Capital Bars, owner of a number of superpubs and hotels in Dublin, suffered increased losses in 2004 in a depressed year for the Dublin pub trade, according to accounts just filed.
The group's accounts state the licensed trade in Dublin shows no sign of recovery.
The group reported a pretax loss of €10.5 million in the year to end September 2004, compared to a loss of €3.5 million the previous year.
The owners blamed changing lifestyles and consumption patterns, growth in home consumption "being driven by a poor perception of value for money" in pubs, and the introduction of the smoking ban in March 2004.
The company owns a number of pubs and superpubs in Dublin which include Café en Seine, Break for the Border, Zanzibar, Bobs Bar, Fireworks Nightclub, Coyote Nightclub and The George.
Turnover for 2004 was €36.1 million, a 20 per cent drop over the previous year. There were a number of disposals during the year.
The 2004 results include taking account of carrying costs of €1.7 million for the Planet Hollywood and O'Dwyer outlets, which underwent refurbishment in 2004.
There was a trading loss of €647,000 arising from the temporary closure of Fireworks, and redundancy and restructuring costs of €359,000. Impairment of goodwill and the write down in the carrying value of fixed assets came to €8.6 million.
The disposal of Sinnotts pub resulted in a profit of €1.5 million.
The drop in turnover was affected by a number of factors, including the disposal of Major Tom's and Sinnotts (€3.7 million) and the reduced performance and temporary closure of Fireworks (€4.1 million), according to the accounts.
A further €4.1 million reduction in turnover was attributable to the softening of trade at other units. There was an €800,000 increase in turnover at Break for the Border.
Sales at pubs were down 15 per cent and at hotels were down 6.3 per cent. Since the end of September 2004 trade had not improved.
In the 35 weeks to the end of May 2005, like for like trade (in premises with uninterrupted trade) was down 10 per cent "reflecting the continuing depressed market conditions for the licensed trade".
The adverse variance (reduction compared to the previous year) for the months of April and May this year was 3 per cent. The adverse variances for the first two quarters of this year were 12 per cent and 13 per cent.
"Based on supplier statistics and trade compiled data, the order of magnitude of these variances and the trend is broadly consistent with what is being experienced in the licensed trade generally in Dublin," according to the accounts.
The occurrence of Easter in the third rather than the second quarter accounted for the seeming improvement in April/May 2005.
"There is still no sign of an improvement in the underlying trade," the accounts stated.
The company said there was a huge increase in off-sale trade at the expense of the on-trade. "The euro changeover is partially responsible for the poor value for money perception.
"Alcohol has become commoditised and there is an over emphasis on price through media and other circles. Continued supplier price increases exasperate what is already a difficult situation."
The accounts stated that in contrast to its pubs, its hotels, the Trinity Capital and the Grafton Capital, were doing well, with room sales up 3 per cent and 11 per cent respectively. In December 2004 the group disposed of its hotel in Rathmines.
Costs were reduced during the year, with group wages down 13 per cent and overheads, excluding rent, down 10 per cent. On a like for like basis, rents remained unchanged.
Total rents due to William and Desmond O'Dwyer, the group's shareholders, and/or to companies owned or controlled by them were €5.5 million in 2004, according to the accounts.
During the year there was capital expenditure of €5 million, mostly on the refurbishment of the ground floor of the former Planet Hollywood premises (now Dandelion), which cost €2.1 million and O'Dwyers, which cost €2.8 million.
Long term trading will be hugely affected by the positive outcome to the group's application for permission for the restoration of a bar in the basement and basement mezzanine of Dandelion, the accounts went on to state.
Directors William O'Dwyer and Desmond O'Dwyer hold 25,500 and 24,500 shares respectively in the group's ultimate parent, Full Circle Investments plc, with William O'Dwyer being the ultimate controlling party, according to the accounts.
Accumulated losses for the group were €29 million at the end of September 2004.
A ten-year €22 million loan agreement with AIB from 2003 includes the right of the bank to call in all outstanding debt at its discretion.
The bank has allowed the group to defer certain repayments due in the period covered by the accounts and up to June 2005.
Directors' emoluments during 2004 were €522,000. Staff costs were €9.9 million and the average number employed during the year was 405.
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