2021 Annual Report
Mode (LSE:MODE)
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2020.
Holdings
02
Introduction
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Contents
Company Information
05
Strategic Report
06
Business Review
06
Financial Review
10
Strategy in 2022
13
Approach to Risk
14
Corporate Governance
19
Directors’ Report
26
Directors’ Remuneration Report
31
Independent Auditor’s Report To The Members Of Mode
Global Holdings PLC
33
Group Financial Statements
42
Notes to the Group Financial Statements
48
Company Financial Statements
72
Notes to the Company Financial Statements
74
01
02
03
04
05
06
07
08
09
10
03
Introduction
To be the most
trusted crypto
company,
enabling our
customers to
discover, own,
and utilize
digital assets.
- From every employee, Executive and Board Member
at Mode.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Introduction
04
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Company Information
Company Information
Directors:
Jonathan Rowland
Yu (Rita) Liu
Richard Morecroft
David Anderson
Michael Robertson
David Shrier
Registered office:
Finsgate,
5-7 Cranwood Street,
London, EC1V 9EE
Registrar:
Neville Registrars
Neville House,
Steelpark Road,
Halesowen, B62 8HD
Bankers:
National Westminster bank Plc
250 Bishopsgate,
London, EC2M 4AA
Auditors:
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London, EC1V 9EE
Solicitors:
Locke Lord (UK) LLP
Second Floor,
201 Bishopsgate,
London, EC2M 3AB
Company Secretary:
Elemental CoSec Ltd,
27 Old Gloucester Street,
London,
WC1N 3AX
Company Number:
12794676
Website:
https://www.modeplc.com/
For all enquiries, please contact:
info@modeplc.com
05
Introduction
Mode entered 2021 with a clear focus on
building upon 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 achieved strong
growth in the year with total onboarded
users increasing by 261% and total trading
volume increasing by 732% compared to
the same period in 2020.
In February 2021, the Group successfully
completed a materially oversubscribed
share 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, holding the digital asset on its
own balance sheet as a long-term store of
generational wealth and as a protection
against currency debasement.
The Group 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 partnership agreement
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 went live in Q3 2021
with their 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.
In October, we launched our first-ever
Bitcoin Cashback product, which opened
up opportunities for UK shoppers to earn
Bitcoin through safe and secure avenues
when they shop online at a number of
partner brands. The move put Mode at the
forefront of online shopping with Bitcoin,
offering store visitors the opportunity to
accrue the best-performing asset of the
decade safely and securely.
This was another step forwards in building
the path to a more inclusive ecosystem
with Crypto Rewards, as we look towards
2022 which promises to be a year of more
opportunities as the market matures and
more consumers and businesses demand
crypto rewards that are more easily
transferable across different merchants.
Strategic Report
Business Review
06
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
07
Strategic Report
Mode App: Key Performance Metrics
12.4%
Average month on
month trading volume
growth
£1,330+
Average Bitcoin balance
per customer with pos-
itive BTC balances (in
GBP)*
£2,995+
Average trading volume
per trading customer (in
GBP)*
70%
Of trading customers are
repeat buyers (traded
more than once)
5 Stars
64% of our reviews on
Trustpilot were 5 stars/
Excellent.
+ Exchange rate used the average for 2021(1 BTC = £34,521)
Please note that these metrics will continue to change and evolve in the next Annual
Report as new products and services are added to the Mode ecosystem.
The Key Performance Indicators (KPIs) displayed below were used to
monitor the performance of our Mode App in 2021.
08
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode’s key focus for 2022 is on scaling
the user base and growing revenue,
given that the major development
and establishing of their concept and
products have taken place.
The Group has segmented its target market
strategically and envisions a specific path for
each type of customer to become acquired.
Through customer data analysis, the Group
will be able to optimise and adjust its
targeting marketing and advertising efforts to
drive new user numbers more effectively, but
initial metrics bear out that customers tend to
begin their relationship with Mode via three
different products; Bitcoin Payroll, Bitcoin
Cashback and Bitcoin trading.
The advantage of this approach is that,
through the use of the Group’s products in
the Mode app, users can move through the
gears from Crypto curious, to Crypto newbie,
to Crypto native, as their experience and
comfort levels with crypto grows. Through
this suite of products that embed crypto
into people’s daily lives, Mode caters to
the different segments of the market, as
Crypto gradually and surely heads to mass
adoption..
Mode in 2022
09
Strategic Report
Performance of the business during
the period and the position at year
end.
Revenue for the year increased significantly
from £450k to £1,313k. The Group
generated this strong revenue growth
primarily through significant growth in
Bitcoin trading year-on-year. During 2021
Mode saw a large increase in user numbers
and transaction volume as the brand
awareness grew and the market saw an
increase in Bitcoin price volatility driving
additional trading volumes.
Administrative expenses were £9,382k
(2020: £3,518k) increasing by £5,864k (167%)
during the year. This was driven by higher
people costs of £4,162k (2020: £1,752k),
which included a share option expense of
£743k (2020; £315k). Also to drive growth in
revenues, there was a significant increase
in advertising spend to £1,394k (2020:
£188k) an increase of 641% for the year.
Finance Costs fell from £284k in 2020 to
nil in 2021 as the Group was not reliant
on debt to fund operations and growth
following the placing in February 2021.
Cash Balances ended the year at £4,155k
(2020: £5,365). The slight reduction reflects
the increase in net cash losses from
operations of £8,134k incurred to continue
to grow the business offset by the issuance
of share capital in February 2021 which
raised £5,741k and gains from Bitcoin
treasury trading of £1,105k.
Lastly, Other Comprehensive Income
reflects the £261k reduction (2020: £455k
increase) in the value of our Bitcoin
investment held during 2021.
The key performance indicators used to
monitor the success of our business are set
out on page 8. These may change in the
next Annual Report as new products and
services are added to the Mode app.
Strategic Report
Financial Review
10
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Notes to the Company Financial Statements
11
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Strategic Report
12
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Approach to risk
In 2021, we focused on improving our
approach to risk management and how we
track and mitigate risk. We implemented
measures to reduce technology and
information security risk and growing
the technology team to prepare for the
growth expected in 2022. Covid-19 has
seen an unprecedented impact on how our
business operates and we have adapted
well to working 100% from home. This global
situation has brought about greater focus
on ensuring we plan and manage for
business continuity and we have continued
to develop our risk management framework
through the Risk Register which is
continually updated and managed by the
Executive team. This is facilitated through a
regular cadence of meetings and decision
points to ensure management remains
informed and has all the information they
require to make decisions quickly.
Risk focused approach - Embedding
in our culture
The day-to-day focus on risk is already
embedded in our approach and culture.
However, our objective is to enhance our
understanding and management of risk
and control across the business by:
•
recording risk, mitigations and actions
plans in the Risk Register;
•
embedding risk and control in all our
thinking and in decisions;
•
identifying the most significant
risks within from operations, taking
appropriate actions to address and
mitigate them;
•
challenging our strategic planning from
a risk and control perspective.
The Board oversees and reviews our
approach to risk and control, with
responsibility for risk management sitting
at all levels across Mode – including the
Board, the Executive Committee and all
members of the teams. During 2021, we will
continue to improve our management of
risk at Mode with the development of an
enhanced risk management framework and
improvements in action plans.
Types of risk
Our approach covers different types of risk,
including:
•
Business Strategy Risk
•
Product Risk
•
Regulatory Risk
•
Operational Risk
•
Technological Risk
Additionally, we track emerging risks which
while not seen as impacting the business
yet are changing rapidly.
Risk Strategy in 2022
13
Strategic Report
Type of Risk
Details
Business strategy risk
Mode’s business strategy risk can be summarised as the
potential impact of strategic decisions (which can include
providing new products and services) or a defective or
inappropriate strategy, including a lack of response to a
situation.
At Mode, we take a proactive and agile approach to strategic
risk management. Using risk prioritisation processes allows us to
direct our resources toward the risks with the biggest potential
impacts. Through continual research and iterative processes,
we ensure decisions are made that allow the business to adjust
and respond to changes as necessary. This includes changes
in the legal or regulatory landscape, market adoption and
competition. This approach means we can be flexible and
responsive whilst continuing to deliver our business aims and
objectives.
Product risk
Launching any product or service creates the potential for
losses, born from a variety of issues including poor planning and
non-adherence to regulations or standards.
We deal with product risk through a combination of research,
effective planning, consultation with experts, e.g. legal opinions,
and an incremental and feature-led roll out. Through extensive
engagement with relevant experts and customer groups, we
have developed a product roadmap and delivery schedule
that is informed, measured, and flexible. This allows us to
minimise the risk of any losses, from inception to live, whilst
allowing the business to quickly respond to opportunity, adapt
to market conditions and quickly rectify issues.
Our products and services reflect our desire to treat customers
fairly and are developed under the FCA’s Treating Customers
Fairly (TCF) principles to ensure we provide positive customer
outcomes and minimise the risks of breaching regulations and
standards.
Approach to Risk
14
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Type of Risk
Details
Regulatory risk
Regulatory risk is the effect of failure to comply with laws and
regulations and any changes therein. The UK regulation under
the FCA is mature and well understood. The FCA’s recent steps
to mandate the registration of cryptoasset businesses under
Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) Regulations 2017, as amended (MLRs)
show a proactive approach, providing greater clarity to Mode.
As previously mentioned, we are active in having conversations
with the regulator and continue dialogue to ensure our business
remains compliant. Our partnership with Modulr allows us to
work together to anticipate changes, adapting the business as
required to minimise impacts.
Operational risk
Operational risk covers the uncertainties and difficulties we face
on a day-to-day basis. We have created an efficient governance
and management structure to ensure we can systematically
monitor, manage and control factors affecting our operation.
This structure is agile and responsive to new challenges with
decisions made quickly to minimise disruption and ensure business
continuity. As the business grows, our operational structure
and governance are adapting to increased demand and new
challenges. We employ experienced people to anticipate these
changes, preparing through scenario planning and practice,
ensuring resilience is in place. We actively manage the risk that
our operations adversely impact customers or our competitive
position to ensure positive outcomes for our customers and the
business. We are always learning and therefore improving our
approach in ensuring we have a robust and efficient operation.
15
Strategic Report
Type of Risk
Details
Technological risk
Technology risk is the potential for any technology failure or cyber
incident to disrupt the business. At Mode, technology is at the
core of our operations, so we manage technology risks proactively
and appropriately. Our approach focuses on de-risking several
areas including:
•
internal system failures
•
external third-party failures
•
security breaches
•
malicious attacks
We take a proactive and continual approach to mitigate these
risks through cutting-edge and intelligent design, systems
redundancy, continual security/penetration testing and activity
monitoring. This continual approach is adapted to respond to new
products, scale and new threats.
As a holder of digital assets, we have developed strong security
procedures and protocols to minimise the chances of breaches.
As previously mentioned, we partner with best-in-class digital
asset custodians who are insured for loss of assets in cold storage.
Our operational and financial governance processes ensure
minimal exposure to losses through an unlikely breach, whether
that be external or internal. Our staff are trained to combat social
engineering bases attacks, and our customer-facing technology
requires multi-layer authentication in order to combat fraud.
Approach to Risk
16
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Key Stakeholders
How we engage
Employees
As a team of under 50 people, there is regular engagement on
a daily basis between all departments either in the office or
using video conferencing. Regular business wide updates are
given through a variety of channels with more formal updates via
presentations around key events.
Shareholders
As a listed business, we have a dedicated investor website with
all key information and RNS updates. We also conduct regular
presentations with investors, both institutional and retail around
the time of key trading updates. Presentations are made available
online for those who did not have the opportunity to attend in a
live capacity
Suppliers
We have multiple processes to ensure ongoing assessment
and onboarding of new suppliers. We maintain strong personal
relationships at all levels within our business across all our supply
chain and update each other through regular meetings and
communication.
Customers
Our customers are at the heart of everything we do. We use email
and social platforms to update them about new products and
regularly review any feedback we received to understand how we
can improve their experience.
