GL&V Closes Fiscal 2007 with Net Earnings of $39.2 Million and Revenues of $830.2 Million



    
    -------------------------------------------------------------------------
    - Normalized net earnings excluding a gain on disposal of commercial
      activities reached $38.1 million or $1.56 per share ($1.53 diluted),
      compared with $37.8 million or $1.57 per share ($1.52 diluted) the
      previous year.

    - The fourth quarter yields a 60.9% growth in consolidated revenues, to
      which all groups contribute, as well as an improvement in the Pulp and
      Paper Group's and the Water Treatment Group's EBITDA margins.

    - Transaction with FLSmidth: the Information Circular will be distributed
      around June 22, in view of a Special Meeting of GL&V's shareholders
      scheduled to be held July 20, 2007.
    -------------------------------------------------------------------------
    

    MONTREAL, June 7 /CNW Telbec/ - (Note: All amounts are expressed in
Canadian dollars unless otherwise indicated.) Management of GROUPE LAPERRIERE
& VERREAULT INC. ("GL&V" or "the Company"; ticker symbols GLV.A, GLV.B/TSX)
discloses today its financial results for the fourth quarter and fiscal year
ended March 31, 2007. Consolidated revenues for the fourth quarter amounted to
$282.0 million, up by 60.9% or $106.7 million over the same quarter of the
previous year. The Process Group accounted for close to half of this increase
as its fourth-quarter revenues rose by $55.5 million or 54.4%, driven by Krebs
International's contribution for the full three-month period coupled with
Dorr-Oliver Eimco's organic growth of over 20%. The Water Treatment Group's
fourth-quarter revenues grew by $46.9 million or 134.6%, primarily as a result
of the acquisition of Enviroquip and Copa earlier in the year, combined with a
46% organic growth in revenues, including the recognition of revenues from a
major contract in the Middle East. The Pulp and Paper Group's revenues grew by
$12.9 million or 25.6% due primarily to the four acquisitions made in fiscal
2007.
    Excluding immaterial non-recurring items for the two comparative period,
the Company's earnings before amortization, financial expenses and income
taxes, or normalized EBITDA(1) for the fourth quarter grew by 59.0%, to reach
$25.8 million. The consolidated normalized EBITDA margin as a percentage of
revenues decreased from 9.3% in 2006 to 9.2% in 2007, this decline being
attributable to the Process Group. Despite a 19.5% increase in its normalized
EBITDA in dollars, this group's normalized EBITDA margin decreased from 15.2%
in 2006 to 11.8% in 2007 due to the addition of Krebs, which currently yields
a lower profit margin than Dorr-Oliver Eimco. However, the Pulp and Paper
Group's fourth-quarter normalized EBITDA grew by $1.4 million or 34.9% over
the same period the previous year, whereas its normalized EBITDA margin rose
from 8.0% to 8.6%. This improvement, which was achieved despite the additional
costs incurred to set up its new technology centre in Karlstad (Sweden), is
attributable to the revenue growth. The Water Treatment Group's normalized
EBITDA increased by $5.8 million, while its normalized EBITDA margin rose from
4.7% in 2006 to 9.0% in 2007. Besides the revenue growth, this improvement is
attributable to Brackett Green's, Enviroquip's and Copa's growing
contribution, as well as the major contract in the Middle East.
    Amortization expenses increased by $5.3 million over the same quarter in
2006, of which $2.7 million relate to the Process Group, $2.2 million to the
Water Treatment Group and $0.3 million to the Pulp and Paper Group. This
increase is due primarily to a net growth of $93.9 million in intangible
assets between March 31, 2006 and 2007, related more particularly to the
technologies, trademarks and customer relations associated with fiscal 2007
acquisitions. Financial expenses were up by $3.2 million. Consequently GL&V
closed the fourth quarter of fiscal 2007 with net earnings of $12.1 million or
$0.50 per share ($0.49 diluted), compared with $11.4 million or $0.47 per
share ($0.45 diluted) in the same period the previous year.
    Laurent Verreault, Chairman of the Board and Chief Executive Officer,
said that management is satisfied with these results considering the Company's
major expansion through acquisitions in the past quarters. "When we acquired
Krebs in December, we informed our shareholders that GL&V's profitability
would sustain some pressure for a few quarters as a result of higher financial
expenses arising from the use of our credit facility to finance the
acquisitions, and increased amortization expenses primarily associated with
the intangible assets of the companies acquired. We are therefore pleased to
see that these factors have been mitigated in recent months by an improvement
in the operating profitability of several business units, especially within
the Pulp and Paper Group and the Water Treatment Group."

    Fiscal 2007 Operating Results
    -----------------------------

    Consolidated revenues totalled $830.2 million for fiscal 2007, up by
$147.1 million or 21.5% over the previous year. This growth is primarily
attributable to the Water Treatment Group, whose annual revenues increased by
$96.0 million or 82.8% to reach $212.0 million, due mainly to the five
acquisitions made during the past two years which have provided it with new
technologies subject to growing demand worldwide. Excluding the acquisitions,
this group's revenues would have been stable compared with 2006. The Process
Group's revenues grew by $66.8 million or 17.6% to $445.2 million, driven by
the addition of Krebs' revenues for the last four months of the year and
Dorr-Oliver Eimco's annual organic growth of 5.5%. The Pulp and Paper Group's
revenues of $217.7 million were relatively stable compared with 2006.
    Excluding various non-recurring gains for both fiscal years, GL&V's
normalized EBITDA(1) increased by 20.2% to $69.1 million, whereas the
normalized EBITDA margin as a percentage of revenues decreased from 8.4% in
2006 to 8.3% in 2007. Besides an unfavourable impact of $2.1 million
attributable to currency fluctuations, this reduction is partly attributable
to the addition of Krebs to the Process Group, which posted a normalized
EBITDA margin of 13.1%, compared with 13.4% the previous year. Moreover, the
Pulp and Paper Group sustained a decline in its normalized EBITDA and its
normalized EBITDA margin, from 8.0% in fiscal 2006 to 7.0% in fiscal 2007, due
mostly to the additional costs incurred to set up its new technology centre in
Karlstad (Sweden). The Water Treatment Group's normalized EBITDA more than
doubled, while its normalized EBITDA margin rose from 4.7% in 2006 to 6.2% in
2007.
    Amortization expenses were up by $ 7.6 million or 95.7% compared to 2006,
due to the increased value of intangible assets, particularly technologies,
trademarks and customer relations related to the acquisitions of the past two
fiscal years. The increase in amortization resulting from the breakdown of the
purchase price allocation related to the acquired companies primarily affected
the Water Treatment Group and the Process Group.
    Also considering a net increase of $1.2 million in financial expenses
(excluding the write-off of deferred financed costs for fiscal 2006) and an
increase in the effective tax rate from 16.2% in 2006 to 20.9% in 2007, GL&V
closed fiscal 2007 with net earnings of $39.2 million or $1.61 per share
($1.57 diluted), up from $36.0 million or $1.50 per share ($1.45 diluted) the
previous year. Excluding the $1.5 million gain on disposal of commercial
activities in 2007 and the 2006 write-off of deferred financing costs, net of
related income taxes, normalized net earnings(1) stood at $38.1 million or
$1.56 per share ($1.53 diluted), compared with $37.8 million or $1.57 per
share ($1.52 diluted) a year earlier.

    Segmented Outlook and Objectives
    --------------------------------

    GL&V's order backlog totalled $560.6 million as at March 31, 2007. The
Process Group's order backlog amounted to $328.2 million, reflecting a
$166.0 million growth over the same date in 2006. Of this increase, $63
million is attributable to the addition of Krebs and $103 million to
Dorr-Oliver Eimco's organic growth. This group is intended to be sold to the
Danish company FLSmidth & Co. ("FLS") pursuant to the Arrangement between FLS
and GL&V. Under the terms of the Arrangement, GL&V will transfer its Water
Treatment Group, Pulp and Paper Group and Manufacturing unit into a new
corporation that will be spun off to shareholders. The new entity will operate
under the corporate name GLV Inc. The Arrangement, the description of which
will be provided in an Information Circular to be distributed to shareholders
and filed on SEDAR around June 22, 2007, will be submitted to vote by GL&V's
shareholders at a Special Meeting scheduled to be held on July 20, 2007 in
Montreal.
    Excluding the Process Group's order backlog (after related segmented
eliminations), the order backlog of GL&V's other units totalled $247.0 million
as at March 31, 2007, up by $93.0 million or approximately 60% over the
previous year. The Water Treatment Group's order backlog more than doubled
since a year earlier to reach $169.1 million as at March 31, 2007. This growth
was particularly strong in North America, Europe and Asia, and is attributable
to the five acquisitions of the past two fiscal years (Jones & Attwood,
Brackett Green, certain Metso technologies, Enviroquip and Copa) which
provided it with new technologies subject to growing demand. Furthermore, in
the past months, the Water Treatment Group has restructured its business in
the United Kingdom which, coupled with the growing contribution of its two
latest acquisitions, Copa and Enviroquip enabled it to improve its
profitability.
    "After two years of significant expansion through acquisitions, fiscal
2008 will be a transition phase during which the Water Treatment Group's
primary objectives will be to complete the integration of the cultures and
operations recently acquired and to reinforce its operational and financial
management," indicated Richard Verreault, President and Chief Operating
Officer. The COO added that the global water treatment industry holds
considerable long-term potential. "In recent years, we have made major efforts
to set up our Water Treatment Group and to provide it with new technologies to
strengthen its market positioning and competitive edge in selective niches of
this still fragmented industry, which is expected to undergo consolidation in
the coming years. We are therefore confident about this group's outlook over
the long term as it will continue to grow and expand through acquisitions that
will allow it to complete its technological portfolio."
    As at March 31, 2007, the Pulp and Paper Group's order backlog stood at a
record high of $95.6 million, up 26.9% over a year earlier, partly due to the
acquisitions made during the last fiscal year and partly due to organic
growth. It should be pointed out that the Pulp and Paper Group's order backlog
as at March 31 does not include the two major contracts totalling over
$80 million signed a few weeks after the close of fiscal 2007. While
particularly strong in North America and Europe, the growth in this group's
order backlog is primarily attributable to the aftermarket, but also to new
equipment orders. "The past two years have been very constructive for the Pulp
and Paper Group, as it has taken initiatives that have enhanced its
positioning, and had a positive impact on its operating results. In fact, the
acquisition of certain assets of Perplas, KanEng, J&L Fiber and Huyck, coupled
with its internal development efforts, broadened its portfolio of aftermarket
products and services, whereas the December 2006 purchase of certain Kvaerner
and Metso technologies provided it with the know-how to offer comprehensive
value-added pulp processing solutions adapted to new market trends worldwide.
This group has also achieved progress in recent quarters in developing and
optimizing its international outsourcing organization, which should contribute
to raise its future profitability", said Richard Verreault. The Pulp and Paper
Group's principal objectives and challenges in upcoming quarters will be to
integrate and optimize its new technology centre in Karlstad (Sweden) and to
continue improving its operating profitability by lowering its operating
costs, standardizing and further strengthening its project management
practices, and optimizing its outsourcing networks.

    Continuity of the Pulp and Paper and Water Treatment Groups within
    ------------------------------------------------------------------
    GLV Inc.
    --------

    Following the closing of the Arrangement with FLS scheduled for late
July, the Water Treatment Group and the Pulp and Paper Group will continue to
develop within GLV Inc. under GL&V's current management. The new corporation's
mission will be to become a world leader in targeted industrial and municipal
solutions, with a special emphasis on the growing environmental technology
sector. It will inherit a well-established business base with approximately
1,500 employees and revenues of over $500 million. GLV Inc. will focus on
profitable growth and the creation of long-term shareholder value, and to that
end will replicate the business model and strategies that have proven
successful over the last three decades including: targeted expansion through
the acquisition and efficient integration of complementary businesses,
enhancing its technology portfolio to provide customers with complete
high-performance solutions, building its aftermarket business and maintaining
an optimal cost structure, notably through efficient outsourcing.

    
    (1) Normalized net earnings and normalized EBITDA are not performance
        measures consistent with Canadian generally accepted accounting
        principles ("GAAP"). Such measures allow management to assess the
        operational and financial performance of the Company's various
        business segments. These measures are also commonly used by the
        investment community to analyze and compare the performance of
        companies in the industries in which the Company is engaged. However,
        they are not intended to be regarded as alternatives to other
        financial accounting performance measures or to the statement of cash
        flows as a measure of liquidity. They are not intended to represent
        funds available for debt service, dividends, reinvestment or other
        discretionary uses, and should not be considered in isolation or as a
        substitute for performance measures prepared in accordance with
        Canadian GAAP. The Company's definition of these measures may not be
        similarly titled measures reported by other companies. Information
        regarding non Canadian GAAP measures is included in the Company's
        Management Report attached to this press release and filed on SEDAR
        on June 7, 2007.

    (2) Certain statements set forth in this press release that describe
        GL&V's and the new company GLV Inc.'s objectives, projections,
        estimates, expectations or forecasts may constitute forward-looking
        statements within the meaning of securities legislation. GL&V's
        management would like to point out that, by their very nature,
        forward-looking statements involve a number of risks and
        uncertainties such that the Company's actual and future results could
        differ materially from those indicated. Factors of uncertainty and
        risk that might result in such differences include trends in the
        demand for the Company's products and cost of its raw materials,
        fluctuations in the value of various currencies, pressures exerted on
        prices by the competition, compliance with environmental legislation
        and general changes in economic conditions. There can be no assurance
        as to the materialization of the results, performance or achievements
        as expressed in or underlying the forward-looking statements. Unless
        required to do so pursuant to applicable securities legislation,
        GL&V's management assumes no obligation as to the updating or
        revision of the forward-looking statements as a result of new
        information, future events or other changes.

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             CONFERENCE CALL ON RESULTS FOR THE FISCAL YEAR AND
                     FOURTH QUARTER ENDED MARCH 31, 2007

             Thursday, June 7, 2007 at 2:00 P.M. (Montreal Time)
             ----------------------------------------------------

    To participate in the conference call, please dial 1-800-594-3790 a few
    minutes before the start of the call. For those unable to participate, a
    taped re-broadcast will be available June 7, 2007, from 5:00 p.m. until
    Friday June 15, 2007 at midnight, by dialing 1-877-289-8525; access
    code: 21234546 #. Members of the media are invited to listen
    in. THE CONFERENCE CALL WILL ALSO BE AVAILABLE AT WWW.GLV.COM.
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                             Management's Report
                   For the Fiscal Year Ended March 31, 2007

         (Management's Discussion and Analysis of Operating Results
                           and Financial Position)

    DESCRIPTION OF BUSINESS

    Business Overview
    -----------------

    Founded in 1975, Groupe Laperrière & Verreault Inc. ("GL&V" or "the
Company") is a world-class provider of process technologies, primarily for
liquid/solid separation, designed for a large number of industrial, municipal
and environmental applications, including those used in metal and ore
processing, pulp and paper production, water treatment and the energy sector.
At the date hereof, the Company has over 2,400 employees and is present in 40
countries on six continents. GL&V is a public company whose Class A
subordinate voting shares and Class B multiple voting shares trade on the
Toronto Stock Exchange under the ticker symbols GLV.A and GLV.B.
    Within the meaning of the Canadian Institute of Chartered Accountants
("CICA") Handbook, the Company's operations are, effective March 31, 2007,
divided into three reportable segments:

    - The Process Group, which includes the operations of Dorr-Oliver Eimco
      and Krebs International, offers an extensive selection of liquid/solid
      separation solutions intended for metal and ore processing as well as
      industrial and environmental processes used in various other markets
      such as energy, pulp and paper, chemicals, petrochemicals and food
      processing.

    - The Pulp and Paper Group specializes in the design and marketing of
      equipment used in various stages of pulp and paper production, notably
      pulp preparation and sheet formation, and is a recognized leader in
      rebuilding, upgrading and optimization services for existing pulp and
      paper equipment.

    - The Water Treatment Group specializes in the development and marketing
      of equipment for the treatment of municipal and industrial wastewater,
      drinking water and water used in various industrial processes, as well
      as water intake screening solutions for certain types of power stations
      and desalinization plants.

    During the last fiscal year, GL&V's three segments accounted for 50.9%,
24.9% and 24.2% of consolidated revenues respectively (before inter-segment
eliminations).
    In addition, another division of the Company, GL&V Manufacturing,
specializes in the production of large custom-made parts for external
customers involved mainly in the pulp and paper and energy sectors, as well as
for GL&V's other units.

    Business Model and Strategy
    ---------------------------

    Over the years, GL&V's management has implemented a business model that
has positioned the Company among the world leaders in its target markets.
    To ensure its growth, GL&V has played a leading role in the consolidation
of its industry by completing numerous acquisitions. At the same time, it has
developed an efficient and profitable business integration strategy, the main
feature of which is to divest lower value-added activities, including
manufacturing assets, in order to focus on intellectual property rights,
know-how and trademarks relating to internationally recognized technologies,
several of which rank among the foremost worldwide in terms of their installed
equipment base.
    While diversifying its geographic positioning and customer base through
the gradual integration of additional expertise, GL&V's growth strategy has
enabled it to establish a strong business base as a provider of OE-quality
replacement parts and aftermarket services, a source of recurring revenues,
thereby reducing its exposure to cyclical downturns in some of its markets.
Furthermore, the sale of non-strategic assets has enabled the Company to
rapidly reimburse the debts contracted to finance its acquisitions.
    Concurrently, GL&V has established an extensive international network of
manufacturing subcontractors located near its customers, providing it with a
competitive cost structure that can easily be adapted to market fluctuations.
    Financially, GL&V's strategic model has resulted in a sustained operating
profitability since the Company's listing on the stock exchange in 1986, and a
sound financial position.
    GL&V has hence distinguished itself as a reliable generator of economic
value through the international expansion of its markets and outsourcing
networks, the diversification of its technology portfolio and customer base,
the quality of its products and services, delivered on a timely basis and at a
competitive price, and a rigorous and proactive management of its costs and
risks. On the organizational level, management has always promoted an
entrepreneurial culture that fosters growth and the Company's ability to
rapidly seize opportunities and effectively meet the challenges arising in the
marketplace.

