Good evening, ladies and gentlemen. Welcome to Chow Tai Fook Jewellery Group Interim Results Analyst Presentation for the Financial Year 2019. Let me introduce the management on stage. They are Mr. Kent Wong, the Managing Director, Mr. Hamilton Cheng, the Executive Director, and Ms. Danita On, the Director of Investor Relations and Corporate Communications. Mr. Hamilton Cheng will present the interim results, operational highlights, and financial review. Mr. Kent Wong will present our business update. Ms. Danita On will give the update on multi-brand strategy, e-commerce, and customer relationship management. Finally, Mr. Kent Wong will conclude the presentation with the group's business outlook and strategies. After that, we will have the Q&A session.
Now, may I invite Hamilton to present? Hamilton, please.
Okay. Good evening, everyone. I am pleased to announce our first half for fiscal year 2019 interim results. The group delivered an encouraging business performance during the period, with revenue rose by 20% year-on-year to HKD 29.7 billion. Same-store sales in Mainland China and Hong Kong and Macau grew by 4.9% and 24.4% respectively. Core operating profit jumped 24.7% year-on-year, benefited from the robust sales momentum. Profit attributable to shareholders was up by 8.8% year-on-year to HKD 1.9 billion, amid renminbi depreciation, which led to net foreign exchange loss of HKD 326 million, versus a net gain of HKD 113 million last year. Basic earnings per share amounted to HKD 0.19. The board has declared an interim dividend of HKD 0.15 per share, payout ratio approximated 77.5% in this period. Operational highlights.
We opened a net of 237 POS, primarily in Mainland China in this first half, bringing the total number of POS to 2,822 at the end of September. To gauge the demand of increasingly sophisticated customers, we have been introducing differentiated store layouts, and in this period, we launched ARTRIUM, which focuses on artisan jewelry pieces with meticulous craftsmanship. One of our most important product, T MARK diamond, progressed well during the period. As of September, the total number of counter in shop reached 456 all across the group. We also opened two specialty store in Shanghai and Hong Kong. Our e-commerce business in Mainland China increased 12.7% in retail sales value in this first half, making up 5.1% in terms of retail sales value and 14% in terms of volume in our Mainland China retail business.
A summary of income statement. The group revenue rose by 20%, as mentioned, year-on-year to HKD 29.7 billion as the stabilizing consumer demand and reviving mainland visitation fuel the jewelry market during the period. Gold products is our major growth driver in this period. That revenue contribution of our gem-set jewelry declined slightly, yet the revenue from gem-set still grew by 17.5% year-on-year. Our adjusted GP margin was down by 60 bps to 28.1%. The contraction was mainly due to a higher retail gold mix and the wholesale contribution, which both carry a lower margin. SG&A expenses increased by 12.9% to HKD 5.5 billion, while the SG&A ratio improved by 110 bps to 18.6%. As benefiting from the operating leverage, our core operating profit, which mainly excluded the impact of unrealized gain or loss on gold loans and the foreign exchange gain or loss, surged by 24.7% year-on-year.
COP margin also increased 40 bps to 10.1%. An analysis of our revenue. Both markets recorded a remarkable growth in this first half. The increase in Mainland China revenue was mainly due to more POS openings, especially franchise POS during the period. Whereas that of Hong Kong and Macau, the improvement was mainly due to the strong same-store sales growth. By product, revenue contribution from gold products expanded by 270 bps to 60.5%, reflecting robust customer demand triggered by short-term gold price movement. While backed by receding performance in Hong Kong and Macau, gem-set jewelry and platinum and karat gold products also recorded a double-digit growth during the period. Here we have same-store sales growth trend for the past six quarters.
