A Gesture That Benefits All - SOGHU · implemented for the Collectors registered with SOGH UOMA once all the Quebec Collectors are integrated. Efficiency, partnerships, performance

A Gesture That Benefits All

2014 ANNUAL REPORT

3

SECTION

1 SOGHU... 10 Years Already! 4

2 Standard Flow Cycle of Funds and Products 5

3 SOGHU: A Win-Win Approach 6

4 Scoreboard 8

5 SOGHU Members 10

6 SOGHU Committees 12

7 SOGHU Zones 14

Financial Statements

SECTION

8 Independent Auditor’s Report 15

9 Income 16

10 Changes in Net Assets 17

11 Balance Sheet 18

12 Cash Flow 19

13 Notes to Financial Statements 20

Table of Contents

GENERATORS

Establishments that generate used products (garages, dealers, commercial, industrial and municipal sectors, forestry, agriculture, transporters, individuals)

COLLECTORS

Establishments registered with SOGHU that collect the products from Generators and receive sub-sidies from SOGHU (for additional information see page 14)

PROCESSORS

Establishments registered with SOGHU that give a second li fe to products

MEMBERS

Brand Owners who fund the system at $0.04 per litre for applicable lubricating oils; $0.10 per litre for oil and antifreeze containers of 50 litres or less; $0.17 per litre for non-metal or non-HDPE oil and antifreeze containers of 50 litres or less; $0.10 per litre of antifreeze mix; $0.16 per litre of antifreeze concentrate; $0.35 per filter of 8 inches or less or 203 mm in height; $0.85 per filter of more than 8 inches or 203 mm or more; $0.35 per sump type filters for automatic transmissions and $0.25 per aerosol container.

COLLECTION FACILITIES

Establishments registered with SOGHU to receive from the small Generators, at no cost to them, used oil products governed by the Regulation

PRODUCTS

$ FUNDS

54 2014 ANNUAL REPORT

The Collectors registered with SOGHU collect the designated products from the Generators and deliver them to Processors, also registered with SOGHU, to give them a second life. The Collectors and the Processors registered with SOGHU must prove their activities are in compliance with the existing regulations. They are also audited at least once every four years.

More than 12,000 Generators, mechanical repair shops or industries, are served by a collection service throughout the province. Over 1,000 of them are registered as Collection Facilities to allow individuals or low-volume businesses to return the designated products free of charge. We thank them for this service. We ask those who use this service to respect the schedule and not leave products unsupervised. All GM and Toyota dealers, Monsieur Muffler and Octo mechanical repair shops, several private mechanical repair shops and several municipalities are voluntarily directly involved in improving the environment and better serving their respective clienteles.

Thanks to rigorous management and an exceptional partnership with the Collectors and Processors, SOGHU ranks with one of the best recovery rates and the lowest system costs in Canada.

Out of concern for harmonization and administrative efficiency, SOGHU has made a management agreement with its Atlantic sister association, SOGHUOMA, at no charge. The agreement represents a substantial saving for both associations.

SOGHU is recognized by Québec, New Brunswick and Prince Edward Island to manage the programs in those provinces and is working closely with Newfoundland, Labrador and Nova Scotia for the introduction of their respective regulations in the near future.

Standard Flow cycle of Funds and Products 2

Since 2005, SOGHU, a private non-profit corporation, has managed the recovery and reclamation throughout Québec of the products subject to the Regulation respecting the recovery and reclamation of products by enterprises. Its Board of Directors is composed of representatives from different sectors, such as oil manufacturers, filter manufacturers, the petroleum industry, the automobile manufacturing industry, the antifreeze manufacturing industry, cooperatives, major retailers, a representative of RECYC-QUÉBEC and the president of a vigilance committee. Today, SOGHU is easily recognized by its logo, which includes the six icons representing the products for which it is responsible.

SOGHU… 10 years already! 1


The Atlantic provinces form a Board of Directors: SOGHUOMA Even though SOGHUOMA has its own independent Board of Directors that includes the four Atlantic provinces, SOGHU is mandated, under an agreement, to manage the SOGHUOMA program in order to optimize management, performance and system costs for each of the Atlantic provinces.

New Brunswick has just completed its first year of operation, while Prince Edward Island finalized and adopted its Regulations and recognized SOGHUOMA as managing agent of its program. Over the past year, SOGHU has also collaborated with the Newfoundland and Labrador Department of Environment and Nova Scotia Environment on the development of their respective future regulations.

The Members of the Board of Directors and the staff of SOGHU are very proud of all the projects and results of this 10th year of activities. The approach based on outstanding “win-win” partnerships among SOGHU, Collectors, Processors, Generators and Municipalities continues to be relevant and, for this tenth year, highlights the excellent work of all the partners.

We also wish to mention and thank RECYC-QUÉBEC for the excellent cooperation it maintains with SOGHU.

In short, we believe our program represents a sustainable development model, balancing environmental benefits, business requirements and the needs of society.

