Parkland reports fourth quarter and record fiscal year



    Performance Highlights

    
    -   Record annual earnings
    -   Record EBITDA - fourth consecutive year
    -   Completed a significant acquisition of the Neufeld companies
    -   Restarted a portion of the Bowden refinery
    -   Expanded the Retail Branded Distributorship (RBD) program
    -   Monthly distributions increased in December and January
    -   Special distribution at year end
    

    RED DEER, AB, March 6 /CNW/ - Parkland Income Fund today announced its
business performance for the three months and year ended December 31, 2006.
Annual volumes, revenue, earnings and EBITDA were all at record levels and
allowed the Fund to increase monthly distributions to $0.24 per unit and
declare special distribution payments at year end.
    President and CEO Mike Chorlton commented "Parkland's results in the
fourth quarter were strong, albeit slightly below the record EBITDA set in the
fourth quarter of 2005. We were able to increase monthly distributions for the
third time in 2006 by a further 10 percent in December to $0.22 per unit and
declare an additional special distribution in December totaling $2.25 per
unit. We continue to be encouraged by increasing contributions from
convenience store merchandise sales and other non-fuel revenues, along with
the ongoing success of the Fas Gas Plus site improvement initiative. In
December, we announced the major acquisition of the Neufeld companies of
Grande Prairie, Alberta, which should add significantly to our earnings in
2007. With the completion of the acquisition on January 24, 2007, we further
increased distributions to $0.24 per unit."

    Outlook
    -------

    Margins in the first quarter of 2007 have returned to more seasonal
levels and operations remained profitable. The acquisition of the Neufeld
companies, expansion of the Esso distributorship in British Columbia and
continued increases in non-fuel revenue are expected to provide substantial
earnings in 2007. Management continues to assess acquisitions or alliances
which will add accretive cash flow and unitholder value.

    
    Consolidated Operating and Financial Highlights
    (Millions except per unit amounts)

                           Three months ended          Twelve months ended
                              December 31                  December 31
                      2006      2005      2004      2006      2005      2004
    ------------------------------------------------------------------------
    Fuel volumes
     (millions of
     litres)           386       297       258     1,501     1,177     1,101
    Net sales and
     operating
     revenue      $  278.9  $  231.3   $ 169.0  $1,199.9  $  875.5  $  686.7
    EBITDA        $    9.4  $   11.5   $   4.3  $   69.7  $   36.7  $   30.5
    Net earnings
     (loss)       $   14.4  $    7.6   $ (15.1) $   58.6  $   25.0  $    4.0
      Per unit
       - basic    $   1.12  $   0.59   $ (1.20) $   4.57  $   1.97  $   0.32
      Per unit
       - diluted  $   1.10  $   0.59   $ (1.19) $   4.52  $   1.96  $   0.31
    -------------------------------------------------------------------------
    

    Twelve Months Ended December 31, 2006
    -------------------------------------

    Higher fuel volumes, higher average fuel margins and increased
convenience store sales and margins all contributed to higher gross margins in
2006. The $45.2 million increase in gross margins was partially offset by a
$5.2 million increase in marketing, general and administrative expenses over
2005. Consistent with the increase in margins, EBITDA in 2006 increased by
$33 million or 89.9 percent over 2005. Net earnings before income taxes for
the year of $59.6 million were significantly higher than the $27 million
reported in 2005.

    Fuel Volumes

    Gasoline and diesel volumes increased by 324 million litres in 2006 to
1.5 billion litres, an increase of 27 percent. The Fund's station upgrade
program was successful in driving increased retail volumes at existing sites
while the addition of the RBD program led to increased volumes through the
wholesale station network. Reseller volumes also increased to optimize
utilization of supply contracts.

    Sales and Cost of Sales

    Net sales and operating revenue for the year ended December 31, 2006 were
$1.2 billion, an increase of 37 percent over the prior year. Fuel sales
increased to $1.14 billion from $830.6 million in the prior year as a result
of volume increases and higher average crude prices. Convenience store
merchandise sales also increased with sales of $59.6 million in 2006 as
compared to $45 million in 2005. Convenience store merchandise sales were up
as a result of higher average sales per store and a larger number of stores in
operation.
    Fuel cost of sales and operating expenses increased to $1.02 billion in
2006 as compared to $750.5 million in 2005. Similar to fuel sales, cost of
sales increased as a result of higher volumes and higher average per litre
costs of fuel products. Fuel costs are generally driven by changes in the
underlying cost of crude oil, which was on average six percent higher in 2006
than in the prior year. Convenience store merchandise cost of sales increased
to $44.1 million in 2006 from $33.1 million in 2005, consistent with the
increase in merchandise sales.

    Gross Margins

    The above noted factors led to aggregate gross margins of $137.1 million
in 2006, an increase of 49 percent over the $91.9 million achieved in 2005.
This increase was primarily driven by higher fuel margins and volumes and a
$3.7 million increase in convenience store margins. Overall, fuel margins on a
per litre basis were also up 1.3 cents or 20.9 percent over the prior year.

    Operating Expenses

    Operating and direct costs are sensitive to changes in fuel volume sales
and, as a result, total costs of $47.3 million in 2006 were $7.0 million
higher than the prior year. The majority of this increase related to the
addition of the Esso RBD sites. Also included in operating and direct costs
for the 2006 calendar year are $1.1 million for environmental remediation
costs as compared to $0.8 million in 2005. The Fund incurred $2.9 million in
maintenance expenses in 2006 related to service station upgrades and tank
replacements.
    Marketing, general and administrative expenses were $20.0 million for the
year ended December 31, 2006, an increase of 34 percent over 2005 expenses of
$14.9 million. A substantial portion of the increase related to variable
compensation driven by Parkland's increased profitability in 2006. Other
sources of increased costs included staffing levels required due to increased
sales volume, higher labor costs that were experienced throughout western
Canada, and consulting and professional fees related to special projects and
studies.

    Refinery Assets

    Parkland conducted a major program of repairs to its storage tanks as
well as some voluntary remediation at the Bowden refinery site during 2006.
The cost of this program was approximately $2.0 million, which was
substantially completed in 2006. With this repair program complete, Parkland
expects this operation to become profitable in 2007.

    Capital Investments

    During 2006 the Fund expended $11.1 million in net capital investments,
of which $6.3 million was maintenance capital and $4.8 million was growth
capital. The classification of capital as growth or maintenance is a
subjective determination of management as many of the Fund's capital projects
have components of both. It is the Fund's policy to treat all capital related
to service station upgrades (i.e. Fas Gas Plus) as maintenance capital even
though it includes the expectation of a financial return, while the
construction of a new building on an existing site is considered growth
capital.
    The primary components of maintenance capital in 2006 were $2.8 million
for service station upgrades, $2.1 million for tank replacements, $0.6 million
for technology initiatives and $0.8 million for trucks and trailers.
    The 2006 growth capital related primarily to major upgrades at existing
retail sites and the addition of two new service station sites.

