<p><strong>Dear Harcourt Pub Group Shareholder,</strong></p>

<p>We write to you as shareholders with investments spread across the six pubs in the Harcourt Pub Group (&lsquo;HPG&rsquo;).&nbsp;</p>

<p>We have had concerns over a number of years about investor communication, the broader strategy of the HPG and in particular the plans for an exit.</p>

<p>Over the past 24 months we have held constructive meetings with James McCulloch and now wish to more widely engage with other shareholders on our findings.&nbsp; Our objective is to get wider shareholder support and to work together with management to maximise the value of our investment.</p>

<p>The discussions that we have been having with the pub management are around the following topics:-</p>

<ol>
	<li>Investor communication has been very poor and needs to improve.</li>
</ol>

<ol>
	<li>Whilst progress is being made around the receipt of EIS clearance for the last three pubs, investors have not been updated and this is resulting in tax planning challenges for many investors.</li>
</ol>

<ol>
	<li>The split of Ducalian into storage and pub divisions has left the management of the pubs very dependent on a limited number of key individuals.&nbsp;&nbsp;&nbsp; James McCulloch and Henry Harris are the sole directors of the pub companies and neither have corporate finance experience.</li>
</ol>

<ol>
	<li>We have collectively invested c.&pound;30m in a series of investments that have little corporate governance.&nbsp; For example, were this to be a VCT there would be non-executive directors monitoring the implementation of the asset management agreement to ensure that the correct fees are being paid, signing off the accounts and agreeing strategy.</li>
</ol>

<ol>
	<li>Losses appear to be mounting on some of the assets and there is concern about trading performance, in particular as we look to be heading into a rough trading environment with Coronavirus.&nbsp; Investors would have expected more cash to have been accumulating in the asset owning companies.&nbsp;</li>
</ol>

<ol>
	<li>There are concerns about the complexity and cost and therefore profitability of the food offering.&nbsp;</li>
</ol>

<ol>
	<li>&nbsp;The exit strategy is unclear.&nbsp;&nbsp; James is being encouraged by some investors to sell each pub separately.&nbsp;&nbsp; HPG is structured with many central functions.&nbsp; &nbsp;The final pubs sold would incur significant overheads.&nbsp;&nbsp; We believe that an orderly sale will only be possible if all the pub companies work together.</li>
</ol>

<ol>
	<li>There could well be conflicts of interest between management and investors around the sale of the pubs and the route to market as either a series of assets or a functioning business.</li>
</ol>

<p>&nbsp;</p>

<p>Having identified the potential issues, as a shareholder group we are clear that we need to work constructively with the existing management.</p>

<p>We are proposing that a Steering Committee of interested shareholders is created to work with management to ensure an orderly exit for shareholders and better communication.&nbsp; This Committee will have no management responsibility nor act as shadow directors.&nbsp; It will, however, be a conduit through which shareholders can be informed and our views expressed.</p>

<p>Areas that the Steering Committee may consider looking at are as follows:-</p>

<ol>
	<li>Sending a representative to meeting with Philip Hare and Associates about the delay in getting EIS clearance</li>
</ol>

<ol>
	<li>Requesting that an appropriate consultant report to shareholders on the management of the pubs and why profitability is so low</li>
</ol>

<ol>
	<li>Entering into discussions with Guinness Asset Management who are the dominant shareholder in KPH to see if they wish to be part of a wider exist strategy</li>
</ol>

<ol>
	<li>Reviewing the implementation of the asset management agreement</li>
</ol>

<ol>
	<li>Working with management on the exit strategy</li>
</ol>

<p>&nbsp;</p>

<p>Decisions to sell any pub will need to be voted on by the respective pub company shareholders.&nbsp; This will require a simple majority of shareholders <strong>that vote</strong> to decide.&nbsp;&nbsp; Given the general lack of shareholder engagement in similar investments, it is possible that dysfunctional decisions to sell assets may be taken by minority shareholders.&nbsp; We believe it is in the interests of all parties to avoid a disorderly exit.</p>

<p>&nbsp;</p>

<p>&nbsp;We have concluded that requesting shareholder representation on boards at this stage is not practical or necessary.&nbsp;</p>

<p>&nbsp;</p>

<p>The purpose of this letter is to get your feed back on the issues outlined above and whether you would support the formation of a Steering Committee to represent shareholders.</p>

<p>&nbsp;</p>

<p>If you are supportive and would like to remain in contact please contact us on <a href="mailto:harcourtpubshareholders@gmail.com">harcourtpubshareholders@gmail.com</a></p>

<p>&nbsp;</p>

<p>If you would like to put your name forward to be on the Steering Committee we would also be interested to hear from you.&nbsp; In particular, we are looking for individuals in the hospitality sectors.&nbsp; There will be no remuneration.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Yours sincerely,</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Note:&nbsp; The numbers after our names represent our investements in each pub to the nearest &pound;&rsquo;000</p>