Scottish Hotels presses ahead: The Investment Column

Scottish Highland Hotels shrugged off the shelving last week of rival Principal Hotels' planned flotation. It is pressing ahead with its own market debut next month and yesterday signalled its confidence by sticking with the placing price of 125p a share it settled on in September.

With six hotels in Scotland's central belt and only 525 bedrooms, Scottish is small even by the standards of the overpopulated, fragmented hotel sector. Its biggest challenge will have been persuading investors that it has anything different to offer but sources close to the float say the placing, to raise pounds 13m, was twice subscribed.

At the placing price, Scottish will be valued at pounds 30.4m, just 12.4 times post-tax earnings, making it one of the most cautiously priced issues. The company said it would have paid a full-year dividend of 3p, representing a gross yield of 3 per cent.

The former fiefdom of the Fimmers family, which remains a sizeable shareholder, the company fell on hard times in the recession and management control was relinquished to the professional operations team who had previously reported to the family. Hamish Grossart was brought in as chairman.

They transformed the company from a family plaything to a more focused business venture and since 1993, operating margins have risen from 21 per cent to a forecast of more than 30 per cent in the year ending tomorrow.

Profits for the period just closing are estimated at not less than pounds 2.1m from sales of pounds 16.5m, up from the pounds 1.4m recorded last year before a one- off chunky exceptional gain that distorted the reported figure. Back in 1993, profits of only pounds 242,000 were made from sales of pounds 14.9m.

When dealings start on 11 November, Scottish should get off to a healthy start. Thereafter it will have to take its chances in a seriously overcrowded market.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral