Pre-tax profits at the Domino's Pizza franchise operator Shorecal last year declined by 35% to €5.6m due to higher operating costs.
New accounts show that Shorecal Ltd recorded the drop in profits as revenues increased by 4% from €61.84m to €64.42m in the 53 weeks to the end of December last.
In March of this year, Domino Pizza Group plc acquired the remaining 85% shareholding in Shorecal Limited in a deal worth up to €72m.
The pizza group acquired the shareholding in the business from Shorecal owners Charles Caldwell, Adrian and Anne Caldwell, and investment vehicle SC Holdings I Ltd.
Shorecal operated 34 of the 99 Domino's stores across the Republic of Ireland and Northern Ireland.
When the purchase was announced in March, Domino's CEO Andrew Rennie said: "We see a significant opportunity to meaningfully increase our Irish store count and deliver long-term, sustainable returns."
The accounts show that last year, Shorecal paid out dividends of €3.8m and this followed a dividend payout of €20.24m in 2022.
In their business review, the directors state that "both the level of business and the period end financial position were satisfactory".
A breakdown of revenues show that €43.8m was generated in the Republic of Ireland and €20.58m in the UK.
Numbers employed by Shorecal last year declined from 530 to 503 though staff costs increased by 19.5% from €11.54m to €13.8m and this was chiefly as a result of a €1.09m cost under "long term incentive plans".
Pay to key management personnel last year increased marginally from €460,970 to €463,700.
A note attached to the accounts state that management fees in the accounts includes amounts in relation to the directors, Charles and Adrian Caldwell of €619,265 and €109,306 and are included under accruals in trade and other payables.
The profits for last year take account of combined non-cash depreciation costs of €1.63m.
Shorecal recorded post tax profits of €4.58m after incurring a corporation tax charge of €1.02m.
Shareholder funds totalled €16m as cash funds declined from €11.4m to €8.19m.
Last year, a subsidiary of Shorecal Ltd lost, Karshan (Midlands) Limited lost a long running legal battle with the Revenue Commissioners on the job status of Domino’s Pizza drivers.
The High Court upheld the finding of the Tax Appeals Commission (TAC) that the delivery drivers should be treated for tax purposes as employees.
Karshan (Midlands) Limited’s appeal to the Court of Appeal, heard in July 2021, was successful.
Revenue appealed that decision to the Supreme Court which was heard in February 2023 and a ruling in favour of Revenue was issued on the 23rd October 2023.
A note attached to the accounts state that in 2014 the Revenue raised estimates amounting to €215,718 in respect of tax years of assessment 2010 and 2011 concerning the issue with Karshan (Midlands) Ltd.
Arising from the Supreme Court ruling, the company engaged KPMG to finalise matters with Revenue in relation to the 2010 and 2011 liabilities and in relation to any liabilities which may have accrued since the decision was issued.
The note states that the KPMG team are in detailed discussions with their counterparts at Revenue.
The note states that the directors, taking into account advice received, have made a provision in the financial statements for what they consider to be a reasonable estimate of the liability as at December 31st 2023.
The directors state that they are of the opinion that the possibility of a liability beyond this provision is low.
Reporting by Gordon Deegan
