Why is there a disconnect between historical and forecast revenue?

In interpreting our forecast data, it's worth nothing that there may sometimes (but very rarely) be a disconnect between certain line items on a historical basis versus the available forecast basis, because the consensus approach of analysts covering the company is different from this historical "as reported" basis. This is usually because they focus on modelling a certain KPI, in a way specific to the company, or because the forecast entity differs somehow from the historic entity due to, say, a disposal (although that issue is largely dealt with by the rules of estimate suppression). 

The most common example of this is revenue/sales. For any given company, on a historical basis, Thomson Reuters collects either Net Sales or Gross Sales, but not both, depending on the company's own reporting practices. Historical net sales strictly represents sales receipts for products and services, less cash discounts, trade discounts, excise tax, and sales returns and allowances. However, the approach of analysts may differ from this standardised approach.

An example of this is Imperial Tobacco where the only available consensus estimate for sales is a company specific definition of net sales, as defined here"Tobacco net revenue comprising tobacco revenue less duty and similar items, excluding peripheral products". The majority of analysts covering Imperial tobacco use the above mentioned basis for forecasting, hence it is used for the consensus sales forecasts.

As a result, the stock report shows historical net revenue for 2012A of £28,574m (as reported by the company) but a net revenue 2013E forecast of £7,895m. We've chosen to include this forecast on the stock report, despite this inconsistency, in the absence of any better forecasts, but clearly it needs to be interpreted in a company specific way. 

If you notice an inconsistency between historical and forecasts financials, do feel free to raise a ticket and we will look into any company specific factors that may be at play here. 

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