Wajax Corporation
TSX : WJX

Wajax Corporation

May 10, 2011 09:30 ET

Wajax Announces Increase in 2011 First Quarter Earnings and Raises Dividend

TORONTO, ONTARIO--(Marketwire - May 10, 2011) - Wajax Corporation (TSX:WJX) today announced a substantial increase in 2011 first quarter earnings and raised its monthly dividend.


                                                 ---------------------------
(Dollars in millions, except per share data)       Three Months Ended March
                                                                         31
                                                 ---------------------------
                                                       2011            2010
                                                 ---------------------------
CONSOLIDATED RESULTS
Revenue                                          $    303.9      $    227.4
Earnings before tax                              $     18.0      $      8.5
Net earnings                                     $     12.8      $      8.9
Basic earnings per share                         $     0.77      $     0.53

SEGMENTS
Revenue  - Equipment                             $    151.4      $    108.4
         - Industrial Components                 $     80.7      $     72.6
         - Power Systems                         $     72.9      $     47.4
Earnings - Equipment                             $     11.2      $      7.9
             % margin                                   7.4%            7.3%
         - Industrial Components                 $      4.4      $      3.1
             % margin                                   5.5%            4.3%
         - Power Systems                         $      7.0      $      0.9
             % margin                                   9.6%            2.0%
                                                 ---------------------------

First Quarter Highlights


--  Consolidated first quarter revenue of $303.9 million increased $76.5
    million, or 34% compared to last year. Equipment and Power Systems
    revenue increased 40% and 54% respectively on significantly higher
    equipment and parts and service sales, with the majority of the
    increases attributable to western Canada. Industrial Components revenue
    increased 11% on stronger demand for all major product categories.

--  Net earnings for the quarter were $12.8 million, or $0.77 per share,
    compared to $8.9 million, or $0.53 per share recorded in 2010. This
    represents an increase of almost 45% even though the Corporation is now
    subject to income tax since its conversion from an income fund as of
    January 1, 2011. Earnings before tax of $18.0 million more than doubled
    last year's level as a result of the significantly higher volumes in all
    three segments.

Wajax recently announced the acquisition of the assets of Harper Power Products Inc. ("Harper") effective May 2, 2011. Harper, with 2010 annual sales of approximately $71.0 million, has 10 branches throughout Ontario and will be integrated into Wajax's Power Systems segment. This acquisition secures the Ontario distribution rights to Detroit Diesel, Mercedes-Benz, MTU and Deutz engines, MTU Onsite Energy generator sets and Allison transmissions. With the exception of Deutz engines, Wajax Power Systems is presently the authorized distributor of these lines in the rest of Canada except for portions of British Columbia. The Harper business will be rebranded as Wajax Power Systems.

In order to continue to strengthen the Wajax identity, the Corporation will rebrand all three of its businesses. Going forward, the Mobile Equipment division will be known as Wajax Equipment, Kinecor will be rebranded Wajax Industrial Components and Waterous, DDACE and Harper will be known as Wajax Power Systems. This change will allow customers, suppliers and employees to more easily identify with the strength of the Wajax name.

The Corporation also announced a $0.03 per share increase in its monthly dividend. Dividends of $0.18 per share ($2.16 annualized) were declared for the months of May, June and July.

Commenting on the first quarter results and the outlook for 2011, Neil Manning, President and CEO, stated:

"With earnings before tax more than doubling, we are very pleased with our 2011 first quarter results. As we had expected, improved results were driven by the robust energy and mining markets in western Canada. However, we were also encouraged by evidence of stronger activity in central and eastern Canada, particularly in forestry, construction and certain other industrial sectors.

We are looking forward to realizing on the potential for additional growth in the Ontario market as a result of the Harper acquisition. With this business well established in the on-highway sector of the market, we intend to further expand its presence in the off-highway and power generation sectors. The acquisition represents a major step towards our strategic objective of becoming a national total power systems solution provider. We expect it will be immediately accretive to our 2011 results.

As well, we believe we have been able to minimize the potential supply disruptions to our Hitachi product line caused by the earthquake and resulting tsunami in Japan. With the inventory levels we decided to carry prior to, and immediately after this disaster, we expect we will have adequate stock of Hitachi parts and construction excavators to meet market demand. However, we are expecting some delays in obtaining mining equipment, which will have some impact on our 2011 revenue for the remainder of the year.

For the balance of 2011, we expect a continuation of the economic activity experienced in the first quarter. Notwithstanding the negative effect of the Hitachi mining equipment supply disruption, we expect pre-tax earnings to continue to be ahead of last year for the balance of 2011."

Wajax Corporation 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 118 branches across Canada. Its customer base spans natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Wajax will Webcast its First Quarter Financial Results Conference Call. You are invited to listen to the live Webcast on Tuesday, May 10, 2011 at 1:30 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.

Forward-Looking Statements

This news release contains forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions.

Although we believe that the expectations represented in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct. Undue reliance should not be placed on forward-looking statements, as a number of factors could cause the actual results to differ materially from the expectations expressed in the forward-looking statements. Information on risk factors is included in the Management's Discussion and Analysis for the year ended December 31, 2010 under the heading "Risk and Uncertainties", and in other reports filed by Wajax Income Fund and the Corporation with Canadian securities regulators and available at www.sedar.com.

Management's Discussion and Analysis - Q1 2011

The following management's discussion and analysis ("MD&A") discusses the consolidated financial condition and results of operations of Wajax Corporation ("Wajax" or "Corporation") for the quarter ended March 31, 2011. On January 1, 2011, Wajax adopted International Financial Reporting Standards ("IFRS"). The term "Canadian GAAP" refers to Canadian GAAP before the adoption of IFRS. This MD&A should be read in conjunction with the information contained in the unaudited Condensed Consolidated Financial Statements and accompanying notes for the quarter ended March 31, 2011, which have been prepared using IFRS, the annual Audited Consolidated Financial Statements and accompanying notes of Wajax Income Fund for the year ended December 31, 2010 which were prepared using Canadian GAAP, and the associated MD&A. Information contained in this MD&A is based on information available to management as of May 10, 2011.

Unless otherwise indicated, all financial information within this MD&A is in millions of Canadian dollars, except share and per share data.

Additional information, including Wajax's Annual Report and Annual Information Form, are available at www.sedar.com.

Responsibility of Management and the Board of Directors

Management is responsible for the information disclosed in this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes, and has in place appropriate information systems, procedures and controls to ensure that information used internally by management and disclosed externally is materially complete and reliable. Wajax's Board of Directors has approved this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes. In addition, Wajax's Audit Committee, on behalf of the Board of Directors, provides an oversight role with respect to all public financial disclosures made by Wajax, and has reviewed this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes.

Disclosure Controls and Procedures and Internal Control over Financial Reporting

Wajax has designed disclosure controls and procedures ("DC&P") to provide reasonable assurance that material information relating to Wajax is made known to the Chief Executive Officer and the Chief Financial Officer, particularly during the period in which the interim filings are being prepared. Wajax has designed internal controls over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

There were no changes in internal control over financial reporting that occurred during the Corporation's most recent interim period that have materially affected, or are reasonably likely to materially affect, the Corporation's ICFR.

Wajax Corporation Overview

Effective January 1, 2011 Wajax Income Fund converted into a corporation, pursuant to a plan of arrangement under the Canada Business Corporations Act ("CBCA") and the shares of Wajax Corporation began trading on the Toronto Exchange on January 4, 2011 under the symbol WJX.

Wajax's core distribution businesses are engaged in the sale and after-sale parts and service support of mobile equipment, industrial components and power systems, through a network of 118 branches across Canada. Wajax is a multi-line distributor and represents a number of leading worldwide manufacturers in its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Wajax's strategy is to continue to grow earnings in all segments through continuous improvement of operating margins and revenue growth while maintaining a strong balance sheet. Revenue growth will be achieved through market share gains, the addition of new or complementary product lines and expansion into new geographic territories either organically or through acquisitions.

Forward-Looking Information

This MD&A contains forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions. The words "anticipate", "expect", "believe", "may", "should", "estimate", "project", "outlook", "forecast" or similar words are used to identify such forward-looking information. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management of Wajax. Although we believe that the expectations represented in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct. By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and the risk that the expectations represented in such forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. These factors include, among other things: changes in laws and regulations affecting Wajax and its business operations, changes in taxation of Wajax, general business conditions and economic conditions in the markets in which Wajax and its customers compete, fluctuations in commodity prices, Wajax's relationship with its suppliers and manufacturers and its access to quality products, the ability of Wajax to maintain and expand its customer base, actual future market conditions being different than anticipated by management and the Board of Directors of Wajax, and actual future operating and financial results of Wajax being different than anticipated by management and the Board of Directors of Wajax. You are cautioned that the foregoing list is not exhaustive. You are further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes. Additional information on these and other factors is included in this MD&A under the heading "Risk and Uncertainties" and in other reports filed by Wajax with Canadian securities regulators and available at www.sedar.com. The forward- looking statements contained in this MD&A are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date of this MD&A and Wajax does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

International Financial Reporting Standards

In February 2008, The Accounting Standards Board of the Canadian Institute of Chartered Accountants confirmed that the use of IFRS is required in Canada for publicly accountable profit oriented enterprises for fiscal years beginning on or after January 1, 2011. The Corporation's first annual IFRS financial statements will be for the year ending December 31, 2011 and will include the comparative period of 2010. Accordingly, the Corporation has adopted IFRS effective January 1, 2010 (the IFRS transition date) and has prepared its unaudited Condensed Consolidated Financial Statements in accordance with International Accounting Standard 34 Interim Financial Reporting. Prior to the adoption of IFRS, the financial statements of the Corporation were prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP").

The most significant impacts on the Corporation's unaudited Condensed Consolidated Financial Statements resulting from the adoption of IFRS are discussed within the applicable sections of this MD&A and Note 16 of the unaudited Condensed Consolidated Financial Statements.

All comparative figures have been restated in accordance with IFRS, unless otherwise indicated.


Consolidated Results

                                                Three months ended March 31
                                                     2011              2010
----------------------------------------------------------------------------
Revenue                                       $     303.9  $          227.4
----------------------------------------------------------------------------
Gross profit                                  $      65.9  $           51.6
Selling and administrative expenses           $      46.8  $           42.0
----------------------------------------------------------------------------
Earnings before finance costs and income                                   
 taxes                                        $      19.0  $            9.6
Finance costs                                 $       1.0  $            1.1
Income tax expense (recovery)                 $       5.2             ($0.4)
----------------------------------------------------------------------------
Net earnings                                  $      12.8  $            8.9
----------------------------------------------------------------------------

Earnings per share
  - Basic                                     $      0.77  $           0.53
  - Diluted                                   $      0.76  $           0.53
----------------------------------------------------------------------------

Revenue

Revenue in the first quarter of 2011 increased 34% or $76.5 million to $303.9 million, from $227.4 million in 2010. Segment revenue increased 40% in Equipment (formerly Mobile Equipment), 11% in Industrial Components and 54% in Power Systems compared to last year.

Gross profit

Gross profit in the first quarter of 2011 increased $14.3 million due to the positive impact of higher volumes compared to last year. The gross profit margin percentage for the quarter of 21.7% decreased from 22.7% in 2010 due primarily to a sales mix variance resulting from a higher proportion of equipment sales in both the Equipment and Power Systems segments compared to last year.

Selling and administrative expenses

Selling and administrative expenses increased $4.8 million in the quarter compared to last year due mainly to higher personnel costs resulting from an increase in headcount, primarily sales related, and a $2.1 million increase in annual and mid-term incentive accruals. Selling and administrative expenses as a percentage of revenue decreased to 15.4% in 2011 from 18.5% in 2010.

Finance costs

Quarterly finance costs of $1.0 million decreased $0.1 million compared to last year due to lower interest rates.

Income tax expense

Effective January 1, 2011, Wajax converted from an income fund to a corporation. As a result, Wajax and its subsidiaries are subject to tax on all of their taxable income from that date forward. The effective income tax rate of 29.0% in the first quarter of 2011 was greater than the Corporation's statutory income tax rate of 27.7% due to certain expenses not fully deductible for tax purposes.

Prior to conversion to a corporation, Wajax was not taxable on its income to the extent it was distributed to its unitholders. The first quarter of 2010 includes a $0.6 million deferred tax recovery amount reflecting an adjustment of Wajax's taxable temporary differences that are estimated to reverse after 2010, tax effected at rates that will apply in the year the differences are expected to reverse.

Net earnings

Quarterly net earnings of $12.8 million, or $0.77 per share, increased $3.9 million from $8.9 million, or $0.53 per share, in 2010. The positive impact of higher volumes and lower finance costs more than offset the negative impact of higher selling and administrative and income tax expenses compared to last year.

