Railcare Group — Interim / Quarterly Report 2022

Nov 3, 2022

Interim Report January-September 2022

Record sales and high volumes in both the Contracting Sweden and Transport Scandinavia segments.

This report is also available in Swedish at www.railcare.se

Third quarter

First nine months of the year

Significant events in the third quarter

Amounts in SEK million , unless otherwise stated	Jul-Sep 2022	Jul-Sep 2021	Jan-Sep 2022	Jan-Sep 2021	Full-year 2021
Net sales	146.5	126.2	369.0	306.2	438.0
Operating profit/loss (EBIT)	23.9	25.3	45.7	31.5	56.2
Operating margin, %	16.3	20.0	12.4	10.3	12.8
Profit for the period	17.9	19.1	33.5	22.3	40.5
Equity/assets ratio, %	41.6	37.5	41.6	37.5	39.6
Earnings per share after dilution, SEK	0.74	0.79	1.39	0.92	1.68

Financial overview

For definitions, see page 28.

CEO's comments

Net sales in the third quarter were SEK 146.5 million (126.2) and operating profit was SEK 23.9 million (25.3). This corresponded to an operating margin of 16.3 percent.

The third quarter was characterised by record volumes, strong growth and continued high operating margin. The volumes in the contracting business in Sweden were significantly higher than the previous year, and volumes remained high in the transport operations.

Volumes in Contracting Sweden were significantly higher than in the corresponding period of the previous year. The green industry boom in northern Sweden is having a positive impact on our business too, and we are pleased to have performed a fair amount of preparatory work in this region during the third quarter. An inventory of parts of the Malmbanan track was carried out ahead of upcoming maintenance work, with test pits and environmental samples. On Pitebanan between Älvsbyn and Piteå, we performed cable handling ahead of track replacement in 2024. An increase in machine maintenance and in

machinery rented from Group companies resulted in higher costs, which offset the effect that the increased volume had on profit during the third quarter. Profit for the third quarter was on a par with the same quarter of the previous year, but accumulated for the full year, the volumes and profit were both significantly higher than the previous year. In the relining operations, demand for culvert inspections and culvert renovations remains very high. The customer focuses strongly on drainage, and volumes for the third quarter as well as for the year to date were more than twice as high as the corresponding periods in the previous year. Most of the work was carried out on Dalabanan, but we also renovated utility lines under the Billerud Korsnäs Karlsborg pulp and paper mill outside Kalix.

The contracting operations in the UK had higher year-on-year volumes in the third quarter. This contributed to improving the profit, and zero profit was reported for the operations in the third quarter. The volume and profit during the first nine months of the year continue to be lower than the previous year. The new framework agreement with Network Rail has a term of two years starting from the end of July.

Transport Scandinavia continues to report high volumes. Transports for Kaunis Iron and LKAB have proceeded as planned and with the same scope as the previous year. The contract with LKAB runs until the end of the year. The volume of contract transports remains high although slightly below the previous year's record volumes.

The locomotive workshop is working at high capacity and the order intake has been strong throughout the year. Two parallel projects are in progress for Nordic Re-Finance, which include installation of on-board equipment and adaptation of Traxx and TMe locomotives for the Nordics. Conversion of two diesel locomotives for Infranord is under way. The project is in an intensive phase, with assembly of the final product currently under way.

In the Machines and Technology segment, the focus has been on the construction of a new, enhanced MPV. This work is progressing according to plan and is expected to be completed in the second half of 2023. We took part in InnoTrans in Berlin in September. InnoTrans is the world's largest trade fair focused on the rail transport industry. We can confirm that there is great interest in electrification and that we are leaders in the development of fossil-free railway maintenance.

It is hard to predict how the turbulence associated with the war in Europe and increased financial uncertainty will develop. We currently see no significant short-term impact on our operations, but possible long-term consequences are hard to predict.

Our spirits need lifting in times like these, and now that we have hopefully left the pandemic behind. Railcare will treat 800 health and care workers in the Skellefteå region to ice hockey. This is our way to recognise and thank them for their huge and vital contribution during the pandemic. A huge thank you to all of you!

Mattias Remahl, CEO

Financial summary – Railcare Group

Net sales

Operating expenses

Operating profit

Profit for the period

Net sales for the first nine months of the year increased to SEK 33.5 million compared with SEK 22.3 million for the corresponding period of the previous year, an increase of SEK 11.2 million.

Cash flow

Cash flow in the third quarter of the year generated a positive cash flow of SEK 7.5 million, compared to SEK 1.4 million in the corresponding quarter of the previous year. The improved cash flow was largely due to lower investments this year.

Cash flow from investing activities was SEK -4.7 MSEK (-11.0) in the third quarter of 2022. Investments were primarily made in the development of batterypowered machines and the upgrade and adaptation of locomotives for our operations.

Cash flow from financing activities totalled SEK -1.3 million (0.9) in the third quarter. During the period, cash flow was positively impacted by new loans amounting to SEK 13.7 million, compared with SEK 19.2 million the previous year. Repayment of lease liabilities was SEK 3.9 million lower than last year. This is attributable to a change in lease contracts, which means that the cost was recognised in operating activities this year, as opposed to the previous year, when it was recognised in financing activities.

