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BUSINESS BUYER & MARKET APPRAISAL VALUATION REPORT on

The Blue Bell Inn Bell Lane Cocking Midhurst GU29 0HN

Market Appraisal Valuation

Instructions

Inspected on Wednesday 21st November 2018

For Blue Bell Community Hub

MJD HUGHES LTD 2 Forest Farm Business Park

Fulford York

YO19 4RH 01904 215241 Telephone

07960 117776 Mobile info@mjdhughes.com www.mjdhughes.com

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Market Appraisal Valuation Summary

The Blue Bell Inn Cocking West Sussex GU29 0HN Report Date 27th November 2018 DESCRIPTION The Blue Bell Inn is a brick built Public House located in Cocking, West Sussex a village about 3 miles or so to the south of Midhurst and 10 miles to the north of Chichester. We are advised that the village has a population of about 450. Cocking is made up of privately-owned residential property together with an eleventh century church, village shop with post office, tea room, and Village Hall on the outskirts of the village. The Blue Bell Inn public house is currently owned by Wand Estates having been purchased from a development company in early summer 2018. The pub has been closed for approximately 18 months. Until the closure the pub had been operated by tenants The Blue Bell Inn is a detached property with outbuildings, parking and grounds. The main building is constructed of brick under a multi-pitched roof with tile covering. We are advised the property is not listed and is in the South Downs National Park. The property has not been registered as an asset of community value (ACV). A garden is located to the rear of the property with a car park to the front and either side of the main building. VALUATION IMPORTANT NOTE: Please find below a report with comments and recommendations for the above property. The information provided is for the sole use of the party to whom it is addressed. MJD HUGHES Ltd or the author of this report take no responsibility for any assumptions and decisions made from the use of this report or the information contained within it. Market Appraisal Values are summarised here for convenience but they should be read together with the full report to establish the observations and assumptions upon which they are based.

VALUATION

Market Value as a Fully Equipped Operational Entity having regard to Trading Potential ("Market Value Trading,")

£650,000

Market Value as a Fully Equipped Operational Entity having regard to Trading Potential - but subject to Special Assumptions ("Market Value - Trading - in Default")

£530,000

Market Value of the Empty Property having regard to Trading Potential and subject to Special Assumptions ("Market Value - Closed - in Default")

£410,000

Reinstatement Insurance Value £740,000

Note: To maintain brevity in the main report, standard clauses concerning assumptions, recommendations, limitations and statements are included in Appendix A. Where relevant, a reference is included in the main report.

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Report Date 27th November 2018 1 INSTRUCTIONS 1.1 Instructions - Details (i) Our instructions were received from Peter Gibbon, Chairman of the Blue Bell Community Hub Committee by email dated 12th November 2018. The instruction is confirmed by despatch of this Valuation. (ii) Copies of the relevant correspondence are attached as Appendix 1. A copy of MJD HUGHES Ltd Standard Conditions of Engagement is attached as Appendix C. These Conditions apply unless amended by the instructions correspondence - except for 2.2 - Measurement procedure, which applies in all circumstances. (iii) Our instructions are to prepare a valuation. This report is not a structural survey. 1.2 Purpose of Valuation & Effective Date The property is valued as at the date of this report. 1.3 Bases of Valuation The basis of valuation - as specified in the letter of Instructions are interpreted to accord with our Valuation definitions as stated in Appendix B:- Market Value as a Fully Equipped Operational Entity having regard to Trading Potential ("Market Value - Trading") Market Value as a Fully Equipped Operational Entity having regard to Trading Potential - but subject to Special Assumptions ("Market Value - Trading - in Default") Market Value of the Empty Property having regard to Trading Potential and subject to Special Assumptions ("Market Value - Closed - in Default") Reinstatement Value - Estimate for Insurance Purposes 2 GENERAL INFORMATION 2.1 Client Blue Bell Community Hub 2.2 Valuer, Qualifications & Status (Also see Appendix A:8) MICHAEL HUGHES FNAEA FNAEACOM FBII DipCPA Fellow National Association of Estate Agents Fellow National Association of Estate Agents Commercial Fellow British Institute of Innkeeping Diploma in Commercial Property Agency Michael is the Director and owner of MJD HUGHES Ltd a company specialising in Business and Commercial Property. He has over 30 years’ experience in the licensed trade and with commercial property. His experience ranges from the physical operation of a variety of outlets (single bar units to multiple bar operations over multiple site locations) to the estate management of property from acquisition, drawing up heads of terms for lease agreements and recruitment of tenants, property valuation, and the sale of property. Michael also has a depth of knowledge in professional services including business rate appraisal, rent appraisal and review negotiation, fixtures and fittings inventory valuation and report preparation for sale. Michael is also on the Governance Board for the Examination Awarding Body of the National Federation of Property Professionals.

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2.3 Date of Inspection Wednesday 21st November 2018 2.4 Sources of information In arriving at our valuation we have relied upon information provided by the following (where relevant):-

Email correspondence, telephone conversations and a personal meeting with members of the Blue Bell Community Hub The Blue Bell Community Hub pub outline business plan Information on the South Downs National Park Authority planning portal

The Valuation Office website for rating information. The property was inspected on Wednesday 21st November 2018 Weather conditions were overcast with occasional drizzle 3 THE PROPERTY The Blue Bell Inn Main Street West Sussex GU29 0HN 4 LOCATION & COMMUNICATIONS The Blue Bell Inn is located in the village of Cocking. The village is about 3 miles or so to the south of Midhurst and 10 miles to the north of Chichester. The village is located on the A286. The A286 links with the A272 to provide access to the A3, links with the A27 in the South and national motorway network to the Northeast at the M25 north of Guildford. Road communication can therefore be described as good. The nearest railway station to the village is at Chichester, 10 miles away and Haslemere 11 miles away. The number 60 Chichester to Midhurst bus service that runs through the village does run directly to the railway station in Chichester. Access by public transport can therefore be described as reasonable. 5 DESCRIPTION OF THE PROPERTY (Also see Appendix A:1) 5.1 General The Blue Bell Inn is a brick built Public House located in Cocking, a village about 3 miles or so to the south of Midhurst and 10 miles to the north of Chichester. We are advised that the village has a population of about 450. Cocking is made up of privately-owned residential property together with a eleventh century church, village shop with post office, tea room, and Village Hall on the outskirts of the village. The Blue Bell Inn public house is currently owned by Wand Estates having been purchased from a development company in early summer 2018. The pub has been closed for approximately 18 months. Until the closure the pub had been operated by tenants 5.2 Construction The Blue Bell Inn is a detached property with outbuildings, parking and grounds. The main building is constructed of brick under a multi-pitched roof with tile covering. We are advised the property is not listed and is in the South Downs National Park. The property has not been registered as an asset of community value (ACV). A garden is located to the rear of the property with a car park to the front and either side of the main building.

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5.3 Dimensions In our description, measurements and dimensions are approximate. No accurate measurements of the building, internally or externally or of the site were taken during the external inspection. Approximate or estimated measurements are provided for guidance or identification purposes only. 5.4 Accommodation Ground floor The property is unoccupied and emptied of contents. Entrances to the property are at the front corner directly from the car park (although this is currently blocked up) and to the side of the property. Access was available from the side entrance, into a trade room. A doorway from this room provides access past the Commercial Kitchen and into the Main Bar. The Main Bar is open plan and L-shaped with a central Bar Servery. Ladies’ and Gentlemen’s toilet facilities are to the rear of the property off the Main Bar. The ground floor Beer Cellar is located off the Main Bar and next to the Commercial Kitchen. The Commercial Kitchen is to the rear of the property and divided into two sections. A stable style door gives access in/out for deliveries to the side of the property. The flooring in the Commercial Kitchen is non-slip ‘Altro’ style throughout. Stairs off the corridor linking the Commercial Kitchen, Beer Cellar and Main Bar provide access to the first floor. First Floor The private accommodation to the property is located to the first floor. The private accommodation retains a limited amount of furniture, fixtures and fittings together with bathroom fittings. The private accommodation has four bedrooms with ensuite facilities which we understand from our investigations were previously used as commercial letting bedrooms. Two further bedrooms do not have ensuite facilities. Loft A ladder leads into the loft. The area that could be inspected appeared in reasonable condition. A section of chimney had been capped and lowered. Rat droppings were observed in the loft area. An Energy Performance Certificate (EPC) with an indication of the internal area of the property has been prepared and a copy of this certificate is attached to this report in Appendix 2. The overall workable floor space in the building, including ground floor trading area, private accommodation, is noted as 296m2 on the EPC. The EPC also mentions that the main source of heating is natural gas, although members of the Community Hub committee have advised that this is incorrect as there is no natural gas supply in the village. This property is served by liquid petroleum gas from a tank in the car park area. 5.5 Outside The outside area of the property comprises an outbuilding with car park which is to either side and front of the main building. A terraced area to the rear leads onto a beer garden. The remaining area of the plot can be described as grounds for the property. The total existing workable plot size is about 800m2 (about 0.2 acre). A copy of the plot measured to arrive at this calculation can be found in Appendix 2 of this report. 5.6 Parking The property has a car park to the side with parking facilities for about 12 vehicles 6 SERVICES & SECURITY 6.1 Water - Mains 6.2 Electricity - Mains

