Final Results

12 March 2018

Raven Russia Limited ("Raven Russia" or the "Company")

Results for the year ended 31 December 2017

The Board of Raven Russia releases the results for the year ended 31 December 2017.

Highlights

· IFRS profit after tax $57.7 million (2016: profit of $7.7 million);

· Underlying earnings after tax of $56.8 million (2016: $47.1 million);

· Basic underlying earnings per share 8.56 cents (2016: 7.17 cents);

· IFRS basic earnings per share 8.69 cents (2016: 1.17 cents);

· Year end cash balance of $266.7 million (2016: $198.6 million);

· Diluted net asset value per share 80 cents (2016: 71 cents);

· Completed $209 million of acquisitions in the year; and

· A 50% increase in distributions to 3p (2016: 2p) by way of tender offer buy back of 1 in 17 shares at 52p.

CEO Glyn Hirsch said "We are delighted with the overall results for 2017. NOI is up 10% to $166.7 million, underlying earnings per share are up 19% to 8.56 cents and diluted net asset value per share is up 13% to 80 cents. The distribution of 4p for the year is a 60% increase over the 2.5p in 2016."

Enquiries

Raven Russia Limited Tel: + 44 (0) 1481 712955

Anton Bilton

Glyn Hirsch

Novella Communications Tel: +44 (0) 203 151 7008

Tim Robertson

Toby Andrews

N+1 Singer Tel: +44 (0) 207 496 3000

Corporate Finance - James Maxwell / Liz Yong

Sales - Alan Geeves / James Waterlow

Numis Securities Limited Tel: + 44 (0) 207 260 1000

Alex Ham / Jamie Loughborough / Alasdair Abram

Ravenscroft Tel: +44 (0) 1481 729100

Jade Cook

This announcement contains forward-looking statements that involve risk and uncertainties. The Group's actual results could differ materially from those estimated or anticipated in the forward-looking statements as a result of many factors. Information contained in this announcement relating to the Company should not be relied upon as a guide to future performance.

About Raven Russia

Raven Russia was founded in 2005 to invest in class A warehouse complexes in Russia and lease to Russian and International tenants. Its Ordinary Shares, Preference Shares and Warrants are listed on the Main Market of the London Stock Exchange and admitted to the Official List of The International Stock Exchange ("TISE"). Its Convertible Preference Shares are admitted to the Official List of TISE and trading on the SETSqx market of the London Stock Exchange. The Group operates out of offices in Guernsey, Moscow and Cyprus and has an investment portfolio of circa 1.8 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don and Novosibirsk and 49,000 square metres of commercial office space in St Petersburg. For further information visit the Company's website: www.ravenrussia.com

Chairman's Message

I am delighted to report that the results for the year have exceeded our expectations and that we are achieving our objective of an acquisition driven business model. In addition, and through a doggedly tenacious approach to planning, we have won various planning consents on our legacy UK land bank and achieved large gains which have added further gloss to the year. I take this opportunity to applaud the executive team for their hard efforts in this regard.

We were successful in completing two acquisition projects in the year, an office portfolio and a warehouse in St Petersburg in April and a large logistics complex in Moscow in November. Consideration for the acquisitions totalled $209 million and should generate a minimum of $24 million of net operating income ("NOI") in the current year.

The acquisitions were part funded by a second issue of convertible preference shares in July 2017, raising $126 million.

With significant cash reserves and the potential to secure finance on the last acquisition, we are actively pursuing further income producing acquisitions in a number of different asset classes.

Underlying earnings have increased to $56.8 million (2016: $47.1 million) and basic underlying earnings per share to 8.56 cents (2016: 7.17 cents). With a revaluation gain of $38.2 million (2016: loss of $43.3 million), the first gain in our portfolio values since 2013, our IFRS earnings increased to $57.7 million (2016: $7.7 million) and diluted net asset value per share to 80 cents (2017: 71 cents).

We are proposing a final distribution of 3p, paid by way of a tender offer buy back of 1 share in every 17 at 52p. This will give a total distribution of 4p for the year.

We are again extremely grateful for the continued support of our shareholders over the last twelve months.

