ANNUALREPORT 2007

A FLEXIBLE AND SUCCESSFUL SYSTEM ………………………………………………………………………… 2

ACHIEVEMENTS ………………………………………………………………………………………………… 5

ONCE AGAIN, SOGHU IMPROVES ITS PERFORMANCE …………………………………………………………… 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 COMMITTEES ………………………………………………………………………………………… 20

¬ BOARD OF DIRECTORS

¬ LEGAL COUNCIL

¬ THE AWARENESS COMMITTEE

¬ NAMES AND TITLES OF EMPLOYEES AND CONSULTANTS

¬ AUDITORS

TABLE OF CONTENTS

2

SOGHU is a non-profit organization created to meet the standards set bythe Regulation respecting the recovery and reclamation of used oils, usedoil containers or fluid and used filters. SOGHU is recognized by RECYC-QUÉBEC as an organization capable of managing an integrated systemof recovery and reclamation of all Regulation-applicable products and ofeducating the users.

SOGHU’s vision is simple: the establishment and management of a programfor the recovery and reclamation of all Regulation-applicable products thatis efficient, self sufficient and environmentally, economically, and sociallyconscious. In short, a model of excellence from the view point of sustainabledevelopment.

The success of the program rests on a win-win partnership, thanks to asystem of financial incentives paid to Collectors based on product andgeographical zone, as well as to Processors of plastics who shred anddecontaminate the plastic and ensure that the materials are reintroducedinto the manufacturing of other products.

Here are 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 serve as the bedrock, offering free servicefor all citizens.

• RECYC-QUÉBEC joins SOGHU and executes the follow up inaccordance with the Agreement.

• Members finance and manage the system via SOGHU

The basic principal at the core of the program is to respect the balancebetween commercial requirements and the needs of the community usingthe principal of sustainable development.

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

For this third year of operation, particular attention was paid toincreasing the collection rate of filters and containers and the registrationof new Collection Facilities to serve all over the province of Quebec andto help meet the objectives in the Regulation. We therefore launched anadvertising campaign aimed at reaching individuals and small businessesthat manage their own used oils and who are generally not serviced byCollectors due to the small quantities they generate. The campaign’s mainobjective was to educate this particular clientele on their responsibility torecycle and inform them of the hundreds of municipalities or garagesregistered as Collection Facilities where they could dispose of theapplicable products free of charge.

A variety of articles published in specialty magazines (transportation,automotive, agriculture, municipal, construction, forestry, etc), television adcampaigns on Réseau des sports (RDS) and Météo Media, distribution of aDVD presentation on SOGHU, participation in two exhibitions for the twomunicipal associations (FQM and UMQ) and a booth at the environmentalexpo in old Montreal were the principal means used to promote SOGHU.

With the financial assistance of RECYC-QUÉBEC of $42,208.00 the budgetfor all of SOGHU’s information campaigns, research and development cameto $377,630.00.

The first two year’s achievements were excellent but it was imperative forSOGHU to improve even further, particularly where filters and containerswere concerned, and we’ve succeeded.

We are happy to present, in table format, the achievements of 2007 and ourgoals for the years 2008-09-10.

A FLEXIBLE AND SUCCESSFUL SYSTEM

ACHIEVEMENTS

5

Achievements for 2007 (in percentages) and projections for 2008-09-10

2007 2008 2009 2010OIL Achievements Projections Projections Projections

Sales 106 617 546 litres 106 617 546 litres 106 617 546 litres 106 617 546 litres

Collectable portion 71 433 756 litres 71 433 756 litres 71 433 756 litres 71 433 756 litres

Collected portion 66 767 257 litres 66 767 257 litres 66 767 257 litres 66 767 257 litres

Collection rate 93.5% 93.5% 93.5% 93.5%

Regulation goals 70.0% 75.0% 75.0% 75.0%

2007 2008 2009 2010FILTERS Achievements Projections Projections Projections

Sales 9 941 470 filters 9 941 470 filters 9 941 470 filters 9 941 470 filters

3 755 765 kilograms 3 755 765 kilograms 3 755 765 kilograms 3 755 765 kilograms

Collected portion 3 107 435 kilograms 3 107 435 kilograms 3 107 435 kilograms 3 107 435 kilograms

Collection rate 82.7% 82.7% 82.7% 82.7%

Regulation goals 50.0% 75.0% 75.0% 75.0%

2007 2008 2009 2010CONTAINERS Achievements Projections Projections Projections

Sales 43 268 894 litres 43 268 894 litres 43 268 894 litres 43 268 894 litres

2 343 102 kilograms 2 343 102 kilograms 2 343 102 kilograms 2 343 102 kilograms

Collectable portion 2 208 639 kilograms 2 208 639 kilograms 2 208 639 kilograms 2 208 639 kilograms

Collected portion 1 897 724 kilograms 1 897 724 kilograms 1 897 724 kilograms 1 897 724 kilograms

Collection rate 85.9% 85.9% 85.9% 85.9%

Regulation goals 50.0% 75.0% 75.0% 75.0%

1st rowMr. Pierre L. Comtois,Mr. Gilles Goddard, GMMr. Carol Montreuil, Pres.

