On 4 June 2014 the Group acquired 100% of the issued share capital of Boardman Bikes Limited and Boardman International Limited for cash consideration of £14.7m (excluding transaction costs). The two Boardman companies retail cycles and cycle accessories under the brand name 'cBoardman' nationally and internationally. The purpose of this acquisition was to benefit from operating synergies. This transaction has been accounted for using the acquisition method of accounting.
The acquisition had the following effect on the Group's assets and liabilities:
| Book value
£m | Fair value
adjustment
£m | Final fair value
£m |
|---|
| Boardman net assets at the acquisition date | | | |
| Intangible assets | 0.2 | (0.2) | — |
| Inventories | 0.7 | — | 0.7 |
| Trade and other receivables | 3.7 | (0.4) | 3.3 |
| Cash | 0.7 | — | 0.7 |
| Trade and other payables | (3.0) | — | (3.0) |
| Current tax liabilities | (0.2) | — | (0.2) |
| Boardman net assets | 2.1 | (0.6) | 1.5 |
Goodwill
Goodwill was recognised as a result of the acquisition as follows:
| £m |
|---|
| Total consideration | 14.7 |
| Less fair value of identifiable assets | (1.5) |
| Goodwill and intangible assets | 13.2 |
| |
| Brand name intangible | 3.1 |
| Deferred tax liability | (0.6) |
| Goodwill | 10.7 |
The goodwill arising on the acquisition of the Boardman business is attributable to a) operating synergies and increased control of operations, b) the value of immaterial other intangible assets and c) future income to be generated from new retail customer contracts and related relationships. None of the goodwill is expected to be deductible for income tax purposes.
The fair value adjustments relate to the best estimate of the contractual trade receivable cash flows not expected to be collected and aligning intangible asset policies with the Halfords Group.
The Boardman business contributed £2.4m revenue and a loss of £0.3m to the Group's profit before tax for the period between the date of acquisition and the balance sheet date. The Retail segment has benefited by £1.7m due to the change in royalty arrangements following acquisition.
If the acquisition of the Boardman business had been completed on the first day of the financial year, Group revenues for the period would have been £2.2m higher and Group profit attributable to equity holders of the parent would have been £0.1m higher (pre amortisation of intangible assets arising on consolidation).