Richard Jewson

Chairman

11 March 2018

Strategic Report

Chief Executive's Report

Dear Shareholders,

We are delighted with the overall results for 2017. NOI is up 10% to $166.7 million, underlying earnings per share are up 19% to 8.56 cents and diluted net asset value per share is up 13% to 80 cents.

With year end cash balances of $266.7 million, we are increasing the distribution per share by 50% to 3p per share. As usual this distribution will be made by way of a tender offer buy back of shares, this time for 1 in 17 shares held at a price of 52 pence per share. We intend to allow shareholders to subscribe for more than their pro rata entitlement.

We took advantage of the strong UK housing market by selling most of our UK strategic land holdings. This generated a profit of $20.2 million and cash of $21.6 million for Raven Mount in the year. These assets were acquired with Raven Mount PLC in 2008 for $0.7 million.

In relation to our joint venture with the Russian CoOp we are at the early planning stage of a pilot project. This has potential both for property returns and for our third party logistics operator, Roslogistics, in managing the sites.

Our core business of logistics warehousing has performed well. We still fight the medium term "Roubilisation" of rents through letting space (187,100sqm in 2017) and by strategic acquisitions.

Favourable market conditions gave us the opportunity to acquire four properties in two transactions in Moscow and St Petersburg for a combined consideration of RUR11.989 billion ($209 million). Both purchases represent attractive prices per sqm relative to replacement cost.The St Petersburg acquisition of three separate properties was completed in April and added 87,000sqm of Grade A warehousing and 33,000sqm of offices for a total consideration of RUR4.9 billion ($86 million) at an initial yield of 16%. The properties were 98% leased at acquisition to 68 tenants including Otis, Oracle, YIT, Schenker and Maersk. In November we completed the acquisition of Logopark Sever, a new Grade A warehouse complex of 195,000sqm to the north of Moscow. The property was 73% leased at completion to major tenants including Obi, Okey, Major Logistics and Miratorg and is 83% let today. Total consideration based on letting of the vacant space over the next 18 months is estimated at RUR7.089 billion ($123 million) which would produce a yield of 11.38% and a reversionary yield of 12.51%.

These acquisitions contributed $10 million of NOI to the 2017 results and should contribute at least $24 million of NOI in 2018.

As previously indicated, at this stage of the Russian property cycle and in a quest for income, we have successfully broadened our focus into property sectors other than logistics warehousing. We anticipate that this will continue as our strategy of seeking high quality income producing acquisitions continues alongside active management of the existing portfolio. The Group's significant cash balance provides us with the financial resource to achieve this. We expect further news during the year.

Longstanding shareholders know that our business can, and has been, significantly affected by geo-political events. Fortunately, 2017 was a year of relative stability.

The Rouble/Dollar remained within a range of 55 to 60. The oil price has slowly improved and now stands at $64 per barrel. The Russian economy has stabilised and returned to growth despite sanctions. 2017 GDP growth was 1.5%, inflation fell from 5.4% to 2.5% and central bank rates have fallen from 10% to 7.5%. Although we will not rely on it, most commentators forecast further improvements in 2018 and beyond. With some fair economic winds and the continued implementation of our strategy of acquisitions, alongside organic growth, we believe that shareholders will be rewarded.

We would like to thank our shareholders for their continued support and encouragement, particularly those who do not delegate their voting responsibilities to voting agencies. Compliance, regulation and political correctness are time consuming issues for businesses and we continue to deal with them with our customary professionalism and sense of humour.

Glyn Hirsch

Chief Executive Officer

11 March 2018

Business Model

Our Strategy

We continue with our strategy of acquiring and maintaining our core investment portfolio of Grade A logistics warehouses in Russia with the aim of producing rental income that delivers progressive distributions to our shareholders.

But whilst we remain focussed on the logistics market we will consider alternative asset class acquisitions if the property and financial metrics are attractive.

As our lease terms convert from US Dollar pegged to Rouble income, our evolving acquisition strategy is bearing fruit in supporting our net operating income through that transition.

Business Model

The fundamentals of our business model have not changed. We have a portfolio of assets with a high yield to cost of circa 12% and bank financing costs of approximately 7%. The significant change in that model has been our exposure to foreign currency risk. Prior to 2015, we operated a US Dollar model and today we continue our transition to a Rouble model.

