Railcare Group — Interim / Quarterly Report 2020

May 5, 2020

Interim report January-March 2020

First quarter

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Significant events in the first quarter

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r mancfal summal y
Amounts in SEK million, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	full-year 2019
Net sales	106.0	84.9	370.6
Operating profit/loss (EBIT)	17.4	10.4	32.0
Operating margin, %	16.5	12.2	8.6
Net profit/loss for the period	12.8	7.4	20.8
Equity/assets ratio, %	36.2	30.4	33.5
Earnings per share after dilution, SEK	0.54	0.31	0.87

CEO's comments

We achieved an operating profit (EBIT) of SEK 17.4 million for the first quarter, and sales of SEK 106 million, giving an operating margin of 16.5 per cent. This is the strongest first quarter we have experienced in Railcare's history. We grew by 25 per cent, with an operating profit that was up by SEK 7.0 million on the first quarter of 2019.

This 25 per cent growth and the strong earnings were mainly attributable to the Machine Sales segment's delivery of three generator wagons to a customer and our early start to the construction work season in Sweden. The Construction Abroad and Transport Scandinavia segments delivered as planned for the quarter.

To date, the COVID-19 pandemic has not impacted the company with any projects being cancelled. According to the information we are receiving from the various countries in which we operate is that the railway is considered a critical function in society that must continue to function in a crisis. Accordingly, we at Railcare continue working to maintain the railways in a robust state. Like many others in society, we have had to rearrange our plans, being innovative in our daily work, with regard to travel, meetings, etc., to be able to carry out the projects that we have booked in. Under the circumstances, this has progressed well, and we are following the recommendations of the authorities in the countries where we operate.

The Swedish government has decided to reduce employers' contributions for the period March to June 2020. Although Railcare is not dependent on reduced employers' contributions, we welcome them. Railcare will use these funds to provide targeted contributions or assistance to businesses and healthcare services in the areas where we operate. We are pursuing this initiative as an internal project to support society by fighting COVID-19 and providing assistance in various ways.

In the Construction Sweden segment, we were fully engaged with our snow removal undertaking for Trafikverket extending until 15 March. The season began early due to the weather being mild and it was possible for preparations for cable lowering to commence as early as 17 March, in advance of our six-track replacement sub-assignments from Trafikverket. Construction Sweden has a favourable level of utilisation until July 2020 and work is in progress with sales and booking utilisation of the machines for the autumn of 2020 and spring of 2021. This represents exceptionally good advance planning for our construction operations in Sweden.

The first quarter of 2020 progressed as planned for the Transport Scandinavia segment, with machines utilised in the Kaunis project and contract transports, as well as bookings for the locomotive workshop. The iron ore transports for Kaunis Iron are progressing according to plan and we also conducted 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 first year of the agreement. The border is open for iron ore transports to Narvik during the Norwegian lock-down resulting from COVID-19. Train drivers have been granted permission to be in Norway to be able to perform their jobs.

On 22 April, we operated our 1,000th ore train between Pitkäjärvi and Narvik and we have now transported approximately three million tonnes of iron ore with favourable quality and safety.

For the other transport operations, it was a normal quarter for the time of year, with Railcare providing contracted snow removal for Trafikverket, as well as various smallerscale projects.

railcane

During the first quarter, we received the following orders for locomotive services ahead of the summer's various track replacements. Borås – Hillared, Gävle departure tracks, Avesta/Krylbo-Hedemora, Öxnered-Håkanstorp, Helsingborg-Teckomatorp, Bankeryd-Jönköping. The total order value is SEK 18 million and the work will be carried out between mid-June and the end of October. During the quarter, Railcare also signed a three-year contract valued at about SEK 22 million with Trafikverket for removing rolling-stock in Borlänge. The agreement is for three years, with an option for two additional years, and will expire on 26 October 2020.

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

In the UK, the railways have been listed as a critical function in society and projects there continue as planned despite the lock-down and our operators are permitted to transport themselves from their homes to the work sites.

With travel currently being more difficult, we have secured operator resources in the UK to cope with the planned number of upcoming projects.

