Good afternoon, ladies and gentlemen. Welcome to Sa Sa's year 2013/14 annual results investor presentation. Before the presentation, let me introduce you the company management on stage. Dr. Simon Kwok, BBS, JP, Chairman and CEO of Sa Sa. Dr. Guy Look, CFO and Executive Director of the group.
Good afternoon, everyone.
The agenda today will begin with Dr. Kwok going through the annual results highlights, followed by Dr. Look walking us through the financial performance, business review, as well as the outlook and the way forward in details. There will be a Q&A section afterward. Now, let me hand over to Dr. Kwok.
Thank you. Good afternoon, ladies and gentlemen. Welcome to Sa Sa's annual results presentation for the year ended 31st March 2014. The group achieved sustained growth through the year due to a strong performance in our core market of Hong Kong in the first half. Turnover grew by 14.2% to HKD 8,756 million, while profits rose by 13.3% to HKD 935 million. The group added nine new stores, with the result that our retail network amounted to a total of 280 stores at the year-end. Our Hong Kong and Macau market continued to benefit from the increase in mainland Chinese tourist arrivals during the year, and relatively steady growth was achieved. However, as has been well reported, the average spending power of mainland tourists continued to moderately weaken, resulting in a downward trend in the average ticket size they represent.
In the second quarter, we noted an overall slowdown in the group's performance from the very fast pace of growth in the first quarter. We therefore launched more promotions to enhance price competitiveness, with a particular focus on low to mid-price products. Meanwhile, the measures that we undertook also successfully boosted sales to the more price-sensitive local consumers in the second half of the year, and helped to expand our local customer base. In mainland China, our boutique store format, which the group launched more than a year ago, has started to show initial results with better contribution. In the overall markets, we continue to record steady progress in Malaysia. Our retail sales growth exceeded that of our peers, as well as the overall retail markets, and our house brand mix increased.
In the Singapore market, store productivity was impacted by manpower constraints due to the tightening of foreign worker quotas, which in turn led to slower sales growth. In Taiwan, despite relatively weak local consumption power and overall cautious business environment, the group improved store productivity over the year and successfully drove same-store growth. sasa.com reported relatively flat sales growth during the year. We will continue to improve user experience to gain customer acceptance and working closely with local affiliates. These strategies would increase our competitiveness and improve our market penetration. The group will continue to build closer partnerships with more international beauty brands. Due to the rising popularity of Korean skincare and cosmetic products in recent years, the group introduced new Korean brands that are exclusive to Sa Sa. These saw robust sales growth and positive feedback.
Our emphasis will be to follow market trends closely and launch a diversity of products that are fashionable and modern to cater to different customer segments on a timely basis. Due to lingering uncertainties in the global economy and signs of slowing growth in the mainland Chinese tourist arrivals, we expect the outlook to be challenging. Nevertheless, past experience has shown that the cosmetic industry is extremely resilient to changing economic circumstances. Moreover, the continued integration of Hong Kong into mainland China and the overall growth in income per capita in mainland China will continue to drive the demand for cosmetics. Therefore, we remain confident in the consistent viability of the cosmetics market, and we expect continued steady growth. Needless to say, we operate with particular prudence at times of economic slowdown.
We will adjust our store expansion strategy and carefully manage our rental renewals to allow us to strengthen cost control. The group's business outside of Hong Kong are so far of modest size. However, this small starting point implies huge potential for Sa Sa to grow in all existing markets. We will therefore devote more expertise and resources to drive both the turnover and profit contribution from these existing markets outside of our home base. We have faith that our flexible and well-scaled business model, together with our responsiveness and adaptability, will help us maintain our competitive strengths. We firmly believe that they will stand us in good stead whatever the market circumstances may be, so that we may continue to strive for satisfactory returns for our shareholders.
I'm now going to hand the platform over to Guy, who will explain in detail Sa Sa's financial and operational performance for the fiscal year of 2013 to 2014. Thank you.
Good afternoon, everyone. Welcome to Sa Sa International Holding Limited's results announcement for the year ended March 31st, 2014. Our agenda today covers financial performance, business review, outlook, and the way forward. First of all, financial performance. We've had a solid performance for the year. Turnover increased by 14.2% to HKD 8,756 million. Profit for the year increased by 13.3% to HKD 935.2 million. Our gross profit margin improved marginally by 10 basis points to 46.5%, and net profit margin declined marginally by 10 basis points to 10.7%. We're declaring a final dividend per share of HKD 0.09, together with a special dividend per share of HKD 0.055.
