First Pacific Co yesterday said attributable profit dropped 20.5 per cent last year to HK$1.59 billion, hurt by an absence of exceptional gains and rising interest costs. Analysts, who were predicting that net profit would fall by as much as 23 per cent, said the result was slightly better than expected. Underlying operations at the company, which is ultimately controlled by Indonesian businessman Liem Sioe Liong, showed broad growth. Operating profit rose 33.5 per cent to HK$4.42 billion, and turnover climbed 33.8 per cent to HK$54.8 bil-lion. Earnings per share rose 20.3 per cent to 66.22 cents on a fully diluted basis. Directors recommended a final dividend of 12 cents, making a full-year dividend payable to shareholders of 21 cents, up from 17.5 cents. The company recorded a loss on exceptionals of HK$123.2 million. The year before, it made a HK$671.6 million gain, buoyed by the sale of interests in Philippines-based telecoms group Smart Communications and Dutch trading house Hagemeyer. At the same time, net interest costs rocketed to HK$925.1 million from HK$651.3 million. Managing director Manuel Pangilinan said: '1996 was a year of significant achievement for us. 'Despite difficulties in a number of economies where we operate, recurrent earnings rose significantly with improved contributions at each of our four core businesses.' Each of the four main areas - mobile phones, banking, property, and trading - posted more than 20 per cent growth in operating profit. The marketing and distribution arm, which includes Hagemeyer, saw a 23 per cent rise in profits before exceptionals to HK$843 million and continued to provide the bulk of the group's earnings. Contribution from the telecommunications division rose 40 per cent to HK$498 million, the property division by 25 per cent to HK$277 million, and the banking contribution by 71 per cent to HK$209 million. One concern for shareholders could be the diluting effect of the company's plan to raise more than US$250 million via a convertible bond issue for general working purposes. Mr Pangilinan said the bond issue would come 'fairly soon'. The directors said the majority of the funds raised would go towards the telecom operations in Indonesia, IndoLink First Pacific, which lost HK$29.64 million last year due to the cost of building its subscriber base. Smart Communications was the star performer of the group with profit contribution surging 93.9 per cent to HK$74.1 million. W I Carr investment analyst Christopher Wilmot said: 'Smart continues to do very well, and it will be a very good source of earnings growth.' Mr Pangilinan said the listing of the 35 per cent owned Smart should take place this year, perhaps in June or July. Smart's cellular subscriber base climbed 173 per cent to 310,000 last year, giving it 39 per cent of the market. Mr Pangilinan said he remained confident the company would continue to perform well this year, aided by improving market conditions for trading activities and growth in telecoms business. First Pacific shares fell 15 cents to HK$10.70 yesterday, making them 3.6 per cent down over the past week.