Strategic expansion with Volkswagen Group and other .../media/Files/M/Marshall...2. Summary of acquisition • Strategic acquisition of eight Volkswagen Group UK franchises • Six

Strategic expansion with Volkswagen Group and other portfolio changes

18th December 2019

2

Summary of acquisition

• Strategic acquisition of eight Volkswagen Group UK franchises

• Six Volkswagen passenger car franchises in Aylesbury, Harlow, Letchworth, Loughton, Milton Keynes and St Albans

• One Volkswagen commercial vehicle franchise (including bodyshop) in Loughton

• One ŠKODA passenger car franchise in Milton Keynes

• Acquired from Jardine Motor Group UK Limited for up to £22.3m including £13.0m of inventory

• Earnings dilutive in 2020 and 2021 whilst the Group improves the operational performance of the businesses. Expected to be earnings enhancing from 2022 onwards

• With 53 operations across the UK, Marshall Motor Holdings plc (MMH) is now Volkswagen Group UK’s largest partner by number of locations

3

Acquisition overview: strong strategic rationale

• Continued execution of stated strategy to grow scale with existing brand partners and extend our geographical footprint into new regions

• Volkswagen Group is one of the world’s leading automobile manufacturers and the largest carmaker in Europe

• MMH partner with all of the Volkswagen Group’s core brands: Volkswagen Passenger Cars, Audi, SEAT, ŠKODA and Volkswagen Commercial Vehicles

• Volkswagen Group core passenger car brands accounted for 20.6% of all new vehicles sold in the UK year to date and 11.5% for commercial vehicles

• Volkswagen Group is investing €60bn in e-mobility, hybridisation and digitisation between 2020 and 2024, with the much anticipated Volkswagen ID.3 model scheduled for release in the UK in 2020

• Volkswagen Group UK is a key brand partner for MMH. First Volkswagen franchise added in 2012, with significant subsequent growth

• Volkswagen Group fully supportive

4

Acquisition overview: business summary

Volkswagen passenger car franchises in Aylesbury,

Harlow, Letchworth, Loughton, Milton Keynes

and St Albans

Acquired nine business units contiguous to a

number of our existing franchises

Volkswagen commercial vehicle franchise in

Loughton

ŠKODA passenger car franchise in Milton Keynes

Bodyshop in Loughton

Volkswagen authorised repairer and approved used car operation in

Towcester to be relinquished post

acquisition

Aylesbury franchise acquisition will be deferred pending a legal process to

sub-divide the site

All sites fully compliant with the latest brand

requirements

2018 revenue: £212.8mLoss before tax: £2.8m

Milton Keynes

AylesburySt Albans Harlow

Letchworth

Loughton

NorthOxford*

Newbury*

Reading*

M1

SouthOxford*

M25

M25

M1

M4M4

M40

M40

M4

M25

M25

c.400 employees

* Existing franchise

5

Volkswagen passenger car geographical coverage

MiltonKeynes

Letchworth

Harlow

Loughton

Aylesbury

St Albans

Barnstaple

Bridgwater*

Grimsby

Newbury

NorthOxford

Reading

Scunthorpe

South Oxford

Taunton

MiltonKeynes

Letchworth

Harlow

Loughton

Aylesbury

St Albans

Barnstaple

Bridgwater*

Grimsby

Newbury

NorthOxford

Reading

Scunthorpe

South Oxford

Taunton

Marshall Jardine Combined2012 F-Cross acquisition: Grimsby and Scunthorpe2013 Silver Street acquisition: Bridgwater, Barnstaple and Taunton2016 Ridgeway acquisitions: Newbury, Oxford (North and South) and Reading

Very attractive demographics:Bucks, Herts and Essex

Volkswagen Passenger Cars grows from 9 locations to 15 (c.6-7% of Volkswagen Passenger Car volumes), making Marshall Volkswagen Passenger Car’s second largest partner

* Bridgwater is an Authorised Repairer

6

Volkswagen commercial vehicles geographical coverage

Bridgwater

South Oxford

Reading

Bridgwater

South Oxford

ReadingLoughton Loughton

Marshall Jardine Combined2012 F-Cross acquisition: Grimsby and Scunthorpe2013 Silver Street acquisition: Bridgwater2016 Ridgeway acquisition: South Oxford and Reading2019 start-up: Lincoln

Very attractive demographics:Bucks, Herts and Essex

Volkswagen Commercial Vehicle grows from 6 to 7 locations (c.6-7% of Volkswagen Commercial Vehicle volumes), cementing Marshall’s position as Volkswagen Commercial Vehicle’s largest partner by number of locations

