Good evening, ladies and gentlemen. Welcome to Chow Tai Fook annual results analyst presentation for the financial year 2018. Let me introduce the management on stage. They are Mr. Kent Wong, the Managing Director. Mr. Hamilton Cheng, the Executive Director. Ms. Danita On, the Director of Investor Relations and Corporate Communications. Mr. Hamilton Cheng will present annual results, operational highlights, and financial review. Mr. Kent Wong will present our business update, and Ms. Danita On will give us the update on multi-brand strategy, e-commerce, and customer relationship management. Finally, Mr. Kent Wong will conclude the presentation with our business outlook and strategies. After that, we will have Q&A session. Now, may I invite Hamilton to present. Hamilton, please.
Thank you. Hi, good evening, everyone. I am pleased to announce our fiscal year 2018 annual results. Fiscal year 2018 was a year of recovery with encouraging development. The retail market in Greater China has regained its upward momentum, leading a vibrant performance for the group. Revenue totaled HKD 59.2 billion, increased by 15.4% year-on-year. Same-store sales in Mainland China and Hong Kong were up by 8% and 10.2% respectively.
Thanks to the encouraging business performance and operating leverage, core operating profit surged by 20.6% year-on-year in our fiscal year 2018. Profit attributable to shareholders rose by 34% year-on-year to HKD 4.1 billion, with a basic earnings per share of HKD 0.409. The board has proposed a final dividend of HKD 0.15 per share and a special dividend of HKD 0.30 per share. Dividend per share for the year amounted to HKD 0.57, excluding special dividend payout ratio approximated 66% in this year.
We opened a net of 204 POS during the financial year, bringing total number of POS to 2,585 at the end of March. Net openings in Mainland China amounted to 203 POS, while POS network optimization continued in Hong Kong, Macau, with a net closure of three POS. We also opened four new POS in other markets in the year. Chow Tai Fook T MARK diamond brand recorded robust growth since its launch in August 2016. As of March 2018, we have 258 and 41 counter-in-shop in Mainland China and Hong Kong, Macau, respectively. Presence of Hearts on Fire is primarily in shop-in-shop and counter-in-shop format by leveraging our extensive retail network in Greater China. Moving ahead, enhancing store productivity through retail network optimization will be our priority for Hearts on Fire.
Our e-commerce business in Mainland China registered an encouraging growth of 73% in retail sales value in 2018, contributing to 4.8% by value and 12.5% by volume to our retail operations in Mainland China. Here, I will elaborate more about the margin of our income statement. Adjusted GP margin was down 130 basis points to 27.2%. This is mainly due to a higher contribution from our wholesale business in both reportable segment and a less favorable product mix. A much smaller unrealized hedging gain of HKD 95 million was recorded in the year, compared to an unrealized hedging gain of HKD 336 million last year, has also resulted in a lower reported GP margin in the year. SG&A expenses increased by 5.9% to HKD 10.9 billion. SG&A ratio improved by 160 basis points year-on-year to 18.5% as operations improved.
Core operating profit, which mainly excluded the impact of unrealized gain on gold loans and net foreign exchange gain or loss, jumped by 20.6% year-on-year. COP margin edged up by 40 basis points to 9.5%. Here, I will also elaborate a bit more about the dividends. For the year, we have a total of HKD 0.27 of regular dividend. This is mainly based on our free cash flow generated in the year. While for the special dividend of HKD 0.30, this is mainly based on a low gearing ratio and also a low cost of capital, so that we believe we may gear up moderately so that we can enhance the return on equity and also the dividend yield for our long-term shareholders. We will have the revenue breakdown.
Revenue contribution from Mainland China increased 18.7% year-on-year, and the contribution to the group has increased over the years to 62.2% of the group's revenue in this fiscal year 2018. Operations in both reportable segments rebounded in this year. Hong Kong and Macau markets also deliver a 10.5% increase. Work growth in Mainland China in the second half was actually a bit better than expected, as it has benefited from the renminbi appreciation and also the wholesale business. By products, revenue contribution from our gold products rose by 200 basis points year-on-year to 59.4% in the year, reflecting robust customer demand for gold products, especially during the first half. Gold products mix was relatively stable in the second half at around 60% comparing to the same period last year. Watches continued to show resilient performance during the year and deliver 18.3% growth thanks to the market recovery.
