The delicate state of the world's financial markets has been blamed for a hefty drop in profits at Cazenove, one of the oldest broking firms in London.

The 179-year-old firm - which is planning to float on the London stock market next year - reported a 33% fall in pre-tax profits before one-off items of �60m ($92.3m) for the year to 30 April.

Falling stock markets hit Cazenove's investment management business, while the lack of activity in the mergers and acquisitions field hit its investment banking arm.

Chairman David Mayhew said it was "the worst downturn in investment banking for many years," and added that he expected the tough conditions to carry on for "some time to come".

Cazenove took an one-off charge of �80m which included the �77m cost of a share hand-out to staff.

Equity was given to staff last year when the company ended its partnership structure and became incorporated.

Cazenove's chief executive Robert Pickering said its flotation plans were still on track, but added that the firm had not decided yet whether to float on the main London Stock Exchange or the junior Alternative Investment Market.