Match Group, LLC v. Bumble Trading Inc.

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

Exhibit F

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0 Exhibit F '\ 0 \,. Register~d nurnoer: 05692436 Badoo Limited Annual Report and Financial Statements Fort~e year ended 31 December '.2018 COM~::.AN!ES HOUSE Sf.LEt\ST 3 J MAY 2019 ·.::;:,::..;"l~iJ 11111111111111111111 ·.·~' RECEPTION DESK *J86NJ840* JNI 31/05/2019 #30 COMPANIES HOUSE 0 Badoo .Limi.ted -------8P~·-~'ll~2<¥~~""'=~= TABLE ·OF CONT~NTS Page .company In formation 2 stratcgic report Directors' report 5 Directors' .responsib.ilitics statement 7 Independent ..audiior's.report 8 Statement M prtjfit·or loss. and .other compr.chensivcfacomc:II Stutcment of financial position Statement ofchah~cS i11 cqiiity 13 Statement of cash flows 14 Notes to ihe litiaticial statements 15 0 B~dpo Limited:COMPANY INFORMATION Directors V Kornilo~ski. i w"iillicilman Cqmp;:iny Secretary Reed Smith Corporate Sc!)'ices Limited Registered num·ber 05692436 Auditor Ernst & Young LLP Bedford ·Liouse 16 Bedford Sttcet Belfast BT2 7DT Banker Barclays J3ank Pie Level 27 l Churchill Piacc Canary Wharf London E 14 5HP Solicitors Mishcon De Rcya Sut1ii'nit ·nousc 12 Red Lion Squnre Loudo.n WC.I R Q4D Registered Offi.ce The Rroadgaie Tolver Thira Floor 20 i>rinir'ose Street London UniH:d Kingd(im EG:iA 2RS 2 0 Badoo Limited Strategic Report for the Year Ended 31December2018 The i)ircctors·jJrcsi:nt their strnicgic report for the year ended) I Qeccmbcr 2018. Business review Aadoo 1.imitcd's (thc·"Company'·l principal activity-is to provide mobile dcvc!Opment services to ·uadoo Software Liniiti!d, aiHither entity in. the Worldwidc·Yi.sion group. The profit for the.year ended 3 I Decemb.cr 20.18, after taxation, is £2,401 k (20 L7::H,8i3k) .. 1'he dircctcirs·do.n'ot ri:cominend. a dividend· for the year ended 31 December 2018(2017; £2,246~): The Ctimpnny•s· key financial Indicators· were as: foilows: 2018 201'7 Change t"ono £'000 % Rc:vc11uc 36,754 27;292 35% Operating profit 2,561 1,887 36% Pr(lfit fqr the ·nnancial year 2,401 1,873 27% Shareholder's cqui.ty 3,681 1,269 189% Revenue from continuing operations increased by.35% in 2018 driven by an increased number of projects on Hadoo and associated applications. Operatir1g profit tnargin rose iii line ivith rcvcriiic at 36% during 20 l S. ivtanagemcnt arc satisfied wiih the perfonnancc of the business during the year: Principal risks anti uncertainties The Comp!Jny's goal in risk management is to ensure tha~ the management 'Understands, measures .arid moni.tors· the various risks that arise in connection with the c:ornp:my's operatir,11is, Po.lie Ics and guidelines have been devciopcd t9 identify, anafysc, appraise and. monitor the principal risks facing the Company. Based o.n this assessment, rhe'Company adopts appropriate mcusu·res'to mitigattr.ttiesc risks in a1.:conla111;c with its view of the balance between risks and rc\vafd.s. Flnanclal risk management The litianc'ial risks are idcnti ficd, measured and managed on an adhoc basis by the Company's senior nianagcmt;nt wi'th appropriate policies and proc.:durcs pul:in place, when necessary. The. Board of Directors revie1vs and agrees policies and procedures for rrninagihg each of these. risks,. which. arc s·ummariscd.' below. Credit risk Credit risk is the risk.tlliit a countcrpany: wlll not mt:cdts obiignticins under a tfo;u1cial instrument or Ci1storricr contract, lcacjiiig to a tinanda.l loss. The Company is exposed to c·rcoit risk ffom its operating activities (primarily trade rcceivabks) and front its fiht1ncing activities, prlma·rily cash at b.ilnk,. The Company provides dCvcloprncnt services 1vithiil the Group and. as such, only has trade receivables from one related entity. lnicrcornpany debtors are paid regularly and an impairment review is peifon'ncd'at each reporting date. ·Management do ilot bclii:Ve there to be significant .credit r.isk on reccivab.les. Credit risk from balances with banks and financial it)sti{utions i~ managed by ih.c Group 's<finuncc dcpartn)cni. Then: nrc minimal policies in place and the Company only holds' cash at banks. There is n low exposure ro credit risk on balances held with banks. 3 0 Badoo· .Limited -------~.i!S$~~~~~~~~~-· Strategic Report (continued) Financial r.isk r:nanage·ment (continued) Foreig:n currency risli Fqreign currency dsk is the risk..that·thc fair vah:1e or:f\1ture <;:ash .riows.·o.f an exposure \Viii fluctuate because ofcharigcs iJ1. for«ig11 exchange rates, Tlw Company'.s exposure io the .dsk of diailges ill foreign exchange rates relates·primarj\y to the Group's opcratin·g activi.tics (wh~n expense is denominafed.in a foreign cuitency). . Liquidity risk.· The Company's tln·ance dt:partmcf1t rnonitors its risk of a shortage of funds ori an ongoing basis ..'!"he Gompany's cibjccti,ve is.to maintain sufficicnt..funds·at the.bi\nk to 111cct upcoming:f'inancial liabiliii.cs througlrthc.reccipt M m6riii:s O\ving: for in'tragroup d~yclopment services. Non-financial risks The 'Comµany·alsoJaces a number ofnon-ti.nanc.ial risks th;it.arise as u result: of the business climate \i.'hiCh. arc not, directly controllabh: by the Company. the risks' ate priinarily compliaoce risk. Complianc~ risk Incidents of 1101i-¢ompliancc wit.h applicable faws and regulations.or ethical ri1isconduct could be damaging to the Compm:1y's reputation. lhhcrerit. in:the Con,1pany-'s bus.incss activities are the potential breach of sta\litory requi~cmcnts tl:fat rcqlli.re. continual oversight arid control. This rcp(irt wh.~ approved by the· ~oard.and si.g.ncd on i.ts behalf.' By order ofthc board ~---·-· i.::_ . . 'f <, .... -~) ldnn Wallkhman Director 4 0 Bacioo Limited -------~.....,.,,;;,:~):l!!!lffi-~~~~~~~ Directors' report Registered No. 05692436 The directors present. their rcp9rt for the year l•ndcd 31 [)cccrnbcr 20-18 .. Directors of th~ Company The·direciors who:served the Company dufing ihe year and to the date of this rc·port:wcrc: V f<.o.rnilovski L WaHichman Dividends The directors do not rec.oninicnd a. final ordinary dividend for the year.ended 31 December 2018. (2017 £2:246k). Future developments The Company intends to continue operating in tile development of mobile applications ai1d application features. · Financial instruments The. Company has chosen to present information on its financial risk rnam1gement policies in t'1~ Strategic Report in i1tcbrdance with S.cetion 414 C (1:1) of the Companies Act 2006. . Research and devel.opment The Company carries out research and dcvClopmeni.on.311 ongoi11g:b!lsis, the value of this is expensed Vlhen incurred: · E.vents sln.ce the. balance sheet date There are. no. significant subsequent events to n:port until tht: date ofthe.sc ·financial statements. Going Concern The Company has had a satisfactory year and the directors believe that the trend willcontinuc .. Thcrc arc no significant i.;hanges in the business·activities expected in the foreseeable future.and Ilic directors are sat is tied that the Company has adequate resources .and wifl tonti1fue to be profitable for the foreseeable future, The Company's forecasts and projections show that the:Company has sullith:nt 'financial resources, \lfld ~as assets that me expected to generate free cash flow to the.Compaity: As. a consequence, the directors have a. reasonable cxpectalion thai the Company is well plac.cd to manugc its business risks arid to continue in operntional' existence for:the foreseeable. f\ttwe.. -Aci:;ordi11gly, the directors co11tinue to adopt the going coriccrn bi1si$ in preparing thq lina11cial staiements. Auditor A resolution to n::a1>poitl\ Ernst & Voui1g LLI; as auditor \viii be put to tlie mefl:ibc~s at the A11nµal General Meeting. PoJiticat Donations No pol.itical donaiionnvere made .by ihcCompany during 2018 (20 (7: .