Good evening, ladies and gentlemen. Welcome to Chow Tai Fook interim results analyst presentation for the financial year 2014 to 2015. Let me introduce the management on stage. They are Mr. Kent Wong, the Managing Director, Mr. Hamilton Cheng, the Finance Director, and Ms. Danita On, the Director of Investor Relations. First, Mr. Hamilton Cheng will present the interim results highlights and financial performance. Next, Mr. Kent Wong will present our business development, latest progress, and e-commerce. At last, Ms. Danita On will present our marketing and branding as well as the group's strategies and prospects. After that, we will have the floor Q&A sessions. Now may I invite Hamilton to deliver the presentation. Hamilton, please.
Okay. Thank you. Good evening, everyone. I will start with the highlights. First, the revenue amounted to HKD 29.3 billion, down 22.4%. This is mainly due to a gold rush in the same period last year, resulting in a very high base. It is mainly because of the base effect. Same-store sales growth for the group decreased by 31.2% versus 33% increase last year. In Mainland China, it was down by 20.4%, and in Hong Kong and Macau and Taiwan, it is down by 40.9%. Gross profit margin improved significantly to 31.8% up 540 basis points year-on-year. This is mainly due to an improvement in product mix. Profit attributable to shareholders amounted to HKD 2.7 billion in this period, down 23.3% over the same period last year. Basic EPS, HKD 0.269. Interim dividend was declared at HKD 0.13 per share, equivalent to approximately 48% payout ratio. Income statement.
I would like to further elaborate a little bit about the improvement in GP margin. The major thing is about the improvement in product mix, where we are selling much more high-margin gem-set items in this period. Also because of the decrease in gold price, during July to September, that we recorded an unrealized hedging gain on the gold loans. The payout ratio was basically keeping at the same level as last year. We turn to balance sheet. The major changes during the period were mainly on fixed assets and also the inventories. We have a net addition of about HKD 1.3 billion fixed asset, which related mainly to the purchase of our jewellery operating center in Hong Kong, and also CapEx on certain development projects in Mainland China, including Wuhan and also our Shenzhen headquarter building.
There are also about HKD 600 million increase in the non-current assets other than the fixed assets. These are mainly the intangible assets generated from the acquisition of Hearts On Fire. For inventories, there is a declining trend, to HKD 39.1 billion, which is down 8.2% over March level. The inventory reduction was basically in line with our strategy of focusing more on the fast-turning gem-set items. Also, this is also in response to the slower sales in the first half this year. Gold loans has also decreased by a similar magnitude according to the change of gold inventories. We may turn to the next page for the cash flow. One of the major items that affect our cash flow with the inventories.
However, for this period, because the decrease in inventories was mainly on gold products, which amounted to about HKD 3.5 billion, and this is offset by a similar amount of the decrease of gold loans. These two altogether basically has no material impact to our cash flow. Our operating cash flow was mainly used for HKD 1.7 billion CapEx and also for an addition of about HKD 900 million working capital. In this first half, we have recorded an operating free cash flow of HKD 850 million. After that, we have an addition of about HKD 1 billion bank borrowings, and we paid about HKD 2 billion of dividends, which was mainly the final dividend for last fiscal year. We also have about HKD 1 billion outflow, which is mainly for the acquisition of Hearts On Fire.
On a net basis, we have about HKD 1.3 billion decrease in our bank and cash balance. However, we are still keeping a very healthy cash flow level of about HKD 8.7 billion. This is a demonstration of when we are taking out the effect of unrealized hedging gain or loss. We have an adjusted gross profit margin of 30.1%, so that means there is a 330 basis point improvement over last year. This is due to the improvement in product mix. For adjusted EBIT margin, it is 200 basis point lower than last year. It is mainly because of the increase in operating expenses, while revenue declined during the period. We have an analysis of the revenue. Retail revenue continued to account for a major portion of the group's revenue, which is about 84.6%, while the wholesale contribution increased to 15.4%.
This is mainly due to the procurement from franchisees for the newly opened stores, because we opened more franchise stores in the first half of this year. By product, our gem-set jewellery sales contribution has increased from 17.6% last year to 28.3% this year. Gold products declined to slightly less than 50% of the group's revenue. By geography, we can see that because the China operations show a stronger momentum compared to Hong Kong and Macau business, that the contribution of our China revenue expanded to 58% of the group's total. While for Hong Kong and Macau, the Mainland tourists accounted for about 57% of the Hong Kong and Macau revenue, which are settled through UnionPay or renminbi. For the same-store sales trend, for this first half, it is basically a reversal of last year's performance.
