Heavily Indebted AWF - or is it? part 2
Quote:
Originally Posted by
Snoopy
Company & Financial Year |
Mercury 2017 |
Sky City 2017 |
Spark 2017 |
AWF 2017 (AbsIT 12mnths) |
EBITDA(F) {B} |
$523m |
$307m |
$1,016m |
$15.664m |
Finance Cost {C} |
$95m |
$31.1m |
$48m |
$1.659m |
Interest Coverage {B}/{C} |
5.5 |
9.8 |
21.2 |
9.4 |
Net Funding Debt {D} |
$1077m |
$889m |
$935m |
$32.383m |
Leverage ratio {D}/{B} |
2.1 |
2.9 |
0.9 |
2.1 |
Company & Financial Year |
Mercury 2017 |
Sky City 2017 |
Spark 2017 |
AWF 2017 (AbsIT 12mnths) |
NPAT {B} |
$184m |
$143m |
$418m |
$7.5m |
Net Funding Debt {D} |
$1077m |
$889m |
$935m |
$32.383m |
MDRT {D}/{B} |
5.9 yrs |
6.2 yrs |
2.2 yrs |
4.3 yrs |
Depreciation & Amortisation {C)} |
$189m |
$95m |
$430m |
$3.2m (*) |
D & A / Net Profit {C)/{B} |
102% |
66% |
103% |
43% |
(*) Estimate assuming AWF historic 30% tax rate
MDRT stands for 'Minimum Debt Repayment Time'. It is the answer to the question:
"If a company put all its efforts into paying back its debt from its current year net profits, then how long would that take?"
Note: In compiling this table, I have made an adjustment to the Sky City declared net profit by removing the goodwill write down from the Darwin casino (a one off non cash item).
The difference between this and the ASB/AWF leverage ratio is that I consider that the depreciation on the company assets and interest payments do matter over time. Spark is again in the strongest position. But look at how much 'lower risk' AWF has become compared to the likes of Sky City and Mercury. You can see that depreciation relative to profits is by far the least at AWF. And that is because AWF is a much less asset intensive business than the others. Being 'asset light' means the company can run at higher debt levels that other companies that have to put aside that much more money each year to ensure their assets do not degrade. So AWF is not nearly as risky as those financiers who simply use the EBITDA to debt ratio as a yardstick think.
SNOOPY