£nil): Directors' indemnities A grc;iup compa.ny has .made .qualifyi11g third party indemnity provisions fot the benefit Mthc Cornpan)"s ·directors 5 0 Badoo l,imited -------·~~-~~~~'BL~~~·~~~· Directors' report {continued) Dlrector5' state·meht as to disclosure of information to auditor The dire.ctors i.vho·Wcre members ofihe:board at the time ofappr.ovii1g the direct.or~.· rcpqrt !ll'e listed on page. 5; Having made· enquiries. of fellow d).rectors aj.J.d of the Company's. a.uditors, each orihese directors confrrms that: · · t(1° the best of each director.'s klici\vlcdge nn.d b:eiief, .there is no in fo.rmation: (thai is, in formatfon needed by the Company's auditor in connection with preparing their.report) of\\'.hlehthe (:ompany's audi.tor is unaware; and. c·ach directpr iigs.foken.ull thc steps a director might reasonably he expected fo have .takenJo .be aware.of rcl\:.vant audit lnfori1ffitfon llrid to cst~blish Jhat t.IJe Company.'s audi.tor is aware of that 'irrforinatfort. · · By order of the board .~r--·· / t_ .::.C:::~ ldan Wallichm:in: Director 6 0 Badbo Limited. . . . . . . . . . . . . . .~~~wT'E-~·iWi:!.mtl~lillCOD:lli:nll~is;:l~!lll!llOfmi;tiil;;';:r;.~~ Directors' Responsibilities Statement The directors i\rl:: responsible for preparing the. Strategic,rep 0 rt, the Directors' r.eport and the financial. st.atcriicr1ls in acc()rdririce with applicable law a11~! regulations. Cqmpa11y ·1aw reqtijres the di rec.tors· to prepare financial statements for each financial year. Under that law the directors have ekcted to prepare the financiai statements.in ac~brdance With h1fcrnational Financial Reporting Standards (IFRS) as.adopted by the Europeru1 Union. Under company law the directors liiust not approve the fii1ancial statertierits.unlcss the)' are s·at(sficd that they give.1duie arid fajr view oflhe state of affairs of the Company and the profit or loss of ihc Company for ihat period.:in preparing ihese Jinru1cial statements, the directors arc required to: Select suitable ilccouhtlrig. poilcies and then apply them consistently; Make judgments and accounting estimates that ure rcascinahlc and prudent; Stak whl!lhct a·pplicablc lntcm·utional Fin.ancial Reporting Standards as adopted by. the. European Union have hccn foll.owed .. subject· to .any nrntcrial. departures disclosed an·d. expfaincd in the financial statements; Prepare the financial statements on the going concern basis unless it is inappropriate 16 ·prcsuine that ihc Company will continue in business, The directors arc responsible for keeping adequate accounting rcctirds 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· e11i1hle them lo ensure that the fimmcial s.tatemenis comply with the Companies Act 2006. They are also responsible for. safeguarding the ilss'cts of the Co1i1pany aiid hence for taking n:ast>nable steps for' the ~irevention ai1d detection of fraud a.nd othe.r irregularities. The directors ·confirm that they have complied With the rcqi1\rc111ents; have a reasonable expectation that the Company has ·adcqliatc rcs61ii'ces to contiriue in-operatiomil existence for the foreseeable foture·and. cont.im1e t.<? adopt the &oing c:onccm basis in preparing thi: accounts. 7 0 Badoo Limited. --------,~~'.!!<oi!l'"-'~'~-.-,~-~·~ r.i!ful!illii:llliit~i'F.l!lil~in!ll>!:.tozc;i:oz~Sli!l•-!ili·'~~~ ill. Independent auditor's report To the members of Badoo Limited Opinion We have audited the:financial" statements of Iladoo Limited (the "Company") for the year ended 31 Dccem.ber 2018 which comprise the Statclnent of Profit and Loss and Other Comprehcnsh•e ii1come, the Statc!nent of Financiai Position, ihc Statement of Changes iri Equity, the Statement of Cash Flows and the related notes .l to 21, including a summary of significant accounting policies, The financial reporting framework that has been applied in their preparation is applicable law and lnternation:il FinanciaJ Reporting Standards (lFRSs) as adopted by the European Union. ln our opinion~ the tinancial statc111ents: give a true and fair \;few of the Compnny's affairs as at 31 December 2018 and of. its profit fonhe year then ended; have bcc1i prope.rty prepared in accordance wiih IERSs. as adopted by the Eliropcan Unipn; and have been prepared in accordance with tlic requirements of the Companies·Act 2006. Basis for opinion We condu.cted our-audit in accordance With International Standards on Auditing (UK) (lSAs (UK)) and applicable la\v,,Oi.ir respons)bilitic$ undcr:thosc siandards ar.c further described in the Audifor.'s responsipllities for the audit of the financial staterilcrlts section q(our report below. We arc independent. of the Company in accordi1nce With the ctl.iical requirements that arc rdcvant to our audit oft.he financial statements In the UK, including· the FRC's Ethical Standard, and \vc have fulfilled·our other ethical. responsibilities in accordance with these .rcquircn;icnts, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basi.s for our opinion. Conclusions relating to goin~ concern We have nothing to reporl in respect of the following matters in rciation to which the.ISAs (UK) require us to report to. you where: the directors' use of the going concern.basis of accounting in the.prcpnratirn1 of the financial statements is not. appropriate; or" the directors have not disclosed in the financial statcri1cnts any idelltified material uncertainties that may cast significant dollbt about the Company's ability to continue to adopt the going concern basis of accounting for-a period of at. least twelve mtmths from .the date w!1en the fiQ\ln~ial statel)lcnts. arc atHhorised for issue. other informaiion The other iMormation comprises theinfom1ation indudcd in the annual report, othc.r than the finatidat statcnH:nts and our ouditor''s report thereon, The directors arc responsible· for the other ihtonnation: Our opinion on the financial statem..:nts docs not cover the other infomiation ari<j; except to the extent othct\\'ise cx·pjjcitly stated inthis report, ~·c do nor express ariy fonil of assurance conclusion ihcrcon. 8 0 Badoo Liniited Independent auditor's report {continued) To the members of Badoo limited In Connectioi1 with our audit o.f the finaiicial statements. our responsibility is to read the other infonnation and, in doing s.o, consider whether the other information is materially inconsistent with ihe financial statements or our kno\vledgc:obtained in the audh or otherwise appears to be materially misstated. lfwe identify such· material .inconsistencies. or apparent· iiliircrial missratcmcills, we arc required lo. dctcni1ii1e whether there is a material misstatement iri the lina~1eial statements or a 1ilaterial misstatement .of the other infonn;!