Rec' Acquisition of Foresight Sustainable Forestry

Averon Park Limited

29 May 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS, A PROSPECTUS EQUIVALENT DOCUMENT OR SCHEME DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE ALTERNATIVE OFFER OR ROLLOVER SHARES EXCEPT ON THE BASIS OF THE INFORMATION TO BE CONTAINED IN THE SCHEME DOCUMENT WHICH IS PROPOSED TO BE PUBLISHED IN DUE COURSE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

29 May 2024

RECOMMENDED ACQUISITION

FORESIGHT SUSTAINABLE FORESTRY COMPANY PLC

ARIZONA BIDCO LIMITED

(a newly formed vehicle, wholly-owned, indirectly, by Averon Park Limited)

to be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006

Summary

· The boards of directors of Averon Park Limited ("Averon Park") and Foresight Sustainable Forestry Company plc ("FSFC") are pleased to announce that they have reached agreement on the terms of a recommended acquisition, pursuant to which Arizona Bidco Limited ("Bidco"), a wholly-owned indirect subsidiary of Averon Park, will acquire the entire issued and to be issued ordinary share capital of FSFC that the Averon Park Group does not already own (the "Acquisition").

· It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (the "Scheme").

· Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to the full terms and conditions which will be set out in the Scheme Document, each Scheme Shareholder at the Scheme Record Time will be entitled to receive:

for each Scheme Share: 97 pence in cash (the "Cash Offer")

· The Offer Price represents:

· a premium of approximately 32.88 per cent. to the Closing Price of 73.0 pence per FSFC Share on 28 May 2024 (being the Latest Practicable Date);

· a premium of approximately 43.28 per cent. to the volume weighted average price of 67.7 pence per FSFC Share for the three-month period ended 28 May 2024 (being the Latest Practicable Date);

· a premium of approximately 44.24 per cent. to the volume weighted average price of 67.3 pence per FSFC Share for the six-month period ended 28 May 2024 (being the Latest Practicable Date); and

· a discount of approximately 5.09 per cent. to the unaudited net asset value of FSFC as at 31 March 2024 (the "31 March 2024 NAV") of 102.2 pence per FSFC Share.

· The Cash Offer values the entire issued ordinary share capital of FSFC at approximately £167 million.

· As an alternative to the Cash Offer, Scheme Shareholders (other than Scheme Shareholders resident or located in a Restricted Jurisdiction) may elect to receive one unlisted B ordinary share in the capital of Bidco (a "Rollover Share") for each Scheme Share held (the "Alternative Offer"). An eligible Scheme Shareholder may elect to take up the Alternative Offer in respect of all of their holding of Scheme Shares and not part only. The maximum number of Rollover Shares available to be issued to eligible Scheme Shareholders under the Alternative Offer will be limited to, in aggregate, the equivalent of 24.99 per cent. of the Bidco Offer Shares (being, in summary, the aggregate of the Bidco A Ordinary Shares and Rollover Shares to be issued on or around the Effective Date). The availability of the Alternative Offer is conditional upon valid elections being made for such number of Rollover Shares which represent, in aggregate, at least 5 per cent. of the Bidco Offer Shares, failing which it will lapse. In these circumstances, no Rollover Shares will be issued and the consideration payable in respect of each Scheme Share will be settled in cash in accordance with the terms of the Cash Offer.

· The principal terms and conditions of the Alternative Offer are set out in paragraph 11 of this announcement and a summary of the rights and restrictions attaching to the Rollover Shares is set out in Appendix 4 to this announcement. The Rollover Shares will neither be listed nor transferable (subject to certain limited exceptions). An estimate by Singer Capital Markets (as Financial Adviser to Bidco, Blackmead Infrastructure Limited ("Blackmead") and Averon Park) of the range of values that may be attributed to a Rollover Share, together with the assumptions, qualifications and caveats forming the basis of its estimate of such values, will be set out in a letter to be included in the Scheme Document.

· As set out below, Bidco has received indications of support in the form of irrevocable undertakings and letters of intent from Scheme Shareholders representing, in aggregate, approximately 18.91 per cent. of FSFC's issued ordinary share capital.

· Bidco is a newly-incorporated company, formed at the direction of Blackmead, for the purposes of the Acquisition. Blackmead, which holds 29.64 per cent. of FSFC's issued ordinary share capital as at the Latest Practicable Date (and is eligible to vote at the General Meeting but not at the Court Meeting), is a wholly-owned subsidiary of Averon Park, the principal activity of which is to provide finance for unquoted trading companies in which it has an equity stake, and which are backed predominately by infrastructure assets with a low risk profile and where capital preservation is key. Foresight Group LLP (the "Investment Manager") acts as discretionary investment manager to Averon Park and also provides (or procures the provision of) company secretarial, administration and custodian services to Averon Park. The Investment Manager also acts as alternative investment fund manager and provides company secretarial and administration services to FSFC.

· A valuation report in respect of FSFC's portfolio of forestry and afforestation assets as at 31 March 2024, prepared in accordance with Rule 29 of the Code, is set out in Appendix 5 to this announcement. A valuation report will also be included in the Scheme Document.

· For information on the impact of any dividend and/or other distribution by FSFC subsequent to this announcement on the Cash Offer, see paragraph 2 in the body of this announcement below.

Strategic rationale

· Averon Park's board of directors (the "Averon Park Board") believes that forestry represents an attractive asset class to diversify investors' portfolios, protect against inflation and offers an opportunity to benefit from trends in favour of home-grown timber production. Alongside these benefits, forestry provides significant environmental and social benefits that are important in their own right and appeal to many investors.

· Averon Park is a long-term private investor with a diverse portfolio of investments in sustainable infrastructure and real asset backed businesses. Averon Park has significant experience in the specialised UK forestry sector as it is already a substantial investor in UK forestry, agriculture and sustainable land assets, having invested in forestry assets since 2020 and currently owning 7,292 hectares of UK forestry in addition to its indirect holding in FSFC.

· The Averon Park Board is pleased by the progress made by FSFC so far under the management of the Investment Manager, and strongly believes in the long-term potential for FSFC to deliver on its investment objective. However, given the adverse macroeconomic backdrop affecting the UK investment trust market, as reflected by the discount to NAV at which FSFC Shares and the wider investment trust market have been trading over the past 12 months, the Averon Park Board believes that there is a low likelihood of this potential being reflected in the FSFC Share price in the medium-term.

· FSFC's persistent share price discount to NAV has prevented FSFC from raising further funds to continue its growth as a publicly traded company and improve liquidity for investors. The Averon Park Board wishes to allocate further capital of Averon Park to UK forestry and afforestation assets and believes that FSFC will be better able to achieve its growth aspirations with better access to capital as a private vehicle.

· FSFC aims to make a direct contribution in the fight against climate change. Averon Park shares this goal and is well placed to support FSFC's existing portfolio in its next phase of growth, having owned certain of FSFC's assets prior to its IPO in November 2021.

Recommendation

· The FSFC Directors, who have been so advised by Stifel as to the financial terms of the Cash Offer, consider the terms of the Cash Offer to be fair and reasonable. In providing its advice to the FSFC Directors, Stifel has taken into account the commercial assessments of the FSFC Directors. Stifel is providing independent financial advice to the FSFC Directors for the purposes of Rule 3 of the Code.

· The FSFC Directors and Stifel have considered the disadvantages and advantages outlined below in relation to the Alternative Offer.

· Stifel is unable to advise the FSFC Directors as to whether or not the financial terms of the Alternative Offer are fair and reasonable. This is because Stifel has not had any involvement in the development and validation of any financial projections for Bidco. As a result, Stifel is unable to assess any plans Bidco may have for the development of FSFC to the degree necessary to form an assessment of the value of the Alternative Offer. Stifel also notes the significant and variable impact that the disadvantages and advantages of the Alternative Offer may have for individual eligible Scheme Shareholders.

· Accordingly, the FSFC Directors are unable to form an opinion as to whether or not the terms of the Alternative Offer are fair and reasonable and are not making any recommendation to eligible Scheme Shareholders as to whether or not they should elect for the Alternative Offer. Eligible Scheme Shareholders are encouraged to take into account the disadvantages and advantages highlighted below, as well as their individual circumstances, when deciding whether or not to elect for the Alternative Offer in respect of their entire holding of Scheme Shares.

· The FSFC Directors intend to unanimously recommend that the Scheme Voting Shareholders vote (or procure the vote) in favour of the Scheme at the Court Meeting and FSFC Shareholders vote (or procure the vote) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as they have irrevocably undertaken to do in respect of their own beneficial holdings of, in aggregate, 244,000 FSFC Shares representing, in aggregate, approximately 0.14 per cent. of the issued ordinary share capital of FSFC and approximately 0.20 per cent. of the Scheme Voting Shares (being those Scheme Shares eligible to vote at the Court Meeting), in each case as at the Latest Practicable Date.

· None of the FSFC Directors intend to elect for the Alternative Offer in respect of their own holdings of FSFC Shares.

· The FSFC Directors consider that, in deciding whether or not to elect for the Alternative Offer, eligible Scheme Shareholders should take their own independent advice and consider carefully the disadvantages and advantages of electing for the Alternative Offer (including, but not limited to, those set out below) in the light of their own financial circumstances and investment objectives.

Disadvantages of electing for the Alternative Offer

· Eligible Scheme Shareholders may elect to take up the Alternative Offer in respect of all of their holding of Scheme Shares and not part only and therefore electing for the Alternative Offer will mean that they receive no cash pursuant to the Acquisition, except in the event that their election for the Alternative Offer is scaled back (as detailed in paragraph 11 below).

· The Rollover Shares will be:

· unlisted and will not be admitted to trading on any stock exchange or market for the trading of securities and will, therefore, be illiquid. As a result, any assessment of the value of the Rollover Shares should take into account an individual shareholder's assessment of an appropriate liquidity discount;

· of uncertain value and there can be no assurance that they will be capable of being sold in the future or that they will be capable of being sold at a price within the range of values to be estimated by Singer Capital Markets in the Scheme Document; and

· non-transferable, save in very limited circumstances as set out in Appendix 4 of this announcement.

· The amount payable by Bidco to Rollover Shareholders in respect of any repurchase of Rollover Shares pursuant to, and the availability of, an Annual Tender Offer and/or the Bidco Share buybacks described in Appendix 4 will depend on the future performance of FSFC's business under Averon Park's ownership. This remains uncertain and could result in the amount received being less than the cash consideration foregone under the Cash Offer.

· Rollover Shareholders will have limited control over the timing and value at which they may be able to realise their investment in Bidco.

· From the Effective Date, Bidco will be controlled by Blackmead. Holders of the Rollover Shares, which will not carry any general voting rights at general meetings of Bidco nor the right to receive a copy of or vote on any written resolutions of shareholders of Bidco and will have consent rights only in respect of a very limited number of reserved matters, will therefore have no influence over decisions made by Bidco or the Bidco Board in relation to its investment in FSFC or the conduct of FSFC's business or in any other business.

· The rights of Rollover Shareholders to participate in future issues of securities by Bidco will be subject to certain exceptions (including those described in paragraph 7 of Appendix 4) which may result in them suffering significant dilution.

· FSFC Shares are currently listed on the premium listing segment of the Official List of the FCA and traded on the London Stock Exchange's main market for listed securities. FSFC Shareholders are afforded certain standards and protections, including in respect of disclosure, as a result. FSFC Shareholders who elect to receive Rollover Shares (being unlisted securities in a private company) will not be afforded standards and protections commensurate with those that they currently benefit from as shareholders in FSFC.

· Payments in respect of Rollover Shares will not be guaranteed or secured.

· Eligible Scheme Shareholders will have no certainty as to the amount of Rollover Shares they will receive because:

· the maximum number of Rollover Shares available to eligible Scheme Shareholders under the Alternative Offer will be limited to the equivalent of 24.99 per cent. of the Bidco Offer Shares;

· to the extent that elections for the Alternative Offer cannot be satisfied in full, the number of Rollover Shares to be issued to each Scheme Shareholder eligible to participate in the Alternative Offer who has elected for the Alternative Offer will be reduced on a pro rata basis, and the consideration for each Scheme Share that is not exchanged for a Rollover Share will be paid in cash in accordance with the terms of the Cash Offer; and

· the availability of the Alternative Offer is conditional upon valid elections being made for such number of Rollover Shares which represent, in aggregate, at least 5 per cent. of the Bidco Offer Shares, failing which it will lapse.

· The Rollover Shares may be ineligible for inclusion in ISAs and SIPPs and may not be capable of being held through retail platforms.

Advantages of electing for the Alternative Offer

The Alternative Offer allows eligible Scheme Shareholders to invest directly in Bidco, providing continued economic exposure to FSFC under private ownership.

· From completion of the Acquisition, the Rollover Shares will rank economically pari passu with Bidco A Ordinary Shares in issue (which will be held by Blackmead) at the time the Rollover Shares are allotted and issued, including the right to receive and retain any dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date.

· Holders of Rollover Shares may be offered the opportunity to have their Rollover Shares bought back by Bidco during certain pre-defined periods pursuant to an Annual Tender Offer, as summarised in Appendix 4 to this announcement.

· Scheme Shareholders should also ascertain whether acquiring or holding Rollover Shares is affected by the laws of the relevant jurisdiction in which they reside and consider whether Rollover Shares are a suitable investment in the light of their own personal circumstances. Scheme Shareholders are, therefore, strongly recommended to seek their own independent financial, tax and legal advice in the light of their own particular circumstances and investment objectives before deciding whether to elect for the Alternative Offer in respect of their entire holding of Scheme Shares. Any decision to elect for the Alternative Offer should be based on independent financial, tax and legal advice and full consideration of the information in this announcement and the Scheme Document (once published).

Irrevocable undertakings and letters of intent

· Bidco has received commitments and indications of support for the Acquisition from FSFC Shareholders in respect of 32,536,971 FSFC Shares representing, in aggregate, approximately 26.88 per cent. of the FSFC Shares eligible to vote at the Court Meeting as at the Latest Practicable Date.

· These commitments and indications comprise irrevocable undertakings in respect of 8,344,000 FSFC Shares representing, in aggregate, approximately 6.89 per cent. of the Scheme Voting Shares, and non-binding letters of intent in respect of 24,192,971 FSFC Shares representing, in aggregate, approximately 19.99 per cent. of the Scheme Voting Shares, in each case as at the Latest Practicable Date.

· The irrevocable undertakings include irrevocable undertakings received from each of the FSFC Directors to vote (or procure the vote): (i) in favour of the Scheme at the Court Meeting; and (ii) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of their entire beneficial holding of Scheme Shares. In aggregate, this represents 244,000 FSFC Shares, being all of the FSFC Shares currently beneficially held by such FSFC Directors, and approximately 0.20 per cent. of the Scheme Voting Shares as at the Latest Practicable Date. None of the FSFC Directors has irrevocably undertaken to elect for the Alternative Offer.

· These commitments and undertakings also include an irrevocable undertaking received from Greenbank, the ethical, sustainable and impact arm of Rathbones Group Plc, and non-binding letters of intent from Aviva Investors and Cantor Fitzgerald Ireland Limited, in each case to vote (or to procure the vote) (i) in favour of the Scheme at the Court Meeting and (ii) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer). In aggregate, such irrevocable undertaking represents 8,100,000 FSFC Shares and approximately 6.69 per cent. of the Scheme Voting Shares as at the Latest Practicable Date. The non-binding letters of intent represent, in aggregate, 24,192,971 FSFC Shares and approximately 19.99 per cent. of the Scheme Voting Shares as at the Latest Practicable Date.

· Further details of these irrevocable undertakings (including the circumstances in which they may lapse) and the non-binding letters of intent are set out in Appendix 3 to this announcement.

Conditions, timetable and valuation report

· It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. However, Bidco reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of a Takeover Offer.

· The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 to this announcement and to the full terms and conditions that will be set out in the Scheme Document. The Conditions include, among other things: (i) the approval of Scheme Voting Shareholders at the Court Meeting and the passing of the Resolutions at the General Meeting; (ii) the sanction of the Scheme by the Court; and (iii) the Scheme becoming Effective by no later than the Long Stop Date. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Voting Shareholders representing at least 75 per cent. of the voting rights of Scheme Voting Shareholders, in each case present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of such meeting.

· It is expected that the Scheme Document, containing full details of the Scheme and notices of the Court Meeting and General Meeting, together with the Forms of Proxy and Form of Election, will be sent to FSFC Shareholders within 28 days of this announcement (or such later time as FSFC, Bidco and the Panel may agree).

· Subject to the satisfaction or, where applicable, waiver of the Conditions, it is expected that the Scheme will become Effective in the third quarter of 2024. An expected timetable of principal events relating to the Acquisition will be provided in the Scheme Document.

· For the purposes of Rule 29.5 of the Code, Savills has confirmed to the FSFC Board that an updated valuation of FSFC's portfolio as at the date of this announcement would not be materially different from the valuation given by Savills as at 31 March 2024 and contained in the Savills valuation report set out in Appendix 5 to this announcement.

Commenting on the Acquisition, Richard Davidson, FSFC's Chairman, said:

"The offer from Arizona Bidco is at a price that represents a significant premium to the volume weighted average price for the past three months. We believe this offer represents good value for shareholders, and therefore we are recommending it. The structure of the deal means investors can continue to participate in the compelling investment fundamentals presented by the forestry and carbon credit industries through a private structure."

Commenting on the Acquisition, Graham Ross Russell, independent non-executive director of Averon Park, said:

"Since its IPO, the FSFC team has rapidly developed its portfolio to become a leading forestry and afforestation player in the UK. Demand for domestic sources of timber and high integrity carbon credits is increasing, and the transaction presents good value for all involved and a great opportunity to grow the portfolio."

This summary should be read in conjunction with, and is subject to, the full text of this announcement and its Appendices.

The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document. The sources and bases of calculation of certain information contained in this announcement are set out in Appendix 2. Details of the irrevocable undertakings and the letters of intent given in relation to the Acquisition are set out in Appendix 3. Appendix 4 contains details of Bidco, Averon Park, the Rollover Shares and eligibility to elect for the Rollover Shares. The valuation report prepared by Savills in respect of FSFC's portfolio of forestry and afforestation assets as at 31 March 2024 is set out in Appendix 5 to this announcement pursuant to Rule 29 of the Code. Definitions of certain terms used in this announcement are set out in Appendix 6.

Enquiries:

Singer Capital Markets (Financial Adviser to Bidco, Blackmead and Averon Park)

Robert Peel

Alaina Wong

Angus Campbell

James Todd

Tel: +44 (0) 20 7496 3000

Averon Park

Matt Hammond

Charlie Wright

Anouska Morjaria

Tel: +44 (0) 20 3667 8100

FSFC

Richard Davidson (Chairman)

Via SEC Newgate

Stifel (Rule 3 Financial Adviser and Broker to FSFC)

Edward Gibson-Watt

Nick Harland

Rajpal Padam

Bruno Benega

Tel: +44 (0) 20 7710 7600

SEC Newgate (PR Adviser to FSFC)

Elisabeth Cowell

Robin Tozer

Alice Cho

Harry Handyside

E: FSF@secnewgate.co.uk

Tel: +44 (0) 7900 248 213

Tel: +44 (0) 7540 106 366

The person responsible for arranging the release of this announcement on behalf of FSFC is Richard Davidson, Chairman.

Dickson Minto LLP is acting as legal adviser to Bidco, Blackmead and Averon Park.

Gowling WLG (UK) LLP is acting as legal adviser to FSFC.

Important notices relating to financial advisers

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Financial Adviser exclusively to FSFC and no one else in connection with the matters described in this announcement and will not regard any other person as its client in respect thereof or be responsible to anyone other than FSFC for providing the protections afforded to clients of Stifel or its affiliates nor for providing advice in connection with any matter referred to in this announcement. Neither Stifel nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Stifel or its affiliates in connection with this announcement, any statement contained herein, the Acquisition or otherwise. No representation or warranty, express or implied, is made by Stifel as to the contents of this announcement.

Singer Capital Markets Advisory LLP ("Singer Capital Markets"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Financial Adviser exclusively to Bidco, Blackmead and Averon Park and no-one else in connection with the matters described in this announcement and will not regard any other person as its client in respect thereof or be responsible to anyone other than Bidco, Blackmead or Averon Park or its affiliates for providing the protections afforded to clients of Singer Capital Markets or its affiliates nor for providing advice in connection with any matter referred to in this announcement. Neither Singer Capital Markets nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Singer Capital Markets or its affiliates in connection with this announcement, any statement contained herein, the Acquisition or otherwise. No representation or warranty, express or implied, is made by Singer Capital Markets as to the contents of this announcement.

In accordance with the Code and normal United Kingdom market practice, Singer Capital Markets or its affiliates will continue to act as exempt principal traders in FSFC securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Further information

This announcement is for information purposes only. It is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities in FSFC in any jurisdiction in contravention of applicable law. The Acquisition will be made solely through the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme. Any voting decision or response in relation to the Acquisition should be made solely on the basis of the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the Offer Document). FSFC and Bidco urge FSFC Shareholders to read the Scheme Document carefully when it becomes available because it will contain important information relating to the Acquisition.