    -------------------------------------------------------------------------
    SIGNIFICANT EVENT NOTICE:

    Signature of an agreement pursuant to which GL&V will sell its Process
    Group to FLSmidth & Co. and transfer its Water Treatment and Pulp and
    Paper Groups and its Manufacturing unit into a new corporation that will
    be spun off to its shareholders. The closing of the transaction is
    scheduled for late July 2007.
    -------------------------------------------------------------------------

    On April 20, 2007, subsequent to the end of the last fiscal year, GL&V and
the Danish company FLSmidth & Co. ("FLS") announced that they have entered
into an agreement whereby, through a court-approved plan of arrangement (the
"Arrangement"), FLS will acquire all the outstanding Class A subordinate
voting shares and Class B multiple voting shares of GL&V. Pursuant to the
Arrangement, GL&V will transfer its Water Treatment and Pulp and Paper Groups
and its Manufacturing unit into a new corporation ("GLV Inc.") which will seek
a listing on the TSX Exchange and be spun off to its shareholders. Following
the Arrangement, FLS will effectively own 100% of GL&V's Process Group in
exchange for a consideration of $840 million in cash (equivalent to $33 per
share of GL&V) and the assumption of the total debt less a net debt of
$ 50 million assumed by the new company, GLV Inc.
    Pursuant to the Arrangement, each GL&V shareholder will receive a
per-share consideration consisting of $33 in cash and one share of GLV Inc.
Holders of Class A subordinate voting shares and Class B multiple voting
shares of GL&V will receive respectively Class A subordinate voting shares and
Class B multiple voting shares of GLV Inc. for each corresponding share held.
According to management, the cash consideration of $33 per GL&V share and the
share of GLV Inc. (the "Consideration") represented an attractive premium over
GL&V's share price at the time the transaction was announced, on April 20,
2007.
    According to GL&V's management, this transaction, which is backed
unanimously by the Board of Directors, is consistent with the Company's core
objective of maximizing shareholder value. The price offered by FLS not only
provides shareholders with a significant immediate return on the Process
Group's assets, but also offers them the opportunity to continue
participating, as GLV Inc. shareholders, in the growth of the Water Treatment
and Pulp and Paper Groups: two well-established global entities equipped with
solid technologies. Furthermore, the development of these groups will continue
to be guided by the same vision, senior officers, entrepreneurial culture,
rigorous management and corporate governance upon which GL&V has built its
strength and success. The price offered by FLS for the Process Group - i.e.
approximately $950 million, including the assumption of net debt - notably
reflects the added value recognized by the metals and ore processing industry,
which is undergoing consolidation, in global suppliers capable of offering
comprehensive solutions that complete their customers' process flowsheets.
    The support agreement signed on April 19, 2007 by GL&V and FLS is
available on SEDAR's website (www.sedar.com). Complete information regarding
the Arrangement and the new corporation GLV Inc. will be contained in the
Arrangement Circular that will be distributed to GL&V's shareholders and filed
with SEDAR around June 22, 2007. The proposed Arrangement is subject to
shareholder approval by resolution approved by no less than 75% of the votes
cast in each class of shares (Class A Subordinate Voting and Class B Multiple
Voting) during a special meeting scheduled to be held on July 20, 2007 in
Montreal. The Arrangement is also subject to a number of conditions including
approval by the Superior Court of Quebec, acceptance by the TSX Exchange and
other regulatory approvals and GLV Inc.'s listing on the TSX Exchange.

    FOREWORD TO MANAGEMENT'S REPORT

    Basis of Presentation
    ---------------------

    This Management's Report presents an analysis of GL&V's operating results
for the fiscal year and fourth quarter ended March 31, 2007, compared with
operating results for the corresponding periods ended March 31, 2006, as well
as of its cash flows and changes in financial position between those dates.
Management's Report should be read in conjunction with the audited
consolidated financial statements and accompanying notes for the fiscal year
ended March 31, 2007. Supplementary information regarding the Company,
including its Annual Information Form, interim reports for the fiscal year
ended March 31, 2007, previous annual reports and press releases, is available
on SEDAR's website and GL&V's website (www.glv.com). Certain other documents
including presentations made to investors over the past year, are also
available on the Company's website.
    In this Management's Report, the fiscal year ended March 31, 2007 and the
fiscal years ended March 31, 2006 and 2005 are designated by the terms "fiscal
2007", "fiscal 2006" and "fiscal 2005". In this Management's Report, GL&V or
the Company designates, as the case may be, Groupe Laperrière & Verreault Inc.
and its subsidiaries and divisions, or Groupe Laperrière & Verreault Inc. or
one of its subsidiaries or divisions.
    The information contained in this Management's Report accounts for any
major events occurring prior to June 7, 2007, on which date the Board of
Directors approved the financial statements and Management's Report for the
fiscal year ended March 31, 2007. It presents the Company's status and
business context as they were, to management's best knowledge, at the time
these lines were written.
    Unless otherwise indicated, the financial information presented in this
report, including tabular amounts, is expressed in Canadian dollars. The
Canadian dollar is also the Company's measurement currency. Unless otherwise
indicated, the analysis of financial results for the period in question is
made in comparison with financial results for the equivalent period of the
previous fiscal year.

    Forward-Looking Statements
    --------------------------

    Management's Report is designed to assist investors in understanding the
nature and the importance of the changes and trends, as well as the risks and
uncertainties associated with GL&V's operating results and financial position.
The statements set forth in this Management's Report and certain other
sections of this report that describe GL&V's objectives, projections,
estimates, expectations or forecasts may constitute forward-looking statements
within the meaning of securities legislation. Positive or negative verbs such
as "plan", "evaluate", "estimate" and "believe" as well as other related
expressions are used to identify such forward-looking statements. GL&V's
management would like to point out that, by their very nature, forward-looking
statements involve a number of risks and uncertainties such that the Company's
actual and future results could differ materially from those indicated. There
can be no assurance as to the materialization of the results, performance or
achievements as expressed in or underlying the forward-looking statements.
Unless required to do so pursuant to applicable securities legislation, GL&V's
management assumes no obligation as to the updating or revision of the
forward-looking statements as a result of new information, future events or
other changes.
    (Additional information regarding the risk factors to which the Company is
exposed is provided in the "Risks and Uncertainties" section of this
Management's Report.)

    Effectiveness of Disclosure Controls and Procedures and Internal Controls
    -------------------------------------------------------------------------
    in Regard to Financial Reporting
    --------------------------------

    Management has designed disclosure controls and procedures to provide
reasonable assurance that material information relating to the Company,
including its consolidated subsidiaries, is made known to them by others
within those entities, particularly during the period in which the annual
filings are being prepared, and disclosed in public documents pursuant to the
requirements of Multilateral Instrument 52-109. As at March 31, 2007, GL&V's
Chief Executive Officer and Chief Financial Officer, with the participation of
the Company's management, have concluded that the design and operation of the
Company's disclosure controls and procedures are effective. The Chief
Executive Officer and Chief Financial Officer have also concluded that GL&V
has designed appropriate internal controls over financial reporting for the
nature and size of the Company's business, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with Canadian
generally accepted accounting principles ("GAAP").

    Changes in Accounting Policies
    ------------------------------

    The Company did not make any accounting changes in fiscal 2007.

    Compliance with Canadian GAAP
    -----------------------------

    Unless otherwise indicated, the financial information presented in this
report, including tabular amounts, is prepared in accordance with Canadian
GAAP. The information contained in the Management's Report and some other
sections of this report also includes some figures that are not performance
measures consistent with GAAP, specifically:

    - EBITDA: earnings before amortization, financial expenses and income
      taxes;

    - normalized EBITDA: according to the reporting periods, EBITDA before
      restructuring costs, gain on disposal of commercial activities, gains
      or losses on disposal of property, plant, equipment and other assets,
      and impairment of property, plant and equipment;

    - EBIT: earnings before financial expenses and income taxes;

    - normalized EBIT: according to the reporting periods, EBIT before
      restructuring costs, gain on disposal of commercial activities, gains
      or losses on disposal of property, plant, equipment and other assets,
      and impairment of property, plant and equipment; and

    - normalized net earnings: according to the reporting periods, earnings
      before restructuring costs, gain on disposal of commercial activities
      and write-off of deferred financing costs.

    Such measures allow management to assess the operational and financial
performance of the Company's various business segments. These measures are
also commonly used by the investment community to analyze and compare the
performance of companies in the industries in which the Company is engaged.
However, they are not intended to be regarded as alternatives to other
financial accounting performance measures or to the statement of cash flows as
a measure of liquidity. They are not intended to represent funds available for
debt service, dividends, reinvestment or other discretionary uses, and should
not be considered in isolation or as a substitute for performance measures
prepared in accordance with Canadian GAAP. The Company's definition of these
measures may not be similarly titled measures reported by other companies.
    The reconciliation between these measures and the most comparable Canadian
GAAP measures for the three and twelve-month periods ended March 31, 2007 and
2006, is summarized in the following table:


    Information Regarding Non Canadian GAAP Measures

    (in thousands of $, except per-share amounts)

    -------------------------------------------------------------------------
                                        4th Quarters            Fiscal Years
                                      Ended March 31,        Ended  March 31,
                               ----------------------  ----------------------
                                    2007        2006        2007        2006
                               ----------------------  ----------------------
    EBIT:
    Earnings before financial
     expenses and income
     taxes (EBIT)                 18,485      14,307      55,489      49,692
    Gain on disposal of
     commercial activities             -           -      (1,486)          -
    Gains on disposal of
     property, plant, equipment
     and other assets                (67)     (1,324)       (451)     (1,366)
    Impairment of property,
     plant and equipment               -       1,194           -       1,194
                               ----------------------  ----------------------
    Normalized earnings before
     financial expenses and
     income taxes (normalized
     EBIT)                        18,418      14,177      53,552      49,520
                               ----------------------  ----------------------
                               ----------------------  ----------------------
    EBITDA:
    Earnings before financial
     expenses and income
     taxes (EBIT)                 18,485      14,307      55,489      49,692
    Amortization                   7,414       2,073      15,539       7,941
                               ----------  ----------  ----------  ----------
    Earnings before amortization,
     financial expenses and
     income taxes (EBITDA)        25,899      16,380      71,028      57,633
    Gain on disposal of
     commercial activities             -           -      (1,486)          -
    Gains on disposal of
     property, plant, equipment
     and other assets                (67)     (1,324)       (451)     (1,366)
    Impairment of property,
     plant and equipment               -       1,194           -       1,194
                               ----------------------  ----------------------
    Normalized earnings before
     amortization, financial
     expenses and income taxes
     (normalized EBITDA)          25,832      16,250      69,091      57,461
                               ----------------------  ----------------------
                               ----------------------  ----------------------
    NET EARNINGS:
    Net earnings                  12,155      11,364      39,248      35,958
    Gain on disposal of
     commercial activities (net
     of related income taxes)          -           -      (1,159)          -
    Write-off of deferred
     financing costs (net of
     related income taxes)             -           -           -       1,839
                               ----------------------  ----------------------
    Normalized net earnings       12,155      11,364      38,089      37,797
                               ----------------------  ----------------------
                               ----------------------  ----------------------
    Weighted average number of
     shares outstanding (in
     thousands)
    - basic                       24,438      24,182      24,436      24,041
    - diluted                     24,967      25,076      24,926      24,862

    Normalized earnings
     per share
    - basic                         0.50        0.47        1.56        1.57
    - diluted                       0.49        0.45        1.53        1.52
    -------------------------------------------------------------------------


    SELECTED CONSOLIDATED ANNUAL INFORMATION

    (in thousands of $, except per-share amounts)

                                                 Fiscal Years Ended March 31,
                                             --------------------------------
                                                2007        2006        2005
    -------------------------------------------------------------------------
    Revenues                                 830,223     683,155     556,214

    EBITDA                                    71,028      57,633      29,823
    Normalized EBITDA                         69,091      57,461      37,593

    EBIT                                      55,489      49,692      21,542
    Normalized EBIT                           53,552      49,520      29,312

    Net earnings                              39,248      35,958      14,599
    - basic per share                           1.61        1.50        0.61
    - diluted per share                         1.57        1.45        0.59

    Normalized net earnings                   38,089      37,797      21,093
    - basic per share                           1.56        1.57        0.88
    - diluted per share                         1.53        1.52        0.86

    Cash dividends per share                       -        0.10           -

    Weighted average number of shares
     outstanding (in thousands)
    - basic                                   24,436      24,041      23,978
    - diluted                                 24,926      24,862      24,607

    Order backlog (as at March 31)           560,612     311,503     284,261
    -------------------------------------------------------------------------
    Balance Sheet Data (as at March 31)
    -------------------------------------------------------------------------
                                                2007        2006        2005

    Total assets                             696,946     383,511     326,128
    Shareholders' equity                     202,255     157,416     127,044
    Long-term financial liabilities(1)       200,300      41,487      54,332
    -------------------------------------------------------------------------
    (1) Comprises long-term debt, including its current portion, and
        liabilities under pension plans.


    KEY EVENTS OF THE PAST THREE FISCAL YEARS

    Creation and Expansion of the Water Treatment Group
    ---------------------------------------------------

    At the beginning of fiscal 2005, a new reportable business segment was
formed, the Water Treatment Group, the operations and results of which were
previously incorporated into the Process Group. This group was originally
comprised mainly of the North American entity Eimco Water Technologies, LLC,
founded in January 2004. Today, this group comprises all drinking water,
industrial process water and municipal and industrial wastewater treatment
activities carried out by GL&V's various international subsidiaries. During
its first complete fiscal year ended March 31, 2005, this group recorded
revenues of approximately $75 million. Two years later, for the fiscal year
ended March 31, 2007, its revenues reached more than $212 million.

    During fiscal 2006, this group made three acquisitions:

    - On April 1, 2005, acquisition of certain water treatment related assets
      and operations of the British company Jones & Attwood ("Jones &
      Attwood") located in the Birmingham, England area and also operating a
      sales and service centre in Chicago, Illinois. The acquired operations
      and assets cover the design, manufacture, marketing and installation of
      effluent liquid/solid filtration and separation process equipment
      targeted mainly to municipalities as well as an industrial customer
      base.

    - On November 7, 2005, acquisition of all the shares of the British
      company Brackett Green Limited ("Brackett Green"), based in Colchester,
      United Kingdom, and its U.S. subsidiary Brackett Green USA, Inc., based
      in Houston, Texas. The transaction was completed for a net cash
      consideration of $15 million (including acquisition costs and certain
      adjustments). This group is a world leader in advanced water intake
      screening and filtration technologies used by power stations,
      desalinization plants and various other types of industries. Brackett
      Green also offers a large selection of municipal and industrial
      wastewater treatment equipment. In addition, the Caird & Rayner Clark
      division offers advanced seawater desalinization technologies.

      Toward the end of fiscal 2006, the closing accounts of Brackett Green
      required for the application of the purchase price adjustment process
      were drawn up, revealing significant differences between the accounts
      established by GL&V and those prepared by the vendor. Accordingly, GL&V
      submitted a claim exceeding the $4.6 million ((euro)3.2 million)
      maximum purchase price adjustment set forth in the purchase agreement.
      As provided for in the purchase agreement, the closing accounts were
      submitted to an arbitration process. During the second quarter of
      fiscal 2007, the arbitration ruled in favour of GL&V for the maximum
      amount of $4.6 million.

    - On January 9, 2006, acquisition of certain assets and operations of the
      Paper Chemical Systems Unit of Metso Paper, Inc. ("Metso Paper"),
      located in Raisio, Finland, primarily the intellectual property rights
      associated with a number of products in the wastewater treatment field.
      This acquisition strengthened the Water Treatment Group's positioning
      in the pulp and paper industry and various other sectors where such
      technologies might be applied, including municipal water treatment.

    During fiscal 2007, the Water Treatment Group made two acquisitions:

    - On June 30, 2006, acquisition of all the outstanding shares of Austin,
      Texas based Enviroquip Inc. ("Enviroquip"). The transaction was
      completed for a net cash consideration of $23 million (including
      acquisition costs and certain adjustments). Enviroquip produces
      drinking water and wastewater treatment equipment, mainly for
      municipalities. In addition to its own technologies, it holds the
      exclusive U.S. municipal market licence for the submerged membrane
      filtration unit developed by the Japanese multinational Kubota. This
      wastewater treatment technology is increasingly in demand by North
      American municipalities. Having held the exclusive licence in Canada
      since 2004, GL&V thereby secured exclusive rights to this technology
      for the whole of North America. The combination of Enviroquip's
      products and Kubota's membrane (MBR) provides GL&V with an edge in the
      marketplace as it enables the Water Treatment Group to establish its
      presence in a growing market segment, where there are considerable
      barriers to entry due to numerous existing patents and to the lengthy
      period required to acquire market share. The addition of this
      technology to GL&V's existing portfolio strengthens its current and
      future positioning in the North American municipal market, where new
      technologies such as the submerged membrane are gradually gaining
      market share at the expense of more conventional technologies.

      In the fourth quarter of fiscal 2007, the closing accounts relating to
      Enviroquip required for the application of the purchase price
      adjustment process were drawn up, revealing some differences between
      the accounts established by GL&V and those prepared by the vendor.
      Therefore, during the fourth quarter of fiscal 2007, GL&V paid an
      additional amount of $713,000.

    - On October 16, 2006, acquisition of all the shares of two companies
      specializing in wastewater treatment solutions: COPA Limited (United
      Kingdom) and COPA Water Pty Ltd (Australia). The transaction was
      completed for a net cash consideration of $18 million (including
      acquisition costs and certain adjustments). This acquisition, the fifth
      to be completed by GL&V's Water Treatment Group within eighteen months,
      enabled it to integrate a portfolio of equipment and processes designed
      for various wastewater treatment applications, and which have gained
      market recognition for their innovative engineering and superior
      reliability. In addition, COPA Limited holds the exclusive licence for
      the Kubota submerged membrane (MBR) for the municipal, commercial and
      industrial wastewater treatment markets in the United Kingdom and the
      Republic of Ireland. Thus, this acquisition provided the Water
      Treatment Group with advanced technologies meeting new global market
      needs, strengthened GL&V's relationship with Kubota, increased its
      know-how in submerged membrane technology, and positioned the Water
      Treatment Group more solidly in certain high-potential regions.

