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　　TORONTO, Nov. 12 /PRNewswire-FirstCall/ - Sino-Forest Corporation ("Sino-Forest") (TSX:TRE) today announced its financial results for the three and nine months ended September 30, 2009. All amounts in this release are expressed in U.S. dollars unless otherwise indicated. Third Quarter 2009 Highlights - Revenue increased 25% for the quarter ("Q3") and year-to-date ("YTD") - Diluted Earnings Per Share increased 18% (19% YTD) - Wood volume sales increased 18% in Q3; up 33% or approximately 9 million m(3) YTD - Sold 1.5 million m(3) of logs from integrated plantation model in Q3; average price $81/m(3); gross margin $31/m(3) - Successfully completed note exchange offer with approximately 71% of the outstanding $300 million 9.125% guaranteed senior notes due 2011 tendered (US$ millions, Three months ended Nine months ended except margins September 30 September 30 and per share 2009 2008 Change 2009 2008 Change amounts) $ $ % $ $ % -------------------------------------------------- ----------------------- Revenue 367.0 293.7 24.9 768.6 614.2 25.1 Gross Profit(1) 144.3 128.6 12.2 293.6 244.0 20.3 Gross Profit Margin 39.3 43.8 (4.5pts) 38.2 39.7 (1.5pts) EBITDA(2) 282.0 220.9 27.6 542.3 403.0 34.5 Net Income 105.6 75.2 40.5 173.7 133.1 30.5 Diluted Earnings Per Share 0.47 0.40 18.2 0.86 0.72 19.4 Cash Flow From Operating Activities 234.2 136.6 71.4 558.5 272.2 105.2 See notes (1) and (2) at end of this news release.

　　Sino-Forest Chairman and CEO Allen Chan said, "We are very pleased to report another strong quarter despite weak prices in most commodities, including logs, during the global economic downturn. We have sustained profitable financial results due to the positive effects of China's economic growth and Sino-Forest's flexible business model, which allows us to sell our wood fibre either as standing timber or as harvested logs from our purchased plantation model or from our integrated plantation model. When log prices are relatively weak, we can defer the sale of harvested logs in favour of the sale of standing timber, which has been generating consistently attractive gross margins per cubic metre." Mr. Chan continued, "In the third quarter of 2009, we experienced a steady recovery of log prices, while standing timber prices remained relatively unchanged. As a result, we began harvesting logs from our integrated plantation model and sold 1.5 million m(3) of log fibre in the third quarter. The sales, at an average price of $81 per m(3) with a gross profit of approximately $31 per m(3), were similar to the level of gross profit dollars generated from the sales of standing timber. Mr. Chan added, "A key part of our integrated plantation model is the replanting programme. Whether we sell standing timber or harvested logs, it does not affect our replanting programme in areas covered by our master agreements. We have continued to ramp up our replanting and focus on improving our plantation yields, planting approximately 7,100 hectares year-to-date with scientifically superior seedlings." Business Segment Highlights Total revenue increased 24.9% to $367.0 million in the third quarter 2009, due primarily to higher revenue from the sales of plantation fibre and imported logs. Total revenue for the nine months ended September 2009 increased 25.1% to $768.6 million. Wood Fibre Operations 3 months ended 3 months ended Sep 30, 2009 Sep 30, 2008 Sales per Total Sales per Total Plantation Model Hectares hectare revenue Hectares hectare revenue $ $'000 $ $'000 -------------------------------------------------- ----------------------- Purchased plantations 18,258 9,647 176,142 26,968 6,733 181,565 Integrated plantations 10,771 11,040 118,912 6,170 9,844 60,738 Planted plantations 423 1,837 777 1,284 2,284 2,933 -------------------------------------------------- ----------------------- Total 29,452 10,045 295,831 34,422 7,124 245,236 -------------------------------------------------- -----------------------

　　Plantation fibre revenue increased 20.6% to $295.8 million in the third quarter 2009, mainly due to an increased volume of fibre sold. The total volume of fibre sold, approximately 4.3 million m(3) during Q3 2009, increased 18%, with approximately 2.8 million m(3) from purchased and planted plantations and 1.5 million m(3) from integrated plantations. During the same period last year, we sold approximately 3.6 million m(3), with approximately 3.0 million m(3) from purchased and planted plantations and 0.6 million m(3) from integrated plantations. The average yield of fibre sold from our purchased and planted plantations in Q3 2009 was 150 m(3) per hectare compared to 106 m(3) per hectare in the same period last year, and generated an average selling price of approximately $63 and $61 per m(3), respectively. The average yield of logs sold from integrated plantations in Q3 2009 was 137 m(3) per hectare and it commanded an average selling price of $81 per m(3). During the same period last year, the average log yield was 100 