GLV Increases its Third-Quarter Revenues by 23%, Improves the Operating Profitability of Both its Groups and Achieves Normalized Net Earnings of $1.6 M



    
    - Excluding the unfavourable impact of currency fluctuations, revenues
      for the third quarter ended December 31, 2007 would have posted a
      36.4% increase, including an organic growth of close to 22% (at
      constant exchange rates) primarily attributable to the Water Treatment
      Group.

    - GLV closes the third quarter with net earnings of $1.0 M or $0.04 per
      share and normalized net earnings of $1.6 M or $0.06 per share
      (excluding non-recurring costs related to the closing of the
      Arrangement and other non-recurring items), as opposed to a normalized
      net loss of $0.5 M or $(0.02) per share last year.

    - For the first nine months of the fiscal year, revenues increase by
      30.5% (36.3% at constant exchange rates) to reach $378.8 M, as a result
      of the previous year's acquisitions and organic growth.

    - As at December 31, 2007, GLV's order backlog amounts to $300.6 M, up
      17.2% over the previous year.
    

    MONTREAL, Feb. 11 /CNW Telbec/ - (Note: All amounts are in Canadian
dollars unless otherwise indicated.) GLV Inc. ("GLV" or "the Company"; ticker
symbols LVG.A and LVG.B) discloses today the financial results and highlights
of the third quarter of fiscal 2008. This period gave rise to solid growth in
the Company's consolidated revenues - to which both groups contributed almost
equally - coupled with an improvement in each group's operational
profitability over the same period a year earlier. It should be pointed out
that consolidated results for the third quarter ended December 31, 2007
reflect GLV's actual results, whereas those for the comparative three-month
period ended December 31, 2006 consist of the unaudited combined carve-out
results of the retained businesses pursuant to the Arrangement ("the
Arrangement") closed on August 10, 2007. For the first nine months ended
December 31, 2007, consolidated and combined carve-out results include GLV's
actual results only for the period extending from August 9, 2007 to
December 31, 2007; prior to August 9, 2007, they consist of the combined
carve-out results of the retained businesses.

    Results for the Three-Month and Nine-Month Periods ended
    --------------------------------------------------------
    December 31, 2007
    -----------------

    For the three-month period ended December 31, 2007, GLV's consolidated
revenues amounted to $137.7 M, up 23.2% over combined carve-out revenues of
$111.8 M for the same quarter a year earlier. Excluding the unfavourable
impact of currency fluctuations, GLV's third-quarter revenues posted a
36.4% increase. This performance was in a large part driven by organic growth
of 21.8% (at constant exchange rates), primarily attributable to the Water
Treatment Group. Despite the negative impact of exchange rate fluctuations,
normalized EBITDA(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)
more than tripled, to stand at $7.0 M in the third quarter. GLV closed the
three-month period with consolidated normalized net earnings(3) of $1.6 M or
$0.06 per share, as opposed to a combined carve-out normalized net loss of
$0.5 M or $(0.02) per share in the same quarter the previous year. This
turnaround in profitability is all the more significant as results for the
third quarter of the current fiscal year include a pre-tax unrealized loss of
$1.3 M on derivative financial instruments, compared with an unrealized gain
of $0.6 M a year earlier.
    For the nine-month period ended December 31, 2007, GLV recorded
consolidated and combined carve-out revenues of $378.8 M, compared with
combined carve-out revenues of $290.2 M the previous year, which represents a
30.5% increase (36.3% increase at constant exchange rates). While largely
attributable to the acquisitions made during the previous year, the revenue
increase also stemmed from organic growth of 8.6% (at constant exchange
rates). GLV achieved consolidated and combined carve-out normalized EBITDA(1)
of $16.4 M, up 58.5% over the same period in 2006 (72.3% increase at constant
exchange rates). The Company posted year-to-date consolidated and combined
carve-out normalized net earnings(3) of $2.3 M or $0.09 per share, compared
with $2.4 M or $0.10 per share the previous year. For the nine-month period,
the unrealized loss on derivative financial instruments amounted to $0.8 M, as
opposed to an unrealized gain of $1.2 M a year earlier. In addition, GLV
assumed a $1.6 M pre-tax increase in amortization of intangible assets, mostly
due to the Enviroquip and Copa acquisitions, although this factor had no
impact on third-quarter results.
    For information purposes, non-recurring costs directly related to the
Arrangement amounted to $0.5 M for the third quarter and to $6.3 M for the
first nine months of fiscal 2008.

    Water Treatment Group: Strong Organic Revenue Growth, Largely
    -------------------------------------------------------------
    Attributable to Enviroquip, and Improved Profitability
    ------------------------------------------------------

    The Water Treatment Group posted a 23.4% increase in its third-quarter
revenues (38.4% increase excluding the unfavourable impact of currency
fluctuations), mostly fostered by organic growth of 33.9% (at constant
exchange rates). This performance is largely attributable to the Enviroquip
division, which continues to benefit from strong demand for most of its
products in the North American municipal market. This unit's results have
generally exceeded management's expectations since its acquisition in June
2006. Other businesses acquired during the previous two years, especially
Brackett Green and Copa, are also contributing to the Water Treatment Group's
growth in Europe, North America and worldwide. In addition, their
profitability has been gradually improving since GLV finalized the integration
of the Water Treatment Group's European organization.
    The group's revenue growth contributed to a $3.1 M increase in its
third-quarter normalized EBITDA(1), which amounted to $3.7 M. The normalized
EBITDA margin as a percentage of revenues thus stood at 5.4% compared with
1.0% the previous year, when the Water Treatment Group had sustained a
temporary decline in its profitability following the Copa acquisition. This
entity's results improved in the following months as its order backlog
increased and its operations were gradually integrated into the Water
Treatment Group's European organization.
    For the first nine months of fiscal 2008, the Water Treatment Group
recorded year-to-date revenues of $188.6 M, compared with $127.6 M the
previous year. This increase is attributable to Enviroquip's and Copa's
contribution for the entire nine-month period (versus six months and two and a
half months respectively last year), coupled with an organic growth of 17.2%
(at constant exchange rates). The group's normalized EBITDA(1) grew by 79.3%
to total $10.2 M, whereas its profit margin rose from 4.5% to 5.4%. Although
better than the previous year, the Water Treatment Group's profit margin
during the third quarter and first nine months was below management's
expectations, due mainly to the fact that the performance of Eimco Water
Technologies, LLC in Salt Lake City (Utah) is being disrupted by the asset and
business carve-out operation currently taking place pursuant to the
Arrangement. This transition period is causing a slowdown in the execution of
certain contracts, leading to delayed delivery of orders and additional costs.

    Pulp and Paper Group: Dynamic Development Worldwide and Enhanced
    ----------------------------------------------------------------
    Profitability
    -------------

    The Pulp and Paper Group continues to post solid revenue growth while its
profitability is in line within expectations. Its third-quarter revenues rose
20.7% (32.4% excluding the impact of currency fluctuations) over the same
period a year earlier. Revenues for the first nine months of the current
fiscal year totalled $182.6 M, posting a 18.2% growth over last year (23.2%
increase at constant exchange rates). Besides an organic growth (at constant
exchange rates) of 7.5% in the third quarter and 2.3% in the first nine
months, this group's revenue increase is mostly attributable to the execution
in progress of large-scale contracts related to the fibre processing and
chemical pulp preparation technologies acquired in December 2006, including
one order worth more than $60 M. Although most of its revenue growth is
currently derived from new equipment contracts, the Pulp and Paper Group is
also posting a sound performance in the aftermarket, not only in North
America, but also in Europe, South America and Asia.
    Despite the unfavourable impact of currency fluctuations, this group's
profitability improved significantly during the third quarter, as its
quarterly normalized EBITDA(1) increased by 55.3%, whereas its quarterly
normalized EBITDA margin rose from 6.1% to 7.8%. For the first nine months of
fiscal 2008, the Pulp and Paper Group's normalized EBITDA grew by 14.9%.
However, its normalized EBITDA margin slightly declined, from 6.3% to 6.1%,
due to the fact that profit margins achieved on large-scale contracts are
lower than those historically recorded by the group, and to the additional
costs associated with setting up the new technology centre in Karlstad
(Sweden) following the December 2006 acquisition. This centre is now fully
operational and increasingly contributing to the Pulp and Paper Group's
profitability and international visibility in the pulp preparation equipment
niche.

