Hello and welcome to Oxford Instruments' half-year results. In the presentation, I will summarize the highlights for the year, hand over to Gavin for the financial results, before returning to cover progress with our Horizon Strategy, a sustainability update, an operational review, and closing with a summary and outlook. Moving straight to the highlights. I'm pleased with the performance of the group in the first half of the year. We have emerged from the pandemic a more focused and efficient business, even better aligned to the needs of our customers. The group delivered a strong financial performance in the first half, reflecting our leading position in attractive end markets with long-term structural growth drivers. Growth has been underpinned by buoyant semiconductor, advanced materials, and quantum markets. The life science market recovered strongly after significant COVID-related disruption in the previous year.
Double-digit order growth from commercial and academic customers reflected strong end market demand and represents significant growth on the first half of 2019. Double-digit order growth from commercial and academic customers reflected strong end market demand and represents significant growth on the first half of 2019. From a geographical perspective, we had strong order growth across Europe, North America, and Asia. Revenue grew strongly in the half despite some ongoing COVID-related constraints affecting travel and customer site access, particularly in Europe. We continue to make good progress in the implementation of our strategy, which has supported our growth and margin enhancement despite inflationary pressures and our investment in the future. This included an increased spend in R&D in line with revenue growth and further investment in our capabilities to support future growth.
In September, we completed the acquisition of VTEC, strengthening our materials analysis portfolio with excellent synergies across our target markets. We have maintained a strong balance sheet with a net cash position of GBP 70 million after the acquisition of VTEC. Strong order momentum resulted in 16.9% growth in the order book since March 2021, providing evidence of our strong market positioning. With underlying drivers for our end markets remaining robust and further gains to come from our Horizon Strategy, I'm confident that we have the foundation for sustainable growth and medium-term margin improvement. I'll now hand over to Gavin for the finance review.
Thank you, Ian. Starting with the income statement, we saw strong revenue growth in the period, albeit against a weak comparator. Reported growth was 21.2% and 26.8% at organic constant currency. Adjusted operating profit increased by 25.9% to GBP 30.6 million. On an organic constant currency basis, the increase was 28% with a currency headwind of GBP 0.7 million. We also made good progress against the 2019 half-year with revenue and adjusted operating profit growth of 13.5% and 17.6%, respectively. The adjusted operating margin increased by 70 basis points from 17.3%-18 %, growth of 10 basis points at constant currency. Adjusting items include amortization of acquired intangibles of GBP 3.8 million, acquisition costs of GBP 0.3 million, and an impairment charge of GBP 0.9 million, which eliminates the profit arising in the acquired VTEC business from a revaluation of their bid/rent freeze to fair value.
Finally, the charge of GBP 3.8 million reflects an uncrystallized reduction in the mark-to-market valuation of forward contracts. Financing costs fell to GBP 0.4 million, principally due to the repayment of private placement notes at the last year-end. Adjusted profit for tax increased by 27.4% to GBP 30.2 million. The effective tax rate increased to 21.5%, reflecting the revaluation of deferred tax provisions arising from the announced increase in the U.K. corporation tax rate from the 1st of April 2023. We expect a full-year effective tax rate of approximately 22.4%. Adjusted basic EPS increased by 26% to 41.2 pence. Consequently, the board has declared an interim dividend of 4.4 pence per share, equivalent to growth of 7.3%. Turning to revenue, very strong organic constant currency growth of 34.2% for materials and characterization is due to high demand for our analyzers for electron microscopes, as well as for our semiconductor processing tools.
Improved deliveries against a weak comparative period for our imaging and microscopy business contributed to growth of 23.2% for research and discovery. Export license delays are holding back some shipments within this sector. Service and healthcare revenue grew by 15.3% at constant currency, with good growth from the service of our own products. The VTEC acquisition contributed revenue of GBP 1.8 million for the period under ownership. With total orders in the year of GBP 198 million, our book-to-bill ratio was 117%. Turning to revenue by territory, revenue at constant currency was broadly flat in Europe. This is primarily due to shipment phasing differences and a planned reduction in bespoke orders within our semiconductor business. Strong demand for our analyzers for electron microscopes, as well as our imaging products, supported North American growth of 33% at constant currency.
