Capital Bars, the Dublin pub and club group run by brothers Liam and Des O'Dwyer, has reported record pretax losses of €18 million and is only continuing to trade because of support from its parent, the latest accounts state.

Capital Bars is ultimately owned by Full Circle Investments, which has seen its losses climb to €18 million in the year ended September 25th 2005, up from €10.4 million in the previous period, a 75 per cent rise.

The company owns bars and clubs including Bad Bobs, Break for the Border, Café En Seine, the Dandelion Club, Howl at the Moon, the Dragon, the George and Zanzibar. Neither of the O'Dwyer brothers were available to comment on the latest results yesterday.

The company blamed tough trading conditions in the pub sector for the figures, although the results also reflected a €12.7 million write down of assets and goodwill in the business. Goodwill is the portion of the price paid for a business not directly attributable to its net assets.

The accounts state that the directors conducted a review of the assets and goodwill in the business and have taken a €12.7 million charge in the 2005 accounts as a result.

The accounts said: "The director's view of the carrying value is based on external valuations and the director's knowledge of and expectations for each individual unit and their long-term prospects."

The company is now sitting on retained losses at year end of €28.9 million and has net debts of €48.8 million, with AIB and Anglo Irish bank among the institutions acting as lenders to the company. AIB has agreements in place to recall its debts at its discretion, although the accounts say there is a repayment schedule in place starting from September 2006.

The accounts state that another company run by the brothers, Toji Holdings, "will continue to provide ongoing parental financial support to the company to enable it to continue in operational existence." Toji is the ultimate parent of Full Circle and has given the banks security over a number of properties.

The accounts state that Full Circle remains a going concern, but this is dependent upon the availability of adequate finance.

Turnover at Full Circle amounted to €34 million, down from €36.1 million in the previous year. Sales in its various pubs were down 3 per cent, but its hotel properties performed better, up 5 per cent.

Disposals during the period also hit turnover. The accounts note the sale of Coyote Lounge and the Rathmines Capital Hotel.

Another event which went against the company during the period was the closure of the Fireworks nightclub venue for a significant period. Another venue, the Dragon, had to be refurbished after a fire.

Room sales at Trinity Capital and Grafton Capital hotels were up 8 per cent and 2 per cent respectively. "We remain extremely satisfied with the occupancy and room rate being achieved at our Trinity and Grafton Capital hotels," the accounts said.

The accounts show that group wages were cut by 2 per cent and other overheads dropped by 1 per cent. However rents continued to be a major financial drain, 9 per cent higher in 2005 at €4.4 million. The accounts say that considering the "continuing capital requirements of the business", the directors are not in a position to recommend a dividend.

In terms of other staff costs, the total pay bill was €9.8 million, down marginally on the year before. The company employed 433 people during the period under review. Directors - Liam and Des O'Dwyer - were paid total emoluments of €589,000, up from €522,000 the year before.

Results round-up

• The company's various bars saw a drop of 3 per cent in sales, but turnover at the hotels was up 5 per cent.

• Turnover overall was knocked by the disposal of Rathmines Capital Hotel which closed in November 2004.

• The closure and sale of the Coyote Lounge club during the period reduced turnover by €1 million.

• The temporary closure of the Fireworks venue on Tara Street during 2005 reduced revenue by €1.1 million.

• The Dandelion Club on St Stephen's Green west boosted turnover by €1.8 million following a ground floor refurbishment completed in mid-August 2004.

• The performance of other individual venues, including Bad Bobs (left), were not disclosed.

• The amount of rental fees paid by the company for its venues rose by 9 per cent. The O'Dwyer brothers were owed €4.8 million in rents in 2005.

• The sale of the company's Coyote Lounge resulted in a €738,000 loss, although the purchaser repaid about €1 million of debt.