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6.3 Drainage – Mains 6.4 Gas – LPG (tank possibly decommissioned) 6.5 Central Heating – Understood to previously have been LPG 6.6 Burglar Alarm – There does not appear to be a burglar alarm in the property. 6.7 Fire Alarm – A fire alarm is in place, but its condition could not be confirmed. We have assumed the above services from our investigations. All service installations are also assumed to be in satisfactory working condition. No tests have been conducted or commissioned. 7 OVERALL CONDITION (Also see Appendices A:2, A:3) 7.1 Internal We understand the property has been unused since late 2016. From the result of our inspection to the interior of the property we would advise that the property is in a reasonable condition of repair considering the time it has been closed. Existing decorative finishes require cleaning and repair together with a full refurbishment of the trade areas to update to modern public house standards. It is evident the building has only been maintained to a limited level for a number of years and in recent years little or no maintenance has been undertaken. There is little evidence of water ingress to the property. Due to the age and condition of the property it can be reasonably expected that continued maintenance will be required to ensure the property remains at an acceptable level for sustainable commercial use throughout the rest of its useful life. 7.2 External From an informal and limited inspection the exterior appears to be in reasonable condition As with the interior of the property, it would appear little maintenance has been undertaken on the building for a number of years. The windows to the property are upvc double glazed. The tiles to several sections of pitched roof appear to be damaged and valleys, lead flashing and rainwater goods all need cleaning, repair and maintenance. Plant growth to the exterior of the building and roof appears to be damaging localised areas. Living plants and vegetation detritus should be removed to avoid continued deterioration of the property. 7.3 Overall Overall the property appears to be in reasonable condition with sections in a poor and badly maintained condition. We would advise that a full structural survey is undertaken on the property prior to exchange of contracts. This report should be used to provide an assessment of cost for the repairs and maintenance required to the property. We consider the building should have a useful economic life providing the property is fully repaired and a routine maintenance schedule is introduced. This schedule must maintain the property to a reasonable standard on an ongoing basis. 8 FIXTURES & FITTINGS (Also see Appendix A:5) 8.1 Included Equipment The property is closed for trade and empty of most fixtures and fittings (save for sanitary ware, several steel catering preparation tables and a limited number of chairs and settees) which are included in this valuation. Trade fixtures, fittings and equipment will be required to commence trading following purchase of the property. The equipment needed can be divided into three requirements. The first requirement will be tables, chairs and other furnishings for the public trade areas, secondly the commercial equipment required for the kitchen and bar servery, and thirdly furnishings for the letting bedrooms. The cost for such requirements should be carefully considered with the assistance of professional advice. This cost will vary greatly depending on the offering that the community group proposes. As such we can only provide an estimate for initial furnishings in the order of between £10,000 and £15,000 for the trade area, with the equipment for the

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bar servery and kitchen at anything from £15,000 to £25,000 as a minimum and a cost of between £3,000 and £5,000 per letting bedroom can be given as a guide. 8.2 Excluded Equipment The Brewers beer raising equipment to the cellar is limited and excluded from this valuation. Acquiring this equipment together with cellar cooling facilities should form part of any negotiations with the supplier of the draught products for re-sale. 8.3 Trading Stock Due to the length of time the pub has been closed no stock remains on the premises. 9 COMPLIANCE MATTERS Prior to the exchange of contracts on any future purchase of this property we would advise that the following assessments and reports are completed to a level that satisfies current statutory requirements. 9.1 Fire Safety (Also see Appendices A:3.5, A:9) 9.2 Disability Discrimination (Also see Appendices A:3.2, A:9) 9.3 Environmental Health, Safety & Hygiene (Also see Appendices A:2, A:3.6, A:9) 9.4 Asbestos Risk Assessment (see Appendices A:3.3, A:9) 9.5 Contamination (see Appendices A:3.1 and A9) The property is in a village environment. During our inspection we did not notice, nor was brought to our attention, any likely areas of contamination that would adversely affect the property. It would be the responsibility of any future purchaser to satisfy any doubts as to whether a further report is necessary. 9.6 Energy Performance Certificate An EPC has been completed rating the property at band C. A copy of this certificate can be found in appendix 2 of this report. 10 PLANS 10.1 Maps and Site Plans - See Appendix 2: (i) Location Map – This is supplied for guidance purposes only, and is not to scale. 10.2 Boundaries The boundaries to the property appear to be adequately defined. We have not checked upon ownership and responsibilities for maintenance of boundaries, and such matters should be checked by a suitably qualified Lawyer. 11 LOCAL AUTHORITY & RATEABLE VALUE The Blue Bell Inn, Cocking, Midhurst GU29 0HN Business Rateable Value : (2017 valuation) £19,900 Previous valuations for the property include June 2010 £12,500, and April 2010 £9,500 The methodology used by the Valuation Office Agency (VOA) in preparation of rateable value for a public house is based upon historic trade levels to assess a fair maintainable trade for the property. The current

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rateable value together with historic values indicates a history of low trading income. This does not always reflect the potential of a business as long term operators may reduce the level of income a business produces as they develop a ‘lifestyle’ business to reflect their own needs. Fair maintainable trade (FMT) should always reflect what a reasonably efficient operator can achieve in a business. From our experience, observations and investigations relating to the rateable value for public houses, the Valuation Office Agency (VOA) have a robust methodology based upon the high number of similar properties they have in their records. That said they tend to look at the ‘maximum’ FMT a business can achieve rather than a true analysis of the turnover and costs of a business. The FMT discussed later in this report analyses this operational system and process. Rateable value is useful when comparing different licensed property. As the RV reflects the fair maintainable trade then this groups public houses together that are achieving similar levels of turnover and profitability. 12 PREMISES LICENCE (Also see Appendix A:3.4) We have not had sight of the Premises Licence and due to the length of time the property has been closed it may have lapsed. This does not however mean the licence cannot be reactivated. We would advise that the retaining of the premises licence should be a condition of sale. The licence should include permission for the performance of live music, the playing of recorded music and dancing and the provision of entertainment facilities including making music (e.g. karaoke). Reactivating a lapsed premises licence is normally an easier way for the licence to be reinstated rather than a full application for a new premises licence. 13 TOWN PLANNING (Also see Appendix A:4) We were advised as a result of our own investigations and from our discussions with members of Blue Bell Community Hub of the following: 13.1 District Zoning/Designation

The Blue Bell Inn does lie within a conservation area of the village and is within the South Downs National Park.

The Blue Bell Inn is not listed and has not been nominated as an asset of community value (ACV).

13.2 Permitted Use 1: The present use of the property does not contravene planning regulations. 2: No enforcement action or proceedings currently affect the property.

3: During our investigations we were advised that a planning application is currently outstanding on this property. This is for the change of use of A3/A4/C1 public house to provide 2 number dwelling houses (SDNP/18/04539/FUL). Subsequent to the inspection, the developer has withdrawn his application, opening up the possibility for the Community group to acquire the site.

13.3 Potential for Development and/or Alternative Use The Blue Bell Inn is currently closed. We are advised that the pub had been operated by a number of tenants prior to its closure and that the last tenant, although still operating profitably, had decided to cease trading following the demand for significant rates and rental increase. The operational requirements for a pub owning company (PubCo) or privately-owned investment company will vary significantly from that of a community group. A PubCo or investment company need to deliver a level of income from a property to maintain its value to the estate and the business. In all operational cases the tenant must achieve an income to make their business model viable. With a community group deriving an income to pay shareholders and lenders via a sustainable rent this reduces the pressure to achieve on the tenant. The potential to build a profitable

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level of trade over a period of time is possible but will require a clear vision as to the style of operation required. The property also needs a substantial amount of refurbishment. The work required to bring the property up to a standard that will complement a sustainable operation will need to be discussed with suitably qualified professionals before work starts. Any development proposals should consider the need for the costs of the work not to exceed a level that will fail to provide a commercial return to the business. It is our opinion that the best commercial use of this property is as a public house but to use the property to its maximum potential with other commercial enterprises and as a benefit to the community. The property has spare rooms, a car park, and there is substantial area of exterior space that could be used to accommodate events and facilities for the community. The only alternative to the property having continued use as a public house is conversion to residential use and/or the plot as a whole developed. A recent planning application to change to residential use has been withdrawn by the developer. Due to the size of the main building, its layout and the restrictions on the existing property, together with the statutory requirements associate with such a conversion we do not believe a development of this building to residential use would be a commercially viable option when compared to a public house and other associated uses. A conversion to residential use is not as simple as taking down the signs, ripping out the interior trading fixtures, fittings and effects, and redecorating. The property will need to be totally refurbished to current building standards and regulations. At its simplest this will mean ensuring that doorways are the correct width and electrical sockets and switches are positioned correctly, and more extensively, obsolete and dangerous materials being removed from the property. In most cases the interior configuration of the rooms will have to be altered. In many cases it is cheaper and more cost effective to demolish the property. The cost of such refurbishment work without demolition is in the region of £1,200 to £1,500 per square metre (see clarification from the links below). As the property occupies about 296m2 it could therefore be reasonably expected to cost a minimum of £355,000 just for the conversion of the existing public house to a residential dwelling. From the detail of the planning application which would include groundwork and landscaping it can be reasonably assumed that the development costs will be substantially higher than this minimum figure. When building a new property the same considerations as above need to be taken into account. The value of the plot for development can therefore begin to be calculated in the same way. New build costs in a village such as Cocking can be anything from between £1,500m2 to £2,000m2 or even higher depending on the style of development. We have undertaken extensive work looking at the change of use of a public house to residential, and also demolishing an existing property to develop a plot for residential use. My calculations fall within the criteria of the assessments made by Costmodelling (www.costmodelling.com), West Lothian Council (www.westlothian.gov.uk/planning-and-building-standards), and the RIBA/BCIS building cost calculator (http://www.rics.org/uk/knowledge/bcis/online-products/riba-bcis-building-cost-calculator/). Due to the high cost of development within statutory requirements, the possible need for demolition, and any rebuild costs, the potential sale price of the total scheme would be unlikely to provide a sufficient return for any developer unless the plot had been bought for a price that is substantially lower than the closed pub value. There is also the very high likelihood of any scheme being turned down by planners due to number of local objections and other planning requirements as previously mentioned. Our comments above outlining the difficulty for this property to be developed for alternate use should be balanced with the limits that can be expected from the net turnover of a licensed business in The Blue Bell Inn. Such limits will restrict the level of investment in the property. Care should be taken that investment in The Blue Bell Inn can either provide a commercial return or be able to be written off. Any development proposals and assumptions of suitability for continued public house use or alternate use would be subject to planning approval. The Planning Officer of the relevant local council should be contacted to approve or otherwise all these points prior to their implementation.