Equity/Asset ratio

Railcare's financial targets state a minimum equity/assets ratio of 25 percent. At the end of the period, the equity/assets ratio was 41.6 percent, compared to 37.5 percent on 30 September 2021.

Employees

As of 30 September 2022, Railcare had 156 employees, compared to 142 on 30 September 2021. This represents an increase of 14 people, and primarily relates to locomotive drivers who were hired to meet the increased demand in Transport Scandinavia.

156 employees

The number of employees increased by 14 compared to the corresponding period in 2021.

Financial summary - Business segment

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

Contracting Sweden

Net sales in the Contracting Sweden segment in the third quarter of 2022 amounted to SEK 48.8 million (35.9), which was an increase of 35.9 percent compared with the corresponding period in the previous year.

Despite an increase in net sales, profit after financial items was on a par with the preceding year and amounted to SEK 6.4 million (6.7). This is due to high maintenance costs and intra-Group rental of machinery from the Machines and Technology segment during periods when the segment's own machinery was undergoing maintenance.

Demand for preparatory work for future year's track replacements increased significantly compared to the previous year. The industrial boom emerging in northern Sweden is also having a positive impact on Railcare. During the quarter, we carried out an inventory of the Malmbanan ahead of upcoming maintenance work, with test pits and environmental samples. On Pitebanan between Älvsbyn and Piteå, we laid cables in preparation for track replacement in 2024.

The relining operations continued to perform well. Net sales more than doubled compared to the third quarter of the previous year and accumulated for the full year. The customer's focus on drainage explains the significant rise in volumes, both with regard to culvert inspections and culvert renovations.

Key performance indicators - Contracting Sweden

Malmbanan

An inventory of the Malmbanan track was carried out during the quarter, with test pits and environmental samples.

Amounts in SEK 000 unless otherwise stated	Jul-Sep 2022	Jul-Sep 2021	Change, %	Jan-Sep 2022	Jan-Sep 2021	Change, %
Net sales	48,767	35.884	35.9	137,843	90.585	52.2
Profit/loss after financial items	6.367	6.668	$-4.5$	16.556	1.062	1,458.9
Net margin, %	13.1	18.6	$-5.5$	12.0	1.2	10.8

Contracting Abroad

Net sales in Contracting Abroad increased by 62 percent in the third quarter of 2022 compared with the corresponding quarter in the preceding year, and amounted to SEK 10.1 million (6.3).

Profit after financial items improved to SEK -0.1 million (-3.0).

Although utilisation was better in the third quarter than the same quarter in the previous year, the accumulated volumes in 2022 were lower. Customer orders have been low for a long period, even though the need for maintenance remains high. The ongoing reorganisation in Network Rail had a negative impact.

New framework agreement

A new 2-year framework agreement with Network Rail will ease the calloff of Railcare's machines.

The new framework agreement with Railcare has a term of two years starting from the end of July. In addition to price adjustments being made, it is now easier for customers to book Railcare's machinery.

Key performance indicators - Contracting Abroad

Amounts in SEK 000, unless otherwise stated	Jul-Sep 2022	Jul-Sep 2021	Change, %	Jan-Sep 2022	Jan-Sep 2021	Change, %
Net sales	10.133	6.262	61.8	26.248	34.500	$-23.9$
Profit/loss after financial items	$-110$	$-2.950$	96.3	$-5.772$	$-1.136$	$-408.2$
Net margin, %	$-1.1$	$-47.1$	46.0	$-22.0$	$-3.3$	$-18.7$

Transport Scandinavia

Net sales in Segment Transport Scandinavia decreased slightly in the third quarter of 2022 compared with the corresponding quarter last year, and amounted to SEK 87.7 million (89.1).

Profit after financial items decreased to SEK 13.5 million (17.3).

The volume of contract transports has been high. However, as expected it was lower in the third quarter this year compared to the previous year's record volumes, due to a lower number of track replacements this year. Railcare's assignment to provide standby locomotives to the Swedish Transport Administration started on 1 August in Långsele. For the other new locations (Boden, Vännäs and Kiruna), the assignments will start on 1 January 2023 as planned.

Transports for Kaunis Iron and LKAB have proceeded as planned and in line with the same quarter of the previous year.

The locomotive workshop Långsele is working at high capacity and the order intake has been strong throughout the year. Two parallel projects are in progress for Nordic Re-Finance. One of them comprises installation of ATC and a Nordics adaptation of six Traxx locomotives, and the other comprises installation of ETCS and a Nordics adaptation of their TMe locomotives. The conversion of two TB locomotives for Infranord is in progress. The project is in an intensive phase, with assembly of the final product currently under way.

Key performance indicators - Transport Scandinavia

Amounts in SEK 000. unless otherwise stated	Jul-Sep 2022	Jul-Sep 2021	Change, %	Jan-Sep 2022	Jan-Sep 2021	Change, %
Net sales	87,664	89.146	$-1.7$	204.171	189.314	7.8
Profit/loss after financial items	13,537	17.252	$-21.5$	24,355	25.669	$-5.1$
Net margin, %	15.4	19.4	$-4.0$	11.9	13.6	$-1.7$

Good utilisation in the locomotive workshop

Installation of on-board equipment and a Nordics adaptation are being carried out for Nordic Re-Finance.