Mrs. Ginette Bureau,

Mr. Julian Cininni,Mr. Michael Paul

2nd rowMr. Ron Damiani,Mr. François Gingras,Mr. Darius Côté,Mr. Roch Cousineau,Mr. Pierre-Yves Larose,Mr. Louis Coulombe

Missing from pictureMr. Yvan Gagné,Mr. Robert Huberdeau, V.P.Mr. Denis Renaud,Mr. Raymond Savard,Mr. Charles Touchette,Mr. Paul Granda

Carol Montreuil,President

Gilles Goddard,General Manager

La Société de gestion des huiles usagées (SOGHU) has been operationalsince January 2005. It is comprised of numerous partners, including 213Members (who put oil products on the market), 23 Collectors, 65 Processors,and 9 Internal Collector/Processors who collect and reclaim their own oil.All of these activities are performed in conformity with the applicableregulations. All products collected are 100% reclaimed.

Amazingly, SOGHU continues to improve its achievements for each of theproducts that it is responsible for collecting and processing on behalf ofits Members. In fact, the collection rate for oil before SOGHU was at 60%and climbed to 84% in 2005, 89% in 2006 to reach 93.5% in 2007.

As for filters, the largest collection increase happened the first year in 2005when the rate went from 20% to 73% and saw a mild increase to 74% in2006 and went on to surpass the goal for 2008 with a rate of 82.7%reached in 2007.

Prior to SOGHU’s launch, containers were not collected. Neverthelessthe collection rate increase now is exceptional: 25% in 2005, 55% in2006 and finally, 82.7% in 2007. These achievements have surpassedall high hopes.

To achieve these results the Collectors serviced between 10,000 and 12,000customers, 386 of which were registered as Collection Facilities in 2005 tooffer free collection services to the population for all applicable products. In2006 the number of Collection Facilities reached 486 and continued toclimb to 571 as of December 31, 2007.

SOGHU believes that the closer the services are to the people, the easierit is for them to use. We thank all of the companies and municipalitieswho took the environment’s best interest at heart and we ask the publicto respect their hours and conditions. Many companies and municipalitiesunderstood the advantages of registering as Collection Facilities; beingdisplayed on the SOGHU’s website therefore benefiting from free publicityand being able to tell their clients that they are actively participating inprotecting the environment.

Furthermore, conscious of the importance of communication andinformation, SOGHU invested time and money in numerous mediaventures including specialized magazines that target all interestedparties, including forestry workers, farmers, manufacturers, municipalities,transporters, garages, the Centres de Formation en Entreprise etRécupération (CFER) and individuals, through television campaigns onRéseaux des sports (RDS) and Météo Média, through the distribution ofa DVD presentation on SOGHU, and through attendance at multipleconferences and participation in exhibitions and meetings.

We are extremely proud of our third year of operation, and the results speak,in part, to the commitment of SOGHU, its Members and in particular theBoard of Directors, whose goal was to attain the objectives set out by thegovernment, and also in part to the exceptional partnership betweenSOGHU, the Collectors, the Processors, the generators and municipalitiesand all in collaboration with RECYC-QUEBEC.

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

Make every drop count….

ONCE AGAIN, SOGHU IMPROVES ITS PERFORMANCE

7

3M 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 Modena Inc.

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.

Bosch Rexroth Canada Corporation

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 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.

Chrysler Canada Inc.

CNH America Ltd.

COMAIRCO LTEE

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

Control Chemical (1989) Corporation

Costco Wholesale Canada Ltd.

CPT Canada Power Technology Limited

CRC Canada Inc.

Cummins Est du Canada SEC

Denis Gauvin Inc.

Distribution M.C. Senc.

Distribution Régionale PML Inc.

Distribution Regitan

Distributions J. Léveillée

ECL Services inc.

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

Honda Canada Inc.

Honeywell ASCA Inc.

8

SOGHU MEMBERS

Houghton Canada Inc.

Hudson's Bay Co.

Husqvarna Canada Corp.

