MARSHALL MOTOR HOLDINGS PLC

("MMH" or the "Group")

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Results for the Year ended 31 December 2019

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Strong Market Outperformance and Strategic Growth

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Marshall Motor Holdings plc, one of the UK's leading automotive retail groups, announces its results for the Year ended 31 December 2019.

Financial summary

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2019 Highlights:

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Daksh Gupta, Chief Executive Officer, said:

"The Group continued to perform well in 2019 and despite a sustained period of market decline, has grown market share by outperforming in all of its key segments. The Group delivered record total reported revenue and achieved like-for-like revenue growth.� Despite market conditions, the business performed well, with like-for-like operating profit down 4.1% to �33.1m against last year's record result.

"The Group has taken advantage of continued market consolidation, completing a number of strategic acquisitions in 2019, adding 20 new businesses. We are particularly proud to have become Volkswagen Group's largest partner in the UK.

"The Board notes the latest forecast by the Society of Motor Manufacturers and Traders ('SMMT') for a further decline in the UK new car market in 2020 of 2.6%. It is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector.� Although we have not seen an impact to date, the Board is monitoring the potential impact of COVID-19 and is considering contingency plans in the event it starts to impact our dealerships.� The Board therefore remains cautious but our order book for the important March plate-change period is encouraging and our outlook for the full Year is unchanged.

"The UK motor retail landscape may change over the years and decades ahead. The Group's long standing strategy of partnering with the right brands in the right locations has positioned it well to remain a relevant and important part of that future landscape.

"I would like to take this opportunity, on behalf of the Chairman and the Board, to thank our entire team, our brand partners and suppliers for their continued support."

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* The comparative figures have been restated on adoption of IFRS 16 Leases.� Full details of the impact of adoption are included in Note 2.

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** results on a 'like-for-like' basis include only the Group's businesses that have been active and trading for a period of 12 consecutive months.� Business that are excluded from the definition of 'like-for-like' are those sites that have recently commenced operation, therefore do not have a 12-month trading history, as well as any businesses that were closed and market segments or activities that were ceased during the current or previous Year.

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*** underlying profit before tax is presented excluding non-underlying items as set out in Note 5.

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**** adjusted net debt is presented excluding the impact of IFRS16 Leases.

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For further information and enquiries please contact:

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Notes to Editors

About Marshall Motor Holdings plc�(www.mmhplc.com)

The Group's principal activities are the sale and repair of new and used vehicles. The Group's businesses have a total of 117 franchises covering 24 brands, operating from 98 locations across 28 counties in England. In addition, the Group operates six trade parts specialists, two used car centres, six standalone body shops and one pre delivery inspection centre.�

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In 2019 the Group was recognised by the Great Place to Work Institute, being ranked the 11st best place to work in the UK (super large company category). This was the tenth year in succession that the Group has achieved Great Place to Work status.

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Cautionary statement

This announcement contains unaudited information based on management accounts and forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and undue reliance should not be placed on any such statements because they speak only as at the date of this document and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.� MMH undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

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Marshall Motor Holdings plc

Results for the Year ended 31 December 2019

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Chairman's Statement

Introduction

I am delighted to present our annual results for the Year ended 31 December 2019 (the "Year).

Whilst market conditions in 2019 continued to be challenging with further declines in the new car market, the Group continued its track record of market out-performance in new and used car sales and further growth in aftersales revenues.

I am also pleased to welcome Nicky Dulieu to the Board. Nicky joined the Board in January 2020 as a Non-Executive Director and Chair of the Remuneration Committee following Sarah Dickins' retirement from the Board in June 2019. I would like to once again thank Sarah for her contribution to the Group since its IPO in 2015.

Strategy

The Group's strategy of close partnership with major global automotive brands has served it well over many years. We are delighted to have extended and strengthened those partnerships during the Year with the acquisition of an additional 20 business. These included the addition of seven �KODA, six Volkswagen passenger car, two Volkswagen commercial vehicles, two Honda and a Volvo business. As a result, in the UK we are now the largest partner for Volkswagen Group, the largest partner for Volvo and the second largest partner for Honda.

The automotive sector is undergoing a period of evolution, driven by a combination of environmental, technological and social change factors. The progression towards battery electric vehicles over the coming years, for example, presents both challenges and opportunities for automotive retailers.� Along with our manufacturer partners, we continue to believe that a strong retail franchise network will be a crucial component of that development. We also believe that those automotive retailers with both scale and a diverse portfolio will be best placed to succeed in a changing market.

Results

The Group has delivered a strong financial performance in what was a very challenging year for the sector.� The Group achieved record reported revenue of �2.3 billion with a fifth consecutive year of like-for-like revenue growth since IPO, up 2.2% to �2.2 billion.� This revenue growth helped to mitigate the impact of significant margin pressure across all main revenue streams (new, used and aftersales) and the impact of loss-making businesses acquired during the Year.� Given these factors, the Board considers underlying PBT during the Year of �22.1m (2018 restated: �24.7m) to be a strong result.

The Group's balance sheet also remains strong, underpinned by �124.9m of freehold land and buildings.

Dividend

The Group's revised dividend policy adopted last year is that, subject to the Group's trading prospects being satisfactory and taking into account potential investments, dividends will be covered by between 2.5 to 3.5 times underlying earnings and paid in an approximate one-third (interim dividend) and two-thirds (final dividend) split.� The Board believes this policy is appropriate and sustainable, balancing the Group's strong financial position and cash generation with its stated strategy of further investment and growth in its business.

