RAVEN RUSSIA LIMITED 2017 Annual Report 3 RAVEN RUSSIA LIMITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017 CONTENTS PAGE Results Highlights 4 Chairman’s Message 5 The Portfolio 6 STRATEGIC REPORT Chief Executive’s Report 26 Business Model 27 Portfolio Review 28 Finance Review 33 Risk Report 37 Viability Statement 41 GOVERNANCE REPORT Directors 42 Corporate Governance 43 Corporate Responsibility 48 Letter from the Remuneration Committee 50 Directors’ Remuneration Report 53 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 121 Enquiries 122 RAVEN RUSSIA LIMITED 2017 ANNUAL REPORT 4 RESULTS HIGHLIGHTS IFRS PROFIT UNDERLYING EARNINGS BASIC UNDERLYING AFTER TAX AFTER TAX OF EARNINGS PER SHARE $57.7 MILLION $56.8 MILLION 8.56 CENTS IFRS BASIC EARNINGS YEAR END DILUTED NET ASSET PER SHARE CASH BALANCE OF VALUE PER SHARE 8.69 CENTS $266.7 MILLION 80 CENTS DISTRIBUTION PER INVESTMENT $209 MILLION ORDINARY SHARE PROPERTY VALUE OF ACQUISITIONS FOR THE YEAR COMPLETED $1.6 BILLION IN THE YEAR 4 PENCE RAVEN RUSSIA LIMITED 2017 ANNUAL REPORT 5 CHAIRMAN’S MESSAGE I am delighted to report that the results for the year have exceeded our expectations and that we are achieving our objective of an acquisition driven business model. In addition, and through a doggedly tenacious approach to planning, we have won various planning consents on our legacy UK land bank and achieved large gains which have added further gloss to the year. I take this opportunity to applaud the executive team for their hard efforts in this regard. We were successful in completing two acquisition projects in the year, an office portfolio and a warehouse in St Petersburg in April and a large logistics complex in Moscow in November. Consideration for the acquisitions totalled $209 million and should generate a minimum of $24 million of net operating income (“NOI”) in the current year. The acquisitions were part funded by a second issue of convertible preference shares in July 2017, raising $126 million. With significant cash reserves and the potential to secure finance on the last acquisition, we are actively pursuing further income producing acquisitions in a number of different asset classes. Underlying earnings have increased to $56.8 million (2016: $47.1 million) and basic underlying earnings per share to 8.56 cents (2016: 7.17 cents). With a revaluation gain of $38.2 million (2016: loss of $43.3 million), the first gain in our portfolio values since 2013, our IFRS earnings increased to $57.7 million (2016: $7.7 million) and diluted net asset value per share to 80 cents (2017: 71 cents). We are proposing a final distribution of 3p, paid by way of a tender offer buy back of 1 share in every 17 at 52p. This will give a total distribution of 4p for the year. We are again extremely grateful for the continued support of our shareholders over the last twelve months. Richard Jewson Chairman 11 March 2018 RAVEN RUSSIA LIMITED 2017 ANNUAL REPORT 6 THE PORTFOLIO RUSSIAN FEDERATION INVESTMENT PROPERTY LAND BANK ST PETERSBURG MOSCOW NIZHNIY NOVGOROD ROSTOV-ON-DON UFA OMSK NOVOSIBIRSK RAVEN RUSSIA LIMITED 2017 ANNUAL REPORT 7 RAVEN RUSSIA LIMITED 2017 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 RUSSIA LIMITED 2017 ANNUAL REPORT 9 THE PORTFOLIO St Petersburg KAD KAD M10 PRIMIUM KELLERMANN KONSTANTA KAD SHUSHARY PULKOVO GORIGO PULKOVO AIRPORT Warehouse Office RAVEN RUSSIA LIMITED 2017 ANNUAL REPORT 10 WAREHOUSE Pushkino, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located on the Yaroslavskoe Highway, approximately KEY TENANTS 15km from the MKAD in the • DHL northeastern part of Moscow Region. • Itella • Makita • Megapolis GLA 214,500 sq m 11 WAREHOUSE Istra, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is directly adjacent to the Nova Riga highway, approximately KEY TENANTS 50km from Moscow city centre, 41km • DSV Solutions from the MKAD and 8km from the • Azbuka Vkusa Betonka A107 motorway. • Major Terminal • Danom • Bacardi GLA 206,000 sq m 12 WAREHOUSE Noginsk, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse The property is located approximately Complex with 26ha of land suitable 55km from the city centre, 44km from for construction the MKAD and 3km from the Betonka A107 motorway. Access is from the KEY TENANTS Volga highway, which links Moscow to • X5 Retail Group Nizhniy Novgorod. A rail spur serves • Dixy the site. • Sportmaster • ID Logistics GLA 203,800 sq m 13 WAREHOUSE Sever, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located north of Moscow city centre, 35km from the KEY TENANTS MKAD, 0.5km from the Betonka A107 • R-Pharm motorway and 1.5km from the new • OBI Moscow-St Petersburg toll highway. • Miratorg • O’Key • Major Terminal GLA 195,000 sq m 14 WAREHOUSE Klimovsk, Moscow DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located to the south of Moscow, approximately 21km from KEY TENANTS the MKAD in the town of Klimovsk. • Danone The project is a short distance from the • Private Trade (Kupi VIP) M2 Simferopolskoye highway, a major • TM Project (Marvel) route to the south of Moscow. • Gradient • FARM GLA 157,600 sqm 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 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 121,300 sq m KEY TENANTS LOCATION • Pepsi The property is located on Petukhova • Sportmaster Street in the south of the city of • Wildberries Novosibirsk, close to the M51 highway • Roust Russia to Moscow, with a rail spur serving • Elektrosystem the site. • OSG • Metro 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, • Itella between the Minsk and Kiev highways. • Gorenje Vnukovo airport, one of the largest • S-Import airports in Moscow, is located within GLA 15km of the complex. 117,900 sq m 18 WAREHOUSE Rostov-on-Don DESCRIPTION GLA Grade A Logistics Warehouse 101,200 sq m Complex with 27ha of land suitable LOCATION for construction The scheme is located on the Federal KEY TENANTS Highway M4 to Moscow, approximately • Auchan 10km from the city centre and 7km • Elektrosystem from the airport. • Mars • Mir Instrumenta • Mobis Parts CIS • Tarkett 19 WAREHOUSE Gorigo, St Petersburg DESCRIPTION LOCATION Grade A Logistics Warehouse Complex The property is located south of St Petersburg close to Pulkovo KEY TENANTS International Airport, just 2 km away • DB Schenker from the Ring Road and Tallin highway, • Simba Toys which provides easy access to the city. • Orimi GLA 84,800 sq m 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 • McKenzie • Vadan GLA 67,600 sq m 21 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 GLA airport. 52,500 sq m 22 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, • RosLogistics approximately 16km from the MKAD, GLA and 15km from Sheremetyevo airport. 45,300 sq m 23 WAREHOUSE Pulkovo, St Petersburg DESCRIPTION GLA Grade A Logistics Warehouse Complex 36,800 sq m KEY TENANTS LOCATION • SKL 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 • Edil Import from Pulkovo International airport. • UPM Southern, Moscow DESCRIPTION GLA Grade A Logistics Warehouse Complex 14,100 sq m 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. • Stomatorg 24 OFFICE Kellermann, St Petersburg DESCRIPTION LOCATION High quality Office Complex The property is located in historical centre of St Petersburg in KEY TENANTS Admiralteyskiy district, 15 min drive • Oracle Development from the Nevskiy prospect. • Baltiyskiy Leasing • Melon Fashion • MAERSK GLA 21,600 sq m 25 OFFICE Primium, St Petersburg DESCRIPTION LOCATION Class A Office Complex The property is located north-west of St Petersburg in Primorskiy district, close to the new Gazprom headquarters. KEY TENANT • YIT GLA 11,100 sq m Konstanta, St Petersburg DESCRIPTION LOCATION Grade B+ office building The Konstanta office is located on Leninsky Prospekt in the Moskovskiy district of St. Petersburg, approximately 8km to the south of the city centre. The property is a modernised administrative KEY TENANT building, which was converted in 2005 to provide an eight storey, self contained office building • LenEnergo for Lenenergo.