In the Machine Sales segment, we experienced increased growth and favourable earnings in the first quarter, with deliveries reaching the customer. The last three of Infranord's five generator wagons were finished and delivered to the customer in March and that project has now been completed.

We completed the renovation and refurbishment of a Railvac and delivered it to the customer, Norsk Jernbane Drift (NJD), in March and the focus is now on developing and finalising the first prototype of our emissions-free battery-powered Multi Purpose Vehicle (MPV), Railcare's latest innovation.

Trafikverket has announced major future investments in railway maintenance, with a focus on planned maintenance, such as track replacements, switch replacements, ballast exchange, that is, projects 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.

We have stable order bookings ahead with extensive construction bookings in Sweden and the UK, we have a good base with the iron ore transports for Kaunis and satisfyingly numerous orders on the transport side for Trafikverket's planned track replacements. We are also experiencing considerable interest from potential new customers, particularly in new markets for machine sales.

It has been a good start to the year for Railcare despite the fact that we, and the rest of the world, are battling the COVID-19 pandemic. The importance of the railways has been further strengthened with the need for robust transport for people and goods. I am very proud of all of my dedicated colleagues who are working to maintain the railways in good condition and the flexibility they have all shown given that we must perform our day-to-day tasks in new ways.

With innovative solutions for the railways and with our personnel being our principal resource, we are building the Railcare of the future.

Daniel Öholm CEO

Financial summary – Railcare Group

Net sales

Operating expenses

Operating profit

Net profit/loss for the period

Cash flow

Equity/assets ratio

Employees

Financial summary – business segments

Construction Sweden

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	Change, %
Net sales	41,984	40,303	4.2
Profit/loss after financial items	8,525	6,047	41.0
Net margin, %	20.3	15.0	5.3

Construction Abroad

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	Change, %
Net sales	17,431	16,846	3.5
Profit/loss after financial items	837	806	3.9
Net margin, %	4.8	4.8	0.0

Transport Scandinavia

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	Change, %
Net sales	34,545	39,010	-11.4
Profit/loss after financial items	1.248	2.422	-48.5
Net margin, %	3.6	6.2	-2.6

Machine Sales

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	Change, %
Net sales	26,508	1,249	2,022.4
Profit/loss after financial items	5,008	-340	1,572.8
Net margin, %	18.9	-27.2	46.1

Parent Company

Financial targets

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Dividend

Innovation & Design

Events after the period

Annual General Meeting 2020

Nomination Committee in preparation for Railcare Group AB's Annual General Meeting 2020

Shareholder structure

Ten largest shareholders 31 March 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	1,163,502	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	741,569	3.0
Bernt Larsson	557.444	2.3
Avanza Pension insurance company	514,301	2.1
Ten largest shareholders	14,267,118	59.0
Other shareholders	9,857,049	41.0
Total	24,124,167	100.0

4.410

Number of shareholders in Railcare Group AB as per 31 March 2020. Source: Euroclear

* No single individual holds shares corresponding to more than 10 per cent of the votes. Sources: Euroclear and Railcare

Significant risks and uncertainties

A description of significant risks and uncertainties available in Railcare's 2019 Annual Report, which be downloaded at www.railcare.se

There has been no material change in significant risks and uncertainties since the publication of the Annual Report.

Railcare is monitoring closely the developing events surrounding the coronavirus and COVID-19. The Group currently perceives no change in demand for its services and products, and expects no significant impact on the Group's operations, financial results or position. Railcare follows the recommendations of the Public Health Agency of Sweden and the Ministry for Foreign Affairs.

One of Railcare's home markets is the UK. The UK withdrew from the EU on 31 January. Railcare maintains its previous assessment that the UK's withdrawal from the EU, will affect the company's operations primarily because it will be more administratively burdensome to have foreign staff in the country and to import and export machines. In Railcare's assessment, demand for the Group's services will persist and, once new administrative routines are in place, the UK's exit from the EU will not have a significant impact on the Group's operations, earnings and financial position.

