Superior Plus Income Fund - 2006 Fourth Quarter and Year-End Results



    TSX: SPF.UN

    CALGARY, March 6 /CNW/ -

    
    Financial Summary
    -------------------------------------------------------------------------
                                    Three Months Ended           Years Ended
    (millions of dollars, except           December 31           December 31
     per trust unit amounts)           2006       2005       2006       2005
    -------------------------------------------------------------------------
    Financial
    Operating distributable cash
     flow before strategic
     plan costs
      Superior Propane                 32.6       31.9       90.6       94.2
      ERCO Worldwide                   20.0       24.2       75.7       93.1
      Winroc                           10.7        8.7       34.6       30.2
      Superior Energy Management
       ("SEM")                          3.0        1.8       10.3        5.3
      Discontinued operations
       - JW Aluminum ("JWA")            8.1        8.6       38.9        8.6
    -------------------------------------------------------------------------
                                       74.4       75.2      250.1      231.4
    Corporate costs                    (2.4)      (2.7)      (6.4)      (8.7)
    Interest                          (16.4)     (12.5)     (63.3)     (35.7)
    -------------------------------------------------------------------------
    Distributable cash flow before
     strategic plan costs              55.6       60.0      180.4      187.0
    Strategic plan costs               (5.3)         -      (19.7)         -
    -------------------------------------------------------------------------
    Distributable cash flow            50.3       60.0      160.7      187.0
    Distributable cash flow per
     trust unit (before strategic
     plan costs), basic               $0.65      $0.70      $2.11      $2.35
    Distributable cash flow per
     trust unit, basic                $0.59      $0.70      $1.88      $2.35
    Average number of trust units
     outstanding (millions)            85.5       85.4       85.5       79.7
    -------------------------------------------------------------------------
    Operating
    Propane retail sales volumes
     (millions of litres)               407        420      1,386      1,468
    Propane retail sales margin
     (cents per litre)                 14.6       15.5       15.1       15.8
    Total chemical sales (thousands
     of metric tonnes "MT")             191        205        756        742
    Average chemical selling price
     (dollar per MT)                    554        545        540        550
    Natural gas sold (millions of
     gigajoules "GJ")                    10          9         40         37
    Natural gas sales margin
     (cents per GJ)                    62.0       47.8       54.3       39.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Message from Chairman and CEO to Unitholders
    For Superior Plus, 2006 was undoubtedly the most challenging in the
history of the Fund and a very difficult period for us and our fellow
unitholders, following nine consecutive years of solid growth and prosperity.
In May 2006, the Board commenced a comprehensive strategic review process in
response to the impact of record warm weather conditions on Superior Propane's
business during last year's winter heating season, medium-term weakness in the
operating results of ERCO Wordwide due to the impact of the rapid rise in the
Canadian dollar and significant increases in electricity prices on ERCO's
operations and customers, as well as the resulting reduction of the Fund's
monthly distribution and the weakness of the market price of our trust units.

    - REALIGNED STRATEGY -
    As part of the strategic plan announced in July 2006, I have taken on the
role as CEO in addition to serving as Chairman. Together with the Board and
new corporate management, we have reshaped Superior Plus into a more focused,
less leveraged and better positioned diversified income trust with a focus on
stability of distributions and long-term, value-based growth. We are
encouraged by our achievements to date and continue to deliver on our
promises. Let us review the steps we have taken, the strength we have gained,
and the opportunities we see for maintaining sustainable distributions and
creating long-term value for our investors.

    - MEETING OUR COMMITMENTS -
    The process of delivering on our commitments has been arduous and I am
pleased by the results achieved over the past few months. In 2006, we
successfully executed on several main elements of our strategic plan:

    -   Sold JW Aluminum, a leading manufacturer of specialty, flat-rolled
        aluminum products in the United States for US$310 million (approx.
        Cdn$350 million) and used the proceeds to repay debt.

    -   Lowered average senior debt level to 1.9 times EBITDA, now within the
        upper range of our target of 1.5 to 2.0 times. The total average debt
        level at 3.4 times EBITDA is now closer to the target of 2.5 to 3.0
        times.

    -   Closed ERCO Worldwide's Bruderheim, Alberta, sodium chlorate
        facility, which  removed 80,000 tonnes of capacity, balancing market
        conditions in North America and increasing the efficiency and
        competitiveness of ERCO's operations.

    -   Started up ERCO's 55,000 tonne capacity sodium chlorate plant in
        Chile, a growing pulp and paper region of the world.

    -   Renegotiated the Valdosta, Georgia power contract, enabling ERCO's
        100,000 tonne capacity plant to operate as swing production facility.

    -   Commenced a distribution reinvestment plan to fund growth capital
        projects for existing Canadian-based businesses.

    -   Changed the corporate management team and refocused on strategy
        execution, capital allocation, risk management and succession
        planning.

    -   Secured new $250 million credit facility and repaid $200 million of
        Medium Term Notes, enhancing debt covenant and repayment flexibility.

    -   Implemented an internal reorganization into a "trust over
        partnership" structure, enhancing distributable cash flow.
    

    We continue to meet our commitments and distributable cash flow per trust
unit for 2006, before strategic plan costs at $2.11 and after strategic plan
costs at $1.88 per trust unit were strong and within the upper range of our
expectations. Distributable cash flow at $180.4 million before strategic
review costs of $19.7 million declined by 4% compared to the $187.0 million
generated in 2005, demonstrating good operating performance by Superior
Propane and ERCO Worldwide despite their challenges and increased
profitability from Winroc and Superior Energy Management. JW Aluminum
contributed $38.9 million to the Fund's 2006 results.

    Superior Propane
    ----------------

    Superior Propane contributed $90.6 million in operating distributable
cash flow in 2006, compared to $94.2 million in 2005. These results reflect
good performance, despite the significant adverse impact of warm weather
conditions and customer conservation on its 2006 first quarter sales volumes.
The decline was partially mitigated by the $3.1 million decrease in net
maintenance capital expenditures resulting from the sale of surplus
properties, tanks and cylinders.
    In January 2006, John Gleason became president of Superior Propane,
leading the repositioning and retooling of the business, designed to achieve
profitable growth in the future. Superior is making steady progress on
aligning the cost structure to current sales volumes and improving operating
efficiencies, while continuing to focus on customer retention and service
programs to increase sales. During 2006, Superior completed the installation
of on-board truck computers, enhancing the flexibility of its workforce and
optimizing its routing and scheduling logistics. To mitigate increasing
operating expenses related to labour, fuel, insurance and regulatory
requirements, Superior Propane introduced a fee structure for propane
deliveries, including a transportation and hazardous materials handling fee.
    Superior has consistently increased revenues from other services and has
benefited from the February 2005 acquisition of Superior Gas Liquids, a
natural gas liquids wholesale marketer, providing transportation, storage,
risk management, supply and logistics services to Superior as well as to third
parties in Canada and the United States. Superior continues to expand its
service offerings such as preventative maintenance and warranty programs and
will be separating the service side from the propane delivery business to gain
further efficiencies and implement best practices across Canada.
    During 2007 and 2008, Superior intends to implement an accelerated fleet
renewal and bulk truck leasing program. Lease arrangements are available at
attractive rates and provide savings in maintenance and operating costs over
time. Newer, more reliable vehicles and a better matching of truck size to
delivery type will improve employee productivity and customer service.
    These initiatives, along with normal winter weather patterns and
continued focus on delivering with excellence are expected to win new
customers and gain organizational momentum. We anticipate that these
initiatives will result in improved profitability with operating distributable
cash flow for 2007 estimated in the range of $95 - $100 million, increasing in
2008 to $100 - $105 million. We are confident that the propane retailing
business will continue to provide a solid foundation for stable returns and
profitable growth for many years to come.

    ERCO Worldwide
    --------------

    ERCO contributed $75.7 million in operating distributable cash flow in
2006, compared to $93.1 million in 2005. These results exceeded our 2006
expectations, considering the medium-term challenges experienced by the North
American pulp and paper industry which resulted in reduced regional sodium
chlorate demand. North American bleached pulp producers continue to experience
global competitive pressures as a result of increased fiber and energy costs
and the impact of foreign exchange rates, which resulted in the closure of
seven mills during 2006. Combined with the mill closures in late 2005, this
resulted in an overall reduction in demand for sodium chlorate of
approximately 82,300 tonnes.
    Increasingly, new world-scale pulp mills are relocating and/or expanding
production capacity in offshore regions with significant access to low cost,
renewable wood fibre, relatively stable lower cost energy supply and
supportive government policies. As a result of this and the impact of high
electricity costs and foreign exchange on its business, ERCO closed its higher
cost 48,000 tonnes annual capacity sodium chlorate facility in Thunder Bay,
Ontario in April 2006, and its 80,000 tonnes Bruderheim, Alberta facility in
October 2006. The closures improved the utilization of ERCO's remaining six
sodium chlorate plants in North America and balanced supply and demand.
    In October 2006, ERCO was granted access to electricity supplied by
Georgia Power pursuant to their industrial interruptible tariff, enabling the
100,000 tonne Valdosta, Georgia plant to operate as swing production facility
when power prices are favourable and can be supported in the sodium chlorate
market place. This is expected to have a positive impact on ERCO's future
results. In late 2006, softwood pulp prices increased and the U.S. dollar
strengthened, improving the sodium chlorate demand profile.
    Internationally, ERCO completed its 55,000 tonne facility in Chile and
commenced production in September 2006 to exclusively supply three existing
mills owned by CMPC Celulosa S.A. over a long-term arrangement, participating
in the continued growth opportunities in lower pulp and paper cost producing
regions of South America and Asia.
    ERCO's total production capacity of approximately 502,000 metric tonnes
makes it the second largest producer of sodium chlorate in North America. ERCO
continues to pursue opportunities in emerging markets. It is one of only two
suppliers in the world of modern dioxide generators and related technology
used by pulp mills to convert sodium chlorate into chlorine dioxide. This
provides a unique competitive advantage, including early access to new market
trends.
    Chloralkali/potassium products represented 28% of ERCO's 2006 sales and
contributed 35% to cash generated from its operations before changes in net
working capital. This provides an important diversification of ERCO's product
lines, as nearly all of ERCO's chlorine, hydrochloric acid, potassium
hydroxide and potassium carbonate production, and approximately 94% of its
caustic soda production are sold to end markets not related to the pulp and
paper industry. Chloralkali operations performed above historical levels in
late 2005 and most of 2006, gradually returning to more balanced conditions.
Unlike the U.S. Gulf market, ERCO's chloralkali end markets are less
susceptible to large swings in profitability. Good growth opportunities exist
and ERCO is continuing to evaluate the economics of converting its Port
Edwards, Wisconsin potassium/chloralkali facility from a mercury-based process
to membrane technology at a cost currently estimated at US $85-$100 million.
Such a move would significantly improve the facility's capacity and process
efficiency and allow ERCO to take advantage of additional business
opportunities.
    Based on the steps taken and encouraged by ERCO's 2006 achievements, as
well as improved sodium chlorate market fundamentals, we expect ERCO's
operating distributable cash flow net of maintenance capital expenditures to
be $65 - $70 million for 2007 and 2008, with potential additional upside for
2008.

    Winroc
    ------

    Winroc, our walls and ceilings product distribution business posted
another record year, contributing operating distributable cash flow of
$34.6 million in 2006, an increase of 15% compared to 2005. It's profitability
has increased consistently over the past 10 years, driven by a combination of
organic growth and acquisitions. Its strong position in the commercial,
renovation and housing construction markets is expected to continue to provide
solid operating results.
    Winroc's focus on service is key to its success. Delivering product on
time to the right place at the construction site, makes Winroc an important
productivity partner for its contractor customers. The continued softening of
new housing construction in some markets is mitigated by strong commercial and
renovations markets, which comprise more than 50% of Winroc's business. With
its 39 distribution branches across Ontario, Western Canada, Utah, Nevada,
Arizona and Minnesota, Winroc's extensive geographic diversification is also a
mitigating factor in the residential construction slow-down being experienced
in certain regions.
    For 2007, we expect pressure on new home construction to be somewhat
mitigated by stronger commercial activity. We are estimating operating
distributable cash flow after maintenance capital expenditures of $30 -
$35 million, increasing to the $32 - $37 million range in 2008 range with some
improvement in the new home construction segment and assuming no new
acquisitions. The fragmented nature of the specialty buildings distribution
industry continues to provide attractive consolidation opportunities. Winroc
has identified a number of acquisition and expansion opportunities which are
anticipated to add further value over time.

    Superior Energy Management (SEM)
    --------------------------------

    SEM, our fixed-price natural gas retailing business posted stellar
results, contributing $10.3 million of operating distributable cash flow,
almost double compared to 2005. These results reflect SEM's success in
transitioning its strategic focus to building sales channels and momentum in
smaller volume, higher margin and longer-term commercial and residential
markets. Exiting 2006, SEM supplied approximately 40 million gigajoules of
natural gas to approximately 85,900 residential and 6,700 commercial flowing
customers with a weighted average remaining customer contract life of
42 months. During 2006, SEM has made substantial progress in expanding the
infrastructure to support its growth plans beyond the Ontario residential
market and the Ontario and Quebec commercial natural gas markets. SEM is
currently looking at expanding into the B.C. market later in 2007 and
potentially entering certain Northeast U.S. markets over time.
    Based on the growth profile in its existing business, SEM is expected to
generate operating distributable cash flow for 2007 of $12 - $15 million,
further increasing in 2008 to $15 - $18 million. In addition, SEM continues to
assess the merits of expanding its product line by offering fixed-price
electricity contracts to residential and small commercial customers in
Ontario. This market of approximately four million customers and a low
penetration rate relative to the Ontario natural gas market represents a
significant growth opportunity for SEM.

    - STRONG DIVERSIFIED ASSET BASE -
    One of Superior Plus' key strengths is our solid portfolio of well
diversified businesses, each of which has a strong market position on which to
build. Each business has an unwavering focus on safe, reliable operations and
quality service. Improving competitiveness and enhancing profitability will
provide Superior Plus with renewed access to capital markets at attractive
terms to prudently finance organic growth and acquisition opportunities to
further leverage our existing asset base. Our high quality assets will be a
strong foundation to sustain distributions and provide value to our investors
for many years to come.