The statements contained in this announcement are made as at the date of this announcement, unless some other time is specified in relation to them, and the release of this announcement shall not give rise to any implication that there has been no change in the facts set out in this announcement since such date. This announcement is an advertisement and does not constitute a prospectus or a prospectus equivalent document.

No person should construe the contents of this announcement as legal, financial or tax advice. If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant, or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Overseas shareholders

This announcement has been prepared in accordance with, and for the purpose of complying with, English law, the Code, MAR and the DTRs, and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England.

The release, publication or distribution of this announcement in, into or from jurisdictions other than the United Kingdom may be restricted by law and/or regulation and therefore any persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom to participate in the Acquisition or to vote their Scheme Voting Shares or FSFC Shares (as applicable) in respect of the Scheme at the Court Meeting or the Resolutions at the General Meeting, or to appoint another person as proxy to vote at the Court Meeting or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that jurisdiction. To the fullest extent permitted by applicable law, the companies, advisers and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by Bidco or required by the Code, and permitted by applicable law and regulation, the Acquisition (including the Alternative Offer) shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws or regulations in that jurisdiction and no person may vote in favour of the Acquisition by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

Copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction or any other jurisdiction where to do so would constitute a violation of the laws or regulations of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in, into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of, or acceptance of, the Acquisition.

If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law or regulation), the Takeover Offer may not be made, directly or indirectly, in or into, or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and the Takeover Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

The availability of the Acquisition to FSFC Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

The availability of the Rollover Shares to persons who are not resident in the United Kingdom may be affected by the laws and/or regulations of the relevant jurisdiction in which they are located. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Where Bidco believes that an election for the Alternative Offer by any Scheme Shareholder may infringe applicable legal or regulatory requirements, or may result in a requirement for a registration under the securities laws of any Restricted Jurisdiction, Bidco will have the right to deem that such Scheme Shareholder has not validly elected for the Alternative Offer and such Scheme Shareholder will instead receive the Cash Offer in respect of the Scheme Shares which were subject to such an election in accordance with the terms of the Acquisition.

Further details in relation to FSFC Shareholders in overseas jurisdictions will be contained in the Scheme Document.

The Acquisition will be subject to the applicable requirements of English law, the Court, the Code, the Panel and the London Stock Exchange.

Additional information for US investors

The Acquisition relates to the shares of an English company and is expected to be implemented by means of a scheme of arrangement provided for under the Companies Act. A transaction implemented by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. The Acquisition is subject to the disclosure requirements and practices applicable to a scheme of arrangement involving a target company in England whose shares are traded on the main market of the London Stock Exchange, which differ from the disclosure requirements of the US tender offer and proxy solicitation rules.

The financial information with respect to FSFC included in this announcement and the Scheme Document (or, if the Acquisition is implemented by way of a Takeover Offer, the Offer Document) has been or will have been prepared in accordance with UK IFRS and may not therefore be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. Generally accepted accounting principles in the United States differ in certain significant respects from UK IFRS.

If, in the future, Bidco exercises its right to implement the Acquisition by way of a Takeover Offer and determines to extend the Takeover Offer into the US, the Acquisition will be made in compliance with applicable US laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder.

The receipt of cash pursuant to the Acquisition by US FSFC Shareholders as consideration for the transfer of FSFC Shares pursuant to the Scheme may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each FSFC Shareholder (including each US FSFC Shareholder) is urged to consult their own independent professional adviser immediately regarding the legal and tax consequences of the Acquisition applicable to them.

Any Rollover Shares to be issued pursuant to the Acquisition have not been and will not be registered under the US Securities Act or under the relevant securities laws of any state or territory or other jurisdiction of the United States. Accordingly, the Rollover Shares may not be offered, sold or delivered, directly or indirectly, in or into the US except pursuant to exemptions from, or transactions not subject to, the applicable requirements of such jurisdiction. It is expected that any Rollover Shares to be issued to FSFC Shareholders resident, or located, in the US will be issued in reliance upon the exemption from such registration provided by section 3(a)(10) of the US Securities Act.

Neither the SEC nor any US state securities commission has approved or disapproved or passed judgment upon the fairness or the merits of the Acquisition or determined if this announcement is adequate, accurate or complete. Any representation to the contrary is a criminal offence in the US.

Each of FSFC and Bidco is incorporated under the laws of England and Wales. In addition, some or all of their respective officers and directors reside outside the US, and some or all of their respective assets are or may be located in jurisdictions outside the US. Therefore, investors may have difficulty effecting service of process within the US upon those persons or recovering against FSFC or Bidco or their respective officers or directors on judgments of US courts, including judgments based upon the civil liability provisions of US federal securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment. It may not be possible to sue FSFC or Bidco or their respective officers or directors in a non-US court for violations of US securities laws.

In accordance with normal United Kingdom practice and pursuant to Rule 14e-5(b) of the US Exchange Act, to the extent applicable, Bidco or its nominees or brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, FSFC Shares outside the US, other than pursuant to the Acquisition, until the date on which the Acquisition becomes Effective, lapses or is otherwise withdrawn, in compliance with applicable law, including the US Exchange Act. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported via a Regulatory Information Service and will be available on the London Stock Exchange website at: http://www.londonstockexchange.com.

Further details in relation to US investors in FSFC will be contained in the Scheme Document.

Forward-looking statements

This announcement contains certain statements which are, or may be deemed to be, "forward-looking statements". These statements are prospective in nature and are not based on historical facts, but rather on the current expectations and projections of the management of Bidco, Averon Park and/or FSFC (as the case may be) about future events, and are, therefore, naturally subject to risks, uncertainties and changes in circumstances that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Forward-looking statements often use words such as, without limitation, "anticipate", "target", "expect", "estimate", "intend", "plan", "forecast", "project", "goal", "believe", "aim", "will", "may", "hope", "continue", "would", "could" or "should" or other words of similar meaning or the negative thereof. Forward-looking statements include, but are not limited to, statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses and future prospects, (ii) business and management strategies and the expansion and growth of the operations of FSFC or Bidco, and (iii) the effects of government regulation on the business of FSFC or Bidco. There are many factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among such factors are changes in global, political, economic, business, competitive, market and regulatory forces, circumstances or conditions, future exchange and interest rates, changes in tax rates and future business combinations or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Except as expressly provided in this announcement, neither they nor any other statements have been reviewed by the auditors of Bidco, Averon Park and/or FSFC. By their nature, these forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. The factors described in the context of such forward-looking statements in this announcement may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, none of Bidco, Averon Park and/or FSFC can give any assurance that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. None of Bidco, Averon Park and/or FSFC or their respective members, directors, officers, employees, advisers or any person acting on behalf of one or more of them, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

Except as required by the FCA, the London Stock Exchange, the Part VI Rules or any other applicable law and/or regulation, none of Bidco, Averon Park and/or FSFC or their respective members, directors, officers, employees, advisers or any person acting on behalf of one or more of them, has any intention or accepts any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. All subsequent oral or written forward-looking statements attributable to Bidco, Averon Park, FSFC or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

No profit forecasts or estimates or quantified financial benefit statements

No statement in this announcement is intended as a profit forecast, profit estimate or quantified financial benefit statement for, or in respect of, Bidco, Blackmead, Averon Park or FSFC for any period and no statement in this announcement should be interpreted to mean that cash flow from operations, earnings, or earnings per share or income of those persons (where relevant) for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, earnings, earnings per share or income of those persons (as appropriate).

Publication on websites

A copy of this announcement and the documents required to be published pursuant to Rule 26.1 and Rule 26.2 of the Code will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, on Bidco's website at https://communications.singercm.com/p/4UWI-F5D/arizona-bidco and on FSFC's website at fsfc.foresightgroup.eu/offer-fsfc by no later than 12 noon on the Business Day following the date of this announcement.

Neither the content of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this announcement.

Requesting hard copy documents

In accordance with Rule 30.3 of the Code, a person so entitled may request a copy of this announcement in hard copy form free of charge. A person may also request that all future documents, announcements and information sent to that person in relation to the Acquisition should be in hard copy form. For persons who have received a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement will not be sent to you unless you have previously notified FSFC's registrar, Computershare Investor Services PLC, that you wish to receive all documents in hard copy form or unless requested in accordance with the procedure set out below.

If you would like to request a hard copy of this announcement please contact Computershare during business hours on + 44 (0) 370 707 1231 (lines are open from 8.30 a.m. to 5.30 p.m., Monday to Friday (excluding public holidays in England and Wales)) or by submitting a request in writing to Computershare at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, United Kingdom. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Information relating to FSFC Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by FSFC Shareholders, persons with information rights and other relevant persons for the receipt of communications from FSFC may be provided to Bidco during the Offer Period as required under section 4 of Appendix 4 to the Code.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Code, as at close of business on the Latest Practicable Date, Bidco's issued share capital consisted of one ordinary share of £0.01 in the capital of Bidco. This ordinary share class does not have an International Securities Identification Number.

In accordance with Rule 2.9 of the Code, as at close of business on the Latest Practicable Date, FSFC's issued share capital consisted of 172,056,075 ordinary shares of £0.01 each, each with voting rights and admitted to trading on the London Stock Exchange's main market for listed securities under ISIN code GB00BMDPKM71. FSFC holds no shares in treasury.

Right to switch to a Takeover Offer

Bidco reserves the right to elect, with the consent of the Panel, to implement the Acquisition by way of a Takeover Offer as an alternative to the Scheme. If the Acquisition is effected by way of a Takeover Offer, and such offer becomes or is declared unconditional and sufficient acceptances are received, Bidco intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act so as to acquire compulsorily the remaining FSFC Shares in respect of which the Takeover Offer has not been accepted.

General

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Time

All times referred to in this announcement are London times, unless otherwise stated.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

29 May 2024

RECOMMENDED ACQUISITION

FORESIGHT SUSTAINABLE FORESTRY COMPANY PLC

ARIZONA BIDCO LIMITED

(a newly formed vehicle, wholly-owned, indirectly, by Averon Park Limited)

to be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006

1. Introduction

The Averon Park Board and FSFC Board are pleased to announce that they have reached agreement on the terms of a recommended acquisition, pursuant to which Bidco, a wholly-owned indirect subsidiary of Averon Park, will acquire the entire issued and to be issued ordinary share capital of FSFC that the Averon Park Group does not already own (the "Acquisition").

It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (the "Scheme"). However, Bidco reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of a Takeover Offer.

2. The Acquisition

Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document, each Scheme Shareholder at the Scheme Record Time will be entitled to receive:

for each Scheme Share: 97 pence in cash (the "Cash Offer")

The Offer Price represents:

· a premium of approximately 32.88 per cent. to the Closing Price of 73.0 pence per FSFC Share on 28 May 2024 (being the Latest Practicable Date);

· a premium of approximately 43.28 per cent. to the volume weighted average price of 67.7 pence per FSFC Share for the three-month period ended 28 May 2024 (being the Latest Practicable Date);

· a premium of approximately 44.24 per cent. to the volume weighted average price of 67.3 pence per FSFC Share for the six-month period ended 28 May 2024 (being the Latest Practicable Date); and

· a discount of approximately 5.09 per cent. to the 31 March 2024 NAV per FSFC Share of 102.2 pence.

The Cash Offer values the entire issued ordinary share capital of FSFC at approximately £167 million.

As an alternative to the Cash Offer, Scheme Shareholders (other than Scheme Shareholders resident or located in a Restricted Jurisdiction) may elect to receive one unlisted B ordinary share in the capital of Bidco (a "Rollover Share") for each Scheme Share held (the "Alternative Offer") subject to the terms and conditions of the Alternative Offer detailed in paragraph 11 of this announcement below.

Eligible Scheme Shareholders will be able to elect for the Alternative Offer in respect of all of their holding of FSFC Shares and not part only.

The maximum number of Rollover Shares available to be issued to eligible Scheme Shareholders under the Alternative Offer will be limited to, in aggregate, the equivalent of 24.99 per cent. of the Bidco Offer Shares (as defined in paragraph 12 below), and the availability of the Alternative Offer is conditional upon valid elections being made for such number of Rollover Shares which represent, in aggregate, at least 5 per cent. of the Bidco Offer Shares, failing which it will lapse. In these circumstances, no Rollover Shares will be issued and the consideration payable in respect of each Scheme Share will be settled in cash in accordance with the terms of the Cash Offer.

The Alternative Offer will not be offered, and Rollover Shares will not be sold or delivered, directly or indirectly, in or into any Restricted Jurisdiction (and so Scheme Shareholders in such jurisdictions will not be eligible to elect for the Alternative Offer) and individual acceptance of the Alternative Offer will only be valid if all regulatory approvals required for such Scheme Shareholder to acquire the Rollover Shares have been obtained.

An estimate by Singer Capital Markets (as Financial Adviser to Bidco, Blackmead and Averon Park) of the range of values that may be attributed to a Rollover Share, together with the assumptions, qualifications and caveats forming the basis of its estimate of such values, will be set out in a letter to be included in the Scheme Document. Further information about the Rollover Shares is set out in paragraph 11 below and in Appendix 4, and will be included in the Scheme Document.

The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 to this announcement and to the full terms and conditions which will be set out in the Scheme Document including, among other things: (i) the approval of Scheme Voting Shareholders at the Court Meeting and the passing of the Resolutions at the General Meeting; (ii) the sanction of the Scheme by the Court; and (iii) the Scheme becoming Effective by no later than the Long Stop Date. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Voting Shareholders eligible to vote, representing at least 75 per cent. of the voting rights of Scheme Voting Shareholders eligible to vote, in each case present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of such meeting.

If, on or after the date of this announcement and prior to the Effective Date, any dividend and/or other distribution and/or other return of capital or value is announced, declared, made or paid or becomes payable in respect of the FSFC Shares, Bidco reserves the right to reduce the consideration due under the terms of the Cash Offer (and, as the case may be, the consideration due under the Alternative Offer) under the terms of the Acquisition at such date up to the amount of such dividend and/or other distribution and/or other return of capital or value. In such circumstances, Scheme Shareholders shall be entitled to retain any such dividend, distribution and/or other return of capital or value declared, made or paid.

The Scheme Shares will be acquired by Bidco fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this announcement or thereafter attaching thereto, including (without limitation) voting rights and the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the date of this announcement, other than any dividend or distribution in respect of which Bidco exercises its right under the terms of the Acquisition to reduce the consideration due under the terms of the Cash Offer (and, as the case may be, the consideration due under the Alternative Offer).

It is expected that the Scheme Document, containing full details of the Scheme and notices of the Court Meeting and General Meeting, together with the Forms of Proxy and Form of Election, will be sent to FSFC Shareholders within 28 days of this announcement (or such later time as FSFC, Bidco and the Panel may agree).

Subject to the satisfaction or, where applicable, waiver of the Conditions, it is expected that the Scheme will become Effective in the third quarter of 2024. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.

3. Strategic rationale

The Averon Park Board believes that forestry represents an attractive asset class to diversify investors' portfolios, protect against inflation and offers an opportunity to benefit from trends in favour of home-grown timber production. Alongside these benefits, forestry provides significant environmental and social benefits that are important in their own right and appeal to many investors.

Averon Park is a long-term private investor, with a diverse portfolio of investments in sustainable infrastructure and real asset backed businesses held in a non-listed fund. Averon Park has significant experience in the specialised UK forestry sector as it is already a substantial investor in forestry, agriculture and sustainable land assets, having invested in forestry assets since 2020 and currently owning 7,292 hectares of UK forests in addition to its indirect holding in FSFC.

Although the Averon Park Board is pleased by the progress made by FSFC so far under the management of the Investment Manager, it believes that the long-term potential for FSFC and its assets to deliver on its investment objective is not reflected in the FSFC Share price. This, coupled with the adverse market backdrop affecting FSFC and many other alternative funds in the UK investment trust sector, has resulted in FSFC trading at a significant and persistent discount to NAV over the past 12 months. The Averon Park Board believes that there can be no certainty or expectation that this discount can be materially reduced or for the FSFC Share price to exceed the Offer Price in the medium term.

In addition, the persistent discount to NAV at which the FSFC Shares have traded since June 2023 has prevented FSFC from raising further capital to continue its growth as a publicly traded company and improve liquidity for investors. The Averon Park Board wishes to allocate further capital of Averon Park to UK forestry and afforestation assets and believes that FSFC will be better able to achieve its growth aspirations with better access to capital as a private vehicle, and thereby deliver its environmental potential.

Blackmead is a highly experienced investor in UK forestry and is well placed to support the FSFC portfolio, having managed some of FSFC's assets prior to FSFC's IPO, in its next phase of growth.

The Averon Park Board believes that the investment management team at the Investment Manager has managed the assets well, despite the constraints of the public markets. As such, Averon Park intends to continue FSFC's focus on sustainable timber supply, carbon sequestration, the protection and enhancement of biodiversity and natural capital land management under the management of FSFC's current portfolio managers.

The Averon Park Board considers that the Cash Offer provides a compelling liquidity opportunity for all independent FSFC Shareholders at a material premium to the FSFC Share price as at the Latest Practicable Date. Alongside this, the Alternative Offer allows eligible Scheme Shareholders to retain exposure to the FSFC portfolio through the Rollover Shares.

4. Recommendation

The FSFC Directors, who have been so advised by Stifel as to the financial terms of the Cash Offer, consider the terms of the Cash Offer to be fair and reasonable. In providing its advice to the FSFC Directors, Stifel has taken into account the commercial assessments of the FSFC Directors. Stifel is providing independent financial advice to the FSFC Directors for the purposes of Rule 3 of the Code.

The FSFC Directors and Stifel have considered the disadvantages and advantages outlined below in relation to the Alternative Offer.

Stifel is unable to advise the FSFC Directors as to whether or not the financial terms of the Alternative Offer are fair and reasonable. This is because Stifel has not had any involvement in the development and validation of any financial projections for Bidco. As a result, Stifel is unable to assess any plans Bidco may have for the development of FSFC to the degree necessary to form an assessment of the value of the Alternative Offer. Stifel also notes the significant and variable impact that the disadvantages and advantages of the Alternative Offer may have for individual eligible Scheme Shareholders.

Accordingly, the FSFC Directors are unable to form an opinion as to whether or not the terms of the Alternative Offer are fair and reasonable and are not making any recommendation to eligible Scheme Shareholders as to whether or not they should elect for the Alternative Offer. Eligible Scheme Shareholders are encouraged to take into account the disadvantages and advantages highlighted below, as well as their individual circumstances, when deciding whether or not to elect for the Alternative Offer in respect of all of their holding of Scheme Shares.

The FSFC Directors intend to unanimously recommend that the Scheme Voting Shareholders vote (or procure the vote) in favour of the Scheme at the Court Meeting and FSFC Shareholders vote (or procure the vote) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as they have irrevocably undertaken to do in respect of their own beneficial holdings of, in aggregate, 244,000 FSFC Shares representing, in aggregate, approximately 0.14 per cent. of the issued ordinary share capital of FSFC and approximately 0.20 per cent. of the Scheme Voting Shares (being those Scheme Shares eligible to vote at the Court Meeting), in each case as at the Latest Practicable Date, as more fully described in Appendix 3 to this announcement.

None of the FSFC Directors intend to elect for the Alternative Offer in respect of their own holdings of FSFC Shares.

The FSFC Directors consider that, in deciding whether or not to elect for the Alternative Offer, eligible Scheme Shareholders should take their own independent advice and consider carefully the disadvantages and advantages of electing for the Alternative Offer (including, but not limited to, those set out below) in the light of their own financial circumstances and investment objectives.

Disadvantages of electing for the Alternative Offer

· The Rollover Shares will be:

· non-transferable, save in very limited circumstances as set out in Appendix 4 of this announcement.

· Rollover Shareholders will have limited control over the timing and value at which they may be able to realise their investment in Bidco.

· Payments in respect of Rollover Shares will not be guaranteed or secured.

· Eligible Scheme Shareholders will have no certainty as to the amount of Rollover Shares they will receive because:

· the maximum number of Rollover Shares available to eligible Scheme Shareholders under the Alternative Offer will be limited to the equivalent of 24.99 per cent. of the Bidco Offer Shares;

· The Rollover Shares may be ineligible for inclusion in ISAs and SIPPs and may not be capable of being held through retail platforms.

Advantages of electing for the Alternative Offer

· The Alternative Offer allows eligible Scheme Shareholders to invest directly in Bidco, providing continued economic exposure to FSFC under private ownership.

Scheme Shareholders should also ascertain whether acquiring or holding Rollover Shares is affected by the laws of the relevant jurisdiction in which they reside and consider whether Rollover Shares are a suitable investment in light of their own personal circumstances. Scheme Shareholders are, therefore, strongly recommended to seek their own independent financial, tax and legal advice in light of their own particular circumstances and investment objectives before deciding whether to elect for the Alternative Offer (in respect of their entire holding of Scheme Shares). Any decision to elect for the Alternative Offer should be based on independent financial, tax and legal advice and full consideration of the information in this announcement and the Scheme Document (once published).

