Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2022 | |
Document and Entity Information [Abstract] | |
Document Type | F-1 |
Entity Registrant Name | Vertical Aerospace Ltd. |
Entity Central Index Key | 0001867102 |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Amendment Flag | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Interim Statements of Income and Comprehensive Income - GBP (£) £ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Unaudited Condensed Consolidated Interim Statements of Income and Comprehensive Income | ||
Revenue | £ 66 | |
Cost of sales | (25) | |
Gross profit | 41 | |
Research and development expenses | £ (19,396) | (7,747) |
Administrative expenses | (23,466) | (23,890) |
Related party administrative expenses | (127) | |
Other operating income | 3,407 | 9,686 |
Operating loss | (39,455) | (22,037) |
Finance income | 42,497 | |
Finance costs | (20,063) | (37) |
Related party finance costs | (483) | |
Net finance income/ (costs) | 22,434 | (520) |
Loss before tax | (17,021) | (22,557) |
Net loss for the period | (17,021) | (22,557) |
Foreign exchange translation differences | 9,482 | |
Total comprehensive loss for the period | £ (7,539) | £ (22,557) |
Basic loss per share | £ (0.10) | £ (0.20) |
Diluted loss per share | £ (0.10) | £ (0.20) |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Interim Statements of Financial Position - GBP (£) | Jun. 30, 2022 | Dec. 31, 2021 |
Non-current assets | ||
Property, plant and equipment | £ 1,738,000 | £ 1,834,000 |
Right of use assets | 2,112,000 | 1,969,000 |
Intangible assets | 4,028,000 | 4,208,000 |
Non-current assets | 7,878,000 | 8,011,000 |
Current assets | ||
Trade and other receivables | 14,157,000 | 12,658,000 |
Cash at bank | 157,552,000 | 212,660,000 |
Current assets | 171,709,000 | 225,318,000 |
Total assets | 179,587,000 | 233,329,000 |
Equity | ||
Share capital | 15,814 | 15,804 |
Other reserve | 80,271,000 | 63,314,000 |
Share premium | 249,103,000 | 248,354,000 |
Accumulated deficit | (267,064,000) | (250,123,000) |
Total equity | 62,326,000 | 61,561,000 |
Non-current liabilities | ||
Long term lease liabilities | 1,683,000 | 1,580,000 |
Provisions | 98,000 | 95,000 |
Derivative financial liabilities | 92,450,000 | 112,799,000 |
Trade and other payables | 6,632,000 | 5,975,000 |
Non-current liabilities | 100,863,000 | 120,449,000 |
Current liabilities | ||
Short term lease liabilities | 426,000 | 362,000 |
Warrant liabilities | 6,187,000 | 10,730,000 |
Trade and other payables | 9,785,000 | 40,227,000 |
Current liabilities | 16,398,000 | 51,319,000 |
Total liabilities | 117,261,000 | 171,768,000 |
Total equity and liabilities | £ 179,587,000 | £ 233,329,000 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Interim Statements of Cash Flows - GBP (£) £ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities | ||
Net loss for the period | £ (17,021) | £ (22,557) |
Adjustments to cash flows from non-cash items | ||
Depreciation and amortization | 832 | 330 |
Depreciation on right of use assets | 189 | 70 |
Finance (income)/costs | (22,434) | 37 |
Related party finance costs | 483 | |
Share based payment transactions | 7,294 | 16,815 |
Net exchange rate differences | 4,694 | |
Income tax expense/(benefit) | (4) | |
Adjustments to cash flows from non-cash items | (26,446) | (4,826) |
Working capital adjustments | ||
(Increase) in trade and other receivables | (1,499) | (7,654) |
(Decrease)/increase in trade and other payables | (30,442) | 2,160 |
Net cash flows used in operating activities | (58,387) | (10,320) |
Cash flows from investing activities | ||
Acquisitions of property plant and equipment | (167) | (147) |
Acquisition of intangible assets | (393) | (349) |
Net cash flows used in investing activities | (560) | (496) |
Cash flows from financing activities | ||
Proceeds from secured convertible notes | 25,000 | |
Proceeds from related party borrowings | 2,208 | |
Payments to lease creditors | (235) | (87) |
Net cash flows (used)/generated from financing activities | (235) | 27,121 |
Net (decrease)/increase in cash at bank | (59,182) | 16,305 |
Cash at bank, beginning of the period | 212,660 | 839 |
Effect of foreign exchange rate changes | 4,074 | |
Cash at bank, end of the period | £ 157,552 | £ 17,144 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Interim Statements of Changes in Equity - GBP (£) £ in Thousands | Share capital | Share premium. | Other reserves | Net parent investment | Accumulated deficit | Total |
Balance at the beginning at Dec. 31, 2018 | £ 0 | £ 0 | £ 643 | £ 0 | £ 643 | |
Loss for the period | (7,484) | |||||
Total comprehensive loss | 0 | 0 | (7,484) | 0 | (7,484) | |
Balance at the end at Dec. 31, 2019 | 0 | 0 | 4,162 | 0 | 4,162 | |
Loss for the period | (12,326) | |||||
Total comprehensive loss | 0 | 0 | (7,175) | (5,151) | (12,326) | |
Share based payment transactions | 0 | 0 | 0 | 96 | 96 | |
Balance at the end at Dec. 31, 2020 | 0 | £ 0 | 4,117 | 0 | (5,055) | (938) |
Loss for the period | (22,557) | (22,557) | ||||
Total comprehensive loss | (22,557) | |||||
New share capital subscribed | 9,000 | 9,000 | ||||
Share based payment transactions | 16,739 | 76 | 16,815 | |||
Balance at the end at Jun. 30, 2021 | 25,739 | 4,117 | (27,536) | 2,320 | ||
Balance at the beginning at Dec. 31, 2020 | 0 | 0 | 4,117 | £ 0 | (5,055) | (938) |
Loss for the period | (245,224) | (245,224) | ||||
Total comprehensive loss | (85) | (245,224) | (245,309) | |||
Share based payment transactions | 156 | 156 | ||||
Reclassification of warrants | 103,053 | 8,558 | 111,611 | |||
Balance at the end at Dec. 31, 2021 | 16 | 248,354 | 63,314 | (250,123) | 61,561 | |
Loss for the period | (17,021) | (17,021) | ||||
Translation differences | 9,482 | 9,482 | ||||
Total comprehensive loss | 9,482 | (17,021) | (7,539) | |||
Share based payment transactions | 749 | 6,465 | 80 | 7,294 | ||
Reclassification of warrants | 1,010 | 1,010 | ||||
Balance at the end at Jun. 30, 2022 | £ 16 | £ 249,103 | £ 80,271 | £ (267,064) | £ 62,326 |
General information
General information | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
General information | ||
General information | 1 General information Vertical Aerospace Ltd (the “Company”, or the “Group” if together with its subsidiaries) is incorporated under the Companies Law (as amended) of the Cayman Island. The address of its principal executive office is: Unit 1 Camwal Court, Bristol, United Kingdom. The Company’s shares are listed on the New York Stock Exchange. The ultimate controlling party is Stephen Fitzpatrick. These financial statements are presented in pounds sterling and all values are rounded to the nearest thousand (£’000) except when otherwise indicated. These financial statements were approved by the board of directors on August 4, 2022. Principal activities The principal activity of the Company and its wholly owned subsidiary, Vertical Aerospace Group Ltd (“VAGL”), is the development and commercialization of vertical take-off and landing electrically powered aircraft (“eVTOL”). The Group’s main operations are in the United Kingdom. | 1 General information Vertical Aerospace Ltd (the “Company”, or the “Group” if together with its subsidiaries) is incorporated under the Companies Law (as amended) of the Cayman Island. The address of its principal executive office is: Unit 1 Camwal Court, Bristol, United Kingdom. The Company’s shares are listed on the New York Stock Exchange. The Group’s main operations are in the United Kingdom. These financial statements are presented in Pounds Sterling and all values are rounded to the nearest thousand (£’000) except where otherwise indicated. These financial statements were authorised for issue by the Board of Directors on April 28, 2022. Principal activities The principal activity of the Company and its wholly owned subsidiary, Vertical Aerospace Group Ltd (“VAGL”), is the development and commercialization of vertical take-off and landing electrically powered aircraft (“eVTOL”). VAGL became a subsidiary of the Company on December 15, 2021 as part of the reorganization (as described below). Prior to December 15, 2021, the Company was a shell company with no active trade or business, and all relevant assets and liabilities, as well as income and expenses, were borne by VAGL. Therefore, the comparatives of 2020 and 2019 in these consolidated financial statements reflects the financial position and results of operations of VAGL. |
Significant accounting policies
Significant accounting policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Significant accounting policies | 2 Basis of preparation This unaudited condensed consolidated interim financial report for the half-year reporting period ended 30 June 2022 has been prepared in accordance with International Financial Reporting Standards (IFRS) applicable to the preparation of interim financial statements, IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021. The accounting policies adopted are consistent with those of the previous financial year. The unaudited condensed consolidated interim financial report has been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit and loss. Items included in the unaudited condensed consolidated interim financial report are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (‘the functional currency’). The financial information is presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s functional and presentation currency, and all amounts are presented in and rounded to the nearest thousand unless otherwise indicated. 2 Significant accounting policies(continued) Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % All intercompany balances and transactions have been eliminated in consolidation. Significant accounting policies and key accounting estimates The accounting policies adopted are consistent with those of the previous financial year, with the exception of newly adopted policies as discussed below. Going concern Management has prepared a cashflow forecast for the Group and have demonstrated the ability for the Group to continue as a going concern for the foreseeable future, being at least 12 months after approving this report. Therefore, management has prepared the financial information on a going concern basis. The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. It is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. The cashflow forecast for the Group demonstrates that the Group has sufficient cash to fund its activity for a period of 12 months from the date of approval of this report. Management has assessed the Group’s ability to continue as a going concern for 12 months by modelling several scenarios of varying activity going forward. Given the level of cash invested into the company and the current trajectory, management has concluded that the Group can continue as a going concern for at least 12 months from the date of approving this report. Changes in accounting policy A number of amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards a) Property, Plant and Equipment: Proceeds before Intended Use — Amendments to IAS 16 b) Onerous Contracts – Cost of Fulfilling a Contract — Amendments to IAS 37 2 Significant accounting policies (continued) c) Annual Improvements to IFRS Standards 2018-2020 d) Reference to the Conceptual Framework — Amendments to IFRS 3 . | 2 Significant accounting policies Presentation of these financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The capital reorganization On December 15, 2021 the Company consummated the capital reorganization pursuant to the Business Combination Agreement dated June 10, 2021. On the closing date the Company acquired all of the ordinary shares of VAGL, from VAGL shareholders, in consideration for the issuance of ordinary shares in the Company, by way of a share for share exchange (the “share acquisition”), such that VAGL became a wholly owned subsidiary of the Company. At the same time Broadstone (Broadstone Acquisition Corp., a Cayman Islands exempted company), a special purpose acquisition company, merged with and into Merger Sub (Vertical Merger Sub Ltd., a Cayman Islands exempted company). As a result of which (a) the separate corporate existence of Merger Sub ceased and Broadstone continued as the surviving company, (b) each issued and outstanding security of Broadstone was cancelled, in exchange for an equivalent security of the Company, (c) each issued and outstanding founder share was transferred to the Company, in consideration for one Company ordinary share. 2 Significant accounting policies (continued) Additionally, certain investors concurrently subscribed for and purchased £71,594 thousand of ordinary shares of the Company (“PIPE Financing”). The Business Combination is accounted for as a capital reorganization in accordance with IFRS. Under this method of accounting, Broadstone is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of the VAGL issuing shares at the closing of the Business Combination for the net assets of Broadstone as of the closing date, accompanied by a recapitalization. The reorganization, which was not within the scope of IFRS 3 since Broadstone did not meet the definition of a business, was accounted for within the scope of IFRS 2. Accordingly, the Company recorded a one-time non-cash expense of £84,712 thousand, recognized as a share listing expense, based on the excess of the fair value of Company shares issued considering a fair value of a share, at $10.68 per share over the fair value of Broadstone’s identifiable net assets (see note 7). The Business Combination generated gross cash proceeds of approximately £218,303 thousand, including £71,594 thousand proceeds from the PIPE Financing. This also included £141,981 thousand from Convertible Senior Secured Notes, consummated simultaneously with the Business Combination. Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The functional currency of the Company is US Dollars (‘$’ or ‘USD’) and the functional currency of VAGL is pounds sterling (‘£’ or ‘GBP’). The financial statements are presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s presentation currency. Items included in the financial statements are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (“the functional currency”). Cumulative translation adjustments resulting from translating foreign functional currency financial statements into GBP are reported within other reserves. All amounts are presented in and rounded to the nearest thousand unless otherwise indicated. Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % On October 31, 2021 the VAGL disposed of its 100% investment in Vertical Aerospace Engineering Limited for nominal consideration. 2 Significant accounting policies (continued) The consolidated financial statements incorporate the financial positions and the results of operations of the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the Company using consistent accounting policies. Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The rapid spread of COVID-19 caused volatility and disruption in financial markets and prompted governments and businesses to take unprecedented measures such as travel restrictions, quarantines, shelter-in-place orders, and business shutdowns. These measures resulted in the majority of the Group’s workforce working from home with a small number of teams remaining onsite. We continue to take actions as may be recommended by government authorities or in the best interests of our employees. Summary of significant accounting policies and key accounting estimates The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Going concern The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. Several scenarios have been modelled and it is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. However, given the level of cash invested into the company and the current trajectory, management has concluded that no material uncertainties exist about the Group’s ability to continue as a going concern for at least 12 months from the date of approving these financial statements. Changes in accounting policy The Group adopted the following standards and amendments for the first time from the annual reporting period commencing January 1, 2021: Interest Rate Benchmark Reform — phase 2 The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. No new accounting standards and interpretations that have been published and are not mandatory for December 31, 2022 reporting periods have been early adopted by the Group or are expected to have a material impact on the Group in current or future reporting periods. 2 Significant accounting policies (continued) Revenue recognition Revenues are minimal to the Group and are generated from the performance of engineering consultancy services to customers. IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS principles are applied using the following 5 step model: 1. Identify the contracts with the customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when or as the entity satisfies its performance obligations The revenue for the Group relates solely to engineering consultancy services and revenue is recognised once the Group has satisfied the performance conditions. The contracts that the Group enters into comprise payments when certain milestones are met. Revenue is recognised at each milestone event and only if the milestone is met. Government grants Government grants are recognised as Other operating income and are recognised in the period when the expense to which the grant relates is incurred. Grants are only recognised when there is a signed grant offer letter or equivalent from the government body and there is reasonable assurance that the Group will be able to satisfy all conditions of the grant. The Group is the recipient of R&D tax credits in the UK. These tax credits are presented within Other operating income. Receivables relating to government grants are presented in Trade and other receivables at their fair value. Research and development expenses Research expenditure is charged to profit or loss in the period in which it occurred. Development expenditure is recognised as an intangible asset when it is probable that the project will generate future economic benefit, considering factors such as technological, commercial and regulatory feasibility. Other development expenditure is charged to profit or loss in the period in which it occurred. Refer to note 3 Critical accounting judgements and key sources of estimation uncertainty for a discussion on the judgement of this classification. The amounts included in research and development expenses include staff costs for staff working directly on research and development projects and for expenses directly attributable to a research project, excluding software costs. 2 Significant accounting policies (continued) Finance income and costs Finance income and costs includes the fair value movement on publicly traded warrants and convertible loan notes. Finance expense includes interest payable and is recognised in profit or loss using the effective interest method. Interest income is recognised in profit or loss as it accrues, using the effective interest method. Foreign currency transactions and balances Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in profit or loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences arising from the consolidation of subsidiaries whose functional currency differs to the presentational currency of the group are recoded within other comprehensive income. The most important exchange rates that have been used in preparing the financial statements are: Closing rate as at December 31, 2021: USD $1 = GBP £0.7420 Average rate for the year ending December 31, 2021: USD $1 = GBP £0.7270 Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated. Tax The tax expense for the period comprises current tax and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. 2 Significant accounting policies (continued) Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Property, plant and equipment Property, plant and equipment is stated at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows: Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line Intangible assets Intangible assets are carried at cost, less accumulated amortization and impairment losses. Computer software licences acquired for use within the Company are capitalized as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Amortization Amortization is provided on intangible assets so as to write off the cost on a straight-line basis, less any estimated residual value, over their expected useful economic life as follows: Asset class Amortization method and rate IT software 3 years straight line 2 Significant accounting policies (continued) Business combinations and goodwill The purchase method is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values on the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets, including intangible assets acquired, is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the difference is recognised directly in profit or loss. Goodwill is stated at cost, less any accumulated impairment losses. Goodwill is tested annually for impairment or when there are indicators of impairment. Cash at bank Cash at bank is held on deposit with financial institutions located within the United Kingdom and is immediately available. Management has assessed the financial institutions that hold the Company’s cash at bank to be financially sound, with minimal credit risk in existence. Trade and other receivables Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established using an expected credit loss model as per the Group’s accounting policy for the impairment of financial assets. Other receivables represent amounts due from parties who are not customers and are measured at amortized cost. Trade and other payables Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at the transaction price and subsequently measured at amortized cost using the effective interest method. Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to profit or loss over the period of the relevant borrowing using the effective interest method. Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 2 Significant accounting policies (continued) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Leases Definition A lease is a contract, or part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (‘the underlying asset’) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset, if throughout the period of use, the company has the right to: Obtain substantially all the economic benefits from the use of the underlying asset, and; Direct the use of the underlying asset (for example, directing how and for what purpose the asset is used). Initial recognition and measurement The company initially recognizes a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where reasonably certain), expected amount of residual value guarantees, termination option penalties (where reasonably certain) and variable lease payments that depend on an index or rate. The right of use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs and an estimate of restoration, removal and dismantling costs. Subsequent measurement After the commencement date, the company measures the lease liability by: (a) Increasing the carrying amount to reflect interest on the lease liability; (b) Reducing the carrying amount to reflect the lease payments made; and (c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events. 2 Significant accounting policies (continued) Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are included in finance costs in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises. Right-of-use assets The related right-of-use asset is accounted for using the cost model in IFRS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of Assets as disclosed in the accounting policy in impairment. Short term and low value leases The company has made an accounting policy election, by class of underlying asset, not to recognize lease assets and lease liabilities for leases with a lease term of 12 months or less (short term leases). The company has made an accounting policy election on a lease-by-lease basis, not to recognize lease assets on leases for which the underlying asset is of low value. Lease payments on short term and low value leases are accounted for on a straight-line bases over the term of the lease or other systematic basis. Short term and low value lease payments are included in operating expenses. Impairment (non-financial assets) All assets are reviewed for impairment when there is an indicator of impairment. In addition, goodwill is reviewed for impairment at least annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. Share capital Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Employee Benefits A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. 2 Significant accounting policies (continued) For defined contribution plans, contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognized as employee benefit expense when they are due. Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as accruals and classified as current liabilities in the balance sheet. Share based payments — Enterprise Management Incentive and 2021 Incentive Plan The Company operates an equity-settled, share based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share options or shares). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the shares granted: ● including any market performance conditions (for example, an entity’s share price); ● excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and ● including the impact of any non-vesting conditions. Non-market performance and service conditions are included in assumptions about the number of shares that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. In addition, in some circumstances employees may provide services in advance of the grant date and therefore, the grant date fair value is estimated for the purposes of recognizing the expense during the period between service commencement period and grant date. At the end of each reporting period, the Company revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. See note 23 for further details. Other non-current share-based payments were made during the year as detailed within the significant accounting policy for the capital reorganization. Further information is included with the critical accounting judgements and key sources of estimation uncertainty. Financial instruments Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.The company recognizes financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are offset, and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. 2 Significant accounting policies (continued) Financial assets The Group’s financial assets include cash at bank and other financial assets. Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. Trade receivables are measured at their transaction price. For all financial assets the Group has the objective to hold financial assets in order to collect the contractual cash flows. The contractual terms of all the Group’s financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the outstanding amount. All financial assets are therefore measured at amortized cost. Impairment of financial assets — expected credit losses (“ECL”) All financial assets measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”), based on the difference between the contractual and expected cash flows The simplification available for financial instruments with a low credit risk (“low credit risk exemption”) is applied as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. Financial liabilities The Group’s financial liabilities include warrants, lease liabilities, convertible loans, trade and other payables, and other financial liabilities. Financial liabilities are classified as measured at amortized cost or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not at fair value through profit or loss, directly attributable transaction costs. Financial liabilities at FVTPL are measured at fair value and gains and losses resulting from changes in fair value are recognized in finance income/expenses. The Group only accounts for convertible loans and warrants as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost. An embedded derivative in a hybrid contract, with a financial liability or a non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. 2 Significant accounting policies (continued) Convertible Loans Convertible loans are bifurcated into a debt component and a conversion right if the latter is an equity instrument. The conversion right of a convertible loan is not an equity instrument but a liability if some conversion features of the loan lead to a conversion into a variable number of shares. In this case it has to be assessed if embedded derivatives need to be separated from the host contract. If this is the case, the remaining host contract is measured at amortized cost and the separated embedded derivative is measured at fair value through profit or loss until the loan is converted into equity or becomes due for repayment. The conversion features and other repayment options provided for in the contract are identified as a combined embedded derivative if they share the same risk exposure and are interdependent. Warrant Liabilities Public warrants are recognized as liabilities in accordance with IFRS 9 at fair value. The liabilities are subject to re-measurement at each balance sheet date until exercised. Private warrants linked to sales targets are recognised within equity as these satisfy |
Critical accounting judgements
Critical accounting judgements and key sources of estimation uncertainty | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Critical accounting judgements and key sources of estimation uncertainty | ||
Critical accounting judgements and key sources of estimation uncertainty | 3 The preparation of the unaudited condensed consolidated interim financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial information and the reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve valuation of the Company’s stock-based compensation or consideration, including the fair value of common stock and market-based restricted stock units, derivative liabilities. This includes the modification of employee option plans as discussed in note 12. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Such estimates often require the selection of appropriate valuation methodologies and models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances. | 3 Critical accounting judgements and key sources of estimation uncertainty The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve valuation of the stock-based consideration, including the fair value of common stock and market-based restricted stock units, the valuations of warrant liabilities, derivative liabilities including convertible loan notes, and the valuation of call options. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Such estimates often require the selection of appropriate valuation methodologies and models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances. Share acquisition — business combination under common control There is currently no guidance in IFRS on the accounting treatment for combinations among entities under common control. IAS 8 requires management, if there is no specifically applicable standard or interpretation, to develop a policy that is relevant to the decision-making needs of users and that is reliable. The entity first considers requirements and guidance in other international standards and interpretations dealing with similar issues, and then the content of the IASB’s Conceptual Framework for Financial Reporting (Conceptual Framework). Management has made a judgement and applied a method broadly described as predecessor accounting. The principles of predecessor accounting are: ● Assets and liabilities of the acquired entity are stated at predecessor carrying values. Fair value measurement is not required. ● No new goodwill arises in predecessor accounting. ● Any difference between the consideration given and the aggregate carrying value of the assets and liabilities of the acquired entity at the date of the transaction is included in equity. The share acquisition of all of the ordinary shares of VAGL has been considered as a business combination under common control for the purpose of preparation of these consolidated financial statements and resulted in VAGL's operations and all of its net assets being recognized by the Company at their historical net book values. However, these consolidated financial statements may not reflect the presentation of equity movements of VAGL for the period prior to the share acquisition.I Share-based Payments Judgments were made in determining the valuation of shares prior to the business combination, including in relation to the issuance of Z-Shares to American Airlines (“American”) on June 10, 2021, using the following methods: For periods prior to the business combination, a probability-weighted model using option pricing methods (Black-Scholes) has been used. For valuations as at, or after December 16, 2021 the market value of the publicly traded share has been used. The issuance of Class Z-Shares to American The issuance of Class Z-Shares to American was concluded to be a stand-alone transaction. The transaction ensured that American had an equity interest in VAGL in the event that the business combination did not complete and provided an incentive for American to invest in the PIPE. As a transaction in the Company’s own stock this would generally be within scope of IAS 32, however the compensatory nature of the transaction required consideration of other IFRS guidance, specifically IFRS 2. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) The valuation of the class Z-Shares took considered the following substantive terms and features: ● Transfer restrictions and discount for lack of marketability ● Economic rights and entitlements ● Potential right to exchange into 6,125,000 Company ordinary shares upon closing of merger Two probability weighted scenarios were considered: a) the Z-Shares convert into to 6,125,000 shares in the Company, subject to lock up and call option, or b) they remain shares of VAGL if the business combination did not complete. An expense of £16,739 thousand was recognised on June 10, 2021 based on the total fair value of the class Z-Shares issued to American over the total consideration received (£nil). See note 7 for further detail. The Company was granted a call option over 50% of the Company shares that the Z-Share converted into at an exercise price of $18 per share and a maximum term to exercise of four years. The fair value of this option reflected in arriving at the aforementioned probability weighted valuation of the Z-Shares issued. Convertible Loans and Embedded Derivatives The initial fair value of the convertible loans (before bifurcation of the embedded derivatives) as well as the subsequent measurement of the embedded derivatives is calculated using a binomial lattice valuation model and many of the input parameters are not observable. This valuation is judgmental. For detailed information on the convertible loans and its embedded derivatives, a description of the valuation model and the input parameters, see note 24. Warrants Public warrants relate to those warrants that commenced trading on the NYSE on December 16, 2021. Prior to that date, there was no public trading market for Company ordinary shares or warrants. Private warrants include those issued upon consummation of the business combination to American, members of the Avolon Group (“Avolon”), Virgin, and Mudrick Capital Management L.P (“Mudrick”). Private options were issued to Marcus Waley-Cohen (“MWC”). The fair value of the Private Warrants is deemed to be equal to the fair value of the Public Warrants except where the terms of Private Warrants materially differ to Public Warrants. Differences exist, with regards to certain warrant, in the maximum term to exercise as well as the strike price. An option pricing model (Black-Scholes Model) therefore been used to derive the fair value of Private Warrants. This valuation is judgmental. For detailed information on the warrants, a description of the valuation model and the input parameters, see note 21. On December 16, 2021 Private Warrants were issued to Avolon, American and Virgin Atlantic Limited (“Virgin”). Warrants issued to Avolon and American were exercised immediately after issuance. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) The warrants meet the fixed-for-fixed criterion and are therefore recognised within other reserves until the point of exercise. The amount classified to other reserves on initial recognition reclassified to share capital and share premium upon exercise. Private Warrants and Options issued to Mudrick and MWC, along Public Warrants, are accounted for as liabilities in accordance with IAS 32, subject to ongoing mark-to-market adjustments. For more information see note 21. Capitalization of development costs The business incurs a significant amount of research and development cost. The point in time at which the business begins capitalization of any project is a critical accounting judgement. The business assesses the technology readiness level of its research and development projects, along with the commercialization potential and guidance from the accounting standards to assess whether a particular development project should be capitalized or not. Costs for internally generated research and development are capitalized only if: ● the product or process is technically feasible; ● adequate resources are available to successfully complete the development; ● the benefits from the assets are demonstrated; ● the costs attributable to the projects are reliably measured; ● the Group intends to produce and market or use the developed product or process and can demonstrate its market relevance. Management has concluded that in 2021 and 2020, none of the projects met the requirements for capitalization. While Management recognises a market for the use of eVTOLs, the market is not yet established or proven. Additionally, the Group is developing new technologies and there are still uncertainties about the successful completion of this development. If costs relating to a research and development project are not capitalized, they are expensed as incurred and presented in Research and Development expenses in profit or loss (Note 7). |
Other operating income
Other operating income | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other operating income | ||
Other operating income | 4 The analysis of the Group’s other operating income for the period is as follows: 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Government grants 1,214 8,999 R&D tax credit 2,193 687 3,407 9,686 Government grants At June 30, 2022, the Group had a receivable of £1,241 thousand (June 30, 2021: £8,943 thousand) from the Aerospace Technology Institute (ATI) relating to the research and development of eVTOL technologies. The grant is made to fund research and development expenditure and is recognised in the period to which the expense it is intended to fund relates. R&D tax credit scheme The R&D tax credit relates to the UK’s research and development expenditure credit scheme. | 6 Other operating income The analysis of the Group’s other operating income for the year is as follows: 2021 2020 2019 £ 000 £ 000 £ 000 Government grants 8,829 1,989 — R&D tax credit 2,388 328 399 Other 135 — — 11,352 2,317 399 Government grants Government grants relate to amounts receivable from the Aerospace Technology Institute (ATI) relating to the research and development of eVTOL technologies. The grant is made to fund research and development expenditure and is recognised in profit or loss in the period to which the expense it is intended to fund relates. R&D tax credit scheme The R&D tax credit relates to the UK’s research and development expenditure credit scheme. |
Expenses by nature
Expenses by nature | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Expenses by nature | ||