      In the fourth quarter of fiscal 2007, the closing accounts relating to
      Copa required for the application of the purchase price adjustment
      process were drawn up, revealing some differences between the accounts
      established by GL&V and those prepared by the vendor. Therefore, during
      the fourth quarter of fiscal 2007, GL&V received an amount of
      $3.2 million.

    - At the end of the last fiscal year, GL&V divested a non-strategic
      portion of the activities acquired as part of the Copa acquisition,
      specifically the Australian stormwater business. The transaction was
      concluded for a consideration of $2 million, subject to certain
      adjustment clauses, which translated into the addition of an estimated
      amount of $688,000 to the selling price. As at March 31, 2007, this
      $688,000 adjustment was registered in the Company's balance sheet as an
      account receivable from the purchaser. The divestment of the stormwater
      business is consistent with the objective of restructuring part of the
      operations of the Water Treatment Group subsequent to its various
      acquisitions. In addition to improving its cost structure, this
      transaction allows the group to further focus on its core business in
      the municipal and industrial sectors in selective growth water
      treatment markets.

    Globally, the five acquisitions of the past two fiscal years have provided
the Water Treatment Group with state-of-the-art technologies and recognized
trademarks, access to new markets including energy, a significant installed
equipment base worldwide, a growth platform in Europe and an increased
international presence.

    Intensified International Development of the Pulp and Paper Group
    -----------------------------------------------------------------

    In recent years, pulp and paper production worldwide has been increasingly
shifting toward certain regions in the Southern Hemisphere, Asia and Eastern
Europe, which benefit from abundant natural resources and advantageous
production costs. Concurrently, new technologies have emerged on the market,
focused on enhancing mill capacity, productivity and efficiency. Pulp and
paper manufacturers' investments in North America, the primary market of
GL&V's Pulp and Paper Group, are increasingly focused on producing specialty
products and upgrading, improving and maintaining existing equipment to
maximize its yield, rather than on new capital projects.
    In such a context, the Pulp and Paper Group has implemented a market
strategy aimed at the following key objectives: (1) the development of its
product portfolio, primarily through acquisitions, in order to provide higher
value-added technologies and more comprehensive solutions, i.e. covering all
stages of its customers' production flowsheets, and to meet the growing need
in the global pulp and paper industry for increased mill capacity and
productivity and lower costs; (2) the development of its aftermarket business
base and the consolidation of its aftermarket leadership in North America and
Europe, also by means of acquisitions; and (3) the development of its presence
in certain emerging markets toward which a growing proportion of pulp and
paper production is shifting, such as China, India, Latin America and Russia.
This strategy yielded tangible benefits, as the Pulp and Paper Group was
awarded several major contracts abroad in the past two years, while
maintaining a strong aftermarket business in North America and Europe.
    This group made one acquisition during fiscal 2006, specifically the May
27, 2005 purchase of certain assets of Perplas Limited ("Perplas") based in
Manchester, England, specializing in the manufacture of stock preparation
equipment and high-turnover replacement parts (consumables). In October 2006,
during the last fiscal year, GL&V divested certain non-strategic operations of
Perplas generating a $1.5 million non-recurring gain on the disposal of
commercial activities.

    The Pulp and Paper Group made four more acquisitions during fiscal 2007:

    - On April 1, 2006, acquisition of the principal assets of KanEng
      Industries Inc. ("KanEng") and of KanEng-Deltec Inc., located in the
      Montreal, Quebec region. KanEng specializes in the manufacture of high-
      turnover components (consumables) for paper machines, including a large
      proportion in the aftermarket.

    - On July 10, 2006, acquisition of the principal assets related to the
      refiner rebuild business of J&L Fiber Services Inc. ("J&L Fiber
      Services"), based in Pittsfield, Massachusetts.

    - On August 24, 2006, acquisition of the principal assets related to the
      operations of the Huyck Dewatering Equipment division of Xerium
      Technologies, Inc., located in Whitstable, U.K. These operations are
      complementary to those of Perplas, acquired the previous year.

    - On December 29, 2006, acquisition from Metso Corporation ("Metso") of
      the principal assets, namely the proprietary rights, patents, know-how,
      trademarks and part of the manufacturing machinery, relating to the
      pulp washing, oxygen delignification and bleaching business of the
      Swedish Kvaerner Pulping ("Kvaerner"), including Kvaerner's Compact
      Press(TM) wash press technology, along with Metso's SuperBatch(TM)
      cooking technology. The price of the transaction amounted to
      $11 million (including acquisition costs). Subsequent to the
      acquisition, GL&V undertook to set up a chemical pulping technology
      centre in Karlstad, Sweden, which strengthens the Pulp and Paper
      Group's European and global presence.

      This acquisition positioned the Company among the world's top three
      providers of stock preparation equipment. The cooking, oxygen
      delignification, bleaching and wash press technologies acquired by GL&V
      have been specifically designed to meet the growing need in the global
      pulp and paper industry for increased mill production capabilities and
      efficiency. The acquisition therefore meets the Pulp and Paper Group's
      key strategic objectives by giving access to world-class value-added
      technologies backed by excellent trademarks, strengthening its European
      team and international presence and providing it with a significant
      global installed equipment base and new aftermarket products.

      In April 2007, it enabled the Pulp and Paper Group to be awarded,
      through its new Karlstad technology centre, the largest contract in its
      history: a close to $60 million order for the design, manufacture and
      turnkey installation of a complete pulp washing, oxygen delignification
      and pulp bleaching system based on the new Compact Press(TM) wash press
      technology. The contract includes the supply of the largest wash press
      in the industry.

    Acquisition of Krebs International by the Process Group
    -------------------------------------------------------

    On December 4, 2006, GL&V acquired, for the Process Group, all the shares
of Krebs International ("Krebs"), based in Tucson, Arizona, and operating six
wholly-owned subsidiaries in Australia, Brazil, Chile, Austria, South Africa
and China, along with sales and engineering offices located in various areas
in the United States as well as in the Philippines and the United Kingdom. The
transaction was completed for a net cash consideration of $98 million
(including acquisition costs) and the assumption of a $10 million debt (net of
the cash position), subject to certain adjustment clauses.
    Founded in 1950, Krebs designs, manufactures and markets high-performance
equipment, primarily hydrocyclone liquid/solid separation equipment and
horizontal slurry pumps used to transport coarse slurries between the various
stages of minerals and other materials processing. It products are targeted to
various industries, mainly metal and ore processing. The company has also
developed its presence in the energy sector, especially the oil and gas
segment. With 308 employees worldwide, Krebs achieved revenues of $97 million
during the twelve-month period ended September 30, 2006.
    Considering the great complementarities between Krebs' and Dorr-Oliver
Eimco's technologies, this acquisition consolidated the Process Group's
position among the largest and most complete suppliers in its market niche, by
enabling it to complete its customers' liquid/solid separation process
flowsheets. In many processes, for instance, hydrocyclone and slurry pump
solutions are applied both before and after Dorr-Oliver Eimco's existing
equipment. Hence, the Krebs products positioned the Process Group to offer
more comprehensive solutions and thereby to carry out larger-scale projects.
The transaction also strengthened the Process Group's presence in the energy
sector and the aftermarket. For these reasons, this acquisition provided the
Process Group with considerable accretive value. According to GL&V's
management, this accounts for the significant price offered by FLSmidth & Co.
pursuant to the aforementioned Arrangement to acquire the Process Group,
especially since this acquisition will enable FLS to complete its own offering
in the only niche of the processing industry in which it has had no
significant presence until now: liquid/solid separation.
    (For further information regarding the business acquisitions and disposals
described in the previous sections, the reader is referred to note 11 of the
condensed notes appended to the press release.)

    Reassessment of Goodwill and Intangible Assets Associated with GL&V's
    ---------------------------------------------------------------------
    Latest Acquisitions
    -------------------

    GL&V made a total of seven acquisitions in fiscal 2007, including the
major Krebs acquisition at the end of the third quarter. The net value of the
assets acquired during the year reached $156 million. In the fourth quarter,
management completed the breakdown of the purchase price allocation of the
acquired companies.
    Consequently, a consideration of $27.2 million previously included in
goodwill, as it appeared in the last balance sheet published by GL&V and dated
December 31, 2006, was reclassified as "intangible assets". This item consists
mostly of technologies and trademarks amortizable over a period of 20 years,
as well as customer relations amortizable over a period of 5 to 10 years. The
impact on earnings was to significantly increase the amortization of
intangible assets for the 2007 fiscal year as a whole, especially for the
Water Treatment Group and the Process Group. (For further information, the
reader is referred to note 5 of the condensed notes appended to the press
release.)

    Refinancing and Modification of GL&V's Financing Agreement
    ----------------------------------------------------------

    On August 2, 2005, a five-year secured multi-jurisdictional and
multi-currency $180 million non-reducing revolving credit facility with no
amortization was arranged with a banking syndicate consisting of Canadian,
American and European institutions, in order to refinance GL&V's existing debt
and finance future acquisitions. This entailed the write-off of $2.2 million
(before income taxes) existing deferred financial costs during the second
quarter of fiscal 2006. However, it provided GL&V with more favourable and
more flexible financing conditions that are better suited to its international
operations.
    On November 16, 2006, GL&V entered into an agreement with its banking
syndicate to modify the financing agreement in place since August 2005, in
order to raise its credit facilities from $180 million to $320 million, with
the option for an additional increase of $100 million. The financing retains
its previous terms and conditions, being a five-year secured
multi-jurisdictional and multi-currency non-reducing revolving credit facility
with no amortization. The primary goal of this financing was to enable the
Company to pursue its expansion. (For further information, the reader is
referred to note 7 a) of the condensed notes appended to the press release.)

    OPERATING RESULTS

    Currency Fluctuations
    ---------------------

    As the Company conducts its business in 40 countries, its results are
exposed to some currency fluctuations in relation to the Canadian dollar,
primarily the U.S. dollar, the Euro and the pound Sterling. The following
table summarizes the impact of currency fluctuations on the principal
statement of income items for the 12 and three-month periods ended March 31,
2007, compared with the exchange rates effective during the same periods in
2006.

    (Unfavourable) Favourable Impact of Currency Fluctuations
    (in thousands of $)

    -------------------------------------------------------------------------
                                                                      Fiscal
                                                     4th Quarter        Year
                                                           Ended       Ended
                                                        March 31,   March 31,
                                                            2007        2007
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Process Group                                        3,167      (9,518)
    -------------------------------------------------------------------------
      Pulp and Paper Group                                 2,411      (3,992)
    -------------------------------------------------------------------------
      Water Treatment Group                                5,492         697
    -------------------------------------------------------------------------
      Other                                                   23        (219)
                                                       ----------  ----------
    -------------------------------------------------------------------------
    Total                                                 11,093     (13,032)
    -------------------------------------------------------------------------
    Gross margin                                           3,393      (3,475)
    -------------------------------------------------------------------------
    EBITDA:
    -------------------------------------------------------------------------
      Process Group                                          845      (1,080)
    -------------------------------------------------------------------------
      Pulp and Paper Group                                   (97)     (1,454)
    -------------------------------------------------------------------------
      Water Treatment Group                                  685         336
    -------------------------------------------------------------------------
      Other                                                  (15)         86
                                                       ----------  ----------
    -------------------------------------------------------------------------
    Total                                                  1,418      (2,112)
    -------------------------------------------------------------------------
    EBIT:
    -------------------------------------------------------------------------
      Process Group                                          764      (1,027)
    -------------------------------------------------------------------------
      Pulp and Paper Group                                  (135)     (1,413)
    -------------------------------------------------------------------------
      Water Treatment Group                                  458         113
    -------------------------------------------------------------------------
      Other                                                  (25)        192
                                                       ----------  ----------
    -------------------------------------------------------------------------
    Total                                                  1,062      (2,135)
    -------------------------------------------------------------------------
    Order backlog as at March 31, 2007                       n/a      11 871
    -------------------------------------------------------------------------


    While exchange rate fluctuations had a significant unfavourable impact on
results for the first quarter of fiscal 2007, this impact diminished in the
second quarter and was virtually nil in the third quarter. In the fourth
quarter, exchange rate fluctuations had a generally positive impact on the
Company's results.
    Thus, for fiscal 2007 as a whole, exchange rate fluctuations had a total
negative impact of 1.6% on revenues, 1.7% on the gross margin, 3.0% on EBITDA
and 3.8% on EBIT. For the fourth quarter of fiscal 2007, they had a positive
impact of 3.9% on revenues, 4.9% on the gross margin, 5.5% on EBITDA and 5.7%
on EBIT.

    Analysis of Consolidated and Segmented Operating Results for
    ------------------------------------------------------------
    the Fiscal Year Ended March 31, 2007
    ------------------------------------

    Consolidated and Segmented Revenues
    (in thousands of $)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                            2007        2006
    -------------------------------------------------------------------------

    Revenues:
    -------------------------------------------------------------------------
      Process Group                                      445,230     378,458
    -------------------------------------------------------------------------
      Pulp and Paper Group                               217,674     218,028
    -------------------------------------------------------------------------
      Water Treatment Group                              212,040     116,015
    -------------------------------------------------------------------------
      Other and eliminations                             (44,721)    (29,346)
                                                       ----------  ----------
    -------------------------------------------------------------------------
    Total                                                830,223     683,155
    -------------------------------------------------------------------------

    Revenue mix:
    -------------------------------------------------------------------------
      New equipment                                      553,585     436,306
    -------------------------------------------------------------------------
      Aftermarket                                        276,638     246,849
                                                       ----------  ----------
    -------------------------------------------------------------------------
    Total                                                830,223     683,155
    -------------------------------------------------------------------------


    During fiscal 2007, consolidated revenues grew by $147.1 million or 21.5%
over the previous year, despite a negative impact of $13.0 million of exchange
rate fluctuations that mainly affected the Process Group and the Pulp and
Paper Group. The acquisitions made in 2006 and 2007 generated the increase in
revenue.

    - The Process Group's revenues grew by $66.8 million or 17.6%
      ($76.3 million or 20.2% increase at constant exchange rates), due
      primarily to the addition of Krebs' revenues for the last four months
      of the year, coupled with organic growth of approximately 5.5% in Dorr-
      Oliver Eimco's revenues, driven by strong demand in most of its
      markets, especially ore processing.

    - The Pulp and Paper Group's revenues were relatively stable compared
      with 2006, but up 1.7% at constant exchange rates as a result of the
      year's acquisitions, especially those of KanEng, J&L Fiber and Huyck.
      Conversely, revenues from the sale of new equipment declined, due
      largely to the previous year's completion of a major new equipment
      contract in Russia.

    - The Water Treatment Group posted a substantial increase of
      $96.0 million or 82.8% in its annual revenues, owing mainly to the five
      acquisitions of the past two years which have provided it with new
      technologies subject to growing demand worldwide.

    On a consolidated basis, revenues from the execution of new equipment
contracts rose 26.9% to account for 66.7% of total revenues (compared with
63.9% the previous year), primarily due to the Water Treatment Group's
expansion through acquisitions and the Process Group's organic growth in the
new ore processing infrastructures segment. Aftermarket revenues accounted for
33.3% of consolidated revenues (versus 36.1% in 2006). Although representing a
lower percentage of total revenues, aftermarket revenues nevertheless grew by
12.1% as a result of the Pulp and Paper Group's solid North American
performance due to its recent acquisitions and organic growth, as well as the
addition of Krebs which benefits from a significant aftermarket business.

    The geographic breakdown of GL&V's revenues for fiscal 2007 was as
follows:

    - 35% of revenues were derived from customers located in the United
      States (36% in 2006);
    - 21% in Europe and Russia (15% in 2006);
    - 19% in China, India and the Asia-Pacific region (19% in 2006);
    - 11% in Latin America (14% in 2006);
    - 9% in Canada (9% in 2006); and
    - the balance in Africa and the Middle East.

    These figures show that the Company's European business posted significant
grow as a result, in particular, of the Water Treatment Group's and the Pulp
and Paper Group's recent acquisitions. These transactions not only provided
these groups with a more influential presence in the European market, but also
allowed them to achieve breakthroughs elsewhere worldwide given their broader
portfolio of technologies and recognized trademarks, and their access to
GL&V's outsourcing networks. Through its various groups, the Company generally
enjoys a relatively well-balanced presence in all major industrial regions
worldwide.

    Consolidated Gross Margin and Normalized EBITDA
    (in thousands of $, except percentages)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                            2007        2006
    -------------------------------------------------------------------------

    Gross margin                                         203,422     165,102
    -------------------------------------------------------------------------
    As a % of revenues                                      24.5%       24.2%
    -------------------------------------------------------------------------

    Operating expenses                                   132,394     107,469
    -------------------------------------------------------------------------
    As a % of revenues                                      15.9%       15.7%
    -------------------------------------------------------------------------

    Normalized EBITDA                                     69,091      57,461
    -------------------------------------------------------------------------
    As a % of revenues                                       8.3%       8.4%
    -------------------------------------------------------------------------


    The consolidated gross margin grew by $38.3 million or 23.2%. It also
improved as a percentage of revenues, from 24.2% in 2006 to 24.5% in 2007.
This improvement was achieved despite a negative impact of $3.5 million
attributable to currency fluctuations and despite the relatively less
important proportion in the revenue mix of aftermarket-related products and
services, which carry a higher gross margin than new equipment projects. The
improvement in the gross margin is particularly attributable to the Water
Treatment Group's increased revenues. The other groups either maintained or
slightly improved their gross profit margins as a result of the development of
outsourcing networks and the strengthening of quality programs throughout the
Company.
    Operating expenses grew by $24.9 million or 23.2%. As a percentage of
revenues, they increased from 15.7% in fiscal 2006 to 15.9% in 2007. The
several acquisitions of the past two years raised selling expenses by
$14.5 million. As for administrative expenses, they increased by $10.4 million
partly due to the acquisitions, and partly to higher head office expenses
mainly related to the Company's wages (including certain non-recurring
expenses, of which those incurred on the retirement of a senior officer) and
stock-based compensation expense.
    Consolidated normalized EBITDA for fiscal 2007 therefore grew by
$11.6 million or 20.2% over the previous year.
    During fiscal 2007, GL&V realized a $1.5 million gain on the disposal of
non-strategic commercial activities associated with a previous acquisition of
the Pulp and Paper Group. During fiscal 2006, the Company had realized a
$1.4 million gain on the Process Group's sale of a property and, conversely,
recognized a $1.2 million impairment loss on a property held for sale by the
Pulp and Paper Group. Excluding these non-recurring items as well as gains and
losses on disposal of property, plant, equipment and various other assets for
the two comparative periods, normalized EBITDA grew by $11.6 million or 20.2%
in fiscal 2007 over the previous year. The normalized EBITDA margin as a
percentage of revenues declined from 8.4% in 2006 to 8.3% in 2007, largely due
to a unfavourable impact of close to $2.1 million attributable to currency
fluctuations, as well as to the increase in operating expenses as a percentage
of revenues.

