Good morning and welcome to Oxford Instruments' full-year results. Before we get started, for those of you who may have been wondering, this is an image taken with our Dragonfly optical microscope of a piece of biological tissue that has been grown from cells taken from a patient. This approach has been used to aid the development of personalized medicines. In terms of the agenda for today, I will take you through the highlights, hand over to Gavin, who will cover the financial results, before returning for a progress update with Horizon and operational review, and closing with summary and outlook. Moving straight to the highlights, we continue to make good progress with the implementation of our Horizon strategy, which is delivering tangible benefits and improved financial performance. We have made significant investments in operations, sales, and marketing, embedding clearly defined capabilities and disciplines.
These are transforming our day-to-day activities and operating processes. This has supported a strong four-year performance with positive second half trading, building on progress in the first, resulting in strong revenue and adjusted operating profit growth. Underlying improvement in operating margin was impacted by in-year investment in our operational excellence program and a small currency headwind. Positive order intake across our three sectors resulted in reported order and order book growth. Our chosen end markets and their underlying long-term growth drivers remain positive and robust. Looking at our sectors, strong order, revenue, and profit growth in Materials and Characterization was underpinned by growth in advanced materials and the semiconductor and communications customer segments. Healthy end markets across life science, quantum technology, and academia supported strong order and revenue growth across our Research and Discovery sector.
However, operating profit for this sector was held back in the period by a lower performance from our X-ray Technology and Scienta Omicron joint venture. The Service and Healthcare sector had good order, revenue, and profit growth with improved operating margin, driven by increased demand for services related to our own products and an improved performance from our OI Healthcare business. Good cash collection in the period further strengthened the balance sheet, resulting in a positive net cash position. I'll now hand over to Gavin for the financial review.
Thanks, Ian. Good morning, everyone. Starting with the income statement, reported revenue grew by 12.4% to GBP 334 million. On a constant currency basis, revenue growth was 10.8%. After a currency headwind of GBP 1.3 million, reported adjusted operating profit grew by 6.9% to GBP 49.7 million. On a constant currency basis, growth was just under 10%. The adjusted operating margin decreased from 15.7% to 14.9%, impacted by a currency headwind and incremental investment in an operational excellence program. The adjusted operating margin on a constant currency basis was 15.5%, broadly in line with last year. Lower average debt over the period led to a fall in net financing costs to GBP 2.2 million. Over half the cost relates to fixed interest on a GBP 30 million private placement note, which matures in 2021. The remainder is attributable to commitment fees, pension charges, and lease costs.
Adjusted profit before tax grew by 12.3% to GBP 47.5 million, with margin remaining constant at 14.2%. As disclosed at the half year, we've adopted IFRS 15, revenue from contracts with customers, and IFRS 16, leases. The main difference on the introduction of IFRS 15 is a change in revenue recognition on complex magnet and cryogenic system sales. The net effect, that's accounting effect of these two new standards, is to increase revenue by GBP 7 million and profit before tax by GBP 2.9 million. Amortization of acquired intangibles of GBP 9.6 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 flows as an adjusting item. At the year-end, we incurred a charge of GBP 1.5 million.
Other adjusting items totaled a very small charge of GBP 900,000, comprising a net credit from our associate, a charge due to guaranteed minimum pension equalization, and a make-whole payment following a repayment of loan notes as a condition of the sale of Industrial Analysis . Profit for tax from continuing operations was GBP 35.5 million. Continuing adjusted basic EPS grew by 15.3% to GBP 0.649. The Board has proposed an increase in the final dividend to GBP 0.106, giving a total dividend of GBP 0.144, an increase over last year of 8.3%.
Looking at revenue by sector, reported revenue for Materials and Characterization grew by 16.8%, 15.3% at constant currency, with particularly strong growth across our semiconductor processing solutions and imaging and analysis products. Reported revenue grew by 11.8%, 9.9% at constant currency for Research and Discovery, with good growth from our optical microscopy systems, scientific cameras, cryogenic systems, and superconducting magnets.
