GLV Inc. Discloses Combined Carve-Out Results of the Water Treatment Group, Pulp and Paper Group and Manufacturing Unit for the First Quarter of Fiscal 2008



    The new corporation posts 32% growth in its order backlog between
    March 31 and June 30, 2007.

    MONTREAL, Aug. 16 /CNW Telbec/ - (Note: All amounts are in Canadian
dollars unless otherwise indicated.) The new corporation GLV Inc. ("GLV" or
"the Company"; ticker symbols LVG.A and LVG.B), originating from the
arrangement closed on August 10, 2007 between Groupe Laperrière & Verreault
Inc. ("GL&V"), its shareholders and FLSmidth & Co. A/S ("FLS"), today
disclosed the unaudited combined carve-out results of its Water Treatment and
Pulp and Paper Groups and Manufacturing unit for the first quarter of fiscal
2008 ending June 30, 2007. It should be noted that the combined carve-out
financial statements are partly based on an allocation of certain expenses
incurred by GL&V during the comparative quarters, which are not necessarily
indicative of the costs that would have been incurred if the commercial
activities transferred into the new corporation GLV had comprised a separate
entity during the periods in question.
    During the three-month period ended June 30, 2007, combined revenues of
the Water Treatment and Pulp and Paper Groups and the Manufacturing unit rose
33.4% to $115.3 M (after segmented eliminations), driven by the five
acquisitions of the previous 12 months. The Enviroquip and Copa acquisitions
effectively contributed to raise the Water Treatment Group's revenues by 64.3%
to $56.4 M, despite the equipment delivery delays imposed by customers in
certain contracts. The Pulp and Paper Group's revenues grew by 15.4% to
$57.9 M. This growth is largely attributable to the purchase of cutting-edge
technologies for fibre processing and pulp preparation in December 2006,
subsequent to which the group was awarded several orders. The past year's
acquisition of certain assets of J&L Fiber Services and Huyck Dewatering
Equipment also contributed to grow the Pulp and Paper Group's aftermarket
revenues.
    The commercial activities transferred into New GLV generated normalized
EBITDA(1) (earnings before amortization, financial expenses, gains or losses
on disposal of property, plant, equipment and other assets and income taxes)
of $3.7 M, compared with $4.1 M in the same quarter of the previous year. This
decline is partly due to an increase of approximately $0.6 M in other
stock-based compensation based on the price of GL&V's Class A subordinate
voting shares, due to the appreciation of over 40% in the share price in the
days and weeks that followed the April 20, 2007 announcement of the proposed
Arrangement between GL&V, its shareholders and FLS. Notwithstanding other
stock-based compensation, the Water Treatment Group's normalized EBITDA rose
by 49.2% to $3.1 M as a result of its revenue growth. However, its profit
margin as a percentage of sales declined slightly due to the weaker
profitability of certain contracts based on conventional technologies for
which profit margins are below those generated by new technologies. "We are
currently striving to expand our outsourcing networks in order to transfer the
manufacturing of such contracts to regions with lower costs. We are also
carrying on our efforts to acquire new technologies offering higher profit
margins, as we have done over the past two years with the acquisition of Jones
& Attwood, Brackett Green, certain Metso technologies and, more recently,
Enviroquip and Copa," explained Richard Verreault, President and Chief
Operating Officer.
    Also notwithstanding other stock-based compensation, the Pulp and Paper
Group's normalized EBITDA stood at $3.0 M, down from $4.3 M the previous year.
"Our group has undertaken to position itself in certain key markets with
new-generation technologies. This recently allowed it to garner large-scale
contracts that will provide it with an excellent international showcase for
its future growth, but for which profit margins are lower than for its other
operations. Furthermore, setting up the technology centre in Karlstad
(Sweden), following the acquisition of chemical pulp processing technologies
in December 2006, entails additional costs that will affect its results for
another few months."
    The first quarter produced a combined carve-out net loss of $0.6 M,
compared with a combined carve-out net profit of $2.4 M in the first quarter
of fiscal 2007. In addition to the increase in other stock-based compensation
arising from the appreciation in GL&V's share price, the decline in the
profitability of commercial activities transferred into New GLV is also due to
the $1.2 M increase in amortization of intangible assets arising from the
backlog and the Enviroquip and Copa acquisitions, which significantly
increased the value of the technologies, trademarks and customer relations
comprising most of this asset category, as well as an increase in financial
expenses incurred from financing charges associated with the acquisitions made
during the previous fiscal year.

    2008 Outlook
    ------------

    As at June 30, 2007, the order backlog of the operations comprising New
GLV reached a record high of $325.2 M (after inter-segment eliminations), an
increase of approximately 32% over March 31, 2007 and approximately 76% over
June 30, 2006. The Water Treatment Group's order backlog grew by close to 10%
within the last three months to $185.3 M as at June 30, 2007, due partly to
the postponed delivery of certain orders and partly to the group's solid
performance. This group's order backlog has grown by more than 61% over last
year. In addition, the Pulp and Paper Group's order backlog has increased by
more than 79% since March 31, 2007 to reach $171.4 M as at June 30, driven by
the booking of several new equipment and complete systems contracts (including
the $60 M order in Portugal and another worth $20 M in Asia), combined with
solid aftermarket activity in North America and Europe.
    "Based on the order backlog, market conditions and the acquisitions of
the past year, we expect New GLV to achieve revenues of $500 M to $545 M for
its first twelve months of operations. It also benefits from a strong
financial position to pursue its operations and development projects,
including shareholders' equity of approximately $150 M after the closing of
the arrangement and total net debt of approximately $52 M, which represents a
total net debt to invested capital ratio of approximately 26%. Furthermore, it
has recently been awarded a fully subscribed and committed credit facility of
$175 M," indicated Marc Barbeau, Executive Vice-President and Chief Financial
Officer.

    Objective: Maximize Long-term Value of GLV Inc.
    -----------------------------------------------

    GLV is determined to become an influential player on the international
scene as a provider of targeted industrial and municipal solutions, with
special expertise in water treatment technologies. It will replicate the same
strategies that have proven successful for the former GL&V, namely: (1)
achieve sustained growth through the acquisition and efficient integration of
businesses, international development and the focus on value-added operations
and products; and (2) optimize its profitability by controlling expenses and
maintaining a profitable and flexible cost structure, in part through
manufacturing outsourcing.

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

    GLV Inc. was founded on May 15, 2007 to carry on part of the commercial
activities of GL&V, which was itself in operation from 1975 to 2007. GLV
consists of two principal business segments. Its 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. Its Pulp and Paper Group specializes in the design
and marketing of equipment used in various stages of pulp and paper
production, notably chemical pulping, pulp preparation and sheet formation,
and is a recognized leader in rebuilding, upgrading and optimization services
for existing equipment, as well as the sale of replacement parts. Finally, a
Manufacturing unit specializes in the production of large custom-made parts
for external customers involved mainly in the pulp and paper and energy
sectors, as well as for the Pulp and Paper Group. GLV is present in some 30
countries and has close to 1,500 employees.

    
    (1) Normalized EBITDA is not a performance measure consistent with
        Canadian generally accepted accounting principles ("GAAP"). This
        measure allows management to assess the operational and financial
        performance of the Company's various business segments. This measure
        is also commonly used by the investment community to analyze and
        compare the performance of companies in the industries in which the
        Company is engaged. However, it is not intended to be regarded as an
        alternative to other financial accounting performance measures or to
        the statement of cash flows as a measure of liquidity. It is not
        intended to represent funds available for debt service, dividends,
        reinvestment or other discretionary uses, and should not be
        considered in isolation or as a substitute for performance measures
        prepared in accordance with Canadian GAAP. The definition of the
        various measures used by the Company may not be similarly titled
        measures reported by other companies. The information regarding
        measures not consistent with Canadian GAAP is contained in the
        Company's management's report appended to this press release and
        filed on SEDAR on August 16, 2007.

    (2) 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 FIRST QUARTER OF FISCAL 2008
             Thursday, August 16, 2007 at 2:00 PM (Montreal time)


    To participate, 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 Thursday, August 16, 2007 from 4:00 p.m. until midnight
    Thursday, August 23, 2007, by dialing 1-877-289-8525; access code
    21242808 #. THE CONFERENCE CALL WILL ALSO BE AVAILABLE AT
    WWW.GLV.COM. Members of the media are invited to listen in.
    -------------------------------------------------------------------------


                         INTERIM MANAGEMENT'S REPORT
                       For the Three-Month Period Ended
                                June 30, 2007

                   (Management's Discussion and Analysis of
         Combined Carve-out Operating Results and Financial Position)

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

    Basis of Presentation

    This Management's Report deals with the financial results of the operating
units, Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
("the transferred commercial activities") of Groupe Laperrière & Verreault
Inc. ("GL&V") for the three-month periods ended June 30, 2007 and 2006.
Effective August 8, 2007, pursuant to the Arrangement ("the Arrangement")
between GL&V, its shareholders and FLSmidth & Co. A/S ("FLS"), substantially
all the assets and liabilities of the retained businesses were transferred
into the new corporation GLV Inc. ("New GLV" or "the Company"), incorporated
on May 15, 2007. The new corporation was listed on the TSX Exchange on August
13, 2007, upon the closing of the Arrangement. (See section titled "Salient
Events; Arrangement between GL&V, its Shareholders and FLSmidth & Co.")
    This Management's Report should be read in conjunction with the unaudited
combined carve-out financial statements and accompanying notes to the
Management's Report. The reader is also invited to refer to the Information
Circular ("the Circular") distributed to GL&V's shareholders and filed on
SEDAR (www.sedar.com) as at June 20, 2007, for the purposes of the Special
General Meeting of Shareholders held on July 27, 2007 in order to approve the
Arrangement. The reader should particularly refer to the "Risk Factors"
section of the Circular for a description of the factors that may affect the
future financial position, cash flows and operating results of New GLV and its
operating units.
    The combined carve-out financial statements and accompanying notes have
been prepared in accordance with Canadian generally accepted accounting
principles ("GAAP"). They have been derived from the accounting records of
GL&V using the historical cost basis of assets and liabilities and historical
results of operations of the transferred commercial activities and a
breakdown, for the two comparative three-month periods ended June 30, 2007 and
2006, of the historical corporate expenses incurred by head office in regard
to those operations.
    In this Management's Report, the fiscal year ending March 31, 2008 and the
fiscal year ended March 31, 2007 are designated by the terms "fiscal 2008" and
"fiscal 2007". The "first quarter of fiscal 2008" and the "first quarter of
fiscal 2007" refer to the three-month periods ended June 30, 2007 and 2006
respectively.
    Unless otherwise indicated, the financial information presented in this
Management's Report, including tabular amounts, is expressed in Canadian
dollars. The Canadian dollar is also GL&V's and New GLV's measurement
currency. Unless otherwise indicated, the analysis of results for the
reporting period in question is made in comparison with financial results for
the equivalent period of the previous fiscal year. The initial "M" means
"millions of dollars".