Comprehensive income

Comprehensive income for the quarter of $13.2 million increased $4.9 million from $8.3 million the previous year due to the $3.9 million increase in net earnings and a $0.9 million increase in other comprehensive income compared to last year. The increase in other comprehensive income resulted from an increase in losses on derivative instruments designated as cash flow hedges in prior periods transferred to cost of inventory or finance costs in the current period and a decrease in losses on derivative instruments designated as cash flow hedges outstanding at the end of the quarter.

Funded net debt

Funded debt net of cash including obligations under finance leases ("funded net debt") of $85.5 million as at March 31, 2011 increased $39.9 million compared to December 31, 2010. The increase resulted mainly from cash used for additional non-cash working capital of $34.2 million, distributions and dividends paid of $17.5 million and $7.5 million disbursed for rental fleet additions, interest payments and other capital additions. The increases were offset by first quarter cash flows from operating activities before changes in non-cash working capital of $19.7 million.

Wajax's $175 million bank credit facility expires December 31, 2011. Management expects to be able to enter into a new credit facility by the end of 2011.

Dividends

For the quarter ended March 31, 2011 monthly dividends declared totaled $0.45 per share and included $0.15 per share for the months of January, February and March. For the quarter ended March 31, 2010 monthly cash distributions declared were $0.45 per unit.

On February 25, 2011 Wajax announced a monthly dividend of $0.15 per share ($1.80 annualized) for the month of April payable on May 20, 2011 to shareholders of record on April 29, 2011.

On May 10, 2011 Wajax announced monthly dividends of $0.18 per share ($2.16 annualized) for each of the months of May, June and July payable on June 20, 2011, July 20, 2011 and August 22, 2011 to shareholders of record on May 31, 2011, June 30, 2011 and July 29, 2011 respectively.

Tax information relating to 2011 dividends and prior year distributions is available on Wajax's website at www.wajax.com.

Backlog

Consolidated backlog at March 31, 2011 of $215.7 million decreased $1.6 million, or 1%, from $217.3 million at December 31, 2010.


Quarterly Results of Operations

Equipment
                                                Three months ended March 31
                                                        2011           2010
----------------------------------------------------------------------------
Equipment(1)                                   $        87.5    $      57.3
Parts and service                              $        63.9    $      51.1
----------------------------------------------------------------------------
Segment revenue                                $       151.4    $     108.4
----------------------------------------------------------------------------
Segment earnings                               $        11.2    $       7.9
Segment earnings margin                                  7.4%           7.3%
----------------------------------------------------------------------------
         (1) Includes rental revenue.

Revenue in the first quarter of 2011 increased $43.0 million, or 40%, to $151.4 million from $108.4 million in the first quarter of 2010. Segment earnings for the quarter increased $3.3 million to $11.2 million compared to the first quarter of 2010. The following factors contributed to the Equipment segment's first quarter results:


--  Equipment revenue increased $30.2 million compared to last year.
    Specific quarter-over-quarter variances included the following:
    --  Construction equipment revenue increased $16.0 million due to
        increases in new Hitachi excavator sales primarily in western Canada
        and JCB equipment sales in eastern Canada.
    --  Forestry equipment sales increased $9.1 million attributable to
        higher market demand in all regions for Tigercat and forestry
        related Hitachi products.
    --  Mining equipment sales increased $4.0 million resulting from an
        increase in Hitachi mining equipment revenues in western Canada.
    --  Material handling equipment revenue increased $3.9 million on higher
        volumes in all regions.
    --  Crane and utility equipment revenue decreased $2.8 million due
        mainly to lower sales to hydro utility customers in Ontario.

--  Parts and service volumes increased $12.8 million compared to last year
    due principally to higher mining and construction sector sales in
    western Canada.

--  Segment earnings increased $3.3 million to $11.2 million compared to
    last year as the positive impact of higher volumes outweighed the
    negative impact of lower equipment gross margins and a $1.8 million
    increase in selling and administrative expenses. Selling and
    administrative expenses increased compared to last year as a result of
    higher personnel costs, including annual and mid-term incentive
    accruals, and other sales related expenses.

Backlog of $97.3 million at March 31, 2011 increased $3.3 million compared to December 31, 2010.

The segment continues to monitor developments in Japan related to the effects of the March 11, 2011 earthquake and tsunami on the Hitachi Japan supply chain. The Equipment segment is the distributor of Hitachi construction and forestry excavators and mining equipment in Canada. Hitachi equipment and parts distributed by Wajax are manufactured and sourced from various locations in Japan and the United States.

Hitachi announced that it incurred damage to several of its buildings, including the production facilities for large excavators, mining trucks and key component parts. In addition, shipping docks were damaged in the immediate area of these production facilities. While plants have returned to production, damage to the surrounding shipping infrastructure has required alternative arrangements to be made. While the full extent of the impact of the Japanese supply chain disruptions on Wajax's operations is not entirely known, the following is the expected impact on the Equipment segment in 2011:


--  Given the Equipment segment's current level of parts inventory,
    potential supply disruptions related to parts sourced from Japan are not
    anticipated to have a significant effect on 2011 parts revenue.

--  Taking into account the segment's current level of inventory and its
    reserved factory order positions of mid-sized excavators sourced from
    the United States, the segment is expecting that any product delays as a
    result of component shortages from Japan will not have a meaningful
    impact on its 2011 revenue derived from these products.

--  With respect to mining equipment, the segment's current working
    assumption is that there will be a delay in mining equipment deliveries
    from Japan of up to six months. The effect on the segment's 2011 revenue
    is estimated to be a reduction of approximately $40 million.


Industrial Components

                                                Three months ended March 31
                                                     2011              2010
----------------------------------------------------------------------------
Segment revenue                              $       80.7   $          72.6
----------------------------------------------------------------------------
Segment earnings                             $        4.4   $           3.1
Segment earnings margin                               5.5%              4.3%
----------------------------------------------------------------------------

Revenue of $80.7 million increased $8.1 million, or 11%, from $72.6 million in the first quarter of 2010. Segment earnings increased $1.3 million to $4.4 million in the quarter compared to the previous year. The following factors contributed to the segment's first quarter results:


--  Bearings and power transmission parts sales increased $2.5 million
    compared to last year due mainly to higher mining sector volumes across
    all regions and increased sales to industrial customers in eastern
    Canada and Ontario.

--  Fluid power and process equipment products and service revenue increased
    $5.6 million on improved oil and gas drilling activity in western Canada
    and higher mining and construction sector volumes in all regions. These
    increases were somewhat offset by lower revenues to metal processing
    customers in eastern Canada.

--  Segment earnings increased $1.3 million compared to last year. The
    positive impact of higher volumes outweighed the negative impact of
    slightly lower gross margins and a $0.3 million increase in selling and
    administrative expenses.

Backlog of $45.5 million as of March 31, 2011 increased $10.1 million compared to December 31, 2010.


Power Systems

                                                Three months ended March 31
                                                      2011             2010
----------------------------------------------------------------------------
Equipment                                   $         35.4   $         13.6
Parts and service                           $         37.5   $         33.8
----------------------------------------------------------------------------
Segment revenue                             $         72.9   $         47.4
----------------------------------------------------------------------------
Segment earnings                            $          7.0   $          0.9
Segment earnings margin                                9.6%             2.0%
----------------------------------------------------------------------------

Revenue in the first quarter increased $25.5 million, or 54%, to $72.9 million compared to $47.4 million in 2010. Segment earnings increased $6.1 million to $7.0 million in the quarter compared to the previous year. The following factors impacted quarterly revenue and earnings:


--  Revenue at Waterous Power Systems ("Waterous") in western Canada
    increased $21.0 million compared to last year. Equipment sales improved
    $16.8 million due primarily to higher product sales to oil and gas
    customers and increased power generation equipment sales. Parts and
    service revenue increased $4.2 million mainly as a result of higher
    sales to off-highway customers, including those in the mining and oil
    and gas sectors.

--  Revenue at the eastern Canada operation, DDACE Power Systems ("DDACE")
    increased by $4.5 million compared to 2010. Equipment sales increased
    $5.0 million on higher generator set sales and an increase in marine and
    military sector activity. Parts and service revenue decreased $0.5
    million.

--  Segment earnings increased $6.1 million compared to last year as the
    positive impact of higher volumes and higher gross margins at Waterous,
    more than offset a $1.3 million increase in selling and administrative
    expenses. Gross margins increased due to higher parts and service
    margins and higher margins resulting from the commissioning of power
    generation packages delivered in 2010. Selling and administrative
    expenses increased due to higher personnel costs, including commissions.

Backlog of $72.9 million as of March 31, 2011 decreased $15.0 million compared to December 31, 2010 due to equipment deliveries in the first quarter.

Effective May 2, 2011, Wajax purchased the assets of Harper Power Products Inc. ("Harper") the authorized Ontario distributor for Detroit Diesel, Mercedes-Benz, MTU and Deutz engines, MTU Onsite Energy generator sets and Allison transmissions with adjusted 2010 annual revenue of approximately $71 million. The cash purchase price paid for the assets was $21.6 million, subject to post closing adjustments.

Wajax Power Systems has assumed the operation of Harper's 10 branches in Ontario located in Toronto, Ottawa, Hamilton, London, Sudbury, Timmins, Kingston, Cornwall, Niagara Falls and Pembroke. With the exception of Deutz engines, Wajax Power Systems is presently the authorized distributor of these lines in the rest of Canada except for portions of British Columbia. This business will be rebranded as Wajax Power Systems.

With Harper's business well established in the on-highway sector of the market, Wajax intends to further expand its presence in the off-highway and power generation sectors in Ontario. This acquisition also represents a major step towards the strategic objective of becoming a national total power systems solution provider.


Selected Quarterly Information

             2011(1)                2010(1)                  2009(2)
                  Q1     Q4     Q3       Q2      Q1      Q4       Q3      Q2
----------------------------------------------------------------------------
Revenue      $ 303.9 $316.4 $294.4 $  272.0 $ 227.4 $ 259.1 $  234.6 $ 248.7
----------------------------------------------------------------------------
Net earnings $  12.8 $ 15.0 $ 19.6 $   12.2 $   8.9 $   8.3 $    6.8 $   9.8
Net earnings
 per share
  - Basic    $  0.77 $ 0.90 $ 1.18 $   0.73 $  0.53 $  0.50 $   0.41 $  0.59
  - Diluted  $  0.76 $ 0.89 $ 1.16 $   0.72 $  0.53 $  0.50 $   0.40 $  0.59
----------------------------------------------------------------------------
1. 2011 and 2010 financials are prepared in accordance with IFRS.

2. 2009 financials are prepared in accordance with Canadian GAAP. In
   addition, certain 2009 comparative amounts have been reclassified to
   conform with the current period presentation. In particular, amounts
   recovered from customers or manufacturers have been reclassified out of
   selling and administrative expenses into revenue. In addition, service
   department overhead amounts have been reclassified out of selling and
   administrative expenses into cost of sales. The above reclassifications
   do not affect net earnings or cashflows.

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

Cash Flow, Liquidity and Capital Resources

Net Cash Flows used in Operating Activities

While the IFRS adjustments do not impact the Corporation's total cash flows, cash flows from operating activities and cash flows used in investing activities have each been adjusted, by equal and offsetting amounts to reflect the reclassification of rental equipment additions as operating activities.

Net cash flows used in operating activities amounted to $20.7 million in the first quarter of 2011, compared to $3.6 million the previous year. The $17.1 million increase was due mainly to a $20.0 million increase in non-cash working capital and higher lift truck rental fleet additions in the Equipment segment of $4.4 million, offset by higher cash flows from operations before changes in non-cash working capital of $6.7 million.


Changes in non-cash working capital include the following components:


Increase (decrease) in non-cash working         Three months ended March 31
 capital                                                2011           2010
----------------------------------------------------------------------------
Trade and other receivables                   $         16.7    $       8.3
Inventories                                   $         10.5    $       5.7
Prepaid expenses                              $         (1.3)   $       0.9
Trade and other payables                      $          5.3    $      (5.1)
Accrued Liabilities                           $          3.3    $       4.2
Provisions                                    $         (0.2)   $       0.1
----------------------------------------------------------------------------
Total                                         $         34.2    $      14.2
----------------------------------------------------------------------------

Significant components of the changes in non-cash working capital for the quarter ended March 31, 2011 are as follows:


--  Trade and other receivables increased $16.7 million due to higher parts
    and service activity in all segments.
--  Inventories increased $10.5 million largely as a result of a continued
    growth in sales activity.
--  Trade and other payables decreased $5.3 million reflecting reductions in
    the Equipment and Power Systems segments.
--  Accrued liabilities decreased $3.3 million due mostly to the payment of
    prior year accrued bonus and mid-term incentive accruals.