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14 TENURE & POSSESSION (Also see Appendix A:6) 14.1 Tenure It is understood that the property is Freehold. 14.2 Third Party Rights & Restrictions We were advised that the property is not subject to a third party right of way. We would however advise this is confirmed by a legal representative before exchange of contracts on any purchase of the property. 14.3 Occupancy & Possession The property is closed, secured by the owner, and vacant. We value on the assumption that vacant possession would be given without delay in the event of a sale. 15 THE BUSINESS 15.1 Period of Occupation From our investigations the property has not been occupied since 2016, prior to the current owner buying the property in early summer 2018. 15.2 Style of Trade From our discussion with members of Blue Bell Community Hub we understand the future style of trade will be as a traditional Public House with accommodation and a food offer that will grow over a period of time depending on the skill set of the tenant recruited. The building will also provide a variety of other uses to compliment and assist the local community. 15.3 Trading Hours The pub is currently closed. The group should consider future opening times that allow commercial viability to the operation and also fulfil the needs of the community. 15.4 Competition The group should explore the strengths, weaknesses, opportunities and threats of competition in and around the area. The operational style of The Blue Bell Inn in the future may involve multiple use so all types of competition should be considered. 15.5 Management & Staffing We are advised that the group propose to initially operate The Blue Bell Inn with a tenant, possibly aided by volunteers from the village as appropriate. 16 ACCOUNTS & TRADING INFORMATION We have not been provided with accounts from any previous business that operated from the site. The community group have produced an initial forecast profit and loss account based upon historic trading figures from a previous tenant supplemented with income from the village shop which will be operated at the pub. A sensitivity analysis has also been included with the central forecast. A copy of this forecast is included in Appendix 2 of this report. We have the following observations and comments to make on the central forecast:

• We are assuming that the figures presented are net of VAT

• The pub is currently closed and will take an unknown period of time to increase sales to the level in the forecast

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• A stepped forecast should be produced to give a better idea as to the level of investment required to achieve the central forecast figures

• Wet sales must achieve no less than 60% gross profit. We would recommend a target gross profit of 65%

• Food sales should also achieve a minimum of 60% pross profit with a target of 65%. Such a level of turnover will require a chef/skilled cook at a wage of about £30,000 per annum. This will increase the wage ratio commented on below

• Accommodation can only operate on a maximum of 4 rooms as two rooms will be required for a tenant. Achieving a tenant of suitable quality on a lock-up will be difficult to achieve

• The property will need someone to live-in due to insurance requirements

• The target for shop sales appears high. If such a level of sales is achievable then gross profit will fall below 20%

• Staff wages. With this style of operation, the wage to turnover percentage will be difficult to achieve below 25%

• Business rates appear to be based upon the 2010 valuation. The current rateable value is £19,900 and small business, rural or other discretionary relief cannot be relied upon. The cost of business rates at the 2018/19 multiplier of 0.48 would therefore be £9552

• Utilities would appear to be based upon historical figures. As a minimum an operation with this level of turnover in the Blue Bell would expect to see utilities cost in excess of £10,000

• The property is old and will require a higher level of repair and renew costs.

• Insurances will be double the costs identified

• Accountancy costs are light but may be possible given preferential rates to the community

• The overall forecast is in line with expectations for the fair maintainable trade of the site when operating. The fair maintainable trade will be further analysed in section 18 Fair Maintainable Trade of this report

Whilst projections of business income are useful the ability to gauge potential should be limited to the knowledge that is available. The first year of trading will provide a base on which future projections can be produced. We would advise that only the first two years are projected, and the existing business plan is updated to reflect this potential. When the pub is operating the business plan should be referred to every month to see how performance is reflected against the projection. Only after the first full year has been completed will future projections have any true meaning. When planning for investment in a business the sustainable level of trade should be targeted as soon as possible. If projections look for growth too quickly or to a level that is not sustainable there may be too much investment in repairs, refurbishment, development or staff recruitment. This would mean an over spend on the asset or the need to make staff redundant if they are surplus to requirement. 17 POTENTIAL & PERSONAL GOODWILL 17.1 Potential From information available in the public domain, our investigations and meeting with the community group, and our experience of over 30 years in the licensed trade it is possible to see there is a sustainable business for the pub. For the business to be sustainable and to encourage an experienced operator to take over the running of the operation before sustainable trade levels have been re-established, The Blue Bell Inn will need to attract visitors not just from the village but from a catchment area beyond the boundary of the village. The layout of the trade areas, and with the potential of the outside areas this can provide confidence that the turnover can gradually be increased to a level that is sustainable. This will probably not happen overnight however and could take several years. How the community group and their potential tenant will deal with the initial shortfall in income and profitability will need to be written into the central financial forecast and business plan. The business at The Blue Bell Inn will need to grow from nil (currently closed) to minimum net sales of about £5,000 a week from all income streams except that of the shop. The shop should be isolated from the ‘pub’ income to allow for overall ‘pub operations to achieve a gross profit to be no lower than 65%. The shop can then be analysed separately, and the target 20% gross profit will then allow the shop to be self-funding in its own individual area of the property. Regular visits and use from locals is paramount but the Blue Bell must

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be attractive to potential customers from outside the area having to use their car. Alcoholic sales may not be able to make up all the sales. Food, teas, coffees and sweet snacks (cakes and biscuits) will therefore be important to the business. This may well mean that the operation does not adhere to conventional pub opening times. Morning coffee, a popular lunch menu and afternoon tea will not only be important to turnover but also as a form of advertisement for the pub. Cyclists, walkers and lunch visitors can be encouraged to return in the evening with family and friends if the correct offering is provided. Blue Bell Community Hub are looking to entrust the initial operation of The Blue Bell Inn to a tenant to ensure that the offering for all the income streams is correct and costs are tightly controlled without reducing the targets for good service. The Blue Bell Inn has the potential to achieve a sustainable level of trade, but the very best operator will have to be found who understands the needs and requirements of the community as a whole. The value of properties and businesses of this type is closely related to trading results and potential. In view of the importance which the market for such properties attaches to trading figures actually achieved, in the event of a future change in the trading potential or actual level of business from that indicated by the information and assumptions made herein the value reported could vary. At present however the pub is closed and the value of the pub as a trading entity can only vary in relation to the demand it generates through its potential to trade. 17.2 Personal Goodwill The business is currently closed so there can be no personal goodwill associated with the business. 18 FAIR MAINTAINABLE TRADE This Report relates to the property as an entity having regard to trading potential. As the current business is closed we are required to assess the fair maintainable level of trade and operating profit that can be achieved by a reasonably efficient operator, upon which a potential purchaser would, in the opinion of the valuer, be likely to base an offer. We include this information therefore to provide an example of what turnover can be expected, the gross profit that will need to be achieved, the costs associated with such an operation and the profitability that can be expected for the tenant. Fair maintainable operating profit is stated prior to deductions for depreciation, amortisation, and loan interest. The assessment is based on a tenant working full time in the business. This would require community group liaison with the operator to ensure that total costs of operation are tightly controlled and to develop a sustainable business.

Estimated Maintainable Net Sales £260,000

Gross profit percentage 65%

Estimated Achievable Gross Profit £169,000

Less

Rent 26,000

Wages & National Insurance 65,000

Business Rates & Insurance 13,000

Services 20,500

Allowance for Sundry Costs 14.500

POTENTIAL OPERATING PROFIT 30,000

The foregoing is intended as a broad indication of achievable returns. These could vary considerably dependent upon the economic climate, the input by the tenant and other factors beyond the direct control of the community. Two examples of this would be property repairs and additional staffing costs as occur from time to time. To ensure that the operating profit was achieved the tenant will have to be able to control costs very tightly and ensure that the maximum level of gross profit is achieved from sales. The management style of operation provides the possibility of increased income. The better the business performs the higher the returns if and only if the property is correctly managed. A tenant model would provide the property owner with a lower income but at a guaranteed level. The greater risk being retained by the tenant.

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It is important to qualify the above. The business will be starting from below a nil base. That is to say work will be required just to begin to achieve the above figures. The need to recruit a suitable operator cannot be over emphasised. The period where the business achieves break-even needs to be considered fully before recruitment. The correct operator for this business therefore needs to not only have entrepreneurial skills but also a very strong work ethic. In our FMT illustration we have presented a good starting gross profit and tight control of costs. These two factors are important additions, showing the need to maintain a strong control of costs and gross profit. These two areas are where many licensed businesses fail. I am including an analysis of the above assessment should there be any protracted times of trading difficulty. If the level of trade does not rise to the required level then the Group could find they have a business failure. Below I have reduced the net turnover by £500 a week to £234,000 a year and the gross profit to 50%. This is a realistic interpretation of how trade levels can alter if controls are not maintained.

