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Railcare Group Interim / Quarterly Report 2021

Feb 17, 2022

3193_10-k_2022-02-17_609e4b94-d488-4c65-859c-9334f4ad9661.pdf

Interim / Quarterly Report

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Year-end Report 2021

Record sales and continued high utilisation in transport operations

Fourth quarter

Full-year 2021, January-December 2021

Significant events in the fourth quarter

1 1110110101 D'011111101 ;
Amounts in SEK million,
unless otherwise stated
Oct-Dec
2021
Oct-Dec
2020
Full-year
2021
Full-year
2020
Net sales 131.8 95.6 438.0 401.3
Operating profit/loss (EBIT) 24.7 14.3 56.2 60.4
Operating margin, % 18.8 14.9 12.8 15.0
Net profit/loss for the period 18.2 11.2 40.5 43.8
Equity/assets ratio, % 39.6 37.4 39.6 37.4
Earnings per share after
dilution, SEK
0.75 0.47 1.68 1.82

CEO's comments

Net sales in the fourth quarter were SEK 131.8 million (95.6) and operating profit was SEK 24.7 million (14.3). This corresponded to an operating margin of 18.8 percent.

"A very strong quarter characterised by continued high utilisation in the transport operations, while volumes in the Swedish construction operations increased on earlier in the year."

In the Swedish construction operations, volumes in the fourth quarter were in line with the previous year, and increased compared to earlier in the year. The construction work carried out mainly related to cable laying and reballasting. Snow clearance on behalf of the Swedish Transport Administration started as planned in mid-November and will continue until mid-March. Extensive snowfall in southern Sweden at the beginning of December meant that Railcare carried out snow clearance on Skånebanan for the first time. Utilisation in the lining operations, increased in year-on-year terms.

Utilisation in the construction operations in the UK were in line with the corresponding quarter last year. The cost saving measures introduced contributed to improved profitability. The Danish operations divested an older MY locomotive, generating a positive profit contribution of SEK 2.6 million.

Transport Scandinavia presented a very strong quarter with year-on-year growth of 80 percent. The higher sales were attributable to construction transport on behalf of Leonhard Weiss throughout the fourth quarter. Alongside transport of iron ore concentrate and iron ore for Kaunis Iron and LKAB, this contributed to high transport volumes. The contract with LKAB expired at year end and has not been extended as the customer does not have a need for these transports at present. In December, Railcare signed a four-year agreement with the Swedish Transport Administration relating to standby locomotives worth a total of SEK 152 million, corresponding to SEK 38 million annually. The contract runs from 1 August 2022. Utilisation was high in the locomotive workshop, and Railcare signed an agreement with Infranord relating to the upgrade of two type TB diesel locomotives in early December. The agreement is worth a total of SEK 30 million.

In the Machine Sales segment, delivery of power packs for Loram were delayed due to delivery problems. A shortage of containers meant that delivery will take place in the first quarter 2022 instead of December 2021 as planned. In the fourth quarter, Railcare signed an agreement with BLS Rail regarding the sale of 28 timber sets, of which 6 were delivered to the customer before year end.

The planned establishment in Hong Kong cannot currently be completed due to the local authorities' decision to tighten the stringent Covid restrictions further.

In mid-December, Railcare announced an aggressive target of reducing fossil emissions from operations by 40% by 2025. This is an important step for Railcare and the sector as a whole. Railways are already an environmentally friendly alternative, but a great deal still remains to be done for operations to become sustainable in the long term. With our focus on people and the environment, our goal is to remain a market leader while making our yellow machinery greener.

Mattias Remahl, 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 sales between segments. See Note 3 for sales between segments.

Construction Sweden

Net sales in the segment Construction Sweden in the fourth quarter of 2021 amounted to SEK 40.0 million (40.3), which is in line with the corresponding period last year.

In the fourth quarter, total volumes in Construction Sweden were in line with the corresponding quarter of the previous year. Construction work volumes relating to cable laying and reballasting were slightly lower than in the corresponding quarter of the previous year, although this has been compensated by increased volumes in the lining operations. A large number of permit inspections of railway drums were carried out in the lining operations. The purpose of the permit inspections is to assess the status of the drums and identify potential maintenance needs.

Profit after financial items was in line with the preceding year and amounted to SEK 6.5 million (6.5).

Net sales for the full-year 2021 decreased by 17.9 percent to SEK 130.6 million (159.0). Profit after financial items decreased to SEK 7.6 million (17.6).

