Newalta's Growth Continues in Third Quarter
CALGARY, ALBERTA--Newalta Income Fund (TSX: NAL.UN) today
announced unaudited financial results for the nine months ended
September 30, 2003.

Newalta Income Fund is the successor organization to Newalta
Corporation. Information for the three and nine months ended
September 30, 2003, along with comparative information for the
respective periods in 2002, is provided. Some numbers from the
prior year have been restated to conform to those reported for
the Fund.

Financial Highlights ($000s)


/T/

                                       Three Months Ended September 30
                                                 (unaudited)
                                                             %Increase
                                           2003         2002  (Decrease)
-----------------------------------------------------------------------
Revenue                                  41,981       30,446         38
Operating income before
 reorganization costs                    12,377        7,108         74
Operating income                         12,377        7,108         74
Net earnings                              9,928        4,322        130
Net earnings per unit (cents)(1)           43.3         19.8        119
Diluted EPU (cents)                        42.5         19.2        121
EBITDA(2) before
 reorganization costs                    16,112       10,474         54
EBITDA                                   16,112       10,474         54
Trailing 12 month EBITDA before
 reorganization costs                         -            -          -
Trailing 12 month EBITDA                      -            -          -
Cash flow before
 reorganization costs (3)                15,315        9,502         61
Cash flow                                15,315        9,502         61
Cash available for distribution
 before reorganization costs
 (Note 9) - $                             9,996          n/a
          - per unit                       0.44
Cash available for distribution
 (Note 9) - $                             9,996          n/a
          - per unit                       0.44
Cash distributions declared
 (Note 9)  - $                            6,530          n/a
           - per unit                     0.285
Capital expenditures, net                 7,069       14,915        (53)
Weighted average units
 outstanding (000s) (1)                  22,907       21,817          5
Total units outstanding (000s)(1)        23,032       21,817          6
-----------------------------------------------------------------------




                                        Nine Months Ended September 30
                                                 (unaudited)
                                                              %Increase
                                           2003         2002  (Decrease)
-----------------------------------------------------------------------

Revenue                                 114,934       77,431         48
Operating income before
 reorganization costs                    26,890       15,031         79
Operating income                         21,695       15,031         44
Net earnings                             18,048        8,965        101
Net earnings per unit (cents)(1)           80.8         43.9         84
Diluted EPU (cents)                        79.4         42.2         88
EBITDA(2) before
 reorganization costs                    38,255       24,850         54
EBITDA                                   33,060       24,850         33
Trailing 12 month EBITDA before
 reorganization costs                    47,694       32,719         46
Trailing 12 month EBITDA                 42,499       32,719         30
Cash flow before
 reorganization costs(3)                 35,774       22,300         60
Cash flow                                30,579       22,300         37
Cash available for distribution
 before reorganization costs
 (Note 9) - $                            28,360          n/a
          - per unit                       1.27
Cash available for distribution
 (Note 9) - $                            23,184          n/a
          - per unit                       1.04
Cash distributions declared
 (Note 9) - $                            14,506          n/a
          - per unit                      0.645
Capital expenditures, net                 9,145       20,918        (56)
Weighted average units
 outstanding (000s) (1)                  22,330       20,446          9
Total units outstanding (000s)(1)        23,032       21,817          6
-----------------------------------------------------------------------

/T/

(1) For comparative purposes the previously reported weighted
average and total number of shares outstanding in 2002 have been
converted to units on a 2:1 basis, and per unit calculations have
been restated on this basis.

(2) EBITDA is provided to assist management and investors in
determining the ability of the Fund to generate cash from
operations. It is calculated from the consolidated statements of
income as revenue less operating and general and administrative
expenses. This measure does not have any standardized meaning
prescribed by GAAP and may not be comparable to similar measures
presented by other funds or companies.

(3) Management uses cash flow (before changes in non-cash working
capital) to analyze operating performance and leverage. Cash flow
as presented does not have any standardized meaning prescribed by
Canadian GAAP and therefore it may not be comparable with the
calculation of similar measures for other entities. Cash flow as
presented is not intended to represent operating cash flow or
operating profits for the period nor should it be viewed as an
alternative to cash flow from operating activities, net earnings
or other measures of financial performance calculated in
accordance with Canadian GAAP. All references to cash flow
throughout this report are based on cash flow before changes in
non-cash working capital.

FINANCIAL SUMMARY AND OPERATIONAL HIGHLIGHTS

Revenue for the third quarter increased 38% to $42.0 million.
Operating income improved 74% to $12.4 million and EBITDA was up
54% to $16.1 million. Cash available for distribution was $10.0
million, or 44 cents per unit. During the third quarter, the Fund
distributed $6.1 million, or 27 cents per unit. Operating costs
declined to less than 60% of revenue; a new performance standard
for the Fund. Operating income improved to 29.5% of revenue which
also sets a new standard.

For the nine months ended September 30, revenue increased 48%
compared to 2002. Before reorganization costs, EBITDA was up 54%
and operating income increased 79%. Cash available for
distribution excluding reorganization costs was $28.4 million, or
$1.27 per unit (14.1 cents per month); well above the declared
distributions. Revenue, EBITDA and operating income in the first
nine months were higher than all of last year.

On October 21, 2003, we closed a bought deal financing of 3.8
million units @ $12.00 per unit, increasing the total units
outstanding to 26.8 million. Net proceeds of approximately $43.0
million were used to eliminate our net debt.