(ion .. If, pased on tlu: \vork we have pcrfonncd, we conclude that there 'is-a maicrfal misstaterile1il of the other iriform!lthin, we ere: rcqii.i1'ed to report that fuct. We have nothing.to report in ~his regilr<l. Opinions on other:maticrs prescribed by the Coin panics Act 2006 In our· opinion, based on the work undcrt!lken·in. the course of t.l~c. audit: the information given in the strategic report and the.directors' report for the financial year for whkh the financial statements arc prepared is consistent \vith ihc linancial statements; and the strategic rcpC1rt and directors' report have been prepared in accordance with applicable legal. requirements. Matters on which we arc required to report by exception In the light ofthi.! knowledge and understandi1ig of the Company and its environment obtah1cd, in the course of the audit, we have not identified material misstntcmc11ts in the.sirategic report or directors' n:port. We huv.e nothing to report in respect of the following matters in relation to \Vhich the Cmilpanics Act-2006 requires us to report to you if, in our opinion: adequate accounting records have not been Rcpt by the p<ircnt company, or returns aj:lcquatc fOr our audit have not been rcccive_d from brunches noi·visitcd by u5; or the financial statements arc riof in agreement with the accounting records and returns; or • certain disclosur.cs of directors' remummition specified. by law arc not made; or we have m>t received all the infon11atio1i and explanations we,tcq1iire for our·audit i:tesponsibilitics of dircc.tors As cxpl::iined mci1:cfully in the dircetors' rcsp'1nsibilitics.statemcnt set out on page 7, the directors are respon·siblc for the preparation of the financiiii sHlkmcnts and for being satisfied that they give n.irue and fair view, iind for such. internal control as the directors determine is necessary io enable the preparation of fin:mcial statements .that arc free from material misstatelnent, \Vhether di1e to fraud or-error. In preparing thc financial statements, the directors arc responsible· for assessing the Co!iipaily's abihty .to coiltin1ie as a goi1ig conc~rn, <;Jisclosing, as applica~l'f, 1T)attc~s rc;latcd l.o going concern and using ihe going_ concern basis of accounting unless the directors either i'ntend to liquidate the Coihpmiy or to cease operations, or ljave no realistic alternati\IC but to do .so, Auditor's responsibilities for the audit of the linuncial statements Our objectives are· to obtain rcasoilable assuram;c about \\ihcthcr the linaneia[ statements a.s a whole arc free from materittl misstatement, whdher due to fraud or error, and· to issue an auditor's report that inc[(1des our opinion. Reasonable assurtu1cc is a high level ofassl1rancc, but is not a g1iarahtce tliat an midi! conduct~·d in accordance with ISAs (lJK) will always detect a niaterial misstatement when il'exisis. ivlisstatemcnts can arise from fraud or error and are considered mutcrial if, individually or in the aggregate, they could reasonably be el'pected to influence the economic decisions of users taken oh the basis of tliesc financial sfatemcnts. 9 0 Badoo Limited Independent auditor's report (continued) To. the member:s of Badoo. Limited A further des<;ription of ouncsp1insibilities for the atid.it of the .financiaLstatements,is locnted on the Finan1:ial Report Irig Counci I's· website a):https://www.frc.org,tiklauditorsresporiS.(biBtics, This description f<:frrns pi:Ji"r ofqur auditor's report. Use of our rcpcfrt This report is made solely to the Com pan j's nicriibers,, as a pody, in accordanci:with Chapter 3· o(Part i6 of tire Companies Act 2006. Our audit work h.as been undertaken so that we might state to !,he Company's meiribcrs those JT!atters we are required to state to them in ail 11Udi1or's report .and for no other purpose. To the fullest extent permiiied by law, we do riot accept or assl1mc responsibility to. ai1yotic other than the Company and tlic Coinpany's mcmb.ers as a· body·, for o·ur auditwork, for this report, or for the opinioris we have formed. Ruth {.ogan Seni01:·.sh11u101y aziditof for cind <in bcholf1/ 1.~·,.,,,1·1 & Young LL!'. Statu/Ory Aiufi/6/· JJelf<ist &," &J ~ ?olG\ 10 0 Bado.o limited --------~~~~~~,,..·-~=~S!il!!=~~:il!l?Jl-~~~if. Statement of profit and loss· and other eornprehens.ive income for the year ended 31 December 2018 writ 2017 Noll!s couo· £'000 Revenue 7 36;.75.4 27;292 Cost Of Sales $ "·····---@,J1JJ _,.. -."'·J!.2/)7£t Gross prorrt R,433 Administr.ittivc expenses 9 (5,872) (5,428) Operating profit 2,561 '!;887 Finance income II .. -··-·_3 ----~--12- ·•···"'····- Profit before tax 2,564 1,904 Income tax e:>(pcnse· I 2 ___.____fl 6Jl ___ ~(:U1 Profitfodhe year 2,4:Cl 1. 1,873. Other comprehensive income Totat.compretiensive income 0 Badoo Limited. . . . . . . . . . . . . !G'~~~~~·~--~.$.llil~mS:~~~~~~!Eli~;:;il>i:;;ft Statement o.f financial position at 31 December 2018 Registration· number: 05692436 2018 2017 Notes. £'000 £'000 Non-current assets Deferred tax assets 12 21 _____2_1____..,..,________)_ Cu(rent assets Trade and other receivables 14 1;944 4,329 Income tax.rc·ccivable 910 Ji'I Cash and cash equivalents -----~----"·-·-····-2L Total c11_rrent assets -----?~073,_'"--~··. 4 732,_ Total Assets 9,094 4739 Equity and liabilities Shareholders' equity · lssued c11pital 15 Contributi.Qn from parent 15 16 5. Retained earnings 15 ____ _l:,665 _ _ _!,264 Total sh_areho/.ders.' equity -----~§11.L. - ..,_!_,~69_ Current liabilities Trade and other payables i7 '5',413 3,095 Shon-term borrowings 18 -·---····---..,.-"'-~=-37~.5- Total current liabilities __ ..___ S;4 ~;!... ---·---·-~?Q_ Total equity a'nd I/abilities 9.094 4 739 By order of the board ~~--·· .. --ICtmr\VftITiClmi~,_ Director 12· 0 Badoo Limited. . . . . . . . . .lml.~~~~~~~~1;.\$«~~'!ilmillmtl!l$!iim:~!lililillll!it!Ml0.m·~~~·1Gll!l~!l!>'Zi~~ St~tement of changes in equity for the year ended 31 December 2018 Reii1ined Cmittibution from Note.1·· l.~.~i1cd capitiil earning.~ pareni Tbtal.e9.11iry ['()()() £'000 £'.000 £'tlO(J At I January 2017 1,637 7 1;644 Profit for the year 1,873 1.• 873 Dividcnd5 IJBid 15 (2,216) (2,2'16) Shar.c based. payment 16 - · · - ····--•••••M•.=·---···---·-·---.':,-.--',--•··~·~~J.:sl.._•----.--·••ill At 3 I Dccc.m bcr 201 7 1264 5 I. 269 f?etained CiJiltl'ibuti!inji«mi i\'iites lssi1i!d t'iipital earnings· parent Total t!<i11i~i· £'000 £'000 £'000 ['(){)() At I Jimuary 2018 J,264 5 1,269 Profit for the year 2,40 I 2.401 Share based payment I G -······-·-·· ..•.......... -······-· . •.~..~~. ~---· ···-·~-'-·-·.-~-,..--c.l.~ Al 31. December:!Olil .3.665 16 J,681 f3 0 Badoo Limited Statement of cash flows for the year ended 31 December 2018 2018 20/'7 Notes 'f '000 l"OliO Profit.before income tax .2,564 1,904 Adjustments: ~harc-lwsc payn1ent 17 II (2) Net finance income ii (3) (17) R&D tax credit. IQ. (909) (16~) Net foreign exchange difference .9 ···-'·~·-.·--·:~. ··········-·--·-"'!.§~ Operating inc.ome before changes in woikin!! capital 1;671 1,736 Increase/ (decrease):In trade and' other receivables (3,615;) 260 Increase ii1 trade and other payribic~ ~-----·-=-2..J\L___..l?.l Cash geT1eratedfrom operetidns)74- 2,353 I nicrest inco1ilc 12 3 17 Income tax received/ (paid)· i3 .-C"~-___!}}______.J.l.Q.'D. Net cash from ope_ra·(ing activities ···-~--s!Q: ____:S.~Pl Cash ffows .,rorh flriandilg ~i;tlvit/es Sh0rt-terih borrowings repaid 1'9 (375) Dividends paid J6 ------·---=-·····"·-~--(~~1§).. Net cas.h nows·u.sed iii finanCing-actlvitles ··-----'-··_Ql.~):_i.~'!