GLV Discloses First Interim Results as a Publicly-Traded Operating Company



    
                Second-Quarter Revenues Rise 36.7% due to the
             Previous Year's Acquisitions and 10% Organic Growth.

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    -   Revenues for the second quarter ended September 30, 2007 reach
        $125.9 M, up 36.7% over the same period a year earlier (including
        10% organic growth at constant exchange rate). Revenues for the first
        six months of fiscal 2008 increase by 35.1% to $241.2 M.

    -   Considering the non-recurring costs directly related to the closing
        of the Arrangement with FLS, totalling $5.8 M since the beginning of
        the year, the Company records a net loss of $2.2 M or $0.08 per share
        in the second quarter, and a net loss of $2.7 M or $0.11 per share
        for the six-month period.

    -   Excluding non-recurring costs (net of related taxes), GLV achieves
        normalized net earnings of $0.4 M or $0.02 per share in the second
        quarter, and $0.8 M or $0.03 per share for the six-month period.

    -   As at September 30, 2007, its order backlog reached a new high of
        $331.2 M, up 63% over the previous year.
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    MONTREAL, Nov. 12 /CNW Telbec/ - (Note: All amounts are in Canadian
dollars unless otherwise indicated.) The new company GLV Inc. ("GLV" or "the
Company"; ticker symbols LVG.A and LVG.B), originating from the Arrangement
("the Arrangement") closed on August 10, 2007 between Groupe Laperrière &
Verreault Inc. ("GL&V"), its shareholders and FLSmidth & Co. A/S ("FLS"),
discloses today its interim consolidated and combined carve-out financial
results for the three-month and six-month periods ended September 30, 2007.
These are the first financial results to be disclosed by GLV since the
effective start of its operations on August 8, 2007. On that date, the
operations of the Water Treatment Group, the Pulp and Paper Group and the
Manufacturing Unit ("Retained Businesses") were transferred to GLV pursuant to
the Arrangement, the closing of which was finalized on August 10, 2007.
Accordingly, the unaudited consolidated and combined carve-out financial
statements for the three-month and six-month periods ended September 30, 2007
include only GLV's actual consolidated results for the past 53 days, starting
from August 9, 2007 and, prior to that date, they include the combined
carve-out results of the Retained Businesses. It should be pointed out that
the combined carve-out financial statements prior to August 9, 2007 are, in
part, based on an allocation of certain expenses incurred by GL&V during the
comparative periods, which are not necessarily indicative of the costs that
would have been incurred if the Retained Businesses had performed the
functions as a stand-alone entity during the periods presented. However, the
consolidated balance sheet as at September 30, 2007 reflects GLV's actual
financial position.
    In terms of operational performance, the second quarter of fiscal 2008
gave rise to sustained growth for the Water Treatment Group and the Pulp and
Paper Group worldwide. For the three-month period ended September 30, 2007,
GLV's consolidated and combined carve-out revenues rose to $125.9 M, up 36.7%
over the same quarter a year earlier. This performance is attributable to the
acquisitions of the previous year and to a 10.0% organic growth (at constant
exchange rates). This brings year-to-date consolidated and combined carve-out
revenues for the first six months of fiscal 2008 to $241.2 M, an increase of
35.1% over the same period last year.

    
    -   The Water Treatment Group's second-quarter revenues grew by 68.6% to
        $65.8 M, due to the acquisition of Copa completed in October 2006,
        coupled with a 25.9% organic growth (at constant exchange rates)
        largely attributable to the Enviroquip division, which benefits from
        growing demand in North American municipal markets for its principal
        products, including for submerged membrane bioreactors (MBR). In
        addition, the Water Treatment Group increased its sales and
        international presence in the water intake screening market niche
        with its Brackett Green technologies, especially in the Middle East
        and Europe. For the first six months of the current fiscal year, the
        group's revenues rose 66.4% to $120.5 M.

    -   The Pulp and Paper Group's second-quarter grew by 18.3% to $58.2 M.
        In addition to benefiting from the contribution of the previous
        year's acquisitions, this group posted a 2.1% organic growth (at
        constant exchange rates). Year-to-date revenues rose 16.8% to
        $116.1 M, driven by the development of its international presence and
        the strengthening of its technological portfolio. The group has been
        awarded several large-scale contracts since the beginning of the
        current fiscal year, including two worth a total of over $80 M. These
        major orders provide the group with important visibility on the
        international scene, while also allowing it to leverage its excellent
        technological portfolio, including the technologies acquired from
        Metso Paper and Kvaerner in December 2006, which are successfully
        marketed to a growing international customer base.

    The August 8, 2007 carve-out transaction in connection with the closing of
the Arrangement has entailed non-recurring costs of $5.8 M since the beginning
of the current fiscal year, $4.9 M of which in the second quarter. Excluding
these costs and other non-recurring items, GLV's consolidated and combined
carve-out normalized EBITDA(1) amounted to $4.8 M in the second quarter ($4.0
M the previous year) and to $9.4 M for the six-month period ($8.1 M the
previous year). The normalized EBITDA margin as a percentage of revenues stood
at 3.8% and 3.9% respectively for the three-month and six-month periods,
compared with 4.4% and 4.5% for the same periods last year.

    -   The Water Treatment Group's normalized EBITDA, expressed in dollars,
        grew by 11.8% in the second quarter and by 27.2% for the six-month
        period. However, its profit margin as a percentage of revenues
        declined in the second quarter and in the first half of the current
        fiscal year. This group's North American profitability continues to
        be affected by the weaker profitability of contracts using
        conventional technologies, and the fact that its business in the
        United States and Canada is being disrupted by the carve-out
        operation under way. In fact, with respect to the carve-out
        transaction, GLV undertook to separate the resources, management
        systems, operations and assets common to GLV's Water Treatment Group
        and the Process Group, which is now part of FLS. Management expects
        that a significant proportion of the operation, which mainly concerns
        the activities located in the United States and Canada, will be
        completed by the end of the current fiscal year. In addition,
        GLV decided to take advantage of this transition to restructure its
        Water Treatment Group in North America in order to improve its
        positioning and profitability.

    -   The Pulp and Paper Group's normalized EBITDA increased by 33.1% in
        the second quarter, but decreased by 6.1% in the first half of the
        current fiscal year. Besides the unfavourable impact of currency
        fluctuations, its profit margin is sustaining a downward pressure as
        a result of the booking of large-scale contracts that yield lower
        profit margins than those it has traditionally posted.

    GLV's amortization expense almost doubled compared with the previous year,
due to the increase in the amortization of intangible assets resulting from
the Enviroquip and Copa acquisitions, which affected results for an amount of
$1.2 M in the second quarter and $2.7 M in the first half of the current
fiscal year. The amortization of intangible assets represents a new factor in
our results, which creates some distortion in comparing the financial
performance of GLV's operating units with the previous year, since unlike
property, plant and equipment, some of the intangible assets do not have to be
regularly renewed by way of new investments.
    Consequently, taking into account the non-recurring costs directly related
to the closing of the Arrangement, GLV recorded a net loss of $2.2 M or $0.08
per share in the second quarter, and a net loss of $2.7 M or $0.11 per share
for the six-month period. Excluding such costs and other non- recurring items
(net of related taxes), GLV posted consolidated and combined carve-out
normalized net earnings(3) of $0.4 M or $0.02 per share for the second
quarter, and $0.8 M or $0.03 per share for the six-month period. These results
are in line with management's expectation.

    Balance Sheet Highlights as at September 30, 2007
    -------------------------------------------------

    Pursuant to the August 8, 2007 carve-out transaction, GLV issued capital
stock with a book value of $172.0 M, and almost all of the advances from
companies of GL&V were capitalized. As a result, GLV closed the quarter with
shareholders' equity of $155.1 M and a total net debt of $53.4 M, representing
a total net debt/invested capital ratio of 25.6%. The Company is therefore in
a sound financial position to carry on its business and development projects,
also considering that its unused credit facilities amounted to approximately
$78 M as at September 30, 2007.

    Outlook
    -------

    As at September 30, 2007, GLV's order backlog totalled $331.2 M, up from
$203.2 M at the same date last year. Without the unfavourable impact of
currency fluctuations, it showed a 71.7% growth over September 30, 2006 and a
6.2% increase within three months, since June 30, 2007. Based on the order
backlog and current market conditions, the Company maintains its revenue
forecast of $500 M to $545 M for GLV's first full year of operations.

    -   As at September 30, 2007, the Water Treatment Group's order backlog
        reached $174.4 M. At constant exchange rates, its orders were up
        45.3% over September 30, 2006, and up 3.8% over June 30, 2007. Not
        only does it benefit from strong demand in the U.S. and Canadian
        municipal markets, but it has also been recently awarded major
        contracts in the U.K. municipal market and energy segment, as well as
        orders for industrial applications in Latin America and Asia. In
        fact, the industrial segment accounts for a growing proportion of the
        Water Treatment Group's order backlog, consistent with its objective
        of better balancing revenues between the municipal and industrial
        markets. The group's aftermarket orders are also growing. In its
        current product portfolio, Brackett Green's water intake screening
        systems and the submerged membrane bioreactors (MBR) are the
        technologies offering the greatest aftermarket revenue potential. The
        Water Treatment Group's efforts in upcoming quarters will target the
        following main goals: further penetrate the industrial segment in its
        key territories, increase its aftermarket business base, expand its
        outsourcing network, reorganize its North American operations,
        finalize its restructuring in Europe and optimize its overall
        business processes. Over the longer term, GLV remains focused on its
        objective of positioning the Water Treatment Group as a key player in
        its industry, and will therefore seek to integrate other
        state-of-the-art technologies into its product selection.

    -   As at September 30, 2007, the Pulp and Paper Group's order backlog
        stood at a record high of $151.1 M. At constant exchange rates, it
        reflected a 124.3% growth over the previous year and a 7.9% increase
        over last June 30. The growth in business was particularly strong in
        the United States, Europe, China and India. In terms of applications,
        it is in the pulp preparation equipment segment that the group posted
        the strongest growth, through its new technology centre in
        Karlstad (Sweden). The Pulp and Paper Group also increased its sales
        in the paper finishing segment, having notably delivered several
        BTF(TM) automatic dilution systems for headboxes worldwide. In the
        aftermarket, the Pulp and Paper Group maintains solid activity in
        North America and is gradually expanding its presence in Europe.
        While further expanding its international markets, the group
        continues to strengthen its outsourcing networks in India and China.

    As GLV has disclosed in its previous communications, management would like
to point out that the new company's short-term profit growth will likely be
slower and less consistent than that shown by GL&V in prior quarters, due
primarily to the ongoing expansion and consolidation of the Water Treatment
Group, and the more aggressive strategy adopted by the Pulp and Paper Group in
order to position itself in key sectors with new-generation technologies. This
recently allowed it to garner large-scale contracts that will provide it with
an excellent international showcase for its future growth, but yield lower
profit margins than its overall operations.
    "We are totally committed to build GLV's long-term success in order to
maximize the future value offered to our shareholders. Although this approach
may translate, in the short term, into slower growth in our groups'
profitability, we are confident that our vision and our development strategies
will contribute in the medium and long-term to position GLV among the most
influential and profitable companies in its target markets worldwide,"
indicated Laurent Verreault, Chairman of the Board and Chief Executive
Officer, and Richard Verreault, President and Chief Operating Officer.

    About GLV Inc.
    --------------

    GLV Inc. was founded on May 15, 2007 to carry on the activities of the
Water Treatment Group and the Pulp and Paper Group formerly conducted by
Groupe Laperrière & Verreault Inc. The Water Treatment Group specializes in
the design and marketing of solutions for the treatment of municipal and
industrial wastewater and water used in various industrial processes, and also
offers water intake screening solutions for power stations and desalination
plants. The Pulp and Paper Group specializes in the design and marketing of
equipment used in various stages of pulp and paper production, notably
chemical pulping, pulp preparation and sheet formation, and is recognized
leader in rebuilding, upgrading and optimization services for existing
equipment, as well as the sale of spare parts. GLV is present in some
30 countries and has approximately 1,500 employees.

    Summary of Consolidated and Combined Carve-Out Operating Results

    -------------------------------------------------------------------------
    (in thousands of $,                        Periods Ended September 30,
     except per share data)
    -------------------------------------------------------------------------
                                             Three Months       Six Months
    -------------------------------------------------------------------------
                                             2007     2006     2007     2006
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
    Water Treatment                        65,834   39,059  120,511   72,438
    -------------------------------------------------------------------------
    Pulp and Paper                         58,153   49,150  116,070   99,352
    -------------------------------------------------------------------------
    Other and eliminations                  1,900    3,857    4,574    6,661
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                 125,887   92,066  241,155  178,451
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Gross margin                           27,699   19,814   52,385   39,538
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Costs Related to the Arrangement        4,900        -    5,797        -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBITDA(1):
    -------------------------------------------------------------------------
    Water Treatment                         3,469    3,102    6,546    5,146
    -------------------------------------------------------------------------
    Pulp and Paper                          3,040    2,284    6,018    6,411
    -------------------------------------------------------------------------
    Other and eliminations                 (1,670)  (1,377)  (3,164)  (3,450)
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   4,839    4,009    9,400    8,107
    -------------------------------------------------------------------------
    Amortization:
    -------------------------------------------------------------------------
    Water Treatment                         1,356      333    2,749      538
    -------------------------------------------------------------------------
    Pulp and Paper                            792      631    1,544    1,237
    -------------------------------------------------------------------------
    Other and eliminations                    623      580    1,342    1,157
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   2,771    1,544    5,635    2,932
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBIT(2):
    -------------------------------------------------------------------------
    Water Treatment                         2,113    2,769    3,797    4,608
    -------------------------------------------------------------------------
    Pulp and Paper                          2,248    1,653    4,474    5,174
    -------------------------------------------------------------------------
    Other and eliminations                 (2,293)  (1,957)  (4,506)  (4,607)
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   2,068    2,465    3,765    5,175
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net earnings (loss)                    (2,156)     745   (2,733)   3,173
    -------------------------------------------------------------------------
    -  per share (basic and diluted)        (0.08)    0.03    (0.11)    0.12
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized net earnings(3)                440      751      766    2 962
    -------------------------------------------------------------------------
    -  per share (basic and diluted)         0.02     0.03     0.03     0.12
    -------------------------------------------------------------------------


    Order Backlogs
    (in thousands of $)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                           September      June     March  December September
                            30, 2007  30, 2007  31, 2007  31, 2006  30, 2006
    -------------------------------------------------------------------------
    Water Treatment Group    174,408   178,205   162,574   171,560   130,565
    Pulp and Paper Group     151,081   143,276    79,494    80,753    68,348
    Manufacturing Group        5,750     3,768     4,969     4,246     4,260
    -------------------------------------------------------------------------
    Total                    331,239   325,249   247,037   256,559   203,173
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note:  As at September 30, 2007, the Company changed the order backlog
           presentation. Thus, instead of presenting segmented eliminations
           on a combined basis as was done previously, these eliminations are
           now deducted within the order backlogs of the respective groups.
           The presentation of order backlogs for previous quarters has been
           adjusted accordingly.

    (1)    Earnings before amortization, financial expenses, income taxes,
           gains or losses on disposal of property, plant and equipment and
           other assets, and before non-recurring costs directly related to
           the Arrangement.
    (2)    Earnings before financial expenses, income taxes, gains or losses
           on disposal of property, plant and equipment and other assets, and
           before non-recurring costs directly related to the Arrangement.
    (3)    Earnings before gains or losses on disposal of property, plant and
           equipment and other assets, and before non-recurring costs
           directly related to the Arrangement (net of related taxes).
    (4)    Normalized EBITDA, normalized EBIT and normalized net earnings are
           not performance measures consistent with Canadian generally
           accepted accounting principles ("GAAP"). The information regarding
           measures not consistent with Canadian GAAP is contained in the
           Company's management's report appended to this press release and
           filed on SEDAR as at November 12, 2007.
    (5)    Certain statements that describe GLV Inc.'s objectives,
           projections, estimates, expectations or forecasts may constitute
           forward-looking statements within the meaning of securities
           legislation. GLV'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, GLV'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 WITH INVESTORS
         ON FINANCIAL RESULTS FOR THE SECOND QUARTER OF FISCAL 2008

           Monday, November 12, 2007 at 10:00 a.m. (Montreal time)

    To participate in the conference call, please dial 1-800-731-5774 a few
    minutes before the start of the call. For those unable to participate, a
    taped re-broadcast will be available Monday, November 12, 2007 from
    4:00 until midnight, Monday, November 19, 2007, by dialing: 1-877-289-
    8525; access code 21252372 #. THE CONFERENCE CALL (AUDIO)
    WILL ALSO BE AVAILABLE AT WWW.GLV.COM. Members of the media are invited
    to listen in.
    -------------------------------------------------------------------------


                         INTERIM MANAGEMENT'S REPORT
               For the Three-Month and Six-Month Periods Ended
                             September 30, 2007

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

    -------------------------------
    FOREWORD TO MANAGEMENT'S REPORT
    -------------------------------

    Basis of Presentation

    On August 8, 2007, the carve-out transaction pursuant to the Arrangement
("the Arrangement") between Groupe Laperrière & Verreault Inc. ("GL&V"), its
shareholders and FLSmidth & Co. A/S ("FLS") was completed. Therefore, all the
assets and liabilities of GL&V's Water Treatment Group, Pulp and Paper Group
and Manufacturing Unit (the "Retained Businesses") were acquired by the new
company GLV Inc. ("GLV" or "the Company"), incorporated to that end on May 15,
2007. The Arrangement closed on August 10, 2007 and GLV was listed on the TSX
on August 9, 2007. (A detailed description of the Arrangement and the carve-
out transaction is provided in the "Significant Events" section of this
Interim Management's Report.)
    The new company GLV having adopted the same fiscal year-end as GL&V, March
31st. This Interim Management's Report covers the three-month and six- month
periods ended September 30, 2007 and 2006. It presents the combined carve-out
financial results of the Retained Businesses for the period extending from
April 1 to August 8, 2007 and, for the 53-day period between August 9 and
September 30, 2007, it presents the actual consolidated results of GLV and its
operational units. The discussion and analysis of statements of earnings,
statements of cash flows and the balance sheet must take the following facts
into consideration:

    -   The combined carve-out statements of earnings and statements of cash
        flows for the period extending from April 1, 2007 to August 8, 2007
        are derived from GL&V's accounting records using the historical cost
        basis assets and liabilities and the historical results of the
        Retained Businesses of GLV. In addition to the expenses and direct
        costs exclusively attributable to the operations of the
        Water Treatment Group, the Pulp and Paper Group and the
        Manufacturing Unit, they include a portion of GL&V's corporate office
        selling and administrative expenses. These expenses are allocated
        between the Retained Businesses and the operations related to the
        Process Group as set forth hereinafter, as well as in note 2 to the
        interim consolidated and combined carve-out financial statements
        accompanying this Interim Management's Report. Management would like
        to point out that, although the assumptions underlying the historical
        combined carve-out financial statements are in its opinion
        reasonable, they do not necessarily reflect GLV's operating results,
        financial position and cash flows for upcoming periods, nor what the
        operating results, financial position and cash flows would have been
        if the Retained Businesses had been a stand-alone entity during the
        reporting periods.

