good morning. Thank you for joining NetDragon Webcast Holdings Limited for our twenty twenty four annual results presentation. The presentation will be broadcast on Roshan China, Huizhou and WING platforms. The results PPT is available for download on our company website at ir.netdragon.com under the Webcast, News and Events tab. The management who are joining us today. Doctor. Simon Le, Group's Vice Chairman and Executive Director.
Hello.
Mr. Good Lao, Good Inch Group CFO Mr. Lin Chen, Group Senior Vice President Now, let's pass our time to Doctor. Simon Le to host our presentation today.
Okay. Thank you. It's the time of the year again. Thank you for joining Alcor wherever you are. So good morning, good evening, good afternoon and all that.
Essentially, what we're going to do today is actually not only taking you through what we have done in 2024, but also look forward to 2025 on the I think there's some exciting strategies that we have. You have read our press release and throughout this call you will hear a lot about how we're going to be embracing AI as our future, which is actually the right thing to do. I think all along we've been looking at AI more from a supportive kind of perspective, I. E. Helping us to maybe cut costs managing our business a little bit better.
But we have decided last year that we're going to be all in. So we talk about how we can help managing our costs and at the same time creating products around the world that we can help us to grow in the future. This not only applies to our core business, gaming and education. We're going to make an announcement later on today on one of the very exciting venture that we're going to have is all around IP and all around AI with our own IP. With that, I'm going to go through the quick highlight of our two businesses, one is gaming, the other one is education.
On gaming, I said it many times, we're going to be doing AI and gaming. Actually, if I can look over to education, we're going to do AI and education at the same time. So not only we are using it to reduce costs in gaming side in both development and also creating great graphics. What we're also going to do is actually really focus on extending our life, which is our Evergreen IP on your demon, which our interns are going to pursue in more detail. On the education side, it's unfortunately we're facing some headwinds, both in The U.
S. And in Europe for many different reasons. So by the way, you know those are our strongest market for education. U. S.
Is just a lot of things, inflation that have been bothering us for the last two years. The uncertainty of the budget allocation because President Trump wants to try to spend the Department of Education. So there's a lot of unknown. The good news is actually the money is actually still there. The question is actually how it's going to be passed on to the state and then subsequently to the district.
Same thing applies to Europe with a war going on in Ukraine and Russia, a lot of the election going on, for example, like Germany. The good news is actually they form a government and they're going to be they have a big budget for education and Germany is our number one market in Europe. So that's right at the end of the tunnel. So we do expect continued headwind in 2025, but we do expect a recovery in 2026. Sorry to be a little bit more winded on those subjects, but I think it's key for you to understand.
One very exciting aspect of our product is that you launched Active Panel 10 which is we call AP10, which is a modular architecture. Actually we took the converting device out of the screen that allow us to be very flexible in terms of how we configure the product. We can go with Android, we can go with Chrome, Windows and even Mac. So it's actually depending on the customer's requirement. At the same time, we have a device that we can deploy a lot more services on, which is actually the thing we call CAST for the last few years and we can continue to take advantage of that.
Of course, AI and education, that's also the services that will go into that box. So very exciting stuff. At the same time, because of the headwind, we try to manage our P and L and also our balance sheet. So we have done a bunch of work and I mean you read the detail, I mean we're going to be very prudent in terms of how we manage our balance sheet. Okay, I'm going to talk a little bit more about 2025 later on.
I'm going to stop right now and turn this over to Wood, our new interim CFO. Wood.
Thank you, Simon. Good morning. So there is the financial part of the net revenue to you. And our gross margin is up 3.3% to 16.502% and our EBITDA margin is going up 4.8% to 23.4% and our profit capacity up 90% to RMB759 million. So demonstrate that even though we have a penta drop in the revenue, our profitability is still there.
And our net cash is increased 50% to RMB2.1 billion. And our operating cash flow we want to highlight here, we have have in six consecutive years over $1,000,000,000 operating cash flow, which demonstrate our business model is sustainable. And finally, the dividend, we have declared a 2.5% or 4% for each shares with me, we have a 7.6% dividend yield based on the yesterday's share price. And here is some key financial highlights, which the group revenue is dropped a bit to $6,000,000,000 which the gaming and application services due to the proactive optimization efforts to in response to the market demand growth growth, our gaming and application services dropped 6% to RMB3.9 billion. And the revenue for mine is still on the transition period, so the revenues dropped by 17% to RMB2.1 billion, but our gross margin is still improved from 3.3 to 65.2%.