    - NEW FOCUS AND DIRECTION -
    The implementation of the strategic plan has bolstered accountability at
the divisional levels, allowing each business to maintain a participative and
entrepreneurial corporate culture. In November, Wayne Bingham joined Superior
Plus as Executive Vice-President and Chief Financial Officer to further
Superior's corporate goals and objectives. Under our joint leadership and
guidance, the corporate office acts as a strategic capital manager, and has
shifted its focus from active business to active investment and risk
management.
    To remain focused on the strategic visions, including the challenges and
opportunities of the businesses, the Board has enhanced and strengthened its
governance processes. An advisory committee has been established for each
business, which includes two independent directors and the president of
another division. The advisory committee assists in delineating capital
allocation and acts as additional sounding board for strategic plans and
initiatives. We are beginning to see concrete results from the heightened
focus on operational strategy and financial discipline.

    - STABILITY OF DISTRIBUTIONS -
    Providing stable distributions to our unitholders that are sustainable
over the long term continues to be our guiding principle. Earlier in the year,
cash distributions were reduced and a new target payout ratio of 85 - 90% was
established. Cash distributed in 2006 reached $1.82 per trust unit which
reflects higher distribution rates paid earlier in the year. This resulted in
a payout ratio of 86% on distributable cash flow before strategic review
costs. Our current distribution rate of $1.56 per trust unit corresponds to an
estimated payout for 2007 within our target range of 85 - 90%.
    The trend to lower our payout ratio over time to ensure financial
stability is well supported by the renewed growth of our diversified asset
base. Under our previous distribution policy, the Fund paid out substantially
all of its distributable cash flow. Since its inception, the Fund has paid out
$18.39 on an original unit price of $10.95 and has distributed cash in excess
of $1 billion. During the past five years, Superior Plus has invested in
excess of $1 billion in growth capital projects and made a significant
contribution to the Canadian economy.

    - INCOME FUNDS IN TRANSITION -
    On October 31, 2006, the Federal Government of Canada announced a
proposal to impose a tax on distributions from publicly traded income trusts
and limited partnerships, beginning in 2011. The intent of the proposal is to
effectively tax trusts at the same level as corporations. We are currently
assessing the potential impact of the proposed change on Superior Plus and the
options available to us. The effect of a potential tax in 2011 would be
partially mitigated by substantial tax pools available to Superior Plus. Based
on preliminary views, we believe that the change may create opportunities for
a diversified business trust with good assets and stable cash flows. Depending
on final tax rules, U.S. acquisitions and expansions may become more
attractive and there may be domestic acquisition opportunities, as smaller
income trusts attempt to exit the market.
    Overall, we expect the change in tax rules to have little impact on our
growth strategy. Our capital requirements are within the new guidelines and
our threshold returns for growth capital projects are well in excess of our
cost of capital and are more than sufficient to account for the proposed tax
changes. In terms of our distribution policy, we believe that there will be a
continuing need for high dividend yield vehicles in Canada.

    - STRONG FINANCIAL POSITION -
    One of our top focuses and priorities is to maintain a strong balance
sheet. Historically, the financial performance of Superior Plus has been solid
and our recent challenges that led to the implementation of the strategic plan
were largely industry and market related. Prudent financial policies will
continue to underpin the ongoing success of accessing multiple sources of
capital on attractive terms to capitalize on the attractive opportunities for
profitable growth that exists within our underlying business portfolio.
    During 2006, we made substantial progress in achieving lower leverage
ratios that are appropriate in the context of our overall business, cash flow
profile, and capital requirements of our businesses, as well as our
distribution policy. We have also increased our liquidity and enhanced our
debt repayment profile. At December 31, 2006, Superior Plus had $588 million
of two year committed revolving term bank credit facilities with nine
chartered banks, of which $425 million was undrawn. Total debt of
$756 million, includes $314 million of publicly traded convertible debentures
with maturity dates to 2015.
    Financial initiatives for 2007 include continued focus on working capital
requirements within each of our businesses and a review of our overall banking
arrangements. This is aimed at ensuring continued flexibility and optimal
financial strength to execute on operational and strategic opportunities.

    - LOOKING AHEAD -
    In 2006, our energy and resources were fully absorbed by the
implementation of the strategic plan. We could not have accomplished so much
in such a short period of time without the dedication and commitment of our
past and present directors and employees involved in the restructuring
process. In particular, we extend our thanks and appreciation to management
and the employees of the operating divisions for their focus and dedication to
their businesses, including the team at JW Aluminum for their cooperation and
professionalism during the course of the sale.
    Although we have made considerable progress to date, we expect market
prices of income trusts to remain volatile over the short term. We will now
direct our efforts towards maintaining our momentum in delivering solid
operating performance to regain the trust and confidence that will ultimately
be rewarded by the market. For 2007, the Fund anticipates distributable cash
flow per trust unit in the $1.65 to $1.85 range, increasing in 2008 to the
$1.85 to $2.00 range without additional upside from potential accretive growth
capital projects. We believe our financial strength, balanced portfolio of
high quality assets and value-based growth strategy will translate into stable
distributions and create long-term value for our unitholders.

    Grant D. Billing
    Chairman and Chief Executive Officer


    Analyst Conference Call
    Superior Plus will be conducting a conference call and webcast for
investors, analysts, brokers and media representatives to discuss the 2006
Fourth Quarter and Annual Results at 9:30 a.m. EST (7:30 a.m. MST) on
Wednesday, March 7, 2007. To participate in the call, dial: 1-800-732-9307. An
archived recording of the call will be available for replay until midnight,
April 4, 2007. To access the recording, dial: 1-877-289-8525 and enter pass
code 21217330 followed by the pound key. Internet users can listen to the call
live, or as an archived call, on Superior's website at: www.superiorplus.com
under the "Events and Presentations" section.

    2006 Annual Financial Statements and Management's Discussion and Analysis
    The Fund intends to file its 2006 Annual Report, including its 2006
Management's Discussion and Analysis and 2006 Annual Financial Statements with
securities regulators on Monday, March 12, 2007. Hard copies of the 2006
Annual Report are expected to be available on March 21, 2007.

    Financial Discussion of 2006 Fourth Quarter and 2006 Year End Results

    Overview of the Fund
    Superior Plus Income Fund is a diversified business trust. The Fund holds
100% of Superior Plus LP, a limited partnership formed between Superior Plus
Inc., as general partner and the Fund as limited partner. Superior Plus has
four Canadian based operating divisions: Superior Propane is Canada's largest
distributor of propane, related products and services; ERCO Worldwide is a
leading supplier of chemicals and technology to the pulp and paper industries,
a regional Midwest supplier of chloralkali products and the third largest
producer of potassium products in North America; Winroc is the seventh largest
distributor of walls and ceilings construction products in North America; and
Superior Energy Management provides fixed price natural gas supply services in
Ontario and Quebec.

    Forward Looking and Non-GAAP Statements
    Forward Looking Statements
    --------------------------
    Except for the historical and present factual information, certain
statements contained herein are forward-looking. Such forward-looking
statements are not guarantees of future performance and involve a number of
known and unknown risks and uncertainties which may cause the actual results
of the Superior Plus Income Fund (the "Fund") or its wholly owned partnership,
Superior Plus LP ("Superior") in future periods to differ materially from any
projections expressed or implied by such forward-looking statements and
therefore should not be unduly relied upon. Any forward-looking statements are
made as of the date hereof and neither the Fund nor Superior undertakes any
obligation to publicly update or revise such statements to reflect new
information, subsequent events or otherwise.

    Distributable Cash Flow and Other Non-GAAP Measures
    ---------------------------------------------------
    Distributable cash flow of the Fund available for distribution to
Unitholders, is equal to cash generated from operations before natural gas
customer acquisition costs and changes in working capital, less amortization
of natural gas customer acquisition costs and maintenance capital
expenditures. Maintenance capital expenditures are equal to capital
expenditures incurred to maintain the capacity of Superior's operations and
are deducted from the calculation of distributable cash flow. Acquisitions and
other capital expenditures incurred to expand the capacity of Superior's
operations or to increase its profitability ("growth capital"), are excluded
from the calculation of distributable cash flow. Distributable cash flow is
the main performance measure used by management and investors to evaluate the
performance of the Fund and its businesses. Readers are cautioned that
distributable cash flow is not a defined performance measure under Canadian
generally accepted accounting principles ("GAAP"), and that distributable cash
flow cannot be assured. The Fund's calculation of distributable cash flow,
maintenance capital and growth capital may differ from similar calculations
used by comparable entities. Operating distributable cash flow is
distributable cash flow before corporate and interest expenses. It is also a
non-GAAP measure and is used by management to assess the performance of the
operating divisions.

    EBITDA represents earnings before interest, taxes, depreciation and
amortization calculated on a 12 month trailing basis giving pro forma effect
to acquisitions and divestitures and is used by Superior to calculate its debt
covenants and other credit information. Superior's calculation of EBITDA may
differ from similar calculations used by comparable entities.

    Fourth Quarter and Year to Date Results
    Fourth quarter distributable cash flow (before strategic plan costs of
$5.3 million) was $55.6 million ($50.3 million after strategic plan costs), a
decrease of $4.4 million (7%) over the prior year quarter (a decrease of
$9.7 million or 16% after strategic plan costs). The decrease in distributable
cash flow was predominantly a result of strategic plan costs of $5.3 million
incurred in the quarter and an increase in interest costs of $3.9 million, due
to increased debt levels and higher interest rates. Operating distributable
cash flow was comparable to the prior year quarter as improved operating
results from Superior Propane, Winroc and SEM more than offset a weaker
contribution from ERCO. JW Aluminum added $8.1 million of operating
distributable cash flow up to its sale on December 7, 2006.
    Distributable cash flow per trust unit before strategic plan costs was
$0.65 in the fourth quarter ($0.59 after strategic plan costs), a decrease of
$0.05 (7%) from the prior year quarter, and a decrease of $0.11 per trust unit
(16%) after strategic plan costs, due to the decrease in distributable cash
flow. The average number of trust units outstanding was consistent with the
prior quarter.
    Distributable cash flow for the year ended December 31, 2006 (before
strategic plan costs of $19.7 million) was $180.4 million ($160.7 million
after strategic plan costs), a decrease of $6.6 million (4%) from the prior
year before strategic plan costs, and $26.3 million (14%) after strategic plan
costs. Increased profibility from Winroc and SEM were outpaced by lower
results from Superior Propane, reflecting depressed heating demand in the
first quarter due to unseasonably warm weather and challenging conditions
experienced by ERCO's North American sodium chlorate operations. JW Aluminum
contributed $38.9 million to the Fund's 2006 results. Interest costs were
higher than the prior year due to higher interest rates and average debt
levels.
    Distributable cash flow per trust unit (before strategic plan costs) was
$2.11 ($1.88 after strategic plan costs), down $0.24 (10%) before strategic
plan costs, and $0.47 (20%) after strategic plan costs. The decrease in per
unit amounts is due to reduced distributable cash flow and a 7% increase in
the number of trust units outstanding.
    Net earnings for the fourth quarter were $38.1 million, compared to
$21.2 million for the prior year quarter. The increase in net earnings is
principally due to reduced amortization in the current quarter compared to the
prior year due to accelerated amortization recorded in the prior year quarter
as a result of ERCO's decision to close its Thunder Bay, Ontario sodium
chlorate facility. Additionally, fourth quarter net earnings were affected for
the same reasons as distributable cash flow for the fourth quarter.

    
    Distributable Cash Flow(1)
    -------------------------------------------------------------------------
                                    Three Months Ended           Years Ended
                                           December 31           December 31
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Cash generated from continuing
     operations before natural gas
     customer acquisition costs and
     changes in working capital        44.9       54.7      137.5      196.0
    Add:  Management
           internalization costs          -          -        1.3        1.3
          Distributable cash flow
           from discontinued
           operations (See "JWA"
           discussion)                  8.1        8.6       38.9        8.6
    Less: Maintenance capital
           expenditures, net           (1.8)      (2.6)     (13.8)     (16.5)
          Amortization of natural
           gas customer
           acquisition costs           (0.9)      (0.7)      (3.2)      (2.4)
    -------------------------------------------------------------------------
    Distributable cash flow            50.3       60.0      160.7      187.0
    Strategic plan costs                5.3          -       19.7          -
    -------------------------------------------------------------------------
    Distributable cash flow before
     strategic plan costs              55.6       60.0      180.4      187.0

    Distributable cash flow            50.3       60.0      160.7      187.0
    Distributable cash flow
     (reinvested) funded from debt    (16.9)      (7.9)      (5.0)       5.0
    -------------------------------------------------------------------------
    Distributed cash flow              33.4       52.1      155.7      192.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable cash flow per
     trust unit (before strategic
     plan costs), basic(2)            $0.65      $0.70      $2.11      $2.35
    Distributable cash flow per
     trust unit (before strategic
     plan costs), diluted(3)          $0.65      $0.67      $2.11      $2.27
    Distributable cash flow per
     trust unit, basic(2)             $0.59      $0.70      $1.88      $2.35
    Distributable cash flow per
     trust unit, diluted(3)           $0.59      $0.67      $1.88      $2.27
    Distribution payout ratio
     (before strategic plan costs)       60%        87%        86%       103%
    Distribution payout ratio
     (after strategic plan costs)        66%        87%        97%       103%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) See the Interim Consolidated Financial Statements for cash generated
        from operations before natural gas customer acquisition costs and
        changes in working capital, management internalization costs,
        maintenance capital expenditures, and amortization of natural gas
        customer acquisition costs.
    (2) The weighted average number of trust units outstanding for the
        quarter ended December 31, 2006 is 85.5 million (2005 - 85.4 million)
        and for the year ended December 31, 2006 is 85.5 million (2005 -
        79.7 million).
    (3) For the three months and twelve months ended December 31, 2006, there
        were no dilutive instruments. For the prior year quarter, the
        dilutive impact of the convertible debentures, trust unit options and
        trust unit warrants was 10.8 million trust units (86.4 million total
        trust units on a diluted basis) with a resulting impact on
        distributable cash flow of $4.9 million ($64.9 million total on a
        diluted basis). For the prior twelve months ended December 31, 2005,
        the dilutive impact of the convertible debentures, trust unit options
        and trust unit warrants was 8.3 million trust units (88.0 million
        total trust units on a diluted basis) with a resulting impact on
        distributable cash flow of $13.1 million ($200.1 million total on a
        diluted basis).