Estimated Maintainable Net Sales £234,000

Gross profit percentage 50%

Estimated Achievable Gross Profit £117,000

Less

Rent 26,000

Wages & National Insurance 65,000

Business Rates & Insurance 13,000

Services 20,500

Allowance for Sundry Costs 14.500

POTENTIAL OPERATING PROFIT -22,000

From this illustration the business would not only be operating at a loss but it is unlikely that any tenant will see this as a sustainable business having to find the shortfall of £22,000 whilst the community group still receive a rent of £26,000. In such case, the group might apply its discretion in reducing the rent for a period allowing for recovery in the near future, but this means of course that repayment of loans would be delayed. Having discussed the matter of attracting an operator that will both fit in with the profile of the pub operation and also be prepared to work at developing The Blue Bell Inn with the community, it is important to stress the need for both professional and legal advice with the appointment of a professional member of staff who shares the group’s vision and values. The group should seek the appropriate professional advice when undertaking this process. During the initial period and later in the operation of The Blue Bell Inn the following breakeven formula will be crucial when calculating the required income for a specific cost. For example, if some building work is costing £1,000, the community group/manager will need to increase gross bar takings by over £3,000 to maintain your profitability. Cost of building work (£1000) ---------------------------------------- X 100 (£2,857) x VAT (20%) = £3,428 (100 – Gross Profit 65%) 35 This formula is very useful when deciding to book entertainment or any other additional cost for the pub Cost of band (£350) --------------------------- X 100 (1,000) X VAT (20%) = £1,200 35 Using the above calculation, it shows that if you normally take £500 on an evening and want to have a band on you will need to take £1,700 (£500 + £1,200) on that night to make it worth your while rather than £850 (£500 + £350) as may be thought. If you are employing more bar staff, kitchen staff, hire a P.A. etc these costs should also be added to the total cost before doing the calculation. From the illustrations above and that of the fair maintainable calculations. The style of operation envisaged for the Blue Bell by the community group can quickly become a business failure without a tight hold on costs whilst striving for maximum income. The shop, working on a much lower gross profit of only 20% will have to stand alone contributing to the cost of operation. With this in mind, it can easily be seen that the shop may only just break-even.

14

19 SPECIAL ASSUMPTIONS Except for those referred to in our standard valuation definitions (see Appendix B), we have made no special assumptions in reaching the conclusions of this report. 20 RECENT TRANSACTIONS (within the last 3 years) (Also see Appendix A:9) The number of recent public houses sales or those sold subject to contract in the area is higher than in the rest of the country.

• Village Inn Bureton GU31 5SW SOLD off an asking price of £850,000 (trading, 17 beds, 0.3 acre)

• Cedars, Alton GU34 4PB SOLD STC off an asking price of £795,000 (1.9 acre with planning perm)

• Bold Forester Southampton SO40 4UQ SOLD off an asking price of £750,000 (trading 1.53 acre)

• The Sun Inn Dummer RG25 2DJ SOLD off an asking price of £695,000 (2.55acre T/O £472k)

• The Trooper, Froxfield GU32 1BD SOLD off an asking price of £650,000 (T/O £290k N/P £57k)

• Fox & Hounds Crawley SO21 2PR SOLD off an asking price of £650,000 (closed, 4 det letting beds)

• The Compasses Inn Lower Chicksgrove SP3 6NB SOLD off and asking price of £595,000 (N/P £94k)

• The George Vernham Dean SP11 0JY SOLD off an asking price of £595,000 (N/P £80k)

• The Kings Head Whiteparish SP5 2SG SOLD off an asking price of £595,000 (closed, listed,1.2acre)

• The Sun Bentworth GU34 5JT SOLD off an asking price of £550,000 (T/O £520,000)

• The Star Inn Bentworth GU34 5JT SOLD off an asking price of £495,000

• Hoeford Inn Farnham PO16 0SX SOLD off an asking price of £450,000 (0.51 acre)

• The Cartwheel Inn Whitsbury SP6 3QA SOLD off an asking price of £435,000

• Mead End Inn Denmead PO7 6PZ SOLD off an asking price of £400,000 (0.29 acre)

• Anchor Ropley SO24 0BG SOLD off an asking price of £265,000 (investment, 1.9 acre with pp) 21 COMMENT/RECOMMENDATION 21.1 Market Conditions Our opinion of current market conditions and current and expected trends in respect of this type of property is as follows:- For the seven years to January 2008 the market in hotels, licensed and leisure premises was exceptionally buoyant, with the peak of the cycle being reached in Spring 2007. Up to this point the major pub owning companies in the UK had seen a sharp increase in their share value based upon the progressive increase in rents that could be asked for, the high number of potential recruits for public houses, and the protection of high beer volumes the fully tied substantive agreements gave to these companies. The acquisition of more public houses to the estate of each Pub Company was therefore a method of sustaining this inflated share price. The cost of borrowing money was below the return that their income could provide and so the Pub Companies were able to out-bid each other and individual purchasers so increasing the market value of many public houses. Following the banking collapse in 2008 and the nationalisation of the Royal Bank of Scotland and Lloyds, the commercial property market went into virtual freefall, and this trend continued for at least six years to 2014 when values appeared to level out. It would seem we have reached the bottom of the cycle, but there are presently no signs of any significant uplift, with few if any pressures which in the foreseeable future are likely to cause an increase in value. Pub owning companies (PubCo’s) and most corporate purchasers have withdrawn from the market, and those funds which were supporting the investment sector are no longer attracted to the hospitality industry. Pub Companies and some Brewers have sold a significant number of their “bottom end” units and many licensed premises have closed, and this trend continues, albeit at a slightly reduced level. Commercial lenders have reduced their loan to value lending criteria and have little appetite for the licensed trades. These factors and the ever-present adverse press reports on the hospitality industry have constrained demand, and made sales difficult to achieve.

15

In the six years from 2008 to 2014 it is estimated that values of hotels and licensed premises fell by between 40% and 50%. At one time there were, on some sites, reasonable prospects of alternative use, including in certain circumstances redevelopment or change of use. That sector of the commercial property market is weak, and such prospective purchasers in that sector are conservative in their assessment of value. The Localism Act 2011 brought to statute the high-profile issue of community ownership. Prior to this date communities wishing to protect the ever-increasing number of local public houses that were struggling for economic, social, and commercial reasons was becoming a hot political issue. The Act provided Community Interest Groups with the ability to apply to have their local Pub listed as an Asset of Community Value (ACV). By 2015 it was reported 1200 pubs were listed as an ACV. The number of pubs listed continues to grow with over 2000 pubs listed according to the latest CAMRA figures. It is very difficult to obtain definitive evidence as to the success of an ACV. Positive or negative evidence seems to be provided by those with a vested interest as to the result. From our own analysis it would seem that 1 in 10 pubs that come to market with an ACV are bought by a local community group. In addition, 2 in 10 that were for sale secure the property as a pub and it is not sold, whilst a further 3 in 10 sell as a pub but the ACV has reduced the sale price. Against this, however, 4 in 10 are eventually sold for alternative use. Whilst this information is pooled from our knowledge of the current market and cannot be relied upon, it does provide a good indication of the effect of ACV’s. Whilst 40% of pubs listed for ACV’s by 2015 were sold for alternate use, the national average for total pub sales sold for alternate use at this time was 48%. We do not have any more recent information to analyse the effect of an ACV on a pub but total public house sales sold for alternate use had fallen to only 31% by the end of 2016. For a vendor having their property listed as an ACV comes at a cost. The delay in selling the property usually results in additional cost by way of business rates, insurance, security charges, and legal fees involved in dealing with the ACV listing. Current industry estimates are that an ACV reduces the final sale price by anything between £25,000 and £80,000. There is therefore a distinct and tangible benefit for the owner of The Blue bell not to have had it listed as an ACV. In assessing the underlying value of licensed and leisure premises one must rely on their current viability and longer term prospects when judged against the realistic potential of fair maintainable trade. In arriving at our valuation we have endeavoured to reflect the present market condition, but clients should be aware that values remain flat and as development costs rise there is a risk that the value of closed pubs or pubs in poor repair may in the short to medium term decline due to the lack of a viable alternate use. In addition to our comments as to the freehold market we are adding the following information relating to the market for attracting tenants. It is estimated the market for leasehold property has fallen from the market high of 2006 to a plateau that remains the same in the number of applicants today as it did in 2008. For every 100 applicants for a tenanted property in 2006 there is now 1. This is backed up by our own data as a licensed property specialist. There are many reasons for this reduction in candidates not wanting to enter the licensed trade, including the increase in cost of adhering to the statutory requirements associated with operating a business and in particular a food/drink business, the low level of available funding from Banks and other finance houses to start up a business, and the unattractive working hours for an increasingly low level of return. The level of rent that can be commanded has fallen to reflect the number of candidates looking to take on licensed premises and also the profits that a tenant can expect to achieve from a business. Rents relating to 15% of net turnover were normal in 2006 and this has now fallen to around 10% of net turnover. 21.2 Summary/Comments/General Remarks The Blue Bell Inn is presented to the market as a closed business with considerable refurbishment work required to the property and significant investment needed in the fixtures and fittings. The pub provides potential for increasing trade. There will be an initial period of uncertainty as to the trade performance after the Community take over the pub and the tenant recruited by the Community should be provided with assistance to constantly analyse trends in trade levels and deal with operational shortcomings. The pub would provide an excellent facility for community groups, meetings, and visitors to the village such as cyclists, walkers and motor car/motor cycle clubs. All local groups should be encouraged to use the pub as often as possible.