And OpEx, which remains stable with the OpEx is around $3,300,000,000 which is about the same in the last years. And we remember that we increased our AI initiatives to control the cost. So that means we take and paste the cost optimization in the last quarter of twenty twenty four, which means the cost savings will be expected to materialize in this year. And our EBITDA margin profit before tax is still going up in 2024. And one point we want to highlight here is the taxation.
The taxation, which include a one time long cash deferred test provision expenses of R452 million dollars which may limit to the operating result of the mine, which is not successful loss making in the previous years, which means the loss carried forward in the deferred assets has been impairment provisions. Bear in mind, this is a provision. So that means if the mine performance is improved in the future this year, this provision may be able to reverse that to our P and L. And cash flow, we are stable, opening cash flow increased in a cash basis. So that's why we have increased our dividend per share from 0.4 to 0.5 in this final dividend in this year, which was not a 25% increase.
Turning into segment and most we've highlighted in the before and one is the gaming represent about 87% of our gaming and application services and as mentioned before, optimization only to campaign in the February, which means we will be deliver a full year cost saving impact in 2025. That means it will be a quite good position for us to go forward financial performance. And for Mai, although the revenue is strong, but our gross margin is improved improved by one percentage point due to the lower credit cost and the freight charge cost. And our sentimental expenses, which means, you know, one highlight here, we disposed our GHI Singapore last year, which means, you know, in this figures we include about US10 million dollars in the last year in the mine business. So if you take now, actually the OpEx will be dropped about 3.4% in the compared year February, so which is a good cost saving take and place in demand level as well.
And we want to highlight here that since IPO, we have been declared a lot of the dividend in the past, which has already surpassed HKD80 dollars inside our IPO, which our dividend the final dividend also increased 25% YOY to HKD2.5 per share, which means we are wanting to share our return to our shareholders. In summary, you know, 02/24 was a year of the mix of financial performance and our strategic execution and enhanced shareholder returns. And this will be market good position for us going forward. Thank you for your attention. Now turn to Lin Chen for talking about the gaming business.
Okay. Thank So just a quick presentation, we have mentioned AI so many times. So you will just hear it as a continual theme for us going forward. Okay. I'm going to take you through very quickly high level on mine.ai because it's actually it's a company that listed on New York Stock Exchange.
So I don't think I can go into too many details, but I think it's good as a shareholder. I'll take you through what we've been doing, so next stage. Revenue was down because of the headwind, but the good news is that you have done good cost management. Freight is down, materials done, operation is done and we have also rationalized our employee count. So that's why we can achieve higher gross margin and all that.
So continue the theme of AI, this is our opportunity going forward with 1,500,000 classrooms around the world. Our ability, which we will talk about on the next page, with our new architecture, we can put AI services into the classroom, allow teachers and students to interact much more effectively. Next one. This is about our AP10. I talked quite a bit about it during the highlight just to give you a visual of what we can do.
We can configure it in many different ways, so which is a covering the entire classroom, allow teachers and students to interact. Next page. This is a continuation of why we are doing the AP10 because we can unbundle basically the brain from the panel that we can deploy more services. Actually, we started doing it in 2024. That's why you can see we're building up our recurring revenue upstream.
We will continue to do that in 2025 and onwards. AI again is a big element of that. Next page, we'll talk a bit about it. Just want to have your attention that we are doing a lot of, like a better term, clean up of our balance sheet and also get ourselves structured in a way that we can take advantage of the capital market in The U. S.
When we need to. So with that, I'm going to the outlook for 2025. The first one I want to take you through, which is actually very exciting for us, is our partnership. With a company called Wengo. Essentially, we have signed a term sheet with them.
We're going to be investing $75,000,000 long limited to by the way, it's actually RMB 75,000,000 of cash and AI asset. Cash is actually important, but the key on this one is actually the AI asset they're going to put in into the company. I think this is actually a match made in heaven. It's actually Wengke is actually a spin off from Zhongke Yuan. They have a lot of technology, which I'm going to talk about Yadi a little bit later on.