    Compliance with Canadian GAAP

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

    - EBITDA: earnings before amortization, financial expenses and income
      taxes;
    - normalized EBITDA: according to the reporting periods, EBITDA before
      gains or losses on disposal of property, plant, equipment and other
      assets;
    - EBIT: earnings before financial expenses and income taxes;
    - normalized EBIT: according to the reporting periods, EBIT before gains
      or losses on disposal of property, plant, equipment and other assets;
      and
    - normalized net earnings: according to the reporting periods, earnings
      before gains or losses on disposal of property, plant, equipment and
      other assets (net of related income taxes).

    Such measures allow Management to assess the operational and financial
performance of the various operating groups. These measures are also commonly
used by the investment community to analyze and compare the performance of
companies engaged in the same industries. However, they are not intended to be
regarded as alternatives to other financial accounting performance measures or
to the statement of cash flows as a measure of liquidity. They are not
intended to represent funds available for debt service, dividends,
reinvestment or other discretionary uses, and should not be considered in
isolation or as a substitute for performance measures prepared in accordance
with Canadian GAAP. Management's definition of these measures may not be
similarly titled measures reported by other companies. A table presenting the
reconciliation between these measures and the most comparable GAAP measures
for the quarters ended June 30, 2007 and 2006 is presented elsewhere in this
Management's Report.

    General Corporate Office Expenses Allocated to the Transferred Commercial
    Activities, Bonus Expenses, Stock Options and Other Stock-Based
    Compensation Plans

    For the three-month periods ended June 30, 2007 and 2006, GL&V has
allocated most of the selling and administrative expenses of the corporate
office (included as "administrative expenses" in the combined carve-out
statement of income) to New GLV's transferred commercial activities on the
basis of the percentage of revenues generated. Such allocated costs include
human resources, legal, treasury, insurance, finance, taxation, marketing,
accounting, strategy, investor relations and public affairs. The costs
allocated are not necessarily indicative of the costs that would have been
incurred if the transferred commercial activities had performed the functions
as a stand-alone company during the periods presented, nor are they indicative
of the costs that will be incurred by New GLV in the future. Since the
completion of the reorganization and transfer of such commercial activities
effective August 8, 2007, New GLV has performed these functions using its own
resources or purchased services.
    For the three-month periods ended June 30, 2007 and 2006, bonus expenses
related to GL&V's corporate office employees have been allocated on the basis
of earnings before amortization, financial expenses and income taxes of each
combined entity. These expenses are not necessarily indicative of those that
would the expenses would have been had the transferred commercial activities
been a stand-alone entity during the periods presented.
    Stock option expenses and other stock-based compensation expenses in the
combined carve-out financial statements of earnings in effect at GL&V during
the periods presented include the expenses related to the fair value of awards
held by the employees of the transferred commercial activities, as well as an
allocation based on earnings before amortization, financial expenses and
income taxes of each combined entity, for GL&V's corporate office employees
during the years presented. These expenses are not necessarily indicative of
what they would have been had the transferred commercial activities been a
stand-alone entity during the periods presented.

    Forward-Looking Statements

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

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

    Management of the former GL&V and New GLV has designed disclosure controls
and procedures to provide reasonable assurance that material information
relating to the Company, including its consolidated subsidiaries, is made
known to them by others within those entities, particularly during the period
in which the annual filings are being prepared, and disclosed in public
documents pursuant to the requirements of Multilateral Instrument 52-109. As
at March 31, 2007, GL&V's Chief Executive Officer and Chief Financial Officer,
with the participation of the Company's management, have concluded that the
design and operation of the Company's disclosure controls and procedures are
effective. The Chief Executive Officer and Chief Financial Officer have also
concluded that GL&V has designed appropriate internal controls over financial
reporting for the nature and size of the Company's business, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Canadian generally accepted accounting principles ("GAAP").
    No other changes to internal control over financial reporting has come to
Management's attention during the three month period ended June 30, 2007 that
have materially adversely affected, or are reasonably likely to materially
adversely affect, the Company's internal control over financial reporting.

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

    About New GLV

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

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

    - The Pulp and Paper Group has specialized for over 30 years in the
      design and marketing of equipment used in various stages of pulp and
      paper production, notably pulp preparation and sheet formation, and is
      a recognized leader in rebuilding, upgrading and optimization services
      for existing equipment, as well as the sale of replacement parts.

    In addition, the Manufacturing Unit specializes in the production of large
custom-made parts for external customers involved mainly in the pulp and paper
and energy sectors, as well as for the Pulp and Paper Group.
    GLV is present in some 30 countries and has close to 1,500 employees.
Since August 13, 2007, its shares have traded on the TSX under the ticker
symbols LVG.A and LVG.B.

    Significant Events

    Arrangement between GL&V, its Shareholders and FLS (Announced April 20,
    2007 and Closed August 10, 2007)

    On April 20, 2007, GL&V and the Danish company FLSmidth & Co. A/S ("FLS")
announced the signing of an agreement under a Plan of Arrangement, pursuant to
which GL&V would transfer its Water Treatment Group, its Pulp and Paper Group
and its Manufacturing Unit into a new corporation (GLV Inc.) to be spun off to
GL&V's shareholders and ultimately listed on the TSX. Immediately thereafter,
FLS would acquire all the Class A subordinate voting shares and Class B
multiple voting shares outstanding of GL&V, thereby becoming the effective
owner of 100% of GL&V's Process Group, for a cash consideration equivalent to
$33 per share of GL&V and the assumption of the net debt, with the exception
of a net debt of approximately $52 M to be assumed by New GLV. Pursuant to the
Arrangement, each GL&V shareholder would receive a per-share consideration of
$33 in cash and one New GLV share of the same class (Class A subordinate
voting or Class B multiple voting) for each share held. The proposed
Arrangement was subject to shareholder approval by a resolution approved by no
less than 75% of the votes cast in each of GL&V's share classes (Class A
subordinate voting and Class B multiple voting) during a Special General
Meeting of Shareholders. It was also subject to a number of conditions,
including approval by the Quebec Superior Court, acceptance by the TSX and
other regulatory approvals.
    A detailed description of the Arrangement and the steps taken by GL&V in
connection with this transaction is provided in the Circular prepared for the
Special General Meeting and filed on SEDAR on June 20, 2007 (www.sedar.com).
    On July 27, 2007 GL&V's shareholders present or represented by proxy at
the Special General Meeting approved the Arrangement, in a majority of 99.92%
of the votes cast by the holders of Class A subordinate voting shares, and
unanimously by the holders of Class B multiple voting shares, for a combined
majority of 99.97% of the votes cast in the two share classes. On July 31,
2007, the Quebec Superior Court issued a final order approving the Plan of
Arrangement. The Arrangement closed on August 10, 2007, after the other
required approvals had been obtained, including those of the Federal
Department of Industry and relevant competition authorities in various
countries. The transfer agent will proceed to distribute the GLV shares and
cash payments to shareholders who had previously delivered the duly completed
Letter of Transmittal along with their GL&V share certificates. At the close
of markets on August 10, 2007, GL&V was delisted from the TSX and when markets
opened on August 13, 2007, New GLV's stock began trading under the ticker
symbols LVG.A and LVG.B.

    Financing of New GLV

    On April 19, 2007, New GLV obtained a credit facility from a Canadian
financial institution for an aggregate $175 M, consisting of two secured
non-reducing revolving credits. Of that amount, $125 M may be used to finance
business acquisitions, meet day-to-day financing requirements and issue
letters of credit. The remaining $50 M may be used to issue letters of credit
guaranteed by Export and Development Canada (EDC). On August 8, 2007, the
credit facility was subject to a syndication and was finalized.

    Creation and Expansion of the Water Treatment Group

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

    During fiscal 2006, this group made three acquisitions:

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

    - On November 7, 2005, acquisition of all the shares of the British
      company Brackett Green Limited ("Brackett Green"), based in the United
      Kingdom and its Texas subsidiary, a world leader in advanced water
      intake screening and filtration technologies used by power stations,
      desalination plants and various other types of industries. Brackett
      Green also offers a broad selection of municipal and industrial
      wastewater treatment equipment. In addition, the Caird & Rayner Clark
      division offers advanced seawater desalination technologies.

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

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

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

    - On October 16, 2006, acquisition of all the shares of two companies
      specializing in wastewater treatment solutions: COPA Limited, in the
      United Kingdom, and COPA Water Pty Ltd, in Australia ("Copa"). This
      acquisition, the fifth to be completed by the Water Treatment Group
      within eighteen months, enabled it to integrate a portfolio of
      equipment and processes designed for various wastewater treatment
      applications, and which have gained market recognition for their
      innovative engineering and superior reliability. In addition, COPA
      Limited holds the exclusive licence for the Kubota submerged membrane
      (MBR) for the municipal, commercial and industrial wastewater treatment
      markets in the United Kingdom. Thus, this acquisition provided the
      Water Treatment Group with advanced technologies meeting new global
      market needs, strengthened its relationship with Kubota, increased its
      know-how in submerged membrane technology, and positioned it more
      solidly in certain high-potential regions. At the end of the last
      fiscal year, a non-strategic portion of the Australian business forming
      part of the Copa acquisition was sold. This divestment is consistent
      with the objective of restructuring part of the operations of the Water
      Treatment Group subsequent to its various acquisitions. In addition to
      improving its cost structure, this transaction allows the group to
      further focus on its core business in the municipal and industrial
      sectors in selective growth water treatment markets.

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

    Intensified International Development of the Pulp and Paper Group

    In recent years, pulp and paper production worldwide has been increasingly
shifting toward certain regions in the Southern Hemisphere, Asia and Eastern
Europe, which benefit from abundant natural resources and advantageous
production costs. Concurrently, new technologies have emerged on the market,
focused on enhancing mill capacity, productivity and efficiency. Pulp and
paper manufacturers' investments in North America, the primary market of the
Pulp and Paper Group, are increasingly focused on producing specialty products
and upgrading, improving and maintaining existing equipment to maximize its
yield, rather than on new capital projects.
    In such a context, the Pulp and Paper Group has implemented a market
strategy aimed at the following key objectives: (1) the development of its
product portfolio, primarily through acquisitions, in order to provide higher
value-added technologies and more comprehensive solutions, i.e. covering all
stages of its customers' production flowsheets, and to meet the growing need
in the global pulp and paper industry for increased mill capacity and
productivity and lower costs; (2) the development of its aftermarket business
base and the consolidation of its aftermarket leadership in North America and
Europe, also by means of acquisitions; and (3) the development of its presence
in certain emerging markets toward which a growing proportion of pulp and
paper production is shifting, such as China, India, Latin America and Russia.
This strategy yielded tangible benefits, as the Pulp and Paper Group was
awarded several major contracts abroad in the past two years, while
maintaining a strong aftermarket business in North America and Europe.
    This group made one acquisition during fiscal 2006, specifically the May
27, 2005 purchase of certain assets of Perplas Limited ("Perplas"), based in
the United Kingdom and specializing in the manufacture of stock preparation
equipment and high-turnover replacement parts (consumables). In October 2006,
during the last fiscal year, certain non-strategic operations of Perplas were
sold.
    The Pulp and Paper Group made four more acquisitions during fiscal 2007:

    - On April 1, 2006, acquisition of the principal assets of KanEng
      Industries Inc. ("KanEng") and KanEng-Deltec Inc. in Quebec City,
      Canada, specializing in the manufacture of high-turnover replacement
      parts (consumables) for paper machines, including a large proportion in
      the aftermarket.

