Henderson took investors by surprise today as it revealed that Roger Yates, its chief executive for the past nine years, would be stepping down to take a sabbatical for the next year.

It came alongside a sharp fall in interim profits at the £53 billion fund manager, which also confirmed plans to relocate to the Republic of Ireland for tax reasons.

Mr Yates, who resigned yesterday, said he had been thinking about stepping down since March. Having told Rupert Pennant-Rea, the chairman, of his decision, he leaves the firm in November.

"I've been in the job for nine years. I don't think that chief executives should take more than ten. And if you don't get out of the way, you block the right succession," Mr Yates told The Times.

He said that he planned to spend at least some of his time indulging in his passion for mountain climbing. The 51-year-old executive, who is extremely popular inside the asset manager, said he would most probably return to fund management after taking his break.

Mr Pennant-Rea said he was "sorry to see him go, but we wish him well for the future".

Mr Yates will be replaced by Andrew Formica, the head of equities and co-head of listed assets. He has been with Henderson, which was spun off from Australia's AMP, for the past ten years.

Catherine Heath at Altium Securities said it had regarded Mr Yates highly. "We suspect there may be some disappointment in the market. We do not know the successor and as such it is too early for us to take a view," she said.

It came as pre-tax profits for the first half at Henderson dropped to £50.8 million. This is a 16 per cent fall compared with the same period last year and is less than half the £106.7 million recorded for the previous six months.

Assets under management slumped by £6.6 billion to £52.6 billion, after Hugh Osmond's investment vehicle Pearl withdrew £4.8 billion of management mandates and a further £3.1 billion was wiped away by deteriorating markets.

Pearl's Staff Pension Scheme accounted for £1.8 billion of the withdrawn funds, worth £2 million in annual revenues alone to Henderson.

Henderson stressed that it was still on track to meet its financial objectives for the year, assuming the market does not fall further.

It also said that some of Pearl's departing capital had been offset by £1.3 billion of fund inflows.

"The economic environment in the first six months of 2008 was extremely hostile compared with the same period last year," Mr Yates said.

"Weaker markets and subdued demand for investment products, particularly from retail investors, put pressure on our fee income."

Previous cost-cutting measures and careful gearing means Henderson should still match or beat last year's pre-tax operating profits of £109.6 million this year, as long as conditions do not deteriorate materially, he said.

Henderson will shortly be writing to shareholders outlining its tax plans, which involve the creation of a new holding company incorporated in Jersey and tax-resident in the Republic of Ireland.

This should lock in an effective tax rate of 20 per cent for Henderson, which becomes the fourth company to quit the UK for a friendlier tax home after WPP, the advertising giant, Shire, the pharmaceuticals firm and United Business Media, the publisher.

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