2006 Annual Report

TABLE OF CONTENTSTHE IMPLEMENTATION OF A SUCCESSFUL PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ACHIEVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

THE SECOND SUCCESSFUL YEAR FOR SOGHU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

SOGHU MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

STANDARD FLOW CYCLE OF FUNDS AND PRODUCTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

AUDITORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CASH FLOWS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

NOTES TO FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

SOGHU COMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

BOARD OF DIRECTORS

LEGAL COUNCIL

THE AWARENESS COMMITTEE

NAMES AND TITLES OF EMPLOYEES AND CONSULTANTS

AUDITORS

A SUCCESSFUL MANAGEMENT PROGRAMThe Société de gestion des huiles usagées (SOGHU) is a non-profitorganization created to meet the standards set by the Regulation respectingthe recovery and reclamation of used oils, used oil containers or fluid andused filters. SOGHU is recognized by RECYC-QUÉBEC as an organizationcapable of managing an integrated system of recovery and reclamation ofall products applicable to the Regulation and of educating the users.

SOGHU’s vision is simple; to implement and manage a recovery andreclamation program for all products applicable to the Regulation, that isefficient, self sufficient, environmentally conscious, economical, as well asbeneficial for our society; in short, a model of excellence, from theperspective of sustainable development.

The success of the program rests on its win-win partnerships, thanks to asystem of financial incentives offered to Collectors, according to product andgeographical recovery zone, as well as to Processors of plastic who shredand decontaminate and ensure that the material is reused in themanufacturing of new products.

Some key points of the program:

• Generators are the first step of the recovery process.

• Collectors recover applicable products from the Generators.

• Processors give new life to the products.

• Collection Facilities are the corner stone, offering free disposal servicesfor all citizens.

• RECYC-QUÉBEC assists SOGHU in ensuring that the operations are incompliance with the Agreement.

• Members finance and manage the system via SOGHU.

See page 10 for the table illustrating the standard flow cycle of funds andproducts.

The basic principle at the core of the program is a principle of sustainabledevelopment that respects the balance between commercial requirementsand the needs of the community.

A strict auditing process ensures the tracking of all products sold on themarket right up until their reclamation.

For the second year of operation, a publicity and information campaign wasput in place, directed to Do It Yourself or DIY people, in other words, thosewho do their own oil disposal and are generally not serviced by Collectorsdue to insufficient quantities generated. The goal of the campaign was toeducate this market of the importance of collecting and the option ofdisposing the applicable products free of charge at certain municipalitiesand garages who take environmental issue to heart. Chiefly, this marketincludes the general public, small contractors with heavy machinery, farmersand forestry workers.

Several articles and publications in a variety of special interest magazines(transportation, mechanics, agriculture, Municipal, construction, forestry,etc.), television campaigns on Réseau des Sports (RDS) and Météo Media,the distribution of the SOGHU DVD presentation, presentations atconferences to key players in the automotive sector (AIA), as well as aninformation seminar given to the municipalities with RECYC-QUÉBEC, weresome of the principle methods that SOGHU employed to promote the program.

With RECYC-QUÉBEC’s financial contribution of $51 776, SOGHU’s budgetfor all of the different informational and awareness campaigns amounted to$320 000.

SOGHU’s achievements in 2005 were already impressive but it wasimperative that SOGHU improve, especially in the realm of plastics, and wesucceeded.

We are happy to present the following table outlining our achievements in2006 and our plan for 2007-08-09.

2

Pamphlet

Folder

“Collection facility” poster

Poster

Bookmark

Sticker

Print Ads

TV Spot

ACHIEVEMENTS

5

Achievements for 2006 in percentage and projections for 2007-08-09

2006 2007 2008 2009OIL Achievements Projections Projections Projections

Sales 110 910 112 litres 110 910 112 litres 110 910 112 litres 110 910 112 litres

Collectable portion 74 309 775 litres 74 309 775 litres 74 309 775 litres 74 309 775 litres

Collected portion 66 121 920 litres 66 121 920 litres 66 121 920 litres 66 121 920 litres

Collection rate 89% 89% 89% 89%

2006 2007 2008 2009FILTERS Achievements Projections Projections Projections

Sales 9 491 595 filters 9 491 595 ffilters 9 491 595 filters 9 491 595 filters

6 292 927 kilograms 6 292 927 kilograms 6 292 927 kilograms 6 292 927 kilograms

Collected portion 4 654 190 kilograms 4 908 483 kilograms 5 034 342 kilograms 5 034 342 kilograms