    -   In the combined carve-out balance sheet as at March 31, 2007, net
        assets of the Retained Businesses are presented as equity invested by
        GL&V, and the debt is largely comprised of advances from companies of
        GL&V. This presentation makes the comparison with the new company's
        actual consolidated balance sheet as at September 30, 2007 difficult.

    This Interim Management's Report should be read in conjunction with the
unaudited interim consolidated and combined carve-out financial statements and
notes hereto accompanying this Interim Management Report. The reader is also
invited to refer to the Information Circular ("the Circular") distributed to
GL&V's shareholders and filed on SEDAR (www.sedar.com) as at June 20, 2007,
for the purposes of the Special General Meeting of Shareholders held on
July 27, 2007 in order to approve the Arrangement. The Circular is also
available on GLV's web site at www.glv.com.
    In this Interim Management's Report, "GLV" or the "Company" designate, as
the case may be, GLV Inc. and its subsidiaries and divisions or GLV Inc. or
one of its subsidiaries or divisions. Similarly, "Groupe Laperrière &
Verreault Inc." or "GL&V" designate, 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.
    In this Interim Management's Report, GLV's fiscal year ending March 31,
2008 and GL&V's fiscal year ended March 31, 2007 and previous fiscal years are
designated by the terms "fiscal 2008", "fiscal 2007", "fiscal 2006" and
"fiscal 2005". The "second quarter of fiscal 2008" and the "second quarter of
fiscal 2007" refer to the three-month periods ended September 30, 2007 and
2006 respectively.
    Unless otherwise indicated, the financial information presented in this
Interim Management's Report, including tabular amounts, is expressed in
Canadian dollars. The Canadian dollar is also GL&V's and New GLV's measurement
currency. Unless otherwise indicated, the analysis of results for the
reporting period in question is made in comparison with financial results for
the equivalent period of the previous fiscal year. The initial "M" means
"millions of dollars".
    The interim consolidated and combined carve-out financial statements
contained in this Interim Report have not been reviewed nor audited by the
Company's external auditors.

    Compliance with Generally Accepted Accounting Principles ("GAAP") in
    Canada

    The financial information presented in this Interim Management's Report,
including tabular amounts, is prepared in accordance with Canadian GAAP. The
information contained in the Interim Management's 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
        gains or losses on disposal of property, plant, equipment and other
        assets, and before non-recurring costs directly related to the
        Arrangement;

    -   EBIT: earnings before financial expenses and income taxes;

    -   normalized EBIT: according to the reporting periods, EBIT before
        gains or losses on disposal of property, plant, equipment and other
        assets, and before non-recurring costs directly related to the
        Arrangement; and

    -   normalized net earnings: according to the reporting periods, earnings
        before gains or losses on disposal of property, plant, equipment and
        other assets, and before non-recurring costs directly related to the
        Arrangement (net of related taxes).

    Such measures allow Management to assess the operational and financial
performance of the various operating groups. These measures are also commonly
used by the investment community to analyze and compare the performance of
companies engaged in the same industries. 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. Management's definition of these measures may not be
similarly titled measures reported by other companies. A table presenting the
reconciliation between these measures and the most comparable GAAP measures
for the quarters ended September 30, 2007 and 2006 is presented elsewhere in
this Interim Management's Report.

    General Corporate Office Expenses Allocated to the Retained Businesses,
    Bonus Expenses, Stock Options and Other Stock-Based Compensation Plans
    for the Periods between April 1 and August 8, 2007, and between
    April 1 and September 30, 2006.

    For the periods prior to the carve-out transaction, specifically those
extending from April 1 to August 8, 2007 and, for the previous year, the
three- month and six-month periods ended September 30, 2006, GL&V has
allocated most of the selling and administrative expenses of the corporate
office (included in the "administrative expenses" account of the combined
carve-out statements of earnings) to the Retained Businesses of GLV on the
basis of the percentage of revenues generated. Allocated costs relate to human
resources, legal, treasury, insurance, finance, taxation, accounting,
marketing, strategic development, investor relations and public affairs. The
costs allocated are not necessarily indicative of the costs that would have
been incurred if the Retained Businesses had performed the functions as a
stand-alone entity during the periods presented, nor are they indicative of
the costs that have been or will be incurred by GLV subsequent to the transfer
of such businesses, effective August 8, 2007.
    For the same periods, bonus expenses related to GL&V's corporate office
employees, as well as the stock option expenses and other stock-based
compensation expenses formerly in effect at GL&V, have been allocated on the
basis of earnings before amortization, financial expenses and income taxes of
each combined entity. These expenses are not necessarily indicative of what
they would have been had the Retained Businesses been a stand-alone entity
during the periods presented.

    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 GLV's operations and financial position. The
statements set forth in this Interim Management's Report and certain other
sections of the interim report that describe management'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. Management would like to point out that, by their very nature,
forward-looking statements involve a number of risks and uncertainties such
that 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, 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.

    Effectiveness of Disclosure Controls and Procedures and Internal Control
    Over Financial Reporting

    Management of the former GL&V and the new GLV 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
(who today hold the positions of Chief Executive Officer and Executive Vice-
President and Chief Financial Officer at GLV), with the participation of the
Company's management, concluded that the design and operation of the Company's
disclosure controls and procedures are effective. The Chief Executive Officer
and Chief Financial Officer also concluded that GL&V has designed appropriate
internal control 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 GAAP.
    No other changes to internal control over financial reporting has come to
Management's attention during the three-month and six-month periods ended
September 30, 2007 that have materially adversely affected, or are reasonably
likely to materially adversely affect, the Company's internal control over
financial reporting.

    -----------------
    BUSINESS OVERVIEW
    -----------------

    About GLV

    Founded on May 15, 2007 to acquire and carry on part of GL&V's business
pursuant to the Arrangement, GLV Inc. is a global provider of technologies and
processes designed for various environmental, municipal and industrial
applications. Its operations are divided into two main groups:

    -   Created in April 2004, the Water Treatment Group specializes in the
        design and marketing of equipment for the treatment of municipal and
        industrial wastewater and water used in various industrial processes,
        as well as water intake screening solutions for certain types of
        power stations and desalination plants.

    -   The Pulp and Paper Group has specialized for over 30 years 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 equipment, as well as the sale of replacement
        parts.

    In addition, the Manufacturing Unit 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 the Pulp and Paper Group.

    GLV is present in some 30 countries and has close to 1,500 employees.
Since August 13, 2007, its shares are traded on the TSX under the ticker
symbols LVG.A and LVG.B.

    ------------------
    SIGNIFICANT EVENTS
    ------------------

    Arrangement between GL&V, its Shareholders and FLS
    (Closed August 10, 2007)

    On April 20, 2007, GL&V and the Danish company FLSmidth & Co. A/S ("FLS")
announced the signing of an agreement under a Plan of Arrangement, pursuant to
which GL&V would transfer its Water Treatment Group, its Pulp and Paper Group
and its Manufacturing Unit into the new corporation GLV Inc. to be spun off to
GL&V's shareholders and subsequently listed on the TSX. Immediately
thereafter, FLS would acquire all the Class A subordinate voting shares and
Class B multiple voting shares outstanding of GL&V, thereby becoming the
effective owner of 100% of GL&V's Process Group, for a cash consideration
equivalent to $33.00 per share of GL&V and the assumption of the net debt,
with the exception of a net debt of $50.0 M to be assumed by New GLV. Pursuant
to the Arrangement, each GL&V shareholder would receive a per-share
consideration of $33.00 in cash and one New GLV share of the same class (Class
A subordinate voting or Class B multiple voting) for each share held. The
proposed Arrangement was subject to shareholder approval by a resolution
approved by no less than 75% of the votes cast in each of GL&V's share classes
(Class A subordinate voting and Class B multiple voting) during a Special
General Meeting of Shareholders. It was also subject to a number of
conditions, including approval by the Quebec Superior Court, acceptance by the
TSX and other regulatory approvals.
    A detailed description of the Arrangement and the steps taken by GL&V in
connection with this transaction is provided in the Circular prepared for
GL&V's Special General Meeting and filed on SEDAR on June 20, 2007
(www.sedar.com) under the profile of Groupe Laperrière & Verreault Inc. The
Circular is also available on GLV's website at www.glv.com.
    On July 27, 2007 GL&V's shareholders present or represented by proxy at
the Special General Meeting approved the Arrangement, in a majority of 99.92%
of the votes cast by the holders of Class A subordinate voting shares, and
unanimously by the holders of Class B multiple voting shares, for a combined
majority of 99.97% of the votes cast in the two share classes. On July 31,
2007, the Quebec Superior Court issued a final order approving the Plan of
Arrangement. On August 8, 2007, after the other required approvals had been
obtained, including those of the Federal Department of Industry and relevant
competition authorities in various countries, the principal carve-out
transactions were effected to complete the Arrangement. The Arrangement closed
on August 10, 2007, after which the transfer agent proceeded to distribute
GLV's shares and cash payments to GL&V's shareholders. At the close of markets
on August 10, 2007, GL&V was delisted from the TSX and when markets opened on
August 13, 2007, GLV's stock began trading under the ticker symbols LVG.A and
LVG.B.

    Financing of New GLV

    On August 8, 2007, GLV obtained a credit facility from a Canadian
financial institution for an aggregate value of $175 M, consisting of two non-
reducing revolving credits. Of this amount, $125 M is intended to finance
business acquisitions, meet day-to-day financing requirements and issue
letters of credit. The remaining $50 M may be used to issue letters of credit
guaranteed by Export and Development Canada (EDC). GLV used part of the $125 M
credit facility to finance the cash consideration of the carve-out transaction
effective August 8, 2007. (See note 1(d) to the interim consolidated and
combined carve-out financial statements accompanying this Interim Management's
Report.) No capital repayment on the long-term debt is required before it
comes due in August 2012.

    Description and Financial Impact of Carve-Out Transactions
    (August 8, 2007)

    On August 8, 2007, the principal carve-out transactions effected to
complete the Arrangement consisted in the transfer, from GL&V to GLV, of all
the shares of the subsidiaries operating within the Water Treatment Group and
the Pulp and Paper Group, of all the assets (including intangible assets) and
liabilities of the divisions included in these groups, and of all the assets
and liabilities of the Manufacturing Unit and head office. The shares and net
assets transferred to GLV, which are described in further detail in note 1(a)
to the interim consolidated and combined carve-out financial statements
accompanying this Interim Management's Report, were acquired for the following
consideration:

    -   the issue of 22,837,075 Class A subordinate voting shares equal to a
        legal stated capital amount of $201.4 M and 2,551,805 Class B
        multiple voting shares, equal to a legal stated capital amount of
        $22.5 M; and

    -   a cash payment of $62.9 M, obtained from GLV's new credit facility,
        representing the assumption of the net debt related to the Retained
        Businesses, the other compensation owed to employees and the balance
        of the inter-company debts not yet repaid at the carve-out date.

    Because the carve-out transaction was between companies under common
control, it was recorded at book value of $172.0 M in GLV's consolidated
balance sheet.
    Concurrently with the carve-out transaction, almost all of the advances
made to the Retained Businesses by companies of GL&V were capitalized. Before
the end of the current fiscal year, the balance of the advances will be repaid
through the transfer to GL&V of certain net operational assets related to the
Process Group.
    The Carve-out Agreement provides for an adjustment of GLV's debt, net of
cash and cash equivalents and temporary investments, based on GLV's audited
opening balance sheet as at August 8, 2007. The estimated adjustments of cash
payment was accounted for against shareholders' equity as at September 30,
2007 and will be subject to, if any, a final adjustment upon approval by the
parties to the Carve-out Agreement. If a difference should arise compared to
the estimated adjustment, it will also be accounted for against the
shareholders' equity.
    Finally, the costs related to the Arrangement include the costs which
would not have been incurred by GLV if there had been no Arrangement. The
costs include a charge of $4.3 related to other compensation, a $0.8 charge
for professional fees related to the audit of GLV's opening balance sheet and
other carve-out expenses totaling $0.7. Pursuant to the Arrangement, the
payment related to other compensation was partially supported by GL&V. It is
estimated that an additional amount of approximately $0.7 will be incurred in
the following quarters in order to complete the transition. This last amount
was not provided for as a provision as at September 30, 2007.

    2004-2007 Business Development of the Water Treatment Group: Creation and
    Expansion

    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 GL&V's 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
activities relating to the treatment of municipal and industrial wastewater,
industrial process water and drinking water carried out by GLV's various
international subsidiaries. For its first complete fiscal year, being GL&V's
fiscal year ended March 31, 2005, the Water Treatment Group recorded revenues
of approximately $75 million. Two years later, for GL&V's fiscal year ended
March 31, 2007, its revenues reached more than $212 million.

    During GL&V's fiscal 2006, this group completed three acquisitions:

    -   On April 1, 2005, acquisition of certain water treatment related
        assets and operations of the British company Jones & Attwood
        ("Jones & Attwood"), based in the United Kingdom 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
        the United Kingdom and its Texas (USA) subsidiary, a world leader in
        advanced water intake screening and filtration technologies used by
        power stations, desalination plants and various other types of
        industries. Brackett Green also offers a broad selection of municipal
        and industrial wastewater treatment equipment. In addition, the Caird
        & Rayner Clark division offers advanced seawater desalination
        technologies.

    -   On January 9, 2006, acquisition of certain assets and operations of
        the Paper Chemical Systems Unit of Metso Paper, Inc ("Metso Paper"),
        based in 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 GL&V's fiscal 2007, the Water Treatment Group completed two
acquisitions:

    -   On June 30, 2006, acquisition of all the outstanding shares of
        Enviroquip, Inc. ("Enviroquip"), based in Texas, a producer of
        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 technology 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, the Water Treatment Group thereby secured
        exclusive rights to this technology for the whole of North America.
        The combination of Enviroquip's products and Kubota's submerged
        membrane bioreactor (MBR) provides the Water Treatment Group with an
        edge in the marketplace, having enabled it 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
        its 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.

    -   On October 16, 2006, acquisition of all the shares of two companies
        specializing in wastewater treatment solutions: COPA Limited, in the
        United Kingdom, and COPA Water Pty Ltd, in Australia ("Copa"). This
        acquisition, the fifth to be completed by the 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 bioreactors (MBR) for the municipal, commercial and
        industrial wastewater treatment markets in the United Kingdom and
        Ireland. Thus, this acquisition provided the Water Treatment Group
        with advanced technologies meeting new global market needs,
        strengthened its relationship with Kubota, increased its know-how in
        submerged membrane technology, and positioned it more solidly in
        certain high-potential regions.

    -   Toward the end of GL&V's fiscal 2007 and on October 3, 2007, after
        the end of the second quarter of GLV's fiscal 2008, two non-strategic
        divisions in Australia that were part of the Copa acquisition were
        sold. Such divestments were 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, these asset disposals allowed the group to further
        focus on its core business: industrial and municipal wastewater
        treatment and water intake screening solutions in selective growth
        markets.

    The five acquisitions made during GL&V's 2006 and 2007 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.

    2004-2007 Business Development of the Pulp and Paper Group: Further
    Penetration of International Markets and Enhancement of Technological
    Portfolio

    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 the
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 GL&V's fiscal 2006, specifically
the May 27, 2005 purchase of certain assets of Perplas Limited ("Perplas"),
based in the United Kingdom and specializing in the manufacture of stock
preparation equipment and high-turnover replacement parts ("consumables"). In
October 2006, during GL&V's last fiscal year, certain non-strategic operations
of Perplas were sold.
    The Pulp and Paper Group completed four more acquisitions during GL&V's
fiscal 2007:

    -   On April 1, 2006, acquisition of the principal assets of
        KanEng Industries Inc. ("KanEng") and KanEng-Deltec Inc. in
        Quebec City, Canada, specializing in the manufacture of high-turnover
        replacement parts ("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 Massachusetts (USA).

    -   On August 24, 2006, acquisition of the principal assets related to
        the operations of the Huyck Dewatering Equipment division of
        Xerium Technologies, Inc., in the United Kingdom. These operations
        are complementary to those of Perplas.

    -   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. Subsequent to the
        acquisition, the Pulp and Paper Group undertook to set up a chemical
        pulping technology centre in Karlstad, Sweden, which strengthens its
        European and global presence.

        This acquisition contributed to position the Pulp and Paper Group
        among the world's top providers of stock preparation equipment. The
        cooking, oxygen delignification, bleaching and wash press
        technologies 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 it 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 the following months,
        the Pulp and Paper Group was awarded several orders through its new
        Karlstad technology centre, including a contract worth 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.

    On September 13, 2007, the new company GLV made its first acquisition
since the official start of its operations, namely the principal assets of a
United Kingdom company specializing in the design and manufacture of doctor
blade systems for paper machines and high-turnover replacement parts
("consumables"). The acquired know-how and products being complementary to
those of KanEng acquired in 2006, this acquisition enables the Pulp and Paper
Group to expand its portfolio in this niche of the pulp and paper industry
while providing it with an additional revenue stream in the aftermarket.

    Financial Benefits of the Acquisitions of the Past Two Years

    The several acquisitions made by the Water Treatment Group and the Pulp
and Paper Group over the last two years contributed to raise the revenues of
the Retained Businesses of New GLV by 48.4% between March 31, 2005 and 2007,
representing an average annual growth of 21.8%. For the six-month period ended
September 30, 2007, consolidated and combined carve-out revenues posted a
35.1% increase over the corresponding period of the previous year.
    In addition, between March 31, 2005 and 2007, combined carve-out
normalized EBITDA rose 44.7% (average annual growth of 20.3%), due to the
contribution of the acquired businesses, their efficient integration with
existing operations, tight cost control and the development of the global
network of subcontractors, to whom a large proportion of the manufacturing is
outsourced in order to maintain a competitive and flexible cost structure. In
the six-month period ended September 30, 2007, consolidated and combined
carve- out normalized EBITDA grew by 15.9%.
    Normalized EBIT posted slower growth than normalized EBITDA (11.3%
annually between March 31, 2005 and 2007) and declined by 27.2% during the
six- month period ended September 30, 2007, due primarily to the increase in
amortization of intangible assets arising from the acquisitions made within
the past two fiscal years. In fact, the expansion strategy is essentially
focused on the acquisition of technologies, trademarks and other strategic
assets that enable the groups to provide an international customer base with
comprehensive value-added solutions, and thereby to secure an advantageous
position in growth niches within various markets. Furthermore, their
distinctive aftermarket expertise as OEM manufacturers of an extensive range
of products with globally recognized brand names allows them to benefit from a
source of recurring aftermarket revenues yielding attractive profit margins.
At present, the aftermarket business is especially developed in the Pulp and
Paper Group.

