Cheshire-based property group Pochin said troublesome joint ventures and a second consecutive year of falling portfolio value were to blame for losses reaching £16m in the year to the end of May.
Richard Fildes, chairman of Pochin, said: "It is in the property joint ventures where most of the group losses have arisen, including a large development site in Birkenhead, now wholly-owned, but formerly jointly held. Contracts for the sale of this painfully assembled land have recently been exchanged on terms which have been designed to avoid further losses in the current year. Similarly, action has been taken in connection with two large refurbished properties in Liverpool where the group's joint venture partner has been unable to bear its share of the holding costs. This has been aggravated by the continuing significant level of void space referred to in the interim management statement. A conditional agreement has been entered into whereby Pochin's would be released from further involvement in these properties, the cost of which has been provided in the group's results."
Pochin reported a loss of £16.2m this year compared to £9.4m in 2009 and following a valuation carried out by Knight Frank, the group's property value had fallen to £25.9m from £38.3m in 2009, an equivalent to 125p a share compared to 184p a share in 2009.
Pochin said a 27% drop in sales from £102.0m in 2009 to £74.8m in 2010, resulted in a reduced operating profit from its in-house activities of £600,000 compared to £2.8m in 2009.
Fildes added: "Shareholders will be disappointed to learn, for the second successive year, of a considerable fall in the group's value. Although there was a significant upward revaluation of prime commercial property during the year, particularly in London, this improvement was much less marked in secondary stock, particularly in the regions. Here too, the problem of letting void space persists over the three sectors of retail, office and industrial property. This makes the performance of the group's owned portfolio the more noteworthy, but is unfortunately the context in which Pochin's is having to give support to large, only partially let, office developments. It is believed that the cost of these exposures has been accounted for."
Pochin was previously in a joint venture with Castlewood Developments in Birkenhead, while the company held a JV stake in Exchange Flags in Liverpool city centre with UK Land & Property.