Sydney Fish Market executives reel in larger salaries as finances sink

Sydney Fish Market executives gave themselves a 23 per cent pay rise in 2023-24 despite posting a $17 million loss over two years, after concerns about the functionality of its billion-dollar new premises brought the company to the brink of insolvency.

Auditors signed off last month on the company’s financial statements – five months after they fell due – giving their opinion that the market would remain viable for the next 12 months.

Directors of the Sydney Fish Market do not believe the relocation to the new building will increase the value of the company.Credit: Edwina Pickles

But they required directors to write off $9.9 million in costs such as legal expenses and consultants fees related to the market’s relocation to the head of Blackwattle Bay, because so little value is perceived to be gained by the move. It is expected to be more expensive to maintain than the existing site, due to increased cleaning, insurance and operational costs.

The write-down was the overwhelming contributor to a $10.6 million loss for the financial year, which followed a $6.2 million loss in 2022-23.

The market’s current tenants are concerned that the $836 million taxpayer-funded building will not have enough power to meet their refrigeration requirements and that the logistics of moving seafood between levels will cause delays that will reduce the value of the product, among other issues.

A NSW government spokesman denied these claims.

“We’ve held over 250 workshops with the subtenants to understand their needs and wants and refined the design of building throughout the detailed design process. This includes ensuring sufficient power and mobility of goods,” he said.

The financial statements showed that Sydney Fish Market’s net assets have fallen from $22 million in 2019 to just over $5 million, representing a 77 per cent decline over five years.

The cash-flow forecast was based on several assumptions, including that it could sublease an adequate number of tenancies at the new site.

Most tenants have refused to sign their agreements to sublease retail space at the new building, raising the prospect of compensation claims if they can prove the new premises are not like-for-like.

“The group continues to negotiate with these tenants,” the report stated.

“This represents normal commercial leasing negotiations, and the board believes it is highly likely that most existing tenants will sign leases in the near term, or that new tenants will be found should agreement not be reached.”

Its only remaining asset that could be sold to maintain liquidity is its annual fishing quota, which it leases out to fishers to ensure that their product is sold at the market’s daily auction.

Former director Bruce Standen, who left the board in 2019, said the quota was not designed to be an income earner, but rather a mechanism to retain supplier loyalty. If the quota were to be sold off, larger suppliers would sell directly to merchants and undermine the role of the market, he said.

“It would be further erosion of the role that the market plays as an intermediary in the price discovery process,” Standen said.

“It would lead to fragmentation.”

Tenants and merchants contacted by the Herald declined to comment publicly.

But two shareholders speaking on the condition of anonymity because the market has warned tenants not to speak to the media said there was disquiet about a 23 per cent increase in remuneration to directors and management between 2023 and 2024, given the deterioration in the company’s financial situation.

It came as the market increased the buyer’s fee from 2.2 to 3.5 per cent, due to the rising cost of maintaining the decrepit existing site. The fee is levied on each product bought at the daily auction held by the market, and buyers have loathed it since it was introduced in 2017.

Sydney Fish Market declined to answer detailed questions but made a general statement that the company was “cash-flow positive and trading profitably”.

The company’s directors had been on a salary freeze for the past couple of years and the overall increase for employees was in line with the market, the statement said.

“Our underlying financial result for FY24 is reasonable in a challenging transition year. This is a complex, once-in-a-generation transformation of our business requiring significant investment in advisory and due diligence costs to ensure we are best-prepared for the move.

“Furthermore, it is important to note that these accounts represent our financial position 10 months ago and significant progress has since been made. We are trading profitably through the first nine months of FY25.”

The financial statements anticipated that the market would commence operating at the new site by January 1, 2026 at the latest, and would continue to operate at the existing site while it worked towards relocation.

When construction began in 2021, it was expected to be completed by 2024, but COVID work restrictions, wet weather, the collapse of a crane jib and continued haggling over the design of the building have contributed to delays that have seen several businesses driven to the wall.

Sharvain Facades, which engineered the market’s distinctive wave-shaped roof, went into administration last month, attributing its collapse to construction delays.

Get the day’s breaking news, entertainment ideas and a long read to enjoy. Sign up to receive our Evening Edition newsletter.