m(3) per hectare, and the average selling price was $99 per m(3). Plantation fibre sales comprised 80.6% of total revenue in Q3 2009, compared to 83.5% in the same period in 2008. Other Fibre Revenue from sales of imported wood products increased 84.5%, from $31.9 million in Q3 2008 to $58.8 million in the same period in 2009, primarily due to a higher volume of Russian logs sold. Revenue from sales of wood logs increased 8.3% to $1.6 million in Q3 2009 from $1.5 million in the same period in 2008. Other fibre sales comprised 16.5% of total revenue in Q3 2009, compared to 11.4% of total revenue in the same period in 2008. Manufacturing and Other Operations Revenue from this business segment decreased 28.9% from $15.1 million in Q3 2008 to $10.7 million in the same period in 2009. Gross Profit Gross profit increased 12.2%, from $128.6 million in Q3 2008 to $144.3 million in the same quarter of 2009. Gross profit margin, being gross profit expressed as a percentage of revenue, decreased from 43.8% in Q3 2008 to 39.3% in the same period in 2009, mainly due to the reduced margin from our plantation operations. Wood Fibre Operations Gross profit margin from sales from our purchased and planted plantations decreased from 54.2% in Q3 2008 to 52.8% in the same period in 2009, mainly due to the sales of plantation trees with a higher fibre cost per m(3) compared to the same period in 2008. The gross profit margin for sales of logs from our integrated plantation model was 38.3% or $31 per m(3) in Q3 2009, compared to 42.2% or $42 per m(3) in the same period in 2008. Other Fibre Gross profit margin from sales of imported wood products increased from 4.1% in Q3 2008 to 6.8% in the same period in 2009. In addition, gross profit margin from sales of wood logs increased from 14.6% in Q3 2008 to 20.7% in the same period this year. Manufacturing and Other Operations Gross profit margin decreased from 9.2% in Q3 2008 to 8.9% in the same period in 2009. Selling, General and Administration Expenses Our SG&A expenses increased 3.7%, from $13.0 million in Q3 2008 to $13.5 million in the same period in 2009, due primarily to additional staff complement and increased accrued incentive compensation. Net Income As a result of higher fibre volume sold and higher selling prices, net income for the period increased 40.5%, from $75.2 million in Q3 2008 to $105.6 million in the same period in 2009. Overall net income as a percentage of revenue increased from 25.6% in Q3 2008 to 28.8% in the same period in 2009. Cash Flows from Operating Activities of Continuing Operations Net cash provided from operating activities increased from $136.6 million in Q3 2008 to $234.2 million in the same period in 2009. This was due to the increase in cash provided by operations and cash provided by a reduction of working capital, that resulted from a smaller increase in accounts receivables and an increase in accounts payable and accured liabilities of wood fibre operations. Capital Expenditures -------------------------------------------------- ----------------------- 3 months ended September 30 9 months ended September 30 -------------------------------------------------- -------------- 2009 2008 2009 2008 -------------------------------------------------- -------------- Hec- Hec- Hec- Hec- tares $ in M tares $ in M tares $ in M tares $ in M -------------------------------------------------- ----------------------- Tree acqui- sition 61,981 279.7 21,661 186.2 179,072 677.8 63,532 375.1 -------------------------------------------------- ----------------------- Re-planting & maintenance of plantations 14.5 6.8 28.2 15.4 -------------------------------------------------- ----------------------- Panel manufacturing and others 3.0 6.6 10.7 25.1 -------------------------------------------------- ----------------------- 297.2 199.6 716.8 415.6 -------------------------------------------------- ----------------------- -------------------------------------------------- -----------------------

　　During the third quarter of 2009, a total of $279.7 million was invested in the acquisition of 61,981 hectares of plantations mainly in the provinces of Hunan, Guangxi, Yunnan and some in Jiangxi. Year-to-date 2009, approximately 7,100 hectares of plantations has been planted in the provinces of Hunan and Guangxi. Total capital expenditures in 2009 are expected to be approximately $900 million for tree plantation acquisitions (including $100 million allocated for Jiangxi), replanting and maintenance, and approximately $30 million for the development of manufacturing facilities integrated with our plantation operations. These acquisition levels will be adjusted as necessary depending on future changes in the economy and our market conditions in the PRC. Outlook Over the past few years, we have been increasing our efforts in research and development to further improve the productive yield of our fast-growing eucalyptus species. We have achieved an average standing timber yield of between 120 m(3) and 150 m(3) per hectare for a six-year