    ------------------------------------------------------------------------
    SELECTED FINANCIAL INFORMATION FOR THE THREE-MONTH AND SIX-MONTH PERIODS
    ------------------------------------------------------------------------

    The following tables present selected consolidated and combined carve-out
financial information relating to the Retained Businesses of New GLV for the
period extending from April 1 to August 8, 2007, and to GLV's actual results
for the period between August 9 and September 30, 2007, following the carve-
out transaction. The selected data include some segmented information
concerning the two major operating units: the Water Treatment Group and the
Pulp and Paper Group. The information relating to the Manufacturing Unit and
head office is included in the item "Other and Eliminations", since this unit
does not meet the quantitative criteria stipulated in the Canadian Institute
of Chartered Accountants ("CICA") Handbook Section 1701 for reportable
segments. The following information should be read in conjunction with (i)
this Interim Management's Report; (ii) the unaudited interim consolidated and
combined carve-out financial statements and notes thereto as at September 30,
2007 and 2006 accompanying this Interim Management's Report; and (iii) the
Circular filed on SEDAR on June 20, 2007.

    Operating Results

    -------------------------------------------------------------------------
    (in thousands of $,                        Periods Ended September 30,
     except per share data)
    -------------------------------------------------------------------------
                                             Three Months       Six Months
    -------------------------------------------------------------------------
                                             2007     2006     2007     2006
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment                      65,834   39,059  120,511   72,438
    -------------------------------------------------------------------------
      Pulp and Paper                       58,153   49,150  116,070   99,352
    -------------------------------------------------------------------------
      Other and eliminations                1,900    3,857    4,574    6,661
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                 125,887   92,066  241,155  178,451
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Gross margin                           27,699   19,814   52,385   39,538
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    EBITDA                                    (96)   3,999    3,623    8,395
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Arrangement-related costs:
    -------------------------------------------------------------------------
      Water Treatment                         144        -      173        -
    -------------------------------------------------------------------------
      Pulp and Paper(1)                    (1,146)       -      242        -
    -------------------------------------------------------------------------
      Other and eliminations                5,902        -    5,382        -
                                          --------           --------
    -------------------------------------------------------------------------
    Total                                   4,900        -    5,797        -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBITDA:
    -------------------------------------------------------------------------
      Water Treatment                       3,469    3,102    6,546    5,146
    -------------------------------------------------------------------------
      Pulp and Paper                        3,040    2,284    6,018    6,411
    -------------------------------------------------------------------------
      Other and eliminations               (1,670)  (1,377)  (3,164)  (3,450)
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   4,839    4,009    9,400    8,107
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Amortization:
    -------------------------------------------------------------------------
      Water Treatment                       1,356      333    2,749      538
    -------------------------------------------------------------------------
      Pulp and Paper                          792      631    1,544    1,237
    -------------------------------------------------------------------------
      Other and eliminations                  623      580    1,342    1,157
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   2,771    1,544    5,635    2,932
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment                       2,113    2,769    3,797    4,608
    -------------------------------------------------------------------------
      Pulp and Paper                        2,248    1,653    4,474    5,174
    -------------------------------------------------------------------------
      Other and eliminations               (2,293)  (1,957)  (4,506)  (4,607)
                                          -------- -------- -------- --------
    -------------------------------------------------------------------------
    Total                                   2,068    2,465    3,765    5,175
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Financial expenses                      1,232    1,258    2,501    1,138
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Income taxes                           (1,943)     452   (1,780)   1,152
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net earnings (loss)                    (2,156)     745   (2,733)   3,173
    -------------------------------------------------------------------------
    -  per share (basic and diluted)        (0.08)    0.03    (0.11)    0.12
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized net earnings                   440      751      766    2,962
    -------------------------------------------------------------------------
    -  per share (basic and diluted)         0.02     0.03     0.03     0.12
    -------------------------------------------------------------------------

    (1) During the second quarter, the Pulp and Paper Group reversed the
        excess portion, in relation to actual payments, of the provision it
        had recorded in anticipation of the payment, as part of the carve-out
        transaction, of other stock-based compensation related to GL&V's
        profit-sharing program.


    Highlights of Consolidated Balance Sheet as at September 30, 2007 and
    Combined Carve-Out Balance Sheet as at March 31, 2007

    -------------------------------------------------------------------------
    (in thousands of $)                               September 30, March 31,
                                                               2007     2007
    -------------------------------------------------------------------------
    Total assets                                            347,295  371,423
    -------------------------------------------------------------------------
    Shareholders'/invested equity                           155,063  116,418
    -------------------------------------------------------------------------
    Available short-term cash (1)                             4,235   21,242
    -------------------------------------------------------------------------
    Long-term liabilities (2)                                63,554  116,981
    -------------------------------------------------------------------------
    Total net debt (3)                                       53,386   89,108
    -------------------------------------------------------------------------

    (1) Includes cash, cash equivalents and temporary investments.
    (2) Includes long-term debt, pension plan liabilities and advances from
        companies of GL&V.
    (3) Consists of long-term debt and advances from companies of GL&V, less
        available cash.

    Information Regarding Non Canadian GAAP Measures

    -------------------------------------------------------------------------
                                   Three months ended September 30, 2007
                          ---------------------------------------------------
                                Water     Pulp and
                            Treatment        Paper   Others and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------
    Segmented EBIT:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     1,909  $     3,419  $    (8,195) $    (2,867)
      Costs related to
       the Arrangement            144       (1,146)       5,902        4,900
     (Gain) loss on
       disposal
       of property, plant
       and equipment and
       other assets                60          (25)           -           35
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
      (normalized EBIT)   $     2,113  $     2,248  $    (2,293) $     2,068
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     1,909  $     3,419  $    (8,195) $    (2,867)
      Amortization              1,356          792          623        2,771
    -------------------------------------------------------------------------
      Earnings (loss)
       before amortization,
       financial expenses
       and income taxes
       (EBITDA)                 3,265        4,211       (7,572)         (96)
      Costs related to
       the Arrangement            144       (1,146)       5,902        4,900
      (Gain) loss on disposal
       of property, plant and
       equipment and other
       assets                      60          (25)           -           35
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
       (nromalized EBIT)  $     3,469  $     3,040  $    (1,670) $     4,839
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings:
      Net earnings (loss)                                        $    (2,156)
      Costs related to
      the Arrangement A
      (net of related
      taxes)                                                           2,577
      (Gain) loss on
       disposal of pro-
       perty, plant and
       equipment and other
       assets (net of
       related taxes)                                                     18
    -------------------------------------------------------------------------
      Normalized earnings                                        $       439
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                   Three months ended September 30, 2006
                          ---------------------------------------------------
                                Water     Pulp and
                            Treatment        Paper   Others and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------
    Segmented EBIT:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     2,793  $     1,619  $    (1,957) $     2,455
      Costs related to
       the Arrangement              -            -            -            -
     (Gain) loss on
       disposal
       of property, plant
       and equipment and
       other assets               (24)          34            -           10
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
      (normalized EBIT)   $     2,769  $     1,653  $    (1,957) $     2,465
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     2,793  $     1,619  $    (1,957) $     2,455
      Amortization                333          631          580        1,544
    -------------------------------------------------------------------------
      Earnings (loss)
       before amortization,
       financial expenses
       and income taxes
       (EBITDA)                 3,126        2,250       (1,377)       3,999
      Costs related to
       the Arrangement              -            -            -            -
      (Gain) loss on disposal
       of property, plant and
       equipment and other
       assets                     (24)          34            -           10
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
       (nromalized EBIT)  $     3,102  $     2,284  $    (1,377) $     4,009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings:
      Net earnings (loss)                                        $       745
      Costs related to
      the Arrangement A
      (net of related
      taxes)                                                               -
      (Gain) loss on
       disposal of pro-
       perty, plant and
       equipment and other
       assets (net of
       related taxes)                                                      6
    -------------------------------------------------------------------------
      Normalized earnings                                        $       751
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                   Six months ended September 30, 2007
                          ---------------------------------------------------
                                Water     Pulp and
                            Treatment        Paper   Others and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------
    Segmented EBIT:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     3,630  $     4,248  $    (9,890) $    (2,012)
      Costs related to
       the Arrangement            173          242        5,382        5,797
     (Gain) loss on
       disposal
       of property, plant
       and equipment and
       other assets                (6)         (16)           2          (20)
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
      (normalized EBIT)   $     3,797  $     4,474  $    (4,506) $     3,765
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     3,630  $     4,248  $    (9,890) $    (2,012)
      Amortization              2,749        1,544        1,342        5,635
    -------------------------------------------------------------------------
      Earnings (loss)
       before amortization,
       financial expenses
       and income taxes
       (EBITDA)                 6,379        5,792       (8,548)       3,623
      Costs related to
       the Arrangement            173          242        5,382        5,797
      (Gain) loss on disposal
       of property, plant and
       equipment and other
       assets                      (6)         (16)           2          (20)
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
       (nromalized EBIT)  $     6,546  $     6,018  $    (3,164) $     9,400
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings:
      Net earnings (loss)                                        $    (2,733)
      Costs related to
      the Arrangement A
      (net of related
      taxes)                                                           3,511
      (Gain) loss on
       disposal of pro-
       perty, plant and
       equipment and other
       assets (net of
       related taxes)                                                    (12)
    -------------------------------------------------------------------------
      Normalized earnings                                        $       766
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                   Six months ended September 30, 2006
                          ---------------------------------------------------
                                Water     Pulp and
                            Treatment        Paper   Others and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------
    Segmented EBIT:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     4,769  $     5,301  $    (4,607) $     5,463
      Costs related to
       the Arrangement              -            -            -            -
     (Gain) loss on
       disposal
       of property, plant
       and equipment and
       other assets              (161)        (127)           -         (288)
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
      (normalized EBIT)   $     4,608  $     5,174  $    (4,607) $     5,175
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
      Earnings (loss)
       before financial
       expenses and income
       taxes (EBIT)       $     4,769  $     5,301  $    (4,607) $     5,463
      Amortization                538        1,237        1,157        2,932
    -------------------------------------------------------------------------
      Earnings (loss)
       before amortization,
       financial expenses
       and income taxes
       (EBITDA)                 5,307        6,538       (3,450)       8,395
      Costs related to
       the Arrangement              -            -            -            -
     (Gain) loss on disposal
       of property, plant and
       equipment and other
       assets                    (161)        (127)           -         (288)
    -------------------------------------------------------------------------
      Normalized earnings
       (loss) before
       financial expenses
       and income taxes
       (normalized EBIT)  $     5,146  $     6,411  $    (3,450) $     8,107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings:
      Net earnings (loss)                                        $    (3,173)
      Costs related to
      the Arrangement A
      (net of related
      taxes)                                                               -
      (Gain) loss on
       disposal of pro-
       perty, plant and
       equipment and other
       assets (net of
       related taxes)                                                   (211)
    -------------------------------------------------------------------------
      Normalized earnings                                        $     2,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ANALYSIS OF CONSOLIDATED AND COMBINED CARVE-OUT OPERATING RESULTS FOR THE
    THREE-MONTH AND SIX-MONTH PERIODS ENDED SEPTEMBER 30, 2007

    Currency Fluctuations

    As GLV's operations are conducted in some 30 countries, its results are
exposed to currency fluctuations in relation to the Canadian dollar, primarily
the U.S. dollar, the pound Sterling and the Euro. The following table
summarizes the impact of currency fluctuations on the principal statement of
earnings items for the three-month and six-month periods ended September 30,
2007, compared with the exchange rates effective during the same periods the
previous year.

    Favourable (Unfavourable) Impact of Currency Fluctuations

    -------------------------------------------------------------------------
    (in thousands of $)                                   Periods Ended
                                                       September 30, 2007
    -------------------------------------------------------------------------
                                                   Three Months   Six Months
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment                                    (1,777)        (626)
    -------------------------------------------------------------------------
      Pulp and Paper                                     (1,887)      (1,223)
    -------------------------------------------------------------------------
      Other and eliminations                                (31)         (35)
                                                         -------      -------
    -------------------------------------------------------------------------
     Total                                               (3,695)      (1,884)
    -------------------------------------------------------------------------

    Gross margin                                           (847)        (498)
    -------------------------------------------------------------------------

    EBITDA:
    -------------------------------------------------------------------------
      Water Treatment                                      (149)          (4)
    -------------------------------------------------------------------------
      Pulp and Paper                                       (291)        (446)
    -------------------------------------------------------------------------
      Other and eliminations                                154          190
                                                         -------      -------
    -------------------------------------------------------------------------
     Total                                                 (286)        (260)
    -------------------------------------------------------------------------

    EBIT:
    -------------------------------------------------------------------------
      Water Treatment                                      (116)         (10)
    -------------------------------------------------------------------------
      Pulp and Paper                                       (266)        (432)
    -------------------------------------------------------------------------
      Other and eliminations                                 77          128
                                                         -------      -------
    -------------------------------------------------------------------------
     Total                                                 (305)        (314)
    -------------------------------------------------------------------------

    The fluctuation in various exchange rates had an unfavourable impact on
consolidated and combined carve-out operating results for the second quarter
and, to a lesser extent, on those for the first six months of fiscal 2008.
Currency fluctuations mainly affected the Pulp and Paper Group. Their impact
on the Water Treatment Group's operating results was less significant in the
second quarter, and immaterial for the full six-month period.

    Revenues

    -------------------------------------------------------------------------
    (in thousands of $)                     Periods Ended September 30
    -------------------------------------------------------------------------
                                      Three Months                Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Revenues:
    -------------------------------------------------------------------------
      Water Treatment          65,834       39,059      120,511       72,438
      Pulp and Paper           58,153       49,150      116,070       99,352
      Other and eliminations    1,900        3,857        4,574        6,661
                              --------     --------     --------      -------
    -------------------------------------------------------------------------
    Total                     125,887       92,066      241,155      178,451
    -------------------------------------------------------------------------

    Revenue mix:
    -------------------------------------------------------------------------
      New equipment            91,246       54,754      164,988      102,132
      Aftermarket              34,641       37,312       76,167       76,319
                              --------     --------     --------     --------
    -------------------------------------------------------------------------
    Total                     125,887       92,066      241,155      178,451
    -------------------------------------------------------------------------


    THREE-MONTH PERIOD
    ------------------

    Consolidated and combined carve-out revenues for the second quarter of
fiscal 2008 grew by $33.8 M or 36.7% over the combined carve-out revenues for
the second quarter of fiscal 2007. Excluding the impact of exchange rate
fluctuations, the revenue growth would have been 40.7%. The revenue increase
is primarily attributable to the five acquisitions of the previous 12 months,
combined with organic growth of approximately 10.0% (at constant exchange
rates) for the Company as a whole.

    -  The Water Treatment Group's second-quarter revenues grew by $26.8 M or
       68.6% ($28.6 M or 73.1% increase at constant exchange rates), as a
       result of the October 2006 acquisition of Copa, coupled with a 25.9%
       organic growth (at constant exchange rates) largely attributable to
       the Enviroquip division. Enviroquip benefits from growing demand in
       North American municipal markets for its principal products, including
       for submerged membrane bioreactors (MBR). In addition, the Water
       Treatment Group increased its sales and international presence in the
       water intake screening market niche with its Brackett Green
       technologies, especially in the Middle East and Europe.

    -  The Pulp and Paper Group achieved a $9.0 M or 18.3% increase in its
       second-quarter revenues ($10.9 M or 22.2% growth at constant exchange
       rates), driven by the development of its international presence and
       the enhancement of its technological portfolio following the
       acquisitions of the previous quarters. Excluding the acquisitions,
       this group's revenues posted a 2.1% organic growth at constant
       exchange rates. It should be pointed out that the Pulp and Paper
       Group's revenues had suffered a set-back in the second quarter of
       fiscal 2007, due to the end-of-period status of the execution schedule
       and billing of certain contracts. Since the beginning of fiscal 2008,
       nonetheless, the Pulp and Paper Group has been awarded several major
       contracts, including two worth a total of over $80 M. Its second-
       quarter revenue growth was particularly strong in the United States,
       Europe, China and India. In terms of applications, the strongest
       revenue growth was in the pulp preparation equipment segment. Through
       its new technology centre in Karlstad (Sweden), the group succeeded in
       leveraging its excellent product portfolio in this particular niche,
       including the technologies acquired from Metso Paper and Kvaerner in
       December 2006 such as the Compact Press(TM) pressure washing
       technology, which it is marketing to a growing international customer
       base. The Pulp and Paper Group also posted growth in the paper
       finishing segment, having notably delivered several BTF(TM) automatic
       dilution systems for headboxes worldwide. In the aftermarket, the Pulp
       and Paper Group maintains solid activity in North America and is
       gradually expanding its presence in Europe.

       Overall consolidated and combined carve-out revenues from the sale of 
new equipment increased by $36.5 M or 66.6% to account for 72.5% of total
revenues, compared with 59.5% in the same quarter the previous year. This
growth can be explained by the expansion of the Water Treatment Group which
generates the greater proportion of its revenues the new equipment segment
(91.7% in the second quarter of fiscal 2008), and by the Pulp and Paper
Group's booking of several new equipment contracts following the acquisition
of new state-of-the-art technologies in December 2006 and the subsequent
setting up of its technology centre in Sweden. Aftermarket consolidated and
combined carve-out revenues decreased by $2.7 M or 7.2%, due largely to the 
unfavourable impact of currency fluctuations.

    SIX-MONTH PERIOD
    ----------------

    Consolidated and combined carve-out revenues for the first half of fiscal
2008 grew by $62.7 M or 35.1% over the same period a year earlier ($64.6 M or
36.2% growth at constant exchange rates). This increase is largely
attributable to the previous year's five acquisitions. Excluding the
acquisitions and the impact of currency fluctuations, revenues posted a 1.9%
organic growth at constant exchange rates.

    -  The Water Treatment Group achieved a $48.1 M or 66.4% increase in its
       first-half revenues due to the contribution of Enviroquip and Copa,
       respectively acquired at the very end of the first quarter and during
       the third quarter of the previous year. Excluding the impact of the
       2006 acquisitions and asset divestiture, as well as the effect of
       currency fluctuations, which was not significant for the six month-
       period, this group's revenues posted a 7.8% organic growth at constant
       exchange rates. The Water Treatment Group recorded approximately 73%
       of its revenues in the municipal segment (compared with 60% in the
       same period last year) and 27% in the industrial segment (40% last
       year). The greater proportion of the municipal segment in the revenue
       mix for the current fiscal year is attributable to the June 2006 and
       October 2006 acquisitions of Enviroquip and Copa.

