Wajax Announces Another Quarter of Significantly Improved Results and Increases Distributions.

MISSISSAUGA, Ontario -- Wajax Income Fund (TSX:WJX.UN) today announced significantly improved fourth quarter 2005 results.

(Dollars in millions,                  Three Months        Year Ended
 except per unit data)            Ended December 31       December 31
                                  -----------------   ---------------
                                     2005     2004      2005     2004

Revenue from continuing
 operations                        $276.8   $236.7  $1,049.4   $871.4

Net earnings from continuing
 operations                         $15.8     $5.8     $35.6    $17.6

Net earnings                        $15.8     $6.0     $33.1    $18.3

Distributable Cash(2)               $15.5      n/a     $33.5(1)   n/a

Basic earnings per unit:
 - From continuing operations       $0.95    $0.37     $2.19    $1.12
 - Net earnings                     $0.95    $0.38     $2.04    $1.17

Basic distributable cash
 Per unit(2)                        $0.94      n/a     $2.02(1)   n/a

(1) Amounts are for the period from the date of conversion (June 15,
    2005) to December 31, 2005.
(2) Denotes non-GAAP measure. See Non-GAAP Measures section in the
    attached Management's Discussion and Analysis (MD&A)

Fourth Quarter Highlights

- Revenues from continuing operations increased $40.1 million, or 17% (20% after adjusting for the decline in the value of the U.S. dollar) compared to last year. Mobile Equipment revenues increased 17%, Industrial Components 12% and Power Systems were up 25% as the Fund benefited from continuing strength in the Alberta energy sector.

- Net earnings from continuing operations for the quarter were $15.8 million or $0.95 per unit compared to $5.8 million or $0.37 per share recorded in 2004. Stronger sales led to significantly improved earnings in all three segments. Compared to the previous year, Mobile Equipment segment earnings were up 33% to $9.2 million, Industrial Components increased 59% to $4.3 million and Power Systems improved by 19% to $5.6 million. In addition, the Fund benefited from a reduction in its interest expense and income tax rate as a result of the income fund conversion effective June 15, 2005.

- Basic distributable cash (See Non-GAAP Measures section in MD&A) amounted to $0.94 per unit for the quarter and $2.02 per unit since the date of conversion (June 15, 2005) compared to cash distributions declared of $1.89 per unit.

- Estimated pro-forma distributable cash (see Non-GAAP Measures section in MD&A) for the twelve-months ended December 31, 2005 was $3.11 per unit, up from an estimated $2.75 per unit for the twelve months ended September 30, 2005.

- As previously announced, on October 31, 2005 the Fund purchased all the shares of Midwest Detroit Diesel-Allison Ltd. ("Midwest"). Midwest is the Detroit Diesel engine and Allison transmission distributor for Manitoba, Saskatchewan, northwestern Ontario and Nunavut. It also distributes Electro-Motive Diesel (EMD) engines across Canada. EMD engines are used in power generation, oil field, industrial and marine applications requiring large, low-speed diesel engines. The price paid for the shares and assumed debt was $7.7 million. Midwest has annual revenues of approximately $22 million and has been integrated into the Fund's Waterous Power Systems operation centered in Edmonton.

- The Fund announced today that it has agreed to acquire the assets of Conley Equipment Limited ("Conley"), the JCB dealer for most of the Greater Toronto Area and eastern Ontario, including Ottawa, for approximately $6.6 million. This acquisition will provide the Fund with expanded territorial right in Ontario. Conley has sales in excess of $10 million annually and it is expected that the deal will close by the end of March, 2006.

- The Fund announced an increase in its monthly distribution to $0.25 per unit ($3.00 per unit annualized) for March, payable on April 20, 2006, to unitholders of record on March 31, 2006.

- A special non-cash distribution of Fund units of $0.14 per unit was deemed to have been made to unitholders of record on December 31, 2005 as provided in the Declaration of Trust. This distribution was deemed to have been made to effectively distribute all of the Fund's taxable income for 2005. Tax information concerning the distributions will be available by March 8, 2005 on the Fund's website at www.wajax.com.

The board of trustees of Wajax Income Fund also announced several board changes.

- Paul Sobey, Chairman of the Fund, has indicated that he does not intend to stand for re-election as a trustee of the Fund at its Annual General Meeting to be held May 5, 2006. Mr. Sobey has been a director/trustee of Wajax since 1998 and Chairman since 2000.

- The board has indicated that it intends to elect Paul Gagne as Chairman of the Fund following the May 5, 2006 Annual General Meeting. Mr. Gagne is a Chartered Accountant and has been a director/trustee since 1995. He has extensive experience as a corporate director in Canada and the U.S., currently serving on the boards of Textron Inc., CAE Inc, Fraser Papers Inc. and Inmet Mining  Corporation. He also has considerable industry experience in the forest products sector and was President and CEO of Avenor Inc. from 1991 to 1997.

- Mark Cullen has resigned as trustee of the Fund. Mr. Cullen had been a director/trustee of Wajax since 2001.

- Edward M. Barrett was appointed a trustee today. Mr. Barrett is Chairman and Co-CEO of Barrett Corporation, a private management company with holdings in a number of distribution and related businesses. Mr. Barrett brings a wide range of distribution experience to the Fund and specific industry knowledge. From 1990 to 2004 he was Chairman and CEO of Barrett Equipment Group which operated mobile equipment sales and rental locations in Atlantic Canada.

Commenting on the fourth quarter results and the outlook for 2006, Neil Manning, President and CEO, stated "Our substantially improved earnings in 2005 are indicative of the positive economic factors we enjoyed, particularly in western Canada, and also reflective of the profitability improvement initiatives implemented in all three businesses over the last few years. Given a continuation  of these factors, we expect further improvements in operating results for 2006. I would also like to personally thank two departing  trustees, our Chairman, Paul Sobey, and Mark Cullen for their insight and counsel to me over the years and their dedication to this organization. I would also like to welcome Ed Barrett to the board and I am pleased to have his expertise available to us going forward."

Wajax Income Fund is a leading Canadian distributor and service support provider of mobile equipment, industrial components and power systems. Reflecting a diversified exposure to the Canadian economy, its three distinct core businesses operate through a network of over 100 branches across Canada. Its customer base spans natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Wajax will Webcast its Fourth Quarter Financial Results Conference Call. You are invited to listen to the live Webcast on Tuesday, March 7, 2006 at 3:00 p.m. ET. To access the Webcast, enter www.wajax.com and click on the link for the Webcast on the Investor Relations page. The archived Webcast will be available at the above mentioned website within 24 hours after the conference call.

This news release contains forward-looking information. Actual future results may differ from expected results.

Management's Discussion and Analysis 

The following management discussion and analysis ("MD&A") provides a review of the consolidated financial condition and results of operations of Wajax Income Fund (the "Fund" or "Wajax") for the quarter ended December 31, 2005. The following discussion should be read in conjunction with the information contained in the accompanying financial statements and notes thereto for the quarter ended December 31, 2005. For additional information and details, readers are referred to the audited financial statements and MD&A for the year ended December 31, 2005 and the Annual Information Form which are published separately and are available on SEDAR at www.sedar.com. Information contained in this MD&A is based on information available to management as of March 7, 2006.

Unless otherwise indicated, all financial information within this MD&A is in millions of dollars, except per unit data or as otherwise indicated.

Wajax Income Fund Overview

Wajax Income Fund is an unincorporated open-ended limited purpose trust established under the laws of the Province of Ontario pursuant to a declaration of trust dated April 27, 2005. The Fund was created to indirectly invest, on June 15, 2005, in substantially all of the assets and business formerly conducted by Wajax Limited (the "Company").

The Fund is considered to be a continuation of Wajax Limited following the continuity of interest method of accounting, which recognizes the Fund as the successor entity to Wajax Limited. Accordingly, these interim consolidated financial statements reflect the financial position, results of operations and cash flows as if the Fund has always carried on the business formerly carried on by Wajax Limited with all assets and liabilities recorded at the carrying values of Wajax Limited.

The Fund makes monthly cash distributions, generally payable to unitholders of record on the last business day of each calendar month and to be paid on or about the 20th day of the following month. The Fund may make special cash and/or special non-cash distributions at the end of the year to ensure, as provided in the Fund's Declaration of Trust, that the Fund's total distributions for the year are equal to its taxable income for the year. Cash distributions are dependent on, among other things, the cash flow of the Fund.

