RCS - Foresight Sustain. - Results analysis from Kepler Trust Intelligence

Foresight Sustainable Forestry

14/06/2023 07:12

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230614:nRSN5906Ca&default-theme=true

RNS Number : 5906C  Foresight Sustain. Forestry Co PLC  14 June 2023

Foresight Sustainable Forestry (FSF)

14/06/2023

Results analysis from Kepler Trust Intelligence

·    Foresight Sustainable Forestry (FSF) has reported its results for the
six months ending 31/03/2023. Despite numerous macroeconomic headwinds, the
trust proved resilient, with its net asset value (NAV) increasing from
£180.6m to 186.6m. The trust's shares also rose by 1.9% over the period.

·    The increase in NAV was mainly driven by revaluations of the trust's
afforestation sites - plots of land that are converted into forestry.
Completion of planting at four sites that had been acquired by the trust was a
key driver of returns. This provides validation of the argument managers
Robert Guest and Richard Kelly of Foresight Group have made since IPO in
November 2021, namely that converting plots of land into forestry should prove
accretive to NAV.

·    In December, FSF also became the first investment company to receive
the Voluntary Carbon Market designation from the London Stock Exchange. The
VCM accreditation shows that FSF's carbon credits are subject to high quality
oversight and verification. FSF's Board plan to allow shareholders the choice
to either receive carbon credits from 2030 onwards as in specie dividends to
offset their unavoidable emissions, or to receive an equivalent dividend in
cash.

·    FSF Chair Richard Davidson said: "The long-term demand outlook for
sustainable timber in both the UK and Europe remains positive and underpinned
by the prevailing decarbonisation agenda. As we embark on the next six months,
 FSF  is well positioned to leverage a range of environmental tailwinds whilst
it continues to deliver on its business objectives."

Kepler View

Foresight Sustainable Forestry (FSF) is the only investment trust listed today
that provides investors with exposure to the UK's natural capital and
sustainable forestry sector. The Investment Manager, Foresight Group LLP,
drives returns by investing in afforestation projects. This takes relatively
lower grade agricultural land and transforms it into more valuable forestry
once fully planted and the trees are established. Returns are also generated
by investing in and upgrading existing forestry sites, with the intention of
harvesting and selling the timber they produce, and by tapping into the
nascent market for carbon credits, which afforestation sites generate.

FSF only launched in November 2021 but these latest half-year performance
figures are positive and build on prior results that suggest the trust's
strategy is working. The Company has delivered a total NAV per Ordinary Share
return of 10.6% since IPO and increased its NAV to £186.6 million
(30/09/2022: £180.6 million) during the period. As noted, a key driver of
returns has been the upward revaluation of land that has been converted into
forestry. So far, these revaluations have been stark. For example, one FSF
site - Mountmill Burn in Scotland - saw a 97% uplift to its acquisition value
when planting was complete.

That uplifts to NAV continued in the most recent half-year period whilst
timber prices were relatively muted also illustrates the resilience of UK
forestry assets to interest rate hikes. Acquisitions in the sector are not
typically reliant on large amounts of debt, meaning rate hikes are less
impactful than on other property investments. FSF has also traded with lower
volatility and at a premium to NAV for several prolonged periods. We think
this illustrates the trust is relatively resilient to wider macroeconomic
headwinds, such as inflation, as well as offering strong portfolio
diversification benefits, given its low correlation to other asset classes,
like bonds and equities.

CLICK HERE TO READ THE FULL REPORT
(https://www.trustintelligence.co.uk/investor/articles/news-investor-results-analysis-foresight-sustainable-forestry-retail-jun-2023?utm_source=RNS&utm_medium=news)

Visit Kepler Trust Intelligence
(http://www.trustintelligence.co.uk/investor?utm_source=RNS&utm_medium=news)
for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has
prepared this report is aware that Kepler Partners LLP has a relationship with
the company covered in this report and/or a conflict of interest which may
impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of
investments can fall as well as rise and you may get back less than you
invested when you decide to sell your investments. It is strongly recommended
that if you are a private investor independent financial advice should be
taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients.
This report has been issued by Kepler Partners LLP, is based on factual
information only, is solely for information purposes only and any views
contained in it must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to,
or use by, any person or entity in any jurisdiction or country where such
distribution or use would be contrary to law or regulation or which would
subject Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively for non-US
Persons. Persons who access this information are required to inform themselves
and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and
should not be construed as, investment advice. No representation or warranty,
express or implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted for the
accuracy or sufficiency of any of the information, for any errors, omissions
or misstatements, negligent or otherwise. Any views and opinions, whilst given
in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation,
offer or solicitation to buy or sell or take any action in relation to any
investment mentioned herein. Any prices or quotations contained herein are
indicative only.

Kepler Partners LLP (including its partners, employees and representatives) or
a connected person may have positions in or options on the securities detailed
in this report, and may buy, sell or offer to purchase or sell such securities
from time to time, but will at all times be subject to restrictions imposed by
the firm's internal rules. A copy of the firm's Conflict of Interest policy is
available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS
(http://www.trustintelligence.co.uk/investor/terms?utm_source=RNS&utm_medium=news)

Kepler Partners LLP is authorised and regulated by the Financial Conduct
Authority (FRN 480590), registered in England and Wales at 70 Conduit Street,
London W1S 2GF with registered number OC334771.

This information is provided by Reach, the non-regulatory press release distribution service of RNS, part of the London Stock Exchange. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  NRAXXLFFXQLZBBF