At March 31, 2011 Wajax had employed $160.5 million in working capital, exclusive of cash and obligations under finance leases, compared to $120.7 million at December 31, 2010. The $39.8 million increase was due primarily to the cash flow factors listed above and a $10.0 million decrease in dividends payable related to the payment in January 2011 of distributions declared in December 2010 prior to converting from an income fund to a corporation. This was offset by a $5.5 million increase in current income tax liabilities.

Investing Activities

Wajax invested a net amount of $1.0 million on capital asset additions net of disposals in the first quarter of 2011 compared to $0.6 million the previous year.

Financing Activities

Wajax used $18.4 million of cash in financing activities in the first quarter of 2011 compared to $8.4 million in the first quarter of 2010. Distributions and dividends paid to shareholders totaled $17.5 million, or $1.05 per share for the quarter ended March 31, 2011.

Funded net debt of $85.5 million at March 31, 2011 increased $39.9 million compared to December 31, 2010. The increase resulted mainly from cash used for additional non-cash working capital of $34.2 million, distributions and dividends paid of $17.5 million and $7.5 million disbursed for rental fleet additions, interest payments and other capital additions. The increases were offset by first quarter cash flows from operating activities before changes in non-cash working capital of $19.7 million.

Wajax's quarter-end debt-to-equity ratio of 0.42:1 at March 31, 2011 increased from last quarter's ratio of 0.23:1.

Liquidity and Capital Resources

At March 31, 2011 Wajax had borrowed $80.0 million and issued $5.5 million of letters of credit for a total utilization of $85.5 million of its $175 million bank credit facility and had no utilization of its $15 million equipment financing facility. Borrowing capacity under the bank credit facility is dependent on the level of inventories on-hand and outstanding trade accounts receivables. At March 31, 2011 borrowing capacity under the bank credit facility was equal to $175 million.

Wajax's $175 million bank credit facility along with an additional $15 million of capacity permitted under the credit facility, should be sufficient to meet Wajax's short-term normal course working capital, maintenance capital and growth capital requirements. In the long-term Wajax may be required to access the equity or debt markets in order to fund significant acquisitions and growth related working capital and capital expenditures.

The $175 million bank credit facility expires December 31, 2011. Management expects to be able to enter into a new credit facility by the end of 2011.

Financial Instruments

Wajax uses derivative financial instruments in the management of its foreign currency and interest rate exposures. Wajax's policy is not to utilize derivative financial instruments for trading or speculative purposes. Significant derivative financial instrument transactions and those outstanding at the end of the quarter were as follows:


--  Wajax has entered into the following interest rate swaps that have
    effectively fixed the interest rate on $80 million of Wajax's debt at
    the combined rate of 2.925%, plus applicable margins, until December 31,
    2011:
    --  On June 7, 2008 the delayed interest rate swap Wajax entered into on
        May 9, 2007 with two of its lenders became effective. As a result,
        the interest rate on the $30 million non-revolving term portion of
        the bank credit facility was effectively fixed at 4.60% plus
        applicable margins until expiry of the facility on December 31,
        2011.
    --  On January 23, 2009 a delayed interest rate swap Wajax entered into
        on December 18, 2008 with two of its lenders became effective. As a
        result, the interest rate on the $50 million revolving term portion
        of the bank credit facility was effectively fixed at 1.92% plus
        applicable margins until expiry of the facility on December 31,
        2011.
    --  Margins on the debt associated with the interest rate swaps depend
        on Wajax's Leverage Ratio and range between 0.75% and 2.5%.

--  Wajax enters into short-term currency forward contracts to fix the
    exchange rate on the cost of certain inbound inventory and to hedge
    certain foreign currency-denominated sales to (receivables from)
    customers as part of its normal course of business. As at March 31,
    2011, Wajax had contracts outstanding to buy U.S.$26.2 million and to
    sell U.S.$4.7 million (December 31, 2010 - to buy U.S.$34.1 million and
    to sell U.S.$0.3 million, March 31, 2010 - to buy U.S.$33.2 million and
    EUR0.3 million and to sell U.S.$0.03 million). The U.S. dollar contracts
    expire between April 2011 and December 2012, with a weighted average
    U.S./Canadian dollar rate of 1.0122.

Wajax measures financial instruments held for trading and not accounted for as hedging items, at fair value with subsequent changes in fair value being charged to earnings. Derivatives designated as effective hedges are measured at fair value with subsequent changes in fair value being charged to other comprehensive income. The fair value of derivative instruments is estimated based upon market conditions using appropriate valuation models. The carrying values reported in the balance sheet for financial instruments are not significantly different from their fair values.

The transition to IFRS did not have a material effect on the Corporation's accounting for financial instruments.

Currency Risk

There have been no material changes to currency risk since December 31, 2010.

Contractual Obligations

There have been no material changes to contractual obligations since December 31, 2010.

Off Balance Sheet Financing

The Equipment segment had $38.0 million (2010 - $25.1 million) of consigned inventory on-hand from a major manufacturer as at March 31, 2011. In the normal course of business, Wajax receives inventory on consignment from this manufacturer which is generally sold to customers or purchased by Wajax. This consigned inventory is not included in Wajax's inventory as the manufacturer retains title to the goods.

Wajax's off balance sheet financing arrangements, with non-bank lenders, include operating lease contracts in relation to Wajax's long-term lift truck rental fleet in the Equipment segment. At March 31, 2011, the non-discounted operating lease commitment for the rental fleet was $5.0 million (December 31, 2010 - $6.0 million).

In the event the inventory consignment program was terminated, Wajax would utilize interest free financing, if any, made available by the manufacturer and/or utilize capacity under its bank credit facility. Although management currently believes Wajax has adequate debt capacity, Wajax would have to access the equity or debt markets, or temporarily reduce dividends to accommodate any shortfalls in Wajax's credit facility. See the Liquidity and Capital Resources section.

Under IFRS, vehicle leases that were previously classified as operating leases under Canadian GAAP are assessed as financing leases. Assets under finance lease are capitalized at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. The liability is recorded in the statement of financial position and classified between current and non- current amounts. Lease payments are apportioned between finance charges and a reduction of the lease liability so as to achieve a constant rate of return of interest on the remaining balance of the liability.


Dividends

Dividends to shareholders were declared as follows:

Record Date                           Payment Date     Per Share      Amount
----------------------------------------------------------------------------
January 31, 2011                 February 22, 2011  $       0.15  $      2.5
February 28, 2011                   March 21, 2011          0.15         2.5
March 31, 2011                      April 20, 2011          0.15         2.5
----------------------------------------------------------------------------
Three months ended March 31,
 2011                                               $       0.45  $      7.5
----------------------------------------------------------------------------

On February 25, 2011 Wajax announced a monthly dividend of $0.15 per share ($1.80 annualized) for the month of April payable on May 20, 2011 to shareholders of record on April 29, 2011.

On May 10, 2011 the Wajax announced monthly dividends of $0.18 per share ($2.16 annualized) for each of the months of May, June and July payable on June 20, 2011, July 20, 2011 and August 22, 2010 to shareholders of record on May 31, 2011, June 30, 2011 and July 29, 2011 respectively.

Tax information relating to 2011 dividends and prior year distributions is available on Wajax's website at www.wajax.com.

Productive Capacity and Productive Capacity Management

There have been no material changes to the Corporation's productive capacity and productive capacity management since December 31, 2010.

Financing Strategies

Wajax's $175 million bank credit facility along with the $15 million demand inventory equipment financing facility should be sufficient to meet Wajax's short-term normal course working capital, maintenance capital and growth capital requirements. The $175 million bank credit facility expires December 31, 2011. Management expects to be able to enter into a new credit facility by the end of 2011.

Wajax's short-term normal course working capital requirements can swing widely quarter-to-quarter due to the timing of large inventory purchases and/or sales and changes in market activity. In general, as Wajax experiences growth, there is a need for additional working capital as was the case in 2006 and 2008.

Conversely, as Wajax experiences economic slowdowns working capital reduces reflecting the lower activity levels as was the case in 2009. Fluctuations in working capital are generally funded by, or used to repay, the bank credit facilities.

In the long-term Wajax may also be required to access the equity or debt markets or reduce dividends in order to fund significant acquisitions and growth related working capital and capital expenditures.

Borrowing capacity under the bank credit facility is dependent on the level of Wajax's inventories on-hand and outstanding trade accounts receivables. At March 31, 2011 borrowing capacity under the bank credit facility was equal to $175 million.

The bank credit facility contains covenants that could restrict the ability of Wajax to make dividend payments, if (i) an event of default exists or would exist as a result of a dividend payment, and (ii) the leverage ratio (Debt to EBITDA) is greater than 3.0. If the leverage ratio is less than or equal to 3.0, then the aggregate dividend payments by the borrowers in each fiscal quarter may not exceed 115% of distributable cash for the trailing four fiscal quarters. Borrowing capacity under the bank credit facility is dependent on the level of inventories on-hand and outstanding trade accounts receivables. For further detail, the bank credit facility is available on SEDAR at www.sedar.com.


Share Capital

The shares of Wajax issued are included in shareholders' equity on the
 balance sheet as follows:

Issued and fully paid shares as at March 31,
 2011                                                Number           Amount
----------------------------------------------------------------------------
Balance at the beginning of quarter              16,629,444  $         105.9
Rights exercised                                          -                -
----------------------------------------------------------------------------
Balance at end of quarter                        16,629,444  $         105.9
----------------------------------------------------------------------------

Wajax has five share-based compensation plans; the Wajax Share Ownership Plan ("SOP"), the Deferred Share Program ("DSP"), the Directors' Deferred Share Unit Plan ("DDSUP"), the Mid-Term Incentive Plan for Senior Executives ("MTIP") and the Deferred Stock Unit Plan ("DSUP"). SOP, DSP and DDSUP rights are issued to the participants and are settled by issuing Wajax Corporation shares. The cash-settled MTIP and DSUP consist of annual grants that vest over three years and are subject to time and performance vesting criteria, a portion of which is determined by the price of the Corporation's shares. Compensation expense for the SOP, DSP and DDSUP is determined based upon the fair value of the rights at the date of grant and charged to earnings on a straight line basis over the vesting period, with an offsetting adjustment to contributed surplus. Compensation expense for the share-based portions of the MTIP and DSUP varies with the price of the Corporation's shares and is recognized over the vesting period. Wajax recorded compensation cost of $2.2 million for the quarter (2010 - $0.6 million) in respect of these plans.

Effective January 1, 2011 the plans have been amended to reflect the conversion to a corporation. In particular, rights issued to participants will be valued and settled by Wajax Corporation shares and portions of the MTIP and DSUP compensation expense will vary with the price of Wajax Corporation's shares.

Critical Accounting Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates include the provision for inventory obsolescence, provision for doubtful accounts and any impairment of goodwill and other assets, classification of leases, warranty reserve and measurement of employee benefit obligations. Wajax makes a provision for doubtful accounts when there is evidence that a specific account may become uncollectible. Wajax does not provide a general reserve for bad debts. As conditions change, actual results could differ from those estimates. Critical accounting estimates used by Wajax's management are discussed in detail in the MD&A for the year ended December 31, 2010 which can be found on SEDAR at www.sedar.com.

Accounting Changes

Transition to International Financial Reporting Standards

The Corporation has adopted IFRS on January 1, 2011 as required by the Accounting Standards Board of the Canadian Institute of Chartered Accountants. The Corporation provided information on its transition to IFRS in its 2010 annual MD&A. This information has not changed materially from what was provided.

Note 16 of the condensed consolidated financial statements provides an explanation of the transition to IFRS. In addition, Note 16 provides detailed reconciliations between Canadian GAAP and IFRS of the consolidated income statement and consolidated statement of comprehensive income for the three months ended March 31, 2010 and for the year ended December 31, 2010 and of the consolidated statement of financial position as at March 31, January 1 and December 31, 2010. These reconciliations provide explanations of each major difference.

New standards and interpretations not yet adopted

As of January 1, 2013, the Corporation will be required to adopt IFRS 9 Financial Instruments, which is the result of the first phase of the IASB's project to replace IAS 39 Financial Instruments: Recognition and Measurement. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The Corporation is currently assessing the impact of this standard on its consolidated financial statements.

Risks and Uncertainties

As with most businesses, Wajax is subject to a number of marketplace and industry related risks and uncertainties which could have a material impact on operating results. Wajax attempts to minimize many of these risks through diversification of core businesses and through the geographic diversity of its operations. There are however, a number of risks that deserve particular comment which are discussed in detail in the MD&A for the year ended December 31, 2010 which can be found on SEDAR at www.sedar.com. For the period April 1, 2011 to May 10, 2011 there have been no material changes to the business of Wajax that require an update to the discussion of the applicable risks discussed in the MD&A for the year ended December 31, 2010.

