Hello and welcome to Oxford Instruments half-year results. Gavin and I are presenting to you from our office near Oxford, and while we are again using a virtual format, we will be following the usual agenda. I will start with the highlights, hand over to Gavin, who will cover the financial results, before returning to a progress update on our Horizon strategy, our response to the COVID pandemic, the operational review, and then closing with a summary and outlook. Moving straight to the highlights, the group has delivered a resilient first half performance, and the underlying long-term growth drivers for our end markets remain robust. Despite the disruption caused by the pandemic, we have continued to make good progress with the implementation of our Horizon strategy, accelerating the delivery of our market intimacy and service transformation programs, and have maintained our investment in R&D.
These actions further strengthen our resilience through the ongoing disruption and support sustainable future growth and margin improvement. The group delivered strong order growth, underpinned by increased demand across semiconductor communications, quantum technology, and advanced materials end markets, and from both commercial and academic customers. The order book increased 17% on a constant currency basis since March 2020, with significant growth in the materials and characterization sector, with good growth across research and discovery, and service and healthcare. Revenue for the group was impacted throughout the period by COVID-related disruptions, predominantly due to temporary customer site closures, reduced access, and travel restrictions hindering the fulfillment of customer orders. In addition, our manufacturing capacity was reduced as we established and adapted to COVID-safe work practices. This resulted in a revenue decline of 11% despite good order growth in the period.
Strong margin performance was supported by the combination of improved commercial practices, the transformation of our service approach, ongoing gains from our operational excellence program, and prudent cost control measures in the period. Continued good cash collection resulted in an improved net cash position, further strengthening the balance sheet. With robust trading and positive cash generation, the board has decided to reinstate the interim dividend. I will now hand over to Gavin for the financial review.
Thank you, Ian. In these results, OA Healthcare has been classified as a discontinued operation following its disposal in the final quarter of the last financial year. Reported and constant currency revenue declined by 11% to GBP 140.3 million. Reported adjusted operating profit decreased by 7.3% to GBP 24.3 million. Excluding currency effects, adjusted operating profit fell by 11.5%, with a currency tailwind of GBP 1.1 million. The adjusted operating margin increased by 70 basis points from 16.6% to 17.3%. The margin on a constant currency basis was in line with last year at 16.6%, despite the decline in revenue. Financing costs increased marginally, owing to a refund of overpaid interest in the prior year. Adjusted profit for tax declined by 8.1% to GBP 23.7 million. Amortization of acquired intangibles of GBP 4.3 million is a non-cash charge and treated as an adjusting item.
We also treat the uncrystallized mark-to-market movement on derivative financial instruments that are hedging future transactional currency exposures as an adjusting item. At 30 September, the spot rate for sterling against the US dollar was higher than the average rates on our outstanding hedges, contributing to a credit of $0.8 million. There were no other adjusting items in the period. Reported profit for tax from continuing operations was up 6.9% at GBP 20.2 million against GBP 18.9 million in the previous year. The effective tax rate increased slightly to 20.7% from 20.2%, reflecting a change in the geographical mix of profits earned. Continuing adjusted basic EPS declined by 8.9% to 32.8 pence. As a result of high uncertainty caused by COVID-19 on our markets, the board decided not to pay last year's interim dividend, nor declare a final dividend for the last financial year.
However, a better-than-expected trading performance, growth in the order book, and good cash generation have resulted in the board proposing an interim dividend of 4. 1 pence for this financial year. Looking at revenue by sector, constant currency revenue declined by 10.9% for materials and characterization, partly due to customer disruption from COVID-19 that hampered our ability to ship product to customer sites, as well as the impact on production capacity from the introduction of new safe working practices. A constant currency decline of 16.4% in research and discovery was as a result of being unable to complete high-value product installations in Asia ahead of the year-end owing to customer site closures and travel constraints on service personnel. In addition, production was constrained as our manufacturing sites adapted to new COVID-19 working practices. Service and healthcare constant currency grew by 1.1%, with good growth from the service of our own products.
