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SAB Miller to Launch Financial Analysis System

SAB Miller, the drinks group, is working with other FTSE 100 companies on a system to change how the City understands “consensus estimates” for financial performance.

Initially developed in-house at SAB, the Vuma Consensus system aims to provide a more accurate and detailed methodology for collating analysts’ expectations for corporate performance.

The success or failure of a company to meet City expectations can have a big impact on its share price. Tesco, SAB rival Diageo and Anglo American , the mining group, have all signed up for the new service. SAB will use it for the company’s interim results in November.

Under the new system, analysts will update their published forecasts to a template provided to Vuma, a third-party platform. In return, they will be able to see their peers’ estimates for the same metrics.

It will remain anonymous and closed to the media for the time being but SAB said it might be opened to investors and the media in future.

SAB said its system would simplify the job of handling the models of a multitude of analysts.

“It was quite time consuming for (our) IR team to go to 12-16 analysts and understand their model,” said Victoria Ferrier, investor relations manager at SAB. She said differences between analysts’ models meant current consensus figures were not a fair representation.

SAB said Vuma’s service was more detailed, with directly comparable forecasts available on the financial metrics that companies consider to be their key drivers of performance.

Ms Ferrier, who came up with the idea, said many of the analysts who covered SAB had signed up to the service.

Existing services that collect analyst data, such as from Thomson Reuters or Bloomberg, are based on collating the published forecasts of all analysts covering a company and then taking a simple average. But such systems can have their limitations.

“Consensus – it’s not that it’s not accurate, but it only gives a baseline story,” said Sridharan Raman, director of quantitative research at Thomson Reuters. “But maybe some analysts are better than others.”

Thomson Reuters is in the process of rolling out a new service with Starmine, its analyst performance measurement service, which will link the profit estimates with the past performance of the analyst.