Main source of income appears to be from motivational speaking
THE BUSINESS career of presidential candidate Seán Gallagher indicates his fortunes rose with the property bubble but hit a wall with the rest of the construction sector approximately four years ago.
Currently, his main source of income appears to be from motivational speaking.
On Sunday, professor of management at UCD Niamh Brennan said on RTÉ radio that she had a “bad vibe” about the candidate and went on to mention three issues that have been the focus of media coverage in recent days. These are: a director’s loan; royalty payments; and rent.
The loan has to do with a company Mr Gallagher set up with his wife, Trish O’Connor, in November 2008. The company, Beach House Training and Consultants Ltd, is used by him to charge for his motivational speaking and other fee-generating activities.
The company’s accounts for the period from incorporation to December 31st, 2009, showed that Mr Gallagher had an interest-free loan of €82,829 from the company at the year’s end.
This was in breach of company law, which stipulates that a director should not have a loan that exceeds 10 per cent of the company’s assets. Mr Gallagher’s loan was equal to more than 70 per cent of the company’s assets. The objective of the law is to protect creditors. The Beach House creditors at the end of 2009 included the State, with €17,503 being owed in corporation tax and €25,174 being owed in VAT at year’s end. The accumulated profits at the end of 2009 were €114,220.
Mr Gallagher, when asked about the loan last week, said it had been an “honest mistake” and had been rectified when brought to his attention by his accountant.
On RTÉ radio he said the loan “relates to a cheque that was lodged into the wrong account . . . And then the accountant treated it as a loan. When it was spotted, it was in fact moved back within four weeks . . .”
As noted, Beach House is essentially a small company used for Mr Gallagher’s personal finances. Mr Gallagher was asked through his spokesman last week what account he was referring to in his interview and when exactly the loan was repaid. As of last night he had not answered.
There is another curious aspect about the Beach House accounts. They say that it is owed €49,975 from Surf Seeds Ltd, a snack food company Mr Gallagher invested in as a result of the Dragons’ Den programme. The accounts say Beach House is a 10 per cent shareholder of Surf Seeds. But the company filings for Surf Seeds say Mr Gallagher is a 10 per cent shareholder. They do not mention Beach House. There was no response from Mr Gallagher when asked through his spokesman about the Surf Seeds issue.
In 2002 Mr Gallagher set up a company, Smarthomes Ltd, with business partner Derek Roddy.
The company installed wiring in new buildings and its fortunes rose with the property bubble. By 2006 turnover had reached €5 million. That same year a number of Business Expansion Scheme investors put a total of €750,000 into the company.
Also that year the two partners bought a commercial building in Finnabair Industrial Park, Dundalk, from iQon Technologies, and moved their company in as their tenants.
The 2006 accounts for iQon show the building was valued at €2.06 million. No loss was booked arising from the sale.
Commercial property in Dundalk has fallen in value by approximately 50 per cent since, according to local experts, indicating Mr Gallagher’s half share in the building could have fallen in value by €500,000.
On the other hand, Smarthomes now only uses part of the building with the rest being leased to an Australian company, Probiotec, for what is understood to be a relatively high rent. A third company, The Hanger Company, also rents part of the building.
According to a spokesman for Smarthomes, the annual rent of €196,283 paid by the company up to 2009 covered Mr Gallagher’s and Mr Roddy’s mortgage repayments. That indicates Mr Gallagher’s obligation is approximately €98,000 per year.
There has been some controversy over the fact that the company paid this level of rent in 2008 and 2009, when it suffered losses respectively of €674,624 and, approximately, €500,000. It currently pays €10,000 per annum in rent.
Mr Gallagher and Mr Roddy also received royalty payments from Smarthomes as they had patented the wiring system Smarthomes installed. Mr Gallagher received €167,000 over 10 years, according to the Smarthomes spokesman. This income would have been entirely tax-free as, up until last year, royalty income from patents was free of tax.