The Board is therefore recommending a final dividend for 2019 of 5.69p per share which, if approved by shareholders at our AGM on 21 May 2020, will be paid on 22 May 2020 to shareholders who are on the Company's register at close of business on 24 April 2020.� If approved, this will result in a full year dividend of 8.54p per share (2018: 8.54p) and dividend cover of 2.7x (2018: 3.2x).

AGM

Our annual general meeting will be held on 21 May 2020 and I look forward to meeting all shareholders who are able to attend.

Outlook

The Board notes the latest forecast by the Society of Motor Manufacturers and Traders ('SMMT') for a further decline in the UK new car market in 2020 of 2.6%. It is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector.� Although we have not seen an impact to date, the Board is monitoring the potential impact of COVID-19 and is considering contingency plans in the event it starts to impact our dealerships.� The Board therefore remains cautious but our order book for the important March plate-change period is encouraging and our outlook for the full Year is unchanged.

The UK motor retail landscape may change over the years and decades ahead. The Group's long standing strategy of partnering with the right brands in the right locations has positioned it well to remain a relevant and important part of that future landscape.

I would like to thank the leadership team, our brand partners, business suppliers, shareholders and colleagues throughout the Group for their continued support during another successful year.

I would also like to thank all of our customers throughout the UK who choose Marshall for their mobility products and services. We continue to put our customers at the heart of everything we do and recognise that our success as a business is dependent on meeting and exceeding their expectations.

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Professor Richard Parry-Jones CBE

Chairman

9 March 2020

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Operating Review

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Overview

I am pleased to announce a strong performance against the backdrop of another challenging Year for the UK automotive retail sector, with a third year of both new and used car market decline.�

The Society of Motor Manufacturers and Traders ("SMMT") reported a total market of 2.31m registrations in 2019, a decline of 2.4% versus 2018. This included a 3.2% decline in registrations to new retail customers and a 1.7% decline in registrations to fleet customers. The used car market also declined by 0.1%.

Despite these continued challenging market conditions, the Group continued to grow its market share both organically and by acquisition. The Group's like-for-like vehicle unit sales outperformed the market in all of its key vehicle segments: total new unit sales, new retail sales, new fleet sales and used vehicle sales.� Aftersales revenue also continued to grow on a like-for-like basis, despite the further reduction in the UK vehicle parc as a result of falling new vehicle sales since 2016.�

Reflecting the difficult market, underlying profit before tax ("PBT") of �22.1m (which included the impact of loss-making acquisitions and the first time adoption of IFRS16) was down by 10.8% (2018 (restated: �24.7m). The Board considers this to be a strong result in the context of the challenging market conditions described above.

I am also pleased that the Group completed a number of strategic acquisitions in the Year, adding 20 new businesses through 8 transactions or start-ups, demonstrating the Group's commitment to grow scale with our existing brand partners in new geographical territories.� Whilst these acquisitions will be earnings dilutive in the short-term, we are confident in their medium to long-term potential as we work to improve their operational performance.� The Group has a track-record of acquiring underperforming business and creating long term value for its shareholders through its well-established business model and scalable platform. We therefore believe these acquisitions will be excellent additions to the Group.

Financial Highlights of the Year:

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Strategic and Operational Highlights of the Year;

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Strategy

The Group's strategic vision to be the UK's premier automotive group remains central to everything we do. The five strategic pillars, of equal importance, which underpin that vision are: class leading returns; putting our customers first; delivering retailing excellence for the benefit of our customers; being people-centric by focusing on employee engagement; and pursuing strategic growth both organically and through targeted acquisitions in line with the Group's strategy.

This strategy has enabled a transformation of the Group since its IPO in 2015.� Selective, value enhancing acquisitions, combined with strategic portfolio management and organic growth, have led to annual revenues more than doubling to �2.3bn with continuing underlying profit before tax growing at a faster rate to �22.1m.� Since IPO, we have invested more than �100m in our property portfolio and, with the final dividend for 2019 announced today, will have returned nearly �25m to shareholders through dividends. This has been achieved with a constant focus on our customers, excellent relationships with our business partners and, as demonstrated by our consistent ranking as one of the UK's Best Workplaces, our colleagues.

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The Group's strong track record of delivery against its strategy since IPO has provided a solid platform for further future growth.

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Class Leading Returns�

The Group continues to focus on organic growth through market outperformance, demonstrated by our strong volume performance in the Year.� In addition, the Group continues to drive sales of used vehicles and aftersales, thereby mitigating the effects of a decline in the new vehicle market.� This resulted in a 6.1% like-for-like increase in used unit sales and a 3.2% like-for-like increase in aftersales revenue, whilst also containing like-for-like expense increase to 1.5% despite continued cost headwinds.�

In recognition of our market leading performance in the first half of the Year, the Group was awarded the Outstanding Achievement Award by Car Dealer Magazine.� In addition, the Group was runner up for the Best Dealer Group Award at the 2020 Automotive Management Awards.

The Group's strategy of building a balanced brand portfolio with the right brand partners in attractive geographic locations, allows for the cyclical nature of individual brands as well as regional variations in performance resulting from local economic issues.

Continued growth with our brand partners will enable the Group to access additional benefits of scale across a number of areas of the business, supported by the use of the Marshall brand across the entire portfolio.� The Group has a robust platform which is scalable for further future growth and is well placed to take advantage of a consolidating market.� The Board anticipates further rationalisation of manufacturer dealer networks over the coming years and given the Group's strong balance sheet and manufacturer relationships, is confident of continued future acquisitive growth.

Customer First

Customer satisfaction is an important element of the Group's strategy, driving repeat business and loyalty to the Marshall brand.

In 2019, 45.2% (2018: 45.6%) of the 72,530 customers surveyed who visited our showrooms indicated that they were either previous customers or were recommended to us. We believe this to be strong for the sector.

