Half-year Report

27 August 2019

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

2019 Interim Results

Raven today announces its unaudited results for the six months ended 30 June 2019.

Highlights

·; Net operating income of £64.3 million for the six months to 30 June 2019 (30 June 2018: £57.6 million);

·; Average occupancy of 90% for the period (30 June 2018: 84%);

·; Basic underlying earnings per share 5.31p (30 June 2018: 0.67p);

·; IFRS profit for the period of £26.2 million (30 June 2018: loss of £28.8 million);

·; Diluted net asset value per share increases by 40% to 67p (31 December 2018: 48p);

·; 14.8% of the Company's ordinary shares purchased for 36p per share and cancelled on 21 August 2019;

·; On a proforma basis, this increases net asset value per share by a further 5p;

·; Proposed distribution of 1.25p per ordinary share by way of a tender offer buy back of 1 in 44 shares at 55p.

Glyn Hirsch CEO said "We are pleased with these results which reflect steadily improving market conditions and finally, some currency movements working in our favour. "

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

I am pleased to report that it has been a positive six months trading for the Group. Average occupancy in our warehouse portfolio ran at 90% compared to 84% in the same period last year, boosting our net rental and related income. Today we are 90% let with a further 2% of vacant space subject to letters of intent.

Our balance sheet too continues to adapt to match our income profile. Secured debt today is 37% Rouble denominated and 52% Euro with two US Dollar denominated facilities remaining. We expect to refinance the last of those US Dollar facilities before the year end and there to be a continuing increase in Rouble weighting as we convert Euro debt. Should the Russian Central Bank continue to ease interest rates then that will accelerate the transition to Roubles.

We have seen a significant improvement in our net asset value per share since the year end, increasing from 48p to 67p as the Rouble strengthened and asset valuations continued to improve.

The threat of increased US sanctions against Russia and the effect of the current trade war tensions on the oil price have dampened the strength of the Rouble since 30 June but without exposure to US Dollar liabilities the immediate impact of events such as these on our balance sheet has been significantly reduced. With Brexit weighing heavily on the UK, the Rouble remains strong against Sterling compared to the position at 31 December 2018.

We have completed the buy back and cancellation of 14.8% of our ordinary shares following the various ordinary shareholder and preference shareholder votes on 20 August 2019. This also supports a strengthening of our net asset value per share. It does, however, mean that Woodford Investment Management is no longer a stakeholder in our business. Neil Woodford has been a staunch supporter of Raven and we thank him for that support.

We intend to pay an interim distribution of 1.25p by way of tender offer buy back in the usual manner, with 1 in 44 shares being purchased at 55p.

Richard Jewson

Chairman

26 August 2019

Chief Executive's Review

Dear shareholders

The first half of the year has shown a continuing improvement in our market. Tenant demand is good and rents are increasing as Russian Central Bank rates ("CBR") continue to fall and there are early signs of yield compression too.

We have let 115,002sqm of space in the first six months of the year at steadily improving rents. Today, prime Moscow dry warehouse rents have increased to Roubles 4,100 per sqm. With average annual indexation of 5.9% these levels are more attractive than they have been for a while.

We have continued to work on the liability side of our balance sheet and have only two US Dollar debt facilities remaining. Both of these will be converted to a Rouble/Euro mix before the year end.

There has also been a significant change in our shareholder register following the well publicised events at Woodford Investment Management ("WIM"). The opportunity to purchase the WIM ordinary shares for cancellation at a significant discount to net asset value was too good to miss and on a proforma basis, would result in a further 5p increase in net asset value per share. It is disappointing to see one of our longest standing supporters withdraw but life goes on. The WIM holding of convertible and irredeemable preference shares were placed with over 35 institutions.

With the reduced number of 511 million ordinary shares now in issue we should see more benefit in any upward valuation or distribution.

Property Update

At 30 June 2019, our warehouse portfolio comprised 1.89 million sqm and our office portfolio, 49,000sqm of space. Average occupancy for the six months ran at 90% compared to 84% for the same period last year. Today, occupancy levels hold at 90% with a further 2% of vacant space subject to letters of intent ("LOIs").

Warehouse Portfolio

New warehouse lettings in the six months to 30 June 2019 totaled 115,002sqm with a further 91,584sqm of existing leases renegotiated and extended. Tenants vacated 119,812sqm of space including one major tenant vacating 91,284sqm at the end of June.

As at 30 June 2019 we had 140,114sqm of warehouse leases maturing in the second half of the year and 71,644sqm of potential lease breaks. Of those, we expect 46,652sqm of maturing tenants and 4,760sqm of breaks to vacate before the year end.

Since the period end, we have let 19,562sqm of vacant warehouse space and renegotiated and extended 31,818sqm of maturing leases. A further 38,713sqm of vacant space and 109,383sqm of negotiations on currently let space are subject to LOIs.

Prime Moscow warehouse rents are in the range Roubles 3,800 to 4,100 per sqm today as compared to Roubles 3,800 to 4,000 per sqm at the end of 2018. Prime yields remain in the range 10.75% to 12.25%.

