Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Merchant, the annual reporting specialists, has completed the UK’s largest research project into annual reporting by reviewing the annual reports of the FTSE500 companies for the second year in a row.

The research demonstrates that those companies who most clearly communicated their strategy and market opportunities in 2006 outperformed the FTSE100 in the subsequent 12 months.

The report shows that on average the FTSE100 companies had around 13 per cent Total Shareholder Return (TSR) between July 2006 and July 2007. However the ten companies that Merchant identified in July 2006 as the best communicators of strategy had a TSR of 24 per cent and the eight companies who were the best communicators of their market opportunities had a TSR of 18 per cent.

Robert Moser, Managing Partner said, ”We’ve been reviewing the FTSE250 annual reports for over a decade and last year we extended this to the FTSE500 companies to give us the largest benchmarking data available on best practice.”

“We were surprised to see that despite the additional pages in annual reports this year, only 69 companies out of the FTSE500 scored above average in explaining their strategy and markets, also there were very few companies reporting on the details of their KPIs.”

He added that  Amlin plc, a FTSE250 company in the insurance sector was amongst the best in class scoring very highly on all the different criteria being assessed. "Their annual report is excellent in terms of content and could be used as a model for others.”

Merchant’s research has found that good annual reports that effectively communicate a company’s compelling investment proposition are as few and far between as those companies who outperform the market. But there appears to be a correlation between those PLCs who are excellent communicators and those delivering operational excellence.