Rocket Lab to conduct audit and consider paying back $2.85m Covid-19 wage subsidy

Rocket Lab is carrying out an internal audit to assess its eligibility for the Government’s wage subsidy scheme after financial results showed a $1.1 million profit.

The Kiwi-American space company claimed nearly $2.85m from the grant for its hundreds of New Zealand-based workers as it experienced uncertainty from Covid-19 lockdowns and border restrictions last year.

“Unable to launch, and with our manufacturing operations suspended, our ability to generate revenue was impacted in 2020,” a Rocket Lab spokesperson told the Herald in a statement.

“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.”

However, with the pandemic now more stable, the company has commissioned an audit to “definitively assess eligibility” for the wage subsidy against full financial results, the spokesperson said.

“While conditions for the subsidy were met due to revenue loss, Rocket Lab New Zealand’s status as a captive service provider to its US parent has introduced accounting complexities and additional assessment is required.

“In the interest of transparency and conservative reporting, this potential ineligibility was outlined in recent financial statements.”

Rocket Lab’s financial statements, released last week, said: “Subsequent to the receipt of the subsidy, the Company has noted that it is unlikely that the conditions of the grant have been met.”

According to the financial papers, Rocket Lab made a $1.1m profit for the year to December 31.

“If the final determination concludes that the wage subsidy conditions were not met, Rocket Lab will repay the subsidy,” the spokesperson said.

Rocket Lab claimed $2,845,440 for 408 employees, according to Ministry of Social Development records.

The Government’s wage subsidy scheme, which was in place in some form since March last year, paid out $14b to help businesses survive declining revenues during the Covid-19 pandemic.

More than 1.8 million jobs are being supported by the high trust scheme.

Some large companies have already repaid its subsidy, including $68m for The Warehouse Group and $14.2m for Ryman Healthcare.

Others to return the emergency funds include Napier Port, Briscoe Group, and law firms Bell Gully, MinterEllisonRuddWatts and Simpson Grierson.

While Rocket Lab is a US-based company most of its about 500 staff are based in New Zealand and launches its rockets carrying small satellites from the East Coast’s Mahia Peninsula.

Invercargill entrepreneur Peter Beck founded the Kiwi-American company in 2006 and as chief executive is due to see its US$4.1 billion ($6b) Nasdaq listing by the end of this month.

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