30 September 2022 Net Asset Value
15 November 2022
Foresight Sustainable Forestry Company Plc
("FSF" or "the Company")
30 September 2022 Net Asset Value ("NAV") and Notice of Full Year Results
Foresight Sustainable Forestry Company Plc, an investment company that invests in UK forestry and afforestation assets, announces that as at 30 September 2022 its unaudited NAV was £180.6 million (31 March 2022: £135.5 million), resulting in a NAV per Ordinary Share of 105.0 pence, up 0.8 pence from 104.2 pence as at 31 March 2022. The Company also announces the publication date of its audited Full Year Results for the period to 30 September 2022.
Highlights
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NAV per Share over the full period increased to 105.0 pence, a total NAV return since IPO of 5.0%. |
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Overall NAV increase of £50.6 million between IPO and 30 September 2022, a material proportion of which was due to the successful £45 million equity raise in June 2022 |
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Total fixed asset portfolio valuation increase of £12.1 million (up 9.1%) from inception to 30 September 2022 |
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Voluntary carbon credits recognised within valuations for the first time, resulting in a £0.6 million increase in the value of the portfolio from two planted afforestation assets |
NAV Update
In aggregate, the Company's NAV increased by £50.6 million between IPO on 24 November 2021 and 30 September 2022. This was due to FSF's successful £45 million equity raise in June 2022, 16 acquisition transactions, increases in portfolio valuations and, for the first time, the recognition of voluntary carbon credits in valuations.
The NAV per share increase in the six-month period to 30 September 2022 has been impacted by transaction costs from the high volume of afforestation acquisitions, the commencement of development activities on multiple afforestation properties, and costs related to securing new equity and debt capital. The benefits of investing in development projects and increasing the Company's available capital base for deployment are becoming apparent in the very strong valuation uplifts delivered by the first two afforestation assets where planting has been completed. Successful afforestation development and the securing of the related voluntary carbon credits is a core part of the Company's business model and the value recognition received on the first two afforestation properties validates this strategy.
Summary of NAV key drivers from 31 March 2022 to 30 September 2022:
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Item |
p/share movement |
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NAV at 31 March 2022 |
104.2 |
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Equity increase (share issue) |
0.3 |
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Operational expenditure |
(0.8) |
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Acquisitions & due diligence |
(0.7) |
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Afforestation & restock |
(0.4) |
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Forest operational costs |
(0.1) |
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Portfolio revaluation |
2.1 |
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Voluntary carbon credit valuation |
0.4 |
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NAV at 30 September 2022 |
105.0 |
Portfolio Valuations
Within the total portfolio, the property revaluation delivered a gain of £12.1 million (up 9.1%) from IPO to 30 September 2022. Following this increase, FSF's split of afforestation properties (by value) now stands at 41% of the total portfolio. The remaining 59% of the portfolio by value is split between established forestry assets (56%) and non-core assets (3%).
During the period, the largest property valuation increases were from two planted afforestation properties, Mountmill Burn and Banc Farm. Of the combined £2.6 million uplift since acquisition, an increase of 89%, £0.6 million was the result of 36,000 voluntary carbon credits being recognised in the valuations. These properties demonstrate the capital appreciation potential of afforestation sites once development milestones are met. The Company has a further 25 afforestation properties as part of a series of development activities which is estimated to see 6.4 million trees planted over 2023 and 2024, and the creation of approximately 800,000 voluntary carbon credits, after the verifier's 20% buffer has been catered for to ensure that the number of units offset or traded is conservative versus the estimated carbon actually sequestered. Afforestation properties remain the engine room of performance and the Company is looking to increase the portfolio allocation to this asset type in the coming year.
Afforestation properties also bring significant Sustainability and ESG ("S & ESG") benefits. For example, FSF's Banc Farm afforestation scheme saw 229,320 trees planted, 75% of which were conifers that are forecast to deliver 48,153 tonnes of sustainable timber production for each c.35-year rotation. 25% of trees planted were non-commercial broadleaves and includes 350 Black Poplar trees which are recognised by the Forestry Commission as one of the UK's rarest native species. FSF's planting is expected to increase the total UK population of this tree species by approximately 5%. The rare and endangered tree planting at the property 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'. As a result of this, using DEFRA's Biodiversity Metric 3.0, the scheme will improve the property's baseline biodiversity habitat unit value by 60%. Finally, the scheme will see the introduction of mountain biking trails, the construction of a car park for visitors and the creation of 25-30 jobs for the local community during the first year from planting commencing. Whilst each scheme is different and tailored to the specific site and region in question, the potential for these types of benefits is explored during the design process across all of FSF's afforestation portfolio.
FSF will release the inaugural standalone S & ESG report in February 2023 and it will act as a supplement to the information presented in the Full-year Annual Report. The Company will detail several achievements since IPO and is particularly looking forward to sharing information regarding its Forestry Skills Training Programme.
As a result of mark-to-market gains, afforestation properties acquired since 31 March 2022 saw gains of £1.0 million, a 6.6% increase. The uplifts demonstrate the value of the Company's proprietary direct origination campaign. Afforestation properties in the portfolio that continued to be developed but which have not yet reached development milestones remained stable in their valuations.
Standing forestry properties delivered gains of £1.2 million, a 1.6% gain from acquisition to 30 September 2022. Valuations for established forest properties have remained comparatively stable, in line with the timber market and the softening timber prices seen in the second half of the reporting period.
Mixed forestry and afforestation properties, a category dominated by Fordie Estate, delivered a 17.4% gain from acquisition to 30 September 2022, a £2.2m of uplift. The development project at Fordie, which includes an afforestation scheme of material scale, continues to progress well.
Valuations were performed on a property-by-property basis by an independent third-party in accordance with the Royal Institute of Chartered Surveyors (RICS) Red Book Fair Value methodology.
Notice of Results
FSF will publish its Full Results for the period to 30 September 2022 on Wednesday, 14 December 2022.
The Company will host a virtual SparkLive presentation at 9:00 a.m. (UK time) on Wednesday, 14 December 2022. To register your interest in attending the presentation, please register at: https://www.lsegissuerservices.com/spark/FORESIGHTSUSTAINABLEFORESTRYCOMPANY/events/b6793ad3-27a1-498e-9859-4e2282c53d6b
Richard Davidson, Chair of Foresight Sustainable Forestry Company, commented:
"Foresight Sustainable Forestry continues to apply its investment strategy diligently and the NAV uplift announced demonstrates the success of the Company's approach. It is particularly pleasing to see voluntary carbon credits recognised for the first time as a source of additional value to our properties and the Company will continue to generate these as we develop our afforestation properties. The recent launch of the London Stock Exchange Voluntary Carbon Market is further evidence of growing demand for these credits and the need for a sophisticated market in which to trade them. We have an exciting series of afforestation development opportunities within the portfolio, and Mountmill Burn and Banc Farm have clearly demonstrated the benefits of a well executed development plan. In just under a year since listing on the LSE, FSF has achieved a huge amount and established a strong platform for further growth."
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.
For further information, please contact:
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Foresight Sustainable Forestry Company Plc Robert Guest Richard Kelly Email: fsfc@foresightgroup.eu
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+44 20 3667 8100 |
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Website: https://fsfc.foresightgroup.eu/
Jefferies International Limited Neil Winward Will Soutar
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+44 20 7029 8000
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Citigate Dewe Rogerson Toby Moore ( toby.moore@citigatedewerogerson.com )
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+44 7768 981763
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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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