Good evening, ladies and gentlemen. Welcome to the live audio webcast of Analyst and Investor Session on Chow Tai Fook Jewellery Group's annual results for the financial year 2022. Let me introduce the management today. They are Mr. Conroy Cheng, Vice Chairman, Ms. Sonia Cheng, Vice Chairman, Mr. Adrian Cheng, Executive Director, Mr. Kent Wong, Managing Director, Mr. Chan Sai-Cheong, Managing Director, Mr. Hamilton Cheng, Executive Director, Mr. Bobby Liu, Executive Director, Mr. Peter Suen, Executive Director, and Ms. Danita On of Investor Relations and Corporate Communications.
Firstly, Mr. Conroy Cheng will present the annual results and operational highlights, then Mr. Hamilton Cheng will talk about financial review. Mr. Chan Sai-Cheong and Mr. Kent Wong will give business updates on mainland China and Hong Kong, Macao, and other markets respectively. Then Mr. Adrian Cheng will give updates on our smart retail strategy. Finally, Ms. Sonia Cheng will conclude the presentation with business outlooks and strategies. After that, we will have a Q&A session. This session will be conducted in English in general. Mr. Chan Sai-Cheong shall present in Mandarin with simultaneous English interpretation. Now, may I invite Mr. Conroy Cheng to present. Conroy, please.
Good evening, ladies and gentlemen. I'm pleased to announce our fiscal year 2022 annual results. The global market remained uncertain during fiscal year 2022 in the midst of geopolitical risks and lingering pandemic. The group revenue rose by 41% to approximately HKD 99 billion in the year, driven by a resilient demand for gold products and our business growth in the mainland. Same-store sales in the mainland rose by 11%, while that of Hong Kong, Macau leaped by about 25%. Core operating profit increased by 16% year-over-year to HKD 10 billion thanks to our well-contained SG&A. As gold price surged approaching the end of March, an unrealized loss on gold loans was recorded in the year versus a gain last year, causing a year-over-year fluctuation to net earnings. Profit attributable to shareholders was up by 11% to HKD 6.7 billion.
Basic earnings per share amounted to HKD 0.67. The Board has proposed a final dividend of HKD 0.28 per share. Full year dividend amounted to HKD 0.50, representing a payout ratio of 74.5%. During the year, we further executed our Dual-Force Strategy and expanded our market share in the mainland. We opened a net of 1,361 Chow Tai Fook stores in the mainland, exceeding the group's annual opening target. This brought the total number of stores there to 5,459 at the end of March. We endeavor to improve in-store ambience and product differentiation. The contribution of CTF • HUÁ Collection to gold products retail sales value, RSV, in the mainland reached 42% during the year versus 40% last year. On gem set jewelry, we focused on promoting T- MARK.
It contributed to 21% and 33% of our diamond products RSV in the mainland and Hong Kong, Macao, respectively in the year. Our smart retail business in the mainland also demonstrated a promising growth. RSV surged by approximately 63% and its contribution to our mainland operations was lifted to 8.6% by value and 18% by volume. Now, may I turn over to Hamilton Cheng to go through our financial performance.
Thanks, Conroy. Good evening, everyone, and thanks again for joining us today. I'll first walk you through some major P&L items and key financial ratios. The group's adjusted GP margin declined by 480 basis points this year, mainly attributable to a higher contribution from our wholesale business and gold products. SG&A expenses increased by 18%, corresponding to a more than 40% top-line growth. The OpEx ratio improved by 280 basis points to 14.1% due to operating leverage. Core operating margin was 10.1%, maintaining fairly stable throughout the year. As Conroy mentioned, there was fluctuation in net profit, which was largely because of two special items below the COP line. First is unrealized loss on gold loans of more than HKD 800 million versus a gain of nearly HKD 300 million last year. Secondly, we had around HKD 600 million impairment loss last year on leases and goodwill.
If we had these two special items excluded, our net profit should have increased by around 20% year-on-year. We turn to revenue breakdown by segment. Revenue from Mainland China demonstrated a robust growth of 46% during the year. Its contribution to the group's revenue amounted to nearly 88%. Within the Mainland market, revenue share of wholesale business expanded to nearly 50%, up from around 40% a year ago. When we look at the trend in the past five years, we can easily find the Mainland market has exceeded the pre-COVID level remarkably, and the franchise business is clearly our major growth driver in recent years. While in Hong Kong, Macao, and other markets, revenue was up by nearly 15%. Sales in Macao has largely returned to a pre-pandemic level thanks to a recovering tourist spending there. Revenue breakdown by product.
