Sunday, 1 December 2013

Profitable Holes

We're back in 19th-century Newark. A place I wouldn't mind visiting myself.

Things went well for Holes in their first years as a public company, as these reports of annual shareholder meetings confirm:

"Messrs. James Hole Co., LIMITED.—The first annual meeting of the shareholders in this Company was held on Thursday afternoon, at the Castle Brewery, Newark, Mr. Alderman Hole occupying the chair. The report and balance-sheet were submitted, showing that after paying the dividend on the five per cent. preference shares, the profits of the year had enabled the directors to declare a dividend at the rate of twelve-and-a-half per cent. per annum on the ordinary shares, to carry forward an additional £1,000 to the reserve fund, which now stands at £11,000, and to write off £2,486 towards the depreciation of property and plant. A further sum of £10,000 had been called upon the ordinary shares, and it was proposed to issue the remainder of the preference shares at a premium of seven per cent. The Chairman, in addressing the meeting, congratulated the shareholders on the success which had attended the Company during the year, and the increase of business, which was mainly due to the development of family trade. During the year, the family trade had increased 35 per cent., while the general trade had also increased over 25 per cent. Additional property had been acquired, and while the directors would act judiciously in this matter, they were always on the look-out for desirable purchases. He was happy to say that the new brewery was rapidly approaching completion, and would be capable of turning out nine hundred barrels per week. They hoped to begin brewing operations there in the course of next month. The Chairman was happy to state that, after boring to some considerable depth, they had been fortunate to strike the bunter sandstone, and a very extensive was running from the bore holes, more than sufficient for the general purposes of the brewery. He believed pressure would be sufficient to raise it to the top of the new brewery without pumping. He would remind them that this was altogether independent of the excellent spring from which they drew their actual brewing water. The results of the year's brewing were most satisfactory, and no better evidence of this could be afforded than the fact that the item known as returned ale was so small as to be insignificant. He trusted the preference shareholders would lend a hand in the development of the family trade, which they could do by recommendation, and that they would assist the directors to further promote the growth and success of the business.—Mr. Taylor (Caunton) moved vote of thanks to the directors, which was seconded by Mr. Wright, of Fiskerton, and carried unanimously.—The auditors were re-appointed, and a hearty vote of thanks to the chairman concluded the meeting."
Grantham Journal - Saturday 09 May 1891, page 2.

Obviously this was when they were part way through building the brewhouse which still stands. The fancy offices at the front of the site are a few years earlier. I seem to remember that building them bankrupted the previous owner. Which was when Mr. Hole stepped in.

By "family trade" they mean barrels of beer sold directly to the public. It was clearly a big part of their business. Which is good news for me, since this means they advertised a lot in newspapers. Before I found out how this trade worked, I used to wonder why brewery price lists were printed in newspapers. It seemed an odd way to appeal to publicans. The family trade remained important for Holes right up until their takeover by Courage, through Hudoris, the name of their soft drinks firm and also their home delivery service. Like Davenports, for oldies like me.

Interesting that the Castle Brewery also used spring water for brewing, rather than well water. That's buggers one of my theories about Newark's brewing industry about the availability of gypsum-rich well water. Unless, of course, the spring water was full of gypsum.

"Additional property" presumably means more pubs. Be interesting to know which ones they were. Looks like they did use some of the capital they had raised to buy pubs.

900 barrels a week is a little under 50,000 barrels annually. Or about half the capacity of their local rivals Warwicks & Richardsons.

"Messrs. James Hole and Co., Limited.—The annual meeting of the shareholders in this company was held on Wednesday at noon, at the Castle Brewery, Newark, under the presidency of Mr. Ald. Hole, the other directors present being Mr. S. K. Marsland and Mr. Arthur Gilstrap Soames.—The Secretary (Mr. Johnstone Smith) having read the minutes, the following report was submitted :— "The directors herewith submit their report and statement of accounts for the past 12 months, extending from lst March, 1891, to 29th February, 1892. The substantial increase in the trade to 28th February, 1891, has been more than maintained this year, the trade showing a further increase of upwards of 15 per cent. It is gratifying to the directors that, notwithstanding the large increase in the cost of hops, and the fact that the new brewery has only just been brought into working order, the profit and loss account, after making a larger allowance for repairs and depreciation account than that of last year, shows a balance of £11,087 11s. 4d. available for dividend, as against £10,137 7s. 6d. The two half-yearly instalments on the Preference Shares have been paid, and your directors propose, after writing off a further sum of £500 off the preliminary expenses, payment of a dividend on the Ordinary Share Capital of 10 per cent., to carry £500 to the Reserve Fund, which will then stand at £11,500, and to carry forward £631 17s. 9d. The auditors (Messrs. Mason and Son) retire, and offer themselves for re-election." —The Chairman, in moving the adoption of the report, said he thought they would admit that the profits had been very satisfactory, considering the extra incidental expenses they had had in bringing the new brewery into operation, and the additional amount which they had had to pay for hops. The increase in the trade during the year 1890-91 was 25 per cent., and they could hardly expect to keep on at that rate; but there had been more than a 15 per cent. increase in the past year, making over 40 per cent, since the formation of the Company. The increase in the family trade was continuous, and there was abundant evidence that their family ales were firmly established throughout the Midlands. The new brewery was now in working order, and an extensive new malt kiln had been erected, so that a large amount of capital had been expended to meet the growing requirements of the business. He did not wish to assume the role of a prophet, but he thought there was every probability of a continued increase in their trade, and he believed that hops would be obtained at more moderate prices.—Mr. Wright (Fiskerton) said he thought it was a most satisfactory report.—Mr. Taylor (Caunton) seconded the adoption of the report, which was carried unanimously.—The Chairman proposed the re-election of the auditors, remarking that they were most conscientious accountants, and if they had a leaning at all it was in favour of the shareholders.—Mr. Wright seconded the motion, and was agreed to. hearty vote of thanks to the Chairman terminated the meeting, and some of the shareholders were then shown over the new brewery, which was greatly admired, being one of the most complete in the country."
Lincolnshire Chronicle - Friday 13 May 1892, page 8.

By the next year the new brewery was up and running. Even after taking into account the cost of that, they were still making a nice profit. And trade was up by a very respectable 15%. £11,087 profit on a capital of £175,000 capital is a bit over 6%. Again, pretty respectable. As is a 10% dividend. See that's how shares are supposed to work. You make money on them through dividends, not casino-style gambling on the shares value.

A new malt kiln? I wonder where that was? I doubt it was on the brewery site as that was pretty much full of other buildings. Most of the maltings in Newark were on the eastern edge of town, a little past the Warwicks brewery.

"The annual meeting of the shareholders in this Company was held on Saturday at the Castle Brewery, Newark. In the absence of the chairman (Mr. Alderman Hole), through indisposition, the chair was taken Mr. S. K. Marsland. managing director. report was as follows "There has been farther satisfactory increase in the trade during the past year. After making substantial addition to the repairs and depreciation account, the profit and loss account shows a balance of £10,704 5s. 7d. The two half-yearly instalments dividend on the preference shares have been paid, and your directors propose, after writing farther sum ef £500 off the preliminary expenses, to pay a dividend of 10 per cent. on the ordinary share capital, and to carry forward £491 4s 1d." Commenting upon the report, the Chairman said the cause of the increase bad been the continued development of the family trade, to which they attached considerable importance. They were able to pay the same dividend last year on the ordinary shares, and had added largely to the depreciation account. Although competition had been very keen, they had not given way in the matter of extreme discounts, and had no intention of doing so. They were determined to stand by the quality their ales, and the results had shown that they were justified in doing so. (Applause.)— The report was unanimously adopted."
Grantham Journal - Saturday 20 May 1893, page 6.

The importance of the family trade is demonstrated by the number of towns in which Holes advertised in local newspapers. Their beers seem to have been fairly widely available in the East Midlands.

They made over £10,000 profit in each of their first three years as a public company. And paid a 10% dividend in each of those years. Which means in three years you'd have made 30% profit on your investment. I must remember to pick up a few Holes shares, if I do make that trip to 1890's Newark.

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