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

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

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

      This acquisition contributed to position the Pulp and Paper Group among
      the world's top providers of stock preparation equipment. The cooking,
      oxygen delignification, bleaching and wash press technologies have been
      specifically designed to meet the growing need in the global pulp and
      paper industry for increased mill production capabilities and
      efficiency. The acquisition therefore meets the Pulp and Paper Group's
      key strategic objectives by giving it access to world-class value-added
      technologies backed by excellent trademarks, strengthening its European
      team and international presence and providing it with a significant
      global installed equipment base and new aftermarket products. In the
      following months, the Pulp and Paper Group was awarded several orders
      through its new Karlstad technology centre, including a contract worth
      close to $60 million order for the design, manufacture and turnkey
      installation of a complete pulp washing, oxygen delignification and
      pulp bleaching system based on the new Compact Press(TM) wash press
      technology. The contract includes the supply of the largest wash press
      in the industry.

    Financial Benefits of the Acquisitions of the Past Two Years

    Within the last two fiscal years, the Water Treatment Group and the Pulp
and Paper Group have thus completed five business acquisitions each, for a
total of ten. These acquisitions contributed to raise the revenues of the
commercial activities transferred into New GLV by 48.4% between March 31, 2005
and 2007, representing an average annual growth of 21.8%. During the same
period, combined carve-out normalized EBITDA rose 44.7% (average annual growth
of 20.3%), due to the contribution of the acquired businesses, their efficient
integration with existing operations, tight cost control and the development
of the global network of subcontractors, to which a large part of
manufacturing is outsourced in order to maintain a competitive and flexible
cost structure.
    Normalized EBIT posted slower growth than normalized EBITDA, i.e. 23.9%
for an average annual growth of 11.3%, due to the increase in amortization
expenses arising from the acquisitions, especially the amortization of
intangible assets. In fact, the expansion strategy is essentially focused on
the acquisition of technologies, trademarks and other strategic assets that
enable the groups to provide an international customer base with comprehensive
value-added solutions, and thereby to secure an advantageous position in
growth niches within various markets. Furthermore, their distinctive
aftermarket expertise as OEM manufacturers of an extensive range of products
with globally recognized brand names allows them to benefit from a source of
recurring aftermarket revenues yielding attractive profit margins. At present,
the aftermarket business is especially developed in the Pulp and Paper Group.

    --------------------------------------------
    SELECTED FIRST-QUARTER FINANCIAL INFORMATION
    --------------------------------------------

    The following tables present selected combined carve-out financial
information relating to the commercial activities transferred into New GLV,
including some segmented information concerning the two major operating units:
the Water Treatment Group and the Pulp and Paper Group. The information
relating to the Manufacturing Unit is included in the item "Other and
eliminations", since this unit does not meet the quantitative criteria
stipulated in CICA Handbook Section 1701 for reportable segments. The
following information should be read in conjunction with (i) this Management's
Report; (ii) the unaudited interim combined carve-out financial statements and
notes thereto as at June 30, 2007 and 2006 accompanying this Management's
Report; and (iii) the Circular filed on SEDAR on June 20, 2007.

    Operating Results

    ------------------------------------------------
                                 1st Quarters Ended
                                            June 30,
    -------------------------------------------------------------------------
    (in thousands of $, except
     percentages)                  2007        2006    Change $    Change %
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment            56,367      34,314      22,053        64.3 %
    -------------------------------------------------------------------------
      Pulp and Paper             57,917      50,202       7,715        15.4 %
    -------------------------------------------------------------------------
      Other and eliminations        984       1,869        (885)      (47.4)%
                              ----------- ----------- ----------- -----------
    -------------------------------------------------------------------------
    Total                       115,268      86,385      28,883        33.4 %
    -------------------------------------------------------------------------
    Gross margin                 24,686      19,724       4,962        25.2 %
    -------------------------------------------------------------------------
    EBITDA                        3,719       4,396        (677)      (15.4)%
    -------------------------------------------------------------------------
    Normalized EBITDA:
    -------------------------------------------------------------------------
      Water Treatment             3,048       2,044       1,004        49.1 %
    -------------------------------------------------------------------------
      Pulp and Paper              1,590       4,127      (2,537)      (61.5)%
    -------------------------------------------------------------------------
      Other and eliminations       (974)     (2,073)      1,099       (53.0)%
                              ----------- ----------- ----------- -----------
    -------------------------------------------------------------------------
    Total                         3,664       4,098        (434)      (10.6)%
    -------------------------------------------------------------------------
    Other stock-based
     compensation(1) :
    -------------------------------------------------------------------------
      Water Treatment                29          19          10        52.6 %
    -------------------------------------------------------------------------
      Pulp and Paper              1,388         152       1,236       813.2 %
    -------------------------------------------------------------------------
      Other and eliminations       (520)        146        (666)     (456.2)%
                              ----------- ----------- ----------- -----------
    -------------------------------------------------------------------------
    Total                           897         317         580       183.0 %
    -------------------------------------------------------------------------
    Amortization:
    -------------------------------------------------------------------------
      Water Treatment             1,393         205       1,188       579.5 %
    -------------------------------------------------------------------------
      Pulp and Paper                752         606         146        24.1 %
    -------------------------------------------------------------------------
      Other                         719         577         142        24.6 %
                              ----------- ----------- ----------- -----------
    -------------------------------------------------------------------------
    Total                         2,864       1,388       1,476       106.3 %
    -------------------------------------------------------------------------
    Normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment             1,655       1,839        (184)      (10.0)%
    -------------------------------------------------------------------------
      Pulp and Paper                838       3,521      (2,683)      (76.2)%
    -------------------------------------------------------------------------
      Other and eliminations     (1,693)     (2,650)        957       (36.1)%
                              ----------- ----------- ----------- -----------
    -------------------------------------------------------------------------
    Total                           800       2,710      (1,910)      (70.5)%
    -------------------------------------------------------------------------
    Financial expenses            1,269        (120)      1,389    (1,157.5)%
    -------------------------------------------------------------------------
    Income taxes                    164         700        (536)      (76.6)%
    -------------------------------------------------------------------------
    Net earnings (loss)            (578)      2,428      (3,006)     (123.8)%
    -------------------------------------------------------------------------
    (1) Compensation based on the appreciation of GL&V's Class A subordinate
        voting shares during the reporting periods.


    Balance Sheet Highlights

    -------------------------------------------------------------------------
    (in thousands of $)                                 June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Total assets                                        349,365     371,423
    -------------------------------------------------------------------------
    Invested equity                                     110,396     116,418
    -------------------------------------------------------------------------
    Available short-term cash(1)                          5,195      21,242
    -------------------------------------------------------------------------
    Long-term liabilities(2)                            112,108     116,981
    -------------------------------------------------------------------------
    Total net debt(3)                                   100,682      89,108
    -------------------------------------------------------------------------
    (1) Includes cash, cash equivalents and temporary investments.
    (2) Includes advances from companies under common control, long-term debt
        and pension plans liabilities.
    (3) Consists of advances from companies under common control and
        long-term debt, less available cash.


    Information Regarding Non Canadian GAAP Measures
    (in thousands of $)

                                           Three months ended June 30, 2007
    -------------------------------------------------------------------------
                                  Water      Pulp &    Others &
                              Treatment       Paper       Elimi-
                                  Group       Group     nations       Total
    -------------------------------------------------------------------------
    Segmented EBIT:
    Earnings (loss) before
     financial expenses and
     income taxes (EBIT)      $   1,721   $     829   $  (1,695)  $     855
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets     (66)          9           2         (55)
    -------------------------------------------------------------------------
    Normalized earnings (loss)
     before financial expenses
     and income taxes
     (normalized EBIT)        $   1,655   $     838   $  (1,693)  $     800
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
    Earnings (loss) before
     financial expenses and
     income taxes (EBIT)      $   1,721   $     829   $  (1,695)  $     855
    Amortization                  1,393         752         719       2,864
    -------------------------------------------------------------------------
    Earnings before amorti-
     zation, financial
     expenses and income taxes
    (EBITDA)                      3,114       1,581        (976)      3,719
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets     (66)          9           2         (55)
    -------------------------------------------------------------------------
    Normalized earnings (loss)
     before amortization,
     financial expenses and
     income taxes (normalized
     EBITDA)                  $   3,048   $   1,590   $    (974)  $   3,664
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    NET EARNINGS:
    Net earnings (loss)                                           $    (578)
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets
    (net of related taxes)                                              (42)
                                                                  -----------
    Normalized net
     earnings (loss)                                              $    (620)
                                                                  -----------
                                                                  -----------

                                           Three months ended June 30, 2006
    -------------------------------------------------------------------------
                                  Water      Pulp &    Others &
                              Treatment       Paper       Elimi-
                                  Group       Group     nations       Total
    -------------------------------------------------------------------------
    Segmented EBIT:
    Earnings (loss) before
     financial expenses and
     income taxes (EBIT)      $   1,976   $   3,682   $  (2,650)  $   3,008
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets    (137)       (161)          -        (298)
    -------------------------------------------------------------------------
    Normalized earnings (loss)
     before financial expenses
     and income taxes
     (normalized EBIT)        $   1,839   $   3,521   $  (2,650)  $   2,710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented EBITDA:
    Earnings (loss) before
     financial expenses and
     income taxes (EBIT)      $   1,976   $   3,682   $  (2,650)  $   3,008
    Amortization                    205         606         577       1,388
    -------------------------------------------------------------------------
    Earnings before amorti-
     zation, financial
     expenses and income taxes
    (EBITDA)                      2,181       4,288      (2,073)      4,396
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets    (137)       (161)          -        (298)
    -------------------------------------------------------------------------
    Normalized earnings (loss)
     before amortization,
     financial expenses and
     income taxes (normalized
     EBITDA)                  $   2,044   $   4,127   $  (2,073)  $   4,098
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    NET EARNINGS:
    Net earnings (loss)                                           $   2,428
    (Gain) loss on disposal
     of property, plant and
     equipment and other assets
    (net of related taxes)                                             (231)
                                                                  -----------
    Normalized net
     earnings (loss)                                              $   2,197
                                                                  -----------
                                                                  -----------


    -------------------------------------------------------------------------
    ANALYSIS OF COMBINED CARVE-OUT OPERATING RESULTS FOR THE THREE-MONTH
    PERIOD ENDED JUNE 30, 2007
    -------------------------------------------------------------------------

    Currency Fluctuations

    As the commercial activities transferred into New GLV are conducted in
some 30 countries, their results are exposed to some currency fluctuations in
relation to the Canadian dollar, primarily the U.S. dollar, the pound Sterling
and the Euro. The following table summarizes the impact of currency
fluctuations on the principal statement of income items for the three-month
period ended June 30, 2007, compared with the exchange rates effective during
the same periods in 2006.

