Pineapplecorp Ne : News – Autumn 2016

Pineapple Corporation plc

Dear Shareholder,

As the end of 2016 approaches it is a pleasure to give more news about our company and recent happenings.

Both the UK vote to leave the EU and the US election outcome are likely to be significant events in shaping the world economy and as a business we look forward to whatever challenges and opportunities will develop in the UK.

The business impact of these events could be significant and will probably affect different sectors of the economy to varying degrees. UK property REITS have shown nervousness as there are possibilities of large commercial spaces, offices particularly, becoming vacant should businesses relocates to mainland Europe. This leads to share prices being discounted against the underlying value of portfolios. For Pineapple Corporation plc the projected dividend yield on the net asset value per share for the current year is about 4% (16 pence for a NAV of £ 3.97 as at 31/3/16). The comparable figure for British Land plc is around 3% (as at 1/11/16) but to be fair one must also consider how the NAV per share will move from year to year which only becomes clear with the passage of time. We feel that the spread of our portfolio in Pineapple will shield the company from disruptions in any individual sector but we also recognise that property values are cyclical and affected by the general economy and interest rates.

With the recent falls in the pound sterling versus euro exchange rate the company will benefit with its investment in the remaining properties in Helsinki albeit this might be temporary. The properties are fully let and with bank borrowing of about 20% of valuations we look forward to increased liquidity in the medium-term future.

Accounts

Since the last newsletter the accounts have been finalised and filed. These are available on this website and show a satisfactory performance for the financial year ended on March 31st, 2016 - the Chairman's statement gives a synopsis of this performance.

Dividend

On September 29th, 2016 Pineapple Corporation paid a property income distribution of 8p per share in line with expectations and a further similar payment is anticipated for March 2017. These distributions are always subject to operating cash being able to cover the payment and for this reason we prefer to be cautious.

Planning

We continuously look to find opportunities in our portfolio and herewith a brief synopsis:

• Roof developments of 8 units in Sulgrave Road, Hammersmith - the planning application was refused by the local authority. This was unexpected and the reasons given for this refusal appeared to be driven by local lobbying rather than planning law so an appeal is being lodged. We are seeking to put a self-contained flat on each roof. There are already

  existing extensions of top floor flats on 2 similar properties and we are confident that we will achieve approval in due course.

• Extension of the artist studios at Delta House, SW19 - this has been approved and should lead to a further improvement in the value of this property over and above the cost of works. This building has already proved to be very popular and has been fully rented to artists and designers with a waiting list to occupy any studio becoming available.

• Student accommodation at Stanhope House, Portsmouth - an application has been lodged jointly by Pineapple Corporation and a development company to replace our existing commercial building with a 19 storey building providing a new commercial retail unit on the ground floor of about 4000 square feet and student units above. If realised this project will significantly improve the value of our existing investment.

Overall these 3 projects are projected to improve existing share values when concluded but it is too early to project by exactly how much.

Lease extensions and freehold sales

Pineapple Corporation has a significant portfolio of freehold buildings wherein tenants regularly apply to extend long leases in line with legal rights and can acquire the freeholds of such properties if they choose to serve notice along with the appropriate requirements. The value of this portfolio is not easy to calculate as it varies in line with movements in property values and the reducing term of most leases - the ones that have not been extended. We do our best to evaluate this portfolio and we suspect the valuations are conservative as we generally achieve better than expected results when we extend a lease or sell a freehold. During the 6 months to September 30, 2016 the cash generated from lease extensions and freehold sales was £ 306,000 and this income bolsters our ability to pay dividends.

The Board wishes everybody joy for the festive season and sincere good wishes for the year ahead.

With kind regards,

Chairman November 2016