Good evening, ladies and gentlemen. Welcome to Shui On Land's 2017 full year result announcement. I am Michelle Sze, Head of IR of the company. Let's move to the stage. I would like to introduce our management on the stage. Mr. Vincent Lo, our Chairman. To his left, Mr. Douglas Sung, Managing Director and CFO of the company. Ms. Stephanie Lo, Executive Director of Shui On Land Management Company and Vice Chairman of China Xintiandi. Let me pass the stage to Mr. Lo to start the presentation.
Okay. Well, first of all, thank you for coming to our results briefing. Last year, I think on the whole, we did okay. We have quite a balanced growth. Our increased property sales, improved margins. Of course, I think very important, we have achieved our gearing, lowering much target. Profits increased by 53%. I will let Douglas do all the detailed presentation to you. Maybe let me now go to slide five. These charts look quite good because everything is pointing upwards. There is still a lot that we need to do, and later on, we will try and share with you more our thoughts and plans going forward. On contracted sales, again, we have reached our target. But it was not easy, because the restriction on sales was really quite tough. But fortunately, we had other asset sale to compensate.
On the shareholders' return, on the final dividend, we are declaring HKD 0.07 final dividend, including the HKD 0.03 in the midterm. It is HKD 0.10, which is double that of last year. On the deleveraging, you can see from the chart, from the peak in 2016, we were 67%, and now it is 51%. Actually, the highest was 87%, so I think we have done a fairly decent job there. Also, in absolute terms, the highest was CNY 41 billion total debt. Now it is about CNY 25 billion. The asset-light model. So we have sold a number of our projects, and that, I think, is realizing our asset value. We are actually selling at higher than our book cost. We are redeploying our cash or assets to other better use. We have also sold our Chongqing project 80% to China Vanke.
We have sold our Dalian Tiandi, the full 48%, but we have not completed the project yet. So in the last year, we have invested into Wuhan, the Optics Valley site, together with CITIC Limited. That is a very exciting project. The Optics Valley, it is actually a very successful and prosperous location for Wuhan. They need us to go and do a Xintiandi and the knowledge community there for them. So I am very pleased that we have acquired this piece of land at very low land cost. Rainbow City, Lot 167, which is right next to our development. We have started the relocation, and hopefully it can continue with our project, because we are running out of land in Rainbow City. We bought two office towers in Yangpu District. We are bullish on the Shanghai office market.
Right now, there's a bit of oversupply, but I think at the right location, and together with our KIC project there, I think we can do well from this project. The outlook for this year. We believe the control measures will continue, which means that the market will continue to be difficult, particularly in a place like Shanghai. We had difficulty just trying to get the pre-sale permit, and then also the pricing. We need to be a bit careful for this year. China economy, I believe it will continue to do okay. It's actually going fairly well. But I'm just a bit worried about geopolitics around the world. I think there's just too much uncertainties all around, and anything can trigger a disaster for the world. On that note, we have adopted a more cautious approach.
In Chinese, we want ourselves to do. We will continue to push ahead to grow the company, but on a more conservative basis. Maybe let me stop there and let Douglas do the detailed presentation for you.
Thank you, Mr. Chairman. Let me go through the financials for 2017. Here is just a quick summary of some of our main financial parameters, the indicators. As the Chairman mentioned earlier, you can see that the comparison between last year and 2016, in general, we have seen very good growth in pretty much all the indicators. Turnover, for example, gross profit, net profit, and even on our margins, we have seen pretty good improvement from 2016. Overall, we have recorded pretty decent results last year. If I go through some of the details on the next page. First on the P&L, you will see that on turnover, we recorded just over CNY 18 billion, almost CNY 18.5 billion of turnover, which is about 5% year-on-year increase. Of which residential sales is roughly about just over CNY 16 billion of turnover.
I will have a further breakdown later on. Rental continues to be a very good growth area for us. You can see last year, our rental income increased by 14%, and other income, construction, other income increased by 15%. Netting out cost of sales, our gross profit increased by about 33% to slightly less than CNY 8 billion, CNY 7.8 billion in 2017. You can see that the gross profit margin actually improved quite a bit from 2016. We are at 43% last year. This is mainly because on the property sales contribution, a large proportion came from Rainbow City, [Non-English content], where the margin has always been very good. The composition of the property sales contributed to higher margin last year.
Going down and netting out the expenses, you will see that operating profit is about CNY 7.19 billion, which is about 36% year-on-year increase. Going down the list, there is a fair value gain on our investment properties of CNY 518 million. This is about 1.3% increase in the total value of our IP portfolio. So, relatively modest valuation increase. As you know, we revalue our investment portfolio every year with third-party valuer. We also had a gain of CNY 1.75 billion. This gain is from the disposal of 49.5% interest to China Life in our Rainbow City, [Non-English content], commercial portfolio. This is where the bulk of the gain is. If you go down the list, you will see that the other gains and losses, there are a couple of components in there.
