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Putting our customersabove all else.

Placing andAdmissionto AIM

Marshall Motor Holdings

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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt about the contents of this document or the action you should take, you should immediately consultyour stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the FinancialServices and Markets Act 2000 (“FSMA”) who specialises in advising on the acquisition of shares and other securities.

This document comprises an admission document prepared in accordance with the rules of the AIM Market of the LondonStock Exchange plc (“AIM”). Application has been made for the whole of the ordinary share capital of Marshall Motor Holdingsplc (“Company”) to be admitted to trading on AIM. It is expected that such application to AIM will become effective and thatdealings will commence on 2 April 2015. The ordinary share capital of the Company is not dealt on any other recognisedinvestment exchange and no application has been or is being made for any such admission to any such exchange.

This document does not constitute a prospectus within the meaning of section 85 of FSMA, has not been drawn up inaccordance with the Prospectus Rules published by the Financial Conduct Authority (“FCA”) and a copy of this documenthas not been, and will not be, filed or reviewed by the United Kingdom Listing Authority or any other competent authority.

AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tendsto be attached than to larger or more established companies. AIM securities are not admitted to the Official Listof the United Kingdom Listing Authority.

A prospective investor should be aware of the potential risks in investing in such companies and should makethe decision to invest only after careful consideration and, if appropriate, consultation with an independentfinancial adviser.

Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. Thenominated adviser is required to make a declaration to the London Stock Exchange on admission in the form setout in Schedule Two to the AIM Rules for Nominated Advisers.

The London Stock Exchange has not itself examined or approved the contents of this document.

The whole of the text of this document should be read. The attention of investors is drawn especially to the Risk Factors setout in Part II of this document. All statements regarding the Company’s business, financial position and prospects should beviewed in light of these risk factors.

MARSHALL MOTOR HOLDINGS PLC(Incorporated and registered in England and Wales with registered number 02051461)

Placing of 26,845,638 new Ordinary Shares at 149 pence per shareand

Admission to trading on AIM

NOMINATED ADVISER AND BROKER

Investec Bank plc

Share Capital immediately following the Placing and on Admission

Issued and fully paid

Amount NumberOrdinary Shares of 64 pence each £49,431,208.32 77,236,263

The directors of the Company whose names appear on page 5 of this Admission Document accept responsibility bothindividually and collectively for the information contained in this document. Those directors have taken all reasonable care toensure that the information contained in this document is, to the best of their knowledge, in accordance with the facts andcontains no omission likely to affect its import.

Upon Admission, the Placing Shares will, following allotment, rank pari passu in all respects with the Ordinary Shares includingthe right to receive all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission.

This document does not constitute an offer to issue or sell or the solicitation of an offer to buy securities in any jurisdiction inwhich such an offer or solicitation is unlawful. The Ordinary Shares have not and will not be registered under the United StatesSecurities Act of 1933, as amended (the “Securities Act”) or under the applicable state securities laws of any jurisdiction inthe United States or under the applicable laws of Canada, Japan, the Republic of Ireland, Australia or South Africa (“ProhibitedTerritories”). Accordingly, subject to certain exceptions, Ordinary Shares may not be offered or sold or subscribed, directly orindirectly, within the Prohibited Territories or to or by any US Person (as such term is defined in Regulation S promulgated underthe Securities Act) or any national, resident or citizen of the other Prohibited Territories or any corporation, partnership or other

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entity created or organised under the laws thereof. This document should not be distributed, published, reproduced orotherwise made available in whole or in part or disclosed by recipients to any other person and, in particular, should not bedistributed to persons with addresses in the Prohibited Territories or to any corporation, partnership or other entity created ororganised under the laws thereof, where such distribution may lead to a breach of any law or regulatory requirement.

The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and, therefore,persons into whose possession this document comes should inform themselves about and observe such restrictions. Anyfailure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.

In connection with this document, no person is authorised to give any information or make any representations other than ascontained in this document and, if given or made, such information or representations must not be relied upon as having beenso authorised. Neither the delivery of this document nor any subscription made pursuant to this document will, under anycircumstances, create any implication that there has been any change in the affairs of the Company since the date of thisdocument or that the information in this document is correct at any time subsequent to its date.

Investec Bank plc (“Investec”) is authorised by the Prudential Regulation Authority and regulated by the Financial ConductAuthority and the Prudential Regulation Authority in the United Kingdom. Investec is acting as the Company’s nominatedadviser and broker for the purposes of the AIM Rules for Companies in connection with the Placing and Admission. Investec’sresponsibilities as nominated adviser are owed solely to the London Stock Exchange plc and are not owed to the Companyor any of its directors. In its capacity of nominated adviser and broker, Investec will not be responsible to anyone other thanthe Company for providing the protections afforded to clients of Investec or for advising any other person in connection withthe transaction and arrangements detailed in this document. Investec accepts no liability whatsoever for the accuracy of anyinformation or opinions contained in, or for the omission of any material information from, this document. Investec is notresponsible for, nor has it authorised the contents of, any part of this document. Investec makes no representation orwarranty, express or implied, concerning the contents of the admission document, including its accuracy, completeness orverification, or concerning any other statement made or purported to be made by it, or on its behalf, in connection with theCompany or the Ordinary Shares.

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CONTENTS

Page

EXPECTED TIMETABLE OF PRINCIPAL EVENTS 4

PLACING STATISTICS 4

DIRECTORS, SECRETARY AND ADVISERS 5

DEFINITIONS AND TERMS 6

GLOSSARY OF TERMS 9

KEY INFORMATION 10

IMPORTANT NOTICE 14

PART I INFORMATION ON MOTOR HOLDINGS 15

PART II RISK FACTORS 39

PART III FINANCIAL INFORMATION ON THE COMPANY 50

PART IV UNAUDITED PRO FORMA STATEMENT OF NET ASSETS 96

PART V ADDITIONAL INFORMATION 98

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of this document 30 March 2015

Admission and commencement of dealings in the Ordinary Shares on AIM 2 April 2015

Delivery of Ordinary Shares in CREST accounts 2 April 2015

Despatch of definitive share certificates (where applicable) 20 April 2015

PLACING STATISTICS

Placing Price 149 pence

Number of Placing Shares 26,845,638

Total number of Ordinary Shares in issue on Admission 77,236,263

Market Capitalisation of the Company on Admission at the Placing Price 115.1 million

Proportion of the Enlarged Issued Share Capital the subject of the Placing 34.8 per cent.

Total estimated net proceeds of the Placing to be received by the Company £36.9 million

ISIN GB00BVYB2Q58

SEDOL BVYB2Q5

TIDM MMH

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DIRECTORS, SECRETARY AND ADVISERS

Directors: Mr Peter William Johnson (Non-Executive Chairman)Mr Daksh Gupta (Chief Executive Officer)Mr Mark Douglas Raban (Chief Financial Officer)Mr Alan Murray Ferguson (Senior Independent, Non-Executive Director)Mrs Sarah Marie Dickins (Independent Non-Executive Director)Ms Francesca Eva Ecsery (Independent Non-Executive Director)Mr Christopher John Sawyer (Non-Executive Director)

Company Secretary: Mr Stephen Jones

Registered Office: Airport HouseThe AirportCambridgeCB5 8RY

Nominated Adviser Investec Bank plcand Broker: 2 Gresham Street

LondonEC2V 7QP

Legal Advisers to Dentons UKMEA LLPthe Company: One Fleet Place

LondonEC4M 7WS

Legal Advisors to Simmons & Simmons LLPthe Nominated Adviser One Linear Parkand Broker: Avon Street

Temple QuayBristolBS2 0PS

Auditors & Reporting Ernst & Young LLPAccountants One Cambridge Business Parkto the Company: Cambridge

CW4 0WZ

Joint Bankers of the Company: Barclays Bank plc1 Churchill PlaceLondonE14 5HP

HSBC Bank plc8 Canada SquareLondonE14 5HQ

Registrar and Transfer Agent: Capita Registrars LimitedThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU

Company websites: www.marshallweb.co.uk, www.marshall-leasing.co.uk andwww.mmhplc.com