Our in-house developed management information system (Phoenix 2) provides daily customer satisfaction information by dealership which allows management to proactively respond to customer needs.

The Group centrally monitors customer satisfaction for both sales and aftersales across all locations and brand partners on a weekly basis. This ensures we remain focused on delivering on our brand partners' key measures whilst ensuring consistency of internal performance monitoring.

The Group's continued expansion and scale provides customers with a wider choice of location, stock and products, increasing both customer satisfaction and sales.

Compliance

The Group operates in a regulated environment and takes its commitment to compliance, and the benefit it brings our customers, seriously. �The Group recognises that compliance is an ongoing process and adopts a culture of continual improvement focused on training and awareness, system and process development, compliance monitoring and internal audit. Key compliance areas for the Group include environmental, health and safety, data protection and financial services. The Group has established compliance committees attended by cross functional colleagues from both compliance and internal audit and from operations and members of the senior management team. �

In April 2019, the Financial Conduct Authority ('FCA') published the findings of its thematic review of general insurance distributions chains and in October 2019 it published its final findings following its review of the motor finance sector.� As part of its findings, the FCA has proposed a number of changes, including to commission arrangements between finance and insurance providers and credit brokers and insurance intermediaries such as the Group. The Group is supportive of the changes proposed by the FCA and the benefits they will bring to our customers and is working with its finance and insurance provider partners to implement them.

Retailing Excellence

The Group's use of the 'Marshall' brand consistently across all of its franchises is unique amongst the large UK multi-brand motor retail groups. As the Group grows and leverages its existing platform, new businesses are re-branded and quickly benefit from wider recognition of the Marshall brand.

The Group believes there are a number of benefits of this consistent brand:�

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As the Group grows, we intend to continue national marketing, where economic, in order to leverage the reputation and recognition of the Marshall brand on a national scale as part of our omni-channel marketing strategy.

Another key differentiator for the Group in achieving retailing excellence is a focus on technology and data to drive performance.� Phoenix 2, the Group's bespoke MI system, supports local decision-making combined with central oversight to ensure consistency of performance and a focus on what makes a difference.� One of the key benefits of Phoenix 2 is the integration of third party external used car pricing and transaction data.� This enables visibility of pricing comparison to the market, including regional and market desirability variations, all of which leads to greater customer transparency and optimal pricing.� The Group continues to see Phoenix 2 as one of the key drivers behind its market outperformance.

Targeted use of online channels and social media continue to be utilised to increase lead conversion, Marshall is viewed as an industry leader in this area as evidenced by two further awards in the Year; "Best Use of Social Media", Automotive Management Awards and winner of the Social Media category at the Motor Trader Awards.

During 2019, the Group began development work on a new website which will contain a number of new customer-centric features including being fully transactional.� The new website will go live in the first half of 2020. The Group believes it is well-placed grow market share further given its unique investment in its online platform, unique use of data through Phoenix 2 and ability to leverage the Marshall brand through its national marketing and social media channels.

People Centric

For the tenth consecutive year, the Group has been recognised by the Great Place to Work Institute as a 'great place to work' based on colleagues surveyed during 2019. We are particularly pleased that the proportion of colleagues stating that Marshall is a 'great place to work' has increased for the tenth consecutive year.� At 80%, this is significantly ahead of the UK average score of 52% and well ahead of the 65% score required to be considered a Great Place to Work.� We also enjoyed an exceptionally high participation rate of 84%, which compares to 70% nationally, and demonstrates the high degree of trust and engagement in the organisation. This result is also particularly pleasing given the number of new businesses the Group has integrated over recent years.

Based on the results of the 2019 survey, the Group was ranked 11th in the super large category in the UK which included employers such as Admiral, Cisco, Deloitte, EY, Hilton, and Mars. 2019 was the fifth year running that the Group was ranked amongst the best employers in the UK, as a result of which the Group received a Laureate award which has only been awarded to a handful of companies in the history of the Great Place to Work Institute.

The Group continues to be committed to diversity, both in Marshall and the wider industry. The Group is a member of the Automotive 30% Club, the aim of which is to work towards having women in at least 30% of management positions in the sector by 2030. The Group has made great strides towards this target with over 24% of our management positions in our like-for-like businesses filled by females. This is up from 15% in 2015. In recognition of this commitment, I am proud to have been asked to become a patron of the Automotive 30% Club.

The Group announced a number of new strategic people initiatives during the Year and we are pleased to report we have seen significant progress in these areas:

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The Group is proud of its longstanding commitment to offering apprenticeship programmes.� In 2020, the Group celebrates 100 years of offering apprenticeship programmes and we currently employ 115 apprentices in the Group.� The Group also partners with Drive My Career, a platform which connects prospective apprentices with career opportunities.� During the Year, the Group took part in the Drive My Career Apprentice Takeover which was run throughout National Apprentice Week.� Drive My Career members were encouraged to promote across their social media channels the most successful stories about their apprentices or hand over their social media accounts directly to their apprentices.� We were delighted that one of our second year apprentice technicians was the overall winner of the event

In keeping with our social agenda and aim to support local communities, we have also implemented a new work experience programme to attract new talent for the future alongside our current apprentice programme.

Finally, the Group is pleased that during the year it also announced the appointed of Jo Moxon as Human Resources Director.� Jo has extensive experience across a diverse range of industries including, financial services, property, online and retail. More latterly, Jo was Group Human Resources Director for Pendragon PLC.� Her experience in these sectors will be invaluable to the Group as we continue with our current growth strategy. I would also like to take this opportunity to thank Helen Burrows for her contribution to the success of the Group since 2013. We wish her well for the future.