5. Background to and reasons for the FSFC Directors' recommendation of the Cash Offer

FSFC is the first and only UK listed investment trust investing in a diversified portfolio of UK forestry and afforestation assets, targeting attractive risk-adjusted total returns of CPI + 5 per cent. per annum through a combination of land appreciation, sustainable timber and carbon credit sales. FSFC's diverse portfolio encompassed 12,653 hectares of land and comprised 69 forestry and afforestation assets in the UK as at 31 March 2024. On 10 May 2024, FSFC announced a net asset value per FSFC Share of 102.2 pence as at 31 March 2024. In addition, FSFC announced that between 31 March 2024 and 10 May 2024, FSFC planted additional trees at four afforestation properties, which is expected to result in a further £2.1 million or 1.2 pence per share of net portfolio value gains.

In arriving at its recommendation, the FSFC Directors have factored in and remain confident that FSFC's high-quality portfolio, investment management platform and pipeline provide a foundation for continued growth and sustainable risk-adjusted returns. However, the FSFC Directors believe that neither these attributes nor the attractive underlying sector dynamics, have been reflected in the current FSFC share price, with a significant de-rating experienced over the last year exacerbated by the inflationary and higher interest rate environment. As a consequence of FSFC's shares trading at a material and persistent discount to NAV over the past 12 months, FSFC has not been able to issue shares in order to achieve more meaningful scale and greater liquidity due to the material NAV per share dilution that would result from issuing shares at a discount to NAV. As a result, access to capital to pursue more accretive (and more environmentally transformative) afforestation activities has been severely constrained. FSFC is restricted in undertaking these activities and in its ability to make new acquisitions, and is, therefore, reliant on its revolving credit facility of £30 million, of which £18.3 million was drawn as at 31 March 2024.

Furthermore, the subscale nature of FSFC within the alternatives UK investment trust universe has resulted in a lack of buyers in the secondary market whose demand could, otherwise, re-rate FSFC's shares and provide trading liquidity.

The FSFC Directors do not foresee FSFC's discount to NAV narrowing within a reasonable time frame, given the following countervailing factors:

· the wider market situation in which the vast majority of the UK investment trust sector is trading at a discount to NAV;

· the reluctance of investors to make new capital allocations (across the board but particularly to subscale funds investing in alternative assets);

· the wealth of opportunities available for total returns and/or capital gains from competing funds, including private funds, and asset classes; and

· the uncertain macroeconomic outlook.

Consequently, whilst the FSFC Directors remain confident in the standalone prospects for FSFC, it was against this background the FSFC Directors received an unsolicited offer from Averon Park on 20 February 2024 which the FSFC Directors initially rejected. Following a period of negotiations, the FSFC Directors believe the Cash Offer provides an opportunity for all Scheme Shareholders to realise the entirety of their Scheme Shares in cash, and at a significant premium to the FSFC share price as at the Latest Practicable Date. In addition, the FSFC Directors believe that the certainty of execution and acceleration of value crystallisation, whilst eliminating the associated uncertainties, is beneficial to Scheme Shareholders and in excess of the reasonable medium-term prospects for FSFC on a standalone basis.

In considering the merits of the Cash Offer, the FSFC Directors have taken into account that the Offer Price of 97 pence represents a significant premium of approximately:

· 32.88 per cent. to the Closing Price of 73.0 pence per FSFC Share on 28 May 2024 (being the Latest Practicable Date);

· 43.28 per cent. to the volume weighted average price of 67.7 pence per FSFC Share for the three-month period ended 28 May 2024 (being the Latest Practicable Date); and

· 44.24 per cent. to the volume weighted average price of 67.3 pence per FSFC Share for the six-month period ended 28 May 2024 (being the Latest Practicable Date).

Therefore, after careful consideration with FSFC's Financial Adviser, Stifel, the FSFC Directors have concluded that the Cash Offer is in the best interests of FSFC Shareholders and FSFC as a whole.

As such, the FSFC Directors unanimously intend to recommend the Cash Offer to Scheme Shareholders. Additionally, the FSFC Directors note that the terms of the Acquisition also provide eligible Scheme Shareholders with the opportunity to continue their investment in the FSFC portfolio through an election for the Alternative Offer. Scheme Shareholders may wish to refer to further details in relation to the Alternative Offer set out in this announcement.

6. Irrevocable undertakings and letters of intent

Bidco has received commitments and indications of support for the Acquisition from FSFC Shareholders in respect of 32,536,971 FSFC Shares representing, in aggregate, approximately 26.88 per cent. of the FSFC Shares eligible to vote at the Court Meeting as at the Latest Practicable Date.

These commitments and indications comprise irrevocable undertakings in respect of 8,344,000 FSFC Shares representing, in aggregate, approximately 6.89 per cent. of the Scheme Voting Shares, and non-binding letters of intent in respect of 24,192,971 FSFC Shares representing, in aggregate, approximately 19.99 per cent. of the Scheme Voting Shares, in each case as at the Latest Practicable Date.

The irrevocable undertakings include irrevocable undertakings received from each of the FSFC Directors to vote (or procure the vote): (i) in favour of the Scheme at the Court Meeting; and (ii) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of their entire beneficial holding of Scheme Shares. In aggregate, this represents 244,000 FSFC Shares, being all of the FSFC Shares currently beneficially held by such FSFC Directors, and approximately 0.20 per cent. of the Scheme Voting Shares as at the Latest Practicable Date. None of the FSFC Directors has irrevocably undertaken to elect for the Alternative Offer.

These commitments and undertakings also include an irrevocable undertaking received from Greenbank and non-binding letters of intent from Aviva Investors and Cantor Fitzgerald Ireland Limited, in each case to vote (or to procure the vote) (i) in favour of the Scheme at the Court Meeting and (ii) in favour of the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer). In aggregate, such irrevocable undertaking represents 8,100,000 FSFC Shares and approximately 6.69 per cent. of the Scheme Voting Shares as at the Latest Practicable Date. The non-binding letters of intent represent, in aggregate, 24,192,971 FSFC Shares and approximately 19.99 per cent. of the Scheme Voting Shares as at the Latest Practicable Date.

Further details of these irrevocable undertakings (including the circumstances in which they may lapse) and the non-binding letters of intent are set out in Appendix 3 to this announcement.

7. Information relating to FSFC

FSFC is an investment company externally managed by the Investment Manager. FSFC invests in a diversified portfolio of UK forestry and afforestation assets. Targeting a net total return of more than CPI + 5 per cent. per annum, FSFC 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, which is not correlated to financial markets.

FSFC also offers outstanding sustainability and ESG attributes and access to carbon units related to carbon sequestration from new afforestation planting. FSFC targets value creation as the afforestation projects successfully achieve milestones in the process of converting marginal livestock farmland and open ground into established commercial forest and woodland areas. FSFC is seeking to make a direct contribution in the fight against climate change through forestry and afforestation carbon sequestration initiatives and to protect and enhance biodiversity and natural capital value across its portfolio.

As at 31 March 2024, FSFC's portfolio encompassed 12,653 hectares of land and comprised 69 forestry and afforestation assets in the UK.

8. Information relating to the Averon Park Group

Bidco is a private company limited by shares incorporated and registered in England and Wales on 20 May 2024 with company number 15730327. Bidco's registered office is at C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG. Bidco is an indirectly wholly-owned subsidiary of Averon Park and was formed for the purpose of implementing the Acquisition. Bidco has not traded or entered into any obligations other than in connection with the Acquisition. Bidco has not paid any dividends or prepared any historical financial statements. In the event that the Scheme becomes Effective, FSFC will represent all or substantially all of the earnings, assets and liabilities of Bidco, save for the liabilities incurred in connection with the Acquisition (if any).

At the date of this announcement, Bidco is a wholly-owned direct subsidiary of Blackmead. Blackmead is a private company limited by shares incorporated and registered in England and Wales on 7 March 2014 with company number 08928992 and is a wholly-owned direct subsidiary of Averon Park.

Gary Fraser (chairman of the Averon Park Board) is the sole director of Bidco, and will remain the sole director of Bidco in the event that the Scheme becomes Effective.

Averon Park is the ultimate holding company of Bidco, and its principal activity is to provide finance for unquoted trading companies in which it has an equity stake, and which are backed predominately by infrastructure assets with a low risk profile and where capital preservation is key. The directors of Averon Park are Gary Fraser, Graham Ross Russell (independent non-executive director), Peter Dicks (independent non-executive director) and Simon Jamieson (independent non-executive director). Blackmead is a wholly-owned direct subsidiary of Averon Park which holds the majority of Averon Parks' assets, including 51,003,762 FSFC Shares, amounting to approximately 29.64 per cent. of FSFC's issued ordinary share capital, in each case as at the Latest Practicable Date. The issued ordinary share capital of Averon Park is held by Foresight Fund Managers Limited as nominee for the underlying beneficial investors in Averon Park, which comprise approximately 9,000 investors. Foresight Fund Managers Limited is an indirect subsidiary of Foresight Group Holdings Limited, the London Stock Exchange-listed ultimate parent company of Foresight Group LLP.

The Investment Manager acts as discretionary investment manager to Averon Park and also provides (or procures the provision of) company secretarial, administration and custodian services to Averon Park. The Investment Manager also acts as investment manager and provides company secretarial and administration services to FSFC.

9. Information relating to the Investment Manager's group

The Investment Manager's ultimate parent company is Foresight Group Holdings Limited, a Guernsey company whose ordinary shares are admitted to trading on the main market for listed securities of the London Stock Exchange and which is a constituent of the FTSE 250 index. The Investment Manager was founded in 1984 and is an infrastructure and private equity investment manager, operating in the UK and across Europe and Australia with £11.9 billion of assets under management as at 31 March 2024.

10. Intentions with regard to the business of FSFC

Investment strategy

Averon Park is committed to forestry as an asset class and wishes to continue to invest in it following implementation of the Acquisition, having invested in forestry assets since 2020 and currently owning 7,292 hectares of UK forestry in addition to its indirect holding in FSFC.

Averon Park intends to continue FSFC's stated strategy, most notably its commitment to continued investment in afforestation schemes and the ongoing creation and value realisation from nature restoration carbon credits.

From the Effective Date, Averon Park therefore expects to continue FSFC's stated strategy and invest in UK forestry, afforestation and natural capital with a view to generating attractive risk-adjusted total returns through land appreciation and sustainable timber and carbon credit sales. FSFC's focus on sustainable timber supply, carbon sequestration, the protection and enhancement of biodiversity and natural capital land management will be continued under the management of its current portfolio managers.

Over time, Averon Park will seek to build on FSFC's legacy and create a significant portfolio of sustainably managed forestry and afforestation assets, consistent with its current business plan.

Board composition and governance arrangements

The Averon Park Board intends to delist FSFC immediately following the Effective Date. Consequently, FSFC will not require listed company governance structures following the Effective Date, and it is intended that each of the FSFC Directors will step down from the FSFC Board and its subsidiaries (as applicable) upon the Effective Date.

Employees

As an externally managed UK investment trust, FSFC does not have any employees and, therefore, does not operate any pension schemes, nor does it have any arrangements in place for any employee involvement in its capital. However, FSFC's indirect subsidiary, Fordie Estates Limited employs a staff of four in operational roles. Averon Park recognises that such employees will continue to be an important factor in maximising the success of Fordie Estates Limited and does not expect or intend for the Acquisition to have any impact on their continued employment.

Were Averon Park to consider any such changes, it intends to consult with relevant FSFC Group employees and employee representatives (as applicable) as required by applicable law.

In addition, it is intended that ongoing operational transactions, contractual arrangements and other operational matters will progress on a business as usual basis during the Offer Period and once completion of the Acquisition has taken place.

Fixed assets, research and development

FSFC's registered office at The Shard, 32 London Bridge, London SE1 9SG is provided by the Investment Manager and its portfolio is managed by Robert Guest and Richard Kelly from this office and from the Investment Manager's Edinburgh office at Clarence House, 131-135 George St., Edinburgh EH2 4JS. Together, these are FSFC's principal places of business. As FSFC does not have any employees, it does not consider itself to have a headquarters.

FSFC's fixed assets are represented by its investment portfolio of forestry assets. FSFC does not have a research and development function.

Investment management arrangements

On the Effective Date, the alternative investment fund management agreement between FSFC and the Investment Manager (the "Investment Management Agreement") will be terminated, and FSFC will enter into a new investment management agreement with the Investment Manager (the "New FSFC Investment Management Agreement"). The New FSFC Investment Management Agreement will be on similar terms to the current Investment Management Agreement, save that certain terms will be changed so as to reflect FSFC being in private ownership as opposed to having its ordinary shares listed on the Official List and traded on the London Stock Exchange's main market for listed securities, and certain other consequential changes.

In particular, it has been agreed between Averon Park, FSFC and the Investment Manager that, pursuant to the New Investment Management Agreement, the Investment Manager will continue to have responsibility to act as portfolio manager to FSFC and also to provide FSFC with administration and company secretarial services. The Investment Manager will be required to manage the FSFC portfolio with the due skill and care as is to be expected of a competent and prudent investment manager and administrator qualified and experienced in managing a portfolio of assets of a comparable nature, size and scope and complexity to FSFC's portfolio, and as consideration for providing such services, the Investment Manager will be entitled to a fee, to be paid quarterly and in arrears, based on the latest NAV of FSFC at a rate of 0.85 per cent. per annum of such NAV. A separate administration services fee, in such amount as may be agreed from time to time, will also be payable. The New Investment Management Agreement will be terminable by either FSFC or the Investment Manager on six months' written notice, and immediately by notice by the non-defaulting party for cause in certain specified situations, including a material breach of the New Investment Management Agreement or in certain insolvency scenarios, subject to the appropriate opportunity of the defaulting party to cure such material breach.

Following the Effective Date, and in accordance with the terms of the New Investment Management Agreement, Robert Guest and Richard Kelly will remain the principal individuals at the Investment Manager responsible for managing the FSFC portfolio. The Averon Park Board attaches great importance to the skills and experience of Robert and Richard and believes they will be a key factor in maximising the success of FSFC following the Effective Date. Robert and Richard will be supported in their roles as co-lead portfolio managers by such of the Investment Manager's staff as is deemed necessary from time to time.

Listing and trading facilities

It is intended that dealings in, and registration of transfers of, FSFC Shares (other than the registration of the transfer of the Scheme Shares to Bidco pursuant to the Scheme) will be suspended shortly before the Effective Date at a time to be set out in the Scheme Document. It is further intended that applications will be made to the London Stock Exchange to cancel trading in the FSFC Shares on the London Stock Exchange's main market, and to the FCA to cancel the listing of the FSFC Shares on the Official List, in each case with effect from, or shortly following, the Effective Date.

Further details about the de-listing and cancellation of trading of the FSFC Shares can be found in paragraph 17 of this announcement.

No statements in this paragraph 10 are "post-offer undertakings" for the purposes of Rule 19.5 of the Code.

11. Alternative Offer

Under the Alternative Offer, Scheme Shareholders (other than Scheme Shareholders resident or located in a Restricted Jurisdiction) may elect, in respect of all their Scheme Shares and not part only, to receive, in lieu of the Cash Offer to which they are otherwise entitled

for each Scheme Share: 1 Rollover Share

If elections are validly received from eligible Scheme Shareholders in respect of a number of Scheme Shares that would require the issue of Rollover Shares exceeding the Alternative Offer Maximum, such elections will be unable to be satisfied in full. In these circumstances, the number of Rollover Shares to be issued to each eligible Scheme Shareholder who has validly elected for the Alternative Offer will be reduced on a pro rata basis, and the consideration for each Scheme Share that is not exchanged for a Rollover Share will be paid in cash in accordance with the terms of the Cash Offer.

Any fractional entitlements to Rollover Shares under the Alternative Offer will be rounded down to the nearest whole number of Rollover Shares per eligible Scheme Shareholder. Fractional entitlements to Rollover Shares will not be allotted or issued to such Scheme Shareholders, and will be disregarded, and the consideration for each applicable Scheme Share will be paid in cash in accordance with the terms of the Cash Offer.

The availability of the Alternative Offer is conditional upon valid elections being made for such number of Rollover Shares which represent, in aggregate, at least 5 per cent. of the Bidco Offer Shares (the "Alternative Offer Minimum Threshold"), failing which it will lapse. In these circumstances, no Rollover Shares will be issued and the consideration payable in respect of each Scheme Share will be settled in cash in accordance with the terms of the Cash Offer.

The Alternative Offer will not be offered, and Rollover Shares will not be sold or delivered, directly or indirectly, in or into any Restricted Jurisdiction. Further details in relation to Scheme Shareholders resident, or located, in overseas jurisdictions will be contained in the Scheme Document.

Upon the Scheme becoming Effective, Scheme Shareholders who have not validly elected for the Alternative Offer will automatically receive the Cash Offer in respect of their entire holding of Scheme Shares.

The issue of Rollover Shares pursuant to the Alternative Offer will be subject to the Conditions and further terms set out in Appendix 1 to this announcement (and to be set out in full in the Scheme Document) and Bidco's articles of association. Further details of the Alternative Offer, the Averon Park Group and the rights attaching to the Rollover Shares are set out in Appendix 4.

The Rollover Shares will be allotted and issued credited as fully paid and will rank economically pari passu in all respects with Bidco A Ordinary Shares in issue at the time the Rollover Shares are allotted and issued, including the right to receive and retain any dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date.

For the purposes of Rule 24.11 of the Code, Singer Capital Markets, as Financial Adviser to Bidco, Blackmead and Averon Park will provide an estimate of the range of values that may be attributed to a Rollover Share, together with the assumptions, qualifications and caveats forming the basis of its estimate of such values, in a letter to be included in the Scheme Document.

12. Structure of the Alternative Offer

Bidco share capital as a result of the Acquisition

The current share capital of Bidco consists of one ordinary share of £0.01 (the "Bidco Subscriber Share") which is held by Blackmead. On or around the Effective Date, the Bidco Subscriber Share will be re-designated as a Bidco A Ordinary Share. It is anticipated that Bidco will simultaneously issue around 172,056,075 Bidco Shares: (i) in order to fund the cash consideration payable by Bidco in respect of the Acquisition; (ii) in exchange for the transfer to Bidco from Blackmead of the 51,003,762 FSFC Shares currently held by Blackmead; and (iii) to meet any valid elections for Rollover Shares under the Alternative Offer (the "Bidco Offer Shares").

If the Alternative Offer were taken up in full by eligible Scheme Shareholders, it is expected that Bidco would issue around:

§ 78,055,500 Bidco A Ordinary Shares to Blackmead to fund the cash consideration payable by Bidco in respect of the Acquisition;

§ 51,003,762 Bidco A Ordinary Shares to Blackmead in exchange for the transfer to Bidco from Blackmead of the 51,003,762 FSFC Shares currently held by Blackmead; and

§ 42,996,813 Rollover Shares to those eligible Scheme Shareholders who validly elect to receive the Alternative Offer.

If the Alternative Offer is accepted in respect of less than the Alternative Offer Maximum (but more than the Alternative Offer Minimum Threshold), the number of Rollover Shares to be issued under the Alternative Offer would reduce and the number of Bidco A Ordinary Shares to be issued to fund the cash consideration payable in respect of the Acquisition would increase accordingly.

Terms of issue of Rollover Shares

The Rollover Shares to be issued to eligible Scheme Shareholders who validly elect for the Alternative Offer will be issued credited as fully paid and will rank economically pari passu with the Bidco A Ordinary Shares held and to be issued to Blackmead pursuant to the Acquisition as described above, including the right to receive and retain any dividends and other distributions declared, made or paid by reference to a record date falling on or after the Effective Date.

The Rollover Shares will be non-voting and, therefore, shall not entitle the holders thereof to: (i) any votes; (ii) receive a copy of any written resolution; or (iii) receive notice of any general meetings of Bidco, except, in each case, as may be required by applicable law.

13. Financing of the Acquisition

The cash consideration payable by Bidco pursuant to the Acquisition is expected to be financed by the existing cash resources of Blackmead which Blackmead will make available to Bidco if the Acquisition becomes Effective. The cash consideration will be payable by Bidco to FSFC Shareholders under the terms of the Acquisition.

All fees, costs and expenses incurred by members of the Averon Park Group in connection with the Acquisition will be met from the existing cash resources of the Averon Park Group.

Singer Capital Markets, in its capacity as Financial Adviser to Bidco, Blackmead and Averon Park, confirms that it is satisfied that sufficient financial resources are available to Bidco to enable it to satisfy in full the cash consideration payable to FSFC Shareholders under the terms of the Acquisition.

14. Offer-related arrangements

New Investment Management Agreement Heads of Terms

Averon Park, FSFC and the Investment Manager have entered into non-legally binding heads of terms dated 29 May 2024, pursuant to which it is proposed that, conditional upon and with effect from the Scheme becoming Effective, the Investment Management Agreement will terminate, and FSFC will enter into the New Investment Management Agreement. No compensation is expected to be payable to the Investment Manager in connection with the termination of the Investment Management Agreement.