Lincoln

Grimsby*

Scunthorpe

Lincoln

Grimsby*

Scunthorpe

* Grimsby is an Authorised Repairer

7

Marshall Jardine Combined

ŠKODA geographical coverage

Barnstaple

CroydonNewbury Reading

Oxford

LeicesterNottingham

NorthamptonBedford

Harlow

Letchworth

MiltonKeynes

Barnstaple

CroydonNewbury Reading

Oxford

LeicesterNottingham

NorthamptonBedford

Harlow

Letchworth

MiltonKeynes

2013 Silver Street acquisition: Barnstaple2015 SG Smith acquisition: Croydon2016 Ridgeway acquisition: Newbury, Oxford, Reading2019 Sandicliffe acquisition: Leicester and Nottingham2019 Progress acquisition: Bedford, Harlow, Letchworth and Northampton

Contiguous to current operations ŠKODA grows from 11 to 12 locations (c.10% of ŠKODA volumes), further cementing number one position with the Brand

8

Other portfolio developments

• Six ŠKODA franchises through two acquisitions previously announced in March 2019

• Integration progressing well

• Two Honda franchises acquired from Jardine Motor Group in September 2019 (Reading and Newbury)

• Reinforces Group’s position as the second largest Honda partner in the UK with eight franchises

• Awarded open point Lincoln Volkswagen Commercial Vehicle, commenced trading in October 2019

• Occupies one of the Group’s existing sites made vacant following the relocation of the Group’s Jaguar and Land Rover businesses

• Commenced a new partnership with London EV Company (LEVC)

• Manufacturer of electric London taxis owned by Geely Automotive Holdings

• Shared facility with the Group’s Volvo dealership

• In advanced negotiations to acquire the Volvo franchise in Derby

• Expected to complete before the end of the year

• Cement the Group’s position as the largest Volvo franchise group in the UK

9

Post interim announcement: Honda acquisitions• Completed acquisition of Honda franchises in Reading

and Newbury from Jardine Motor Group Limited

• Reading and Newbury are large markets where we have other Marshall presence already

• Scale will provide synergy opportunities and give the whole division the benefit of increased reach and stock depth

• Strategy to partner with the right brands

• Honda 2018 sales: 52,570, market share 2.2%

• Great global brand introducing lots of exciting new products

• Strategy to grow scale with key brand partners and geographic footprint:

• Entry to brand: Peterborough

• 2009: York, Hull and Scarborough

• 2010: Leicester

• 2011: Harrogate

• 2019: Newbury, Reading

• Second largest Honda retailer in the UK by number of sites. Collectively, c.8% UK outlets

• Acquisitions fully supported by the Brand

10

Strategic expansion financials

• Volkswagen and ŠKODA:

• Consideration for fixed assets and goodwill of £22.3m including deferred consideration for Aylesbury franchise and inventory

• Goodwill of £3.6m

• Includes £4.3m in respect of freehold/long leasehold properties in Letchworth and St Albans

• Inventory of £13.0m (excluding Aylesbury). Funded via existing stock funding facilities

• Expect to be earnings dilutive in 2020 and 2021

• Earnings enhancing from 2022

• Honda acquisitions and Lincoln Volkswagen Commercial Vehicles:

• Revenue of c£30m in 2020

• Marginally earnings dilutive in 2020

• Earnings enhancing thereafter

11

Long term track record of successful M&A integrations

*Start-up

EXIT

S

EXIT OF 41 NON-CORE, SUBSCALE OR LOSS MAKING OPERATIONS

1ST

GERMAN BRAND ADDED

MERCEDES-BENZ

2ND

GERMAN BRAND ADDED

VOLKSWAGEN

3RD

GERMAN BRAND ADDED

AUDI

4TH

GERMAN BRAND ADDED

BMW

2010 2011 2012 2013 2014 2015 2016 2017

CO

RPO

RAT

E

2009

MMH LISTSON THE

LSE

STRATEGIC EXIT FROM MARSHALL

LEASING

2 TRANSACTIONS& 4 START-UPS

2 TRANSACTIONS & 1 START-UP

2 TRANSACTIONS

2 TRANSACTIONS

2 TRANSACTIONS

3 TRANSACTIONS & 1 START-UP

1 TRANSACTION

1 TRANSACTION

1 TRANSACTION & 1 START-UP

5 TRANSACTIONS & 2 START-UPS

ACQ

UIS

ITIO

NS

/ STA

RTU

PS

2018 2019

*

* *

*Ridgeway integration

£75m capex investment

Leasing disposal

Balance sheet strengthened

*

*

*

*

*

12* Source: SMMT data (June 2019 year to date)

A national player in a consolidating market0.8% Specialist

42.9% Premium

32.8% Alt Premium

25.2% Volume

• 119 Franchises across 28 counties• 15 other standalone operating units• Headroom for further growth• German brands now 33% of market*

• Premium brands now 30% of market*

13

Trading statement and outlook

• Trading conditions continue to be challenging

• The Society of Motor Manufacturers and Traders (“SMMT”) forecasts for a market decline of 2.8% in 2019 and 4.4% in 2020

• The Group has continued to perform well despite trading conditions weakening in Q4

• The Board’s outlook for the full year remains unchanged

• Next scheduled announcement: final results announcement 10th March 2020