10 May
2024
Foresight Sustainable
Forestry Company Plc
("FSF" or
"the Company")
31 March 2024 Net Asset Value
and Company Update
Foresight Sustainable Forestry
Company Plc, an investment company that invests in UK forestry and
afforestation assets, is delighted to announce that the Company's
unaudited Net Asset Value ("NAV") has increased to £175.8 million (30 September 2023: £169.2 million) as at
31 March 2024.
Summary of NAV key movements from 30 September 2023 to 31
March 2024 (the "Period"):
Item
|
p/share movement
|
30 September 2023 NAV
|
98.4
|
Net Afforestation & Restock
Expenditure
|
(1.1)
|
Portfolio revaluation
gains
|
3.7
|
Voluntary carbon credit valuation
gains
|
3.7
|
Asset Level Operating
Expenditure
|
(1.0)
|
Fund Operating
Expenditure
|
(1.5)
|
31 March 2024 NAV
|
102.2
|
NAV per share increased to 102.2
pence, representing an increase of 3.9% or 3.8 pence for the
Period. The key drivers of the increase have been successful
completion of planting and value ascribed towards the creation of
carbon credits at newly planted afforestation
properties.
H1
2024 Planting and Carbon Credit Highlights
· Approximately 2.9 million trees were planted at 13
afforestation properties during the period.
· FSF
has planted 4.3 million trees across 19 planting properties since
IPO to 31 March
2024.
· An
additional c.334,000 carbon credits associated with new planting
have been recognised on FSF's balance sheet, taking the total
number of carbon credits to c.478,000.
· The
Company also successfully received validation from the Soil
Association for c.35,000 of those carbon credits.
· As at
31 March 2024, the total value ascribed towards the creation of
carbon credits was £9.2 million (30 September 2023: £2.7
million).
H1 2024 Portfolio
Overview
· As at
31 March 2024, the Company's portfolio encompassed 12,654 hectares
of land and comprised 39 afforestation properties, 25 forestry
properties and five mixed (forestry and afforestation)
properties.
· During
the Period, the Company's portfolio sequestered c.17,559 tCO2e
increasing the total to c.81,513 tCO2e
since IPO.
Planting Completed
Post-Period
· Between 31 March 2024 and 10 May 2024, the Company planted an
additional c.650,000 trees at four afforestation properties,
bringing the total number of afforestation properties where
planting has been completed since IPO to 23.
· Based
on an independent RICS Red Book property valuation and the
Company's comparable transactions-based approach to carbon credit
valuation, the additional four completed planting schemes are
expected to result in a further £2.1 million or 1.2 pence per share
of net portfolio value gains.
Planting Outlook for 2024 Year End
and Spring 2025
· From
10 May 2024, the Company expects to plant approximately 2.1 million
trees at seven afforestation properties by the next valuation cycle
(30 September 2024).
· From 1
October 2024, the Company anticipates to plant approximately 2.3
million trees at fourteen afforestation properties by the 31 March
2025 valuation cycle.
· By
Spring 2025, the Company expects to have planted c.9 million trees
over a total forest area of 4,500 hectares since IPO.
UK
Forestry Investment Market
There were £33.9 million of 2023
comparable transactions relevant to the Company's 30 September 2023
RICS Red Book valuation observed by Savills with a weighted average
price of £22.9k per net productive commercial hectare. For the 31
March 2024 valuation there were an additional £59.4 million of
relevant 2023 comparable transactions observed by Savills with a
weighted average price of £27.6k per net productive commercial
hectare.
The observed transaction volumes (in
GBP) and pricing in the UK forestry investment market therefore
stabilised and improved during the Period. However, as the 2023
total transaction volume of £93.3 million remains substantially
lower than the 2021-2022 average of £275.9 million, the current
independent RICS Red Book valuation has been kept broadly flat
versus the position at 30 September 2023, other than where
afforestation properties have achieved completion of
planting.
