Interim report January-June 2020

Second quarter

First six months of the year

Significant events in the second quarter

Financial summary
Amounts in SEK million, unless otherwise stated	Apr-Jun 2020	Apr-Jun 2019	Jan-Jun 2020	Jan-Jun 2019	full-year 2019
Net sales	105.3	91.2	211.2	176.1	370.6
Operating profit/loss (EBIT)	14.3	3.4	31.7	13.8	32.0
Operating margin, %	13.5	3.7	15.0	7.8	8.6
Net profit/loss for the period	9.9	1.1	22.8	8.5	20.8
Equity/assets ratio. %	35.4	29.9	35.4	29.9	33.5
Earnings per share after dilution, SEK	0.41	0.05	0.95	0.36	0.87

CEO's comments

We achieved an operating profit (EBIT) of SEK 14.3 million for the second quarter, and sales of SEK 105.3 million, giving an operating margin of 13.5 per cent.

Second quarter growth was 15.5 per cent up on last year and our operating profit was the strongest to date for a second quarter. Combined with the record-strong first quarter, this meant that we achieved growth of 20.0 per cent in the first half of the year and an operating profit of SEK 31.7 million, corresponding to an operating margin of 15 per cent.

Although the second quarter is usually our weakest seasonally, this year we succeeded well in all of our segments. We got off to an early start for the season with good utilisation of our machines in construction works in Sweden, while also maintaining stability in all of the other segments in terms of both sales and earnings, which is great.

With a strong first half of the year behind us and a stable order book, we are now looking forward to the upcoming jobs this autumn. Planning is now in progress for next year, with machines being booked up, and the order books for Construction Sweden, Transport Scandinavia, and the operations abroad are continuously being filled up. There is also a great interest in the products we offer through Machine Sales, particularly in our latest innovation, the emission-free battery-powered Multi-Purpose Vehicle (MPV).

In the segment Construction Sweden, we have been busy with our preparations, including cable lowering, ahead of upcoming track replacements. Among other things, we conducted works on the Borås – Varberg, Borås – Herrljunga, Bankeryd – Jönköping, Gävle– Ånge and Laxå–Kil lines.

Construction Sweden had a good utilisation of machines throughout the first half of the year, and the situation also looks good for the rest of the season. Under our framework agreement, we are currently coordinating our 2021 planning with Trafikverkert. We have good utilisation of machines in 2021, with many preparatory works needing to be performed. This represents exceptionally good planning for our construction operations in Sweden.

For the segment Transport Scandinavia, the second quarter was strong. Numerous orders have been received and production has progressed as planned. Looking ahead, our utilisation of machines will be good – partly in the Kaunis project, but also in all of the summer's continuing track replacements in which we are involved, as well as in the locomotive workshop. Compared with last year, we had lower repair and maintenance costs in the first half of the year.

In our regular transport operations, we received the following orders for locomotive services during the summer's various track replacements. Borås-Hillared, Gävle departure tracks, Avesta/Krylbo-Hedemora, Öxnered-Håkanstorp, Helsingborg-Teckomatorp, Bankeryd-Jönköping. The total value of the order is SEK 18 million and the work will be carried out between mid-July and early October.

On 12 June 2020, we began operating iron ore transports for LKAB Malmtrafik, in a threemonth project. Transports commenced with one circulation per day and subsequently increasing to two with a total of 6,400 tonnes of iron ore per day.

The iron ore transports for Kaunis Iron are progressing according to plan and we also performed some additional iron ore circulations during the quarter. This provides a good base and stability for the segment. The agreement with Kaunis Iron is for five years and we have now completed the second year of the agreement. The border between Sweden and Norway was open for iron ore transports to Narvik during the Norwegian lock-down

railcane

necessitated by COVID-19. Railcare's train drivers have been granted permission to be in Norway to be able to perform their jobs.

During the second quarter, we had stable levels of utilisation in the Construction Abroad segment, and sales and planning for the rest of 2020 and 2021 are in progress. With sales in full swing, new orders are continuously being received.

During the quarter, we conducted work for Network Rail in the following routes, London North West, London North East & Midlands and South East.

We have not suffered any project cancellations as a consequence of COVID-19. The railways perform a critical function that must continue to transport people and goods. In the UK, the railways have been listed as a critical function for society and projects there continued as planned despite the lock-down, with our operators being permitted to travel from their homes to the work sites.