At the year end, 46% of our warehouse income was denominated in Roubles (2016: 24%). These leases represent 47% of the Gross Lettable Area ("GLA") of our warehouse portfolio (2016: 26%). Our banking facilities remain predominately US Dollar denominated and over the past two years we have reduced and restructured facilities to increase covenant headroom and build in a safety margin on debt service should exchange rates move against us. Each of the facilities secured on our warehouse assets sits in a special purpose vehicle ("SPV") structure to minimise recourse to the overall portfolio and holding company. At the year end, asset specific debt represented 53% loan to value (2016: 55%).

Our office portfolio has a different currency mix. 49% of income is Rouble denominated, 39% Euro and 12% US Dollar. Two of the assets have sole tenants and we have refinanced the portfolio of three assets with a Euro loan.

As Russian Central Bank rates continue to reduce, the plan for the next stage of adapting our business model is to move banking facilities to a Rouble/currency mix. This will start the process of reducing our foreign currency risk while managing the cost of debt. Ultimately, the Russian Central Bank rates do not have far to fall before we consider moving to full Rouble facilities and if market commentary is correct, we may not have long to wait for that to be the case. We are having an open dialogue with all of our banking partners on this transition process.

Our average letting size by tenant is 8,760sqm (2016: 11,240sqm). We do not have one tenant with more than 11% (2016: 11%) of our portfolio's GLA and the top ten tenants account for 41% (2016: 46%) of our portfolio in GLA terms and 54% (2016: 58%) in income terms.

Key Performance Indicators ('KPIs')

We continue to focus on occupancy KPIs together with the currency mix of income and how that is likely to change over the medium term. Cash flows after interest and debt amortisation, a measure of debt service cover, influenced our decision to restructure our existing bank facilities and issue new convertible preference shares.

The ability to distribute to ordinary shareholders from cash covered underlying earnings and operating cash-flows after interest remains our focus when determining distribution policy.

All of the above underpin financial targets set for annual bonus incentives.

Portfolio Review

Leasing and maturities

During the year we made two significant acquisitions, three properties in St Petersburg and Logopark Sever, a warehouse complex north of Moscow, for a total consideration of $209 million. The acquisition of Logopark Sever did not have a material impact in 2017 as this was completed in November but we expect it to contribute $13.8 million of NOI during 2018.

Vacancy has remained stable on a like for like basis and stands at 19% including acquisitions. Although the statistics have remained broadly static there has been a considerable amount of activity in the portfolio.

198,100sqm of existing leases have been renegotiated and extended in the financial year. Space vacated on maturity and early terminations of weaker covenants totalled 179,600sqm which, together with existing vacant space, gives 342,900sqm of vacancy at 31 December 2017. The result is a new lease maturity profile as follows:

This reflects 187,100sqm of new leases signed in the year in addition to the 198,100sqm of existing lease renegotiations. There are also potential breaks in the portfolio of 78,300sqm in 2018 and 79,000sqm in 2019. Significant new lettings include 27,200sqm to Makita in Moscow, 8,000sqm to Mars in Rostov and Wildberries (one of the largest Russian internet retailers) doubling their space to 10,000sqm in Novosibirsk.

Since the year end, a further 53,000sqm of renewals, 21,000sqm of new lettings have been completed. In addition, letters of intent on vacant space of 38,000sqm and lease extensions of 8,400sqm have been signed.

The warehouse and office markets in which we operate are now almost exclusively Rouble denominated and although we still have historic long term contracts in US Dollars and Euros these are continuing to unwind. New lease terms are shorter, generally contain breaks and are Rouble denominated but they have the benefit of annual indexation linked to Russian CPI.

At the year end 31% (2016: 50%) of our warehouse GLA had US Dollar denominated leases with an average warehouse rental level of $143 per sqm (2016: $125 per sqm) and a weighted average term to maturity of 3.0 years (2016: 3.0 years). Rouble denominated or capped leases account for 47% (2016: 26%) of our total warehouse space with an average warehouse rent of Roubles 5,200 per sqm (2016: 5,120 per sqm) and weighted average term to maturity of 3.6 years (2016: 4 years). Rouble leases have an average minimum annual indexation of 6.8% (2016: 7.7%). Average rents on new lettings during the year were Roubles 3,870 per sqm and for renewals Roubles 5,250 per sqm.