    Outlook
    -------

    "The outlook is bright for both of GLV's groups, which currently benefit
from a growing demand in most of their segmented and geographic markets,"
indicated Richard Verreault, President and Chief Operating Officer of GLV. As
at December 31, 2007, the order backlog of the Water Treatment Group and the
Pulp and Paper Group stood at $164.6 M and $129.9 M respectively. GLV Inc.'s
order backlog hence totalled $300.6 M (including the Manufacturing Unit's
backlog), compared with $256.6 M at the same date in 2006, and $331.2 M as at
September 30, 2007. The 8.4% decline (at constant exchange rates) in the value
of the order backlog during the third quarter mostly results from the
progressive recognition of the revenues associated with the Pulp and Paper
Group's major $60 M contract in progress.
    The Water Treatment Group continues to enjoy particularly strong demand
within the municipal market in the United States and Canada, especially for
submerged membrane bioreactors (MBR), but also for its more conventional
technologies. In the United Kingdom, it benefits from solid activity in the
municipal market, as well as in the industrial and energy segments. The group
also continues to expand its international presence, including in Singapore,
the Middle East and Australia.
    The Water Treatment Group's major market objectives are to develop its
share of the industrial segment, including the energy sector, and to increase
its business base in the aftermarket, especially for its water intake
screening solutions and submerged membrane bioreactors (MBR). In the
third quarter, it undertook to set up an aftermarket sales force in the
United States dedicated to the submerged membrane bioreactor technology (MBR).
This new unit, which is currently in a start-up phase, is expected to soon
contribute to the group's profitability. The Water Treatment Group also
remains on the lookout for opportunities to integrate other advanced
technologies into its product selection.
    This group's operational objectives for the next quarters will be to
rapidly restore the profitability of its Salt Lake City operations, while
further strengthening the contribution of its European base. This group will
also continue to develop its international outsourcing operations, notably to
improve the profit margins achieved on conventional technology products. In
regard to the carve-out transaction pursuant to the Arrangement, the
relocation of the Salt Lake City and Oakville (Ontario) employees and the
transfer of the replacement parts inventory to Austin (Texas) have been
virtually completed. GLV is now focusing on separating the technical data of
the Water Treatment Group and the former GL&V Process Group.
    For its part, the Pulp and Paper Group is in a sound position to continue
developing its business, given the growth in international demand and the
significant progress it has made within the last two years to adapt its
technological portfolio to the global pulp and paper industry's evolving needs
and to establish its presence in the most dynamic geographic markets. In
regard to operations, the Pulp and Paper Group continues to develop its
international outsourcing infrastructure, including in China and India where
it is also gradually increasing its market share in terms of contract
bookings. Furthermore, the group is progressing as planned in the global
standardization and reinforcement of its contract management practices as well
as in the implementation of the total quality program, resulting in most of
its business units being ISO compliant today.
    "In the coming quarters, GLV will focus on the following issues: improve
the Water Treatment Group's profitability, pursue our organic growth, seek
further expansion projects, strengthen our global outsourcing and contract
management operations, and complete the implementation of our total quality
program. Through our various initiatives we remain firmly committed to our
foremost objective of building GLV's long-term success so as to maximize
future shareholder value," concluded management.

    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 a 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.


    
    Operating Results

    -------------------------------------------------------------------------
    (in thousands of $,
     except per-share data)               Periods Ended December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues:
      Water Treatment          68,105       55,176      188,616      127,614
    -------------------------------------------------------------------------
      Pulp and Paper           66,576       55,172      182,646      154,524
    -------------------------------------------------------------------------
      Other and eliminations    3,009        1,444        7,583        8,105
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                     137,690      111,792      378,845      290,243
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Gross margin               27,531       22,422       79,916       61,960
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    EBITDA                      6,302        3,715        9,925       12,110
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Arrangement-related costs:
    -------------------------------------------------------------------------
      Water Treatment               -            -          173            -
    -------------------------------------------------------------------------
      Pulp and Paper              294            -          536            -
    -------------------------------------------------------------------------
      Other and eliminations      201            -        5,583            -
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                         495            -        6,292            -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBITDA:
    -------------------------------------------------------------------------
      Water Treatment           3,675          553       10,221        5,699
    -------------------------------------------------------------------------
      Pulp and Paper            5,193        3,344       11,211        9,755
    -------------------------------------------------------------------------
      Other and eliminations   (1,883)      (1,669)      (5,047)      (5,119)
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       6,985        2,228       16,385       10,335
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Amortization:
    -------------------------------------------------------------------------
      Water Treatment           1,306        1,340        4,055        1,878
    -------------------------------------------------------------------------
      Pulp and Paper              709          668        2,253        1,905
    -------------------------------------------------------------------------
      Other and eliminations      785          644        2,127        1,801
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       2,800        2,652        8,435        5,584
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment           2,369         (787)       6,166        3,821
    -------------------------------------------------------------------------
      Pulp and Paper            4,484        2,676        8,958        7,850
    -------------------------------------------------------------------------
      Other and eliminations   (2,668)      (2,313)      (7,174)      (6,920)
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       4,185         (424)       7,950        4,751
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Financial expenses          2,207          211        4,708        1,349
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Income taxes                  270          229       (1,510)       1,381
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net earnings (loss)         1,025          623       (1,708)       3,796
    -------------------------------------------------------------------------
    per share (basic and
     diluted)                    0.04         0.02        (0.07)        0.15
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized net earnings     1,565         (537)       2,331        2,425
    -------------------------------------------------------------------------
    per share (basic and
     diluted)                    0.06        (0.02)        0.09         0.10
    -------------------------------------------------------------------------


    Consolidated Balance Sheet Highlights as of December 31, 2007 and
    Combined Carve-out Balance Sheet Highlights as of March 31, 2007

    -------------------------------------------------------------------------
                                                    December 31,    March 31,
    (in thousands of $)                                    2007         2007
    -------------------------------------------------------------------------
    Total assets                                        336,779      371,816
    -------------------------------------------------------------------------
    Shareholders' /invested equity                      150,524      116,418
    -------------------------------------------------------------------------
    Available short-term cash(1)                         12,231       18,057
    -------------------------------------------------------------------------
    Long-term liabilities(2)                             74,223      117,567
    -------------------------------------------------------------------------
    Total net debt(3)                                    55,947       92,879
    -------------------------------------------------------------------------
    (1) Includes cash and cash equivalents.
    (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.


    Order Backlogs(1)
    (in thousands of $)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                            December  September     June     March  December
                                  31,        30,      30,       31,       31,
                                2007       2007     2007      2007      2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Water Treatment Group    164,644    174,408  178,205   162,574   171,560
    Pulp and paper Group     129,933    151,081  143,276    79,494    80,753
    Manufacturing Unit         6,016      5,750    3,768     4,969     4,246
    -------------------------------------------------------------------------
    Total                    300,593    331,239  325,249   247,037   256,559
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) During fiscal 2008, 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.