Wajax has three core distribution businesses engaged in the sale and after-sales parts and service support of mobile equipment, power systems and industrial components, through a network of 104 branches across Canada. Its customer base spans natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Consolidated Results

for the three months ended December 31                  2005     2004
---------------------------------------------------------------------
Revenue                                               $276.8   $236.7

Gross profit                                           $62.2    $53.3
Selling and administrative expenses                    $44.6    $41.8
Earnings from continuing operations
 before interest and income taxes                      $17.6    $11.5
Interest expense                                        $0.8     $1.7
Income tax expense                                      $1.0     $4.0

Net earnings from continuing operations                $15.8     $5.8
Earnings from discontinued operations                      -     $0.2
Net earnings                                           $15.8     $6.0

Distributable cash(1)                                  $15.5        -
Distributions declared - Cash                          $20.8        -
                       - Non-cash                       $2.3        -
Distributions paid                                      $9.6        -
Dividends paid(5)                                          -     $0.6
---------------------------------------------------------------------

Net earnings per unit - Basic                          $0.95    $0.38
                      - Diluted                        $0.94    $0.37
Distributable cash per unit(1)(2)  - Basic             $0.94        -
Distributions declared per unit(3) - Cash              $1.25        -
                                   - Non-cash          $0.14        -
Distributions paid per unit(3)                         $0.58        -
Dividends paid per share (3)(5)                            -    $0.04
---------------------------------------------------------------------

for the year ended December 31                         2005     2004
---------------------------------------------------------------------
Revenue                                            $1,049.4   $871.4

Gross profit                                         $231.4   $198.5
Selling and administrative expenses                  $176.0   $161.4
Earnings from continuing operations
 before interest and income taxes
 and income fund conversion-related
 items(1)(4)                                          $55.4    $37.2
Income fund conversion-related items (4)              $10.2        -
Interest expense                                      $ 4.6    $ 7.5
Income tax expense                                    $ 5.0    $12.1
Net earnings from continuing operations               $35.6    $17.6
(Loss) earnings from discontinued operations          $(2.5)   $ 0.7
Net earnings                                          $33.1    $18.3

Distributable cash (1)                               $ 33.5        -
Distributions declared - Cash                        $ 31.4        -
                       - Non-cash                      $2.3        -
Distributions paid                                    $17.2        -
Dividends paid (3)                                     $2.2     $2.5
---------------------------------------------------------------------

Net earnings per unit - Basic                         $2.04    $1.17
                      - Diluted                       $2.03    $1.14
Distributable cash per unit (1)(2)  - Basic           $2.02        -
Distributions declared per unit (3) - Cash            $1.89        -
                                    - Non-cash        $0.14        -
Distributions paid per unit (3)                       $1.03        -
Dividends paid per share (3)(5)                       $0.14    $0.16
---------------------------------------------------------------------

(1) Non-GAAP measure, see the Non-GAAP Measures section.
(2) Based on actual number of units outstanding on December 31, 2005.
(3) Based on actual number of units/shares outstanding on record
    date.
(4) Income fund conversion-related items relate to the income fund
    conversion and the early extinguishment of long-term debt.
    See Non-GAAP Measures section.
(5) Dividends paid prior to conversion of Wajax Limited into Wajax
    Income Fund.

Revenue

Revenue from continuing operations increased $40.1 million, or 17%, in the fourth quarter of 2005 to $276.8 million from $236.7 million in 2004. The strengthening Canadian dollar relative to the U.S. dollar had the effect of decreasing 2005 consolidated quarterly revenue by approximately $6.5 million, or 2%, as the Fund realized lower sales dollars per unit on U.S.-sourced products. Segment revenue increased 17% in Mobile Equipment, 12% in Industrial Components and 25% in Power Systems as strong gains were realized by all segments primarily as a result of continued strength in the western Canadian economy.

For the twelve months ended December 31, 2005 revenue from continuing operations increased $178.0 million, or 20%. The strengthening Canadian dollar relative to the U.S. dollar had the effect of decreasing 2005 consolidated revenue from continuing operations for 2005 by approximately $29.3 million, or 3%. Mobile Equipment's revenues increased 24%, or $108.1 million, from higher equipment and parts and service volumes in all regions of Canada. Kinecor's revenues increased 13%, or $32.3 million, as all regions across the country showed improvement, particularly in western Canada. Power Systems revenues increased 22%, or $38.0 million, as strong revenues in western Canada offset a 3% reduction in eastern Canada.

Gross profit

Gross profit increased $8.9 million, or almost 17%, in the quarter due mainly to higher sales volumes. The gross profit percentage for the quarter decreased slightly to 22.4% from 22.5% in 2004 as the negative impact of a higher percentage of lower margin equipment sales to total sales was offset, in part, by higher parts margins compared to last year.

Selling and administrative expenses

Selling and administrative expenses increased $2.8 million in the quarter due to costs related to higher sales activity partly offset by a reduction in corporate costs compared to last year. The corporate cost reduction of $1.3 million was due primarily to long-term incentive costs incurred in 2004. Selling and administrative expenses as a percentage of revenue declined from 17.7% to 16.1%.

Interest expense

Interest expense decreased $0.9 million in the quarter to $0.8 million from $1.7 million the previous year due to the Fund's lower cost of borrowing resulting from new financing arrangements entered into on June 8, 2005.

Income tax expense

The effective income tax rate of 5.9% for the quarter was lower than the Fund's statutory income tax rate of 34.3% due to the majority of the Fund's income that was distributed directly to unitholders and not subject to tax in the Fund.

Net earnings

Quarterly net earnings of $15.8 million, or $0.95 per unit, increased $9.8 million compared to $6.0 million, or $0.38 per unit in 2004.

Net earnings for the year ended December 31, 2005, increased $14.8 million to $33.1 million, or $2.04 per unit, from $18.3 million, or $1.17 per unit in the previous year. Included in the 2005 earnings are income fund conversion-related items totaling $10.2 million ($6.7 million after tax or $0.42 per unit) which include conversion-related costs of $2.6 million ($1.7 million after tax or $0.11 per unit) and charges associated with the early extinguishment  of long-term debt of $7.6 million ($5.0 million after tax or $0.31 per unit).

Funded debt 

Funded debt, net of cash, of $35.9 million decreased $4.7 million compared to September 30, 2005. As a result, the Fund's quarter-end debt to equity ratio of 0.18:1 decreased from last quarter's ratio of 0.20:1.

Distributable cash (see Non-GAAP Measures section) and Distributions

For the quarter ending, distributable cash was $15.5 million or $0.94 per unit. For the period June 15, 2005 to December 31, 2005, distributable cash was $33.5 million or $2.02 per unit. For the same period, distributions declared were $2.03 per unit comprised of cash distributions of $1.89 per unit and non-cash distributions of $0.14 per unit to ensure, as provided by the Fund's Declaration of Trust, that the Fund's total distributions for the year equal its taxable income.

Distributable cash in excess of cash distributions of $0.13 per unit, or $2.2 million, provides the Fund with an additional reserve for fluctuations in working capital requirements, growth capital expenditure requirements or future distributions.

Quarterly Results of Operations

Mobile Equipment

for the three months ended December 31          2005            2004
---------------------------------------------------------------------
Equipment                                     $103.3           $87.1
Parts and service                              $42.4           $37.5
---------------------------------------------------------------------
Gross revenue                                 $145.7          $124.6
Segment earnings                                $9.2            $6.9
Segment earnings margin                          6.3%            5.5%
---------------------------------------------------------------------

for the year ended December 31                  2005            2004
---------------------------------------------------------------------
Equipment                                     $389.6          $298.0
Parts and service                             $167.3          $150.8
---------------------------------------------------------------------
Gross revenue                                 $556.9          $448.8
Segment earnings                               $31.4           $22.6
Segment earnings margin                          5.6%            5.0%
---------------------------------------------------------------------

Revenues increased 17%, or $21.1 million, to $145.7 million in the fourth quarter of 2005 from $124.6 million in 2004. The strengthening Canadian dollar relative to the U.S. dollar had the effect of decreasing 2005 quarterly revenues by approximately $5.3 million compared to last year. Segment earnings increased $2.3 million, to $9.2 million compared to the previous year. For the twelve months ended December 31, 2005, revenues increased 24% to $556.9 million and segment earnings increased 39% to $31.4 million from $22.6 million. The following factors contributed to the Mobile Equipment segment's fourth quarter results:

- Revenues in western Canada and Ontario increased 18%, or $16.2 million quarter-over-quarter due to a $13.1 million increase in equipment sales and a $3.1 million increase in parts and service revenues. Forestry and construction equipment revenues increased by $8.2 million, including a $9.0 million increase in new Hitachi excavator sales in western Canada, which was partially offset by a reduction in forestry equipment sales in Ontario as a result of the transition out of the Timberjack product line earlier in the year. Mining equipment revenues increased $4.1 million due mainly to revenues generated from deliveries under the North American  Construction Group and Elk Valley Coal mining packages. Crane and utility equipment sales increased $1.3 million due to stronger demand, while material handling equipment sales declined $0.5 million compared to last year. Parts and service revenues increased $3.1 million in the quarter, principally in the western Canada forestry and construction and mining sectors reflecting both an increase in equipment units in the marketplace and targeted marketing efforts to grow these revenues. Earnings increased $1.6 million compared to last year due primarily to higher volumes and lower selling and administrative expenses, offset somewhat by a lower gross margin percentage. The gross margin for the quarter decreased 1.6 percentage points compared to 2004 as the negative impact of increased lower margin equipment sales was offset, in part, by higher parts margins. Selling and administrative expenses declined $0.4 million primarily due to cost reduction initiatives introduced in Ontario in order to reduce personnel and warranty costs.

