Legal & General, one of the UK’s largest asset managers, today announced that it would cease quarterly reporting of results in 2016 following the removal of requirements for Interim Management Statements.
The Board said it believed the move was in the best long-term interests of the company, shareholders and customers.
The decision comes as pressure mounts on UK companies to end practices that contribute to pressure to generate higher short-term profits, because this profit-drive can result in decisions that are less sustainable for companies long-term.
Years of research and authoritative reports on long-term financial stability, including the Kay review, recommend less frequent reporting schedules to reduce this pressure.
The L&G board said it felt the decision will enhance its communications with investors and other stakeholders, as it will allow the company to better articulate Legal & General’s business strategies and the long-term dynamics of its markets, through timely and frequent updates, rather than quarterly trading figures.
Legal & General Investment Management (LGIM), one of the largest investors in UK plc, wrote to all the FTSE 350 Boards in June outlining their support for the regulatory changes that removed the mandatory requirement to disclose financial reporting on a quarterly basis.
LGIM stated in their correspondence, that it was up to individual company Boards to make the appropriate decision on quarterly reporting, based upon their own business environment. Legal & General has also discussed this change with its shareholders, who are supportive.
Legal & General will continue to provide, in conjunction with prelims and interims, qualitative updates covering market and company developments.
Nigel Wilson, Group Chief Executive said: “Legal & General believes in long termism. The future success of the UK economy is dependent on companies and shareholders making the correct long-term business decisions. Legal & General believes making this change will help management and the Board make the right long-term decisions in the interests of all our stakeholders.
“Our business cycle is long-term, with many of our investment and business decisions playing out over years and sometimes decades, rather than quarters. As such, ending quarterly reporting will allow us to focus on communicating what is relevant to the value creation in Legal & General’s businesses.”
