Second Quarter 2008 Financial Results

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Second Quarter 2008 Performance Highlights:

    -   Record Q2 2008 fuel sales volume of 525 million litres, up 12% from
        471 million litres the prior year.
    -   Record Q2 2008 sales of $606.6 million, up 43% from $424.6 million
        the prior year.
    -   EBITDA of $19.0 million for Q2 2008, down 61% from $48.3 million the
        prior year due to weaker refiners' margins.
    -   Completed acquisition of Noco Energy fuel marketing business.RED DEER, Aug. 1 /CNW/ - Parkland Income Fund (TSX:PKI.UN) today
announced its business performance for the second quarter of 2008 and the six
months ended June 30, 2008. Volumes and revenues achieved record levels for
the quarter basically as a result of acquisitions, while EBITDA was lower for
Q2 2008 compared to the same period a year earlier, primarily due to lower
contributions from our share of refinery margins.
    President and CEO Mike Chorlton said, "Both our Retail and Commercial
business units performed well in the quarter despite lack of market growth and
the challenge of controlling costs. This performance reflects both our
long-term growth strategy and our decision to diversify our business into
areas not impacted by refiners' margins. The acquisitions of the past two
years have contributed significantly to our ability to maintain distributions
in face of the current decline in refiners' margins. Refiners' margins for
gasoline, which are historically weaker in the winter season before gaining
strength in the summer driving season, have remained low, at levels not seen
since 1999. Key factors in this weakness have been the rapid increase in crude
prices together with widespread North American economic weakness causing
decreased demand and compressing profit margins. Conversely, diesel refiners'
margins are near all-time highs, but they account for a smaller portion of our
total fuel volume."
    "We are addressing the pressure on distributable cash by managing
discretionary operating and maintenance capital expenditures for the balance
of the year without impairing the productive capacity of the business. We have
deferred $6.5 million of our maintenance capital budget for 2008 and are now
targeting $10 million. We have dedicated resources to accelerating synergies
within our operations and developing long-term cost savings. However, we are
continuing with expenditures that are immediately accretive to cash flow as
well as those essential to the conduct of our business."

    Outlook and Distributions

    All business segments remain profitable and we continue to increase sales
volumes. Improvements in the outlook for oil and gas drilling and continued
strength in the agricultural inputs market bode well for the Commercial
division, particularly for the fourth quarter. The first few weeks of the
third quarter have exhibited further weakness in the refiners' margins for
gasoline while diesel remains strong. Retail fuel volumes in Western Canada
have not experienced the declines reported in other parts of North America and
retail margins remain strong.
    While the third quarter may show some weakness, the Board continues to
believe that the current distribution rate is appropriate given earnings
expectations for the full year.
    Cash distributions slightly exceeded cash available for distribution for
the second quarter and the monthly distribution rate was maintained at the
rate of $0.105 per unit. For the six months ended June 30, 2008 the cash
available for distribution slightly exceeded actual distributions.

    Fuel Volumes

    Gasoline, diesel and propane volumes were strong with total sales of
525 million litres in the quarter ended June 30, 2008, an increase of 12% from
471 million litres for the same period in 2007. The increase resulted from the
acquisitions completed over the past year, as same-store volumes were similar
to the prior year.


    The daily average spread between the price of crude oil and the posted
gasoline rack price at the refinery gate in Edmonton (refiners' margin) was
9.9 cents per litre in the second quarter (9.4 cents per litre for six months)
compared to 26.5 cents per litre in the second quarter of 2007 (19.4 cents per
litre for six months). These variances affected those volumes where we share
in the refiners' margin under our supply contracts and reduced gross margins
by approximately $30 million for Q2 2008 compared to Q2 2007 and by
approximately $35 million for the six months ended June 30, 2008 relative to
the six months ended June 30, 2007. The refiners' margin for gasoline in the
second quarter was 3.4 cents per litre lower than the annual average for the
prior five years.
    The refiners' margin numbers for diesel were more consistent year over
year with the current quarter 2.0 cents per litre higher than Q2, 2007 and the
year to date 1.0 cents per litre lower.
    At December 31, 2007 we incorporated the early adoption of CICA Handbook
Section 3031, Inventories to account for inventory on a FIFO basis. We
restated the quarterly results from 2007. The second quarter, 2007 EBITDA,
which is reported in our current comparative results, increased by $0.7
million from the original reports at June 30, 2007. In the first six months of
2008 this change in policy has added $9.9 million of EBITDA. During this
period the price of crude oil at Edmonton increased from 59 cents per litre to
89.5 cents per litre. Subsequent to the end of the second quarter, the oil
price has declined to 81 cents per litre by mid July.
    Early in 2008 we commenced a facility renewal program at seven of our
company-operated convenience stores. This program was substantially completed
in the second quarter at a cost of $1.4 million in maintenance capital. During
the renovation period these stores continued with fuel sales but had minimal
merchandise sales. Accordingly the aggregate gross margin from merchandise
sales decreased to $3.8 million in the second quarter compared to $4.2 million
the prior year.
    Our operating and direct expenses were $20.3 million in the second
quarter compared to $14.5 million for the same period in 2007. The increase
reflects the full year effect of our acquired businesses as well as higher
store operating costs such as labor, credit card costs and loyalty program
costs. As industry volume growth has flattened and retail prices have remained
buoyant, retailers have turned to more aggressive promotional activity to
maintain or build sales volumes. Although operating and direct expenses were
up over the prior year, they were down from the first quarter of 2008 as the
commercial segment entered the slower summer season.
    Our marketing, general and administrative expenses increased as a result
of the acquisitions in 2007, higher labor costs as well as an expenditure of
$0.8 million in the six month period this year on a project to upgrade our
technology and our business processes. Expenditures on the balance of this
project will be classified as capital and include $1.6 million expended to
June 30, 2008 and $2.1 million expected to be spent in the balance of 2008 and
$2.7 million in 2009. It will result in a one-time charge and will facilitate
compliance with regulatory requirements, harmonize the systems of all acquired
companies, reduce operating costs and improve management data.
    A comparison of EBITDA for the second quarter of 2008 with the second
quarter of 2007, as well as graphs of historic refiners' margins are available
online at