Outlook

First quarter improved results were driven by the robust energy and mining markets in western Canada. In addition, management was also encouraged by evidence of stronger activity in central and eastern Canada, particularly in forestry, construction and certain other industrial sectors.

Management is looking forward to realizing on the potential for additional growth in the Ontario market as a result of the Harper acquisition. With this business well established in the on-highway sector of the market, Wajax Power Systems intends to further expand its presence in the off-highway and power generation sectors. The acquisition represents a major step towards the segment's strategic objective of becoming a national total power systems solution provider. Management expects it will be immediately accretive to its 2011 results.

As well, management believes it has been able to minimize the potential supply disruptions to its Hitachi product line caused by the earthquake and resulting tsunami in Japan. With the inventory levels the Equipment segment decided to carry prior to, and immediately after this disaster, management expects it will have adequate stock of Hitachi parts and construction excavators to meet market demand. However, the Equipment segment is expecting some delays in obtaining mining equipment, which will have some impact on 2011 revenue for the remainder of the year.

For the balance of 2011, Wajax expects a continuation of the economic activity experienced in the first quarter. Notwithstanding the negative effect of the Hitachi mining equipment supply disruption, management expects pre-tax earnings to continue to be ahead of last year for the balance of 2011.

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


                             WAJAX CORPORATION

            Unaudited Condensed Consolidated Financial Statements

                 For the three months ended March 31, 2011

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

The attached condensed consolidated financial statements have been prepared by Management of Wajax Corporation and have not been reviewed by the Corporation's auditors.


                             WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                             FINANCIAL POSITION


As at                                      
(unaudited, in thousands of           March 31,  December 31,    January 1,
 Canadian dollars)                         2011          2010          2010
----------------------------------------------------------------------------
ASSETS
CURRENT
Cash                                $     2,873 $      42,954 $       9,207
Trade and other receivables             152,176       135,517       123,537
Inventories                             208,125       196,460       177,909
Prepaid expenses                          5,945         7,244         7,800
----------------------------------------------------------------------------
                                        369,119       382,175       318,453
----------------------------------------------------------------------------

NON-CURRENT
Rental equipment              Note  4    19,370        15,794        16,370
Property, plant and equipment Note  5    45,846        46,090        46,008
Intangible assets                        72,853        72,972        73,505
Deferred tax assets           Note 12     5,234         5,277         2,229
Pension asset                               307           240             -
----------------------------------------------------------------------------
                                        143,610       140,373       138,112
----------------------------------------------------------------------------
                                    $   512,729 $     522,548 $     456,565
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS'
 EQUITY
CURRENT
Trade and other payables            $   129,542 $     134,832 $      83,723
Accrued liabilities                      61,001        64,229        66,089
Provisions                    Note  6     5,119         4,892         4,859
Dividends payable                         2,494        12,472         2,491
Income taxes payable                      7,557         2,072           274
Obligations under finance
 leases                       Note  7     3,596         3,677         3,850
Derivative instrument
 liability                                1,989         2,452             -
Bank debt                                79,759        79,680             -
----------------------------------------------------------------------------
                                        291,057       304,306       161,286
----------------------------------------------------------------------------

NON-CURRENT
Provisions                    Note  6     4,477         4,338         3,518
Employee benefits                         4,021         4,132         3,699
Derivative instrument
 liability                                    -             -         2,643
Bank debt                                     -             -        79,461
Other liabilities                         2,601         5,221           841
Obligations under finance
 leases                       Note  7     5,036         5,227         6,140
----------------------------------------------------------------------------
                                         16,135        18,918        96,302
----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital                 Note  9   105,892             -             -
----------------------------------------------------------------------------
Trust units                   Note 10         -       105,892       105,307
----------------------------------------------------------------------------
Contributed surplus           Note 11     6,971         6,426         5,645
----------------------------------------------------------------------------
Retained earnings                        94,744        89,411        90,258
Accumulated other
 comprehensive loss                      (2,070)       (2,405)       (2,233)
----------------------------------------------------------------------------
                                         92,674        87,006        88,025
----------------------------------------------------------------------------
Total shareholders' equity              205,537       199,324       198,977
----------------------------------------------------------------------------
                                    $   512,729 $     522,548 $     456,565
----------------------------------------------------------------------------
----------------------------------------------------------------------------

These condensed consolidated financial statements were approved by the Board
of Directors on May 10, 2011.

                             WAJAX CORPORATION
                  CONDENSED CONSOLIDATED INCOME STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31
(unaudited, in thousands of Canadian
 dollars, except per share data)                          2011         2010
----------------------------------------------------------------------------

Revenue                                            $   303,929   $  227,440
Cost of sales                                          238,066      175,829
----------------------------------------------------------------------------
Gross profit                                            65,863       51,611
----------------------------------------------------------------------------
Selling and administrative expenses                     46,843       42,037
----------------------------------------------------------------------------
Earnings before finance costs and income
 taxes                                                  19,020        9,574
Finance costs                                              976        1,067
----------------------------------------------------------------------------
Earnings before income taxes                            18,044        8,507
Income tax expense (recovery)            Note 12         5,228         (370)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings                                       $    12,816   $    8,877
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Basic earnings per share                 Note 13   $      0.77   $     0.53
Diluted earnings per share               Note 13   $      0.76   $     0.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                             WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                            COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31
(unaudited, in thousands of Canadian dollars)             2011         2010
----------------------------------------------------------------------------

Net earnings                                        $   12,816   $    8,877
----------------------------------------------------------------------------

Losses on derivative instruments designated as
 cash flow hedges in prior periods reclassified to
 cost of inventory or finance costs during the
 period, net of tax of $230 (2010 - $15)                   607          139

Losses on derivative instruments designated as
 cash flow hedges during the period, net of tax of
 $103 (2010 - $7)                                         (272)        (706)

----------------------------------------------------------------------------
Other comprehensive income (loss), net of tax              335         (567)
----------------------------------------------------------------------------

Total comprehensive income                          $   13,151   $    8,310
----------------------------------------------------------------------------

                              WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                       CHANGES IN SHAREHOLDERS' EQUITY



FOR THE THREE MONTHS
 ENDED MARCH 31, 2011                       Share        Trust  Contributed
(unaudited, in thousands                  capital        units      surplus
 of Canadian dollars)                     (Note 9)    (Note 10)    (Note 11)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
January 1, 2011                     $           -      105,892        6,426

Conversion to corporation                 105,892     (105,892)           -

Net earnings                                    -            -            -

Other comprehensive
 income

Losses on derivative
 instruments designated
 as cash flow hedges in
 prior periods
 reclassified to cost of
 inventory or finance
 costs during the period,
 net of tax                                     -            -           -

Losses on derivative
 instruments designated
 as cash flow hedges
 during the period, net
 of tax                                         -            -            -

----------------------------------------------------------------------------
Total other comprehensive
 income
----------------------------------------------------------------------------
Total comprehensive
 income for the period                          -            -            -
----------------------------------------------------------------------------
Dividends                      Note 8           -            -            -
----------------------------------------------------------------------------
Share-based
 compensation expense         Note 11           -            -          545
----------------------------------------------------------------------------
March 31, 2011                      $     105,892            -        6,971
----------------------------------------------------------------------------

                             WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                      CHANGES IN SHAREHOLDERS' EQUITY

                                                 Accumulated
                                                    other
                                                comprehensive
                                                 income(loss)
                                                   ("AOCL")
                                                --------------

FOR THE THREE MONTHS                                 Gains and
 ENDED MARCH 31, 2011                Actuarial       Losses on
(unaudited, in thousands   Retained  Gains and       Cash Flow
 of Canadian dollars)      earnings     Losses          Hedges        Total
----------------------------------------------------------------------------

----------------------------------------------------------------------------
January 1, 2011              89,411       (628)         (1,777) $   199,324

Conversion to corporation         -          -               -            -

Net earnings                 12,816          -               -       12,816

Other comprehensive
 income

Losses on derivative
 instruments designated
 as cash flow hedges in
 prior periods
 reclassified to cost of
 inventory or finance
 costs during the period,
 net of tax                       -          -             607          607

Losses on derivative
 instruments designated
 as cash flow hedges
 during the period, net
 of tax                           -          -            (272)        (272)

----------------------------------------------------------------------------
Total other comprehensive
 income                                                    335          335
----------------------------------------------------------------------------
Total comprehensive
 income for the period       12,816          -             335       13,151
----------------------------------------------------------------------------
Dividends           Note 8   (7,483)         -               -       (7,483)
----------------------------------------------------------------------------
Shared-based compensation
 expense            Note 11       -          -               -          545
----------------------------------------------------------------------------
March 31, 2011               94,744       (628)         (1,442) $   205,537
----------------------------------------------------------------------------


                              WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                      CHANGES IN SHAREHOLDERS' EQUITY


FOR THE THREE MONTHS ENDED
 MARCH 31, 2010                             Share      Trust    Contributed
(unaudited, in thousands                  capital      units        surplus
 of Canadian dollars)                     (Note 9)  (Note 10)      (Note 11)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
January 1, 2010                       $         -    105,307          5,645

Net earnings                                    -          -              -

Other comprehensive loss
Losses on derivative
 instruments designated as
 cash flow hedges in prior
 periods reclassified to cost
 of inventory or finance costs
 during the period, net of tax                  -          -              -

Losses on derivative
 instruments designated as
 cash flow hedges during the
 period, net of tax                             -          -              -

----------------------------------------------------------------------------
Total other comprehensive loss
----------------------------------------------------------------------------
Total comprehensive income for
 the period
----------------------------------------------------------------------------
Dividends                        Note 8         -
----------------------------------------------------------------------------
Shared-based
 compensation expense           Note 11         -                       292
----------------------------------------------------------------------------
March 31, 2010                        $         -    105,307          5,937
----------------------------------------------------------------------------


                             WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                      CHANGES IN SHAREHOLDERS' EQUITY

                                               Accumulated
                                                  other
                                              comprehensive
                                              income (loss)
                                                 ("AOCL")
                                             ----------------

FOR THE THREE MONTHS ENDED                         Gains and
 MARCH 31, 2010                                       Losses
(unaudited, in thousands            Retained         on Cash
 of Canadian dollars)               earnings     Flow Hedges          Total
----------------------------------------------------------------------------

----------------------------------------------------------------------------
January 1, 2010                       90,258          (2,233)       198,977

Net earnings                           8,877               -          8,877

Other comprehensive loss
Losses on derivative
 instruments designated as
 cash flow hedges in prior
 periods reclassified to cost
 of inventory or finance costs
 during the period, net of tax             -             139            139

Losses on derivative
 instruments designated as
 cash flow hedges during the
 period, net of tax                        -            (706)          (706)

----------------------------------------------------------------------------
Total other comprehensive loss                          (567)          (567)
----------------------------------------------------------------------------
Total comprehensive income for
 the period                            8,877            (567)         8,310
----------------------------------------------------------------------------
Dividends                   Note 8    (7,472)                        (7,472)
----------------------------------------------------------------------------
Shared-based
 compensation expense      Note 11                                      292
----------------------------------------------------------------------------
March 31, 2010                        91,663          (2,800)       200,107
----------------------------------------------------------------------------

                             WAJAX CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF
                                 CASH FLOWS


FOR THE THREE MONTHS ENDED MARCH 31
(unaudited, in thousands of Canadian dollars)               2011       2010
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings                                            $ 12,816  $   8,877
Items not affecting cash flow:
  Depreciation and amortization
    Rental equipment                                         962        849
    Property, plant and equipment                          1,137        893
    Assets under finance lease                               720        722
    Intangible assets                                        119        176
  Share-based compensation expense               Note 11     545        292
  Other liabilities                                       (2,620)       424
  Non-cash rental expense                                     30         27
  Pension expense, net of payments                          (178)        48
  Finance costs                                              976      1,067
  Income tax expense (recovery)                            5,228       (370)
----------------------------------------------------------------------------
Cash flows from operating activities before
 changes in non-cash working capital                      19,735     13,005
----------------------------------------------------------------------------
Changes in non-cash working capital:
  Trade and other receivables                            (16,659)    (8,309)
  Inventories                                            (10,521)    (5,720)
  Prepaid expenses                                         1,299       (911)
  Trade and other payables                                (5,320)     5,111
  Accrued liabilities                                     (3,270)    (4,237)
  Provisions                                                 227       (134)
----------------------------------------------------------------------------
                                                         (34,244)   (14,200)
----------------------------------------------------------------------------
Cash flows used in operating activities                  (14,509)    (1,195)
----------------------------------------------------------------------------
Rental equipment additions                                (5,682)    (1,279)
Provisions                                                   139       (171)
Interest paid                                               (856)      (999)
Income taxes (paid) received                                 169         61
----------------------------------------------------------------------------
Net cash flows used in operating activities              (20,739)    (3,583)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment additions                     (993)      (709)
Proceeds on disposal of property, plant and
 equipment                                                    38         87
----------------------------------------------------------------------------
Net cash flows used in investing activities                 (955)      (622)
----------------------------------------------------------------------------
                                                         (21,694)    (4,205)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in transaction costs                                  -        (83)
Payments under finance leases                               (926)      (801)
Dividends paid                                    Note 8 (17,461)    (7,472)
----------------------------------------------------------------------------
Net cash flows used in financing activities              (18,387)    (8,356)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Net change in cash and cash equivalents                  (40,081)   (12,561)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Cash (bank indebtedness) - beginning of period            42,954      9,207
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Cash (bank indebtedness) - end of period               $   2,873  $  (3,354)
----------------------------------------------------------------------------

                             WAJAX CORPORATION
                      NOTES TO CONDENSED CONSOLIDATED
                            FINANCIAL STATEMENTS

MARCH 31, 2011

(unaudited, amounts in thousands of Canadian dollars, except share and per share data)

1. COMPANY PROFILE

Wajax Corporation ("the Corporation") is incorporated in Canada. The address of the Corporation's registered office is 3280 Wharton Way, Mississauga, Ontario, Canada. The Corporation's core distribution businesses are engaged in the sale and after-sale parts and service support of mobile equipment, industrial components and power systems, through a network of 118 branches across Canada. The Corporation is a multi-line distributor and represents a number of leading worldwide manufacturers across its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.

