Rolls-Royce and Boeing-backed rocket maker Reaction Engines looks to cut costs ahead of cash deadline
Reaction Engines, a UK-based space and technology company currently developing a rocket engine for hypersonic flight, has said it is looking to cut costs to avoid asking shareholders to drum up more cash.
The Abingdon, Oxfordshire-based firm had previously raised £150m from its backers but warned in its latest Companies House filing that it would run out of money by June unless it finds more.
The company, which is backed by a slew of major players in the aerospace sector including Rolls-Royce, Boeing and BAE Systems, said there was a “material uncertainty” over its ability to continue as a going concern.
However, it added it was confident risks could be managed, given its previous success in securing outside investment. The space tech firm obtained equity investments of £23.5m in 2021 and £41m in 2022, although it made a pre-tax loss of nearly £30m that same year.
“The directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future, and thus they continue to adopt the going concern basis in preparing the financial statements,” the company said in a statement.
In an interview with Bloomberg, chief executive Mark Thomas declined to comment on potential job cuts but said the company would look at cutting back capital expenditure and scrapping a planned relocation of its headquarters.
Reaction Engines, which was founded in 1989 by former Rolls-Royce engineers Richard Varvill and John Scott-Scott, also counts the government as one of its investors.
“The year 2024 is probably a year of uncertainty for many people, particularly with elections,” Thomas said.
In 2022, Sky News reported that shareholders intended to raise a pre-IPO round of funding, with a view to listing its shares on public markets as soon as 2024.
A spokesperson for Reaction Engines said the company is “successfully commercialising its unique heat exchanger technology across a range of applications including motorsport, sustainable aviation and high-speed flight.”
They added: “The company is rapidly growing its commercial revenues which have increased by over 400 per cent last year and benefits from strong support from its shareholders having successfully raised a significant amount of equity funding over the previous two years from a range of investors. The company is confident in its ability to unlock the significant potential from its technology”.