Key performance indicators - Construction Sweden

Amounts in SEK 000.
unless otherwise stated
Oct-Dec
2021
Oct-Dec
2020
Change,
%
Full-year
2021
Full-year
2020
Change,
%
Net sales 39.971 40.259 $-0.7$ 130,556 159,027 $-17.9$
Profit/loss after financial items 6.513 6.526 $-0.2$ 7,575 17,625 $-57.0$
Net margin, $%$ 16.3 16.2 0.1 5.8 11.1 $-5.3$

Construction Abroad

Net sales in Segment Construction Abroad was in line with the corresponding quarter in the preceding year and amounted to SEK 13.5 million (13.6).

The cost saving measures completed in the year contributed to improved profitability. The Danish operations sold an older type MY locomotive in the fourth quarter, which made a positive profit contribution of SEK 2.6 million.

Profit/loss after financial items increased to SEK 4.9 million (-0.3) due to cost savings and a locomotive sale in the Danish operations. The locomotive sale made a positive profit contribution of SEK 2.6 million.

Net sales decreased by 19.9 percent for the full year 2021 compared to the preceding year, and amounted to SEK 48.0 million (59.9). Profit after financial items increased compared with the preceding year and amounted to SEK 3.8 million $(1.8)$ .

Key performance indicators - Construction Abroad

Amounts in SEK 000,
unless otherwise stated
Oct-Dec
2021
Oct-Dec
2020
Change,
%
Full-year
2021
Full-year
2020
Change,
%
Net sales 13.454 13.582 $-0.9$ 47.954 59,891 $-19.9$
Profit/loss after financial items 4.933 $-304$ 1.721.8 3.797 1.830 107.5
Net margin, $%$ 36.7 $-2.2$ 38.9 7.9 3.1 4.9

Transport Scandinavia

Net sales in the Transport Scandinavia segment increased by 80.1 percent in the fourth quarter 2021 in year-on-year terms, totalling SEK 84.6 million (47.0).

The increased sales were due to construction transport on behalf of Leonhard Weiss throughout the fourth quarter. Alongside transport of iron ore concentrate and iron ore for Kaunis Iron and LKAB, this contributed to high transport volumes. The contract with LKAB expired at year end and has not been extended as the customer does not have a need for these transports at present.

Utilisation in the locomotive workshop was higher than in the corresponding period of the previous year. In the beginning of December, Railcare signed an agreement with Infranord relating to the upgrade of two type TB diesel locomotives with a total value of SEK 30 million. The assignment involves changing to stage-V engines to ensure that the locomotives satisfy current demands on performance and CO2 emissions, as well as improving the working environment with a new type of driver's cab and a general upgrade to ensure that vehicles will remain up-to-date and environmentally friendly for many years to come.

Profit after financial items increased to SEK 13.8 million (5.4).

Net sales increased by 48.8 percent in the full-year compared to the previous year, totalling SEK 273.9 million (184.0), the highest net sales on record for the segment. Profit after financial items increased year-on-year, amounting to SEK 39.5 million (24.2).

Key performance indicators - Transport Scandinavia

Amounts in SEK 000,
unless otherwise stated
Oct-Dec
2021
Oct-Dec
2020
Change,
%
Full-year
2021
Full-year
2020
Change,
%
Net sales 84,574 46.959 80.1 273,888 184.025 48.8
Profit/loss after financial items 13.803 5.416 154.9 39.472 24,245 62.8
Net margin, % 16.3 11.5 4.8 14.4 13.2 1.2

Machine Sales

Net sales in the Machine Sales segment decreased in the fourth quarter of 2021, compared to the corresponding quarter in the previous year and amounted to SEK 6.5 million (40.6). The decrease was due to intra-Group MPV sales to Construction Sweden in the fourth quarter 2020.

In the Machine Sales segment, delivery of power packs for Loram were delayed due to delivery problems. A shortage of containers has meant that delivery will take place in the first quarter 2022 instead of in December 2021 as planned.

In the fourth quarter, Railcare signed an agreement with BLS Rail regarding the sale of 28 timber sets, of which 6 were delivered to the customer before year end.

Profit after financial items amounted to SEK -0.9 million (2.0).

Amounts in SEK 000.
unless otherwise stated
Oct-Dec
2021
Oct-Dec
2020
Change,
%
Full-year
2021
Full-year
2020
Change,
%
Net sales 6.537 40.552 $-83.9$ 37.197 82.653 -55.0
Profit/loss after financial items $-860$ 1.952 $-144.1$ 763 11.330 $-93.3$
Net margin, $%$ $-13.2$ 4.8 $-18.0$ 2.1 13.7 $-11.7$

Parent Company

Targets

Financial targets

Sustainability

Dividend

up to the Company's required equity/assets ratio of 25 per cent following payment of dividends.

