Essay finance

The company realized interest on income worth £24.0 million as proceeds on the disposal of Hilton International hotel, one of its key subsidiaries. Moreover, the company realized 169.85 increase in net finance costs of its continuing business operations that were worth £45.6 million. Compared to £16.9 million in the previous financial year, hence reflecting increased leveraging on the company’s new capital structure. The company recorded a net debt to EBITDATA ratio of 3.1 times compared to the projected ratio of between 3.5 to 3.75 times. The increase in trading profits plus the interest income realized on the hotel sale produced a 6.2 % increase in pre-tax profits and non-trading items to £246.5 million in the 2006 financial year from £232.1 million realized in the previous financial year. In the non-trading items section, Ladbrokes plc reported the sale of Hilton International Hotel at £412.2 million, and reported it as non-trading profits. The company’s taxation charge on continuing operations was £43.9 million that represented an effective tax rate of 17.8 % compared to 17.6% in the previous financial year. The effective tax rate of 17.8% was inclusive of a prior settlement and hence the company expected its ongoing rate to be approximately 20% in the medium term. Ladbrokes plc consolidated its ordinary shares within this financial year by replacing every existing shares of nominal value 10 pence with six shares of nominal value 281/3 pence. Moreover, the shareholders of the Group’s £300 million convertible bond exercised their conversion rights by converting the bond into ordinary shares in the same financial year. The company’s earnings per share (EPS) on continuing operations were 22.0 pence compared to 12.0 in the year 2005. The difference in EPS was due to the share conversion. In the 2006 financial year, the company recorded a higher diluted EPS of 20.7 pence compared to 12.0 pence realized in the previous year. The Group earning’s per share increased by 3.6% to 22.8 pence from 22.0 pence in the preceding financial year. The Group paid a final dividend of 8.6 pence per share, 2.0 pence higher than 6.6 pence dividend paid in 2005. In reporting its financial position and results, the Ladbrokes plc followed the IFRS financial reporting standards that require the application of IAS 39 for betting and gaming transactions. Ladbrokes generated a profit of £384.2 million from the sale of its hotel division at £3.2 billion. Through ordinary and special dividends £4.2 billion was returned to the shareholders through a capital restructuring.