RAVEN PROPERTY GROUP LIMITED 2019 Annual Report 3 RAVEN PROPERTY GROUP LIMITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019 CONTENTS PAGE Results Highlights 4 Chairman’s Message 5 The Portfolio 6 STRATEGIC REPORT Chief Executive’s Report 28 Business Model 29 Portfolio Review 30 Finance Review 35 Risk Report 40 Viability Statement 44 GOVERNANCE REPORT Directors 45 Corporate Governance 46 Corporate Responsibility 52 Letter from the Remuneration Committee 54 Directors’ Remuneration Report 56 Audit Committee Report 60 Directors’ Report 64 Independent Auditor’s Report 67 FINANCIAL STATEMENTS Group Income Statement 74 Group Statement of Comprehensive Income 75 Group Balance Sheet 76 Group Statement of Changes in Equity 79 Group Cash Flow Statement 80 Notes to the Financial Statements 82 Advisers 119 Enquiries 120 RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 4 RESULTS HIGHLIGHTS NET OPERATING UNDERLYING EARNINGS IFRS EARNINGS INCOME AFTER TAX AFTER TAX £126.5 MILLION £43.2 MILLION £46.0 MILLION BASIC EARNINGS DILUTED NAV PORTFOLIO PER SHARE PER SHARE OCCUPANCY TODAY 8.16 PENCE 75 PENCE 92% INVESTMENT PROPERTY CASH BALANCES VALUATION TODAY OF £1.34 BILLION £104.4 MILLION RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 5 CHAIRMAN’S MESSAGE I am pleased to report that, in the 12 months to 31 December 2019, we have enjoyed a strengthening in all aspects of our business. High average occupancy, improving asset valuations, increasing market rents, reducing Central Bank rates and stable average Rouble exchange rates in 2019 have all contributed to improved results. Together, they have supported an increase in underlying earnings to £43.2 million (2018: £20.0 million), a significant swing in IFRS earnings to £46.0 million (2018: loss of £120.7 million) and a jump in basic net asset value per share from 48p at the end of 2018 to 76p at 31 December 2019. As you will read in this Annual Report, the executive team focus in the last 12 months has been diverted to deal with shareholder issues. We have purchased and contracted to purchase 38% of our ordinary shares from our two largest institutional holders. It has been a distracting and stressful period for our senior executive team, but the enhancements are well worth the effort and I’d like to congratulate them all on their determination to secure these transactions. As I write, the issues with Coronavirus are on all personal and business agendas. This has now been exacerbated by the oil price crash and the impact that has had on Rouble exchange rates. We have agreed an extension to the back stop date to acquire our shares from Invesco as a direct consequence of this. We have yet to see any tangible effect on our trading operations but we are progressing with caution. As we continue with our Board succession planning, I am sorry to say that Christopher Sherwell will be stepping down as a Non Executive Director at the AGM. Christopher has been an exemplary Senior Independent Director and Chair of the Remuneration Committee and will be missed. We are actively searching for new members of the non executive team and hope to make an announcement soon. All in all, a good year but with mixed emotions on the loss of two long term shareholders and supporters of the Company and we will continue into 2020 with a cautious approach given the wider issues in play today. Sir Richard Jewson Chairman 15 March 2020 RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 6 THE PORTFOLIO RUSSIAN FEDERATION INVESTMENT PROPERTY LAND BANK ST PETERSBURG MOSCOW NIZHNY NOVGOROD ROSTOV-ON-DON OMSK NOVOSIBIRSK RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 7 RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT KAD KAD M10 KAD 8 THE PORTFOLIO Moscow SEVER LOBNYA SHOLOKHOVO PUSHKINO SHEREMETIEVO AIRPORT ISTRA NOGINSK NOVA RIGA KREKSHINO SOUTHERN VNUKOVO AIRPORT DOMODEDOVO AIRPORT KLIMOVSK Warehouse Office RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 9 THE PORTFOLIO St Petersburg KAD KAD M10 PRIMIUM KELLERMANN KONSTANTA KAD SHUSHARY PULKOVO GORIGO PULKOVO AIRPORT Warehouse Office RAVEN PROPERTY GROUP LIMITED 2019 ANNUAL REPORT 10 WAREHOUSE Sever, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 254,000 sqm KEY TENANTS LOCATION • X5 Retail Group The property is located north of • R-Pharm Moscow city centre, 35km from the • OBI MKAD, 0.5km from the Betonka A107 • Miratorg motorway and 1.5km from the new • O’Key Moscow-St Petersburg toll highway. • Major Terminal • Zara 11 WAREHOUSE Pushkino, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 214,000 sqm KEY TENANTS LOCATION • DHL The property is located on the • Itella Yaroslavskoe Highway, approximately • Makita 15km from the MKAD in the • Megapolis northeastern part of Moscow Region. • Axioma • Perrino 12 WAREHOUSE Istra, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 206,000 sqm KEY TENANTS LOCATION • DSV Solutions The property is directly adjacent to • Azbuka Vkusa the Nova Riga highway, approximately • Major Terminal 50km from Moscow city centre, 41km • Santens from the MKAD and 8km from the • Bacardi Betonka A107 motorway. • Kerry • Splat • Amway 13 WAREHOUSE Noginsk, Moscow DESCRIPTION GLA Grade A Logistics Warehouse 204,000 sqm Complex with 26ha of land suitable LOCATION for construction The property is located approximately KEY TENANTS 55km from the city centre, 44km from • X5 Retail Group the MKAD and 3km from the Betonka • Dixy A107 motorway. Access is from the • Cotton Club Volga highway, which links Moscow • ID Logistics to Nizhny Novgorod. A rail spur serves • UPM the site. • Roto Frank 14 WAREHOUSE Klimovsk, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 158,000 sqm KEY TENANTS LOCATION • Kupi VIP The property is located to the south • Marvel of Moscow, approximately 21km from • Danone the MKAD in the town of Klimovsk. • FARM The project is a short distance from the • Mir Instrumenta M2 Simferopolskoye highway, a major • AccordPost route to the south of Moscow. • Gates • Fischer Clinical • Rhenus Automotive 15 WAREHOUSE Shushary, St Petersburg DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located in the Shushary District of St. Petersburg, KEY TENANTS approximately 15km south of the city • RosLogistics centre and 5km from the St Petersburg • Dixy ring road (KAD) on a motorway linking • Officemag Sbp St. Petersburg to Moscow, close to • Bbraun Pulkovo International airport. • Amway GLA 148,000 sqm 16 WAREHOUSE Novosibirsk DESCRIPTION GLA Grade A Logistics Warehouse Complex 121,000 sqm KEY TENANTS LOCATION • Pepsi The property is located on Petukhova • Sportmaster Street in the south of the city of • OSG Novosibirsk, close to the M51 highway • Metro to Moscow, with a rail spur serving • Oriflame the site. • Toyota • FM Logistics • Wildberries • Ozon 17 WAREHOUSE Krekshino, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located in Moscow about 40km to the south west of the KEY TENANTS city centre, 24km from the MKAD, • Gorenje between the Minsk and Kiev highways. • Simple Wines Vnukovo airport, one of the largest • Diageo airports in Moscow, is located within GLA 15km of the complex. 118,000 sqm 18 WAREHOUSE Rostov-on-Don DESCRIPTION GLA Grade A Logistics Warehouse Complex 102,000 sqm with 27ha of land suitable for construction LOCATION KEY TENANTS The scheme is located on the Federal • Auchan Highway M4 to Moscow, approximately • Electrosystem 10km from the city centre and 7km • Mars from the airport. • KDV Group • Mir Instrumenta • Mobis Parts CIS • FM Logistics • Havi Logistics 19 WAREHOUSE Gorigo, St Petersburg DESCRIPTION GLA Grade A Logistics Warehouse Complex 88,000 sqm KEY TENANTS LOCATION • DB Schenker The property is located south of • Logisan St Petersburg close to Pulkovo • DNS Retail International Airport, just 2 km away • Major Terminal from the Ring Road and Tallin highway, • 220 Volt which provides easy access to the city. • KDV Group • Kiilto • Greenland 20 WAREHOUSE Nova Riga, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse The property is directly adjacent to Complex with 25ha of land suitable the Nova Riga highway allowing easy for construction access to the centre of Moscow, 25km from the MKAD and 5km from the KEY TENANTS Betonka A107 motorway. • Pernod Ricard • Maunsfeld • BGLC Group • ORB GLA 68,000 sqm 21 WAREHOUSE Volga, Nizhny Novgorod DESCRIPTION LOCATION Grade A warehouse complex with Volga Logistics Park is located on additional 21.5ha of land 33 ha land plot 7 km away from Nizhny Novgorod in Kstovo town. KEY TENANT There is a direct access provided • X5 Retail Group from the complex to M7 highway • Bristol Alcohol (Moscow-Kazan). GLA 64,000 sqm 22 WAREHOUSE Lobnya, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located on the Rogachevckoe highway approximately KEY TENANTS 35km to the north of the Moscow • Nippon Express city centre, 20km from the MKAD and • RosLogistics 10km north-east of Sheremetyevo • ProStore airport. GLA 52,000 sqm 23 WAREHOUSE Sholokhovo, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located in Myitischensky District of the Moscow KEY TENANT Region, on the Dmitrovskoe highway, • BVK Group approximately 16km from the MKAD, • Perspektiva and 15km from Sheremetyevo airport. • Godovalov GLA 45,000 sqm 24 WAREHOUSE Pulkovo, St Petersburg DESCRIPTION GLA Grade A Logistics Warehouse Complex 37,000 sqm KEY TENANTS LOCATION • SKL Group The property is located to the south of the city centre on Pulkovskoe highway forming part of • OSG the Finland-Russia-Ukraine corridor and in close proximity to the Ring Road (KAD) and 2km • UPM from Pulkovo International airport. • Melon Fashion Group • Holodilnik.ru Southern, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 14,000 sqm KEY TENANTS LOCATION • Lindex The property is located in an industrial area of the Southern administrative district of • A&D Rus Moscow, approximately 10km from the city centre, around 1km from the Varshavskoye • L’Occitane highway and 5km from the MKAD.