Expenses by nature | 5 Included within administrative expenses, research and development expenses and related party administrative expenses are the following expenses. 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Staff costs excluding share-based payment expenses 12,425 5,546 Share based payment expenses 7,294 16,815 Research and development components, parts and tooling 4,771 2,478 Research and development consultancy 7,936 625 Consultancy costs 990 1,501 Legal and financial advisory costs 1,476 2,060 Software costs 1,438 497 Related party administrative expenses — 127 Insurance expenses 1,729 15 Other administrative expenses 3,774 1,670 Expense on short term leases 8 30 Depreciation expense 260 162 Amortisation expense 572 168 Depreciation on right of use assets — Property 189 70 Total administrative and research and development expenses 42,862 31,764 Staff costs excluding share-based payment expenses relates primarily to salary and salary related expenses, including social security and pension contributions. Included within staff costs is £6,689 thousand directly and wholly attributable to research and development activity (June 30, 2021: £3,979 thousand). Certain amounts in the prior period have been reclassified to conform to the current period presentation. | 7 Expenses by nature Included within administrative expenses and research and development expenses are the following expenses. 2021 2020 2019 £ 000 £ 000 £ 000 Staff costs excluding share-based payment expenses 16,230 8,445 3,642 Share based payment expenses 111,996 96 — Warrant expense (note 21) 111,611 — — Legal and financial advisory transaction costs 7,350 — — Software costs 1,506 579 191 Depreciation expense 377 279 89 Depreciation on right of use assets — 176 140 171 Amortisation expense 387 263 70 Consultancy costs 13,144 745 518 Expense on short term leases 49 64 8 Research and development components 11,378 2,555 2,096 Related party administrative expenses 108 144 144 Marketing expenses 3,918 — — Stamp duty 6,669 — — Other administrative expenses 3,760 565 922 Total administrative and research and development expenses 288,659 13,875 7,851 Staff costs excluding share-based payment expenses relates primarily to salary and salary related expenses, including social security and pension contributions. Research and development components, combined with £12,913 thousand of staff costs related to research and development activity, represent the amount spent on hardware and testing for building eVTOL prototypes totalling £24,291 thousand. 7 Expenses by nature (continued) Legal and financial advisory expenses relate primary to the Business Combination transaction. Share based payment expense includes the following: 2021 £ 000 Issuance of Z-Shares to American 16,739 Capital reorganization 84,712 Issuance of PIPE shares to suppliers and partners 10,389 Enterprise Management Initiative 156 111,996 Issuance of Z-Shares to American On June 10, 2021, VAGL and American executed a subscription agreement by which American subscribed for 5,804 class Z-Shares of VAGL for total consideration of £0.06. Z-Shares refer to Z ordinary shares of £0.00001 par value that did not carry the right to receive distributions. If the Business Combination did not complete American would have retained 5,804 Z-Shares, carrying dividends and voting rights. The value of the shares can be used by reference to the pre-money valuation of the Company; adjusted for the actual share price as at June 10, 2021 ($9.93); reflecting the American shareholding percentage (3.96%); and a discount for lack of marketability. Upon closing of the Business Combination, American exchanged 100% of its class Z-Shares for 6,125,000 common shares of the Company, subject to a four-year lock-up. 50% of the common shares held by American are subject to a call option exercisable by the Company at a $18 per share exercise price; exercisable in two tranches until June 2025. The value of these shares was derived as at June 10, 2021 using a Black-Scholes Model and based upon actual share price ($9.93). The following inputs were used: Risk-free rate 0.75 % Dividend yield — Volatility 75 % The lock up agreement was considered part of the same contract for the subscription of Z-Shares, with a discount for lack of marketability applied, and the call option considered. Business Business combination combination does completes not complete £’000 £’000 Value of Z-Shares as at June 10, 2021 30,105 2,558 Less valuation of call option (8,121) — Fair value of Z-Shares as at June 10, 2021 21,984 2,558 A probability weighted calculation as at June 10, 2021 concluded that Business Combination was likely to be completed, giving a probability weighted valuation of £16,739 thousand, recognised as an expense and within share premium of VAGL. 7 Expenses by nature (continued) A valuation of £19,616 thousand would have been derived had the Black-Scholes Model used a volatility assumption of 50%, with reasonable changes in all other inputs having an immaterial impact. Capital reorganization The difference in the fair value of the shares issued by the Company over the value of the net monetary assets of the Broadstone represented a listing service, and the cost of the listing service was recognized as an expense upon consummation of the Business Combination Agreement. 2021 £’000 Market value of 9,203,984 ordinary shares ($10.68 per share) 74,265 Cash acquired 4,728 Warrants acquired (15,701,067 warrants at $1.04 per warrant) (11,997) Accounts payable acquired (2,289) Add net liabilities acquired (9,558) Foreign exchange differences 671 Charge for listing services 83,152 An additional £1,572 thousand was recognised in relation to the issuance of private options to MWC, giving a total charge of £84,712 thousand. Issuance of PIPE shares to suppliers and partners Upon consummation of the Business Combination the Company recognised an expense £10,389 thousand in relation to the issuance of PIPE shares to certain suppliers and partners for net proceeds below market value. |
Finance income(costs)
Finance income(costs) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Finance income/(costs). | ||
Finance income/(costs) | 6 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Interest paid on convertible loan notes (7,005) — Interest on loans from related parties — (483) Foreign exchange loss (12,981) — Fair value movements — (3) Interest expense on leases (67) (34) Other (10) — Total finance costs (20,063) (520) 6 Finance income/(costs) (continued) 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Fair value movements on convertible loan notes (note 13) 38,124 — Fair value movements on warrant liabilities (note 11) 4,373 — Total finance income 42,497 — Interest on loans from related parties represented the interest charges by Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. | 8 Finance income/(costs) 2021 2020 2019 £ 000 £ 000 £ 000 Interest on loans from related parties (483) (709) — Bad debt write-off (14) — (15) Fair value losses — (18) — Interest expense on leases (77) (74) (46) Other (1) (6) (5) Total finance costs (575) (807) (66) Fair value gains 32,578 — — Other 12 — — Total finance income 32,590 — — Total finance income/(costs) 32,015 (807) (66) Interest on loans from related parties represents the interest charged by Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Fair value movements include a fair value gain on public and private warrants in issue of £6,817 thousand (note 21) in addition to a fair value gain on the Convertible Senior Secured Notes of £26,876 thousand (note 25). Other finance costs include discount unwind on provisions for dilapidations. |
Loss per share
Loss per share | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loss per share | ||
Loss per share | 7 Basic earnings per share, in this case a loss per share, is calculated by dividing the loss for the period attributable to ordinary equity holders of the parent by the number of ordinary shares outstanding. Because a net loss for all period presented has been reported, diluted loss per share is the same as basic loss per share. Therefore, all potentially dilutive common stock equivalents are antidilutive and have been excluded from the calculation of net loss per share. The calculation of loss per share is based on the following data: 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Net loss for the period (17,021) (22,557) £ £ Basic and diluted loss per share (0.10) (0.20) No. of shares No. of shares Weighted average issued shares 178,329,218 115,155,683 | 9 Loss per share Basic earnings per share, in this case a loss per share, is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the number of ordinary shares outstanding. During the year the number of ordinary or potential ordinary shares outstanding increased because of a share issue. Therefore, the calculation of basic and diluted earnings per share for all periods presented has been adjusted retrospectively. Because a net loss for all period presented has been reported, diluted loss per share is the same as basic loss per share. Therefore, all potentially dilutive common stock equivalents are anti-dilutive and have been excluded from the calculation of net loss per share. The calculation of loss per share is based on the following data: 2021 2020 2019 £ 000 £ 000 £ 000 Net loss for the period (245,224) (12,326) (7,484) £ £ £ Basic and diluted loss per share (1.98) (0.12) (0.07) No. of shares No. of shares No. of shares Weighted average issued shares 124,130,921 99,904,427 99,904,427 |
Trade and other receivables
Trade and other receivables | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other receivables | ||
Trade and other receivables | 8 June 30, December 31, 2022 2021 £ 000 £ 000 Government receivables 7,440 5,415 Prepayments 4,203 6,571 Other receivables 2,514 672 14,157 12,658 Included within Government receivables is £4,909 thousand for the R&D tax credit receivable (December 31, 2021: £2,716 thousand). | 15 Trade and other receivables December 31, December 31, 2021 2020 £ 000 £ 000 Government receivables 5,415 1,989 Prepayments 6,571 733 Other receivables 672 810 12,658 3,532 Included within Government receivables is £2,716 thousand for the R&D tax credit receivable (2020: £328 thousand) and £2,595 thousand for VAT receivable (2020: £6 thousand). Prepayments includes £3,805 thousand in relation to insurances (2020: £nil). The fair value of trade and other receivables classified as financial instruments are disclosed in note 25 Financial instruments. Expected credit losses were not significant in 2021 or 2020. The Group’s exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is disclosed in note 26 Financial risk management and impairment of financial assets. |
Share capital and reserves
Share capital and reserves | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share capital and reserves | ||
Share capital and reserves | 9 Allotted, called up and fully paid shares June 30, December 31, 2022 2021 No. £ No. £ Ordinary of $0.0001 each 209,285,392 15,814 209,135,382 15,804 209,285,392 15,814 209,135,382 15,804 In addition 101,350,565 shares had been authorised for allotment at June 30, 2022. Other reserves During the period other reserves increased by £1,010 thousand as a result of the reclassification of warrants (note 11) and £6,465 thousand as a result of the modification of the EMI scheme (note 12); and £9,482 thousand reflecting cumulative translation differences. Share Premium On June 5, 2022 a total of 150,000 shares were issued resulting in increase in share premium of £749 thousand. | 16 Share capital and other reserves Allotted, called up and fully paid shares December 31, December 31, 2021 2020 No. £ No. £ A ordinary of £0.00001 each — — 100,000 1.00 B ordinary of £0.00001 each — — 4,832 0.05 Ordinary of $0.0001 each 209,135,382 15,804 — — 209,135,382 15,804 104,832 1.05 16 Share capital and other reserves (continued) As part of the Business Combination 100% of VAGL shares (146,749) were acquired by the Company in exchange for the payment, issue and delivery of 177,762,797 Company shares to VAGL shareholders. This included the Z-Shares issued to American on June 10, 2021. At the time there was no IFRS guidance on the accounting treatment for combinations among entities under common control. This transaction has been recorded at the nominal value of shares issued, with the excess premium paid recorded within other reserves. Of the 177,762,797 company shares issued in exchange to VAGL shareholders, 35,000,000 company shares held by VAGL shareholders are subject to an earn-out mechanism (the “Earn Out Shares”) that would be released from restriction upon fulfilment of certain share price milestones being satisfied prior to the fifth-year anniversary of the consummation of the Business Combination Agreement. Failure to achieve such milestones will result in forfeiture of the Earn Out Shares. The Company has determined that the fair value of the Earn Out Shares should be accounted for as a component of the deemed cost of the listing services upon consummation of the Business Combination, as disclosed within Note 7 in the section entitled “Capital reorganization”. The Company also determined that no separate accounting recognition was necessary in respect of the Earn Out Shares as the fair value of the Earn Out Shares will be inherently reflected within the quoted price of Broadstone’s shares, in respect of the Earn Out Shares’ potential dilutive impact, used in valuing the consideration given to Broadstone’s shareholders to derive the deemed cost of the listing services. A total of 9,400,000 ordinary shares were also issued to PIPE investors upon consummation of the business transaction with 9,203,984 public and sponsor shares issued and outstanding Ordinary shares have full voting rights, full dividend rights. A ordinary shares had full voting rights, full dividend rights. B ordinary shares had no voting or dividend rights and have rights to capital distribution on liquidation on par with A ordinary shares. Options have been granted to employees to be able to acquire B shares. Refer to note 23 Share-based payments. Share premium and other reserves Movements in reserves are shown below Share Premium Other Reserves £000 £000 As at January 1 — 4,117 Issuance of Z-Shares to American (note 7) — 16,739 Debt to equity conversion of related party loan (note 27) — 9,000 Debt to equity conversion of Microsoft and Rocket loan — 25,000 Transfer of intergroup share capital — (15) Share acquisition — 50,724 Cumulative translation differences — (85) Issuance of warrants to American, Avolon and Virgin (note 21) 103,053 8,558 Capital reorganization (note 7) 74,265 — PIPE investment 71,036 — As at December 31 248,354 63,314 16 Share capital and other reserves (continued) Share premium The difference in the fair value of the shares issued by the Company over the value of the net monetary assets of the Broadstone gives rise to share premium upon consummation of the Business Combination Agreement. In addition, upon consummation of the Business Combination 9,400,000 ordinary shares at $0.0001 par value were issued to PIPE investors at $10 per share giving rise to share premium of £71,036 thousand. See note 7 for further details As at December 31, 2021 warrants issued to American and Avolon were issued and exercised. The excess of the fair value of these warrants over the par value of the shares issued is recognised in share premium. See note 21 for more details. Other reserves American held 5,804 Z-Shares in VAGL immediately prior to the Business Combination. As part of the consideration for the acquisition of VAGL, American exchanged its existing shareholding in VAGL for 6,125,000 Ordinary Shares in the Company. See note 7 for more details. Upon consummation of the Business Combination, convertible loans issued to Microsoft and Rocket (totalling £25,000 thousand) and Stephen Fitzpatrick (£9,000 thousand) were converted into equity. As at December 31, 2021 warrants issued to Virgin were issued but not exercised. The fair value of these warrants is reflected within other reserves as they satisfy the “fix to fix” criterion as per IAS 32. See note 21 for more details. |
Trade and other payables
Trade and other payables | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other payables | ||
Trade and other payables | 10 Amounts falling due within one year: June 30, December 31, 2022 2021 £ 000 £ 000 Trade payables 1,861 6,715 Accrued expenses 7,145 26,358 Social security and other taxes 602 7,145 Outstanding defined contribution pension costs 177 9 9,785 40,227 Amounts falling due after more than one year: June 30, December 31, 2022 2021 £ 000 £ 000 Deferred transaction fee payable 6,632 5,975 The Group’s exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in note 15 Financial risk management and impairment of financial assets. | 20 Trade and other payables Amounts falling due within one year: December 31, December 31, 2021 2020 £ 000 £ 000 Trade payables 6,715 846 Accrued expenses 26,358 1,226 Amounts due to related parties — 56 Social security and other taxes 7,145 203 Outstanding defined contribution pension costs 9 70 40,227 2,401 Accrued expenses includes £9,666 thousand indirectly attributable financial and capital markets advisory fees. Social security and other taxes includes Stamp Duty payable of £6,669 thousand. Amounts falling due after more than one year: December 31, December 31, 2021 2020 £ 000 £ 000 Deferred transaction fee payable 5,975 — Due to the Business Combination transaction, the Group has deferred transaction fees payable at December 31, 2021. The Group’s exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in note 26 Financial risk management and impairment of financial assets. |
Warrant Liability
Warrant Liability | 6 Months Ended |
Jun. 30, 2022 | |
Warrant Liability | |
Warrant Liability | 11 As at June 30, 2022 and December 31, 2021 the following warrants were issued but not exercised and therefore recorded as a liability: June 30, December 31, 2022 2021 Number Number Public Warrants 15,265,136 15,265,146 Mudrick Warrants 4,000,000 4,000,000 MWC Options — 2,000,000 Outstanding, end of period 19,265,136 21,265,146 Recorded as a liability, the following shows the change in fair value during the period ended June 30, 2022: £ 000 December 31, 2021 10,730 Addition/(Disposal) of private placement warrants — Reclassification of MWC Options to equity (1,010) Change in fair value (4,373) Exchange differences on translation 840 June 30, 2022 6,187 Each public warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share. Once the public warrants become exercisable, the Company may redeem the public warrants at a price of $0.01 per public warrant if the closing price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period. |
Share-based payments
Share-based payments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-based payments | ||
Share-based payments | 12 Scheme details and movements On September 11, 2020, the VAGL implemented an Enterprise Management Incentive (“EMI”) scheme. An EMI scheme is a tax advantaged share scheme that can be operated by qualifying companies. The scheme comprised options over B ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. On March 15, 2022 the scheme was modified. This modification reflects the revised capital structure of the Company following completion of the Business Combination transaction. As part of this modification, all option holders exchanged their options held in VAGL for newly issued options in the Company. This modification resulted in a charge of £6,545 thousand, which is reflected in this financial information. 12 Share-based payments (continued) The movements in the number of EMI share options during the period were as follows: June 30, December 31, 2022 2021 Number Number Outstanding, start of period 19,670 16,817 Granted during the period — 3,147 Grant arising due to scheme modification 23,213,933 — Forfeited during the period (1,576,948) (294) Outstanding, end of period 21,656,655 19,670 In addition, Marcus Waley-Cohen (MWC) was granted 2,000,000 options during the period ending December 31, 2021. The original EMI share options granted were all granted prior to March 31, 2021. The modification that occurred on March 15, 2022 resulted in 23,213,933 additional replacement options being granted. The movements in the weighted average exercise price of share options during the period were as follows: June 30, December 31, 2022 2021 £ £ Outstanding, start of period 308.06 143.28 Granted during the period — 1,178.94 Grant arising due to scheme modification 0.23 — Forfeited during the period 0.83 204.00 Outstanding, end of period 0.19 308.06 The exercise price of share options granted during the period is based upon the modification of the scheme to reflect the revised capital structure of the Company. Outstanding share options Details of share options outstanding at the end of the period are as follows: June 30, December 31, 2022 2021 Weighted average exercise price (£) 0.19 308.06 Number of share options outstanding 21,656,655 19,670 Expected weighted average remaining vesting period (years) 2.64 1.12 The number of options which were exercisable at June 30, 2022 were 9,594,507 (December 31, 2021: 7,715) with exercise prices ranging from £0.03 to £1.18. 12 Fair value of options granted The weighted average fair value per option of options granted during the period at measurement date was £0.52 (December 31, 2021: £31.97). The option pricing model used was Black Scholes and the main inputs are set out in the table below. June 30, December 31, 2022 2021 Average share price at date of grant (£) 5.38 492.42 Expected volatility (%) 50.00 50.00 Vesting period in years 2.75 4.00 Risk-free interest rate (%) 1.25 0.28 Volatility Given the lack of share price history, volatility has been estimated with reference to other industry competitors, on a listed stock market, with a premium attached for various uncertainties. Share based payments charge During the period, a charge of £6,465 thousand was recognised within other reserves and £80 thousand within retained earnings for equity settled share-based payment transactions in relation to employees (June 30, 2021: £76 thousand). An additional £749 thousand was recognised with respect to third parties. Refer to note 5 Expenses by nature. | 23 Share-based payments Scheme details and movements On September 11, 2020, the VAGL implemented an Enterprise Management Incentive (“EMI”) scheme. An EMI scheme is a tax advantaged share scheme that can be operated by qualifying companies. The scheme comprised options over B ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. This scheme remained in existence as at December 31, 2021 and therefore the number and fair value of options presented in note 23 relate solely to this scheme. Subsequent to the year ended December 31, 2021 the scheme was modified. This modification reflects the revised capital structure of the Company following completion of the Business Combination transaction. As part of this modification, all option holders exchanged their options held in VAGL for newly issued options in the Company. Also subsequent to the year ended December 31, 2021, the Board of Directors adopted the 2021 Incentive Award Plan in order to facilitate the grant of cash and equity incentives, which is essential to our long-term success. The impact of the modification of the EMI scheme and the adoption of the 2021 Inventive Aware Plan is not reflected in these financial statements as both of these events occurred subsequent to the year ended December 31, 2021. During the year ended December 31, 2021 a total of 2,000,000 private options were awarded to Marcus Waley-Cohen. For more details see note 21 and note 27. 23 Share-based payments (continued) The movements in the number of EMI share options during the year were as follows: December 31, December 31, 2021 2020 Number Number Outstanding, start of period 16,817 — Granted during the period 3,147 16,817 Forfeited during the period (294) — Outstanding, end of period 19,670 16,817 The EMI share options granted were all granted prior to March 31, 2021, after which no new grants were made. The movements in the weighted average exercise price of share options during the year were as follows: December 31, December 31, 2021 2020 £ £ Outstanding, start of period 143.28 — Granted during the period 1,178.94 143.28 Forfeited during the period 204.00 — Outstanding, end of period 308.06 143.28 The exercise price of share options granted during the year is based upon the valuation of VAGL in contemplation of the Business Combination and the number of VAGL shares issued and outstanding at the time of grant. Outstanding share options Details of share options outstanding at the end of the year are as follows: 31 December 31 December 2021 2020 Weighted average exercise price (£) 308.06 143.28 Number of share options outstanding 19,670 16,817 Expected weighted average remaining vesting period (years) 1.12 1.13 The number of options which were exercisable at December 31, 2021 was 7,715 (2020: 7,635) with exercise prices ranging from £38.22 to £1,298.49. The range in exercise price reflects the valuation of VAGL as at the date when the respective options were granted. Fair value of options granted The weighted average fair value per option of options granted during the period at measurement date was £31.97 (2020: £6.70). 23 Share-based payments (continued) The option pricing model used was Black Scholes and the main inputs are set out in the table below. The date of grant of the options was between September 11, 2020 and March 12, 2021. December 31, December 31, 2021 2020 Average share price at date of grant (£) 492.42 40.36 Expected volatility (%) 50.00 50.00 Vesting period in years 4 1 Dividends — — Option life in years 4.25 4.00 Risk-free interest rate (%) 0.28 (0.13) The change in vesting period from December 31, 2020 to December 31, 2021 reflects the terms of the newly granted EMI share options during 2021. Volatility Given the lack of share price history and volatility, the volatility has been estimated with reference to other industry competitors, on a listed stock market, with a premium attached for the uncertainty around an unlisted investment. Share based payments charge During the year, a charge of £156 thousand was recognised for equity settled share-based payment transactions (2020: £96 thousand). Refer to note 7 Expenses by nature. |
Derivative financial liabilitie
Derivative financial liabilities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Derivative financial liabilities | ||
Derivative financial liabilities | 13 Convertible Senior Secured Notes consists of the following: Mudrick £ 000 As at December 31, 2021 112,799 Fair value movements (38,124) Interest paid 7,005 Exchange differences on translation 10,770 As at June 30, 2022 92,450 On December 16, 2021 Mudrick Capital Management purchased Convertible Senior Secured Notes of an aggregate principal amount of £151,000 thousand ($200,000 thousand) for an aggregate purchase price of £145,000 thousand ($192,000 thousand). The Convertible Senior Secured Notes are initially convertible into up to 18,181,820 ordinary shares at an initial conversion rate of 90.9091 ordinary shares per £824 ($1,000). In accordance with IFRS 9, this is treated as a hybrid instrument and is designated it in entirety as fair value through profit or loss. The valuation methods and assumptions are shown in note 14. 13 Derivative financial liabilities (continued) The Company has elected pay interest in-kind at 9% per annum. Interest is paid semi-annually in arrears and on June 15, 2022 the Company authorised the payment of interest by increasing the nominal amount of the outstanding Convertible Senior Secured Notes by £7,005 thousand ($8,950 thousand). Several covenants exist including retention of $10 million cash. Accordingly, cash at bank includes £8,235 thousand deemed to be restricted as at June 30, 2022. | 24 Derivative financial liabilities Convertible Senior Secured Notes consists of the following: Mudrick £ 000 As at January 1, 2020 — As at December 31, 2020 — Issuance of Convertible Senior Secured Notes 141,981 Fair value movements (26,876) Foreign exchange movements (2,306) As at December 31, 2021 112,799 During the year ended December 31, 2021 additional convertible loan notes were issued to Microsoft Corporation and Rocket Internet, giving rise to proceeds of £25,000 thousand. These loans were converted into equity during the year. See note 17, Loans from related parties for more information. Concurrently with the consummation of the Business Combination, Mudrick purchased Convertible Senior Secured Notes of and from the Company in an aggregate principal amount of £151,000 thousand ($200,000 thousand) for an aggregate purchase price of £145,000 thousand ($192,000 thousand) (the “Purchase Price”). The Convertible Senior Secured Notes are initially convertible into up to 18,181,820 ordinary shares at an initial conversion rate of 90.9091 ordinary shares per £756 ($1,000) principal amount of Convertible Senior Secured Notes. 24 Derivative financial liabilities (continued) Upon the occurrence of a Fundamental Change, Mudrick has the right, at its option, to require us to repurchase for cash all or any portion of its Convertible Senior Secured Notes in principal amounts of £756 ($1,000), at a fundamental change repurchase price equal to the principal amount of the Convertible Senior Secured Notes to be repurchased plus, if repurchased before the second anniversary of issuance, certain make-whole premiums, plus accrued and unpaid interest. A fundamental change consists of a change in beneficial owner of the Company; the sale of all or substantially all of the assets or share capital of the Company; dissolution or liquidation of the Company; or NYSE de-listing. The Convertible Senior Secured Notes will bear interest at the rate of 7% per annum if the Company elects to pay interest in cash or 9% per annum if the Company elects to pay interest in-kind, by way of PIK Notes. Interest will be paid semi-annually in arrears. Upon the occurrence of an event of default, an additional 2.00% will be added to the stated interest rate. The Convertible Senior Secured Notes will mature on the fifth anniversary of issuance and will be redeemable at any time by the Company, in whole but not in part, for cash, at par plus, if redeemed before the second anniversary of issuance, certain make-whole premiums. A number of covenants exist in relation to the Company’s obligations with regard to payment of notes and interest; furnishing the trustee with exchange act reports; compliance with Section 13 or 15(d) of the Exchange Act; provision of an annual compliance certificate; relinquishing of the benefit or advantage of, any stay, extension or usury law; acquisition of notes by the Company; permitting any Company subsidiaries to become liable for the notes; limitation on liens securing indebtedness; limitation on asset sales; limitation on transactions with affiliates; limitation on restricted payments; retention of $10 million cash; guarantors; and material IP. No breaches have been identified during the year. Accordingly, cash at bank includes £7,420 thousand deemed to be restricted as at December 31, 2021. In accordance with IFRS 9, this is treated as a hybrid instrument and is designated it in entirety as fair value through profit or loss. Therefore, upon initial recognition the Company has not separated the convertible note into a host liability component (accounted for at amortized cost) and the derivative liability components (accounted for at fair value through profit or loss). The valuation methods and assumptions are shown in note 25. |
Financial instruments
Financial instruments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial instruments | ||
Financial instruments | 14 To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. Financial liabilities at fair value through profit and loss: June 30, 2022 December 31, 2021 £000 £000 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Convertible Senior Secured Notes — — 92,450 — — 112,799 Warrant liabilities 6,187 — — 10,730 — — 6,187 — 92,450 10,730 — 112,799 The fair value of financial instruments is deemed to be equivalent to the carrying value. Level 1: The fair value of financial instruments traded in active is based on quoted market prices at the end of the reporting period. As such, warrants issued but not exercised are valued with reference to the observable market price as at the period end date ($0.39 per warrant). Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for the issued Convertible Senior Secured Notes. The fair value of the convertible senior secured notes has been estimated using a binomial lattice framework. The following inputs have been used: June 30, 2022 December 31, 2021 Risk-free rate 3.00 % 1.25 % Dividend yield — — Volatility 52.5 % 52.5 % Credit spread 21.8 % 21.8 % No changes were made during the period ended June 30, 2022 to the valuation techniques applied as at December 31, 2021. | 25 Financial instruments Financial assets at amortized cost Carrying value Fair value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 Cash at bank 212,660 839 212,660 839 Trade and other receivables 672 810 672 810 213,332 1,649 213,332 1,649 The fair value of financial assets is based on the expectation of recovery of balances. All balances are expected to be received in full. 25 Financial instruments (continued) Financial liabilities at amortized cost: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Trade and other payables 45,717 2,128 45,717 2,128 Borrowings — 6,309 — 6,309 Lease liabilities 1,942 1,021 1,942 1,021 47,659 9,458 47,659 9,458 Financial liabilities at fair value through profit or loss: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Convertible Senior Secured Notes 112,799 — 112,799 — Warrant liabilities (Note 21) 10,730 — 10,730 — 123,529 — 123,529 — Warrants are traded in an active market and are therefore categorized in level 1 of the fair value hierarchy (see note 21). Convertible Senior Secured Notes (both host contract and embedded derivative) are categorized in level 3 of the fair value hierarchy (see note 24). Valuation methods and assumptions Financial liabilities at amortized cost The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material. Due to their short maturities, the fair value of the trade and other payables approximates to their book value. The total interest expense for financial liabilities not held at fair value through profit or loss is £747 thousand (2020: £801 thousand). 25 Financial instruments (continued) Financial liabilities at fair value through profit or loss The fair value of the convertible senior secured notes has been estimated using a binomial lattice framework in consideration of the American-option style nature of the embedded features. Company specific inputs include the expected probability and timing of future equity financing, in addition to the probability and timing of a future fundamental change. The following observable inputs have been used: December 31, 2021 Interest rate (%) 9.0 Risk-free rate (%) 1.25 Dividend yield — Volatility (%) 52.5 Credit spread (%) 21.8 As of December 16, 2021 an estimated fair value of £141,981 thousand was calculated as the issuance price of the convertible note and warrants (4% Original Issue Discount from £151,000 thousand face value). Specifically, management performed a calibration analysis, back solved for the implied credit spread such that the fair value of the convertible notes and warrants would reconcile with the £145,000 thousand issuance price as of December 16, 2021 along with other inputs such as the estimated volatility, term, dividend and risk-free rate. The implied credit spread, and the fair value of the convertible note were estimated to be 2,179 basis points and approximately £141,981 thousand, respectively, through this calibration process. As of December 31, 2021 an estimated a fair value of £112,799 thousand was calculated for the convertible note based on the following valuation inputs: ● Stock price: $6.73 based on the stock price observed for as at December 31, 2021 ● Risk free rate: 1.25% based on the US Treasury Yield interpolated to match the term input ● Volatility: 52.50% based on the estimated equity volatility as adjusted via a volatility haircut process ● Credit spread: 2,179 bps based on the estimated implied credit spread estimated ● Dividend yield: 0% based on management’s expectation Had the stock price traded higher, or a higher volatility been assumed then this would have resulted in a higher fair value being attributed to the instrument. |
Financial risk management and i
Financial risk management and impairment of financial assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial risk management and impairment of financial assets | ||
Financial risk management and impairment of financial assets | 15 The Group’s activities expose it to a variety of financial risks including market risk, credit risk, foreign exchange risk and liquidity risk. Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations, arising principally from prepayments to suppliers and deposits with the Group’s bank. Also included in Cash at bank is £8,235 thousand deemed to be restricted as at June 30, 2022. The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was £9,248 thousand (December 31, 2021: £672 thousand) being the total of the carrying amount of financial assets, including contractual receivables but excluding R&D tax credits receivables and cash. The allowance account of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly. The Group provides for impairment losses based on estimated irrecoverable amounts determined by reference to specific circumstances and the experience of management of debtor default in the industry. On that basis, the loss allowance as at June 30, 2022 and December 31, 2021 was determined as £nil for trade receivables. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s financial position. The Group’s principal exposure to market risk is exposure to foreign exchange rate fluctuations. There are currently no currency forwards, options, or swaps to hedge this exposure. Foreign exchange risk The Group is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. The Group received funding in USD, and subsequently holds cash in both USD and GBP. The majority of the Group’s trading costs are in GBP. The Group also has supply contracts denominated in USD and EUR. The Group holds sufficient cash in both USD and GBP to satisfy its trading costs in each of these currencies. The Company may be exposed to material foreign exchange risk in subsequent period as a result of the significance of the USD denominated Convertible Senior Secured Notes in particular relative to USD cash deposits held (which were $47,999 thousand at June 30, 2022) and which are expected to decline as expenses are incurred until future funding is secured. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Group’s management uses short and long-term cash flow forecasts to manage liquidity risk. Forecasts are supplemented by sensitivity analysis which is used to assess funding adequacy for at least a 12-month period. The Company manages its cash resources to ensure it has sufficient funds to meet all expected demands as they fall due. 15 Financial risk management and impairment of financial assets (continued) Maturity analysis Between 2 and 5 After more than Within 1 year years 5 years Total 30 June 2022 £ 000 £ 000 £ 000 £ 000 Trade and other payables 9,785 6,730 — 16,515 Lease liabilities 426 1,515 168 2,109 Convertible senior secured notes — 92,450 — 92,450 10,211 100,695 168 111,074 31 December 2021 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 Capital management The Group’s objective when managing capital is to ensure the Group continues as a going concern; and grows in a sustainable manner. Given the ongoing development of eVTOL aircraft with minimal revenues, the Group relies on funding raised from the Business Combination transaction and other equity investors. Cash flow forecasting is performed on a regular basis which includes rolling forecasts of the Group’s liquidity requirements to ensure that the Group has sufficient cash to meet operational needs. | 26 Financial risk management and impairment of financial assets The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. Credit risk and impairment Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from prepayments to suppliers and distributors and deposits with the Group’s bank. Included in cash at bank is £10,388 thousand which is set aside to satisfy a short-term commitment that was satisfied during April 2022 and included within trade and other payables. Also included in Cash at bank is £7,420 thousand deemed to be restricted as at December 31, 2021. The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was £672 thousand (2020: £2,799 thousand) being the total of the carrying amount of financial assets excluding cash, which includes trade receivables and other receivables. All the receivables are with parties in the UK. The allowance account of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly. The Group provides for impairment losses based on estimated irrecoverable amounts determined by reference to specific circumstances and the experience of management of debtor default in the industry. On that basis, the loss allowance as at December 31, 2021 and December 31, 2020 was determined as £nil for trade receivables. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s financial position. The Group’s principal exposure to market risk is exposure to foreign exchange rate fluctuations. There are currently no currency forwards, options, or swaps to hedge this exposure. Foreign exchange risk The Group is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. The Group received proceeds from the Business Combination transaction in USD, and subsequently holds cash in both USD and GBP. The majority of the Group’s trading costs are in GBP. The Group also has supply contracts denominated in USD and EUR. The Group holds sufficient cash in both USD and GBP to satisfy its trading costs in each of these currencies. In 2020 and 2021, the Group did not consider foreign exchange rate risk to have a material impact on the financial statements and therefore no sensitivity analysis is presented The Company may be exposed to material foreign exchange risk in subsequent years as a result of the significance of the USD denominated Convertible Senior Secured Notes in particular relative to USD cash deposits held (which were $145,098 thousand at December 31,2021) and which are expected to decline as expenses are incurred until future funding is secured. 26 Financial risk management and impairment of financial assets (continued) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Group’s management uses short and long-term cash flow forecasts to manage liquidity risk. Forecasts are supplemented by sensitivity analysis which is used to assess funding adequacy for at least a 12-month period. The Company manages its cash resources to ensure it has sufficient funds to meet all expected demands as they fall due. Maturity analysis Between 2 and After more than Within 1 year 5 years 5 years Total 2021 £ 000 £ 000 £ 000 £ 000 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 2020 Trade and other payables 2,401 — — 2,401 Lease liabilities 175 700 397 1,272 Other borrowings 6,309 — — 6,309 8,885 700 397 9,982 Capital management The Group’s objective when managing capital is to ensure the Group continues as a going concern; and grows in a sustainable manner. Given the ongoing development of eVTOL aircraft with minimal revenues, the Group relies on funding raised from the Business Combination transaction and other equity investors. Cash flow forecasting is performed on a regular basis which includes rolling forecasts of the Group’s liquidity requirements to ensure that the Group has sufficient cash to meet operational needs. |
Related party transactions
Related party transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related party transactions | ||