"We entered 2003 with clear action plans to increase revenue,
improve profitability and generate cash flow in excess of our
committed distributions to investors," said Al Cadotte, President
and Chief Executive Officer. "We have achieved our objectives for
the year and our focus now is on driving improved performance in
2004."

Management's Discussion and Analysis as well as financial
statements and notes to the financial statements are attached.

Management will hold a conference call on Wednesday, November 19,
2003 at 11:00 a.m. (ET) to discuss the third quarter results. To
listen, please dial 1-800-814-4853 or 416-640-4127, or log onto
the web cast at www.newalta.com or www.ccnmatthews.com. For those
unable to listen to the live event, a rebroadcast will be
available until midnight, November 26, 2003. Please dial
416-640-1917 or 1-877-289-8525 and enter the pass code 21022649.

This document may contain forward-looking statements, relating to
the operations or to the environment in which Newalta operates,
which are based on the Fund's operations, estimates, forecasts
and projections. These statements are not guarantees of future
performance and involve risks and uncertainties that are
difficult to predict, or are beyond the Fund's control. A number
of important factors could cause actual outcomes and results to
differ materially from those expressed in these forward-looking
statements. These factors include those set forth in this report
and other public filings. Consequently, readers should not place
any undue reliance on such forward-looking statements. In
addition, these forward-looking statements relate to the date on
which they are made. Newalta disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.

Newalta Income Fund maximizes the inherent value in certain
industrial wastes through recovery of saleable products and
recycling, rather than disposal. Through an integrated network of
35 state-of-the-art facilities, Newalta delivers world-class
solutions to a broad customer base of national and international
corporations, in a range of industries, including the automotive,
forestry, pulp and paper, manufacturing, mining, oil and gas,
petrochemical, and transportation services industries. With a
strong track record of profitable growth and environmental
stewardship, Newalta is focused on leveraging its proven
competencies in new service sectors and geographic markets from
coast to coast.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND
2002

The following discussion and analysis should be read in
conjunction with the consolidated financial statements and notes
thereto for the year ended December 31, 2002 of Newalta
Corporation in the fiscal 2002 annual report, and the MD&A in the
fiscal 2002 annual report, including the section on risks and
uncertainties.

ACHIEVEMENTS

We have made excellent progress on all of our objectives in 2003.
The conversion to an Income Fund on March 1 has been successful
and the unit price has increased steadily. An extensive cost
reduction and price improvement program was completed, a
strategic alliance was established and we completed the
acquisition of our first oilfield satellite facility. We set new
performance records every quarter as revenue grew and
profitability was enhanced. Based on the new standards of
financial performance of the Fund, distributions were increased
in September from $0.09 per unit per month to $0.105 per unit per
month. We also completed a bought deal financing in October with
net proceeds of approximately $43.0 million to eliminate our net
debt.

We have established clear plans to grow our existing business and
acquire complementary businesses. We have the opportunities,
experienced management and the financial capacity to capitalize
on opportunities to maintain the momentum that we have
established. We are confident that the action we are taking will
further enhance performance of the Fund and continue to increase
returns to our investors in 2004 and beyond.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2003

For the three months ended September 30, 2003, Newalta Income
Fund (the "Fund") increased revenue 38% to $42.0 million, from
$30.4 million in the third quarter of 2002. Operating income
improved 74% to $12.4 million, while cash flow improved by $5.8
million, or 61%, to $15.3 million. The third quarter's
performance was driven by management initiatives to maximize
price, reduce costs, and enhance efficiencies, as well as was
strong market demand in both the Oilfield and Industrial
divisions. Net earnings increased $5.6 million, or 130%, to $9.9
million compared with $4.3 million in 2002.

General and administrative costs increased $0.3 million to $0.8
million, principally as a result of increases in bonus accruals.

Interest expense of $0.6 million was slightly less than 2002
primarily due to reduced interest expense resulting from the
conversion of debentures.

The increase in depreciation to $3.1 million from $2.7 million in
2002 was attributable to 2002 and 2003 capital investments.

Income tax expense recognizes the future liability arising from
the difference between taxable and accounting income. The Fund is
a unit trust for income tax purposes, and is taxable on taxable
income not allocated to the unitholders. During the period
substantially all the Fund's income was allocated to
shareholders. Newalta is subject to corporate income taxes and
follows the liability method of accounting for income taxes.

Diluted earnings per unit increased over 120% to 42.5 cents per
unit from 19.2 cents in 20021. Distributable cash totaled $10.0
million, of which approximately $6.1 million (27 cents per unit)
was distributed to unitholders.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2003

For the nine months ended September 30, 2003 revenue improved 48%
and operating income before reorganization costs increased 79%.
Including the reorganization costs incurred earlier in the year,
operating income improved 44% to $21.7 million and net earnings
improved 101% to $18.0 million. Reorganization costs were $5.2
million or $0.23 per unit. Cash flow before reorganization costs
increased 60% to $35.8 million for the nine months, and including
reorganization costs increased $8.3 million, or 37%, to $30.6
million. Cash available for distribution, excluding
reorganization costs, was $28.4 million ($1.27 per unit). Cash
available for distribution, after reorganization costs, was $23.2
million ($1.04 per unit). Excluding reorganization costs,
trailing 12 month EBITDA(2) improved by 46% to $47.7 million.
After reorganization costs, diluted earnings per unit were 79.4
cents compared with 42.2 cents per unit2 in 2002. The record
performance for the nine months ended September 30, 2003 can be
attributed to strong demand for the Fund's services and products
and to operating efficiencies. Further reasons for the
improvement in performance are outlined in the results of
operations for the three months ended September 30, 2003.