    (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 Condensed
        Interim Management's Report appended to this press release and filed
        on SEDAR as at February 11, 2008.

    (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.

    -------------------------------------------------------------------------
                       CONFERENCE CALL WITH INVESTORS
               ON RESULTS FOR THE THIRD QUARTER OF FISCAL 2008

           Monday, February 11, 2008 at 10:00 a.m. (Montreal time)

    To participate in the conference call, please dial 1-800-732-9303 a
    few minutes before the start of the call. For those unable to
    participate, a taped re-broadcast will be available Monday, February 11,
    2008 from 1:00 p.m. until midnight, Monday, February 18, 2008, by dialing
    1-877-289-8525; access code 21260752 #. THE CONFERENCE CALL
    (AUDIO) WILL ALSO BE AVAILABLE AT WWW.GLV.COM. Members of the media are
    invited to listen in.
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    A condensed version of the Interim Management's Report for the
    three-month and nine-month periods ended December 31, 2007 is appended to
    this press release, accompanied by the unaudited interim consolidated and
    combined carve-out financial statements. The full version of the Interim
    Management's Report and the interim financial statements and accompanying
    notes are filed effective today on SEDAR's website (www.sedar.com) and
    the Company's website (www.glv.com).
    -------------------------------------------------------------------------


                    CONDENSED INTERIM MANAGEMENT'S REPORT
                 For the Three-Month and Nine-Month Periods
                           Ended December 31, 2007

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

    -------------------------------------------------------------------------
    ANALYSIS OF CONSOLIDATED AND COMBINED CARVE-OUT OPERATING RESULTS FOR THE
    THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 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 Swedish krona. The following table
summarizes the impact of currency fluctuations on the principal statement of
earnings items for the three-month and nine-month periods ended December 31,
2007, compared with the exchange rates effective during the same periods the
previous year.

    Favourable (unfavourable) Impact of Currency Fluctuations

    -------------------------------------------------------------------------
                                                          Periods Ended
    (in thousands of $)                                 December 31, 2007
    -------------------------------------------------------------------------
                                                   Three Months  Nine months
    -------------------------------------------------------------------------
    Revenues:
      Water Treatment                                    (8,278)      (8,904)
    -------------------------------------------------------------------------
      Pulp and Paper                                     (6,487)      (7,710)
    -------------------------------------------------------------------------
      Other and eliminations                                (24)         (59)
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               (14,789)     (16,673)
    -------------------------------------------------------------------------
    Gross margin:                                        (3,050)      (3,548)
    -------------------------------------------------------------------------
    EBITDA:
    -------------------------------------------------------------------------
      Water Treatment                                      (555)        (559)
    -------------------------------------------------------------------------
      Pulp and Paper                                       (566)      (1,012)
    -------------------------------------------------------------------------
      Other and eliminations                                (45)         145
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                                (1,166)      (1,426)
    -------------------------------------------------------------------------
    EBIT:
    -------------------------------------------------------------------------
      Water Treatment                                      (405)        (415)
    -------------------------------------------------------------------------
      Pulp and Paper                                       (498)        (930)
    -------------------------------------------------------------------------
      Other and eliminations                                (50)          78
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                                  (953)      (1,267)
    -------------------------------------------------------------------------

    The fluctuation in various exchange rates had an unfavourable impact on
the consolidated results and segmented performance of GLV's two groups during
the third quarter and, consequently, on consolidated and combined carve-out
operating results for the first nine months of fiscal 2008.


    Revenues
    -------------------------------------------------------------------------
    (in thousands of $)                   Periods Ended December 31,
    -------------------------------------------------------------------------
                                   Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment          68,105       55,176      188,616      127,614
    -------------------------------------------------------------------------
      Pulp and Paper           66,576       55,172      182,646      154,524
    -------------------------------------------------------------------------
      Other and eliminations    3,009        1,444        7,583        8,105
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                     137,690      111,792      378,845      290,243
    -------------------------------------------------------------------------
    Revenue mix:
    -------------------------------------------------------------------------
      New equipment            95,742       70,173      260,730      172,305
    -------------------------------------------------------------------------
      Aftermarket              41,948       41,619      118,115      117,938
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                     137,690      111,792      378,845      290,243
    -------------------------------------------------------------------------


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

    GLV's consolidated revenues for the third quarter of fiscal 2008 grew by
$25.9 M or 23.2% over the combined carve-out revenues of the third quarter of
GL&V's fiscal 2007. Excluding the impact of exchange rate fluctuations,
revenues grew by 36.4%. This performance was partly fostered by a solid
organic growth of 21.8% (at constant exchange rates) primarily attributable to
the Water Treatment Group, combined with the Pulp and Paper Group's
acquisition of certain technologies in December 2006.

    - The Water Treatment Group's third-quarter revenues grew by $12.9 M or
      23.4% ($21.2 M or 38.4% increase at constant exchange rates), due
      almost entirely to a 33.9% (at constant exchange rates) organic growth
      in this group's revenues over the previous year. The balance of the
      growth is attributable to the acquisition of Copa, on October 16, 2006,
      which contributed to the results of the third quarter of the current
      fiscal year for two more weeks than in the same quarter of the previous
      year. As for the group's organic growth, it is largely attributable to
      the Enviroquip division, which continues to benefit from strong demand
      in the North American municipal market for most of its products. This
      unit's performance has regularly exceeded management's expectations
      since its acquisition on June 30, 2006. The other operations acquired
      during the previous two years, especially those of Brackett Green and
      Copa, are also contributing to the Water Treatment Group's growth in
      Europe, North America and worldwide.

    - The Pulp and Paper Group achieved an $11.4 M or 20.7% growth in its
      third-quarter revenues ($17.9 M or 32.4% growth at constant exchange
      rates). This increase is mostly attributable to certain fibre
      processing and chemical pulp preparation technologies acquired in
      December 2006. Through its new technology centre in Karlstad (Sweden)
      set up following this acquisition, the group has been awarded several
      major orders in the chemical pulp preparation segment, including one
      contract worth more than $60 M that is currently in progress. In terms
      of technologies, the group also maintains a good level of activity in
      the paper finishing segment. The second-quarter acquisition of the
      assets of a U.K. company specializing in the design and the
      manufacturing of doctor blade systems for paper machines has not yet
      had a material impact on its revenue growth, but will contribute to
      gradually expand its presence in the dewatering and thickening
      equipment segment as well as the aftermarket. Furthermore, the Pulp and
      Paper Group recorded a 7.5% organic growth (at constant exchange rates)
      in its third-quarter revenues. It notably grew its aftermarket revenues
      (at constant exchange rates), not only in North America, but also in
      Europe, South America and Asia.

    Despite the unfavourable impact of currency fluctuations, GLV's overall
revenues from the sale of new equipment increased by $25.6 M or 36.4% to
account for 69.5% of total revenues, compared with 62.8% 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 in the
new equipment segment (89.2% in the third quarter of fiscal 2008), and by the
Pulp and Paper Group's booking of several major new equipment contracts in
recent quarters. Aftermarket revenues were relatively stable due to the
unfavourable impact of currency fluctuations.

    NINE-MONTH PERIOD
    -----------------

    Consolidated and combined carve-out revenues for the first nine months of
fiscal 2008 grew by $88.6 M or 30.5% over the same period a year earlier
($105.3 M or 36.3% growth at constant exchange rates). This increase is mostly
attributable to the five acquisitions completed the previous year, especially
those of Enviroquip, Copa and certain fibre processing and chemical pulp
preparation technologies, coupled with an 8.6% organic growth for the Company
as a whole (at constant exchange rates).