    Long-Term Debt

    For the year ended December 31, 2006, interest on long-term debt was
$1.0 million which was $0.2 million higher than the prior year. Debt levels
have decreased while interest rates have increased, resulting in the modest
increase in overall interest costs. Approximately 76 percent of the Fund's
long-term debt bears interest at variable rates linked to prime.
    At December 31, 2006, Parkland had available a $32.0 million bank line of
credit of which approximately $24.7 million was taken up by letters of credit
outstanding to major suppliers and fuel tax authorities. The credit facility
is secured by fixed and floating charges on all of Parkland's assets except
those specifically pledged to other real estate lenders. The covenants
relating to this facility provide for margin limits on accounts receivable and
inventory values. The covenants also require that total debt to tangible net
worth not exceed 1.75 to 1, that the current assets to current liabilities
ratio be not less than 0.80 to 1, and that debt service coverage be not less
than 1.2 to 1 on a rolling four quarter basis. Parkland is in compliance with
all covenant terms.
    Following the closing of the Neufeld acquisition, Parkland commenced
negotiations to establish new credit facilities appropriate for the combined
businesses.
    During 2006 Parkland decreased its long-term debt by $4.8 million as a
result of normal repayment terms. At December 31, 2006, Parkland had
$1.7 million in long-term debt excluding current portions. Parkland classified
$10.1 million as current as the Fund intended to repay a significant portion
with the proceeds of an equity issue completed in January 2007.
    On January 24, 2007 Parkland completed an equity issue of 1.36 million
units. The proceeds, which netted $47 million, were used to repay $10 million
of long-term debt and $37 million of the purchase price of the Neufeld
companies.

    Income Tax

    In 2006 taxable income was $58.3 million compared to $27.1 million in
2005 after distributions to unitholders. The Fund retained $2.1 million of
taxable income in 2006 within corporate subsidiaries, resulting in a current
income tax provision of $1.0 million. This compares to the $3.2 million that
was retained in 2005. The income tax provision results from retaining funds as
a cash reserve to pursue attractive investment opportunities.

    Working Capital

    Parkland's working capital at December 31, 2006 remained strong at
$12.4 million as compared to $2.1 million at December 31, 2005. The cash
balance at December 31, 2006 of $36.5 million increased from the December 31,
2005 balance of $8.3 million as a result of $68.2 million of funds flow from
operations, an increase of $33.9 million compared to 2005. Assuming normal
seasonal trends, it is expected the Fund will use current cash flow to finance
distributions in the first quarter of 2007.

    Related Party Transactions

    During the year, the Fund incurred fees for legal services, including
costs related to an acquisition, by a law firm of which a Director is a
partner. These fees totaled $0.4 million in 2006 and $0.2 million in 2005.

    Three Months Ended December 31, 2006
    ------------------------------------

    The 2006 results showed net earnings before tax decreased to $6.7 million
from $8.8 million in 2005 and EBITDA decreased to $9.4 million from
$11.5 million. The fourth quarter of 2005 was impacted significantly by
weather related supply issues which led to very strong margins during that
period.

    Fuel Volumes

    Gasoline and diesel volumes increased by 89 million litres in the fourth
quarter of 2006 to 386 million litres, an increase of 30 percent. This
substantial increase in fuel volume was due in large part to the expanded RBD
program.

    Sales and Cost of Sales

    Net sales and operating revenue for the quarter ended December 31, 2006
were $278.9 million, an increase of 20.5 percent or $47.5 million over the
same quarter in 2005. Fuel sales revenue increased to $263.7 million from
$219.8 million in the prior year, an increase of 20 percent, as a result of
volume increases. Convenience store merchandise sales also increased with
sales of $15.2 million in 2006 as compared to $11.5 million in 2005, an
increase of 32 percent.
    Fuel cost of sales increased to $239.5 million in 2006 as compared to
$196.1 million in 2005. Similar to sales revenue, cost of sales increased as a
result of higher volumes. Convenience store merchandise cost of sales
increased to $11.3 million in 2006 from $8.5 million in 2005, consistent with
the increase in merchandise sales.

    Gross Margins

    The above noted factors led to aggregate gross margins of $28 million in
the fourth quarter of 2006, which was $1.2 million higher than the
$26.8 million achieved in the same period in 2005. Gross margin decreased to
5.5 cents per litre compared to 7.4 cents per litre in the fourth quarter of
2005. The gross margin on convenience store merchandise sales decreased to
25.3 percent in 2006 from 26.2 percent in the same quarter of 2005.

    Operating Expenses

    Operating and direct costs increased to $12.4 million in the quarter
ended December 31, 2006 compared to $10.6 million in 2005. Site operating
costs are sensitive to changes in fuel volume sales and, as a result, total
costs were higher than the prior year. However, operating and direct costs for
the quarter only increased 17 percent from 2005 compared to the 30 percent
increase in fuel volumes for the same period.
    Marketing, general and administrative expenses were $6.2 million for the
quarter ended December 31, 2006 compared to $4.7 million in 2005.

    Income Tax

    At September 30, 2006 taxable income was significantly greater than
distributions made to unitholders to date. A tax provision of $8.6 million was
recorded at the time. An increase in monthly distributions combined with a
special distribution at December 29, 2006 of $2.25 per unit reduced taxable
income considerably and caused the Fund to record a $7.7 million income tax
recovery in the quarter. As a result, net earnings were $14.4 million while
EBITDA was $9.4 million.
    On December 21, 2006, the Minister of Finance released for comment draft
legislation concerning the taxation of certain publicly traded trusts and
partnerships. Under the proposed legislation, certain distributions will not
be deductible to publicly traded income trusts and partnerships with the
exception of real estate investment trusts and, as a result, these entities
will in effect be taxed as corporations on the amount of the non-deductible
distributions. For entities in existence on October 31, 2006, the proposed
rules, if passed into law, would not apply until 2011 provided the entities
meet certain qualifying conditions. The Fund believes it meets the qualifying
conditions.

    Capital Investments

    During the fourth quarter the Fund expended $2.8 million net in capital
investments, of which $1.9 million was classified as maintenance capital and
$0.9 million was classified as growth capital. Amortization for the quarter
was $2.2 million compared to $1.7 million in 2005.

