Business Combinations
6 Months Ended
Jun. 30, 2022
Disclosure Of Business Combinations Text Block [Abstract]  
Business combinations

6. Business combinations


6.1 brumbrum S.p.A


On January 31, 2022, the Group acquired 100% of the share capital of brumbrum S.p.A (“brumbrum”) for total consideration of £59.9 million, with £27.7 million paid in cash, £3.0 million of deferred consideration, £6.2 million of debt assumed and discharged and £23.1 million through the issue of Class A Shares. The acquisition balance sheet includes £3.7 million of cash. Total consideration net of cash acquired was £56.2 million.


Founded in 2016, brumbrum was based in Milan and operated a 40,000 square meter vehicle preparation center in Reggio Emilia. The business offered vehicles for sale, finance or subscription for delivery across Italy.


The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. The unaudited condensed consolidated interim financial statements include the results of brumbrum for the period from the acquisition date.


In calculating goodwill arising from the acquisition, the fair value of net assets acquired was assessed and no material adjustments from book value were made to existing assets and liabilities. The Group has recognized a number of separately identifiable intangible assets as part of the acquisition. Details of the provisional amounts are set out in the table below.


Property, plant and equipment   7,342 
Right-of-use assets   6,276 
Inventory   1,752 
Trade and other receivables   6,401 
Cash and cash equivalents   3,743 
Trade and other payables   (6,992)
Loans and borrowings   (10,194)
Lease liabilities   (6,276)
Provisions   (631)
Total net assets acquired   1,421 
Intangible assets recognized on acquisition:     
Brand   4,158 
Customer relationships   3,669 
Software   2,592 
Deferred tax arising on intangible assets   (2,501)
Total intangible assets recognized on acquisition   7,918 
Total identifiable net assets at fair value   9,339 
Goodwill   50,597 
Purchase consideration transferred   59,936 
Satisfied by:     
Cash   27,694 
Deferred consideration   2,955 
Debt assumed and discharged   6,236 
Shares issued   23,051 
Purchase consideration transferred   59,936 


At the date of the acquisition, the carrying amount of trade and other receivables was £6.4 million, all of which was expected to be collectible in the short-term. As such, there was no difference between the carrying amount and fair value of trade and other receivables at the date of acquisition.


The Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition. The right-of-use assets were measured at an amount equal to the lease liabilities.


Software acquired represents brumbrum’s platform system and website, which had been developed in-house and are considered to be brumbrum owned intellectual property. The brand was considered to be highly recognizable in Italy.


An intangible asset has been recognized for significant customer relationships.


Goodwill is attributable mainly to the skills and technical talent of brumbrum’s workforce.


The fair value of the Class A Shares issued at the date of acquisition was determined as £3.52 per Class A Share, which was the closing share price of the Class A Shares on the acquisition date.


From the date of acquisition to June 30, 2020, brumbrum has contributed £3.0 million of revenue and £8.5 million to loss before tax to the Group. If the acquisition had occurred on January 1, 2022, Management estimates that the Group’s revenue from continuing operations attributable to brumbrum would have been £3.6 million and the loss from continuing operations attributable to brumbrum for the period would have been £10.3 million.


Transaction costs of £1.0 million have been expensed and are included in administrative expenses in the statement of profit or loss and are part of operating cash flows in the statement of cash flows.