General and administrative expenses were $2.4 million compared to
$1.5 million in 2002. The increase in expenses relates to a
non-cash accrual of $0.3 million for the stock appreciation
rights expense (2002-nil), plus additional bonus and insurance
costs.

Interest expense is approximately $0.2 million higher than last
year due to the interest incurred on the debentures issued for
asset acquisitions last year. As at September 30, 2003 all the
remaining debentures have been converted to units.

Depreciation expense of $9.1 million was 8% of revenue compared
to $7.7 million or 10% of revenue in 2002. The increase in
depreciation expense reflects the 2002 capital program and is
mainly attributable to the acquisition of assets from Mohawk
Lubricants Ltd.

The reorganization costs incurred during the nine month period
relate to restructuring the Corporation into an income fund.

SEGMENTED PERFORMANCE

Oilfield

The Oilfield segment ("Oilfield") recovers and resells crude oil
from oilfield wastes. Oilfield accounts for approximately 63% of
the Fund's total assets and 65% of the Fund's revenues. Revenue
from Oilfield is generated mainly from the fees charged for the
treatment and processing of various oilfield waste materials and
from the sale of recovered crude oil. Approximately 83% of
Oilfield revenues come from wastes generated from oil and gas
production. Revenue in Oilfield varies with oilfield activity and
commodity prices.

During the three months ended September 30, 2003 Oilfield
recovered a total of 289,000 barrels of crude oil, of which
76,000 barrels were for the Fund's account and sold at an average
price of $36.13 per barrel. Comparable recoveries in third
quarter of 2002 were 291,000 barrels including 65,000 barrels for
the Fund's account, at an average price of $39.24 per barrel.
Revenue for the three months from Oilfield increased 44% to $28.7
million and segment margin improved 68% to $13.7 million. The
record Oilfield performance resulted primarily from management
initiatives and strong oilfield activity, which more than
compensated for the 8% reduction in average price received per
barrel of oil recovered and sold. The 62% drilling rig
utilization rate for the quarter was above the 5 year average of
48% and last year's average of 41%.

For the nine months ended September 30, 2003 business
fundamentals remained strong with above average drilling and
strong market demand. During the nine months Oilfield recovered a
total of 878,000 barrels of crude oil, of which 207,000 barrels
were sold for the Fund's account at an average price of $39.01
per barrel. For the first nine months of 2002 oil recoveries
totalled 800,000 barrels including 175,000 barrels for the Fund's
account, at an average price of $34.88 per barrel. Revenue for
the nine months increased 40% to $74.8 million, and margin
improved 67% to $32.7 million.

(1) Per unit calculations for 2002, prior to the reorganization
into the Fund, are calculated as if the weighted average number
of shares at the time had been converted to units on a 2:1 basis,
and have been retroactively restated.

(2) EBITDA is provided to assist management and investors in
determining the ability of the Fund to generate cash from
operations.  It is calculated from the consolidated statements of
income as revenue less operating and general and administrative
expenses.  This measure does not have any standardized meaning
prescribed by GAAP and may not be comparable to similar measures
presented by other funds or companies.

(3) Management uses cash flow (before changes in non-cash working
capital) to analyze operating performance and leverage.  Cash
flow as presented does not have any standardized meaning
prescribed by Canadian GAAP and therefore it may not be
comparable with the calculation of similar measures for other
entities.  Cash flow as presented is not intended to represent
operating cash flow or operating profits for the period nor
should it be viewed as an alternative to cash flow from operating
activities, net earnings or other measures of financial
performance calculated in accordance with Canadian GAAP.  All
references to cash flow throughout this report are based on cash
flow before changes in non-cash working capital.

For the three months ended September 30, 2003 capital spending
totaled $6.2 million ($3.1 million in 2002) of which $2.5 million
was a non-cash equity issue. Capital expenditures for the nine
months were $8.7 million ($6.2 million cash) compared to $5.5
million last year. On July 1, 2003, the Fund purchased a
satellite oilfield facility in southwest Saskatchewan for $3.2
million.

The outlook for Oilfield remains positive for the balance of the
year. Continuing strong oilfield activity combined with strategic
initiatives to improve profitability should continue to deliver
record performance.

Industrial

The Industrial segment ("Industrial") collects automotive and
industrial wastes and waste lubricating oil in western Canada,
which are then processed into resalable products. Industrial
accounts for approximately 34% of the Fund's total assets and
generates approximately 35% of the Fund's total revenue.
Industrial produces various recycled products from waste
lubricating oil, including base oil, burner fuel, fuel oil, and
drilling oil. This year approximately 57% of Industrial revenue
comes from product sales with the balance derived from collection
fees (compared to 47% product sales in 2002). This increase in
product sales is attributed to the business acquired from Mohawk
in 2002.

For the three months ended September 30, 2003 Industrial revenue
increased 27%, to $13.3 million, and margin improved 28%. During
the quarter Industrial collected 13.9 million liters of waste
oil, compared to 14.9 million litres collected in 2002.
Collection revenue increased 25% to $5.9 million for the quarter.


For the nine months ended September 30, 2003 revenue improved 68%
to $40.1 million, and margin increased 57%. For the nine months
Industrial collected 39.9 million liters of waste oil compared to
34.4 million liters in 2002.

Capital expenditures for the three months ended September 30,
2003 were $0.4 million compared with $11.3 million in 2002. Year
to date capital spending was $1.4 million ($14.2 million in
2002). Capital spending in 2002 included $10.3 million spent to
acquire the Mohawk assets.

