Sun International cuts debt by R300m in six months
03 September 2024 - 05:00
byNoxolo Majavu
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Sun International’s flagship Sun City resort. Picture: SUPPLIED
Hospitality and gaming group Sun International has cut its debt by R300m after strong earnings growth in its casino and betting platforms.
The Sun City owner released a trading update on Monday as it finalises its interim results to end-June when it expects to report an upswing in earnings that led to the company hitting its growth targets. This included a rise in urban casino revenue at its larger properties.
“Sun International is in a strong financial position with SA debt (excluding IFRS 16 lease liabilities) at R5.4bn, down from R5.7bn as of end-December. This is after the company paid a final net dividend of R510m for the 2023 financial year and share buybacks amounting to R141m,” the company said.
Sun International’s debt-to-adjusted earnings before interest tax, depreciation and amortisation (ebitda) ratio stands at 1.6 times, and its interest coverage is at 6 times, both of which are comfortably within their lenders’ covenants of less than 3 times and more than 3 times, respectively, it said. The debt-to-adjusted ebitda ratio is a key leverage metric for creditors and lenders, as it helps ensure that the company can manage its debt while remaining operational.
The company expects interim headline earnings per share (HEPS), a common earnings metric that excludes one-off items, to rise by 5.4%-12.4% to 182c-194c.
Adjusted HEPS are set to rise 4.5%-11.6%.
The group said the primary difference between HEPS and adjusted HEPS “relates to among other things an increase in the estimated redemption value of the SunWest put option liability of R48m and transaction costs of R14m relating to the proposed Peermont acquisition”.
Sun International said in December that it would purchase rival Peermont, which owns the prized Emperors Palace near OR Tambo International Airport, for R7.3bn.
Sun International’s share price rose 2.65% to R43.01 on Monday, giving it a market cap of R11.1bn.
Hit hard by the pandemic, the share price has risen sixfold since plumbing lows of R7.19 in May 2020.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sun International cuts debt by R300m in six months
Hospitality and gaming group Sun International has cut its debt by R300m after strong earnings growth in its casino and betting platforms.
The Sun City owner released a trading update on Monday as it finalises its interim results to end-June when it expects to report an upswing in earnings that led to the company hitting its growth targets. This included a rise in urban casino revenue at its larger properties.
“Sun International is in a strong financial position with SA debt (excluding IFRS 16 lease liabilities) at R5.4bn, down from R5.7bn as of end-December. This is after the company paid a final net dividend of R510m for the 2023 financial year and share buybacks amounting to R141m,” the company said.
Sun International’s debt-to-adjusted earnings before interest tax, depreciation and amortisation (ebitda) ratio stands at 1.6 times, and its interest coverage is at 6 times, both of which are comfortably within their lenders’ covenants of less than 3 times and more than 3 times, respectively, it said. The debt-to-adjusted ebitda ratio is a key leverage metric for creditors and lenders, as it helps ensure that the company can manage its debt while remaining operational.
The company expects interim headline earnings per share (HEPS), a common earnings metric that excludes one-off items, to rise by 5.4%-12.4% to 182c-194c.
Adjusted HEPS are set to rise 4.5%-11.6%.
The group said the primary difference between HEPS and adjusted HEPS “relates to among other things an increase in the estimated redemption value of the SunWest put option liability of R48m and transaction costs of R14m relating to the proposed Peermont acquisition”.
Sun International said in December that it would purchase rival Peermont, which owns the prized Emperors Palace near OR Tambo International Airport, for R7.3bn.
Sun International’s share price rose 2.65% to R43.01 on Monday, giving it a market cap of R11.1bn.
Hit hard by the pandemic, the share price has risen sixfold since plumbing lows of R7.19 in May 2020.
majavun@businesslive.co.za
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