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Bottom Line: Westminster in best of health

Monday 09 August 1993 23:02 BST
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ROOM rates of between pounds 280 and pounds 600 a week and occupancy levels of more than 90 per cent, once a reality for top hotels in London, are now the enviable record of Westminster Health Care, operator of 48 nursing homes.

With residents staying 28 months on average and a demand curve pointing upwards until well into the next century, the potential for Westminster to forge further ahead looks good.

Taxable profits for the year to 31 May of pounds 4.3m exceeded the pounds 3.85m flotation forecast made in March, and, temporarily freed from high interest charges, should hit pounds 11.3m in 1993/94.

The flotation brought debt down to 18 per cent of shareholders' funds, but gearing will rise above 30 per cent this year as Westminster opens another 10 homes and spends at least pounds 25m.

Expanding on borrowed money will remain a fact of life for at least another four years, and at some stage before that it is almost certainly going to need to call on shareholders.

Faith in the company, however, is almost certainly going to be rewarded by solid appreciation in the share price which yesterday hit a fresh high with a 3p rise to 307p.

Original investors are sitting on an 18 per cent profit since the shares were floated four months ago. A prospective price-earnings multiple of 16.3 and a gross yield of 1.8 per cent, on a projected dividend of 4.55p, underline the market's favourable long-term view and make the shares a buy.

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