Related party transactions | 16 Key management personnel compensation Key management personnel are the members of the Board. June 30, June 30, 2022 2021 £ 000 £ 000 Salaries and other short term employee benefits 629 140 Payments to defined contribution pension schemes 8 7 Share-based payments 79 76 716 223 On September 11, 2020, the Group implemented an Enterprise Management Incentive scheme. The scheme comprises options over ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. Reflecting the Company structure at the time, the individuals eligible and included within this scheme were key employees at the time of option granting. Therefore, the charge recognised upon the vesting of these options is included within key management personal compensation. The impact of the modification to this scheme on March 15, 2022 is not included within key management personnel compensation. The total charge recognised in relation to this modification is £6,545 thousand, of which £4,434 thousand relates to individuals who are members of the Board as at the date of the modification. Summary of transactions with other related parties During the period ending June 30, 2022 Imagination Industries Ltd did not not not On 1 January, 2022 Domhnal Slattery was appointed chairman of the board of directors since January 2022. Domhnal Slattery is also the Chief Executive Officer of Avolon. | 27 Related party transactions Key management personnel In 2021 key management personnel are the members of the Board. In 2020 key management personnel are the CEO and the first line of reporting into the CEO, excluding support staff. There were 3 key management personnel in 2020. Key management compensation 2021 2020 2019 £ 000 £ 000 £ 000 Salaries and other short term employee benefits 244 374 181 Payments to defined contribution pension schemes 14 39 24 Share-based payments 156 92 — 414 505 205 In addition to the above, upon consummation of the Business Combination, Marcus Waley-Cohen was awarded 2,000,000 private options by the Company valued at £1,572 thousand (For more details see note 21). Summary of transactions with other related parties Imagination Industries Ltd During the year ended December 31, 2021, the Group received loan funds from Imagination Industries Ltd of £2,945 thousand (2020: £5,600 thousand). The loan incurred an interest charge at 30% (2020: 30%) of £483 thousand (2020: £709 thousand) and amounts repaid totalled £737 thousand (2020: £nil). During the year ended December 31, 2021, Imagination Industries Incubator Ltd charged the Group management fees of £108 thousand (2020: £144 thousand). The total balance outstanding at December 31, 2021 was £nil (2020: £72 thousand). At December 31, 2021 the total balance owed to Imagination Industries Ltd was £nil (2020: £6 thousand). Stephen Fitzpatrick During the year ended December 31, 2021 the Group agreed to reallocate the loan outstanding from Imagination Industries Ltd totalling £9,000 thousand to Stephen Fitzpatrick. The loan was released by Stephen Fitzpatrick in exchange for newly issued share capital in the Company. Upon consummation of the Business Combination, Stephen Fitzpatrick advanced $5m, recognised as £3,779 thousand, as part of the PIPE in exchange for 500,000 ordinary shares in the Company. 27 Related party transactions(continued) Dómhnal Slattery On January 1, 2022, Dómhnal Slattery, who is also the Chief Executive Officer of Avolon, was appointed Chairman of the Board of Directors of the Company. Vertical Advanced Engineering Ltd On October 31, 2021, Vertical Advanced Engineering Ltd was disposed of for nominal consideration. During the year ended December 31, 2021, the Group charged Vertical Advanced Engineering Ltd a total of £65 thousand for engineering design services. |
Significant accounting polici_2
Significant accounting policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Presentation of these financial statements | Presentation of these financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). | |
Basis of preparation | Basis of preparation This unaudited condensed consolidated interim financial report for the half-year reporting period ended 30 June 2022 has been prepared in accordance with International Financial Reporting Standards (IFRS) applicable to the preparation of interim financial statements, IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021. The accounting policies adopted are consistent with those of the previous financial year. The unaudited condensed consolidated interim financial report has been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit and loss. Items included in the unaudited condensed consolidated interim financial report are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (‘the functional currency’). The financial information is presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s functional and presentation currency, and all amounts are presented in and rounded to the nearest thousand unless otherwise indicated. 2 Significant accounting policies(continued) Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % All intercompany balances and transactions have been eliminated in consolidation. | Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The functional currency of the Company is US Dollars (‘$’ or ‘USD’) and the functional currency of VAGL is pounds sterling (‘£’ or ‘GBP’). The financial statements are presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s presentation currency. Items included in the financial statements are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (“the functional currency”). Cumulative translation adjustments resulting from translating foreign functional currency financial statements into GBP are reported within other reserves. All amounts are presented in and rounded to the nearest thousand unless otherwise indicated. |
Basis of consolidation | Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % On October 31, 2021 the VAGL disposed of its 100% investment in Vertical Aerospace Engineering Limited for nominal consideration. 2 Significant accounting policies (continued) The consolidated financial statements incorporate the financial positions and the results of operations of the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the Company using consistent accounting policies. Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. | |
Going concern | Going concern Management has prepared a cashflow forecast for the Group and have demonstrated the ability for the Group to continue as a going concern for the foreseeable future, being at least 12 months after approving this report. Therefore, management has prepared the financial information on a going concern basis. The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. It is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. The cashflow forecast for the Group demonstrates that the Group has sufficient cash to fund its activity for a period of 12 months from the date of approval of this report. Management has assessed the Group’s ability to continue as a going concern for 12 months by modelling several scenarios of varying activity going forward. Given the level of cash invested into the company and the current trajectory, management has concluded that the Group can continue as a going concern for at least 12 months from the date of approving this report. | Going concern The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. Several scenarios have been modelled and it is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. However, given the level of cash invested into the company and the current trajectory, management has concluded that no material uncertainties exist about the Group’s ability to continue as a going concern for at least 12 months from the date of approving these financial statements. |
Changes in accounting policy | Changes in accounting policy A number of amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards a) Property, Plant and Equipment: Proceeds before Intended Use — Amendments to IAS 16 b) Onerous Contracts – Cost of Fulfilling a Contract — Amendments to IAS 37 2 Significant accounting policies (continued) c) Annual Improvements to IFRS Standards 2018-2020 d) Reference to the Conceptual Framework — Amendments to IFRS 3 . | Changes in accounting policy The Group adopted the following standards and amendments for the first time from the annual reporting period commencing January 1, 2021: Interest Rate Benchmark Reform — phase 2 The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. No new accounting standards and interpretations that have been published and are not mandatory for December 31, 2022 reporting periods have been early adopted by the Group or are expected to have a material impact on the Group in current or future reporting periods. |
Revenue recognition | Revenue recognition Revenues are minimal to the Group and are generated from the performance of engineering consultancy services to customers. IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS principles are applied using the following 5 step model: 1. Identify the contracts with the customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when or as the entity satisfies its performance obligations The revenue for the Group relates solely to engineering consultancy services and revenue is recognised once the Group has satisfied the performance conditions. The contracts that the Group enters into comprise payments when certain milestones are met. Revenue is recognised at each milestone event and only if the milestone is met. | |
Government grants | Government grants Government grants are recognised as Other operating income and are recognised in the period when the expense to which the grant relates is incurred. Grants are only recognised when there is a signed grant offer letter or equivalent from the government body and there is reasonable assurance that the Group will be able to satisfy all conditions of the grant. The Group is the recipient of R&D tax credits in the UK. These tax credits are presented within Other operating income. Receivables relating to government grants are presented in Trade and other receivables at their fair value. | |
Research and development expenses | Research and development expenses Research expenditure is charged to profit or loss in the period in which it occurred. Development expenditure is recognised as an intangible asset when it is probable that the project will generate future economic benefit, considering factors such as technological, commercial and regulatory feasibility. Other development expenditure is charged to profit or loss in the period in which it occurred. Refer to note 3 Critical accounting judgements and key sources of estimation uncertainty for a discussion on the judgement of this classification. The amounts included in research and development expenses include staff costs for staff working directly on research and development projects and for expenses directly attributable to a research project, excluding software costs. | |
Finance income and costs policy | 2 Significant accounting policies (continued) Finance income and costs Finance income and costs includes the fair value movement on publicly traded warrants and convertible loan notes. Finance expense includes interest payable and is recognised in profit or loss using the effective interest method. Interest income is recognised in profit or loss as it accrues, using the effective interest method. | |
Foreign currency transactions and balances | Foreign currency transactions and balances Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in profit or loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences arising from the consolidation of subsidiaries whose functional currency differs to the presentational currency of the group are recoded within other comprehensive income. The most important exchange rates that have been used in preparing the financial statements are: Closing rate as at December 31, 2021: USD $1 = GBP £0.7420 Average rate for the year ending December 31, 2021: USD $1 = GBP £0.7270 Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated. | |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment is stated at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows: Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line | |
Intangible assets | Intangible assets Intangible assets are carried at cost, less accumulated amortization and impairment losses. Computer software licences acquired for use within the Company are capitalized as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Amortization Amortization is provided on intangible assets so as to write off the cost on a straight-line basis, less any estimated residual value, over their expected useful economic life as follows: Asset class Amortization method and rate IT software 3 years straight line | |
Business combinations and goodwill | Business combinations and goodwill The purchase method is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values on the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets, including intangible assets acquired, is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the difference is recognised directly in profit or loss. Goodwill is stated at cost, less any accumulated impairment losses. Goodwill is tested annually for impairment or when there are indicators of impairment. | |
Cash and cash equivalents | Cash at bank Cash at bank is held on deposit with financial institutions located within the United Kingdom and is immediately available. Management has assessed the financial institutions that hold the Company’s cash at bank to be financially sound, with minimal credit risk in existence. | |
Trade and other receivables | Trade and other receivables Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established using an expected credit loss model as per the Group’s accounting policy for the impairment of financial assets. Other receivables represent amounts due from parties who are not customers and are measured at amortized cost. | |
Trade and other payables. | Trade and other payables Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at the transaction price and subsequently measured at amortized cost using the effective interest method. | |
Borrowings | Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to profit or loss over the period of the relevant borrowing using the effective interest method. Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. | |
Provisions | 2 Significant accounting policies (continued) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. | |
Leases | Leases Definition A lease is a contract, or part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (‘the underlying asset’) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset, if throughout the period of use, the company has the right to: Obtain substantially all the economic benefits from the use of the underlying asset, and; Direct the use of the underlying asset (for example, directing how and for what purpose the asset is used). Initial recognition and measurement The company initially recognizes a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where reasonably certain), expected amount of residual value guarantees, termination option penalties (where reasonably certain) and variable lease payments that depend on an index or rate. The right of use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs and an estimate of restoration, removal and dismantling costs. Subsequent measurement After the commencement date, the company measures the lease liability by: (a) Increasing the carrying amount to reflect interest on the lease liability; (b) Reducing the carrying amount to reflect the lease payments made; and (c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events. 2 Significant accounting policies (continued) Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are included in finance costs in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises. | |
Impairment (non-financial assets) | Impairment (non-financial assets) All assets are reviewed for impairment when there is an indicator of impairment. In addition, goodwill is reviewed for impairment at least annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. | |
Share capital | Share capital Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. | |
Defined contribution pension obligation | Employee Benefits A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. 2 Significant accounting policies (continued) For defined contribution plans, contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognized as employee benefit expense when they are due. Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as accruals and classified as current liabilities in the balance sheet. | |
Share based payments | Share based payments — Enterprise Management Incentive and 2021 Incentive Plan The Company operates an equity-settled, share based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share options or shares). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the shares granted: ● including any market performance conditions (for example, an entity’s share price); ● excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and ● including the impact of any non-vesting conditions. Non-market performance and service conditions are included in assumptions about the number of shares that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. In addition, in some circumstances employees may provide services in advance of the grant date and therefore, the grant date fair value is estimated for the purposes of recognizing the expense during the period between service commencement period and grant date. At the end of each reporting period, the Company revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. See note 23 for further details. Other non-current share-based payments were made during the year as detailed within the significant accounting policy for the capital reorganization. Further information is included with the critical accounting judgements and key sources of estimation uncertainty. | |
Financial instruments | Financial instruments Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.The company recognizes financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are offset, and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. 2 Significant accounting policies (continued) Financial assets The Group’s financial assets include cash at bank and other financial assets. Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. Trade receivables are measured at their transaction price. For all financial assets the Group has the objective to hold financial assets in order to collect the contractual cash flows. The contractual terms of all the Group’s financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the outstanding amount. All financial assets are therefore measured at amortized cost. Impairment of financial assets — expected credit losses (“ECL”) All financial assets measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”), based on the difference between the contractual and expected cash flows The simplification available for financial instruments with a low credit risk (“low credit risk exemption”) is applied as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. Financial liabilities The Group’s financial liabilities include warrants, lease liabilities, convertible loans, trade and other payables, and other financial liabilities. Financial liabilities are classified as measured at amortized cost or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not at fair value through profit or loss, directly attributable transaction costs. Financial liabilities at FVTPL are measured at fair value and gains and losses resulting from changes in fair value are recognized in finance income/expenses. The Group only accounts for convertible loans and warrants as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost. An embedded derivative in a hybrid contract, with a financial liability or a non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. 2 Significant accounting policies (continued) Convertible Loans Convertible loans are bifurcated into a debt component and a conversion right if the latter is an equity instrument. The conversion right of a convertible loan is not an equity instrument but a liability if some conversion features of the loan lead to a conversion into a variable number of shares. In this case it has to be assessed if embedded derivatives need to be separated from the host contract. If this is the case, the remaining host contract is measured at amortized cost and the separated embedded derivative is measured at fair value through profit or loss until the loan is converted into equity or becomes due for repayment. The conversion features and other repayment options provided for in the contract are identified as a combined embedded derivative if they share the same risk exposure and are interdependent. Warrant Liabilities Public warrants are recognized as liabilities in accordance with IFRS 9 at fair value. The liabilities are subject to re-measurement at each balance sheet date until exercised. Private warrants linked to sales targets are recognised within equity as these satisfy the “fix to fix” criterion within IAS 32. Fair value measurements IFRS 13 clarifies that fair value is a market price, representing the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier hierarchy is established as follows: Level 1 Level 2 Level 3 If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. |
Significant accounting polici_3
Significant accounting policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Summary of details of subsidiaries | Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % | Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % |
Summary of estimated useful lives of property, plant and equipment | Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line | |
Summary of estimated useful lives of Intangible assets | Asset class Amortization method and rate IT software 3 years straight line |
Other operating income (Tables)
Other operating income (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other operating income | ||
Summary of analysis of the Group's other operating income | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Government grants 1,214 8,999 R&D tax credit 2,193 687 3,407 9,686 | 2021 2020 2019 £ 000 £ 000 £ 000 Government grants 8,829 1,989 — R&D tax credit 2,388 328 399 Other 135 — — 11,352 2,317 399 |
Expenses by nature (Tables)
Expenses by nature (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Expenses by nature | ||
Summary of expense by nature | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Staff costs excluding share-based payment expenses 12,425 5,546 Share based payment expenses 7,294 16,815 Research and development components, parts and tooling 4,771 2,478 Research and development consultancy 7,936 625 Consultancy costs 990 1,501 Legal and financial advisory costs 1,476 2,060 Software costs 1,438 497 Related party administrative expenses — 127 Insurance expenses 1,729 15 Other administrative expenses 3,774 1,670 Expense on short term leases 8 30 Depreciation expense 260 162 Amortisation expense 572 168 Depreciation on right of use assets — Property 189 70 Total administrative and research and development expenses 42,862 31,764 | Included within administrative expenses and research and development expenses are the following expenses. 2021 2020 2019 £ 000 £ 000 £ 000 Staff costs excluding share-based payment expenses 16,230 8,445 3,642 Share based payment expenses 111,996 96 — Warrant expense (note 21) 111,611 — — Legal and financial advisory transaction costs 7,350 — — Software costs 1,506 579 191 Depreciation expense 377 279 89 Depreciation on right of use assets — 176 140 171 Amortisation expense 387 263 70 Consultancy costs 13,144 745 518 Expense on short term leases 49 64 8 Research and development components 11,378 2,555 2,096 Related party administrative expenses 108 144 144 Marketing expenses 3,918 — — Stamp duty 6,669 — — Other administrative expenses 3,760 565 922 Total administrative and research and development expenses 288,659 13,875 7,851 |
Finance income(costs) (Tables)
Finance income(costs) (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Finance income/(costs). | ||
Summary of finance costs | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Interest paid on convertible loan notes (7,005) — Interest on loans from related parties — (483) Foreign exchange loss (12,981) — Fair value movements — (3) Interest expense on leases (67) (34) Other (10) — Total finance costs (20,063) (520) 6 Finance income/(costs) (continued) 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Fair value movements on convertible loan notes (note 13) 38,124 — Fair value movements on warrant liabilities (note 11) 4,373 — Total finance income 42,497 — | 2021 2020 2019 £ 000 £ 000 £ 000 Interest on loans from related parties (483) (709) — Bad debt write-off (14) — (15) Fair value losses — (18) — Interest expense on leases (77) (74) (46) Other (1) (6) (5) Total finance costs (575) (807) (66) Fair value gains 32,578 — — Other 12 — — Total finance income 32,590 — — Total finance income/(costs) 32,015 (807) (66) |
Loss per share (Tables)
Loss per share (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loss per share | ||
Summary of calculation of loss per share | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Net loss for the period (17,021) (22,557) £ £ Basic and diluted loss per share (0.10) (0.20) No. of shares No. of shares Weighted average issued shares 178,329,218 115,155,683 | 2021 2020 2019 £ 000 £ 000 £ 000 Net loss for the period (245,224) (12,326) (7,484) £ £ £ Basic and diluted loss per share (1.98) (0.12) (0.07) No. of shares No. of shares No. of shares Weighted average issued shares 124,130,921 99,904,427 99,904,427 |
Trade and other receivables (Ta
Trade and other receivables (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other receivables | ||
Summary of trade and other receivables | June 30, December 31, 2022 2021 £ 000 £ 000 Government receivables 7,440 5,415 Prepayments 4,203 6,571 Other receivables 2,514 672 14,157 12,658 | December 31, December 31, 2021 2020 £ 000 £ 000 Government receivables 5,415 1,989 Prepayments 6,571 733 Other receivables 672 810 12,658 3,532 |
Share capital and reserves (Tab
Share capital and reserves (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share capital and reserves | ||
Summary of allotted, called up and fully paid shares | June 30, December 31, 2022 2021 No. £ No. £ Ordinary of $0.0001 each 209,285,392 15,814 209,135,382 15,804 209,285,392 15,814 209,135,382 15,804 | December 31, December 31, 2021 2020 No. £ No. £ A ordinary of £0.00001 each — — 100,000 1.00 B ordinary of £0.00001 each — — 4,832 0.05 Ordinary of $0.0001 each 209,135,382 15,804 — — 209,135,382 15,804 104,832 1.05 |
Trade and other payables (Table
Trade and other payables (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other payables | ||
Summary of trade and other payables | Amounts falling due within one year: June 30, December 31, 2022 2021 £ 000 £ 000 Trade payables 1,861 6,715 Accrued expenses 7,145 26,358 Social security and other taxes 602 7,145 Outstanding defined contribution pension costs 177 9 9,785 40,227 Amounts falling due after more than one year: June 30, December 31, 2022 2021 £ 000 £ 000 Deferred transaction fee payable 6,632 5,975 | Amounts falling due within one year: December 31, December 31, 2021 2020 £ 000 £ 000 Trade payables 6,715 846 Accrued expenses 26,358 1,226 Amounts due to related parties — 56 Social security and other taxes 7,145 203 Outstanding defined contribution pension costs 9 70 40,227 2,401 Amounts falling due after more than one year: December 31, December 31, 2021 2020 £ 000 £ 000 Deferred transaction fee payable 5,975 — |
Warrant Liability (Tables)
Warrant Liability (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Warrant Liability | ||
Schedule of warrants issued but not exercised | As at June 30, 2022 and December 31, 2021 the following warrants were issued but not exercised and therefore recorded as a liability: June 30, December 31, 2022 2021 Number Number Public Warrants 15,265,136 15,265,146 Mudrick Warrants 4,000,000 4,000,000 MWC Options — 2,000,000 Outstanding, end of period 19,265,136 21,265,146 | As at December 16, 2021 and December 31, 2021 the following warrants were issued but not exercised: Number Public Warrants 15,265,146 Mudrick Warrants 4,000,000 MWC Options 2,000,000 21,265,146 |
Schedule of reconciliation of warrant liabilities | Recorded as a liability, the following shows the change in fair value during the period ended June 30, 2022: £ 000 December 31, 2021 10,730 Addition/(Disposal) of private placement warrants — Reclassification of MWC Options to equity (1,010) Change in fair value (4,373) Exchange differences on translation 840 June 30, 2022 6,187 |
Share-based payments (Tables)
Share-based payments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-based payments | ||
Schedule of movements in the number of share options | 12 Share-based payments (continued) The movements in the number of EMI share options during the period were as follows: June 30, December 31, 2022 2021 Number Number Outstanding, start of period 19,670 16,817 Granted during the period — 3,147 Grant arising due to scheme modification 23,213,933 — Forfeited during the period (1,576,948) (294) Outstanding, end of period 21,656,655 19,670 | 23 Share-based payments (continued) The movements in the number of EMI share options during the year were as follows: December 31, December 31, 2021 2020 Number Number Outstanding, start of period 16,817 — Granted during the period 3,147 16,817 Forfeited during the period (294) — Outstanding, end of period 19,670 16,817 |
Schedule of movements in the weighted average exercise price of share options | The movements in the weighted average exercise price of share options during the period were as follows: June 30, December 31, 2022 2021 £ £ Outstanding, start of period 308.06 143.28 Granted during the period — 1,178.94 Grant arising due to scheme modification 0.23 — Forfeited during the period 0.83 204.00 Outstanding, end of period 0.19 308.06 | The movements in the weighted average exercise price of share options during the year were as follows: December 31, December 31, 2021 2020 £ £ Outstanding, start of period 143.28 — Granted during the period 1,178.94 143.28 Forfeited during the period 204.00 — Outstanding, end of period 308.06 143.28 |
Schedule of share options outstanding | Details of share options outstanding at the end of the period are as follows: June 30, December 31, 2022 2021 Weighted average exercise price (£) 0.19 308.06 Number of share options outstanding 21,656,655 19,670 Expected weighted average remaining vesting period (years) 2.64 1.12 | Details of share options outstanding at the end of the year are as follows: 31 December 31 December 2021 2020 Weighted average exercise price (£) 308.06 143.28 Number of share options outstanding 19,670 16,817 Expected weighted average remaining vesting period (years) 1.12 1.13 |
Schedule of fair value of options granted | The option pricing model used was Black Scholes and the main inputs are set out in the table below. June 30, December 31, 2022 2021 Average share price at date of grant (£) 5.38 492.42 Expected volatility (%) 50.00 50.00 Vesting period in years 2.75 4.00 Risk-free interest rate (%) 1.25 0.28 | December 31, December 31, 2021 2020 Average share price at date of grant (£) 492.42 40.36 Expected volatility (%) 50.00 50.00 Vesting period in years 4 1 Dividends — — Option life in years 4.25 4.00 Risk-free interest rate (%) 0.28 (0.13) |
Derivative financial liabilit_2
Derivative financial liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative financial liabilities | |
Schedule of convertible senior secured notes | Mudrick £ 000 As at December 31, 2021 112,799 Fair value movements (38,124) Interest paid 7,005 Exchange differences on translation 10,770 As at June 30, 2022 92,450 |
Financial instruments (Tables)
Financial instruments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial instruments | ||
Schedule of financial liabilities measured at fair value | Financial liabilities at fair value through profit and loss: June 30, 2022 December 31, 2021 £000 £000 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Convertible Senior Secured Notes — — 92,450 — — 112,799 Warrant liabilities 6,187 — — 10,730 — — 6,187 — 92,450 10,730 — 112,799 | Recorded as a liability, the following shows the change in fair value during the year ended December 31, 2021: £ 000 January 1, 2021 — Additions 17,801 Change in fair value recognised in profit or loss (6,817) Foreign exchange movements (254) December 31, 2021 10,730 |
Schedule of measurement inputs for level 3 fair value financial liabilities | The fair value of the convertible senior secured notes has been estimated using a binomial lattice framework. The following inputs have been used: June 30, 2022 December 31, 2021 Risk-free rate 3.00 % 1.25 % Dividend yield — — Volatility 52.5 % 52.5 % Credit spread 21.8 % 21.8 % |
Financial risk management and_2
Financial risk management and impairment of financial assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial risk management and impairment of financial assets | ||
Schedule of liquidity risk | Between 2 and 5 After more than Within 1 year years 5 years Total 30 June 2022 £ 000 £ 000 £ 000 £ 000 Trade and other payables 9,785 6,730 — 16,515 Lease liabilities 426 1,515 168 2,109 Convertible senior secured notes — 92,450 — 92,450 10,211 100,695 168 111,074 31 December 2021 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 | Between 2 and After more than Within 1 year 5 years 5 years Total 2021 £ 000 £ 000 £ 000 £ 000 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 2020 Trade and other payables 2,401 — — 2,401 Lease liabilities 175 700 397 1,272 Other borrowings 6,309 — — 6,309 8,885 700 397 9,982 |
Related party transactions (Tab
Related party transactions (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Disclosure of transactions between related parties [line items] | ||
Schedule of key management compensation | December 31, December 31, 2021 2020 £ 000 £ 000 Current loans and borrowings Loans from related parties — 6,309 Loans from related parties represents a loan from Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Movements in the year were as follows: 2021 2020 £ 000 £ 000 As at January 1 6,309 — Amounts advanced 2,945 5,600 Interest charged 483 709 Amounts repaid (737) — Conversion to equity (9,000) — As at December 31 — 6,309 During the year loans was issued to Microsoft Corporation and Rocket Internet SE. Movements in the year were as follows: 2021 £ 000 As at January 1 — Amounts advanced 25,000 Interest charged — Amounts repaid — Conversion to equity (25,000) As at December 31 — | |
Board of Director | ||
Disclosure of transactions between related parties [line items] | ||
Schedule of key management compensation | June 30, June 30, 2022 2021 £ 000 £ 000 Salaries and other short term employee benefits 629 140 Payments to defined contribution pension schemes 8 7 Share-based payments 79 76 716 223 | 2021 2020 2019 £ 000 £ 000 £ 000 Salaries and other short term employee benefits 244 374 181 Payments to defined contribution pension schemes 14 39 24 Share-based payments 156 92 — 414 505 205 |
Significant accounting polici_4
Significant accounting policies - Basis of consolidation (Details) - Vertical Aerospace Group Limited ("VAGL") | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of subsidiaries [line items] | ||
Name of subsidiary | Vertical Aerospace Group Limited (“VAGL”) | |
Principal place of business of subsidiary | Development and commercialization of eVTOL technologies. | |
Country of incorporation of subsidiary | Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW | |
Proportion of ownership interest held | 100% | 100% |
Other operating income (Details
Other operating income (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other operating income | |||||
Government grants | £ 1,214 | £ 8,999 | £ 8,829 | £ 1,989 | |
R&D tax credit | 2,193 | 687 | 2,388 | 328 | £ 399 |
Other operating income | 3,407 | 9,686 | 11,352 | 2,317 | £ 399 |
Government Grants Receivable | £ 1,241 | £ 8,943 | £ 5,415 | £ 1,989 |
Other operating income - Govern
Other operating income - Government grants (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Other operating income | ||||
Government receivable | £ 1,241 | £ 5,415 | £ 8,943 | £ 1,989 |
Expenses by nature (Details)
Expenses by nature (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure of attribution of expenses by nature to their function [line items] | |||||
Staff costs excluding share-based payment expenses | £ 12,425 | £ 5,546 | |||
Share based payment expenses | 7,294 | 16,815 | £ 111,996 | £ 96 | |
Research and development components, parts and tooling | 4,771 | 2,478 | 11,378 | 2,555 | £ 2,096 |
Research and development consultancy | 7,936 | 625 | |||
Consultancy costs | 990 | 1,501 | 13,144 | 745 | 518 |
Legal and financial advisory costs | 1,476 | 2,060 | |||
Software costs | 1,438 | 497 | 1,506 | 579 | 191 |
Related party administrative expenses | 127 | 108 | 144 | 144 | |
Insurance expenses | 1,729 | 15 | |||
Other administrative expenses | 3,774 | 1,670 | 3,760 | 565 | 922 |
Expense on short term leases | 8 | 30 | 49 | 64 | 8 |
Depreciation expense | 260 | 162 | 377 | 279 | 89 |
Amortisation expense | 572 | 168 | 387 | 263 | 70 |
Depreciation on right of use assets - Property | 189 | 70 | 176 | 140 | 171 |
Total administrative and research and development expenses | 42,862 | 31,764 | £ 288,659 | £ 13,875 | £ 7,851 |
Research and development | |||||
Disclosure of attribution of expenses by nature to their function [line items] | |||||
Staff costs excluding share-based payment expenses | £ 6,689 | £ 3,979 |
Finance income(costs) (Details)
Finance income(costs) (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure Of Finance income costs Line Items | |||||
Interest paid on convertible loan notes | £ (7,005) | ||||
Interest on loans from related parties | £ (483) | ||||
Foreign exchange loss | (12,981) | ||||
Fair value movements | (3) | ||||
Interest expense on leases | (67) | (34) | £ (77) | £ (74) | £ (46) |
Other | (10) | (1) | (6) | (5) | |
Total finance costs | (20,063) | £ (520) | (575) | £ (807) | £ (66) |
Total finance income | 42,497 | £ 32,590 | |||
Convertible Senior Secured Notes | |||||
Disclosure Of Finance income costs Line Items | |||||
Fair value movements | 38,124 | ||||
Warrant liabilities | |||||
Disclosure Of Finance income costs Line Items | |||||
Fair value movements | £ 4,373 |
Loss per share - Basic and dilu
Loss per share - Basic and diluted loss per share (Details) - GBP (£) £ / shares in Units, £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Loss per share | |||||
Net loss for the period | £ (17,021) | £ (22,557) | £ (245,224) | £ (12,326) | £ (7,484) |
Basic loss per share | £ (0.10) | £ (0.20) | £ (1.98) | £ (0.12) | £ (0.07) |
Diluted loss per share | £ (0.10) | £ (0.20) | £ (1.98) | £ (0.12) | £ (0.07) |
Weighted average issued shares | 178,329,218 | 115,155,683 | 124,130,921 | 99,904,427 | 99,904,427 |
Adjusted weighted average issued shares | 178,329,218 | 115,155,683 | 124,130,921 | 99,904,427 | 99,904,427 |
Trade and other receivables (De
Trade and other receivables (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Trade and other receivables | |||
Government receivable | £ 7,440 | £ 5,415 | |
Prepayments | 4,203 | 6,571 | £ 733 |
Other receivables | 2,514 | 672 | 810 |
Total trade and other current receivables | 14,157 | 12,658 | 3,532 |
R&D tax credit receivable | £ 4,909 | £ 2,716 | £ 328 |
Share capital and reserves- All
Share capital and reserves- Allotted, called up and fully paid shares (Details) | Jun. 30, 2022 GBP (£) £ / shares shares | Dec. 31, 2021 GBP (£) £ / shares shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 GBP (£) shares |
Disclosure of classes of share capital [line items] | ||||
Number of shares allotted, called up and fully paid shares | 209,285,392 | 209,135,382 | 104,832 | |
Share capital | £ | £ 15,814 | £ 15,804 | £ 1.05 | |
Number of other shares authorized for allotment | 101,350,565 | |||
A ordinary | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | £ / shares | £ 0.00001 | |||
Number of shares allotted, called up and fully paid shares | 100,000 | |||
Share capital | £ | £ 1 | |||
B ordinary | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | £ / shares | £ 0.00001 | |||
Number of shares allotted, called up and fully paid shares | 4,832 | |||
Share capital | £ | £ 0.05 | |||
Ordinary Share | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | (per share) | £ 0.0001 | $ 0.0001 | ||
Number of shares allotted, called up and fully paid shares | 209,285,392 | 209,135,382 | ||
Share capital | £ | £ 15,814 | £ 15,804 |
Share capital and reserves - Ad
Share capital and reserves - Additional Information (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 05, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of classes of share capital [line items] | |||||
Reclassification of warrants | £ 1,010 | £ 111,611 | |||
Share based payment transactions | 7,294 | £ 16,815 | 156 | £ 96 | |
Foreign exchange translation differences | 9,482 | ||||
Share premium. | |||||
Disclosure of classes of share capital [line items] | |||||
Reclassification of warrants | 103,053 | ||||
Share based payment transactions | £ 749 | 749 | £ 16,739 | ||
Shares issued during the period | 150,000 | ||||
Other reserves | |||||
Disclosure of classes of share capital [line items] | |||||
Reclassification of warrants | 1,010 | £ 8,558 | |||
Share based payment transactions | 6,465 | £ 0 | |||
Foreign exchange translation differences | £ 9,482 |
Trade and other payables (Detai
Trade and other payables (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Outstanding defined contribution pension costs | £ 9 | £ 70 | |
Within 1 year | |||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Trade payables | £ 1,861 | 6,715 | 846 |
Accrued expenses | 7,145 | 26,358 | 1,226 |
Social security and other taxes | 602 | 7,145 | 203 |
Outstanding defined contribution pension costs | 177 | 9 | 70 |
Total trade and other payables | 9,785 | 40,227 | 2,401 |
