Good evening, ladies and gentlemen. Welcome to Chow Tai Fook Annual Results Analyst Presentation for the financial year 2013 to 2014. Let me introduce the management on stage. We have Mr. Kent Wong, the Managing Director. Mr. Hamilton Cheng, the Finance Director. And Ms. Danita On, the Director of Investor Relations. First, Ms. Danita On will present the annual results and financial highlights. Second, Mr. Kent Wong will present our business development and latest progress. Danita will then present our marketing and branding, and Kent will present the group's strategies and prospects. After that, we will have the floor Q&A session. Now may I invite Danita to deliver the presentation. Danita, please.
Sure. Good evening, ladies and gentlemen. We are pleased to announce our fiscal year 2014 annual results. During fiscal year 2014, revenue reached HKD 77.4 billion, up 34.8% year-on-year, mainly driven by the increase in retail sales and improvement in wholesale business. Same-Store Sales Growth for the group increased by 18.6%. Same-store sales growth in Mainland China and Hong Kong, Macau, and Taiwan, were 17.2% and 20.1% respectively. Gross profit margin declined 110 basis points to 27.3%, due to the increase in gold mix.
Operating profit mix declined by 70 basis points to 20%. Profit attributable to shareholders amounted to HKD 7.3 billion in fiscal year 2014, up 32.1% year-on-year. Basic earnings per share was HKD 0.727, an increase of 32.1% year-on-year. Final dividend was proposed at HKD 0.19 per share, including the interim dividend, the full year dividend payout approximates 49.5%. Our retail network expanded to 2,077 POS as at March 31st, 2014. A net of 241 POS were added in fiscal year 2014. Now I will turn to our Finance Director, Hamilton, to review the financial highlight section with you.
Thank you, Danita. First, we have our income statement. On the top line, we have almost 35% top line growth this year. This is mainly contributed by the strong sales of our gold products, especially during the first half, both in Mainland China and also Hong Kong and Macau markets. Also, in this year, the wholesale business has improved, in Mainland China, the wholesale to our franchisees because of the improvement in market sentiment and also we are opening more franchise stores in the lower tier cities. But because of the change of this sales mix, there are more share from the gold products and also the wholesale business. These are the lower margin segments that has lower our GP margin and also the EBIT margin. Then turn to our balance sheet. The major change for the balance sheet items this year is mainly on the inventories.
On year-on-year basis, we have more than 50% increase in the inventory level. The increase in inventory was mainly financed by gold loans and also bank borrowings. We are keeping a very strong bank and cash balance of nearly HKD 10 billion. I will explain in the later slides regarding our inventory strategy. We are actually reserving more cash balance for the high CapEx in the coming few years. This I will also have further elaboration. This is a slide that exhibit our adjusted GP margin and also EBIT margin. Eliminating the unrealized hedging gain or loss, we actually just have a slightly lower adjusted profit margin at 27.7%, which is 0.4% lower than the year before. We had a flat adjusted EBIT margin.
The impact of the change in gold mix is actually lighter or smaller than we expected because we have actually widened our markup margin of the gold products in Hong Kong and Macau. So the impact of that sales mix change is lighter. Turn to our revenue breakdown. Retail business continue to be our major source of income, which contribute nearly 87% of our total revenue. Wholesale revenue also increased from 12.4% last year to 13.2% this year. As I explained that it is mainly due to the rebounding of demand from the existing franchise stores and also the new opened franchise stores. By product category, gold products increased from 57.4% to 61.2%. Gem set decreased accordingly from 22.9% to 21.1%.
But actually, when compared to the 17% contribution in the first half, gem set products has actually increased to a nice 24.5% in the second half. By geography, we can see that mainland customers continue to be our They are increasing their share of our revenue contribution. No matter in Mainland China and also the mainland tourists in Hong Kong and Macau. The same-store sales growth. We can see that after very strong in the fiscal year 2012, there was a slight decline in last year. This year with the gold rush, we are back to a strong same-store sales growth this year. When compared to fiscal year 2012, we can see that in fiscal year 2012, the same-store sales growth was both contributed by the volume growth and also the increase in ASP.
While in this year, we can see we have same-store volume growth of 35.6% and the teens decline of the ASP. So, this is completely a different situation from two years before. SG&A. Staff cost continue to be the biggest item of our expense, which is staying flat at 5.7% of revenue. The total SG&A ratio has decreased slightly from 16% to 15.8%. We can see that concessionary fees in Mainland China has been decreasing in the recent years because of the change of product mix, that gold products typically got a lower concessionary rate. While rental ratio in Hong Kong and Macau has been increasing. In this fiscal year, it is 3.5% to revenue.