You can see that the performance of Mainland China was relatively better than Hong Kong and Macau because of a lower base last year. Also, Mainland China got a slightly better consumer sentiment as reflected in the more resilient gem-set jewellery business. By product, we can see that the gem-set jewellery business was much more stable in the past three years. In this first half, we still recorded a slight growth of 1.1% on a same-store basis. While for gold, we got a big swing from last year's very high base, and we got a decline of 46.8% on a same-store basis. For our SG&A, the overall expense ratio has increased mainly due to the items with more fixed components. These items include mainly the staff costs, the rental, and also the office overhead.
For staff costs, as a percentage to revenue, it has increased from 5.5% - 6.8%. During the period, we have about a 10% increase in headcount. The fixed component of our staff costs has increased from 54% last year to 62% in this period. The other item would be rental. During the first half in this year, the average renewal of our Hong Kong and Macau rental has increased by about 30%. That is talking about the renew stores compared to the last contract, which is about three years ago. While compared to about 40% negative same-store sales for the Hong Kong and Macau stores, that is a big jump for the ratio of our rental. Another item has also increased. That is the A&P. In general, we have a fairly stable budget on our A&P expenses.
Our historical average was about 1.6%, which is similar to the level of our fiscal year 2013. Last year, during a very strong growth, the ratio was a bit lower. That was 1.3%. While for this year, because of the weaker sales and also because we have some special promotions for our 85th anniversary, so the ratio is a bit high. That is 2%. We believe that when we are going into the second half, which is typically the higher or the peak seasons, we believe that the total SG&A can be returned to around the 17% level in the second half. For full year, will be around 18%-19% range. Next will be an analysis of the reported segment profit margin. We can see that the segment profit margin for both major markets has improved slightly.
That is because the improvement in GP margin can basically cover the increase in SG&A. We will turn to the inventory analysis. We can see that the inventory turnover days has lengthened to 373 days. This is mainly attributable to two reasons. One is about the proportion of our gem set. In this first half, the proportion of gem set in our sales, and also in the inventory, has increased significantly. So gem set is relatively a slower-turning item compared to our gold products. So when the portion increased, that has also lengthened our overall turnover days. Another reason is about the high opening balance for this year, because we got quite a high level during the March level.
Actually, in response to the first half situation, we have lowered the inventory level by about 8%, and especially for our gold products, we lowered the inventory level by about 30%. We believe that the inventory balance in the second half can be further controlled. On a full year basis, we believe that the inventory turnover should improve to around 270 to about 280 days for the full year. For our bank balances and borrowings. In light of a favorable interest rate environment, we have actually increased about HKD 1 billion bank borrowings in this first half, while gold loans have decreased following the reduction of our gold inventory. We have maintained a very stable hedging level of 70% of our exposure. Our net gearing ratio has decreased to 14% from the 18.5% March level. We come to the CapEx.
Of the total HKD 1.7 billion CapEx, about HKD 850 million was used for the acquisition of operation center in Hong Kong, and about HKD 400 million for the development projects, including the Wuhan Jewellery Park and also the Shenzhen headquarters building, and other projects in China. The rest, HKD 400 million, was mainly for the recurring CapEx for our POS. Our full-year estimation for CapEx remains at about HKD 3.5 billion -HKD 4 billion for the full year. Lastly, I would report to you about a new inventory management mechanism. In response to a very fast-changing customer preference and also the change of the retail environment, we have started to optimize our inventory management mechanism. The major change is about the point of settlement and revenue recognition. In the past, we recognized our wholesale revenue at delivery.
However, from now on, we will retain our ownership until the products are sold at the retail level to the retail customers. That means we will recognize the wholesale revenue also at this point. That means appointing the sales to the retail customers. The major benefits for this mechanism would be allowing us to have an inventory pooling, because we can address the customer needs very quickly across all the POS network, and we can have efficient distribution and also relocation of our inventories. Secondly, we can also strengthen the profit stability of our franchisees because all the inventories are now pooled together, and then we can manage and also apply our hedging mechanism for all the inventories so that the franchisees would not be affected by the volatility of the gold price.