Transactions with related parties

During the year, no significant changes have occurred, for the Group or the Parent Company, in their relations or transactions with related parties, compared with what is described in the 2019 Annual Report.

Skelleftehamn, 5 May 2020 Railcare Group AB (publ) Board of Directors

This report has not been subject to review by the Company's auditors.

FINANCIAL REPORTS

CONSOLIDATED SUMMARY STATEMENT OF COMPREHENSIVE INCOME

		Jan-Mar	Jan-Mar	full-year
Amounts in SEK thousands Note		2020	2019	2019
Net sales
Capitalised work for own account	3	105,952 661	84,895	370,610
Other operating income			1,106	7,548
Total		609	250	1,775
		107,222	86,251	379,933
Raw materials and consumables		-31,405	-23.798	-129,593
Other external costs		-15,300	-11,722	-47,142
Personnel costs		-29,746	-27,997	-120,357
Depreciation and impairment of tangible and intangible assets		-12,699	-11,983	-49,654
Other operating expenses		-638	-395	-1,210
Total operating expenses		-89,788	-75,895	-347,956
Operating profit/loss (EBIT)		17,434	10,356	31,977
Financial income		1		6
Financial expenses		-1,180	-1,488	-5,763
Net financial items		-1,179	-1,488	-5,757
Share of profit after tax from
associated companies reported		54	60	284
according to the equity method
Profit/loss before tax		16,309	8,928	26,504
Income tax		-3,475	-1,525	-5,744
Net profit/loss for the period		12,834	7,403	20,760
Other comprehensive income:
Items that may be reclassified to the
profit/loss for the period
Exchange rate differences from the		711	345	355
translation of foreign operations
Other comprehensive income for the period, net after tax		711	345	355
Total comprehensive income for the		13,545	7,748	21,115
period

	Jan-Mar	Jan-Mar	full-year
Amounts in SEK	2020	2019	2019
Earnings per share before dilution*	0.54	0.32	0.90
Earnings per share after dilution*	0.54	0.31	0.87
Average number of shares	23,770,077	23,013,056	23,013,056
Number of shares outstanding on the balance sheet date	24,124,167	23,013,056	23,013,056

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION

Amounts in SEK thousands	Note	31 Mar 2020	31 Mar 2019	31 Dec 2019
ASSIBITS
Non-current assets
Intangible assets
Capitalised development costs		2,358	2,328	2,471
Patent		357	473	377
Goodwill		7,371	3,840	3,554
Transportation licence		513	650	547
Total intangible assets		10,599	7,291	6,949
Tangible assets	4
Buildings and land		30,332	21,062	30,790
Locomotives and wagons		122,905	132,832	129,169
Mobile machinery		162,848	158,190	165,405
Vehicles		7,802	9,083	7,604
Equipment, tools, fixtures and fittings		5,478	5,479	5,545
Construction in progress		40,597	40,451	31,912
Total tangible assets		369,963	367,097	370,425
Financial non-current assets
Holdings reported according to the equity method		739	655	686
Deposits Deferred tax assets		658 115	658	658 97
Other non-current receivables			3,954
Total financial non-current assets		3,954 5,467		3,954 5,395
			5,267
Total non-current assets		386,029	379,655	382,769
Current assets
Inventories
Raw materials and consumables		12,069	11,239	11,805
Work in progress		7,315		10,765
Total inventories		19,384	11,239	22,570
Current receivables
Accounts receivable		46,379	27,154	15,928
Current tax receivables		115		1,750
Other current receivables		3,331	6,830	6,775
Prepaid expenses and accrued income		7,019	5,919	7,362
Total current receivables		56,844	39,903	31,815
Cash and cash equivalents		13,727	31,807	22,012
Total current assets		89,954	82,949	76,397
TOTAL ASSETS		475,983	462,604	459,166

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION, cont.

