Parkland reports record second quarter



    
    Performance Highlights

    -  Record second quarter and six month EBITDA
    -  Completed the acquisitions of Joy Propane and United Petroleum
       Products
    -  Split units 3 for 1

    RED DEER, AB, Aug. 3 /CNW/ - Parkland Income Fund today announced its
business performance for the six months ended June 30, 2007. Volumes, revenue,
earnings and EBITDA were all at record levels.
    President and CEO Mike Chorlton commented "Parkland's results in the
second quarter were substantially stronger than any previous quarter. The
superb performance resulted from Parkland delivering on our core strategies:
    -  Optimizing our supply contracts provided the opportunity to enjoy the
       best fuel margins in Parkland's history;
    -  Building fuel sales volumes to increase our market presence was
       achieved through internal growth, expansion of the RBD program and
       completion of acquisitions;
    -  Building non-fuel profits to enhance the long term stability of the
       enterprise was achieved through increased convenience merchandise
       sales and the acquisition of a significant new commercial business
       segment marketing lubricants, farm inputs and related services.
    

    During the quarter Parkland was able to complete the acquisitions of Joy
Propane Ltd. for $16.4 million and United Petroleum Products Inc. for $17.6
million. Strong cash flows provided the initial funding of the cash portion of
the acquisitions as well as temporarily paying down term debt. The three
acquisitions completed in 2007 have met our expectations for financial
performance and have been a major step in Parkland's growth and
diversification strategy."

    EXECUTIVE SUMMARY OF SECOND QUARTER RESULTS

    Fuel margins in the second quarter of 2007 increased significantly along
with the North America wide market, led by strong refiners' margins. Refiners'
margins have moderated as of this date but retail margins remain strong. The
integration of the acquired businesses was a major management focus during the
second quarter. This includes evaluating and integrating operating procedures
as well as melding the financial reporting and control systems.

    Acquisition of Joy Propane Ltd. ("Joy")

    On April 24, 2007 Parkland purchased Joy of Dawson Creek, British
Columbia for $16.4 million funded by the issuance of 130,530 (391,590 post
split) Class C Limited Partnership units with an aggregate value of
$5.1 million and $11.2 million in cash. Joy markets propane to automotive,
commercial, agricultural and residential customers from six locations in
northeastern British Columbia and northwestern Alberta. Annual propane volumes
have exceeded 20 million litres in recent years.
    This acquisition extends the market area established through the Neufeld
acquisition and will provide opportunities for operational synergies.

    Acquisition of United Petroleum Products Inc. ("UPPI")

    On May 28, 2007 Parkland completed the purchase of UPPI of Burnaby,
British Columbia, for $17.6 million after adjustments for working capital. The
purchase was funded by the issuance of 430,520 (post split) Class C Limited
Partnership units with an aggregate value of $6.5 million, $10.4 million in
cash and the assumption of $0.7 million of debt.
    UPPI is an independent fuel and lubricants marketer in British Columbia
with annual fuel sales volumes in the range of 180 million litres distributed
through a network of commercial accounts and independent service station
operators.

    Unit Split

    Parkland completed a division of its units on a three for one basis with
a record date of May 25, 2007. This was intended to enhance the marketability
of Parkland's units and make the units more accessible to a wider range of
investors. The unit split applied to the Class B and C Limited Partnership
units and Fund units equally. As of June 30, 2007, after the split Parkland
had 34.3 million Fund units and 14.1 million Limited Partnership units
outstanding.

    
    CONSOLIDATED OPERATING AND FINANCIAL HIGHLIGHTS

    ($millions except
     volume and         Three Months Ended June 30   Six Months Ended June 30
     per unit amounts)     2007     2006     2005     2007     2006     2005
    -------------------------------------------------------------------------
    Fuel volumes             471      374      290       911      703     558
    Net sales and
     operating revenue    $424.6   $320.1   $208.2    $758.6  $ 561.7  $385.3
    EBITDA                $ 47.5   $ 24.4   $  9.4    $ 66.7  $  32.5  $ 12.7
    Net earnings          $ 21.2   $ 21.9   $  6.9    $ 34.4  $  27.5  $  7.8
      Per unit - basic    $ 0.44   $ 0.59   $ 0.19    $ 0.72  $  0.74  $ 0.21
      Per unit - diluted  $ 0.44   $ 0.58   $ 0.19    $ 0.71  $  0.73  $ 0.21
    -------------------------------------------------------------------------
    

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    The following discussion and analysis of the results of operations and
financial condition of Parkland Income Fund (the "Fund") should be read in
conjunction with the unaudited interim financial statements for the six month
period ended June 30, 2007, Management's Discussion and Analysis and the
audited financial statements for the year ended December 31, 2006 and the
Fund's Annual Information Form dated March 16, 2007.

    NON-GAAP FINANCIAL MEASURES

    In this document there are references to non-GAAP financial measures such
as EBITDA and Cash Available for Distribution. EBITDA refers to Earnings
Before Interest Expense, Income Taxes, Depreciation and Amortization and Loss
on Disposal of Capital Assets and can be calculated from the GAAP amounts
included in the Fund's financial statements. Management believes that EBITDA
is a relevant measure to users of its financial information as it provides an
indication of pre-tax earnings available to distribute to debt and equity
holders in the Fund. The Fund's definition of EBITDA may not be consistent
with other providers of financial information and therefore may not be
comparable.
    Cash Available for Distribution is defined in the Fund's Deed of Trust
and related documents and generally represents the cash available to be
distributed to the Fund's Unitholders. Cash Available for Distribution is
calculated as EBITDA less interest expense, current income taxes, if any, and
maintenance capital expenditures. EBITDA is as defined above, while interest
expense and current income taxes are GAAP measures. Maintenance Capital
represents capital expenditures made by the Fund to maintain its current
business operations. This differs from growth capital, which represents
capital used to expand the Fund's business operations.

    THREE MONTHS ENDED JUNE 30, 2007

    Higher fuel volumes, higher average fuel margins, increased convenience
store sales and margins and the addition of profits from the acquired
businesses all contributed to higher gross margins in the quarter. EBITDA
increased significantly to $47.5 million from $24.4 million for the same
period in 2006. Net earnings were $21.2 million compared to $21.9 million
reported in the second quarter of 2006. Current earnings were reduced by two
large charges more fully described under "Future Income Taxes" and "Current
Tax Provision". The Future Income Tax charge of $7.5 million is a non-cash
item. The Current Tax provision reflects the significant amount of current
earnings in excess of current distributions. The Current Tax provision will be
adjusted through the balance of the year depending on earnings and unitholder
distributions.

