It will be curious to see how things pan out for the half year report.
Not sure if people remember back to the initial days of the issues but there was talk in the early days about how the loans to the various investments were structured - ie were the loans on the investments balance sheets or the BLA balance sheets. If you have a detailed look at the annual reports, it would appear that some of the loans are actually on the BLA balance sheet (the retirement village ones - which they have exited).
Now looking forward BLA is technically required to hold approximately 15mil to 20mil in liquid assets (ie CASH) of net tangible assets to maintain its AFSL license, so what I hear people say, the balance sheet has 160mil assets on it. But it doesn't work that way... Loans using investments as security (ie the aged care loans) net out the loan, but unsecured loans do not. So for example, say i have:
1. Cash of $50 mil
2. Investments of $50mil with a loan of 30mil
3. Other non-liquid investments of 75mil
4. Loan of $40mil
You essentially have a balance sheet with assets of 175mil and liabilities of $70mil = a balance sheet of $105mil yay...
But my understanding of the AFSL requirements (and I'm no expert) is that you must have liquid assets of $xxx (which given the disclosed assets under management would be between $15mil and $20mil). Which means in the above scenario the net liquid assets are $50mil cash and $40mil of liabilities = $10mil of liquid assets.
So it will be interesting to see in the next report the true liquid asset position of Blue Sky given the recent 50million loan and other moving parts.