Collection rate 74% 78% 80% 80%

2006 2007 2008 2009CONTAINERS Achievements Projections Projections Projections

Sales 44 741 204 litres 44 741 204 litres 44 741 204 litres 44 741 204 litres

2 352 559 kilograms 2 352 559 kilograms 2 352 559 kilograms 2 352 559 kilograms

Collected portion 1 288 267 kilograms 1 646 791 kilograms 1 764 419 kilograms 1 764 419 kilograms

Collection rate 54.8% 70% 75% 75%

1st row: Darius Coté; Gilles Goddard, gm; Carol Montreuil, pres.; Robert Huberdeau, v.p.; Ginette Bureau2nd row: Roch Cousineau; Pierre L. Comtois; Normand Benoit; Yvan Gagné; André Turgeon; François Gingras; Raymond Savard; Charles Touchette3rd row: Paul Granda; Pierre-Yves Larose; Michael Paul | missing from picture: Julian Cininni; Ron Damiani

THE SECOND SUCCESSFUL YEAR FOR SOGHULa Société de gestion des huiles usagées (SOGHU) has been operationalsince January 2005. It is comprised of numerous partners, including 207Members (who put oil products on the market), 27 Collectors, 63 Processors,and 7 Internal Collector/Processors who collect and process their own oil.Allof these activities are performed in conformity with the applicableregulations. All products are 100% processed.

Did you know that at the start up of the SOGHU program more than 30million litres of oil disappeared in Québec every year? That is theequivalent of 3 tanker trucks a day. The recovery rate was estimated at60%. We surpassed 84.1% in 2005 to reach 89% in 2006. When weknow that 1 litre of oil can contaminate 1 million litres of water, it’s nowonder that our leitmotiv is: “Make Every Drop Count!”

Did you know that every day 20,000 filters, the equivalent of a full 20cubic yard container, were not collected? The collection rate was only at20%. We surpassed 73% in 2005 to reach 74% in 2006.

Did you know that a volume of roughly 40 million litres of used oilcontainers a year, enough to fill 2 football fields a day, were notcollected? Practically none were collected prior to the creation of theprogram. In 2005, we reached a 25% recovery rate and in 2006 we’vemore than doubled it, reaching 55%.

To achieve these results, Collectors serviced over 15,000 clients, more than386 of which registered as Collection Facilities in 2005, offering thegeneral public free disposal services for all applicable products. In 2006,that number has climbed to 486 and will continue to increase. SOGHUbelieves that the closer the service is to the people, the easier it is to use.We thank all of the companies and municipalities who takeenvironmental issues to heart and we ask the general public to respecttheir operating hours and conditions.

Furthermore, ever conscious of the importance of communication andinformation, SOGHU invested time and money in numerous media venturesto target all interested parties, including: magazines to forestry workers,farmers, industries, municipalities, transporters and individuals, as well astelevision ad campaigns airing on Réseau des sports (RDS) and MétéoMédia, also with the distribution of the SOGHU DVD presentation, multipleconferences and participation in trade fairs and conventions.

We are extremely proud of our second year of operation, and the resultsspeak, in part, to the efforts of SOGHU, its Members and in particular, theBoard of Directors for facing the objectives set out by the government headon, and also in part to the extraordinary partnership between SOGHU, itsCollectors, Processors and Generators, and all with the cooperation ofRECYC-QUÉBEC.

In closing, the program is a prime example of sustainable development,balancing commercial requirements with the needs of the people.

Make every drop count…

7

Carol Montreuil,President

Gilles Goddard,General Manager

SOGHU MEMBERS3M Canada Company

ABB Inc. (Québec)

ABB Inc. (Varennes)

Acklands-Grainger Inc.

Aerochem Inc.

Affinia Canada Corporation

AGCO Corporation

Air BP Canada Ltd.

Altrom Canada Corp.

American Agip Company Inc.

Amsoil Inc.

April Super Flo

Asalco Inc.

Assemblage Camaz inc.

Atelier PV Hydraulique (2002) inc.

Atlas Copco Compressors Canada

Auto-Camping Ltd.

Autolectra Inc.

AutoTrans Transmissions (Québec) Inc.

Baldwin Filters Inc.

Baldwin Filters Inc. (DBA Hastings Filters)

Bardahl Canada

Beck/Arnley World Parts Canada ULC

Bert Dunbar Enterprises Limited

BestBuy Distributors Ltd.