With total orders in the half-year of GBP 175.7 million, our book-to-bill ratio was 1.25. Moving to revenue by territory. In the half-year, Europe and North America were most affected by disruption to product shipments. Both regions saw depressed revenue for our electron microscope analyzers and optical imaging systems. In addition, installation of our cryogenic and magnet systems was impacted by customer site closures in North America. For Asia, on a group basis, we have seen a fairly stable performance, with revenue from our cryogenic and magnet systems offsetting a slowdown in our imaging system sales. The weakness in Europe and North America, combined with the relatively good performance from China, has meant that China constituted 25% of total group revenue for the half-year. The orders picture has been stronger across all regions, particularly driven by demand for semiconductor process systems.
Looking at the order book, the order book has grown by 16.9% since last year-end on a reported basis and 16.6% at constant currency. We have witnessed good constant currency growth of just under 45% for materials and characterization, supported by strong demand for our scanning probe microscopes and semiconductor process systems. Order book growth in research and discovery has been a little over 5%, supported by delayed shipments and installations due to COVID-19. Turning to adjusted operating profit by sector. On a group basis, the fall in revenue led to a decline in reported adjusted operating profit to GBP 24.3 million. Despite the decline in revenue, constant currency margin was held in line with last year at 16.6%, with margin improvement from our operational excellence and other Horizon programs, in addition to savings in marketing and other discretionary expenditure. Currency effects pushed margin higher to 17.3%.
Materials and characterization margin declined by 300 basis points to 13.7%, with margin on our electron microscope analyzers falling on lower revenue. At constant currency, the margin was 12.7%. Adjusted operating margin for research and discovery increased to 13.3%, growth of 220 basis points, plus 120 basis points in constant currency. Margin growth was supported by the installation of some significant magnet and cryogenic systems for nanoscience. Good cost control and favorable product mix in our imaging business prevented margin dilution following a fall in revenue. Continued focus on service revenue lifted service and healthcare reported and constant currency margin by 490 basis points to 33.6%. Turning now to the cash flow. In the half-year, the group delivered adjusted earnings for interest, tax, depreciation, and amortization of GBP 28.4 million.
Working capital rose by GBP 3 million due to a small rise in inventories and a decline in payables, partly due to a clearing of balances prior to implementation of a new ERP in Asylum Research. Cash spend on research and development was GBP 12.7 million, equivalent to 9.1% of revenue. Deficit recovery pension payments of GBP 3.7 million were made to the U.K. Defined Benefit Scheme. The scheme recorded an accounting net surplus of GBP 1.1 million as of 30 September, down from a net surplus of GBP 30.7 million at the end of March. A significant fall in corporate bond yields has resulted in a lower discount rate, and combined with changes to the assumed level of inflation, has resulted in a higher value being placed on the scheme's liabilities.
The increase in liabilities has been partially mitigated by contributions paid and the return on the scheme's assets being higher than the discount rate over the period. Cash generated from operations of GBP 23.3 million represents 97% cash conversion and growth of over 50% against last year. Net cash was GBP 81.4 million at the end of September, up from GBP 67.5 million at the end of March. Looking at currency exposure, as regularly presented, the business has a large exposure to foreign currency fluctuations. This chart shows the long US dollar, euro, and yen exposures and 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 in the near term, with cover over approximately 80% of second-half forecast transactional exposures.
In the half-year, we recorded a currency benefit of GBP 1.1 million to operating profit. For the second half of the year, our assessment of the currency impact is, based on hedges currently in place and forecast rates, a reduction in revenue of GBP 1 million and an increase in adjusted operating profit of GBP 200,000. Forecast rates for the second half are 1.3 for sterling dollar, 1.11 for sterling euro, and 135 for sterling yen. As an example, sensitivity and appreciation of 5% in sterling against all our major trading currencies from forecast rates would result in a reduction in revenue and adjusted operating profit of GBP 7.9 million and GBP 1.3 million, respectively, for the second half of the year.
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 year. We have seen good growth in orders. The margin of constant currency was sustained despite the fall in revenue. Good operating cash conversion of 97% has helped to lift net cash to GBP 81.4 million. We have GBP 105 million of undrawn facility on a committed credit facility, resulting in headroom of approximately GBP 214 million. A robust trading performance, the growth in the order book, and good cash generation underpins the board's decision to reinstate guidance and declare an interim dividend. I'll hand back to Ian.
Thank you, Gavin. Let me now turn to an update on Horizon.
The Horizon strategy has provided a solid foundation for growth. It has equipped us well to respond to the COVID-related disruption and has delivered tangible financial gains in the period, supporting operating margin. Throughout the first half, we have continued the implementation of our strategy, strengthening our resilience and supporting future sustainable growth and margin improvement. We accelerated our market intimacy program, including the transfer of magnetic resonance into the materials and characterization sector, better aligning our operations to end markets and enabling further sales, marketing, and service synergies. In addition, we expanded our digital sales and marketing capabilities, which supported order growth in the half. The transformation of our service offering, including digital service products and remote service capabilities, enabled improved levels of customer support and operational efficiencies, mitigating reduced customer site access and travel restrictions.
We continued progress with our operational excellence program, maintaining a focus on future gains through strategic procurement, operational efficiencies, and logistics. The development of market-leading products and key enabling technologies is an essential pillar of our strategy. Through the half, we maintained our investment in our R&D program, sustaining a healthy pipeline of future products. We continued to invest in the development of our employees and undertook selective recruitment to further enhance specific skills and capabilities to support future growth. Turning to our response to the coronavirus, our priorities throughout the pandemic have remained the health and well-being of our employees and the provision of support to our customers, helping them navigate their own operational challenges. Revenue in the period was most significantly impacted by the temporary closure and ongoing COVID-related disruption at customer sites, combined with slower administrative processes.
Our hybrid workplace model has allowed us to respond quickly to the ongoing and rapidly changing global disruption, enabling our sites to maintain operations and business continuity. Throughout the period, we continued to refine working practices to improve output and efficiencies. This included the introduction of shifts at some of our sites to increase output whilst maintaining COVID-safe operations. The agility and commitment of our employees during these challenging times has provided the resilience and foundation to successfully navigate the ongoing disruption. Moving to our operations review and starting with the group performance. As previously mentioned, strong order growth across academic and commercial customers, combined with deferred revenue due to COVID-related disruptions, resulted in double-digit order book growth. Revenue was most significantly impacted in the first quarter, with strengthening demand and positive momentum building through the period.
Operating margin was maintained despite lower revenues through benefits from Horizon initiatives being realized in the half and prudent cost control. The breadth of our markets and exposure across the technology cycle supported performance through the pandemic and positioned us well to benefit from each wave of commercialization and technology disruption. Looking at our end markets, we are positioned to address a broad and diverse range of attractive end markets and industrial sectors with underlying long-term growth drivers. These remain robust and have experienced varying amounts of disruption due to the pandemic. Order growth, supported by strong demand across semiconductor, quantum technology, and advanced materials, was partially offset by softness in healthcare and life science, energy and environment, and fundamental research and markets. Revenue for semiconductor and communications and quantum technology grew in the period, with customer-related disruptions resulting in a decline in revenue in the other market segments.
From a regional perspective, good order growth across North America and Asia was partially offset by a small decline in Europe, where customer disruption has been most pronounced. Our customer-centric approach and tailored product launches enabled expansion into new applications, further supporting order growth. Moving to our individual sectors and starting with materials and characterization, the sector represents 47% of group revenue and comprises Asylum Research, magnetic resonance, NanoAnalysis, plasma technology. The sector provides products and solutions for the imaging and analysis of materials down to the atomic level, as well as the fabrication of semiconductor devices and structures through our range of etch and deposition systems, with commercial customers representing 52% of revenue. Orders for the sector increased 17%, with growth evenly split across academic and commercial customers. Strong order growth in North America and Asia was supported by good order growth in Europe.
