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It may never become anybody’s idea of great beach reading, but the corporate annual report is definitely evolving.

What was once strictly an instrument for financial disclosure has today become much more of a marketing document. And designers who work in the area say that new requirements with respect to corporate disclosure ­ securities regulations now demand that public companies include a Management Discussion and Analysis (md&a) section at the back of their annual reports ­ have accelerated the transformation of the traditional annual report over the past five years.

Bev Tudhope, principal of Toronto-based Tudhope Associates, says a lot of the operating information that used to go into the front end of the report, detailing the company’s activities over the previous 12 months, now has to go into the md&a section.

To avoid redundancy, he recommends that clients use the front end less as a vehicle for reviewing the past year, and more for ‘positioning the company, talking about strategic direction and focusing on key messages you want various stakeholders to get.’

Tudhope says it’s important that the design of an annual report convey the same look and feel as a company’s other communications, to ensure the portrayal of a consistent corporate image across all media.

This d’esn’t happen enough, he contends. Too often within corporations, the people handling the annual report don’t work with those responsible for marketing or other corporate communications functions ­ which means that it’s up to the communications and design consultants to promote integration.

Luc Goodhue, president of Goodhue & Associes in Montreal, says that to create effective annual reports, design firms must work closely with clients to understand who they are, as organizations, and where they’re going.

‘We discuss the values of the company and always try to focus on what’s important for that company to communicate to their shareholders,’ he says. ‘You have few alternatives. You can talk about human resources, about products, about your market or your facilities. Each year, you have to change and focus on a different target.’

Michel Viau, president of Ove Design in Toronto, agrees. ‘We try to focus on the right message, and translate it visually for the shareholders,’ he says.

Viau recommends to clients that they use their annual reports to educate the target audience not only about their organization, but about the environment in which they operate.

‘Many annual reports we have done feature articles discussing the industry, the changing nature of the competitive environment and so on,’ he says. ‘By giving a feel for the industry in general, it enlightens the audience not only about the challenges the company is facing, but about the opportunities that might arise.’

Budgets for annual reports have fluctuated somewhat in recent years, as a result of the recession.

Goodhue says they have suffered particularly in Quebec. His firm used to be quite busy with annual reports, he notes, but belt-tightening sent many clients to small desktop studios instead, looking for low-cost solutions.

Casey Hrynkow, president of Vancouver-based Herrainco Design Associates, says many clients are concerned not just about the actual expense of their annual report, but also about the perceived expense. Cost-conscious shareholders tend to frown upon lavish-looking reports.

‘The objective sometimes is to create the perception that not a great deal of money was spent,’ she says. ‘People perceive that if you use a coated paper, four-color images and glossy photography, the book is expensive. In fact, very inexpensive books are sometimes produced that way.’

Viau says the investment community tends to cast a critical eye at anything that has a flashy look. The more glitz to a report, he says, the more they will be inclined to dig below the surface to see if there is real substance.

There are few hard and fast guidelines for annual report design. Hrynkow says each client’s needs must be considered individually.

Different typefaces, for example, will be used for different clients.

‘If they’re trying to look accessible, warm and friendly, we’re probably going to use something Garamond,’ she says. ‘For a high-tech client, [we’ll use] sans serif type of some kind.’

Readability is a key factor not only in the choice of typeface, but of paper as well.

‘We do one book where we use three or four different papers,’ Hrynkow says, ‘because we have different kinds of information in it, and people will spend different amounts of time staring at [different] pages.’

For financial information, which people may have in front of them for some time, Hrynkow prefers uncoated paper. However, pages that use high-impact graphics to convey a bright, upbeat message may fare better on coated stock.

The next major change in store for annual reports may be the format in which they appear. As Viau points out, many corporations are now beginning to put part or all of their annual reports on their Web sites. This, in turn, may create new challenges for designers.

For the moment, annual reports on the Web tend to be designed for the lowest common denominator. Many Internet users, Viau explains, lack the hardware or software necessary to handle sophisticated graphics. The reports must therefore be designed so that it’s easy for investors to download financial information or print out sections, no matter what computer system they happen to be using.

In time, Viau predicts, elements such as full-motion video will be used to illustrate on-line reports.

Hrynkow says her firm has been called upon to put annual reports on the Web. She isn’t sure, however, that multimedia is necessarily fitting for this type of communication.

‘The technology is there, but whether or not it’s appropriate to the message remains to be seen,’ she says. ‘Just because you can do it d’esn’t mean you [should].’