§2. Net inc~ase in c.ash at b.ank 135 17 Net forcigii e·xchangc difference (8) .(16) Cash at bank al the beginning of the .year ____...__2;L_.__-.-"-2L Cash at bank at the end of:the year 219 92 l4: 0 Badoo Limited Notes to the financial statements 1. Corporate information Badon U1i1ited is a private coinpany, iimired by shares, incorp9rated,' registered and domiciled in England and Wales. The Company's registered number is 05692436,'and .registered oflicc address is The. Broad gate Tower Third Floor,. 20 Pdmrosc Street, London 1;c2A 2R$, l)n.ltedKin~dom. The principalaciiviiies· of the· Compa1iy arc to provide inobilc dcvclcip1i1ent services to Bac!oo Software Limited, another entity in the Worldwide Vision Group. Badoo Limih:d is a 'wholly owned sl1bsidiary of Worldwide· Vision l.;imited, a company iht'.Orporated iii Bern1uda.Th.c ultimate parent undertaking is Rirnberg International Corp., a company incorporated in the British Virgin Islands. The ultimate controlling party is· Mr A Ogandzhm1yants. · 2. Ba~is of preparation The financial stat.:mcnts have been prepared under the historical cost convention and in accordance with the lntcm11ti()naf 171hahclal Reporting Standards (l.FRS) as issued by the International Accounting Standards Board (IASB} as adopted by the European Union ahd applied in accorclancc with Companies Act 2006. The Company's financial statements urc presented in GBP (£'000), which is also. the Company's functional currency: All values are rounded to the nearest £'000. 3. Summary of significant accounting .policies 11) Revenue recognition Revenue is measured at the fair vall1c of ihe consideration received or rcccivable,.taking into .account contractually defined terms of payment and· excluc!ing taxes or duiy. Revenue.Ts recognised to the c:xtenl that it is probable thai the economic benefits will Jlo\v to the Company arid .the revenue can. be reliably measured, regardless of ~vhcn the payinent is received. The. Company charges fees .equalling operating costs plus 7.5% for development s.crviccs. h) Marketing Costs rvJarkcting cosis arc cxpc1iscd in the ·period iii which the scrvi"ccs a.re dcliycred to the Company. Where mcdfo spate is plirchascd in advanc¢ then this will be heid as a prepayment until the Service has been received QY .the Company. Marketing represents onl.ine marketing,. incluclihg fees paid to search engines and social media sites, offline marketing, such as television advertising, tie\d marketing and· partner- rclated pa)•1!Jents to those who direct traffic to our platfonils. c) Currelll 11ersus mm-l:11rreni clilssijic11ti011 The Ct)mpany ·presents assets and liabiiitics in the statc.mcnt of finuncial position based on currentlnon- currcnt classification. An assci is current when it is: Expected 111 be realised or intended to be sold or cohsuhicd in the normal operating: cycle Held priniarily for thc·purpose oftra<iing Expected tq be r.calised within twelve. months after the r..:porting perit'>d Or Cash or cash equivalent 1inicss restrict.Gd from being .exchanged or used to settlc«l liability f9r at least twelve months after th.e reporting period · AII ot'her assets are ·classified as non-current. Deferred tax assets ·are classified as non-current assets. A liability is current vihcn: It. is cxpci:ted to .be settled in the normal operating cycle Ii is held primarily for the purpose of trading It is due. to be settled withi1i twelve 1nonths ail"er the rcportingperio\! hen: is no unconditional right to defer the settlement of the liability for at least twelve months after till< reporting period 0 -.. Badoo Limited ------~~~~---z»:.1 ·,;, Notes to the financial' statements .(conti.nued) 3. .Summary ofsignificant accounting policie$ (continued) d) Ta.xe.\· Current income tax Current ineoi11c tax assets and liabilities for the current and. prior periods arc measured· at the amoi1nt expected to be recovered from or paid to the faxation authorities. The tax rates and tax laws used to compute the, amount are those. that arc enacted or substantively enacted at the reporting date in the countries wher.e the Company operates and generates taxable income. Current income tax rel;ating to items recognised directly in other comprehe.nsive income or equity is recognised in other comprehensive income or equity and not i.n profit or loss. Management pcri9dically. evaluates positions taken in the. t<lX returns with respect to situations \Vhere applicable tax regulations are subject to interpretation and establishes provisions. where appropriate. Deferred tax Deferred ta'< is recognized in respect of all timing differences: that have originated bul not reversed at the balance sheel date where transactions or events have occurred at that date .that will result in an obligatiop to pay more, or a right to pay less or to receive 111ore, tax, with the follo1ving exceptions:. deferred: tax assets arc recognized only to the extent that the Directors consider that it is more likely than nonhat there will be suitable taxable profits .from which the future reversal of the underlying tiniing di fferenccs can be deducted. Deferred tax assets and liabilities ar.: measured at the tax rates lhat arc expected to apply to the year when the asset is realised or the liability is settled, bused.on tax ·rates (and tax laws) that have been enacted or substantively enac\cd by .the end of the reporting period, Deterred tax i1sscts and dcforrcd tax liabilities arc offset. if a legally enfor"ccable right exists to set off current tax assets againsi current .tax liabilities. and the deferred I.axes relate to the.same taxable cnti\y and the same taxation authority. Deferred ta~ is measured on an undiscou11tcd basis at the tax rates that are expected to apply in the periods in which timing differences reverse. based on lax rates and laws enacted or Slibstantively enacted at the balance sheet date. c) Foreign c11rre11cies ar Transactiµns in cuncncics other than un entity's ronctional currency are .recorded the exchange ra.tc on the transaction date, whilst assets and liabilities are translated at cxcha1ige. rates al the bahuwe sheet date. Exchange difTerenccs are recognised in the Profit· and Coss. f) Financial i11strlime11ts A financial instrument is ai1y contract that gives rise 10 a financial asscr of one entity and a financial liability or equity ·instrument of anothcre11tity. Financial assets A. lnitial recognition and measurement and Subsequent meilsµrcmcnt Financial assets comprise of intercompany m:civablcs and other receivables. The Company nieasmes linancial.assets al a111ortiscd cost if both.of the following conditions are met: The financial asset .is held within a business model \vi th the objective to hold financial assets iri order to collect contractual cash nows The conlrnctual terms of the financial asset, give rise on specified dates to .cash !lows thal arc solery payments. of principal and interest on ihc principal amount outstanding Financial assets,iirc subsequently measured at ainortised cost. .Gains and losses arc recognised ill profit or loss when the asset is dcrccognised, modific;d or impaired. 15 0 Badoo Limited -------~ft.,w~~~~"~---~~'m:a•Jm1!.r~._.