Hello, good morning, and welcome to Oxford Instruments' half-year results. In terms of the agenda for today, I'll take you through the highlights, hand over to Gavin, who will cover the financial results before returning for an operational review, and then closing with a summary and outlook. Moving straight on to the highlights. We continue to make good progress with the implementation of our Horizon Strategy, which is delivering tangible financial benefits, and we can see opportunities for Horizon to drive further revenue growth and margin improvement. The group achieved a positive first-half performance against a backdrop of uncertain macroeconomic conditions, with strong underlying revenue and profit growth and margin improvement in the period. Our customer-centric approach is providing valuable market insights, enabling us to identify opportunities within existing markets and move into new adjacent markets, supporting growth from both academic and commercial customers.
Growth in orders and order book was supported by positive academic markets, with increased demand from commercial customers being partially offset by softer silicon semiconductor, electronics, and automotive end markets, and the timing of some larger OEM orders. The implementation of improved commercial practices, combined with the initial gains from our operational excellence program, contributed to enhanced profitability in the period and provide the foundation for further growth and margin improvement. Our focus on customer applications is contributing to the success of recently launched products and the development of a richer product roadmap and stronger IP portfolio. We've increased the interim dividend by 7.9%, reflecting the improvement in underlying earnings per share. Now, hand over to Gavin for the financial review.
That'll do. That'll do. Cut straight to the chase.
Morning, everyone. As we hear, straight to the income statement. As you can see, reported revenue grew by 13.1% to GBP 166 million. On a constant currency basis, revenue growth was 9.1%. Reported adjusting operating profit grew by 22.9% to GBP 25.8 million, assisted by a currency tailwind of GBP 2.2 million. Excluding currency effects, growth was 12.4%. The adjusted operating margin increased by 120 basis points from 14.3% to 15.5%. The margin on a constant currency basis was 14.7%, equivalent to growth of 40 basis points. A net asset position at the half-year on the UK-defined benefit pension scheme resulted in us not incurring any pension financing charges. This contributed to a decrease in net finance costs to GBP 0.4 million. Adjusted profit before tax increased by 28% to GBP 25.4 million. Amortization of required intangibles of GBP 4.8 million is a non-cash charge and treated as an adjusting item.
We also, as most of you will know, treat the uncrystallised mark-to-mark 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 at 1.23 was lower than average rates on our outstanding hedges, contributing to a charge of GBP 2.6 million. There were no other adjusting items in the period. Reported profit before tax from continuing operations was GBP 18 million against GBP 11.6 million in the previous year. Continuing adjusted basic EPS grew by 30%- 35.5%, and the board has proposed an increase in the interim dividend of 7.9% to 4.1 pence. Turning to revenue by sector, reported revenue for materials and characterisation grew by 16.1%, 12.3% at constant currency, with particularly strong growth across all constituent businesses.
Reported revenue grew by 12.7%, 8.7% at constant currency for research and discovery, with good growth from our optical microscopy systems and scientific cameras. Reported revenue from the service of our own products led to an increase in reported revenue of 8.3%, 4% at constant currency for service and healthcare. With total orders in the year of GBP 173 million, our book-to-bill ratio was 1.04. Moving to revenue by territory. In Europe, we have seen constant currency revenue growth of just over 18% due to strong sales for our plasma processing solutions and atomic force microscopes. In North America, we saw constant currency growth of 7.8%, driven by an improvement in demand for our electron microscope analysers and optical imaging systems. For Asia, we saw constant currency revenue growth of 4.3%, with growth of 13% in China. China represents 21% of group revenue in the half-year.
The order book has grown by 8.9% since last year on a reported basis and 6% at constant currency. Constant currency growth was a little over 10% for materials and characterisation, with good growth across all businesses and particularly our semiconductor processing solutions. Constant currency growth in research and discovery of approximately 1% was held back by the phasing of large OEM orders for X-ray technology. Growth in orders from the service of our own products and across both our healthcare businesses resulted in constant currency order growth of 13.6%. Turning to adjusted operating profit by sector, adjusted operating profit in materials and characterisation of GBP 12.2 million reflects a growth rate of 16.5% at constant currency. The operating margin increased by 140 basis points to 17.5%, up 60 basis points at constant currency. We saw good profit and margin growth across all constituent businesses.