16

From our projection as to the fair maintainable trade our valuation reflects the property and trade level/potentials with a basic level of investment. Future investment into the property and business will need to be carefully analysed to ensure the community group receive a return on the investment. If this does not happen then the community must be prepared to receive no return for their investment. The same process as outlined above is required to be undertaken when any future developments to the business is analysed. This includes the installation of the shop in the pub and how it is operated. Each operational expansion, development or refurbishment proposal must stand alone on its own to either pay for itself by increased income, added value to the business, or as a cost that will provide no financial benefit for the business and needs to be written off over a period of time. As mentioned above, the level of investment by the community should be calculated in a commercial way to ensure a return. The inclusion of ‘nice to have’ items may soon damage cash flow for the business if such purchases are not correctly assessed. The property in this report is valued as it currently stands as a closed public house and as a property with the potential to operate as a sustainable business. It is important to understand that any repairs and improvements to the property may not necessarily translate to an increase in value. The market values a property such as The Blue Bell Inn by the level of trade and profitability, together with any additional investment potential rather than the bricks, mortar, fixtures, fittings and effects. As with trade fixtures and fittings it is therefore important to only invest in the business to a level that ensures the property can begin to trade and reduces the risk of additional spending in the future. That said, an eye should always be kept on the finances available. If repairs can be paid for out of the operational profits of the business this should be considered. The cost of repairs and decoration to the existing property is difficult to estimate. Investment will be needed after any initial urgent repairs are undertaken and refurbishment completed. This should be assessed as part of an ongoing programme. Operating The Blue Bell may be difficult to achieve by even the most experienced business owner, as illustrated in the FMT section of this report. Many licensed businesses have failed due to the operators not realising the importance of tight controls on costs whilst maintaining the gross profit at the required level. Having a tenant at The Blue Bell Inn is not without its problems. We would recommend that prior to deciding on the tenant a profile of the type of operation is written up and agreed with the community. From this an operator can be recruited who will follow the same vision as the community. The terms of any agreement must be sustainable. The operator must be able to fulfil all of the conditions and still make the operation work for them. A tenancy agreement should be put together where the terms are weighted on the side of the community group. This allows the community to offer a concession on particular terms in the agreement as the need arises, should they need it whilst at the same time protecting the groups interests. The tenant should buy the fixtures and fittings at an agreed price prior to taking on the lease or provide the fixtures and fittings themselves, and the fixtures and fittings should be to a minimum standard agreed with the community group. This will return capital to the community group for re-investment into the project. It is normal for tenants to be required to keep the fixtures and fittings in good order and replace as needed. When the tenant leaves the fixtures and fittings are then bought back by the community group at a value assessed on the day of change-over, or more normally bought by the new tenant taking over the pub. An alternative to this is that the F&F are rented to the tenant. The tenant is responsible for the F&F maintenance and if something is broken/comes to the end of its natural life, it has to be replaced. In my experience however this system does become a bit difficult to administer when a high value item needs replacing. The lease should be fully repairing and insuring so that the community does not find itself having to repair the property if and when the tenant leaves. To ensure that the property remains in good condition the community as landlords should undertake an annual property inspection (API) with a copy of the report given to the tenant and a copy held by the community group. All repairs required following this report should be completed by the party responsible (landlord or tenant) before the following API is undertaken.

17

The heads of terms for the lease agreement should be put together from the group’s profile of the type of tenant they require and the style of operation. The profile can be supplied to the solicitor preparing the lease to ensure the document contains everything the community group expect. An important factor in the operation of The Blue Bell Inn is the size of the total plot. The main pub building covers about 296m2 including the private accommodation. This will only work to capacity if operated correctly. If any additional trade area is proposed, then the break-even calculations outlined in the fair maintainable trade section of this report should be considered first before a more detailed analysis of cost against return. Similarly, when considering the location of the shop in the pub, account should be taken as to how this will reduce trading area and if the same level of income can be achieved from the shop as the pub. The vagaries of the British weather mean that additional outside area does not always mean potential trading area. As the trading area moves further from the main pub building there is less chance of it providing a lucrative return. When planning how a pub will operate it is therefore beneficial to group as much activity around the central building. Activities that do not raise the income of the business can then be planned for the outer most areas of the plot. Our valuations below can only look at the pub as an operating entity. Other interested parties may look at the development potential of the site and disregard the pub completely. We are finding that the lack of development land is resulting in a premium being paid for property such as The Blue Bell Inn. The risk of the high development cost outlined at 13.3 Potential for Development and/or Alternative Use being more lucrative than selling the pub to the community should not be disregarded even if the option to develop does not seem commercially viable at first glance. From our investigations into comparable licensed property sales in the area we have found that pubs such as The Blue Bell Inn are realising higher sale prices than elsewhere in the country. The property can only be valued as a public house and community hub for the purposes of this report and full consideration of the financial consequences should be taken into account if a purchase is only possible above this figure. The above summary outlines why the property is valued as it is in this Business Buyers Report, how to deal with any added investment into the property, and the initial process of recruiting an operator. We have also given an indication as to the level of rent and lease conditions to be agreed. In addition to this information the group should take note of the statutory responsibilities mentioned in this report they will be taking on as owners of the property. 22 VALUATION METHODOLOGY & STATUS This valuation has been made after having regard to evidence of 14 comparable market transactions, and 1 comparable property sold subject to contract in support of general market analysis. (See Appendix A:7 - 12) 23 OTHER MATTERS 23.1 Legal Issues, Grants and Taxation, Liability, Disclosure, Complaints It would be advisable to ensure that all legal matters are understood and the responsibilities of the Society fully covered before exchanging contracts on the property. Our comments on this together with our disclosure and complaints procedure can be found in appendices A:10 to A:15 23.2 Funding The subject property in this report may be purchased by the client. The funding for such a purchase may be found from the clients own funds, personal loan, grant money, loan from a bank or similar lending house, or mixture of all the above. When securing funding it is advisable to prepare the following for the lender:

• A copy of this Business Buyers & Market Appraisal Report • A copy of the Constitution of the community group • An executive summary outlining the deal – background to the pub, amount required etc. • Any historic year end accounts that are available • An integrated 2 year forecast pack – P&L, Balance Sheet, Cash Flow Forecast (accountant produced)

along with supporting commentary around the key assumptions.

18

24 MARKET APPRAISAL VALUATION Based upon the information provided to us, and in accordance with the assumptions and conditions as detailed in this report, we are of the opinion that the market appraisal valuations as at today's date and as detailed at the commencement of this report are as follows:-

VALUATION

Market Value as a Fully Equipped Operational Entity having regard to Trading Potential ("Market Value Trading,")

£650,000

Market Value as a Fully Equipped Operational Entity having regard to Trading Potential - but subject to Special Assumptions ("Market Value - Trading - in Default")

£530,000

Market Value of the Empty Property having regard to Trading Potential and subject to Special Assumptions ("Market Value - Closed - in Default")

£410,000

Reinstatement Insurance Value £740,000

We trust the foregoing opinions and market appraisal valuations will satisfy your requirements, but should you require a more detailed report on any particular aspect, please let us know.

Dated

27th November 2018

FNAEA FICBA FBII DipCPA

MJD HUGHES Ltd Business & Commercial Property Specialists

2 Forest Farm Business Park Fulford York

YO19 4RH

19

APPENDIX 1

Market Appraisal Valuation Instructions

20

Re: Valuation Date - Bluebell at Cocking 1 message

Peter Gibbon <PGibbon@mga-ideas.com> 12 November 2018 at 17:37 To: Mike Hughes <info@mjdhughes.com> Cc: "colinmcknight2@gmail.com" <colinmcknight2@gmail.com>, "ndekker@hotmail.co.uk" <ndekker@hotmail.co.uk>

Hi Mike, Just to confirm it's the 21st not the 23rd? Regards Peter Peter Gibbon Mobile +44 (0)7836 522305 Home 01730 816006 E: pgibbon@mga-ideas.com

From: Mike Hughes <info@mjdhughes.com> Date: Monday, 12 November 2018 at 17:33 To: Peter gibbon <pgibbon@mga-ideas.com> Cc: Colin McKnight <colinmcknight2@gmail.com>, Nico Dekker <ndekker@hotmail.co.uk> Subject: Re: FW: Valuation Date - Bluebell at Cocking

Hi Peter,

Many thanks for confirming Wednesday 23rd November for my inspection of the Blue Bell. Will you be able to organise access to the property by then? Let

me know all is OK on that front when you can.

I am attaching the questionnaire I previously sent to Colin. I know I missed it off the original email!

If you could complete as much as you can and return it to me that would be great. If you don't think you will have it completed before I arrive please let me

have it when I get there. It really is a great help when I am inspecting the property and also discussing how you plan t operate the business when we discuss

matters following my inspection.

I will look forward to hearing form you in due course and meeting you all on 21st.