Machines and Technology (previously Machine Sales)

Net sales in the Machines and Technology segment increased significantly in the third quarter of 2022 compared to the corresponding quarter of last year, and amounted to SEK 23.6 million (6.1).

Profit after financial items amounted to SEK 2.6 million (-0.1).

There were no major machine deliveries in the quarter. The machines acquired from the Danish operations have been leased internally to the Contracting Sweden segment. Other machinery was also leased to Contracting Sweden, as the contracting operations have been performing maintenance on some of their own machinery. Machines and Technology also leased their rented locomotives to Transport Scandinavia.

The construction of a new, enhanced MPV is on schedule, and the machine is expected to be completed in the second half of 2023.

MPVe

The improved Multi Purpose Vehicle with a pantograph is expected to be completed in the second half of 2023.

Key performance indicators - Machines and Technology

Amounts in SEK 000, unless otherwise stated	Jul-Sep 2022	Jul-Sep 2021	Change, %	Jan-Sep 2022	Jan-Sep 2021	Change, %
Net sales	23,565	6.072	288.1	68.996	30.660	125.0
Profit/loss after financial items	2.583	$-71$	3.745.1	7.107	1.624	337.7
Net margin, %	11.0	$-12$	12.2	10.3	5.3	5.0

Parent Company

Targets

Financial targets

Sustainability

Dividend

Events after the end of the period

Annual General Meeting 2023

Nomination Committee for Railcare Group AB's Annual General Meeting 2023

Shareholder structure

Ten largest shareholders	Number of	Proportion of share
30 September 2022	shares	capital and votes (%)
Norra Västerbotten Fastighets AB	7,121,395	29.5
TREAC Aktiebolag	2,415,000	10.0
Ålandsbanken AB	1,236,162	5.1
Avanza Pension insurance company	829,676	3.4
Bernt Larsson	750,987	3.1
HSBC Bank PLC	600,000	2.5
Mikael Gunnarsson	485,000	2.0
Nordnet Pensionsförsäkring AB	383,198	1.6
Torsten Germund Dahlquist	268,506	1.1
Harry Markku Sjöblom	268,000	1.1
Ten largest shareholders	14,357,924	59.5
Other shareholders	9,766,243	40.5
Total	24,124,167	100.0

Source: Euroclear

Significant risks and uncertainties

Transactions with related parties

The Board's and CEO's assurances

Anders Westermark Catharina Elmsäter-Svärd Anna Weiner Jiffer Adam Ådin Chairman Board member Board member Board member

Board member Board member CEO Deputy CEO

Björn Östlund Ulf Marklund Mattias Remahl

Audit review report

Introduction

Scope of review

Conclusion

Financial reports

Consolidated statement of comprehensive income in summary

Amounts in SEK 000	Note	Jul-Sep 2022	Jul-Sep 2021	Jan-Sep 2022	Jan-Sep 2021	Full-year 2021
Net sales	3	146,497	126,195	369,021	306,178	437,946
Capitalised work on own account		1,218	1,915	7,291	6,775	8,341
Other operating income		169	1,210	2,920	3,585	6,359
Total		147,884	129,319	379,233	316,537	452,646
Raw materials and consumables		-56,402	-39,931	-137,710	-93,989	-140,987
Other external costs		-21,868	-16,713	-56,356	-45,195	-62,858
Personnel costs		-33,782	-33,390	-105,994	-103,780	-138,950
Depreciation and impairment of property,
plant and equipment and intangible assets		-11,661	-13,661	-32,116	-41,145	-52,096
Other operating expenses		-246	-325	-1,343	-931	-1,536
Total operating expenses		-123,959	-104,020	-333,520	-285,039	-396,426
Operating profit/loss (EBIT)		23,926	25,299	45,713	31,498	56,219
Financial income		6	3	6	57	57
Financial expenses		-1,494	-1,090	-3,583	-3,221	-4,427
Net financial income/expense		-1,489	-1,087	-3,577	-3,164	-4,370
Share of profit after tax from associated companies
reported according to the equity method		-	35	-	176	-182
Profit/loss before tax		22,437	24,247	42,136	28,509	51,667
Income tax		-4,550	-5,186	-8,615	-6,207	-11,152
Profit for the period		17,886	19,061	33,520	22,302	40,514
Other comprehensive income:
Items that may be reclassified to profit/loss for the
period Exchange rate differences from the translation of
foreign operations		128	92	518	194	250
Other comprehensive income for the period, net of
tax		128	92	518	194	250
Total comprehensive income for the period		18,014	19,153	34,038	22,496	40,764

Amounts in SEK	Jul-Sep 2022	Jul-Sep 2021	Jan-Sep 2022	Jan-Sep 2021	Full-year 2021
Profit/loss per share1	0.74	0.79	1.39	0.92	1.68
Average number of shares	24,124,167	24,124,167	24,124,167	24,124,167	24,124,167
Number of shares outstanding on the reporting date	24,124,167	24,124,167	24,124,167	24,124,167	24,124,167

¹ Due to no shares instruments in issue, there is no dilution effect.

