This is the text of an abridged form of APCM's pre-launch prospectus, used as a press release.
Henry Osborne O'Hagan was consulted by William Tingey Jr in 1897 regarding conversion of his firm into a Public Company. O'Hagan was unimpressed, and reported pessimistically. On researching the cement industry more generally, he was more generally unimpressed, finding people of a similar calibre and mind-set in charge of all the companies. O'Hagan's ideal business, at worst, acted in collaboration with "competing" firms, and at best, formed an absolute monopoly. The various firms, to his disgust, were ignorant of each other's activities and strategies, and in fact treated each other with extreme suspicion. He says "one of the weaknesses which revealed itself to me in the cement trade was the animosity which existed amongst the various manufacturers, who scarcely knew each other, and this could probably only be removed under a powerful combination." Later that year he discovered that several of the firms (including the two largest - John Bazley White - JBW - and Hilton, Anderson and Brooks - HAB) were discussing amalgamation. He let it be known that he might assist in this, but his offer was not taken up, although his interest now was generally discussed. In October 1899, he was approached by Vavasour Earle for help in merging the six main Medway firms: the others had already been approached by Earle. Apparently, the brash Earle told O'Hagan "the people whom you are already working with are too old-fashioned, and although now at the top of the tree will not remain there long. You had better come in with us." This move was a "red rag to a bull" on a number of counts:
- Earle, generally regarded, not without justification, as an idiot, now appeared to be a dangerous idiot.
- The combine proposed would, at least in terms of capacity, be larger than JBW, and probably larger than JBW and HAB together.
- The inclusion in the combine of Tingey, with its control of Rochester chalk supplies, would be fatal to the Frindsbury plants.
A knee-jerk reaction followed in a few days, and John Bazley White came to see O'Hagan, saying that a much larger amalgamation was well under way, but had stalled. O'Hagan says "they had interviewed a large number of manufacturers who seemed disposed to consider the proposals, but they found a difficulty in getting any information. I saw that in the hands of these gentlemen with no one to guide them very little progress would be made." Put simply, the firms were unwilling to show their books to each other. O'Hagan offered to act as an intermediary, gathering information and presenting it in anonymised form. He formed a temporary company, British Incorporators Ltd., which would buy up all the firms, then turn them over to the new combine to be called the Associated Portland Cement Manufacturers Ltd.
The formation of APCM became regarded as a classic example of anti-competitive business practice in the pre-"anti-trust" period. The prospectus also gives a useful dramatis personae of the time.
The LISTS will OPEN on WEDNESDAY, the 15th July, at 10 a.m., and CLOSE on SATURDAY, the 21st July, at 3 p.m.
THE ASSOCIATED PORTLAND CEMENT MANUFACTURERS (1900) LIMITED.
CAPITAL.
| 250,000 5½ per CENT. CUMULATIVE PREFERENCE SHARES of £10 each | £2,500,000 |
| 250,000 ORDINARY SHARES of £10 each | £2,500,000 |
| FIRST MORTGAGE 4½ per CENT. DEBENTURE STOCK | £3,000,000 |
PRESENT ISSUE:-
| 5½ per CENT. CUMULATIVE PREFERENCE SHARES | £2,450,000 |
| ORDINARY SHARES | £2,450,000 |
And
£2,475,000 of 4½ per CENT. FIRST MORTGAGE DEBENTURE STOCK.
Of the £525,000 remaining £375,000 will be reserved to retire Mortgages of that amount on two of the undertakings.
Of the above the Vendors take one-third of each class – namely, £825,000 of Debenture Stock, £816,660 of Preference, and £816,660 of Ordinary Shares.
Applications have already been received for £294,800 Debenture Stock, £448,770 of Preference Shares, and £295,900 of Ordinary Shares, which will be allotted in full, making in all £1,039,470.
The Balance, namely:-
| Debenture Stock. | £1,355,200 |
| Preference Shares. | £1,184,570 |
| Ordinary Shares. | £1,337,440 |
is now offered for Public Subscription, payable as follows:-
Debenture Stock.
| On Application | 5 per cent | £0 10 0 |
| On Allotment | 35 per cent | £3 10 0 |
| On 31st August, 1900 | 30 per cent | £3 0 0 |
| On 30th September, 1900 | 30 per cent | £3 0 0 |
The Debenture Stock will be transferable in multiples of £1, and is repayable at Par in 1960. A Cumulative Annual Sinking Fund will be created sufficient, if invested at 4 per cent, to redeem the whole of the Debenture Stock at the expiration of 60 years, and this fund will be applied half-yearly to the purchase of Debenture Stock in the open market, so long as the Stock can be obtained below 115 per cent. In the event of a winding-up or of the security from any other reason becoming enforceable, the Debenture Stock is to be repaid at £110 per cent.