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DEFINITIONS AND TERMS

In this Admission Document, where the context permits, the expressions set out below shall bear thefollowing meanings:

“Act” the Companies Act 2006, as amended;

“Admission” the admission of the entire issued and to be issued ordinary sharecapital of the Company to trading on AIM becoming effective inaccordance with Rule 6 of the AIM Rules;

“Admission Document” this document;

“AIM” the AIM Market operated by the London Stock Exchange;

“AIM Rules” the rules of AIM as issued by the London Stock Exchange;

“Articles of Association” or the articles of association of the Company adopted on“Articles” 12 March 2015;

“Board” or “Directors” the directors of the Company whose names are listed on page 5 ofthis document;

“City Code” the City Code on Takeovers and Mergers;

“Company” or “Motor Holdings” Marshall Motor Holdings plc;

“certificated” or a share or other security which is not in un-certificated form (i.e. not“in certificated form” in CREST);

“CREST” the relevant system (as defined in the CREST Regulations) inrespect of which Euroclear UK & Ireland Limited is the operator (asdefined in the CREST Regulations), which facilitates the transfer oftitle to shares without a written instrument;

“CREST Regulations” the Uncertificated Securities Regulations 2001 (SI 2001 No.3755);

“EBT” the employee benefit trust as described in paragraph 8.2 of Part Vof this document;

“Enlarged Issued Share Capital” the entire issued ordinary share capital of the Company immediatelyfollowing Admission;

“Euroclear” Euroclear UK & Ireland Limited, the operator of CREST;

“FCA” Financial Conduct Authority;

“FSMA” Financial Services and Markets Act 2000;

“Group” the Company, Marshall Leasing, Marshall Motor Group Limited,Marshall of Cambridge (Garage Properties) Limited, Tim BrintonCars Limited, Marshall Commercial Vehicles Limited, Marshall NorthWest Limited, Marshall of Scunthorpe Limited, Silver StreetAutomotive Limited, Exeter Trade Parts Specialists LLP, Audi SouthWest Limited, Hanjo Russell Limited, CMG 2007 Limited, AstleLimited, Crystal Motor Group Limited, Gates Contract Hire Limited,Marshall of Ipswich Limited, Marshall of Peterborough Limited andMarshall of Stevenage Limited;

“Investec” Investec Bank plc;

“Marshall Leasing” Marshall Leasing Limited;

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“Marshall Motors” means the motor retail business operated by the Group;

“MCHL Agreements” the agreements described at paragraphs 10.5 to 10.26 inclusiveand 10.36 of Part V of this document;

“MCHL” Marshall of Cambridge (Holdings) Limited;

“MCHL Group” MCHL, Marshall Group Properties Limited, Marshall of Cambridge(Airport Properties) Limited, MGPH Limited, The Cambridge AeroClub Limited, Marshall of Cambridge Aerospace Limited,Aeropeople Limited, Aeropeople Gmbh, Aeropeople Italy srl,Marshall Aerospace Netherlands B.V., Marshall Aerospace U.S.Inc., Marshall Aerospace Canada Inc., Slingsby Holdings Limited,Slingsby Advanced Composites Limited, Slingsby Limited, SlingsbyAerospace Limited, Slingsby Aviation Limited, Marshall AerospaceAustralia Pty Limited, Aeroacademy Limited, FlairJet Limited,Marshall Aviation Services Limited, Marshall of Cambridge(Engineering) Limited, Marshall Land Systems Limited, MarshallSpecialist Vehicles Limited, MSV Norway, Marshall Fleet SolutionsLimited, Marshall Thermo King Limited, Marshall Tail Lift Limited,Lorica Systems UK Limited, Marshall Land Systems Australia PtyLimited, Marshall Aircraft Sales Limited, Marshall Middle EastLimited and Marshall Norway AS.

“Ordinary Shares” ordinary shares of 64 pence each (being par value) in the sharecapital of the Company;

“Placing” the conditional placing of the Placing Shares at the Placing Pricepursuant to the Placing Agreement;

“Placing Agreement” the conditional agreement dated 30 March 2015 between theDirectors, the Company, MCHL and Investec relating to the Placing,as described in paragraph 10.2 of Part V of this document;

“Placing Price” 149 pence;

“Placing Shares” the 26,845,638 new Ordinary Shares to be issued pursuant to thePlacing, such issue being conditional on Admission;

“PSP” the Marshall Motor Holdings plc Performance Share Plan describedin paragraph 8.1 of Part V of this document;

“QCA Corporate Governance the Corporate Governance Code for Small and Mid Size QuotedCode” Companies 2013 issued by the Quoted Company Alliance;

“Relationship Agreement” the agreement dated 27 March 2015 between the Company andMCHL, as described in paragraph 10.3 of Part V of this document;

“Share Capital” the 77,236,263 issued ordinary shares of 64 pence each of theCompany as at the date of this document;

“Shareholder” a holder of Ordinary Shares;

“Share Plans” the PSP and EBT, details of which are set out in paragraph 8 ofPart V of this document;

“subsidiary” or have the meanings given to them by the Act;“subsidiary undertaking”

“Taxes Act” the Income and Corporation Taxes Act 1988, as amended;

“UK” or “United Kingdom” the United Kingdom of Great Britain & Northern Ireland;

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“UK Listing Authority” the FCA acting in its capacity as the competent authority for thepurposes of Part VI of the Financial Services and Markets Act 2000;

“United States” or “US” the United States of America, its territories and possessions, anystate of the United States of America and the District of Columbiaand all other areas subject to its jurisdiction;

“Voting Rights” the voting rights attached to the Ordinary Shares;

“$” United States Dollars.

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GLOSSARY OF TERMS

The following glossary of terms applies throughout this document, unless the context otherwise requires:

“alternate premium brands” Honda, Toyota, Volkswagen, Volkswagen Commercial and Volvobrands;

“BCA” BCA Limited, a used-vehicle market place;

“CAGR” compound annual growth rate;

“EBIT” earnings before interest and tax;

“EBITDA” earnings before interest, taxes, depreciation, and amortisation;

“HR” human resources;

“OEM” original equipment manufacturer;

“parc” the number of cars and other vehicles in a region or market;

“PCP” personal contract purchase;

“prestige brands” Audi, BMW, BMW MINI, BMW Motorrad, Jaguar, Land Rover,smart and Mercedes-Benz brands;

“ROCE” return on capital employed being EBIT over average shareholdersfunds (being an average of closing shareholders’ funds for thecurrent and prior year);

“SMMT” the Society of Motor Manufactures and Traders;

“specialist brand” the Maserati brand; and

“volume brands” Citroen, Ford, Ford Commercial, Hyundai, Kia, Nissan, Peugeot,SEAT, Skoda and Vauxhall brands.

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KEY INFORMATION

The following is a brief summary only and should be read in conjunction with the more detailedinformation and financial data and statements and risk factors appearing elsewhere in thisdocument.

Prospective investors should read the whole of this document and not rely solely on the summarisedinformation set out below:

1. Information on Marshall MotorsThe Group’s principal activities are the sale and repair of new and used vehicles through Marshall Motorsand the leasing of vehicles through Marshall Leasing. The Group’s businesses are integrated and includea total of 71 franchises covering 24 brands, operating from 63 sites across 16 counties in England. TheGroup operates from leasehold and freehold sites (details of which are set out in paragraph 11 of Part V ofthis document), includes two bodyshops and also operates one fuel filling station under the Shell brand.

The Group is the only dealer group in the UK to represent all of the top five prestige (being Audi, BMW,Mercedes-Benz, Land Rover and Jaguar) and top ten volume (being Ford, Vauxhall, Volkswagen, Nissan,Peugeot, Toyota, Citroen, Hyundai, Kia and Skoda) vehicle manufacturer brands. In addition, it is currentlyone of only six dealer groups in the UK to represent all of the major German and British prestige andalternate premium brands, and on Admission, will be one of only two English companies quoted on theLondon Stock Exchange to do so.