Together with the interim dividend already paid, the total annual dividend per share would be HKD 0.235, representing 71% payout ratio. The group turnover is made up of Hong Kong and Macau, HKD 7,122 million, representing 81.4% of our sales mix. Mainland China represents 4.2%, Singapore 2.9%, Malaysia 3.8%, Taiwan 3.2%, and our online business 4.5%. It has been our long-term objective to increase our sales mix in markets outside of Hong Kong, and we're increasingly diverting resources and expertise into these markets. We believe that these markets have the potential to grow as we have relatively little or low market share in each of these respective markets. Therefore, we feel that these would become engines of growth for us in the future. We're in a sound financial position. CapEx has increased by HKD 76 million to HKD 267.8 million.
This includes HKD 95 million spent on an office floor and the building that we are in, as we are running out of office space. Putting this acquisition aside, CapEx would actually have reduced marginally because of slower store opening in China and because of savings in terms of store renovation costs. Our net cash and bank balance has increased by HKD 157.3 million to HKD 909 million. This is because of stronger cash generated from operating activities. We move on to business review. We've had a solid performance in Hong Kong, Macau. Our first half was boosted by a gold rush due to low gold prices. As you can see, in particular, the first quarter, we had a top-line sales growth of 28.1% and the same-store growth of 18.6%. This is a really high base for 2014 to 2015.
You might have noticed that in our announcement in the outlook section, we have disclosed that the growth rates for April 1st to June 21st was 5.4% in the Hong Kong markets. This is one of the reasons for this relatively low growth rate, because of the high base in 2014 to 2015. Of course, as you can see, the second quarter is a lot better, relatively as a base. In the second half, while the growth rate is still relatively steady, especially in the third quarter, it was really more driven by our own strong promotions. During the entire year, product offerings and promotions drove transactions and built our customer base. We have also run an effective loyalty program, resulting in sales to VIP increasing by 31.3%.
The Hong Kong and Macau customer mix continued to evolve, with Mainland visitors representing 17.9% of our sales during the year, an increase of 3.2% compared to last year, while the local residents still accounted for more than half of our transactions, accounting for 50.8%. In the China markets, our sales growth was marginally negative to the extent of 0.02%. Our same-store growth was a negative 3.75%. We incurred a loss for the year of HKD 53.7 million, of which HKD 34.9 million was recurring and HKD 18.8 million non-recurring. The supply chain issues have been a major drag on us in terms of our performance. On the one hand, we had out-of-stocks situation affecting our top line and same-store growth and excessive stocks in other instances, giving rise to stock write-offs and provisions.
Both of these would relate to a weaker purchasing department function, and we have put through some structural changes to that department. In terms of other markets, we have seen a sluggish market in the Singapore retail scene. We have seen the biggest release of retail space into Singapore market since 2009. This has the effect of diluting sales growth throughout the market. In addition, there has been a shortage of labor in the Singapore market, and that also affects productivity in our stores. As a result, sales have slowed down to 2.3%. In Malaysia, we have grown by 9.7%. The 9.7% is lower than 25.9% last year, primarily because of more new store openings and also stores being opened in more productive places last year, including the Genting Highlands. In Taiwan, we have grown by 10% top line.
In e-commerce, we have grown by 2.6%, and the decrease in sales growth is mainly due to weaker key market, and that is of Australia, where department stores have slashed prices to align with international prices and where the purchasing power has been sapped by a weakened AUD. We, of course, are taking actions, first of all, diverting resources to other key markets, primarily China, and localizing our efforts in key markets, including adopting local payment gateways, accepting local currencies, and developing affiliate networks. We would enhance our marketing functions in the areas of search, CRM, and social media. In the area of brand management, our strategy has been yielding results. Korean brands under our house brand mix has grown by 57% in Hong Kong, Macau, and that is due to the growth in sales of brands like Banila Co, Beyond, CremorLab, et cetera.
We seek to cooperate more closely with Korean principals to better realize the potential of their brands and increase focus on mid to low price and trendy products. We would be putting more sales and marketing resources on hero products, and we have appointed new Suisse programme ambassadors. As a result of these, the sale of our house brands products has increased by 19.5%, and the sales mix has gone up by 2%. While the quantity of own-label products sold has increased by 35.7%. We have strategically broadened our retail network for the year. In Hong Kong, Macau, we ended the year with 106 stores, Mainland China, 61, Singapore, 22, Malaysia, 53, Taiwan, 29, giving us a total of 271. During the year, we have been quite selective in opening new stores and quite cautious in renewing existing leases.
