Match Group, LLC v. Bumble Trading Inc.

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

Exhibit G

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4 Exhibit G 4 In accordanc:e with Regulatfon 32 of the Overseas Companies Regulations 2009. OS AA01 Statement of details of parent law and other information for an overseas company ./ What this form is for You may use this form to accompany your accounts disclosed under parent law.)(What this form i~ NOT f ~ You cannot use this form t an alteration of manner of ' with accounting requirem ~111111~ 111~111~~111 A13 *A7J9D¢YI* 22/11/2018 #356 Part 1 Corporate company name - COMPANIES HOUSE -i' Filling in this form -··--·-------- Please complete in typescript or in IBADOO TECHNOLOGIES LIMITED ----·-----~------ ~ Corporate name of bold blade: capitals. overseas company o --------------------- All fields are mandatory unless i specified or indicated by " UK establishment number re1Rr 0111s11101e1 OThis is the name of the company in its home state. Part 2 Statement of details of parent law and other information for an overseas company m legislation o Legislation ~ - - - - - - - - - · - · · · - · · · · ...... ·-····-----------·-····-··· Please give the legislation under which the accounts have been prepared and, if applicable, the legislation under which the accounts have been audited. i1FRSs adopted by the EU and Cypriot Companies Law n··· -. his means the relevant rules or egislation which regulates the reparation and, if applicable. the udit of accounts. Accounting principles Accounts Have the accounts been prepared in accordance with a set of generally accepted 0 Please insert the name of the accounting principles? appropriate aceounting organisation or body. Please tick the appropriate box. D No. Go to Section A3. 0 Yes. Please enter the name of the organisation or other body which issued those principles below, and then go to Section Al. Name of organisation ri··- ·--· -· --··-----·- -- . . --·· --- - ---~----··- ------~-- ntemational Accounting Standards Board or bodyO Accounts -·-·- ---- -·-------- -- ~---··· - - - - - - -- Accounts Have the accounts been audited? Please tick the appropriate box. D No. Go to Section AS. 0 Yes. Go to Section A4. CHFP010(FF) 05/12 Version 5.0 4 OS AA01 Statement of details of parent law and other information for an overseas company II Audited accounts Audited accounts Have the accounts been audited in accordance with a set of generally accepted 8 Please insert the name of the auditing standards 7 appropriate accounting organisation or body. Please tick the appropriate box. D No. Go to Part 3 'Signature'. 0 Yes. Please enter the name of the organisation or other body which issued those standards below, and then go to Pilrt 3 'Signature'. Name of organisation or body• I1ntematlonal Accounting Standards Board 'M Unaudited accounts Unaudited accounts Is the company required to have its accounts audited? Please tick the appropriate box. D No. D Yes. Part 3 Signature I 1am signing this form on behalf of the overseas company. Signature 1x ---- This form may be signed by: / __.,,->If//)(Director, Secretary, Permanent representative. CHFP010(FF) 05/12 Version 5.0 4 OS AA01 Statement of details of parent law and other information for an overseas company p 1 Presenter information 11 Important information You do not have to give any contact information, but if Please note that all this information will appear you do it will help Companies House if there is a query on the public record. on the form. The contact information you give will be visible to searchers of the public record. (el Where to send Contact name You may return this form to any Companies House address: I'"''""' "'"" REED SMITH LLP England and Wales: The Registrar of Companies, Companies House. Crown Way, Cardiff. Wales, CF14 3UZ. I"""" REF: CORPORATE SERVICES DX 33050 Cardiff. I THE BROADGATE TOWER Scotland: The Registrar of Companies, Companies House, II Post iown 20 PRIMROSE STREET Fourth floor. Edinburgh Quay 2, LONDON 139 Fountainbridge, Edinburgh, Scotland, EH3 9FF. Coooty/Region DX ED235 Edinburgh 1 or LP - 4 Edinburgh 2 (Legal Post). I Postcode 1Eicl21All2fRis Northern Ireland: I (Ollltty UNITED KINGDOM The Registrar of Companies, Companies House, Second Floor. The linenhall, 32-38 linenhall Street, I°' 1066 CITY Belfast, Northern Ireland, BT2 SBG. DX 481 N.R. Belfast 1. r lell!Jlhone P"4 Checklist We may return forms completed Incorrectly or with information missing. II Further information For further information, please see the guidance notes Please make sure you have remembered the on the website at www.companieshouse.gov.uk following: or email enquiries@companieshouse.gov.uk 0 The company name and, if appropriate, the registered number, match the information held on the public Register. This form is available in an 0 You have completed all sections of the form, if appropriate. alternative format. Please visit the 0 You have signed the form. forms page on the website at www.companieshouse.gov.uk CHFP01 O(FF) 05112 version 5.0 4 OFFICE COPY BADOO TECHNOLOGIES LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS Year ended 31 December 2017 4 BADOO TECHNOLOGIES LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS Year ended 31 December 2017 CONTENTS PAGE Board of Directors and other Corporate Information Management Report 2 Independent Auditor's Report 3- s Statement of Comprehensive Income 6 Statement of Financial Position 7 Statement of Changes in Equity B Cash Flow Statement 9 Notes to the Financial