Carol MontreuilChairman of the Board

Gilles GoddardGeneral Manager

1st row > Mr. Paul Granda – Mr. Maxime Rivet – Mr. Michael Paul – Mrs. Loulia Kouchaji–Mr. Carol Montreuil, prés. – Mr. Gilles Goddard, DG – Mr. L. Pierre Comtois – Mr. Jean Duchesneau – Mr. Jean-François Lacasse – 2nd row > Mr. François Gingras – Mr. Pierre-Yves Larose – Mr. Serge Ouellette – Mr. Guy Bélanger – Mr. Roch Cousineau – Mr. Laurent Gagnon – Mr. Paul Lefebvre – Mr. Benoit Camirand – Not shown in photo > Mr. Alain Gariépy – Mr. Robert Huberdeau – Mrs. Chantale Mantha – Mr. Raymond Savard

SOGHU continues its sustainable development approachDue to the development and implementation of an electronic data entry system during pickup of products by Collectors, SOGHU’s employees will no longer have to verify over 12,000 pages of data per month coming from the Generators. Thanks to geocoding, the financial incentives granted to products and zones will be calculated automatically, eliminating numerous errors. In addition, because the Collectors’ internal management systems required several copies, they will now save three to four times the number of pages saved by SOGHU. In addition, this program allows Collectors to use the same platform for independent management of the other products they recover. This program will also be implemented for the Collectors registered with SOGHUOMA once all the Quebec Collectors are integrated.

Efficiency, partnerships, performance In the development and implementation of its program, SOGHU has always favoured win-win partnerships, whether with the Members who finance the system, the Collectors who are the key players in the field, the Processors who ensure the products have a second life, or the Generators, more than a thousand of which are registered as Collection Points to offer individuals and small businesses who do their own oil changes the possibility of returning regulated used products free of charge.SOGHU, over its first ten years, has been able to establish noteworthy performance standards. Tight management has allowed it to reduce its Members’ Environmental Handling Charges and simplify the system’s administration and management by integrating electronic payments, while maintaining recovery rates that exceed regulatory expectations.

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Partnership with the four recognized management organizations (RMO) in QuébecWith a constant concern for efficiency and harmonization, SOGHU works with the four other Québec RMOs (paint, electronics, batteries and fluo-compacts) to improve coherence in the application of the Regulation respecting

the recovery and reclamation of products by enterprises and the resulting agreements with RECYC-QUÉBEC. For example, the five RMOs work in collaboration for the implementation of recovery of products in NUNAVIK.

SOGHU: A Win-Win Approach


Products EHC RI Net

Difference Average RI per quantity collected

Oils 4,122,584 3,392,623 729,961 729,961 $0.054/l

Filters 4,076,734 3,111,333 965,401 965,401 $0.381/un. $1.09/kg

Oil Containers 4,509,607 3,925,914 583,693 583,693 $0.109/un. $1.81/kg

Processing 0 619,687 619,6878 (619,687) $0.017/un. $0.30/kg

Glycol (antifreeze) 1,498,656 343,292 1,155,365 1,155,365 $0.232/l

Glycol (antifreeze) Containers 558,456 112,526 445,930 445,930 $0.092/un. $2.12/kg

14,766,038 11,505,375 3,260,663

Products Measurements Sales Recoverable Reused 5 % Recuperated Reused –

Recuperated (%)Objective

R-Q

Oils litres 102,846,382 74,975,0131 63,150,651 84.2% 75.0%

Filtersunits 10,497,275 10,497,275 8,159,747 77.7% 75.0%

kg 3,676,8172 3,676,817 2,858,0653 77.7% 75.0%

Oil Containerslitres 39,356,223 39,356,223 1,967,8114 35,920,7985 96.3% 75.0%

kg 2,378,255 2,378,255 118,9134 2,170,6565 96.3% 75.0%

Glycol (antifreeze) litres 16,030,905 7,005,5066 1,482,146 21.2% 25.0%***

Glycol (antifreeze) Containers

litres 5,584,560 5,584,560 1,217,6777 21.8% 25.0%***

kg 242,889 242,8894 52,960 21.8% 25.0%***

Oils

Filters

Containers

Containers

Antifreeze

Collection Facilities

Zone RI In Litres % RI In kg % RI Oil % Glycol (antifreeze) % Total kg % RI In Litres % Commercial Commission Total

1 $0.03 30,965,346 49.03% $0.65 1,387,039 48.53% $1.27 839,819 38.69% 18,526 34.98% 858,345 38.60% $0.16 655,231 44.21% 175 100 275

2 $0.04 7,245,860 11.47% $0.65 339,095 11.86% $1.70 217,442 10.02% 5,768 10.89% 223,210 10.04% $0.18 214,155 14.45% 59 54 113

3 $0.07 9,158,276 14.50% $0.80 475,012 16.62% $1.95 338,020 15.57% 8,822 16.66% 346,843 15.60% $0.23 256,107 17.28% 105 141 246

4 $0.07 2,974,657 4.71% $0.82 170,399 5.96% $1.95 186,552 8.59% 5,119 9.67% 191,671 8.62% $0.23 46,228 3.12% 23 76 99

