Blue Sky shares continue freefall on downgraded guidance

Blue Sky shares continue freefall on downgraded guidance

Under-fire Blue Sky Alternative Investments (ASX: BLA) has downgraded its full year guidance along with its assets under management (AUM) as it announces an independent review of its business processes and financial reporting.

The Brisbane-based company's share price has plunged a further 20 per cent in early trade to $4.12 as it deals with the fallout from an attack by short seller Glaucus Research which last month released a negative report on Blue Sky.

Glaucus alleged Blue Sky had "wildly exaggerated" its AUM and said its correct share price valuation was around $2.56. That report has sent Blue Sky's share price plummeting more than 60 per cent from $11.43 on March 27 to $4.12 at around 12.30pm.

Blue Sky has revised its fee-earning AUM guidance for FY18 from $4.25 to $4.75 billion to $4.0 to $4.25 billion and underlying net profit after tax guidance from $34 to $36 million to $20 to $25 million.

"The revision to fee earning AUM and underlying NPAT guidance is based on the expectation the company will now be constrained from completing new investments outside of unallocated institutional mandates," Blue Sky chairman John Kain says.

"2HFY18 earnings will also be impacted by unbudgeted costs associated with the response to recent market events, including the costs of the upcoming independent review."

Kain says the review was commissioned to ensure the company was meeting market expectations around transparency and disclosure.

"We have listened to the market feedback and it is clear that Blue Sky has fallen short of market and shareholder expectations around transparency and disclosure.

"We are committed to making changes which will improve the business, provide greater transparency and improve shareholder value over the long term.

"As part of this, the Board is committed to an independent review which will examine Blue Sky's risk management framework, its valuation processes, financial reporting processes and other disclosures," Kain says.

"We will update shareholders in due course on progress of the review and the expected date of completion."

Blue Sky says it has also reaffirmed its commitment to strengthening governance and will prioritise an earlier undertaking to form a board comprised of majority independent directors.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

Hard seltzer start-up enters non-alcoholic market with launch of Fellr Free

Hard seltzer start-up enters non-alcoholic market with launch of Fellr Free

Alcoholic pre-mix brand Fellr is expanding its core range of produc...

The co-founder question: Do you need one, and how do you find someone?

The co-founder question: Do you need one, and how do you find someone?

I’ve played beach volleyball for Australia for the last decad...

EML Payments awarded $320m government contract to help stimulate the Spanish arts sector

EML Payments awarded $320m government contract to help stimulate the Spanish arts sector

Global payment solutions business EML Payments (ASX: EML) will play...

Microbio goes public as med-tech tackles condition that causes 11 million deaths per year

Microbio goes public as med-tech tackles condition that causes 11 million deaths per year

Brisbane-based medical technology company Microbio has stepped...