In 2010 the Corporation was structured as an unincorporated, open-ended, limited purpose investment trust called Wajax Income Fund ("the Fund"). On January 1, 2011, the Fund converted into a corporation pursuant to a Plan of Arrangement under the Canada Business Corporations Act. Unitholders of the Fund automatically received one common share of the Corporation in exchange for each unit of the Fund. The conversion was accounted for as a continuity of interests. The business continues to be carried on by the same management team that was in place prior to the completion of the conversion.

2. BASIS OF PREPARATION

Statement of compliance

These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. These are the Corporation's first International Financial Reporting Standards ("IFRS") condensed consolidated financial statements for part of the period covered by the first IFRS annual financial statements, and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. The condensed consolidated financial statements do not include all of the disclosures required for full annual consolidated financial statements. Accordingly, these condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements of Wajax Income Fund for the year ended December 31, 2010 reported under previous Canadian generally accepted accounting principles ("Canadian GAAP"). The significant accounting policies are disclosed in Note 3.

An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Corporation is provided in Note 16. This note includes reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition reported under previous Canadian GAAP to those reported for those periods and at the date of transition under IFRS. The Corporation's date of transition to IFRS is January 1, 2010.

Basis of measurement

The condensed consolidated financial statements have been prepared under the historical cost basis, except for derivative financial instruments and held for trading financial instruments that have been measured at fair value.

Functional and presentation currency

These condensed consolidated financial statements are presented in Canadian dollars, which is the Corporation's functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand, unless otherwise stated and except share and per share data.

Judgements and estimation uncertainty

The preparation of the condensed consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and revenues and expenses. Actual results could differ from those estimates. The Corporation bases its estimates on historical experience and various other assumptions that are believed to be reasonable in the circumstances.

In preparing these condensed consolidated financial statements, the significant judgments made by management applying the Corporation's accounting policies and the key sources of estimation uncertainty are expected to be the same as those to be applied in the first annual IFRS financial statements. The more significant judgements and assumptions that have an effect on the amounts recognized in the condensed consolidated financial statements are provision for doubtful accounts, inventory obsolescence, asset impairment, classification of leases, impairment of intangible assets, warranty reserve and measurement of employee benefit obligations.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

These condensed consolidated financial statements include the accounts of Wajax Corporation and its subsidiary entities, which are all wholly-owned.

The financial statements of the subsidiaries are prepared for the same reporting period as the Corporation, using consistent accounting policies. All intercompany balances, transactions, unrealized gains and losses from intercompany transactions and dividends are eliminated in full on consolidation.

When goodwill arises from a business combination, the Corporation measures it as the fair value of the consideration transferred less the net recognized amounts (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date.

Revenue recognition

Revenue is measured at the fair value of consideration received or receivable, net of expected returns, rebates and discounts and is recognized as it is earned in accordance with the following:


--  Revenue from the sale of equipment and parts is recognized in earnings
    at the time goods are shipped to customers or when all contracted-upon
    conditions have been fulfilled.
--  Revenue from the sale of internally-manufactured or assembled products
    is recognized in earnings when goods are shipped to customers or when
    all contracted-upon conditions have been fulfilled.
--  Revenue from the rental of equipment is recognized in earnings on a
    straight-line basis over the term of the lease.
--  Revenue from construction contracts is recognized using the percentage
    of completion method, with the stage of completion being assessed by
    reference to the proportion that contract costs incurred for the work
    performed to date bears to the estimated total contract costs. An
    expected loss on the contract is recognized immediately in earnings.
--  Revenue from engineering and technical services rendered to customers is
    recognized in earnings upon performance of contracted-upon services with
    the customer.
--  Revenue for separately priced extended warranty or product maintenance
    contracts is recognized in earnings over the contract period in
    proportion to the costs expected to be incurred in performing the
    services under the contract. If insufficient historical evidence exists
    to support this pattern, then revenue is recognized on a straight-line
    basis over the term of the contract.

Derivative financial instruments

The Corporation uses derivative financial instruments to hedge its foreign currency and interest rate exposures. The Corporation's policy is not to utilize derivative financial instruments for trading or speculative purposes.

The Corporation purchases foreign exchange forward contracts to fix the cost of certain inbound inventory and the related accounts payable, and to hedge certain anticipated foreign currency denominated sales to customers and the related accounts receivable.

In order to manage its exposure to interest rates on variable rate debt, the Corporation has entered into interest rate swaps where it receives variable rate interest and pays fixed rates on a notional amount.

On initial designation of the hedge, the Corporation formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions, together with the methods that will be used to assess the effectiveness of the hedging relationship. This process includes linking all derivatives to specific assets and liabilities on the statement of financial position or to specific firm commitments or forecasted transactions. The Corporation also assesses, both at the inception of the hedged relationship and at the end of each quarter on a retrospective and prospective basis, whether the hedging instruments are expected to be effective in offsetting the changes in the fair values or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80% - 125% effective. Hedge accounting has been applied when the hedge is effective.

Derivative instruments are recognized initially at fair value. Subsequent to initial recognition, derivative financial instruments are measured at fair value, and any changes in fair value are recognized in earnings unless cash flow hedge accounting is applied, in which case changes in fair value are recognized in other comprehensive income with any ineffectiveness recognized in earnings.

Foreign currency transactions and balances

Foreign currency transactions are translated into Canadian dollars at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting dates are retranslated into Canadian dollars at the rate of exchange in effect at the date of the statement of financial position. Foreign currency differences arising on retranslation are recognized in earnings, except for differences arising on retranslation of qualifying cash flow hedges which are recognized in other comprehensive income.

Inventories

Inventories are valued at the lower of cost and estimated net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Cost is determined using the weighted average method except where the items are not ordinarily interchangeable, in which case the specific identification method is used.

Cost of equipment and parts includes purchase cost, conversion cost if applicable and cost incurred in bringing inventory to its present location and condition.

Cost of work-in-progress and cost of conversion includes cost of direct labour, direct materials and a portion of direct and indirect overheads, allocated based on normal capacity.

Cost of inventories includes transfers from other comprehensive income of gains or losses on qualifying cash flow hedges of foreign currency purchases of inventories.

Rental equipment

Rental equipment assets are recorded at cost less accumulated depreciation and accumulated impairment losses. Cost includes all expenditures directly attributable to the acquisition of the asset. Assets are depreciated over their estimated useful lives using the declining balance method at a rate of 20% per year (for the current and comparative periods), and recognized in earnings over the estimated useful life of rental equipment. The depreciation method and useful lives are reviewed at each annual reporting date and adjusted if appropriate. Rental equipment assets are transferred to inventory at their carrying amount when they cease to be rented and become held for sale.

Property, plant and equipment

Initial recognition and measurement after recognition

Property, plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses. Cost includes all expenditures directly attributable to the acquisition of the asset. Depreciation is recognized in current earnings over the estimated useful lives of property, plant and equipment based on the following methods and annual rates for the current and comparative periods:


Asset                     Method                   Rate
----------------------------------------------------------------------------
Buildings                 declining balance        4% - 5%
Equipment and vehicles    declining balance        20% - 30%
Information systems       straight-line            3 - 7 years
Furniture and fixtures    declining balance        20%
Leasehold improvements    straight-line            over the remaining terms
                                                   of the leases


Depreciation methods and useful lives are reviewed at each annual reporting date and adjusted if appropriate. Leased assets are depreciated over the shorter of the lease term and their useful life.

Impairment

The carrying amounts of property, plant and equipment, and rental equipment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset is the higher of its value in use or its fair value less costs to sell. Value in use is the present value of estimated future cash flows using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or "CGU"). Where the asset does not generate cash flows that are independent of other assets, impairment is considered for the CGU to which the asset belongs.

An impairment loss is recognized if the carrying amount of the asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in current earnings. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss recognized in a prior period is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss, other than goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in current earnings.

Leases

As lessor:

Leases in which the Corporation does not transfer substantially all the risks and rewards of ownership of the assets are classified as operating leases. The Corporation's equipment rentals are classified as operating leases with amounts received included in revenue on a straight-line basis over the term of the lease.

As lessee:

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased item to the Corporation. Under finance leases, the asset is capitalized at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Corporation will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

All other leases are classified as operating leases. Operating lease payments are recognized as an operating expense in profit or loss on a straight-line basis over the lease term.

Intangible assets

Goodwill

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed at the date of acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized but is tested annually for impairment, and whenever there is an indication that the CGU to which goodwill has been allocated, may be impaired. For the purposes of impairment testing, goodwill acquired in a business combination is allocated to the CGU, or group of CGUs, that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes. To test for impairment, the Corporation compares the carrying amount of the CGU, including the goodwill, with the recoverable amount of the CGU. Recoverable amount is the higher of its value in use or its fair value less costs to sell. Value in use is the present value of estimated future cash flows using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the CGU. Any goodwill impairment in the current year would be recorded as a charge against current earnings. An impairment loss in respect of goodwill is not reversed.

Product distribution rights

Product distribution rights are all acquired through business combinations and are initially recorded at the fair value attributed to these rights. They are classified as indefinite life intangible assets because the Corporation is generally able to renew these rights with minimal cost of renewal. Indefinite life intangible assets are not amortized but are tested annually for impairment, and whenever there is an indication that the intangible asset may be impaired. To test for impairment, the Corporation compares the carrying amount of the intangible asset with the recoverable amount of the intangible asset. Recoverable amount is the higher of its value in use or its fair value less costs to sell. Value in use is the present value of estimated future cash flows using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the CGU. Any impairment in the current year would be recorded as a charge against current earnings. An impairment loss recognized in a prior period is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in current earnings.

Customer lists and non-competition agreements

Customer lists and non-competition agreements are all acquired through business combinations and are initially recorded at their fair values. They are amortized on a straight-line basis over their useful lives which range from 2 to 7 years. They are tested for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment of an intangible asset is recognized in an amount equal to the difference between the carrying value and the recoverable amount of the related intangible asset and would be recorded as a charge against current earnings. Recoverable amount is the higher of its value in use or its fair value less costs to sell. Value in use is the present value of estimated future cash flows using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the CGU. An impairment loss recognized in a prior period is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in current earnings.

Cash

Cash includes cash on hand, demand deposits and bank overdrafts. The Corporation considers cash to be an integral part of the Corporation's cash management. Cash and bank overdrafts are offset and the net amount presented in the statement of financial position when the Corporation has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Transaction costs

Transaction costs related to the acquisition or amendment of bank debt are deferred and amortized to finance costs using an effective yield method. Deferred transaction costs are included in the carrying amount of the related debt.

Finance costs

Finance costs comprise interest expense on borrowings and amortization of transaction costs.

Provisions

Provisions are recognized when there is a present legal or constructive obligation arising from past events, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation. The best estimate is the amount that the Corporation would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time. The amount has been determined using an expected cash flow approach that reflects a range of possible outcomes that are probability weighted.

Warranty claims

The Corporation provides for customer warranty claims that may not be covered by the manufacturers' standard warranty. Warranties relate to products sold and generally cover a period of 6 months to 5 years. The reserve is determined by applying a claim rate to the value of each machine sold. The rate is developed using management's best estimate of actual warranty expense, generally based on recent claims experience, and is adjusted as required. The provision is not discounted to reflect the time value of money, because the impact is not considered material.