For same-store sales growth in Mainland China and Hong Kong, same-store sales growth turnaround commenced in the second half of fiscal year 2017, and the recovery trend sustained into this fiscal year 2018. Same-store sales growth was driven by both ASP and volume growth in both markets during the financial year. Yet Hong Kong and Macau registered a stronger volume growth than Mainland China. Same-store sales growth in Hong Kong and Macau stood at 10.2% in the year, despite the high comparison base. The strong momentum continued in the second half in Hong Kong and Macau, thanks to the improving consumer sentiment and reviving Mainland visitation. Same-store sales in Mainland China grew by 8% in the year. Including our e-commerce business, Mainland China same-store sales growth would be lifted to 10.8%. Here is a further analysis by products.
Gold products performed strongly in both markets, as supported by both volume and price increase. While for gem set, our recovery in Mainland China was led by tier one and tier two markets, and we have been focusing on the upselling in these markets. So that despite that same-store sales in Mainland China reported negative growth of 2% in the year, the ASP, however, expanded by about 7% year-on-year to HKD 6,700. In the latest quarter, we saw a sequential improvement in Mainland China, and we are starting to trending to a positive growth in the latest month in gem set in Mainland China. While for Hong Kong and Macau, recorded a strong rebound since the second quarter in the year, as supported by improving consumer sentiment, a favorable comparison base, as well as effective penetration into the local residential market. An analysis of profitability.
For Mainland China, thanks to the stabilized consumer demand, Mainland China's COP delivered promising growth of 19.3% in the year and accounted for about 75% of the group COP. Adjusted GP margin was lower by 100 basis points in the year, primarily due to a higher gold sales mix and an increased wholesale contribution. While SG&A was contracted by about 100 basis points as operations improved, COP margin in Mainland China remained stable at 11.6% in the year. For Hong Kong, Macau, and other markets, COP of Hong Kong, Macau, and other markets was up by 24.7% in the year. Adjusted GP margin was reduced by 190 basis points year-on-year, yet benefiting from operating leverage, COP margin increased by 70 basis points to 6% in the year.
The lower GP margin, especially in the second half, was mainly due to a negative impact from the increased jewelry trading, which arise a much lower margin, and the one-off impairment of gem set inventories. When excluding the one-off impairment, adjusted GP margin would be 25.8% and the COP for Hong Kong and Macau in the second half would register an 8% year-on-year growth. SG&A analysis. The group's SG&A were well managed with a 5.9% year-on-year growth in the year. Thanks to operating leverage, SG&A ratio was further reduced to 18.5%. Our major SG&A components, namely staff costs, concessionaire fees, and rental expenses, made up approximately 70% of total SG&A. I show, walk through these in detail shortly. A&P expenses ratio stayed low at 0.9% in the year. We expect A&P ratio to normalize to about 1.2% in the coming year.
Other SG&A, which include bank charges for sales transaction settlement, royalties on licensed products, certificate expenses, packaging materials, utilities, and staff-related expenses. Most of these are variable in nature and was broadly tied to the transaction volume. For staff costs in Mainland China, total staff costs and related expenses were up by 16.4% year-on-year. The expansion was mostly on the variable performance-based component as we aligned the staff remuneration with market standard. In Hong Kong and Macau, staff costs and related expenses increased by 4.2% year-on-year. The fixed staff costs were reduced by 2.5%, while variable staff costs were up by 21.6% as business recovered. In the coming year, overall staff costs and related expenses at group level should continue to rise along with the revenue growth. For rental.