Amounts due to related parties | £ 56 | ||
After more than one year | |||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Deferred transaction fee payable | £ 6,632 | £ 5,975 |
Warrant Liability - Warrants we
Warrant Liability - Warrants were issued but not exercised (Details) - shares | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | |
Disclosure of fair value measurement of liabilities [line items] | |||
Outstanding, end of period | 21,265,146 | 19,265,136 | 21,265,146 |
Public Warrants | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Outstanding, end of period | 15,265,146 | 15,265,136 | 15,265,146 |
Mudrick Warrants | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Outstanding, end of period | 4,000,000 | 4,000,000 | 4,000,000 |
MWC Options | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Outstanding, end of period | 2,000,000 | 2,000,000 |
Warrant Liability - Change in f
Warrant Liability - Change in fair value (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Warrant Liability | ||
Warrant liability at beginning of period | £ 10,730 | |
Reclassification of MWC Options to equity | (1,010) | |
Change in fair value | (4,373) | £ (6,817) |
Exchange differences on translation | 840 | |
Warrant liability at end of period | £ 6,187 | £ 10,730 |
Warrant Liability - Additional
Warrant Liability - Additional information (Details) - Public Warrants | 6 Months Ended | |
Jun. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Disclosure of fair value measurement of liabilities [line items] | ||
Number of shares entitled per public warrant | shares | 1 | 1 |
Exercise price of warrants | $ 11.50 | $ 11.50 |
Redemption price | 0.01 | $ 0.01 |
Trigger price | $ 18 | |
Threshold trading days for redemption of warrants | 20 | |
Threshold consecutive trading days for redemption of warrants | 30 |
Share-based payments - Movement
Share-based payments - Movements in the number of share options (Details) £ in Thousands | 6 Months Ended | 12 Months Ended | ||
Mar. 15, 2022 GBP (£) Options | Jun. 30, 2022 GBP (£) Options | Dec. 31, 2021 Options | Dec. 31, 2020 Options | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Outstanding, start of period | 19,670 | 16,817 | ||
Granted during the period | 3,147 | 16,817 | ||
Forfeited during the period | (294) | |||
Outstanding, end of period | 19,670 | 16,817 | ||
EMI share option scheme | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Outstanding, start of period | 19,670 | 16,817 | ||
Granted during the period | 3,147 | |||
Grant arising due to scheme modification | 23,213,933 | 23,213,933 | ||
Forfeited during the period | (1,576,948) | (294) | ||
Outstanding, end of period | 21,656,655 | 19,670 | 16,817 | |
Grant raised in modified scheme | £ | £ 6,545 | £ 6,545 | ||
MWC share option scheme | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Granted during the period | 2,000,000 |
Share-based payments - Moveme_2
Share-based payments - Movements in the weighted average exercise price of share options (Details) - £ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | |||
Weighted average exercise price, options outstanding, start of period | £ 308.06 | £ 143.28 | |
Weighted average exercise price, options granted during the period | 1,178.94 | £ 143.28 | |
Weighted average exercise price, options forfeited during the period | 204 | ||
Weighted average exercise price, options outstanding, end of period | 308.06 | 143.28 | |
EMI share option scheme | |||
Disclosure of terms and conditions of share-based payment arrangement [line items] | |||
Weighted average exercise price, options outstanding, start of period | 308.06 | 143.28 | |
Weighted average exercise price, options granted during the period | 1,178.94 | ||
Weighted average exercise price, options grant arising due to scheme modification | 0.23 | ||
Weighted average exercise price, options forfeited during the period | 0.83 | 204 | |
Weighted average exercise price, options outstanding, end of period | £ 0.19 | £ 308.06 | £ 143.28 |
Share-based payments - Share op
Share-based payments - Share options outstanding (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 Options £ / shares | Dec. 31, 2021 Options £ / shares | Dec. 31, 2020 Options £ / shares | |
Outstanding share options | |||
Weighted average exercise price | £ 308.06 | £ 143.28 | |
Number of share options outstanding | Options | 19,670 | 16,817 | |
Expected weighted average remaining vesting period (years) | 1 year 1 month 13 days | 1 year 1 month 17 days | |
Number of options exercisable | Options | 7,715 | 7,635 | |
EMI share option scheme | |||
Outstanding share options | |||
Weighted average exercise price | £ 0.19 | £ 308.06 | £ 143.28 |
Number of share options outstanding | Options | 21,656,655 | 19,670 | 16,817 |
Expected weighted average remaining vesting period (years) | 2 years 7 months 20 days | 1 year 1 month 13 days | |
Number of options exercisable | Options | 9,594,507 | 7,715 | |
Minimum | |||
Outstanding share options | |||
Exercise prices | £ 38.22 | ||
Minimum | EMI share option scheme | |||
Outstanding share options | |||
Exercise prices | £ 0.03 | ||
Maximum | |||
Outstanding share options | |||
Exercise prices | £ 1,298.49 | ||
Maximum | EMI share option scheme | |||
Outstanding share options | |||
Exercise prices | £ 1.18 |
Share-based payments - Fair val
Share-based payments - Fair value of options granted (Details) | 12 Months Ended | |||||
Jun. 30, 2022 GBP (£) $ / shares | Jun. 10, 2021 $ / shares | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 GBP (£) Y | Dec. 31, 2021 GBP (£) £ / shares | Dec. 31, 2020 GBP (£) £ / shares | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Weighted average fair value per option of options granted | £ 31.97 | £ 31.97 | £ 31.97 | £ 6.70 | ||
Average share price at date of grant | £ / shares | £ 492.42 | £ 40.36 | ||||
Expected volatility (%) | 50% | 50% | ||||
Vesting period in years | 4 | 4 | 1 | |||
Option life in years | 4.25 | 4 | ||||
Risk-free interest rate (%) | 0.28% | (0.13%) | ||||
EMI share option scheme | ||||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Weighted average fair value per option of options granted | £ 0.52 | £ 31.97 | £ 31.97 | £ 31.97 | ||
Average share price at date of grant | $ / shares | £ 5.38 | $ 492.42 | ||||
Expected volatility (%) | 50% | 50% | ||||
Vesting period in years | 2 years 9 months | 4 years | ||||
Risk-free interest rate (%) | 1.25% | 0.28% |
Share-based payments - Share ba
Share-based payments - Share based payments charge (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Charge recognized for equity settled share based payment transactions | £ 156 | £ 96 | ||
Share-based compensation expense with respect to third parties | £ 749 | |||
Other reserves | ||||
Charge recognized for equity settled share based payment transactions | 6,465 | |||
Accumulated deficit | ||||
Charge recognized for equity settled share based payment transactions | £ 80 | £ 76 |
Derivative financial liabilit_3
Derivative financial liabilities - Convertible Senior Secured Notes (Details) £ in Thousands | 6 Months Ended |
Jun. 30, 2022 GBP (£) | |
Disclosure of financial liabilities [line items] | |
Balance at beginning of period | £ 112,799 |
Balance at end of period | 92,450 |
Mudrick | |
Disclosure of financial liabilities [line items] | |
Balance at beginning of period | 112,799 |
Fair value movements | (38,124) |
Interest paid | 7,005 |
Exchange differences on translation | 10,770 |
Balance at end of period | £ 92,450 |
Derivative financial liabilit_4
Derivative financial liabilities - Additional Information (Details) £ in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | |||||||||
Jun. 15, 2022 GBP (£) | Jun. 15, 2022 USD ($) | Dec. 16, 2021 GBP (£) shares | Dec. 16, 2021 USD ($) shares | Jun. 30, 2022 GBP (£) | Jun. 30, 2021 GBP (£) | Dec. 31, 2021 GBP (£) shares | Dec. 31, 2021 USD ($) shares | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) shares | Dec. 16, 2021 USD ($) shares | |
Disclosure of financial liabilities [line items] | |||||||||||
Aggregate purchase price | £ | £ 25,000 | £ 166,981 | |||||||||
Limitation on restricted payments for retention guarantors | $ | $ 10,000 | ||||||||||
Convertible loan notes | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Convertible shares | shares | 18,181,820 | 18,181,820 | |||||||||
Conversion ratio per $1000 principal amount | shares | 90.9091 | 90.9091 | |||||||||
Convertible loan notes | Interest paid in cash | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Interest rate | 7% | 7% | |||||||||
Convertible loan notes | Interest paid in-kind and semi-annually in arrears | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Interest rate | 9% | 9% | |||||||||
Mudrick | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Increase through accumulating interest | £ | £ 7,005 | ||||||||||
Mudrick | Convertible loan notes | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Principal amount | £ 151,000 | £ 151,000 | $ 200,000 | $ 200,000 | |||||||
Aggregate purchase price | £ 145,000 | $ 192,000 | 145,000 | $ 192,000 | |||||||
Convertible shares | shares | 18,181,820 | 18,181,820 | |||||||||
Conversion ratio per $1000 principal amount | shares | 90.9091 | 90.9091 | |||||||||
Convertible Senior Secured Notes Principal Amount | 756 | $ 1,000 | |||||||||
Denominator in calculation of number of equity instruments holder of convertible debt is entitled to, notional amount | £ 824 | $ 1,000 | |||||||||
Interest rate | 9% | 9% | |||||||||
Increase through accumulating interest | £ 7,005 | $ 8,950 | |||||||||
Mandatory cash balance under loan covenants | $ | $ 10,000 | ||||||||||
Restricted cash | £ | £ 8,235 | ||||||||||
Microsoft and Rocket | |||||||||||
Disclosure of financial liabilities [line items] | |||||||||||
Aggregate purchase price | £ | £ 25,000 |
Financial instruments - Financi
Financial instruments - Financial liabilities at fair value through profit or loss (Details) - Financial liabilities at fair value through profit or loss - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Level 1 | ||
Disclosure of financial assets [line items] | ||
Financial liabilities | £ 6,187 | £ 10,730 |
Level 3 | ||
Disclosure of financial assets [line items] | ||
Financial liabilities | 92,450 | 112,799 |
Convertible Senior Secured Notes | Level 3 | ||
Disclosure of financial assets [line items] | ||
Financial liabilities | 92,450 | 112,799 |
Warrant liabilities | Level 1 | ||
Disclosure of financial assets [line items] | ||
Financial liabilities | £ 6,187 | £ 10,730 |
Financial instruments - Additio
Financial instruments - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares | |
Level 1 | Financial liabilities at fair value through profit or loss | Warrant liabilities | |
Disclosure of financial assets [line items] | |
Market price (per warrant) | $ 0.39 |
Financial instruments - Fair va
Financial instruments - Fair value of the convertible senior secured notes (Details) - Financial liabilities at fair value through profit or loss - Convertible Senior Secured Notes - Level 3 | Jun. 30, 2022 | Dec. 31, 2021 |
Risk-free rate | ||
Disclosure of financial assets [line items] | ||
Significant unobservable input liabilities | 0.0300 | 0.0125 |
Dividend yield | ||
Disclosure of financial assets [line items] | ||
Significant unobservable input liabilities | 0 | 0 |
Volatility | ||
Disclosure of financial assets [line items] | ||
Significant unobservable input liabilities | 0.525 | 0.525 |
Credit spread | ||
Disclosure of financial assets [line items] | ||
Significant unobservable input liabilities | 0.218 | 0.218 |
Financial risk management and_3
Financial risk management and impairment of financial assets (Details) £ in Thousands, $ in Thousands | Jun. 30, 2022 GBP (£) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 GBP (£) |
Financial risk management and impairment of financial assets | |||||
Restricted cash | £ 8,235 | £ 7,420 | |||
Cash deposits held | 212,660 | £ 839 | |||
USD | |||||
Financial risk management and impairment of financial assets | |||||
Cash deposits held | $ | $ 47,999 | $ 145,098 | |||
Credit risk | |||||
Financial risk management and impairment of financial assets | |||||
Maximum exposure to credit risk | 9,248 | 672 | 2,799 | ||
Allowance account for credit losses of financial assets | 0 | £ 0 | |||
Credit risk | Trade receivables | |||||
Financial risk management and impairment of financial assets | |||||
Allowance account for credit losses of financial assets | £ 0 | £ 0 |
Financial risk management and_4
Financial risk management and impairment of financial assets - Maturity analysis (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Financial risk management and impairment of financial assets | |||
Trade and other payables | £ 16,515 | £ 46,202 | |
Lease liabilities | 2,109 | 1,942 | |
Convertible senior secured notes | 92,450 | 112,799 | |
Total financial obligations | 111,074 | 160,943 | £ 9,982 |
Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Trade and other payables | 9,785 | 40,227 | |
Lease liabilities | 426 | 362 | |
Total financial obligations | 10,211 | 40,589 | 8,885 |
Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Trade and other payables | 6,730 | 5,975 | |
Lease liabilities | 1,515 | 1,343 | |
Convertible senior secured notes | 92,450 | 112,799 | |
Total financial obligations | 100,695 | 120,117 | 700 |
More than 5 years | |||
Financial risk management and impairment of financial assets | |||
Lease liabilities | 168 | 237 | |
Total financial obligations | £ 168 | 237 | 397 |
Trade and other payables [Member] | |||
Financial risk management and impairment of financial assets | |||
Total financial obligations | 46,202 | 2,401 | |
Trade and other payables [Member] | Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Total financial obligations | 40,227 | £ 2,401 | |
Trade and other payables [Member] | Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Total financial obligations | 5,975 | ||
Convertible Senior Secured Notes | |||
Financial risk management and impairment of financial assets | |||
Total financial obligations | 112,799 | ||
Convertible Senior Secured Notes | Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Total financial obligations | £ 112,799 |
Related party transactions - Ke
Related party transactions - Key management compensation (Details) | 6 Months Ended | 12 Months Ended | ||||
Mar. 15, 2022 GBP (£) | Jun. 30, 2022 GBP (£) director | Jun. 30, 2021 GBP (£) director | Dec. 31, 2021 GBP (£) | Dec. 31, 2020 GBP (£) | Dec. 31, 2019 GBP (£) | |
Disclosure of transactions between related parties [line items] | ||||||
Salaries and other short term employee benefits | £ 629,000 | £ 140,000 | £ 244,000 | £ 374,000 | £ 181,000 | |
Payments to defined contribution pension schemes | 8,000 | 7,000 | 14,000 | 39,000 | 24,000 | |
Share-based payments | 79,000 | 76,000 | 156,000 | 92,000 | ||
Key management compensation | 716,000 | 223,000 | 414,000 | 505,000 | £ 205,000 | |
Amounts payable, related party transactions | 6,309,000 | |||||
EMI share option scheme | ||||||
Disclosure of transactions between related parties [line items] | ||||||
Expense recognised from modifications of share-based payment arrangements | £ 6,545,000 | 6,545,000 | ||||
Board of Director | EMI share option scheme | ||||||
Disclosure of transactions between related parties [line items] | ||||||
Expense recognised from modifications of share-based payment arrangements | 4,434,000 | |||||
Imagination Industries Ltd | ||||||
Disclosure of transactions between related parties [line items] | ||||||
Amounts payable, related party transactions | 0 | 2,945,000 | £ 0 | £ 6,000 | ||
Services received, related party transactions | £ 0 | £ 127,000 | ||||
Number of directors of entity to which related party has paid compensation on behalf of the entity | director | 0 | 2 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - GBP (£) £ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Unaudited Condensed Consolidated Interim Statements of Income and Comprehensive Income | |||
Revenue | £ 132 | £ 87 | £ 70 |
Cost of sales | (64) | (44) | (66) |
Gross profit | 68 | 43 | 4 |
Research and development expenses | (24,291) | (9,971) | (5,153) |
Administrative expenses | (264,260) | (3,760) | (2,554) |
Related party administrative expenses | (108) | (144) | (144) |
Other operating income | 11,352 | 2,317 | 399 |
Operating loss | (277,239) | (11,515) | (7,448) |
Finance income/(costs) | 32,498 | (98) | (66) |
Related party finance costs | (483) | (709) | |
Net finance income/ (costs) | 32,015 | (807) | (66) |
Loss before tax | (245,224) | (12,322) | (7,514) |
Income tax expense | (4) | 30 | |
Net loss for the period | (245,224) | (12,326) | (7,484) |
Foreign exchange translation differences | (85) | ||
Total comprehensive loss for the period | £ (245,309) | £ (12,326) | £ (7,484) |
Basic loss per share | £ (1.98) | £ (0.12) | £ (0.07) |
Diluted loss per share | £ (1.98) | £ (0.12) | £ (0.07) |
Consolidated Statement of Finan
Consolidated Statement of Financial Position - GBP (£) | Dec. 31, 2021 | Dec. 31, 2020 |
Non-current assets | ||
Property, plant and equipment | £ 1,834,000 | £ 1,422,000 |
Right of use assets | 1,969,000 | 1,062,000 |
Intangible assets | 4,208,000 | 2,030,000 |
Non-current assets | 8,011,000 | 4,514,000 |
Current assets | ||
Trade and other receivables | 12,658,000 | 3,532,000 |
Cash at bank | 212,660,000 | 839,000 |
Current assets | 225,318,000 | 4,371,000 |
Total assets | 233,329,000 | 8,885,000 |
Equity | ||
Share capital | 15,804 | 1.05 |
Other reserve | 63,314,000 | 4,117,000 |
Share premium | 248,354,000 | |
Accumulated deficit | (250,123,000) | (5,055,000) |
Total equity | 61,561,000 | (938,000) |
Non-current liabilities | ||
Long term lease liabilities | 1,580,000 | 846,000 |
Provisions | 95,000 | 88,000 |
Derivative financial liabilities | 112,799,000 | |
Trade and other payables | 5,975,000 | |
Non-current liabilities | 120,449,000 | 934,000 |
Current liabilities | ||
Lease liabilities | 362,000 | 175,000 |
Warrant liabilities | 10,730,000 | |
Trade and other payables | 40,227,000 | 2,401,000 |
Loans from related parties | 6,309,000 | |
Income tax liability | 4,000 | |
Current liabilities | 51,319,000 | 8,889,000 |
Total liabilities | 171,768,000 | 9,823,000 |
Total equity and liabilities | £ 233,329,000 | £ 8,885,000 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - GBP (£) £ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | |||
Loss for the period | £ (245,224) | £ (12,326) | £ (7,484) |
Adjustments to cash flows from non-cash items | |||
Depreciation and amortization | 765 | 542 | 159 |
Depreciation on right of use assets | 177 | 140 | 171 |
Finance (income)/costs | (32,498) | 98 | 66 |
Related party finance costs | 483 | 709 | |
Share based payment transactions | 101,608 | 96 | |
Warrant expense | 111,611 | ||
Net exchange differences | 853 | ||
Income tax expense | 4 | (30) | |
Adjustments to cash flows from non-cash items | (62,225) | (10,737) | (7,118) |
Increase in trade and other receivables | (9,126) | (2,062) | (848) |
Increase in trade and other payables | 43,801 | 787 | 683 |
Net cash flows used in operating activities | (27,550) | (12,012) | (7,283) |
Cash flows from investing activities | |||
Acquisition of subsidiaries net of cash | (731) | ||
Acquisitions of property plant and equipment | (790) | (155) | (1,527) |
Acquisition of intangible assets | (2,565) | (233) | (575) |
Deferred consideration payments | 1 | (300) | |
Net cash flows used in investing activities | (3,354) | (688) | (2,833) |
Cash flows from financing activities | |||
Proceeds from secured convertible notes | 166,981 | ||
Proceeds from related party borrowings | 2,945 | 5,600 | |
Repayment of related party borrowings | (737) | ||
Payments to lease creditors | (240) | (220) | (130) |
Proceeds from related party investment | 3,779 | ||
Cash acquired as part of Business Combination | 4,728 | ||
Proceeds from PIPE | 67,257 | ||
Movement in net parent investment | 7,130 | 11,003 | |
Net cash flows (used)/generated from financing activities | 244,713 | 12,510 | 10,873 |
Net increase/(decrease) in cash at bank | 213,809 | (190) | 757 |
Cash at bank, beginning of the period | 839 | 1,029 | 272 |
Effect of foreign exchange rate changes | (1,988) | ||
Cash at bank, end of the period | £ 212,660 | £ 839 | £ 1,029 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - GBP (£) £ in Thousands | Share capital | Share premium. | Other reserves | Net parent investment | Accumulated deficit | Total |
Balance at the beginning at Dec. 31, 2018 | £ 0 | £ 0 | £ 643 | £ 0 | £ 643 | |
Net loss for the period | (7,484) | |||||
Total comprehensive loss for the period | 0 | 0 | (7,484) | 0 | (7,484) | |
Movement in net parent investment | 0 | 0 | 11,003 | 0 | 11,003 | |
Balance at the end at Dec. 31, 2019 | 0 | 0 | 4,162 | 0 | 4,162 | |
Net loss for the period | (12,326) | |||||
Total comprehensive loss for the period | 0 | 0 | (7,175) | (5,151) | (12,326) | |
Share based payment transactions | 0 | 0 | 0 | 96 | 96 | |
Movement in net parent investment | 0 | 0 | 7,130 | 0 | 7,130 | |
Transfer to Other reserves | 0 | 4,117 | (4,117) | 0 | ||
Balance at the end at Dec. 31, 2020 | 0 | £ 0 | 4,117 | 0 | (5,055) | (938) |
Net loss for the period | (22,557) | (22,557) | ||||
Total comprehensive loss for the period | (22,557) | |||||
Share based payment transactions | 16,739 | 76 | 16,815 | |||
Balance at the end at Jun. 30, 2021 | 25,739 | 4,117 | (27,536) | 2,320 | ||
Balance at the beginning at Dec. 31, 2020 | 0 | 0 | 4,117 | £ 0 | (5,055) | (938) |
Net loss for the period | (245,224) | (245,224) | ||||
Translation differences | (85) | (85) | ||||
Total comprehensive loss for the period | (85) | (245,224) | (245,309) | |||
Share based payment transactions | 156 | 156 | ||||
Share acquisition | 16 | 50,724 | 50,740 | |||
PIPE investment | 71,036 | 71,036 | ||||
Capital reorganization | 74,265 | 74,265 | ||||
Reclassification of warrants | 103,053 | 8,558 | 111,611 | |||
Balance at the end at Dec. 31, 2021 | 16 | 248,354 | 63,314 | (250,123) | 61,561 | |
Net loss for the period | (17,021) | (17,021) | ||||
Total comprehensive loss for the period | 9,482 | (17,021) | (7,539) | |||
Share based payment transactions | 749 | 6,465 | 80 | 7,294 | ||
Reclassification of warrants | 1,010 | 1,010 | ||||
Balance at the end at Jun. 30, 2022 | £ 16 | £ 249,103 | £ 80,271 | £ (267,064) | £ 62,326 |
General information_2
General information | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
General information | ||
General information | 1 General information Vertical Aerospace Ltd (the “Company”, or the “Group” if together with its subsidiaries) is incorporated under the Companies Law (as amended) of the Cayman Island. The address of its principal executive office is: Unit 1 Camwal Court, Bristol, United Kingdom. The Company’s shares are listed on the New York Stock Exchange. The ultimate controlling party is Stephen Fitzpatrick. These financial statements are presented in pounds sterling and all values are rounded to the nearest thousand (£’000) except when otherwise indicated. These financial statements were approved by the board of directors on August 4, 2022. Principal activities The principal activity of the Company and its wholly owned subsidiary, Vertical Aerospace Group Ltd (“VAGL”), is the development and commercialization of vertical take-off and landing electrically powered aircraft (“eVTOL”). The Group’s main operations are in the United Kingdom. | 1 General information Vertical Aerospace Ltd (the “Company”, or the “Group” if together with its subsidiaries) is incorporated under the Companies Law (as amended) of the Cayman Island. The address of its principal executive office is: Unit 1 Camwal Court, Bristol, United Kingdom. The Company’s shares are listed on the New York Stock Exchange. The Group’s main operations are in the United Kingdom. These financial statements are presented in Pounds Sterling and all values are rounded to the nearest thousand (£’000) except where otherwise indicated. These financial statements were authorised for issue by the Board of Directors on April 28, 2022. Principal activities The principal activity of the Company and its wholly owned subsidiary, Vertical Aerospace Group Ltd (“VAGL”), is the development and commercialization of vertical take-off and landing electrically powered aircraft (“eVTOL”). VAGL became a subsidiary of the Company on December 15, 2021 as part of the reorganization (as described below). Prior to December 15, 2021, the Company was a shell company with no active trade or business, and all relevant assets and liabilities, as well as income and expenses, were borne by VAGL. Therefore, the comparatives of 2020 and 2019 in these consolidated financial statements reflects the financial position and results of operations of VAGL. |
Significant accounting polici_5
Significant accounting policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Significant accounting policies | 2 Basis of preparation This unaudited condensed consolidated interim financial report for the half-year reporting period ended 30 June 2022 has been prepared in accordance with International Financial Reporting Standards (IFRS) applicable to the preparation of interim financial statements, IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021. The accounting policies adopted are consistent with those of the previous financial year. The unaudited condensed consolidated interim financial report has been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit and loss. Items included in the unaudited condensed consolidated interim financial report are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (‘the functional currency’). The financial information is presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s functional and presentation currency, and all amounts are presented in and rounded to the nearest thousand unless otherwise indicated. 2 Significant accounting policies(continued) Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % All intercompany balances and transactions have been eliminated in consolidation. Significant accounting policies and key accounting estimates The accounting policies adopted are consistent with those of the previous financial year, with the exception of newly adopted policies as discussed below. Going concern Management has prepared a cashflow forecast for the Group and have demonstrated the ability for the Group to continue as a going concern for the foreseeable future, being at least 12 months after approving this report. Therefore, management has prepared the financial information on a going concern basis. The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. It is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. The cashflow forecast for the Group demonstrates that the Group has sufficient cash to fund its activity for a period of 12 months from the date of approval of this report. Management has assessed the Group’s ability to continue as a going concern for 12 months by modelling several scenarios of varying activity going forward. Given the level of cash invested into the company and the current trajectory, management has concluded that the Group can continue as a going concern for at least 12 months from the date of approving this report. Changes in accounting policy A number of amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards a) Property, Plant and Equipment: Proceeds before Intended Use — Amendments to IAS 16 b) Onerous Contracts – Cost of Fulfilling a Contract — Amendments to IAS 37 2 Significant accounting policies (continued) c) Annual Improvements to IFRS Standards 2018-2020 d) Reference to the Conceptual Framework — Amendments to IFRS 3 . | 2 Significant accounting policies Presentation of these financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The capital reorganization On December 15, 2021 the Company consummated the capital reorganization pursuant to the Business Combination Agreement dated June 10, 2021. On the closing date the Company acquired all of the ordinary shares of VAGL, from VAGL shareholders, in consideration for the issuance of ordinary shares in the Company, by way of a share for share exchange (the “share acquisition”), such that VAGL became a wholly owned subsidiary of the Company. At the same time Broadstone (Broadstone Acquisition Corp., a Cayman Islands exempted company), a special purpose acquisition company, merged with and into Merger Sub (Vertical Merger Sub Ltd., a Cayman Islands exempted company). As a result of which (a) the separate corporate existence of Merger Sub ceased and Broadstone continued as the surviving company, (b) each issued and outstanding security of Broadstone was cancelled, in exchange for an equivalent security of the Company, (c) each issued and outstanding founder share was transferred to the Company, in consideration for one Company ordinary share. 2 Significant accounting policies (continued) Additionally, certain investors concurrently subscribed for and purchased £71,594 thousand of ordinary shares of the Company (“PIPE Financing”). The Business Combination is accounted for as a capital reorganization in accordance with IFRS. Under this method of accounting, Broadstone is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of the VAGL issuing shares at the closing of the Business Combination for the net assets of Broadstone as of the closing date, accompanied by a recapitalization. The reorganization, which was not within the scope of IFRS 3 since Broadstone did not meet the definition of a business, was accounted for within the scope of IFRS 2. Accordingly, the Company recorded a one-time non-cash expense of £84,712 thousand, recognized as a share listing expense, based on the excess of the fair value of Company shares issued considering a fair value of a share, at $10.68 per share over the fair value of Broadstone’s identifiable net assets (see note 7). The Business Combination generated gross cash proceeds of approximately £218,303 thousand, including £71,594 thousand proceeds from the PIPE Financing. This also included £141,981 thousand from Convertible Senior Secured Notes, consummated simultaneously with the Business Combination. Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The functional currency of the Company is US Dollars (‘$’ or ‘USD’) and the functional currency of VAGL is pounds sterling (‘£’ or ‘GBP’). The financial statements are presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s presentation currency. Items included in the financial statements are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (“the functional currency”). Cumulative translation adjustments resulting from translating foreign functional currency financial statements into GBP are reported within other reserves. All amounts are presented in and rounded to the nearest thousand unless otherwise indicated. Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % On October 31, 2021 the VAGL disposed of its 100% investment in Vertical Aerospace Engineering Limited for nominal consideration. 2 Significant accounting policies (continued) The consolidated financial statements incorporate the financial positions and the results of operations of the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the Company using consistent accounting policies. Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The rapid spread of COVID-19 caused volatility and disruption in financial markets and prompted governments and businesses to take unprecedented measures such as travel restrictions, quarantines, shelter-in-place orders, and business shutdowns. These measures resulted in the majority of the Group’s workforce working from home with a small number of teams remaining onsite. We continue to take actions as may be recommended by government authorities or in the best interests of our employees. Summary of significant accounting policies and key accounting estimates The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Going concern The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. Several scenarios have been modelled and it is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. However, given the level of cash invested into the company and the current trajectory, management has concluded that no material uncertainties exist about the Group’s ability to continue as a going concern for at least 12 months from the date of approving these financial statements. Changes in accounting policy The Group adopted the following standards and amendments for the first time from the annual reporting period commencing January 1, 2021: Interest Rate Benchmark Reform — phase 2 The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. No new accounting standards and interpretations that have been published and are not mandatory for December 31, 2022 reporting periods have been early adopted by the Group or are expected to have a material impact on the Group in current or future reporting periods. 2 Significant accounting policies (continued) Revenue recognition Revenues are minimal to the Group and are generated from the performance of engineering consultancy services to customers. IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS principles are applied using the following 5 step model: 1. Identify the contracts with the customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when or as the entity satisfies its performance obligations The revenue for the Group relates solely to engineering consultancy services and revenue is recognised once the Group has satisfied the performance conditions. The contracts that the Group enters into comprise payments when certain milestones are met. Revenue is recognised at each milestone event and only if the milestone is met. Government grants Government grants are recognised as Other operating income and are recognised in the period when the expense to which the grant relates is incurred. Grants are only recognised when there is a signed grant offer letter or equivalent from the government body and there is reasonable assurance that the Group will be able to satisfy all conditions of the grant. The Group is the recipient of R&D tax credits in the UK. These tax credits are presented within Other operating income. Receivables relating to government grants are presented in Trade and other receivables at their fair value. Research and development expenses Research expenditure is charged to profit or loss in the period in which it occurred. Development expenditure is recognised as an intangible asset when it is probable that the project will generate future economic benefit, considering factors such as technological, commercial and regulatory feasibility. Other development expenditure is charged to profit or loss in the period in which it occurred. Refer to note 3 Critical accounting judgements and key sources of estimation uncertainty for a discussion on the judgement of this classification. The amounts included in research and development expenses include staff costs for staff working directly on research and development projects and for expenses directly attributable to a research project, excluding software costs. 2 Significant accounting policies (continued) Finance income and costs Finance income and costs includes the fair value movement on publicly traded warrants and convertible loan notes. Finance expense includes interest payable and is recognised in profit or loss using the effective interest method. Interest income is recognised in profit or loss as it accrues, using the effective interest method. Foreign currency transactions and balances Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in profit or loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences arising from the consolidation of subsidiaries whose functional currency differs to the presentational currency of the group are recoded within other comprehensive income. The most important exchange rates that have been used in preparing the financial statements are: Closing rate as at December 31, 2021: USD $1 = GBP £0.7420 Average rate for the year ending December 31, 2021: USD $1 = GBP £0.7270 Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated. Tax The tax expense for the period comprises current tax and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. 2 Significant accounting policies (continued) Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Property, plant and equipment Property, plant and equipment is stated at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows: Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line Intangible assets Intangible assets are carried at cost, less accumulated amortization and impairment losses. Computer software licences acquired for use within the Company are capitalized as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Amortization Amortization is provided on intangible assets so as to write off the cost on a straight-line basis, less any estimated residual value, over their expected useful economic life as follows: Asset class Amortization method and rate IT software 3 years straight line 2 Significant accounting policies (continued) Business combinations and goodwill The purchase method is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values on the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets, including intangible assets acquired, is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the difference is recognised directly in profit or loss. Goodwill is stated at cost, less any accumulated impairment losses. Goodwill is tested annually for impairment or when there are indicators of impairment. Cash at bank Cash at bank is held on deposit with financial institutions located within the United Kingdom and is immediately available. Management has assessed the financial institutions that hold the Company’s cash at bank to be financially sound, with minimal credit risk in existence. Trade and other receivables Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established using an expected credit loss model as per the Group’s accounting policy for the impairment of financial assets. Other receivables represent amounts due from parties who are not customers and are measured at amortized cost. Trade and other payables Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at the transaction price and subsequently measured at amortized cost using the effective interest method. Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to profit or loss over the period of the relevant borrowing using the effective interest method. Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 2 Significant accounting policies (continued) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Leases Definition A lease is a contract, or part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (‘the underlying asset’) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset, if throughout the period of use, the company has the right to: Obtain substantially all the economic benefits from the use of the underlying asset, and; Direct the use of the underlying asset (for example, directing how and for what purpose the asset is used). Initial recognition and measurement The company initially recognizes a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where reasonably certain), expected amount of residual value guarantees, termination option penalties (where reasonably certain) and variable lease payments that depend on an index or rate. The right of use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs and an estimate of restoration, removal and dismantling costs. Subsequent measurement After the commencement date, the company measures the lease liability by: (a) Increasing the carrying amount to reflect interest on the lease liability; (b) Reducing the carrying amount to reflect the lease payments made; and (c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events. 2 Significant accounting policies (continued) Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are included in finance costs in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises. Right-of-use assets The related right-of-use asset is accounted for using the cost model in IFRS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of Assets as disclosed in the accounting policy in impairment. Short term and low value leases The company has made an accounting policy election, by class of underlying asset, not to recognize lease assets and lease liabilities for leases with a lease term of 12 months or less (short term leases). The company has made an accounting policy election on a lease-by-lease basis, not to recognize lease assets on leases for which the underlying asset is of low value. Lease payments on short term and low value leases are accounted for on a straight-line bases over the term of the lease or other systematic basis. Short term and low value lease payments are included in operating expenses. Impairment (non-financial assets) All assets are reviewed for impairment when there is an indicator of impairment. In addition, goodwill is reviewed for impairment at least annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. Share capital Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Employee Benefits A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. 2 Significant accounting policies (continued) For defined contribution plans, contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognized as employee benefit expense when they are due. Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as accruals and classified as current liabilities in the balance sheet. Share based payments — Enterprise Management Incentive and 2021 Incentive Plan The Company operates an equity-settled, share based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share options or shares). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the shares granted: ● including any market performance conditions (for example, an entity’s share price); ● excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and ● including the impact of any non-vesting conditions. Non-market performance and service conditions are included in assumptions about the number of shares that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. In addition, in some circumstances employees may provide services in advance of the grant date and therefore, the grant date fair value is estimated for the purposes of recognizing the expense during the period between service commencement period and grant date. At the end of each reporting period, the Company revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. See note 23 for further details. Other non-current share-based payments were made during the year as detailed within the significant accounting policy for the capital reorganization. Further information is included with the critical accounting judgements and key sources of estimation uncertainty. Financial instruments Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.The company recognizes financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are offset, and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. 2 Significant accounting policies (continued) Financial assets The Group’s financial assets include cash at bank and other financial assets. Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. Trade receivables are measured at their transaction price. For all financial assets the Group has the objective to hold financial assets in order to collect the contractual cash flows. The contractual terms of all the Group’s financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the outstanding amount. All financial assets are therefore measured at amortized cost. Impairment of financial assets — expected credit losses (“ECL”) All financial assets measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”), based on the difference between the contractual and expected cash flows The simplification available for financial instruments with a low credit risk (“low credit risk exemption”) is applied as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. Financial liabilities The Group’s financial liabilities include warrants, lease liabilities, convertible loans, trade and other payables, and other financial liabilities. Financial liabilities are classified as measured at amortized cost or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not at fair value through profit or loss, directly attributable transaction costs. Financial liabilities at FVTPL are measured at fair value and gains and losses resulting from changes in fair value are recognized in finance income/expenses. The Group only accounts for convertible loans and warrants as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost. An embedded derivative in a hybrid contract, with a financial liability or a non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. 2 Significant accounting policies (continued) Convertible Loans Convertible loans are bifurcated into a debt component and a conversion right if the latter is an equity instrument. The conversion right of a convertible loan is not an equity instrument but a liability if some conversion features of the loan lead to a conversion into a variable number of shares. In this case it has to be assessed if embedded derivatives need to be separated from the host contract. If this is the case, the remaining host contract is measured at amortized cost and the separated embedded derivative is measured at fair value through profit or loss until the loan is converted into equity or becomes due for repayment. The conversion features and other repayment options provided for in the contract are identified as a combined embedded derivative if they share the same risk exposure and are interdependent. Warrant Liabilities Public warrants are recognized as liabilities in accordance with IFRS 9 at fair value. The liabilities are subject to re-measurement at each balance sheet date until exercised. Private warrants linked to sales targets are recognised within equity as these satisfy |