Guaranteed residual value and recourse contracts

From time to time the Corporation guarantees the resale value of equipment sold ("guaranteed residual value contracts") or guarantees a portion of a customers' lease payments ("recourse contracts"). These contracts are subject to certain conditions being met by the customer. A provision is recorded at management's estimate of the amount that will eventually be required to settle the contracts and is adjusted as required. The contracts are not discounted to reflect the time value of money because the impact is not considered material.

Environmental

The Corporation is required to remediate certain environmental contamination at some of its locations. A provision is recorded at management's estimate of the amount of the cost of remediation. The provision is not discounted to reflect the time value of money because the impact is not considered material.

Financial Instruments

The Corporation measures financial instruments held for trading at fair value with subsequent changes in fair value being charged to earnings. Loans and receivables and other financial liabilities are measured at amortized cost. Derivative instruments are measured at fair value. All changes in their fair value are recorded in earnings unless cash flow hedge accounting is used, in which case changes in fair value are recorded in other comprehensive income with any ineffectiveness charged to earnings. Cash was designated as held for trading upon initial recognition.

The Corporation's non-derivative financial assets consist of cash and trade and other receivables. Impairment of trade and other receivables is assessed by performing an analysis of specific accounts. Provisions are maintained for possible credit losses.

Share-based compensation plans

The Corporation has five share-based compensation plans: the Wajax Share Ownership Plan ("SOP"), the Deferred Share Program ("DSP"), the Directors' Deferred Share Unit Plan ("DDSUP"), the Mid-Term Incentive Plan for Senior Executives ("MTIP") and the Deferred Stock Unit Plan ("DSUP").

Under the SOP, DSP and the DDSUP, rights are issued to the participants which, upon satisfaction of certain time and performance vesting conditions, are settled by issuing Wajax Corporation shares for no consideration. The rights are settled when the participant is no longer employed by the Corporation or one of its subsidiary entities or no longer sits on its board. Compensation expense is based upon the fair value of the rights at date of grant, adjusted for anticipated forfeitures and is charged to earnings on a straight-line basis over the vesting period, with an offsetting adjustment to contributed surplus.

The MTIP and DSUP, which are settled in cash, consist of annual grants that vest over three years and are based upon time and performance vesting criteria, a portion of which is determined by the price of the Corporation's shares. The fair value of the amounts payable in respect of the MTIP and DSUP is recognized as compensation expense over the vesting periods with an offsetting adjustment to other liabilities. The liabilities are remeasured at each reporting date and at settlement date based on the market price of the Corporation's shares. Any changes in fair value of the liabilities are recognized as compensation expense.

Employee benefits

Defined contribution plans

The Corporation has defined contribution pension plans for most of its employees. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in earnings in the periods during which services are rendered by employees.

Defined benefit plans

The Corporation has defined benefit plans covering some of its employees. The Corporation's net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on long-term high-quality corporate fixed income investments that have maturity dates approximating the terms of the Corporation's obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Corporation, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Corporation. An economic benefit is available to the Corporation if it is realizable during the life of the plan, or on settlement of the plan liabilities.

All actuarial gains and losses are recognized immediately in other comprehensive income in the period in which they occur. Actuarial valuations are generally updated only at the end of the year unless there have been material changes to the plans. Accordingly, there are no actuarial gains or losses to record in the interim period.

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in earnings except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable earnings. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

New standards and interpretations not yet adopted

These condensed consolidated financial statements have been prepared using IFRS currently issued and expected to be effective at the end of the Corporation's first annual IFRS reporting period, December 31, 2011. Accounting policies currently adopted under IFRS are subject to change as a result of either a new standard being issued or as a result of a voluntary change in accounting policy made by the Corporation during 2011. A change in an accounting policy used may result in material changes to the Corporation's reported financial position, results of operations and cash flows.

As of January 1, 2013, the Corporation will be required to adopt IFRS 9 Financial Instruments, which is the result of the first phase of the IASB's project to replace IAS 39 Financial Instruments: Recognition and Measurement. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The Corporation is currently assessing the impact of this standard on its consolidated financial statements.

4. RENTAL EQUIPMENT

During the three months ended March 31, 2011 the Corporation acquired rental equipment with a cost of $5,682 (2010 - $1,279). Rental equipment with a carrying amount of $1,144 (2010 - $714) ceased to be rented and was classified as held for sale in the normal course of business and transferred to inventory.

5. PROPERTY, PLANT AND EQUIPMENT

During the three months ended March 31, 2011 the Corporation acquired property, plant and equipment with a cost of $1,651 (2010 - $1,101). Assets with a carrying amount of $58 (2010 - $178) were disposed of, resulting in a gain on disposal of $16 (2010 - $173).


Included in the above are vehicles held under
 finance leases:
                                                           March    December
                                                        31, 2011    31, 2010
----------------------------------------------------------------------------
Cost                                             $        22,527 $    22,006
Accumulated depreciation                                  13,149      12,542
----------------------------------------------------------------------------
Carrying amount                                  $         9,378 $     9,464
----------------------------------------------------------------------------
All property, plant and equipment have been pledged as security
 for bank debt.

6.  PROVISIONS
                                  Warranties           Other          Total

Provisions, January 1, 2011    $       9,230   $           -  $       9,230
Charge for the period                  1,103               -          1,103
Utilized in the period                  (737)              -           (737)
----------------------------------------------------------------------------
Provisions, March 31, 2011     $       9,596   $           -  $       9,596
----------------------------------------------------------------------------

Current                                5,119               -          5,119
----------------------------------------------------------------------------
Non-current                            4,477               -          4,477
----------------------------------------------------------------------------
Total                          $       9,596   $           -  $       9,596
----------------------------------------------------------------------------
Provisions, January 1, 2010    $       8,199   $         178  $       8,377
Charge for the period                    860               -            860
Utilized in the period                (1,165)              -         (1,165)
----------------------------------------------------------------------------
Provisions, March 31, 2010     $       7,894   $         178  $       8,072
----------------------------------------------------------------------------

Current                                4,547             178          4,725
----------------------------------------------------------------------------
Non-Current                            3,347                           3,347
----------------------------------------------------------------------------
Total                          $       7,894   $         178  $       8,072
----------------------------------------------------------------------------

7. LEASES

Operating leases - as lessor

The Corporation rents equipment to customers under rental agreements with varying terms of up to 5 years. The rental agreements are subject to overtime charges when usage exceeds the amount contemplated in the agreements. The rentals may be cancelled subject to a cancellation fee. The future minimum non-cancelable lease payments receivable under the agreements are as follows:


                                                              March 31, 2011
----------------------------------------------------------------------------
                                              Present value of minimum lease
                                                                    payments
----------------------------------------------------------------------------
For the remainder of 2011            $                                 3,769
Between one and five years                                             4,218
----------------------------------------------------------------------------
                                     $                                 7,987
----------------------------------------------------------------------------

During the three months ended March 31, 2011 the Corporation recognized $38 (2010 - $15) of overtime charges under the rental agreements as contingent rent.

Finance leases - as lessee

The Corporation finances certain vehicles under a finance lease arrangement. The leases have a minimum six month term and are extended on a monthly basis thereafter until terminated. On termination the difference between the lessor's proceeds of disposal and the residual value is charged or refunded to the Corporation as a rental adjustment. Obligations under finance leases are as follows:


                                                              March 31, 2011
----------------------------------------------------------------------------
                                                               Present value
                                                                  of minimum
                                       Payment  Interest      lease payments
----------------------------------------------------------------------------
Less than one year                 $     3,960       364               3,596
Between one and five years               5,588       552               5,036
----------------------------------------------------------------------------
Total minimum lease payments             9,548       916               8,632
----------------------------------------------------------------------------

Current                                  3,960       364               3,596
Non-current                              5,588       552               5,036
----------------------------------------------------------------------------
Total minimum lease payments       $     9,548       916               8,632
----------------------------------------------------------------------------

8. DIVIDENDS DECLARED

During the three months ended March 31, 2011 the Corporation declared cash dividends of $0.45 per share, or $7,483 (March 31, 2010, distributions of $0.45 per unit or $7,472).

9. SHARE CAPITAL

The Corporation is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series and without par value.


                                            Number of Shares          Amount
----------------------------------------------------------------------------
Balance, January 1, 2011                                   -               -
----------------------------------------------------------------------------
Converted on January 1, 2011 from trust
 units                                            16,629,444   $     105,892
----------------------------------------------------------------------------
Balance, March 31, 2011                           16,629,444   $     105,892
----------------------------------------------------------------------------

10. TRUST UNITS

In 2010 the Corporation was structured as an unincorporated open-ended limited purpose investment trust called "Wajax Income Fund". The issued and fully paid trust units of the Fund were included in shareholders' equity on the statement of financial position and are summarized as follows:


                                              Number of Units         Amount
----------------------------------------------------------------------------
Balance, January 1, 2011                           16,629,444   $    105,892
----------------------------------------------------------------------------
Converted on January 1, 2011 to share capital      16,629,444   $    105,892
----------------------------------------------------------------------------
Balance, March 31, 2011                                     -   $          -
----------------------------------------------------------------------------

11. SHARE-BASED COMPENSATION PLANS

The Corporation has five share-based compensation plans: the Wajax Share Ownership Plan ("SOP"), the Deferred Share Program ("DSP"), the Directors' Deferred Share Unit Plan ("DDSUP"), the Mid-Term Incentive Plan for Senior Executives ("MTIP") and the Deferred Stock Unit Plan ("DSUP").

a) Share Rights Plan

Under the SOP, DSP and the DDSUP, rights are issued to the participants which, upon satisfaction of certain time and performance vesting conditions, are settled by issuing Wajax Corporation shares for no cash consideration. The rights are settled when the participant is no longer employed by the Corporation or one if its subsidiary entities or no longer sits on its board. The aggregate number of shares issuable to satisfy entitlements under these plans may not exceed 1,050,000 shares. Compensation expense is based upon the fair value of the rights at the date of grant and is charged to earnings on a straight-line basis over the vesting period, with an offsetting adjustment to contributed surplus. Forfeitures are recognized as they occur. The Corporation recorded compensation cost of $545 for the three months ending March 31, 2011 (2010 - $292) in respect of these plans.


Share Ownership      March 31,                     March 31,
 Plan                     2011                             2010
----------------------------------------------------------------------------
                     Number of        Fair value      Number of   Fair value
                        Rights        at time of         Rights   at time of
                                           grant                       grant
----------------------------------------------------------------------------
Outstanding at
 beginning of
 period                101,999  $          2,326        126,125 $      2,764
Granted in the
 period                  2,948               108          2,403           57
----------------------------------------------------------------------------
Outstanding at
 end of period         104,947  $          2,434        128,528 $      2,821
----------------------------------------------------------------------------

At March 31, 2011 96,297 SOP rights were
 vested.

Deferred Share       March 31,                     March 31,
 Program                 2011                             2010
----------------------------------------------------------------------------
                     Number of        Fair value      Number of   Fair value
                        Rights        at time of         Rights   at time of
                                           grant                       grant
----------------------------------------------------------------------------
Outstanding at
 beginning of
 period                 24,165  $            738         21,944 $        673
Granted in the
 period                  4,719               177            419           10
----------------------------------------------------------------------------
Outstanding at
 end of period          28,884  $            915         22,363 $        683
----------------------------------------------------------------------------

No DSP rights have vested at March 31, 2011.

Directors'
 Deferred Share      March 31,                     March 31,
 Unit Plan                2011                             2010
----------------------------------------------------------------------------
                     Number of        Fair value      Number of   Fair value
                        Rights        at time of         Rights   at time of
                                           grant                       grant
----------------------------------------------------------------------------
Outstanding at
 beginning of
 period                147,797  $          3,641        117,518 $      2,768
Granted in the
 period                  7,701               291          6,806          176
----------------------------------------------------------------------------
Outstanding at
 end of period         155,498  $          3,932        124,324 $      2,944
----------------------------------------------------------------------------

DDSUP rights vest immediately upon grant.

b) Mid-Term Incentive Plan for Senior Executives ("MTIP")

The MTIP, which is settled in cash, consists of an annual grant that vests over three years and is based upon time and performance vesting criteria, a portion of which is determined by the price of the Corporation's shares. Compensation expense varies with the price of the Corporation's shares and is recognized over the 3 year vesting period. The Corporation recorded compensation cost of $1,617 for the three months ending March 31, 2011 (2010 - $277) in respect of the share-based portion of the MTIP. At March 31, 2011 the carrying amount of the share-based portion of the MTIP liability was $4,898 (2010 - $966).

c) Deferred Stock Unit Plan ("DSUP")

The DSUP, which is settled in cash, consists of an annual grant that vests over three years and is based upon time and performance vesting criteria. If the vesting criteria for DSUP rights are satisfied, the amount earned is recast as a share-based component. Compensation expense for vested DSUP rights varies with the price of Corporation shares and is recognized immediately in earnings. The rights are settled when the participant is no longer employed by the Corporation or one if its subsidiary entities. The Corporation recorded no compensation cost for the three months ending March 31, 2011 or March 31, 2010 in respect of the share-based portion of the DSUP.

