MICROSOFT IRELAND Operations Ltd (MIOL), the subsidiary of the software giant which sells, distributes and markets software around the world from Dublin, increased pretax profits by 76.5 per cent to €1.43 billion in the year to the end of June 2010.
Accounts for the Microsoft subsidiary, seen by The Irish Timesand submitted to the Companies Office, show revenues increased to €11.35 billion during its 2010 financial year, up from €10.83 billion in 2009.
Despite the significant jump in profits, MIOL cut the dividend paid to its US parent, from €551.5 million, or €1,646.12 per ordinary share, in 2009 to €45.2 million, or €134.83 per share, last year.
It had retained profits of €3.39 billion at the end of the 2010 financial year.
MIOL paid Irish corporation tax of €150.3 million. This works out at less than the headline rate of 12.5 per cent corporation tax as the unit applied a number of off-setting charges, including manufacturing relief of €34 million.
The subsidiary employed an average of 689 staff during 2010, down from 717 in the prior year.
Reflecting the high demand for staff in the technology sector, MIOL’s payroll costs increased from €79.1 million in 2009 to €81.7 million last year despite the fall in staff numbers.
This brings the average salary, including stock options but excluding pension or social welfare contributions, up to €104,082.
Overall, Microsoft employs about 1,100 staff directly, although third-party contractors employ several hundred more at the software company’s offices.
The financial performance of the rest of Microsoft’s activities in Ireland fall under Microsoft Ireland Research (MIR). Its primary activities include engineering work and research and development.
MIR is an unlimited company and as such is not required to publicly file its accounts.
Microsoft has a number of other unlimited companies in Ireland which handle international operations.
These include Round Island One, which is primarily responsible for research and development, and Flat Island Company, which issues licences for software in Europe, the Middle East and Africa.
The directors’ report states MIOL had a “strong performance” during the 2010 financial year “notwithstanding the continuing challenging economic environment”.
The directors state that they will “focus on maintaining a disciplined approach to controlling costs” during 2011.
Costs were reduced significantly in a number of categories last year. The costs of sales was reduced from €970.5 million to €770.1 million last year, while distribution costs fell from €132.7 million to €60.4 million.
Administrative expenses, which includes royalty payments to MIR on the products shipped by the sister company, increased from €8.98 billion to €9.13 billion.
In addition to selling Microsoft software in over 120 countries MIOL sells into the Irish market. Revenues in Ireland last year came in at €129.4 million, up from €116.3 million in 2009.
