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GL net profit up by 20% in FY2018 at US$59 million; rocky road ahead for London hotels

GL LTD, the former GuocoLeisure, reported a jump in its full-year earnings on the back of other operating income, despite challenges in the London hospitality business.

Net profit was US$59 million, up by 20 per cent year on year, for the 12 months to June 30. Revenue came in 1 per cent lower at US$344.4 million, according to audited results released on Friday.

The slip in turnover came in both the hotel and oil and gas segments, even as the impact of a decrease in rooms available was mitigated by the strengthening of the pound against the US dollar. Meanwhile, revenue from oil and gas was down on lower production, despite the rise in oil prices.

But the bottom line was supported by an increase in other operating income, on compensation from the compulsory acquisition of one hotel property and a recovery of legacy loan that was previously written off. Other operating expenses dropped on the absence of one-off costs in the previous financial year.

"The London hotel market will remain challenging for the next 12 months," GL said in its outlook statement, pointing to factors such as weaker British economic growth on uncertainty over the "Brexit" departure from the European Union, as well as pressures on household spending.

The company also cited a hike in new room supply in London, which it expected to depress the growth in the average daily rate of London hotels. "In this challenging environment, the group is focusing on an occupancy-led strategy in order to maintain RevPAR (revenue per available room) and protect its market share," it said. "The group maintains its cautious outlook on the London hotel market."

GL said that the Cumberland Hotel is on track to be launched as Hard Rock Hotel London in 2019, but rooms available for sale will remain affected during the refurbishment. The group also plans to dispose of its casino licence, having closed The Clermont Club in end-March and exited the gaming business.

Earnings per share came in at 4.5 US cents, against 3.8 US cents the previous year, while net asset value was 84.8 US cents a share, up from 80.8 US cents the year before.

The board has declared a dividend of 2.2 Singapore cents a share, unchanged from the previous year, to be paid on Nov 26.

GL closed flat at S$0.77, before the announcement.

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