Cazenove profits fall as hedge fund fees down 96%

Cazenove Capital Management saw pre-tax profits dip £9.5m last year on the back of a 96% fall in hedge fund performance fees, despite a 30% increase in revenue from its wealth management arm.

The firm's annual report for 2010 showed profit before tax was £13.9m, down from £23.4m at the end of 2009.

A fall in hedge fund performance fees from £14.7m in 2009 to £600,000 at the end of 2010 was a drag on profits.

However, excluding performance fees, revenues were 24% higher on the back of a strong year from the firm's private wealth management arm and charity businesses.

Cazenove also had to pay out £2.6m pre-tax for the FSCS levy, compared with £44,000 the year before.

The group said: "The most unexpected and undeserved extraordinary item was an FSCS levy to compensate clients of a number of failed businesses, principally in the IFA sector.

"The increases in the levels of payments required from our sector were very significant and shocked many of the firms involved, our company included."

Nonetheless, revenue was up 5% from £92.5m to £97.3m. The firm also showed a strong balance sheet, with cash up from £82.6m to £93.4m.

Cazenove increased its dividend from 3.5p in 2009 to 3.75p in 2010.