Strategic Growth

As demonstrated since IPO, the Group's strategy is to grow scale with existing brand partners in new geographical territories. There continues to be considerable consolidation in the UK motor retail market and the Group, with its scalable platform, is very well positioned to take advantage of the opportunities arising given its strong balance sheet and excellent manufacturer relationships. The Group continually seeks to maximise return on capital employed and closely monitors and reviews its portfolio to ensure optimal returns.

Acquisitions and Disposals

During the Year, 20 new business units were added to our portfolio through eight acquisitions or start-ups.� We are pleased that, in line with our historical practice, all of these transactions were off-market and completed with the full support of our brand partners.

The Group completed five trade and asset acquisitions during the Year as follows:

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During 2019 the Group also announced the following portfolio additions:

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Following a review of the Group's portfolio, the Board took the decision to close its Halesworth Land Rover used car centre. During 2016 the Group relocated the Halesworth Land Rover franchise to a state of the art 'dual arch' site in Ipswich.� The Board has also, with the agreement of the brand partner, taken the decision to exit the Maserati franchise in Peterborough. The business will continue trading until June 2020 to ensure a smooth transition.

The Group now consists of 117 franchises representing 24 brand partners trading in 28 counties nationwide. In addition, the Group operates six trade parts specialists, two used car centres, six standalone body shops and a pre-delivery inspection (PDI) centre. The Group operates a balanced portfolio of volume, premium and alternate premium brands including all of the top five premium brands.

The Group's scale and diversified spread of representation helps mitigate the effect of the cyclical nature of individual brand performance. The Group's strategy is to develop strong relationships with our brand partners, targeting a 5% share or more of UK sales for each brand partner.� We now exceed that threshold with nine of our key brand partners and our strategy is to grow that scale further.

Investment in New Retail Locations and Major Developments

The Group continues to invest in its retail sites and has invested a total of �19.4m into its asset base during the Year. Investment in relocations and major rebuilds included:

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In addition to large scale redevelopments, the Group continues to invest in upgrading existing businesses to enhance the customer experience, satisfy brand requirements, electrification and increase sales and aftersales capacities.�

Since IPO in 2015, the Group has invested over �100m into its estate including corporate identity upgrades, freehold and long-leasehold acquisitions and ongoing maintenance capital expenditure.� Following this unprecedented level of investment, the Group expects to see its free cashflow benefit from 2021.

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Market and Business Update

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2019 proved to be a challenging year for new vehicle sales in the UK.� The SMMT reported a third�year of decline in 2019 with the market down 14.2% from its peak in 2016.

Total new vehicle registrations of 2.31m in the Year represented a decline of 2.4% versus 2018. Registrations of new vehicles to retail customers continued to be impacted by general economic uncertainty, weaker sterling and the negative impact of Brexit and were down 3.2%.� Fleet registrations were more encouraging, with the decline contained to 1.7%. Purchasing decisions continue to be influenced by the lack of clarity on the future tax implications of diesel vehicles.� Fleet registrations also benefitted from a pull forward of demand towards the end of 2019 as OEMs incentivised the sales of higher Co2 emitting vehicles as a result of the introduction of the new Clean Air For Europe programme ("CAFE") which came into effect on the 1 January 2020.

Against this challenging market backdrop, during the Year, the Group sold a total of 47,303 new vehicles, an increase of 2.4% versus 2018.� Despite the market decline, the Group's like-for-like new unit sales increased by 0.3%.

Total sales of new vehicles to retail customers increased by 1.3% in the Year, with like-for-like sales outperforming the market with a decline of 2.2%.

Total sales of new vehicles to fleet customers increased by 4.1% in the Year, with like-for-like sales also outperforming the market with an increase of 4.5%.

Overall new vehicle margins improved versus 2018, up 32bps to 7.4%.� Margins declined in the second half of the Year, reflecting a combination of reduced manufacturer support for vehicles affected by changes introduced by the Worldwide Light Vehicle Test Procedure ('WLTP') in 2018 and an increased proportion of lower margin fleet sales.

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Used Vehicles

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The SMMT reported further used vehicle market decline of 0.1% in 2019.� The Group is therefore pleased that with its continued focus on sales of used vehicles, we are able to report an increase in used unit sales of 8.5%, with like-for-like sales increasing by 6.1%.

The Group's strategy on used car sales is to utilise capacity within the current Group portfolio to maximise throughput on its existing footprint, therefore mitigating the associated investment in additional sites and resource. We believe this approach reinforces the resilience of the franchise model.� As the Group continues to grow, the combination of increased used vehicle stock availability, the ability to market that stock on our unified Marshall.co.uk website and the overall awareness of the Marshall brand, assists all franchises to leverage the benefits of our group scale.

The Group continually looks for opportunities to increase the number of used vehicles sold including through:

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There was further growth in the number of used cars purchased from the Group using PCP products which have now become a key feature of the 3-6 year old used car market in which the Group primarily operates. 63% of the Group's used vehicles which were purchased on finance were purchased using a PCP (2018: 63%). As in the new car market, PCPs create a defined point of renewal/purchase/replacement and we actively manage the renewal process to ensure, where possible, customers are retained by the Group.

We believe the recent popularity of used car PCPs presents the Group with future opportunities for the sale of older used cars given the event-driven nature of a PCP.

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Aftersales

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Aftersales remains a key strategic focus of the Group, providing future revenue and profit assurance during periods of a more challenging economic environment. In addition to our retail centre based aftersales facilities, the Group operates six standalone bodyshops, six trade parts centres and one PDI centre.