Section 172 of the Companies Act 2006
requires Directors to take into consideration
the interests of stakeholders in their decision
making. They must make decisions in
good faith that they believe will most likely
promote the success of the Group for the
benefit of its shareholders. In making these
decisions the Directors must consider,
amongst other things:
•
Likely long-term impact of their
decisions
•
Interests of employees and the need
to act fairly between members of the
Group
•
The reputation of the Group with
customers and suppliers
•
The community and environment in
which the Group operates
The Board has demonstrated our
commitment to the ongoing consideration
for stakeholder interests through this report
including on pages 26 and 27 and in the
Corporate Governance and Stakeholder
sections. The Board is responsible for
maintaining adequate accounting records
and seeks to ensure compliance with
statutory and regulatory obligations. An
explanation from the Directors about
their responsibility for preparing the
financial statements is on page 29 in the
Statement of Directors’ Responsibilities. The
Company’s external auditors explain their
responsibilities on page 39.
On Behalf of the Board
Jonathan Rowland
Chairman
Responsibility for preparing the Annual
Report and Accounts
17
Strategic Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Strategic Report
18
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Corporate governance statement
Our Board has a collective objective of
promoting the long-term success of Mode
for its shareholders and provides dedicated
leadership in the development and
promotion of the business’ strategy, and
the monitoring of its implementation, on an
ongoing basis. A key part of our Board’s role
is ensuring that we have the appropriate
people, financial and other resources to
achieve our aims.
As a company with a Standard Listing,
we are not required to comply with the
provisions of the UK Corporate Governance
Code. The directors have decided, so far as
is practicable given our size and nature, to
voluntarily adopt and comply with the QCA
Corporate Governance Code. Our Board
maintains governance structures that are
fit for purpose and support good decision
making.
Board activity
Our Board’s meeting schedule for 2022 has
been approved and our Board will meet
formally at least four times during the year
with additional ad hoc meetings called as
and when appropriate, as was the case
in 2021. Our Board’s activities throughout
the year are underpinned by our external
reporting calendar and our internal
business planning processes. A rolling
annual agenda ensures that all important
topics receive sufficient attention. Standing
agenda items provide an anchor to the
strategy and provide our Board with a
consistent view of progress during the year.
At each Board meeting the standing
agenda includes:
•
quorum;
•
approval of minutes (circulated to all
directors in advance for comment) and
review of outstanding actions;
•
corporate governance and Committee
reports;
•
reports from the Chairman, including key
business developments;
•
and financial and operational review.
The agendas and accompanying papers
are distributed to Board members in
advance of each Board meeting. These
include reports from Executive Directors,
and other members of the Executive team,
as appropriate. All directors have direct
access to the Executive team and other
senior management should they require
additional information on any of the items
to be discussed.
Expertise and experience of the
directors
Our Board is satisfied that the directors,
both individually and collectively, have
the range of strategic and commercial
experience, knowledge, diversity of
experience and dedication necessary, to
lead Mode. Our Board is responsible for
the appointment, removal and re-election
of directors and when such a decision is
required it will take account of our need
for a balance of market, operational and
financial experience.
Appointment of directors
Mode’s Articles of Association contains
detailed rules for the appointment and
retirement of directors. There is a formal
procedure in place to select and appoint
new directors to our Board. These directors
Corporate Governance
19
Corporate Governance
are required to retire at the next Annual
General Meeting (AGM), but can offer
themselves for re-election by shareholders.
Under the Articles, all directors are required
to submit themselves for re-election at
intervals not exceeding three years.
All of the directors shall retire and,
being eligible, each offers themself for
reappointment by the shareholders at the
AGM.
Independence of the Non-Executive
Directors
As at the date of this report, our Board
comprised the Chairman, the Executive
Directors and the Non-Executive
Directors. We have not appointed a senior
independent director. These appointments
are reflective of our size and nature as a
company, and the size and composition
of our Board. We are looking to appoint
independent Non-Executive Directors in the
future.
Circumstances likely to impair, or which
could appear to impair, a director’s
independence include whether a director
participates in our share option scheme.
As an early-stage company, we have
granted options to Non-Executive Directors
under Mode’s share option scheme. Our
Board does not consider that the granting
of options to Non-Executive Directors, or
the continued vesting of options already
granted, impairs the independence of those
directors concerned.
Committees and Policies
Our Board has delegated certain
responsibilities to members of the
Executive team which can be exercised
through committees, approved policies
and guidance for certain functions of the
business, including:
•
Audit Committee
•
Disclosure Committee
•
Remuneration Policy
•
Share Dealing Policy
•
Internal Policies - Anti Bribery and
Corruption (ABC), Whistleblowing, Anti-
Fraud, Know Your Customer (KYC) and
Anti Money Laundering (AML)
•
Diversity and Inclusion Guidance
The matters reserved for the Board and its
Committees include:
•
Group strategy, which is reviewed by
the Board and management regularly
during the year;
•
Group’s Budget approval;
•
Risk management approach and risk
mitigation;
•
Direct shareholder communications;
•
Board membership and other
appointments;
•
Corporate governance matters; and
•
Remuneration of directors and the
Executive team.
The Board as a whole will review the Board’s
size, structure and composition and scale
and structure of the directors’ fees, taking
into account the interest of shareholders
and our performance as a company.
Corporate Governance
20
Corporate Governance
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Audit Committee
The Audit Committee, which comprises
David Anderson and Jonathan Rowland,
are responsible, amongst other things,
for monitoring Mode’s financial reporting,
external and internal audits and controls,
including reviewing and monitoring the
integrity of our annual and half yearly
financial statements, reviewing and
monitoring the extent of non-audit work
undertaken by external auditors, advising
on the appointment of external auditors,
overseeing our relationship with external
auditors, reviewing the effectiveness of
the external audit process and reviewing
the effectiveness of our internal control
review function. The ultimate responsibility
for reviewing and approving the annual
report and accounts and the half-yearly
reports remains with the Board. The Audit
Committee gives due consideration to laws
and regulations, the applicable provisions
of the Quoted Companies Alliance
Corporate Governance Code and the
requirements of the FCA’s Listing Rules.
Disclosure Committee
Our Board has delegated to the Disclosure
Committee responsibility for overseeing the
disclosure of information by the Company
to meet its obligations under the Market
Abuse Regulation, the FCA’s Listing Rules
and the Disclosure and Transparency Rules.
The Disclosure Committee is chaired by the
Company Secretary or the Chairman and
comprises the Chairman, the Company
Secretary/General Counsel (Nathalie
Hoon), the Chief Operations Officer (Richard
Morecroft), and the Chief Executive Officer
(Rita Liu).
Remuneration Policy
Refer to the Directors’ Remuneration Report
on page 31.
Share Dealing Policy
We have adopted a share dealing policy
which sets out the requirements and
procedures for dealings in any of our
listed securities. The share dealing policy
applies widely to all directors of Mode and
our subsidiaries, certain employees and
persons closely associated with them. The
policy complies with the Market Abuse
Regulations, which came into effect on 10
July 2016 and was transposed into UK law
on 31 December 2020.
Internal Policies
We have an employee handbook in
place which details our expectations
of employees and promotes an open
culture. This is supported by policies
covering Anti Bribery and Corruption (ABC),
Whistleblowing, Anti-Fraud, Know Your
Customer (KYC) and Anti Money Laundering
(AML). Training and assessments are
undertaken to ensure the team are aware
and compliant with these policies.
Diversity and Inclusion Guidance
Specifically in terms of Diversity & Inclusion,
we believe in building accessibility,
transparency and credibility around digital
assets, and we’ve made it our mission
to propel an unprecedented wave of
democratisation and inclusion.
We strongly believe that creating a diverse
team and a culture of inclusion is absolutely
21
Corporate Governance
essential to our business success. We simply
cannot build a product that is accessible
for all without ensuring that our team is
both representative of our customers and
the general population as a whole, and
that everyone at Mode feels comfortable
speaking up, contributing to the discussion,
and bringing their whole, authentic selves
to work.
We are, and always have been, committed
to baking inclusion into our processes and
ways of working, and promoting equality of
opportunity in everything we do. Whilst we
recognise that we’ve made strong progress
in some areas (for example, our gender
split across the business is slightly ahead
of our sector average, and our gender split
within the Executive team sits well above
average), we know that we still have work
to do.
It goes without saying that we do not
accept discrimination, harassment or
bullying of any kind.
Risk management and control
Our Board is responsible for promoting
the company’s long-term success for the
benefit of shareholders, as well as taking
account of other stakeholders including
employees and customers. This includes
ensuring that an appropriate approach to
risk is embedded throughout the Group,
taking into account both opportunities and
threats. To discharge this responsibility,
the Board has established processes for
risk management and internal control and
reserves for itself the setting of our risk
appetite as a business.
The Board retains ultimate responsibility
for our approach to risk and control,
but has delegated in-depth monitoring
of the establishment and operation of
prudent and effective controls to the Chief
Operations Officer.
Members of the Executive team are
responsible for the application of
internal control and risk management,
for implementing and monitoring the
operation of the systems of internal control
and for providing assurance to the Chief
Operations Officer and the Board.
Stakeholders
The Board believes that maintaining strong
stakeholder relationships is essential to
our long-term, sustainable success, and is
committed to effective engagement with all
stakeholders within Mode.
Our shareholders
We are committed to establishing a
strategy and business model which
promotes long-term value for shareholders.
The Board also aims to be transparent
and have open engagement with our
shareholders. This enables the Board to
clearly communicate its strategy, provide
updates on business performance and
receive regular feedback. It also gives the
opportunity to respond to questions and
suggestions.
At Mode, we provide regular updates via
RNS and RNS Reach, as well as social
media publications. The Chief Investor
Relations Officer provides regular reports to
the Board on shareholder interactions.
Shareholder communications, such as our
trading results, half-year results, Annual
Reports, notices of general meetings and
Corporate Governance
22
Corporate Governance
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
other information, are provided on our
investor website at www.modeplc.com.
Shareholders can sign up via our website to
receive automated email alerts when news
and updates are published.
Our people
Our team consists of a talented group of
individuals who have strong alignment
with our mission and share the same drive
and passion as our customers. The Board
regularly receives reports on HR-related
matters and the individual directors
spend time with employees across all
departments. We recognise that our
people are a key driver of our success,
and therefore our HR and People focus
for 2021 has been to establish strong HR
foundations for the future of Mode, whilst
also responding to the challenges that
Covid-19 presented.
During 2021, and continuing, we have:
•
looked to support our people with
their wellbeing during the Covid-19
pandemic and lockdowns, including
holding twice-weekly company
meetings, virtual team events, creating
the Mode internal newsletter, and
introducing a Social Committee to help
combat loneliness and isolation;
•
launched our Mode Employee
Handbook to document how we work,
our expectations and to set out what it
means to be part of the Mode Team;
•
formalised our approach to HR, People
and Culture;
•
introduced enhanced background
checking measures for all new
joiners and conducted retrospective
background checking for our existing
team, to help to build trust and
demonstrate our commitment to
security and compliance. We have also
introduced a clear escalation and risk
assessment process and review for any
failed checks;
•
worked to improve candidate
experience during the recruitment
process including introducing training to
better support our hiring managers.
Looking forward, we will:
•
increase focus on performance
management and development,
making sure that everyone in the
business understands their roles and
responsibilities and what success looks
like, and gets regular feedback on their
performance;
•
launch our Company Values which will
act as the architecture and framework
for steering behaviour and decision-
making within Mode, enabling us to
better screen for cultural alignment
during recruitment and helping us
maintain our culture as we grow;
•
improve the mechanisms by which we
listen to, and seek feedback from our
people through pulse surveys, to better
inform our People and HR planning,
and so we can continue to improve our
people’s experience at Mode.
Our customers
Providing attractive products to our
customers remains a key part of the
Board’s strategy. The Board is committed
to maintaining an open dialogue with our
customer base, including obtaining its
feedback on our products and ensuring we
treat customers fairly and provide effective
23
Corporate Governance
customer service as well as support. The
results of engagement with our customers
are fed back to the directors to inform their
strategic review and decision making.