Blue Water Agencies LTD

BMW Canada Inc.

BRP

Busch Vacuum Technics Inc.

Camions Freightliner Rivière-du-Loup Inc.

Camoplast Industriel Inc.

Campbellton Auto Supply

Canadian General Filters Limited

Canadian Pacific Railway

Carquest Canada Ltd

Castrol Canada Limited

Castrol Industrial North America Inc.

Centre du Camion J.L. Inc.

Champion Laboratories, Inc.

Chauffage Premier Inc.

Chem-Ecol Ltd.

Chevron Global Lubricants

Chicago Pneumatic Tool Co.

CNH America Ltd.

COMAIRCO LTEE

Complete Lube Supply Ltd.

Compresseurs Québec Div. Inter-Power A.K.Corp.

Costco Wholesale Canada Ltd.

CPT Canada Power Technology Limited

CRC Canada Inc.

Cummins Est du Canada SEC

DaimlerChrysler Canada Ltd.

Denis Gauvin Inc.

Distribution M.C. Senc.

Distribution Régionale PML Inc.

Distribution Regitan

Distributions J. Léveillée

Elso International Inc.

Engrenage Provincial Inc.

Entrepôt de Montréal 1470 Inc.

Entrepôts Carrier Inc.

Équipement Fédéral Div. de Gestion KCL West

Équipements Labrie Ltée

Équipements Lourds Papineau Inc.

Evans 2000 Ltd

Excel F.I.G. inc.

Federated Co-operatives Limited

FL Viscosity Oil Company

Ford Motor Company of Canada Ltd.

For-Min Div. DK Spec Inc.

Fred Deeley Imports Ltd

Freightliner LLC

Fuchs Lubricants Canada Ltd.

G.K. Industries Ltd.

Gaetan Hotte Inc.

Gates Canada Inc.

General Motors du Canada Limitée

Gilles Cusson Inc.

Hall-Chem MFG Inc.

Hangsterfer’s Laboratories Incorporated

Henkel Canada Corporation

Hewitt Équipement Limitée

Home Hardware Stores Limited

8

Honda Canada Inc.

Honeywell ASCA Inc.

Houghton Canada Inc.

Hudson’s Bay Co.

Hydralogie Inc.

Hyundai Auto Canada

International Truck & Engine Corporation Canada

Irving Oil Marketing Limited

J. Walter Compagnie Ltée

Jaguar Land Rover Canada

Jig-A-Loo Canada Inc.

John Deere Limited

Kia Canada Inc.

Kinecor Inc.

King-O-Matic Industries Limited

Kleen-Flo Tumbler Industries Limited

Komatsu International (Canada) Inc.

Krown Corporate

Kubota Canada Ltd.

La Coop fédérée

La Corporation Tribospec

Laboratoires St-Antoine inc.

Le Groupe GLM Inc.

Le Groupe Harnois Inc.

Le Groupe Pétrolier Olco Inc.

Les Distributions Automont Inc.

Les Distributions R.V.I. Ltée

Les Équipements G. Comeau Inc.

Les Industries Spectra/Premium Inc.

Les Industries Wajax Limitée

Les Lubrifiants Sentinel Corp.

Les Pétroles Sonic (Coopérative Fédérée de Québec)

Les Pièces d’Auto Transbec Inc.

Les Pièces d’Autos Transit Inc.

Les Pièces de Transmission Unitrans Ltée.

Les Produits Agro B Inc.

Les Services Maintech

Lubri-Expert Inc.

Lubrifiants et Produits Spécialisés Kenbec Inc.

Lubrification Québec Inc.

Lubri-Lab Inc.

Lucas Oil Products

M & M Fournels Corp. Ltd

Magnéto Hydraulique et Pneumatique

Malmberg Truck Trailer Equipment Ltd

Matech BTA Inc.

Maxim Transportation Services Inc.

Mazda Canada Inc.

MCS-Servo Inc.

Mercedes-Benz Canada Inc.

MFTA Canada Inc.

Milacron Canada Inc.

Mitsubishi Motor Sales of Canada

Modern Sales Co-op

Motion Industries (Canada) Inc.

Motor Coach Industries Limited

Motovan Corporation

Mr. Lube Canada Inc.

New Flyer Industries Ltd.

Nissan Canada Inc.

NLS Products

Noco Lubrifiants Canada

Nynas Canada Inc.

Oto-Protec Inc.