5 $0.07 2,973,107 4.71% $0.85 126,345 4.42% $2.25 135,223 6.23% 3,727 7.04% 138,950 6.25% $0.30 52,159 3.52% 30 20 50

6 $0.09 2,231,646 3.53% $0.90 125,293 4.38% $2.33 87,083 4.01% 2,340 4.42% 89,423 4.02% $0.34 39,433 2.66% 44 76 120

7 $0.07 2,630,104 4.16% $0.90 96,989 3.39% $2.33 128,557 5.92% 3,302 6.24% 131,859 5.93% $0.32 23,300 1.57% 18 34 52

8 $0.10 1,302,698 2.06% $0.95 51,420 1.80% $2.55 75,610 3.48% 2,013 3.80% 77,622 3.49% $0.45 13,560 0.91% 13 21 34

9 $0.10 868,954 1.38% $0.95 20,509 0.72% $2.55 48,646 2.24% 1,274 2.41% 49,921 2.25% $0.45 1,566 0.11% 3 2 5

10 $0.28* 294,969 0.47% $1.35 4,924 0.17% $5.25 4,205 0.19% 116 0.22% 4,321 0.19% $0.50 0 0.00% 6 0 6

11 $0.28** 1,897,889 3.01% $1.50 50,227 1.76% $5.25 17,524 0.81% 382 0.72% 17,906 0.81% $0.50 113,667 7.67% 0 3 3

12 $0.20 607,146 0.96% $0.55 10,811 0.38% $1.20 91,975 4.24% 1,571 2.97% 93,546 4.21% $0.50 66,739 4.50% 0 0 0

Total $0.05 63,150,652 100.00% $1.09 2,858,064 100.00% $1.97 2,170,655 100.00% 52,960 100.00% 2,223,616 100.00% $0.23 1,482,145 100.00% 476 527 1 003

ScoreboardSales and Recovery Summary – January to December 20144

Members 275 Collectors 24 Processors 54 Internal Collector-Processor 3

As of December 31, 2014Ratings Legend1 72.9% of oils are recoverable2 Average weight of filters marketed < 8” = 0.28304 kg and > 8” = 1.17899 kg3 Actual collections X 0.6767 (0.6767 = Actual weight of crushed filters4 5% of containers are reused according to a study dated March 25, 20085 94.2% of containers collected = lubricants6 43,7% of antifreeze is recoverable7 Actual weight collected X 2.7 % glycol (antifreeze) containers only8 Decontamination oil containers = $551,403

Decontamination glycol (antifreeze) containers = $68,284

* Note: For zone 10, Îles-de-la-Madeleine, a special transportation RI of $ 0.18 per litre is allowed for used oils and used antifreeze collected and carried to the mainland.** Note: For zone 11, Basse-Côte-Nord, a special transportation RI of $0.28 per litre is allowed for all unprocessed used oils and used antifreeze collected and carried to

the mainland.*** These rates will be applicable in 2015. Note: This information is based on remittances received and RIs paid up to March 31, 2015 in relation to 2014.

Zone legend1 Montréal2 Québec3 Centre-du-Québec4 Outaouais – Laurentides5 Saguenay – Lac-Saint-Jean6 Bas-Saint-Laurent – Gaspésie

7 Abitibi8 Côte-Nord9 Nord-du-Québec

10 Les Îles-de-la-Madeleine 11 Basse-Côte-Nord

21 Municipale


5 SOGHU Members3M Canada Company9169-1931 Québec Inc. (VAG Motorsport)9189-0731 Québec Inc. / Envirolin Canada9201-9868 Québec Inc. (Multi-Dépôt)Acklands-Grainger Inc.ADF Diesel Montréal Inc.Aerochem Inc.Affinia Canada ULCAGCO CorporationAgnico-Eagle Mines Ltd., Division MeadowbankALFA Services Conseils Inc.Altrom Canada Corp.American Grease Stick Co.Amsoil Inc.Antirouille MétropolitainApril Super Flo Inc.Arctic Cat Sales Inc.Armored Auto Group Canada ULCAsalco Inc.Atelier HP LtéeAtelier PV Hydraulique (2004) Inc.Atlas Copco Compressors Canada Inc.Auto Master Supplies King IncAuto Modena Inc.Auto-Camping Ltd.Autolectra Inc.Auto-Moto Canada Inc.Aviall Canada Ltd.AvJet Holding Inc.Baldwin Filters Inc.Baldwin Filters Inc. (DBA Hastings Filters)BASF Canada Inc.Beck Arnley Worldparts Inc.Benson Group Inc.BestBuy Distributors Ltd.Black Dog Lubricants Ltd.Blue Water Agencies Ltd.Bluewave EnergyBMW Canada Inc.Bosch Rexroth Canada CorporationBP Lubricants USA Inc.Bronswerk Marine Inc.BRP Inc.Busch Vacuum Technics Inc.Campbellton Auto SupplyCanadian General Filters Ltd.Canadian Kawasaki Motors Inc.

