TIDMFSF
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/
For further information, please contact:
Foresight Sustainable Forestry Company Plc
Robert Guest
Richard Kelly
fsfc@foresightgroup.eu +44 20 3667 8100
Jefferies International Limited
Neil Winward
Will Soutar +44 20 7029 8000
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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