Collection activity and product sales are expected to continue at
a high level for the remainder of 2003. Price increases and cost
reduction initiatives previously initiated are positively
impacting operating results. For the remainder of the year
Industrial will focus on developing product markets, increasing
collection activities in the waste water market and the
centrifugation of sludges.

CAPITAL EXPENDITURES

Capital expenditures on a cash basis for the three months ending
September 30, 2003, net of proceeds of disposition, were $4.6
million, compared with $8.9 million in 2002. Total capital
additions, for the quarter, were $7.1 million compared to $14.9
million in 2002. Included in the 2003 spending is $3.2 million
for a satellite oilfield facility. Year to date net capital
spending was $9.1 million inclusive of the $1.5 million of
proceeds from the sale of assets as compared to net capital
spending of $20.9 million in 2002. For the nine months growth
capital spending totaled approximately $2.0 million, the
acquisition cost $3.2 million, and the balance of capital
spending, $5.4 million related to sustenance capital. Total
sustenance capital expenditures for 2003 are estimated to be
approximately $7.0 million. Total growth capital expenditures for
2003, excluding acquisitions, are estimated to be approximately
$5.0 million.

LIQUIDITY AND FINANCIAL RESOURCES

At September 30, 2003, long-term debt (including the current
portion) was $39.3 million or approximately 0.9 times trailing 12
month EBITDA, compared with $50.1 million, or 1.5 times trailing
12 month EBITDA a year ago. During the first quarter of 2003,
management negotiated a new credit facility with two Canadian
chartered banks. The new facility provides for a total of $65.0
million in loan capacity, with equal quarterly payments of $0.75
million. As at September 30, 2003, the $25 million operating line
was unutilized, the $25.0 million extendable term facility was
fully drawn, and the five year term facility had $14.3 million
outstanding.

On September 30, 2003 the Fund announced that it had entered into
a bought deal to raise $45.6 million of equity through the
issuance of 3.8 million units, at $12.00 per unit. On October 21,
2003 the financing closed with net proceeds to the Fund of
approximately $43.0 million. The proceeds of the offering will be
used to repay the $25.0 million extendable term facility, general
corporate purposes and to fund Newalta's growth through
investments in existing operations as well as acquisitions.

UNITHOLDERS' CAPITAL

During the first quarter, under a Plan of Arrangement, the Fund
issued 21.8 million units and 0.3 million Exchange Rights in
exchange for all of the common shares and options of Newalta
Corporation. In March 2003, holders of 0.2 million Exchange
Rights exercised resulting in an additional issuance of 0.2
million units. During the year the holders of the $6.0 million of
debentures converted their debentures to 750,000 units in the
Fund. On July 1, 2003, 250,000 units ($2.5 million) were issued
to acquire a satellite Oilfield facility. Outstanding units at
the end of the quarter totaled 23.0 million units.


/T/

QUARTERLY COMPARISON ($000'S)

                               Three Months Ended     Nine Months Ended
                                     September 30          September 30
-----------------------------------------------------------------------
                                  2003       2002       2003       2002
-----------------------------------------------------------------------
Revenue                         41,981     30,446    114,934     77,431
Net earnings                     9,928      4,322     18,048      8,965
Net earnings per unit
 (cents)                          43.3       19.8       80.8       43.9
Diluted net earnings per
 unit (cents)                     42.5       19.2       79.4       42.2

/T/

RISKS AND UNCERTAINTIES

This report contains forward-looking statements that involve a
number of risks and uncertainties, including statements regarding
the outlook for the Fund's business and results of operations.
There are a number of factors that could cause actual results to
differ materially from those indicated. Operational risks
include:

- The business of the Fund is affected by fluctuations in the
level of activity in the oil and natural gas industry, which, in
turn, is directly affected by changes in world energy prices.

- Fluctuations in commodity prices also affect the value of the
crude oil the Fund recovers and resells. In the first nine months
of the year oil sales accounted for 12% of total revenue in both
2003 and 2002.

- The waste management industry is highly regulated, and the
Fund's business is affected by government legislation.

- The Fund's business is also affected by seasonality and by
competition, which varies by location and by type of service.

The Fund currently has no swaps, hedges, nor derivatives in
place. Financial risk is limited to the Fund's exposure to
fluctuations in interest rates, and to the normal business risk
incurred with trade accounts receivable. In the three months
ending September 30, 2003, a 1% change in interest rates would
have increased/decreased operating income by $0.1 million. Some
sales are to customers based in the United States and as a result
the Fund is exposed to the risk of currency exchange rate
changes. Both exchange rate and trade receivables risk are
minimized through the Fund's credit granting and receivables
collection processes.


/T/

Newalta Income Fund
Consolidated Balance Sheets
($000s)
---------------------------------------------------------------------
---------------------------------------------------------------------
                                September 30, 2003  December 31, 2002
---------------------------------------------------------------------
                                         Unaudited            Audited
Assets
Current assets
  Cash (Note 12)                               489                  -
  Accounts receivable                       33,251             27,924
  Inventory                                  7,504              7,923
  Prepaid expenses                           1,918                730
---------------------------------------------------------------------
                                            43,162             36,577
Capital assets and intangibles             208,188            207,642
Goodwill                                    10,782             10,782
Deferred costs                                 839                811
---------------------------------------------------------------------
                                           262,971            255,812
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities
Current liabilities
  Bank indebtedness                              -                759
  Accounts payable                          17,968             17,626
  Distribution payable                       2,418
  Current portion of long-term debt (Note 3) 3,003              2,339
  Current portion of debentures                  -              6,000
---------------------------------------------------------------------
                                            23,389             26,724
Long-term debt (Notes 3 and 12)             36,250             38,751
Debentures                                       -              3,000
Future income taxes                         35,271             32,024
Site restoration                             3,052              2,732
---------------------------------------------------------------------
                                            97,962            103,231
---------------------------------------------------------------------