    Segmented EBITDA and Normalized EBITDA
    (in thousands of $)

                                Fiscal Year Ended March 31, 2007
                   ----------------------------------------------------------

                                Pulp and       Water      Others
                     Process       Paper   Treatment     and eli-
                       Group       Group       Group    mination       Total
                   ----------  ----------  ----------  ----------  ----------
    Segmented
     EBITDA:
    Earnings before
     financial
     expenses and
     income taxes
     (EBIT)           52,284      14,185       8,827     (19,807)     55,489
    Amortization       6,238       2,771       4,397       2,133      15,539
                   ----------  ----------  ----------  ----------  ----------
    Earnings before
     amortization,
     financial
     expenses and
     income
     taxes (EBITDA)   58,522      16,956      13,224     (17,674)     71,028
    Gain on disposal
     of commercial
     activities            -      (1,486)          -           -      (1,486)
    Gain on disposal
     of property,
     plant and
     equipment and
     other assets        (82)       (255)       (136)         22        (451)
    Impairment of
     property, plant
     and equipment         -           -           -           -           -
                   ----------  ----------  ----------  ----------  ----------
    Normalized
     earnings before
     amortization,
     financial
     expenses and
     income taxes
     (normalized
     EBITDA)          58,440      15,215      13,088     (17,652)     69,091
                   ----------------------------------------------------------
                   ----------------------------------------------------------


                                Fiscal Year Ended March 31, 2006
                   ----------------------------------------------------------

                                Pulp and       Water      Others
                     Process       Paper   Treatment     and eli-
                       Group       Group       Group    mination       Total
                   ----------  ----------  ----------  ----------  ----------
    Segmented
     EBITDA:
    Earnings before
     financial
     expenses and
     income taxes
     (EBIT)           48,819      13,842       4,955     (17,924)     49,692
    Amortization       3,179       2,302         521       1,939       7,941
                   ----------  ----------  ----------  ----------  ----------
    Earnings before
     amortization,
     financial
     expenses and
     income
     taxes (EBITDA)   51,998      16,144       5,476     (15,985)     57,633
    Gain on disposal
     of commercial
     activities            -           -           -           -           -
    Gain on disposal
     of property,
     plant and
     equipment and
     other assets     (1,324)         16         (58)          -      (1,366)
    Impairment of
     property, plant
     and equipment         -       1,194           -           -       1,194
                   ----------  ----------  ----------  ----------  ----------
    Normalized
     earnings before
     amortization,
     financial
     expenses and
     income taxes
     (normalized
      EBITDA)         50,674      17,354       5,418     (15,985)     57,461
                   ----------------------------------------------------------
                   ----------------------------------------------------------


    On a segmented basis, the trend in the various groups' normalized EBITDA
    (excluding non-recurring items for both years) was as follows:

    - The Process Group's normalized EBITDA grew by $7.8 million or 15.3%,
      while its normalized EBITDA margin as a percentage of sales decreased
      from 13.4% in fiscal 2006 to 13.1% in 2007. Besides the unfavourable
      impact of currency fluctuations, this decline is attributable to the
      addition of Krebs which currently yields a lower profit margin than
      Dorr-Oliver Eimco.

    - The Pulp and Paper Group's normalized EBITDA decreased by $2.1 million
      or 12.3% from fiscal 2006, while its normalized profit margin therefore
      decreased from 8.0% to 7.0%. These declines are due largely to currency
      fluctuations which had an unfavourable impact of close to $1.4 million
      on this group's EBITDA. They are also attributable to the additional
      costs incurred by the Pulp and Paper Group to set up its new technology
      centre in Karlstad during the fourth quarter.

    - The Water Treatment Group's normalized EBITDA more than doubled,
      posting a $7.7 million increase. This group's normalized EBITDA margin
      hence rose from 4.7% in 2006 to 6.2% in 2007, despite the unfavourable
      circumstances that affected it in the third quarter due to the addition
      of Copa's expenses and to cost increases resulting from delays between
      the booking date and the delivery date of some municipal wastewater
      treatment contracts. This situation and the group's overall
      profitability improved in the fourth quarter attributable to Brackett
      Green's, Enviroquip's and Copa's growing contribution, as well as the
      recognition of revenues from the major contract in the Middle East. It
      should also be noted that in the fourth quarter, the Company undertook
      to restructure part of the Water Treatment Group's business resulting
      from its acquisitions, which should yield savings in the coming months.

    - Finally, net expenses before amortization related to corporate
      activities and GL&V Manufacturing increased by $1.9 million or 10.4%.
      This rise can be partly explained by the costs related to stock options
      granted to officers in November and December 2006. It is also partly
      attributable to the addition of new resources and certain non-recurring
      wage-related expenses, as well as the expenses incurred by GL&V to
      comply with the new regulatory control requirements of Securities
      Commissions, to strengthen its quality assurance process in order to
      shortly obtain the ISO certification for all its units, and to
      gradually implement an internal audit function. Moreover, it should be
      noted that GL&V Manufacturing has been affected for several quarters by
      deteriorating market conditions for its external customers, especially
      Canadian pulp and paper manufacturers. However, the Company expects its
      contribution to improve following a reorganization of its operations,
      as well as the recent booking of a major contract by the Pulp and Paper
      Group, part of the production of which will be outsourced to GL&V
      Manufacturing.

    Segmented and Consolidated Normalized EBIT
    (in thousands of $, except percentage)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                            2007        2006
    -------------------------------------------------------------------------

    EBITDA                                                71,028      57,633
    -------------------------------------------------------------------------
    Less amortization:
    -------------------------------------------------------------------------
     Process Group                                         6,238       3,179
    -------------------------------------------------------------------------
     Pulp and Paper Group                                  2,771       2,302
    -------------------------------------------------------------------------
     Water Treatment Group                                 4,397         521
    -------------------------------------------------------------------------
     Other                                                 2,133       1,939
                                                         --------    --------
    -------------------------------------------------------------------------
    Total                                                 15,539       7,941
    -------------------------------------------------------------------------

    Normalized EBIT                                       53,552      49,520
    -------------------------------------------------------------------------
    As a % of revenues                                       6.5%        7.2%
    -------------------------------------------------------------------------

    Segmented normalized EBIT:
    -------------------------------------------------------------------------
      Process Group                                       52,202      47,495
    -------------------------------------------------------------------------
      Pulp and Paper Group                                12,444      15,052
    -------------------------------------------------------------------------
      Water Treatment Group                                8,691       4,897
    -------------------------------------------------------------------------
      Other and eliminations                             (19,785)    (17,924)
    -------------------------------------------------------------------------
    Total                                                 53,552      49,520
    -------------------------------------------------------------------------


    During fiscal 2007, amortization expenses were up by $7.6 million or 95.7%
over 2006. As explained in the section titled "Reassessment of Goodwill and
Intangible Assets Associated with GL&V's Latest Acquisitions", this growth is
attributable to the increased value of intangible assets, particularly
technologies, trademarks and customer relations resulting from the
acquisitions of the last fiscal year. During fiscal 2007, the increase in
amortization arising from the breakdown of the purchase price allocation
related to the acquired companies primarily affected the Water Treatment Group
and the Process Group.
    Considering the increase in amortization, consolidated normalized EBIT
grew by $4.0 million or 8.1%, whereas the normalized EBIT margin as a
percentage of revenues decreased from 7.2% in 2006 to 6.5% in 2007. Besides
the increase in depreciation and amortization, this decline is due partly to
the negative impact of approximately $2.1 million attributable to currency
fluctuations.

    - The Process Group's normalized EBIT grew by $4.7 million or 9.9%,
      whereas its normalized EBIT margin stood at 11.7% in 2007, compared
      with 12.5% in 2006. This decline can mainly be explained by the
      increased amortization related to Krebs' intangible assets, along with
      currency fluctuations.

    - The Pulp and Paper Group's normalized EBIT was down by $2.6 million or
      17.3% from fiscal 2006, while its normalized EBIT margin declined from
      6.9% to 5.7%, due largely to currency fluctuations.

    - The Water Treatment Group's normalized EBIT grew by $3.8 million or
      77.5%, whereas its normalized EBIT margin decreased from 4.2% to 4.1%.

    - Net expenses related to corporate activities and GL&V Manufacturing
      increased by $1.9 million or 10.4%, due to the aforementioned factors.

    Earnings Before Income Taxes
    (in thousands of $, except percentages)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                            2007        2006
    -------------------------------------------------------------------------

    EBIT                                                  55,489      49,692
    -------------------------------------------------------------------------
    Financial expenses                                     5,874       4,647
    -------------------------------------------------------------------------
    Non-recurring financial costs(1)                           -       2,159
                                                         --------    --------
    -------------------------------------------------------------------------

    EBT                                                   49,615      42,886
    -------------------------------------------------------------------------
    Normalized EBT(2):                                    48,129      45,045
    -------------------------------------------------------------------------
    As a % of revenues                                       5.8%        6.6%
    -------------------------------------------------------------------------
    (1) In 2006, the Company wrote off deferred financing costs of
        $2.2 million as part of a refinancing agreement.
    (2) Excluding the gain on disposal of commercial activities in 2007 and
        the write-off of deferred financing costs in 2006.


    Excluding the write-off of deferred financing costs for fiscal 2006,
financial expenses increased by $1.2 million or 26.4%. Interest on long-term
debt rose by $4.2 million due to the financing of the year's acquisitions,
especially those of Enviroquip, Copa and Krebs, while other financial expenses
decreased by $3.0 million. These decreases are explained by realized and
unrealized gains on forward exchange contracts, which are recognized at their
fair value, and a higher interest income from available cash. (For further
information, the reader is referred to note 2 of the condensed notes appended
to the press release.)
    Excluding the write-off of deferred financing costs for fiscal 2006 and
the gain on disposal of commercial activities for 2007, earnings before income
taxes, or normalized EBT, grew by $3.1 million or 6.8%, whereas the normalized
EBT margin decreased from 6.6% in 2006 to 5.8% in 2007.

    Net Earnings and Earnings Per Share
    (in thousands of $, except per-share amounts and percentages)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                           2007        2006
    -------------------------------------------------------------------------

    EBT                                                   49,615      42,886
    -------------------------------------------------------------------------
    Income taxes                                          10,367       6,928
    -------------------------------------------------------------------------
    Effective tax rate                                      20.9%       16.2%
                                                         --------    --------
    -------------------------------------------------------------------------

    Net earnings                                          39,248      35,958
    -------------------------------------------------------------------------
    - basic per share                                       1.61        1.50
    -------------------------------------------------------------------------
    - diluted per share                                     1.57        1.45
    -------------------------------------------------------------------------

    Normalized net earnings (1)                           38,089      37,797
    -------------------------------------------------------------------------
    - basic per share                                       1.56        1.57
    -------------------------------------------------------------------------
    - diluted per share                                     1.53        1.52
    -------------------------------------------------------------------------
    As a % of revenues                                       4.6%        5.5%
    -------------------------------------------------------------------------

    Weighted average number of shares outstanding (in thousands)
    - basic                                               24,436      24,041
    - diluted                                             24,926      24,862
    -------------------------------------------------------------------------
    (1) Before the gain on disposal of commercial activities in 2007 and the
        write-off of deferred financing costs in 2006, net of related income
        taxes


    Consistent with management's expectations, the effective tax rate
increased in fiscal 2007 due primarily to the profit growth achieved by most
of the Company's business units over the past year, including in jurisdictions
where tax rates are relatively high.
    GL&V closed fiscal 2007 with net earnings of $39.2 million or $1.61 per
share ($1.57 diluted), up from $36.0 million or $1.50 per share ($1.45
diluted) the previous year. Excluding the gain on the disposal of commercial
activities in 2007 and the write-off of deferred financing costs in 2006, net
of related income taxes, normalized net earnings increase by $0.3 million or
0.8%, from $37.8 million or $1.57 per share ($1.52 diluted) in 2006 to
$38.1 million or $1.56 per share ($1.53 diluted) in 2007. The normalized net
earnings margin as a percentage of sales thus went from 5.5% in 2006 to 4.6%
in 2007.
    These figures are consistent with management's expectations considering
the expansion through acquisitions achieved in 2006 and 2007, which notably
entailed a significant increase in the Company's interest expense as well as
the amortization of intangible assets.
    The slight increase in the weighted average number of shares outstanding
reflects the previous year's exercise of stock options held by officers and
directors.

    Selected Financial Information for the Past Eight Quarters (Unaudited)

    (in thousands of $, except per-share amounts)

    -------------------------------------------------------------------------
    Fiscal Year Ended              First      Second       Third      Fourth
     March 31, 2007              Quarter     Quarter     Quarter     Quarter
    -------------------------------------------------------------------------

    Revenues                     160,825     169,777     217,611     282,010
    EBITDA                        12,302      14,692      18,137      25,899
    Normalized EBITDA             11,987      14,644      16,630      25,832
    EBIT                          10,236      12,421      14,348      18,485
    Normalized EBIT                9,921      12,373      12,841      18,418
    Net earnings                  11,560(1)    4,908(1)   10,625      12,155
      - basic per share             0.47(1)     0.20(1)     0.43        0.50
      - diluted per share           0.46(1)     0.20(1)     0.42        0.49
    Normalized net earnings        8,317       8,151       9,466      12,155
      - basic per share             0.34        0.33        0.39        0.50
      - diluted per share           0.33        0.33        0.38        0.49

    -------------------------------------------------------------------------
    Fiscal Year Ended
     March 31, 2006
    -------------------------------------------------------------------------

    Revenues                     159,433     179,156     169,301     175,265
    EBITDA                        10,668      16,338      14,247      16,380
    Normalized EBITDA             10,624      16,317      14,270      16,250
    EBIT                           8,755      14,436      12,194      14,307
    Normalized EBIT                8,711      14,415      12,217      14,177
    Write-off of deferred
    financing costs                    -       2,159           -           -
    Net earnings                   6,089       9,312       9,193      11,364
      - basic per share             0.25        0.39        0.38        0.47
      - diluted per share           0.25        0.38        0.37        0.45
    Normalized net earnings        6,089      11,151       9,193      11,364
      - basic per share             0.25        0.46        0.38        0.47
      - diluted per share           0.25        0.45        0.37        0.45
    -------------------------------------------------------------------------
    (1) At the beginning of fiscal 2007, the Company contracted zero-cost
        collar contracts. As these derivative financial instruments did not
        meet the required criteria for hedge accounting purposes, such
        contracts had to be recognized at fair value as at June 30, 2006,
        producing an unrealized gain of $4.2 million in first-quarter
        results. At the beginning of the second quarter, the Company sold all
        the zero-cost tunnel contracts it held. The sale of these contracts
        led to the reversal of the unrealized gain recognized in the first
        quarter, translating into an unrealized loss of $4.2 million in the
        second quarter. The Company does not have any other zero-cost tunnel
        contracts as of this date. As this situation is not likely to
        reoccur, the financial impact of this transaction was excluded from
        the calculation of normalized net earnings for the first and second
        quarters of fiscal 2007, whereas this impact was cancelled in year-
        to-date results for the first six months of fiscal 2007 and fiscal
        2007 as a whole.


    Analysis of Consolidated and Segmented Operating Results for the
    ----------------------------------------------------------------
    Fourth Quarter Ended March 31, 2007
    -----------------------------------

    The following section provides a detailed analysis of GL&V's operating
results for the fourth quarter of fiscal 2007 in comparison with the same
quarter in 2006. The analysis of previous quarters is provided in the interim
reports for fiscal 2007, available on SEDAR (www.sedar.com) or on the
Company's website (www.glv.com). It should be noted that GL&V's revenues are
influenced by the volume of its order backlog, which is exposed to operating
risks and the global external business context, which has a negative or
positive impact on orders, as well as order postponement, cancellation and
execution schedule. Accordingly, the Company's quarterly results are subject
to such fluctuations in its order backlog and execution schedule.

    Selected Consolidated Quarterly Information (Unaudited)
    (in thousands of $, except per-share amounts and percentages)

    -------------------------------------------------------------------------
                                                                4th Quarters
                                                              Ended March 31
                                                            2007        2006
    -------------------------------------------------------------------------
    Revenues:
      Process Group                                      157,484     102,012
      Pulp and Paper Group                                63,150      50,298
      Water Treatment Group                               81,781      34,859
      Other and eliminations                             (20,405)    (11,904)
                                                         --------------------
    Total                                                282,010     175,265
    -------------------------------------------------------------------------

    EBITDA                                                25,899      16,380
    -------------------------------------------------------------------------

    Normalized EBITDA:
      Process Group                                       18,528      15,508
      Pulp and Paper Group                                 5,460       4,048
      Water Treatment Group                                7,388       1,629
      Other and eliminations(2)                           (5,544)     (4,935)
                                                         --------------------
    Total                                                 25,832      16,250
    As a % of revenues                                       9.2%        9.3%
    -------------------------------------------------------------------------

    EBIT                                                  18,485      14,307
    -------------------------------------------------------------------------

    Normalized EBIT:
      Process Group                                       15,125      14,797
      Pulp and Paper Group                                 4,594       3,481
      Water Treatment Group                                4,870       1,360
      Other and eliminations                              (6,171)     (5,461)
                                                         --------------------
    Total                                                 18,418      14,177
    As a % of revenues                                       6.5%        8.1%
    -------------------------------------------------------------------------

    Net earnings                                          12,155      11,364
    - basic per share                                       0.50        0.47
    - diluted per share                                     0.49        0.45
    -------------------------------------------------------------------------

    Normalized net earnings                               12,155      11,364
    - basic per share                                       0.50        0.47
    - diluted per share                                     0.49        0.45
    -------------------------------------------------------------------------

    Weighted average number of shares
      outstanding (in thousands)
    - basic                                               24,438      24,182
    - diluted                                             24,967      25,076
    -------------------------------------------------------------------------
    Cash dividends paid                                        -           -
    -------------------------------------------------------------------------


    GL&V's consolidated revenues for the fourth quarter of 2007 grew by $106.7
million or 60.9% over the same period a year earlier. All the groups
contributed to this growth:

    - The Process Group accounted for close to half of the increase, raising
      its fourth-quarter revenues by $55.5 million or 54.4%. This performance
      is attributable to Krebs' contribution of approximately $34.8 million
      for the full three-month period, combined with Dorr-Oliver Eimco's
      organic growth of more than 20%.