Within research and discovery, adjusted operating profit increased by 16.7% at constant currency to GBP 6.4 million. The operating margin increased by 170 basis points, 70 basis points at constant currency. Margins were held back in the period due to some large cryogenic and magnet systems that are expected to be shipped and accepted by customers in the second half of the year. Adjusted profit grew by 3.1% at constant currency for service and healthcare, with margin rising by 50 basis points, assisted by improvement in the performance of service of our own products. The group made adjusted earnings before interest, tax, depreciation, and amortization of GBP 31 million. The working capital outflow of GBP 10.4 million reflects an increase in inventories of GBP 3.8 million to support shipments in the second half of the year.
Receivables fell by GBP 3.6 million, less than last year, owing to a higher number of shipments occurring closer to the half-year end compared to the previous year. The reduction in payables is due to a decline in deferred revenue, a fall in customer deposits due to revenue recognized on acceptance close to the half-year end, and timing of payments made on our operational excellence program. Cash spend on research and development was GBP 13 million against GBP 12 million last year. Of this, GBP 2.2 million was capitalized in the half-year. Pension costs included a payment of GBP 2.3 million to the US Pension Scheme as part settlement of termination liabilities. We expect a second and final payment will be made of approximately GBP 1 million prior to the year-end.
On an accounting basis, we recorded a net asset on our defined benefit pension schemes of GBP 2.6 million against a net liability of GBP 6.5 million as of the 31st of March 2019. Other items include a receipt of GBP 1.6 million in respect of the sale of industrial analysis back in 2017. Cash generated from operations of GBP 16.4 million represents 65% cash conversion against 91% last year. We expect the cash conversion ratio to improve for the full year. Net cash was GBP 14.2 million at the end of September, up from GBP 6.7 million at the end of March. As regularly presented, the business has a large exposure to foreign currency fluctuations. This chart shows the long US dollars, Euro and JPY exposures and short Sterling and Chinese Renminbi position for the half-year. As you can infer from the previous slide, the group's financial results will be subject to currency fluctuations.
We maintain a hedging program against a proportion of our transactional exposure, covering a period of 12 to 18 months forward. This is the impact of mitigating currency movements in the near term. In the half-year, we recorded a currency benefit of GBP 2.2 million to operating profit, as I mentioned at the beginning. We estimate that the benefit in the second half will be less than half that seen in the first, based on exchange rates prevailing at the end of October. For the full year 2020-2021, with current hedges at the end of October in place and assuming no change from end-of-October spot rates, then we would expect a benefit against the full year 2019-2020 to an AOP of approximately GBP 1 million.
As an example, sensitivity and appreciation of 5% in Sterling against all our major trading currencies from spot rates at the end of October would result in a headwind of GBP 2.7 million to profit. The actual currency impact will be dependent on currency rates at the time of shipments and customer acceptances, as well as the currency mix, and is therefore subject to a high degree of uncertainty. To summarise key highlights from the half-year, we've seen good reported and constant currency revenue and profit growth. Underlying adjusted operating margins increased, supported by savings from our operational excellence program. Continuing adjusted basic earnings per share grew by 30%, and the interim dividend was raised by 7.9%. Our balance sheet remains robust, with net cash rising to GBP 14.2 million at the end of September. With that, I'll hand back to Ian.
Thank you, Gavin. Let me now turn to the operations review. As I mentioned in the highlights, we continue to make good progress with implementation of our Horizon Strategy, which is delivering tangible benefits. Whilst I remain pleased with our progress, there is still much to do, and we can see significant opportunities to drive further growth and margin improvement. As a group, we report in three sectors: materials and characterisation, research and discovery, and service and healthcare. In the period, we delivered strong growth in revenue and operating profits across each of our three sectors, with an increase in operating margin supported by the implementation of improved commercial practices and gains from our operational excellence program.