Overall, the Company's portfolio
valuation has been resilient and demonstrated relatively low
volatility during challenging macro-economic and UK forestry
investment market conditions over the last 12-18 months and the
Investment Manager's opinion of the forestry investment market is
positive for 2024.
Timber Prices
Timber prices in the UK and Europe
have been positively impacted by a rise in US demand. In February
2024, Swedish lumber exports to the US increased 60% year-on-year,
attributed to a 10.7% increase in housing construction. It is the
Investment Manager's belief that increased demand for UK and
European timber is to continue.
The Company observes strong UK small
roundwood prices and strengthening sawlog prices, allowing it to
progress its 2024 harvesting programme. FSF
has c.166,000 tonnes of standing timber ready for
harvesting.
Operational Update
An updated portfolio breakdown to
the end of the planting season will be provided in the Company's
Interim Report due to be released in June 2024. The latest
portfolio breakdown can be found in the appendix.
The Company's £30 million Revolving
Credit Facility ("RCF") has been extended and reaches maturity in
July 2026. At 31 March 2024, the Company had drawn £18.3 million on
the RCF. The Company intends to service/repay the RCF through a
combination of timber harvesting and planned disposal of non-core
assets.
Richard Davidson, Chair of Foresight Sustainable Forestry
Company Plc, commented:
"I
am delighted to report that FSF has been successfully driving NAV
gains by planting a further 2.3 million trees during the period,
bringing the total number of trees planted since IPO to 4.3 million
at the reporting date. Planting has continued at pace since period
end with a further 650,000 trees planted since 31 March 2024, and
we are pleased to outline the additional impact that this is
expected to have on the value of our portfolio.
"Despite headwinds seen in the investment trust market, we
continue to build meaningful value across our afforestation
portfolio. Add to this strengthening timber and property prices and
it is clear that we have a strong platform from which to
build."
Appendix
Gross Area
|
30
September 20232
|
31
March 20242
|
Difference
|
10
May 2024
(post period end)
|
Development Stage Afforestation Assets
(Hectares)
|
5,167
|
3,058
|
(2,109)
|
3,058
|
Planting Stage Afforestation Assets (Hectares)
|
93
|
481
|
+ 388
|
-
|
Establishment Stage Afforestation Assets
(Hectares)
|
1,035
|
2,986
|
+ 1,951
|
3,467
|
Established Forest Assets (Hectares)
|
6,251
|
6,129
|
(112) 3
|
6,129
|
Total (Hectares)
|
12,545
|
12,654
|
|
12,654
|
Definitions:
Development Stage Afforestation Assets
- Land prior to the securing of planning
permission and grant application.
Planting Stage Afforestation Assets - Planning permission and grant application completed but
initial planting of trees not yet completed.
Establishment Stage Afforestation Assets
- Initial
planting of property completed but trees establishing and
stabilising (typically a 3-5 year period).
Established Forestry Assets -
Trees stabilised and established.
¹
Acquisition costs = consideration paid to Seller + transaction
taxes + deal costs (excludes cumulative net project development
costs and operational costs of the properties).
2 All numbers are total land
holding and include both Other Land and Non-Core
areas.
3 Re-allocation of open ground
to afforestation.
For further information, please
contact:
Foresight Sustainable Forestry Company Plc
Robert Guest
Richard Kelly
fsfc@foresightgroup.eu
|
+44 20 3667 8100
|
Stifel Nicolaus Europe Limited
Edward Gibson-Watt
Bruno Benega
Rajpal Padam
Catriona Neville
|
+44(0) 20 7663 3227
|
SEC
Newgate
Elisabeth Cowell
Alice Cho
Harry Handyside
|
+44 (0)20 3757 6882
fsf@secnewgate.co.uk
|
About the Company
Foresight Sustainable Forestry
Company Plc 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.
The Company 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.
The Company is managed by Foresight
Group LLP. https://fsfc.foresightgroup.eu/
Notes
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.