Recovery was actually started in our second half of our fiscal year 2017, and the growth momentum of same-store sales in both Mainland China and Hong Kong extended to this first half. Same-store sales growth in Mainland China was 4.9%, primarily driven by the increase of average selling price. While in Hong Kong and Macau, thanks to the positive consumer sentiment and the recovery of mainland visitation, same-store sales growth accelerated to 24% in the first half, and which was driven by strong ASP as well as volume growth. When we look further into the two markets by products. For gold products in Hong Kong, Macau, that deliver a very strong same-store sales growth of 36%, benefited from a drop of about 10% in international gold price during the period, as Hong Kong is generally more sensitive to the short-term gold price movement.
Whereas in Mainland China, such movement has relatively less impact to the market as the price change is partly offset by the renminbi depreciation. Yet Mainland China still recorded an 11% same-store sales growth in gold products. While for gem set, same-store sales in Mainland China declined slightly by about 1% in the first half, which actually improved sequentially compared to the second half last year. ASP also continued to rise and reached 6,700 level, up about 4% year-on-year. Gem set same-store sales growth in Hong Kong, Macau was about 11% during the period, with the healthy volume growth of about 15%. ASP, on the other hand, was dragged by the relative stronger high-end luxury jewelry sales recorded in the same period last year.
Then we turn to analysis of profitability and margin. In Mainland China, an 11% COP growth was mainly attributable to revenue growth, while in Hong Kong, Macau, thanks to the robust sales growth and margin recovery, COP grew by 70% during the period. When we look further into Mainland China, adjusted GP margin contracted by 100 bps during the period as more contribution from gold products and also the wholesale business, which are the lower margin segment. This flow through to the OP margin level and recorded leading to a decline in the COP margin. While Hong Kong and Macau, similarly, the adjusted GP margin of Hong Kong, Macau also impacted by higher mix of gold products, yet it was offset by a reversal of inventory impairment provision that we made in the previous financial year.
With the improvement of SG&A ratio to 18.1% as operating leverage kicked in, the COP margin of Hong Kong, Macau lifted by 240 bps to 7.9%. SG&A analysis. Thanks to the remarkable sales growth, the group SG&A ratio improved by 110 bps to 18.6%. I shall walk through the major SG&A items, including staff costs, concessionaire fees, and rental expenses in the next two slides. Here we would focus on A&P, where the ratio normalized to 1.1% as more resources have been put on the implementation of multi-brand strategy and lifting brand equity. We expect the A&P ratio will stay at about 1.1%- 1.2% for the full year. Other SG&A jumped by more than 20% year-on-year. This item included bank charges for sales transaction settlement, royalties on licensed products, as well as diamond certificate expenses and packing materials.
These are largely variable in nature and was generally tied to the transaction volume. Staff costs. Staff and related expenses in both segments increased by a mid-teens, 15%, 16% in both markets during the period. The variable staff cost in both markets was generally in line with business growth. The increase in fixed staff costs was largely attributable to the additional headcount for strengthening the capabilities in areas such as branding, marketing, production, logistics, and technology applications. We turn to rental. In Mainland China, concessionaire fees ratio edged down to 8.6%, mainly due to the shift of sales mix towards gold products, which generally are subject to lower rates. In Hong Kong, Macau, rental expenses fell 13.7% year-on-year as the effect of renewals and closures in Hong Kong, Macau last year kicked in. Rental ratio shrank by 220 bps to 5.2%.
The average rental ratio reduction in this first half was about 3% relative to the last lease, which was a combined effect of 11% reduction for street-level stores and 8% increment for shopping malls. For the rest of the year, we believe that the impact from rental renewal will be minimal. We believe that the rental expenses in Hong Kong, Macau show deliver a high single-digit reduction for the full year basis. Inventory. Inventory balances increased by about 10% compared to the March level and stood at about HKD 38 billion. This is a very mild level as for the stocking up for the second half as we are taking a conservative view in the second half. Therefore, inventory turnover period shortened by 41 days when compared to the same period last year.