Statements 10 - lB 4 BADOO TECHNOLOGIES LIMITED BOARD OF DIRECTORS AND OTHER CORPORATE INFORMATION Board of Directors Vladimir Kornilovsk.i Idan Wallichman Alexey Rybak (resigned on 29 September 2017) Company Secretary Pageserve Limited Independent Auditors Ernst & Young Cyprus Limited Certified Public Accountants and Registered Auditors Jean Nouvel Tower 6 Stasinou Avenue PO Box 21656 1511 Nicosia, Cyprus Registered office 332 Agiou Andreou Str. Patrician Chambers 3035 Limassol Cyprus Registration number C235963 4 BADOO TECHNOLOGIES LIMITED MANAGEMENT REPORT The Board of Directors presents its management report and audited financial statements of Badoo Technologies Limited (the "Company") for the year ended 31December2017. Principal activity and nature of operations of the Company The principal activity of the Company, which is unchanged from last year, is the provision of technology and other services to related companies. Review of current position, future developments and performance of the Company's business The Company's development to date, financial results and position as presented in the financial statements are considered satisfactory. Principal risks and uncertainties The principal risks and uncertainties faced by the Company are disclosed in note 3 of the financlal statements. Results The Company's results for the year are set out on page 6. The net profit for the year attributable to the shareholders of the Company amounted to €16.151 (2016: €15.999). On 31 December 2017 the total assets of the Company were €1.551.770 (2016: €1.921.616) and the net assets of the Company were €75.878 (2016: €59.727). Dividends The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained. Share capital There were no changes in the share capital of the Company during the year under review. Board of Directors The members of the Company's Board of Directors as at 31 December 2017 and at the date of this report are presented on page 1. All of them were members of the Board of Directors throughout the year ended 31 December 2017 except Mr A\exey Rybak who resigned from Director of the Company on 29 September 2017. In accordance with the Company's Articles of Association all Directors presently members of the Board continue in office. There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors. Events after the reporting period Any significant events that occurred after the end of the reporting period are described in note 15 to the financial statements. Independent Auditors The independent auditors, Ernst & Young Cyprus limited, have expressed their willingness to continue in office and a resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. By order of the Board of Directors, <-d7li~- ldan Wallichman Director London, UK, 18 September 2018 2 4 Ern,t h Youn4 Cyµrus Ltd EV - i J;. •'),-,-,. Building a better working world Independent Auditor's Report To the Members of Badoo Technologies Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Badoo Technologies Limited (the "Company"), which are presented in pages 6 to 18 and comprise the statement of financial position as at 31 December 2017, and the statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and notes to the financial statements, Including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International financial Reporting Standards (IFRSs) as adopted by the European Union and the requfrements of the Cyprus Companies Law, Cap. 113. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Information The Board of Directors is responsible for the other information. The other information comprises the information included in the management report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors for the financial statements The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines 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 Board of Directors is responsible for assessing the Company's ability to continue as iJ going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Company's financial reporting process. 3 4 EV Bui!dinq u better working world 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 will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of Internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty eXists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, futun:>: events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following: In our opinion, the management report, has been prepared Jn accordance with the requirements of the Cyprus Companies Law, Cap 113, and the information given is consistent with the financial statements. In our opinion, and 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 management report. 4 4 EV Building a better working world Other Matter This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. 5 .~ ~/:._ --- Andreas~~~i·~·~~--- --- Certified Public Accountant and Registered Auditor for and on behalf of Ernst & Young Cyprus Limited Certified Public Accountants and Registered Auditors Nicosia, 18 September 2018 s 4 BADOO TECHNOLOGIES LIMITED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2017 2017 2016 Note € € Revenue 12 9.605.647 10.198.927 Cost of sales 5 (9.309.224) (9.217.428) Gross profit 296.423 981.499 Administration- expenses 5 (595.988) (535.276) Operating (loss)/profit (299.565) 446.223 Finance income 6 319.566 Finance costs 6 (426.224) Profit before tax 20.001 19.999 Tax 7 (3.850) (4.000) Net profit for the year 16.151 15.999 Other comprehensive income Total comprehensive income for the year 16.151 15.992 The notes on pages 10 to 18 form an integral part of these financial staternents. 