Consolidated statement of financial position in summary

ASSETS Non-current assets Intangible assets Capitalised development costs 522 1,183 Patents 217 288 263 6,300 7,290 7,293 Goodwill Transportation licence 1,250 1,479 1,441 Total intangible assets 8,289 10,239 9,964
Property, plant and equipment 4
31,360 28,430 35,975 Buildings and land
Locomotives and wagons 135,042 138,459 132,579 182,110 149,059 145,762
Mobile machinery 4,255 4,703 5,761
Vehicles Equipment, tools, fixtures and fittings 6,305 6,239 6,092
Construction in progress 66,289 82,941 92,151
Total property, plant and equipment 425,361 409,830 418,319
Financial non-current assets
Holdings reported according to the equity method - 808
Deferred tax assets 732 1,002
3,954 3,954 3,954 Other non-current receivables
Total financial non-current assets 4,686 5,764 4,679
438,337 425,834 432,962 Total non-current assets
Current assets
Inventories
17,195 13,445 14,414 Raw materials and consumables
14,721 14,803 13,555 Work in progress
Total inventories 31,916 28,249 27,968
Current receivables
72,400 70,692 46,543 Accounts receivable
190 Current tax receivables 4 1,030
9,358 1,620 1,597 Other current receivables
12,558 8,955 9,306 Prepaid expenses and accrued income
94,507 Total current receivables 81,270 58,475
Cash and cash equivalents 14,156 5,073 38,560
140,580 114,591 125,003 Total current assets
TOTAL ASSETS 578,916 540,425 557,965

Consolidated statement of financial position in summary, cont.

Amounts in SEK 000 Note	30 Sep 2022	30 Sep 2021	31 Dec 2021
EQUITY
Share capital	9,891	9,891	9,891
Other capital provided	19,830	36,565	19,830
Reserves	2,048	1,474	1,530
Retained earnings (comprehensive income for the	208,945	154,952	189,899
period included)
Total equity attributable to Parent Company	240,715	202,882	221,150
shareholders
LIABILITIES
Non-current liabilities
Deferred tax liabilities	47,258	38,279	48,158
Liabilities to credit institutions	101,114	126,540	97,041
Lease liability	40,127	41,569	48,062
Total non-current liabilities	188,498	206,387	193,261
Current liabilities
Lease liability	10,537	9,938	10,945
Liabilities to credit institutions	60,521	37,621	61,668
Accounts payable	36,947	40,158	26,057
Prepayments from customers	1,575	6,151	9,382
Current tax liabilities	5,673	2,807	356
Other liabilities	4,718	5,249	7,046
Accrued expenses and deferred income	29,732	29,232	28,101
Total current liabilities	149,703	131,155	143,554
TOTAL EQUITY AND LIABILITIES	578,916	540,425	557,965

Consolidated statement of changes in equity in summary

		Share	Other capital		Retained earnings (incl. profit for
Amounts in SEK 000	Note	capital	provided	Reserves	the period)	Total equity
Opening balance as of 1 January 2021		9,891	36,565	1,280	147,126	194,862
Net profit/loss for the period		-	-	-	22,302	22,302
Other comprehensive income		-	-	194	-	194
Total comprehensive income		-	-	194	22,302	22,496
Transactions with shareholders
Dividend		-	-	-	-14,475	-14,475
Closing balance as of 30 September 2021		9,891	36,565	1,474	154,952	202,882
Opening balance as of 1 January 2022		9,891	19,830	1,530	189,899	221,150
Net profit/loss for the period		-	-	-	33,520	33,520
Other comprehensive income		-	-	518	-	518
Total comprehensive income		-	-	518	33,520	34,038
Transactions with shareholders
Dividend		-	-	-	-14,475	-14,475
Closing balance as of 30 September 2022		9,891	19,830	2,049	208,944	240,715

The Group's equity is attributable in its entirety to Parent Company's shareholders.

Consolidated cash flow statement in summary

	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	full-year
Amounts in SEK 000	Note 2022	2021	2022	2021	2021
Cash flow from operating activities
Operating profit	23,926	25,299	45,713	31,498	56,219
Adjustment for non-cash items	11,688	13,591	32,180	41,075	49,371
Interest paid	-1,495	-1,089	-3,583	-3,221	-4,427
Interest received	6	3	6	57	57
Income tax paid	-578	-718	-3,499	-3,539	-1,782
Cash flow from operating activities before changes	33,547	37,086	70,817	65,870	99,438
in working capital
Cash flow from changes in working capital
Increase/decrease in inventories	-4,220	-2,576	-4,235	-8,821	-8,597
Increase/decrease in operating receivables	-6,234	-27,952	-36,821	-23,581	502
Increase/decrease in operating liabilities	-9,676	4,880	2,422	19,371	8,894
Total changes in working capital	-20,130	-25,648	-38,634	-13,031	799
Cash flow from operating activities	13,417	11,438	32,183	52,839	100,237
Cash flow from investing activities
Investments in intangible assets	-	-78	-	-951	-957
Investments in property, plant and equipment	-4,666	-10,991	-35,880	-32,782	-42,220
Dividends from associated companies	-	-	-	200	200
Divestment of associated companies		-		-	450
Divestment of property, plant and equipment	-	70	109	70	3,645
Cash flow from investing activities	-4,666	-10,999	-35,771	-33,463	-38,882
Cash flow from financing activities
Loans raised	13,685	19,200	23,239	19,200	19,200
Net change in overdraft facility	-4,779	-4,726	-	-	-
Amortisation of loans	-6,928	-6,355	-20,313	-22,192	-27,645
Amortisation of lease liabilities	-3,261	-7,200	-9,580	-21,900	-24,982
Dividend paid	-	-	-14,475	-14,475	-14,475
Cash flow from financing activities	-1,283	919	-21,129	-39,367	-47,902
Cash flow for the period	7,468	1,358	-24,717	-19,991	13,453
Cash and cash equivalents at the
beginning of the period	6,625	3,684	38,559	24,785	24,785
Exchange rate difference in cash
and cash equivalents	64	31	314	279	321
Cash and cash equivalents at the end of the period	14,156	5,073	14,156	5,073	38,559

