Seven reasons why you still need to publish an Annual Report
Over the past decade, we have heard repeatedly that the designed, glossy annual report is dead. Frequent comments heard from executives and investors include:
- “Institutional investors just throw them in the trash, nobody reads them.”
– CFO at an independent Exploration & Production Company
- “Annual Reports cost too much to print, I don’t want to spend that kind of money.”
– VP Investor Relations
- “I used to just rip off the cover and read the notes in the 10-K, now I just go online and download the PDF.”
– Hedge Fund Manager
Many of our clients have asked the question – Is this the year I forego the annual report?
Here are 7 good reasons why most industrial companies, including oil and gas, still take the effort, time and cost to produce a designed annual report:
#1. It’s evolving and going online. Some companies are significantly reducing the costs of printing and mailing by evolving their annual report into an online format. General Electric and Shell are leaders in this case, and their 2016 Annual Reports are online “microsites” with comprehensive content on the company’s performance, letter to shareholders, financial filings and videos. Not only are Shell’s and General Electric’s online annual reports saving them printing costs, but it also provides investors and other stakeholders a better communications experience.
#2. The press reads it. Importantly, the press often turns to a company’s annual report for background information and story generation. The International Center for Journalists (ICFJ), a project of the International Finance Corporation (World Bank Group), encourages reporters to read corporate annual reports as a source of story ideas and doing so “…often leads to journalistic scoops.” Make sure your annual report says what you want to read in the media. It is every bit as critical for a company to define its reputation with the media, regulators and activists as it is to position itself with investors.
#3. It’s a strategic marketing document reflecting brand cohesion. The annual report is your best opportunity to connect your corporate strategy to your brand. We have heard plenty of times that oil and gas companies don’t have a brand, but experience demonstrates otherwise. In our white paper Brand DNA – The Most Important Thing You Will Ever Do for Your Business, we noted a study of 450 industrial companies across 47 industries over 16 years that found up to 7% of stock price performance could be attributed to brand equity. Oilfield services and energy tech companies have brands, and so do E&Ps! What are you known for –Are you an oil finder, a resource developer a dividend payer or something else entirely? Telling your audience who you are helps clarify your company’s value to the investment community, which builds trust and makes targeting more effective.
In its 2016 annual report, PDC Energy made its strategy clear, “PDC’s strategy is simple: increase shareholder value through the growth of reserves, production, and per share cash flow and earnings, while focusing on safe and efficient operations, environmental stewardship and community outreach.” Defining itself in this way reinforced PDC Energy’s brand and message. We are pleased to report Prism Group designed and developed PDC Energy’s annual report, which earned two ARC (Annual Report Competition) Awards from Mercomm, the world’s premier international annual report competition. The ARC Awards are globally recognized, providing a platform for the highest standards in the annual report industry. Prism Group was privileged to create this strategic marketing document hand-in-hand with PDC Energy.
#4. It speaks to all of your stakeholders. Your annual report is often a company’s only opportunity to communicate its story in its own words to the multitude of corporate stakeholders, not just shareholders. More than ever it is critical to communicate positively to key stakeholders beyond the investment community, including regulators, activists, legislators, employees, potential recruits and the communities in which they operate and live.
#5. It goes beyond the numbers. In communications, it is often said that content is king, but in our experience context reigns above all. Numbers don’t always tell the complete story. Investors, media, partners and vendors often look at financial results impacted by the downturn negatively, but in a cyclical business the annual report gives the CEO and the board the opportunity to put corporate results in context, emphasize the company’s core competency (the foundation of a B2B brand) and competitive strengths to give investors a reason to maintain interest.
For example, Continental Resources made it clear in its 2016 annual report that it is America’s Oil Champion. Chairman and CEO Harold Hamm wrote, “Continental is well positioned to deliver strong returns for our shareholders in our next 50 years.” Continental’s Brand Promise is embedded in that quote, and it was wise for Continental to avoid burying this positioning statement somewhere in the 10-K.
#6. Stop the (printing) presses! Leverage digital technology and print only what you need. The quality of a digital copy now approaches that of a commercial press, and you can save your shareholders somewhere between $3.50 to $8.00 per hard copy.
#7. It’s a resource. The effort of creating an Annual Report also produces high-quality photography, graphics and charts that can be re-used in corporate presentations, brochures, marketing data sheets, the corporate website and other communications assets. More than one group benefits from the message platform and assets used to build the annual report, including public relations, government relations, operations, investor relations, land and legal.
Stop communicating like a commodity!
You’ve got a great story, now let us help you tell it.
Contact us today at 303.506.2559 or Erik@1PrismGroup.com to learn how Prism Group can help you design an award-winning Annual Report that will set you apart, help build trust with stakeholders with the potential to save you money.
About Prism Group
Prism Group provides investor relations, marketing and financial consulting solutions to the oil and gas, technology, oilfield services and financial sectors. We provide strategic communications, marketing and financial consulting to leaders who are serious about building value and delivering results.