The New Investment Management Agreement will be on similar terms to the current Investment Management Agreement, save that certain terms will be changed so as to reflect FSFC being in private ownership. In particular, it is proposed that, pursuant to the New Investment Management Agreement, the Investment Manager will continue to have responsibility to act as portfolio manager to FSFC and also to provide FSFC with administration and company secretarial services. In addition, the Investment Manager will be required to manage the FSFC portfolio with the due skill and care as is to be expected of a competent and prudent investment manager and administrator qualified and experienced in managing a portfolio of assets of a comparable nature, size and scope and complexity to FSFC's portfolio.

In consideration for providing such services, the Investment Manager will be entitled to a fee, to be paid quarterly and in arrears, based on the latest NAV of FSFC at a rate of 0.85 per cent. per annum of such NAV. A separate administration services fee, in such amount as may be agreed from time to time, will also be payable.

The New Investment Management Agreement will be terminable by either FSFC or the Investment Manager on six months' written notice, and immediately by notice by the non-defaulting party for cause in certain specified situations, including a material breach of the New Investment Management Agreement or in certain insolvency scenarios, subject to the appropriate opportunity of the defaulting party to cure such material breach.

Under the New Investment Management Agreement, the Investment Manager will be permitted to delegate its services provided that notice is given to FSFC, and the Investment Manager will remain liable for the provision of the activities of its delegate(s). The New Investment Management Agreement will be governed by the laws of England and Wales.

15. Structure of and conditions to the Acquisition

It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement between FSFC and Scheme Shareholders under Part 26 of the Companies Act (although Bidco reserves the right to implement the Acquisition by way of a Takeover Offer, subject to the consent of the Panel).

The purpose of the Scheme is to provide for Bidco to become the holder of the entire issued and to be issued ordinary share capital of FSFC not already owned by the Averon Park Group. This is to be achieved by the transfer of Scheme Shares to Bidco in consideration for which Scheme Shareholders will receive cash consideration due under the Cash Offer or, if an eligible Scheme Shareholder makes a valid election under the Alternative Offer, Rollover Shares on the basis set out at paragraph 11 of this announcement, in each case to be effected pursuant to the Scheme. The transfer to Bidco of the Scheme Shares is intended to result in FSFC becoming a wholly-owned subsidiary of Bidco.

Conditions to the Acquisition

The Scheme is subject to the Conditions and certain further terms set out in Appendix 1 to this announcement and to the full terms and conditions which will be set out in the Scheme Document. In particular, the Scheme will only become Effective if, among other things, the following events occur on or before 11.59 p.m. (London time) on the Long Stop Date:

(a) the approval of the Scheme by a majority in number of Scheme Voting Shareholders eligible to vote, representing at least 75 per cent. of the voting rights of the Scheme Voting Shareholders eligible to vote, in each case present and voting, either in person or by proxy, at the Court Meeting;

(b) the Resolutions being duly passed at the General Meeting;

(c) the sanction of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to FSFC and Bidco);

(d) following the sanction by the Court, a copy of the Court Order being delivered to the Registrar of Companies; and

(e) all other Conditions to the Scheme being satisfied or (where applicable) waived.

The FSFC Shares held by Stephen Thayer, a director of Blackmead, are not Scheme Voting Shares as Mr Thayer has consented to be treated as a separate class of Scheme Shareholder not entitled to vote such Scheme Shares at the Court Meeting, but he will be permitted to vote such Scheme Shares at the General Meeting. Upon the Scheme becoming Effective, the FSFC Shares held by Mr Thayer would be either: (i) acquired by Bidco pursuant to the Cash Offer; or (ii) in the event Mr Thayer elects for the Alternative Offer, exchanged for Rollover Shares.

Additionally, the Scheme will lapse if, among other things:

(a) the Court Meeting and/or the General Meeting is not held by the 22nd day after the expected date of such meeting, which will be set out in the Scheme Document in due course (or such later date as may be agreed between Bidco and FSFC with the consent of the Panel and, in the case of the Court Meeting, as the Court may allow);

(b) the Court Hearing is not held by the 22nd day after the expected date of such hearing, which will be set out in the Scheme Document in due course (or such later date as may be agreed between Bidco and FSFC with the consent of the Panel, and as the Court may allow); or

Upon the Scheme becoming Effective: (a) it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting (and, if they attended and voted, whether or not they voted in favour); and (b) share certificates in respect of Scheme Shares will cease to be of value and should be destroyed and entitlements to Scheme Shares held within the CREST system will be cancelled. The cash consideration payable under the Scheme will be despatched to Scheme Shareholders who have not elected for the Alternative Offer by Bidco no later than 14 days after the Effective Date and share certificates in respect of Rollover Shares will be despatched to eligible Scheme Shareholders who have validly elected for the Alternative Offer by Bidco no later than 14 days after the Effective Date.

Full details of the Scheme will be included in the Scheme Document, together with notices of the Court Meeting and the General Meeting. The Scheme Document will also contain the expected timetable for the Acquisition and will specify the necessary actions to be taken by Scheme Shareholders. It is expected that the Scheme Document, together with the Forms of Proxy and Form of Election, will be posted to FSFC Shareholders and, for information only, to persons with information rights within 28 days of this announcement (or such later time as Bidco, FSFC and the Panel may agree). Subject, amongst other things, to the satisfaction or (where applicable) waiver of the Conditions, it is expected that the Scheme will become effective during Q3 2024.

The Scheme will be governed by English law and will be subject to the jurisdiction of the Court. The Scheme will also be subject to the applicable requirements of the Code, the Panel, the FCA, the London Stock Exchange and the Registrar of Companies.

There are no agreements or arrangements to which Bidco is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a Condition of the Acquisition.

16. Right to switch to a Takeover Offer

Bidco reserves the right to elect, with the consent of the Panel, to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued ordinary share capital of FSFC not already held by the Averon Park Group as an alternative to the Scheme.

In such an event, the Acquisition will be implemented on the same terms and conditions, so far as applicable, as those which would apply to the Scheme (subject to appropriate amendments for an acquisition being made by way of a Takeover Offer, including (without limitation) the inclusion of an acceptance condition set at 90 per cent. of the FSFC Shares to which the Takeover Offer relates (or such lesser percentage as may be determined by Bidco after consultation with the Panel (if necessary)), being, in any case, more than 50 per cent. of the voting rights normally exercisable at a general meeting of FSFC, including, for this purpose, any such voting rights attaching to FSFC Shares that are issued before the Takeover Offer becomes or is declared unconditional, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise). Further, if sufficient acceptances of the Takeover Offer are received and/or sufficient FSFC Shares are otherwise acquired, it is the intention of Bidco to apply the provisions of the Companies Act to compulsorily acquire any outstanding FSFC Shares to which the Takeover Offer relates.

17. De-listing and re-registration

It is intended that dealings in FSFC Shares will be suspended on or shortly before the Effective Date at a time to be set out in the Scheme Document. It is further intended that an application will be made to each of the London Stock Exchange and the FCA to cancel trading in FSFC Shares on the London Stock Exchange's main market for listed securities and to remove the listing of the FSFC Shares from the Official List, respectively, with effect from or shortly after the Effective Date.

The last day of dealing in FSFC Shares on the London Stock Exchange's main market for listed securities is currently expected to be the Business Day immediately prior to the Effective Date and it is currently intended that no transfers will be registered after 6.00 p.m. (London time) on that date.

Share certificates in respect of FSFC Shares will cease to be valid and should be destroyed on the Effective Date. In addition, entitlements held within CREST to FSFC Shares will be cancelled on the Effective Date.

It is Bidco's intention that, as soon as practicable following de-listing, FSFC will be re-registered as a private limited company.

18. Disclosure of interests in FSFC

As at the Latest Practicable Date, other than: (i) the disclosures set out in this paragraph 18; and (ii) the irrevocable undertakings referred to in paragraph 6 of this announcement, none of Bidco, or any of its directors or, so far as Bidco is aware, any person acting, or deemed to be acting, in concert with Bidco, had:

(a) an interest in, or right to subscribe for, relevant securities of FSFC;

(b) any short position in (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of, relevant securities of FSFC;

(c) procured an irrevocable commitment or letter of intent to accept the terms of the Acquisition in respect of relevant securities of FSFC; or

(d) borrowed, lent or entered into any financial collateral arrangements or dealing arrangements of the kind referred to in Note 11 on the definition of acting in concert in the Code in respect of any relevant securities of FSFC.

Other than the irrevocable undertakings described in paragraph 6 of this announcement, no arrangement exists between Bidco or FSFC or any person acting in concert with Bidco or FSFC in relation to FSFC Shares. For these purposes, an arrangement includes any indemnity or option arrangement, and any agreement or any understanding, formal or informal, of whatever nature, relating to FSFC Shares which may be an inducement to deal or refrain from dealing in such securities.

Holdings in FSFC held by Bidco and its concert parties

As at the Latest Practicable Date, the following interests in relevant securities of FSFC were held by, or on behalf of, the following persons or entities who are deemed to be acting in concert with Bidco under the Code for the purposes of the Acquisition:

(a) Averon Park beneficially owns, through Blackmead, in aggregate, 51,003,762 FSFC Shares;

(b) the Investment Manager beneficially owns, in aggregate, one FSFC Share;

(d) Mr Richard Kelly, the co-investment manager of FSFC, beneficially owns, in aggregate, 43,000 FSFC Shares;

(e) Mr Ricardo Pineiro, a member of the Foresight Group LLP Executive Committee, beneficially owns, in aggregate, 10,000 FSFC Shares; and

(f) Mr Stephen Thayer, a director of Blackmead, beneficially owns, in aggregate, 10,000 FSFC Shares.

In this paragraph 18:

· "relevant securities of FSFC'' means FSFC Shares and securities convertible into, or rights to subscribe for, options (including traded options) in respect thereof and derivatives referenced thereto; and

· "interests in securities" arise, in summary, when a person has a long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an 'interest' by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities.

19. Overseas shareholders

The availability of the Acquisition (including, for the avoidance of doubt, the right to make an election for Rollover Shares under the Alternative Offer) and the distribution of this announcement to persons resident in, or citizens of, or otherwise subject to, jurisdictions outside the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. FSFC Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

This announcement is not intended to, and does not, constitute or form part of any offer to sell or to subscribe for, or any invitation to purchase or subscribe for, or the solicitation of any offer to purchase or otherwise subscribe for, any securities. FSFC Shareholders are advised to read carefully the Scheme Document, the Forms of Proxy and the Form of Election once these have been despatched.

Further information for FSFC Shareholders resident, or located, in overseas jurisdictions will be set out in the Scheme Document.

20. General

The Scheme Document, the Forms of Proxy and the Form of Election accompanying the Scheme Document are expected to be sent to FSFC Shareholders within 28 days of this announcement (or such later time as Bidco, FSFC and the Panel may agree). A copy of the Scheme Document is also expected to be sent (for information only) to persons with information rights at the same time as it is posted to FSFC Shareholders.

The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document. The sources and bases of calculation of certain information contained in this announcement are set out in Appendix 2. Details of the irrevocable undertakings and the letters of intent given in relation to the Acquisition are set out in Appendix 3. Appendix 4 contains details of Bidco, Averon Park, the Rollover Shares and eligibility to elect for the Alternative Offer. The valuation report prepared by Savills in respect of FSFC's portfolio of forestry and afforestation assets as at 31 March 2024 is set out in Appendix 5 to this announcement pursuant to Rule 29 of the Code. Certain definitions and terms used in this announcement are set out in Appendix 6.

In deciding whether or not to vote or procure votes to approve the Scheme at the Court Meeting or to vote or procure votes in favour of the Resolutions at the General Meeting in respect of their FSFC Shares, FSFC Shareholders who are eligible to vote at such meetings should rely on the information contained, and follow the procedures described, in the Scheme Document.

Prior to the Effective Date, in the event that the forestry assets and other assets within FSFC's portfolio were to be sold at the valuation contained in Savills' valuation report set out in Appendix 5 to this announcement, any gains realised on such disposals may, in certain circumstances, be subject to taxation in the UK. If FSFC were to dispose of assets it would seek to do so, where possible, by the sale of the shares in an underlying UK subsidiary which holds such assets. As an investment trust for the purposes of UK taxation, FSFC would generally be exempt from UK corporation tax on any gains realised from such disposals. However, if an underlying UK subsidiary of FSFC were to dispose of assets held by it, any gains realised from such disposal may be subject to UK corporation tax. In connection with the Acquisition, it is not contemplated that any aforementioned liability to taxation will crystallise. Following the Effective Date, FSFC is no longer expected to qualify as an investment trust for the purposes of UK taxation. Therefore, if FSFC were to dispose of its subsidiaries or an underlying UK subsidiary of FSFC were to dispose of assets held by it, any gains realised from such disposals may be subject to UK corporation tax.

Singer Capital Markets and Stifel have each given and not withdrawn their consent to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear.

Savills has given and not withdrawn its consent to the publication of its valuation report in this announcement with the inclusion herein to the references to its name and, where applicable, report in the form and context in which it is included.

For the purposes of Rule 29.5 of the Code, the FSFC Board confirms that Savills has confirmed to it that an updated valuation of FSFC's portfolio of forestry and afforestation assets as at the date of this announcement would not be materially different from the valuation given by Savills as at 31 March 2024 and contained in the Savills valuation report set out in Appendix 5 to this announcement.

21. Documents available on websites

Copies of the following documents will, by no later than 12 noon on the Business Day following the date of this announcement, be made available, free of charge, on Bidco's website at https://communications.singercm.com/p/4UWI-F5D/arizona-bidco and on FSFC's website at fsfc.foresightgroup.eu/offer-fsfc until the end of the Offer Period:

(a) this announcement;

(b) the irrevocable undertakings and letters of intent referred to in paragraph 6 and summarised in Appendix 3 to this announcement;

(d) the valuation report from Savills as set out in Appendix 5 to this announcement;

(e) the consent and no material difference letter from Savills referred to in paragraph 20 above; and

(f) the New Investment Management Agreement Heads of Terms referred to in paragraph 14 above.

For the avoidance of doubt, the content of the websites referred to above is not incorporated into and does not form part of this announcement.

Enquiries:

Singer Capital Markets (Financial Adviser to Bidco, Blackmead and Averon Park)

Robert Peel

Alaina Wong

Angus Campbell

James Todd

Tel: +44 (0) 20 7496 3000

Averon Park

Matt Hammond

Charlie Wright

Anouska Morjaria

Tel: +44 (0) 20 3667 8100

FSFC

Richard Davidson (Chairman)

Via SEC Newgate

Stifel (Rule 3 Financial Adviser and Broker to FSFC)

Edward Gibson-Watt

Nick Harland

Rajpal Padam

Bruno Benega

Tel: +44 (0) 20 7710 7600

SEC Newgate (PR Adviser to FSFC)

Elisabeth Cowell

Robin Tozer

Alice Cho

Harry Handyside

E: FSF@secnewgate.co.uk

Tel: +44 (0) 7900 248 213

Tel: +44 (0) 7540 106 366

The person responsible for arranging the release of this announcement on behalf of FSFC is Richard Davidson, Chairman.

Dickson Minto LLP is acting as legal adviser to Bidco, Blackmead and Averon Park.

Gowling WLG (UK) LLP is acting as legal adviser to FSFC.

Important notices relating to financial advisers

Stifel, which is authorised and regulated in the United Kingdom by the FCA, is acting as Financial Adviser exclusively to FSFC and no one else in connection with the matters described in this announcement and will not regard any other person as its client in respect thereof or be responsible to anyone other than FSFC for providing the protections afforded to clients of Stifel or its affiliates nor for providing advice in connection with any matter referred to in this announcement. Neither Stifel nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Stifel or its affiliates in connection with this announcement, any statement contained herein, the Acquisition or otherwise. No representation or warranty, express or implied, is made by Stifel as to the contents of this announcement.

Singer Capital Markets, which is authorised and regulated in the United Kingdom by the FCA, is acting as Financial Adviser exclusively to Bidco, Blackmead and Averon Park and no-one else in connection with the matters described in this announcement and will not regard any other person as its client in respect thereof or be responsible to anyone other than Bidco, Blackmead or Averon Park or its affiliates for providing the protections afforded to clients of Singer Capital Markets or its affiliates nor for providing advice in connection with any matter referred to in this announcement. Neither Singer Capital Markets nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Singer Capital Markets or its affiliates in connection with this announcement, any statement contained herein, the Acquisition or otherwise. No representation or warranty, express or implied, is made by Singer Capital Markets as to the contents of this announcement.

Further information

Overseas shareholders

This announcement has been prepared in accordance with, and for the purpose of, complying with English law, the Code, MAR and the DTRs, and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England.

Further details in relation to FSFC Shareholders in overseas jurisdictions will be contained in the Scheme Document.

The Acquisition will be subject to the applicable requirements of English law, the Court, the Code, the Panel and the London Stock Exchange.

Additional information for US investors

Further details in relation to US investors in FSFC will be contained in the Scheme Document.

Forward-looking statements

No profit forecasts or estimates or quantified financial benefit statements

Publication on websites

Neither the content of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this announcement.

Requesting hard copy documents

Information relating to FSFC Shareholders

Rounding

Disclosure requirements of the Code

Rule 2.9 disclosure

Right to switch to a Takeover Offer

General

Time

All times referred to in this announcement are London times, unless otherwise stated.

Appendix 1

Conditions and CERTAIN further terms of the acquisition AND THE SCHEME

The Acquisition and the Scheme will be subject to the Conditions and terms set out in this Appendix 1 and in the Scheme Document.

Part A

Conditions to the Acquisition and the Scheme

Long Stop Date

1. The Acquisition will be conditional upon the Scheme becoming unconditional and Effective, subject to the provisions of the Code, by no later than 11.59 p.m. on the Long Stop Date.

Conditions of the Scheme

2. The Scheme will be conditional upon:

(a)

(i) its approval by a majority in number representing not less than 75 per cent. of the voting rights of Scheme Voting Shareholders who are on the register of members of FSFC at the Voting Record Time (or the relevant class or classes thereof, if applicable) in each case present, entitled to vote and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting(s); and

(ii) the Court Meeting and any separate class meeting which may be required by the Court or any adjournment of any such meeting(s) being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date, if any, as Bidco and FSFC may agree, with the consent of the Panel (and that the Court may allow, if required));

(b)

(i) the Resolutions being duly passed by the requisite majority or majorities at the General Meeting or at any adjournment thereof; and

(ii) the General Meeting or any adjournment thereof being held on or before the 22nd day after the expected date of the General Meeting to be set out in the Scheme Document in due course (or such later date, if any, as Bidco and FSFC may agree, with the consent of the Panel (and that the Court may allow, if required)); and

(c)

(i) the sanction of the Scheme by the Court with or without modification (but subject to any such modification being on terms acceptable to Bidco and FSFC);

(ii) the Court Hearing being held on or before the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date, if any, as Bidco and FSFC may agree, with the consent of the Panel (and that the Court may allow, if required); and

(iii) the delivery of a copy of the Court Order to the Registrar of Companies for registration.