~~· Notes to the financial statements (continued) 3. Summary of significant accounting policies (continued) It l>erccogi1ition A financial asset {or, when:: applicable, a part Ma finan~ial asfot or part of a group of simii_ar financial assets) is primarily dcrecognised (i.e., removed from the Company's statemciii offinaitcial position) when: · The rights to receive cash flows from the asset have expirctf; or the. Cortipany has- transferred its rights to. receive.cash flows from the asset or has assi1med an oh ligation to pay the.received.cash· tlows iii full \\•ithtfot material delay to a third: p;irty under a 'pass-through' arran·ge1ilcht; and cithe.r (a) the Company has transferred substantially all the dsks and rewards o[the asset, <>r (b) the Company has neither transferred nor retained substantially all ihe.risks:and·rewa:rds oi'the a5set, but has transferred control of the asset When the Company has; transfen:cd its righi~ to receive cash flows frt1m an asset or. has entered into a pass- thro'tigh arrangement, ii evaluates if, and to wliat c?itcrH, fr has retained lhe r.isks and rcwc:1rds ofow11crshi_p·. When it has neither trnnsfcrred nor retained substantially ai I of the r.isks .and rewards oft he asset, nor transferred eontroi orthe asset, the Company continues to recognise the transferred ass·et to the extent.of its continuing involv,emenr. In that case, the Company also recognises an ussociated. liability. The transferred asset and the associatccl liability a.re measured on a basis that reflects the rights und q\J)igaiions ihal the Cbmpany has retained. · · C. Impairment of finuncial assets The Coh1pany recognises an allowi1.m:e for expected credit losses (ECLs) for all debt instruments-nt>t hclci at fair value through profit or loss or OCI. ECLs arc based cin the difference betwceri the contra~tuul cash flows due in accordance with the contract and all the cash fiows tha.i the Company expects to receive, discountt:d at an approximation ofthe original effective interest nite. The expected ca~h flo"ws will include cash flows from the sale of collateral held or other credit enhancements that are integral. to the contraciual terms; ECLs arc recognised .in two stages, For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs arc provided for credit losses that result from default.events that arc possible \vithin the next 12-months (a 12-month ECL). Fnr. those credit exposures for which there. hus been a-significant increase in credit risk since Initial rccogn.itiqn, a loss allowance is required for credit. losses expected over the remaining life of the cxpqsurc, irrespective of the iin1ing of the defa1ilt (a lifetime ECL). . The Company d.oes notrccord· any ECLs as there has bcc1i no history of default on: the services provided, Managemc.nt.a~scsscs on ari adlioc basis for any changes in crcdil\\iorihiness. Financ.ial liaiiiiities Financial liabilities arc classified, at initial recognition under Ilic following categories: intcrcompany paynblcs, lrndc payables and accruals. All financial liaJ1ilities arc non interest-bearing and recognised initially at fair. Fi11ai1cinl lii1b.iJitics are subsequently measured.at amortised cost. Financial liabilities are" dcrecognised when the obligation under the liabiiity is discharged, cancel.led .or expires. l7 0 -------·!'iliu;Wil:J!ll.:..__\li<t\!<,-.,. Badoo Limited,lalillli'11~'.;8;,!!'l!/t££1!1'l!ll""!MN ! $leMt;:z;~m:i-~iml!-'.!Wi!!3!5~""'1'li-!lilil!'~'tJ! Notes to the financial statements (continued) 3. Summary of significant.accounting policies (continued) g) Slrfire"based payments Employees (ii1ciuding senior executives) ofthe Company receive renrnncratiqn in the form of share-based payments, whereby employees re11der services. 4s. consideration. for the bencfidal interes\ i.n equity inslrumcnts (cquity"settled transactions) in the parententiiy Worldwide Vision Limited. · Eq11ity-set1led /rtmsactions The rnst of equity-settled transactions is recognised in employee bench ts expense, !Ogethcr with a corresponding increase in equity (share:bascd payment rcserve).ovcr the perfod in which the service and, where applicable, the performance conditions arc fulfilled (the vesting period). The cumu.lative expense recognised for equity-settled transactions iii each reporting date until the vesting date reflects the e)(tent to which .the vesting period has expired and the Group's best estimate of the number of equity instruments that will 1d1i111ately vest. The e;<pcnsc or credit iii the s1atcme11t of profit or loss for· a period represents the movement in cumulative expense rL'COgniscd·as at the beginning and end of that period. Service and non·inarket performance conditions.arc not taken into account \vheri determining the grant date fair value of awards, but th'c likelihood of the conditions being met is usscsscd as pnrt of the Croup's best estimate of the numbc.r of equity instrum~nts that wiii ultimately vest. Market performance conditions are. renected within the grar1i date fair value. Any other conditions attached to an award, but without an associated service requirement, an: considered to be nc\11•vestfng conditions. Non-vesting conditions arc rcnected in the fair value of an award and lead to an immediate ·expensing of an award unless.there arc. also service and/µr performance conditions. No expcr\sc is recognised for awards thaf do not ultimately vest because non-m·11rkct perfonnancc' condition and/or service conditions have not been ri1et Where the ierms of an equity-settled transaction award are modified, the minimum expense recognised is the grant date fair vall!C ofihe unmodified award, provided the original terins of the award are met. An additional expense, measured as at the date of modification, is recognised for any modificati·on that increases the total. fair value t1f the share-based payment transaction, or is otherwise beneficial to the employee. In January 2019 it was confirmed that all ieavers should be· regarded as ''good" leavers, \\lhereas' pn,:vioi!sly they were considered "bad" ltavcrs unless they fo1d been specifically designated good leaver. status. This led to additional share based payment charges. in 2018. 4. Significant accounting judgements, estimates and assumptions The preparation of1he Cprnpany's linnncial statements requires management to milkejudgcmenis, estin1atcs and assumptions thnt affect:the reported amounts of revenues; expenses, assets and liabilities; and the accompanying.disclosures, and the disClosurc of contingent liabilities at the date of the consolidated financial statements. Esti1natcs and assumptions.are continuously evaluated ar1d are based on management's experience and other factors, including e.xpecia(ions of tirtlrrc events that l)re believed to be reasom1hlc under the circumstances. ·uncertainty about ·these asswnptions and estimates could result. in outcomes that require a material adjustment to the carrying amount of assets. or liabilities affected in future periods. Other disclosures relating to the C6mpany's exposure to risks and uncertainties includes: Capital mahagemeni Financial instruments risk management and polil:ies In particular, the Company lu1s identified the following areas where signilici111tjudgemcnts, estimates and assumptions arc required. Further informatior\ on each of these .areas and how they impact the varicius accounting policies, are described below and also i'n the relevant notes to the financfal statements. Changes in cstim;tics are accounted for prospectively. ln the process or i1pplying the Company's accouriting policies, managemerit has made the following judgements, which hi1vc the most signifo:;ant effect' ori the ari1ounts rc<;ogniscd in the finaneial statcnu:nis: 18 0 Badoo Limited ...............""