    Fuel Volumes

    Gasoline and diesel volumes increased by 76 million litres in the second
quarter of 2007 to 450 million litres, an increase of 20 percent. In addition,
another 21 million litres of propane fuel were sold by the commercial
operations during the quarter. The station upgrade program, addition of the
Esso retail branded distributorship sites and fuel sales from the Neufeld, Joy
and UPPI businesses continue to generate increased volumes for the Fund year
over year.

    Sales and Cost of Sales

    Net sales and operating revenue for the quarter ended June 30, 2007 was
$424.6 million, an increase of 32.6 percent over the same period in 2006. Fuel
sales revenue increased to $387 million from $305 million in the prior year as
a result of volume increases and higher prices. Convenience store merchandise
sales also increased with sales during the second quarter of $16.2 million in
2007 as compared to $14.8 million in 2006. With the acquisitions the Fund now
also sells fertilizer, lubes and other agricultural and industrial products
and services. These sales are included in the Commercial segment in Note 4 to
the Interim Consolidated Financial Statements and totaled $21.4 million for
the quarter.
    Fuel cost of sales increased to $325 million in 2007 as compared to $269
million in 2006. Cost of sales increased as a result of higher volumes of fuel
products. Convenience store merchandise cost of sales increased to $12.0
million in 2007 from $10.9 million in 2006, consistent with the increase in
merchandise sales. Cost of sales related to fertilizer, lubes and other
agricultural and industrial products and services for the quarter came to
$15.9 million.

    Gross Margins

    These factors led to gross margins of $71.7 million for the second
quarter of 2007, which was $31.8 million higher than the $39.9 million
achieved in the second quarter of 2006. The largest single contribution to the
increase was average fuel margins rising to 12.7 cents per litre compared to
9.1 cents per litre in the same period in 2006.

    Operating Expenses

    Operating expenses increased as a result of the acquisitions and the
addition of 26 sites under the retail branded distributorship program. Site
operating costs are sensitive to changes in fuel sales volume and, as a
result, total costs were higher than the prior year. Also affecting site
operating costs is the upward pressure on wages that is being experienced in
western Canada due to a robust economy and tight labor supply, specifically
for convenience store personnel.
    Marketing, general and administrative expenses were $9.7 million for the
quarter ended June 30, 2007 compared to $4.3 million in 2006. Significant
drivers of increased costs were the inclusion of overhead costs of the
acquired businesses and provision for higher variable compensation costs
arising from strong profits. Staffing levels increased as a result of the
acquisitions.

    Future Income Taxes

    During the second quarter of 2007, Parkland recorded a non-cash tax
expense in the amount of $7.5 million. This followed the substantial enactment
of federal legislation to levy a new income tax against business trusts at the
rate of 31.5 percent beginning in 2011.
    The future income tax adjustment represents the taxable temporary
differences of the Fund tax affected at 31.5 percent, which is the rate that
will be applicable in 2011 under the current legislation and the Fund's
current corporate structure.

    Current Tax Provision

    During the first half of 2007, Parkland's taxable income significantly
exceeded distributions to unitholders. In the absence of other actions such as
special distributions to unitholders this would result in a current income tax
obligation to the Fund. Accordingly, we have recorded a tax provision in the
amount of $11.2 million as of June 30, 2007. In 2006 we recorded a tax
provision in the third quarter for the same reason. The 2006 provision was
reversed at year end as the special distribution declared in December, 2006
transferred most of the taxable income to the unitholders. As of the current
date, the directors have made no decision regarding a special distribution for
2007.

    Earnings

    Net earnings were $21.2 million in 2007 compared to $21.9 million in
2006. The fuels segment of Parkland's business contributed increased earnings
as a result of the acquisitions and internal volume and margin growth and the
non-fuel commercial business was boosted by the acquired businesses. These
increases were offset by the provision for current income taxes and the
non-cash booking of future income taxes.

    Capital Investments

    In addition to the two acquisitions, during the second quarter the Fund
expended $3.7 million net in capital investments, of which $0.8 million was
classified as maintenance capital and $2.9 million was classified as growth
capital.
    The two acquisitions recorded in the second quarter included the purchase
of capital assets at an estimated fair value of $12.2 million. Amortization
for capital assets acquired in 2007 plus amortization on intangible assets
accounted for most of the increase compared to the second quarter of 2006.
During the second quarter Parkland conducted valuations of the various asset
classes included in the January, 2007 purchase of the Neufeld companies. This
resulted in adjustments to the amounts recorded in the different asset
categories.

    Long-Term Debt and Cash Balances

    For the quarter ended June 30, 2007 interest on long-term debt was
$139,000. Most of the Fund's long-term debt bears interest at variable rates
linked to prime.
    On August 1, 2007, the Fund entered into a syndicated financing
arrangement with HSBC Bank Canada and Bank of Montreal. The new financing
arrangement has a three year term and provides for credit facilities totaling
$128.1 million, comprised of $32.0 million for operating debt, $30.0 million
for letters of credit and the remainder for term debt.
    The cash balance at June 30, 2007 of $12.5 million decreased from the
December 31, 2006 balance of $36.5 million due to the payment of the cash
portion of the special distributions declared for Unitholders of record on
December 29, 2006 and paid during the first quarter, cash consideration paid
for the acquisitions and repayment of debt associated with the acquisitions.

    Equity Financing

    In January 2007, Parkland completed the issuance of 1,360,000 (4,080,000
post split) Fund units for net proceeds of $47.1 million on a bought deal
basis through a syndicate of investment dealers. The proceeds were used in
part to fund the purchase of the Neufeld companies in January, 2007 and to
repay approximately $10 million of Parkland's term debt.

    SIX MONTHS ENDED JUNE 30, 2007

    Sales volumes of refined products increased 22% over the six months ended
June 30, 2006 driven by acquisitions, additional RBD sites and internal
growth. Net sales and operating revenue increased by $196.9 million or 35%
through higher volume and average sales prices for fuel, higher merchandise
sales and commercial operations.
    Gross margins were $111.7 million, compared to $62.7 million in 2006, an
increase of 78% year-over-year. Operating and direct costs increased to
$27.6 million from $22.1 million in 2006, as a result of acquisitions,
additional RBD sites and internal growth. Marketing, general and
administrative costs were $17.4 million compared to $8.1 million in 2006.
These factors contributed to an increase in EBITDA to $66.7 million as
compared to $32.5 million in the first six months of 2006.
    The increase in EBITDA in 2007 compared to 2006 was driven by
improvements in each area of the enterprise. Fuel margins increased as
Parkland was able to optimize its product costs through its supply contracts.
Fuel volumes increased as additional sites were brought on stream through its
RBD program. Retail fuel marketing volumes increased as upgraded sites reached
maturity and sales initiatives were targeted at specific markets. Convenience
store contribution increased as several sites were converted to the company
operated model. The acquisition of new business introduced a new, non-fuel
commercial segment to Parkland's customer offering. This consists of
lubricants, fertilizer, other agricultural inputs and industrial products and
services.