Canadian Pacific RailwayCarquest Canada Ltd.Castrol Industrial North America Inc.Centre du Camion J.L. Inc.Centre Hydraulique Hydrep Inc.Chalifour CanadaChampion Laboratories Inc.Chauffage Premier Inc.Chem-Ecol Ltd.Chevron Canada LimitedChicago Pneumatic Tool Company Canada Ltd.Chrysler Canada Inc.CNH Industriel Canada LtéeCOMAIRCO LTEECompresseurs Québec Div. Inter-Power A.K. Corp.Control Chemical (1989) CorporationContrôle-air Compresseur 2010 Inc.Cool Distribution Inc.Costco Wholesale Canada Ltd.CPT Canada Power Technology LimitedCRC Canada Inc.Cummins Est du Canada SECD.A.S. Distributors, Inc.D.D. Distributions Lubrifiants Inc.Daimler Trucks North America LLCDavanac inc.Denis Gauvin inc.Distribution M.C. Opéré par 9222-2850 Québec Inc.Distribution, Importation Jean GagnonDistributions J. Pilon enr.Echo Power Equipment (Canada)ECL Services Inc.Elso Ltée/Ltd.Empack Spraytech Inc.Engrenage Provincial Inc.ENI USA R&M CO. INCEntrepôt de Montréal 1470 Inc.Entreprises Électriques Nadco Inc.Équipement SMS Inc.Équipements E.M.U. LtéeÉquipements Lourds Papineau Inc.Fastenal Canada Ltd.Ford Motor Company of Canada Ltd.For-Min Div. DK Spec Inc.FRAM Group (Canada) Inc.Fred Deeley Imports Ltd.

Fuchs Lubricants Canada Ltd.Fullbore Marketing Ltd.G.F. Thompson Company Ltd.G.K. Industries Ltd.Gamma Sales Inc.Garage Guy AudetGarage R. NadeauGates Canada Inc.Gauvin Équipement Inc.GEA Farm Technologies IncGeneral Electric Canada - Transportation SystemsGeneral Motors du Canada LtéeGilles Cusson Inc.Granby Industries Limited PartnershipGrenier Poulin Inc.Groupe BMR Inc.Groupe Environnement Labrie inc.Hall-Chem MFG Inc.Hangsterfer’s Laboratories IncorporatedHenkel Canada CorporationHewitt Équipement LimitéeHome Depot of Canada Inc.Home Hardware Stores LimitedHonda Canada Inc.Houghton Canada Inc.Hudson’s Bay Co.Husqvarna Canada Corp.Hydralogie Inc.Hydromec Inc.Hyundai Auto Canada Corp.Importations Thibault LtéeInter Outaouais Inc.Irving Blending & PackagingJ. Walter Compagnie LtéeJacques Larochelle Inc.Jaguar Land Rover Canada ULCJohn Deere Canada ULCJonjo Transport Refrigeration Ltd. / Thermo King MoKaeser Compresseurs Canada Inc.Kia Canada Inc.Kimpex Inc.King-O-Matic Industries LimitedKleen-Flo Tumbler Industries Ltd.Krown CorporateKTM Canada Inc.Kubota Canada Ltd.La Coop fédérée

Laboratoires St-Antoine Inc.Le Groupe GLM Inc.Le Groupe Harnois Inc.Leader Auto Ressources LAR Inc.Les Distributions Automont Inc.Les Distributions R.V.I. LtéeLes Entreprises Ethier Hi-Tech Inc.Les Équipements Industriels IBS Inc.Les Industries Gotham inc.Les Industries Spectra/Premium Inc.Les Industries Wajax LimitéeLes Industries Zeroflo LtéeLes Lubrifiants Sentinel Corp.Les Pétroles R.L. Inc.Les Pétroles Sonic (Coopérative Fédérée de Québec)Les Pièces d’Auto T.D.G. Inc.Les Pièces d’Auto Transbec Inc.Les Pièces d’Auto Transit Inc.Les Pièces de Transmission Unitrans LtéeLes Services Maintech / Maintech ServicesLoblaws IncLubri-Expert Inc.Lubrifiants et Produits Spécialisés Kenbec Inc.Lubrifiants Petro-Canada inc.Lubrification Québec Inc.Lubri-Lab Inc.Lucas Oil ProductsM & M Fournels Corp. Ltd.MacEwen Petroleum Inc..Machinerie R. Gagnon Inc.Magnéto Hydraulique et PneumatiqueMalmberg Truck Trailer Equipment Ltd.Mann + Hummel Canada, Inc.Matech BTA Inc.Maxim Transportation Services Inc.Mazda Canada Inc.MCS-Servo Inc.Mechanick Pieces d’Autos (144597 Canada Inc.)Mercedes-Benz Canada Inc.MFTA Canada Inc.Milacron Canada, division of Milacron Canada CorpMitsubishi Motor Sales of Canada Inc.Modern Sales Co-OpMontreal 4 Cylindres – Pièces Inc.Motion Industries (Canada) Inc.Motor Coach Industries Limited