Paccar Parts,A Division of Paccar of Canada, Ltd

Parker Hannifin Canada

Parts Canada

Pennzoil-Quaker State Canada Inc.

Permatex Canada

Pétro-Canada

Pétroles Petro-Canada Inc.

Pétrolière Impériale

Pièces d’Autos Jean Leblanc

Pièces de Camion de la Beauce Inc.

Porsche Cars North America Inc.

Produits Chimiques Magnus Ltée

Produits Industriels Kara Inc.

Produits Lubri-Delta Inc.

Produits Shell Canada Limitée

Prolab Technolub Inc.

Protec Lube Inc.

Radiator Specialty Company of Canada Ltd.

Recochem Inc.

Réfrigération Thermo King Montréal Inc.

Ridge Tool Company

Robert Bosch Inc.

Roby Metal 2000 (Exacta)

Sears Canada Inc.

Service de Filtres Sefor Inc.

Simson-Maxwell Ltd.

Sinto Inc.

Southwestern Petroleum Canada Ltd.

Spécialité Hydraulique Côte-Nord Inc.

Spécialités Hipertech inc.

State Industrial Products

Stork Bronswerk Inc.

Subaru Canada Inc.

Suzuki Canada Inc.

Systèmes de Distribution Intégrés LP Div Detroit Diesel Allison Canada East (1995)

TEC Automotive Industries Inc.

Technologies de procédé WARCO

Teklub Distribution inc.

Texas Refinery Corp. of Canada Limited

The Clorox Co. of Canada Ltd.

The Sherwin-Williams Co.

Thermal-Lube Inc.

Toyota Canada Inc.

Transformateurs Pioneer Ltée

UAP Inc.

Ultramar Ltée

VA TECH Tranformateurs Ferranti-Packard(Québec) Inc.

Valley Napa Auto Parts

Valvoline Canada Limitée

Volkswagen Canada Inc.

Volvo Cars of Canada Corp.

Volvo Trucks Canada Inc.

Wakefield Canada Inc.

Wal-Mart Canada Corp.

WD-40 Products (Canada) Ltd

Westfalia Surge Canada Co.

Weston/Loblaws/Provigo

Wolseley Canada Inc.

Worldpac Canada Inc.

Wynn’s Canada Ltd

9

STANDARD FLOW CYCLE OF FUNDS AND PRODUCTS

MEMBERS: brand owners and the primary importers or suppliers

COLLECTORS: establishments that collect the products from generators

PROCESSORS: establishments that give new life to products

GENERATORS: establishments that create used products (garages, vendors, commercial, industrial and municipal sectors,forestry industry, agriculturists, transporters, individuals)

COLLECTION FACILITIES: establishment registered with SOGHU to receive from the public, at no cost to them, used oil products governed by the Regulation

RECYC-QUÉBEC

COLLECTORSPROCESSORS

GENERATORS

COLLECTION FACILITIESMunicipal/Commercial

SOGHU

Products

$ Funds

MEMBERS

10

AUDITORS’ REPORTTo the Members of Société de gestion des huiles usagées (SOGHU)

We have audited the balance sheet of SOCIÉTÉ DE GESTION DES HUILES USAGÉES (SOGHU) as at December 31, 2006 and the statements of incomeand cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is toexpress an opinion of these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform anaudit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2006 andthe results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Rochon, Thériault & AssociésRochon, Thériault & Associés, s.e.n.c.r.l.Chartered Accountants

