Foresight Sustain. - Completion of three acquisitions

Foresight Sustainable Forestry

30/03/2023 07:00

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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 £9.9 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         +44 20 3667 8100

 Robert Guest

 Richard Kelly

 fsfc@foresightgroup.eu

 Jefferies International Limited                    +44 20 7029 8000

 Tom Yeadon

 Will Soutar

 Citigate Dewe Rogerson

 Toby Moore (toby.moore@citigatedewerogerson.com)   +44 7768 981763

 

Appendix - Acquisition information

 

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