I think a lot of you remember we have a Chongqing guarantee fee, that we basically guarantee the rental difference with the buyer. This is included in the other gain and losses. This also includes some of the redemption costs of our U.S. dollar bonds. Last year, we redeemed quite a lot of U.S. dollar bonds, so the cost of the redemption is in here as well. These are some of the bigger items on the other losses. On the share of the associate losses, this is coming primarily from Dalian, our investment in Dalian. As many of you know, we signed at the end of the year an agreement to divest our shares back to Yida. We expect that transaction to complete in first half this year.
Last year, we also, because of that transaction, even though it has not been closed, we took a write-down on the value of the Dalian investment. A large amount of this losses is relating to the provision for that transaction. We expect that when we close the transaction this year, there won't be any further P&L impact in 2018. On finance costs, you will see that there's a 30% reduction in our overall finance costs. The finance costs include a small FX gain. As you know, the CNY appreciated quite a bit in second half of last year. We had about CNY 190 million of Forex translation gain in 2017, which is included in this total finance cost number. On the next page then, before tax profit is, you can see that CNY 6.2 billion, about 35% year-on-year increase.
Profit after tax is CNY 2.3 billion, 31% year-on-year increase. Netting out all the minority share interest and the perpetual securities owners, the attributable profit to shareholder last year is CNY 1.67 billion, which is 53% increase from 2016 level. As the Chairman mentioned earlier, the board recommend a final dividend of HKD 0.07 per share. The full-year dividend will be HKD 0.10 per share. So that's 100% increase from 2016. So that's on the P&L. On property sales, I mentioned turnover earlier, about CNY 16 billion came from property sales, residential sales. We can see here the breakdown is mainly coming from Taipingqiao and Rainbow City, Rui Hong. So that accounts for about CNY 10 billion of the CNY 16 billion of property sales.
If you go down the list, you will see that there is an additional CNY 12.4 billion of what we call recognized sale or recognized property sale. This is basically the disposal of the Chongqing portfolio, the commercial portion to China Vanke, and the commercial divestment of our Rainbow City project to China Life Insurance. That is where this CNY 12.4 billion sales figure came from. Locked in sale, you will see that at the end of last year, we had about CNY 5.1 billion of locked in sale. Mainly coming from the signed contract of Rui Hong, which has not been handed over to buyers yet at the end of last year. That is roughly about half of the CNY 5.1 billion. The remaining coming from various projects such as sales in Dalian and Chongqing and some of our other projects.
Valuation, I mentioned earlier, of our IP portfolio is at 1.3% year-on-year increase compared to 2016. You can see the list of our major assets, and also the valuation difference, at the far right-hand side of the table. Basically, most of the assets we have seen relatively stable movement in value, about 1%-2%, with the exception of the Hub. You see that is a negative figure. Basically what this is we have a performance center, some of you may know the Hub, which in the past we classify as fixed assets. In 2017, we moved that into an investment property. So we did a revaluation of that asset, based on the contracted rental value of the performance center. That is why there is a reduction of value of about CNY 200 million. Otherwise, you can see very stable valuation in basically all of our IP portfolio.
On financial, we have already talked about gearing at the end of last year. Net gearing is 51%, and from the peak of mid-2015, the company has reduced our net debt by about CNY 16 billion. That is a pretty substantial figure. This is a key focus of the company and management in the last two to three years to reduce our gearing, to deleverage, and to build up our financial strength. I am pleased to report that we have pretty much completed the target of bringing our gearing down to around 50% level. Debt profile for this year, the only major repayment we have is a $630 million U.S. dollar bond, which is maturing in May this year. This is the CNY 4.1 billion figure there in the table.
The rest are primarily just bank loans relating to construction, some working capital loan, which we expect to refinance upon maturity. Beyond 2018, you can see that next two years, 2019, 2020, we do not have a lot of bond maturity. Again, our refinancing and repayment pressure going forward will be a lot lighter compared to last couple of years. This is just for a reference. We basically were very busy repaying or redeeming our higher-cost bonds in 2017. In aggregate, we have repaid about $2.1 billion U.S. dollar of U.S . Dollar bond or CNY bond in 2017. This is quite a significant amount. You can see that these bonds carried a fairly high coupon, and upon refinancing, basically, we would expect our interest costs to continue to come down in 2018. That concludes the financial part. I will move quickly on to residential.
