Match Group, LLC v. Bumble Trading Inc.

Western District of Texas, txwd-6:2018-cv-00080

Exhibit C

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7 Exhibit C 7 Registered number: 09214520 Bumble Holding Limited Annual Report and Financial Statements for the year ended 31 December 2017 *J7HEFH7V* JNI 26/10/2018 #22 COMPANIES HOUSE 7 Bumble Holding Limited TABLE OF CONTENTS Page Company information 2 Directors' report 3 Directors' responsibilities statement 5 Independent auditor's report 6 Statement of comprehensive income 9 Statement of financial position 10 Statement of changes in equity 11 Notes to the financial statements 12 7 Bumble Holding Limited COMPANY INFORMATION Directors Andrey Ogandzhanyants Whitney Wolfe Jdan Wallichman Company Secretary Reed Smith Corporate Services Limited Registered number 09214520 Auditor Ernst & Young LLP Bedford House 16 Bedford Street Belfast BT2 7DT Bankers Barclays Bank Pie Level27 I Churchill Place Canary Wharf London E14 5HP Solicitors Mishcon De Reya Africa House 70 Kingsway London United Kingdom WC2B 6AH Registered Office The Broadgate Tower Third Floor 20 Primrose Street London United Kingdom EC2A 2RS 2 7 Bumble Holding Limited Directors' report Registered No. 09214520 The directors present their report for the year ended 31 December 2017. Directors of the company The directors who served the company during the year and to the date of this report were: A Ogandzhanyants W Wolfe I Wall ichman (appointed 19 September 2017) In addition, V Kapranova was a director until 19 September 2017 Results The results for the period amounted to a profit after tax of £6,221 (2016: loss of £4,867). Dividends The directors declared and paid ordinary dividend for the year ended 31 December 2017 amounting to £747,496 (2016 £NIL). Future developments The Company intends to continue growing brand awareness and the user base in both new and existing markets. Financial instruments The Company finances its activities through a combination of equity and loan funding from the parent company. Currently no hedging techniques are being used to manage interest rate and foreign currency risks. Events since the balance sheet date There were no significant post balance sheet events affecting the financial position of the company which would require adjustment to the financial statements or the inclusion of a note thereto. Going Concern The company's business activities, together with the factors likely to affect its future development, its financial position, financial risk management objectives, details of its financial instruments and its exposures to price, credit, liquidity and cash flow risk are described above and in note 15 to the financial statements. The company has the full support and financial backing of the parent company with strong user and monetisation growth. As a consequence, the directors believe that the company is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. Auditor A resolution to reappoint Ernst & Young LLP as auditor will be put to the members at the Annual General Meeting. 3 7 Bumble Holding Limited Directors' report {continued) Small company exemptions This report has been prepared in accordance with the special provisions applicable to companies subject to the small company regime within Part 15 of the Companies Act 2006. Directors' statement as to disclosure of information to auditor The directors who were members of the board at the time of approving the directors' report are listed on page 3. Having made enquiries offellow directors and of the Company's auditor, each of these directors confirms that: • to the best of each director's knowledge and belief, there is no information (that is, information needed by the Company's auditor in connection with preparing their report) of which the Company's auditor is unaware; and • each director has taken all the steps a director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company's auditor is aware of that information. By order of the board on 20 September 2018 Whitney Wolfe ldan Wallichman Director Director 5 7 Bumble Holding Limited Directors' Responsibilities Statement The directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable Jaw and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that Jaw the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable Jaw. 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 of the Company and the profit or Joss of the Company for that period. In preparing these financial statements, the directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgments and accounting estimates that are reasonable and prudent; • State whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that they have complied with the requirements; have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing the accounts. 5 7 Bumble Holding Limited Independent auditor's report To the members of Bumble Holding Limited Opinion We have audited the financial statements of Bumble Holding Limited (the 'Company') for the year ended 31 December 2017 which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity and the related notes 1 to 21, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation 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 company's affairs as at 31 December 2017 and of its profit for the · year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have heen 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 below. 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 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 We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. 