CHINESE Estates Holdings saw a 7.2 per cent slide in net profit last year to $593.25 million because of interest charges incurred in buying back almost $1 billion of its own securities. Chairman Joseph Lau Luen-hung said that in the year ended December 31 the company spent $932 million on repurchases of company securities, including 165 million shares. He said interest charge also affected the results from $500 million of property redevelopment costs and $220 million of long-term investment in China. The share buyback meant that basic earnings per share were flat, at 37 cents. Fully diluted earnings per share rose 12.9 per cent to 35 cents because of the decrease in the dilution effect of outstanding warrants since the 1993 warrants were exercised, cancelled or lapsed, amounting to 181.15 million warrants worth $157 million, in cash paid, at the end of the year. In a major reappraisal by Chesterton Petty of the group's property values, net asset value per share of the group soared 146.8 per cent to $14.12. On yesterday's share close of $9.75, the company is on a historic price-earnings ratio of more than 27 and a discount to net asset value of 30.9 per cent. As in previous years, no dividend was paid. To keep borrowing low, the debt-equity ratio was 16 per cent. Mr Lau said that to pay for investment in China ''the directors consider it is appropriate to adopt a conservative policy on dividend distribution having regard to the financial and cash position of the group, its future capital expenditure requirement and potential investment opportunity.'' This year, its prospects are earnings from the 112,000 sq ft Entertainment office and retail building in Central, a cinema development at Silvercord, Evergo House and Windsor House. The group's disposal of the seventh, eighth and ninth floors of Harcourt House and the 34th floor of Queen's Road Central will be booked this year. Last year, group turnover fell 16.7 per cent to $2.43 billion, the operating profit fell 11.6 per cent to $620.81 million, and the profit before tax was down 22 per cent to $652.28 million. Associated company profit slumped 77 per cent to $31.47 million. Net rental income rose 21.8 per cent to $462 million and gain from property disposals rose nine per cent to $427 million. Mr Lau said: ''The market price of quality office space has increased substantially and the group may consider a readjustment of its property portfolio accordingly.'' Despite the uncertainty in relation to mainland land appreciation tax, the group plans to seek out further investment opportunities in major mainland cities. The company said it would maintain low gearing to ensure it kept a strong working capital base.