    - The Water Treatment Group's year-to-date revenues grew by $61.0 M or
      47.8% ($69.9 M or 54.8% increase at constant exchange rates) due to the
      additional contribution of Enviroquip and Copa (respectively acquired
      at the very end of the first quarter and at the beginning of the
      third quarter of the previous year), combined with a 17.2% organic
      growth in the group's revenues (at constant exchange rates). The Water
      Treatment Group recorded approximately 72% of its revenues in the
      municipal segment and 28% in the industrial segment, including the
      energy market.

    - The Pulp and Paper Group's revenues increased by $28.1 M or 18.2%
      ($35.8 M or 23.2% growth at constant exchange rates), due mostly 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. The
      previous 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 posted a
      2.3% organic growth (at constant exchange rates) over the same period
      the previous year.

    Overall consolidated and combined carve-out revenues from the sale of new
equipment grew by $88.4 M or 51.3% to account for 68.8% of total revenues
during the nine-month period, compared with 59.4% in the same period a year
earlier.
    The geographic breakdown of consolidated and combined carve-out revenues
between customers operating in the various regions of the world mentioned
below was as follows for the first nine months of fiscal 2008:

    - 40% in the United States (46% in 2007);
    - 36% in Europe and Russia (29% in 2007);
    - 13% in India, China and the Asia-Pacific region (10% in 2007);
    - 6% in Canada (9% in 2007);
    - 3% in Latin America (3% in 2007); and
    - 2% in the Middle East and Africa (3% in 2007).


    Gross Margin and Normalized EBITDA

    -------------------------------------------------------------------------
    (in thousands of $, except
     percentages)                         Periods Ended December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Gross margin               27,531       22,422       79,916       61,960
    -------------------------------------------------------------------------
    As a % of revenues           20.0%        20.1%        21.1%        21.3%
    -------------------------------------------------------------------------
    Operating expenses(1)      20,734       18,707       63,699       49,850
    -------------------------------------------------------------------------
    As a % of revenues           15.1%        16.7%        16.8%        17.2%
    -------------------------------------------------------------------------
    Normalized EBITDA:
    -------------------------------------------------------------------------
      Water Treatment           3,675          553       10,221        5,699
    -------------------------------------------------------------------------
      Pulp and Paper            5,193        3,344       11,211        9,755
    -------------------------------------------------------------------------
      Other and eliminations   (1,883)      (1,669)      (5,047)      (5,119)
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       6,985        2,228       16,385       10,335
    -------------------------------------------------------------------------
    As a % of revenues            5.1%         2.0%         4.3%         3.6%
    -------------------------------------------------------------------------
    (1) Excluding costs directly related to the Arrangement


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

    The third-quarter consolidated gross margin grew by $5.1 M or 22.8%.
Excluding the impact of currency fluctuations, it would have increased by
$8.2 M or 36.4%. Expressed as a percentage of revenues, the gross margin stood
at 20.0% in the third quarter of fiscal 2008, compared with 20.1% in the same
quarter the previous year. Besides the unfavourable impact of currency
fluctuations, this slight decline can be explained by two key factors: (1) the
weaker profitability posted since the beginning of the year by one of the
Water Treatment Group's business units in the United States; and (2) the Pulp
and Paper Group's booking, as part of its global positioning strategy, of
several large-scale contracts for which the profit margins are lower than its
historic margins.
    Excluding the costs directly related to the Arrangement, consolidated and
combined carve-out operating expenses increased by $2.0 M or 10.8% due to the
expansion of the Company's business within the past year. However, operating
expenses expressed as a percentage of revenues decreased from 16.7% to 15.1%.
    During the third quarter, GLV recorded non-recurring costs of $0.5 M
directly related to the Arrangement closed on August 10, 2007. The Company
also incurred a $0.2 M loss on the disposal of non-strategic assets of the
Water Treatment Group, whereas it had realized a net gain of $1.5 M on the
disposal of non-strategic operations of the Pulp and Paper Group during the
same period of the previous year.
    Excluding the costs directly related to the Arrangement as well as
non-recurring gains and losses on the disposal of property, plant and
equipment and other assets for the two comparative periods, consolidated
normalized EBITDA increased by $4.8 M or 213.5% ($5.9 M or 265.8% growth at
constant exchange rates), whereas the normalized EBITDA margin as a percentage
of revenues rose from 2.0% to 5.1%. This improvement, to which both groups
contributed, is largely attributable to their revenue increase. It should also
be noted that the Water Treatment Group had recorded a temporary decline in
its profitability in the fall of 2006 subsequent to the Copa acquisition. This
entity's results improved in the following months thanks to the increase in
its order backlog and its integration within the Water Treatment Group's
European operations.

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

    - The Water Treatment Group's normalized EBITDA grew by $3.1 M or 564.6%
      ($3.7 M or 664.9% increase at constant exchange rates) due mainly to
      its revenue growth and the weak profitability recorded in the
      third quarter of the previous year during the weeks following the
      Copa acquisition. Its normalized profit margin as a percentage of
      revenues amounted to 5.4% compared with 1.0% a year earlier. Despite
      the Enviroquip division's solid performance and the satisfactory
      performance of most of the Water Treatment Group's other units,
      including the European operations whose profitability has risen since
      the completion of their integration, the group's third-quarter
      normalized EBITDA was below management's expectations. This is mainly
      due to the fact that the performance of Eimco Water Technologies,
      LLC in Salt Lake City (Utah) is being disrupted by the business and
      asset carve-out transaction pursuant to the Arrangement. This
      transition period is causing a slowdown in the execution of certain
      contracts, leading to delays in the delivery of orders and additional
      costs. In addition, certain changes in this group's management team,
      including the December 2007 departure of its former Vice-President and
      General Manager, gave rise to additional expenses in the third quarter,
      mostly severance pay. The group's leadership has been taken over by
      Richard Verreault, GLV's President and Chief Operating Officer.

      In regards to the carve-out transaction pursuant to the Arrangement,
      the relocation of the Salt Lake City and Oakville (Ontario) employees
      and the transfer of the replacement parts inventory to Austin (Texas)
      have been virtually completed. GLV is currently working on separating
      all of the technical data, which should be completed in the summer of
      2008. Meanwhile, the Water Treatment Group continues to develop its
      international outsourcing operations so as to improve its profit
      margins, notably those achieved on conventional technology products.

    - The Pulp and Paper Group's normalized EBITDA grew by $1.8 M or 55.3%
      ($2.4 M or 72.2% increase at constant exchange rates), whereas its
      normalized profit margin as a percentage of revenues rose to 7.8% from
      6.1% the previous year. Its third-quarter profitability also posted an
      improvement over the previous two quarters. Management deems this
      performance satisfactory, especially since this group's profit margin
      is sustaining some pressure due the booking of major contracts that
      yield lower profit margins than those traditionally achieved by the
      group. The improvement in the Pulp and Paper Group's profitability can
      be explained by a combination of factors. First, the technology centre
      in Karlstad (Sweden), which was in a start-up phase in the first half
      of fiscal 2008, is now fully operational and is contributing to the
      group's profitability and to its international visibility in the pulp
      preparation equipment segment. Secondly, the Pulp and Paper Group
      continues to develop its international outsourcing infrastructure,
      including in China and India where it is also gradually increasing its
      market share in terms of contract bookings. Furthermore, it is
      progressing as planned in the global standardization and reinforcement
      of its contract management practices as well as in the implementation
      of the total quality program, with the result that most of its business
      units are ISO compliant today.

    - The sum of corporate expenses entering into the calculation of
      consolidated normalized EBITDA and the Manufacturing Unit's normalized
      EBITDA posted an unfavourable variance of $0.2 M or 12.8%. However, it
      represented 1.4% only of total revenues, versus 1.5% the previous year.

