Twenty-First Century Fox 2002 Annual Report Download - page 67

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NOTE 7
Change in accounting policy
Change in accounting policy before tax (1,107)
At the beginning of the prior financial year, the Company changed its accounting policy with regards to, amongst other things, the
treatment of marketing and development costs incurred in the production and distribution of films whereby marketing and certain
development costs, previously capitalised and expensed over time, are now expensed as incurred. This change in accounting policy
provides better comparability of the Company’s results against its competitors and has also ensured continued consistency with
United States generally accepted accounting principles for producers and distributors of films. The net impact of this change in
accounting policy net of outside equity interest was a prior year one-off pre-tax charge to profit of $1,107 million with an associated
tax benefit of $421 million. The effect of this change on prior year was a reduction in net profit attributable to members of the parent
entity of $686 million and a corresponding reduction in the carrying value of inventory of $1,338 million, a reduction in tax liabilities
of $509 million and in outside equity interest of $143 million.
NOTE 8
Additional investment by an associated entity
The reduction in associated entity reserves of $267 million (2001 $1,060 million increase) primarily arises as during the previous year
British Sky Broadcasting Group plc (“BSkyB”) issued new equity as consideration for several transactions, including the acquisition of
Sports Internet Group and the remaining shares in British Interactive Broadcasting Holdings Limited (“BiB”). These issuances reduced
the Company’s ownership interest in BSkyB from 37.1% to 36.2%. In accordance with AASB 1016 “Accounting for Investments in
Associates”, in the year to 30 June, 2001 the Company recorded an increase in its investment in BSkyB and a corresponding increase in
reserves of $1,060 million. In the year to 30 June, 2002, the Company recorded a decrease in its investment in BSkyB and a corresponding
decrease in reserves of $240 million. As a result the Company has recorded the change in its share of BSkyB’s reserves following the
above transactions.
NOTE 9
Retained profits
Retained profits at the beginning of the financial year 10,906 11,691
Net loss attributable to members of the parent entity (11,962) (746)
Dividends provided for or paid (203) (305)
Aggregate amount transferred from reserves 1,260 266
Retained profits at the end of the financial year 1 10,906
Dividends on ordinary and preferred limited voting ordinary shares are paid out of the retained profits of the parent entity, The News
Corporation Limited. The parent entity has retained profits as at 30 June, 2002 of $13.7 billion.
66
Notes to and forming part of the Concise Financial Report (Continued)
FOR THE YEAR ENDED 30 JUNE, 2002
THE NEWS CORPORATION LIMITED
Annual Report 2002
Consolidated
2002 2001
A$ million