<p><strong>Summary of call</strong></p>

<p><strong>Attendees:</strong></p>

<ul>
	<li><strong>James McCulloch (JM)</strong></li>
	<li><strong>Rachel Rossiter</strong> (RR)</li>
	<li><strong>John Soden</strong> (JS)</li>
	<li><strong>Steve Nurse</strong> (SN)</li>
</ul>

<p>&nbsp;</p>

<p><strong>JM demands apology from SN calling RR (0-mins)</strong></p>

<ul>
	<li>JM demand apology from SN for calling RR to chase promised financials</li>
	<li>&ldquo;Want to be helpful, believe we are being helpful, but there is a crossover point&quot;</li>
	<li>SN apologises</li>
</ul>

<p>&nbsp;</p>

<p><strong>JS asks for a snapshot of each pub with respect to reopening (2-mins)</strong></p>

<ul>
	<li>JM: They are currently preparing analysis of break-even point for each pub, based on a rota of staff and partial opening</li>
	<li>Proposed running short-term (August-November) test program and provide week by week analysis</li>
	<li>Suggested his plan that was almost &ldquo;break-even&rdquo;</li>
	<li>Recognised consumer demand is somewhat unknown</li>
</ul>

<p>&nbsp;</p>

<p><strong>SN asked for the definition of break-even (4mins)</strong></p>

<ul>
	<li>SN:Does the break-even proposal include management fees?
	<ul style="list-style-type:circle">
		<li>JM : Includes head-office fees but not management fees</li>
	</ul>
	</li>
	<li>Asked why he would not include management fees?
	<ul style="list-style-type:circle">
		<li>JM &ldquo;it would be almost impossible to get to [to break-even] &rdquo; &nbsp;</li>
		<li>Admits it is impossible to get any of the pubs to be profitable if including management fees
		<ul>
			<li>Note: JM has a tendency to report PnL of pubs excluding non-operating costs (fees,interest).&nbsp; I pulled him over this when we met in February but he persists on this in his communications.&nbsp;</li>
			<li>His argument to me in February, is that management fees were not part of buy-out multiples.&nbsp;</li>
			<li>My retort would be that that is fine to point out to investors for the future<em> possibilities</em>, but the base case when speaking with investors about historic performance is that all costs have to be included.&nbsp; No other business operates like that, and to make that assumption when presenting, and not explicitly pointing out, is deception. Personally I would have some sympathy for that approach if the fees were a small percentage of the profit, but in this case the sin of omission wholly obfuscates the reporting of value by changing a small profit into an unsustainable heroic loss. My view is that JM is guilty of systematic, repeated and pre-meditated misrepresentation to investors to avert attention and prolong the duration of his management fees &nbsp;</li>
		</ul>
		</li>
	</ul>
	</li>
	<li>Rachel points out consider long-term value of hotel rooms
	<ul style="list-style-type:circle">
		<li>Note:&nbsp; Should have asked JM and RR if they &ldquo;believe in that strategy&rdquo; and after a &lsquo;Yes&rsquo; suggest they subordinate their fees until investors had been returned par</li>
	</ul>
	</li>
	<li><em>JM concedes it will be the shareholders decision whether to reopen</em></li>
</ul>

<p>&nbsp;</p>

<p><strong>SN Asked why should we reopen if the pubs can&rsquo;t make money (6mins)?</strong></p>

<ul>
	<li>JM answer: Inertia around hiring staff</li>
</ul>

<p><strong>What is he currently working on:</strong></p>

<ul>
	<li>JM noted that the creditors will want a plan, which can&rsquo;t just be mothballing, but will require refinancing or cashflow injection. &ldquo;Being worked on as we speak&rdquo;</li>
	<li>JM Promise/deliverable: By Friday 26th June, will circulate updated PnL and cashflow forecast, based on rotas agreed. Promised now: cash positions/creditors.&nbsp;&nbsp; Note: done</li>
</ul>

<ul>
	<li>HR advisors to advise on cost of redundancies &ndash; &ldquo;massive redundancies being planned&rdquo; (somewhat contrary to his prior statement on importance of continuity of staff?)</li>
</ul>

<p>&nbsp;</p>

<p><strong>Discussion of Tronc (8mins)</strong></p>

<ul>
	<li>Background information on structure of pay (NI on service charge). Not important to the decision process</li>
</ul>

<p>&nbsp;</p>

<p><strong>Asked which pubs will reopen</strong></p>

<ul>
	<li>Harcourt &ndash; no</li>
	<li>Three Cranes- &nbsp;Discussed pedestrianizing the road nearby and take-away
	<ul style="list-style-type:circle">
		<li>Note this is not new news and was part of the original plans</li>
	</ul>
	</li>
	<li>KPH - Maybe</li>
	<li>Hero - Yes</li>
	<li>Coach -Yes</li>
	<li>Crown &ndash; Open
	<ul>
		<li>See email sent .</li>
	</ul>
	</li>
</ul>

<p>&nbsp;</p>

<p><strong>JS asked about working capital and immediate cashflow needs</strong></p>