In the second quarter, the Machine Sales segment focused fully on developing and completing the first prototype of our emission-free battery-powered Multi-Purpose Vehicle (MPV), Railcare's latest innovation. In other regards, aftermarket management is in progress, as are sales and marketing. Recently acquired company Elpro is delivering according to plan and, looking ahead, has good utilisation of machines.

Trafikverket has announced major future investments in railway maintenance, with a focus on planned maintenance, such as track replacements, switch replacements, and ballast exchanges, i.e. jobs entirely in line with what our fleet can offer. Trafikverket's national plan extends for ten years, with railway maintenance volumes increasing further in the future. On 19 May 2020, the Government decided to allocate an additional SEK 720 million to Trafikverket for its expanded maintenance work due to the COVID-19 pandemic'.

To date, the COVID-19 pandemic has not impacted Railcare with any projects being cancelled. In the various countries in which we work, the focus is on the railways being considered a critical function for the society that must continue to function in a crisis. Accordingly, we at Railcare continue working to maintain the railways in a robust state. During the second quarter, we also continued our internal charity project to support the community in fighting COVID-19 and assisting businesses and healthcare in the areas in which we operate. The project was highly appreciated by many and is now complete.

To continue developing the Company, we will be making new investments in machinery and new technologies where we seek to be at the forefront.

A record-strong first half of the year, with a stable order book looking ahead and high pressure on both sales and production. Our customers are presenting substantial plans to invest in the railways for many years to come and governments in various countries are currently investing additionally in railway maintenance to kick-start the economy following the pandemic, but also because railways play a critical function, bringing further increased focus on the railways.

With innovative solutions for the railways and with our staff as our primary resource, we are building the Railcare of the future.

Daniel Öholm CEO

¹ https://www.regeringen.se/pressmeddelanden/2020/05/storsatsning-pa-jarnvags-och-vagunderhall-i-hela-landet/

Financial summary – Railcare Group

Net sales

Operating expenses

Operating profit

Net profit/loss for the period

Cash flow

Cash flow from operating activities amounted to SEK 23.2 million (2.1). The increase is partly due to improved operating profit, and partly because the Company had a significantly greater negative net change in working capital last year.

Cash flow from investing activities amounted to an outflow of SEK 12.3 million (8.1) in the second quarter of 2020 and mainly involved the building of an MPV (Multi Purpose Vehicle) for the Company's own production purposes and investments in existing machinery. In the preceding year, investments were primarily made in existing machines.

Cash flow from financing activities amounted to an outflow of SEK 15.1 million (11.9). During the quarter, the Group raised a bank loan of SEK 5.7 million to finance ongoing investments in its machinery. Dividends amounting to SEK 7.2 million (0) were distributed to shareholders.

Cash flow in the first half of the year amounted to an outflow of SEK 12.9 million, compared with an outflow of SEK 10.4 million in the corresponding period in the preceding year.

Equity/assets ratio

According to Railcare's financial targets, the equity/assets ratio should amount to at least 25 per cent. The equity/assets ratio at the end of the period was 35.4 per cent, compared with 33.5 per cent on 31 December 2019.

Employees

The number of employees in Railcare as of 30 June 2020 was 140, compared with 132 on 30 June 2019. The increase is mainly attributable to the acquisition of Elpro i Skellefteå AB.

Financial summary – business segments

Construction Sweden

Amounts in SEK thousands, unless otherwise stated	Apr-Jun 2020	Apr-Jun 2019	Change, 00	Jan-Jun 2020	Jan-Jun 2019	Change, 00
Net sales	46,918	41,500	13.1	88,902	81,803	8.7
Profit/loss after financial items	2,652	2.689	-1.4	11,177	8,735	28.0
Net margin, %	5.7	6.5	-0.8	12.6	10.7	1.9

Construction Abroad

Amounts in SEK thousands, unless otherwise stated	Apr-Jun 2020	Apr-Jun 2019	Change, %	Jan-Jun 2020	Jan-Jun 2019	Change, %
Net sales	18,264	18,042	1.2	35.695	34.888	2.3
Profit/loss after financial items	1,717	532	222.7	2,554	1.339	90.7
Net margin, %	9.4	2.9	6.5	7.2	3.8	3.4

Transport Scandinavia

Net sales within the Transport Scandinavia segment increased by 16.6 per cent in the second quarter of 2020, compared with the corresponding quarter last year and amounted to SEK 45.8 million (39.3). Profit after financial items amounted to SEK 5.8 million (0.1). The higher sales were mainly attributable to the increased utilisation of machines in the locomotive workshop. All parts of the segment have contributed to the increased profit. Repair and maintenance costs were lower compared with the preceding year.