Just a few key highlights. On residential, first of all, for sale this year, we would expect a few projects. First of all, in Shanghai, we have about 40,000 sq m remaining in Taipingqiao, in Lakeville Luxe. That, we expect to launch this year. We are in the process of getting pre-sale permits, so hopefully we will be able to launch in the coming months. We also have the remaining of Rainbow City Lot 2, The Gallery, which is about 21,000 sq m, which we also hope to launch this year. In Shanghai, we have about 65,000 sq m of space that we hope to put to the market this year. In the rest of the portfolio, it is mainly coming from Wuhan. We have two projects we are targeting launching this year.
In Wuhan Xintiandi, we have what we call Lot 10, which is about the phase I residential we expect to come up at around 27,000, 28,000 sq m of GFA. The joint venture with CITIC Optics Valley, phase I residential, we also expect to launch this year, about 80,000 sq m. So there is quite a bit of volume coming from Wuhan. Overall, in terms of GFAs, roughly about 400,000 sq m that we hope to launch in 2018. Beyond that, on the next page, you can see that in terms of our sellable resources in Shanghai, for example, other than the two projects I mentioned earlier, we have a few sites under construction right now. On the left-hand side of the table, for Shanghai, we have altogether 250,000 sq m of residential space coming online in the next one to two years.
On the right-hand side, are two sites in Rainbow City that are in the process of clearance, which we expect the relocation to finish within the next one to two years. So you can see then Shanghai altogether, the attributable residential GFA is about 450,000 sq m. By our very conservative estimate, based on current price, we think the value of this residential GFA is about CNY 55 billion. Outside of Shanghai, we have attributable GFA of about 750,000 sq m, coming mainly from Wuhan and also in Chongqing, and in Foshan. So altogether, here outside of Shanghai, the sellable resources is probably about 20 billion-25 billion. If you look at in aggregate, our residential portfolio, we expect to have 75 billion, 80 billion of sellable resources coming online in the next three, four, five years. Okay.
Just to summarize on relocation, a lot of you obviously know we have focused quite a lot on relocating, clearing the sites in Shanghai last few years. We are basically at the very end of this relocation exercise now. You can see that we have cleared all the residential sites in Taipingqiao and Lakeville. The last site, Lot 118, all cleared and construction has started. So that basically is underway. In Rainbow City, we have a few sites. Lot 10 is the commercial one, which we also completed relocation at the end of last year. So that construction has started. Lot 1 is residential. We also completed relocation at the end of last year. We are in the process of getting all the approvals, so hopefully we will start construction in the next couple of months.
The remaining two sites, Lot 7, Lot 167, which is the one we invested in last year. You can see that the relocation status is more than 90% of the families have signed up. They are moving quite fast, and we would expect these two sites to be cleared in the next one to two years, and construction start. This basically will give us very good sellable resources in Shanghai in the next few years. I will stop here and turn over to Stephanie.
Thanks, Douglas. Let us take a look at how we did with our investment property portfolio. At the end of 2017, our total leasable area for our IP portfolio was about 1.1 million sq m, valued at CNY 39 billion. Shanghai accounted for 54% of GFA and 66% by value. Rental income generated from this portfolio was CNY 1.9 billion, representing an increase of 14% year-on-year, with a CAGR of 15% over the last seven years. Just a note here, the disposal of 49% of our equity interest in the Rainbow City portfolio, including the Hall of the Sun, Hall of the Stars and The Palette, will affect our rental income in 2018, as this is no longer consolidated. Here we can see the occupancy rate and rental breakdown of our IP portfolio in Shanghai.
Our leasable area in Shanghai is approximately 733,000 sq m of leasable GFA. It generates CNY 1.4 billion in rental income in 2017 and increased 9% compared with the year before. Occupancy remains high across various projects. Occupancy rate at the Hall of the Moon at Rainbow City increased significantly from 61% at the end of 2016 to 91% at the end of 2017. Rental income from that project alone increased by 48%. At The Hub, it performed quite well last year. The total project had an increase of 21% in rental income. What you see as a drop in 35% of rental income from Shanghai Plaza in 2017 was mainly because there is a large AEI project going on. We are renovating the retail podium facing Huaihai Road. There is a GFA there of 28,000 sq m, and we are expecting to open it at the end of this year.
Here we can see the occupancy rate and rental breakdown of our IP portfolio outside Shanghai. Within Wuhan, Chongqing, and Foshan, we have a leasable GFA of 447,000 sq m, generating CNY 424 million in rental income in 2017, representing a large increase of 35%. Mainly, this was driven by two shopping malls opened in 2016, which is Horizon in Wuhan and NOVA in Foshan, both recording an increase in occupancy and rental income there. Here is a summary and overview of our completed IP portfolio across the seven projects. We have 955,000 sq m of attributable GFA completed at the year-end 2017. Currently, the group still has 1.8 million sq m of attributable GFA of our commercial land bank, which is under development or for future development as shown.
Depending on the market and our potential investment opportunities, we will consider how best to maximize the return and the value of this commercial portfolio. Thank you.