2019 InterimResults Presentation13th August 2019

Richard BlumbergerChief Financial Officer

Daksh GuptaChief Executive Officer

2New Audi SQ8

3

Agenda

• H1 2019 key highlights and market overview

– Daksh Gupta

• Financial review

– Richard Blumberger

• Compliance overview

– Richard Blumberger

• Update on business initiatives, strategy and future outlook

– Daksh Gupta

• Summary

– Daksh Gupta

• Q&A

2

4New BMW X7

Interim highlights and market overview

Daksh GuptaChief Executive Officer

6

Strong like-for-like outperformance against the market

6* Like-for-like (includes group businesses or activities that have been active or trading for a period of 12 consecutive months and excludes businesses or activities that do not have 12 months trading activity); ** Reported underlying; *** Non GAAP measure that excludes IFRS 16-related lease liabilities; **** SMMT registrations which includes impact of dealer self-registration activity

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REVENUE *

£1,160.6m +0.9%

2018: £1,150.0m

GROSSPROFIT % *

11.4% -3bps

2018: 11.4%

PBT **

£15.2m -5.3%

2018: £16.0m

DIVIDENDup 32.6%

Interim 2.85p

2018: 2.15p

A D J U S T E DN E T

C A S H / ( D E B T ) * * *

£5.8m

H1 18: £0.9m

L E V E R A G E

Nil

2018: NilFY 18: (£5.1m)

NEW RETAIL UNITS*

-0.4%

FLEET UNITS*

-1.1%

USED UNITS*

+7.2%

AFTERSALES REVENUE*

+1.8%

OPERATING PROFIT*

£20.2m -4.1%

2018: £21.1m

vs market -3.2%**** vs market -3.6%****

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H1 2019 key highlights

• Revenue up 0.9% to £1,160.6m*

• Gross margin consistent at 11.4%*

• Reported underlying PBT of £15.2m

• Net cash of £5.8m despite continued investment and balance sheet strengthening

• Strong balance sheet with £200.7m of net assets, underpinned by £123.9m of freehold / long leasehold property

• Acquisition of six ŠKODA retail centres to become UK’s largest retailer for the brand for £3.5m

• £8.8m portfolio investment, including £1.7m freehold acquisition of Northampton ŠKODA

• Ranked as one of the UK’s best workplaces for the 5th continuous year

• Strong like-for-like outperformance against the market for new retail units, new fleet units and used units

• Interim dividend 2.85p per share, up 32.6% aided by recently revised policy

* Like-for-like 55

8

New car market update

Newly opened Cambridge Ford Store

9

New car market remains challengingUK Market• 1.27m new cars registered in H1, down 3.4%

• Retail down 3.2%, fleet / business down 3.6%

• Ongoing consumer uncertainty around diesel vehicles

• Registrations by fuel type:• Diesel down 19.4% (27.2% share) – lowest since 2002• Petrol up 3.5% (66.2% share)• AFVs up 13.9% (6.6% share), pure EV up 60.3% (0.9% share)

• WLTP continued to impact supply in certain brands

• July -4.1%, YTD -3.5%

• Latest SMMT forecast for full year 2019 -2.2% to 2.3m

• Implies Aug-Dec -0.1%

• 1st September further emissions regulations being introduced

MMH• Despite declining markets, MMH outperformed in both new retail

and fleet units versus the market, an excellent result• Like-for-like new retail unit sales down 0.4%• Like-for-like fleet unit sales down 1.1%

• Strong like-for-like margin growth to 7.7%, +73bps

• PCP remains popular with 81% of new car finance cases (H1 18: 80%), 72,938 Live PCPs (H1 18: 66,540)

0.0

0.5

1.0

1.5

2.0

2.5

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F

UK NEW CAR REGISTRATIONS (m)

Source: SMMT

Diesel AFVPetrol

66

10Honda e prototype

Used car market update

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1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F

UK USED CAR MARKET (m)

Used car market: Q2 residual value (‘RV’) pressure

Source: SMMT and Cox Automotive

UK Market

• Q1 used car transactions down -0.6% to 2.0m

• Q2 experienced residual value pressure

• 2019 full year forecast transactions down 2% to 7.8m (still fourth highest on record)

MMH

• Highest ever used unit sales performance

• Like-for-like used unit sales up 7.2%

• Like-for-like revenue up 6.8%

• Like-for-like margin down 62bps to 6.6%

• Continued 56 day stocking policy and use of data / technology remain key differentiators

• PCP penetration of used finance cases broadly stable at 59% (H1 18: 63%)

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12New Hyundai Kona Hybrid

13Source: CAP HPI 7.2

Q2 RV pressure expected to normalise in H2CUMULATIVE CAP BLACK BOOK LIVE % MOVEMENTS 2015-19

