PDF《HC INTERNATIONAL, INC. 慧聪国际资讯有限公司*》

s television advertising business, a decrease of 10% in turnover was recorded for the discontinued operations as compared to that in 2004. Comparing the Group'

s segment financial performance of the continuing operations against those achieved last year, the Group recorded a strong growth in the revenue generated from the search engine business segment. A total revenue of RMB96,351,000 was achieved by this segment in 2005, representing a growth of approximately 17% over last year (2004: RMB82,373,000). In 2005, the revenue generated from this on-line business segment (search engine services) accounted for over 30% of the Group'

s total revenue, representing an increase of about

4 percentage points when compared to that in 2004. The revenue generated from the trade catalogues and yellow page directories segment remained relatively stable in 2005. A total revenue of RMB173,304,000 was recorded during the year, representing a slight decrease of approximately 3% when compared with RMB179,195,000 recorded in 2004. A slight increase in turnover by 6% was recorded by the continuing operations in the market research and analysis segment, with total revenue of RMB30,251,000 as compared with RMB28,565,000 recorded in 2004. The gross profit margin of the Group'

s continuing operations decreased by about

1 percentage point from approximately 52% in

2004 to approximately 51% this year. As a result of the deferred revenue generated from the search engine business together with the recording of substantial amount of selling and staff costs in 2005, the gross profit margin of the Group'

s search engine business segment also decreased by

4 percentage points from approximately 75% achieved in

2004 to approximately 71% in 2005. Faced with keen competition and increasing cost in the television advertising sector, a total loss of RMB6,908,000 and negative gross profit margin were recorded for the discontinued operations of the Group in 2005. Suffering from the poor performance in the discontinued operations and the increasing investment costs in relation to the enhancement in system technology and quality of on- line contents, the Group recorded a loss in the financial year ended 31st December, 2005. A net loss attributable to equity holders of RMB24,747,000 was recorded by the Group in 2005. The board of Directors does not recommend the payment of a dividend for the year ended 31st December, 2005. C

3 C Business Review The Group published its first trade catalogue in 1992. During the past

14 years, in addition to the Group'

s printed media business which include trade catalogues, yellow page directories and market research reports, the group extended its services and products to cover the on-line sector and succeeded in expanding its business across China to become one of the leading domestic business-to-business on-line marketplace operators. During the reporting period, the Group'

s business-to-business industry portal, www.hc360.com , was ranked one of the top

100 most popular websites worldwide by ALEXA, an independent web ranking services provider, with an average daily visitors identified by independent IP addresses of over 1.5 millions and approximately

25 million page-views. The Group consolidated its position in the market by introducing a new trading platform Mai-Mai-Tong买卖通 , in addition to its sector search prioritising service. Mai-Mai- Tong买卖通 provides a reliable and comprehensive trading platform for buyers and sellers, and was well received and recognised by member of the business-to-business community. Mai-Mai-Tong买卖通 , an on-line marketplace launched by the Group in late 2004, provides reliable and timely business information to members of the business-to-business community, and allows users to locate and source products on-line. The main features of this innovative on-line product of the Group include 1) the virtual display platform C where users can design personalised on-line storefronts;