The Board of Directors intends to propose that the 2022 Annual General Meeting approve a dividend of SEK 0.60 (0.60) per share, totalling SEK 14,474,500 (14,474,500), for the 2021 financial year.

Events after the period

In January, Railcare signed a new agreement with the Swedish Transport Administration, relating to construction work in Sweden. The agreement spans a period of 3 years with the option to extend it by a further 1+1 years. The new agreement provides conditions for Railcare's latest innovation MPV, a batterypowered maintenance machine for railways. The MPV can be used on a call-off basis in circumstances where Railcare's vacuum technology is currently being used.

Annual General Meeting 2022

Railcare's Annual General Meeting 2022 will take place on Wednesday 4 May 2022 at 1:00 p.m. at the Company's premises at Näsuddsvägen 10, SE-932 32 Skelleftehamn, Sweden.

The Annual Report and other documents are available on Railcare's website, www.railcare.se.

Nomination Committee in preparation for Railcare Group AB's Annual General Meeting 2022

In consultation with the largest shareholders, the Chairman of the Board of Railcare Group AB has established a Nomination Committee in preparation for the Annual General Meeting 2022. The Nomination Committee was adjusted following the ownership changes that took place in November, and now comprises Lina Ådin, appointed by TREAC AB, Jonas Holmqvist, appointed by Norra Västerbotten Fastighets AB, and Kjell Lindskog, appointed by Ålandsbanken AB. The Nomination Committee appointed Lina Ådin as Chairman. Combined, the members of the Nomination Committee represent 44.9 per cent of the total number of shares and votes in the company (as of 30 November 2021).

The Nomination Committee is tasked with submitting a proposal to the Annual General Meeting regarding the Chairman of the Board and other members of the Board of Directors, and regarding fees and other compensation to each of the Board members for their Board assignments. The Nomination Committee shall also submit a proposal regarding the election and remuneration of auditors. In addition, the Nomination Committee shall submit a proposal regarding the process for appointing a Nomination Committee in preparation for the Annual General Meeting 2023.

Shareholders wishing to submit proposals to the Nomination Committee may do so by sending an e-mail to [email protected]. Railcare's Annual General Meeting will take place on 4 May 2022 at Railcare's head office in Skelleftehamn, Sweden.

Shareholder structure

A major change to Railcare's ownership structure took place in November 2021, when the founding families Marklund and Dahlqvist sold their shares to Norra Västerbotten Fastighets AB. Norra Västerbotten Fastighets AB was already the single largest shareholder of Railcare Group, and as of 31 December 2021 the company holds 29.5 percent of the total share capital.

Ten largest shareholders
31 December 2021
Number of
shares
Proportion of share
capital and votes (%)
Norra Västerbotten Fastighets AB 7,121,395 29.5
TREAC Aktiebolag 2,415,000 10.0
Ålandsbanken AB 1,225,262 5.1
Avanza Pension insurance company 872,939 3.6
Bernt Larsson 750,987 3.1
HSBC Bank PLC 600,000 2.5
Nordnet Pensionsförsäkring AB 368,448 1.5
Mikael Gunnarsson 351,500 1.5
Emil Burén 289,316 1.2
Torsten Germund Dahlquist 256,110 1.1
Ten largest shareholders 14,250,957 59.1
Other shareholders 9,873,210 40.9
Total 24,124,167 100.0

4,250

Number of shareholders in Railcare Group AB As per 31 December 2021. Source: Euroclear

Source: Euroclear and Railcare

Significant risks and uncertainties

A description of significant risks and uncertainties can be found in Railcare's Annual Report for 2020, which can be downloaded at www.railcare.se

There have been no material changes to significant risks and uncertainties since the publication of the Annual Report.

Transactions with related parties

During the year, there were no significant changes to the Group or Parent Company's relations or transactions with related parties, compared to the information provided in the 2020 Annual Report.