General Conditions

3. In addition, Bidco and FSFC have agreed that, subject as stated in Part B below and to the requirements of the Panel and in accordance with the Code, the Acquisition will also be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless the following Conditions (as amended, if appropriate) have been satisfied or, where relevant, waived prior to the Scheme being sanctioned by the Court:

General anti-trust and Third Party clearances

(a) all notifications to, and filings with, any anti-trust regulator, government or governmental, quasi-governmental, supranational, statutory, regulatory, administrative, environmental, fiscal, professional or investigative body, court, trade agency, association, institution, any entity owned or controlled by any relevant government or state in any jurisdiction (each a "Relevant Authority") which are necessary or are reasonably considered appropriate by Bidco having been made, all appropriate waiting and other time periods (including any extensions of such waiting and other time periods) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory or regulatory obligations in any relevant jurisdiction having been complied with, in each case in connection with the Acquisition or, except pursuant to Chapter 3 of Part 28 of the Companies Act, the acquisition or proposed acquisition of any shares or other securities in, or control or management of, FSFC by any member of the Averon Park Group, and all such authorisations remaining in full force and effect at the time at which the Acquisition becomes otherwise unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such authorisations;

(b) no Relevant Authority having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and, in each case, not having withdrawn the same), or required any action to be taken or enacted, or made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order, or otherwise having taken any other step or done anything, which would or might reasonably be expected to:

(i) require, prevent or materially delay the divestiture, or materially alter the terms envisaged for any proposed divestiture, by any member of the Wider Bidco Group or any member of the Wider FSFC Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their respective businesses (or any part thereof) or to own, control or manage any of their respective assets or properties (or any part thereof) to the extent which, in any such case, is material in the context of the Wider FSFC Group or the Wider Bidco Group (as the case may be);

(ii) require, prevent or materially delay, or materially alter the terms envisaged for, any proposed divestiture by any member of the Wider Bidco Group of any shares or other securities in FSFC or any other member of the Wider FSFC Group or in any member of the Wider Bidco Group;

(iii) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Bidco Group directly or indirectly to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in FSFC or any other member of the Wider FSFC Group or to exercise voting or management control over FSFC or any other member of the Wider FSFC Group to the extent which, in any such case, is material in the context of the Wider Bidco Group;

(iv) otherwise adversely affect any or all of the business, assets, profits, value, financial or trading position or prospects of any member of the Wider Bidco Group or of any member of the Wider FSFC Group to the extent which, in any such case, is material in the context of the Wider Bidco Group or the Wider FSFC Group (as the case may be) taken as a whole;

(v) make the Scheme, the Acquisition or, in each case, its implementation or the acquisition or proposed acquisition by Bidco or any member of the Wider Bidco Group of any shares or other securities in, or control or management of, FSFC or any other member of the Wider FSFC Group void, voidable, illegal, and/or unenforceable under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, prevent, restrain, restrict, prohibit, delay or otherwise adversely interfere with the same, or impose additional conditions or obligations with respect thereto, or otherwise challenge or interfere therewith, or require amendment to the terms of the Acquisition, the Scheme or the acquisition or proposed acquisition of any shares or other securities in, or control of management of, FSFC or any other member of the Wider FSFC Group by any member of the Wider Bidco Group;

(vi) require (save as envisaged pursuant to the Acquisition or, if applicable, sections 974 to 991 of the Companies Act) any member of the Wider Bidco Group or the Wider FSFC Group to acquire or offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider FSFC Group or the Wider Bidco Group or any other asset owned by any third party;

(vii) result in any member of the Wider FSFC Group or the Wider Bidco Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii) impose any material limitation on or result in any material delay in the ability of any member of the Wider Bidco Group to conduct, integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider FSFC Group and/or the Wider Bidco Group,

and all applicable waiting and other time periods (including extensions thereof) during which any such Relevant Authority could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Acquisition, the Scheme or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, FSFC or any other member of the Wider FSFC Group by any member of the Wider Bidco Group or otherwise intervene, having expired, lapsed or been terminated.

(c) all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals for the proposed acquisition of any shares or other securities in, or control or management of, FSFC or any other member of the Wider FSFC Group by any member of the Wider Bidco Group having been obtained in terms and in a form reasonably satisfactory to Bidco from all appropriate Relevant Authorities or persons or bodies with whom any member of the Wider FSFC Group has entered into contractual arrangements, and all such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals together with all authorisations orders, recognitions, grants, licences, confirmations, clearances, permissions and approvals necessary to carry on the business of any member of the Wider FSFC Group in any jurisdiction, remaining in full force and effect and all material filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke, suspend, restrict, modify or not to renew any of the same at the time at which the Acquisition becomes Effective or otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

Certain matters arising as a result of any arrangement, agreement etc.

(d) except as Disclosed, there being no provision of any agreement, arrangement, licence, lease, permit, franchise or other instrument to which any member of the Wider FSFC Group is a party or by or to which any such member or any of its assets is or are or may be bound, entitled or subject or any circumstance, which, in each case as a consequence of the Acquisition, the Scheme or the acquisition or proposed acquisition by any member of the Wider Bidco Group of any shares or other securities (or the equivalent) in FSFC or because of a change in the control or management of FSFC or any other member of the Wider FSFC Group or otherwise, would or would reasonably be expected to result in any of the following (in any case, to an extent which is material and adverse in the context of the FSFC Group taken as a whole):

(i) any monies borrowed by, or any other indebtedness or liabilities (actual or contingent) of, or any grant available to, any such member being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any assets or interests of, or any asset the use of which is enjoyed by, any such member being or falling to be disposed of or charged or ceasing to be available to any such member or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any such member;

(iii) the creation or enforcement of any mortgage, charge, encumbrance or other security interest over the whole or any part of the business, property, assets or interests of any such member or any such mortgage, charge, encumbrance or other security interest (whenever created, arising or having arisen) becoming enforceable;

(iv) the rights, liabilities, obligations or interests of any such member under any such agreement, arrangement, licence, lease, permit, franchise or other instrument, or the interests or business of any such member in or with any other person, firm, company or body (or any arrangement or arrangements relating to any such interest or business) being or becoming capable of being terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

(v) the value of any such member or its financial or trading position, profits or prospects being prejudiced or adversely affected;

(vi) any such member ceasing to be able to carry on business under any name under which it presently does so;

(vii) the creation or acceleration of any material liability, actual or contingent, by any such member, other than trade creditors or other liabilities incurred in the ordinary course of business;

(viii) any liability of any such member to make any severance, termination, bonus or other payment to any of its directors; or

(ix) any requirement on any such member to acquire, subscribe, pay up or repay any shares or other securities (or the equivalent),

and no event having occurred which, under any provision of any agreement, arrangement, licence, lease, permit, franchise or other instrument to which any member of the Wider FSFC Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (ix) of this Condition, in each case, to the extent material in the context of the Wider FSFC Group taken as a whole.

Certain events occurring since 30 September 2023

(e) except as Disclosed, no member of the Wider FSFC Group having, since 30 September 2023:

(i) save as between FSFC and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, issued, agreed to issue, or authorised or proposed the issue of, additional shares of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares of any class or convertible securities or transferred or sold any shares out of treasury;

(ii) save as between FSFC and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue, dividend or other distribution whether payable in cash or otherwise;

(iii) authorised, implemented or effected any merger or demerger with any body corporate, partnership or business, any joint venture, asset or profit sharing arrangement, partnership, reconstruction, amalgamation, scheme, commitment or other transaction or arrangement (other than the Scheme) or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, joint venture, asset or profit sharing arrangement, partnership, reconstruction, amalgamation, scheme, commitment or other transaction or arrangement (other than the Scheme), transfer, mortgage, charge or security interest, in each case to an extent that is material in the context of the Wider FSFC Group taken as a whole;

(iv) save as between FSFC and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, made or authorised or proposed or announced an intention to propose any material change in its loan capital;

(v) issued, authorised or proposed the issue of, or made any change in or to, any debentures or, save in the ordinary course of business, incurred or increased any indebtedness or become subject to any liability (actual or contingent);

(vi) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(vii) entered into or changed the terms of any contract with any director or senior executive;

(viii) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, agreement, arrangement, transaction or commitment (whether in respect of capital expenditure or otherwise) otherwise than in the ordinary course of business which is of a long term, onerous or unusual nature or magnitude or could reasonably be expected to involve an obligation of a nature or magnitude which is or would be reasonably likely to be restrictive on the business of any member of the Wider FSFC Group or the Wider Bidco Group or which restricts or would restrict the business of any member of the Wider FSFC Group or which involves an obligation of such a nature or magnitude or which is other than in the ordinary course of business;

(ix) been unable or admitted in writing that it is unable, or admitted in writing that it is unable, to pay its debts as they fall due or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(x) (other than in respect of a member of the Wider FSFC Group which is dormant and was solvent at the relevant time) taken or proposed any corporate action or steps or had any legal proceedings started or threatened against it for its winding--up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xi) commenced negotiations with any of its creditors or taken any step with a view to rescheduling or restructuring any of its indebtedness or entered into a composition, compromise, assignment or arrangement with any of its creditors whether by way of a voluntary arrangement, scheme of arrangement, deed of compromise or otherwise;

(xii) other than with respect to claims between FSFC and its wholly-owned subsidiaries or between such wholly owned subsidiaries, waived, settled, abandoned or compromised any claim or admitted any dispute, claim or counter-claim, whether made or potential and whether by or against any member of the Wider FSFC Group to the extent which is material in the context of the Wider FSFC Group;

(xiii) entered into any contract, commitment, arrangement or agreement or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition 3(e);

(xiv) terminated or varied the terms of any agreement or arrangement between any member of the Wider FSFC Group and any other person in a manner which would or might reasonably be expected to be materially adverse to the Wider FSFC Group taken as a whole;

(xv) other than in connection with the Acquisition, made any material alteration to its constitutional documents;

(xvi) made, proposed, or agreed or consented to or procured any change to:

(A) the terms of the trust deeds or other governing documents constituting the pension scheme(s) established by any member of the Wider FSFC Group for its directors, former directors, employees, former employees or their dependents;

(B) the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder;

(C) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined;

(D) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to; or

(E) the manner in which the assets of such pension schemes are invested;

in each case, other than as required in accordance with applicable law;

(xvii) carried out any act (other than any act arising from or in connection with the Acquisition):

(A) which would or could reasonably be expected to lead to the commencement of the winding up of any pension scheme(s) established by any member of the Wider FSFC Group for its directors, former directors, employees, former employees or their dependents;

(B) would or might create a material debt owed by an employer to any such pension scheme;

(C) which would or might accelerate any obligation on any employer to fund or pay additional contributions to any such pension scheme; or

(D) which would, having regard to the published guidance of the Pensions Regulator, give rise to a liability on a member of the Wider FSFC Group to make payment to any such pension scheme arising out of the operation of sections 38 and 38A of the Pensions Act 2004;

(xviii) entered into or proposed to enter into one or more bulk annuity contracts in relation to any such pension scheme pursuant to which a member of the Wider FSFC Group is required to pay further contributions, or agreed to the entering into of a bulk annuity contract by a trustee of any such pension scheme, in each case other than as required in accordance with applicable law;

(xix) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider FSFC Group; or

(xx) having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of FSFC Shareholders in a general meeting in accordance with, or as contemplated by, Rule 21.1 of the Code;

No adverse change, litigation or regulatory enquiry

(f) except as Disclosed, since 30 September 2023:

(i) no adverse change or deterioration having occurred, and no circumstances having arisen which would or might reasonably be expected to result in any adverse change or deterioration, in the business, assets, financial or trading position or profits or prospects of any member of the Wider FSFC Group which, in each case, is material in the context of the Wider FSFC Group taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal or regulatory proceedings to which any member of the Wider FSFC Group is or may become a party (whether as a claimant, defendant or otherwise) and no investigation, enquiry or complaint by any Relevant Authority or other investigative body against or in respect of any member of the Wider FSFC Group having been instituted, announced or threatened by or against or remaining outstanding in respect of any member of the Wider FSFC Group which, in each such case, might reasonably be expected to have a material adverse effect on the Wider FSFC Group taken as a whole;

(iii) no contingent or other liability having increased or arisen or become apparent to Bidco which would be reasonably likely to adversely affect the business, assets, value of, or the financial or trading position, profits or prospects of any member of the Wider FSFC Group to an extent which is material in the context of the Wider FSFC Group taken as a whole;

(iv) no steps having been taken and no omissions having been made which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider FSFC Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and reasonably likely to have a material adverse effect on the Wider FSFC Group taken as a whole; and

(v) no member of the Wider FSFC Group having conducted its business in breach of any applicable laws and regulations which in any case is material in the context of the Wider FSFC Group taken as a whole;

No discovery of certain matters

(g) except as Disclosed, Bidco not having discovered (in each case to an extent which is material in the context of the Wider FSFC Group taken as a whole or material in the context of the Acquisition):

(i) that any financial, business or other information concerning the Wider FSFC Group as contained in the information publicly announced before the date of this announcement or Disclosed to any member of the Wider Bidco Group or to any of the Wider Bidco Group's advisers or otherwise by or on behalf of any member of the Wider FSFC Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading and which was not subsequently corrected before the date of this announcement by disclosure by or on behalf of the Wider FSFC Group through the publication of an announcement via a Regulatory Information Service or otherwise to Bidco or its advisers; or

(ii) that any member of the Wider FSFC Group is subject to any liability (actual or contingent) which is not fairly disclosed in the annual report and audited financial statements of FSFC for the financial year ended 30 September 2023;

(iii) that any past or present member of the Wider FSFC Group has failed to comply with any and/or all applicable legislation or regulations or other requirements of any jurisdiction, or any permit, authorisation or other consent, with regard to the use, treatment, storage, carriage, disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or animal health or otherwise relating to environmental matters or the health and safety of any person, or that there has otherwise been any such use, treatment, storage, carriage, disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation, regulations or requirements, and wherever the same may have taken place) any of which use, treatment, storage, carriage, disposal, spillage, release, discharge, leak or emission or non-compliance would be likely to give rise to any liability (actual or contingent) on the part of any member of the Wider FSFC Group;

(iv) that circumstances exist whereby a person or class of persons would be likely to have a claim in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider FSFC Group; or

(v) that there is, or is reasonably likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the Wider FSFC Group to make good, remediate, repair, reinstate or clean up any property, asset or controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider FSFC Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi--governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction;

Anti-corruption, sanctions and criminal property

(h) except as Disclosed, Bidco not having discovered that:

(i) any past or present member, director, officer, employee or agent of the Wider FSFC Group is or has at any time engaged in any activity, practice or conduct that would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation or any person that performs or has performed services for or on behalf of the Wider FSFC Group is or has at any time engaged in any activity, practice or conduct in connection with the performance of such services which would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation; or

(ii) any asset of any member of the Wider FSFC Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition); or

(iii) any past or present member, director, officer or employee of the Wider FSFC Group, or any other person for whom any such person may be liable or responsible, is or has engaged in any business or activity with, or made any investments in, or made any funds or assets available to or received any funds or assets from: (a) any government, entity or individual in respect of which US or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US or European Union laws or regulations, including the economic sanctions administered by the US Office of Foreign Assets Control, or HM Treasury in the United Kingdom; or (b) any government, entity or individual targeted by any of the economic sanctions of the United Nations, the US, the European Union or any of its member states; or

(iv) any member of the Wider FSFC Group has engaged in any transaction that would cause Bidco or any other member of the Wider Bidco Group to be in breach of any law or regulation upon its acquisition of FSFC, including the economic sanctions of the US Office of Foreign Assets Control, or HM Treasury in the United Kingdom, or any government, entity or individual targeted by any of the economic sanctions of the United Nations, the US, the European Union or any of its member states.

Part B

Certain further terms of the Acquisition and the Scheme

1. The Acquisition will be subject to the satisfaction (or waiver, if permitted) of the Conditions in Part A above, and to certain further terms set out in this Part B, and to the full terms and conditions which will be set out in the Scheme Document.

2. Subject to the requirements of the Panel or the Court, Bidco reserves the right to waive, in whole or in part, all or any of the Conditions in Part A above, except for Conditions 1, 2(a)(i), 2(b)(i), 2(c)(i) and 2(c)(iii) which cannot be waived.

3. If any of Conditions 2(a)(ii), 2(b)(ii) or 2(c)(ii) are not satisfied by the deadline specified in the relevant Condition, Bidco shall make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked the relevant Condition, waived the relevant deadline or agreed with FSFC to extend the relevant deadline. Conditions 2(a), 2(b) and 3(a) to 3(h) (inclusive) must be fulfilled, or (if capable of waiver) waived, by no later than 11.59 p.m. on the date immediately preceding the date of the Court Hearing. The Acquisition will lapse if it does not become Effective by 11.59 p.m. on the Long Stop Date.

4. Bidco shall be under no obligation to waive (if capable of waiver) or treat as satisfied any of the Conditions by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions to the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

5. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

6. Subject to paragraph 7 below, under Rule 13.5(a) of the Code, Bidco may only invoke a Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn with the consent of the Panel. The Panel will normally only give its consent if the circumstances which give rise to the right to invoke the Condition are of material significance to Bidco in the context of the Acquisition. This will be judged by reference to the facts of each case at the time that the relevant circumstances arise.

7. The Conditions set out in paragraphs 1 and 2(a)(i), 2(b)(i), 2(c)(i) and 2(c)(iii) of Part A of this Appendix 1 (and any Takeover Offer acceptance condition adopted on the basis specified in paragraph 15 of this Part B of this Appendix 1) will not be subject to Rule 13.5(a) of the Code.

8. Any Condition that is subject to Rule 13.5(a) of the Code may be waived by Bidco.

9. If Bidco is required by the Panel to make an offer for FSFC Shares under the provisions of Rule 9 of the Code, Bidco may make such alterations to any of the above Conditions and terms of the Acquisition as are necessary to comply with the provisions of that Rule.

10. Scheme Shares will be acquired by Bidco under the Acquisition fully paid and free from all liens, equities, equitable interests, charges, encumbrances, options, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this announcement or thereafter attaching or accruing thereto, including (without limitation) voting rights and the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the date of this announcement, other than any dividend or distribution in respect of which Bidco exercises its right under the terms of the Acquisition to reduce the consideration payable in respect of each Scheme Share.

11. Without prejudice to any right Bidco may have, with the consent of the Panel, to invoke Condition 3(e)(ii), if any dividend or other distribution is announced, declared, made, payable or paid in respect of the FSFC Shares on or after the date of this announcement and prior to the Effective Date, Bidco reserves the right to reduce the consideration payable in respect of each Scheme Share under the terms of the Acquisition (including the Alternative Offer) by the amount of all or part of any such dividend or other distribution, provided that, to the extent that such dividend or distribution is cancelled, the consideration shall not be subject to change. If Bidco exercises this right or makes such a reduction in respect of a dividend or other distribution, Scheme Shareholders will be entitled to receive and retain that dividend or other distribution.

12. The availability of the Acquisition (including the Alternative Offer) to persons resident in, or citizens of, or otherwise subject to, jurisdictions outside the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. FSFC Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

13. Unless otherwise determined by Bidco or required by the Code, the Acquisition (including the Alternative Offer) is not being made, directly or indirectly, in, into or from, or by use of the mails of, or any means of instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and shall not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

14. The Acquisition will be governed by English law and be subject to the jurisdiction of the Court and to the Conditions and further terms set out in this Appendix 1 and to be set out in the Scheme Document. The Acquisition will also be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange, the FCA and the Registrar of Companies.

15. Bidco reserves the right to elect to implement the Acquisition by way of a Takeover Offer as an alternative to the Scheme, subject to obtaining the consent of the Panel. In such event, such Takeover Offer will be implemented on the same terms and conditions, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments for an acquisition being made by way of a Takeover Offer including (without limitation) the inclusion of an acceptance condition set at 90 per cent. of the FSFC Shares to which the Takeover Offer relates (or such lesser percentage as may be determined by Bidco after consultation with the Panel (if necessary), being in any case more than 50 per cent. of the voting rights normally exercisable at a general meeting of FSFC, including, for this purpose, any such voting rights attaching to FSFC Shares that are issued before the Takeover Offer becomes or is declared unconditional, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise). Further, if sufficient acceptances of the Takeover Offer are received and/or sufficient FSFC Shares are otherwise acquired, it is the intention of Bidco to apply the provisions of the Companies Act to compulsorily acquire any outstanding FSFC Shares to which the Takeover Offer relates.

Appendix 2

Sources of information and bases of calculation

1. As at close of business on the Latest Practicable Date, FSFC had 172,056,075 ordinary shares in issue and no ordinary shares were held in treasury, and the issued share capital of FSFC has been calculated using this number.

2. As at close of business on the Latest Practicable Date, FSFC had 121,052,313 Scheme Shares in issue, being the 172,056,075 FSFC Shares in issue referred to in paragraph 1 above less the 51,003,762 FSFC Shares held by Blackmead.

3. As at close of business on the Latest Practicable Date, FSFC had 121,042,313 Scheme Voting Shares in issue, being the 121,052,313 Scheme Shares in issue referred to in paragraph 2 above less the 10,000 FSFC Shares beneficially owned by Mr Stephen Thayer.

4. The value of approximately £167 million for the entire issued and to be issued ordinary share capital of FSFC is based on:

(a) the Cash Offer of 97 pence for each Scheme Share; and

(b) FSFC's issued ordinary share capital of 172,056,075 FSFC Shares, as set out in paragraph 1 above.

5. Unless otherwise stated, all prices quoted for FSFC Shares are Closing Prices.

6. Volume weighted average prices have been derived from Bloomberg and have been rounded to the nearest tenth of a penny.

7. Portfolio information relating to FSFC's portfolio of forestry and afforestation assets is derived from the Investment Manager and valuation information relating to FSFC's portfolio of forestry and afforestation assets is derived from the valuation report prepared by Savills as set out in Appendix 5 to this announcement. Certain immediately adjacent assets are treated by FSFC as a single property for the purposes of portfolio reporting. However, for the purposes of the valuation report, Savills has treated these assets as separate properties, resulting in the valuation report referring to FSFC's portfolio comprising 71 forestry and afforestation assets (rather than 69).

8. The premium calculations to the price for each FSFC Share have been calculated by reference to:

(a) the Closing Price of 73.0 pence per FSFC Share on 28 May 2024 (being the Latest Practicable Date);

(b) the volume weighted average price of 67.7 pence per FSFC Share for the three-month period ended 28 May 2024; and

9. Unless otherwise stated, the financial information relating to FSFC has been extracted from FSFC's annual report and audited financial statements for the financial year ended 30 September 2023.