2. Key Strengths and AdvantagesThe Directors believe the Group has a number of key strengths and advantages that are important to thesuccess of the business as follows:

● Strong relationships with OEMs

● Opportunity to grow with OEMs

● An integrated leasing business

● Bespoke IT platform – Phoenix

● Excellent financial track record

● Strong platform for future growth

● Senior management with extensive industry experience

3. Current Trading and ProspectsThe Board expects Q1 2015 profits to be ahead of the same period in 2014 (which was a record for theGroup). The Board is targeting another year of material improvement in the Group’s trading performanceduring the year ending 31 December 2015.

Further details of the Group’s current trading and prospects can be found in paragraph 5 of Part I of thisdocument.

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4. StrategyHaving successfully completed its five year plan to 2013, the Company now aims to achieve strategicgrowth and become the nation’s premier automotive dealer group for both retail and leasing. It will seek todo this by focussing on its Five Key Strategic Pillars as follows:

* ROCE adjusted for Capitalised lease commitments in 2014 was approximately 16.9 per cent.** Source of new enquiries, up from 34.1% Q1 2012

*** Source Great Place to Work Survey 2014

5. Reasons for Admission to AIM and use of ProceedsThe Directors are seeking admission to AIM in order to raise approximately £40.0 million through theplacing of 26,845,638 Placing Shares at 149 pence per Ordinary Share, to be used to:

● accelerate growth through funding of acquisition opportunities; and

● invest in the Group’s existing operations including investment in freehold opportunities, site upgradesand redevelopments, and investment in the Group’s website and e-commerce capabilities.

The Directors consider that the Company’s flotation on AIM will be an important step in its development byaccessing new investors and raising new equity capital through the Placing, it will enable the accelerationof the Group’s development and provide access to capital markets which may be required for futureacquisitions.

6. The PlacingPursuant to the Placing, Investec has conditionally placed, as agent for the Company, 26,845,638 PlacingShares at the Placing Price with institutional and other investors, which will represent approximately 34.8per cent. of the Enlarged Issued Share Capital following Admission. The Placing has not been underwritten.

The Placing is conditional, inter alia, on Admission. The Placing and Admission are subject to certainconditions contained in the Placing Agreement.

7. Directors and Senior ManagementPeter Johnson – Non-Executive ChairmanPeter has over 40 years’ experience in the automotive sector, spending 30 years in senior roles in retail anddistribution with the Rover group, Inchcape and Marshall. After previously leading the Marshall retailbusiness between 1990 and 1995, he joined Inchcape, heading up its retail operation. He was thenappointed to run Inchcape Motors International and in 1999 was made the chief executive of Inchcape plc.

Daksh Gupta – Chief Executive OfficerDaksh has over 20 years’ experience in the automotive retail sector and joined the Company in 2008 as itschief executive officer. Daksh was previously group managing director for Ridgeway Group and the chief

ROCE 24.0%

Customer Advocacy

43.3%

Internal Phoenix IP,

Strong Online Presence

Great Place to Work

81% Organic and Acquisitive

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operating officer of Accident Exchange Group PLC in 2007. He was also franchise director with Inchcapefor seven years where he was responsible for the Volkswagen, Audi and Mercedes-Benz brands.

Mark Raban – Chief Financial OfficerMark has 25 years’ of general retail experience, including three as the finance director of Inchcape RetailLimited. He spent three years as chief financial officer for the UK and Ireland for the Borders Group andwas the interim financial director of Selfridges Retail Limited. Mark has also held senior finance roles atpublic companies such as Safeway and Burton. He joined Marshall Motors as a consultant in 2014.

Alan Ferguson – Non-Executive DirectorAlan is a non-executive director of Johnson Matthey PLC, Croda International Plc and The Weir GroupPLC. He chairs the audit committees of each of these companies and is the senior independent directorof Johnson Matthey. Alan spent 22 years in a variety of roles at Inchcape plc, including six years as itsgroup finance director from 1999.

Sarah Dickins – Non-Executive DirectorSarah has over 20 years’ HR experience across a broad range of sectors including retail, utilities andfinancial services. She spent 16 years at Asda, five of those years as an operating board memberresponsible for people operations and customer service for 150,000 colleagues. Sarah joined ProvidentFinancial Group in 2012 as its executive people director.

Francesca Ecsery – Non-Executive DirectorFrancesca has 19 years’ directorship experience in both blue chip companies and start-ups in the digital,retail, fast-moving consumer goods (FMCG) and leisure industries. Francesca is also non-executive directorof Foreign & Colonial Investment Trust plc, Share plc and Good Energy Group plc, all of which are listedon AIM or FTSE. Her previous executive experience includes McKinsey, PespiCo, ThornEMI, ThomasCook, STA Travel and many other consumer brands.

Christopher Sawyer – Non-Executive DirectorFrom 1991 to 2006, Christopher led Deltron Electronics plc, initially leading the buyout, then developing itinto a strong European group with ten European locations and representative offices in China and Japan.Deltron Electronics was quoted in 1996 and sold to ABACUS Electronics Plc in 2006. In 2007, Christopherbecame chairman of the Lorien Limited group and led the portfolio reorganisation of that group, in particulardeveloping its engineering and resourcing businesses substantially before the subsequent successful salesof both businesses. Between 2006 to 2013, he was chairman of the parent of Bearmach Limited, a globaldistributor of Land Rover parts. Christopher has been a non-executive director of MCHL since 2008.

Senior ManagementStephen Jones – Company SecretaryStephen is a practising Solicitor and spent eight years as a corporate lawyer at Eversheds LLP. He also spenteight years as group counsel and company secretary at Automotive and Insurance Solutions Group Plc.

Peter Cakebread – Managing Director of Marshall LeasingPeter has 34 years of experience in the contract hire industry. He has led Marshall Leasing for 24 years,seeing its funded fleet grow from 415 to over 6,000 vehicles. Active in the industry, Peter is a recognisedand respected figure. He is currently chairman of the British Vehicle Rental and Leasing Association(BVRLA), the trade association for the industry and was recently inducted into the Fleet News Hall of Fame.

Jamie Crowther – Head of OperationsJamie has 28 years of industry experience, including 17 years as operations director at Reg Vardy and eightyears as the managing director and commercial director at Peter Vardy. Jamie joined the Company in 2014.

Helen Burrows – HR DirectorHelen has 19 years of industry experience including 17 at Inchcape, latterly as head of HR for InchcapeRetail. She also spent six years as HR director for Selecta UK & Ireland, a vending services business andjoined Marshall Motors in 2013.

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8. Relationship with MCHLMCHL Group is a long standing, private family owned group, with interests in:

● aviation and defence, including owning and operating Cambridge Airport;

● property, including land of some 900 acres;

● fleet management and transport solutions; and

● the automotive sector through Motor Holdings.

MCHL Group has been led by three generations of the Marshall family, which has contributed to MCHL’sdevelopment as a stable, conservatively run business.

As the Company is part of MCHL’s wider group, historically its funding considerations had to be balancedwith other companies in the MCHL Group. Despite this, MCHL has been a strong supporter of theCompany and provided the funding to the Company to allow it to undertake its portfolio transformation.However, MCHL has elected to float the Company on AIM to provide it with the opportunity to accelerategrowth, take advantage of a number of consolidation opportunities in the sector and to provide it withaccess to a fresh source of capital to fund its expansion plans. Following Admission MCHL will continueto be a significant Shareholder and fully supports the Company’s strategy as set out in this document.

In light of MCHL’s aggregate shareholding in the Enlarged Issued Share Capital conditional upon AdmissionMCHL has entered into the Relationship Agreement in order to regulate the relationship between MCHL andthe Company and enable the Company to act independently of MCHL and its affiliates. Under the terms ofthis agreement MCHL will have the right for so long as it owns 30 per cent. or more of the Ordinary Sharesto appoint two directors to the Board and one director to each of the committees of the Board, includingthe Audit, Remuneration and Nominations Committees referred to below. The Relationship Agreement willterminate in the event that MCHL ceases to own 30 per cent. or more of the Ordinary Shares. Further detailsof the Relationship Agreement can be found in paragraph 10.3 of Part V of this document.

