KUALA LUMPUR (Sept 21): Straits Energy Resources Bhd (KL:STRAITS) has proposed a share capital reduction to eliminate RM90 million in accumulated losses.
Based on the latest unaudited results, the proposed share capital reduction would eliminate the group's RM39.17 million accumulated losses as of June 30, 2026 – resulting in retained earnings of RM50.83 million, before taking into account the estimated RM165,000 expenses related to the exercise as well as the foreign currency translation reserve of RM4.05 million, the group said in a bourse filing on Monday (Sept 21).
On the company level, the share capital reduction will eliminate part of its accumulated losses of RM101.91 million, leaving accumulated losses of RM11.91 million.
The board said the share capital reduction is intended to strengthen its capital position and provide the company with greater flexibility in managing its financial position and capital structure going forward.
The proposed share capital reduction will not have a material effect on the group's consolidated earnings or earnings per share for the financial year ending June 30, 2027.
The proposal is subject to shareholders' approval by way of a special resolution at a general meeting, confirmation from the High Court of Malaya and any other relevant approvals.
Straits Energy Resources expects the capital reduction to be completed in the first quarter of 2027.
Last month, the group proposed to diversify into engineering, procurement, construction and commissioning (EPCC) services, in a bid to pursue higher-value contracts in areas such as renewable energy, data centres and smart city infrastructure.
The EPCC business is expected to contribute 25% or more to the group’s net profit, or divert 25% or more of its net assets to an operation that differs widely from its existing businesses, said Straits Energy in a bourse filing on Monday.
The EPCC business, it said, will be undertaken through its subsidiary Straits CommNet Solutions Sdn Bhd (SCS), whose principal activities are the provision of telecommunications and network services, information technology services and construction work.
Shares of Straits Energy Resources closed up half a sen or 20% to three sen on Monday, giving the group a market capitalisation of RM33 million.
The stock has fallen more than 60% since the start of this year when it traded at eight sen.