*'~~ ·viatti~~.lr.i.:ii!\i>!ll(!!SSl!>lrilii:illl!!!llll!i!!S~~lli!!lli!S'"1K~~lili!l!)'!;l!l~:;r1A""1""""'"""'111'!11llltli!~~-··~:~!llt!llllll!!!::ilj:·lf!il· Notes to the financial statements (continued) 4. Significant accounting judgements, estimates and assumptions (continued) T11xe.1· Dcforrcd Im< assets arc recognised for in respect oftnxable temporary diffcrl:nccs and unused t.ax losses to the extent thal it is probable that ta.xable profit will be iiv11ilable against whic;h the .losses can be. utilised. Sigi1ificant management judgement is required io determine the amount of deferred tax assets that cun be recognised. based upon the likely timing and the. level of future t11xable profits, together y.iith future tax. planning strategics: The Company has no tax losses carried forward. further details on taxes arc disclosed in Note 12. E1·tim11te.1· anti 11.1'.mmptio11s The key assumptions concerning the future.and other key sources of estimation uncertainty at.the reporting date thai have a.significant risk of causing a niaterial adjustment to the. carrying amounts of assets and. liabilities within the next financial year, arc described below. The Company based its ass\1mptions and estimates on parameters available when the fina1ii:ial statements were prepared. E:xisting circumstances and assumptions about fu.ture developments, however, may· change due to market ctiange or ci'rcumstanccs arising beyond·the control of the Company. Such changes are reflected in the assumptions when they occur. Share-basect. payments Estimating fair value for share-based payment transactions rcquires.dctcnnination of the most appropriate valuation model, which depends on the terms an.d conditions of the granr. This estiinate also requires determination of the most appropriate inputs to thc·valuation model. including ihe expected life cifthc share option or appreciation right, volatility and diyidend yield and making assumptions about them and discount rate for lack of marketability. The assumptions ahd models used fo.r estimating fair value. for sharc-hased payment transactions arc distloscd iii mite 16. .5. New and amended standards and interpretations adopted by the Company The· company applied IFRS ·15 and. lFRS 9 for the first time. The nature and effect of the changes as <i rcsuli:ofad6ption of these new accounting standards arc described bcfow. Several other amen;:lmcnts ond interpretations appiy for the first time. in 2018, but do not have aii impact on the financial sttttemchls ofthe Company. The Compm1y .has not early adopted any standards, interpretations or ah1chdmcnts .that have been issued but art• llllt yet effective. a) IFRS JS i~cvenue rrom Contracts with Customers lFRS 15 supersedes !AS l l Cl•nstrnction Contracts; lAS 18 Revenue and related l1iti::rj1rctations and it applies, with limited exceptions, tq all .n::vcnue-arising from contracts with its customers. IFRS; 15 establishes <i fivc•step model to account for revenue ad.sing frq111 contracts with customers and· requires that-revenue be recognised m ai1 u1nolint.thal rctlects the c:onsideration lo which an entity expects to be entitled in exclia1ige for transferring goods or services 10 a clislomcr. lF(<S \.5 requires entities to exerciscjudgement, taking into consideration ail of the relevant facts.and. circumi:tance~ when applying each step of ihe model to cq.ntracts with their custoiilers. 'i'hc s\andard also specifics the accounting for the incremental costs of obtaining a contract and·the costs .directly related to full111ing a contract. In. ai:ldition, the standard requires extensive disclosures. The Company adopted !FRS 15 and this had no impiict.ori the financial statements ofthc Company. The effect of the transition on the. ctirrcnt period has not been discl:Osed as the standard provides an qplional practical expedient. 'the Company did not apply any of the.other avaiiable·optiorial practical ex,Pedicnts. .19 0 Badoo Limited Notes to the financial statements (continued) s. New and amended ·standards arid. interpretations adopted by the Comparw (continued) h) IFRS 9 Financial lnsfrument IF.RS 9 Financiiil Insttunicnts"i"cplaccs.IAS 39 Fi.nancial Instruments: Recognition and.Measurement for annual periods beginning on or all.er I January 2018. -bringing t_ogether all three aspects of the accounting for tinanciai instruments: classification aiid me<isure.ment; impairment; and hedge accounting. Under IFRS 9, debt instruincnts of the Company arc subsequently measured at amortise,dsost. The classification is based on tv.io criteria: the Company's busii1ess model tor. managing the assets; and \vhe,ther the instruments' contractliiil· cash tfows represent 'Solely payrne11ts of principal and ·interest' on. tlic principal amount outstanding. The new standard did not impact the Classification of debt..instrunients of\he Company or· give. rise: ro any.expected credit lo.sses. 6. Standards issued but not yet effective Tlie standards and interpretations thatai'i: is~~ucd, but:.npl ycteffcctive, up to the date of issunnce·of the Company's. fiua·ridai st<Hcments <ire diseloscd.'bclow. the Company intends to adopt these stillidards, if aprlicablc, when they become effective. IF ftS 16 Leases IFRS 16 was issued in January 2016 1md frrcplaccs iAS t 7 Leases, ff RIC 4 Dctem1in.ing·whcthcr an Arrangcmcnl contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance ofTrnnsac:tions lnvol.ving the Legal Form ofa Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation. und disclosure of leasd and requires lessees to account for all lei\scs under a single on-balance she.et model similar to the accounting for tinahce leases under 11\S rt The.standard inclucks two recognition exemptions for lessees -- leases of 'low-value' assets (e:g., personal computers) und sliorHerm leases (i.e., leases with a lease term of 12 months ot Jess). At the commcncemcni date of a lease, a lessee will recognise a.liability to make lease. payments (i-.e,, the lease liability) and an.asset representing the .righno \1sc the underlying asset during the lease term (i.e., the righ(-of-use asset). Lessees will be required to separately recognise ihe interest expense on the lease liability and the depreciation expense on the right-.Of-uS:e asset. Lessccs ~viii b.::·also ~equired to remeasure the foase liability upon the occurrence of certain even.ls (e,g., a. change hi the lease term, a change in filture leas~ payments resulting from a .changc in an index or rate used to determine those pay111cn,ts). The lessee will generally recognise the amount oftlic rcrnc.:isurernent of the lease iiability as an adjustment to the right-of-use asset. lFRS 16, \Vhich is effcctiv·e for a111iual periods. beginning on or after J January 2019,:requires lessees and lc·ssorsto ma.kc more extensive disclosures than under lAS. 17 .. H'RS \6 will iinpact the financjal stalemcnts ofihc Co1npany, ho\\•.e.ver, the Company has not yet assesscd che. quantitative i1npact ofthe new standard. a) IAS .12 Income Taxes The amendments clarify that the income tax consequences of dividends ar¢ li1iked mo.re 'directly to· past hansactio11s or events: that g~n~ratcd.distribuiable profits ihiii\ to distributions to ciw1iers. Therefore; an- eniity rccogni'scs the incon1e tax consequences of.div id.ends in profit or loss. other comprehensive income or equity according to where the c11\ity originally recognised those past t.ransactions o·r events. An entity applicsthose <iniendments (\>r annual reporting p.::riodsobc.ginning on or after I January 2()19,. wit)l early application .is perp1ihcd. When an .entity ti_rst applies ihosc amendments, It applies ihc111 toihe:incorne tax consequences of dividends recognised on. or aftcdhe beginning; qf the earliest cort1parativc period.