Critical accounting judgement_2
Critical accounting judgements and key sources of estimation uncertainty | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Critical accounting judgements and key sources of estimation uncertainty | ||
Critical accounting judgements and key sources of estimation | 3 The preparation of the unaudited condensed consolidated interim financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial information and the reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve valuation of the Company’s stock-based compensation or consideration, including the fair value of common stock and market-based restricted stock units, derivative liabilities. This includes the modification of employee option plans as discussed in note 12. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Such estimates often require the selection of appropriate valuation methodologies and models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances. | 3 Critical accounting judgements and key sources of estimation uncertainty The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve valuation of the stock-based consideration, including the fair value of common stock and market-based restricted stock units, the valuations of warrant liabilities, derivative liabilities including convertible loan notes, and the valuation of call options. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Such estimates often require the selection of appropriate valuation methodologies and models and may involve significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances. Share acquisition — business combination under common control There is currently no guidance in IFRS on the accounting treatment for combinations among entities under common control. IAS 8 requires management, if there is no specifically applicable standard or interpretation, to develop a policy that is relevant to the decision-making needs of users and that is reliable. The entity first considers requirements and guidance in other international standards and interpretations dealing with similar issues, and then the content of the IASB’s Conceptual Framework for Financial Reporting (Conceptual Framework). Management has made a judgement and applied a method broadly described as predecessor accounting. The principles of predecessor accounting are: ● Assets and liabilities of the acquired entity are stated at predecessor carrying values. Fair value measurement is not required. ● No new goodwill arises in predecessor accounting. ● Any difference between the consideration given and the aggregate carrying value of the assets and liabilities of the acquired entity at the date of the transaction is included in equity. The share acquisition of all of the ordinary shares of VAGL has been considered as a business combination under common control for the purpose of preparation of these consolidated financial statements and resulted in VAGL's operations and all of its net assets being recognized by the Company at their historical net book values. However, these consolidated financial statements may not reflect the presentation of equity movements of VAGL for the period prior to the share acquisition.I Share-based Payments Judgments were made in determining the valuation of shares prior to the business combination, including in relation to the issuance of Z-Shares to American Airlines (“American”) on June 10, 2021, using the following methods: For periods prior to the business combination, a probability-weighted model using option pricing methods (Black-Scholes) has been used. For valuations as at, or after December 16, 2021 the market value of the publicly traded share has been used. The issuance of Class Z-Shares to American The issuance of Class Z-Shares to American was concluded to be a stand-alone transaction. The transaction ensured that American had an equity interest in VAGL in the event that the business combination did not complete and provided an incentive for American to invest in the PIPE. As a transaction in the Company’s own stock this would generally be within scope of IAS 32, however the compensatory nature of the transaction required consideration of other IFRS guidance, specifically IFRS 2. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) The valuation of the class Z-Shares took considered the following substantive terms and features: ● Transfer restrictions and discount for lack of marketability ● Economic rights and entitlements ● Potential right to exchange into 6,125,000 Company ordinary shares upon closing of merger Two probability weighted scenarios were considered: a) the Z-Shares convert into to 6,125,000 shares in the Company, subject to lock up and call option, or b) they remain shares of VAGL if the business combination did not complete. An expense of £16,739 thousand was recognised on June 10, 2021 based on the total fair value of the class Z-Shares issued to American over the total consideration received (£nil). See note 7 for further detail. The Company was granted a call option over 50% of the Company shares that the Z-Share converted into at an exercise price of $18 per share and a maximum term to exercise of four years. The fair value of this option reflected in arriving at the aforementioned probability weighted valuation of the Z-Shares issued. Convertible Loans and Embedded Derivatives The initial fair value of the convertible loans (before bifurcation of the embedded derivatives) as well as the subsequent measurement of the embedded derivatives is calculated using a binomial lattice valuation model and many of the input parameters are not observable. This valuation is judgmental. For detailed information on the convertible loans and its embedded derivatives, a description of the valuation model and the input parameters, see note 24. Warrants Public warrants relate to those warrants that commenced trading on the NYSE on December 16, 2021. Prior to that date, there was no public trading market for Company ordinary shares or warrants. Private warrants include those issued upon consummation of the business combination to American, members of the Avolon Group (“Avolon”), Virgin, and Mudrick Capital Management L.P (“Mudrick”). Private options were issued to Marcus Waley-Cohen (“MWC”). The fair value of the Private Warrants is deemed to be equal to the fair value of the Public Warrants except where the terms of Private Warrants materially differ to Public Warrants. Differences exist, with regards to certain warrant, in the maximum term to exercise as well as the strike price. An option pricing model (Black-Scholes Model) therefore been used to derive the fair value of Private Warrants. This valuation is judgmental. For detailed information on the warrants, a description of the valuation model and the input parameters, see note 21. On December 16, 2021 Private Warrants were issued to Avolon, American and Virgin Atlantic Limited (“Virgin”). Warrants issued to Avolon and American were exercised immediately after issuance. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) The warrants meet the fixed-for-fixed criterion and are therefore recognised within other reserves until the point of exercise. The amount classified to other reserves on initial recognition reclassified to share capital and share premium upon exercise. Private Warrants and Options issued to Mudrick and MWC, along Public Warrants, are accounted for as liabilities in accordance with IAS 32, subject to ongoing mark-to-market adjustments. For more information see note 21. Capitalization of development costs The business incurs a significant amount of research and development cost. The point in time at which the business begins capitalization of any project is a critical accounting judgement. The business assesses the technology readiness level of its research and development projects, along with the commercialization potential and guidance from the accounting standards to assess whether a particular development project should be capitalized or not. Costs for internally generated research and development are capitalized only if: ● the product or process is technically feasible; ● adequate resources are available to successfully complete the development; ● the benefits from the assets are demonstrated; ● the costs attributable to the projects are reliably measured; ● the Group intends to produce and market or use the developed product or process and can demonstrate its market relevance. Management has concluded that in 2021 and 2020, none of the projects met the requirements for capitalization. While Management recognises a market for the use of eVTOLs, the market is not yet established or proven. Additionally, the Group is developing new technologies and there are still uncertainties about the successful completion of this development. If costs relating to a research and development project are not capitalized, they are expensed as incurred and presented in Research and Development expenses in profit or loss (Note 7). |
Operating segments
Operating segments | 12 Months Ended |
Dec. 31, 2021 | |
Operating segments | |
Operating segments | 4 Operating segments The Group operates as a single operating segment and one reporting segment, being the development and commercialization of eVTOL technology. An operating segment is defined as a component of an entity for which discrete financial information is available and whose results of operations are regularly reviewed by the chief operating decision maker. The Chief Operating Decision Maker, being the Board of Directors, reviews all financial information as a single segment. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2021 | |
Revenue | |
Revenue | 5 Revenue The analysis of the company’s revenue for the year from continuing operations is as follows: 2021 2020 2019 £ 000 £ 000 £ 000 Rendering of engineering consultancy services 132 87 70 All revenue is generated within the UK, based on the location where the engineering consultancy are delivered. |
Other operating income_2
Other operating income | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other operating income | ||
Other operating income | 4 The analysis of the Group’s other operating income for the period is as follows: 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Government grants 1,214 8,999 R&D tax credit 2,193 687 3,407 9,686 Government grants At June 30, 2022, the Group had a receivable of £1,241 thousand (June 30, 2021: £8,943 thousand) from the Aerospace Technology Institute (ATI) relating to the research and development of eVTOL technologies. The grant is made to fund research and development expenditure and is recognised in the period to which the expense it is intended to fund relates. R&D tax credit scheme The R&D tax credit relates to the UK’s research and development expenditure credit scheme. | 6 Other operating income The analysis of the Group’s other operating income for the year is as follows: 2021 2020 2019 £ 000 £ 000 £ 000 Government grants 8,829 1,989 — R&D tax credit 2,388 328 399 Other 135 — — 11,352 2,317 399 Government grants Government grants relate to amounts receivable from the Aerospace Technology Institute (ATI) relating to the research and development of eVTOL technologies. The grant is made to fund research and development expenditure and is recognised in profit or loss in the period to which the expense it is intended to fund relates. R&D tax credit scheme The R&D tax credit relates to the UK’s research and development expenditure credit scheme. |
Expenses by nature_2
Expenses by nature | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Expenses by nature | ||
Expenses by nature | 5 Included within administrative expenses, research and development expenses and related party administrative expenses are the following expenses. 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Staff costs excluding share-based payment expenses 12,425 5,546 Share based payment expenses 7,294 16,815 Research and development components, parts and tooling 4,771 2,478 Research and development consultancy 7,936 625 Consultancy costs 990 1,501 Legal and financial advisory costs 1,476 2,060 Software costs 1,438 497 Related party administrative expenses — 127 Insurance expenses 1,729 15 Other administrative expenses 3,774 1,670 Expense on short term leases 8 30 Depreciation expense 260 162 Amortisation expense 572 168 Depreciation on right of use assets — Property 189 70 Total administrative and research and development expenses 42,862 31,764 Staff costs excluding share-based payment expenses relates primarily to salary and salary related expenses, including social security and pension contributions. Included within staff costs is £6,689 thousand directly and wholly attributable to research and development activity (June 30, 2021: £3,979 thousand). Certain amounts in the prior period have been reclassified to conform to the current period presentation. | 7 Expenses by nature Included within administrative expenses and research and development expenses are the following expenses. 2021 2020 2019 £ 000 £ 000 £ 000 Staff costs excluding share-based payment expenses 16,230 8,445 3,642 Share based payment expenses 111,996 96 — Warrant expense (note 21) 111,611 — — Legal and financial advisory transaction costs 7,350 — — Software costs 1,506 579 191 Depreciation expense 377 279 89 Depreciation on right of use assets — 176 140 171 Amortisation expense 387 263 70 Consultancy costs 13,144 745 518 Expense on short term leases 49 64 8 Research and development components 11,378 2,555 2,096 Related party administrative expenses 108 144 144 Marketing expenses 3,918 — — Stamp duty 6,669 — — Other administrative expenses 3,760 565 922 Total administrative and research and development expenses 288,659 13,875 7,851 Staff costs excluding share-based payment expenses relates primarily to salary and salary related expenses, including social security and pension contributions. Research and development components, combined with £12,913 thousand of staff costs related to research and development activity, represent the amount spent on hardware and testing for building eVTOL prototypes totalling £24,291 thousand. 7 Expenses by nature (continued) Legal and financial advisory expenses relate primary to the Business Combination transaction. Share based payment expense includes the following: 2021 £ 000 Issuance of Z-Shares to American 16,739 Capital reorganization 84,712 Issuance of PIPE shares to suppliers and partners 10,389 Enterprise Management Initiative 156 111,996 Issuance of Z-Shares to American On June 10, 2021, VAGL and American executed a subscription agreement by which American subscribed for 5,804 class Z-Shares of VAGL for total consideration of £0.06. Z-Shares refer to Z ordinary shares of £0.00001 par value that did not carry the right to receive distributions. If the Business Combination did not complete American would have retained 5,804 Z-Shares, carrying dividends and voting rights. The value of the shares can be used by reference to the pre-money valuation of the Company; adjusted for the actual share price as at June 10, 2021 ($9.93); reflecting the American shareholding percentage (3.96%); and a discount for lack of marketability. Upon closing of the Business Combination, American exchanged 100% of its class Z-Shares for 6,125,000 common shares of the Company, subject to a four-year lock-up. 50% of the common shares held by American are subject to a call option exercisable by the Company at a $18 per share exercise price; exercisable in two tranches until June 2025. The value of these shares was derived as at June 10, 2021 using a Black-Scholes Model and based upon actual share price ($9.93). The following inputs were used: Risk-free rate 0.75 % Dividend yield — Volatility 75 % The lock up agreement was considered part of the same contract for the subscription of Z-Shares, with a discount for lack of marketability applied, and the call option considered. Business Business combination combination does completes not complete £’000 £’000 Value of Z-Shares as at June 10, 2021 30,105 2,558 Less valuation of call option (8,121) — Fair value of Z-Shares as at June 10, 2021 21,984 2,558 A probability weighted calculation as at June 10, 2021 concluded that Business Combination was likely to be completed, giving a probability weighted valuation of £16,739 thousand, recognised as an expense and within share premium of VAGL. 7 Expenses by nature (continued) A valuation of £19,616 thousand would have been derived had the Black-Scholes Model used a volatility assumption of 50%, with reasonable changes in all other inputs having an immaterial impact. Capital reorganization The difference in the fair value of the shares issued by the Company over the value of the net monetary assets of the Broadstone represented a listing service, and the cost of the listing service was recognized as an expense upon consummation of the Business Combination Agreement. 2021 £’000 Market value of 9,203,984 ordinary shares ($10.68 per share) 74,265 Cash acquired 4,728 Warrants acquired (15,701,067 warrants at $1.04 per warrant) (11,997) Accounts payable acquired (2,289) Add net liabilities acquired (9,558) Foreign exchange differences 671 Charge for listing services 83,152 An additional £1,572 thousand was recognised in relation to the issuance of private options to MWC, giving a total charge of £84,712 thousand. Issuance of PIPE shares to suppliers and partners Upon consummation of the Business Combination the Company recognised an expense £10,389 thousand in relation to the issuance of PIPE shares to certain suppliers and partners for net proceeds below market value. |
Finance income (costs)
Finance income (costs) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Finance income/(costs) | ||
Finance income/(costs) | 6 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Interest paid on convertible loan notes (7,005) — Interest on loans from related parties — (483) Foreign exchange loss (12,981) — Fair value movements — (3) Interest expense on leases (67) (34) Other (10) — Total finance costs (20,063) (520) 6 Finance income/(costs) (continued) 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Fair value movements on convertible loan notes (note 13) 38,124 — Fair value movements on warrant liabilities (note 11) 4,373 — Total finance income 42,497 — Interest on loans from related parties represented the interest charges by Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. | 8 Finance income/(costs) 2021 2020 2019 £ 000 £ 000 £ 000 Interest on loans from related parties (483) (709) — Bad debt write-off (14) — (15) Fair value losses — (18) — Interest expense on leases (77) (74) (46) Other (1) (6) (5) Total finance costs (575) (807) (66) Fair value gains 32,578 — — Other 12 — — Total finance income 32,590 — — Total finance income/(costs) 32,015 (807) (66) Interest on loans from related parties represents the interest charged by Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Fair value movements include a fair value gain on public and private warrants in issue of £6,817 thousand (note 21) in addition to a fair value gain on the Convertible Senior Secured Notes of £26,876 thousand (note 25). Other finance costs include discount unwind on provisions for dilapidations. |
Loss per share_2
Loss per share | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loss per share | ||
Loss per share | 7 Basic earnings per share, in this case a loss per share, is calculated by dividing the loss for the period attributable to ordinary equity holders of the parent by the number of ordinary shares outstanding. Because a net loss for all period presented has been reported, diluted loss per share is the same as basic loss per share. Therefore, all potentially dilutive common stock equivalents are antidilutive and have been excluded from the calculation of net loss per share. The calculation of loss per share is based on the following data: 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Net loss for the period (17,021) (22,557) £ £ Basic and diluted loss per share (0.10) (0.20) No. of shares No. of shares Weighted average issued shares 178,329,218 115,155,683 | 9 Loss per share Basic earnings per share, in this case a loss per share, is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the number of ordinary shares outstanding. During the year the number of ordinary or potential ordinary shares outstanding increased because of a share issue. Therefore, the calculation of basic and diluted earnings per share for all periods presented has been adjusted retrospectively. Because a net loss for all period presented has been reported, diluted loss per share is the same as basic loss per share. Therefore, all potentially dilutive common stock equivalents are anti-dilutive and have been excluded from the calculation of net loss per share. The calculation of loss per share is based on the following data: 2021 2020 2019 £ 000 £ 000 £ 000 Net loss for the period (245,224) (12,326) (7,484) £ £ £ Basic and diluted loss per share (1.98) (0.12) (0.07) No. of shares No. of shares No. of shares Weighted average issued shares 124,130,921 99,904,427 99,904,427 |
Taxation
Taxation | 12 Months Ended |
Dec. 31, 2021 | |
Taxation | |
Taxation | 10 Taxation Tax credited /(charged) in profit or loss 2021 2020 2019 £ 000 £ 000 £ 000 Current taxation UK corporation tax — (4) 30 The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2020 — The differences are reconciled below: 2021 2020 2019 £ 000 £ 000 £ 000 Loss before tax (245,224) (12,322) (7,514) Corporation tax benefit at standard rate 46,593 2,341 1,428 Decrease in tax benefit from effect of expenses not deductible in determining taxable profit/(loss) (92) (135) — Decrease in tax benefit from tax losses for which no deferred tax asset was recognised (46,501) (841) — Decrease in tax benefit arising from group relief tax reconciliation — (1,369) (1,428) Deferred tax credit from unrecognised temporary difference from a prior period — — 30 Total tax benefit/(expense) — (4) 30 The main rate of UK corporation tax for the years to December 31, 2020 and December 31, 2021 was 19%. 10 Taxation (continued) At the March Budget 2021, the UK government announced that the Corporation Tax main rate (for all profits except ring fence profits and profits under £50 thousand) for the years starting April 1, 2023 be 25%. No deferred tax assets or liabilities have been recognised as the Group has a surplus of UK tax losses which offset in the same jurisdiction as any deferred tax liabilities. A deferred tax asset for the surplus tax losses has not been recognised as the Group has not yet been profitable and therefore there is uncertainty over the availability of future taxable profits against which to utilise the tax losses. Unused potential tax losses for which no deferred tax asset has been recognised as at December 31, 2021 were estimated as £250,500 thousand (2020: £4,641 thousand). |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, plant and equipment | |
Property, plant and equipment | 11 Property, plant and equipment Leasehold improvements Office equipment Total £ 000 £ 000 £ 000 Cost or valuation At January 1, 2020 1,350 304 1,654 Additions 18 137 155 December 31, 2020 1,368 441 1,809 Additions 162 628 790 December 31, 2021 1,530 1,069 2,599 Depreciation At January 1, 2020 32 76 108 Charge for year 174 105 279 At December 31, 2020 206 181 387 Charge for the year 168 210 378 At December 31, 2021 374 391 765 Net book value At December 31, 2021 1,156 678 1,834 At December 31, 2020 1,162 260 1,422 Leasehold improvements represent improvements to leased property in Bristol, UK. All property, plant and equipment is attributable to the UK. |
Right of use assets
Right of use assets | 12 Months Ended |
Dec. 31, 2021 | |
Right of use assets | |
Right of use assets | 12 Right of use assets Leasehold Property £ 000 Cost or valuation At January 1, 2020 and 31 December 2020 1,445 Additions 1,084 At December 31, 2021 2,529 Depreciation At January 1, 2020 243 Charge for year 140 At December 31, 2020 383 Charge for the year 177 At December 31, 2021 560 Net book value At December 31, 2021 1,969 At December 31, 2020 1,062 The right of use assets are leasehold properties at Camwal Court, Bristol, UK and at Cotswold Airport, Kemble, UK. Further information on the lease liability of this lease can be found in Note 18 Leases. |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2021 | |
Intangible assets | |
Intangible assets | 13 Intangible assets Goodwill IT software Total £ 000 £ 000 £ 000 Cost or valuation At January 1, 2020 1,473 682 2,155 Additions — 233 233 At December 31, 2020 1,473 915 2,388 Additions — 2,565 2,565 At December 31, 2021 1,473 3,480 4,953 Amortisation At January 1, 2020 — 95 95 Amortisation charge — 263 263 At December 31, 2020 — 358 358 Amortisation charge — 387 387 At December 31, 2021 — 745 745 Net book value At December 31, 2021 1,473 2,735 4,208 At December 31, 2020 1,473 557 2,030 The amortisation charge of £387 thousand (2020: 263 thousand) is shown in Administrative expenses. All intangible assets are attributable to the UK. IT software is third party software licences which includes perpetual licences and implementation costs. 13 Intangible assets (continued) The carrying amounts of the software was reviewed at the reporting date and management determined that there were no indicators of impairment. The goodwill was recognised on the acquisition of Vertical Advanced Engineering Ltd in July 2019 and related to the Formula 1 approach to the use materials and technologies. The individuals with the specific skill set in relation to this since became embedded within VAGL, along with their respective ways of working. Management views the business as one cash generating unit (‘CGU’) being the commercialization and development of eVTOL technologies. Management have performed a valuation exercise as part of the capital reorganization and has calculated the fair value of the business, less cost to sell, which has demonstrated that there is no indication of impairment. |
Business disposal
Business disposal | 12 Months Ended |
Dec. 31, 2021 | |
Business disposal | |
Business disposals | 14 Business disposal On October 31, 2021, the Group disposed of 100% of the share capital of Vertical Advanced Engineering Ltd for nominal consideration. The net assets of Vertical Advanced Engineering Ltd were £102 thousand as at this date. |
Trade and other receivables_2
Trade and other receivables | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other receivables | ||
Trade and other receivables | 8 June 30, December 31, 2022 2021 £ 000 £ 000 Government receivables 7,440 5,415 Prepayments 4,203 6,571 Other receivables 2,514 672 14,157 12,658 Included within Government receivables is £4,909 thousand for the R&D tax credit receivable (December 31, 2021: £2,716 thousand). | 15 Trade and other receivables December 31, December 31, 2021 2020 £ 000 £ 000 Government receivables 5,415 1,989 Prepayments 6,571 733 Other receivables 672 810 12,658 3,532 Included within Government receivables is £2,716 thousand for the R&D tax credit receivable (2020: £328 thousand) and £2,595 thousand for VAT receivable (2020: £6 thousand). Prepayments includes £3,805 thousand in relation to insurances (2020: £nil). The fair value of trade and other receivables classified as financial instruments are disclosed in note 25 Financial instruments. Expected credit losses were not significant in 2021 or 2020. The Group’s exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is disclosed in note 26 Financial risk management and impairment of financial assets. |
Share capital and other reserve
Share capital and other reserves | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share capital and reserves | ||
Share capital and other reserves | 9 Allotted, called up and fully paid shares June 30, December 31, 2022 2021 No. £ No. £ Ordinary of $0.0001 each 209,285,392 15,814 209,135,382 15,804 209,285,392 15,814 209,135,382 15,804 In addition 101,350,565 shares had been authorised for allotment at June 30, 2022. Other reserves During the period other reserves increased by £1,010 thousand as a result of the reclassification of warrants (note 11) and £6,465 thousand as a result of the modification of the EMI scheme (note 12); and £9,482 thousand reflecting cumulative translation differences. Share Premium On June 5, 2022 a total of 150,000 shares were issued resulting in increase in share premium of £749 thousand. | 16 Share capital and other reserves Allotted, called up and fully paid shares December 31, December 31, 2021 2020 No. £ No. £ A ordinary of £0.00001 each — — 100,000 1.00 B ordinary of £0.00001 each — — 4,832 0.05 Ordinary of $0.0001 each 209,135,382 15,804 — — 209,135,382 15,804 104,832 1.05 16 Share capital and other reserves (continued) As part of the Business Combination 100% of VAGL shares (146,749) were acquired by the Company in exchange for the payment, issue and delivery of 177,762,797 Company shares to VAGL shareholders. This included the Z-Shares issued to American on June 10, 2021. At the time there was no IFRS guidance on the accounting treatment for combinations among entities under common control. This transaction has been recorded at the nominal value of shares issued, with the excess premium paid recorded within other reserves. Of the 177,762,797 company shares issued in exchange to VAGL shareholders, 35,000,000 company shares held by VAGL shareholders are subject to an earn-out mechanism (the “Earn Out Shares”) that would be released from restriction upon fulfilment of certain share price milestones being satisfied prior to the fifth-year anniversary of the consummation of the Business Combination Agreement. Failure to achieve such milestones will result in forfeiture of the Earn Out Shares. The Company has determined that the fair value of the Earn Out Shares should be accounted for as a component of the deemed cost of the listing services upon consummation of the Business Combination, as disclosed within Note 7 in the section entitled “Capital reorganization”. The Company also determined that no separate accounting recognition was necessary in respect of the Earn Out Shares as the fair value of the Earn Out Shares will be inherently reflected within the quoted price of Broadstone’s shares, in respect of the Earn Out Shares’ potential dilutive impact, used in valuing the consideration given to Broadstone’s shareholders to derive the deemed cost of the listing services. A total of 9,400,000 ordinary shares were also issued to PIPE investors upon consummation of the business transaction with 9,203,984 public and sponsor shares issued and outstanding Ordinary shares have full voting rights, full dividend rights. A ordinary shares had full voting rights, full dividend rights. B ordinary shares had no voting or dividend rights and have rights to capital distribution on liquidation on par with A ordinary shares. Options have been granted to employees to be able to acquire B shares. Refer to note 23 Share-based payments. Share premium and other reserves Movements in reserves are shown below Share Premium Other Reserves £000 £000 As at January 1 — 4,117 Issuance of Z-Shares to American (note 7) — 16,739 Debt to equity conversion of related party loan (note 27) — 9,000 Debt to equity conversion of Microsoft and Rocket loan — 25,000 Transfer of intergroup share capital — (15) Share acquisition — 50,724 Cumulative translation differences — (85) Issuance of warrants to American, Avolon and Virgin (note 21) 103,053 8,558 Capital reorganization (note 7) 74,265 — PIPE investment 71,036 — As at December 31 248,354 63,314 16 Share capital and other reserves (continued) Share premium The difference in the fair value of the shares issued by the Company over the value of the net monetary assets of the Broadstone gives rise to share premium upon consummation of the Business Combination Agreement. In addition, upon consummation of the Business Combination 9,400,000 ordinary shares at $0.0001 par value were issued to PIPE investors at $10 per share giving rise to share premium of £71,036 thousand. See note 7 for further details As at December 31, 2021 warrants issued to American and Avolon were issued and exercised. The excess of the fair value of these warrants over the par value of the shares issued is recognised in share premium. See note 21 for more details. Other reserves American held 5,804 Z-Shares in VAGL immediately prior to the Business Combination. As part of the consideration for the acquisition of VAGL, American exchanged its existing shareholding in VAGL for 6,125,000 Ordinary Shares in the Company. See note 7 for more details. Upon consummation of the Business Combination, convertible loans issued to Microsoft and Rocket (totalling £25,000 thousand) and Stephen Fitzpatrick (£9,000 thousand) were converted into equity. As at December 31, 2021 warrants issued to Virgin were issued but not exercised. The fair value of these warrants is reflected within other reserves as they satisfy the “fix to fix” criterion as per IAS 32. See note 21 for more details. |
Loans from related parties
Loans from related parties | 12 Months Ended |
Dec. 31, 2021 | |
Loans from related parties | |
Loans from related parties | 17 Loans from related parties December 31, December 31, 2021 2020 £ 000 £ 000 Current loans and borrowings Loans from related parties — 6,309 Loans from related parties represents a loan from Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Movements in the year were as follows: 2021 2020 £ 000 £ 000 As at January 1 6,309 — Amounts advanced 2,945 5,600 Interest charged 483 709 Amounts repaid (737) — Conversion to equity (9,000) — As at December 31 — 6,309 17 The loan attracted an interest rate of 30% per annum (2020: 30%) and was repayable on demand. During the year loans was issued to Microsoft Corporation and Rocket Internet SE. Movements in the year were as follows: 2021 £ 000 As at January 1 — Amounts advanced 25,000 Interest charged — Amounts repaid — Conversion to equity (25,000) As at December 31 — The loans and borrowings classified as financial instruments are disclosed in note 25 Financial instruments. The Company’s exposure to market and liquidity risk; including maturity analysis, in respect of loans and borrowings is disclosed in note 26 Financial risk management and impairment of financial assets. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | 18 Leases The balance sheet shows the following amounts relating to lease liabilities: December 31, December 31, 2021 2020 £ 000 £ 000 Long term lease liabilities 1,580 846 Current lease liabilities 362 175 1,942 1,021 Lease liabilities maturity analysis A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below: December 31, December 31, 2021 2020 £ 000 £ 000 Less than one year 425 175 Within 2 – 1,653 700 More than 5 years 262 397 Total lease liabilities (undiscounted) 2,340 1,272 18 Leases (continued) Total cash outflows related to leases Total cash outflows related to leases are presented in the table below: December 31, December 31, Payment 2021 2020 £ 000 £ 000 Right of use assets 240 220 Low value leases — — Short term leases 49 64 Total cash outflow 289 284 A reconciliation of the lease creditors is shown below: £000 As at January 1, 2020 1,166 Interest element of payments to finance lease creditors (74) Principal element of payments to finance lease creditors (146) Interest expense on leases 74 As at December 31, 2020 1,021 Additions 1,084 Interest element of payments to finance lease creditors (78) Principal element of payments to finance lease creditors (162) Interest expense on leases 77 As at December 31, 2021 1,942 Lease creditors relate to a property in Bristol, UK. In addition, during 2021, the Company entered into a 5-year lease agreement for a property in Kemble, UK. The cost, depreciation charge and carrying value for the right-of-use asset is disclosed in note 12 Right of use assets. The interest expense on lease liabilities is disclosed in note 8 Finance costs. |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2021 | |
Provisions | |
Provisions | 19 Provisions Dilapidations £ 000 As at January 1, 2020 83 Unwinding of discount 5 As at December 31, 2020 88 Unwinding of discount 7 As at December 31, 2021 95 The dilapidation provision was recognized as a result of the obligation to return the leased property in Bristol, UK to its original condition at the end of the lease which currently expires in 2028. The provision is recognized at amortized cost with discount unwind being recognized each year. The provision is expected to be utilized at the end of the lease period. |
Trade and other payables_2
Trade and other payables | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other payables | ||
Trade and other payables | 10 Amounts falling due within one year: June 30, December 31, 2022 2021 £ 000 £ 000 Trade payables 1,861 6,715 Accrued expenses 7,145 26,358 Social security and other taxes 602 7,145 Outstanding defined contribution pension costs 177 9 9,785 40,227 Amounts falling due after more than one year: June 30, December 31, 2022 2021 £ 000 £ 000 Deferred transaction fee payable 6,632 5,975 The Group’s exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in note 15 Financial risk management and impairment of financial assets. | 20 Trade and other payables Amounts falling due within one year: December 31, December 31, 2021 2020 £ 000 £ 000 Trade payables 6,715 846 Accrued expenses 26,358 1,226 Amounts due to related parties — 56 Social security and other taxes 7,145 203 Outstanding defined contribution pension costs 9 70 40,227 2,401 Accrued expenses includes £9,666 thousand indirectly attributable financial and capital markets advisory fees. Social security and other taxes includes Stamp Duty payable of £6,669 thousand. Amounts falling due after more than one year: December 31, December 31, 2021 2020 £ 000 £ 000 Deferred transaction fee payable 5,975 — Due to the Business Combination transaction, the Group has deferred transaction fees payable at December 31, 2021. The Group’s exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in note 26 Financial risk management and impairment of financial assets. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2021 | |
Warrants | |
