In a statement Chief Executive Michael Holmes said: 'Theuncertainty in both the commercial real estate market and the midto highprice London residential real estate market that developedin April and early May has hardened into a sharp reduction in thevolume of transactions completed in May and June.

'This has adversely affected our traditional property agency andadvisory activities at a time of year when, through typicalseasonality, we normally earn the major part of our profit.Therefore it is now clear that our profit for the year to 30 June2001, to be announced in September, is likely to be substantiallybelow last year's figure and significantly below the market'sexpectation,' Holmes said.He added that cost-cutting measures hadalready been put in place. 'Discretionary spending has been cut andaction is being taken to streamline our cost base for the future,on the assumption thatthe volume reduction might continue for sometime,' he said.

Chesterton shares closed in London at 25.5p, down 8.5p on theday.

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