    - The Pulp and Paper Group's revenues improved by $12.9 million or 25.6%,
      due almost equally to new equipment sales and aftermarket revenues.
      This solid performance is mostly attributable to this group's recent
      acquisitions, including certain Kvaerner and Metso technologies in
      December 2006.

    - The Water Treatment Group fourth-quarter revenues grew by $46.9 million
      or 134.6%, owing primarily to the acquisition of Copa and Enviroquip
      during fiscal 2007 as well as to the revenue recognition from an
      important contract in the Middle East. Consistent with management's
      expectations, Copa and Enviroquip's contribution to the group's results
      is growing. Excluding the acquisitions, revenues recorded by the Water
      Treatment Group's existing business posted organic growth of more than
      46%, including the recognition of revenues from a major contract in the
      Middle East.

    - Finally, the increase in fourth-quarter consolidated revenues was
      partly driven by a positive impact of $11.1 million attributable to
      currency fluctuations, approximately half of which in favour of the
      Water Treatment Group.

    On a consolidated basis, GL&V's revenues from the execution of new
equipment contracts rose 76.6% as a result of the Water Treatment Group's
acquisitions, the Process Group's organic growth in the new ore processing
infrastructures segment, and the Pulp and Paper Group's booking of large-scale
orders in certain emerging countries. On the other hand, the addition of
Krebs' business and the growth in the Pulp and Paper Group's aftermarket
revenues contributed to raise GL&V's revenues from this segment by 33.5%.
Consequently, 69.8% of consolidated revenues for the fourth quarter of 2007
were derived from new equipment sales (versus 63.6% in 2006) and 30.2% came
from the sale of spare parts and other aftermarket services (36.4% in 2006).
    The quarterly consolidated gross margin expressed in dollars grew by $24.8
million or 55.2% due to the revenue growth. However, the gross margin as a
percentage of revenues decreased from 25.6% in the fourth quarter of 2006 to
24.7% this year, despite a positive contribution of $3.4 million attributable
to currency fluctuations. This slight decline is due to a decrease in the
Process Group's gross margin. The Water Treatment Group increased its gross
margin, while the Pulp and Paper Group's gross margin posted a slight
improvement.
    GL&V's operating expenses increased by $15.3 million or 53.5% due mainly
to the acquisitions of the past twelve months, in particular those of Copa,
Krebs and Enviroquip. Expressed as a percentage of revenues, however,
operating expenses decreased from 16.3% in 2006 to 15.5% in 2007.
    In the fourth quarter of 2007, GL&V realized immaterial non-recurring
gains on the disposal property, plant and equipment. Excluding one-time gains
for the two reporting periods, fourth-quarter normalized EBITDA grew by
$9.6 million or 59.0%, $1.4 million of this increase is attributable to
currency fluctuations. The normalized EBITDA margin as a percentage of
revenues declined from 9.3% in 2006 to 9.2% in 2007, due mainly to the
reduction in the Process Group's EBITDA following the addition of Krebs, which
currently yields a lower profit margin than Dorr-Oliver Eimco.

    - The Process Group's normalized EBITDA increased by $3.0 million or
      19.5% as a result of the Krebs acquisition, Dorr-Oliver Eimco's solid
      performance and the favourable impact of currency fluctuations.
      However, the addition of Krebs lowered its normalized EBITDA margin as
      a percentage of revenues from 15.2% in the fourth quarter of 2006 to
      11.8% in 2007.

    - The Pulp and Paper Group's normalized EBITDA grew by $1.4 million or
      34.9%, while its normalized EBITDA margin rose from 8.0% to 8.6%,
      despite the costs incurred to set up the new technology centre in
      Karlstad and despite a slight negative impact of exchange rates. This
      improvement is attributable to its revenue growth, the integration of
      the acquisitions made in the first half of the fiscal year,
      specifically those of KanEng, J&L Fiber and Huyck, as well as the
      initial benefits from the optimization of its international sales,
      engineering and outsourcing networks.

    - The Water Treatment Group's normalized EBITDA improved by $5.8 million
      or 353.5% over the same quarter the previous year, whereas its
      normalized EBITDA margin as percentage of revenues rose from 4.7% in
      2006 to 9.0% in 2007. Besides the revenue growth, this improvement is
      attributable to Brackett Green's, Enviroquip's and Copa's growing
      contribution, as well as the major contract in the Middle East.

    - Finally, net expenses related to corporate activities and GL&V
      Manufacturing increased by $0.6 million or 12.3% for the aforementioned
      reasons.

    As a result of the aforementioned factors, especially the increase in
intangible assets, amortization expenses more than tripled, posting an
aggregate increase of $5.3 million, of which $2.7 million for the Process
Group, $2.2 million for the Water Treatment Group and $0.3 million for the
Pulp and Paper Group.
    Consequently, GL&V's fourth-quarter normalized EBIT grew by $4.2 million
or 30.0%. Some $1.1 million of this growth is attributable to currency
fluctuations. The normalized EBIT margin as a percentage of revenues decreased
to 6.5%, compared to 8.1% in the same quarter the previous year.

    - The Process Group's normalized EBIT grew by $0.3 million or 2.2%, while
      its normalized EBIT margin declined from 14.5% in 2006 to 9.6% in
      2007 as a result of the addition of Krebs, including the increase in
      amortization expense.

    - The Pulp and Paper Group's normalized EBIT improved by $1.1 million or
      32.0%, whereas its normalized EBIT margin rose from 6.9% to 7.3%.

    - The Water Treatment Group recorded a $3.5 million or 258.1% growth in
      its normalized EBIT, due to the aforementioned factors and the positive
      impact of currency fluctuations. Its normalized EBIT margin as a
      percentage of revenues increased from 3.9% to 6.0%.

    GL&V posted a total increase of $3.2 million in its financial expenses in
the fourth quarter of 2007. The rise of $2.6 million in interest on long-term
debt and of $0.6 million of the other financial expense. The increase in other
financial expenses was partly offset by unrealized gains on forward exchange
contracts and exchange rate gains.
    The effective tax rate stood at 18.2% in the fourth quarter of fiscal
2007, versus 18.0% in the same period in 2006, due to the different geographic
breakdown of the Company's revenues.
    Thus, GL&V closed the fourth quarter of fiscal 2007 with net earnings
(effective and normalized) of $12.1 million or $0.50 per share ($0.49
diluted), up by $0.8 million or 7.0% from net earnings (real and normalized)
of $11.4 million or $0.47 per share ($0.45 diluted) for the same period a year
earlier.
    As stated previously, GL&V's recent results are consistent with
management's expectations considering the Company's significant expansion
through acquisitions in the past quarters. They also reflect an improved
profitability for several business units, especially within the Pulp and Paper
Group and the Water Treatment Group.

    FINANCIAL POSITION

    Analysis of Principal Cash Flows for the Fiscal Year Ended
    ----------------------------------------------------------
    March 31, 2007
    --------------

    Summary Cash Flows

    (in thousands of $)

    -------------------------------------------------------------------------
    Fiscal Years Ended March 31,                            2007        2006
    -------------------------------------------------------------------------

    Operating activities:
      Net earnings                                        39,248      35,958
    -------------------------------------------------------------------------
      Non-cash net earnings items                         13,141       6,415
    -------------------------------------------------------------------------
      Net change in operating assets and liabilities     (42,688)     10,618
                                                         --------    --------
    -------------------------------------------------------------------------
    Total                                                  9,701      52,991
    -------------------------------------------------------------------------

    Financing activities                                 141,252     (20,915)
    -------------------------------------------------------------------------

    Investing activities                                (155,510)    (28,944)
    -------------------------------------------------------------------------

    Impact of exchange rate fluctuations on cash
     and cash equivalents                                  1,362      (3,493)
    -------------------------------------------------------------------------

    Net decrease in cash and cash equivalents             (3,195)       (361)
    -------------------------------------------------------------------------

    Cash and cash equivalents at year-end                 28,776      31,971
    -------------------------------------------------------------------------


    Cash flows from operating activities (before net change in operating
assets and liabilities) totalled $52.4 million, up from $42.4 million in 2006,
due primarily to an increase in non-cash net earnings items, including
amortization and the change in future income taxes. The unfavourable variation
in operating assets and liabilities between the two fiscal years mainly
reflects the status of work in progress, progress billings and the payment of
suppliers as at March 31, 2007, in comparison with March 31, 2006. It should
be noted that considering the magnitude of the contracts executed by GL&V's
various groups, funding requirements related to ongoing operations can vary
significantly from quarter to quarter, and even within a single quarter.
    Most of the cash flows used by investing activities reflect the total cash
cost of the period's business acquisitions, in particular that of Krebs, net
of proceeds from the disposal of commercial activities. (These transactions
are described in note 11 of the condensed notes appended to the press
release.) The Company also purchased property, plant and equipment in the
normal course of business during fiscal 2007, and increased its other assets.
    As for financing activities, the Company used its revolving credit
facility, along with the net cash flows provided by operating activities and
proceeds from the disposal of commercial activities, property, plant and
equipment, to finance its fiscal 2007 business acquisitions (including the
repayment of part of Krebs' and Copa's debt), the purchase of property, plant
and equipment and the increase in other assets consisting mainly of
capitalized development expenses. GL&V also used its revolving credit facility
to finance some of the normal course funding requirements resulting from its
organic business growth.
    After accounting for fiscal 2007 cash inflows and outflows and the impact
of exchange rate fluctuations, cash and cash equivalents decreased by
$3.2 million, from $32.0 million as at March 31, 2006 to $28.8 million at the
same date in 2007.

    Balance Sheet Analysis as at March 31, 2007
    -------------------------------------------

    Summary Balance Sheet

    (in thousands of $)

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

    As at March 31,                                         2007        2006

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

    Current assets                                       442,406     283,112
    -------------------------------------------------------------------------
    Long-term assets                                     254,540     100,399
                                                         --------    --------
    -------------------------------------------------------------------------
    Total                                                696,946     383,511
    -------------------------------------------------------------------------

    Current liabilities                                  243,741     170,823
    -------------------------------------------------------------------------
    Long-term liabilities                                250,950      55,272
    -------------------------------------------------------------------------
    Shareholders' equity                                 202,255     157,416
    -------------------------------------------------------------------------
    Total                                                696,946     383,511
    -------------------------------------------------------------------------


    Changes in GL&V's financial position between March 31, 2006 and 2007
reflect the following main items:

    - the period's business acquisitions and their financing by the Company's
      credit facility, which particularly increased long-term assets and
      liabilities;

    - the use of GL&V's credit facilities to finance some of the funding
      requirements associated with its organic business growth;

    - the status of work in progress, progress billings and the payment of
      suppliers as at March 31, 2007; and

    - the impact of currency fluctuations on the value of assets and
      liabilities.

    Tables showing changes in current balance sheet items and indebtedness,
along with comments, are presented below. The increase in long-term assets is
due primarily to the rise in the value of intangible assets and goodwill
(which is described in notes 4 and 5 of the condensed notes appended to the
press release) as a result of the business acquisitions since November 2005.
To a lesser extent, it can be explained by the higher value of property, plant
and equipment attributable partly to the acquisitions, combined with the
year's purchases (less disposals of property, plant and equipment and the
year's amortization). The business acquisitions and their financing by the
Company's revolving credit facilities account for most of the increase in
long-term liabilities. For its part, the 28.5% growth in shareholders' equity
over the end of fiscal 2006 is due to the year's net earnings.

    Changes in Current Balance Sheet Items

    (in thousands of $, except ratio)

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

    As at March 31,                                         2007        2006

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

    Current assets:
    -------------------------------------------------------------------------
      Cash, cash equivalents and temporary investments    29,853      32,788
    -------------------------------------------------------------------------
      Accounts receivable                                238,275     144,975
    -------------------------------------------------------------------------
      Inventories                                         68,128      39,941
    -------------------------------------------------------------------------
      Contracts in progress (less progress billings)      83,695      50,775
    -------------------------------------------------------------------------
      Prepaid expenses and future income tax assets       22,455      14,633
                                                         --------    --------
    -------------------------------------------------------------------------
    Total                                                442,406     283,112
    -------------------------------------------------------------------------

    Current liabilities:
    -------------------------------------------------------------------------
      Accounts payable and accrued liabilities           237,908      162,533
    -------------------------------------------------------------------------
      Income taxes payable and future income tax
       liabilities                                         5,833        8,290
    -------------------------------------------------------------------------
    Total                                                243,741      170,823
    -------------------------------------------------------------------------

    Working capital                                      198,665      112,289
    -------------------------------------------------------------------------
    Current ratio                                         1.82:1       1.66:1
    -------------------------------------------------------------------------


    Working capital increased by $86.4 million or 76.9%, and the current ratio
also increased due primarily to the integration of the operating assets and
liabilities of the businesses acquired during the year, the changes in
operating assets and liabilities of the Company's existing activities in
connection with the execution of contracts, and the use of its revolving
credit facility for some of its ongoing operations.

    Principal changes in working capital items were as follows:

    - Contracts in progress (less progress billings) and accounts receivable
      posted a combined increase of $126.2 million or 64.5%, due mainly to
      the year's acquisitions and organic growth.

    - Accounts payable and accrued liabilities increased by $75.4 million or
      46.4%, also due to the year's acquisitions and organic growth.

    - Despite the Company's acquisitions and organic growth, inventories
      posted smaller growth of $28.2 million, reflecting its strategy of
      outsourcing most of its manufacturing operations to a network of
      subcontractors.

    Indebtedness

    (in thousands of $, except ratio)

    -------------------------------------------------------------------------
    As at March 31,                                         2007        2006
    -------------------------------------------------------------------------

    Total net debt:
    -------------------------------------------------------------------------
    Long-term debt                                       185,031      28,182
    -------------------------------------------------------------------------
    Less available short-term cash                        29,853      32,788
                                                         --------    --------
    -------------------------------------------------------------------------
    Total net debt (debt free cash)                      155,178      (4,606)
    -------------------------------------------------------------------------

    Net debt to invested capital ratio:
    -------------------------------------------------------------------------
    Invested capital:
    -------------------------------------------------------------------------
       Shareholders' equity                              202,255     157,416
    -------------------------------------------------------------------------
       Total net debt (debt free cash)                   155,178      (4,606)
                                                         --------    --------
    -------------------------------------------------------------------------
    Total                                                357,433     152,810
    -------------------------------------------------------------------------
    Net debt/capital ratio                                  43.4%        n/a
    -------------------------------------------------------------------------


    As detailed in note 7 of the condensed notes appended to the press
release, long-term debt increased substantially, due to the financing of the
year's acquisitions (including the assumption of some of Krebs' and Copa's
debt), and part of the operational requirements arising from the Company's
business growth (net of repayments of the revolving credit facility).
Consequently, the Company presented total net debt of $155.2 million as at
March 31, 2007, as opposed to a cash surplus over total debt as at March 31,
2006. The total net debt to invested capital ratio therefore stood at 43.4% at
the close of fiscal 2007.

    Available Sources of Financing

    (in thousands of $)

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

    As at March 31,                                         2007        2006

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

    Credit facilities:
    -------------------------------------------------------------------------
      Authorized                                         321,589     180,000
    -------------------------------------------------------------------------
      Outstanding loans                                 (185,031)    (28,182)
    -------------------------------------------------------------------------
      Letters of credit outstanding                      (72,747)    (24,580)
    -------------------------------------------------------------------------

    Unused credit                                         63,811     127,238
    -------------------------------------------------------------------------

    Cash, cash equivalents and temporary investments      29,853      32,788
    -------------------------------------------------------------------------
    Total                                                 93,664     160,026
    -------------------------------------------------------------------------


    As at March 31, 2007, GL&V had available unused credit facilities of $63.8
million, based on the effective exchange rate at that date, as well as
immediate available cash of $29.9 million.

    Information on the Company's Share Capital
    ------------------------------------------

    As at May 31, 2007, GL&V's share capital consisted of 2,607,359 Class B
multiple voting shares and 21,852,521 Class A subordinate voting shares, for a
total of 24,459,880 voting and participating shares outstanding.
    During fiscal 2007, 12,110 Class B shares were converted into an
equivalent number of Class A shares and 4,000 Class A shares were issued under
a stock option plan.
    A maximum of 2,811,679 Class A shares can be issued under stock option
plans for senior executives, management and directors. During fiscal 2007,
more specifically in the third quarter, 265,000 stock options were granted and
55,000 were cancelled. As at March 31, 2007, options for the purchase of
949,000 Class A subordinate voting shares had been granted, at a weighted
average exercise price of $11.38 per share.
    (For further information, the reader is referred to notes 9 and 10 of the
condensed notes appended to the press release.)

    Contractual Commitments

    In addition to the debts appearing in the balance sheet, the Company has
entered into operating leases for premises and equipment with total minimum
lease payments of approximately $28.7 million as at March 31, 2007, which
expire at various dates until 2015. The Company believes that its liquidity,
capital resources and cash flows from operations are sufficient to fund
planned capital expenditures, working capital requirements, pension
contributions, interest and principal payment obligations for the foreseeable
future.
    Minimum annual lease payments for the next five years and thereafter are
as follows:

    -------------------------------------------------------------------------
    Contractual Cash Obligation (in thousands of $)
                                                           2013 and
                                                              there-
                  2008     2009     2010     2011     2012    after    Total

    Long-term
    debt(1)          -        -        -        -  185,031        -  185,031


    Interest
    payment on
    long-term
    debt (2)    11,427   11,396   11,396   11,396    7,181        -   52,796

    Operating
    leases       7,818    5,834    4,589    3,440    2,419    4,596   28,696
               -------  -------  -------  -------  -------  ------- --------
                19,245   17,230   15,985   14,836  194 631    4 596  266 523

    (1) The reimbursement of long-term debt on the Company's credit
        facilties is schedule to be repaid at maturity although the amount
        may be reimbursed at the discretion of the Company with the
        possiblity to reuse the credit facilties until its maturity in
        November 2011.
    (2) The interest payment is calculated using the interest rate in effect
        on March 31, 2007 and the balance on March 31, 2007.
    -------------------------------------------------------------------------


    The Company is also committed under letters of credit and corporate
guarantees for the achievement of contracts, for an amount that totalled
$205.5 million as at March 31, 2007 ($106.7 million as at March 31, 2006),
including letters of credit and letters of credit guaranteed by EDC.

