Why Northern Rock annual report is a collectors’ item
Business columnist Bill Jamieson wryly questions the value of financial statements:
In the great global credit crisis of 2007-8 some artefacts are set to become collectors’ items. Prominent among these, I suspect, will be the Northern Rock 2006-7 annual report. It was presented to the group’s 108,000 shareholders less than a year ago.
Key features in the report were a 19 per cent rise in underlying attributable profits to a new record; a 24 per cent growth in underlying assets to £100.5 billion; a record 22.7 per cent rise in gross lending to £33bn; “robust” credit quality, with mortgage arrears less than half the industry average; and a 20.3 per cent rise in dividends.
It should serve as a textbook model for management and business schools on how an annual report, compliant in all respects and bristling with figures to reassure shareholders – including the “virtuous circle” – cannot be taken as a guide to a business model or its resilience.
Continued at the Edinburgh Scotsman…
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