Constant currency growth in Asia of 44% was driven by strong demand for our semiconductor processing tools and electron microscope analyzers. China constitutes 30% of group revenue in the period and 27% of group orders. With respect to orders, we have seen good growth across all key regions in the first half. Looking at the order book, the total order book at GBP 232 million has grown by over 13% on a reported and organic constant currency basis, providing good visibility for the current financial year. We have witnessed very strong growth across all materials and characterization constituent businesses, with constant currency growth of 25.9%. The margin of fall in research and discovery is attributable to a planned reduction in the acceptance of fewer complex orders from our cryogenic and magnet business, combined with a phasing difference in OEM orders for our X-ray technology business.
Turning to adjusted operating profit by sector, adjusted operating profit increased by 17.4% to GBP 30.6 million, equivalent to a margin of 18%. Materials and characterization adjusted operating profit grew by 43% at organic constant currency, with margin rising to 15.3%, supported by good demand for our high-margin material analysis systems. Research and discovery's adjusted operating profit grew by 41%, with margin increasing to 15.5% due to good trading from our imaging and cryogenic and magnet businesses. Margin for service and healthcare fell slightly to 30.8% due to an increase in service delivery costs as travel restrictions eased. The VTEC acquisition contributed profit of GBP 0.2 million for the period under ownership. Turning to the cash flow, working capital increased by GBP 14.2 million. Inventories rose by GBP 1.7 million to support order intake and mitigate supply chain disruption, particularly across electronic components.
Receivables increased by GBP 5.9 million, primarily due to phasing differences in shipments. In the previous half-year, CapEx was held to minimal levels. CapEx of GBP 5.5 million this period reflects investments in semiconductor processing development tools and infrastructure, as well as initial payments for our new semiconductor facility, which is currently under construction. Challenges in sourcing construction materials means that we now expect to incur CapEx expenditure on the new facility of GBP 12 million in this financial year, with GBP 20 million falling into the following year. Cash conversion of 48% reflects timing of shipments, increases in inventory, and a resumption in capital investments. Cash conversion is normally lower in the first half compared to the full year. Deficit recovery payments of GBP 3.8 million were made to the U.K. Defined Benefit Pension Scheme. We are recording an accounting asset of GBP 25 million.
Acquisition expenditure for VTEC, net of cash acquired, was GBP 30 million. Net cash was GBP 17.1 million at the end of September, down from GBP 97.6 million at the end of last year, mainly due to the acquisition consideration. As regularly presented, the business has a large exposure to foreign currency fluctuations. This chart shows the long positions for our major trading currencies, as well as the short sterling position. As you can infer from the previous slide, the group's financial results will be subject to currency fluctuations. We maintain a hedging program to mitigate currency movements up to 18 months forward from the next reporting date, covering approximately 80% of forecast transactional exposures. In the half-year, we recorded an adverse currency impact of GBP 9.6 million to revenue and GBP 0.7 million to operating profit.
For the full year, our assessment of the currency impact is, based on hedges currently in place and current FX rates, a reduction in revenue of approximately GBP 17 million and a decrease in adjusted operating profit of GBP 1.8 million. Current rates are 1.38 for sterling/dollar, 1.18 for sterling/euro, and 1.56 for sterling/yen. Looking ahead to the financial year 2022-2023, we will see the benefit from hedges currently in place rolling off. Based on current rates, this will have an adverse impact to adjusted operating profit of approximately GBP 5.7 million. This does not affect the underlying future growth of the group and is prior to mitigating actions. Currency headwind guidance is lower than given at the previous year-end, owing to favorable currency movements.