We provide information and support
to customers in an accessible format,
including, for instance, through blog posts,
email, FAQs, push notifications and in-app
messages. We very actively engage with
customers as well as the wider community.
We facilitate performance reporting to
customers so that they may monitor their
investments.
Our business partners
We work with a number of “best in class”
business partners, which support us with
a variety of specialist services. We seek to
maintain a good business relationship with
these partners, who are well-respected
experts in their field.
Our business partners are critical to the
success of Mode so we maintain good
relationships with them all, built on mutual
interest and trust, ensuring both parties
continue to benefit from our success.
The selection of partners is done in a fair
and transparent manner, the process driven
by the need to ensure that we receive
the services requested under a fair and
competitive commercial agreement. Where
possible, we engage multiple potential
partners in our selection process, with
both commercial and technical evaluation
undertaken.
Importantly, our business partners must
share our values and ambitions, supporting
our missions and goals.
Financial Conduct Authority (FCA)
When considering proposed changes
to our product offerings in the UK, the
Board and Executive Committee carefully
considered the views of the FCA, in addition
to customer feedback, to ensure any
new features or products fall within all
applicable regulations, as well as being
beneficial to our customers.
The Board ensures it is kept apprised of key
legal and regulatory changes affecting the
business to inform its strategy and decision
making.
Corporate Governance
24
Corporate Governance
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Notes to the Company Financial Statements
25
Directors’ Report
The Directors present their report and the
audited financial statements for Mode
Global Holdings PLC for the year ended 31
December 2021.
The preparation of these financial
statements is in compliance with UK
adopted international accounting
standards (IFRSs) and that apply to
financial years commencing on or after
1 January 2021. The Group financial
statements consolidate the financial
statements of the Company and its
subsidiaries. The Parent Company financial
statements present information about the
Company as a separate entity and not
about its Group.
Principal Activities
Mode Global Holdings PLC (MGH) is a
holding company. It is the parent company
of; Mode Global Limited, a UK based
company incorporated on 9th September
2015, JGOO Limited (incorporated: 26th July
2016), Fibermode Limited (incorporated:
28th November 2018), Greyfoxx Limited
(incorporated: 25th July 2019) and Fibere
Limited (incorporated 17th January 2020).
MGH’s principal activity is being the parent
company of a group of technology start-
ups including; Mode Global Limited, which
operates cryptocurrency treasury function
and digital wallet product (Trading name:
Mode), electronic payments administrator
Greyfoxx Limited (Trading name: Mode for
Business), JGOO Limited which operates
the Global services platform (Mode Global
Services), and Finbermode Limited (Trading
name: Fibermode) facilitates Crypto
trading, rewards and cashback for Mode
customers. Fibere Limited is primarily set
to manage the Mode Store selling retail
items leveraging the mode brand and only
became operational in 2021.
Business review and future
developments
The review of the period’s operations, future
developments and key risks is contained in
the Strategic Report. The directors do not
recommend a final ordinary dividend for the
period (2020: £nil).
Directors and directors’ interests
The directors who held office during the
period and subsequently were as follows:
•
Jonathan Rowland
•
Yu (Rita) Liu
•
Richard Morecroft
•
David Anderson (appointed on 30
November 2021)
•
Michael Robertson (appointed on 10
May 2022)
•
David Shrier (appointed on 10 May
2022)
•
Gary Wilkinson (resigned on 10 May
2022)
•
Ryan Moore (resigned on 18 January
2022)
With regard to the appointment and
replacement of directors, the Company is
governed by its articles of association, the
Companies Act and related legislation. The
articles themselves may be amended by
special resolution of the shareholders.
26
Director's Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Ordinary shares
of 0.01p each
Issued
share capital %
Jonathan Rowland (1)
18,973,559
20.7%
Ryan Moore (2)
6,506,094
7.1%
2021
Executive Directors
Salaries
(£)
Fees
(£)
Pension
& other
benefits
Long-Term
Incentives
(1)
Total
Jonathan Rowland
-
£75,000
-
£57,633
£132,633
Richard Morecroft
£175,000
-
£1,508
£172,900
£349,408
£175,000
£75,000
£1,508
£230,533
£484,041
2021
Non-Executive Directors
Remuner-
ation (£)
Fees
(£)
Pension
& other
benefits
Long-Term
Incentives
(1)
Total
Gary Wilkinson
-
£50,000
-
£14,408
£64,408
Ryan Moore
£89,284
£25,000
£1,931
£14,408
£130,623
Rita Liu (2)
£120,000
-
£1,626
£144,084
£265,710
David Anderson
-
£4,167
£65
£11,527
£15,759
£209,284
£79,167
£3,622
£184,427
£476,500
Directors’ interests
The directors held the following beneficial interests in the shares of Mode Global Holdings
PLC at 31st December 2021:
The remuneration of the directors in Mode Global Holdings PLC who held office during the
year to 31 December 2021 was as follows:
(1) The Directors listed above were awarded unapproved share options as part of the Long-Term Incentives strategy. These
were granted shortly after listing in October 2020. The values shown above are calculated based on their fair market value
on grant of £0.18.
(2) Rita Liu is employed and paid by JGOO Limited.
(1) As at 09 April 2021, Jonathan Rowland transferred his shares to JR Spac 1 Limited, a company wholly owned by Jonathan
Rowland.
(2) Ryan Moore is a beneficial shareholder of Mode Global Holdings as a shareholder in both Keve Family Ltd Partnership
and Tulham LLC.
27
Director's Report
Events after the reporting
date
Events after the reporting period
are described in note 19 to the
financial statements.
Financial risk management
Details of financial risk
management are provided in note
3 to the financial statements.
Carbon emissions
The Group is mindful of carbon emissions and
looks to obtain clean energy sources wherever
possible. A low staff headcount and staff
currently working from home allow the Group to
maintain low emissions of less than 40,000kWH
of energy consumed.
Political and charitable contributions
The Group made a £11,000 donation to
registered charity, Young Lives vs Cancer and
£1,000 to Macmillan Cancer.
Substantial shareholdings
The Company has been advised of the following
interests in more than 3% of its ordinary share
capital as at 31st December 2021:
%
JR Spac 1 Limited
20.7%
Ruskin Capital Ltd
12.2%
Hargreaves Lansdown (Nominees) Limited
5.9%
Aurora Nominees Limited
4.5%
J P Morgan Securities LLC
3.9%
Tulham LLC
3.8%
Hargreaves Lansdown (Nominees) Limited
3.7%
Goldman Sachs Securities (Nominees) Limited
3.6%
HSBC Global Custody Nominee (Uk) Limited
3.3%
64.9%
Directors’ Report
28
Director's Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Statement of Directors’
responsibilities
The directors are responsible for preparing
the Annual Report and the financial
statements in accordance with company
law, which requires the directors to prepare
group and parent company financial
statements for each financial year. Under
that law the directors have elected to
prepare the Group consolidated financial
statements in accordance with UK adopted
international accounting standards (IFRSs)
and have elected to prepare the parent
company financial statements under United
Kingdom Generally Accepted Accounting
Practice.
Under company law the directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs and of the
profit or loss of the Group and the parent
company for that period.
In preparing each of the Group and parent
company financial statements, the directors
are required to:
•
select suitable accounting policies and
then apply them consistently;
•
make judgments and estimates that are
reasonable and prudent;
•
state whether they have been prepared
in accordance with UK adopted
international accounting standards
(IFRSs), or whether UK Accounting
Standards have been followed, subject
to any material departures disclosed
and explained; and
•
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and the parent company will
continue in business.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
company’s transactions and disclose with
reasonable accuracy at any time the
financial position of the parent company
and the Group and enable them to ensure
that the financial statements comply
with the Companies Act 2006. They are
also generally responsible for taking such
steps as are reasonably open to them to
safeguard the assets of the Group and
to prevent and detect fraud and other
irregularities.
The directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Information published
on the website is accessible in many
countries and legislation in the United
Kingdom governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
The directors consider that the annual
report and accounts, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s position
and performance, business model and
strategy. Each of the directors confirms
that, to the best of their knowledge:
The Group financial statements, which
have been prepared in accordance with
UK adopted international accounting
standards (IFRSs), give a true and fair view
of the assets, liabilities, financial position
and profit or loss of the Group; and the
Annual Report includes a fair review of
the development and performance of the
business and the position of the Group,
together with a description of the principal
risks and uncertainties that it faces.
29
Director's Report
Statement of Disclosure to the
Auditors
All of the current directors have taken all
the steps that they ought to have taken to
make themselves aware of any information
needed by the Company’s auditors for the
purposes of their audit and to establish that
the auditors are aware of that information.
The directors are not aware of any relevant
audit information of which the auditors are
unaware. This confirmation is given and
should be interpreted in accordance with
the provisions of s418 of the Companies Act
2006.
Auditors’ appointment
Jeffreys Henry LLP has expressed its
willingness to continue in office and a
resolution to re-appoint them will be
proposed at the annual general meeting.
Signed by order of the Board
Jonathan Rowland
Chairman
Directors’ Report
30
Director's Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Directors’ Remuneration Report
The information included in this report
is not subject to audit other than where
specifically indicated.
Remuneration Policy
Mode has implemented a Remuneration
policy to steer the board of directors in
determining and providing oversight of the
remuneration of the Company’s Board,
directors, and employees, ensuring that
the Company is able to attract, retain and
motivate suitably skilled personnel.
The Remuneration policy aims to ensure
that remuneration across the Company is
competitive, fair, aligned to the Company
values and rewards the right behaviours
that deliver value to the business.
The Remuneration Policy covers the
following aspects:
•
the determination of board members
and (where appropriate) other senior
management remuneration, ensuring
that such remuneration promotes long-
term success, is aligned with Company
purpose and values; is compliant with all
legal and regulatory requirements and is
aligned to the company risk policies and
appetites
•
within the terms of the policy, and in
consultation with the Chairman as
appropriate, help determine the total
individual remuneration package of
each board member;
•
the design of all long-term incentive
plans within the Company; and
•
determining the Company’s overall
philosophy and approach to
remuneration for all staff, ensuring that
it supports and takes into account the
strategic objectives, purpose and values
of the Company.
Directors’ interests
The directors’ interests in the share capital
of the Company are set out in the Directors’
report.
Directors’ emoluments
The directors’ salaries, fees and long-term
incentive plans are also set out in the
Directors’ report.
Shareholder Approval
At the next Annual General Meeting of the
Company, a resolution approving this report
is to be proposed as an ordinary resolution.
31
Director’s Remuneration Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Independent Auditor’s Report
32
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Independent Auditor’s Report To The
Members Of Mode Global Holdings PLC
Opinion
We have audited the financial statements
of Mode Global Holdings Plc (the ‘parent
company’) and its subsidiaries (the
‘group’) for the period ended 31 December
2021 which comprise the consolidated
statement of comprehensive income,
consolidated statement of financial
position, consolidated statement of
changes in equity, consolidated statement
of cash flows, company statement of
financial position, company statement
of changes in equity, and notes to the
financial statements, including a summary
of significant accounting policies.
The financial reporting framework that has
been applied in the preparation of the
group financial statements is applicable
law and UK adopted international
accounting standards. The financial
reporting framework that has been applied
in the preparation of the parent company
financial statements is applicable law and
United Kingdom Accounting Standards,
including FRS 101 Reduced Disclosure
Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion
•
the financial statements give a true and
fair view of the state of the Group’s and
of the parent company’s affairs as at 31
December 2021 and of the group’s loss
for the year then ended;
•
the Group financial statements have
been properly prepared in accordance
with UK adopted international
accounting standards (IFRSs);
•
the parent company financial
statements have been properly
prepared in accordance with United
Kingdom Generally Accepted
Accounting Practice; and
•
the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report. We
are independent of the company in
accordance with the ethical requirements
that are relevant to our audit of the
financial statements in the UK, including
the FRC’s Ethical Standard as applied to
listed public interest entities, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements. We
believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going
concern
In auditing the financial statements, we
have concluded that the director’s use of
the going concern basis of accounting in
the preparation of the financial statements
is appropriate. Our evaluation of the
directors’ assessment of the entity’s ability
to continue to adopt the going concern
basis of accounting included reviews of
expected cash flows for a period of 12
months, to determine expected cash
burn, which was compared to the liquid
assets held in the entity, including the
£1,935,000 of irrevocable commitments
made for convertible loan notes in the week
commencing 20 June 2022.