Aftersales contributed 43.9% of total retail gross profit during the Year and therefore makes a significant financial contribution to the Group which is important in the context of a more cyclical new car market.

Our strong aftersales performance in recent years continued during the Year, with total revenue growth of 4.9% (3.2% like-for-like) partially offsetting margin pressure (down 127bps) due to an increased proportion of parts sales compared to servicing revenue. Overall like-for-like gross profit from aftersales during the Year increased by �0.4m.

In order to drive customer retention, we offer service plans to customers of both new and used vehicles which allow customers to plan and budget for service costs. These plans are often included in the monthly payment of a vehicle and are therefore very convenient for customers.

As most new and used cars purchased with PCPs also come with service plans, this has helped to increase our segment 2 and segment 3 penetration, an area of the market that's historically been dominated by the independent sector.

Industry Strategic Landscape

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The automotive sector is undergoing an exciting period of evolution, driven by a combination of technology, environmental and social change factors.� The Group's strategy anticipates the impact that these macro factors will have for automotive retailers in the future.

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Macro change factors

Climate change and the response of international governments to these issues, in combination with technological developments by vehicle manufacturers, will have a significant impact on the automotive sector over the coming years.

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The global response to the issue of climate change, including the Paris Agreement target for carbon neutrality by 2050, has instigated a shift from traditional internal combustion engines ('ICE') to battery electric vehicles ('BEVs').� That process is already well underway, driven by regulatory interventions such as the Clean Air for Europe programme ('CAFE'). Under the CAFE regulations, punitive financial penalties will be imposed from 2020 on vehicles manufacturers which do not achieve significantly reduced average Co2 emissions.� In addition, national governments, including the UK, are setting their own targets for the cessation of sales of new ICE vehicles (including hybrids) over the next 15-20 years.

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As a result, all major vehicle manufacturers are investing heavily in the development and launch of hybrids and BEVs.� The substantial investment requirements of these developments has already led to significant collaboration and consolidation between vehicle manufacturers, including the acquisition of Vauxhall Opel by Groupe PSA, the merger of Fiat Chrysler Automobiles and Groupe PSA and the alliance between Renault, Nissan and Mitsubishi.

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Other technological developments will also have an increasing influence on the automotive sector in the future. Connected car capabilities have existed for a number of years and have facilitated a variety of new sharing and subscription models of vehicle use.� In addition, autonomous technologies, whilst still many years away in terms of the potential for fully autonomous vehicles, have introduced a range of comfort and safety features to modern motor vehicles.�

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Impact and opportunities automotive retailers

The macro change factors outlined above present a number of potential challenges and opportunities for motor retailers in the future.�

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The increasing proportion of BEVs in the vehicle parc is likely to impact traditional aftersales activities, including the sale of parts and oil products.� However, these new technologies, and the associated expertise and facilities required to service them, can also offer opportunities for certain franchised dealers. Close partnerships with vehicle manufacturers and the ability to invest in infrastructure required to service BEVs, differentiates their franchised dealers' expertise and service capabilities from those of the independent aftersales sector.�

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Connected car technology will provide further opportunities for manufacturers, through their franchised dealer networks, to improve retention rates for older vehicles within their aftersales networks.�

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Ancillary revenue streams including digital services, the sale of charging points and tyres (given increased replacement cycles for BEVs) are also areas of opportunity for certain retailers able and willing to invest.

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Finally, further consolidation of vehicle manufacturers and the anticipated reduction of retail networks by up to c25% over the coming years should assist in higher throughput and profitability per retail location.

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Marshall Strategy�

The Board believes that the Group's long standing strategy of partnering with the rights brands in the right locations has positioned it well to benefit from the changes ahead.��

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The Group's key manufacturer partners are strong and are taking leading positions in the development of future mobility technologies and the Group will benefit from the continued success of their brands.�

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The Board also believes that the Group's portfolio of dealerships are in the right locations and markets to benefit from the expected rationalisation and consolidation of dealer networks in the UK.�

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Finally, and importantly, the Group's growing scale and depth of relationships with its manufacturer partners will help to ensure it remains a relevant and important part of their future retail strategies.

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Market Outlook

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As reported above, 2019 was a challenging year for the new vehicle market with registrations down 2.4% from 2018 and down 14.2% from the market peak of 2.69m registrations in 2016.

The current SMMT forecast for 2020 predicts a further new car market decline of 2.6% to 2.25m. Further declines are expected in diesel market share, with growth in registrations of alternative fuel vehicle registrations expected to continue.

The Board is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector.� We are, however, confident in our brand partners' commitment to the UK automotive retail market (the second largest in Europe).

Although we have not seen an impact to date, the Board is monitoring the potential impact of COVID-19 and is considering contingency plans in the event it starts to impact our dealerships.�

Summary

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The Group continues to perform well despite a sustained period of market decline.� Despite a declining market, the Group has grown market share by outperforming in all of its key segments and carefully managing both margins and costs.

We are particularly pleased with our used vehicle performance and growth in aftersales revenues. These revenue streams provide resilience to the business during more challenging periods of the cyclical new car market.

The Group has demonstrated the benefits of its strong balance sheet and has taken advantage of continued market consolidation in the Year.� We are pleased to welcome 20 new business and over 400 new colleagues to the Marshall family, demonstrating our confidence and belief in both the industry and our brand partners.

Finally, on behalf of the Board, I would like to thank our colleagues and our brand and business partners for their hard work and support during 2019. I look forward to continuing to work together in 2020.

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Daksh Gupta

Chief Executive Officer

9 March 2020

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Financial Review

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Overview

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I am pleased to present the Group's 2019 annual results.