The actual currency impact will be dependent on currency volumes and mix, as well as currency rates at the time of shipments and customer acceptances, and is therefore subject to a high degree of uncertainty. To summarize key financial highlights from the half-year, we have seen strong growth in orders and the order book with a book-to-bill ratio of 117%. However, supply chain disruptions and U.K. export license delays are likely to affect the timing of order conversion to revenue. We continue to invest across our businesses to support future growth, as well as delivering an uplift in margin. Good EPS growth supports an increase in the interim dividend of 7.3%. Net cash of GBP 70.1 million is after the initial consideration for VTEC and still leaves us with a strong balance sheet to support future growth in the business through organic investment and acquisition opportunities. I'll hand back to Ian.
Thank you, Gavin. Let me now turn to an update on our Horizon Strategy. Our Horizon Strategy has provided the resilience to enable growth and improved profitability throughout the global pandemic and has underpinned a strong financial performance in the first half of the year. We have continued to make good strategic progress, further exploiting synergies across the group and heightening our focus on attractive end markets with positive long-term structural growth drivers where we can sustain leadership positions. We have increased our investment in R&D, guided by our strong market intimacy, delivering product differentiation and new solutions that create increased value for our existing customers and have enabled us to expand into adjacent markets.
Through our Operational Excellence Program, we continue to drive efficiencies across the group, building long-term strategic partnerships with fewer suppliers, embedding improved manufacturing processes, and utilizing our expertise to benefit new product delivery across the group. Our service transformation is enhancing our customers' experience, driving growth, and improving our efficiency. I'll cover this in more detail in the service and healthcare section. The acquisition of VTEC, a leading Raman imaging business, has enhanced our portfolio with excellent revenue alignment across our target markets. The Raman technique is complementary to our existing materials analysis products, enabling us to offer a broader suite of solutions to address the needs of our existing customers. To date, the Horizon Strategy has delivered tangible gains across the group, improving our financial performance. Through Horizon, we continue to have significant opportunities for further gains that will support our future growth and margin enhancement.
Moving to sustainability, we believe that embedding sustainability throughout the group creates long-term value for all our stakeholders and will secure our long-term success. Our purpose to enable a greener, healthier, more connected advanced society for all puts us at the heart of global and corporate sustainability initiatives. We recognize that the greatest impact we can make to a sustainable net-zero world is through enabling our customers to deliver the essential technologies to transition to a low-carbon economy. With regard to our own operations, we are developing our ambitious and wide-ranging sustainability agenda based on our commitment to net-zero and the TCFD reporting framework. Whilst the impact our facilities have on the environment is relatively small, we have made continuous strides in reducing our own carbon footprint and will continue our efforts in minimizing our overall environmental impact throughout our supply chain.
As a group, we have embraced a hybrid workplace model, helping us establish more effective ways to support and engage with our global customers and maintain the essential connectivity between our teams to optimize our internal operations and the delivery of our strategic roadmaps, whilst reducing our carbon footprint. We were delighted to welcome Sir Nigel Sheinwald to the board in September and as chair of our Sustainability Committee. Nigel brings a wealth of skills and experience from his time as chair of Shell's Sustainability Committee and will help support the further development and delivery of our initiatives. We will publish our first sustainability and TCFD statements in 2022 alongside our annual report. Moving to our operations review and starting with group performance. The group delivered a strong financial performance in the first half with double-digit order, revenue, and profit growth.
It also represented strong growth relative to the pre-pandemic half-year of 2019. We had significant order growth to commercial customers in line with our strategy, with strong growth into academia. Revenue grew strongly in the half despite some ongoing COVID-related constraints affecting travel and customer site access. Our continued focus on driving operational efficiency supported improved operating margin to 18% despite inflationary headwinds in the half. Our proactive engagement across the full technology cycle has supported our performance throughout the pandemic and positions us well to benefit from each wave of commercialization and technology disruption. Looking at our end markets, as part of our strategy, we target a broad range of attractive end markets. Their underlying structural growth drivers have been strengthened and reinforced by the nature of the global economic recovery and an increased sustainability agenda.