    -  The Pulp and Paper Group's year-to-date revenues grew by $16.7 M or
       16.8% ($17.9 M or 18.1% growth at constant exchange rates),
       attributable mainly to the acquisition of state-of-the-art fibre
       processing and pulp preparation technologies in December 2006.
       Subsequent to this acquisition, the group was awarded several major
       contracts, including a $60 M order for which it started recognizing
       revenues in the first quarter. The past year's acquisition of certain
       assets of J&L Fiber Services and Huyck Dewatering Equipment, combined
       with the acquisition of a U.K. company in September 2007, also
       contributed to grow the Pulp and Paper Group's aftermarket revenues.
       Excluding the impact of the acquisitions and the 2006 business
       divestiture, as well as the impact of currency fluctuations, the Pulp
       and Paper Group's revenues were stable (at constant exchange rates)
       compared with the same period the previous year.

       Overall, consolidated and combined carve-out revenues from the sale of
new equipment increased by $62.9 M or 61.5% during the six-month period, to
account for 68.4% of total revenues, up from 57.2% in the same period the
previous year. Aftermarket consolidated and combined carve-out revenues
remained stable compared with last year, given the unfavourable impact of
currency fluctuations.
    The geographic breakdown of consolidated and combined carve-out revenues
between customers operating in various regions of the world mentioned below
was as follows for the first half of fiscal 2008:

    -  41% in the United States (45% in 2007);
    -  32% in Europe and Russia (28% in 2007);
    -  15% in India, China and the Asia-Pacific region (12% in 2007);
    -  6% in Canada (10% in 2007);
    -  3% in Latin America (3% in 2007); and
    -  3% in the Middle East and Africa (2% in 2007).

    Gross Margin and Normalized EBITDA

    -------------------------------------------------------------------------
    (in thousands of $,
     except percentages)                  Periods Ended September 30,
    -------------------------------------------------------------------------
                                      Three Months                Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Gross margin               27,699       19,814       52,385       39,538
    -------------------------------------------------------------------------
    As a % of revenues           22.0%        21.5%        21.7%        22.2%
    -------------------------------------------------------------------------

    Operating expenses (1)     22,895       15,815       42,965       31,143
    -------------------------------------------------------------------------
     As a % of revenues          18.2%        17.2%        17.8%        17.5%
    -------------------------------------------------------------------------

    Normalized EBITDA:
    -------------------------------------------------------------------------
      Water Treatment           3,469        3,102        6,546        5,146
    -------------------------------------------------------------------------
      Pulp and Paper            3,040        2,284        6,018        6,411
    -------------------------------------------------------------------------
      Other and eliminations   (1,670)      (1,377)      (3,164)      (3,450)
                              --------     --------     --------      -------
    -------------------------------------------------------------------------
    Total                       4,839        4,009        9,400        8,107
    -------------------------------------------------------------------------
    As a % of revenues            3.8%         4.4%         3.9%         4.5%
    -------------------------------------------------------------------------
    (1) Excluding costs directly related to the Arrangement


    THREE-MONTH PERIOD
    ------------------

    The consolidated and combined carve-out gross margin grew by $7.9 M or
39.8%. Excluding the impact of currency fluctuations, it would have increased
by $8.7 M or 44.1%. Expressed as a percentage of revenues, the gross margin
amounted to 22.0% in the second quarter of fiscal 2008 compared with 21.5% the
previous year. This improvement is due mostly to the fact that the Pulp and
Paper Group's gross margin for the second quarter of 2007 had sustained a
downward pressure due to a decrease in revenues. However, a number of recent
factors are exerting a pressure on GLV's gross margin since the beginning of
the current fiscal year, including the weaker profitability achieved on some
of the Water Treatment Group's contracts based on conventional technologies
for which profit margins are lower than those yielded by new technologies, and
the Pulp and Paper Group's booking of large-scale contracts for which the
profit margins are lower than its usual margins.
    Excluding the costs directly related to the Arrangement, consolidated and
combined carve-out operating expenses increased by $7.1 M or 44.8% due
primarily to the acquisitions of the previous 12 months, especially that of
Copa. Expressed as a percentage of revenues, operating expenses rose from
17.2% to 18.2%.
    During the second quarter, GLV incurred non-recurring costs of $4.9 M
directly related to the Arrangement closed on August 10, 2007. These costs
include a charge of $4.3 M related to other compensation, a charge of $0.8 M
in professional fees related to the audit of GLV's opening balance sheet and
other carve-out expenses totalling $0.7 M.
    Excluding the costs directly related to the Arrangement as well as non-
recurring gains and losses on disposal of various assets (in an immaterial
amount for the two comparative periods), the consolidated and combined carve-
out normalized EBITDA increased by $0.8 M or 20.7% ($1.1 M or 27.8% growth at
constant exchange rates), whereas the normalized EBITDA margin as a percentage
of revenues decreased from 4.4% to 3.8%. This decline is attributable to the
aforementioned factors, namely, lower profitability on some of the Water
Treatment Group's contracts and the Pulp and Paper Group's large-scale orders,
coupled with certain additional costs carried by both groups.

    On a segmented basis, the trend in normalized EBITDA was as follows:

    -  The Water Treatment Group's normalized EBITDA grew by $0.4 M or 11.8%
       (16.6% growth at constant exchange rates) due to the revenue increase.
       Its normalized profit margin as a percentage of revenues decreased
       from 7.9% to 5.3% this year due to the weaker profitability on certain
       contracts and to the fact that business in North America is being
       somewhat disrupted by the carve- out operation. In fact, Eimco Water
       Technologies, LLC's profitability is being affected by the operational
       transition aimed at separating the resources, assets and operations of
       the Water Treatment Group and the Process Group, which is now part of
       FLS. In the second quarter, the group started to prepare for the
       relocation of the Salt Lake City (Utah) and Orillia (Canada)
       operations and the moving of replacement parts inventories to Austin
       (Texas). It is expected that the new sites will operational toward the
       beginning of the fourth quarter. GLV will shortly undertake the
       particularly complex task of dividing all the technical data specific
       to the Water Treatment Group and the Process Group, in order to
       finalize most of the exercise of separating the two groups toward the
       end of the current fiscal year. The Water Treatment Group continues to
       develop its international outsourcing operations so as to improve the
       profit margins achieved on conventional technology products. Finally,
       the integration of the European operations is progressing on schedule
       and is starting to yield the expected benefits.

    -  The Pulp and Paper Group's normalized EBITDA grew by $0.8 M or 33.1%
       ($1.0 M or 45.8% growth at constant exchange rates), whereas its
       normalized profit margin as a percentage of revenues rose from 4.6%
       the previous year to 5.2% this year. This improvement can primarily be
       explained by the fact that the profit margin for the second quarter of
       fiscal 2007 was weaker than normal, due to the execution schedule and
       billing of certain contracts. As aforementioned, this group's profit
       is sustaining some pressure due to the booking of large-scale orders
       that yield lower profit margins than those this group has
       traditionally achieved.

    -  Corporate expenses entering into the calculation of normalized EBITDA
       posted an unfavourable variance of $0.3 M or 21.3%, which can be
       explained by the reversal of a $0.5 M insurance provision in the
       second quarter of the previous year. Notwithstanding this item, total
       corporate EBITDA and the Manufacturing Unit's EBITDA would have
       recorded an improvement of $0.2 M.

    SIX-MONTH PERIOD
    ----------------

    The consolidated and combined carve-out gross margin for the first half of
fiscal 2008 grew by $12.8 M or 32.5%. At constant exchange rates, it posted a
$13.3 M or 33.8% increase. Expressed as a percentage of revenues, it declined
from 22.2% in the first half of the previous year, to 21.7% in the first six
months of fiscal 2008. This decrease can be explained by the lower
profitability achieved on certain of the Water Treatment Group's and the Pulp
and Paper Group's contracts.
    Excluding the costs related to the Arrangement, operating expenses
increased by $11.8 M or 38.0% due primarily to the acquisitions of the
previous 12 months.
    Excluding the costs related to the Arrangement as well as non-recurring
gains on disposal of various assets for the comparative periods (in an
immaterial amount for fiscal 2008 and $0.3 M last year), normalized EBITDA
increased by $1.3 M or 15.9% ($1.6 M or 19.2% growth at constant exchange
rates), whereas the normalized EBITDA margin as a percentage of revenues
decreased from 4.5% to 3.9%. On a segmented basis, the trend in normalized
EBITDA was as follows:

    -  The Water Treatment Group's normalized EBITDA grew by $1.4 M or 27.2%
       as a result of its revenue increase. Currency fluctuations did not
       have a material impact on its profitability. Its profit margin as a
       percentage of revenues decreased from 7.1% the previous year to 5.4%
       this year for the aforementioned reasons. To improve its margins, the
       Water Treatment Group is currently striving to expand its outsourcing
       networks in order to transfer the manufacturing of conventional-type
       contracts to regions where costs are lower. Management is also
       carrying on its efforts to acquire new technologies offering higher
       profit margins, as it has done over the past two years with the
       acquisition of Jones & Attwood, Brackett Green, certain Metso
       technologies and, more recently, Enviroquip and Copa.

    -  The Pulp and Paper Group's year-to-date normalized EBITDA declined by
       $0.4 M or 6.1%. However, at constant exchange rates, its normalized
       EBITDA would have been slightly higher than the previous year. Its
       profit margin as a percentage of revenues decreased from 6.5% to 5.2%.
       Besides the unfavourable impact of exchange rate fluctuations and the
       weaker profit margins on certain recently awarded large-scale
       contracts, this decline is partly attributable to the costs associated
       with setting up the new technology centre in Karlstad (Sweden)
       following the acquisition of chemical pulp processing technologies in
       December 2006.

    -  Total corporate expenses entering into the calculation of normalized
       EBITDA and the Manufacturing Unit's normalized EBITDA posted a
       favourable variance of $0.3 M or 8.3%.

    Normalized EBIT

    -------------------------------------------------------------------------
    (in thousands of $)                      Periods Ended September 30
    -------------------------------------------------------------------------
                                    Three Months               Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Normalized EBIT             4,839        4,009        9,400        8,107
    -------------------------------------------------------------------------
    Less amortization:
    -------------------------------------------------------------------------
      Water Treatment           1,356          333        2,749          538
    -------------------------------------------------------------------------
      Pulp and Paper              792          631        1,544        1,237
    -------------------------------------------------------------------------
      Other and eliminations      623          580        1 342        1,157
                              --------     --------     --------      -------
    -------------------------------------------------------------------------
     Total                      2,771        1,544        5,635        2,932
    -------------------------------------------------------------------------

    Normalized EBIT             2,068        2,465        3,765        5,175
    -------------------------------------------------------------------------
    As a % of revenues            1.6%         2.7%         1.6%         2.9%
    -------------------------------------------------------------------------

    Segmented normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment           2,113        2,769        3,797        4,608
    -------------------------------------------------------------------------
      Pulp and Paper            2,248        1,653        4,474        5,174
    -------------------------------------------------------------------------
      Other and eliminations   (2,293)      (1,957)      (4,506)      (4,607)
                              --------     --------     --------      -------
    -------------------------------------------------------------------------
     Total                      2,068        2,465        3,765        5,175
    -------------------------------------------------------------------------

    THREE-MONTH PERIOD
    ------------------

    Amortization expenses were up $1.2 M or 79.5%, due primarily to the growth
in intangible assets, namely the order backlog, technologies, trademarks and
customer relations resulting from the acquisitions of the previous 12 months,
especially those of Enviroquip and Copa. The increase in amortization affected
the Water Treatment Group for an amount of $1.0 M and the Pulp and Paper Group
for an amount of $0.2 M.
    Consequently, consolidated and combined carve-out normalized EBIT
decreased by $0.4 M or 16.1%, although the decline would have been $0.1 M or
3.7% at constant exchange rates.

    -  The Water Treatment Group's normalized EBIT decreased by $0.7 M or
       23.7% ($0.5 M or 19.5% decline at constant exchange rates) due
       primarily to the increase in amortization of its intangible assets.

    -  Conversely, the Pulp and Paper Group's normalized EBIT, which was less
       affected by the increase in amortization of intangible assets, posted
       a $0.6 M or 36.0% growth ($0.9 M or 52.1% growth at constant exchange
       rates), due primarily to the abnormally weak profitability in the
       second quarter the previous year.

    -  Total corporate expenses entering into the calculation of normalized
       EBIT and the Manufacturing Unit's normalized EBIT posted an
       unfavourable variance of $0.3 M or 17.2% for the aforementioned
       reason.

    SIX-MONTH PERIOD
    ----------------

    Year-to-date amortization expenses rose by $2.7 M or 92.2% due to the
increase in intangible assets resulting from the previous year's acquisitions,
especially those of Enviroquip and Copa. The increase in amortization affected
the Water Treatment Group for an amount of $2.2 M, the Pulp and Paper Group
for an amount of $0.3 M, and the corporate office and Manufacturing Unit for
an amount of $0.2 M.
    Consequently, consolidated and combined carve-out normalized EBIT
decreased by $1.4 M or 27.2% ($1.1 M or 21.2% decline at constant exchange
rates).

    -  The Water Treatment Group's normalized EBIT decreased by $0.8 M or
       17.6% due primarily to the $2.2 M increase in amortization of its
       intangible assets. Currency fluctuations had an immaterial impact on
       its normalized EBIT." The Pulp and Paper Group's normalized EBIT
       decreased by $0.7 M or 13.5% ($0.3 M or 5.2% decline at constant
       exchange rates), for the aforementioned reasons.

    -  Total corporate expenses entering into the calculation of normalized
       EBIT and the Manufacturing Unit's normalized EBIT posted a $0.1 M or
       2.2% improvement.

    Net Earnings (Loss)

    -------------------------------------------------------------------------
    (in thousands of $)                      Periods Ended September 30
    -------------------------------------------------------------------------
                                    Three Months               Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    EBIT                       (2,867)       2,455       (2,012)       5,463
    -------------------------------------------------------------------------
    Financial expenses          1,232        1,258        2,501        1,138
                               -------     --------      -------      -------
    -------------------------------------------------------------------------
    EBT                        (4,099)       1,197       (4,513)       4,325
    -------------------------------------------------------------------------
    Income taxes               (1,943)        (452)      (1,780)       1,152
    -------------------------------------------------------------------------
    Net earnings (loss)        (2,156)         745       (2,733)       3,173
    -------------------------------------------------------------------------
    - per share
      (basic and diluted)       (0.08)        0.03        (0.11)        0.12
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized net earnings       440          751          766        2,962
    -------------------------------------------------------------------------
    - per share
      (basic and diluted)        0.02         0.03         0.03         0.12
    -------------------------------------------------------------------------

    THREE-MONTH PERIOD
    ------------------

    Financial expenses for the second quarter of fiscal 2008 were comparable
to those of the previous year. (For further information, the reader is
referred to note 4 to the interim consolidated and carve-out financial
statements accompanying this Interim Management's Report.) The Company
recorded a tax recovery of $1.9 M, compared with a tax expense of $0.5 M in
the same quarter of fiscal 2007.
    The second quarter produced a consolidated and combined carve-out net loss
of $2.1 M or $0.08 per share, as opposed to combined carve-out net earnings of
$0.7 M or $0.03 per share in the same quarter of fiscal 2007. Excluding
non-recurring costs directly related to the Arrangement and other
non-recurring items (net of related taxes), GLV posted normalized net earnings
of $0.4 M or $0.02 per share during the second quarter of fiscal 2008,
compared with normalized net earnings of $0.8 M or $0.03 per share a year
earlier.
    It should be pointed out that the increase in amortization of intangible
assets resulting from the past year's acquisitions had an unfavourable impact
of $1.1 M (net of related taxes) on second-quarter net earnings compared with
the same period the previous year.

    SIX-MONTH PERIOD
    ----------------

    Year-to-date financial expenses for the first six months more than doubled
over the previous year due mainly to the financing of the past year's
acquisitions, especially those of Enviroquip and Copa. (For further
information, the reader is referred to note 4 to the interim consolidated and
carve-out financial statements accompanying this Interim Management's Report.)
The Company recorded a tax recovery of $1.8 M, compared with a tax expense of
$1.2 M in the same period of fiscal 2007.
    The first half of fiscal 2008 closed with a consolidated and combined
carve-out net loss of $2.7 M or $0.11 per share, as opposed to combined carve-
out net earnings of $3.2 M or $0.12 per share in the first six months of
fiscal 2007. Excluding non-recurring costs directly related to the Arrangement
and other non-recurring costs (net of related taxes), GLV posted normalized
net earnings of $0.8 M or $0.03 per share for the six-month period ended
September 30, 2007, compared with normalized net earnings of $3.0 M or $0.12
per share a year earlier.
    In addition to lower profit margins on certain contracts, various
additional operating costs incurred by both groups and currency fluctuations,
the main reason for the decline in GLV's normalized net earnings is the
increase in amortization of intangible assets which had an impact of $1.1 M
(net of related taxes) on the period's net earnings, as well as the increase
in first-quarter financial expenses resulting from the Enviroquip and Copa
acquisitions. The amortization of intangible assets represents a new factor in
the results that creates some distortion in comparing the financial
performance of New GLV's operating units with the previous year, since unlike
property, plant and equipment, some of the intangible assets do not have to be
regularly renewed by way of new investments.

    Consolidated and Combined Carve-Out Comprehensive Income

    -------------------------------------------------------------------------
    (in thousands of $)        Periods Ended September 30
    -------------------------------------------------------------------------
                                      Three Months                Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings (loss)        (2,155)         745       (2,733)       3,173
    -------------------------------------------------------------------------
    Other comprehensive
     income
     items (net of income
     taxes):

    Unrealized gains (losses)
     on translating financial
     statements of self-
     sustaining foreign
     operations (net of
     related taxes)
                              (11,628)         886      (11,125)         586
                              --------     --------     --------      -------
    -------------------------------------------------------------------------
    Comprehensive income
     (loss)                   (13,783)       1,631      (13,858)       3,759
    -------------------------------------------------------------------------

    CICA Handbook Section 1530 introduces the concept of comprehensive income,
which is calculated by adding other comprehensive income to net earnings (net
loss). For the Retained Businesses of New GLV, other comprehensive income for
the three and six-month periods ended September 30, 2007 and 2006 pertains
exclusively to translation adjustments related to self- sustaining foreign
operations. (For further information, see note 3(a) to the interim
consolidated and carve-out financial statements accompanying this Interim
Management's Report.)

