<p>&nbsp;</p>

<p><a name="_MailEndCompose"></a></p>

<p><a name="_MailOriginal"><strong>From:</strong></a> Steven Partridge &lt;sjpmhh@gmail.com&gt;<br />
<strong>Sent:</strong> 06 July 2020 22:18<br />
<strong>To:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />
<strong>Cc:</strong> Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; David Smith &lt;parkhouse87@btinternet.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; Alistair Higgins &lt;Alistair.higgins@gmail.com&gt;<br />
<strong>Subject:</strong> Re: Harcourt Pubs</p>

<p>&nbsp;</p>

<p>I read again the income tax loss relief&nbsp;rules.&nbsp; They contain the same &quot;control and independence&quot; condition as the EIS rules. This means if HMRC successfully argue&nbsp;the pubcos are under the control of McC and Harcourt Inns, not only does that invalidate EIS, it rules out income tax relief&nbsp;for the&nbsp;capital&nbsp;loss.&nbsp;&nbsp;</p>

<p>&nbsp;</p>

<p>Alistair&nbsp;this could perhaps explain why you have conflicting advice on Section 131.&nbsp;&nbsp;</p>

<p>&nbsp;</p>

<p>Steve</p>

<p>&nbsp;</p>

<p>&nbsp; &nbsp; &nbsp;</p>

<p>&nbsp;</p>

<p>On Mon, 6 Jul 2020 at 13:18, John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt; wrote:</p>

<p>Dear all,</p>

<p>See EIS thoughts from Steve on impact of a sale before 3 years trading is up. Particularly relevant to the Coach.</p>

<p>Sent from my iPad</p>

<p><br />
Begin forwarded message:</p>

<p><strong>From:</strong> Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;<br />
<strong>Date:</strong> 6 July 2020 at 12:33:23 BST<br />
<strong>To:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />
<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>

<p>﻿</p>

<p>The Coach is tricky due to the open three year period.&nbsp; But the position is similar for Chiswick, Hero and KPH.</p>

<p>&nbsp;</p>

<p>If we sell the company, any value we get reduces the 30%.&nbsp; For&nbsp;example, if you invested 100, got back 30 and now receive 60 on a sale of shares, 18 of your&nbsp;30 gets clawed back by HMRC together&nbsp;with interest.</p>

<p>You then have a capital loss on the sale of 28 (60-100+30-18) which should be eligible for income tax relief&nbsp;at 45% ie 12.6.&nbsp; So you&nbsp;end up with 60-18+12.6.= 54.6 in your pocket,&nbsp;ignoring the interest.&nbsp; There&#39;s a tricky point here.&nbsp; If we sell within the&nbsp;three year period, the buyer I think needs to continue&nbsp;to ensure that the company continues to meet EIS eligibility&nbsp;for the remainder of the three&nbsp;year period (i.e continues the trade etc).&nbsp; This is a point to be checked with a proper EIS expert in due course as it seems odd that post sale events by a new owner can impact our position, but if so, we&#39;d need to include an&nbsp;undertaking in the sale agreement to that effect.&nbsp; (If this is a point, it will be more significant for the other three which are further away from their three year expiry).&nbsp;</p>

<p>&nbsp;</p>

<p>If the company sells the asset, on the face of it, it hasn&#39;t traded for the full three year period and this invalidates the initial&nbsp;EIS claim of 30 in its entirety - ie it&#39;s all potentially clawed back plus interest.&nbsp; However, if the sale is in the course of the administration or receivership of the company , then it should be possible to limit the clawback of the 30 as in the previous paragraph.&nbsp; There&#39;s another tricky point here.&nbsp; The sale has to be in consequence&nbsp;of the company going into administration of receivership, not the other way round.&nbsp; &nbsp;&nbsp;</p>

<p>&nbsp;</p>

<p>Would be good if we could defer the Coach sale until&nbsp;the three years has elapsed, as then we should be in the clear as far as clawback of the 30 is concerned.&nbsp; Would need to do a cost/benefit calculation&nbsp;to figure out whether&nbsp;delay is worthwhile.&nbsp; Btw, if we entered into&nbsp;put or call options in this regard, that wouldn&#39;t work.&nbsp; A put would invalidate&nbsp;EIS altogether.&nbsp; A call would be treated as a sale, so any value eventually received&nbsp;would lead to clawback of EIS as in the first paragraph.</p>

<p>&nbsp;</p>

<p>The period of non-trading inspired by Covid raises some questions.&nbsp; My read is that provided it remains the intention of the Coach to resume trading when the time is judged right, and it conducts no other activity in the meantime, this does not invalidate eligibility&nbsp;for EIS, nor should it extend the three year period.&nbsp; &nbsp;If it ever abandons that intention, we would want to put it into&nbsp;liquidation relatively&nbsp;quickly.&nbsp; I hope this is a moot point.&nbsp;</p>

