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

<p><strong>From:</strong> Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;<br />
<strong>Sent:</strong> 15 July 2020 16:51<br />
<strong>To:</strong> Shane Gallwey &lt;shane.gallwey@guinnessfunds.com&gt;<br />
<strong>Cc:</strong> nurse_stephen@hotmail.com; Alistair Higgins &lt;Alistair.higgins@gmail.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; John Soden &lt;soden.j@gmail.com&gt;; Nick Stockdale &lt;nicholasstockdale@googlemail.com&gt;; parkhouse87@btinternet.com; Stephen.Phillips@templebright.com; Steven Partridge &lt;sjpmhh@gmail.com&gt;; Bridget Hallahane &lt;Bridget.Hallahane@guinnessfunds.com&gt;<br />
<strong>Subject:</strong> Re: Investor website: KPH (Barts) - Guinness Asset Management Limited</p>

<p>&nbsp;</p>

<p>Dear Shane</p>

<p>Thanks for your email. &nbsp;Yes, you are correct that the valuation is &pound;4.8m not &pound;4.0m - but the equity is still worthless at this valuation.</p>

<p>We agree with you that previous trading has been poor and that other pubs in the area may well have substantially higher turnover. &nbsp;Our concern, however, is that the KPH won&rsquo;t have a chance to prove its&#39; worth unless you can fund the initial trading losses and/or mothballing before a return to normality. &nbsp; If you cannot plug the cash hole, the KPH is very likely to be put up for sale by Downing and equity investors will be wiped out.</p>

<p>The current cash balance and a &pound;50k bounce back loan ( if it is received), in our view, will be unlikely to cover off the start up trading losses.</p>

<p>On the other pubs we are replacing McCulloch and Harris with new directors (hopefully and confidentially from Ducalian). &nbsp;I think you can assume that McC and H. will not come up with a proposal on the KPH so it is Guinness in charge and you have to come up with a funding strategy.</p>

<p>If (as we have discussed) Guinness cannot come up with a cash injection/ loan, the other shareholders may have to be asked to undertake an emergency rights issue. &nbsp;On the current valuation the company is not worth much more than option value and therefore, I can not see the other 40% of shareholders being very enthusiastic about putting more cash in. &nbsp; At very least, any rights issue will be highly dilutive to existing shareholders. &nbsp;All accrued management fees to both Harcourt Investments and Guinness are very likely to have to be written off.</p>

<p>On this note we are working on a case against McC and Harris to show that they are not due their fees under the management contract as they have failed to manage the companies correctly/ not supplied information and misled investors. &nbsp;If you have any examples of this - please can you let us know.</p>

<p>As soon as we get the proposal from Ducalian, we will share it with you. &nbsp; We will then have to work with them to develop a business plan for the KPH. &nbsp;We will have to model the cash flow in a low case scenario and show that the KPH has the resources to trade. &nbsp;No new director will wish to take on the liability / reputation risk of being linked to a company that will run out of cash and be put through an insolvency process.</p>

<p>&nbsp;</p>

<p>We intend to write to all the [250] shareholders in the other 5 pubs, in the next two weeks, so I suggest we do the same for the KPH. &nbsp;You need to consider how you are going to manage the Downing loan (that I understand ends in Oct this year). &nbsp; I assume that Downing will have to sign off on any business plan that we put forward.</p>

<p>Whilst there could be equity upside in the KPH, &nbsp;we have some very seasoned workout specialists amongst our shareholders who doubt that a rescue can be pulled together in the time available.</p>

<p>We will let you know the time of the next zoom call, but I thought it best if we were a little more direct on what we think of the prospects for the KPH.</p>

<p>&nbsp;</p>

<p>Kr Nick</p>

<p>&nbsp;</p>

<p>On 15 Jul 2020, at 09:29, Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt; wrote:</p>

<p>Many thanks for your email Stephen, and for providing access to the website.</p>

<p>I share your concerns and would be grateful if you could add me to your calls.&nbsp; James McCulloch has not been providing me with sufficient information, and I had not seen the valuation report.</p>

<p>Having now reviewed the Barts Pub valuation I have some observations:&nbsp;</p>

<ul>
	<li>The Fleuret report puts a valuation of &pound;4.8m on the KPH (not &pound;4m below).&nbsp;</li>
	<li>This appears to be based on 9 months trading history from June 2019 to March 2020, the initial trading period over which the pub was not trading at capacity, and takes a discount to this to reflect current market conditions.&nbsp;</li>
	<li>I believe that The Elgin across the road from The KPH has a substantially higher turnover</li>
	<li>I envisage that the value of The KPH would be somewhere between the &pound;4.8m in the Fleuret&rsquo;s report and the &pound;8m+ book value of assets.</li>
</ul>

<p>I look forward to speaking further on this</p>

<p>Best wishes</p>

<p>Shane</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><strong>From:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>&gt;<br />
<strong>Sent:</strong> 14 July 2020 11:17<br />
<strong>To:</strong> Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt;<br />
<strong>Cc:</strong> Alistair Higgins &lt;<a href="mailto:Alistair.higgins@gmail.com">Alistair.higgins@gmail.com</a>&gt;; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com">denis@ermakgroup.com</a>&gt;; &#39;John Soden&#39; &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;; Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;; <a href="mailto:parkhouse87@btinternet.com">parkhouse87@btinternet.com</a>; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com">Stephen.Phillips@templebright.com</a>&gt;; Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com">sjpmhh@gmail.com</a>&gt;<br />
<strong>Subject:</strong> FW: Investor website: KPH (Barts) - Guinness Asset Management Limited</p>

<p>&nbsp;</p>

<p>Shane,</p>

<p>I have given you access to the website including access to the conversations the &ldquo;activist investor&rdquo; team are having with McCulloch directly.&nbsp; It is very concerning around his mis-management.</p>

<p>By my rough calculations, I think investors in KPH are essentially wiped out. In fact I see them all at -18% , and this ignores any sale transaction costs and carry costs in the intervening time.</p>

<p>Would you like to be invited to the next &ldquo;activist&rdquo; call.</p>

<p>&nbsp;</p>

<p>Kind rgds</p>

<p>Stephen</p>

<p>&nbsp;</p>