June 30, 2011

June 30, 2011

PRT Forest Regeneration Income FundCorporate & Investor Update

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Corporate and Investor Update

Outline

Recent performance and current state of our industry

Industry outlook

Key strategies for growth

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Current Industry Status

Downturn started in 2006 with US housing downturn/credit crisis/economic recession

Canadian Forest Industry is highly dependent on US market

Stronger CA$, low commodity prices, softwood lumber tariffs…..

China has been increasingly buying wood fiber from western North America

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The worst housing recession in over 50 years…….

Canadian and American Historic Housing Starts

0

500

1,000

1,500

2,000

2,500

3,000

19

59

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

E

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The effects on our business were severe

2006 2010 Δ 06/10

Market RealityHousing starts (prior year) 2,335,000 703,000 -70%Seedlings ordered 228,000,000 131,000,000 -43%Blocks sown 2,497,000 1,345,000 -46%Average revenue/seedling block 18.60$ 17.32$ -7%Annual revenue 51,574,000$ 25,965,000$ -50%Operating Income 11,229,000$ 2,811,000$ -75%Capacity Utilization 87% 71% -16%

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We stayed focussed, and adapted to maximize our opportunities

Performance 2006 2010 Q1-2011 Δ 06/10 or 11Safety - days lost per worker year 1.45 0.95 TBD -34%Reliability index/100 74.6 97.5 TBD 22.9 Nursery locations 15 12 13 -2Capacity (seedling blocks) 3,236,000 1,804,000 1,875,000 -42%Capacity utilization 87% 71% 89% 2%Outdoor and second crops 43.0% 42.4% 40.5% -2.5%Market share estimate 33.3% 33.9% 35.5% 2%SG&A and Nursery OH expense 9,489,000$ 7,588,000$ TBD -20%Annual capex spending 2,567,000$ 1,501,000$ TBD -42%Annual gross margin % 40.1% 40.1% TBD 0%Term debt 7,178,000$ 1,128,000$ 1,078,000$ -85%Annual cash available for distribution 9,099,000$ 2,119,000$ TBD -77%

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Everyone chipped in

Supervisors, managers, executives and directors took wage cuts from 2 to 15%

Union members gave wage concessions Adjustments made to non-union wage scales Distributions were suspended to Unitholders

And more

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Some Key Achievements

Achieved record contract delivery reliability Heightened focus on continuous improvement - improved KPI’s Product development achievements

– Outdoor grown spruce– Container grown bareroot replacement seedling– Lower cost stock sizes – Successful Cranberry & Willow plant propagation

Numerous process improvement achievements Successfully defended & increased market share Achieved increased volume from new markets Strengthened relationships with key partners for new market

development (CellFor/Rutgers/SUNY/Willow Biomass Group) Developed new decision support systems Established new credit lines to fund growth

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Balance Sheet Strong

Suspension of distributions provided us the flexibility to fund capex and restructuring costs

An unfortunate snow loss provided us with a significant cash insurance settlement– The proceeds gave us the opportunity to retire most of

our term debt, shore up working capital and fund future capex

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And the results of our efforts showed

2008 2009 2010Seedlings 167,300,000 128,300,000 130,900,000Revenue 38,789,000$ 30,062,000$ 25,965,000$ Gross Margin 35.8% 34.5% 40.1%Operating income 4,093,000$ 2,555,000$ 2,811,000$ Adj Pre tax Earnings (Loss)1 740,000$ 876,000$ 1,080,000$ Distributable Cash 3,602,000$ 1,816,000$ 2,119,000$ Total Bank Debt 11,799,000$ 8,720,000$ 1,128,000$

1 Before asset disposal gains/losses, impairment charges, closure costs or other write downs

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The Outlook is improving…but not from the usual sources

Housing starts – US double dip?– Canada recovered

China exports increasing Improved Forest Industry profitability on higher lumber and

pulp prices & cost reduction efforts– Addressing deferrals

Fires & MPB?

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Housing Markets

Source: RISI

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Canada recovered, but relatively small

Source: RISI

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China: Softwood Log Imports

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China’s lumber imports are soaringCanada has overtaken Russia

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Risks to the outlook

Chinese market share/global competition– Cost of logs is high

– Russia expected to lower their export tariff

Speed of the US housing market recovery

US currency weakness

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Challenges we still face

Short Term - Low seedling prices Mid Term - More volatility in harvest (and silviculture) Long Term - MPB effect - BC reduction in AAC

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StrategyLever off Our Strengths

Reliable plant propagation and cost effective production of high volume orders, grown in multiple locations over a wide geographic area

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Our Goal

To provide highly reliable seedling propagation services for forestry and other customers, throughout North America

Our mission is to provide the most trusted growing services, best suited to the needs of our customers

“Trusted to Grow”

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Our Responsibility to our Shareholders

Our business strategy provides a path to recover value lost since the announcement of the Trust Tax in Oct 2006 due to the forestry downturn.

Earnings and cash flow will drive share value

Trust Tax Announced

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How Will We Do It?

1. Recovery in core forestry markets– “The future will not look like the past”

PRT Seedling Order Forecast vrs NA Housing Starts

100

150

200

250

300

2004

2005

2006

2007

2008

2009

2010

F

2011

F

2012

F

2013

F

2014

F

See

dli

ng

s (m

illi

on

s)

0.5

1

1.5

2

2.5

3

Sta

rts

(mil

lio

ns)

PRT Orders NA Housing Starts

NA Housing Trend Line

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How Will We Do It?

2. Expansion of core forestry markets

i. Midwest USA

ii. Northeast USA

iii. Southeast USA

iv. Canadian Maritime provinces

v. Value added environmentally focussed sales (Global Seedlings & PRT Promo)

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How Will We Do It?

3. Energy Crops (Bionera)i. Cutting salesii. Plantation establishmentiii. Consulting expertise

4. Growing Services for delivery of improved plant genetics

i. CellFor (specialized seedlings for forestry)

ii. Cranberry starter plantsiii. Starter plants for two or

more new crops (yet to be identified)

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The Intended Results

Growth in Revenue and cash flow will drive increases in shareholder value

New markets will create a more diversified company, increasing stability and lowering the impact of forestry market cycles

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Summary We have adapted for sustainability and future

growth Cyclical forestry downturn - excellent

prospects for a significant recovery from today’s levels

Market expansion is possible in our core forestry business

We have identified new products which fit with our business and help achieve diversification

We will lead by emphasizing innovation in seedling products and continuous improvement in growing methods


June 30, 2011

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June 30, 2011

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