    Superior Propane
    Superior Propane generated operating distributable cash flow of
$32.6 million in the fourth quarter, an increase of $0.7 million from the
prior year quarter due to higher other services gross profit and reduced
operating expenses, partially offset by reduced propane gross profits.
    Condensed operating results for the three months and years ended
December 31, 2006 and 2005 are provided in the following table. See "Segmented
Distributable Cash Flow" for detailed comparative business segment results.

    -------------------------------------------------------------------------
    (millions of
     dollars except     Three Months Ended                 Years ended
     per litre               December 31                   December 31
     amounts)          2006           2005           2006           2005
    -------------------------------------------------------------------------
                          cents/         cents/         cents/         cents/
    Gross Profit          litre          litre          litre          litre
                          ------         ------         ------         ------
      Propane
       sales        59.3   14.6    64.9   15.5   209.4   15.1   231.7   15.8
      Other
       services     18.9    4.6    15.0    3.6    63.5    4.6    52.7    3.6
    -------------------------------------------------------------------------
    Total Gross
     Profit         78.2   19.2    79.9   19.1   272.9   19.7   284.4   19.4
    Less:
      Cash
       operating,
       admin & cash
       tax costs   (47.6) (11.7)  (49.9) (11.9) (182.6) (13.2) (187.4) (12.8)
    -------------------------------------------------------------------------
    Cash generated
     from operations
     before changes
     in net working
     capital        30.6    7.5    30.0    7.2    90.3    6.5    97.0    6.6
    Maintenance
     capital
     expenditures,
     net             2.0    0.5     1.9    0.4     0.3      -    (2.8)  (0.2)
    -------------------------------------------------------------------------
    Operating
     distributable
     cash flow      32.6    8.0    31.9    7.6    90.6    6.5    94.2    6.4
    -------------------------------------------------------------------------
    Propane retail
     volumes sold
     (millions of
     litres)            407            420           1,386          1,468
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Propane sales gross profit of $59.3 million declined $5.6 million (9%)
from the prior year quarter, as sales volumes declined by 13 million litres
(3%) and sales margins decreased by 0.9 cents per litre (6%). Auto propane
volumes declined by 4 million litres (11%), consistent with decline trends in
this end-use market. Residential and commercial volumes declined by 5 million
litres (3%), due principally to warmer weather in Eastern Canada. Weather in
Eastern Canada was 7% warmer than the prior year and 9% warmer than the five
year average. Industrial volumes were comparable as a reduction in heating
related demand was substantially offset by stronger oil patch volumes. Propane
sales margins declined principally due to the outsourcing of primary
transportation services following the sale of the Energy Transportation in the
fourth quarter of 2005. Additionally, propane sales margins were negatively
impacted by reduced, high-margin heating related business mix.
    Other services gross profit was $18.9 million for the fourth quarter, an
increase of $3.9 million (26%) over the prior year quarter, as Superior
Propane's fixed-price heating programs returned to historical profitability.
The 2005/2006 heating season fixed-price program was negatively impacted by
the gulf coast hurricane in the third quarter of 2005 which had increased the
hedging costs of the program. Additionally, other service gross profit
benefited from a full quarter's impact of the propane delivery and hazmat fees
implemented during the fourth quarter of 2005, to mitigate increasing fuel and
regulatory costs.

              Volume and Gross Profit by End-Use Market Segment
    -------------------------------------------------------------------------
                Three Months Ended December 31    Years Ended December 31
                      2006           2005           2006           2005
                 ----------------------------- ------------------------------
    End-Use      Volume  Gross  Volume  Gross  Volume  Gross  Volume  Gross
    Applications:  (1) Profit(2)  (1) Profit(2)  (1) Profit(2)  (1) Profit(2)
                 ----------------------------- ------------------------------
    Residential      54    17.0     58    18.8    163    54.3    183    59.9
    Commercial       88    16.1     89    17.4    296    56.7    315    60.9
    Agricultural     41     3.0     42     4.0     89     7.7    100    11.5
    Industrial      191    19.2    194    20.5    686    71.5    696    78.8
    Automotive       33     4.0     37     4.2    152    19.2    174    20.6
    Other Services    -    18.9      -    15.0      -    63.5      -    52.7
                 ----------------------------- ------------------------------
                    407    78.2    420    79.9  1,386   272.9  1,468   284.4
                 ----------------------------- ------------------------------
    Average Margin(3)  14.6           15.5           15.1           15.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Volume of retail propane sold (millions of litres)
    (2) Millions of dollars
    (3) Average retail propane sale margin (cents per litre)



    -------------------------------------------------------------------------
                      Volume and Gross Profit by Region
    -------------------------------------------------------------------------
                Three Months Ended December 31    Years Ended December 31
                      2006           2005           2006           2005
                 ----------------------------- ------------------------------
    Regions:     Volume  Gross  Volume  Gross  Volume  Gross  Volume  Gross
                   (1) Profit(2)  (1) Profit(2)  (1) Profit(2)  (1) Profit(2)
                 ----------------------------- ------------------------------
    Atlantic         25     8.4     27     8.8     97    30.5    110    32.3
    Quebec           67    12.0     76    13.0    233    44.5    257    49.9
    Ontario          85    20.7     94    23.4    309    75.3    342    80.1
    Sask/Man         67     8.4     61     7.8    195    26.6    202    27.2
    AB/NWT          100    16.4     98    15.3    331    53.0    322    51.8
    BC/YK            63    12.3     64    11.6    221    43.0    235    43.1
                 ----------------------------- ------------------------------
                    407    78.2    420    79.9  1,386   272.9  1,468   284.4
                 ----------------------------- ------------------------------
    Average Margin(3)  14.6           15.5           15.1           15.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Volume of retail propane sold (millions of litres)
    (2) Millions of dollars
    (3) Average retail propane sale margin (cents per litre)

    Cash operating, administrative and capital tax costs of $47.6 million,
decreased by $2.3 million (5%) from the prior year quarter, principally due to
the reduction of operating costs associated with the sale of the Energy
Transportation primary fleet operations. Net maintenance capital proceeds for
the quarter totaled $2.0 million, an increase of $0.1 million compared to the
prior year quarter, and benefited from $4.3 million of proceeds on the
disposition of Superior Propane's Concord, Ontario property, offset by
$2.3 million in expenditures. The sale of the Concord property has been
facilitated by reallocating customers previously serviced by this location to
other Superior Propane branches.
    Superior Propane has been leasing service trucks, crane trucks and tandem
tractors for several years and will now be expanding and streamlining its
leasing programs with a master lease and other lease arrangements at
attractive rates. Superior intends to expand the program to bulk trucks and
accelerate the fleet renewal for 2007 and 2008. Increasing lease costs are
anticipated to be offset over time by lower operating costs, resulting from
lower repair and maintenance costs, fleet reliability, as well as improved
productivity, safety and corporate image. The program is designed to better
align the cost structure with Superior Propane's ongoing operations and result
in customer service improvements. In 2007, this is anticipated to positively
impact operating distributable cash flow by lowering ongoing maintenance
capital expenditures by approximately $3.5 - $4.0 million.

    ERCO Worldwide
    ERCO Worldwide generated operating distributable cash flow in the fourth
quarter of $20.0 million, a reduction of $4.2 million (17%) from the prior
year quarter, predominantly due to additional operating expenses.
    Condensed operating results for the three months and years ended December
31, 2006 and 2005 are provided in the following table. See "Segmented
Distributable Cash Flow" for detailed comparative business segment results.

    -------------------------------------------------------------------------
    (millions of
     dollars except
     per metric         Three Months Ended                Years Ended
     tonne ("MT")           December 31                   December 31
     amounts)           2006           2005           2006           2005
    -------------------------------------------------------------------------
    Revenue             $ per MT       $ per MT       $ per MT       $ per MT
      Chemical     105.9    554   111.7    545   408.6    540   408.2    550
      Technology     9.6     50     5.5     27    28.6     38    23.4     32
    Cost of Sales
      Chemical     (52.8)  (276)  (58.3)  (284) (214.9)  (284) (213.2)  (287)
      Technology    (6.3)   (33)   (2.5)   (13)  (18.2)   (24)  (11.5)   (15)
    -------------------------------------------------------------------------
    Gross Profit    56.4    295    56.4    275   204.1    270   206.9    280
    Less: Cash
     operating,
     administrative
     & tax costs   (33.3)  (174)  (28.7)  (140) (120.9)  (160) (105.7)  (142)
    -------------------------------------------------------------------------
    Cash generated
     from operations
     before changes
     in net working
     capital        23.1    121    27.7    135    83.2    110   101.2    138
    Maintenance
     capital
     expenditures   (3.1)   (16)   (3.5)   (17)   (7.5)   (10)   (8.1)   (11)
    -------------------------------------------------------------------------
    Operating
     distributable
     cash flow      20.0    105    24.2    118    75.7    100    93.1    127
    -------------------------------------------------------------------------
    Chemical
     volumes sold
     (thousands of MTs)  191          205(1)           756          742(1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Hydrochloric acid volumes have been restated to reflect a dry basis
        of measurement as compared to a wet basis of measurement to reflect
        industry practice.

    Fourth quarter gross profit was $56.4 million, comprised of $53.1 million
from chemical sales and $3.3 million from technology services. Chemical sales
gross profit was consistent with the prior year quarter, as a marginal
increase in sodium chlorate gross profit was offset by a moderate decrease in
chloralkali/potassium gross profit. Sodium chlorate gross profits were
marginally higher than the prior year quarter as a 13% decrease in sodium
chlorate sales volumes was more than offset by the impact of the start-up of
ERCO's Chilean facility, lower effective electrical prices and higher realized
selling prices. The decrease in chloralkali/potassium gross profits reflect
the return to more normalized pricing levels compared to the record prices
realized during the fourth quarter of 2005. Technology gross profit was
consistent with the prior year period, as increased chlorine dioxide generator
project revenues were offset by reduced royalty revenue, due to normal course
royalty license expirations.
    Cash operating, administration and tax costs were $33.3 million, an
increase of $4.6 million (16%) from the prior year quarter, due to the
inclusion of costs associated with the Chilean facility and higher maintenance
and compliance costs. Maintenance capital expenditures of $3.1 million were
consistent with the prior year quarter.
    Growth capital expenditures of $1.8 million were incurred in the quarter
and were principally focused on the completion of the 55,000 tonne sodium
chlorate plant in Chile. The project is now complete at a cumulative project
cost of $70.2 million.
    ERCO is continuing to evaluate the economic feasibility of converting its
Port Edwards, Wisonsin potassium/chloralkali facility from a mercury based
process to membrane technology at a cost currently estimated at US $85-$100
million. The project is expected to provide significant improvements in
process efficiency and capacity. If the project does not proceed,
environmental compliance expenditures of approximately $3.5 to $4.0 million,
of which $2.6 million were accrued upon acquisition, are required in 2007 to
meet government regulations which became effective December 17, 2006. ERCO has
received a one year extension from government authorities to complete its
project evaluation.
    In accordance with Superior's strategic plan, ERCO closed its 80,000 tonne
sodium chlorate plant in Bruderheim, Alberta during November of 2006 due to
high electricity costs, lower realized sodium chlorate prices resulting from
the appreciation of the Canadian dollar on US dollar denominated sales and
reduced sodium chlorate demand due to the closure of various bleached pulp
mills in North America. The Bruderheim facility is currently operated by ERCO
as a dissolving facility. Closure costs were $4.1 million and have been
categorized as strategic plan costs. ERCO is currently assessing options
related to the closure of the facility which range from a sale to a full
dismantlement and reclamation of the property. Depending on the closure option
available, additional costs to close the facility will range from NIL to
$5.0 million. See "Corporate" for a detailed discussion of strategic plan
costs.  The fixed price power agreement previously used by the Bruderheim
facility was transferred to ERCO's Grande Prairie, Alberta sodium chlorate
facility and will provide competitive rates until its expiry in 2017.
    During 2006, ERCO established a new long-term electrical supply agreement
for its Valdosta, Georgia sodium chlorate facility. The agreement with Georgia
Power will supply ERCO's facility with power at the industrial interruptible
tariff rate which is anticipated to be in the mid US $40's/MW, using US $10/GJ
as the assumed natural gas cost in the tariff calculation. The facility will
operate as a swing facility when electrical prices are favorable and can be
supported in the sodium chlorate market price.

    Winroc
    Winroc generated operating distributable cash flow of $10.7 million, an
increase of $2.0 million (23%) from the prior year quarter, as sales and gross
profit improvements in Western Canada were partially offset by weaker
performance in the Ontario and United States markets.
    Condensed operating results for the three months and years ended December
31, 2006 and 2005 are provided in the following table. See "Segmented
Distributable Cash Flow" for detailed comparative business segment results.

    -------------------------------------------------------------------------
                                     Three Months Ended       Years Ended
                                        December 31           December 31
    (millions of dollars)              2006       2005       2006       2005
    -------------------------------------------------------------------------
    Distribution sales gross profit    31.7       30.9      127.2      113.4
    Direct sales gross profit           1.6        1.5        5.0        4.4
    -------------------------------------------------------------------------
    Gross Profit                       33.3       32.4      132.2      117.8
    Less: Cash operating,
     administrative & cash tax costs  (21.9)     (22.7)     (91.0)     (82.0)
    -------------------------------------------------------------------------
    Cash generated from operations
     before changes in net working
     capital                           11.4        9.7       41.2       35.8
    Capital expenditures, net          (0.7)      (1.0)      (6.6)      (5.6)
    -------------------------------------------------------------------------
    Operating distributable cash flow  10.7        8.7       34.6       30.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distribution sales gross profit of $31.7 million in the fourth quarter was
$0.8 million (3%) higher than the prior year period, as increased volumes and
margins in Western Canada outpaced reduced volumes and margins in Ontario due
to competitive pressures and reduced board volumes in the United States,
resulting from reduced residential construction demand. Drywall sales volumes,
an indicator of overall sales volumes, decreased by 16% compared to the prior
year quarter. The decrease in sales volumes was due to weaker sales volumes in
Ontario and the United States outpacing the increase in sales volumes in
Western Canada. Cash operating and administrative costs were $0.8 million (4%)
lower than the prior year quarter due principally to lower sales volumes,
offset partially by costs associated with restructuring the Ontario operations
and cost pressures experienced in the Western Canada operations. Maintenance
capital expenditures of $0.7 million in the quarter were comparable to the
prior year period. In conjunction with Superior Propane, Winroc has entered
into master lease arrangements for the ongoing requirements of its delivery
fleet. Similarly to Superior Propane, the leasing program is anticipated to
positively impact operating distributable cash flow by lowering maintenance
capital expenditures for 2007 by approximately $1.5 - $2.0 million.