    ------------------
    FINANCIAL POSITION
    ------------------

    Summary Cash Flows

    -------------------------------------------------------------------------
    (in thousands of $)                      Periods Ended September 30
    -------------------------------------------------------------------------
                                    Three Months               Six Months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Operating activities:
    -------------------------------------------------------------------------
      Net earnings (loss)      (2,155)         745       (2,733)       3,173
    -------------------------------------------------------------------------
      Non-cash items in
       earnings (loss)          2,428        1,701        4,786        1,716
    -------------------------------------------------------------------------
      Net change in operating
       assets and liabilities     669       (8,083)     (14,197)     (20,383)
                               -------     --------     --------     --------
    -------------------------------------------------------------------------
    Total                         942       (5,637)     (12,144)     (15,494)
    -------------------------------------------------------------------------
    Financing activities          685       (4,987)         354       27,162
    -------------------------------------------------------------------------
    Investing activities       (2,568)      (1,461)      (3,754)     (26,076)
    -------------------------------------------------------------------------
    Impact of exchange rate
     fluctuations on cash and
     cash equivalents             (27)       4,344       (1,479)       3,625
    -------------------------------------------------------------------------
    Net decrease in cash and
     cash equivalents            (968)      (7,741)     (17,023)     (10,783)
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period              3,376       12,211        3,376       12,211
    -------------------------------------------------------------------------

    THREE-MONTH PERIOD
    ------------------

    Before net change in operating assets and liabilities, operating
activities provided cash flows of $0.3 M. Excluding the impact of a business
acquisition, net change in operating assets and liabilities provided cash
flows of $0.7 M in the second quarter of fiscal 2008, whereas they used cash
flows of $8.1 M in the same period the previous year. It should be pointed out
that considering the magnitude of certain contracts executed by the Water
Treatment and Pulp and Paper Groups, normal course funding requirements can
vary significantly from year to year, and even from one quarter to another.
Consequently, operating activities provided net cash flows of $0.9 M in the
second quarter of fiscal 2008, whereas they had used cash flows of $5.6 M in
the same quarter last year.
    Second-quarter financing activities mainly reflect the August 8, 2007
carve-out transaction, specifically the use of $62.9 M of GLV's credit
facility to finance the cash payment required as part of the carve-out as well
as the net amount of transactions with another GL&V group, representing a net
cash outflow of $54.7 M. In addition, before the end of the quarter, GLV
allocated an amount of $6.4 M to the repayment of the long-term debt.
    In regard to investing activities, $3.2 M was invested to purchase
property, plant and equipment in the normal course of business, while GLV
realized proceeds of $1.1 M on the disposal of a property located in the
United Kingdom. On September 13, 2007, it also acquired certain assets of a
United Kingdom company specializing in the design and manufacture of doctor
blade systems for paper machines and high-turnover replacement parts
("consumables") for a cash consideration of $0.6 M.

    SIX-MONTH PERIOD
    ----------------

    Operating activities (before net change in operating assets and
liabilities) produced cash flows of $2.1 M in 2007, compared with $4.9 M the
previous year, due to the period's net loss resulting primarily from the costs
related to the Arrangement. Excluding the impact of business acquisitions, net
change in operating assets and liabilities used cash flows of $14.2 M in the
first six months of fiscal 2008, compared with $20.4 M in the same period last
year. The change in operating assets and liabilities reflects the increase in
operational requirements arising from the business growth. Consequently,
operating activities used net cash flows of $12.2 M in the first half of
fiscal 2008, compared with $15.5 M in the first six months of last year.
    Financing activities for the six-month period ended September 30, 2007
primarily reflect the previously described carve-out transaction and the
repayment of long-term debt. Investing activities used cash flows of $3.8 M,
including $3.3 M for the purchase of new property, plant and equipment, net of
the proceeds from the sale of a building, $0.6 M for a business acquisition.
These investments were financed by GLV's available cash. Investments in the
corresponding period of fiscal 2007 mainly related to the June 30, 2006
acquisition of Enviroquip.
    After accounting for the period's cash inflows and outflows and the $1.5 M
unfavourable impact of exchange rate fluctuations, cash and cash equivalents
decreased from $20.4 M as at March 31, 2007 to $3.4 M as at September 30,
2007.

    Summary Consolidated Balance Sheet as at September 30, 2007 and
    Combined Carve-Out Balance Sheet as at March 31, 2007

    -------------------------------------------------------------------------
    (in thousands of $)                            September 30,    March 31,
                                                           2007         2007
    -------------------------------------------------------------------------
    Current assets                                      240,591      250,246
    -------------------------------------------------------------------------
    Long-term assets                                    106,704      121,177
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               347,295      371,423
    -------------------------------------------------------------------------

    Current liabilities                                 120,191      123,035
    -------------------------------------------------------------------------
    Long-term liabilities                                72,041      131,970
    -------------------------------------------------------------------------
    Shareholders'/invested equity                       155,063      116,418
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               347,295      371,423
    -------------------------------------------------------------------------

    The principal changes between the combined carve-out balance sheet as at
March 31, 2007 and the consolidated balance sheet as at September 30, 2007
relate to changes in long-term liabilities and shareholders'/invested equity
and reflect the carve-out transaction as at August 8, 2007. At that date,
almost all of the advances from companies of GL&V were either converted into
share capital of GLV, either repaid by way of the cash payment as part of the
carve-out transaction. This transaction was financed by the issuance to GL&V's
shareholders of 22,837,075 Class A subordinate voting shares and 2,551,805
Class B multiple voting shares for an aggregate book value of $172.0 M, and by
a cash payment of $62.9 M obtained from GLV's new credit facilities.
    The increase in current assets and current liabilities mainly reflects the
growth in the Water Treatment Group's and Pulp and Paper Group's business as a
result of the significant growth of their order backlog in recent quarters.
The decrease in long-term assets is due primarily to the impact of the
amortization of property, plant and equipment and intangible assets, the
disposal of a building in the United Kingdom and translation adjustments.

    Changes in Current Balance Sheet Items

    -------------------------------------------------------------------------
    (in thousands of $, except ratio)              September 30,    March 31,
                                                           2007         2007
    -------------------------------------------------------------------------
    Current assets:
    -------------------------------------------------------------------------
      Cash, cash equivalents and
       temporary investments                              4,235       21,242
    -------------------------------------------------------------------------
      Accounts receivable                               137,435      130,944
    -------------------------------------------------------------------------
      Inventories                                        32,323       27,942
    -------------------------------------------------------------------------
      Contracts in progress (less progress billings)     54,455       59,088
    -------------------------------------------------------------------------
      Prepaid expenses, income taxes receivable
       and future income tax assets                      12,143       11,030
                                                       --------      --------
    -------------------------------------------------------------------------
    Total                                               240,591      250,246
    -------------------------------------------------------------------------
    Current liabilities:
    -------------------------------------------------------------------------
      Accounts payable and accrued liabilities          120,191      121,916
    -------------------------------------------------------------------------
      Income taxes payable and future income tax
       liabilities                                            -        1,119
                                                       --------      --------
    -------------------------------------------------------------------------
     Total                                              120,191      123,035
    -------------------------------------------------------------------------
    Working capital                                     120 400      127,211
    -------------------------------------------------------------------------
    Current ratio                                        2.00:1       2.03:1
    -------------------------------------------------------------------------

    The slight decline in working capital is due primarily to the use of some
of the available cash to finance the operational working capital requirements
arising from the two groups' business growth and to reimburse the long-term
debt.

    Indebtedness
    -------------------------------------------------------------------------
    (in thousands of $, except ratio)              September 30,    March 31,
                                                           2007         2007
    -------------------------------------------------------------------------
    Total net debt:
    -------------------------------------------------------------------------
      Long-term debt and advances from
       companies of GL&V                                 57,621      110,350
    -------------------------------------------------------------------------
      Less cash, cash equivalents and
       temporary investments                             (4,235)     (21,242)
                                                       ----------- ----------
    -------------------------------------------------------------------------
    Total debt net of cash                               53,386       89,108
    -------------------------------------------------------------------------
    Total net debt to invested capital ratio:
    -------------------------------------------------------------------------
    Invested capital:
    -------------------------------------------------------------------------
    Shareholders'/invested equity                       155,063      116,418
    -------------------------------------------------------------------------
    Total net debt                                       53,386       89,108
                                                       ----------- ----------
    -------------------------------------------------------------------------
    Total                                               208,449      205,526
    -------------------------------------------------------------------------
    Total net debt/invested capital ratio                  25.6%        43.4%
    -------------------------------------------------------------------------

    On August 8, 2007, all the advances from companies of GL&V, except for a
$1.0 M balance, were converted into share capital of GLV or reimbursed through
a cash payment as part of the carve-out transaction. Consequently, and also
considering the use of some of the available cash to finance operations in the
normal course of business and to repay part of the long-term debt at the end
of the quarter, total net debt between March 31 and September 30, 2007
decreased by $35.7 M or 40.1%, whereas shareholders'/invested equity increased
by $38.6 M or 33.2% as a result of the previously described carve-out
transactions. (The carve-out transaction is described in note 1 to the interim
consolidated and carve-out financial statements accompanying this Interim
Management's Report.) As at September 30, 2007, GLV thus had a total net
debt/invested capital ratio of 25.6%, compared with 43.4% as at March
31, 2007.
    New GLV therefore benefits from a sound financial position to carry on its
business and development projects. In addition, the Company has a credit
facility of $175 M, consisting of two non-reducing revolving credits. Of that
amount, $125 M may be used to finance business acquisitions, meet day-to-day
funding requirements and issue letters of credit, and the remaining $50 M may
be used to issue letters of credit guaranteed by Export and Development Canada
(EDC). As at September 30, 2007, credit facilities for the issue of letters of
credit were used for an amount of $5.4 M, and those for the issue of EDC-
guaranteed letters of credit were used for an amount of $34.8 M. Taking into
account the financing used and issued letters of credit, the balance of the
unused credit facility amounted to $78.1 M at the end of the period. No
capital repayment on the long-term debt is required before it comes due in
August 2012.

    -------
    OUTLOOK
    -------

    Order Backlogs (1)
    (in thousands of $)
    -------------------------------------------------------------------------
                 September       June        March     December    September
                   30,2007    30,2007     31, 2007     31, 2006     30, 2006
    -------------------------------------------------------------------------
    Water
     Treatment
     Group         174,408    178,205      162,574      171,560      130,565
    Pulp and
     Paper Group   151,081    143,276       79,494       80,753       68,348
    Manufacturing
     Unit            5,750      3,768        4,969        4,246        4,260
    -------------------------------------------------------------------------
    Total          331,239    325,249      247,037      256,559      203,173
    -------------------------------------------------------------------------

    (1) As at September 30, 2007, the Company changed the presentation of the
        order backlog. Thus, instead of presenting segmented eliminations on
        a combined basis as was done formerly, these eliminations are now
        deducted directly from the order backlogs of the respective groups.
        The presentation of order backlogs for previous quarters has been
        adjusted accordingly. Although this presentation does not change the
        total order backlog, management believes that it offers a more
        accurate picture of the different groups' end-of-period order
        backlogs.


    As at September 30, 2007, GLV's order backlog totalled $331.2 M, up by
$128.1 M or 63.0% over the previous year. Currency fluctuations had a negative
impact of $17.6 M on the order backlog, without which its actual growth would
have been 71.7% since September 30, 2006. Compared with June 30, the order
backlog as at September 30, 2007 was up by $6.0 M or 1.8%. However, at
constant exchange rates, its actual growth was more than $20.0 M or 6.2% for
the three-month period.

    - The Water Treatment Group's order backlog grew by $43.8 M or 33.6%
      within the past year (actual growth of $59.2 M or 45.3% at constant
      exchange rates), as a result of the Enviroquip and Copa acquisitions
      coupled with organic growth. Notwithstanding the impact of currency
      fluctuations, this group posted effective growth of $6.7 M or 3.8% in
      its order backlog between June 30 and September 30, 2007, due primarily
      to the organic growth of the Enviroquip division and the good
      performance of Brackett Green water intake screening technologies.

      The acquisitions made by the Water Treatment Group over the past two
      years have provided it with new technologies for which the demand is
      growing. Operations derived from more conventional technologies are
      posting lesser growth, which attests to the relevance of this group's
      strategy of acquiring companies with newer technologies. In addition to
      benefiting from strong demand in the U.S. and Canadian municipal
      markets, the group has recently been awarded major contracts in the
      U.K. municipal market and energy segment, as well as orders for
      industrial applications in Latin America and Asia. The industrial
      segment accounts for a growing proportion of the Water Treatment
      Group's order backlog, consistent with its objective of better
      balancing revenues between the municipal and industrial markets. The
      group mainly targets the energy, chemicals, petrochemicals, food
      processing and pulp and paper industries, whereas Australia, the United
      States, the Middle East and Southern Europe are all territories that
      hold significant potential for its technologies in the industrial
      segment. The Water Treatment Group's aftermarket orders are also
      growing, which corresponds to another of this group's main objectives.
      In its current product portfolio, the technologies offering the
      greatest aftermarket revenue potential are Brackett Green's water
      intake screening systems and the submerged membrane bioreactors (MBR),
      given the wearing-out of certain parts. Considering the size of its
      order backlog and the activity level in the Water Treatment Group's
      various markets, GLV's management is confident that it will continue to
      build its business base and market share in upcoming quarters.

      After two years of strong expansion through acquisitions, fiscal 2008
      marks a transition phase during which the Water Treatment Group is
      focusing on the final integration of cultures and operations resulting
      from its latest acquisitions, and on reinforcing its operational and
      financial management to improve its profitability. To that end, the
      group has undertaken to restructure its business in Europe; this
      initiative is progressing on schedule and has started to the yield the
      expected benefits. It is also striving to expand its outsourcing
      networks in order to transfer its product manufacturing to regions with
      lower costs, in order to raise the profit margins achieve on
      conventional technology products.

      Subsequent to the carve-out transaction related to the Arrangement with
      FLS and GL&V, GLV has initiated the operational transition that
      consists in separating the resources, assets and operations of the
      Water Treatment Group and the Process Group, which is now part of FLS.
      In addition, GLV has decided to take advantage of this transition,
      which relates primarily to operations located in United States and
      Canada, to restructure the Water Treatment Group in North America in
      order to improve its positioning and profitability. During the second
      quarter, the Water Treatment Group started to prepare for the
      relocation of the Salt Lake City (Utah, USA) and Orillia (Ontario,
      Canada) operations and the moving of replacement parts inventories to
      Austin (Texas, USA), so as to ensure that the new sites are operational
      toward the beginning of the fourth quarter. GLV will shortly undertake
      the particularly complex task of dividing all of the technical data
      specific to the Water Treatment Group and the Process Group, in order
      to finalize most of the exercise of separating the two groups toward
      the end of the current fiscal year.

      The Water Treatment Group's efforts in upcoming quarters will target
      the following main goals: further penetrate the industrial segment in
      its key territories, increase its business base in the aftermarket,
      expand its outsourcing operations, reorganize its North American
      operations, finalize its restructuring in Europe and optimize its
      overall business processes.

      Over the longer term, GLV remains focused on the objective of
      positioning the Water Treatment Group as a key player in its industry,
      and will therefore seek to integrate other state-of-the-art
      technologies into its product selection. The global water treatment
      industry holds considerable potential. In recent years, major efforts
      have been rolled out, first to set up 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 with respect to 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.

    - The Pulp and Paper Group's order backlog has more than doubled over the
      past year, increasing by $82.7 M or 121.0% (124.3% growth at constant
      exchange rates). This growth was driven by the booking of several major
      contracts for new equipment and complete systems since the beginning of
      the current fiscal year (including a $60 M order in Portugal and
      another worth $20 M in Asia), coupled with solid aftermarket activity
      in North America and Europe. However, it should be pointed out that
      profit margins on such large-scale contracts are weaker than the
      traditional margins posted by the Pulp and Paper Group. Between June 30
      and September 30, 2007, excluding currency fluctuations, this group's
      order backlog grew by $11.3 M or 7.9%.

      Recent growth in the Pulp and Paper Group's order backlog was
      particularly strong in the United States, Europe, China and India. In
      terms of applications, the strongest growth was recorded in the pulp
      preparation equipment segment. Through its new technology centre in
      Karlstad (Sweden), the group succeeded in leveraging its excellent
      product portfolio in this particular niche, including the technologies
      acquired from Metso Paper and Kvaerner in December 2006 such as the
      Compact Press(TM) pressure washing technology, which it is marketing to
      a growing international customer base. The Pulp and Paper Group also
      posted growth in the paper finishing segment, notably with regards to
      its BTF(TM) automatic dilution systems for headboxes worldwide. In the
      aftermarket, the Pulp and Paper Group maintains solid activity in North
      America and is gradually expanding its presence in Europe.

      The past two years have been very constructive for the Pulp and Paper
      Group, as it has taken initiatives that have enhanced its already well
      established international positioning. For instance, coupled with its
      internal development efforts, the acquisitions of Perplas, KanEng, the
      principal assets of J&L Fiber Services, the Huyck Dewatering Equipment
      Division and, more recently, a U.K. company, 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 main 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.

    Based on the order backlog, market conditions and the acquisitions of the
past year, management expects GLV to achieve revenues of $500 M to $545 M for
its first 12 months of operations. However, management wishes to remind
investors that GLV's short-term profit growth will likely be slower and less
consistent than that shown by GL&V in previous quarters. First, the Company is
building the Water Treatment Group to make it a world leader, and such as
expansion and consolidation effort could put pressure on its profit margins
and create some volatility in its earnings in upcoming quarters. As for the
Pulp and Paper Group, it lately adopted a more aggressive strategy to position
itself in certain key markets with new-generation technologies. This recently
allowed it to garner large-scale contracts that provide it with an excellent
international showcase for its future growth, but for which profit margins are
lower than for its other operations.
    As management has disclosed in its previous communications, it intends to
build GLV based on a long-term vision. Therefore, all business decisions will
be motivated by its commitment to maximize its groups' long-term value in the
best interests of its shareholders, which could lead to slower growth in their
short-term profitability. Management is determined to make New GLV an
influential player on the international scene as a provider of targeted
industrial and municipal solutions, with special expertise in water treatment
technologies. To do so, it will replicate the same strategies that have proven
successful for the former GL&V, namely: (1) achieve sustained growth through
the acquisition and efficient integration of businesses, international
development and the focus on value-added operations and products; and (2)
optimize its profitability by controlling its expenses and maintaining a
profitable and flexible cost structure, in part through manufacturing
outsourcing.

    -------------------------
    SHARE CAPITAL INFORMATION
    -------------------------

    Share Capital

    On August 8, 2007, as part of the carve-out transaction provided for by
the Arrangement, the Company issued 22,837,075 Class A subordinate voting
shares for a legal stated capital amount of $201.4 M and 2,551,805 Class B
multiple voting shares for a legal stated capital amount of $22.5 M. Since the
carve-out transaction was carried out between companies under common control,
it is accounted for at the book value of $172.0 M in the consolidated balance
sheet. Between the carve-out transaction date as at August 8, 2007 and the end
of the period as at September 30, 2007, 4,000 Class B multiple voting shares
were converted into an equivalent number of Class A subordinate voting shares.
Thus, as at September 30, 2007, New GLV's share capital consisted of 2,547,805
Class B multiple voting shares and 22,841,075 Class A subordinate voting
shares, for a total of 25,388,880 voting and participating shares issued and
outstanding.

