Final Results

10 March 2014

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

Results for the year ended 31 December 2013

The Board of Raven Russia releases the results for the year ended 31 December 2013.

Highlights

· Full year distribution up 33% from 3.75p to 5p

· NOI up 37% from $135.6 million to $186.4 million

· Underlying profit before tax is up 103% from $34.5 million to $70.0 million

· Basic underlying earnings per share are up 106% from 5.3 cents to 10.9 cents

· Adjusted diluted net asset value per share up a cent to 126 cents

· Free cash of US$229 million at today's date

Chairman Richard Jewson said "Our balance sheet is strong, we have cash to deploy, we continue to raise external debt when required and we have a good balance of capital instruments with our preference and ordinary shares. We have a proven and committed management team to execute our plans, to manage our estate, and to optimise the balance sheet."

Enquiries

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

Anton Bilton

Glyn Hirsch

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

Tim Robertson

Ben Heath

N+1 Singer Tel: +44 (0) 20 7496 3000

Corporate Finance - James Maxwell

Sales - Alan Geeves / James Waterlow

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 with a market capitalisation of approximately £590 million. The Company operates out of offices in Guernsey, Moscow and Cyprus and has to date completed a portfolio of circa 1.4 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don and Novosibirsk. For further information visit the Company's website: www.ravenrussia.com

Chairman's Message

It is now five years since the Group changed its structure following the acquisition of its property advisor. At that time we were in the middle of a global financial crisis and were completing 675,500 square metres ("sqm") of new, speculative development. It needed strong management to deal with the uncertainties we faced. We anchored our balance sheet with an issue of preference shares, without significant dilution to our ordinary shareholders and stuck to our belief that the market we operated in was chronically under supplied and that we could deliver a superior return for our shareholders. The highlights follow the journey that we have been on over the last five years and vindicate our strategy through those difficult times.

Today, we have 1.4 million sqm of completed assets and occupancy is running at 97%, with annualised Net Operating Income ("NOI") of $192 million. Underlying earnings, one of our key measures for covered distributions to ordinary shareholders, has increased from a loss of $27 million in 2009 to a profit of $60 million at 31 December 2013, a number which I hope will increase further with a full year of rental income at today's occupancy level.

With a mature portfolio, we have taken the opportunity to adjust our balance sheet weighting, converting half of our preference shares to ordinary shares with a 1 for 2 offer which was oversubscribed. This reduces our adjusted diluted NAV per share but has no significant impact on our earnings per share, the saving on preference share coupon compensating for the increase in the number of ordinary shares. As an investment company whose strategy has focussed on shareholder distributions, our earnings performance has always been the most important ratio for us. NAV growth should follow with a sustained history of high yield returns.

So what about the next five years? The existing portfolio still has to show the results of a full year at current occupancy. We have prime development land in Moscow and we intend to build that out over the next four years with a mixture of pre let and speculative space, if demand remains at current levels. Acquisition opportunities are increasing in our market and we will take those opportunities if they meet our quality criteria and are earnings accretive for ordinary shareholders. Our balance sheet is strong, we have cash to deploy, we continue to raise external debt when required and we have a good balance of capital instruments with our preference and ordinary shares. We have a proven and committed management team to execute our plans, to manage our estate, and to optimise the balance sheet.

We are well placed to continue growing.

Our final distribution of 3 pence per share takes our total for the year to 5 pence, a 33% increase on 2012. Again we intend to distribute by way of a tender offer of 1 in 28 ordinary shares at 85 pence.

We must hope that events in the Ukraine settle peaceably in the coming months and we recognise the effect that this will have on the capital markets whilst the issues remain unresolved. For us, it is 'business as usual' in Russia, with leases and banking arrangements continuing to be signed and rents paid.

As always, I would like to thank our shareholders, employees, advisors and all of our other stakeholders for their support during another busy year.

Richard Jewson

Chairman

9 March 2014

Strategic Report

Chief Executive's Report

2013 has been an important year. Raven Russia has finally become the specialist investment company that was always planned. Slightly delayed by the financial crisis, but better late than never.