    Accounting Estimates

    The financial statements include accounting estimates, the nature of
which are described in the 2006 Annual Report.

    Related Party Transactions

    During the second quarter of fiscal 2007, Parkland paid $230,276 for
legal services to Bennett Jones LLP where David Spencer, a Parkland director,
is a partner. The majority of services received related to documentation for
the acquisitions.
    Parkland provides management, labor, accounting and delivery services to
Neufeld Petroleum and Propane (High Level) Ltd. (NPPHL). NPPHL is owned by Abe
Neufeld, Parkland's Vice President, Commercial Development and consists of a
small scale Petro-Canada bulk fuel agency in High Level, Alberta. The services
are provided by Parkland on a cost recovery basis and totaled $252,744 in the
second quarter. Parkland intends to purchase this business in the future.

    DISTRIBUTIONS AND INCOME TAX

    The Fund is a mutual fund trust for income tax purposes. As such, the
Fund is only taxed on any amount not allocated to unitholders.
    The Fund makes monthly distribution payments to its unitholders. As of
the beginning of 2007, after adjusting for the three for one unit split,
monthly distributions were $0.0733 per unit. This was increased on
February 15, 2007 to $0.08 per unit and on June 15, 2007 to $0.0967 per unit.
Estimated regular distributions in 2007, assuming continued $0.0967 payments
for the duration of the year, would be approximately $52 million.
    Although it is typical for the Fund's cash flow to have seasonal
fluctuations, it is management's current intention to pay consistent regular
monthly distributions throughout the year based on estimated annual cash
flows.
    The Directors review distributions quarterly giving consideration to
current performance, historical trends in the business and the expected
sustainability or change in those trends, as well as maintenance capital
requirements to sustain performance. As the year end approaches the Directors
will consider the needs of the enterprise and the option of retaining taxable
income within the corporate subsidiaries of the Fund or paying a special
distribution in cash or units.

    SUPPLEMENTARY INFORMATION
    -------------------------

    Parkland seeks to provide relevant information to allow investors to
evaluate its operations. The nature of this information is limited by
competitive sensitivities, confidentiality terms in written agreements and
Parkland's policy not to provide guidance regarding future earnings. We have
developed a template of supplementary information that is published with each
quarterly financial report. For persons seeking information regarding fuel
margins we refer to outside sources: Bloomberg's Oil Buyers Guide, Nymex
contracts for gasoline and crude oil as well as Government of Canada,
Department of Finance reports. Data from these sources will not be sufficient
to calculate Parkland's fuel margin given that it does not correlate directly
with our market region and supply contracts, but should indicate margin
trends.


    PARKLAND HOLDINGS LIMITED PARTNERSHIP
    -------------------------------------

    At the time of Parkland's conversion to a Trust, we issued Class B
limited partnership (LP) units to investors seeking a tax free rollover of
their shares. The LP units have the same voting and economic rights and
benefits as the TSX listed trust units, are non-transferable and can be
converted by the holder into trust units at any time. The LP units had a call
feature which would have resulted in their conversion to trust units in June,
2008 resulting in an income tax obligation to the holders. At a meeting of
Class B LP unitholders on June 22, 2007 this call feature was deferred to
June 30, 2011. This will give investors maximum flexibility should Parkland
undertake a future re-organization in response to the federal government
taxation of trusts planned for 2011. Parkland's current plans are to maintain
its trust structure until there is a compelling reason to change.

    
    CASH AVAILABLE FOR DISTRIBUTION AND RECONCILIATION OF EBITDA
    TO CASH FROM OPERATING ACTIVITIES
    ------------------------------------------------------------

                                              For the three      For the six
                                              months  ended      months ended
    (000's)                                   June 30, 2007     June 30, 2007
    -------------------------------------------------------------------------

    Cash from operating activities               $ 54,946           $ 59,198
    Net changes in non-cash working capital       (18,374)            (3,525)
                                                 ---------          ---------
    Funds flow from operations                     36,572             55,673
    Add back (deduct):
      Interest on long-term debt                      139                781
      Unit incentive compensation                    (359)              (930)
      Accretion expense                               (15)               (30)
      Current taxes                                11,190             11,206
                                                 ---------          ---------
    EBITDA                                         47,527             66,700
    Maintenance capital expended                     (794)            (1,640)
    Current taxes and interest                    (11,329)           (11,987)
                                                 ---------          ---------
    Cash available for distribution              $ 35,404           $ 53,073
                                                 ---------          ---------
    Cash distributed                             $ 13,182           $ 24,474
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    DISTRIBUTION REINVESTMENT PLAN

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

    INTERNAL CONTROLS

    Parkland has completed the initial phases of a review and enhancement of
internal controls as well as system documentation. A program has been
developed to test the key internal controls. No major controls gaps have been
identified. The same process is currently underway at the recently acquired
businesses. The Fund believes that it will be able to continue to comply with
regulations as required.

    ACCOUNTING POLICIES

    As a result of the recent acquisitions, the Fund has updated the
following significant accounting policies and practices:

    
      -  Goodwill
      -  Intangible Assets
      -  Deferred Revenue
    

    All of these updated accounting policies are described in more detail in
Note 1 to the Interim Consolidated Financial Statements. The adoption of these
new standards has had no impact on the Fund's net earnings or cash flows.

    NEW ACCOUNTING STANDARDS ADOPTED

    On January 1, 2007, the Fund adopted the Canadian Institute of Chartered
Accountants (CICA) handbook sections 1530 "Comprehensive Income", section 3251
"Equity" and section 3855 "Financial Instruments - Recognition and
Measurement". These standards result in changes in the accounting for
financial instruments as well as introduce comprehensive income as a separate
component of unitholders' capital. As required, these standards have been
adopted prospectively and comparative amounts for the prior periods have not
been restated.
    The adoption of these new standards is explained more fully in Note 2 to
the Interim Consolidated Financial Statements.

    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 approximately 550
locations, Parkland has developed a strong market niche in western and
northern Canadian non-urban markets. Through Neufeld and Joy 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. Through
United Petroleum the Fund markets wholesale and commercial fuels and
lubricants throughout southern British Columbia. 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's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit www.parkland.ca.