    Superior Energy Management ("SEM")
    SEM's condensed operating results for the three months and years ended
December 31, 2006 and 2005 are provided below. See "Segmented Distributable
Cash Flow" for detailed comparative business segment results.

    -------------------------------------------------------------------------
    (millions of
     dollars except     Three Months Ended               Years Ended
     per gigajoule         December 31                   December 31
     ("GJ") amounts)   2006           2005           2006           2005
    -------------------------------------------------------------------------
                          cents          cents          cents          cents
                         per GJ         per GJ         per GJ         per GJ
                         ------         ------         ------         ------
    Gross profit     6.2   62.0     4.3   47.8    21.7   54.3    14.5   39.2
    Less: Cash
     operating,
     admin. &
     selling costs  (3.2) (32.0)   (2.5) (27.8)  (11.4) (28.5)   (9.2) (24.9)
    -------------------------------------------------------------------------
    Operating
     distributable
     cash flow       3.0   30.0     1.8   20.0    10.3   25.8     5.3   14.3
    -------------------------------------------------------------------------
    Natural gas sold
     (millions of GJs)  10              9             40             37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SEM generated operating distributable cash flow of $3.0 million in the
fourth quarter, an increase of $1.2 million compared to the prior year
quarter. These results reflect SEM's continued trend of increasing gross
profit through growth in its lower-volume, higher-margin residential and small
commercial customer base. Residential and small commercial customer volumes
comprised approximately 25% of total sales volumes in the fourth quarter (2005
fourth quarter - 14%) and contributed to a 44% increase in gross profit
margins over the prior year period. Operating, administration and selling
costs of $3.2 million were $0.7 million higher than the prior year quarter due
to higher amortization of customer acquisition costs, customer servicing costs
and overhead costs attributable to the growth in SEM's customer base. The
majority of fixed-price sales contracts entered into during the quarter were
for a five year term. The average remaining term of SEM's sales contracts at
December 31, 2006 was 42 months (December 31, 2005 - 42 months).

    Discontinued Operations - JW Aluminum
    In July, the Fund announced as part of its strategic plan, its decision to
sell JWA in order to focus on its Canadian businesses and to reduce debt. As a
result, JWA was sold on December 7, 2006 for net proceeds of $354.7 million.
JWA's financial statements have been classified as a discontinued operation in
the Fund's Consolidated Financial Statements effective July 1, 2006 as a
result of the sales process.

    Condensed operating distributable cash flow results for the three and
twelve months ended December 31, 2006 are provided below:

    -------------------------------------------------------------------------
                                      October 1 -  October 19 -   January 1 -
    (millions of dollars except per   December 7,  December 31,   December 7,
     pound amounts)                       2006(1)       2005(2)       2006(1)
    -------------------------------------------------------------------------
                                           cents         cents         cents
                                             /lb           /lb           /lb
    Gross profit                     13.1   21.8   12.5   17.6   58.7   18.5
    Less: Cash operating,
     administration and tax costs    (4.2)  (7.0)  (3.4)  (4.8) (17.0)  (5.4)
    -------------------------------------------------------------------------
    Cash generated from operations
     before changes in net working
     capital                          8.9   14.8    9.1   12.8   41.7   13.1
    Maintenance capital
    expenditures, net                (0.8)  (1.3)  (0.5)  (0.7)  (2.8)  (0.9)
    -------------------------------------------------------------------------
    Operating distributable cash
     flow                             8.1   13.5    8.6   12.1   38.9   12.2
    Aluminum sold (millions of pounds)   60            71            317
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) JWA was sold on December 7, 2006 (See Note 3 to the Interim
        Consolidated Financial Statements).
    (2) JWA was acquired on October 19, 2005 (See Note 4 to the Interim
        Consolidated Financial Statements).

    Operating distributable cash flow for the period October 1, 2006 to
December 7, 2006 was $8.1 million, compared to $8.6 million for the prior year
period of October 19, 2005 to December 31, 2005. These results reflect the
Fund's effective ownership period. As a result of the sale of JWA on December
7, 2006, the 2007 financial results of the Fund will have no contribution from
JWA.

    Corporate
    Corporate costs for the fourth quarter were $2.4 million, comparable to
the prior year quarter.
    Interest expense on revolving term bank credits and term loans was
$11.4 million for the fourth quarter, an increase of $3.7 million from the
prior year quarter. Higher interest costs reflect increased floating interest
rates, average debt levels for the quarter were consistent with the prior year
quarter. See "Strategic Plan Costs" and "Liquidity and Capital Resources"
discussion for further details.
    Interest on convertible debentures was $5.0 million for the fourth
quarter, an increase of $0.2 million from the prior year quarter. The increase
in convertible debenture interest expense is the result of the issuance of
$75.0 million, 5.85% convertible debentures in October 2005, offset partially
by the conversion of $0.9 million, 8% convertible debentures since December
31, 2005.
    Cash income and withholding taxes of $3.6 million were incurred with
respect to continuing operations in the United States in the fourth quarter
(2005 - $3.4 million) and have been charged to the businesses from which the
taxable income was derived. In Canada, cash capital taxes were NIL in the
fourth quarter (2005 - $0.8 million). The decrease in Canadian cash taxes is
due to the Fund's conversion to a trust-on-partnership structure on September
30, 2006.
    On October 31, 2006, the Government of Canada announced proposed changes
that would result in the taxation of "specified investment flow-throughs",
which include income trusts. For Superior the proposed changes would take
effect in 2011, if implemented. Due to the uncertainty with respect to the
proposed changes, the Fund has not completed a full assessment of the
potential implications that these proposed changes may have. Superior
currently has approximately $400 million in tax pools. These tax pools may be
impacted by adjustments to reduce tax at the partnership level and/or
adjustments for additional capital outlays.

    Strategic Plan Costs
    Costs associated with the implementation of Superior's strategic plan were
$5.3 million in the fourth quarter ($19.7 million year to date) and were
comprised of the following:

    -------------------------------------------------------------------------
                                            Three Months Ended    Year Ended
                                                   December 31   December 31
                                                          2006          2006
    -------------------------------------------------------------------------
    Operating and administrative expenses:
      Employee severance and retention                    $3.1         $11.0
      Partnership reorganization costs                     0.4           1.9
      ERCO - Bruderheim closure costs                      2.4           4.1
      Advisory and other                                  (0.6)          0.7
      Write off of deferred financing costs                  -           2.0
    -------------------------------------------------------------------------
    Total Strategic Plan Costs                            $5.3         $19.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Strategic plan costs for 2007 are expected to range from $1.5 million to
$6.5 million. The range in estimated strategic plan costs is due to the
uncertainty of the costs associated with ERCO's closure of its Bruderheim,
Alberta sodium chlorate facility. The remainder of the costs relate to
employee retention programs, to be completed on or before May 1, 2007.

    Liquidity and Capital Resources
    As at December 31, 2006, revolving term bank credits and term loan
borrowings by Superior totaled $346.7 million ($441.7 million including
accounts receivable securitization), a decrease of 46% (41% including accounts
receivable securitization) from December 31, 2005 levels, due principally to
the sale of JW Aluminum on December 7, 2006. As at December 31, 2006,
$429.7 million was available under Superior's credit facilities and is
considered to be sufficient to meet Superior's net working capital funding
requirements and expected growth capital expenditures.
    As at December 31, 2006, subordinated convertible debentures issued by the
Fund totaled $313.9 million (including current portion of $8.1 million), a
decrease of $0.4 million from December 31, 2005 due principally to the
conversion of Series 1 and 2, 8% convertible debentures into trust units.
    Consolidated net working capital from continuing operations was
$178.9 million as at December 31, 2006, a decrease of $5.3 million as compared
to the prior year. The decrease in net working capital is due to lower net
working capital at Propane and Winroc as a result of reduced inventory levels,
offset in part, by higher net working capital at ERCO Worldwide due to the
start-up of the Chilean operations. See Note 14 to the Interim Consolidated
Financial Statements for segmented net working capital by division, net of the
accounts receivable sales program.
    As at December 31, 2006, Superior's senior debt and total debt to EBITDA
are 1.9 and 3.4 times, respectively after taking into account the impact of
the off-balance sheet receivable sales program amounts, the impact of cash on
hand, the disposition of JWA and the impact of the start-up of ERCO's Chilean
operations. Senior debt and total debt to EBITDA are 2.1 times and 3.7 times,
respectively when calculated in accordance with Superior's senior banking
agreements. These ratios are well within the requirements contained in
Superior's senior debt covenants which restrict its ability to pay
distributions to the Fund's Unitholders if Senior Debt to EBITDA exceeds 3.0
times.
    In response to Superior's strategic review announcement on July 10, 2006,
Standard and Poor's and Dominion Bond Rating Service confirmed their April 24,
2006 ratings, pending the completion of a full credit review. On April 24,
2006, Standard and Poor's confirmed Superior's BBB- secured long-term debt
credit rating, but altered their outlook from stable to negative and Dominion
Bond Rating Service confirmed Superior's secured long-term debt at BBB(low),
but altered their outlook from stable to under review with negative
implications.

    Unitholders' Capital
    The weighted average number of trust units outstanding during the fourth
quarter was 85.5 million trust units, consistent with the prior year quarter.

    As at December 31, 2006 and December 31, 2005, the following trust units,
and securities convertible into trust units, were outstanding:

    -------------------------------------------------------------------------
                                       December 31, 2006   December 31, 2005
                                      Convertible  Trust  Convertible  Trust
    (millions)                         Securities  Units   Securities  Units
    -------------------------------------------------------------------------
    Trust units outstanding                         85.5                85.5
    Series 1, 8% Debentures
     (convertible at $16 per trust unit)     $8.1    0.5         $8.9    0.5
    Series 2, 8% Debentures
     (convertible at $20 per trust unit)    $59.2    3.0        $59.3    3.0
    Series 1, 5.75% Debentures
     (convertible at $36 per trust unit)   $174.9    4.9       $174.9    4.9
    Series 1, 5.85% Debentures
     (convertible at $31.25 per trust
     unit)                                  $75.0    2.4        $75.0    2.4
    Warrants (exercisable @ $20 per
     trust unit until May 2008)               2.3    2.3          2.3    2.3
    -------------------------------------------------------------------------
    Trust units outstanding, and
     issuable upon conversion of
     Debenture and Warrant securities               98.6                98.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at December 31, 2006, there were 1,086,000 trust unit options
outstanding (December 31, 2005 - 1,177,000 trust units) with a weighted
average exercise price of $22.69 per trust unit (2005 - $22.82 per trust
unit). The number of trust units issued upon exercise of the trust unit
options is equal to the growth in the value of the options at the time the
options are exercised, (represented by the market price less the exercise
price) times the number of options exercised, divided by the current trust
unit market price.

    Distributions Paid to Unitholders
    Distributions paid to Unitholders in the fourth quarter were $33.4 million
or $0.39 per trust unit, compared to $52.1 million or $0.61 per trust unit in
the fourth quarter of 2005. Distributable cash flow exceeded distributions
paid to Unitholders by $16.9 million in the fourth quarter (2005 Q4 - $7.9
million) resulting in a payout ratio of 60% before strategic plan costs and
66% (2005 Q4 - 87%) after strategic plan costs.
    For the twelve months ended December 31, 2006, distributions paid to
Unitholders were $155.7 million or $1.82 per trust unit compared to
$192.0 million or $2.41 per trust unit in the prior year, a decrease of 24%.
The Fund paid out 86% before strategic plan costs and 97% after strategic plan
costs in 2006, compared to 103% in 2005, resulting in undistributed
distributable cash flow in 2006 of $24.7 million before strategic plan costs
and $5.0 million after strategic plan costs, which was reinvested in the
business, compared to $5.0 million in excess distributions which were funded
from debt in 2005. The decrease in distributions paid is the result of a
change in the Fund's monthly distribution level from $.205 per trust unit to
$0.185 per trust unit effective with the March 2006 monthly distribution and a
reduction to $0.13 per trust unit ($1.56 on an annualized basis) effective
with the May 2006 monthly distribution.

    Foreign Currency Hedging
    SEM and Superior Propane contract a portion of their fixed price natural
gas and propane purchases (sales) in US dollars and enter into forward US
dollar purchase contracts to create an effective Canadian dollar fixed price
purchase cost. ERCO Worldwide enters into US dollar forward sales contracts on
an ongoing basis to mitigate the impact of foreign exchange fluctuations on
sales margins on production from its Canadian plants that is sold in US
dollars. Interest expense on Superior's US dollar debt is also used to
mitigate the impact of foreign exchange fluctuations on its US dollar
distributable cash flow. Superior's US dollar debt acts as a balance sheet
hedge against its US dollar net assets. Superior hedges its net US dollar
future cash flows with external third party contracts after first matching
internally SEM's and Superior Propane's forward US dollar purchase (sale)
requirements against ERCO Worldwide's US dollar revenues where possible.
    As at December 31, 2006, SEM and Superior Propane had hedged approximately
100% of their US dollar natural gas and propane purchase (sale) obligations
and ERCO Worldwide had hedged 85% and 34% of its estimated US dollar exposure
for the remainder of 2007 and 2008, as shown in the table below.

    -------------------------------------------------------------------------
    (US$ millions)      2007    2008    2009    2010    2011    2012   Total
    -------------------------------------------------------------------------
    SEM - US $ forward
     purchases         131.1   118.3   111.1    61.9     5.4       -   427.8
    Superior Propane -
     US $ forward
     purchases (sales) (13.8)      -       -       -       -       -   (13.8)
    ERCO - US $
     forward sales     (89.6)  (15.9)      -       -       -       -  (105.5)
    -------------------------------------------------------------------------
    Net US $ forward
     purchases          27.7   102.4   111.1    61.9     5.4       -   308.5
    -------------------------------------------------------------------------

    SEM - Average US $
     forward purchase
     rate               1.22    1.22    1.21    1.16    1.11       -    1.21
    Superior Propane -
     Average US $
     forward rate       1.12       -       -       -       -       -    1.12
    ERCO - Average
     US $ forward
     sales rate         1.22    1.20       -       -       -       -    1.21
    -------------------------------------------------------------------------
    Net average
     external US$/Cdn$
     exchange rate      1.21    1.22    1.21    1.16    1.11       -    1.21
    -------------------------------------------------------------------------

    Restatement of Accrued Pension Asset
    As described in Note 10 to the Interim Consolidated Financial Statements,
the Fund has determined that Superior Propane's accrued pension asset should
be accounted for in accordance with CICA Handbook 3461, Employee Future
Benefits. Previously the Fund had determined that the adoption of this
standard was inconsequential. Accordingly, it has retroactively restated its
2005 consolidated financial statements.
    The impact for 2005 was to increase total assets by $25.9 million to
$2,373.6 million, reflecting the previously unrecorded pension asset. The
opening deficit was reduced by $27.6 million. Net earning for the three months
ended December 31, 2005 were reduced by $0.5 million and for the twelve months
ended December 31, 2005 by $1.7 million. There was no impact on the
consolidated statement of cash flows. Net earnings (loss) per trust unit for
the three months ended December 31, 2005 was unchanged, for the twelve months
ended December 31, 2005 was reduced by $0.02 per trust unit.