We anticipate the inventory balance to return to about HKD 35 billion by March next year. Whereas inventory turnover period shall improve by about 20 days compared to last year. CapEx. In this first half, it totaled to HKD 528 million and up about 30% year-on-year. Major CapEx were spent on our POS, covering new openings as well as renovation for our existing stores. We are keeping our forecast, our estimate of CapEx of around HKD 1.5 billion for the full year. The balance sheet items and capital structure. For financing the increase of inventory, bank borrowings and gold loans were up by HKD 1.9 billion and HKD 1.7 billion respectively. The gold hedging ratio was approximately 52% at the end of September.
Bank deposits and cash equivalents amounted to HKD 4.8 billion, down HKD 3.1 billion from the March level, mainly due to a payment of HKD 4.5 billion final and special dividend for last financial year. Net gearing ratio was 40% as at end of September, which we expect the ratio shall reduce to 23%-25% by March next year. Lastly, cash flow. Operating cash flow before movements in working capital amounted to HKD 3.1 billion. After cash used for inventories and CapEx, we have a slight negative free cash flows during the period. However, on a full year basis, with the inflow in the second half and we are expecting a lower inventory balance, we expect the free cash flow to be around HKD 3 billion- HKD 4 billion on a full year basis.
Like last year, this is an important reference in defining our dividend payout ratio by reference to this free cash flow balance. As of September 2018, we have a cash and bank position of about HKD 4.8 billion. As mentioned, after the HKD 4.5 billion dividend for last year, we believe this is still a very healthy and sufficient level.
I will pass on to Kent for the business update.
Okay. Thank you, Hamilton. We have a net open of 237 point of sale during H1 2019. In Mainland China, in order to capture market potential in lower tier cities and shopping mall, our net openings amount to 233 point of sale in the first half, reaching 2,682 point of sale as of September 2018. In Hong Kong and Macau, our retail network footprint remains stable at 99 point of sale as of September 2018. During first half of financial year 2019, we also opened four new point of sale in other markets, including Korea, Japan, Malaysia, and Singapore. This slide show our retail sales value and distribution of point of sale network under Chow Tai Fook Jewellery brand, which contribute 90% of our RSV in Mainland China.
By tier of cities with stabilized fundamental helped by progressive urbanization and infrastructure development, point of sales expansion during the period has been accelerated in Tier 3 and lower tier city with 91 net open. As such, RSV performance of Tier 3 cities and other exceeds that of the Tier 1 and Tier 2 cities in H1 2019 financial year. By operation model, as of 30 September 2018, we had 58% of point of sale in self-operated model. Approximately 65% of our opening in first half of the financial year was opened by franchisee. By sale-operated model, self-operated point of sale as shopping mall continue to outpace the other operation models and demonstrate a 27% RSV growth during the first half of this year. Sustained through openings of our self-operated point of sale during the period were located in shopping malls. In Mainland China, 220 point of sale were opened under Chow Tai Fook Jewellery brand.
Market penetration in lower tier cities shall continue to accelerate through our franchise model. In order to benefit from the rapid urbanization and infrastructural development in this area, this financial year, our net opening target shall reach about 400. Meanwhile, we embark on store revamp initiative and upgrade some of our select Chow Tai Fook Jewellery point of sales with differentiated store layout and product offerings to capture the demands of more sophisticated middle-class consumer. RSV and point of sale by area in Hong Kong and Macau. Customer traffic rebound by 10% year-on-year, which was mainly attributable to a recover consumer sentiment among local customer and mainland tourists. Coupled with the positive impact brought by the point of sale optimization in recent years.
Both touristic and other areas fare well during the period with 20% and 26% RSV growth respectively. Share of RSV in China UnionPay, Alipay, WeChat Pay, and even some other renminbi payment, a proxy of sales contribution from mainland tourists lift from 42% a year ago to 45% this year. Retail network management. Hong Kong and Macau footprint remains stable in the first half of this financial year. We expect a one store net open in the second half of the year.
I will turn it to Danita to further illustrate our branding, multi-brand strategy, and innovative initiative. Thank you.