In addition to the Relationship Agreement, the Group will have from Admission a number of commercialarrangements with MCHL principally regarding shared services, property and intellectual property. TheDirectors expect the aggregate annual cost to the Company to be £1.4 million in respect of the propertyleases and licences (described in paragraphs 10.9 and 10.11 to 10.25 inclusive of Part V of this document)and £0.2 million for all other services pursuant to the terms of the commercial agreement (described atparagraph 10.5 of Part V of this document). Further details of the MCHL Agreements can be found inparagraphs 10.5 to 10.26 inclusive and 10.36 of Part V of this document.

MCHL will in aggregate be interested in 50,390,625 issued Ordinary Shares which will represent, assumingfull take up of the Placing Shares, approximately 65.2 per cent. of the Enlarged Issued Share Capital of theCompany. MCHL in respect of itself and each of its connected persons has undertaken to the Companyand Investec that, except in limited circumstances, it will not sell or dispose of its interests in or rights overany of their Ordinary Shares for a period of six months from Admission and, for a further six monthsthereafter, it will only sell or dispose of its interests in or rights over their Ordinary Shares subject to orderlymarket restrictions.

9. Dividend PolicySubject to the Group’s trading prospects being satisfactory, the Board intend to implement a dividend policywhereby dividends are covered by between 4 to 5 times underlying earnings and paid in an approximate one-third (interim dividend) and two-thirds (final dividend) split. The Board expect the Company’s first dividend asa quoted group to be a pro-rated interim dividend for the six months ended 30 June 2015.

10. Risk FactorsInvestors should note the risks associated with an investment in the Company as set out in Part II of thisdocument.

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IMPORTANT NOTICE

Forward looking statementsAll statements, other than statements of historical facts, included in this document, including, withoutlimitation, those regarding the Company’s financial position, business strategy, plans and objectives ofmanagement for future operations or statements relating to expectations in relation to dividends or anystatements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”,“intends”, “plans”, “will”, “may”, “anticipates”, “would”, “could” or similar expressions or the negativethereof, are forward-looking statements. Such forward-looking statements involve known and unknownrisks, uncertainties and other important factors beyond the Company’s control that could cause the actualresults, performance, achievements of or dividends paid by the Company to be materially different fromactual results, performance or achievements, or dividend payments expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding theCompany’s net asset value, present and future business strategies and income flows and the environmentin which the Company will operate in the future.

These forward-looking statements speak only as of the date of this document. The Company expresslydisclaims any obligation or undertaking to disseminate any updates or revisions to any forward-lookingstatements contained herein to reflect any change in the Company’s expectations with regard thereto, anynew information or any change in events, conditions or circumstances on which any such statements arebased, unless required to do so by law or any appropriate regulatory authority.

Market and financial informationThe data, statistics and information and other statements in this document regarding the markets in whichthe Company operates, or the Company’s position therein, are based on the Company’s records or aretaken or derived from statistical data and information derived from the sources described in this document.

In relation to these sources, such information has been accurately reproduced from the publishedinformation, and, so far as the Directors are aware and are able to ascertain from the information providedby the suppliers of these sources, no facts have been omitted which would render such informationinaccurate or misleading.

Unless otherwise indicated, audited historical financial information for the three years ended 31 December2014 and the notes to that financial information have been prepared in accordance with InternationalFinancial Reporting Standards.

Various figures and percentages in tables in this document and certain financial data in this document havebeen rounded. As a result of this rounding, the totals of data presented in this document may vary slightlyfrom the actual arithmetical totals of such data.

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PART I

INFORMATION ON MOTOR HOLDINGS

1. IntroductionThe Group’s principal activities are the sale and repair of new and used vehicles through Marshall Motorsand the leasing of vehicles through Marshall Leasing. The Group’s businesses are integrated and includea total of 71 franchises covering 24 brands, operating from 63 sites across 16 counties in England. TheGroup operates from leasehold and freehold sites (details of which are set out in paragraph 11 of Part V ofthis document), includes two bodyshops and also operates one fuel filling station under the Shell brand.

The Group is the only dealer group in the UK to represent all of the top five prestige (being Audi, BMW,Mercedes-Benz, Land Rover and Jaguar) and top ten volume (being Ford, Vauxhall, Volkswagen, Nissan,Peugeot, Toyota, Citroen, Hyundai, Kia and Skoda) vehicle manufacturer brands. In addition, it is currentlyone of only six dealer groups in the UK to represent all of the major German and British prestige andalternate premium brands, and on Admission, will be one of only two English companies quoted on theLondon Stock Exchange to do so.

During the year ended 31 December 2014, the Group completed 31,951 new vehicle sales and 25,598used vehicle sales, and had a leasing fleet of 6,031 vehicles. The Group is the tenth largest dealer groupin the UK, and prior to Admission, is the second largest in private ownership.

In order to accelerate its growth through potential acquisition activity and enable investment in the Group’sexisting operations, the Company has conditionally raised £40.0 million (before expenses) through theplacing of 26,845,638 Placing Shares with institutional and other investors. Application has been made tothe London Stock Exchange for all of the issued Ordinary Shares to be admitted to trading on AIM whichis expected to occur on 2 April 2015.

2. History and Background Information

MCHL GroupMCHL Group is a privately owned group, headquartered in Cambridge, which operates through fourprincipal divisions: Marshall Aerospace and Defence Group, Marshall Group Properties, Marshall FleetSolutions and Motor Holdings. The trading entity that became MCHL Group was established as a chauffeurdrive business by David Gregory Marshall in 1909, moving into the provision of garage services in 1912and franchised dealerships in 1919. In around 1979 MCHL Group then expanded its operations into themotor leasing business. The MCHL Group has operated in the automotive sector since its inception, andrepresents automotive industry experience of almost 100 years.

Marshall MotorsMarshall Motors operates as a dealer group on franchise arrangements with a large number of OEMs,offering new and used car sales and aftersales. Marshall Motors’ strategy had been to increase revenue bymaximising its market presence in a geographical area. By 2008, Marshall Motors had 41 franchisescovering 16 brands, concentrated in seven counties throughout East Anglia.

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In 2008, following the appointment of Daksh Gupta as the Company’s Chief Executive Officer, MarshallMotors underwent a strategic review. This highlighted several issues: (i) Marshall Motors had anunbalanced portfolio comprising two thirds volume brands, with the remaining third split between prestigeand alternate premium brands; (ii) the increased use of the internet had resulted in a shift in patterns ofcustomer behaviour so that the car buying process tended to begin remotely with customers searching forcars on the internet (rather than, as in previous years, customers visiting a number of local dealerships toidentify their vehicle of choice); and (iii) Marshall Motors’ strong presence in East Anglia meant itsdealerships were effectively competing with each other for customers and talent, resulting in a lowerturnover per site than those of its peer group with wider geographical presence.

To address this, the Company implemented a five year plan between 2009 and 2013 to add depth andscale of representation with its core OEM partners. As part of this plan, Marshall Motors sought to broadenits geographical reach through the acquisition of new dealerships and to exit certain other parts of itsportfolio that were no longer considered core to its business. At the same time, Marshall Motors alsosought to diversify its portfolio to include a balanced mixture of prestige, alternate premium and volumebrands. By the end of 2014, Marshall Motors had exited 21 non-core or loss-making franchises and anumber of other businesses that were no longer key to its strategy. During this time, it made 13 acquisitionsas well as building six start-ups, together adding some 51 franchises and strategically entering into brandssuch as Audi, Mercedes-Benz, Volkswagen, BMW and BMW MINI, who together make up approximately30 per cent. of the UK new car market. As at the date of this document, Marshall Motors has a total of 71franchises across 63 sites, with coverage across 16 counties as set out below:

16


Sector Brand Number of dealerships

Prestige Audi 3 BMW 2 BMW Motorrad 1 Jaguar 4 Land Rover 6 Mercedes-Benz 5 BMW MINI 1 smart 2Alternate Premium Honda 7 Toyota 2 Volkswagen 4 Volkswagen Commercial 2 Volvo 7Volume Citroen 1 Ford 3 Ford Commercial 1 Hyundai 1 Kia 2 Nissan 4 Peugeot 3 SEAT 3 Skoda 1 Vauxhall 5Specialist Maserati 1

Marshall Motors also has two standalone body shops and is an authorised repairer for Peugeot, Citroen,Jaguar, Land Rover, Hyundai, Honda, Volvo, Nissan and Toyota. It supplies spare parts for both its ownrepairs and to other car dealers, independent vehicle repairers and accident repair centres. In addition,Marshall Motors facilitates the provision of finance, warranty and insurance products for customers andservice plans for the on-going maintenance of vehicles. It also operates a standalone used car businessfrom Cambridge under the Marshall brand.