All product categories registered a positive revenue growth in the year. Revenue of gem-set jewelry increased by 19%. Gold products saw a robust demand. This revenue leaped by more than 50% during the year. Continual success of CTF • HUÁ Collection and our retail network expansion in lower tier cities also helped boost the sales of this product category. As a result, its contribution to the group's revenue expanded by 550 basis points to nearly 74%. Let's look at the quarterly same-store sales growth trend for the past two years. In general, same-store sales growth momentum sustained in the Mainland and Hong Kong, Macao during the first three quarters of the year, while they turned negative in the Q4 quarter because of COVID.
In the Mainland, same-store sales growth was 11% for the full year, and that 11% was for our self-operated stores. While same-store sales growth of our franchise stores was around 23%. The franchise stores were outperforming because they are mostly located in the under-penetrated markets, and they are also younger, just opened in the past few years. In Hong Kong, Macao, same-store sales leaped by 25%, within which Hong Kong was 7%, while that of Macao was an encouraging 97%. Latest update for the recent two months in April and May. In the Mainland, April and May same-store sales was down by 28% due to the pandemic. We are delighted to see that the decline was leveled in May to high teens versus a decline of 40s in the months of March and April.
Even more encouraging is a more than 30% same-store sales growth that was recorded for the first week of June in the Mainland. It's partly because of an earlier Dragon Boat Festival versus last year. When we compare to the same 3-day holiday, which was in mid-June last year, there's still a single-digit positive growth. While in Hong Kong and Macao, April and May same-store sales decline leveled to 6%, remarkable improvement from 30% or 40% decline in February and March, in light of an easing situation and social distancing measures. Same-store sales growth of major products in both markets. During the year, both the Mainland and Hong Kong, Macao registered a double-digit same-store sales growth in gold products driven by a resilient demand.
ASP in the Mainland increased steadily, while ASP of Hong Kong, Macao declined to HKD 4,900 from HKD 5,500 a year ago, largely because of sales mix shift towards fixed price gold products, which typically has a lower ASP, but higher margin. On gem-set jewelry, both markets saw a single-digit same-store sales decline in the year. Yet in the Mainland, same-store sales performance of this category improved in the fourth quarter thanks to the success of our new product collections and effective marketing campaign launched during this festive season. Moving into April and May, performance of our gem-set and gold products was similar in the Mainland and was down by around 25%. In Hong Kong, Macao, gem-set declined by 17%, but gold was doing better and staying flat in the past two months. Profitability analysis.
In Mainland China, core operating profit recorded 17% growth and continued to be our major profit contributor, which accounted for over 95% of the group's profits. Because of this, changes in margins and ratios of the Mainland segment were largely similar to the group's overall performance as explained in the earlier slides. Hong Kong, Macao and other markets. Adjusted GP margin decreased by 370 basis points to 25.7% back to a relatively long-term normal based on the sales mix. SG&A ratio improved and COP margin stayed at 3.5%. Operating profit in this segment edged up slightly by 4%.
However, when excluding the Hong Kong government subsidies of around HKD 160 million received last year, COP would have surged by more than 70% as supported by local consumption recovery. When we further look into the half-year analysis on profitability, in the first half of last year, adjusted GP margin of both segments were higher than usual. This was quite a special situation due to a combined effect of the increase in gold price and the outbreak of COVID has deferred the sales of some low-cost gold inventory stocked up in the previous year to the first 2 quarters last year. The margins therefore normalized later in the second half last year when such factors were fading away.
The margins remained pretty stable in both segments throughout this fiscal year, especially in the Mainland, despite the sales contribution from wholesale and gold products continued to expand in the second half. The impact on adjusted GP margin was largely compensated by like-for-like margin improvement. Also, we managed to have a stable operating margin in the second half for both segments, notwithstanding the adverse impact from pandemic on our operations during the fourth quarter. SG&A analysis. Our operating expenses increased by 18% to HKD 14 billion this year, and OpEx ratio improved significantly by 280 basis points to 14.1%. In terms of cost structure, our SG&A composed of around 45% fixed and 55% variable components, and the variable costs were largely driven by our retail revenue.
In other words, expansion in our wholesale business carried minimal additional cost so that bringing us operating leverage, which may compensate the dilutive effect to the GP margin. As our wholesale business normally generates GP margin at low teens level and incurs minimal variable expenses, that means nearly all the gross profits fall through to the operating profit level and have low dilutive effect to our operating margin. We turn to staff costs. Fixed staff costs in the Mainland increased by about 26%, mainly due to our revision of remuneration structure during the year in order to attract and retain talents. Nevertheless, overall staff costs expanded by 19%, which was still slightly lower than the retail revenue growth of 22% in this segment.