• Since ihc Company's current practice is in line with these amendments, the Company docs not expect any cfTi:ct 20 0 Badoo Lirnited -------~~~-~~~""t't ~~~~~~•.axw..smI Notes to the financial statements (contin1J~d) 7. Revenue 2011$ 201'7 r·ooo £'000 ·Mbbiic development- 36,754 27,292 Total revenue J6 7.5:4 27;292- A ii of the Company·s revenue is generated. from Badoo Softw\lrc limited, an entity resident in.11.1alta wfti.ch is part ci!thc Worldwide Vision group. a. Cost of sales 201-S 2017 £'.000 £'000 Wages and· salaries 23,014 15,994 Social seeurity·costs 3,029 2,0~3 Pension costs 647 223 Other costs 1,631 1,707 Total cost of sales ~-2s.321---19-:97y The average inonthiy ni.m1ber of employees during ihc period Was nui.di;·up as follows: 21118 2017 No. No·. Mobile 73 58. Prtiducls and b't1sii)css In tell igcncc 64 48 Quality assur.ancc and R&D 51 39 Server 23 14 Billing dcvelopmcrit 6 5 217. !64 lhciudcd in wages and salaries arc share-base ·payments of£ l lk for 2018(2017: (£2k)) which arises from transactil~ns acc11untcd for as ecfuity"settled shani~hased payment ti·ansactions. There has notbeen any rcmuncrhtiori to dlr.ccfors ~uring the year (2017: £nil) as the director~ ljre ~\!t.nuncraied by other group compar1ics. 9. Administrative expenses 20.18 2017. £'00{) £'/JO(} Rent.and utilities 2,075 2;073 onb: anti kitchen supplies 1,860 1,706 Travel and cntcrtainincnt 1,087 689 Professional fees 55~ 531 Foreign· exchungc loss 8 16. Other ex pens cs 290 413 Total administrative expenses 5,872 5,42R Dliring the yetir the Company chose to present Its bank c.hargcs as.administrative .expenses. In iihc with IA.S l ~hey have reclassified the comparatlye infonnation to ensure compambility ·froni fiiiance costs. 21 0 Badbo limited ------•d>i-t¢!'•-lll1~~~·~.n..2-~ Note$ to the financial statements (continued) 10. 10. Audit9r's r.emu.neration The Company has recogniscil the foilowing in respect of an1ounts. paid or p<iyilble·fq its auditors in respect of the audir oi· 11ic financial statements and for other sc·..vi.ccs provided to the Company. 2018 2017 £000 £000 Fees payabic to the Company's auditor for the audit of the Company's annual accounts 21 20 Accounts prcpafatlon 7 Tax compliance service~ 22 28 t1. Finance income 2.01.8. 20.17 £'000 £'000 li1tcrest iilcon1c from other finanCial assets J rt Tc)tal finance income 3 17 12. Income tax a) The major components ofincomc ta.x ·expense for ihe·yearsehd~d 31 December 20·18 and 2017 arc: 2018 2017 £'000 £'1100 Current tax Current incrnlic fax charge Adjustments in respect of current i1icome l~x of previous years ··-·-·. . . JJ2.---~.~l.. Total current tax 177 33 Deferred tax Increase. in deferred tax 1.63 31 h) Factors atli:cting tax charge for the year: A rccqncllintfon between tax.expense:incj.lhe accounting profit multipiicd by UK's domestic tax rate for ihc years ended 3 I. December 20 I~ al)d .2017 is, tis follows: 2018 2017 j;"(j{j(j [ '(}()() Profit on ordinary activitie_s before tax Prot1t on ordinary activities multiplied by standard. rate of corporation i~x in the UK of i 9% (20 I7: 19.25%) 487 367 F.ffccis of: Disallowed expenses and no1Haxable incorhc 158 (26) .Adjustrncnts.in respect o(previous.pcriods 1.77 33 Difference in tax. rate 2 Group ·reliefd1i:imed for nil payment Total. tax chargeTorthe period 16J jj 22. 0 Badoo Limited -------1;:1-==-~~'f.~""'~--~ Notes to the. financial ~taternents (continued) 12. In.come tax.(continued) Deferred tax Deferred tax rdates io the followrng:; At I January 20 IR 7 Addition during I.he yeiir 14 i\t-3 I December 2018 ----2.1 The provision for deferred taxation is made up lis follows: 2018 2017 £'000 £.'000 Pcnsior\ 21 7 c) fac.tors that m;iy;\ffc.:t:tirture t<i.x charges The Fl.1imic<:: Act 2015, has prpvided that from: I .April 21)1 ij taxable profits will be taxed atthe: rate of icio/o and the fl.nancu\ct 2016, has prci.Vidcd th~1t from I April2020 taxable profits will be taxed at 17%. This will affect the· ruture ta.x clH1.J:ge ofBadoo Liniitcd, It is not expected that'this rate reduction w.ill have a nrntcrial impact on Badoo Limited. 13. Financial assets arid liabilities Financial assets 2018 2017 £.'0.00 I'OVIJ Cash and cash equiv;Jlen,ts 219 92 Financial assets at amortised cos·t Other receivables· 125 243 Amounts O\vcd by related parties _. . . .~._!,,?§~~., ··-~-"-~-'~G.~ ' Toti/I financial assets 7910 4,199 2018 20/7 £'000 £'000 Financiaf/iabilit!es i\ccru,als 3,239 1,312 Trade. payables 66 96 Other payabics 358 240 Short-1crm. borrowings (note 18) ·--·•~•-·-•--o.........;.;;..·-·-···_375_ Total ·financial liabilities 3 663. 2,023 Trade and other payables included as financial' liabilitil:s exclude soeial insurance and other taxes. Financial risk management The Company's principal financial liabilities comprise trade aiid other payables ahd.short-terii1 borrowings from arclaicd company. The main purpose of these financial liabilities is to finance the Group's operations .. The Company's priqc;ipal financial assets indude. trade rcccivablq~ from related parties·arid cash.and short-term deposits. that derive. directly from its operations. 23 0 Badoo Limited -------.m;·&'llllil'.."1.<~~~----~~~ Notes to the financial statements (continued) 13. Fina,ncJal assets and liabilities (continued) The. Company is exposed to liqu\di\y, credit and foreign currency risk. 'i'hc Company is noi ei<poscd to iilrerest. rate and other price risk. The Company's· senior m·anagcment'oversees the manage1herit' of these risks. The tiol\ocial risks· arc identified, 1nca.sured and managed on an adhoc basi~ by· the Company's senior management with appropriate polic~fos and procedurcs put in place; when necessary. The Board .ofdirectors reviews and agrees policies imd procedures for ·managing:each of these risks, which arc summarised bclo~v. LiqlJidity risk The Company's foiancc department monitors its risk of a short;1ge of funds on an ongoing basis. The Company's objective is fo ·maintain suf1icicnt funds anhe bank to meet upcoming' fiiiaii¢ial lialiliitics through the receipt of monies owing for intragroup development ser:vices: f,ess than 3 to 12 Oi1de111a11d 3 n10.nths months Tola! £'00() £'0()1):£ '()()() £'0011 31 Dccci1ibcr 2017 375 1,175 473 2,023 31 lkccmbcr 2018 1,925 1,738 3_,663 Credit risk Credit risk is the risk that a countcrpaity will .not meet its obligations under a !inanci'al instrument or cust\>mcr contract; leading to a financial loss. i'he Company is exposed to creditrisk from its operating activities (primarily trade receivables) and from deposits witb bank_s. The. Company provides dcvel oprnent services within the Group and; us such', only has trade receivables from one related cntity .. lntercompariy dc.btors are paid rc:g1ilad'y and an. impairment review is perfonncd at each reporting date. Management do n()t believe i.h.