Between 2008 and 2014, Marshall Motors increased its sales of new vehicles from 12,188 to 31,951, andits sales of used vehicles from 12,540 to 25,598.

In addition, since 2008, Marshall Motors has more than doubled its new car market share, growing from0.6 per cent. in 2008 to 1.3 per cent. in 2014, and quadrupled its used car market share, growing from0.1 per cent. in 2008 to 0.4 per cent. in 2014. This represents growth in new car unit sales for MarshallMotors of 16.8 per cent. CAGR, compared to industry growth of 2.5 per cent. CAGR. For used car units,complete market data in respect of 2014 is not yet available, however, between 2008 and 2013 MarshallMotors increased sales by 13.3 per cent. CAGR, compared to an industry decline of 1.1 per cent. CAGR.

In terms of turnover, Marshall Motors is the fourth fastest growing of the UK’s largest 100 dealer groups.

17


Marshall Motors’ new car salesMarshall Motors’ new car sales include both retail and fleet sales. Its total new car sales for 2014 weremade up of 18,570 retail sales and 13,381 sales to fleet, military, agency and other specialist customers.

Marshall Motors’ used car sales

Marshall LeasingBefore 2009, Marshall Leasing and Marshall Motors operated as two separate businesses. MarshallLeasing provided vehicle leasing, contract purchase, contract hire, short-term vehicle rental and fleetmanagement services to corporate customers, and Marshall Motors was responsible for the sale and repairof new and used vehicles. There was minimal crossover or collaboration between the two groups.

As part of the Company’s five year plan, Marshall Leasing was integrated with Marshall Motors. Previously,in common with other leasing businesses, Marshall Leasing would both source vehicles and sell themajority of the vehicles it no longer needed to third parties. By the end of the five year plan, most ofMarshall Leasing’s fleet was being sourced from Marshall Motors and the vast majority of its retailable

12,188 12,699

16,038

20,207

25,245

27,250

31,951

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2008 2009 2010 2011 2012 2013 2014

12,540

14,289

16,635 16,615

18,965

23,395

25,598

5,000

10,000

15,000

20,000

25,000

30,000

2008 2009 2010 2011 2012 2013 2014

18


standard stock was being sold at the end of their lease term through Marshall Motors. In addition, in linewith the reshaping of Marshall Motors’ offering, since 2008 the manufacturer profile of Marshall Leasing’sfleet sourced from Marshall Motors has broadened to include Volkswagen, BMW, Audi, Kia, Mercedes-Benz, Skoda and SEAT. The leasing book has a balanced customer base, with the top 20 customersaccounting for approximately 60 per cent. of the fleet, but with no single customer being responsible formore than 10 per cent. Marshall Leasing also uses a conservative debt to equity funding ratio, whichcontributes to a consistent level of generated profit.

As part of the Company’s five year plan, Marshall Leasing increased its fleet at a rate of 8.5 per cent. CAGRper year, growing from 3,706 vehicles in 2008 to 6,031 in 2014.

Marshall Leasing fleet

3. Key StrengthsThe Directors believe the Group has several key strengths as follows:

Strong relationships with OEMsThe Group values its relationships with its OEM partners and recognises that OEM support is crucial to itssuccess.

The Group operates under franchise arrangements awarded by the OEMs to their chosen partners. TheDirectors believe that the strength of the relationship between the OEM and the Group under thesearrangements has benefitted the Group’s financial and commercial performance.

The Group is committed to collaborating with its manufacturer partners in a number of ways. It assignssenior operational personnel to each of its brand partners, and provides professional support to suchbrands through a number of roles including aftersales support manager, HR business partner and divisionalfinancial controller. The Group also engages with its OEM partners by way of pilot and dealer programmes,and strives to work in tandem with their commercial goals. Strong relationships with its OEM partners areone of the Group’s core strategic values and the Group will continue to develop these.

The Directors believe the support of the Group’s OEMs to be crucial to the Group’s success. However, theDirectors also consider the Group’s scale means it is an important route to market for its OEM partners.

3,706

3,937

4,266

4,752

5,212

5,610

6,031

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2008 2009 2010 2011 2012 2013 2014

19


The Group has received external recognition for its performance with its OEM partners: Jaguar UK awardedPeterborough Jaguar the best service department for customer care in 2014; Honda announced Hull Hondaas the best dealership in the UK in 2013 for sales customer satisfaction; Grantham Volvo won best used cardealer in the large category at the Car Dealer Magazine Awards 2013; in 2010 and 2011 the Group won thedealer group of the year category at the Motor Trader Awards, the first time any motor retail group has wonthe category in two successive years; and it won the business of the year category at the 2014 BusinessExcellence Awards sponsored by Barclays and in conjunction with Cambridge News. The Group was alsorecently shortlisted as a finalist for the Automotive Management Awards for dealer group of the year.

Opportunity to grow with OEMsThe Group is a national retailer with a portfolio composed of the right brand partners for it. The Group’sportfolio is balanced between prestige, alternate premium and volume brands with capacity to expandwithin these brands.

The Directors believe that whilst the current portfolio is balanced between prestige, alternate premium andvolume brands, it is under-represented with certain of its core brand partners and see this as anopportunity to increase its representation across the country.

The Group is the only dealer group in the UK to represent all of the top five prestige (being Audi, BMW,Mercedes-Benz, Land Rover and Jaguar) and top ten volume (being Ford, Vauxhall, Volkswagen, Nissan,Peugeot, Toyota, Citroen, Hyundai, Kia and Skoda) vehicle manufacturer brands. In addition, the Group iscurrently one of only six dealer groups in the UK to represent all of the major German and British prestigeand alternate premium brands, and on Admission, will be one of only two English companies quoted onthe London Stock Exchange to do so. It has demonstrated its strong partnerships with OEMs by achievingstrategic entry into Mercedes-Benz in November 2010, Volkswagen in January 2012, Audi in February

20


2013 and BMW and BMW MINI in August 2014. This is also shown by the Group’s growth with 18 of itscurrent brand partners.

The Group represents 88 per cent. of OEMs by market share (increased from 54 per cent. in 2008), thehighest coverage of any UK dealer group.

The Group has consulted senior UK management at all of its OEM partners regarding its flotation on AIM.The Directors look forward to continuing to work constructively with its OEM partners in the future as aquoted group.

An integrated leasing businessMarshall Leasing operates as an integrated and profitable leasing business and had a fleet of 6,031vehicles as at 31 December 2014 which has grown at 7.6 per cent. CAGR from 2012 to 2014. There aresignificant synergies between the Group’s leasing and retail businesses. In 2014, 1,055 of the vehiclesprovided through Marshall Leasing were sourced from Marshall Motors. Also in 2014, Marshall Leasingsold approximately 80 per cent. of de-fleeted vehicles to Marshall Motors when there was a retailopportunity, thereby enabling Marshall Motors to realise a secondary revenue stream for those usedvehicles on re-sale. Due to Marshall Motors’ balanced portfolio, Marshall Leasing is now able to source themajority of its diversified fleet of vehicles directly from Marshall Motors.

As a result of management’s approach to the residual value setting of leased vehicles, Marshall Leasinghas not taken an aggregate loss on sales in any of the last ten years, including during the significantchallenges faced in the 2008 global financial crisis.