Regards

Mike

Mike Hughes FNAEA FNAEAcom FBII DipCPA Director

Telephone: 01904 215241 Mobile: 07960 117776 Email: info@mjdhughes.com Web: www.mjdhughes.com

MJD HUGHES Ltd Registered in England & Wales No. 10385651 Registered Office: 2 Forest Farm Business Park, Fulford, York YO19 4RH Confidentiality statement: This e-mail message (including any attachments) may contain confidential and privileged information and is intended to be for the

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21

GDPR REGULATIONS - If you do not wish to receive future e-mails or communications from MJD HUGHES Ltd please reply to this e-mail with the word

"UNSUBSCRIBE". Many Thanks

On Mon, 12 Nov 2018 at 16:06, Peter Gibbon <PGibbon@mga-ideas.com> wrote:

Home 01730 816006

Hi Colin,

Mike

22

APPENDIX 2

Location Maps and Plans

23

Map 1

24

Map 2

25

Plot

26

Title Number : WSX217381 This title is dealt with by HM Land Registry, Durham Office.

The following extract contains information taken from the register of the above title number. A full copy of the

register accompanies this document and you should read that in order to be sure that these brief details are

complete.

Neither this extract nor the full copy is an 'Official Copy' of the register. An official copy of the register is admissible

in evidence in a court to the same extent as the original. A person is entitled to be indemnified by the registrar if he

or she suffers loss by reason of a mistake in an official copy.

This extract shows information current on 27 NOV 2018 at 15:52:15 and so does not take account of any

application made after that time even if pending in HM Land Registry when this extract was issued. REGISTER

EXTRACT

Title Number : WSX217381

Address of Property : The Blue Bell, Bell Lane, Cocking, Midhurst (GU29 0HU)

Price Stated : £420,000

Registered Owner(s) : WAND ESTATES LTD (Co. Regn. No. 09084311) of Riversdown,

4 Closewalks Wood, Midhurst GU29 0ET and of karin@karindunbar.co.uk and

of ojwheeler@me.com.

Lender(s) : None

1 of 2

Title number WSX217381

This is a copy of the register of the title number set out immediately below, showing the entries in the register on 27

NOV 2018 at 15:52:15. This copy does not take account of any application made after that time even if still pending

in HM Land Registry when this copy was issued.

This copy is not an 'Official Copy' of the register. An official copy of the register is admissible in evidence in a court to

the same extent as the original. A person is entitled to be indemnified by the registrar if he or she suffers loss by

reason of a mistake in an official copy. If you want to obtain an official copy, the HM Land Registry web site explains

how to do this.

A: Property Register

This register describes the land and estate comprised in the title. WEST SUSSEX : CHICHESTER

1 (05.02.1993) The Freehold land shown edged with red on the plan of the above Title filed at the Registry and being The Blue Bell, Bell Lane, Cocking, Midhurst (GU29 0HU).

2 (14.11.1997) The land has the benefit of the rights granted by but is subject to the rights reserved by the Transfer dated 30 September 1997 referred to in the Charges Register.

27

B: Proprietorship Register

This register specifies the class of title and identifies the owner. It contains any entries that affect the right of disposal.

Title absolute

1 (06.06.2018) PROPRIETOR: WAND ESTATES LTD (Co. Regn. No. 09084311) of Riversdown, 4 Closewalks Wood, Midhurst GU29 0ET and of karin@karindunbar.co.uk and of ojwheeler@me.com.

2 (06.06.2018) The price stated to have been paid on 30 May 2018 was £420,000.

3 (06.06.2018) The Transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.

C: Charges Register

This register contains any charges and other matters that affect the land.

1 (14.11.1997) A Transfer of the land in this title dated 30 September 1997 made between (1) Andrew Robert Paramor and (2) Timothy James Fuller and Pauline Fuller contains restrictive covenants.

¬NOTE: Copy filed.

End of register

2 of 2

27

This is a copy of the title plan on 27 NOV 2018 at 15:52:15. This copy does not take account of any application made after

that time even if still pending in HM Land Registry when this copy was issued.

This copy is not an 'Official Copy' of the title plan. An official copy of the title plan is admissible in evidence in a court to

the same extent as the original. A person is entitled to be indemnified by the registrar if he or she suffers loss by reason

of a mistake in an official copy. If you want to obtain an official copy, the HM Land Registry web site explains how to do

this.

HM Land Registry endeavours to maintain high quality and scale accuracy of title plan images.The quality and accuracy of

any print will depend on your printer, your computer and its print settings.This title plan shows the general position, not

the exact line, of the boundaries. It may be subject to distortions in scale. Measurements scaled from this plan may not match measurements between the same points on the ground.

This title is dealt with by HM Land Registry, Durham Office.

Crown Copyright. Produced by HM Land Registry. Further reproduction in whole or in part is prohibited without the prior

written permission of Ordnance Survey. Licence Number 100026316.

28

29

30

APPENDIX 3

Comparable Property Sales We provide evidence of recent transactions together with licenced property sold subject to contract

• Village Inn Bureton GU31 5SW SOLD off an asking price of £850,000 (trading, 17 beds, 0.3 acre)

• Cedars, Alton GU34 4PB SOLD STC off an asking price of £795,000 (1.9 acre with planning perm)

• Bold Forester Southampton SO40 4UQ SOLD off an asking price of £750,000 (trading 1.53 acre)

• The Sun Inn Dummer RG25 2DJ SOLD off an asking price of £695,000 (2.55acre T/O £472k)

• The Trooper, Froxfield GU32 1BD SOLD off an asking price of £650,000 (T/O £290k N/P £57k)

• Fox & Hounds Crawley SO21 2PR SOLD off an asking price of £650,000 (closed, 4 det letting beds)

• The Compasses Inn Lower Chicksgrove SP3 6NB SOLD off and asking price of £595,000 (N/P £94k)

• The George Vernham Dean SP11 0JY SOLD off an asking price of £595,000 (N/P £80k)

• The Kings Head Whiteparish SP5 2SG SOLD off an asking price of £595,000 (closed, listed,1.2acre)

• The Sun Bentworth GU34 5JT SOLD off an asking price of £550,000 (T/O £520,000)

• The Star Inn Bentworth GU34 5JT SOLD off an asking price of £495,000

• Hoeford Inn Farnham PO16 0SX SOLD off an asking price of £450,000 (0.51 acre)

• The Cartwheel Inn Whitsbury SP6 3QA SOLD off an asking price of £435,000

• Mead End Inn Denmead PO7 6PZ SOLD off an asking price of £400,000 (0.29 acre)

• Anchor Ropley SO24 0BG SOLD off an asking price of £265,000 (investment, 1.9 acre with pp)

31

• Village Inn Bureton GU31 5SW SOLD off an asking price of £850,000 (trading, 17 beds, 0.3 acre)

• Cedars, Alton GU34 4PB SOLD STC off an asking price of £795,000 (1.9 acre with planning perm)

• Bold Forester Southampton SO40 4UQ SOLD off an asking price of £750,000 (trading 1.53 acre)

32

• The Sun Inn Dummer RG25 2DJ SOLD off an asking price of £695,000 (2.55acre T/O £472k)

• The Trooper, Froxfield GU32 1BD SOLD off an asking price of £650,000 (T/O £290k N/P £57k)

• Fox & Hounds Crawley SO21 2PR SOLD off an asking price of £650,000 (closed, 4 det letting beds)

33

• The Compasses Inn Lower Chicksgrove SP3 6NB SOLD off and asking price of £595,000 (N/P £94k)

• The George Vernham Dean SP11 0JY SOLD off an asking price of £595,000 (N/P £80k)

• The Kings Head Whiteparish SP5 2SG SOLD off an asking price of £595,000 (closed, listed,1.2acre)

34

• The Sun Bentworth GU34 5JT SOLD off an asking price of £550,000 (T/O £520,000)

• The Star Inn Bentworth GU34 5JT SOLD off an asking price of £495,000

• Hoeford Inn Farnham PO16 0SX SOLD off an asking price of £450,000 (0.51 acre)

35

• The Cartwheel Inn Whitsbury SP6 3QA SOLD off an asking price of £435,000

• Mead End Inn Denmead PO7 6PZ SOLD off an asking price of £400,000 (0.29 acre)

#

• Anchor Ropley SO24 0BG SOLD off an asking price of £265,000 (investment, 1.9 acre with pp)