    Long-Term Debt

    For the quarter ended December 31, 2006 interest on long-term debt was
$0.3 million. Parkland decreased its long-term debt by $1.1 million during the
quarter as a result of normal repayment terms.

    Cash Balance

    Funds flow from operations for the quarter increased to $17.0 million
compared to $10.1 million in 2005 largely due to the increase in quarterly
after tax earnings. The significant accumulation of cash that occurred during
the third quarter of 2006 reversed itself in the fourth quarter due to a net
cash outflow of $35.7 million from changes in non-cash working capital. This
compares to a net cash outflow of $3.7 million in non-cash working capital in
the fourth quarter of 2005.
    Distributions paid to unitholders resulted in a cash outflow of
$8.6 million during the quarter in 2006 compared to $5.5 million in 2005. An
additional $15.8 million of cash distributions were paid out in January 2007
on account of the special distribution declared to holders of record
December 29, 2006.

    Distributions
    -------------

    At the beginning of 2006 monthly distributions were $0.17 per unit. This
was increased on June 15, 2006 to $0.18, September 15, 2006 to $0.20,
December 15 to $0.22 and February 15, 2007 to $0.24. Additional special
distributions totaling $2.25 per unit were also declared for holders of record
at December 29, 2006. Total distributions in 2006 were $56.2 million of which
$15 million were paid in units. Total distributions in 2005 were
$23.9 million, all of which was paid in cash.

    
    Cash Available for Distribution and Reconciliation of EBITDA to Cash from
    -------------------------------------------------------------------------
    Operating Activities
    ---------------------

    -------------------------------------------------------------------------
                                                  For the three      For the
    $000's                                   month period ended   year ended
    -------------------------------------------------------------------------
                        March      June      September   December   December
                        31, 2006   30, 2006   30, 2006   31, 2006   31, 2006
    -------------------------------------------------------------------------
    Cash from operating
     activities           13,208     24,412     51,336    (18,708)    70,248
    -------------------------------------------------------------------------
    Net changes in
     non-cash working
     capital              (5,253)      (183)   (32,318)    35,712     (2,042)
    -------------------------------------------------------------------------
    Funds flow from
     operations            7,955     24,229    19,018      17,004     68,206
    -------------------------------------------------------------------------
    Add back (deduct)
    -------------------------------------------------------------------------
      Interest on
       long-term debt        250        242       218         334      1,044
    -------------------------------------------------------------------------
      Unit incentive
       compensation          (48)       (93)     (101)        (99)      (341)
    -------------------------------------------------------------------------
      Accretion expense      (15)       (15)      (15)        (15)       (60)
    -------------------------------------------------------------------------
      Current taxes           44         (6)     8,523     (7,779)       782
    -------------------------------------------------------------------------
      Asset retirement
       obligation
       expenditures            -          -         40          -         40
    -------------------------------------------------------------------------
    EBITDA                 8,186     24,357     27,683      9,445     69,671
    -------------------------------------------------------------------------
    Maintenance capital
     expended               (497)    (2,336)    (1,730)    (1,733)    (6,296)
    -------------------------------------------------------------------------
    Current taxes and
     interest               (294)      (236)    (8,741)     7,445     (1,826)
    -------------------------------------------------------------------------
    Cash available for
     distribution          7,395     21,785     17,212     15,157     61,549
    -------------------------------------------------------------------------
    Distributions paid
     in cash               6,320      6,590      7,223     21,075     41,208
    -------------------------------------------------------------------------
    Distributions paid
     in units                                              14,963     14,963
    -------------------------------------------------------------------------
    Total Distributions    6,320      6,590      7,223     36,038     56,171
    -------------------------------------------------------------------------
    

    The Directors review distributions quarterly giving consideration to
current performance, historical and future trends in the business and the
expected sustainability of those trends, as well as maintenance capital
requirements to sustain performance.
    This report contains references to certain financial measures that do not
have any standardized meaning prescribed by Canadian Generally Accepted
Accounting Principles (GAAP) and may not be comparable to similar measures
presented by other companies or trusts. These measures are provided to assist
investors in determining the Fund's ability to generate cash from operations
and to provide additional information regarding the use of its cash resources.
These financial measures are identified and defined below:

    
    -   "EBITDA" means earnings before Interest Expense, Income Taxes,
        Depreciation and Amortization, Loss on Disposal of Capital Assets and
        Loss on the Writedown of the Refinery

    -   "Growth Capital Expenditures" include amounts incurred to add new
        facilities or services.

    -   "Maintenance Capital Expended" refers to capital expenditures
        required to maintain existing levels of service and includes the cost
        of refurbishment of existing assets.

    -   "Cash Available for Distribution" is defined in the Fund's Trust
        Deed and is calculated as EBITDA, less maintenance capital
        expenditures, current taxes and interest.

    -   "Funds Flow From Operations" is cash from operating activities
        plus/minus changes in non-cash working capital related to
        operating activities.
    

    Distribution Reinvestment Plan
    ------------------------------

    Parkland Income Fund has established a Distribution Reinvestment Plan
administered by Valiant Trust Company. Details are available from the Fund or
from Valiant Trust Company.

    Fund Description
    ----------------

    Parkland Income Fund operates retail and wholesale fuels and convenience
store businesses under its Fas Gas Plus, Fas Gas, Race Trac Fuels and Short
Stop Food Stores brands and through independent branded dealers, and
transports fuel through its Petrohaul division. With over 550 locations,
Parkland has developed a strong market niche in western and northern Canadian
non-urban markets. Through Neufeld Petroleum and Propane the Fund markets
propane, gasoline, diesel, lubricants, industrial fluids, agricultural inputs
and delivery services to commercial and industrial customers in Northern
Alberta, Northeastern British Columbia and the Northwest Territories. To
maximize value for its unitholders, the Fund is focused on the continuous
refinement of its retail portfolio, increased revenue diversification through
growth in non-fuel revenues and active supply chain management. Parkland
operates the Bowden refinery near Red Deer, Alberta producing drilling fluids
on a contract basis.
    The Fund is an unincorporated open-ended limited purpose trust
established under the laws of the Province of Alberta. The Fund, together with
the limited partnership that issued the exchangeable LP Units, own,
indirectly, securities which collectively represent the right to receive cash
flow available for distribution from the business operated by Parkland
Industries Limited Partnership, after current taxes, debt service payments,
maintenance capital expenditures and other cash requirements.
    The Fund's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit www.parkland.ca.