    Financial Instruments
    ---------------------

    Derivative Financial Instruments To reduce the risks related to currency
fluctuations, GL&V uses derivative financial instruments such as forward
exchange contracts. The Company does not hold or issue any derivative
financial instruments for speculative purposes. The derivative financial
instruments are subject to normal credit terms and conditions, financial
controls and management and risk monitoring procedures. In management's
opinion, none of the parties to the existing derivative financial instruments
are expected to default on their obligations since they are renowned financial
institutions. Forward exchange contracts are recorded at their fair value.

    Fair Value

    The fair values of financial liabilities are estimated based on discounted
cash flows using year-end market yields or the market value of similar
instruments having the same maturity. The fair values of derivative financial
instruments are estimated using year-end market rates, and reflect the amount
the Company would receive or pay if the instruments were closed out at those
dates. The carrying amount of cash and cash equivalents, temporary
investments, accounts receivable and accounts payable and accrued liabilities
approximates their fair value, as these items will be realized or paid within
one year.
    The carrying amount of the long-term debt of $185.0 million as at
March 31, 2007 ($28.2 million as at March 31, 2006) approximates its fair
value, as the debt bears interest at rates varying according to the market.
Forward exchange contracts are accounted for at a positive fair value of
$1.2 million (negative fair value of $0.2 million in 2006).

    Events Subsequent to Fiscal Year-End (Other Than Arrangement with
    -----------------------------------------------------------------
    FLSmidth)
    ---------

    In April 2007, the Pulp and Paper Group was awarded the largest contract
in its history: an order worth approximately $60 million for the design,
manufacture and turnkey installation of a complete pulp washing, oxygen
delignification and pulp bleaching system, based on the new Compact Press(TM)
wash press technology acquired in December 2006. This contract is part of a
large-scale project to expand a pulp mill in Portugal. The system, which is
planned for commissioning in September 2008, includes the supply of the
largest wash press in the industry. In addition, in May 2007, a major Chinese
company awarded the Pulp and Paper Group a contract worth a total of over
$20 million to install two pulp processing systems as part of the construction
of new mills: one in China and the other in Vietnam, consisting of
state-of-the-art equipment, including certain technologies recently acquired
by the Pulp and Paper Group. These systems will be delivered and installed by
May 2008.
    Being awarded such major contracts reinforces GL&V's position as a
world-class provider of state-of-the-art solutions for the pulp and paper
industry. Considering the size of the orders and the quality of the customers'
facilities, it will also provide the Pulp and Paper Group with an excellent
showcase in the eyes of the global pulp and paper industry, which could pave
the way for other significant market developments in the future. Finally,
these orders attest to the merits of GL&V's acquisition strategy, one of the
key objectives of which is to equip its groups with high-performance
technologies that will enable them to offer comprehensive value-added
solutions to customers, and thereby position themselves solidly for the long
term in their respective markets.

    Outlook

    Conclusion of Arrangement with FLSmidth
    ---------------------------------------

    The outlook of the Company and the main groups that comprise it depends on
the outcome of the Arrangement described in a previous section of this
Management's Report, pursuant to which GL&V will sell its Process Group to
FLSmidth & Co. and spin off to shareholders its Water Treatment and Pulp and
Paper Groups and its Manufacturing unit, through a new corporation that will
seek a listing on the stock exchange prior to the conclusion of the
Arrangement: GLV Inc. The Arrangement will be submitted to a vote by GL&V's
shareholders at a Special Meeting scheduled to be held around July 22, 2007 in
Montreal.
    Upon conclusion of the Arrangement, the Process Group will continue to
operate within FLSmidth, which will thereby become the world leader in process
solutions for the ore processing industry, whereas the Pulp and Paper Group,
the Water Treatment Group and the Manufacturing unit will continue to develop
within GLV Inc. under GL&V's current management team (excluding the Process
Group's officers and managers).
    Again upon conclusion of the Arrangement, GLV Inc. will inherit from a
solidly established worldwide business base with approximately
1,500 employees, and revenues of over $500 million. Its mission will be to
become a global leader in targeted industrial and municipal solutions, with a
special emphasis on the fast-growing environmental technology sector. GLV Inc.
will focus on profitable growth and the creation of long-term shareholder
value and to that end, will replicate the business model and strategies that
have proven successful over the last three decades including: targeted
expansion through the acquisition and efficient integration of complementary
businesses, enhancing its technology portfolio to provide customers with
complete high-performance solutions, building its aftermarket business and
maintaining an optimal cost structure, notably through efficient outsourcing.
Finally, consistent with the business model they have developed and promoted
over the years, senior officers will continue to proactively manage the new
corporation's business risks by further diversifying its expertise,
technological portfolio and markets segments, developing its aftermarket
operations, and maintaining rigorous risk management and corporate governance
practices.

    Segmented Outlook
    -----------------

    Order Backlogs
    (in thousands of $)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       March    December   September        June       March
                     31 2007     31 2006     30 2006     30 2006     31 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Process Group    328,153     329,005     201,800     178,134     162,111
    Pulp and Paper
     Group            95,552      93,934      75,886      75,462      75,293
    Water Treatment
     Group           169,140     174,384     131,862     114,891      82,194
    Other and
     eliminations(1) (32,233)    (26,167)    (10,707)     (2,130)     (8,095)
    -------------------------------------------------------------------------
    Total            560,612     571,156     398,841     366,357     311,503
    -------------------------------------------------------------------------
    (1) Including GL&V Manufacturing's order backlog


    As at March 31, 2007, GL&V's order backlog amounted to $560.6 million,
down slightly from December 31, 2006, but up by $249.1 million or 80.0% over
the previous year. This increase is due primarily to the numerous acquisitions
of fiscal 2007 which, coupled with organic growth, contributed to more than
double the Process Group's and the Water Treatment Group's orders and to
increase the Pulp and Paper Group's backlog by 26.9%. It should be noted that
the Pulp and Paper Group's backlog as at March 31, 2007 does not include the
two major contracts totalling over $80 million that it was awarded a few weeks
subsequent to fiscal 2007 year-end.
    As at March 31, 2007, the Process Group's order backlog reached
$328.2 million, reflecting a $166.0 million increase over the same date in
2006. Of this increase, $63 million comes from the addition of Krebs and
$103 million from Dorr-Oliver Eimco's organic growth, due to the favourable
conditions that continue to prevail in the commodities markets and industrial
sectors where its products are most in demand. This group, which is intended
to be transferred to FLSmidth pursuant to the Arrangement, primarily serves
the metal and mineral processing, energy, pulp and paper, food processing,
chemicals and petrochemicals industries.
    As at March 31, 2007, the Pulp and Paper Group's order backlog stood at a
record high of $95.6 million, excluding the two contracts totalling
$80 million booked in April and May 2007. This group's order backlog was
therefore up by $20.3 million or 26.9% over the previous year, due primarily
to the aftermarket, but also to orders for new equipment. The growth in the
Pulp and Paper Group's order backlog, which was particularly strong in North
America and Europe, largely came from the acquisitions of the last fiscal
year.
    The past two years have been very constructive for the Pulp and Paper
Group, as it has taken initiatives that have enhanced its positioning and
started to have a positive impact on its operating results. For instance, the
acquisition of Perplas, KanEng, J&L Fiber and Huyck, coupled with its internal
development efforts, broadened its portfolio of aftermarket products and
services, whereas the December 2006 purchase of certain Kvaerner and Metso
technologies provided it with the know-how to offer comprehensive value-added
pulp processing solutions adapted to new market trends worldwide. This group
has also achieved significant progress in recent quarters in developing and
optimizing its international outsourcing organization, which should contribute
to raise its future profitability. The Pulp and Paper Group's principal
objectives and challenges in upcoming quarters will be to integrate and
optimize its new technology centre in Karlstad (Sweden), and to continue
improving its operating profitability by lowering its operating costs,
standardizing and further strengthening its project management practices, and
optimizing its outsourcing networks.
    As at March 31, 2007, the Water Treatment Group's order backlog reached
$169.1 million, up by $86.9 million or close to 106% over the previous year.
This growth was particularly strong in North America, Europe and Asia, and is
attributable primarily to the five acquisitions of the last two fiscal years
(Jones & Attwood, Brackett Green, certain Metso technologies, Enviroquip and
Copa). The group thereby gained new technologies for which the demand is
growing. Operations derived from more conventional technologies are posting
slower growth, which attests to the relevance of this group's strategy of
acquiring companies with newer technologies.
    In the past months, this group has also improved its profitability,
although significant efforts are still required in this regard. After two
years of strong expansion through acquisitions, fiscal 2008 will be a
transition phase during which the Water Treatment Group's objectives will be
to complete the integration of the cultures and operations resulting from its
latest acquisitions and to reinforce its operational and financial management.
To that end, GL&V recently restructured the Water Treatment Group's business
in the United Kingdom, which should yield annual savings of approximately
$1 million in operating expenses. These operations are now divided into two
business units, one of which focuses on the municipal market and the other on
the power and industrial markets in Europe, Africa and the Middle East. By the
end of April 2007, the number of operating facilities in the U.K. had thus
been reduced by two, which notably involved the sale of one property.
    During fiscal 2008, this group's profitability should benefit from the
growing contribution of its two latest acquisitions, Enviroquip and Copa, the
restructuring of the U.K. operations related to its recent acquisitions and
the strengthening of its management team. Over the longer term, the global
water treatment industry holds considerable potential. In recent years, GL&V
has rolled out major efforts, first to set up its Water Treatment Group, and
then to provide it with new technologies so as to position it more solidly and
competitively in promising niches of this still fragmented industry which is
expected to undergo a consolidation in the coming years. Management is
therefore confident about this group's outlook over the long term, as it will
continue to expand through growth and acquisitions that will allow it to
complete its technological portfolio.

    RISKS AND UNCERTAINTIES

    Principal Risk Factors
    ----------------------

    Customers

    Some of the primary markets served by GL&V, especially the pulp and paper
and mining industries, are exposed to cyclical fluctuations and largely depend
on the health of the world economy. The Company conducts its business in
markets exposed to various other risk factors and uncertainties. Among others,
the pulp and paper industry has been experiencing a major transition during
the past several years which has made large capital projects rather limited in
North America, where pulp and paper manufacturers are more inclined to rebuild
their existing equipment and to use replacement parts and repair services. The
Company's Pulp and Paper Group has adapted to this reality by further focusing
on the aftermarket and spare parts services in North America and Europe, by
targeting certain emerging markets abroad, and by integrating new technologies
adapted to the global industry's evolving needs. For its part, the Water
Treatment Group operates in a segment that is relatively less cyclical by
nature. Finally, GL&V's outsourcing strategy enables it to minimize the risks
associated with fixed costs and thereby rapidly react to fluctuations in
demand.

    Availability of Qualified Personnel

    The Company's success is largely dependent on the quality and stability of
its personnel. The unexpected loss or simultaneous departure of a number of
the Company's key officers or employees could be detrimental to its future
business. Hence, the Company's future success will depend, in part, upon its
ability to attract and retain qualified personnel in accordance with its
needs. As at March 31, 2007, GL&V had over 2,400 employees, working primarily
in engineering, sales, aftermarket services and administration. The Company
estimates that it benefits from skilled, qualified and experienced personnel,
and that the breakdown into various age groups provides for both experience
and its future succession. In general, to ensure the stability and quality of
its personnel, in addition to offering competitive working conditions in
relation to other companies in its industry, GL&V favours an entrepreneurial
culture based on a stimulating working environment where employees are
encouraged to show creativity and initiative. This translates into a very low
voluntary departure rate, i.e. less than 3% annually for the entire Company
over the past two years. However, there can be no assurance that the Company
will be able to engage the services of such personnel or to retain its current
personnel.

    Currency Fluctuations

    As the Company's business is conducted in several countries, it is exposed
to the risk of fluctuations of such currencies compared to the Canadian
dollar. Major foreign currencies used are the U.S. dollar, the Euro and the
pound Sterling. Part of its exposure to the risk of currency fluctuations is
naturally hedged by the portion of its long-term debt denominated in U.S.
dollars. Major contracts awarded to subsidiaries are hedged using forward
exchange contracts.

    Interest Rates

    Changes in interest rates can have a direct impact on the Company's
profitability. GL&V's management regularly assesses the risk of fluctuations
in interest rates on its long-term debt and can use interest rate swaps if it
deems it appropriate to hedge against such risks.

    Forward Exchange Contracts

    Forward exchange contracts, zero-cost tunnel contracts and interest rate
swaps are arranged with recognized financial institutions. Considering the
solvency of these institutions, the Company estimates it is unlikely that it
could sustain losses resulting from the non-compliance of these financial
institutions with their obligations.

    Credit

    The Company considers its credit concentration risk to be minimal on
account of its diversified operations, products, customers and the
geographical distribution of its customer base. GL&V was not exposed to any
unusual credit risk as at March 31, 2007.

    Liquidity

    Given the nature of its business, more specifically large-scale mandates
and progress billings, GL&V can be exposed to certain liquidity risks during
the execution of major contracts for which it must incur costs before billing
the customer. The Company considers this risk to be attenuated by its large
number of contracts as well as their segmented and geographical diversity. In
addition, it manages this risk by obtaining letters of credit or bank
guarantees from recognized banking institutions.

    Acquisitions

    The Company's growth strategy is based primarily on
expansion-by-acquisition, which involves a degree of risk. GL&V has developed
a solid expertise in this field, having successfully acquired and integrated a
dozen businesses in the last ten years. To limit its risk, the Company pursues
its targeted acquisition strategy meeting strict return on investment
criteria, applies due diligence practices, and develops detailed integration
plans focused notably on the disposal of non-strategic assets to lower its
fixed costs and repay a portion of its debt using the proceeds from the sale.

    Critical Accounting Estimates
    ------------------------------

    The preparation of financial statements in conformity with Canadian GAAP
requires the Company to make estimates and assumptions which affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period. The Ontario
Securities Commission defines critical accounting estimates as those requiring
assumptions made about matters that are highly uncertain at the time the
estimate is made, and when the use of different reasonable estimates or
changes to the accounting estimates would have a material impact on a
Company's financial condition or operating results. Based on this definition,
the Company has identified the following critical accounting estimates:

    Revenue Recognition

    The Company recognizes revenues when the production process is completed
or when services are performed, or else according to the pro rata billing
value of the work completed. When progress must be measured, the method used
always reflects the realized output. Progress is determined on the basis of
the costs incurred over the total costs expected based on the Company's
estimates. The underlying work in progress is valued at the pro rata billing
value of the work completed, based on the billable value. Usually, the time
lag is less than one year between revenue recognition and the final billing.

    Business combinations

    The Company's acquisitions have been accounted for using the purchase
method of accounting. Under the purchase method, the acquiring company adds to
its balance sheet the estimated fair values of the acquired company's assets
and liabilities. There are various assumptions made by the Company in
determining the fair values of the acquired companies' assets and liabilities.
The most significant assumptions, and those requiring the most judgment,
involve the estimated fair values of technologies. To determine the fair value
of these technologies, we adopted the relief from royalty approach, an
evaluation technique based on the assumption that a technology can be used by
a royalty paying third party licensee. The amount of the notional royalty
payment is used as a surrogate for income attributable to the technology. The
fair value of the technology is based upon the present value of the expected
after-tax royalty or cash flow stream. Significant assumptions include, among
others, the determination of royalty rates, discount rate, weighted average
cost of capital and anticipated average income tax rates.

    Intangible Assets

    Intangible assets represented 15.8% (4.2% in 2006), of the Company's
consolidated assets as at March 31, 2007. If the Company's estimated useful
lives of these assets were incorrect, the Company could experience increased
or reduced charges for amortization of intangible assets with finite lives in
the future. Such charges do not result in a cash outflow and would not affect
the Company's liquidity.

    Goodwill

    Goodwill is not amortized but tested for impairment annually, or more
frequently if events or changes in circumstances indicate a possible
impairment. The Company compares the reporting unit's carrying value to its
market value determined through an analysis of EBITDA multiples. This analysis
considers: (1) known multiples of similar public company markets, to which a
takeover and acquisition premium is applied; and (2) known multiples of recent
acquisitions in the industry. If the carrying value of the reporting unit
exceeds the market value, the Company would then evaluate the impairment loss
by comparing the fair value of the goodwill to its carrying amount.
    Based on the last impairment tests performed, the Company concluded that
no impairment existed. In the event that actual outcome differs from
management's estimates, an impairment could be necessary.

    Impairment of Long-Lived Assets

    The Company tests the recoverability of long-lived assets, including
property, plant and equipment, intangible assets and other long-term assets,
when events or changes in circumstances indicate that their carrying amounts
may not be recoverable. Examples of such events and changes include: the
decommissioning of an asset, assets rendered idle after plant shutdown, costs
that significantly exceed the amount initially estimated for the acquisition
or construction of an asset, and continuous operating losses or negative cash
flows resulting from the use of an asset and adverse economic changes
affecting a group of assets and causing continuing underperformance. An
impairment is recognized when the carrying amount of a long-lived asset is not
recoverable and exceeds its fair value. A long-lived asset, or group of assets
is considered unrecoverable when its carrying value exceeds the estimated
undiscounted future cash flows directly associated with it. The Company
estimates future cash flows based on historical and budgeted performance as
well as assumptions on future economic environment, pricing and volume.
Management's judgments regarding the existence of impairment indicators are
based on market conditions and operating performances. Future events could
cause management to conclude that impairment indicators exist and that the
carrying values of some long-lived assets are impaired. Any resulting
impairment loss could have a material adverse impact on the Company's
financial position and operating results.