Skelleftehamn, 17 February 2022 Railcare Group AB (publ) Board of Directors

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

FINANCIAL REPORTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IN SUMMARY

Amounts in SEK 000
Note
Oct-Dec
2021
Oct-Dec
2020
Full-year
2021
Full-year
2020
Net sales
3
131,768 95,583 437,946 401,301
Capitalised work on own account 1,566 11,346 8,341 16,217
Other operating income 2,775 228 6,359 3,603
Total 136,108 107,157 452,646 421,120
Raw materials and consumables $-46,998$ $-31,704$ $-140,987$ $-121,740$
Other external costs $-17,664$ $-13,934$ $-62,858$ -58,868
Personnel costs $-35,170$ $-32,696$ $-138,950$ $-124,575$
Depreciation and impairment of
property, plant and equipment and $-10,951$ $-13,605$ $-52,096$ $-53,266$
intangible assets
Other operating expenses -605 -962 $-1,536$ $-2,285$
Total operating expenses $-111,388$ $-92,901$ $-396,426$ $-360,733$
Operating profit/loss (EBIT) 24,721 14,257 56,219 60,386
Financial income 57 $\bf{2}$
Financial expenses $-1,206$ $-1,209$ $-4,427$ -4,820
Net financial items $-1,205$ $-1,209$ $-4,370$ $-4,818$
Share of profit after tax from
associated companies reported
$\overline{\mathbf{4}}$
$-358$ 167 $-182$ 347
according to the equity method
Profit/loss before tax 23,157 13,215 51,667 55,915
Income tax $-4,945$ $-1,981$ $-11,152$ $-12,139$
Net profit/loss for the period 18,212 11,234 40,514 43,776
Other comprehensive income:
Items that may be reclassified to
profit/loss for the period
Exchange rate differences from the 56 $-424$ 250 $-389$
translation of foreign operations
Other comprehensive income for
the period, net of tax
56 $-424$ 250 -389
Total comprehensive income for
the period 18,268 10,810 40,764 43,387
Amounts in SEK Oct-Dec
2021
Oct-Dec
2020
Full-year
2021
Full-year
2020
Earnings per share before dilution* 0.75 0.47 1.68 1.82
Earnings per share after dilution* 0.75 0.47 1.68 1.82
Average number of shares 24,124,167 24,124,167 24,124,167 24,036,128
Number of shares outstanding on the
reporting date
24.124.167 24,124,167 24,124,167 24,124,167

CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN SUMMARY

Amounts in SEK 000 Note 31 Dec 2021 31 Dec 2020
ASSETS
Non-current assets
Intangible assets
Capitalised development costs 967 1,830
Patents 263 299
Goodwill 7,293 7,274
Transportation licence 1,441 685
Total intangible assets 9,964 10,088
Property, plant and equipment
Buildings and land
5
Locomotives and wagons 35,975
132,579
33,257
135,316
Mobile machinery 145,762 155,562
Vehicles 5,761 6,521
Equipment, tools, fixtures and fittings 6,092 5,898
Construction in progress 92,151 66,907
Total property, plant and equipment 418,319 403,461
Financial non-current assets
Holdings reported according to the equity method 832
Deposits 658
Deferred tax assets 725 925
Other non-current receivables 3,954 3,954
Total financial non-current assets 4,679 6,369
Total non-current assets 432,962 419,918
Current assets
Inventories
Raw materials and consumables
Work in progress 14,414
13.555
11,865
7.659
Total inventories 27,968 19,524
Current receivables
Accounts receivable 46,543 44,905
Current tax receivables 1,030 655
Other current receivables 1,597 1,809
Prepaid expenses and accrued income 9,306 9,792
Total current receivables 58,475 57,161
Cash and cash equivalents 38,560 24,785
Total current assets 125,003 101,470
TOTAL ASSETS 557,965 521,388

CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN SUMMARY, cont.

Amounts in SEK 000 Note 31 Dec 2021 31 Dec 2020
EQUITY
Share capital 9.891 9.891
Other capital provided 19,830 36,565
Reserves 1,530 1,280
Retained earnings (comprehensive income for the
period included)
189,899 147,126
Total equity attributable to Parent Company
shareholders
221,150 194,862
LIABILITIES
Non-current liabilities
Deferred tax liabilities 48,158 38,170
Liabilities to credit institutions 97,041 107,659
Lease liability 48,062 33,654
Total non-current liabilities 193,261 179,483
Current liabilities
Lease liability 10,945 26,045
Liabilities to credit institutions 61,668 59,494
Accounts payable 26,057 25,139
Prepayments from customers 9,382 5,848
Current tax liabilities 356 861
Other liabilities 7,046 2,680
Accrued expenses and deferred income 28,101 26,977
Total current liabilities 143,554 147,044
TOTAL EQUITY AND LIABILITIES 557,965 521,388

