31 May 2017

Investment Association calls for end to quarterly reporting

The Investment Association has published guidance on long-term reporting, which includes a call for companies to stop publishing quarterly reports and to focus more on longer term performance.

The guidance sets out the expectations of the IA’s members on various aspects of long-term reporting and applies to companies with a premium listing of shares. Companies with a standard listing of shares or with shares admitted to trading on AIM or to the High Growth Segment of the Main Market are encouraged to adopt the guidance as best practice.

The guidance sets out the following recommendations:

  • Business models and long-term reporting: the guidance calls on companies to stop issuing quarterly reports and quarterly earnings guidance in favour of greater attention being given to longer term performance and strategic issues. It encourages companies to review their current approach to business model disclosures against the FRC Reporting Lab's Business Model Reporting recommendations, to ensure better linkage of business model information to other sections of the annual report.
  • Productivity: this section outlines members’ expectations as to how companies should report on the drivers of productivity within their business. Companies are encouraged to develop their own set of key performance indicators by which improvements in productivity can be reliably measured over time.
  • Capital management: this section outlines members’ expectations on capital management disclosures and how companies can improve reporting on the connection between capital management and its long-term strategy.
  • Disclosure of material environmental and social risks: this section is based on a modification of the IA's 2007 Guidelines on Responsible Investment Disclosure and outlines the disclosures that members would expect to see in the annual report. These include disclosures relating to the board responsibilities and policies, procedures and verification systems to manage environmental, social and governance risks.
  • Human capital and culture: this section sets out expectations as to how companies should report on human capital and culture.

The IA encourages companies to adopt the guidance at the earliest possible opportunity. The IA’s research arm, IVIS, will monitor implementation of the guidance through analysis of annual reports for year-ends on or after 30 September 2017. IVIS will outline to the IA's members those companies that continue to adopt short-term reporting models, and where companies are not making the desired disclosures.

The guidance is designed to complement the requirements in the Companies Act 2006 and the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, and to be read in conjunction with the FRC's Guidance on the Strategic Report.