<p><strong>Shareholder Update: </strong></p>

<p>Enclosed is the first draft P&amp;L and cash flow forecasts for South West Leisure Ltd.</p>

<p>For the period August &ndash; December 2020 we have assumed a drop in F&amp;B revenue of 40%. This is driven by Government enforced social distancing requirements and a significant drop in customer demand and spend per head. For the period January &ndash; July 2021 the discount to &ldquo;normalised revenue&rdquo; narrows until reaching 85% of normalised revenue in July 2021. The management team expects the Crown to perform better than the wider portfolio given its large outdoor covered seating area integrated into the dining room and residential location.</p>

<p>As more detail is provided by Government on how pubs can operate in a post COVID-19 environment we will be able to develop the forecasts further. There could be an ability to take advantage of weekly trading patterns across the Harcourt Inns estate and move staff accordingly and hence reduce wage costs although this will be subject to any reorganisation.</p>

<p>The company is in discussions with several banks/lenders to refinance the existing loan and all options will be considered including a share issue or a restructuring. The company intends on providing shareholders with a proposal, including financing options, in early July.</p>

<p>In the short term the company is looking at the bounce back loan scheme to aid cash flow.</p>

<p>Harcourt Inns is in discussions to bring on board two highly experienced business operators in the next few weeks to help guide the group through a challenging transition period, the medium-term effects of COVID-19 and hopefully the subsequent long term success of the Crown and the group as a whole. Although we aren&rsquo;t in a position to mention names at this stage one appointment, as Chairman, is a highly regarded operator and CEO having built and subsequently sold a multi-billion pound operational real estate business and the other appointment, who will become a non executive director, built and sold one of London&rsquo;s most successful pub, dining and hotel groups over the last 15 years. These two new appointments will be subject to any reorganisation of the wider group. In terms of EIS and on the advice of the company&rsquo;s tax advisers, Philip Hare &amp; Associates, the EIS application was withdrawn. The reason for this was a concern relating to HMRC enquiries into two other EIS pubs schemes managed by Harcourt Inns &amp; Ducalian. Naturally, the EIS submission will be shaped around HMRC&rsquo;s response to these applications and we hope to have a definitive answer in July at which point the SWLL submission can be made. The overall view from PHA is that SWLL should be an EIS-qualifying business but it would be prudent to wait for the conclusion of the latest HMRC enquiries.</p>