Hello, and welcome to Xaar's 2022 Full Year Results. My name is John Mills, CEO of Xaar, and I'm joined by Ian Tichias, our CFO. Today, we will present our full year results for 2022. They show that we are performing better and we are stronger and more resilient as a group. Let me start with a brief overview. We're delighted with the full year results, especially in the context of the tough macroeconomic environment. Revenues are up by 23%, and we have delivered a full year adjusted profit of GBP 2.8 million. Our Printhead business has grown in all markets, except China, which has continued to be impacted due to COVID restrictions in place for most of the year.
We are also pleased that EPS, Megnajet, and FFEI delivered ahead of expectations, offsetting the decline in China and demonstrating the increased resilience and strength of the Xaar Group. Aquinox was launched on time and on budget to a very enthusiastic market response. We strongly believe that in time, this product will be transformational for Xaar and the digital print industry. Phase one of the factory efficiency program has been successfully completed. We are now back in full production, having achieved all our objectives. In short, the first key steps of our business transformation have been completed. We're in a strong position from which we can build, having delivered a great performance in 2022, which you can see from the numbers. With that in mind, let me hand over to Ian to take you through our financial performance.
As you heard, the business is in a strong position and has delivered a good set of results. Strong revenue growth of 23%, margin growth of five percentage points, and we delivered an adjusted full year profit of GBP 2.8 million. When you measure this against external environment, we are ahead of our own expectations during what has been a challenging time for all. Let's look more closely at our Group performance. Due to our actions, we now have a more resilient business, which is resulting in a strong financial performance across the Group. We've delivered double-digit revenue growth of 23% with organic growth of 8%. Our top line growth has driven adjusted profit of GBP 2.8 million, meaning we will be able to continue investing in our business, further strengthening the core.
All this gives us confidence that the strategy and hard work are paying off, and we are seeing real progress against our plan and across all parts of the business. Let's look at all the elements and our business units in more detail, starting with Printhead. Our Printhead business continues to improve performance. We continue to see good growth, particularly in the U.S. region as we further strengthen our position in packaging and coding and marking. Whilst total revenue is down by GBP 1 million in the face of the challenging environment in China, excluding Asia, the Printhead business grew 12%. We are cautiously optimistic with COVID restrictions lifted in China, and we are seeing positive signs from OEMs there. Our customer relationships continue to strengthen, and our market share is growing.
As you know, our new Aquinox product was launched on time and on budget. It has received very positive engagement with customers showing genuine enthusiasm. In fact, sales of our development kits have been ahead of expectations, which is a very positive sign for the future. We believe Aquinox will also play a significant role in supporting our rapidly improving customer relationships. Profit and margin continue to increase with gross margin growing to 43% compared to 38% in 2021. This delivered an EBITDA of GBP 2 million. This will allow us to continue to invest in R&D, ensuring that we maintain our market leading position. All in all, a more resilient business delivering a strong performance and a major step up for the group. Moving on now to EPS. EPS completed a year of strong performance.
This is reflected in the 41% increase in revenue driven by good recovery in digital machine sales and positive momentum. Additionally, we have delivered a much improved gross margin of 40%, which is a direct result of the strategic actions we have taken. This performance places the business in a more robust position as part of our core offering. Because we've been proactive, we are establishing a stronger foothold in the U.S., providing greater potential for expansion. Now, moving on to FFEI and Megnajet. We acquired FFEI and Megnajet in order to further widen our product offering. With these two businesses now fully integrated into the Xaar Group, we are really pleased with their strong performance, which is supported by the positive customer feedback we've received.
The product range from both businesses allows us to further expand our customer offering and deliver vertically integrated print solutions in line with our strategy. As a reminder, we spent GBP 4 million on the Megnajet acquisition, and it has already contributed profit of nearly GBP 1 million, demonstrating a great result and testament to our sound approach to acquisitions. In addition to the acquisition of Megnajet, we've invested GBP 5.4 million on maintenance and asset improvements while continuing to invest in inventory, holding high levels of raw materials to meet anticipated customer demand. Naturally, as supply chains improve, we will reduce our raw materials holding. With regards to our finished goods volumes, those remain under review as the factory gets back on track, customer behavior becomes more consistent, and with restrictions in China now lifted.