33
Independent Auditor’s Report
The cashflow forecasts contained ongoing
running costs of the group and committed
expenditure at the date of approving the
financial statements. The key assumptions
that impacted the conclusion are the levels
of future revenue generated by the main
revenue streams Bitcoin Cashback, Bitcoin
Payroll and Bitcoin Trading, and the ability
to control the operating costs.
We ensured reliability of the forecasts
by: agreeing historical actual results to
budgeted results; challenging the current
forecast and its assumptions; and checked
the clerical accuracy of management’s
forecasts. We also considered the
appropriateness of the group’s disclosures
in relation to going concern in the financial
statements
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or collectively,
may cast significant doubt on the group’s
ability to continue as a going concern for a
period of at least twelve months from when
the financial statements are authorised for
issue.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
Key audit matters
Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period and
include the most significant assessed
risks of material misstatement (whether or
not due to fraud) we identified, including
those which had the greatest effect on:
the overall audit strategy, the allocation
of resources in the audit; and directing the
efforts of the engagement team. These
matters were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters. This is not a complete list
of all risks identified by our audit.
34
Independent Auditor’s Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Key audit matter
How our audit addressed the key audit
matter
Carrying value of investments and
recoverability of group receivables –
Company Risk
The amount owed to the Company at the
year end by the subsidiary Mode Global
Limited was £Nil (2020: 2,070,000) after
being fully impaired . The impairment value
of the carrying amount owe by Mode
Global Limited was £13,934,000 (2020: £Nil)
The carrying values of investments in group
companies was £Nil (2020: £27,490,000)
following impairment at the year end. The
impairment value of the carrying amount
of investment in group companies was
£27,490,000 (2020: £Nil).
The impairment was determined following
the calculation of the realisable value of
the investment in the subsidiaries being less
than the carrying amount.
We performed the following audit
We performed the following audit
procedures:
procedures:
•
We carried out a review of the
investments held in the subsidiaries.
•
Management’s impairment workings
were reviewed and the underlying
assumptions audited.
•
We reviewed management’s basis for
impairment across the Company and
agree with their approach.
•
As part of the review of management’s
forecasts, consideration was given to
the capability of the subsidiary to repay
the amount within a 12-month period.
Based on the audit work performed we
are satisfied, that although there are
inherent uncertainties associated with
the forecast used to determine realisable
value, we consider that the directors have
made reasonable assumptions about
the valuation of investments and group
receivables, based on past experience
and expected future revenues. We are also
satisfied that all necessary disclosures have
been made in the financial statements
35
Independent Auditor’s Report
Treatment of cryptocurrency balances
(treasury & customer)
The Group has several holdings of
Cryptocurrency, totalling £463,000 (2020:
£5,168,000), for which the appropriate
accounting treatment and presentation will
be reviewed.
Customer balances are recognised on the
balance sheet where an entity has the
ability to direct the use of the asset.
As the assets are not held for trade they
are held as intangible assets under the
revaluation model.
We performed the following audit
We performed the following audit
procedures:
procedures:
•
The rights of the entity to direct the
use of the asset have been reviewed to
confirm the treatment is appropriate.
•
Fair values were agreed to open market
valuations and movements recognised
through OCI vouched.
•
Treatment upon disposal and
movement of realised revaluation gains,
movement from the revaluation surplus
to retained earnings were review and
agreed.
•
Disclosures have been reviewed for
sufficiency.
Based on the audit work performed, we are
satisfied with the crypto currency balances
disclosed in the financial statements.
36
Independent Auditor’s Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Our application of materiality
The scope of our audit was influenced
by our application of materiality. We
set certain quantitative thresholds
for materiality. These, together with
qualitative considerations, helped us to
determine the scope of our audit and
the nature, timing and extent of our
For each component in the scope of our
Group audit, we allocated a materiality
that is less than our overall Group
materiality. The range of materiality
allocated across components was
between £100 and £174,000.
We agreed with the Audit Committee
audit procedures on the individual financial
statement line items and disclosures and
in evaluating the effect of misstatements,
both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgment, we
determined materiality for the financial
statements as a whole as follows:
that we would report to them misstatements
identified during our audit above £22,000
for the Group (2020: £8,900) and £8,700
for the Parent (2020: £5,700) as well as
misstatements below those amounts that, in
our view, warranted reporting for qualitative
reasons.
Group financial statements
Company financial statements
Overall materiality
£439,000 (2020: £178,000)
£439,000 (2020: £178,000)
£174,000 (2020: 114,000)
How we determined it
5% of net loss
5% of net loss
(2020: 5% net loss)
1% of gross assets
1% of gross assets
(2020: 1% of gross assets)
Rationale for
benchmark applied
We believe that net loss is
a primary measure used by
shareholders in assessing the
performance of the Group,
whilst the subsidiaries are in
varied states of development
and trading.
We believe that gross assets
is a primary measure used by
shareholders in assessing the
performance of the Company,
given that it is largely a holding
company for the trading
subsidiaries.
37
Independent Auditor’s Report
An overview of the scope of our
audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in
the financial statements. In particular,
we looked at where the directors made
subjective judgments, for example in
respect of significant accounting estimates
that involved making assumptions and
considering future events that are inherently
uncertain. As in all of our audits we also
addressed the risk of management override
of internal controls, including evaluating
whether there was evidence of bias by the
directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work
to be able to give an opinion on the
financial statements as a whole, taking into
account the structure of the Group and
the Company, the accounting processes
and controls, and the industry in which they
operate.
The Group financial statements are
a consolidation of 6 reporting units,
comprising the Group’s operating
businesses and holding companies.
We performed audits of the complete
financial information of Mode Global
Holdings Plc, Mode Global Limited, JGOO
Limited, Fibermode Limited, Greyfoxx
Limited, and Fibere Limited reporting
units, which were individually financially
significant and accounted for 100% of the
Group’s revenue and 100% of the Group’s
absolute profit before tax (i.e. the sum of the
numerical values without regard to whether
they were profits or losses for the relevant
reporting units). The Group engagement
team performed all audit procedures.
Other information
The directors are responsible for the
other information. The other information
comprises the information included in the
annual report, other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the audit or otherwise appears to be
materially misstated. If we identify such
material inconsistencies or apparent
material misstatements, we are required
to determine whether there is a material
misstatement in the financial statements
or a material misstatement of the other
information. If, based on the work we
have performed, we conclude that there
is a material misstatement of this other
information, we are required to report that
fact.
We have nothing to report in this regard.
38
Independent Auditor’s Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Opinions on other matters
prescribed by the Companies Act
2006
In our opinion the part of the directors’
remuneration report to be audited has
been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
•
the information given in the strategic
report and the directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
•
the strategic report and the directors’
report have been prepared in
accordance with applicable legal
requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and
understanding of the group and parent
company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report
to you if, in our opinion:
•
adequate accounting records have not
been kept by the parent company, or
returns adequate for our audit have not
been received from branches not visited
by us; or
•
the parent company financial
statements and the part of the directors’
remuneration report to be audited are
not in agreement with the accounting
records and returns; or
•
certain disclosures of directors’
remuneration specified by law are not
made; or
•
we have not received all the information
and explanations we require for our
audit.
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on page
29, the directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view, and for such internal control as the
directors determine is necessary to enable
the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
group’s and parent company’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the group or the parent
company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that
an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are
considered material if, individually or in
the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these financial statements.
39
Independent Auditor’s Report
Irregularities, including fraud, are instances
of non-compliance with laws and
regulations. We design procedures in line
with our responsibilities, outlined above, to
detect material misstatements in respect
of irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud is
detailed below.
Explanation as to what extent the
audit was considered capable of
detecting irregularities, including
fraud
The objectives of our audit, in respect to
fraud are; to identify and assess the risks
of material misstatement of the financial
statements due to fraud; to obtain sufficient
appropriate audit evidence regarding the
assessed risks of material misstatements
due to fraud, through designing and
implementing appropriate responses;
and to respond appropriately to fraud or
suspected fraud identified during the audit.
However, the primary responsibility for the
prevention and detection of fraud rests with
both those charged with governance of the
entity and management.
Our approach to identifying and assessing
the risks of material misstatement in respect
of irregularities, including fraud and non-
compliance with laws and regulations, was
as follows:
Our approach to identifying and assessing
the risks of material misstatement in respect
of irregularities, including fraud and non-
compliance with laws and regulations, was
as follows:
•
the senior statutory auditor ensured the
engagement team collectively had the
appropriate competence, capabilities
and skills to identify or recognise non-
compliance with applicable laws and
regulations;
•
we identified the laws and regulations
applicable to the company through
discussions with directors and other
management, and from our knowledge
and experience of the entity’s activities;
•
we focused on specific laws and
regulations which we considered may
have a direct material effect on the
financial statements or the operations
of the company, including Companies
Act 2006, taxation legislation, data
protection, employment and health and
safety legislation and registration of one
of the group subsidiaries, Fibermode
Limited, as a registered cryptoasset firm
with the Financial Conduct Authority;
•
we assessed the extent of compliance
with the laws and regulations identified
above through making enquiries of
management and inspecting legal
correspondence; and
•
identified laws and regulations were
communicated within the audit team
regularly and the team remained
alert to instances of non-compliance
throughout the audit.
We assessed the susceptibility of the
company’s financial statements to material
misstatement, including obtaining an
understanding of how fraud might occur,
by:
•
making enquiries of management as
to where they considered there was
susceptibility to fraud, their knowledge
of actual, suspected and alleged fraud;
•
considering the internal controls in place
to mitigate risks of fraud and non-
compliance with laws and regulations.
To address the risk of fraud through
management bias and override of controls,
we:
•
performed analytical procedures to
identify any unusual or unexpected
relationships;
•
tested journal entries to identify unusual
transactions;
40
Independent Auditor’s Report
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
•
assessed whether judgements and
assumptions made in determining the
accounting estimates set out in Note 1
were indicative of potential bias;
•
investigated the rationale behind
significant or unusual transactions.
In response to the risk of irregularities and
non-compliance with laws and regulations,
we designed procedures which included,
but were not limited to:
•
agreeing financial statement
disclosures to underlying supporting
documentation;
•
reading the minutes of meetings of
those charged with governance;
•
enquiring of management as to actual
and potential litigation and claims;
•
Obtaining confirmation of compliance
from the company’s legal advisors.
There are inherent limitations in our audit
procedures described above. The more
removed that laws and regulations are
from financial transactions, the less likely
it is that we would become aware of
non-compliance. Auditing standards also
limit the audit procedures required to
identify non-compliance with laws and
regulations to enquiry of the directors and
other management and the inspection of
regulatory and legal correspondence, if any.
Material misstatements that arise due to
fraud can be harder to detect than those
that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities
for the audit of the financial statements
is located on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities.
This description forms part of our auditor’s
report.
Other matters which we are required
to address
We were reappointed as auditors by the
company at the Annual General Meeting
on 13 July 2021 to audit the financial
statements for the period ending 31
December 2021. Our total uninterrupted
period of engagement is 6 years, covering
the periods ending 31 December 2016 to 31
December 2021.
The non-audit services prohibited by the
FRC’s Ethical Standard were not provided
to the group or the parent company and
we remain independent of the group and
the parent company in conducting our
audit.
Tax compliance services were provided in
the period before the listing and terminated
as required by the Ethical Standards.
Our audit opinion is consistent with the
additional report to the audit committee.