    Quarterly Financial and Operating Information

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

    (millions of dollars         2006                        2005
     except per trust          Quarters                    Quarters
     unit amounts)   Fourth  Third Second  First Fourth  Third Second  First
                              (1)    (1)    (1)    (1)    (1)    (1)    (1)
    -------------------------------------------------------------------------
    Propane sales
     volumes (millions
     of litres)         407    261    270    448    420    277    286    485
    Chemical sales
     volumes
     (thousands of
     metric tonnes)     191    190    183    192    205    203    170    164
    Natural gas sales
     volumes (millions
     of GJs)             10     11     10      9      9      9      9      9
    Gross profit      174.1  143.5  141.2  172.1  173.0  149.6  137.2  163.8
    Asset impairments,
     net of tax           -   56.3  170.8      -      -      -      -      -
    Net earnings
     (loss) from
     continuing
     operations        25.3   46.3 (157.4)  30.2   18.1   23.6   18.5   41.1
    Net earnings
     (loss)            38.1    1.1 (153.3)  33.3    3.1   23.6   18.5   41.1
    Per basic trust
     unit from
     continuing
     operations       $0.30  $0.54 ($1.84) $0.35  $0.22  $0.30  $0.24  $0.54
    Per diluted trust
     unit from
     continuing
     operations       $0.30  $0.54 ($1.84) $0.35  $0.22  $0.30  $0.24  $0.52
    Per basic trust
     unit             $0.45  $0.01 ($1.79) $0.39  $0.25  $0.30  $0.24  $0.54
    Per diluted trust
     unit             $0.45  $0.01 ($1.79) $0.39  $0.25  $0.30  $0.24  $0.52
    Distributable
     cash flow         50.3   25.3   28.6   56.5   60.0   33.4   29.9   63.7
    Per basic trust
     unit             $0.59  $0.30  $0.33  $0.66  $0.70  $0.42  $0.38  $0.83
    Per diluted trust
     unit             $0.59  $0.30  $0.33  $0.66  $0.67  $0.42  $0.38  $0.79
    Net working
     capital(2)       178.9  237.9  294.8  310.6  269.1  106.0   54.0   61.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Restated for the impact of the Superior Propane defined pension
        asset, see Note 10 of the Interim Consolidated Financial Statements.
    (2) Net working capital reflects amounts as at the quarter end and is
        comprised of cash and cash equivalents, accounts receivable and
        inventories, less accounts payable and accrued liabilities.



    Segmented Distributable Cash Flow(1)
    -------------------------------------------------------------------------
                                                              Discon-
    For the three                                             tinued
    months ended                                              Opera-   Total
    December 31,     Superior                          Corp-  tions-  Consol-
    2006              Propane   ERCO   Winroc    SEM   orate   JWA(2) idated
    -------------------------------------------------------------------------
    Net earnings
    (loss) from
     continuing
     operations         23.3    10.6    10.3     2.9   (21.8)      -    25.3
    Add:
      Amortization of
       property, plant
       and equipment,
       intangible
       assets and
       convertible
       debenture issue
       costs             6.2    13.1     1.1       -     0.6       -    21.0
      Future income tax
       expense
       (recovery)          -    (3.2)      -       -     0.3       -    (2.9)
      Superior Propane
       non-cash pension
       expense           0.6       -       -       -       -       -     0.6
      Distributable
       cash from
       discontinued
       operations          -       -       -       -       -     8.1     8.1
    Less:
      Maintenance
       capital
       expenditures,
       net               2.0    (3.1)   (0.7)      -       -       -    (1.8)
    -------------------------------------------------------------------------
    Distributable
     cash flow          32.1    17.4    10.7     2.9   (20.9)    8.1    50.3
    Strategic plan
     costs               0.5     2.6       -     0.1     2.1       -     5.3
    -------------------------------------------------------------------------
    Distributable cash
     flow before
     strategic plan
     costs              32.6    20.0    10.7     3.0   (18.8)    8.1    55.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                              Discon-
    For the three                                             tinued
    months ended                                              Opera-   Total
    December 31,     Superior                          Corp-  tions-  Consol-
    2005              Propane   ERCO   Winroc    SEM   orate   JWA(2) idated
    -------------------------------------------------------------------------
    Net earnings
     (loss) from
     continuing
     operations         18.3    (7.8)    5.7     1.4     0.5       -    18.1
    Add:
      Amortization of
      property, plant
      and equipment,
      intangible
      assets and
      convertible
      debenture issue
      costs              2.3    40.8     0.7       -     0.6       -    44.4
      Future income tax
       expense
       (recovery)        8.9    (5.3)    3.3     0.4   (15.0)      -    (7.7)
      Trust unit
       incentive plan
       recovery            -       -       -       -    (1.3)      -    (1.3)
      Superior Propane
       non-cash pension
       expense(4)        0.5       -       -       -       -       -     0.5
      Distributable
       cash from
       discontinued
       operations          -       -       -       -       -     8.6     8.6
    Less:
      Maintenance
       capital
       expenditures,
       net               1.9    (3.5)   (1.0)      -       -       -    (2.6)
    -------------------------------------------------------------------------
    Distributable cash
     flow               31.9    24.2     8.7     1.8   (15.2)    8.6    60.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                              Discon-
    For the year                                              tinued
    ended                                                     Opera-   Total
    December 31,     Superior                          Corp-  tions-  Consol-
    2006              Propane   ERCO   Winroc    SEM   orate   JWA(2) idated
    -------------------------------------------------------------------------
    Net earnings
     (loss) from
     continuing
     operations        115.8   (59.3)   46.0    12.6  (170.7)      -   (55.6)
    Add:
      Amortization of
       property, plant
       and equipment,
       intangible
       assets and
       convertible
       debenture issue
       costs            20.4    52.6     4.1       -     2.3       -    79.4
      Future income
       tax expense
       (recovery)      (49.2) (133.9)   (8.9)   (2.6)   85.4       -  (109.2)
      Trust unit
       incentive plan
       recovery            -       -       -       -    (1.2)      -    (1.2)
      Management
       internalization
       costs               -       -       -       -     1.3       -     1.3
      Superior Propane
       non-cash
       pension expense   2.2       -       -       -       -       -     2.2
      Impairment of
       property, plant
       and equipment,
       and goodwill(3)     -   218.7       -       -       -       -   218.7
      Distributable
       cash from
       discontinued
       operations          -       -       -       -       -    38.9    38.9
    Less:
      Maintenance
       capital
       expenditures,
       net               0.3    (7.5)   (6.6)      -       -       -   (13.8)
    -------------------------------------------------------------------------
    Distributable cash
     flow               89.5    70.6    34.6    10.0   (82.9)   38.9   160.7
    Strategic plan
     costs               1.1     5.1       -     0.3    13.2       -    19.7
    -------------------------------------------------------------------------
    Distributable cash
     flow before
     strategic plan
     costs              90.6    75.7    34.6    10.3   (69.7)   38.9   180.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                              Discon-
    For the year                                              tinued
    ended                                                     Opera-   Total
    December 31,     Superior                          Corp-  tions-  Consol-
    2005              Propane   ERCO   Winroc    SEM   orate   JWA(2) idated
    -------------------------------------------------------------------------
    Net earnings
     from continuing
     operations         49.4     7.4    22.1     3.4    19.0       -   101.3
    Add:
      Amortization of
       property, plant
       and equipment,
       intangible
       assets and
       convertible
       debenture issue
       costs            17.9    92.5     3.0       -     1.7       -   115.1
      Future income
       tax expense
       (recovery)       28.0     1.3    10.7     1.9   (61.8)      -   (19.9)
      Trust unit
       incentive
       plan recovery       -       -       -       -    (4.6)      -    (4.6)
      Management
       internalization
       costs               -       -       -       -     1.3       -     1.3
      Superior Propane
       non-cash
       pension
       expense(4)        1.7       -       -       -       -       -     1.7
      Distributable
       cash from
       discontinued
       operations          -       -       -       -       -     8.6     8.6
    Less:
      Maintenance
       capital
       expenditures,
       net              (2.8)   (8.1)   (5.6)      -       -       -   (16.5)
    -------------------------------------------------------------------------
    Distributable cash
     flow               94.2    93.1    30.2     5.3   (44.4)    8.6   187.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) See the Interim Consolidated Financial Statements for net earnings
        (loss), amortization of property, plant and equipment, intangible
        assets and convertible debenture issue costs, future income tax
        expense (recovery), trust unit incentive plan expense (recovery),
        management internalization costs, impairment of property, plant and
        equipment and goodwill, non-cash pension expense, and maintenance
        capital expenditures.
    (2) See Note 3 to the Interim Consolidated Financial Statements.
    (3) See Note 5 to the Interim Consolidated Financial Statements.
    (4) Restated for the impact of the Superior Propane defined pension
        asset, see Note 10 of the Interim Consolidated Financial Statements.



    SUPERIOR PLUS INCOME FUND
    Consolidated Balance Sheets
                                                   December 31  December 31
    (unaudited, millions of dollars)                      2006         2005
    -------------------------------------------------------------------------
                                                                  (Restated
    Assets                                                          Note 10)
    Current Assets
      Cash and cash equivalents                            33.6         19.9
      Accounts receivable and other (Note 6)              246.1        250.4
      Inventories                                         142.8        146.3
      Current assets of discontinued operations (Note 3)      -        132.8
    -------------------------------------------------------------------------
                                                          422.5        549.4

    Property, plant and equipment                         571.1        708.3
    Other deferred                                         25.9         22.3
    Intangible assets                                      31.5         37.0
    Goodwill (Note 5)                                     452.4        541.3
    Accrued pension asset (Note 9 and 10)                  23.7         25.9
    Future income tax asset (Note 11)                       9.8            -
    Long term assets of discontinued operations (Note 3)      -        489.4
    -------------------------------------------------------------------------

                                                        1,536.9      2,373.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Unitholders' Equity
    Current Liabilities
      Accounts payable and accrued liabilities            243.6        232.4
      Current portion of term loans and convertible
       debentures (Note 7 and 8)                           10.8          2.0
      Distributions and interest payable
       to Unitholders and Debentureholders                 17.9         25.0
      Current liabilities of discontinued
       operations (Note 3)                                    -         47.9
    -------------------------------------------------------------------------
                                                          272.3        307.3

    Revolving term bank credits and term
     loans (Note 7)                                       344.0        642.7
    Convertible unsecured subordinated
     debentures (Note 8)                                  305.8        314.3
    Future employee benefits (Note 9)                      19.2         17.7
    Future income tax liability (Note 11)                     -        100.6
    Future income tax liability of discontinued
     operations (Note 3)                                      -        162.2
    -------------------------------------------------------------------------
    Total Liabilities                                     941.3      1,544.8

    Unitholders' Equity
      Unitholders' capital (Note 12)                    1,340.8      1,338.3
      Deficit                                            (745.3)      (508.8)
      Currency translation account                          0.1         (0.7)
    -------------------------------------------------------------------------
    Total Unitholders' Equity                             595.6        828.8
    -------------------------------------------------------------------------

                                                        1,536.9      2,373.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Interim Consolidated Financial Statements)



    SUPERIOR PLUS INCOME FUND
    Consolidated Statements of Net Earnings (Loss) and Deficit

    -------------------------------------------------------------------------
    (unaudited, millions        Three Months Ended               Years Ended
     of dollars except per             December 31               December 31
     trust unit amounts)         2006         2005         2006         2005
    -------------------------------------------------------------------------
                                         (Restated                 (Restated
                                           Note 10)                  Note 10)
    Revenues                    592.8        585.0      2,264.3      2,059.2
    Cost of products sold       418.7        412.0      1,633.4      1,435.6
    -------------------------------------------------------------------------
    Gross profit                174.1        173.0        630.9        623.6
    -------------------------------------------------------------------------

    Expenses
      Operating and
       administrative           112.1        102.7        423.8        382.1
      Amortization of
       property, plant
       and equipment             19.1         42.4         72.0        108.0
      Amortization of
       intangible assets          1.3          1.4          5.1          5.4
      Interest on
       revolving term bank
       credits and term
       loans                     11.4          7.7         43.1         22.8
      Interest on
       convertible
       unsecured
       subordinated
       debentures                 5.0          4.8         20.2         12.9
      Amortization of
       convertible
       debenture issue
       costs                      0.6          0.6          2.3          1.7
      Management
       internalization
       costs                        -            -          1.3          1.3
      Impairment of
       property, plant
       and equipment and
       goodwill (Note 5)            -            -        218.7            -
      Income tax recovery
       of Superior (Note 11)     (0.7)        (4.7)      (100.0)       (11.9)
    -------------------------------------------------------------------------
                                148.8        154.9        686.5        522.3
    -------------------------------------------------------------------------

    Net earnings (loss)
     from continuing
     operations                  25.3         18.1        (55.6)       101.3
    Net earnings (loss)
     from discontinued
     operations (Note 3)         12.8          3.1        (25.2)         3.1
    -------------------------------------------------------------------------
    Net Earnings (Loss)          38.1         21.2        (80.8)       104.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Deficit, Beginning of
     Period                    (750.0)      (477.9)      (508.8)      (421.2)
    Net earnings (loss)          38.1         21.2        (80.8)       104.4
    Distributions to
     Unitholders                (33.4)       (52.1)      (155.7)      (192.0)
    -------------------------------------------------------------------------