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN SUMMARY

Other Retained
earnings
Amounts in SEK 000 Note Share
capital
capital
provided
Reserves (incl. profit
for the period)
Total equity
Opening balance
as of 1 January 2020
9,435 32,178 1,669 110,589 153,870
Net profit/loss for the period 43,776 43,776
Other comprehensive income $-389$ $-389$
Total comprehensive income $-389$ 43,776 43,387
Transactions with shareholders
Conversion of debenture 456 4,387 4,843
Dividend $-7,237$ $-7,237$
Closing balance
as per 31 December 2020
9,891 36,565 1,280 147,126 194,862
Opening balance
as of 1 January 2021
9,891 36,565 1,280 147,126 194,862
Reversal in shareholders' equity
due to dividend paid in previous
years.
$-16,735$ 16,735 $\mathbf 0$
Net profit/loss for the period 40,514 40,514
Other comprehensive income 250 250
Total comprehensive income 250 40,514 40,764
Transactions with shareholders
Dividend $-14,475$ $-14,475$
Closing balance
as per 31 December 2021
9,891 19,830 1,530 189,899 221,150

CONSOLIDATED CASH FLOW STATEMENT IN SUMMARY

Oct-Dec Oct-Dec Full-year Full-year
Amounts in SEK 000
Note
2021 2020 2021 2020
Cash flow from operating activities
Operating profit 24,721 14,256 56,219 60,386
Adjustment for non-cash items 8,296 13,605 49,371 51,835
Interest paid $-1,206$ $-1,210$ $-4,427$ $-4,784$
Interest received $\mathbf 0$ $\overline{2}$ 57 2
Income tax paid 1,757 512 $-1,782$ $-1,756$
Cash flow from operating activities 33,568 27,165 99,438 105,683
before changes in working capital
Cash flow from changes in working
capital
Increase/decrease in inventories 224 $-2,244$ $-8,597$ 2,788
Increase/decrease in operating
receivables 24,083 $-5,500$ 502 $-26,136$
Increase/decrease in operating $-10,477$ 3,113 8,894 516
liabilities
Total changes in working capital 13,830 $-4,631$ 799 $-22,832$
Cash flow from operating activities 47,398 22,534 100,237 82,851
Cash flow from investment activities
Investments in intangible assets -6 $-275$ $-957$ -462
Investments in property, plant and $-9,438$
equipment $-11,709$ $-42,220$ $-53,410$
Acquisitions of subsidiaries, net effect $-2,617$
on cash and cash equivalents
Dividends from associated companies 200 200
Divestment of associated companies 450 450
Divestment of property, plant and 3,575 3,645 2,150
equipment
Cash flow from investment activities $-5,419$ $-11,984$ $-38,882$ $-54,139$
Cash flow from financing activities
Loans raised 10,000 19,200 34,020
Amortisation of loans $-5,453$ $-4,750$ $-27,645$ $-24,006$
Amortisation of lease liabilities $-3,082$ $-7,253$ $-24,982$ $-28,600$
Dividend paid $-14,475$ $-7,237$
Cash flow from financing activities $-8,535$ $-2,003$ $-47,902$ $-25,823$
Cash flow for the period 33,444 8,547 13,453 2,889
Cash and cash equivalents at the 5,073 16,507 24,785 22,012
beginning of the period
Exchange rate difference in cash and
cash equivalents
42 $-269$ 321 -116
Cash and cash equivalents at the end
of the period 38,559 24,785 38,559 24,785

PARENT COMPANY INCOME STATEMENT IN SUMMARY

Oct-Dec
2021
Oct-Dec Full-year
2021
Full-year
Amounts in SEK 000 Note 2020 2020
Net sales 7,291 6,190 35,447 30,189
Other operating income 46 240 127
Total operating income 7,337 6,190 35,687 30,316
Operating expenses
Raw materials and consumables $-7$ $-2$ $-3,939$ $-3,300$
Other external costs $-3,651$ $-3,189$ $-12,871$ $-14,168$
Personnel costs $-4,345$ $-3,369$ $-17,733$ $-11,937$
Depreciation and impairment of property, plant and
equipment and intangible assets
$-97$ $-44$ $-396$ $-163$
Other operating expenses $-5$ $-38$ $-28$ -80
Total operating expenses $-8,107$ $-6,640$ $-34,967$ $-29,648$
Profit from participations in associated
companies and jointly controlled companies
$\overline{4}$ 246 446 200
Operating profit $-524$ $-450$ 1,166 868
Profit/loss from financial items
Profit from participations in Group companies 21,000 $\overline{\phantom{0}}$ 23,404 4,346
Other interest income and similar profit/loss items $\mathbf{0}$ $\mathbf{1}$ $\mathbf 0$ 73
Interest expenses and similar profit/loss items $-13$ $-83$ $-53$
Total profit/loss from financial items 20,987 $\mathbf{1}$ 23,321 4,366
Profit/loss after financial items 20,463 $-449$ 24,487 5,234
Appropriations $-1,200$ 70 $-1,200$ 70
Tax on net profit/loss for the period 340 $-23$ 3 $-547$
Net profit/loss for the period 19,604 $-401$ 23,291 4,757