6 7 Bumble Holding Limited Independent auditor's report (continued) To the members of Bumble Holding Limited 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 the other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the directors' report has 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in 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, or returns adequate for our audit have not been received from branches not visited by us; or • the financial statements 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 • the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies exemptions in preparing the directors' report and from the requirement to prepare a strategic report. Responsibilities of directors As explained more fully in the directors' responsibilities statement set out on page 5, 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 company's ab,ility 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 company or to cease operations, or have no realistic alternative but to do so. 7 7 Bumble Holding Limited Independent auditor's report (continued) To the members of Bumble Holding Limited 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 rrom 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. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.rrc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. Use of our 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. Ruth Logan (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor Belfast Da" U II.. tl oJ,l..,r ./ to\ J 8 7 Bumble Holding Limited Statement of comprehensive income for the year ended 31 December 2017 2017 2016 Notes £'000 £'000 Turnover 36,374 4,986 Administrative expenses (29,909) (9, 177) Operating profitl(loss) 5 6,465 (4,191) Interest payable and similar charges 8 (244) (676) Profitl(loss) on ordinary activities before tax 6,221 (4,867) Tax 9 Profitl(loss) for the year 6,221 (4,8672 All the results shown in the Statement of Comprehensive Income are from continuing operations. There were no items of other comprehensive income that occurred during the years presented. The notes on pages 12 to 25 form part of these financial statements. 9 7 Bumble Holding Limited Statement of financial position at 31 December 2017 Registered number: 09214520 2017 2016 Notes £'000 £'000 Fixed assets Investments IO Property and equipment 11 14 Intangible assets 12 138 66 Total fixed assets 152 66 Current assets Debtors: amounts falling due within one year 13, 15 1,001 1,395 Cash at bank 21 IO Total current assets 1,092 1,405 Current liability Creditors:· amounts falling due within one year 14, 15 (244) (6 722) Net current assets!(liability) 848 (5 317) Total assets less current liability 1 000 (5 251) Net assets!(liability) I 000 (5,251) Capital and reserves Share capital 16 Other reserves 17 2,701 1,924 Retained earnings 17 (1 701) (7 175) Total equity I 000 (5,251) By order of the board on 20 September 2018 ldan Wallichman Director Director 11 7 Bumble Holding Limited Statement of changes in equity ~~- -~C e-,-.~ for the year ended 31 December 2017 Share Other Retained Total capital reserves earnings Equity Notes £'000 £'000 £'000 £'000 At 1January2016 1,924 (2,308) (384) Total comprehensive income for the year (4,867) (4,867) At 31 December 2016 16, 17 1,924 (7, 175) (5,251) Share Other Retained Total capital reserves earnings Equity Notes £'000 £'000 £'000 £'000 At 1 January 2017 1,924 (7, 175) (5,251) Capital contribution 777 777 Dividends paid (747) (747) Total comprehensive income for the year 6,221 6,221 At 31 December 2017 16, 17 2,701 (1,701) 1,000 11 7 Bumble Holding Limited Notes to the financial statements at 31 December 2017 1. Corporate information Bumble Holding Limited is a private company, limited by shares, incorporated, registered and domiciled in England and Wales. The company's registered number is 09214520 with a registered office address of The Broadgate Tower Third Floor, 20 Primrose Street, London EC2A 2RS, United Kingdom. The Company is principally engaged in public relations and marketing. Information on the Company's structure and information on other related party relationships of the Company are provided in Note 18 and 19. 2. Basis of preparation The financial statement of the Company for the year ended 31 December 2017 were authorised for issue by the board of directors and the statement of financial position was signed on the board's behalf by Whitney Wolfe and Idan Wallichman. These financial statements were prepared in accordance with United Kingdom Accounting Standards including Financial Reporting Standard (FRS) I 01 "Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). The Company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare group accounts as it is a wholly owned subsidiary of Badoo Trading Limited, a UK incorporated, private limited company. The results of Bumble Holding Limited are included in the consolidated financial statements of Badoo Trading Limited, which are available from UK Companies House: https://www.gov.uk/govemment/organisations/companies-house The principal accounting policies adopted by the Company are set out in note 3. The financial statements have been prepared on a historical cost basis. The Company's functional and presentation currency is British Pounds(£). All values are rounded to the nearest thousand (£'000), except when otherwise indicated. The Company has taken the following disclosure exemptions in the preparation of these financial statement, in accordance with FRS I 01: • The requirement of IFRS 7, Financial Instruments: Disclosures; • Paragraphs 91to99 oflFRS 13, Fair value Measurement; • Paragraph 38 of IAS 1, Presentation of Financial Statements comparative information requirements in respect of paragraph 79(a)(iv) of IAS 1 paragraph 73(e) of IAS 16, Property, Plant and Equipment, paragraph 118(e) of IAS 38, Intangible Assets • IAS 7, Statement of Cash Flows • Paragraph 30 and 31 of IAS 8, Accounting policies, changes in accounting estimates and errors (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective) • The following paragraphs of IAS 24, Related party disclosures (key management compensation): 17 (Key management compensation), and l 8A (Key management services provided by a separate