Parent Company income statement in summary

	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Full-year
Amounts in SEK 000 Note	2022	2021	2022	2021	2021
Net sales Other operating income	7,293 3	10,130 6	29,599 19	28,155 194	35,447 240
Total operating income	7,296	10,136	29,617	28,350	35,687
Operating expenses
Raw materials and consumables	-1	-7	-7,692	-3,932	-3,939
Other external costs	-3,723	-2,754	-12,187	-9,219	-12,871
Personnel costs	-2,253	-3,814	-8,169	-13,388	-17,733
Depreciation and impairment of property, plant and
equipment and intangible assets	-100	-99	-300	-299	-396
Other operating expenses	-13	-11	-25	-22	-28
Total operating expenses	-6,090	-6,684	-28,373	-26,860	-34,967
Profit from participations in associated companies
and jointly controlled companies	-	-	-	200	446
Operating profit	1,206	3,452	1,244	1,690	1,166
Profit/loss from financial items
Profit from participations in Group companies	-4,449	-	-4,334	2,404	23,404
Other interest income and similar profit/loss items	19	-	26	-	-
Interest expenses and similar profit/loss items	-38	-48	-82	-70	-83
Total profit/loss from financial items	-4,469	-47	-4,389	2,334	23,321
Profit/loss after financial items	-3,263	3,405	-3,145	4,024	24,487
Appropriations	-	-	-	-	-1,200
Tax on net profit/loss for the period	-229	-711	-271	-337	3
Net profit/loss for the period	-3,492	2,694	-3,417	3,687	23,291

Parent Company balance sheet in summary

Amounts in SEK 000	Note	30 Sep 2022	30 Sep 2021	31 Dec 2021
ASSETS
Intangible assets
Patents		217	288	263
Total intangible assets		217	288	263
Property, plant and equipment
Buildings		3,927	4,142	4,088
Equipment, tools, fixtures and fittings		397	272	435
Total property, plant and equipment		4,323	4,414	4,524
Financial non-current assets
Participations in Group companies		33,887	38,336	38,336
Participations in associated companies		-	204	-
Deferred tax receivables		43	-	3
Total financial non-current assets		33,930	38,540	38,340
Total non-current assets		38,470	43,242	43,127
Current assets
Current receivables
Accounts receivable		35	7	13
Receivables from Group companies		95,918	3,750	67,649
Current tax receivables		-	-	-
Other receivables		-	-	1
Prepaid expenses and accrued income		1,414	1,348	1,297
Total current receivables		97,367	5,105	68,959
Cash and cash equivalent		8,220	1,295	30,802
Total current assets		105,587	6,400	99,761
TOTAL ASSETS		144,058	49,642	142,888

Parent Company balance sheet in summary, cont.

Amounts in SEK 000	Note	30 Sep 2022	30 Sep 2021	31 Dec 2021
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		17,446	17,446	17,446
Retained earnings		8,816	-	-
Net profit/loss for the period		-3,417	3,687	23,291
Total non-restricted equity		22,846	21,133	40,737
Total equity		32,737	31,024	50,628
Current liabilities
Accounts payable		677	1,784	1,960
Current tax liabilities		150	524	649
Liabilities to Group companies		107,361	11,479	86,264
Other liabilities		930	1,688	720
Accrued expenses and deferred income		2,163	3,142	2,668
Total current liabilities		111,281	18,618	92,260
TOTAL EQUITY AND LIABILITIES		144,057	49,642	142,888

Note

Note 1 General information

Railcare Group AB (publ) ("Railcare"), Corp. ID no. 556730-7813 is a Parent Company registered in Sweden with its registered office in Skellefteå, at the address Näsuddsvägen 10, SE-932 32 Skelleftehamn, Sweden.

Unless otherwise stated, all amounts are given in SEK thousands (SEK 000). Figures in brackets refer to the corresponding period in the previous 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 the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for legal entities. 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 Annual Report 2021.

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

Note 3 Segment information

Description of segments and principal activities:

Railcare's Group Management is the highest executive decision-making body in the Railcare Group and evaluates 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 which is used as a basis for allocating resources and evaluating results of operations.

