Company Announcements

28^th September 2021

Mode Global Holdings PLC

("Mode" or "the Company" or "the Group")

Unaudited interim results for the six months ended 30 June 2021

Mode Global Holdings PLC ("LSE:MODE"), the LSE-listed Fintech Group, is pleased to announce its unaudited results for the six months ended 30 June 2021.

Ryan Moore, Mode CEO, said: "Our half-year results mark a significant milestone for Mode. 2021 has been a transformational year and, after a successful period of investing in our people and products, we are now moving at pace. We have successfully built a strong platform of regulated and innovative products to drive growth. I continue to be impressed by our team at Mode and their ability to deliver a disruptive financial ecosystem where exchanging value can be seamless for all."

Financial Highlights 

●     The Group moved into a gross profit margin of 19% following H1 2020 gross loss

●     Strong balance sheet with £5.7m cash and liquid assets of £8.3m (FY 2020: £6.2m) 

●     Revenues increased more than twenty-fold to £0.8m (H1 2020: £0.03m) reflecting 3,200% growth in trading volumes and increased payment volumes of Global Services 

●     Growth of Bitcoin under management by 327%

●     Successful completion of a materially oversubscribed placing (the "Placing"), to raise £6m to support the continued growth of Mode's financial ecosystem

Regulatory highlights

●     Granted Electronic Money Institution ("EMI") licence from the Financial Conduct Authority ("FCA") 

●     Fifth company to receive FCA registration as a Registered Cryptoasset Firm under the Money Laundering Regulations

Commercial growth

●     Entered partnership with THG Plc ("THG") for payments and loyalty solution launch

●     Continued strong growth with total onboarded users increasing by 575% and total GBP trading volume increasing by 3,200% compared to the same period in 2020

●     Appointment of Mode director, Ryan Moore, as the Company's first Chief Executive Officer ("CEO")

●     Public launch of payments and loyalty solutions

●     Recruitment of ex Open Banking Advisor, Jonathan Conway, as Chief Technology Officer ("CTO")

Post Period End

●     Influx of new customers leveraging Mode's regulated GBP crypto on-ramp following global regulatory clampdown

●     Entering charity sector with Young Lives Vs Cancer partnership

●     US cross-trading commenced on OTCQB Venture Market under ticker "MODGF"

●     Signed Crypto Climate Accord

●     First Annual General Meeting held with all resolutions passing

●     Appointment on 28th September 2021 of Arden Partners plc as Broker and Financial Adviser

For further information please visit www.modeplc.com or contact:

About Mode 

Mode is an LSE-listed fintech company on a mission to build the world's most disruptive ecosystem where exchanging value and growing wealth is seamless for all. Mode is leveraging the power of Bitcoin and Open Banking to deliver on this mission and offer people a one-stop app for growing wealth and spending smarter, as well as providing businesses with a cheaper, safer and smarter alternative to card payments and boosting loyalty amongst customers. 

Interim Management Report

Mode entered 2021 with a clear focus on building out the products which form the Mode ecosystem. The business maintained its focus on attracting customers and a flagship launch partner in a key market vertical ahead of a targeted launch date in Q2 of 2021. The Group's existing products achieved strong growth in the first half of the year with total onboarded users increasing by 575% and total trading volume increasing by 3,200% compared to the same period in 2020.

In the first quarter of the year, the Group successfully completed a materially oversubscribed placing. The resulting strong cash reserves allowed the Group to accelerate its ambitious development plans, including the launch of a first-of-its-kind QR code payments solution powered by Open Banking and a loyalty and rewards programme offering Bitcoin cashback. The placing also allowed the Group to further invest in its Bitcoin treasury strategy of holding the digital asset on its own balance sheet as a long-term store of generational wealth and as a protection against currency debasement.

In March, the Group appointed former Open Banking Advisor, Jonathan Conway, as CTO. Jonathan brought a wealth of experience in payments and Open Banking, which is a key pillar of growth and innovation for Mode.

In May, the Group announced that Mode director Ryan Moore had been appointed as the Company's first CEO, with Founder Jonathan Rowland remaining as Chairman. Ryan has  been involved with the Group as a board director since its inception and his leadership has reinforced the company's organisational efficiency and focus.