The leasing business operates to the same core values as the Group’s retail business and is a service ledbusiness. This is demonstrated by the fact that Marshall Leasing has been consistently rated in the topthree for customer service in the independent survey commissioned by Fleet Eye. It also won the ACFO(Association of Car and Fleet Operators) award for fleet supplier of the year in both 2010 and 2013.Although there are no current plans to do so, going forward the Directors may decide to amend the Group’sleasing finance arrangements from a principal to an agency structure.

Bespoke IT platform – PhoenixThe Group benefits from its own internally developed and bespoke dealer management reporting system,called Phoenix. The system provides wide ranging information and enables the Group to manage thebusiness in real-time. Phoenix is integrated with the Group’s dealer management system, Kerridge.

The Directors believe Phoenix is critical to the Group as a retail business, as the detailed informationprovided by the system gives both management and sales staff a competitive edge in their day-to-dayoperations. Phoenix provides core data on sales operations such as customer experience, enquirymanagement and mystery shopper data.

Due to the detailed stock information held on Phoenix, management is able to monitor and control workingcapital movements. An example of this is that despite Group turnover increasing from around £443 millionin 2008 to £1.09 billion in 2014, parts stocking only increased from £3.9 million to £4.7 million over thesame period.

Increased online penetrationThe Group has increased its online capabilities, including website redevelopments to optimise thecustomer interface, mobile usage and technology, supported by ongoing investment in Phoenix.

In January 2015, the Group was ranked 14th most visited of the websites across the UK automotiveindustry (i.e. including vehicle supermarkets and OEMs) with its websites listed as the 7th most visited ofthe UK dealer groups. This shows the Group’s online capability exceeds its relative ranking in size as thetenth largest UK dealer group. It also demonstrates significant growth from its previous position in March2007 as 157th most visited across the automotive sector.*

21

* Source: Hitwise report “Most Popular Websites in Automotive”, January 2015


Excellent financial track recordThe year ended 31 December 2014 saw the Group reach an important financial milestone reportingrevenues in excess of £1 billion. This represented CAGR of 16.9 per cent. from 2012 to 2014. Key driversto this growth have been:

● Strong core organic like-for-like performance: the Group has outperformed the market in both newand used vehicle sales, increased its aftersales revenue and has generated good growth in its leasingbusiness; and

● Restructuring of the Group’s portfolio: by way of (i) exits of subscale, loss making or non-corebusinesses and (ii) acquisitions and start ups resulting in existing brand extension and newrepresentation with prestige and alternate premium brands.

Growth in the Group’s revenues has not come at the expense of profitability. The growth in the Group’s profitsover the last three years has been achieved through a combination of organic sales growth, acquisitions anddisposals, synergies between its retail and leasing businesses and benefits of scale opportunities. The growthin the Group’s profitability has led to a ROCE that management has improved from 12.4 per cent. for the yearended 31 December 2012 to 24.0 per cent. for the year ended 31 December 2014.

Strong platform for future growthThe Group has undergone a transformation in recent years from a business that reported losses before taxof £10.5 million (under UK GAAP) in 2008 to a business that made profit before tax of £12.9 million andEBITDA of £18.9 million (both under IFRS) in the year ended 31 December 2014. The Directors believe thatthe existing business presents an excellent platform for future growth, specifically through:

Organic sales and margin improvement:● The assimilation of standalone businesses into the Group can take time and the Directors believe

there to be further latent potential in recently acquired businesses to increase sales and margin.

● Recent investments across the Group in aftersales people and processes, including management,customer relations management (CRM) and technology, should enable the Group to capture anincreased proportion of the higher margin aftersales sector.

● In the year ended 31 December 2014, the Group’s used car sales made up 39.3 per cent. of its retailrevenues. The Directors believe that there is opportunity to drive used vehicle margin, through stockmatrix profiling (using the Group’s proprietary management system Phoenix), improved buying andsales processes, pricing techniques, vehicle appraisals and add-on products.

● Having reorganised the portfolio in recent years with the right brand partners for the Group, theDirectors believe that they are well placed to benefit from partnering with OEMs on any strong productlaunches in the pipeline.

Acquisitive growth:● The majority of dealerships previously acquired by Marshall Motors were loss making. Examples of

recent acquisitions that management has been able to convert into profitable businesses include:

Unaudited EBIT for the Unaudited year ended EBIT 31 December Year of Consideration pre-acquisition 2014 Acquisition acquisition £ million £ million £ million*

North West Mercedes-Benz (MA 5) 2010 5.1 Loss making 1.6 F-Cross & Sons Ltd 2012 1.7 Loss making 0.4 Silver Street Automotive Ltd 2013 1.8 Loss making 2.5 CMG 2007 Ltd 2014 11.5 1.3 Not applicable – part year ownership

22

* Site EBIT prior to charging central management charges


● Management has been able to turn around the financial performance of these dealerships through acombination of actions including:

o implementation of the Group’s common dealer management system, Kerridge, overlaid by itsown bespoke internal system, Phoenix;

o the benefits of the Group’s supply terms;

o sales training and processes;

o policy on stock management (through the use of Phoenix);

o introducing support to management personnel; and

o driving cost saving synergies.

The Directors believe that there remain a number of poorly performing dealerships nationally in theindustry that, should the opportunity arise, the Group could acquire and which the management ofMarshall Motors could use the measures described above to improve returns in respect of suchdealerships. The Directors are also aware of acquisition opportunities as a result of a number ofindependent operators wishing to exit the industry. Given the Group’s commitment to strong OEMrelationships and performance, the Directors believe they are well placed to take advantage of this.

● The Group’s approach to acquiring dealerships is to work together with its OEM partners. Throughthe Group’s material investment in its relationships with OEMs and excellent financial track record,Marshall Motors benefits from the full support of its OEM partners when acquiring dealerships. Thissupport has also generated acquisition opportunities where OEMs have introduced potential vendorsto Marshall Motors.

● During the last three years, the Group has benefitted from operational leverage of its operatingexpenses which have reduced as a percentage of sales from 10.9 per cent. in the year ended31 December 2012 to 10.2 per cent. for the year ended 31 December 2014. The Directors believethe Group has the necessary scalable infrastructure to support the business as it is expected to grow,providing operational gearing opportunities.

● As set out above, whilst the Group has a balanced portfolio of brands, the current geographic spreadof the portfolio provides the opportunity for bolt-on acquisitions in certain regions as well as thepossibility of entering new market areas whilst avoiding the risk of cannibalising the performance ofother dealerships within the Group.

Senior management with extensive industry experience

The Board and senior management team have considerable experience in the motor retail and leasingindustry. In addition, a number of the management team have previously worked together at formeremployers and, therefore, have an intrinsic understanding of the skills that each of them brings for drivingthe Group’s strategy forward.

Management also has a proven track record at managing the Group’s portfolio of assets. In the last fiveyears, management has made some 13 acquisitions and started six dealerships, adding some51 franchises to the Group, and exited 21 dealerships and a number of other businesses.

Market Overview

The automotive market has experienced a period of growth in comparison with the previous years ofrecession and economic uncertainty. 2013 appears to have been a turning point in terms of economicrecovery in the UK. Gross domestic product is estimated by the Office for National Statistics to have grownby 1.7 per cent. in 2013 and by 2.6 per cent. in 2014. Continued growth is forecast for 2015 and 2016.

Whilst the Eurozone is still generally suffering from the legacies of the 2008 global financial crisis, the UKeconomy continues to improve and is expected to become one of the strongest economies in Europe overcoming years. Unemployment levels are low at 6 per cent. (the lowest since 2005).*

23

* http://www.ons.gov.uk/ons/rel/lms/labour-market/statistics/february-2015/statistical-bulletin.html


The UK new car marketA BCA report1 on the 2014 car market notes that UK new car sales peaked at 2.58 million vehicles in 2003,then fell to a low of 1.94 million in 2011. There was little recovery until 2013 when new car registrationsrose by 10.8 per cent. to 2.26 million, their highest point since 2007. In December 2014, the number ofnew cars registered increased by 8.7 per cent. compared to the number registered in December 2013,marking the 34th consecutive month of growth. Overall, the market grew by 9.3 per cent. in 2014. 2014also recorded the fourth highest volume of new vehicle registrations.