    Deficit, End of Period     (745.3)      (508.8)      (745.3)      (508.8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)
     per trust unit from
     continuing operations,
     basic (Note 13)            $0.30        $0.22       ($0.65)       $1.27
    Net earnings (loss)
     per trust unit from
     continuing operations,
     diluted (Note 13)          $0.30        $0.22       ($0.65)       $1.26
    Net earnings (loss) per
     trust unit from
     discontinued
     operations,
     basic (Note 13)            $0.15        $0.03       ($0.29)        0.04
    Net earnings (loss) per
     trust unit from
     discontinued
     operations,
     diluted (Note 13)          $0.15        $0.03       ($0.29)        0.04
    Net earnings (loss) per
     trust unit,
     basic (Note 13)            $0.45        $0.25       ($0.94)        1.31
    Net earnings (loss) per
     trust unit,
     diluted (Note 13)          $0.45        $0.25       ($0.94)        1.30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Interim Consolidated Financial Statements)



    SUPERIOR PLUS INCOME FUND
    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
                                Three Months Ended               Years Ended
    (unaudited, millions               December 31               December 31
     of dollars)                 2006         2005         2006         2005
    -------------------------------------------------------------------------
                                         (Restated                 (Restated
    Operating Activities                   Note 10)                  Note 10)
    Net earnings (loss)
     from continuing
     operations                  25.3         18.1        (55.6)       101.3
      Items not affecting
       cash:
      Amortization of
       property, plant and
       equipment,
       intangible assets
       and convertible
       debenture issue
       costs                     21.0         44.4         79.4        115.1
      Amortization of
       natural gas customer
       acquisition costs          0.9          0.7          3.2          2.4
      Trust unit incentive
       plan compensation
       recovery                     -         (1.3)        (1.2)        (4.6)
      Pension expense             0.6          0.5          2.2          1.7
      Impairment of
       property, plant and
       equipment and
       goodwill (Note 5)            -            -        218.7            -
      Future income tax
       recovery of
       Superior                  (2.9)        (7.7)      (109.2)       (19.9)
    -------------------------------------------------------------------------
    Cash generated from
     continuing operations
     before natural gas
     customer acquisition
     costs and changes in
     working capital             44.9         54.7        137.5        196.0
    Natural gas customer
     acquisition costs           (1.4)        (2.2)        (8.4)        (7.0)
    Decrease (increase) in
     non-cash operating
     working capital items      (29.6)       (79.7)        22.6        (44.9)
    -------------------------------------------------------------------------
    Cash flows from
     operating activities
     of continuing
     operations                  13.9        (27.2)       151.7        144.1
    -------------------------------------------------------------------------

    Investing Activities
      Maintenance capital
       expenditures, net         (1.8)        (2.6)       (13.8)       (16.5)
      Other capital
       expenditures, net         (1.8)       (16.6)       (53.0)       (38.3)
      Acquisitions (Note 4)         -       (405.4)           -       (471.2)
      Proceeds on sale of
       JW Aluminum
       Company (Note 3)         354.7            -        354.7            -
    -------------------------------------------------------------------------
    Cash flows from
     investing activities       351.1       (424.6)       287.9       (526.0)
    -------------------------------------------------------------------------

    Financing Activities
      Revolving term bank
       credits and term
       loans                   (342.8)       113.3       (122.7)        19.2
      Issuance of Medium
       Term Notes                   -            -        197.2            -
      Repayment of Medium
       Term Notes                   -            -       (197.2)           -
      Proceeds (repayment)
       of JW Aluminum
       Company acquisition
       credit facility              -        170.8       (167.8)       170.8
      Net proceeds
       (repayment) of
       accounts receivable
       sales Program(Note 6)     15.1         14.0         (5.0)           -
      Net proceeds from
       issue of 5.75%
       Series I
       convertible
       unsecured
       subordinated
       debentures                   -            -            -        167.6
      Net proceeds from
       issue of trust
       units, to finance
       JW Aluminum Company
       acquisition                  -        151.4            -        151.4
      Net proceeds from
       issue of 5.85%
       Series 1
       convertible
       unsecured
       subordinated
       debentures, to
       finance JWA                  -         71.8            -         71.8
      Receipt of management
       internalization
       loans receivable           0.3            -          2.1          1.3
      Proceeds from
       exercise of trust
       unit warrants                -            -          0.2         16.5
      Distributions to
       Unitholders              (33.4)       (52.1)      (155.7)      (192.0)
    -------------------------------------------------------------------------
    Cash flows from
     financing activities      (360.8)       469.2       (448.2)       406.6
    -------------------------------------------------------------------------

    Net increase
     (decrease) in cash
     from continuing
     operations                   4.2         17.4         (9.3)        24.7
    Net increase (decrease)
     in cash from
     discontinued
     operations (Note 3)          8.0         (7.1)        23.0         (7.1)
    Cash and cash
     equivalents beginning
     of period                   21.4          9.6         19.9          2.3
    -------------------------------------------------------------------------

    Cash and cash
     equivalents end of
     period                      33.6         19.9         33.6         19.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Interim Consolidated Financial Statements)
    


    Notes to Interim Consolidated Financial Statements
    (tabular amounts in millions of dollars, unless noted otherwise, except
    per trust unit amounts)

    1. Accounting Policies
    (a) Basis of Presentation

    The accompanying unaudited Interim Consolidated Financial Statements have
    been prepared according to Canadian generally accepted accounting
    principles ("GAAP"), applied on a consistent basis and include the
    accounts of the Superior Plus Income Fund (the "Fund"), its wholly owned
    subsidiaries, Superior Plus LP ("Superior"), and Superior's subsidiaries.
    These financial statements do not conform in all respects to the note
    disclosure requirement of GAAP for annual financial statements as certain
    information and disclosures included in the annual financial statements
    notes have been condensed or omitted. The accounting principles applied
    are consistent with those as set out in the Fund's annual financial
    statements for the year ended December 31, 2005, except as noted in Note
    10. These interim financial statements and notes thereto should be read
    in conjunction with the Fund's financial statements for the year ended
    December 31, 2005. All significant transactions and balances between the
    Fund, the Fund's subsidiaries, Superior, and Superior's subsidiaries have
    been eliminated on consolidation.

    In the opinion of Management, the accompanying unaudited Interim
    Consolidated Financial Statements include all adjustments (of a normal
    recurring nature) necessary to present fairly the consolidated financial
    position of the Fund as at December 31, 2006 and December 31, 2005 and
    the consolidated results of its operations for the three and twelve
    months ended December 31, 2006 and 2005.

    (b) Business Segments
    Superior operates four continuing distinct business segments; the
    delivery of propane and propane related services and accessories
    operating under the Superior Propane trade name; the manufacture and sale
    of specialty chemicals and related products and services operating under
    the ERCO Worldwide trade name ("ERCO"); the distribution of walls and
    ceilings construction products operating under the Winroc trade name; and
    the sale of natural gas under fixed-price term contracts operating under
    the Superior Energy Management trade name ("SEM"). (See Note 14). JW
    Aluminum Company ("JWA" or "JW Aluminum"), a manufacturer of specialty
    flat-rolled aluminum products, has been sold and classified as a
    discontinued operation. (See Note 3).

    2. Seasonality of Operations
    Superior Propane

    Propane sales typically peak in the first quarter when approximately one-
    third of annual propane sales volumes and gross profits are generated due
    to the demand from heating end use customers. They then decline through
    the second and third quarters rising seasonally again in the fourth
    quarter with heating demand. Similarly, net working capital levels are
    typically at seasonally high levels at the end of the first quarter, and
    normally decline to seasonally low levels in the second and third
    quarters. Net working capital levels are also significantly influenced by
    wholesale propane prices.

    Winroc
    Winroc's sales typically peak during the second and third quarters with
    the seasonal increase in building and remodeling activities. They then
    decline through the fourth and first quarters. Similarly, net working
    capital levels are typically at seasonally high levels during the second
    and third quarter, and normally decline to seasonally low levels in the
    fourth and first quarters.

    3. Disposition - JW Aluminum

    In July of 2006, the Fund announced the results of its strategic review
    designed to maximize Unitholder value which included the decision to sell
    JWA in order to reduce debt levels and refocus its operations on its
    existing Canadian businesses. Accordingly, effective July 1, 2006, JWA's
    balance sheet, results of operations and cash flows have been classified
    as discontinued operations on a retroactive basis. As a result of its
    classification as a discontinued operation, amortization of JWA's
    property, plant and equipment and intangible assets ceased on July 1,
    2006.

    In addition, during the third quarter, the assets and liabilities of JWA
    were valued at the lower of cost or estimated net fair value, resulting
    in an impairment charge of $56.3 million included in net loss from
    discontinued operations.

    On December 7, 2006, the Fund completed the sale of all the issued and
    outstanding shares of JWA on a cash and debt free basis to Wellspring
    Capital Management LLC, for total consideration of $354.7 million
    (US $308.9 million ), net of $4.9 million (US $4.3 million ) in
    disposition costs.

    The results of discontinued operations presented in the consolidated
    statements of net earnings (loss) were as follows:

    
    -------------------------------------------------------------------------
                                Three Months Ended               Years Ended
                                       December 31               December 31
                                 2006         2005         2006         2005
    -------------------------------------------------------------------------
    Revenue                     110.2        112.2        573.3        112.2
    Cost of product sold         97.1         99.7        514.6         99.7
    -------------------------------------------------------------------------
    Gross profit                 13.1         12.5         58.7         12.5
    -------------------------------------------------------------------------
    Operating and administrative  2.4          2.2          9.5          2.2
    Amortization of property,
     plant, equipment,
     and intangibles                -          7.9         19.1          7.9
    Impairment of property,
     plant and equipment            -            -         56.3            -
    Gain on sale of JWA          (4.7)           -         (4.7)           -
    Income tax expense
     (recovery)                   2.6         (0.7)         3.7         (0.7)
    -------------------------------------------------------------------------
    Net earnings (loss) from
     discontinued operations     12.8          3.1        (25.2)         3.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The balance sheet information for the discontinued operations was as
    follows:

    As at December 31                                      2006         2005
    -------------------------------------------------------------------------
    Assets
      Accounts receivable                                     -         85.7
      Inventories                                             -         47.1
    -------------------------------------------------------------------------
                                                              -        132.8
      Property, plant, equipment and intangibles, net         -        489.4
    -------------------------------------------------------------------------
                                                              -        622.2
    Liabilities
      Accounts payable and accrued liabilities                -         47.9
      Future income tax liability                             -        162.2
    -------------------------------------------------------------------------
                                                              -        210.1
    -------------------------------------------------------------------------
    Net assets of (used in) discontinued operations           -        412.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The cash flows from (used in) discontinued operations were as follows:

                                Three Months Ended               Years Ended
                                       December 31               December 31
                                 2006         2005         2006         2005
    -------------------------------------------------------------------------
    Cash flows from
     discontinued operations
     before changes in
     working capital              8.9          9.1         41.7          9.1
      Decrease (increase) in
       non-cash operating
       working capital items      0.3        (13.8)       (12.2)       (13.8)
    -------------------------------------------------------------------------
    Cash flows from
     discontinued operations      9.2         (4.7)        29.5         (4.7)
    -------------------------------------------------------------------------
      Maintenance capital
       expenditures, net         (0.8)        (0.5)        (2.8)        (0.5)
      Other capital
       expenditures, net         (0.4)        (1.9)        (3.7)        (1.9)
    -------------------------------------------------------------------------
    Cash flows used in
     investing activities        (1.2)        (2.4)        (6.5)        (2.4)
    Cash flows from financing
     activities                     -            -            -            -
    -------------------------------------------------------------------------
    Cash flows from (used in)
     discontinued operations      8.0         (7.1)        23.0         (7.1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    4. Acquisitions

    There were no acquisitions completed by Superior during 2006.

    The following acquisitions were completed by Superior in during 2005:

    On October 19, 2005, Superior acquired the shares of JW Aluminum Holding
    Company, a leading manufacturer of specialty flat rolled aluminum
    products in the United States, for consideration of $405.4 million
    (US $344.2 million).

    On June 7, 2005, ERCO acquired a chloralkali potassium business in Port
    Edwards, Wisconsin for consideration of $22.4 million (the "Port Edwards"
    acquisition).

    On April 11, 2005, Winroc acquired the shares of Leon's Insulation Inc.
    and associated entities (collectively "Leon's"), a distributor of
    specialty walls and ceilings construction products for consideration of
    $31.7 million of which $28.2 million was paid in cash (net of
    $5.3 million in cash acquired). Deferred consideration bears interest at
    the prime bank rate and is repayable over a five year period. Additional
    consideration of up to $5.0 million is contingently payable over a period
    of five years based upon Leon's achieving specified financial targets
    ($0.8 million paid in 2006), and are treated as additional consideration
    as the amounts become payable, with a corresponding increase to goodwill.

    On February 2, 2005, Superior Propane acquired the business of Foster
    Energy Corporation, a wholesale marketer of natural gas liquids, for
    consideration of $25.6 million of which $14.7 million was paid in cash
    (net of $2.3 million in cash acquired). Deferred consideration is payable
    over a five year period and has been recorded at its fair market value of
    $10.9 million, calculated by discounting future cash payments. Foster
    Energy is now being operated under the trade name Superior Gas Liquids
    ("SGL").

    Using the purchase method of accounting for acquisitions, Superior
    consolidated the assets and liabilities from the acquisition and included
    earnings as of the closing date. The consideration paid for this
    acquisition has been allocated as follows:

                                                2005
    -------------------------------------------------------------------------
                                  ERCO's                Superior
                             Acquisition    Winroc's   Propane's
                 Acquisition     of Port Acquisition Acquisition
                      of JWA     Edwards   of Leon's      of SGL       Total
    -------------------------------------------------------------------------
    Cash consideration
     paid              403.6        21.6        28.2        14.6       468.0
    Transaction costs    1.8         0.8         0.5         0.1         3.2
    -------------------------------------------------------------------------
    Total cash
     consideration     405.4        22.4        28.7        14.7       471.2
    Notes payable
     and deferred
     consideration(1)      -           -         3.0        10.9        13.9
    -------------------------------------------------------------------------
    Total
     consideration     405.4        22.4        31.7        25.6       485.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Property, plant
     and equipment     468.9        22.1         3.1           -       494.1
    Goodwill               -           -        16.2        22.7        38.9
    Intangibles         31.0           -         2.0         1.3        34.3
    Working capital,
     net                71.1         3.2        10.4         1.6        86.3
    Future income tax
     liability        (165.6)          -           -           -      (165.6)
    Other
     Liabilities           -        (2.9)          -           -        (2.9)
    -------------------------------------------------------------------------
                       405.4        22.4        31.7        25.6       485.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Deferred consideration are unsecured obligations and have been
        included in revolving term bank credits and term loans on the Interim
        Consolidated Balance Sheets.