6 4 BADOO TECHNOLOGIES LIMITED STATEMENT OF FINANCIAL POSffiON 31 December 2017 2017 2016 Note € € ASSETS Current assets Other receivables 8 239.318 341.428 Receivables from related companies 12 1.312.082 1.580.188 Refundable taxes 11 370 l.S51.770 1.921.616 Total assets l.SSl.770 1.921.616 EQUITY AND LIA8Iln'IES Equity Share capital 9 750 750 Retained earnings 75.128 58.977 Total equity 75.878 59.727 Current liabilities Trade and other payables 10 285.163 593.605 Payables to related companies 12 1.190.729 1.266.654 Current tax liabilities 11 1.630 Total liabilities 1.475.892 1.861.889 Total equity and liabilities 1.551.770 1.921.616 On 18 September 2018 the Board of Directors of Badoo Technologies Limited authorised these financial statements for issue. Vladimir Kornilovski ....c:;;c?zv ..... Idan Wallichman Director Director The notes on pages 10 to 18 form an integral part of these financial statements. 7 4 BADOO TECHNOLOGIES LIMITED STATEMENT OF CHANGES IN EQUDY Year ended 31 December 2017 Share Retained capital earnings Total € € € Balance at 1 January 2016 750 42.97B 43.728 Total comprehensive income for the year 15.999 15.999 Balance at 31 December 2016/ 1 January 2017 750 58.977 59.727 Total comprehensive income for the year 16.151 16.151 Balance at 31 December 2017 750 75.128 75.878 The notes on pages 10 to 18 form an integral part of these financial statements. 8 4 BADOO TECHNOLOGIES LIMITED CASH FLOW STATEMENT Year ended 31 December 2017 2017 2016 € € CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 20.001 19.999 20.001 19.999 Changes in working capital: Decrease/(increase) in other receivables 102.110 (14.186) Decrease/(increase) in receivables from related companies 268.106 (874.884) Decrease in trade and other payables (308.442) (255.883) (Decrease)/increase in payables to related companies (75.925) 1.128.996 Cash generated from operations 5.850 4.042 Tax paid {5.850) (4.042) Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Cash and cash equivalents at end of the year The notes on pages 10 to 18 form an integral part of these financial statements. 9 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 1. Corporate information Country of incorporation Badoo Technologies Limited (the "Company") was incorporated in Cyprus on 13 August 2008 as a private limited liability company under the provisions of the Cyprus Companies law, Cap. 113. Its registered office is at 332 Agiou Andreou Str., Patrician Chambers, 3035 Limassol, Cyprus. On 4 April 2011, the Company's tax residency was transfered to the United Kingdom. Principal activity The principal activity of the Company, which is unchanged from last year, is the provision of technology and other services to related companies. 2. Summary of significant accounting policies The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented in these financial statements unless otherwise stated. BasJs of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, cap.113. The financial statements have been prepared under the historical cost convention. Adoption of new and revised lFRSs During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to Its operations and are effective for accounting periods beginning on 1 January 2017. This adoption did not have a material effect on the accounting policies of the Company. Standards issued but not yet effective Up to the date of approval of the financial statements, certain new standards, interpretations and amendments to existing standards have been published that are not yet effective for the current reporting period and which the Company has not early adopted, as follows: (i) Issued by the JASS and adopted by the European Union IFRS 9 Financial Instruments - (effective for annual periods beginning on or after 1 January 2018) IFRS 15 Revenue from contracts with customers including amendments to JFRS 15: Effective date of JFRS 15 - {effective for annual periods beginning on or after 1 January 2018) JFRS 16 Leases - (effective for annual periods beginning on or after 1 January 2019) Oarifications to IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 20 J8) Amendments to IFRS 4: Applying IFRS 9 F;nancial Instruments with lFRS 4 Insurance Contracts (effective for annual periods beginning on or after 1January2018) Annual Improvements to IFRS Standards 2014-2016 Cycle (effective for annual periods beginning on or after 1 January 2018) Amendments to IFRS 2: Oassification and Measurement of Share based Payment Transactions (effective for annual periods beginning on or after 1 January 2018) (ii) Issued by tt>e IASB but not yet adopted by the European Union JFRS 14 Regulatory Deferral Accounts - (the European Commiss;on has decided not to launch the endorsement process of this interim standard and to wait for the final standard) 10 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 2. Summary of significant accounting policies (continued) Adoption of new and revised IFRSs (continued) (ii) Issued by the IASB but not yet adopted by the European Union (continued) • Amendments to IFRS 10 and !AS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - (the effective date is postponed indefinitely pending the outcome of IASBS research project on the equity method of accounting) IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for annual periods beginning on or after 1 January 2018) Amendments to !AS 40: Transfers of Investment Property (effective for annual periods beginning on or after 1 January 