Basis of consolidation

Vertical Aerospace Ltd is the parent of the Group and has 100% ownership interest and voting rights of Vertical Aerospace Group Limited, which is its only material subsidiary.

The consolidated financial information 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

Management has prepared a cash flow forecast for the Group and has considered the ability for the Group to continue as a going concern for the foreseeable future, being at least 12 months after the issuance of this financial information.

The Group is currently in the research and development phase of its journey to commercialize eVTOL and hybrid-electric technology. Consistent with being in the development phase, the Group has invested heavily in research to support the development of its aircraft. The Group is not currently generating revenue and has incurred net losses (other than from fair value movements on financial liabilities at fair value through profit and loss) and net cash outflows from operating activities since inception.

As of June 30, 2026, the Group had £50 million of cash and cash equivalents on hand and a net shareholders’ deficit of £34 million.

On August 11, 2026, the Company closed a registered direct offering which culminated in gross proceeds of $35 million (£26 million), before deducting underwriting discounts and commissions and other offering expenses. On August 10, 2026, coinciding with the pricing date of the above, Yorkville Capital purchased 25,000 Series A Convertible Preferred Shares at a purchase price of $960 per Preferred Share for an aggregate purchase price of $24 million (£18 million).

On August 12, 2026, the Company entered into agreements with Mudrick Capital involving, among other things, amendments to the Convertible Note Purchase Agreement to accelerate the issuance of the remaining $35 million (£26 million) of Additional Notes thereunder.

As at the date of this filing, the Group had approximately £99 million of cash and cash equivalents on hand, which includes the proceeds from the registered direct offering, issuance of Series A Convertible Preferred Shares, and partial settlement of the Additional Notes as mentioned above. Settlement of the remaining Additional Notes is expected to occur on or about August 13, 2026.

The Company’s ability to access the remaining $200 million under the Series A Convertible Preferred Shares Facility is subject to a number of conditions, including requirements to maintain a minimum liquidity level (that is, cash and cash equivalents) of $50 million and to be solvent, as well as limitations on tranche size and minimum periods between drawdowns, which may affect the timing and amount of funding availability. The facilities also include customary structural features typical of arrangements of this nature, including limits on the proportion of the Company’s shares that may be held by counterparties at any one time. The financing package is intended to support the Group’s funding requirements as it progresses towards its strategic milestones, including certification. However, access to these facilities remains subject to the conditions described above, and there can be no assurance that the Group will be able to access such funding in the amounts or at the times assumed in its forecasts, or at all.

To position itself to deliver upon its stated operational objectives, management currently projects that its net cash outflows from operations within the next 12 months after issuance of this financial information to be approximately £110 million.

The forecast reflects management’s prioritisation of expenditure, including a focus on the Group’s near-term certification, manufacturing and testing activities. These include progress towards Critical Design Review and activities to enable the build and test of certification-conforming aircraft. Management has prioritised investment in, and execution of, these near-term activities to support future funding initiatives and strategic options. Accordingly, the forecast does not assume a ramp-up in expenditure to accelerate longer-term activities until after further progress has been made against these milestones. However, in the absence of additional funding or other support, further actions would be required, including the reprioritisation of expenditure and other cost reduction measures.

Subject to market conditions, the Group continues to evaluate and pursue a range of potential actions to support its ongoing funding requirements. These may include capital raises, strategic transactions, partnerships, commercial arrangements, or other financing alternatives. Management continues to actively assess these options and their timing. However, there can be no assurance that any such action will be completed, or that additional funding or other support will be available on acceptable terms or within the timeframe necessary to sustain the Company’s ongoing operations in accordance with the business plan.

As part of the going concern assessment, Management has considered and evaluated any potential impact of the complaint filed by Archer Aviation Inc. in the U.S. District Court for the Eastern District of Texas, on February 23, 2026, alleging infringement of Archer Aviation Inc.’s design and utility patents under the U.S. Patent Act (the “Complaint”). The Company believes that the asserted claims in the Complaint are without merit and intends to defend the allegations vigorously.

Because of the restrictions noted above imposed by the financing package executed in April 2026, including limitations on the funding accessible thereunder over the next 12 months, and unless the Company is able to raise additional funds in the intervening period, management projects that its current existing resources and facilities will be sufficient to fund its ongoing operations to the end of the third quarter of 2027.

The Convertible Senior Secured Notes Indenture contains a covenant requiring the Group to maintain a minimum cash balance of at least $10 million (approximately £7.5 million) at all times. Based on management’s current forecasts, this covenant would be breached during the same period in which the Group’s available cash resources would otherwise become substantially depleted, unless additional capital is raised. Such a breach, if not cured, would result in an event of default under the Indenture, including potential acceleration of the Convertible Senior Secured Notes, which the Group would not have sufficient funds to repay.

Absent additional funding, the need to reprioritise expenditure, including those related to the Group’s certification programme, may result in delays to previously communicated timelines and the deferral of certain objectives.

Consistent with being in the development phase of its aircraft, the Group has not yet generated revenue and continues to be dependent on raising additional capital to fund its operations. This dependency indicates that a material uncertainty exists that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) on the Group’s ability to continue as a going concern and therefore the Group may be unable to realize the assets and discharge the liabilities in the normal course of business. The unaudited condensed consolidated interim financial information have been prepared assuming that the Group will continue as a going concern, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business and do not include any adjustments that would result if the Group were unable to continue as a going concern.

Convertible Preferred Equity

During the period, the Group entered into a Securities Purchase Agreement under which it issued Series A Convertible Preferred Shares. Management exercised significant judgement in determining the appropriate classification of the Convertible Preferred Shares under IAS 32 and IFRS 9.

The Preferred Shares do not satisfy the IAS 32 fixed-for-fixed criterion because the conversion feature permits settlement through a variable number of the Company’s ordinary shares. Accordingly, the instrument has been classified as a financial liability measured at fair value through profit or loss. Management also concluded that the instrument should be measured as a single financial liability rather than separately accounting for embedded derivative features.

The fair value of the Series A Convertible Preferred Shares is determined using valuation models incorporating both observable and unobservable market inputs. Significant assumptions include the Company’s share price, expected volatility, credit spread, and assumptions relating to conversion, redemption and triggering events. The fair value measurement is classified as a Level 3 measurement within the IFRS 13 fair value hierarchy due to the significant use of unobservable inputs.

The valuation techniques and significant assumptions used in determining the fair value of the Series A Convertible Preferred Shares are disclosed in Note 15.

Except as described above, the significant judgements and key sources of estimation uncertainty applied in preparing this unaudited condensed consolidated interim financial information are consistent with those applied in the Group’s consolidated financial statements for the year ended December 31, 2025.