Despite a halving of income in the 2009/10 financial year, Bluestone Group managed a seven per cent increase in earnings. A financial report lodged with the Australian Securities and Investments Commission last week shows that Bluestone increased net profit from $6.06 million in 2008/09 to $6.5 million last financial year.Since Bluestone was forced out of the reverse mortgage and non-conforming loan markets during the financial crisis, it has turned itself into an investor in, and manager of, financial assets such as distressed debt portfolios. The financial report shows that its overall level of activity has been reduced significantly.Interest and "similar" income fell from $214 million in 2008/09 to $130 million last financial year. A big reduction in interest and operating expenses allowed the company to report higher earnings.In November Bluestone announced yesterday that Macquarie Group would acquire 17.5 per cent of its equity through an issue of new shares, with proceeds of the capital raising to be used for expansion in Europe, as well as for business development in Australia and New Zealand.At the same time it announced that it had entered into a $20 million debt-refinancing arrangement with property fund manager Forum Partners. As part of the deal, Forum took five per cent of Bluestone equity.According to the financial report $10 million of ordinary share capital was issued in November.The financial report shows the value of mortgage receivables falling from $1.2 billion to $897 million. The value of financial assets fell from $505 million to $345 million.The value of interest bearing liabilities fell from $1.76 billion to $1.26 billion.