The Group has delivered on its plan to bring regulatory oversight to the digital asset industry, securing its EMI licence and FCA registration as a Registered Cryptoasset Firm under the Money Laundering Regulations. The licence and registration allow the Group to maintain its focus on providing consumers and businesses with a trusted ecosystem to exchange value.

The Group signed a Memorandum of Understanding with THG, partnering for the launch of Mode's payments and loyalty solution. THG is a market leader in the Group's targeted market vertical and, post period end, the Group announced it had formally signed a contract with the leading technology consumer brands group to offer payments and loyalty solutions for its 30+ brands.

Having successfully delivered on the launch of a first-of-its-kind payments and loyalty solution in 2021, the Group's focus will shift to the refinement and optimisation of the newly launched products, whilst reaffirming our commitment to securing key merchants in our target markets.

Outlook

During H1 2021, the Group saw strong growth in gross profit to £0.2m from a H1 2020 gross loss of -£0.04m. 

The Group generated strong revenue growth of over 3600% for Bitcoin trading compared to H1 2020, which correlated with increased user growth and transaction volume during H1 2021, in addition to the increased volatility of Bitcoin during this period.

The results reflect changing consumer attitudes in the UK towards Bitcoin as a store of value which the Group will continue to leverage through its product offerings.

As consumer behaviour towards Bitcoin evolved, the Group witnessed a changing risk environment combined with decreasing interest rates for Bitcoin lending. As such, the Group developed Mode's Bitcoin cashback rewards product and decommissioned the Bitcoin Jar. The Group is pleased to report that Mode customers have supported this renewed focus and it has not led to a material difference in the Group's Bitcoin under management. 

These results mark an important milestone for the Group as it transitions from a pre-revenue, development stage company to one that is building diversified revenue streams. These include the FCA regulated Bitcoin app, which enables customers to buy, sell and hold the cryptocurrency, the Open Banking QR code payments solution, a new-age loyalty programme offering Bitcoin cashback and the Global Services arm. 

The gains over this period also reflect the milestones that Bitcoin, as a developing store of generational wealth, has made over the period. There have been numerous large-scale shocks to the Bitcoin ecosystem which have tested its maturity and resilience, including one of the largest decreases in global hashrate seen over the digital asset's lifetime caused by a large decrease of miners from China. This was followed by a global regulatory focus on cryptocurrencies and the companies and start-ups that serve the wider ecosystem. This has reaffirmed Mode's strategic decision to pursue FCA regulation in the belief that innovation and regulation are not mutually exclusive. The Group firmly believes that this focus is necessary for the long-term growth of the industry and is the beginning of a positive influence from regulators globally, which is needed for Bitcoin to continue its growth trajectory. 

Building on the Group's trusted brand, Mode became a signatory of the Crypto Climate Accord, committing to net-zero emissions from all crypto-related activities by 2030. Mode believes that customers should be able to invest in Bitcoin safe in the knowledge that they are not harming the environment. To ensure this obligation is met, the Mode Sustainability Committee was set up and is drawing up plans to achieve this ahead of 2030 as well as to achieve net-zero emissions from all other business activities. This will not only function as a significant differentiator for the Company but will also ensure there are no barriers in the way of any participant entering the Mode ecosystem. 

In June, Mode signed a flagship partnership agreement with THG with the rollout commencing post-period end. This marks the beginning of Mode's Open Banking, QR code payment solution being available to public customers and it will be rolled out to all of THG's 30+ brands. This signifies the start of the Group's primary user acquisition strategy of attracting merchant's customers to the Mode ecosystem through Bitcoin cashback. With the pandemic turning the QR code into an everyday essential, Mode's QR code powered payments solution transitioned from an action requiring education to one of intuition for the majority of the UK population. 

Following minimal marketing spend to date, the Group will start increasing expenditure on merchant and customer acquisition towards the end of 2021. Mode's growth strategy remains focused on intelligently targeting customers and merchants who can bring value to the Group's ecosystem and contribute to generating revenue from the early stages of our relationship.

Following the successful launch of the Group's primary products in the first half of 2021, merchant acquisition has become a primary focus for the Sales and Marketing teams. This will help to further diversify revenue streams beyond existing ones with further launches planned in the coming year. This includes the Group's newly developed rewards and loyalty programme which offers Bitcoin cashback in addition to data-led loyalty offers.