Motovan CorporationMSC Industrial Supply Co. / Barnes DistributionNational Energy Equipment Inc.National Pneumatic Inc.Navistar Canada Inc.NCH Canada Inc.Nissan Canada Inc.NLS ProductsNoco Lubricants LPOto-Protec IncPaccar Parts, A Division of Paccar of Canada Ltd.Para-Performance Inc.Parker Hannifin CanadaParts CanadaPermatex CanadaPétroles Petro-Canada 6989641 Canada IncPétrolière ImpérialePhilippe Gosselin & Associés LimitéePièces D’Auto Carluce IncPièces d’Auto J.L. LtéePièces d’Auto Ultra Chateauguay Inc.Pièces d’Autos Jean LeblancPièces de Camion de la Beauce Inc.Polaris Industries Ltd.Porsche Cars Canada Ltd.Prévost, une division de Groupe Volvo Canada Inc.Prinoth Ltd.Produits Automobiles Laurentide Inc.Produits Chimiques Magnus LtéeProduits Industriels Kara Inc.Produits Lubri-Delta Inc.Produits Shell Canada LimitéeProlab Technolub Inc.Radiator Specialty Company of Canada Ltd.Recochem Inc.Recyclage Ramtech Inc.Regional Automotive Warehousing Ltd.Réseau C.B. (Div. Canadian Bearings)Ridge Tool CompanyRobco Inc.Robert Bosch Inc.Rona Inc.Safety-Kleen Canada inc.SC CLS Holdings ULC Complete Lube SupplySears Canada Inc.Service de Filtres Sefor Inc.

Shoreline Lube Distribution Inc.

Siemens Transformateurs Canada Inc.

Sinto Racing Inc.

Southwestern Petroleum Canada Ltd.

Spécialités Hipertech Inc.

State Industrial Products DBA State Chemical Ltd.

STIHL Limited

Subaru Canada Inc.

Suzuki Canada Inc.

Systèmes de Distribution Intégrés LP Div Detroit D

Target Canada Co.

TEC Automotive Industries Inc.

Technologies de procédé WARCO

Teklub Canada Ltée

Texas Refinery Corp. of Canada Ltd.

The North West Company Inc.

The Sherwin-Williams Co.

Thermal-Lube Inc.

Total Canada Inc.

Toyota Canada Inc.

Transformateurs Pioneer Ltée

TruServ Canada Inc.

Turf Care Products Canada Limited

UAP Inc.

Uni-Sélect Québec Inc.

Univar Canada Ltd.

Valley Napa Auto Parts

Valvoline Canada Ltd.

Verco International Inc.

Vermeer Canada Inc.

Viscosity Oil Company

Volkswagen Group Canada Inc.

Volvo Cars of Canada Corp.

Volvo Group Canada Inc.

Wainbee Limited

Wajax Industrial Components Ltd.

Wakefield Canada Inc.

Walmart Canada Corp.

WD-40 Company (Canada) Ltd.

Westpier Marine & Industrial Supply Inc.

Worldpac Canada Inc.

Wurth Canada Limitée

Yamaha Motor Canada Ltd.


SOGHU Committees

SOGHU’s Board Of DirectorsAffinia Canada ULC Serge Ouellette

Association canadienne des carburants Carol Montreuil

Association canadienne des constructeurs de véhicules (ACCV) L. Pierre Comtois

Beck/Arnley (Division Uni-Select) Raymond Savard

Constructeurs mondiaux d'automobiles du Canada Loulia Kouchaji

Costco Wholesale Canada Ltd Chantale Mantha

La Coop fédérée François Gingras

Lubrifiants Chevron Canada inc. Pierre-Yves Larose

Pétrolière Impériale Jean-François Lacasse

Produits Shell Canada Limitée Guy Bélanger

Recochem inc. Paul Lefebvre

Robert Bosch Inc. Roch Cousineau

Produits Automobiles Laurentides inc. Alain Gariépy

Total Canada inc. Benoit Camirand

Valvoline Canada Limitée Michael Paul

Wakefield Canada Inc. Robert Huberdeau

RECYC-QUÉBEC Maxime Rivet

Awareness Committee President Laurent Gagnon

General Manager Gilles Goddard

Legal Advisor, Sheahan & Associés, s.e.n.c. Paul Granda

Legal AdvisorSheahan & Associés, s.e.n.c.

Membres du comité de vigilance de la SOGHUCAA-Québec Jacques Maheu

Campor Environnement inc. Laurent Gagnon

Conseil québécois du commerce de détail Françoise Paquet

Front commun québécois pour une gestion écologique des déchets Karel Ménard

Ministère du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques

Nicolas Boisselle

Union des municipalités du Québec Marieke Cloutier

RECYC-QUÉBEC Maxime Rivet

SOGHU’S General Manager Gilles Goddard

Employees and ConsultantsGilles Goddard General Manager

Jean Duchesneau, CPA, CMA Assistant General Manager

Magalie Morrissette, CPA, CMA Controller

Diane Caron Assistant to the General Manager

Kim DeMaisonneuve Administrative Assistant

Nathalie Télénis Administrative Assistant

Joël Ouimet Field Inspector

Carmen Mensher Responsible for printed incentive reports

Auditors

LEHOUX BOIVIN COMPTABLES AGRÉÉS SENC 4255 Lapinière Blvd., Suite 300, Brossard, Quebec J4Z 0C7

