Vertical Issues Shareholder Letter
Vertical Aerospace Ltd. (“Vertical” or the "Company") (NYSE:
EVTL; EVTLW), a global aerospace and technology company that is
pioneering zero emission aviation, announces its financial results
for the first half of the year ended June 30, 2024. Vertical has
also issued a shareholder letter in conjunction with the filing of
its first half-year results, which is posted to its investor
relations website at investor.vertical-aerospace.com.
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the full release here:
https://www.businesswire.com/news/home/20240917135638/en/
The new VX4 prototype, which has
completed Phase 1 of piloted flight tests. (Photo: Business
Wire)
Stuart Simpson, CEO at Vertical, said:
“During the past few months we have delivered our most advanced
full-scale VX4 prototype, have gone from first powered ground test
to 'wheels up’ in just one week and completed the first phase of
our piloted test flight programme. Every day I continue to be
deeply impressed by the phenomenal engineers we have and the
progress we are making here in Bristol as we build a new generation
of aviation. This could not be a more exciting time to follow
Vertical as we accelerate through our piloted flight tests and work
closely with the UK Civil Aviation Authority, our home regulator,
on the path to certification.”
First Half-Year 2024 and Recent Operational Updates
- Flight tests of new VX4 prototype: Vertical unveiled its
next full-scale VX4 prototype in July and began piloted flight
tests days later, following the UK Civil Aviation Authority (CAA)
issuing a Permit to Fly. This more advanced aircraft has 60% of its
technology from tier-one aerospace partners, up from 10% on the
previous prototype, marking a significant step towards the final
certification aircraft. This is also the first use of Vertical’s
proprietary batteries, designed and developed at the Vertical
Energy Centre, in a piloted aircraft. Vertical’s new proprietary
propellers designed specifically for eVTOLs are optimised for low
noise and made of carbon fibre composite using a single-shot cure
process to maximise integrity.
- The VX4 recently completed Phase 1 of the piloted test flight
programme. During Phase 1, the VX4 prototype conducted multiple
piloted tethered flights and ground runs, across 20 piloted test
sorties, completing a total of 70 individual test points, measuring
35,000 flight and system parameters. Vertical is now preparing to
progress to piloted untethered thrustborne testing, as soon as it
receives permission from the CAA. The flight tests have already
shown the aircraft’s incredible stability – particularly in ground
effect, typically one of the most challenging flight
conditions.
- Certification Progress: The CAA expanded the scope of
Vertical’s Design Organisation Approval (DOA), which is a
requirement for the Type Certification of the VX4 and its entry
into service. At the same time, there has been strong regulatory
collaboration, with the European Union Aviation Safety Agency
(EASA) and the CAA agreeing how they will work together on the
certification of the VX4.
- Go To Market: At the Farnborough International Airshow,
the team met existing and prospective customers, investors,
suppliers, regulators and government agencies, who were able to
explore the new prototype using a unique Apple Vision Pro
experience. Vertical also brought its customers together in London
for their Pioneers event in Q2 to bring them up to speed on the
latest developments and hear their feedback. In August, the UK
Ministry of Defence (MOD) accepted Vertical’s application to join
their Uncrewed Air Systems Heavy Lift Challenge framework. The aim
of this £95m framework is to define capabilities and test solutions
for the Royal Navy for non-weaponised cargo drone operations, with
a special focus on ship-to-shore and ship-to-ship missions.
Acceptance onto this framework means Vertical can participate in
tenders issued by the Royal Navy, facilitating Vertical’s access to
R&D funding, development support and in particular, the
collaboration across the Uncrewed Air System community that
membership of Defence Equipment & Support’s Heavy Lift
Capability Framework provides.
