JSE-listed information technology group Gijima was pursuing recapitalisation through a R150-million rights offer, after falling into the red during the six months to December 2012.

The group reported a fall in earnings during the first half of the 2013 financial year, owing to limited new revenue opportunities in a tough market and top-line pressure on a major project.

Further, remnants of the loss and insourcing of two significant contracts during the second half of the previous financial year weighed on the group during the interim period under review.

Gijima reported a headline loss a share of 9.59c in the six months to December 2012, compared with earnings of 1.49c achieved in the comparative period in the prior year. The group’s basic earnings a share also fell from 1.47c in the first half of the 2012 financial year, to a basic loss a share of 11.12c in the six months ended December.

The group reported a loss of R23-million for the six months, compared with a profit of R28.5-million recorded in the six-month period the year before.

Revenue fell to R911-million in the period under review, down from the R1.18-billion achieved in the comparative period in the prior year.

To strengthen its balance sheet, establish working capital and ensure sufficient funds to meet its funding covenants and ongoing trading requirements, the group would offer three-billion shares at a subscription price of R0.05 a share.

Meanwhile, GijimaAst Finance currently owed R255-million to Futuregrowth Asset Management and Investec Asset Management, as part of a trade receivables securitisation funding programme. The funding parties have conditionally agreed to provide temporary leniency for GijimaAst Finance’s noncompliance with the covenants.

The rights offer, which remained subject to several conditions precedent, was expected to be concluded within the current financial year.

Gijima said in a statement that it was positive about the growth of the company and has secured several new, and extended several current, contracts.

“The company has also completed the implementation of its new structure, and its business model has been altered to reflect an organisation where client-centricity is the primary focus”.

However, the company noted that the new model had not yet yielded the “desired levels of revenue generation”.

Gijima did not declare a dividend for the six months to December 2012.