Birmingham Chamber of Commerce has insisted its plans for a new £80 million headquarters are still on track as it reported a 12 per cent fall in operating income.

Chief executive Sue Battle said it had delivered a "strong performance" despite seeing income fall by £4.36 million to £32 million for the year to the end of March.

Despite widespread speculation the project was already six months adrift, she denied there had been slippage on the 13-storey building in Edgbaston, which was originally due to start construction this Autumn.

She said: "There was no timetable for work to start on the new building, we have always said the intention to get this project up and running in 2005-06.

"We are meeting at the moment with potential financial partners, and we expect to get that agreed in the next few weeks.

" We are very very optimistic. It could start in 2005-06 or it could be 2006-07. It is still going ahead and we are very relaxed about it.

"But we do not want to rush it. This is a big development for the chamber and we want to get it right."

The loss of income reflected a reduction in Government and European cash to provide subsidised consultancy and other services to businesses in the region. The figure dropped from £14.8 million to £13.3 million, while funding received to manage regional projects such as the SME initiative Mustard was reduced by £1.9 million.

Meanwhile, income from other business services including training fell from £9.7 million to £8.6 million.

But the Chamber also reduced its costs by £4.54 million in the year, and despite the downturn in income, managed to increase its surplus from £323,000 to £501,000.

The cost-cutting involved a handful of redundancies.

Chief executive Sue Battle said: "The downturn has come from the publicly funded projects coming to the end of their life.

"We always knew this was going to happen, we planned and reduced our costs accordingly. Nothing surprising has happened, we were able to find the cost reductions.

"It has been a strong performance." Mrs Battle said the costs had been removed with the winding down of its involvement in various schemes.

"With the end of the programmes there has been a reduction in the costs. We manage the business very tightly.

"But we do not squeeze every drop out, because that will affect the service we provide to business." Mrs Battle said the Chamber was looking at new revenue streams, particularly expanding the services it offers to companies in the region on a commercial basis.

"Our business development team is currently looking at a number of opportunities. These will have to be things that companies are prepared to pay for."

Among the options under consideration was an extension of its advice for tendering scheme which helps small firms identify opportunities to bid for, expanding its translation service and data service. The Chamber was also awaiting the outcome of discussions with Advantage West Midlands about proposed changes to its public sector funding arrangements.

Mrs Battle said she was pleased with how the Chamber had responded to the MG Rover crisis, by helping the supply chain through the Accelerate initiative.