Good afternoon, investors. Thank you so much for your attendance to the twenty twenty four China Leilan Annual Result Investors Meeting. This is Angela from SPRG. The meeting is the form of both telephone online and off line. Investors using the online should have received before the event the PPT.
If you have not received the slides, please contact the SVRG team. Please be reminded that the English channel is only for listening. If there is any question from the investors after the meeting, please dial into the Chinese channel to ask your questions. Let me now introduce the management. Mr. Wang Dongxing, Chairman and Non Executive Director Mr. Wang Liangxing, Vice Chairman and CEO Mr. Wang Chongqing, Vice Chairman and Executive Director Mr. Sizong, CFO, Mr. Song Chen, director of the group's strategic and development department.
The following agenda is, first of all, Mr. Wang Chung Xin will share the result highlights, followed by Mr. Frankie Shen to the financial status and Mr. Song Chen to review business and operation. And finally, the Chairman will share the gross reviews on outlook and strategy and then the Q and A session.
Now Mr. Wong. Thank you moderator. Good afternoon. I am Wang Zhongxin.
Let me brief you the 2024 annual result highlights. In 2024, the global situation remained complex and volatile with the exception of the Chinese economy which show greater resilience and a gradual pickup in the retail market as a result of the central government's policy to promote consumption despite the recovery in overall consumption growth, consumer confidence was still affected by external uncertainties and the market sentiment was cautious. Facing ever changing business environment, the group proactively pursued strategic transformation, increased R and D, enhance the competitiveness of brand diversification, reinforce corporate management and improve operational efficiency during the year in order to lay a solid foundation for achieving higher quality and sustainable development. In the past year, the group recorded revenue of RMB3.65 billion, profit attributable to shareholders of RMB0.4611 billion and gross profit margin of 47.7% of which due to the strong uplift of in average sales per store and the remarkable results of the new retail pipeline, the Smart Casual continue the positive momentum of 2023 and recorded and overall turnover growth of 27.2%. The group further optimize its channels and enhance its operational efficiency by leveraging on the information accumulated in the retail business of the smart casual and the valuable experience gained from the successful implementation of direct sales to reform the business model of the core collection.
During the year, the group recovered the operating rights of its distributors in the three northeastern provinces and the four provinces in Jiangsu and initiated the implementation of the direct to customer DDC model of the core collection and the operation of this new business model appears positive. Meanwhile, the group implemented a brand new retail strategy and recorded a rapid sales growth of 24% during the year demonstrating that the group's efforts will enhance the development of TikTok and other e commerce platforms and also new platforms including PDD and Poison to enrich an e commerce platform's coverage and we have achieved desirable outcomes. In terms of brand management and promotion, the group has successfully reached out to consumers in different cities and age groups through diversifying marketing strategies and brand strategy upgrades with different kind of age groups, consumers which is much better and outperforming the industry. And the growth financial strength was solid during the year. The Board has resolved to pay a final dividend of HK9 per share and a special final dividend of HK3 per share, a total of HK30 per share for 2024 resulting in stable dividend payout ratio of 73.1%. The accumulated dividend paid since the listing was HK7.3 billion dollars and the dividend per share has reached HK6.1 dollars per share, which demonstrates the commitment in creating values for the shareholders. I will now hand over to Mr. Shen.
Thank you. Thank you, Vice Chairman. Good afternoon. I'm Frank Yisham, Company CFO. I will now present you the financial situation of 2024.
Revenue on Page seven is revenue gross profit with 3% ROI to RMB3.65 billion of which the Smart Casual has enjoyed from the strong expansion of the outlets and the significant results of TikTok live streaming generating revenue of 27.2%, revenue from the core collection down 3%. During the year, the group recovered the rights of distributors in Northeast China and Jiangsu province and switched to the DDC mode resulting in a drop in the distributing sales. The group was required to pay one off combination to the former distributors in the two regions which was deducted directly from sales revenue. GP margin recorded a slight increase of 0.5% YOY correction down 0.5% YOY mainly due to the payment of one off compensation to distributors and the decrease in the reverse provision for inventories. The reverse provision for inventories during the year amounted to RMB31.42 million which further increase the sales cost.
On Page eight, it is about the selling, distribution and administrative expenses. On the left chart, it is the selling and distribution expenses total RMB1.059 billion or RMB102 million compared to 2023. Part A is the advertising and renovation accounting to 13.1% of revenue ranging from 38,000,000 to $483,000,000 compared to 2023. Part B is a direct source and e commerce expenses according to 9.7% of revenue ranging from $68,000,000 to $356,000,000 Part C is auto selling and distributing expenses ranging from $72,000,000 to $220,000,000 accounting for 6% of the total revenue. The right chart shows the administrative expenses which amounted to RMB188 million accounting for 5.2% of sales.