Saint-Jerome,March 14, 2007

11

INCOME

12

Year ended December 31 2006 2005

REVENUE

Environmental handling charges $13,146,511 $13,047,128

Registration and renewal 13,400 16,400

Interest 221,314 69,800

Other _ 246

13,381,225 13,133,574

EXPENSES

PROGRAM

Return incentives 9,873,610 7,387,791

Collection points incentives 85,091 165,970

Communications and public relations 267,816 486,118

Recyc-Québec contribution 315,946 321,257

Legal fees 10,118 78,757

Management and administration contracts 46,862 46,751

Compliance reviews and audits 123,334 62,624

10,722,777 8,549,268

ADMINISTRATIVE

Office and general expenses 106,377 109,572

Legal fees 40,236 62,710

Rent 25,500 24,000

Consulting fees 59,238 48,558

Management and administration contracts 282,399 299,485

Professional fees 7,600 7,317

Depreciation - fixed assets 15,355 14,109

536,705 565,751

11,259,482 9,115,019

EXCESS OF REVENUE OVER EXPENSES $2,121,743 $4,018,555

13

BALANCE SHEETDecember 31 2006 2005 $

ASSETS

CURRENT ASSETS

Cash, 4.12% $1,714,369 $4,896,646

Accounts receivable 2,435,834 1,274,508

Accrued interests receivable 105,867 _

Prepaid expenses 33,791 51,651

Current portion of investments (Note 3) 800,000 _

5,089,861 6,222,805

INVESTMENTS (Note 3) 3,200,000 _

FIXED ASSETS (Note 4) 26,937 39,892

$8,316,798 $6,262,697

LIABILITIES

CURRENT LIABILITIES

Accounts payable (Note 5) $1,732,399 $1,800,041

NET ASSETS Unrestricted 1,557,462 $4,422,764

Restricted (Note 6) 5,000,000 _

Invested in fixed assets 26,937 39,892

6,584,399 4,462,656

$8,316,798 $6,262,697

COMMITMENTS (Note 7)

On behalf of the board

Mr. Carol Montreuil, Mr. Robert Huberdeau, Director Director

CASH FLOWS

14

Year ended December 31 2006 2005

OPERATING ACTIVITIES

Cash receipts - members $12,027,865 $12,653,745

Cash receipts - interest and other 115,447 70,046

Cash paid - suppliers (11,323,189) (7,542,989)

820,123 5,180,802

INVESTING ACTIVITIES

Acquisition of investments (4,000,000) _

Acquisition of fixed assets (2,400) (9,770)

(4,002,400) (9,770)

FINANCING ACTIVITIES

Changes in bank loan _ (165,000)

Due to members _ (100,000)

_ (265,000)

CASH AND CASH EQUIVALENTSINCREASE (DECREASE) (3,182,277) 4,906,032

CASH (BANK OVERDRAFT), BEGINNING OF YEAR 4,896,646 (9,386)

CASH, END OF YEAR $1,714,369 $4,896,646

NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2006

1. STATUTES OF INCORPORATION, BEGINNING AND NATURE OF ACTIVITIES

The organization, incorporated under Part III of the Quebec Companies Act on April 30, 2004, began its operations December1st, 2004. According to the Federal and Provincial Income Tax Acts, it is a non-profit organization and is therefore exempt fromincome taxes.

According to the terms of a consent agreement with Recyc-Québec, the company has the mandate to establish and administer a program for recovery and reclamation of used oils, oil or fluid containers and used filters.

2. SIGNIFICANT ACCOUNTING POLICIES

Use of estimatesThe presentation of financial statements in accordance with Canadian generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingencies at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.Actual results could differ from those estimates .

Revenue recognitionEnvironmental handling charge revenue is recognized when the lubricating oil and/or oil containers and oil filters are sold bymembers, except for revenue from prior years received in the current year following a new registration or a compliance reviewwhich are recognized in the year that they are determined.

Return incentivesReturn incentive expenditures are recognized when the lubricating oil and/or oil containers and oil filters are collected by aregistered collector.

InvestmentsInvestments are accounted for at cost.

Fixed assetsFixed assets are accounted for at cost.Depreciation is calculated using the straight-line basis over the estimated useful lives at the following rates:

Computer hardware 33%Computer software 100%Furniture and fixtures 20%

Cash and cash equivalentsThe company's cash and cash equivalents include cash and term deposits maturing within three months.

15

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2006

17

3. INVESTMENTS 2006 2005 $

Term deposits, bearing interest at rates from 4.22% to 4.60%,maturing from November 2007 to May 2011 $4,000,000 _ $

Current portion of investments $800,000 _ $

$3,200,000 _ $

4. FIXED ASSETS 2006 2005

Accumulated Net NetCost depreciation value value

Computer hardware $30,561 $18,674 $11,887 $19,408

Computer software 1,495 1,495 _ 496

Furniture and fixtures 24,691 9,641 15,050 19,988

$56,747 $29,810 $26,937 $39,892

5. ACCOUNTS PAYABLE 2006 $ 2005

Trade $1,474,126 $1,455,347

Sales taxes _ 117,973

Other 258,273 226,721

$1,732,399 $1,800,041

6. INTERNALLY IMPOSED RESTRICTIONS

During the year, the organization's board of directors has internally restricted $5,000,000 from unrestricted net assets to be held incase of proceedings against the organization, program dissolution, unexpected changes in programs or mandate or other unexpectedsituations. This internally restricted amount is not available for other purposes without approval of the board of directors.