    5. Asset Impairments

    Superior determined during 2006 that the net book value of ERCO's sodium
    chlorate facilities located in Bruderheim, Alberta and Valdosta, Georgia
    and ERCO's goodwill were impaired. An aggregate impairment charge of
    $218.7 million was recorded in 2006 ($170.8 million net of tax) which was
    equivalent to the pre-impairment net book value of the assets.

    A pre-tax impairment charge of $73.4 million ($47.7 million net of tax)
    was recorded with respect to ERCO's Bruderheim, Alberta sodium chlorate
    facility, based on estimates of the future cash flows from the facility
    which have been negatively impacted by high electrical prices, lower
    sodium chlorate selling prices resulting from the appreciation of the
    Canadian dollar on U.S. dollar denominated sales, and reduced demand for
    sodium chlorate due to various bleached pulp mill closures in North
    America.

    A pre-tax impairment charge of $55.9 million ($33.7 million net of tax)
    was recorded with respect to ERCO's Valdosta, Georgia sodium chlorate
    facility based on estimates of the future cash flows from the facility
    which have been negatively impacted by high electrical prices and reduced
    demand for sodium chlorate due to various bleached pulp mill closures in
    North America.

    As part of Superior's assessment of ERCO's overall operations, the fair
    value of ERCO was estimated using various valuation methods based on
    current market assumptions surrounding the sodium chlorate industry which
    has been negatively impacted by reduced demand for North American sodium
    chlorate due to various pulp mill closures, the impact of the
    appreciation of the Canadian dollar on ERCO's U.S. dollar denominated
    sales and on the competitiveness of its Canadian pulp producer customer
    base, and increased power costs. Based on the estimated fair values, it
    was determined that ERCO's goodwill was impaired and as such an
    impairment charge of $89.4 million was recorded.

    6. Accounts Receivable and Other

    Superior sells, with limited recourse, certain trade accounts receivable
    on a revolving basis to an entity sponsored by a Canadian chartered bank.
    The accounts receivable are sold at a discount to face value based on
    prevailing money market rates. Superior has retained the servicing
    responsibility for the accounts receivable sold and has therefore
    recognized a servicing liability. The level of accounts receivable sold
    under the program fluctuates seasonally with the level of accounts
    receivable. At December 31, 2006 proceeds of $95.0 million (December 31,
    2005 - $100.0 million) had been received.

    Included in accounts receivable and other is $15.3 million (2005 -
    $14.6 million) of prepaid expenses.

    7. Revolving Term Bank Credits and Term Loans

                            Maturity   Effective Interest December  December
                               Dates   Rates               31 2006   31 2005
    -------------------------------------------------------------------------
    Revolving term bank
     credits(1)

      Bankers Acceptances              Floating BA rate plus
      ("BA")(2)                 2008    applicable credit
                                        spread                35.0     157.6
      LIBOR Loans
       (US$92.3 million;               Floating LIBOR rate
       2005 - US$95.3 million)  2008    plus applicable
                                        credit spread        107.5     111.1
    -------------------------------------------------------------------------
                                                             142.5     268.7
    -------------------------------------------------------------------------
    Other Debt
      Notes payable       2009, 2010   Prime                   7.4       8.0
      Deferred consideration    2010   Non-interest bearing    9.2      11.3
      Mortgage payable
       (US$0.9 million; 2005
       - US$0.9 million)        2011   7.53%                   1.1       1.1
    -------------------------------------------------------------------------
                                                              17.7      20.4
    -------------------------------------------------------------------------
    Senior Secured Notes
      Senior secured notes
       subject to floating
       interest rates
       (US$85.0 million;
       2005 - US$85.0 million)(5)      Floating LIBOR rate
                                2015    plus 1.7%             99.1      99.1
      Senior secured notes
       subject to fixed interest
       rates (US$75.0 million;
       2005 - US$75.0 million)(5)
                          2013, 2015   6.65%                  87.4      87.4
      JWA acquisition credit           Floating LIBOR rate
       facility                         plus credit
       (US$145.0 million)(3)    2007    applicable spread        -     169.1
      Medium Term Notes(4)      2016   5.57%                     -         -
    -------------------------------------------------------------------------
                                                             186.5     355.6
    -------------------------------------------------------------------------
    Total revolving term bank credits and term loans         346.7     644.7
    Less current maturities                                    2.7       2.0
    -------------------------------------------------------------------------
    Revolving term bank credits and term loans               344.0     642.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Superior and its wholly-owned subsidiaries, Superior Plus US Holdings
        Inc. and Commercial e Industrial (Chile) Limitada have revolving term
        bank credit borrowing capacity of $587.8 million. These facilities
        are secured by a general charge over the assets of Superior and
        certain of its subsidiaries.
    (2) The prior year BA balance has been adjusted by $19.9 million
        representing the reclassification to cash and cash equivalents.
    (3) On October 19, 2005, Superior Plus US Holdings Inc. entered into a
        secured non-revolving term bank facility for US$145.0 million
        (CDN$169.1 million at December 31, 2005) to partially finance the
        acquisition of JWA. The facility was secured by a general charge over
        the assets of Superior and certain of its subsidiaries. This facility
        was repaid and cancelled in March 2006 from proceeds raised through
        the issuance of Medium Term Notes.
    (4) On March 3, 2006, Superior issued $200.0 million, 5.50% coupon,
        Medium Term Notes maturing on March 3, 2016 with an effective yield
        to maturity of 5.57%. These facilities are secured by a general
        charge over the assets of Superior and certain of its subsidiaries.
        On August 8, 2006, Superior repaid the Medium Term Notes from
        borrowings under the revolving term credit facilities referred to in
        footnote(1) above, providing enhanced debt repayment and covenant
        flexibility.
    (5) Senior Secured Notes (the "Notes") totaling US$160.0 million (CDN
        $186.5 million at December 31, 2006 and December 31, 2005) are
        secured by a general charge over the assets of Superior and certain
        of its subsidiaries. Principal repayments begin in 2009. Management
        has estimated the fair value of the Notes based on comparisions to
        treasury instruments with similar maturity and interest rates. The
        estimated fair value of the Notes at December 31, 2006 was CDN
        $181.0 million (2005 - CDN $183.5 million). In conjunction with the
        issue of the Notes, Superior swapped US$85.0 million
        (CDN $99.1 million at December 31, 2006 and December 31, 2005) of the
        fixed rate obligation into a US dollar floating rate obligation.

    8. Convertible Unsecured Subordinated Debentures

    The Fund has issued four series of Debentures denoted as 8% Series 1, 8%
    Series 2, 5.75% Series 1, and 5.85% Series 1 as follows:

                                                           Unamor-     Total
                                                             tized  Carrying
                  Series 1  Series 2  Series 1  Series 1  Discount     Value
    -------------------------------------------------------------------------
                   July 31, November  December   October
    Maturity date     2007   1, 2008  31, 2012  31, 2015
    Interest rate      8.0%      8.0%     5.75%     5.85%
    Conversion
     price per
     trust unit     $16.00    $20.00    $36.00    $31.25
    -------------------------------------------------------------------------
    Debentures
     outstanding
     December 31,
     2005              8.9      59.3     174.9      75.0      (3.8)    314.3
    Conversion of
     Debentures and
     amortization
     of discount
     during 2006      (0.8)     (0.1)        -         -       0.5      (0.4)
    -------------------------------------------------------------------------
    Debentures
     outstanding
     December 31,
     2006              8.1      59.2     174.9      75.0      (3.3)    313.9
    Current portion
     of Debentures
     outstanding       8.1         -         -         -         -       8.1
    -------------------------------------------------------------------------
    Long term
     portion of
     Debentures
     outstanding         -      59.2     174.9      75.0      (3.5)    305.8
    -------------------------------------------------------------------------
    Quoted market
     value December
     31, 2006          8.2      60.8     157.5      66.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fixed interest rate obligation on $100.0 million of the Fund's
    Debentures was swapped into a floating rate obligation until July, 2007.

    The Debentures may be converted into trust units at the option of the
    holder at any time prior to maturity and may be redeemed by the Fund in
    certain circumstances. The Fund may elect to pay interest and principal
    upon maturity or redemption by issuing trust units to a trustee in the
    case of interest payments, and to the Debentureholders in the case of
    payment of principal. The number of any trust units issued will be
    determined based on market prices for the trust units at the time of
    issuance.

    9. Future Employee Benefits

    Superior Propane and ERCO Worldwide have defined benefit ("DB") and
    defined contribution ("DC") pension plans covering most employees. The
    benefits provided under DB pension plans are based on the employees'
    years of service and on the highest average earnings for a specified
    number of consecutive years. Information about Superior's DB and other
    post-retirement benefit plans as at December 31, 2006 and 2005 in
    aggregate, is as follows:

                    Superior Propane
                        Pension          ERCO Pension         Total Other
                     Benefit Plans       Benefit Plans       Benefit Plans
                      2006      2005      2006      2005      2006      2005
    -------------------------------------------------------------------------
    Accrued benefit
     obligation,
     beginning
     of year          56.0      52.9      56.9      50.2      25.9      17.3
    Current service
     cost              0.3       0.3       2.7       2.2       0.5       0.4
    Past service
     cost                -         -         -         -         -         -
    Interest cost      2.9       3.1       3.1       3.0       1.4       1.1
    Benefits paid     (4.1)     (4.0)     (1.4)     (1.9)     (1.1)     (1.1)
    Actuarial
     loss (gain)      (1.2)      3.7      (0.4)      3.4      (0.4)      8.2
    -------------------------------------------------------------------------
    Accrued benefit
     obligation,
     end of year      53.9      56.0      60.9      56.9      26.3      25.9
    -------------------------------------------------------------------------
    Fair value of
     plan assets,
     beginning
     of year          63.4      64.3      45.1      39.7         -         -
    Actual return
     on plan assets    6.8       5.3       6.5       3.6         -         -
    Transfers to
     defined
     contribution
     plan             (2.5)     (2.2)        -         -         -         -
    Employer
     contributions       -         -       3.0       3.7       1.1       1.1
    Benefits paid     (4.1)     (4.0)     (1.4)     (1.9)     (1.1)     (1.1)
    -------------------------------------------------------------------------
    Fair value of
     plan assets,
     end of year      63.6      63.4      53.2      45.1         -         -
    -------------------------------------------------------------------------
    Funded status
     - plan surplus
     (deficit)         9.7       7.4      (7.7)    (11.8)    (26.3)    (25.9)
    Unamortized net
     actuarial loss   14.0      18.8      (0.2)      3.3       9.9      10.8
    Unamortized past
     service costs       -         -       0.6       0.9         -         -
    Unamortized
     transitional
     asset               -      (0.3)        -         -         -         -
    -------------------------------------------------------------------------
    Accrued net
     pension asset    23.7      25.9
    Accrued net
     benefit
     obligation                           (7.3)     (7.6)    (16.4)    (15.1)
    Current portion
     of accrued net
     benefit
     obligation
     recorded in
     accounts payable
     and accrued
     liabilities                          (3.4)     (3.9)     (1.1)     (1.1)
    -------------------------------------------------------------------------
    Long-term accrued
     net benefit
     obligation
     (2006:
     $19.2 million;
     2005:
     $17.7 million)                       (3.9)     (3.7)    (15.3)    (14.0)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    10. Restatement of Accrued Pension Asset

    Upon initial adoption of CICA Handbook 3461, Employee Future Benefits, on
    January 1, 2000, the Fund determined that the impact of Superior
    Propane's accrued pension asset was inconsequential to its financial
    statements and this component of the pension was not recorded. The Fund
    subsequently determined this component should be reflected in the
    financial statements and accordingly, it has retroactively restated its
    2005 consolidated financial statements to reflect the correction of this
    accounting treatment.

    The impact for 2005 was to increase total assets by $25.9 million to
    $2,373.6 million, reflecting the previously unrecorded pension asset. The
    opening deficit was reduced by $27.6 million. Net earning for the three
    months ended December 31, 2005 were reduced by $0.5 million and for the
    twelve months ended December 31, 2005 by $1.7 million. There was no
    impact on the consolidated statement of cash flows. Net earnings (loss)
    per trust unit for the three months ended December 31, 2005 was
    unchanged, for the twelve months ended December 31, 2005 was reduced by
    $0.02 per trust unit.

    11. Income Taxes of Superior

    The Fund is a Mutual Fund Trust for income tax purposes and is only
    taxable on any taxable income not allocated to the Unitholders. During
    2006 and 2005, the Fund has allocated all of its taxable income to the
    Unitholders and accordingly no provision for income taxes was recorded at
    the Fund level.

    During the year, the Fund reorganized into a trust-over-partnership
    structure. Prior to the internal reorganization, income tax expense had
    consisted of current and future Canadian corporate income taxes, United
    States income tax, United States non-resident withholding tax and Chilean
    taxes. Coincident with the internal reorganization and the creation of a
    flow-through structure under Canadian income tax laws, the Fund reversed
    its accumulated future Canadian corporate income taxes of $33.2 million.
    The Fund no longer recognizes future Canadian corporate income tax assets
    or liabilities on temporary differences.

    On October 31, 2006, the Government of Canada announced proposed changes
    that would result in the taxation of "specified investment flow-
    throughs", which includes income trusts. For Superior the proposed
    changes would take effect in 2011, if implemented. The Fund has not
    completed its assessment of the potential implications that these
    proposed changes may have.

    12. Unitholders' Equity
    Authorized

    The Fund may issue an unlimited number of trust units. Each trust unit
    represents an equal undivided beneficial interest in any distributions
    from the Fund and in the net assets in the event of termination or wind-
    up of the Fund. All trust units are of the same class with equal rights
    and privileges.