    Certain information included herein is forward-looking. Forward-looking
statements include, without limitation, statements regarding the future
financial position, business strategy, budgets, projected costs, capital
expenditures, financial results, taxes and plans and objectives of or
involving Parkland. Many of these statements can be identified by looking for
words such as "believe", "expects", "expected", "will", "intends", "projects",
"anticipates", "estimates", "continues", or similar words. Parkland believes
the expectations reflected in such forward-looking statements are reasonable
but no assurance can be given that these expectations will prove to be correct
and such forward-looking statements should not be unduly relied upon.
Forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties some of which are described in the
Fund's annual report, annual information form and other continuous disclosure
documents. Such forward-looking statements necessarily involve known and
unknown risks and uncertainties and other factors, which may cause the Fund's
actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. Such factors include, but are not
limited to: general economic, market and business conditions; industry
capacity; competitive action by other companies; refining and marketing
margins; the ability of suppliers to meet commitments; actions by governmental
authorities including increases in taxes; changes in environmental and other
regulations; and other factors, many of which are beyond the control of
Parkland. Any forward-looking statements are made as of the date hereof and
the Fund does not undertake any obligation, except as required under
applicable law, to publicly update or revise such statements to reflect new
information, subsequent or otherwise.

    
    Conference Call
    ---------------

    Parkland will hold a conference call for Analysts, Brokers and Investors
to discuss fourth quarter and annual results as follows:

        Wednesday, March 7, 2007, 9:00 a.m. (11:00 a.m. Eastern Time)
        Direct:     416-644-3423
        Toll-free:  800-733-7571

        The replay will be available as follows:

        From Wednesday March 7, 2007, 12:00 p.m.  (2:00 p.m. Eastern Time)
        To Thursday, March 22, 2007 at 9:59 p.m. (11:59 p.m. Eastern Time)
        Direct:     416-640-1917
        Toll-free:  877-289-8525
        Passcode:   21216160 followed by the number sign

    Webcast:
    --------
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1698180


    Parkland Income Fund
    Consolidated Balance Sheet


                                                    December 31, December 31,
    ($000's)                                               2006         2005
    -------------------------------------------------------------------------
    Assets
      Current Assets
        Cash and cash equivalents                   $    36,462  $     8,290
        Accounts receivable                              40,294       34,253
        Inventories                                      20,351       18,962
        Prepaid expenses and other                        3,874        1,570
    -------------------------------------------------------------------------
                                                        100,981       63,075
      Capital assets (Note 2)                            68,541       66,454
      Other                                               1,499        1,859
      Future income taxes (Note 7)                        1,438        1,631
    -------------------------------------------------------------------------
                                                    $   172,459  $   133,019
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities    $    62,124  $    49,669
        Distributions declared and payable               15,842        3,342
        Income tax payable                                  459        1,138
        Long-term debt - current portion (Note 5)        10,145        6,862
    -------------------------------------------------------------------------
                                                         88,570       61,011
      Long-term debt (Note 5)                             1,651        9,749
      Refinery remediation accrual (Note 3)               3,038        3,038
      Asset retirement obligations (Note 4)               1,140        1,120
    -------------------------------------------------------------------------
                                                         94,399       74,918
    -------------------------------------------------------------------------

    Unitholders' Capital (Note 6)
      Class B Limited Partners' Capital                  12,310       13,055
      Unitholders' Capital                               65,750       45,046
    -------------------------------------------------------------------------
                                                         78,060       58,101
    -------------------------------------------------------------------------
                                                    $   172,459  $   133,019
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Parkland Income Fund
    Consolidated Statement of Earnings and Retained Earnings

    For the years ended                             December 31, December 31,
    ($000's except per unit amounts)                       2006         2005
    -------------------------------------------------------------------------

    Net sales and operating revenue                 $ 1,199,866  $   875,539
    Cost of sales and operating expenses              1,062,809      783,615
    -------------------------------------------------------------------------
    Gross margin                                        137,057       91,924
    -------------------------------------------------------------------------
    Expenses
      Operating and direct costs                         47,342       40,338
      Marketing, general and administrative              20,044       14,885
      Amortization                                        8,453        8,077
      Interest on long-term debt                          1,044          873
      Loss on disposal of capital assets                    608          727
    -------------------------------------------------------------------------
                                                         77,491       64,900
    -------------------------------------------------------------------------
    Earnings before income taxes                         59,566       27,024
    -------------------------------------------------------------------------
    Income tax expense (Note 7)
      Current                                               782        1,726
      Future                                                193          329
    -------------------------------------------------------------------------
                                                            975        2,055
    -------------------------------------------------------------------------
    Net earnings                                    $    58,591  $    24,969
    Retained earnings, beginning of year                      -            -
    Allocation to Class B Limited Partners (Note 6)     (13,581)      (6,859)
    Allocation to Unitholders (Note 6)                  (45,010)     (18,110)
    -------------------------------------------------------------------------
    Retained earnings, end of year                  $         -  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings per unit (Note 1)
      - basic                                       $      4.57  $      1.97
      - diluted                                     $      4.52  $      1.96
    Units outstanding (Note 6)                           12,861       12,338
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Parkland Income Fund
    Consolidated Statement of Cash Flows


    For the years ended                             December 31, December 31,
    ($000's)                                               2006         2005
    -------------------------------------------------------------------------

    Cash Provided By Operations
      Net earnings                                  $    58,591  $    24,969
        Add (deduct) non-cash items
          Amortization                                    8,453        8,077
          Loss on disposal of capital assets                608          727
          Unit incentive compensation (Note 6)              341          181
          Accretion expense                                  60           60
          Asset retirement obligation expenditures          (40)           -
          Future taxes                                      193          329
    -------------------------------------------------------------------------
       Funds flow from operations                        68,206       34,343
       Net changes in non-cash working
         capital (Note 10)                                2,042       (1,366)
    -------------------------------------------------------------------------
       Cash from operating activities                    70,248       32,977
    -------------------------------------------------------------------------

    Financing Activities
      Long-term debt repayments                          (4,815)      (4,483)
      Distributions to Class B Limited Partners         (12,934)      (6,761)
      Distributions to Unitholders                      (28,274)     (17,111)
      Fund units issued                                   2,235        1,799
      Proceeds from long-term debt                            -        3,458
      Net changes in non-cash working
       capital (Note 10)                                 12,500        1,833
    -------------------------------------------------------------------------
      Cash used for financing activities                (31,288)     (21,265)
    -------------------------------------------------------------------------

    Investing Activities
      Recovery in other assets                              360          242
      Purchase of capital assets                        (12,846)      (8,812)
      Proceeds on sale of capital assets                  1,698          224
      Refinery remediation expenditures                       -         (362)
    -------------------------------------------------------------------------
      Cash used for investing activities                (10,788)      (8,708)
    -------------------------------------------------------------------------

    Increase in cash                                     28,172        3,004
    Cash and cash equivalents, beginning of year          8,290        5,286
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year          $    36,462  $     8,290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Parkland Income Fund
    Notes to Consolidated Financial Statements

    December 31, 2006
    Dollar and unit amounts presented in tables are in thousands,
    except per unit information.