Investment Portfolio

Moscow

We have ten projects in Moscow, including Logopark Sever, totalling 1,274,000sqm, and with 78% of space let at the year end.

The Moscow portfolio had a net reduction in occupied area of 23,600sqm during the year as lease expiries ran at a faster rate than new lettings. Moscow remains the most competitive market in which we operate, although the reduction in the amount of new space being built means the market has certainly stabilised.

St Petersburg and Regions

Occupancy in the regional markets of St Petersburg and Novosibirsk continues to be better than in Moscow, driven by demand from retailers and a lack of over supply because of less historic speculative development. Although Rostov was more competitive in 2016 and 2017, since the year end we have secured additional lettings of 9,600sqm and we are now 83% let. We have signed long term agreements with both Metro in Novosibirsk and Mars in Rostov where we have adapted premises to incorporate temperature controlled sections of the warehouse for the storage of specialist goods.

Since the acquisition of the St Petersburg portfolio we have worked hard to extend and enhance the income profile. At Kellerman we have signed a new six year lease without break with the largest tenant and increased the area they occupy and rental level by 33% and 35% respectively. We are in discussions with various other tenants on similar deals.

Tenant Mix

Portfolio Yields

The investment properties and additional phases of existing projects were valued by Jones Lang LaSalle ("JLL") at the year end, in accordance with the RICS Valuation and Appraisal guidelines, and are carried at a market value of $1.63 billion (see notes 11 & 12 to the financial statements). This has resulted in a net profit on revaluation of $38.2 million in portfolio value during the year.

Overall JLL have sharpened their yield assumptions for the portfolio although in general they still quote a range for yield across all sectors to reflect the difference in quality of assets, leases and differing currencies. The yields used for the portfolio fall within this range.

Estimated rental values ("ERVs") have remained static during the year, although the consensus is that they have now found their floor and the next move will be upwards, albeit gradually.

In the property investment market it is clear that the there is a two way tension. On the one hand the Central Bank of Russia has reduced its key lending rate from 10% to 7.5% since the start of 2017. Although this does not have a direct and immediate impact on the prices investors will pay for assets it is clear the risk premium for property assets has become more attractive. The cost of borrowing in Roubles has also fallen, making local currency funding increasingly attractive. On the other hand there are a number of forced or distressed sellers who wish to leave the market. This is primarily a function of the negative view of Russia in the Western press and a number of funds set up in 2007 and 2008 reaching the end of their life. This means there is not yet a clear trend for prices, although domestic buyers remain the most active.

Land Bank

We continue to hold just over 50ha of land in Moscow for future development where we could build an additional 250,000sqm, although for the foreseeable future we do not anticipate starting development unless we secure pre-lets.

Our 6ha of development land at Lobnya, Moscow have been affected by recent changes in local highway planning. Since the year end these changes have been upheld by the court and as a consequence we have written down the carrying value of the land.

The Market

As indicated a year ago, the level of new development in the warehouse sector in the Moscow region has reduced during the year with new supply almost halving to just over 500,000sqm. Take up was almost 1.2 million sqm and as a result the vacancy rate in the market has fallen to around 9%. Demand was strongest from retail and distribution businesses who accounted for 39% and 19% of the take up respectively. The warehouse market is now almost without exception denominated in Roubles and rents are in the range of Roubles 3,600 per sqm to Roubles 4,000 per sqm for Grade A space.

Vacancy in our portfolio, especially in Moscow, remains higher than the general market as existing leases expire and new letting activity fails to keep pace. There are still a number of other developers who are leasing space at rents which we feel are below real market levels which is something we will resist doing as we believe it destroys value. As the economy stabilises we expect to see an improvement in letting activity in our portfolio during the year. This is already being reflected in the activity we have seen since the year end.

In St Petersburg and our two regional hubs of Rostov and Novosibirsk rental levels are broadly the same, although the lack of completion and tighter markets mean they are more often at the higher end of this range.