Although we are seeing that there's slowing down in the increment of the rental, we are still expecting around a 30%-40% renewal increment when compared to the rental rate of three, four years ago. The other expenses are basically keeping pretty stable. Then turn to our EBIT margin and also the segment profits. The group EBIT margin, adjusted of the unrealized gain or loss has been staying flat at 12.4%. However, when we look at the segment profit margin of the two major markets, we can see there's a divergence. In Hong Kong, the segment profit margin increased mainly due to the improvement in markup margin of our gold products, as I explained before. It is mainly a measure to shorten the price gap between Hong Kong and Macau and also Mainland China.
Because Hong Kong and Macau still got the benefit of a lower price on the same item. So we see there's some room to increase the margin. Also, when compared to the products in the past, we now have a much higher standard of craftsmanship, and so we are actually charging a relatively higher labor fee. That's why the overall GP margin and also the segment profit margin can increase in Hong Kong and Macau. While in China, there's a 2.3 percentage point decrease compared to a year before. The major reason is still mostly about the gold products and sales mix. First, the gold products in the overall revenue mix has increased quite strongly in Mainland China. Also, the wholesale business was also growing faster than the retail. The Mainland China pro margin is also affected by the hedging ratio.
On a group basis, we are having a hedging ratio of very stable at 70% of our gold inventory. However, because of the higher cost in Mainland China, we actually have a slightly lower hedging ratio in Mainland China compared to the group or compared to Hong Kong and Macau. That's why when gold price dropped in this year, it has a bigger impact on the margin of our Mainland China segment. Then we turn to the tax and net profit. We can see effective tax rate in this year was lower than the last two years. It is mainly due to a change of the dividend payout ratio of our Mainland China subsidiaries. Because there will be a withholding tax when we pay the dividend from our Mainland China subsidiaries to Hong Kong.
Because we are expecting there will be an increase in CapEx in Mainland China, and also for the new openings. We are also going to have further investments in the lower tier cities in Mainland China. So we see the need of retaining more profits or cash in Mainland China. So, actually in this year we have lower the dividend payout ratio from China, and at the same time, there would be a one-time change or one-time impact to the effective tax rate. If excluding this one-off effect or in the coming year, we believe that the effective tax rate would return to around 20%-21%. Then net profit increased by 32%, and we can see the return on equity has actually increased from 16.3% to 18.9% this year. Inventory. In this year, for the full year, the inventory turnover day is 227 days.
It is longer than the first half, but actually shortened for 26 days when compared to last year. As a strategy or as a target, we actually would move or somehow allowing a slightly longer inventory turnover day. We are expecting this to return to roughly the last year's level, that is around 240 to 250 days. You may know that in the past couple of years, we have increased quite a bit of our gem-set jewelries, especially for the lower ticket size items, so as to target for the middle-income group in Mainland China, and this is what the market demand comes from. This year, actually starting in the second half of this fiscal year, we found that actually gold products can also have a very good opportunity for further growth.
In the past, for gold products, we are mainly focused on the traditional items, like for wedding, like for the Chinese New Year. But through the e-commerce channel and through some of the licensed products and some of our fashionable collections of our gold products, we found that these fashionable or different from the traditional market items are well accepted by the younger customers. More importantly, gold products by itself is a fast-turning item and also highly liquid. Since second half last year, we have increased much more the product development, especially in Mainland China. The SKU of our gold products in Mainland China has increased by more than 50% in the second half last year.
We believe that this strategy would make us more resilient in the weak market, and also allow us more opportunities when the market recovers or when there is a stronger rebound in the consumer sentiment. As I mentioned before, the increase in inventory was mainly financed by gold loans and bank borrowings. That is why in this page, you can see we are still maintaining a strong cash flow. While net gearing of 18.5%, we believe this is still a very healthy and manageable level. For CapEx, as I have mentioned that we are retaining or keeping a strong cash balance mainly for some CapEx project in the coming few years. In this year, we can see we have HKD 1.36 billion CapEx, which is mainly for the POS and also for our offices. These are mostly recurring items.