12. INCOME TAXES

On January 1, 2011, a plan of arrangement was completed and Wajax Income Fund was converted to Wajax Corporation. The arrangement resulted in the reorganization of the Fund into a corporate structure and subject to income tax on all of its taxable income at combined federal and provincial rates.

Prior to conversion, the Fund was a "mutual fund trust" as defined under the Income Tax Act (Canada) and was not taxable on its income to the extent that it was distributed to its unitholders. Pursuant to the terms of the Declaration of Trust, all taxable income earned by the Fund was distributed to its unitholders. Accordingly, no provision for income taxes was required on taxable income earned by the Fund that was distributed to its unitholders. For 2010, only the Fund's corporate subsidiaries were subject to tax on their taxable income.


Income tax expense comprises current and deferred tax as follows:

For the three months ended March 31                          2011      2010
----------------------------------------------------------------------------
Current                                                  $  5,317  $    126
Deferred  - Origination and reversal of temporary
            difference                                       (135)       74
          - Change in tax law and rate                         46      (570)
----------------------------------------------------------------------------
Income tax expense (recovery)                            $  5,228  $   (370)
----------------------------------------------------------------------------

The calculation of current tax is based on a combined federal and provincial statutory income tax rate of 27.7% (2010 - 29.4%). The tax rate for the current year is 1.7% lower than 2010 due to the effect of the reduced statutory tax rates. Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax assets and liabilities have been measured using an expected average combined statutory income tax rate of 25.9% based on the tax rates in years when the temporary differences are expected to reverse.


The reconciliation of effective income tax is as follows:

For the three months ended March 31                       2011        2010
----------------------------------------------------------------------------
Combined statutory income tax rate                        27.7%       29.4%
Expected income tax expense at statutory rates     $     4,998   $   2,501
Income of the Fund taxed directly to unitholders                   (2,892)
Non-deductible expenses                                    199         129
Deferred tax related to changes in tax law and
 rates                                                      46        (582)
Other                                                      (15)        474
----------------------------------------------------------------------------
Income tax expense (recovery)                      $     5,228   $    (370)
----------------------------------------------------------------------------

Deferred income tax relates to book and tax basis differences for assets and
 liabilities and is attributable to the following:

                                                    March 31,      December
                                                         2011      31, 2010
----------------------------------------------------------------------------
Accrued liabilities and provisions not currently
 deductible                                        $    8,375    $    8,258
Property, plant and equipment                          (1,447)       (1,418)
Vehicles under finance lease                             (173)         (146)
Deductible goodwill and other assets                   (2,090)       (2,052)
Deductible future financing costs                         (27)          (38)
Derivative instrument liability not currently
 deductible                                               546           673
Income tax losses available for carry forward              50             
----------------------------------------------------------------------------
Net deferred income tax asset                      $    5,234    $    5,277
----------------------------------------------------------------------------

13.EARNINGS PER SHARE

The following table sets forth the computation of basic and
 diluted earnings per share:

                                                  March 31,        March 31,
                                                       2011             2010
----------------------------------------------------------------------------
Numerator for basic and diluted earnings
 per share:
- net earnings                              $        12,816  $         8,877
----------------------------------------------------------------------------
Denominator for basic earnings per share -
 weighted average shares                         16,629,444       16,603,423
----------------------------------------------------------------------------
Denominator for diluted earnings per share:
- weighted average shares                        16,629,444       16,603,423
- effect of dilutive share rights                   273,893          251,703
----------------------------------------------------------------------------
Denominator for diluted earnings per share       16,903,337       16,855,126
----------------------------------------------------------------------------
Basic earnings per share                    $          0.77  $          0.53
----------------------------------------------------------------------------
Diluted earnings per share                  $          0.76  $          0.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------
No share rights were excluded from the above calculations as none
were anti-dilutive.

14. SEGMENTED INFORMATION

The Corporation operates through a network of 118 branches in Canada in three core businesses which reflect the internal organization and management structure according to the nature of the products and services provided. The Corporation's three core businesses are: i) the distribution, modification and servicing of mobile equipment; ii) the distribution, servicing and assembly of industrial components; and iii) the distribution and servicing of power systems.


----------------------------------------------------------------------------
For the three months ended
March 31, 2011                                           Segment
                                                    Eliminations
                                                             and
                               Industrial     Power  Unallocated
                    Equipment  Components   Systems      Amounts      Total
----------------------------------------------------------------------------
Equipment         $    80,500 $           $  35,447 $             $ 115,947
Parts                  44,823      80,724    24,081                 149,628
Service                19,086                13,403                  32,489
Rental and other        7,034                            (1,169)     5,865
----------------------------------------------------------------------------
Revenue           $   151,443 $    80,724 $  72,931 $     (1,169) $ 303,929
----------------------------------------------------------------------------

Segment earnings
 before finance
 costs and income
 taxes            $    11,191 $     4,445 $   7,014 $             $  22,650
Corporate costs
 and eliminations                                         (3,630)    (3,630)
----------------------------------------------------------------------------
Earnings before
 finance costs         
 and income taxes      11,191       4,445     7,014       (3,630)    19,020
Finance costs                                                976        976
Income tax
 expense                                                   5,228      5,228
----------------------------------------------------------------------------
Net earnings      $    11,191 $     4,445 $   7,014 $     (9,834) $  12,816
----------------------------------------------------------------------------

Segment assets
 excluding
 intangible
 assets           $   224,817 $   106,329 $ 100,502 $             $ 431,648
Intangible assets      21,541      45,868     5,444                  72,853
Cash                                                       2,873      2,873
Corporate and
 other assets                                              5,355      5,355
----------------------------------------------------------------------------
Total assets      $   246,358 $   152,197 $ 105,946 $      8,228  $ 512,729
----------------------------------------------------------------------------


----------------------------------------------------------------------------
For the three months ended
March 31, 2010                                           Segment
                                                    Eliminations
                                                             and
                             Industrial      Power   Unallocated
                  Equipment  Components    Systems       Amounts      Total
----------------------------------------------------------------------------
Equipment        $   49,745 $         $    13,609 $             $  63,354
Parts                35,873      72,584    21,263                 129,720
Service              15,228                12,569                  27,797
Rental and other      7,539                               (970)     6,569
----------------------------------------------------------------------------
Revenue          $  108,385 $    72,584 $   47,441 $        (970) $ 227,440
----------------------------------------------------------------------------
Segment earnings
 before finance
 costs and income
 taxes           $    7,919 $     3,147        944 $              $  12,010
Corporate costs
 and
 eliminations                                             (2,436)    (2,436)
----------------------------------------------------------------------------
Earnings before
 finance costs
 and income taxes     7,919       3,147        944        (2,436)     9,574
Finance costs                                              1,067      1,067
Income tax
 recovery                                                   (370)      (370)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings     $    7,919 $     3,147 $      944 $      (3,133) $   8,877
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Segment assets
 excluding
 intangible
 assets          $  197,594 $    99,893 $   88,412 $              $ 385,899
Intangible
 assets              21,541      46,344      5,444                  73,329
Corporate and
 other assets                                              2,747      2,747
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets     $  219,135 $   146,237 $   93,856 $       2,747  $ 461,975
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Segment assets do not include assets associated with the corporate office, financing or income taxes. Additions to corporate assets, and depreciation of these assets, are included in segment eliminations and unallocated amounts.

15. SUBSEQUENT EVENTS

On May 2, 2011, the Corporation's Power Systems segment acquired the assets of Harper Power Products Inc. ("Harper") for $21,600, subject to post-closing adjustments. The acquisition price was funded through the Corporation's existing bank lines. This acquisition secures the Ontario distribution rights to certain product lines and complements the segment's existing distribution rights in the rest of Canada, except for portions of British Columbia. Harper had 2010 adjusted annual revenue of approximately $71,000. The Corporation has not yet fully determined details of goodwill recognized or acquisition-date fair values of net assets acquired. It is anticipated that the amount eventually attributed to goodwill will be 75% deductible for income tax purposes.

16. EXPLANATION OF TRANSITION TO IFRS

This is the first year that the Corporation has presented its condensed consolidated financial statements in accordance with IFRS. In the year ended December 31, 2010, the Corporation reported under previous Canadian GAAP.

The accounting policies set out in Note 3 have been applied in preparing the financial statements for the three months ended March 31, 2011, the comparative information presented in these financial statements for both the three months ended March 31, 2010 and year ended December 31, 2010 and in the preparation of an opening IFRS statement of financial position at January 1, 2010 (the Corporation's date of transition).

In preparing its opening IFRS statement of financial position, the Corporation has adjusted amounts reported previously in financial statements prepared in accordance with previous Canadian GAAP. An explanation of how the transition from previous Canadian GAAP to IFRS has affected the Corporation's reported financial position, financial performance and cash flows is set out in the tables below and the notes that accompany the tables.

IFRS 1 First-time Adoption of International Financial Reporting Standards sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retrospectively at the transitional statement of financial position date and, in general, all adjustments to assets and liabilities are taken to retained earnings, unless certain exemptions are elected and certain mandatory exceptions are applied. In preparing its opening IFRS statement of financial position, the Corporation has elected the following exemptions:

Business combinations before January 1, 2010 (IFRS 3 "Business Combinations")

The Corporation has elected not to apply IFRS 3 retrospectively to business combinations that took place before January 1, 2010. In addition, and as a condition under IFRS 1 for applying this exemption, goodwill relating to business combinations that occurred prior to January 1, 2010 was tested for impairment even though no impairment indicators were identified. No impairment existed at the date of transition.

Employee Benefits - actuarial gains and losses (IAS 19 "Employee Benefits")

Under IFRS, the Corporation's accounting policy is to recognize all actuarial gains and losses immediately in other comprehensive income. At the date of transition, the Corporation has elected to recognize all cumulative actuarial gains and losses in retained earnings.

Employee Benefits - pension costs (IAS 19 "Employee Benefits")

The Corporation has elected to disclose the present value of the defined benefit obligation, fair value of the plan assets, surplus or deficit in the plan, and the experience adjustments arising on the plan assets or liabilities, for each accounting period prospectively from the date of transition to IFRS.


Reconciliation of Consolidated Income Statement

FOR THE THREE MONTHS ENDED
MARCH 31, 2010                 Canadian Employee Leases Inventory      IFRS
                                   GAAP Benefits IAS 17     IAS 2
                                          IAS 19
----------------------------------------------------------------------------
(In thousands of Canadian
 dollars)
----------------------------------------------------------------------------

Revenue                       $ 227,440                           $ 227,440
Cost of sales                   176,261                      (438)  175,829
----------------------------------------------------------------------------
Gross profit                     51,179                       432    51,611
----------------------------------------------------------------------------
Selling and administrative
 expenses                        42,351      (35)  (279)             42,037
----------------------------------------------------------------------------
Earnings before finance costs
 and income taxes                 8,828       35    279       432     9,574
Finance costs                     1,031              36               1,067
----------------------------------------------------------------------------
Earnings before income taxes      7,797       35    243       432     8,507
Income tax expense (recovery)      (565)       9     65       121      (370)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings                  $   8,362       26    178       311 $   8,877
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Reconciliation of Consolidated Statement of Comprehensive Income

                               Canadian Employee Leases Inventory      IFRS
FOR THE THREE MONTHS ENDED         GAAP Benefits IAS 17     IAS 2
MARCH 31, 2010                            IAS 19
----------------------------------------------------------------------------
(In thousands of Canadian
 dollars)
----------------------------------------------------------------------------

Net earnings                 $    8,362       26    178       311 $   8,877
----------------------------------------------------------------------------

Losses on derivative
 instruments designated
 as cash flow hedges
 in prior periods
 reclassified to
 cost of inventory or
 finance costs during the
 period, net of tax                 139                                 139

Losses on derivative
 instruments designated
 as cash flow hedges during
 the period, net of tax            (706)                               (706)

----------------------------------------------------------------------------
Other comprehensive loss,
 net of tax                        (567)                               (567)
----------------------------------------------------------------------------

Total comprehensive income   $    7,795       26    178       311 $   8,310
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Reconciliation of Consolidated Income Statement