    Significant Accounting Policies

    Basis of Presentation
    Parkland Income Fund (the "Fund" or "Parkland") is an unincorporated,
    open-ended limited purpose mutual fund trust established under the laws
    of the Province of Alberta on April 30, 2002. The Fund was created to
    acquire the fuel marketing, convenience store and related ancillary
    businesses formerly owned by Parkland Industries Ltd. This acquisition
    was completed on June 28, 2002 through a Plan of Arrangement that
    resulted in the previous Parkland Industries Ltd. shareholders indirectly
    exchanging their shares for Units in the Fund or Class B Limited
    Partnership Units in Parkland Holdings Limited Partnership ("LP Units"),
    a limited partnership controlled by the Fund.

    Principles of Consolidation
    The consolidated financial statements include the accounts of all wholly
    owned subsidiaries, partnerships and trusts. All significant accounts and
    transactions between consolidated entities are eliminated.

    The LP Units are, to the greatest extent possible, the economic
    equivalent to a Unit in the Fund. They are exchangeable by the holder on
    a one-for one basis into Units in the Fund until June 28, 2008. In
    certain circumstances, and at any time after June 30, 2008, the Fund may
    compel the exchange of the LP Units. As such, the LP Units are treated as
    being equivalent to Fund Units.

    Use of Estimates
    The preparation of the financial statements necessarily involves the use
    of estimates and approximations. Should the underlying assumptions
    change, the actual amounts could differ from those estimated.

    Estimates are used when accounting for items such as allowance for
    doubtful accounts, asset retirement obligations, the refinery closure
    accrual, amortization and income taxes.

    Inventories
    The Fund values its inventories at the lower of cost and market value.
    The Fund uses the last-in first-out (LIFO) method of determining the cost
    of product inventory.

    Amortization
    Amortization is provided for on a straight line basis over the estimated
    useful lives of assets at the following annual rates:

    Land improvements                           4 percent
    Buildings                                   5 percent
    Equipment                             10 - 20 percent
    Assets under capital lease            10 - 20 percent

    Income Taxes
    Income earned directly by the Limited Partnership is not subject to
    income taxes as its income is taxed directly to the Limited Partnership
    unitholders. Income earned in the Fund and distributed to the Fund
    unitholders is taxed directly to the Fund unitholders. Income taxes
    incurred by taxable entities controlled by the Fund are accounted for
    using the future method. Under this method, the Fund recognizes a future
    tax liability whenever recovery or settlement of the carrying amount of
    an asset or liability would result in future income tax outflow.
    Similarly, the Fund recognizes a future income tax asset whenever
    recovery or settlement of the carrying amount of an asset or liability
    would generate future income tax reductions.

    Long-term future tax assets relate primarily to the difference in the
    carrying value of the refinery assets to the tax basis.

    Asset Retirement Obligations
    The estimated future costs to remove underground fuel storage tanks at
    locations where the Fund has a legal obligation to remove these tanks are
    recorded as Asset Retirement Obligations at the time the tanks are
    installed. A corresponding increase to the carrying value of the fuel
    storage tanks is also recorded at installation. The Fund recognizes
    accretion expense in connection with the discounted retirement
    obligations and amortization in connection with the increase in carrying
    value over the estimated remaining life of the respective underground
    fuel storage tanks.

    Long-Term Debt
    Capital lease obligations, which relate to transactions which are similar
    in nature to a purchase, are capitalized and included in long-term debt.

    Earnings Per Unit
    Basic earnings per unit are calculated on the weighted average number of
    units outstanding for the period. Diluted earnings per unit are
    calculated by application of the Treasury Stock Method. Under this
    method, the diluted number of units are calculated based upon the
    weighted average number of units outstanding for the period plus the
    dilutive effect of the exercise of those employee options which were
    "in-the-money" during the period. Special distributions to unitholders in
    the form of additional units are recorded at the declaration date. The
    computation of earnings per unit for prior years are retroactively
    restated to reflect the change in units as a result of special
    distributions in the form of new units issued.

    Revenue
    The Fund recognizes revenue on its sale of goods when title passes to
    the purchaser.

    Grants of Options and Restricted Units
    The Fund accounts for its grants of options and restricted units in
    accordance with the fair value based method of accounting for stock-based
    compensation.

    Cash and Cash Equivalents
    Cash and cash equivalents include short-term investments, such as money
    market deposits or similar type instruments, with a maturity of three
    months or less when purchased.

    Prior Year Numbers
    Certain prior year numbers have been restated to conform with
    current year presentation.

    1.  Earnings Analysis and Earnings Per Unit

                                                           2006         2005
    -------------------------------------------------------------------------
    Net earnings                                    $    58,591  $    24,969
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per unit
      - basic                                       $      4.57  $      1.97
      - diluted                                     $      4.52  $      1.96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Equivalent units outstanding, beginning of year      12,727       12,610
    Weighted average of equivalent units issued
     pursuant to distribution reinvestment plan              15           18
    Weighted average of equivalent units issued
     pursuant to exercise of unit options                    83           61
    -------------------------------------------------------------------------
    Denominator utilized in basic earnings per unit      12,825       12,689
    Incremental equivalent units outstanding that
     were "in-the-money"                                    138           67
    -------------------------------------------------------------------------
    Denominator utilized in diluted
     earnings per unit                                   12,963       12,756
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Equivalent units outstanding at January 1, 2005 has been restated for the
    retroactive change resulting from the special distribution of units on
    December 29, 2006.

    2.  Capital Assets

                                                   Accumulated           Net
    December 31, 2006                       Cost  Amortization    Book Value
    -------------------------------------------------------------------------
    Land                             $    13,069  $          -  $     13,069
    Land improvements                      6,940         2,278         4,662
    Buildings                             24,738        10,530        14,208
    Assets under capital lease            14,038         7,996         6,042
    Equipment                             63,420        32,860        30,560
    -------------------------------------------------------------------------
                                     $   122,205  $     53,664  $     68,541
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                   Accumulated           Net
    December 31, 2005                       Cost  Amortization    Book Value
    -------------------------------------------------------------------------
    Land                             $    14,891  $          -  $     14,891
    Land improvements                      6,490         2,025         4,465
    Buildings                             23,371         9,576        13,795
    Assets under capital lease            14,691         6,730         7,961
    Equipment                             58,696        33,354        25,342
    -------------------------------------------------------------------------
                                     $   118,139  $     51,685  $     66,454
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    3.  Refinery Remediation Accrual

    In December 2004, the Fund reduced the carrying value of its Bowden
    refinery and recorded a net liability of $3.4 million for future
    estimated costs of remediation of the site, net of salvage value, based
    on the uncertainty of creating an alternative to the refinery being
    dismantled, remediated and sold for salvage values.

