Good evening, ladies and gentlemen. Welcome to Chow Tai Fook interim results analyst presentation for the financial year 2016. Let me introduce the management on stage. They are Mr. Kent Wong, the Managing Director, Mr. Hamilton Cheng, the Finance Director, and Miss Danita On, the Director of Investor Relations. Mr. Hamilton Cheng will present the interim results highlights and ending. Mr. Kent Wong will then present the group's business outlook and strategies. After that, we will have the floor Q&A session. Now, may I invite Hamilton to deliver the presentation.
To HKD 28 billion. Same-store sales is an 8.7% down, which is mainly driven by a decrease of same-store sales volume of 7.5%. Adjusted operating profit, excluding the impact of unrealized hedging gain or loss on our gold loans, amount to HKD 2.2 billion. It is a 26.6% down compared to the same period last year. Profit attributable to shareholders, HKD 1.6 billion, decrease of 42.2%. Basic earnings per share, HKD 0.156. For the interim dividend, we declare HKD 0.08, which is around a 50% payout ratio. Also, in light of the excess cash and also the future development lease, we declare a special dividend of HKD 0.42 for this period. So altogether, there are HKD 0.50 of dividend. Some further information for our income statement.
First, contribution of our gem-set jewelry to the revenue is 26.8% for this period, a decrease of 1.5 percentage point. Coupled with the increase of contribution from our gold products, the change of product mix has lowered the adjusted GP margin by 1.6 percentage point. With the unrealized hedging loss versus a gain last year, the GP margin decreased 3.9 percentage point. Adjusted operating profit. Because of the SG&A maintained at a similar level to last year, the decrease was mainly due to a decrease of gross profit. Operating profit margin when accounting for the unrealized hedging loss is a 42% decrease year-on-year. The revenue breakdown. By reportable segment, we can find that contribution from our mainland China business continued to increase. The contribution from Hong Kong and Macau decreased because of the lower contribution from our Mainland tourists.
By operation model, the contribution from our wholesale business is also decreased slightly because of the Mainland franchisees are taking a conservative approach in restocking or in inventory replenishment. By product, the contribution from gold products increased from 49.5% last year to 55.5% this year, is taking up shares from the gem-set jewelry as well as platinum and karat gold. Compared to the tier one and tier two cities, performance of our tier three and lower-tier cities are still opportunities for opening new stores in these areas. By region, we can find that the eastern and southern coastal regions are performing better compared to the other regions in mainland China. By operation format, our standalone stores and also the franchise POS are performing better than those situated in the department stores. We turn to Hong Kong and Macau.
Because of the declining number of Mainland tourists, the performance or contribution of our stores in the touristic areas has decreased. This is also reflected in the decrease of contribution from settlement through UnionPay or RMB. While the contribution to the total revenue of our Hong Kong Macau segment, Macau has decreased slightly compared to Hong Kong. That shows that performance in the Macau market was even weaker than Hong Kong during the period. Next is an illustration of our same-store sales performance in the past six quarters. Both markets demonstrated a stabilizing or improving trend over the past six quarters. Mainland China was performing better than Hong Kong and Macau. Especially with the help of a mini gold rush during July and August this year, the same-store sales has returned to a positive growth in the mainland China segment. By product.
The improvement or stabilizing of the performance was mainly driven by the gold products, while in mainland China the gem-set jewelry was still performing quite stable. However, in Hong Kong and Macau, especially during the latest quarter, performance of the gem-set jewelry segment weakened partly because some of the consumption was driven to the gold products. Our SG&A. On dollar terms, the total SG&A maintained at a similar level as last year. However, due to a decrease of revenue, total expense ratio has increased 80 basis points from 19.8% to 20.6%. Staff costs, concessionary fees, and rentals still contribute to major spending, which contribute about 70% of the total spending. I will elaborate in the next two slides. In the period, we have implemented a number of cost control measures, and for our A&P is more than 40% decrease compared to the same period last year.
Depreciation has increased, however, because of the operation of some of our addition infrastructures in the past financial year, and also the amortization of the intangible assets of our Hearts On Fire acquisition has also increased this account. While for the other SG&A, the increase was mainly due to the increase of royalty fees and certification fees for our diamond products because the sales during the period, sales of the licensed products such as Forevermark, Rio Tinto and Disney has increased. We are also making use of higher volume of smaller diamonds. That is why the royalty fees and certification fees associated with these products has increased. We turn to staff costs of mainland China. During the period, number of staff has decreased 5% compared to the same period last year, and the total staff cost decreased 2%.
That means there is a slight increase per head in mainland China for the staff income. Concessionary fees, we have quite a remarkable decrease from 9.9% last year to 9.1% this year. This is mainly due to change of product mix and also a reduction of concessionary rate in some of the department stores. For Hong Kong and Macau. Based on natural attrition, we have decrease of 8% in the number of staff compared to the same period last year, and total staff cost decreased 13%. However, for rental, there is still a 19% year-on-year increase. It is mainly because of the new stores opened in the last financial year and also some of the stores were expanded last year. We have actively seeking for a reduction in the rental ratio, and also we have reduced and are also going to reduce some of the stores in Hong Kong.