More importantly, for longer term, this mechanism can help us to facilitate the development of omnichannel and also O2O interactions, which is very crucial in the modern retail management. We have started this new mechanism with some selected franchisees in August this year, and we expect this will be applied to all franchisees by the end of fiscal year 2017. The next page will be a demonstration of the impact to our financials. The total impact to our financial would approximate the total amount of inventory currently on hand of our franchisees. That is about HKD 4 billion- HKD 5 billion in total. The impact would be on our wholesale revenue in the coming three years. That is from this year to fiscal year 2017.
However, in the long run, while our inventory balance and related turnover would increase by approximately this amount, that is equivalent to about 10%-12% of our total inventory. There would be no material impact to the group's revenue, profitability, and also working capital requirement or cash flow, or to the ROE. Because we would collect the deposits from franchisees before the dispatch of our inventories. Here concludes my part of the financial highlights, and I will pass to Kent for the business update.
Thank you, Hamilton. I would like to share with you our retail network today. In first half 2015 financial year, we opened a net of 114 point-of-sales, with a total of 2,191 point-of-sale at the end of September 2014. We have a net opened of 99 jewellery point-of-sale in Mainland China, with most of them were located in Tier 2, Tier 3, and other lower tier city, where we still can see a huge opportunity there. Net opening in Hong Kong, Macau and other market were seven in the first half year. Among those opening, one was opened in The Shilla Duty Free shop, in Jeju Island, Korea. In addition, 10 Hearts On Fire point of sale were included after the completion of the acquisition of Hearts On Fire. Next page, I would like to show you some picture about the store image in Mainland China.
Out of the net jewellery point of sale opened in Mainland China, 10% are located in Tier 1 cities. Approximately, about 45% are located in Tier 2, and the other 45% are located in Tier 3 and other tier cities. As you can see in the picture, there are some photos, which been shown in some Tier 3 city in middle or western part of China. As you can see the image, the store has become bigger and more luxury, and this is what we have, expand our store in Mainland China in the recent year. Next page. As of end of September 2014, we have 1,927 jewellery point of sale in China, including self-operate and franchise store.
Close to 70% of our jewellery point of sale in China are located in Tier 1 and 2 city, and those point of sales contribute about 80% of the retail sale value in Mainland China, which reflecting a generally higher store productivity. Self-operate jewellery store represent about 62% of our jewellery retail store in Mainland China. In respect of the management of our retail network in China, we remained our target of 200 net opening jewellery store in 2015 financial year. We still further penetrate into lower tier city by leveraging franchisee with strong customer and location access. Lastly, we stress to take action in facilitating the development of omni-channel retailing and online to offline interaction. In Hong Kong and Macau, we opened six point of sales in the first half year, mainly in prime location such as Tsim Sha Tsui and Mong Kok tourist area.
We remain flexible and we are open to suitable opportunity. Consolidation of some point of sale continue, to enhance our store productivity and efficiency. Just give you example, what we have done in the market in the first half year to improve our technology to capture customer buying preference. For example, we have already in most of the store in Hong Kong and Macau, we have a overhead people counter so that we can capture the customers come in and the data. Not only this, we have also invent our own patent, Smart Tray, which is a very special tray which have built in a RFID sensor, which compared with our RFID price tag, so that we can capture the buying preference of the customer.
Say, for example, what kind of SKU will be most welcome to the customer, and what is the sales feedback or the conversion rate for each piece of jewellery when customer sit down and have a negotiation with our staff. All these data are very helpful for us to understand the buying preference. Currently, we have 5.7 in Hong Kong, already start our Smart Tray, and we expect to cover around 10.7 by the end of this financial year. Here, I would also like to give you update on our new diamond brand, Hearts On Fire. We complete the acquisition of Hearts On Fire in August at a consideration of approximately $150 million, which fund internally. Hearts On Fire is a luxury diamond brand, which offering premium bridal and fashion jewellery product using the world's most perfectly cut diamond. Designer collection include some signature product, Lorelei and Aerial Collection.