For the coming year, according to our plan, we will have around HKD 3.5 billion to HKD 4 billion CapEx. We will have some extra items or some CapEx projects like Wuhan, as we have planned actually two years before. It will be a multifunction center, including production, logistics, e-commerce, and sales and exhibition. In the coming year, we are going to invest around CNY 1 billion, or HKD 1.2 billion -HKD 1.3 billion in this Wuhan project. For our Shenzhen headquarter, we are also going to spend around HKD 200 million -HKD 300 million for the completion and the finalizing of the building. So in China, we are spending around HKD 1.5 billion -HKD 1.8 billion on this CapEx project.
In Hong Kong, as we have announced before, we are going to acquire the building which is now used as our operation center for Hong Kong and Macau with a price of HKD 850 million. It is also in the announcement before that we are also acquiring a warehouse of HKD 60 million. So in Hong Kong altogether, we are spending around HKD 1 billion for these one-off items. Including also this recurring CapEx of around HKD 1 billion -HKD 1.2 billion. Altogether, we are going to spend around HKD 3.5 billion -HKD 4 billion in the coming year. Of course, after the one-off item, we believe that in the year after that, we believe that the CapEx would be back to around HKD 2 billion -HKD 3 billion. Lastly, the major movements in cash flow. Our cash flows are mainly used for the inventories.
Of course, this was supported by gold loans, which is basically loan cash. In this year, we have slightly negative pro forma free cash flow. As mentioned, we have now increased our inventory level, which we believe is pretty sufficient based on our strategy. In the coming year, we are mostly just spending on the CapEx that we believe the operating profit or operating cash flow could provide a very good support for that. We are very confident that in the coming year, the pro forma free cash flow would return to a positive territory. This concludes my financial highlights.
Okay. Thank you, Hamilton. Firstly, let me give an update on our retail network. During financial year 2014, we achieved a net opening of 195 jewelry point-of-sales and 46 watch point-of-sales, totaling 241 net openings in the Greater China regions. During the year, most of the openings were located in Tier- two and Tier -four cities in mainland China, where we can see the growth opportunity is there. Net opening in Hong Kong, Macau, and other Asian regions were seven stores in financial year 2014, compared with 10 in financial year 2013. Out of the net jewelry point-of-sales opened in China in 2014 financial year, 36% are located in Tier -one and Tier-two cities. Currently, we cover over 470 cities in China.
During 2014, we expanded our coverage to cities like middle part and western part of mainland China, mostly are Tier -three and Tier-four cities or rural areas, as you can see in the picture. As at 31 March 2014, we had 1,228 jewelry point-of-sales in China, including self-operate and franchise stores. Close to 60% of our jewelry store network in China are located in Tier -one and Tier-two cities, and those point-of-sales contribute about 70% of the retail sales in China, reflecting a generally higher store productivity. Self-operate jewelry store today represents about 65% of our jewelry retail network in China. For financial year 2015, there are three key areas that we will focus on in managing our retail network in mainland China. One, we will keep our opening target of a net 200 jewelry point-of-sale in financial year 2015.
Second, we aim to deepen our penetration into lower tier cities by leveraging quality franchise with strong customer and local knowledge. Third, at store level, we will strategically enrich our product offerings in terms of the numbers of SKU and choices of collection, both proprietary and patent in order to drive business growth and differentiate with other peers. For instance, we enrich our product portfolios with contemporary. We are the first company to use 10-karat jewelry product, which target to the young customer with affordable but trendy design. The sale feedback encouraging. For example, 24-karat gold, we launched Charming Gold Collection, which target with a higher craftsmanship.
We can charge a double labor charge compared with the ordinary kind of 24-karat gold jewelry. It is most welcome to the young customer. Fashion jewelry, a diamond fashion jewelry, which we cooperate with Rio Tinto, we launched two years ago. A huge success. Year -by -year, target to the young office lady. The sales double in the past two year. We have already planned in the coming few years, both Rio Tinto and Chow Tai Fook would spend marketing efforts in order to drive non-bridal market. We target in the coming few year, every year, double the number of sales of the jewelry pieces. Last year, we sell more than 100,000 pieces of affordable diamond jewelry. ASP range from HKD 3,000 to HKD 5,000 on average. For example, our new collection, Caprice and Blissful collection, which is one of the really successful collection to lure the new customer.