- Our People: Vertical continues to attract world-class
aerospace professionals, including, Martyn Ashford, Head of
Aircraft Programmes Development from Leonardo. It also appointed
Ben Story to the Board of Directors as an independent non-executive
director and Charlotte Cowley as Director of Strategic Finance
responsible for executing Vertical’s fundraising strategy. Ben was
formerly Strategic Marketing Director at FTSE 100 Rolls-Royce plc
and, before that, Managing Director at Citi. Charlotte has
previously led Investor Relations for the FTSE100 Burberry Group
plc, and FTSE250 Aston Martin Lagonda plc, where she supported
successful capital raises. In May 2024, Stuart Simpson, formerly
Vertical’s CFO and a seasoned FTSE100 executive, was appointed as
CEO to lead the company through the pivotal phase of certifying and
commercializing its VX4 aircraft. Stephen Fitzpatrick, founder,
majority shareholder and former CEO of Vertical, remains on
Vertical’s board of directors as a non-executive director, focusing
on business strategy and the delivery of the company’s vision. In
September 2024, Vincent Casey was appointed to rejoin the Vertical
Board as a Non-Executive Director, having previously served as a
member of the board of directors from May 2021 to August 2023 and
as Vertical’s Chief Financial Officer from November 2020 to
February 2023. Vincent is currently the Chief Financial Officer at
Ovo Energy, a leading energy supply group that includes one of
Europe’s largest independent energy retailers, a company he joined
in 2013.
First Half-Year 2024 and Recent Financial Updates
- Vertical maintained its industry-leading capital efficiency
with an H1 2024 operating loss of £20 million ($25 million). The
operating loss for the period primarily reflects the spend to
successfully complete Vertical’s second full-scale prototype
aircraft.
- In May 2024, Vertical mutually agreed to exit Rolls-Royce's
contract to design an Electric Propulsion Unit (EPU). Under the
agreement, Vertical received $34 million from Rolls-Royce which is
expected to cover the anticipated costs of an alternative EPU
design contract and provided an extension to the cash runway. This
followed Rolls-Royce's announcement in November 2023 of its
intention to seek a partner or buyer for its advanced air mobility
activities. Vertical is already working with other EPU suppliers
and does not anticipate this having any impact on the completion of
their prototypes.
- Over the half, Vertical was awarded an £8 million ($10 million)
UK Government grant from the Aerospace Technology Institute (ATI)
for its next-generation propeller development. Vertical also
received a cash amount of $25 million from Imagination Aero
Investments Ltd., a company owned by Vertical founder, Stephen
Fitzpatrick, in connection with an investment agreement dated
February 22, 2024 (the “Investment Agreement”). Vertical is in
discussion with regards to the second $25 million tranche of the
investment committed under the Investment Agreement, which remains
outstanding.
Financial Outlook
- As of June 30, 2024, Vertical had cash and cash equivalents of
£67m / $84m.
- The 2024 capital plan continues to remain on track, with net
cash outflows from operations in the second half of the year
expected to be between £40m to £45m.
- Net cash outflows incurred in the second half of the year will
be in relation to the advancement of Vertical’s piloted flight test
programme.
- As of the date of this report, Vertical had approximately £48m
/ $63m of cash and cash equivalents on hand.
- As previously announced, Vertical will need to raise capital to
fund its future operations and remain as a going concern. Vertical
intends to do so and are in discussions regarding potential third
party investment. The timely receipt of an amount equal or
equivalent to the second tranche committed under the Investment
Agreement is required to extend its projected cash runway into the
third quarter of 2025 (from the second quarter of 2025).
- On September 16, 2024, following the requisite shareholder
approvals at Vertical’s Annual General Meeting earlier on the same
day, Vertical’s Board of Directors authorised the implementation of
a reverse share split at a ratio of 1 for 10, with an effective
date of September 20, 2024.
The above forward-looking statements reflect our expectations
for the six months ending June 30, 2024, as of September 17, 2024,
and are subject to substantial uncertainty. Our results are based
on assumptions that we believe to be reasonable as of this date,
but may be materially affected by many factors, as discussed below
in “Forward-Looking Statements.”
About Vertical Aerospace
Vertical Aerospace is a global aerospace and technology company
pioneering electric aviation.
Vertical is creating a safer, cleaner and quieter way to travel.
Vertical's VX4 is a piloted, four passenger, Electric Vertical
Take-Off and Landing (eVTOL) aircraft, with zero operating
emissions. Vertical combines partnering with leading aerospace
companies, including GKN, Honeywell and Leonardo, with developing
its own proprietary battery and propeller technology to create the
world’s most advanced and safest eVTOL.