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Note 1: For zone 10, Les Îles-de-la-Madeleine, a special transportation return incentive of $0.18 per litre is allowed for used oils and used antifreeze (antifreeze starting July 1st, 2012) carried to the mainland.Note 2: For zone 11, Basse-Côte-Nord and Île d’Anticositi, a special transportation return incentive of $0.28 per litre is allowed for all unprocessed used oils and used antifreeze (antifreeze starting July 1st, 2012) in zone 11. List of cities for zone 11: Blanc-Sablon, Brador, Chevery, Harrington Harbourg, Kegaska, La Romaine, La Tabatière, Lourdes-de-Blanc-Sablon, Middle Bay, Mutton Bay, Old Fort Bay, Pakua Shipi, Port Menier (Île d’Anticosti), Saint-Augustin, St-Paul’s River, Tête-à-la-Baleine.Note 3: Zone 12 is privileged from a particular functioning following a contract with Laurentide re/sources for a specific service to municipalities.NOTE: For information concerning RI rates for Internal Collector-Processor, please contact SOGHU.

To the Members of SOCIÉTÉ DE GESTION DES HUILES USAGÉES (SOGHU)We have audited the accompanying financial statements of the SOCIÉTÉ DE GESTION DES HUILES USAGÉES (SOGHU), which comprise the balance sheet as at December 31, 2014 and the statements of income, changes in net assets and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accouting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the SOCIÉTÉ DE GESTION DES HUILES USAGÉES (SOGHU) as at December 31, 2014, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Lehoux Boivin1

Brossard, April 7, 2015

Independent Auditor’s Report

1 CPA auditor, CGA, public accountancy permit No A127955

RI Table

ZONE 1 2 3 4 5 6 7 8 9 101 112 123

Municipale

Used oil ($/litre) 0.03 0.04 0.07 0.07 0.07 0.09 0.07 0.10 0.10 0.10 0.10 0.20

Used glycol (antifreeze) (45-55) ($/litre)(Depuis le 1er juillet 2012)

0.16 0.18 0.23 0.23 0.30 0.34 0.32 0.45 0.45 0.50 0.50 0.50

Used filters ($/kg) 0.65 0.65 0.80 0.82 0.85 0.90 0.90 0.95 0.95 1.35 1.50 0.55/unit

Used oil and used glycol (antifreeze) containers ($/kg)(Taux depuis le 1er février 2008 et contenants d’antigels usagés depuis le 1er juillet 2012)

1.27 1.70 1.95 1.95 2.25 2.33 2.33 2.55 2.55 5.25 5.25 1.20

Aerosols ($/kg) (Depuis le 1er août 2006)

3.67 3.67 3.84 3.84 3.87 3.92 3.97 3.97 3.97 4.37 4.37 0.55

Zone legend1 Montréal2 Québec3 Centre-du-Québec4 Outaouais – Laurentides5 Saguenay – Lac-Saint-Jean6 Bas-Saint-Laurent – Gaspésie7 Abitibi8 Côte-Nord9 Nord-du-Québec

10 Les Îles-de-la-Madeleine 11 Nord du Nord-Québec Basse-Côte-Nord Île d’Anticosti

7 8SOGHU Zones


Changes in Net Assets for the Year Ended December 31, 20149 10Income

for the Year Ended December 31, 2014

UnrestrictedReserve

fund

Invested in fixed

assets

2014 2013

Balance, beginning of year 3,329,047 10,200,000 113,354 13,642,401 12,952,147

Excess (deficiency) of revenue over expenses 1,783,771 ― (41,549) 1,742,222 690,254

Amount restricted to reserve fund (1,000,000) 1,000,000 ― ― ―

Investment in fixed assets (61,033) ― 61,033 ― ―

Balance, end of year 4,051,785 11,200,000 132,838 15,384,623 13,642,401

The accompanying notes are an integral part of the financial statements

REVENUES

2014 2013

Environmental Handling Charges 14,721,507 13,863,325

Transfer to Eco Peinture (aerosol) 121,917 87,477

Registration and renewal 6,400 9,200

Investment income 380,459 361,567

Management revenue (note 3) 129,729 ―

15,360,012 14,321,569

EXPENSES

Program

Return incentives 10,978,732 11,297,764

Process incentives 619,687 590,776

Collection facilities incentives 74,469 30,970

Incentive aerosol (Éco peinture) 121,917 87,477

Container segregation 80,475 61,027

Advertising and communications 332,540 337,232

Contribution to RECYC-QUÉBEC 181,384 127,913

Legal fees 11,317 8,487

Salaries, fringe benefits and management and administration contracts 306,972 306,927

Office and general expenses 102,834 96,125

Consulting fees 21,137 4,921

Compliance reviews and audits 245,575 172,027

Depreciation – fixed assets 13,360 22,800

13,090,399 13,144,446

Administration

Office and general expenses 87,723 167,675

Legal fees 36,309 19,057

Rent 29,756 27,900

Salaries, fringe benefits and management and administration contracts 325,820 246,383