Investment volumes in the year increased to $4.6 billion, with 79% of this in Moscow. Over 80% of all deals were funded by Russian capital, and only 8% of the total capital or $370m went into the warehouse sector. JLL indicate prime yields in the range of 11-12.5% for Moscow warehouses.

There is certainly a general market view that 2018 will be a year of continued improvement on all fronts, including rents, yields and occupancy driven by a general improvement in the wider economy, lower central bank rates and market forces in the property sector.

Finance Review

We continue to assess our ability to make covered distributions with reference to underlying earnings and operating cash-flows after interest. The former also allows a comparison of operating results before mark to market valuation movements. The reconciliation between underlying and IFRS earnings is given in note 9 to the accounts.

Our investment portfolio, including the contribution from Roslogistics, shows the continuing effect of the transition from US Dollar pegged to Rouble leases. On a like for like basis, NOI has dropped from $172 million in 2015, to $150 million in 2016 and $136 million for 2017 but our acquisition strategy to counteract this fall in income is bearing fruit. We purchased two investment portfolios during the year, one in April and one in November, which contributed $10 million to NOI, giving investment income for the year of $146 million including the contribution from Roslogistics (see note 4). A full year of acquisition income should more than compensate for any additional drop in revenues from the existing portfolio in the current year.

In addition to the positive impact of acquisitions we have been successful in selling off part of the legacy land bank that we hold in the UK. This generated $21 million of income after costs and boosted our NOI for the year to $167 million.

Underlying administrative expenses increased during the year, predominantly due to general salary costs increasing on a strengthening Rouble and cash bonuses paid in the year. Bonuses in 2016 had a larger share based element.

As we hold an increasing amount of our free cash in Roubles the strengthening currency created a positive foreign exchange movement in US Dollar terms. This was countered by strengthening sterling at the end of the year increasing the US Dollar value of our preference share liabilities. This resulted in a foreign exchange gain of $9 million in the income statement (2016: profit of $18 million) and a foreign currency loss through reserves of $24.7 million (2016: gain of $10.9 million).

Underlying earnings increased to $56.8 million (2016: $47.1 million) giving Basic Underlying Earnings per Share of 8.56 cents (2016: 7.17 cents).

IFRS earnings are bolstered by the revaluation gain on the portfolio offset against other mark to market movements on derivatives, amortisation and depreciation charges and an increased deferred tax liability of $16.7 million on the gains. We also impaired the remaining goodwill of $2 million carried against the Raven Mount subsidiary following the sale of the strategic land bank and this is included in administrative expenses.

Finance costs increased with the issue of new convertible preference shares during the year, the proceeds being used for the acquisition completed at the end of the year. Finance income from cash balances held increased to $7.2 million (2016: $3.4 million) reflecting the higher proportion of Rouble cash generating a better interest return. 2016 also had a one off gain of $15.4 million on the redemption of a loan at below book value which was not repeated this year.

Investment Properties

A tightening of yields and stable ERVs resulted in a revaluation gain of $38.2 million for our investment properties during the year. Together with acquisitions this increases the carrying value of investment properties to $1.57 billion. The carrying value of land held for development reduced by $2.8 million, the majority relating to one small site where changes in local highway planning has reduced the possibility of new development on this site. This gives a carrying value of investment properties under construction of $38.4 million.

Debtors and Creditors

Debtors and creditors are inflated by the most recent acquisition, creditors including a provision for deferred consideration which is dependent on the leasing of vacant space on the asset and debtors including VAT recoverable on the consideration paid to date. Tax payable is also increased by uncertain tax provisions made in the year.

Cash and Debt

Cash balances increase by $68 million with a refinancing straddling the year end, a new facility of $62.3 million being drawn on 29 December 2017 but the old facility of the same amount not repaid until 9 January 2018. This artificially increases cash and debt repayable within one year at the balance sheet date.

In essence, adjusting for above, cash balances are flat for the year, acquisition expenditure of $190 million being financed from the issue of new convertible preference shares and profits generated.

The quantum and number of facilities maturing each year is shown below.

We continue to extend the maturity dates of our secured facilities, 50% of debt now maturing after 2021. The effective loan to value ratio on theses facilities is 53% (2016: 55%).

Our cost of debt has increased slightly to 7.62% (2016: 7.48%) with increases in underlying US LIBOR.

Taxation

The tax charge for the year increases with a deferred tax liability charge on the property revaluations. Tax paid in cash terms rose to $14.4 million (2016: $7.7 million), the majority a result of the introduction of the new tax ruling last year, limiting the offset of deferred tax assets to 50% of profits.

Subsidiaries

Raven Mount contributed significantly to profits during the year, generating $24.3 million on the sale of legacy land plots held in the UK which had a book value of $0.7 million.

Roslogistics operated out of 112,700sqm of warehouse space at the year end and has increased its Rouble NOI by 10% to Roubles 724 million. We are keen to develop this business in the medium term and increased administration costs include investment into the on-going strategy for operations.

Outlook

Our acquisition strategy is supporting our transition to Rouble rents. Over the coming year we will start to align our foreign currency risk by introducing elements of Rouble debt into our secured facilities. Should the Central Bank of Russia continue with its reduction in the Central Bank rate then this exercise will be accelerated.

Risk Report

Risk Appetite

The Group continues to adapt its balance sheet to meet the risks of the market in which we operate. The key financial risks continue to be foreign exchange driven, our income model now predominantly Rouble based but our financing US Dollar and Sterling based. Our approach is threefold:

· In the short term we have reduced our amortising US Dollar debt facilities and extended the period of amortisation to build in sufficient covenant headroom to manage adverse foreign exchange movements;

· We have embarked on an acquisition strategy to build our Rouble income streams as our US Dollar pegged income continues to decline; and

· With Russian Central Bank rates reducing, we expect all new and maturing financing facilities to have an increasing proportion of Rouble denominated debt, reducing our exposure to US Dollar financing over the medium term.

With a certain stability returning to the Russian market in 2017, our risk appetite has increased as we seek income enhancing acquisition opportunities.

Risk Management and Internal Controls

The Board is responsible for the management of risk and regularly carries out a robust assessment of the principal risks and uncertainties affecting the business, discusses how these may impact on operations, performance and solvency and what mitigating actions, if any, can be taken. The Audit Committee is responsible for ensuring that the internal control procedures are robust and that risk management processes are appropriate. A fuller explanation of the processes is given in the Audit Committee Report.

The business recruited additional senior managers in both our Cyprus and Moscow offices this year. Together with our acquisition and growth plans it became evident that the current operational review structure would become less effective with the increased senior team. Each department now holds its own weekly meeting to review risks and issues and reports to an operational oversight Group of eight members comprising two executive directors, two directors of the intermediate Cypriot holding board and four senior managers. This group also meets weekly. At least one of the oversight Group sits on each departmental committee. Departmental meetings cover the day to day operating issues and refer key issues to the oversight Group where appropriate. The oversight Group also discusses business wide issues and risks and reports into the Executive Board at the formal bi monthly Board meetings. With the addition of the Company Secretary, the oversight Board also acts as the Risk Committee, reporting to the Audit Committee.

The risk management process is designed to identify, evaluate and mitigate any significant risk the Group faces. The process aims to manage rather than eliminate risks and can only provide reasonable and not absolute assurance.

The Audit Committee has not identified any significant failings or weaknesses in the internal control and risk assessment procedures during the year.

Principal Risks and Uncertainties

We have set out in the following tables the principal risks and uncertainties that face our business, our view on how those risks have changed during the year and a description of how we mitigate or manage those risks. We have also annotated those risks that have been considered as part of the viability assessment.

Financial Risk

Property Investment

Russian Domestic Risk

Personnel Risks

Political and Economic Risk

Change key

↑ Increased risk in the period

 → Stable risk in the period

↓ Decreased risk in the period

Signed for and on behalf of the Board

Colin Smith

Director

11 March 2018

Directors' Responsibility Statement

The Statement of Directors' Responsibilities below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 31 December 2017.

The Board confirms to the best of its knowledge:

The financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole;

The strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

The Annual Report and Accounts, taken as a whole, are fair balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 11 March 2018 and is signed on its behalf by:

Mark Sinclair Colin Smith

Chief Financial Officer Chief Operating Officer