    This interim report includes forward-looking statements regarding
Parkland Income Fund's operations, anticipated financial performance, business
prospects and strategies. Forward-looking information may involve words such
as "believe", "expect", "anticipate", or similar words implying future
outcomes. Readers are cautioned not to place undue reliance on forward-looking
information because it is possible that predictions, forecasts and other forms
of forward-looking information will not be achieved by Parkland Income Fund.
Parkland Income Fund is under no obligation to update publicly or otherwise
revise any forward-looking information. Certain information regarding Parkland
Income Fund including management's assessment of future plans and operations,
constitutes forward-looking information or statements under applicable
securities laws and necessarily involve assumptions regarding factors and
risks that could cause actual results to vary materially, including, without
limitation, assumptions and risks associated with retail pricing and margins,
availability and pricing of petroleum product supply, volatility of crude oil
prices, marketing competition, environmental damage, credit granting, interest
rate fluctuation and availability of capital and operating funds. The reader
is cautioned that these factors and risks are difficult to predict and that
the assumptions used in the preparation of such information, although
considered reasonably accurate by Parkland at the time of preparation, may
prove to be incorrect. Accordingly, readers are cautioned that the actual
results achieved will vary from the information provided herein and the
variations may be material. Readers are also cautioned that the foregoing list
of factors is not exhaustive. Additional information on these and other
factors that could affect Parkland's operations or financial results are
included in Parkland's reports on file with Canadian securities regulatory
authorities. In particular see Parkland's MD&A and the Risk Factors and
Industry Conditions section of Parkland's Annual Information Form. Parkland's
reports may be accessed through the SEDAR website (www.sedar.com) or
Parkland's website (www.parkland.ca). Consequently, there is no representation
by Parkland that actual results achieved will be the same in whole or in part
as those set out in the forward-looking information. Furthermore, the
forward-looking statements contained in this document are made as of the date
of issue. Parkland does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise. The forward-looking statements
contained herein are expressly qualified by this cautionary statement.


    CONFERENCE CALL

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

    
      Tuesday, August 7, 2007, 9:00 a.m. (11:00 a.m. Eastern Time)
      Direct: 416-644-3419
      Toll-free: 800-731-6941

      The replay will be available as follows:

      From Tuesday, August 7, 2007, 11:00 a.m. (1:00 p.m. Eastern Time)
      To Tuesday, August 21, 2007 at 9:59 p.m. (11:59 p.m. Eastern Time)
      Direct:      416-640-1917
      Toll-free:   877-289-8525
      Passcode:    21240271 followed by the number sign

    Webcast
    -------

    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1929840


                         Consolidated Balance Sheet

                                                       June 30,  December 31,
    ($000's) (Unaudited)                                  2007          2006
    -------------------------------------------------------------------------

    Assets
      Current Assets
        Cash and cash equivalents                    $  12,509     $  36,462
        Accounts receivable                             87,633        40,294
        Inventories                                     34,003        20,351
        Prepaid expenses and other                       3,460         3,874
    -------------------------------------------------------------------------
                                                       137,605       100,981
      Capital assets                                   164,453        68,541
      Other                                              1,320         1,499
      Future income taxes                                    -         1,438
      Goodwill (Note 6,7)                               17,680             -
      Intangible assets (Note 5)                        10,419             -
    -------------------------------------------------------------------------
                                                     $ 331,477     $ 172,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities     $  85,874     $  62,124
        Distributions declared and payable               4,661        15,842
        Income tax payable                              15,580           459
        Deferred revenue                                   590             -
        Long-term debt - current portion                17,188        10,145
    -------------------------------------------------------------------------
                                                       123,893        88,570
      Long-term debt                                     1,971         1,651
      Refinery remediation accrual                       3,038         3,038
      Asset retirement obligations                       1,170         1,140
      Future income taxes (Note 10)                      6,153             -
    -------------------------------------------------------------------------
                                                       136,225        94,399
    -------------------------------------------------------------------------
    Unitholders' Capital (Note 3)
      Class B Limited Partners' Capital                 14,067        12,310
      Class C Limited Partners' Capital                 59,279            -
      Unitholders' Capital                             121,906        65,750
    -------------------------------------------------------------------------
                                                       195,252        78,060
    -------------------------------------------------------------------------
                                                     $ 331,477     $ 172,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



     Consolidated Statements of Earnings and Other Comprehensive Income,
        Accumulated Other Comprehensive Income and Retained Earnings


    (000's except
     per unit              For the three months        For the six months
     amounts)                  ended June 30,            ended June 30,
    (Unaudited)           2007     2006     2005     2007     2006     2005
    -------------------------------------------------------------------------
    Net sales and
     operating
     revenue           $424,628 $320,166 $208,177 $758,634 $561,718 $385,258
    Cost of sales and
     operating
     expenses           352,913  280,237  185,090  646,924  499,020  347,862
    -------------------------------------------------------------------------
    Gross margin         71,715   39,929   23,087  111,710   62,698   37,396
    -------------------------------------------------------------------------
    Expenses
      Operating and
       direct costs      14,492   11,313   10,143   27,614   22,066   18,854
      Marketing,
       general and
       administrative     9,696    4,259    3,520   17,396    8,089    5,875
      Amortization        7,647    2,083    2,031   12,856    4,126    4,026
      Interest on
       long-term debt       139      242      216      781      492      414
      (Gain) loss on
       disposal of
       capital assets      (137)     127        -     (130)     385      186
    -------------------------------------------------------------------------
                         31,837   18,024   15,910   58,517   35,158   29,355
    -------------------------------------------------------------------------
    Earnings before
     income taxes        39,878   21,905    7,177   53,193   27,540    8,041
    -------------------------------------------------------------------------
    Income tax expense
      Current            11,190       (6)     159   11,206       38      159
      Future (Note 10)    7,477       22       70    7,591       47      110
    -------------------------------------------------------------------------
                         18,667       16      229   18,797       85      269
    -------------------------------------------------------------------------
    Net earnings         21,211   21,889    6,948   34,396   27,455    7,772
    Other comprehensive
     income                   -        -        -        -        -        -
    -------------------------------------------------------------------------
    Comprehensive
     income            $ 21,211 $ 21,889 $  6,948 $ 34,396 $ 27,455 $  7,772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive
     income, beginning
     of year           $      - $      - $      - $      - $      - $      -
    Comprehensive
     income                   -        -        -        -        -        -
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive
     income, end
     of period         $      - $      - $      - $      - $      - $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings,
     beginning of year $      - $      - $      - $      - $      - $      -
    Allocation of net
     earnings to
     Class B Limited
     Partners            (3,766)  (5,122)  (2,105)  (6,167)  (6,428)  (2,376)
    Allocation of net
     earnings to
     Class C Limited
     Partners            (2,372)       -        -   (3,688)       -        -
    Allocation of
     earnings to
     Unitholders        (15,073) (16,767)  (4,843) (24,541) (21,027)  (5,396)
    -------------------------------------------------------------------------
    Retained earnings,
     end of period     $      - $      - $      - $      - $      - $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings
     per unit
      - basic          $   0.44 $   0.59 $   0.19 $   0.72 $   0.74 $   0.21
      - diluted        $   0.44 $   0.58 $   0.19 $   0.71 $   0.73 $   0.21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                    Consolidated Statement of Cash Flows

