Property firm Newport warned profits would be dented today after agreeing a £750,000 pay-off for its former chief executive.

Peter Lewin, who was paid a total of £330,000 in 2001 and was on a three-year contract, left last month after pressure from shareholders.

The deal covers loss of office and Newport, which does not intend to replace Mr Lewin, said his departure would contribute to "significant" overhead savings.

But the size of the pay-off means profits are likely to feel the pinch.

"As a consequence of this agreement," the group warned, "Newport's profit before tax for the second half of the financial year ending December 31 will be materially lower than expectations."

In the year to December 2001, Newport made pre-tax profits of £923,000 on turnover of £8.2 million.

However, executive chairman Bob Carlton-Porter remained confident for the group's prospects going forward.

He said: "We have identified new opportunities to grow shareholder value and work in partnership with our major shareholders to the benefit of all shareholders."