Cheers at Yahoo as income tops €100m mark

Internet search engine operator Yahoo has declared annual royalty income of more than €100 million at one of its main Irish units and pretax profits of €4.22 million.

Newly-filed accounts for 2006 show that Overture Search Services (Holdco) Ireland, a wholly-owned division of Yahoo, paid dividends of €3.52 million last year on non-equity preference shares in the business.

This legal entity, whose immediate parent is incorporated in the Cayman Islands, is the holding company for the European activities of Yahoo's subsidiary Overture. It receives royalty income and incurs research and development expenditure for the Yahoo group of companies.

The accounts indicate that the holding company's business had a net book value of €73.6 million in September, when Yahoo restructured its operations with the aim of streamlining its administrative and financial requirement.

As part of the restructuring process, the holding company's entire issue share capital was transferred to a Dutch entity called Yahoo! Netherlands Holdings CV. This was achieved by way of a two-step process in which the holding company was acquired for €73.6 million by its immediate parent, the Cayman-registered Overture Services Europe, which in turn transferred its interest to the Dutch firm.

The holding company's activities increased significantly last year. Turnover rose by more than 100 per cent from €47.88 million in 2005, a year in which the company incurred a pre-tax loss of €1.65 million.

Yahoo is prominent among major US internet players, such as Google, Amazon and eBay, which have significant Irish operations. A spokeswoman for Yahoo declined last night to comment on the financial performance this year of Yahoo's Irish operations. The group set up its European headquarters in Dublin two years ago.

Separate filings earlier this year for a subsidiary of the holding company - Overture Search Services (Ireland) Ltd - show that it booked sales here of €712.4 million last year and pretax profits of €20.6 million.

In common with many US organisations that locate significant international assets in the Republic for tax reasons, this unit controls subsidiaries in big European markets such as Germany, Italy, France and Spain.