    Favourable (Unfavourable) Impact of Currency Fluctuations

    -------------------------------------------------------------------------
    (in thousands of $)                                   1st Quarter Ended
                                                              June 30, 2007
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment Group                                           1,151
    -------------------------------------------------------------------------
      Pulp and Paper Group                                              664
    -------------------------------------------------------------------------
      Other and eliminations                                             (4)
                                                                  -----------
    -------------------------------------------------------------------------
    Total                                                             1,811
    -------------------------------------------------------------------------
    Gross margin                                                        349
    -------------------------------------------------------------------------
    EBITDA:
    -------------------------------------------------------------------------
      Water Treatment Group                                             145
    -------------------------------------------------------------------------
      Pulp and Paper Group                                             (155)
    -------------------------------------------------------------------------
      Other and eliminations                                             12
                                                                  -----------
    -------------------------------------------------------------------------
    Total                                                                 2
    -------------------------------------------------------------------------
    EBIT:
    -------------------------------------------------------------------------
      Water Treatment Group                                             106
    -------------------------------------------------------------------------
      Pulp and Paper Group                                             (166)
    -------------------------------------------------------------------------
      Other and eliminations                                             19
                                                                  -----------
    -------------------------------------------------------------------------
    Total                                                               (41)
    -------------------------------------------------------------------------
    Order backlog as at June 30, 2007                                (3,226)
    -------------------------------------------------------------------------


    The fluctuation in various exchange rates did not have a material impact
on combined carve-out operating results for the first quarter of fiscal 2008.
On a segmented basis, the Water Treatment Group slightly benefited, but the
Pulp and Paper Group's operating income was adversely affected.

    Revenues

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
                                                           2007        2006
    -------------------------------------------------------------------------
    Revenues:
    -------------------------------------------------------------------------
      Water Treatment Group                              56,367      34,314
    -------------------------------------------------------------------------
      Pulp and Paper Group                               57,917      50,202
    -------------------------------------------------------------------------
      Other and eliminations                                984       1,869
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               115,268      86,386
    -------------------------------------------------------------------------
    Revenue mix:
    -------------------------------------------------------------------------
      New equipment                                      74,373      48,007
    -------------------------------------------------------------------------
      Aftermarket                                        40,895      38,378
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               115,268      86,386
    -------------------------------------------------------------------------


    Combined carve-out revenues for the first quarter of fiscal 2008 grew by
$28.9 M or 33.4% over the same period in 2007, driven mainly by the five
acquisitions of the previous twelve months.

    - The Water Treatment Group posted a $22.1 M or 64.3% increase in its
      quarterly revenues as a result of the acquisition of Enviroquip and
      Copa at the very end of the first quarter and during the third quarter
      of the previous fiscal year respectively. Excluding these acquisitions,
      this group's revenues sustained negative organic growth of 11.8% due
      mainly to the equipment delivery delays imposed by customers in certain
      contracts.

    - The Pulp and Paper Group's revenues grew by $7.7 M or 15.4%, thanks to
      the purchase of cutting-edge technologies for fibre processing and pulp
      preparation in December 2006, subsequent to which the group was awarded
      several contracts including a $60 M order for which it started
      recognizing revenues during the first quarter. The past year's
      acquisition of certain assets of J&L Fiber Services and Huyck
      Dewatering Equipment also contributed to grow the Pulp and Paper Group
      aftermarket revenues. Excluding the acquisitions and the commercial
      activities sold in 2007, the Pulp and Paper Group's revenues remained
      stable with those of the same period last year.

    Overall, revenues from the sale of new equipment increased by $26.4 M or
54.9% to account for 64.5% of total revenues (before inter-segment
eliminations), compared with 55.6% in the same quarter a year earlier. This
growth can be explained by the expansion of the Water Treatment Group which
generates a large proportion of its revenues in the new equipment segment
(79.3% in the first quarter of fiscal 2008), and also by the booking of
several new equipment contracts by the Pulp and Paper Group subsequent to its
latest acquisition and the setting of its technology centre in Sweden.
Aftermarket revenues grew by $2.5 M or 6.6% thanks to the Pulp and Paper
Group's other acquisitions.
    The geographic breakdown of the revenues of the commercial activities
transferred into New GLV for the first quarter of fiscal 2008 was as follows:

    - 43% of revenues were derived from customers located in the United
      States (44% in 2007);
    - 30% in Europe and Russia (28% in 2007);
    - 10% in India, China and the Asia-Pacific region (10% in 2007);
    - 8% in Canada (14% in 2007);
    - 3% in Latin America (3% in 2007); and
    - 6% in Africa and the Middle East (1% in 2007).

    Gross Margin and Normalized EBITDA

    -------------------------------------------------------------------------
    (in thousands of $, except percentages)      1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Gross margin                                         24,686      19,724
    -------------------------------------------------------------------------
    As a % of revenues                                     21.4 %      22.8 %
    -------------------------------------------------------------------------
    Operating expenses                                   20,967      15,328
    -------------------------------------------------------------------------
    As a % of revenues                                     18.2 %      17.7 %
    -------------------------------------------------------------------------
    Normalized EBITDA:
    -------------------------------------------------------------------------
    Water Treatment Group                                 3,048       2,044
    -------------------------------------------------------------------------
    Pulp and Paper Group                                  1,590       4,127
    -------------------------------------------------------------------------
    Other and eliminations                                 (974)     (2,073)
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                                 3,664       4,098
    -------------------------------------------------------------------------
    As a % of revenues                                      3.2 %       4.7 %
    -------------------------------------------------------------------------


    The combined carve-out gross margin grew by $5.0 M or 25.2%. Expressed as
a percentage of revenues, it decreased to 21.4% in the first quarter of fiscal
2008 from 22.8% the previous year. This reduction can be explained by the
weaker profitability of certain of the Water Treatment Group's contracts using
conventional technologies for which profit margins are below those yielded by
new technologies. In addition, the Pulp and Paper Group has recently been
awarded certain large-scale contracts for which the profit margins are lower
than its usual margins.
    Operating expenses were up by $5.6 M or 36.8%, primarily as a result of
the five acquisitions of the previous twelve months. Administrative expenses
include an increase of approximately $0.6 M in other stock-based compensation
based on the price of GL&V's Class A subordinate voting shares due to the
appreciation of over 40% in the share price in the days and weeks that
followed the April 20, 2007 announcement of the Arrangement. This increase had
an unfavourable impact of $1.4 M on the Pulp and Paper Group's results and a
non-material impact on the Water Treatment Group's results.
    Excluding non-recurring gains on disposal of various assets during the two
comparative periods, being an immaterial amount in the first quarter of 2008
and $0.3 M the previous year, normalized EBITDA decreased by $0.4 M or 10.6%,
and the normalized EBITDA margin as a percentage of revenues declined from
4.7% to 3.2%. On a segmented basis, the trend in normalized EBITDA was as
follows:

    - The Water Treatment Group's normalized EBITDA rose 49.1% as a result of
      its revenue growth. Notwithstanding the impact of other stock-based
      compensation, its normalized EBITDA grew by 49.2%, whereas its profit
      margin as a percentage of revenues decreased to 5.4% from 6.0% a year
      earlier. This slight decline can be explained by the weaker
      profitability of certain contracts based on conventional technologies.
      The Water Treatment Group is currently striving to expand its
      outsourcing network in order to transfer the manufacturing of such
      contracts to regions with lower costs. Management is also carrying on
      its efforts to acquire new technologies offering higher profit margins,
      as it has done over the past two years with the acquisition of Jones &
      Attwood, Brackett Green, certain Metso technologies and, more recently,
      Enviroquip and Copa.

    - The Pulp and Paper Group's normalized EBITDA decreased by $2.5 M or
      61.5%. Notwithstanding the unfavourable impact of other stock-based
      compensation, this group sustained a 30.4% decrease in its normalized
      EBITDA, while its profit margin as a percentage of revenues declined to
      5.1% from 8.5% the previous year. Besides the weaker profit margins on
      certain recently awarded large-scale contracts, this decline is
      primarily attributable to the costs associated with setting up its
      technology centre in Karlstad (Sweden) in the wake of the acquisition
      of chemical pulp processing technologies in December 2006.

    - Excluding the impact of other stock-based compensation, normalized
      EBITDA of the allocated corporate activities and the Manufacturing Unit
      increased by $0.4 M or 22.5%.

    Normalized EBIT

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Normalized EBITDA                                     3,664       4,098
    -------------------------------------------------------------------------
    Less amortization:
    -------------------------------------------------------------------------
      Water Treatment Group                               1,343         205
    -------------------------------------------------------------------------
      Pulp and Paper Group                                  752         606
    -------------------------------------------------------------------------
      Other                                                 719         577
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                                 2,864       1,388
    -------------------------------------------------------------------------
    Normalized EBIT                                         800       2,710
    -------------------------------------------------------------------------
    As a % of revenues                                      0.7 %       3.1 %
    -------------------------------------------------------------------------
    Segmented normalized EBIT:
    -------------------------------------------------------------------------
      Water Treatment Group                               1,655       1,839
    -------------------------------------------------------------------------
      Pulp and Paper Group                                  838       3,521
    -------------------------------------------------------------------------
      Other and eliminations                             (1,693)     (2,650)
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                                   800       2,710
    -------------------------------------------------------------------------


    Amortization expenses were up by $1.5 M or 106.3%. This higher amount is
mainly due to the growth in intangible assets, particularly the backlog,
technologies, trademarks and customer relations resulting from the past year's
acquisitions, especially those of Enviroquip and Copa. Thus, the increase in
amortization primarily affected the Water Treatment Group, for an amount of
$1.2 M.
    Consequently, combined carve-out normalized EBIT declined by $1.9 M or
70.5%.

    - The Water Treatment Group's normalized EBIT decreased by $0.2 M or
      10.0% due mainly to the increase in amortization of its intangible
      assets.

    - The Pulp and Paper Group's normalized EBIT declined by $2.7 M or 76.2%
      as a result of the aforementioned factors.

    - Normalized EBIT of the corporate activities and the Manufacturing Unit
      increased by $1.0 M or 36.1% for the aforementioned reasons.