- In eastern Canada revenues increased 15%, or $4.9 million compared to last year due to a $3.1 million increase in equipment revenues and a $1.8 million increase in parts revenues. Service revenues remained flat quarter-over-quarter. Mining equipment revenues increased $3.2 million, due mainly to the delivery of a LeTourneau loader, and forestry and construction equipment sales increased $1.7 million primarily from higher JCB and Hitachi new equipment sales. These increases in equipment revenues more than offset a $1.2 million decline in material handling equipment revenues and a $0.6 million decrease in crane and utility equipment revenues. The $1.8 million increase in parts sales compared to last year was due principally to higher mining sector volumes which included two large orders to mines in Nova Scotia and Newfoundland. Earnings increased by $0.7 million due to the positive impact of increased revenues and a higher parts margin offset, in part, by slightly higher selling and administrative expenses compared to last year.

On December 31, 2005 Jim Burns, Senior Vice-President of Mobile Equipment retired from Wajax. The divisional Vice-Presidents of the Mobile Equipment segment, Mark Whitman (western Canada and Ontario) and Jack Doyon (eastern Canada) now report directly to Neil Manning, CEO of the Fund.

As previously reported, the Mobile Equipment segment received an order from North American Construction Group for sixteen 320 ton Hitachi mining trucks and two 800 ton Hitachi hydraulic shovels with deliveries over 16 months from the end of December 2004. As of December 31, 2005, four of the mining trucks had been delivered. Due to a tire supply shortage, certain trucks that were scheduled for delivery in 2006 will be delayed until 2007.

On March 7, 2006 the Fund announced that it agreed to acquire the assets of Conley Equipment Limited ("Conley"), the JCB dealer for most of the Greater Toronto Area and eastern Ontario, including Ottawa, for approximately $6.6 million. This acquisition will provide the Fund with expanded territorial rights in Ontario. Conley has sales in excess of $10 million annually and it is expected that the deal will close by the end of March, 2006.

Industrial Components - Kinecor

for the three months ended December 31            2005          2004
---------------------------------------------------------------------
Gross revenue                                    $72.9         $65.3
Segment earnings                                  $4.3          $2.7
Segment earnings margin                            5.9%          4.1%
---------------------------------------------------------------------

for the year ended December 31                    2005          2004
---------------------------------------------------------------------
Gross revenue                                   $285.3        $253.0
Segment earnings                                 $13.3          $7.6
Segment earnings margin                            4.6%          3.0%
---------------------------------------------------------------------

Revenue at Kinecor increased 12% to $72.9 million in the fourth quarter of 2005 from $65.3 million in the fourth quarter of 2004 and segment earnings increased $1.6 million to $4.3 million compared to $2.7 million in the previous year. The strengthening Canadian dollar relative to the U.S. dollar had the effect of decreasing 2005 quarterly revenue by approximately $0.7 million. For the twelve months ended December 31, 2005, revenue of $285.3 million reflected a 13% increase compared to the prior year, while segment earnings increased $5.7 million to $13.3 million from $7.6 million in 2004. The following factors contributed to the segment's quarterly results:

- Bearings and power transmission sales increased 6%, or $2.7 million compared to last year, with increases in all regions of Canada. Stronger sales in Ontario due in part to a one-time $0.6 million maintenance contract for a major mining customer, western Canada's strong economy and increased industrial sales in eastern Canada accounted for this increase.

- Fluid Power parts and service revenue increased 23%, or $4.9 million, primarily as a result of the continued strength of the oil and gas and mining sectors in western Canada as well as increased revenues from the forestry and industrial sectors in eastern Canada and sales of imported hydraulic products.

- Segment earnings increased $1.6 million to $4.3 million as improved volumes and a slight increase in margins more than offset higher selling and administrative expenses, primarily due to higher personnel costs related to higher sales activity, compared to last year.

Power Systems (formerly Diesel Engines)

for the three months ended December 31            2005          2004
---------------------------------------------------------------------
Equipment                                        $29.3         $21.3
Parts and service                                $29.5         $25.9
---------------------------------------------------------------------
Gross revenue                                    $58.8         $47.2
Segment earnings                                  $5.6          $4.7
Segment earnings margin                            9.5%         10.0%
---------------------------------------------------------------------

---------------------------------------------------------------------
for the year ended December 31                    2005          2004
---------------------------------------------------------------------
Equipment                                       $104.3         $73.5
Parts and service                               $105.4         $98.2
---------------------------------------------------------------------
Gross revenue                                   $209.7        $171.7
Segment earnings                                 $18.7         $15.2
Segment earnings margin                            8.9%          8.9%
---------------------------------------------------------------------

Revenues increased 25%, or $11.6 million, to $58.8 million in the fourth quarter of 2005 compared to $47.2 million in 2004. Segment earnings increased $0.9 million in the quarter to $5.6 million from $4.7 million the previous year. For the twelve months ended December 31, 2005, revenues increased 22%, or $38.0 million, to $209.7 million and earnings improved $3.5 million to $18.7 million. The following factors impacted quarterly revenues and earnings:

- Revenues at Waterous Power Systems ("Waterous") in western Canada were 57%, or $14.6 million, ahead of 2004. Equipment sales increased $9.7 million and parts and service revenues increased $4.9 million compared to last year. These gains were due mainly to an increase in oil and gas activity in western Canada and the acquisition of Midwest Detroit Diesel-Allison Ltd. ("Midwest") on October 31, 2005 which generated $3.1 million of revenue in the quarter.

- Revenues from the Quebec and Maritimes operation, Detroit Diesel-Allison Canada East, decreased 14%, or $3.0 million, compared to last year. Equipment sales decreased $1.7 million due to lower engine and generator set deliveries. Parts and service sales decreased $1.3 million as a result of lower sales to Freightliner and other truck dealers, retail customers and Quebec transit authorities.

- The increase in segment earnings compared to 2004 was due to the increased volumes and higher parts margins, offset in part by increased selling and administrative expenses due mainly to higher sales activity at Waterous and costs associated with the Midwest operation. Higher parts margins resulted from the favourable impact of the stronger Canadian dollar on U.S. dollar purchases.

On October 31, 2005 the Fund purchased all the shares of Midwest Detroit Diesel-Allison Ltd., the Detroit Diesel engine and Allison transmission distributor for Manitoba, Saskatchewan, northwestern Ontario and Nunavut. Midwest has been integrated into the Fund's Waterous Power Systems operation centered in Edmonton. Midwest also distributes Electro-Motive Diesel ("EMD") engines across Canada. EMD engines are used in power generation, oil field, industrial and marine applications requiring large, low-speed diesel engines. The price paid for the shares and assumed debt was $7.7 million. Midwest has annual revenues of approximately $22 million.

Discontinued Operations 

On September 30, 2005, the assets of Spencer, the US based operation of Industrial Components, were sold for cash proceeds of $19.2 million. As a result, the revenues and the results of Spencer have been reported as discontinued activities in the consolidated statement of operations.

Selected Quarterly Information

                          2005                       2004
                Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1
---------------------------------------------------------------------
Revenue     $276.8 $258.0 $275.4 $239.1 $236.7 $215.0 $222.1  $197.6
Net
 earnings
 from
 continuing
 operations   15.8   12.7    2.6    4.6    5.8    4.9    4.4     2.4
Net
 earnings
 from
 continuing
 operations
 per unit
 - Basic     $0.95  $0.77  $0.15  $0.29  $0.37  $0.31  $0.28   $0.15
 - Diluted   $0.94  $0.76  $0.15  $0.28  $0.36  $0.31  $0.27   $0.15

Net
 earnings    $15.8   $9.4   $3.0   $5.0   $6.0   $5.2   $4.6    $2.5
Earnings
 per unit
 - Basic     $0.95  $0.56  $0.19  $0.32  $0.38  $0.33  $0.29   $0.16
 - Diluted   $0.94  $0.56  $0.19  $0.31  $0.37  $0.33  $0.28   $0.16
Distribut-
 able cash(1)$15.5  $14.2   $3.8      -      -      -      -       -
Distribut-
 able cash
 per unit(1)
 - Basic     $0.94  $0.85  $0.23      -      -      -      -       -
 - Diluted   $0.93  $0.85  $0.23      -      -      -      -       -

(1) Non-GAAP measure, see the Non-GAAP Measures Section.

A discussion of the Fund's previous quarterly results can be found in the Fund's quarterly MD&A reports available on SEDAR at www.sedar.com.

Liquidity and Capital Resources

The Fund generated $15.2 million of cash from continuing operations before financing activities in the fourth quarter of 2005 compared to $20.3 million in the fourth quarter of 2004. The $5.1 million decrease in cash flows from continuing operations before financing activities was due to a lower reduction in non-cash working capital compared to last year and the acquisition of Midwest, which more than offset higher earnings in the quarter compared to 2004. For the year ended December 31, 2005 the Fund used $3.7 million of cash from continuing operations before financing activities compared to $12.1 million generated the previous year.

Cash generated by continuing operating activities amounted to $24.3 million in the fourth quarter of 2005, with $18.3 million of cash generated from operating earnings and $6.0 million of cash generated by changes in non-cash working capital. A significant component of the decrease in non-cash working capital included the following:

- Accounts receivable decreased by $4.4 million as a $9.5 million reduction in western Canada's Mobile Equipment operation, due mainly to collections related to large deliveries made at the end of September 2005, was offset in part by increased receivables in several other operations as a result of higher volumes.