We are very pleased that we have taken these steps as we believe they give us a commercial advantage. The conscious decision to carry these levels of stock has enabled us to successfully mitigate the macro challenges that all businesses are experiencing. While we continue to deliver a strong performance across all business units, it's important to note that we are also taking steps to set the business up for the future to achieve our growth ambitions. Despite it being an initiative for 2023, it is worth spending a moment on our factory shutdown. As you may remember, this is the first of three planned stages that we have for our Huntingdon facility. We have now successfully reconfigured our factory on time and on budget, and John will expand on this later.
These operational improvements allowed us to implement more efficient processes as well as to halve our energy usage to mitigate against cost inflation. We have spent one and a half million pounds on the first phase of planned operational improvements, which has remained in line with our forecasts, and we see those returns coming through in the next 12 months. These successfully completed operational transformations ensure we are fit for the future and for our growth ambitions. This chart shows more of a detailed analysis of our cash flow and targeted investment in the year. Our core business has generated cash with EBITDA of over GBP 6 million, the waterfall chart demonstrates where we have invested across the business. Organic investment shown here with investment in working capital, principally inventory of GBP 12 million and infrastructure and asset improvements of GBP 5.4 million.
The right-hand side of the chart demonstrates the impact of the acquisition of Megnajet with closing cash balance of GBP 8.5 million. To summarize this section, the business is in a strong position and has delivered a good set of results in the face of continuing macro challenges. We've delivered strong revenue growth of 23%, margin growth of five percentage points, and a full year profit of GBP 2.8 million while continuing to invest in the business. What does that mean in terms of outlook? We have made very good progress last year against our plan. We did what we said we would do and delivered a strong financial performance. We achieved the important milestone of achieving full year profitability. The first key steps of our business transformation are complete.
We can be confident that we are in good shape to make further progress in the year ahead, notwithstanding the challenging external environment that continues in China with full year performance predicted to be in line with expectations. We remain well-positioned for the business to achieve its exciting potential over the medium and long term.
Thanks, Ian. As outlined, we are on track with our journey and making significant progress against our plan. One of the key strategic initiatives we outlined in September last year was the factory shutdown and re-layout. Let me start by updating you on the successful completion of this project before talking about the rest of the business. You'll remember that we have a three-year plan to increase capacity, improve yields, reduce overhead costs, and improve product margins. To achieve this plan, we will need to upgrade and improve some of our process equipment and change parts of the product design, and we expect to invest in the region of GBP 10 million over this period. We are confident that the improvements in efficiency and margins will justify this investment.
The re-layout of our factory in Huntingdon was the first step in achieving this plan, and you will recall, we operated our Printhead manufacturing in four clean rooms, and the plan was to reduce that to two clean rooms through a three-month factory close from the 16th of December. I'm delighted to report that the factory is now fully operational. We did this while maintaining a 100% on time delivery for our customers, utilizing the buffer stock of product we built up through H2. The successful completion of the factory re-layout will make an immediate and significant impact with three key benefits. Firstly, the reduction in clean room space has delivered an overall reduction of 40% in energy consumption. Secondly, the improved layout will significantly improve process flow and efficiently.
Lastly, we have created space enabling the introduction of new process equipment that will allow us to increase capacity, improve yields, and reduce product cost. A very worthwhile investment positioning us to meet our future ambitions. It is also important to highlight that the factory improvements to reduce energy consumption and waste are all part of our broader ESG journey. We are committed to ESG at every level in the business, from our people's actions to our innovations for more sustainable approaches to design and how that impacts our communities and environment. Our ESG strategy is built on two pillars: how we operate our business in a more sustainable way, and how Xaar's products can help our customers transform the sustainability of their business and industry. Let me talk about the first element in Xaar's operations.
Xaar has made significant and positive progress to drive forward its ESG commitments across all operations. Led by our ESG committee and sustainability team, we have been working hard to achieve our goal and ambitions across all four of our sustainability pillars: environment, people, innovation, and community. We are fully committed to this initiative. As you can see on this page, we are making great progress against our sustainability roadmap. We are ahead of schedule for our 2023 initiatives, and thanks to the team's actions, we are already making headway into our plans for 2024. As you can see, internally, we are working hard to ensure we operate in the most sustainable way possible. I also want to share with you why we believe that our products will have a very positive impact on our customers' sustainability.