                             Canadian Employee Leases Inventory       IFRS
FOR THE YEAR ENDED               GAAP Benefits IAS 17     IAS 2
DECEMBER 31, 2010                       IAS 19
----------------------------------------------------------------------------
(In thousands of Canadian
 dollars)
----------------------------------------------------------------------------

Revenue                   $ 1,110,888                           $ 1,110,888
Cost of sales                 874,327                       (29)    874,298
----------------------------------------------------------------------------
Gross profit                  236,561                       (29)    236,590
----------------------------------------------------------------------------
Selling and
 administrative expenses      180,131     (140)  (877)              179,114
----------------------------------------------------------------------------
Earnings before finance
 costs and income taxes        56,430      140    877       (29)     57,476
Finance costs                   4,094             183                 4,277
----------------------------------------------------------------------------
Earnings before income
 taxes                         52,336      140    694       (29)     53,199
Income tax expense
 (recovery)                    (2,683)      35    185        (9)     (2,454)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings             $     55,019      105    509        20 $    55,653
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Reconciliation of Consolidated Statement of Comprehensive Income

                              Canadian Employee  Leases Inventory      IFRS
FOR THE YEAR ENDED                GAAP Benefits  IAS 17     IAS 2
DECEMBER 31, 2010                        IAS 19
----------------------------------------------------------------------------
(In thousands of Canadian
 dollars)
----------------------------------------------------------------------------

Net earnings                $   55,019      105     509      20 $    55,653
----------------------------------------------------------------------------

Actuarial losses on pension
 plans, net of tax                         (628)                       (628)
Losses on derivative
 instruments designated
 as cash flow hedges
 in prior periods
 reclassified to cost of
 inventory or finance
 costs during the period,
 net of tax                        938                                  938

Losses on derivative
 instruments designated as
 cash flow hedges during the
 period, net of tax               (482)                                (482)

----------------------------------------------------------------------------
Other comprehensive income
 (loss), net of tax                456     (628)                       (172)
----------------------------------------------------------------------------

Total comprehensive income  $   55,475     (523)    509      20 $    55,481
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Reconciliation of Consolidated Statement of Financial Position


AS AT MARCH 31, 2010  Canadian Employee Leases Inventory  Income        IFRS
                          GAAP Benefits IAS 17     IAS 2 Tax IAS
                                 IAS 19                       12
----------------------------------------------------------------------------
(In thousands of
 Canadian dollars)
----------------------------------------------------------------------------
ASSETS
CURRENT
Trade and other
 receivables        $  131,846                                    $ 131,846
Inventories            182,233                     2,110            184,343
Prepaid expenses         8,711                                        8,711
Income taxes
 receivable                124                      (585)    461          
Deferred tax assets      3,731                            (3,731)         -
----------------------------------------------------------------------------
                       326,645                     1,525  (3,270)   324,900
----------------------------------------------------------------------------

NON-CURRENT
Rental equipment        16,086                                       16,086
Property, plant and
 equipment              35,729           9,154                       44,883
Intangible assets       73,329                                       73,329
Deferred tax assets          -      874    (27)            1,870      2,717
Pension asset            2,164   (2,104)                                 60
----------------------------------------------------------------------------
                       127,308   (1,230)  9,127            1,870    137,075
----------------------------------------------------------------------------
                     $ 453,953   (1,230)  9,127    1,525  (1,400) $ 461,975
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND
 SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness    $   3,354                                    $   3,354
Trade and other
 payables               88,468      393                              88,861
Accrued liabilities     61,849                                       61,849
Provisions               4,725                                        4,725
Distributions payable    2,491                                        2,491
Income taxes payable         -                               461        461
Obligations under
 finance leases              -            3,704                       3,704
----------------------------------------------------------------------------
                       160,887      393   3,704              461    165,445
----------------------------------------------------------------------------

NON-CURRENT
Provisions               3,347                                        3,347
Deferred income taxes    1,861                            (1,861)         -
Employee benefits        2,966      841                               3,807
Derivative instrument
 liability               3,203                                        3,203
Bank debt               79,448                                       79,448
Other liabilities        1,265                                        1,265
Obligations under
 finance leases              -            5,353                       5,353
----------------------------------------------------------------------------
                        92,090      841   5,353           (1,861)    96,423
----------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Trust units            105,307                                      105,307
----------------------------------------------------------------------------
Contributed surplus      5,937                                        5,937
----------------------------------------------------------------------------
Retained earnings       92,532   (2,464)     70    1,525             91,663
Accumulated other
 comprehensive loss     (2,800)                                      (2,800)
----------------------------------------------------------------------------
                        89,732   (2,464)     70    1,525             88,863
----------------------------------------------------------------------------
Total shareholders'
 equity                200,976   (2,464)     70    1,525            200,107
----------------------------------------------------------------------------
                     $ 453,953   (1,230)  9,127    1,525  (1,400) $ 461,975
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Reconciliation of Consolidated Statement of Financial Position

AS AT JANUARY 1, 2010  Canadian Employee Leases Inventory Income        IFRS
                           GAAP Benefits IAS 17     IAS 2    Tax
                                  IAS 19                  IAS 12
----------------------------------------------------------------------------
(In thousands of
 Canadian dollars)
----------------------------------------------------------------------------
ASSETS
CURRENT
Cash                  $   9,207                                   $   9,207
Trade and other
 receivables            123,537                                     123,537
Inventories             176,230                     1,679           177,909
Income taxes
 receivable                 190                      (464)   274          
Deferred tax assets       3,191                           (3,191)         
Prepaid expenses          7,800                                       7,800
----------------------------------------------------------------------------
                        320,155              1,215 (2,917)   318,453
----------------------------------------------------------------------------

NON-CURRENT
Rental equipment         16,370                                      16,370
Property, plant and
 equipment               36,164           9,844                      46,008
Intangible assets        73,505                                      73,505
Deferred tax assets           -      883     38            1,308      2,229
Pension asset             2,013   (2,013)                                 
----------------------------------------------------------------------------
                        128,052   (1,130)  9,882           1,308    138,112
----------------------------------------------------------------------------
                      $ 448,207   (1,130)  9,882    1,215 (1,609) $ 456,565
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND
 SHAREHOLDERS' EQUITY
CURRENT
Trade and other
 payables             $  83,066      657                          $  83,723
Accrued liabilities      66,089                                      66,089
Provisions                4,859                                       4,859
Distributions payable     2,491                                       2,491
Income taxes payable          -                              274        274
Obligations under
 finance leases               -            3,850                      3,850
----------------------------------------------------------------------------
                        156,505      657   3,850             274    161,286
----------------------------------------------------------------------------

NON-CURRENT
Provisions                3,518                                       3,518
Deferred income tax       1,883                           (1,883)         
Employee benefits         2,995      704                              3,699
Derivative instrument
 liability                2,643                                       2,643
Bank debt                79,461                                      79,461
Other liabilities           841                                         841
Obligations under
 finance leases               -            6,140                      6,140
----------------------------------------------------------------------------
                         91,341      704   6,140          (1,883)    96,302
----------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Trust units             105,307                                     105,307
----------------------------------------------------------------------------
Contributed surplus       5,645                                       5,645
----------------------------------------------------------------------------
Retained earnings        91,642   (2,491)   (108)   1,215            90,258
Accumulated other
 comprehensive loss      (2,233)                                     (2,233)
----------------------------------------------------------------------------
                         89,409   (2,491)   (108)   1,215            88,025
----------------------------------------------------------------------------
Total shareholders'
 equity                 200,361   (2,491)   (108)   1,215           198,977
----------------------------------------------------------------------------
                      $ 448,207   (1,130)  9,882    1,215 (1,609) $ 456,565
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Reconciliation of Consolidated Statement of Financial Position

AS AT DECEMBER 31,   Canadian Employee Leases Inventory Income          IFRS
2010                     GAAP Benefits IAS 17     IAS 2    Tax
                                IAS 19                  IAS 12
----------------------------------------------------------------------------
(In thousands of
Canadian dollars)
----------------------------------------------------------------------------
ASSETS
CURRENT
Cash                $  42,954                                     $  42,954
Trade and other
 receivables          135,517                                       135,517
Inventories           194,752                     1,708             196,460
Prepaid expenses        7,244                                         7,244
Deferred tax assets     6,466                           (6,466)           -
----------------------------------------------------------------------------
                      386,933                     1,708 (6,466)     382,175
----------------------------------------------------------------------------

NON-CURRENT
Rental equipment       15,794                                        15,794
Property, plant and
 equipment             36,626           9,464                        46,090
Intangible assets      72,972                                        72,972
Deferred tax assets         -    1,065   (146)           4,358        5,277
Pension asset           3,013   (2,773)                                 240
----------------------------------------------------------------------------
                      128,405   (1,708) 9,318            4,358      140,373
----------------------------------------------------------------------------
                    $ 515,338   (1,708) 9,318     1,708 (2,108)   $ 522,548
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND
 SHAREHOLDERS' EQUITY
CURRENT
Trade and other
 payables           $ 134,540      292                            $ 134,832
Accrued liabilities    64,229                                        64,229
Provisions              4,892                                         4,892
Distributions payable  12,472                                        12,472
Income taxes payable    1,599                       473               2,072
Obligations under
 finance leases             -            3,677                        3,677
Derivative instrument
 liability              2,452                                         2,452
Bank debt              79,680                                        79,680
----------------------------------------------------------------------------
                      299,864      292   3,677      473             304,306
----------------------------------------------------------------------------

NON-CURRENT
Provisions              4,338                                         4,338
Deferred income tax     2,108                           (2,108)           -
Employee benefits       3,118    1,014                                4,132
Other liabilities       5,221                                         5,221
Obligations under
 finance leases             -            5,227                        5,227
----------------------------------------------------------------------------
                       14,785    1,014   5,227          (2,108)      18,918
----------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Trust units           105,892                                       105,892
----------------------------------------------------------------------------
Contributed surplus     6,426                                         6,426
----------------------------------------------------------------------------
Retained earnings      90,148   (2,386)     414   1,235              89,411
Accumulated other
 comprehensive loss    (1,777)    (628)                              (2,405)
----------------------------------------------------------------------------
                       88,371   (3,014)     414   1,235              87,006
----------------------------------------------------------------------------
Total shareholders'
 equity               200,689   (3,014)     414   1,235             199,324
----------------------------------------------------------------------------
                    $ 515,338   (1,708)   9,318   1,708 (2,108)   $ 522,548
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Material adjustments to the statement of cash flows for 2010

Consistent with the Corporation's accounting policy choice under IAS 7 Statement of Cash Flows, interest paid and income taxes paid have moved into the body of the Statement of Cash Flows, whereas they were previously disclosed as supplementary information. There are no other material differences between the statement of cash flows presented under IFRS and the statement of cash flows presented under previous Canadian GAAP.

Notes to the reconciliations

(a) Employee Benefits (IAS 19)

Under Canadian GAAP, the Corporation accounted for post-employment benefits under CICA Handbook Section 3461, Employee Future Benefits, whereby defined benefit pension plan net actuarial gains or losses over 10% of the greater of the benefit obligation and the fair value of the plan assets were amortized to income over the average remaining service life of active employees. Under IAS 19, Employee Benefits, the Corporation has adopted the policy of recognizing actuarial gains and losses in full in other comprehensive income in the period in which they occur.

(b) Leases (IAS 17)

Under Canadian GAAP, the Corporation assessed vehicle leases under CICA Handbook Section 3065, Leases, as operating leases. Under IAS 17, Leases, the Corporation has assessed the vehicle leases as financing leases. Under finance leases the asset is recorded at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease. The liability is included in the statement of financial position and classified between current and non-current amounts. The interest component of the lease payments is charged to earnings over the period of the lease so as to achieve a constant rate of interest on the remaining balance of the liability.

(c) Inventory (IAS 2)

Under Canadian GAAP, the Corporation did not allocate overhead to work in process inventory relating to customer repair orders. Under IFRS the Corporation allocates overhead to work in process inventory relating to customer repair orders resulting in an adjustment to inventory and opening retained earnings.

(d) Income Taxes (IAS 12)

The effect of applying IAS 12 is that all deferred tax balances are now classified as non-current. No other changes arise from this section. Applicable income tax rates have been applied to all IFRS adjustments.

(e) Comparative Information

Certain comparative amounts have been reclassified to conform with the current period presentation.

In particular, 2010 cash discounts provided to customers in an amount of $237 for the quarter and $978 for the full year have been reclassified out of selling and administrative expenses into revenue.

Contact Information

  • Wajax Corporation
    Neil Manning
    President and Chief Executive Officer
    (905) 212-3300
    nmanning@wajax.com

    Wajax Corporation
    John Hamilton
    Chief Financial Officer
    (905) 212-3300
    jhamilton@wajax.com