31 March 2022 Net Asset Value and Portfolio Update
3 May 2022
Foresight Sustainable Forestry Company Plc
("FSF" or "the Company")
31 March 2022 Net Asset Value ("NAV") and Portfolio Update
Foresight Sustainable Forestry Company Plc, an investment company that invests in UK forestry and afforestation assets, announces that as at 31 March 2022 its unaudited Net Asset Value ("NAV") was £135.5 million (post IPO: £127.6 million), resulting in a NAV per Ordinary Share of 104.2 pence, up 6.1 pence from 98.1 pence immediately following the Company's IPO in November 2021.
Summary of NAV key drivers:
FSF saw gains across its portfolio of £7.9m (6.2%) over the period from the first day of trading on 24 November 2021 to the period end on 31 March 2022. The related 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.
Within the portfolio, the afforestation assets delivered a gain to FSF of 18% during the period, with demand for afforestation and the associated voluntary carbon credits particularly strong. In addition, several afforestation properties achieved key development milestones in the period, including Banc Farm, which completed planting activities, and Mountmill Burn, which commenced planting activities. The established forestry aspect of the portfolio saw a gain of 2% with notably few comparable transactions within the UK for mature assets during the period, partly as a result of the impact of Storm Arwen.
Following the revaluation, FSF's split of afforestation assets (by value) has increased by 3% to 36% of the total portfolio, moving FSF materially closer to its stated target of 40-50% afforestation. The remaining 64% of value is in established forestry assets.
Portfolio Update
Completion of planting at Banc Farm
At the end of March 2022, FSF completed planting at Banc Farm, with no material deviations to the expected number of trees planted at c.229,300. This is a key development milestone for the asset and driver of capital appreciation for FSF. In addition to the forecasted production of over 48,000 tonnes of sustainable timber on a c.35-year rotation, this project is forecast to increase the baseline biodiversity net gain of the site (according to DEFRA's Metric 3.0) by 60% over the next five years and sequester 21,218 tonnes of additional CO 2 . Banc Farm will now undergo an independent verification to confirm the number of voluntary carbon units that are accredited to it.
Pipeline and deployment update
Following the expansion of FSF's mapping activity, the Company has identified over 4,500 properties that meet its afforestation criteria, covering an area in excess of 860,000 hectares. This activity has driven a material boost to the pipeline of future investments and provides confidence in FSF's ability to originate attractive, off-market afforestation properties going forward.
FSF is currently in the process of transacting twelve individual off-market afforestation properties under exclusivity, extending over 2,700 hectares, for an aggregated consideration (excluding transaction taxes and adviser costs) of over £18 million, demonstrating FSF's continued ability to convert its pipeline into live, executable deals.
Additionally, FSF is pleased to have entered into an option agreement, valid until 31 December 2022, with Foresight Inheritance Tax Fund ("FITF") for an additional eight forestry properties covering more than 3,000 hectares, with a combined value of £27.6 million as of 30 September 2021. Afforestation assets represent c.19% of these properties by value.
FSF has deployed 91% of IPO proceeds. It is estimated that FSF has £4.1m available for further afforestation investments until the IPO proceeds will be considered fully invested.
Richard Davidson, Chairman of Foresight Sustainable Forestry Company, commented:
"We are delighted that FSF, the London Stock Exchange's first natural capital investment vehicle, has delivered such a strong first NAV update which illustrates how capital appreciation is achieved by acquiring and developing afforestation sites, while also directly contributing to the twin fights against climate change and biodiversity loss.
We are proud to have successfully completed planting at Banc Farm, one of Wales's largest planting schemes this season and Foresight's first to reach this milestone. The development of our afforestation pipeline, together with the opportunity to execute on the option agreement over another eight forestry sites, gives FSF an attractive pipeline of assets that positions us well to deploy the small remaining IPO proceeds and deliver future growth for our investors."
Looking forward, we intend to build on our good performance to date, adding scale and leveraging the favourable macro tailwinds applicable to UK forestry to continue to deliver strong investor returns."
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/
For further information, please contact:
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Foresight Sustainable Forestry Company Plc Robert Guest Richard Kelly fsfc@foresightgroup.eu
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+44 20 3667 8100 |
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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) Jos Bieneman (jos.bieneman@citigatedewerogerson.com) |
+44 7768 981763 +44 7834 336650 |
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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