THE property and toy companies of the Playmates Group posted drops in interim operating profit for the first half. Playmates Properties Holdings reported a 0.1 per cent rise in interim net profit to $169.53 million, despite a 4.5 per cent fall in operating profit. Earnings per share were flat at 26 cents. The directors recommended an interim dividend of 3.5 cents per share. Turnover rose 24 per cent to $825.47 million, against the previous $665.47 million. Operating profit dropped to $192.63 million which was primarily generated from the disposal of Abergeldie on The Peak, Happy Plaza in Yuen Long and 99 Tai Ho Road in Tsuen Wan. Chief finance officer George Chan Wan-kan said operating profit fell despite a rise in turnover because of the differing natures of properties sold during the two comparative periods. For the first half of last year, the group's operating profit was mainly generated from high-end residential multi-storey property, Broadville, in Causeway Bay. Although Abergeldie was also a high-end residential property, it was of a smaller scale than Broadville. Happy Plaza and 99 Tai Ho Road were commercial properties at the lower end of the scale. The sale of a higher-end property brings a larger profit in absolute monetary terms than that of a lower-end property, while the sale of a larger property returns a larger profit in absolute monetary terms than that of a smaller property of similar grading. Mr Chan said Broadville was also sold at the price-peak of the property market. A 29.4 per cent reduction in tax to $22.85 million saved the group from seeing a drop in interim net profit for the first half. Tax decreased because Happy Plaza and 99 Tai Ho Road were both investment properties and no profit tax was charged on their sale,Mr Chan said. The profit taxation for the sale of Abergeldie was lower than that on Broadville because of the difference in transaction size. Two associates, a Shanghai property developer and a local project management company, were the cause of a profit reduction of $243,000. Executive director Clara Chan attributed their losses to start-up costs in the absence of income because they were not set up until the end of last year. Rental income accounted for about 15 per cent of the operating profit. Mrs Chan expected rental income in the second half to be larger than that in the first half, partly because the renovation of Century Plaza would boost its rentals to about $42 per square foot from about $20 to $40 per sq ft. Rental income in the second half would be about $55.41 million, mostly from 100 Canton Road in Tsim Sha Tsui and Century Square in Central. It now has a gearing of below 35 per cent based on the assets evaluation as at September 30, 1993. It was 20 at the end of last year. Mrs Chan attributed the rise to its acquisition of Shui Hing House, the 32nd floor of 9 Queens Road, Central, and the second floor of New Mandarin Plaza. The group expected to sell the second floor of New Mandarin Plaza next month, hoping to get $310 million. It would confine its China investment to about 15 per cent of the whole group's investment, said Ms Chan.. Meanwhile, Playmates Toys Holdings posted a 16.15 per cent fall in net interim profit to $106.68 million for the first half due to a decline in Teenage Mutant Ninja Turtles sales, a reduction in interest income and realised gains on portfolio investments. Earnings per share were down 16.13 per cent to $16.16 cents. The directors recommended an interim dividend of 5.5 cents per share. Turnover fell 8.06 per cent to $552.11 million. Operating profit fell 31.39 per cent to $128.05 million. Of the $58.6 million reduction, the company estimated that about $25 million to $30 million was from a drop in interest income and realised gains on portfolio investments such as securities. A substantial portion of the group's investment funds were redeployed in connection with last year's de-merger from Playmates Properties Holdings, the company said. Improved performances at associates Harbour Ring and Ideal Loisirs gave the group a gain of $7.02 million. Executive vice-president Ian Forsyth said the fall in Turtles sales was partly because of the exceptionally high sales during the first half of last year when a Turtles movie was shown. He said the Turtles line was the biggest contributor to the group's operating profit, closely followed by the Star Trek lines. It will launch video games next month to diversify its products and reduce its dependence on a particular line of products. Mr Forsyth expected video games to contribute 20 per cent of turnover for the full year, and that the full year results would be better than the interims. Shipment of its first video game, Earthworm Jim, would start next month, followed shortly by two others, Star Trek: Deep Space Nine, and Exosquad.