We own a portfolio of top quality logistic warehouses, mainly in Moscow, which are fully let to strong tenants with average unexpired lease terms of 4.6 years and currently producing annualised NOI of $192 million. In addition we have sufficient permitted land to support our organic growth plans for a number of years.

In terms of financial performance, these are the highlights:

Full year distribution up 33% from 3.75p to 5p;

NOI up 37% from $135.6 million to $186.4 million;

Underlying profit before tax is up 103% from $34.5 million to $70.0 million;

Basic underlying earnings per share are up 106% from 5.3 cents to 10.9 cents; and

Adjusted Diluted Net Asset value per share up a cent to 126 cents.

Bank debt at the year end of $815 million, the majority of which is secured on individual assets, has an average interest rate of 7.2% and an average weighted term to maturity of 4.7years.

We also have $229 million of free cash at today's date.

For 2013 we intend to make a final distribution of 3 pence for each ordinary share making it 5 pence for the year. This continues our progressive distribution policy that has seen us return $347 million to ordinary and preference shareholders since flotation.

There is no benefit to shareholders of self congratulation (no matter how tempting) the real question is: what comes next?

We still believe that our sector of the market is structurally under supplied and that even modest economic growth in Russia will result in a significant excess of demand over supply. Competition remains fragmented and none of the major global players has entered the market. Russia continues to present many barriers to entry.

We have a stable position in terms of lease contracts and banking in the medium term, however we will be focussing on improving all of these arrangements through active management of tenants and lenders.

Raven Russia has always been about yield. In today's market stabilised assets produce a dollar yield of 11% and developments show around 14%. These stable cashflows provide the platform for attractive and growing distributions to shareholders.

We remain committed to distributing to ordinary shareholders by way of tender offer buy-backs. This is tax efficient and gives shareholders the option of receiving cash or increasing their percentage holding. In the long term the continual shrinking of the share base could have a powerful effect on value.

Our overhead base is stable so all increases in income will flow to the bottom line and enable us to increase distributions. Indexation will help but we can add 50,000sqm to 100,000sqm per year by building on existing land. Assuming rents of $130 per sqm, each 10,000sqm adds $1.3 million to NOI when let.

We are still pursuing acquisitions of completed assets and Moscow land.

The global economic and political environment remains difficult. Relatively speaking Russia is in a strong position but currency volatility makes financial planning difficult and we know that globalisation means banking contagion. For this reason we feel justified in keeping a relatively high balance of free cash.

Glyn Hirsch

Chief Executive Officer

9 March 2014

Business Model

Our Strategy

Our strategy is simple: to build an investment portfolio of Grade A logistics warehouses in Russia that delivers progressive distributions to our shareholders.

Russia and Moscow in particular, has long had an under supply of logistics infrastructure supporting its growing consumer demand. The sector offers high, dollar denominated, ungeared yields. The market was and continues to be neglected by both local and international property investment players and from a standing start in 2005 we have become the largest investment company in the warehouse sector in Russia, with only 1.4 million sqm of completed assets.

We see a continuing opportunity to grow our portfolio, especially in the Moscow market.

Business Model

As there was no active investment market in Russia when we floated the business, we entered into a development programme to build our own investment portfolio. Between 2005 and 2010, the majority of that development was speculative and it has taken until this year to complete the letting of our properties on acceptable lease terms and with the covenants we required.

Our model has adapted over that time from one initially focussed on deploying our equity in forward funding construction projects with local joint venture developers, to a geared development model with in house construction project management. The bulk of our investment portfolio was completed in 2009 and we entered into a sustained period of letting activity. Today, we are a maturing investment property group with a focus on growth through proactive asset management, organic development projects and acquisition.

Our tenants are a mixture of large, local and international businesses: retailers; distributors; manufacturers; and large, third party logistics providers. Where possible, we look to partner tenants to assist in their growth, the development at Noginsk over the last three years is a good example, with high specification developments, completed and in progress, for the large Russian retailers X5 and Dixy.

Our lease maturity profile shows a spike in 2016 and we will be working to deal with that well in advance as we will with debt maturities arising in 2016/17.

Operating in an underdeveloped investment market such as Russia does come with risks and we expand on these later in the Report.

Key Performance Indicators (KPIs)

The opportunity of high, Dollar denominated yield attracted us to this market and our KPIs are yield and distribution focussed. Our results are driven by increasing rental income and NOI performance, underpinned by the portfolio ERV and vacancy rates.

Our central overheads are reasonably stable and can support more growth. We focus on measurements that reflect our ability to pay cash covered distributions, principally underlying earnings and operating cash flows after interest. The latter forms the key measurement in our incentive plan targets.

With an immature investment market in Russia, asset values will have less of an effect on our share price than distribution growth and may result in a period where our shares trade at a premium to our fully diluted NAV per share.

With a final distribution of 3 pence confirmed and a total of 5 pence for the year, our shares yield 6.7% at today's share price.

We have struggled to find comparable indices for our stock. Russia is dominated by developers in the property market and we do not know of any similar investment companies in our part of the property universe. Similarly, comparing ourselves to UK Reits does not work given the disparity in metrics.

However, we have shown a comparison of our total shareholder return over the last 5 years to both the FTSE Small Cap and FTSE 350 indices later in the Annual Report, which shows a significant outperformance over that period.

Portfolio Review

Geographical

2013 saw the company consolidate its position as the market leader in the warehouse and logistics sector in Russia. We delivered 83,600sqm of new space in Moscow at our Noginsk and Klimovsk projects, started work at Padikovo in Moscow and signed a substantial pre-let with Dixy Group at Noginsk in Moscow. We also ended the year with a vacancy rate in the portfolio of only 3% and contracted NOI of $191.8 million including $1.7 million of PLAs and LOIs. This increases to over $200 million with the Dixy pre let.

Portfolio lease expiries and breaks

During 2014 we only have 57,800sqm of lease breaks and expiries reflecting the defensiveness of our portfolio in the short term. Looking further ahead, 161,300sqm expiries and breaks occur in 2015 and 302,200sqm in 2016. We are already in discussions with a number of these tenants with the aim of renewing or extending expiries early to lock into today's strong rents.

Portfolio yields

Valuation yields remain steady at circa 11% for our prime Moscow assets, moving out to 12.5% for St Petersburg and the regional cities of Rostov and Novosibirsk. We still believe these yields are above where they should be but without greater investment interest in Russia they are likely to stay there. From a shareholders perspective, if we can keep growing the portfolio at these yields or better through selective investment, land acquisition and development we should continue to produce excellent returns.

Our investment properties were valued by Jones Lang LaSalle ("JLL") at the period end, in accordance with the RICS Valuation and Appraisal guidelines, and are carried at a market value of $1.65 billion (see note 11 to the financial statements). This resulted in an increase of $144 million in portfolio value since 2012, reflecting our progress in leasing, development and asset management. This carrying value reflects an average yield of 12% on a fully let portfolio NOI of $196.7 million (not including phases under construction).

Investment Portfolio

Letting in the year

Moscow

In Moscow, excluding the space under construction at Noginsk and Nova Riga, we have eight completed projects totalling 966,000sqm, producing an annualised income of $135 million at the year end. These properties are virtually fully let. During the year we had net lettings of 69,684sqm in Moscow increasing our income by $12 million per annum. Rents have remained around $130-$135 per sqm for Grade A warehousing throughout the year.

Moscow Portfolio

At Noginsk we completed a further 35,600sqm at a marginal yield on cost of 17.7%. We have also signed a pre-let with Dixy, the leading Russian Supermarket operator, for 39,284sqm on a 15 year lease and annual rent of $8.5 million. This space is due for delivery in the first quarter of 2015. We anticipate this will generate a marginal yield on cost of 17.7% and a development profit of circa $11 million.

At Klimovsk we delivered 48,000sqm of new space in the summer. This is now 60% leased with a further 9% under LOI. Based on actual and anticipated rents of $130 per sqm, the project has generated a marginal yield on cost of 21%.

At Pushkino we have completed circa $10 million of improvements to the property that were funded by the vendor.

St Petersburg

St Petersburg Portfolio

In St Petersburg, the market has remained strong and we only have 3,500sqm vacant, representing 2% of our warehouse portfolio in the city. Rents have continued to improve and have now reached $120-$125 per sqm compared to an average rent on our St Petersburg warehouses of $105 per sqm. With a number of breaks and expiries coming up over the next two years we are hopeful of increasing our income and locking in higher rents for the medium term.

Regions

Regional Portfolio

Our project in Rostov is 95% let following the release of 5,300sqm of space at the year end. We are seeking pre-lets and development finance to allow us to start an additional 15,000sqm of development on the second phase.

In Novosibirsk rents have improved to $120 per sqm and we only have 5,300sqm available to let, having leased a further 38,500sqm and renewed existing leases on 17,000sqm in 2013.

Tenant Mix

Our strategy remains to lease to strong Russian and International tenants who can fulfil their rental obligations over the term of their lease contracts. In selecting tenants we are also conscious of exposure to any one tenant or any particular sector or use. Our largest tenant, Itella, accounts for only 12% of our annual warehouse NOI. We have tenants from a very broad business base who are involved in many different aspects of the Russian economy, from high street retail, to car part assembly, internet retail and pharmaceuticals. This diversified profile helps protect the Company from a downturn in any particular sector.

Land Bank

We have started work building 39,284sqm at Noginsk for Dixy and on the first 67,000sqm at Nova Riga both for delivery in the first quarter of 2015. At Noginsk we still hold another 25.9 ha on which we can build 134,000sqm and at Padikovo there is the potential to add a further 130,000sqm on the additional 25.2 ha we own.

Demand in the regional cities across Russia is improving and we are talking to a number of large occupiers about their expansion plans although any development in the regions would only commence once we had signed a pre-let for a long term lease. The last of those land plots held under leasehold are nearing their maturity and we have reduced the carrying value of these on the assumption that we will not renew the land lease.

The Market

Tenant demand is still driving the market and JLL estimate that take up in 2013 was 1.3 million sqm in Moscow alone. The vacancy rate for class A warehouse stood at 1.4% at the year end. In St Petersburg the vacancy rate has fallen to 1.7%. For 2014, JLL forecast new supply of Grade A warehouse space in Moscow of circa 1.6 million sqm with potential demand of 1.1 million sqm. The key trend in the market is the increase in build to suit for sale deals which accounted for 35% of total take up in 2013, up from 26% in 2012.

The investment market has been relatively quiet over the last twelve months with property owners, anticipating future yield compression, unwilling to sell at current prices. The owner occupier market has been strong with circa 316,000 sqm of space sold in Moscow at an estimated average price of between $1,250 and $1,300 per sqm. This compares favourably to our own valuations in Moscow of circa $1,235 per sqm.

Ownership of one of our largest competitors, MLP, changed in the second half of the year in an off market transaction. Their portfolio consisted of 4 assets totalling 730,000sqm, with two properties in Moscow, one in St Petersburg and one in Kiev, Ukraine. We estimate the deal was completed at around 11% to 11.5% for the Moscow properties.

Looking into 2014, we are aware of a number of investment deals that have been marketed in the last quarter of 2013 where deals may close in the next few months at or around 11%.

Finance Review

The success in letting our portfolio continues to drive our results with underlying net rental and related income increasing from $143.2 million to $186.5 million in the year.

General underlying administrative expenses have reduced from $33.5 million to $27.8 million. The element relating to the property investment portfolio (see note 4 to the financial statements) was $16.0 million (2012: $15.3 million). Underlying operating profit increases to $161.4 million from $111.9 million in 2012.

Our bank interest expense for the year increased with a full year of charge on debt drawn in 2012 (note 7 to financial statements), increasing to $63.2 million from $51.1 million. Similarly, our preference share charge increased to $38.3 million (2012: $33.5 million) with a full year of charge on shares issued in 2012. This charge will halve in the current year following the preference share conversion.

Underlying profit after tax increased by 99% to $60.3 million (2012: $30.3 million). Basic underlying earnings per share increase by 106% to 10.92 cents (2012: 5.30 cents).

Our IFRS results are dominated by the accounting treatment for the preference share conversion exercise completed at the year end. The swap of 1 preference share for 2 ordinary shares, for half of the preference shares in issue, results in an increase in shareholder funds of $170 million following the issue of new shares and reduction in the preference share liability but results in a charge to the income statement of $86 million. This charge reflects the difference between the market value of the ordinary shares being issued and the carrying value of the preference shares on the balance sheet, which are recorded at amortised cost. Other than the costs of the transaction, there is no cash impact on this year's results.

The preference share conversion strengthens our balance sheet, reducing perceived gearing and reducing exposure to the fixed sterling preference share coupon. The ability to progress our distribution policy to ordinary shareholders is maintained as the future saving on preference share coupon compensates for the increase in the number of ordinary shares.

Our completed investment property portfolio had a market value at 31 December 2013 of $1.65 billion, up from $1.5 billion at the end of 2012. This follows transfers from assets under construction of $85 million and a valuation uplift of $57 million. Investment property under construction had a market value of $116 million at the year end, down from $147 million at the beginning of the year following the completion of phases at Noginsk and Klimovsk and after a net revaluation uplift of $6.7 million.

Following the preference share conversion exercise, adjusted fully diluted NAV per share increased during the year from $1.25 to $1.26.

Cash and Debt

Net cash generated from operating activities increased from $129.8 million to $192.3 million in the year. Construction costs in the year were $74.9 million, funded from a net increase in borrowings of $38.9 million and operating cash. Bank borrowing costs were $72.0 million (2012: $53.2 million) and distributions to ordinary and preference shareholders totalled $75 million (2012: $62.3 million). This combined to leave an increase in cash held at the year end from $188.7 million to $201.3 million.

We have total debt outstanding of $815 million at the year end (2012: $776 million), with only $43 million (2012: $128 million) unhedged. Our average weighted cost of debt remains stable at 7.2% (2012: 7.3%) and weighted average time to maturity remains at 4.7 years (2012: 4.7 years).

We have one short term maturity of $37 million which we aim to roll over during the year.

Our focus on debt in the year has been refinancing the equity on the additional phases we completed at Klimovsk and Noginsk and refinancing the most expensive debt we have on our regional assets. We have achieved the former, drawing an additional $20 million before the year end and $23 million on the latter early in the current year. We have also refinanced our Rostov facility, with a new loan of $61 million, repaying the existing facility of $41 million. The refinancing of our Novosibirsk asset is also progressing well with a new loan now credit approved at a cost of debt to the Group well below the existing facility. We aim to complete this refinancing in the next quarter.

Our attention is now on the maturities which arise in 2016 and 2017 and we will aim to extend these maturities well before they reach term.

We are also in discussions to finalise a long term construction loan secured on the Nova Riga project which will allow us to accelerate the build programme there.

Foreign Exchange

The Rouble depreciation in the last few months has put focus on foreign exchange risk. As a US Dollar denominated business the main foreign exchange risks we face are:

- Rental income: leases are pegged to the US Dollar and we receive a variable Rouble amount based on the Central Bank exchange rate on the date paid;

- Property operating costs: these are recoverable from tenants and are Rouble denominated;

- Construction costs: the majority of these are Rouble amounts;

- Administrative costs: the majority of these are salary related and the only exposure is central overheads which are paid in Sterling; and

- Preference share coupon: this is a Sterling cost.

In the majority of cases, we hold sufficient cash in the three main currencies of US Dollar, Rouble and Sterling to cover cash requirements. The most significant of these is ongoing property operating costs and sufficient Rouble reserves are held to cover these each quarter. The remainder of rental income is then converted to US Dollars to service our US Dollar debt requirements and pass surplus cash to the holding company. We are mindful that the majority of our tenants are Rouble based companies and the continued weakening of the Rouble means that their US Dollar denominated rents get increasingly expensive.

As our construction activities are now a smaller part of the business, there is no significant foreign exchange exposure and our cost of construction reduces with the weakening Rouble.

We maintain sufficient rolling Sterling cash balances to cover our overhead exposure.

Following the preference share conversion exercise, our exposure to the preference share coupon has been halved. We do still maintain a three year cap at $1.60 to £1.00, maturing quarterly to hedge the exposure.

As we hold a mixture of different currency cash balances and also preference shares denominated in Sterling, our balance sheet is open to unrealised exchange movements but these should unwind as the cash is used for future expenditure. Given the long term nature of the preference shares there is no reason to hedge their principal value and as the recent conversion to ordinary shares demonstrated, there are methods for redeeming these without foreign exchange risk.

So the main risk is any knock on effect that the weak Rouble has on consumer demand and the level of rents that can be achieved in the market place. We are watching the trends closely.

Subsidiaries

Our trading subsidiaries have performed well this year. Raven Mount has now disposed of the majority of its legacy residential stock in the UK and its joint venture for second homes at The Lakes in the Cotswolds continues to generate cash.

Roslogistics has contributed $14.7 million to profit (2012: $10.2 million), the equivalent of $1.3 million profit (2012: loss of $3.2 million) after taking account of the rent and operating expenses payable to the Group for warehouse space.

Provisions

We continue to carry a provision for a legacy litigation claim on the Pushkino project, which we acquired in 2012. The liability is covered by retention monies released to us by the vendor during the year. The majority of this is held as restricted cash until the litigation is settled. Details are given in note 25 to the Financial Statements.

The year ahead

We have a strong balance sheet today and the year ahead is about minimising risk, especially in the current environment. A long period of Rouble weakness could have an impact on demand for our new stock and the sustainability of the current rent roll on our existing portfolio. It is too early to say if there will be wider implications, on the banking sector and cost of debt for example. But, for now, as the Chairman said, it is business as usual in Russia.

Risk Report

The Board places significant importance on identifying and managing the risks facing the business. These encompass the risks, real and perceived, of operating in a foreign market such as Russia, to the more obvious cyclical, property specific risks, presented by the development and investment in a large property portfolio.

In the last nine years we have addressed the fundamental risks of entry into any new market, identifying experienced and trustworthy local joint venture partners in the early stages and gradually building up our own domestic presence. We are now the largest player in our niche and have all of the in house skills required to manage both local regulatory and generic property risks. Our in house expertise includes legal, finance and accounting, leasing, asset management and construction departments. We believe that we have the structure and culture in place to identify and effectively manage the risks that our market and sector presents.

The macro and political risks that have arisen since 2008, including the current situation in Ukraine, obviously have an impact on our business and we strive to dampen the effects of those as best we can. We pass foreign exchange risk onto our tenants with US Dollar pegged rents in exchange for reduced inflationary indexation (linked to US CPI rather than Russian inflation); we use ring fenced structures to hold assets, minimising recourse to the holding company; we have a diverse spread of funding banks, both international and domestic; similarly, we have a diverse range of tenants, international and domestic; and we have a mixture of capital instruments that we can offer on the Company balance sheet, ordinary shares, preference shares and warrants. All of which, to date, has allowed us to minimise the effect of downturns on our shareholders.

Our primary focus remains an offering of attractive returns for our shareholders. As such, and in the context of the paragraph above, we have a commensurate focus on financial risks. Set out below is an overview of how we manage our key financial risks.

Financial Risks

Our strategy from the outset has been simple: to build an investment portfolio in the Russian warehouse sector which allows us to generate a high Dollar denominated, ungeared yield on cost. We believed that this would translate into very attractive distribution yields for our shareholders.

Gearing

Gearing has enabled us to accelerate our growth but we have managed the increased risk to the Group by raising asset secured facilities, ring-fenced in special purpose vehicle structures. We have not taken any significant bank debt exposure onto the holding company balance sheet to date. This allows us to monitor both our debt service obligations at an asset level but maintain low gearing ratios at a consolidated level. Our Group gearing levels, not including preference shares, have been managed between 41% and 48%. This held us in good stead during a busy speculative construction period in 2008 and 2009 and through the recent financial crises.

The changing banking landscape, combined with our maturing portfolio, may mean that we do look to alternative financing structures in the future. We have demonstrated this already with the issue of preference shares and at some point we may change our financing risk profile to a more central financing structure, using the portfolio as a whole, to reduce our effective cost of debt. We would be mindful of refinancing and covenant risk if we were to move in that direction.

Key Performance Indicators

With the impact of gearing and our preference shares on results, we place emphasis on our "Underlying Earnings" (as defined in note 9 to the financial statements) and operating cash flows after financing costs, the key metric in our incentive schemes. These measures give the most relevant and comparable information on the operating performance of our portfolio and our ability to pay distributions from those operations.

We also monitor our loan to value covenants and the impact of valuations on our diluted net asset value per share. However, given that valuation yields in our market remain significantly above other comparable European markets (close to replacement cost) and result in high cash cover on debt service, we do not currently see this as a key metric on our performance. Our focus is on yield driving our shareholder return.

Property Acquisition and Development

The market in which we operate has been and continues to be undersupplied. This means that we have had to construct the majority of our portfolio speculatively, 2008 and 2009 being the periods of greatest construction activity. The global downturn resulted in this new space taking time to let with the cost of vacant space being carried by the Group. We have now reached letting levels that reduce this cost to de minimis levels.

New development in today's market has the potential to deliver high income yields, especially on additional phases of existing assets. We have commenced a speculative construction programme limited to a maximum of 100,000 sqm in any year. This allows us to manage the construction and letting risk on new space in the context of our existing portfolio of 1.4 million sqm.

There are a number of potential acquisition opportunities in the market, of completed, fully let properties. We continue to assess acquisitions of fully let income producing assets to grow the portfolio. Acquisitions have presented their own risks in our market as we have not been involved in the historic construction and management of the sites. Whilst this adds to the potential for enhanced asset management returns it also introduces the risk of legacy issues that may need to be managed out. This is all part of the integration risk of introducing new assets to the portfolio.

We have set out in the following table 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. Given the current political climate we see the first three of the financial risks below increasing.

Financial Risk

Property Investment

Property Development

Russian Domestic Risk

Other Operational Risks

Signed for and on behalf of the Board

Colin Smith

Director

9 March 2014

Going Concern

The financial position of the Group, its cash flows, liquidity position and borrowings are described in the Financial Review and the notes to the accompanying financial statements. In addition, in note 36 there is a description of the Group's objectives and policies for managing its capital, financial instruments and hedging activities and its exposure to credit and liquidity risk.

During the year the Group continued to hold substantial cash and short term deposits. The property portfolio is running at high occupancy levels, with stable rental income streams and overhead base. Debt facilities have a weighted average time to maturity of 4.7 years at 31 December 2013.

The Board receive monthly updates on future cash flow projections and have regular working capital reports presented, in particular, as part of the half year and full year reporting process. A comprehensive independent working capital review was also undertaken as part of the preference share conversion transaction just prior to the year end. After making appropriate enquiries and examining sensitivities that could give rise to financial exposure, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue operations for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparation of these financial statements.

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 2013. Certain parts of the Annual Report and Accounts have not been included in this announcement.

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 9 March 2014 and is signed on its behalf by:

Mark Sinclair Colin Smith

Chief Financial Officer Chief Operating Officer