The rise in new car sales from 2013 has been partly driven by a combination of aggressive pricing, cheapfinance offers and pent-up demand from the recession. Personal contract purchases (PCPs) in particularplayed a key part in the increase, consisting of finance sold with the car with a deposit paid at the outsetand with following monthly payments over an agreed term (usually 36 months). The key difference betweenPCPs and the hire purchase arrangements traditionally available is that, under a PCP, the repayment of asubstantial part of the car’s value is left until the end of the agreed term. At the end of such term, thecustomer may take ownership of the car by making a final payment for the remaining value, return the carwithout further payment, or use any difference between the bullet payment and the trade-in value of thecar as part of a deposit on a new model.

In addition to the above, BCA has suggested2 that the following factors might also have driven the growthof the new car market:

● historically low interest rates have led to an increase in new car registrations as they have allowedcheaper financing and encouraged consumers to spend their savings;

● incentive arrangements and attractive finance deals offered by OEMs in a bid to keep their operationsrunning against the backdrop of a weak economy in the Eurozone;

● motorists replacing used vehicles to pre-empt possible problems in future or to take advantage ofnewer and more fuel efficient models; and

● used car prices have been strong for some time, encouraging motorists to substitute their vehiclesby way of part-exchange arrangements.

The UK used car marketThe UK used car market is significantly bigger than the new car market, with BCA reporting used car salesreaching 7.4 million units and a record market value of £42.7 billion in 2013. The market has grown steadilyfrom its recessionary low, and is approaching its previous 2004 peak of 7.7 million units.

Over the past five years, comparatively low new car volumes have affected the supply of first-time usedcars entering the used car market, however, supply is now increasing. OEMs and franchised dealershipsare reliant upon strong first time used car sales, as the majority of such cars are replaced with a new vehicleby their sellers. Conversely, the used car market is dependent on the supply of younger used carsgenerated by new car buyers disposing of their previous vehicles.

The SMMT reports3 that the number of cars in the UK parc grew by over 400,000 units in 2013 as new carregistrations rose and owners continued to run their cars longer, representing the fastest growth in tenyears. BCA anticipates4 further increases in the parc as new car volumes continue to rise and this shouldalso improve younger used car supply. As mentioned above, new car registrations over the past couple ofyears have been increasingly driven by finance offers, PCPs in particular, many of which will conclude inthe next two or three years resulting in those vehicles entering the used car market.

The UK leasing marketThe industry newspaper Fleet News has reported that the UK leasing market reached a five year high in2014, with the UK’s 50 largest leasing companies having a combined fleet of 1.33 million vehicles, a growthof 7 per cent. from 2013, and only 1.7 per cent. below 2009 levels. A pre-recessionary high of 1.5 millionvehicles was previously reached in 2008.

24

1 http://www.british-car-auctions.co.uk/About-Us/Latest-News/6-November-2014---BCA-Used-Car-Market-Report-2014/2 http://www.bca-group.com/~/media/Files/B/BCA/documents/bca-2013-used-car-market-report.pdf3 http://www.smmt.co.uk/2014/03/decades-fastest-growth-sees-almost-32-million-cars-road/4 http://www.british-car-auctions.co.uk/About-Us/Latest-News/6-November-2014---BCA-Used-Car-Market-Report-2014/


The British Vehicle Rental & Leasing Association (BVRLA), a trade body for the vehicle rental and leasingindustry, expects growth to continue in 2015. Further growth is anticipated in the ultra-low emission vehiclesector, partly due to UK government grants to support ’plug-in’ electric cars.

The UK aftersales marketAftersales involves the servicing, maintenance and repair of vehicles, including bodyshop repairs and retailof parts and vehicle accessories. The aftersales market is highly dependent on the parc. The parc in theUK grew by over 400,000 units to 31.9 million in 2013, with further increases in the parc expected in 2015.The parc can be segmented by vehicle age into separate markets. According to a BCA report, in 2014approximately 30 per cent. of the parc comprises cars of less than five years old, around 20 per cent.comprises cars of six to eight years old, with the remainder made up of cars of nine years or older. Thesize of these age groups is determined by the number of new cars entering and exiting the parc and theaverage age of cars in use is increasing, from 6.69 years per car in 2004 to 7.79 years in 2014.

Increased new and used car activity will benefit the aftersales servicing and repair business. In particular,growth in the less than three year old segment of the parc is expected in 2015 as result of increased newvehicle supply. The aftersales market is resilient to adverse economic conditions, since, as compared toother sectors, such conditions have less impact on the demand for servicing and repair activity. This isbecause regular maintenance and repair of vehicles are necessary for their safety, economy andperformance.

The factors above have led to growth in the aftersales market, and this area is expected to improve furtherin 2015.

4. StrategyHaving successfully completed its five year plan to 2013, the Company now aims to achieve strategicgrowth and become the nation’s premier automotive dealer group for both retail and leasing. It will seek todo this by focussing on its Five Key Strategic Pillars as follows:

*ROCE adjusted for capitalised lease commitments in 2014 was approximately 16.9 per cent.**Source of new enquires, up from 34.1% Q1 2012

***Source Great Place to Work Survey 2014

Class Leading ReturnsThe Directors believe that as a result of strengthened operating margins in acquired dealerships,considered capital deployment and effective working capital control, the Group has delivered strong ROCE,including achieving 24.0 per cent. in the year ended 31 December 2014.

ROCE 24.0% *

Customer Advocacy

43.3% **

Internal Phoenix IP,

Strong Online Presence

Great Place to Work

81% Organic and Acquisitive

25


Group historical ROCE

Customer firstCustomer service is key to the Group’s business both as a motor retailer and a provider of vehicle leasingservices.

It commissions ongoing independent surveys to measure customer satisfaction. The independentcustomer surveys conducted in 2014 in respect of Marshall Motors showed 97.2 per cent. of customerssurveyed were very satisfied or completely satisfied with Marshall Motors’ service. 43.3 per cent. (in Q42014) of the customers surveyed in 2014 were using Marshall Motors’ services because of a good previousexperience with the business or on the recommendation of a third party. This customer advocacy is key tocapturing repeat car sales as well as attracting customers to dealerships to purchase additional highermargin aftersales products.

Marshall Leasing also offers a high standard of service, and in 2013 was voted winner of the ACFO FleetService Company of the Year Award. ACFO (Association of Car and Fleet Operators) is the premierrepresentative organisation for fleet decision-makers in charge of cars and light commercial vehicles. Inaddition to the 2013 award, Marshall Leasing was runner up in 2011 and 2012 and winner of the award in2010. It is this customer focussed service which differentiates Marshall Leasing from its competitors, manyof which are owned by banks or vehicle manufacturers.

Retailing excellenceThe Directors consider that the Group maintains its edge in a competitive and dynamic industry by way ofinnovation and creativity. This has been demonstrated through the Group’s development of Phoenix, itsbespoke dealer management reporting system. Core to the Group are its sales processes by which bothcustomer acquisition and margin retention are carefully monitored and executed. The Group also has aculture open to change and rewards its employees for their ideas used to improve the business.

People centricThe Company is committed to recruiting, training and retaining talent in the industry. Since 2008, the Grouphas acquired or started 51 franchises (whilst also exiting a number of non-core or subscale businesses)and grown from 41 franchises to 71. Despite significant portfolio churn and expansion in headcount, theGroup has consistently improved its results in the Great Place to Work survey. The Directors believe this isdue to the Company’s commitment to its people and its core values. This is also demonstrated by MarshallLeasing’s average staff retention of 17 years.