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2019 has been a year of exciting growth. Despite the ongoing economic uncertainty, we continued to outperform the new and used car markets with continued growth of like-for-like unit sales of both new and used vehicles, with a particularly strong performance from our fleet business.� In line with our strategy of partnering with the right brands and in the right markets, we acquired a number of underperforming businesses in the Year.� Whilst these acquisitions were earnings dilutive in 2019 and are expected to be earnings dilutive in 2020 and 2021, we are confident in their medium and long term potential.� Losses from the acquired businesses are reflected in our 2019 results which are presented below.

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As I stated last year, we were in a strong position to capitalise on acquisition opportunities as they arose. Including freehold property associated with acquired businesses, we invested over �30m in the Year on acquisition activity which included 6 Volkswagen, 7 SKODA, 2 Honda, 1 Volvo and 1 LEVC franchise. As a result of this exciting year of acquisitive growth, we have seen our number of sites increase by almost 20%.� We also continued to invest in the business and spent �15.2m on capital expenditure, excluding freehold property acquired as part of business acquisitions. This also included the exciting upgrade of Audi Wimbledon, the first virtual reality showroom of its kind in the UK and which opened in February 2020. We also completed the development of our new multi-million-pound Mercedes-Benz Commercial Vehicles site in Nursling, Southampton.

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We continued to delight our customers and grow market share and, with the benefit of our industry-leading software, we are able to continue to go from strength to strength. This is in a large part thanks to our dedicated team of people who go about their day to day activities, challenging everything they can and delivering strong customer outcomes. All this is done whilst controlling our cost base, demonstrated by the fact that our like-for-like expenses were up only 1.5% despite ongoing cost headwinds, or 1.8% excluding the impact of a lease disposal.

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The Group achieved revenue growth during the Year on both reported and like-for-like basis.� We did experience margin pressure as a result of the market decline and we saw strong headwinds in our cost base, both of which were highlighted in our annual report last year.� When combined with the impact of loss making acquisitions referred to above, these have led to an overall decline in the Group's underlying continuing PBT.

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Despite the continued investment in our existing portfolio and the number of acquisitions we made, along with the working capital increase from a growing business, especially around fleet, I am pleased to report that we continue to optimise our working capital and Adjusted Net Debt �at the end of the Year was �30.6m (2018: �5.1m), giving a healthy leverage of less than 1x EBITDA (pre IFRS16).� Our balance sheet continues to strengthen with Net Assets of �202.3m (2018 restated: �194.0m) and is underpinned by our strong freehold and long leasehold property portfolio.

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Notwithstanding the SMMT forecast for further new car market decline in 2020, our platform leaves us in an excellent position to continue our outperformance.

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Reported Financial Performance

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The Group adopted IFRS 16 Leases effective 1 January 2019, using the full retrospective approach. Further details of this can be found in note 2 of this report .�

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Despite the site closures effected in November 2018, reported revenue increased by 4.1% during the Year to �2,276.1m.� This strong performance was achieved as a result of both organic growth and acquisitions made during 2019.

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The Group's operating profit, on a continuing underlying basis was �32.0m compared to �34.3m in 2018. Continuing underlying PBT in the Year was �22.1m compared to �24.7m in 2018. This decline was driven by a combination of anticipated margin pressure, cost headwinds and the impact of loss-making acquisitions made during the Year.

Our reported PBT of �19.6m (2018 restated: �18.0m) included one-off non-underlying items of �2.4m (2018: �6.7m) as set out in note 5 of this report.

Analysis of Reported Revenue and Gross Profit

The segmental mix on a reported basis is shown in the table below, with like-for-like analysis covered later in this report.� �The table below shows a broadly similar mix versus 2018.

Twelve months ended 31 December 2019

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Twelve months ended 31 December 2018

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* mix calculation excludes Internal / Other Sales

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Finance Costs

Net finance costs increased by �0.3m in the Year to �9.9m (2018 restated: �9.6m) reflecting the costs of financing higher average stock levels as a result of the growth in the business during the Year.

Generating Sustainable Shareholder Value

Profit from continuing operations before tax and non-underlying items was �22.1m (2018 restated: �24.7m), �19.6m after non underlying (2018 restated: �18.0m). The total reported effective tax rate was 20.7% (18.9% on a continuing underlying basis).� Profit from continuing operations after tax was �15.6m (2018 restated: �13.4m), resulting in a reported basic continuing earnings per share of 19.9p, an increase of 15.7% on the prior year.

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The Group's strategy of organic growth incorporating cost control and sound working capital management, combined with strategic acquisitions, provides a platform for improving shareholder returns.

Non-Underlying Items

The Income Statement includes a separate presentation of non-underlying items to assist a consistent understanding of the performance of the Group year on year.

Non-underlying items in the Year comprise the following:

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Acquisition costs include professional advisory costs and initial integration costs for the new dealerships added to the Group during the Year.

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Following a review of the Group's dealerships, a decision was made to close one site, with a further site scheduled for closure during the year ended 31 December 2020. The costs, included in restructuring costs in non-underlying items, represent redundancy costs, asset impairment, and unavoidable costs associated with contracts which relate to these sites.

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An independent valuation of the Group's properties was obtained during the Year which indicated an increase in value of the investment properties held of �0.6m, the benefit of which is taken through non underlying. Whilst non-investment properties also had a substantial gain, no accounting adjustment is made for these.

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Like-for-Like Financial Performance

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Basis of Comparatives

To enable effective comparison of the Group's year-on-year performance, underlying operating profit is shown on a like-for-like basis.� The full definition of an Alternative Performance Measure can be found in Note 2 of this report.