                           For the three months       For the six months
                               ended June 30,            ended June 30,
    ($000's) (Unaudited)  2007     2006     2005     2007     2006     2005
    -------------------------------------------------------------------------
    Cash Provided By
     Operations
      Net earnings     $ 21,211 $ 21,889 $  6,948 $ 34,396 $ 27,455 $  7,772
        Add back
         non-cash items
        Amortization      7,647    2,083    2,031   12,856    4,126    4,026
        (Gain) loss on
         disposal of
         capital assets    (137)     127        -     (130)     385      186
        Accretion expense    15       15       15       30       30       30
        Non-cash unit
         based incentive
         compensation       359       93       44      930      141       88
        Future taxes      7,477       22       70    7,591       47      110
    -------------------------------------------------------------------------
    Funds flow from
     operations          36,572   24,229    9,108   55,673   32,184   12,212
    Net changes in
     non-cash working
     capital (Note 8)    18,374       41    8,569    3,525    6,528    6,643
    -------------------------------------------------------------------------
    Cash from operating
     activities          54,946   24,270   17,677   59,198   38,712   18,855
    -------------------------------------------------------------------------

    Financing Activities
      Proceeds from
       long-term debt        53        -        -   28,003        -      158
      Long-term debt
       repayments       (16,720)  (1,340)  (1,120) (50,188)  (2,548)  (2,228)
      Distributions to
       Class B Limited
       Partners          (2,341)  (1,542)  (1,675)  (4,397)  (3,025)  (3,491)
      Distributions to
       Class C Limited
       Partners          (1,474)       -        -   (2,601)       -        -
      Distributions to
       Unitholders       (9,367)  (5,048)  (3,855) (17,476)  (9,885)  (7,554)
      Fund units issued,
       net of issue
       costs                915      604      577   48,148    1,663    1,206
      Net changes in
       non-cash working
       capital (Note 8)     864      142   (3,678) (11,181)  (1,092)  (3,672)
    -------------------------------------------------------------------------
      Cash used for
       financing
       activities       (28,070)  (7,184)  (9,751)  (9,692) (14,887) (15,581)
    -------------------------------------------------------------------------

    Investing Activities
      Acquisition of
       Neufeld
       Petroleum
       (Note 5)          (1,906)       -        -  (47,907)       -        -
      Acquisition of
       Joy Propane Ltd.
       (Note 6)          (9,872)       -        -   (9,872)       -        -
      Acquisition of
       United Petroleum
       Products Inc.
       (Note 7)         (10,425)       -        -  (10,425)       -        -
      Change in other
       assets               393      114      (69)     179      277      (38)
      Purchase of
       capital assets    (4,234)  (3,899)  (1,374)  (6,692)  (6,221)  (1,887)
      Proceeds on sale
       of capital assets    555      284       81    1,258      441       81
      Refinery
       remediation
       expenditures           -        -      (33)       -        -      (43)
    -------------------------------------------------------------------------
      Cash used for
       investing
       activities       (25,489)  (3,501)  (1,395) (73,459)  (5,503)  (1,887)
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash              1,387   13,585    6,531  (23,953)  18,322    1,387
    Cash and cash
     equivalents,
     beginning of
     period              11,122   13,027      142   36,462    8,290    5,286
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period     $ 12,509 $ 26,612 $  6,673 $ 12,509 $ 26,612 $  6,673
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash interest
     paid              $    139 $    242 $    216 $    781 $    492 $    414
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash taxes paid    $    193 $  1,132 $    159 $    209 $  1,176 $    159
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                 Notes to Consolidated Financial Statements

    1.  Update to Accounting Policies

    The consolidated interim financial statements have been prepared
    following the same accounting policies and methods of computation as the
    most recent annual financial statements dated December 31, 2006, except
    as noted below. These financial statements should be read in conjunction
    with the annual financial statements and notes.

      Goodwill

    The Fund must record goodwill relating to a corporate acquisition when
    the total purchase price exceeds the fair value for accounting purposes
    of the net identifiable assets and liabilities of the acquired company.
    The goodwill balance is assessed for impairment annually at year-end or
    as events occur that could result in an impairment. Impairment is
    recognized based on the fair value of the reporting entity compared to
    the book value of the reporting entity. If the fair value of the Fund is
    less than the book value, impairment is measured by allocating the fair
    value of the Fund to the identifiable assets and liabilities as if the
    Fund has been acquired in a business combination for a purchase price
    equal to its fair value. Any excess of the book value of goodwill over
    the implied value of goodwill is the impairment amount. Impairment is
    charged to earnings and is not tax affected, in the year in which it
    occurs. Goodwill is stated at cost less impairment and is not amortized.

      Intangible Assets

    Customer relationships and tradenames acquired during the acquisition of
    Neufeld Petroleum are recorded at estimated fair value and will be
    amortized using the straight-line method over their estimated useful
    lives of 5 years. The value of the non-compete agreement acquired during
    the acquisition of Neufeld Petroleum was recorded at estimated fair value
    and will be amortized using the straight-line method over the term of the
    agreement. Intangible assets are tested for impairment when conditions
    exist which may indicate that the estimated future net cash flows from
    the asset will be insufficient to cover its carrying value.

      Deferred Revenue

    Deferred revenue consists of deposits and prepayments by customers for
    the purchase of product not yet delivered and not recorded as revenue by
    the Fund.

