Rocket Lab considers repaying $2.85m wage subsidy, but says revenue was impacted by


Space company Rocket Lab is conducting an internal audit to assess whether the company was eligible for the $2.85 million wage subsidy it received.

The company claimed the subsidy for its 408 New Zealand employees last year.

But Rocket Lab’s financial statements, uploaded to the Companies Office on Friday, noted it was “unlikely that the conditions of the grant have been met”.

A Rocket Lab spokeswoman said the company would pay back the subsidy if the audit found it was ineligible for the funds.

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The spokeswoman said the company had experienced significant uncertainty due to the Covid-19 lockdowns and border restrictions.

“Unable to launch, and with our manufacturing operations suspended, our ability to generate revenue was impacted in 2020,” she said.

Rocket Lab's launch site on the Mahia Peninsula. The company had to pause rocket launches during the Covid-19 lockdown.

Supplied

Rocket Lab’s launch site on the Mahia Peninsula. The company had to pause rocket launches during the Covid-19 lockdown.

“We determined at the time that this loss of revenue qualified the company for the wage subsidy, and it enabled Rocket Lab to keep more than 400 people employed in New Zealand through a period of economic uncertainty.”

But after the situation became more stable in New Zealand, Rocket Lab proactively commissioned an audit to assess its eligibility for the wage subsidy against the company’s full financial results, she said.

Rocket Lab’s status as a captive service to its United States parent introduced “accounting complexities” and required additional assessment, the spokeswoman said.

“In the interest of transparency and conservative reporting, this potential ineligibility was outlined in recent financial statements. If the final determination concludes that the wage subsidy conditions were not met, Rocket Lab will repay the subsidy.”

The Government set up the $14 billion wage subsidy scheme early in the pandemic as a cash injection for businesses to help keep people in jobs.

It was administered by the Ministry of Social Development (MSD) and at its peak supported 1.8 million jobs.

To access the first round, companies had to have experienced a 30 per cent revenue drop over a month between January and June compared with the same month in 2019, and that decline had to be related to Covid-19.

It was a “high trust” system and businesses that did not meet the revenue drop criteria were encouraged to pay it back.

A number of high-profile big businesses have done so as their profits recovered sharply after lockdown, including The Warehouse, which repaid almost $70m.

The number of refunds made hit 21,465 in early April. As at May 14, $708.8m had been repaid.

Rocket Lab’s financial statements showed it made a $1.1m profit on $90m revenue for the year to December 31. The previous year it made a $32,000 loss.

Rocket Lab was started in New Zealand in 2006 and is directed by space entrepreneur Peter Beck.

It has powerful United States investors and is headquartered in the US, but employs most of its staff in New Zealand where it has launched all its rockets to date from the Māhia Peninsular near Gisborne.



Read More:Rocket Lab considers repaying $2.85m wage subsidy, but says revenue was impacted by