FORESIGHT SUSTAINABLE COMPANY PLC Real returns from growing assets that combat climate change.

September 2021 Why UK Forestry?

Globally and in the UK, there is increasing demand Value of Global Imports of Products1 for forestry and timber related products. 1988-2018 340 Three key macroeconomic trends underpin this increasing 320 demand, which include: 300 280 • a growing global population, that is expected to reach 260 +3%CAGR Oceania c. 10 billion by 2050; 240 Africa 220 Americas • an increasingly urban population, with mass urbanisation and 200 180 sub-urbanisation accelerating across Asia in particular; and 160 Europe • a growing consumer preference, driven by the global 140 USD billions 120 environmental agenda, for more sustainable construction, 100 packaging and consumer product materials. 80 60 Asia These macroeconomic trends are expected to prevail over the 40 medium to long-term. 20

0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 UK timber demand has remained robust over the last twenty-five years and has been resilient throughout several financial crises. However, as a net importer of timber, UK timber prices are more directly influenced by global demand than domestic. Global timber Forecast of UK Coniferous Standing Volume2 demand has out-stripped supply over the long term and UK 2017-2041 timber prices have generally maintained good real terms growth 400 historically. Global demand for timber products is predicted to 350 quadruple from 2012 to 2050, whilst the yearly supply deficit is -1%CAGR forecast to materially deepen from 1 billion cubic meters in 2012 300 to 4.5 billion cubic meters in 2050.1 This places significant upward pressure on global timber prices as supply becomes increasingly 250 constrained. England 200

Globally there is a shortage in the supply of 150 timber, with the UK one of the least forested Scotland 100 countries in Europe. Million cubic metres

The ability to upscale UK timber production is limited by the lack 50 of available mature woodland, regulatory restrictions on levels Wales 0 of and the biological cycle of growth. The UK’s short 2017-21 2022-26 2027-31 2032-36 2037-41 supply of timber stems from:

• the decimation of the nation’s woodlands and during the World Wars; UK Timber Price Index2 • the removal of tax incentives in 1988 that had previously 1995-2025 stimulated planting and restocking; and 200 • policy shifts in the 1990s that prioritised the planting of native conifers and non-commercial broadleaves, CSSPI* and suspended any large-scale government sales of forestry land. 150 +5.60% CAGR Foresight believes that attractive supply and demand dynamics create a compelling capital 100 appreciation opportunity that leaves UK forest owners very well positioned.

Over the last twenty years UK timber prices have appreciated 50 at a 5.5% compound annual growth rate (“CAGR”). Foresight expects this trend in timber prices to continue due to ending Sept 2016=100 year Fisher Index macroeconomic and structural factors. 0 2025 2015 2000 2005 1995 2020 2010 1. World Bank 2. Forestry Commission * Coniferous Standing Sales Price Index Foresight Sustainable Forestry Company Plc

The Company offers direct and liquid The Company provides investors the opportunity for real returns and capital appreciation driven by the prevailing access to the attractive investment global imbalance between supply and demand for timber; the inflation-protection qualities of UK land freeholds; and characteristics of UK forestry and biological annual tree growth not correlated to financial projects, with scope markets. The Company also offers outstanding sustainability and Environmental, Social and Governance (“ESG”) attributes for upside via the carbon and timber and access to carbon units4 related to markets. The Company targets a net from new afforestation planting. total return of more than CPI +5%.

Five key reasons why investors might wish to consider the Foresight Sustainable Forestry Company Plc for their portfolio.

Fight Climate Change 1 Foresight estimates that the IPO proceeds will directly enable c.4 million tonnes of carbon sequestration from the atmosphere from new afforestation planting. That is the equivalent to the entire carbon footprint of the population of Edinburgh for a year5. For each tonne of carbon sequestered, a carbon unit will be generated in accordance with the Woodland Carbon Code (“WCC”). Foresight expects to execute a strategy for WCC units that generates maximum sustainability credentials and value for Company shareholders.

Proprietary Pipeline of Real Assets 2 Investors will enjoy priority access to Foresight's proprietary pipeline of on and off-market forestry investment opportunities. Off-market opportunities account for c.50% of total observed deal flow. These special opportunities have been directly originated by, and are exclusive to, Foresight. Investors will also immediately benefit from a carefully selected and diversified portfolio of forestry and afforestation seed assets.