Our strong order and revenue growth has been supported by buoyant semiconductor, quantum, and advanced materials end markets. This was supported by recovery in life science markets after being heavily subdued in the previous year and representing growth relative to 2019. From a regional perspective, we had double-digit order growth in Europe, North America, and Asia, and also relative to 2019. COVID-related disruption, supply chain challenges, and delays in receiving export licenses continue to impact revenue in the half, resulting in strong growth in North America and Asia, with Europe slightly behind the previous year. Moving to our individual sectors and starting with materials and characterization. The sector represents 50% of group revenue, providing products for the imaging and analysis of materials, as well as the fabrication of semiconductor devices. Constant currency orders and revenue grew by 20% and 37% respectively, representing strong growth relative to 2019.
Growth was underpinned by a buoyant semiconductor market, representing 51% of revenue for the sector, and was supported by increased demand across advanced materials, life science, and energy and environment markets, and the success of recently launched products. This resulted in strong growth to commercial customers, with growth also into academia. Orders grew strongly across all major regions. The addition of VTEC's leading Raman microscopy solutions increased the role we can play in helping our customers achieve their goals and provides opportunities for synergies across our sales, marketing, and service teams. Looking at end markets and starting with semiconductor and communications, the compound semiconductor market continues to strengthen, with long-term structural growth drivers due to the potential of transforming communications and increasing the energy efficiency of power systems and consumer electronics.
This has driven strong demand for our advanced compound semiconductor systems and proprietary semiconductor processes, supported by our new portfolio dedicated to high-volume manufacturing. We had strong growth to commercial customers across data communications and energy applications. These include 5G and 6G networks and hyperscale data centers, as well as growth into micro-LEDs and 3D sensors that are increasingly being deployed in mobile devices, cameras, cars, and even designer sunglasses. Compound semiconductors also play a significant role in providing a pathway to net-zero by providing more efficient energy conversion, generation, and storage, supporting growth for our gallium nitride and silicon carbide etch and deposition systems. In addition, the proliferation of semiconductor chips within consumer electronics is driving a ramp-up in global manufacturing capacity and increased investment in the development of next-generation devices, driving strong growth across our portfolio of imaging and analysis solutions.
Within the energy and environment segment, strong growth has been underpinned by the strength of battery-related markets, driven by the increase in portable electronic devices and the growing electric vehicle market. Our products enable our customers to develop the new technologies utilizing different materials that will deliver the enhanced performance and cost points needed for batteries to replace fossil fuels. We have also had growth for our quality control and defect inspection systems to support the expansion of global battery manufacturing. Within the segment, we saw partial recovery across forensic and environmental-related markets relative to the previous half-year. Moving to advanced materials, these are the building blocks of advanced society, enabling everything from touchscreens on devices, thinner drink cans, to the lightweight super alloys that provide structural integrity in cars.
Our products enable our customers across a broad range of markets to develop, control, and repeatedly manufacture the stronger, lighter, higher-performing materials that will play a critical role in delivering a sustainable advanced society. Through our market intimacy and deep understanding of our customers' workloads, we increase our customers' productivity through delivering tailored solutions for specific applications. Strong growth into advanced steels is supported by our products' ability to measure with precision and reliability, the nanoscale structure which strongly determines the physical properties and inherent value of the material. Our new advanced analytics greatly simplifies data interpretation, providing actionable insights and removing the need for specialist operators. Within life science, whilst a relatively small proportion of the sector, it remains an opportunity for growth as we develop tailored offerings for pharma and bio applications.
