Telling your investment story “pays off and out” according to a benchmarking study of annual reports.

Research by corporate reporting and design consultancy Merchant reveals that the best communicators outperform the FTSE 100 by 13%.

The report is Merchant’s third annual benchmark of the annual reports of the top 500 London-listed PLCs. The firm assesses how well a report communicates the company’s ‘investment story’ by measuring its use of core reporting: this includes an ‘at a glance’ section covering total shareholder return, strategy, market opportunities, business reports, KPIs and forward-looking information.

This year, the report has found that, despite mixed improvements, disclosure of strategy and forward-looking statements remains poor, and TSR reporting is “dismal”. Given the turbulence of the markets, Merchant looked for specific evidence of the chairman or CEO reporting on the company’s TSR performance – and found an average score of 0.4 out of five.

However, certain areas have improved since the benchmark began, including reporting on assets such as relationships with customers and human resources. The best performing larger sectors included banks, gas water and multiutilities, and life and nonlife insurance.