Staff costs in Hong Kong and Macau was flat, with fixed portion declined by 11% due to attrition, while variable part rose by 21%, largely in line with our retail business recovery. Leases and concessionaire fees. Concessionaire arrangement or turnover rent was still the mainstream format of our retail stores in the Mainland, which rose by 19% as retail revenue increased, and lease-related expenses also registered a similar growth. The ratios to corresponding sales were similar to last year with slight improvement. In Hong Kong and Macau, these related expenses fell by 23%, mainly due to a sharp reduction in right-of-use assets depreciation as the respective assets were written off last year. In the year, we had about half of our leases renewed in Hong Kong and Macau with average reduction of around 15% relative to the last contract. Inventory and CapEx.
As of March, inventory balances amounted to HKD 57 billion, an increase of more than 30%, mainly due to our retail network expansion in the Mainland with inventory mix largely consistent with previous years. Yet the inventory expansion was slower than the increase of our cost of goods sold, which was more than 50% for the year. As a result, overall inventory turnover shortened by 40 days to around 9 months. In response to the pandemic impact during February and March, we strategically lowered our replenishment level so as to retain more cash reserve for a more resilient financial position. CapEx, a total of HKD 1.5 billion in the year, were mainly spent on store renovation, smart retail and office automation projects. We planned to spend around HKD 3 billion-HKD 4 billion in the coming year, of which around HKD 1.5 billion will still be the recurring items.
The additional part of around HKD 2 billion would be mainly for the construction of a new office building beside our current Shenzhen headquarters, as well as expanding our production sites in Wuhan and Shunde, as we aim to have a majority of our production, logistics, and operation process be automated in 3-4 years' time. Capital structure and balance sheet highlights. First, on cash and bank. The balance increased to nearly HKD 15 billion as of March. As explained just now, we tend to maintain a prudent balance sheet in times of uncertainty, and the 40 days shorter inventory turnover alone has released around HKD 8 billion free cash flows. Then on gold loans.
As we've seen in the previous page, gold inventory increased by nearly 50% in the year. Our freehold base inventory remained largely unchanged because basically all the addition was for our franchise stores, which would be supported by gold loans according to our policy. Further magnified by the mark-to-market effect due to the increase in gold price in the last two months of the year. Balance of our gold loans increased by HKD 10 billion, and hedging ratio increased to 60% correspondingly. As a result of that, together with an increase in bank borrowings, net gearing ratio increased to 28.5%. When excluding gold loans, however, we had a net cash position of nearly HKD 6 billion. Return on equity has improved steadily over the past few years as there were more developments on the franchise business, coupled with an efficient yet prudent management of our financial leverage.
We had an ROE of around high single digit to low teens some 5 or 6 years ago, and this has now improved to nearly 20%. Lastly, a summary of cash flows. Normally, we would look at the first two items together, namely operating cash flow before movements in working capital. Net of leases paid totaled HKD 11 billion. Our inventories increased by HKD 14 billion, and because a large part of this was supported by gold loans, cash used for inventories was just HKD 4.2 billion. There is an item called net cash from other operating activities of HKD 5.6 billion. This represents mainly deposits from franchisees for consignment goods. This item is good enough to cover our cash for inventories as well as CapEx. For the full year, we had a very strong free cash flow of nearly HKD 11 billion.
This concludes my part, and I will turn over to Chan Sai-Cheong and Kent Wong for the business update. Thank you.
Thank you, Hamilton. In 2022, we will continue to launch the Dual-Force Strategy. We'll continue to expand our mainland business, dedicate our efforts to optimize ambiance of our shops, and improve diversification of products so as to expand our market share. I believe Adrian will tell you more details about smart retail. In 2022, we have opened 1,361 Chow Tai Fook POS. By the end of March this year, the total number in mainland China is 5,757. Now I'm going to talk about the performance of such Chow Tai Fook points of sale. We are talking about nearly 90% of retail value. In 2022, more than half of the newly added POS are located in third- and fourth-tier cities or other cities.
Driven by the new stores, third, fourth tier cities and other cities, growth in retail value has been stronger compared to top-tier cities. If you look at different models of operations, most of the newly added POS are franchise shops. Self-operated, only six of them. By the end of March, 74% of POS are franchise models. Within the year, franchise POS growth in retail value was as high as 62%, mainly because of the stable growth of new and existing POSs. If you look at different types of shops, most of the newly opened shops are on the street level or located in shopping malls. These two types of POSs, the retail value has been growing faster than those in department stores.