Access to an Attractive Asset Class 3 UK forestry is an attractive asset class that has a long track record of outperforming bonds and equities3. Increasing timber demand and diminishing supply creates a strong capital appreciation opportunity. Further, demand for carbon credits is estimated to expand by up to 100X by 20506 . The Company's afforestation projects will generate carbon units thereby providing investors with access to compelling upside potential. However, the specialist nature of forestry investments means that the asset class has, until now, more typically been accessed via direct investments by institutions and ultra-high-net worth investors.

4 Hedge Against Rising Inflation UK commercial forestry has strong inflation-beating characteristics, for both expected and unexpected inflation. UK Timber prices and the related timber land and crop values have historically outperformed Consumer Price Index (“CPI”) on a long term basis. 5 Portfolio Diversification UK forestry enjoys low correlations to both traditional and alternative asset classes. Versus renewable energy, forestry offers attractive risk-adjusted returns that are uncorrelated to power prices. Versus real estate, forestry offers uncorrelated returns. These low correlations are driven by average annual biological tree growth of 3% to 4% regardless of economic cycle.

3. MSCI, 2017 over 3, 5, 10 and 25 year time horizons. 4. UK Woodland Carbon Code (“WCC”) units in the form of Pending Issuance Units (“PIUs”) and Verified Carbon Units (“VCU’s” or “Woodland Carbon Units’). 5. This is the equivalent of offsetting the carbon footprint of 512,000 UK individuals for a year. Assuming 7.8 tCO2 / person / year (from the Committee on Climate Change 6th Carbon Budget). 6. McKinsey & Company. Foresight Sustainable Forestry Company Plc

Asset Class Risk/Return Outlook7 Correlation between Coniferous Standing Sales Price Index (“CSSPI”) and Other Asset Classes7 10 9 Global Direct Long-term Correlation Lending Asset Class 8 UK Large Cap Equities (2011-2020) 7 IPD UK Annual Forestry Index8 +0.48 6 UK Forestry 5 UK CPI +0.42 Global Core 4 Real Estate Global UK Index-linked Gilts +0.07 3 Infrastructure 2 Developed Equity Global High Infrastructure UK Government Bonds +0.05 1 Cash Yield Bonds Debt 0 UK Corporate Bonds (0.16) -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 -2 All UK UK Property (0.16) Government UK Index-Linked Gilts -3 Bonds UK Corporate UK Wholesale Electricity Prices (0.30) -4 Bonds Expected 5 Year Annual Return % Annual Return 5 Year Expected -5 UK Large Cap Equities (0.32) -6 Expected 5 Year Annual Volatility (%) Global High Yield Bonds (0.60) Equities Fixed income Private Markets

Forestry is a real asset, and a natural and growing store of value, independent of the economic cycle.

7. Foresight analysis of market data, sources available on request. 8. Time period set to 2011 – 2017. IPD index discontinued in 2017. Climate change and biodiversity loss: the greatest health risk faced by humans and the natural world

CO2 is the most abundant Green House International recognition that forestry is a leading part of the climate change solution Gas (“GHG”) that directly contributes to • As grow, they absorb and store C02. Further, climate change. displacement of carbon-intensive building materials (e.g. steel, cement & plastic) with timber products has huge potential to deliver net carbon and other environmental 10 Global by Gas benefits . • The World Economic Forum (“WEF”) has launched a global initiative to grow, restore and conserve 1 trillion 65% Carbon Dioxide (Fossil fuel emissons) trees around the world - in a bid to restore biodiversity and help fight climate change. 16% Methane • The WEF estimate that nature-based solutions can 11% Carbon Dioxide () provide up to one-third of the emissions reductions required by 2030 to meet the Paris Agreement targets. 6% Nitrous Oxide

2% Fluorinated Gases In addition to helping fight climate change, properly planned and managed commercial forestry offers further ESG benefits:

• Protected areas of rich natural habitat and biodiversity; Climate change is the greatest threat to • Clean water benefits; human health in history9 • Soil erosion, flood and landslide resilience; We live in a highly interconnected world. The consequences of climate change are far reaching; from an unprecedented • Supports rural jobs; loss of biodiversity to extreme weather conditions, and • Supports the UK economy through trade of timber; and the social and economic consequences that accompany • Active engagement enabling health and social benefits for such change. local communities.