The reason was mainly the increase in staff salaries and bonuses. Page nine summarizes the group's earnings and margins. GP margin was approximately 47.7% down 0.5% percentage points while on while reverse provision for inventory market to RMB31.42 million as compared to 2023 profit from operation down by 9.5% to RMB609 million and operating profit margin down by 19 percentage points to 15.1%. Profit attributable to shareholders was approximately RMB460 million, down 13.1% profit margin attributable to shareholders down 2.4 percentage points to 12.6%. On Page 10, it is the working capital turnover days.
During the year, the group's average accounts receivable turnover day were thirty six days. The decrease in turnover days is because of the increased direct store sales. For inventory, the average inventory turnover was one hundred and eighty three days. The increase is because mainly due to the increase in the proportion direct operation and distribution during the year. In addition, sales of winter collection were down due to the warm winter at the end of twenty twenty four.
The total inventory balance increased by RMB260 million. As at 12/31/2024, the total provision of RMB49 million had been made in accordance with the group's inventory provisioning policy. As for trade payables, the average turnover days during the year was one hundred and fifty seven days. The increase was due to the increase of using trade bills which we repay at a larger states and the year was amounted to $185,000,000 to $91,490,000 On Page one is the cash flow. Operation cash flow for the period was RMB227.3 million.
The main adjusting items compared to the net profit worth inventories of RMB252.6 million and an increase in trade and other receivables of RMB94.8 million. Meanwhile, depreciation expenses amount to RMB250.8 million. For investing activities, the net cash flow was RMB306.3 million, which may include a capital expenses of R112.8 million dollars placement of time deposit RMB207.2 million and deduction of interest comes from RMB19.5 million. For financing activities, net cash offer amounted to RMB471.6 million with payments of twenty twenty three final dividend and twenty twenty four interim dividend totaling RMB392.2 million and lease payment totaling RMB109.8 million net of net bank borrowings of RMB20.2 million. On Page 12, it is the bank and cash balances.
The group's cash position remains healthy and strong. As at 12/31/2024, we had a net cash of RMB1.972 billion. This includes my presentation. I will now hand over to Mr. Song.
And Mr. Song, please. Thank you, Frankie. My name is Song Chan, Director of Strategy and Investment. I'd like to give you an overview of the business operation for the year 2024.
Let me first talk about you the sales of the collection for the past years. We have insist on the dual policy of the differentiation position to satisfy more consumers and towards satisfy the shareholders' requirement to maximize our profit. In 2024, the deal collection has also performed the The consumption The consumption in motion is also down and that is because of the situation. In addition in 2024, the Smart Casual was also a kind of double growth, which was also maintained a high speed growth with 27% up and Smart Casual, which is already 25%, which was 5% up compared to last year. Next page.
In Page 16, we can see sales by regions and the change in store numbers. On the Eastern China contributed larger sales with sales of RMB 1,563,000,000.000, up RMB 41,300,000,000.0. The lower sales growth in the Central South and Southeast was mainly due to the stabilization of the stores and the short term impact of sales during especially in Chongqing. So sales in the Northwest local and North China regions, reporting significant of RMB 32,100,000.0 and RMB 40,800,000.0 respectively during the period, mainly benefits from the increase in the regional stores as well as the favorable sales performed of the outlets. The decline in sales of Northeast Region was mainly due to the one off deduction from sales revenue of the compensation paid for the recovery rights of the distributors during the year.
Excluding the factor, sales revenue in the Northeast Region grew satisfactory, reflecting improved operation efficiency after the implementation of the DDC model. In terms of store numbers as at the December 2024, we have a total of 2,773 retail stores with an increase of 462,500 square meters, representing a year on year increase of 7.1% overall. Although there was slight contribution to sales and store numbers in some regions, we maintained a steady growth. On Page 16, the group continued its pipeline restructuring and streamlining of organization. First of all, the group has planned for pipeline trends during the year by increasing the portion of the DTC model and taking the lead in Heilongjiang, Liaoning, Jiangsu province and with the Lida's core collection DTC model also terminating the contributors with direct sales and also second tier show system mix operation through this kind of direct sales.
And also on the second tier distributors, there were also kind of VLANX core selections collections is also a kind of improvement at the same time with kind of standardization to have this kind of improvement. So offering to the local consumers high end and high quality products up to the end of twenty twenty four, it was altogether twenty seventeen. So this kind of measure is already with a lot of in Changfus of altogether two zero three. So we expect on this long term development will be also foreseen. Number two, we also have our overall, so with the core cities and also on the shopping malls and the premium location together with our existing shop, we also increased our brand better.