Amounts in SEK thousands Note	31 Mar 2020	31 Mar 2019	31 Dec 2019
EQUITY
Share capital	9,891	9,435	9,435
Other capital provided	36,565	32,178	32,178
Reserves	2,380	1,659	1,669
Retained earnings (comprehensive income for the	123,421	97,231	110,589
period included)
Total equity attributable to Parent Company	172,257	140,503	153,871
shareholders
LIABILITIES
Non-current liabilities
Deferred tax liabilities
Convertible loans	27,692	23,236	27,670
Liabilities to credit institutions		4,618
	109,408	124,160	106,979
Lease liability	23,218	30,679	24,712
Total non-current liabilities	160,318	182,693	159,361
Current liabilities
Lease liability	27,298	24,852	31,567
Liabilities to credit institutions	50,777	51,864	50,162
Convertible loans			4,782
Accounts payable	26,181	25,498	24,537
Prepayments from customers	2,949	4,609	4,162
Current tax liabilities	2,717	764	931
Other liabilities	6,288	6,146	4,475
Accrued expenses and deferred income	27,200	25,675	25,318
Total current liabilities	143,408	139,408	145,934
TOTAL EQUITY AND LIABILITIES	475,983	462,604	459,166

CONSOLIDATED SUMMARY STATEMENT OF CHANGES IN EQUITY

Amounts in SEK thousands	Note	Share capital	Other capital provided	Reserves	Retained earnings (comprehensive income for the period included)	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					7,403	7,403
Other comprehensive income				345		345
Total comprehensive income				345	7,403	7,748
Closing balance as per 31 March 2019		9,435	32,178	1,659	97,231	140,503
Opening balance as per 1 January 2020		9,435	32,178	1,669	110,589	153,870
Profit for the year					12,834	12,834
Other comprehensive income				711		711
Total comprehensive income				711	12,834	13,545
Transactions with shareholders
Conversion of debenture		456	4,387			4,843
Closing balance as per 31 March 2020		9,891	36,565	2,380	123,421	172,257

CONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS

	Jan-Mar	Jan-Mar	full-year
Amounts in SEK thousands Note	2020	2019	2019
Cash flow from operating activities
Operating profit/loss	17,434	10,356	31,977
Adjustment for
non-cash items	12,601	12,132	50,993
Interest paid	-1,162	-1,433	-5,544
Interest received	1		6
Income tax paid	-537	-590	-2,041
Cash flow from operating activities	28,337	20,465	75,391
before changes in working capital
Cash flow from changes in working
capital
Increase/decrease in inventories	3,550	-913	-12,244
Increase/decrease in operating receivables	-25,126	-4,911	5,017
Increase/decrease in operating
liabilities	1,275	7,072	3,798
Total changes in working capital	-20,301	1,248	-3,429
Cash flow from operating activities	8,036	21,713	71,962
Cash flow from investment activities
Investments in intangible assets	-72	-2
Investments in tangible assets	-10,257	-8,737	-704 -27,732
Acquisitions of subsidiaries, net effect
5 on cash and cash equivalents	-2,617
Dividends from associated companies			193
Divestment of tangible assets	148		420
	-12,798	-8,739	-27,823
Cash flow from investment activities
Cash flow from financing activities
Loans raised	10,320	6,030	6,030
Amortisation of loans and lease	-14,159	-11,562	-52,546
liability
Cash flow from financing activities	-3,839	-5,532	-46,516
Cash flow for the period	-8,601	7,442	-2,377
Cash and cash equivalents at the
beginning of the period	22,012	24,081	24,081
Exchange rate difference in cash and
cash equivalents	316	284	308
Cash and cash equivalents at the end
of the period	13,727	31,807	22,012

PARENT COMPANY SUMMARY INCOME STATEMENT

	Not	Jan-Mar	Jan-Mar	full-year
Amounts in SEK thousands	e	2020	2019	2019
Net sales		6,262	6,211	27,620
Other operating income		56	20	44
Total operating income		6,317	6,231	27,664
Operating expenses
Raw materials and consumables		-86		-2,748
Other external costs		-2.909	-3,617	-14,130
Personnel costs		-2,774	-2,774	-11,683
Depreciation and impairment of tangible and		-40	-50	-197
intangible assets
Other operating expenses		-8	-4	-77
Total operating expenses		-5,818	-6,445	-28,835
Profit from participations in associated companies and jointly controlled companies				193
Operating loss		500	-214	-978
Profit from financial items
Profit from participations in Group companies				4,296
Other interest income and similar profit/loss items		72	234	778
Interest expenses and similar profit/loss items		-36	-80	-392
Total profit/loss from financial items		36	154	4,682
Profit/loss after financial items		536	-60	3,704
Appropriations				2,300
Tax on net profit/loss for the period		-11	4	-384
Net profit/loss for the period		425	-56	5,620

