RJP Electronics has sunk deep into the red, with a $30 million provision on existing stocks producing attributable losses to $27.91 million for the six months to September 30. The company yesterday announced a rights issue to raise $90 million to finance new projects, including the expansion of its pager business. The net losses compared with attributable earnings of $5.41 million for the same period last year. Operating losses amounted to $27.68 million. Its share of losses of associated companies stood at $285,000, compared with losses of $158,000 previously. Chairman Robert Li Shu-keung said the group recorded a moderate increase in turnover during the period but operating profit was 'adversely affected by high overhead costs, increasing cost of electronic components used by the group in its production and keen competition in the consumer electronics market'. Turnover climbed 3.96 per cent to $165.16 million from $158.86 million a year earlier. Losses per share during the period were put at 3.84 cents, compared with earnings per share of 0.79 cent previously, and no interim dividend has been recommended by directors. The company entered a strategic alliance in September with Applied International Holding, with an issue of 600 million new shares at 10 cents each to an Applied subsidiary. It raised $58 million for RJP to repay bank borrowings and to increase additional working capital. The rights issue was expected to raise $90 million before expenses 'to enable the group to capture new business opportunities'. Mr Li said a cost reduction programme to streamline the group's manufacturing and administration operations was under way. 'The review has . . . included a critical examination of the group's marketing strategy and the present market conditions,' he said. 'The production of a number of products has been stopped due to low profitability. 'The management board felt it necessary to make a further provision of $30 million on the group's existing stocks used specifically in the production of these items.' Mr Li said sales were expected to improve, as its association with Applied gave it access to new markets in North America, Europe and the Asia-Pacific. 'This will substantially increase the circulation of RJP's products and therefore marketability and sales of those products are expected to improve,' he said. Mr Li said RJP's performance was expected to improve in the second half.