    NINE-MONTH PERIOD
    -----------------

    The consolidated and combined carve-out gross margin for the first nine
months of fiscal 2008 grew by $18.0 M or 29.0%. At constant exchange rates, it
increased by $21.5 M or 34.7%. Expressed as a percentage of revenues, it
amounted to 21.1% in the first nine months of fiscal 2008, compared with 21.3%
in the same period the previous year. Besides the unfavourable impact of
exchange rates, this slight decline can be explained by the weaker
profitability of one of the Water Treatment Group's business units in the
United States and by the lower profit margins achieved by the Pulp and Paper
Group in the execution of large-scale contracts, compared with its historic
margins.
    For the full nine-month period, GLV incurred costs of $6.3 M directly
related to the Arrangement. Excluding the latter, operating expenses increased
by $13.8 M or 27.8% due mainly to the acquisitions made during the previous
12 months. However, operating expenses as a percentage of revenues decreased
from 17.2% to 16.8%.
    Excluding the costs directly related to the Arrangement as well as the
$0.2 M non-recurring loss on disposal of various assets (as opposed to a
$1.8 M non-recurring gain the previous year), consolidated and combined
carve-out normalized EBITDA grew by $6.1 M or 58.5% ($7.5 M or 72.3% increase
at constant exchange rates), whereas the normalized EBITDA margin as a
percentage of revenues rose from 3.6% to 4.3%. On a segmented basis, the trend
in normalized EBITDA was as follows:

    - The Water Treatment Group's normalized EBITDA grew by $4.5 M or 79.3%
      ($5.1 M or 89.2% growth at constant exchange rates) due to its revenue
      increase, to Enviroquip's solid performance, and to the improved
      performance of the European operations compared to the weaker
      profitability posted in the third quarter of the previous year. For the
      same reasons, this group's profit margin as a percentage of revenues
      rose from 4.5% last year to 5.4% this year. To further improve its
      profit margins, the Water Treatment Group is currently striving to
      strengthen its Salt Lake City operations and to expand its outsourcing
      networks in order to transfer certain phases of 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
      by acquiring Jones & Attwood, Brackett Green, and more recently,
      Enviroquip and Copa.

    - The Pulp and Paper Group's year-to-date normalized EBITDA grew by
      $1.5 M or 14.9% ($2.5 M or 25.3% increase at constant exchange rates).
      Its profit margin as a percentage of revenues decreased from 6.3% to
      6.1%. Besides the unfavourable impact of exchange rate fluctuations and
      the weaker profit margins on certain large-scale contracts recently
      obtained, 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.

    - The sum of corporate expenses entering into the calculation of
      consolidated normalized EBITDA and the Manufacturing Unit's normalized
      EBITDA posted a favourable variance of $0.1 M.


    Normalized EBIT

    -------------------------------------------------------------------------
    (in thousands of $)                   Periods Ended December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Normalized EBIT             6,985        2,228       16,385       10,335
    -------------------------------------------------------------------------
    Less amortization:
    -------------------------------------------------------------------------
      Water Treatment           1,306        1,340        4,055        1,878
    -------------------------------------------------------------------------
      Pulp and Paper              709          668        2,253        1,905
    -------------------------------------------------------------------------
      Other and eliminations      785          644        2,127        1,801
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       2,800        2,652        8,435        5,584
    -------------------------------------------------------------------------
    Normalized EBIT             4,185         (424)       7,950        4,751
    -------------------------------------------------------------------------
    As a % of revenues            3.0%        (0.4%)        2.1%         1.6%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Segmented normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment           2,369         (787)       6,166        3,821
    -------------------------------------------------------------------------
      Pulp and Paper            4,484        2,676        8,958        7,850
    -------------------------------------------------------------------------
      Other and eliminations   (2,668)      (2,313)      (7,174)      (6,920)
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    Total                       4,185         (424)       7,950        4,751
    -------------------------------------------------------------------------


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

    Amortization expenses were up by $0.1 M or 5.6%, due primarily to the
recognition of the amortization of Copa's intangible assets for two more weeks
than last year. Deducting amortization expenses, consolidated and combined
carve-out normalized EBIT improved by $4.6 M ($5.6 M improvement at constant
exchange rates) compared with the previous year's loss.

    - The Water Treatment Group, which had incurred a negative normalized
      EBIT in the third quarter of GL&V's fiscal 2007, turned around its
      profitability and hence improved its normalized EBIT by $3.2 M ($3.6 M
      improvement at constant exchange rates), due mainly to its revenue
      growth and the other aforementioned factors.

    - The Pulp and Paper Group's third-quarter normalized EBIT grew by $1.8 M
      or 67.6% ($2.3 M or 86.2% growth at constant exchange rates) for the
      reasons described in the previous section.

    - The sum of corporate expenses entering into the calculation of
      normalized EBIT and the Manufacturing Unit's normalized EBIT posted an
      unfavourable variance of $0.4 M or 15.3%.

    NINE-MONTH PERIOD
    -----------------

    Year-to-date amortization expenses were up by $2.9 M or 51.1%, due
primarily to the increase 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 $2.2 M, the Pulp and Paper Group for an amount of slightly over
$0.3 M, and the corporate office and Manufacturing Unit for an amount of
$0.3 M.
    Despite the increase in amortization, consolidated and combined carve-out
normalized EBIT grew by $3.2 M or 67.3% ($4.5 M or 94.0% growth at constant
exchange rates), due mainly to the revenue growth. Furthermore, the Water
Treatment Group's profitability had been particularly weak during the
third quarter of the previous year.

    - The Water Treatment Group's normalized EBIT improved by $2.3 M or 61.4%
      ($2.8 M or 72.2% improvement at constant exchange rates) despite the
      significant increase in the amortization of its intangible assets.

    - The Pulp and Paper Group's year-to-date normalized EBIT grew by $1.1 M
      or 14.1% ($2.0 M or 26.0% increase at constant exchange rates).

    - The sum of 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 3.7%.


    Net Earnings (Loss)

    -------------------------------------------------------------------------
    (in thousands of $)                  Periods Ended December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    EBIT                        3,502        1,063        1,490        6,526
    -------------------------------------------------------------------------
    Financial expenses          2,207          211        4,708        1,349
                             ---------    ---------    ---------    ---------
    -------------------------------------------------------------------------
    EBT                         1,295          852       (3,218)       5,177
    -------------------------------------------------------------------------
    Income taxes                  270          229       (1,510)       1,381
    -------------------------------------------------------------------------
    Net earnings (loss)         1,025          623       (1,708)       3,796
    -------------------------------------------------------------------------
    per share (basic and
     diluted)                    0.04         0.02        (0.07)        0.15
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Normalized net earnings     1,565         (537)       2,331        2,425
    -------------------------------------------------------------------------
    per share (basic and
     diluted)                    0.06        (0.02)        0.09         0.10
    -------------------------------------------------------------------------


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

    Financial expenses increased by $2.0 M during the third quarter of fiscal
2008, mainly due to recognition of an unrealized loss of $1.3 M on derivative
financial instruments, as opposed to an unrealized gain of $0.6 M the previous
year. This can be explained by the fact that GLV does not apply hedge
accounting, but rather recognizes its derivative financial instruments at
their fair market value at the end of each quarter, which occasionally
produces unrealized gains or losses. Other financial expenses items showed
little variation compared with last year. (For further information regarding
financial expenses, the reader is referred to note 4 to the interim
consolidated and combined carve-out financial statements accompanying this
Interim Management's Report.)
    GLV recorded an income tax expense of $0.3 M this year, compared with $0.2
M in the same quarter last year. The third quarter therefore gave rise to
consolidated and combined carve-out net earnings of $1.0 M or $0.04 per share,
up 64.5% over the combined carve-out net earnings of $0.6 M or $0.02 per share
recorded in the same quarter a year earlier. Excluding the non-recurring costs
directly related to the Arrangement and other non-recurring items (net of
related taxes), GLV posted normalized net earnings of $1.6 M or $0.06 per
share for the third quarter of fiscal 2008, as opposed to a combined carve-out
normalized net loss of $0.5 M or $(0.02) per share in the corresponding
quarter of the previous year. This turnaround in profitability was achieved
despite an unfavourable pre-tax variation of $1.9 M in the unrealized gains
and losses on derivative financial instruments between the two comparative
periods.

