Half-year Report

1 September 2020

Raven Property Group Limited ("Raven" or the "Company")

2020 Interim Results

Raven today announces its unaudited results for the six months ended 30 June 2020.

Highlights

· Occupancy at 30 June 2020 increased to 93% (31 December 2019: 90%) with 142,000sqm of new lettings and 176,000sqm of maturity extensions in the period;

· Underlying earnings of £13.4 million (30 June 2019: £13.4 million) before unrealised foreign exchange movements;

· Unrealised foreign exchange losses of £23.8 million (30 June 2019: profit £18.9 million) on weaker Rouble;

· IFRS loss of £31.7 million (30 June 2019: profit £26.2 million) after these unrealised foreign exchange movements and loss on revaluation of £12.5 million (30 June 2019: profit £18.2 million);

· Cash balance of £85.0 million (31 December 2019: £68.1 million);

· Rouble value of investment property portfolio down by only 0.3% since 31 December 2019;

· Diluted net asset value per share of 58p (31 December 2019: 75p) on the weaker Rouble;

· Re-designation of convertible preference shares to complete on 30 September 2020; and

· Payment of final distribution for 2019 of 2.25p by way of tender offer buy back of 1 in 16 ordinary shares at 36p per share confirmed.

Glyn Hirsch CEO said "It looks like global interest rates will stay low for some time and with reliable investment yields likely to become an increasingly scarce commodity, it is reasonable to expect high quality yielding assets to increase in value. We own a high quality portfolio of assets in the best real estate class in the world, with a fifteen year track record of reliable cash flows. These assets are currently valued on a yield of 11% with underlying income in Roubles and annual indexation of around 5%. Russia is not for everyone but on an objective financial analysis, it is one of the strongest and least leveraged economies in the world today. We look forward to the future with confidence."

Enquiries

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 Property Group Limited

Raven Property Group Limited was founded in 2005 to invest in class A warehouse complexes in Russia and lease to Russian and International tenants. Its Ordinary Shares and Preference Shares are listed on the Main Market of the London Stock Exchange and admitted to the Official List of the UK Listing Authority and the Official List of The International Stock Exchange ("TISE"). Its Ordinary Shares also have a secondary listing on the main board of the Johannesburg Stock Exchange and the Moscow Stock Exchange. Its Convertible Preference shares are admitted to the Official List of TISE and to 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 1.9 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don, Novosibirsk and Nizhny Novgorod and 49,000 square metres of commercial office space in St Petersburg. For further information visit the Company's website: www.theravenpropertygroup.com

Financial Summary

Letting Summary

Warehouse Portfolio Maturities

Office Portfolio Maturities

Lease Currency Mix

Secured debt currency profile

Chairman's Message

It is with a sense of déjà vu that I issue another foreword overshadowed by the influence of macro events. Since the crisis of 2009 we have had to deal with the impact of international sanctions, oil price crashes, currency devaluations and now the unprecedented impact of a global pandemic. As you will read later, our priority in recent months has been the safety and welfare of our staff, assisting tenants experiencing genuine cash flow problems and securing our own liquidity position.

We have been fortunate that our assets have continued in operation throughout the period of lockdown, logistics networks being an essential part of the supply chain, allowing supermarkets, their suppliers and e-commerce arms to continue to operate. The Russian government introduced compulsory rental deferral schemes, mostly targeted at the non-essential retail and hospitality industries, which have not had a significant impact on our portfolio, but we will continue to work with all tenants who have genuine difficulties in meeting rental payments.

The Russian national balance sheet appears to be in a significantly better position than was the case at the time of the last oil crash which precipitated the free float of the Rouble. Today, the government's national and external sovereign debt levels are one of the lowest globally and its financial reserves are at their highest levels. This should mean that it is well placed to support recovery.

The Group's underlying trading in the six months has been strong. Occupancy at the end of June was 93% with cash reserves of £85 million. We have no near term debt maturities today. However the weaker Rouble exchange rates have generated unrealised foreign exchange losses, reducing reported Sterling earnings and our net asset value per share.

On shareholder matters, the Board was pleased to report the approval for the re-designation of our convertible preference shares at the General Meeting on 31 July 2020. The re-designation to ordinary and preference shares will complete on 30 September 2020. However, the conditional agreement between the Company and Invesco for the purchase of Invesco's ordinary and preference shares has now lapsed, a victim of the uncertainty resulting from Covid-19. We will continue our dialogue with Invesco in the meantime and remain keen to find a solution to the perceived stock overhang. This may be by way of a syndication of the Company and its executive management acquiring Invesco's holding.

I am also pleased to report that the Nominations Committee intends to meet with two potential candidates for Non Executive Director positions when circumstances allow and we hope to make positive announcements on the Board composition later this year.

Given the performance of the Group through these difficult times I am pleased to confirm that we now intend to make the final distribution to ordinary shareholders for 2019. The amount, equivalent to 2.25p per share will be distributed by way of a tender offer of 1 in 16 shares at 36p per share.

Finally, I would like to extend my gratitude to the Group's employees for all of their continuing efforts in very difficult circumstances and I look forward to a time when we can celebrate their hard work together.

Sir Richard Jewson

Chairman

31 August 2020

Chief Executive's Review

Dear Shareholders,

We are delighted with the Group's operating performance for the period. We have maintained a high level of occupancy and suffered minimal rental deferral. In the period we have completed 142,000sqm of new lettings and agreed prolongations on a significant amount of space where leases were due to expire in the short term.

Although we continue to trade through a difficult period we have seen an excellent level of rent payment and as in other countries, a shift to e-commerce has benefitted us too. We expect this trend to continue and are working actively with tenants to assist in their e-commerce requirements.

With the Central Bank of Russia key interest rate falling by 325 basis points since 30 June 2019 it's unsurprising that the Rouble valuation of our portfolio has remained stable and we remain optimistic that these falling rates, combined with the resilience of our sector globally, will lead to a re-rating in due course. Our balance sheet remains strong and we are actively looking for new investment opportunities.

The Sterling presentation of our results has been adversely affected by the weak Rouble but the majority of these losses are unrealised and can easily reverse.

As explained in our 2019 Annual Report we deferred the payment of the final distribution for 2019 due to the global uncertainty. We now feel it is appropriate to make this payment in recognition of the 2019 financial performance. Distribution will be by way of tender offer on the basis of 1 in 16 shares at 36p per share. No over allocation will be permitted. Our market is stabilising but we think it prudent that in relation to 2020 we will announce one distribution at the time of the issue of our annual results.

Our employees have made a tremendous effort during this difficult period and we thank them for that.

Property Update

At 30 June 2020, our warehouse portfolio comprised 1.89 million sqm and our office portfolio, 49,000sqm of space. Average occupancy for the six months ran at 92% compared to 90% for the same period last year. At 30 June 2020, occupancy levels were 93%.

Warehouse Portfolio

New warehouse lettings in the six months to 30 June 2020 totalled 140,649sqm with a further 172,419sqm of existing leases renegotiated and extended, including the renewal of 76,000sqm to X5 Retail Group in Moscow and the simultaneous new letting to the same tenant of 25,000sqm, both for ten years. Tenants vacated 66,243sqm of space including one major tenant vacating 18,326sqm in March.

As at 30 June 2020 we had 141,896sqm of warehouse leases maturing in the second half of the year and 92,018sqm of potential lease breaks. Of those, we expect 121,076sqm of maturing tenants and 9,874sqm of breaks to vacate, including a large block of 66,275sqm in Pushkino, Moscow. We have already successfully re-let 43,693sqm of this space to Wildberries on a short term basis for e-commerce fulfilment.

Since the period end, in addition to the Wildberries lease, we have let a further 11,564sqm of vacant warehouse space and renegotiated and extended 9,403sqm of maturing leases. A further 17,309sqm of space is subject to letters of intent or lease renewal negotiations.

Rental levels for dry warehouse space remain in the region of Rouble 4,000 - Rouble 4,100 per sqm and demand appears to remain strong. Prime yields remain in the range 11% to 12%.

Currency Mix

Rouble denominated leases accounted for 76% (31 December 2019: 71%) of the total warehouse space at the period end and US Dollar leases 14% (31 December 2019: 16%). The average Rouble rent at 30 June 2020 was 4,833 per sqm (31 December 2019: 4,922 per sqm) and the average US Dollar rent was $160 per sqm (31 December 2019: $158 per sqm). Rouble denominated leases had a weighted average term to maturity of 4.2 years (31 December 2019: 4.1 years) and US Dollar leases 1.6 years (31 December 2019: 1.9 years).

Office Portfolio

Our St Petersburg office portfolio has performed extremely well given the impact of Covid-19 and during the first six months of 2020 we have let 1,169sqm of vacant space with maturities of 2,631sqm vacating, including a single tenant from 1,742sqm. Average Rouble rent at the period end was Roubles 14,641 per sqm (31 December 2019: 13,988 per sqm).

Since the period end, we have let 3,437sqm of vacant space in the office portfolio to one major tenant for 10 years. Occupancy now stands at 98%.

Finance Review

The Group's underlying Rouble trading has been strong in the first six months of the year. Occupancy increased to 93% (31 December 2019: 90%) and we continue the unwinding of our legacy US Dollar pegged leases. The Covid-19 pandemic has not had a significant impact on rental recovery, with over 99% of rents received in the first six months. The indirect impact of the pandemic on our results has been the effect of the oil price crash, leading to a weakening of the Rouble exchange rate over the period. This has been exacerbated by a strong Euro and a perceived heightened risk of US sanctions in the run up to US elections.

The weaker Rouble influences our results and our primary statements in a number of ways:

Income Statement 

· In the income statement Rouble weakness causes an increased cost in the servicing of our Euro denominated debt and Sterling preference shares and an unrealised foreign exchange movement on the translation of balance sheet Euro debt in our Russian property owning subsidiaries; and

· On the translation to our Sterling presentation, a reduction in the Sterling equivalent of our Rouble income offset by a reduction in Rouble costs such as bank interest.

Balance Sheet

· The greatest impact on our results is the presentation translation of our Rouble denominated net assets to Sterling. This is principally the translation of our investment property value, net of related Rouble denominated debt, generating an exchange movement through our balance sheet reserves and volatility in our Sterling net asset value per share.

Net Rental and Related Income

Net rental and related income drops to £59.6 million in the six months (30 June 2019: £64.3 million). The continued unwinding of foreign currency leases, 17% of the portfolio now pegged to currency leases compared to 22% at 30 June 2019, accounting for roughly half of the decrease. The remainder is due to the weaker average Rouble exchange rate of 87.3 (30 June 2019: 84.5) in the six months when translating to Sterling presentation.

Administrative Expenses

Underlying administrative costs reduce to £10.0 million (30 June 2019: £11.4 million). This is driven by lower employment costs as there was no bonus expensed in the six months to 30 June 2020.

Net Finance Costs

Underlying net finance costs reduce to £32.7 million (30 June 2019: £35.9 million). As explained above, there will be some increase in the cost for servicing of Euro debt in the Russian subsidiaries but as the proportion of our Rouble denominated debt continues to increase, 59% at the period end (30 June 2019: 37%), this more than offsets the Euro impact. The Central Bank of Russia has reduced its key rate to the lowest level since the Soviet collapse, 4.25% today (30 June 2019: 7.5%) with expectations that this will continue to fall. We also have the positive impact on translating to Sterling.

Underlying Earnings

Underlying profit before tax and unrealised foreign exchange movements of £16.8 million (30 June 2019: £17.6 million) illustrates the reduction in overheads and interest cost offsetting the drop in net operating income. The unrealised foreign exchange loss in the period of £23.8 million (30 June 2019: profit of £18.9 million) represents the biggest swing in underlying results. As explained, the majority relates to the unrealised movement in the carrying value of our Euro debt in our Russian subsidiaries and moves us to an underlying loss before tax of £7.0 million (30 June 2019: profit of £36.6 million).

IFRS Earnings

We continue to use underlying earnings as the best comparative measure for the Group's results. The reconciliation between underlying and IFRS earnings is shown in note 6 to the Report. Principal differences relate to depreciation, unrealised movements in property valuations, mark to market of derivative instruments and the convertible preference share redemption premium. The IFRS loss before tax for the period is £26.7 million (30 June 2019: profit £33.6 million). In addition to the unrealised foreign exchange movements noted previously, the larger IFRS movements were a loss on the revaluation of investment property of £12.5 million (30 June 2019: gain of £18.2 million) and a finance expense of £6.5 million (30 June 2019: expense of £19.3 million). The finance expense includes the amortisation premium on our convertible preference shares of £3.6 million in each period and a loss on mark to market of derivative instruments of £1.7 million (30 June 2019: a loss of £13.9 million). The latter is a factor of the reducing Russian Central Bank key rate.

Taxation

The underlying tax charge of £3.4 million (30 June 2019: £4.2 million) principally relates to corporate tax due in our Russian subsidiaries and withholding tax payments. The IFRS tax charge of £5.1 million (30 June 2019: £7.4 million) also includes deferred tax movements in relation to the investment property valuations.

We are awaiting the release of the full text of the new double tax treaty signed between Russia and Cyprus and will assess the impact on the Group, if any, once we have had the opportunity to review this.

Earnings Per Share

The unrealised foreign exchange loss in the income statement swings our underlying basic earning per share to a loss of 2.16p for the period (30 June 2019: earnings of 5.31p) and the unrealised loss on revaluation of investment properties contributing to a basic IFRS loss per share of 6.59p (30 June 2019: earnings of 4.30p).

Investment Properties

Our investment property portfolio valuation has not moved significantly in Rouble terms since 31 December 2019, reducing by 0.30%. Together with property improvements of £8.8 million, the revaluation loss for the period is £16.2 million before accounting for tenant incentives. The largest movement on the property valuation is on translation to Sterling, the weaker Rouble closing exchange rate of 86.4 (31 December 2019: 81.2) contributing a reduction in Sterling asset value of £83.7 million. The investment property carrying value at 30 June 2020 is £1.25 billion (31 December 2019: £1.34 billion) and Investment property under construction £31.5 million (31 December 2019: £33.8 million).

Cash and Rent Recovery

We held the Sterling equivalent of £85.0 million at the period end (31 December 2019: £68.1 million). Due to the Covid-19 crisis, we had postponed any conditional cash outflows within our control, the largest being the final ordinary share distribution for 2019. Rent collection rates have remained high, over 99% of rents due being collected in the six months to 30 June 2020.

In July, 1.21% of rent was subject to deferral agreements and 0.12% given in discounts. All other rent due has been received. Deferrals in August dropped to 0.66% of rent due with a similar outcome on receipts expected. Contracted deferrals for the year total Roubles 119 million with Roubles 87.7 million of that to be collected before the end of the year.

Discounts given on the portfolio will total Roubles 22.8 million for the financial year.

Debt

Net proceeds from re-financings in the period totalled £20.5 million after loan amortisation of £16.2 million. £21.2 million of loans due within one year relate to one project where maturity has been extended for two years since the period end. The majority of the remainder of short term payments relate to standard loan amortisation.

We continue to focus on increasing the Rouble weighting of our debt which at 30 June 2020 was 59% Rouble (31 December 2019: 58%) and Euro 41% (31 December 2019: 42%). The weighted average term to maturity of loans was 4.3 years (31 December 2019: 4.7 years) and the weighted average interest rate in the six months 5.77% (30 June 2019: 7.39%).

The loan to value ratio on secured debt at 30 June 2020 was 54% (31 December 2019: 50%).

Net Asset Value

Diluted Net Asset Value per share at the period end is 58p (31 December 2019: 75p per share). The weak Sterling/Rouble exchange rate is the principal reason for the movement, a translation exchange loss of £54.8 million reducing reserves and the unrealised foreign exchange movement of £23.8 million reducing profit in the period.

Re-designation of Convertible Preference Shares

On 31 July 2020 shareholders approved the re-designation of the Company's convertible preference shares into a ratio of ordinary shares and preference shares. On 30 September 2020, up to 121,046,430 ordinary shares and 115,913,650 preference shares will be admitted to trading. The Company issued a prospectus for the admission of these new shares on 14 July 2020, a copy of which is available on the Company's website, which included a pro forma illustration of the effect of the re-designation on the Company's income statement and balance sheet.

Glyn Hirsch

Chief Executive Officer

31 August 2020

Corporate Governance

Principal risks and uncertainties

The principal risks and uncertainties affecting the Group and how these are mitigated or managed and our approach to risk appetite are set out in the Risk Report on pages 40 to 43 of the Annual Report for the year ended 31 December 2019.

Covid-19

The impact of the pandemic has tested a number of our key controls and has had direct and indirect implications for our business. Our priorities were, and continue to be, the well being of our employees, support for our tenants and stakeholders where required and cash flow management.

The most immediate challenge we faced was our ability to deal with the potential business interruption issues. Our Group structure and management oversight procedures have always been dependent on the remote operation of key controls, underpinned by the appropriate communication, security and support structures. These are used daily by the executive directors, senior management team and other key operational staff. Prior to official lock down, all business travel for the Group, both domestic and international, was cancelled and virtual meeting rooms for all of the operational committees introduced to facilitate home working. Members of the executive and key members of the senior management team had daily virtual meetings to monitor the situation and the wider senior management team met three times a week to ensure Group policies were being followed and adapted as the external environment changed. The various business committees met at least weekly as usual to deal with operational matters and the Risk Committee convened twice during lockdown to assess the changing risks and approve Group policy.

Our warehouse properties have remained in operation throughout the pandemic as a large proportion of our tenants serve the essential retail supply chains. We set up secure space within the sites for the small number of our staff who were required on site, with face to face meetings with tenants restricted. Our tenants also took the appropriate approach to their own employee safety to ensure that they could continue to operate.

As lockdown eases in each jurisdiction we have taken a cautious approach to a return to the various offices. We continue to encourage working from home where appropriate. In the Russian offices, each department is permitted up to half of their team in the office on a two week rotation. If employees want to take advantage of this then we arrange a virus test and confirmation of a negative test must be forwarded to the HR department before entry to the office at the beginning of the week. Similarly, Cyprus can operate with up to half of staff in the office at any time with temperature tests taken before entry. Guernsey is now officially Covid free however staff can continue to work from home if required. A social distancing regime continues in all offices.

Principal Risks

We believe the principal risks faced by the business remain the same as reported in the 2019 Annual Report. The indirect impact of the pandemic has heightened a number of these risks. The oil price crash in March had a knock on effect on the strength of the Rouble but the fact that our warehouses remained operational has dampened the effect of the crisis so far. Having weathered both the 2009 global crisis and the more localised impact of the oil price collapse of 2015/16, which precipitated the Rouble free float, we can point to some positive outcomes that have served us well through the current crisis. We continue to reduce our balance sheet foreign exchange exposure, diminishing the impact of any Rouble volatility on cash flows; we have built cure mechanisms into our financing facilities to manage potential covenant breaches; and all of these crises emphasised the importance of our asset specific financing structure in isolating individual asset issues.

The Group's principal risks are grouped into five categories: Political and Economic; Financial; Property Investment; Russian Domestic; and Personnel. We have illustrated in the table below how we believe that these risks have changed in the six months to 30 June 2020, principally due to the effects of Covid-19.

We continue to monitor our risk profile closely and remain cautious. Uncertainty still prevails in the market place and new outbreaks of the virus can quickly change the business environment.

Going concern

The financial position of the Group, its cash flows, liquidity and borrowings and the impact of Covid-19 are described in the Chief Executive's Review. The changes the pandemic has caused to our business risks are summarised in the Principal Risks and Uncertainties section.

The Board regularly reviews and approves the financial position of the Group with a three year forecast model supporting the Viability Statement in the Annual Report, an updated model for Interim Results, an annual budget with quarterly reforecasts and monthly management information which includes a 12 month rolling cash flow forecast. All of these models include stress testing similar to that applied for the Viability Statement to consider "severe but credible scenarios". In addition, this year, a full working capital exercise was undertaken in support of the Prospectus issued to shareholders on 14 July 2020 for the re-designation of the Company's convertible preference shares. The working capital model and sensitivities applied, including those relevant to Covid-19, were reviewed by Ernst and Young and our broker, Nplus1 Singer to confirm the working capital statement made by the directors in the prospectus.

In assessing going concern and the impact of Covid-19 the directors have considered:

- The high level of rent collections during lockdown and subsequently;

- Finance facility covenant headroom after applying sensitivities;

- The potential impact on speculative warehouse letting income should demand decline;

- The maturity profile of existing finance facilities;

- The continued availability of bank financing in the market; and

- The results of the independent portfolio valuations undertaken this year.

Having made the appropriate enquiries and examining major areas that could give rise to significant uncertainty and financial exposure, including the uncertainties arising from the pandemic, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue its operations for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in the preparation of the accompanying interim financial statements.

Directors' Responsibility Statement

The Board confirms to the best of its knowledge:

The condensed financial statements have been prepared in accordance with IAS 34 as adopted by the European Union, and that the half year report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

The names and functions of the Directors of Raven Property Group Limited are disclosed in the 2019 Annual Report of the Group.

This responsibility statement was approved by the Board of Directors on the 31 August 2020 and is signed on its behalf by

Mark Sinclair Colin Smith

Chief Financial Officer Chief Operating Officer

INDEPENDENT REVIEW REPORT TO RAVEN PROPERTY GROUP LIMITED

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2020 which comprises the Condensed Unaudited Group Income Statement, the Condensed Unaudited Group Statement of Comprehensive Income, the Condensed Unaudited Group Balance Sheet, the Condensed Unaudited Group Statement of Changes in Equity, the Condensed Unaudited Group Cash Flow Statement and the related notes 1 to 19. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

31 August 2020