Care International announced a crucial financial step aimed at addressing its financial situation. In an official statement to the Saudi Stock Exchange (Tadawul), the company revealed its board of directors' recommendation to utilize a total of SAR 55.34 million from its reserves to offset a significant portion of its accumulated losses. This recommendation follows the company's accumulated losses reaching a critical level of 95.3% of its capital, necessitating urgent corrective measures in accordance with applicable regulations in the Kingdom.
Details of the proposed financial plan
The recommendation to be presented to the Extraordinary General Assembly of Shareholders comprises two main components. The first involves transferring the entire balance of the company's statutory reserve, amounting to SAR 13.57 million, to the accumulated losses account. The second component entails transferring the entire balance of the share premium, amounting to SAR 41.77 million, for the same purpose. This accounting process aims to reduce the accumulated losses item on the company's balance sheet, thereby strengthening its financial position and paving the way for a new phase of growth and stability.
Organizational context and importance of the procedure
This measure is a direct response to the requirements of the Saudi Companies Law, which mandates that companies whose accumulated losses exceed half of their paid-up capital must convene their general assembly to decide on either increasing or decreasing their capital, or dissolving the company. Care International's move is a proactive attempt to correct its financial trajectory and avoid more complex scenarios. Using reserves to offset losses is a common financial tool that allows companies to clean up their balance sheets without the need for immediate cash injections, thus giving them greater flexibility to restructure their operations.
Expected impact and future outlook
Domestically, this move is seen as an indication of the board's seriousness in addressing the financial challenges. If approved by shareholders, this process is expected to improve the company's financial indicators and restore investor confidence in the market. The board emphasized in its recommendation the necessity for the company to continue its operations, expressing optimism for a significant improvement in operational and financial performance during 2025. Investors and analysts in the Saudi telecommunications and information technology sector will remain focused on the results of the upcoming general assembly, which will largely determine the company's future and its ability to overcome this critical phase.