In Mainland China, about 75% of our POS are in concessionaire model, and concessionaire fees increased along with sales growth, while its ratio contracted slightly by 20 basis points to 8.5%, mainly due to the shift of sales mix towards gold products, in which gold products are subject to a lower rate. While in Hong Kong, Macau, rental expenses were shrunken by 17.8% thanks to POS consolidation and rental renewal reduction. Coupled with the stabilizing business environment, rental expenses ratio was further lowered to 6.1%, down 190 basis points year-on-year. During the year, we achieved an average reduction on rental renewal of around 29% in the year, with the rental renewal reduction at straight level at about 38%, while that for shopping malls stayed flattish. Stepping into our fiscal year 2019, the average reduction on rental renewal is expected to be minimal, with flat or low single-digit decline.
Coupled with the full year effect of renewals and closures in this year, rental expenses in Hong Kong, Macau should decrease by about a mid-single digit in the coming year. Inventory balances amounted to about HKD 35 billion as of March this year, mainly attributable to the addition of gold inventories amid strong consumer demand. Inventory turnover period stood at 296 days, similar to the level of fiscal year 2017. In fiscal year 2019, we anticipate the inventory balances to stay flat while inventory turnover period should improve as revenue grows. CapEx totaled about HKD 1.1 billion, up 25.8% year-on-year. CapEx was mainly spent on our POS and also the infrastructure projects. We expect that for fiscal year 2019, CapEx is around HKD 1.5 billion, again, mostly on POS renovation, infrastructure projects, and production facilities.
For the changes in capital structure, our borrowings, in particular, gold loans, has increased as we have increased inventories, especially on gold products. The net gearing ratio was around 15.6% as at end of March this year, and as the increase in gold inventory were supported by gold loans, the hedging ratio has increased from 35% in the same period last year to 43.5% at end of March. We expect by end of fiscal year 2019, net gearing ratio will increase to around mid 20s, taking into account the payment of proposed final and special dividends. We consider this is still a very healthy and manageable level. Lastly, cash flow. Our operating cash flows before movements in working capital amounted to HKD 6.9 billion, up 20.6% year-on-year.
After cash used for inventories and CapEx, we have a pro forma free cash flow of HKD 3 billion in the year. When deducting the payment of dividends and the increase in bank borrowings, the company maintained a cash position at HKD 7.9 billion, which is the same level as the same period last year. Here concludes my part, and we'll pass to Kent for the business update.
Okay. Thank you, Hamilton. May I take this opportunity to illustrate our business update. We opened the net POS 204 during financial year 2018. In mainland China, we witnessed an overall recovery of jewelry and retail market. Our net openings reached 203 point of sale resulting in 2,449 point of sales as of March 2018. In Hong Kong and Macau, we have been consolidating our point of sale since 2016 financial year.
Point-of-sale optimization continue in 2018 with a net closure of three point of sale, resulting in 99 point of sale as of March 2018. We also opened two point of sale in Korea and two point of sale in Japan during the financial year. This slide showed our retail sales value and distribution of point of sale network under Chow Tai Fook Jewellery brand in mainland China. By tier of cities, all tiers of cities report positive RSV growth, reflecting a broad recovery in mainland China.
Tier one and tier two city continue to outperform tier three cities and others. Nevertheless, tier three cities and other brands traction in 2018 second half and deliver a comparable RSV performance with tier one and Tier two city during the period. By operation model, our operation models deliver an improvement in RSV performance, shopping mall remained the best performer. Major opening were in shopping mall with 119 net openings, while net closure in department store have been narrowed to 32 point of sale as retail landscape stabilize and macro environment improve. In mainland China, 199 point of sale were opened under Chow Tai Fook Jewellery brand, inclusive of four Jewelria, one of our upgrade version of Chow Tai Fook Jewellery brand, which target for jewelry sales majority.
A two-pronged strategy shall be adopt, while expansion will be accelerate in lower tier cities to capitalize on the rapid urbanization and infrastructural development in this area. We remain selected in openings and focus on uplifting the ASP in tier one and tier two city. Those ways such as segmentation, enhancement in store environment. In 2019, our net opening target shall be reached about 300 store for Chow Tai Fook Jewellery brand. RSV and point of sale by area in Hong Kong and Macau. Tourist area rebound since first half of 2018. RSV growth of touristic area further improved to 5.6% in second half, from 1.8% in the first half of the year, amid mainland visiting numbers improving. Our customer traffic decline in Hong Kong and Macau narrowed to 7.2% year-on-year.