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Like-for-Like Segmental Analysis

Twelve months ended 31 December 2019

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Twelve months ended 31 December 2018

* mix calculation excludes Internal / Other Sales

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Like-for-like Revenue

�2,209.6m (up 2.2%)

(2018: �2,161.5m)

Like-for-like revenue in the Year was �2,209.6m (2018: �2,161.5m), an increase of 2.2% and a continuation of our track record of like-for-like revenue growth since IPO.� This result is particularly pleasing in a year which saw the new car market decline by 2.4% and the used car market decline by 0.1%.

This year-on-year improvement was driven by a strong used car performance with unit sales up by 6.1% and associated revenues, at �951.0m (2018: �903.4m), up by 5.3%.� This increase was against the backdrop of a total used car market which declined by 0.1%.

Aftersales revenue increased by 3.2% to �250.1m (2018: �242.3m) with both service and parts revenue increasing in the year and parts mix of aftersales increasing to 51.6% (2018: 50.7%)

Revenue relating to the sales of new vehicles was marginally down (0.3%) in the Year at �1,056.7m (2018: �1,060.2m), on a unit sales increase of 0.3%, reflecting a decline in the turnover per unit largely due to an increased mix of fleet sales.� This performance is particularly pleasing when compared to an overall market decline of ?2.4% in unit sales.

During periods of cyclical market decline, a strong used and aftersales revenue growth demonstrates the resilience of the business model.� It is, therefore, pleasing that our focus on these areas has allowed the business to continue to drive revenue growth in the Year.

Like-for-like Gross Profit

�252.3m (up 0.8%)

(2018: �250.4m)

As anticipated, the Group was impacted by margin pressure during the Year.� At 11.4%, gross margin percentage was slightly down (17bps) from the prior Year (2018: 11.6%).� Despite this margin decline, absolute like-for-like gross profit increased 0.8% to �252.3m (2018: �250.4m) as a result of the strong revenue growth referred to above.

New vehicle margins at 7.4% were up versus 2018 by 27bps (2018: 7.1%), a recovery following the well documented challenges experienced in 2018 relating to Worldwide Harmonised Light Vehicle Test Procedure ("WLTP") and the availability of petrol vehicle alternatives.

Our used vehicle margin at 6.7% was down by 47bps versus 2018 (2018: 7.1%), a trend which was highlighted at the half year caused by market residual value declines experienced in Q2 2019.� These pressures eased in the second half of the Year, but not to an extent to offset the declines experienced in the first half of the Year.

Like-for-like aftersales margin was 44.0% compared to 45.6% last year. This was as a result of an increased proportion of lower margin parts sales referred to above, combined with an increase in aftersales operating costs.

Like-for-like Operating Expenses

�219.3m (up 1.5%)

(2018 restated: �215.9m)

Although cost pressures continue to impact the overall sector, our like-for-like expenses, at �219.3m, were contained to 1.5%, or 1.8% excluding the benefit of a lease disposal.� This was an excellent performance given the significant cost headwinds experienced, in particular employee and property related costs. The Group continued to place focus on all discretionary costs, particularly in relation to marketing effectiveness, use of temporary labour and costs relating to vehicle stockholding.

Like-for-like Operating Profit

�33.1m (down 4.1%)

(2018 restated: �34.5m)

Given the factors referred to above in relation to margin pressures and cost headwinds, our like-for-like operating profit declined by �1.4m to �33.1m, a solid result given the challenges the sector is facing.� Overall operating margin, at 1.5%, was down 10bps versus last Year (2018 restated: 1.6%).

Shareholder Returns

Full year dividend per share

8.54p (maintained)

(2018: 8.54p)

In March 2019, the Group announced a revised dividend policy whereby dividends would be covered between 2.5x to 3.5x underlying earnings per share.� The Board believes this policy is appropriate and sustainable, balancing the Group's strong financial position and cash generation with its stated strategy of further investment and growth in its business.� The Board is recommending a final dividend for 2019 of 5.69p which would give a full year dividend of 8.54p, flat versus last year (2018: 8.54p) and cover of 2.68x.

During the Year, total dividends of �7.2m were paid to shareholders, an increase of �2.2m versus last year (2018: 5.0m).

ROCE

Return on capital employed (ROCE) for the Year was 10.9% (2018 restated: 12.8%). ROCE is calculated as underlying profit before tax divided by total equity.

This movement is a reflection of the decline in continuing underlying PBT which was, in part, impacted by loss making acquisitions which management expect to show significant improvement in the medium term.

Reported Balance Sheet

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Goodwill and Other Intangible Assets

Following the completion of a number of acquisitions during the Year, additions to goodwill and other intangible assets total �7.5m; of this, �5.0m represents the assessment of the value of the acquired dealership franchise agreement with the vehicle manufacturer. These franchise agreement intangible assets are deemed to have an indefinite life and so no amortisation is charged to the income statement.

Consistent with the requirements of accounting standards, the Group has carried out an assessment of the carrying value of goodwill and other intangible assets. This assessment, which is based upon the Group's annual budget and medium-term plan, has not indicated any impairment of these assets (see note 10).

Acquisitions

Including the purchase of freehold property relating to Northampton �KODA and Derby Volvo, the Group invested �31.6m (2018: Nil) acquiring businesses during the Year.� Although the majority of these businesses were loss making at the point of acquisition, the Group views them as having strong potential for the future, further growing representation with a number of our key brand partners.�

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As a result of these acquisitions, the Group has added �6.6m of intangible assets, �5.0m relating to franchise agreements and �1.5m for goodwill.� The remaining �25m related to property plant and equipment, right of use assets and the associated lease liabilities along with inventory and other working capital related items.