2018• Used car market robust. Tailwinds driven by WLTP-related new car supply issues and associated move towards car allowances• Prices inflated, with petrol values particularly strong

H1 2019• Prices drop from beginning of year. No Q1 strength as in previous years• “Perfect storm” from April onwards: High volumes from 2015/16 registrations, March 2019 plate change, WLTP delays normalising,

timing of Easter and May bank holidays

H2 2019• CAP HPI predict a more normalised position, with recent heavy drops in value unlikely to continue• Longer term, market expected to be reasonably healthy. Whilst Brexit is a big unknown, it is not expected to adversely impact values

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Financial review

Richard BlumbergerChief Financial Officer

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H1 2019 key financials• Like-for-like revenue up 0.9% to £1,160.6m

• Strong like-for-like outperformance against the market for new retail units, new fleet units and used units

• Gross margin remains strong at 11.4%

• Like-for-like net operating expenses up 1.6%, excluding the impact of lease disposals up 2.0%

• Reported underlying PBT of £15.2m, in line with our expectations

• Net assets of £200.7m, £2.57 per share• £123.9m of freehold / long leasehold property

• Adjusted net cash £5.8m, up £10.8m from the year end

• £6m to settle all historic defined benefits pension liability

• £3.5m acquisition of six ŠKODA retail centres

• £8.8m capital expenditure including £1.7m freehold acquisition of Northampton ŠKODA

• £1.7m increased dividend payments to shareholders

• Interim dividend 2.85p per share, up 32.6%

• First time adoption of IFRS 16• Fully retrospective method, prior year adjusted

• Reported net debt £82.2m (H1 2018: £92.7m)

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16Jaguar I-Pace

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Strong performance in challenging market conditions

Reported (£m) H1 19 H1 18 Var

Revenue 1,183.3 1,162.9 1.8%

Underlying PBT 15.2 16.0 (5.3%)

Underlying EPS 15.0 16.1 (6.8%)

ROCE 11.7% 12.7% (97bps)

Like-for-like (£m) H1 19 H1 18 Var

Revenue 1,160.6 1,150.0 0.9%

Gross profit 132.5 131.6 0.7%

Gross profit % 11.4% 11.4% (3bps)

Operating expenses (112.3) (110.5) (1.6%)

Operating profit 20.2 21.1 (4.1%)

ROS 1.7% 1.8% (9bps)

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• Reported revenue benefitted from acquisitions

• EPS down due to lower profit and higher effective tax rate

• Return on capital employed impacted by ŠKODA loss making acquisitions

• Like-for-like gross margin remains strong, driven by strong new car margin performance offsetting margin pressure in used vehicle and aftersales

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18New Kia XCeed

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Like-for-like: Focus on growth to offset market pressures

£m

Volume: +1.5m

Margin: -0.5m

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Volume Margin

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20Range Rover Velar SVAutobiography Dynamic Edition

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Strong like-for-like outperformance to the marketClass Leading

Returns

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Like-for-like revenue (£m)

H1 19 H1 18 Var

New 559.7 580.7 (3.6%)

Used 498.8 467.0 6.8%

AFS 127.1 124.9 1.8%

Other (25.0) (22.7) (10.2%)

Total 1,160.6 1,150.0 0.9%

Like-for-like unit sales H1 19 H1 18 Var

New retail 15,586 15,653 (0.4%)

Fleet 9,167 9,271 (1.1%)

New 24,753 24,924 (0.7%)

Used 23,630 22,053 7.2%

Total 48,383 46,977 3.0%

Like-for-likegross profit (%) H1 19 H1 18 Var

New 7.7% 7.0% 73bps

Used 6.6% 7.2% (62bps)

AFS 44.5% 46.0% (154bps)

Total 11.4% 11.4% (3bps)

Like-for-like gross profit (£m) H1 19 H1 18 Var

New 43.0 40.3 6.6%

Used 32.8 33.7 (2.5%)

AFS 56.5 57.5 (1.6%)

Other 0.2 0.1 43.9%

Total 132.5 131.6 0.7%

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22Maserati Levante

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Like-for-like: Proactive cost management

1414.3

Cost headwinds Management actions

14

£m

24New Mercedes-Benz EQC 400 4MATIC

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Impact of IFRS 16Class Leading

Returns

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£m 30 June 2018As originally

presentedIFRS 16

Transition Restated

Balance sheet extractRight-of-use assets - 85.3 85.3Freehold / long leasehold 114.9 (4.3) 110.6Other 630.3 0.5 630.8Total assets 745.2 81.5 826.7

Lease liabilities - 93.6 93.6Other 544.0 (6.0) 538.0Total liabilities 544.0 87.6 631.6

Net assets 201.2 (6.1) 195.1

Net cash / (debt) 0.9 (93.6) (92.7)

