Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

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Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital
Kingfisher Resorts Meudon Limited
Marketing Presentation

Armstrong / November 2020           1
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

• This Marketing Presentation should be read in full and your attention       • The opportunity to invest in the Company is open to any investor,
  is drawn, in particular, to the risk factors set out in this Marketing        retail or professional, for whom the distributor has determined it is
  Presentation (the “Marketing Presentation”).                                  a suitable investment as COBS 9 and COBS 10 of the FCA handbook.
                                                                                The Company is not a collective investment scheme.
• All provisions which constitute the document for investors
  (“Investors”) is issued by Armstrong Energy Limited, which is               • Investing in the Company may expose the investor to a significant
  authorised and regulated in the UK by the Financial Conduct                   risk of losing all of the monies so invested. Any individual who is
  Authority (the “FCA”). This investment may not be suitable for retail         in any doubt about investment in the Company should consult an
  investors as defined in the FCA handbook COBS 3.4.1R. If in doubt             authorised person specialising in advising on investments of this
  about the content of this Marketing Presentation and its suitability          nature. Accordingly, potential investors are strongly advised to carry
  for your needs, you are recommended to seek your own independent              out their own due diligence including, without limitation, a review of
  financial advice immediately from your stockbroker, solicitor,                the legal and tax consequences to them of becoming a lender or a
  accountant or other independent financial adviser authorised                  shareholder within the Company.
  under the Financial Services and Markets Act 2000 (“FSMA”) who
  specialises in advising on investment in shares and loan notes.             • Save where expressly stated otherwise, Armstrong is acting
                                                                                exclusively for the Company and for no one else in connection with
• Nothing in this presentation constitutes investment, tax, legal or            this Marketing Presentation and is not advising any other person or
  other advice by Kingfisher Resorts Meudon Limited (the “Company”)             treating any other person as its customer in relation thereto and,
  or Armstrong Energy Limited (the “Marketing Presentation Issuer”),            in particular, Armstrong is not, nor shall it be, responsible to any
  or Armstrong Capital Management Limited (“adviser to the company              other person for providing the protections afforded to the customers
  and distributor of the material to FCA authorised firms”). This               of Armstrong or for providing advice in relation to this Marketing
  Marketing Presentation is approved by Armstrong Energy Limited                Presentation. Neither the Company nor Armstrong has authorised
  as a financial promotion for communication to distributors who                any person to make representations or give information to any person
  are FCA regulated and it has been approved for the purposes of                on its respective behalf with respect to this Marketing Presentation or
  section 21 FSMA to the standards required for onward distribution             in connection with any material or information referred to in it.
  by distributors to investment professionals and high net worth or
  sophisticated investors falling within the categories described in          • You should therefore not rely on any such representation or
  FSMA.                                                                         information made or given to you by any such person as having been
                                                                                made or given on behalf of either the Company or Armstrong.
• Armstrong Capital Management Limited is an appointed representative
  of Armstrong Energy Limited (together “Armstrong”) and has been             • Investments into non-readily realisable securities are high-risk due
  appointed by the Company to give advice. Investors will not be                to their illiquid nature and are therefore not deemed suitable for
  treated as clients of Armstrong. The distributor (not Armstrong               retail investors as defined in the FCA handbook COBS 3.4.1R. If you
  Energy Limited or Armstrong Capital Management Limited) will be               are in doubt about the content of this marketing presentation and
  responsible for providing the protections afforded to their clients and       its suitability to your needs, you should seek independent financial
  will be responsible for advising investors in relation to the suitability     advice from a suitably qualified adviser.
  of investment in the Company.

Armstrong / November 2020                                                                    2
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

• Past performance or projected performance is not an indication of future         • The projections, views, statements and forecasts in this Marketing
  performance, you could lose some, part or all of your original capital             Presentation or referred to in this Marketing Presentation are based
  invested. Tax treatment is based on individual circumstances and may be            upon various assumptions and estimates which involve significant
  subject to change. Please read the risk section within this presentation.          elements of subjective judgement and analysis and which are subject
                                                                                     to uncertainties and contingencies; actual results could differ materially
• No application has been made, nor is any application intended to                   from those set forth in such projections, views, statements and forecasts.
  be made, for any shares in the capital of the Company to which this                These risks, uncertainties and assumptions could adversely affect the
  Marketing Presentation relates to be dealt in, or listed on, the Official List     outcome and financial effects of the plans and events described herein
  of the FCA, acting as the competent authority for the purposes of Part VI          and could result in the loss of monies invested.
  of FSMA, or to be listed or traded on any recognised stock exchange or
  market. This Marketing Presentation has not been reviewed, authorised            • The Company has taken all reasonable care to ensure that all the facts
  or otherwise approved by the FCA or any other regulatory body. This                stated in this document are true and accurate in all material respects
  Marketing Presentation does not constitute a prospectus as defined                 and that there are no other material facts, or opinions, which have been
  by the Prospectus Regulations 2005 and has not been prepared in                    omitted, which would make any part of this promotion misleading. The
  accordance with those regulations.                                                 Company accepts responsibility accordingly, limited to circumstances
                                                                                     where it can be shown that reasonable care and diligence was not taken
• By receiving this Marketing Presentation, the recipient agrees to keep             by the Company in the matters stated above.
  confidential, without limitation in time, the information contained
  herein, and any information made available to them in connection with            • This Marketing Presentation may not be distributed to any person
  further inquiries. This Marketing Presentation, and all other information          outside of the United Kingdom and the Marketing Presentation and any
  supplied (“Confidential Information”) may not under any circumstances              offers are directed solely at persons within the United Kingdom. The
  be copied, distributed, published or reproduced, in whole or in part, at           Company will not process Application Forms from any other person. The
  any time, nor may their contents (or any part of them) be disclosed to             terms and conditions of the offer and the procedure for application are
  any person without Armstrong Energy Limited’s prior written consent,               set out in the application form.
  other than to a person or to the directors, officers, employees and
  professional advisers of a person who needs to know the Confidential             • The laws of England and Wales govern the issue, communication and
  Information and provided only that such persons undertake to abide by              terms of this Marketing Presentation and any disputes arising in relation
  the same restrictions and responsibilities as set out herein.                      to any of them (including any non-contractual obligations relating
                                                                                     thereto) will be subject to the exclusive jurisdiction of the English courts.
• All statements of opinion contained in this Marketing Presentation, all
  views expressed and all projections, forecasts or statements relating to
  expectations regarding future events or the possible future performance
  of the Company represent the Company’s own assessment based on
  information available to it as at the date of this Marketing Presentation.
• No representation is made or warranty given as to the accuracy,
  completeness, achievability or reasonableness of any such projections,
  views, statements or forecasts, which are illustrative and rely on
  assumptions which the Company considers to be reasonable.

Armstrong / November 2020                                                                           3
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

                                                                INVESTOR SUITABILITY

  • Suitability: ‘Certified High Net Worth’ or “Sophisticated” investors only.