Through its products and services Mode is not only focused on maximising the user experience, but is tackling the outdated underlying infrastructure that underpins global payments and loyalty systems. Mode's services will enable customers to better store and grow value in an increasingly digitised world. Firmly at the centre of this financial ecosystem, Mode is able to empower both merchants and consumers to spend smarter and grow wealth. 

Finally, I would like to thank all existing employees, directors and shareholders of the Company for their continued support. I'm proud to have delivered on our commitments, and built a strong platform of regulated and innovative products, including a Bitcoin wallet and a revolutionary payments and loyalty product. I am more confident than ever that we are well positioned to solve the inadequacies of today's payment landscape and continue building a disruptive ecosystem, where exchanging value and creating wealth is seamless for all.

Ryan Moore

CEO Mode Global Holdings PLC

Responsibility Statement

We confirm that to the best of our knowledge:

●     the Interim Report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the UK; 

●     gives a true and fair view of the assets, liabilities, financial position and profit/loss of the Group;

●     the Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

●     the Interim Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.

The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

Ryan Moore

CEO Mode Global Holdings PLC

CONDENSED CONSOLIDATED STATEMENT OF INCOME

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       COMPANY INFORMATION

Mode Global Holdings PLC is a public company, limited by shares, and incorporated in England and Wales. The registered office is Finsgate, 5-7 Cranwood Street, London, United Kingdom, EC1V 9EE.

The Company's principal activity is being the parent of a group of technology start-ups, including cryptocurrency and a digital wallet (Mode and Mode for Business), electronic payments, Greyfoxx (EMI), and JGOO (Mode Global Services).

2.       ACCOUNTING POLICIES

Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 June 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and are presented in sterling. They do not include all of the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020, which have been prepared in accordance with UK adopted International Financial Reporting Standards.

The financial information has been prepared under the historical cost convention.  The principal accounting policies adopted are set out below and these policies have been consistently applied.

The preparation of financial statements requires the Group's management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed below.

Basis of consolidation

The consolidated financial statements include the results of the Group as if they formed a single entity for the full period or, in the case of acquisitions, from the date control is transferred to the Group.  The Company controls an entity when the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, whereby it is classified as a subsidiary. Intercompany transactions and balances between Group companies are therefore eliminated in full. 

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.

Subsidiaries are all entities over which Mode Global Holdings PLC has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. All subsidiaries have a reporting date of 31 December.

Going concern

The consolidated financial statements are prepared on the going concern basis. As expected for any start-up, the Group has incurred significant operating losses.

With the listing to the main market on October 5th 2020 raising £7.5m in funds and a subsequent £6m market placing on 3^rd March 2021, the Directors are confident that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.  The financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

The directors are aware of the risks and uncertainties facing the business, but the assumptions used are the directors' best estimates of the future development of the business.

Summary of critical accounting estimates and judgements

The preparation of financial information, in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires the directors to exercise their judgement in the process of applying the accounting policies which are detailed above. These judgements are continually evaluated by the directors and management, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key estimates and underlying assumptions concerning the future, and other key estimated uncertainties at the date of the financial statements, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:

Accounting for cryptocurrencies

The Group's cryptocurrencies are accounted for as Intangible Assets using the revaluation model. The valuation of cryptocurrencies is a key source of estimation due to the volatility of prices in the market. Treasury assets held are marked at Fair Value using the closing market price at the period end (30 June 2021).

Share-based payments

The basis for the share-based payments expense has been set out in note 10. In accounting for the fair value of options and warrants, the Company makes assumptions regarding share price volatility, risk free rate, and expected life, in order to determine the amount of associated expense to recognise.

Revenue recognition

Digital Wallet - Fibermode

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business. VAT is not charged on Fibermode's invoices.

Revenue represents commission on customer trading activities and includes interest received on Bitcoin holdings lent out to a third-party network. Commission is recognised on the day the trade completes.

Global Services - JGOO

Revenue is recognised on service contracts at the point at which the service has been completed, or for contracts covering a period of time, monthly over the period of the contract. Revenue excludes intra-group sales and value added taxes and represent funds received on a gross basis, as the transaction revenue is received by JGOO as the principal in respect of completing the payment transaction.  JGOO controls the service of completing payments on its payments platform and bears primary responsibility for the fulfilment of the payment service. JGOO has full discretion in determining fees charged to UK merchants, which is independent of the revenue it receives from Alipay and WeChat Pay. It therefore bears the risk when completing transactions and reports these items as separate transactions.

