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.