EVTL

Business Context and Reporting Period

Company: Vertical Aerospace Ltd. (EVTL)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2024
Business Overview: Vertical Aerospace is a pre-revenue, early-stage aerospace company developing the VX4, a zero-emission electric vertical takeoff and landing (eVTOL) aircraft. The company is currently in the research and development phase, focusing on flight testing and regulatory certification (targeting 2028) with the UK Civil Aviation Authority (CAA) and European Union Aviation Safety Agency (EASA). The company has not yet manufactured non-prototype aircraft or generated revenue from aircraft sales.

Key Financial Metrics

Note: Financial statements are presented in British Pounds Sterling (GBP). The significant increase in net loss for 2024 is primarily driven by non-cash fair value adjustments related to the modification of Convertible Senior Secured Notes.

Material Changes vs. Prior Period

• Net Loss Expansion: Net loss increased by approximately 1,203% to £781.2 million. This was driven by a £687.7 million charge in related party finance costs resulting from the substantial modification and partial conversion of Convertible Senior Secured Notes in December 2024.
• Other Operating Income: Increased by 904% to £43.4 million, largely due to a £27.9 million cash settlement received from Rolls-Royce following the termination of an Electric Propulsion Unit development contract.
• Debt Restructuring: On December 23, 2024, the company amended its Convertible Senior Secured Notes, extending maturity to 2028 and increasing interest rates. Approximately $130 million of the notes were converted into 47.3 million ordinary shares, making Mudrick Capital the ultimate controlling party (approx. 63% ownership).
• Capital Raise: Subsequent to year-end (January 24, 2025), the company closed a public offering raising $90 million in gross proceeds.
• Going Concern: The company disclosed a material uncertainty regarding its ability to continue as a going concern due to recurring losses and the need for additional capital to fund operations beyond late 2025.

Guidance, Outlook, and Risks

• Flight Testing: The company successfully completed piloted thrustborne flight maneuvers in January 2025 and is preparing for piloted wingborne flight testing. Certification is targeted for 2028.
• Liquidity Outlook: As of the report date, cash on hand was approximately £77 million (post-2025 Offering). Management projects net cash outflows of approximately £100 million for the 12 months following the report date. Additional capital is required to continue operations beyond Q4 2025.
• Key Risks:
  • Going Concern: Significant doubt exists regarding the ability to continue as a going concern without further financing.
  • Regulatory Certification: Delays in obtaining type certification from CAA/EASA/FAA could materially impact the business.
  • Pre-Orders: Approximately 1,500 aircraft pre-orders are conditional and non-binding; they may be terminated without penalty.
  • Internal Controls: Material weaknesses in internal control over financial reporting remain unremediated as of December 31, 2024.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the £77 million cash balance (post-offering) against the projected £100 million burn rate for the next 12 months.
• Debt Covenants: Confirm compliance with the $10 million minimum cash balance covenant in the Convertible Senior Secured Notes Indenture, which is projected to be breached in Q4 2025 without further funding.
• Pre-Order Validity: Review the specific conditions precedent for major pre-orders (e.g., American Airlines, Avolon) to assess the likelihood of conversion to binding sales contracts.
• Internal Controls: Monitor progress on remediation of material weaknesses in internal financial controls to ensure accurate future reporting.
• Warrant Liability: Assess the impact of outstanding warrants (Public, Tranche A/B, SF Warrants) on potential future dilution.