    NINE-MONTH PERIOD
    -----------------

    Year-to-date financial expenses for the first nine months of fiscal 2008
increased by $3.4 M or 249.0%. This can be explained by the recognition of a
year-to-date unrealized loss of $0.8 M on derivative financial instruments, as
opposed to an unrealized gain of $1.2 M the previous year (representing an
unfavourable variation of $2.0 M), coupled with a $1.5 M increase in interests
on the long-term debt attributable 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
combined carveout financial statements accompanying this Interim Management's
Report.)
    The Company recorded a tax recovery of $1.5 M, compared with a tax expense
of $1.4 M in the same period of GL&V's fiscal 2007.
    The first nine months of fiscal 2008 therefore closed with a consolidated
and combined carve-out net loss of $1.7 M or $(0.07) per share, as opposed to
combined carve-out net earnings of $3.8 M or $0.15 per share in the same
period a year earlier. Excluding non-recurring costs directly related to the
Arrangement and other non-recurring costs (net of related taxes), GLV posted
normalized net earnings of $2.3 M or $0.09 per share, compared with $2.4 M or
$0.10 per share the previous year.
    For information purposes, besides the unfavourable impact of currency
fluctuations, the variation in unrealized gains and losses on derivative
financial instruments had a negative impact of $0.7 M (net of related taxes)
on normalized net earnings for the current fiscal year, or $0.03 per share. In
addition, the increase in the amortization of intangible assets had an impact
of $1.1 M (net of related taxes) on the period's net earnings. The
amortization of intangible assets represents a significant new factor in GLV's
results. However, it should be pointed out that 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 December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings (loss)         1,025          623       (1,708)       3,796
    -------------------------------------------------------------------------
    Other comprehensive
     income items (net
     of income taxes):

    Unrealized losses
     on translating financial
     statements of
     self-sustaining foreign
     operations (net of
     related taxes)              (704)      (4,321)     (11,829)      (3,735)
    -------------------------------------------------------------------------
    Comprehensive income          321       (3,698)     (13,537)          61
    -------------------------------------------------------------------------

    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 the new company GLV, other comprehensive
income for the three and nine-month periods ended December 31, 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 combined carve-out financial statements accompanying this
Interim Management's Report.)


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

    Summary Cash Flows

    -------------------------------------------------------------------------
    (in thousands of $)                   Periods Ended December 31,
    -------------------------------------------------------------------------
                                    Three Months              Nine months
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Operating activities:
    -------------------------------------------------------------------------
      Net earnings (loss)       1,025          623       (1,708)       3,796
    -------------------------------------------------------------------------
      Non-cash items in net
       earnings (loss)          5,406        2,047       15,989        3,763
    -------------------------------------------------------------------------
      Net change in operating
       assets and liabilities   1,346       (4,582)       2,233      (24,965)
    -------------------------------------------------------------------------
    Total                       7,777       (1,912)      16,514      (17,406)
    -------------------------------------------------------------------------
    Financing activities        4,640       29,181       (9,318)      56,343
    -------------------------------------------------------------------------
    Investing activities       (1,462)     (24,920)      (6,275)     (50,996)
    -------------------------------------------------------------------------
    Impact of exchange rate
     fluctuations on cash and
     cash equivalents           1,301       (4,601)      (6,747)        (976)
    -------------------------------------------------------------------------
    Net increase (decrease)
     in cash and cash
     equivalents               12,256       (2,252)      (5,826)     (13,035)
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             12,231        6,759       12,231        6,759
    -------------------------------------------------------------------------


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

    Before net change in operating assets and liabilities, operating
activities provided cash flows of $6.4 M, compared with $2.7 M in the same
quarter last year. Net change in operating assets and liabilities provided
cash flows of $1.3 M in the third quarter of fiscal 2008, whereas they had
used cash flows of $4.6 M the previous year. It should be pointed out that
considering the size 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 total cash flows of $7.8 M in the
third quarter of fiscal 2008, whereas they had used net cash flows of $1.9 M
in the same quarter last year.
    Financing activities provided net cash flows of $4.6 M, due to loans
contracted on the revolving credit facility to finance the operational funding
requirements arising from the Company's business growth. Investing activities
used cash flows of $1.5 M, consisting mainly of the purchase of new property,
plant and equipment (net of asset disposals) in the normal course of business.
Investments in the corresponding period of GL&V's fiscal 2007 related
primarily to the acquisition of Copa on October 16, 2006.

    NINE-MONTH PERIOD
    -----------------

    Operating activities (before net change in operating assets and
liabilities) provided total cash flows totalling $14.3 M for the first nine
months of fiscal 2008, compared with $7.6 M in the same period the previous
year. Excluding the impact of business acquisitions, the net change in
operating assets and liabilities generated cash flows of $2.2 M this year,
compared with a utilization of $25.0 M in the same period last year.
Consequently, operating activities generated total cash flows of $16.5 M in
the first nine months of fiscal 2008, whereas they had used funds of $17.4 M
in the same period a year earlier.
    Financing activities for the nine-month period ended December 31, 2007,
which used net cash flows of $9.3 M, mainly reflect the August 8, 2007
carve-out transaction, specifically the use of $66.0 M of GLV's credit
facility to finance the cash payment required as part of the carve-out
transaction as well as the net amount of transactions with another GL&V group,
representing a net cash outflow of $73.8 M.
    Investing activities used cash flows of $6.3 M, including $4.7 M for the
purchase of new property, plant and equipment (net of proceeds from asset
disposals). On September 13, 2007, GLV also acquired certain assets of a U.K.
company specializing in the design and the manufacturing of doctor blade
systems for paper machines and high-turnover replacement parts ("consumables")
for a cash consideration of $0.6 M. These investments were mostly financed by
GLV's available cash. Investments in the corresponding period of fiscal 2007
related primarily to the acquisitions of Enviroquip and Copa, on June 30, 2006
and October 16, 2006 respectively.
    After accounting for the period's cash inflows and outflows and the $6.7 M
unfavourable impact of exchange rate fluctuations, cash and cash equivalents
decreased from $18.1 M as at March 31, 2007 to $12.2 M as at December 31,
2007.


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

    -------------------------------------------------------------------------
                                                    December 31,    March 31,
    (in thousands of $)                                    2007         2007
    -------------------------------------------------------------------------
    Current assets                                      228,330      247,454
    -------------------------------------------------------------------------
    Long-term assets                                    108,449      124,362
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               336,779      371,816
    -------------------------------------------------------------------------
    Current liabilities                                 107,390      123,637
    -------------------------------------------------------------------------
    Long-term liabilities                                78,865      131,761
    -------------------------------------------------------------------------
    Shareholders'/invested equity                       150,524      116,418
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               336,779      371,816
    -------------------------------------------------------------------------

    The principal changes between the combined carve-out balance sheet as at
March 31, 2007 and the consolidated balance sheet as at December 31, 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, or repaid by cash 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 $163.8 M, and by a cash payment
of $62.9 M obtained from GLV's new credit facilities.
    The change in current assets and current liabilities mainly reflects the
situation of contracts in progress and progress billings at the end of the
period, as well as the use of some of the Company's available cash to finance
its investments, the organic growth of its business and the repayment of
long-term debt. 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 various assets and translation adjustments.