10. Certain figures included in this announcement have been subject to rounding adjustments.

11. The 31 March 2024 NAV has been calculated by reference to the valuation in respect of FSFC's portfolio of forestry and afforestation assets as at 31 March 2024 prepared by Savills adjusted as follows:

	£m
Value of FSFC's portfolio of forestry and afforestation assets per valuation report	179.8
Adjustments*	9.2
Fair value of portfolio of investments	189.0
Group cash	4.5
Other net current assets/(liabilities)	0.7
Outstanding debt	(18.3)
31 March 2024 NAV	175.8
Total FSFC Shares in issue	172,056,075
31 March 2024 NAV per FSFC Share (p)	102.2p

*For the purposes of Rule 29.1(d)(ii) of the Code, "adjustments" is £9.2 million in value ascribed towards the creation of carbon credits.

Carbon credits are issued by the Woodland Carbon Code (the "WCC") and each unit represents measurable amounts of carbon dioxide (CO2) removed from the atmosphere by trees as they grow - one unit is one tonne of carbon dioxide equivalent permanently removed from the atmosphere. As trees take a while to grow and sequester carbon dioxide, the WCC issues two types of unit, Pending Issuance Units ("PIUs"), which recognise expected future additional and permanent carbon sequestration and Woodland Carbon Units ("WCUs"), which recognise actual additional and permanent carbon sequestration.

As at 31 March 2024, the FSFC Group recognised value ascribed towards the creation of 478,000 carbon credits calculated by the Investment Manager as an estimated value of the progress made on obtaining validated WCUs. To date, none of the FSFC Group's PIUs have been converted into WCUs by the WCC.

When establishing the value of PIUs that have yet to receive validation (by the Soil Association, on behalf of the WCC), a conservative c.25 per cent. risk discount is applied to the average observed unit price of traded carbon credits. FSFC applies a 10 per cent. discount for the WCC validation process not having fully completed and a further 15 per cent. discount for carbon credit vintage risk. The vintage risk buffer has been retained in order to take account of the current lack of visibility of the timeframe within which the WCC carbon credits that form the existing comparable transaction data set will become usable for offsetting. When establishing the value of PIUs that have received Soil Association validation, FSFC applies only the 15 per cent. discount on the average observed unit price of traded carbon credits for vintage risk.

Pursuant to Rule 29.1(b)(iii) of the Code, as the carbon credits are a separate class of unquoted assets representing, in aggregate, less than 10 per cent. of FSFC's gross asset value, no external valuation of these assets is required under Rule 29 of the Code.

Appendix 3

DETAILS OF Irrevocable undertakings AND LETTERS OF INTENT IN RESPECT OF FSFC shares

1. FSFC Directors' irrevocable undertakings

Each of the FSFC Directors has entered into an irrevocable undertaking with Bidco to vote (and, if applicable, procure the vote) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer, in respect of their entire beneficial holdings of FSFC Shares:

Name of FSFC Director	Number of FSFC Shares in respect of which the irrevocable undertaking is given¹	Percentage of FSFC issued ordinary share capital	Percentage of Scheme Voting Shares
Richard Davidson	150,000	0.09	0.12
Sarika Patel	40,000	0.02	0.03
Josephine Bush	19,000	0.01	0.02
Christopher Sutton	35,000	0.02	0.03
Total	244,000	0.14	0.20

Note:

1. The FSFC Shares referred to in the table are, in some instances held via nominees. In each case, the FSFC Director has undertaken to vote himself/herself, or to procure the exercise of the votes attaching to his/her FSFC Shares, in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting.

These irrevocable undertakings given by the FSFC Directors, shall lapse and cease to be binding: (a) immediately if Bidco announces (with the consent of the Panel) that it will not proceed with the Acquisition; or (b) on or from the earlier of: (i) the Scheme becoming Effective; (ii) the Long Stop Date; (iii) such time and date on which the Scheme is withdrawn, lapses or otherwise terminates in accordance with its terms (provided that the reason is not because Bidco has elected to proceed by way of a Takeover Offer rather than by way of a Scheme or vice versa); and (iv) any competing offer for the entire issued and to be issued share capital of FSFC being declared wholly unconditional or, if implemented by way of a scheme of arrangement, becoming effective.

2. FSFC Shareholder irrevocable undertaking

The following FSFC Shareholder has entered into an irrevocable undertaking with Bidco to vote (and, if applicable, procure the vote) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer:

Entity beneficially entitled to the FSFC Shares	Number of FSFC Shares in respect of which the irrevocable undertaking is given	Percentage of FSFC issued ordinary share capital	Percentage of Scheme Voting Shares
Greenbank	8,100,000	4.71	6.69
Total	8,100,000	4.71	6.69

The irrevocable undertaking given by Greenbank is conditional on the publication of the Scheme Document (or, if applicable, the Offer Document) within 28 days of this announcement (or such later date as may be agreed with the Panel). The Greenbank irrevocable undertaking shall lapse and cease to be binding: (a) on the earlier of: (i) the Scheme becoming effective in accordance with its terms or (if the Acquisition proceeds by way of a Takeover Offer), the Acquisition being declared unconditional in accordance with the requirements of the Code; (ii) the Long Stop Date; and (iii) the Acquisition being withdrawn, lapsing or otherwise terminating (provided that (A) the reason is not because Bidco has elected to proceed by way of a Takeover Offer rather than by way of a Scheme or vice versa; and/or (B) no new, revised or replacement Acquisition in accordance with Rule 2.7 of the Code is announced by Bidco at the same time); or (b) if, at any time prior to the Scheme becoming effective or the Takeover Offer becoming unconditional (as applicable): (i) in accordance with Rule 2.7 of the Code, a third party (a "Competing Bidder") announces a firm intention to acquire the issued and to be issued share capital of FSFC not already owned by the Competing Bidder for an amount of consideration that is equal to or higher than the amount that is 10 per cent. more than the consideration under the Acquisition (a "Higher Competing Offer"); and (ii) Bidco does not increase the consideration offered under the Acquisition to an amount which represents an offer value equal to or higher than the consideration offered pursuant to the Higher Competing Offer by 11.59 p.m. (UK time) on the fifth business day after the date of the firm intention announcement by the Competing Bidder, and, in the event that some or all of the consideration pursuant to the Higher Competing Offer includes non-cash consideration, such as shares or other securities, the amount of consideration offered under the Higher Competing Offer for the purposes of this assessment shall be as determined by the FSFC Board (acting reasonably), having taken advice from FSFC's financial advisers, and announced such determination by way of a Regulatory News Service.

3. FSFC Shareholder letters of intent

The following FSFC Shareholders have delivered a non-binding letter of intent to vote (or procure the voting) in favour of the Scheme at the Court Meeting and the Resolutions at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer) in relation to the following FSFC Shares:

Entity beneficially entitled to the FSFC Shares	Number of FSFC Shares in respect of which the letter of intent is given	Percentage of FSFC issued ordinary share capital	Percentage of Scheme Voting Shares
Aviva Investors	15,340,826	8.92	12.67
Cantor Fitzgerald Ireland Limited	8,852,145	5.14	7.31
Total	24,192,971	14.06	19.99

APPENDIX 4

THE AVERON PARK GROUP AND THE ROLLOVER SHARES

1. Additional information in respect of the Averon Park Group

Bidco is a private company limited by shares incorporated and registered in England and Wales on 20 May 2024 with company number 15730327. Bidco is indirectly wholly-owned by Averon Park and was formed for the purpose of implementing the Acquisition. Bidco has not traded or entered into any obligations other than in connection with the Acquisition. The share capital of Bidco currently comprises the Bidco Subscriber Share, which is held by Blackmead. At the date of this announcement, Bidco is, therefore, a wholly-owned direct subsidiary of Blackmead.

Blackmead is a private company limited by shares incorporated and registered in England and Wales on 7 March 2014 with company number 08928992, and is a wholly-owned direct subsidiary of Averon Park.

Averon Park is the ultimate holding company of Bidco, and its principal activity is to provide finance for unquoted trading companies in which it has an equity stake and which are backed predominately by infrastructure assets with a low risk profile and where capital preservation is key. The directors of Averon Park are Gary Fraser (chairman of the board and also executive director, Chief Financial Officer and Chief Operating Officer of Foresight Group Holdings Limited), Graham Ross Russell (independent non-executive director), Peter Dicks (independent non-executive director) and Simon Jamieson (independent non-executive director). Blackmead is a wholly-owned direct subsidiary of Averon Park which holds the majority of Averon Park's assets, including, as at the Latest Practicable Date, 51,003,762 FSFC Shares. The issued ordinary share capital of Averon Park is held by Foresight Fund Managers Limited as nominee for the underlying beneficial investors in Averon Park, which comprise approximately 9,000 investors. Foresight Fund Managers Limited is an indirect subsidiary of Foresight Group Holdings Limited, the London Stock Exchange-listed ultimate parent company of Foresight Group LLP.

Set out below is a summary of the proposed share capital structure of Bidco and the provisions of Bidco's articles of association governing the terms on which FSFC Shareholders who validly elect for the Alternative Offer will hold Rollover Shares in Bidco pursuant to the mechanism described in paragraph 11 of the announcement above. Further details will be included in the Scheme Document.

2. Bidco share capital

The current share capital of Bidco consists of the Bidco Subscriber Share which is held by Blackmead. On or around the Effective Date, the Bidco Subscriber Share will be re-designated as a Bidco A Ordinary Share. It is anticipated that Bidco will simultaneously issue around 172,056,075 Bidco Shares: (i) in order to fund the cash consideration payable by Bidco in respect of the Acquisition; (ii) in exchange for the transfer to Bidco from Blackmead of the 51,003,762 FSFC Shares currently held by Blackmead; and (iii) to meet any valid elections for Rollover Shares under the Alternative Offer (the "Bidco Offer Shares").

If the Alternative Offer were taken up in full by eligible Scheme Shareholders, it is expected that Bidco would issue around:

§ 78,055,500 Bidco A Ordinary Shares to Blackmead to fund the cash consideration payable by Bidco in respect of the Acquisition;

§ 51,003,762 Bidco A Ordinary Shares to Blackmead in exchange for the transfer to Bidco from Blackmead of the 51,003,762 FSFC Shares currently held by Blackmead; and

§ 42,996,813 Rollover Shares to those eligible Scheme Shareholders who validly elect to receive the Alternative Offer.

The Rollover Shares will be issued credited as fully paid.

3. Economic rights

The economic rights described below are subject to the advantages and disadvantages of the Alternative Offer described in paragraph 4 of this announcement (for example, that (i) holders of Rollover Shares may be diluted over time, potentially significantly, should holders of Rollover Shares not elect to participate in further issues of additional shares, loan notes or other securities in Bidco; (ii) holders of Rollover Shares are not always entitled to participate in such issues; and (iii) such additional securities may have different rights to the Rollover Shares).

Subject to the above, from an economic perspective, the Bidco A Ordinary Shares and the Rollover Shares shall rank equally in all respects, including (without limitation) as regards any distributions, dividends, buy-backs, capital redemption or other returns or distributions of income or capital made by Bidco in respect of Bidco A Ordinary Shares and/or Rollover Shares by reference to a record date falling on or after the Effective Date.

Any return or distribution of capital or income in respect of Bidco A Ordinary Shares and/or Rollover Shares, whether on Exit (as described below in paragraph 8 of this Appendix 4) or otherwise, shall be distributed to each holder of Bidco A Ordinary Shares and Rollover Shares pro rata to their holdings of Bidco Shares.

4. Governance and voting rights

Every holder of one or more Bidco A Ordinary Shares on the date on which either a written resolution is circulated or a general meeting is held and who is present at such meeting shall, subject to Bidco's articles of association, have one vote for each Bidco A Ordinary Share held.

Bidco will generally be governed by a board of directors. However, for so long as the Rollover Shares represent, in aggregate, in excess of 5 per cent. of the share capital of Bidco, the following matters are reserved matters requiring the prior consent of holders of at least 50.1 per cent. or more of the Rollover Shares ("Rollover Shareholder Minority Consent"):

(i) any amendments to the provisions of Bidco's articles of association that have a material and disproportionate adverse impact on the economic rights of the Rollover Shares; and

(ii) the entry into, by Bidco or any other member of the Bidco Group, of any related party contract with Blackmead, and/or its affiliates (subject to: (i) customary carve outs, including further debt or equity funding or actions taken in the ordinary course of business and/or on arms' length terms; and (ii) a de minimis threshold).

Rollover Shareholder Minority Consent will not be required in relation to any action approved by Bidco and/or Blackmead (which they shall be entitled but not obliged to take) in relation to dealing with any emergency and/or distress and/or underperformance affecting or reasonably likely to affect Bidco.

For the avoidance of doubt, the issue of securities in Bidco or any of its affiliates to Blackmead or any other third party approved by it shall not require any consent of any holder of Rollover Shares if such holder has (either before or after through a catch-up right) been offered, but has not accepted or (under the terms of such offer) has been deemed to have accepted, the opportunity to take up their pro-rata share of such an issue.

Except as described above, any decisions of the Bidco Board (as approved by Blackmead), including (without limitation) any amendment to the rights of the Bidco Shares (notwithstanding any statutory class rights or otherwise) shall be deemed to be approved by each Rollover Shareholder, provided that reasonable notice setting out the amendments shall be sent to Rollover Shareholders. In order to give effect to the foregoing principle, the passing of statutory class consents in respect of alterations of statutory class rights attaching to the Rollover Shares may be made by Blackmead on behalf of the holders of Rollover Shares.

5. Transfers of Rollover Shares

Rollover Shares will not be transferable without the prior written consent of Blackmead except pursuant to:

a) Annual Tender Offers and any share buy-backs described below;

b) a Reorganisation of the Bidco Group approved by Blackmead; or

c) the operation of the drag-along or tag-along rights described below.

6. Annual Tender Offers and Bidco Share buybacks

Annual Tender Offers

Bidco will use reasonable endeavours to facilitate an annual liquidity event for Original Rollover Shareholders by providing an opportunity for such Rollover Shareholders to sell a portion of their Rollover Shares back to Bidco at the net asset value per Rollover Share as reported in Bidco's most recent annual report in each financial year (an "Annual Tender Offer"). It is expected that an Annual Tender Offer will be offered within four months of Bidco's financial year end.

Net asset value, as determined by reference to Bidco's annual report in each financial year, shall be final in determining the price at which Rollover Shares will be bought back by Bidco pursuant to each Annual Tender Offer.

The availability of an Annual Tender Offer will depend on, in addition to being legally permissible, the Bidco Board being satisfied of the availability of sufficient free cash flow, taking account of Bidco's maintenance of appropriate working capital balances.

Bidco Share buybacks

Without prejudice to the Annual Tender Offer(s), Bidco will have the ability (but not an obligation) under Bidco's articles of association to buyback Rollover Shares as and when the Bidco Board think fit at a price to be determined by the Bidco Board (subject always to agreement with the relevant Rollover Shareholder as to the terms of any such buyback and subject to applicable law).

7. Further Bidco Share issues

If, after the Effective Date, Bidco proposes to issue new Bidco Shares (being either Bidco A Ordinary Shares, Rollover Shares, or otherwise), each holder of Bidco Shares shall be entitled to participate pro rata in such issue (either, at the option of the Bidco Board, at the time of such issue or through a catch-up right), excluding issues of new Bidco Shares, or transfers of Bidco Shares from treasury:

a) in connection with a Reorganisation of the Bidco Group, IPO or pre-IPO reorganisation;

b) in connection with dealing with any emergency and/or distress and/or underperformance affecting or reasonably likely to affect Bidco; or

c) in respect of which Blackmead obtains Rollover Shareholder Minority Consent to the disapplication of pre-emption rights.

8. Exit arrangements

Blackmead shall take any decisions in respect of an exit, including Blackmead having a drag-along right (and there being a corresponding customary tag-along right) in relation to Rollover Shares and/or any other shares in Bidco provided that such exit (if a share or asset sale) is to a third party and the form of consideration payable under the drag-along right or tag-along right (as the case may be) is the same as that which is received by Blackmead in respect of Bidco A Ordinary Shares (unless Blackmead agrees to accept non-cash consideration and determines that shareholders who are the subject of the drag-along right or tag-along right (as the case may be) may receive a cash or cash-like equivalent).

A customary definition of exit will be set out in Bidco's articles of association and it shall exclude the following (without limitation):

a) a transfer to Averon Park, or other affiliate of Bidco or Blackmead, including, for the avoidance of doubt, any fund, company or other entity managed by the Investment Manager or any member of its group) or any current or prospective director, officer, employee or consultant of Bidco, Blackmead or any of their affiliates; or

b) a Reorganisation of the Bidco Group or IPO of Bidco or any member of the Bidco Group.

The following actions shall be at Blackmead's sole discretion:

a) any sale, transfer, or disposal of or other dealing in Bidco Shares (other than Rollover Shares);

b) the giving of any consent for any transfer of Rollover Shares;

c) any reorganisation of the Bidco Group, including, but not limited to, any winding up or similar process in respect of any member of the Bidco Group where such process is required by applicable law or such action would not reasonably be expected to have an adverse effect on the Bidco Group as a whole (a "Reorganisation of the Bidco Group"). Rollover Shareholders shall co-operate and take such actions in respect of any proposed Reorganisation of the Bidco Group as are requested by Bidco, Blackmead, or Averon Park in respect of the same; and

d) any sale of shares, asset sale, IPO, winding up or other form of liquidity event relating to the Bidco Group (other than pursuant to an Annual Tender Offer or any Bidco Share buybacks described above) (an "Exit").

All holders of Rollover Shares will be required to co-operate and take such actions in respect of any proposed Exit as are reasonably requested by Bidco, Blackmead, or Averon Park.

Each holder of Rollover Shares who is selling their Rollover Shares will give such customary warranties and such undertakings, warranties and indemnities as are requested in relation to the Exit, including, without limitation, any obligation to contribute to any escrow, in each case on the same basis and terms, including as to the basis of liability and any proportionality provisions, as Blackmead.

9. Information rights

Each Rollover Shareholder holding in excess of 3 per cent. of the issued share capital of Bidco shall, for so long as they hold in excess of 3 per cent., be entitled to receive detailed quarterly management reports covering valuation, operational highlights, portfolio developments and sustainability within approximately eight weeks of the relevant quarter end.

Each Rollover Shareholder who receives such information is entitled to pass such information to its affiliates on a confidential basis to the extent that such affiliates need to know such information.

10. Terms of Alternative Offer in the event of a switch to a Takeover Offer

In the event that Bidco elects, with the consent of the Panel, to switch to a Takeover Offer, and less than 100 per cent. of the FSFC Shares are acquired by Bidco (pursuant to acceptances of the Takeover Offer or otherwise) on or around the date of such Takeover Offer becoming unconditional, the total number of Bidco A Ordinary Shares to be issued to Blackmead and Rollover Shares to be issued to eligible FSFC Shareholders who validly elect for the Alternative Offer at that time will be reduced (and in the same proportions as between Bidco A Ordinary Shares and Rollover Shares) such that the maximum number of Rollover Shares available to eligible FSFC Shareholders under the Alternative Offer will remain equal to the equivalent of 24.99 per cent. of the total Bidco Offer Shares in issue at such time following the settlement of consideration due to FSFC Shareholders who have accepted the Takeover Offer (either the Cash Offer or the Alternative Offer) on or before that time. In that event, to the extent that valid elections for the Alternative Offer are unable to be satisfied in full, the number of Rollover Shares to be issued to each eligible FSFC Shareholder who has validly elected for the Alternative Offer will be reduced on a pro rata basis, and the consideration for each FSFC Share that is not exchanged for a Rollover Share will be paid in cash in accordance with the terms of the Cash Offer.

If: (i) further FSFC Shares are acquired for cash by or on behalf of Bidco after the Takeover Offer becomes unconditional (under the Cash Offer or the compulsory acquisition procedure or otherwise); and (ii) the Bidco A Ordinary Shares to be issued to fund those acquisitions were not included in the calculation of the above 24.99 per cent. maximum entitlement of eligible FSFC Shareholders who elect for the Alternative Offer, any additional Bidco Shares which are to be issued in order to fund those acquisitions will be offered in the same proportions as between the Bidco A Ordinary Shares and Rollover Shares as existed following the initial issue of Bidco Offer Shares to electing eligible FSFC Shareholders. Such holders of Rollover Shares shall be entitled to customary pre-emption rights or catch-up rights in relation to any such additional issue of Bidco Shares in order to have an opportunity to maintain their percentage interests in Bidco. Any such additional Bidco Shares offered and taken up by holders of Rollover Shares will be issued in the form of Rollover Shares, and any such additional Bidco Shares to be issued to Blackmead (including where such holders of Rollover Shares do not take up in full their pre-emption or catch-up right) will be issued in the form of Bidco A Ordinary Shares.