So increasing our in terms of the inventories, we also have number one, on the transformation from the original distributors to have the inventories in 2024, we have also 95% of the clearing. Number two, in the outlets on the platform's e commerce platform in 2024, we have also a very good growth in 2024. It is already eighty three days turnover with a fair health development up to the end of last year. Altogether, we have 2,773 with an increase of 78 core and also on the 20 for the Smart Mirror shops. On Page 16, it will be a highlight of new retail business development.
The e commerce outperformed the overall growth by 24%. In terms of the products, we have already on the inventory to be changed into a kind of direct sales in the past one year. In terms of the channels, there are also new products offered. And in terms of the coverage, we insist on also our own food channels. Last year, we have also maximized our PDT and also poisons, our sales.
Now we also have our upgrade of our retail reinforced also on the distributors to have very more convenient and high quality products for the consumers, we are talking about on this latest product design development. The growth together with our pioneer designer on the design, so offering consumers the best products. Last year, we have also worked together with our Changpeng technology. We've also the capsule down and also with the water repellent down. The product supply and it's also very, very motivating the whole group's growth with 41% year on year on the down sales.
The group also launched its first original long lasting. We have the lone iron durable white shirt, which is a this kind of EP 3.5 level of non iron and super high white shirts at the same time to guarantee also the portion. In response to young consumers a sense of self identity to go although we launched a smart elite connection in the TikTok and also Xiaohongshu, which were praised by the general consumers. In Page 19, this is a diverse event in the group's brand management and promotion. Through the year, the group continues to explore new ways of diversifying marketing with innovation, quality and new business as the keywords.
The group has successfully reached out to consumers, various businesses and also celebrities, also to all kinds of different age groups, in particular, with many of the consumers realize also the business group. We also work together with VANCO TV, or three times is the Columbia by Fire promotion of the brand, which is strange to simplicity but not simple. We also worked through the Paris Olympics and National Geographic China to launch a Follow the Silk Road to Paris with the Lin On Smart Elite Suites. At the same time, we also worked together with many of the celebrities to dress in LENA's best in small series to have meet and greet sessions in various locations across the country to promote this kind of young business by promoting the group's penetration in regional markets. Now thank you.
Good afternoon. I am the Chairman of the company, Wang Dongxing. Allow me to present the group's development strategy for 2025. Looking to 2025, the global economic and political environment remains uncertain. China Lila will continue to capitalize on its leadership position and market consolidation opportunities.
Focusing on the core development of the Lilan's core collection and the Lilan less is small smart casual collection as well as the multi brand strategy internationalization process and the promotion of digital business in order to expand our market share and enhance our brand competitiveness. First of all, the group will continue its channel reform for the Lila's core collection. The group will further strengthen the connection between the brand and pursuant of the implementation of DTC model and expect the positive impact of the DTC sales growth to be realized from 2025 onwards. Meanwhile, the Smart Casual has gained momentum in recent years. With the rise of the new middle class and the emergence of young consumers, we will increase our investment in product R and D, enhance product quality and design and further strengthen our brand differentiation to meet the needs of more consumers.
The group was strategically positioned and developed its sales network with a net increase of additional stores in shopping centers providing capitals and prefecture and auto outlets in order to effectively clear inventory and boost sales. In addition, the group will flexibly close inefficient stores, improve the overall store efficiency and expects to add a net increase of 100 stores in 2025. For the new retail, the group will continue to deliver related businesses to achieve faster growth. The group will continue to set up its online promotional efforts and continue to leverage social media platforms such as TikTok to reach consumers nationwide in-depth through live streaming and other means to drive the sales growth. With last year's transformation of inventory clearing channel to a retail channel focusing on new products, the group will increase the proportion of online sales of new products up to 80% this year.
Through the implementation of these new retail initiatives, the group who aims to achieve a growth of 15% or more in 25% for its new retail business. During the year, the group has acquired in August the operation rights of the high end Gulf apparel brand, Munsingwear in China, which further enriched the group's high end product portfolio. And according to the plan, the group will launch online sales in first half of this year and open our first fiscal store in the second half of the year. In terms of developing the Southeast Asian market, the group has already organized the company in Malaysia and is expected to open its first store in Malaysia in the first half of this year. And it also introduced China's quality and affordable manufacturing products to overseas markets as well as to broaden the group's new sources of income and master more market opportunities.