Revenue growth from OI Healthcare and the service of our own products led to an increase in reported revenue of 5.5%, 4.2% at constant currency. With total orders in the year of GBP 354 million, our book-to-bill ratio, which compares orders received to goods and services billed in the period, was 1.06. Moving to revenue by territory, in Europe, we've seen constant currency revenue growth of 2.5%. We saw a reduction in revenue in the U.K. and France, principally from our plasma processing solutions, where, given their nature, orders do tend to be irregular. This was more than offset, however, by good growth in Germany and the rest of Europe. In North America, we saw constant currency growth of 9.8%, driven by an improvement in demand for our plasma processing and optical imaging systems.
For Asia, we saw constant currency revenue growth of just under 18%, with double-digit growth across China, Japan, and the rest of Asia. China now represents approximately 21% of group revenue. Orders for the region were up 23% against last year at constant currency, supported by a large order from the Chinese Academy of Sciences. Turning to the order book, the order book at the 31st of March 2018 has been restated on an IFRS 15 basis to show a true like-for-like comparison. The order book has grown by 12.2% since last year on a reported basis and 9.4% at constant currency. Constant currency growth was just under 17% for Materials and Characterization , with strong growth for imaging and analysis products, as well as our semiconductor processing solutions. The previously mentioned large order in China contributed to 15% growth in Research and Discovery .
This was also supported by good growth for imaging and optical microscopy systems. A high level of refurbished system installations in the final period of the year resulted in a reduced year-end order book for U.S. healthcare compared to the same time last year. This offset good order book growth in Japan healthcare from winning more accounts and an improvement in orders from the service of our own products. Moving now to adjusted operating profit by sector. Adjusted operating profit in Materials and Characterization of GBP 22.1 million reflects a growth rate of just under 14% at constant currency. The operating margin declined by 100 basis points to 16% with effect of currency and the allocation of incremental operational excellence program costs. Excluding currency effects, margin was broadly flat. Within Research and Discovery , adjusted operating profit declined by 2% at constant currency to GBP 12.7 million.
This was attributable to yield issues in X-ray Technology and operational excellence program costs, offsetting good growth in our optical microscopy business. Consequently, the margin fell by 220 basis points on a reported basis and 110 at constant currency. An improvement from U.S. healthcare with strong utilization of the mobile MRI fleet, combined with new service contracts and system sales, resulted in constant currency operating profit growth of 15.9% to GBP 14.9 million and a margin improvement of 220 basis points. Turning to the cash flow, the group made adjusted earnings for interest, tax, depreciation, and amortization of GBP 60.7 million. Cash generated from operations of GBP 56 million represents a 103% cash conversion against 69% last year.
The working capital inflow of GBP 3.7 million reflects an increase in inventories and receivables of GBP 4 million and GBP 3.5 million, respectively, offset by an increase in payables of GBP 4.1 million and customer deposits of GBP 7.1 million. The combined deficit for the U.K. and U.S. defined benefit pension schemes fell from GBP 15.3 million at the end of last year to GBP 6.5 million, largely due to contributions paid in the period. The U.S. scheme is significantly smaller of the two, and given its scale and large ongoing running costs, it is economically advantageous to terminate the scheme. We have commenced this process and expect to make payments this year of approximately $4.5 million, which will fully extinguish the liabilities. The income statement tax charge represents an effective tax rate of 21.9%. In April 2019, the tax tribunal adjudicated on a historical loan structure.
The decision went against us, and as a result, a payment of GBP 4 million was made to HMRC in April 2019 after the end of the financial year. The liability was broadly covered by historical provisions and one-off credits. Good cash conversions we've seen resulted in net cash of GBP 6.7 million at the end of the year, compared to net debt at the beginning of GBP 19.7 million. Having a quick look at the currency exposure of the group, as regularly presented, this business has a large exposure to foreign currency fluctuations. This chart shows the long U.S. dollar, euro, yen positions, and also our short sterling position. We maintain a hedging program against a proportion of our transactional exposure covering the next 12 months. Based on exchange rates prevailing around the balance sheet date, we expect a broadly neutral impact from currency in the 2019-2020 financial year.
To summarize key highlights from the year, we've seen good reported and constant currency growth in orders and order book. Adjusted operating profit at constant currency grew by just under 10%, and the related margin was broadly in line with last year. Continuing adjusted earnings per share grew by little over 15%. We had good cash conversion of 103%, leading to net cash just under GBP 7 million at the year-end. With a strong balance sheet combined with the new credit facility that was signed in July 2018, we have the financial capacity to support future business growth. With that, I shall hand back to Ian.