11. "Know Your Client" and other regulatory requirements

Eligible FSFC Shareholders who elect for the Alternative Offer may be required to provide, and procure that their affiliates and other related persons provide, to Bidco, Blackmead and/or Averon Park before the Effective Date such materials and information with respect to themselves (and, to the extent applicable, their directors, shareholders, members, affiliates and other relevant parties) as requested by Bidco, Blackmead and/or Averon Park in order to satisfy any applicable anti-money laundering, anti-bribery and corruption, anti-sanctions and "Know Your Client" checks reasonably required by Bidco, Blackmead or Averon Park or their respective associates and/or any antitrust or regulatory change in control approvals required by any regulator.

APPENDIX 5

VALUATION REPORT

Foresight Sustainable Forestry Company PLC

Report and Valuation

29 May 2024

Contents

1. Valuation Report 3

1.1. Addressees… …………………………………………………………………………….......………………….. ...... 4

1.2. Project Name …………………………………………………………………………………………………………..4

1.3. Instructions and Purpose of Valuation…………………………………………………………………….………….4

1.4. Terms of Reference …………………………………………………………………………………………………… .4

1.5. Conflicts of Interest ……………………………………………………………………………………………………..5

1.6. Date of Valuation and Changes to Value since the Valuation Date …………………………………………….... 5

1.7. Valuer Details …………………………………………………………………………………………………………... 5

1.8. Basis of Valuation ..............................................................................................................................................5

1.9. Market Conditions ……………………………………………………………………………………………………… 6

1.10. Market Value …………………………………………………………………………………………………………… 7

1.11. Confidentiality ………………………………………………………………………………………………………...... 7

1.12. Portfolio Valuation General Assumptions and Conditions……………………………………………………………8

1.13. Reliance ………………………………………………………………………………………………………8

1.14. Responsibility ……………………………………………………………………………………………………….......8

1.15. Signatories ……………………………………………………………………………………………………………… 9

1.16. Date of Report ………………………………………………………………………………………………………….. 9

2. Schedule of Properties 10

3. Portfolio Valuation General Assumptions and Conditions 14

1. Valuation Report

RICS Registered Valuer

Director

Sarah Jackson MRICS TEP

RICS Registered Valuer

Director

1.1. Addressees

Foresight Sustainable Forestry Company Plc

The Shard

32 London Bridge Street

London

SE1 9SG

Stifel Nicolaus Europe Limited

4th Floor, 150 Cheapside

London

EC2V 6ET

1.2. Project Name

Foresight Sustainable Forestry Company PLC

1.3. Instructions and Purpose of Valuation

In accordance with our instructions received from Foresight Sustainable Forestry Company Plc and Stifel Nicolaus Europe Limited ("FSFC Plc" and "Stifel" respectively) and our terms of engagement dated 22 May 2024 with FSFC Plc and Stifel, we have undertaken valuations (the "Valuations") of the heritable/freehold interests in the properties described in Schedule 2 (the "Properties" and each being a "Property") (together, the "Portfolio") in connection with a recommended cash offer by Arizona Bidco Limited ("Arizona"), a newly-incorporated subsidiary of Averon Park Limited ("Averon"), for the entire issued and to be issued share capital of FSFC Plc (the "Transaction"). FSFC Plc and Stifel have expressly instructed us not to disclose certain information which is considered commercially sensitive, namely the individual values of the properties.

This report has been prepared in accordance with the RICS Valuation - Global Standards (incorporating the IVSC International Valuation Standards) effective from 31 January 2022 together, where applicable, with the UK National Supplement effective 1 May 2024, together the ''Red Book". The Report has been prepared in accordance with, and complies with, the requirements of Rule 29 of the City Code on Takeovers and Mergers (the "Code"). We understand that this Report is required for: (i) inclusion in an announcement proposed to be made by FSFC Plc and Arizona pursuant to Rule 2.7 of the Code in connection with the "Transaction (the "Announcement"); (ii) inclusion in a scheme circular to be published by FSFC Plc in connection with the Transaction (the "Scheme Document"); (iii) inclusion and/or reference to it in any other announcements, documents and/or supplementary documents required to be released by FSFC Plc and Stifel, Averon Park and/or Arizona pursuant to the Code and which directly relate to the Transaction (each a "Code Document"); and (iv) publication on FSFC Plc's website and Averon Park's website in accordance with the requirements of the Code (the "Purpose").

1.4. Terms of Reference

The Portfolio comprises 71 Properties, all of which are owned on a heritable/freehold basis. There are no leasehold assets. The Properties are all held for investment purposes. They are located throughout the UK and all, apart from one new acquisition, have been inspected within the last three years, a timeframe which is normal for assets of this nature for which change is typically gradual. All the Properties are identified on the attached schedule at Section 2 of this Report.

FSFC Plc has provided us with information on the portfolio, and we have relied on this information in preparing our report, verifying data only where we have been able to visually inspect the relevant parts. We confirm that we have considered sustainability features relevant to the Properties and the implications these could have on our Valuations.

1.5. Conflicts of Interest

In accordance with the RICS professional statement on Conflicts of Interest (1^st Edition, March 2017), we are not aware of any conflict of interest preventing us from providing you with an independent valuation of the properties in accordance with the RICS Red Book. We confirm that we undertake valuations of the Properties on behalf of FSFC Plc for net asset value and performance measurement purposes on a half-yearly basis, the last of which was as at 31 March 2024. We confirm we are acting as an "external valuer" as defined in the RICS Red Book.

1.6. Date of Valuation and Changes to Value since the Valuation Date

Our opinions of value are as at 31 March 2024 (the "Valuation Date"). The importance of the Valuation Date must be stressed as property values can change over a relatively short period.

For the purposes of Rule 29.5 of the Code, we confirm that there is no material difference between the values of the Properties stated in this Report and the values that would be stated were the Valuation Date the date of this Report. Nor do we believe that market conditions have changed sufficiently to materially alter the Valuations reported as at the Valuation Date. As a result, we confirm for the purpose of Rule 29.5 of the Code that an updated valuation as at the date of this Report would not be materially different from the Valuations as at the Valuation Date.

1.7. Valuer Details

These Valuations have been prepared by a number of valuers under the supervision of James Adamson MRICS (the "Lead Valuer"), who is a RICS Registered Valuer. We confirm that the valuers are appropriately qualified for the purposes of the Valuation as required by Rule 29.3(a)(ii) of the Code, meet the requirements of the Red Book and Rule 29.3(a)(iii) of the Code in having sufficient current knowledge of the relevant markets and the necessary skills and understanding to undertake the Valuations competently in accordance with Rule 29 of the Code. We confirm that the valuers are independent of the parties to the Transaction as required by Rule 29.3(a)(i) of the Code, and confirm that we are not aware of any reason why we would not satisfy the requirements of Rule 29.3(a)(i) of the Code.

We are required by RICS regulations to disclose the following:

· James Adamson MRICS commenced supervision of the valuation of this Portfolio in 2021, when Savills (UK) Limited, and subsequently Savills Advisory Services Ltd, was instructed to provide half-yearly valuations.

· In the financial year ending 31 December 2023, the total fees earned from the Addressees, and connected parties, was less than 5% of Savills (UK) Limited and Savills Advisory Limited's turnover.

1.8. Basis of Valuation

Our Valuations have been prepared on the basis of Market Value, the definition of which is as follows:

"The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

Our Valuations have been arrived at predominantly by reference to market evidence for comparable property. We have made no allowance for any Capital Gains Tax or other taxation liability that might arise upon a sale of any of the Properties, nor have we allowed for any adjustment to any of the Properties' income streams to take into account any tax liabilities that may arise. Our Valuations are exclusive of VAT (if applicable).

We are advised by FSFC Plc that there is no fixed plant and machinery anywhere on the portfolio.

We have made no variation from standard assumptions.

1.9. Market Conditions

The UK economy continues to maintain a watch over inflationary pressures amid sluggish economic growth. In the first half of 2023, the UK witnessed a modest expansion, leading the IMF to upgrade their forecasts and dismiss the possibility of a recession in 2023, however, to combat inflation, the Bank of England consistently raised the base rate from late 2021, reaching a high of 5.25% in August 2023. These measures have contributed to the UK economy being classified as being in recession, with the economy contracting 0.3% between October and December 2023, following an initial fall of 0.1% between July and September 2023.

Accordingly, whilst further increases in interest rates cannot be ruled out, the prospect of any increase appears to have subsided given that inflation gradually reduced over the course of 2023. Nonetheless, whilst the UK inflation rate for November 2023 was at its lowest level in 2 years, at 3.9%, December 2023 recorded a small rise to 4.0%, the first rise since February 2023, and inflation for January 2024 was also recorded at 4.0%, and moreover remains stubbornly above target. The rise was unexpected and may delay rate cuts by the Bank of England, the committee responsible for interest rate setting split over whether rates should be held, reduce or even rise.

As a result of the increases in the base rate, borrowing costs have increased, surpassing prime real estate yields although the financial markets have begun to price in an anticipated reduction in interest rates, which is considered to indicate a turning point in the market.

The commercial real estate market felt the impact of these developments and experienced a sharp recalibration in prices. Many sales were withdrawn as vendors' price expectations were not met, while buyers have adopted an opportunistic pricing approach. Real estate lenders continue to exercise caution when it comes to financing new lending opportunities, except for the most exceptional assets and sponsors. In the meantime, in several commercial real estate sectors there is a positive occupational market which has offered encouragement to investors in seeking out properties with good underlying fundamentals and where there is the opportunity to deliver attractive returns in the medium to longer term.

Consequently, transactional volumes and liquidity significantly declined over 2022 and 2023, leading to a scarcity of comparable evidence to inform the valuation process. The investment market has recorded significantly reduced volumes with the UK commercial real estate market in 2023 recording investment volumes of broadly 45.0% of the long term average whilst in Central London investment volumes are down almost 60.0%. Market sentiment has gained increased importance in making informed assessments, given the limited availability of data. Notably, a divided market is emerging, differentiating "best in class" properties from those facing challenges due to locational factors and the overall quality of the real estate. Stakeholders in the market, including occupiers, investors, and lenders, are attaching heightened significance to environmental, social, and governance (ESG) considerations and the associated costs, in their decision making.

While there is still liquidity in the market, ongoing geopolitical uncertainties, economic challenges, and the cost and accessibility of debt finance are expected to further impact pricing. As a result, the potential for future value erosion cannot be discounted, particularly for secondary properties and those outside prime markets where more significant declines can be anticipated as real estate markets and values continue to recalibrate to elevated levels in the cost of capital, subdued transaction volumes and a cautious lending environment. We anticipate improved market sentiment during 2024, albeit the planned General Election curtails the prospects for a sustained return to growth this year.

It is therefore important to recognise that our valuation has been prepared against the backdrop outlined above. Moreover, investor behaviour can change quickly during such periods of heightened volatility. As such, the conclusions set out in this report are only valid at the valuation date and we would recommend that the value of the property is kept under regular review. For the avoidance of doubt, our valuation is not reported as being subject to 'material valuation uncertainty' as defined in the RICS Valuation - Global Standards.

1.10. Market Value

We are of the opinion that the aggregate Market Value of the Properties in the Portfolio, as at 31 March 2024, is:

TOTAL

£179,831,000

(ONE HUNDRED AND SEVENTY-NINE MILLION EIGHT HUNDRED AND THIRTY-ONE THOUSAND POUNDS)

The total valuation figure reported is the aggregate total of the individual Properties and not necessarily a figure that could be achieved if the Portfolio was sold as a single holding.

The tenure of the Properties held by FSFC Plc as at the Valuation Date are all heritable/freehold.

1.11. Confidentiality

In accordance with the recommendations of the RICS, this Report is provided solely for the purpose stated in this Report. It is confidential to and for the use only of the parties to whom it is addressed, and no responsibility is accepted to any third party for the whole nor any part of its contents. Any such parties rely upon this Report at their own risk. Save as referred to in this Report neither the whole nor any part of this Report or any reference to it may be included now, or at any time in the future, in any published document, circular or statement, nor published, referred to or used in any way without our written approval of the form and context in which it may appear.

Notwithstanding the above, we understand that the Report is being produced for inclusion in the Announcement, Scheme Document and any further Code Documents published pursuant to the Transaction. We consent to the publication and reproduction of the Report as required (including in the Announcement and the Scheme Document) subject to the provisions of our Terms of Engagement.

1.12. Portfolio Valuation General Assumptions and Conditions

All valuation advice has been carried out on the basis of the General Assumptions and Conditions set out in Section 3.

1.13. Reliance

This Report is addressed to and capable of being relied upon by:

· Foresight Sustainable Forestry Company Plc

· Stifel Nicolaus Europe Limited

(together, the Addressees) provided that, in relying on this Report, each of the Addressees acknowledges and agrees that:

(a) this Report refers to the position at the date it was originally issued and, unless otherwise confirmed by us in writing, we have taken no action to review or update this Report since the date it was originally issued;

(b) our aggregate liability under or in connection with this report to any one, or more, or all of the Addressees and any other party who becomes entitled to rely on the report is limited to the amount as set out in our letter of engagement with FSFC Plc and Stifel dated 22 May 2024; and

(c) this Report is subject to the terms and conditions set out in our letter of engagement with FSFC Plc and Stifel dated 22 May 2024.

Notwithstanding the above, we acknowledge that this Report will also be for the use of the shareholders of FSFC Plc and Averon Park Limited for the specific Purpose set out in this Valuation.

This Report is subject to the terms and conditions set out in our Terms of Engagement dated 22 May 2024.

1.14. Responsibility

For the purposes of the Code, we are responsible for this Report and accept responsibility for the information contained in this Report and confirm that to the best of our knowledge (having taken all reasonable care to ensure that such is the case), the information contained in this Report is in accordance with the facts and contains no omissions likely to affect its import. This Report complies with, and is prepared in accordance with, and on the basis of, the Code. We authorise its contents for the purpose of Rule 29 of the Code. We understand that the publication or reproduction by FSFC Plc, Stifel, Averon Park and/or Arizona of this Report and/or the information contained herein as required by Rules 26 and 29 of the Code is necessary, including in the Announcement, the Scheme Document and any other Code Documents released by FSFC Plc, Stifel, Averon Park and/or Arizona pursuant to the Code and which directly relate to the Transaction.

We confirm that we are not aware, as a result of our role as an External Valuer of the Properties of any matter which would affect the Market Value of the Properties which is not disclosed in this Report (subject to any assumptions set out in this Report) in order to make this Report materially accurate and not misleading and we are not aware of any matter in relation to this Report that we believe should be and has not yet been brought to the attention of the Addressees of this Report.

1.15. Signatories

James Adamson MRICS

Anna Henderson MRICS

RICS Registered Valuer

Director

For and on behalf of Savills Advisory Services Limited, a subsidiary of Savills Plc

Regulated by RICS

Registered in England No. 06215875

Registered Office: 33 Margaret Street, London, W1G 0JD

1.16. Date of Report

29 May 2024

2. Schedule of Properties

Region/Property (old name in brackets)	Description	Date of Inspection
North Scotland
Aberarder	Mature forest	28/8/2023
Bogbain	Mid-rotation forest	7/4/2023
Central Scotland
Balmuick	Afforestation
Balnagowan	Mature forest	17/4/2023
Bedehouse & East Bennachie	Mixed age forest	17/4/2023
Brown Hill (Greenfold)	Afforestation	8/9/2022
Burn of Bellyhack (Mains of Blairmore & Cottartown)	Afforestation	8/9/2022
Carlinden Burn (Marchmar)	Afforestation & non-forestry assets	8/9/2023
Coull	Mixed age forest	8/9/2023
Donside Collection - Bogforlea	Mature forest	8/9/2023
Donside Collection - Harthills	Mature forest	8/9/2023
Donside Collection - Kirkwood	Mature forest	13/9/2022
Donside Collection - Tom Na Wan	Mature forest	8/9/2023
Drumelzie	Mid-rotation forest & non-forestry assets	1/9/2022
Fordie	Mixed & Establishment age forest & non-forestry assets	30/8/2023
Glen Burn (Corncatterach)	Establishment age forest	8/4/2024
Ness Bogie (Collithie)	Afforestation	8/9/2022
New Noth Farm	Establishment age forest	8/4/2024
New Noth Forest	Mature forest	8/9/2023
Reams Hill (Lessendrum)	Afforestation	8/9/2022
Red Craig (Edendiack)	Establishment age forest	8/4/2024
South Scotland & North England
Allan Water Wood	Afforestation	27/3/2024
Allanton Farm	Afforestation	27/3/2021
Auchensoul	Establishment age forest & non-forestry assets	14/9/2023
Bruntaburn Forest (Raecleugh)	Afforestation	27/3/2023
Camps	Mature forest	15/9/2023
Central Scotland Portfolio - Barkip	Mid-rotation forest	14/9/2023
Central Scotland Portfolio - Berrieswalls	Mid-rotation forest	1/9/2022
Central Scotland Portfolio - Crofthead	Mid-rotation forest	1/9/2022
Central Scotland Portfolio - East Browncastle	Young Forest & non-forestry assets	1/9/2022
Central Scotland Portfolio - Over Auchentiber	Mid-rotation forest	26/8/2022
Cessnock Wood (Auchmillanhill)	Afforestation	22/3/2022
Chatto Craigs (Langshaw)	Establishment age forest	26/3/2024
Chesterknowes Wood (Curling Farm)	Establishment age forest	26/3/2024
Craigwell Wood	Mixed age forest	5/9/2022
Dove Hill (Auchenskeith)	Afforestation & non-forestry assets	5/9/2022
Droveroad Wood	Mid-rotation & Establishment age forest	26/3/2024
Glass Rigg	Mid-rotation forest	15/9/2023
Glendyne Wood (Auchentaggart)	Afforestation	22/3/2023
Goukstane Wood (Burnside)	Afforestation & non-forestry assets	27/3/2023
High Auldgirth	Mixed & Establishment age forest	20/3/2024
Highside Wood (Linton Burnfoot)	Afforestation	27/3/2023
Knock Fell (Knock of Luce)	Afforestation	5/9/2022
Knocktail Wood (Upper Senwick)	Establishment age forest	8/4/2024
Lamb's Craig (Auchenbrack)	Afforestation	8/9/2022
Liddel Water (Flatt Farm)	Afforestation	11/9/2023
Mountmill Burn (Airhouses)	Establishment age forest	13/9/2023
Nor Hill (Ellenber)	Afforestation	1/9/2022
Piltanton Wood (Half Mark Farm)	Afforestation	5/9/2022
Redding Farm	Establishment age forest	14/9/2023
Rorie Hill (Annefield)	Establishment age forest & non-forestry assets	15/9/2023
Shorthope	Mixed age forest	13/9/2023
Threepwood Hill (Jeaniefield)	Afforestation	11/9/2023
Toun Hill (Shoestanes)	Afforestation & non-forestry assets	14/9/2023
Upper Barr	Establishment age forest & non-forestry asset	12/9/2023
Waterhead & Craigenputtock	Mixed age forest	12/9/2023
Whiteburn	Mixed age forest & non-forestry asset	13/9/2023
Windylaws (Winkstonhill)	Establishment age forest	27/3/2024
Wales
Banc Farm	Establishment age forest	7/9/2023
Bronnant	Mid-rotation forest	6/9/2022
Brynglas	Afforestation	6/9/2022
Coed Doethie (Bryn Y Gorlan)	Afforestation	6/9/2022
Coed Y Garreg (Blaencarreg Farm)	Afforestation & non-forestry assets	5/4/2023
Cwmban Fawr	Establishment age forest & non-forestry asset	16/4/2024
Derry Lodge	Mixed age forest	7/9/2023
Esgair Hir	Hill	6/9/2022
Frongoch	Establishment age forest	21/11/2023
Maescastell	Establishment age forest & non-forestry asset	6/9/2022
Pistyll South	Establishment age forest	16/4/2024
South Dairy	Mid-rotation forest	6/9/2022
Waun Maenllwyd	Mature forest	7/9/2023

3. Portfolio Valuation General Assumptions and Conditions

General Assumptions

Our reports and valuations are carried out on the basis of the following General Assumptions:

Non-forest Assets

The assets comprise mainly forests and land for afforestation. The only non-forestry assets included in the valuation are those declared to us by FSFC Plc.

Alternative Use

As far as we are aware none of the sites are likely to have any significant value associated with change of use other than in the case of afforestation sites where there is a planned change of use from agricultural land to woodland. We have not undertaken a review of the planning opportunities on each site, and are not reporting on alternative use/development or hope value where this may exist.

Tenure and Tenancies

That the properties are not subject to any unusual or especially onerous restrictions, encumbrances or outgoings contained in the Titles. Properties let on short term agreements or residential tenancies capable of termination on the sale of an asset have been valued with vacant possession. We have not inspected the Title Deeds or Land Registry Certificates and have relied upon information provided by FSFC Plc relating to all properties including shared access arrangements, wayleaves, private water supplies, grazing agreements, etc. Should there be any mortgages or charges, we have assumed that the Properties would be sold free of them.

Forestry/Afforestation Grant Contracts

No account has been taken of the value of any grant contracts or any other such cash flow or debtor/creditor items pertaining to the properties. We have assumed that any necessary consents or permissions are in place for any grants, licences and forest plans running concurrently across the properties and that there are no contractual breaches that would impact on valuation. We have further assumed that consent for planting on the afforestation sites will be granted in accordance with the draft planting proposals provided, in particular the proportion of species planned.