    ‘Certified High Net Worth’ investors are individuals with either net assets (excluding their primary residence, insurance benefits or pension
    schemes) of £250,000 or more or an income in excess of £100,000 per annum as per COBS 4.7.9R and COBS 4.12.6R, COBS 4.12.7R and COBS
    4.12.8R of the Financial conduct authority handbook.

  • Sophisticated Investors are members of a network or syndicate of business angels for at least the last six months, or have previously made a loan to,
    or invested in an unlisted company within the past two years, or are currently or have been a company Director with an annual turnover of at least
    £1 million within the last two years.
  • The investments discussed in this document are only for Certified High Net Worth or Sophisticated Investors because of the added risks and
    limitations involved in investing in or lending to small trading businesses. Investors may lose part or all of their money. However, providing a robust
    business model can be adopted by investing in areas that generate reliable revenues, and the potential returns can be attractive.

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                                                     INVESTOR PROTECTION AND LIQUIDITY

  • The investments quoted in this document are not traded on a stock exchange and, as such, realising a cash value can be difficult, or in some
    circumstances impossible, except when facilitated by the management. An investor’s capital is often only returned when the underlying investment
    is sold. You should consult your professional advisers before investing into a non readily realisable security. Redemptions are not guaranteed and
    are often subject to matched bargain arrangements, where an investor selling has to be matched with a new investor.
  • Investors are not protected by the Financial Services Compensation Scheme or the Financial Ombudsman Service.

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                                                      POTENTIAL INVESTORS SHOULD NOTE

  • The value of investments may go down as well as up and investors may not get back the full amount invested and could suffer a total loss
    should the Company and its Management teams assumptions prove unrealistic.

Armstrong / November 2020                                                                        4
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

                                                                                                         KEY POINTS

    • Kingfisher Resorts Meudon Limited (the “Company”) is a UK limited company established for the
      purpose of acquiring and developing the Meudon Hotel, Cornwall.
    • The Company will acquire the hotel trading company, Meudon Vean Limited, in an all cash
    • The Company will be managed by experienced hotel operator and developer, Kingfisher Resorts
      (“Kingfisher” or “Management”).
    • Located just outside busy, year-round, Falmouth, the Meudon Hotel (the “Meudon” or the
      “Hotel”) is an operational, but currently under-traded hotel, set in 20 acres of stunning, and
      historic, sub tropical gardens, leading down to an exclusive private sandy beach.                                                                Sub-Tropical Gardens

        - Agreement has been reached to acquire the company that owns and the hotel (including
          a substantial family house and adjoining land) for what Management consider to be an
          advantageous acquisition price of £3.55m, subject to contract and due diligence.
        - Utilising the Management’s extensive experience of revitalising and successfully trading
          ‘dormant’ hotels, a complete refurbishment is planned which Kingfisher believe will bring the
          Meudon Hotel back to being one of the best hotels in Cornwall.
    • Following acquisition, the Company will seek to secure planning permission for construction of up
      to 24 luxury holiday villas which it intends to sell off plan and realise value for shareholders.
                                                                                                                                                       Existing Restaurant
    • Company is seeking to raise acquisition finance of £4.0m(1). The investment is structured to
      provide investors with a combination of income and capital growth, as set out below:
        - £2.0m by way of 5-year 7% Loan Notes (“Loan Notes”). Interest will be payable at a rate of
          3.5% per annum with a further 3.5% rolled up and paid on redemption of the Loan Notes.
        - £2.0m(2) by way of Ordinary Shares (“Shares”). The Company is targeting a return on equity
          of above £2.50 per £1.00 investors over 5 years.
        - Investors will subscribe for £1.00 of Loan Notes for every £1.00 of Shares.
        - Investors will be entitled to annual hotel redemption vouchers equivalent to 2.0% of the
          amount subscribed for Shares.                                                                                                                Private Beach

(1) Investment into unlisted companies remains high risk due to their illiquid nature and the removal of certain risks does not remove all risk
(2) Base Case returns estimates on a pre-tax basis based upon full redevelopment of the hotel. Please refer to the risk section of this document

Armstrong / November 2020                                                                                                                          5
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

                                                                  FROM THE MANAGEMENT TEAM

  “Created in 1965 as ‘the most modern hotel in Cornwall’, by Harry Pilgrim, Meudon has enjoyed distinguished
  patronage. Originally a pair of coastguard cottages (apparently with a sideline in smuggling), the house today has an
  attractive, red brick and stone, castellated Victorian, façade. The name was given by Napoleonic prisoners of war,
  working on the nearby farmhouse, in memory of their hometown, on the outskirts of Paris. Today the hotel sits at the
  head of a valley (or vean) leading down to its private beach.
  Although Harry Pilgrim acquired Meudon from Lady Worley, the sub-tropical gardens were created in the 19th
  century by the Fox family. Highly successful Quaker entrepreneurs and creators of exotic gardens, the Fox family also
  created both Trebah and Glendurgan gardens. They delighted in their works, and Caroline Fox, writing in the mid
  1800’s, tells of ‘lounging on Bream Beach’ (Meudon) and listening to one of her party reading Tennison.
  Attractive though the original house is, the half mile of valley side gardens are the crowning glory of Meudon Hotel,
  together with the delightful private sandy beach, with safe bathing.
                                                                                                                           Coastal View of Bream Cove
  Located a stone’s throw from historic, and busy year-round Falmouth, Meudon sits between Carrick Roads and the
  Helford Estuary, a much-favoured area full of discrete luxury houses owned by, amongst others, Roger Taylor from
  Queen. Enjoyment of Meudon’s charms aside, the immediate access to the South West Coastal Path opens up some
  of the most beautiful and varied walks in England.
  Although Meudon traded well in its earlier years, and the first (1978) Good Hotel Guide listed the hotel as ‘a stylish
  Country House Hotel’, enthusiasm for the trade appears to have gradually waned. Today the hotel appears to be being
  run to suit the personal needs of the family – open only a part of the year, and recently operating only as a B&B. We
  have been able to secure the hotel, a large family house and some 20 acres of land for £3.55m. This very attractive
  price fully reflects the current market conditions and the trading of the hotel.
  This 4* hotel is waiting for professional management and an inspired ‘make-over’, to once again become one of the
  best hotels in Cornwall and an international attraction. The management team have a long history of acquiring and
  reviving ‘fallen hotels’ and most recently took the 5* Sheen Falls Lodge from an annual EBITDA loss, on acquisition,     Bridge Deck Lounge
  of -€235k to a profit, on sale, of €1.2m. Knoll House in Studland has been moved from a loss, on acquisition, of -£3k
  to a profit this year of ~£450k – and with virtually no capital expenditure.
  Our plan is to give Meudon an immediate ‘make-over’ and to once again a create a stylish and comfortable hotel
  offering the highest standard of service plus a ‘rated’ restaurant. Cornwall enjoys a rich larder of food and Meudon
  will focus on bringing a very high standard of cooking to The Bream – our restaurant, which will also help attract
  discerning guests looking for the best quality experiences.
  The hotel has extensive further development potential which we plan to fully unlock, once the initial improvements
  have been completed. Realising this development potential will additionally enhance shareholder returns.
  Meanwhile our aim is to, once again, make Meudon Hotel ‘a haven of peace and discrete luxury’ (1978 Good Hotel
  Guide), qualities which discerning guests greatly value.”
  Nigel Chapman, Chief Executive Officer, Kingfisher Resorts                                                               Ariel Shot of Bream Cove

Armstrong / November 2020                                                                                       6
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

                                                Management has negotiated an attractive purchase price for the Hotel

  1         ADVANTAGEOUS
                                                • The total acquisition price of £3.55m is considered to be a very good buyers price and is reflective of the current trade at the Hotel.
                                                • The price is considered to be a fair value for the real estate with little or no value attributed to the business goodwill and therefore
                                                  presents Management and the Company with genuine upside potential through trading alone.

