This annual report was issued in 1916, the end of a difficult year for British brewers. Probably just as well they didn't realise things would only be getting worse for the next couple of years.
Archibald Arrol and Sons, Ltd.
The annual meeting was held on the 15th ult. at Glasgow. Mr. Lee Hudson (chairman) presiding. The Chairman, in moving the adoption of the report (vide last issue). said it was a matter of congratulation, considering the increased beer taxes, increased selling prices, and the restriction of hours, that the position of the company had again improved to the extent of £9,400, an improvement of £688 over the previous year. They had expended £6,556 on the brewery buildings and other properties of the company, and had written off £18,632 for the proportion of leases, depreciation for properties sold, and compensation moneys received. That item stood at £462,778. as against £474,954 last year. Moveable plant, lees depreciation, had decreased £1,093, but stock-in-trade had increased £4,155. The book debts and loan had increased £1,220, cash and balance on hand £2,880, and bills under discount and guarantees had decreased £4,017, making a net decrease in assets of £9,031. On the other hand, the liabilities had been considerably decreased. Mortgages and bonds on properties had decreased £14,120, interest thereon £213, sundry creditors had increased £1,731, debenture interest accrued had decreased £281, bank overdraft had decreased £1,530, and contingent liabilities £4,017, making a net decrease in liabilities of £18,431, which, deducting the decrease in assets of £9,031, showed an improvement in the financial position of the company of £9,400. Profit and loss account showed a gross profit of £41,123, as against £36,763 last year, an improvement of £4,360. The net balance carried to the balance-sheet was £24,456, as against £25,931 last year, and after payment of interest on debenture stock, mortgages, and bonds there was left a net profit of £9,400, as against £8,711 last year. The net profit must, of course, be carried to the reduction of the suspense account, and Would reduce that account to £170,689.
"Brewers' Journal 1916", pages 26 - 27.
Reading reports like this bring home to me just how little I understand of the working of capitalism. Is it good or bad? They made more money that the previous year, so it must be good, mustn't it? Though, given the way prices had risen, that might not be as impressive as it sounds. £9,400 isn't sound a great deal of profit for what was a substantial brewery, one of the largest in Alloa. Especially if you recall that the net profit in the first years after flotation was over £20,000.
What exactly was the suspense account? Presumably not a murder tale. Obviously something important, as it gobbled up all the profit. At £9,000 a year, it would take a couple of decades to pay off the full amount. It doesn't sound like anyone was making much money from the business.
Arrol's became a limited company in 1895, with a share capital of £250,000. When that was increased to £400,000 in 1899, Arrol's became the fifth largest Scottish brewery in terms of capital. Though the capital was reduced to £305,000 in 1909. Let's have a think. My knowledge of capitalism does extend as far as recognising a proper return on capital: 5%. So around £15,000 profit is what they should have been aiming for.
"They had expended £6,390 in alterations and repairs, against £4,963 last year. That considerable increase was due to the fact that while installing the new plant at the brewery, it was found necessary to spend large sums under that head, which had all been charged to revenue. They had also made a large provision for bad debts—£3,959, as against £651 last year. That increased provision had been made owing to the effect of the increased prices and enormous restrictions imposed by the Government. Some customers had been unable to meet their liabilities in full, and large sums had had to be written off some of the Scottish loan accounts. During the four years which have elapsed since the revaluation of the properties in 1911 mortgages and bonds on the properties had been reduced by £28,626 and the contingent liabilities by £40,030, a total reduction of £68,657. Against this the sundry creditors had increased by £10,132, leaving a net decrease in liabilities of £58,514. In the four years the position of the company had been considerably strengthened by the policy of the board. The new plant at the brewery was now practically all installed, and was working satisfactorily. And the company was now the possessor of one of the best-equipped and most up-to-date breweries in Scotland. The new plant had not been working long enough to give actual figures in comparison with other years, but there was not the slightest doubt that a considerable amount of economy would be effected. The general scheme of driving all the machinery by electric power was most economical. Appreciable economies were effected by the new plant, which ought to improve further the position of the company at the end of the current year. The trade, however, was faced with a serious rise in the cost of materials. In these days it was impossible to form any reliable forecast of the future.
The report was adopted, and Mr. Deuchar was re-elected a director."
"Brewers' Journal 1916", page 27.
So the war increased bad debts. I suppose that sort of makes sense, given how prices rose. I assume "Scottish loan accounts" refers to the money lent to publicans to get their trade.
One thing really shocked me in this section. That they were installing new plant during the war. That certainly didn't happen in WW II. There weren't sufficient materials for that sort of frivolous activity. Over on the continent, in Belgium, it was even worse. There the occupying Germans confiscated copper brewing equipment. I'm equally surprised at the investment because of the financial situation of the company.
The use of electrical power intrigues me. Aitken's new brewery, completed in 1900, had an electrical generator but also retained steam-powered machinery. Clearly technology had moved on in the 15 intervening years. I suspect Arrol's was one of the first British breweries to make the switch to electricity.
There's a sure sign that their fancy new brewery wasn't running at capacity. In 1921 John J. Calder, who was a director of Arrol's, closed his own Shore Brewery and had all his Calder beers brewed at Arrol's.
One final tiny point: names. See how a Mr. Deuchar was a director of Arrol's. There's a good Scottish brewer's name. There were a couple of different Deuchar breweries. Almost as bad as the Youngers.