YEAR-END RELEASE, 2010

INTERIM REPORT OCTOBER-DECEMBER, 2010

Improved cash flow despite continued weak growth in Central Europe

Fourth quarter

• Net turnover declined by 12% in relation to the same period and amounted to SKr 270.3 million (306.4), SKr 23 million of which was attributable to currency effects. The remainder of the decrease is attributable to contracting activities, which saw a decline in volumes in relation to 2009 as a result of the early winter in Europe.

• The operating result was a loss of SKr 51.9 million (loss 55.2).

• The operating cash flow, i.e. the cash flow before financing activities, amounted to SKr 137.9 million (119.5).

• The result after tax was a loss of SKr 85.0 million (loss 55.1).

• The loss per share was SKr 5.04 (loss 5.14).

January-December

• Net turnover decreased by 10% in relation to the previous year and amounted to SKr 1,293.9 million (1,435.0). As a result of the stronger Swedish krona turnover declined by SKr 100 million upon the translation of sales in foreign currencies into Swedish kronor. The remainder of the decrease is mainly due to weak contracting markets in Central Europe.

• The operating result was a loss of SKr 60.7 million (loss 40.0). The decrease is attributable to higher raw material prices and lower volumes in Central Europe.

• The operating cash flow amounted to SKr 40.6 million (57.8).

• The consolidated result after tax amounted to a loss of SKr 101.3 million (loss 57.0).

• The loss per share for 2010 was SKr 7.08 (loss 5.55).

Dividend

• The Board proposes to the AGM that no dividend be paid for the 2010 financial year.

Comments by Stefan Tilk, CEO and Managing Director
After I took over as CEO in September Geveko estimated that the operating result would be about the same as in 2009, or lower. The operating result reported for 2010 was a loss of SKr 60.7 million (loss 40.0), which is clearly unsatisfactory. Several factors had an effect on our ability to improve profitability. The unsettled financial conditions involving public finance problems in countries in Central Europe which was accompanied by cuts in spending on road infrastructure, an uncertain situation on commodities markets with significant shortages that resulted in price increases, the early winter in the Nordic region, and severe flooding in Europe were all factors behind the loss incurred. The markets in Central Europe were characterised by a steep decline in both volume and result. The businesses in Poland, Slovakia, the Czech Republic and Romania were also affected in 2010 by the huge budget deficits in these countries and the accompanying cutbacks in the road industry. The British government was also forced to decide on an austerity programme, which further increased the pressure on a British market that was already exposed to intense competition. On the other hand, developments on the contracting market in the Nordic region were satisfactory. Sweden, Norway, Denmark and Finland all decided to increase their budgets for road maintenance, which stimulated the demand for Geveko’s products. The Material Sales business area noted robust volume growth in the Nordic region and Western Europe and reported modest growth for its Premark® product area.

In 2010 efforts focused on co-ordinating the Group’s contracting units in order to take advantage of operational synergies. Geveko has also lowered its cost base in preparation for the continued unstable market conditions, but the effects on the result of the action plan implemented in 2010 were, unfortunately, curtailed by the sharp increases in the prices of raw materials with limited scope to pass these on to customers. 2011 will be a year of many challenges. The conditions for a recovery on the contracting markets in Central Europe are dependent on the state of these countries’ finances and what opportunity they have in 2011 to resume spending on the road infrastructure. There is a pressing need for infrastructural improvements in these countries and the hope is that it will be possible to implement some of them in 2011. However the likelihood of the market situation in Central Europe improving during the year is considered to be slight.

With its business- and market-orientated organisational structure, and as one of the few players active at all points along the value chain, the company will continue to focus on marketing activities and product development. In the Material Sales business area we have a well-established sales organisation that also serves as a distribution channel on new markets and creates openings for organic growth. When it comes to the Contracting business, I can foresee a more favourable year ahead in the Nordic region thanks to the highly integrated organisation. We shall continue our efforts to strengthen the co-ordination between the contracting units in Central Europe.

The contracting markets that are expected to show a stable pattern in 2011 are the Nordic region and Hungary. In the Material Sales business area there are good prospects for healthy growth in the Premark® and 2-component material product areas. Sharp increases in raw material prices may, however, reduce the demand for thermoplastic products. In Intelligent Road Markings, our new business area, we see opportunities for higher sales and we can also note that demand is increasing for the traffic engineering products being developed and marketed by the Hungarian business.

Geveko is well placed to build on its experience in road markings and to be an active partner in road safety activities in Europe. Despite negative profitability and market conditions that will probably persist in 2011, as the newly appointed CEO I have a positive view regarding our future prospects.

Contact information:
Stefan Tilk, CEO and Managing Director
Tel: +46 (0) 31 172945, +46 (0) 702 499419
Stefan.tilk@geveko.se

Göran Eklund, CFO
Tel: +46 (0) 31 172945, +46 (0) 727 325054
Goran.eklund@geveko.se

Address:
AB Geveko (publ)
Company registration number: 556024-6844
P.O. Box 2137
403 13 Göteborg, Sweden
Tel: +46 (0) 31 172945
Fax: +46 (0) 31 7118866
info@geveko.se

The information AB Geveko releases in this interim report is such that shall be published in accordance with the Act concerning the Securities Market and/or the Act concerning Trading in Financial Instruments. This information was released for publication on 23 February 2011 at 12.30 p.m.