Universal
On 18 March 2021, the Group acquired 100% of the issued share capital of The Universal Tyre Company (Deptford) Limited and its subsidiary companies (see Notes to the Financial Statements) ("Universal") for a cash consideration of £14.0m (excluding transaction costs) and deferred consideration of £1.0m. The acquired businesses comprise a number of garages and a fleet of vans which provide support for commercial customers, based in the South East of England. The principal reason for the acquisition was to build on the commercial fleet customer base and expand presence in the South and South East of England.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows (fair value is used apart from leases, contingent liabilities and income taxes).
| Book value
£m | Fair value
adjustment
£m | IFRS 16
adjustment
£m | Final fair
value
£m |
| Universal net assets at the acquisition date | | | | |
| Intangible assets | 0.5 | 2.1 | – | 2.6 |
| Tangible assets | 6.0 | 1.4 | 2.7 | 10.1 |
| Inventories | 3.2 | – | – | 3.2 |
| Assets held for sale | 0.4 | – | – | 0.4 |
| Trade and other receivables | 5.7 | – | – | 5.7 |
| Cash | 4.2 | – | – | 4.2 |
| Trade and other payables | (6.6) | (0.4) | (2.7) | (9.7) |
| Other taxation and social security | (1.0) | – | – | (1.0) |
| Borrowings | (1.7) | – | – | (1.7) |
| Current tax liabilities | (0.2) | – | – | (0.2) |
| Deferred tax liability | (0.2) | (0.5) | – | (0.7) |
| Total | 10.3 | 2.6 | – | 12.9 |
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
| £m |
| Total cash consideration | 14.0 |
| Total deferred consideration | 1.0 |
| Less fair value of identifiable (assets)/liabilities | (12.9) |
| Goodwill | 2.1 |
| Intangible Assets: | |
| Customer relationships | 1.6 |
| Other | 0.2 |
| Brand names | 0.8 |
| Total | 2.6 |
None of the goodwill acquired is expected to be deductible for income tax purposes. The goodwill constitutes value of locational benefits giving Halfords ability to expand growth within the South and South East of England and also increase presence in the commercial fleet marketplace.
The Universal businesses contributed £1.4m revenue and a profit of £0.1m to the Group's profit before tax for the period between the date of acquisition and the balance sheet date.
If the acquisition of the Universal businesses had been completed on the first day of the financial year, Group revenues for the period would have been £30.0m higher and Group profit before tax would have been £1.0m higher (before amortisation of intangible assets arising on consolidation £nil).
Acquisition costs of £0.6m arose as a result of the transaction. These have been recognised as part of non-underlying costs in the consolidated income statement.