Thank you, Gavin. Let me now turn to an update on our strategy. Horizon, our transformational program for the group, has now been in place for two years. It is building a stronger Oxford Instruments position to deliver long-term sustainable growth and margin improvement. Through our focus on market intimacy, innovation, service support, and operational excellence, we've been changing the way we operate, embedding clearly defined capabilities and disciplines across the group. We've made good progress transitioning to a customer-centric, market-focused group, better understanding the technical and commercial challenges faced by our customers.
This has enabled us to deliver growth and increased value within our current markets, as well as expansion into new areas and applications. We're now better positioned to address a broad and diverse range of attractive end markets and industrial sectors. We have reshaped our portfolio, focusing on those areas where our key enabling technologies are supporting long-term growth drivers for our customers and where we can maintain leadership positions.
Within these markets, our products are facilitating a greener economy, increased connectivity, improved health, and leaps in scientific understanding. This has supported significant growth from commercial customers over the last two years, who now represent over 50% of group revenue. Our heightened market intimacy has strengthened our future product roadmaps, is driving our product development priorities, and focus for innovation. With our cohort of lean champions in place, we undertook a significant investment to deliver a step change in our operational capabilities, targeting three areas of strategic procurement, operational efficiencies, and logistics. This investment helped deliver increased revenues and established the foundations and methodologies to support further growth and margin improvements. We continue to build our wider leadership team and enhance our commercial focus.
This has been a dual approach of investing in existing employees, as well as looking outside the organization for individuals with specific capabilities and experience to accelerate our progress. Now, while there is still much to do, I'm pleased with the progress we've made in the past two years. Horizon will continue to shape our long-term plans and initiatives to deliver sustained growth in shareholder value. Moving to the group's performance, as you know, we report in three sectors: Materials and Characterization , Research and Discovery , and Service and Healthcare . The group delivered strong growth in revenue and operating profit, supported by our enhanced customer focus and the success of recently launched products. Operating margin at constant currency would have shown growth year -on -year without the investment in our operational excellence program.
Our increased focus on commercial customers and robust academic markets supported strong growth in orders and order book across each of our three sectors. Looking at our end markets, we are positioned to address a broad and diverse range of end markets and industrial sectors. These remain positive with long-term fundamental growth drivers. However, we are mindful that we are not immune to the current economic and geopolitical uncertainties. Double-digit revenue growth was underpinned by significant increases from advanced materials and quantum technology, with good growth across healthcare and life science and the semiconductor and communications application segments. We perform strongly across Asia and North America, with modest growth in Europe. Global distribution of revenue remains broadly in line with the previous year and also overall global R&D spend profiles.
Moving to our individual sectors and starting with Materials and Characterization, the sector represents 41% of group revenue, 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 devices and structures through our range of etch and deposition systems. Our products accelerate our customers' applied R&D and improve their capabilities and productivity in high-tech manufacturing. The sector delivered a strong financial performance, supported by our enhanced end application focus, resulting in double-digit revenue, order and order book growth, and strong profit growth. From an end market perspective, we saw significant growth in advanced materials, with good growth in semiconductor and energy segments. Our focus on and success with commercial customers underpinned the strong financial performance, with their proportion of sales increasing to 58%.
Looking more closely at growth drivers for the sector, within advanced materials, significant growth for our imaging and analysis products has been driven by the increased demand for lighter, stronger, and higher-performing materials. Our solutions are used across a broad range of end markets to aid the development of next-generation products and in quality control. Key market applications include automotive, additive manufacturing, consumer electronics, and polymers. As an example, the disruptive transformation within the automotive industry towards electric, hybrid, and autonomous vehicles is leading manufacturers to use new composites and super alloys and to develop more efficient battery storage and power delivery solutions. With the performance and reliability of materials increasingly determined by their composition and microstructure, this is driving the demand for our advanced analytical imaging systems.
Within the energy segment, we saw good growth across generation, storage, and battery applications, supported by sales of our award-winning Extreme X-ray detector. Looking at the semiconductor and communication segments, strong growth from commercial customers for our compound semiconductor processing solutions more than offset the decline in sales to mainstream silicon chip and electronics manufacturers. In addition, sales of our imaging and analysis products into research and applied R&D partly offset declines in these products for manufacturing and production support. Within compound semiconductors, demand has been driven by the transitioning of technology away from silicon-based solutions for power electronics, connectivity, and communication applications. Power electronics are the enabling technologies to use, distribute, and generate electrical energy.