Underlying P&L extractRevenue 1,162.9 - 1,162.9Cost of sales (1,029.9) - (1,029.9)Gross profit 133.0 - 133.0Net operating expenses (113.3) 1.2 (112.1)Operating profit 19.7 1.2 20.9Net finance costs (3.3) (1.6) (4.9)Profit before taxation 16.4 (0.4) 16.0

• Newly introduced accounting standard has no economic benefit or disbenefit and no cash impact

• Banking covenants unaffected

Balance sheet

• H1 19 right-of-use asset (£83.2m; H1 18: £85.3m) and lease liability (£88.0m; H1 18: £93.6m)

• New standard treats additional lease liability as debt. Adjusted net (debt) / cash position shown

Income statement

• IFRS 16 applied on a fully retrospective basis (H1 18: -£0.4m PBT impact, FY 18: -£0.9m)

• Operating lease rental charges in the income statement are replaced by interest charges and depreciation expenses

• Operating profit increases

• Interest charge increases

• PBT earnings dilutive early years

26Mercedes-Benz Arocs

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Balance sheet with a strong asset base

£m H1 19 H1 18Intangible 115.5 121.5Freehold / long leasehold 123.9 116.6Right-of-use assets 83.2 85.3Other 34.3 30.9Fixed assets 356.9 354.3Inventory 376.4 351.4Trade / other receivables 113.1 113.3Cash & equivalents 11.9 7.7Assets held for sale 0.8 -Current assets 502.2 472.4Vehicle funding (361.2) (324.3)Trade / other payables (177.9) (175.8)Lease liabilities (88.0) (93.6)Bank / other debt (6.1) (6.8)Other liabilities (25.1) (31.1)Total liabilities (658.4) (631.6)Net assets 200.7 195.1

• Continued investment in freehold / long leasehold property including:

• Northampton ŠKODA• Lincoln JLR• Cambridge Ford Store• Lincoln Nissan

• Net assets increased by £5.6m

• Strong inventory management continues

• Total inventory down £7.5m versus December 2018 despite acquisitions, like-for-like down £17.3m, 4.5%

• Used car stock turn of 9.3 versus 6.5 for 56 day policy

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28Interior of the new Mini Clubman

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£m H1 19 H1 18

Operating profit after non underlying 19.8 21.1

Depreciation 9.9 8.8

Other 0.1 0.2

Cashflows from operating activities 29.8 30.1

Working capital 10.3 (4.0)

Cashflows generated by operations 40.1 26.1

Capital expenditure (7.8) (8.6)

Dividends (5.0) (3.3)

Tax / interest (6.5) (7.7)

Other (10.1) (3.7)

Cashflow 10.8 2.8

Cash generative businessClass Leading

Returns

• Focus on working capital resulted in £10.8m inflow

• Tax benefits from capital allowances project

• £5.0m paid in dividends, up £1.7m on H1 2018, aided by revised dividend policy

• £6m to extinguish all defined benefit pension liability

• £5.6m spent in relation to acquisitions

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Working capital H1 19 H1 18

Inventory 10.1 49.8

Trade and other receivables (34.1) (21.9)

Stock funding (9.6) (56.4)

Trade and other payables 49.6 25.0

Other (5.7) (0.7)

Total 10.3 (4.0)

Adjusted net cash 5.8 0.9

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30New Peugeot 208

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Other full year 2019 guidance itemsClass Leading

Returns

Previous guidance

• 2019 capital expenditure £24m - £26m

• Well documented structural cost headwinds to continue

• Dividend cash outflows to shareholders to increase by c.£2.2m

• Full year effective tax rate c.21 - 22%

• IFRS 16 1 - 2% dilutive to PBT

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£5m deferred to 2020

Increased to 22 - 23%

Movement

Unchanged at 2.5 - 3.5%

Unchanged

Increased to 3 - 4%

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32Seat Cupra Formentor concept

Compliance overview

Richard BlumbergerChief Financial Officer

34ŠKODA Vision iV concept

35

Knowledgeof regulatory requirements

Compliance at Marshall

Culture

Effective governance

and assurance

Training and continuous

improvement

Rightsystems and processes

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36smart EQ fortwo cabrio edition nightsky

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Compliance and the regulatory environmentFinancial Services Regulation• Well established governance structure in place• Agenda item at every PLC Board meeting• Independent compliance team headed by experienced

Head of Compliance reporting to Group Counsel and Company Secretary and the PLC Board

• Compliance committee meets monthly; comprised of operations, finance, HR and training, franchise, F&I, with Head of Compliance in attendance

• Compliance oversight committee meets quarterly; comprised of CEO, CFO, Group Counsel and Company Secretary, with a non executive director in attendance. Reports to the PLC Board every meeting

• Annual compliance agenda approved by oversight committee

• Assurance through audit checks• Culture of continual improvement focusing on:

• systems and documentation• sales process• awareness, training and assessment• compliance monitoring• complaints handling with root cause analysis