Vertical has 1,500 pre-orders of the VX4 worth $6bn, with
customers across four continents, including Virgin Atlantic,
American Airlines, Japan Airlines, GOL and Bristow. Headquartered
in Bristol, the epicentre of the UK’s aerospace industry, Vertical
was founded in 2016 by Stephen Fitzpatrick, founder of the OVO
Group, Europe’s largest independent energy retailer.
Vertical's experienced leadership team comes from top tier
automotive and aerospace companies such as Rolls-Royce, Airbus, GM
and Leonardo. Together they have previously certified and supported
over 30 different civil and military aircraft and propulsion
systems.
Unaudited Condensed Consolidated Interim
Statements of Income and Comprehensive Income
H1’2024
£ 000
H1’2023
£ 000
Research and development expenses
(31,951)
(27,500)
Administrative expenses
(20,710)
(24,266)
Related party administrative expenses
(42)
(42)
Other operating income
32,763
2,861
Operating loss
(19,940)
(48,947)
Finance income
7,397
32,333
Finance costs
(11,026)
(8,140)
Net finance income/(costs)
(3,629)
24,193
Loss before tax
(23,569)
(24,754)
Income tax expense
6,448
12,984
Net loss for the period
(17,121)
(11,770)
Foreign exchange translation
differences
1,162
(6,922)
Total comprehensive loss for the
period
(15,959)
(18,692)
Unaudited Condensed Consolidated Interim
Statement of Cashflows
H1’2024
£ 000
H1’2023
£ 000
Cash flows from operating activities
Net loss for the period
(17,121)
(11,770)
Adjustments to cash flows from non-cash
items:
Depreciation and amortization
1,094
990
Depreciation on right of use assets
326
327
Finance costs/(income)
3,629
(24,193)
Share based payment transactions
4,785
7,056
Income tax credit
(6,448)
(12,984)
Non-cash gain (settled in treasury
shares)
(803)
-
(14,538)
(40,574)
Working capital adjustments:
(Decrease)/increase in trade and other
receivables
(3,035)
802
Increase/(decrease) in trade and other
payables
84
(4,603)
Income taxes received
15,838
11,319
Net cash outflow from operating
activities
(1,651)
(33,056)
Cash flows from investing activities
Decrease in financial assets at amortized
cost
-
59,886
Acquisitions of property plant and
equipment
(391)
(1,304)
Acquisition of intangible assets
-
(73)
Interest income on deposits
1,168
2,337
Net cash inflow from investing
activities
777
60,846
Cash flows from financing activities
Proceeds from issue of shares
-
180
Proceeds from issue of shares to related
party
15,629
-
Proceeds from issue of warrants to related
party
3,907
-
Payments to lease creditors
(396)
(349)
Net cash (outflow) from financing
activities
19,140
(169)
Net increase/(decrease) in cash at
bank
18,266
27,621
Cash at bank as at January 1
48,680
62,927
Effect of foreign exchange rate
changes
(160)
(855)
Cash at bank as at June 30
66,786
89,693
Unaudited Condensed Consolidated Interim
Statement of Financial Position
H1’2024
£ 000
H1’2023
£ 000
Non-current assets
Property, plant and equipment
3,653
3,821
Right of use assets
2,128
2,453
Intangible assets
481
1,018
6,262
7,292
Current assets
Trade and other receivables
20,058
26,413
Restricted cash
1,700
1,700
Cash and cash equivalents
66,786
48,680
88,544
76,793
Total assets
94,806
84,085
Equity
Share capital
17
17
Other reserve
97,254
86,757
Treasury share reserve
(803)
-
Share premium
273,824
257,704
Accumulated deficit
(412,373)
(394,257)
Total equity
(42,081)
(49,779)
Non-current liabilities
Lease liabilities
1,748
1,977
Provisions
327
256
Derivative financial liabilities
112,770
109,291
Trade and other payables
3,955
3,922
118,800
115,446
Current liabilities
Lease liabilities
558
643
Warrant liabilities
610
907
Trade and other payables
16,919
16,868
18,087
18,418
Total liabilities
136,887
133,864
Total equity and liabilities
94,806
84,085
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 that relate to our current expectations and views of future
events. We intend such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements as
contained in Section 27A of the Securities Act and Section 21E of
the Exchange Act. Any express or implied statements contained in
this press release that are not statements of historical fact may
be deemed to be forward-looking statements, including, without
limitation, statements regarding the design and manufacture of the
VX4, our future results of operations and financial position and
expected financial performance and operational performance,
liquidity, growth and profitability strategies, business strategy
