KUMAGAI Gumi (HK) has reported profit attributable to shareholders of $906.1 million for last year in results affected by the booking of the Ambassador Hotel sale. On the 15 months to December 31, 1993, attributable profit was $352 million. Earnings per share on a fully diluted basis were $2.081 last year, compared with 93.7 cents for the previous 15-month period. Chairman and managing director Yu Ching-po said the group saw strong profit growth in construction and contribution from property development in China looked encouraging on the basis of reaction to pre-sales. The annual dividend for the year is 50 cents against 48 cents in the previous 15-month period. The final dividend portion of the total, of 25 cents, will be paid to those members who appear on the register on May 29. Kumagai reported contracts on hand at the end of 1994 at $12 billion. To date this total is understood to be about $14 billion. Of this $10 billion is understood to be in Hong Kong and the rest in China. The group has negotiated $10 billion of the total contracts on hand on a cost-plus basis, protecting profit margin. The exceptional item was the previously reported sale of the Ambassador Hotel, in Tsim Sha Tsui, in September 1993 for $1.29 billion, to Lippo. In the 1994 accounts $655.4 million was booked, representing 72.7 per cent of the operating profit after exceptionals. The hotel was bought by Kumagai in 1987 for $600 million. After the sale of the hotel to Lippo in September, 1994, Hong Kong China, a 71 per cent-owned Lippo vehicle, sold the hotel to Stelux Holdings for $2 billion, a rise of $710 million over the sale by Kumagai. At the operating profit level the company reported $246 million, against $70.4 million on the previous 15-month period. Under this item $200 million is made up of construction. Operating profit margin for 1994 was 8.54 per cent against 2.58 per cent. The margin attributable to construction business was about seven per cent. Turnover in 1994 was $2.88 billion against $2.72 billion in the 15-month period previously. The reason for the relatively high margin, according to the company, was the high proportion of construction contract undertaken on a cost-plus basis, protecting against major escalation in the cost of materials and other inflationary-linked items. Exceptional items in 1995 are not expected to report the same significant level of earnings, but earnings from three property developments in China are expected to kick in under associated items. Associated items in 1995 could be a low of $250 million or as high as $500 million in the period, said analysts. In the period a $10.1 billion contract linked to the airport was awarded to a consortium in which the group was a 20 per cent partner. The consortium was the British Chinese Japanese joint venture which will build the Chek Lap Kok Airport Terminal building. The company got approval to enlarge the Red Hill luxury residential complex from 47,000 square feet to 53,000 sq ft and through the 40 per cent-held Yangpu Power (Hainan) Co the company signed 15-year deal to produce electric power for Hainan province. Mr Yu said: 'Kumagai Gumi (HK) had an excellent year which saw strong profit growth and a much improved balance sheet which placed the group in a solid financial position for future growth and expan-sion.' The important items due to kick in in 1995 under associated companies include the Silver Valley residential complex in Haikou, Hainan Island, the residential and retail complex called South Ocean Centre, Shenzhen and the Shun Hing Square. Analysts said there could be a degree of embedded profit in these projects to be booked on completion of sales as the company would be able to realise its portion of the gains in the pro-jects. Mr Yu said: 'The prospects for construction look excellent for the group. 'In property development the group is optimistic about the residential and commercial markets in Hong Kong and will be looking for new development opportunities.' In China the property market was sluggish due to the austerity measures. 'The group's major developments in China are showing encouraging pre-sales results due to their prime location and the group's reputation as a contractor and developer,' Mr Yu said.