<p>o Sent by James McCulloch on the 14th May 2020.<br />
o No mention of loans, or financial distress of the pubs.</p>

<p>&nbsp;</p>

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

<p>Following the closure of the pubs in late March all employees were enrolled onto the Government Furlough scheme. This has helped provide security for staff during these difficult times.</p>

<p>We have negotiated short term interest and capital holidays with lenders and a temporary break on financial covenants.</p>

<p>Unfortunately, the hospitality sector was the first into lockdown and will be the last out of lockdown. Businesses will need to share the cost burden of the furlough scheme from August 2020 and the scheme will end entirely from October 2020. The biggest concern in the hospitality sector is the impact of reopening in a low revenue environment driven by Government forced and demand-led social distancing measures in the pubs and a structural shift from office to working from home with the latter having a particularly significant impact on central London pubs. Combined with low consumer spending and a decline in tourism in the medium term we expect a considerable negative impact on trading performance until 2022-23 and a loss of investor appetite until 2025 in line with the GFC.</p>

<p>Depending on Government guidance, the management team will take a view as to whether or not certain pubs should reopen in 2020 even after the Government has ended lockdown as social distancing and an unprecedented fall in demand could well make the pubs unsustainable in the next 12-18 months.&nbsp;</p>

<p>In terms of P&amp;L and cash flow forecasts we are waiting to receive more guidance from the Government as to how pubs and restaurants can operate post lockdown and indeed when lockdown will end. Once we have this guidance we will be in a better position to provide detailed forecasts showing likely cash burn and capital investment requirements. At this point we hope to be able to provide a strategy on how to proceed in this new climate including disposal or restructuring if required. &nbsp;&nbsp;</p>

<p>I will be in touch as soon as we have more information from Government on when and how lockdown will be eased for the hospitality sector.</p>

<p>Regards,</p>

<p>&nbsp;</p>

<p>James McCulloch</p>

<p>Managing Director</p>

<p>Harcourt Inns</p>

<p>Tel: 07904910301</p>

<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>

<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>

<p>&nbsp;</p>

<p><img src="data:image/png;base64,[encoded data, 108776 characters]" style="height:153px; width:811px" /></p>