This excerpt taken from the CTRP 20-F filed Jun 22, 2005.
2004 compared to 2003
We had revenues of 354.0 million (US$42.8 million) in 2004, an increase of 93.8% over RMB182.7 million. This revenue growth was principally driven by the substantial volume growth in hotel room nights booked and air tickets sold in 2004.
Hotel Reservation. Revenues from our hotel reservation business increased by 79.9% to RMB276.0 million (US$33.4 million) in 2004 from RMB153.4 million in 2003, primarily as a result of the continued rapid growth in our hotel room nights sales volume, and to a lesser extent, the negative impact of SARS to our hotel reservation business in the first half of 2003. The total number of hotel room nights booked in 2004 was above 4.2 million compared to above 2.4 million in 2003.
Air Ticketing. Revenues from our air ticketing business increased substantially by 210.3% to 63.0 million (US$7.6 million) in 2004 from RMB20.3 million (US$2.5 million) in 2003, primarily due to strong growth of air tickets sales volume as we continued to expand our air ticketing capabilities significantly, and to a lesser extent, the negative impact of SARS to our air ticketing business in the first half of 2003. The total number of air tickets sold in 2004 was about 1.7 million, compared to about 610,000 in 2003.
Packaged-tour. Packaged-tour revenues increased substantially from RMB4.8 million in 2003 to RMB 10.5 million (US$1.3 million) in 2004, an increase of 118.8% as we continued growing our packaged-tour business. See Recognition of Packaged-tour Revenues.
Other businesses. Revenues from other businesses increased by 7.7% from RMB4.2 million in 2003 to RMB4.5 million (US$543,792) in 2004, primarily due to increased sales of our advertising service and special marketing alliance projects in 2004.
Our net revenues increased by 92.8% from RMB173.1 million in 2003 to RMB333.8 million (US$40.3 million) in 2004 as a result of our increased revenues in all of our business lines, partially offset by the resulting increase in business tax and related surcharges.
Cost of Services
Cost of services in 2004 increased by 88.8% to RMB48.5 million (US$5.9 million) from RMB25.7 million in 2003. This increase was primarily attributable to the hiring of additional customer service representatives and increased telecommunication expenses resulting from the overall expansion of our hotel reservation and air ticketing businesses.
Operating expenses in 2004 increased by 67.4% to RMB149.7 million (US$18.1 million) from RMB89.4 million in 2003, primarily due to a significant increase in product development expenses as well as sales and marketing and general and administrative expenses. However, operating expenses as a percentage of net revenues decreased from 51.6% in 2003 to 44.8% in 2004 as a result of our scalable and profitable business platform.
Product Development. Product development expenses increased by 83.6% to RMB38.0 million (US$4.6 million) in 2004 from RMB20.7 million in 2003, primarily due to increased salary and benefit expenses for the increased number of product development staff mainly in the air-ticketing and packaged-tour sectors.
Sales and Marketing. Sales and marketing expenses increased by 53.2% to RMB72.9 million (US$8.8 million) in 2004 from RMB47.6 million in 2003, primarily because of increased salary and benefit expenses for the increased number of sales and marketing staff, increased expenses in connection with our customer reward program, advertisements and commission payments to our marketing partners.
General and Administrative. General and administrative expenses increased by 89.6% to RMB36.4 million (US$4.4 million) in 2004 from RMB19.2 million in 2003, primarily due to increased salary and benefits for the increased number of general and administrative staff and increased professional service fees.
Share-based Compensation. Share-based compensation increased by 25.0% to RMB2.0 million (US$236,576) in 2004 from RMB1.6 million in 2003, primarily due to the effect of amortization of share-based compensation expenses associated with share options issued in 2003.
Amortization of Goodwill and Other Intangible Assets. Amortization expenses increased by 27.0% to RMB0.49 million (US$59,554) in 2004 from RMB0.39 million in 2003, primarily due to amortization expenses related to our acquisition of Shanghai Ctrip Charming in September 2003.
Interest Income. Interest income increased tremendously to RMB5.5 million (US$669,670) in 2004 from RMB400,557 in 2003 because of the increase in our cash balance and the increase in the interests rates of our bank deposits.
Other Income. Other income decreased by 11.8% to RMB4.5 million (US$540,080) in 2004 from RMB5.1 million in 2003, primarily due to an increase in other expenses, offset in part by the higher amount of financial subsidies we received in 2004.
Income Tax Expense. Income tax expense was RMB12.5 million (US$1.5 million) in 2004, an increase of 22.5% over RMB10.2 million in 2003, primarily because of the increase of our taxable income in 2004. Our effective income tax rate in 2004 was lower than 2003 because a substantial portion of our income was generated by Ctrip Travel Information, which was exempted from paying EIT in 2004.
Net income increased by 147.4% to RMB133.1 million (US$16.0 million) in 2004 from RMB53.8 million in 2003, as a result of the factors discussed above.