Welcome to our results presentation for the first half of financial year 2023. I'm William Lee, Chief Executive, and I'm joined today by Allen Roberts, our Group Finance Director. I'm gonna start looking at some of the financial highlights before looking at the progress that we've made on our strategy. Allen will go through the financials in more detail before I will pick up and cover the investments that we're planning and also the outlook for the future. Let's start by having a look at the financials. Really pleasing to see continued growth in H1, particularly building on the record six months that we had at the second half of last year. This revenue growth was actually 7% when you compare it with the same period last year, 1% compared to the most recent six month period.
We've seen revenue growth in both business segments and a notably strong performance from the Americas sales region. We have seen a softening in demand in some key sectors. We'll go through this in more detail. This is particularly in the semiconductor CapEx area. This has been offset though by our success in our strategy, bringing through new products and winning new customers. We've also benefited from a stronger US dollar, and this accounts for about 6% of our year-on-year growth. Profit was 13% down from a year ago. We've talked about this in recent presentations. We are, like every other business, facing inflationary pressures in terms of pricing from suppliers and also particularly employment costs.
Despite this though, a combination of currency tailwinds that just talked about and price rises have enabled us actually to keep our gross margin before engineering cost maintained. We're also continuing to invest for long term. The most critical bit here is making sure we're offering competitive pay to make sure that really attract and retain key talent within the business. Our balance sheet remains strong. Cash, bank deposits currently over GBP 200 million. Allen will go through a little bit more detail on cash movements later. Let's take a look at our reporting segments. First of all, Manufacturing technology. Here we're providing the technologies into some really high growth areas of advanced manufacturing, and we're really allowing our customers to take advantage of those trends of automation, sustainability and smart manufacturing.
Really pleasing here to see the progress we've made with high value CapEx sales. We saw strong growth in both our additive manufacturing and our 5-axis CMM systems business in the first half of the year. We also actually had a record six months for our machine calibration business, and this really highlights the growing importance of this precision equipment in modern manufacturing. We also saw steady growth in analytical instruments, where we've got a growing order book and also received a really positive reception to a couple of new products. These are gonna help us in the future access new Raman applications. Our neurological business really still is continuing to focus on building this pipeline of drug delivery clinical trials with large pharma companies.
These two segments give us broad industry exposure, and you can see the estimated revenue shares shown on the right, and these have been updated to reflect the most recent product mix changes. The important precision manufacturing sector down at the bottom includes a broad range of equipment builders and subcontractors, and these are supporting multiple industries or other markets than those that are listed. If we now take a look at the H1 growth drivers and a look at what we're doing to try and offset some of the weaker demand that we mentioned that we're seeing for positioning encoders, good initiatives going on. First of all, we have implemented price increases where this is appropriate, and these are starting to come through.
There is a lag before the impact on revenues as we deliver outstanding orders from last year. We do expect, though, this increase to be about 2% by the end of this financial year. We're also continuing to make good progress in gaining market share. This is winning new customers and securing additional design wins. This is really key for us 'cause this is long-term revenue. We're also seeing a positive from currency changes, which we mentioned earlier. U.S. dollar, particularly strong against the pound, and that's helped us as well in this first half. We're also making good progress with our initiative of new non-substitutional products which are opening up new markets to us.
The impact of the pandemic feels like it's now thankfully largely behind us. Supply chain shortages we've highlighted much reduced, and we're now returning our lead times back to normal levels for customers. We did see some COVID-related disruptions in China, but what we're hoping for is going forward that the opening up of the Chinese market should really stimulate some higher demand in the months ahead. The semiconductor and electronics capital equipment manufacturers are important customers, accounting for around 15%-20% of our group sales. We have seen this demand super cycle over the last couple of years, and with a lot of fab construction going on across the world.
This is expected to continue into 2023, and this is a combination of things, whether it's technology advances, also with the reshoring governments, manufacturers working out how to reduce their supply chain risks. We're still seeing evidence of this continued fab investment. Our laser encoder product line very much goes into front-end semi, and then we've had strong revenues for that in the first half. We also supply encoders to a wide range of builders of back-end semiconductor and electronics processing equipment. These customers have seen their demand decrease, and they've also been reducing their inventories as their supply chains improve. Whilst it is unclear exactly when this inventory cycle is gonna finish, we are expecting demand to improve in the medium-term, as these new fabs continue to come on stream.
