Read this and be confused. It’s the 19 page preliminary final report from newspaper group John Fairfax. Talk about spinning itself into a knot.

The reporting of 2005 earnings on an “underlying” (good for us) and “reported” (not so good for us) basis shows a company whose board and management just doesn’t know how to take it on the chin.

It’s the Fairfax version of the Packer family’s “normalised” and “actual” bases of reporting its earnings, as it did last Thursday. Naturally, the Packers highlighted the best figure which showed a 21% improvement, thanks to the lower tax bill.

At Fairfax today, the “underlying” profit was the focus because of the reported 22% increase to $252.61 million, not the reported profit, which showed a fall of 6% to $259.68 million. It’s the wonderful vagaries of accounting and tax and reporting and all those things that have come to make Australian finance and business so much fun.

At Fairfax the big difference is the return to regular tax payments in the year, which totalled just over $91 million, compared to a tax credit of just over a million in 2004.

So playing the tax game helped Fairfax a year earlier. So did they report on underlying versus reported then? No, not as openly and directly as in the 2005 Preliminary Report from directors. There wasn’t the break down of revenue and earnings on the underlying and reported bases in the 2004 statement.

But the most curious thing is the complete absence from the 2004 and 2005 financial reports of any explanation as to why the tax bill was so different – and why there was a difference from the prima facie 30% tax rate.

The Packer-controlled PBL does that each year and it is for a fairly clear and legible reason: it might confirm the way the company plays the tax game to boost tax, but it doesn’t try to hide it as Fairfax does. Tax is part of business. Profits these days can only be paid after it has been paid, such is the demand for fully-franked dividends.

In a year’s time the tax bill should be higher to reflect higher earnings. That’s always a good indicator of good “underlying” growth. It’s only a minor point but when your newspapers constantly call for clarity and better disclosure, it’s something that should be practised at the corporate level. That’s what they are paid for.