IDE.L Regulatory News (IDE)

Cupid plc

Result of Independent Review

Cupid plc (AIM: CUP), a global leader in online dating, updates the market following the completion of the independent review of operating practices and members' database by KPMG LLP ("the Independent Review").

The Board is pleased to announce that the conclusion of the Independent Review supports the Board's previous statements to the market. In particular, there was found to be no evidence of a Company organised practice of staff enticing registered members to subscribe through use of fake profiles.

The scope of the Independent Review covered the allegations of fake profiles, communication levels, the control environment and content from the Cupid teams at all points in the customer journey, cancellation procedures and database membership analysis. The Independent Review took over two months to complete and included:

§ An examination of the Company's working practices including those of its Motivation team

§ The use of data analytics tools to interrogate information held on Company systems (around 3.5 billion records were examined over a 17 month period to 3 June 2013)

§ Group-wide staff interviews in Edinburgh and the Ukraine.

Key findings were as follows:

§ The Independent Review supported the Board's statements that it is not the Group's practice to create 'fake profiles' to encourage customers to sign up. Nevertheless the Independent Review highlighted that Cupid staff operating on the sites were not clearly identified as such and that this could potentially lead to confusion in interactions with customers or subscribers. The Independent Review recognised changes were being been made to the Motivation team's structure and approach. These will ensure that Cupid staff are clearly identified when interacting with customers and subscribers.

§ Scammers were identified as an area of concern, however it was noted that this is an industry-wide issue, particularly in the casual dating market. The Independent Review stated that the Company expends significant effort and has implemented mature technical controls to combat scammers and control fraudulent activity on its sites. Cupid has always taken governance and technical controls seriously, and as such has had in place a number of methods, such as the use of Scamalytics, to address these issues for some time. Current rates for detection and blocking are c.92% of scammers in the first eight hours.

§ The Independent Review identified a number of areas where existing controls and practices could be improved and the Group is working to implement the recommendations of the Independent Review.

§ The Independent Review noted the recruitment of new senior UK staff and a realignment of responsibilities in early 2013 which has improved operational management. The Group has plans for further organisational changes which will be implemented from August 2013 onwards along with a plan to implement the recommendations around operation management and control.

§ The Independent Review also stated that 99.9% of payments were taken correctly, as per the Group's cancellation policy

Although the Board is pleased with the conclusions of the Independent Review, KPMG did identify a number of practices and policies of the Company in certain areas such as marketing, governance, technical controls and risk management which could be improved. The Group is working to implement the recommendations of the Independent Review in these areas.

In line with the Group's desire to improve customer experience and as part of the process of implementing the recommendations of the Independent Review, the Company is introducing a number of changes. These include:

§ The formation of a team of 'Dating Advisors' to replace the Motivation team, who will act purely as live help to users. Their role will be made clear to users within the Company's new guide to safe dating. There is a code of conduct for these advisors which will be strictly monitored.

§ The Company has recently launched a 'safe mode' for its sites, which allows users to choose who they communicate with.

§ The Company's terms and conditions are being simplified to ensure ease of use, and a new sign up process has been designed with all 'opt-ins' unticked as default to ensure customers are making active choices.

Conclusion

The Board is pleased to have concluded this review, and will continue to innovate and enhance the customer experience, whilst taking steps to ensure that the recommendations of the Independent Review are implemented and policies and procedures and best practice are complied with.

For further information please contact:

Notes to Editors

§ Cupid plc listed on AIM in June 2010 and is a leading provider of online dating services

§ Cupid has built significant and growing revenues in 15 countries.

§ Cupid offers a wide variety of online dating services allowing members to interact with each other and access the content available on the Group's websites. These websites are intended to appeal to dating users of diverse ages, cultures and social interest groups. The Group's most heavily visited websites include www.cupid.com, www.flirt.com, www.benaughty.com and www.girlsdateforfree.com. The Group also promotes the niche brands www.datingforparents.com, www.indiandating.com, www.loveagain.com and www.uniformdating.com.

§ Cupid plc products are available across the web and also via mobile application stores.

§ Further information on the Company can be found at www.cupidplc.com.