PARENT COMPANY SUMMARY BALANCE SHEET

Amounts in SEK thousands	Note	31 Mar 2020	31 Mar 2019	31 Dec 2019
ASSETS
Intangible assets Patents		357	472	377
Total intangible assets		357	472	377
Tangible assets
Buildings		1,103
Equipment, tools, fixtures and fittings		196	229	168
Total tangible assets		1,299	229	168
Financial non-current assets
Participations in Group companies		38,336	34,236	34,236
Participations in associated companies		204	204	204
Deferred tax assets			298
Total financial non-current assets		38,540	34,738	34,440
Total non-current assets		40,196	35,439	34,985
Current assets
Current receivables
Receivables from Group companies		191	29,353	23,348
Current tax receivables			252	337
Other receivables				183
Prepaid expenses and accrued income		1,140	998	1,021
Total current receivables		1,331	30,603	24,889
Cash and bank balances		7,270	515	5,099
Total current assets		8,601	31,118	29,988
TOTAL ASSETS		48,796	66,557	64,973

PARENT COMPANY SUMMARY BALANCE SHEET, cont.

Amounts in SEK thousands	Note	31 Mar 2020	31 Mar 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		11,377	5,757	5,757
Net profit/loss for the period		425	-56	5,620
Total non-restricted equity		34,826	24,339	30,015
Total equity		44,717	33,774	39,450
Provisions
Deferred tax liabilities				47
Total provisions				47
Non-current liabilities
Convertible loans			4,618
Total non-current liabilities			4,618
Current liabilities
Convertible loans				4,782
Accounts payable		1,062	655	1,0005
Current tax liabilities		13
Liabilities to Group companies		395	24.485	16,911
Other liabilities		340	645	555
Accrued expenses and deferred income		2,269	2,380	2,223
Total current liabilities		4,079	28,165	25,476
TOTAL EQUITY AND LIABILITIES		48,796	66,557	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:

Construction Sweden

Railway construction work involving machinery and personnel and renovation of glass-fibre lined culverts beneath railways, roads and industrial areas in Sweden.

Construction Abroad

Railway construction work involving machinery and personnel in countries other than Sweden, currently predominantly in the UK.

Transport Scandinavia

Special transports involving locomotives, wagons and personnel, as well as repair and upgrading services for locomotives and wagons performed in workshops.

Machine Sales

Sales of machines primarily outside Sweden, as well as marketing focused on new areas in which Railcare's construction services can be implemented.

The Group common item is used for reconciliation purposes and includes Group Management and other Group common services.

Although the Machine Sales segment does not meet the limits required for segments for which information is to be disclosed in accordance with IFRS 8, company management has determined that this segment should nonetheless be reported as it is monitored closely by Group Management as a possible area of growth and is expected to contribute significantly to consolidate income in the future.

Group Management primarily uses profit after financial items in assessing consolidated earnings.

Income

Sales between segments are conducted on market terms. Income from external customers reported to Group Management is valued in the same way as in the Consolidated statement of comprehensive income.