From an end market perspective, strong order growth in semiconductors was supported by increased demand across advanced materials, quantum, and life science, partially offset by softness for energy and environment applications due to lower academic activity in the period. Revenue and margin for the sector were significantly impacted by COVID-related disruptions, with the strongest declines in Europe and North America. Revenue in Asia was broadly in line with the previous year. Looking at end markets and starting with semiconductor and communications, the market segment had double-digit order and revenue growth and remains a significant focus for the sector. Growth of our etch and deposition systems into compound semiconductor applications was supported by buoyant end markets, with long-term growth drivers due to the ability of compound semiconductor devices to transform the energy efficiency of power electronics, dramatically increase connectivity and bandwidth, and enable faster communications.
Growth was underpinned by our strategic focus on improving the key semiconductor processing steps that determine device performance. This led to strong growth in power electronics for applications such as chargers, optoelectronic devices and lasers used in data communications, and sensors for autonomous vehicles. We also saw strong growth of our imaging and analysis solutions into mainstream silicon semiconductor and electronics applications, supporting next-generation technologies and quality control within production. For example, the control of wafer and device composition, contamination levels, and structural integrity. Order growth of our measurement and semiconductor processing solutions has been further supported by our strategy to tailor product offerings for the specific needs of academic, corporate R&D, and production customers. Within the energy and environment segment, orders and revenue declined in the period due to customer disruption. However, we continue to see underlying growth drivers across applications such as batteries and photovoltaics.
Within advanced materials, our growth reflects the continued drive to develop, control, and repeatedly manufacture stronger, lighter, and higher-performing materials across a broad range of end markets, including textiles, displays, energy generation, automotive, and construction. Our imaging and analysis products help our customers to develop new, higher-performing materials and improve their manufacturing yields. These advanced materials provide the pathway to transform end application performance and the move towards reduced raw material usage and lower end-to-end carbon footprints. For example, our new imaging solution has been used by a major steel manufacturer in the development of advanced steels and super alloys required by automotive manufacturers to reduce vehicle weight whilst retaining structural integrity. Combined with our proprietary machine learning algorithms, the system reduces analysis time from hours down to minutes.
Order growth in the analysis of advanced polymers was driven by increased demand across a diverse range of applications, including lower-cost photovoltaics, flexible displays, and bioimplants. The healthcare and life science segment, whilst a relatively small proportion of the sector, continued to see growth driven by the launch of tailored products. For example, AZtecPharma has been developed in collaboration with major pharmaceutical manufacturers, providing the required regulatory certification, and has been used to identify foreign body contamination within and on the surface of medicine tablets. Moving to our second sector, research and discovery, the sector representing 34% of group revenue comprises Andor Technology, NanoScience, and X-ray Technology.
The sector provides advanced solutions that create unique environments and enable imaging and analytical measurements down to molecular and atomic level, used predominantly in fundamental and applied research, with a higher proportion of customers with academic or government funding representing 67% of sales. Revenues and orders for the sector were significantly impacted by COVID-related disruptions, falling 16% and 7% respectively. The impact of COVID disruption was most severe in the first quarter, with continued improvement and positive momentum building through the period. Customer disruption was most pronounced within Europe and North America and had a disproportionate impact on sales of our scientific cameras and optical microscopy solutions. Order growth and inline revenue performance in quantum technology and advanced materials applications was more than offset by COVID-related softness from academic life science customers.