    Allowance for Doubtful Accounts

    The Company maintains an allowance for doubtful accounts for expected
losses from customers who are unable to pay their debts. The allowance is
reviewed periodically and is based on an analysis of specific significant
accounts outstanding, the age of the receivable, customer creditworthiness,
and historical collection experience. The Company believes that its allowance
for doubtful accounts is sufficient to face the risks inherent in outstanding
receivables. However, an additional expense could be recognized in the event
that results were to be different from the assumptions and estimates used by
Company.

    Allowance for Excess Inventories or Inventory Obsolescence

    Inventories are valued at the lower of cost, net realizable value and
replacement value. The cost of finished products is calculated on the basis of
average cost. The Company records an allowance for estimated obsolescence
calculated on the basis of assumptions about the future demand for its
products and conditions prevailing in the markets where its products are sold.
This allowance, which reduces inventories to their net realizable value, is
then entered as a reduction of inventories in the consolidated balance sheet.
Management must make estimates and judgments when establishing such
allowances. If actual market conditions are less favourable than the Company's
assumptions, additional allowances could prove necessary.

    Warranties

    Products and equipment sold are accompanied by performance and functional
warranties.
    Warranty cost is recorded when revenue for the underlying product or
equipment is recognized. The cost is estimated based on a number of factors,
including the historical warranty claims and cost experience, the nature of
products and equipment sold and duration of warranty coverage.
    The Company reviews quarterly its recorded product warranty provisions and
any adjustment is charged against income. Warranty expense is recorded as a
component of cost of contracts and goods sold.

    Income Taxes

    The Company uses its best judgment in determining its effective tax rate.
There are many factors in the normal course of business that affect the
effective tax rate, since the ultimate tax outcome of some transactions and
calculations is uncertain until assessment notices are received from tax
authorities.
    Future tax assets are recognized and an allowance for a corresponding
amount is established if it is unlikely that such assets will be realized.
This allowance is based on management's estimates in regard to taxable income
in each of the jurisdictions in which the Company operates and the period
during which the future tax assets should be recovered.
    The Company could be at any time under audit by various tax authorities in
each of the jurisdictions in which it operates. A number of years may elapse
before a particular matter for which management has established a reserve is
audited and resolved. The number of years with open tax audits varies
depending on the tax jurisdiction.
    Management believes that its estimates are reasonable and reflect the
probable outcome of known tax contingencies, although the final outcome and
its timing are difficult to predict. In addition, the Company has not
recognized any future tax liabilities for the retained earnings of its
subsidiaries for the current fiscal year and prior years, since it does not
expect such retained earnings to become taxable in the foreseeable future
except for an amount of $205,000 ($392,000 in 2006) related to the retained
earnings that will become taxable in the foreseeable future.
    In the event that the tax outcome differs from management's estimates, the
provision may be adjusted.
    It should be noted that any unexpected change in national legislation in
force in the countries in which the Company operates or any change to the tax
agreements currently made use of by the Company could have an impact on the
Company's effective tax rate.

    Insurance

    The Company is exposed to various operational risks in the normal course
of business, some of which are transferred to third parties under insurance
policies. The Company has a self-insurance policy where the foreseeable losses
from self-insurance are relatively low in comparison with the cost of
purchasing insurance from third parties.
    The Company maintains insurance coverage for risks associated with civil
liability insurance including an insurance coverage for its assets. It has
opted to assume a portion of the losses it could sustain for the civil
responsibility risks in the form of a deductible, so as to lower the costs
associated with such protection. The Company manages the retention of the
civil liability related risk through its captive insurance company. As at
March 31, 2007, the Company's potential liability under the terms of its
current self-insurance policy was a maximum of $3 million annually, subject to
deductibles and other factors specific to each claim.
    The Company believes it has implemented a combination of third-party
insurance and self-insurance providing adequate protection against major
unexpected losses, while reducing its operating costs and limiting its overall
risk.

    Pension Plans

    The Company offers defined benefit pension plans to certain of its
employees. The Company's policy is to maintain its contributions at a level
sufficient to cover benefits. The Company's various pension plans have
undergone actuarial valuations over past three years and the required
valuations will be performed at different periods over the next three years.
    Pension assets are calculated at fair value and consist of equity
securities as well as corporate and government fixed-income securities. One of
the Company's plans is partially capitalized by means of an interest in an
insurance contract.
    The Company's obligations in regard to pensions and complementary pension
benefits are assessed on the basis of various economic and demographic
assumptions determined in conjunction with the Company's actuaries. Key
assumptions include the discounting rate, expected return on plan assets and
compensation increase rate. The Company deems the assumptions used to be
reasonable based on the information currently available. However, variations
in such assumptions could have a material impact on the costs and obligations
of pension plans and complementary pension benefits in the coming years.

    Recent Accounting Developments in Canada
    ----------------------------------------

    In 2005, the CICA released Section 3855, Financial Instruments -
Recognition and Measurement, Section 3865, Hedges and Section 1530,
Comprehensive Income. Section 3855 sets standards for measuring and
recognizing financial instruments in the balance sheet. In some cases they are
measured at fair value, in other cases a value based on cost. It also
clarifies the means of presenting gains and losses on financial instruments.
    Section 3865 offers entities the possibility of applying other treatments
than those provided for in Section 3855 to eligible transactions that they opt
to designate, for accounting purposes, as constituent components of a hedging
relationship. It adds to the guidelines of AcG-13, Hedging Relationships, and
Section 1650, Foreign Currency Translation, specifying how hedge accounting is
to be applied and what information is to be provided by the entity applying
it.
    Section 1530 introduces a new requirement to temporarily present certain
gains and losses outside net earnings and to recognize them in comprehensive
income.
    These new standards will be applied by the Company starting in the first
quarter of fiscal 2008.

    Supplementary Information
    -------------------------

    Supplementary information about the Company, including its Annual
Information Form, the Support Agreement relating to the Arrangement between
FLS and GL&V, interim reports and press releases, is available on SEDAR's
website (www.sedar.com) and GL&V's website (www.glv.com).


    (SIGNED)
    Laurent Verreault
    Chairman of the Board and Chief Executive Officer


    (SIGNED)
    Marc Barbeau, CA
    Vice-President and Chief Financial Officer

    June 7, 2007



                      CONSOLIDATED STATEMENTS OF INCOME
                       for the periods ended March 31
           (in thousands of dollars, except for per share amounts)


                                      Fourth Quarter           Twelve Months
                               ----------------------  ----------------------
                                       (unaudited)             (audited)

                                    2007        2006        2007        2006
                               ----------  ----------  ----------  ----------

    Revenues                   $ 282,010   $ 175,265   $ 830,223   $ 683,155

    Cost of contracts
     and goods sold              212,336     130,376     626,801     518,053
                               ----------  ----------  ----------  ----------
    Gross margin                  69,674      44,889     203,422     165,102
                               - - - - -   - - - - -   - - - - -   - - - - -

    Selling expenses              22,170      14,999      72,245      57,765
    Administrative expenses       21,607      13,510      60,149      49,704
                               ----------  ----------  ----------  ----------
                                  43,777      28,509     132,394     107,469
    Earnings before
     depreciation and
     amortization, financial
     expenses and income
     taxes                        25,897      16,380      71,028      57,633

    Depreciation and
     amortization                  7,413       2,073      15,539       7,941
                               ----------  ----------  ----------  ----------

    Earnings before financial
     expenses and income taxes    18,484      14,307      55,489      49,692

    Financial expenses(note 2)     3,621         447       5,874       6,806
                               ----------  ----------  ----------  ----------

    Earnings before income
     taxes                        14,863      13,860      49,615      42,886

    Income taxes                   2,708       2,496      10,367       6,928
                               ----------  ----------  ----------  ----------

    Net earnings               $  12,155   $  11,364   $  39,248   $  35,958
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Earnings per share
     (note 12):
      Basic                    $    0.50   $    0.47   $    1.61   $    1.50
      Diluted                       0.49        0.45        1.57        1.45

    Weighted average number
     of participating
     shares outstanding
     (note 12):
      Basic                   24,437,791  24,181,658  24,436,350  24,041,355
      Diluted                 24,966,542  25,075,974  24,926,397  24,862,554


                             SEGMENTED INFORMATION
                        for the periods ended March 31
                           (in thousands of dollars)
                                  (unaudited)

    FOURTH QUARTER (unaudited)

                                Pulp and       Water      Others
                     Process       Paper   Treatment     and eli-
    2007               Group       Group       Group    mination       Total
    -------------- ----------  ----------  ----------  ----------  ----------

    Revenues       $ 157,484   $  63,150   $  81,781   $ (20,405)  $ 282,010

    Amortization
     of property,
     plant and
     equipment,
     intangible
     assets and
     other assets
     (excluding
     deferred
     financing
     cost)             3,403         866       2,519         625       7,413

    Earnings (loss)
     before
     financial
     expenses
     and income
     taxes            15,111       4,685       4,882      (6,194)     18,484

    Acquisition
     of property,
     plant and
     equipment         1,052       1,774         297         881       4,004

    2006
    -------------

    Revenues       $ 102,012   $  50,298   $  34,859   $ (11,904)  $ 175,265

    Amortization
     of property,
     plant and
     equipment,
     intangible
     assets and
     other assets
     (excluding
     deferred
     financing
     cost)               711         567         269         526       2,073

    Earnings (loss)
     before
     financial
     expenses
     and income
     taxes            16,125       2,283       1,360      (5,461)     14,307

    Acquisition of
     property, plant
     and equipment       895         770         797         185       2,647
    -------------------------------------------------------------------------


    TWELVE MONTHS (audited)
                                Pulp and       Water      Others
                     Process       Paper   Treatment     and eli-
    2007               Group       Group       Group    mination       Total
    ------------- ----------  ----------  ----------  ----------  ----------

    Revenues       $ 445,230   $ 217,674   $ 212,040   $ (44,721)  $ 830,223

    Amortization
     of property,
     plant and
     equipment,
     intangible
     assets and
     other assets
     (excluding
     deferred
     financing
     cost)             6,238       2,771       4,397       2,133      15,539

    Earnings (loss)
     before
     financial
     expenses
     and income
     taxes            52,283      14,185       8,828     (19,807)     55,489

    Acquisition of
     property, plant
     and equipment     3,276       3,148         995       1,343       8,762

    2006
    -------------

    Revenues       $ 378,458   $ 218,028   $ 116,015   $ (29,346)  $ 683,155

    Amortization
     of property,
     plant and
     equipment,
     intangible
     assets and
     other assets
     (excluding
     deferred
     financing
     cost)             3,179       2,302         521       1,939       7,941

    Earnings (loss)
     before
     financial
     expenses
     and income
     taxes            48,819      13,842       4,955     (17,924)     49,692

    Acquisition of
     property, plant
     and equipment     2,697       2,603       1,073         492       6,865
    -------------------------------------------------------------------------


                        CONSOLIDATED BALANCE SHEETS
                         (in thousands of dollars)

                                                        March 31,   March 31,
                                                            2007        2006
                                                       ----------  ----------
                                                        (audited)   (audited)
    ASSETS
    Current assets:
      Cash and cash equivalents                        $  28,776   $  31,971
      Temporary investments                                1,077         817
      Accounts receivable                                238,275     144,975
      Inventories                                         68,128      39,941
      Contracts in progress, less
       progress billings(note 3)                          83,695      50,775
      Prepaid expenses and other                           9,020       2,531
      Future income tax assets                            13,435      12,102
                                                       ----------  ----------
                                                         442,406     283,112

    Long-term investments                                  3,712       3,483
    Property, plant and equipment                         63,258      39,506
    Future income taxes assets                             7,226       9,435
    Goodwill(note 4)                                      62,449      26,405
    Intangible assets(note 5)                            110,154      16,233
    Other assets(note 6)                                   7,741       5,337
                                                       ----------  ----------
                                                       $ 696,946   $ 383,511
                                                       ----------  ----------
                                                       ----------  ----------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities         $ 237,908   $ 162,533
      Income taxes payable                                 3,549       6,529
      Future income tax liabilities                        2,284       1,761
                                                       ----------  ----------
                                                         243,741     170,823

    Long-term debt(note 7)                               185,031      28,182
    Other liabilities(note 8)                             28,602      21,883
    Future income tax liabilities                         37,317       5,207

    Shareholders' equity:
      Share capital(note 9)                               58,785      58,770
      Contributed surplus(note 10)                         1,566         985
      Retained earnings                                  160,117     120,869
      Translation adjustment                             (18,213)    (23,208)
                                                       ----------  ----------
                                                         202,255     157,416
                                                       ----------  ----------
                                                       $ 696,946   $ 383,511
                                                       ----------  ----------
                                                       ----------  ----------


                CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                       for the periods ended March 31
                          (in thousands of dollars)

                                      Fourth Quarter           Twelve Months
                               ----------------------  ----------------------
                                       (unaudited)             (audited)

                                    2007        2006        2007        2006
                               ----------  ----------  ----------  ----------
    Retained earnings,
     beginning of period       $ 147,962   $ 109,505   $ 120,869   $  87,310

    Net earnings                  12,155      11,364      39,248      35,958
                               ----------  ----------  ----------  ----------
                                 160,117     120,869     160,117     123,268

    Dividends                          -           -           -       2,399
                               ----------  ----------  ----------  ----------
    Retained earnings,
     end of period             $ 160,117   $ 120,869   $ 160,117   $ 120,869
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------


                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       for the periods ended March 31
                          (in thousands of dollars)

                                      Fourth Quarter           Twelve Months
                               ----------------------  ----------------------
                                       (unaudited)             (audited)

                                    2007        2006        2007        2006
                               ----------  ----------  ----------  ----------
    Cash flows from operating
     activities:
      Net earnings             $  12,155   $  11,364   $  39,248   $  35,958
      Non-cash items in
       earnings
        Gain on disposal of
         commercial activities
         (note 11)                     -           -      (1,486)          -
        Gain on disposal of
         property, plant and
         equipment and other
         assets                      (67)     (1,324)       (451)     (1,366)
        Write-off of deferred
         financing cost                -           -           -       2,159
        Write-down of the value
         of a property                 -       1,194           -       1,194
        Amortization of property,
         plant and equipment,
         intangible assets and
         other assets              7,413       2,073      15,539       7,941
        Amortization of deferred
         financing costs              96          30         275         503
        Amortization of the
         deferred gain on
         sale-leaseback
         arrangement                (120)       (122)       (481)       (509)
        Stock-based compensation     236         300         581         732
        Future income taxes         (191)     (1,595)        606      (4,758)
        Unrealized (gain) loss
         on derivative
         financial instruments      (213)        451      (1,442)        519
      Net changes in non-cash
       balances related to
       operations (net of the
       effect of business
       acquisitions)             (12,151)     12,092     (42,688)     10,618
                               ----------  ----------  ----------  ----------
                                   7,158      24,463       9,701      52,991
                               - - - - -   - - - - -   - - - - -   - - - - -

    Cash flows (used in) from
     financing activities:
      Net issuance of
       long-term debt              3,407     (22,050)    155,064      28,415
      Repayment of
       long-term debt            (13,027)          -     (13,027)    (46,732)
      Increase in deferred
       financing cost                (43)        239        (800)     (1,238)
      Issuance of Class A
       subordinate shares             15         984          15       1,039
      Dividends                        -           -           -      (2,399)
                               ----------  ----------  ----------  ----------
                                  (9,648)    (20,827)    141,252     (20,915)
                               - - - - -   - - - - -   - - - - -   - - - - -

    Cash flows used in
     investing activities:
      Business acquisitions
       (note 11)                  (4,603)     (4,725)   (150,136)    (26,669)
      Business disposals
       (note 11)                   2,055           -       4,445           -
      Change in temporary
       investments                 2,410         (17)       (260)      2,534
      Acquisition of long-term
       investments                   (64)        (58)       (250)       (233)
      Purchase of property,
       plant and equipment        (4,004)     (2,647)     (8,762)     (6,865)
      Disposal of property,
       plant and equipment           863       2,391       1,659       4,506
      Net change in other
       assets                     (1,961)         44      (2,206)     (2,217)
                               ----------  ----------  ----------  ----------
                                  (5,304)     (5,012)   (155,510)    (28,944)
                               - - - - -   - - - - -   - - - - -   - - - - -

    Effect of translation
     adjustments on cash and
     cash equivalents              1,841       1,323       1,362      (3,493)
                               ----------  ----------  ----------  ----------
    Net decrease in cash and
     cash equivalents             (5,953)        (53)     (3,195)       (361)

    Cash and cash equivalents,
     beginning of period          34,729      32,024      31,971      32,332
                               ----------  ----------  ----------  ----------
    Cash and cash equivalents,
     end of period             $  28,776   $  31,971   $  28,776   $  31,971
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Supplemental information:
      Net interest paid        $   4,346   $     554   $   8,474   $   2,863
      Income taxes paid            3,663       2,067      12,590       8,551


    Notes to Interim Consolidated Financial Statements

    For the three-month and twelve-month periods ended March 31, 2007
    and 2006
    (Tabular amounts are expressed in thousands of dollars, except for
    earnings per share amount)
    (Information for the three-month period is unaudited)

    1. Basis of presentation

    The Interim Consolidated Financial Statements have been prepared in
accordance with Canadian generally accepted accounting principles ("GAAP").
The same accounting policies as described in the Company's latest Annual
Report have been used. These Consolidated Financial Statements do not include
all disclosures required under GAAP, and accordingly, should be read in
conjunction with the audited Consolidated Financial Statements and the notes
thereto included in the Company's latest Annual Report.