                                                The Meudon Hotel is in a premium private location on the south coast of Cornwall

                                                • The Hotel benefits from exceptional views down to Bream Cove and includes its own private sandy beach.
            ATTRACTIVE                          • Falmouth, a popular port, sailing centre and tourist attraction is only 3.8 miles from the Hotel.
            LOCATION                            • Falmouth is a year round centre with an established university and port providing the Hotel with steady year round demand.
                                                • Cornwall is one of the most attractive tourism and holiday home destinations across UK.

                                                The management plan to return the Meudon to its former prime and establish the premises as a luxury hotel and resort
                                                • The Meudon will aim to be one of the leading coastal hotels in south Cornwall, with a strong emphasis on sophisticated dining and

  3         DEVELOPMENT
                                                  a focus on provenance.
                                                • The space within the Bream House grounds is well suited for development of up to 24 luxury villas, subject to planning.
                                                • The villas would be sold off plan but remain part of the Hotel’s trading inventory and on sale could generate substantial development
                                                  profits for the Company.

                                                The Management have extensive experience in the development and operation of hotels and resorts in the UK
            EXPERIENCED                         • Kingfisher’s founder, Nigel Chapman, founded the Luxury Family Hotels business which continues to be managed by Kingfisher.
            MANAGEMENT                          • Kingfisher currently manage the Knoll House Hotel in Studland Bay, Dorset and Una St Ives Resort and Spa in St Ives, Cornwall.

                                                The outlook for the UK domestic holiday market remains strong

            STRONG                              • The number of domestic visits by UK residents has grown by 20% over the 12 year period from 2008 to 2019. The largest volume of
            DOMESTIC                              domestic holiday trips was in 2019, up +4.4% on 2018 and +2.2% on 2017(1)
            MARKET                              • Covid-19 has increased demand for domestic holidays and staycations owing to disruption in overseas travel.

                                                The investment is structured to provide stable income to investors combined with capital growth
                                                • Investors are being offered to participate equally in both Shares and Loan Notes
            OF INCOME                           • Loan Notes carry a total interest rate of 7.0%, of which 3.5% is payable annually and 3.5% rolled up and paid on redemption of the
            AND GROWTH                            Loan Notes.
                                                • Investors will also receive an annual voucher equivalent to 2.0% of the Shares (at subscription) to be redeemed at the Hotel.

A number of these highlights are explored in more detail on pages 8 to 15

(1) The Great British Tourist Report, August 2020 ( jointly sponsored by VisitEngland, VisitScotland, Visit Wales)

Armstrong / November 2020                                                                                                7
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

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                                 PERFECT LOCATION                              THE PREMIUM LOCATION OF THE SITE

   • The Meudon Hotel is located 1 hour from Newquay Airport and
     15 minutes from Falmouth train station.
   • The Hotel is located directly on the south coast of Cornwall, and set
     in 20 acres of stunning, and historic, sub tropical gardens, leading
     down to an exclusive private sandy beach.
   • Nearby activities include; boat trips, fishing, snorkelling, sea safari
     trips, golf, surfing and sailing, as well as exploring nearby historic
     nearby towns such as Truro and Falmouth.
   • The historical university town of Falmouth is located 3.8 miles
                                                                                                 THE MEUDON
     from the Hotel and has one of the strongest year round events                               HOTEL
     programme of any town in Cornwall.
   • Cornwall receives around 4 million annual visitors in a tourism
     economy worth over £1bn.(1)


Armstrong / November 2020                                                        8
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

       Two key drivers to the success of the Company are visitor demand and real estate values. The charts below show that Cornwall continues to lead the
       UK as the premier destination for holidays whilst real estate demand and prices, based on latest available information, continues to show strong growth.

             Top 5 English Counties by Number of Holiday Nights (Average of 2017-2019)(1)                                                 Cornwall – Total and Holiday Tourist Visits (3 Year Average)(1)

                               20                                                                                                    5
  Number of Holiday Nights

                                                                                                         Tourist Visits (Millions)
                               15                                                                                                    4

                               10                                                                                                    4
                                0                                                                                                    2
                                       Cornwall        Devon    North        Cumbria           Norfolk                                                                                                  Total

                                                                                                                                     20 0
                                                                                                                                     20 1
                                                                                                                                     20 2
                                                                                                                                     20 3
                                                                                                                                     20 4
                                                                                                                                     20 5
                                                                                                                                     20 6
                                                                                                                                     20 7
                                                                                                                                     20 8

                                                                                                                                     20 -9
                                      and Isles of             Yorkshire



                   Cornwall – Total Annual House Sale Volume(2)                                                                          Cornwall – Average Annual House Price – All Property Types(2)
 Cornwall – Total Annual House Sale Volume (2)

                             13,000                                                                      Average Annual House Price      260,000
  Total Annual House Sales



                              4,000                                                                                                      140,000
                                        2011    2012    2013   2014   2015    2016     2017       2018                                               2011 2012 2013 2014 2015 2016 2017 2018

(1) Source: GBTS Analysis 2006 - 2019 -
(2) Source: Land Registry Data, Government of UK

Armstrong / November 2020                                                                                                                      9
Kingfisher Resorts Meudon Limited - Marketing Presentation - Armstrong Capital

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                                                                     MEUDON BENCHMARKED AGAINST COMPETITORS
   HOTEL                                HOTEL MEUDON                         HOTEL TRESANTON                                IDLE ROCKS            FOWEY HALL               SOUTH SANDS
   Location                         Nr Falmouth - Cornwall                    St Mawes - Cornwall                     St Mawes - Cornwall       Fowey - Cornwall        Salcombe - Cornwall
   #Bedrooms                                       30                                      30                                   19                     36              22 (plus self catering)

   Location                                     Coastal                                 Coastal                             Waterfront               Coastal                 Beachfront

   Direct beach/                                    3                                       3                                    3                      7                         3
   water access
   Spa                                              7                                       7                                    7                      3                         7
   Highly rated
   restaurant                                       3                                       7                                    3                      7                         7

