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CSL and News Corp rejig their accounts

Australian biotech giant CSL (ASX: CSL) has released changes to financial reporting details ahead of its June full-year results to reflect the reorganisation of its Australian operations. The changes are reasonably straightforward for investors to understand but have altered the allocation of sales across certain segments and will require financial models to be restated and adjustments to be made.

Accounting reorganisations such as this can create headaches for investors and analysts. While CSL’s moves are unlikely to cause too many issues, News Corp (ASX: NWS) and its recent split into Newscorp and 21st Century Fox  is likely to cause a lot of confusion as investors re-evaluate the earnings and profits of the newly separated Murdoch empire.

Foolish takeaway

Company spin-offs and reorganisations can often create great buying opportunities for investors. For reasons ranging from confusion around quality to technical issues, sometimes companies undergoing reorganisation trade well below fair value.  Two examples from recent years are DuluxGroup (ASX: DLX) and Treasury Wine Estates (ASX: TWE) both of which appeared to be unloved and perhaps misunderstood when they were spun-off from their respective parent companies, yet have performed very well since.

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Motley Fool contributor Tim McArthur owns shares in News Corp.

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