UK Afforestation Schemes

The Government has recognised that planting new forests will be a key contributor to achieving the UK’s net zero emissions targets by 2050. In 2020 Rishi Sunak announced an annual target to plant “the size of Birmingham” (equivalent to 30,000 hectares) with new forests across England.

The Company intends to actively contribute to the UK Farmland Values11,12 planting of new UK forests with an allocation of up to 50% of GBP thousand per Hectare Gross Asset Value (“GAV”) to afforestation projects. Commercial Forestry 26 Afforestation projects offer attractive development returns Prime Arable Land 22 by transforming lower grade farmland into conifer and broadleaf forest. Opportunistically selling the sites once the Grade 3 Arable 18 trees have established themselves can generate an attractive Prime Dairy 17 capital gain or they can be held for the long term to enjoy 2.6x All Land Types 17 timber yield. There is scope for considerable upside in the carbon market and Foresight intends to execute a carbon Poor Arable 16 strategy that maximises the value of the carbon units that Grade 3 Livestock 13 the sites are expected to generate. Poor Livestock 10 Maintaining areas of biodiversity on each site, as well as Target Land for Afforestation sustainable commercial timberland management, are both integral to the success of afforestation projects. Testament to this, the Company will target double forestry certification The Company will look to further enhance on all forestry assets by the Forestry Stewardship Council returns by pursuing afforestation development (“FSC”) and Program for the Endorsement of Forest that can offer the potential for total returns of Certification (“PEFC”). 2-3X on each asset over a ten year period. 9. International Panel on Climate Change 10. Jefferies 11. Savills Farmland Survey to December 2019 12. John Clegg & Co. Forest Market Report 2020 About Foresight Group FORMED IN 1984 Foresight Group was established in 1984 and now Foresight Group has built its manages money for more than 28,000 private reputation amongst investors by delivering strong performance investors and over 200 institutional investors, from unquoted UK investments for more than 35 years including some of the world’s leading financial institutions, government organisations, pension funds and insurance companies. SHARES IN FORESIGHT GROUP HOLDINGS LIMITED Over £7.8 billion 200+ begin trading on the Main Market of the London Stock Exchange Assets under institutional investors Management including Blackrock, the European Investment Bank on behalf of leading 2021 and Legal & General institutional and private investors

Investment advisor to Foresight Group Forestry Credentials: two UK focused Investment Companies with • Actively tracked the forestry market since 2016

• Developed Foresight Forestry investment strategy £1.2 BILLION of AUM: in 2019, acquiring the first asset in 2020 FORESIGHT SOLAR • Acquired or holds exclusivity over 34 forestry and FUND LIMITED afforestation assets covering c. 11,700 HA of land is the largest UK listed dedicated solar energy fund • Value of acquired or in exclusivity assets by market capitalisation. c.£130 million, observes an annual forestry deal flow of over £300 million JLEN manages a diversified portfolio • Diversified portfolio by age, yield class of UK renewables, including and geography bioenergy, solar, wind, hydro and battery storage

AUM by Investment Strategy

Global sustainable infrastructure, renewable energy and real estate 10% £7.8 Private Equity BILLION 90% Foresight Group Holdings Limited was awarded the Green Economy Mark at IPO in February 2021. This recognises companies that derive 50% or more of their revenues from environmental solutions. Details of the Company

Indicative Company Term Sheet

Company Foresight Sustainable Forestry Company (“Company”)

Listing and domicile UK domiciled investment trust, trading on the London Stock Exchange's Main Market, Premium Segment of the Official List. Investment Manager Foresight Group LLP

Lead Managers Robert Guest and Richard Kelly, Foresight Group LLP Fully independent board of non-Executive Directors (diversified by age and gender) with relevant experience Company Board has been recruited and is ready to be appointed. Jefferies International Ltd. have been appointed sole bookrunner. The Company’s shares at IPO will be available Distribution via an intermediaries offer arranged by Rothschild & Co. and supported by Primary Bid.