PARENT COMPANY BALANCE SHEET IN SUMMARY

Amounts in SEK 000 Note 31 Dec 2021 31 Dec 2020
ASSETS
intangible assets
Patents 263 299
Total intangible assets 263 299
Property, plant and equipment
Buildings 4,088 4,304
Equipment, tools, fixtures and fittings 435 344
Total property, plant and equipment 4,524 4,648
Financial non-current assets
Participations in Group companies 38,336 38,336
Participations in associated companies 4 $\,204$
Total financial non-current assets 38,340 38,540
Total non-current assets 43,127 43,487
Current assets
Current receivables
Accounts receivable 13
Receivables from Group companies 67,649 10,070
Other receivables 1 33
Prepaid expenses and accrued income 1,297 828
Total current receivables 68,959 10,931
Cash and cash equivalent 30,802 1,789
Total current assets
99,761 12,720
TOTAL ASSETS 142,888 56,207

PARENT COMPANY BALANCE SHEET IN SUMMARY, cont.

Amounts in SEK 000 Note 31 Dec 2021 31 Dec 2020
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital 9,891 9,891
Total restricted equity 9,891 9,891
Non-restricted equity
Share premium reserve 17,446 23,024
Retained earnings 4,140
Net profit/loss for the period 23,291 4,757
Total non-restricted equity 40,737 31,921
Total equity 50,628 41,812
Current liabilities
Accounts payable 1,960 966
Current tax liabilities 649 498
Liabilities to Group companies 86,264 10,028
Other liabilities 720 622
Accrued expenses and deferred income 2,668 2,281
Total current liabilities 92,260 14,395
TOTAL EQUITY AND LIABILITIES 142,888 56,207

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 2020.

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:

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

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

railcane

Income

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

Oct-Dec
2021
Oct-Dec
2020
Segment
income
between
segments
Sales Income from
external
customers
Segment
income
between
segments
Sales Income from
external
customers
Construction
Sweden
39,971 3,445 36,526 40,259 4,780 35,479
Construction
Abroad
13,454 1,708 11,746 13,582 2,816 10,767
Transport
Scandinavia
84,574 4,976 79,598 46,959 4,999 41,960
Machine
Sales
6,537 3,242 3,295 40,552 33,552 7,000
Group-wide 7,291 6,687 604 6,190 5,812 378
Total 151,827 20,059 131,768 147,543 51,960 95,583
Full-year
2021
Full-year
2020
Segment
income
Segment
income
Segment
income
Segment
income
between
segments
Sales Income from
external
customers
Construction
Sweden
130,556 15.720 114,836 159.027 14.595 144,432
Construction
Abroad
47,954 5,657 42,296 59,891 9,809 50,082
Transport
Scandinavia
273,888 14.280 259,608 184.025 14.284 169,741
Machine
Sales
37,197 17.790 19,407 82,653 47,123 35,530
Group-wide 35.447 33.648 1,798 30.189 28,674 1,515
Total 525,041 87,096 437,946 515,785 114,485 401.301

railcane

Profit/loss after financial items

Oct-Dec
2021
Oct-Dec
2020
Full-year
2021
Full-year
2020
Construction Sweden 6,513 6.526 7.575 17,625
Construction Abroad 4.933 $-304$ 3.797 1,830
Transport Scandinavia 13,803 5.416 39,472 24,245
Machine Sales $-860$ 1,952 763 11,330
Group-wide $-873$ $-542$ 242 539
Total 23,515 13,048 51,849 55,568

Profit/loss after financial items for the Group's operating segments is reconciled with Group profit/loss before tax as follows:

Profit/loss before tax 23.157 13.215 51.667 55,915
equity method
companies reported according to the $-358$ 167 $-182$ 347
Share of profit after tax from associated
Profit/loss after financial items 23.515 13.048 51.849 55.568
profit/1033 before tax as follows.

