MMH.L Regulatory News (MMH)

17 November 2015

MARSHALL MOTOR HOLDINGS PLC

("MMH" or the "Group")

Acquisition of S.G. Smith

Marshall Motor Holdings plc, one of the UK's leading automotive retail and leasing groups, is pleased to announce the acquisition of SG Smith Holdings Limited ("SGS") for a cash consideration of approximately £24.4m (the "Acquisition"). The acquisition agreement provides for a retention of £1.7m, the release of which is subject to certain performance conditions, the completion of certain property developments and finalisation of the completion accounts.

SGS, which has been family owned and operated since it was founded in the 1930s, is a new and used car dealer group operating from locations across Kent, Surrey and London. SGS brand partners are Audi in the Wimbledon, Coulsdon, Bexley and Beckenham market areas; Skoda in Croydon; and Mercedes Benz commercial (after sales only) in Croydon.

The Acquisition is in line with MMH's growth strategy and enables the Group to grow with its existing brand partners, including a major expansion of the Group's relationship with Audi; Audi's future growth prospects are expected to benefit from an exciting new product pipeline over the coming years. The Acquisition also extends the Group's footprint into new and attractive geographic territories, being the Kent, Surrey and London markets.

The Acquisition has been funded from the existing cash resources of the Group. The Acquisition is expected to be materially earnings enhancing for the year ending 31 December 2016 and to generate a return on investment in excess of the Group's cost of capital* in the following year. Given the timing of the Acquisition after the important September plate change period, the Acquisition is expected to be marginally dilutive for the financial year ending 31 December 2015. In addition, the Group has incurred transaction fees and expenses in connection with the Acquisition of approximately £0.5m.

The Group has acquired the entire issued share capital of SGS from Robert Smith (the son of the founder and SGS Managing Director) and certain other family and non-family individual investors. Robert Smith will remain with the Group for some months to assist with the integration process.

Daksh Gupta, Group Chief Executive, commented:

"We are delighted to have acquired this long established, family run business and I am particularly pleased to welcome our new colleagues to the Group. The Acquisition is in line with our stated strategy to grow scale with existing brand partners and expand our geographic footprint. The business is a good cultural fit for the Group and we are delighted to be significantly growing our relationship with Audi, strengthening our Skoda representation and extending our partnership with Mercedes Benz in commercial vehicles."

Robert Smith, SGS Managing Director, commented:

"After over 70 years, it was important to our family to find a good home for our business and our people. The Acquisition brings together two long standing organisations with a rich history in automotive retail. I would like to thank the entire SGS team and wish them well with Marshall Motors over the coming years."

For further information and enquiries please contact:

Notes to Editors

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

The Group's principal activities are the sale and repair of new and used vehicles through Marshall Motors and the leasing of vehicles through Marshall Leasing. The Group's businesses are integrated and prior to the Acquisition, included a total of 71 franchises covering 24 brands, operating from 63 sites across 16 counties in England.

MMH is the only franchised dealer group in the UK to represent all of the top 5 premium vehicle manufacturer brands (being Audi, BMW, Mercedes-Benz, Land Rover and Jaguar) and all of the top 10 volume vehicle manufacturer brands (being Ford, Vauxhall, Volkswagen, Nissan, Peugeot, Toyota, Citroen, Hyundai, Kia and Skoda). Its diverse portfolio means it represents manufacturer brands accounting for around 88% of all new vehicle sales in the UK, the highest market coverage of any UK dealer group.

With revenues of £1.1bn in 2014, the Group is the tenth largest dealer group in the UK.

In May 2015 the Group was recognised by the Great Place to Work Institute, being ranked the 26th best place to work in the UK (in the large company category).

2. About SG Smith

The statutory audited consolidated accounts for S G Smith Automotive Limited (a wholly owned subsidiary of SGS) for the year ended 31 December 2014 reported revenue of £177.4m, profit before tax of £3.0m and total net assets of £12.2m. Unaudited management accounts covering the 9 month period to 30 September 2015 show profit before tax of c£2.9m. Prior to the Acquisition, certain trading and investment freehold properties were transferred out of SGS to a company controlled by the Sellers and will not be acquired as part of the Acquisition. SGS has, therefore, entered into leasehold arrangements for the continued occupation of two of the transferred properties at an annual rent expense of approximately £0.28m.

The Acquisition consideration includes c£9.3m in respect of the estimated consolidated net assets of SGS, subject to a completion accounts process, which included c£4.1m of freehold property and c£1.4m of net cash.

\* The 'return on investment' is a simplified calculation comprising net operating profit after tax divided by invested capital. We consider this a useful criteria to assess acquisitions, though alternative calculations could also be applied.

Cautionary statement

This announcement contains unaudited information based on management accounts or 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 announcement and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and MMH'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. Nothing in this announcement should be construed as a profit forecast