<ul>
	<li>Food &ndash; will be bought daily</li>
	<li>Trade creditors that they owe money to are not chasing for payments and they are reliant on relationships
	<ul>
		<li>Sites with more cash are paying more money to suppliers</li>
		<li>Sites with less cash (Hero, KPH) paying less to suppliers</li>
		<li>Can&rsquo;t afford to re-stock wine cellars</li>
		<li>All suppliers being &ldquo;incredibly understanding&rdquo;
		<ul>
			<li>One moving to CoD.&nbsp;</li>
		</ul>
		</li>
	</ul>
	</li>
	<li>Unbelievable that they are dramatically short of cash and are in a desperate positio</li>
	<li>&nbsp;</li>
</ul>

<p><strong>Are they planning on taking on debt to finance working capital?</strong></p>

<ul>
	<li>JM ans:&nbsp; this is what he is working on and will &ldquo;present in July&rdquo;</li>
	<li>Bounce-back loans</li>
	<li>JM agrees it is down to shareholders how to refinance (my view: yes, now he has no options on bank debt)</li>
</ul>

<p>&nbsp;</p>

<p><strong>Asked what he would be &ldquo;presenting on the 4 July&rdquo; (38mins)</strong></p>

<ul>
	<li>Restructuring proposal mentioned in the past</li>
	<li>Integrating businesses where we can, considering tax issues</li>
	<li>Exit to shareholders and a share of any future performance</li>
	<li>No indication yet on levels</li>
	<li>Will bring to the advocacy team first before to wider shareholders, alongside other options</li>
	<li>In discussions with the banks</li>
	<li>Will work out the strategic plans together to benefit all shareholders</li>
</ul>

<p><strong>Bounceback loans</strong></p>

<ul>
	<li>Applied for bounce-back loans</li>
	<li>Harcourt agreed, but not paid</li>
	<li>One thing pressing &ndash; Andrew Ending (Harcourt) &ndash; he is threatening to take wind-up proceedings against the Harcourt&nbsp; (Sansar)</li>
</ul>

<p>&nbsp;</p>

<p><strong>Sansar- When did Sansar stop working (45mins)</strong></p>

<ul>
	<li>JM ans:&nbsp; Stop working over 12months ago</li>
	<li>Wants a payment of 18months fee on top of what he was owed</li>
	<li>Started 2016.&nbsp; Did 3 yrs and asking a year and a half</li>
	<li>However, they continue to use Sansar to do the accounts.
	<ul style="list-style-type:circle">
		<li>&quot;Rachel &ndash; what does Vinesh do?&quot;</li>
		<li>Owed 171k.</li>
	</ul>
	</li>
</ul>

<p><strong>Costs to mothball Harcourt</strong></p>

<ul>
	<li>Insurance : 2k</li>
	<li>PoS systems &ndash; negotiate exit/reduction</li>
	<li>Non-operating costs</li>
	<li>Interest accruing but not being paid.
	<ul style="list-style-type:circle">
		<li>RBS have agreed to capitalise interest</li>
	</ul>
	</li>
	<li>The proposal for the Harcourt will clear up a lot of these issues.
	<ul style="list-style-type:circle">
		<li>Capital for recovery and build out</li>
	</ul>
	</li>
</ul>

<p><strong>Valuations</strong></p>

<ul>
	<li>Any sale will be perceived as distressed</li>
	<li>Has to be a third party arms length sale to trigger termination of contracts</li>
	<li>Fair summary -dire -&nbsp; will be tipped over in a few months</li>
</ul>

<p>&nbsp;</p>

<p><strong>Next most stressed - KPH</strong></p>

<ul>
	<li>Metro bank</li>
	<li>&nbsp;Got loans for Coach and 3 Cranes</li>
	<li>xxx</li>
</ul>

<p>&nbsp;</p>

<p><strong>Bounce back loan (58mins)</strong></p>

<ul>
	<li>JS suggested that they get application for bounce-back loans, but do not take until approval agreed by shareholders</li>
	<li>JM- agreed to that&nbsp;</li>
</ul>

<p>&nbsp;</p>

<p><strong>Metro bank</strong></p>

<ul>
	<li>Relaxed covenants, and interest is being deferred</li>
</ul>

<p>&nbsp;</p>

<p><strong>Downing (Hero and KPH)</strong></p>

<ul>
	<li>Wholly confused description of what the loan is with Downing</li>
	<li>No covenants other than paying interest</li>
	<li>But not sustainable</li>
	<li>Need a plan by early July of a plan of a sustainable plan</li>
</ul>

<p>&nbsp;</p>

<p><strong>Chiswick</strong></p>

<ul>
	<li>Lendinvest.&nbsp; Pulled refi in Feb CV19
	<ul style="list-style-type:circle">
		<li>Short term liabilities</li>
		<li>Interest &ndash; bridging loan at 0.08%</li>
	</ul>
	</li>
	<li>Why are the using fledgling banks?</li>
	<li>Coutts &ndash; hire a director to access loans,&nbsp; Sounds sketchy</li>
</ul>