<p>&nbsp;</p>

<p>Best</p>

<p>&nbsp;</p>

<p>Steve</p>

<p>&nbsp;</p>

<p>On Mon, 6 Jul 2020 at 11:06, John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt; wrote:</p>

<p>Not yet - I have chased.</p>

<p>The Coach has EIS but doesn&rsquo;t come out of its 3 year hold period till next Jan. What happens if we sell now - assume at a book loss. Do we lose any benefits or can there be any clawback of our 30% already received.&nbsp;</p>

<p>IE are we able to sell now if we want without adverse tax consequences?</p>

<p>Sent from my iPad</p>

<p><br />
&nbsp;</p>

<p>On 5 Jul 2020, at 18:14, sjpmhh &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt; wrote:</p>

<p>﻿</p>

<p>John</p>

<p>&nbsp;</p>

<p>Did you make contact with him?</p>

<p>&nbsp;</p>

<p>Best</p>

<p>&nbsp;</p>

<p>Steve</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Sent from my Samsung Galaxy smartphone.</p>

<p>&nbsp;</p>

<p>-------- Original message --------</p>

<p>From: John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;</p>

<p>Date: 03/07/2020 09:45 (GMT+00:00)</p>

<p>To: Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;</p>

<p>Subject: Fwd: Harcourt Pubs</p>

<p>&nbsp;</p>

<p>Hi Steve,&nbsp;</p>

<p>Did you ring him on this number? I want to chase him today and if he hasn&rsquo;t responded have a go at him.</p>

<p>Sent from my iPad</p>

<p><br />
Begin forwarded message:</p>

<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />
<strong>Date:</strong> 2 July 2020 at 14:09:09 BST<br />
<strong>To:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;<br />
<strong>Cc:</strong> Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;, David Smith &lt;<a href="mailto:parkhouse87@btinternet.com" target="_blank">parkhouse87@btinternet.com</a>&gt;, Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com" target="_blank">denis@ermakgroup.com</a>&gt;, Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com" target="_blank">n.curtis123@btinternet.com</a>&gt;, Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com" target="_blank">nicholasstockdale@googlemail.com</a>&gt;, Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com" target="_blank">Stephen.Phillips@templebright.com</a>&gt;, Alistair Higgins &lt;<a href="mailto:Alistair.higgins@gmail.com" target="_blank">Alistair.higgins@gmail.com</a>&gt;<br />
<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>

<p>﻿The no I have is 07904910301. It was definitely good as of 3 weeks ago. Suggest you call and send sms on it.</p>

<p>Sent from my iPad</p>

<p><br />
&nbsp;</p>

<p>On 2 Jul 2020, at 14:00, Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt; wrote:</p>

<p>﻿ Correct number.</p>

<p>&nbsp;I have recently communicated with JM on that number.&nbsp; May be worth sending a WA message.&nbsp;</p>

<p>Stephen Nurse. 447588 717515</p>

<p><br />
&nbsp;</p>

<p>On 2 Jul 2020, at 13:58, Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt; wrote:</p>

<p>﻿</p>

<p>I&#39;ve tried calling McC twice this morning.&nbsp; His phone rang on both occasions.&nbsp; The first attempt went dead.&nbsp; The second&nbsp;eventually went through to a non-personalised answering service.&nbsp; I left a message to the effect of &quot;where are we on the EIS requests, it&#39;s strange it&#39;s taking so long as you just need to instruct Philip Hare to deal openly with me, as a shareholder group we&#39;re beginning to get worried, call me back please&quot;.</p>

<p>&nbsp;</p>

<p>Will let you know if and when I hear back.&nbsp; I&#39;m not holding&nbsp;my breath.</p>

<p>&nbsp;</p>

<p>Btw, the number I have for him is 07904 910301.&nbsp; Does anyone have a different one?</p>

<p>&nbsp;</p>

<p>Best</p>

<p>&nbsp;</p>

<p>Steve</p>

<p>&nbsp;</p>

<p>&nbsp;&nbsp;</p>

<p>&nbsp;&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>On Thu, 2 Jul 2020 at 13:17, John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt; wrote:</p>

<p>The follow up to McCulloch</p>

<p>Sent from my iPad</p>

<p><br />
Begin forwarded message:</p>

<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />
<strong>Date:</strong> 2 July 2020 at 12:47:51 BST<br />
<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt;<br />
<strong>Cc:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;<br />
<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>