Warrants | 21 Warrants Warrants and options issued to Mudrick and MWC As at December 16, 2021 and December 31, 2021 the following warrants were issued but not exercised: Number Public Warrants 15,265,146 Mudrick Warrants 4,000,000 MWC Options 2,000,000 21,265,146 Recorded as a liability, the following shows the change in fair value during the year ended December 31, 2021: £ 000 January 1, 2021 — Additions 17,801 Change in fair value recognised in profit or loss (6,817) Foreign exchange movements (254) December 31, 2021 10,730 21 Warrants (continued) Public warrants may only be exercised for a whole number of shares. The public warrants will expire five years from the consummation of the Business Combination or earlier upon redemption or liquidation. Once the public warrants become exercisable, the Company may redeem the public warrants for redemption at a price of $0.01 per public warrant if the closing price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period. Each public warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share. The exercise price and number of common stock issuable upon exercise of the public warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation. The public warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the public warrants. Warrants issued to Virgin, American and Avolon On October 29, 2021, the Company entered into the Virgin Atlantic Warrant Instrument, which provides for a warrant over 2,625,000 Ordinary Shares issued immediately after the Share Acquisition Closing. As at December 31, 2021, these warrants remained outstanding and were valued at £8,558 thousand, within other reserves, using a Black-Scholes Model with the following inputs: December 31, 2021 Spot $ 10.68 Strike $ 10.00 Risk-free rate (%) 0.05 Dividend yield — Maximum term to exercise 4 Volatility (%) 50 Had 75% been used as an alternative yet feasible volatility input then a valuation of £11,907 thousand would have been derived as the entry to other reserves. Adjustments to the other inputs would have not derived a materially different valuation. Immediately after the Share Acquisition Closing, the Company entered into the American Warrant Instrument, which provides for a warrant over 2,625,000 Ordinary Shares that were both issued and exercised immediately after the Share Acquisition Closing. Immediately after the Share Acquisition Closing, the Company entered into the Avolon Warrant Instrument, which provides for warrants over 6,378,600 Ordinary Shares that were both issued and exercised immediately after the Share Acquisition Closing. Avolon were also issued with, and exercised, 3,765,000 commercial warrants by the Company as a result of Avolon entering into a firm commitment to place 100 aircraft with a prime carrier. 21 Warrants (continued) A contract asset has not been recognised as the customer has the ability to terminate the contract without penalty and the aircraft subject to the purchase order has not yet been certified, therefore an expense has been recognised as shown below: £ 000 American (2,625,000 warrants) 21,186 Avolon (6,378,600 warrants) 51,481 Avolon commercial (3,765,000 warrants) 30,386 Virgin (2,625,000 warrants) 8,558 111,611 |
Pension and other schemes
Pension and other schemes | 12 Months Ended |
Dec. 31, 2021 | |
Pension and other schemes | |
Pension and other schemes | 22 Pension and other schemes Defined contribution pension scheme The Group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Group to the scheme and amounted to £471 thousand (2020: £271 thousand). Contributions totalling £9 thousand (2020: £70 thousand) were payable to the scheme at the end of the year and are included in trade and other payables. |
Share-based payments_2
Share-based payments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-based payments | ||
Share-based payments | 12 Scheme details and movements On September 11, 2020, the VAGL implemented an Enterprise Management Incentive (“EMI”) scheme. An EMI scheme is a tax advantaged share scheme that can be operated by qualifying companies. The scheme comprised options over B ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. On March 15, 2022 the scheme was modified. This modification reflects the revised capital structure of the Company following completion of the Business Combination transaction. As part of this modification, all option holders exchanged their options held in VAGL for newly issued options in the Company. This modification resulted in a charge of £6,545 thousand, which is reflected in this financial information. 12 Share-based payments (continued) The movements in the number of EMI share options during the period were as follows: June 30, December 31, 2022 2021 Number Number Outstanding, start of period 19,670 16,817 Granted during the period — 3,147 Grant arising due to scheme modification 23,213,933 — Forfeited during the period (1,576,948) (294) Outstanding, end of period 21,656,655 19,670 In addition, Marcus Waley-Cohen (MWC) was granted 2,000,000 options during the period ending December 31, 2021. The original EMI share options granted were all granted prior to March 31, 2021. The modification that occurred on March 15, 2022 resulted in 23,213,933 additional replacement options being granted. The movements in the weighted average exercise price of share options during the period were as follows: June 30, December 31, 2022 2021 £ £ Outstanding, start of period 308.06 143.28 Granted during the period — 1,178.94 Grant arising due to scheme modification 0.23 — Forfeited during the period 0.83 204.00 Outstanding, end of period 0.19 308.06 The exercise price of share options granted during the period is based upon the modification of the scheme to reflect the revised capital structure of the Company. Outstanding share options Details of share options outstanding at the end of the period are as follows: June 30, December 31, 2022 2021 Weighted average exercise price (£) 0.19 308.06 Number of share options outstanding 21,656,655 19,670 Expected weighted average remaining vesting period (years) 2.64 1.12 The number of options which were exercisable at June 30, 2022 were 9,594,507 (December 31, 2021: 7,715) with exercise prices ranging from £0.03 to £1.18. 12 Fair value of options granted The weighted average fair value per option of options granted during the period at measurement date was £0.52 (December 31, 2021: £31.97). The option pricing model used was Black Scholes and the main inputs are set out in the table below. June 30, December 31, 2022 2021 Average share price at date of grant (£) 5.38 492.42 Expected volatility (%) 50.00 50.00 Vesting period in years 2.75 4.00 Risk-free interest rate (%) 1.25 0.28 Volatility Given the lack of share price history, volatility has been estimated with reference to other industry competitors, on a listed stock market, with a premium attached for various uncertainties. Share based payments charge During the period, a charge of £6,465 thousand was recognised within other reserves and £80 thousand within retained earnings for equity settled share-based payment transactions in relation to employees (June 30, 2021: £76 thousand). An additional £749 thousand was recognised with respect to third parties. Refer to note 5 Expenses by nature. | 23 Share-based payments Scheme details and movements On September 11, 2020, the VAGL implemented an Enterprise Management Incentive (“EMI”) scheme. An EMI scheme is a tax advantaged share scheme that can be operated by qualifying companies. The scheme comprised options over B ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. This scheme remained in existence as at December 31, 2021 and therefore the number and fair value of options presented in note 23 relate solely to this scheme. Subsequent to the year ended December 31, 2021 the scheme was modified. This modification reflects the revised capital structure of the Company following completion of the Business Combination transaction. As part of this modification, all option holders exchanged their options held in VAGL for newly issued options in the Company. Also subsequent to the year ended December 31, 2021, the Board of Directors adopted the 2021 Incentive Award Plan in order to facilitate the grant of cash and equity incentives, which is essential to our long-term success. The impact of the modification of the EMI scheme and the adoption of the 2021 Inventive Aware Plan is not reflected in these financial statements as both of these events occurred subsequent to the year ended December 31, 2021. During the year ended December 31, 2021 a total of 2,000,000 private options were awarded to Marcus Waley-Cohen. For more details see note 21 and note 27. 23 Share-based payments (continued) The movements in the number of EMI share options during the year were as follows: December 31, December 31, 2021 2020 Number Number Outstanding, start of period 16,817 — Granted during the period 3,147 16,817 Forfeited during the period (294) — Outstanding, end of period 19,670 16,817 The EMI share options granted were all granted prior to March 31, 2021, after which no new grants were made. The movements in the weighted average exercise price of share options during the year were as follows: December 31, December 31, 2021 2020 £ £ Outstanding, start of period 143.28 — Granted during the period 1,178.94 143.28 Forfeited during the period 204.00 — Outstanding, end of period 308.06 143.28 The exercise price of share options granted during the year is based upon the valuation of VAGL in contemplation of the Business Combination and the number of VAGL shares issued and outstanding at the time of grant. Outstanding share options Details of share options outstanding at the end of the year are as follows: 31 December 31 December 2021 2020 Weighted average exercise price (£) 308.06 143.28 Number of share options outstanding 19,670 16,817 Expected weighted average remaining vesting period (years) 1.12 1.13 The number of options which were exercisable at December 31, 2021 was 7,715 (2020: 7,635) with exercise prices ranging from £38.22 to £1,298.49. The range in exercise price reflects the valuation of VAGL as at the date when the respective options were granted. Fair value of options granted The weighted average fair value per option of options granted during the period at measurement date was £31.97 (2020: £6.70). 23 Share-based payments (continued) The option pricing model used was Black Scholes and the main inputs are set out in the table below. The date of grant of the options was between September 11, 2020 and March 12, 2021. December 31, December 31, 2021 2020 Average share price at date of grant (£) 492.42 40.36 Expected volatility (%) 50.00 50.00 Vesting period in years 4 1 Dividends — — Option life in years 4.25 4.00 Risk-free interest rate (%) 0.28 (0.13) The change in vesting period from December 31, 2020 to December 31, 2021 reflects the terms of the newly granted EMI share options during 2021. Volatility Given the lack of share price history and volatility, the volatility has been estimated with reference to other industry competitors, on a listed stock market, with a premium attached for the uncertainty around an unlisted investment. Share based payments charge During the year, a charge of £156 thousand was recognised for equity settled share-based payment transactions (2020: £96 thousand). Refer to note 7 Expenses by nature. |
Derivative financial liabilit_5
Derivative financial liabilities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Derivative financial liabilities | ||
Derivative financial liabilities | 13 Convertible Senior Secured Notes consists of the following: Mudrick £ 000 As at December 31, 2021 112,799 Fair value movements (38,124) Interest paid 7,005 Exchange differences on translation 10,770 As at June 30, 2022 92,450 On December 16, 2021 Mudrick Capital Management purchased Convertible Senior Secured Notes of an aggregate principal amount of £151,000 thousand ($200,000 thousand) for an aggregate purchase price of £145,000 thousand ($192,000 thousand). The Convertible Senior Secured Notes are initially convertible into up to 18,181,820 ordinary shares at an initial conversion rate of 90.9091 ordinary shares per £824 ($1,000). In accordance with IFRS 9, this is treated as a hybrid instrument and is designated it in entirety as fair value through profit or loss. The valuation methods and assumptions are shown in note 14. 13 Derivative financial liabilities (continued) The Company has elected pay interest in-kind at 9% per annum. Interest is paid semi-annually in arrears and on June 15, 2022 the Company authorised the payment of interest by increasing the nominal amount of the outstanding Convertible Senior Secured Notes by £7,005 thousand ($8,950 thousand). Several covenants exist including retention of $10 million cash. Accordingly, cash at bank includes £8,235 thousand deemed to be restricted as at June 30, 2022. | 24 Derivative financial liabilities Convertible Senior Secured Notes consists of the following: Mudrick £ 000 As at January 1, 2020 — As at December 31, 2020 — Issuance of Convertible Senior Secured Notes 141,981 Fair value movements (26,876) Foreign exchange movements (2,306) As at December 31, 2021 112,799 During the year ended December 31, 2021 additional convertible loan notes were issued to Microsoft Corporation and Rocket Internet, giving rise to proceeds of £25,000 thousand. These loans were converted into equity during the year. See note 17, Loans from related parties for more information. Concurrently with the consummation of the Business Combination, Mudrick purchased Convertible Senior Secured Notes of and from the Company in an aggregate principal amount of £151,000 thousand ($200,000 thousand) for an aggregate purchase price of £145,000 thousand ($192,000 thousand) (the “Purchase Price”). The Convertible Senior Secured Notes are initially convertible into up to 18,181,820 ordinary shares at an initial conversion rate of 90.9091 ordinary shares per £756 ($1,000) principal amount of Convertible Senior Secured Notes. 24 Derivative financial liabilities (continued) Upon the occurrence of a Fundamental Change, Mudrick has the right, at its option, to require us to repurchase for cash all or any portion of its Convertible Senior Secured Notes in principal amounts of £756 ($1,000), at a fundamental change repurchase price equal to the principal amount of the Convertible Senior Secured Notes to be repurchased plus, if repurchased before the second anniversary of issuance, certain make-whole premiums, plus accrued and unpaid interest. A fundamental change consists of a change in beneficial owner of the Company; the sale of all or substantially all of the assets or share capital of the Company; dissolution or liquidation of the Company; or NYSE de-listing. The Convertible Senior Secured Notes will bear interest at the rate of 7% per annum if the Company elects to pay interest in cash or 9% per annum if the Company elects to pay interest in-kind, by way of PIK Notes. Interest will be paid semi-annually in arrears. Upon the occurrence of an event of default, an additional 2.00% will be added to the stated interest rate. The Convertible Senior Secured Notes will mature on the fifth anniversary of issuance and will be redeemable at any time by the Company, in whole but not in part, for cash, at par plus, if redeemed before the second anniversary of issuance, certain make-whole premiums. A number of covenants exist in relation to the Company’s obligations with regard to payment of notes and interest; furnishing the trustee with exchange act reports; compliance with Section 13 or 15(d) of the Exchange Act; provision of an annual compliance certificate; relinquishing of the benefit or advantage of, any stay, extension or usury law; acquisition of notes by the Company; permitting any Company subsidiaries to become liable for the notes; limitation on liens securing indebtedness; limitation on asset sales; limitation on transactions with affiliates; limitation on restricted payments; retention of $10 million cash; guarantors; and material IP. No breaches have been identified during the year. Accordingly, cash at bank includes £7,420 thousand deemed to be restricted as at December 31, 2021. In accordance with IFRS 9, this is treated as a hybrid instrument and is designated it in entirety as fair value through profit or loss. Therefore, upon initial recognition the Company has not separated the convertible note into a host liability component (accounted for at amortized cost) and the derivative liability components (accounted for at fair value through profit or loss). The valuation methods and assumptions are shown in note 25. |
Financial instruments_2
Financial instruments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial instruments | ||
Financial instruments | 14 To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. Financial liabilities at fair value through profit and loss: June 30, 2022 December 31, 2021 £000 £000 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Convertible Senior Secured Notes — — 92,450 — — 112,799 Warrant liabilities 6,187 — — 10,730 — — 6,187 — 92,450 10,730 — 112,799 The fair value of financial instruments is deemed to be equivalent to the carrying value. Level 1: The fair value of financial instruments traded in active is based on quoted market prices at the end of the reporting period. As such, warrants issued but not exercised are valued with reference to the observable market price as at the period end date ($0.39 per warrant). Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for the issued Convertible Senior Secured Notes. The fair value of the convertible senior secured notes has been estimated using a binomial lattice framework. The following inputs have been used: June 30, 2022 December 31, 2021 Risk-free rate 3.00 % 1.25 % Dividend yield — — Volatility 52.5 % 52.5 % Credit spread 21.8 % 21.8 % No changes were made during the period ended June 30, 2022 to the valuation techniques applied as at December 31, 2021. | 25 Financial instruments Financial assets at amortized cost Carrying value Fair value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 Cash at bank 212,660 839 212,660 839 Trade and other receivables 672 810 672 810 213,332 1,649 213,332 1,649 The fair value of financial assets is based on the expectation of recovery of balances. All balances are expected to be received in full. 25 Financial instruments (continued) Financial liabilities at amortized cost: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Trade and other payables 45,717 2,128 45,717 2,128 Borrowings — 6,309 — 6,309 Lease liabilities 1,942 1,021 1,942 1,021 47,659 9,458 47,659 9,458 Financial liabilities at fair value through profit or loss: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Convertible Senior Secured Notes 112,799 — 112,799 — Warrant liabilities (Note 21) 10,730 — 10,730 — 123,529 — 123,529 — Warrants are traded in an active market and are therefore categorized in level 1 of the fair value hierarchy (see note 21). Convertible Senior Secured Notes (both host contract and embedded derivative) are categorized in level 3 of the fair value hierarchy (see note 24). Valuation methods and assumptions Financial liabilities at amortized cost The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material. Due to their short maturities, the fair value of the trade and other payables approximates to their book value. The total interest expense for financial liabilities not held at fair value through profit or loss is £747 thousand (2020: £801 thousand). 25 Financial instruments (continued) Financial liabilities at fair value through profit or loss The fair value of the convertible senior secured notes has been estimated using a binomial lattice framework in consideration of the American-option style nature of the embedded features. Company specific inputs include the expected probability and timing of future equity financing, in addition to the probability and timing of a future fundamental change. The following observable inputs have been used: December 31, 2021 Interest rate (%) 9.0 Risk-free rate (%) 1.25 Dividend yield — Volatility (%) 52.5 Credit spread (%) 21.8 As of December 16, 2021 an estimated fair value of £141,981 thousand was calculated as the issuance price of the convertible note and warrants (4% Original Issue Discount from £151,000 thousand face value). Specifically, management performed a calibration analysis, back solved for the implied credit spread such that the fair value of the convertible notes and warrants would reconcile with the £145,000 thousand issuance price as of December 16, 2021 along with other inputs such as the estimated volatility, term, dividend and risk-free rate. The implied credit spread, and the fair value of the convertible note were estimated to be 2,179 basis points and approximately £141,981 thousand, respectively, through this calibration process. As of December 31, 2021 an estimated a fair value of £112,799 thousand was calculated for the convertible note based on the following valuation inputs: ● Stock price: $6.73 based on the stock price observed for as at December 31, 2021 ● Risk free rate: 1.25% based on the US Treasury Yield interpolated to match the term input ● Volatility: 52.50% based on the estimated equity volatility as adjusted via a volatility haircut process ● Credit spread: 2,179 bps based on the estimated implied credit spread estimated ● Dividend yield: 0% based on management’s expectation Had the stock price traded higher, or a higher volatility been assumed then this would have resulted in a higher fair value being attributed to the instrument. |
Financial risk management and_5
Financial risk management and impairment of financial assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial risk management and impairment of financial assets | ||
Financial risk management and impairment of financial assets | 15 The Group’s activities expose it to a variety of financial risks including market risk, credit risk, foreign exchange risk and liquidity risk. Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations, arising principally from prepayments to suppliers and deposits with the Group’s bank. Also included in Cash at bank is £8,235 thousand deemed to be restricted as at June 30, 2022. The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was £9,248 thousand (December 31, 2021: £672 thousand) being the total of the carrying amount of financial assets, including contractual receivables but excluding R&D tax credits receivables and cash. The allowance account of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly. The Group provides for impairment losses based on estimated irrecoverable amounts determined by reference to specific circumstances and the experience of management of debtor default in the industry. On that basis, the loss allowance as at June 30, 2022 and December 31, 2021 was determined as £nil for trade receivables. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s financial position. The Group’s principal exposure to market risk is exposure to foreign exchange rate fluctuations. There are currently no currency forwards, options, or swaps to hedge this exposure. Foreign exchange risk The Group is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. The Group received funding in USD, and subsequently holds cash in both USD and GBP. The majority of the Group’s trading costs are in GBP. The Group also has supply contracts denominated in USD and EUR. The Group holds sufficient cash in both USD and GBP to satisfy its trading costs in each of these currencies. The Company may be exposed to material foreign exchange risk in subsequent period as a result of the significance of the USD denominated Convertible Senior Secured Notes in particular relative to USD cash deposits held (which were $47,999 thousand at June 30, 2022) and which are expected to decline as expenses are incurred until future funding is secured. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Group’s management uses short and long-term cash flow forecasts to manage liquidity risk. Forecasts are supplemented by sensitivity analysis which is used to assess funding adequacy for at least a 12-month period. The Company manages its cash resources to ensure it has sufficient funds to meet all expected demands as they fall due. 15 Financial risk management and impairment of financial assets (continued) Maturity analysis Between 2 and 5 After more than Within 1 year years 5 years Total 30 June 2022 £ 000 £ 000 £ 000 £ 000 Trade and other payables 9,785 6,730 — 16,515 Lease liabilities 426 1,515 168 2,109 Convertible senior secured notes — 92,450 — 92,450 10,211 100,695 168 111,074 31 December 2021 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 Capital management The Group’s objective when managing capital is to ensure the Group continues as a going concern; and grows in a sustainable manner. Given the ongoing development of eVTOL aircraft with minimal revenues, the Group relies on funding raised from the Business Combination transaction and other equity investors. Cash flow forecasting is performed on a regular basis which includes rolling forecasts of the Group’s liquidity requirements to ensure that the Group has sufficient cash to meet operational needs. | 26 Financial risk management and impairment of financial assets The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. Credit risk and impairment Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from prepayments to suppliers and distributors and deposits with the Group’s bank. Included in cash at bank is £10,388 thousand which is set aside to satisfy a short-term commitment that was satisfied during April 2022 and included within trade and other payables. Also included in Cash at bank is £7,420 thousand deemed to be restricted as at December 31, 2021. The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the balance sheet date was £672 thousand (2020: £2,799 thousand) being the total of the carrying amount of financial assets excluding cash, which includes trade receivables and other receivables. All the receivables are with parties in the UK. The allowance account of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly. The Group provides for impairment losses based on estimated irrecoverable amounts determined by reference to specific circumstances and the experience of management of debtor default in the industry. On that basis, the loss allowance as at December 31, 2021 and December 31, 2020 was determined as £nil for trade receivables. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s financial position. The Group’s principal exposure to market risk is exposure to foreign exchange rate fluctuations. There are currently no currency forwards, options, or swaps to hedge this exposure. Foreign exchange risk The Group is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. The Group received proceeds from the Business Combination transaction in USD, and subsequently holds cash in both USD and GBP. The majority of the Group’s trading costs are in GBP. The Group also has supply contracts denominated in USD and EUR. The Group holds sufficient cash in both USD and GBP to satisfy its trading costs in each of these currencies. In 2020 and 2021, the Group did not consider foreign exchange rate risk to have a material impact on the financial statements and therefore no sensitivity analysis is presented The Company may be exposed to material foreign exchange risk in subsequent years as a result of the significance of the USD denominated Convertible Senior Secured Notes in particular relative to USD cash deposits held (which were $145,098 thousand at December 31,2021) and which are expected to decline as expenses are incurred until future funding is secured. 26 Financial risk management and impairment of financial assets (continued) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Group’s management uses short and long-term cash flow forecasts to manage liquidity risk. Forecasts are supplemented by sensitivity analysis which is used to assess funding adequacy for at least a 12-month period. The Company manages its cash resources to ensure it has sufficient funds to meet all expected demands as they fall due. Maturity analysis Between 2 and After more than Within 1 year 5 years 5 years Total 2021 £ 000 £ 000 £ 000 £ 000 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 2020 Trade and other payables 2,401 — — 2,401 Lease liabilities 175 700 397 1,272 Other borrowings 6,309 — — 6,309 8,885 700 397 9,982 Capital management The Group’s objective when managing capital is to ensure the Group continues as a going concern; and grows in a sustainable manner. Given the ongoing development of eVTOL aircraft with minimal revenues, the Group relies on funding raised from the Business Combination transaction and other equity investors. Cash flow forecasting is performed on a regular basis which includes rolling forecasts of the Group’s liquidity requirements to ensure that the Group has sufficient cash to meet operational needs. |
Related party transactions_2
Related party transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related party transactions | ||
Related party transactions | 16 Key management personnel compensation Key management personnel are the members of the Board. June 30, June 30, 2022 2021 £ 000 £ 000 Salaries and other short term employee benefits 629 140 Payments to defined contribution pension schemes 8 7 Share-based payments 79 76 716 223 On September 11, 2020, the Group implemented an Enterprise Management Incentive scheme. The scheme comprises options over ordinary shares which are exercisable over a set period, dependent upon when the employee joined the scheme. Reflecting the Company structure at the time, the individuals eligible and included within this scheme were key employees at the time of option granting. Therefore, the charge recognised upon the vesting of these options is included within key management personal compensation. The impact of the modification to this scheme on March 15, 2022 is not included within key management personnel compensation. The total charge recognised in relation to this modification is £6,545 thousand, of which £4,434 thousand relates to individuals who are members of the Board as at the date of the modification. Summary of transactions with other related parties During the period ending June 30, 2022 Imagination Industries Ltd did not not not On 1 January, 2022 Domhnal Slattery was appointed chairman of the board of directors since January 2022. Domhnal Slattery is also the Chief Executive Officer of Avolon. | 27 Related party transactions Key management personnel In 2021 key management personnel are the members of the Board. In 2020 key management personnel are the CEO and the first line of reporting into the CEO, excluding support staff. There were 3 key management personnel in 2020. Key management compensation 2021 2020 2019 £ 000 £ 000 £ 000 Salaries and other short term employee benefits 244 374 181 Payments to defined contribution pension schemes 14 39 24 Share-based payments 156 92 — 414 505 205 In addition to the above, upon consummation of the Business Combination, Marcus Waley-Cohen was awarded 2,000,000 private options by the Company valued at £1,572 thousand (For more details see note 21). Summary of transactions with other related parties Imagination Industries Ltd During the year ended December 31, 2021, the Group received loan funds from Imagination Industries Ltd of £2,945 thousand (2020: £5,600 thousand). The loan incurred an interest charge at 30% (2020: 30%) of £483 thousand (2020: £709 thousand) and amounts repaid totalled £737 thousand (2020: £nil). During the year ended December 31, 2021, Imagination Industries Incubator Ltd charged the Group management fees of £108 thousand (2020: £144 thousand). The total balance outstanding at December 31, 2021 was £nil (2020: £72 thousand). At December 31, 2021 the total balance owed to Imagination Industries Ltd was £nil (2020: £6 thousand). Stephen Fitzpatrick During the year ended December 31, 2021 the Group agreed to reallocate the loan outstanding from Imagination Industries Ltd totalling £9,000 thousand to Stephen Fitzpatrick. The loan was released by Stephen Fitzpatrick in exchange for newly issued share capital in the Company. Upon consummation of the Business Combination, Stephen Fitzpatrick advanced $5m, recognised as £3,779 thousand, as part of the PIPE in exchange for 500,000 ordinary shares in the Company. 27 Related party transactions(continued) Dómhnal Slattery On January 1, 2022, Dómhnal Slattery, who is also the Chief Executive Officer of Avolon, was appointed Chairman of the Board of Directors of the Company. Vertical Advanced Engineering Ltd On October 31, 2021, Vertical Advanced Engineering Ltd was disposed of for nominal consideration. During the year ended December 31, 2021, the Group charged Vertical Advanced Engineering Ltd a total of £65 thousand for engineering design services. |
Ultimate controlling party
Ultimate controlling party | 12 Months Ended |
Dec. 31, 2021 | |
Ultimate controlling party | |
Ultimate controlling party | 28 Ultimate controlling party The ultimate controlling party is Stephen Fitzpatrick. |
Non adjusting events after the
Non adjusting events after the reporting period | 12 Months Ended |
Dec. 31, 2021 | |
Non adjusting events after the reporting period | |
Non adjusting events after the reporting period | 29 Non adjusting events after the reporting period No such events have occurred following the end of the reporting period. |
Significant accounting polici_6
Significant accounting policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Presentation of these financial statements | Presentation of these financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). | |
The capital reorganisation | The capital reorganization On December 15, 2021 the Company consummated the capital reorganization pursuant to the Business Combination Agreement dated June 10, 2021. On the closing date the Company acquired all of the ordinary shares of VAGL, from VAGL shareholders, in consideration for the issuance of ordinary shares in the Company, by way of a share for share exchange (the “share acquisition”), such that VAGL became a wholly owned subsidiary of the Company. At the same time Broadstone (Broadstone Acquisition Corp., a Cayman Islands exempted company), a special purpose acquisition company, merged with and into Merger Sub (Vertical Merger Sub Ltd., a Cayman Islands exempted company). As a result of which (a) the separate corporate existence of Merger Sub ceased and Broadstone continued as the surviving company, (b) each issued and outstanding security of Broadstone was cancelled, in exchange for an equivalent security of the Company, (c) each issued and outstanding founder share was transferred to the Company, in consideration for one Company ordinary share. 2 Significant accounting policies (continued) Additionally, certain investors concurrently subscribed for and purchased £71,594 thousand of ordinary shares of the Company (“PIPE Financing”). The Business Combination is accounted for as a capital reorganization in accordance with IFRS. Under this method of accounting, Broadstone is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of the VAGL issuing shares at the closing of the Business Combination for the net assets of Broadstone as of the closing date, accompanied by a recapitalization. The reorganization, which was not within the scope of IFRS 3 since Broadstone did not meet the definition of a business, was accounted for within the scope of IFRS 2. Accordingly, the Company recorded a one-time non-cash expense of £84,712 thousand, recognized as a share listing expense, based on the excess of the fair value of Company shares issued considering a fair value of a share, at $10.68 per share over the fair value of Broadstone’s identifiable net assets (see note 7). The Business Combination generated gross cash proceeds of approximately £218,303 thousand, including £71,594 thousand proceeds from the PIPE Financing. This also included £141,981 thousand from Convertible Senior Secured Notes, consummated simultaneously with the Business Combination. | |
Basis of preparation | Basis of preparation This unaudited condensed consolidated interim financial report for the half-year reporting period ended 30 June 2022 has been prepared in accordance with International Financial Reporting Standards (IFRS) applicable to the preparation of interim financial statements, IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021. The accounting policies adopted are consistent with those of the previous financial year. The unaudited condensed consolidated interim financial report has been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit and loss. Items included in the unaudited condensed consolidated interim financial report are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (‘the functional currency’). The financial information is presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s functional and presentation currency, and all amounts are presented in and rounded to the nearest thousand unless otherwise indicated. 2 Significant accounting policies(continued) Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % All intercompany balances and transactions have been eliminated in consolidation. | Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The functional currency of the Company is US Dollars (‘$’ or ‘USD’) and the functional currency of VAGL is pounds sterling (‘£’ or ‘GBP’). The financial statements are presented in pounds sterling (‘£’ or ‘GBP’), which is the Group’s presentation currency. Items included in the financial statements are measured using the currency of the primary economic environment in which the entity and its subsidiaries operate (“the functional currency”). Cumulative translation adjustments resulting from translating foreign functional currency financial statements into GBP are reported within other reserves. All amounts are presented in and rounded to the nearest thousand unless otherwise indicated. |
Basis of consolidation | Basis of consolidation Vertical Aerospace Ltd is the parent of the Group. Details of the material subsidiaries are as follows: Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % On October 31, 2021 the VAGL disposed of its 100% investment in Vertical Aerospace Engineering Limited for nominal consideration. 2 Significant accounting policies (continued) The consolidated financial statements incorporate the financial positions and the results of operations of the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the Company using consistent accounting policies. Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. | |
COVID-19 Pandemic | COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The rapid spread of COVID-19 caused volatility and disruption in financial markets and prompted governments and businesses to take unprecedented measures such as travel restrictions, quarantines, shelter-in-place orders, and business shutdowns. These measures resulted in the majority of the Group’s workforce working from home with a small number of teams remaining onsite. We continue to take actions as may be recommended by government authorities or in the best interests of our employees. | |
Going concern | Going concern Management has prepared a cashflow forecast for the Group and have demonstrated the ability for the Group to continue as a going concern for the foreseeable future, being at least 12 months after approving this report. Therefore, management has prepared the financial information on a going concern basis. The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. It is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. The cashflow forecast for the Group demonstrates that the Group has sufficient cash to fund its activity for a period of 12 months from the date of approval of this report. Management has assessed the Group’s ability to continue as a going concern for 12 months by modelling several scenarios of varying activity going forward. Given the level of cash invested into the company and the current trajectory, management has concluded that the Group can continue as a going concern for at least 12 months from the date of approving this report. | Going concern The Group is currently in the research and development phase of its journey to commercialization of eVTOL technology. It is generating minimal revenue. Management has prepared a cash flow model detailing the cash inflows and outflows of the Group. There are inherent risks in producing a forecast given the complexities of working in an emerging industry. For example, components needed for the development of the eVTOL prototypes may prove more costly than anticipated. As such, there can be no assurance that the timing and costs necessary to complete the development of eVTOL vehicles will prove accurate. Several scenarios have been modelled and it is evident that future cash is required for the Group to reach the point where it is due to start generating revenues in its business plan. However, given the level of cash invested into the company and the current trajectory, management has concluded that no material uncertainties exist about the Group’s ability to continue as a going concern for at least 12 months from the date of approving these financial statements. |
Changes in accounting policy | Changes in accounting policy A number of amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards a) Property, Plant and Equipment: Proceeds before Intended Use — Amendments to IAS 16 b) Onerous Contracts – Cost of Fulfilling a Contract — Amendments to IAS 37 2 Significant accounting policies (continued) c) Annual Improvements to IFRS Standards 2018-2020 d) Reference to the Conceptual Framework — Amendments to IFRS 3 . | Changes in accounting policy The Group adopted the following standards and amendments for the first time from the annual reporting period commencing January 1, 2021: Interest Rate Benchmark Reform — phase 2 The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. No new accounting standards and interpretations that have been published and are not mandatory for December 31, 2022 reporting periods have been early adopted by the Group or are expected to have a material impact on the Group in current or future reporting periods. |