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

Contracting Sweden

Railway contracting work involving machinery and personnel and culvert renovation of fibreglass-lined culverts beneath railways, roads and industrial areas in Sweden.

Contracting Abroad

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

Transport Scandinavia

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

Machines and Technology

Technology development, construction, selling new machines and expansion and re-development of existing machines to a national and international market.

The 'Group-wide' item is used for reconciliation purposes and includes Group Management and other Groupwide services.

Income

		Jul-Sep			Jul-Sep
		2022			2021
			Income			Income
		Sales	from		Sales	from
	Income	between	external	Segment	between	external
	Segment	segments	customers	income	segments	customers
Contracting Sweden	48,767	1,374	47,393	35,884	5,906	29,978
Contracting Abroad	10,133	261	9,871	6,262	335	5,927
Transport Scandinavia	87,664	1,443	86,222	89,146	1,016	88,130
Machines and Technology	23,565	20,893	2,672	6,072	4,359	1,712
Group-wide	7,293	6,954	338	10,130	9,682	448
Total	177,422	30,925	146,497	147,494	21,299	126,195

		Jan-Sep			Jan-Sep			full-year
		2022			2021			2021
	Segment income	Sales between segments	Income from external customers	Segment income	Sales between segments	Income from external customers	Segment income	Sales between segments	Income from external customers
Contracting Sweden	137,843	6,086	131,757	90,585	12,275	78,310	130,556	15,720	114,836
Contracting Abroad	26,248	2,375	23,873	34,500	3,949	30,551	47,954	5,657	42,296
Transport Scandinavia	204,171	10,691	193,481	189,314	9,304	180,010	273,888	14,280	259,608
Machines and Technology	68,996	50,138	18,858	30,660	14,548	16,112	37,197	17,790	19,407
Group-wide	29,582	28,529	1,053	28,155	26,961	1,194	35,447	33,648	1,798
Total	466,840	97,818	369,022	373,214	67,037	306,178	525,041	87,096	437,946

$\overline{\phantom{a}}$

Profit/loss after financial items

Group Management primarily uses profit after financial items to assess consolidated profit.

	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	full-year
	2022	2021	2022	2021	2021
Contracting Sweden	6.367	6,668	16,556	1.062	7.575
Contracting Abroad	$-110$	$-2.950$	$-5,772$	$-1,136$	3,797
Transport Scandinavia	13,537	17,252	24,355	25,669	39,472
Machines and Technology	2,583	$-71$	7,107	1,624	763
Group-wide	60	3.313	$-110$	1.115	242
Total	22,437	24.212	42,136	28,334	51,849

Profit/loss after financial items for the Group's operating segments is reconciled with

Profit/loss before tax	22.437	24.247	42.136	28.510	51.667
Share of profit after tax from associated companies reported according to the equity method		35		176	$-182$
Profit/loss after financial items	22.437	24.212	42.136	28.334	51,849
Group profit/loss before tax as follows:

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

	Income from services			Sales of goods		Leasing	Total
	Jul-Sep 2022	Jul-Sep 2021	Jul-Sep 2022	Jul-Sep 2021	Jul-Sep 2022	Jul-Sep 2021	Jul-Sep 2022	Jul-Sep 2021
Contracting Sweden	47,393	29,978	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	47,393	29,978
Contracting Abroad	9,859	5,721	12	$\overline{\phantom{a}}$	$\qquad \qquad$	206	9,871	5,927
Transport Scandinavia	83,250	83,805	1,265	2.396	1,706	1,929	86,222	88,130
Machines and Technology	912	563	1,760	1,150		$\overline{\phantom{a}}$	2,672	1,712
Group-wide	338	449	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	338	449
Total	141,753	120.516	3,038	3.546	1.706	2,135	146.497	126,195

	Income from services			Sales of goods		Leasing	Total
	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Jan-Sep
	2022	2021	2022	2021	2022	2021	2022	2021
Contracting Sweden	131,757	78,311	$\overline{\phantom{0}}$	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	131,757	78,311
Contracting Abroad	23,837	29,914	36	22		614	23,873	30,551
Transport Scandinavia	183,584	165,709	3.303	6,264	6,593	8.037	193,481	180,010
Machines and Technology	3,708	2,387	15,150	13,725		$\overline{\phantom{a}}$	18,858	16,112
Group-wide	1,052	1.194	$\overline{\phantom{0}}$			$\overline{\phantom{a}}$	1.052	1,194
Total	343,939	277,515	18,489	20,011	6,593	8.652	369.021	306.178