By the end of twenty twenty five, the group aims to achieve its goal of operating in both China and Malaysia under the brand, Lilan's Business Model and Munsingwear and to implement various developments to further consolidate its leading position in the Mansead Pro industry and to create greater value for shareholders and consumers. This is the end of my report. Thank you very much. Management, my name is Changyin Guo. Thank you very much for your presentation and thank you for your transformation of your channels.
I do have three questions here. Number one is regarding the do you remember last year that at the end, would there be any kind of things that we can achieve as promised at online and offline and also wholesale and retail? Would there be any kind of more strategies? Question number one. Number two is on the target for this year.
The growth is also quite minimal. And how much is your confidence in achieving this target? And then on the e commerce currently on the e commerce, what do you how do you define the e commerce currently? Last year, what were the sales of the e commerce? And this year, what were the opportunities what kind of contribution on the e commerce?
And any kind of a kind of effect to change? So what about comparing to the peers? Number three, regarding the possible development of light in terms of the Brexit and also any other cooperation? So I would like to ask all of you mentioned. Thank you very much for these three questions.
Regarding question number one, for the growth for the overall environment, relatively, it is still promising. Number two, of course, that's all because of the weather condition, there's no way for us to achieve. The growth in the second half of the year. The strategy would be to ensure very healthy financial station tuning operation and also on the products, shipping, and calling previous targets. Naturally, for our sales, we expect it would be good.
Of course, there will be some inventory, but with so many online offline channels for 2025, there will be also some press on sales. And in 2025, if we can achieve our target, first of all, we can see consumers' confidence, first of all, is the nationwide conditions that they have also have the national meetings or the political leaders have also do this kind of conference you will offer to the whole China, including ourselves, on the AI's sustainable operation, which is kind of a strong move. So we can be rest assured to have our motivation in creations to understand the overall capital market, including auto security markets, including Hong Kong. Of all these kind of factors, we can still this 2025 would be including the positive panels. This is also and that is why we are I mean, this kind of 2025 has steady growth.
But for the e commerce and retail, put it this way, for the traditional sales and the deal retail sales. We've also e commerce altogether. This is number one. Number two, if that overall, the retail percentage is approximately 10 plus the live streaming and also the online is another 20%. Indeed, I do not think that this is within the industry a little percentage and that's why we having this kind of offers in the market is reasonably reasonable indeed even for the whole industry, enable also the online sales is even more we can see that we are still under observation.
Hopefully, we can have a much better performance. A lot of the people would like to engage in this business, but it is a kind of online and it has a much better gene. So in terms of Apple, business for the last sales and also operational talent wise and R and D. We have already accumulated a lot of the benefits and also competitors. So in terms of the brand gene, we have accumulated for so many years of our experience.
We believe that within the next two, three years, we should within two, three years be able to have a very fair promising development. Thank you. Thank you. Now we are now taking questions both on the floor and offline or on the floor. Any questions from the floor please.
Gentleman from the first row. My name is Jason Wong. So please remind me, my question number one is to quantify, we have what kind of influence with reality in terms of technology? Number two, what are the reasons for that in terms of the future operation regardless of channels or profit or net profit? Would there be also some influence?
Last, The inventory of 10%, what do you have for your target? What about the net profit being affected? Thank you. The recovery of the distributors originally, the recovery of the distributors, right, the management feels that it's a very good thing. I'm just happy about that because for those distributors we have done very good, But recovering those distributors are some of the less efficiencies, some of them is doing some kind of tens of millions per year.
So we have spent very, very less effort to recover the provinces in Jiangsu and the other regions. So in one or two years or three years, we should be able to make the profitable on this distributors competition. So after three years, I feel that this is a very promising future for development. Put it this way, if we have to recover those rights, we are able to have multiple channels. We have online having so many connections and also on the shopping malls.
So this is what the distributors are doing, including the online or houselets. We have very unique, very good operating teams for the online sales. That is why we also want the good side, but previously the distributors or the agents were dealing with the inventories in the past, why they now VLAN as this kind of a huge recovery rail inventory, the reason why on our dedicated sales, we are selling all products, but in twenty percent of is to deal with the inventories. Now the inventories only are dedicated online, so that at the end gradually after doing this apple industry for such a long time. 60% of our inventory, if we can have them sold, we feel very happy now that if we can sell up to 90% of the products, the new products, there's something beyond imagination.
But previously, with this kind of sales through, with the recovery of the distributors right now, we see that we are confident in the future. Thank you. In terms of the net profit and also the gross profit, having those recoveries, in terms of the gross and net profit, there will be also some difference. We have expected that within three years, we will still recover for this kind of one off compensation and we can still make it profitable, we can make the money back for the online sales if we are confident that we will do it ourselves with this kind of competitiveness. This is our upper hand in the future.
