FSF Foresight Sustainable Forestry Company Plc

Completion of seed assets transaction and update on portfolio

8 March 2022

Foresight Sustainable Forestry Company Plc

Completion of seed assets transaction and update on portfolio

Foresight Sustainable Forestry Company Plc ("FSF", “the Company”), an investment company that invests in UK forestry and afforestation assets, today announces the completion of its UK-wide seed assets portfolio transaction, the acquisition of an afforestation site at Maescastell in Wales, and the commencement of planting at Mountmill Burn, an afforestation site in Scotland. Together, these developments represent a materially significant milestone in FSF’s development.

Seed Portfolio Transaction

On 7 March 2022, FSF completed the seed assets portfolio transaction to acquire Blackmead Forestry Limited (“BFL”) and Blackmead Forestry II Limited (“BFL II”) from Foresight Inheritance Tax Solution for a total cost (inclusive of tax and other transaction costs) of £113.4 million. FSF has acquired 27 sites in total; the portfolio consists of 11 afforestation sites, 15 forestry sites and one site which is both afforestation and forestry. By value, the acquired portfolio consists of 29% afforestation sites and 71% forestry sites. By area, the acquired portfolio consists of 41% afforestation sites and 59% forestry sites. The portfolio is located across the United Kingdom and by area is split between Scotland (80%), Wales (13%) and England (7%). The total area of the acquired portfolio extends over 8,117 hectares, of which 4,182 hectares is stocked or stockable with commercial conifer trees. A full breakdown of the portfolio asset list can be found in the Appendix.

FSF continues to actively seek further opportunities in the market and is in exclusivity and transacting upon several additional afforestation sites. Once the acquisition of this immediate pipeline is complete, the percentage by value of afforestation sites in the portfolio will increase to 34%. At this point, FSF will also be substantially invested. Successfully developing land for afforestation (which drives returns through capital appreciation and access to voluntary carbon credits) is a core part of FSF’s strategy.

Portfolio Update – Maescastell Acquisition

FSF stated in its announcement of 25 January 2022 that the seed assets transaction consisted of 26 sites. Since that announcement and before the completion of the seed assets transaction, BFL acquired Maescastell, an afforestation site, for a total cost (inclusive of tax and other transaction costs) of £0.5 million. Following this acquisition, the total number of FSF seed assets to be acquired from BFL and BFL II increased to 27.

Maescastell adds to a synergistic collection of afforestation properties in Carmarthenshire, Wales. The site is located within 1km of land acquired from Cwmban Fawr Farm and Pistyll South, both existing properties in the portfolio. The total area of all three sites is 177 hectares, of which 158 hectares is plantable with new forest and woodland.

Consulting closely with the local community, FSF will now further develop the preferred planting design across the three sites and will continue the development and application process in line with national and regional regulations. As with all FSF’s afforestation schemes in Wales, no arable land will be planted on and a diverse species mix across the sites is expected to consist of c.75% varied commercial tree species (the trees which create maximum climate change impact) and c.25% non-commercial broadleaves (including rare and endangered species). Each scheme will also include un-planted open ground areas providing additional diversity of natural habitat, complementing the forest and woodland areas. Under FSF’s ownership, the sites are expected to deliver material biodiversity improvements. An independent ecologist will be appointed to evaluate the impact on biodiversity of the finalised scheme’s design using the UK Government’s Department for Environment, Food and Rural Affairs’ Biodiversity Metric 3.0 methodology. Following completion of the above, planting at all three sites is planned to commence later this year.

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 imported from outside the UK. The three sites will contribute towards the Welsh Government’s aim to increase tree cover in the country to c.17.8% - 20.7% by 2050. The Welsh Government, as part of its 2050 Net Zero plan and in response to the climate emergency which 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.

