​No large tax bill sees IBM Australia pocket AU$40m 2017 profit

After reporting AU$16.8 million in after-tax profit in 2016, the local arm of Big Blue has more than doubled its profit to AU$40 million for 2017.
Written by Asha Barbaschow, Contributor

IBM Australia has made its financial results for 2017 available, reporting to the Australian Securities and Investments Commission it raked in AU$40 million in after-tax profit, more than double its 2016 AU$16.8 million lull.

Revenue for the 12 months to December 2017 was reported as AU$2.8 billion, a decrease from 2016's AU$3.2 billion. Receipts from customers totalled AU$2.6 billion, while AU$2.5 billion was paid out to suppliers and employees.

During the 12-month period, the local arm of IBM paid AU$8.4 million in tax, almost half of the AU$13.9 paid a year prior.

IBM considers its principal continuing activities in Australia to be the provision of advanced information services, products, and technologies, including the marketing of imported and locally produced information processing equipment, software, and supplies.

The company's financial report also describes the group's primary services offerings as IT, datacentre, and business process transformation outsourcing; application management services; technology infrastructure and system maintenance; web hosting; and the design and development of "complex IT systems".

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During 2017, the sales of goods -- hardware and software -- totalled AU$634 million; services -- such as consulting and outsourcing -- AU$2.1 billion; and financial services AU$12 million.

Meanwhile, software licence fees paid to the ultimate parent entity in 2017 was AU$315 million.

In Australia, Big Blue's subsidiaries comprise IBM Global Services Australia Limited, Cerulean Solutions Ltd, IBM Superlife Services Ply Limited, IBM Australia Client Servloes Ply Limited, Kenexa Ply Limited, and JRA (Aust) Ply Limited.

Previous subsidiaries Netezza Pty Limited, i2 Australia Pty Limited, Curam Software Pty Limited, Emptoris Australia Pty Limited, and Algorithmics (Australia) Pty Limited were deregistered during 2017.

IBM Australia was awarded a contract with the Department of Human Services (DHS) in May 2017. Valued at AU$96 million, the contract falls under the category of communications devices and accessories, and is described by DHS as "mainframe lease and maintenance".

The contract was awarded following IBM's hand in the 2016 Census debacle.

On August 9, 2016, the Australian Bureau of Statistics (ABS) experienced a series of denial-of-service (DDoS) attacks, suffered a hardware router failure, and baulked at a false positive report of data being exfiltrated, which resulted in the Census website being shut down and citizens unable to complete their online submissions.

The ABS called out IBM for failiing to adequately address the risk posed to the Census systems it was under contract to provide, and that IBM should have been able to handle the DDoS attack.

Since then, IBM Australia has been awarded dozens of federal government contracts across departments including Department of Defence, the Australian Taxation Office, the Department of Immigration and Border Protection, and the Department of Industry, Science and Innovation.

IBM in October announced the appointment of David La Rose as the new managing director of IBM Australia and New Zealand, replacing Kerry Purcell who joined the local arm of Big Blue in 2015.

IBM Corp posted $79.1 billion in revenue for 2017.


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