The Group's customers are private and public operators in the railway industry and vary according to area of operations. The Group's customers are largely repeat customers based on long-term relationships.

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
Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec
Segment 2021 2020 2021 2020 2021 2020 2021 2020
Construction Sweden 36,526 35,479 - $\blacksquare$ 36,526 35,479
Construction Abroad 11,815 10,560 ۰. -69 207 11.746 10.767
Transport Scandinavia 77,001 37,484 309 843 2.288 3.634 79,598 41,960
Machine Sales 1,113 742 2.182 6,259 $\blacksquare$ 3.295 7,000
Group-wide 604 377 ۰. н. 604 377
Total 127,059 84,641 2,491 7,101 2,219 3.841 131,768 95,583
Income from services Sales of goods Leasing Total
Full-year Full-vear Full-year Full-year Full-year Full-year Full-year Full-year
Segment 2021 2020 2021 2020 2021 2020 2021 2020
Construction Sweden 114.836 144.432 - $\blacksquare$ $\overline{\phantom{0}}$ $\blacksquare$ 114.836 144.432
Construction Abroad 41.729 49,379 22 $\blacksquare$ 545 703 42,296 50,082
Transport Scandinavia 242,710 151,388 6,573 4.479 10.325 13,875 259,608 169,741
Machine Sales 3,500 5.239 15,907 30,291 $\blacksquare$ 19.407 35,530
Group-wide 1.798 1.515 $\blacksquare$ $\sim$ $\sim$ 1.798 1,515
Total 404,573 351,953 22,502 34,770 10,870 14,578 437,946 401,301

Note 4 Participations in associated companies

Divestment of shares

In October, Railcare divested its entire holding (40%) in associated company Atumo AB for SEK 450,000. The Group reported a value of the holding of SEK 808,000 and the Parent Company recognized the cost at SEK 204,000.

In the Consolidated Statement of Comprehensive Income in summary, the item Proportion of profit after tax from associated companies recognized according to equity method comprises proceeds from the sale of shares of SEK-358,000 and profit share relating to the period prior to the divestment of SEK 176,000.

In the Parent Company Income Statement in summary, the item Profit from shares in associated companies and jointly controlled companies comprises proceeds from the sale of shares of SEK 246,000 and dividends received earlier in the year of SEK 200,000.

Note 5 Non-current assets

Locomoti Equipment, Construction
Buildings ves and Mobile tools, fixtures in progress
and land wagons machinery Vehicles and fittings Total
31 December 2020
Opening carrying amount 30,790 129,169 165,405 7,604 5,545 31,912 370,425
Exchange rate differences $-122$ $-78$ $-110$ -6 $-49$ $-365$
Purchases/capitalised expenses for the
year 10,389 26,266 ۰ 1,471 672 46,939 85,737
Reclassifications 7,992 3,666 853 $-11,797$ 714
Disposals and scrappings $-73$ $-522$ $-84$ $-147$ $-826$
Depreciation $-7,727$ $-27,511$ $-13,399$ $-2,548$ $-1,040$ $-52,226$
Closing carrying amount 31 Dec 2020 33,257 135,316 155,562 6,521 5,898 66,907 403,461
Of which, right-of-use assets 22,842 31,873 2,178 6,482 13 63,389
31 December 2021
Opening carrying amount 33.257 135,316 155,562 6,521 5.898 66,907 403,461
Exchange rate differences 101 29 58 7 27 222
Purchases/capitalised expenses for the
year 10,129 13,632 4,425 419 40,171 68,776
Reclassifications 10,661 3,362 1,058 $-14,927$ 153
Disposals and scrappings -51 $-863$ $-2,317$ $-66$ $-3,297$
Depreciation $-7,462$ $-26,195$ $-13,221$ $-2,875$ $-1,243$ $-50,996$
Closing carrying amount 31 Dec 2021 35,975 132,579 145,762 5,761 6,092 92,151 418,319
Of which, right-of-use assets 25,403 27,895 1,927 5,675 60,900

KEY PERFORMANCE INDICATORS, RAILCARE GROUP IN SUMMARY

Amounts in SEK 000, Oct-Dec Oct-Dec Full-year Full-year
unless otherwise stated 2021 2020 2021 2020
Net sales 131,768 95,583 437,946 401,301
Sales growth, % 37.9 2.2 9.1 8.3
Operating profit/loss (EBIT) 24,721 14,257 56,219 60,386
Operating margin, $%$ 18.8 14.9 12.8 15.0
Net profit/loss for the period 18,212 11,234 40,514 43,776
Net financial items $-1,205$ $-1,209$ $-4,370$ $-4,818$
Total assets 557,965 521,388 557,965 521,388
Equity/assets ratio, % 39.6 37.4 39.6 37.4
Key performance indicators per
share, SEK
Earnings per share before dilution 0.75 0.47 1.68 1.82
Earnings per share after dilution 0.75 0.47 1.68 1.82
Equity per share 9.17 8.08 9.17 8.08
Dividend per share, SEK 0.6 0.30