Note 4 Non-current assets

		Locomotiv			Equipment, Construction
	Buildings	es and	Mobile		tools, fixtures	in progress
	and land	wagons	machinery	Vehicles	and fittings		Total
30/09/2021
Opening carrying amount	33,257	135,316	155,562	6,521	5,898	66,907	403,461
Exchange rate differences	72	39	52	-	23	-	186
Purchases/capitalised expenses for the year	871	14,040	-	2,577	204	31,019	48,710
Reclassifications	-	10,661	3,362	-	1,058	-14,984	96
Disposals and scrappings	-51	-	-	-2,235	-8	-	-2,294
Depreciation	-5,719	-21,596	-9,918	-2,161	-935	-	-40,329
Closing carrying amount as per 30/09/2021	28,430	138,459	149,059	4,703	6,239	82,941	409,830
Of which, right-of-use assets	18,233	30,053	1,990	4,611	-	-	54,887
30/09/2022
Opening carrying amount	35,975	132,579	145,762	5,761	6,092	92,151	418,319
Exchange rate differences	18	13	30	4	75	-	141
Purchases/capitalised expenses
for the year	668	-	1,059	805	1,090	33,715	37,337
Reclassifications	-	13,043	46,820	-	-	-59,578	286
Disposals and scrappings	-	-61	-	-241	-32	-	-334
Depreciation	-5,301	-10,532	-11,561	-2,073	-920	-	-30,387
Closing carrying amount 30/09/2022	31,360	135,042	182,110	4,255	6,305	66,289	425,361
Of which, right-of-use assets	21,099	25,390	1,740	4,189	-	-	52,418

Key performance indicators, Railcare Group in summary

Amounts in SEK 000 , unless otherwise stated	Jul– Sep 2022	Jul-Sep 2021	Jan– Sep 2022	Jan– Sep 2021	Full-year 2021
Net sales	146,497	126,195	369,021	306,178	437,946
Sales growth, %	16.1	33.6	20.5	0.2	9.1
Operating profit/loss (EBIT)	23,926	25,299	45,713	31,498	56,219
Operating margin, %	16.3	20.0	12.4	10.3	12.8
Net profit/loss for the period	17,886	19,061	33,520	22,302	40,514
Net financial income/expense	-1,489	-1,087	-3,577	-3,164	-4,370
Total assets	578,916	540,425	578,916	540,425	557,965
Equity/assets ratio, %	41.6	37.5	41.6	37.5	39.6
Key performance indicators per share, SEK
Earnings per share before and after dilution	0.74	0.79	1.39	0.92	1.68
Equity per share	9.98	8.41	9.98	8.41	9.17
Dividend per share, SEK	-	-	0.6	0.6	0.6

Quarterly data, Railcare Group summary

Amounts in SEK million	Q3 2022	Q2 2022	Q1 2022	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020
Net sales	146.5	127.2	95.3	131.8	126.2	91.0	88.9	95.6	94.5
Capitalised work on own account	1.2	3.2	2.9	1.6	1.9	3.5	1.4	11.3	3.5
Other operating income	0.2	0.8	1.9	2.8	1.2	1.3	1.0	0.2	1.0
Total	147.9	131.2	100.2	136.1	129.3	95.8	91.4	107.2	99.0
Raw materials and consumables	-56.4	-48.8	-32.5	-47.0	-39.9	-33.7	-20.3	-31.7	-27.5
Other external costs	-21.9	-19.1	-15.4	-17.7	-16.7	-15.7	-12.8	-13.9	-14.4
Personnel costs	-33.8	-39.5	-32.7	-35.2	-33.4	-34.9	-35.5	-32.7	-29.0
Depreciation and impairment
of property, plant and equipment	-11.7	-10.7	-9.7	-11.0	-13.7	-13.8	-13.7	-13.6	-13.4
Other operating expenses	-0.2	-0.1	-1.0	-0.6	-0.3	-0.2	-0.4	-1.0	-0.2
Total operating expenses	-124.0	-118.2	-91.3	-111.4	-104.0	-98.3	-82.7	-92.9	-84.5
Operating profit/loss (EBIT)	23.9	13.0	8.8	24.7	25.3	-2.5	8.7	14.3	14.4
Financial income	0.0	0.0	0.0	0.0	0.0	0.1	0.0	0.0	0.0
Financial expenses	-1.5	-1.1	-1.0	-1.2	-1.1	-1.0	-1.1	-1.2	-1.2
Net financial income/expense	-1.5	-1.1	-1.0	-1.2	-1.1	-1.0	-1.1	-1.2	-1.2
Share of profit after tax from associated
companies reported according to the	0.0	0.0	0.0	-0.4	0.0	0.1	0.1	0.2	0.1
equity method
Profit/loss before tax	22.4	11.9	7.8	23.2	24.2	-3.4	7.7	13.2	13.3
Tax	-4.6	-2.3	-1.8	-4.9	-5.2	0.4	-1.5	-2.0	-3.6
Net profit/loss for the period	17.9	9.6	6.0	18.2	19.1	-3.0	6.2	11.2	9.8
Equity/assets ratio, %	41.6	39.3	40.2	39.6	37.5	36.7	39.5	37.4	36.4