Unitholders' Equity
Unitholders' capital (Notes 4 and 12)      106,709             98,269
Contributed surplus                            446                  -
Accumulated earnings (Note 2)               72,360             54,312
Accumulated cash distributions
 (Notes 9 and 10)                         (14,506)                  -
---------------------------------------------------------------------
                                           165,009            152,581
---------------------------------------------------------------------
                                           262,971            255,812
---------------------------------------------------------------------
---------------------------------------------------------------------



Newalta Income Fund
Consolidated Statements of Income and Accumulated Earnings
For the periods ended September 30
($000s) (Unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
                              Three Months Ended    Nine Months Ended
                                 September 30          September 30

                                2003       2002       2003       2002
---------------------------------------------------------------------

Revenue                       41,981     30,446    114,934     77,431

Expenses
 Operating                    25,081     19,468     74,439     51,101
 General and
  administrative                 787        504      2,381      1,513
Interest (Note 3)                648        691      2,239      2,057
Depreciation and site
 remediation                   3,087      2,675      9,126      7,762
(Gain) on disposal of
 fixed assets                      1                  (141)       (33)
Reorganization (Note 2)                              5,195
---------------------------------------------------------------------
Operating income              12,377      7,108     21,695     15,031
Provisions for income
 taxes
Current                          150        148        400        448
Future (Note 7)                2,299      2,638      3,247      5,618
---------------------------------------------------------------------
Net earnings                   9,928      4,322     18,048      8,965

Accumulated earnings,
 beginning of period          62,432     46,538     54,312     44,282
Goodwill write-down, net
 of tax                                                        (2,232)
Stock appreciation rights                                        (155)
---------------------------------------------------------------------
Accumulated earnings, end
 of period                    72,360     50,860     72,360     50,860
---------------------------------------------------------------------
Net earnings per unit
 (cents) (Notes 2 and 6)        43.3       19.8       80.8       43.9
Diluted net earnings per
 unit (cents)
 (Notes 2 and 6)                42.5       19.2       79.4       42.2
---------------------------------------------------------------------

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



Newalta Income Fund
Consolidated Statements of Cash Flows
For the periods ended September 30
($000s) (Unaudited)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                                 Three Months Ended   Nine Months Ended
                                       September 30        September 30
                                    2003       2002      2003      2002
-----------------------------------------------------------------------

Net inflow (outflow) of cash
 related to the following
 activities:
Operating activities
Net earnings                       9,928      4,322    18,048     8,965
 Items not requiring cash
 Depreciation and site
  remediation                      3,087      2,675     9,126     7,762
 Future income taxes               2,299      2,638     3,247     5,618
 Stock compensation expense            -       (133)      318       (12)
 (Gain) on disposal of fixed
  assets                               1                 (141)      (33)
 Reorganization                        -                  (19)
-----------------------------------------------------------------------
Cash flow from operations         15,315      9,502    30,579    22,300
Decrease (increase) in
 working capital                  (3,050)    (2,435)   (3,189)   (4,753)
-----------------------------------------------------------------------
                                  12,265      7,067    27,390    17,547
-----------------------------------------------------------------------

Investing activities
 Additions to capital assets      (4,569)    (8,915)   (8,161)  (15,132)
 Net proceeds on sale of
  capital assets                       -          -     1,516       214
 Deferred costs                      (22)      (221)      (29)     (528)
 Site restoration                    (34)                 (64)       52
-----------------------------------------------------------------------
                                  (4,625)    (9,136)   (6,738)  (15,394)
-----------------------------------------------------------------------

Financing activities
 Issuance of units                     -                  (61)   28,071
 Decrease in long-term debt and
  debentures                        (751)     2,069    (4,837)  (19,850)
 Distribution to unitholders      (6,128)             (12,088)
 (Increase) in accrued
  distributions                     (401)              (2,418)
-----------------------------------------------------------------------
                                  (7,280)     2,069   (19,404)     8,221
-----------------------------------------------------------------------
Net cash inflow                      360          -     1,248    10,374
Cash (bank indebtedness),
 beginning of period                 129                 (759)  (10,374)
-----------------------------------------------------------------------
Cash, end of period                  489          -       489         -

Supplementary information:
Interest paid                        709        639     2,358     2,032
Income taxes paid                    178        222       413       540
-----------------------------------------------------------------------



NEWALTA INCOME FUND
Notes to the Consolidated Financial Statements
For the Nine Months ended September 30, 2003 and 2002
($000s) (Unaudited)

/T/

Newalta Income Fund (the "Fund") is a Canadian income trust
engaged, through its wholly-owned subsidiary Newalta Corporation
("Newalta"), in maximizing the inherent value of certain
industrial wastes through recovery of saleable products and
recycling, rather than disposal. Through 35 integrated facilities
in western Canada, Newalta delivers solutions to a broad customer
base of national and international corporations, in a range of
industries, including the automotive, forestry, pulp and paper,
manufacturing, mining, oil and gas, petrochemical, and
transportation services industries.