    2. Financial expenses

                                      Fourth Quarter     Twelve-month period
                                      ended March 31          ended March 31
                            -------------------------------------------------
                                    2007        2006        2007        2006
                            -------------------------------------------------
    Interest on long-term
     debt                      $   3,168   $     602   $   6,633   $   2,388
    Interest revenue, net
     amount                         (467)       (594)     (1,319)       (987)
    Amortization of deferred
     financing costs                  95          30         275         503
    Exchange rate (gain)
     loss                           (667)       (631)     (1,400)        115
    Non-materialized (gain)
     loss on derivative
     financial instruments          (213)        451      (1,442)        519
    Write-off of deferred
     financing costs                   -           -           -       2,159
    Other                          1,705         589       3,127       2,109
                            -------------------------------------------------
                               $   3,621   $     447   $   5,874   $   6,806
                            -------------------------------------------------
                            -------------------------------------------------


    3. Contracts in progress, less progress billings

                                                      -----------------------
                                                               Balance as at
                                                      -----------------------
                                                        March 31,   March 31,
                                                            2007        2006
                                                      -----------------------
    Contracts in progress                              $ 350,223   $ 272,815
    Progress billings                                   (266,528)   (222,040)
                                                      -----------------------
                                                       $  83,695   $  50,775
                                                      -----------------------
                                                      -----------------------


    4. Goodwill

    The following table shows the changes in the carrying amounts of goodwill
since March 31, 2006:

                            -------------------------------------------------
                              Balance as    Business              Balance as
                             at March 31,    Acquisi- Foreign at    March 31,
                                    2006       tions    Currency        2007
                            -------------------------------------------------
    Process Group              $  18,949   $  17,024   $      25   $  35,998
    Water Treatment Group          5,004      16,515       1,215      22,734
    Pulp and Paper Group           2,452       1,050         215       3,717
                            -------------------------------------------------

                               $  26,405   $  34 589   $   1,455   $  62,449
                            -------------------------------------------------
                            -------------------------------------------------


    5. Intangible Assets

           ------------------------------------------------------------------
           Balance as                                             Balance as
             at March    Acquisi-   Disposi-  Amortiza-   Foreign   at March
             31, 2006      tions      tions       tion   Currency   31, 2007
           ------------------------------------------------------------------
    Techno-
     logies  $ 16,233   $ 60,592   $   (799)  $ (2,252)  $  1,370   $ 75,144
    Trade-
     marks          -     17,368       (342)      (410)       458     17,074
    Customer
     relations      -     11,688          -     (1,286)       450     10,852
    Non-
     compete
     agree-
     ments          -      5,477          -       (662)        63      4,878
    Backlog         -      3,929          -     (1,933)       210      2,206
           ------------------------------------------------------------------
             $ 16,233   $ 99,054   $ (1,141)  $ (6,543)  $  2,551   $110,154
           ------------------------------------------------------------------
           ------------------------------------------------------------------


    The intangible assets are recorded at cost and amortized on a straight-
line basis over the following periods:

    -------------------------------------------------------------------------
    Intangible assets                                                 Period
    -------------------------------------------------------------------------
    Technologies                                              10 to 20 years
    Trademarks                                                      20 years
    Customer relations                                         5 to 10 years
    Non-compete agreements                                      3 to 5 years
    Backlog                                                          2 years

    The weighted average useful life of intangible assets was 16 in 2007
(10 years in 2006).

    6. Other assets

                                                      -----------------------
                                                               Balance as at
                                                      -----------------------
                                                        March 31,   March 31,
                                                            2007        2006
                                                      -----------------------
    Development costs                                  $   5,229   $   3,425
    Deferred financing costs                               1,639       1,102
    Other                                                    873         810
                                                      -----------------------
                                                       $   7,741   $   5,337
                                                      -----------------------
                                                      -----------------------


    7. Long-term debt

                                                      -----------------------
                                                               Balance as at
                                                      -----------------------
                                                        March 31,   March 31,
                                                            2007        2006
                                                      -----------------------
    Resolving credit facility a)
      Amount of debt in Canadian dollars               $ 107,100   $   8,400
      Amount of debt in US dollars corresponds
       to $66,550,000 USD ($16,950,000 USD in 2006)       76,725      19,782
    Term loans b)                                          1,206           -
                                                      -----------------------
                                                       $ 185,031   $  28,182
                                                      -----------------------
                                                      -----------------------

    a) On November 16, 2006, the Company amended its financing agreement in
       place since August 2005 to increase its credit facilities from
       $180,000,000 to $320,000,000 with an option for additional increase
       of its credit facilities by $100,000,000. The rates vary depending on
       the Canadian, US or European prime rates, plus 0% to 0.5% and/or the
       bankers' acceptance rates and/or LIBOR and/or the European rates plus
       0.625% to 1.5%, maturing in November 2011.

       The modified facilities consist of two non-revolving credits totalling
       $320,000,000. Of the amount, $250,000,000 may be used to meet day-to-
       day financing requirements, issue letter of credits and finance
       business acquisitions. The remaining $70,000,000 may be used to issue
       letter of credit guaranteed by Export and Development Canada (EDC).

       These credit facilities are secured by various types of collateral,
       including moveable and immoveable hypothecs on all of the Company's
       assets and those of certain of its subsidiaries.

       As at March 31, 2007, the credit facilities were used to issue letter
       of credits totalling $14,055,000 and to issue EDC-guaranteed letter of
       credit totalling $58,692,000.

       No capital repayments are required before the long-term debt comes due
       in November 2011.

       The Company is required to maintain certain financial ratios with
       respect to the credit facilities. On March 31, 2007, the Company is
       in compliance with all financial ratios.

    b) On October 16, 2006, the Company assumed $3,969,000 ($4,723,000 AUD)
       of Copa's debt upon its acquisition (note 11).

       The debt includes a credit facility secured by the accounts receivable
       and certain term loans related to a previous acquisition.

       All of the credit facility and loans related to the acquisition of
       Copa were classified as long-term, since the Company has the ability
       and the intent to maintain such debt on a long-term basis and has
       long-term credit facilities available (see a) above) to reimburse such
       debt. A part of the Copa's debt ha been repaid with the Company's
       credit facilities during the year.

    On December 4, 2006, the Company assumed $10,226,000 ($8,932,000 USD) of
Krebs' debt upon its acquisition (note 11). The debt was repaid with the
Company's credit facilities during the last quarter.

    8. Other liabilities

                                                      -----------------------
                                                               Balance as at
                                                      -----------------------
                                                        March 31,   March 31,
                                                            2007        2006
                                                      -----------------------
    Pension liabilities                                $  15,269   $  13,305
    Deferred gain on a sale-leaseback arrangement          3,287       3,825
    Other stock-based compensation                         6,407       3,707
    Other                                                  3,639       1,046
                                                      -----------------------
                                                       $  28,602   $  21,883
                                                      -----------------------
                                                      -----------------------


    9. Share capital

                            -------------------------------------------------
                                      March 31, 2007          March 31, 2006
                            -------------------------------------------------
                               Number of               Number of
                                  shares       Total      shares       Total
                            -------------------------------------------------
    Class B shares

    Outstanding, beginning
     of period                 2,619,469   $   2,066   2,863,815   $   2,258
    Conversion of Class B
     shares into Class A
     shares                      (12,110)        (10)   (244,346)       (192)
                            -------------------------------------------------
    Outstanding, end of
     period                    2,607,359   $   2,056   2,619,469   $   2,066
                            -------------------------------------------------

    Class A subordinate
     voting shares

    Outstanding, beginning
     of period                21,816,411   $  56,704  21,122,065   $  55,473
    Conversion of Class B
     shares into Class A
     shares                       12,110          10     244,346         192
    Issuance of shares
     pursuant to stock
     option plan                   4,000          15     450,000       1,039
                            -------------------------------------------------
    Outstanding, end
     of period                21,832,521   $  56,729  21,816,411   $  56,704
                            -------------------------------------------------
                            -------------------------------------------------
    Total                     24,439,880   $  58,785  24,435,880   $  58,770
                            -------------------------------------------------
                            -------------------------------------------------


    10. Stock-based compensation

    For stock options granted since April 1, 2003, the Company uses the fair
value method of accounting, the compensation cost is charged to earnings over
the vesting period. Before April 1, 2003, the Company used the settlement
method for its stock option plans. If the compensation cost had been
determined using the fair value method on the date of grant for stock options
granted between April 1, 2002 and March 31, 2003, under the terms of all
programs, pro forma net earnings and pro forma earnings per share (basic and
diluted) would not significantly differ from those presented in the
consolidated statement of earnings.
    During this quarter, 265,000 stock options were issued to the directors of
the Company and 55,000 stock options have been cancelled. The compensation
cost for stock options granted since April 1, 2003 amounts to $236,000 for the
quarter ended March 31, 2007 and amounts to $581,000 for the twelve-month
period ended March 31, 2007.
    The fair value of each option granted during 2006 was determined using the
Black Scholes option pricing model and the following assumptions:

    Weighted average fair value                                       $10.21
    Risk-free interest rate                                             6.0%
    Expected life                                                    7 years
    Expected volatility of stock price                                   30%
    Expected dividend yield                                             1.6%


    11. Business acquisitions

    a) Business acquisitions

       On April 1, 2006, the Company acquired the principal assets of KanEng
       Industries Inc. and KanEng-Deltec Inc., both located in Montreal.
       Assets acquired by the Pulp and Paper Group are related to the
       manufacturing of high-turnover components for paper systems.

       On June 30, 2006, the Water Treatment Group acquired all
       outstanding shares of the Austin (Texas) based company, Enviroquip,
       Inc. Enviroquip,Inc. produces water and wastewater treatment
       equipment, mainly for municipalities. In addition, it holds the
       exclusive U.S. municipal market licence for the Submerged Membrane
       Unit developed by the Japanese multinational Kubota.

       In the fourth quarter of fiscal 2007, the closing accounts relating to
       Enviroquip required for the application of the purchase price
       adjustment process were drawn up, revealing some differences between
       the accounts established by GL&V and those prepared by the vendor.
       Therefore, during the fourth quarter of fiscal 2007, GL&V paid an
       additional amount of $713,000.

       On July 7, 2006, the Company acquired the principal assets related to
       the refiner rebuild business of J&L Fiber Services Inc. based in
       Pittsfield (Massachusetts). This acquisition is consistent with the
       Pulp and Paper Group's strategy aimed at increasing the added value of
       its product selection and strengthening its position in the
       aftermarket products.

       On August 24, 2006, the Company acquired the activities of the UK
       based company, Huyck Dewatering Equipment Business. This acquisition
       is consistent with the Pulp and Paper Group's strategy to strengthen
       the wet end side of the Paper Machine group with formation technology
       and aftermarket products.

       On October 16, 2006, the Water Treatment Group acquired from CDS
       Technologies Limited all the outstanding shares of COPA Limited
       located in the United Kingdom and COPA Water Pty Ltd located in
       Australia. The acquisition resulted in additional and complementary
       products and technologies for the stormwater and municipal wastewater
       markets, including the exclusive licence to market the Kubota membrane
       (MBR) in the municipal, commercial and industrial wastewater treatment
       segment in the UK and Republic of Ireland. After October 16, 2006, the
       closing accounts required for the application of the purchase price
       adjustment process was drawn up. The application of this process
       indicated material differences between the accounts established by the
       Company and those established by the vendor in the amount of
       $2,495,000 ($ 2,969,000 AUD) to be received from the vendor. During
       the last quarter, purchase price adjustment process was finalized
       resulting in a purchase price of adjustment of $3,270,000
       ($3,500,000 AUD) received including an additional adjustment for
       allowance for doubtful accounts.

       On December 4, 2006, the Company acquired all the outstanding shares
       of Krebs International based in Tucson (Arizona) along with its six
       wholly-owned subsidiaries in Australia, Austria, Brazil, Chile, China
       and South Africa, as well as, sales and engineering offices located in
       various areas of the United States and in the Philippines and the
       United Kingdom. This acquisition resulted additional cutting-edge
       technologies consistent with Process Group's strategy to strongly
       enhance its positioning and potential as a global supplier to the
       minerals industry and expands its presence and technological offerings
       in the buoyant energy market, including oil and gas.

       On December 29, 2006, the Company acquired the technologies and
       certain other assets relating to the pulp washing, oxygen
       delignification and bleaching business of Swedish Kvaerner(TM)
       Pulping, including the Compress Press wash press technology, along
       with Metso's SuperBatch(TM) cooking technology from Metso Corporation
       based in Sweden. This acquisition is consistent with the Pulp and
       Paper Group's strategy to position itself among the world's top
       providers of pulp process equipment.

       The cash consideration paid for these acquisitions amount to
       $154,689,000 (including acquisition costs) with a balance of
       $1,285,000 to be paid in September 2008, and the results of operations
       of these commercial activities are included in the consolidated
       results of operations of the Company since their respective
       acquisition date.

       On September 18, 2006, the Company received, as part of the
       arbitration settlement, $4,553,000 ((euro) 3,200,000) from Brackett
       Green for the purchase price adjustment. The initial reduction of
       $4,553,000 in the purchase price allocation was already accounted for
       on March 31, 2006.

       The final purchase price allocations for Brackett Green and Metso
       Paper have been finalized during fiscal year 2007 and the final
       adjustments did not have a significant impact on the preliminary
       allocations.

    b) Business disposals

       On October 4, 2006, the Company sold non-core assets including
       inventory, fixed assets, intellectual property and goodwill to a
       company located in the United Kingdom for a cash consideration of
       $2,390,000 ( pnds stlg 1,124,000). The Company recorded a gain of
       $1,486,000 ( pnds stlg 699,000) on the sale.

       On March 30, 2007, the Company sold the Australian stormwater business
       of the Water Treatment Group and associated Asian licenses to a
       company located in Australia for a cash consideration of $2,055,000
       ($2,200,000 AUD) subject to certain adjustment clauses. These
       adjustments are estimated at an amount of $688,000 ($736,000 AUD) as
       an increase to the selling price. As at March 31, 2007, the estimated
       balance of $688,000 ($736,000 AUD) was recorded as a receivable from
       the buyer.

    The following table summarizes the net assets acquired and sold during the
year:

                   ----------------------------------------------------------
                      Net assets acquired
                   ----------------------

                                                                         Net
                                                                    business
                                                      Net assets     acquisi-
                       Krebs      Others       Total        sold       tions
                   ----------------------------------------------------------
    Net assets
     acquired
      Current
       assets      $  51,827   $  26,137   $  77,964   $  (2,850)  $  75,114
      Fixed
       assets         10,536      12,975      23,511        (203)     23,308
      Future
       income
       tax asset       1,764       3,588       5,352         (39)      5,313
      Goodwill        20,410      14,179      34,589           -      34,589
      Intangible
       assets         66,165      32,889      99,054      (1,141)     97,913
      Other assets       358           -         358           -         358
                   ----------------------------------------------------------
                   $ 151,060   $  89,768   $ 240,828   $  (4,233)  $ 236,595
    Current
     liabilities      15,904      14,961      30,865        (586)     30,279
    Long-term debt
     acquired         10,226       3,969      14,195           -      14,195
    Future income
     tax liability    26,543      11,711      38,254           -      38,254
    Other
     liabilities       1,026         514       1,540           -       1,540
                   ----------------------------------------------------------
    Net assets
     acquired
     or sold       $  97,361   $  58,613   $ 155,974   $  (3,647)  $ 152,327
                   ----------------------------------------------------------
                   ----------------------------------------------------------
    Consideration
     paid or
     received:
      Cash paid    $  97,361   $  57,328   $ 154,689   $  (4,445)  $ 150,244
      Balance of
       purchase
       price               -       1,285       1,285           -       1,285
                   ----------------------------------------------------------
                   $  97,361   $  58,613   $ 155,974   $  (4,445)  $ 151,529
    Net purchase
     price (sales
     price)
     adjustment
     receivable            -           -           -        (688)       (688)
    Gain on
     business
     disposal              -           -           -       1,486       1,486
                   ----------------------------------------------------------
                   $  97,361   $  58,613   $ 155,974   $  (3,647)  $ 152,327
                   ----------------------------------------------------------
                   ----------------------------------------------------------


    12. Earnings per share

    Basic earnings per share are calculated by dividing the net earnings
attributable to the shareholders by the weighted average number of
participating shares outstanding during the year.
    Diluted earnings per share are calculated by dividing the net earnings
attributable to the shareholders by the weighted average number of shares
outstanding adjusted to take into account the potential diluting impact of the
stock options.

                                      Fourth Quarter     Twelve-month period
                                      ended March 31          ended March 31
                            -------------------------------------------------
    (in thousands)                  2007        2006        2007        2006
                            -------------------------------------------------
    Weighted average number
     of participating shares
     outstanding                  24,438      24,182      24,436      24,041
    Potential dilutive impact        529         894         490         821
                            -------------------------------------------------
    Weighted average number
     of participating and
     diluted shares               24,967      25,076      24,926      24,862
                            -------------------------------------------------
                            -------------------------------------------------


    13. Subsequent event

    On April 20, 2007, the Company announced that they have entered into an
agreement with FLSmidth & Co. ("FLS"), a Danish company whereby, through a
court-approved plan of arrangement (the "Arrangement"), FLS will acquire all
the outstanding Class A subordinate voting shares and Class B multiple voting
shares of the Company. In connection with the Arrangement, the Company will
transfer its Water Treatment and Pulp and Paper groups and its Manufacturing
unit into a new corporation ("GLV Inc.") which will be seeking a listing on
the TSX Exchange and that will be spun off to shareholders. Following the
Arrangement, FLS will effectively own 100% of the Company's Process Group in
exchange for a consideration of $840 million in cash (equivalent to $33 per
share) and the assumption of the total debt less a net debt of $50 million
assumed by the new company, GLV Inc.
    Pursuant to the Arrangement, each Company shareholder will receive a per-
share consideration consisting of $33 in cash and one share of GLV Inc.
Holders of Class A subordinate voting shares and Class B multiple voting
shares of the Company will receive respectively Class A subordinate voting
shares and Class B multiple voting shares of GLV Inc. for each corresponding
share held.
    The proposed Arrangement is subject to shareholder approval by resolution
approved by no less than 75% of the votes cast in each class of shares (Class
A subordinate voting and Class B multiple voting) and the Company expects to
present the matter to shareholders at a special meeting. The Arrangement is
also subject to a number of conditions including approval by the Superior
Court of Quebec, acceptance by the TSX Exchange and other regulatory
approvals.

    14. Comparative figures

    Certain comparative figures previously reported has been have been
reclassified to conform to the presentation adopted in the current period.
    




For further information:

For further information: Laurent Verreault, Chairman of the Board and
Chief Executive Officer; Richard Verreault, President and Chief Operating
Officer; Marc Barbeau, Vice-President and Chief Financial Officer, (514)
284-2224, www.glv.com

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