		Jan-Mar 2020		Jan-Mar 2019
	Segment income	between segments	Sales Income from external customers	Segment income	hetween segments	Sales Income from external customers
Construction Sweden	41,984	3,126	38,858	40,303	3.113	37,189
Construction Abroad	17,431	2,116	15,315	16,846	2,459	14,388
Transport Scandinavia	34,545	6,577	27,968	39,010	6,661	32,349
Machine Sales	26,508	3,058	23,451	1,249	675	574
Group common	6,194	5,834	360	6,213	5,818	395
Total	126,662	20,710	105,952	103,621	18,726	84,895

Profit/loss after financial items

	Jan-Mar	Jan-Mar
	2020	2019
Construction Sweden	8,525	6,047
Construction Abroad	837	806
Transport Scandinavia	1.248	2,422
Machine Sales	5.008	-340
Group common	637	-67
Total	16,255	8,868
Profit/loss after financial items	16,255	8,868
Share of profit after tax from associated
companies reported according to the equity method	54	60
Profit/loss before tax	16,309	8.928

The Group's customers are both private and public players in the railway industry and vary according to area of operations. The Group's customers are largely recurring, and its customer relationships are long term.

Sales comprise the income categories Income from services, Sales of goods and Leasing, and a breakdown of income is provided below.

	Income from services		Sales of goods		Leasing		Total
	Jan-Mar		Jan-Mar Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar	Jan-Mar Jan-Mar
Segment	2020	2019	2020	2019	2020	2019	2020	2019
Construction Sweden	38.858	37,189					38.858	37.189
Construction Abroad	15.243	14.388			73		15,315	14,388
Transport Scandinavia	23,041	25,677	1,274	2.880	3,653	3,792	27,968	32,349
Machine Sales	3.358		20,093	574			23,451	574
Group common	360	395					360	395
Total	80,860	77.649	21,367	3,454	3,725	3,792	105,952	84,895

railcane

Note 4 Non-current assets

		BuildingsLocomotives and land and wagonsmachinery Vehicles	Mobile		Equipment, tools, fixtures Construction in and fittings	progress	Total
Closing balance as per 31 December 2019	30,790	129,169	165,405	7,604	5,545	31,912	370,425
Of which, right-of-use assets	24,482	129,169	165,405	7,604	5,545		332,205
31 March 2019
Opening balance as per 1 January 2019	5,534	111,773	161,517	10.299	5,385	31,586	326,094
Adjustment on transition to IFRS 16	15,946	27,223			66		43,235
Exchange rate differences		58	68		35		161
Purchases/activated expenses for the
year	1,149	116			239	8,865	10,369
Reclassifications			209	-209
Disposals and scrappings			-514	-408			-922
Depreciation	-1,567	-6,338	-3,089	-598	-246		-11,838
Closing balance as per 31 March 2019	21,062	132,832	158,190	9,083	5,479	40,451	367,097
Of which, right-of-use assets	15.577	31,924	2,823	8,913	50		59,287
31 March 2020
Opening balance as per 1 January 2020	30.790	129,169	165,405	7,604	5,545	31,912	370,425
Exchange rate differences	21	183	234	2	73		512
Purchases/activated expenses for the
vear	1,464			2.039	159	9.105	12,767
Reclassifications			510			-420	90
Disposals and scrappings			2	-1,321	-50		-1,369
Depreciation	-1,943	-6,446	-3,303	-520	-248		-12,462
Closing balance as per 31 March 2020	30,332	122,905	162,848	7,802	5,478	40,597	369,963
Of which, right-of-use assets	22,970	21,655	2,386	7,737	92		54,839

Note 5 Business combinations

Railcare Group AB has acquired 100 per cent of the shares in Elpro i Skellefteå AB, control of the acquired company being transferred on 3 February 2020. Elpro is an electricity company employing five electricians who are also skilled in circuit design. Elpro offers services including electrical maintenance and installation for companies, design and installation of machines, as well as programming of new or rebuilt machines. The company's customers are private individuals, property owners, companies and industries.

The goodwill arising from the acquisition is attributable to Elpro's future profitability and the synergies expected from merging Elpro's operations with those of the Group. The goodwill arising from the acquisition is not expected to be tax deductible.