   Extensive gardens                                3                                       7                                    7                      3                         7
   Average ADR(1)                               c.£147                                   £224                                   £265                  £179                      £174
                                     The refurbished and                        Hotel Tresanton and The Idle Rocks are both                    Fowey Hall is located    This small boutique
                                      repositioned Hotel                         located in the upmarket coastal village of St                  in the sophisticated   hotel is located directly
                                     Meudon will be one                       Mawes on the Roseland Peninsula. Both hotels                    estuary town of Fowey.    on the beach on the
                                     of the leading coastal                  have undergone comprehensive refurbishments                      Family focused, Fowey    outskirts of in-demand
                                   hotels in south Cornwall,                      in recent years and have a well established                   Hall benefited from           Salcombe.
                                    with a strong emphasis                       domestic and international guest base (Idle                   a multimillion pound
   Commentary                                                                                                                                 refurbishment in 2020.
                                   on sophisticated dining.                     Rocks is also a member of Relais & Chateux).
                                       The above ADR is                           The relatively limited inventory and strong
                                      based upon steady                       year round demand drives the high ADR’s. This
                                      state trading, post                     illustrates further upside opportunity for Hotel
                                         refurbishment.                                       Meudon over time.

   The Meudon Hotel has an unparalleled coastal setting, with extensive subtropical gardens and direct access to the South West coast path and its own
   private, sandy beach. Management expect the Meudon to exceed these conservative performance metrics. Please note that it is the intention to
   develop a luxury spa offering at a later development phase.

(1) ADR – Average daily rate, net of VAT and breakfast allocations Source: Hotel websites:,, etc.

Armstrong / November 2020                                                                                                                10

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                                           HOTEL REFURBISHMENT AND REPOSITIONING OF OFFER

  The hotel will undergo an extensive refurbishment immediately following acquisition and aim to
  reopen as a full service hotel in time for Easter 2020. Included in the refurbishment programme are
  the following plans:
  • Full upgrade of bedrooms, bathrooms and communal areas.
  • Installation of verandas to the rooms with garden and sea views.
  • Upgrade of existing main restaurant (currently only serving breakfast) which will offer
    breakfast, lunch, afternoon tea and dinner.
  • Establishment of a cocktail bar with separate casual bar offering tapas style bar snacks.
  • The food offer will aim to provide a high quality experience with a strong local influence.
  Future (subject to planning):
  • Construction of a 20 metre year round heated outdoor infinity pool and pool terrace.
  • Establishment of seasonal poolside restaurant (‘Potager’) offering alfresco summer dining.
  • Conversion of vacant staff accommodation into luxury spa.

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                                                            LUXURY VILLAS DEVELOPMENT

  Included in the Hotel acquisition is the current owners private family home, Bream House. The 5
  bedroom house occupies a large unused area of the site offering elevated views over Bream Cove.
  Management will seek to obtain planning permission for up to 24 luxury multi level villas along the
  main ridge of the valley leading to the private beach. Each luxury villa will comprise 2 to 4 bedrooms
  and seek to provide unrivalled views over Bream Cove. The villas will be fully furnished and include
  their own hot tubs.
  The villas will be sold off plan to private buyers under a sale and leaseback arrangement. This will
  allow the Company to realise the development profit on each villa (considered to be in excess of
  £200k per villa) whilst retaining the right to trade the villas as part of the overall Hotel offering.
  The proceeds from the sale of the villas is expected to be used to redeem the Loan Notes.

Armstrong / November 2020                                                                          11

                                             NOV 2020                         DEC 2020                           APR 2021                  APR 2022                   DEC 2022           JAN 2023 -
                                                                                                                                                                                          DEC 2025
                                        Acquire the Hotel                Commencement                    Reopening of the              Works to be            Planning permission     Marketing and
                                                                         of initial                      refurbished Hotel             carried out for 20m    to be secured for       sales of luxury
  DEVELOPMENT                                                            refurbishment                   as full service               infinity swimming      construction of up      holiday villas
                                                                         works                           hotel                         pool and casual        to 24 luxury villas
                                                                                                                                       dining area

                                        Completion of fund               Senior Debt of                                                Senior Debt of £1m                             Repayment of
                                        raise of £4.1m in                £1.5m to be raised                                            to be raised                                   Loan Notes from
                                        Shares and Loan                                                                                                                               expected net
  CAPITAL                               Notes                                                                                                                                         profit of £2.94m
                                                                                                                                                                                      (based on 12 villa

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                                                HOTEL ROOMS                                     LUXURY VILLAS                             MAIN FACILITIES                   OTHER FACILITIES

  CURRENT                                              30 rooms                                              -                          Restaurant (breakfast only)                  None
  HOTEL                                                                                                                                        Lounge bar

                                               30 luxury hotel rooms                                Up to 24 villas                            Restaurant                             Pool
                                                                                                                                               Cocktail bar                            Spa
  POST                                                                                                                                         Lounge bar                           Beach Bar
                                                                                                                                           Reading/game room
                                                                                                                                           Pool bar/restaurant

Source: Kingfisher Management Team
(1) The timeline is meant to be indicative and is based upon the current design plans. However, the timetables are subject to change

Armstrong / November 2020                                                                                                                12

  Kingfisher Management Commentary
  “We believe that the team’s depth of experience in working with both challenging consultative bodies, and local planning authorities, to achieve beneficial
  planning consents, subsequent track record of ‘on time and on budget’ construction and fit out, combined with extensive luxury hotel and resort operations,
  bring an almost unique set of skills to the benefit of this project.”

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                                                         KINGFISHER MANAGEMENT TEAM
  Employee             Biography

                       Nigel, a Chartered Accountant (FCA), describes himself as ‘a hotel and resort developer and operator’, a role he has undertaken
                       for over 30 years, founding Luxury Family Hotels in 1989, which was the first of a new breed of hotels, focusing on family friendly
                       luxury. Nigel also conceived and developed successful ‘edgy urban’ hotel brand – Alias Hotels, which was subsequently sold to
                       Swire Hotels. In 2003 Nigel was part of the team who formed a partnership with the developer – Baylife – to help create and
  Nigel Chapman        then operate the Beach at Carlyon Bay – a 512 unit five star residential and resort project in Cornwall. This was followed by a
  CEO                  joint development venture, with a local partner, to create a new five star family friendly beachside resort in the Algarve. In 2010
                       the €100m Martinhal opened with 132 residences, a 40 key hotel, four food and drink outlets, a spa and four swimming pools,
                       plus extensive children’s facilities. There are now four Martinhal Resorts in Portugal with a fifth on the way. Nigel currently holds
                       interests in several hotels and resorts including; Polurrian on the Lizard, UNA St Ives, Knoll House Hotel, Studland and Martinhal
                       Resort, Sagres, as well as retaining his interest in Luxury Family Hotels.

                       Tony is a Chartered Accountant (FCA) and is the Finance Director responsible for all the accounting and finance aspects across
  Tony Nares           the portfolio of interests managed by Nigel Chapman and the wider Management team, including Luxury Family Hotels and the
  Finance Director     Kingfisher Resorts investments in Una St Ives and Gara Rock in South Devon. Tony is a consultant to Palladian Hotels and Resorts,
                       owner of Sheen Falls, and has held FD, NED and consultancy roles in a wide mix of leisure and hospitality businesses, over a period
                       spanning 30+ years, ranging from PLC and PE backed companies to EIS and other tax efficient vehicles.