1. Summary of Significant Accounting Policies

Newalta Income Fund was established by Deed of Trust dated
January 16, 2003. Pursuant to the terms of a Plan of Arrangement,
the Fund acquired all of the common shares of Newalta on March 1,
2003. Prior to the Plan of Arrangement the consolidated financial
statements include the accounts of Newalta and its subsidiaries.
After giving effect to the Plan of Arrangement, the consolidated
financial statements include the accounts of the Fund and its
subsidiaries. For reporting purposes the Fund is considered the
continuing entity of Newalta.

The interim consolidated financial statements include the
accounts of the Fund and its wholly owned subsidiary companies
and have been prepared by management in accordance with Canadian
generally accepted accounting principles. The interim
consolidated financial statements contain disclosures, which are
supplemental to the Fund's annual consolidated financial
statements. Certain disclosures, which are normally required to
be included in the notes to the annual consolidated financial
statements, have been condensed or omitted. These interim
financials statements and the notes thereto should be read in
conjunction with Newalta's consolidated financial statements for
the year ended December 31, 2002 as contained in the Annual
Report for fiscal 2002.

The Fund is a unit trust for income tax purposes, and is taxable
on taxable income not allocated to the unitholders. During the
third quarter of 2003, the Fund allocated all of its taxable
income to the unitholders, and accordingly, no provision for
income taxes is required at the Fund level. Newalta is subject to
corporate income taxes and follows the liability method of
accounting for income taxes.

Accounting measurements at interim dates inherently involve
greater reliance on estimates than at year-end and the results of
operations for the interim periods shown in these statements are
not necessarily indicative of results to be expected for the
fiscal year. In the opinion of management, the accompanying
unaudited interim consolidated financial statements include all
adjustments (of a normal recurring nature) necessary to present
fairly the consolidated result of its operations and cash flows
for the periods ended September 30, 2003 and 2002.

2. Reorganization

On February 24, 2003, the shareholders and option holders of
Newalta approved a Plan of Arrangement under section 193 of the
Business Corporations Act (Alberta). The purpose of the
Arrangement was to convert Newalta from a corporate entity
concentrating on growth through reinvestment of cash flow to a
trust entity which will distribute a substantial portion of cash
flow to unitholders. The Plan of Arrangement was effected on
March 1, 2003.

Under the Plan of Arrangement the Fund issued units in exchange
for all of the shares of Newalta on a 1:2 basis. Prior to the
exchange, Newalta had approximately 43,634,000 shares outstanding
and, subsequent to the exchange, the Fund had approximately
21,810,000 units outstanding.

Associated with the reorganization, the Fund recorded
reorganization costs of $5,195 (excluding $596 recorded in 2002).


Effective March 1, 2003, the Fund established a Trust Unit Rights
Incentive Plan (the "Rights Incentive Plan") to replace the stock
option plan of Newalta. In accordance with the CICA Handbook
section 3870 regarding stock based compensation, grants under the
Rights Incentive Plan are valued using the intrinsic value method
at the time of issuance. The expense thus calculated is described
in note 5. Rights are valued as options using a Black-Scholes
option pricing model. Prior to March 1, 2003, Newalta had
outstanding both options and stock appreciation rights. The
options were issued prior to January 1, 2002 and, in accordance
with CICA Handbook section 3870, had been neither valued nor
expensed in the financial statements. The stock appreciation
rights were issued after January 1, 2002 and were expected to be
settled in cash. Accordingly an expense was recognized in each
period based on the gain in the underlying value of the common
shares of Newalta. For the first two months of 2003, prior to
reorganization into the Fund, Newalta expensed $318 in stock
appreciation rights expense.  In the third quarter of 2002,
Newalta recognized $133 as a recovery of the stock appreciation
rights expense, and for the period ending September 30, 2002,
Newalta recognized a recovery of $12.

3. Debt

(a) Credit facility

On February 20, 2003, the Fund entered into an agreement for a
new credit facility with a syndicate arranged by two Canadian
chartered banks. The credit facility provides for a total of
$65,000 comprised of a $25,000 extendable term facility, a
$15,000 reducing 5-year term facility, and a $25,000 operating
facility. The credit facility is secured principally by a general
security agreement over the Fund's assets. Subject to certain
conditions the term facilities charge interest at prime plus 0.5%
or at Bankers Acceptance base plus 2.0%, at the Fund's option.
The operating facility charges interest at prime or at Bankers
Acceptance base plus 1.5%, also at the Fund's option. At
September 30, 2003, the Fund had utilized $39,250 of the term
facilities and the operating facility was unutilized. Principal
repayments are $750 per quarter, commencing July 1, 2003.

(b) Debentures

On February 28, 2003, $3,000 of 8% debentures were redeemed by
Newalta in exchange for cash. During the nine months $6,000 of
9.5% debentures were converted into 750,000 units of which $3,000
was converted during the third quarter. There are no debentures
outstanding as at September 30, 2003.

4. Unitholders' capital

Pursuant to the Plan of Arrangement 21,810,318 units were issued
by the Fund in exchange for 43,620,665 common shares of Newalta
previously outstanding. Additional units were subsequently issued
upon the exercise of Exchange Rights granted pursuant to the Plan
of Arrangement.

During the third quarter of 2003, $3,000 of debentures were
converted into 375,000 units. Also during the third quarter the
Fund purchased certain assets for 250,000 units plus $700. An
additional 1,000 units were exercised during the quarter under
the Rights Incentive Plan.