Amounts in SEK thousands
Purchase consideration on date of acquisition, 3 February 2020
Cash and cash equivalents	4,100
Total purchase consideration	4,100
Carrying amounts of identifiable acquired assets and liabilities in Elpro i Skellefteå AB as of the date of acquisition:
Cash and cash equivalents	1,483
Tangible assets	53
Rights-of-use assets in lease agreements (vehicles)	143
Inventories	364
Accounts receivable and other receivables	1,582
Lease liabilities	-104
Accounts payable and other liabilities	-3,175
Total identifiable net assets	346
Goodwill	3,754
Impact on cash flow:
Amounts in SEK thousands
Cash outflow for acquiring subsidiaries, cash	-4,100
purchase consideration
Less acquired cash balances	1,483
Net outflow of cash and cash equivalents -	9 617

investment activities

-2,617

KEY FINANCIAL RATIOS AND FIGURES, RAILCARE GROUP SUMMARY

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2020	Jan-Mar 2019	full-year 2019
Net sales	105,952	84,895	370,610
Sales growth, %	24.8	27.7	37.2
Operating profit/loss (EBIT)	17,434	10,356	31,977
Operating margin, %	16.5	12.2	8.6
Net profit/loss for the period	12,834	7,403	20,760
Net financial items	-1,179	-1,488	-5,757
Total assets	475,983	462,604	459,166
Equity/assets ratio, %	36.2	30.4	33.5
Key financial ratios and figures per share, SEK
Earnings per share before dilution	0.54	0.32	0.90
Earnings per share after dilution	0.54	0.31	0.87
Equity per share	7.14	6.11	6.69
Dividend per share, SEK

QUARTERLY DATA , RAILCARE GROUP SUMMARY

	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Amounts in SEK million	2020	2019	2019	2019	2019	2018	2018	2018	2018
Net sales	106.0	93.5	101.0	91.2	84.9	78.7	62.3	62.7	66.5
Capitalised work for own account	0.7	1.0	2.3	3.2	1.1	1.2	1.8	2.1	0.3
Other operating income	0.6	0.8	0.1	0.6	0.3	0.2	0.1	0.3	0.6
Total	107.2	95.3	103.5	94.9	86.3	80.1	64.1	65.1	67.5
Raw materials and consumables	-31.4	-37.6	-33.7	-34.5	-23.8	-22.7	-16.7	-15.2	-16.0
Other external costs	-15.3	-12.2	-12.2	-11.1	-11.7	-19.7	-18.9	-16.7	-16.0
Personnel costs	-29.7	-31.2	-28.1	-33.1	-28.0	-29.2	-26.9	-28.0	-24.3
Depreciation and impairment of tangible assets	-12.7	-12.7	-12.5	-12.6	-12.0	-6.1	-6.0	-6.0	-6.0
Other operating expenses	-0.6	-0.3	-0.2	-0.4	-0.4	-0.3	-0.2	-0.3	-0.2
Total operating expenses	-89.8	-93.8	-86.7	-91.5	-75.9	-77.9	-68.7	-66.1	-62.5
Operating profit/loss (EBIT)	17.4	1.5	16.8	3.4	10.4	2.2	-4.6	-1.0	5.0
Financial income	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Financial expenses	-1.2	-1.4	-1.5	-1.5	-1.5	-1.4	-1.3	-1.4	-1.4
Net financial items	-1.2	-1.4	-1.5	-1.5	-1.5	-1.4	-1.3	-1.4	-1.3
Share of profit after tax from
associated companies reported	0.1	0.1	0.1	0.1	0.1	0.1	0.0	0.0	0.1
according to the equity method
Profit/loss before tax	16.3	0.2	15.4	2.0	8.9	0.9	-5.9	-2.4	3.7
Taxes	-3.5	0.0	-3.3	-0.9	-1.5	-0.6	1.2	2.2	-0.7
Net profit/loss for the period	12.8	0.2	12.0	1.1	7.4	0.3	-4.7	-0.2	3.1
Equity/assets ratio, %	36.2	33.5	33.4	29.9	30.4	32.3	31.6	32.4	33.1