Hydralogie Inc.

Hyundai Auto Canada Corp.

International Truck & Engine CorporationCanada

Irving Oil Marketing Limited

J & M Filters and Auto Parts Inc

J. Walter Compagnie Ltée

Jaguar Land Rover Canada

Jig-A-Loo Canada Inc.

John Deere Limited

Kia Canada Inc.

Kimpex 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

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 R.L. Inc.

Les Pétroles Sonic(La Coop Fédérée)

Les Pièces d'Auto Transbec Inc.

Les Pièces d'Autos Transit Inc.

Les Pièces de Transmission Unitrans Ltée.

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.

Réseau C.B. (Div. Canadian Bearings)

Ridge Tool Company

Robert Bosch Inc.

Roby Metal 2000 (Exacta)

SC CLS Holdings ULC

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 DetroitDiesel 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.

Total Lubrifiants Canada 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

Worldpac Canada Inc.

Wynn's Canada Ltd

9

RECYC-QUÉBEC

COLLECTORSPROCESSORS

GENERATORS

COLLECTION FACILITIESMunicipal/Commercial

SOGHU

Products

$ Funds

MEMBERS

10

STANDARD FLOW CYCLE OF FUNDSAND PRODUCTS

MEMBERSbrand owners andthe primary importersor suppliers

___________________

COLLECTORSestablishments thatcollect the productsfrom generators

___________________

PROCESSORSestablishments thatgive new life toproducts

___________________

GENERATORSestablishments thatcreate used products(garages, vendors,commercial, industrialand municipal sectors,forestry industry,agriculturists,transporters,individuals)

___________________

COLLECTIONFACILITIESestablishmentregistered with SOGHUto receive from thepublic, at no cost tothem, used oil productsgoverned by theRegulation

To 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, 2007 and the statements of income,changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the organization's management.Our responsibility is to express 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 organization as at December 31, 2007and the 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 12, 2008

11

AUDITORS' REPORT

Year ended December 31 2007 2006

REVENUE

Environmental Handling Charge $ 13 157 257 $ 13 146 511

Registration and renewal 8 400 13 400

Interest 293 199 221 314

Support of Recyc-Québec to the advertisement

and communications expenses 42 208 51 776

13 501 064 13 433 001

EXPENSES

PROGRAM

Return Incentives 11 383 263 9 467 974

Processor Incentives 635 660 405 636

Collection Facilities Incentives 75 961 85 091

Advertising and communications 379 949 319 592

Contribution to RECYC-QUÉBEC 318 345 315 946

Legal fees 13 480 10 118

Salaries – management and administration contracts 52 343 52 321

Compliance reviews and audits 107 087 123 334

12 966 088 10 780 012

ADMINISTRATION

Office and general expenses 187 442 106 377

Legal fees 53 921 40 236

Rent 25 500 25 500

Consulting fees 81 148 53 779

Salaries – management and administration contracts 256 652 282 398

Professional fees 7 830 7 600

Depreciation - fixed assets 17 196 15 355

629 689 531 245

13 595 777 11 311 257

EXCESS (DEFICIENCY) OF REVENUE OVER EXPENSES $ (94 713) $ 2 121 744

INCOME

12

December 31 2007 $ 2006 $

ASSETS

CURRENT ASSETS

Cash, 4.12% $1 394 371 $1 714 369

Accounts receivable 2 619 068 2 435 834

Accrued interest receivable 126 088 105 867

Prepaid expenses 5 801 33 791

Current portion of investments (Note 5) –$ 800 000

4 145 328 5 089 861

INVESTMENTS (Note 5) 4 200 000 3 200 000

FIXED ASSETS (Note 6) 25 787 26 937

$8 371 115 $8 316 798

LIABILITIES

CURRENT LIABILITIES

Accounts payable (Note 7) $1 881 428 $1 732 398

NET ASSETS

Unrestricted 1 463 900 1 557 463

Restricted (Note 6) 5 000 000 5 000 000

Invested in fixed assets 25 787 26 937

6 489 687 6 584 400

$8 371 115 $8 316 798

COMMITMENTS (Note 8)

On behalf of the board

Mr. Carol Montreuil, Mr. Robert Huberdeau,

Director Director

BALANCE SHEET

13

Year ended December 31 2007 $ 2006 $

OPERATING ACTIVITIES

Cash receipts – Members $13 045 740 $12 027 865

Cash receipts – interest and other 315 186 115 447

Cash paid – suppliers (13 464 878) (11 323 189)

(103 952) 820 123

INVESTING ACTIVITIES

Acquisition of investments (200 000) (4 000 000)

