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Apple NZ almost doubles FY profit as revenue slips to $556m; pays $3.9m tax, extracts dividend

Apple Sales New Zealand, the local unit of the iPad and iPod maker, almost doubled annual profit on largely flat sales, while extracting a dividend that eclipsed earnings.

Net profit jumped to $10.5 million in the 12 months ended Sept. 28, from $5.5 million a year earlier, while sales slipped 1.5 percent to $565.6 million, according to the company's financial statements lodged with the Companies Office.

The local unit of the world's biggest tech company paid income tax of $3.9 million in the year, up from $2.5 million in 2012. Apple is one of a number high-profile multinational companies criticised for minimising tax by routing profits through offshore subsidiaries.

The Organisation for Economic Development is discussing measures to clamp down on such arrangements, and Revenue Minister Todd McClay yesterday said New Zealand tax department officials will be participating in the Paris-based talks this week.

Apple NZ's accounts show the local unit was flush with cash during the year, with cash and equivalents rising to $26.5 million as at Sept. 28 from $4.3 million a year earlier. The company paid a $14.8 million dividend in March last year, its first since the 2010 financial year, when it returned $33 million to its parent.

The bulk of Apple NZ's revenue went to related parties in the global group. It spent $531.5 million buying inventory from related parties, down from $539.2 million in 2012. Its total cost of sales was $541.4 million, leaving it with a gross margin of 4.1 percent in the 2013 year, slightly wider than the 3.4 percent margin a year earlier.

Apple NZ sold $552.8 million of goods in the 2013 year, down from $561.3 million a year earlier, while service fee income rose to $11.9 million from $9.7 million.

(BusinessDesk)

More by Paul McBeth

Comments and questions
4

When will people learn to read financial statements.

They did not pay income tax of $3.9m, they probably paid more. Tax expense is not tax payments! With the deferred tax asset increasing $1.6m, my guess is their cash tax liability was more like $5.5m.

However, the whole accounts need to brought into question considering that their Australia auditors signed off on accounts showing the NZ company tax rate as 30%, not 28% as it is in NZ (refer note 12). Big STUFF UP.

I also note that they are a unlimited company which is normally for american 'check the box' tax planning purposes.

Good guess Harvey at $5.5m, at note 14 it looks like another group member paid tax on their behalf so assuming that was the only tax paid that was $5.8m but note that is less than last year of $6.2m. That does not necesarily mean that is tax paid relating to the current year but is should be a close enough estimate.

In terms of the tax rate used in the accounts. I think that might be right, as you point out this is a look through entity for accounting and it might be that the tax rate used is that of the parent (i.e. 30%) because of that - but I am no expert in that regard. What we do know is this money will never see it home to the USA because of those favourable check the box rules!

Apple's listed results in USA
Gross Margin US$64b or 37.62%of sales
New Zealand
Gross Margin 4.1%
Get realistic
Transfer pricing at its best

Ird should Treat them like exploration companies and tax the revenue