12.4%

21.5%

24.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2012 2013 2014

26


The Group has developed the Marshall Academy, which provides learning and development programmesfor its staff. The Marshall Academy works closely with the Group’s businesses, so that each programmefocuses on developing people to be effective in their roles and fosters alignment with the Group’s culturalvalues. It provides development opportunities by way of bespoke training for sales, aftersales andmanagement roles. The Group has also implemented the Marshall eAcademy, an online development toolwhich allows its employees to be assessed against relevant industry competencies and benchmarks, andundertake development to reach those benchmarks. The Group has worked in partnership with theInstitute of the Motor Industry and Aston University to develop this assessment tool.

The Group has participated in the Great Place to Work survey since 2008. This survey is run by the GreatPlace to Work Institute, an independent organisation, which enables employees to submit anonymousfeedback in respect of their employers. The 30 largest companies by headcount taking part in the GreatPlace to Work survey obtained an average trust index of 79 per cent. The trust index measures employees’rating of management’s credibility, respect for staff and fairness. Since it began taking part in the Great Placeto Work survey, the Group’s trust index has steadily increased to above the average of the 30 largestcompanies in 2014. The Group has a high engagement rate, with 89 per cent. of its staff taking part in thesurvey in 2013, in contrast with an average survey engagement rate of 69 per cent.

The Group in 2014 improved its scoring in the Great Place to Work survey across all metrics 2014 UK Best Large 2013 2014 Workplaces

Credibility 77% 82% 79%Respect 74% 80% 78%Fairness 76% 79% 78%Pride 78% 82% 81%Camaraderie 78% 83% 83%Overall 77% 81% 80%

The Great Place to Work Survey has seen an improvement in the Group’s overall score to 81%in 2014

Strategic growthMarshall Motors believes it can grow by expanding into other English geographical locations in which itcurrently has no presence and focusing on brands with sufficient room for growth. The Board considersthat Marshall Motors is well positioned to utilise these opportunities. It has a diversified portfolio of prestige,alternate premium and volume brands consisting of 14 core OEM partners, and scope for growth with themajority of these. Marshall Motors has also developed strong relationships with its OEM partners, whichthe Directors believe are key to achieving growth on this basis. Marshall Motors is currently in negotiationsto enter into a new brand by way of start-up, which is not considered to be material, although there canbe no certainty on timing for completion of this transaction or that completion will occur. Part of the netPlacing proceeds, together with the Company’s revolving credit facility of £75 million, is expected to enableMotor Holdings to achieve strategic growth by participating in larger scale industry consolidation.

The Directors believe that should growth through brands reach saturation point in England, there are alsoopportunities available for the Company to expand elsewhere at a later stage. The Company has in recent

50%

55%

60%

65%

70%

75%

80%

85%

2008 201320132009 2010 2011 2012 2013 2014

27


years been approached by existing brand partners to explore such opportunities, but its focus has beenand continues to be in England where consolidation prospects are available.

5. Current Trading and ProspectsThe Board is targeting another year of material improvement in the Group’s trading performance during theyear ending 31 December 2015. This will be driven by improved trading performance as a result ofcontinued improvements from past portfolio changes the Group has made, continued outperformance ofthe new and used car market (despite the SMMT forecasting a lower growth rate in new car registrationsyear on year) and by maintaining the Group’s gross margin.

This is expected to be achieved notwithstanding the additional overhead costs relating to the Group’squoted status and additional interest costs associated with the Group’s new banking facilities.

The Group’s effective tax rate is expected to be approximately 24 per cent. for the year ending31 December 2015. Total 2015 retail capital expenditure is likely to be approximately £10 million.

The Group’s trading performance in the first two months of the current financial year was in line withmanagement’s expectations. The Group’s retail activities recorded satisfactory performance over thisperiod and its leasing activities continued its track record of steady growth on past performance.

March and September remain important trading months for new car sales with the change in theregistration plate. The Board now has increased visibility on the likely outcome for March 2015. As a result,Q1 2015 profits will be ahead of the same period in 2014 (which was a record for the Group). Thisincreases the Board’s confidence of delivering the targeted material improvement in full year tradingperformance as detailed above.

The Group’s interim results for the six months ending 30 June 2015 are expected to include an exceptionalcost item relating to the settlement of historic LTIP liabilities and transaction costs. The amount will befinalised at the interim audit review but is not expected to be more than £1.0 million.

Longer term, the Directors believe the Group’s prospects are attractive as it successfully executes itsstrategy of continued operational focus and participating in the expected further consolidation of the UKmotor retail industry with its existing OEM partners.

6. Financial InformationThe table below, which has been extracted from the historical financial information set out in Part III of thisdocument, sets out a summary of the financial results of the Group for the three years ended 31 December2014. Prospective investors should read the full historical financial information in Part III of this documentand not solely rely upon the summary below.

Year ended Year ended Year ended 31 December 31 December 31 December 2012 2013 2014 £ million £ million £ million

Revenue Retail 763.6 906.8 1,050.5 Leasing 30.7 33.5 35.2 Unallocated 0.1 0.1 0.2 Total 794.4 940.5 1,085.9

EBIT 6.8 12.5 15.2Profit before tax 4.5 10.2 12.8ROCE 12.4% 21.5% 24.0%Net assets 56.0 60.7 66.2Adjusted net debt* 4.0 4.7 4.7

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* Net debt adjusted to exclude asset backed financing associated with Marshall Leasing.


7. Dividend PolicySubject to the Group’s trading prospects being satisfactory, the Board intends to implement a dividendpolicy whereby dividends are covered by between 4 to 5 times underlying earnings and paid in anapproximate one-third (interim dividend) and two-thirds (final dividend) split. The Board expects theCompany’s first dividend as a quoted group to be a pro-rated interim dividend for the six months ended30 June 2015.

8. Financial PositionThe Board believes it is in the interests of many of the Company’s stakeholders, be those shareholders,OEMs, employees, or lenders to the Company, that the Company maintains a sound financial position andhas the financial capacity to execute its strategy. The Company has recently entered into a revolving creditfacility of £75 million on competitive terms and pricing and the Board targets net bank indebtedness(excluding lease liabilities) of not more than 1.25 times net debt / EBITDA within its future results. Thisleverage may rise for a period of time up to the Company’s banking facility limit of not more than 3.0 timesnet debt / EBITDA due to an exceptional acquisition or property opportunity, in which instance the Boardwould actively seek to reduce that leverage in a timely manner post such acquisition or propertyopportunity.

9. Board of Directors and Senior Management

Board of DirectorsThe Company currently has seven directors, of which three are independent non-executives. Under theterms of the Relationship Agreement (details of which are set out in paragraph 10.3 of Part V of thisdocument), and conditional on Admission, MCHL is entitled to appoint two of its nominated directors tothe Board, so long as it holds 30 per cent. or more of the Ordinary Shares. As at Admission it will haveappointed one of its nominated directors, being Christopher Sawyer.

Peter Johnson (aged 67) – Non-Executive ChairmanPeter has over 40 years’ experience in the automotive sector, spending 30 years in senior roles in retail anddistribution with the Rover group, Inchcape and Marshall. After previously leading the Marshall retailbusiness between 1990 and 1995, he joined Inchcape, heading up its retail operation. He was thenappointed to run Inchcape Motors International and in 1999 was made the chief executive of Inchcape plc.During the period between 1999 and 2005, working alongside Alan Ferguson, Daksh Gupta and MarkRaban, Peter oversaw the group’s growth in market capitalisation from around £250 million to over £1.5billion.

In addition to being the Company’s Chairman, Peter is currently a non-executive director of MCHL,however, he will resign from the MCHL board with effect from Admission. Peter has served on the BunzlPublic Limited Company board from 2006 to date as its senior independent director and chairman of itsremuneration committee. He also chaired Rank plc from 2007 to 2012 and served on the Wates GroupLimited board from 2003 to 2013. Peter is due to be appointed chairman of the Retail Motor IndustryFederation in June 2015.

Daksh Gupta (aged 44) – Chief Executive OfficerDaksh has over 20 years’ experience in the automotive retail sector and joined the Company in 2008 asits Chief Executive Officer. Daksh was previously group managing director for Ridgeway Group and thechief operating officer of Accident Exchange Group PLC in 2007. He was also franchise director forInchcape for seven years where he was resp

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