We're focused on making sure that we're ready to take advantage of the upturn when it comes. Our growing range of positioning encoders makes us really well-positioned to continue being integrated into new machines designs, both at new and existing customers. A recent product range addition is the patented, new CENTRUM self-centering disc scale. This makes it easier than ever for our customers to integrate our miniature ATOM DX encoder into their equipment. The metal AM market is seeing double-digit revenue growth, although unit sales growth is actually lower than this. This is driven by a trend towards more expensive productive equipment as customers are increasingly developing production applications. Renishaw makes laser powder bed fusion machines, which is by far the leading metal 3D printing technology.
Our competitors here are really increasingly emphasizing their larger machine offerings, whereas our focus is on actually driving down the cost per part and optimizing part quality in the much higher volume mid-size machine range. This is really key, we believe, to opening up a much greater range of applications for AM and allowing the business to really grow. We feel that getting this core technology right is the most important next step, and this is the focus of upgrades that we're currently making to our RenAM 500 model range, and it's also the focus for the development of our next generation of machines. As we've talked about in previous presentations, we have simplified and focused our AM business exclusively towards these higher volume manufacturing applications.
It's nice to see a really growing success with this approach. AM was one of our fastest growing businesses in H1, and this is being driven by securing repeat machine sales to key customers in a really wide range of sectors here. You can see the opportunities from consumer electronics right the way through to those more traditional AM strongholds of healthcare, aerospace, and tooling. Machine tools still remain a critical technology in modern manufacturing and have been great to reengage with many of our OEM customers at recent exhibitions as markets open up again. When we talk to them, what they're telling us is they've seen strong demand and really strong order books for sophisticated at the high-end five-axis machines. This is coming from customers looking to automate and manufacture more complex components.
They're also seeing lower demand for the more sort of standard three-axis machines used by job shops, and this is probably due to affordability, with higher interest rates. As we talked about previously, we've got really attractive opportunities for diversification in the machine tool market, so this is selling new non-substitutional products to the same customer base that we already sell to. One of the ones we talked about with a lot of excitement around is our FORTiS, our linear enclosed encoder. I'm really pleased to say that we're continuing to make good progress here, gaining new accounts. This is coming from a broader range of machine tool builders now. We're now picking up more general business from milling, turning, EDM machines as well.
Metrology is critical to modern smart manufacturing, and the big recent trend here is towards deploying measurement system in line or next to line, rather than in a QA lab. Manufacturers are also demanding increasingly complex measurements to provide feedback to automated processes, and this often leads to the need for different suite of measurement techniques. As I mentioned earlier, we're seeing strong growth here in our sales of high-value solutions to key end user customers. This is really being driven by the capabilities, the multi-sensor capabilities of our REVO 5-axis measurement system. In addition to rapid tactile measurement, we are seeing growing demand for vision inspection and also for our new ultrasonic thickness measuring sensor. Overall, these REVO sales are pretty evenly split across the aerospace, automotive, consumer electronics, and precision manufacturing sectors.
Encouragingly here, no single sector or no geographic region dominates. In the automotive sector, systems are being installed to measure parts used in both ICE, internal combustion engine, and EV, with sales into the consumer electronic sector in the Far East, this is particularly China, Taiwan, have really grown in the last 12 months. Meanwhile, we continue to work closely with third-party metrology software providers, and this is to expand the reach of our family of Equator flexible gauges. One of the major trends that we're seeing in the wider economy and some of our key markets is this growing shift amongst manufacturers headquartered in the US and in Europe to limit their dependence on Chinese suppliers.
This is being driven by a combination of governments looking to build capability in critical industries, as well as self-interest of firms as they react to the recent disruption to their supply chains under pandemic restrictions. In the semiconductor sector, this actually only affects Renishaw indirectly 'cause we're supplying to equipment builders rather than the fabs themselves. We're also seeing changes in where consumer electronics machining and assembly operations are being established. India and Vietnam being the most notable destinations here for new large-scale facilities. This sector has been a really key driver for our growth over the last decade, and we're therefore working really closely with these customers to support them in this transition. We very much view this as a net positive for our business.
These new facilities, they will need investment in our Manufacturing technologies. We believe we're in a really strong position to benefit from this change. We've got proven expertise right across our Asia office network, and we're expanding our local infrastructure and teams as necessary. As an example of this, I was really delighted actually, back in December to open our new technology center in Bangalore. That concludes my business review. I'll now hand over to Allen to go through the financials in more detail.
Thank you, Will. Hello, everybody. As Will has already reported, we achieved record revenue in the first half. We'd like to thank our people across the business for their continued commitment and dedication in making this happen. We'll now take a look at the numbers in a little bit more detail. In line with our strategy, we continue to invest in long-term. The adjusted profit before tax of GBP 73.5 million reflects these investments and the inflationary pressures on our cost base. I'll cover this in a little bit more detail on the following slide. Within statutory profit, we have a GBP 4.3 million gain in the period on Ineffective hedges. All outstanding contracts with an ineffective portion will mature by March this year. We do not anticipate any adjustment in future years.
