<p>This is an email from JM on 1 June 2020.&nbsp; It includes projections for a post CV-19 opening, and is the first admission that Harcourtis in serious financial distress.</p>

<p>However, the email fails to communicate the exact scale of the losses accrued to date and the fact that the pub is practically out of working capital and has levered all the assets of the investors in loans that have been spent through mismanagement to date</p>

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

<p>Enclosed is the first draft P&amp;L and cash flow forecasts for Harcourt Pub Ltd. As more detail is provided by Government we will be able to develop the forecasts further but unfortunately the Harcourt doesn&rsquo;t lend itself well to &ldquo;social distancing&rdquo; given its size and combined with many office workers working from home in the next six months the outlook isn&rsquo;t positive. 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 a reorganisation of the group.</p>

<p>The operating losses are significant and combined with a high non operating cost base the pub is unsustainable in its current structure. Furthermore, considerable capital investment is required to develop the hotel rooms, subject to planning, and again in the current single pub structure with high non operating expenses, any investment may not yield the required returns and will require a long term view.</p>

<p>Prior to COVID-19 and lockdown we were close to securing an exit solution to present to shareholders. Unfortunately this is no longer an option and so we have been working on an alternative exit plan to present to shareholders in the coming weeks.</p>

<p>There is now an urgent need to reorganise the structure of the pub and although the detail is being worked on we are looking at options that provide shareholders with a partial exit, equity upside to share in the future performance of a fully developed and operational pub &amp; hotel and the benefits of a long term recovery in values.</p>

<p>Harcourt Inns expects to be able to appoint 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 pubs 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.</p>

<p>We intend to provide a shareholder exit proposal in July 2020.</p>