Xaar's unique capability to inkjet print high viscosity and highly pigmented fluids allows customers from a wide range of industries to adopt inkjet as a method of additive manufacturing to dispense precise volumes of fluid accurately on any substrate. Applications we are enabling include the replacement of spray painting of cars with inkjet printing, which significantly reduces waste and VOCs, the replacement of traditional processes in PCB manufacture, eliminating toxic waste. We are delighted to be part of the new process to manufacture the next generation of car batteries. All of these are enabled by the unique capabilities of Xaar technology, and this is why we believe our technology can have a positive impact across a large number of industries. Going back to our business model, our strategy is clear: sell more printheads .
For this to occur, we need to extend our range of products to access all digital print markets, as well as make it easier for our customers to use our printheads by supplying the supporting system components. We also need to continue to clearly communicate our value proposition to our customers. Firstly, how are we extending our product range to increase our addressable market? Our goal has been to launch a compelling product in each of the market sectors, which will give us a total addressable market of GBP 1 billion. This approach not only increases the total addressable market but makes us far more resilient as a business. Let's look at each of the major markets in turn. The ceramics market is mature with established OEMs and clear product requirements. In 2013, Xaar had a 100% share of the global ceramics business.
By 2018, we had lost that market share due to the factors we have now addressed in our business transformation. As you will know by now, the launch of Xaar 2002 was the first step to recovery in the ceramics and glass market, which enabled us to regain over 15% market share. This high-resolution head has been fundamental in building back our customer reputation, demonstrated by the fact that three of the top five global ceramics OEMs are now developing new products using Xaar heads. We expect another major OEM product launch in 2023, which we anticipate will further drive market share growth. We have given this market two stars as we see the market size remaining static, but expect to regain market share steadily over the next three to five years.
Xaar Irix then took things further, increasing throw distance while maintaining print quality, allowing the customer to increase the distance between the printhead and substrate, which minimizes the possibility of a misaligned product hitting the printhead and causing damage and downtime. Along with the Xaar 50x printhead, we continue to grow our position in the secondary coding and marking sector, with one of our major OEMs adopting this technology into their next generation of products. We have reduced this market to one star, as we do not see significant growth in the coding and marking sector, and the direct-to-shape market is extremely fragmented. As a result, our main focus is now on the other four markets where we see significant potential. Nitrox allows us to print with increased speed with a wide range of fluid types.
What is exciting is that we are seeing significant adoption in 3D and advanced manufacturing, where the unique capabilities of printing fluids with high viscosity and high pigment loading are enabling customers to achieve results not possible with other printheads . We see the size of the advanced manufacturing market growing significantly, which is why we have increased the estimate of the market opportunity for 3D and advanced manufacturing to GBP 200 million. Now moving to more recent developments, we have just released Aquinox, which is our fourth product to be successfully launched from our ImagineX platform on time and on budget. As mentioned, we launched Aquinox in November to incredibly positive feedback.
The interest in this product has been huge, with over 500 leads and counting. Aquinox is the first water-based version of Xaar's bulk printhead technology and delivers a radically new approach to how water-based inks are jetted. It is highly reliable and durable, incorporating Xaar's aQ Power technology. aQ Power is the combination of patented technologies that enable Aquinox to deliver not only high performance, but also high reliability. Whilst our target market was textiles and packaging, we believe that Aquinox will also enable us to access the next layer of the ceramics market, particularly in areas such as glazing and furniture-related ceramic, like tabletops and kitchen tops. The interest in Aquinox has been extremely high due to the unique capability of Xaar products to print high viscosity and highly pigmented inks, and this is particularly true when printing water-based inks.
Due to the viscosity limits of other printhead technologies, all water-based inks are low viscosity with very high levels of water. This means that all water-based digital printers need infrared lamps and hot air dryers to dry the substrate after printing. The time taken to dry the substrate is often the limiting factor in how quickly a machine is able to print. What the graph on this slide shows, that if you reduce the water content of an ink from just 80% - 70%, there is a 40% energy reduction for the drying of the substrate, which is a huge saving. This comes with a challenge. As you take the water out of an ink, the viscosity increases, which is a real problem for competitive printheads .
