Interim report January-March 2021

First quarter

Significant events in the first quarter

•

Significant events after the period

•

Jan-Mar 2021	Jan-Mar 2020	full-year 2020
88.9	106.0	401.3
8.7	17.4	60.4
9.8	16.5	15.0
6.2	12.8	43.8
39.5	36.2	37.4
0.26	0.54	1.82

CEO's comments

During the first quarter of 2021, we had an operating profit (EBIT) of SEK 8.7 million and a sales turnover of SEK 89 million, which gives an operating margin of 9.8 per cent. It was a stable quarter where the segments delivered according to plan. In comparison with the first quarter of the previous vear. we have a 16 per cent lower volume and lower operating profit. In the same quarter last year, we had deliveries of machines in the Machine Sales segment and this year we had a somewhat later start on the construction side in Sweden. This, however, is offset by better results in the Construction Abroad and Transport Scandinavia segments.

We have had a good and stable start to 2021, long-term agreements, and many contracts have been signed, in all segments for 2021. We have signed agreements for the delivery of machine parts to Loram in North America and agreements for this year's track replacements both in terms of transport and construction operations.

It is a continuing unusual situation in which the world finds itself, where a third wave of the pandemic and new variants of the virus is spreading in Sweden and large parts of the world. New restrictions are being applied in many countries, however, the vaccination now underway means we can begin to see the light at the end of the tunnel to return to normal. In the UK, 35 million people have currently been vaccinated and it is estimated that the country will ease most restrictions on 21 June. The railway industry has so far not been financially affected by the pandemic, but the railway is a critical societal function where we who work in the industry have been extra flexible to find new solutions in the way we work.

On 16 April, the infrastructure budget was announced by the Swedish government. The plan covers the years 2022-2033 and the total framework amounts to SEK 876 billion! It is the largest financial framework ever for the transport infrastructure. It is very pleasing for us companies in the railway industry and gives us a real boost for a long time to come.

On the Construction side, we have during the first quarter been busy with the snow removal for the contract we have with Trafikverket, which for the season applied until 15 March. A new contract with Trafikverket has been signed for snow removal for the coming years. The agreement is for two years with the possibility of an extension for a further three years. The agreement applied from 15 November 2020 and the contract amount is SEK 40.2 million per year. The number of machine units in the agreement is the same as in the previous contract.

This year we started the summer's construction work in early April, which is two weeks later than last year which was then extremely early. From April onwards, we worked with cable management before the track replacements. The first section was Laxâ–Kil, Sweden, then follows several track replacements around the country.

Planning is currently underway for the utilisation of the machines for the work to be carried out in 2021 within the framework agreement we have with Trafikverket. The utilisation rate for 2021 is good as there is a lot of preparatory work to be carried out. It is unusually good foresight for our business on the construction side in Sweden.

The first quarter of the year was strong for the Transport Scandinavia segment with a growth of 26 per cent compared with the first quarter of the previous year and with an operating profit of SEK 3.6 million. During the quarter, we were busy transporting iron ore for both Kaunis Iron and LKAB, also five locomotives and ten locomotive drivers were involved in the snow removal project for Trafikverket until 15 March.

Sales of our transport services are now in full swing and ahead of the planned track replacement projects in 2021. Many contracts have been signed for the summer, for example, transport of macadam to NRC with an order value of SEK 3 million, a locomotive for the track replacements for Leonhard Weiss with an order value of SEK 28 million, a locomotive for track replacements for Infrakraft with an order value of SEK 7 million and more. During the quarter, we also

¹ https://www.regeringen.se/pressmeddelanden/2021/04/storsta-ekonomiska-ramen-nagonsinfor-transportinfrastrukturatgarder/

Railcare Group AB (publ) | Reg. No. 556730-7813 Page 2 of 27

transported iron ore for Kaunis Iron and the transports went according to plan between Pitkäjärvi, Sweden, and Narvik, Norway. On 12 June 2020, we started transporting ore for LKAB Malmtrafik. The project has been extended until 31 August 2021. We transport one round per day with a total of 3200 tonnes of ore between Svappavaara and Kiruna, Sweden.