    Stock Option Plan

    Under stock option plan put in place by GLV for senior executives,
management and directors, a maximum of 2,538,888 Class A subordinate voting
shares of the share capital of the Company may be issued. Under the plan, the
exercise price of each option cannot be less than the weighted average price
of the shares negotiated at the Toronto Stock Exchange for the five days
immediately preceding the grant date of the stock options. The number of stock
options that may be issued to non-managing directors is limited to 1% of the
number of shares of the Company in circulation. Stock options vest over five
years at the rate of 20% per year and upon the achievement of a fixed quoted
market price of the Class A subordinate voting shares determined by the Board
of Directors of the Company. In addition, these options have a maximum term
that may not exceed 10 years from the grant date. On September 6, 2007, the
Company issued 1,370,000 stock options at an exercise price of $10.82.
    The stock option plans that existed before the Arrangement were cancelled
by GL&V before the closing of the Arrangement and the holders of these options
received a cash amount equal to the difference between $33.00 and the grant
price of an option and one Class A subordinate voting share of GLV for every
option held.
    (For further information, see note 13(a) to the interim consolidated and
combined carve-out financial statements accompanying this Interim Management's
Report.)

    Other Stock-Based Compensation

    GLV also offers stock appreciation rights to certain senior executives. On
September 6, 2007, the Company issued 500,000 units of stock appreciation
rights at the exercise price of $10.82 of the Company's Class A subordinate
voting shares. The stock appreciation rights vest over five years at the rate
of 20% per year and upon the achievement of a fixed quoted market price of the
Class A subordinate voting shares determined by the Company's Board of
Directors. (For further information, see note 13(b) to the interim
consolidated and combined carve-out financial statements accompanying this
Interim Management's Report.)


    ----------------------
    PRINCIPAL RISK FACTORS
    ----------------------

    The following section describes the major risk factors to which the
Company is exposed. GLV is exposed to other lesser risks, which could become
more important in the future.

    Holding Company Structure

    As a holding company, GLV in order to meet its financial obligations, is
primarily dependent upon the receipt of interest and principal payments on
intercompany advances, management fees, cash dividends and other payments from
its subsidiaries. All of GLV's business activities are operated by its
subsidiaries. All of GLV's subsidiaries will are distinct legal entities and
have no obligation, contingent or otherwise, to make funds available to GLV
whether by dividends, interest payments, loans, advances or other payments. In
addition, the payment of dividends and the making of loans, advances and other
payments to GLV by these subsidiaries is subject to statutory or contractual
restrictions, is contingent upon the earnings of such entities and is subject
to various business and other considerations. These subsidiaries are parties
to various agreements, including loan agreements, that restrict the ability of
the respective subsidiaries to pay cash dividends or make advances or other
payments.

    Liquidity

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

    Customers and Markets

    GLV's operations are not dependent on a limited number of customers.
However, it conducts its business in markets exposed to various risk factors
and uncertainties. Among those, the pulp and paper industry is exposed to
cyclical fluctuations and largely depends on the health of the world economy.
In recent years, pulp and paper production worldwide has also been gradually
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' new equipment investments in North America, the primary
market of the Pulp and Paper Group, have decreased considerably and 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 in recent years
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.
    For its part, the Water Treatment Group operates in a segment that is
relatively less cyclical by nature.

    Suppliers

    Its outsourcing strategy enables GLV to minimize the risks associated with
fixed costs by using a wide outsourcing network, and thereby to rapidly react
to fluctuations in demand. Strict quality control procedures are in place in
order to monitor suppliers' performances.
    Finally, alternate supplier arrangements exist although the replacement of
key suppliers could affect GLV's ability to meet its commitments.

    Vulnerability to Exchange Rate Fluctuations

    As GLV's business is conducted in several countries, it is exposed to the
risk of fluctuations of such currencies compared to the Canadian dollar,
mainly the U.S. dollar, the Euro and the pound Sterling. Consequently,
fluctuations in the value of the Canadian dollar against other major
currencies could have a material impact on GLV's financial position and
operating results. Major contracts awarded to GLV's subsidiaries are hedged
using forward exchange contracts.

    Interest Rates

    Changes in interest rates could have a direct impact on GLV's
profitability. Management evaluates the risks of interest rate fluctuations
and may use exchange contracts when deemed appropriate.

    Hedging Investments

    Hedging investments are arranged with recognized financial institutions.
Considering the solvency of these institutions, Management estimates it is
unlikely that GLV could sustain losses resulting from the non-compliance of
these financial institutions with their obligations.

    Credit

    Management considers that GLV's credit concentration risk is minimal on
account of its diversified operations, products, customers and the
geographical distribution of its customer base.

    Acquisitions

    GLV's growth strategy is based primarily on expansion through
acquisitions, which could involve a degree of risk. Management has developed a
solid expertise in this field. The groups have successfully acquired and
integrated more than 25 businesses in the last 15 years. To limit this risk,
Management will continuer to follow a targeted acquisition strategy meeting
strict return on investment criteria, apply due diligence practices, and
develop 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 asset disposals.

    Additional Sources of Financing

    To finance the acquisition of complementary companies, the growth of its
current operations or other requirements of its working capital, GLV could
need additional sources of financing, over and above its current credit
facilities. There can be no assurance that additional financing by borrowing
or by issuing shares on conditions acceptable to GLV will be available, or
that such financing will be available at all. Failure to obtain such financing
could restrict GLV's capacity to proceed with acquisitions or satisfy its
needs for working capital.

    Competition and Technological Change

    GLV's business is highly competitive. GLV faces competition in each of its
primary businesses from entities which provide substantially similar services,
some of which entities have significantly greater resources than GLV.

    Dependence on Key Personnel

    GLV's success depends upon its personnel. The unexpected loss or
simultaneous departure of a number of GLV's key officers or employees could be
detrimental to its future business. Hence, GLV's future success will depend,
in part, upon its ability to attract and retain qualified personnel in
accordance with its needs. The current boom in the water treatment industry
represents a challenge in this regard as it creates increased competition in
the search for qualified personnel. There can be no assurance that GLV will be
able to engage the services of such personnel or to retain its current
personnel. However, as Management has always successfully done in the past,
GLV believes it will be in a position to achieve a high personnel retention
rate through a stimulating business culture and competitive compensation
conditions.

    -----
    OTHER
    -----

    Contractual Commitments

    In addition to the debts appearing in the combined carve-out balance sheet
as at September 30, 2007, operating leases for premises and equipment
allocated to GLV's operating units, expiring at various dates until 2015, have
total minimum lease payments of approximately $22.6 M as at September 30, 2007
($22.6 M as at March 31, 2007). Management believes that the Company's cash
and cash equivalents, capital resources and net cash flows from operations
will suffice to finance its capital expenditures, working capital
requirements, pension plan contributions, and interest and principal payments
on long-term debt in a foreseeable future.
    Minimum annual lease payments on the operating leases for the next years
and thereafter are as follows:

    (in thousands of $)
     2008 (six months)        2,696
     2009                     4,738
     2010                     3,763
     2011                     3,383
     2012                     2,996
     2013  and thereafter     5,053
                              -----
     Total                   22,629
                             ------

    GLV is also committed under letters of credit and corporate guarantees for
the achievement of contracts, for an amount that totalled $113.9 M as at
September 30, 2007 ($91.0 M as at March 31, 2007).
    Under the terms of the Carve-out Agreement between GL&V and FLS, the
Company will have to indemnify GL&V and each of its subsidiaries for any taxes
arising out of or connected with the carve-out transactions in excess of
$13.0 M. As at September 30, 2007, management did not expect that GLV will be
required to indemnify GL&V or its subsidiaries as it estimated that the taxes
arising out of or connected with the carve-out transactions will be below
$13.0 M.

    Transitional Services Agreement

    Transitional Services
    ---------------------

    Pursuant to the Transitional Services Agreement: (i) GLV Inc. shall and
shall cause its subsidiaries to provide GL&V and its subsidiaries during the
Transitional Period (as defined below) with certain specific services and
administrative, corporate, operational and support services required to carry
on the GL&V Process Group business substantially as it was carried on prior to
the Arrangement closing date; and (ii) GL&V shall cause its subsidiaries to
provide GLV Inc. and its subsidiaries during the Transitional Period with
certain services and administrative, corporate, operational and support
services required to carry on the Retained Businesses substantially as they
were carried on prior to the Arrangement closing date.

    Fees
    ----

    Pursuant to the Transitional Services Agreement, the person receiving the
Transitional Services will pay to the provider of such services the actual
cost of the services provided plus a mark-up, subject to any particular fees
specifically agreed to in the Transitional Services Agreement.

    Transitional Period
    -------------------

    The Transitional Services Agreement will have a term varying between six
to nine months effective August 10, 2007, depending upon the services (the
"Transitional Period"), subject to the right of the party receiving the
Transitional Services to terminate the Transitional Services Agreement in
whole, or only in respect of selected services provided, upon a 30-day prior
notice.


    Financial Instruments

    Derivative Financial Instruments
    --------------------------------
    To reduce the risks related to currency fluctuations, GLV uses derivative
financial instruments such as forward exchange contracts. GLV 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 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 large financial
institutions. Forward exchange contracts will be recorded at their fair value.
(For further information, see note 3(b) to the interim consolidated and
combined carve-out financial statements accompanying this Interim Management's
Report.)

    Fair Value
    ----------

    As described in the combined consolidated and carve-out financial
statements, the carrying amounts of cash and cash equivalents, temporary
investments, accounts receivable and accounts payable and accrued liabilities
approximate their fair value, as these items will be realized or paid within
one year.
    Forward exchange contracts are recognized at their positive fair value of
$1.8 M as at September 30, 2007 (positive fair value of $1.2 M as at March 31,
2007).
    The fair values of financial liabilities are mainly estimated based on
discounted cash flows using year-end market yields or market values 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
New GLV would receive or pay if the instruments were closed out at those
dates.
    As at March 31, 2007, the fair value of the advances from or to companies
of GL&V, which were capitalized and refinanced upon the closing of the
transaction with FLS, could not be determined since it is practically
impossible to find financial instruments on the market having substantially
the same economic characteristics.
    The fair value of long-term debt is equivalent to the carrying amount
since it bears interest at a rate that varies with the market rate.

    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. The critical accounting
estimates identified by management according to this definition are described
in detail in the Circular available on SEDAR and GLV's website.

    Changes in Accounting Policies

    Effective April 1, 2007, GL&V adopted four new accounting standards
released in April 2005 and July 2006 by the Canadian Institute of Chartered
Accountants ("CICA"), specifically Handbook Section 1506, "Accounting
Changes", Section 1530, "Comprehensive Income", Section 3855, "Financial
Instruments - Recognition and Measurement" and Section 3865, "Hedges". These
changes are described in note 3 to the interim consolidated and combined
carve- out financial statements accompanying the Interim Management's Report.
Briefly:

    - Section 1506, which describes how to apply changes in accounting
      policies, did not have an impact on the operating results or financial
      position for the first half of fiscal 2008.

    - A comprehensive income statement is henceforth presented, which is the
      subject of a section in this Interim Management's Report titled
      "Comprehensive Income". This new policy is also described in detail in
      note 3(a) to the interim consolidated and combined carve-out financial
      statements accompanying this Interim Management's Report.

    - According to Section 3855, all financial assets and liabilities are
      carried at fair value in the interim consolidated and combined carve-
      out balance sheet, except for loans, receivables and financial
      liabilities held for purposes other than the transaction, which are
      recognized at amortized cost using the effective interest method (see
      note 3(b) to the interim consolidated and combined carve-out financial
      statements accompanying this Interim Management's Report). The adoption
      of this standard did not have an impact on the interim combined carve-
      out balance sheet and interim combined carve-out statement of owner's
      net equity for the periods between April 1 and August 8, 2007, nor on
      the consolidated balance sheet and consolidated statement of
      shareholders'/invested equity as at September 30, 2007.

    - Finally, as described in note 3(c) to the interim consolidated and
      combined carve-out financial statements accompanying this Interim
      Management's Report, Section 3865 indicates that when the Company uses
      derivative financial instruments to manage its exposures, it must
      determine for each of them whether hedge accounting is appropriate. The
      adoption of this standard did not have an impact on the operating
      results or the interim consolidated balance sheet as at September 30,
      2007.

    Recent Accounting Developments in Canada

    In June 2007, the Canadian Institute of Chartered Accountants ("CICA")
issued a new accounting standard for Handbook Section 3031, Inventories, which
replaces the existing standard for Inventories, Section 3030. The main
features of the new standard are as follows:

    - measurement of inventories at the lower of cost and net realizable
      value;
    - consistent use of either the first-in, first-out or the weighted
      average cost formula to measure costs; and
    - reversal of previous write-downs of net realizable value when there is
      a subsequent increase in the value of inventories.

    The new standard is effective for GLV beginning April 1, 2008. The Company
is currently assessing the impact on the interim consolidated and combined
carve-out financial statements.
    In December 2006, the CICA issued three new accounting standards: Handbook
Section 1535, Section 3862, Financial Instruments - Disclosures, and Section
3863, Financial Instruments - Presentation.
    Section 1535 requires the disclosure of both qualitative and quantitative
information that provides users of financial statements with information to
evaluate the entity's objective, policies and processes for managing capital.
    Section 3862 and Section 3863 will replace Section 3861, Financial
Instruments - Disclosure and Presentation once adopted. These new Sections
revise and enhance the disclosure requirements in Section 3861 and carry
forward unchanged its presentation requirements.
    These new standards are effective for GLV beginning April 1, 2008. The
Company is currently assessing the impact on the interim consolidated and
combined carve-out financial statements.

    Supplementary Information

    Supplementary information about the new company GLV and the former GL&V,
including that related to the Arrangement between GL&V, its shareholders and
FLS and the consolidated and combined carve-out financial statements of the
last three fiscal years, is available on SEDAR's website (www.sedar.com) and
GLV's website (www.glv.com).



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

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


    November 9, 2007



    GLV Inc.
    Interim Consolidated and Combined Carve-out Statements of Earnings
    (in thousands of dollars, except for per share data and the number of
    shares) (unaudited)

                                Three months              Six months
                             ended September 30,       ended September 30,
                          ------------------------- -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues              $   125,887  $    92,066  $   241,155  $   178,451
    Cost of contracts
     and goods sold            98,188       72,252      188,770      138,913
    -------------------------------------------------------------------------
                               27,699       19,814       52,385       39,538

    Expenses:
      Selling expenses          9,742        9,803       20,287       18,634
      Administrative
       expenses                13,153        6,012       22,678       12,509
      Costs related to
       the Arrangement
       (note 1)                 4,900            -        5,797            -
    -------------------------------------------------------------------------
                               27,795       15,815       48,762       31,143

    -------------------------------------------------------------------------
    Earnings (loss) before
     amortization, financial
     expenses and income
     taxes                        (96)       3,999        3,623        8,395
    Amortization                2,771        1,544        5,635        2,932
    -------------------------------------------------------------------------
    Earnings (loss) before
     financial expenses and
     income taxes              (2,867)       2,455       (2,012)       5,463
    Financial expenses
    (note 4)                    1,232        1,258        2,501        1,138
    -------------------------------------------------------------------------
    Earnings (loss) before
     income taxes              (4,099)       1,197       (4,513)       4,325
    Income taxes               (1,944)         452       (1,780)       1,152
    -------------------------------------------------------------------------
    Net earnings (loss)   $    (2,155) $       745  $    (2,733) $     3,173
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per
     share (note 15):
      Basic and diluted   $     (0.08) $      0.03  $     (0.11) $      0.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of
     participating
     shares outstanding
     (note 15):
      Basic and diluted    25,388,880   25,388,880   25,388,880   25,388,880
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.


    GLV Inc.
    Interim Segmented Information
    (in thousands of dollars)
    (unaudited)


                          ---------------------------------------------------
                                  Three months ended September 30, 2007
                          ---------------------------------------------------
                                Water     Pulp and       Others
                            Treatment        Paper          and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------

    Revenues              $    65,834  $    58,153  $     1,900  $   125,887

    Costs related to the
     Arrangement (note 1)         144       (1,146)       5,902        4,900

    Amortization of
     property, plant
     and equipment,
     intangible assets
     and other assets           1,356          792          623        2,771

    Earnings (loss)
     before financial
     expenses and
     income taxes               1,909        3,419       (8,195)      (2,867)

    Acquisition of
     property, plant
     and equipment              1,231        1,427          502        3,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended September 30, 2006
                          ---------------------------------------------------
                                Water     Pulp and       Others
                            Treatment        Paper          and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------
    Revenues              $    39,059  $    49,150  $     3,857  $    92,066

    Amortization of
     property, plant
     and equipment,
     intangible assets
     and other assets             333          631          580        1,544

    Earnings (loss)
     before financial
     expenses and
     income taxes               2,793        1,619       (1,957)       2,455

    Acquisition of
     property, plant
     and equipment                232          387           36          655
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   Six months ended September 30, 2007
                          ---------------------------------------------------
                                Water     Pulp and       Others
                            Treatment        Paper          and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------

    Revenues              $   120,511  $   116,070  $     4,574  $   241,155

    Costs related to the
     Arrangement (note 1)         173          242        5,382        5,797

    Amortization of
     property, plant
     and equipment,
     intangible assets
     and other assets           2,749        1,544        1,342        5,635

    Earnings (loss)
     before financial
     expenses and
     income taxes               3,630        4,248       (9,890)      (2,012)

    Acquisition of
     property, plant
     and equipment              1,570        1,866          914        4,350
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    Six months ended September 30, 2006
                          ---------------------------------------------------
                                Water     Pulp and       Others
                            Treatment        Paper          and
                                Group        Group  Elimination        Total
    -------------------------------------------------------------------------

    Revenues              $    72,438  $    99,352  $     6,661  $   178,451

    Amortization of
     property, plant and
     equipment, intangible
     assets and other
     assets                       538        1,237        1,157        2,932

    Earnings (loss)
     before financial
     expenses and
     income taxes               4,769        5,301       (4,607)       5,463

    Acquisition of
     property, plant
     and equipment                332          883          228        1,443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.


    GLV Inc.
    Interim Consolidated and Combined Carve-out Statements
    of Comprehensive Income
    (in thousands of dollars)
    (unaudited)

    -------------------------------------------------------------------------
                               Three months                Six months
                             ended September 30,        ended September 30,
                          ------------------------- -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings (loss)   $    (2,155) $       745  $    (2,733) $     3,173

    Other comprehensive
     income (loss), net
     of tax:
      Unrealized gains
       (losses) on
       translating
       financial
       statements of
       self-sustaining
       foreign operations     (11,628)         886      (11,125)         586
    -------------------------------------------------------------------------
    Comprehensive
     income (loss)        $   (13,783) $     1,631  $   (13,858) $     3,759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.