1

Health, Safety and Environmental• Agenda item on every PLC Board meeting• Oversight by dedicated central HSE team• On-site Risk Assessors and risk assessments• Comprehensive HSE induction training for all

colleagues and one-to-one support for managers• Online live handbooks and guidance documents• Monthly reporting at dealership, division and group

level

Data Protection• Managed by independent compliance team• Agenda item at compliance committee• Robust process to implement and embed GDPR • Clear GDPR guidelines• Ongoing training and awareness raising

21

38New Lincoln Nissan retail centre

Update on business initiatives, strategy and future outlook

Daksh GuptaChief Executive Officer

40Phoenix 2 – Group’s bespoke MI system

41

Phoenix: The Group’s bespoke MI systemPhoenix provides live MI to management to optimise margins, costs and working capital, as well as increasing efficiency and productivity. Developed over 10 years and fully expensed through P&L

• Continued in-house development

• Future strategy and development plans

• Reduce dependency on third party providers where possible

• Further integration of our operating platforms, eliminating multiple log-ins and simplifying processes

• Continued use of data to increase customer retention and service levels

• Further external market data integration

• Two new developments

• Phoenix Deal File

• Enhanced stock visibility

23

AA10 AAA

427 colleagues nominated from Marshall

Top 100 Great British Women – Rising Stars 2019

43

11thBest UK

workplace

9 YearsRunning

GPTW status

5 YearsRunning ranked

Top 30

No.1Automotive employer

MMH score79%

vs UK average

55%

Cultureof continual

improvement

Ongoing people initiatives

progressing well

24

Our people and culture at the heart of our success

44Industry leading online presence

45

Continued progress in our online presence

Source: Google analytics, internal management information

www.marshall.co.uk Sector Leading Social Media

46,157 Followers+17.9%

116,012 Likes+24.3%

12,043 Followers +48.9%

3.0mvisits

12.8mpage views

Marshall brand consistency

Automotive Management Awards

Winner - “Best Use of Social Media”

Motor Trader AwardsWinner - “Social Media”

category

15 industry digital marketing accolades in a little over 2 years

25

UK’s 6th mostvisited franchise

website

25

46New Vauxhall Corsa-e

47

Long term track record of successful M&A integrations

EXIT

S

EXIT OF 40 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

*Start-up

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

1TRANSACTION

1 TRANSACTION & 1 START-UP

2 TRANSACTIONS

ACQ

UIS

ITIO

NS

/ STA

RTU

PS

2018 2019

*

* *

*Ridgeway integration

£75m capex investment

Leasing disposal

Balance sheet strengthened

28

*

*

*

26

48ŠKODA integrations nearing completion

49

Integration in action: Six ŠKODA sites acquired in 2019Integrations progressing well and nearing completion:

Pre-completion• Comprehensive due diligence

Day 1• CEO on-site welcome

• Phoenix go-live

Week 1• Rolled out MMH best practice for stock management – 56 day policy

Month 1• All sites rebranded

• All colleague inductions conducted

• Compliance audits completed and MMH accounting policies in place

• Key supplier contracts renegotiated

• Increased depth and width of new and used car stock pool

By end of month 3• New and used car volumes increased significantly

• Stock turn increased

• Management team in place; with 4 key senior roles filled internally (bringing MMH expertise into new sites)

• 16 key additional people recruited, mirroring MMH proven structures

29

BarnstapleBedfordCroydonHarlow

LeicesterLetchworth

NewburyNorthamptonNottingham

OxfordReading

c.8-9% of UK volumes

27

50New Volkswagen Passat Estate R-Line

51

Current trading and outlook

• 2019 new car market expected to decline 2.2%*, implies Aug to Dec -0.1%

• September 2018 impacted by WLTP supply constraints, market down 20.5%

• Diesel expected to continue to lose share

• WLTP introduction on commercial vehicles 1 September 2019

• RDE 2 implementation 1 September 2019

• WLTP and RDE 2 could impact supply, however too early to form any conclusions

• Whilst early, September order bank building as anticipated

• September key underpin to full year result

• 2019 full year used car market forecast to decline 2%**

• Given political and economic uncertainty, Board continues to remain cautious

• Outlook for the full year remains unchanged

* Source: SMMT, ** Source: Cox Automotive 3028

52New Volvo S60

53

Summary

• Strong H1 results despite challenging market backdrop

• Like-for-like revenue growth underpinned by market outperformance across core KPIs

• Excellent cash generation in the period, adjusted net cash £5.8m despite investments

• Interim dividend of 2.85p, up 32.6%

• Strong balance sheet with £200.7m of net assets, equating to £2.57 per share

• Significant firepower to take advantage of future opportunities in a challenging and consolidating market

• Strategic acquisition of six ŠKODA dealerships to become UK’s largest retailer for the brand

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