Aquinox can run with viscosities of up to 10 times higher than our competitors, enabling our OEMs to build machines that print faster and consume significantly less energy. If you consider the millions of tons of water-based inks that are printed every year, the potential to positively impact energy consumption and carbon is several orders of magnitude greater than the energy used and carbon footprint caused by the manufacturing of the printheads . Since launch, customer feedback validates the benefits of high viscosity and high pigment loading. As a result, we have reevaluated the market opportunity for textiles and packaging as four stars. We believe that Aquinox will be our fastest-growing product over the next few years, with a very strong adoption, particularly in the textiles market.
On that note, I'd just like to take a moment to thank the whole team for the hard work they have put in to get the product launched. We are really excited about this product and believe it will be transformational, not only for Xaar, but the digital print industry. Moving back to the final element on our product roadmap. Wide format graphics is the biggest single industrial print market. It relates to any large graphic you may find in a supermarket or retail store. We plan to launch our fifth new product from our ImagineX platform to target this market in H1 2024. The new product will have higher speed and high resolution and feature a more robust nozzle plate to enable easier removal of UV-cured ink from the nozzle plate.
As you can see, by the end of 2024, we will have a compelling product in each of the major markets, giving a total addressable market of GBP 1 billion. We feel confident about this plan and are excited about the potential future ahead. As we have discussed on many occasions, the customer decision to adopt Xaar technology is the start of the process. To achieve revenues as early as possible, we need to help our customers get to market more quickly. This is why we have been growing our capability in system components. By now, you'll recognize this slide. It shows all the system components required in any digital printer. On the back of our actions, we now have the capability to supply all these customer components to our customers.
With the acquisition of Megnajet and FFEI, along with close strategic partnerships with electronic and ink companies, we have become a one-stop shop for our customers, making Xaar the best choice for performance and ease of adoption, helping to shorten OEM's development time. We now have all the necessary components to deliver our roadmap and growth ambitions. Overall, great progress across the business, from operational improvements through to product rollout, in what has been a very challenging year. What does this mean for our progress against the plan? Simply put, it means an increased number of customers adopting our technology, as is shown in our sales pipeline. Global supply chain issues and the need to divert R&D resource away from our OEM's new product development has impacted progress of a number of projects.
As a result, of the 15 machines due to launch in 2022, three projects were stopped and seven were delayed until this year. In the face of these challenges, five product launches using Xaar printheads is still a good result. The global supply chains loosen up, we expect to see the focus return to new product development and an increased number in machine launches this year and for years to come. The really exciting fact is that we now have 63 customers who have bought a development kit and are in various stages of development of a machine using the Xaar printheads. This is the largest at any point in Xaar's history, and gives us great confidence for the future revenue growth. It's worth mentioning that this does not include the huge interest we already have received for Aquinox.
Although it's early days, we could see revenues from this product emerging within the next year, with more significant revenues in 2025. The interest in the products we are rolling out is very positive, and it's being reflected in the continued growth of our pipeline. You can see the plan is working with a lot of positive progress across the business. In summary, we have delivered a strong performance in 2022, with revenue up by 23% and an adjusted profit of GBP 2.8 million. Our core Printhead business has delivered strong growth in all regions except China, but we have demonstrated the resilience of the Xaar Group with ahead-of-expectation performance from EPS, Megnajet, and FFEI. The Aquinox launch was extremely well-received, and we have real confidence about the future success of this product.
To ensure we can deliver the growth we expect over the coming years, we have successfully completed phase one of our factory improvement program, which will deliver immediate efficiency and cost benefits. Overall, we've done what we said we would do. We have delivered a good performance in 2022 and continue to be very excited about the future. 2023 has started well, with our revenue in line with expectation. There's likely to be an impact on margins in H1 due to the factory shutdown. However, we anticipate a stronger performance in H2, and we are confident of delivering full year performance also in line with expectations. Our customers recognize the fundamental advantages of our technology, which is why I truly believe over the next decade we will become the number-one supplier of industrial inkjet printheads globally.
With that, we'd be happy to answer any questions you may have.