<p>&nbsp;</p>

<p><strong>Discussion on local council debts</strong></p>

<ul>
	<li>Council tax during refurbishing</li>
</ul>

<p>&nbsp;</p>

<p><strong>Management fees</strong></p>

<ul>
	<li>Harcourt investments &ndash; replacement of Ducalian</li>
	<li>Ducalian &ndash; outstanding prior to April 2019. Invoiced &ndash; but not paid?</li>
	<li>Harcourt Inns &ndash; Head office- Henry, Steve, Jen (Marketing), events team
	<ul style="list-style-type:circle">
		<li>Passed down to the pubs</li>
	</ul>
	</li>
</ul>

<p><strong>Guinness Asset management charge</strong></p>

<ul>
	<li>Essentially like for like replacement of Ducalian fee.&nbsp;</li>
	<li>Not a problem</li>
</ul>

<p>&nbsp;</p>

<p><strong>Loans Harcourt Investments to other pubs</strong></p>

<ul>
	<li>JM lending from Harcourt Investments to meet liquidity needs</li>
</ul>

<p>&nbsp;</p>

<p><strong>Exit proposal &ndash; who is helping Partner at TDR capital </strong></p>

<ul>
	<li>Mike Smith, IMO Car wash</li>
	<li>Investor and CEO</li>
</ul>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><strong>Valuations (1hr 20min)</strong></p>

<ul>
	<li>Harcourt (Pre CV19)
	<ul style="list-style-type:circle">
		<li>&pound;3.05m for Harcourt as bricks and mortar</li>
		<li>Net creditors/loans - &pound;433k losses; &nbsp;RBS 561m etc</li>
		<li>=&gt; 40 cents</li>
		<li>Post CV19 it is &ldquo;not particularly good&rdquo;</li>
	</ul>
	</li>
	<li>Three Cranes (1hr 32min)
	<ul style="list-style-type:circle">
		<li>Savills - &pound;2.1m (pre CV19)</li>
		<li>Florets on Harcourt - &pound;2.2m post CV-19.&nbsp; Values equity at zero</li>
	</ul>
	</li>
</ul>

<p>&nbsp;</p>

<p><strong>Will you waive management fees given total value destruction?</strong></p>

<ul>
	<li>&ldquo;What&rsquo;s my incentive to do that&rdquo;?</li>
</ul>

<p>&nbsp;</p>

<p><strong>When is the proposal due - </strong></p>

<ul>
	<li>&ldquo;In July&rdquo;</li>
	<li>Returns will be significantly higher than if we sell now</li>
	<li>Aiming for valuations second week of July</li>
	<li>Face to face the proposal</li>
</ul>

<p>&nbsp;</p>

<p><strong>Alternative use value</strong></p>

<ul>
	<li>Harcourt may have resi value</li>
	<li>Hero &ndash; could be a hotel.&nbsp; Change</li>
	<li>&nbsp;</li>
</ul>

<p>&nbsp;</p>

<p><strong>Discussion of option to build hotel rooms in Harcourt</strong></p>

<ul>
	<li>Planning permission costs ~ 20k.&nbsp;</li>
	<li>Approval ~ 8 weeks</li>
	<li>Discussion on 8-9 room</li>
</ul>

<p>&nbsp;</p>

<p><strong>EIS (1hr 45mins)</strong></p>

<ul>
	<li>Promised to provide all information. &ldquo;Will get it to you&rdquo;&nbsp;</li>
	<li>Have not collated it yet and correspondence with HMRC</li>
	<li>Will chase Philip Hare</li>
</ul>

<p>&nbsp;</p>

<p><strong>Reopening</strong></p>

<ul>
	<li>People can come on/off furlough part-time.&nbsp; But not fulltime</li>
	<li>Deferring to shareholders&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	<ul style="list-style-type:circle">
		<li>Won&rsquo;t put it out to vote</li>
	</ul>
	</li>
</ul>

<p><strong>Weekly update on liquidity per pub</strong></p>

<ul>
	<li>Shareholders must be given the decision to take loans</li>
	<li>Rachel agreed to that too</li>
</ul>

<p>&nbsp;</p>

<p><strong>Furlough and redundancy </strong></p>

<ul>
	<li>Redundancies tied to minimise costs</li>
	<li>100 employees across the pub (!!)</li>
	<li>&nbsp;35 redundancies</li>
</ul>

<p>&nbsp;</p>

<p><strong>Apology requested for Harcourt investment</strong></p>

<ul>
	<li>No forthcoming</li>
	<li>Meeting terminated</li>
</ul>

<p>&nbsp;</p>

<p><strong>Ask to change the fee structure to avoid contra-alignment</strong></p>

<p><strong>Sensible offer required</strong></p>

<p>&nbsp;</p>

<p><strong>EIS</strong></p>

<ul>
	<li>JS asked if Steve Partridge can talk to Philip Hare</li>
	<li>- Whether waiting for relief is sensible etc</li>
	<li>JM &ndash; to set up meeting between Steve P and Philip Hare</li>
</ul>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>