Denomination GBP

Domicile United Kingdom

Target Issue Size GBP £150 million (minimum issue of GBP £130 million and maximum issue of GBP £200 million).

Cornerstone Investor Up to 29.99% cornerstone investment in the Company has been secured from the Foresight Inheritance Tax Fund.

Target Seeding More than 50% of the Company will be seeded at IPO.

Target Return More than CPI + 5% per annum on a rolling five year basis, based on NAV once the Company is substantially invested.

Management Fees 0.85% p.a. of NAV up to £500 million and 0.75% p.a. of NAV in excess of £500 million. No performance fees or deal fees.

Ongoing Charges 1.3% of NAV assuming a £150 million issue at IPO.

Valuations Independent value of portfolio determined annually, with unaudited interim valuations determined quarterly. The Board will follow a prudent approach to gearing for the asset class and will maintain a conservative level of aggregate borrowings that are not to exceed 30% of GAV. Borrowings may be used primarily for share buybacks, short-term liquidity or short- Gearing term investment purposes. Management fees are chargeable on RCF drawn balance for up to 12 months when used for asset purchases. Market share buy-back authority of 14.99%. After the fund deployment period (ie. after 12 months from IPO), the Company Share Repurchase will use uncommitted cash for share buybacks if the average 12 month rating is a discount to NAV of 5% or wider.

Continuation Vote Continuation vote at year 6 and every 5th year thereafter.

At least 50% of GAV will be allocated to established forestry. Up to 50% of GAV may be allocated to afforestation Target Investments projects. At least 90% of GAV will be allocated to UK assets. Up to 10% of GAV may be allocated to forestry and afforestation projects located in European Economic Area (“EEA”) countries.

Sustainable Evaluation Criteria (“SEC”): The Company will apply a holistic and integrated approach to sustainability using Foresight’s proprietary SEC. Sustainability is central to the Company’s strategy, with measurable targets and comprehensive reporting. EU Green Taxonomy classification: Sustainable forestry and afforestation offer the highest classification of sustainable activity available under the EU Green Taxonomy.

Sustainability and EU Sustainable Finance Disclosure Regulation (“SFDR”): The Company expects to meet the Article 9, "dark green", ESG Credentials criteria. Woodland Carbon Code certified: The carbon sequestration of afforestation schemes will be tracked and validated via the UK Woodland Carbon Code. United Nations Sustainable Development Goals (“SDGs”): The Company directly contributes to 5 UN SDGs: Goal 3 (Health, Wellbeing), Goal 6 (Clean Water, Sanitation), Goal 12 (Responsible consumption/production), Goal 13 (Climate Action) and Goal 15 (Life on Land). London Stock Exchange Green Economy Mark: It is expected that the Company will qualify.

What’s Next? If you would like to discuss this investment opportunity with someone at Jefferies, please do not hesitate to contact either Neil Winward (020 7029 8140 / [email protected]) or Lee Morton (020 7029 8753 / [email protected]). Important information

This document is issued by Foresight Group LLP (“Foresight”) in relation to the proposed launch of the Company for the confidential use of only those persons to whom it is distributed and is not to be reproduced, distributed or used for any other purpose. By accepting delivery of this document, each recipient agrees to treat this document as strictly confidential and not to reproduce, distribute or otherwise use this document or any of its contents without the prior written consent of Foresight. This document is an advertisement and not a prospectus and investors should not subscribe for or purchase any securities except on the basis of information in any prospectus to be published by the Company in due course (and which, if published, will be made available by the Company) which will supersede and qualify in its entirety all the information set forth in this document. 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The offer and sale of shares in the Company (“Shares”) has not been and will not be registered under the applicable securities laws of any member state of the European Economic Area (the “EEA”), the United States, Canada, Australia, the Republic of South Africa or Japan. Subject to certain exemptions, the Shares may not be offered to or sold within the EEA, the United States, Canada, Australia, the Republic of South Africa or Japan or to any national, resident or citizen of the EEA, the United States, Canada, Australia, the Republic of South Africa or Japan. The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). Outside the United States, the Shares may be sold to persons who are not “U.S. Persons”, as defined in and pursuant to Regulation S under theU.S. Securities Act. 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