Use of this report
This report is made solely to the company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the company’s
members those matters we are required
to state to them in an auditor’s report and
for no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the company and the company’s members
as a body, for our audit work, for this report,
or for the opinions we have formed.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP,
Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
27 June 2022
41
Independent Auditor’s Report
Group Financial Statements
Note
31-Dec-
2021
£’000
31-Dec-
2020
Restated(1)
£’000
Continuing operations
Revenue
4
1,313
450
Cost of sales
(1,151)
(507)
Gross profit
162
(57)
Administrative expenses
5
(9,382)
(3,518)
Operating Loss
(9,220)
(3,575)
Investment Revenue
5
4
Finance costs
-
(248)
Loss before taxation
(9,215)
(3,855)
Taxation
7
269
156
Loss for the period
(8,946)
(3,699)
Attributable to:
Non- Controlling interest
-
(338)
Equity shareholders of the parent
(8,946)
(3,361)
(8,946)
(3,699)
Basic and diluted loss per share (pence)
8
(10)
(6)
All amounts relate to continuing activities.
Consolidated Statement
of Income
(1) Details of restatement of prior year can be found in the accounting policies and notes
42
Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
31-Dec-
2021
£’000
31-Dec-
2020
Restated(1)
£’000
Loss for the period
(8,946)
(3,699)
Other Comprehensive Income:
Reclassified to profit or loss when specific conditions are met
(261)
455
Total Comprehensive Loss for the year
(9,207)
(3,244)
Attributable to:
Non- Controlling interest
-
(338)
Equity shareholders of the parent
(9,207)
(2,906)
Total Comprehensive Loss for the year
(9,207)
(3,244)
The notes on pages 48 to 71 form an integral part of this consolidated financial
information.
Consolidated Statement of
Comprehensive Income
1. Details of restatement of prior year can be found in the accounting policies and notes
43
Group Financial Statements
Group Financial Statements
Notes
31-Dec-
2021
£’000
31-Dec-
2020
Restated(1)
£’000
Assets
Non-current Assets
Property, plant and equipment
10
33
14
Intangible Non-Current Assets
Software
57
75
Intangible Current Assets
Treasury BTC
9
463
832
Customer BTC
-
4,336
Current Assets
Trade and other receivables
11
1,259
302
Cash and cash equivalents
12
4,155
5,365
Total Assets
5,967
10,924
Equity and Liabilities
Equity attributable to equity holders of the Group
Share Capital - Ordinary shares
14
914
805
Share Premium account
14
16,723
11,091
Profit and Loss Account
(14,719)
(6,878)
Group Reorganisation Reserve
454
454
Revaluation Reserve
194
455
Share Option Reserve
15
1,058
315
Total Equity
4,624
6,242
Consolidated Statement
of Financial Position
Table continues on the next page
44
Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Notes
31-Dec-
2021
£’000
31-Dec-
2020
Restated(1)
£’000
Intangible Liabilities
Customer BTC
-
4,336
Current Liabilities
Current trade and other payables
13
1,343
346
Total Liabilities
1,343
4,682
Total Equity and Liabilities
5,967
10,924
These financial statements were approved and authorised for issue by the board of
directors on 27 June 2022 and were signed on its behalf by:
Jonathan Rowland
Chairman
(1) Details of restatement of prior year can be found in the accounting policies and notes
45
Group Financial Statements
Group Financial Statements
Note
Share
capital
£’000
Share
premium
£’000
Accu-
mulated
deficit (1)
£’000
Non Con-
trolling
Interest
£’000
Group
Reorgan-
isation
Reserves
£’000
Reval-
uation
Reserve
£’000
Share
Option
Reserve
£’000
Con-
vertible
loan
note
£’000
Total
equity
£’000
As at 31 December 2019
-
1,004
(2,987)
(260)
-
-
-
533
(1,710)
Adjustment for the FRC
restatement
2
-
-
143
-
-
-
-
-
143
Restated balances at 31
December 2019
-
1,004
(2,844)
(260)
-
-
-
533
(1,567)
MGH Plc as at 1 January
2020
-
-
-
-
-
-
-
-
-
Mode Global Limited bal-
ances brought forward
-
1,004
(2,844)
(260)
-
-
-
533
(1,567)
Share for Share exchange
550
(1,004)
-
-
454
-
-
-
-
Shares issued (incl Placing)
150
6,973
-
-
-
-
-
-
7,123
Share Option Reserve
-
-
-
-
-
-
315
-
315
CLN Conversion
106
4,117
-
-
-
-
-
(533)
3,690
Acquisition of NCI
-
-
(673)
598
-
-
-
-
(75)
Total Comprehensive Loss
for the prior year
-
-
(3,361)
(338)
-
455
-
-
(3,244)
As at 31 December 2020
805
11,091
(6,878)
-
454
455
315
-
6,242
Shares issued
109
5,632
-
-
-
-
-
-
5,741
Share Option Reserve
-
-
-
-
-
-
743
-
743
Gain on sale of Bitcoin
assets
-
-
1,105
-
-
-
-
-
1,105
Total Comprehensive Loss
for the year
-
-
(8,946)
-
-
(261)
-
-
(9,207)
As at 31 December 2021
914
16,723
(14,719)
-
454
194
1,058
-
4,624
Consolidated Statement
of Changes in Equity
The accompanying notes are an integral part of these financial statements.
(1) Details of restatement of prior year can be found in the accounting policies and notes
46
Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
The accompanying notes are an integral part of these financial statements.
Consolidated Statement of
Cashflows
31-Dec-2021
£’000
31-Dec-2020
Restated(1)
£’000
Cash flows from operating activities
Loss before taxation
(9,215)
(3,844)
Adjustment for:
Depreciation and amortisation
28
2
Convertible Loan Note FX and Interest FRC adjustment
-
(140)
Share based payment
743
315
Finance Costs
-
248
Finance income
(5)
(4)
Research and development tax credit claim
269
156
(Increase) in receivables
(957)
(71)
Increase/(decrease) in payables
998
(11)
Net interest received / (paid)
5
(280)
Net cash generated from operations
(8,134)
(3,315)
Cash flows from investing activities
Purchase of Property, plant & equipment
(29)
(9)
Purchase of BTC Treasury
(1,933)
(377)
Purchase of non-controlling interest in JGOO
-
(75)
Purchase of intangible assets
-
(75)
Net cash from financing activities
(1,962)
(536)
Cash flows from financing activities
Sale of BTC Treasury
3,139
-
Issue of shares
5,741
7,123
Net cash from financing activities
8,880
7,123
Net increase in cash and cash equivalents
(1,216)
3,272
Cash and cash equivalents at the beginning of the period
5,365
2,077
Effect of exchange rate changes on cash and cash equivalents
6
16
Cash and cash equivalents at end of period
4,155
5,365
Represented by: Bank balances and cash
4,155
5,365
(1) Details of restatement of prior year can be found in the accounting policies and notes
47
Group Financial Statements
Notes to the Group Financial Statements for the
year ended 31 December 2020
1. General information
Mode Global Holdings is the holding
company for a group of companies that
trade under the name ‘Mode Global’. Mode
Global Holdings was incorporated on 5
August 2020 under the laws of England with
a registered number of 12794676. Mode
Global Holdings is in the financial services
business. Its business address is Finsgate,
5-7 Cranwood Street, London, United
Kingdom, EC1V 9EE.
Mode Global Holdings wholly owns
Mode Global Limited (“Mode Global”),
which in turn owns 100% of JGOO Limited
(“JGOO®”), 100% of Greyfoxx Limited
(“Greyfoxx”) and 100% of Fibere Limited
(“Fibere”). Greyfoxx wholly owns Fibermode
Limited (“MODE®”). Mode Global
Holdings, together with its subsidiaries,
are referred to herein as the “Group”. All
the limited companies are incorporated
and domiciled in England. The registered
company numbers of these companies are
09768854 (Mode Global Limited) 10805100
(JGOO Limited), 12123111 (Greyfoxx Limited),
12408852 (Fibere Limited) and 11085143
(Fibermode Limited).
MODE provides customers the ability to
manage their traditional (fiat) money and
their digital assets (cryptocurrency) using
the same mobile (or web) application.
Through MODE’s mobile interface,
customers have an all-encompassing view
of their traditional fiat and cryptocurrency
balances and will be able to initiate various
transactions in both.
JGOO is a payment processing, marketing
and advertising company. It aims to provide
Name
Country of
incorporation
Holding
Ownership
Nature of Business
Mode Global
Limited
United
Kingdom
Direct
100%
Holding Company
JGOO Limited
United
Kingdom
Indirect
100%
Global Payments
Platform
Fibermode
Limited
United
Kingdom
Indirect
100%
Mode Digital Wallet
(including
Cryptocurrency)
Greyfoxx
Limited
United
Kingdom
Indirect
100%
Mode for Business
Fibere
Limited
United
Kingdom
Indirect
100%
Dormant
48
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
2. Accounting policies
the next generation of a social media
and mobile payments platform, enabling
consumers, merchants, and brands to make
and receive payments without the need for
card platforms, using their mobile phones to
make and accept payments. JGOO’s initial
focus has been on enabling British brands
to engage with Chinese shoppers, both
face-to face and online, but will widen its
markets in the future.
Greyfoxx became a Financial Conduct
Authority (FCA) authorised electronic money
institution as of 23rd June 2021, meeting
various conditions set out by the FCA.
Greyfoxx aims to provide e-money services
to both JGOO and MODE.
Fibere Limited is the Mode Clothing Store
where customers can get Bitcoin cashback
for buying items that advertise Mode as a
brand.
The Group’s principal activity is to invest in
fintech companies. Its core platform, ‘Mode’,
is a financial services ecosystem which
is a fully regulated, UK-based institution,
providing the full scope of banking and
financial services to the holders of both
traditional and crypto-assets.
The consolidated financial statements
comprised of the Company and its
subsidiaries (together referred to as “the
Group”) as at 31 December 2021 and for the
period to 31 December 2021.
The principal accounting policies applied
in the preparation of the consolidated
financial statements are set out below.
These policies have been consistently
applied to all periods presented, unless
otherwise stated.
Basis of preparation
This financial information has been
prepared in accordance with UK adopted
international accounting standards (IFRSs)
and with those parts of the Companies Act
2006 applicable to companies reporting
under UK adopted international accounting
standards (IFRSs). 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,
in compliance with adopted UK adopted
international accounting standards
(IFRSs), requires the use of certain critical
accounting estimates. It also requires
the Group’s management to exercise
judgement 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.
49
Notes to the Group Financial Statements
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.
Changes in accounting policies and
disclosures
The accounting policies adopted are
consistent throughout the financial period.
Standards and amendments to UK adopted
international accounting standards (IFRSs)
effective as of 01 January 2021 have been
applied by the Group.
There were a number of standards and
interpretations which were in issue at 31
December 2021 but were not effective at 31
December 2021 and have not been adopted
for these Financial Statements.
These include:
•
Amendments to IFRS 3 Business
Combinations – change in reference to
the conceptual framework (applicable
on or after 1 January 2022)
•
Amendments to IFRS 17 Insurance
Contracts – measurement of insurance
liabilities (applicable on or after 1
January 2023)
•
Amendments to IAS 1 Presentation of
Financial Statements – further disclosure
requirements including additional detail
around accounting policies (applicable
on or after 1 January 2023)
•
Amendments to IAS 8 Accounting
Policies, Changes in Accounting
Estimates and Errors – definition of
accounting estimates (applicable on or
after 1 January 2023)
•
A number of narrow-scope amendments
to IFRS 3, IAS 16, IAS 17, IAS 37 and some
annual improvements on IFRS 1, IFRS 9,
IAS 41 and IFRS 16 (applicable on or after
1 January 2022)
The Directors have assessed the impact of
these accounting changes on the Group. To
the extent that they may be applicable, the
Directors have concluded that none of these
pronouncements will cause material adjust-
ments to the Group’s Financial Statements.
There are no other UK adopted international
accounting standards (IFRSs) that are
effective for the first time in this financial
year that would be expected to have a
material impact on the Group.
50
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Going concern
The directors have adopted the going
concern basis in preparing these financial
statements, after assessing the Group’s
principal risks, which assume the Group will
meet its liabilities when the fall due.
When assessing the ability of the Group to
continue as a going concern, the directors
have considered the Group’s current and
future trading performance, the history
of recurring losses from operations, the
forecast trading performance and any
significant cash commitments for a period
of at least 12 months from the approval of
these financial statements.