Globally, only less than 0.1% of the diamond are qualified to be Hearts On Fire diamond due to its utmost standard. Currently, the retail partners of Hearts On Fire have a presence in over 523 stores, covering 28 countries. It also have eight self-operate store located in Taiwan and two self-operate store located in U.S. We expect the rollout plan of Hearts On Fire store would be very soon in Mainland China. We will focus the retail network expansion in Tier 1 and Tier 2 city in mainland China, as well as Hong Kong and Macau very soon. We would first introduce standalone store into the market in order to build a very prestige, luxury image. Then, we will open some shop-in-shop and counter-in-shop stores to leverage on our solid customer bases.
Three standalone store are currently in pilot, where we will keep you guide update on the detail later. I would like to share with you our e-commerce business. E-commerce continue to be our important strategy to expand online to offline strategy and building relationship with young customers. In 2015 financial year first half, growth momentum in our e-commerce business continued to be strong at 47% year-on-year growth. Average daily online traffic records over 153,000 unique viewers, and 39% over the same period increased compared to last year. Our number of followers on Sina, Tencent Weibo, and WeChat account also reach over 1.5 million. During the period, we leverage on mobile gambling, WeChat, and other popular online channel to promote our brand and collections. For example, we partnered with Tencent Games by adopting Global Family, our hero product, as a special feature in one of their popular mobile game, [Dash].
Currently, we launched the exclusive [Dash] jewellery collection online too. We also promote the Red Packet lottery on WeChat, where users of WeChat can grab and send the QR code, discount coupon to their friends and relatives. I would like to pass it to Danita for marketing.
Thank you, Kent. Let me give an update on our customer loyalty program. In Hong Kong Macau, we had about 180,000 members as of September 30th, 2014, with their repeat purchase maintained steadily at 17.6% of our RSV in Hong Kong Macau. In Mainland China, the numbers of members reached almost 1.5 million. Their repeat purchase increased to about 30.5% of our RSV in China in first half 2015, versus 24.3% in the same period last year, which reflects our effective CRM strategies and our effort in maintaining relationship with existing members as well as attracting new members. In terms of our marketing and branding strategies in the mass luxury segment, wedding market continues to be an important pillar, which contributes roughly one-third of our retail revenue.
In terms of the marketing effort, following the success last year, we launched a viral marketing campaign again, of which video clips of marriage proposal of our customers were uploaded to popular online platforms such as YouTube and YOUKU to promote the marriage proposal culture across China and Hong Kong. This year in Hong Kong and Macau, we also launched a CTF Wedding Club to provide value-added service and advices to our customers. In order to celebrate our 85 years of anniversary, we launch our collaborations with four world industry leaders, including PGI, World Gold Council, Forevermark, and Rio Tinto, in which we collaborate with jewellery experts to create thematic jewellery pieces. In fact, this Friday we will be also launching our 85th anniversary party in Shanghai, in which the auction pieces, those kind of thematic jewellery will also be showcased during the event.
In respect of the high-end luxury and the youth line, we are also very proactive in promoting the high-end jewellery collection to uplift our brand image over time. Following the debut in Hong Kong in March, our one-of-a-kind collections, Reflections of Siem, was showcased in Singapore and Mainland China to our prestigious members and guests during the period. Regarding the youth line, we also collaborated with Korean fashion icon G-Dragon to launch the exclusive G-Dragon collection. Through our multi-channel coverage and marketing events, we successfully created widespread collection discussions on social media platforms and received overwhelming responses in terms of orders. In relating to the outlook for second half 2015 fiscal year, we remain cautiously optimistic. Sales in the second half of our financial year is usually better as it is the peak retail season, supported by traditional festivals and various celebratory occasions.
A generally better consumer sentiment in Mainland China, which we have seen in the past six months, will continue to support a stronger growth there relative to Hong Kong, Macau market in the interim. Despite the short-term volatilities in Hong Kong, we expect the sales performance in Hong Kong and Macau to improve in second half of our fiscal year 2015. In the medium term, we are still optimistic about the growth potential in Greater China. We will continue our penetration into lower-tier cities in Mainland China, supported by our excellent franchisees management and our enhanced inventory management mechanism. We will also promote the development of omni-channel retailing and O2O interactions in order to promptly address the demand of the customers. At store level, we will continue to focus on enhancing shopping experience and creating differentiations on our product offerings.
Last but not least, we are committed to innovating and improving our technology and infrastructure to support our sustainable development. Here concludes our presentation today. Thank you.