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Wharf (Holdings) posted a 125 per cent rise in profit for the year to December 31, helped by a $3.59 billion gain from the spin-off of its i-Cable Communications unit.

 Profit attributable to shareholders rose to $4.21 billion, within analysts' expectations.

 Stripping out the gain from i-Cable, Wharf's operating profit was down 41 per cent from a year earlier to $1.5 billion on higher borrowing costs and provisions.

  Borrowing costs during the year rose to $1.93 billion from $1.29 billion in 1998.

 The conglomerate made a provision of $1.5 billion for properties under redevelopment and for sale.

 Analysts said the provision was designed to take advantage of the high profit period to minimise the impact on earnings from selling loss-making developments in future.

 Devaluation of Wharf's industrial-office building, Delta House, in Sha Tin, accounted for 80 per cent of the provision, while the balance was for China projects, they said.

 Wharf's earnings growth last year was also partly helped by a change in accounting practice.

  In line with new accounting standards, Wharf adopted a policy of stating all investment at fair value.

 The change produced an additional $403 million profit but slashed net assets by $159.7 million.

 Wharf will pay a final dividend of 50 cents per share, bringing the dividend for the year to 78 cents.

 Earnings per share rose to $1.82 from 82 cents in 1998.

  Operating profit before provisions dropped 6.5 per cent to $3.01 billion.

 Chairman Gonzaga Li Wei-jen said the Wharf group was on a firmer footing than at any time during the past five years.

 In the next five years, Wharf would see property comprise 55 per cent of its business, telecommunications 35 per cent and terminals 10 per cent, he said.

 It would launch the third tower of Gateway Two for lease and The Peak luxury property portfolio for sale later this year.

 Annual rental billings were expected to reach $4.25 billion if optimum occupancy was achieved in the group's property portfolio.

 Its property portfolio is 93 per cent occupied at present.

 In Gateway Two, retail space is fully let, two of the three office towers is 80 per cent leased.

 Of the 190 serviced apartments launched, 150 units have been let.

 Mr Li said i-Cable was actively developing e-commerce and related contents to complement its multimedia capabilities.

 Subsidiary Modern Terminals achieved 9.8 per cent throughput growth in the year.

 Anton Kwang, an analyst at ABN Amro, said Wharf's telecom arm, New T&T, would be a growth sector for the group.

  Wharf expected to pass the 100,000 fixed-line mark by the month's end.

  Mr Kwang said the company had also sold securities worth $4 billion to $5 billion last year, which helped reduce its gearing ratio to 32 per cent from 50 per cent.

 Merrill Lynch analyst Christine Leung said New T&T's operating losses narrowed to $20 million last year from $100 million in 1998.

 However, Ms Leung expected Wharf's profit to drop to $2.6 billion next year.

 She said the company's share price represented a 60 per cent discount to net asset value, excluding its share in i-Cable and New T&T, compared with the average 44 per cent discount for other property investors.

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Wharf surges on i-Cable spin-off