    During 2006 the Fund entered into a custom processing agreement to toll
    produce fluids used in the oilfield. The commercial agreement is multi
    year and utilizes a portion of the processing units at the refinery. The
    Fund is continuing to pursue other economically viable uses for the
    remaining processing units at the refinery and therefore any decision to
    dismantle, remediate and sell the refinery site has been deferred
    indefinitely. The obligations relating to future environmental
    remediation, however, continue to exist.

    Assuming the Fund continues operations at the refinery, remediation for
    any potential environmental liabilities associated with a complete
    dismantling of the site would be delayed indefinitely. The Fund has
    estimated the cost of remediation on the basis that the refinery will
    become fully operational and that remediation would be part of a multi
    year management plan. Remediation costs have been estimated by taking
    into account an extended time frame for remediation, the likely
    escalation of future costs of goods and services offset by the time value
    discount inherent in a deferred time frame and technology developments
    available to assist in remediation.

    4.  Asset Retirement Obligations

    A reconciliation of the Fund's estimated liability for the removal of its
    underground storage tanks is as follows:

                                                              2006      2005
    -------------------------------------------------------------------------
    Asset retirement obligations, beginning of year       $  1,120  $  1,043
    Additions during the year                                    -        17
    Expenditures during the year                               (40)        -
    Accretion expense                                           60        60
    -------------------------------------------------------------------------
    Asset retirement obligations, end of year             $  1,140  $  1,120
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On an undiscounted basis, the estimated liability is $1.5 million
    (2005 - $1.5 million) with costs expected to be incurred between 2007 and
    2019. The discount rate is 6.9 percent (2005 - 6.9%).

    5.  Long-Term Debt

                                                              2006      2005
    -------------------------------------------------------------------------

    Bank loans secured by an assignment of accounts
    receivable, inventories and demand debentures
    creating a first fixed charge over specific fixed
    assets and a floating charge upon all other assets.
    The loans are repayable in monthly instalments of
    $103,768 including interest at prime plus 0.35
    percent. The effective interest rate at year end
    was 6.35 percent (2005 - 5.35 percent). The loans
    were paid in full in January 2007.                    $  4,029  $  5,448

    Mortgages payable in monthly instalments totaling
    $122,346 including interest. Interest rates vary
    from 5.15 percent to 8.5 percent and prime plus
    0.7 percent to prime plus 0.8 percent per annum.
    The effective rates of interest at year end for
    the prime based loans were 6.7 percent to 6.8 percent
    (2005 - 5.7 percent to 5.8 percent). The mortgages
    are secured by real properties with a net book value
    of $8,907,000 and mature at various dates ending
    May 7, 2009. Mortgages totaling $2.8 million were
    paid in full January 2007.                               3,238     4,462

    Capital leases payable in monthly instalments
    totaling $188,114 including interest varying
    from 4.54 percent to 16.34 percent and prime
    plus 0.35 percent per annum. The effective rate of
    interest at year end for the prime based lease was
    6.35 percent (2005 - 5.35 percent). The leases are
    for land, buildings and equipment with a net book
    value of $6,043,988 and mature at various dates ending
    July 2022. Capital leases totaling $3.1 million were
    paid in full January 2007.                               4,529     6,701
    -------------------------------------------------------------------------
                                                            11,796    16,611
    Less current portion                                    10,145     6,862
    -------------------------------------------------------------------------
                                                          $  1,651  $  9,749
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund has outstanding letters of credit totaling $24.7 million (2005 -
    $25.7 million) which mature at various dates to October 31, 2007.

    For 2006 the Fund has available lines of credit of $32.0 million, subject
    to margin calculations. The outstanding letters of credit are considered
    a part of this facility.

    6.  Unitholders' Capital

    An unlimited number of Fund Units and LP Units may be created and issued,
    pursuant to the Fund Declaration of Trust and the Amended and Restated
    Limited Partnership Agreement, respectively, as outlined in the Plan of
    Arrangement.

    Fund Units represent an undivided interest in the Fund. LP Units
    represent a partnership interest in Parkland Holdings Limited Partnership
    and are exchangeable on a one-for-one basis in to Fund Units. Both Fund
    Unitholders and LP Unitholders are entitled to vote at meetings of the
    Fund and are entitled to distributions from time to time as determined by
    the Board of Directors.

                                           2006                   2005
                                Number of             Number of
                                    Units      Amount     Units       Amount
    -------------------------------------------------------------------------
    Class B Limited Partnership
     Units
      Balance, beginning of year    2,908   $  13,055     4,307    $  18,833
      Allocation of retained
       earnings                         -      13,581         -        6,859
      Distribution to partners          -     (12,934)        -       (6,761)
      Exchanged for Fund units        (53)     (1,392)   (1,399)      (5,876)
    -------------------------------------------------------------------------
    Balance, end of year            2,855   $  12,310     2,908    $  13,055
    -------------------------------------------------------------------------

    Fund Units
      Balance, beginning of year    9,430   $  45,046     7,914    $  36,191
      Allocation of retained
       earnings                         -      45,010         -       18,110
      Unit incentive compensation       -         341         -          181
      Issued under distribution
       reinvestment plan               21         491        32          661
      Issued under unit option plan   113       1,744        85        1,138
      To be issued to unitholders
       pursuant to special
       distribution                   389      14,963         -            -
      Distribution to
       unitholders                      -     (43,237)        -      (17,111)
      Exchange of Limited
       Partnership units               53       1,392     1,399        5,876
    -------------------------------------------------------------------------
    Balance, end of year           10,006   $  65,750     9,430    $  45,046
    -------------------------------------------------------------------------
                                   12,861   $  78,060    12,338    $  58,101
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Unit Option Plan
    The Fund has a Unit Option Plan under which the Fund may grant up to
    1,200,000 unit options to directors, officers, employees and consultants.
    The maximum number of options is reduced by the number of units allocated
    to the Restricted Unit Plan. The unit options have a 10 year term and,
    with limited exceptions, vest proportionally over the first three
    anniversary dates following the grant.