and plans and objectives of management for future operations,
including the building and testing of our prototype aircrafts on
timelines projected, selection of suppliers, certification and the
commercialization of the VX4 and our ability to achieve regulatory
certification of our aircraft product on any particular timeline or
at all, our ability and plans to raise additional capital to fund
our operations, including as a result of any ongoing or future
discussions with potential investors, statements regarding receipt
of the committed funding from Company’s founder and majority owner,
our plans to mitigate the risk that we are unable to continue as a
going concern, our plans for capital expenditures, the expectations
surrounding pre-orders and commitments, the features and
capabilities of the VX4, the transition towards a net-zero
emissions economy, as well as statements that include the words
“expect,” “intend,” “plan,” “believe,” “project,” “forecast,”
“estimate,” “may,” “should,” “anticipate,” “will,” “aim,”
“potential,” “continue,” “are likely to” and similar statements of
a future or forward-looking nature. Forward-looking statements are
neither promises nor guarantees, but involve known and unknown
risks and uncertainties that could cause actual results to differ
materially from those projected, including, without limitation: our
limited operating history without manufactured non-prototype
aircraft or completed eVTOL aircraft customer order; our potential
inability to raise additional funds when we need or want them, or
at all, to fund our operations; our limited cash and cash
equivalents and recurring losses from our operations raise
significant doubt (or raise substantial doubt as contemplated by
PCAOB standards) regarding our ability to continue as a going
concern; our potential inability to produce or launch aircraft in
the volumes or timelines projected; the potential inability to
obtain the necessary certifications for production and operation
within any projected timeline, or at all; the inability for our
aircraft to perform at the level we expect and may have potential
defects; our history of losses and the expectation to incur
significant expenses and continuing losses for the foreseeable
future; the market for eVTOL aircraft being in a relatively early
stage; any accidents or incidents involving eVTOL aircraft could
harm our business; our dependence on partners and suppliers for the
components in our aircraft and for operational needs; the potential
that certain strategic partnerships may not materialize into
long-term partnership arrangements; all of the pre-orders received
are conditional and may be terminated at any time and any
pre-delivery payments may be fully refundable upon certain
specified dates; any circumstances; any potential failure to
effectively manage our growth; our inability to recruit and retain
senior management and other highly skilled personnel; we have
previously identified material weaknesses in our internal controls
over financial reporting which if we fail to properly remediate,
could adversely affect our results of operations, investor
confidence in us and the market price of our ordinary shares; as a
foreign private issuer we follow certain home country corporate
governance rules, are not subject to U.S. proxy rules and are
subject to Exchange Act reporting obligations that, to some extent,
are more lenient and less frequent than those of a U.S. domestic
public company; and the other important factors discussed under the
caption “Risk Factors” in our Annual Report on Form 20-F filed with
the U.S. Securities and Exchange Commission (“SEC”) on March 14,
2024, as such factors may be updated from time to time in our other
filings with the SEC. Any forward-looking statements contained in
this press release speak only as of the date hereof and accordingly
undue reliance should not be placed on such statements. We disclaim
any obligation or undertaking to update or revise any
forward-looking statements contained in this press release, whether
as a result of new information, future events or otherwise, other
than to the extent required by applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240917135638/en/
For more information: Justin Bates, Head of
Communications Justin.bates@vertical-aerospace.com +44 7878357463
Samuel Emden, Head of Investor Affairs
Samuel.emden@vertical-aerospace.com +447816 459 904
Vertical Media Kit Available here.
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