The effective tax rate of 17.7% compares with 17.3% for the year to 30th of June. The year-end rate reflects an increase in the U.K. corporation tax rate from 19%- 25% in April this year, mostly offset by forecast increase in the U.K. Patent Box benefit. The resulting adjusted earnings per share was GBP 83.4. An interim dividend of GBP 16.8 per share, an increase of 5% over the previous year, will be paid on the 11th of April. This slide presents detail of our income statement. The profit bridge shows the movements that reconcile last year's adjusted profit before tax of GBP 84.2 million- GBP 73.5 million this year. Our gross margin percentage, excluding the engineering costs, remain stable.
Higher rates paid for our manufacturing employees has been offset by favorable currency movements and increases in our sales prices. Since the end of June, group headcount has increased by 53 to 5,150, including continued investment in our early careers programs, which are mostly related to research, development, and global sales and support teams. Labor costs were up 16% to GBP 133.4 million, with the average headcount increasing by 7%. The cost increase also reflects the salary reviews undertaken across the business as part of our employee development and retention programs. Our pay benchmarking will now be undertaken around December each year, with the December 2022 review resulting in around GBP 4 million of additional annual costs going forward.
We remain strongly committed to our long-term strategy of developing new, innovative, and patented products, our net engineering expenditure increased by 22% to GBP 46.1 million. With pandemic-related restrictions now largely lifted, we've increased our investment in customer-facing activities, resulting in higher travel and exhibition costs compared to last year. This, together with our investment in global sales and support teams, has seen distribution costs increase by 20%. Most areas of our cost base have been being impacted by inflationary increases, particularly people costs, as previously mentioned, as well as energy and service costs. Net financial income is increased by GBP 4.9 million, with interest income on bank deposits increasing by GBP 2.3 million, and currency gains increasing by GBP 1.4 million.
Turning to cash flow, this bridge tracks the movements from our opening cash and bank deposits balance of GBP 253 million at the first of July to the closing position of GBP 212 million at the 31st of December. Working capital is increased by GBP 40 million, representing a GBP 17 million investment in inventory and a GBP 24 million reduction in trade and other payables. The inventory change mainly reflects planned increases in certain component, sub-assembly, and finished good safety stocks for our positioning encoders business. Trade and other payables are down due to reduced purchasing activity in the second quarter, and bonuses accrued at the year-end being paid during the period.
We've invested GBP 20.2 million in capital expenditure in this first six months, primarily on production plants and equipment, and GBP 7.8 million for the ongoing development of our new production facility in Miskin in South Wales. Finally, we paid GBP 41 million for last year's final dividend. That concludes my financial review, and I'll now hand back to Will.
Thanks, Allen. I'm now gonna look at investments that we're making for the future. We have an innovation-led growth model. Therefore, our success is really down to the skill and dedication of our people. Like many firms, we saw a rise in employee turnover following the pandemic. We have been taking a range of steps to try and improve retention and make sure we can attract the skilled employees that we really need to support our growth. In recent results presentations, I have explained and talked through how we've been benchmarking our pay to ensure that we're really competitive in what has been a tight employment market in many countries. This process started in the U.K. and is now being rolled out across the group.
We also continue to invest in our talent pipeline through our renowned early careers and education outreach programs, with more than 300 graduates and apprentices moving through our various schemes. We're also making major investments in our manufacturing capacity, with construction well underway, with two new halls at our largest factory in Miskin, South Wales. This will add about 60% to our global factory footprint. And this is really important for us because a lot of our planned growth is coming from physically larger products like the additive manufacturing machines we talked about earlier. We're on track here to start to occupy the first hall by December this year.
As part of our commitment to improve sustainability and reduce our carbon footprint, these new buildings in Miskin are being constructed on a Net Zero basis. Let's turn to the outlook. As we've seen, our business is benefiting from a combination of new products penetrating the market, as well as our ongoing success in building reoccurring business with new customers. We expect these factors to continue to drive growth in the future. We also expect an improvement in demand from this critical semiconductor and electronics market we talked about earlier in the medium term. We continue to take the long-term view, targeting our investment in the areas that will drive our future growth. At this stage, we're entering H2 with a strong order book, and we expect full-year revenue to be in the range of GBP 690 million-GBP 730 million.
We expect adjusted profit before tax to be in the range of GBP 140 million-GBP 165 million. That concludes our presentation today. Thank you very much for watching.