GOVERNMENT attempts to cut health spending are beginning to be felt in
the private nursing home sector, which until fairly recently appeared to
have a licence to print money.
Those operators with well-managed purpose built, high quality homes
capable of offering value added services such as homecare appear better
placed to succeed than those often small independents owning converted
property.
Westminster Healthcare, the UK's second largest private nursing home
operator, has successfully taken advantage of the growth opportunities
in the marketplace. Profits in the six months to November 30 jumped by
25% to #5.2m before tax on turnover up 40% to #23.9m.
During the period, 186 new beds were added, increasing the total to
3429, just over half that of market leader Takare.
However, margins dipped to 23% from 25.5% reflecting tougher
bargaining by local authority purchasers of nursing care. Just over 40%
of Westminster's revenues comes from local authority contracts.
Chief executive Pat Carter believes there remain considerable growth
prospects for the group, both geographically within the UK and
demographically due to the ageing population. ''The fundamentals are
still there,'' he said.
Earnings per share jumped by 59% to 8.6p, the increase mainly down to
a #2.4m reduction in the interest bill following last year's floation,
which raised about #63m for the company. Gearing at the end of the
half-year was lower than projected at 23%.
The company has no plans for a rights issue within the next 18 months,
given that it has only drawn down #20m of the #50.5m bank facility
arranged at the time of the flotation. It is proposing an interim
dividend of 1.75p.
The company, which was floated about a year ago, has been good to its
shareholders with the price at 391p, up 1p yesterday, compared with that
on flotation of 260p. Its emphasis on quality and steady sustainable
growth should enable it to continue to prosper in the more taxing times
ahead.
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