2018) I FRIC 23 Uncertainty over Income Tax Treatments (effective for annual periods beginning on or after 1 January 2019) Amendments to IFRS 9: Prepayment Features with Negative Compensation (effective for annual periods beginning on or after 1 January 2019) Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2019) Annual Improvements to IFRS Standards 2015-2017 Cycle (effective for annual periods beginning on or after 1 January 2019) Amendments to IAS 19: Plan Amendment Curtailment or Settlement (effective for annual periods beginning on or after 1January2019) IFRS 17 Insurance Contracts (effective for annual periods beginning on or after 1 January 2021) The above are expected to have no significant impact on the Company's financial statements when they become effective. Revenue recognition Revenue comprises the invoiced amount for the sale of products net of Value Added Tax, rebates and discounts. Revenues earned by the Company are recognised on the following bases: Rendering of services Renedring of services are recognised in the accounting period in which the services are rendered by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 11 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 2. Summary of significant accounting policies (continued) Foreign currency translation (1) Functional and presentation currency Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'}. The financial statements are presented in Euro (€), which is the Company's functional and presentation currency. (2) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, Tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority. Dividends Dividends on ordinary shares are recognised as a liabHity and deducted from equity when they are approved by the Company's shareholders. Interim dividends are deducted from equity when they are declared and approved by the Company's Directors. Financial instruments Financial assets and financial liabilities are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Other receivables Other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Trade and other payables Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method. 12 4 BADOO TECHNOLOGIES UMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 2. Summary of signif'teant accounting policies (continued) Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement; or the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Financial liabilities 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 a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Offsetting financial instruments Financial assets and financial liabllities are offset and the net amount reported in the statement of financial position if, and only 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 asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position. Share capital Ordinary shares are classified as equity. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. 3. Financial risk management objectives and policies Financial risk factors The Company is exposed to credit risk, liquidity risk, currency risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Company to manage these risks are discussed below: 13 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE ANANCIAL STATEMENTS Year ended 31 December 2017 3. Financial risk management objec.tives and policies (continued} 3.1 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 is exposed to credit risk from its operating activities ~ primarily receivables and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments. The carrying amount of financial assets represents the maximum credit exposure. The maximum expasure to credit risk at the reporting date was: 2017 2016 € € Other receivables 2.228 3.267 Receivables from related companies 1.312.os2 _ _,1~.5,,,s,,o"'.1,_,s"'s 1.314.310 ===1=.s..s..,3.,.4=5=5 3.2 Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting fts obligations associated with financial liabilities. The Company has established procedures with the objective of maintaining a balance between continuity of funding and flexiblllty through financing from related companies. The table below summarises the maturity profile of the Company's financial liabilities at the reporting date based on contractual undlscounted payments: 31 December 2017 Less than 3 - 12 1 to 5 More than On demand 3 months months years 5 years Total € € € € € € Trade and other payables 285.163 285.163 Payables to related companies 1.190.729 1.190.729 1.190.729 285.163 1.475.892 31 December 2016 Less than 3 ~ 12 1 to 5 More than On demand 3 months months years 5 years Tora/ € € € € € € Trade and other payables 593.605 593.605 Payables to related companies 1.266.654 q66.654 1.266.654 593.605 1.860.259 3.3 Foreign currency risk Foreign currency risk is the risk that the fair value or cash flows of financial instruments will fluctuate because of changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the United States Dollar and United Kingdom Pound, relating primarily to its operating activities. The Company's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. 14 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 3. Financial risk management objectives and policies (continued) 3.4 Capital risk management Capital includes equity shares. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions, in order to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company's overall objectives, policies and processes remain unchanged from last year. Fair values The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date. 4. Critical accounting estimates, judgments and assumptions The preparation of the Company's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. Judgments In the process of applying the Company's accounting policies, management has made the following judgments, apart from those involving estimations, which had the most significant effect on the amounts recognised in the financial statements: 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. 5. Expenses by nature 2017 2016 € € Auditors' remuneration 5.610 5.500 Software licenses and subscriptions 294.282 265.056 overseas VAT paid 127.228 120.034 Other professional fees 137.993 120.884 Data centre maintenance 976.129 971.970 Data centre rent 1.882.908 1.844.349 Data centre various charges 3.264.193 3.263.320 Intercompany charge for leasing of servers 3.185.994 3.124.146 Various data-centre related services received 13.643 Other expenses ~~~~3~0~.8~7~5~~~2~3~.8~0=2 Total expenses 9.905.212_...,..9...,1,..s2,..1..0,,.4 15 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 6. Finance income/ cost 2017 2016 € € Foreign exchange profit 319.566 Finance income 319.566 Foreign exchange loss (426.224) Finance costs (426.224) Net finance income}(cost) 319.566 (426.224) 7.Tax 2017 2016 € € Corporation tax - current year 3.850 4.000 Charge for the year 3.850 4.000 The tax on the Company's profit before tax differs from theoretical amount that would arise uSing the applicable tax rates as follows: 2017 2016 € € Profit before tax 20.001 19.999 Tax calculated at the applicable tax rates 3.850 4.000 Tax charge 3.850 4.000 The Company is tax resident in the United Kingdom from 4 April 2011. The rate used for the reconciliation above is the corporate tax rate of 20°/o up to 31 March 2017 and 19o/o from 1 April 2017 onwards (2016: 20°/o) payable by corporate entities in the UK on taxable profits under tax Jaw in that jurisdiction. 8. Other receivables 2017 2016 € € Deposits and prepayments 237.090 338.161 Refundable VAT 2.228 3.267 239.318 341.428 The fair values of other receivables due within one year approximate to their carrying amounts as presented above. The exposure of the Company to credit risk and impairment losses in relation to other receivables is reported in note note 3 of the financial statements. 16 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 9. Share capital 2017 2017 2016 2016 Number of Number of shares € shares € AuthQrised Ordin~ry shares of €1 each 1.000 1.000 1.000 1.000 € € Issued and fully paid Balance at 1 January 750 750 750 750 Balance at 31 December 750 750 750 750 10. Trade and other payables 2017 2016 € € Trade payables 69.040 265.903 Accruttls 216.123 327.702 285.163 593.605 The fair values of trade and other payables due within one year approximate to their carrying amounts as preserlted above. 11. (Refundable) taxes/current tax liabilities 2017 2016 € € Corporation tax (370) 1.630 (370) 1.630 12. Related party transactions The company is controlled by Worldwide Vision Limited, incorporated in Bermuda, which owns lOOo/o of the Company's shares. The ultimate controlling company is Rimberg International Corp., a company incorporated in the British Virgin Islands. The ultimate controlling party is Mr A Ogandzhanyants. The fallowing transactions were carried out with related parties: 12.1 Rendering of services 2017 2016 Nature of transactions € € Badoo Trading Limited Composite services 9.605.647 10.198.927 9.605.647 10.198.927 12.2 Purchases of services 2017 2016 Nature of transactions € € Greysom Limited Leasing of servers 3.185.994 3.124.146 Badoo Development LLC Service agreement 1.101.388 857.558 Worldwide Vision Limited Recharge of insurance 6.163 7.485 4.293.545 3.989.189 17 4 BADOO TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2017 12. Related party transactions (continued) 12.3 Receivables from related companies 2017 2016 Name € € Badoo Worldwide Limited 1.523 Badoo Trading Limited 1.312.082 1.471.980 Badoo Media Limited 417 Badoo Limited 106.268 1.312.082 1.580.188 The receivables from related companies were provided interest free, and there was no specified repayment date. 12.4 Payables to related companies 2017 2016 Name € € Badoo Development LLC 92.747 104.091 Greysom Limited 1.097.982 1.158.113 Social Online Payments Limited 4.450 1.190.729 1.266.654 The payables to related companies were provided interest free, and there was no specified repayment date. 13. Contingent liabilities The Company had no contingent liabilities as at 31 December 2017 and 2016. 14. Commitments Operating lease commitments On 4 April 2011 the Company entered into an agreement with Greysom Limited (the "Lessor") for the leasing of its servers. The rental payment is payable quarterly and shall equal to the aggregate depreciated value of all equipment feased during the quarter plus a margin of lOo/o. The operating lease is non-cancelfable and upon default the Lessee is obligated to repay any accrued rental payments and any loss, a sum equal to the Lessor's reasonable assessment of the market value of the equipment on sale. The future aggregate minimum lease payments under non-cancellable operating leases of servers are as follows: 2017 2016 € € Within one year 2.338.412 2.271.195 Between one and five years 2.023.350 -~1~.3~9~2~.0~9~1 4.361.762 _ _.3~.6=6=3,..2..8=6 The Company had no other capital or other commitments as at 31 December 2017 and 2016. 15. 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. Independent Auditor's Report on pages 3 to 5 18