~re to be ~ignificant credit riHk on rcc;eivables. Credit risk from balance·s with bank~ an.<;l financial il1stiiutloris.is managed· by the Group'.strcasury <;lcpartment. There tire rninimul policies in place itllll the Company only hoids <;asll deposits with established b!!nks and fin·ancinl institutions. There is a ltiw cxp(:Jsure fo credit risk on balaiices held with banks and financial ihstittltions. · F.oreign currency risk For.:.ign c.urrcncy risk is the ris~ lhanhc fair value tit future cash flows of an exposure will fluctuate because of changes in foreign c;-;change rates. The Company.;s exposure to the. risk of chan·ges .in foreign eKthange rates relates primt\rily to the Group's operating activiilcs (when expcrisc iS:denominatcdjn a foreign currency). l'he Company had EUR 35k arid USD 238k exposure at the year end yctth'cse payables ure settled within one week of the year end .so management do not believe there to be sig1iiflcant foreign currency risk. 24 0 Badoo Limited. . . . . . . . . . . . . .~~~~i!Sl!O~~~~ll\jl;llllll!!~~~ciii:miiruilt~Gm~B;tll~~1E;l.~· Notes to the financial statements {continued) 14. Trade and O:ther receivables 2018 2017 1"000 J: 'rjoo R.cceivablcs from related parties 7,566 3,86'4 Prepayments 211 i46 VAT rcccivabk 42 76 Other receivables 125 24J 7,944 4,329 The receivables from related parties bl!lance at JI December20l7 included a loan receivable from Mr A Ogandzhanyants. the: ultimate controlling party, ambun!ing·to,£2.01 111illion (includii1g.iiitcfest). This w.as repaid in February-2018.:Receivables Trqm related parties are repayable on demand i\hdarc interest-free. 15. lss.ued. share capitaTarid r¢sei:Ves 20i8 2Ql7 Author~zed.share capital No. Ncl. Ordfnary shares of.fl each 1.00 100 Total authorized share capital 100 .100 2018 2017 Ordinary sh.ared issued and fully paid up £ £ J'OOOrdinury shares of£! cµch ioo 100 Total ordinary shared issued and fully paid up 100 100 Retained earnings Thi; retained carnirigs of 1hc Company relates tcHhc cumulative profit as of year end and ciish dividends paid during th~ year. 2018 2017 J.' ·ooo rOtJo Cash diviclonds on ordi17ary shares declared,and paid: Dividends 2,246 2,246 Contribution irom parent This pertains io the: share-based payment charge lO" the. Company as discussed 'in note 16. 25 0 Badoo Limited -------!r~,-~~·t~ Notes to the financial statements {continued) 1s~ Share-based jjaymerits The parent cniity, Wtiddwide Vision Li111ited, Board of Di'rcctors has the power to issue any unissued· shares in Worldwide YisionLim.itcd on siich terins and con.ditions as it may determine. During the period .2012 to 2013 \Vorldwide Vision Lirnited granted growth shares to various employees of the Company, including key management personnel, based 0111hcir management grade. Growth .~flare p/1in. Growth shnr.cs were granted between 2012 and 2013, lhcy arc fully paid.by the employee .at date of issuance i1nci are held in iru~t by Songsir Limited, which holds the legal title. Beneficial ownership of the growth shares· with .the employee.vests over time, typic;illy 4 years. Growth sh.arcs. are not forJeitcd. when employment ce·ases unless the employee is.deemed to be a bad leaver. The gr.owih shares arc o.nly r.ealisrihle in .the event of an exit and to the cxtcn·t they have vested. Different classes of growth share have different hurdie values at the exit event. Additioi1all)", the. growth shares fowe restrictions associated with them, as the holclcrs. ufthe ·growth shares: an: nut entitled io participate in dividend payments or cannot participate in dividend payments until dividend payments to ordinary shareho.lders exceed$ t 50m; are not cntillcd to vote on Company matters except in situations whit~ invQlve alterations. io share class. The· gro\vth shares arc·equity setticd and a share-based payrnent charge .is recognised over the~ period the shares arc vcsling·. Oh forfeiture the share-based payment charge is reversed. Growth shares as at 31December2018: Issued Ve.1'ferf Forfeited:To Vesi M growth shares 15,000 1,1,250 3,75.0 Y growth shares (Series I) 70~500 43,875 26,625 Y growth sh;m:s (Series 2) 57.000 32,281 24,594 125 Total .201~ 2017 £'000 i'OOO Expcr1sc I (incori1c) arisin!? Jrom growth shares 1i. (2) =-~·~~-·.,1r_~==~---ill During the ye<1r; n1anagement dctcrn1ined that former employees with .vcstccl .shares were entitled to ·retain their beneficial interest in the vested.growth shares, this was raii!ied by thd3oard in Jan-.19~ As such, share. based payment c:harges in relation tci Ves.tcd shares. tha1 \Vere previously reversed on the employee ceasing crnployment, have been char~ed to profit .aitd: ioss in '.?O't &. - The Company has cash settled incentive schemes which wouid materiitli~c.iftberc were an cx{tevcn\. ·Management do not.believe the threshold of"morc likely than nm" to have been crossed for an exit .event hut currently estimates the potential liability to be ill lhc region of$250k. 'No expense or provision has been recognised. 17. Trade and other payabies 2018 2017 r·noo £'000 Trade payables 66 96 Socil1l insllrancc and otl1er taxes 1,750 1,447 Accruals 3,239 1,312 Other payables 26 0 Badoo Limited. . . . . . . . . . . . . .~"IS/1Jf"'1<!l<tllll'iE<>:ssi~,_~m:iii:i~aiitl~~t.t?i;:;~~~~:l2~~~~ Notes to the finariciat stateme.nts fccmtinu.ed) 18, .$hort-terro borrowings· 2iU8 2,li17 £~000 POOO Bornnyings owcdfo related party The. loai1 at Ji l)ccci:nber:2() 17 was payable io Badoo' Trading Limited;. »'as interest free .and was paid during2018. t9. Related party transactions Crw. rcic·har!(e's. to/ Amimnts owed Sales 10. related l'urchas~s.from .(from) ri11ated byl(to) related parties re/med parties parties parties ['0()() £.'000 £'000 £'000 Parent Ci,)inpany World~vidcVision J,1d 2017. (25) 20.11! Other group undertakings Ducloo ·Software I .tu 2017 27.292 1,849 2018 36,754 i,56.6 13ul\oo Trnding Ltd 2017 4,942 (l75) 2018 7,354 ·Clrnppy 1Jd 2017 3 2018 2 Other related parties K:cv.iid.Lld 2017 5.2 2018 71 t7) f~yclink Media.lid· 2017 372 2018 34j Kev ad Ltd and 'Eyclink ~'lcdia Ltd arc related parties through the co nm.ion director of. Vladimir Komilovs.k), Transactions with .k~y .managementpei'l!blihel There has been no compensation. to key managenicnt pcrso1incl. during the year (2-dJ 7: £nilj .. At 31 December 2017, .the Company had a lorui: rcccivaolc from Mr A Ogandzh[!nyiints .. amounting to'£2.'0 I milliori (including interest). This was repaid In February 2()1'8 in full. 0 Badoo Limited Notes to the financial statements (continued) 20. Capital.management. The Cornpany manages its cap ha I to ·cnsure·lhat entities in the Companywili be abie to continue as g()ing concerns while rnaximlsinglhc return to shareholders through the optlr:nisati'onofthc'dcbt and equity balance. The Company's o.verall strategy remains unchange.d fronr 20;17. There is n<).external. financing wiihin the Conipany. · 2018 2017 £'00,11 coon Cash and cash equivalents .219 92 Equity 3,681. 1,264 Netcash to equity rati() Q.. 1 0.1 No .changes were 1i1iide in ti1c objectives,, policies or processes 'tor 1i1nn_aging capital~ during. the years cridcd JI Dect:r't1ber 2018 and'2017. 21. Events after the reporting period There were no. n1aterial events af\cr the rcportihg,Pcl'iod. 28