Thank you, Kent. Chow Tai Fook Jewellery Group has evolved from a single-brand retailer to a multi-brand owner. On top of our core brand, Chow Tai Fook Jewellery, we have been investing and developing our multi-brand strategies since 2016 to cater to different customers' segments and deliver experience-driven retail offering. In first half fiscal year 2019, we continue our differentiations in store layouts and launch ARTRIUM, which focuses on artisan jewelry pieces with meticulous craftsmanship. New POS in Changsha and Shanghai were also rolled out during the period. As of September 30, 2018, there were 405 counter in shop in Mainland China and 44 counter in shop in Hong Kong, Macau, distributing T MARK products. Two specialty stores were also opened in Hong Kong and Shanghai during the period.
In first half fiscal 2019, T MARK recorded an impressive RSV growth of 134.8% year-on-year in Mainland China and 156.7% in Hong Kong, Macau. It accounted for 18.6% and 25.2% of diamond product RSV in Mainland China and Hong Kong, Macau respectively. During the period, we also collaborated with GIA, the leading independent diamond grading authority in the industry to apply blockchain technology in order to deliver secure and digital diamond grading reports to our customers for the first time. In October this year, we joined hand with Vera Wang, the world-renowned fashion designer, to launch a fine jewelry collection catering to the wedding market. The Vera Wang Love collection debuted at our T MARK specialty store in Shanghai. For Hearts On Fire, there were 21 POS and 192 shop-in-shop and counter in shop as of September 2018.
During first half, our first Hearts On Fire store in Hong Kong was opened in SOGO Department Store. MONOLOGUE and SOINLOVE were introduced in 2016 and 2017 to diversify our product offerings and enhance customers' experience. For SOINLOVE, six POS were opened in first half, bringing the total number of POS to 15 as of September 30th. For MONOLOGUE, we had a net of five POS open during the period, resulting in a total of 16 POS as of first half 2018. Rollout of these two brands shall continue, and we anticipate 20 net POS openings for each brand in fiscal year 2019. To cope with the evolving consumer expectation, we continue to strengthen customer experience. Experience shops in Hong Kong have been gaining traction and embraced by our customers.
To extend the momentum, we will roll out experience shops with different themes in Mainland China in second half of fiscal 2019. Also, innovative self-service experience corners incorporating the idea of grab and go concept are now operating in five cities in Mainland. Our e-commerce business recorded a 12.7% RSV growth in first half. It contributed to 5.1% of retail sales value and 14% of retail sales volume in our Mainland China operation. Average daily online traffic reached 405,000 unique visitors. The number of followers on our Sina, Tencent, Weibo, and WeChat accounts also increased to 4.9 million. Average sales values of our e-commerce slightly decreased to HKD 1,300 in this period.
Here is an update on our customer relationship management. As of September 2018, we had about 1.7 million members in our membership program in Mainland China. Its repeat purchase declined to 22% in first half following the launch of a revamped program. Yet the combined first and repeat purchase ratios improved to 58% from 55% last year the same period. In Hong Kong, Macau, the number of members reached 932,000 with a steady repeat purchase of 33%, which was similar to last year level.
I shall turn over to Kent for the business outlook and strategies.
Okay. Thank you, Danita. To conclude, the robust sales growth in our first half of 2019 financial year is a testament to both improvement consumer sentiment and our continued efforts in executing our strategic priorities. Nevertheless, such growth momentum is expected to slow down in second half of this financial year as the base of comparison become tougher in the second half and macro headwinds may weigh on the overall economic goal. Yet the Chinese government has ramped up efforts in deploying a series of measures that should vitalize domestic consumption and counteract slowing economy. As such, we are cautiously optimistic about the prospect of the Greater China jewelry market for the foreseeable future. We would also remain vigilant and strive for excellence in consumer experience through Smart+ 2020 strategic framework.
We focus on these four key areas. Rollout of multi-brand strategy and innovative retail experience. Conversion to an agile C2M business model to enable consumer engaging along the supply chain. Investment in data analytics to drive insights and value along business operation. Incubation of innovative and entrepreneurial culture across the group and the jewelry industry. This is the end of our presentation today. Thank you very much.