Definitions

General	All amounts in the tables are in SEK 000 unless otherwise stated. All values in brackets are comparative figures for the corresponding period in the preceding year unless otherwise stated. Amounts in tables and other summaries have been rounded individually. Accordingly, minor rounding differences can be found in totals.
Alternative key performance indicators	This Interim Report refers to a number of financial measures not defined in accordance with IFRS, known as alternative key performance indicators. Railcare uses these key performance indicators to monitor and analyse the financial outcome of the Group's operations and its financial position. These alternative key performance indicators are intended to supplement, not replace, the financial measures presented in accordance with IFRS. See definitions and further information below.
Key performance indicators	Definition/calculation	Purpose
Operating profit/loss (EBIT)	Calculated as net profit/loss for the period before tax, participations in the earnings of associated companies and financial items.	This key performance indicator illustrates the Company's profit/loss generated by operating activities.
Net financial income/expense	Net financial items are calculated as financial income less financial expenses.	This key performance indicator illustrates the net amount resulting from the Company's financial activities.
Net margin	The net margin is calculated as income after financial items divided by net sales.	This performance indicator illustrates how much of the Company's earnings remain after all expenses, excluding 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 number of shares outstanding at the end of the period.	This key performance indicator illustrates the Company's net worth per share.
Sales growth, %	Calculated as the difference between net sales for the period and net sales for the preceding period, divided by net sales for the preceding period.	This key performance indicator illustrates the Company's growth and historical performance, contributing to an understanding of the Company's development.
Operating margin, %	Calculated as operating income divided by net sales.	This key performance indicator illustrates how much of the Company's profit/loss is generated by its operating activities.
Equity/assets ratio, %	Calculated as equity divided by total assets.	This key performance indicator illustrates the Company's financial position and long- term payment ability.
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, SEK	Calculated as profit/loss attributable to the Parent Company's shareholders divided by the weighted average number of shares outstanding in the period.	This key performance indicator illustrates the Company's earnings per share, excluding any dilution effect from outstanding convertibles.
Earnings per share after dilution, SEK	To calculate earnings per share after dilution, the weighted average number of outstanding shares is adjusted for the 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 net profit is adjusted to eliminate interest expenses less tax effect. Convertible debentures do not give rise to a dilution effect when the interest per share that may be received upon conversion exceeds earnings per share before dilution.	This key performance indicator illustrates the Company's earnings per share, excluding any dilution effect from outstanding convertibles.

GLOSSARY

Reballasting

Replacement of the top layer of the rail embankment in which the sleepers are set.

Standby locomotive

A clearance locomotive with personnel available around the clock to urgently clear or remove vehicles involved in stoppages and quickly get the track open for traffic again. Railcare is under contract to provide standby locomotives in five locations.

Relining operations

Includes relining of culverts beneath railways, roads and industrial sites using a fibreglass lining adapted to the existing culvert, which makes renovations more effective than when conventional culvert renovation or culvert replacement methods are used.

Cable laying

To minimise risk of cable breakage in connection with, for example, track refurbishment and other track maintenance, cables and obstacles in the rail embankment are laid or moved under the rails at a lower level. Railcare uses its machinery with vacuum technology for this type of assignment.

MPV

Railcare's newest maintenance machine, Multi Purpose Vehicle, which is batterypowered. The machine is equipped with its own power source, vacuum pumps, hydraulics and operator cabs, which allows it to be used as a complement to Railcare's railway vacuum cleaner and snow melter, and to function as a towing vehicle for macadam wagons during track works.

On-board equipment

The technical equipment installed on board a locomotive to communicate with the train protection system in the track.

Test pits

Pits that are dug/vacuum excavated for pre-installation measurement and physical installation of cables and obstacles in railway lines, ahead of upcoming track renovations and other track maintenance. Railcare uses its machinery with vacuum technology for this type of assignment.

Network Rail

Network Rail has overall responsibility for installation and maintenance of large parts of the British rail network.

Railvac

Railcare's machine for maintenance contracts that are able to perform various types of track maintenance on the railways using vacuum technology.

Culvert inspections

Inspections and documentation of the condition and potential maintenance need for culverts under railways and roads.

Culvert renovations

Relining of culverts beneath railways, roads and industrial sites using fibreglass lining. The installation equipment used is not track-bound, which minimises traffic disruption.

Press releases in the third quarter 2022

Financial calendar

For further information, please contact

Mattias Remahl, CEO

Telephone: +46 (0)70–271 33 46 E-mail: mattias.remahl@railcare.se

Lisa Borgs, IR and Communication Manager

Telephone: +46 (0)70–622 50 01 E-mail: lisa.borgs@railcare.se

This information is such as Railcare Group AB (publ) is required to disclose under the EU Market Abuse Regulation. This information was submitted to the market, through the agency of these contacts, for publication on 3 November 2022 at 07:30 a.m. CET.

About Railcare Group

The railway specialist Railcare offers innovative products and services for the railway; for example, railway maintenance with self-developed machines, a locomotive workshop, special transport and machine sales projects. Our market is mainly in Scandinavia and the United Kingdom. The railway industry is in a positive development with increasing traffic volumes, extensive investment programs, developing cost-effective freight and passenger transport, and rising environmental awareness. Railcare delivers both sustainable and efficient solutions that contribute to the railway, so it can be used for the maximum number of years to come. The shares of Railcare Group AB (publ) are listed on the Small Cap list of the Nasdaq Stockholm exchange. The Group has some 150 employees and annual sales of approximately SEK 440 million. The company's registered office is located in Skellefteå, Sweden.

RAILCARE GROUP AB (publ)

Näsuddsvägen 10, SE–932 32 Skelleftehamn, Sweden Tel. +46 (0)910–43 88 00 www.railcare.se