Considering the pandemic may lead to short-term impacts on the logistics and operations of new shops, for 2023, we believe there will be 1,000 newly added POSs to the network. We will continue to use regional distributors and franchisees to expand our footprint for third-tier or lower-tier cities and enhance support for quality franchisees. On top of that, we will use innovation to enhance services, continuously optimize our shop images, and create the best shopping experience for our customers. Facing continuous changes in the jewelry market, we'll continue to do diversification and expand our customer base. In relation to gemstone jewelry, we will promote T -MARK and Hearts On Fire, optimize brand image, product design, and sales channels. Within the year, T -MARK products will take up about 21% of retail value for mainland diamond products. Hearts On Fire is famous for diamond cutting craftsmanship.
We will turn it into an international level high-end brand. We have started global update plan and focus on solidifying our foundation using our products to rejuvenate our brand. We have repackaged and relaunched the popular ILLA Collection. As one major pilot scheme in Mainland China, we will also plan for online plus offline marketing strategies, collaborate with KOL to enhance brand awareness. In relation to gold products, we will step up CTF • HUÁ Collection development, enrich its offering, identify new cross-sectoral collaboration, and also set up dedicated sales areas to sustain its growth within the year. The retail growth for HUÁ Collection is 58%. I will pass it to Kent, who will talk about the business development in Hong Kong, Macao, and other markets. Thank you.
In Hong Kong and Macau and other markets, our SV of Macau and other markets rose by 100% and 47% respectively. As a result, our SV contribution from Macau and other markets expanded to 37%. Retail network management. We closed a net of 6 points of sale in Hong Kong during the year, mainly in touristic areas such as Tsim Sha Tsui and Mong Kok. Going forward, point of sale development will depend on the sales performance and the leasing terms of individual store. However, we believe the worst of Hong Kong and Macau market was over. There are about 40 points of sale pending for lease renewal in FY 2023. We shall continue to negotiate with landlords and hope for further room for renewal reduction.
In other markets, we add a net of 5 points of sale in the year, including stores in Singapore and Malaysia. We will focus on Asia-Pacific market with stronger local retail growth potential in short term and revise expansion plans after international travel resumes. As of March this year, we have six duty-free points of sale in Hainan. In long term, we will keep the development of duty-free shopping policy in the Mainland and shall continue to work closely with various duty-free operators. I will turn over to Adrian to walk through our smart retail strategy in the Mainland.
Thank you, Kent. RSV of our smart retail business in the Mainland rose approximately 63% during the year. Share of the smart retail business to the Mainland RSV further expanded to 8.6%. In terms of retail sales volume, its share to the Mainland business increased 280 basis points to 17.5%. ASP of smart retail applications was roughly 3x of that of the e-commerce platform as they enabled closer connections and stronger trust with our customers. In the long run, we endeavor to lift the ASP of our smart retail business. We aim to deliver thoughtful services and unique shopping experiences to our customers and accelerate digitization to improve our operational efficiency. Our ecosystems has gradually evolved after our relentless enhancements over the past two years.
In 2023 fiscal year, despite the uncertainties we expect to see in the market, we shall strengthen the interaction of the ecosystem and connectivity with CRM, leveraging our smart retail applications to seamlessly integrate the online and offline shopping experience. Next, I will walk you through the performance and outlook of the e-commerce and smart retail applications respectively. The group's e-commerce displayed outstanding RSV growth of 63% in fiscal year 2022, largely attributable to the robust performance of our public domains. Our e-commerce platform saw a remarkable increase in unique visitors and sales conversion rate in second half of fiscal year 2022. We ventured into new channels such as Douyin and Pinduoduo, which helped injecting new growth momentum into our smart retail business during the year.
To meet an increasing customer's expectation towards experiences, we tapped closely the trend of the e-commerce and enhanced our development in e-commerce exclusive products and value-added services. On products, we have been launching hot-selling items and exclusive differentiated product collections available only. In fiscal year 2022, RSV of online exclusive products on Mainland e-commerce platforms rose to approximately 55% from 50% last year. We believe that e-commerce shall continue to grow steadily in fiscal year 2023. In addition to keeping our effort on key platforms, we shall further explore and cultivate new online channels and launch more exclusive collections and products with an aim to raise the contribution of non-gold products. For CloudSales 365, we onboarded our CloudSales 365 to assist our frontline staff in contacting and providing services to customers in the midst of the pandemic.