- For the twelve months ended December 31, 2005 the Fund generated $13.5 million of cash from continuing operations compared to $22.1 million the previous year, and included $46.0 million of cash from operating earnings net of a $32.5 million increase in non-cash working capital due mainly to higher accounts receivable and inventory levels due to higher sales activities.

During the quarter the Fund invested a net amount of $9.1 million of the cash provided from operating activities. The investing activities included the $6.2 million acquisition of the shares of Midwest, $1.9 million of lift truck and JCB rental fleet additions in Mobile Equipment and other capital asset additions of $1.4 million.

Working capital from continuing operations, exclusive of funded debt and cash, decreased $13.5 million to $133.4 million at December 31, 2005 from $146.9 million at September, 2005. The decrease was due to the cash flow factors listed above and the $11.2 million increase in the distributions payable, partly reduced by the increase in working capital as a result of the Midwest acquisition.

Debt, net of cash, of $35.9 million, decreased $4.7 million compared to September 30, 2005 principally due to cash flows from continuing operations offset by $9.6 million of distributions paid in the quarter and the repayment of $1.4 million of debt assumed on the acquisition of Midwest. As a result, the Fund's debt to equity ratio decreased to 0.18:1 at December 31, 2005 compared to 0.20:1 at September 30, 2005. Compared to December 31, 2004, the debt-to-equity ratio increased from 0.13:1 to 0.18:1.

During the quarter, the Fund increased its bank credit facility from $95 million to $130 million at a cost of $0.3 million which will be amortized over the term of the facility. The fully secured bank credit facility, which expires June 7, 2008, is made up of a $30 million non-revolving term portion and a $100 million revolving term portion.

At December 31, 2005 the Fund had utilized $35.0 million of its $130 million bank credit facility, $5.7 million of its $15 million equipment financing facility and had cash balances of $4.8 million.

The Fund has entered into interest-rate swap contracts with two of its lenders, such that in total the interest rate on the $30 million non-revolving term portion of the bank credit facility is effectively fixed at 3.47% plus applicable margins until expiry of the facility on June 7, 2008. The differential the Fund would receive to hypothetically terminate or exchange the swap agreement in the prevailing market conditions is estimated at $0.4 million.

The Fund's $130 million bank credit facility along with its $15 million equipment financing demand facility should be sufficient to meet the Fund's short-term working capital and maintenance capital requirements. In the long-term the Fund may be required to access the equity or debt markets in order to fund significant acquisitions and growth related working capital and capital expenditure requirements.

The Mobile Equipment segment had $59.4 million of consigned inventory on-hand from a major manufacturer at December 31, 2005 compared to $57.3 million the previous year. This inventory is not included in the Fund's inventory as the manufacturer has title to the inventory.

The Fund's off balance sheet financing arrangements with Wajax Finance (a "private label" financing operation of CIT Financial Ltd.) include operating lease contracts in relation to the Fund's long-term lift truck rental fleet in the Mobile Equipment segment. At December 31, 2005, the non-discounted operating lease commitment for the rental fleet was $14.3 million.

The Fund has committed to acquire land in Edmonton for an amount of $2.3 million. It is anticipated the land will be purchased in early 2006 and subsequently sold to a third party and leased back by Waterous Power Systems in a design build transaction.

Non-GAAP Measures

To supplement the consolidated financial statements, the Fund uses non-GAAP financial measures that do not have standardized  meaning prescribed by Canadian GAAP and are therefore unlikely to be comparable to similar measures used by other companies.

"Earnings from continuing operations before interest and income taxes and income fund conversion-related items", is a non-GAAP financial measure that management believes is useful to investors because it excludes the impact of conversion-related items which are non-recurring in nature and therefore provide more meaningful information for investors, and management, to assess the ongoing financial performance of the Fund. A reconciliation between reported "Net earnings" and "Earnings from continuing operations before interest and income taxes and income fund conversion-related items" is detailed in the Consolidated Results section above.

"Distributable cash" and "Estimated distributable cash", and their per unit equivalents, are not recognized measures under GAAP, and the method of calculation adopted by the Fund may differ from methods used by other entities. Accordingly, "Distributable cash" and "Estimated distributable cash", and their per unit equivalents, as presented may not be comparable to similar measures presented by other entities. The Fund believes that "Distributable cash" and "Estimated distributable cash", and their per unit equivalents, are useful financial metrics as they represent the key determination of cash flow available for distribution to unitholders. "Distributable cash" and "Estimated distributable cash", and their per unit equivalents, should not be construed as an alternative to net earnings as determined by GAAP. Distributable cash is calculated as cash flow from continuing operations before changes in non-cash working capital, less maintenance capital expenditures and amortization of deferred financing costs. See the Distributable Cash and Estimated Distributable Cash sections below for the method of calculating the Fund's "Distributable cash" and "Estimated distributable cash".

"Maintenance capital expenditures" is not a recognized measure under GAAP, and the method of calculation adopted by the Fund may differ from methods used by other entities. The Fund believes that "Maintenance capital expenditures" represents cash expenditures required to maintain normal operations."Maintenance capital expenditures" exclude acquisitions and land and building additions as they are considered to be expenditures that are not required to maintain normal operations. See the Distributable Cash and Estimated Distributable Cash sections below for the method of calculating "Maintenance capital expenditures".

Distributions

The Fund makes monthly cash distributions, generally payable to unitholders of record on the last business day of each calendar month and to be paid on or about the 20th day of the following month. The Fund may make special cash and/or special non-cash distributions at the end of the year to ensure, as provided in the Fund's Declaration of Trust, that the Fund's total distributions for the year are equal to its taxable income for the year.

Cash distributions to unitholders for the three months and the period
 ended December 31, 2005 were declared as follows:

Record Date                    Payment Date      Per Unit     Amount
---------------------------------------------------------------------
Three months ended
 December 31, 2005:
  October 31, 2005        November 21, 2005       $0.1833      $ 3.0
  November 30, 2005       December 20, 2005        0.2100        3.5
  December 31, 2005        January 20, 2006        0.2100        3.5
  December 31, 2005
   - Special               January 20, 2006        0.6500       10.8
---------------------------------------------------------------------
                 Sub-Total                         1.2533       20.8
June 15, 2005 to
 September
 30, 2005                                          0.6416       10.6
---------------------------------------------------------------------
Period ended
 December
 31, 2005                                         $1.8949      $31.4
---------------------------------------------------------------------

On December 31, 2005, a special non-cash distribution of $0.14 per unit, or $2.3 million, was paid by way of additional Fund units to ensure, as provided in the Fund's Declaration of Trust, that the Fund's total distributions for the year equal its taxable income. Immediately after the issuance of the additional units, the outstanding Fund units were consolidated such that the number of Fund units was unchanged from the number held immediately prior to the special non-cash distribution.

During the quarter, the Fund increased its regular monthly distribution from $0.21 per unit to $0.23 per unit effective January  1, 2006 to reflect the growth in the Fund's distributable cash. On January 10, 2006 and February 10, 2006, the Fund declared cash distributions of $0.23 per unit for the months of January and February, payable on February 20, 2006 and March 20, 2006 to unitholders of record on January 31, 2006 and February 28, 2006, respectively. On March 7, 2006, the Fund announced a further increase in its monthly distribution to $0.25 per unit ($3.00 per unit annualized) for March 2006, payable on April 20, 2006, to unitholders of record on March 31, 2006.

For income tax purposes, the 2005 distributions declared of $2.03 per unit are 100% taxable in 2005 and treated as other income.

During the fourth quarter of 2004, Wajax Limited paid a dividend on common shares of $0.04 per share. For the period January 1, 2005 to June 14, 2005, Wajax Limited paid dividends on common shares totaling $0.14 per share ($0.16 per share for the year ending December 31, 2004).

Distributable Cash and Estimated Distributable Cash

October 1, 2005 to   June 15, 2005 to
Distributable Cash for                December 31,       December 31,
 the period                                  2005               2005
---------------------------------------------------------------------

Cash flows from continuing
 operations before changes
 in non-cash working
 capital(1)                                 $18.3              $38.9
  Maintenance capital
   expenditures(2)(4)                        (2.6)              (5.0)
  Amortization of deferred
   financing costs(3)                        (0.2)              (0.4)
---------------------------------------------------------------------
Distributable Cash(4)                       $15.5              $33.5
Distributable Cash per unit(4) - Basic      $0.94              $2.02
                               - Diluted    $0.93              $2.01
Distributions Declared
 per unit - Cash                            $1.25              $1.89
          - Non-cash                        $0.14              $0.14
          - Total                           $1.39              $2.03
---------------------------------------------------------------------

(1) Based on pro-rata results for the month of June 2005.
(2) Includes plant, equipment and rental equipment additions, net
    of disposals and rental equipment transfers to inventory.
    Maintenance capital expenditures exclude acquisitions and land
    and building additions.
(3) Adjustment required to reflect financing costs, included in
    interest expense, over the term of the bank credit facility.
(4) See Non-GAAP Measures section above.

