Pulling out the stops to depress profit growth, is not what investors have come to expect from Hong Kong blue chips. However, the allegation is being made against the directors at Wharf (Holdings). With a very predictable earnings flow at the office property group, deviance from expectation is a matter of one-offs. In the early 1990s profits were helped by property sales in Singapore, including Parc Oasis. In Hong Kong, trading profits came in from the New Tech Centre and a sale of half of Telford House. Together these items, appearing in group accounts between 1992 and 1994, amounted to $1.5 billion or 17 per cent of the operating profits reported over the three years. Another big one-off appears in the group's 1995 accounts. However, analysts argue the group has tried to dampen its impact to avoid reporting a dip in profit in 1996. What is particularly interesting is the 1995 accounts contain a series of one-off deductions and a single one-off gain. Analysts contend the one-off deductions have depressed profit growth in 1995 so that the group's track record shows a smooth long-term record of profit growth, with no dips. At the interim stage the group announced a $1.94 billion exceptional on an asset swap with parent Wheelock. Somehow this became $1.88 billion this year, knocking off $57 million from profit. Another three items in the accounts, which together with the reduction in the asset swap gain, reduce group profit overall by $435.5 million. What this means is profit attributable to shareholders rose 16.26 per cent to $3.6 billion after all the profit dampening. Profit would have risen by 30.3 per cent to $4.04 billion had there been no deductions. On the basis of a profit expectation of $3.75 billion in 1996 it means the reported profit rise next year will be about 4 per cent over the profit-dampened figure in 1995. If it were not for the profit dampening, the profit would have fallen 7 per cent, the first fall in profit since the 12 months ending March 31, 1988, the old year end. Analysts contend the one-off deductions in the exceptional column were unusual. A write-off as small as $180 million on a $4 billion project like Wharf Cable is exceptional. The provision was on obsolete equipment, which, analysts contend, should have been foreseen at the beginning of the project and amortised. A provision under these circumstances ought to be taken on a permanent diminution of value. Hutchison Whampoa, for instance, has taken hits before of $1.4 billion for Husky Oil and a similar amount for the failure of CT2 in the United Kingdom. There is a further $95 million hit in the Wharf numbers on long-term investments. By their very nature these investments ought to be very long term and therefore do not need writing down through the profit and loss account, say analysts. This is especially where treasuries are concerned, say analysts. Another hit of $103.2 million was taken on litigation which remains on-going. Even the argument with the government over tax in the Times Square project is being appealed. The nature of these three hits and their timing is arbitrary, argue analysts. When will all this dallying with the accounts stop, 1998? This year's and next year's profits are due to be helped by Diamond Hill residential unit sales. Then the earnings picture totally changes at Wharf with Gateway II office complex coming on line with $1.5 billion of rent coming in each year.