    The table below represents the status of the Fund's Unit Option Plan as
    at December 31, 2006 and 2005 and the changes therein for the years then
    ended:

                                          2006                 2005
                                               Weighted             Weighted
                                      Number    Average    Number    Average
                                     of Unit   Exercise   of Unit   Exercise
                                     Options      Price   Options      Price
    -------------------------------------------------------------------------
    Option units, beginning of year      550   $  18.09       438   $  15.26
    Granted                                -          -       280      21.38
    Cancelled                            (28)     21.03       (83)     19.02
    Exercised                           (113)     15.54       (85)     13.45
    -------------------------------------------------------------------------
    Option units, end of year            409   $  18.59       550   $  18.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable options, end of year     271   $  16.75       129   $  15.28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exercise prices for outstanding options at December 31, 2006 have the
    following ranges: 94,300 from $12.45 - $15.71, 115,337 from $17.62 -
    $18.97 and 199,668 from $20.05 - $21.80. These issue prices represent the
    market value at the time of issue.

    The corresponding remaining contractual life for these options range from
    6 - 9 years.

    The Fund accounts for its grants of options using the fair value based
    method of accounting for stock based compensation. The total cost to be
    reported is $0.5 million (2005 - $0.6 million). The compensation cost
    that has been included in marketing, general and administrative expenses
    for 2006 is $0.2 million (2005 - $0.2 million).

    The fair value of the options granted is estimated using the Black-Sholes
    options pricing model on the basis of the following assumptions:

    Expected average annual distribution                       $        1.80
    Expected average volatility                                   20 percent
    Weighted average risk-free interest rate                    3.25 percent
    Expected life                                                    3 years

    Restricted Unit Plan
    Effective January 1, 2006, the Fund adopted a Restricted Unit Plan to
    complement the Unit Option Plan. A maximum of 617,028 units was allocated
    to this Plan. Under the Plan the units granted in 2006 vest over a five
    year period and are subject to entity performance criteria.

    The table below represents the status of the Fund's Restricted Unit Plan
    as at December 31, 2006 and the changes therein for the year then ended:

                                                                    Weighted
                                                    Number of        Average
                                                 Units (000's)    Unit Price
    -------------------------------------------------------------------------
    Restricted units, beginning of year                     -     $        -
    Granted                                                46          19.80
    Cancelled                                              (2)         19.65
    -------------------------------------------------------------------------
    Restricted units, end of year                          44     $    19.81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund accounts for its grants of restricted units over the graded
    vesting schedule of each grant. Each grant of restricted units is treated
    as if the grant were a series of awards rather than a single award. The
    fair value of the award is determined based on the different expected
    lives for the restricted units that vest each year. The total cost to be
    reported is $0.8 million. The compensation cost that has been included in
    marketing, general and administrative expenses for 2006 is $0.2 million.

    7.  Income Taxes

    Income tax expense varies from the amounts that would be computed by
    applying the Canadian Federal and Provincial income tax rates to earnings
    before provision for income taxes as shown in the following table:

                                               2006               2005
                                                    %                  %
    -------------------------------------------------------------------------
    Provision for income taxes
     at statutory rates                  $ 19,353   32.49   $  9,085   33.62
    Add (deduct) the tax effect of :
      Income earned in limited
       partnership                        (18,560) (31.16)    (7,697) (28.48)
      Large corporation/capital taxes          89    0.15        623    2.30
      Other                                    93    0.16         44    0.16
    -------------------------------------------------------------------------
                                         $    975    1.64   $  2,055    7.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital assets and inventory held directly by the Limited Partnership,
    having carrying values of $54.0 million (2005 - $51.6 million) and $6.3
    million (2005 - $5.9 million), have a tax basis of $51.7 million (2005 -
    $46.7 million) and $9.1 million (2005 - $8.3 million) respectively.

    Future income tax assets amounting to $1.4 million (2005 - $1.6 million)
    relate to the difference in carrying value of the refinery assets to the
    tax basis. The refinery assets are held by Parkland Refining Ltd., a
    wholly owned subsidiary of the Fund, and were written off in 2004.

    On December 21, 2006, the Minister of Finance released for comment draft
    legislation concerning the taxation of certain publicly traded trusts and
    partnerships. The legislation reflects proposals originally announced by
    the Minister on October 31, 2006. Under the proposed legislation, certain
    distributions will not be deductible to publicly traded income trusts and
    partnerships with the exception of real estate investment trusts and, as
    a result, these entities will in effect be taxed as corporations on the
    amount of the non-deductible distributions. For entities in existence on
    October 31, 2006, the proposed rules, if passed into law, would not apply
    until 2011 provided the entities meet certain qualifying conditions. The
    Fund believes it meets the qualifying conditions.

    8.  Commitments

    The Fund has contracted obligations under various debt agreements as well
    as under operating and capital leases for land, building and equipment.
    Minimum operating lease payments under the existing terms for each of the
    five succeeding years are as follows:

    2007                 $  2,126
    2008                 $  1,828
    2009                 $  1,046
    2010                 $    522
    2011                 $    336
    Thereafter           $    782

    The Fund also has purchase commitments under its fuel supply contracts
    that require the purchase of approximately 1.6 billion litres of fuel
    products at variable costs over the next year.

    9.  Financial Instruments

    The fair value of cash, accounts receivable and accounts payable are
    equal to their carrying values due to their short term maturities. The
    fair value of long-term bank loans equal their carrying values as their
    interest rates fluctuate with the prime lending rate. The carrying values
    and fair values of mortgages payable, capital lease obligations and other
    assets, which consist primarily of mortgages and loans receivable, are as
    follows:


                                              2006                 2005
                                      Carrying      Fair   Carrying     Fair
                                         Value     Value      Value    Value
    -------------------------------------------------------------------------
    Mortgages payable                  $ 3,238   $ 3,228    $ 4,462    4,465
    Capital lease obligations            4,529     4,575      6,701    6,735
    Mortgages and loans receivable       1,393     1,495      1,930    1,822
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Fair value of mortgages and loans receivable and long-term debt are
    estimated using discounted cash flow analysis based upon incremental
    borrowing rates for similar borrowing arrangements.

    The Fund does not have a significant credit exposure to any individual
    customer. The Fund reviews a new customer's credit history before
    extending credit and conducts regular reviews of its existing customers'
    credit performance.

    Mortgages and loans receivable are receivable in monthly instalments of
    $38,787  (2005 - $31,368), bear interest at rates ranging between nil and
    13 percent and are secured by specific assets of the mortgage.