Revenue recognition | Revenue recognition Revenues are minimal to the Group and are generated from the performance of engineering consultancy services to customers. IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS principles are applied using the following 5 step model: 1. Identify the contracts with the customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when or as the entity satisfies its performance obligations The revenue for the Group relates solely to engineering consultancy services and revenue is recognised once the Group has satisfied the performance conditions. The contracts that the Group enters into comprise payments when certain milestones are met. Revenue is recognised at each milestone event and only if the milestone is met. | |
Government grants | Government grants Government grants are recognised as Other operating income and are recognised in the period when the expense to which the grant relates is incurred. Grants are only recognised when there is a signed grant offer letter or equivalent from the government body and there is reasonable assurance that the Group will be able to satisfy all conditions of the grant. The Group is the recipient of R&D tax credits in the UK. These tax credits are presented within Other operating income. Receivables relating to government grants are presented in Trade and other receivables at their fair value. | |
Research and development expenses | Research and development expenses Research expenditure is charged to profit or loss in the period in which it occurred. Development expenditure is recognised as an intangible asset when it is probable that the project will generate future economic benefit, considering factors such as technological, commercial and regulatory feasibility. Other development expenditure is charged to profit or loss in the period in which it occurred. Refer to note 3 Critical accounting judgements and key sources of estimation uncertainty for a discussion on the judgement of this classification. The amounts included in research and development expenses include staff costs for staff working directly on research and development projects and for expenses directly attributable to a research project, excluding software costs. | |
Finance income and costs | 2 Significant accounting policies (continued) Finance income and costs Finance income and costs includes the fair value movement on publicly traded warrants and convertible loan notes. Finance expense includes interest payable and is recognised in profit or loss using the effective interest method. Interest income is recognised in profit or loss as it accrues, using the effective interest method. | |
Foreign currency transactions and balances | Foreign currency transactions and balances Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognised in profit or loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences arising from the consolidation of subsidiaries whose functional currency differs to the presentational currency of the group are recoded within other comprehensive income. The most important exchange rates that have been used in preparing the financial statements are: Closing rate as at December 31, 2021: USD $1 = GBP £0.7420 Average rate for the year ending December 31, 2021: USD $1 = GBP £0.7270 Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated. | |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment is stated at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows: Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line | |
Intangible assets | Intangible assets Intangible assets are carried at cost, less accumulated amortization and impairment losses. Computer software licences acquired for use within the Company are capitalized as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific software. Amortization Amortization is provided on intangible assets so as to write off the cost on a straight-line basis, less any estimated residual value, over their expected useful economic life as follows: Asset class Amortization method and rate IT software 3 years straight line | |
Business combinations and goodwill | Business combinations and goodwill The purchase method is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values on the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets, including intangible assets acquired, is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of net assets of the subsidiary acquired, the difference is recognised directly in profit or loss. Goodwill is stated at cost, less any accumulated impairment losses. Goodwill is tested annually for impairment or when there are indicators of impairment. | |
Cash at bank | Cash at bank Cash at bank is held on deposit with financial institutions located within the United Kingdom and is immediately available. Management has assessed the financial institutions that hold the Company’s cash at bank to be financially sound, with minimal credit risk in existence. | |
Trade and other receivables | Trade and other receivables Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established using an expected credit loss model as per the Group’s accounting policy for the impairment of financial assets. Other receivables represent amounts due from parties who are not customers and are measured at amortized cost. | |
Trade and other payables | Trade and other payables Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at the transaction price and subsequently measured at amortized cost using the effective interest method. | |
Borrowings | Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to profit or loss over the period of the relevant borrowing using the effective interest method. Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. | |
Provisions | 2 Significant accounting policies (continued) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. | |
Leases | Leases Definition A lease is a contract, or part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (‘the underlying asset’) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset, if throughout the period of use, the company has the right to: Obtain substantially all the economic benefits from the use of the underlying asset, and; Direct the use of the underlying asset (for example, directing how and for what purpose the asset is used). Initial recognition and measurement The company initially recognizes a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where reasonably certain), expected amount of residual value guarantees, termination option penalties (where reasonably certain) and variable lease payments that depend on an index or rate. The right of use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs and an estimate of restoration, removal and dismantling costs. Subsequent measurement After the commencement date, the company measures the lease liability by: (a) Increasing the carrying amount to reflect interest on the lease liability; (b) Reducing the carrying amount to reflect the lease payments made; and (c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events. 2 Significant accounting policies (continued) Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are included in finance costs in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises. | |
Right-of-use assets | Right-of-use assets The related right-of-use asset is accounted for using the cost model in IFRS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of Assets as disclosed in the accounting policy in impairment. Short term and low value leases The company has made an accounting policy election, by class of underlying asset, not to recognize lease assets and lease liabilities for leases with a lease term of 12 months or less (short term leases). The company has made an accounting policy election on a lease-by-lease basis, not to recognize lease assets on leases for which the underlying asset is of low value. Lease payments on short term and low value leases are accounted for on a straight-line bases over the term of the lease or other systematic basis. Short term and low value lease payments are included in operating expenses. | |
Impairment (non-financial assets) | Impairment (non-financial assets) All assets are reviewed for impairment when there is an indicator of impairment. In addition, goodwill is reviewed for impairment at least annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. | |
Share capital | Share capital Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. | |
Employee Benefits | Employee Benefits A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. 2 Significant accounting policies (continued) For defined contribution plans, contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognized as employee benefit expense when they are due. Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as accruals and classified as current liabilities in the balance sheet. | |
Share based payments - Enterprise Management Incentive and 2021 Incentive Plan | Share based payments — Enterprise Management Incentive and 2021 Incentive Plan The Company operates an equity-settled, share based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share options or shares). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the shares granted: ● including any market performance conditions (for example, an entity’s share price); ● excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and ● including the impact of any non-vesting conditions. Non-market performance and service conditions are included in assumptions about the number of shares that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. In addition, in some circumstances employees may provide services in advance of the grant date and therefore, the grant date fair value is estimated for the purposes of recognizing the expense during the period between service commencement period and grant date. At the end of each reporting period, the Company revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. See note 23 for further details. Other non-current share-based payments were made during the year as detailed within the significant accounting policy for the capital reorganization. Further information is included with the critical accounting judgements and key sources of estimation uncertainty. | |
Financial instruments | Financial instruments Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.The company recognizes financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are offset, and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. 2 Significant accounting policies (continued) Financial assets The Group’s financial assets include cash at bank and other financial assets. Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. Trade receivables are measured at their transaction price. For all financial assets the Group has the objective to hold financial assets in order to collect the contractual cash flows. The contractual terms of all the Group’s financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the outstanding amount. All financial assets are therefore measured at amortized cost. Impairment of financial assets — expected credit losses (“ECL”) All financial assets measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”), based on the difference between the contractual and expected cash flows The simplification available for financial instruments with a low credit risk (“low credit risk exemption”) is applied as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. Financial liabilities The Group’s financial liabilities include warrants, lease liabilities, convertible loans, trade and other payables, and other financial liabilities. Financial liabilities are classified as measured at amortized cost or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not at fair value through profit or loss, directly attributable transaction costs. Financial liabilities at FVTPL are measured at fair value and gains and losses resulting from changes in fair value are recognized in finance income/expenses. The Group only accounts for convertible loans and warrants as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost. An embedded derivative in a hybrid contract, with a financial liability or a non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. 2 Significant accounting policies (continued) Convertible Loans Convertible loans are bifurcated into a debt component and a conversion right if the latter is an equity instrument. The conversion right of a convertible loan is not an equity instrument but a liability if some conversion features of the loan lead to a conversion into a variable number of shares. In this case it has to be assessed if embedded derivatives need to be separated from the host contract. If this is the case, the remaining host contract is measured at amortized cost and the separated embedded derivative is measured at fair value through profit or loss until the loan is converted into equity or becomes due for repayment. The conversion features and other repayment options provided for in the contract are identified as a combined embedded derivative if they share the same risk exposure and are interdependent. Warrant Liabilities Public warrants are recognized as liabilities in accordance with IFRS 9 at fair value. The liabilities are subject to re-measurement at each balance sheet date until exercised. Private warrants linked to sales targets are recognised within equity as these satisfy the “fix to fix” criterion within IAS 32. Fair value measurements IFRS 13 clarifies that fair value is a market price, representing the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier hierarchy is established as follows: Level 1 Level 2 Level 3 If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. | |
Warrants | Warrants Public warrants relate to those warrants that commenced trading on the NYSE on December 16, 2021. Prior to that date, there was no public trading market for Company ordinary shares or warrants. Private warrants include those issued upon consummation of the business combination to American, members of the Avolon Group (“Avolon”), Virgin, and Mudrick Capital Management L.P (“Mudrick”). Private options were issued to Marcus Waley-Cohen (“MWC”). The fair value of the Private Warrants is deemed to be equal to the fair value of the Public Warrants except where the terms of Private Warrants materially differ to Public Warrants. Differences exist, with regards to certain warrant, in the maximum term to exercise as well as the strike price. An option pricing model (Black-Scholes Model) therefore been used to derive the fair value of Private Warrants. This valuation is judgmental. For detailed information on the warrants, a description of the valuation model and the input parameters, see note 21. On December 16, 2021 Private Warrants were issued to Avolon, American and Virgin Atlantic Limited (“Virgin”). Warrants issued to Avolon and American were exercised immediately after issuance. 3 Critical accounting judgements and key sources of estimation uncertainty (continued) The warrants meet the fixed-for-fixed criterion and are therefore recognised within other reserves until the point of exercise. The amount classified to other reserves on initial recognition reclassified to share capital and share premium upon exercise. Private Warrants and Options issued to Mudrick and MWC, along Public Warrants, are accounted for as liabilities in accordance with IAS 32, subject to ongoing mark-to-market adjustments. For more information see note 21. | |
Capitalization of development costs | Capitalization of development costs The business incurs a significant amount of research and development cost. The point in time at which the business begins capitalization of any project is a critical accounting judgement. The business assesses the technology readiness level of its research and development projects, along with the commercialization potential and guidance from the accounting standards to assess whether a particular development project should be capitalized or not. Costs for internally generated research and development are capitalized only if: ● the product or process is technically feasible; ● adequate resources are available to successfully complete the development; ● the benefits from the assets are demonstrated; ● the costs attributable to the projects are reliably measured; ● the Group intends to produce and market or use the developed product or process and can demonstrate its market relevance. Management has concluded that in 2021 and 2020, none of the projects met the requirements for capitalization. While Management recognises a market for the use of eVTOLs, the market is not yet established or proven. Additionally, the Group is developing new technologies and there are still uncertainties about the successful completion of this development. |
Significant accounting polici_7
Significant accounting policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Summary of details of subsidiaries | Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held 2022 2021 Vertical Aerospace Group Limited (“VAGL”) Development and commercialisation of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % 100 % | Proportion of ownership interest and voting rights held Name of subsidiary Principal activity Registered office 2021 2020 Vertical Aerospace Group Limited (“VAGL”) Development and commercialization of eVTOL technologies. Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW 100 % — % |
Summary of estimated useful lives of property, plant and equipment | Asset class Depreciation method and rate Leasehold property under right of use Straight line over term of lease Computer equipment 3 years straight line Leasehold improvements 5 – 9 years straight line | |
Summary of estimated useful lives of Intangible assets | Asset class Amortization method and rate IT software 3 years straight line |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue | |
Summary of analysis of the company's revenue for the year from continuing operations | 2021 2020 2019 £ 000 £ 000 £ 000 Rendering of engineering consultancy services 132 87 70 |
Other operating income (Table_2
Other operating income (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other operating income | ||
Summary of analysis of the Group's other operating income | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Government grants 1,214 8,999 R&D tax credit 2,193 687 3,407 9,686 | 2021 2020 2019 £ 000 £ 000 £ 000 Government grants 8,829 1,989 — R&D tax credit 2,388 328 399 Other 135 — — 11,352 2,317 399 |
Expenses by nature (Tables)_2
Expenses by nature (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Expenses by nature | ||
Summary of expense by nature | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Staff costs excluding share-based payment expenses 12,425 5,546 Share based payment expenses 7,294 16,815 Research and development components, parts and tooling 4,771 2,478 Research and development consultancy 7,936 625 Consultancy costs 990 1,501 Legal and financial advisory costs 1,476 2,060 Software costs 1,438 497 Related party administrative expenses — 127 Insurance expenses 1,729 15 Other administrative expenses 3,774 1,670 Expense on short term leases 8 30 Depreciation expense 260 162 Amortisation expense 572 168 Depreciation on right of use assets — Property 189 70 Total administrative and research and development expenses 42,862 31,764 | Included within administrative expenses and research and development expenses are the following expenses. 2021 2020 2019 £ 000 £ 000 £ 000 Staff costs excluding share-based payment expenses 16,230 8,445 3,642 Share based payment expenses 111,996 96 — Warrant expense (note 21) 111,611 — — Legal and financial advisory transaction costs 7,350 — — Software costs 1,506 579 191 Depreciation expense 377 279 89 Depreciation on right of use assets — 176 140 171 Amortisation expense 387 263 70 Consultancy costs 13,144 745 518 Expense on short term leases 49 64 8 Research and development components 11,378 2,555 2,096 Related party administrative expenses 108 144 144 Marketing expenses 3,918 — — Stamp duty 6,669 — — Other administrative expenses 3,760 565 922 Total administrative and research and development expenses 288,659 13,875 7,851 |
Summary of share based payment expense | 2021 £ 000 Issuance of Z-Shares to American 16,739 Capital reorganization 84,712 Issuance of PIPE shares to suppliers and partners 10,389 Enterprise Management Initiative 156 111,996 | |
Schedule of inputs used | Risk-free rate 0.75 % Dividend yield — Volatility 75 % | |
Schedule of calculation of fair value of Z-Shares | Business Business combination combination does completes not complete £’000 £’000 Value of Z-Shares as at June 10, 2021 30,105 2,558 Less valuation of call option (8,121) — Fair value of Z-Shares as at June 10, 2021 21,984 2,558 | |
Schedule of cost of service | 2021 £’000 Market value of 9,203,984 ordinary shares ($10.68 per share) 74,265 Cash acquired 4,728 Warrants acquired (15,701,067 warrants at $1.04 per warrant) (11,997) Accounts payable acquired (2,289) Add net liabilities acquired (9,558) Foreign exchange differences 671 Charge for listing services 83,152 |
Finance income (costs) (Tables)
Finance income (costs) (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Finance income/(costs) | ||
Summary of finance costs | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Interest paid on convertible loan notes (7,005) — Interest on loans from related parties — (483) Foreign exchange loss (12,981) — Fair value movements — (3) Interest expense on leases (67) (34) Other (10) — Total finance costs (20,063) (520) 6 Finance income/(costs) (continued) 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Fair value movements on convertible loan notes (note 13) 38,124 — Fair value movements on warrant liabilities (note 11) 4,373 — Total finance income 42,497 — | 2021 2020 2019 £ 000 £ 000 £ 000 Interest on loans from related parties (483) (709) — Bad debt write-off (14) — (15) Fair value losses — (18) — Interest expense on leases (77) (74) (46) Other (1) (6) (5) Total finance costs (575) (807) (66) Fair value gains 32,578 — — Other 12 — — Total finance income 32,590 — — Total finance income/(costs) 32,015 (807) (66) |
Loss per share (Tables)_2
Loss per share (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loss per share | ||
Summary of calculation of loss per share | 6 months ended 6 months ended June 30, June 30, 2022 2021 £ 000 £ 000 Net loss for the period (17,021) (22,557) £ £ Basic and diluted loss per share (0.10) (0.20) No. of shares No. of shares Weighted average issued shares 178,329,218 115,155,683 | 2021 2020 2019 £ 000 £ 000 £ 000 Net loss for the period (245,224) (12,326) (7,484) £ £ £ Basic and diluted loss per share (1.98) (0.12) (0.07) No. of shares No. of shares No. of shares Weighted average issued shares 124,130,921 99,904,427 99,904,427 |
Taxation (Tables)
Taxation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Taxation | |
Summary of tax charged/(credited) in profit or loss | 2021 2020 2019 £ 000 £ 000 £ 000 Current taxation UK corporation tax — (4) 30 |
Summary of differences between corporation tax benefit at standard rate and total tax (expense)/benefit | 2021 2020 2019 £ 000 £ 000 £ 000 Loss before tax (245,224) (12,322) (7,514) Corporation tax benefit at standard rate 46,593 2,341 1,428 Decrease in tax benefit from effect of expenses not deductible in determining taxable profit/(loss) (92) (135) — Decrease in tax benefit from tax losses for which no deferred tax asset was recognised (46,501) (841) — Decrease in tax benefit arising from group relief tax reconciliation — (1,369) (1,428) Deferred tax credit from unrecognised temporary difference from a prior period — — 30 Total tax benefit/(expense) — (4) 30 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, plant and equipment | |
Summary of property, plant and equipment | Leasehold improvements Office equipment Total £ 000 £ 000 £ 000 Cost or valuation At January 1, 2020 1,350 304 1,654 Additions 18 137 155 December 31, 2020 1,368 441 1,809 Additions 162 628 790 December 31, 2021 1,530 1,069 2,599 Depreciation At January 1, 2020 32 76 108 Charge for year 174 105 279 At December 31, 2020 206 181 387 Charge for the year 168 210 378 At December 31, 2021 374 391 765 Net book value At December 31, 2021 1,156 678 1,834 At December 31, 2020 1,162 260 1,422 |
Right of use assets (Tables)
Right of use assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Right of use assets | |
Summary of right of use assets | Leasehold Property £ 000 Cost or valuation At January 1, 2020 and 31 December 2020 1,445 Additions 1,084 At December 31, 2021 2,529 Depreciation At January 1, 2020 243 Charge for year 140 At December 31, 2020 383 Charge for the year 177 At December 31, 2021 560 Net book value At December 31, 2021 1,969 At December 31, 2020 1,062 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Intangible assets | |
Summary of intangible assets | Goodwill IT software Total £ 000 £ 000 £ 000 Cost or valuation At January 1, 2020 1,473 682 2,155 Additions — 233 233 At December 31, 2020 1,473 915 2,388 Additions — 2,565 2,565 At December 31, 2021 1,473 3,480 4,953 Amortisation At January 1, 2020 — 95 95 Amortisation charge — 263 263 At December 31, 2020 — 358 358 Amortisation charge — 387 387 At December 31, 2021 — 745 745 Net book value At December 31, 2021 1,473 2,735 4,208 At December 31, 2020 1,473 557 2,030 |
Trade and other receivables (_2
Trade and other receivables (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other receivables | ||
Summary of trade and other receivables | June 30, December 31, 2022 2021 £ 000 £ 000 Government receivables 7,440 5,415 Prepayments 4,203 6,571 Other receivables 2,514 672 14,157 12,658 | December 31, December 31, 2021 2020 £ 000 £ 000 Government receivables 5,415 1,989 Prepayments 6,571 733 Other receivables 672 810 12,658 3,532 |
Share capital and other reser_2
Share capital and other reserves (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share capital and reserves | ||
Summary of allotted, called up and fully paid shares | June 30, December 31, 2022 2021 No. £ No. £ Ordinary of $0.0001 each 209,285,392 15,814 209,135,382 15,804 209,285,392 15,814 209,135,382 15,804 | December 31, December 31, 2021 2020 No. £ No. £ A ordinary of £0.00001 each — — 100,000 1.00 B ordinary of £0.00001 each — — 4,832 0.05 Ordinary of $0.0001 each 209,135,382 15,804 — — 209,135,382 15,804 104,832 1.05 |
Schedule of movements in reserves | Movements in reserves are shown below Share Premium Other Reserves £000 £000 As at January 1 — 4,117 Issuance of Z-Shares to American (note 7) — 16,739 Debt to equity conversion of related party loan (note 27) — 9,000 Debt to equity conversion of Microsoft and Rocket loan — 25,000 Transfer of intergroup share capital — (15) Share acquisition — 50,724 Cumulative translation differences — (85) Issuance of warrants to American, Avolon and Virgin (note 21) 103,053 8,558 Capital reorganization (note 7) 74,265 — PIPE investment 71,036 — As at December 31 248,354 63,314 |
Loans from related parties (Tab
Loans from related parties (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Loans from related parties | |
Summary of loans from related parties | December 31, December 31, 2021 2020 £ 000 £ 000 Current loans and borrowings Loans from related parties — 6,309 Loans from related parties represents a loan from Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Movements in the year were as follows: 2021 2020 £ 000 £ 000 As at January 1 6,309 — Amounts advanced 2,945 5,600 Interest charged 483 709 Amounts repaid (737) — Conversion to equity (9,000) — As at December 31 — 6,309 During the year loans was issued to Microsoft Corporation and Rocket Internet SE. Movements in the year were as follows: 2021 £ 000 As at January 1 — Amounts advanced 25,000 Interest charged — Amounts repaid — Conversion to equity (25,000) As at December 31 — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Summary of balance sheet shows the following amounts relating to lease liabilities | The balance sheet shows the following amounts relating to lease liabilities: December 31, December 31, 2021 2020 £ 000 £ 000 Long term lease liabilities 1,580 846 Current lease liabilities 362 175 1,942 1,021 |
Summary of lease liabilities maturity analysis | A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below: December 31, December 31, 2021 2020 £ 000 £ 000 Less than one year 425 175 Within 2 – 1,653 700 More than 5 years 262 397 Total lease liabilities (undiscounted) 2,340 1,272 |
Summary of cash outflows related to leases | Total cash outflows related to leases are presented in the table below: December 31, December 31, Payment 2021 2020 £ 000 £ 000 Right of use assets 240 220 Low value leases — — Short term leases 49 64 Total cash outflow 289 284 |
Summary of reconciliation of the finance lease creditors | A reconciliation of the lease creditors is shown below: £000 As at January 1, 2020 1,166 Interest element of payments to finance lease creditors (74) Principal element of payments to finance lease creditors (146) Interest expense on leases 74 As at December 31, 2020 1,021 Additions 1,084 Interest element of payments to finance lease creditors (78) Principal element of payments to finance lease creditors (162) Interest expense on leases 77 As at December 31, 2021 1,942 |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Provisions | |
Summary of dilapidation provision | Dilapidations £ 000 As at January 1, 2020 83 Unwinding of discount 5 As at December 31, 2020 88 Unwinding of discount 7 As at December 31, 2021 95 |
Trade and other payables (Tab_2
Trade and other payables (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Trade and other payables | ||
Summary of trade and other payables | Amounts falling due within one year: June 30, December 31, 2022 2021 £ 000 £ 000 Trade payables 1,861 6,715 Accrued expenses 7,145 26,358 Social security and other taxes 602 7,145 Outstanding defined contribution pension costs 177 9 9,785 40,227 Amounts falling due after more than one year: June 30, December 31, 2022 2021 £ 000 £ 000 Deferred transaction fee payable 6,632 5,975 | Amounts falling due within one year: December 31, December 31, 2021 2020 £ 000 £ 000 Trade payables 6,715 846 Accrued expenses 26,358 1,226 Amounts due to related parties — 56 Social security and other taxes 7,145 203 Outstanding defined contribution pension costs 9 70 40,227 2,401 Amounts falling due after more than one year: December 31, December 31, 2021 2020 £ 000 £ 000 Deferred transaction fee payable 5,975 — |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Warrants | ||
Schedule of warrants issued but not exercised | As at June 30, 2022 and December 31, 2021 the following warrants were issued but not exercised and therefore recorded as a liability: June 30, December 31, 2022 2021 Number Number Public Warrants 15,265,136 15,265,146 Mudrick Warrants 4,000,000 4,000,000 MWC Options — 2,000,000 Outstanding, end of period 19,265,136 21,265,146 | As at December 16, 2021 and December 31, 2021 the following warrants were issued but not exercised: Number Public Warrants 15,265,146 Mudrick Warrants 4,000,000 MWC Options 2,000,000 21,265,146 |
Schedule of change in fair value of warrants | Financial liabilities at fair value through profit and loss: June 30, 2022 December 31, 2021 £000 £000 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Convertible Senior Secured Notes — — 92,450 — — 112,799 Warrant liabilities 6,187 — — 10,730 — — 6,187 — 92,450 10,730 — 112,799 | Recorded as a liability, the following shows the change in fair value during the year ended December 31, 2021: £ 000 January 1, 2021 — Additions 17,801 Change in fair value recognised in profit or loss (6,817) Foreign exchange movements (254) December 31, 2021 10,730 |
Schedule of estimated fair value of market inputs | December 31, 2021 Spot $ 10.68 Strike $ 10.00 Risk-free rate (%) 0.05 Dividend yield — Maximum term to exercise 4 Volatility (%) 50 | |
Schedule of expense | £ 000 American (2,625,000 warrants) 21,186 Avolon (6,378,600 warrants) 51,481 Avolon commercial (3,765,000 warrants) 30,386 Virgin (2,625,000 warrants) 8,558 111,611 |
Share-based payments (Tables)_2
Share-based payments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-based payments | ||
Schedule of movements in the number of share options | 12 Share-based payments (continued) The movements in the number of EMI share options during the period were as follows: June 30, December 31, 2022 2021 Number Number Outstanding, start of period 19,670 16,817 Granted during the period — 3,147 Grant arising due to scheme modification 23,213,933 — Forfeited during the period (1,576,948) (294) Outstanding, end of period 21,656,655 19,670 | 23 Share-based payments (continued) The movements in the number of EMI share options during the year were as follows: December 31, December 31, 2021 2020 Number Number Outstanding, start of period 16,817 — Granted during the period 3,147 16,817 Forfeited during the period (294) — Outstanding, end of period 19,670 16,817 |
Schedule of movements in the weighted average exercise price of share options | The movements in the weighted average exercise price of share options during the period were as follows: June 30, December 31, 2022 2021 £ £ Outstanding, start of period 308.06 143.28 Granted during the period — 1,178.94 Grant arising due to scheme modification 0.23 — Forfeited during the period 0.83 204.00 Outstanding, end of period 0.19 308.06 | The movements in the weighted average exercise price of share options during the year were as follows: December 31, December 31, 2021 2020 £ £ Outstanding, start of period 143.28 — Granted during the period 1,178.94 143.28 Forfeited during the period 204.00 — Outstanding, end of period 308.06 143.28 |
Schedule of share options outstanding | Details of share options outstanding at the end of the period are as follows: June 30, December 31, 2022 2021 Weighted average exercise price (£) 0.19 308.06 Number of share options outstanding 21,656,655 19,670 Expected weighted average remaining vesting period (years) 2.64 1.12 | Details of share options outstanding at the end of the year are as follows: 31 December 31 December 2021 2020 Weighted average exercise price (£) 308.06 143.28 Number of share options outstanding 19,670 16,817 Expected weighted average remaining vesting period (years) 1.12 1.13 |
Schedule of fair value of options granted | The option pricing model used was Black Scholes and the main inputs are set out in the table below. June 30, December 31, 2022 2021 Average share price at date of grant (£) 5.38 492.42 Expected volatility (%) 50.00 50.00 Vesting period in years 2.75 4.00 Risk-free interest rate (%) 1.25 0.28 | December 31, December 31, 2021 2020 Average share price at date of grant (£) 492.42 40.36 Expected volatility (%) 50.00 50.00 Vesting period in years 4 1 Dividends — — Option life in years 4.25 4.00 Risk-free interest rate (%) 0.28 (0.13) |
Derivative financial liabilit_6
Derivative financial liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative financial liabilities | |
Schedule of convertible senior secured notes | Mudrick £ 000 As at January 1, 2020 — As at December 31, 2020 — Issuance of Convertible Senior Secured Notes 141,981 Fair value movements (26,876) Foreign exchange movements (2,306) As at December 31, 2021 112,799 |
Financial instruments (Tables_2
Financial instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Financial instruments | |
Schedule of financial assets at amortized cost | Carrying value Fair value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 Cash at bank 212,660 839 212,660 839 Trade and other receivables 672 810 672 810 213,332 1,649 213,332 1,649 |
Schedule of financial liabilities | 25 Financial instruments (continued) Financial liabilities at amortized cost: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Trade and other payables 45,717 2,128 45,717 2,128 Borrowings — 6,309 — 6,309 Lease liabilities 1,942 1,021 1,942 1,021 47,659 9,458 47,659 9,458 Financial liabilities at fair value through profit or loss: Carrying Value Fair Value December 31, December 31, December 31, December 31, 2021 2020 2021 2020 £ 000 £ 000 £ 000 £ 000 Convertible Senior Secured Notes 112,799 — 112,799 — Warrant liabilities (Note 21) 10,730 — 10,730 — 123,529 — 123,529 — |
Schedule of estimated fair value of convertible senior secured notes by using binomial lattice framework | December 31, 2021 Interest rate (%) 9.0 Risk-free rate (%) 1.25 Dividend yield — Volatility (%) 52.5 Credit spread (%) 21.8 |
Financial risk management and_6
Financial risk management and impairment of financial assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Financial risk management and impairment of financial assets | ||
Schedule of liquidity risk | Between 2 and 5 After more than Within 1 year years 5 years Total 30 June 2022 £ 000 £ 000 £ 000 £ 000 Trade and other payables 9,785 6,730 — 16,515 Lease liabilities 426 1,515 168 2,109 Convertible senior secured notes — 92,450 — 92,450 10,211 100,695 168 111,074 31 December 2021 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 | Between 2 and After more than Within 1 year 5 years 5 years Total 2021 £ 000 £ 000 £ 000 £ 000 Trade and other payables 40,227 5,975 — 46,202 Lease liabilities 362 1,343 237 1,942 Convertible senior secured notes — 112,799 — 112,799 40,589 120,117 237 160,943 2020 Trade and other payables 2,401 — — 2,401 Lease liabilities 175 700 397 1,272 Other borrowings 6,309 — — 6,309 8,885 700 397 9,982 |
Related party transactions (T_2
Related party transactions (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Disclosure of transactions between related parties [line items] | ||
Schedule of key management compensation | December 31, December 31, 2021 2020 £ 000 £ 000 Current loans and borrowings Loans from related parties — 6,309 Loans from related parties represents a loan from Imagination Industries Ltd, a company wholly owned by Stephen Fitzpatrick. Movements in the year were as follows: 2021 2020 £ 000 £ 000 As at January 1 6,309 — Amounts advanced 2,945 5,600 Interest charged 483 709 Amounts repaid (737) — Conversion to equity (9,000) — As at December 31 — 6,309 During the year loans was issued to Microsoft Corporation and Rocket Internet SE. Movements in the year were as follows: 2021 £ 000 As at January 1 — Amounts advanced 25,000 Interest charged — Amounts repaid — Conversion to equity (25,000) As at December 31 — | |
Board of Director | ||
Disclosure of transactions between related parties [line items] | ||
Schedule of key management compensation | June 30, June 30, 2022 2021 £ 000 £ 000 Salaries and other short term employee benefits 629 140 Payments to defined contribution pension schemes 8 7 Share-based payments 79 76 716 223 | 2021 2020 2019 £ 000 £ 000 £ 000 Salaries and other short term employee benefits 244 374 181 Payments to defined contribution pension schemes 14 39 24 Share-based payments 156 92 — 414 505 205 |
Significant accounting polici_8
Significant accounting policies - The capital reorganisation (Details) £ in Thousands | 12 Months Ended | ||
Dec. 16, 2021 GBP (£) | Dec. 31, 2021 GBP (£) shares | Dec. 16, 2021 $ / shares | |
Significant accounting policies | |||
Consideration for each share transferred | shares | 1 | ||
Maximum amount of PIPE financing | £ 71,594 | ||
Share listing expense | £ 84,712 | ||
Fair value per share over fair value of net assets acquired | $ / shares | $ 10.68 | ||
Gross proceeds from Business Combination | 218,303 | ||
Gross proceeds from PIPE financing | 71,594 | ||
Gross proceeds from issue of Convertible Senior Secured Notes | £ 141,981 |
Significant accounting polici_9
Significant accounting policies - Basis of consolidation (Details) - Vertical Aerospace Group Limited [Member] | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of subsidiaries [line items] | ||
Name of subsidiary | Vertical Aerospace Group Limited (“VAGL”) | |
Principal place of business of subsidiary | Development and commercialization of eVTOL technologies. | |
Country of incorporation of subsidiary | Unit 1, Camwal Court, Bristol, United Kingdom BS2 0UW | |
Proportion of ownership interest and voting rights held | 100% | 100% |
Significant accounting polic_10
Significant accounting policies - Going concern (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Significant accounting policies | |
Projected funding period of cash and cash equivalents held | 12 months |
Significant accounting polic_11
Significant accounting policies - Foreign currency transactions and balances (Details) | 12 Months Ended |
Dec. 31, 2021 £ / $ | |
Foreign exchange rates [abstract] | |
Closing rate | 0.7420 |
Average rate | 0.7270 |
Significant accounting polic_12
Significant accounting policies - Property, plant and equipment (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Computer equipment | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives of property, plant and equipment | 3 years |
Maximum | Leasehold improvements | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives of property, plant and equipment | 9 years |
Minimum | Leasehold improvements | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives of property, plant and equipment | 5 years |
Significant accounting polic_13
Significant accounting policies - Intangible assets (Details) | 12 Months Ended |
Dec. 31, 2021 | |
IT software | |
Disclosure of detailed information about intangible assets [line items] | |
Expected useful economic life | 3 years |
Critical accounting judgement_3
Critical accounting judgements and key sources of estimation uncertainty (Details) £ in Thousands | 12 Months Ended | |||||
Jun. 10, 2021 GBP (£) shares | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 | Dec. 31, 2021 $ / shares | Dec. 31, 2021 Y | Dec. 31, 2020 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Number of shares exchangeable upon closing of merger | shares | 6,125,000 | |||||
Expense recognised | £ | £ 111,996 | |||||
Exercise price | $ / shares | $ 18 | |||||
Vesting period in years | 4 | 4 | 1 | |||
Percentage of common shares subject to call option exercisable | 50% | |||||
Issuance of Class Z shares to American | ||||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Number of shares exchangeable upon closing of merger | shares | 6,125,000 | |||||
Expense recognised | £ | £ 16,739 | £ 16,739 |
Operating segments (Details)
Operating segments (Details) | 12 Months Ended |
Dec. 31, 2021 segment | |
Operating segments | |
Number of reporting segment | 1 |
