Foresight Sustain. - Update on Seed Portfolio Transaction and Banc Farm

Foresight Sustainable Forestry

25/01/2022 07:00

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RNS Number : 4545Z  Foresight Sustain. Forestry Co PLC  25 January 2022

 

25 January 2022

 

Foresight Sustainable Forestry Company Plc

 

Update on Seed Portfolio Transaction and confirmation that planting has
commenced at Banc Farm

 

Foresight Sustainable Forestry Company Plc ("FSF", "the Company"), an
investment company that invests in UK forestry and afforestation assets, today
announces updates on its asset prioritisation and acquisition sequencing
exercise (as referenced in FSF's RNS announcement of 6 December 2021) and on
its Banc Farm afforestation scheme.

 

Seed assets portfolio

 

The Company is pleased to confirm that it has agreed a variation to the option
agreement to acquire from Foresight Inheritance Tax Fund a seed assets
portfolio. The prioritisation exercise will have the net result of increasing
the allocation, by value, of afforestation assets from 27% to 34%, closer
towards the Company's target afforestation allocation of 40-50%. The
established forestry assets in the revised seed assets portfolio provide
useful cash flow generation for the Company during the establishment stage of
the business and the revised consideration leaves the Company with an optimal
mix of seed assets, capital for acquisition and working capital. The Company
continues to develop and transact upon a strong pipeline of additional
attractive acquisition opportunities which will positively contribute to the
Company's growth strategy, alongside the seed assets transaction.

 

In order to appropriately scale the seed assets portfolio to the capital
available, the variation sees eight assets removed from the seed assets
portfolio register (as set out in FSF's Prospectus), seven of those being
located in Scotland and one in Wales.  Five of the removed assets are
established forestry properties and three of the removed assets are
afforestation properties. FSF's substantial seed assets portfolio therefore
comprises 26 assets in total (covering 8,000 hectares) including Banc Farm,
Rorie Hill and Auchenbrack.

 

The valuations agreed as part of the seed assets portfolio remain an arm's
length transaction, with the support of the independent board of FSF, and
continue to be informed by the third-party RICS Red Book report provided by
Savills. The seed assets transaction is scheduled to become finalised in
February 2022. Further updates in relation to the seed assets transaction will
be provided in due course.

 

Commencement of planting at Banc Farm

 

FSF is also pleased to announce that Blackmead Forestry Limited, which FSF has
an option to acquire, has received full planning approval and confirmation of
grant funding for Banc Farm, an afforestation scheme. These key development
milestones mean that the site has now commenced planting.

 

Banc Farm is located in the Welsh region of Carmarthenshire, consists of 149.5
hectares and has a planting scheme area of 90.8 hectares. Planting at the site
commenced in January 2022 and is expected to take 6-8 weeks to complete.

 

The project aims to plant approximately 229,320 trees, 75% of which will be
commercial conifers, and 25% of which will be non-commercial. The commercial
tree planting is forecast to deliver 48,153 tonnes of sustainable timber
production for each c.35-year rotation. The scheme appears on the UK Land
Carbon Registry and is already registered with the Woodland Carbon Code
("WCC"). Once planting has been completed, the process for full accreditation
and award of the carbon units by the WCC can take place. Once fully
established, the site is expected to sequester 21,218 tCO(2), and generate
associated voluntary carbon credits.

 

Wales is one of the least forested countries in Europe, with c.14.5% of land
area tree covered in 2020. As a result, Welsh timber production is
insufficient to support domestic demand, with 80% of timber used imported from
outside the UK. The Welsh Government, as part of its 2050 Net Zero plan and in
response to the climate emergency that has been declared by the Environment
Minister in Wales, has a stated target to increase tree planting to at least
2,000 hectares per year, aiming to increase this to 4,000 hectares as rapidly
as possible from 2020-2050. The Welsh Government's overall aim is to increase
Welsh tree cover to c.17.8 - 20.7% by 2050. The establishment of the Banc Farm
afforestation scheme alone makes an approximately 4.5% contribution to the
Welsh Government's 2022 woodland creation target.

 

The diverse planting scheme at Banc Farm comprises 50% Sitka Spruce, 15%
Douglas Fir, 10% Norway Spruce, 10% Silver Birch, 10% Sycamore and 5% Oak and
tree species that are designated as rare and endangered. The planting of 350
Black Poplar trees, recognised by the Forestry Commission as one of the UK's
rarest native species, is expected to increase the total UK population of the
tree species by c.5%. The rare and endangered tree planting also includes
1,500 Holm Oak and 300 Juniper trees, both of which are on the International
Union for Conservation of Nature's 'Red List'. The project also involves the
restoration of 25 hectares of non-commercial native oak woodland by
re-introducing the rotational coppicing of selected trees, the introduction of
mountain biking trails, and the construction of a car park for visitors. Banc
Farm will see the creation of 25-30 jobs for the local community during the
first year from planting commencing.

 

An independent ecologist has been appointed to confirm the bio-diversity
improvement achieved by the Banc Farm afforestation scheme. Using DEFRA's
Biodiversity Metric 3.0, the scheme will improve Banc Farm's baseline
biodiversity habitat unit value by 60% over the next five years.

 

 

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

"This is an exciting milestone for Foresight Sustainable Forestry. We are
proud to have started planting at our first afforestation scheme so soon after
the IPO. Successfully developing land for afforestation is a key part of our
strategy and will help drive returns in the form of capital appreciation and
access to voluntary carbon credits. At the same time, Banc Farm will also be
making a direct and meaningful contribution to the twin fights against climate
change and biodiversity loss, through a combination of carbon sequestration
and the restoration and establishment of non-commercial trees."

 

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. It 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. It is managed by Foresight Group LLP.
https://fsfc.foresightgroup.eu/ (https://fsfc.foresightgroup.eu/)

 

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

 Neil Winward

 Will Soutar

 Citigate Dewe Rogerson

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

 Dominic Tonner (dominic.tonner@citigatedewerogerson.com)   +44 07540 203471

 

 

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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