Foresight Sust Regulatory News (FSF)

 6 December 2021

Foresight Sustainable Forestry Company Plc

Completion of two acquisitions of substantial new afforestation opportunities in Scotland

Foresight Sustainable Forestry Company Plc ("FSF"), an investment company that invests in UK forestry and afforestation assets, today announces that Blackmead Forestry II Limited ("BFL II"), which FSF has an option to acquire, has fully completed the purchase of two substantial and ideally located afforestation opportunities in Dumfries and Galloway, Scotland.

Rorie Hill, one of the key afforestation opportunities which BFL II previously had under offer, has a freehold area of 303 hectares and will be developed as a mixed forestry and afforestation site. A cash consideration (inclusive of tax and other transaction costs) of £5.59 million was deployed to acquire the asset.

Auchenbrack, which BFL II also previously had under offer, has a freehold area of 470 hectares and will be developed as an afforestation site. A cash consideration (inclusive of tax and other transaction costs) of £5.30 million was deployed to acquire the asset.

Additionally, Blackmead Forestry Limited ("BFL") has completed the sale of various buildings and four hectares of non-afforestation land (all considered to be Non-Core Assets) at the 150 hectare Banc Farm afforestation site in Carmarthenshire, Wales, receiving a cash consideration of £0.53m.

As previously announced, FSF has entered into an Option Agreement with Blackmead Infrastructure Limited to acquire the issued shares of BFL and BFL II, the holding companies of the Target Seed Forestry Assets.

The Target Seed Forestry Assets comprise 34 assets, diversified in age, project type and geography which were valued at approximately £138.0 million as at 1 September 2021. The Target Seed Forestry Assets extend across c.11,000 hectares (equivalent to c.27,000 acres), with 85 per cent. by area located in Scotland, 10 per cent. in Wales and 5 per cent. in England. 59 per cent. of the Target Seed Forestry Assets are mature Standing Forests; and 38 per cent. of the Target Seed Forestry Assets are Afforestation projects, that will be planted; the remaining 3 per cent. of the portfolio is made up of mixed assets.

Given that the Target Seed Forestry Assets are valued at more than the net asset value of FSF, an asset prioritisation and acquisition sequencing exercise is underway. There will be a further announcement regarding the result of this exercise in due course.

As part of a wide and ongoing deal sourcing campaign, FSF continues to explore various development avenues and has identified a number of specific opportunities in line with the Company's investment policy which are either, (i) under active discussion with the relevant counterparties, or (ii) likely to be available for sale within 12 months. This pipeline represents a potential investment volume for the Company of more than £115 million at the date of this announcement.

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

"Foresight Sustainable Forestry Company offers a unique investment opportunity into UK forestry and afforestation assets. The acquisition of these sites cements two more substantial afforestation opportunities within our Target Seed Portfolio that will both drive attractive risk-adjusted returns for investors, whilst also directly contributing to the fight against the twin threats of climate change and biodiversity loss. At Banc Farm, we now have a more concentrated, higher returning, pure afforestation asset. Investment in UK forestry and afforestation assets offers access to an attractive capital appreciation opportunity, as well as the benefits we see in significantly increasing demand for carbon credits. We continue to explore development avenues and look forward to delivering our business plan."

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/ 

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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.