Net sales increased by 2.6 per cent over the first six months of the year, compared with the corresponding period in the preceding year and amounted to SEK 80.3 million (78.3). Profit after financial items increased compared with the preceding year and amounted to SEK 7.1 million (2.5).

Key financial ratios and figures - Transport Scandinavia

Amounts in SEK thousands, unless otherwise stated	Apr-Jun 20220	Apr-Jun 2019	Change, %	Jan-Jun 2020	Jan-Jun 2019	Change, %
Net sales	45,793	39,280	16.6	80,337	78,290	2.6
Profit/loss after financial items	5,808	50	11,516.4	7,057 /	2.472	185.5
Net margin, %	12.7	0.1	12.6	8.8	3.2	5.6

Machine Sales

in the Machine Sales segment, net sales for the second quarter of 2020 amounted to SEK 8.5 million (1.1). Profit after financial items amounted to SEK 3.0 million

(loss 0.4). Higher sales and profit were mainly attributable to aftermarket sales and the recent acquisition of electricity company Elpro in Skellefteå AB, which was part of the Group throughout the quarter.

The development and building of the innovative MPV (Multi-Purpose Vehicle) are in progress – an emissions-free battery-powered unit with several areas of application. The MPV is being reported under Construction in progress until ready for use.

During the first six months of the year, net sales amounted to SEK 35.0 million (2.3). Profit after financial items amounted to SEK 8.0 million (loss 0.7). During the first quarter, three generator wagons ordered by Infranord were delivered and recognised as income.

Key financial ratios and figures - Machine Sales

Amounts in SEK thousands, unless otherwise stated	Apr-Jun 20220	Apr-Jun 2019	Change, %	Jan-Jun 2020	Jan-Jun 2019	Change, %
Net sales	8,491	1.078	687.7	35,000	2,327	1,404.1
Profit/loss after financial items	2,955	-376	n/a	7.962	-716	n/a
Net margin, %	34.8	-34.9	69.7	22.7	-30.8	53.5

Parent Company

Financial targets

Dividend

Innovation & Design

Events after the period

Annual General Meeting 2020

Ten largest shareholders 30 June 2020	Number of shares	Proportion of share capital and votes (%)
Norra Västerbotten Fastighets AB	2,521,335	10.5
Marklund family* through companies	2,433,905	10.1
TREAC Aktiebolag	2,415,000	10.0
Dahlqvist family through companies	2,002,155	8.3
Ålandsbanken AB	1,168,337	4.8
Norrlandsfonden	1,111,111	4.6
BNY Mellon NA, W9	806,796	3.3
NTC IEDP AIF Clients S Non Treaty
30 % Account	716,538	3.0
Bernt Larsson	557,444	2.3
Avanza Pension insurance company	484,487	2.0
Ten largest shareholders	14,217,108	58.9
Other shareholders	9,907,059	41.1
Total	24,124,167	100.0

Significant risks and uncertainties

Transactions with related parties

Attestation by the Board of Directors and CEO

Catharina Elmsäter-Svärd Ulf Marklund Anna Weiner Jiffer Chairman of the Board Board member, Deputy CEO Board member

Adam Ådin Anders Westermark Björn Östlund Board member Board member Board member

CEO

Daniel Öholm

FINANCIAL REPORTS

CONSOLIDATED SUMMARY STATEMENT OF COMPREHENSIVE INCOME

Amounts in SEK thousands	Note	Apr-Jun 2020	Apr-Jun 2019	Jan-Jun 2020	Jan-Jun 2019	full-year 2019

Net sales	3	105,289	91,161	211,241	176,056	370,610
Capitalised work for own account		743	3,176	1,404	4,282	7,548
Other operating income		1,746	600	2,355	850	1,775
Total		107,778	94,937	215,000	181,188	379,933

Raw materials and consumables		-31,099	-34,494	-62,504	-58,292	-129,593
Other external costs		-15,252	-11,058	-30,552	-22,780	-47,142
Personnel costs		-33,164	-33,051	-62,910	-61,048	-120,357
Depreciation and impairment of tangible and intangible assets		-13,549	-12,553	-26,248	-24,536	-49,654
Other operating expenses		-461	-368	-1,098	-763	-1,210
Total operating expenses		-93,524	-91,524	-183,313	-167,419	-347,956

