TIDMFSF
RNS Number : 3684G
Foresight Sustain. Forestry Co PLC
15 November 2022
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
GBP180.6 million (31 March 2022: GBP135.5 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
- NAV per Share over the full period increased to 105.0 pence, a total
NAV return since IPO of 5.0%.
- Overall NAV increase of GBP50.6 million between IPO and 30 September
2022, a material proportion of which was due to the successful GBP45
million equity raise in June 2022
- Total fixed asset portfolio valuation increase of GBP12.1 million
(up 9.1%) from inception to 30 September 2022
- Voluntary carbon credits recognised within valuations for the first
time, resulting in a GBP0.6 million increase in the value of the portfolio
from two planted afforestation assets
NAV Update
In aggregate, the Company's NAV increased by GBP50.6 million
between IPO on 24 November 2021 and 30 September 2022. This was due
to FSF's successful GBP45 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:
Item p/share
movement
NAV at 31 March 2022 104.2
----------
Equity increase (share issue) 0.3
----------
Operational expenditure (0.8)
----------
Acquisitions & due diligence (0.7)
----------
Afforestation & restock (0.4)
----------
Forest operational costs (0.1)
----------
Portfolio revaluation 2.1
----------
Voluntary carbon credit valuation 0.4
----------
NAV at 30 September 2022 105.0
----------
Portfolio Valuations
Within the total portfolio, the property revaluation delivered a
gain of GBP12.1 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 GBP2.6 million uplift since acquisition, an
increase of 89%, GBP0.6 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 GBP1.0 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 GBP1.2 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 GBP2.2m 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:
Foresight Sustainable Forestry Company Plc
Robert Guest
Richard Kelly
Email: fsfc@foresightgroup.eu +44 20 3667 8100
Website: https://fsfc.foresightgroup.eu/
Jefferies International Limited
Neil Winward
Will Soutar +44 20 7029 8000
Citigate Dewe Rogerson
Toby Moore ( toby.moore@citigatedewerogerson.com
) +44 7768 981763
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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END
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