Acquisition of fixed assets (16 046) (2 400)

(216 046) (4 002 400)

CASH AND CASH EQUIVALENTS DECREASE (319 998) (3 182 277)

CASH, BEGINNING OF YEAR 1 714 369 4 896 646

CASH, END OF YEAR $1 394 371 $1 714 369

14

CASH FLOWS

DECEMBER 31, 2007

1. STATUTES OF INCORPORATION AND NATURE OF ACTIVITIES

The organization is incorporated under Part III of the Quebec Companies Act. According to the Federal and Provincial Income

Tax Acts, it is a non-profit organization and is therefore exempt from income 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 requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies 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.

Revenues recognitionEnvironmental Handling Charge revenue are recognized when the lubricating oil and/or oil containers and oil filters are sold by

Members, except for revenue from prior years received in the current year following a new registration, because the Environmental

Handling Charge must be remitted retroactively from January 1st, 2004, and for additionnal revenue determined following a

compliance review. These Environmental Handling Charges are recognized in the year during which they are determined.

Return IncentivesReturn Incentives expenses are recognized when the lubricating oil and/or oil containers and oil filters are collected by a SOGHU

registred Collector.

Processor IncentivesProcessor Incentives expenses are recognized when the lubricating oil containers are processed by a SOGHU registred Processor.

Financial assets and liabilitiesFinancial assets and financial liabilities held for tradingFinancial instruments held for trading represent assets acquired or liabilities assumed principally for the purpose of selling

or repurchasing in the near term. They are recognized at fair value for each balance sheet date using the fair market value

method. Any change in the fair value is recognized in the statement of operations in the year they occur.

NOTES TO FINANCIAL STATEMENTS

15

Held-to-maturity investments, loans and receivables and other financial liabilitiesFinancial instruments classified as loans and receivables, held-to-maturity investments and other financial liabilities are

accounted for at amortized cost using the effective interest method. The interest income or the interest charge is included in

the statement of operations through the expected life of the financial instrument.

Available-for-sale financial assetsFinancial instruments classified as available-for-sale are accounted for at fair value at each balance sheet date and any change

in the fair value is accounted for in the statement of operations at each balance sheet date of the year during which these

changes arise. Investments securities classified as available-for-sale and that are not actively traded are accounted for at cost.

Investments available-for-sale are written down at the fair value when it is necessary to reflect a permanent impairment.

When the instrument is derecognized, all cumulated unrealized gains and losses are derecognized in the unrestricted net

asset and all realized gains and losses on available-for-sale financial assets are then accounted for in the statement of

operations as realized gain or loss on disposal of investments.

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 organization's cash and cash equivalents include cash and term deposits maturing within three months.

3. CHANGE IN ACCOUNTING POLICIESJanuary 1st, 2007, the organization has adopted the new recommendation of the Canadian Institute of Chartered Accountants,relating to recognition, measurement and presentation of financial instruments according to sections 3855, Financial instruments -recognition and measurement, 3862, Financial instruments - disclosure and 3863, Financial instruments - presentation. These newhandbook sections provide requirements as to the recognition and measurement of financial instruments. The application ofthese new sections had no impact on the financial statements of the organization as of January 1st, 2007. The significantmodifications in the reporting of financial instruments resulting of the adoption of these new standards are described below.Further to the adoption of these new standards, the organization has classified its cash as assets held for trading. Term depositswith maturation periods exceeding three months are classified as available-for-sale financial assets. Accounts receivable andaccrued interest receivable are classified as loans and receivables. Accounts payable are classified as other financial liabilitieswhich are measured, in each case, at amortized cost.

DECEMBER 31, 2007

16

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. NEW ACCOUNTING STANDARDS NOT YET IMPLEMENTEDThe Canadian Institute of Chartered Accountants ("CICA") issued a new standard, Section 1535, Capital Disclosures, whichrequires an organization to disclose qualitative and quantitative information to enable users of the financial statements toevaluate its capital management objectives, policies and procedures. This section applies to annual financial statements for yearsbeginning on or after October 1st, 2007. The organization does not anticipate any significant effect on financial statementsfurther to the adoption of this new standard.

