Good afternoon, ladies and gentlemen. Welcome to the investor presentation of Sa Sa International Holdings Limited interim results year 2017/2018. Before the presentation, let me introduce the company representative on stage, Dr. Simon Kwok, SBS, JP, Chairman, and CEO.
Hi there. Hello.
Dr. Guy Look, CFO and Executive Director.
The agenda today will begin with Dr. Kwok going through the interim results highlights, followed by Dr. Look walking us through the financial performance, business review, and outlook in detail. There will be a Q&A forum afterward. We will now invite Dr. Kwok to go through the interim results highlights for us. Dr. Kwok, please.
Good afternoon, ladies and gentlemen. Welcome to Sa Sa's interim results investor presentation for the six months ended 30th September 2017. Although the retail market in Hong Kong has remained weak over the past two to three years, it has recently shown signs of gradual recovery as the flow of tourist arrivals started stabilizing. Leveraging on our strenuous efforts to improve operations in other markets, the group's turnover increased by 1.6% year-on-year to HKD 3,659,000,000 in the first half of the year, while profit rose by 14.5% to HKD 110 million. The Hong Kong and Macau market saw keener competition. We took a relatively cautious inventory management approach to facilitate operations during the relocation of our warehouse in the first half, and were unable to fully leverage the market opportunities to attain higher sales growth.
This investment in the consolidation and automation of our warehouse has generated and will continue to generate increased cost in the short term. So too have our new store openings at premium locations in traditional tourist areas during the parallel run period and the increase in amount of resources to promote our new house brands. However, we are confident that the completion of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macau Bridge will generate increasingly positive results in the coming year, along with the culmination of the period of one-off investments. In the mainland China market, the management team has stabilized upon restructuring over the past two years. Store network has been further optimized, with the closure of isolated underperforming stores in remote regional cities and by clustering new stores in well-managed provincial capitals with higher successful rate of opening new stores.
These stores are now contributing increased profitability. In addition, improvement of importation process leading to shorter lead time has helped enhance overall operational efficiency and effectiveness. Riding on our existing business strengths, we will further sharpen the efficiency of our warehouse operations and improve our product offerings by strengthening the launch of new products to attract more traffic. In the overseas markets, we have seen an improvement in operational efficiency and store productivity in the Singapore and Taiwan markets as a result of the vigorous efforts of our new management teams. This is particularly the case in the Singapore markets. We will continue to strengthen our management while prudently expanding and optimizing our store network, with the aim of providing increasing contributions to the group. In Malaysia, same-store sales growth was impacted by weaker local demand. We will therefore maintain a relatively prudent strategy of market expansion.
In regard to our e-commerce, against the backdrop of various initiatives to drive sales, our e-commerce business recorded a relatively significant loss last year. This was largely due to a lack of support from logistics and poor operational flow. This year, therefore, we have focused on improving our backend infrastructure to enhance both our competitive edge and our expansion capacity for the long term. In the first half of the year, we made flexible adjustments to our prices and the minimum spend for free shipping, which halved our losses as we upgraded our logistics functions. However, there is still room for improvement in terms of reducing the cost of logistics function and shortening the time of delivery to customers. We will therefore strive to further strengthen our competitiveness and profitability in the future. Consumers are now more sophisticated and well-informed than ever before.
Given their constantly changing offline and online behaviors, we will strengthen our customer relationship management and implement targeted promotions to enhance our customers' overall shopping experience. This will help us better equip ourselves for a new retail era, maintain our competitive advantages, and scale new heights for the group. I am now going to give over the floor to Guy, who will explain in detail Sa Sa's financial and operational performance for the first half of the year. Thank you.
Good afternoon, everyone, and welcome to Sa Sa International Holdings Limited's interim results announcement for the six months ended 30th September 2017. Our agenda today covers financial performance review, a review of our business by market, and outlook and the way forward. First of all, our financial performance. Our turnover increased by 1.6% to HKD 3,660,000,000.
Profit for the year increased by 14.5% to HKD 110 million, and earnings per share increased by 10.6% to HKD 0.037 a share. Our gross profit margin increased by 60 basis points to 42.4%, and our net profit margin improved by 0.3% to 3%. We are declaring an interim dividend of HKD 0.035, representing a payout ratio of 96%. We also offer a script alternative with a 5% discount. In terms of geographical sales mix, Hong Kong and Macau accounted for 81.5% of our sales. Mainland China accounted for 3.8%, Singapore 2.7%, Malaysia 4.6%, Taiwan 2.5%, and our e-commerce platform, sasa.com, 4.9%. The group is in a sound financial position. We have invested HKD 61 million in CapEx into our new warehouse. Net cash generated increased by HKD 87.3 million to HKD 326.1 million, and net cash in bank reduced by HKD 78.5 million to HKD 1,198,000,000.
