The summary of the company's profit & loss account is derived from copies of the audited accounts of the company which survived and were discovered together in a bundle after the company folded in the 1990s. They include almost all years from its formation in 1893/94 to 1927/28, the year of Douglas Hetley Pearson's death. The one exception is the year 1909/10 for which the accounts were missing from the bundle.

When considering the figures from a present day viewpoint, an important factor is inflation. £10,000 in 1893 would have a purchasing valued today of around one million pounds and someone earning £1000 then is the equivalent to earnings of about £400,000 today. In broad terms, then, we are looking at a company that was turning over a viable amount and paying its directors well. An overall view would be that we are looking at a reasonably successful. well-funded and stable, middle-size company. However, there are clear signs that it was not really growing, certainly in real-terms. While we will continue to evaluate the results in terms of the values in the accounts, present day equivalents should always be borne in mind.

The above graph shows the trend of sales and of net profit over the range of years covered by the accounts. While the accounts, rightly, report sales to Beeston Foundry separately from sales to third parties, we have combined the two values in our analysis of Sales. The following observations can be made:

• It is very evident that, in terms of sales, after bumping along at about £10,000 per annum for the first few years. the company reached a norm of around £20,000 per annum. It is noticeable that this significant change coincided with the arrival of Charles Mason as an additional Director.
• A clear exception to the normality of this pattern is the severe drop in sales during the Great War years when sales dropped dramatically with a significant bounce-back immediately after the war.
• Net Profit showed a similar but slightly more volatile trend - around £2500 in each of the first few years and running around £4000 thereafter, except for the war years when they followed sales down to very low level with a post-war bounce.
• A growing weakness in the final years we have is also evident. It appears that this was caused partly by a weakening in the Gross Profit (i.e. Sales less Direct Costs - materials and labour). While Gross Profit as a % of Sales was running at 31.5% in the years up to 1910, that had dropped to 29.8% over the last 10 years we have available - a further sign of the company's relative weakening position by that time.

We have chosen not to include details of the balance sheets, mainly because they show relatively little variation over the years. In summary, however, they record that :

• The original paid-up capital was provided by the issue of 250 Common Shares at £10 each and 796 Preferred Shares at £10 each. The number of issued Common Shares increased over time to reach the authorised maximum of 750 (£7,500) by 1920, largely to fund the increase in activity. The number of Preference Shares issued remained unchanged. Although we have no definite evidence, it is likely that the shares were held by members of the Pearson family with a relatively minor holding by Charles Mason following his appointment as a Director in 1902.
• The Directors followed the practice, as they did at Beeston Foundry, of distributing essentially all profits in the form of dividends and directors fees in the respective current year. The 6% Preferred dividend (£477 12s) was paid currently every year except for two of the war years, 1917 & 1918, when these were deferred until 1920.
  
• Annual Directors' Fees varied from year to year. In each of the first 8 years, a total of £750 was paid. As this did not change in 1898, when Charles Mason returned to Beeston, we can perhaps conclude that he joined in about 1902 when the total changed to £1,050 for each of 3 years from 1902, £1,100 for 10 years from 1905 and £1150 for each of 2 years from 1915. For each of the other 3 war years, it was reduced to £950, returned to £1,150 in 1920 and then £1,950 for each of the next 7 years. The total payment of £1,898 in 1927/8 appears to reflect the change of Director following the death of Douglas Hetley Pearson. There is no indication of the split of each annual total payment between individual Directors.
• For the holders of the Common Shares, the company represented a good investment - though, of course, it could always have done better! During the 34 years we have the detail for, a total of £53,071 was paid in dividends against an average investment of £5,132. This return of around 10% per annum should be judged against the relative safety of the investment, given the company's reasonably strong financing, low level of outside liabilities and reasonably valued assets.

© David Hallam - 2022