    2.  Changes in Accounting Policies

    On January 1, 2007, the Fund adopted the Canadian Institute of Chartered
    Accountants (CICA) handbook sections 1530 "Comprehensive Income", section
    3251 "Equity" and section 3855 "Financial Instruments - Recognition and
    Measurement". These standards result in changes in the accounting for
    financial instruments as well as introduction of comprehensive income as
    a separate component of unitholders' capital. As required, these
    standards have been adopted prospectively and comparative amounts for the
    prior periods have not been restated.

     a) Comprehensive Income

        Comprehensive income is comprised of net earnings or loss and other
        comprehensive income ("OCI"). OCI represents the change in capital
        for a period that arises from unrealized gains and losses on
        available for sale securities and changes in the fair value of
        derivative instruments designated as cash flow hedges. The Fund does
        not currently have any OCI.

     b) Equity

        This section establishes the standards for presentation of capital
        and changes in capital during the period. It requires separate
        presentation of changes in unitholders' capital for the period
        arising from net income, OCI, contributed surplus, retained earnings,
        unitholders' capital and reserves. Accumulated OCI would be included
        in the consolidated balance sheet as a separate component of
        unitholders' capital.

     c) Financial Instruments

        This section establishes standards for the recognition and
        measurement of financial instruments which is comprised of: financial
        assets, financial liabilities, derivatives and non-financial
        derivatives.

        A financial asset is cash or a contractual right to receive cash or
        another financial asset, including equity, from another party. A
        financial liability is the contractual obligation to deliver cash or
        another financial asset to another party.

        A derivative is a financial instrument whose value changes in
        response to a specified variable, requires little or no net
        investment and it is settled at a future date. An embedded derivative
        is a derivative that is a part of a non-derivative contract and not
        directly related to that contract. Under this standard, embedded
        derivatives must be accounted for as a separate financial instrument.
        A non-financial derivative is a contract that can be settled net in
        cash or another financial instrument.

        Under this standard, all financial instruments are initially recorded
        at fair value and are subsequently accounted for based on one of four
        classifications: held for trading, held-to-maturity, loans and
        receivables or available-for-sale. The classification of a financial
        instrument depends on its characteristics and the purpose for which
        it was acquired. Fair values are based upon quoted market prices
        available from active markets or are otherwise determined using a
        variety of valuation techniques and models.

        Under this standard, all guarantees upon inception are required to be
        recognized on the balance sheet at their fair value. No subsequent
        re-measurement is required to fair value each guarantee at each
        subsequent balance sheet date unless the guarantee is considered a
        derivative.

           i) Held for trading

              Held for trading financial instruments are financial assets or
              financial liabilities that are purchased with the intention of
              selling or repurchasing in the near term. Any financial
              instrument can be designated as held for trading as long as its
              fair value can be reliably measured. A derivative is classified
              as held for trading, unless designated as and considered an
              effective hedge. Held for trading instruments are recorded at
              fair value with any subsequent gains or losses from changes in
              the fair value recorded directly into earnings.

              All of the Fund's cash and cash equivalents, accounts
              receivable, accounts payable and accrued liabilities and
              distributions declared and payable are designated as held for
              trading and are recorded at fair value.

          ii) Held-to-maturity

              Held-to-maturity investments are financial assets with fixed or
              determinable payments and a fixed maturity that the Fund has
              the intent and ability to hold to maturity. These financial
              assets are measured at amortized cost using the effective
              interest method. Any gains or losses arising from the sale of a
              held-to-maturity investment are recorded directly into
              earnings.

              The Fund has not designated any financial instruments as held-
              to-maturity.

         iii) Loans and receivables and other financial liabilities

              Loans and receivables and other financial liabilities are
              accounted for at amortized cost using the effective interest
              method of amortization.

              The fair value of other assets and long-term debt approximate
              their carrying values due to their floating interest rates.

          iv) Available-for-sale

              Available-for-sale assets are those assets that are not
              classified as held for trading, held-to-maturity or loans and
              receivables. Available-for-sale instruments are recorded at
              fair value. Any gains or losses arising from the change in fair
              value is recorded in OCI and upon the sales of the instrument
              or other-than-temporary impairment, the cumulative gain or loss
              is transferred into earnings.

              The Fund has not designated any financial instruments as
              available-for-sale.

        The methods used by the Fund in determining fair value of financial
        instruments are unchanged as a result of implementing the new
        standard.

    3.  Unitholders' Capital

                                       Six months ended       Year ended
                                         June 30, 2007     December 31, 2006
                                       Units               Units
                                      (000's)  ($000's)   (000's)   ($000's)
    -------------------------------------------------------------------------

    Class B Limited Partnership Units
      Balance, beginning of period       8,566  $ 12,310     8,724  $ 13,055
      Allocation of retained earnings        -     6,167         -    13,581
      Distribution to partners               -    (4,397)        -   (12,934)
      Exchanged for Fund units              (5)      (13)     (158)   (1,392)
    -------------------------------------------------------------------------
    Balance, end of period               8,561  $ 14,067     8,566  $ 12,310
    -------------------------------------------------------------------------

    Class C Limited Partnership Units
      Balance, beginning of period           -  $      -         -  $      -
      Issued on capital acquisition,
       net of issue costs                5,519    58,192         -         -
      Allocation of retained earnings        -     3,688         -         -
      Distribution to partners               -    (2,601)        -         -
    -------------------------------------------------------------------------
    Balance, end of period               5,519  $ 59,279         -  $      -
    -------------------------------------------------------------------------

    Fund Units
      Balance, beginning of period      30,014  $ 65,750    28,288  $ 45,046
      Allocation of retained earnings        -    24,541         -    45,010
      Issued on vesting of
       restricted units                     26         -         -         -
      Unit incentive compensation            -       930         -       341
      Issued for cash, net of
       issue costs                       4,080    47,085         -         -
      Issued pursuant to the
       distribution reinvestment plan       24       307        63       491
      Issued under unit option plan        132       756       339     1,744
      To be issued pursuant to
       special distribution                  -         -     1,165    14,963
      Distribution to unitholders            -   (17,476)        -   (43,237)
      Exchange of Limited
       Partnership units                     5        13       159     1,392
    -------------------------------------------------------------------------
    Balance, end of period              34,281 $ 121,906    30,014  $ 65,750
    -------------------------------------------------------------------------
                                        48,361 $ 195,252    38,580  $ 78,060
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On May 4, 2007 the Directors passed a resolution authorizing the Fund to
    provide for a division of its units on a three-for-one unit basis. The
    unit split did not change the rights of the holders of units and each
    unit outstanding after the split is entitled to one vote. These financial
    statements have been adjusted retroactively for the three- for-one split.