The slight reduction results from a smaller opening cash balance of HKD 110 million. We move on to business review by markets. In Hong Kong and Macau, and on a same-store basis, our performance has been affected by parallel operations of new and old stores as we relocate to better retail positions to capitalize on a weak rental market. Retail sales increased by 2.2% in the first half, and on a same-store basis, declined by 2.1%. The transaction volume decreased by 1.1%, while ticket size increased by 3.4%. In the China market, we are seeing consistent improvements over the last three years. Right on the top, you see the average number of multi-brand Sa Sa stores decreasing slightly from 57 to 53. But this, in fact, doesn't tell the full story.
In the course of reduction from 57 to 53, we have, in fact, opened a number of stores and we have closed off a number, a process of consolidating and improving on our store portfolio, as we will discuss in the next slide a little bit more. As a result of all this work, retail sales has improved from a decline of 8.6% two years ago from a positive growth of 3.9%, and total operating loss has decreased from HKD 19.9 million to HKD 6.6 million this year. Improvements in China has been due to the stabilization of our management team, the improvement of importation process leading to shorter lead time and faster product launches, the closure of underperforming stores in remote cities, and cautious expansion in regions with high operation effectiveness. We are building clusters of stores and management team in well-managed provincial capitals.
We are further upgrading our store image and visual merchandising and improving new product offerings. We are streamlining product offerings to improve product and store productivity. In other markets, our persistent management efforts are driving continuous same-store improvements in Singapore and Taiwan. In Singapore, same-store performance has improved from a decline of 13% last year to a growth of 7% this year. For Taiwan, from a decline of 19.5% last year to a growth of 0.8% this year. The improvement in same-store growth in Taiwan, although is significant, is not yet sufficient to recoup the effect of seven store closures. As a result, sales performance improved from a decline of 22.8% to a decline of 8.9%. In Singapore, the same-store performance improvements are closer to recouping a loss of sales of three store closures. As a result, sales improved from a decline of 11% to a decline of 2.3%.
In Malaysia, the overall sales performance and the same-store performance has weakened somewhat in line with the local consumption demand. As a result, sales increased by 9.1% in terms of top line and 1.1% in terms of same-store measurement. For our e-commerce business, our losses have reduced significantly. We had a higher sales base from last year due to efforts to recover sales after our relocation of warehouse in Hong Kong. Whereas for this year, the emphasis has been on back-end support improvement. In the meantime, we raised prices and the hurdle for free shipments in the short term. This has resulted in a slight drop in sales of 6% in the first half, but with a reduction of deficit of HKD 17.6 million. We have significantly improved our logistic operation, resulting in a 10% decline in the logistic cost as a percentage of turnover.
We have substantially improved market exposure through major e-commerce platforms. We are continuously upgrading our mobile application to provide better shopping experience. At the group level, our house brand mix is stabilizing, increasing marginally to 38.9%. We move on to outlook and the way forward. In Hong Kong and Macau, we believe that the Hong Kong retail market has seen the worst. The one trip per week policy has been fully reflected. The renminbi has stabilized. According to WeChat, Hong Kong is the most popular travel destination for mainland Chinese. The soon-to-open Hong Kong-Zhuhai-Macau Bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail Link will boost PRC tourist arrivals. We will continue to strengthen our store network and establish our stores in better locations as well as improving coverage in residential areas and transport hubs and near the mainland. A brand-new mobile app to improve customer engagement.
We'll leverage on process automation and new warehouse to improve overall supply chain management. For Mainland China, the popularity of e-commerce brings both pressure and opportunities to brick-and-mortar operations, allowing expansion of store network at reasonable cost. We're streamlining our products and this is yielding results, and we'll continue to leverage on new products. We'll continue to roll out improving new stores to attract more traffic. We're putting emphasis on training. This is now online, first of all, to train our junior beauty consultants how to serve customers and also to train them how to open stores. The emphasis online is to improve customer experience. This involves work of multi-facets. Improving our shop experience by using big data analytics, using multiple customer touch points, and upgrading systems to enable flexibility and efficiency.
We'll continue to improve logistics and further collaborate with top e-commerce platforms to increase exposure and acquire new customers. In the overseas markets, in Singapore, we will provide further incentives to improve staff morale and improve our store design to provide space for better shopping experience, and broaden customer experience for younger-aged customers. We expand our network cautiously to increase store-level contribution. In the Malaysia market, consumer sentiments have shown signs of slowdown, and we'll implement a comparatively conservative development strategy. In Taiwan, we'll streamline our store network to enable more effective management. In the area of category management and product development, we'll strengthen the makeup product portfolio and display, increase digital media exposure for house brands, fill product gaps according to function and at different price points, and accelerate new product launches, and improve management of product life cycle, reducing the number of SKUs.