The gross profit net profit will definitely be more profitable and that's why we are more confident on that. What was the third question about? Oh, yes, the target and the G. Because in terms of the short term on the profit, there is some kind of influence of the recovery by the mid to long term. The group's profit is still maintained at a higher percentage in future.
In the future, we depending on the market situation to expedite this trend transformation. And if the plan is to be expedited to guarantee the target and the profitability is still good? I'd like to follow-up another question. Now for this transformation in terms of our new stores and also on the profit and loss in the group in terms of the inventory, if we have to put the inventory listed here in the profit and liabilities, if they'll be over engaged. So in the long run, would there be other different kind of figures shown in the books?
Would it be also different? Number two, I'm curious about on the profit target, how the recoveries in the next one to two years, would there be also continuous recovery? This is only a one off. There will be also in the followed by on the recovery. It is still on the one off in about six months.
And then we can also start seeing the profits. For the recovered inventories, we have also tried to have also consignments franchise on the smart casuals. So the reason why we do it this way, especially on this market. On this kind of operation, it is already in a very stable approach in 2024. We believe it's really on the track and believe it will change in 2025 is not where it means that including the people more importantly is that on the product will be maximized.
Originally, we have only about 30 shops or stores. They can only sell through those stores and there's no way for them to sell more if it's a best sale. If it's a worst sale, you will accumulate through this kind of operation mode to solve this situation, this dilemma. So ordering the new products does not affect their inventory or to sell. And that is why 2024, If you order more and the market is not going to be consumed, but it can still maintain this growth.
Especially now, we have already built up the system on each of the stores. In other words, now that if there will be some consignments or franchise, we can still be more competitive. So we have to recover it despite that there would be some difference in our the weight on the recovery and also the sales will be improved. For the Smart Casual, it is believed that Any other question from the floor, please? I have another question.
Regarding on the Smart Casual, for the last couple of years, we have also added the Moreover, in terms of the customer groups, they are more focused on the young people and the age distributions. Would there be more data points to share? One is on the Lila on the online platform, less than 30 years old consumers, that is one, compared to the others, which is a very big differentiation. And this number two is like 50% of the 40 years old plus consumers representing a different age group, Which of course, the age group is becoming younger and younger, the two age groups are what we can see in the Smart Casual and the result is quite promising. But what about the past few years, would there be any change of directions?
On the age going down, age groups, well, the tendency is, we did not have any kind of study on this age tendency, but we only compare for last year. On especially the smart schedule, we have never paid attention to the change of the age groups in the past. Thank you so much. Has been transformed. My question is whether from last year, the brand and then also opportunities, what will be also the growth?
Would that be the same? Question number one. Number two is on the transformation. Last year, overall, it was quite quick with four provinces in 2025. Would there be also other transformation to other provinces, how many provinces?
So what would be the final expectation for the direct sales to those to a certain level? These are the two of my questions. Thank you. We have just started for the brand last year. So this is additional operation.
So we did not have any kind of time for last year, number two. For the distributors and wholesales, this has already been taking off of the rivers, the traffic of the rights for the Northeast Part of China, we have already recovered it. The first batch, E to C to have this kind of recovery rights of the operations. Thank you very much. Thank you.
Let's see if there's any other questions from the floor now. Good afternoon. The first question is on the expense, expenses online and also the store efficiency and its equivalents. In terms of expenses, what would be your expectation of the future expenses? Thank you.
I'm sorry. Direct sales and also on the e commerce channels. Well, most of the stores are in direct sales. So what is the percentage of the e commerce in terms of the direct sales, direct stores, most of the expenses, right? The growth is higher than the revenue because we are also having some progress on the Northeast Part of China.
So if there will be some unfavorable sales, then we'll reinforce our e commerce so that we can maintain a very favorable ratio and that is why on the sales expense. And second reason is that we have to maintain the smart casual direct stores and the 20% will increase to 35% of the growth for the small casual, not the expenses, that would be much closer. We're talking about two years. So it's a ratio and the second is also to maintain a healthy growth. Number two is on future trend.
In terms of the future trend, we believe the store efficiency upgrade in the future, the sales expenses will have a reasonable deployment in a reasonable range. So hopefully, we can follow-up the 2025, including 2026 transformation or the Smart Casual growth. The store efficiency will increase on this kind of minimize also on the expenses of the stores. Okay, thank you. Any other questions? We're now taking questions both from online and offline.