growing cycle of our eucalyptus trees, which are expected to be ready for harvest in 2010. However, in certain regions, our currently growing eucalyptus trees are expected to have yield of approximately 250 m(3) per hectare at maturity. Given the increase in demand and pricing of fibre in the third quarter 2009, we are optimistic that log prices will return to 2008 levels by the end of this year. However, we continuously monitor market prices across China before deciding to sell wood fibre as either harvested logs or as standing timber, so as to maximize our return on investment. As indicated by the Chinese government at a recent UN climate change summit. China is targeting to increase the country's forest coverage by 40 million hectares and forest stock volume by 1.3 billion m(3) by 2020 to absorb carbon emissions, and increase the proportion of energy generated from non-fossil fuels. We anticipate the government will further advance the reform of collectively-owned plantation rights and commercialise the management of its state-owned forest plantations. We believe that Sino-Forest is very well positioned to provide plantation management expertise and investment capital in cooperation with Chinese forestry authorities to achieve this important and ambitious target. Notice of Conference Call Sino-Forest will hold an investor conference call to further discuss its third quarter 2009 operating and financial results on November 12, 2009 at 8:30 am EST / 9:30 pm HKT. To participate, please dial +1-416-644-3428 for local and international callers, or 800-732-6179 for North America toll-free access, +852-3009-5027 for Hong Kong, or +65-6823-2087 for Singapore. Alternatively, to listen to the live webcast and replay in a listen-only mode, go to Sino-Forest's website under "Investor Relations - Earnings Releases" or click on the following link: http://www.sinoforest.com/earningsreleases.asp. About Sino-Forest Corporation Sino-Forest Corporation is a leading commercial forest plantation operator in China. Its principal businesses include the ownership and management of forest plantation trees and sales of standing timber, wood logs, and complementary manufacturing of downstream engineered-wood products. The Corporation's common shares have traded on the Toronto Stock Exchange under the symbol TRE since 1995. Note (1) to the Financial Highlights table: Gross profit for any period is defined as total revenue less cost of sales. Gross profit is presented as additional information because we believe that it is a useful measure for certain investors to determine our operating performance. Gross profit is not a recognized term under Canadian GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or any other measure of performance derived in accordance with Canadian GAAP. Because it is not a Canadian GAAP measure, gross profit may not be comparable to similar measures presented by other companies. Note (2) to the Financial Highlights table: EBITDA for any period is defined as income from continuing operations for the period after adding back depreciation and amortization, impairment of capital assets as well as depletion of timber holdings from cost of sales, for the period. EBITDA is presented as additional information because we believe that it is a useful measure for certain investors to determine our operating cash flow and historical ability to meet debt service and capital expenditure requirements. EBITDA is not a measure of financial performance under Canadian GAAP and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with Canadian GAAP. No stock exchange or regulatory authority has approved or disapproved of information contained herein. Certain information included in this news release is forward-looking and is subject to important risks and uncertainties. When used in this news release, the words "believe", "intend", "estimate", "expect", "plan" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations. The results or events predicted in these statements may differ materially from actual results or events and are no guarantees of future performance of Sino-Forest. Factors which could cause results or events to differ from current expectations include, among other things: our ability to acquire rights to additional standing timber, our ability to meet our expected plantation yields, the cyclical nature of the forest products industry and price fluctuation in and the demand and supply of logs, our reliance on joint venture partners, authorized intermediaries, key customers, suppliers and third party service providers, our ability to operate our production facilities on a profitable basis, changes in currency exchange rates and interest rates, and PRC economic, political and social conditions and government policy, and stock market volatility, other factors not currently viewed as material could cause actual results to differ materially from those described in the forwarding-looking statements. For additional information with respect to certain of these and other factors, see the reports filed by Sino-Forest Corporation with applicable Canadian securities administrators. Sino-Forest Corporation disclaims any intention or obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by law. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Expressed in thousands of United States dollars, except for earnings per share information) (Unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 $ $ $ $ -------------------------------------------------- ----------------------- Revenue 366,962 293,696 768,615 614,172 Costs and expenses Cost of sales 222,631 165,095 475,034 370,188 Selling, general and administration 13,453 12,973 46,021 33,236 Depreciation and amortization 1,160 846 3,450 2,250 -------------------------------------------------- ----------------------- 237,244 178,914 524,505 405,674 -------------------------------------------------- ----------------------- Income from operations before the undernoted 129,718 114,782 244,110 208,498 Interest expense (17,323) (15,079) (51,154) (35,307) Interest income 2,580 3,705 6,760 8,970 Exchange losses (217) (493) (580) (3,606) Gain (loss) on changes in fair value of financial instruments 1,938 2,229 3,545 (1,112) Other income - 446 1,272 1,485 -------------------------------------------------- ----------------------- Income before income taxes 116,696 105,590 203,953 178,928 Provision for income taxes (10,199) (10,353) (22,515) (19,872) -------------------------------------------------- ----------------------- Net income from continuing operations 106,497 95,237 181,438 159,056 Net loss from discontinued operations (880) (20,062) (7,767) (25,953) -------------------------------------------------- ----------------------- Net income for the period 105,617 75,175 173,671 133,103 -------------------------------------------------- ----------------------- Earnings per share Basic 0.48 0.41 0.87 0.73 Diluted 0.47 0.40 0.86 0.72 -------------------------------------------------- ----------------------- Earnings per share from continuing operations Basic 0.48 0.52 0.91 0.87 Diluted 0.48 0.50 0.90 0.86 -------------------------------------------------- ----------------------- Loss per share from discontinued operations Basic (0.00) (0.11) (0.04) (0.14) Diluted (0.00) (0.10) (0.04) (0.14) -------------------------------------------------- ----------------------- Retained earnings Retained earnings, beginning of period 837,611 598,892 769,557 540,964 Net income for the period 105,617 75,175 173,671 133,103 -------------------------------------------------- ----------------------- Retained earnings, end of period 943,228 674,067 943,228 674,067 -------------------------------------------------- ----------------------- -------------------------------------------------- ----------------------- CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed in thousands of United States dollars) (Unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 $ $ $ $ -------------------------------------------------- ----------------------- Net income for the period 105,617 75,175 173,671 133,103 Other comprehensive income: Unrealized gains (losses) on financial assets designated as available-for-sale, net of tax of nil 6,650 (423) 10,955 (1,471) Unrealized gains on foreign currency translation of self-sustaining operations 1,096 10,784 1,590 110,267 -------------------------------------------------- ----------------------- Other comprehensive income 7,746 10,361 12,545 108,796 -------------------------------------------------- ----------------------- Comprehensive income 113,363 85,536 186,216 241,899 -------------------------------------------------- ----------------------- -------------------------------------------------- ----------------------- CONSOLIDATED BALANCE SHEETS (Expressed in thousands of United States dollars) (Unaudited) As at As at September December 30, 2009 31, 2008 $ $ -------------------------------------------------- ----------------------- ASSETS Current Cash and cash equivalents 565,200 441,171 Short-term deposits 51,323 45,784 Accounts receivable 167,571 225,753 Inventories 41,800 43,200 Prepaid expenses and other 28,252 21,768 Convertible bonds 31,919 2,659 Assets of discontinued operations 3,205 31,122 -------------------------------------------------- ----------------------- Total current assets 889,270 811,457 -------------------------------------------------- ----------------------- Timber holdings 2,065,752 1,653,306 Capital assets, net 70,628 63,704 Other assets 105,236 75,457 -------------------------------------------------- ----------------------- 3,130,886 2,603,924 -------------------------------------------------- ----------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness 71,298 67,188 Accounts payable and accrued liabilities 173,887 179,903 Income taxes payable 6,041 6,383 Current portion of long-term debt 37,500 - Liabilities of discontinued operations 33,646 32,004 Derivative financial instrument - 5,214 -------------------------------------------------- ----------------------- Total