Chesterton chief quits as profits dive by 50%

Michael Holmes yesterday resigned as chief executive of Chesterton, the upmarket estate agent, after delivering a halving of profits and warning that the New York atrocities would add to the difficulties in the UK property market.

Peter Brooks, the chairman of the company, admitted that "these are disappointing results," as Chesterton's shares fell 26 per cent to 16p yesterday.

Analysts said Mr Holmes lost the confidence of the non-executives on the board after putting out a surprise profits warning in June. To the puzzlement of other estate agents, Mr Holmes said that expensive homes were not selling. Other operators were not experiencing the same difficulties at the time. The board is thought to have felt that the company should have foreseen the problems and not ramped up investment earlier in the year.

Mr Holmes was recruited in 1997 as a "company doctor" and over the next two years he succeeded in turning Chesterton's fortunes around, focusing on recurring revenue streams from new activities such as facilities management. However, this year, the performance of the core estate agency business deteriorated. Mr Holmes will leave with two years' pay, or £380,000.

Chesterton reported that pre-tax profit slumped from £5m to £2.3m for the year ended 30 June as a result of a market downturn. The group forecast that worse could be ahead.