Diverse markets supported order and order book growth in the period, with growth from academic and commercial customers being partially offset by weakness within the silicon semiconductor, electronics, and automotive markets and the timing of some large OEM customer orders. Our access to all phases of the technology cycle, from academic research through to commercial production, means we are well positioned to benefit from waves of commercialisation and market disruption. Looking at our end markets, we focus on addressing a broad and diverse range of attractive end markets. These remain positive, with long-term fundamental growth drivers. In the period, we delivered strong revenue growth across each of our chosen customer segments, despite the challenging macroeconomic conditions. Revenue and order growth in the period were supported by our increased market intimacy, focusing on customer outcomes.
This has enabled us to find growth in existing and new adjacent markets and in more than offset, further softening within the specific markets I have just mentioned. From a geographical perspective, we achieved strong revenue growth across Europe and North America, with good growth across Asia. Within Asia, we continued to see growth in China. Moving to our individual sectors and starting with materials and characterisation. The sector represents 42% of group revenue and comprises Asylum Research, NanoAnalysis, and 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 device structures through our range of etch and deposition systems. A core strength of the sector is the market diversification and reach across academic and corporate R&D and commercial production customers.
The sector delivered double-digit revenue and operating growth in the period, with good order growth resulting in double-digit increase in orders and order book since year-end. Increased volumes and operational efficiencies contributed to an improved operating margin for the sector. From a market perspective, we achieved strong growth in advanced materials, with good growth in semiconductor and communications and the energy and environment segments. Improved performance in the period was supported by the success of new and recently launched products and our increased focus on tailoring product offerings to specific end customer applications, raising both the product value and expanding our addressable markets. This led to strong revenue growth from both academic and commercial customers, with the latter accounting for 55% of revenue. Looking more closely for growth drivers in the sector, this is the sheet that starts advanced materials.
Within advanced materials, the continued demand for lighter, stronger, and higher functioning materials has increased the investment in material science, driving strong growth across our imaging and analysis solutions, which are used to aid the development of next-generation products and components, as well as in the quality control and assurance of manufactured products. Applications include the development of safer cars and planes, with improved fuel efficiency, and advanced materials for applications such as wind turbine blades and medical implants. Not all applications are quite so high profile, and we continue to see growth in more routine applications, including the optimization of razor blades, the quality control of ceramics used in mobile phones, and increasing the strength of thinner aluminum drink cans to allow a reduction in their raw material consumption.
In the period, we launched our first large sample atomic force microscope, which builds on our portfolio of market-leading performance and reputation within the research end of this particular market. The new product enables the measurement and analysis down to individual atoms for samples up to the size of a typical tablet computer. This launch has significantly expanded our addressable market, providing faster results and a simpler user experience for multi-user sites and industrial customers. Within the energy and environment segment, growth was predominantly driven by increased activities related to battery research and quality control and supporting the development of improved efficiency and performance photovoltaic materials. Looking at the semiconductor and communication segment, within this segment, we provide imaging and analysis products, as well as etch and deposition systems used across a range of advanced compound semiconductor and silicon device applications.
Whilst we have seen continued weakness and associated reduced sales of our imaging and analysis systems into silicon semiconductor and electronics customers, we had continued strong growth in demand across our portfolio of etch and deposition systems, underpinned by our expertise in compound semiconductor processes, where silicon is being replaced by materials made of more than one material. Here, our growth has been supported by tailoring our product offerings to meet the specific needs of academic, corporate R&D, or production customers. For example, we are now offering production-ready systems with dedicated processes and high wafer throughput. The compound semiconductor market remains buoyant, with strong long-term fundamental drivers. Looking more closely at the compound semiconductor market, there are several fundamental drivers that enable a step change in device performance, including higher power, energy efficiency, speed, and the ability to emit and sense light.
The advanced performance can be finely tuned by the precise control of the composition and microstructure of the material. These attributes have the potential to transform several markets, including power electronics, connectivity, and communication applications, when the appropriate costs and manufacturing yield can be established. In the period, we've seen growth in a number of key areas. For example, our silicon carbide and gallium nitride solutions are being used to develop more efficient and faster power devices, enabling greater electric vehicle range and faster charging times. Our gallium arsenide and indium phosphide solutions are supporting the increased speed and infrastructure capacity in devices used in telecommunication data centers. In addition, the demand for increased communications has driven growth for our process solutions used to develop lasers, sensors, and optoelectronic devices for applications including facial recognition and heads-up displays.