    Net Earnings (Loss)

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    EBIT                                                    855       3,008
    -------------------------------------------------------------------------
    Financial expenses                                    1,269        (120)
                                                      ----------- -----------
    -------------------------------------------------------------------------
    EBT                                                    (414)      3,128
    -------------------------------------------------------------------------
    Income taxes                                            164         700
    -------------------------------------------------------------------------
    Net earnings (loss)                                    (578)      2 428
    -------------------------------------------------------------------------


    Financial expenses on debt, consisting primarily of advances from
companies under common control, increased by $1.4 M as a result of the
financing of the past year's acquisitions, in particular those of Enviroquip
and Copa. (For further information, see note 4 to the interim combined
carve-out financial statements accompanying this Management's Report.)
    For the first quarter of 2008, income taxes were $0.2 M, compared to
$0.7 M in 2007. A valuation allowance pertaining to the tax benefits
associated with the presence of integration costs related to the acquisition
of principal assets from Metso explains the occurrence of income tax expenses
for the first quarter of 2008. When excluding this item and due to the
different geographic breakdown of the Group's revenues, income taxes would be
a recovery.
    The first quarter produced a combined carve-out net loss of $0.6 M,
compared with a combined carve-out net profit of $2.4 M in the first quarter
of fiscal 2007. In addition to the increase in stock-based compensation
arising from the appreciation in GL&V's share price and lower operating
margins as a percentage of revenues, the other reasons for the decline in
profitability of the commercial activities transferred into New GLV are the
increase in amortization of intangible assets along with the increase of
financial fees resulting from the Enviroquip and Copa acquisitions. The
amortization of intangible assets represent a major new factor in the results
that creates some distortion in comparing the financial performance of New
GLV's operating units with the previous year, especially since unlike
property, plant and equipment, intangible assets do not have to be regularly
renewed by way of new investments.

    Comprehensive Income

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Net earnings (loss)                                    (578)      2,428
    -------------------------------------------------------------------------
    Unrealized gains (losses) on translating
     financial statements of self-sustaining
     foreign operations (net of related taxes)              503        (300)
    -------------------------------------------------------------------------
    Comprehensive income (loss)                             (75)      2,128
    -------------------------------------------------------------------------


    CICA Handbook Section 1530 introduces the concept of comprehensive income,
which is calculated by including other comprehensive income with net income.
For the commercial activities transferred into New GLV, other comprehensive
income for the three-month period ended June 30, 2007 pertains exclusively to
translation adjustments related to self-sustaining foreign operations. (For
further information, see note 3(a) of the combined carve-out financial
statements accompanying this Interim Management's Report.)

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

    Summary Cash Flows

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Operating activities:
    -------------------------------------------------------------------------
      Net earnings (loss)                                  (578)      2,428
    -------------------------------------------------------------------------
      Non-cash items in earnings (loss)                   3,255         332
    -------------------------------------------------------------------------
      Net change in operating assets and liabilities    (15,763)    (12,287)
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               (13,086)     (9,527)
    -------------------------------------------------------------------------
    Financing activities                                 (1,064)     31,832
    -------------------------------------------------------------------------
    Investing activities                                   (453)    (24,628)
    -------------------------------------------------------------------------
    Impact of exchange rate fluctuations on cash
     and cash equivalents                                (1,452)       (719)
    -------------------------------------------------------------------------
    Net decrease in cash and cash equivalents           (16,055)     (3,042)
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period              4,344      19,952
    -------------------------------------------------------------------------


    Cash flows from operating activities (before net change in operating
assets and liabilities) totalled $2.7 M in 2007, compared with $2.8 M in 2006,
the period's net loss having been partially offset by the increase in non-cash
earnings items, including amortization of intangible assets and stock-based
compensation expense. Excluding the impact of business acquisitions for the
previous year, net change in operating assets and liabilities used cash flows
of $15.8 M in the first quarter of fiscal 2008, compared with $12.3 M in the
same period a year earlier. It should be pointed out that the first quarter
generally yields a negative change in operating assets and liabilities as a
result of the payment of certain accounts payable, including prior-year income
taxes. The change in operating assets and liabilities also reflects the
end-of-period status of contracts in progress less progress billings and the
payment to suppliers, as well as the increase in operational requirements
arising from the growth of the commercial activities transferred into New GLV
since the end of the last fiscal year. It should be noted that considering the
magnitude of certain contracts executed by the Water Treatment and Pulp and
Paper groups, normal course funding requirements can vary significantly from
year to year, and even from one quarter to another. Consequently, operating
activities used net cash flows of $13.1 M in the first quarter of fiscal 2008,
compared with $9.5 M in the same quarter last year.
    In regard to investing activities, $1.2 M was invested to purchase
property, plant and equipment in the normal course of business, partially
financed by the receipt of advances of $0.7 M due by companies under common
control. Investments for the corresponding period of fiscal 2007 relate
primarily to the June 30, 2006 acquisition of Enviroquip.
    As for financing activities, transactions with another GL&V group and
companies under common control used net cash flows of $1.0 M. After accounting
for the period's cash inflows and outflows as well as the impact of exchange
rate fluctuations, cash and cash equivalents decreased from $20.0 M as at
March 31, 2007 to $4.3 M as at June 30, 2007.

    Summary Combined Carve-Out Balance Sheet

    -------------------------------------------------------------------------
    (in thousands of $)                                 June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Current assets                                      237,113     250,246
    -------------------------------------------------------------------------
    Long-term assets                                    112,252     121,177
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               349,365     371,423
    -------------------------------------------------------------------------
    Current liabilities                                 111,481     123,035
    -------------------------------------------------------------------------
    Long-term liabilities                               127,488     131,970
    -------------------------------------------------------------------------
    Invested equity                                     110,396     116,418
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               349,365     371,423
    -------------------------------------------------------------------------


    In addition to the impact of currency fluctuations on the value of assets
and liabilities, the changes in the combined carve-out financial position of
the commercial activities transferred into New GLV between March 31 and June
30, 2007 primarily reflect the first-quarter operational funding requirements,
including the end-of-period status of contracts in progress less progress
billings and payment to suppliers. These funding requirements were financed by
available cash and advances from companies under common control.
    Tables showing changes in current balance sheet items and indebtedness,
along with comments, are presented below. The decrease in long-term assets is
mainly attributable to the amortization of property, plant, equipment and
intangible assets, as well as translation adjustments which lowered the total
value of goodwill and intangible assets by $4.6 M.

    Changes in Current Balance Sheet Items

    -------------------------------------------------------------------------
    (in thousands of $, except ratio)                   June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Current assets:
    -------------------------------------------------------------------------
      Cash, cash equivalents and temporary investments    5,195      21,242
    -------------------------------------------------------------------------
      Accounts receivable                               131,520     130,944
    -------------------------------------------------------------------------
      Inventories                                        29,116      27,942
    -------------------------------------------------------------------------
      Contracts in progress (less progress billings)     56,598      59,088
    -------------------------------------------------------------------------
      Prepaid expenses and future income tax assets      14,684      11,030
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               237,113     250,246
    -------------------------------------------------------------------------
    Current liabilities:
    -------------------------------------------------------------------------
      Accounts payable and accrued liabilities          108,886     121,916
    -------------------------------------------------------------------------
      Income taxes payable and future income
       tax liabilities                                    2,595       1,119
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               111,481     123,035
    -------------------------------------------------------------------------
    Working capital                                     125,632     127,211
    -------------------------------------------------------------------------
    Current ratio                                        2.13:1      2.03:1
    -------------------------------------------------------------------------

    Changes in working capital primarily reflect the payment of accounts
payable, including income taxes payable, by using available cash.

    Indebtedness

    -------------------------------------------------------------------------
    (in thousands of $, except ratio)                   June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Total net debt:
    -------------------------------------------------------------------------
      Advances from companies under common control
       and long-term debt (including current portions)  105,877     110,350
    -------------------------------------------------------------------------
      Less cash, cash equivalents and temporary
       investments                                       (5,195)    (21,242)
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total debt net of cash                              100,682      89,108
    -------------------------------------------------------------------------
    Total net debt to invested capital ratio:
    -------------------------------------------------------------------------
      Invested capital:
    -------------------------------------------------------------------------
      Net owner's equity and translation adjustments    110,396     116,418
    -------------------------------------------------------------------------
      Total net debt                                    100,682      89,108
                                                      ----------- -----------
    -------------------------------------------------------------------------
    Total                                               211,078     205,526
    -------------------------------------------------------------------------
    Total net debt/invested capital ratio                  47.7 %      43.4 %
    -------------------------------------------------------------------------


    The increase in total net debt between March 31 and June 30, 2007 can be
explained by the period's working capital requirements related to the growth
in business and payment of accounts payable, as well as by translation
adjustments. The decrease in net owner's equity and translation adjustments
reflects the transactions with other GL&V entities, the impact of translation
adjustments and the period's net loss.
    It should be noted that the combined carve-out capital structure of the
transferred commercial activities as at June 30, 2007 does not reflect that in
place upon the closing of the Arrangement between GL&V, its shareholders and
FLS effective August 8, 2007, when all advances from companies under common
control were converted into New GLV shares or settled in cash by way of bank
indebtedness. (This transaction is described in note 9 to the interim combined
carve-out financial statements accompanying this Management's Report.) As at
August 10, 2007, New GLV therefore had owner's equity of approximately $150 M
and total net debt of approximately $52 M, for a total net debt/invested
capital ratio of only 26%. New GLV therefore has a strong financial position
to carry on its operations and development projects.
    In addition, New GLV benefits from a credit facility of $175 M, consisting
of two secured non-reducing revolving credits. Of that amount, $125 M may be
used to finance business acquisitions, meet day-to-day funding requirements
and issue letters of credit, and the remaining $50 M may be used to issue
letters of credit guaranteed by Export and Development Canada (EDC).

    Information on New GLV's Share Capital as at August 13, 2007

    As at August 13, 2007, after the closing of the Arrangement, share capital
New GLV's consisted of 2,607,359 Class B multiple voting shares and 22,781,521
Class A subordinate voting shares, for a total of 25,388,880 voting and
participating issued and outstanding.
    On June 18, 2007, Board of Directors New GLV's set up a stock option plan
for the directors, officers and key employees of New GLV, subject to approval
by GL&V's shareholders. Pursuant to this plan, which is described in Appendix
"F" of the Circular available on SEDAR (www.sedar.com), approximately 10% of
New GLV's shares outstanding as at August 13, 2007 are reserved. On July 27,
2007, New GLV's Board of Directors agreed to amend the stock option plan to
add a restriction limiting the number of shares that may be issued to
non-officer directors, at any time, to 1% of the total number of shares issued
and outstanding of New GLV. The same day, at GL&V's Special General Meeting,
shareholders approved the amended stock option plan.

    Contractual Commitments

    In addition to the debts appearing in the combined carve-out balance sheet
as at June 30, 2007, operating leases for premises and equipment allocated to
the commercial activities transferred to New GLV, expiring at various dates
until 2015, have total minimum lease payments of approximately $20.0 M as at
June 30, 2007 ($22.6 M as at March 31, 2007). Management believes that the
cash and cash equivalents, capital resources and net cash flows from
operations of the commercial activities transferred to New GLV will suffice to
finance the capital expenditures, working capital requirements, pension plan
contributions, and interest and principal payments on long-term debt in a
foreseeable future.
    Minimum annual lease payments on the operating leases for the next five
years and thereafter are as follows:

    (in thousands of $)
    2008 (nine months)                                                3,644
    2009                                                              3,754
    2010                                                              3,107
    2011                                                              2,680
    2012                                                              2,323
    2013 and thereafter                                               4,444
                                                                  -----------
    Total                                                            19,952
                                                                  -----------


    New GLV is also committed under letters of credit and corporate guarantees
for the achievement of contracts, for an amount that totalled $105.2 M as at
June 30, 2007 ($91.0 M as at March 31, 2007).
    Pursuant to the agreement with FLS, New GLV shall indemnify GL&V and each
of its subsidiaries for any taxes arising out of or connected with any
carve-out transactions in excess of $13 M.
    On August 8, 2007, all advances to companies under common control were
converted into share capital and all the long-term debt existing as at June
30, 2007 was repaid as part of the carve-out transactions.

    Related-Party Transactions in the Normal Course of Business

    -------------------------------------------------------------------------
    (in thousands of $)                          1st Quarters Ended June 30,
    -------------------------------------------------------------------------
                                                           2007        2006
    Revenues:
    -------------------------------------------------------------------------
      Sales                                                 630         629
    -------------------------------------------------------------------------
    Expenses:
    -------------------------------------------------------------------------
      Purchases                                               1          25
    -------------------------------------------------------------------------
      Financial Expenses                                  1,578         168
    -------------------------------------------------------------------------


    These transactions were measured at the exchange amount which is the
amount established and accepted by the related parties.

    Transitional Services Agreement

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

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

    Fees
    ----

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

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

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

    Financial Instruments

    Derivative Financial Instruments

    To reduce the risks related to currency fluctuations, New GLV will use
derivative financial instruments such as forward exchange contracts. New GLV
will not hold or issue any derivative financial instruments for speculative
purposes. The derivative financial instruments will be subject to normal
credit terms and conditions, financial controls and risk monitoring
procedures. In management's opinion, none of the parties to the existing
derivative financial instruments are expected to default on their obligations
since they are large financial institutions. Forward exchange contracts will
be recorded at their fair value. (For further information, see note 3(b) to
the combined carve-out financial statements accompanying this Interim
Management's Report.)

    Fair Value

    As described in the combined carve-out financial statements, the carrying
amounts of cash and cash equivalents, temporary investments, accounts
receivable and accounts payable and accrued liabilities approximate their fair
value, as these items will be realized or paid within one year.
    Forward exchange contracts are recognized at their positive fair value of
$1.5 million as at June 30, 2007 (positive fair value of $1.2 M as at
March 31, 2007).
    The fair values of financial liabilities are mainly estimated based on
discounted cash flows using year-end market yields or market values of similar
instruments having the same maturity. The fair values of derivative financial
instruments are estimated using year-end market rates, and reflect the amount
New GLV would receive or pay if the instruments were closed out at those
dates.
    The fair value of the advances to companies under common control and
advances from companies under common control could not be determined since it
is practically impossible to find financial instruments on the market having
substantially the same economic characteristics and because these amounts were
settled and refinanced when the transaction with FLS is completed.
    The fair value of long-tem debt is equivalent to the carrying amount since
it bears interest at a rate that varies with the market rate.

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

    Order Backlogs
    (in thousands of $)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                    June 30,   March 31,   December   September     June 30,
                       2007        2007    31, 2006    31, 2006        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Water Treatment
     Group          185,308     169,140     174,384     131,862     114,891
    Pulp and Paper
     Group          171,430      95,552      93,934      75,886      75,462
    Other and elimi-
    nations(1)      (31,489)    (17,655)    (11,759)     (4,575)     (6,012)
    -------------------------------------------------------------------------
    Total           325,249     247,037     256,559     203,173     184,341
    -------------------------------------------------------------------------
    (1) Includes the Manufacturing Unit's order backlog.


    As at June 30, 2007, the order backlog of the commercial activities
transferred into New GLV reached a record high of $325.2 M (after
inter-segment eliminations), an increase of approximately 32% over March 31,
2007 and approximately 76% over June 30, 2006.

    - The Water Treatment Group's order backlog grew by close to 10% within
      the past three months to $185.3 M as at June 30, 2007, due partly to
      the postponed delivery of certain orders and partly to the group's
      solid performance. This group's order backlog has grown by more than
      61% over last year. This growth was particularly strong in North
      America, Europe and Asia, and is primarily attributable to the
      acquisition of Brackett Green, Enviroquip and Copa. The group thereby
      gained new technologies for which the demand is growing. Operations
      derived from more conventional technologies are posting slower growth,
      which attests to the relevance of this group's strategy of acquiring
      companies with newer technologies.

      After two years of strong expansion through acquisitions, fiscal 2008
      will be transition phase during which the Water Treatment Group's
      objectives will be to complete the integration of the cultures and
      operations resulting from its latest acquisitions and to reinforce its
      operational and financial management in order to improve its
      profitability. To that end, the group recently restructured its
      business in the United Kingdom. It is also striving to expand its
      outsourcing networks in order to transfer the manufacturing of such
      contracts to regions with lower costs.

      Over the longer term, the global water treatment industry holds
      considerable potential. In recent years, major efforts have been rolled
      out, first to set up Water Treatment Group, and then to provide it with
      new technologies so as to position it more solidly and competitively in
      promising niches of this still fragmented industry which is expected to
      undergo a consolidation in the coming years. Management is therefore
      confident about this group's outlook over the long term, as it continue
      to expand through growth and acquisitions that will allow it to
      complete its technological portfolio.

    - The Pulp and Paper Group's order backlog has increased by more than 79%
      since March 31, 2007 to reach $171.4 M as at June 30, 2007, driven by
      the booking of several new equipment and complete systems contracts
      (including the $60 M order in Portugal and another worth $20 M in
      Asia), combined with solid aftermarket activity in North America and
      Europe. However, it should be pointed out that profit margins on such
      large-scale contracts are weaker than the traditional margins posted by
      the Pulp and Paper Group.

      The past two years have been very constructive for the Pulp and Paper
      Group, as it has taken initiatives that have enhanced its positioning
      and started to have a positive impact on its operating results. For
      instance, the acquisition of Perplas, KanEng, J&L Fiber and Huyck,
      coupled with its internal development efforts, broadened its portfolio
      of aftermarket products and services, whereas the December 2006
      purchase of certain Kvaerner and Metso technologies provided it with
      the know-how to offer comprehensive value-added pulp processing
      solutions adapted to new market trends worldwide. This group has also
      achieved significant progress in recent quarters in developing and
      optimizing its international outsourcing organization, which should
      contribute to raise its future profitability.

      The Pulp and Paper Group's principal objectives and challenges in
      upcoming quarters will be to integrate and optimize its new technology
      centre in Karlstad (Sweden), and to continue improving its operating
      profitability by lowering its operating costs, standardizing and
      further strengthening its project management practices, and optimizing
      its outsourcing networks.

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

    -------------------------------------------------------------------------
    OTHER
    -------------------------------------------------------------------------

    Critical Accounting Estimates

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

    Changes in Accounting Policies

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

    - Section 1506, which describes how to apply changes in accounting
      policies, did not have an impact on the operating results or financial
      position for the first quarter of fiscal 2007.

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

    - According to Section 3855, all financial assets and liabilities are
      carried at fair value in the interim combined carve-out balance sheet,
      except for loans, receivables and financial liabilities held for
      purposes other than the transaction, which are recognized at amortized
      cost using the effective interest method (see note 3(b) to the interim
      combined carve-out financial statements). The adoption of this standard
      did not have an impact on the interim combined carve-out balance sheet
      and interim combined carve-out statement of owner's net equity as at
      April 1, 2007 and as at June 30, 2007.

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

    Recent Accounting Development in Canada

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

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

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

    Principal Risk Factors

    The principal risk factors to which New GLV is exposed are described in
detail in the Circular available on SEDAR.

    Supplementary Information

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


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


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

    August 16, 2007


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Combined Carve-out Statements of Earnings
    (in thousands of dollars)
    (unaudited)

                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Revenues                                          $ 115,268   $  86,385
    Cost of contracts and goods sold                     90,582      66,661
                                                      ----------- -----------
                                                         24,686      19,724

    Selling expenses                                     10,545       8,831
    Administrative expenses                               9,525       6,180
    Other stock-based compensation (note 11 (b))            897         317
                                                      ----------- -----------
                                                         20,967      15,328
    Earnings before amortization, financial
     expenses and income taxes                            3,719       4,396
    Amortization                                          2,864       1,388
                                                      ----------- -----------
    Earnings before financial expenses and income
     taxes                                                  855       3,008
    Financial expenses (note 4)                           1,269        (120)
                                                      ----------- -----------
    Earnings (loss) before income taxes                    (414)      3,128
    Income taxes                                            164         700
                                                      ----------- -----------
    Net earnings (loss)                               $    (578)  $   2,428
                                                      ----------- -----------
                                                      ----------- -----------

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Segmented Information
    (in thousands of dollars)
    (unaudited)

                                           Three months ended June 30, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Water    Pulp and      Others
                              Treatment       Paper         and
                                  Group       Group Elimination       Total
    -------------------------------------------------------------------------
    Revenues                  $  56,367   $  57,917   $     984   $ 115,268
    Other stock-based
     compensation                    29       1,388        (520)        897
    Amortization of property,
     plant and equipment,
     intangible assets and
     other assets                 1,393         752         719       2,864
    Earnings (loss) before
     financial expenses
     and income taxes             1,721         829      (1,695)        855
    Acquisition of property,
     plant and equipment            339         439         412       1,190


                                           Three months ended June 30, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Water    Pulp and      Others
                              Treatment       Paper         and
                                  Group       Group Elimination       Total
    -------------------------------------------------------------------------
    Revenues                  $  34,314   $  50,202   $   1,869   $  86,385
    Other stock-based
     compensation                    19         152         146         317
    Amortization of property,
     plant and equipment,
     intangible assets and
     other assets                   205         606         577       1,388
    Earnings (loss) before
     financial expenses
     and income taxes             1,976       3,682      (2,650)      3,008
    Acquisition of property,
     plant and equipment            150         459         192         801

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Combined Carve-out Statements of Comprehensive Income
    (in thousands of dollars)
    (unaudited)

                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Net earnings (loss)                               $    (578)  $   2,428
    Other comprehensive income (loss), net of tax:
      Unrealized gains (losses) on translating
       financial statements of self-sustaining
       foreign operations                                   503        (300)
                                                      ----------- -----------
    Comprehensive income (loss)                       $     (75)  $   2,128
                                                      ----------- -----------
                                                      ----------- -----------

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Combined Carve-out Balance Sheets
    (in thousands of dollars)

                                                        June 30    March 31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
                                                     (unaudited)   (audited)
    ASSETS
    Current assets:
      Cash and cash equivalents                       $   4,344   $  20,399
      Temporary investments                                 851         843
      Accounts receivable                               131,520     130,944
      Inventories                                        29,116      27,942
      Contract in progress, less progress billings
       (note 5)                                          56,598      59,088
      Prepaid expenses                                    8,658       5,068
      Future income tax assets                            6,026       5,962
                                                      ----------- -----------
                                                        237,113     250,246
    Long-term investments and other (note 6)              5,793       6,644
    Property, plant and equipment                        39,660      42,010
    Future income tax assets                              1,289         833
    Goodwill (note 7)                                    24,464      26,451
    Intangible assets (note 8)                           37,340      41,143
    Other assets                                          3,706       4,096
                                                      ----------- -----------
                                                        349,365     371,423
                                                      ----------- -----------
                                                      ----------- -----------
    LIABILITIES AND INVESTED EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities          108,886     121,916
      Income taxes payable                                1,903       1,119
      Future income tax liabilities                         692           -
                                                      ----------- -----------
                                                        111,481     123,035
    Advances from companies under common control
     (note 9)                                           104,776     109,144
    Long-term debt                                        1,101       1,206
    Other liabilities                                    13,641      14,651
    Future income tax liabilities                         7,970       6,969
                                                      ----------- -----------
                                                        238,969     255,005
    Invested equity:
      Owner's net equity                                113,451     119,976
      Accumulated other comprehensive loss               (3,055)     (3,558)
                                                      ----------- -----------
                                                        110,396     116,418
                                                      ----------- -----------
                                                      $ 349,365   $ 371,423
                                                      ----------- -----------
                                                      ----------- -----------

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Combined Carve-out Statements of Owner's Net Equity
    (in thousands of dollars)
    (unaudited)

                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Owner's net equity, beginning of period           $ 119,976    $ 96,709
    Net earnings (loss)                                    (578)      2,428
    Contributed surplus relating to stock-based
     compensation (note 11 (a))                             102           8
    Net transactions with other group of Groupe
     Laperrière & Verreault Inc.                         (6,049)      2,550
                                                      ----------- -----------
    Owner's net equity, end of period                 $ 113,451   $ 101,695
                                                      ----------- -----------
                                                      ----------- -----------

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Combined Carve-out Statements of Retained Earnings
    (in thousands of dollars)
    (unaudited)

                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------

    Cash flows used in operating activities:
    Net earnings                                      $    (578)  $   2,428
    Non-cash items in earnings:
      Gain on disposal of property, plant and
       equipment and other assets                           (55)       (298)
      Amortization of property, plant and equipment       1,571       1,078
      Amortization of intangible assets                   1,193         218
      Amortization of other assets                          100          92
      Amortization of the deferred gain on
       sale-leaseback arrangement                          (117)       (120)
      Stock-based compensation                              102           8
      Other stock-based compensation                        897         317
      Future income taxes                                  (127)         14
      Unrealized gain on derivative financial
       instruments                                         (309)       (977)
    Net changes in non-cash balances related to
     operations (net of effect of business
     acquisitions)                                      (15,763)    (12,287)
                                                      ----------- -----------
                                                        (13,086)     (9,527)

    Cash flow from (used in) financing activities:
    Advances from companies under common control          1,879      28,877
    Repayment of long-term debt                             (33)          -
    Net transactions with other group of Groupe
     Laperrière & Verreault Inc.                         (2,910)      2,955
                                                      ----------- -----------
                                                         (1,064)     31,832

    Cash flow used in investing activities:
    Business acquisitions                                     -     (24,728)
    Change in temporary investments                          (8)        915
    Advances to companies under common control              733           -
    Acquisition of property, plant and equipment         (1,190)       (801)
    Net change in other assets                               12         (14)
                                                      ----------- -----------
                                                           (453)    (24,628)
    Effect of translation adjustment on cash and cash
     equivalents                                         (1,452)       (719)
                                                      ----------- -----------
    Net decrease in cash and cash equivalent            (16,055)     (3,042)
    Cash and cash equivalents, beginning of period       20,399      22,994
                                                      ----------- -----------
    Cash and cash equivalents, end of period          $   4,344   $  19,952
                                                      ----------- -----------
                                                      ----------- -----------
    Supplemental information:
      Net interest paid                               $   1,538   $     122
      Income taxes paid                                     286         186

    See accompanying notes to the combined carve-out financial statements.


    Water Treatment Group, Pulp and Paper Group and Manufacturing Unit
    GLV Inc.
    Notes to Combined Carve-out Financial Statements
    For the three-month period ended June 30, 2007 and 2006
    (tabular amounts are expressed in thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    1. NATURE OF OPERATIONS AND ORGANIZATION

    On April 20, 2007, Groupe Laperrière Verreault Inc. ("GL&V") announced
that it had entered into an agreement with FLSmidth & Co. A/S ("FLS"), a
Danish company whereby, through a court-approved plan of arrangement (the
"Arrangement"), FLS will acquire all the outstanding Class A subordinate
voting shares and Class B multiple voting shares of GL&V. In connection with
the Arrangement, GL&V will transfer its Water Treatment Group, Pulp and Paper
Group and Manufacturing Unit ("Group" or "the retained businesses") into a new
corporation ("GLV Inc.") which will be seeking a listing on the TSX Exchange
and that will be spun off to shareholders. Following the Arrangement, FLS will
effectively own 100% of the GL&V's Process Group in exchange for a
consideration in cash equivalent to $33 per share and the assumption of the
net debt less $50,000,000 of net debt to be assumed by GLV Inc.
    Pursuant to the Arrangement, each GL&V shareholder will receive a per-
share consideration consisting of $33 in cash and one share of GLV Inc.
Holders of Class A subordinate voting shares and Class B multiple voting
shares of GL&V will receive respectively Class A subordinate voting shares and
Class B multiple voting shares of GLV Inc. for each corresponding share held.
    The proposed Arrangement is subject to shareholder approval by resolution
approved by no less than 75% of the votes cast in each class of shares (Class
A subordinate voting and Class B multiple voting) and GL&V expects to present
the matter to its shareholders at a special meeting. The Arrangement is also
subject to a number of conditions including approval by the Superior Court of
Quebec, acceptance by the TSX Exchange and other regulatory approvals.
    On July 27, 2007, GL&V announced that during the Special General Meeting
held that day in Montreal, shareholders present or represented by proxy voted
in favour of the proposed Arrangement between GL&V, its shareholders and a
Canadian subsidiary of FLS, in a majority exceeding the required minimum of
75% of the votes cast in both share classes. Holders of Class A subordinate
voting shares approved the resolution in a majority of 99.92% of the votes
cast, whereas holders of Class B multiple voting shares approved it
unanimously.
    On July 31, 2007, GL&V announced that the Quebec Superior Court has issued
a final order approving the proposed Plan of Arrangement mentioned above
between GL&V, its shareholders and FLS.
    On August 10, 2007, GL&V announced the closing of the Arrangement. GL&V
transferred its Water Treatment Group, Pulp and Paper Group and Manufacturing
unit to GLV Inc., and the shares were distributed to the shareholders of GL&V.
A Canadian subsidiary of FLS acquired all of GL&V's Class A subordinate voting
shares and Class B subordinate voting shares in circulation, thus effectively
became owner of 100% of GL&V's Process Group in exchange for a cash
consideration and assumption of the net debt less $50,000,000 of net debt to
be assumed by GLV Inc. As a result, each shareholder of GL&V received or will
shortly receive a cash consideration of $33 per share held plus one share of
new GL&V.
    The Water Treatment Group specializes in the design and marketing of
solutions for the treatment of municipal and industrial wastewater and water
used in various industrial processes, and also offers water intake screening
solutions for power stations and desalination plants. The Pulp and Paper Group
specializes in the design and marketing of equipment used in various stages of
pulp and paper production, notably chemical pulping, pulp preparation and
sheet formation, and is a recognized leader in rebuilding, upgrading and
optimization services for existing equipment, as well as the sale of
replacement parts. Finally, a Manufacturing unit specializes in the production
of large custom-made parts for external customers involved mainly in the pulp
and paper and energy sectors, as well as for the Pulp and Paper Group.
    Prior to the Arrangement, the following carve-out transactions have been
completed:

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

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

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

    iv)  The transfer of the shares and the net assets as described above was
         in consideration for the shares issued by GLV Inc. and payment in
         cash. The shares issued by GLV Inc. have been transferred to
         shareholders of GL&V as part of the Arrangement. The cash payment to
         GL&V obtained from bank borrowing, was equal to the aggregate of
         (i) $50,000,000 minus the excess of the debt over the cash and cash
         equivalents and temporary investments, or plus the excess of the
         cash and cash equivalents and temporary investments over the debt of
         GLV Inc. that remained after the above described carve-out
         transactions and (ii) the other stock-based compensation calculated
         using the stock price of class "A" subordinate voting shares at
         closing of the Arrangement less $33.00. The debt is defined as the
         bank indebtedness, the short-term portion of the long-term debt and
         the long-term portion of the long-term debt.

    Transitional Services Agreement

    Transitional Services

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

    Fees

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

    Transitional period

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

    2. BASIS OF PRESENTATION AND METHODS OF ALLOCATION

    The interim combined carve-out financial statements are presented using
Canadian generally accepted accounting principles ("GAAP") and have been
derived from the accounting records of GL&V using the historical cost basis of
assets and liabilities and historical results of operations of the retained
businesses. The same accounting policies as described in the Group's combined
carve-out financial statements included in the information circular (the
"Circular") dated June 20, 2007 have been used, with the exception of the
changes described in note 3 below. However, these interim combined carve-out
financial statements do not include all disclosures required for an annual
report under Canadian GAAP and accordingly should be read in conjunction with
the Group's audited combined carve-out financial statements and notes thereto
included in the Circular.
    These interim combined carve-out financial statements have been prepared
on a basis that management believes to be reasonable and appropriate and
include the historical balance sheets, results of operations, and cash flows
of each division and/or legal entity included in the Group operations, as well
as the necessary allocations described below. However, the interim combined
carve-out financial statements may not necessarily reflect the Group's results
of operations, financial position and cash flows in the future or what their
results of operations, financial position and cash flows would have been had
the Group been a stand-alone company during the periods presented. As these
interim carve-out financial statements represent a portion of the businesses
of GL&V which were not organized in a single separate legal entity, the net
assets of the Group have been reflected as GL&V's owner's net equity in the
retained businesses. GL&V's owner's net equity in the retained businesses
include the accumulated earnings of the retained businesses as well as the
effect of net cash transfers related to cash management functions performed by
GL&V and investing decision in the Group by GL&V.
    The interim combined carve-out financial statements include the direct
revenue, costs and expenses that are solely attributable to the activities of
the Water Treatment Group, Pulp and Paper Group and Manufacturing unit.
    The interim combined carve-out financial statements also reflect
allocations of certain corporate expenses, assets and liabilities of GL&V
including the items described below.