DEFINITIONS

General	All amounts in tables are in SEK thousands unless otherwise stated. All values in parentheses are comparative figures for the corresponding period in the preceding year unless otherwise stated. Amounts in tables and other summaries have been rounded off individually. Accordingly, minor rounding differences can be found in totals.
Alternative key financial ratios	This interim report refers to a number of financial measures not defined in accordance with IFRS,
and figures
	so-called alternative key financial ratios and figures. These key financial ratios and figures are used
	by Railcare to monitor and analyse the financial outcome of the Group's operations and its financial
	position. These alternative key financial ratios and figures are intended to supplement, not replace,
	the financial measures presented in accordance with IFRS. See definitions and further information
	below.
Key financial ratios and figures	Definition/calculation	Purpose
Operating profit/loss (EBIT)	Calculated as net profit/loss for the	This key financial ratio shows the Company's
	period before tax, participations in the	profit/loss generated by operating activities.
	earnings of associated companies and
	financial items.
Net financial items	Net financial items are calculated as	This key financial figure shows the net amount
	financial income less financial	resulting from the Company's financial
	expenses.	activities.
Net margin	The net margin is calculated as income	This key financial figure shows how much of the
	after financial items divided by net sales.	Company's earnings remain after all of its expenses,
		except for corporation tax, have been deducted.
Total assets	Calculated as the total of the Company's
	assets at the end of the period.
Equity per share, SEK	Calculated as equity divided by the	This key financial figure shows the Company's net
	number of shares outstanding at the end	worth per share.
	of the period.
Sales growth, %	Calculated as the difference between net	This key financial figure shows the Company's growth
	sales for the period and net sales for the	and its historical trend, contributing to an
	preceding period, divided by net sales for	understanding of the Company's development.
	the preceding period.
Operating margin, %	Calculated as operating income divided	This key financial figure shows how much of the
	by net sales.	Company's profit/loss is generated by its operating
		activities.
Equity/assets ratio, %	Calculated as equity divided by total	This key financial ratio shows the Company's financial
	assets.	position and its long-term ability to pay.
Dividend per share, SEK	Dividend per share approved by a General
	Meeting at which the Annual Report for
	the specified financial year is adopted.
Earnings per share before dilution,	Calculated as profit/loss attributable to	This key financial figure shows the Company's
SEK	the Parent Company's shareholders	earnings per share, regardless of any dilution effect
	divided by the weighted average number	from convertibles outstanding.
	of shares outstanding over the period.
Earnings per share after dilution,	To calculate earnings per share after	This key financial figure shows the Company's
SEK	dilution, the weighted average number of	earnings per share, regardless of any dilution effect
	shares outstanding is adjusted for the	from convertibles outstanding.
	dilution effect of all potential shares. The
	Parent Company has a category of
	potential common shares with a dilution
	effect: convertible debentures. The
	convertible debentures are assumed to
	have been converted into shares and the
	net profit is adjusted to eliminate interest
	expenses less the tax effect. Convertible
	debentures do not give rise to a dilution
	effect when the interest per share that
	may be received on conversion exceeds
	earnings per share before dilution.

GLOSSARY

CP6

Control Period 6. The UK government has earmarked funds of approximately GBP 47.9 billion for the railways between 2019 and 2024.

MPV

Multi-Purpose Vehicle – a versatile working vehicle in rail maintenance. During 2019 and 2020, Railcare will develop a battery-powered version of an MPV.

National Plan

On 31 May 2018, the Swedish government adopted a national plan for the transport system for the period 2018–2029. The plan includes measures, representing an important step towards a modern and sustainable transport system.

Railvac

Maintenance contracts with Railvac 16,000-machines that are able to perform various types of track maintenance on the railways using vacuum technology.

Press releases in the first quarter of 2020

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Financial calendar

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About Railcare Group

RAILCARE GROUP AB (publ)

Railvac in 3D

For further information, please contact:

Daniel Öholm, CEO Telephone: +46 (0)70-528 01 83 E-mail: daniel.oholm@railcare.se

Sofie Dåversjö, IR and Communications Manager Telephone: +46 (0)72-528 00 09 E-mail: sofie.daversjo@railcare.se

This information is such that Railcare Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, for publication on 5 May 2020 at 7:30 a.m. CEST.

This document is essentially a translation of Swedish language original thereof. In the event of any discrepancies between this translation and the original Swedish document

the latter shall be deemed correct.