Currency Mix

Rouble denominated leases accounted for 67% (31 December 2018: 61%) of the total warehouse space at the period end and US Dollar leases 19% (31 December 2018: 26%). The average Rouble rent was 5,118 per sqm (31 December 2018: 4,900 per sqm) and the average US Dollar rent was $147 per sqm (31 December 2018: $148 per sqm). Rouble denominated leases had a weighted average term to maturity of 4.2 years (31 December 2018: 4.5 years) and US Dollar leases 2.2 years (31 December 2018: 2.1 years).

Office Portfolio

Our St Petersburg office portfolio has seen significant changes in tenancy as a result of known lease expiries, but overall performance is satisfactory with rents continuing to increase. In the year to date, we have let 11,530sqm of vacant space with maturities of 10,171sqm vacating, including a single tenant from 6,936sqm. Average Rouble rents at the period end were Roubles 14,207 per sqm (31 December 2018: 13,997 per sqm).

Results

Underlying Earnings

Improving average occupancy, increasing to 90% from 84% for the same period last year, together with revenue generated from the 123,200sqm of acquisitions completed in the second half of last year supported net rental and related income of £64.3 million for the six months (30 June 2018: £57.6 million). Underlying earnings before foreign exchange profits were £13.4 million (30 June 2018: £8.6 million) and £32.4 million (30 June 2018: £4.4 million) after foreign exchange movements. The recovery of the Rouble from the weak position at the end of 2018 generated foreign exchange gains of £18.9 million in the income statement (30 June 2018: loss of £4.2 million).

IFRS Earnings

An IFRS profit of £26.2 million (30 June 2018: loss of £28.8 million) includes a profit on the revaluation of property of £18.2 million (30 June 2018: loss of £26.1 million) reflecting the continuing improvement in ERV's and yields. This was offset by mark to market losses on interest caps of £13.9 million (30 June 2018: profit of £2.6 million), principally on CBR caps taken out towards the end of 2018, the movement indicative of the positive outlook for further CBR cuts.

Net Asset Value

Our net asset value has made a marked recovery from the year end, our property asset values increasing both in Rouble terms and on translation to Sterling when compared to the very weak Rouble position at 31 December 2018. From a Sterling/Rouble rate of 88.4 at the year end the Rouble strengthened to 79.9 at 30 June 2019, the latter being close to the three year average of 80. This resulted in an increase of £129.3 million on the equivalent Sterling value of our properties.

Diluted, Net Asset Value per share of 67p at 30 June 2019 is a 40% increase on the year end value of 48p.

Financing 

The transition of our secured finance facilities to a Rouble/Euro blend continues. Today, of the £677 million (31 December 2018: £643 million) secured debt, 37% (31 December 2018: 31%) is Rouble denominated, 52% (31 December 2018: 35%) Euro denominated and 11% (31 December 2018: 34%) US Dollar denominated. We are currently engaged in extending £122 million of facilities, including the near term maturities, and converting another 8% into Rouble facilities. We do not expect to hold any US Dollar denominated debt at the year end.

Our blended cost of debt is 7.39% (31 December 2018: 7.69%), the weighted average term to maturity 3.6 years (31 December 2018: 4.0 years) and all facilities have floating rate interest hedged with interest caps. The secured debt loan to value ratio at 30 June 2019 was 50.0% (31 December 2018: 53.3%).

Cash flow

Cash balances are slightly up on the year end at £83 million (31 December 2018: £73 million), with a small cash inflow in the six months before the effect of the strengthening Rouble.

Share Buy Back

Following the EGM held on 20 August, the Company purchased 89,144,978 of its ordinary shares, representing 14.8% of the shares in issue, for 36p per share. This represents a significant discount to the Company's net asset value per share. The shares have now been cancelled and, on a proforma basis, this would add a further 5p to the Company's basic net asset value per share as at 30 June 2019.

Tender offer

We are proposing a distribution of the equivalent of 1.25p per ordinary share by way of tender offer buy back of 1 in 44 shares at 55p (30 June 2018: 1.25p by way of an offer of 1 in 44 shares at 55p).

Glyn Hirsch

Chief Executive Officer

26 August 2019

Corporate Governance

Principal risks and uncertainties

Internal controls and an effective risk management regime are integral to the Group's continued operation. The assessment of risks faced by the Group, together with their potential impact and possible mitigating actions, is set out in the Risk Report on pages 40 to 43 of the Group's 2018 Annual Report. These risks fall into five main categories: political and economic risk; financial risk; property investment; Russian domestic risk; and personnel risk.

Having reviewed the principal risks and uncertainties for the Group in relation to the first half of 2019, the Board believes that these have remained consistent with those presented in the 2018 Annual Report.

Going concern

The financial position of the Group, its cash flows, liquidity and borrowings are described in the Chief Executive's Review and the accompanying financial statements and related notes. During the period the Group had, and continues to hold, substantial cash and short term deposits and is generating underlying profits. As a consequence, the Directors believe the Group is well placed to manage its business risks.

After making enquiries and examining major areas that could give rise to significant financial exposure, 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 2018 Annual Report of the Group.

This responsibility statement was approved by the Board of Directors on the 26 August 2019 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 2019 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 20. 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 2410 (UK and Ireland) "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 2019 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

26 August 2019