Portfolio Update - Commencement of Planting at Mountmill Burn

Mountmill Burn, located in Oxton, Scotland, has now received full planning approval and confirmation of grant funding from the Scottish Government. These are key development milestones which have allowed planting activities to commence. Mountmill Burn consists of 119 hectares and has a plantable area of 101 hectares. Planting at the site commenced in February 2022 and is expected to take 6-8 weeks. The project aims to plant approximately 240,485 trees and the commercial tree planting is forecast to deliver 51,000 tonnes of sustainable timber production for each c.35-year rotation. The scheme is registered on the UK Land Carbon Registry and the Woodland Carbon Code ("WCC"). Once planting is complete, the process for full accreditation and award of carbon units by the WCC can take place. Once fully established, the site is expected to sequester 21,000 tCO2 and generate associated voluntary carbon credits.

Richard Davidson, Chairman of Foresight Sustainable Forestry Company, said:

“We are delighted to have acquired the seed assets portfolio, the Company’s most significant milestone since listing last November. The Company is now 87% invested, with a higher allocation to afforestation properties than we anticipated at IPO and with an exciting immediate pipeline of attractive additional acquisitions. FSF’s diverse portfolio (around half of which comprises land which is or can be planted with a variety of commercial tree species to produce home-grown sustainable timber) will directly contribute to the afforestation targets of governments across the UK and will generate material biodiversity net gain, and we will continue to work hard to ensure it delivers tangible benefits to local communities.”

Richard Kelly and Robert Guest, Co-Heads of Foresight Sustainable Forestry Company, added:

“The completion of the seed assets transaction demonstrates execution of a crucial aspect of the early stage business plan and secures high quality sustainable real assets for the Company. We are also very pleased to announce the acquisition of Maescastell. Its location and afforestation capabilities align perfectly with our strategy and we look forward to working with the local community to develop plans for the sites. The commencement of planting at Mountmill Burn is another key development for the Company and takes the total number of trees to be planted since IPO to nearly half a million.”

Appendix: FSF seed assets portfolio

Name	Asset Type	Country	Location	Hectares
Fordie Estate	Mixed	Scotland	Perthshire	2,150
Whiteburn	Forestry	England	Northumberland	484
Auchenbrack	Afforestation	Scotland	Dumfries and Galloway	470
Shorthope	Forestry	Scotland	Scottish Borders	462
Aberarder	Forestry	Scotland	Inverness	448
Frongoch, Brynglas & Esgair Hir	Afforestation	Wales	Carmarthenshire	416
Central Scotland Portfolio	Forestry	Scotland	Central Scotland	383
Coull	Forestry	Scotland	Aberdeenshire	371
Auchensoul	Afforestation	Scotland	South Ayrshire	350
Upper Barr	Afforestation	Scotland	Dumfries and Galloway	343
Donside Forestry Collection	Forestry	Scotland	Aberdeenshire	339
Annefield	Afforestation	Scotland	Dumfries and Galloway	303
W&C	Forestry	Scotland	Dumfries and Galloway	301
Camps Woodlands	Forestry	Scotland	South Lanarkshire	201
Banc Farm	Afforestation	Wales	Carmarthenshire	150
Glass Rigg	Forestry	Scotland	Dumfries and Galloway	139
Mountmill Burn	Afforestation	Scotland	Scottish Borders	119
Ellenber Farm	Afforestation	England	North Yorkshire	95
Cwmban Fawr Farm	Afforestation	Wales	Carmarthenshire	94
Drumelzie	Forestry	Scotland	West Lothian	76
Waun Maenllyd	Forestry	Wales	Carmarthenshire	74
South Dairy	Forestry	Wales	Pembrokeshire	71
Derry Lodge	Forestry	Wales	Ceredigion	71
Bronnant	Forestry	Wales	Gwynedd	65
Craigwell Wood	Forestry	Scotland	South Ayrshire	56
Maescastell	Afforestation	Wales	Carmarthenshire	49
Pistyll South	Afforestation	Wales	Carmarthenshire	36
Total				8,117

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) Dominic Tonner (dominic.tonner@citigatedewerogerson.com)	+44 7768 981763 +44 7540 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.