Henderson Group (HGI), the company behind the £70 million plans to transform the former site of the Bank of England in Birmingham into a new mixed-use development, has reported a major drop in profits.
The company, part of the Birmingham Alliance consortium which built the Bullring, said that its first-half pretax profit before non-recurring items fell to £50.8 million compared with £60.5 million in the same period of 2007.
The firm also said current chief executive Roger Yates would stand down in November and be replaced by Andrew Formica, the head of equities.
Justifying the performance, Mr Yates said: “The economic environment in the first six months of 2008 was extremely hostile compared with the same period last year.
“Weaker markets and subdued demand for investment products, particularly from retail investors, put pressure on our fee income.”
He added that assuming markets did not fall materially from the current position, Henderson was still aiming to meet or beat its pre-tax operating profit from last year of £109.6 million.
“This is facilitated by the prompt action we took on costs earlier this year, together with further net fund inflows into our Institutional business and some of our higher margin products,” added Mr Yates.
The firm will also be writing to shareholders shortly with proposals to change the corporate structure of the group.
This will involve a scheme to create a new holding company, which will be incorporated in Jersey and tax-resident in the Republic of Ireland.
“As our business becomes increasingly global, we have concluded that the group and its shareholders would be better served by having an international holding company with a group structure that is designed to help protect the group’s taxation position and better facilitate its financial management,” said Mr Yates.
Such a move would lead to a tax rate of around 20 per cent from 2009.
Assets under management fell to £52.6 billion from £59.2 billion at the end of December.
The 55 Temple Row scheme, in prime office space opposite St Philip’s Cathedral, aims to create a new Grade A office building with ground floor retail space.