    Changes in Current Balance Sheet Items

    -------------------------------------------------------------------------
                                                    December 31,    March 31,
    (in thousands of $, except ratio)                      2007         2007
    -------------------------------------------------------------------------
    Current assets:
    -------------------------------------------------------------------------
      Cash and cash equivalents                          12,231       18,057
    -------------------------------------------------------------------------
      Accounts receivable                               120,102      126,445
    -------------------------------------------------------------------------
      Inventories                                        29,361       27,942
    -------------------------------------------------------------------------
      Contracts in prgress (less progress billings)      62,040       63,980
    -------------------------------------------------------------------------
      Prepaid expenses, income taxes receivable
       and future income tax assets                       4,596       11,030
    -------------------------------------------------------------------------
    Total                                               228,330      247,454
    -------------------------------------------------------------------------
    Current liabilities:
    -------------------------------------------------------------------------
      Accounts payable and accrued liabilities          107,390      122,518
    -------------------------------------------------------------------------
      Income taxes payable                                    -        1,119
    -------------------------------------------------------------------------
    Total                                               107,390      123,637
    -------------------------------------------------------------------------
    Working capital                                     120,940      123,817
    -------------------------------------------------------------------------
    Current ratio                                       2.13 :1      2.00 :1
    -------------------------------------------------------------------------

    The slight decrease 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 the repayment of long-term
debt.


    Indebtedness

    -------------------------------------------------------------------------
                                                    December 31,    March 31,
    (in thousands of $, except ratio)                      2007         2007
    -------------------------------------------------------------------------
    Total net debt:
    -------------------------------------------------------------------------
      Long-term debt and advances from companies
       of GL&V                                           68,178      110,936
    -------------------------------------------------------------------------
      Less cash and cash equivalents                    (12,231)     (18,057)
    -------------------------------------------------------------------------
    Total debt net of cash                               55,947       92,879
    -------------------------------------------------------------------------
    Total net debt to invested capital ratio:
    -------------------------------------------------------------------------
      Invested capital:
    -------------------------------------------------------------------------
      Shareholders'/invested equity                     150,524      116,418
    -------------------------------------------------------------------------
      Total net debt                                     55,947       92,879
                                                       ---------    ---------
    -------------------------------------------------------------------------
    Total                                               206,471      209,297
    -------------------------------------------------------------------------
    Total net debt/invested capital ratio                  27.1%        44.4%
    -------------------------------------------------------------------------

    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 since the
carve-out transaction, total net debt between March 31 and December 31, 2007
decreased by $36.9 M or 39.8%, whereas shareholders'/invested equity increased
by $34.1 M or 29.3% as a result of the previously described carve-out
transactions. (The carve-out transaction is described in note 1 to the interim
consolidated and combined carve-out financial statements accompanying this
Interim Management's Report.) As at December 31, 2007, GLV thus had a total
net debt/invested capital ratio of 27.1%, compared with 44.4% 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-today
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 December 31, 2007, credit facilities for the issue of letters of
credit were used for an amount of $35.9 M, of which $34.3 M was guaranteed by
EDC. Taking into account the financing used and issued letters of credit, the
balance of the unused credit facility amounted to approximately $73 M at the
end of the period. No capital repayment on the long-term debt is required
before it comes due in August 2012.


    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              Nine months
                                 ended December 31,        ended December 31,
                              ---------------------     ---------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Revenues              $   137,690  $   111,792  $   378,845  $   290,243
    Cost of contracts
     and goods sold           110,159       89,370      298,929      228,283
    -------------------------------------------------------------------------
                               27,531       22,422       79,916       61,960

    Expenses:
      Selling expenses          9,744       10,288       30,031       28,922
      Administrative
       expenses                10,990        8,419       33,668       20,928
      Costs related to the
       Arrangement (note 1)       495            -        6,292            -
    -------------------------------------------------------------------------
                               21,229       18,707       69,991       49,850
    -------------------------------------------------------------------------
    Earnings before
     amortization, financial
     expenses and income
     taxes                      6,302        3,715        9,925       12,110
    Amortization                2,800        2,652        8,435        5,584
    -------------------------------------------------------------------------
    Earnings before financial
     expenses and income
     taxes                      3,502        1,063        1,490        6,526
    Financial expenses
     (note 4)                   2,207          211        4,708        1,349
    -------------------------------------------------------------------------
    Earnings (loss) before
     income taxes               1,295          852       (3,218)       5,177
    Income taxes                  270          229       (1,510)       1,381
    -------------------------------------------------------------------------
    Net earnings (loss)   $     1,025  $       623  $    (1,708) $     3,796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss)
     per share (notes 2
     (a)(i) and 16):
      Basic and diluted   $      0.04  $      0.02  $     (0.07) $      0.15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted-average
     number of
     participating shares
     outstanding (notes 2
     (a)(i) and 16):
      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 December 31, 2007
                          ---------------------------------------------------
                                Water
                            Treatment     Pulp and   Others and
                                Group  Paper Group  Elimination        Total
    -------------------------------------------------------------------------
    Revenues              $    68,105  $    66,576  $     3,009  $   137,690

    Costs related to the
     Arrangement (note 1)           -          294          201          495

    Amortization of
     property, plant and
     equipment,
     intangible assets
     and other assets           1,306          709          785        2,800

    Earnings (loss)
     before financial
     expenses and income
     taxes                      2,167        4,204       (2,869)       3,502

    Acquisition of
     property, plant and
     equipment                    889          271          438        1,598
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                 Three months ended December 31, 2006
                          ---------------------------------------------------
                                Water
                            Treatment     Pulp and   Others and
                                Group  Paper Group  Elimination        Total
    -------------------------------------------------------------------------
    Revenues              $    55,176  $    55,172  $     1,444  $   111,792

    Amortization of
     property, plant and
     equipment,
     intangible assets
     and other assets           1,340          668          644        2,652

    Earnings (loss)
     before financial
     expenses and income
     taxes                       (823)       4,199       (2,313)       1,063

    Acquisition of
     property, plant and
     equipment                    366          491           23          880
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                 Nine months ended December 31, 2007
                          ---------------------------------------------------
                                Water
                            Treatment     Pulp and   Others and
                                Group  Paper Group  Elimination        Total
    -------------------------------------------------------------------------
    Revenues              $   188,616  $   182,646  $     7,583  $   378,845

    Costs related to the
     Arrangement (note 1)         173          536        5,583        6,292

    Amortization of
     property, plant and
     equipment,
     intangible assets
     and other assets           4,055        2,253        2,127        8,435

    Earnings (loss)
     before financial
     expenses and income
     taxes                      5,797        8,452      (12,759)       1,490

    Acquisition of
     property, plant and
     equipment                  2,459        2,137        1,352        5,948
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                 Nine months ended December 31, 2006
                          ---------------------------------------------------
                                Water
                            Treatment     Pulp and   Others and
                                Group  Paper Group  Elimination        Total
    -------------------------------------------------------------------------
    Revenues              $   127,614  $   154,524  $     8,105  $   290,243

    Amortization of
     property, plant and
     equipment,
     intangible assets
     and other assets           1,878        1,905        1,801        5,584

    Earnings (loss)
     before financial
     expenses and income
     taxes                      3,946        9,500       (6,920)       6,526

    Acquisition of
     property, plant and
     equipment                    698        1,374          251        2,323
    -------------------------------------------------------------------------
    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               Nine months
                                 ended December 31,        ended December 31,
                          ------------------------  -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings (loss)      $  1,025     $    623     $ (1,708)    $  3,796

    Other comprehensive
     income, net of
     income tax:
      Unrealized losses
       on translating
       financial
       statements of
       self-sustaining
       foreign operations        (704)      (4,321)     (11,829)      (3,735)
    -------------------------------------------------------------------------
    Comprehensive
     income                  $    321     $ (3,698)    $(13,537)    $     61
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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)

                                                    -------------------------
                                                    -------------------------
                                                    December 31,    March 31,
                                                           2007         2007
    -------------------------------------------------------------------------
                                                     (unaudited)    (audited)
    Assets

    Current assets:
        Cash and cash equivalents                   $    12,231  $    18,057
        Accounts receivable                             120,102      126,445
        Income taxes receivable                             265            -
        Inventories                                      29,361       27,942
        Contracts in progress, less progress
         billings (note 5)                               62,040       63,980
        Prepaid expenses                                  4,256        5,068
        Future income tax assets                             75        5,962
    -------------------------------------------------------------------------
                                                        228,330      247,454
    Long-term investments and other (note 6)              1,500        6,644
    Property, plant and equipment (note 7)               38,146       42,010
    Future income tax assets                              4,593          833
    Goodwill (note 8)                                    22,338       26,451
    Intangible assets (note 9)                           33,319       41,143
    Restricted cash (note 10)                             4,205        3,185
    Other assets                                          4,348        4,096

    -------------------------------------------------------------------------
                                                    $   336,779  $   371,816
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders'/Invested Equity

    Current liabilities:
        Accounts payable and accrued liabilities    $   107,390  $   122,518
        Income taxes payable                                  -        1,119
      -----------------------------------------------------------------------
                                                        107,390      123,637

    Advances from companies of Groupe Laperrière
     & Verreault Inc. (note 1 (d))                          959      109,144
    Long-term debt (note 11)                             67,219        1,792
    Other liabilities (note 12)                           9,381       13,856
    Future income tax liabilities                         1,306        6,969
    -------------------------------------------------------------------------
                                                        186,255      255,398

    Shareholders'/Invested equity:
        Share capital (note 13)                         163,812            -
        Contributed surplus (note 14 (a))                   371            -
        Retained Earnings                                 1,728            -
        Accumulated other comprehensive
         income                                         (15,387)      (3,558)
        Owners' net equity                                    -      119,976
      -----------------------------------------------------------------------
                                                        150,524      116,418
      Commitments (note 17)
      Guarantees (note 18)

    -------------------------------------------------------------------------
                                                    $   336,779  $   371,816
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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)

                                       --------------------------------------
                                       --------------------------------------
                                             Share  Contributed     Retained
                                           Capital      Surplus     Earnings
    -------------------------------------------------------------------------

    Balance, March 31, 2007            $         -  $         -  $         -
    Net earnings (loss)                          -            -        1,852
    Unrealized losses on translating
     financial statements of
     self-sustaining foreign
     operations                                  -            -            -
    Contributed surplus relating to
     stock-based compensation                    -          371            -
    Future income taxes related to
     carve-out transactions                      -            -            -
    Net transactions with other
     group of Groupe Laperrière &
     Verreault Inc.                              -            -            -
    Issuance of share capital              163,812            -         (124)
    -------------------------------------------------------------------------
    Balance, December 31, 2007         $   163,812  $       371  $     1,728
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                       --------------------------------------
                                       --------------------------------------
                                       Accumulated
                                             Other       Owners'
                                     Comprehensive          Net
                                            Income       Equity        Total
    -------------------------------------------------------------------------

    Balance, March 31, 2007            $    (3,558) $   119,976  $   116,418
    Net earnings (loss)                          -       (3,560)      (1,708)
    Unrealized losses on translating
     financial statements of
     self-sustaining foreign
     operations                            (11,829)           -      (11,829)
    Contributed surplus relating to
     stock-based compensation                    -          689        1,060
    Future income taxes related to
     carve-out transactions                      -        1,427        1,427
    Net transactions with other
     group of Groupe Laperrière &
     Verreault Inc.                              -       45,280       45,280
    Issuance of share capital                    -     (163,812)        (124)
    -------------------------------------------------------------------------
    Balance, December 31, 2007           $ (15,387) $         -  $   150,524
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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               Nine months
                                 ended December 31,        ended December 31,
                          ------------------------  -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Cash flows from
     (used in) operating
     activities:
    Net earnings (loss)   $     1,025  $       623  $    (1,708) $     3,796
    Non-cash items in
     earnings (loss):
      Gain on disposal
       of commercial
       activities                   -       (1,486)           -       (1,486)
      (Gain) loss on
       disposal of
       property, plant
       and equipment and
       other assets               188            -          168         (289)
      Amortization of
       property, plant
       and equipment            1,727        1,463        4,959        3,763
      Amortization of
       intangible assets          949        1,096        3,178        1,545
      Amortization of
       other assets               124           93          298          276
      Amoritzation of
       deferred
       financing costs             42            -           72            -
      Amortization of
       the deferred gain
       on sale-leaseback
       arrangement               (117)        (122)        (351)        (361)
      Stock-based
       compensation
       (note 14 (a))              290          100          524          111
      Other stock-based
       compensation
       (note (14 (b))              63            -          105            -
      Costs related to
       the Arrangement
       (note 1)                   495            -        6,292            -
      Future income
       taxes                      301        1,532          (16)       1,431
      Unrealized (gain)
       loss on
       derivative
       financial
       instruments              1,344         (629)         760       (1,227)
      Net changes in
       non-cash balances
       related to
       operations (net
       of effect of
       business
       acquisitions)            1,346       (4,582)       2,233      (24,965)
    -------------------------------------------------------------------------
                                7,777       (1,912)      16,514      (17,406)

    Cash flow from (used
     in) financing
     activities:
    Net utilization of
     the revolving
     credits                    9,539            -       66,003            -
    Repayment of
     long-term debt              (402)           -         (402)           -
    Financing costs                 -            -         (955)           -
    Costs for issuance
     of share capital               -            -         (124)           -
    Net transactions
     with other group of
     Groupe Laperrière &
     Verreault Inc.            (4,497)      29,181      (73,840)      56,343
    -------------------------------------------------------------------------
                                4,640       29,181       (9,318)      56,343

    Cash flow from (used
     in) investing
     activities:
    Business
     acquisitions
     (note 15)                      -      (24,270)        (552)     (46,766)
    Changes in temporary
     investments                    -          (40)           -       (2,439)
    Acquisition of
     property, plant and
     equipment                 (1,598)        (880)      (5,948)      (2,323)
    Disposal of property,
     plant and equipment          177          362        1,269          657
    Changes in
     restricted cash               55            -       (1,020)           -
    Net changes in other
     assets                       (96)         (92)         (24)        (125)
    -------------------------------------------------------------------------
                               (1,462)     (24,920)      (6,275)     (50,996)

    Effect of exchange
     rate changes on
     cash and cash
     equivalents                1,301       (4,601)      (6,747)        (976)
    -------------------------------------------------------------------------
    Net increase
     (decrease) in
     cash and cash
     equivalents               12,256       (2,252)      (5,826)     (13,035)
    Cash and cash
     equivalents,
     beginning of
     period                       (25)       9,011       18,057       19,794
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period               $    12,231  $     6,759  $    12,231  $     6,759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental
     information:
      Net interest paid   $       647  $       927  $     3,886  $     1,974
      Income taxes paid           282          263          837          699

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




For further information:

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

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GLV Inc.

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