Professional fees 19,594 20,844

Depreciation – fixed assets 28,189 5,010

527,391 486,869

EXCESS OF REVENUE OVER EXPENSES 1,742,222 690,254



Cash Flow for the Year Ended December 31, 2014

Balance Sheet for the Year Ended December 31, 2014

ASSETS

2014 2013

Current assets

Cash 1,524,608 676,697

Accounts receivable (note 4) 4,302,823 4,191,454

Advances to an organization (note 5) 33,352 96,380

Prepaid expenses 3,955 6,371

Current portion of investments 2,500,000 1,100,000

8,364,738 6,070,902

Investments (note 6) 8,963,616 9,320,477

Fixed assets (note 7) 132,838 113,354

17,461,192 15,504,733

LIABILITIES

Current liabilities

Accounts payable (note 8) 2,076,569 1,862,332

NET ASSETS

15,384,623 13,642,401

17,461,192 15,504,733


On behalf of the Board:Mr. Carol Montreuil, DirectorMr. Robert Huberdeau, Director

OPERATING ACTIVITIES

2014 2013

Cash receipts – members 14,719,883 13,446,998

Cash receipts – interest and others 500,912 434,681

Cash paid – suppliers and employees (13,359,588) (13,717,151)

1,861,207 164,528

INVESTING ACTIVITIES

Acquisition of investments (2,115,291) (814,850)

Cashing of investments 1,100,000 800,000

Acquisition of fixed assets (61,033) (92,297)

Advances to (from) an organization 63,028 (96,380)

(1,013,296) (203,527)

Increase (decrease) in cash and cash equivalents 847,911 (38,999)

Cash and cash equivalents, beginning of year 676,697 715,696

Cash and cash equivalents, end of the year 1,524,608 676,697


11 12


Notes to Financial Statements for the Year Ended December 31, 2014

1 Governing Statutes and Nature of BusinessThe organization is incorporated under Part III of 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 organization has the mandate to establish and manage a program for recovery and reclamation of used oils and antifreeze, oil or fluid containers and used filters.

2 Significant Accounting PoliciesThe financial statements were prepared in accordance with Canadian accounting standards for not-for-profit organizations (ASNFPO) and include the following significant accouting policies:

2 Significant Accounting Policies (continued))Cash and cash equivalentsCash and cash equivalents include cash and other highly liquid financial instruments with maturities of three months or less from date of purchase. Term deposits with maturities exceeding three months from date of purchase are not included in cash and cash equivalents. They are considered as an investing activity.

InvestmentsInvestments are accounted for at market value.

Revenue recognitionRevenue from environmental handling charges are recognized when the lubricating oil and/or oil containers and oil filters are sold by members, based on their remittance forms, except for revenue from prior years received in the current year following a new registration, because Environmental Handling Charges must be remitted retroactively from seven years, and for additional revenue determined following a compliance review. These Environmental Handling Charges are recognized in the year during which they are determined.

13Use of estimatesThe preparation of these financial statements, in accordance with Canadian accounting standards for not-for-profit organizations, requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the current period. Actual information could differ from that determined based on these estimates and assumptions. These estimates are reviewed periodically and adjustments are made to income in the year they become known.

Return incentivesReturn incentives expenses are recognized when the lubricating oil and antifreeze and/or containers and filters are collected by a SOGHU registered Collector.

Processing incentivesProcessing incentives expenses are recognized when the lubricating oil containers are processed by a SOGHU registered Processor.

Financial instruments Measurement of financial instrumentsThe organization initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. They are subsequently measured at amortized cost, except for other investments and advances from shareholders which are measured at cost and investments in quoted shares which are measured at fair value. Changes in fair value are recognized in net income.

ImpairmentFinancial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income.

Fixed assetsFixed assets are accounted for at cost and depreciation on the basis of their useful life of assets with the diminishing balance method based on the rates below:

Expense allocationThe organization displayed its expenses by functions. Salaries, fr inge benefits and management and administration contracts shared by program and administration functions are allocated proportionaly to hours spent as follow:

Program Administration

Management and administration contracts - manager from 75% to 90% from 10% to 25%

Salaries, fringe benefits and management and administration contracts from 10% to 70% from 30% to 90%

Furniture and fixtures

33%

33%

20%

20%

Computer hardware

Computer software

Collection equipment


3 Management RevenueThe organization SOGHUOMA retains the services of SOGHU for the purposes of assisting SOGHUOMA in the conception, implementation and operation of the recovery and reclamationprogram required to ensure the appropriate recovery and reclamation of the Products in accordancewith applicable Atlantic Provinces legislative and regulatory requirements.