Operating profit/loss (EBIT)		14,254	3,413	31,688	13,769	31,977

Financial income			5		5	6
Financial expenses		-1,224	-1,453	-2,403	-2,941	-5,763
Net financial items		-1,224	-1,448	-2,403	-2,936	-5,757

Share of profit after tax from associated companies reported		34	52	88	112	284
according to the equity method
Profit/loss before tax		13,064	2,017	29,373	10,945	26,504

Income tax		-3,116	-899	-6,591	-2,424	-5,744
Net profit/loss for the period		9,948	1,118	22,782	8,521	20,760

Other comprehensive income:
Items that may be reclassified to the
profit/loss for the period
Exchange rate differences from the		-747	62	-36	407	355
translation of foreign operations
Other comprehensive income for the period, net after tax		-747	62	-36	407	355
Total comprehensive income for the period		9,201	1,180	22,746	8,928	21,115

Amounts in SEK	Apr-Jun 2020	Apr-Jun 2019	Jan-Jun 2020	Jan-Jun 2019	full-year 2019
Earnings per share before dilution*	0.41	0.05	0.95	0.37	0.90
Earnings per share after dilution*	0.41	0.05	0.95	0.36	0.87
Average number of shares	24,124,167	23,013,056	23.947,122	23,013,056	23,013,056
Number of shares outstanding on the balance sheet date	24,124,167	23,013,056	24,124,167	23,013,056	23,013,056

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION

Amounts in SEK thousands	30 Jun 2020 Note	30 Jun 2019	31 Dec 2019

ASSIBITS
Non-current assets

Intangible assets
Capitalised development costs	2,262	2,242	2,471
Patent	337	338	377
Goodwill	7,315	3,879	3,554
Transportation licence	479	615	547
Total intangible assets	10,392	7,074	6,949
Tangible assets 4
Buildings and land	35,087	27,221	30,790
Locomotives and wagons	136,343	127,608	129,169
Mobile machinery	159,573	155,049	165,405
Vehicles	7,276	8,635	7,604
Equipment, tools, fixtures and fittings	6,022	5,643	5,545
Construction in progress	46,804	48,287	31,912
Total tangible assets	391,105	372,443	370,425

Financial non-current assets
Holdings reported according to the equity method	573	514	686
Deposits	658	658	658
Deferred tax assets	107		97
Other non-current receivables	3,954	3,954	3,954
Total financial non-current assets	5,292	5,126	5,395

Total non-current assets	406,789	384,643	382,769

Current assets
Inventories
Raw materials and consumables	12,115	10,965	11,805
Work in progress	6,905	2,372	10,765
Total inventories	19,020	13,337	22,570

Current receivables
Accounts receivable	41,616	48,547	15,928
Current tax receivables		819	1,750
Other current receivables	1,795	5,166	6,775
Prepaid expenses and accrued income	13,332	8,116	7,362
Total current receivables	56,743	62,648	31,815

Cash and cash equivalents	9,270	13,784	22,012
Total current assets	85,033	89,769	76,397
TOTAL ASSETS	491,822	474,412	459,166

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION, cont.

Amounts in SEK thousands	30 Jun 2020	30 Jun 2019	31 Dec 2019

EQUITY
Share capital	9,891	9,435	9,435
Other capital provided	36,565	32,178	32,178
Reserves	1,633	1,721	1,669
Retained earnings (comprehensive income for the period included)	126,132	98,349	110,589
Total equity attributable to Parent Company shareholders	174,220	141,683	153,871
LIABILITIES
Non-current liabilities
Deferred tax liabilities	27,644	23,106	27,670
Convertible loans		4.673
Liabilities to credit institutions	106,747	118,135	106,979
Lease liability	40,885	25,295	24,712
Total non-current liabilities	175,277	171,209	159,361

Current liabilities
Lease liability	22,975	32,488	31,567
Liabilities to credit institutions	53,196	50,476	50,162
Convertible loans			4,782
Bank overdraft facility		2.953
Accounts payable	25,084	31,406	24,537
Prepayments from customers		9,218	4,162
Current tax liabilities	5,093	2,009	931
Other liabilities	5,831	7,147	4,475
Accrued expenses and deferred income	30,146	25,823	25,318
Total current liabilities	142,325	161,520	145,934
TOTAL EQUITY AND LIABILITIES	491,822	474,412	459,166