36

APPENDIX 4

Photographs

37

Exterior 1

38

Exterior 2

39

Exterior 3

40

Interior 1

41

Interior 2

42

Interior 3

43

First floor 1

44

First floor 2

45

Loft and roof detail

46

APPENDIX A

Standard Assumptions, Recommendations, Limitations and Statements 1: THE BUILDING/S - RECENT ADDITIONS - RECOMMENDATION It is recommended that legal advisers check on compliance with Planning and Building Control Regulations in respect of any recent additions/changes. We have made no such checks. 2: CONDITION OF PROPERTY - LIMITATIONS These observations are subject to the limitations detailed in our Conditions of Engagement. We have not carried out a Building Survey, nor have we inspected those parts of the property which are covered, unexposed or inaccessible, and such parts have been assumed to be in good repair and condition. We cannot express an opinion about or advise upon the condition of uninspected parts and this report should not be taken as making any implied representation or statement about such parts. 3: COMPLIANCE MATTERS 3.1: CONTAMINATED LAND - LIMITATIONS We are not aware of the content of any environmental audit or other environmental investigation or soil survey which may have been carried out on the property and which may draw attention to any contamination or the possibility of any such contamination. In undertaking our work, we have been instructed to assume that no contaminative or potentially contaminative uses have ever been carried out in the property. We have not carried out any investigation into past or present uses, either of the property or of any neighbouring land, to establish whether there is any potential for contamination to the subject property from these uses or sites, and have therefore assumed that none exists. However, should it be established subsequently that contamination exists at the property or on any neighbouring land, or that the premises have been or are being put to a contaminative use, this might reduce the values now reported. 3.2: DISABILITY DISCRIMINATION ACT We have not carried out or commissioned any investigations to determine whether or not the property complies with the requirements of the Disability Discrimination Act 1995 and have made no allowance for any potential cost or compliance works. We make informal comment but we are not qualified or registered Access Consultants. Operators are obliged to make reasonable adjustments to minimise impediments to provision of their services to disabled people. 3.3: ASBESTOS & ANY OTHER HAZARDOUS OR DELETEROUS MATERIALS Owners, occupiers or tenants of non-domestic premises have responsibilities to manage any risk concerning asbestos containing materials (ACMs) on the premises (Control of Asbestos at work Regulations 2002). We have not arranged for any investigation to be carried out to determine whether or not any deleterous or hazardous material or technique, (eg high alumina cement, asbestos) were used in the construction of the property or have since been incorporated, and we are therefore unable to report that the property is free from risk in this respect. For the purpose of this valuation we have assumed that such investigation would not disclose the presence of any such material to any significant extent. 3.4: PREMISES LICENCE We have made enquiries concerning any Premises Licence as indicated in the report. It is the responsibility of the owner or operator to be and/or appoint Personal Licence holder/s for the business to be operated. We have made no enquiries concerning personal licence holders. 3.5: FIRE RISK ASSESSMENT [Regulatory Reform (Fire Safety) Order 2005] Owners, Occupiers or Tenants - “Responsible Persons” of business premises are required to make suitable and sufficient assessment of the risks and to identify and action the fire precautions required to comply with the order. We have not carried out or commissioned any fire risk assessment. 3.6: ENVIRONMENTAL HEALTH, SAFETY & HYGIENE Businesses must have assessed their operations and made adequate provision for compliance. We have not carried out or commissioned any Environmental Health, Food Safety or Hygiene assessments. 4: TOWN PLANNING - ASSUMPTIONS Our report is issued strictly on the understanding that all work to the property and the use are fully authorised by valid planning consents in accordance with the Town & Country Planning Legislation. In the event that subsequently it appears that planning consent has not been obtained for any part or parts then this valuation should be referred back to us for reconsideration. 5: FIXTURES & FITTINGS - ASSUMPTIONS We have assumed that the trade furniture, fixtures, fittings and effects (with the exception of the obvious personal and private items) would be included in any sale and that all these are or will be owned outright by the Mortgagor or Applicant and not subject to any Lease, Hire Purchase or Third Party Charge. Any Brewers Beer raising and dispense equipment is specifically excluded from the Valuation. 6: TENURE & TITLE - GENERAL ASSUMPTIONS This Appraisal is based on the assumption that good title can be shown and that the property is not subject to any unusual or especially onerous restrictions, encumbrances or outgoings, that the property and its value are unaffected by any matters which would be revealed by a local search and replies to the usual enquiries, or by any statutory notice, and that neither the property nor its condition or its use or its intended use is or will be unlawful. 7: VALUATION METHODOLOGY The property has been valued by the profits method relying on the trade information provided and using our knowledge of other comparable trading accounts of similar styles of business.

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The resulting market appraisal valuations have been checked by reference to open market sales of comparable categories of property. Due to the confidential nature of our business, we may be unable to quote full transaction details. 8: STATUS OF AUTHOR of the REPORT It is confirmed that neither the author of the report nor MJD HUGHES LTD have any direct or indirect interest - financially or otherwise - in the property or any loan transaction secured upon it. The Business Buyer and Market Appraisal Valuation Report has been prepared by us as an independent Agent and is not conditional upon the production of any specific value or range of values. 9: RE-APPRAISAL In the event that an assumption we have made proves to be wrong whereby the difference could have an effect on value, the valuation should be referred back to us for reappraisal. 10: LEGAL ISSUES - LIMITATIONS (i) No responsibility or liability is accepted for the true interpretation of the legal position of the client or other parties. Any interpretation of legal documents and legal assumptions must be checked by the client with a suitably qualified lawyer if they are to be relied upon. (ii) This report is carried out in accordance specifically with your instructions. (iii) Any discrepancies revealed by the searches and verification should be referred back to us so that the valuation can be reviewed in the light thereof. 11: GRANTS & TAXATION - ASSUMPTIONS (i) We have not taken account of any grants or other subsidies which may have been received or may be available in respect of the property nor any liability to repay such sums which may arise on disposal. (ii) No allowance has been made in the valuation for Capital Gains Tax and VAT or any other taxation liability which may arise on the letting or disposal of the property - actual or notional, nor for any costs of acquisition or disposal. (iii) We have assumed that VAT will not be chargeable in addition on the interest valued. In the event of VAT being chargeable, the value reported could vary and should be referred back to us for comment. 12: LIABILITY - LIMITATION This Report and Market Appraisal Valuation has been prepared for the stated purpose and for the sole use of the named client. The author accepts responsibility to the client alone that the Report has been prepared with the skill, care and diligence reasonably to be expected of a competent property professional, and accepts no responsibility whatsoever to any parties other than the client. Any such parties rely on the Report at their own risk. 13: DISCLOSURE - LIMITATION Neither the whole nor any part of the Report nor any reference to it may be included in any published document, circular or statement or published in any way, without the author’s written approval of the form and context in which it may appear 15: COMPLAINTS MJD HUGHES Ltd has in place a Complaints Handling Procedure in compliance with the regulations of The National Federation of Property Professionals. If you have a complaint please refer it to your Contact Office. If your complaint cannot be resolved immediately, we will ask you to follow the approved Complaints Procedure, and a copy of the Procedure will be dispatched to you.

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GENERAL APPENDIX B MARKE APPRAISAL VALUATION DEFINITIONS a) Market Value The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. ("Market Value") The valuation prepared on an open market basis which is defined as follows:- b) Market Value as a Fully Equipped Operational Entity having regard to Trading Potential (“Market Value - Trading”) Market Value, plus: (i) Vacant possession is provided on completion of all parts of the property occupied by the business. (ii) The business is open for trade. (iii) The business includes an Inventory of trade furnishings and equipment. (iv) Accounts or records of trade are available and will be assessed and/or relied upon by a prospective purchaser. (v) (If specified in addition) with special assumptions made as to trading performance. C) Market Value as a Fully Equipped Operational Entity having regard to Trading Potential - but subject to Special Assumptions (“Market Value - Trading - in Default”) As Market Value Trading, but of a property which is equipped and continuing to trade with mortgagee in possession. Assumptions (iv) and (v) change: (iv) Accounts or records of trade are not available and prospective purchasers are aware that the business has trading difficulties. (v) The mortgagee realises it would be beneficial to achieve a sale within four months. d) Market Value of the Empty Property having regard to Trading Potential and subject to Special Assumptions (“Market Value - Closed - in Default”) The market value of a property which is usually valued as a fully equipped operational entity, having regarding to trade potential but subject to the following special assumptions. (i) Vacant possession is provided on completion of all parts of the property occupied by the business. (ii) The business has been closed. (iii) The trade Inventory has been depleted or removed. (iv) Accounts or trading records would not be available to a prospective purchaser. (v) Licences have been lost or breached (vi) The mortgagee desires a sale within three months. (vii) The property has not been vandalised. e) The Market Value of a property which is or will be a fully equipped or operational entity having regard to trading potential - subject to special assumptions regarding development as proposed or in progress. ("Market Value - Trading Development Projection") Market Value plus: (i) Vacant possession is provided on completion of all parts of the property occupied by the business. (ii) The proposed development of the business is assumed to have been completed. (iii) The business is assumed to have been equipped /re-equipped to a specified standard. (iv) The valuation is made on the assumption that trade projections as supplied and/or specified by the valuer are being achieved. f) The Market Value of a fully equipped operational entity having regard to trading potential, let as a trading investment ("Market Value - trading investment") Market Value plus: (i) The property is let subject to a tied supply agreement on known/specified terms and reflects the maintainable margin gained on goods and services. (ii) The business is open for trade. (iii) Tied supply (barrelage etc) records are available and will be relied upon by a prospective purchaser. (iv) The trade inventory is owned by the lessee and not included in the valuation. g) The Market Value of a fully equipped trading entity, let as a trading investment as part of a portfolio of properties ("Market Value - trading investment - Portfolio") As “Market Value - trading investment” plus: (v) Enhanced assumptions of investment return because the freeholder / lessor obtains preferential discount terms from brewers/trade suppliers and overheads benefit from the economies of scale. h) Market Rent The estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm’s-length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion, assuming: (i) A stated length of term and principal conditions which are neither onerous nor beneficial apply. (ii) No premium passed. (iii) Any rent free period was in respect only of the time needed by the tenant to make the property fit for occupation. j) Reinstatement An indication for insurance purposes (which is given solely as a guide, as a formal estimate for insurance purposes can be given only by a quantity surveyor or other person with sufficient current experience of replacement costs) of the current reinstatement cost of:

(i) The buildings in their present form (unless otherwise stated); (ii) or

Buildings being constructed as proposed to be completed; each including the costs of clearance and professional fees, and assuming satisfactory ground conditions. Excluding:-

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(a) VAT (except on fees) (b) loss of rent; and/or (c) cost of alternative accommodation for the reinstatement period. Note: In particular, where a building is listed as being of architectural or historic interest, or is located in a conservation area, or is of substantial stone half -timbered or other construction which is at variance with conventional modern techniques or methods the Client is advised to obtain specialist advice because reinstatement costs of such buildings can exceed substantially the reinstatement costs usually recommended for buildings of conventional construction. Where buildings are likely to be rebuilt or to have to be rebuilt in a different way from their original, the insurers approval of the proposed method of reinstatement must be obtained.