18

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2006

7. COMMITMENTS

AgreementThe organization has a consent agreement with Recyc-Québec until December 31, 2008, which is renewable. In accordance withthis agreement, the organization must collect environmental handling charges from its members and pay a financial contribution toRecyc-Québec.

Management and administration servicesUnder the terms of a management agreement, the organization is charged a fee for provision of management services of the GeneralManager until June 2007.

RentThe organization has a lease commitment until November 2009 for the rental of office space.

Contribution to environmental organizationsThe board of directors has decided to finance the activities of the “Caravane de la récupération”. The organization hascommitted to an annual contribution of $30,000 for the years ending in 2007 and 2008.

The board of directors agreed to pay a contribution not exceeding $25,000 to the “Fondation estrienne en environnement”during the next year.

Minimum paymentsThe estimated minimum annual payments required under these agreements are as follows:

Contribution to Management and environmental

administration services Rent organizations

2007 $60,049 $25,500 $55,000

2008 _ 25,500 30,000

2009 _ 23,375 _

$60,049 $74,375 $85,000

19

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2006

8. RELATED PARTY TRANSACTIONS

In the ordinary course of its business, the company receives environmental handling charges from its members and paysincentive returns to collectors and processors. Some members and one collector and processor have representatives who arepart of the board of directors. These transactions are measured at the exchange amount and are subjected to the usualcommercial conditions of the organization.

9. FINANCIAL INSTRUMENTS

Fair valueFor short-term financial instruments such as cash, accounts receivables, accrued interests receivable and accounts payable, thecarrying values are equivalent to their fair values, because of the short-term maturities of these financial instruments. For the long-term investments consisting of term deposits, the fair values approximate the carrying values because of their interest rates whichrepresent the interest rates the company could obtain for investments with similar terms and maturity dates.

Credit riskThe company is not exposed to any significant risk with respect to a single member.

10. CHANGE IN NET ASSETS

No change in net assets were prepared since the required information is available from other financial statements and related notes.

20

SOGHU COMITTEESBOARD OF DIRECTORS

Jim Bétournay Robert Bosch Inc.

Russell Bilodeau Pétro Canada

Ginnette Bureau RECYC-QUÉBEC

Julian Cininni La Corporation Tribospec

Pierre L. Comtois Général Motors du Canada Limitée

Darius Côté Pétrolière Impériale

Ron Damiani Costco Wholesale Canada Ltd

Yvan Gagné Toyota Canada Inc.

François Gingras Coopérative Fédérée de Québec

Robert Huberdeau Wakefield Canada Inc.

Pierre-Yves Larose Lufrifiants Mondiaux Chevron Texaco

Carol Montreuil Institut Canadien des Produits Pétroliers

Michael Paul Valvoline Canada Ltée

Raymond Savard Carquest Canada Ltd

Charles Touchette Affinia Canada Corporation

André Turgeon RPM Environnement Ltée

Gilles Goddard General Manager

Paul Granda Gowling, Lafleur, Henderson s.r.l.

LEGAL COUNCIL

Gowling, Lafleur, Henderson s.r.l.

21

THE AWARENESS COMMITTEE

Denis Bergeron Fédération Québecoise des Municipalités

Louis Coulombe Peintures Récupérées du Québec Inc.

Benoit Germain RECYC-QUÉBEC

Gilles Goddard Directeur général de la SOGHU

Paula Landry CAA-Québec

Robert Ménard Front commun québécois pour une gestion écologique des déchets

Françoise Paquet Conseil Québecois du Commerce de Détail

Marie-Sol Rioux Hébert Union des Municipalités du Québec

Patrice Savoie Ministère du Développement durable, de l’Environnement et des Parcs

André Turgeon RPM Environnement

NAMES AND TITLES OF EMPLOYEES AND CONSULTANTS

Gilles Goddard General Manager

Diane Caron Assistant to the General Manager

Jean Duchesneau Controller

Carmen Mensher Assistant to the Controller

Barbie Mensher Administrative Assistant

AUDITORS

ROCHON THÉRIAULT & ASSOCIÉS, S.E.N.C.R.L.

298, De Martigny Street West, suite 10

Saint-Jérôme (Québec) J7Y 4C9

Société de Gestion des Huiles Usagées

1101, boul. Brassard, bureau 214

Chambly, Quebec

J3L 5R4

Telephone: (450) 447-9996

Fax: (450) 447-9988

Toll Free Number: 1-877-98 SOGHU (1-877-987-6448)

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