<p>﻿</p>

<p>﻿Dear James,</p>

<p>We need to move quickly to know where this is going and what your plans are. Shareholders are getting increasingly frustrated and you need to provide clear direction on your intentions to ensure you have their support. To that end;</p>

<p>&nbsp;</p>

<p>1. Your proposal to shareholders. Stephen and I have checked our notes of our call on 12 June and you said you expected to have a proposal by 4 July. In our call of 24 June we reiterated that we were expecting it by that date and you did not say no. You have now said in you recent email to Stephen that you did not commit to that date. Time is of the essence. When will you have it?</p>

<p>2. Part of evaluating your proposal is having the valuations available also. Please confirm when you will have the valuations and please provide the instructions given and to which firms as requested. Please send them through as available - do not wait to have all 6.</p>

<p>3. You have been working on a definitive proposal on furlough/cost of redundancies by pub especially given that certain pubs will be unable to open in the foreseeable future. We need to understand the implications and how you propose to fund the costs. Can we expect that info by tomorrow?</p>

<p>4. Can we have the list of proposed essential payments for each pub by tomorrow please together with the specific status for bounce back loans in each pub.</p>

<p>5. EIS - When is the call with Philip Hare to take place? We have yet to receive the correspondence which you promised weeks ago.</p>

<p>6. Please confirm alternative dates for the session with Steve Ham.</p>

<p>7. when will the Harcourt/Endean contract/correspondence be available?</p>

<p>&nbsp;</p>

<p>Stephen is following up separately on other specific info requests.</p>

<p>&nbsp;</p>

<p><strong>Please can we have a Zoom call tomorrow to discuss where you are generally and tie down each of these areas.</strong></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Sent from my iPad</p>

<p><br />
&nbsp;</p>

<p>On 1 Jul 2020, at 10:24, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt; wrote:</p>

<p>﻿</p>

<p>Dear John,</p>

<p>&nbsp;</p>

<p>Comments below in red.</p>

<p>&nbsp;</p>

<p>Regards</p>

<p>&nbsp;</p>

<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />
<strong>Sent:</strong> 29 June 2020 07:39<br />
<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt;<br />
<strong>Cc:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com" target="_blank">Stephen.Phillips@templebright.com</a>&gt;; Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;; Alistair Higgins &lt;<a href="mailto:Alistair.higgins@gmail.com" target="_blank">Alistair.higgins@gmail.com</a>&gt;; Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com" target="_blank">n.curtis123@btinternet.com</a>&gt;; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com" target="_blank">nicholasstockdale@googlemail.com</a>&gt;; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com" target="_blank">denis@ermakgroup.com</a>&gt;; John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com" target="_blank">john.soden@moorgateindustries.com</a>&gt;; David Smith &lt;<a href="mailto:parkhouse87@btinternet.com" target="_blank">parkhouse87@btinternet.com</a>&gt;<br />
<strong>Subject:</strong> Fwd: Harcourt Pubs</p>

<p>&nbsp;</p>

<p>Dear James,</p>

<p>Stephen and I have shared the information you have given us in our calls and by email in the last week or so with the core group. I am writing to set out initial thoughts and reactions.</p>

<p>There is a universal feeling of shock and disbelief at the financial position of the pubs and the extent of debt and commitments which have built up which significantly impact shareholder value. The high head office costs do not seem to be delivering the necessary benefits to all pubs even pre C-19. I won&rsquo;t comment on other than to say that much of the information has been available to investors from the last reporting period which included management accounts and balance sheets. Other than liabilities owed to Harcourt Investments and Ducalian many of the trading liabilities have been built up in Q1 2020 which is the worst quarter for trading and Feb was a particularly poor month weather wise which was felt across many other pub groups. You then recover from Jan &amp; Feb in the following months but unfortunately we didn&rsquo;t get a chance with the onset of COVID-19.</p>

<p>The head office costs seem to be a contentious point and so I thought I would cover this off in a little bit more detail. Head office costs are made up of the following (note Rachel is employed directly by each PubCo);</p>

<p>&nbsp;</p>

<p>Henry Harris, F&amp;B director &ndash; Henry is high profile and therefore attracts media, influencers, food bloggers and of course chefs (and GMs). Separating the PR &amp; marketing side one of the hardest areas to manage is the kitchen. You speak to any gastropub group and they would say building and retaining a strong kitchen team is the hardest part of a pub. For the number of pubs within the portfolio we would always need either a chef director or an executive chef who would still command a salary of &pound;70k+. Given several of the pubs are in locations that lack footfall and need to attract customers (ie destinations) we would always need an individual who can develop a top quality food offering &ndash; albeit perhaps &ldquo;pub grub&rdquo;. In any case we are discussing a reduced basic salary and linking his remuneration to a long term share incentive scheme although the latter doesn&rsquo;t work in the current structure.</p>