/T/

                                            Units/Shares        Amount
                                           ---------------------------
Shares issued as at December 31, 2002
  (000s)                                          43,634     $  98,269
Shares cancelled under the plan of
 arrangement                                     (43,634)      (98,269)

Units issued under the plan of arrangement        21,817        98,269
Non-board lot repurchased                             (7)          (62)
Rights exercised                                     222             2
Units issued in exchange for debentures              750         6,000
Units issues on asset purchase                       250         2,500
----------------------------------------------------------------------
Units outstanding as at September 30, 2003        23,032     $ 106,709
----------------------------------------------------------------------

/T/

The Fund declared a monthly distribution of $0.09 per unit for
each of the months of March through August, inclusive. In
September, the monthly distribution was increased to $0.105 per
unit. A total of $0.645 per unit, or approximately $14,500 has
been distributed to unitholders as of October 15, 2003.

5. Trust Unit Rights Incentive Plan

On February 24, 2003, the Shareholders of Newalta approved the
Rights Incentive Plan. On March 1, 2003, the Fund granted
1,042,500 Rights under the plan to certain executives, trustees,
and employees. The Rights vest 20% annually from March 1, 2004
until March 1, 2008 and are exercisable at market value at the
time of the grant, $9.30 per unit. In addition, pursuant to the
Plan of Arrangement, the outstanding stock options as of March 1,
2003 were exchanged for Exchange Rights that are exercisable for
units at $0.01 per unit. 218,000 Exchange Rights were exercised
during March 2003, another 2,800 were exercised in June 2003, and
a further 1,000 were exercised during September 2003. The
remaining 85,200 vest at various dates over the next three years.
On May 22, 2003 the Fund granted 275,000 Rights to certain
directors, officers, and managers of Newalta Corporation.

The Exchange Rights were valued at the date of conversion, March
1, 2003, and the value of the Exchange Rights was attributed to
the Contributed Surplus of the Fund. The market value of the
Exchange Rights was recorded at $446 using the Black-Scholes
option pricing model with the following assumptions: risk-free
interest rate of 6%; yield of 12%; expected life of three years;
and expected volatility of 48%.

The Fund accounts for Rights granted pursuant to the Rights plan
using intrinsic values. On this basis compensation costs are not
required to be recognized in the financial statements for Rights
granted at market value. Had compensation costs for the Fund's
Rights Plan been determined based on the fair value methodology
at the date of the grant, the Fund's pro-forma net earnings for
the nine months ended September 30, 2003 would have been reduced
by $968 and net earnings per unit would have been 78 cents. There
was no impact in the third quarter. The fair market value of the
March 1, 2003 Rights was estimated on the grant date using the
Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 6%; yield of 12%;
expected life of seven years; and expected volatility of 48%.

The May 22, 2003 Rights were issued at the market price of $9.08
per unit, and valued on the date of issuance using a
Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 3.6%; yield of 11.9%;
expected life of seven years; and expected volatility of 16.8%.
Had these compensation costs been recognized in the Fund's
expenses, the operating income for the nine months ended
September 30, 2003 would have been reduced by $13. There was no
impact in the third quarter.

6. Net Earnings per unit

Basic per unit calculations for the period ending September 30,
2003 were based on the weighted average number of units
outstanding for the quarter. Diluted net earnings included the
potential dilution of the outstanding rights and the convertible
debentures. The prior year's per share calculations and number of
shares have been retroactively restated to reflect the 2 for 1
conversion of shares into units effective March 1, 2003.


/T/

                                 Three Months Ended   Nine Months Ended
                                       September 30        September 30
-----------------------------------------------------------------------
                                      2003     2002       2003     2002
-----------------------------------------------------------------------
Weighted average number of units    22,907   21,817     22,330   20,446
Net additional units if rights
 exercised                             372       67        242      128
Additional units if debentures
 converted                             125    1,011        486    1,011
-----------------------------------------------------------------------
Diluted weighted average number
  of units                          23,404   22,895     23,040   21,585

/T/

7. Future Income Taxes

During the second quarter the Alberta government reduced the
corporate tax rate and in the second quarter the Fund accordingly
accounted for the recovery of future income tax due to the change
in tax rates.

8. Comparative Figures

Certain of the prior year's and prior quarter's comparative
figures have been reclassified to conform to the current period's
presentation.

9. Reconciliation of Unitholder Distributions Declared and Paid


/T/

                                         Three Months       Nine Months
                                                Ended             Ended
                                         September 30      September 30
                                                 2003              2003
                                             --------------------------
Cash flow from operations before
 reorganization costs                        $ 15,315          $ 35,755
Capital expenditures                           (4,569)           (8,161)
Proceeds from fixed asset sales                                   1,516
Debt repayment                                   (750)             (750)
                                             --------------------------
Cash available for distribution
 before reorganization costs                    9,996            28,360
Reorganization costs                                -            (5,176)
                                             --------------------------
Cash available for distribution              $  9,996          $ 23,184
                                             --------------------------
                                             --------------------------
Unitholder distributions declared - $           6,530            14,506
                                  - per unit    0.285             0.645
Unitholder distributions paid - $               6,128            12,088
                              - per unit         0.27              0.54


10. Reconciliation of Accumulated Unitholder Distributions

Balance, December 31, 2002                                    $       -
Unitholder distributions declared and paid                      (12,088)
Unitholder distributions declared                                (2,418)
                                                              ---------
Balance, September 30, 2003                                   $ (14,506)
                                                              ---------

/T/

11. Acquisition

Effective July 1, 2003, the Fund acquired a satellite oilfield
facility located in southwest Saskatchewan. The purchase price of
$3,200 was funded by $700 of cash plus the issuance of 250,000
units valued at $10.00 per unit. The value of the consideration
given and the assets received are:


/T/

Units issued                                $ 2,500
Cash                                            712
                                          ---------
 Total consideration                          3,212
                                          ---------
                                          ---------

Plant & equipment                             2,912
Intangibles                                     300
                                          ---------
 Total                                      $ 3,212
                                          ---------
                                          ---------

/T/

12. Subsequent event

On September 30, 2003, the Fund announced that it had entered
into an agreement with an underwriting syndicate to raise $45.6
million through the issuance of units of the Fund. On October 21,
2003, the Fund issued 3.8 million units at $12.00 each for gross
proceeds of $45.6 million and net proceeds of approximately $43.0
million.