    Update on Beaver Hills Project

    Work on the Beaver Hills project, which is in the feasibility study phase
for proposed construction of a $300 million fuel and chemical production
facility in the Edmonton area, is continuing on schedule. We have a 25%
interest in this project and expect to reach a decision regarding construction
around year end.

    Completion of Noco Energy Acquisition

    On May 29, 2008 we acquired Noco Energy fuel marketing business in
Ontario. This business is an extension of our Esso retail branded distributor
operation together with a similar arrangement for Sunoco and additional
wholesale accounts. These are dealer accounts primarily outside the greater
Toronto area and therefore not exposed to the volatile retail prices in that
region. The purchase price was $8.5 million and the prior year's normalized
earnings were approximately $2.0 million. The early financial performance and
prospects for growth are encouraging.SUMMARY FINANCIAL RESULTS
    For the period ended June 30, 2008

    Thousands of Canadian dollars,
    except per Unit amounts and
    fuel volumes
                     Q2      Six        Q2       Six        Q2      months
                    2008    months     2007     months   % Change  % Change
    Revenue        606,612 1,089,505   424,628   758,634       43%       44%
     earnings(1)    11,018    21,238    21,957    39,064       50%       46%
    Net earnings
     per Unit(1)      0.22      0.42      0.42      0.79       48%       47%
     number of
     Units          50,335              48,361
    EBITDA(2)       18,965    36,210    48,273    71,368       61%       49%
     cash flow
     per Unit         0.30      0.63      0.72      0.81       58%       22%
     per Unit         0.31      0.63      0.27      0.51       15%       24%
    Fuel sales
     (millions of
     litres)           525     1,081       471       911       12%       19%
    (1) Certain year-earlier numbers have been restated as a result of
        Parkland's early adoption of the new CICA standards on inventories to
        record the cost of inventory using the First In, First Out method.

    (2) EBITDA, which is not a financial measure under Generally Accepted
        Accounting Principles (GAAP), refers to Earnings Before Interest on
        Long-Term Debt, Income Tax Expense, Amortization of Capital Assets,
        Refinery Remediation Accrual and Loss on Disposal of Capital Assets.
        It can be calculated from the GAAP amounts included in the Fund's
        financial statements and a table reconciling net income in accordance
        with GAAP to EBITDA is included in the Management's Discussion and
        Analysis (MD&A). 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.

    The MD&A as well as the complete unaudited interim Consolidated Financial
Statements and notes for the second quarter of 2008 are available online at

    Investment Community Conference Call and Webcast

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

           Tuesday, August 5, 2008, 9:00 a.m. (11:00 a.m. Eastern Time)
           Direct:      416-644-3414
           Toll-free:   800-733-7571

           The replay will be available as follows:

           From Tuesday August 5, 2008, 11:00 a.m. (1:00 p.m. Eastern Time)
           To Tuesday, August 19, 2008 at 11:59 p.m. (1:59 a.m. Eastern Time)
           Direct:      416-640-1917
           Toll-free:   877-289-8525
           Passcode:    21275133 followed by the number signWebcast


    Parkland Income Fund currently 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 and other products through its Distribution division. With
approximately 590 locations, Parkland has developed a strong market niche in
Canadian non-urban markets focused in the West and Ontario. The Fund supplies
propane, bulk fuel, heating oil, lubricants, industrial fluids, agricultural
inputs and associated services to commercial and industrial customers in
western Canada under the Neufeld, Joy, United Petroleum and Great Northern Oil
    Additionally, Parkland operates the Bowden refinery near Red Deer,
Alberta as a storage and contract-processing site. The Fund is also a 25
percent joint venture partner in a study, due to be completed around the end
of 2008, to determine the feasibility of building a $300 million facility to
refine condensate into petroleum and other products.
    Parkland is focused on creating and delivering value for its unitholders
through the continuous refinement of its site portfolio, increasing revenue
diversification through growth in non-fuel revenues and active supply chain
    The Fund's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit

    If you prefer to receive Company news releases via e-mail, please request

    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",
"projected", "anticipates", "estimates", "continues", or similar words and
include but are not limited to, statements regarding the accretive effects of
acquisitions and the anticipated benefits of acquisitions. 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.

For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; John G. Schroeder, Vice President and CFO (403) 357-6400