    Unit Option Plan

    The table below represents the status of the Fund's Unit Options Plan
    as at June 30, 2007 and the changes therein for the period then
    ended:

                                    Six months ended         Year ended
                                      June 30, 2007       December 31, 2006

                                    Number    Weighted    Number    Weighted
                                  of Options   average  of Options   average
                                     Units     exercise    Units     exercise
                                    (000's)     price     (000's)     price
    -------------------------------------------------------------------------

    Balance, beginning of period      1,228    $  6.20      1,650    $  6.03
    Cancelled                             -          -        (84)   $  7.01
    Exercised                          (132)      5.73       (338)   $  5.18
    -------------------------------------------------------------------------
    Balance, end of period            1,096    $  6.25      1,228    $  6.20
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable options, end
     of period                          916    $  6.08        813    $  5.58
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exercise prices for outstanding options at June 30, 2007 have the
    following ranges: 286,902 from $4.15 - $5.87, 268,008 from $6.32 - $6.68
    and 541,011 from $6.73 - $7.27. These issue prices represent the market
    value at the time of issue.

    The corresponding remaining contractual life for these options ranges
    from 5 - 8 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 $530,710. The compensation cost that has been charged against
    income for the six months ended June 30, 2007 is $62,793 (June 30, 2006 -
    $82,526, June 30, 2005 - $88,452).

    Restricted Unit Plan

    Effective January 1, 2006, the Fund adopted a Restricted Units Plan
    to complement the Option Plan and Unit Distribution Rights Plan.
    Under the Plan the units vest over a five year period and are subject
    to entity performance criteria.

    Details of the Plan are set out in the Notice of Annual and Special
    Meeting of Unitholders dated March 16, 2007.

    The table below represents the status of the Fund's Restricted Unit
    Plan as at June 30, 2007 and the changes therein for the period then
    ended:

                                    Six months ended         Year ended
                                      June 30, 2007       December 31, 2006

                                              Weighted              Weighted
                                     Number   Average     Number    Average
                                       of       Unit        of        Unit
                                      Units    Price       Units     Price
                                     (000's)  ($/unit)    (000's)   ($/unit)
    -------------------------------------------------------------------------

    Balance, beginning of period        131    $  6.60          -    $     -
    Granted                             141      12.38        137       6.60
    Issued                              (26)      6.60          -          -
    Cancelled                            (2)     12.38         (6)      6.55
    -------------------------------------------------------------------------
    Balance, end of period              244    $  9.90        131    $  6.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 for the restricted units granted in 2007 is $1.7 million. The
    compensation cost that has been included in marketing, general and
    administrative expenses for the six months ended June 30, 2007 is
    $0.9 million.

    4.  Segmented Information

    The Fund's operations have been predominantly in fuel marketing and
    convenience store sales in western Canada. With the acquisitions of
    Neufeld Petroleum, Joy Propane and United Petroleum, the Fund now sells
    propane, fertilizer, lubes, other agricultural inputs and industrial
    products and services. The Fund's operating segments have been adjusted
    to reflect these changes.

    Fuel Marketing includes sales of gasoline, diesel, heating oil, propane
    fuel and variable rents derived from service station sites. Convenience
    Store Merchandise continues to include the operations of the Fund owned
    and operated convenience stores that are integrated into fuel marketing
    sites and bear common operating costs. Commercial includes primarily the
    non-fuel components of the acquired businesses as noted in the previous
    paragraph.

    Due to the amount of common operating and property costs it is not
    practical to report these segments below their respective gross margins.
    The segregation of capital expenditures and total assets is not practical
    as the reportable segments represent product sales that are generated
    from common locations.


                                         For the three months ended

                                          Convenience
                                   Fuel      Store
    ($ 000's) (Unaudited)       Marketing Merchandise  Commercial     Total
    -------------------------------------------------------------------------
    June 30, 2007
      Net sales and operating
       revenue                  $387,006    $ 16,239    $ 21,383    $424,628
      Cost of sales              324,974      12,021      15,918     352,913
    -------------------------------------------------------------------------
      Gross margin              $ 62,032    $  4,218    $  5,465    $ 71,715
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    June 30, 2006
      Net sales and operating
       revenue                  $305,324    $ 14,842    $      -    $320,166
      Cost of sales              269,337      10,900           -     280,237
    -------------------------------------------------------------------------
      Gross margin              $ 35,987    $  3,942    $      -    $ 39,929
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    June 30, 2005
      Net sales and operating
       revenue                  $196,664    $ 11,513    $      -    $208,177
      Cost of sales              176,852       8,238           -     185,090
    -------------------------------------------------------------------------
      Gross margin              $ 19,812    $  3,275    $      -    $ 23,087
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                        For the six months ended

                                          Convenience
                                  Fuel       Store
    ($ 000's) (Unaudited)      Marketing  Merchandise  Commercial     Total
    -------------------------------------------------------------------------
    June 30, 2007
      Net sales and operating
       revenue                  $697,494    $ 30,614    $ 30,526    $758,634
      Cost of sales              603,605      22,730      20,589     646,924
    -------------------------------------------------------------------------
      Gross margin              $ 93,889    $  7,884    $  9,937    $111,710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    June 30, 2006
      Net sales and operating
       revenue                  $533,761    $ 27,957    $      -    $561,718
      Cost of sales              478,351      20,669           -     499,020
    -------------------------------------------------------------------------
      Gross margin              $ 55,410    $  7,288    $      -    $ 62,698
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    June 30, 2005
      Net sales and operating
       revenue                  $364,284    $ 20,974    $      -    $385,258
      Cost of sales              332,553      15,309           -     347,862
    -------------------------------------------------------------------------
      Gross margin              $ 31,731    $  5,665    $      -    $ 37,396
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    On January 24, 2007, the Fund acquired all of the outstanding shares of
    Neufeld Petroleum & Propane Ltd. and Neufeld Holdings Ltd. ("Neufeld
    Petroleum"). The transaction was accounted for using the purchase method
    with the allocation of the purchase price as follows:

                                                                     ($000's)
    Estimated fair value of net assets acquired:
      Capital assets                                             $  89,896.9
      Working capital, net (excluding bank indebtedness)            21,750.0
      Intangible asset - customer relationships                      6,442.7
      Intangible asset - tradenames                                  4,711.8
      Intangible asset - non compete agreement                         577.0
    -------------------------------------------------------------------------
                                                                 $ 123,378.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consideration:
      Cash paid to vendor                                        $  23,841.8
      Class C Limited Partnership Units                             46,640.0
      Acquisition costs                                              1,905.7
      Bank indebtedness assumed                                      2,137.8
      Shareholder loans paid out                                    17,828.0
      Management bonus paid out                                      4,331.1
      Long-term debt assumed                                        26,694.0
    -------------------------------------------------------------------------
                                                                 $ 123,378.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The effective date of the transaction was November 1, 2006. The interim
    period net earnings after tax to January 24, 2007 of $3,995.4 have been
    credited to the purchase price. The above purchase price allocation is
    subject to change. The value of the Class C Limited Partnership units was
    adjusted to reflect a discount calculated due to the restrictions on
    conversion to publicly tradeable units.