The increase of inventory balance as of 31 March, financial year 2014, which is in line with our plan for the purpose to enhance our product offering and attract newer, more customer. In fact, as you can see in last year, 2014, Q3 and Q4, especially coming year, Q1, I can roughly say we can see a rebound, a recovery in diamond jewelry sales, which is mainly driven by volumes. We aim to keep an optimal balance between steady business growth and health inventory management. I think, as Hamilton just say, 240 days about around the turnover date, we feel comfortable to meet the target. Okay.
Talking about Hong Kong, Macau, I think people are very concerned about the opening strategy of the company in Hong Kong, Macau, especially in recent circumstance, which is how the company to look into the market in Hong Kong and Macau. Let's look back to 2014 financial year. We opened seven store. In fact, compared with the previous financial year, we have reduced store opening. However, most of the new store opened in 2014 were located in prime tourist area like Tsim Sha Tsui, like near the Canton Road, Mong Kok and Causeway Bay. All these store provide high productivity per store. With most of the key openings are in this prime area, we can see they ramp up generally faster than some other ordinary store, and we are satisfied with the performance.
Regarding point of sales, opening plan in 2015 in Hong Kong, Macau, I think we will keep a flexible approach. We may be open, may or may not, but anyway, we would always looking for an opportunity, whichever available, especially when the rental price is very attractive and the location very prime location. I am looking for long-term success rather than short-term suffer. I think at the end of the day, we would count every new store. Every store should provide company profit, okay? That is for sure. That is the criteria why we open the store before make a decision. However, some point of sale might also be consolidated to enhance store productivity and efficiency. Say, for example, second tier city, we might shut down if the rental and the lease is expired. That we would strongly consider the performance of the store.
We continue to consolidate, I think not this year, coming years. All the time we have to review. With the recent dynamics surrounding Hong Kong and Macau retail, I think it is difficult to conclude if the impact is structural or temporary. As most of our point of sale in Hong Kong and Macau are on rental base, so we believe we can judge and rebalance our point of sale network according to if necessary. Okay? However, no matter what, we are optimistic to the long-term development of the jewelry industry. So we strive to enhance our vertical integrated business model and invest in human capital. I think that is core, even market is volatile.
During 2014, in upstream, we enter into a long-term exclusive supply and licensing agreement with Crossworks, a Canadian diamond supplier, to distribute the patented Hearts and Arrows ideal cut square diamond in Greater China region. I think main purpose, we bring in something exclusive differentiate in order to enhance our competitiveness. Our diamond and cutting site in Botswana, where it is strategically located near De Beers' new headquarter in Botswana, I think also commenced production during the year. Regarding midstream, the construction of our mainland headquarter in Shenzhen has been complete, and we will move in gradually at the end of second, I mean at the second half of this year. The jewelry part in Wuhan is also scheduled to commence production in September 2014.
Tenders for automate logistics system in Shunde, Guangdong, has been selected, and we expect the system installation to be complete by the end of financial year 2015. In downstream, of course, we will continue to extend our retail network in Greater China regions, especially mainland China, and we will continue to enhance and invest to upgrade our IT infrastructure in order to ensure our future development has been supported. As at 31 March 2014, we have over 36,000 employees. During the years, we have organized more than 3,000 training course, which add up to over one million training hours. The jewelry part, I think Hamilton has described a lot. We now currently occupy 221,000 sq m, which will become our largest integrated production and logistic hub in the future. I think why is a logistic hub, I think including six key functions.
Not only a jewelry production center, but also a logistic and distribution center, sales, exhibition and tour center, training, e-commerce and jewelry support. Other service centers we will integrate and centralize here. The construction was commenced in October last year, and the production is scheduled to kick-start in coming September. We anticipate the annual production capacity to Wuhan to reach over one million jewelry pieces at the end of 2015 financial years. I think here is the conclusion of my part, and I shall pass the next part to Danita to present the e-commerce and our marketing and branding strategy. Thank you.
Thank you, Kent. Our e-commerce business, as you can see, is strategically important to our business as it provides huge potential for powerful O2O synergy. Despite its small revenue scale compared to our physical stores, the business has been expanding fast. If you refer to our fiscal year 2014, our e-commerce retail sales value increased by 19.7% year-on-year. Among all the international and domestic watches and jewelry brands, we are ranked number one in terms of digital competence in mainland China, according to the latest L2 Digital IQ Index published in May. Our online traffic and also our numbers of followers on key social platforms continue to expand as well. For instance, in fiscal year 2014, our average daily online traffic recorded over 122,000 unique visitors, which represents an increase of around 51% year-on-year.