In Mainland China, we have closed quite a number of stores, those which are bigger and underperforming, to make way for the smaller size formats that we refer to as boutique-style stores. In Singapore and Malaysia, we have rationalized our store network so that we can optimize our locations and store sizes. For department store counters, we have continued to rationalize our portfolio of counters, and we have closed three underperforming locations, giving us a total of nine as at the year-end. Then we move on to outlook and the way forward. The Hong Kong and Macau market continues to be challenging. We are seeing a slower mainland economy, slower mainland tourist arrival, and lower spending resulting from a change in tourist mix. The e-commerce brings about changes in consumer behavior and also the competitive landscape.
Number of actions we can take and are taking would include further adapting our product offerings to meet market demand, in particular Korean and also low to mid-price products, putting more intensive efforts to serve local consumers, and initiating O2O efforts. We would also be looking at cost management, including addressing rental cost, staff cost, A&P, and unproductive costs. On the whole, we believe that the Hong Kong market would remain resilient as the Hong Kong market has its advantages in the cosmetic area, where the comprehensiveness and pricing of product offerings and the timing of new product launches are really quite outstanding as compared to what we have in China. Hong Kong will also remain particularly competitive in the southern provinces, including Guangdong Province, where the traffic time and cost advantage is clear.
In the future, we do expect enhanced transportation network, which will allow further integration into China. We believe that the disposable income of the lower tier city travelers will increase, meaning that they will increase their travel and spending power. We believe that the local consumer market remains attractive to us. We are moving strategically towards a more balanced market mix. The objective is to increase the sales and profit contribution from outside of Hong Kong. The direction is to commit more resources and expertise to markets outside of Hong Kong, and we would be going through strategic and structural changes to support this. We will be enhancing and automating workflow to enable scalability.
Key changes for business units will include more new store format and cost management for China, a new Senior Vice President to drive Singapore, Malaysia, and Taiwan markets, and building management resource and expertise for online businesses, and also initiating online to offline directions. Now, strategy for Mainland China market, I will just name the headings. I am sure you can read through the details if you wish. Primarily, we will be improving store-level profitability, improving supply chain and build scalability, improving management and cost structure, and enhancing brand image. For Singapore, Malaysia, and Taiwan markets, first of all, we have appointed a new Senior Vice President on board to head these three markets to drive overall strategic development and execution. There are common strategies for all markets, including building management resources, their competence, and team building. In working on visual merchandising and also enhancing our product portfolio.
We would be increasing our same-store productivity through these efforts. We would be going through intensive training programs and provide better incentive programs and closer store management monitoring. We would take cost initiative, including looking into reduced renovation cost by introducing new contractors and simplified construction methods, and reducing inventory carrying cost by reducing the stock level and storage space. There are specific strategies for each individual market. For Malaysia, we feel that the majority of the population, i.e., the local Malays, still have to be tapped, and we will be working on that. We will be developing different shop formats for market penetration. In Singapore, as I mentioned, there are more retail space diluting sales. We will be working to strengthen the retail network in high traffic locations.
Also, we will be implementing IT systems and automation to reduce manpower cost and reliance on labor. In Taiwan market, we will be working on network expansion through market segmentation. The strategy for e-commerce would include building management team and resources, enhancing expertise of specialized disciplines, including search, loyalty program, social media, and leveraging on external expertise and resources, and localizing our marketing activities for major markets. We would initiate O2O efforts and improve customer satisfaction all around, from online to fulfillment to CRM program. In the area of category management and product development strategies, we will source popular products to meet fast-changing demand and try and replace low-margin source, i.e., the PI products or parallel import products. We would be looking to replace those by higher-margin sources over time. For example, locally sourced, official supply products or house brand sources.
We would develop official working relationship with international brands and strategic product categories and target new product offerings. We would strengthen branding and marketing efforts and refine our inventory management by reducing inventory of product categories with short lead time and discontinue products with low productivity. We will continue to improve house brand offerings and increase sales mix and make use of effective O2O coordination in building own brands. We expect to, in general, increase the number of stores that we have, but on a very calculated basis. In Hong Kong and Macau, the market is very dynamic, and while we are seeing a slower growth in the Hong Kong market as a whole, we see that the growth rates for overnight visitors as opposed to same-day visitors actually vary. Also, the rental market is correcting.
For that reason, we feel that there are opportunities for us to optimize our store network, so that in certain areas, we may be able to cap or rein in our rental cost. In other areas, we may be able to tap opportunities for growth. Therefore, we expect that we will probably end the year with 110 stores. Whereas for the other markets, we have discussed the strategy for developing the network, and so the projections here are basically a reflection of what we have discussed earlier. On the whole, we expect to increase the number of stores by 9 to 280 by the year-end. We would also be increasing the number of single-brand stores or counters from 9 to 12. Thank you.