​IBM Australia takes 47 percent profit tumble

The local arm of IBM has copped a AU$72 million profit drop, posting AU$82 million in pre-tax profit for 2015, while parting with AU$590 million in software licencing and business service fees to related entities.
Written by Asha Barbaschow, Contributor

IBM Australia has reported AU$82 million in pre-tax profit for the year ended December 31, 2015, down AU$72 billion from its 2014 pre-tax profit of AU$154 million.

A wholly owned subsidiary of International Business Machines Corporation (IBM), the Australian arm of the business recorded AU$3.5 billion in total revenue, with services including datacentre provision and IT outsourcing accounting for just shy of AU$2.4 billion.

According to the latest financial filing with the Australian Securities and Investments Commission (ASIC), IBM Australia's income tax expense came to AU$28.6 million, with the company paying just under AU$8 million the previous year, despite posting AU$145.9 total profit in 2014.

IBM Australia also received a AU$2.3 million concessional R&D tax benefit in 2015, down slightly from its 2014 AU$2.6 million tax benefit.

For the year ending December 31, 2013, the local arm of the technology giant posted AU$233 million in net profit, a AU$122 million drop from its 2012 total of AU$355 million.

IBM Australia's parent company reported better-than-expected first quarter earnings earlier this month, thanks mainly to cloud revenue, which saw double-digit year-over-year growth.

In 2015 IBM Australia paid over half a billion dollars in software licence and business servicing fees to its related entities. It also handed over AU$680 million to IBM companies for the provision of goods and services, receiving AU$384 million in return also for services it rendered.

Globally, the company reported first quarter net income of $2.01 billion and revenue of $18.7 billion.

Earlier this month, the Queensland government dropped its legal battle against IBM Australia over its role in the state's troubled health payroll system, which cost taxpayers an estimated AU$1.2 billion.

The Queensland government was ordered on Monday by the Supreme Court of Brisbane to pay IBM Australia's legal fees from the case.

Despite the company's ASIC filing not explicitly itemising any legal fees incurred from the trial, one legal industry source estimated the cost of the case to be as high as AU$3 million.

The tech giant was initially accused by the Queensland government of misrepresenting its capability to deliver a new payroll system on time and on budget in legal action launched by the former state government in 2013.

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