TRUSTEES FOR THE DEBENTURE STOCKHOLDERS.
The RIGHT HON. LORD HILLINGDON, 6, Lombard-street, E.C.SIR CHARLES RIVERS WILSON, G.C.M.G., C.B., President of the Grand Trunk Railway Company of Canada.
SOLICITORS FOR TRUSTEES.
BIRCHAM and Co., 50, Old Broad-street, E.C.DIRECTORS. (see Note 1)
FREDERICK ANTHONY WHITE, of John Bazley White and Brothers, Limited.W. CURLING ANDERSON, of Hilton, Anderson, Brooks, and Company, Limited.
LEEDHAM WHITE, of John Bazley White and Brothers, Limited.
ISAAC CHARLES JOHNSON, of I. C. Johnson and Company, Limited. Note 2
E. F. HILTON, of Hilton, Anderson, Brooks, and Company, Limited.
OTTO TRECHMANN, of Trechmann, Weekes, and Company, Limited. Note 2
ARTHUR W. BOOTH, of Booth and Company, Limited.
W. M. CUNINGHAM, London Portland Cement Company, Limited.
JOHN HEAL, Imperial Portland Cement Company, Limited.
ALFRED BROOKS, of Hilton, Anderson, Brooks, and Company, Limited.
D. H. GIBBS, of Gibbs and Company, Limited.
G. M. R. LAYTON, Arlesey Lime and Portland Cement Co., Ld.
W. TINGEY, Jun., of Tingey and Son, Frindsbury, Rochester.
GEORGE COOPER, of Weston and Co.
HENRY HOLT, of Macevoy and Holt, Northfleet.
RICHARD PLEWS, Charles Francis, Son, and Co., Limited.
A. P. MARGETTS, West Kent Portland Cement Company, Limited. Note 2
FRANK WILLAN, Imperial Portland Cement Company, Limited.
CHARLES O. TRECHMANN, of West Hartlepool. Note 2
MANAGING DIRECTORS.
| J. BAZLEY-WHITE, | Managing Directors of John Bazley White and Brothers, Limited. |
| WILLIAM MORGAN, | |
| FRANK CHAPMAN, | |
| ANTHONY WHITE, | |
| E. W. BROOKS, | Managing Directors of Hilton, Anderson, Brooks, and Company, Limited. |
| G. K. ANDERSON, | |
| HERBERT E. BROOKS, | |
| CHARLES CHARLETON, | Managing Directors of I. C. Johnson and Co., Limited, London and Greenhithe. Note 2 |
| C. H. WATSON, | |
| H. K. GWYER BAMBER, | of Knight, Bevan, and Sturge, Northfleet. |
| GERALD B. F. FRANCIS, | of Francis and Co., Limited, Cliffe, Rochester. |
| GEORGE BUTCHARD, | The Tower Portland Cement Works, Northfleet. |
| OLIVER L. ELLIS, | Managing Director of Gibbs and Co., Limited. |
| G. E. W. CRANAGE, | of I. C. Johnson and Co., Ld., Gateshead-on-Tyne. Note 2 |
BANKERS.
GLYN, MILLS, CURRIE, and Co., 67, Lombard-Street, E.C.LONDON and COUNTY BANKING COMPANY, Limited, 21, Lombard-Street, E.C.
BARCLAY and COMPANY, Limited, 54, Lombard-Street, E.C.
NATIONAL BANK of SCOTLAND, Limited, 37, Nicholas-lane, E.C.
NATIONAL BANK, Limited, Dublin.
LONDON and PROVINCIAL BANK, Limited.
BANK of LIVERPOOL, Limited, Liverpool.
HILTON, RIGDEN, and COMPANY, The Bank, Faversham.
And their respective Branches.
SOLICITORS.
ASHURST, MORRIS, CRISP, and Co., 17, Throgmorton-avenue, London, E.C.
BROKERS.
London – JAMES CAPEL and Co., 31, Throgmorton-street, E.C.PANMORE GORDON, HILL, and Co., Hatton-court, E.C.
Dublin – DUDGEON and SONS, 113, Grafton-street.
Edinburgh – HARDIE and TURNBULL, 43, George-street.
Glasgow – AITKEN, MACKENZIE, and CLAPPERTON, 2, West Regent-street.
Manchester – STAVEACRE and WALTON, 26, Brown-street.