However, the impact would be most likely reflected in the coming two financial years. An analysis of profitability. Over the past three years, mainland China performed more stable compared to Hong Kong and Macau market, and in this interim period, it clearly surpassed Hong Kong as a major profit contributor to the group. During the period, we can find that the total SG&A ratio of mainland China has decreased 1.7 percentage points thanks to the cost control measures that we have implemented. However, in Hong Kong, the expense ratio has increased by about 4 percentage points. About half of those was due to the inclusion of operation expenses of Hearts On Fire after the acquisition. The remaining is mainly due to deleveraging impact from rental and other fixed expenses. We turn to our inventory analysis.
During the period compared to end of March, we have lowered the inventory level by about 6% to the HKD 37 billion level. Inventory turnover days has lowered by 21 days compared to the same period last year. For the full-year basis, we target to further lower the inventory level to around HKD 36 billion, and inventory days for the full year will be around 280 - 300 days. Capital expenditure. We also target to lower or postpone some of our capital expenditure. In the first half, CapEx spending was just below HKD 500 million.
For the full-year basis, we would lower the CapEx from the originally planned HKD 2 billion to about HKD 1.5 billion for the full year, within which roughly half would be spending for the maintenance of our POS and office, and the other half would be, again, for infrastructure and some of the equipment for our customer experience and data analytics. Changes in capital structure. During the period, the major change was on inventory, a decrease of inventory, and an increase in bank balances. This has lowered our net gearing ratio to 11.5%. Even after the payment of our interim and special dividend of HKD 5 billion, the net debt ratio will still be a healthy 28% level. To the net asset or to the equity. This interim period, we have more than HKD 700 million loss recorded on the translation reserve because of the devaluation of renminbi.
Lastly, we will have the cash flow. The major cash flow items will be the HKD 2.7 billion cash inflow before movements of working capital. This is like an EBITDA of our group. This is a 24% decrease compared to the same period last year. The lower inventory freed up another HKD 1.7 billion cash flow. The cash outflow would be mostly for the CapEx of around HKD 500 million and the HKD 1.5 billion final dividend for last year. Up to end of September, we have more than HKD 10 billion cash in bank. This concludes my part, and I will hand over to Kent for the business update.
Thank you, Hamilton. In 2016 first half year, we opened a net of 29 point of sales. The total number of our store up to September 30 was 2,286. In mainland China, we opened a net of 36 jewelry point of sale. However, we closed a net of 10 watch point of sales in mainland China. In Hong Kong, Macau, and other market, six point of sale were opened, one in Macau and the rest five in other market like South Korea and Taiwan. But in Hong Kong, we have three point of sales were closed, and the net addition is only three. We have 115 point of sale were closed during the period and will be about 5% of our total point of sale, which is a bit more than last previous year.
The closing was higher than our historical average because, many department store were closed down or business restructure in mainland China. Some low-performance store in some region were also consolidated. Over 80% of the new point of sale in mainland China are opened in lower tier three and lower-tier city. By regions, most of the net opening were in the central and northern regions. Eastern and southern region has a net closing as a result of consolidation of some low-performing store. Among the net openings, 80% was self-operate store. Only around 20% was franchise. However, I would like to highlight because a franchisee has changed its business strategy and terminate the franchise business in the period. We then took over the profitable point of sale and convert them into self-operate store.
Excluding the above mentioned factor, the franchise store ratio stand at about 60%, which is same as last year. In summary, we have 2,028 jewelry point of sale in more than 490 cities in mainland China. Tier one and tier two represent 67%, which is same as last year. Around 37% of our jewelry point of sale in China are franchisee, and also this is same as last year. Talking about Hong Kong and other countries. We consolidate 4% in Hong Kong in the first half year in order to enhance store productivity and reduce our operating costs. These areas, I mean the store being shut down, which is mainly the store around tourist area. Due to the weak luxury market sentiment. The rental market in Hong Kong has been softened in the first half year.
The average rental reduction was on average, which is about 10%. However, some of the individual store we plan say even up to 30% kind of reduction. Over the long run, we remained positive that Hong Kong would also be a popular destination for mainland China because of we are tax-free and also we have a different product offering in the market. Here, let me also give an update on Hearts On Fire that we have acquired last year. Since the acquisition, we have already expanded our Hearts On Fire presence and roll out a brand-new promotional campaign in mainland China, Taiwan, and Hong Kong, and even United States. As of September 30, we have 16 Hearts On Fire standalone store in U.S., Taiwan, and also China. We also have 53 shop-in-shop and counter-in-shop in mainland China and Hong Kong, which is on course of our development plans.
We will continue to expand the Hearts On Fire retail network in tier two and tier one city in mainland China. Currently, we have two standalone stores in China. In the long run, we would continue to build more shop-in-shop and counter-in-shop in some high traffic Chow Tai Fook Jewellery stores. Let me share with you what we have today, which is a brand-new Hearts On Fire brand image campaign, which is called Ignite Something. It has already been launched in the United States, and then this month it will be coming to launch in Hong Kong and China. May we share some TVC? Just a minute. One minute.