Compartment Data and Planting Proposals

That any data provided by a third party and assigned to Savills Advisory Services Limited is accurate. This information is comprehensive but has not been verified on site except insofar as we were able to do so in the time available for inspection.

Afforestation Land

The value of the afforestation sites lie either in their use as farmland, or as planting land for a forestry investment. We have therefore valued these sites on the basis of the higher value of either the potential for planting or farmland, and specifically using the species breakdown provided by FSFC Plc.

The development status of an afforestation site has a direct bearing on valuation. We have therefore considered what stage has been reached in terms of the project development.

A number of sites were actively being planted at the date of valuation. As work in progress, we have considered the extent to which planting was completed at 31 March 2024. Where sites were substantially finished at 31 March 2024, these have been valued on the basis they were fully planted.

Timber Harvesting

It should be noted that timber harvesting is essentially a partial capital disposal as timber and land are part of the overall forest asset, and there is a correlation between overall capital value and the growth stage of the timber present. For the purpose of valuation we assume that active harvesting jobs are valued as restocking sites (i.e. on the basis that the timber is forward sold), whereas planned harvesting where no operation has commenced is still valued as standing timber.

Carbon

With regards to the ability to offset carbon through future trade in Woodland Carbon Units, we have not been advised of any restrictions or clawbacks on carbon rights and have valued the afforestation sites on the basis that any implied benefit from carbon trading is available with the land. We have not attributed any value to carbon units.

Minerals

We have not investigated mineral rights or made any assessment of the mineral potential.

Access

That all properties benefit from unfettered access to and from the forest gate over the public road network, suitable for all future timber haulage requirements. Forest roads are typically built with locally sourced material. Road stone is likely to be present in most properties, but this has not been verified.

Tree Health

Over recent years a number of tree diseases have become problematic in the UK. There is no evidence of any significant impact on capital value anywhere across the portfolio.

Residential Properties

In respect of any residential properties or buildings we have assumed:

· That any buildings are structurally sound, and that there are no structural, latent or other material defects, including rot and inherently dangerous or unsuitable materials or techniques, whether in parts of the buildings we have inspected or not, that would cause us to make allowance by way of capital repair. Our inspection of the properties and this report do not constitute a building survey. Our Valuation is on the basis that building surveys would not reveal material defects or cause us to alter our Valuation materially.

· That in the construction or alteration of any building no use was made of any deleterious or hazardous materials or techniques, such as high alumina cement, calcium chloride additives, woodwool slabs used as permanent shuttering and the like (other than those points referred to above). We will not carry out any investigations into these matters.

· That the properties are not adversely affected, nor are likely to become adversely affected, by any highway, town planning or other schemes or proposals, and that there are no matters adversely affecting value that might be revealed by a local search, replies to usual enquiries, or by any statutory notice.

· That any buildings have been constructed and are used in accordance with all statutory and bye-law requirements, and that there are no breaches of planning control. Likewise, that any future construction or use will be lawful.

· That the properties are connected or capable of being connected without undue expense, to the public services of gas, electricity, water, telephones and sewerage. Sewers, mains services and roads giving access to the Properties have been adopted.

Environmental Risks

We have not carried out any soil tests or environmental audits. We understand that the properties have been in residential, forestry and agricultural use for many years. On this basis, it would appear unlikely that land contamination exists. This comment is made without liability.

As our informal enquiries have suggested that land contamination is unlikely, or insignificant, we have valued the properties on the basis that no parts have suffered any land contamination in the past, nor are likely to become so contaminated in the foreseeable future. However, should it subsequently be established that contamination exists at any property, or on any neighbouring land, or that any property has been, or is being put to a contaminative use, then we may wish to review our valuation advice.

We have assumed that the properties are free from environmental hazards, including infestation from invasive plants such as Japanese Knotweed. This assumption is made in recognition of the fact that identifying Japanese knotweed is problematic and cannot be guaranteed. This is partly because during the early stages of its annual life cycle some of the classic visual characteristics are not distinctive and during the winter months the plant sheds its leaves and suffers die back. It is also possible that Japanese knotweed has received a herbicide-based treatment which has removed all visible above ground signs but may not have killed the below ground rhizome (root) which, in turn, may lead to new growth and the spread of the plant in time.

In relation to the residential properties, we have not investigated radon gas, asbestos or flood risk.

General Conditions

Our reports and valuations are carried out on the basis of the following General Conditions:

1. We have not made any allowance for any Capital Gains Tax or other taxation liability that might arise upon a sale of the properties. No allowance has been made for any expenses of realisation.

2. Our valuations are exclusive of VAT (if applicable).

3. Our valuations are prepared in accordance with the latest edition of the RICS Valuation - Professional Standards ("the Red Book") on the basis of Market Value, unless instructed otherwise. Any such deviation is expressly stated in our terms of engagement.

4. Each property has been valued individually and no allowance has been made, either positive or negative, should it form part of a larger disposal. The total stated is the aggregate of the individual Market Values.

5. That we have been supplied with all information likely to have an effect on the value of the properties and that the information supplied to us and summarised in this report is both complete and correct.

6. Our valuations are based on market evidence which has come into our possession from numerous sources. That from other agents and valuers is given in good faith but without liability. It is often provided in verbal form. Some comes from databases such as the Land Registry or computer databases to which Savills subscribes. In all cases, other than where we have had a direct involvement with the transactions, we are unable to warrant that the information on which we have relied is correct although we believe it to be so.

7. The files which we hold relating to all of our property valuations may be subject to monitor and audit by the RICS under its conduct and disciplinary regulations.



James Adamson MRICS	Anna Henderson MRICS	Sarah Jackson MRICS TEP
Director - RICS Registered Valuer	Director - RICS Registered Valuer	Director - RICS Registered Valuer

APPENDIX 6

Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

31 March 2024 NAV	the unaudited net asset value of FSFC as at 31 March 2024 of £175.8 million
Acquisition	the proposed acquisition by Bidco of the entire issued and to be issued ordinary share capital of FSFC not already owned by the Averon Park Group, to be implemented by means of the Scheme, on the terms and subject to the Conditions set out in this announcement and to be set out in the Scheme Document (or by means of a Takeover Offer, under certain circumstances as described in this announcement) and, where the context permits, any subsequent revision, variation, extension or renewal thereof
Alternative Offer	the alternative offer to the Cash Offer under which eligible Scheme Shareholders may elect to receive Rollover Shares, in lieu of cash under the Cash Offer, on the basis of one Rollover Share for each Scheme Share so elected on and subject to the terms of this announcement and the terms and conditions to be set out in the Scheme Document (or, if applicable, the Offer Document) in due course, further details of which are set out at paragraph 11 of this announcement
Alternative Offer Maximum	the maximum number of Rollover Shares available to be issued to eligible Scheme Shareholders under the Alternative Offer, being the equivalent of 24.99 per cent. of the Bidco Offer Shares
Alternative Offer Minimum Threshold	the minimum number of Rollover Shares to be issued to eligible Scheme Shareholders under the Alternative Offer, being such number of Rollover Shares which represent, in aggregate, at least 5 per cent. of the Bidco Offer Shares, failing which the Alternative Offer will lapse
Annual Tender Offer	has the meaning given to it in paragraph 6 of Appendix 4 of this announcement
Averon Park	Averon Park Limited, a private limited company incorporated and registered in England and Wales with registered number 08669482, the registered office of which is at C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG
Averon Park Board	the board of directors of Averon Park as at the date of this announcement
Averon Park Group	Averon Park and its subsidiary undertakings from time to time
associated undertaking	shall be construed in accordance with paragraph 19 of Schedule 6 to the Large and Medium‑sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) but for this purpose ignoring paragraph 19(1)(b) of Schedule 6 to those regulations
Bidco	Arizona Bidco Limited, a private limited company incorporated and registered in England and Wales with registered number 15730327, the registered office of which is at C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG
Bidco A Ordinary Shares	the A ordinary shares of £0.01 each in the capital of Bidco
Bidco Board	the board of Bidco Directors as at the date of this announcement or, where the context so requires, the board of directors of Bidco from time to time
Bidco Directors	the directors of Bidco as at the date of this announcement or, where the context so requires, the directors of Bidco from time to time
Bidco Group	Bidco and its subsidiary undertakings from time to time
Bidco Offer Shares	the Bidco A Ordinary Shares and Rollover Shares to be issued on or around the Effective Date: (i) in order to fund the cash consideration payable by Bidco in respect of the Acquisition; (ii) in exchange for the transfer to Bidco from Blackmead of the 51,003,762 FSFC Shares currently held by Blackmead; and (iii) to meet any valid elections for Rollover Shares under the Alternative Offer
Bidco Shares	Bidco A Ordinary Shares and Rollover Shares
Bidco Subscriber Share	the ordinary share of £0.01 in the capital of Bidco, issued to Blackmead on Bidco's incorporation
Blackmead	Blackmead Infrastructure Limited, a private limited company incorporated and registered in England and Wales with registered number 08928992, the registered office of which is at C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG
Business Day	a day (other than a Saturday, Sunday or public holiday) on which banks in London are open for normal business
Cash Offer	the Offer Price, in cash, payable in consideration for each Scheme Share held (other than for any Scheme Shares for which a valid election is made for the Alternative Offer) under the terms, and subject to the conditions of, the Acquisition
certificated or in certificated form	where a share or other security is not in uncertificated form (that is, not in CREST)
Closing Price	the closing middle market price of a FSFC Share as derived from the Daily Official List of the London Stock Exchange
Code	the City Code on Takeovers and Mergers (as amended from time to time)
Companies Act	the Companies Act 2006 (as amended from time to time)
Computershare	Computershare Investor Services PLC, a public company limited by shares incorporated and registered in England and Wales with registered number 03498808, the registered office of which is at The Pavilions, Bridgwater Road, Bristol BS13 8AE
Conditions	the conditions to the Acquisition, as set out in Part A of Appendix 1, and to be set out in the Scheme Document
Court	the High Court of Justice, Business and Property Courts of England and Wales, Companies Court
Court Hearing	the hearing of the Court to sanction the Scheme under section 899 of the Companies Act
Court Meeting	the meeting or meetings of Scheme Voting Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act, notice(s) of which will be set out in the Scheme Document, for the purposes of considering and, if thought fit, approving the Scheme (with or subject to any modification, addition or condition which Bidco and FSFC may agree and the Court may impose or, if required, approve) and any adjournment, postponement or reconvention thereof
Court Order	the order of the Court sanctioning the Scheme under section 899 of the Companies Act
CPI	the UK Consumer Price Index
CREST	the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations
CREST Regulations	the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended from time to time
Dealing Disclosure	an announcement pursuant to Rule 8 of the Code containing details of dealings in relevant securities of a party to an offer
Disclosed	the information which has been fairly disclosed: (a) in writing by or on behalf of FSFC to Bidco or Averon Park or to the professional advisers of Bidco or Averon Park (in their capacity as such in relation to the Acquisition) (including in the virtual data room operated by, or on behalf of FSFC in connection with the Acquisition) prior to the date of this announcement; (b) in the annual report and audited financial statements of FSFC for the financial year ended 30 September 2023; (c) in this announcement; or (d) in any other public announcement made by FSFC via a Regulatory Information Service prior to the date of this announcement
DTRs	the disclosure guidance and transparency rules made by the FCA pursuant to section 73 of FSMA (as amended from time to time)
Effective	in the context of the Acquisition: (a) if the Acquisition is implemented by way of the Scheme, the Scheme having become effective pursuant to and in accordance with its terms; or (b) if the Acquisition is implemented by way of the Takeover Offer, the Takeover Offer having been declared or having become unconditional in accordance with the requirements of the Code
Effective Date	the date on which the Acquisition becomes Effective
Euroclear	Euroclear UK & International Limited, a private limited company incorporated and registered in England and Wales with registered number 02878738, the registered office of which is at 33 Cannon Street, London EC4M 5SB, the operator of CREST
Excluded Shares	any FSFC Shares which, at the relevant time, are: (a) registered in the name of or beneficially owned by Averon Park or any other member of the Averon Park Group (or their nominee(s)); or (b) held in treasury
Exit	has the meaning given to it in paragraph 8 of Appendix 4 of this announcement
FCA	the Financial Conduct Authority or its successor from time to time
Form of Election	the form of election for use in respect of the Alternative Offer by eligible Scheme Shareholders who hold their FSFC Shares in certificated form only, which (subject to exceptions for certain overseas jurisdictions) will accompany the Scheme Document
Forms of Proxy	the forms of proxy for use in connection with each of the Court Meeting and the General Meeting, which will accompany the Scheme Document
FSFC	Foresight Sustainable Forestry Company Plc, a public company limited by shares incorporated and registered in England and Wales with registered number 13594181, the registered office of which is at Foresight Group, The Shard, 32 London Bridge Street, London SE1 9SG
FSFC Board	the board of FSFC Directors as at the date of this announcement
FSFC Directors	the directors of FSFC as at the date of this announcement or, where the context so requires, the directors of FSFC from time to time
FSFC Group	FSFC and its subsidiary undertakings from time to time and, where the context permits, each of them
FSFC Shareholder(s)	holder(s) of FSFC Shares
FSFC Share(s)	ordinary share(s) of £0.01 each in the capital of FSFC
FSMA	the Financial Services and Markets Act 2000 (as amended from time to time)
General Meeting	the general meeting of FSFC Shareholders (including any adjournment, postponement or reconvention thereof) to be convened for the purpose of considering and, if thought fit, approving the Resolutions, notice of which will be contained in the Scheme Document
Greenbank	the ethical, sustainable and impact arm of Rathbones Group Plc (and a trading name of Rathbones Investment Management Limited)
Investment Manager	Foresight Group LLP, a limited liability partnership incorporated and registered in England and Wales with registered number OC300878, the registered office of which is at C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG, the investment manager of both FSFC and Averon Park
Investment Management Agreement	the alternative investment fund management agreement entered into between the Investment Manager and FSFC dated 28 October 2021
IPO	an initial public offering
Latest Practicable Date	close of business on 28 May 2024
Listing Rules	the listing rules made by the FCA pursuant to section 73A of FSMA (as amended from time to time)
London Stock Exchange	London Stock Exchange plc
Long Stop Date	31 October 2024 or such later date (if any): (i) as may be agreed in writing by Bidco and FSFC (with the Panel's consent if required and (if required) as the Court may allow); or (ii) at the direction of the Panel under the Note on Section 3 of Appendix 7 to the Code
MAR	the UK version of EU Regulation No. 596/2014, which has effect in English law by virtue of the European Union (Withdrawal) Act 2018, as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019
Meetings	the Court Meeting and the General Meeting
NAV	net asset value
New Investment Management Agreement	the investment management agreement that it is proposed the Investment Manager and FSFC enter into with effect from, and conditional upon, the Scheme becoming Effective pursuant to the New Investment Management Agreement Heads of Terms
New Investment Management Agreement Heads of Terms	the non-legally binding heads of terms entered into between Averon Park, FSFC and the Investment Manager dated 29 May 2024, pursuant to which it is proposed that, conditional upon and with effect from the Scheme becoming Effective, the Investment Management Agreement will terminate and the New Investment Management Agreement be entered into
Offer Document	should the Acquisition be implemented by way of a Takeover Offer, the offer document to be sent to (amongst others) FSFC Shareholders setting out, amongst other things, the full terms and conditions of the Takeover Offer
Offer Period	the period commencing on the date of this announcement and ending on: (a) the earlier of the date on which the Scheme becomes Effective and/or the date on which the Scheme lapses or is withdrawn (or such other date as the Panel may decide); or (b) the earlier of the date on which the Takeover Offer has become or has been declared unconditional and/or the date on which the Takeover Offer lapses or is withdrawn (or such other date as the Panel may decide), other than (in the case of (a)) where such lapsing or withdrawal is a result of Bidco exercising its right to implement the Acquisition by way of a Takeover Offer
Offer Price	97 pence for each Scheme Share payable under the Cash Offer
Official List	the official list of the FCA
Opening Positions Disclosure	has the meaning in Rule 8 of the Code
Original Rollover Shareholders	eligible Scheme Shareholders who validly elect for the Alternative Offer and to whom Rollover Shares are issued on or around the Effective Date
Panel	the Panel on Takeovers and Mergers
Part VI Rules	together, the DTRs, the Listing Rules and the Prospectus Regulation Rules
Prospectus Regulation Rules	the prospectus regulation rules made by the FCA pursuant to section 73A of FSMA
Registrar of Companies	the registrar of companies in England and Wales
Regulatory Information Service	an information service authorised from time to time by the FCA for the purposes of disseminating regulatory announcements
Relevant Authority	has the meaning given to it in paragraph 3(a) of Part A of Appendix 1 to this announcement
relevant securities	shall be construed in accordance with the Code
Reorganisation of the Bidco Group	has the meaning given to it in paragraph 8 of Appendix 4 of this announcement
Restricted Jurisdiction(s)	any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available to FSFC Shareholders in that jurisdiction
Resolutions	such shareholder resolutions of FSFC as are necessary to approve, implement and effect the Acquisition and the Scheme to be proposed at the General Meeting, including (without limitation) a special resolution relating to the Acquisition
Rollover Shareholder(s)	any holder of Rollover Shares from time to time
Rollover Shares	the B ordinary shares of £0.01 each in the capital of Bidco
Savills	Savills Advisory Services Limited, a private limited company incorporated and registered in England and Wales with registered number 06215875, the registered office of which is at 33 Margaret Street, London W1G 0JD
Scheme	the proposed scheme of arrangement under Part 26 of the Companies Act between FSFC and Scheme Shareholders in order to implement the Acquisition, upon the terms and subject to the conditions set out in this announcement and to be set out in the Scheme Document (with or subject to any modification, addition or condition which Bidco and FSFC may agree and the Court may impose or, if required, approve)
Scheme Document	the document to be despatched to FSFC Shareholders including, among other things, the Scheme, an explanatory statement and the notices convening the Court Meeting and the General Meeting (and shall include any supplementary scheme document if applicable)
Scheme Record Time	the record date and time for the Scheme, as specified in the Scheme Document
Scheme Shareholder(s)	the holder(s) of Scheme Shares from time to time
Scheme Shares	all FSFC Shares: (a) in issue at the date of the Scheme Document; (b) if any, issued after the date of the Scheme Document and before the Voting Record Time; and (c) if any, issued at or after the Voting Record Time and before the Scheme Record Time, either on terms that the original or any subsequent holders of such shares are to be bound by the Scheme or in respect of which their holders are, or shall have agreed in writing to be, bound by the Scheme, but, in each case, other than the Excluded Shares
Scheme Voting Shareholders	the holders of Scheme Voting Shares
Scheme Voting Shares	the Scheme Shares in issue at the Voting Record Time, other than any Scheme Shares beneficially owned or controlled by Mr Stephen Thayer
SEC	the US Securities and Exchange Commission
Significant Interest	in relation to an undertaking or partnership, a direct or indirect interest of 20 per cent. or more of: (a) the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking; or (b) the relevant partnership interest
subsidiary, subsidiary undertaking and undertaking	shall be construed in accordance with the Companies Act
Takeover Offer	if the Acquisition is implemented by way of a takeover offer, as defined in Chapter 3 of Part 28 of the Companies Act, the offer to be made by or on behalf of Bidco to acquire the entire issued and to be issued ordinary share capital of FSFC not already owned by the Averon Park Group on the terms and subject to the conditions to be set out in the related Offer Document and, where the context permits, any subsequent revision, variation, extension or renewal of such takeover offer
UK or United Kingdom	the United Kingdom of Great Britain and Northern Ireland
UK IFRS	International Financial Reporting Standards, as adopted by the United Kingdom
US or United States or USA	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
US Exchange Act	the US Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder
US FSFC Shareholders	FSFC Shareholders who have a registered address in the US, or who FSFC or Bidco reasonably believes to be citizens, residents or nationals of the US, including any custodian, nominee or trustee holding FSFC Shares for persons in the US or with a registered address in the US
US Securities Act	the US Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder
Voting Record Time	the time and date by reference to which entitlement to vote on the Scheme will be determined, as specified in the Scheme Document
Wider Bidco Group	Bidco and its parent undertakings, including, for the avoidance of doubt, Blackmead and Averon Park and its and such parent undertakings' subsidiary undertakings, and each of their respective associated undertakings, and any other body corporate, partnership, joint venture or person in which Bidco and all such undertakings (aggregating their interests) have a Significant Interest but excluding, for these purposes, FSFC
Wider FSFC Group	FSFC and its subsidiary and associated undertakings and any other body corporate, partnership, joint venture or person in which FSFC and all such undertakings (aggregating their interests) have a Significant Interest
£ or pounds or pence	the lawful currency of the United Kingdom from time to time

All references in this announcement to any statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validly therefrom.

References to the singular include the plural and vice versa where the context permits.

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Tuesday, 3rd December 2024

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