    6.  Acquisition of Joy Propane Ltd.

    On April 24, 2007, the Fund acquired all of the outstanding shares of Joy
    Propane Ltd. The transaction was accounted for using the purchase method
    with the allocation of the purchase price as follows:

                                                                    ($000's)
    Estimated fair value of net assets acquired:
      Capital assets                                              $  9,716.7
      Working capital, other                                           887.4
      Cash                                                           1,414.0
      Goodwill                                                       4,368.0
    -------------------------------------------------------------------------
                                                                  $ 16,386.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consideration:
      Cash paid to vendor                                         $ 11,201.5
      Acquisition costs                                                 84.6
      Class C Limited Partnership Units                              5,100.0
    -------------------------------------------------------------------------
                                                                  $ 16,386.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The effective date of the transaction was February 28, 2007. The interim
    period net earnings after tax to April 24, 2007 of $168.5 have been
    credited to the purchase price. The above purchase price allocation is
    subject to change pending completion of the valuation of the intangible
    assets.

    7.  Acquisition of United Petroleum Products Inc.

    On May 28, 2007, the Fund acquired all of the outstanding shares of
    United Petroleum Products Inc. The transaction was accounted for using
    the purchase method with the allocation of the purchase price as follows:

                                                                    ($000's)
    Estimated fair value of net assets acquired:
      Capital assets                                              $  2,538.4
      Working capital, net                                           1,789.5
      Goodwill                                                      13,311.8
    -------------------------------------------------------------------------
                                                                  $ 17,639.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consideration:
      Cash paid to vendor                                         $ 10,382.9
      Acquisition costs                                                 41.7
      Class C Limited Partnership Units                              6,500.0
      Bank debt assumed                                                715.1
    -------------------------------------------------------------------------
                                                                  $ 17,639.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The effective date of the transaction was May 1, 2007. The above purchase
    price allocation is subject to change pending completion of the valuation
    of the intangible assets.

    8. Net Changes in Non-Cash Working Capital


                       For the three months           For the six months
    ($000's)               ended June 30                 ended June 30
     (Unaudited)     2007       2006      2005      2007      2006      2005
    -------------------------------------------------------------------------
    Accounts
     receivable    $ 1,848  $ (9,254) $     80  $ (7,580) $ (6,774) $ (7,440)
    Inventories       (596)      554       749    (2,418)      517        99
    Prepaid
     expenses
     and other       6,443      (245)     (250)      565        83       226
    Accounts
     payable         2,017    10,124     7,990       508    13,840    13,758
    Deferred
     revenue        (4,139)        -         -       448         -         -
    Income taxes
     payable        12,801    (1,138)        -    12,002    (1,138)        -
    -------------------------------------------------------------------------
      Subtotal for
       operating
       activities $ 18,374  $     41  $  8,569  $  3,525  $  6,528  $  6,643
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributions
     declared
     and payable  $    864  $    142  $ (3,678) $(11,181) $ (1,092) $ (3,672)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    9.  Financial Instruments

    The Fund's exposure under its financial instruments is limited to
    financial assets and liabilities, all of which are included in the
    financial statements. The fair values of financial assets and liabilities
    that are included in the balance sheet approximate their carrying
    amounts.

    The Fund's accounts receivables are subject to normal credit risks.

    The Fund is exposed to interest rate risk to the extent that bank debt is
    at a floating rate of interest.

    10. Future Income Taxes

    On June 12, 2007, Bill C-52 Budget Implementation Act, 2007 was
    substantively enacted by the Canadian federal government, which contains
    legislation to tax publicly traded trusts in Canada. As a result, a new
    31.5 percent tax will be applied to distributions from Canadian public
    income trusts. The new tax is not expected to apply to the Fund until
    2011 as a transition period applies to publicly traded trusts that
    existed prior to November 1, 2006. As a result of this substantive
    enactment of trust taxation, the Fund recorded an additional $7,477
    future income tax expense and increased its future income tax liability
    in the second quarter of 2007. The future income tax adjustment
    represents the taxable temporary differences of the Fund tax affected at
    31.5 percent, which is the rate that will be applicable in 2011 under
    the current legislation and the Fund's current corporate structure.

    11. Comparative Figures

    Certain comparative figures have been reclassified to comply with the
    presentation adopted in the current period.


    Supplementary Information

                           For the three months         For the six months
                               ended June 30,             ended June 30,
    (Unaudited)           2007     2006     2005     2007     2006     2005
    -------------------------------------------------------------------------

    Volume (millions
     of litres)
      Retail fuel           136      130      123      268      248      239
      Wholesale fuel        314      244      167      592      455      319
      Propane                21        -        -       51        -        -
    -------------------------------------------------------------------------
    Total volume            471      374      290      911      703      558
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net sales and
     operating
     revenue ($000's)
      Retail fuel      $118,598 $113,839 $ 94,016 $215,675 $203,162 $173,296
      Wholesale fuel    260,725  191,485  102,648  460,788  330,599  190,988
      Propane             7,683        -        -   21,031        -        -
      Convenience
       store
       merchandise
       sales             16,239   14,842   11,513   30,614   27,957   20,974
      Commercial
       sales             21,383        -        -   30,526        -        -
    -------------------------------------------------------------------------
    Total net sales
     and operating
     revenue           $424,628 $320,166 $208,177 $758,634 $561,718 $385,258
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross margin
     ($000's)          $ 71,715 $ 39,929 $ 23,087 $111,710 $ 62,698 $ 37,396

    Less:
      Convenience
       store merchandise
       gross margin    $  4,218 $  3,942 $  3,275 $  7,884 $  7,288 $  5,665
      Other revenue
       included in
       gross margin       7,669    1,985    1,702   14,078    3,637    3,331
    -------------------------------------------------------------------------
    Fuel and propane
     gross margin      $ 59,828 $ 34,002 $ 18,110 $ 89,748 $ 51,773 $ 28,400
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cents per litre    $ 0.1270 $ 0.0909 $ 0.0624 $ 0.0985 $ 0.0736 $ 0.0509
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Station counts:

    Retail (Parkland and
     commission operated)
      Fas Gas                                           83       98      120
      Fas Gas Plus                                      92       95       86
      Esso                                               6        2        -
    -------------------------------------------------------------------------
                                                       181      195      206
    -------------------------------------------------------------------------
    Wholesale
     (Independent
     dealer)
      Race Trac Fuels                                  170      201      222
      Fas Gas Plus                                      23       12        -
      Esso                                             172      150        -
    -------------------------------------------------------------------------
                                                       365      363      222
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
     Total stations                                    546      558      428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





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

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890