2014 2013

Program 63,615 ―

Administration 66,114 ―

129,729 ―

Management revenues incurred during the year with this organization are splitted as follows:

PROGRAM

Container segregation 11,789 ―

Advertising and communication 247 ―

Salaries, fringe benefits and management and administration contracts 45,125 ―

Office and general expenses 6,454 ―

63,615 ―

ADMINISTRATION

Office and general expenses 9,672 ―

Rent 4,374 ―

Salaries, fringe benefits and management and administration contracts 47,924 ―

Depreciation – fixed assets 4,144 ―

66,114 ―

129,729 ―


4 Accounts Receivable

2014 2013

Accounts receivable 4,156,230 4,172,882

Account receivable - SOGHUOMA 146,593 ―

Sales taxes receivable ― 18,572

4,302,823 4,191,454

5 Advances to an OrganizationCash and the current managements of SOGHUOMA and SOGHU was provided by a common general manager. The advances from the other organization consist of cash advances and expenses assuming related to the management of the organization, based on an agreement renewable in 2018. These loans beared interest at prime plus 2% for the first three months of the year and do not include terms of repayment. The balance receivable is $33 352 at December 31, 2014.

6 Investments

2014 2013

Term deposits, bearing interest at rate from 2,6% to 3,8%, maturing from June 2015 to December 2020.

10,328,966 10,420,477

Mutual funds 1,134,650 ―

11,463,616 10,420,477

Current portion of investments 2,500,000 1,100,000

8,963,616 9,320,477

7 Fixed Assets CostAccumulated amortization

2014 2013

Computer hardware 12,127 5,551 6,576 2,354

Computer software 121,405 22,959 98,446 68,878

Collection equipment 62,400 39,400 23,000 36,360

Furniture and fixtures 14,201 9,385 4,816 5,762

210,133 77,295 132,838 113,354


9 CommitmentsManagement and administration servicesThe organization has reached an agreement with SOGHU until December 31, 2018. Under this agreement, the orga-nization must pay a management fee to SOGHU, calcu-lated on a pro rata basis of total budgeted environmental handling charges for each organization. For the year ended December 31, 2014, the pro rata used is 85,3% for SOGHU and 14,7% for SOGHUOMA.

AgreementThe organization has a consent agreement with RECYC-QUÉBEC until December 31, 2015, which is renewable annually until December 2017. The new agreement was approved on October 22, 2012. In accordance with this agreement, the organization must collect Environmental Handling Charges from its members and pay a financial contribution to RECYC-QUÉBEC. Also, the organization must obtain compliance reviews for selected firms by SOGHU and has to pay it’s fees.

Management and administration servicesUnder the terms of a management agreement, the organization is charged a fee for provision of management services until April 2015. The commitment for next year is $73,686.

Software and technology servicesThe organization has commitment until April 2016 regarding the execution of software and technology services.

Compliance reviewsThe organization has commitment until 2015 with firm regarding the execution of the compliance reviews. The estimated minimum annual payments under this commitment cannot be determined at this time.

RentThe organization has a lease commitment until November 2019 for the rental of office space.

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

Software and technology services Rent

2015 3,990 30,900

2016 1,330 30,900

2017 ― 30,900

2018 ― 30,900

2019 ― 28,325

5,320 151,925

10 Related Party TransactionsIn regular course of its business, the organization receives Environmental Handling Charges from its members and pays Return Incentives to Collectors and Processors. Some members and one Collector (without voting right) have representatives who are part of the Board of directors. These transactions are measured at the exchange amount and are subject to the usual commercial conditions or the organization.

The principal transactions concluded with companies or organizations members of the Board of directors of the society during the year are as follow:

REVENUES

2014 2013

Environmental Handling Charges 2,951,200 2,905,364

EXPENSES

Return incentives 560,458 862,864

Contribution to RECYC-QUÉBEC 181,384 127,913

Finally, the accounts receivable include an amount of $716,781 (2013: $585,842) to be received from companies managed by members of the Board of directors and the accounts payable include $90,651 (2013: $194,591) to be paid to companies and organizations managed by members of the Board of directors.

11 Expenses AllocationExpenses amounts for salaries, fringe benefits and management and administration contracts were allocated as follow:

2014 2013

Program 306,972 306,927

Administration 325,820 246,383

632,792 553,310

13 8

Accounts Payable 2014 2013

Trade 1,973,432 1,852,535

Sales taxes payable 79,439 ―

Salaries payable 3,403 1,503

Benefits payable 20,295 8,294

2,076,569 1,862,332



12 Financial InstrumentsThe organization is exposed to various risks through its financial instruments. The following analysis provides a measure of the Organization’s risk exposure and concentrations as at December 31, 2014.

Credit riskIn the regular course of its operations, the organization monitors the members that did not produce monthly remittance forms and did not remit Environmental Handling Charges.

The organization is not exposed to any significant risk with respect to a credit concentration.

Market riskThe organization is exposed to the interest rate risk, which is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates.

13 Reclassified AccountsSome accounts in the financial statements of the previous year have been reclassified to conform with disclosure adopted in the current year.

13 Notes to Financial Statements for the Year Ended December 31, 2014

1101 Brassard Blvd., Suite 214, Chambly, Quebec J3L 5R4Phone: 450 447-9996 | Fax: 1 855 497-7505E-mail: [email protected]

SOGHU.COM 1 877 987-6448

Documents

A Gesture That Benefits All - SOGHU · implemented for the Collectors registered with SOGH UOMA once all the Quebec Collectors are integrated. Efficiency, partnerships, performance