                       Adrian has extensive experience in the premium tourism and hospitality sector and was Head of Marketing for the UK and Europe
                       for luxury Tour Operator Abercrombie & Kent. During his tenure, annual turnover increased by over 30%. His success continued
  Adrian Burley        when he was appointed Regional Director of Sales & Marketing for Indian Ocean hotel group, Constance Hotels doubling turnover
  Sales &              in a three year period. Adrian and Nigel worked together on the development and launch marketing of Martinhal Beach Resort
  Marketing            and in 2011 joined Nigel as part of the team which reacquired the Luxury Family Hotels group in partnership with Patron Capital.
                       Adrian has played a key role in increasing the turnover of the Luxury Family Hotels group since 2012. Adrian has a BA (Hons) in
                       International Tourism Management and has provided consultancy services to a wide number of specialist hospitality and tourism
                       businesses in the U.K. and overseas.

Armstrong / November 2020                                                                         13

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                                                                         NON-EXECUTIVE DIRECTORS
  Employee                        Biography

                                  Robin Chamberlayne is a chartered financial planner and has over 30 years’ experience in the financial services industry. Robin
  Robin                           is the founding partner of Progressive Strategic Solutions LLP (one of the first Chartered firms of Financial Planners in the UK)
  Chamberlayne                    providing holistic financial advice and tax planning strategies to high net worth individuals and businesses. Robin is also co-
  Director                        founder of Armstrong, which specialises in the promotion and management of companies in the energy/infrastructure and leisure
                                  sectors. Armstrong manages assets for major financial institutions and private clients.

                                  Nigel holds several Trustee appointments and a number of directorships, including in companies with a property and leisure focus.
  Nigel Street                    Nigel qualified as a lawyer in 1974 and co-founded BrookStreet des Roches LLP in 1994, acting as Managing Partner through to his
  Non-Executive                   retirement in 2010. The firm grew to some 14 partners (specialising in commercial property) with numerous high profile clients.
  Director                        He has recently been involved as a project team member managing the refurbishment and major extension of a Grade 2 listed
                                  Church Hall in Burford at a total cost of some £3.7 million and also in the construction of a 152 berth marina on the river Thames
                                  near Marlow.

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  Ickworth House Hotel, Suffolk                                UNA, St Ives                                         Gara Rock, Salcombe

Armstrong / November 2020                                                                                 14

    • UK domestic market has remained resilient over the 10 year period to 2019. Domestic tourism spend has increased from
      £16bn in 2010 to £19bn in 2019.
    • 2020 saw major travel disruption in wake of the COVID-19 pandemic. Extreme measures taken by governments around the
      world to restrict movement and global travel has reduced demand for overseas holidays and increased demand for domestic
    • With continued uncertainty for overseas travel demand for UK holidays and holiday homes is expected to remain strong.

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                                                                                      UK DOMESTIC HOLIDAY (BY VALUE)

                                                                                 Domestic Tourism Spend in England Annually(1)

                                                         £19 bn                                                      £20 bn                 £19 bn   £19 bn   £19 bn
                                                                                £19 bn                 £18 bn                    £18 bn
                                  £18 bn
           £16 bn

                                                         £11 bn                 £10 bn                               £11 bn      £10 bn     £11 bn   £11 bn   £11 bn
                                  £10 bn                                                               £10 bn
            £9 bn

             2010                   2011                   2012                   2013                   2014         2015           2016   2017     2018     2019

                                                                                                               All   Holidays

(1) The Great British Tourist Report, August 2020 ( jointly sponsored by VisitEngland, VisitScotland, Visit Wales)

Armstrong / November 2020                                                                                                       15

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                             KEY POINTS                                        DIAGRAM OF THE PROPOSED CAPITAL STRUCTURE

  • Investors will subscribe £4.0m for a combination of Shares and Loan                      Kingfisher
                                                                                                          Resorts Meudon
                                                                                                                  Meudon LLimited
                                                                                                                           imited (“K(“KRS”)
    Notes in the Company (Kingfisher Resorts Meudon Limited).
                                                                                                           Funding  Structure
                                                                                                           Funding Structure

  • Management will subscribe for £0.1m of B Ordinary Shares
                                                                                                                                             Kingfisher Resorts
    (“Management Shares”).                                                                                          Direct Investors
                                                                                                                                               St Ives Limited

  • Kingfisher Resorts St Ives Limited (“KRSI”) is expected to invest into
    the Company on the same terms. KRSI will be raising funds from its                                Security
                                                                                                                                   7% Loan
                                                                                                                                                 7% Loan

    own shareholders to take up the offer.                                                                                                                              B Shares

                                                                                     Loan Note
                                                                                                                               Kingfisher Resorts
  • Investors should note that KRSI will be required to invest into              Debentures Limited                             Meudon Limited
    a minimum of 50% of the Shares and is therefore expected to                                                                         equity
    subscribe for a minimum of £2.0m of Shares and Loan Notes under
    the offer. This is necessary as KRSI is a Business Relief qualifying                                                           Meuden Vean                        Loan          Bank
                                                                                                                                     Limited                                        Debt
    company and cannot carry investments where it holds less than                                                                                                   1st Charge

    50% of the underlying companies shares.
  • KRSI will be the largest shareholder in the Company and will, by
    virtue of holding more than 50% of the Shares, have a controlling
    shareholding. See risks on page 25.
  • Loan Notes Debentures Limited (“LND”) will act as Security Trustee                         ROLE OF LOAN NOTE DEBENTURES
    on behalf of all Loan Note holders. LND will have a fixed and floating
    charge over the shares and assets of the Company.                        • LND is an independent security trustee and will act for the collective
                                                                               interests of all holders of Loan Notes in the Company.
  • The Hotel is owned by Meudon Vean Limited which will be acquired
    in full by the Company and become a 100% subsidiary of the               • LNDs role is to ensure the full adherence of the terms of the
    Company.                                                                   Loan Notes and to manage any enforcement of security/charge if
  • The bank debt required to fund the initial hotel refurbishment is
    expected to be borrowed by Meudon Vean Limited and will have a           • LND is owned and managed by Nigel Street who will also be a
    legal mortgage over the Hotel.                                             non-executive director of the Company (see page 14).