management entity) • The requirement of IAS 24, Related party disclosures to disclose related party transactions entered into between two or more member of a group 12 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 3. Summary of significant accounting policies a) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. b) Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the company operates and generates taxable income. Current income tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions: • deferred tax assets are recognized only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. c) Investments Investments in subsidiaries, associates and joint ventures are held at historical cost less any applicable provision for impairment. d) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as finite. Intangible assets with finite lives are amortised on a straight-line basis from the date they are available as follows: Trademark 10 years Domain 3 years 13 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 3. Summary of significant accounting policies (continued) The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised. · e) Tangible assets Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended. Borrowing costs directly attributable to assets under construction and which meet the recognition criteria in IAS 23 are capitalised as part of the cost of that asset. Depreciation is provided on all tangible assets, on a straight-line basis over its expected useful life as follows: Computer hardware 3 years Furniture and fittings 4 years f) Impairment Impairment of non-financial assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount in order to determine the extent of the impairment loss. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses on continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset. g) Current versus non-current classification The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is: • Expected to be realised or intended to be sold or consumed in the normal operating cycle • Held primarily for the purpose of trading, • Expected to be realised within twelve months after the reporting period Or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current. A liability is current when: • It is expected to be settled in the normal operating cycle • It is held primarily for the purpose of trading 14 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 3. Summary of significant accounting policies (continued) • It is due to be settled within twelve months after the reporting period Or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Company classifies all other liabilities as non-current. h) Financial instruments - initial recognition and subsequent measurement A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale (AFS) financial assets, or derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a timeframe established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date at which the Company commits to purchase or sell the asset. The Company's financial assets include cash and cash equivalents and trade and other receivables. Subsequent measurement For purposes of subsequent measurement financial assets are classified as loans and receivables: Loans and receivables This category is the most relevant to the Company. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance income in the statement of profit or loss and other comprehensive income. The losses arising from impairment are recognised in the Profit and Loss Account in Administrative expenses. This category generally applies to "Debtors: amounts falling due within one year", refer to Note 13. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e., removed from the Company's consolidated statement of financial position) when either: • The rights to receive cash flows from the asset have expired, or • The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset; or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. 15 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 3. Summary of significant accounting policies (continued) The Company assesses at each reporting date whether there is objective evidence that a financial asset or a Company of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event') has an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a Company of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments; the probability that they will enter bankruptcy or other financial reorganisation; and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial Liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's financial liability included in "Creditors: amounts falling due within one year" and is classified as loans and borrowings, refer to Note 14. Subsequent measurement Loans and borrowings This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortise·d cost using the effective interest rate method. Gains and losses are recognised in the Profit and Loss Account when the liabilities are derecognised, as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. This category generally applies to interest-bearing loans and borrowings. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss and other comprehensive income. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. i) Cash at banks Cash at banks in the statement of financial position comprise cash at banks, which are subject to an insignificant risk of changes in value. 16 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 3. Summary of significant accounting policies (continued) j) Changes in accounting policies and disclosure The Company applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after I January 2017. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The nature and the effect of these changes are disclosed below. Although these new standards and amendments applied for the first time in 2017, they did not have a material impact on the annual financial statements of the Company. The nature and the impact of each new standard or amendment is described below: Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) Amends IAS 12 Income Taxes to clarify the following aspects: • Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use. • The carrying amount of an asset does not limit the estimation of probable future taxable profits. • Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences. • An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type. Disclosure Initiative (Amendments to IAS 7) Amends IAS 7 Statement of Cash Flows to clarify that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. 4. Significant accounting judgements, estimates and assumptions The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively. 17 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 4. Significant accounting judgements, estimates and assumptions (continued) Judgements In the process of applying the Company's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements: Provision for bad and doubtful debts The Company reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the customer's payment record and the customer's overall financial position. If indications of irrecoverability exist, the recoverable amount is estimated and a respective provision for bad and doubtful debts is made. The amount of the provision is charged through profit or loss. The review of credit risk is continuous and the methodology and assumptions used for estimating the provision are reviewed regularly and adjusted accordingly. Income taxes Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Contingencies Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised ifthe revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. Changes in estimates and assumptions about these inputs could affect the reported fair value. 18 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 5. Operating profit/(loss) This is stated after charging/ (crediting): For the year ended For the year ended 31 December 2017 31 December 2016 £'000 £'000 Depreciation and amortisation 13 11 Net foreign currency (gain)/loss (278) 706 6. Auditor's remuneration The Company has recognised the following in respect of amounts paid or payable to its auditors in respect of the audit of the financial statements and for other services provided to the company. For the year ended For the year ended 31 December 2017 31 December 2016 £'000 £'000 Fees payable to the company's auditor for the audit of the company's annual accounts 13 IO Non audit-related services 6 6 Tax compliance services I 20 17 7. Staff costs For the year ended For the year ended 31 December 2017 31 December 2016 £'000 £'000 Salaries and wages 188 94 Social security costs 35 IO Pensions 2 225 105 The average monthly number of employees during the year was 7. There has not been any remuneration to directors during the year (2016: £nil), as they are remunerated by other group companies. Per service agreement between Bumble Holding Limited and Bumble Trading Inc. the part of the salary and expenses of Whitney Wolfe relating to her time spent working for Bumble Holding Limited in her role as Chief Executive Officer in London offices for up to 3 months of each year, shall be invoiced to Bumble Holding Limited with no mark up since this is not Bumble Trading Inc. cost of performing services covered by the agreement. During the year of2017, Whitney Wolfe spent 8 days in London offices acting as a director of Bumble Holding Limited. 19 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 8. Interest payable and similar charges For the year ended For the year ended 31December2017 31 December 2016 £'000 £'000 lntercompany loan interest 236 676 Bank charges 8 244 676 9. Income tax a) Tax on profit on ordinary activities There is no tax charge in the year. b) Factors affecting tax charge/(credit) for the period: The tax assessed for the period is lower/higher than the standard rate of corporation tax in the UK (19.25%). The differences are explained below: 2017 2016 £'000 £'000 Profit on ordinary activities before tax 6,221 (4,867) Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19.25% 1,198 (973) Effects of: Disallowed expenses and non-taxable income (3,488) (496) Group relief surrendered 1,060 1,036 Deferred tax not recognised 1,230 433 Total tax expense reported in the statement of profit or loss and other comprehensive income c) Deferred taxes No deferred tax asset has been recognised on the tax losses due to the uncertainty over future taxable profits against which to recover the deferred tax asset. d) Factors that may affect future tax charges The Finance Act 20 I 5, has provided that from I April 20 I 7 taxable profits will be taxed at the rate of I 9% and the Finance Act 2016, has provided that from I April 2020 taxable profits will be taxed at 17%. This will affect the future tax charge of Bumble Holding Limited. It is not expected that this rate reduction will have a material impact on Bumble Holding Limited. 10. Investments 2017 2016 £ £ At I January Additions At 3 I December 20 7 Bumble Holding Limited Notes to the financial statements {continued) at 31 December 2017 10. Investments (continued) Subsidiary undertakings The following were subsidiary undertakings of the company: % equity Country of interest Name Principal activities Incorporation 2017 Bumble Trading Inc PR and Marketing us 100.0% Bumble Trading Inc's registered address is 1209 Orange Street, Wilmington, United States. 