For the quarter ending December 31, 2005 distributable cash was $15.5 million or $0.94 per unit. For the period June 15, 2005 to December 31, 2005, distributable cash was $33.5 million or $2.02 per unit. For the same period, distributions declared were $2.03 per unit comprised of cash distributions of $1.89 per unit and non-cash distributions of $0.14 per unit.

Distributable cash in excess of cash distributions of $0.13 per unit, or $2.2 million, provides the Fund an additional reserve for fluctuations in working capital requirements, growth capital expenditure requirements or future distributions.

The following summary of estimated distributable cash for the twelve months ended December 31, 2005 has been prepared by Wajax on the basis of actual results of continuing operations adjusted for non-recurring items which are transactions or events which management believes are unusual in the context of a publicly-traded entity or which are not expected to recur within the foreseeable future. Adjustments for interest and taxes have been made. Although the Fund does not have firm commitments for all of these additional amounts and, accordingly, the complete financial effects of all of these additional amounts are not objectively determinable, based on past experience, management has estimated such amounts and prepared the following analysis, which management believes represents a reasonable estimate of distributable cash had the Fund been in existence for the twelve months ended December 31, 2005. This analysis is not a forecast or a projection of future results. The actual results of operations of the Fund will vary from the amount set forth in the following analysis, and those variations may be material. The actual results of Wajax are subject to a number of risks and uncertainties. See Risk and Uncertainties section and Forward-Looking Statements  section.

Estimated Distributable Cash for the twelve months
--------------------------------------------------
ended December 31, 2005
------------------------

Cash flows from continuing operations
 before changes in non-cash working capital                    $46.0
Estimated excess interest expense incurred
 prior to conversion(1)                                          0.7
Estimated excess tax expense incurred

 prior to conversion(2)                                          6.3
Income fund conversion-related costs(3)                          9.3
Management long-term incentive cost (4)                         (0.6)
---------------------------------------------------------------------
Adjusted cash flows from continuing
 operations before changes in non-cash working capital          61.7
Maintenance capital expenditures(5)(6)                          (9.6)
Amortization of deferred financing costs(7)                     (0.6)
---------------------------------------------------------------------
Estimated distributable Cash(5)                                $51.5
Estimated distributable Cash per unit(5) - Basic               $3.11
                                         - Diluted             $3.09
---------------------------------------------------------------------
(1) Wajax was refinanced as a result of conversion to the Fund.
    Interest expense has been adjusted to reflect the new financing
    arrangements.
(2) Tax expense has been adjusted to reflect the new structure of
    Wajax as a result of conversion to the Fund. A portion of the
    Fund's income prior to conversion is assumed to be distributed
    directly to unitholders and not subject to tax in the Fund.
(3) Net of non-cash write-off of deferred expenses of $0.9 million.
(4) Executive and director compensation plans were modified as a
    result of conversion to the Fund. Cash flows from continuing
    operating activities has been increased by $1.7 million to take
    into account those plans that will no longer exist and reduced
    by $1.1 million to take into account the new compensation plans
    and by non-cash stock compensation expense of $1.2 million.
(5) See Non-GAAP Measures section above.
(6) Includes plant, equipment and rental equipment additions, net of
    disposals and rental equipment transfers to inventory.
    Maintenance capital expenditures exclude acquisitions and land
    and building additions.
(7) Adjustment required to reflect financing costs, included in
    interest expense, over term of bank credit facility.

Unit Capital

Wajax converted from a share corporation to an income fund trust on June 15, 2005. Under the Arrangement, the former shareholders of Wajax indirectly received trust units of the Fund. The trust units of the Fund issued are included in unitholders' equity on the balance sheet and are summarized as follows.

2005                 2004
                                Trust Units            Shares
Issued and fully paid:      Number     Amount       Number    Amount
---------------------------------------------------------------------
Balance at the
 beginning
 of quarter             16,582,530     $104.8   15,721,460    $102.3
Stock options
 exercised                       -          -       18,000       0.1
Balance at end
 of quarter             16,582,530     $104.8   15,739,460    $102.4
---------------------------------------------------------------------

The Fund has replaced the former stock option plan with two new unit-based compensation plans:the Unit Ownership Plan in which certain members of management participate and the Trustee Deferred Unit Plan. Both plans issue rights to the participants which are settled by issuing Wajax Income Fund units. Compensation expense is determined based upon the fair value of the rights when issued and recognized over the vesting period. The Fund recorded compensation cost of $44 thousand for the quarter and $764 thousand for the year-to-date in respect of these plans.

Changes in Accounting Policy

For information on changes in accounting policy refer to the MD&A for the year ended December 31, 2005 which may be found on SEDAR at www.sedar.com.

Risks and Uncertainties

As with most businesses, the Fund is subject to a number of marketplace and industry related risks and uncertainties which could have a material impact on operating results. The Fund attempts to minimize many of these risks through diversification of core businesses and through the geographic diversity of its operations. For more information on risks and uncertainties refer to the MD&A for the year ended December 31, 2005 which may be found on SEDAR at www.sedar.com.

Outlook

Results of continuing operations of the Fund have shown significant improvement over the last couple of years as a result of favourable economic conditions experienced in a number of the Fund's markets and primarily in the western Canada oil and gas sector and the Canadian mining segment. As well, profitability improvement and business building initiatives instituted over the last couple of years have also positively impacted revenue and earnings. Going into 2006, management expects the favourable economic conditions to continue and the Results of Operations section outlines the profitability and business building initiatives for each segment that will continue to be a focus for the upcoming year. As a result, management expects further improvements in operating results in 2006.

Forward-Looking Statements

This MD&A contains forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management of the Fund. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. These factors include and are not restricted to the risks identified in this MD&A. In addition these factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. These forward-looking statements are made as of the date hereof and the Fund does not assume any obligation to update or revise them to reflect new events or circumstances.

Additional information, including the Fund's Annual Report and Annual Information Form, are available on SEDAR at www.sedar.com.

WAJAX INCOME FUND

Unaudited Consolidated Financial Statements

For the twelve months ended December 31, 2005

Notice required under National Instrument 51-102, "Continuous Disclosure Obligations" Part 4.3(3) (a).

The attached consolidated financial statements have been prepared by Management of Wajax Income Fund and have not been reviewed by the auditors of Wajax Income Fund.

WAJAX INCOME FUND
CONSOLIDATED BALANCE SHEETS

---------------------------------------------------------------------
---------------------------------------------------------------------

                                          December 31    December 31
                                                 2005           2004
(in thousands of dollars)                   unaudited      unaudited
---------------------------------------------------------------------

Current Assets
 Cash and cash equivalents                    $ 4,840      $  49,409
 Accounts receivable                          130,008        108,380
 Inventories                                  188,570        150,586
 Future income taxes                            6,380          5,059
 Prepaid expenses                               3,839          3,671
 Current assets related to discontinued
  operations (note 10)                            667         18,652
---------------------------------------------------------------------
                                              334,304        335,757
---------------------------------------------------------------------

Non-Current Assets
 Rental equipment                              17,249      $  16,362
 Property, plant and equipment                 28,983         28,804
 Goodwill and other assets                     59,232         54,621
 Future income taxes                              920          1,160
 Long-term assets related to
  discontinued operations (note 10)                 -          3,138
---------------------------------------------------------------------
                                              106,384        104,085
---------------------------------------------------------------------
                                            $ 440,688    $   439,842
---------------------------------------------------------------------
---------------------------------------------------------------------

Current Liabilities

 Accounts payable and accrued liabilities   $ 179,615     $  151,441
 Distributions payable to unitholders          14,261              -
 Income taxes payable                           1,510          7,935
 Equipment notes payable (note 4)               5,719              -
 Current portion of long-term debt (note 5)         -          4,683
 Current liabilities related to
  discontinued operations (note 10)             2,469          4,289
---------------------------------------------------------------------
                                              203,574        168,348
---------------------------------------------------------------------

Non-Current Liabilities
 Future income taxes                            2,358          3,545
 Long-term pension liability                    2,695          2,080
 Long-term debt (note 5)                       35,000         70,884
---------------------------------------------------------------------
                                               40,053         76,509
---------------------------------------------------------------------

Unitholders' Equity
 Trust units (note 1) (note 6)                104,818        102,390
 Unit-based compensation                          764            373
 Accumulated earnings                          91,479         92,222
---------------------------------------------------------------------
                                              197,061        194,985
---------------------------------------------------------------------
                                         $    440,688      $  439,842
---------------------------------------------------------------------
---------------------------------------------------------------------


WAJAX INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS
AND ACCUMULATED EARNINGS

---------------------------------------------------------------------
---------------------------------------------------------------------
                         Three months ended               Year ended
                                December 31              December 31
                                  unaudited                unaudited
(in thousands
 of dollars,
 except per
 unit data)                2005        2004          2005       2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Revenue              $  276,830   $ 236,657  $  1,049,416  $ 871,351
Cost of sales           214,648     183,337       818,031    672,836
---------------------------------------------------------------------

Gross profit             62,182      53,320       231,385    198,515
Selling and
 administrative
 expenses                44,631      41,844       175,971    161,361
Income fund
 conversion-related
 costs (note 1)               -           -         2,606          -
---------------------------------------------------------------------