The acquisition of VTEC further enhances our capabilities in this area, with the technique being ideally suited for the study of biological samples. Moving to our second sector, research and discovery. Robust end markets supported strong order and revenue growth in the period, also representing an improved performance relative to 2019. Strong performance was driven by sustained growth in quantum and advanced materials markets, supported by recovery in life science. Research and fundamental science remained subdued, with a slower market recovery for these typically larger and centrally funded projects. The sector had strong growth for both academic and commercial customers, with double-digit order growth across all regions. The continued realization of tangible gains through our Horizon Strategy more than offsets inflationary headwinds, driving further enhancement in profit and margin for the sector.
Looking at end markets and starting with healthcare and life science, the positive momentum in the second half of last year continued, with an increasing number of customer labs and facilities reopening around the world. The long-term market growth drivers of improving the well-being and healthcare of society remain robust, driven by an aging population and an increased focus on delivering improved and cost-effective healthcare provision. Our products enable our customers to better understand fundamental disease mechanisms and develop new treatments, therapies, and medicines with enhanced efficacy. This drove double-digit order and revenue growth despite a reduction in the sales of COVID-related applications, which returned to pre-COVID levels. Growth has been supported by the success of recently launched products and tailored solutions into neuroscience and cancer research.
For example, within cancer research, we've had strong growth for our scientific cameras for tumor imaging, enabling rapid and accurate diagnostic screening of patient samples. Our microscopy systems are providing new insights into the mechanisms that cause tumor growth, identifying proteins that can counteract uncontrolled cell division, providing new candidates for cancer treatments. Strong growth into pharma applications was supported by our key enabling technologies, being at the heart of OEM partners' equipment across a broad range of applications, including diagnostic X-ray imaging, cell analysis, and gene sequencing. Within research and fundamental science, we continue to see long-term customer interest in our specialized cryogenic superconducting magnet and high-end scientific cameras across a broad range of research themes, including chemistry, physics, and astronomy. Orders, which tend to be lumpy in nature, were down compared to the previous half, despite a positive forward-looking pipeline.
Within quantum technology, the ongoing transition of quantum computing from research into applied R&D and commercial applications has driven strong order and revenue growth, supported by increased government funding and corporate activity. This has led to an emerging ecosystem of national laboratories, technology startups, and quantum as a cloud service to an increasing number of end users. This drove strong growth across our portfolio of cryogenic platforms into quantum computing and scientific cameras into secure communications. Within the advanced materials segment, growth reflected continued and sustained customer demand to explore the fundamental properties of materials within a broad range of applications, including sensors, semiconductors, and batteries. Moving to our final sector, service and healthcare, we've made good progress in our service transformation program, building on the success of last year and resulting in strong order and revenue growth in the half.
This resulted in adjusted operating profit and margin being significantly ahead of 2019, but with margin slightly depressed relative to the comparative period due to investments in our teams and increased travel costs as COVID restrictions eased. Our broader portfolio of tailored service offerings and product connectivity are enhancing customers' capabilities and productivity throughout the lifetime use of our products. The transformation includes moving to a regionally led service delivery model, enabling us to better support our customers whilst improving our own efficiency and reducing our travel footprint. While still in the early stages of our transformation, we have identified significant scope for further developments that will increase the value and breadth of our service portfolio and contribute to the ongoing success of our Horizon Strategy.
Finally, moving to our summary and outlook, we have seen strong order and revenue growth in the year, as well as strong growth relative to the first half of 2019. Growth in operating profit has been supported by ongoing gains through our Horizon Strategy, resulting in adjusted operating margin rising to 18% for the half. We have emerged from the pandemic a stronger, more focused, and efficient business, even more aligned to the needs of our customers in end markets with structural growth drivers. We are increasing our investment to take advantage of these growth opportunities, providing the foundation for growth and medium-term margin expansion.
While supply chain pressures will moderate conversion of orders to revenue and drive cost inflation in the second half, our strategic alignment to a range of attractive end markets, combined with our strong opportunity pipeline and healthy order book, provides us with good momentum going into the second half. Our expectations for further progress in the year are unchanged. That concludes our half-year result.