DESPITE spiralling office rentals in Central, Hongkong Land Holdings posted virtually no profit growth last year. Net profits for the year to December 31 rose only marginally to US$306.5 million, dragged down by a terrible performance by its 25.3 per cent British affiliate Trafalgar House. Hongkong Land was forced to take a US$24 million after-tax charge to its profit and loss account after Trafalgar declared a GBP366.8 million (about HK$4.2 billion) year-end net loss for last year after asset write-downs, property provisions and rationalisation. Analysts in Hong Kong and London are split over whether Trafalgar will return to profitability this year and contribute to Hongkong Land. In Hong Kong, brokerages seem confident the new-look Trafalgar will turn a profit this year. Their counterparts in London last night were saying the opposite. Hongkong Land's earnings per share rose just 0.5 per cent to 11.71 US cents. Nevertheless, the directors have recommended a five per cent rise in dividend payments for the year to 10 cents a share. Although Jones Lang Wootton reported a 56.1 per cent rise in average prime office rentals in Central last year, rental income from Hongkong Land's vast commercial and retail property portfolio fell slightly. This was partly due to the new phase of positive rental reversions in the company's office portfolio taking hold only in the second half of the year, and partly to a loss of rental income following the sale of Nine Queen's Road Central. The property was sold for US$490 million in June, realising an extraordinary profit of US$213.2 million for the year. Managing director Alasdair Morrison said he was confident the company would benefit more from positive rental reversions this year. Recently it has been achieving more than HK$100 a square foot for new rents on odd small units in Exchange Square, while whole floors have been fetching $90 a square foot. This compares with an average $45 achieved on its office portfolio last year. Despite recent hefty rises, Mr Morrison said: ''Rentals at current levels are in real terms lower than they were in 1979, so we would think they still have some way to go.'' In light of the soaring real estate prices, a revaluation of the company's investment portfolio was carried out late last year, resulting in a net valuation surplus for the year of US$2.5 billion which has been credited to reserves. As a result, the company's net asset value per share jumped 50 per cent to US$2.93, which Mr Morrison said was on the conservative side. Net borrowings at year-end stood at just US$82 million, representing a modest one per cent of shareholders' funds. Company chairman Simon Keswick said: ''The group has the financial strength and the resources to exploit new property and infrastructure-related opportunities in Hong Kong or elsewhere.''