    GLV Inc.
    Interim Consolidated and Combined Carve-out Balance Sheets
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                   September 30,    March 31,
                                                           2007         2007
    -------------------------------------------------------------------------
                                                    (unaudited)     (audited)

    Assets

    Current assets:
      Cash and cash equivalents                     $     3,376  $    20,399
      Temporary investments                                 859          843
      Accounts receivable                               137,435      130,944
      Income taxes receivable                             1,303            -
      Inventories                                        32,323       27,942
      Contract in progress, less progress
       billings (note 5)                                 54,455       59,088
      Prepaid expenses                                    5,950        5,068
      Future income tax assets                            4,890        5,962
      -----------------------------------------------------------------------
                                                        240,591      250,246
    Long-term investments and other (note 6)              1,500        6,644
    Property, plant and equipment (note 7)               39,056       42,010
    Future income tax assets                              4,589          833
    Goodwill (note 8)                                    22,568       26,451
    Intangible assets (note 9)                           35,401       41,143
    Other assets                                          3,590        4,096

    -------------------------------------------------------------------------
                                                    $   347,295  $   371,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders'/Invested Equity

    Current liabilities:
      Accounts payable and accrued liabilities          120,191      121,916
      Income taxes payable                                    -        1,119
      -----------------------------------------------------------------------
                                                        120,191      123,035

    Advances from companies of Groupe Laperrière
    & Verreault Inc. (note 1 d))                            980      109,144
    Long-term debt (note 10)                             56,641        1,206
    Other liabilities (note 11)                           9,487       14,651
    Future income tax liabilities                         4,933        6,969
    -------------------------------------------------------------------------
                                                        192,232      255,005

    Shareholders'/Invested equity:
      Share capital (note 12)                           172,002            -
      Contributed surplus (note 13 a))                       81            -
      Deficit                                            (2,337)           -
      Accumulated other comprehensive loss              (14,683)      (3,558)
      Owner's net equity                                      -      119,976
      -----------------------------------------------------------------------
                                                        155,063      116,418

    Guarantees (note 16)
                                                    $   347,295  $   371,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.


    GLV Inc.
    Interim Consolidated and Combined Carve-out Statements of
    Shareholders'/Invested Equity
    (in thousands of dollars)
    (unaudited)

    -------------------------------------------------------------------------
                                              Accumulated
                                                Other
                                                Compre-
                                                hensive    Owner's
                  Share  Contributed            Income      Net
                 Capital   Surplus   Deficit    (Loss)     Equity    Total
    -------------------------------------------------------------------------

    Balance,
     March 31,
     2007      $       - $       - $       -  $  (3,558) $ 119,976 $ 116,418
    Net loss           -         -         -          -       (578)     (578)
    Accumulated
     other
     compre-
     hensive
     income            -         -         -        503          -       503
    Contributed
     surplus
     relating
     to stock-
     based
     compen-
     sation            -         -         -          -        102       102
    Net
     transactions
     with other
     group of
     Groupe
     Laperrière
     & Verreault
     Inc.              -         -         -          -     (6,049)   (6,049)
    -------------------------------------------------------------------------
    Balance,
     June 30,
     2007              -         -         -     (3,055)   113,451   110,396
    Net loss           -         -    (2,155)         -          -    (2,155)
    Accumulated
     other
     comprehensive
     loss              -         -         -    (11,628)         -   (11,628)
    Contributed
     surplus
     relating
     to stock-
     based
     compensation      -        81         -          -         51       132
    Future tax
     related to
     carve-out
     transactions
     (note 1(f))       -         -         -          -      3,360     3,360
    Net
     transactions
     with other
     group of
     Groupe
     Laperrière
     & Verreault
     Inc.              -         -         -          -     55,140    55,140
    Issuance of
     share capital
     during carve-
     out
     (note 12)   172,002         -      (182)         -   (172,002)     (182)
    -------------------------------------------------------------------------
    Balance,
     September
     30, 2007  $ 172,002  $     81  $ (2,337) $ (14,683) $       - $ 155,063
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.


    GLV Inc.
    Interim Consolidated and Combined Carve-out Statements of Cash Flows
    (in thousands of dollars)
    (unaudited)


                                         Three months         Six months
                                     ended September 30,  ended September 30,
                                    --------------------- -------------------
                                         2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash flows from (used in)
     operating activities:
    Net earnings (net loss)           $ (2,155) $    745  $ (2,733) $  3,173
    Non-cash items in earnings:
      (Gain) loss on disposal of
       property, plant and
       equipment and other assets           35         9       (20)     (289)
      Amortization of property,
       plant and equipment               1,661     1,222     3,232     2,300
      Amortization of intangible
       assets                            1,036       231     2,229       449
      Amortization of other assets          74        91       174       183
      Amoritzation of deferred
       financing costs                      30         -        30         -
      Amortization of the deferred
       gain on sale-leaseback
       arrangement                        (117)     (119)     (234)     (239)
      Stock-based compensation
       (note 13 (a))                       132         3       234        11
      Other stock-based compensation
       (note 13 (b))                        42         -        42         -
      Future income taxes                 (190)     (115)     (317)     (101)
      Unrealized (gain) loss on
       derivative financial
       instruments                        (275)      379      (584)     (598)
    Net changes in non-cash
     balances related to
     operations (net of effect of
     business acquisitions)                669    (8,083)  (14,197)  (20,383)
    -------------------------------------------------------------------------
                                           942    (5,637)  (12,144)  (15,494)

    Cash flow from (used in)
     financing activities:
    Issuance of long-term debt          62,876         -    62,876         -
    Repayment of long-term debt         (6,379)        -    (6,412)        -
    Deferred financing costs              (955)        -      (955)        -
    Issuance of share capital             (182)        -      (182)        -
    Net transactions with other
     group of Groupe
     Laperrière & Verreault Inc.       (54,675)   (4,987)  (54,973)   27,162
    -------------------------------------------------------------------------
                                           685    (4,987)      354    27,162

    Cash flow used in investing
     activities:
    Business acquisitions                 (552)    2,232      (552)  (22,496)
    Change in temporary investments         (8)   (3,314)      (16)   (2,399)
    Acquisition of property, plant
     and equipment                      (3,160)     (655)   (4,350)   (1,443)
    Disposal of property, plant
     and equipment                       1,092       295     1,092       295
    Net change in other assets              60       (19)       72       (33)
    -------------------------------------------------------------------------
                                        (2,568)   (1,461)   (3,754)  (26,076)

    Effect of exchange rate changes
     on cash and cash equivalents          (27)    4,344    (1,479)    3,625
    -------------------------------------------------------------------------
    Net decrease in cash and cash
     equivalent                           (968)   (7,741)  (17,023)  (10,783)
    Cash and cash equivalents,
     beginning of period                 4,344    19,952    20,399    22,994
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                    $  3,376  $ 12,211  $  3,376  $ 12,211
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental information:
      Net interest paid               $  1,701  $    925  $  3,239  $  1,047
      Income taxes paid                    269       250       555       436

    See accompanying notes to the unaudited interim consolidated and combined
    carve-out financial statements.



    GLV Inc.
    Notes to Interim Consolidated and Combined Carve-out Financial Statements
    Periods ended September 30, 2007 and 2006
    (tabular amounts are expressed in thousands of dollars, except per share
     data and number of shares)
    (unaudited)
    -------------------------------------------------------------------------

    1. NATURE OF OPERATIONS AND ORGANIZATION

    On May 15, 2007, GLV Inc. ("GLV" or the "Company"), a wholly-owned
subsidiary of Groupe Laperrière & Verreault Inc. ("GL&V") was incorporated
under the Canadian Business Corporation Act. GLV was incorporated and
organized for the purposes of receiving upon carve-out the business and net
assets of the Water Treatment and Pulp and Paper Groups, and the Manufacturing
Unit (the "Group" or "Retained Businesses") of GL&V.
    The Water Treatment Group specializes in the design and marketing of
solutions for the treatment of municipal and industrial wastewater and water
used in various industrial processes, and also offers water intake screening
solutions for power stations and desalination plants. The Pulp and Paper Group
specializes in the design and marketing of equipment used in various stages of
pulp and paper production, notably chemical pulping, pulp preparation and
sheet formation, and is a recognized leader in rebuilding, upgrading and
optimization services for existing equipment, as well as the sale of
replacement parts. Finally, the Manufacturing Unit 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 the Pulp and Paper
Group.

    Corporate Reorganization - Carve-out of the Group

    On April 20, 2007, GL&V announced that it had entered into an agreement
with FLSmidth & Co. A/S ("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 GL&V. In connection with the Arrangement, GL&V will transfer its
Retained Businesses to GLV, which will be seeking a listing on the TSX
Exchange and the shares will be spun off to shareholders.
    Pursuant to the Arrangement, each GL&V shareholder will receive a
per-share consideration consisting of $33.00 in cash and one share of GLV.
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 for each corresponding share held.
    The proposed Arrangement was 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). GL&V presented the matter
to its shareholders at a special meeting. The Arrangement was also subject to
a number of conditions including approval by the Superior Court of Quebec,
acceptance by the TSX Exchange and other regulatory approvals.
    On July 27, 2007, GL&V announced that during the Special General Meeting
held that day, shareholders present or represented by proxy voted in favour of
the proposed Arrangement between GL&V, its shareholders and a Canadian
subsidiary of FLS, in a majority exceeding the required minimum of 75% of the
votes cast in both share classes. Holders of Class A subordinate voting shares
approved the resolution in a majority of 99.92% of the votes cast, whereas
holders of Class B multiple voting shares approved it unanimously.
    On July 31, 2007, GL&V announced that the Quebec Superior Court has issued
a final order approving the proposed Arrangement mentioned above between GL&V,
its shareholders and FLS.
    On August 10, 2007, GL&V announced the closing of the Arrangement. GL&V
transferred its Water Treatment and Pulp and Paper Groups and its
Manufacturing Unit to GLV on August 8, 2007, and the shares were distributed
to the shareholders of GL&V on August 9, 2007 after the listing of GLV on the
TSX Exchange. On August 10, 2007 a Canadian subsidiary of FLS acquired all of
GL&V's Class A subordinate voting shares and Class B multiple voting shares in
circulation, thus effectively became owner of GL&V's Process Group in exchange
for a cash consideration of $807,176,000 and assumption of the net debt less
$50,000,000 of net debt assumed by GLV. As a result, each shareholder of GL&V
received a cash consideration of $33.00 per share held plus one share of GLV.
    The consolidated balance sheet as at September 30, 2007 takes into account
the following carve-out transactions which were realized on August 8, 2007:

    (a) GL&V and its subsidiaries transferred to GLV and its subsidiaries the
        shares of Eimco Water Technologies LLC, Eimco Water Technologies
        Limited, Eimco Water Technologies Pty Ltd, Copa Limited, Copa
        Cornwall Limited, Copa Waste Water Controls Ltd, GL&V Singapore Pte
        Ltd, GL&V USA Inc, GL&V Sweden AB, GL&V India Private Limited, GL&V
        Process Equipment Private Limited and Norcan Insurance Co Ltd;

    (b) GL&V and its subsidiaries transferred to GLV and its subsidiaries
        substantially all of the operating assets and liabilities of GL&V
        Canada Inc.'s Water Treatment, Pulp and Paper and Manufacturing
        divisions, GL&V Brasil Ltda - Pulp and Paper division and Dorr-Oliver
        Eimco UK Limited - Pulp and Paper division. Operating assets and
        liabilities related to the Retained Businesses from other legal
        entities of GL&V group have been transferred to GLV Inc., and the net
        assets value was estimated to be nominal.

    (c) GL&V and its subsidiaries transferred to GLV Inc. and its
        subsidiaries the intangible assets related to the Pulp and Paper and
        Water Treatment Groups and the assets and liabilities related to the
        corporate offices.

    (d) The transfer of the shares and the net assets as described above
        were in consideration for the shares issued by GLV, a payment in cash
        and the capitalization of almost all of the advances from companies
        of GL&V except for an amount of $980,000. The shares issued by GLV
        have been transferred to shareholders of GL&V as part of the
        Arrangement. The cash payment to GL&V in the amount of $62,876,076
        obtained from GLV's credit facilities was equal to the aggregate of:

        (i)  $50,000,000 plus the excess of the cash and cash equivalents and
             temporary investments over the debt of GLV and any inter-company
             indebtedness due by GLV to GL&V that were not reimbursed at the
             date of the carve-out; and

        (ii) other stock-based compensation calculated using the estimated
             value determined for the distribution of GLV shares in the
             amount of $8.82.

    The Carve-out Agreement provides for an adjustment of the debt of GLV, net
of cash and cash equivalents and temporary investments based on the audited
opening balance sheet of GLV as at August 8, 2007 for the items (i) and (ii)
above. The estimated cash payment was accounted for against the shareholders'
equity as at September 30, 2007 and will be subject, if necessary, to a final
adjustment upon approval by the parties to the Carve-out Agreement. If a
difference should arise compared to the estimated adjustment, it will also be
accounted for against the shareholders' equity.

    (e) Consideration for the transfer by GL&V of the businesses and net
        assets of the Water Treatment, Pulp and Paper Groups and
        Manufacturing Unit to GLV consisting of the issuance of 22,837,075
        Class A subordinate voting shares at a legal stated capital of
        $201,423,000 and 2,551,805 Class B multiple voting shares at a legal
        stated capital of $22,507,000, a cash payment of $62,876,000 obtained
        from the credit facilities and the issuance of a note payable in the
        amount of $178,000 for a total consideration of $286,984,000.

    (f) Because the transactions are between companies under common control,
        they were recorded at the carrying amount of $172,002,000 in the
        consolidated balance sheet and at the fair value for tax purposes.
        Consequently, future income tax asset totaling $3,336,000 is recorded
        in the shareholders' equity at the carve-out date and corresponds to
        the deductible temporary difference between the carrying amounts of
        the net assets transferred by GL&V to GLV and fair value for tax
        purposes. No future income tax is recognized on the deductible
        temporary differences related to the investment in the different
        subsidiaries transferred by GL&V to GLV because these differences are
        not expected to reverse in the foreseeable future.

    Costs Related to the Arrangement

    The costs related to the Arrangement of GLV include the costs which would
not have been incurred if there was no Arrangement. The costs include a charge
of $4,284,000 related other compensation, $849,000 for professional fees
related to the audit of GLV's opening balance sheet and $664,000 for other
carve-out expenses. As part of the Arrangement, the payment related to other
compensation was partially supported by GL&V. It is estimated that an
additional amount of approximately $725,000 will be incurred in the following
quarters in order to complete the transition.

    Transitional Services Agreement

    (a) Transitional Services

        The Transitional Services Agreement provide that (i) GLV Inc. shall
        and shall cause its subsidiaries to provide GL&V and its subsidiaries
        during the transitional period (as defined below) with certain
        specific services and administrative, corporate, operational and
        support services required to carry on the Process Group business of
        GL&V substantially as it was carried on prior to the closing date of
        the Arrangement and that (ii) GL&V shall cause its subsidiaries to
        provide GLV Inc. and its subsidiaries during the transitional period
        with certain services and administrative, corporate, operational and
        support services required to carry on the Retained Businesses
        substantially as they were carried on prior to the Arrangement
        closing date.

    (b) Fees

        The Transitional Services Agreement provide that the person receiving
        the transitional services will pay to the provider of such services
        the actual cost of the services provided plus a mark-up, subject to
        any particular fees specifically agreed to in the Transitional
        Services Agreement.

    (c) Transitional period

        The Transitional Services Agreement have a term varying between six
        to nine months depending on the services ("transitional period"),
        subject to the right of the party receiving the transitional services
        to terminate the Transitional Services Agreement in whole, or only in
        respect of selected services provided, upon a 30-day prior written
        notice.

    2. BASIS OF PRESENTATION AND METHODS OF ALLOCATION

    (a) Pre Arrangement:

        The consolidated balance sheet as at March 31, 2007 and combined
        carve-out earnings, comprehensive income and cash flows for the
        period from April 1, 2007 to August 8, 2007 included in the period
        ended September 30, 2007 and for the period ended September 30, 2006
        has been derived from the accounting records of GL&V using the
        historical cost basis for assets and liabilities and historical
        results of operations of the Retained Businesses. Management believes
        the assumptions underlying the combined carve-out financial
        statements, including the allocations as described in Note 2 of the
        Group's combined carve-out financial statements included in the
        information circular (the "Circular") dated June 20, 2007, with the
        exception of earnings (losses) per share described below and the
        changes as described in Note 3 below, are reasonable. However, the
        combined carve-out financial statements may not necessarily reflect
        the Company's results of operations, financial position, and cash
        flows or what the results of operations, financial position, and cash
        flows would have been if the Group was a stand-alone company during
        the periods presented. As these carve-out financial statements
        represent a portion of the businesses of GL&V which were not
        organized in a single legal entity, the net assets of the Group have
        been reflected as GL&V's owner's net equity. GL&V's owner's net
        equity in the Group include the accumulated earnings of the Group, as
        well as the effect of the net cash transfer related to cash
        management functions performed by GL&V and investing decision in the
        Group by GL&V.

        The combined carve-out financial statements include the direct
        revenue, cost, and expenses that are solely attributable to the
        activities of the Water Treatment Group, Pulp & Paper Group and
        Manufacturing Unit and a proportion of expenses from corporate,
        bonuses, stock option plans and other stock-based compensation.

        i) Earnings (loss) per share

           Prior to the Arrangement, the Group was not a separate entity with
           common shares outstanding. The earnings (loss) per share for the
           three-month and six-month periods ended September 30, 2006 and the
           three-month and six-month periods ended September 30, 2007 were
           calculated using the common shares outstanding immediately after
           the completion of the Arrangement as being the common shares
           outstanding as at April 1, 2006 and for the period up to
           August 8, 2007, date of carve-out (note 15).

    (b) Post Arrangement:

        The consolidated balance sheet as at September 30, 2007 and the
        consolidated results of operations from August 9, 2007 to
        September 30, 2007 present the results of operations, financial
        position and cash flows as a stand-alone entity. Following the
        Arrangement on August 8, 2007, as a stand-alone basis, the Company
        performed its corporate functions with its own resources or purchased
        services.

    (c) Interim financial statements:

        The unaudited interim consolidated and combined carve-out financial
        statements of the Company have been prepared under Canadian generally
        accepted accounting principles ("GAAP"). The unaudited consolidated
        balance sheet as at September 30, 2007 and the unaudited interim
        consolidated and combined carve-out statements operations, deficit
        and cash flows for the three-month and nine-month periods ended
        September 30, 2007 and 2006 reflect all adjustments which are, in the
        opinion of management, necessary to the fair statement of the results
        of the interim periods presented. The interim consolidated and
        combined carve-out financial statements follow the same accounting
        policies as the audited combined carve-out financial statements
        presented in the Circular dated June 20, 2007, except for the changes
        described in Note 3 below. These interim consolidated and combined
        carve-out financial statements have not been reviewed nor audited by
        the Company's external auditors.

        The interim consolidated and combined financial statements do not
        include all the disclosures required for the annual financial
        statements and should be read in conjunction with the combined carve-
        out financial statements of the Company presented in the Circular
        dated June 20, 2007.

    3. CHANGES IN ACCOUNTING POLICIES

    In April 2005, the Canadian Institute of Chartered Accountants ("CICA")
issued three new accounting standards: Handbook Section 1530, Comprehensive
Income, Section 3855, Financial Instruments - Recognition and Measurement, and
Section 3865, Hedges. Effective April 1, 2007, the Group adopted these new
accounting standards. Changes in accounting policies in conformity with these
new accounting standards are as follows:

    (a) Comprehensive income

        Section 1530 introduces the concept of comprehensive income, which is
        calculated by adding other comprehensive income with net income or
        net loss. Other comprehensive represents changes in
        shareholders'/invested equity arising from transactions and other
        events with non-owner sources, such as unrealized gains and losses on
        financial assets classified as available-for-sale, changes in
        translation adjustment of self-sustaining foreign operations, and
        changes in the fair value of the effective portion of cash flow
        hedging instruments. The accumulation of other comprehensive income
        represents the accumulated other comprehensive income.

        With the adoption of this section, the interim consolidated and
        combined carve-out financial statements now include interim
        consolidated and combined carve-out statements of comprehensive
        income and the accumulated other comprehensive income is presented
        separately under shareholders/invested equity in the interim
        consolidated and combined carve-out balance sheets. Accumulated
        other comprehensive income includes the cumulative foreign currency
        translation adjustments previously recorded in the cumulative
        translation adjustment account. The comparative interim consolidated
        and combined carve-out statements of comprehensive income were
        restated solely to present the translation adjustment of self-
        sustaining foreign operations as accumulated other comprehensive
        income as provided by transition rules.

        The following table summarizes the change in accumulated other
        comprehensive income:

                                ---------------------   ---------------------
                                    Three months             Six months
                                 ended September 30,     ended September 30,
                                ---------------------   ---------------------
                                    2007        2006        2007        2006
                                ---------------------   ---------------------
    Balance,
     beginning of period        $ (3,055)   $ (2,511)   $ (3,558)   $ (2,211)
    Net change in unrealized
     foreign currency gains
     (losses) on translation
     of net investments in
     self-sustaining
     foreign operations          (11,628)        886     (11,125)        586
    -------------------------------------------------------------------------
    Balance, end of period      $(14,683)   $ (1,625)   $(14,683)   $ (1,625)
    -------------------------------------------------------------------------

    (b) Financial instruments

        Section 3855 requires that all financial assets and liabilities be
        carried at fair value in the interim consolidated and combined carve-
        out balance sheet, except for loans and receivables, financial assets
        held to maturity, and non-trading liabilities. The latter are carried
        at amortized cost using the effective interest method. Changes in the
        fair value of financial instruments carried at fair value are charged
        or credited to the interim consolidated and combined carve-out
        statements of income for the current period, except for changes in
        the fair value of financial instruments designated as cash flow
        hedges which are charged or credited to other comprehensive income.
        Once realized, these amounts are recognized in the interim
        consolidated and combined carve-out statement of income.

        All derivative financial instruments are carried at fair value in the
        interim consolidated and combined carve-out balance sheets, including
        those derivatives that are embedded in other contracts but are not
        considered to be closely related to the host contract.

        This new standard requires the Company make certain elections, upon
        initial adoption, regarding the accounting policy to be used to
        account for each financial instrument. This new standard also
        require that the transaction costs incurred in connection with the
        issuance of financial instruments either be capitalized and presented
        as a reduction of the carrying value of the related financial
        instrument or expensed as incurred. If capitalized, transaction costs
        must be amortized to income using the effective interest method.

        Following is a summary of the accounting policy the Company has
        elected to apply to each of its categories of financial instruments
        outstanding as of April 1, 2007:

        ---------------------------------------------------------------------
        Assets/Liabilities            Category                Measurements
        ---------------------------------------------------------------------
        Cash and cash equivalents     Held for trading        Fair value
        Temporary investments         Held for trading        Fair value
        Trade accounts receivable     Loans and receivables   Amortized cost
        Long-term investments         Available for sale      Amortized cost
        Accounts payable and          Other liabilities       Amortized cost
         accrued liabilities
        Long-term debt                Other liabilities       Amortized cost
        ---------------------------------------------------------------------

        The Company has elected to account for transactions costs related to
        the issuance of financial instruments as a reduction of the carrying
        value of the related financial instruments. Transaction costs are now
        deducted from the financial liability and are amortized using the
        effective interest method over the expected life of the expected
        liability. The transactions costs incurred related to the credit
        facility are amortized effective from August 9, 2007.

        The Company does not have any outstanding contracts with embedded
        derivatives.

    (c) Hedges

        Section 3865 defines the criteria that must be satisfied in order for
        hedge accounting to be applied and the accounting for each of the
        permitted hedging strategies. As the Company has not established
        hedging relationship, these recommendations had no impact on the
        results of operations or financial position of the Company.

        On adoption of these new standards, the transition rules require that
        the Company adjust either the opening deficit or accumulated other
        comprehensive income as if these new rules had always been applied in
        the past, without restating comparative figures for prior years.
        Accordingly, as at April 1, 2007, the application of this new rule
        did not have an effect on the opening deficit nor the accumulated
        other comprehensive income.

        Finally, the adoption of the new standards had no significant impact
        on the net loss of fiscal 2008.

    4. FINANCIAL EXPENSES

                                ---------------------   ---------------------
                                    Three months             Six months
                                 ended September 30,     ended September 30,
                                ---------------------   ---------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Interest on long-term debt  $    593    $      -    $    613    $      -
    Interest on advances from
     companies of Groupe
     Laperrière & Verreault Inc.     155         628       1,713         796
    Interest income, net amount     (289)        (41)       (329)        (87)
    Amortization of deferred
     financing costs                  30           -          30           -
    Foreign exchange loss            734         210         556         658
    Foreign unrealized (gain)
     loss on derivative
     financial instruments          (275)        379        (584)       (598)
    Others                           284          82         502         369
    -------------------------------------------------------------------------
                                $  1,232    $  1,258    $  2,501    $  1,138
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    5. CONTRACTS IN PROGRESS, LESS PROGRESS BILLINGS

                                    -----------------------------------------
                                                  Balance as at
                                    -----------------------------------------
                                    September 30, 2007        March 31, 2007
                                    -----------------------------------------
    Contracts in progress                   $  225,333            $  181,836
    Progress billings                         (170,878)             (122,748)
    -------------------------------------------------------------------------
                                            $   54,455            $   59,088
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    6. LONG-TERM INVESTMENTS AND OTHERS

                                    -----------------------------------------
                                                  Balance as at
                                    -----------------------------------------
                                    September 30, 2007        March 31, 2007
                                    -----------------------------------------
    Investment in shares of private
     company, at cost                       $    1,500            $    1,500
    Advances to companies of
     Groupe Laperrière &
     Verreault Inc., without
     interest and repayment terms                    -                 5,144
    -------------------------------------------------------------------------
                                            $    1,500            $    6,644
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    7. PROPERTY PLANT AND EQUIPMENT

                                                                 Unamortized
                                          Cost   Amortization           Cost
    -------------------------------------------------------------------------
    Land                             $   4,075      $       -      $   4,075
    Buildings                           22,810         (8,002)        14,808
    Equipment, moulds, furniture
     and fixtures                       37,412        (22,188)        15,224
    Computer hardware and software      13,322         (9,206)         4,116
    Leasehold improvements               1,539           (419)         1,120
    Deferred government assistance
     and investment tax credits         (1,101)           814           (287)
    -------------------------------------------------------------------------
                                     $  78,057    $   (39,001)     $  39,056
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8. GOODWILL

                                 Balance as at                 Balance as at
                                      March 31,       Foreign   September 30,
                                          2007       Currency           2007
    -------------------------------------------------------------------------
    Water Treatment Group            $  22,734    $    (3,605)     $  19,129
    Pulp & Paper Group                   3,717           (278)         3,439
    -------------------------------------------------------------------------
                                     $  26,451    $    (3,883)     $  22,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    9. INTANGIBLE ASSETS

                     Balance                                         Balance
                       as at                                           as at
                     April 1,                 Amorti-    Foreign   September
                        2007   Acquisition    zation    Currency    30, 2007
    -------------------------------------------------------------------------
    Technologies    $ 27,251         273    $   (825)   $ (2,307)   $ 24,392
    Trademarks         6,221                    (151)       (634)      5,436
    Customer
     relations         5,335                    (354)       (629)      4,352
    Non-compete
     agreements          640                     (72)        (64)        504
    Backlog            1,696                    (822)       (157)        717
    -------------------------------------------------------------------------
                    $ 41,143         273    $ (2,224)    $(3,791)   $ 35,401
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    10. LONG-TERM DEBT

                                    -----------------------------------------
                                                  Balance as at
                                    -----------------------------------------
                                    September 30, 2007        March 31, 2007
    -------------------------------------------------------------------------

    Revolving credit facilities
     for a maximum amount of
     $175,000,000; the rates vary
     depending on the Canadian
     prime rate and US base rate,
     plus 0% to 0.75% and/or the
     bankers acceptance rates and/
     or LIBOR and/or the European
     rates plus 0.625% to 1.75%,
     maturing in August 2012(a)
      Amount of debt in
       Canadian dollars                     $   56,700            $        -

    Guaranteed loan for a maximum
     amount of pnds stlg 209,000
     (pnds stlg 300,000 as at
     March 31, 2007), bearing
     interest at LIBOR plus 2%
     with interest payable
     semi-annually on March 30 and
     September 30, maturing in
     June 2008(b)                                  424                   681

    Term loan in the amount of pnds
     stlg 211,000 (pnds stlg 231,000
     as at March 31, 2007), bearing
     interest at British base rate
     plus 2%, interest payable
     monthly, maturing in
     January 2011(b)                               429                   525

    Deferred financing costs,
     net of amortization(c)                       (912)                    -
    -------------------------------------------------------------------------
                                            $   56,641            $    1,206
    -------------------------------------------------------------------------

    (a) On August 8, 2007, GLV Inc. proceeded to a syndication of the credit
        facilities with a banking syndicate in the amount of $175,000,000
        that will expire in August 2012.

        The credit facilities consist of two secured non-reducing revolving
        credits totaling $175,000,000. Of that amount, $125,000,000 may be
        used to finance business acquisitions, meet day-to-day financing
        requirements, and issue letters of credit. The remaining $50,000,000
        may be used to issue letters 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.

        The credit facilities were used for the cash payment to GL&V
        explained in note 1(d).

        As at September 30, 2007, the credit facilities were used to issue
        letters of credit totaling $5,380,000 and to issue EDC-guaranteed
        letters of credit totaling $34,843,000.

        No capital repayments are required before the credit facilities come
        due in August 2012.

        The Company is required to maintain certain financial ratios with
        respect to the credit facilities. As at September 30, 2007, the
        Company was in compliance with all financial ratios.

    (b) The debt includes credit facilities, secured by the accounts
        receivable and certain loans related to a previous acquisition.

        All of the credit facilities and loans are presented as long-term
        debt, since the Company has the ability and intent to maintain such
        debt on a long-term basis and has the long-term credit facilities
        available (see (a) above) to reimburse such debt.

    (c) The Company incurred $955,000 of financing costs related to obtaining
        the credit facilities described in (a) above. The financing costs are
        recorded at cost and amortized on the effective interest rate method
        over the term of the credit facilities.

    11. OTHER LIABILITIES

                                    -----------------------------------------
                                                  Balance as at
                                    -----------------------------------------
                                    September 30, 2007        March 31, 2007
    -------------------------------------------------------------------------
    Pension liability                       $    5,933            $    6,631
    Deferred gain on a
     sale-leaseback arrangement(a)               2,628                 3,287
    Other stock-based compensation
     (note 13(b))                                   42                 2,276
    Other                                          884                 2,457
    -------------------------------------------------------------------------
                                            $    9,487            $   14,651
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) In 2004, the Company disposed of a building in which it leased floor
        space. The sale of the building was accounted for as a sale-
        leaseback, and consequently, the gain resulting from the disposal has
        been recorded on the balance sheet and is recognized on a straight-
        line basis over the term of the lease, until 2014 and the interim
        consolidated and combined carve-out statements of earnings.

    12. SHARE CAPITAL

    Authorized:
      Unlimited number of shares without par value:

        Class B multiple voting shares, carrying 10 votes per share,
        participating, convertible into Class A subordinate voting shares

        Class A subordinate voting shares, participating

        Preferred shares, issuable in series

    Issued and fully paid:

                                    -----------------------------------------
                                               As at September 30, 2007
                                    -----------------------------------------
                                             Number of
                                                shares                 Total
    -------------------------------------------------------------------------

    Class B multiple voting shares

    Outstanding, beginning of period                 -           $         -
    Issuance of share on
     August 8, 2007                          2,551,805                17,288
    Conversion of Class B shares
     into Class A shares                        (4,000)                  (27)
    -------------------------------------------------------------------------
    Outstanding, end of period               2,547,805           $    17,261
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Class A subordinate voting shares

    Outstanding, beginning of period
     (August 8, 2007)                                -           $         -
    Issuance of share on
     August 8, 2007                         22,837,075               154,714
    Shares issued:
    Conversion of Class B shares
     into Class A shares                         4,000                    27
    -------------------------------------------------------------------------
    Outstanding, end of period              22,841,075           $   154,741
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total                                   25,388,880           $   172,002
    -------------------------------------------------------------------------

    On August 8, 2007, the Company issued 22,837,075 Class A subordinate
voting shares for a legal stated capital of $201,423,000 and 2,551,805 Class B
multiple voting shares for a legal stated capital of $22,507,000. Since the
carve-out transaction was carried out between companies under common control
it is accounted for at the book value of $172,002,000 in the consolidated
balance sheet.

    13. STOCK-BASED OPTION PLANS AND OTHER STOCK BASED COMPENSATION PLANS

    (a) Stock option plans:

        Under stock option plan put in place by GLV for senior executives,
        management and directors, a maximum of 2,538,888 Class A subordinate
        voting shares of the share capital of the Company may be issued.
        Under the plans, the exercise price of each option cannot be less
        than the weighted average price of the shares negotiated at the
        Toronto Stock Exchange for the five days immediately preceding the
        grant date of the stock options. The number of stock options that may
        be issued to non managing directors is limited to 1% of the number of
        shares of the Company in circulation.

        Stock options vest over 5 years at the rate of 20% per year and upon
        the achievement of a fixed quoted market price of the Class A
        subordinate voting shares determined by the Board of Directors of the
        Company. In addition, these options have a maximum term that may not
        exceed 10 years from the grant date.

        On September 6, 2007, the Company issued 1,370,000 stock options at
        the exercise price of $10.82.

        The Company recorded stock-based compensation expenses in the amount
        of $132,000 and $234,000 during the three-month and six-month
        periods, respectively, related to stock option plans where i) an
        amount of $51,000 for the period from July 1st, 2007 to August 8,
        2007 and an amount of $153,000 for the period from April 1st, 2007 to
        August 8, 2007 were  related to stock option plans of GL&V which
        existed prior to the Arrangement with the corresponding credit
        presented as owner's net equity, and ii) an amount of $81,000 is
        related to the new stock option plan of GLV for the period from
        August 9, 2007 to September 30, 2007 with the corresponding credit
        presented as contributed surplus.

        The fair value of each stock option granted at the issue date was
        determined using the Black-Scholes option pricing model and the
        following assumptions:

        Weighted average fair value                                $    4.37
        Risk-free interest rate                                         3.9%
        Expected life                                                7 years
        Expected volatility of stock price                               30%
        Expected dividend yield                                           0%
        ---------------------------------------------------------------------

        The stock option plans that existed before the Arrangement were
        cancelled by GL&V before the closing of the Arrangement and the
        holders of these options received a cash amount equal to the
        difference between $33.00 and the exercise price of an option and one
        Class A subordinate voting share of GLV for each option held.

    (b) Other stock-based compensation plans:

        GLV Inc. also offers stock appreciation rights to certain executives.

        On September 6, 2007, the Company issued 500,000 units of stock
        appreciation rights at the exercise price of $10.82 of the Company's
        Class A subordinate voting shares. The stock appreciation rights vest
        over 5 years at the rate of 20% per year and upon the achievement of
        a fixed quoted market price of the Class A subordinate voting shares
        determined by the Board of Directors of the Company.

        As at September 30, 2007, the Company recorded other stock-based
        compensation expense of $3,596,000 and $4,451,000 for the three-
        months and six-months, respectively, related to the rights attached
        to units granted to certain employees of GL&V in which these rights
        were fully paid prior to the Arrangement.  The Company also recorded
        a compensation expense of $42,000 for the three-months and six-months
        related to the stock appreciation rights granted since the beginning
        of GLV's operations with the corresponding credit accrued in other
        liabilities.

    14. BUSINESS ACQUISITION

    On September 13, 2007, the Company acquired the principal assets of a
company located in the United Kingdom for a cash consideration of $552,000
((pnds stlg)264,000). This company acquired the design and manufacture of
doctor blade systems paper machines and high-turnover replacement parts
("consumables"). The acquired know-how and products obtained in this
acquisition are complementary to the products acquired from KanEng, a Montreal
based company in 2006 and was integrated in the Pulp and Paper Group's
activities for North America. This acquisition provides for potential
commercial synergy aimed at increasing the added value of this group's product
selection and strengthening its position in this special niche market while
providing it an additional revenue stream in the aftermarket.

    15. 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.
    The effect of 1,370,000 stock options has been excluded in the
determination of the weighted average number of participating shares
outstanding for the diluted earnings or loss per share in each of the periods
presented as the effect are anti-dilutive.


                           ------------------------  ------------------------
                                 Three months               Six months
                              ended September 30,       ended September 30,
                           ------------------------  ------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Weighted average
     number of
     participating shares
     outstanding           25,388,880   25,388,880   25,388,880   25,388,880
    Potentially dilutive
     impact                         -            -            -            -
    -------------------------------------------------------------------------

    Weighted average
     number of
     participating and
     diluted shares        25,388,880   25,388,880   25,388,880   25,388,880
    -------------------------------------------------------------------------


    16. GUARANTEES

    Under the terms of the Carve-out Agreement between GL&V and FLS, the
Company will have to indemnify GL&V and each of its subsidiaries for any taxes
arising out of or connected with the carve-out transactions in excess of
$13,000,000. As at September 30, 2007, management did not expect that GLV will
be required to indemnify GL&V or its subsidiaries as it estimates that the
taxes arising out of or connected with the carve-out transactions will be
below $13,000,000.
    




For further information:

For further information: Marc Barbeau, CA, Executive Vice-President and
Chief Financial Officer, Tel: (514) 284-2224, www.glv.com

Organization Profile

GLV Inc.

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