Share of RSV settled in China UnionPay, Alipay, WeChat Pay and renminbi, a proxy for sales contribution from mainland tourists, improved slightly from 43.9% to 44.6%. Retail network management. Consolidation of point of sales in tourist area continue while we have opening focusing in residential area. Five experience stores with themes were opened in 2018. In 2019, we will continue our efforts to engage the relative stable local clientele through optimization of our point of sale network and the deliver of rejuvenated shopping experience. A net opening of five point of sale in Hong Kong and Macau is expect, inclusive of opening of Chow Tai Fook Jewellery brand, as well as Chow Tai Fook T MARK, our exclusive diamond brand, and Hearts on Fire, our premium diamond brand. Other markets. We also continue to explore opportunities to further expand to other regions such as Southeast Asia.
In 2018, our average rental renewal was down by about 29% in Hong Kong and Macau. We expect the rental renewal reduction trend shall moderate to flat or a low single-digit decline in 2019 financial year. Here I would like to share our exclusive T MARK diamonds brand. Chow Tai Fook T MARK have been gaining strength since its launch in 2016, reflecting consumer demand and expectation for diamond authenticity and traceability. As of March 31, there were 258 counter-in-shop in mainland China and 41 counter-in-shop in Hong Kong and Macau. T MARK product account for 11.5% and 15.6% of diamond product RSV in mainland China and Hong Kong respectively in 2018. To leverage on the social media, we engage celebrities and key opinion leaders to launch a series of promotional video on various platform.
In April this year, we opened our first Chow Tai Fook T MARK diamond specialty store in Tsim Sha Tsui, and we expect to further roll out some T MARK diamond specialty store in both Hong Kong and mainland China. We also collaborate with GIA, a gem certificate company, to apply blockchain technology in order to deliver secure and digital diamond grading report to our customer for the first time. Hearts on Fire is primarily in shop-in-shop in our counter-in-shop format by leveraging our extensive retail network in Greater China. As of March 2018, there were 165 shop-in-shop and counter-in-shop and 27 shop-in-shop in mainland and Hong Kong and other market respectively. Hearts on Fire account for 2.6% and 3.7% of diamond product RSV in mainland and Hong Kong respectively.
To boost brand awareness, we appoint a famous Chinese artist, Zhao Liying, as our group ambassador in Mainland during the financial year. As part of our multi-brand strategy, we roll out two new brands, SOINLOVE and MONOLOGUE. SOINLOVE we launched in April last year with target for soon-to-wed couples. Nine point of sale were opened in 2018. MONOLOGUE, we also introduced. Since 2016, eight point of sale were opened, resulting a total of 11 as of March. Expansion plan. Rollout of these two brands shall continue, and we anticipate about 20 net point of sale open for each brand in this year. In order to deliver exceptional consumer experience that create long-term differentiation and loyalty, we embark on our Smart+ 2020 framework, which is a three-year strategic work plan underpinned by our commitment to innovation, technology, and sustainability. This framework focus on five key areas.
Product and brand, retail experience, customization, culture, and insight. Here, let me go through part of the key area of this strategic work plan. Customization. We adopt a customer-driven approach for our production in order to drive experience in customer experience using our standardization, automation, digitalization, and intelligence, which ultimately enable us to establish a C2M, customer to manufacturer experience, and engage our customer along with the supply chain from design to manufacturing. As a pilot, we already launched a D-ONE, a mobile apps, a jewelry customization online platform in Mainland last year to offer our customer the unique experience of creating their own jewelry design according to their own preference. Insight. Upon the deployment of RFID-enabled smart trays, we are now collecting data in a more systematic and scientific way.
