a) McConechy's
On 5 November 2019, the Group acquired 100% of the issued share capital of McConechy's Tyre Service Limited and its subsidiary companies (see Note 4) ("McConechy's") for a cash consideration of £6.0m (excluding transaction costs). The acquired business comprises of Scotland's leading tyre and autocare specialist. The principal reason for the acquisition was to increase the Group's footprint in Car Servicing by 60 sites and establish a strong coverage in Scotland and the North 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 |
| McConechy's net assets at the acquisition date | | | | |
| Intangible assets | 1.2 | 1.5 | – | 2.7 |
| Tangible assets | 2.1 | 0.8 | 11.4 | 14.3 |
| Inventories | 3.4 | (0.2) | – | 3.2 |
| Trade and other receivables | 6.3 | – | – | 6.3 |
| Cash | – | – | – | – |
| Trade and other payables | (8.9) | (1.1) | (11.5) | (21.5) |
| Borrowings | (1.0) | – | – | (1.0) |
| Bank overdraft | (3.1) | – | – | (3.1) |
| Other taxation and social security | (0.9) | – | – | (0.9) |
| Deferred tax liability | (0.2) | (0.7) | – | (0.9) |
| Total | (1.1) | 0.3 | (0.1) | (0.9) |
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
| £m |
| Total cash consideration | 6.0 |
| Less fair value of identifiable (assets)/liabilities (excluding intangible assets) | 3.6 |
| Goodwill and intangible assets | 9.6 |
| Intangible assets: | |
| Customer relationships | (2.0) |
| McConechy's brand names | (0.7) |
| Goodwill | 6.9 |
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 Scottish market.
The McConechy's businesses contributed £18.2m revenue and a loss of £0.4m 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 McConechy's businesses had been completed on the first day of the financial year, Group revenues for the period would have been £26.0m higher and Group profit before tax of the parent would have been £0.5m higher (before amortisation of intangible assets arising on consolidation).
Acquisition costs of £0.9m arose as a result of the transaction. These have been recognised as part of non-underlying costs in the consolidated income statement (see Note 5).
b) Tyres on the Drive
On 14 October 2019, the Group acquired the trade and assets of Victor Holdings Limited (trading as "Tyres on the Drive") for an immaterial amount. The acquisition secured the outright ownership of market leading mobile services software for Halfords Mobile Expert and acts as a significant enabler in the Group's plans to grow that business. Goodwill of £0.7m arose on acquisition.