We're going to put VIP into this company and we can be working exclusively on market outside of Mainland China, I. E. Hong Kong Macau and the rest of the world. It's actually AI is going to be a key on this one, so which is the technology part. But Trifix, we've been working with a lot of major customers in Hong Kong, government, Hong Kong airport, MTR and also we're going to take everything out to the rest of the world.
So it's actually a net between IP IP and AI and the ability to execute and deliver in not only in Hong Kong but around the world. I forgot to talk about we also work very closely with the Hong Kong government and also one of the software that Chainlink has worked on is PayMe. I'm sure a lot of you, if you're living in Hong Kong, we build that product for Hong Kong China Bank. Let me talk a little bit about YIE. I mean, it's actually if you go to the chart on the right hand side, it's actually something that we own in the company outside of China.
It's actually if you've been tracking the large language model of the AI agent tests, so YAI has been moving up. So if you look at the ranking, it's actually really ran behind some of the very notable large language model GPT-four point five, GPT-nine, IpSeq, Kimi and then it's us. So we are very excited about it. I mean what we're going to do is we are leveraging IP and focus on certain verticals, I. E.
Industries, including education by the way, I mean, that's going to be very exciting to see how this venture can help us in AI education going forward. This one, I think the chart probably a little bit misleading, so I apologize on that one. Let me give you the gist of all this. We are going to build our AI plus content creation strategy. This platform will support both gaming, which Liqing talked all about, and also AI educational gaming, which I talked about many times before.
So that AI AI educational gaming is actually spent across mind dot AI plus what CherryPix is going to do and all that. So I think that's going to be extremely exciting. So okay, with that, I'm going to end on the outlook for this year. On the gaming, I kind of repeated what Vincen has been saying. Our strategy is AI plus gaming.
So we can help with our costs, not only just on graphics, but also on coding. We're going to make sure our evergreen IP agreement will continue to grow, so very important for us. For mine, I think we'll continue to optimize our cost structure and then we can set ourselves up for success when the market returns. I didn't say when, I didn't say but not least, I think we're going to be really focusing on shareholder return. So simply put, we will continue to look at our dividend strategy and also the possible alignment of our share in the market at the right time.
So with that, thank you for your attention. Thank you for bearing with us. So we can open it up for Q and A. Thank you.
Thank you, Simon. Now it's our Q and A session. You're welcome to raise questions in two ways. Your first question is from the teleconferencing system. You screen. Let's welcome our first question from the teleconferencing system. Thank you.
That's a very good question. So we like it because we know what they're focusing on. And by the way, I mean, we've been working with them even before we were talking about getting together. So we have experience with them. Obviously, ranking of Yahi in the market, it's actually moving up.
So we much rather work with somebody who's up and coming, which is actually a little bit smaller than we work together to really focus on certain industries rather than working with GBD R4.5 which they are trying to approach the wider market. Where we are right now is actually we have signed the term sheet. We're moving towards on the SPA, but that doesn't mean we are not working together. So I can't go into detail. But I think there are few exciting projects that we're working on.
Hopefully, at the right time, we will be in front of you, telling you the good news of those projects. Thank you.
Okay. Well, that's a very good question. And then if I may point you to what has done is that you need the last page of this presentation to give you a little bit of history on what we have done.
Also point you to my closing comments when I was talking about the outlook. We're going to be looking at returning how we can return the value to the shareholders. So we will I expect we'll continue to have paid back to our shareholders and at the right time we will definitely look at buying back.
Thank you, Simon. Our next question comes from Victor Ku from Lumiere Capital. Actually this question we have answered already, but I would just repeat it. Why did the game core profit drop those in SMB from RMB88 million in 1H to RMB237 million in 2H twenty twenty four? Can we expect a meaningful rebuff in 1H twenty twenty five?
Just to repeat what Ying Zhengs do is, this is a proactive adjustment we're taking for Evergreen IP, so that the revenue is taking a strong back in the second half. And for this year, we would expect the H O over H will be a little bit flat in the first half and the second half will because of the new gains coming in and adjustment taking place in the second half in the last year. So that means second half will have been advanced back to our revenue or the core segmental performance. So once again the first half because the adjustment can be in the last year second half, so that means first half we still had a little bit in the first half. But the second half we will be have a healthy growth again in the futures.
So we expect early on the market to kind of play line. So, it's a challenging revenue.
Thank you.