                                                  Issued Number
                                                 of Trust Units  Unitholders'
                                                      (millions)      Equity
    -------------------------------------------------------------------------
    Unitholders' equity, December 31, 2005                 85.5        828.8
    Conversion of Debentures -
     (8% Series 1 - $0.8 million
     converted @ $16 per trust unit
     8% Series 2 - $0.1 million
     converted @ $20 per trust unit) (Note 8)              -          0.9
    Exercise of trust unit warrants                           -          0.2
    Trust unit incentive plan compensation recovery           -         (1.2)
    Currency translation adjustment                           -          0.8
    Receipt of management internalization
     loans receivable                                         -          2.6
    Net loss                                                  -        (80.8)
    Distributions to unitholders                              -       (155.7)
    -------------------------------------------------------------------------
    Unitholders' equity, December 31, 2006                 85.5        595.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Unitholders' capital and deficit as at December 31, 2006 and December 31,
    2005 consists of the following components:

                                                           2006         2005
    -------------------------------------------------------------------------
    Unitholders' capital
      Trust unit equity                                 1,336.0      1,332.3
      Conversion feature on warrants and
       convertible debentures                               4.8          4.8
      Contributed surplus                                     -          1.2
    -------------------------------------------------------------------------
                                                        1,340.8      1,338.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Deficit
      Retained earnings from operations                   313.5        394.3
      Accumulated distributions on trust unit equity   (1,058.8)      (903.1)
    -------------------------------------------------------------------------
                                                         (745.3)      (508.8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At December 31, 2006, the Fund had 2.3 million trust unit warrants
    outstanding (2005 - 2.3 million), exercisable at $20 per trust unit
    warrant. The trust unit warrants expire May 8, 2008.

    13. Net Earnings (Loss) per Trust Unit

                                    Three Months Ended           Years Ended
                                           December 31           December 31
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Net earnings (loss) per trust
     unit computation, basic
      Net earnings (loss) from
       continuing operations           25.3       18.1      (55.6)     101.3
      Net earnings (loss) from
       discontinued operations         12.8        3.1      (25.2)       3.1
    -------------------------------------------------------------------------
      Net earnings (loss)              38.1       21.2      (80.8)     104.4
      Weighted average trust units
       outstanding                     85.5       85.4       85.5       79.7
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations per trust
     unit, basic                      $0.30      $0.22     ($0.65)     $1.27
    Net earnings (loss) from
     discontinued operations per
     trust unit, basic                $0.15      $0.03     ($0.29)     $0.04
    Net earnings (loss) per trust
     unit, basic                      $0.45      $0.25     ($0.94)     $1.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss) per trust
     unit computation, diluted
    -------------------------------------------------------------------------
    Net earnings (loss)                38.1       21.2      (80.8)     104.4
    Dilutive effect of Debentures         -        0.2          -        0.8
    -------------------------------------------------------------------------
    Net earnings (loss), assuming
     dilution                          38.1       21.4      (80.8)     105.2
    -------------------------------------------------------------------------

    Weighted average trust units
     outstanding                       85.5       85.4       85.5       79.7
      Dilutive effect of:
        Debentures                        -        0.6          -        0.6
        Trust unit options                -        0.1          -        0.1
        Trust unit warrants               -        0.3          -        0.8
    -------------------------------------------------------------------------
    Weighted average trust units
     outstanding, assuming dilution    85.5       86.4       85.5       81.2
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations per
     trust unit, diluted              $0.30      $0.22     ($0.65)     $1.26
    Net earnings (loss) from
     discontinued operations per
     trust unit, diluted              $0.15      $0.03     ($0.29)     $0.04
    Net earnings (loss) per trust
     unit, diluted                    $0.45      $0.25     ($0.94)     $1.30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Trust unit options and warrants whose exercise price was greater than the
    market price and Debentures that were anti-dilutive were excluded from
    this calculation.

    14. Business Segments

    Superior operates four continuing distinct business segments; the
    delivery of propane and propane related services and accessories
    operating under the Superior Propane trade name; the manufacture and sale
    of specialty chemicals and related products and services operating under
    the ERCO Worldwide trade name ("ERCO"); the distribution of walls and
    ceilings construction products operating under the Winroc trade name; and
    the sale of natural gas under fixed-price term contracts operating under
    the Superior Energy Management trade name ("SEM"). JW Aluminum Company
    ("JWA" or "JW Aluminum"), a manufacturer of specialty flat-rolled
    aluminum products, has been classified as discontinued operations. (See
    Note 3). Superior's corporate office arranges intersegment foreign
    exchange contracts from time to time between its business segments.
    Intersegment revenues and cost of sales pertaining to intersegment
    foreign exchange gains and losses are eliminated under the Corporate cost
    column.

    For the three
    months ended                                                       Total
    December 31,  Superior                                   Corp-    Consol-
    2006           Propane      ERCO    Winroc       SEM     orate    idated
    -------------------------------------------------------------------------
    Revenues         279.9     115.4     118.8      78.8      (0.1)    592.8

    Cost of products
     sold            201.7      59.0      85.5      72.6      (0.1)    418.7
    -------------------------------------------------------------------------
    Gross profit      78.2      56.4      33.3       6.2         -     174.1

    Expenses
      Operating and
       administ-
        rative        48.8      35.0      20.6       3.3       4.4     112.1
      Amortization
       of property,
       plant and
       equipment       6.2      12.0       0.9         -         -      19.1
      Amortization of
       intangible
       assets            -       1.1       0.2         -         -       1.3
      Interest on
       revolving term
       bank credits
        and term loans   -         -         -         -      11.4      11.4
      Interest on
       convertible
       unsecured
       subordinated
       debentures        -         -         -         -       5.0       5.0
      Amortization of
       convertible
       debenture
       issue costs       -         -         -         -       0.6       0.6
      Income tax
       expense
       (recovery) of
       Superior       (0.1)     (2.3)      1.3         -       0.4      (0.7)
    -------------------------------------------------------------------------
                      54.9      45.8      23.0       3.3      21.8     148.8
    -------------------------------------------------------------------------
    Net earnings (loss)
     from continuing
     operations       23.3      10.6      10.3       2.9     (21.8)     25.3
    Net earnings from
     discontinued
     operations
     (Note 3)                                                           12.8
    -------------------------------------------------------------------------
    Net Earnings                                                        38.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the three
    months ended                                                       Total
    December 31,  Superior                                   Corp-    Consol-
    2005           Propane      ERCO    Winroc       SEM     orate    idated
    -------------------------------------------------------------------------
    Revenues         262.4     117.1     126.1      80.3      (0.9)    585.0

    Cost of
     products sold   182.5      60.7      93.7      76.0      (0.9)    412.0
    -------------------------------------------------------------------------
    Gross profit      79.9      56.4      32.4       4.3         -     173.0

    Expenses
      Operating and
       administ-
       rative         50.2      27.9      21.3       2.5       0.8     102.7
      Amortization
       of property,
       plant and
       equipment       2.3      39.6       0.5         -         -      42.4
      Amortization of
       intangible
       assets            -       1.2       0.2         -         -       1.4
      Interest on term
       bank credits
       and term loans    -         -         -         -       7.7       7.7
      Interest on
       convertible
       unsecured
       subordinated
       debentures        -         -         -         -       4.8       4.8
      Amortization of
       convertible
       debenture
       issue costs       -         -         -         -       0.6       0.6
      Income tax
       expense
       (recovery) of
       Superior        9.1      (4.5)      4.7       0.4     (14.4)     (4.7)
    -------------------------------------------------------------------------
                      61.6      64.2      26.7       2.9      (0.5)    154.9
    -------------------------------------------------------------------------
    Net earnings (loss)
     from continuing
     operations       18.3      (7.8)      5.7       1.4       0.5      18.1
    Net earnings from
     discontinued
     operations
     (Note 3)                                                            3.1
    -------------------------------------------------------------------------
    Net Earnings                                                        21.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the
    Year ended                                                         Total
    December 31,  Superior                                   Corp-    Consol-
    2006           Propane      ERCO    Winroc       SEM     orate    idated
    -------------------------------------------------------------------------
    Revenues         985.4     437.2     518.7     325.6     (2.6)   2,264.3

    Cost of
     products sold   712.5     233.1     386.5     303.9     (2.6)   1,633.4
    -------------------------------------------------------------------------
    Gross profit     272.9     204.1     132.2      21.7        -      630.9

    Expenses
      Operating and
       administ-
       rative        185.3     122.1      87.1      11.7     17.6      423.8
      Amortization
       of property,
       plant and
       equipment      20.4      47.9       3.7         -        -       72.0
      Amortization
       of intangible
       assets            -       4.7       0.4         -        -        5.1
      Interest on
       revolving
       term bank
       credits and
       term loans        -         -         -         -     43.1       43.1
      Interest on
       convertible
       unsecured
       subordinated
       debentures        -         -         -         -     20.2       20.2
      Amortization of
       convertible
       debenture
       issue costs       -         -         -         -      2.3        2.3
      Management
       internalization
       costs             -         -         -         -      1.3        1.3
      Impairment
       of property,
       plant, and
       equipment
       and goodwill      -     218.7         -         -        -      218.7
      Income tax
       expense
       (recovery) of
       Superior      (48.6)   (130.0)     (5.0)     (2.6)    86.2     (100.0)
    -------------------------------------------------------------------------
                      157.1    263.4      86.2       9.1    170.7      686.5
    -------------------------------------------------------------------------
    Net earnings (loss)
     from continuing
     operations       115.8    (59.3)     46.0      12.6   (170.7)     (55.6)
    Net loss from
     discontinued
     operations
     (Note 3)                                                          (25.2)
    -------------------------------------------------------------------------
    Net Loss                                                           (80.8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the
    Year ended                                                        Total
    December 31,   Superior                                  Corp-    Consol-
    2005           Propane      ERCO    Winroc      SEM      orate    idated
    -------------------------------------------------------------------------
    Revenues         856.2     431.6     486.6     288.4      (3.6)  2,059.2

    Cost of
     products sold   571.8     224.7     368.8     273.9      (3.6)  1,435.6
    -------------------------------------------------------------------------
    Gross profit     284.4     206.9     117.8      14.5         -     623.6

    Expenses
      Operating and
       administ-
       rative        188.3     101.9      78.6       9.2       4.1     382.1
      Amortization
       of property,
       plant and
       equipment      17.9      87.4       2.7         -         -     108.0
      Amortization
       of intangible
       assets            -       5.1       0.3         -         -       5.4
      Interest on
       term bank
       credits and
       term loans        -         -         -         -      22.8      22.8
      Interest on
       convertible
       unsecured
       subordinated
       debentures        -         -         -         -      12.9      12.9
      Amortization of
       convertible
       debenture
       issue costs       -         -         -         -       1.7       1.7
      Management
       internalization
       costs             -         -         -         -       1.3       1.3
      Income tax
       expense
       (recovery) of
       Superior       28.8       5.1      14.1       1.9     (61.8)    (11.9)
    -------------------------------------------------------------------------
                     235.0     199.5      95.7      11.1     (19.0)    522.3
    -------------------------------------------------------------------------
    Net earnings from
     continuing
     operations       49.4       7.4      22.1       3.4      19.0     101.3
    Net earnings from
     discontinued
     operations
     (Note 3)                                                            3.1
    -------------------------------------------------------------------------
    Net Earnings                                                       104.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Total Assets, Net Working Capital, Acquisitions and Other Capital
    Expenditures

                                                              Discon-
                                                              tinued
                                                               Opera-  Total
                    Superior                           Corp-   tions  Consol-
                     Propane    ERCO   Winroc    SEM   orate (Note 3) idated
    -------------------------------------------------------------------------
    As at December 31,
     2006
      Net working
       capital          60.8    32.0    69.7    (2.6)   19.0       -   178.9
      Total assets     679.5   566.4   202.8    46.7    41.5       - 1,536.9
    -------------------------------------------------------------------------
    As at December 31,
     2005
      Net working
       capital         103.1     7.3    76.1    (8.3)    6.0    84.9   269.1
      Total assets     722.4   749.2   206.8    42.9    30.1   622.2 2,373.6
    -------------------------------------------------------------------------
    For the three
     months ended
     December 31, 2006
      Acquisitions
       (dispositions)      -       -       -       -       -  (354.7) (354.7)
      Other capital
       expenditures,
       net                 -     1.8       -       -       -     0.4     2.2
    -------------------------------------------------------------------------
    For the three
     months ended
     December 31, 2005
      Acquisitions         -       -       -       -       -   405.4   405.4
      Other capital
       expenditures,
       net                 -    16.4     0.2       -       -     1.9    18.5
    -------------------------------------------------------------------------
    For the year ended
     December 31, 2006
      Acquisitions
       (dispositions)      -       -       -       -       -  (354.7) (354.7)
      Other capital
       expenditures,
       net                 -    51.4     1.6       -       -     3.7    56.7
    -------------------------------------------------------------------------
    For the year ended
     December 31, 2005
      Acquisitions      14.7    22.4    28.7       -       -   405.4   471.2
      Other capital
       expenditures,
       net               1.9    36.2     0.2       -       -     1.9    40.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Geographic Information
                                                           Discont-
                                                             inued     Total
                                        United          Operations   Consoli-
                              Canada    States     Other   (Note 3)    dated
    -------------------------------------------------------------------------
    Revenues for the
     three months ended
     December 31, 2006         482.7      91.5      18.6     110.2     703.0
    Revenues for the
     year ended
     December 31, 2006       1,824.0     392.5      47.8     573.3   2,837.6
    Property, plant and
     equipment as at
     December 31, 2006         468.1      33.2      69.8         -     571.1
    Total assets as at
     December 31, 2006       1,305.4     148.5      83.0         -   1,536.9
    -------------------------------------------------------------------------
    Revenues for the
     three months ended
     December 31, 2005         481.4      93.6      10.0     112.2     697.2
    Revenues for the
     year ended
     December 31, 2005       1,667.5     372.2      19.5     112.2   2,171.4
    Property, plant and
     equipment as at
     December 31, 2005         591.8      92.4      24.1     459.3   1,167.6
    Total assets as at
     December 31, 2005       1,518.5     199.5      33.4     622.2   2,373.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    15. Comparative Figures

    Certain reclassifications of prior period amounts have been made to
    conform to current period presentations.
    




For further information:

For further information: about Superior, visit our website at:
www.superiorplus.com or contact: Grant Billing, Chairman and Chief Executive
Officer, E-mail: gbilling@superiorplus.com, Phone: (403) 218-2950, Fax: (403)
218-2973, Toll Free: 1-866-490-PLUS (7587); Wayne Bingham, Executive
Vice-President and Chief Financial Officer, E-mail: wbingham@superiorplus.com,
Phone: (403) 218-2951, Fax: (403) 218-2973, Toll Free: 1-866-490-PLUS (7587);
Theresia Reisch, Vice-President, Investor Relations and Corporate Secretary,
E-mail: treisch@superiorplus.com, Phone: (403) 218-2953, Fax: (403) 218-2973,
Toll Free: 1-866-490-PLUS (7587)

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