Earnings from
 continuing
 operations
 before interest
 and income taxes        17,551      11,476        52,808     37,154
Interest expense            821       1,690         4,603      7,482
Early extinguishment
 of long-term debt
 (note 1)                     -           -         7,592          -
---------------------------------------------------------------------

Earnings from
 continuing
 operations before
 income taxes            16,730       9,786        40,613     29,672
Income tax expense
 (recovery)  - current    1,251       3,206         7,541     11,307
             - future      (273)        777        (2,506)       774
---------------------------------------------------------------------

Net earnings from
 continuing operations $ 15,752     $ 5,803      $ 35,578   $ 17,591
(Loss)Earnings
 from discontinued
 operations (note 10)         -         235        (2,474)       747
---------------------------------------------------------------------
Net earnings             15,752       6,038        33,104     18,338

Accumulated earnings,
 beginning of period,
 as reported             96,510      87,273        92,222     77,331
Impact of new
 accounting standards
 (note 2)                     -        (459)            -       (932)
Adjustment to future
 income tax in
 consequence of the
 income fund conversion
 (note1,3)                    -           -          (216)         -
Distributions           (20,783)          -       (31,422)         -
Dividends on
 common shares                -        (630)       (2,209)    (2,515)
---------------------------------------------------------------------

Accumulated earnings,
 end of period         $ 91,479    $ 92,222      $ 91,479   $ 92,222
---------------------------------------------------------------------

Earnings per unit
 from continuing
 operations (note 7)
 - basic                 $ 0.95      $ 0.37        $ 2.19     $ 1.12
 - diluted                 0.94        0.36          2.19       1.09
Earnings per unit
 (note 7) - basic          0.95        0.38          2.04       1.17
          - diluted        0.94        0.37          2.03       1.14

---------------------------------------------------------------------
---------------------------------------------------------------------
Number of trust units
 outstanding          16,582,530 15,739,460    16,582,530 15,739,460

Number of common
 share stock options
 outstanding                   -    843,070             -    843,070
Number of Trustee
 Deferred Unit Plan
 and Management Unit
 Plan rights
 outstanding              89,979          -        89,979          -
---------------------------------------------------------------------
---------------------------------------------------------------------


WAJAX INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                      Three months ended December 31
                                             2005               2004
(in thousands of dollars)               unaudited          unaudited
---------------------------------------------------------------------

OPERATING ACTIVITIES
 Net earnings from continuing
  operations                             $ 15,752         $    5,803
 Items not affecting cash flows:
  Amortization
   - Rental equipment                         982              1,137
   - Property, plant and equipment          1,418              1,192
   - Deferred expenses and
    intangible assets                         206                250
  Pension expense, net of payments            156                 14
  Non-cash rental expense                      38                  -
  Unit compensation expense (note 8)           44                 79
  Future income taxes                        (273)               777
---------------------------------------------------------------------
Cash flows from continuing operations
 before changes in non-cash working
 capital                                   18,323              9,252
---------------------------------------------------------------------
Changes in non-cash working capital:
 Accounts receivable                        4,418                826
 Inventories                                  386             (5,176)
 Prepaid expenses                            (353)            (1,465)
 Accounts payable and accrued liabilities     857             18,634
 Income taxes payable                         696              2,011
---------------------------------------------------------------------
                                            6,004             14,830
---------------------------------------------------------------------
Cash flows from operating activities
 from continuing operations                24,327             24,082
---------------------------------------------------------------------
INVESTING ACTIVITIES
 Rental equipment additions                (1,893)            (1,778)
 Proceeds on disposal of rental equipment     392                227
 Property, plant and equipment additions   (1,408)            (1,418)
 Proceeds on disposal of property,
  plant and equipment                          64                 17
 Acquisition of business (note 14)         (6,216)              (845)
---------------------------------------------------------------------
                                           (9,061)            (3,797)
---------------------------------------------------------------------
Cash flows from continuing operations
 before financing activities               15,266             20,285
---------------------------------------------------------------------
FINANCING ACTIVITIES
 Issuance of common shares on exercise
  of stock options (note 6) (note 8)            -                 85
 Repayment of long term debt (note 5)     (29,000)            (1,325)
 Repayment of debt upon acquisition
  of business (note 14)                    (1,445)              (326)
 Increase in deferred financing costs
  (note 5)                                   (263)               (50)
 Increase in equipment notes
  payable (note 4)                          5,719                  -
 Distributions paid                        (9,562)                 -
 Dividends paid                                 -               (630)
---------------------------------------------------------------------
                                          (34,551)            (2,246)
---------------------------------------------------------------------
Net change in cash and cash equivalents
 (used in) from continuing operations   $ (19,285)            18,039
Cash and cash equivalents from
 discontinued operations (note 10)            747                822
Cash and cash equivalents
 - beginning of period                   $ 23,378           $ 30,548
---------------------------------------------------------------------
Cash and cash equivalents
 - end of period                          $ 4,840           $ 49,409
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash flows from by operating
 activities include the following:
---------------------------------------------------------------------
Interest paid                               $ 628            $ 2,446
Income taxes paid                           $ 597            $ 1,177
---------------------------------------------------------------------
Significant non-cash transactions:
Rental equipment transferred to inventory $   247              $ 102


WAJAX INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              Year ended December 31
                                             2005               2004
(in thousands of dollars)               unaudited          unaudited
---------------------------------------------------------------------

OPERATING ACTIVITIES
 Net earnings from continuing
  operations                           $   35,578           $ 17,591
 Items not affecting cash flows:
  Amortization
   - Rental equipment                       4,009              4,385
   - Property, plant and equipment          5,196              4,774
   - Deferred expenses and
    intangible assets                         767              1,130
  Write off of deferred charges               867                  -
  Pension expense - net of payments           643                552
  Non-cash rental expense                     297                  -
  Unit compensation expense (note 8)        1,183                310
  Future income taxes                      (2,506)               774
---------------------------------------------------------------------
Cash flows from continuing operations
 before changes in non-cash working
 capital                                   46,034             29,516
---------------------------------------------------------------------
Changes in non-cash working capital:
 Accounts receivable                      (18,652)            (7,976)
 Inventories                              (34,062)           (18,223)
 Prepaid expenses                             216             (1,795)
 Accounts payable and accrued
  liabilities                              26,346             13,994
 Income taxes payable                      (6,388)             6,592
---------------------------------------------------------------------
                                          (32,540)            (7,408)
---------------------------------------------------------------------
Cash flows from operating activities
 from continuing operations                13,494             22,108
---------------------------------------------------------------------
INVESTING ACTIVITIES
 Rental equipment additions                (8,217)            (6,663)
 Proceeds on disposal of rental equipment   2,003              1,293
 Property, plant and equipment additions   (4,852)            (3,580)
 Proceeds on disposal of property,
  plant and equipment                         103                 86
 Acquisition of business (note 14)         (6,216)            (1,095)
---------------------------------------------------------------------
                                          (17,179)            (9,959)
---------------------------------------------------------------------
Cash flows (used in) from
 continuing operations
 before financing activities               (3,685)            12,149
---------------------------------------------------------------------
FINANCING ACTIVITIES
 Issuance of common shares on exercise
  of stock options (note 6) (note 8)        5,314                178
 Repayment of debentures and U.S.
  senior notes (note 5)                   (78,477)            (4,267)
 Repayment of debt upon acquisition
  of business (note 14)                    (1,445)              (326)
 Income fund conversion costs charged
  to trust units (note 1) (note 3)         (3,678)                 -
 Increase in long-term bank debt (note 5)  35,000                  -
 Increase in deferred financing costs
  (note 5)                                 (2,081)               (50)
 Hedging activities (note 9)                 (910)            (2,025)
 Increase in equipment notes payable
  (note 4)                                  5,719                  -
 Distributions paid                       (17,161)                 -
 Dividends paid                            (2,209)            (2,515)
---------------------------------------------------------------------
                                          (59,928)            (9,005)
---------------------------------------------------------------------
Net change in cash and cash equivalents
 (used in) from continuing operations   $ (63,613)           $ 3,144
Cash and cash equivalents from
 discontinued operations (note 10)         19,044                870
Cash and cash equivalents
 - beginning of period                   $ 49,409           $ 45,395
---------------------------------------------------------------------
Cash and cash equivalents
 - end of period                          $ 4,840           $ 49,409
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash flows from operating activities
 include the following:
---------------------------------------------------------------------
Interest paid                             $ 5,183            $ 7,096
Income taxes paid                        $ 13,878           $  4,714
---------------------------------------------------------------------
Significant non-cash transactions:
Rental equipment transferred to
 inventory                                $ 1,308              $ 828
Note receivable transferred
 from inventory                             $ 377                $ -


                             WAJAX INCOME FUND
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (Tabulated in thousands of dollars)
                                (unaudited)

Note 1 Structure of the trust and basis of presentation

Wajax Income Fund (the "Fund") is an unincorporated, open-ended, limited purpose investment trust governed by the laws of Ontario pursuant to the declaration of trust dated April 27, 2005. The Fund was created to indirectly acquire all the outstanding shares of Wajax Limited ("Wajax") and exchange those on an equal basis for Wajax Trust Units ("Units") in the Fund pursuant to a Plan of Arrangement (the "Arrangement") effective June 15, 2005. The Fund is authorized  to issue an unlimited number of units and each Unitholder participates pro rata in any distribution from the Fund.