    (a) General corporate expenses:

        GL&V has allocated most of selling and administrative expenses of the
        corporate office to the retained businesses on the basis of the
        percentage of revenues generated. Such allocated costs include human
        resources, legal, treasury, insurance, finance, taxation, marketing,
        accounting, strategy, investor's relations and public affairs. The
        costs allocated are not necessarily indicative of the costs that
        would have been incurred if the retained businesses had performed the
        functions as a stand-alone company, nor are they indicative of costs
        that will be incurred in the future. Following the reorganization the
        Group will perform these functions using its own resources or
        purchased services.

    (b) Bonus expenses:

        Bonus expenses of GL&V's corporate office employees are allocated on
        the basis of earnings before restructuring costs, amortization,
        financial expenses and income taxes of each combined entity. These
        expenses are not necessarily indicative of what the expenses would
        have been had the Group been a separate stand-alone company during
        the periods presented.

    (c) Stock options and other stock-based compensation plans:

        Stock option expense and other stock-based compensation expense in
        the interim combined carve-out statements of earnings include the
        expenses related to the fair value of awards held by the employees of
        the Group as well as an allocation based on earnings before
        restructuring costs, amortization, financial expenses and income
        taxes of each combined entity, for GL&V's corporate office employees
        during the years presented. These expenses are not necessarily
        indicative of what the expenses would have been had the Group been a
        separate stand-alone company during the periods presented.

    (d) Pension plan:

        One entity being part of the Group has pension obligations. The
        pension plan is managed separately and the related assets,
        liabilities and costs are included in the interim combined carve-out
        financial statements.

    (e) Interest expense:

        Several entities of the Group obtained short and long-term financing
        from other entities of GL&V that will not be transferred to the
        Group.

        Historically, GL&V has incurred third party debt at the parent level
        and provided certain financing to the Group. This financing is
        reflected in the interim combined carve-out balance sheets within the
        advances from companies under common control and is interest bearing
        as described in Note 9 - Advances from companies under common
        control. The interim combined carve-out financial statements do not
        include any allocation of additional interest expense of GL&V. The
        Group's interest expense as a stand-alone company may be higher or
        lower than reflected in the interim combined carve-out statements of
        earnings.

    (f) Incomes taxes:

        Income taxes are calculated as if all of the Group's operations had
        been separate tax paying legal entities, each filing a separate tax
        return in its local tax jurisdiction. Future income tax assets and
        liabilities are included in the interim combined carve-out financial
        statements when corporate entities are expected to be transferred to
        the Group as a stand-alone entity. When assets and liabilities
        relating to the Group are expected to be transferred by another
        company of GL&V, it is assumed that the basis of the assets and
        liabilities transferred equals their carrying value. Future income
        tax assets and liabilities may have to be recorded when the actual
        transfers are made.

    (g) Cash management:

        Cash and cash equivalents in the interim combined carve-out financial
        statements are comprised of the cash and cash equivalents of
        corporate entities part of the Group. Historically, GL&V has
        performed cash management functions on behalf of certain units that
        are part of the Group. The non-interest bearing financing from GL&V
        to the Group were accounted for as owner's net equity. Subsequent to
        the spin-off, the Group will be responsible for its own cash
        management functions.

    (h) Derivative financial instruments:

        The Group primarily enters into derivative contracts to manage its
        foreign currency. These contracts are recorded at their fair value on
        the interim combined carve-out balance sheets. Changes in the fair
        value and gains or losses on these contracts are recorded in the
        interim combined carve-out statements of earnings.

    (i) Earnings per share:

        The Group is not a separate legal entity with outstanding common
        shares. Therefore, historical earnings per share have not been
        presented in the interim combined carve-out financial statements.

    3. CHANGES IN ACCOUNTING POLICIES

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

    (a) Comprehensive income

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

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

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


                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Balance, beginning of period                      $  (3,558)  $  (2,211)
    Net change in unrealized foreign currency gains
     (losses) on translation of net investments in
     self-sustaining foreign operations, net of tax
     of nil                                                 503        (300)
                                                      -----------------------
    Balance, end of period                            $  (3,055)  $  (2,511)
                                                      -----------------------
                                                      -----------------------

    (b) Financial instruments

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

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

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

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

        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Assets/Liabilities           Category                 Measurements
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

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


        The Group has elected to account for transactions costs related to
        the issuance of financial instruments as a reduction of the carrying
        value of the related financial instruments.

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

        Transaction costs are now deducted from the financial liability and
        are amortized using the effective interest method over the expected
        life of the expected liability. As the Group's credit facility was
        completed subsequent to June 30, 2007, the transactions costs
        incurred related to the credit facility will be amortized effective
        from August 8, 2007. In addition, the Group did not have any
        transaction costs related to its financial liabilities prior to
        June 30, 2007. The adoption of this standard had no impact on the
        combined carve-out statements of income for the quarter ended
        June 30, 2007.

    (c) Hedges

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

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

    Finally, the adoption of the new standards had no significant impact on
the net income during the first quarter of fiscal 2008.


    4. FINANCIAL EXPENSES

                                                 Three months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           2007        2006
    -------------------------------------------------------------------------
    Interest on advances from companies under
     common control                                   $   1,578   $     168
    Interest income, net amount                             (40)        (46)
    Foreign exchange (gain) loss                           (178)        448
    Foreign unrealized gain on derivative financial
     instruments                                           (309)       (977)
    Other                                                   218         287
                                                      -----------------------
                                                      $   1,269   $    (120)
                                                      -----------------------


    5. CONTRACTS IN PROGRESS, LESS PROGRESS BILLINGS

                                                              Balance as at
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Contracts in progress                             $ 198,077   $ 181,836
    Progress billings                                  (141,479)   (122,748)
                                                      -----------------------
                                                      $  56,598   $  59,088
                                                      -----------------------


    6. LONG-TERM INVESTMENTS AND OTHERS

                                                              Balance as at
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Shares of private company at cost                 $   1,500   $   1,500
    Advances to companies under common control,
     without interest and repayment terms                 4,293       5,144
                                                      -----------------------
                                                      $   5,793   $   6,644
                                                      -----------------------
                                                      -----------------------

    7. GOODWILL

                                         Balance as              Balance as
                                        at March 31,    Foreign  at June 30,
                                               2007    Currency        2006
    -------------------------------------------------------------------------

    Pulp & Paper Group                    $   3,717   $    (119)  $   3,598
    Water Treatment Group                    22,734      (1,868)     20,866

                                        -------------------------------------
                                          $  26,451   $  (1,987)  $  24,464
                                        -------------------------------------

    8. INTANGIBLE ASSETS

                             Balance as                          Balance as
                            at March 31,     Amorti-    Foreign  at June 30,
                                   2007      zation    Currency        2006
    -------------------------------------------------------------------------
    Technologies              $  27,251   $    (491)  $  (1,617)  $  25,143
    Trademarks                    6,221         (77)       (406)      5,738
    Customer relations            5,335        (169)       (439)      4,727
    Non-compete agreements          640         (37)        (39)        564
    Backlog                       1,696        (419)       (109)      1,168
                            -------------------------------------------------
                              $  41,143   $  (1,193)  $  (2,610)  $  37,340
                            -------------------------------------------------


    9. ADVANCES FROM COMPANIES UNDER COMMON CONTROL

    As of April 19, 2007, GL&V obtained a credit facility of from the National
Bank of Canada ("NBC") in the amount of $175,000,000 for its new subsidiary,
GLV Inc. that will expire in July 2012. The credit facilities will consist of
two secured non-reducing revolving credits totaling $175,000,000. Of that
amount, $125,000,000 may be used to finance business acquisitions, meet
day-to-day financing requirements, and issue letters of credit. The remaining
$50,000,000 may be used to issue letters of credit guaranteed by Export and
Development Canada ("EDC"). On August 8, 2007, NBC and GLV Inc. proceeded to a
syndication of the credit facilities with a banking syndicate and negotiated
an agreement with EDC that reflect the same terms and conditions to those
currently in place with GL&V.
    In the course of the carve-out transactions, as described in note 1, the
advances from companies under common control will be either converted into
share capital of GLV Inc or paid in cash. The credit facilities will be used
for the cash payment to GL&V that will be equal to $50,000,000 minus the
excess of the debt over the cash and cash equivalents and temporary
investments or plus the excess of the cash and cash equivalents and temporary
investments over the debt of GLV Inc. The debt is defined as the bank
indebtedness, the short-term portion of the long-term debt and the long-term
portion of the long-term debt.
    All the advances from companies under common control are presented as
long-term since those advances will either be converted into shares capital or
paid in cash using the credit facility in the course of the carve-out
transaction and GLV Inc. has the intent to maintain the debt created by the
cash payment on a long-term basis and has long-term credit facilities
available.

    10. OTHER LIABILITIES

                                                              Balance as at
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        June 30,   March 31,
                                                           2007        2007
    -------------------------------------------------------------------------
    Pension liabilities                               $   6,231   $   6,631
    Deferred gain on a sale-leaseback arrangement         2,918       3,287
    Other stock-based compensation                        2,359       2,276
    Other                                                 2,133       2,457
                                                      -----------------------
                                                      $  13,641   $  14,651
                                                      -----------------------


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

    (a) Stock option plans:

        Stock options may be granted to senior executives, management and
        directors of GL&V. Under the plans, the exercise price of each option
        is equivalent to the price of the GL&V's shares on the date of grant
        of the options.

        The number of options granted and option activity is not necessarily
        indicative of what the activity would have been had the Group been a
        separate stand-alone company during the periods presented or what the
        activity may be in the future. For this reason, the number of options
        granted and option activity have not been presented.

        Stock-based compensation expense for stock options granted to
        employees of the Group and an allocation for GL&V's corporate office
        employees as described in Note 2 total $102,000 for the quarter ended
        June 30, 2007 ($8,000 in 2006).

    (b) Other stock-based compensation plans:

        GL&V also offers to directors and certain employees, units with a
        value corresponding to the market price of the Class A subordinate
        voting shares of GL&V.

        The number of units outstanding is not necessarily indicative of what
        the activity would have been had the Group been separate stand-alone
        company during the periods presented or what the activity may be in
        the future.  For this reason, the number of outstanding units has not
        been presented.  Compensation cost for the quarter ended June 30,
        2007 was $897,000 ($317,000 in 2006) for employees of the Group.

    12. RELATED PARTY TRANSACTIONS

                                                         Three months ended
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        June 30,    June 30,
                                                           2007        2006
    -------------------------------------------------------------------------
    Transactions in the normal course of operations
     concluded with GL&V's Process Group
      Revenue
        Sales                                         $     630   $     629
      Expenses
        Purchases                                             1          25
        Interest expenses                                 1,578         168
    




For further information:

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

Organization Profile

GLV Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890