CONSOLIDATED SUMMARY STATEMENT OF CHANGES IN EQUITY

Amounts in SEK thousands	Share capital	Other capital provided	Reserves	Retained earnings (incl. comprehensive income for the period)	Total equity
Opening balance as per 1 January 2019	9,435	32,178	1,314	90,677	133,604
Adjustment on transition to IFRS 16				-849	-849
Net profit/loss for the period				8,521	8,521
Other comprehensive income			407		407
Total comprehensive income			407	8,521	8,928
Closing balance as per 30 June 2019	9,435	32,178	1,721	98,349	141,683

Opening balance as per 1 January 2020	9,435	32,178	1,669	110,589	153,870
Profit for the year				22,782	22,782
Other comprehensive income			-36		-36
Total comprehensive income			-36	22,782	22,746
Transactions with shareholders
Conversion of debenture	456	4,387			4,843
Dividend				-7,237	-7,237
Closing balance as per 30 June 2020	9,891	36,565	1,633	126,132	174,220

CONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS

Amounts in SEK thousands	Apr-Jun 2020 Note	Apr-Jun 2019	Jan-Jun 2020	Jan-Jun 2019	full-year 2019

Cash flow from operating activities
Operating profit/loss	14,254	3,413	31,688	13,769	31,977
Adjustment for	12,070	12,953	24,671	25.085	50,993
non-cash items
Interest paid	-1,206	-1,399	-2,367	-2,832	-5,544
Interest received		5		5	6
Income tax paid	-560	-631	-1,097	-1,221	-2,041
Cash flow from operating activities	24,558	14,341	52,895	34,806	75,391
before changes in working capital

Cash flow from changes in working
capital
Increase/decrease in inventories	364	-2,098	3,914	-3,011	-12,244
Increase/decrease in operating	-815	-21,987	-25,941	-26,898	5,017
receivables
Increase/decrease in operating liabilities	-922	11,859	353	18,931	3,798
Total changes in working capital
	-1,373	-12,226	-21,674	-10,978	-3,429
	23,185	2,115	31,221	23,828	71,962
Cash flow from operating activities

Cash flow from investment activities
Investments in intangible assets	-115	-87	-187	-89	-704
Investments in tangible assets	-14,400	-8,192	-24,657	-16,929	-27,732
Acquisitions of subsidiaries, net effect	5
on cash and cash equivalents			-2,617
Dividends from associated companies	200	193	200	193	193
Divestment of tangible assets	2,002		2,150		420
Cash flow from investment activities	-12,313	-8,086	-25,111	-16,825	-27,823


Cash flow from financing activities
Loans raised	5,700		16,020	6,030	6,030
Net change in bank overdraft facility		2,953		2,953
Amortisation of loans	-13,595	-14,805	-27,754	-26,367	-52,546
Dividends paid	-7,237		-7,237
Cash flow from financing activities	-15,132	-11,852	-18,971	-17,384	-46,516

Cash flow for the period	-4,260	-17,823	-12,861	-10,381	-2,377
Cash and cash equivalents at the
beginning of the period	13,727	31,807	22,012	24,081	24,081
Exchange rate difference in cash and
cash equivalents	-197	-200	119	84	308
Cash and cash equivalents at the end
of the period	9,270	13,784	9,270	13,784	22,012

PARENT COMPANY SUMMARY INCOME STATEMENT

	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	full-year
Amounts in SEK thousands Note	2020	2019	2020	2019	2019

Net sales	10,955	7,389	17,217	13,600	27,620
Other operating income	ব	9	60	29	44
Total operating income	10,959	7,398	17,276	13,629	27,664

Operating expenses
Raw materials and consumables	-3,213	-1,149	-3,299	-1,149	-2,748
Other external costs	-4,724	-3,824	-7,633	-7,441	-14,130
Personnel costs	-3,008	-3,267	-5,782	-6,041	-11,683
Depreciation and impairment of tangible and	-41	-45	-81	-95	-197
intangible assets
Other operating expenses	-22	-124	-31	-128	-77
Total operating expenses	-11,008	-8,409	-16,826	-14,854	-28,835