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These acquisitions were funded through existing resources, utilising our unsecured �120m revolving credit facility with all relevant inventory placed onto our current stock funding lines.

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Freehold Land and Building

The Group invested a total of �15.2m (excluding the freehold property acquired in relation to business acquisitions) in capital expenditure during the Year.� This amount included major redevelopments in Nursling Mercedes Benz Commercial Vehicles, Wimbledon Audi, Lincoln Jaguar Land Rover, Lincoln Nissan and Grimsby BMW.

This investment brings the net book value of the Group's property, plant and equipment at 31 December 2019 to �159.3m (2018 restated: �148.2m), of which �123.2m related to freehold land and buildings (2018 restated: �108.2m).

Since IPO in 2015, the Group has invested over �100m in to its estate including corporate identity upgrades, freehold and long-leasehold acquisition and ongoing maintenance capital expenditure.� Following this unprecedented level of investment, the Group expects to see its free cashflow benefit from 2021.

During the Year the Group instructed external property advisors, BNP Paribas, to conduct a revaluation exercise of its freehold properties.� I am pleased to report that this showed our freehold estate (excluding investment properties) has been market valued at c�15m above book value.� This difference, in-line with our accounting policies, has not been recognised in our balance sheet.

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Strong Working Capital Management

A disciplined approach to working capital remains a key focus for the Group.� In the Year, excluding the settlement of the defined benefit pension scheme, the Group generated a cash inflow of �7.5m from working capital.� Of this amount c�15m related to stock funding on vehicles acquired as part of the acquisitions referred to above.� The remaining increase in working capital related to increased levels of fleet debt at the year end following strong fleet deliveries at the end of the Year.

Inventory, net of provisions, at �470.7m increased by 22.6% versus 2018, largely due to acquisitions with the like-for-like inventory increasing 9.3%. �443.7m (94.2%) of this inventory was covered by vehicle financing arrangements which is a marginal decline from 2018 (96.6%) mainly due to timings of year end deliveries and increased fleet orders.

An increase in trade and other receivables reflected the increased scale of the Group following acquisitions and start-ups as well as the increased level of fleet debt referred to above.

Overall, the Group's reported net assets at 31 December 2019 were �202.3m (2018 restated: �194.0m), which equates to �2.59 per share (2018 restated: �2.50).

Cash Conversion

The Group remains cash generative with cash flow from operations during the Year of �53.3m. This enabled us to maintain our investment programme supporting both organic growth and facilitate the acquisition of new dealerships when appropriate opportunities arose. Operating cash flow conversion (being total cash flow generated by operations divided by operating profit from continuing operations before interest, tax, depreciation, amortisation and depreciation on right-of-use assets) is a key metric for managing operational performance.

During the Year, total cash inflows from operations of �53.3m (2018 restated: �47.3m) represented a cash conversion of 108% (2018: restated: 86%).

The Group's cash conversion remains strong and is supported by a focus on the management of working capital, appropriate stock holding policies and the utilisation of stock funding facilities.

Net Debt and Facilities (excluding IFRS16)

At 31 December 2019, the Group's adjusted net debt was �30.6m (2018: �5.1m).

The Group's current finance facilities include a �120m revolving credit facility which is committed until May 2021. The interest rate on this facility is LIBOR plus 120bps to 200bps dependent upon the ratio of Net Debt (excluding IFRS16) to EBITDA. The Group is at an advanced stage of discussions with its lenders to enter into a new RCF.

Net debt including IFRS 16 lease liabilities at 31 December 2019 was �138.6m (2018 restated: �92.8m).

Tax

The Group manages all taxes in line with its published Tax Strategy. This focuses on ensuring that tax compliance risks are managed and therefore the Group pays the appropriate amount of tax. The Group's Tax Strategy is reviewed at least annually and is approved by the Board.

The Group's tax charge before non-underlying items for the Year was �4.2m (2018 restated: �4.3m), an effective tax rate of 18.9% (2018 restated: 17.3%). The effective tax rate for 2018 was reduced by the benefit of retrospective capital allowance claims, excluding the impact of these would result in an effective tax rate for 2018 of 21.6%.

The Group's effective tax rate including non-underlying items was 20.7% (2018 restated: 25.9%).

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IFRS 16

The Group adopted IFRS 16 Leases effective 1 January 2019 using the full retrospective approach under which the standard is applied as though it had been in place at the start date of the Group's current lease portfolio. The comparative results for the Year ended 31 December 2018 are therefore restated. Further details can be found in note 3 to the Consolidated Financial Statements.

The Group balance sheet at 31 December 2019 includes additional assets of �98.6m (being principally right of use assets) and additional liabilities of �105.6m (being principally lease liabilities). Further detail can be found in note 2 of this report.

Due to the profile of the Group's lease portfolio, the adoption of the standard is marginally earnings diluting in the early years.

While this standard is a substantial change for the presentation of the balance sheet and the income statement, it has no impact on the underlying cash flows and therefore economic performance of the Group.

Pensions

As previously reported, during the Year ended 31 December 2018, the Group ceased to be a participating employer in the Marshall Group Executive Plan (a defined benefit pension scheme).� A provision for the Group's residual liability of �5.6m as at 31 December 2018 and was paid to the scheme in February 2019.

The Group has no further commitments to defined benefit pension schemes, with all remaining Group pension plans being on a defined contribution basis.

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Richard Blumberger

Chief Financial Officer

9 March 2020

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Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

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The comparative figures have been restated on adoption of IFRS 16 Leases. Full details of the impact of adoption are included in Note 2 'Changes in Accounting Policies and Disclosures'.
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Consolidated Balance Sheet

At 31 December 2019

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