<p>&nbsp;</p>

<p>Steve Ham, Operations Manager &ndash; As you can imagine without an operations manager the pubs aren&rsquo;t sustainable. GM&rsquo;s need supervision, management, infrastructure, controls and support. Again I would like to look at long term share incentive scheme but under the current structure this doesn&rsquo;t work.</p>

<p>&nbsp;</p>

<p>Jen Booth, Marketing Coordinator &ndash; Jen oversees all PR and marketing activities for the portfolio. Her role is relatively new having only started in Q4 2019 but vital for the long term success of the pubs. Working with PR consultants, tone of voice, website developers and google marketing, in-pub promotions, instagram and supporting the GMs on local marketing activities.</p>

<p>&nbsp;</p>

<p>Events team &ndash; led by Ellie Laidlaw, events and private dining is a fundamental part of the pub&rsquo;s revenue streams. You only need to talk to other gastropub groups and we barely scratch the surface of what we could and should be doing. This is in large part because we didn&rsquo;t have a fully functioning events team until late Q3 2019. A business like Cubitt House, which is undoubtedly one the best in London, invests a lot of time and money into building a quality events team and the supporting infrastructure.</p>

<p>&nbsp;</p>

<p>In any case the events team will be shrunk and Ellie, who will be the only remaining member in the short term and like all other members of the head office team will have to carry out a multi-purpose role.</p>

<p>&nbsp;</p>

<p>Clearly under the current fragmented ownership structure and combined with the patience and long term approach required before benefits are realised, shareholders see no use in having a head office team.</p>

<p><br />
Our initial thoughts are that the priority is for immediate action to be taken to stabilise each pub and to protect value. To that end we believe you should not spend your time rushing or analysing how to re-open the pubs in the next few weeks because the situation is so uncertain and is likely to deplete cash even more. Instead we suggest you focus your attention and energy on the following:</p>

<p>1. &nbsp;developing further cashflows for each individual pub setting out immediate liquidity needs assuming re-opening does not take place for the next two months, showing the minimum payments that needs to be made to protect the pub and a narrative highlighting issues or risks which threaten continuation and any key milestones in the coming weeks. No problem although we will need to consider who we keep and who we make redundant as it will be cost effective to make the redundancies during furlough to minimise costs depending on notice periods.</p>

<p>2. Take business bounce-back loans where possible but husband cash and pay only essential costs which protect the pubs in the medium term. For the avoidance of doubt we believe management fees must not be paid. Please send an update on each application made and status. Noted</p>

<p>3. Managing for cash is essential. Please ask Rachel to compile a list for each pub of payments that are absolutely essential in the coming weeks to ensure stability and any further costs that can be cut. Noted</p>

<p>4. Work up your proposal to shareholders so that it can be discussed as soon as possible and then we can consider with you how it can be presented to each of the 6 shareholder groups. This includes getting independent valuation ranges (upside and downside) for each of the pubs as soon as possible. Please confirm when valuations will be provided and from who as well as the instructions which have been given to them. Noted</p>

<p>5. Provide all the information that has been requested and promised to us (Stephen Nurse) will send a separate comprehensive list for completeness). Rachel is providing under a separate email</p>

<p>6. provide the correspondence and legal advice relating to the management agreement for the Harcourt with Harcourt management (Andrew Endean?). This is held by solicitors so will be requested.</p>

<p>7. Provide the EIS correspondence with HMRC and ensure that EIS certification is chased with HMRC and set up a call early this week between Philip Hare and Steve Partridge as agreed. Please provide dates when the most recent information on the Hero and KPH were provided to HMRC, confirm that there is nothing outstanding and when you intend to chase HMRC (if this has not already been done). Requesting and will compile all info plus will try and arrange the call as requested.</p>

<p>8. We would like to seek views from one or two pub specialists known to the group and therefore would like to set up discussions for them with Steve Ham on his operational view of each pub and how operations can be optimised including re-opening strategies where appropriate. Please confirm your agreement so that we can initiate this and provide Steve&rsquo;s contact details. Happy for this but I would like to join the initial call.</p>

<p>9. Finally, we would like to nominate a director representing shareholders for each pub company. Please confirm that you are agreeable to this.&nbsp;As we understand you will be making some kind of offer in the next few weeks it would be sensible for you to be able to defer decision-making on that offer to the shareholder director. I&rsquo;m sure you appreciate the point that you cannot make an offer and then consider that offer as a director given your fiduciary duty to avoid conflicts as a director. Happy for this</p>

<p>&nbsp;</p>

<p>John Soden<br />
&nbsp;</p>