Armstrong / November 2020                                                                       16

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                      KEY POINTS                                          SOURCES                                            £’000            USES                                             £’000

    • Kingfisher Resorts Meudon Limited                                    Shares                                            2,000            Acquisition Price(1)                             (3,550)
      is seeking to raise a total of £2.0m in
      Shares and £2.0m in Loan Notes                                       Loan Notes                                        2,000            Professional Costs and Stamp Duty(2)              (127)
    • Management will subscribe for £0.1m
      in return for Management Shares                                      Management Shares                                    100           Capital Raise Fee(3)                              (164)
    • The initial funding will be used to
      acquire the Hotel and Bream House                                                                                                       Working Capital                                   (260)
      for £3.55m as well as cover fund-
      raising costs and working capital for
      the Company.                                                         Total Sources                                     4,100             Total                                           (4,100)

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                                                                                       LOAN NOTES – KEY FEATURES

    • Loan Note Coupon – 7.0% per annum.
    • Maturity date of 31 December 2025.
    • 3.5% interest will be paid six monthly and 3.5% will be rolled up (compounded) and payable on redemption. The first interest payment will be
      31 December 2021.
    • Loan Notes will be subordinate, with a second charge, to any senior bank debt expected to be borrowed to fund the initial hotel refurbishment
      (see page 16).

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                                                                                            SHARES – KEY FEATURES

    • 2,000,000 Ordinary Shares of £0.01 each.
    • Shares will entitle the shareholder to receive an annual redemption voucher worth 2.0% of the amount subscribed for the Shares to be redeemed
      at the Hotel, including rooms, food/beverage and spa treatments (when available).
    • Target return of above £2.50 per £1.00 invested over the target 5-6 year investment term.
    • Shares in unquoted companies should be considered highly illiquid which can make it difficult for investors to dispose of the Shares. Management
      anticipate facilitating an exit to investors within 5-6 years once the anticipated development is complete.

(1) Acquisition Price includes £3.48m for the share capital of Meudon Vean Ltd, and £0.07m for land
(2) Includes £35k acquisition fee payable to Management (refer slide on management fee), £18k stamp duty applicable for share purchase and £74k provision for third party transaction costs.
(3) 4% Capital Raise Fee payable to Armstrong

Armstrong / November 2020                                                                                                                   17

                                                FINANCIAL PROJECTIONS                                                                                 PATHWAY TO REDEVELOPMENT

                                               OPENING         2021         2022         2023          2024          2025          2026           • After the initial raise of £4.1m, the company
                                                                                                                                                    will seek to raise a further £1.5m through
   Sales                                                       1,590        2,348        2,481          2,798         3,269        3,705            senior bank debt for the purpose of initial
   Cost of Sales                                               (221)        (334)        (351)           (389)        (448)        (501)
   Gross Profit                                                1,369        2,014        2,130          2,409         2,821        3,205
                                                                                                                                                    hotel refurbishment.
   Wages                                                      (1,102)      (1,565)      (1,637)        (1,790)       (2,018)       (2,237)        • A further £1.0m is planned to be raised
   Sale and Lease Back Rentals                                    -            -           (17)          (101)        (191)         (264)           through senior bank debt in 2022-23 to fund
   EBITDAR                                                      267          449          475            517           612           703
                                                                                                                                                    the new 20m infinity swimming pool and
                                                                                                                                                    casual dining ‘Potager’.
   Profit from sale of villas                        -            -            -          490            980           980           490
                                                                                                                                                  • Once planning permission is obtained, the
   Profit after sale of villas                       -          267          449          965           1,497         1,592        1,193
                                                                                                                                                    Company will start marketing of the new
   Interest on Senior Debt                           -           (53)         (65)         (99)           (97)         (94)          (90)           luxury villas in 2023. Assuming a 12 villa
   Ongoing Capex                                     -           (52)         (52)         (52)           (52)         (52)          (52)           scheme, profits of £2.94m are forecast from
   Operating Lease (3)                               -            -            -            -             (18)         (53)         (468)           sale of villas (net of sales costs).(1)
   Annual Coupon on Loan Notes                       -           (70)         (70)         (70)           (70)         (35)           -           • Management will leverage their experience
   Rolled-up interest for Loan Notes                 -            -            -            -            (140)        (175)           -             of the Sale and Leaseback model for villa
   Management Fee                                    -          (150)        (173)        (205)          (238)        (282)         (298)
                                                                                                                                                    sales from current operations of Kingfisher
                                                                                                                                                    UNA resort. Villas will be sold, crystallising
   Net Cashflows before capex and funding            -           (57)         89          539            883           902           286            development profits, and then leased back
                                                                                                                                                    and traded by the Hotel.
   Acquisition (including costs)                 (3,677)          -            -            -             -             -             -
   Project and Hotel Development                     -        (1,500)        (500)        (500)           -             -             -           • Please note that all forecasts are based
   Capital Raise Fee                               (164)          -            -            -             -             -             -             on Managements projections and are not
   Shareholder equity                             2,000           -            -            -              -             -            -
   Management equity                               100            -            -            -              -             -            -
   Loan Note movements                            2,000           -            -            -          (1,000)       (1,000)          -
   Senior debt movements                             -         1,500         500          450             (50)        (100)         (100)
   Net Cashflows after Capex and Financing         260          (57)          89          489            (167)        (198)          186
   Opening Balance
   Closing Balance
                                                                                                                                                  • Forecast mature EBITDAR of £703k in 2026,
                                                                                                                                                    or 19% operating margin.(1)
                                                                                                                                                  • Revenues driven by expected full scale
                                                                                                                                                    Average Daily Rate (“ADR”) of £163/key(2)
                                                                                                                                                    and occupancy of 74%.
(1) The projections are based on the current financial model and are subject to the company receiving planning permission for construction
    of villas. The returns are forward looking projections based on variable assumptions and deliverables, of which may not be achieved
(2) Blended ADR for rooms and luxury villas
(3) £468k payment In 2026 includes full repayment of all operating leases

Armstrong / November 2020                                                                                                                    18

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                                                                        KEY POINTS

  • Management fees will be paid by Kingfisher to two parties, Armstrong and Kingfisher
  • These fees will been set out in the Management Agreement between the Company, Kingfisher and Armstrong
  • Management will be responsible for the day to day management of the Hotel and will also be responsible for planning, development and sales.
    Fees are structured to incentivise profitable activity and compensate for increased workloads and the costs associated with the differing aspects of
    running the business. All fees have been included in the financial projections.

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                              MANAGEMENT FEES                                                                  ARMSTRONG FEES

  • Acquisition Fee: One–off fee equal to 1% of the total of the Hotel                      • Capital Raise Fee: Armstrong will receive a fee of 4% of
    acquisition price.                                                                        funds raised, for both Shares and Loan Notes. Up to 2%
                                                                                              of this fee will be paid to authorised advisers, including
  • Management Fee: An annual management fee (Management Fee) of a sum
                                                                                              Progressive Strategic Solutions LLP.
    equal to 3% of Trading Revenue and 10% of Gross Operating Profit per year.
                                                                                            • Ongoing: Armstrong will receive 26.66% of the
  • Capital Expenditure Fee: A project management fee of a sum equal to 3% of
                                                                                              entitlement to the ongoing fees paid to Management.
    the capital expenditure on the Resort.
                                                                                            • Fees are exclusive of VAT, if applicable.
  • Sales incentive Fee: Equal to 1% of the gross value of the sales price of villas.
                                                                                            • Disclosure: Robin Chamberlayne is a partner at
  • Fees, where applicable, are to be paid on a monthly basis to Management.
                                                                                              Progressive Strategic Solutions LLP and also a director of
  • Fees are exclusive of VAT, where applicable.                                              the Company and Armstrong.