Big data analytics with useful insight enable us to adopt various business strategy, such as inventory assortment, distribution, and performance management. Culture. An internal sustainability and innovation center was set up in April this year to uplift consumer experience through investing in innovation and technology to support the sustainable development of the group. We also established The Loop, a common or design incubator open to public space which is allocated in PMQ Central to foster creativity and to provide an engagement platform for local and international talent in the jewelry sector. I would like to turn another page to Danita for Smart+ again.
Okay. Thank you, Kent. I will continue with the rest of the Smart+ 2020 initiatives. We are positioned to meet a wide spectrum of customer needs through our multi-brand strategy. Chow Tai Fook Jewellery is our major brand to offer classic jewelry and has been widely recognized for its trustworthiness and authenticity. Besides our major brand, we developed six other brands to cater to different segments of customers. They are House 1929, Hearts on Fire, Jewelria, Chow Tai Fook T MARK, SOINLOVE, and MONOLOGUE. House 1929 is our high jewelry brand. It delivers one-of-a-kind artistic jewelry pieces with preeminent design and craftsmanship. Bespoke service through one-on-one appointments is also available to ensure exclusivity and privacy to our super VIPs. Hearts on Fire, a U.S. premium diamond brand we acquired in 2014, which carries unique and exclusive high-quality cut diamonds.
To target sophisticated customer group, we upgraded some of our Chow Tai Fook Jewellery POS and launched Jewelria in 2017. Jewelria offers international designer jewelries, which is focusing on our gem set products. To enhance our image as a diamond expert, we launched Chow Tai Fook T MARK to fulfill market demand on our authentic and traceable diamonds. Tapping Mainland China's brighter jewelry market, SOINLOVE was unveiled in 2017. We also launched MONOLOGUE to target on the millennials market in Mainland China. To cope with the evolving consumer expectations, we will continue to enhance our customer experience both in-store and online. Five experience shops in different themes were rolled out in Hong Kong to deliver a rejuvenated shopping experience during our fiscal 2018. Shops with similar or new themes will be gradually introduced in Mainland China in fiscal year 2019 and onwards.
Riding on the sweeping trend towards online transactions through smartphone, we also leverage the power of instant sharing on social media platforms during the year. We are also excited to roll out the first self-service experience corner with the idea of grab and go for jewelry retail. Here is an update on our e-commerce business in Mainland China. Our e-commerce business accelerated and registered a significant growth of 73.2% in fiscal year 2018, benefiting from a strengthened cooperation with our major online platform partners. It contributed to 4.8% of retail sales value and 12.5% of retail sales volume in Mainland China operations. Average daily online traffic reached 385,000 unique visitors. The number of followers on our Sina, Tencent, Weibo, and WeChat accounts also reached approximately 4 million.
Average selling price on our online platform also increased to HKD 1,400 in fiscal year 2018 versus HKD 1,200 last year. As of March 2018, we had about 1.3 million members in our membership program in Mainland China. Members' repeat purchase increased steadily to 31%. In Hong Kong, Macau, the number of members reached 817,000 with a repeat purchase ratios of 33% in fiscal 2018. I shall turn over to Kent for the business outlook and strategies. Thank you.
Thank you. To conclude, 2018 financial year was a year of recovery with resilient business performance in both mainland China and Hong Kong, Macau. On the back of the shifting retail landscape, we remain confident in the prospects of the Greater China jewelry market in 2019 financial year and beyond. In 2018 financial year, we embarked on our Smart+ 2020 three-year strategic plan. This framework is characterized by five key areas. More product offerings and innovations shall be introduced through our multi-brand strategy. In-store experience and omni-channel retailing shall be enhanced to deliver a rejuvenated shopping experience. A more customer-centric production and operation shall be adopted. Furthermore, we shall further invest in big data analytics to empower insight for a more efficient operation model. Finally, we shall continue to inspire an innovative and entrepreneurial culture for talent development across the globe and the jewelry industry as a whole.
These five key areas enable us to explore new customer segments and unleash the full potential of our capabilities. We firmly believe that we are well-placed to achieve sustainable business development and will emerge stronger than ever in the years to come. This is the end of the presentation. Thank you.