Despite the slowdown in offline sales in the fourth quarter, CloudSales 365, which has successfully connected with over 8 million customers as at 31st March 2022, recording a double-digit RSV growth during the quarter. Additionally, we also found that services provided by our frontline staff through CloudSales 365 resulted in about twice as many repeated purchase as those usually made by Chow Tai Fook members, and the utilization of gift vouchers was also relatively high. This gave us great confidence in our smart retail applications development. Cloud Kiosk, a smart retail tool to facilitate customer traffic and services at physical stores, were covered in over 50% of our stores in the Mainland. We shall focus on cultivating a stronger private domain ecosystem and exploiting big data in order to enhance business operation.
Particularly for fiscal year 2023, we shall strengthen CloudSales 365 in driving traffic and reach out more customers through CRM and QR. For Cloud Kiosk, we shall continue to expand our coverage. For D-ONE, D-ONE capitalizes on Chow Tai Fook's unique O2O model to promote a faster and ultimate C2M experience. With the growing variety and complexity of the customized design styles offered on the D-ONE platform, we are not only capable to provide simple designs through an express 24 hours customization services, but also sophisticated personalization that provides greater design flexibility. Some of these products can be completed in 10 days, which is half the production time from before.
During the year, we included a number of highly customized collections, such as Moments Collection, featuring a modular concept that allows customers to choose components from a portfolio of modules and create a ring with their personalized design. Meanwhile, a private customization service named T -MARK PRIVATE was launched in D-ONE, and this exclusive feature is offered to limited availability, allowing customers to personalize the serial numbers on the T -MARK diamonds for a unique meaning. Currently, RSV of D-ONE accounts for 3.8% of the group's overall diamond sales in the Mainland, and such contribution expected to ratchet up. As of March this year, we had over 4.1 million members in the Mainland, with a repeated purchase ratio of around 32% in the year. In Hong Kong account, the number of members was approximately 1.2 million.
Repeated purchase ratio was lifted to 52%. During the year, we continued to expand the use of K- Dollar, which now has countrywide coverage and can deepen our connection with our customers. Thank you.
To conclude, the group remains cautiously optimistic while moving forward steadfastly in the implementation of its Dual-Force Strategy. Despite possible short-term disruptions to the Mainland economy due to the lingering effects of the pandemic and global economic uncertainties, we are confident about the mid to long-term prospect of the Mainland market. The policies of the central government in promoting rural revitalization and common prosperity will further galvanize businesses in the Mainland. To this end, we shall continue to strengthen our collaborations with franchisees and tap further into the lower tier markets in Mainland. Meanwhile, we shall work towards greater product differentiation in order to build a more diverse customer base. Furthermore, by leveraging technology, we will curate and deliver extraordinary customer experience and optimize our use of smart retail applications while staying up to date with the consumer needs through data.
In Hong Kong, we believe that operation will take some time to normalize. As for Macau business, our overall retail sales of watches and jewelry has largely returned to pre-pandemic level as the local pandemic situation remained relatively under control. Nonetheless, we will keep a close watch on the future developments as there are still some short-term uncertainties arising from the epidemic. We will also continue to organize events to better engage and interact with our customers and enhance the use of smart retail applications. In view of the changing market conditions and consumer needs, the group shall take further steps to strengthen our competitiveness and maintain our leading position. The group has three key actions in mind, namely branding, corporate culture, and intellectual capital and sustainability.
On branding, we will undergo a brand revamp based on our DNA to develop Chow Tai Fook Jewelry as an iconic jewelry brand for the next generation. Meanwhile, we will also enhance all consumer touchpoints, including product offerings, store experiences, staff services, online experiences and communications to provide better consumer experience. Talent also plays a critical part. We will cultivate a greater sense of identity for our employees and align the corporate culture through various programs in every stage of their journey with the group. We are also committed to building the group into a learning organization as part of our efforts to foster knowledge and idea exchange. At the same time, we shall accelerate our technological and digital transformation journey to support our Dual-Force Strategy. We believe that ESG is essential in maintaining our competitive edge as the group thrives.
We're committed to upholding good corporate governance and enhance effectiveness of governance and accountability. These are the cornerstones to build business resilience. Moreover, we shall fulfill our social responsibilities in different aspects of our operations and assume leading roles in industry coalitions and partnerships to promote best practices for a better future of mankind and our planet. This concludes our presentation today. Thank you.