[Presentation]
Okay. Thank you. Let me elaborate our smart initiative, which is some program that we are tackling to the millennial market. Smart initiative employs internet technology and innovative tools in order to enhance our operational efficiency and also provide a seamless shopping experience to our consumers. We are active in leveraging social media, our business partners, et cetera, in order to launch some viral market campaigns and promote O2O synergy and even channel customers traffic to our physical store. Early this year, we successfully commercialized our Smart Tray, a RFID-enabled customer serving tray at 48 points of sale in Hong Kong to better serve our customer and collect the data for business analysis. As of now, about 130 points of sale in Hong Kong and mainland China have installed WeChat and Alipay terminal to provide more efficient, convenient payment option.
Here, I would like to share some of the interesting data extract from our Smart Tray. Smart Tray is smart in the sense that it can capture variable data during a consumer visiting us. For example, about the age, gender, nationality, and also even the average consumer serving time. For instance, 60% of the walk-in customer in Hong Kong are age below 40. Average serving time was around 22 minutes. Usually ring have a higher viewing ratio. However, the conversion ring will be lower because it takes a lot of time and also a lot of consideration to buy a ring. Compared with a gold coin which have a high conversion rate, however, have a very low views rate.
All this data are very helpful for us to train our staff to improve our store product allocation. Here is my conclusion, and I would like to ask Danita to share with you more about e-commerce and omni-channel.
Thank you, Kent. In first half 2016, our e-commerce retail sales value continued to deliver an impressive year-on-year growth of 44.3%. During first half, our mainland e-commerce business contributed approximately 1.9% of our mainland China jewelry's RSV. With this strong growth and momentum, we expect its contribution to further expand to mid-single digit in three to five years' time. Average daily online traffic amounted to over 225,000 unique visitors in first half, up 47.1% over the same period last year. We also accumulated over 1.4 million followers on Sina, Tencent Weibo, and WeChat accounts. To extract the O2O synergy, we collaborate with different business partners from time to time in promoting our products and brand. For instance, since January this year, we have launched a mobile marketing program collaborating with Ctrip, a leading online travel agent in mainland China, in order to tap its customer base.
Ctrip customers, upon arrival in Hong Kong, will receive promotional messages which direct them to the nearest CTF store. By showing the QR code and shopping in our stores, customers can receive cash rebates in their Ctrip accounts. With the prevalence of mobile phone and social media, we expect we will devote more resources on digital marketing programs and campaigns in the future. Our customer loyalty program also plays an important role in supporting our business growth. As at September 2015, we had approximately 1 million members in mainland China versus 1.5 million in March 2015. The decline was mainly due to the revamp on the qualifying membership requirements. Members' repeat purchase ratio, nonetheless, stayed at 29%, similar to fiscal 2015's of 29.2%. In Hong Kong, Macau, the number of members reached almost 12,000, up 21.1% year-on-year.
The repeat purchase ratio also stayed at around 19% level, similar to fiscal year 2015. For marketing and branding, being one of the world's few listed jewelers with a long heritage, we are dedicated to superlative design and exclusive craftsmanship. In September 2015, our Cullinan masterpiece, A Heritage in Bloom, was showcased at the previews in Hong Kong with over 370 VIPs and privileged guests invited from mainland China, Hong Kong, Macau, and overseas. This signature piece, set with 104 carat D-color internal flawless round diamond cut from our 507 carat Cullinan Heritage, which we acquired in 2010. It's a timeless jewelry piece illustrating our strength as a world-class jeweler. We were also honored to be an official global partner of the China Pavilion at Expo Milano 2015, showcasing our special collection, which echoed the pavilion's core concept.
Apart from the continuous efforts in promoting our bridal collection, which serve as an important pillar to our mass luxury segment, we also dedicated our resources to maximizing the exposure and impact on younger generation. For instance, during April to June this year, we organized an unconventional travel program called Freely on Silk Road. Four finalists were selected from 36,000 candidates, and we employed them as contract staff to explore and experience Silk Road. By leveraging social network and internet, updates of the finalists during the trip were posted on various online and social media platforms. Over 200 million views and forward actions were recorded. Here, let me pass to Kent for the business outlook and strategies. Thank you.
Okay, thank you. First of all, we are long-term positive and take a long view to the jewelry market in China. Even though we have facing a macro headwind in the market, however, in the next 12 months, we will take a conservative approach in point-of-sale network management. Like once, consolidate our point of sale, especially in Hong Kong and Macau, to enhance our productivity and profitability. Second, slow down our store open expansion in mainland China in light of changing retail landscape and macro environment. We will also focus on improving inventory turnover. Reduce our stock level, so that we can enhance not only our return of investment, but also give us a more effective sales channel and also lease some outlets. Second, enhance our SKU and in-store product display management. Third, marketing of some significant hero collection and fast-turning items.
We are also very supportive of innovation in technology education, like our Smart+ initiative should help us deliver better customer service and shopping experience. We are also developing some new initiative or tools, so that we can capture the market through omni-channel retailing, which is, we think really important in the future. Lastly, we are committed to human capital investment so that CTF Academy is one of our long-term commitment to staff training and human resource development. Here is my speech conclusion today. Thank you very much.