The Construction Abroad segment had approximately the same utilisation during the first quarter as the first quarter of the previous year, but with a better result than before. This is because we have made cost savings and found new ways of working. Sales and planning are progressing for 2021 and new orders are coming in continuously. During the quarter, work was carried out for Network Rail on all geographical routes.

In Denmark, the machine rental of locomotives and the Railvac are continuing as normal. The locomotive is rented to Contec and the Danish Railvac has been rented to Sweden during the quarter.

The Machine sales segment during the quarter continued with the construction of a Ballast Feeder that will be used in our own business for hire in Sweden or abroad. Construction of the machine parts to be delivered to Loram is also underway, as well as the fine-tuning of the first prototype of the MPV. The MPV will be tested in the workshop area in Skelleftehamn, Sweden, and will then begin working during the first half of 2021.

We have received an order from Loram worth SEK 18 million for machine parts, namely power packs, of which two machine parts will be delivered to North America during the second quarter of 2021 along with an order to be delivered to Brazil with delivery during the fourth quarter of 2021. Furthermore, the managing of after-sales service is ongoing, primarily for Loram, as well as sales and marketing around the world.

We have had a good start to 2021, there are many orders in the order portfolio going forward, both for 2021, and for the long-term contracts, we have signed in many of our companies. In Sweden, the government has introduced historically high investments in railways and infrastructure for a long time to come. In many countries, major maintenance efforts are required on the railway and there is a great interest in our innovative solutions, not least for our latest innovation the battery vehicle for machines on the railway. We can see a light at the end of the tunnel with the vaccination continuing so that we can return to a more normal situation. Our growth and expansion journey for the company continues.

With innovative solutions for the railway and with our staff as our primary 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

The segments' net sales also include internal sales between the segments. See Note 3 for sales between segments.

Construction Sweden

Net sales in Segment Construction Sweden in the first quarter of 2021 amounted to SEK 31.0 million (42.0), which is a decrease of 26.2 per cent compared with the corresponding period last year.

Profit after financial items decreased compared with the preceding year and amounted to SEK 1.5 million (8.5).

Under the new agreement with the Swedish Transport Administration, snow removal contracting continued until 15 March. This summer's contracting work began in early April, two weeks later than last year's early start.

In the lining operations, the utilisation of machines was low, as is normal for the season.

Key financial ratios and figures - Construction Sweden

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2021	Jan-Mar 2020	Change, 00
Net sales	30.970	41.984	-26.2
Profit/loss after financial items	1.485	8.525	-82.6
Net margin, %	4.8	20.3	-15.5

Construction Abroad

Net sales in Segment Construction Abroad increased by 7.1 per cent in the first quarter of 2021, compared with the corresponding quarter in the preceding year and amounted to SEK 18.7 million (17.4).

Profit after financial items improved to SEK 4.1 million (0.8).

During the quarter, the utilisation of machines in the segment was on a par with last year. Cost savings and improved working methods explain the improvement in profit.

Key financial ratios and figures – Construction Abroad

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2021	Jan-Mar 2020	Change, 00
Net sales	18.666	17.431	7.1
Profit/loss after financial items	4.141	837	394.6
Net margin, %	22.2	4.8	17.4

Transport Scandinavia

Net sales within Segment Transport Scandinavia increased by 39.9 per cent in the first quarter of 2021, compared with the corresponding quarter in the preceding year and amounted to SEK 48.3 million (34.5).

Profit after financial items improved to SEK 3.6 million (1.2).

The improvement in growth and earnings is mainly explained by transports for LKAB that were not performed in the corresponding quarter last year. The agreement with LKAB has been extended until the end of August 2021.

Iron ore transports for Kaunis Iron have continued according to plan.

