Foresight Sustain. Forestry Co PLC Completion of three acquisitions (6969U)

TIDMFSF

RNS Number : 6969U

Foresight Sustain. Forestry Co PLC

30 March 2023

30 March 2023

Foresight Sustainable Forestry Company Plc

Completion of three acquisitions and operational update

Foresight Sustainable Forestry Company Plc ("FSF", "the Company"), an investment company that invests in UK forestry and afforestation assets, today announces three acquisitions and provides an operational update.

New acquisitions

During March 2023, the Company deployed a further GBP9.9 million (inclusive of tax and transaction costs) into three properties in Scotland:

 
 --   Newnoth Farm : This asset has strong afforestation potential 
       and is directly adjacent to Newnoth Forest, an existing mature 
       forestry property within the portfolio. Together, these properties 
       create a combined area of circa 234 hectares. 
 --   Balnagowan: Neighbouring the Company's existing asset Coull Woodlands, 
       this is a mature forest which creates an aggregate property area 
       of circa 461 hectares when combined with Coull Woodlands. 
 --   High Auldgirth : This is a sizeable property in its own right 
       (circa 288 hectares) with existing forestry on circa 60% of the 
       land and the remaining area having excellent afforestation potential. 
 

The combination of properties at both Newnoth Farm and Balnagowan has the potential for operational efficiencies and marriage value for the Company.

The acquisitions have been funded from cash on the balance sheet and to date the Company has not utilised its Revolving Credit Facility ("RCF") although it expects to draw on the facility soon for planned capital expenditure. The Company's intention is to minimise exposure to interest charges whilst also retaining a sufficient cash buffer.

Following these acquisitions, FSF's portfolio now covers a total area of 11,743 hectares across 65 properties. The current breakdown of the portfolio, post the acquisitions above, is shown below:

 
 Development Stage Afforestation Assets 
  (Hectares*)                                       3,430 
 Planting Stage Afforestation Assets (Hectares*)    426 
                                                   ------- 
 Establishment Stage Afforestation Assets 
  (Hectares*)                                       264 
                                                   ------- 
 Established Forest Assets (Hectares*)              5,772 
                                                   ------- 
 Other Land (Hectares**)                            1,851 
                                                   ------- 
 Total (Hectares)                                   11,743 
                                                   ------- 
 

Definitions

Development Stage Afforestation Assets - Land prior to the securing of planning permission and grant application.

Planting Stage Afforestation Assets - Planning permission and grant application completed but initial planting of trees not yet completed.

Establishment Stage Afforestation Assets - Initial planting of site completed but trees establishing and stabilising (typically a 3-5 year period).

Established Forests Assets - Trees stabilised and established.

* Hectares within woodland creation scheme boundary or managed forest area boundary.

** Hectares not within woodland creation scheme boundary or managed forest boundary. This Other Land is held as part of the core Forestry Assets allocation and can accompany both Afforestation and Established Forest Assets.

Planting Stage Afforestation Projects update

The Company is pleased to report that planting activities on Auchensoul, Redding Farm, Upper Bar and Frongoch have all commenced, with planting expected to be completed imminently.

All schemes are registered with the UK Land Carbon Registry and the Woodland Carbon Code ("WCC") and once planting is complete, the process for full accreditation and award of carbon units by the WCC can take place.

These schemes will contribute to the Welsh and Scottish governments' annual planting targets. The Scottish Government has set particularly ambitious targets for afforestation and is currently targeting at least 12,000 hectares planted per year, increasing to 18,000 hectares per year from March 2024 through to 2030.

IPO target achieved with dual FSC and PEFC accreditations secured

Following recent accreditations secured across the portfolio, the Company is delighted to announce that it has achieved its IPO target of having all its eligible commercial forestry projects secure dual Forest Stewardship Council ("FSC") and Programme for the Endorsement of Forest Certification ("PEFC") accreditation within twelve months of acquisition or planting completion.

Trading Update

The Company expects to provide a further trading and NAV update in May 2023, following an independent valuation of the portfolio using the Royal Institute of Chartered Surveyors ("RICS") Red Book valuation methodology for the period to 31 March 2023.

Robert Guest, Co-Head of Foresight Sustainable Forestry Company, said:

"We are delighted to have added three new properties to the portfolio and to be nearing completion of planting on four of our afforestation sites. This adds to our track record of securing attractive acquisition opportunities for FSF and demonstrates our continued ability to deliver progress on the afforestation development pipeline. Reaching the Establishment Stage is a major milestone for Afforestation Assets, as by this point planning permission and grant funding are secured and the Planting Stage has been completed which means the asset is materially de-risked and therefore more valuable."

Richard Kelly, Co-Head of Foresight Sustainable Forestry Company, added:

"In our IPO objectives, and as part of our proprietary silvicultural management approach, we outlined that FSF would seek to secure and continuously maintain dual FSC and PEFC certification on all FSF forests within 12 months of acquisition, to significantly raise the industry bar on truly sustainable forest management practices. This achievement represents the delivery of another significant Company milestone. The certifications attest to the priority we place on sustainable forest management and FSF's role as a responsible custodian of local ecosystems and the wider sustainable timber industry."

For further information, please contact:

 
         Foresight Sustainable Forestry Company Plc 
          Robert Guest 
          Richard Kelly 
          [e-mail]                                      [phone] 
         Jefferies International Limited 
          Tom Yeadon 
          Will Soutar                                                 [phone] 
         Citigate Dewe Rogerson 
          Toby Moore ([e-mail])              [phone] 
 

Appendix - Acquisition information

 
 Name              Acquisition       Location          Asset Type       Acquisition      Size of asset   Anticipated 
                   date                                                 cost             (hectares)      sequestration 
                                                                        (including tax                   of additional 
                                                                        and other                        CO(2) 
                                                                        transaction                      equivalent 
                                                                        costs, GBPm)                     (tonnes) 
                                     Aberdeenshire, 
 Balnagowan        20/03/2023         Scotland         Forestry         0.86             90                   - - 
                  ----------------  ----------------  ---------------  ---------------  --------------  -------------- 
                                     Aberdeenshire, 
 Newnoth Farm      10/03/2023         Scotland         Afforestation    1.90             154             27,433 
                  ----------------  ----------------  ---------------  ---------------  --------------  -------------- 
                                     Dumfries & 
                                      Galloway, 
 High Auldgirth    03/02/2023         Scotland         Mixed            7.10             287             25,000 
                  ----------------  ----------------  ---------------  ---------------  --------------  -------------- 
 

About the Company

Foresight Sustainable Forestry Company Plc ("the Company") is an externally managed investment company investing in a diversified portfolio of UK forestry and afforestation assets.

Targeting a net total return of more than CPI +5%, the Company provides investors with the opportunity for real returns and capital appreciation driven by the prevailing global imbalance between supply and demand for timber; the inflation-protection qualities of UK land freeholds; and biological tree growth of 3% to 4% not correlated to financial markets.

The Company also offers outstanding sustainability and ESG attributes and access to carbon units related to carbon sequestration from new afforestation planting.

The Company targets value creation as the afforestation projects successfully achieve development milestones in the process of converting open ground into established commercial forest and woodland areas.

The Company is seeking to make a direct contribution in the fight against climate change through forestry and afforestation carbon sequestration initiatives and to preserve and proactively enhance natural capital and biodiversity across its portfolio.

The Company is managed by Foresight Group LLP. https://fsfc.foresightgroup.eu/

Notes

This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description, or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase securities in the Company.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will", "targeting" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.

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