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                                                           PERFORMANCE INCENTIVE FEES

  • Management will be incentivised by sharing in the profit investors make on their investment in the Company.
  • All investors in the Company will receive their Loan Notes (plus all interest) and original subscription in Shares returned before Management will
    receive any profit share.
  • The profit share will be structured through the issue of Management Shares in the Company, which Management will subscribe £100,000.
  • Once investors have received their original investment in Shares and Loan Notes profits will be shared between the investors and management as
    set out on page 20.
  • Armstrong will participate in the profit share arrangement by subscribing for 26.66% of the Management Shares.

Armstrong / November 2020                                                                      19

                                                              EXIT VALUATION (FORECAST ONLY NOT GUARANTEED)
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                                    KEY POINTS                                                                                                  OPENING (2020) £’000          EXIT (2026) £’000
                                                                                                       Market Value                                               3,636                 9,495
    • Opening Gross Market Value of £3.9m net of deal
      arrangement fee.                                                                                 Cash at Bank                                                  260                  600
    • Forecast Gross Market Value of £9.5m at exit based on                                            Total Assets                                               3,895               10,095
      13.5x multiple of 2026 EBITDAR (£703k)(1)
    • Forecast Net Asset Value of £7.9m on exit                                                        Senior Debt                                                                    (2,200)
    • Opening LTV of 51% at fund raise stage                                                           Loan Notes                                                (2,000)
    • Returns are on a pre-tax basis                                                                   Total Net Assets                                           1,895                 7,895

                                                BREAKDOWN OF PROFIT SHARE (FORECAST ONLY NOT GUARANTEED)
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    DISTRIBUTION STEPS                  PROCEEDS                    INVESTORS                     MANAGEMENT(2)                        TOTAL                     SUMMARY
                                            £’000            % SHARE             £’000         % SHARE             £’000               £’000
                                                                                                                                                • Forecast exit proceeds of £7.9m is split
                                                                                                                                                  between Management and investors as
   Total Net Assets (per above)                  7,895                                                                                            under:

   Return of Original Capital                  (2,100)        Pro Rata          2,000          Pro Rata            100                  2,100
                                                                                                                                                  - First the invested capital of £2.1m is
                                                                                                                                                    returned at £1.00 per £ invested
   First £2.0m of Profit                       (2,000)             80%          1,600               20%            400                  2,000     - Thereafter, the profit of £5.8m is split
                                                                                                                                                    between Management and investors as
                                                                                                                                                    set out in the table over
   Next £2.0m of Profit                        (2,000)             60%          1,200               40%            800                  2,000
                                                                                                                                                • Exit value of ~£2.75 per £ invested for
   Profit Thereafter                           (1,795)             40%            718               60%          1,077                  1,795     investors after the split of profit share
                                                                                                                                                • Exit value excludes annual voucher worth
   Total Equity Return                                                          5,518                            2,377                  7,895     2% per annum of the share subscription.

(1) The returns are based on forward looking projections based on management assumptions and deliverables, which may not be achieved
(2) Management returns would be split in the ratio of 73.34% and 26.6% between Kingfisher and Armstrong

Armstrong / November 2020                                                                                                               20

  The Company and Management have been carrying out detailed due diligence on the underlying business and business assets comprising Meudon
  Hotel. Management have been working alongside a team of specialist advisers and a summary of key areas of due diligence undertaken and advisers is
  provided below.

                     • Review and report of the legal title of the properties.
                     • Assessing responses to business enquiries provided by sellers.
                     • Advising on acquisition of Meudon Vean Limited, the company that owns
  LEGAL AND            the Hotel.
  PROPERTY           • Agreeing the form of warranties and indemnities to be provided be vendors.
                     • Setting up the Company ahead of capital raise, including establishing principle
                       investment documents.
                     • Advising the Company on any third party debt requirements.

                     • Reviewing historic tax position of the target company and agreeing specific
                       tax warranties from sellers.
  TAX                • Advising on any tax structuring required to mitigate tax on acquisition and
                       ongoing considerations.

                     • Assessing the open market value of the Hotel and business based on existing
  VALUATION            market and trading conditions to validate the acquisition price.
  AND SURVEY         • Surveying the property to identify any structural, mechanical or other material
                       defects that could impact the strategy of the Company.

                     • Advising on the initial planned hotel modifications as part of the immediate
  DESIGN AND           refurbishment programme.
  PLANNING           • Feasibility assessment of the proposed luxury villa development both from
                       a planning, design and construction perspective.

  All professional advisers will be retained by the Company to support the business on an ongoing basis. In addition, the company will work with a number
  of other specialist professional advisers to assist the Company in meeting its objectives including consultants specialising in construction management
  and exclusive branding and marketing agencies.

Armstrong / November 2020                                                                                21

  The key tax considerations for investors include Inheritance Tax (IHT), Income Tax and Capital Gains Tax as detailed hereunder.
  Further details on Inheritance tax benefits for Business Relief qualifying vehicles are elaborated in the next page of this

                            Shares held in the Company will be an asset in the investors’ estate and assets in excess of the ‘Nil Rate Band’ and the
  INHERITANCE               ‘Residence Nil Rate Band’ are exposed to Inheritance Tax (IHT). Shares qualifying for Business Relief will be exempt from IHT
  TAX                       once held for two years or more at the date of death. Business Relief is also potentially a form of effective planning for clients
                            under Power of Attorney and trusts.

                            Interest receivable on interest from Loan Notes will be taxable as income at the investors marginal rate of tax which,
                            depending on the investors personal circumstances will be 20%, 40% or 45%. Any dividends paid by the Company will also
  INCOME TAX                be taxable at income at the investors marginal rate of tax which, depending on the investors personal circumstances will be
                            7.5%, 32.5% or 38.1%. The first £2,000 of dividends received each year are exempt from tax.

                            Stamp Duty (SD) may be payable on the redemption of shares. The current rate of SD is 0.5% on the value of the shares. UK
                            residents are liable to Capital Gains Tax (CGT) when they sell or gift shares to a third party. This is typically charged at a rate of
  SHARE                     10% or 20%, depending on shareholder’s level of income. CGT liabilities only arise on the sale of shares and Capital Gains Tax
  DISPOSAL                  is not paid on death. Though it cannot be guaranteed and is subject to your personal circumstances, some shareholders may
                            benefit from Investors Relief and so may be taxed at a capital gains rate of 10%.

  Potential investors should note - Tax treatment depends on the individual’s circumstances at a given point in time. It should
  also be noted that the law may change which could have a positive or adverse affect on an individual’s tax treatment. The
  content of this section is for information purposes only and should not be relied upon. Always seek tax advice from a suitably
  qualified independent financial, tax and / or legal adviser.