11. Property and equipment Computer Furniture Hardware and fittings Total £ £ £ Cost At 1 January 2017 Additions J2,075 1,809 J3,884 At 31 December 2017 12,075 J,809 J3,884 Amortisation At I January 2017 Depreciation charge 335 38 373 At 31 December 20J 7 335 38 373 Carrying amount At 31 December 2017 l J,740 J,77J 13,51 J At 31 December 2016 12. Intangible assets Intellectual Intellectual Property-: Property- Trademark Domain Total £'000 £'000 £'000 Cost At 1 January 78 78 Additions 75 JO 85 At 31 December 20 J7 J53 JO J63 Accumulated depreciation At J January 12 J2 Amortisation 12 13 24 25 Carrying amount At 31 December 2017 129 9 J38 At 31. December 2016 66 66 21 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 13. Debtors: amounts falling due within one year 2017 2016 £'000 £'000 Prepayments and other receivables 289 37 Accrued income 1,358 Amounts owed by related parties 712 1,001 1,395 Amounts owed by related parties are repayable on demand. 14. Creditors: amounts falling due within one year 2017 2016 £'000 £'000 Trade payables 140 41 Accruals 96 17 Other payables 8 714 Amounts owed to related parties 5,950 244 6,722 Amounts owed to related parties are payable on demand. 15. Financial assets and liabilities Financial assets 2017 2016 £'000 £'000 Trade and other receivables 712 1,358 Total financial assets 712 1,358 Financial liabilities 2017 2016 £'000. £'000 Trade and other payables 244,772 Amounts owed to related parties 5,950 Total financial assets 244 6,722 Financial risk management The Company's goal in risk management is to ensure that the management understands, measures and monitors the various risks that arise in connection with its operations. Policies and guidelines have been developed to identify, analyze, appraise and monitor the dynamic risks facing the Company. Based on this assessment, the Company adopts appropriate measures to mitigate these risks in accordance with the business unit's view of the balance between risk and reward. 22 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company is financially supported by the Group so management considers liquidity risk to be minimal. 15. Financial assets and liabilities (continued) 31 December 2017 less than 3-12 I to 5 More than On demand 3 months months years 5 years Total £'000 £'000 £'000 £'000 £'000 £'000 Trade and other payables 244 244 Amounts owed to related party At 31 December 2017 244 244 31 December 2016 less than 3-12 I to 5 More than On demand 3 months months years 5 years Total £'000 £'000 £'000 £'000 £'000 £'000 Trade and other payables 772 772 Amounts owed to related party 5,950 5,950 At 31 December 2016 5,950 772 6,722 Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company trades only with its parent company, thus there is no significant credit risk for the Company. 2017 2016 £'000 £'000 Trade and other receivables 1,358 Amounts owed by related parties 712 Total financial assets 712 1,358 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a different currency from the Company's functional currency). The Company does not hedge these exposures, and therefore, adapts its operating model, to minimise foreign currency exchange rate volatility. The Company's exposure to foreign currency changes for all currencies is limited. 23 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 16. Issued share capital 2017 2016 £'000 £'000 Authorised Ordinary shares of £0.0 I each 200 200 £ £ Issues and fully paid Ordinary shares of £0.0 I each 2 2 17. Reserves Capital contribution Retained earnings Total £'000 £'000 £'000 At I January 2017 1,924 (7,175) (5,25 I) Capital contributions 777 777 Dividends paid (747) (747) Total comprehensive income 6,221 6,221 At 3 I December 20 I 7 1,954 (954) 1,000 Capital contribution Retained earnings Total £'000 £'000 £'000 At 1 January 20 I 6 (2,308) (2,308) Loss for the year (4,867) (4,867) Capital contributions 1,924 1,924 At 31 December 2016 1,924 (7, 175) (5,251) Capital Contribution Under Bumble shareholders agreement Badoo Trading Limited would make a total irrevocable capital contribution of US$ 4 million, US$ 1 million of which was conditional upon evidencing that it had generated 5 million unique installations of Bumble App onto mobile user devices. In August 2017, Badoo Trading Limited made additional irrecoverable capital contribution of £777, 122 (USO$ 1 million) to Bumble Holding Limited as a result of meeting the above condition. Dividends On 7 December 2017, the Board have approved and paid dividend amounting to £747,496 (US$ 1 million). 24 7 Bumble Holding Limited Notes to the financial statements (continued) at 31 December 2017 18. Related party transactions During the year, the Company entered into transactions, in the ordinary course of business with other related parties. Transactions entered into, and trading balances outstanding at 31 December with other related parties, are as follows: Amounts Amounts owed by owed to Sales Purchases related party related party £'000 £'000 £'000 £'000 Parent Company Worldwide Vision Limited 2017 2016 (2) Badoo Trading Limited 2017 36,374 694 2016 3,628 (5,308) Subsidiary Bumble Trading Inc. 2017 412 18 2016 Transactions with key management personnel There has been no compensation to key management personnel during the year (2016: £nil) 19. Ultimate group undertakings The Company's immediate parent is Badoo Trading Limited and the ultimate parent undertaking is Rimberg International Corp., a company incorporated in the Bristish Virgin Islands. The ultimate controlling party is Mr A Ogandzhanyants. Worldwide Vision Limited is the largest group and Badoo Trading Limited is the smallest group to prepare consolidated financial statements that include the Company for the year ended 31 December 2017. Copies of the consolidated accounts of Worldwide Vision Limited are available from its registered office at 21 Laffan Street, Hamilton HM09, Bermuda and Badoo Trading Limited's consolidated accounts are available from its registered office at The Broadgate Tower Third Floor, 20 Primrose Street, London EC2A 2RS, United Kingdom. 20. Commitments and contingencies There were no capital commitments at the end of reporting period. 21. Events after the reporting period There were no material events after the reporting period, which have a bearing on the understanding of the financial statements. 25