    10. Net Changes in Non-Cash Working Capital

                                                          2006          2005
    -------------------------------------------------------------------------
    Accounts receivable                               $ (6,041)     $(12,330)
    Inventories                                         (1,389)         (989)
    Prepaid expenses and other                          (2,304)          (48)
    Accounts payable                                    12,455        10,863
    Income taxes payable                                  (679)        1,138
    -------------------------------------------------------------------------
      Subtotal for operating activities               $  2,042      $ (1,366)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions declared and payable                $ 12,500      $  1,833
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other cash flow information
      Cash taxes paid                                 $  1,461      $    588
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Cash interest paid                              $  1,044      $    873
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    11. Segmented Information

    The Fund's operations are predominantly in fuel marketing in Western
    Canada. In recent years the Fund initiated operations in the convenience
    store industry. The convenience stores have been integrated into fuel
    marketing properties already owned by the Fund and all continue to market
    transportation fuels. Due to the amount of common operating and property
    costs it is not practical to report these segments below their respective
    gross margins.

                                               Fuel
                                          Marketing   Merchandise      Total
    -------------------------------------------------------------------------
    Year ended December 31, 2006
    Net sales and operating revenue     $ 1,140,242   $ 59,624   $ 1,199,866
    Cost of sales                         1,018,692     44,117     1,062,809
    -------------------------------------------------------------------------
    Gross margin                        $   121,550   $ 15,507   $   137,057
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Year ended December 31, 2005
    Net sales and operating revenue     $   830,569   $ 44,970   $   875,539
    Cost of sales                           750,501     33,114       783,615
    -------------------------------------------------------------------------
    Gross margin                        $    80,068   $ 11,856   $    91,924
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The segregation of capital expenditures and total assets is not practical
    as the reportable segments operate from the same location.

    12. Subsequent Events

    Acquisition of Neufeld Petroleum & Propane Ltd and Neufeld Holdings Ltd.

    On January 24, 2007, the Fund closed the acquisition of all the
    outstanding shares of Neufeld Petroleum & Propane Ltd and Neufeld
    Holdings Ltd ("Neufeld Petroleum"), a leading fuel, propane and
    agricultural inputs supplier in Western Canada, for consideration of
    approximately $131 million. The purchase was funded through the issuance
    of 1,565,694 Class C Limited Partnership units valued at $58.3 million,
    an equity financing of $50 million, the assumption of debt and from
    existing cash on hand. The effective date on the transaction was
    November 1, 2006 and the interim earnings to January 24, 2007 will be
    credited to the purchase price.

    Equity Financing

    On January 24, 2007, the Fund and a syndicate of underwriters closed a
    bought deal equity financing pursuant to which the syndicate sold
    1,360,000 units of the Fund for gross proceeds of $50 million ($36.75 per
    unit). All conditions of the offering were satisfied and the proceeds
    were released to the Fund.

    Long-Term Debt

    In January 2007, the Fund paid off $9.9 million of long-term debt from
    proceeds of the equity financing. On January 26, 2007, $3.0 million of
    long-term debt was refinanced under similar terms and conditions.

    In January 2007, the Fund accepted the terms and conditions of a proposed
    financing arrangement with HSBC Bank Canada. The proposed financing
    arrangement will provide for an increase in the Fund's credit facility
    from $54 million to $128.1 million. The proposed financing arrangement is
    comprised of $32 million for operating debt, $30 million for letters of
    credit and the remainder for term debt. The proposed financing will
    assist in the refinancing of existing debt of Neufeld Petroleum and
    finance growth opportunities in 2007.

    In February 2007, the Fund paid off $19.0 million of working capital debt
    of Neufeld Petroleum using the Fund's existing cash on hand.

    13. Related Party Transactions

    The following table summarizes the Fund's related party transactions:

                                                               2006     2005
    -------------------------------------------------------------------------
    Fees for legal services, including costs related
     to an acquisition, by a law firm of which a
     Director is a partner                                    $ 438    $ 177
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    These transactions are in the normal course of operations and are
    measured at the exchange amount, which is the amount of consideration
    established and agreed to by the related parties.


    Parkland Income Fund
    Supplementary Information

              Three months ended December 31           Year ended December 31
                   2006      2005       2004        2006       2005      2004
    -------------------------------------------------------------------------
    Volume
     (millions of
     litres)
      Retail        137       124        123         527        497       488
      Wholesale     249       173        134         974        680       612
    -------------------------------------------------------------------------
    Total volume    386       297        257       1,501      1,177     1,100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net sales
     and
     operating
     revenue
     ($000's)
      Retail
       fuel   $ 102,311 $  67,774  $  83,762 $   433,495  $ 353,786 $ 321,025
      Wholesale
       fuel     161,386   152,066     75,120     706,747    476,783   327,582
    -------------------------------------------------------------------------
      Fuel
       sales    263,697   219,840    158,882   1,140,242    830,569   648,607
      Merch-
       andise
       sales     15,179    11,540     10,047      59,624     44,970    38,051
    -------------------------------------------------------------------------
    Total
     net
     sales
     and
     oper-
      ating
     revenue  	 278,876   231,380    168,929   1,199,866    875,539   686,658
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross
     margin      28,009    26,811     17,754     137,057     91,923    82,892

    Less:
     Merch-
      andise
      gross
      margin      3,833     3,023      2,648      15,507     11,856     9,888
     Non
      fuel
      revenue
      included
      in gross
      margin      3,118     1,738      1,508       8,824      7,014     5,291
    -------------------------------------------------------------------------
    Fuel
     gross
     margin   $  21,058 $  22,050  $  13,598 $   112,726  $  73,053 $  67,713
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cents
     per
     litre    $  0.0546 $  0.0742  $  0.0529 $    0.0751  $  0.0621 $  0.0616
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Merch-
     andise
     cost of
     sales       11,346     8,517      7,399      44,117     33,114    28,163
    Fuel
     cost
     of sales   239,521   196,052    143,776   1,018,692    750,502   575,603
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Station
     counts:

    Retail
      Fas Gas                                         94        111       133
      Fas Gas Plus                                    91         95        78
      Esso                                             6        115         -
    -------------------------------------------------------------------------
                                                     191        321       211
    -------------------------------------------------------------------------

    Wholesale
      Race Trac Fuels                                188        215       222
      Fas Gas Plus                                    16          -         -
      Esso                                           170          -         -
    -------------------------------------------------------------------------
                                                     374        215       222
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total stations                                   565        536       433
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; John G. Schroeder, Vice President and CFO, (403) 357-6400; If
you prefer to receive Company news releases via e-mail, please request at
corpinfo@parkland.ca

Organization Profile

Parkland Fuel Corporation

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