QUARTERLY DATA, RAILCARE GROUP SUMMARY

Q 4 Q 3 Q 2 Q 1 Q 4 Q 3 Q2 Q1 Q 4
Amounts in SEK million 2021 2021 2021 2021 2020 2020 2020 2020 2019
Net sales 131.8 126.2 91.0 88.9 95.6 94.5 105.3 106.0 93.5
Capitalised work on own account 1.6 1.9 3.5 1.4 11.3 3.5 0.7 0.7 1.0
Other operating income 2.8 1.2 1.3 1.0 0.2 1.0 1.7 0.6 0.8
Total 136.1 129.3 95.8 91.4 107.2 99.0 107.8 107.2 95.3
Raw materials and consumables $-47.0$ $-39.9$ $-33.7$ $-20.3$ $-31.7$ $-27.5$ $-31.1$ $-31.4$ $-37.6$
Other external costs $-17.7$ $-16.7$ $-15.7$ $-12.8$ $-13.9$ $-14.4$ $-15.3$ $-15.3$ $-12.2$
Personnel costs $-35.2$ $-33.4$ $-34.9$ $-35.5$ $-32.7$ $-29.0$ $-33.2$ $-29.7$ $-31.2$
Depreciation and impairment $-11.0$ $-13.7$ $-13.8$ $-13.7$ $-13.6$ $-13.4$ $-13.5$ $-12.7$ $-12.7$
of property, plant and equipment
Other operating expenses $-0.6$ $-0.3$ $-0.2$ $-0.4$ $-1.0$ $-0.2$ $-0.5$ $-0.6$ $-0.3$
Total operating expenses $-111.4$ 104.0 $-98.3$ $-82.7$ $-92.9$ $-84.5$ $-93.5$ $-89.8$ $-93.8$
Operating profit/loss (EBIT) 24.7 25.3 $-2.5$ 8.7 14.3 14.4 14.3 17.4 1.5
Financial income 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0
Financial expenses $-1.2$ $-1.1$ $-1.0$ $-1.1$ $-1.2$ $-1.2$ $-1.2$ $-1.2$ $-1.4$
Net financial items $-1.2$ $-1.1$ $-1.0$ $-1.1$ $-1.2$ $-1.2$ $-1.2$ $-1.2$ $-1.4$
Share of profit after tax from
associated companies reported
$-0.4$ 0.0 0.1 0.1 0.2 0.1 0.0 0.1 0.1
according to the equity method
Profit/loss before tax 23.2 24.2 $-3.4$ 7.7 13.2 13.3 13.1 16.3 0.2
Taxes $-4.9$ $-5.2$ 0.4 $-1.5$ $-2.0$ $-3.6$ $-3.1$ $-3.5$ 0.0
Net profit/loss for the period 18.2 19.1 $-3.0$ 6.2 11.2 9.8 9.9 12.8 0.2
Equity/assets ratio, % 39.6 37.5 36.7 39.5 37.4 36.4 35.4 36.2 33.5

DEFINITIONS

General All amounts in 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 items 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

MPV

Railcare is developing a new generation of battery-powered Multi Purpose Vehicle, MPV. An MPV is a versatile working vehicle used in rail maintenance. All testing was completed and all approvals obtained in June 2021. On 21 July 2021, Railcare launched its first live project with the new innovation MPV, the world's largest battery-powered maintenance machine for the railway industry.

Railvac

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

Powerpack

The power supply system in a Railvac, comprising motor, vacuum pump and hydraulics.

Press releases in the fourth quarter 2021

Financial calendar

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About Railcare Group

RAILCARE GROUP AB (publ)

Railvac in 3D

For further information, please contact:

Mattias Remahl, CEO Telephone: +46 (0)70–271 33 46 E-mail: [email protected]

Lisa Borgs, interim IR and Communication Manager Telephone: +46 (0)70–622 50 01 E-mail: [email protected]

This information is such as Railcare Group AB (publ) is required to disclose under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, for publication on 17 February 2022 at 7:30 a.m. CET.

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.