Hong Kong Exchanges and Clearing has proposed introducing controversial quarterly results reporting in two phases to allow smaller companies more time to prepare for the changes, according to a consultation paper released yesterday. The paper suggests that firms with a market capitalisation of at least HK$10 billion should report results every three months from September next year, while smaller firms would be given until September 2010 to comply. According to the exchange, 179 companies fall into the large category and represent about 18 per cent of the main-board listed stocks. The consultation ends in November. The paper issued yesterday confirmed a report by the South China Morning Post in July that the exchange intended to relaunch its proposal to narrow the reporting period from the current half year. The exchange in 2002 also tried to halve the reporting period but shelved the plan in the face of opposition from companies, including blue chips such as HSBC Holdings and Sun Hung Kai Properties. They said it would add costs and lead management to chase short-term profits. The exchange paper said it had decided to broach the idea again to match international trends. The United States, the mainland and many Asian jurisdictions have adopted quarterly reporting, as does Hong Kong's second board, the Growth Enterprise Market, since its launch in 1999. Britain, where quarterly reporting is still not mandatory, from this year began requiring companies to at least provide key figures to investors every three months. The exchange proposes firms report only unaudited results of the first and third quarters within 45 days from the end of the financial period. The report must include an income statement, balance sheet, cash flow statements and business review. The Chamber of Hong Kong Listed Companies' chief executive Mike Wong Ming-wai said that while his organisation still had reservations about the change, it was heartened that the exchange had chosen to stagger the introduction. 'If the exchange really forces the companies to do quarterly reporting, the two-phase introduction will be more acceptable as it allows smaller firms to have more time to prepare for the new rules,' Mr Wong said. Tony Espina, chairman of the Hong Kong Stockbrokers Association, said he supported the change but thought that 'the exchange could [exempt] small firms from doing quarterly reporting to save them cost'.