The rehabilitation efforts of Blue Sky's (ASX: BLA) board are still ongoing, but they were not enough to improve the company's results at the end of 2018.
The company reported an underlying net loss after tax of $25.7 million, down by $41.8 million from the profit at the end of 2017. This loss was outside the lower end of what the company predicted just two weeks ago on 12 February which was in the range of a $28 million and $32 million loss.
Revenue also tanked for Blue Sky, from $38.3 million in 1H18 to $16.6 million in 1H19. Revenue and expenses were negatively impacted by impairments adjustments relating to the restructure of the business.
Though the market was quite prepared for these results, executive chairman Andrew Day says they are still disappointing.
"The company's financial performance in the first half, foreshadowed earlier this month, is clearly disappointing primarily the result of significant costs associated with restructuring the business."
The group's restructure has seen the company close its hedge fund business, exit its retirement living portfolio, and sell its residential development sites all within the first half of the 2019 financial year.
Five new directors were appointed to the company's board in 1H19 including executive chairman Andrew Day. A new CFO, CRO and CEO have all been appointed too.
John Kain has now stepped down as a non-executive director of the company, with the board thanking Kain for his contribution to the company over the last year.
During the half Oaktree, a global capital manager, invested $50 million into Blue Sky. This investment also included some assistance for Blue Sky in attracting new directors and executives.
Oaktree is a global investment manager specialising, like Blue Sky, in alternative investments. The company has USD$122 billion in assets under management and over 900 employees in 18 cities worldwide.
Under the agreement, Oaktree has rights to convert the amounts owing to it into ordinary shares in Blue Sky, subject to shareholder and regulatory approval. The conversion will be at a price of $1.87.
However, today the asset manager revealed that it may not be able to meet the relevant repayment requirements agreed to as part of the Oaktree loan. As such Blue Sky says it is in discussions with Oaktree to negotiate a way forward.
Shares in Blue Sky are down 1.25 per cent to $0.79 per share at 10.09am AEDT.
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Business News Australia
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