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Annual Report & Accounts 2013 - NOTES
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26.8 Sportingbet PLC - Spanish Subsidiaries Under a UK court sanctioned Scheme of Arrangement Sportingbet PLC was divided between the assets to be acquired by William Hill PLC (mainly Australia and certain freehold property in Guernsey) and other assets to be acquired by the Group. However, the subsidiary companies operating the business in Spain, which are regulated, were not immediately included in the acquisition. The arrangement included a provision for the temporary running of this business by the Group during a transitional period post acquisition. This consisted of a call option for William Hill to purchase the business six months post acquisition. In the absence of an any scope exclusion within IAS 27 for subsidiaries acquired when control is intended to be temporary, the Directors have considered whether, at the date of acquisition, GVC Holdings PLC retained control over the Spanish business. IAS 27 presumes that where the Parent owns more than half of the voting power of an entity then control is presumed to exist. However, it is possible to demonstrate, in exceptional circumstances, that such ownership does not constitute control of the business. Control is defined in IAS 27 as "the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities". Taking into account the Transfer Deed dated 12 March 2013, the Co-Existence Agreement dated 19 March 2013, and the Side Deed dated 5 September 2013; the Directors are satisfied that the running of the Spanish business by GVC Holdings PLC was envisaged as a temporary transitional arrangement to allow an orderly migration of the Spanish business, and did not constitute the power of governance. As part of the transition a Steering committee, comprised of members equally from GVC Holdings PLC and William Hill coordinated the migration and supervision of the transitional running of the Spanish business. In addition, certain obligations falling on GVC Holdings plc were drafted limiting the actions that GVC Holdings PLC could take in respect of the Spanish business during the transitional period. Therefore as the Group did not control the subsidiaries operating the business in Spain during the year, results have not been included within the 2013 consolidated financial statements. 27. GOING CONCERN The Group's business activities, together with the factors likely to affect its future performance and position are set out in the Chairman's, Chief Executive's and Group Finance Director's statements. Note 22 to the financial statements sets out the Group's financial risk management policies, and its exposure to credit risk and liquidity risk. The Directors have assessed the financial risks facing the business, and compared this risk assessment to the net current assets position and dividend policy. The Directors have also reviewed relationships with key suppliers and software providers and are satisfied that the appropriate contracts and contingency plans are in place. The Directors have prepared income statement and cash flow forecasts to assess whether the Group has adequate resources for the foreseeable future. The Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements. 28. SUBSEQUENT EVENTS There have been no subsequent events between 31 December 2013 and the date of the signing of these accounts that merit inclusion. GVC HOLDINGS PLC ANNUAL REPORT 2013 61 NOTES TO THE FINANCIAL STATEMENTS