The Fund is considered to be a continuation of Wajax following the continuity of interest method of accounting, which recognizes the Fund as the successor entity to Wajax. Accordingly, these interim consolidated financial statements reflect the financial position, results of operations and cash flows as if the Fund had always carried on the business formerly carried on by Wajax with all assets and liabilities recorded at the carrying values of Wajax.

In the second quarter, income fund conversion costs including audit fees, legal fees, investment advisory fees and other costs of $3,678 thousand were charged to trust units. Conversion-related costs of $2,606 thousand including the acceleration of certain executive and director long-term incentives, including Wajax stock based compensation plans were charged to earnings. Costs for the early extinguishment of long-term debt of $7,592 thousand were charged to interest expense. The tax effect of the reorganization was to decrease future income taxes and retained earnings by $216 thousand.

The accounting policies used in the preparation of these unaudited interim consolidated financial statements conform with those used in the audited annual consolidated financial statements of Wajax.

These unaudited interim consolidated financial statements do not include all of the disclosures included in the audited annual consolidated financial statements. Accordingly, these unaudited interim financial statements should be read in conjunction with the annual consolidated financial statements of Wajax for the year ended December 31, 2005.

Additional information, including the Fund's Annual Report and Annual Information Form, may be found on SEDAR at www.sedar.com.

Note 2 Change in accounting policies

a. Vendor Rebates

Effective September 30, 2004, Wajax adopted CICA EIC-144 "Accounting by a Customer (Including a Reseller) For Certain Consideration Received From a Vendor". The abstract requires a customer to record cash consideration received from a vendor as a reduction in the price of the vendor's products and reflect it as a reduction to cost of goods sold and related inventory when recognized in the income statement and balance sheet. The abstract must be applied retroactively for annual and interim periods ending after August 15, 2004. Wajax has restated its 2004 comparative results and balances in its financial statements. The implementation of the new standard has resulted in a reduction to opening retained earnings of $482 thousand for the full year ending December 31, 2004. The impact on balance sheet accounts for the year ending December 2004, was a decrease in inventory of $777 thousand and an increase in future income taxes of $295 thousand. The net earnings for the 12 months ending December 31, 2004 were not impacted by the adoption of the abstract.

b. Asset Retirement Obligations 

Effective January 1,2004, Wajax adopted the CICA Handbook section 3110 "Asset Retirement Obligations". This section requires a company to capitalize the fair market value of the costs to decommission an asset, with an offsetting liability. The implementation of the new standard has resulted in a reduction to opening retained earnings of $450 thousand for the full year ending December 31, 2004. The asset retirement obligations pertain to operating leases of branch facilities where certain clauses require premises to be returned to their original state at the end of the lease term. The total estimated undiscounted cash flows required to settle these obligations amount to $1,025 thousand.

Note 3 Income Taxes

The Fund is not taxable on any income that is distributable to unitholders. Wajax Limited, a subsidiary of the Fund is taxable on its income at Canadian statutory rates.

The provision for income taxes in the consolidated statements of earnings represents an effective tax rate different than the Canadian statutory rate of 34.3%. The differences are as follows:

December 31,     December 31,
Three months ended                             2005             2004
---------------------------------------------------------------------
Statutory tax rates                            34.3%            34.5%

Earnings before income tax                 $ 16,730          $ 9,786

Computed income tax expense at
 Canadian statutory rate                   $  5,738         $ $3,376
Increase (decrease) resulting from:
 Income of the Fund taxed directly
  to unitholders                             (4,835)               -
 Non-deductible expenses                         74              122
 Other                                            1              485
---------------------------------------------------------------------
Income tax expense                          $   978         $  3,983
---------------------------------------------------------------------

As a result of the Arrangement, previously recorded future income taxes of $216 thousand were charged to retained earnings in the second quarter of 2005.

Note 4 Equipment Notes Payable

During the year, the Fund entered into a $15 million wholesale financing agreement. The notes payable bear floating rates of interest at margins over Canadian dollar bankers' acceptances yields, are secured by the applicable equipment and are due in full when the applicable equipment is sold.

Note 5 Long-Term Debt

                                        December 31,     December 31,
                                               2005             2004
---------------------------------------------------------------------
Bank credit facility, repayable
 June 7, 2008
  Non-revolving term portion               $ 30,000       $        -
  Revolving term portion                      5,000                -
U.S. $50.0 million senior notes,
 7.62%, maturing December 18, 2007                -           59,677
Debentures
  10.69%, Series I, maturing August 24, 2009      -           11,557
   8.66%, Series II, maturing June 13, 2006       -            4,333
---------------------------------------------------------------------
                                             35,000           75,567
Less current portion                              -            4,683
---------------------------------------------------------------------
Total Long-term debt                       $ 35,000         $ 70,884
---------------------------------------------------------------------

In order to facilitate the Arrangement, on June 8, 2005 the Company entered into a new $95 million bank credit facility and repaid the U.S. senior notes and Series I and Series II debentures. The early extinguishment of the debt resulted in a $6.7 million pre-payment penalty and a $0.9 million write-off of unamortized deferred financing costs. During the fourth quarter, the credit facility was increased by an additional $35 to $130 million. The total cost of entering into the new bank credit facility of $2.0 million has been capitalized and is amortized over the term of the facility.

The Fund's fully secured $130 million bank credit facility, which expires June 7, 2008, is made up of a $30 million non-revolving term portion and a $100 million revolving term portion. Borrowing capacity under the new bank credit facility is dependent upon the level of the Fund's inventories on hand and the outstanding trade accounts receivable. In addition, the bank credit facility contains customary restrictive covenants including restrictions on the payment of cash distributions and the maintenance of certain financial ratios all of which were met as at December 31, 2005. Borrowings under the facility bear floating rates of interest at margins over Canadian dollars bankers' acceptance yields, US dollar LIBOR rates or prime rates. The Fund entered into interest-rate swap hedge contracts with two of its lenders, such that in total the interest rate on the $30 million of its non-revolving term portion of the credit facility is fixed at effectively 3.47% plus applicable margins until expiry of the facility on June 7, 2008.

Note 6 Trust Units

Wajax converted from a share corporation to an income fund trust on June 15, 2005. Under the Arrangement, the former shareholders of Wajax indirectly received trust units of the Fund. The trust units of the Fund issued are included in unitholders' equity on the balance sheet and are summarized as follows.

2005                 2004
Issued and fully paid:         Number    Amount     Number    Amount
---------------------------------------------------------------------
Balance of common shares of
 the Company at beginning
 of year                   15,739,460  $102,390 15,696,960 $ 102,212
Stock options exercised       843,070     6,087     42,500       178

---------------------------------------------------------------------
Total common shares of
 the Company indirectly
 exchanged for Fund trust
 units                     16,582,530  $108,496 15,739,460 $ 102,390

Conversion-related costs
 charged to capital                 -    (3,678)         -         -

---------------------------------------------------------------------
Balance of trust units
 of the Fund at end of
 the year                  16,582,530 $ 104,818 15,739,460 $ 102,390


Note 7 Earnings per unit

The following table sets forth the computation of basic and diluted
earnings per unit (in thousands, except per unit information):

Three months ended December 31               2005               2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Numerator for basic and diluted
 earnings per unit:
 - net earnings from continuing
  operations                             $ 15,752            $ 5,803

 - net earnings                            15,752              6,038
---------------------------------------------------------------------
Denominator for basic earnings
 per unit :
 - weighted average units              16,582,530         15,731,619
---------------------------------------------------------------------
Denominator for diluted
 earnings per unit:
 - weighted average units              16,582,530         15,731,619
 - effect of dilutive unit rights          88,915            428,509
---------------------------------------------------------------------
Denominator for diluted
 earnings per unit                     16,671,445         16,160,128
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic earnings per unit from
 continuing operations                     $ 0.95             $ 0.37
---------------------------------------------------------------------
Diluted earnings per unit
 from continuing operations                $ 0.94             $ 0.36
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic earnings per unit                    $ 0.95             $ 0.38
---------------------------------------------------------------------
Diluted earnings per unit                  $ 0.94             $ 0.37
---------------------------------------------------------------------
---------------------------------------------------------------------


Year ended December 31                       2005               2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Numerator for basic and diluted
 earnings per unit:
 - net earnings from continuing
  operations                             $ 35,578           $ 17,591

 - net earnings                            33,104             18,338
---------------------------------------------------------------------
Denominator for basic earnings
 per unit :
 - weighted average units              16,227,812         15,713,115
---------------------------------------------------------------------
Denominator for diluted
 earnings per unit:
 - weighted average units              16,227,812         15,713,115
 - effect of dilutive unit rights          47,053            356,357
---------------------------------------------------------------------
Denominator for diluted earnings
 per unit                              16,274,865         16,069,472
---------------------------------------------------------------------
Basic earnings per unit from
 continuing operations                     $ 2.19             $ 1.12
---------------------------------------------------------------------
Diluted earnings per unit from
 continuing operations                     $ 2.19             $ 1.09
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic earnings per unit                    $ 2.04             $ 1.17
---------------------------------------------------------------------
Diluted earnings per unit                  $ 2.03             $ 1.14
---------------------------------------------------------------------
---------------------------------------------------------------------

No stock options were outstanding at the end of the year (2004 - 843,070). In 2004, 120,000 options with a price range of $10.22-$13.34 were excluded from the above calculations as they were anti-dilutive.