Liverpool – A. M. MCCULLOCH and Co., 9, Tithebarn-street.
Leeds – R. SALMON BACKHOUSE, St. Andrews-chambers, Park-row.
Newcastle – HUNTER and HENDERSON, 30, Moseley-street.
AUDITORS.
CREWDSON, YOUATT, and HOWARD, 17, Coleman-street, London, E.C., and Manchester.
SECRETARY – ALFRED STEVENS.
TEMPORARY OFFICES – 3, TOKENHOUSE BUILDINGS, LONDON, E.C.
ABRIDGED PROSPECTUS.
This Association has been formed for the purpose of purchasing the undertakings of the undermentioned firms and companies engaged in the manufacture of Portland Cement. With the exception of three, all the works are situated on the Thames and Medway, and possess such advantages in the quantity and quality of raw material, that the neighbourhood of these two rivers, from being the cradle of the Portland Cement industry, has now become the chief seat of the manufacture. It is believed that upward of 80 per cent. of the entire output of Portland Cement in the United Kingdom is produced on the Thames and Medway, where the supplies of chalk and clay are of the finest quality for the manufacture. (Note 3). The total production of cement on those rivers in 1899 has been estimated at 1,700,000 tons, whereas the estimate of production in 1895 was only 1,350,000 tons. This difference is due to the largely increasing demand for Portland Cement.
The purposes to which Portland Cement is applied are daily growing in number: harbours, docks, railroads, fortifications, pavements, bridges, embankments, aqueducts, sewers, conduits of all sorts, foundations of tramways, and all good roadways, whether asphalte or wood, besides every other sort of building operations, depend largely for their strength as well as for economy of construction upon this material.
Many of the firms whose undertakings are old-established, and possess Brands and "Trade Marks" of the highest reputation throughout the world. The certified production of the firms taken over by this Association was
- 1897 1,222,240 tons.
- 1898 1,337,268
- 1899 1,404,569
and owing to improvements and additions the capacity of the combined works is now about 1,570,000 tons.
Although the demand for Cement is steadily increasing, there have been times when the supply has exceeded the demand, leading necessarily to fluctuations in profits. To avoid this in the future the present Association is formed.
Another object of the Association is to effect reduction in the cost, as well as improvements in the manufacture, by bringing all the various businesses under one control. The Association will also aim at lessening the expenses of distribution, and at steadying prices without unduly raising them; while the tendency to cut prices in the winter, when storage is difficult at some of the Works, will be avoided. The Directors will have at their disposal a large amount of extra Working Capital to enable them to continue the policy already begun at some of the Works – of introducing new and improved methods of manufacture, which will effect savings, and consequent increase of profits.
The Directors of the largest undertaking acquired, having expended considerable time in investigating various methods for the manufacture of Portland Cement upon the Rotary Kiln principle, selected the Hurry and Seaman’s as the best, and obtained a licence to work that system on royalty (Note 4). A sum of over £120,000 is being expended on new plant in their works, for the yearly production of about 160,000 tons (Note 5) of Portland Cement on that principle, which only necessitates a substitution of different burning plant. It is proposed to manufacture another 70,000 tons a year on the same principle. An option has been obtained by the promoters for an exclusive license to the Association in this country of this system, which the Directors will be in a position to use extensively.
Contracts have been entered into by the Vendor Company for the acquisition of, amongst other properties, the undermentioned businesses—
John Bazley-White and Brothers’ Works at Swanscombe and Greenhithe.
Hilton, Anderson, and Brooks’ Works at Grays.
Knight, Bevan, and Sturge’s Works at Northfleet.
I. C. Johnson and Company’s Works at Greenhithe. Note 2
Gibbs And Company’s Works at West Thurrock, Grays.
Francis and Company’s Works at Cliffe.
London Portland Cement Company’s Works at Northfleet.
Robins and Company’s Works at Northfleet.
Imperial Portland Cement Company, Northfleet.
Wilders and Cary’s Works at Greenhithe.
Weston and Company’s Works at Northfleet.
Macevoy and Holt’s Works at Northfleet.
Hollick and Company’s Works at Greenwich.
Lawrence and Wimble’s Works at Northfleet.
New Rainham Portland Cement Works at Rainham.
Tower Portland Cement Works at Northfleet.
ON THE RIVER MEDWAY.
Hilton, Anderson, and Brooks’ Works at Upnor, Halling, and Faversham.
J. Bazley White and Brothers’ Works at Gillingham, and Bridge, Globe, and Quarry Works at Frindsbury.
Burham Brick, Lime, and Cement Company’s Works.