Operating margin increased to 13.3%, reflecting the realization of tangible gains from the previous year's Horizon initiatives and careful cost management. Looking at end markets and starting with healthcare and life science, as previously mentioned, demand in Europe and North America was significantly impacted during the first quarter. However, we believe that the long-term fundamental market drivers for our products in supporting the improved health and well-being of society remain robust. As customer restrictions have eased, we've seen positive momentum through the second quarter, with bookings in line with the second quarter of the previous year. Within the segment, we received increased demand from customers and our OEM partners involved in COVID-related initiatives. This included use of our cameras within diagnostic testing equipment and researchers using our broad range of products to study the virus, understand its genetic sequence, mutations, and how it attacks cells and organs.
Our key enabling technologies continue to help our customers better understand fundamental disease mechanisms at the cellular and molecular level and for the development of new treatments, therapies, and personalized medicines. As an example, the CRISPR technique, which can be thought of as a pair of genetic scissors to cut and edit DNA and was recognized with this year's Nobel Prize, is an important part of the cell biology's toolkit. The method, which is gaining interest due to its potential within cancer research, relies on extremely weak light signals and therefore requires highly sensitive scientific cameras such as our iXon. Within quantum technology, we continue to see increased demand across our portfolio of cryogenic and magnet platforms for both fundamental research into quantum effects, new quantum materials, and in the development towards practical quantum computers.
This demand has been driven by increased funding across government and commercial customers due to the potential of quantum computing, cryptography, and sensor capabilities to disrupt diverse end markets such as banking and healthcare. We are delighted to be a key partner in a government-funded consortium to build and operate the U.K.'s first commercial quantum computer with Rigetti, a US-based quantum systems provider. Our cryogenic platform will be at the heart of the system, which will be operated from our Oxford facility. In research and fundamental science, we continue to see customer interest across a broad range of research themes, including fundamental physics, astronomy, chemistry, and materials research. In the half, we received further grants to develop more sensitive cameras for the tracking of space debris.
Also, the SOFIA Space Telescope, which NASA used to discover water on the moon, uses one of our cameras to guide the telescope and track objects of interest. In the period, we successfully installed the first two systems of the multi-system order taken in 2018 for the Institute of Physics in Beijing. Moving to our final sector, service and healthcare. This sector represents 19% of revenue and comprises the group support services related to our own products and the service and support of third-party MRI systems in Japan. In the first half, the sector delivered order and revenue growth driven by increased demand for support services related to our own products. Revenue from our Japan MRI service operations were broadly in line with the previous year, with our team continuing to provide the same levels of support to hospitals throughout the disruption.
To meet the changing needs of customers for our own products as a result of the pandemic, we accelerated the transformation of our customer support services. This included adapting our own service offerings, introducing remote access products, and changing the way in which we are organized to deliver our services. These actions underpinned increased service profitability in the half. To overcome challenges related to reduced customer site access, we utilized our virtual reality and live assist capabilities to enable remote service delivery. Through the provision of increased digital products, operational efficiencies, and better leveraging our global footprint, we maintained high levels of customer support and improved our capacity. These new approaches were well received by customers, improving their productivity and minimizing downtime.
Whilst we have accelerated the early phase of our service transformation, we have further developments to implement to better support our customers in the future and contribute to the ongoing success of our Horizon strategy. Finally, moving to our summary and outlook, we've seen strong order growth in the first half, with revenue significantly impacted by COVID-related disruptions. Gains from our Horizon strategy and cost control enabled sustained operating margins. We are adjusting to the external and internal effects of the pandemic and expect uncertainty to remain high. However, robust trading in the first half, combined with a strong order book, gives us confidence for the second half, absent a material increase in COVID-related disruption that could impact facility or customer site access. We expect full-year performance to be a little behind last year on a constant currency basis ahead of current analyst forecasts.
The transformation of the group through our Horizon strategy has provided a solid foundation for future growth. Our focus on markets with sustainable long-term growth drivers, our continuous drive for greater efficiencies, and our ability to respond to evolving customer needs mean that we remain well positioned to navigate the current challenges and return to longer-term growth and margin improvement. That concludes our half-year presentation. Thank you for your attention.