Larger than expected property provisions and a sharp decline in contributions from associate Hutchison Whampoa pulled the profit of Cheung Kong (Holdings) down 62 per cent to HK$7.29 billion last year. Its share of profits from Hutchison dropped 65 per cent from HK$17.04 billion to HK$6.04 billion. Before Hutchison's contribution, Cheung Kong's profit amounted to HK$1.25 billion, down 48 per cent from HK$2.38 billion a year earlier. Analysts were surprised by the higher than expected HK$1.5 billion provision made for the Caribbean Coast residential project in Tung Chung and The Metropolis commercial complex in Hunghom. However, deputy chairman Victor Li Tzar-kuoi said the group had taken 'a more conservative individual-property approach' on making provisions. 'Once the project's cost is lower than market value, we make the provision. All properties after provision will therefore only bring about profits when sold,' he said. Chairman Li Ka-shing said he expected this year to be another volatile one but he maintained an optimistic outlook on the business of his group. Earnings per share for the year ending December 31 decreased 62 per cent to HK$3.15, against HK$8.42 previously. Turnover for property sales during the period, including jointly controlled entities, sank 25 per cent to HK$6.21 billion compared with HK$8.26 billion a year ago. Contribution from property sales this year would mainly come from Nob Hill and Victoria Towers, which would be completed this year. Cheung Kong acquired six development sites in Hong Kong last year, with a total developable floor area of more than 4.1 million square feet. Total borrowings increased 15 per cent to HK$24.4 billion last year and the gearing ratio rose from 11.5 per cent to 13.8 per cent. HSBC Securities analyst Derek Cheung said the profit generated by Cheung Kong was generally in line with his expectation but the provision was higher than his projection of HK$1 billion. Meanwhile, he said Cheung Kong's future profit growth would depend much on the telecommunications business, given the large portion of contributions from Hutchison.