Management has prepared multiple
trading scenarios including a base case
which reflects current trading and also a
reasonable worst case scenario, reflecting
severe but plausible downside trading
performance. In all scenarios management
are able to demonstrate sufficient working
capital to continue for 12 months from the
approval of these financial statements.
The directors are aware of all of the risks
facing the business, but the assumptions
used are the directors’ best estimates of the
future development of the business.
Foreign currency
The functional currency of the Group is
Sterling Pound (£) and its subsidiary is
also in £. The presentational currency of
the Company is £ because a significant
amount of its transactions is in £.
Transactions entered by the Group’s entities
in a currency other than the reporting
currency are recorded at the rates ruling
when the transaction occurs. Foreign
currency monetary assets and liabilities
are translated at the rates ruling at the
statement of financial position date.
Exchange differences arising on the re-
translation of outstanding monetary assets
and liabilities are also recognised in the
income statement.
Share capital
During the period the Company issued
10,909,091 ordinary shares of £0.01 at £0.55
for a total consideration of £6m.
This brings the total shares in issue 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. For the options, these
have been detailed below as share based
payments
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 in accordance
with IFRS 15 ‘Revenue from Contracts with
Customers’. The Company recognises
revenue on the transfer of services to
customers in an amount that reflects the
consideration to which the entity expects to
be entitled, in exchange for those services.
51
Notes to the Group Financial Statements
This core principle is delivered in a five-step
model framework:
1. Identify the contract(s) 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; and
5. Recognise revenue when (or as)
the entity satisfies a performance
obligation.
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. Revenues exclude 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. We control
the service of completing payments on
our payments platform and bear 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 we
receive from Alipay and WeChat Pay. We
therefore bear the risk when completing
transactions and report these items as
separate transactions.
Employee benefits
(i) Short-term benefits
Wages, salaries, paid annual leave and
sick leave and non-monetary benefits
are accrued in the period in which the
associated services are rendered by
employees of the Company.associated
services are rendered by employees of
the Company.
(ii) Defined contribution plan
As at year ended 31 December 2021, the
Company had a defined contribution
pension scheme for employees with
Scottish Widows. For this defined
contribution plan, the Company pays
contributions to a privately administered
pension insurance plan on a mandatory
basis. The contributions are recognised
as an employee benefit expense when
they are due.
Operating leases
The Group has elected not to recognise
right-of-use assets and lease liabilities for
its leases, all of which qualify as short-term
leases. The Group recognises the lease
payments associated with these leases as
an expense on a straight-line basis over the
lease term.
Current taxation
The tax expense for the period comprises
current and deferred tax. Tax is recognised
in the consolidated statement of income or
directly in equity. In this case, the tax is also
recognised in other comprehensive income
or directly in equity, respectively.
Current income tax liabilities and/or
assets comprise those obligations to, or
claims from, fiscal authorities relating to
the current or prior reporting period , that
are unpaid at the reporting date. Current
tax is payable on profit, which differs from
profit or loss in the consolidated financial
statements. The calculation of current tax is
based on tax rates and tax laws that have
been enacted or substantively enacted by
the end of the reporting period.
Deferred taxation
Deferred tax assets and liabilities are
recognised where the carrying amount
of an asset or liability in the statement of
financial position differs from its tax base,
52
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
except for differences arising on:
•
the initial recognition of goodwill;
•
the initial recognition of an asset or
liability in a transaction which is not
a business combination and at the
time of the transaction affects neither
accounting or taxable profit; and
•
investments in subsidiaries where the
Group is able to control the timing of
the reversal of the difference and it is
probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is
restricted to those instances where it
is probable that taxable profit will be
available against which the difference can
be utilised.
The amount of the asset or liability is
determined using tax rates that have been
enacted or substantially enacted by the
balance sheet date and are expected to
apply when the deferred tax liabilities or
assets are settled or recovered. Deferred
tax balances are not discounted.
Deferred tax assets and liabilities are offset
when the Group has a legally enforceable
right to offset current tax assets and
liabilities.
The Group is entitled to a tax deduction
on the exercise of certain employee share
options. A share-based payment expense
is recorded in the income statement over
the period from the grant date to the
vesting date of the relevant options. As
there is a temporary difference between
the accounting and tax bases, a deferred
tax asset may be recorded. The deferred
tax asset arising on share option awards
is calculated as the estimated amount
of tax deduction to be obtained in the
future (based on the Group’s share price
at the balance sheet date) pro-rated
to the extent that the services of the
employee have been rendered over the
vesting period. If this amount exceeds the
cumulative amount of the remuneration
expense at the statutory rate, the excess
is recorded directly in equity, against
retained earnings. Similarly, current tax relief
in excess of the cumulative amount of the
Share-based payments expense at the
statutory rate is also recorded in retained
earnings.
Cash and cash equivalents
Cash and cash equivalents include
cash in hand and deposits held on call,
together with other short term highly
liquid investments which are not subject
to significant changes in value and have
original maturities of less than three months.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable
to the issue of new shares or options are
shown in equity as a deduction, net of
tax, from proceeds. Dividends on ordinary
shares are recognised as liabilities when
approved for distribution.
Share based payments
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
27th 2020 and 4th November 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
53
Notes to the Group Financial Statements
expensed was determined by reference to
the fair value of the total options granted
using the Black Scholes model – see note
15.
No options were able to be exercised prior
to April 2021. Since then, no options have
been exercised as the share price remains
below the original strike price.
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 would automatically lapse.
Intangible assets
Intangible assets are reported separately
between Bitcoin assets (both Customer
holdings and Treasury holdings) and
acquired software and websites.
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
assets are held for investment purposes
and therefore cannot be recognised as
inventory as they are not being held for
sale in the ordinary course of business.
Intangible Liabilities
Intangible liabilities are made up of
customer cryptocurrency assets and are
held at fair value for 2021.
During the year, the company discontinued
the Bitcoin “Jar” product. As a result the
balance of customer’s Bitcoin which
management deemed to ‘control’ and
therefore meet the asset recognition criteria
has fallen to nil. The corresponding liability
has also been removed.
Property, plant and equipment
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
54
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Financial assets and liabilities
Recognition and initial measurement
The Group initially recognises loans and
advances, trade and other receivables/
payables, and borrowings plus or minus
transactions costs, when and only when the
Group becomes party to the contractual
provisions of the instruments.
Financial assets at amortised cost
The Group’s financial assets at amortised
cost comprise trade and other receivables.
These represent debt instruments with fixed
or determinable payments that represent
principal or interest and where the intention
is to hold to collect these contractual
cash flows. They are initially recognised
at fair value, included in current and non-
current assets, depending on the nature
of the transaction, and are subsequently
measured at amortised cost using the
effective interest method, less any provision
for impairment.
Financial liabilities at amortised cost
Financial liabilities at amortised cost
comprise trade and other payables. They
are classified as current and non-current
liabilities depending on the nature of
the transaction, and are subsequently
measured at amortised cost using the
effective interest method.
Financial assets
The Group derecognises a financial asset
when the contractual rights to the cash
flows from the financial asset expire, or
when it transfers the rights to receive the
contractual cash flows in a transaction
in which substantially all of the risks and
rewards of ownership of the financial asset
are transferred, or in which the Group
neither transfers nor retains substantially all
of the risks and rewards of ownership and
it does not retain control of the financial
asset.
On derecognition of a financial asset, the
difference between the carrying amount of
the asset (or the carrying amount allocated
to the portion of the asset derecognised)
and the sum of (i) the consideration
received (including any new asset obtained
less any new liability assumed) and (ii) any
cumulative gain or loss that had been
recognised in OCI is recognised in profit or
loss.
Financial liabilities
The Group derecognises a financial liability
when its contractual obligations are
discharged, cancelled, or expire.
Summary of critical accounting
estimates and judgements
The preparation of financial information, in
conformity with UK adopted international
accounting standards (IFRSs), 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
55
Notes to the Group Financial Statements
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. However, the risk here is
mitigated by a corresponding liability to
the customer. Treasury assets held are
marked at Fair Value using the closing
market price at 31 December 2021. The
gain is shown under the Revaluation
Reserve and subsequently within Other
Comprehensive Income.
Share based payments
The basis for the share-based payments
expense for 2021 has been set out in
note 15. 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.
Prior Year Restatement
In late 2021, the Financial Reporting Council
(FRC) submitted a request for further
information on the Group’s Report and
Financial Statements for the year ended 31
December 2020.
The review conducted by the FRC was
based solely on the Group’s published
Report and Accounts and does not
provide any assurance that the Report
and Accounts are correct in all material
respects.
Following completion of this review, the
Directors in conjunction with external
advisors and the Audit Committee, have
concluded that the convertible loan note
classification prior to the IPO should have
been classified as a liability in total and
that the unwinding of the CLN position at
IPO should not have resulted in a Finance
Revenue gain.
As a result, the Consolidated Statement of
Financial Position as at 31 December 2020
has been restated as follows (next page):
56
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Published
accounts (as
reported)
Restated ac-
counts)
Difference
P&L impact
Net asset
impact
Liability
(3,387,515)
(3,920,680)
533,165
-
-
Equity
(533,165)
-
(533,165)
-
-
Liability
(3,676,452)
(4,065,691)
389,239
-
(389,239)
Equity
(533,165)
-
(533,165)
-
533,165
Finance costs
312,401
164,734
147,667
(147,667)
-
Foreign exchange
(23,463)
(19,722)
(3,741)
3,741
-
(143,926)
143,926
Remove liability
4,046,883
4,222,974
(176,091)
-
-
Remove CLN Reserve
533,165
-
533,165
-
-
Conversion to equity
(4,222,974)
(4,222,974)
-
-
-
Gain)/Loss
(357,074)
-
(357,074)
357,074
(357,074)
143,926
(143,926)
Liability
(4,046,883)
(4,222,974)
176,091
-
(176,091)
Equity
(533,165)
-
(533,165)
-
533,165
PPA Retained earnings
(143,926)
143,926
-
(143,926)
Finance costs
283,889
147,849
136,041
(136,041)
-
Foreign exchange
86,541
9,434
77,107
(77,107)
-
Initial recognition
Dec-19
Conversion at IPO
Dec-20
57
Notes to the Group Financial Statements
3. Financial risk management
Financial assets
31-Dec-21
£’000
31-Dec-20
£’000
Cash and cash equivalents
4,155
5,365
Treasury BTC
463
832
Trade receivables – net of provision
13
1
Other receivables
1,116
279
Financial assets
5,747
6,477
Financial instruments
Financial liabilities
31-Dec-21
£
31-Dec-20
£
Trade payables
708
89
Other payables
127
106
Accruals
508
151
Financial liabilities
1,343
346
58
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Fair value hierarchy
All the financial assets and financial
liabilities recognised in the financial
statements which are short-term in nature
are shown at the carrying value, which
also approximates the fair values for short-
term financial instruments. Therefore, no
separate disclosure for fair value hierarchy
is required. The disclosure on fair value
hierarchy does not apply to the financial
leases.
The Group’s activities expose it to a variety
of financial risks, mainly credit risk, liquidity
risk and interest rate risk.
Credit risk
Credit risk refers to the risk that a
counterparty will default on its contractual
obligations resulting in financial loss to
the Group. In order to minimise this risk,
the Group endeavours only to deal with
companies which are demonstrably
creditworthy.
The aggregate financial exposure is
continuously monitored. The maximum
exposure to credit risk is the value of the
Group’s outstanding bank balances. The
Group’s exposure to credit risk on cash and
cash equivalents is considered to be low as
the bank accounts are with banks with high
credit ratings.
Liquidity risk
The Group currently holds cash and Bitcoin
balances to manage trading activity and
is managed centrally. Trade and other
payables are monitored as part of normal
management operations.
The below, for 2021, is predominantly made
up of accrued costs and tax liabilities
relating to payroll:
2021
Within 1 year
£’000
1-2 years
£’000
2-5 years
£’000
Trade and other payables
1,343
-
-
Total
1,343
-
-
2020
Within 1 year
£’000
1-2 years
£’000
2-5 years
£’000
Trade and other payables
346
-
-
Total
346
-
-
59
Notes to the Group Financial Statements
Market risk - interest rate risk
The Group carries no interest rate risk at the
respective year ends.
