Northern lights at the Rock.

Northern Rock had more than doubled its share of the mortgage market, a sharp
rise from 3% to 7.8% when it unveiled its first half year results last year.
With performance like that in the background, analysts and investors alike will
be watching with keen interest when the Rock steps forward again on 19 July to
show just how well it’s done. There is currently optimism all round. It can be
sensed at Northern Rock’s headquarters and it can be seen in the analyst
statements put out just before the lender entered its close period. Capital has
been managed ‘efficiently’, its e-commerce projects ‘continue to show progress’
generating ‘further business volumes’ and ‘costs remain tightly controlled’. The
Rock looks like it is going to announce results as good as last year after it
said lending had been strong in all areas. So be prepared for a jump in the
share price when the results go live. Last year they rose 24.5p to 325p. Bob
Bennett, finance director at the Rock, has had a busy year. He’s seen his chief
executive change from Leo Finn, and his replacement, Adam Applegarth, will have
relied heavily on advice from Bennett who has now been with the Rock for eight
years. ‘I don’t see myself as a number cruncher. I’d rather look forward and
understand that business is not just about numbers,’ he says. Previously,
Bennett was general manager at Leeds Permanent and prior to that worked in
practice as a chartered accountant and three years in a local authority.
However, he said the best experience in terms of preparation for his current job
was three years at a company that made three-piece suites. There have been risks
for the Rock. Consolidation in the sector lead to speculation that it could
swallowed up by a bigger outfit. The furore over Abbey National and Bank of
Scotland’s merger plans, which followed in the wake of Barclays’ takeover of the
Woolwich, seemed to indicate a whole rash of mergers and acquisitions were on
the cards. The Rock however, has seen its relatively small size as the defence
reasoning that its size was unlikely to interest the big fish. Applegarth has
been proved right so far but as the Rock’s success continues it will become an
increasingly attractive target.


Results for 2000

Record gross lending of #6.4bn

Pretax profits: #250.1m

Record post tax profits: #182m, up 26.8%

Market capitalisation (31.5.2001): #2.16bn

Executive directors:

Adam Applegarth, chief executive, appointed 2000; Bob Bennett, finance
director appointed 1993; David Baker, chief operating officer.

Auditor: PricewaterhouseCoopers

Profile: Created in 1965, Northern Rock was born out of the merger
of the Northern Counties and Rock Permanent building societies. Listed on the
LSE in 1997 and operates as bank, financial institution and mortgage lender.
Mortgages are the primary business.

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