Note 8 Unit-based compensation plans

During the quarter no stock options were exercised. In 2004, 18,000 stock options were exercised with a weighted-average exercise price of $4.71. Wajax did not issue any employee stock options during the quarter.

Year to date, 843,070 (2004 - 42,500) stock options were exercised with a weighted-average exercise price of $6.30 (2004 - $4.19). Wajax did not issue any employee stock options during the year (2004 - 141,570 with an exercise price of $10.70 and a weighted average life of 9.13 years).

As part of the Arrangement to convert Wajax into an Income Fund, Wajax permitted exercise of any unvested options. Any outstanding options at the time of conversion were to be cancelled. There were no outstanding options at the time of conversion. The Fund recorded no compensation cost for the quarter (2004 - $79 thousand) and $419 thousand for the year to date (2004 - $310 thousand) in respect of employee stock options granted after December 31, 2002. Wajax had accounted for employee stock options using the intrinsic value method prior to 2003 and accordingly has not recorded compensation cost for grants prior to this year. There would have been a nominal reduction in both net earnings and earnings per share, except for the current quarter, if Wajax had accounted for employee stock options issued in 2002 under the fair value method.

The Fund has replaced the former stock option plan with two new stock-based compensation plans: the Unit Ownership Plan in which certain members of management participate and the Trustee Deferred Unit Plan. Both plans issue rights to the participants which are settled by issuing Wajax Income Fund units. Compensation expense is determined based upon the fair value of the rights when issued and recognized over the vesting period. The Fund recorded compensation cost of $44 thousand for the quarter and $764 thousand for the year to date in respect of these plans.

Note 9 Financial Instruments

The Fund has entered into interest-rate swap contracts with two of its lenders, such that in total the interest rate on $30 million of its non-revolving term facility is effectively fixed at the 3.47 % plus applicable margins until expiry of the facility on June 7, 2008. The differential the Fund would receive to hypothetically terminate or exchange the swap agreement in the prevailing market conditions is estimated at $0.4 million.

Note 10 Discontinued Operations

On September 30, 2005 the assets of Spencer Industries ("Spencer"), the US based operation of Industrial Components, were sold for cash proceeds of $19.2 million. The results of operations, cash flows, and financial position of Spencer have been reported as discontinued operations in the consolidated financial statements since the Fund will not have a continuing involvement in the ongoing operations of the Spencer.

Three months ended December 31, 2005              2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Sales                                             $  -    $   12,515
Earnings, net of future taxes of
 2005 - $Nil; 2004 - $125                            -           235
---------------------------------------------------------------------
Earnings from discontinued operations                -           235
---------------------------------------------------------------------

Year ended December 31, 2005                      2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Sales                                         $ 48,194    $   56,802
Earnings, net of future taxes of
 2005 - $595; 2004 - $400                        1,108           747
Loss on sale of discontinued operations,
 net of future taxes of $2,140                  (3,582)            -
---------------------------------------------------------------------
(Loss)Earnings from discontinued operations     (2,474)          747
---------------------------------------------------------------------
---------------------------------------------------------------------

The assets and liabilities of the discontinued operations are as
follows:

                                              December      December
                                                  2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Current assets                               $     667    $   18,652
Non-current assets                                   -         3,138
---------------------------------------------------------------------
Net assets                                         667        21,790
---------------------------------------------------------------------
Current Liabilities                              2,469         4,289
---------------------------------------------------------------------


Cash flows from discontinued operations consist of cash provided
from (used in):


                     For the three months ended   For the year ended
                            December   December  December   December
                                2005       2004      2005       2004
---------------------------------------------------------------------
---------------------------------------------------------------------

Operating activities          $    -  $     684  $ (2,304) $   1,178
Investing activities             758          5    19,126       (150)
Financing activities               -          -         -          -
Effect of foreign
 exchange on
 translation adjustment          (11)       133     2,222       (158)
---------------------------------------------------------------------
Cash and cash equivalents
 from discontinued
 operations                      747        822    19,044        870
---------------------------------------------------------------------


Note 11 Employees' pension plans

Net pension plan expenses are as follows:

For the three months ended December 31            2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Net pension plan expense
 - defined benefit plans                         $ 202          $ 60
Net pension plan expense
 - defined contribution plans                      866           412
---------------------------------------------------------------------
                                               $ 1,068         $ 472
---------------------------------------------------------------------
---------------------------------------------------------------------


For the year ended December 31                    2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Net pension plan expense
 - defined benefit plans                         $ 846         $ 732
Net pension plan expense
 - defined contribution plans                    3,670         3,290
---------------------------------------------------------------------
                                               $ 4,516       $ 4,022
---------------------------------------------------------------------
---------------------------------------------------------------------


Note 12 Segmented information

For the three months ended December 31            2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Revenue
---------------------------------------------------------------------
---------------------------------------------------------------------
Mobile Equipment                             $ 145,699     $ 124,606
Industrial Components                           72,885        65,343
Power Systems                                   58,844        47,206
Segment eliminations                              (598)         (498)
---------------------------------------------------------------------
Revenue from continuing operations             276,830       236,657
---------------------------------------------------------------------
---------------------------------------------------------------------

Segment Earnings
---------------------------------------------------------------------
---------------------------------------------------------------------
Mobile Equipment                               $ 9,215       $ 6,901
Industrial Components                            4,250         2,725
Power Systems                                    5,551         4,657
Corporate costs and eliminations                (1,465)       (2,807)
---------------------------------------------------------------------
Earnings from continuing operations             17,551        11,476
---------------------------------------------------------------------
---------------------------------------------------------------------
Interest expense, income taxes and corporate costs are not allocated
to business segments.


For the year ended December 31                    2005          2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Revenue
---------------------------------------------------------------------
---------------------------------------------------------------------
Mobile Equipment                             $ 556,875     $ 448,761
Industrial Components                          285,343       252,991
Power Systems                                  209,680       171,700
Segment eliminations                            (2,482)       (2,101)
---------------------------------------------------------------------
Revenue from continuing operations           1,049,416       871,351
---------------------------------------------------------------------
---------------------------------------------------------------------

Segment Earnings
---------------------------------------------------------------------
---------------------------------------------------------------------
Mobile Equipment                              $ 31,371      $ 22,572
Industrial Components                           13,250         7,573
Power Systems                                   18,730        15,223
Corporate costs and eliminations                (7,937)       (8,214)
Income fund conversion-related costs
 (note 1)                                       (2,606)            -
---------------------------------------------------------------------
Earnings from continuing operations             52,808        37,154
---------------------------------------------------------------------
---------------------------------------------------------------------
Interest expense, income taxes and corporate costs are not allocated
to business segments.

Note 13 Contingencies 

In August 2004, a statement of claim was served naming the Fund's subsidiary, Wajax Limited, and a subsidiary, since amalgamated into Wajax Limited, as defendants in proceedings under the Class Proceedings Act of British Columbia. The action arises out of the conversion on January 1, 2001 of the Employee Pension Plan from defined benefit to defined contribution, the taking of contribution holidays and the payment of pension administration expenses from the pension fund. Management has assessed the facts and arguments pleaded and believes the claims are unlikely to succeed. A statement of defence has been filed.

Note 14 Acquisition

On October 31, 2005, the Fund's Power Systems segment acquired all of the outstanding shares and assumed debt of Midwest Detroit Diesel - Allison Limited, the Detroit Diesel engine and Allison transmission distributor for Manitoba, Saskatchewan and Nunavut for a purchase price of $7.7 million which is subject to post closing adjustments. The results of operations from the acquisition have been included in the consolidated financial statements of the Fund as of the effective date.

The following is a summary of the purchase price allocation:

---------------------------------------------------------------------
---------------------------------------------------------------------
Working capital                                              $ 3,057
Property, plant and equipment                                    636
Goodwill                                                       3,968
---------------------------------------------------------------------
Purchase Price                                                 7,661
Assumed Debt                                                  (1,445)
---------------------------------------------------------------------
Total cash paid                                            $   6,216
---------------------------------------------------------------------
---------------------------------------------------------------------

Note 15 Subsequent Events

On March 7, 2006, the Fund's Mobile Equipment segment agreed to acquire the assets of Conley Equipment Limited ("Conley"), the JCB dealer for most of the Greater Toronto Area and eastern Ontario, including Ottawa, for approximately $6.6 million. Conley has sales in excess of $10 million annually and it is expected that the deal will close by the end of March, 2006.

Note 16 Comparative information

Certain comparative numbers have been reclassified to conform with the current year presentation.

Wajax Income Fund (TSX:WJX.UN)