Capital risk management
The Group’s capital management
objectives are to ensure that the Group
continues to operate as a going concern,
and provide an adequate return to
shareholders by pricing products and
services commensurate with the level of risk.
To meet these objectives, the Company
reviews the budgets and forecasts on a
regular basis to ensure there is sufficient
capital to meet the needs of the Company
through to profitability, and achieve a
positive cash flow.
All working capital requirements are
financed from existing cash resources.
60
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
4. Segment information
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.
JGOO
£’000
Fibermode
£’000
Other
£’000
Total
£’000
Revenue
721
656
(64)
1,313
Cost of sales
(694)
(452)
(5)
(1,151)
Gross Profit / (Loss)
27
204
(69)
162
Administrative expenses
(936)
(2,466)
(5,980)
(9,382)
Operating Loss
(909)
(2,262)
(6,049)
(9,220)
Assets
188
911
4,868
5,967
Liabilities
2,585
5,040
(6,281)
1,344
Equity
(2,397)
(4,129)
11,149
4,623
Total Liabilities & Equity
188
911
4,868
5,967
JGOO
£’000
Fibermode
£’000
Other
£’000
Total
£’000
Revenue
353
97
-
450
Cost of sales
(325)
(182)
-
(507)
Gross Profit / (Loss)
28
(85)
-
(57)
Administrative expenses (1)
(934)
(1,319)
(1,265)
(3,518)
Operating Loss
(907)
(1,404)
(1,265)
(3,575)
Assets
152
4,540
6,232
10,924
Liabilities
1,684
6,655
(3,657)
4,682
Equity
(1,532)
(2,115)
9,889
6,242
Total Liabilities & Equity
152
4,540
6,232
10,924
31-Dec-21
31-Dec-20
(1) Adjusted for FRC restatement
61
Notes to the Group Financial Statements
5. Loss from operations
Year to 31
December 2021
£’000
Year to 31
December 2020
£’000
Operating loss is stated after charging:
Directors Fees
132
259
Consulting and advisory fees
530
393
Premises
80
23
Software costs
872
300
Advertising
1,394
188
Legal and professional fees
639
361
Audit fees*
26
50
Share option expense
743
315
Other administrative expenses
4,966
1,629
Total administrative expenses
9,382
3,518
*Non audit services paid to our Group auditors total £8,427. These include £4,985 for VAT compliance support and £3,442 for
Company secretarial support services.
62
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
6. Employment costs & directors
The average number of employees (including directors) during the period was made up as
follows:
The cost of employees (including directors) during the period was made up as follows:
The compensation of key management personnel, principally directors of Mode Global
Holdings PLC, for the period were as follows:
The compensation of key management
personnel, principally directors of Mode
GlobThe above remuneration (including
share-based payments) of directors
includes the following amounts paid to the
highest paid Director:
Year ended
31-Dec-21
Number
Year ended
31-Dec-20
Number
Directors (including non-executive directors)
6
5
Administrative
38
26
Total
44
31
Year ended
31-Dec-21
£’000
Year ended
31-Dec-20
£’000
Salaries and wages (including directors)
3,048
1,281
Social security costs
335
137
Pension Costs
36
19
Share Based Remuneration
743
315
Staff costs
4,162
1,752
Year ended
31-Dec-21
£’000
Year ended
31-Dec-20
£’000
Salaries/fees
484
308
Social security costs
45
19
Other benefits and pension contributions
5
-
Share Based Remuneration
389
192
Total
923
519
Year ended
31-Dec-21
£’000
Year ended
31-Dec-20
£-000
Highest paid Director
372
210
63
Notes to the Group Financial Statements
Year ended
31-Dec-21
£’000
Year ended
31-Dec-20
£’000
Total current tax (Relief for R&D)
(269)
(156)
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation
(9,215)
(3,855)
Loss on ordinary activities before taxation multi-
plied by standard rate of UK corporation tax of 19%
(2020: 19%)
(1,751)
(964)
Effects of:
Non-deductible expenses
143
103
Depreciation
5
2
Research & Development tax credits
(269)
(156)
Tax credit carried forward
1,602
859
Current tax charge/(credit) for the period
(269)
(156)
7. Taxation
Changes in tax rates
At the period end, the group had estimated
tax losses of £14,450,000 (£6,160,000)
available for carry forward against future
trading profits. The group considered that
0% of these would become realised before
1 April 2023 (applied a tax rate of 19%) and
100% would be realised after this date
(applied a tax rate of 25%). The tax losses
would have resulted in a deferred tax asset
of £3,613,000 (£1,143,000) which has not
been recognised in the financial statements
due to the uncertainty of the recoverability
of the amount.
64
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
31-Dec-21
£’000
31-Dec-20
£’000
At period start (1 January)
14
8
Additions
29
9
Revaluation
-
-
Depreciation
(10)
(3)
At period end (31 December)
33
14
Year ended
31-Dec-21
Year ended
31-Dec-20
Loss for the period and earnings used in basic &
diluted EPS (£)
(8,946,882)
(3,556,780)
Weighted average number of shares used in basic
and diluted EPS
89,593,045
61,071,349
Loss per share (p)
(10)
(6)
31-Dec-21
£’000
31-Dec-20
£’000
At period start (1 January)
832
-
Additions
1,933
377
Revaluation
(261)
455
Disposals
(2,041)
-
At period end (31 December)
463
832
8. Earnings per share (EPS)
10. Tangible assets
9. Intangible assets - Treasury BTC
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 2021 takes into account the plac-
ing of 10.9m shares in March 2021.
Tangible Assets comprises of only computer equipment.
65
Notes to the Group Financial Statements
31-Dec-21
£’000
31-Dec-20
£’000
Trade receivables
13
1
Other receivable
1,116
211
Prepayments
40
22
VAT Receivable
90
68
1,259
302
12 months to
31-Dec-21
£’000
12 months to
31-Dec-20
£’000
Trade payables
708
89
Other payables
127
106
Accruals
508
151
1,343
346
31-Dec-21
£’000
31-Dec-20
£’000
Cash at bank and in hand
4,155
5,365
11. Trade and other receivables
13. Trade and other payables
12. Cash and cash equivalents
Where cash at bank earns interest, the
interest accrues at floating rates based
on daily bank deposit rates. The fair
value of the cash and cash equivalents
is as disclosed below. For the purpose of
the cash flow statement, cash and cash
equivalents comprise of the amounts shown
below.
66
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Number of share
options (millions)
Average Exercise
price per share (£)
Outstanding as at 31 December 2020
8,735,989
0.5
Granted during the period
100,000
0.5
Exercised during the period
-
0.5
Forfeited during the period
-
0.5
Outstanding as at 31 December 2021
8,835,989
0.5
Ordinary
shares
Number
Nominal
value/share
£
Share
capital
£’000
Share
premium
£’000
Total
consideration
£’000
At 31 December 2020
80,537,005
0.01
805
11,091
11,896
Ordinary Shares issued on Placing
10,909,091
0.01
109
5,632
5,741
At 31 December 2021
91,446,096
0.01
914
16,723
17,637
14. Share capital
15. Share based remuneration
All shares of the Company rank pari passu in all respects.
The parent operates an unapproved share
option plan for all employees of the Group.
In accordance with standard vesting terms,
the full award will vest four years after the
start of the vesting date (5th October 2021),
with 20% vesting on the initial IPO date and
a further 5% of the options vested on each
three-month anniversary. If the options
remain unexercised after a period of ten
years from the date of grant, the options
expire. Options are forfeited if the employee
leaves the Group before the options vest.
The details of the movements in the share
scheme are as follows:
Unapproved Options
67
Notes to the Group Financial Statements
£
Current Price (£) on date issued
0.55
Option Exercise Price (£)
0.5
Expected Life of Options in years
4
Volatility
59%
Dividend Yield
-
Risk free interest rate
0.72%
Adjustment for sub-optimal exercise factor
20%
No options were exercisable at the end of
the period. No share-based payments were
settled during the period and therefore the
method of settlement is not applicable.
The weighted average fair values of the
options granted under the unapproved
options scheme were £0.18 per option using
the Black Scholes model.
The significant inputs into the model are as
follows:
The expected volatility was determined us-
ing the trading prices for MGH plc from the
period it listed until February 16th 2021 to
allow for sufficient time to provide enough
scope. The reason for only considering MGH
is that there were no other similar compa-
nies listed in the UK with comparable oper-
ations to MGH.
68
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
16. Reserves
The following describes the nature and purpose of each reserve within equity:
The Other Reserves noted on the Statement
of Changes in Equity include Group
Reorganisation Reserve, Share Based
Payments Reserve and the Revaluation
Reserve.
Share premium
Amount subscribed for share capital in
excess of nominal value.
Retained earnings
Retained earnings represent all other net
gains and losses and transactions with
shareholders (example dividends) not
recognised elsewhere.
Revaluation Reserve
Revaluation Reserve is the excess over
nominal value for the purchased Intangible
Bitcoin Assets
Group Reorganisation Reserve
The consolidation of Mode Global
Limited and its subsidiaries resulted in the
elimination of the parent’s investment in the
subsidiaries, and the recognition of a group
reorganisation reserve
Share Based Payment Reserve
Cumulative estimated expense amount
based on the price of MGH’s share options
69
Notes to the Group Financial Statements
Director
Company
Transactions
31-Dec-21
£’000
31-Dec-20
£’000
Richard Morecroft
Digital Works
Consulting
Director Fees
-
100
Consultancy
Fees
-
-
Jonathan Rowland
Ruskin Capital Ltd
Share Purchase
-
750
Ryan Moore
Tulham LLC
CLN converted
-
508
Ryan Moore
Keve Limited
Partnership
Share Purchase
-
1,500
17. Capital commitments
18. Related Party Transactions
The Company has no capital commitments at the years ended 31 December 2021 and 31
December 2020.
During the period the Company entered into the following transactions with related
parties:
Ruskin Capital Limited is owned by David Rowland, the father of Jonathan Rowland.
70
Notes to the Group Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
19. Events after the reporting date
During the week commencing 20 June
2022, Mode Global Holdings PLC received
irrevocable commitments from existing and
new investors to subscribe for £1,935,000
of convertible loan notes (“Loan Notes”),
with subscription monies to be received
from investors for their Loan Notes on or
before 1 July 2022. The Loan Notes will be
unsecured, have a coupon of 8% and will be
convertible into Mode’s Ordinary Shares at
a price equal to the lower of (i) 90% of the
average mid-market price for the period
of 5 Business Days prior to conversion; and
(b) 10p. To the extent not converted, the
Loan Notes will be repaid after 12 months.
Investors in the Loan Notes will also be
issued with one warrant for every Loan
Note held (“Warrants”). The Warrants are
exercisable into Mode’s Ordinary Shares for
a period of two years from issuance at a
price per share of £0.20.
20. Ultimate controlling party
There is no ultimate controlling party of the Company.
71
Notes to the Group Financial Statements
Notes
2021
’000
2020
£’000
Assets
Non-current Assets
Net amounts due from subsidiaries
3.1
-
6,339
Investment in group companies
3.3
-
27,490
Current Assets
Trade and other receivables
169
1
Cash and cash equivalents
3.6
3,307
5,054
Total Assets
3,476
38,884
Equity and Liabilities
Equity attributable to equity holders of the Group
Share Capital - Ordinary shares
3.4
914
806
Share Premium account
3.4
16,723
11,091
Profit and Loss Account
(42,197)
(278)
Merger Relief Reserve
26,940
26,940
Share Option Reserve
1,058
315
Total Equity
3,438
38,874
Current Liabilities
Current trade and other payables
38
10
Total Liabilities
38
10
Total Equity and Liabilities
3,476
38,884
The Company profit and loss account has
been approved by the directors, and the
use of the exemption under s408 of the
Companies Act has been applied to publish
an individual profit & loss statement.
Losses for the Company for the year ended 31 December
2021 were £41,919k (2020: £278k).