GENERAL APPENDIX C

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MJDHUGHES LTD STANDARD CONDITIONS OF ENGAGEMENT FOR THE MARKET APPRAISAL VALUATION OF COMMERCIAL LAND AND BUILDINGS (Which apply unless agreed to the contrary in the Letter of Instruction)

1. The Service

1.1 The Author will provide directly to the Client a Report based on an inspection as described below. In respect of the subject property(ies), the

Author will be an independent Agent, who either:

(a) in respect of the particular type of property, has sufficient current local, and national (as appropriate) knowledge of the particular market and the

skills and understanding necessary to undertake the market appraisal valuation competently;

or:

(b) where he satisfies (a) above, except that he has insufficient current knowledge, he will be or has been assisted by a person(s) who has/have such

knowledge and the skills and understanding necessary to provide the assistance required;

and

where the nature of the instruction dictates, the above requirements in (a) and (b) may be met in aggregate by more than one Author for the report.

(c) meets any legal or regulatory requirements which apply in the circumstances in which the particular market appraisal valuation is required.

(d) has, no other current or presently foreseeable potential fee earning relationship concerning the subject property(ies), apart from the report fee,

who has disclosed in writing to the Client any present relationship, or relationship within the past two years of receipt of the report instruction, with

any of the interested parties and any previous involvement with the subject property(ies).

(e) has professional indemnity insurance.

1.2 The Report will provide the following points:

1.2.1 A full description of the property, its location, apparent state of repair and other relevant information such as the approximate site area.

1.2.2 The Author’s market appraisal valuation(s) of the property(ies) on the following bases:

(a) Market Value as a Fully Equipped Operational Entity having regard to Trading Potential.

When providing valuation (a) the Valuer may also report on the effect of closure of the business, making special assumptions, which are interpreted

as:

(b) Market Value as a Fully Equipped Operational Entity having regard to Trading Potential - but subject to Special Assumptions.

(c) Market Value of the Empty Property having regard to Trading Potential and subject to Special Assumptions.

The valuations will exclude any additional value attributable to personal goodwill, but will include the value of any fixtures and fittings which are of

value in situ to the present or proposed occupier.

and: if the Author believes there is a special prospective purchaser, on the above basis(es) but reflecting the bid of that special prospective purchaser:

and: where the market appraisal valuation(s) reported pursuant to (a) above, has/have been affected by the existence of an unimplemented planning

consent for change of use or other development or by the prospect of such consent(s) being available, the Author will so report and advise as to the

amount(s) of the increase reported in consequence.

1.2.3 In the case of property to be held as an investment:

(a) a projection, at rental levels current at the reporting date, of the rental income to which the owner will be entitled from the property on the bases

of current and full occupancy, with comment on the time-scale to achieve the latter and any other related factors;

(b) an opinion upon the effects on value of the quality and terms of the lease(s) and relevant implications upon the valuation in respect of privity of

contract (if any); and

(c) the Auithor’s view of the market's opinion of tenant covenants for the class of the subject property in the subject locality.

1.2.4 In the case of a property which is, or which is intended to be, the subject of development or refurbishment, comment upon:

(a) the cost and viability of the project where cost information is provided.

(b) the implications on market value of any cost overruns or completion delays.

1.2.5 Advice, if the Author considers it relevant, that there is a significant prospect of or potential for change of use or other development of the

subject property, or those in the vicinity, which would materially affect the value of the subject property.

1.2.6 Advice on any other factors which the Author considers are likely materially to affect the status of the property as security, e.g: privity of contract

1.2.7 Comment upon the proposed purchase price if this has been notified to the Author.

1.2.8 A statement as to any special assumptions which the Author has made.

1.2.9 An opinion (without liability on the part of the Author) of current market conditions and current and expected trends in respect of the type of

property in the area.

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1.2.10 A statement as to the valuation method adopted, and an indication as to the extent to which the Author has been able to have regard to

comparable market transactions and: in the case of property valued for the existing use as an operational entity having regard to trading potential, the

opinion which the Author has formed as to the future trading potential, including the gross income and profitability likely to be achieved with comment

where possible on trading results, current trends, budget and management accounts and existing and expected competition.

1.2.11 Any other aspects, other than the usual legal investigations, which the Author considers require further consideration or investigations by or

on behalf of the Client.

1.2.12 The date of valuation will be the date of the Report, and the date of inspection will be stated.

1.3 Following provision of the Report, the Author will be prepared to discuss its contents with the Client.

1.4 The Author will:

1.4.1 unless otherwise expressly agreed, rely upon information provided by the Client's legal or other professional advisers relating to tenure, leases

and all other relevant matters. However, the Author will advise in the Report if he becomes aware of information which appears to be at variance with

that provided.

1.4.2 Subject to Paragraph 2.1 below, carry out such inspections and investigations as are, in the Author’s professional judgement, appropriate and

possible in the particular circumstances. These will include oral town planning enquiries.

1.4.3 Where appropriate, make informal comment with regard to the likely conformity of the property with local Environmental Health Officer

requirements. The Authorwill not make any enquiries of the Environmental Health Officer and the opinion will be given without liability on the part of

the Author

1.4.4 If the Author’s knowledge or inspection suggests that there may be contamination or hidden defects the Author will so advise and may

exceptionally defer submitting a final Report until the results of further investigations and costings are available. The Author will not provide a formal

environmental assessment.

1.4.5 In preparing the Report, unless otherwise stated by the Author, make the following assumptions which the Author shall be under no duty to

verify:

(a) that no deleterious or hazardous materials or techniques were used in the construction of the property or have since been incorporated;

(b) that good title can be shown and that the property is not subject to any unusual or especially onerous restrictions, encumbrances or outgoings;

(c) that the property and its value are unaffected by any matters which would be revealed by a local search and replies to the usual enquiries, or by

any statutory notice, and that neither the property, nor its condition, or its use, or its intended use, is or will be unlawful;

(d) that inspection of those parts that have not been inspected would neither reveal material defects nor cause the Valuer to alter the valuation(s)

materially; and

(e) unless otherwise stated, that no contaminative or potentially contaminative uses have ever been carried out on the property and that there is no

potential for contamination of the subject property from past or present uses of the property or from any neighbouring property.

(f) in the case of proposed or potential building or construction works, that ground conditions are satisfactory and no extraordinary expenses or delays

will be incurred during the construction period.

1.5 The Report will be provided for the stated purpose and for the sole use of the named Client. The Author accepts responsibility to the Client alone

that the Report will be prepared with the skill, care and diligence reasonably to be expected of a competent property professional, and accepts no

responsibility whatsoever to any parties other than the Client. Any such parties rely upon the Report at their own risk. Neither the whole nor any part

of the Report nor any reference to it may be included in any published document, circular or statement or published in any way, without the Author’s

written approval of the form and context in which it may appear.

2. The lnspection

2.1 The Author will undertake a visual inspection of so much of the exterior and interior of the property as is accessible with safety and without undue

difficulty, as can be seen whilst standing at ground level within the boundaries of the site and adjacent public/communal areas and whilst standing at

the various floor levels, which the Author considers reasonably necessary to provide the Service, having regard to its purpose.

The Author is under no duty to carry out a building survey or to inspect those parts of the property which are covered, unexposed or inaccessible, or

to raise boards, move anything, use a moisture detecting meter, or to arrange for the testing of electrical, heating or other services.

2.2 Measurements and Dimensions: The Author will not take accurate measurements of the building, internally or externally or of the site, but will take

approximate or estimated measurements for guidance or identification purposes only.

3. The Report

3.1 If it is not reasonably possible to carry out a substantial part of the inspection (see paragraph 2 above) this will be stated

3.2 Where the Author relies on information provided, this and its source will be indicated in the Report.

3.3 The Report will state the existence of tenants improvements and any apparently recent significant alterations and extensions.

3.4 The Author is not required to:-

3.4.1. take account of any grants or other subsidies which may have been received or may be available in respect of the property nor any liability to

repay such sums which may arise on disposal.

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3.4.2. make allowance in the valuation for Capital Gains Tax and VAT or any other taxation liability which may arise on the letting or disposal of the

property - actual or nominal, nor for any cost of acquisition or disposal.

3.5 The Author can assume that VAT will not be chargeable in addition on the interest valued. Following the provision of the report in the event of

VAT being chargeable, the Author will provide a revised opinion of value/s.

3.6 Where the Author is required to interpret the legal position of the Client or other parties, the Client confirms that no responsibility or liability will

be accepted by the Author for any interpretation of legal documents, and in any interpretation of legal documents and legal assumptions must be

checked by the Clients with a suitably qualified Lawyer if they are to be relied upon.

4. lnstructions and Charges

4.1 All instructions of the Client Lender will be made directly by the Client and confirmed in writing.

4.2 The Client will pay to the Author the fee initially agreed between them, or any amendment thereto to be agreed if the Author's instructions are

subsequently modified. In addition the Client will pay the amount of any Value Added Tax on the fee.