Armstrong / November 2020                                                                           22

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                                                                   INHERITANCE TAX

  • Shares held in the Company are expected to be eligible for Business Relief (“BR”)
  • Currently, taxable estates worth more than £325,000 are subject to 40% Inheritance Tax (“IHT”). This allowance can be extended via the ‘Residence
    Nil Rate Band’. Options to mitigate IHT often include complex trusts and the gifting of assets (thereby losing control of capital), which may require
    an individual to live up to a further seven years for full IHT relief to be obtained on the estate.
  Inheritance Tax
  • Business Relief was introduced in the Finance Act 1976 and amended in subsequent years. Any share in a company that undertakes an IHT trade
    and is unquoted for the purposes of BR, and which has been held for two years or more at the date of death, should qualify for BR. If the whole of
    the share value relates to business assets, then the share value will effectively be disregarded for inheritance tax purposes. If the shares have been
    inherited from a spouse, then the spouse’s period of ownership can be added to the period held by the new investor in computing the two year
    holding period.
  • The two year holding period will begin on the date that the shares are purchased. The shares must have been held for two years and remain
    unquoted, or quoted on AIM, on the date of death to qualify for BR.
  • Under current legislation, proceeds received on exit from an IHT company can be re‐invested into shares in another IHT company to maintain the
    IHT relief provided that:
       • the whole of the proceeds have been used to purchase the replacement shares; and
       • the original and replacement shares have been held for a total period of at least two years out of the last five years.
  IHT Trade
  • An IHT trade is any business that is carried on with a view to making a profit and does not consist wholly or mainly of dealing in land and buildings,
    stocks and shares, or making or holding investments. BR will not be available to the extent that the IHT company has any assets that: (i) have not
    been used wholly or mainly for the business in the previous two years (or since acquisition if shorter); or (ii) are not required for the future use of
    the business.

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                                                                   CAPITAL GAIN TAX

  • Investors will be subject to different tax treatment depending on how they liquidate their investment in the Company:
     • If an investor disposes of their shares to a third party then any gain on the sale of the shares (calculated as the amount received for the shares
       on a disposal less the amount that the shares cost) may be subject to capital gains tax (CGT).
     • The current annual allowance for CGT is £12,300 for the current tax year. Gains in excess of the annual allowance are taxed at 20% for higher
       rate taxpayers and 10% for basic rate tax payers. No CGT is payable upon death.

Armstrong / November 2020                                                                        23

  This section contains the material risk factors that Management and Armstrong believe to be associated with, but not limited to, an investment
  in the Company. If any of the following events or circumstances arise, the Company’s business, financial condition and/or results of operations
  could be materially and adversely affected, as could the availability of IHT relief to Investors. In such case, a shareholder may lose all or part of their
  investment and/or a qualifying Investor may lose all or part of their IHT relief.
  • No personal recommendation is being made to you by Armstrong. If you are in any doubt about whether the investments described in this document
    are suitable for you, you should seek a personal recommendation from an authorised person specialising in advising on investments of this kind
  • Prior to making any investment decision, prospective investors should carefully consider whether an investment is suitable in light of their personal
    circumstances, tax position and the financial resources available to them. Potential investors should therefore seek advice from a stockbroker,
    accountant, fund manager or other independent financial adviser before making any decision to invest
  • The Company’s forecast returns are based on a series of assumptions and judgements which are subject to uncertainties and contingencies.
    Actual results could differ materially from those set out and could therefore adversely affect the outcome and financial effects of the plans and events
    described herein, and could result in the partial or total loss of monies invested

                                                                 GENERAL INVESTMENT RISKS
                     • The Company’s forecast returns are based on a series of assumptions. Whilst some of these are known with a reasonable degree of certainty, other
 ASSUMPTIONS           material assumptions cannot be determined with certainty in advance. The actual performance of the Company may be higher or lower than forecast.

  INVESTMENT         • This investment should not be viewed as a short-term investment. Investors should be prepared to invest for at least five years and understand that
     TERM              the Management may not be able to achieve an exit from their investment at all.

 FLUCTUATIONS        • The value of an investment, its real estate assets and its income associated with it are not guaranteed and can go down as well as up. Investors who
    IN VALUE           cannot afford a total loss of their investment should not consider subscribing for Shares in the Company.

  NON-READILY        • This investment will be in an unquoted trading company. Investors should be aware that there may be difficulty in realising their investment at a
   REALISABLE          reasonable price and, in some circumstances, it may be impossible to sell their investment at all.

   QUALIFYING        • While the Company will trade as a hotel and leisure business, it is possible that HMRC could re-evaluate the criteria for Business Relief. If the Company
    ACTIVITY           were to lose its BR status or HMRC were to assess the relief as lower than expected, investor after tax returns would be impacted accordingly.

                     • Investors should be aware that investment returns are dependent upon the performance of the Company, the income it generates and whether it
  INVESTMENT           performs in accordance with the initial business plans. Outside factors such as the economic climate, market conditions and a change in regulatory
    RETURN             environment may all adversely impact on the Company’s performance.

Armstrong / November 2020                                                                                   24

                                                                DEVELOPMENT RISK FACTORS
                    • The site does not currently have planning permission for the proposed construction of luxury villas.

    PLANNING        • There is a risk that the Company would not be able to secure the required planning permission or the permission obtained will result in less
   PERMISSION         development value than targeted.

                    • Under such circumstances, the investor returns would be negatively impacted.

                    • Under the development scenario, the Hotel will undergo a refurbishment; the cost to be funded by the Company

     CAPEX          • There is a risk that the cost of redevelopment will be in excess of the budgeted price and that returns will not be as forecast as a result
                    • The Company will require bank financing for the redevelopment and, whilst this is expected to be obtainable, there is a risk that it may not be to the
                      desired levels; this could result in an increased equity requirements from investors and could negatively impact investor returns

                    • If the Company were to receive planning permission it may have to adhere to a strict villa construction timeline. This could affect the Hotel’s ability
     CAPEX            to operate over the peak months of the year (May-September) which would be likely to have a negative impact on the Company’s operating revenue
  REQUIREMENT         and so the investors’ returns.

                                              RISK FACTORS RELATING TO THE CAPITAL STRUCTURE
                    • It is expected that Kingfisher Resorts St Ives Limited (“KRSI”) will invest into the Shares and Loan Notes on the same terms as other investors. KRSI
                      will seek to only invest if it can hold more than 50% of the issued share capital of the Company. In this situation, KRSI will control the Company. KRSI
                      owns and operates the UNA St Ives Resort and has the same directors as the Company. Whilst interests between KRSI and the Company should be
                      aligned, with operational synergies being targeted, it is possible that over time the requirement of KRSI may diverge from those of the investors and
     CONTROL          KRSI could appoint directors to the Company and influence the strategy of the business that may not be in the best interests of the Company’s other

                    • The Company’s articles will, as far as possible, seek to protect the interests of all shareholders in the Company and for as long as Loan Notes in the
                      Company remain in issue the Security Trustee will be able to ensure the interests of all investors are fairly represented.

Armstrong / November 2020                                                                                  25
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