bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Enoch Yiu

Countless trees are expected to escape the axe after regulatory changes allowing companies to issue annual reports, corporate announcements and prospectuses online.
But the city's once flourishing financial printers - including many small operators - face a gloomy future unless they learn to adapt to the new cyber-environment. 
 Last week, the Securities and Futures Commission and the stock exchange announced the end of the consultation period on proposed new 'green' law amendments.
The changes, expected to take effect from February 1, mean companies will no longer have to issue paper prospectuses. They will only need to post an electronic version on their own websites and that of the Hong Kong Exchanges and Clearing.
 Gone are the good old days for the city's army of financial printers who used to earn good money from printing listing prospectuses, shareholders' circulars, company announcements and annual reports.
 It was mandatory for these documents to be sent as hard copies to shareholders, and like it or not, listing candidates and listed companies had to pay a high price to print them. 
A company's listing prospectus for example could cost HK$2 million to HK$3 million. After the listing, the listed companies would each pay roughly HK$300,000 a year for about 3,000 copies, or HK$100 per copy, to print their annual reports.
Environmental concerns and the development of the internet led the Securities and Futures Commission and the stock exchange in recent years to remove the hard copy rules. Most disclosure can now be done online, saving costs for companies and giving wider access to investors.
 Eddie Yu, chairman of printing firm HeterMedia Group, admitted the regulatory environment has forced financial printers to change their business models. HeterMedia is a printer for many listed companies including China Shenhua Energy, China Citic Bank and mainland sportswear company Li Ning. 
 'If a financial printer can only print documents for a company without any extra services, it is hard to survive in the current regulatory environment,' Yu said.
In 2007 the era of electronic disclosure began when the stock exchange scrapped rules that required companies to place paid newspaper advertisements to announce financial statements, mergers and acquisitions or other corporate news such as changes of directorships. This change has not only affected newspaper publishers but also the financial printers that prepared the ads. 
Yu said following the change some smaller printers opted to merge with bigger players in order to keep operating.
HeterMedia decided to diversify, expanding into the mainland and offering more electronic services for listed companies. The gamble paid off, with Yu doubling the company's headcount to 200 staff from 2007.
'We have expanded in the mainland market by setting up office in Beijing,' Yu said. 
'We have also expanded our internet design team so as to provide electronic solutions for listing candidates and listed companies.'
Yu said though regulators allow companies to issue online versions of annual reports and prospectus, companies still need the services of translators and designers.
'We can provide a whole team of staff to design an interactive internet version of their annual report. For example, the companies can have their chairman's webcast put on the annual report website. We also offer iPhone or iPad versions of annual reports. The new technology offers new opportunities and as such, HeterMedia is no longer a financial printer but a content solution provider.'
Yu also pointed out that though the regulatory change allows companies to issue soft copies, some companies still liked to issue hard copies in a bid to maintain good investor relationship services.
 Joseph Tong Tang, executive director of brokerage Sun Hung Kai Financial, said his company still issues printed prospectuses for listing candidates and the company itself still prints annual reports.  
Kelvin Wong Tin-yau, chairman of the Hong Kong Institute of Directors, who is also deputy managing director of Cosco Pacific, said companies would still need to print hard copies.
'Although the e-world is very convenient, some shareholders still find it useful to receive printed copies of our documents for reading and records,' Wong said. 'A printed copy also gives them a sense of security when compared to a virtual soft copy. As far as my company is concerned, we still have to print and keep hard copies though the amount has been reduced.'
 Edward Chow Kwong-fai, chairman of Hong Kong-listed CIG Yangtze Ports, supports the move to put annual reports and prospectuses online because 'it will save a few trees and save storage space on the bookshelf.' In reality, however, Chow said financial printers are not losing all their former business as companies still need to print items. 
'Some shareholders still ask for hard copies and you still need to prepare some hard copies at annual general meetings for them. In addition, we also need the annual report for presentations at meetings and road shows. 
'Hence, printed copies are still required, albeit in smaller quantities,' Chow said. 'But since the cost per copy for small quantities is very high, so you end up ordering a 'non-small' quantity.'
The plan to change the printed prospectus regulations follows lobbying by environmentalists such as Green Sense, which said the paper used to print listing prospectuses in 2006 was equivalent to more than 15,000 trees. 
Prospectuses have 501 pages on average, with the thickest one to date being 812 pages. Most of them go to waste. 
An SFC study in 2006 showed only one out of 10 retail investors who picked up an application form also took a copy of the prospectus. In most public offerings, at least a third of the printed prospectuses are never taken by investors, the survey found.
E-commerce bites
The old business model has changed, but not vanished completely
In the good old days for printers, a company's listing prospectus could cost up to, in Hong Kong dollars, $3m



Printers face hard times as reports go online