Firm hit by ‘inappropriate’ use of funds

THE coffee shop chain business Insomnia co-owned by RTÉ Dragon, Bobby Kerr was hit by “inappropriate use of funds” totalling over €280,000 in 2009, new accounts reveal.

The exceptional cost of €283,750 contributed to Redcoral Catering Ltd incurring a pre-tax loss of €1.1 million in the 12 months to the end of December 2009.

In filings just made with the Companies Office, a note attached to the accounts discloses a €283,750 exceptional cost relating to the “inappropriate use of funds during the year” in 2009.

The note records that Mr Kerr and fellow director, Harry O’Kelly “have addressed the issues giving rise to this event and are confident that adequate procedures are now in place”.

Mr Kerr, in a comment yesterday, said “2009 was a tough year for Insomnia”, but he had no further comment to make.

The pre-tax loss of €1.1m in 2009 compared to a pre-tax loss of €4m in 2008 when the company incurred impairment costs on financial and fixed assets totalling €3.5m.

However, the filings show that the company made a profit €49,339 in 2009 before the non-cash item of depreciation costs of €1.2m is taken into account.

The filings confirm that the company increased its gross profit by 2% in 2009 from €7.9m to €8.1m. No turnover figure is provided.

After taking into account administrative expenses totalling €7m, depreciation costs and the inappropriate use of funds cost, the company’s operating loss doubled from €180,607 in 2008 to €368,390 in 2009.

The company was also hit last year by €545,224 in the waiver of group company balances and €238,538 in bank loan repayments.

Under Mr Kerr’s control, Insomnia has grown from 17 to 50 coffee shops and in March last year Mr Kerr changed his role from chief executive at Insomnia to chairman to allow him concentrate on his growing portfolio of businesses.

In April of last year Mr Kerr, along with two partners, purchased Bang Café on Dublin’s Merrion Row. More recently Mr Kerr has presented the Down to Business radio show on Newstalk.

The directors’ report for Redcoral Catering Ltd attached to the accounts states: “The company has experienced challenging trading conditions in the year under review. However, the necessary steps have been taken to improve operating performance through cost efficiencies and margin controls as well as continued focus on service levels based on understanding the requirements of our customers.”

The company had a shareholders’ deficit at the end of 2009 of €1.1m. This included accumulated losses of €4.7m and a share premium of €3.5m.

It had bank loans totalling €3.2m at the end of 2009.

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