Revenue (Details)
Revenue (Details) - GBP (£) £ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Rendering of engineering consultancy services | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Rendering of engineering consultancy services | £ 132 | £ 87 | £ 70 |
Other operating income (Detai_2
Other operating income (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other operating income | |||||
Government grants | £ 1,214 | £ 8,999 | £ 8,829 | £ 1,989 | |
R&D tax credit | 2,193 | 687 | 2,388 | 328 | £ 399 |
Other | 135 | ||||
Other operating income | £ 3,407 | £ 9,686 | £ 11,352 | £ 2,317 | £ 399 |
Other operating income - Gove_2
Other operating income - Government grants (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Other operating income | ||||
Government grants receivable | £ 1,241 | £ 5,415 | £ 8,943 | £ 1,989 |
Expenses by nature (Details)_2
Expenses by nature (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Expenses by nature | |||||
Staff costs excluding share-based payment expenses | £ 16,230 | £ 8,445 | £ 3,642 | ||
Share based payment expenses | £ 7,294 | £ 16,815 | 111,996 | 96 | |
Warrant expense (note 21) | 111,611 | ||||
Legal and financial advisory transaction costs | 7,350 | ||||
Software costs | 1,438 | 497 | 1,506 | 579 | 191 |
Depreciation expense | 260 | 162 | 377 | 279 | 89 |
Depreciation on right of use assets - Property | 189 | 70 | 176 | 140 | 171 |
Amortisation expense | 572 | 168 | 387 | 263 | 70 |
Consultancy costs | 990 | 1,501 | 13,144 | 745 | 518 |
Expense on short term leases | 8 | 30 | 49 | 64 | 8 |
Research and development components | 4,771 | 2,478 | 11,378 | 2,555 | 2,096 |
Related party administrative expenses | 127 | 108 | 144 | 144 | |
Marketing expenses | 3,918 | ||||
Stamp duty | 6,669 | ||||
Other administrative expenses | 3,774 | 1,670 | 3,760 | 565 | 922 |
Total administrative and research and development expenses | £ 42,862 | £ 31,764 | 288,659 | £ 13,875 | £ 7,851 |
Staff costs | 12,913 | ||||
Hardware and testing costs | £ 24,291 |
Expenses by nature - Share base
Expenses by nature - Share based payment expense (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Jun. 10, 2021 | Dec. 31, 2021 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Expense from share-based payment transactions | £ 111,996 | |
Capital Reorganization [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Expense from share-based payment transactions | 84,712 | |
Issuance of PIPE shares to suppliers and partners | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Expense from share-based payment transactions | 10,389 | |
Enterprise Management Initiative [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Expense from share-based payment transactions | 156 | |
Issuance of Class Z shares to American | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Expense from share-based payment transactions | £ 16,739 | £ 16,739 |
Expenses by nature - Issuance o
Expenses by nature - Issuance of Z-Shares to American and Issuance of PIPE shares to suppliers and partners (Details) | 12 Months Ended | |||
Jun. 10, 2021 GBP (£) item shares | Jun. 10, 2021 GBP (£) $ / shares shares | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 $ / shares | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Percentage of common shares subject to call option exercisable | 50% | |||
Fair Value of Other Equity Instruments | ||||
Amount of valuation by using volatility assumption of 50% | £ 19,616,000 | £ 19,616,000 | ||
Expense from share-based payment transactions | £ 111,996,000 | |||
Issuance of Class Z shares to American | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Par value per share | $ / shares | $ 0.00001 | |||
Fair Value of Other Equity Instruments | ||||
Probability adjusted valuation | 16,739,000 | 16,739,000 | ||
Expense from share-based payment transactions | £ 16,739,000 | 16,739,000 | ||
Issuance of Class Z shares to American | Vertical Aerospace Group Ltd | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Number of shares subscribed | 5,804 | |||
Consideration for shares subscribed | £ 0.06 | £ 0.06 | ||
Issuance of Class Z shares to American | Business combination does not complete | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Number of shares retained | shares | 5,804 | 5,804 | ||
Actual share price | $ / shares | £ 9.93 | |||
Percentage of holding | 3.96% | |||
Fair Value of Other Equity Instruments | ||||
Value of Z-Shares as at June 10, 2021 | £ 2,558,000 | £ 2,558,000 | ||
Fair value of Z-Shares as at June 10, 2021 | £ 2,558,000 | £ 2,558,000 | ||
Issuance of Class Z shares to American | Business combination completes | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Actual share price | $ / shares | £ 9.93 | |||
Percentage of Class Z shares exchanged | 100% | |||
Number of Class Z Shares exchanged for common shares | shares | 6,125,000 | 6,125,000 | ||
Lock-up period for shares exchanged | 4 years | |||
Percentage of common shares subject to call option exercisable | 50% | |||
Exercise price of call option exercisable | $ / shares | £ 18 | |||
Number of tranches for call option exercisable | item | 2 | |||
Measurement of Other Equity Instruments | ||||
Risk-free rate | 0.75% | |||
Volatility | 75% | |||
Fair Value of Other Equity Instruments | ||||
Value of Z-Shares as at June 10, 2021 | £ 30,105,000 | £ 30,105,000 | ||
Less valuation of call option | (8,121,000) | (8,121,000) | ||
Fair value of Z-Shares as at June 10, 2021 | £ 21,984,000 | £ 21,984,000 | ||
Issuance of PIPE shares to suppliers and partners | ||||
Fair Value of Other Equity Instruments | ||||
Expense from share-based payment transactions | £ 10,389,000 |
Expenses by nature - Capital re
Expenses by nature - Capital reorganization (Details) £ in Thousands | 12 Months Ended | |||
Dec. 16, 2021 $ / shares shares | Dec. 31, 2021 GBP (£) | Jun. 30, 2022 GBP (£) | Dec. 31, 2020 GBP (£) | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Warrants acquired (15,701,067 warrants at $1.04 per warrant) | £ 10,730 | £ 6,187 | ||
Accounts payable acquired | (40,227) | £ (9,785) | £ (2,401) | |
Market value per ordinary share | $ / shares | $ 10.68 | |||
Expense recognised | 111,996 | |||
Private Warrants | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Expense recognised | 1,572 | |||
Capital Reorganization [member] | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Market value of 9,203,984 ordinary shares ($10.68 per share) | 74,265 | |||
Cash acquired | 4,728 | |||
Warrants acquired (15,701,067 warrants at $1.04 per warrant) | (11,997) | |||
Accounts payable acquired | (2,289) | |||
Add net liabilities acquired | 9,558 | |||
Foreign exchange differences | 671 | |||
Charge for listing services | 83,152 | |||
Number of ordinary shares issued | shares | 9,203,984 | |||
Number of warrants issued | shares | 15,701,067 | |||
Value per warrant | $ / shares | $ 1.04 | |||
Expense recognised | 84,712 | |||
Issuance of PIPE shares to suppliers and partners | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Expense recognised | £ 10,389 |
Finance income (costs) (Details
Finance income (costs) (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finance Income Cost [Line Items] | |||||
Related party finance costs | £ (483) | £ (483) | £ (709) | ||
Bad debt write-off | (14) | £ (15) | |||
Fair value losses | 18 | ||||
Interest expense on leases | £ (67) | (34) | (77) | (74) | (46) |
Other finance cost | (10) | (1) | (6) | (5) | |
Total finance costs | (20,063) | (520) | (575) | (807) | (66) |
Fair value gains | 32,578 | ||||
Other finance income | 12 | ||||
Total finance income | 42,497 | 32,590 | |||
Net finance income/ (costs) | £ 22,434 | £ (520) | 32,015 | £ (807) | £ (66) |
Convertible loan notes | |||||
Finance Income Cost [Line Items] | |||||
Fair value gains | 26,876 | ||||
Warrant liabilities | |||||
Finance Income Cost [Line Items] | |||||
Fair value gains | £ 6,817 |
Loss per share - Basic and di_2
Loss per share - Basic and diluted loss per share (Details) - GBP (£) £ / shares in Units, £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Loss per share | |||||
Net loss for the period | £ (17,021) | £ (22,557) | £ (245,224) | £ (12,326) | £ (7,484) |
Net loss for the period, diluted | £ (245,224) | £ (12,326) | £ (7,484) | ||
Basic loss per share | £ (0.10) | £ (0.20) | £ (1.98) | £ (0.12) | £ (0.07) |
Diluted loss per share | £ (0.10) | £ (0.20) | £ (1.98) | £ (0.12) | £ (0.07) |
Weighted average issued shares, basic | 178,329,218 | 115,155,683 | 124,130,921 | 99,904,427 | 99,904,427 |
Weighted average issued shares, diluted | 178,329,218 | 115,155,683 | 124,130,921 | 99,904,427 | 99,904,427 |
Taxation - Current taxation (De
Taxation - Current taxation (Details) - GBP (£) £ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||||
Standard rate of corporation tax | 25% | 19% | 19% | |
UNITED KINGDOM | ||||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||||
UK corporation tax | £ (4) | £ 30 |
Taxation - Reconciliation (Deta
Taxation - Reconciliation (Details) - GBP (£) £ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Taxation | ||||
Loss before tax | £ 50 | £ (245,224) | £ (12,322) | £ (7,514) |
Corporation tax benefit at standard rate | 46,593 | 2,341 | 1,428 | |
Decrease in tax benefit from effect of expenses not deductible in determining taxable profit (tax loss) | (92) | (135) | ||
Decrease in tax benefit from tax losses for which no deferred tax asset was recognized | £ (46,501) | (841) | ||
Decrease in tax benefit arising from group relief tax reconciliation (pre Reorganization) | (1,369) | (1,428) | ||
Deferred tax credit from unrecognised temporary difference from a prior period | 30 | |||
Total tax (expense)/benefit | £ (4) | £ 30 |
Taxation - Tax rate (Details)
Taxation - Tax rate (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of non-adjusting events after reporting period [line items] | |||||
Main rate of UK corporation tax | 25% | 19% | 19% | ||
Change in tax rate announced | |||||
Disclosure of non-adjusting events after reporting period [line items] | |||||
Main rate of UK corporation tax | 19% | 19% |
Taxation (Details)
Taxation (Details) - GBP (£) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Taxation | ||||
Accounting profit | £ 50,000 | £ (245,224,000) | £ (12,322,000) | £ (7,514,000) |
Unused potential tax losses for which no deferred tax asset is recognized | 250,500,000 | £ 4,641,000 | ||
Deferred tax assets or liabilities recognized | £ 0 |
Property, plant and equipment -
Property, plant and equipment - Balance (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | £ 1,422 | |
Balance at the end | 1,834 | £ 1,422 |
Leasehold improvements | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | 1,162 | |
Balance at the end | 1,156 | 1,162 |
Office equipment | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | 260 | |
Balance at the end | 678 | 260 |
Cost or valuation | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | 1,809 | 1,654 |
Additions | 790 | 155 |
Balance at the end | 2,599 | 1,809 |
Cost or valuation | Leasehold improvements | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | 1,368 | 1,350 |
Additions | 162 | 18 |
Balance at the end | 1,530 | 1,368 |
Cost or valuation | Office equipment | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | 441 | 304 |
Additions | 628 | 137 |
Balance at the end | 1,069 | 441 |
Depreciation | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | (387) | (108) |
Charge for year | 378 | 279 |
Balance at the end | (765) | (387) |
Depreciation | Leasehold improvements | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | (206) | (32) |
Charge for year | 168 | 174 |
Balance at the end | (374) | (206) |
Depreciation | Office equipment | ||
Reconciliation of changes in property, plant and equipment [abstract] | ||
Balance at the beginning | (181) | (76) |
Charge for year | 210 | 105 |
Balance at the end | £ (391) | £ (181) |
Right of use assets (Details)
Right of use assets (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure of quantitative information about right-of-use assets [line items] | |||||
Balance at the beginning | £ 1,969 | £ 1,062 | £ 1,062 | ||
Charge for year | 189 | 70 | 176 | £ 140 | £ 171 |
Balance at the end | 2,112 | 1,969 | 1,062 | ||
Property | |||||
Disclosure of quantitative information about right-of-use assets [line items] | |||||
Balance at the beginning | 1,969 | 1,062 | 1,062 | ||
Balance at the end | 1,969 | 1,062 | |||
Property | Cost or valuation | |||||
Disclosure of quantitative information about right-of-use assets [line items] | |||||
Balance at the beginning | 2,529 | 1,445 | 1,445 | ||
Additions | 1,084 | ||||
Balance at the end | 2,529 | 1,445 | |||
Property | Depreciation | |||||
Disclosure of quantitative information about right-of-use assets [line items] | |||||
Balance at the beginning | £ (560) | £ (383) | (383) | (243) | |
Charge for year | (177) | (140) | |||
Balance at the end | £ (560) | £ (383) | £ (243) |
Intangible assets (Details)
Intangible assets (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | £ 2,030 | |
Balance at the end | 4,208 | £ 2,030 |
Goodwill | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | 1,473 | |
Balance at the end | 1,473 | 1,473 |
IT software | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | 557 | |
Balance at the end | 2,735 | 557 |
Cost or valuation | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | 2,388 | 2,155 |
Additions | 2,565 | 233 |
Balance at the end | 4,953 | 2,388 |
Cost or valuation | Goodwill | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | 1,473 | 1,473 |
Balance at the end | 1,473 | 1,473 |
Cost or valuation | IT software | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | 915 | 682 |
Additions | 2,565 | 233 |
Balance at the end | 3,480 | 915 |
Amortisation | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | (358) | (95) |
Amortisation charge | 387 | 263 |
Balance at the end | (745) | (358) |
Amortisation | IT software | ||
Reconciliation of changes in intangible assets and goodwill [abstract] | ||
Balance at the beginning | (358) | (95) |
Amortisation charge | 387 | 263 |
Balance at the end | £ (745) | £ (358) |
Intangible assets - Amortisatio
Intangible assets - Amortisation (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Administrative expenses. | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Amortisation charge | £ 387 | £ 263 |
Intangible assets - CGU (Detail
Intangible assets - CGU (Details) | 12 Months Ended |
Dec. 31, 2021 segment | |
Intangible assets | |
Number of cash generating unit | 1 |
Business disposal (Details)
Business disposal (Details) - GBP (£) £ in Thousands | Oct. 31, 2021 | Dec. 31, 2021 |
Vertical Advanced Engineering Ltd | ||
Disclosure of detailed information about business combination [line items] | ||
Net assets | £ 102 | |
Vertical Advanced Engineering Ltd | ||
Disclosure of detailed information about business combination [line items] | ||
Percentage of ownership interest disposed | 100% |
Trade and other receivables (_3
Trade and other receivables (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Trade and other receivables | ||||
Government grants receivable | £ 1,241 | £ 5,415 | £ 8,943 | £ 1,989 |
Prepayments | 4,203 | 6,571 | 733 | |
Other receivables | 2,514 | 672 | 810 | |
Total trade and other current receivables | 14,157 | 12,658 | 3,532 | |
R&D tax credit receivable | £ 4,909 | 2,716 | 328 | |
VAT receivables | 2,595 | 6 | ||
Prepaid insurance | £ 3,805 | £ 0 |
Share capital and other reser_3
Share capital and other reserves - Allotted, called up and fully paid shares (Details) | Jun. 30, 2022 GBP (£) £ / shares shares | Dec. 31, 2021 GBP (£) £ / shares shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 GBP (£) shares |
Disclosure of classes of share capital [line items] | ||||
Number of shares allotted, called up and fully paid shares | 209,285,392 | 209,135,382 | 104,832 | |
Issued capital | £ | £ 15,814 | £ 15,804 | £ 1.05 | |
Number of shares authorised for future allotment | 90,449,562 | |||
Vertical Aerospace Group Ltd | ||||
Disclosure of classes of share capital [line items] | ||||
Percentage of shares acquired | 100% | |||
Number of shares acquired | 146,749 | |||
Number of shares issued | 177,762,797 | |||
Number of warrants issued | 12,768,600 | |||
A ordinary | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | £ / shares | £ 0.00001 | |||
Number of shares allotted, called up and fully paid shares | 100,000 | |||
Issued capital | £ | £ 1 | |||
B ordinary | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | £ / shares | £ 0.00001 | |||
Number of shares allotted, called up and fully paid shares | 4,832 | |||
Issued capital | £ | £ 0.05 | |||
Ordinary Share | ||||
Disclosure of classes of share capital [line items] | ||||
Par value per share | (per share) | £ 0.0001 | $ 0.0001 | ||
Number of shares allotted, called up and fully paid shares | 209,285,392 | 209,135,382 | ||
Issued capital | £ | £ 15,814 | £ 15,804 |
Share capital and other reser_4
Share capital and other reserves - Movements in reserves (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Balance at the beginning | £ 61,561 | £ (938) |
Cumulative translation differences | (85) | |
Issuance of warrants to American, Avolon and Virgin (note 21) | 1,010 | 111,611 |
Share acquisition | 50,740 | |
Capital reorganization (note 7) | 74,265 | |
Balance at the end | 62,326 | 61,561 |
Share premium. | ||
Balance at the beginning | 248,354 | 0 |
Issuance of warrants to American, Avolon and Virgin (note 21) | 103,053 | |
Capital reorganization (note 7) | 74,265 | |
PIPE investment | 71,036 | |
Balance at the end | 249,103 | 248,354 |
Other reserves | ||
Balance at the beginning | 63,314 | 4,117 |
Issuance of Z-Shares to American (note 7) | 16,739 | |
Debt to equity conversion of related party loan (note 27) | 9,000 | |
Debt to equity conversion of Microsoft and Rocket loan | 25,000 | |
Transfer of intergroup share capital | (15) | |
Cumulative translation differences | (85) | |
Issuance of warrants to American, Avolon and Virgin (note 21) | 1,010 | 8,558 |
Share acquisition | 50,724 | |
Balance at the end | £ 80,271 | £ 63,314 |
Share capital and other reser_5
Share capital and other reserves - Additional information (Details) £ in Thousands | 12 Months Ended | ||
Dec. 16, 2021 $ / shares | Dec. 31, 2021 GBP (£) shares | Dec. 31, 2021 $ / shares shares | |
Disclosure of offsetting of financial assets [line items] | |||
IFRS Increase (Decrease) Through PIPE Investment | £ | £ 71,036 | ||
Percentage of common shares subject to call option exercisable | 50% | ||
Market value per ordinary share | $ / shares | $ 10.68 | ||
Stephen Fitzpatrick | |||
Disclosure of offsetting of financial assets [line items] | |||
Convertible loans issued | £ | £ 9,000 | ||
Vertical Aerospace Group Ltd | |||
Disclosure of offsetting of financial assets [line items] | |||
Number of shares held | 35,000,000 | ||
Number of shares issued | 177,762,797 | ||
PIPE Investors | |||
Disclosure of offsetting of financial assets [line items] | |||
Number of shares issued during the period | 9,400,000 | ||
Par value per ordinary share issued | $ / shares | $ 0.0001 | ||
Share price | $ / shares | $ 10 | ||
Share premium received | £ | £ 71,036 | ||
Shares outstanding | 9,203,984 | ||
PIPE Investors | Vertical Aerospace Group Ltd | |||
Disclosure of offsetting of financial assets [line items] | |||
Shares issued | 9,203,984 | ||
American | Vertical Aerospace Group Ltd | |||
Disclosure of offsetting of financial assets [line items] | |||
Number of shares issued | 6,125,000 | ||
American | Vertical Aerospace Group Ltd | |||
Disclosure of offsetting of financial assets [line items] | |||
Number of shares held | 5,804 | ||
Microsoft and Rocket | |||
Disclosure of offsetting of financial assets [line items] | |||
Convertible loans issued | £ | £ 25,000 |
Loans from related parties - Cu
Loans from related parties - Current loans and borrowings (Details) £ in Thousands | Dec. 31, 2020 GBP (£) |
Loans from related parties | |
Amount due to related party | £ 6,309 |
Loans from related parties - Lo
Loans from related parties - Loan from Imagination Industries Ltd (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of transactions between related parties [line items] | ||
As at January 1 | £ 6,309 | |
Amounts advanced | 2,945 | £ 5,600 |
Interest charged | 483 | 709 |
Amounts repaid | (737) | |
Conversion to equity | £ (9,000) | |
As at December 31 | £ 6,309 | |
Companies owned by key management personnel | Imagination Industries Ltd | ||
Disclosure of transactions between related parties [line items] | ||
Interest rate | 30% | 30% |
Microsoft and Rocket | ||
Disclosure of transactions between related parties [line items] | ||
Amounts advanced | £ 25,000 | |
Conversion to equity | £ (25,000) |
Leases - Balance sheet shows th
Leases - Balance sheet shows the following amounts relating to lease liabilities (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Lease liabilities [abstract] | ||||
Long term lease liabilities | £ 1,683 | £ 1,580 | £ 846 | |
Lease liabilities | £ 426 | 362 | 175 | |
Total lease liabilities | £ 1,942 | £ 1,021 | £ 1,166 |
Leases - Lease liabilities matu
Leases - Lease liabilities maturity analysis (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of maturity analysis of operating lease payments [line items] | ||
Total lease liabilities (undiscounted) | £ 2,340 | £ 1,272 |
Within 1 year | ||
Disclosure of maturity analysis of operating lease payments [line items] | ||
Total lease liabilities (undiscounted) | 425 | 175 |
Within 2 - 5 years | ||
Disclosure of maturity analysis of operating lease payments [line items] | ||
Total lease liabilities (undiscounted) | 1,653 | 700 |
More than 5 years | ||
Disclosure of maturity analysis of operating lease payments [line items] | ||
Total lease liabilities (undiscounted) | £ 262 | £ 397 |
Leases - Cash outflows related
Leases - Cash outflows related to leases (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | |||||
Right of use assets | £ 235 | £ 87 | £ 240 | £ 220 | £ 130 |
Short term leases | 49 | 64 | |||
Total cash outflow | £ 289 | £ 284 |
Leases - Reconciliation of the
Leases - Reconciliation of the finance lease creditors (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of quantitative information about right-of-use assets [line items] | ||
Beginning balance | £ 1,021 | £ 1,166 |
Additions | 1,084 | |
Interest element of payments to finance lease creditors | (78) | (74) |
Principal element of payments to finance lease creditors | (162) | (146) |
Interest expense on leases | 77 | 74 |
Ending balance | £ 1,942 | £ 1,021 |
Bristol property | ||
Disclosure of quantitative information about right-of-use assets [line items] | ||
Lease agreement term | 5 years |
Provisions (Details)
Provisions (Details) - Dilapidation Provision - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disclosure of other provisions [line items] | ||
As at January 1 | £ 88 | £ 83 |
Unwinding of discount | 7 | 5 |
As at December 31 | £ 95 | £ 88 |
Trade and other payables (Det_2
Trade and other payables (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Outstanding defined contribution pension costs | £ 9 | £ 70 | |
Social security and other taxes includes stamp duty payable | 6,669 | ||
Within 1 year | |||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Trade payables | £ 1,861 | 6,715 | 846 |
Accrued expenses | 7,145 | 26,358 | 1,226 |
Amounts due to related parties | 56 | ||
Social security and other taxes | 602 | 7,145 | 203 |
Outstanding defined contribution pension costs | 177 | 9 | 70 |
Total trade and other payables | 9,785 | 40,227 | £ 2,401 |
Financial and capital markets advisory fees | 9,666 | ||
After more than one year | |||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | |||
Deferred transaction fee payable | £ 6,632 | £ 5,975 |
Warrants - warrants were issued
Warrants - warrants were issued but not exercised (Details) - shares | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | |
Disclosure of fair value measurement of liabilities [line items] | |||
Number of warrants issued but not exercised | 21,265,146 | 19,265,136 | 21,265,146 |
Public Warrants | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Number of warrants issued but not exercised | 15,265,146 | 15,265,136 | 15,265,146 |
Mudrick Warrants | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Number of warrants issued but not exercised | 4,000,000 | 4,000,000 | 4,000,000 |
MWC Options | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Number of warrants issued but not exercised | 2,000,000 | 2,000,000 |
Warrants - change in fair value
Warrants - change in fair value (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Warrants | ||
January 1,2021 | £ 10,730 | |
Additions | £ 17,801 | |
Change in fair value recognised in profit or loss | £ (4,373) | (6,817) |
Foreign exchange movements | (254) | |
December 31, 2021 | £ 10,730 |
Warrants - Additional informati
Warrants - Additional information (Details) £ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 $ / shares | Jun. 30, 2022 $ / shares shares | Dec. 31, 2021 GBP (£) shares | Jun. 10, 2021 GBP (£) | |
Disclosure of fair value measurement of liabilities [line items] | ||||
IFRS Valuation Amount Using Volatility Assumption Of 50 Percent | £ | £ 19,616 | |||
Public Warrants | ||||
Disclosure of fair value measurement of liabilities [line items] | ||||
Warrants expiration period | 5 years | |||
Redemption price | $ 0.01 | $ 0.01 | ||
Trigger price | $ 18 | |||
Threshold trading days for redemption of warrants | 20 | |||
Threshold consecutive trading days for redemption of warrants | 30 | |||
Number of shares entitled per public warrant | shares | 1 | 1 | ||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||
Virgin, American And Avolon Warrants | ||||
Disclosure of fair value measurement of liabilities [line items] | ||||
IFRS Valuation Amount Using Volatility Assumption Of 50 Percent | £ | £ 11,907 |
Warrants - Warrants issued to V
Warrants - Warrants issued to Virgin, American and American (Details) £ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 GBP (£) shares | Dec. 31, 2021 GBP (£) $ / shares shares | Oct. 29, 2021 shares | |
Disclosure of fair value measurement of liabilities [line items] | |||
Value of warrants outstanding | £ 8,558 | £ 8,558 | |
Warrant expense | £ 111,611 | ||
Virgin Atlantic Warrant Instrument | |||
Disclosure of fair value measurement of liabilities [line items] | |||
IFRS Class Of Warrant Or Right, Number Of Securities Called By Warrants Or Rights | shares | 2,625,000 | 2,625,000 | 2,625,000 |
Volatility | 75% | ||
Warrant expense | £ 8,558 | ||
American Warrant Instrument | |||
Disclosure of fair value measurement of liabilities [line items] | |||
IFRS Class Of Warrant Or Right, Number Of Securities Called By Warrants Or Rights | shares | 2,625,000 | 2,625,000 | |
Warrant expense | £ 21,186 | ||
Avolon Warrant Instrument | |||
Disclosure of fair value measurement of liabilities [line items] | |||
IFRS Class Of Warrant Or Right, Number Of Securities Called By Warrants Or Rights | shares | 6,378,600 | 6,378,600 | |
Warrant expense | £ 51,481 | ||
Avolon Commercial Instrument | |||
Disclosure of fair value measurement of liabilities [line items] | |||
IFRS Class Of Warrant Or Right, Number Of Securities Called By Warrants Or Rights | shares | 3,765,000 | 3,765,000 | |
Number Of Aircraft Placed With Prime Carrier | 100 | ||
Warrant expense | £ 30,386 | ||
Virgin, American And Avolon Warrants | |||
Disclosure of fair value measurement of liabilities [line items] | |||
Spot | $ / shares | £ 10.68 | ||
Strike | $ / shares | £ 10 | ||
Risk-free rate | 0.05% | ||
Maximum term to exercise | 4 years | ||
Volatility | 50% |
Pension and other schemes (Deta
Pension and other schemes (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Pension and other schemes | ||
Pension cost, contributions payable | £ 471 | £ 271 |
Outstanding defined contribution pension costs | £ 9 | £ 70 |
Share-based payments - Moveme_3
Share-based payments - Movements in the number of share options (Details) - Options | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based payments | ||
Outstanding, start of period | 16,817 | |
Granted during the period | 3,147 | 16,817 |
Forfeited during the period | (294) | |
Outstanding, end of period | 19,670 | 16,817 |
Share-based payments - Moveme_4
Share-based payments - Movements in the weighted average exercise price of share options (Details) - £ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based payments | ||
Weighted average exercise price, options outstanding, start of period | £ 143.28 | |
Granted during the period | 1,178.94 | £ 143.28 |
Forfeited during the period | 204 | |
Weighted average exercise price, options outstanding, end of period | £ 308.06 | £ 143.28 |
Share-based payments - Share _2
Share-based payments - Share options outstanding (Details) | 12 Months Ended | |
Dec. 31, 2021 Options £ / shares | Dec. 31, 2020 Options £ / shares | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Weighted average exercise price | £ 308.06 | £ 143.28 |
Number of share options outstanding | Options | 19,670 | 16,817 |
Expected weighted average remaining vesting period (years) | 1 year 1 month 13 days | 1 year 1 month 17 days |
Number of options exercisable | Options | 7,715 | 7,635 |
Maximum | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Exercise prices | £ 1,298.49 | |
Minimum | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Exercise prices | £ 38.22 |
Share-based payments - Fair v_2
Share-based payments - Fair value of options granted (Details) | 12 Months Ended | |||
Dec. 31, 2021 GBP (£) | Dec. 31, 2021 GBP (£) Y | Dec. 31, 2021 GBP (£) £ / shares | Dec. 31, 2020 GBP (£) £ / shares | |
Share-based payments | ||||
Weighted average fair value per option of options granted | £ | £ 31.97 | £ 31.97 | £ 31.97 | £ 6.70 |
Average share price at date of grant | £ / shares | £ 492.42 | £ 40.36 | ||
Expected volatility (%) | 50% | 50% | ||
Vesting period in years | 4 | 4 | 1 | |
Option life in years | 4.25 | 4 | ||
Risk-free interest rate (%) | 0.28% | (0.13%) |
Share-based payments - Share _3
Share-based payments - Share based payments charge (Details) - GBP (£) £ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based payments | ||
Charge recognized for equity settled share based payment transactions | £ 156 | £ 96 |
Share-based payments - Addition
Share-based payments - Additional information (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2021 shares | Jun. 30, 2022 shares | Dec. 31, 2021 Options shares | Dec. 31, 2020 Options | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Number of warrants issued but not exercised | shares | 21,265,146 | 19,265,136 | 21,265,146 | |
Number of share options granted in share-based payment arrangement | Options | 3,147 | 16,817 | ||
Marcus Waley Cohen | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Number of warrants issued but not exercised | shares | 2,000,000 | |||
Number of share options granted in share-based payment arrangement | Options | 2,000,000 |
Derivative financial liabilit_7
Derivative financial liabilities - Convertible Senior Secured Notes (Details) £ in Thousands | 12 Months Ended |
Dec. 31, 2021 GBP (£) | |
Disclosure of financial liabilities [line items] | |
Balance at end of period | £ 112,799 |
Mudrick | |
Disclosure of financial liabilities [line items] | |
Balance at beginning of period | 0 |
Issuance of Convertible Senior Secured Notes | 141,981 |
Fair value movements | (26,876) |
Foreign exchange movements | (2,306) |
Balance at end of period | £ 112,799 |
Derivative financial liabilit_8
Derivative financial liabilities - Additional Information (Details) £ in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | ||||||
Dec. 16, 2021 GBP (£) shares | Dec. 16, 2021 USD ($) shares | Jun. 30, 2021 GBP (£) | Dec. 31, 2021 GBP (£) shares | Dec. 31, 2021 USD ($) shares | Jun. 30, 2022 GBP (£) | Dec. 31, 2021 USD ($) shares | Dec. 16, 2021 USD ($) shares | |
Disclosure of financial liabilities [line items] | ||||||||
Aggregate purchase price | £ | £ 25,000 | £ 166,981 | ||||||
Limitation on restricted payments for retention guarantors | $ | $ 10,000 | |||||||
Restricted cash | £ | £ 7,420 | £ 8,235 | ||||||
Convertible loan notes | ||||||||
Disclosure of financial liabilities [line items] | ||||||||
Convertible shares | 18,181,820 | 18,181,820 | ||||||
Conversion ratio per $1000 principal amount | 90.9091 | 90.9091 | ||||||
Additional interest rate | 2% | 2% | ||||||
Convertible loan notes | Interest paid in cash | ||||||||
Disclosure of financial liabilities [line items] | ||||||||
Interest rate | 7% | 7% | ||||||
Convertible loan notes | Interest paid in-kind and semi-annually in arrears | ||||||||
Disclosure of financial liabilities [line items] | ||||||||
Interest rate | 9% | 9% | ||||||
Mudrick | Convertible loan notes | ||||||||
Disclosure of financial liabilities [line items] | ||||||||
Debt discount face amount | £ 151,000 | £ 151,000 | $ 200,000 | $ 200,000 | ||||
Aggregate purchase price | £ 145,000 | $ 192,000 | 145,000 | $ 192,000 | ||||
Convertible shares | 18,181,820 | 18,181,820 | ||||||
Conversion ratio per $1000 principal amount | 90.9091 | 90.9091 | ||||||
Convertible Senior Secured Notes Principal Amount | 756 | $ 1,000 | ||||||
Interest rate | 9% | |||||||
Microsoft and Rocket | ||||||||
Disclosure of financial liabilities [line items] | ||||||||
Aggregate purchase price | £ | £ 25,000 |
Financial instruments - Finan_2
Financial instruments - Financial assets at amortized cost (Details) - Financial assets at amortized cost - GBP (£) | Dec. 31, 2021 | Dec. 31, 2020 |
Financial assets | ||
Carrying value | £ 213,332 | £ 1,649 |
Fair value | 213,332 | 1,649 |
Trade receivables [member] | ||
Financial assets | ||
Carrying value | 672 | 810 |
Fair value | 672 | 810 |
Cash at bank | ||
Financial assets | ||
Carrying value | 212,660 | 839 |
Fair value | £ 212,660 | £ 839 |
Financial instruments - Finan_3
Financial instruments - Financial liabilities at amortized cost (Details) - Financial liabilities at amortized cost - GBP (£) £ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Financial liabilities | ||
Carrying Value | £ 47,659 | £ 9,458 |
Fair Value | 47,659 | 9,458 |
Trade and other payables [Member] | ||
Financial liabilities | ||
Carrying Value | 45,717 | 2,128 |
Fair Value | 45,717 | 2,128 |
Borrowings | ||
Financial liabilities | ||
Carrying Value | 6,309 | |
Fair Value | 6,309 | |
Lease liabilities. | ||
Financial liabilities | ||
Carrying Value | 1,942 | 1,021 |
Fair Value | £ 1,942 | £ 1,021 |
Financial instruments - Finan_4
Financial instruments - Financial liabilities at fair value through profit or loss (Details) - Financial liabilities at fair value through profit and loss £ in Thousands | Dec. 31, 2021 GBP (£) |
Disclosure of financial liabilities [line items] | |
Carrying Value | £ 123,529 |
Fair Value | 123,529 |
Convertible loan notes | |
Disclosure of financial liabilities [line items] | |
Carrying Value | 112,799 |
Fair Value | 112,799 |
Warrant liabilities | |
Disclosure of financial liabilities [line items] | |
Carrying Value | 10,730 |
Fair Value | £ 10,730 |
Financial instruments - fair _2
Financial instruments - fair value of the convertible senior secured notes (Details) - Financial liabilities at fair value through profit and loss | Dec. 31, 2021 |
Interest rate | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items] | |
Significant unobservable input liabilities | 9 |
Risk-free rate | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items] | |
Significant unobservable input liabilities | 1.25 |
Dividend yield. | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items] | |
Significant unobservable input liabilities | 0 |
Volatility | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items] | |
Significant unobservable input liabilities | 52.5 |
Credit spread | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items] | |
Significant unobservable input liabilities | 21.8 |
Financial instruments - Addit_2
Financial instruments - Additional Information (Details) £ in Thousands | 12 Months Ended | |||
Dec. 16, 2021 GBP (£) | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 $ / shares | Dec. 31, 2020 GBP (£) | |
Disclosure of financial liabilities [line items] | ||||
Total interest expense for financial liabilities not held at fair value through profit or loss | £ 747 | £ 801 | ||
Exercise price | $ / shares | $ 18 | |||
Risk-free interest rate (%) | 0.28% | (0.13%) | ||
Expected volatility (%) | 50% | 50% | ||
Convertible note and warrants | ||||
Disclosure of financial liabilities [line items] | ||||
Estimated fair value | £ 141,981 | |||
Percentage of discount for face value | 4% | |||
Debt discount face amount | £ 151,000 | |||
Fair value of debt issuance price | 145,000 | |||
Convertible note | ||||
Disclosure of financial liabilities [line items] | ||||
Fair value of convertible note estimated | £ 141,981 | £ 112,799 | ||
Exercise price | $ / shares | $ 6.73 | |||
Risk-free interest rate (%) | 1.25% | |||
Expected volatility (%) | 52.50% | |||
Credit spread | 2,179 | 2,179 | ||
Dividend yield | 0% |
Financial risk management and_7
Financial risk management and impairment of financial assets - Credit risk and impairment (Details) £ in Thousands, $ in Thousands | Jun. 30, 2022 GBP (£) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 GBP (£) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 GBP (£) |
Financial risk management and impairment of financial assets | |||||
Amount included in cash at bank for short term commitment | £ 10,388 | ||||
Restricted cash | £ 8,235 | 7,420 | |||
Balances with banks | 212,660 | £ 839 | |||
USD | |||||
Financial risk management and impairment of financial assets | |||||
Balances with banks | $ | $ 47,999 | $ 145,098 | |||
Credit risk | |||||
Financial risk management and impairment of financial assets | |||||
Maximum exposure to credit risk | £ 9,248 | 672 | 2,799 | ||
Allowance account for credit losses of financial assets | £ 0 | £ 0 |
Financial risk management and_8
Financial risk management and impairment of financial assets - Liquidity risk (Details) - GBP (£) £ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Financial risk management and impairment of financial assets | |||
Financial obligations | £ 111,074 | £ 160,943 | £ 9,982 |
Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 10,211 | 40,589 | 8,885 |
Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 100,695 | 120,117 | 700 |
More than 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | £ 168 | 237 | 397 |
Trade and other payables [Member] | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 46,202 | 2,401 | |
Trade and other payables [Member] | Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 40,227 | 2,401 | |
Trade and other payables [Member] | Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 5,975 | ||
Lease liabilities. | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 1,942 | 1,272 | |
Lease liabilities. | Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 362 | 175 | |
Lease liabilities. | Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 1,343 | 700 | |
Lease liabilities. | More than 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 237 | 397 | |
Convertible loan notes | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 112,799 | ||
Convertible loan notes | Between 2 and 5 years | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | £ 112,799 | ||
Other borrowings | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | 6,309 | ||
Other borrowings | Within 1 year | |||
Financial risk management and impairment of financial assets | |||
Financial obligations | £ 6,309 |
Related party transactions - _2
Related party transactions - Key management personnel (Details) | 12 Months Ended |
Dec. 31, 2020 item | |
Related party transactions | |
Number of key management personnel | 3 |
Related party transactions - _3
Related party transactions - Key management compensation (Details) - GBP (£) £ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related party transactions | |||||
Salaries and other short term employee benefits | £ 629 | £ 140 | £ 244 | £ 374 | £ 181 |
Payments to defined contribution pension schemes | 8 | 7 | 14 | 39 | 24 |
Share-based payments | 79 | 76 | 156 | 92 | |
Key management compensation | £ 716 | £ 223 | £ 414 | £ 505 | £ 205 |
Related party transactions - Su
Related party transactions - Summary of transactions with other related parties (Details) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 GBP (£) shares | Jun. 30, 2022 GBP (£) shares | Jun. 30, 2021 GBP (£) | Dec. 31, 2021 GBP (£) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 GBP (£) | |
Related party transactions | ||||||
Loan from related party | £ 2,208,000 | £ 2,945,000 | £ 5,600,000 | |||
Amount due to related party | 6,309,000 | |||||
Repayments of related party loan | 737,000 | |||||
Expense from share-based payment transactions | £ 111,996,000 | |||||
Number of warrants issued but not exercised | shares | 21,265,146 | 19,265,136 | 21,265,146 | 21,265,146 | ||
Imagination Industries Ltd | ||||||
Related party transactions | ||||||
Loan from related party | £ 2,945,000 | £ 5,600,000 | ||||
Interest rate | 30% | 30% | 30% | |||
Interest charge | £ 483,000 | £ 709,000 | ||||
Management fees to related party | £ 0 | 127,000 | ||||
Amount due to related party | £ 0 | £ 0 | £ 2,945,000 | 0 | 6,000 | |
Repayments of related party loan | 737,000 | 0 | ||||
Imagination Industries Incubator Ltd | ||||||
Related party transactions | ||||||
Management fees to related party | 108,000 | 144,000 | ||||
Amount due to related party | £ 0 | 0 | £ 72,000 | |||
Vertical Advanced Engineering Ltd | ||||||
Related party transactions | ||||||
Services charged to related parties | 65,000 | |||||
Marcus Waley Cohen | ||||||
Related party transactions | ||||||
Expense from share-based payment transactions | £ 1,572,000 | |||||
Number of warrants issued but not exercised | shares | 2,000,000 | 2,000,000 | ||||
Stephen Fitzpatrick | ||||||
Related party transactions | ||||||
Loan from related party | £ 3,779,000 | $ 5 | ||||
Conversion to equity | £ 9,000,000 | |||||
Number of shares issued in exchange of PIPE financing | shares | 500,000 | 500,000 |