Our followers on Sina, Tencent, Weibo, and also WeChat accounts reached over 1.4 million members, up 94% year-on-year. During the year, we also opened our first experiential POS in Wuhan, which features our four in-store technologies, which you could see in the illustration. Here, I will also talk about the customer loyalty program. You can see that our program is also core to our business success. In Hong Kong, Macau, we had approximately 161,000 members as at March 31st, 2014. Their repeat purchase maintained a steady 17.5% of our retail sales value in Hong Kong and Macau in fiscal year 2014. In mainland China, the number of members exceeded 1.2 million in fiscal year 2014. Repeat purchase from those members account for close to one-fourth of our retail sales value in China, signifying the strong loyalty from these customers and also an acknowledgement of our CRM assets.
Here is a highlight of one of the programs that we offered to our members this year. This year, we leveraged the Claude Monet exhibition in Shanghai to offer this experience to our exclusive members of our artistic lifestyles. For the marketing and branding for mass luxury, you can see that we are also very innovative in our marketing campaigns. For instance, last year, we launched an unconventional viral marketing campaign to promote marriage proposal culture in Greater China. We selected 50 couples in China with their marriage proposal film and upload it to popular online platform such as YouTube and Youku. To date, the campaign has generated over 30 million views online.
Last year, we also hosted a sales and promotional campaign using QR codes to encourage bundle purchases of wedding jewelries at our store. At the product level, as you can see that we also enrich our selections of collections with trendy, affordable, and contemporary designs targeting the middle income group. For instance, like what Kent has mentioned, the fashion jewelries, the Capri, and also the Chow Tai Fook 520 Collection as well. Just to have a highlight as well, last year, we also opened our first of its kind, Disney Store in our iSquare POS in Tsim Sha Tsui to create a differentiated shopping experience to our customers. Since you know that our product lines consist of mass luxury, high, and also youth line. You could see that we will continue to leverage on our high-end jewelry collections to uplift our brand image and showcase our heritage.
In March this year, we hosted an exclusive high jewelry preview and a gala party where we invited exclusive members and celebrities to preview our Reflections of Claude Monet collection. In China, we also organized several private appreciation events to promote our Imperial collection as well. In relation to youth line, you could see that we are mainly focused on online marketing channels such as WeChat, Tmall, and also online gaming apps to reach the younger generations. You can see more new proprietary and also patented collections will be added from time to time to attract online traffic and to capture the demand for youth line products. Here conclude my part, and then I will pass to Kent to talk about the outlook.
Okay. Thank you very much. Last, I would like to share the outlook of 2015 financial year. First, we are cautiously optimistic about the business outlook of 2015 financial year, despite last year high base and market volatilities. But an improving product mix, especially a high percentage of non-gold products. Okay? Also, the new store ramp up will be a driver for the business growth. I can see especially second half year, we have a very encouraging performance. Second, we are optimistic about the growth potential in mainland China still today, even those might say 75% GDP growth and China maybe first quarter, the figure is not very good. However, what I can see is our business, especially non-gold jewelry and like diamond and sales, we have a double-digit kind of growth year-on-year. This is mainly driven by ASP.
I can see recently the ASP, average selling price, has been go back to a kind of back to so low single. All these figures show our customer has been stable. Define the momentum is still there. I think mid to long term, we are optimistic to the potential growth mainland China. Following our strategy, going to deepen into Tier -three and Tier-four city, especially recently we have already enhanced our franchisee policy to lure more franchise invest into the company. The feedback is encouraging. A lot of demand, looking for new store open by franchisee in Tier -three and Tier-four city. This year, 200 store open for sure. That we can meet the target. Okay? For sure. Okay?
Third, at store level, we will focus on enhancing product offering by improving our design, especially gold to the diamond jewelry market, diamond fashion jewelry market, 10-karat, affordable fashion jewelry targeted to the young customer. That is strategy. Fourth, we would further leverage our e-commerce. We will roll out our omni-channel program not only through e-commerce, through different channel like cooperations with bank in order to lure the customer. That will be continue to invest. Last but not least, we would focus our commitments to improve our infrastructure like Wuhan production center infrastructure, automatic logistic system, and some other kind of innovative device in order to capture big data, further analysis the customer buying pattern. All this, we will continue to invest. Here, my conclude of our presentation. Thank you very much.