As an example, the move to silicon carbide and gallium nitride-based solutions enables a step change in efficiency, and as a consequence, we've seen increased sales across a range of applications, including electric vehicles and distribution networks. Our compound semiconductor solutions are also supporting the increased speed and infrastructure capacity to deliver the required transformation in connectivity, for example, 5G networks and the rise in the data economy. Moving to our second sector, Research and Discovery , this sector representing 38% of group revenue comprises Andor Technology, NanoScience, Magnetic Resonance, X-ray Technology, and our share of the Scienta Omicron joint venture. It provides advanced solutions that create unique environments and enable the imaging and analytical measurements down to the molecular and atomic level. Products are predominantly used to support fundamental research and accelerate applied R&D, with a higher proportion of customers with academic or government funding representing 69% of sales.
The sector saw double-digit order revenue and order book growth, with strong performance across the portfolio. Growth was supported by positive academic end markets and increased demand from commercial customers. However, underlying profit improvement within the sector was more than offset by a period of low manufacturing yield at X-ray Technology and a lower contribution from the Scienta Omicron joint venture. We saw growth across our three largest customer segments of life science, quantum technology, and fundamental science, which collectively account for over 80% of sales within the sector. From a geographical perspective, we had good growth across each of Europe, Asia, and North America. Looking at the healthcare and life science segment, here growth was driven by strong performance from our optical microscopy products, including our Dragonfly range, image visualization software, and scientific cameras.
Growth drivers include the increasing need for those developing new therapies for cancer and neurological conditions for larger, higher-resolution images to better understand the core biological processes that lead to disease. Dragonfly has become a platform of choice because it enables exceptional imaging capability for millimeters right down to the nanometer scale. Furthermore, advances in instrumentation are leading to the generation of huge data sets. Our Imaris software enables efficient visualization and analysis of this data, allowing customers to better understand conditions such as autism and Alzheimer's. Our high-sensitivity cameras have proven valuable for our strategic OEM partners, helping to advance their capabilities across a range of applications, including gene sequencing and clinical screening solutions used in drug feasibility studies. Moving to the quantum technology segment, here fundamental shifts in quantum technology and capability are driving increased research and development from both academic and commercial customers.
This field continues to receive strong investment, supported through national and corporate programs, with key applications including quantum computing, sensors, and secure communications. This has driven growth across our Triton, low-temperature platforms, and scientific cameras. With the expanding role of technology in the world, we have also seen increased academic and government investment in fundamental science. This is across a broad range of disciplines, as well as in large-scale national user facilities. We remain well-positioned to support this sustained investment, and in the year, we won a significant contract to supply several high-performance systems to the renowned Institute of Physics in Beijing. Moving to our final sector, Service and Healthcare . This sector comprises the group's support 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.
The sector delivered order revenue and profit growth with improved operating margin. We continue to see increased demand for services and support related to our own products. As part of the Horizon strategy, we continue to develop our service offerings, adding value to our customers' day-to-day work and increasing their overall productivity. In addition, we saw an improved performance from our U.S. healthcare business in line with our strategy to seek a higher proportion of revenue from service contracts relative to the sale of refurbished systems. We have also seen good improvement in the utilization of our mobile imaging fleet. Within Japan, we continue to focus on supporting key customers through the provision of best-in-class service and support for a range of MRI systems.
Finally, moving to our summary and outlook, we have made good progress in the year with the continued implementation of our Horizon strategy, which is delivering good growth and improved profitability. We are seeing attractive markets. We are serving attractive markets with long-term fundamental growth drivers and focusing on segments where we can maintain leadership positions. Our core purpose is to address some of the world's most pressing challenges. We have positioned the group to be a leading provider of high-technology products and services to image, analyze, and manipulate materials down to the atomic and molecular level, facilitating a greener economy, increased connectivity, improved health, and leaps in scientific understanding. While mindful of the backdrop of geopolitical and market uncertainty, we remain focused on improving the business and expect to make further progress in the year. Thank you very much.