Trade Me says it won’t pay back $4.1 million wage subsidy despite bumper trading periods
Trade Me’s financial performance has exceeded expectations since being ravaged by Covid-19 restrictions but is not intending to repay $4.1 million of government wage subsidies due to ongoing uncertainty.
The online marketplace is privately owned by British private equity Firm Apax Partners and is not due to file accounts until October. However, chief executive Anders Skoe indicated some parts of the business had bounced back and shown encouraging results in the early part of its current financial year.
A staff member also told the Herald that during a meeting late last year, Skoe had told staff that Trade Me had a bumper first quarter trading period and had “smashed” its financial goals “out of the park” despite it originally being unsure about whether it would meet its targets in the period.
Through the height of the Covid-19 pandemic and amid lockdowns in New Zealand last year, Trade Me laid off 82 staff members.
When contacted by the Herald, Skoe confirmed that Trade Me would not be paying back the wage subsidy.
He said the subsidy was used as it was intended – to keep jobs.
“We applied for the original wage subsidy, along with thousands of other Kiwi companies, in order to get through that very tough time. We quite clearly met the criteria to apply for, and receive, the subsidy at the time as Covid and the lockdown had significantly impacted our business.
“Without the wage subsidy, and other significant cost savings, we would have had to make far more drastic changes to our headcount than we eventually did.”
Trade Me did not apply for any later rounds of the wage subsidy and had not paid any dividends to its owners, Skoe said.
“While some parts of our business have bounced back from the lockdown period, significant uncertainty remains in the market and we don’t know what’s coming round the corner.”
Skoe was unable to share any financial information, but said the first quarter of Trade Me’s current financial year had exceeded expectations.
He said the business had seen “encouraging results” in its marketplace and property divisions, but it was early days and uncertainty remained in the market.
A growing number of large businesses have opted to voluntarily pay back the wage subsidy they received following growing criticism from the public and politicians – including the Prime Minister – on the moral ground of posting profits on the back of wage subsidy gains.
So far, Briscoe Group, the Warehouse Group, Summerset Group, Ryman Healthcare and Coca-Cola Amatil have paid back the millions of dollars they received following bumper profit earnings in the periods that followed the initial lockdown period.
Trade Me delisted from the New Zealand Stock Exchange and was sold to Apax Partners for $2.56 billion in April 2019.
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