Tingey and Son’s Works at Frindsbury and Chalk Quarries.
Booth and Co.’s Works at Borstal and Cuxton.
McLean, Levett, and Co.’s Works, Frindsbury and Elmley.
Trechmann, Weekes, and Co.’s Works, Halling. Note 2
West Kent Portland Cement Works, Aylesford and Burham.
Phoenix Portland Cement Works, Frindsbury.
Borstal Manor Portland Cement Works, Borstal.
Wouldham (Medway) Cement Works, Wouldham.
OUTSIDE THAMES AND MEDWAY DISTRICT. (Note 6)
I. C. Johnson and Company's Works at Gateshead-on-Tyne. Note 2
Charles Francis, Son, and Co.’s Works, Newport, Isle of Wight.
The Arlesey Lime and Portland Cement Company’s Works.
In addition to the above, the Association will have, on terms which have been agreed, working arrangements for three years or over with the following firms (Note 7): —
Martin Earle and Company, Limited, Wickham, Medway.
William Lee, Son, and Co.
Wouldham Cement Co. (1900), Ld., West Thurrock.
Queenborough Portland Cement Company, Medway.
The undertakings which the Association acquires, and others with whom they will have working arrangements, are estimated to produce about 89 per cent (Note 8) of the total capacity of production of Cement on the Thames and Medway. Negotiations for other working agreements are in progress.
An agreement has been entered into with George E. Wragge on behalf of the principal London Cement Merchants, which provides inter alia for all Merchants joining them taking their whole requirements of Cement from this Association for the term of seven years (Note 9).
Messrs. Farebrother, Ellis, and Co. have examined the whole of the properties which the Association will take over, and the following is a copy of their valuation: –
To the DIRECTORS of THE ASSOCIATED PORTLAND CEMENT MANUFACTURERS (1900) LIMITED.
Gentlemen, — In accordance with instructions received from the British Incorporators, Limited, we have surveyed the whole of the Freehold and Leasehold Properties, the particulars of which have been handed to us by them, and are referred to in the Accountant’s Report.
The several properties and their tenure are more particularly described in the Schedule appended hereto, and comprise very extensive works, wharves, and premises, together with Landed Estates, including large quantities of chalk and clay lands, the whole occupying a total area of upwards of 3,697 acres of Freehold Land, and 1,058 acres of Leasehold Land. These are all advantageously placed, possessing nearly 10 miles of frontage upon The Rivers Thames and Medway, and we value them, exclusive of goodwill, but as going concerns, including the entire equipment of machinery, fixed and loose plant, railways, locomotives, barges, horses, wagons, utensils, and other effects, together with the expenditure by the Vendors on Capital Account to the 30th ult., and the completion of the rotary plant at Swanscombe at a cost of £120.000, estimated to increase the capacity of the works to an output of over 1,570,000 tons per annum, at the sum of five millions and seventeen thousand pounds (£5,017,000).
We are, Gentlemen, yours faithfully,
(signed) FAREBROTHER, ELLIS and Co.
The Association propose to acquire :—
| The freehold and leasehold estates, including chalk and clay lands, ground-rents, works, buildings, plant, machinery, wharves, railways and tramways, locomotives, rolling stock, barges, tugs, &c., valued by Messrs. Farebrother, Ellis, and Co. at | £5,017,000 |
| Less mortgages on two of the undertakings at 3¾ and 4 per cent. | £375,000 |
| £4,642,000 | |
| Add— Working Capital, £1,050,000, reduced, however, by the estimated amount of £120,000, expended or to be expended on New Rotary Plant at Swanscombe (and included in the above valuation) | £930,000 |
| £5,572,000 | |
| While the present Debenture issue amounts to | £2,475,000 |
The Goodwills, Valuable Brands, and Trade Marks are acquired at less than 2¾ years’ purchase of last year’s profits of £658,356
The freehold and leasehold estates, works, buildings, ground-rents, houses, cottages, fixed plant, and machinery to be taken over by the Association will be comprised in the specific mortgage to the Trustees for the Debenture Stock. There will, in addition to this specific mortgage, be a floating charge on the general undertaking of the Association (but not including Capital not paid up) to secure the Debenture Stock.
The accounts have been examined for the Vendor Company by Messrs. Crewdson, Youatt, and Howard, and the following is a copy of their certificate: –
17, Coleman-street, E.C., 30th June, 1900.
To the Chairman and Directors of
THE ASSOCIATED PORTLAND CEMENT MANUFACTURERS (1900) LIMITED.
