Barrenjoey reports loss as set-up costs bite

afr.com:

Barrenjoey Capital Partners has reported a $26 million dollar net loss after spending more than $62 million setting up new business units over the past financial year.

The loss compares with the $5.3 million in profit it recorded for the year ending June 30, 2022, and after it brought new divisions online in the past 12 months – including fixed income, derivatives, private capital and prime brokerage services. Last year’s profit included a $48.1 million tax benefit based on the assessment there will be “sufficient future taxable profits”.

“Establishment costs continued to be a material component of the overall expense base as the major task of building operating businesses neared completion,” Brian Benari, Barrenjoey’s chief executive, said.

Barrenjoey Capital chief executive Brian Benari says the 2024 financial year has started strongly. Louie Douvis

The bank said spending on tech, moving to their new Sydney office on Bridge Street and compensating staff for entitlements they left behind to join the bank also ate up costs. Employment expenses increased slightly from $145.4 million last financial year to $174 million in the financial year ended in June. The new Bridge Street lease will cost $58.7 million over a 10-year period, the bank said.

The new fixed-income business started contributing to the group’s revenue, while the equities financing and private capital only started up later in the financial year so did not meaningfully contribute, Benari said.

The group expects the year ahead to be a different story, now that all its main businesses are operating. “The 2024 year has started strongly with year-to-year revenue ahead of the same period last year,” Mr Benari said. Operating profit before interest and establishment