These financial statements were approved
and authorised for issue by the board of di-
rectors on 30th June 2022 and were signed
on its behalf by:
Company Financial Statements
Company Statement of
Financial Position
Jonathan Rowland
Chairman
72
Company Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Notes
Share
capital
£’000
Merger Relief
Reserve
£’000
Share
premium
£’000
Accumulat-
ed deficit
£’000
SBP
Reserve
£’000
Total
equity
£’000
Incorporation on 5 August
2020
-
-
-
-
-
-
-
Share for Share exchange
-
550
26,940
-
-
-
27,490
Shares issued
(including placing)
-
150
-
6,974
-
-
7,124
Share Option Reserve
-
-
-
-
-
315
315
CLN Conversion
-
106
-
4,117
-
-
4,223
Loss for Year
-
-
-
-
(278)
-
(278)
As at 31 December 2020
-
806
26,940
11,091
(278)
315
38,874
Shares issued (incl Placing)
-
108
-
5,632
-
-
5,740
Share Option Reserve
-
-
-
-
-
743
743
Loss for Year
-
-
-
-
(41,919)
-
(41,919)
As at 31 December 2021
-
914
26,940
16,723
(42,197)
1,058
3,438
Company Statement of
Changes in Equity
Share capital is the amount subscribed for
shares at nominal value.
Merger relief reserve is the excess over the
nominal value for shares issued as part of a
share-for-share exchange.
The accompanying notes are an integral part of these financial statements.
73
Company Financial Statements
Notes to the Company Financial Statements for
the year ended 31 December 2021
1. General information
2. Accounting policies
Mode Global Holdings Plc is an investment
company incorporated by shares in the
United Kingdom. The address of the
registered office is Finsgate, 5-7 Cranwood
Street, London, United Kingdom, EC1V
9EE. The Company was incorporated and
registered in England and Wales on 5th
August 2020 as a public limited company.
As at 31 December 2021 the Company
had shareholdings in five entities, a direct
holding in Mode Global Limited, and
indirect holdings in JGOO Limited 100%,
Greyfoxx Limited 100%, Fibermode Limited
(100%) & Fibere Limited (100%).
Basis of preparation
The financial statements of the parent
company have been prepared in
accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure
Framework’ (“FRS101”) and the requirements
of the Companies Act 2006 in accordance
with applicable accounting standards.
These policies have been consistently
applied.
The company has taken advantage of the
following disclosure exemptions under FRS
101:
•
the requirements of IFRS 7 Financial
Instruments: Disclosures;
•
the requirements of paragraphs 91-99 of
IFRS 13 Fair Value Measurement;
•
the requirements of paragraphs 10(d),
10(f), 16, 38A to 38D, 40A to 40D, 111
and 134 to 136 of IAS 1 Presentation of
Financial Statements;
•
the requirements of IAS 7 Statement of
Cash Flows;
•
the requirements of paragraphs 30 and
31 of IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors;
•
the requirements of paragraphs 17 and
18A of IAS 24 Related Party Disclosures;
•
the requirements in IAS 24 Related Party
Disclosures to disclose related party
transactions entered into between two
or more members of a group, provided
that any subsidiary which is a party to
the transaction is wholly owned by such
a member ; and
•
the requirements of paragraphs 130(f)
(ii), 130(f)(iii), 134(d) to 134(f), and 135(c) to
135(e) of IAS 36 Impairment of Assets.
74
Notes to the Company Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
The Company has also taken advantage
of the exemption under Section 408 of the
Companies Act 2006 from presenting its
own profit and loss account.
The preparation of financial statements,
in conformity with FRS101, 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 areas
involving a higher degree of judgement or
complexity, or areas where assumptions
and estimates are significant to the
financial statements, are disclosed in the
Company statement of financial position.
Although these estimates are based on
management’s experience and knowledge
of current events and actions, actual results
may ultimately differ from these estimates.
The estimates and underlying assumptions
are reviewed on an on-going basis.
Revisions to accounting estimates are
recognised in the period in which the
estimates are 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.
Changes in accounting policies and
disclosures
(a) New, amended standards,
interpretations not adopted by the
Company
•
Amendments to IFRS 3 Business
Combinations – change in reference to
the conceptual framework (applicable
on or after 1 January 2022)
•
Amendments to IFRS 17 Insurance
Contracts – measurement of insurance
liabilities (applicable on or after 1
January 2023)
•
Amendments to IAS 1 Presentation of
Financial Statements – further disclosure
requirements including additional detail
around accounting policies (applicable
on or after 1 January 2023)
•
Amendments to IAS 8 Accounting
Policies, Changes in Accounting
Estimates and Errors – definition of
accounting estimates (applicable on or
after 1 January 2023)
•
A number of narrow-scope amendments
to IFRS 3, IAS 16, IAS 17, IAS 37 and some
annual improvements on IFRS 1, IFRS 9,
IAS 41 and IFRS 16 (applicable on or after
1 January 2022)
* Subject to endorsement
Management has not yet fully assessed
the impact of this standard, but does not
believe it will have a material impact on the
financial statements.
75
Notes to the Company Financial Statements
Financial instruments
Financial assets and financial liabilities are
recognised in the statement of financial
position when the Company becomes
party to the contractual provisions of
the instrument. Financial assets are
derecognised when the contractual rights
to the cash flows from the financial asset
expire or when the contractual rights to
those assets are transferred. Financial
liabilities are derecognised when the
obligation specified in the contract is
discharged, cancelled or expired.
Trade and other receivables
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost using the effective interest
method, less provision for impairment.
Appropriate provisions for estimated
irrecoverable amounts are recognised in
the statement of comprehensive income
using the expected credit loss method.
The carrying amount of these assets
approximates their fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash
in hand, demand deposits, and other
short‑term highly liquid investments that
are readily convertible to a known amount
of cash and are subject to an insignificant
risk of changes in value. The carrying
amount of these assets approximates their
fair value.
Equity instruments
An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Company
are recorded at the proceeds received, net
of direct issue costs.
Trade and other payables
Trade payables are obligations to pay
for goods or services that have been
acquired in the ordinary course of
business from suppliers. Trade payables
are recognised initially at their fair value
and are subsequently measured at their
amortised cost using the effective interest
rate method. Due to the short term nature
of these balances, the carrying amount of
trade payables approximates to their fair
value.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to
the issue of new ordinary shares or options
are shown in equity as a deduction, net of
tax, from the proceeds.
Critical accounting estimates and
judgments
The Company makes certain judgements
and estimates which affect the reported
amount of assets and liabilities. Critical
76
Notes to the Company Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
judgements and the assumptions used
in calculating estimates are continually
evaluated and are based on historical
experience and other factors, including
expectations of future events that are
believed to be reasonable under the
circumstances.
In the process of applying the Company’s
accounting policies, which are described
above, the directors do not believe that
they have had to make any assumptions
or judgements that would have a material
effect on the amounts recognised in the
financial information.
Financial risk management
The Company’s activities may expose it
to some financial risks. The Company’s
overall risk management programme
focuses on the unpredictability of financial
markets and seeks to minimise potential
adverse effects on the Company’s financial
performance.
Capital risk
The Company takes great care to protect
its capital investments. Significant due
diligence is undertaken prior to making
any investment. Investments are closely
monitored.
Investments in subsidiary companies
The Company’s investment in its subsidiaries
is carried at cost less provision for any
impairment. Investments denominated in
foreign currency are recorded using the rate
of exchange at the date of acquisition.
Impairment of investments in
subsidiaries
The Company assesses investments for
impairment whenever events or changes
in circumstances indicate that the
carrying value of an investment may not
be recoverable. If any such indication of
impairment exists, the Company makes
an estimate of the recoverable amount.
If the recoverable amount of the cash-
generating unit is less than the value of the
investment, the investment is considered
to be impaired and is written down to its
recoverable amount. An impairment loss is
recognised immediately in the profit and
loss account.
Share based payments
The Group operates an equity settled share
based compensation plan for employees
of subsidiary undertakings using the
Company’s equity instruments. The fair
value of the compensation given in respect
of these share based compensation plans
is recognised as a capital contribution is
reduced by any payments received from
subsidiary undertakings in respect of these
share based payments.
77
Notes to the Company Financial Statements
During the period, management reviewed
the future cash flow projections and
market value of Mode Group Holdings
Plc’s subsidiary undertakings and deemed
it appropriate to pass an impairment
provision to reduce their values to nil.
Management will continue to review the
forecasts of the subsidiary undertakings
and assess whether it is appropriate to
reverse this impairment charge in future
periods.
3. Notes to the financial statements
3.1 Net amounts due from subsidaries
3.2 Capital risk management
The directors’ objectives when managing
capital are to safeguard the Company’s
ability to continue as a going concern in
order to provide returns for shareholders
and benefits for other stakeholders and to
maintain an optimal capital structure to
reduce the cost of capital. At the date of
this financial information, the Company had
been financed by the introduction of capi-
tal. In the future, the capital structure of the
Company is to consist of borrowings and
equity attributable to equity holders of the
Company, comprising issued share capital
and reserves.
Director
Company
Transactions
Amounts due from subsidiaries
13,934
6,339
Impairment provision
(13,934)
-
Net amounts due from subsidiaries
-
6,339
78
Notes to the Company Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.
The principal undertakings in which the
Company has an interest at the period-end
is as follows:
During the period, management reviewed
the future cash flow projections and
market value of Mode Group Holdings
Plc’s subsidiary undertakings and deemed
it appropriate to pass an impairment to
reduce their values to nil. Management
will continue to review the forecasts of the
subsidiary undertakings and assess whether
it is appropriate to reverse this impairment
charge in future periods.
Name
Country of
incorporation
Holding
Ownership
Nature of
Business
Mode Global Limited
United Kingdom
Direct
100%
Holding
Company
JGOO Limited*
United Kingdom
Indirect
100%
Global Payments
Platform
Fibermode Limited**
United Kingdom
Indirect
100%
Mode Digital
Wallet (including
Cryptocurrency)
Greyfoxx Limited*
United Kingdom
Indirect
100%
Mode for
Business
Fibere Limited*
United Kingdom
Indirect
100%
Mode Apparel
Store
Share in group undertakings
31-Dec-21
£’000
31-Dec-20
£’000
At period start (1 January)
27,490
-
Additions
-
27,490
Impairment
(27,490)
-
At period end (31 December)
-
27,490
3.3 Net amounts due from subsidaries
*- direct 100% investments of Mode Global Limited
**-direct 100% investment of Greyfoxx Limited
79
Notes to the Company Financial Statements
3.4 Share capital and share premium
For details of the share capital and share
premium see note 14 of the consolidated
financial statements.
3.5 Related party transactions
During the year ended 31 December 2021,
there were no related party transactions
that occurred.
The remuneration of the directors in Mode
Global Holdings PLC who held office during
the year to 31 December 2021 including
salary, fees and other benefits can be found
in the Directors’ Report
3.6 Cash and cash equivalent
3.7 Merger relief reserve
The merger relief reserve was created to
recognise the excess over par value of the
shares issued as part of the share-for-share
exchange with the previous shareholders of
Mode Global Limited.
3.8 Share-based payment reserve
The Company operates a non-approved
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
27th 2020 and 4th November 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.
No options have been exercised as at 31
December 2021. The maximum date that
the options can be exercised is the tenth
anniversary of the Grant Date, and if not
exercised before then the options would
automatically lapse. For full details of the
group shared-based compensation plan,
please refer to note 15 of the consolidated
Group accounts, presented above
3.9 Contingent liabilities
The Company has no contingent liabilities
in respect of legal claims arising from the
ordinary course of business.
3.10 Capital commitments
There was no capital expenditure contract-
ed for at the end of the reporting period
but not yet incurred.
3.11 Ultimate controlling party
There is no ultimate controlling party of the
Company.
3.12 Events after the reporting date
Please see note 19 of the Group accounts
for full details of post balance sheet events
affecting the Mode Group.
31 December 2021
£’000
Cash at the bank
and in hand
3,307
80
Notes to the Company Financial Statements
Mode Global Holdings Plc Annual Report. For the year ended 31 December 2021.