Top FTSE 500-listed companies with strong annual report communications outperform those with weaker communications by 13 per cent, according to a new survey.
The research – published by Merchant, itself a design consultancy specialising in annual report communications – looked at a hypothetical ‘total shareholder return’, comparing any given company to its position in the previous year’s survey.
Robert Moser, managing partner at Merchant, says the purpose of the exercise is to demonstrate the importance of clear communications to potential clients. ‘It shows that if you invested in the best communicators each year, your investment would outperform the FTSE,’ he explains.
The release of the survey ties in with what Moser calls ‘the pitching season’ for annual report communications.
The survey is now in its third year, and Moser says the results, so far, disprove the notion that larger companies are better at communicating.
He says smaller companies show many examples of good reporting and suggests that consultancies are ‘missing a trick’ by not working with them, adding that larger companies would do well to learn from their success.
Each company’s communications are judged on 18 criteria. The most important of these is laying out information clearly upfront, including a description of the company’s business, a display of key financial and operating statistics and a clear breakdown of any divisions within the company.
Findings show the weakest areas of annual report communications are information on senior management and relationships with suppliers.
Some of the survey findings are available on Merchant’s website, www.merchant.co.uk. A more detailed breakdown will be uploaded in November.