13. Segmented Information

The Fund has two reportable segments. The Oilfield segment
recovers and resells crude oil from oilfield waste. The
Industrial segment collects waste lubricating oil, automotive,
and industrial wastes which are processed into resalable
products.

For the three months ended September 30 ($000's)


/T/
                                                                 Consol-
2003                             Indus-   Inter-    Corporate,   idated
                     Oilfield    trial  segment   Unallocated     Total
-----------------------------------------------------------------------
External revenue       28,682   13,299                           41,981
Inter segment
 revenue(4)                 4       29      (33)                      -
Operating expense      11,643    9,458      (33)                 21,068
Indirect operating
 expense(5)             1,482      478                2,054(6)    4,014
Depreciation & site
 remediation            1,819    1,070                    198     3,087
-----------------------------------------------------------------------
Net margin             13,742    2,322                 (2,252)   13,812
General and
 administrative                                           787       787
Interest expense                                          648       648
Reorganization
 costs                                                      -         -
-----------------------------------------------------------------------
Operating income       13,742    2,322                 (3,687)   12,377
-----------------------------------------------------------------------
Capital expenditures    6,118      488                    463     7,069
Goodwill               10,782                                    10,782
Total assets          165,405   89,357                  8,209   262,971
                     ---------------------------------------------------
                     ---------------------------------------------------

                                                    Corporate    Consol-
2002                 Oilfield    Indus-   Inter-          and    idated
                                 trial  segment   Unallocated     Total
-----------------------------------------------------------------------
External revenue       19,974   10,472                           30,446
Inter segment
 revenue(4)               118       19     (137)                      -
Operating expense       9,088    7,255     (137)                 16,206
Indirect operating
 expense(5)             1,057      682                1,523(6)    3,262
Depreciation & site
 remediation            1,765      738                    172     2,675
-----------------------------------------------------------------------
Net margin              8,182    1,816                 (1,695)    8,303
General and
 administrative                                           504       504
Interest expense                                          691       691
-----------------------------------------------------------------------
Operating income        8,182    1,816                 (2,890)    7,108
-----------------------------------------------------------------------
Capital expenditures    3,029   11,341                    545    14,915
Goodwill               10,782                                    10,782
Total assets          150,834   93,093                 10,023   253,950
-----------------------------------------------------------------------
-----------------------------------------------------------------------

/T/

(4) Inter-segment revenues are recorded at market, less the costs
of serving external customers.

(5) Indirect operating expenses are defined as the allocated
general management costs for the reporting unit.

(6) Management does not allocate certain indirect operating,
general & administrative, taxes, and interest costs in the
segment analysis.

For the nine months ended September 30 ($000's)


/T/

                                                    Corporate    Consol-
2003                             Indus-   Inter-          and    idated
                     Oilfield    trial  segment   Unallocated     Total
-----------------------------------------------------------------------
External revenue       74,805   40,129                          114,934
Inter segment
 revenue(4)                48       95     (143)                      -
Operating expense      32,991   30,288     (143)                 63,136
Indirect operating
 expense(5)             3,879    1,812                5,612(6)   11,303
Depreciation & site
 remediation            5,274    3,126                    585     8,985
-----------------------------------------------------------------------
Net margin             32,709    4,998                 (6,197)   31,510
General and
 administrative                                         2,381     2,381
Interest expense                                        2,239     2,239
Reorganization costs                                    5,195     5,195
-----------------------------------------------------------------------
Operating income       32,709    4,998                (16,012)   21,695
-----------------------------------------------------------------------
Capital expenditures    8,615    1,445                    601    10,661
Goodwill               10,782                                    10,782
Total assets          165,405   89,357                  8,209   262,971
                      -------------------------------------------------
                      -------------------------------------------------

                                                    Corporate    Consol-
2002                 Oilfield    Indus-   Inter-          and    idated
                                 trial  segment   Unallocated     Total
-----------------------------------------------------------------------
External revenue       53,524   23,907                           77,431
Inter segment
 revenue(4)               239      147     (386)                      -
Operating expense      25,963   17,107     (386)                 42,684
Indirect operating
 expense(5)             3,071    1,630                3,716(6)    8,417
Depreciation & site
 remediation            5,136    2,130                    463     7,729
-----------------------------------------------------------------------
Net margin             19,593    3,187                 (4,179)   18,601
General and
 administrative                                         1,513     1,513
Interest expense                                        2,057     2,057
-----------------------------------------------------------------------
Operating income       19,593    3,187                 (7,749)   15,031
-----------------------------------------------------------------------
Capital expenditures    5,516   14,197                  1,419    21,132
Goodwill               10,782                                    10,782
Total assets          150,834   93,093                 10,023   253,950
                      -------------------------------------------------
                      -------------------------------------------------
For further information: Newalta Income Fund - Ronald L. Sifton, Senior Vice President, Finance and Chief Financial Officer, (403) 206-2684; Website: www.newalta.com