Aim-listed hedge fund manager RAB Capital, a significant shareholder in Northern Rock, has announced net profits for 2007 not much changed from the previous year, with a rise of 3 per cent

Aim-listed hedge fund manager RAB Capital, a significant shareholder in Northern Rock, has announced net profits for 2007 not much changed from the previous year, with a rise of 3 per cent to GBP36m (USD72.6 m), while revenue for the period grew 4 per cent to GBP125.2m.

The group said it had a strong first half in 2007, followed by weaker trading as credit and liquidity problems impacted on markets. RAB Capital says assets under management rose 38 per cent to  UDS7.2bn at the end of the year, with over half that growth driven by net inflows to its funds.

The firm did cheer investors by raising its final dividend a third to 1.8 pence a share. RAB says continued market weakness has seen its assets under management fall back to around USD6.9bn in the first weeks of 2008.

Fees were drawn from a broader range of investment strategies, a reflection of the programme of fund launches and acquisitions which have diversified the business since flotation in 2004. An increased proportion of revenues (42 per cent) were derived from management fees (2006: 28 per cent).

Philip Richards, chief executive, says: 'In 2007 our business model was tested and proved durable. RAB funds protected investors' capital and achieved decent positive returns, as evidenced by our RAB Multi- Strategy fund at 10.2 per cent.'

Michael Alen-Buckley, executive chairman, adds: 'Our investment in business infrastructure, products and distribution continues to underpin the scope for future growth. Nervousness in global markets will bring many challenges and opportunities in 2008 and RAB is in good shape to take them on.'

Assets under management, the driver of management fees, grew by 38 per cent to USD7.2bn (2006:  USD5.2bn). Over half of the increase was a result of net inflows to our funds, a significant part resulted from positive investment performance, and the remainder reflected the acquisition of the business of Pi Investment Management in October 2007.

Rab Capital's financial highlights for the ending 31 December, 2007 include:

• Assets under management up 38 per cent to USD7.24 billion (2006: UDS5.24bn)
• Pre-tax profit up 1 per cent to GBP51.1m (2006:GBP50.6m)
• Net income up 3 per cent to GBP137  m (2006: GBP133m)
• Diluted earnings per ordinary share down 4 per cent to 6.28p (2006: 6.53p)
• Proposed final dividend of 1.80p per ordinary share (2006: 1.35p) to give total dividends of 2.40p per ordinary share (up 50 per cent from 1.60p in 2006)
• Strong cash generation and strong balance sheet
• Net asset value per ordinary share 34.7p (2006: 28.4p)
• Operating Highlights:
• Robust business performance in more challenging market conditions
• Improved diversity of the RAB fund range
• First overseas office established in Hong Kong
• Continued investment in new products and distribution capability

The RAB Capital Group enjoyed a strong first half in 2007 followed by weaker trading in the second half as credit and liquidity issues impacted negatively on global equity markets. In spite of the more challenging conditions, the business proved robust and achieved marginally higher profit before tax for the full year of  GBP51.1m (2006: GBP50.6m, restated for the adoption of IFRS), and a net income of  GBP137m (2006: GBP133m).