Key financial ratios and figures - Transport Scandinavia

Amounts in SEK thousands, unless otherwise stated	Jan-Mar 2021	Jan-Mar 2020	Change, 00
Net sales	48,322	34.545	39.9
Profit/loss after financial items	3.647	1.248	192.1
Net margin, %	7.5	3.6	3.9

Machine Sales

Net sales in Segment Transport Scandinavia decreased in the first quarter of 2021, compared with the corresponding quarter last year and amounted to SEK 4.8 million (26.5).

The loss after financial items amounted to SEK 1.0 million (5.0).

Unlike last year, no machines were sold in the first quarter of 2021. The operations focused on the construction of a Ballast Feeder for proprietary operations and of machine parts, so-called power packs, that will be delivered to Loram in the second quarter this year.

Key financial ratios and figures - Machine Sales

Amounts in SEK thousands. unless otherwise stated	Jan-Mar 2021	Jan-Mar 2020	Change, 0%
Net sales	4.789	26.508	-81.9
Profit/loss after financial items	-987	5.008	-119.7
Net margin, %	-20.6	18.9	-39.5

Parent Company

Financial targets

Dividend

Events after the period

2021 Annual General Meeting

Nomination Committee in preparation for Railcare Group AB's 2021 Annual General Meeting

railcane

Shareholder structure

Ten largest shareholders 31 March 2021	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	1,220,293	5.0
Norrlandsfonden	864,560	3.6
Avanza Pension insurance company	840,653	3.5
Bernt Larsson	650,039	2.7
Nordnet Pensionsförsäkring AB	406,491	1.7
BNY Mellon NA, W9	358,938	1.5
Ten largest shareholders	13,713,369	56.9
Other shareholders	10,410,798	43.1
Total	24,124,167	100.0

4,311

Number of shareholders in Railcare Group AB as per 31 March 2021. 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 2020 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.

One of Railcare's home markets is the UK. The UK withdrew from the EU on 31 January 2020. 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 2020 Annual Report.

Skelleftehamn, 4 May 2021 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

Not	Jan-Mar	Jan-Mar	full-year
Amounts in SEK thousands e	2021	2020	2020
Net sales
3 Capitalised work for own account	88,936	105,952	401,301
Other operating income	1,396	661	16,217
Total	1,038	609	3,603
	91,369	107,222	421,120
Raw materials and consumables	-20,337	-31,405	-121,740
Other external costs	-12,810	-15,300	-58,868
Personnel costs	-35,452	-29,746	-124,575
Depreciation and impairment of
tangible and intangible assets	-13,712	-12,699	-53,266
Other operating expenses	-381	-638	-2,285
Total operating expenses	-82,692	-89,788	-360,733

Operating profit/loss (EBIT)	8,677	17,434	60,386

Finanancial income		1	2
Financial expenses	-1,087	-1,180	-4,820
Net financial items	-1,087	-1,179	-4,818

Share of profit after tax from
associated companies reported	84	54	347
according to the equity method
Profit/loss before tax	7,674	16,309	55,915

Income tax	-1,470	-3,475	-12,139
Net profit/loss for the period	6,204	12,834	43,776

Other comprehensive income: Items that may be reclassified to the
profit/loss for the period
Exchange rate differences from the
translation of foreign operations	211	711	-389
Other comprehensive income for	211	711	-389
the period, net after tax
Total comprehensive income for the period	6,415	13,545	43,387

	Jan-Mar	Jan-Mar	full-year
Amounts in SEK	2021	2020	2020
Earnings per share before dilution*	0.26	0.54	1.82
Earnings per share after dilution*	0.26	0.54	1.82
Average number of shares	24,124,167	23,770,077	24,036,128
Number of shares outstanding on the balance	24,124,167	24,124,167	24,124,167
sheet date

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION

Amounts in SEK thousands Note	31 Mar 2021	31 Mar 2020	31 Dec 2020

ASSETS
Non-current assets

Intangible assets
Capitalised development costs	1,614	2,358	1,830
Patents	326	357	299
Goodwill	7,294	7,371	7,274
Transportation licence Total intangible assets	1,254	513	685
	10,488	10,599	10,088
Tangible assets 4
Buildings and land	32,046	30,332	33,257
Locomotives and wagons	129,040	122,905	135,316
Mobile machinery	152,289	162,848	155,562
Vehicles	6,438	7,802	6,521
Equipment, tools, fixtures and fittings	6,882	5,478	5,898
Construction in progress	74,037	40,597	66,907
Total tangible assets	400,733	369,963	403,461

Financial non-current assets
Holdings reported according to the equity method	917	739	832
Deposits	658	658	658
Deferred tax assets	546	115	925
Other non-current receivables	3,954	3,954	3,954
Total financial non-current assets	6,075	5,467	6,369

Total non-current assets	417,296	386,029	419,918
Current assets

Inventories
Raw materials and consumables	12,749	12,069	11,865
Work in progress	8.732	7.315	7.659
Total inventories	21,481	19,384	19,524

Current receivables
Accounts receivable	28,408	46,379	44,905
Current tax receivables	1,039	115	655
Other current receivables	970	3,331	1,809
Prepaid expenses and accrued income	12,810	7,019	9,792
Total current receivables	43,228	56,844	57,161

Cash and cash equivalents	27,766	13,727	24,785
Total current assets	92,475	89,954	101,470
TOTAL ASSETS	509,771	475,983	521,388

CONSOLIDATED SUMMARY STATEMENT OF FINANCIAL POSITION, cont.

Amounts in SEK thousands	31 Mar 2021	31 Mar 2020	31 Dec 2020

EQUITY
Share capital	9,891	9,891	9,891
Other capital provided	36,565	36,565	36,565
Reserves	1,491	2,380	1,280
Retained earnings (comprehensive income for the period included)	153,329	123,421	147,126
Total equity attributable to Parent Company shareholders	201,276	172,257	194,862
LIABILITIES
Non-current liabilities
Deferred tax liabilities	38,223	27,692	38,170
Liabilities to credit institutions	102,137	109,408	107,659
Lease liability	33.321	23.218	33,654
Total non-current liabilities	173,681	160,318	179,483
Current liabilities
Lease liability	20.382	27,298	26,045
Liabilities to credit institutions	56,114	50,777	59,494
Accounts payable	21,773	26,181	25,139
Prepayments from customers	3.499	2.949	5,848
Current tax liabilities	132	2,717	861
Other liabilities	3,241	6,288	2,680
Accrued expenses and deferred income	29.672	27,200	26,977
Total current liabilities	134,814	143,408	147,044
TOTAL EQUITY AND LIABILITIES	509,771	475,983	521,388

CONSOLIDATED SUMMARY STATEMENT OF CHANGES IN EQUITY

Amounts in SEK thousands		Share	Other capital		Retained earnings (incl. profit
	Note	capital	provided	Reserves	for the period)	Total equity
Opening balance as per 1 January 2020		9.435	32,178	1,669	110,589	153,870
Net profit/loss for the period					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
Opening balance as per 1 January 2021		9,891	36,565	1,280	147,126	194,862
Profit for the year					6,204	6,204
Other comprehensive income				211		211
Total comprehensive income				211	6,204	6,415
Closing balance as per 31 March 2021		9,891	36,565	1,491	153,329	201,276

CONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS

	Jan-Mar	Jan-Mar	full-year
Amounts in SEK thousands Note	2021	2020	2020

Cash flow from operating activities
Operating profit/loss	8,677	17,434	60,386
Adjustment for	13,712	12,601	21,835
non-cash items
Interest paid	-1,087	-1,162	-4,784
Interest received		1	2
Income tax paid	-2,102	-537	-1,756
Cash flow from operating activities	19,200	28,337	105,683
before changes in working capital

Cash flow from changes in working
capital
Increase/decrease in inventories	-1,991	3,550	2,788
Increase/decrease in operating receivables	14,896	-25,126	-26,136
Increase/decrease in operating
liabilities	-3,378	1,275	516
Total changes in working capital	9,527	-20,301	-22,832

	28,727	8,036	82,851
Cash flow from operating activities

Cash flow from investment activities
Investments in intangible assets	-648	-72	-462
Investments in tangible assets	-9,005	-10,257	-53,410
Acquisitions of subsidiaries, net effect		-2,617
on cash and cash equivalents			-2,617
Dividends from associated companies			200
Divestment of tangible assets		148	2,150
Cash flow from investment activities	-9,653	-12,798	-54,139


Cash flow from financing activities
Loans raised		10,320	34,020
Amortisation of loans	-8,902	-7,194	-24,006
Amortisation of lease liabilities	-7.536	-6,965	-28,600
Dividends paid			-7,237
Cash flow from financing activities	-16,438	-3,839	-25,823

Cash flow for the period	2,636	-8,601	2,889
Cash and cash equivalents at the
beginning of the period	24,785	22,012	22,012
Exchange rate difference in cash and
cash equivalents	345	316	-116
Cash and cash equivalents at the end
of the period	27,766	13,727	24,785

PARENT COMPANY SUMMARY INCOME STATEMENT

Amounts in SEK thousands	Jan-Mar 2021	Jan-Mar 2020	full-year 2020

Net sales	7,063	6,262	30,189
Other operating income	12	56	127
Total operating income	7,075	6,317	30,316

Operating expenses
Raw materials and consumables	-25	-86	-3,300
Other external costs	-3,242	-2,909	-14,168
Personnel costs	-4,291	-2,774	-11,937
Depreciation and impairment of tangible and	-97	-40	-163
intangible assets
Other operating expenses		-8	-80
Total operating expenses	-7,654	-5,818	-29,648
Profit from participations in associated companies and jointly controlled companies			200
Operating profit/loss	-579	500	868
Profit from financial items
Profit from participations in Group companies	2,404		4,346
Other interest income and similar profit/loss items		72	73
Interest expenses and similar profit/loss items		-36	-53
Total profit/loss from financial items	2,404	36	4,366
Profit/loss after financial items	1,825	536	5,234
Appropriations			70
Tax on net profit/loss for the period	96	-111	-547
Net profit/loss for the period	1,920	425	4,757

PARENT COMPANY SUMMARY BALANCE SHEET

Amounts in SEK thousands	31 Mar 2021	31 Mar 2020	31 Dec 2020

ASSETS

Intangible assets
Patent	326	357	299
Total intangible assets	326	357	299

Tangible assets
Buildings	4,250	1,103	4,304
Equipment, tools, fixtures and fittings	319	196	344
Total tangible assets	4,569	1,299	4,648

Financial non-current assets
Participations in Group companies	38,336	38,336	38,336
Participations in associated companies	204	204	204
Total financial non-current assets	38,540	38,540	38,540

Total non-current assets	43,435	40,196	43,487

Current assets

Current receivables
Receivables from Group companies		191	10,070
Other receivables	3		33
Prepaid expenses and accrued income	1,151	1,140	828
Total current receivables	1,154	1,331	10,931

Cash and bank balances	4,581	7,270	1,789

Total current assets	5,735	8,601	12,720

TOTAL ASSETS	49,170	48,796	56,207

PARENT COMPANY SUMMARY BALANCE SHEET, cont.

Amounts in SEK thousands	31 Mar 2021	31 Mar 2020	31 Dec 2020

EQUITY AND LIABILITIES
Equity

Restricted equity
Share capital	9,891	9,891	9,891
Total restricted equity	9,891	9,891	9,891

Non-restricted equity
Share premium reserve	23,024	23.024	23,024
Retained earnings	8,897	11,377	4,140
Net profit/loss for the period	1.920	425	4.757
Total non-restricted equity	33,841	34,826	31,921

Total equity	43,732	44,717	41,812

Current liabilities
Accounts payable	1.257	1.062	966
Current tax liabilities	298	13	498
Liabilities to Group companies	283	395	10,028
Other liabilities	699	340	622
Accrued expenses and deferred income	2,900	2,269	2,281
Total current liabilities	5,438	4,079	14,395

TOTAL EQUITY AND LIABILITIES	49,170	48,796	56,207

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 2020 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 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: