Tuesday, 27 November 2012

William Murray goes public

If you've been paying attention, you should remember that William Murray was the first to build a brewery at Duddingston on the outskirts of Edinburgh. Several others would later follow.

Murray's launch was a modest affair, raising just £75,000. That's nothing compared to other brewery launches of the time.

"William Murray & Company (Limited), has been incorporated with a capital of £75,000 in £10 shares divided into 4000 Five per cent, Cumulative Preference shares and 35,000 Ordinary. The prospectus explains that the company has been formed, for the purpose of acquiring, carrying on, and extending the business of brewers and maltsters of William Murray & Company, Craigmillar Brewery, Edinburgh, and business incidental thereto. The Craigmillar Brewery was erected by the firm of William Murray & Company in 1887-8, and it is thought that its development may be further increased if members of the public and present and prospective customers of the brewery become shareholders in the incorporated company now proposed. The brewery is situated on ground (held in feu) adjoining the Duddingston Railway Station of the City of Edinburgh Suburban Branch of the North British Railway. There are railway sidings leading directly into the brewery. The extent of the ground (2.5 acres or thereby), admits of large extensions of the work. The brewery has an excellent supply of water from a well on the ground, and this water has been found well suited for brewing purposes. The assets to be acquired exclusive of goodwill are valued at £42,154, and the present issue of capital leaves £10,000 for new maltings to be erected by the company. It is certified that since April, 1895, the net profits, after making allowance for repairs, renewals, depreciation, and bad and doubtful debts, have annually averaged £6718, and that the sales up to the last balance on 30th June showed an increase of over 18 per cent. in the sales over the corresponding period of last year. The Ordinary shares are taken by the vendors, and all the Preference shares are offered for subscription. The lists open tomorrow (Wednesday)."
Glasgow Herald - Tuesday 14 December 1897, page 6.
£6718 is a pretty decent return on capital of £75,000, almost 10%. If the level of profit remained the same, there should have been plenty left to pay dividends to the shareholders. Unlike some of the dodgier flotations, that was the case a Murray. As we can see from their first  annual general meeting:

"Wm. Murray & Co., Limited. - The first annual general meeting of the shareholders of William Murray & Co., Ltd., was held at the company's brewery, Craigmillar Park, Edinburgh, today - Mr Wm. Murray presiding. The secretary read the directors' report, and submitted the balance-sheet and profit and loss account as at 30th June. It was recommended, after providing for a dividend on the Preference shares, to pay 10s per share on the Ordinary shares, being at the rate of 10 per cent, per annum; to place £1000 to the reserve fund, and to carry forward the balance amounting to £876 10s 10d. The report was unanimously adopted. The retiring director, Mr Wm. Murray, was unanimously reelected, as were the auditors, Mesrs Robertson & Carson. C.A.
Edinburgh Evening News - Thursday 28 July 1898, page 4.

Let's work out how much profit they needed to pay those dividends. 5% on the 4,000 £10 Preference shares is £2,000. 10s per Ordinary share I reckon should be £1,750. (I'm assuming that 35,000 Ordinary shares is a misprint and that it should really be 3,500. Otherwise the share capital doesn't add up.) Add to those the £1,000 carried over and the £876 balance and you get £5,526. Reasonably close to the average of £6718.

This looks a much better investment that many of the other breweries. At least in the short term.

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