Moving to our second sector, research and discovery, the sector representing 37% of group revenue comprises Andor Technology, NanoScience, Magnetic Resonance X-ray Technology, and our share in Scienta Omicron. It provides advanced solutions that create unique environments and enable imaging and analytical measurements down to the molecular and atomic level. Products are predominantly used in fundamental and applied research. The sector delivered strong revenue and profit growth, with continued growth from each of the main target applications segments of healthcare and life science, quantum technology, and research and fundamental science. Revenue growth was supported by an increased demand across the product portfolio and improved operational performance in NanoScience, with profit growth supported by manufacturing yield improvements for our scientific X-ray tubes. We saw good growth to academic and government-funded customers, with our applications focus delivering strong growth to commercial customers, increasing their proportion of sales to 35%.
Underlying order growth in the period was offset by the phasing of large framework OEM orders for our X-ray technology business and the timing of orders for high-value rock core analysis systems. Looking at the growth drivers for this sector and starting with healthcare and life science, within this segment, a significant portion of sales have been used to better understand cancers and neurological disorders and to contribute to the development of new treatments. This has driven increased revenue across our microscopy systems, analysis and visualization software, and scientific cameras. Our products are helping to reveal more accurate details at better resolutions and higher speeds. Due to the attractiveness of the market and increased need for advanced microscopy systems, we are seeing heightened competitor activity, which has moderated order growth in the period. We continue to focus on adding value to our customers by building on our market-leading capabilities.
For example, our latest image analysis software utilizes advanced data management and machine learning algorithms to enable the efficient visualization, analysis, and interpretation over multiple length scales. Users can now see the big picture and zoom in to interrogate the molecular detail at specific areas of interest. This is particularly useful for many applications, including brain samples, where statistically meaningful data is required over large areas in addition to the microscopic detail. Our scientific cameras are being used to measure and observe the interaction of individual biomolecules in real time, and this drove growth with our strategic OEM customers for a range of applications, including gene sequencing and clinical screening solutions, which have been used for drug feasibility studies and in the development of personalized medicines.
Moving to quantum technology, quantum technology continues to attract funding from both governments and private industry, with increased long-term investments being announced within Europe, China, and Japan, targeting quantum computing, secure communication, sensors, and imaging applications. We had continued demand for our cryogenic platforms for both fundamental research into quantum effects and in the development towards practical quantum computers. Our low-temperature, high-magnetic field systems are being used to characterise quantum materials and sensors, and our ultra-sensitive, high-speed cameras in quantum optics, where the identification of individual photons is required. Within research and fundamental science, we had growth in our high-field magnets and research instruments. Astronomy also remains an attractive market, and in the period, we launched a new large-area camera allowing the capture of larger areas of the sky with improved resolution and stability.
Importantly, this now enables the practical tracking of significantly smaller space junk and enhanced studies of solar activity, which are both important due to their impact on satellite and Earth-based communications. Moving to our final sector, service and healthcare. This sector comprises the group's services related to our own products under the OI service brand and the sale, service, and rental of refurbished third-party imaging systems under the OI healthcare brand. Good underlying order, revenue, and profit growth for services related to our own products was partially offset by the timing of system orders within our US OI healthcare business. The sector is now a focal point within the evolution of our Horizon Strategy, and we have initiated a transformation of our customer service approach, including the way we provide support to our customers, as well as expanding the range and breadth of service product offerings.
This includes the tailoring of service products to end-market applications and customer segments. For example, we are introducing a broader range of remote diagnostic and support capabilities and process control and yield management software packages for our industrial customers. Whilst we're at the early stages of this transformation, we've already built a pipeline of opportunities and have seen an uplift in service-related revenue and profitability. Finally, moving to our summary and outlook, we've made good progress, and the group has delivered a strong first-half performance with revenue, profit, and order growth against a backdrop of uncertain market conditions. Our customer-centric approach has delivered growth within existing markets and expansion into new areas. The breadth of our product portfolio and the diversity of our end markets, together with our focus on understanding our customer needs and responding to market changes, underpin our ability to deliver further growth and margin improvements.
We expect the second half of the financial year to benefit from the normal seasonal bias, with expectation for the current financial year remaining unchanged on a constant currency basis. Thank you very much.