5. INVESTMENTS 2007 2006

Portfolio investments: Term deposits, bearing interest at rates from 4.22% to

4.60%, maturing from November 2007 to May 2011. $– $4 000 000

Held for trading investments: Term deposits, bearing interest at rates from 4.22%

to 4.60%, maturing from May 2009 to January 2012 4 200 000 –

4 200 000 4 000 000

Current portion of investments –$ 800 000

$4 200 000 $3 200 000

6. FIXED ASSETS 2007 $ 2006 $

AccumulatedCost depreciation Net Value Net Value

Computer hardware $32 742 $28 842 $3 900 $11 887

Computer software 1 495 1 495 – –

Furniture and fixtures 38 556 16 669 21 887 15 050

$72 793 $47 006 $25 787 $26 937

DECEMBER 31, 2007

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

17

DECEMBER 31, 2007

18

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. ACCOUNTS PAYABLE 2007 $ 2006 $

Trade $1 630 860 $1 474 125

Payroll, withholding taxes and contributions 5 351 –

Other 245 217 258 273

$1 881 428 $1 732 398

8. COMMITMENTS

AgreementThe organization has a consent agreement with RECYC-QUÉBEC until December 31, 2008, which is renewable. In accordance

with this agreement, the organization must collect an Environmental Handling Charge from its Members and pay a financial

contribution to RECYC-QUÉBEC.

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

June 2012.

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".

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

Management Contributionand administration to environmental

services Rent organizations

2008 $142 260 $25 500 $30 000

2009 142 260 23 375 –

2010 142 260 – –

2011 142 260 – –

2012 71 130 – –

$640 170 $48 875 $30 000

9. RELATED PARTY TRANSACTIONS

In the ordinary course of its business, the organization receives an Environmental Handling Charge from its Members and pays

incentive returns to Collectors and Processors. Some Members and one Collector (without voting rights) have representatives

who are part of the board of directors. These transactions are measured at the exchange amount and are subjected to the usual

commercial conditions of the organization.

The principal transactions concluded with related party during the year are as follow:

2007 2006

Revenue

Environmental Handling Charge $4 182 888 $4 400 831

Renewal 200 200

Expenses

Return Incentives 150 443 439 168

Processing Incentives – 263 610

Collection Facilities Incentives $74 211 $–

10. FINANCIAL INSTRUMENTS

Available-for-sale financial assetsFor the long-term investments consisting of term deposits, the fair values approximate the carrying values because of their interest

rates which represent the interest rates the organization could obtain for investments with similar terms and maturity dates.

Credit riskIn the normal course of its operation, the organization monitors the Members that did not produce monthly remittance forms

and did not remit the Environmental Handling Charge.

The organization is not exposed to any significant risk with respect to a single Member.

DECEMBER 31, 2007

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

19

BOARD OF DIRECTORS

Ginette Bureau RECYC-QUÉBEC

Julian Cininni Total Lubrifiants Canada inc.

Pierre L. Comtois Général Motors du Canada Limitée

Darius Côté Pétrolière Impériale

Louis Coulombe Peintures Récupérées du Québec inc.

Roch Cousineau Robert Bosch Inc.

Ron Damiani Costco Wholesale Canada Ltd

François Gingras La Coop fédérée

Robert Huberdeau Wakefield Canada Inc.

Pierre-Yves Larose Lufrifiants Mondiaux Chevron Texaco

Carol Montreuil Institut Canadien des Produits Pétroliers

Michael Paul Valvoline Canada Ltée

Denis Renaud Pétro Canada

Raymond Savard Carquest Canada Ltd

Charles Touchette Afffinia Canada Corporation

Gilles Goddard General Manager

Paul Granda Legal Adviser - Gowling, Lafleur, Henderson s.r.l.

LEGAL COUNCIL

Gowling, Lafleur, Henderson s.r.l.

20

SOGHU COMMITTEES

THE AWARENESS COMMITTEE

Denis Bergeron Fédération Québecoise des Municipalités

Claude Bourque RECYC-QUÉBEC

Marieke Cloutier Union des Municipalités du Québec

Louis Coulombe Peintures Récupérées du Québec Inc.

Gilles Goddard SOGHU General Manager

Paula Landry CAA-Québec

Karel Ménard Front commun québécois pour une gestion écologique des déchets

Françoise Paquet Conseil Québecois du Commerce de Détail

Patrice Savoie Ministry of Sustainable Development, Environment and Parks

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, rue De Martigny Ouest, bureau 10

Saint-Jérôme (Québec) J7Y 4C9

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Printed in Canadaon 100% recycled paper.

Société de Gestion des Huiles Usagées

1101, blvd. Brassard, suite 214, Chambly (Québec) J3L 5R4

Phone : (450) 447-9996 | Fax: (450) 447-9988

Toll free: 1-877-98 SOGHU (1-877-987-6448)

E-mail: soghu@soghu.ca | www.soghu.com MAKE EVERY DROP COUNT…