Gentlemen,—Acting on instructions received from the British Incorporators, Limited, we have examined the accounts of the thirty firms whose businesses and assets your Association has contracted to purchase.
In the case of sixteen businesses the dates of annual stocktaking are uniform (31st December), but with the others different dates between the 30th June and the succeeding 31st March have prevailed. In three cases, the business has been started since 1st January, 1898.
Owing to these various dates of stocktaking, it is obviously not possible to state the whole of the profits for consecutive periods to similar given dates. The periods of twelve months in each individual case, however, are consecutive, and are adjusted to incorporate any odd periods.
We find that the aggregate profits thus arrived at (including in each year an amount equal to the last year’s Rental from Landed Property - House and Cottage Rents, &c.), after making the various necessary adjustments and after charging interest upon certain Mortgages which are being taken over, but before charging interest on other loans, Directors’ Fees, Managing Directors or Partners’ Salaries, Income Tax, and Depreciation, are as follows:—
For the three periods of twelve months an annual average of £561,103/16/00 For the two periods of twelve months an annual average of £639,652/14/11 For the last period of twelve months £658,356/01/03 It will be observed that in the foregoing statement of Profits no Depreciation has been charged. This is due to the fact that some of the firms have omitted to make any such provision (on the ground that the large expenditure upon Repairs and Renewals rendered it necessary), while others have dealt with the item in various ways.
In this connexion we have ascertained that during the period under review the expenditure on Repairs and Renewals included in the working expenses has exceeded £480,000; but, notwithstanding this large outlay, we are of opinion that provision for Depreciation should be made by the Association.
Yours faithfully, CREWDSON, YOUATT, and HOWARD, Chartered Accountants.
Deducting interest at the rate of 4¼ per cent. on the Debenture Stock, and 5½ per cent. on the Preference Shares, there are shown by these figures past earnings equivalent to 10 per cent. on the Ordinary Shares now issued, and in addition:—
| On the average of the three years a balance of | £76,163 |
| On the average of the two years a balance of | £154,714 |
| On the profits of last year | £173,418 |
available for Depreciation and Reserve Funds and payment of General Management Charges, including Managing Directors’ and Directors’ remuneration.
After payment of the purchase price, there will remain out of the proceeds of the present issue £1,050,000, being a sum equal to about 15s. per ton upon last year’s output of cement. From this, however, will have to be deducted the estimated expenditure of £120,000 upon the new Rotary Plant at Swanscombe.
The remaining £930,000 will be applied for taking over the stock-in-trade, raw materials, sacks, cooperage, new stores, farm stock, &c., at either cost price or at an agreed valuation (roughly estimated as being about £420,000), and for general working capital, and as the Directors estimate that, including stocks, from 7s. 6d. to 10s. per ton of the output should be ample working capital to carry on the combined undertakings, there will be a large free balance available for improvements of works, &c.
The dates and names of the parties to Agreements entered into by the Vendor Company during the negotiations, the Service Agreements,. the Working Agreements, Options and other Contracts, and the Agreements, relating to the Wouldham Cement Company (1900), Limited, are set out on the last page of the Prospectus.
The contract for purchase, dated 10th July, 1900, is made between the British Incorporators, Limited, of the one part, and this Association of the other part, and contains the terms and conditions upon which the various properties, businesses, and works will be transferred to this Association, and also refers to the obligations to be undertaken by this Association.
The above Contract, prints of the Memorandum and Articles of Association, a draft of the Trust Deed to be executed for constituting and securing the Debenture Stock, and the certificates of Messrs. Farebrother, Ellis, and Co., and Messrs. Crewdson, Youatt, and Howard, can be seen by intending applicants at the offices of the Solicitors of the Association, while the list of applications is open.
In relation to the carrying on of the various businesses as going concerns, a number of Contracts and arrangements have been made from time to time, and there are also many arrangements and agreements for the payment of the expenses of the formation of the Association, and of issue of this Prospectus, and of the Association’s Capital, to none of which this Association is a party, but which may come within the provisions of Section 38 of the Companies Act, 1867. Applicants for Shares will be taken to have notice of such Contracts and arrangements, and to agree with the Association as Trustee for the Directors and other persons liable to waive any claim against them for not more fully complying with the requirements of Section 38 of the Companies Act, 1867.
Settlements and Quotations will be applied for in due course on the Stock Exchange and leading Provincial Exchanges.
Full Prospectuses, with Forms of Application, can be obtained at the offices of the Association, or from any of the Bankers, Brokers, or Solicitors.