Tangible assets

Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the assets.

Subsequent costs are included in the asset's carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to write off their cost over their estimated useful lives at the following annual rates:

Computer equipment: 33% straight-line

Plant and machinery: 33% straight-line

Intangible assets

Intangible assets are reported separately between Bitcoin assets (Treasury holdings) and acquired software.

Software

Software has a finite life and is therefore carried at cost less accumulated amortisation. Amortisation is calculated using a straight-line method to allocate the cost of software and websites over their estimated useful lives of three years.

Cryptocurrency assets

The bitcoin cryptocurrency assets (under IAS 38) for Treasury are recorded as intangible assets and can be measured at either cost or revaluation. The Group has elected to measure them at revaluation, as there is now an active market for these assets across many digital exchanges (Coinbase, Kraken etc), and under IFRS 13 recognises the bitcoin assets at fair value, reflected in both the Revaluation Reserve and in Other Comprehensive Income. The reversal of the value on the prior gain of these assets for the period until 30 June 2021 is shown under Other Comprehensive Income / (Loss).

3.       SEGMENTAL REPORTING

The Group's revenue is made up of the trading and interest commission on cryptocurrency assets (Fibermode), as well as bespoke payment and marketing solutions on its Global Services platform (JGOO). 

The Group currently only operates in the UK and so for now the presentation of a geographical split is not applicable.

4.       EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the number of ordinary shares in issue at the end of the period. The weighted average number of shares for 2020 has been restated to be comparable to 2021 due to the listing of Mode Global Holdings on the London Stock Exchange on October 5^th 2020. 

5.       SHARE CAPITAL

For the recent placing to the main market on the London Stock Exchange on March 3^rd 2021, the following transactions occurred:

§ On the 3^rd March the Company issued 10,909,091 ordinary shares of £0.01 at £0.55 per share.

§ This brought the total issued share capital to 91,446,096

The ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights. 

The costs directly associated with the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

6.       INTANGIBLE ASSETS

The intangible asset additions relate to further Bitcoin purchases with the Group pursuing its long-term Treasury strategy of acquiring Bitcoin as a store of value for liquidity investment.

The Customer BTC intangible assets have been derecognised from the balance sheet as the Company can no longer determine their yield due to the decommissioning of the Bitcoin jar product. This also applies to Customer BTC intangible liabilities. The revaluation of the Bitcoin Treasury assets has been shown above. £455,000 has been revalued through Other Comprehensive Income/(Loss) whilst the remaining £50,000 has been recognised as an impairment within expenses.

7.       TRADE AND OTHER PAYABLES

8.       TRADE AND OTHER RECEIVABLES

Trade receivables increased due to requirements for added liquidity for third parties that Mode uses for Bitcoin trading.

9.       SHARE-BASED REMUNERATION

The Company operates an unapproved share-based compensation plan, under which the Company receives services from employees as consideration for equity instruments (options) of Mode Global Holdings plc.  The awards were granted on two separate dates being October 27^th 2020 and November 4^th 2020, by Mode Global Holdings plc, and the fair value of the employee services received in exchange for the grant of the options is recognised as an expense under IFRS 2. A credit is recognised directly in equity (Share Option Reserve). 

The total amount to be expensed was determined by reference to the fair value of the total options granted using the Black Scholes model (the details about which can be found in the Annual Report 2020).

The first point at which options could be exercised from was June 17^th 2021 when the annual report was published, but so far no options have been exercised.

The latest date that the options can be exercised is the tenth anniversary of the Grant Date, and if not exercised before then the options will automatically lapse.

The incremental Option expense for H1 June 2021 was derived from the Black Scholes model and the additional options vested. The Fair Value price is the same as it was stated on the annual report 2020, being £0.18.

Due to the additional options vesting during the H1 2021 period, the expense realised during this period was £0.6m, taking the Option Reserve total to £0.9m.

10.     RELATED PARTY TRANSACTIONS

During the period, CEO and Director of Mode Global Holdings PLC, Ryan Moore, increased their interest in Keve Family Limited Partnership from 8% to 33%. Keve FLP holds an interest of 3.3% in the MGH plc.

11.     CONTROLLING PARTY

There is no controlling party of the Group.