current liabilities 322,372 290,692 -------------------------------------------------- ----------------------- Long-term debt 674,383 714,468 -------------------------------------------------- ----------------------- Total liabilities 996,755 1,005,160 -------------------------------------------------- ----------------------- Commitments and Contingencies Shareholders' equity Equity portion of convertible senior notes 70,462 70,462 Share capital 884,968 539,315 Contributed surplus 11,097 7,599 Accumulated other comprehensive income 224,376 211,831 Retained earnings 943,228 769,557 -------------------------------------------------- ----------------------- Total shareholders' equity 2,134,131 1,598,764 -------------------------------------------------- ----------------------- 3,130,886 2,603,924 -------------------------------------------------- ----------------------- -------------------------------------------------- ----------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of United States dollars) (Unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 $ $ $ $ -------------------------------------------------- ----------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period 105,617 75,175 173,671 133,103 Net loss from discontinued operations 880 20,062 7,767 25,953 Add (deduct) items not affecting cash Depletion of timber holdings included in cost of sales 151,079 105,266 294,716 192,301 Depreciation and amortization 1,160 846 3,450 2,250 Accretion of convertible senior notes 3,354 2,214 9,764 2,214 Stock-based compensation 1,173 1,019 3,498 3,195 (Gain) loss on changes in fair value of financial instruments (1,937) (2,229) (3,545) 1,112 Unrealized exchange losses (gains) 193 (483) 196 3,809 Interest income from Mandra (300) (300) (900) (900) Other (747) 339 (191) 1,760 -------------------------------------------------- ----------------------- 260,472 201,909 488,426 364,797 Net change in non-cash working capital balances (26,308) (65,274) 70,071 (92,608) -------------------------------------------------- ----------------------- Cash flows from operating activities of continuing operations 234,164 136,635 558,497 272,189 -------------------------------------------------- ----------------------- Cash flows from (used in) operating activities of discontinued operations 232 506 (2,342) (2,952) -------------------------------------------------- ----------------------- CASH FLOWS USED IN INVESTING ACTIVITIES Additions to timber holdings (303,930) (190,118) (729,703) (389,121) Increase in other assets (14,457) (1,274) (20,065) (24,373) Additions to capital assets (2,932) (6,475) (8,805) (24,617) (Increase) decrease in non-pledged short-term deposits (5,122) 7,848 (6,600) (2,505) Business acquisition - - - (1,928) Acquisition of convertible bonds - - (200) - Proceeds from disposal of capital assets - 2 111 3 -------------------------------------------------- ----------------------- Cash flows used in investing activities (326,441) (190,017) (765,262) (442,541) -------------------------------------------------- ----------------------- Cash flows from (used in) investing activities of discontinued operations 14,981 (112) 24,120 (470) -------------------------------------------------- ----------------------- CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES Payment on deferred financing costs (14,027) (9,135) (14,027) (9,135) Payment on derivative financial instrument (2,890) (2,819) (5,781) (4,919) Increase in bank indebtedness 1,835 13,527 3,860 12,223 (Increase) decrease in pledged short-term deposits (213) 293 1,089 (2,426) Issuance of shares, net of issue costs - 1,302 323,947 1,591 Increase in long-term debt - 345,000 - 345,000 -------------------------------------------------- ----------------------- Cash flows (used in) from financing activities (15,295) 348,168 309,088 342,334 -------------------------------------------------- ----------------------- Cash flows used in financing activities of discontinued operations - (5) - (458) -------------------------------------------------- ----------------------- Effect of exchange rate changes on cash and cash equivalents 21 (278) (72) 2,218 -------------------------------------------------- ----------------------- Net (decrease) increase in cash and cash equivalents (92,338) 294,897 124,029 170,320 Cash and cash equivalents, beginning of period 657,538 204,113 441,171 328,690 -------------------------------------------------- ----------------------- Cash and cash equivalents, end of period 565,200 499,010 565,200 499,010 -------------------------------------------------- ----------------------- -------------------------------------------------- ----------------------- Supplemental cash flow information Cash payment for interest charged to income 22,783 15,451 50,047 35,793 Interest received 646 2,811 1,833 6,828 -------------------------------------------------- ----------------------- -------------------------------------------------- -----------------------

　　SOURCE Sino-Forest Corporation