Profit from participations in associated companies	200	193	200	193	193
and jointly controlled companies
	151
Operating profit/loss		-818	650	-1,032	-978
Profit from financial items
Profit from participations in Group companies	4,346		4,346		4,296
Other interest income and similar profit/loss items		186	72	420	778
Interest expenses and similar profit/loss items	-5	-100	-41	-180	-392
Total profit/loss from financial items	4,341	86	4,377	240	4,682

Profit/loss after financial items	4,491	-732	5,027	-792	3,704

Appropriations					2,300
Tax on net profit/loss for the period	-214	193	-325	197	-384
Net profit/loss for the period	4,277	-539	4,702	-595	5,620

PARENT COMPANY SUMMARY BALANCE SHEET

ASSETS Intangible assets Patents 337 338 Total intangible assets 337 338 Tangible assets Buildings 2,945 Equipment, tools, fixtures and fittings 175 208 Total tangible assets 3,120 208 Financial non-current assets Participations in Group companies 34,236 38,336 Participations in associated companies 204 204 Deferred tax assets 491 Total financial non-current assets 38,540 34,931 41,997 Total non-current assets 35,477 34,985 Current assets Current receivables Receivables from Group companies 4,217 Current tax receivables 355 Other receivables 1 Prepaid expenses and accrued income 3,121 3,211 Total current receivables 3,211 7,694 Cash and bank balances 2 2,867	Amounts in SEK thousands Note	30 Jun 2020	30 Jun 2019	31 Dec 2019



				377
				377



				168
				168


				34,236
				204

				34,440





				23,348
				337
				183
				1,021
				24,889

				5,099
Total current assets
6,078 7,696				29,988
TOTAL ASSETS 48,075 43,173				64,973

PARENT COMPANY SUMMARY BALANCE SHEET, cont.

Amounts in SEK thousands Note	30 Jun 2020	30 Jun 2019	31 Dec 2019
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital	9,891	9,435	9,435
Total restricted equity	9,891	9,435	9,435
Non-restricted equity
Share premium reserve	23,024	18,638	18,638
Retained earnings	4,140	5,757	5,757
Net profit/loss for the period	4,702	-595	5,620
Total non-restricted equity	31,866	23,800	30,015
Total equity	41,757	33,235	39,450
Provisions
Deferred tax liabilities			47
Total provisions			47
Non-current liabilities
Convertible loans		4,673
Total non-current liabilities		4,673
Current liabilities
Convertible loans			4,782
Accounts payable	2.379	1,513	1,0005
Bank overdraft facility		638
Current tax liabilities	124
Liabilities to Group companies	389	326	16,911
Other liabilities	372	593	555
Accrued expenses and deferred income	3,054	2,195	2,223
Total current liabilities	6,318	5,265	25,476
TOTAL EQUITY AND LIABILITIES	48,075	43,173	64,973

NOTES

Note 1 General information

Railcare Group AB (publ) ("Railcare"), Reg. No. 556730-7813 is a Parent Company registered in Sweden and domiciled in Skellefteå, with the address Näsuddsvägen 10, SE-932 32 Skelleftehamn, Sweden.

Unless otherwise stated, all amounts are given in SEK thousands. Figures in parentheses refer to the corresponding period in the preceding year.

Note 2 Basis for preparation of statements

Railcare's consolidated accounts for have been prepared in accordance with the Annual Accounts Act, recommendation RFR 1 Supplementary Accounting Rules for Groups from the Swedish Financial Reporting Board, International Financial Reporting Standards (IFRS) and the interpretations of the IFRS Interpretations Committee (IFRS IC) as adopted by the EU. This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Annual Accounts Act.

The accounts of the Parent Company have been prepared in accordance with the Annual Accounts Act and RFR 2 Accounting for legal entities from the Swedish Financial Reporting Board, The interim report for the Parent Company has been prepared in accordance with the Annual Accounts Act.

The accounting principles applied are consistent with those described in the Railcare Group's 2019 Annual Report.

The fair value of financial assets and liabilities is estimated to correspond to book value.

Note 3 Segment information

Description of the segments and their principal activities:

Railcare's Group Management, comprising the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the IR and Communications Manager, is the highest executive decision-making body in the Railcare Group and assesses the Group's financial position and earnings and makes strategic decisions. Company management has determined the operating segments based on the data processed by Group Management and used as a basis for allocating resources and assessing earnings.

Group Management has identified four reportable segments in the Group's operations: