0505ANNUAL REPORT

0505

Annual Report

3

THE OPERATION EuroMaint in brief 2005 4

Important events in 2005 5

The President’s comments 6

Benefit in a changing world 8

EuroMaint – a Group in motion 10

Goals and goal achievement 12

Acquisitions and investments 13

Article on EuroMaint’s historical background Bengt Möller 14

EuroMaint Rail 16

EuroMaint Industry 22

Article on EuroMaint Industry’s technical development Jan-Olof Lundgren 28

Research and technical development 30

Article on EuroMaint Rail’s technical development Thomas Robertsson 32

Personnel in focus 34

Article on EuroMaint’s HR work Janette Sved and Ulf Sandén 36

Quality and environment 38

Article on EuroMaint’s environmental work Annkristin Castagna and Urban Ekmark 40

Sustainable development 42

Risk management 43

Article on a member of the Board’s view of EuroMaint Elisabeth Nilsson 44

Four-year summary 46

THE BUSINESS IN FIGURES Report of the Directors 48

Income Statement 51

Balance Sheet 52

Change in equity 54

Cash flow analysis 55

Notes 56

Auditors’ Report 72

CORPORATE GOVERNANCE Corporate Governance 73

The Chairman’s comments 76

The EuroMaint Board of Directors 77

The EuroMaint Group management 79

EuroMaint Rail management 80

EuroMaint Industry management 81

OTHER INFORMATION Addresses 82

CONTENTS

55

EUROMAINT IN BRIEF 2005

2005 was an eventful year for the EuroMaint Group.There was a great deal of movement, both internallyand on the market. The Group achieved its goals ofgenerating even better profits, winning important newcontracts, gaining environmental certification for theGroup and strengthening its customer relations. One major and important event half-way through the year was the acquisition of Euromation from VolvoTechnology Transfer AB, Volvo Powertrain AB and VolvoCars. The acquisition extends the EuroMaint Group’sestablished position within the rail transport industry witha closely related operation in the engineering sector.

NEW GROUP STRUCTURE

As of 2006, EuroMaint has a new Group structure with two

subsidiary companies targeting the rail transport industry and

the engineering industry respectively. The subsidiaries focus on

customers and their needs, while the parent company conducts

strategic development issues in networks with the two subsidiaries.

EUROMAINT RAIL AB AND EUROMAINT INDUSTRY AB

The names of the subsidiary companies are EuroMaint Rail AB

and EuroMaint Industry AB. Euromation is disappearing as a name

and a brand, and in this annual report has been renamed EuroMaint

Industry except in historical contexts. The operation known as

EuroMaint up until the beginning of the year is now called

EuroMaint Rail. The name EuroMaint is used when referring to

the EuroMaint Group.

MANY COMMON FACTORS

Both EuroMaint Rail and EuroMaint Industry have a history that

extends back to the 19th century. Both companies were founded

from the realisation that maintenance and technical development

for increased availability, efficiency and quality are important core

operations. Both are specialist companies that combine long

experience with fresh thinking and innovative solutions. Both are

profitable and strengthen their customers’ competitiveness by

putting expertise, customisation and delivery quality first.

EUROMAINT RAIL

EuroMaint – without the Rail add-on – was established at the begin-

ning of 2001 when the Swedish State Railways (SJ) were converted

into companies and SJ Engineering became EuroMaint AB. The pri-

mary operation encompasses the maintenance and refurbishment

of rail rolling stock. EuroMaint Rail’s head office is in Solna outside

Stockholm, and it has operations in 14 locations: Blackvreten, Borlänge,

Gävle, Gothenburg, Hallsberg, Linköping, Luleå, Malmö, Nässjö,

Stockholm/Hagalund, Sundsvall, Vännäs, Åmål and Örebro. In 2005

it had around 1,370 employees and a turnover of SEK 1,710 million.

EUROMAINT INDUSTRY

EuroMaint Industry – formerly Euromation – was established in

2000 when the business unit Maskinteknik within the Volvo Group

was converted into a company. This operation focuses on the

engineering industry and encompasses maintenance services,

component servicing and production engineering, as well as the

development and manufacture of production equipment. The head

office is in Skövde, southern central Sweden. There is also an

operation in Hallsberg, central Sweden. In 2005 EuroMaint Industry

had around 285 employees and a turnover of SEK 307 million.

FACTS IN BRIEF

The EuroMaint Group strengthens its customers’ competitiveness

through tailored maintenance and technical solutions. The Group’s

headquarters are in Solna. Turnover in 2005 totalled SEK 1,872 million,

with a profit of SEK 113 million. The Group had approximately 1,650

employees in 2005. EuroMaint is owned by AB Swedcarrier, a state-

owned holding company.

4

KEY RATIOS 2005 1 2004 2

Turnover, SEK mn 1,872 1,493

Operating profit, SEK mn 113 47

Cash flow after investment activities, SEK mn 52 14

Operating margin, % 6 3.2

Equity/assets ratio, % 17.8 11

Average number of employees 1,669 1,534

1 Includes EuroMaint Industry as of 1 July 2005.

2 The present EuroMaint Rail.

IMPORTANT EVENTS IN 2005

5

2.

3.

4.

6.

1.

2,000

1,500

1,000

500

02003

1,49

4

2004

1,87

2

2005

1,6

53

2002

1,87

9

The world’s first biogas train in regular service

A unique event occurred when EuroMaint Rail

delivered a Y1 engine coach converted from diesel

to biogas – the first in the world to go into regular

service. The customer was Svensk Biogas AB,

a wholly-owned subsidiary of Tekniska Verken

i Linköping AB. This investment in reducing environ-

mental load from non-electrified rail transport

attracted international attention.

Acquisition of Euromation

The opportunity to acquire Euromation arose very

suddenly. When it happened, the EuroMaint Group

was already mentally prepared to extend and deepen

its dealings with the engineering industry. With stable

profitability the Group was also ready to take this

step financially. The Board was able to make a rapid

decision.

10-year maintenance agreement with

Arlanda Express

In January EuroMaint Rail signed a 10-year agreement

with Arlanda Express to maintain the X3 trains on

the Arlanda Line. EuroMaint Rail won the tender in

the face of stiff international competition, thereby

gaining its first major contract with an operator

outside the circle of companies that traditionally

derive from the Swedish State Railways – and also

an operator with a foreign owner.

Whole of EuroMaint eco-certified

Many of EuroMaint’s production units had already

been awarded environmental certification by the start

of 2005. During the year, a great deal of commitment

and work has been invested in gaining ISO 14001

environmental certification for all units. This goal

was achieved at the end of the year. As a result, the

whole of EuroMaint is now quality and environ-

mentally certified.

Stockholm Train Alliance won SL procurement

At the end of the year, the Stockholm Train Alliance

– owned by Tågkompaniet and SJ AB, with ISS

TraffiCare and EuroMaint Rail as suppliers – won

the procurement of commuter rail services within

Stockholm Transport (SL), in the face of stiff competi-

tion from international players. The quality level of

our maintenance was an important reason behind

winning the contract. The agreement runs to June

2011 with an option for a further five years.

New Group structure

The decision to revise the Group structure as of

2006, with separate companies for the rail transport

industry and the engineering industry, enables the

EuroMaint Group to invest more generally in the

development of maintenance and technical solutions.

The companies EuroMaint Rail and EuroMaint

Industry are devoted to customer benefit, while the

parent company drives strategic development issues.

1. SJ AB, 42 %

2. Green Cargo, 15 %

3. AB Volvo, 10 %

4. Volvo Cars, 3 %

5. Other customers, rail transport, 28 %

6. Other customers, engineering industry, 2 %

TURNOVER BY GROUP COMPANY TURNOVER BY CUSTOMER IN THE GROUP VOLUME DEVELOPMENT *SEK mn

2.

1. EuroMaint Rail, 85 %

2. EuroMaint Industry, 15 %

1.

5.

* The relevant figures for 2002–2004 relate to

EuroMaint Rail. EuroMaint Industry is included

from 1 July 2005.

6

THE PRESIDENT’S COMMENTS

During 2005, operations within EuroMaint havebeen further reinforced from the positive positionwe managed to achieve the year before. We havereceived several major orders, kept our promises to the customers regarding good quality at theright time – and achieved our planned profit levelby a clear margin. The operation has expandedthrough the acquisition of Euromation. The futureis looking bright, with a good workload and strongpotential for further contracts.

Reinforced engineering and planning function

In March we carried out a restructuring operation, which primarily

involved strengthening the engineering and planning function

within EuroMaint Rail. The aim was to become more proactive in

relation to our customers and to highlight the importance we place

on being at the leading edge of technical developments. One direct

consequence of this was our partnership with AEA Technology Rail,

a specialist company in condition-based maintenance. Our

customers have shown great interest and I have already received

numerous positive reactions.

The EuroMaint Group will also be increasingly active in its

contacts with universities and colleges. Euromation brought with

it an established network of R&D contacts. We will now expand

this into areas such as rolling stock engineering, maintenance

engineering and systems engineering.

A strong contract portfolio

In January we entered into a ten-year maintenance contract with

Arlanda Express. Since the contract came into force in April,

Arlanda Express has reported that they have never had such a

high level of availability for their trains, while passenger numbers

are rising steadily.

The biogas train in Linköping was another important project.

We developed, designed and converted a Y1 engine coach from

diesel to biogas. It will go into service shortly, when our workshop

in Linköping has been adapted for maintenance of biogas trains.

Through this investment we are clarifying our commitment to

reducing environmental impact.

The agreement with Stockholm Transport (SL) regarding

commuter train services in Stockholm is also worthy of mention.

As a supplier in the Stockholm Train Alliance, EuroMaint Rail

plays an important role in supplying light maintenance, component

maintenance and material sourcing.

SL is striving to achieve clean, working, punctual trains as well

as a secure environment for its passengers. The Stockholm Train

Alliance won the contract in the face of stiff competition from seve-

ral international companies, thanks to top marks for quality as well

as the actual takeover process, which is clearly just as important.

The contract will run from 18 June 2006 for five plus five years.

The total order value amounts to around SEK 1 billion a year.

EuroMaint Rail’s share is approximately 17 per cent.

Stable market share

In order to illustrate the stability of our position in the rail transport

industry, one only has to look back to 2002. It was then that we

realised that if we were to lose all the tenders we competed for, our

market share would fall from 50 to 6 per cent in four years. Today we

still have a market share of 50 per cent. After winning many extremely

competitive contracts, we now have so many long-term contracts

that we have secured a capacity of 80 per cent up until 2008.

Environmental certification

An important factor, in particular for our competitiveness, is that

the entire Group has been environmentally certified since last

December. As a result, the whole of EuroMaint is now both quality

and environmentally certified.

Improved profits – to say the least

During 2005 we have achieved our goal of improving our profits

– to say the least. Profits grew from SEK 47 million to SEK 113 million,

an increase of more than 100 per cent. This success, delivering a

profit amounting to 6 per cent of turnover, means that the Board

of Directors is continuing to entrust us to develop the company.

We have also succeeded in turning around the cash flow during 2005,

finishing the year with a surplus.

Acquisition of Euromation

Back in the spring, the Board of Directors considered that the time

was right to plan for new business areas, specifically the engineering

and process industries. On 1 July 2005 we acquired Euromation,

now called EuroMaint Industry, with almost 285 employees, head-

quarters in Skövde, a turnover of approximately SEK 300 million

and a profit level of 8 per cent in 2005. The majority of this turnover

comes from the previous owner, Volvo. The aim is to increase the

number of additional customers through active cultivation of the

market, thereby reducing dependency on Volvo.

A logical consequence of the acquisition was the decision,

from the beginning of 2006, to introduce a new Group structure

with separate subsidiaries for rail transport and engineering. At the

same time we have opened the door to the potential of expanding

internationally – an important step in strengthening our brand.

7

ships with local players. A clear structural shift is under way in the

Swedish engineering industry, with maintenance and production

streamlining increasingly being outsourced. This is where EuroMaint

Industry will be an important supplier! The market is so large in

certain areas that a five per cent market share would double the

Group’s turnover. Our ambition is to approach this share within

a few years. We are focusing on a segment with relatively advanced

services, which demand the level of authorisation and security at

which EuroMaint excels.

I would like to conclude by saying a big thank you to all the

tremendous employees within EuroMaint. When I travel around

and speak with you, I can see that the climate and level of confidence

are constantly changing for the better. I hope and trust that you feel

satisfied – particularly bearing in mind our excellent profit figures.

PETHER WALLIN

President & CEO

”We are now ready to grow””We are now ready to grow”Pether Wallin –President & CEO

Visions for the future

From half-way through 2006, when the SL contract begins, we

anticipate achieving a rolling 12-month turnover of SEK 2 billion.

With 1,650 employees, this means a turnover of SEK 1,21 million

per employee, which is excellent for a service-producing company.

In the rail transport industry, maintenance procurement for the

Pågatågen trains is currently under way. During the year, the basic

material for the procurement of Öresund rail services is anticipated.

On the refurbishment side, two major procurements are in progress:

the upgrading of Green Cargo’s T44 and RC2 engines respectively.

The two contracts have a combined value of between SEK 1 and

1,5 billion, depending on the scope.

With the large market share we have in train maintenance and

refurbishment, we need to expand internationally in order to continue

evolving the company. As the Swedish market is not expanding over

time, it is also important to stabilise the economy with streamlined

services on a broader market.

At the same time we realise that the rules of the game and

business cultures differ considerably from one country to the next.

We will bridge these differences through co-operation or partner-

8

BENEFIT IN A CHANGING WORLD

EuroMaint strengthens its customers’ competitivenessthrough tailored maintenance and technical solutions.The Group’s companies focus on customer benefit anddelivery quality. They have a strong position on themarket and good relations with their customers.

THE MARKET & BUSINESS ENVIRONMENT

A general structural change in maintenance and productivity

development is taking place on the Swedish market. In addition to

the current good economic situation, there are various general trends

that are leading to increased demand for the Group’s services.

General structural changes on the maintenance market

The market for maintenance services is rapidly changing and being

restructured. It is becoming increasingly common in most sectors

to establish a long-term collaboration with external partners,

partners whose core business is maintenance and who can offer

complete turnkey solutions. Collaboration takes place through a

complete outsourcing agreement or by placing parts of the main-

tenance with external suppliers. EuroMaint’s companies are

specialist businesses that offer advanced maintenance services.

They supply their customers with expertise, development resources,

proactive planning and innovative maintenance solutions.

The EuroMaint Group is also investing in strategic development

and connecting research with practical experience.

Increased demand for availability-based services

Looking at the rail transport industry in particular, more and more

operators and vehicle owners are investing in modernising or

renewing their rolling stock. There is a growing need for refurbish-

ment services, both in Sweden and abroad. The market for train

maintenance, on the other hand, is not displaying any general growth.

There is however greatly increased demand for more advanced,

availability-based services.

Increased need for production refinement within industry

Demand for efficiency and productivity-raising services and tech-

nical solutions in Swedish industry is growing. Above all there is an

emerging realisation that it is worth investing in the development of

production engineering, automation and systematic maintenance.

Many companies have also experienced the fact that it can cost

money to move production to low-cost countries. When it comes

to knowledge-intensive production in particular, it is important to

have maintenance suppliers close by who offer quality, flexibility

and experience of advanced technology.

Prospects on the export market

EuroMaint Rail has strengthened its capacity on the marketing side,

with the focus on train maintenance and refurbishment work in

Denmark, Norway and Germany, as well as the new EU states of

Estonia, Latvia and Lithuania. Clear wishes have been expressed in

these countries to bring in new incentives and to increase domestic

competition. Many contacts have been made and positive discus-

sions are being conducted.

The export venture relates primarily to services and structural

capital: to export EuroMaint Rail’s quality and environmentally

certified business management system, specialist knowledge within

technical maintenance and project management expertise. The

required resources are built up on site with the aid of key individuals

and partners.

The Swedish market is EuroMaint Industry’s main market.

The company follows its customers out into the world, but does not

currently focus on exports.

9

BENEFIT IN SOCIETY

In our day-to-day lives, we can all see that careful maintenance

of our home or car preserves its value, usability and traffic safety

– and reduces the need for expensive emergency measures. It’s

that simple. On a larger scale, it is vital to achieve an optimum

balance between cost and benefit. EuroMaint is strengthening

the rail transport and engineering industries’ profitability

through tailored maintenance and technical solutions:

• EuroMaint Rail is contributing to a safer, more efficient and

more environmentally friendly rail transport system, and is

helping to make the system more attractive and convenient

for passengers and more competitive for freight transporters.

• EuroMaint Industry is contributing to a higher level of

availability, better utilisation of facilities and an improved

quality exchange in industry, thereby supporting profitability

and competitiveness.

The EuroMaint Group as a whole aims to contribute to increased

exports of knowledge and structural capital. There is also a

clear desire to promote training and research within those

areas where the Group possesses leading-edge expertise.

EuroMaint Rail

EuroMaint Rail is contributing towards

a safer, more efficient and more

environmentally friendly transport

system, and is helping to make the

system more attractive and convenient.

EuroMaint Industry

EuroMaint Industry is contributing

to a higher level of availability,

better utilisation of facilities and

an improved quality exchange

in industry.

10

EUROMAINT – A GROUP IN MOTION

The opportunity for EuroMaint to acquire Euromationarose very suddenly. When it happened, the Group wasalready mentally prepared to extend and deepen itsdealings with the engineering industry. With stable profitability the Group was also ready to take this stepfinancially. The Board was able to make a rapid decision.

THE NEW GROUP STRUCTURE

The two companies in the EuroMaint Group have many factors in

common. In particular, they both have experience of developing

from being an internal resource within their former owner

organisations – the Swedish State Railways and Volvo respectively

– to becoming commercial companies on a competitive market.

They are both still heavily dependent on their former owners.

This dependency will decrease without reducing the assignment

volumes: EuroMaint Rail and EuroMaint Industry intend to grow.

The decision to form a Group in which the different companies

focus on different markets was important. The Group is now broader,

both from a market and a skills perspective. The Group has a clear

structure – the companies can concentrate on customer benefit

and delivery quality, while strategic development issues and the

development of co-operation with strategic partners are dealt with

at Group level. The Group management operates with the lowest

possible overhead in networks with the companies.

VISION

EuroMaint’s vision is to be a leading innovative partner for more

efficient maintenance and increased productivity.

This means that the companies in the Group must be driving

forces that promote development, as well as being the largest main-

tenance suppliers in the selected industry – and that the Group as a

whole must stand out as a leader in ‘all categories’. Innovative means

that the Group’s companies must lead the development of concepts

for new maintenance and technical solutions, based on their know-

ledge of their customers. The Group must work on the continual

development of organisational forms, processes and working

methods in order to achieve improved efficiency and productivity.

The term ‘partner’ means that the Group’s companies must

develop long-term collaborations with their customers and offer

them tailored total solutions, rather than simply supplying one-off

services from time to time. This means focusing on areas of business

where the Group’s strategic strengths can best be put to use.

More efficient maintenance and increased productivity mean

strengthening our customers’ competitiveness by improving

availability and the degree of utilisation of their production plants

and rolling stock.

BUSINESS CONCEPT

EuroMaint strengthens its customers’ competitiveness through

tailored maintenance and technical solutions, primarily within

the rail transport industry and the engineering industry.

An important success factor is EuroMaint’s ability to develop

and supply total solutions – and to unify customisation with

cost-effectiveness. Customisation naturally requires diversity.

Cost-effectiveness often demands uniformity. These requirements

may appear contradictory, but they can be united.

Diversity is achieved through receptiveness, knowledge about

customers and by creating service concepts that can be flexibly

combined to form customised total solutions. Uniformity is secured

in that the business management system’s standardised processes

support the work at every stage, from early business phases to

final delivery.

11

STRATEGIC GOALS

EuroMaint’s strategic goals are for the companies to be market

leaders and profitable in maintenance for the rail transport industry

and the engineering industry, as well as to further develop and expand

the Group towards new sectors through corporate acquisitions.

The strategic goals are to:

• Increase turnover significantly during the period 2006–2008

by expanding within current business units and in new sectors.

• Satisfy the owners’ demands for profitability, in part by

developing new technical maintenance and production

solutions, as well as through standardised, efficient, uniform,

clear processes.

• Be an attractive employer that ensures success through a skilled

and dedicated workforce with a high level of satisfaction and

shared action.

• Develop long-term relationships with customers, suppliers

and partners. The goal is based in part on sustaining a high level

of delivery quality and on developing the EuroMaint brand so

that it represents the Group’s core values: customer orientation,

environmental consideration and being a safe, attractive

workplace.

The idea behind the EuroMaint Group’s structure is

that the companies can concentrate on customer

benefit and delivery quality, while strategic develop-

ment issues are conducted at Group level. The Group

management co-operates with the lowest possible

overhead in networks with the companies.

EuroMaint AB

EuroMaint Rail AB EuroMaint Industry AB

12

GOALS AND GOAL ACHIEVEMENT

PROFITABILITY

Turnover for 2005 amounted to SEK 1,872 million, operating profit

was SEK 113 million and the operating margin was 6 per cent.

These results satisfy the goals laid down for 2005 by a clear margin.

EuroMaint Rail has won new contracts, such as Arlanda Express

and the maintenance of Stockholm’s commuter rail traffic. We have

also commenced deliveries of refurbished X2 trains. Turnover is

above forecast and expectation. Planned cost-cutting has been

successfully implemented. Day-to-day efficiency at all levels has

increased. All control and support systems have been further

developed in order to function in a changing world.

Important factors that have influenced the results include:

• Problems with the net cash flow during the first half of the year,

primarily due to initially delayed deliveries of the X2 refurbishment.

• Tough cost control at all levels – contract, workshop, division,

company and Group – has entailed high cost consciousness

and a strong focus on the optimum utilisation of resources.

• A decrease in purchasing costs by about 10 per cent wherever

possible. Intensive efforts to ensure improved and more cost-

effective suppliers will also produce results in the longer term.

• Reassessment of the obsolescence model means that inventories

have been revalued by SEK 23 million, which has had a positive

impact on profit.

• The lease agreement in Tillberga was dissolved at a one-off cost

of SEK 23 million, of which SEK 19 million relates to the period

after the end of 2005.

• The acquisition of Euromation, now EuroMaint Industry,

whose profits and net cash flow exceeded the forecast at the

time of the takeover.

CAPITAL STRUCTURE

The total assets amounted to SEK 973 million. Equity amounted to

SEK 174 million, an increase of SEK 93 million during the year. The

equity/assets ratio is 17.8 per cent and no dividend will be paid until

the minimum ratio target of 25 per cent is achieved. Goodwill of

SEK 44 million derives from the acquisition of Euromation AB,

which took place on 1 July 2005.

DIVIDEND

No dividend has been paid to shareholders. A dividend will be paid

when the target equity/assets ratio of 25 per cent has been achieved.

12345

Satisfy owner demandson profitability

Continue to developpositively on the domestic market andexpand internationally

Develop partnershipswith customers and suppliers

Be an attractiveemployer

Environmental goals

Operating margin

Cash flow

Equity/assets ratio

Market share

Employee Satisfaction Index,

ESI

Overall key ratios for the

environment are currently

being developed

6 %

SEK 52 mn

17.8 %

EuroMaint Rail 49 % *

EuroMaint Rail 2.4 (2004) *

Under

development

Goal achieved for 2005. There is still

some way to go before the long-term

profitability goals are met: 8 % operating

margin and 25 % equity/assets ratio.

Goal achieved for the domestic

market. No export business was

conducted during the year.

Goal achieved.

Next CSI measurement in 2006.

Next ESI measurement in 2006.

Planned for completion in 2006.

Operating margin

5 %

Market share in

Sweden

> 50 %

CSI 24.5

ESI 2.9

Under

development

Goal Key ratio Target for 2005 Outcome Comments

Customer Satisfaction Index,

CSI

EuroMaint Rail 24.5 (2004) *

* Only EuroMaint Rail’s goals are presented for 2005, in relation to goals 2, 3 and 4. Group-wide key ratios are to be produced.

OVERALL KEY RATIOS, RESULTS AND GOALS FOR 2005

13

ACQUISITIONS AND INVESTMENTS

ACQUISITIONS

The EuroMaint Group acquired Euromation AB from Volvo

Technology Transfer, Volvo Powertrain and Volvo Cars on 1 July 2005.

Euromation had approximately 285 employees and a turnover of

SEK 307 million in 2005. As of 2006 the company’s name has been

changed to EuroMaint Industry AB.

INVESTMENTS

All investments in 2005 have been characterised by moderation,

in order to safeguard the goal of achieving a positive cash flow. Any

investments that were made were important and forward-looking.

The Group’s control and support systems have been further

developed to facilitate flexible adaptation to a changing world. For

example, a great deal of work has been devoted to ensuring that

future corporate acquisitions blend into the IT system environment

as easily as possible. EuroMaint Rail’s conversion of the Y1 engine

coach from diesel to biogas meant that the Group had to invest

in specialist resources for the maintenance of biogas vehicles.

In conjunction with the acquisition of Euromation, now EuroMaint

Industry, certain investments were made ahead of the new Group

structure. Work aimed at developing the Group brand was also

initiated during the year.

Considerable investments were made in developing expertise

within EuroMaint Industry. EuroMaint Rail invested in leadership

development for production managers. The content for a project

academy for project managers was also produced in 2005. The

Effective Workshop training programme, which many of EuroMaint

Rail’s employees underwent in 2004, has provided an understanding

of the importance of cost-awareness and has also resulted in

tangible proposals for cost rationalisations.

However, the planned investment in developing a joint

corporate culture had to be postponed, to be resumed in 2006

when it will also encompass EuroMaint Industry. EuroMaint Rail’s

focus on delivery quality meant that the greatest forces and

resources were devoted to fulfilling existing contracts.

14

Bengt Möller – historical perspective

”We built a good foundation for deregulation”

”We built a good foundation for deregulation”

Article on EuroMaint’s historical background

15

throughout this year. One of the high points

will be the King’s participation in the cele-

brations in Nora in June. Commemorative

stamps bearing train motifs are also being

issued. Here at EuroMaint Rail we are con-

tributing by holding open house events in

a number of our workshops. We have also

been involved in refurbishing a Rapidlok

high-speed engine dating from the 1960s.”

A quick look back

Up until 1988, the Swedish State Railways

had a virtual monopoly on rail transport in

Sweden. It was then that Stig Larsson was

appointed Director-General and came to

personify ‘the new SJ’.

“This was a clear watershed in the

Swedish State Railways’ development,”

explains Bengt, “and even back then we held

many discussions regarding how customer-

orientation could be increased. A number

of organisational changes were also made

during the first few years. For example,

Banverket became a separate unit, the heavy

freight wagon workshops were sold to

ABB and the other heavy workshops were

converted into independent companies

and transferred to TGOJ.

“At that time, maintenance was carried out

by us in the Machine Division within the

Swedish State Railways. It seems remarkable

now that we were able to decide for ourselves

on the regulations regarding how the main-

tenance should be carried out. We also drew

up the rules and instructions for how the

commercialised workshops would work.”

Another distinct change at the time

related to the form of state control. During

the 1980s, the Machine Division had to

respond to all kinds of questions from

politicians.

Train maintenance has tradi-tionally been part of the SwedishState Railways. The 1990s sawthe progressive development of a more customer-oriented and deregulated operation,which bore fruit in 2001 with the formation of EuroMaint AB.Bengt Möller has been involvedthroughout this journey. He canexplain the historical perspective,and also consider how the futurewill be affected.

Bengt Möller has been involved in the

maintenance of rail rolling stock almost his

entire adult life. He began working for the

Swedish State Railways in the early 1960s,

and has since grown and developed with

and within the company – apart from a few

years when he worked in shipping.

With his many years of experience in the

sector, he is the obvious guide for anyone who

wants to know more about the company’s

history and obtain a good foundation for

looking to the future. He was also the perfect

representative for EuroMaint Rail when

planning the 150th anniversary of the railway.

150 years of railways, 2006

The Swedish State Railways have naturally

been responsible for organising previous

railway anniversaries.

This time it was Banverket (Sweden’s

National Rail Administration) that took on

the 150th anniversary celebrations.

“They have invited various players in

the industry to a joint celebration of the fact

that it is 150 years since the first commercial

railway went into service in Sweden,”

explains Bengt, who is EuroMaint Rail’s

representative on the anniversary board.

In addition to Banverket and EuroMaint Rail,

the principal sponsors for the arrangements

are Green Cargo, Jernhusen, Railway Forum,

SJ AB and TGOJ Trafik. Other organisations

will also participate in the actual celebrations.

“A wide variety of arrangements and

activities will take place across Sweden

150 years have shaped EuroMaint Rail

“The questions could be about anything

right down to component level, even

technical matters,” remembers Bengt.

“During the 1990s we were governed

more according to principles, however, and

the politicians left the questions of detail to

the civil servants.”

Progressive deregulation

Bengt feels that the Swedish State Railways

did not have a particularly businesslike

approach prior to 1989, but that since then it

has consciously built up a strong foundation

for operating on a deregulated market.

“Even in the 1990s the Machine Division

had a number of small external customers,

which allowed us to ‘practise’ getting paid.

We gradually built up knowledge about

where the costs lay and about pricing, and

were able to learn a good deal about the

relationship between customer and supplier.

“Up until then we were closer to the end

customer in a way – the passenger or trans-

port client – but being an internal supplier

seldom encourages development and cost-

effectiveness.

“The roles are far more clearly defined

now. The operator is our customer and the

one responsible for setting regulations. The

operator in turn is responsible for satisfying

the end customer’s needs. There is an

entirely different vitality in the operation

when you work on a fully competitive market

and have to focus on delivering quality.”

Further development

Maintenance of rolling stock is increasingly

being streamlined, which means that the

entire operation is gradually changing.

“It is very important for us to identify

areas where we can develop, in particular

by entering new markets here in Sweden.

However, it is also essential for us to retain

a focused railway company within the Group,

which our customers think of as experts

in the field of modern railway engineering.

This is a position we have to nurture,”

believes Bengt.

.

”The 150th anni-versary celebrations

are taking placethroughout the year”

16

EUROMAINT RAIL

EuroMaint Rail is Sweden’s leading company in mainte-nance and refurbishment of rolling stock, with a marketshare of around 50 per cent. The company’s businessproposition strengthens its customers’ competitivenessand the profitability of the rail transport industry bycontributing to improved transport safety, lower main-tenance costs, increased availability, better performance,more efficient transport and more comfortable journeys.

2005 IN SUMMARY

2005 was a positive year, with good results and many new opportu-

nities. EuroMaint Rail has entered into new contracts, been involved

in winning the most important procurement of the year on the

Swedish market, worked hard to bring in new orders and has resolved

a couple of difficult problems to the satisfaction of customers.

Ten-year contract with Arlanda Express

The year began with EuroMaint Rail signing a ten-year availability

contract with Arlanda Express in January, to maintain the X3 trains

on the Arlanda Line. This was EuroMaint Rail’s first major main-

tenance contract outside the circle of companies that traditionally

derive from the Swedish State Railways, and also an operator with

a foreign owner.

Thanks to the length of the contract, the maintenance system can

be developed within the framework of the agreement. Through

innovative maintenance engineering, skilled employees and more

efficient control, the extremely high availability requirements can

be fulfilled at progressively reduced cost. During 2005, Arlanda

Express achieved its highest vehicle availability ever: an average of

99.8 per cent.

Problems resolved

One problem during the early part of the year was the delayed

delivery of refurbished X2 trains for SJ AB. The primary reason was

a lack of preparation on the part of EuroMaint Rail. The refurbishment

process has been improved and work has subsequently proceeded

to plan. Another problem was the key figures in the contract with SJ

AB regarding maintenance of passenger carriages. The first stage of

this contract has now been completed to the customer’s satisfaction.

Engineering & Planning – separate division

A new organisational structure was introduced in the spring,

with Engineering & Planning becoming a separate division. This

represented a clear signal, both internally and to the outside world,

that cutting-edge technical expertise and proactive planning are

strategic factors for success. The new division also illustrates the

importance of effective planning and preparation at every stage of

a contract, to ensure that the solutions are adapted to customers’

needs and that delivery quality meets their demands and expectations.

Tools for condition-based maintenance

One direct consequence of Engineering & Planning being included

at management level was that EuroMaint Rail entered into a colla-

boration with the British specialist company AEA Technology Rail.

The aim is to increase flexibility and speed in technical development.

The goal is to offer world-class train maintenance within the frame-

work of a partnership. AEA’s tool for checking the condition of

wheels and brake linings by means of laser measurement has been

installed on a trial basis at the workshop in Hagalund.

The world’s first biogas train

A unique event occurred when EuroMaint Rail delivered a Y1 engine

coach converted from diesel to biogas – the first in the world to go

into regular service. The customer was Svensk Biogas AB.

This investment in reducing the environmental load from

non-electrified rail transport attracted international attention.

EuroMaint Rail has also invested in specialist resources for the

maintenance of biogas trains. The company aims to be at the

forefront when it comes to development and leading-edge expertise

for sustainable transport development.

>>>

17

The world’s first biogas train in regular service

The delivery of a Y1 engine coach converted from

diesel to biogas was a unique event – it was the first

in the world to go into regular service. The customer

was Svensk Biogas AB. This investment in reducing

environmental load from non-electrified rail transport

attracted international attention. EuroMaint Rail has

also invested in resources for the maintenance of

biogas trains.

Refurbishment of X2 trains for SJ AB

X2 trains revolutionised rail travel in Sweden. They

made it possible to ‘fly at ground level’ – quickly and

conveniently. After 15 years SJ AB decided it was time

to renew the trains, and the task of refurbishing

them is EuroMaint Rail’s largest and most prestigious

refurbishment order to date. Work began in 2005

and a total of 30 refurbished trains will have rolled

out by mid-2007.

Highest availability for Arlanda Express

In January, EuroMaint Rail signed a ten-year availability

agreement with Arlanda Express to maintain the

X3 trains on the Arlanda Line. This was the company’s

first major maintenance contract with a foreign-owned

operator. During 2005, Arlanda Express achieved

its highest vehicle availability ever: an average of

99.8 per cent.

18

EUROMAINT RAIL CONTD.

MARKET CONDITIONS

The market conditions for train maintenance and refurbishment are

entirely different. In maintenance, the volumes vary fairly predictably,

while requirements for refurbishment fluctuate considerably from

year to year. The reason is that maintenance is conducted continu-

ally throughout the service life of a train, while major refurbishments

are only performed occasionally.

Market conditions for train maintenance

The market for train maintenance is primarily influenced by the

volume of traffic and the age of the rolling stock. Increased travel and

growing freight transport volumes are increasing vehicle mileage

and therefore leading to more maintenance being required. Older

vehicles generally require more maintenance than new or refur-

bished ones. Another factor that plays in is rationalisation, such

as the transition from balanced to condition-based maintenance,

which reduces volumes.

All of these factors contribute to a market with relatively slow

and predictable fluctuations. However, more abrupt fluctuations

can become commonplace when the volume of traffic is adapted

more and more flexibly to the needs of passengers and freight

transporters. A recent example during 2005 was when demand for

timber transport by rail increased dramatically following Hurricane

Gudrun (known as Erwin outside the Nordic countries). All the

players in the rail transport industry worked alongside the forestry

industry in order to come up with creative transport solutions as

quickly as possible.

Market conditions for refurbishment

As major refurbishments only occur occasionally during the service

life of a rail vehicle, this market fluctuates dramatically. The refur-

bishment work is intensive during a highly compressed time period

– the refurbished trains have to be back in service as quickly as

possible. The largest Swedish refurbishment contract to date is

for the X2 trains for SJ AB. This assignment serves as an excellent

reference for EuroMaint Rail as it seeks new refurbishment

contracts, both in Sweden and abroad.

The Swedish market

Conditions for EuroMaint Rail on its domestic market remain good.

The overall market share is approximately 50 per cent. The current

backlog of orders – mainly contracts that the company has won

through competitive tender – entails guaranteed capacity utilisation

of 80 per cent up until 2008. Our customers are showing faith in

EuroMaint Rail, and the company is living up to that confidence.

Elmia Nordic Rail

In October, EuroMaint Rail showed off its skills and resources at

Elmia Nordic Rail 2005. Many rail transport industry stakeholders

from Sweden and abroad visited the company’s stand and took part

in the seminars that had been arranged.

Maintenance of SL commuter trains

The year was crowned by the Stockholm Train Alliance

– Tågkompaniet and SJ AB, with ISS TraffiCare and EuroMaint Rail

as suppliers – winning the contract for Stockholm Transport (SL)

commuter rail traffic. There was extremely stiff competition with a

number of international players. The level of quality of the mainte-

nance was one of the factors that led to the contract being won. The

contract runs until June 2011 with an option for a further five years.

19

Even when there have been problems, the dialogue has been con-

structive. EuroMaint Rail has dealt with the problems directly and

produced action plans, both for emergency measures and for those

that require preparation. Careful preparation and flexible adaptation

of capacity and costs are of the utmost importance, as the Swedish

market for train maintenance and refurbishment is one of the most

competitive in Europe.

The export market

The market conditions overseas – primarily in Denmark, Norway

and Germany, as well as the new EU states of Estonia, Latvia and

Lithuania – are positively affected as deregulation and European

harmonisation increasingly open the door to service exports.

Submitting a tender and being able to live up to it is a tremendous

undertaking. Everything has to be prepared: structures, business

partners, workshops, personnel, skills provision, material sourcing,

etc. It is important to understand the regulations in different countries,

so that tenders are not only assessed on the basis of price. It is to the

benefit both of EuroMaint Rail and its customers if procurements

include clear quality requirements that allow proactive solutions.

TRAIN MAINTENANCE

EuroMaint Rail supports operators and vehicle owners with opti-

mised maintenance for increased traffic safety, increased vehicle

availability, improved punctuality and lower costs. Optimised

maintenance requires a high level of delivery quality, meticulous

cost control and total responsibility for the entire package.

Train maintenance is divided into three levels: light maintenance,

corrective and preventive maintenance at workshops around

Sweden, as well as the maintenance of heavy components at

specialist workshops.

In some cases the contracts are based on maintenance at tradi-

tional intervals, which means that the customer governs what is to

be done. The most common situation is where the contracts are

availability based, which means that EuroMaint Rail assumes

complete responsibility for the trains’ availability and is paid per

vehicle kilometre.

The customers are to be found in long-distance, regional and

local rail services. They have varying needs. In some cases EuroMaint

Rail’s nationwide workshop resources are an advantage, while in

others it is important for the company to have a presence in the city

regions. With broad experience and in-depth expertise, EuroMaint

Rail is able to adapt its services to each individual customer.

>>>

20

Through continuous development, for example with regard to

methods and equipment for condition-based maintenance,

EuroMaint Rail can offer an increasingly high level of availability

at lower and lower costs. Checks on condition mean that the

maintenance can be directly adapted to actual requirements, as

compared to balanced maintenance, where the trains are taken

out of service after a set number of vehicle kilometres.

Major savings can be achieved for the customer, particularly

when it comes to wheels and brakes, both of which require con-

siderable maintenance and are critical to traffic safety.

REFURBISHMENT

EuroMaint Rail supports operators and vehicle owners with refur-

bishment for increased traffic safety, better travel comfort, improved

performance, extended service life and higher vehicle value.

Refurbishment work can encompass technical reconditioning and

modernisation of the vehicle’s various subsystems. It can also

cover new exterior design and new interior furnishings and fittings,

including an Internet connection at each seat so that the journey

time can be better utilised.

EUROMAINT RAIL CONTD.

Thanks to extensive experience in maintaining vehicles of virtually

every type in the Swedish rail transport industry, EuroMaint Rail

can also propose solutions that improve rolling stock from a

maintenance and functional safety perspective – thus rationalising

future maintenance.

The refurbishment operation is based on close co-operation with

the customer. Alliances with strategic partners and collaboration

with local suppliers contribute to the overall content of EuroMaint

Rail’s propositions. These may be strategic partners who supplement

the company’s core technical expertise, or the company may even

engage independent contractors for work that does not require

specific rail expertise. The business management system contributes

to flexible customisation, both in minor refurbishment contracts

and in major contracts that include several partners and suppliers.

CUSTOMER FOCUS AND DELIVERY QUALITY

It is becoming increasingly important to be able to offer tailored

total solutions based on the needs of each individual customer.

By not standardising its solutions, but instead standardising the

processes, EuroMaint Rail combines customisation and cost-

effectiveness. The cross-functional organisation places various

skills and resources at the customer’s disposal in a flexible manner.

For each contract – from initial sale through to delivery

– EuroMaint Rail creates a customised organisation with distinct

processes and a clear division of responsibility. Careful preparation,

meticulous follow-up and a constant focus on satisfying the

customer’s needs for delivery quality combine to produce a

relationship that ensures the customer’s peace of mind.

FUTURE 2006

The important procurement of Öresund rail services is due to begin

in 2006 – a contract for which EuroMaint Rail will be competing.

The procurement of the Pågatågen trains in Skåne is under way, and

the winner of the maintenance contract will be announced during

the year.

EuroMaint Rail is also currently working to win the refurbishment

contract for Green Cargo’s engines – a total of around 80 RC engines

and almost 100 diesel engines. The refurbishment will result in

a longer service life, lower maintenance costs and improved per-

formance. For the diesel engines, the environmental performance

will also be improved.

In Norway, deregulation is progressing slightly slower than

anticipated. EuroMaint Rail is monitoring the maintenance market

in Germany with interest, as well as a large fleet of diesel engines

that require refurbishment.

EuroMaint Rail reinforced its marketing organisation for exports

in 2005, in the conviction of being able to offer high-quality, cost-

effective, competitive services for train maintenance and refurbish-

ment in neighbouring geographical regions.

What has been thebest thing about thejob in 2005 and whatcould be better?

Staffan Åström, maintenance engineer, Gävle

The celebrations in Gothenburg last spring were

a real highlight, and it was good to meet so many

other employees. Internal projects shouldn’t be

over and done with quite so quickly.

Michael Kohr, engineer, Blackvreten

The best thing is when something unexpected

happens, like a problem we have to go out and solve

on the line. I would like to see more events for the staff.

Charlotte Andersson, controller, Solna

It’s been rewarding for me to start working as a

workshop controller as well, and to learn more

about the core of our operation. Co-operation

between the divisions should be developed.

21

“I was previously EuroMaint’s marketing

director and am now looking forward to

leading EuroMaint Rail towards a future

that feels very positive. We have positive

profitability and an upward trend. With skilled

and experienced employees – and by creating

a corporate culture that makes even better

use of their abilities – we will become increa-

singly successful.”

1. Train maintenance 78 %

2. Refurbishment 13 %

3. Other 9 %

TURNOVER BY PRODUCT AREA VOLUME DEVELOPMENTSEK mn

Jonas Samuelson –President of EuroMaint Rail

2,000

1,500

1,000

500

02003

1,49

4

2004

1,71

0

2005

1,6

53

2002

1,87

92.

3.

1.

22

EUROMAINT INDUSTRY

EuroMaint Industry was established in 2000 when theMaskinteknik business unit within Volvo was convertedinto a company. The company increases Swedishindustry’s competitiveness through production stream-lining. We design and refine production processes, develop and manufacture customer-specific productionequipment, and are a complete supplier in the field of maintenance. Our customers are primarily to befound in the engineering industry.

BRIEF HISTORY

Even though EuroMaint Industry has only been in existence as an

independent company for a relatively short time, we actually have

a very long history, dating back to the 1860s when the company

Sköfde Gjuteri och Mekaniska was established. From the 1930s up

until 2000, the company formed part of Volvo’s engine factories

in Skövde. In the tough automotive sector, there has been a high

demand for efficient and operationally reliable production pro-

cesses. Against this background, experience and skills have been

built up with the aim of supporting and optimising production.

From the late 1980s the company also operated outside the confines

of Volvo, but it was only when the operation was converted into

an independent company in 2000 that the focus on the ‘external’

market truly gathered momentum. On 1 July 2005 EuroMaint

acquired the company, which now operates under a new brand and

company name: EuroMaint Industry.

2005 IN SUMMARY

2005 was a record year for EuroMaint Industry, both with regard to

turnover and profit margin. The new strategy and corporate culture

launched in 2003/2004 began to have a full impact.

Successful strategy work

The strategy is that the company’s knowledge about its customers’

production processes and the way it works in close co-operation

with customers should be unique distinguishing factors. Business

should be characterised by long-term customer relations and

customised total solutions with a high knowledge content. Working

models and working methods aimed at achieving continuous im-

provements have therefore been evolved throughout the operation.

New ways of measuring results have been introduced. Similarly,

risk assessments in ongoing projects have been honed.

Full-service concept for electric engines

At the beginning of 2005, EuroMaint Industry took over the motor

rewinding operation from ABB in Skövde. This acquisition supple-

mented the company’s existing service operation for servo and

electric motors, and enables it to offer a full-service concept of fast,

quality-assured repairs. During the year, the acquired operation has

been relocated and integrated with the existing service workshop in

order to achieve an optimum process.

Production engineering assignment resulted in

major order for new customer

Two areas on which EuroMaint Industry has decided to focus in

2005 are Maintenance Development and Production Engineering.

Resources have been doubled and initiatives for further skills

development have been taken. One such production engineering

project for a brand new customer initially resulted in investigation

assignments, followed by a historic major order for two assembly

systems. This is evidence that the company’s expertise as well as its

business and turnkey concepts are valued by the market.

>>>

23

In certain cases the use of standard machinery does

not produce optimum results, and customised

equipment is preferable. EuroMaint Industry

develops and manufactures special machines as well

as various accessories and peripheral equipment.

Several AGV systems have been installed for various

customers in 2005.

EuroMaint Industry focuses primarily on the

engineering industry, although its customer base

has been extended as a consequence of the new

Group structure. This has resulted in more

customers in the processing industry, such as

the steel, paper and power sectors.

When the Group was restructured, business

responsibility and sales resources for the Industrial

Maintenance product area were transferred from

EuroMaint Rail to EuroMaint Industry. As a result,

the company is expanding its product range with

service on rotating electrical machinery such as large

electric engines, generators, transformers, etc.

24

EUROMAINT INDUSTRYCONTD.

Important assignment for small company

One assignment that began in 2005 involved helping CC Pack, a

company with around 25 employees, to bring out ‘hidden capacity’

through more efficient maintenance. This partnership has

gradually grown into something very good.

MARKET CONDITIONS

The primary target group for EuroMaint Industry is the Swedish

market. The company only really works on overseas markets when

existing customers move into these markets. Two trends that

produce positive market conditions are: increased interest in

production streamlining, as well as greater interest in total solutions

and partnerships in the field of maintenance.

Production streamlining for increased competitiveness

Swedish industry has long had to battle hard in the face of interna-

tional competition. Many companies have therefore elected to locate

their production in ‘low-cost’ countries. During 2005, however, this

previously one-sided debate experienced a turnaround. In certain

cases there is good reason to relocate, but the risks and costs are

often misjudged, as many companies have experienced.

Instead there has been greater emphasis on the potential of

focusing first on the domestic market and picking out the unused

production resources – the hidden factory. Productivity can be

significantly improved by focusing on production engineering,

automation and systematic maintenance. The potential can often

be 50 per cent or more.

Total solutions and partnerships

There is a clear trend of focusing on core operations. Outsourcing

basic support functions such as cleaning and office services is

nothing new. Another clear trend is for companies to seek long-term

partnerships with their suppliers. In production engineering and

maintenance, broad experience and in-depth specialist expertise are

key. Both of these can be difficult for an individual industrial company

to maintain and develop to a sufficiently high, cost-effective level.

Major AGV orders

The most important business events include a couple of major

orders for AGVs. AGV stands for Automated Guided Vehicle,

systems of self-propelled, loop-controlled trucks for complex

assembly applications.

EuroMaint Industry has developed AGVs in collaboration with a

large group of Swedish and international R&D partners, as well as in

close co-operation with customers. The systems consist of mobile

units that flexibly move about between different workplaces in the

production flow. The have built-in quality assurance systems and

are easy to reset if the production process is altered. They are also

easy to adapt individually to different operators.

25

THE PRODUCT RANGE

The total solution – and the parts – that EuroMaint Industry offers

have been developed within and in close co-operation with the

automotive industry. This was the first sector to feel the full force

of global competition, and consequently it adopted cutting-edge

know-how at a very early stage.

The company’s expertise displays range and depth, and has

been built up through many years of experience, training and

recruitment. As an independent service partner, the company offers

everything from small, individual projects to long-term total solu-

tions. The operation now encompasses maintenance, component

servicing, production engineering and production equipment

– all equally important for increased efficiency.

Maintenance

More and more companies are realising the benefits of well-planned,

well-executed maintenance. Sure signs of this include disruption-

free production, a workplace with a high level of safety and a good

environment, as well as excellent delivery precision and satisfied

customers. Overall Equipment Efficiency (OEE) is a good way of

measuring productivity improvements based on APQ.

Availability (A) indicates the degree of disruption and losses

from down time. Performance (P) shows how well the equipment

‘is being utilised, and the Quality parameter (Q) reveals quality

shortcomings in the items produced by the equipment.

Many companies have considerable potential for improvement

and invisible capacity to utilise. EuroMaint Industry can help its

customers to measure, analyse and structure their maintenance work.

The foundation is a maintenance platform, and there are several

tools in EuroMaint’s ‘toolbox’. However, the starting point is the

customer’s requirements and conditions when planning the job of

improving operational reliability. The aspect that makes EuroMaint

Industry unique in the field of maintenance is that the company can

also implement the proposed measures. This includes technical

maintenance services and procedures for preventive maintenance,

preparation of spare parts etc., as well as carrying out maintenance

on machinery, from day-to-day activities to major machine overhauls.

>>>

26

Component servicing

Many machine components can be repaired or reconditioned to

improve function – all with the aim of increasing their service life.

Preventive maintenance is of course preferable even at component

level, but sudden stoppages occur nevertheless. In situations like

these, EuroMaint Industry can provide a service organisation for

rapid fault-tracing and repairs on a large number of machine com-

ponents, irrespective of make. Examples of specialist areas include

spindles, electric motors, servo motors, servo actuators, electronics,

tools and dies, mechanical components and measuring equipment.

Production engineering

The integration of maintenance and production is a natural founda-

tion for EuroMaint Industry’s expertise and business propositions

in the field of production engineering. This can start off with a pilot

study and continue through preparation, participation in new

procurement as well as various kinds of technical design service.

Production equipment

In certain cases the use of standard machinery does not produce

optimum results, and customised equipment is preferable. This

is true for example in the transition between different parts of a

customer’s production process.

EuroMaint Industry develops and manufactures special

machines for assembly, handling, machining and testing, as well

as various accessories and peripheral equipment, such as fixtures,

lifting devices and protection.

CUSTOMER FOCUS

EuroMaint Industry has made the strategic decision to focus on

proximity to the customer. This working method entails being close

to the customer’s production and genuinely understanding the

conditions and challenges the customer faces. As a result, the com-

pany’s personnel are able to provide the right service and suggest

improvements – either as a total supplier or in individual projects.

Quite simply, one partner is all that’s needed.

FUTURE 2006

Over the next few years the aim is to expand the customer base, as

the company is currently heavily dependent on a few large customers.

The first customer category in line to be cultivated comprises

medium-sized industrial companies.

Here the hidden factory will be developed with the aid of strategic

and operative services. Many large Swedish corporations are already

world leaders in OEE, but there is still considerable potential for

improvement in many companies.

Further strengthening and deepening relations with existing

customers is another focus area for 2006, as is a concentration on

clarifying our customer proposition by turning our skills into pro-

duct offerings – ‘productising’ them.

One area that may be problematic in the short term is produc-

tion equipment, where volumes fluctuate dramatically from year to

year. There are no orders currently in the pipeline of the same scale

as those in 2005. On the other hand demand for maintenance

services is increasing noticeably, and more personnel are required

on that side of the business.

One of EuroMaint Industry’s policies is to develop its co-workers

so that they can grow into new duties and flexibly shift between

different working areas. In addition to increased job satisfaction

from job variety and skills development, this approach also helps

to reveal undreamt-of capabilities.

Skills development is a very high priority. Considerable energy

has been devoted to this area during 2005, and this will continue in

2006. As a service-producing company, the employees’ expertise

and service spirit are absolutely crucial to success.

EUROMAINT INDUSTRY CONTD.

What has been thebest thing about the job in 2005 andwhat could be better?

Urban Gustavsson, service engineer, Skövde

The constant challenges are the best thing.

I’m always learning a lot and the work is never

monotonous. I need training in the new systems.

Mikael Pajunen, co-ordinator at the prototype

department, Skövde

I have a varied job that entails numerous contacts

with customers and employees. We have old machines

and need some more modern machinery.

Katarina Andersson, production engineer, Skövde

Introducing operator maintenance into the customer’s

operation has been exciting. Their production level has

increased and things look better. We need to be more

flexible.

27

“I joined Euromation as President just over

two years ago. We now have an owner whose

core operation we are a part of. Our market is

also being broadened as a result of this new

owner. We aim to strengthen the competitive-

ness and profitability of Swedish industry by

contributing to a better overall perspective,

increased utilisation of resources, structured

maintenance work and smart automation

solutions.”

1. Maintenance 25 %

2. Component servicing 21 %

3. Production engineering 9 %

4. Production equipment 45 %

350

300

250

200

150

100

50

02003

303

2004

307

2005

288

2002

259

TURNOVER DEVELOPMENTSEK mn

Per-Olof Rengstedt –President of EuroMaint Industry

TURNOVER BY PRODUCT AREA

2.

1.

3.

4.

28

wanted to apply for research grants and

needed an industrial partner for their

projects – and they thought of us.

“It is clear that research contributes to

our brand-building and is a way of helping

us to win market shares.

“It is important for us to have a common

thread through our development work.

The research projects we chose to participate

in were initially related to technical design,

although we have increasingly moved

towards maintenance-related areas.”

Concluded research projects

Integrated Design, Simulation and Distributed

Control of Agile Modular Manufacturing

Machinery, popularly known as Vir-Eng, was

one of the first major research projects that

what was then Euromation became involved

in. The project related to the virtual building

and testing of products in a simulated envir-

onment. During the course of the project,

an in-house research lab was constructed.

Project Copernicus has been extremely

important for the company. Several different

European companies and universities were

involved in the project, which focused on

Automated Guided Vehicles (AGVs).

The project looked at navigation

principles, sensor-driven simulation and

architectures for hardware and software.

“The results have to a large extent influ-

enced our production of AGV systems,

as they broadened the view of what was pos-

sible and stimulated us to find new methods

and ways of working,” explains Jan-Olof.

Current projects

One project that plays more of a supporting

role and in which less money is involved is

MASSIVE, Machine Service Support based

on Innovative Virtual Engineering. Here

too there are universities and several

companies involved.

“New simulation models were developed

during the design stage, and the MASSIVE

EuroMaint Industry focuses onkeeping up to date with technicaldevelopments in the sector. Andwhat better way than to takepart in the research work? Thisprovides a good foundation whenmaking decisions regarding thedevelopment of new productsand services.

Jan-Olof Lundgren is Research and

Development Manager as well as IT Manager

at EuroMaint Industry. When it comes to

making decisions about which services

are to be productised, he is assisted by a

product council, which includes parts of

the management group.

“The council defines the strategic areas

where the product range needs to be

developed and decides on fund allocation.

In some cases we participate in research

collaboration alongside universities and

other companies, thereby acquiring useful

material for further decisions.

“Our heaviest involvement usually lies

in the actual productisation process. Our own

employees are responsible for developing

the products and services we offer our

customers,” explains Jan-Olof, and observes

that these skilled employees are EuroMaint

Industry’s greatest strength.

The majority of Jan-Olof’s working day

is taken up with his job as IT Manager, and

he feels that it is important to have an IT

environment that is flexible and supports

the customer. He is also in the middle of his

doctoral studies.

“The lifecycle process for one-off

production companies” is the working title

of his thesis, and the processes within

EuroMaint Industry are naturally the

subject of his research.

Marketing channel

“I am convinced that we will become better

known by participating in various research

projects,” says Jan-Olof. “We have achieved

a relatively strong position in the research

world, and regularly receive enquiries regar-

ding doctoral students looking for industrial

projects. A while ago I was contacted by

both a Greek and a Russian professor, who

project is about using these when operating

the equipment as well. The focus is on

maintenance and fault-tracing, above all

remotely,” explains Jan-Olof. “It is possible

to build with simulation support, and we

also intend to draw benefit from these

models during fault-tracing.”

With the aid of these simulations,

conclusions can be drawn about what is

wrong and requires maintenance. This

should entail a reduced travel requirement

for service personnel.

During the course of the project, it has

become increasingly clear that, when con-

ducting remote diagnostics with intelligent

simulation support, the large amount of

data that needs to be transferred via the

Internet constitutes a limitation. It is there-

fore pleasing to note that the University of

Skövde has recently initiated a research pro-

file for information fusion, i.e. integrating

data from various sources, as well as looking

at how the systems should be designed in

order to support decisions with large volumes

of information.

“The university profile has just started,

and we’re currently in the process of defining

various projects.

The hope is that we will be able to develop

products in parallel with the research,

particularly in the field of maintenance,”

explains Jan-Olof. “Our investment for the

university profile is not enormous, but we

are contributing time and our research lab,

and we were one of the companies that

helped ensure the venture got started in

the first place.

“With intelligent ways of gathering

information and MASSIVE’s simulation, we

hope to be able to rationalise the mainte-

nance process to ensure that the right

resources are in the right place, without

always having to perform fault-tracing on site.

“The role of research is to indicate

possibilities, and I obviously hope that a

technical platform will be created that can

subsequently be built upon. We will then

have the very latest capability in our sector,

enabling us to provide our customers with

added value when they engage EuroMaint

Industry,” hopes Jan-Olof in conclusion.

”Common thread indevelopment work”

Article on EuroMaint Industry’s technical development

Right resources in right place thanks to research

Jan-Olof Lundgren – development perspective

”Research contributes to ourbrand-building”

”Research contributes to ourbrand-building”

29

30

RESEARCH AND TECHNICAL DEVELOPMENT

FUTURE

Strategy for co-operation

Strategic work is currently in progress aimed at identifying which

universities are of most interest when it comes to co-operation in

the fields of automotive engineering, systems engineering, mainte-

nance engineering, production engineering and technical/aesthetic

design. Work is also under way to bring about a greater exchange

of experiences with industry organisations such as UTEK/Swedish

Maintenance Society and the Swedish Centre for Maintenance

Management.

Smart trains, machines and production equipment

Smart trains and production equipment that can independently

communicate their maintenance needs provide greater opportu-

nities for proactive planning. As materials, documentation and

personnel are in the right place at the right time, turnaround times

are short and the maintenance is highly effective, thus increasing

availability and productivity alike.

Reliable information to support decisions

Information fusion is an R&D project at the University of Skövde for

the integration of data from various sources regarding the behaviour

of technical systems. Many companies are involved in the project,

including EuroMaint.

Three events in 2005 increased and clarified the importance that EuroMaint places on research andtechnical development: the formation of the Engineering& Planning division within EuroMaint Rail, the collaboration with UK company AEA Technology Railand the acquisition of Euromation.

FORMATION OF ENGINEERING & PLANNING DIVISION

The Engineering & Planning division is an expression of the strategic

importance that the EuroMaint Group places on leading-edge

technical expertise and proactive planning. In order to identify

internal recipients for new technology – and to make the most of

new ideas that originate internally – a production engineering

network has been created. Many development proposals contribute

to increased customer benefit, such as patents for a mobile lathe

and new brake testing equipment.

COLLABORATION WITH AEA TECHNOLOGY RAIL

AEA Technology Rail is a specialist company in rail engineering,

which develops world-leading products for checking the condition

of components. By means of a transition from balanced mainte-

nance to condition-based maintenance, the service content in

availability-based transactions can be refined.

ACQUISITION OF EUROMATION

Euromation has a long and strong tradition of viewing research and

development as a natural part of its operation. Co-operation with

universities and colleges is well established. Knowledge from various

R&D projects is implemented directly in the day-to-day work. The

acquisition provides a better outlook for the entire EuroMaint

Group with regard to bringing in new impulses from outside.

IMPORTANT R&D PROJECTS

EuroMaint Industry has conducted three different development

projects alongside a number of European universities. The projects

have contributed greatly to the company’s AGV systems.

1. Vir-Eng – simulation for virtual product development

2. ARMMS – modular machines and mobility

3. Copernicus – mobile robots

The next stage of one current project – MASSIVE – will enable more

advanced remote diagnostics of machines than at present, i.e.

transferring and processing data for fault detection and fault-tracing.

The problem here is not a lack of data but rather an overabundance,

which has to be filtered if the information is to be reliable and usable.

31

Where would youmost like to seeEuroMaint focusingin the future?

Lars Kallio, concept designer, Skövde

We have to satisfy our customers’ need for innovation

value when it comes to production equipment.

We can broaden our clientele by developing our

specialist machines.

Mattias Wernersson, maintenance engineer,

Skövde

It’s good that we have efficient maintenance as our core

activity. We should continue to develop our concepts

and maintenance solutions with our customers.

Tommy Andersson, maintenance engineer

and instructor, Svartön, Luleå

We should develop a forum where maintenance engineers

and fault-tracers can discuss vehicle problems and

share experiences, technology and expertise.

1. Vir-Eng – simulation for virtual product development

A simulation system for virtual product development. The project

was launched in 1998. The customers’ requirement was to be able,

early in the design phase, to speed up and quality-assure the

development processes surrounding new or modified products or

production flows. The result was a time reduction from 5 weeks

to 15 minutes.

2. ARMMS – modular machines and mobility

A European network for modular machines and mobility.

The network encompasses some 30 companies, half of which

are highly research-intensive. The project is both a consequence

of and a supplement to Vir-Eng.

3. Copernicus – mobile robots

A research project into mobile robots. R&D partners are De Montfort

in the UK, the University of Skövde, Kaunas University in Lithuania

and MSTU in Moscow. The results included a prototype for an

Automated Guided Vehicle (AGV). Since 2002, EuroMaint Industry’s

AGV systems have been successfully sold to companies that require

flexible production flows that can swiftly be changed over.

Thomas Robertsson – development perspective

“Tremendous technical expertise and long experience”

“Tremendous technical expertise and long experience”

32

Article on EuroMaint Rail’s technical development

Focusing more on development

vehicles, so that we can subsequently

obtain measurement values for a decision

support system, initiate an evaluation and

gather the information in our maintenance

system. Our hope is to be able to implement

a number of additional installations for

monitoring within the next few years.”

The system will initially measure wheel

profiles and brake linings. Together with the

current collectors, these are the most signi-

ficant factors influencing the frequency of

maintenance intervals.

“That’s why I hope that condition

monitoring of the current collectors will be

our next project,” says Thomas.

Collaboration and partnership are

crucial to achieve good results. In this case

EuroMaint Rail is working with a UK com-

pany which supplies both hardware and

software. Thomas also wants to increase

the co-operation with institutes of tech-

nology and bring in more students working

on graduation projects.

“I would like to take this opportunity to

praise some of our alert employees who, on

their own initiative, have devised mobile

tools that will solve some of the problems

they have faced in their service work.”

Thomas also explains that the company

is investigating the potential to conduct

non-destructive ultrasound testing on hol-

low axles automatically to achieve digital

measurement values, rather than a manual

system with results on paper.

Refurbishment of rolling stock

Modernisation and refurbishment of rolling

stock have traditionally always been carried

out according to the customer’s detailed

specification.

“Developments are moving towards a

situation where we, in our role as supplier,

produce proposals for technical solutions.

We should be able to offer our customers

The Group management hasclearly highlighted the need fortechnical development and inno-vation in the field of maintenance,and has decided on investmentsfor the years to come.

As the company works with large volumes, it

is not difficult to access improvements and

new ideas. This is one of the aspects that

the newly appointed head of technology and

development at EuroMaint Rail particularly

appreciates.

Thomas Robertsson has only been with

EuroMaint Rail since October 2005.

However, he has almost 20 years’ experience

of rail transport as a vehicle supplier.

“The Technology department has been

created during the past year, and we are also

responsible for technical development. This

is an indication from the management that

these are important issues.

“The best thing about EuroMaint Rail is

that we work with large volumes, so it shouldn’t

be difficult to identify profitable rationalisa-

tions,” hopes Thomas. “I believe it is parti-

cularly important to make the most of the

experience that exists within the organisation,

especially among the vehicle engineers.

“As the manager of a fairly large number

of employees, it is my job to know what every-

one is doing, to help out where I can and, in

particular, to get everyone to work together

as a team,” says Thomas, adding that this is

both a difficult and a challenging task.

Thomas highlights three areas that he

feels are particularly important to focus on

in the immediate future: streamlining,

refurbishment and skills development.

Streamlining maintenance

“As train maintenance accounts for the

vast majority of EuroMaint Rail’s turnover,

streamlining and optimisation of this

operation are essential to our profitability,”

Thomas explains.

“Condition-based maintenance is of

great interest, and we have carried out a

pilot installation for condition monitoring

in Hagalund. We’re currently working to

install identification units on the relevant

added value which generates better economy

in the long term.

“Examples include the calculation of

lifecycle costs and maintenance costs, as

well as providing operational reliability

guarantees. We are also working to develop

computerised documentation systems.”

Skills development

“EuroMaint Rail possesses a tremendous

amount of technical expertise and long

experience.

“This will be supplemented with the

more general use of modern technical

design aids, such as 3D CAD, as well as with

various specialist skills, in particular so we

can offer the added values I mentioned,”

explains Thomas.

Integrated Logistics Support (ILS),

functional reliability analysis, maintenance

analysis and maintenance optimisation are

some of the areas where skills development

will take place, with the aid both of external

courses and learning in the workplace.

“We are often consulted and have already

established that we need more technical

designers,” says Thomas. “This, in combi-

nation with a high average age, makes it

very important to pass on these skills to

younger generations. In order to make this

easier, we will group ourselves according to

technical systems expertise, such as brakes,

doors, propulsion and diesel engines.”

Thoughts on the future

Thomas is a firm believer in condition-based

maintenance. A major reason for this is that

research indicates that a very large proportion

of the maintenance carried out at present is

not actually required.

“There are so many areas that can be

monitored to provide even more refined

information. The first step should be to gain

access to the information that can already

be supplied wirelessly from the train’s on-

board computer, but that is mostly only used

during commissioning when the vehicle has

just been delivered. The vehicles’ control

data and error codes, along with condition

monitoring that we carry out ourselves, can

ensure even more relevant maintenance.”

33

“Added value that is profitable for the customer”

34

EMPLOYEES

SKILLS DEVELOPMENT

Skills development has a high priority within the EuroMaint Group.

Both companies work with knowledge-intensive services and

advanced technology in industries that are characterised by renewal

and increased specialisation. Skills development takes place both

through external courses and internal training.

For work that requires special authorisation, such as safety-

related work on rolling stock, production equipment and compo-

nents, there is a comprehensive administration system for training.

As a rule, theoretical training and practical training with tutors both

take place on home ground.

Skilled project managers are an important key to success.

The content of a project academy has therefore been produced,

with training to commence in 2006.

AN ATTRACTIVE WORKPLACE

The Employee Satisfaction Index (ESI) and Customer Satisfaction

Index (CSI) are both measured regularly. Satisfied employees and

satisfied customers form a virtuous circle. Another way of measuring

attractiveness as an employer will be available in 2006, when

EuroMaint will be included for the first time in the Företags-

barometern – essentially a ‘corporate barometer’ where young

academics are asked who their preferred employer would be.

The barometer takes many different factors into consideration.

From an employee perspective, the EuroMaint Grouphas not yet become a single entity. Even though bothEuroMaint Rail and EuroMaint Industry are focusing onexpertise, proximity to the customer and delivery quality,the companies have different cultures and experiences.For this reason they will initially be described separately.

EUROMAINT RAIL

2005 was characterised by the completion of the major restructuring

operation and by several large contracts that generate faith in the

future. The focus has been on delivery quality. As a result, the work

of creating a shared corporate culture, which had previously been

established as a strategic theme for 2005, was postponed until 2006.

Even though the venture has not been completed, activities

aimed at increased participation and team spirit have been con-

ducted. This included the two employee meetings in Gothenburg,

where employees from around Sweden had the opportunity to meet

and socialise for the first time. Many people refer to ‘before and after

Gothenburg’ as a paradigm shift in the company’s history. Another

much appreciated element was the Presidents’ annual tour visiting

all the plants, under the heading of ‘Dialogue for Change’.

The major investment in leadership development for production

managers has also continued during 2005. Similarly, a project has

been carried out to develop skills profiles for administrative per-

sonnel. There is already a well-developed authorisation system for

production personnel. Moreover, a considerable amount of work

has been devoted to developing a standardised salary model.

The restructuring carried out in previous years has restricted

external recruitment and minimised profiling in relation to univer-

sities. A working group has now been appointed to intensify

co-operation with the academic world.

EUROMAINT INDUSTRY

During 2005, EuroMaint Industry experienced a significant increase

in demand for maintenance services and other parts of its offering.

The provision of skills is achieved in part through new recruitment,

although primarily through internal recruitment, training and

mentorship. The policy is that anyone who wants to develop must

be given the opportunity – and this includes full-time or part-time

external training.

Many employees’ everyday workplace is out at the customer’s

premises. As a result, professional competence is not the only area

of great importance, but also the ability to create good relations and

to be receptive to new customer requirements. It is also important

to have a high level of expertise in safety issues, and thorough safety

training is therefore provided. Close co-operation with various

research environments has contributed to the company’s skills

development over the years.

35

Örjan Jalava, maintenance engineer and

health & safety officer, Vännäs

For me it’s important to acquaint myself with the

company’s development and to be involved in it.

I would like more interchange with employees from

other workshops.

Rolf Forsell, maintenance engineer, Notviken, Luleå

Flexibility and variation in work are important – working

in different departments, trying out new professional

roles. I get good support in my work, and everyone

helps out.

Susanne Johansson, HR administrator, Skövde

I feel it’s important to have knowledge in order to do

my job properly. This knowledge can be developed

in various ways.

HEALTH REPORT

The health report illustrates and describes the health of the personnel in keyratios that are quantifiable from a corporate finance perspective. Weighted keyratio EuroMaint Rail 13.1, EuroMaint Industry 9.8. The combined key ratio is a summation where key ratio 1 weighs 0.6, key ratio 2 weighs 0.6, key ratio 3weighs 2.5, key ratio 4 weighs 2.5 and key ratio 5 weighs 5.

HEALTH REPORT TABLE FOR 2005

All employees/EuroMaint Rail Number Key ratio

Hours worked 2,206,859 0

Sickness number – hours 1) 113,780 3.1

Sickness cases – quantity 2) 2,341 6.4

Rehabilitation cases 3) 58 0.66

Returns 4) 50 0.57

Staff turnover 5) 108 2.45

All employees/EuroMaint Industry Number Key ratio

Hours worked 461,416 0

Sickness number – hours 1) 15,633 3.4

Sickness cases – quantity 2) 339 7.3

Rehabilitation cases 3) 13 0.28

Returns 4) 10 0.77

Staff turnover 6) 21 0.45

1) Both: Sick leave hours/worked hours * 100.2) Both: Commenced sickness cases/worked hours * 10,000.3) Both: Sick leave periods that commence day 29/hours worked * 10,000.4) Both: Full returns after commencing sick leave day 29/sick leave periods that commence day 29.5) EuroMaint Rail: Personnel departures/worked hours * 10,000.6) EuroMaint Industry: Number of personnel departures minus reduced number of employees on

“SKO”/hours worked * 10,000.

What is most important in your personal development at work, and what support would you like?

36

Day-to-day improvement programmes

Within the production division, Janette has

worked on various programmes related to

developing day-to-day operations and

supporting the actions of the management.

One of these involves promoting commun-

icative leadership.

“The emphasis is on a fresh start for

activities that involve and motivate the

employees, such as results boards, staff

appraisals, a suggestion scheme and

workplace meetings. These meetings are

facilitated as the production managers

receive presentation material every month

reporting aspects such as costs, hours,

deviations and sick leave.

“The other programme focuses on early

rehabilitation,” Janette explains. “The

managers have a considerable responsibility

in this area, and we have developed clear

structures to provide them with support.

Information about absence has been

systemised, and the managers can act more

rapidly in the event of any signs of ill health,

often with the assistance of occupational

health care resources. At one of the units,

short-term sick leave has been reduced

from 11 to 3 per cent in one year!”

Focus on customer proximity

“At EuroMaint Industry we have come to the

conclusion that one of our most important

success factors is customer proximity,”

explains Ulf Sandén, who is both Financial

and Human Resources Manager. “A far-

reaching venture is under way on the topic

of customer proximity. It is based on offering

our customers the opportunity to receive

the products and services they need, deli-

vered to wherever they are.” The past year

Within EuroMaint Rail, employeeswith different backgrounds andcultures have worked together tobecome a single company – inboth physical and psychologicalterms. EuroMaint Industry hasnow joined the Group, and theHR units are continuing to workto co-ordinate operations so thatthe newcomers will also feel welcome under the EuroMaintumbrella.

“I think it’s very important for us to work

actively to ensure that everyone who belongs

to the EuroMaint Group feels part of one

company,” says Janette Sved, who works at

the central HR function at EuroMaint Rail

with specific responsibility for the produc-

tion division. Janette is based in Örebro,

central Sweden.

“We talk a great deal about the fact that

we have to be an innovative engineering

Group, and I feel we can act even more

clearly to demonstrate this. One example

could be to focus on promoting and

developing the operation by having more

production engineers.

“Another example is a greater focus on

the process for making use of the employees’

own proposals for improvement.”

Joint pay model

Much of Janette’s work over the past year has

been on a project aimed at developing a joint

pay model for the whole of EuroMaint Rail.

“We come from separate operations,

and there are certain differences in the con-

ditions of existing employment contracts.

To become a single company with a shared

culture, we have to find ways of bridging

these differences. This will require a lot of

talking and will take time. It feels good to

have made a start, and I’m sure that every-

thing will turn out fine in the end,” says

Janette.

has seen an intensification of efforts to

productise and package the various skills

that customers are demanding.

“This is where we are now,” explains Ulf.

“In our charting process, we are dividing up

our business skills into basic skills that

everyone should have and the specialist

skills that our employees possess, such as

electrical maintenance, mechanical design,

electronics and so on. The needs of our

customers change, and we have to meet

these needs. That’s why we’re working

intensively on skills development, recruit-

ment and network building.

“Demands from the market also mean

that we have to increase our flexibility. This

relates to the potential to work during

holiday periods when our customers have

a great need for service and maintenance,

as well as working to develop flexible, wide-

ranging skills, as needs can vary greatly over

time,” Ulf explains. The skills that are in

demand today could be completely different

tomorrow. He observes that the entire

project entails a concerted effort that has

to succeed if EuroMaint Industry is to serve

its customers in the best way.

Different worlds become one

Ulf does not see belonging to the

EuroMaint Group as a problem.

“Up until about a year ago we were

part of the Volvo Group, so this is not a

new situation for us. EuroMaint Rail and

ourselves also have similar backgrounds

– both have been internal suppliers that,

after being converted into independent

companies, have developed rapidly into

competitive units – even though our former

parent companies operated in completely

different worlds.

“So far we have mostly received

information about the EuroMaint Group,

and there has not been that much practical

collaboration between the companies.

But obviously I hope that together we will

become stronger at what we do, and I see

this as an exciting challenge,” Ulf Sandén

concludes.

“Develop

day-to-day

operations”

Article on EuroMaint’s HR work

From many different corporate cultures – to collaboration in a single Group

Janette Sved and Ulf Sandén – employee perspective

“Together we willbecome strongerat what we do”

“Together we willbecome strongerat what we do”

37

38

QUALITY AND ENVIRONMENT

EuroMaint generally works to streamline its customers’ energy

usage and utilisation of resources. One example of environmental

commitment and environmental expertise is the Y1 engine coach,

which has been converted from diesel to biogas. It is the first biogas

train in the world to go into regular service. EuroMaint Rail developed,

technically designed and carried out the refurbishment. In addition

to modernising the exterior and interior of the coach, the project

entailed developing new products and new technology for converting

from diesel to biogas. EuroMaint Rail has also invested in specialist

resources for the maintenance of biogas trains. This gives a clear

signal of our ambition to be at the forefront of developments for

reduced environmental impact.

Shared significant environmental aspects

The list opposite specifies EuroMaint’s shared significant environ-

mental aspects. EuroMaint’s environmental impact requires a

licence and official notification.

As of the 2006 financial year, the entire EuroMaint Grouphas been awarded quality and environmental certification.However, the two companies in the Group have achievedthis status by different routes. As EuroMaint Industry hasits roots in the automotive industry, quality and environ-mental certification have been natural elements for manyyears. The company was certified to ISO 9001 in 1994and ISO 14001 in 1998. EuroMaint Rail, which was certified in 2004 and 2005 respectively, has its roots in a sector where these phenomena are still largely unique.

QUALITY

EuroMaint is a specialist company offering advanced services.

In addition to the specialist expertise required to carry out safety-

related work, it is important to maintain a generally high level of

expertise when it comes to safety. There are various risks in our

customers’ working environments, and considerable sums can be

at stake.

The delivery quality that EuroMaint provides plays a crucial

role in ensuring safe rail transport, operationally reliable industrial

plants, customers’ profitability in the short and long term – and

their confidence in the Group. The business management system

provides support for continuous improvements at all levels and in

all business phases. Delivery quality has been an important focus

area in 2005. The companies have devoted considerable energy to

refining processes and procedures in the practical quality work.

Within the EU, work is currently under way on special EU certif-

ication for suppliers of maintenance on rolling stock. The require-

ments will be completed in 2007. As a result of EuroMaint Rail’s

experience in quality certification and practical quality work, the

Swedish Rail Agency has obtained good arguments for influencing

the European Railway Agency (ERA).

THE ENVIRONMENT

Several of the units within EuroMaint already have environmental

certification in accordance with ISO 14001. During 2005, intensive

work has been conducted in order to achieve environmental certif-

ication for the entire Group. The formal documentation indicating

that the whole of EuroMaint had been awarded quality and environ-

mental certification was received in December.

The greatest focus was initially placed on those units that had

not previously been environmentally certified, followed by the

phasing-in of those units that had been certified before. The next

stage of development will be to decide on common key ratios for

environmental management.

39

How can you affect theenvironmental workon a day-to-day basis?

Leif Tornebjer, electrician and health & safety

officer, Malmö

By following the regulations and policies we’ve

drawn up. I also help to train personnel so we can

raise our environmental awareness.

Significant environmental aspects

for EuroMaint:

• Energy consumption

• Waste

• Exhaust fumes from

company cars/transport

• Diesel tank installations

• Volatile organic compounds

• Waste/process water

Jörgen Forsman, maintenance engineer, Gävle

There are many examples, such as using the

containers for separating waste and dealing with

any oil spillages. When washing off graffiti, we treat

all the wastewater.

Lennart Grundel, Quality and Environmental

Manager, Skövde

I have to do the right thing myself and set a good

example, as I work with these issues. One example

is reducing car travel and taking the train instead.

40

Annkristin Castagna and Urban Ekmark – environmental perspective

“Important to retain our focus on environmentalaspects”

“Important to retain our focus on environmentalaspects”

40

Article on EuroMaint’s environmental work

High environmental awareness among all employees

41

Common key ratios

The next goal for Annkristin is for the entire

company to have common key ratios for

environmental impact.

“The areas we will begin working with

during the year are waste management,

energy consumption and volatile organic

compounds. My vision is for us to be able

to agree on further key ratios, such as the

environmental impact of transport, business

travel and process water discharge. After that,

of course, each unit must focus on the areas

that are relevant to their particular operation.

There are a number of significant environ-

mental aspects within EuroMaint Rail. These

can be influenced, although not eliminated

entirely. Each workshop has its own environ-

mental aspect catalogue, where all aspects

are classified according to the same model.

“It’s incredibly important for us to focus on

these at all times, and to develop our pro-

cesses as far as possible, also with conside-

ration for the environment,” she says. “Our

overall goals are to raise the degree of recyc-

ling and waste separation, heighten environ-

mental awareness and increase the number

of environmentally certified suppliers.”

EuroMaint Industry

– a long environmental tradition

Urban Ekmark, who is in charge of technical

issues and quality at EuroMaint Industry,

explains that the company’s quality and

environmental certification dates back to

the 1990s.

“Because we started out as part of

Volvo, safety and environmental thinking

have always been important. We’re also

located in a large factory area that employs

4,000 people close to Skövde town centre.

This makes it even more important to

monitor any environmental impact, but it

also means that there is a high level of

awareness and environmental spirit.”

EuroMaint Rail has focused heavily on environmental certif-ication over the past year. AtEuroMaint Industry, safety andenvironmental thinking havebeen part of the scenery since the company’s time as part ofVolvo, and the company hasbeen environmentally certifiedfor several years. Everyone is nowpulling in the same direction,making EuroMaint a Group witha high level of environmentalcommitment.

Annkristin Castagna, environmental co-

ordinator at EuroMaint Rail, explains that

many people have been involved in the work

of obtaining environmental certification for

the entire company during 2005, particularly

within those parts of the operation that

did not previously hold an environmental

certificate.

“It has been an extremely stimulating

process,” she says, before going on to

explain how the work was structured:

“Many employees have taken part in a

training course comprising three separate

sections. We began with information about

the global environmental problems. There

was a lot of ground to cover – everyone has

heard descriptions of these problems, but

taking in and understanding how they affect

your own job is a different matter. The next

step was to define how work within

EuroMaint Rail is affected and how this is

described in goals, policies and business

management systems. What is released

and how is the environment affected?

Finally we conducted group work, where

everyone had the opportunity to submit

proposals for how their own operation

could be changed in practical terms in order

to reduce environmental impact.

“The fact that many people were involved

so early meant that there was a high level of

commitment throughout the certification

process,” explains Annkristin. “We can now

see that everyone is more aware and con-

siders environmental impact in advance,

performs risk analyses and so on.”

The company is endeavouring to further

reduce its already low environmental impact

in its own operation. There are well-estab-

lished systems for separation at source both

in offices and workshops, for forwarding to

incineration or recycling. Filter installations

are installed wherever welding is performed.

“Over the past year, for example, we

have reviewed energy consumption in the

workshop and made investments aimed at

making better use of our heating. We have

also improved the storage stations for oil

and cutting fluids,” explains Urban.

Impact on customers

“Our primary initiative for reducing environ-

mental impact is being conducted in co-

operation with our customers, by increasing

efficiency and reducing resource wastage in

their installations.”

Urban explains: “We often work on our

customers’ premises to rationalise their

production facilities. Through preventive

maintenance it is possible to achieve many

benefits – particularly environmental ones.

When operations gradually become

continuous, there is a higher utilisation of

resources and as a result the environmental

impact is less per produced unit. A well-

tuned plant produces fewer items that have

to be scrapped, requires fewer product

adjustments, ensures lower energy con-

sumption and fewer residual products.”

The same thought processes apply when

developing new production equipment.

“Environmental thinking is naturally

essential, such as selecting environmentally

certified subcontractors and ensuring that

the machines are energy efficient as they

often operate in three shifts.”

Future together

“Railways are often associated with the

environment, while industry is symbolised

by smoking chimneys,” says Urban. “It is

my hope that we will be able to preserve the

long tradition of safety and environmental

thinking, and ensure that the new EuroMaint

is known as a company with strong environ-

mental commitment and high levels of

expertise.”

“Common key ratios are the next goal”

42

SUSTAINABLE DEVELOPMENT

as possible, employees are offered workplaces with individual

ergonomic solutions. Stress in conjunction with a high workload

can occasionally be unavoidable in an event-led business. It is

therefore important to detect early signs of stress and to take

measures quickly. Even ‘positive stress’ in highly dedicated

employees can constitute a risk.

The opportunities for skills development are good. This is both

because it is possible to work in different areas within different

parts of the Group’s companies, and because further development

of the employees’ skills is high on the agenda when it comes to

bringing strong financial results to the operation.

EuroMaint supports those employees who want to continue

studying, and is also involved in research and education in society.

For example, plans are in place to establish a maintenance

engineering centre in Malmö.

EuroMaint is a constantly changing Group, on a constantly changing market, in a constantly changingsociety. Sustainable development means contributing to social development with a sound economy and consideration for people’s health and safety, and for the environment.

EuroMaint contributes to sustainable development in many ways.

The Group enjoys long-term, stable profitability – and contributes

to its customers’ profitability.

The Swedish rail transport industry as a whole is now profitable

for the first time in its history. This is highly significant: the most

environmentally friendly and safe transport system is profitable for

the first time ever.

EuroMaint also contributes to the development of the ‘hidden

factory’ in manufacturing companies – raising their OEE (Overall

Equipment Efficiency) and adding to their competitiveness. This

process reinforces economic growth with more job opportunities,

where efficient, operationally reliable industrial processes work

alongside environmental consideration.

As an employer, EuroMaint aims to set a good example: core

values for the Group include being an attractive employer and a

safe workplace. The companies work in a targeted fashion in order

to offer a safe and enjoyable working environment that helps

develop skills and offers good ergonomics. Many of our employees

work in risky workplaces with assignments that affect traffic safety

and operational reliability. Safety work is therefore meticulous.

It is almost impossible to contribute to human and socially

sustainable development in society without starting at home and

looking after your own workforce’s health and enjoyment. As far

EUROMAINT’S IMPACT ON THE LOCAL, REGIONAL AND GLOBAL ENVIRONMENT

Environmental aspect Energy Waste Exhaust fumes Diesel tank Volatile Waste/process consumption from company installation organic water

cars/transport compounds

ImpactGround • • •Groundwater • •Greenhouse effect • • •Acidification • • • •Eutrophication • • •Ozone depletion • •Ground-level ozone • • •Organic environmental toxins •Discharge of metals • •Consumption of resources • • • • • •

Sustainable development means contributing

to social development with a sound economy

and consideration for people’s health and

safety, and for the environment.

The environment

People

Economy

43

RISK MANAGEMENT

Phase 1, Identification

Identifying risks calls for active participation by the people whose

operation is to be analysed. The process can be based on situational

questions, interviews with key people or personnel at different

levels in the operation, or through workshops focusing specifically

on risk identification.

Phase 2, Analysis/classification

In the event of changes in the operation, a qualitative analysis

should be conducted prior to risk classification in order to identify

trends or patterns that may affect the assessment of damage or

the probability ratio. The risk classification is carried out with the

aid of a matrix, in which damage/probabilities are graded: low

(0–20 per cent), medium (20–40 per cent) and high (>40 per cent).

Phase 3, Preventive measures

Preventive measures are taken to reduce the probability of identified

risks occurring. Activities include establishing the preventive

measures, appointing someone to ensure the measures are

implemented, scheduling the measures and documenting them

in an action plan.

Phase 4, Follow-up

The preventive measures are continually followed up to ensure they

are having the intended effect. This can take place by analysing

completed improvement measures on the basis of the action plan.

It can also be achieved by summarising the risks and results,

which are checked against the final report. In some cases, a new

identification and analysis phase and a new action plan may be

required.

HIGH LEVEL OF READINESS

Risk and sensitivity analyses are not only about changes instigated

by EuroMaint: they also involve changes that the outside world

imposes on the Group. In an increasingly complex world, risk and

sensitivity analyses entail a high level of response readiness in the

face of different scenarios.

FINANCIAL RISK MANAGEMENT

See Note 26 for information about financial risk management

(exchange rate, interest rate, credit, liquidity and refinancing risks,

pensions and interest rates).

What safety, quality and environmental factors aresusceptible ahead of a planned change? How can they beaffected? What are the risks and how can they be elimi-nated? These are questions that EuroMaint regularlyhas to ask itself before implementing any change. In an operational field exposed to competition, continuousimprovement is a must to be commercially successful.It is equally important to analyse planned changes froma risk and sensitivity perspective.

PROCEDURES FOR RISK AND SENSITIVITY ANALYSIS

What risks could arise for the company, customers or in the sur-

rounding environment? How can the risks be eliminated or prevented?

Safety is regularly included in EuroMaint’s risk and sensitivity

analyses. The Group’s procedures for risk and sensitivity analysis

regarding safety, quality, the environment and working environment

encompass four phases, which are outlined below.

Elisabeth Nilsson – Board of Directors’ perspective

“We can influence developments by workingalongside others”

44

“We can influence developments by workingalongside others”

Article on a member of the Board’s view of EuroMaint

Skilled management of the company provides security

45

kinds of talk about quality these days, and

that maintenance and quality are the same

thing for EuroMaint.

“For me it is important as a member

of the Board to be able to feel proud that

I am working for a good company, and that

we are offering services of a high quality.

It is necessary for each individual employee

to think quality in his or her day-to-day work

– when making decisions, installing a

component or examining a drawing.”

Great breadth of operations

Elisabeth is fascinated by the tremendous

breadth within EuroMaint Rail’s various parts.

Rewinding engines is an amazing skill,

and taking trains out of service for main-

tenance work and then returning them with-

out disrupting the traffic flow is something

entirely different. Collaborating with per-

sonnel on technical and ergonomic solutions

when working on refurbishment projects,

as well as producing attractive coaches that

entice passengers, requires still other

qualifications.

“I was also very impressed when I visited

EuroMaint Industry in Skövde and saw what

they had done for Volvo,” explains Elisabeth.

“With so many different parts of the

operation, it is incredibly important to con-

stantly develop efficiency. To ask yourself if

you are doing the right things, whether any-

thing should be phased out or anything new

added. Constant changes of this kind can

be stressful for the employees, who ideally

want stability. However, I believe competent

work towards change produces long-term

security. The world is changing, and we need

to constantly evaluate how customers and

clients are acting and how political develop-

ments change the conditions and rules of

the game – and to act accordingly.”

As the rail transport industry is moving

Elisabeth Nilsson has been amember of EuroMaint’s Board of Directors for two years. She isimpressed by the breadth thatexists within the operation: the craftsmanship in rewindingengines, the logistics when trainsare taken out of and returned toservice for maintenance, and inparticular the extremely long-termwork of influencing developmentswithin the European rail sector.

Elisabeth Nilsson is President of the

Swedish Steel Producers’ Association. She

is now a member of EuroMaint’s Board of

Directors for the second year, and has there-

fore immersed herself in the situation for

railways both within and outside of Sweden.

“Since the various parts of the Swedish

State Railways were first converted into

independent companies there have been a

number of interesting developments. The

revolution has not been easy for anyone,”

she says.

“EuroMaint has been very adept at

developing the company from being part of

a state operation to working as an efficient

company on a market exposed to competi-

tion. It has successfully identified new

concepts, developed quality awareness

and developed the relationship between

customer and supplier.”

Tough competition demands quality

One interesting example is the Stockholm

Train Alliance, in which EuroMaint is a

supplier, which in competition with other

companies and consortiums has been

commissioned to run the commuter train

services in Stockholm.

“When you work with the public sector,

it’s important that transport is punctual.

EuroMaint’s capabilities will be put to the

test, and it is important to realise that

anyone who does not do their part in

Stockholm will be ‘blacklisted’, and not be

given a chance anywhere else either.”

Elisabeth mentions that there is all

“We are on the right track,and I believe the future

looks bright”

towards fewer and fewer maintenance

assignments, it is vital to review how the

company should deal with this situation.

EuroMaint already has a high market share

in Sweden and now sees two opportunities:

to grow within neighbouring sectors in the

field of maintenance in Sweden, and to

establish itself on the international market.

“It’s important to act wisely,” says

Elisabeth. “You have to have the ability

to handle growth while at the same time

adapting the organisation.”

Looking to Europe

“There is a great deal to be done to make

the railway an attractive means of transport

in Europe,” says Elisabeth. “Quite simply,

trains have to travel more quickly and be

extremely reliable in areas such as safety,

maintenance and punctuality.

“EuroMaint Rail has everything in place

to influence this development. By setting

good examples, we can spread our way of

working to business partners and custo-

mers in other countries. We have to be the

engine, pulling a heavy load in this initial

phase. If we succeed, we can then sit in first

class once the journey is under way,” says

Elisabeth with a smile.

She adds that European countries have

reached different stages in the deregulation

process, and that Sweden is very advanced.

There are a great many factors influencing

such decisions, not least the fact that train

operations are often closely linked to the

nation – indeed they frequently bear the

name of the nation.

“It’s a little odd: nobody wants to put up

barriers to road haulage and shipping com-

panies when it comes to operating across

national borders, but the railways have to be

protected. This will take time to change, but

we can influence developments by working

alongside others.

“The name EuroMaint is an indication of

what we expect of the future,” feels Elisabeth.

“Our goal is to grow across national borders.

We are on the right track, and I believe that the

future looks bright!”

FOUR-YEAR SUMMARY

PRO FORMA PRO FORMA

Income statement, SEK mn 2005 2004 2003 2002

Turnover 1,872 1,493 1,653 1,879

Operating profit/loss 113 47 -103 -188

Net financial items -11 -10 -11 -26

Profit/loss after tax 92 52 -106 -164

Cash flow, SEK mn 2005 2004 2003 2002

Cash flow from:

Ongoing activities 62 48 -40 -56

Investment activities -100 -34 10 -21

Financing activities 90 0 30 76

Change in cash and cash equivalents 52 14 0 0

Balance sheet, SEK mn 31 Dec 2005 31 Dec 2004 31 Dec 2003 31 Dec 2002

Fixed assets 215 160 113 140

Receivables and stock 693 563 690 722

Cash and cash equivalents 66 14 0 0

Total assets 974 737 803 862

Equity 174 81 18 110

Deferred tax 12 0 0 13

Other provisions 45 46 54 75

Long-term liabilities 340 250 250 240

Operating liabilities 403 359 481 424

Total equity and liabilities 974 737 803 862

46

The relevant figures for 2002–2004 relate to EuroMaint Rail. EuroMaint Industry is included from 1 July 2005.

2,000

, 750

1,500

1,250

1,000

750

500

250

02003 2004 20052002

TURNOVERSEK mn

150

100

50

0

-50

-100

-150

-2002003 2004 20052002

OPERATING PROFIT/LOSSSEK mn

200

150

100

50

02003 2004 20052002

EQUITYSEK mn

81

174

18

110

47

113

-10

3

-188

1,49

4

1,87

2

1,6

531,87

9

The business in figures

0505

48

REPORT OF THE DIRECTORS

The Board of Directors and President of EuroMaint AB hereby submit the Annual Report and consolidated financial

statements for the 2005 financial year. EuroMaint AB is a wholly-owned subsidiary of AB Swedcarrier, with registered number

553036-3409 domiciled in Stockholm, Sweden, and is wholly-owned by the Swedish state.

GROUP RESTRUCTURING

In order to better handle future challenges and expansion plans while retaining customer focus, the decision was made in late 2005

to restructure the EuroMaint Group. In December AB Swedcarrier acquired EuroMaint AB (formerly Jernhusen Exploatering AB)

from Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB (formerly EuroMaint AB) from the parent company AB

Swedcarrier. The acquisition was financed through a shareholders’ contribution. The technically new Group, which thus comprises

EuroMaint AB and the EuroMaint Rail Group, equates in financial terms to the former EuroMaint Group.

In January 2006, the shares in Euromation AB were transferred from EuroMaint Rail AB to the new parent company, and

Euromation AB changed name to EuroMaint Industry AB and continued to focus on the engineering industry.

OPERATIONS

EuroMaint strengthens its customers’ competitiveness through tailored maintenance and technical solutions. EuroMaint’s

business proposition targets the rail industry and engineering industry.

The proposition for the rail industry encompasses train maintenance and refurbishment of rolling stock, including spare

parts sourcing.

EuroMaint Rail is currently the market leader in Sweden and has begun offering its services to an international market,

primarily Denmark, Norway and Germany.

The largest customers in the rail industry are SJ AB and Green Cargo.

The company’s competitors are mainly various international maintenance providers, train operators’ own maintenance

organisations and vehicle manufacturers.

The proposition for the engineering industry encompasses maintenance, component service, production engineering

consultancy services and the development of production equipment. EuroMaint Industry currently focuses its offering on the

Swedish engineering industry. The largest customers in the engineering industry are from the Volvo group of companies, which

account for 90 per cent of turnover. Most maintenance service in the industry is carried out internally, so the challenge for

EuroMaint Industry is to present prospective customers with a sufficiently attractive offering that maintenance services are

outsourced with EuroMaint Industry.

THE ENVIRONMENT

The Group carries out operations with permit and notification obligations in accordance with the Swedish Environmental Code,

through its companies EuroMaint Rail and EuroMaint Industry. These two companies account for the Group’s main impact on the

external environment.

The Group’s overall operation has a certain impact on the external environment, primarily via emissions to land, water and air.

The Group’s permit and notification decisions are absolutely crucial to conducting the present operating activities.

Impact on the environment

EuroMaint Rail conducts three operations requiring permits and 12 requiring notification. At all workshops, the main effect on the

environment is to the air and water. Eleven of the notification decisions pertain to workshops for train maintenance, and one relates

to the refurbishment workshop in Malmö. The notification decisions mainly relate to vehicle washing units, painting and deicing

and refuelling facilities.

Increased activity in Malmö may require a new notification decision due to the increased discharge of solvent.

This is currently being looked into. Malmö also has a permit for inflammable goods which expires in February 2006 and needs

to be renewed. The workshops in Åmål and Gävle also need to renew their permits for inflammable goods in 2006.

The operations in Åmål and Örebro require permits. This is primarily due to the large amount of chemicals used, partly in

connection with vehicle washing and handling diesel systems.

EuroMaint Industry does not conduct any activities that require a permit. It has one operation which requires notification. It

relates to the motor rewinding operation and the use of paints. The environmental impact of all EuroMaint Industry operations is low.

THE BUSINESS IN FIGURES

49

SIGNIFICANT DEVELOPMENTS

In January EuroMaint Rail signed a 10-year maintenance contract with Arlanda Express worth in the region of SEK 250 million.

In March EuroMaint Rail established a new division, Engineering & Planning, to further focus on and secure solid expertise in

engineering and development of maintenance systems.

In May a sales function with a focus on international sales was established.

In June EuroMaint Rail delivered a Y1 engine coach converted from diesel to run on biogas – the world’s first biogas engine

coach. The customer, Svensk Biogas AB, is a wholly-owned subsidiary of Tekniska Verken i Linköping AB.

Euromation AB was acquired from Volvo Technology Transfer, Volvo Powertrain and Volvo Cars on 1 June. Euromation has

around 285 employees and a turnover of approximately SEK 300 million.

The ‘Stockholm Train Alliance’, in which EuroMaint Rail is a maintenance provider, won the contract for Stockholm’s Pendeltåg

commuter rail traffic. The agreement runs until 2011 with an option for a further five years, and the order is worth in the region of

SEK 850 million, excluding the option period. There was an appeal against the decision but the legal process led to the Alliance finally

receiving the order in any case. In December, EuroMaint Rail’s operational management system was granted environmental certi-

fication. During the year, EuroMaint Rail began a collaboration with AEA Technology Rail to enable the introduction of maintenance

technology that decreases maintenance costs and increases the availability of customers’ rolling stock.

FUTURE DEVELOPMENT

Clear trends in trade and industry towards an increased focus on the core business have resulted in various types of service increa-

singly being outsourced to specialist companies. Over the longer term this trend has related to services under the umbrella term of

‘facility management’.

The development has continued with the division of industrial corporations and public services into different companies or

specialist operations, thereby enabling each part to evolve into a robust unit under professional, proactive management. EuroMaint

Rail is a good example of this trend, whereby SJ Engineering with its maintenance and refurbishment operation within the former

Swedish State Railways (SJ) was converted into companies in 2001. In a similar way, the Volvo companies set up the Maskinteknik

unit as a company in 2000, which became part of the EuroMaint Group on 1 July 2005 and changed name to EuroMaint Industry

in 2006.

By highlighting the development of the engineering operation in the rail industry, automotive industry and proprietary core

business on a competitive market, it has been possible to achieve major benefits for customers and owners alike. The results have

been measurable in increased accessibility to costly production equipment and plants, while it has also been possible to reduce

maintenance costs and improve production efficiency. The EuroMaint Group will further develop efficient methods and processes

for maintenance and production, thereby helping increase customers’ competitiveness.

EuroMaint also intends to be part of the continued restructuring and development of the maintenance industry, both in Sweden

and in other EU countries. This could take place through organic growth and corporate acquisitions. It primarily refers to the rail

industry and the engineering industry, but could also extend to other industrial segments where EuroMaint’s processes can be

successfully applied.

THE BUSINESS IN FIGURES

50

TURNOVER AND PROFIT

Turnover

Turnover amounted to SEK 1,872 (1,493) million. Of the SEK 379 million increase in turnover, SEK 161 million can be attributed

to the acquisition of Euromation on 1 July. The remaining increase in turnover is due to expansion in refurbishment business (X2)

and a general increase in volume.

Operating profit

Operating profit amounted to SEK 113 (47) million, which gives an operating margin of 6 per cent and an increase in absolute terms

of SEK 66 million.

The improvement can be explained by

• The acquisition of Euromation with a positive contribution of SEK 13 million.

• A decrease in purchasing costs by about 10 per cent wherever possible.

• An update of the obsolescence model for materials, which means that inventories have been revalued by SEK 23 million,

which has had a positive impact on profit for the year.

Financial items

Net financial income/expense amounted to SEK -11 (-10) million. The figure has been positively affected by lower interest rates,

and negatively influenced by increased borrowing due to the acquisition of Euromation.

Cash flow

Cash flow for the year amounted to SEK 52 (14) million. The increase is mainly attributable to improved profit and moderation in

investments in tangible assets. During the first three quarters of the year there was a backlog in the planned cash flow, mainly due

to initial delays in deliveries for the X2 refurbishment. Cash flow from business in the fourth quarter was, however, strong. Cash

flow has also been influenced by transactions linked to the acquisition of Euromation.

Goal achievement

Turnover for 2005 amounted to SEK 1,872 million. Operating profit was SEK 113 million and the operating margin equalled 6 per cent.

The long-term goal is an operating margin of 8 per cent. EuroMaint has won and started working on new contracts. Planned cost-

cutting has been successfully implemented, as has effective cost control.

The equity/assets ratio is 17.8 (11) per cent, which is in line with the business plan. The goal is an equity/assets ratio of at least

25 per cent.

Proposed treatment of unappropriated earnings

Profit for the year in the parent company amounted to SEK 117,570 ( ). The Board of Directors proposes that the funds at the

AGM’s disposal, in accordance with the parent company’s balance sheet, be carried forward.

Earnings carried forward (SEK) 156,761,000

Net profit for the year 117,570

TOTAL 156,878,570

The income statement and balance sheet will be presented to the AGM on 30 March 2006 for approval.

THE BUSINESS IN FIGURES

51

INCOME STATEMENT1 January–31 December 2005

Group Parent company

SEK thousands Note 2005 2004 2005 2004

OPERATING INCOME

Net turnover 1,865,011 1,482,906 0 0

Other operating income 4 7,202 10,374 0 0

TOTAL OPERATING INCOME 1,872,213 1,493,280 0 0

OPERATING EXPENSES

Net operating expenses -631,100 -462,882 0 0

Other external expenses 5, 24 -381,036 -315,855 0 0

Costs of personnel 6 -721,183 -661,554 0 0

Depreciation of tangible assets 7 -24,164 -18,636 0 0

Amortisation of intangible assets 8 -938 0 0 0

Other operating expenses -69 917 0 0

Items affecting comparability 9 0 12,364 0 0

TOTAL OPERATING EXPENSES -1,758,489 -1,445,646 0 0

Operating profit 113,723 47,634 0 0

FINANCIAL ITEMS

Financial income 10 916 570 163 0

Financial expenses 10 -11,800 -10,585 0 0

NET FINANCIAL INCOME/EXPENSES -10,884 -10,015 163 0

Pre-tax profit 102,840 37,619 163 0

Tax 11 -10,375 13,970 -46 0

NET PROFIT FOR THE PERIOD 92,464 51,589 118 0

Parent company shareholders’ share of profit for the period 92,464 51,589 118 0

Earnings per share, SEK thousands 92.5 51.6 0.12 0

52

BALANCE SHEETOn 31 December 2005

Group Parent company

SEK thousands Note 2005 2004 2005 2004

ASSETS

FIXED ASSETS

Tangible assets 7 125,567 118,703 66 0

Intangible assets 8 44,258 0 0 0

Participations in Group companies 12 0 0 156,761 0

Long-term receivables 13, 14 12,929 12,929 129 129

Pension receivables 14 10,383 12,456 0 0

Deferred tax assets 15 21,547 20,000 0 0

TOTAL FIXED ASSETS 214,684 164,088 156,956 129

CURRENT ASSETS

Inventories 16 259,343 237,925 0 0

Accounts receivable 283,644 174,970 164 0

Receivables from Group companies 511 470 0 0

Other receivables 41,275 13,196 0 0

Completed, not invoiced 79,997 85,912 0 0

Tax assets 0 20,000 0 0

Prepaid expenses and accrued income 17 28,450 26,330 0 0

Cash and cash equivalents 65,850 13,820 0 0

TOTAL CURRENT ASSETS 759,070 572,623 164 0

TOTAL ASSETS 973,753 736,711 157,120 129

EQUITY

Share capital 100 100 100 100

Other contributed capital/statutory reserve 394,863 394,863 29 29

Accumulated deficit/non-restricted equity -221,372 -313,532 156,879 0

SHARE CAPITAL PERTAINING TO

PARENT COMPANY SHAREHOLDERS 173,591 81,431 157,008 129

TOTAL EQUITY 173,591 81,431 157,008 129

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

53

BALANCE SHEETCONTD.

Group Parent company

SEK thousands Note 2005 2004 2005 2004

LIABILITIES

LONG-TERM LIABILITIES

Long-term interest-bearing liabilities 18 340,000 250,000 0 0

Provision for pensions and similar commitments 14 38,448 41,219 0 0

Other provisions 19 6,363 4,975 0 0

Deferred tax liability 20 12,418 0 0 0

TOTAL LONG-TERM LIABILITIES 397,229 296,194 0 0

CURRENT LIABILITIES

Advance payment from customers 21 9,938 21,454 0 0

Accounts payable 21 116,954 109,514 0 0

Income tax liability 21 6,690 8,747 46 0

Liabilities to Group companies 21 7,482 10,705 0 0

Other current liabilities 21 19,120 3,323 66 0

Accrued expenses and prepaid income 22 242,750 205,343 0 0

TOTAL CURRENT LIABILITIES 402,933 359,086 112 0

TOTAL LIABILITIES 800,162 655,280 112 0

TOTAL EQUITY AND LIABILITIES 973,753 736,711 157,120 129

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets, floating charges 23 20,000 20,000 None None

Contingent liabilities 23 11,809 9,463 None None

54

CHANGES IN CONSOLIDATED EQUITY1 January – 31 December 2005

Share capital pertaining to parent company shareholders Share capital Other contri- Accumulated Total equitySEK thousands buted capital deficit

Opening equity 1 Jan 2004 100 394,863 -365,121 29,842

Net profit for the year 0 0 51,589 51,589

TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 51,589 51,589

CLOSING EQUITY 31 DEC 2004 100 394,863 -313,532 81,431

Opening equity 1 Jan 2005 100 394,863 -313,532 81,431

Reclassification 0 0 -304 -304

Net profit for the year 0 0 92,464 92,464

TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 92,160 92,160

CLOSING EQUITY 31 DEC 2005 100 394,863 -221,372 173,591

CHANGES IN PARENT COMPANY EQUITY1 January – 31 December 2005

Share capital pertaining to Share capital Statutory Earnings Net profit Total equityparent company shareholders, SEK thousands reserve vinstmedel for the year

Opening equity 1 Jan 2004 100 29 0 0 129

Net profit for the year 0 0 0 0 0

TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 0 0 0

CLOSING EQUITY 31 DEC 2004 100 29 0 0 129

Opening equity 1 Jan 2005 100 29 0 0 129

Net profit for the year 0 0 0 118 118

TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 0 118 118

Shareholders’ contribution 0 0 156,761 0 0

CLOSING EQUITY 31 DEC 2005 100 29 156,761 118 157,008

The number of shares in the parent company amounts to 1,000

The quota value in the parent company amounts to 100

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

55

Group Parent company

SEK thousands Note 2005 2004 2005 2004

ONGOING ACTIVITIES

Profit after financial items 102,840 37,619 163 0

Depreciation and write-downs 25,102 18,636 0 0

Other items not affecting liquidity 25 -33,929 -82,962 -46 0

CASH FLOW FROM ONGOING ACTIVITIES 94,013 -26,707 118 0BEFORE CHANGES IN WORKING CAPITAL

CHANGES IN WORKING CAPITAL

Increase (–)/decrease (+) in inventories -18,501 42,284 0 0

Increase (–)/decrease (+) in accounts receivable -47,675 66,568 0 0

Increase (–)/decrease (+) in other current receivables 22,910 -801 -163 0

Increase (+)/decrease (–) in accounts payable -15,467 -14,182 0 0

Increase (+)/decrease (–) in other current liabilities 26,694 -19,513 112 0

CASH FLOW FROM ONGOING ACTIVITIES 61,974 47,649 66 0

INVESTMENT ACTIVITIES

Acquisition of tangible fixed assets 7 -21,049 -49,589 -66 0

Divestment of tangible fixed assets 1,115 16,990 0 0

Acquisition of subsidiary/business segment, net liquidity effect 27 -80,534 0 0 0

Acquisition of financial assets 524 -1,230 0 0

CASH FLOW FROM INVESTMENT ACTIVITIES -99,944 -33,829 -66 0

Cash flow from operating activities -37,970 13,820 0 0

FINANCING ACTIVITIES

Borrowings 100,000 0 0 0

Repayment of debt -10,000 0 0 0

CASH FLOW FROM FINANCING ACTIVITIES 90,000 0 0 0

Change in cash and cash equivalents for the year 52,030 13,820 0 0

Cash and cash equivalents at beginning of year 13,820 0 0 0

Exchange rate differences in cash and cash equivalents 0 0 0 0

CASH AND CASH EQUIVALENTS AT END OF YEAR 65,850 13,820 0 0

CASH FLOW ANALYSIS1 January – 31 December 2005

56

IAS 1 Presentation of Financial StatementsIAS 2 InventoriesIAS 7 Cash Flow StatementsIAS 8 Accounting Policies, Changes in Accounting Estimates

and ErrorsIAS 10 Events after the Balance Sheet DateIAS 11 Construction ContractsIAS 12 Income TaxesIAS 14 Segment ReportingIAS 16 Property, Plant and EquipmentIAS 17 LeasesIAS 18 RevenueIAS 19 Employee BenefitsIAS 23 Borrowing CostsIAS 24 Related Party DisclosuresIAS 27 Consolidated and Separate Financial StatementsIAS 32 Financial Instruments: Disclosure and Presentation IAS 33 Earnings per ShareIAS 37 Provisions, Contingent Liabilities and Contingent AssetsIAS 38 Intangible AssetsIAS 39 Financial Instruments: Recognition and MeasurementIFRS 1 First-time Adoption of IFRSIFRS 3 Business Combinations

Important estimates and assumptions for accounting purposesThe Group makes estimates and assumptions about the future. The estimates for accounting purposes which result from these, by definition, will rarely equate to the actual result.

The estimates and assumptions which entail a significant riskfor considerable adjustments in carrying amounts for assets andliabilities over the coming financial year are discussed below.

Critical accounting issuesDuring the preparation of EuroMaint’s consolidated financial statements, the Board and President have, in addition to estimates,made a number of assessments of critical accounting issues whichare highly significant to carrying amounts. This applies for the following areas:

Fair value of acquired subsidiaryEuroMaint Industry’s predominant customers operate in the auto-motive industry. This industry is undergoing heavy restructuring bothnationally and internationally, which is henceforth likely to force players possibly to relocate their production facilities to regions withcomparative advantages. Needless to say, this scenario means thatvaluations of customer relations and goodwill contain a degree ofuncertainty.

Uncertainty in estimatesCertain assumptions about the future and certain estimates andassessments on the balance sheet date are of particular importanceto the valuation of assets and liabilities in the balance sheet. Theareas where the risk of changes in value during the subsequent yearare greatest because the assumptions or estimates may need to bealtered are discussed below.

NOTES

NOTE 1 Accounting principles

General informationEuroMaint Rail develops and produces technical system services andmaintenance of rolling stock. EuroMaint’s proposition to customersencompasses most forms of technical maintenance. EuroMaintIndustry offers customers maintenance, installation and developmentof various types of production equipment. The accounting principlesbelow apply for both the parent company and the Group.

The consolidated financial statements and the Annual Report for EuroMaint AB (the parent company) for the 2005 financial yearhave been approved by the Board of Directors and the President forpresentation to the AGM on 30 March 2006 for adoption.

The parent company is a registered limited company domiciledin Stockholm, Sweden.

The address of the head office is Svetsarvägen 10, SE-171 29 SOLNA. The Swedish state is the ultimate owner.

The parent company of the largest Group in which EuroMaint AB,556084-8458, is a subsidiary and in which consolidated financial sta-tements are prepared, is AB Swedcarrier, 556036-3409, in Stockholm.

Summary of important accounting principlesThe most important accounting principles applied in the preparationof these consolidated financial statements have been set out.

Statement on compliance with the applied rulesThe consolidated financial statements for the EuroMaint Group havebeen prepared in accordance with International Financial ReportingStandards (IFRS).

As the parent company is a company in the EU, only the IFRS asendorsed by the EU are applied. Moreover, the consolidated financialstatements are prepared in accordance with Swedish legislationthrough the application of Swedish Financial Accounting StandardsCouncil recommendation RR 30 (Supplementary financial reportingrules for Groups).

The parent company Annual Report is prepared in accordancewith Swedish law through the application of Swedish FinancialAccounting Standards Council recommendation RR 32 (Financialreporting for legal entities). This means that IFRS valuation and disclosure principles are applied with the deviations specified in thesection on parent company accounting principles.

EuroMaint also follows the Stockholm Stock Exchange’s listingagreement with appendices and regulations from the SwedishIndustry and Commerce Stock Exchange Committee (NBK).

Foundation for preparing reportsThe consolidated financial statements for the EuroMaint Group havebeen prepared in accordance with International Financial ReportingStandards (IFRS).

The accounts are primarily based on historical costs with theexception of certain financial instruments which are reported at fairvalue. The Group has applied the following IFRS for 2005.

Comparison figures for 2004 have been adjusted as required in accordance with prevailing rules.

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

57

Impairment test for goodwillThe value of recognised goodwill is tested at least once a year todetermine any write-down requirement. The test requires an assess-ment of the value in use of the cash generating unit, or groups ofcash generating units, to which the goodwill value is attributable. In turn, this requires an estimation of the expected future cash flowfrom the cash generating unit and a relevant discount rate must beestablished to calculate the present value of the cash flow. Theassessments carried out on 31 December 2005 are stated in Note 8,Intangible Assets.

Obsolescence of inventoriesIn terms of value, inventories mainly comprise items which havebeen acquired in accordance with an assessed maintenance plan for various train models. As these cycles are long-term in nature (5 to 12 years), there is an element of uncertainty in this assessment.The company has a far-reaching obligation to stock items (spareparts) for a long time for various train models which have a verylong financial and technical life.

Consolidated accountsSubsidiaries are all companies in which the Group is entitled toformulate financial and operational strategies in a way that usuallyaccompanies a shareholding amounting to over half the voting rights.

Subsidiaries are included in the consolidated financial statementsfrom the day on which controlling influence passes to the Group.They are excluded from the consolidated financial statements fromthe day on which this controlling influence ceases.

The purchase method is used in accounting for the Group’sbusiness combinations. The cost of an acquisition comprises the fairvalue of assets provided as remuneration, arisen or assumed liabilitieson the transfer day, plus costs directly attributable to the acquisition.Identifiable acquired assets and assumed liabilities and contingentliabilities in a corporate acquisition are initially measured at fairvalue on the acquisition date regardless of the extent of any minorityinterest. The surplus comprising the difference between the cost andfair value of the Group’s proportion of identifiable acquired net assetsis recognised as goodwill. If the cost is less than the fair value of theacquired subsidiary’s net assets, the difference is recognised directlyin the income statement.

Intra-Group transactions and balance sheet items, as well asprofits on transactions between Group companies, are eliminated.Losses are also eliminated, unless the transaction is proof of a write-down requirement for the transferred asset. The accounting principlesfor subsidiaries have been changed where appropriate to guaranteeconsistent application of the Group’s principles.

Euromation AB which was acquired on 1 July 2005 has beenincluded in the consolidated financial statements in accordance withthe purchase method. This entails, for example, distributing the costof acquired assets, assumed commitments and liabilities at the timeof the acquisition on the basis of their fair values. Consequently,Euromation’s profit and cash flow for the six-month period July – December 2005 are included in the consolidated financial statements.

In order to better handle future challenges and expansion planswhile retaining customer focus, the decision was made in late 2005to restructure the EuroMaint Group. In December AB Swedcarrieracquired EuroMaint AB (formerly Jernhusen Exploatering AB) from

Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB(formerly EuroMaint AB) from the parent company AB Swedcarrier.The acquisition was financed through a shareholders’ contribution.

The technically new Group, which thus comprises EuroMaint ABand the EuroMaint Rail Group, equates in financial terms to the formerEuroMaint Group. EuroMaint AB’s acquisition of EuroMaint Rail ABwas a transaction between companies under the same controllinginfluence. IFRS 3 which deals with accounting of business combina-tions does not, therefore, apply. The consolidated financial statementshave been prepared using the pooling of interests method, whichentails preparing the consolidated financial statements for the newlyformed Group as though both units (EuroMaint AB and theEuroMaint Rail Group) merged at the beginning of the comparisonyear and without revaluation of assets and liabilities in both the merged units.

Business combinationsIFRS 3 has been applied for business combinations carried out since1 January 2004, which is in accordance with IFRS 1 and therefore anexception from the main rule on retroactive application of IFRS.IFRS 3 entails establishing the fair value of identifiable assets and liabilities in the acquired operation at the time of acquisition.

Identifiable assets and liabilities also include assets, liabilitiesand provisions including obligations and demands from externalparties not reported in the acquired operation’s balance sheet. No provisions are made for costs relating to planned restructuringmeasures resulting from the acquisition.

The difference between the cost of the acquisition and the acquiredproportion of net assets in the acquired operation is classified asgoodwill and is recognised as an intangible asset in the balance sheet.

The useful life of each individual intangible asset is establishedand the asset’s fair value is amortised over its useful life. If the usefullife is deemed indefinite, no amortisation takes place. If the useful lifeof an intangible asset is deemed indefinite, all relevant conditionsare taken into account and based on there being no foreseeableupper time limit for the net cash flow generated by the asset. Theuseful life for goodwill is generally assumed to be indefinite.

Segment reportingAs the subsidiaries conduct separate operations with separate products and services, their operations have been chosen as the primary segment. Sales between subsidiaries are based on marketconditions.

All assets and liabilities have been included for each subsidiary.Segment information per subsidiary is given in Note 3.

Translation of foreign currenciesTransactions in foreign currencies are translated at the rate used onthe transaction date. Receivables and liabilities in foreign currenciesare translated at the exchange rates in force on the balance sheetdate. Exchange rate differences on loans and investments in foreigncurrencies are reported as financial income or financial expense.Other exchange differences are included in operating income.

NOTES

58

Tangible fixed assetsTangible fixed assets are recognised at cost less accumulated deprecia-tion according to plan and accumulated write-downs. Depreciationtakes place in accordance with a systematic plan over the useful lifeof the asset to an estimated residual value.

Additional costs are added to the asset’s carrying amount orrecognised as a separate asset, as appropriate, only when it is likelythat future economic benefits associated with the asset will accrue tothe Group and the asset’s cost can be measured in a reliable way.

All other forms of repair and maintenance are recognised asexpenses in the income statement for the period in which they arise.

In order to distribute the cost of tangible fixed assets down to theestimated residual value, depreciation takes place linearly over theestimated useful life, in accordance with the following percentages.

Category Depreciation, %Machinery and equipment 5–10

Computers and terminals 33

Buildings 5

Other intangible assets/Customer relationsIn connection with corporate acquisitions, the Group has identifiedintangible assets which fulfil the criteria set out in IAS 38. Linearamortisation is applied over the useful life of the asset, which is 8 years.

The carrying amounts of intangible assets are tested to determineany write-down requirement when events or changes in circumstancesindicate that the value may not be recoverable.

Write-downsAssets with an indefinite useful life are not depreciated/amortisedbut tested annually to determine any write-down requirement. Theassets which are depreciated/amortised are assessed in terms ofdecrease in value whenever an event or a change indicates that thecarrying amount may not be recoverable. A write-down is carried outfor the amount by which the asset’s carrying amount exceeds itsrecoverable amount.

The recoverable amount is the higher of an asset’s fair value lessselling expenses, or its value in use. On determining the write-downrequirement, the assets are grouped at the lowest levels at whichthere are separate, identifiable cash flows (cash generating units).Goodwill is tested annually to identify any write-down requirementand is recognised at cost less accumulated write-downs.

Financial instrumentsFinancial instruments recognised as assets in the balance sheetinclude cash equivalents, accounts receivable, derivatives and otherreceivables. Those recognised as liabilities include accounts payable,borrowings, derivatives and other liabilities.

A financial asset or financial liability is recognised in the balancesheet when the company becomes party to the instrument’s contractual terms.

Accounts receivable are recognised in the balance sheet once an invoice has been sent.

Liabilities are recognised once the counterparty has completedits task and there is a contractual obligation to pay, even though an invoice may not yet have been received.

Accounts payable are recognised once the invoice has beenreceived.

A financial asset is excluded from the balance sheet once thecontractual rights have been realised, have expired or the companyhas lost control over it. The same applies for part of a financial asset.A financial liability is removed from the balance sheet once theobligation in the contract has been fulfilled or has in some other waybeen extinguished. The same applies for part of a financial liability.

EuroMaint has taken the voluntary exception to apply IAS 32 andIAS 39 from 1 January 2005.

Financial assetsAcquisitions and sales of financial assets are reported on the businessday, i.e. the day on which the company commits to acquiring or sellingthe asset.

NOTES

The residual values and useful lives of assets are tested on eachbalance sheet date and adjusted as necessary. An asset’s carryingamount is depreciated immediately to its recoverable amount (thehigher of the net selling price and value in use) if the asset’s carryingamount exceeds its estimated recoverable amount.

Profits and losses from sales are established by means of acomparison between the sales proceeds and carrying amount andthe result is recognised in the income statement.

Intangible assets

GoodwillGoodwill is the amount by which the cost exceeds the fair value

of the Group’s proportion of the subsidiary’s identifiable net assetsupon acquisition. Goodwill upon acquisition of the subsidiary isrecognised under intangible assets.

Profit or loss from the sale of a unit includes the remaining carrying amount of the goodwill pertaining to the sold unit.

Goodwill is distributed between cash generating units upon testing to determine any write-down requirement. The write-downrequirement for goodwill is tested as follows: the goodwill valueestablished at the time of acquisition is distributed among cashgenerating units or groups of cash generating units, which areexpected to bring benefits through the acquisition in the form ofsynergy effects.

Assets and liabilities already within the Group at the time ofacquisition may also be attributed to these cash generating units.

Each cash flow of this kind to which goodwill is distributed,corresponds to the lowest level in the Group at which goodwill ismonitored in the company’s Board and is not a larger part of theGroup than a segment, i.e. a business segment or geographical areain accordance with the Group’s segment reporting. A write-downrequirement exists when the recoverable amount for a cash generatingunit, or group of cash generating units, is lower than the carryingamount. In such cases a write-down is entered in the income statement.

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

59

BorrowingLoans are initially recognised at the loan amount and are subsequentlyentered at the loan amount less reductions. Borrowing is classifiedas current liabilities unless the Group has an unconditional right topostpone payment of the liability for at least 12 months after thebalance sheet date.

Derivative instrumentsThe Group uses derivative instruments to secure parts of its exposureto currency risks in ongoing payment flows. Management is in accordance with the financial rules established by the Board. Hedgeaccounting is not applied, instead all derivatives are categorised asfinancial assets and liabilities valued at fair value through the incomestatement.

This means that the change in value of the derivatives is recog-nised in the income statement under financial items. Derivatives withpositive values are entered as assets and derivatives with negativevalues are entered as liabilities.

Fair value is established by obtaining the costs or revenue whichwould have arisen if the contract had expired on the balance sheet date.

InventoriesMaterial stores and finished goods inventories are valued at the lowerof cost or net selling price. The Group applies the first-in, first-outmethod (FIFO). The net selling price is the estimated selling price in the ongoing operation less applicable variable selling expenses.

Accounts receivableAccounts receivable are reported at the invoiced amount less anyreserve for decrease in value. A reserve for decrease in value ofaccounts receivable is set up when there is objective proof that theGroup will not be able to receive all amounts due in accordance withthe original terms of the receivables. The size of the reserve is thedifference between the asset’s carrying amount and the value ofassessed future cash flows. The decrease in value is reported in theincome statement.

Cash and cash equivalentsCash and cash equivalents include cash and bank balances. In the balance sheet, the bank overdraft facility utilised is entered asborrowing under current liabilities.

Income taxThe tax burden is affected by appropriations and other tax adjustmentsmade in each company. The tax rate used is 28 per cent. Deferred taxis recognised in its entirety on all temporary differences comprisingthe difference between the tax base for assets and liabilities and theircarrying amounts in the consolidated financial statements. Deferredtax is calculated through the application of tax rates and laws whichhave been decided or notified on the balance sheet date and whichare expected to apply when the deferred tax assets in question arerealised or the deferred tax liability is cleared.

Deferred tax assets are recognised for tax-deductible temporarydifferences and unused loss carry-forwards to the extent it is likely thatfuture taxable profit will be available against which the temporarydifferences or unused loss carry-forwards may be used.

Remuneration to employees

Pension obligationsThe Group companies have different pension plans. The pensionplans are primarily financed through payment of insurance premiumsor through a provision in the balance sheet. The Group has bothdefined benefit and defined contribution pension plans. For employeesin the Group previously employed by the public enterprise theSwedish State Railways, the Swedish state is responsible for earnedand not paid pension commitments for the time prior to conversioninto companies at the end of 2000/beginning of 2001.

A defined contribution pension plan is a plan whereby the Grouphas no further payment obligation once the contributions are paid.Defined contribution pension plans in the Group are PA-03, AlternativITP-S (supplementary pensions for higher earners), and ITP supple-mentary pensions for salaried employees, Alecta. ITP pensions in Alectaare recognised as defined contribution plans due to a deficiency in the information required to classify the plan as a defined benefitpension. According to a statement from the Swedish FinancialAccounting Standards Council’s Emerging Issues Task Force, URA42, these are defined benefit plans encompassing several employers.

EuroMaint has not had access to such information for the 2005financial year that would make it possible to enter this plan as a defined benefit plan. The ITP pension, which is secured through an insurance policy with Alecta, is therefore entered as a definedcontribution plan.

Fees for the year for pension plans issued by Alecta amount toSEK 19 (14) million. Some employees are entitled to exchange part of their ITP plan for a premium-based pension solution where thecompany’s sole obligation is to pay the set premiums. The fees arereported as costs of personnel when they fall due for payment.Prepaid fees are recognised as an asset to the extent that cash repay-ment or a reduction in future payments may accrue to the company.

A defined benefit pension plan guarantees the employee a pensionequivalent to a certain percentage of his or her final salary.

The liability recognised in the balance sheet regarding definedbenefit pension plans is the present value of the defined benefit obli-gation on the balance sheet date net the fair value of the plan assets,with adjustments for unrecognised actuarial losses/past service losses.The defined benefit pension obligation is calculated annually by inde-pendent actuaries. The present value of the defined benefit obligationis established by discounting the estimated future cash flow at aninterest rate for government bonds issued in the same currency in which the remuneration will be paid out, and with durationscomparable to the pension provision in question. Actuarial gains and losses arising from experience-based adjustments and changesin actuarial assumptions exceeding the higher of 10 per cent of the value of the plan assets and 10 per cent of the defined benefitobligation, are taken up as expense or income over the estimatedaverage remaining period of service of the employees.

Past service cost is recognised directly in the income statement,unless the changes in the pension plan are conditional on theemployee remaining in service for a set period (entitlement period).In such cases, the past service cost is recognised on a straight-linebasis over the entitlement period.

The results for defined benefit pension obligations were calcu-lated in accordance with IAS 19 (Projected Unit Credit Method) on 31 December 2005.

NOTES

60

Remuneration on termination of employmentRemuneration on termination of employment is paid when anemployee’s position is terminated prior to standard retirement orwhen an employee accepts voluntary redundancy from the positionin exchange for such remuneration. The Group recognises severancepay when it is demonstrably obliged either to make the employeeredundant in accordance with a detailed formal plan with no oppor-tunity for recall, or to provide remuneration upon redundancy due toan offer made to encourage voluntary redundancy among personnel.Benefits due after 12 months of the balance sheet date or longer arediscounted at the present value.

ProvisionsProvisions are recognised when the Group has an existing legal or constructive obligation as a result of a past event, and it is more probable than not that an outflow of resources will be required tosettle the obligation, and the amount has been reliably estimated. If there are a number of similar obligations, the probability that anoutflow of resources will be required to settle is assessed generallyfor this entire group of obligations. A provision is also reported if the probability of an outflow regarding a specific item in this groupof commitments is only slight.

Revenue recognitionNet turnover encompasses sales of services within maintenance,refurbishment of rolling stock, as well as maintenance and imple-mentation of production facilities for the engineering industry.

For maintenance contracts guaranteeing availability (known as‘availability contracts’) and refurbishment contracts, income and costspertaining to the assignment are recognised relative to the degree ofcompletion of the assignment. This accounting principle is based onthe view that the task is fulfilled in line with the work being carriedout, and means that profit is recognised progressively based on thedegree of completion of each assignment when the assignment’sfinal outcome can be measured in a reliable way. For availabilitycontracts, the degree of completion is determined on the basis ofwork carried out in relation to the maintenance plan.

For refurbishment contracts, the degree of completion is determined in relation to accrued assignment costs.

If an assignment’s final outcome cannot be measured in a reliableway but no loss is feared, revenue corresponding to accrued costs isrecognised.

A feared loss for an assignment is immediately charged in itsentirety to the period’s results.

LeasesLeases where a considerable part of the risks and rewards of owner-ship are retained by the lessor are classified as operating leases.Payments made during the lease term are taken up as expenses inthe income statement on a straight-line basis over the lease term.

Cash flow analysisThe indirect method is applied in recognising cash flow from ongoingactivities.

Related partiesRelated companies to the EuroMaint Group are defined as statecompanies with market requirements where the state has a controlling influence.

Persons closely associated with the Group are defined as Boardmembers, senior personnel and close family members of these people.

Disclosures are provided about transactions with related partieswhich entail the transfer of resources, services or obligations betweenrelated parties, whether or not remuneration is paid. The informationcontains details of the nature of the relationship and informationabout the effect of the relationship on the financial reports.

Parent companyThe parent company applies the same accounting principles as theGroup, along with RR 32.

Transition to International Financial Reporting Standards (IFRS)As of 1 January 2005, the Group prepares its consolidated financialstatements in accordance with International Financial ReportingStandards, IFRS. The Group has applied the Swedish FinancialAccounting Standards Council’s recommendations up until 2004,which largely correspond to IFRS. Accounting and reporting in accordance with IFRS have affected the Group’s reported results and position. The area that has had an impact on the Balance Sheet,Equity and Reported Result upon transition to IFRS is:• Pensions IAS 19

Balance Sheet, SEK mn 1 Jan 2004Equity as per former accounting principles 18,2

Effect of IAS 19 11,6

Equity as per new accounting principles 29,8

Balance Sheet, SEK mn 31 Dec 2004Equity as per former accounting principles 68,6

Effect of IAS 19 12,8

Equity as per new accounting principles 81,4

Income Statement, SEK mn 2004Profit as per former accounting principles 50,4

Effect of IAS 19 1,2

Profit as per new accounting principles 51,6

NOTES

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

61

The table below presents information about the prime nature of the transactions with related parties.

Operating revenues Expenses

Banverket Sale of materials Premises rentalRolling stock maintenance Telephone costsRecovery services

Green Cargo Sale of materials Premises rentalRolling stock maintenance Transport costsRecovery services

Lantmäteriverket – Purchase of maps

SJ AB Sale of materials Train journeysRolling stock maintenanceRecovery services

SweMaint AB Sale of materials Material costsRolling stock maintenance Component

maintenance costs

ASJ Refurbishment Damages costsof rolling stock

Jernhusen – Workshop rental

Vattenfall AB Industrial maintenance Energy costs

NOTES

Note 2 Transactions with related parties

Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004

Sale of goods and servicesState companies/departmentsBanverket 50,313 61,848

Green Cargo 299,802 297,448

SJ AB 835,565 689,644

ASJ 12,829 1,732

SweMaint AB 55,453 41,465

Vattenfall 543 651

Jernhusen 19 246

Purchase of goods and servicesState companies/departmentsBanverket 7,688 8,372

Green Cargo 2,014 5,283

SJ AB 9,821 7,367

ASJ 37 36

SweMaint AB 30,937 31,644

Lantmäteriverket 6 4

Vattenfall 233 444

Jernhusen 128,482 115,555

Receivables from related partiesState companies/departmentsBanverket 8,019 21,701

Green Cargo 31,505 32,392

SJ AB 102,278 73,360

ASJ 14,087 414

SweMaint AB 209 415

Vattenfall 3 4

Jernhusen 0 470

Liabilities to related partiesState companies/departmentsBanverket 2,049 2,710

Green Cargo 283 567

SJ AB 1,187 627

SweMaint AB 3,821 5,543

Vattenfall 27 10

Jernhusen 3,645 4,648

62

NOTES

Note 3 Segment reporting

The EuroMaint Group operates in the maintenance industry. The Group has two segments: rolling stock maintenance and industrial maintenance.EuroMaint Rail provides maintenance for rolling stock, while EuroMaint Industry provides industrial maintenance. EuroMaint Industry (at the timeEuromation AB) was acquired on 1 July 2005, which is why segment reporting for industrial maintenance is barely applicable for the 2005 financial year.

1 januari–31 december 2005, SEK thousands EuroMaint Rail EuroMaint Industry Group adjustments GroupNet turnoverExternal net turnover 1,709,608 161,429 0 1,871,037

Internal net turnover 4,933 27 -3,784 1,176

Total net turnover 1,714,541 161,456 -3,784 1,872,213

Profit/lossOperating profit/loss 105,516 6,850 1,357 113,723

Financial income 642 111 163 916

Financial expenses -11,793 -7 0 -11,800

Pre-tax profit 94,365 6,954 1,520 102,840

Income tax -6,200 -1,971 -2,204 -10,375

Net profit/loss for the year 88,165 4,983 -684 92,464

Other disclosuresAssets 924,600 123,699 -74,546 973,753

Liabilities 735,284 74,968 -10,090 800,162

Investments 6,185 970 66 7,221

Depreciation/amortisation 23,230 935 938 25,102

The Group generally enters sales and transfers between the segments as though the sales and transfers had been to a third party at prevailingmarket prices.

Note 4 Other operating income

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Profit from sale of fixed assets 869 5,363

Exchange gain from receivables/liabilities relating to operations 1,480 1,050

Rental income 1,226 385

Other 3,627 3,576

Total 7,202 10,374

Note 5 Remuneration to auditors

Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004

Deloitte Audit engagement 22 370

Other engagements 630 402

Ernst & YoungAudit engagement 910 0

Other engagements 150 0

Total 1,712 772

Audit engagement refers to the examination of the annual report andaccounts as well as the Board’s administration, other tasks incumbenton the company’s auditors as well as advice or other assistanceresulting from observations during the examination or implementationof other such work tasks. All other work is classified as other engage-ments.

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

63

NOTES

Note 6 Average number of employees and costs of personnel

Group Parent company1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004

31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Average number of employees by genderSwedenWomen 108 102 0 0

Men 1,561 1,432 0 0

Total 1,669 1,534

Board members and senior personnelBoard membersWomen 4 3 2 0

Men 24 22 7 3

President and other senior personnelWomen 2 1 0 0

Men 17 15 4 0

Total 47 41 13 3

EuroMaint EuroMaint Rail Industry

Sick leave, % 2005 2004 2005 2004Total sick leave 5.2 4.9 2.8 3.8

Long-term sick leave 5.2 4.9 0.7 2.0

Sick leave for men 5.2 4.9 2.6 3.0

Sick leave for women 4.2 4.3 4.7 13.2

Employees – 29 years 5.1 7.1 1.9 2.8

Employees 30 – 49 years 4.2 3.7 3.2 3.3

Employees 50+ years 6.3 6.0 2.5 4.9

Sick leave is calculated based on the actual absence in relation to thenormal working hours for each group.

Group, SEK thousandsCosts of personnel 1 Jan 2005 1 Jan 2004Salaries and other remuneration 31 Dec 2005 31 Dec 2004in Sweden

Board and President 6,230 5,848

of which bonus and thereby equalised remuneration 2,558 890

Other employees 463,564 449,630

Total salaries and other remuneration 472,352 455,478

Social security expenses 232,592 222,548

of which pension costs 61,877 53,496

64

NOTES

Remuneration to senior personnel of EuroMaint RailBasic salary Bonus Other benefits Pension cost

President 1,948 0 142 560

Executive Vice President, Strategy & Business Development 1,507 0 12 738

Executive Vice President, CFO 1,404 0 103 494

Vice President, Refurbishment & Component Overhaul 1,064 0 68 231

Vice President, Train Maintenance 825 0 32 238

Vice President, Engineering & Planning 604 0 0 136

Vice President, Sourcing & Supply 655 0 24 110

Vice President, Sales & Marketing 1,078 0 75 356

Vice President, Quality & Environment 883 0 54 266

Vice President, Human Resources 721 0 0 287

Total 10,689 0 511 3,415

Remuneration to senior personnel of EuroMaint IndustryBasic salary Bonus Other benefits Pension cost

President 1,129 2,558 61 336

Executive Vice President, Sales 699 245 48 135

Executive Vice President & CFO 666 233 50 145

Total 2,493 3,036 159 616

The management of EuroMaint Industry have received bonuses conditional on agreements entered into prior to the acquisition.

Remuneration and other benefits during the financial yearSenior personnel receive an old-age pension at 65 years. Two membersof senior personnel have individual defined contribution pensionsequivalent to 20–35 per cent of pensionable salary. Other senior personnel are covered by the ITP supplementary pension for salariedemployees with the option to choose alternative ITP with voluntarypremiums relating to salary exceeding 7.5 income base amounts. Two of these members of senior personnel are, however, covered by asupplementary defined contribution pension within the framework ofalternative ITP, with a premium equivalent to 20–40 per cent of thepensionable salary exceeding 7.5 income base amounts. Agreementshave been reached with two senior personnel regarding severance payshould the company give notice. The severance pay is equivalent tothe fixed salary for 12 months in addition to the period of notice, whichis 12 months. Severance pay is not pensionable, is fully adjustableand is not paid on retirement. Other senior personnel receive salaryduring the period of notice, which is 12 months, and no severance pay.EuroMaint Rail’s Board received a fee of SEK 520,000 (440,000).

Note 6 Average number of employees and costs of personnel, contd.

The agreed retirement age for all senior personnel is 65 years. Upontermination of employment for the President there is a period ofnotice of 12 months from the employer’s side, or 6 months from the President’s side. The Vice Presidents have a term of notice of 3 months which applies for notice given by either side.

No severance pay is payable upon termination of employment.Management members are free to choose how the premium is mana-ged for salary exceeding 7.5 income base amounts. Irrespective of thepension solution chosen by the manager, it must be cost-neutral for the company in relation to the ITP plan. Management members havea bonus agreement for 2005 which stipulates a maximum bonus of 50 per cent of annual salary for the President and a maximum bonus of

35 per cent of annual salary for the Vice Presidents. The Presidenthas received a bonus related to the sale of Euromation. The cost of thisbonus has been carried by the sellers of Euromation.

The EuroMaint Industry Board has received a fee amounting toSEK 75,000 for the period 1 July – 31 December 2005. The chairmanhas not received any fee and other members received SEK 25,000 each.

Remuneration is paid to the Board Chairman and other membersof the Group’s Boards in accordance with decisions by the generalmeeting of shareholders. Salary and remuneration to Presidents isdecided by each company’s Board. Salary and remuneration to othersenior personnel is decided by each company’s Board or President.

THE BUSINESS IN FIGURES

As of 2004, no bonus is paid to the management or other personnelwithin EuroMaint Rail.

The chairman of EuroMaint Rail receives a fee of SEK 120,000 andother Board members SEK 80,000 provided they are not members of the Swedcarrier Board. If they are, a fee of SEK 0 (zero) is paid tomembers of the EuroMaint Rail Board. The President of EuroMaintRail received salary and benefits totalling SEK 2,09 (2,124) million(excluding social security costs) during the financial year and hadthe use of a company car with a total benefit value of SEK 73,000(61,000).

The President receives an old-age pension at 65 years. ThePresident has a non-revokable premium-based pension promise of 30 per cent of monthly income. The term of notice is 12 monthsfrom both the company’s and the President’s side, and during thistime salary is payable with full adjustment. If notice is given by thecompany, 12 months’ non-pensionable severance pay is also awardedwith full adjustment against other income.

THE BUSINESS IN FIGURES

65

NOTES

Note 7 Tangible fixed assets

Group, SEK thousands Equipment, tools, ConstructionLand and buildings Plant and machinery fixtures and fittings in progress Total

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004Opening cost 29,454 34,820 128,035 118,723 151,773 152,663 15,737 4,384 324,998 310,591

Acquisition of subsidiaries 18,768 0 2,677 0 0 0 21,445 0

Purchases 1,779 14,036 7,220 13,952 18,367 10,248 -6,317 11,353 21,049 35,553

Sales/scrappings -488 -19,402 -4,760 -4,641 -8,580 -11,139 0 0 -13,340 -35,182

Closing accumulated cost 30,745 29,454 149,262 128,035 164,237 151,773 9,420 15,737 353,664 324,998

Opening depreciation -6,101 -11,643 -89,403 -86,339 -110,790 -112,873 0 0 -206,294 -210,854

Acquisition of subsidiaries -8,299 0 -2,579 0 0 0 -10,878 0

Depreciation for the year -4,119 -2,819 -8,593 -6,879 -11,452 -8,938 0 0 -24,164 -18,636

Sales/scrappings 358 8,361 4,760 3,815 8,120 11,020 0 0 13,239 23,196

Closing accumulated depreciation -9,862 -6,101 -101,535 -89,403 -116,701 -110,790 0 0 -228,097 -206,294

CLOSING RESIDUAL VALUEACCORDING TO PLAN 20,884 23,353 47,727 38,631 47,536 40,982 9,420 15,737 125,567 118,703

Parent company Equipment, tools, ConstructionLand and buildings Plant and machinery fixtures and fittings in progress Total

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004Opening cost 0 0 0 0 0 0 0 0 0 0

Purchases 0 0 0 0 0 0 66 0 66 0

Sales/scrappings 0 0 0 0 0 0 0 0 0 0

Closing accumulated cost 0 0 0 0 0 0 66 0 66 0

Opening depreciation 0 0 0 0 0 0 0 0 0 0

Depreciation for the year 0 0 0 0 0 0 0 0 0 0

Sales/scrappings 0 0 0 0 0 0 0 0 0 0

Closing accumulated depreciation 0 0 0 0 0 0 0 0 0 0

CLOSING RESIDUAL VALUEACCORDING TO PLAN 0 0 0 0 0 0 66 0 66 0

Note 8 Intangible assets

Accumulated cost, SEK thousands Goodwill Trademarks & licences Customer relations Total

Opening balance 1 Jan 2005 0 0 0 0

Business combinations 30,195 0 15,000 45,195

Amortisation 0 0 -938 -938

Closing balance 31 Dec 2005 30,195 0 14,063 44,258

Goodwill is attributable to the acquisition of Euromation. This goodwill was tested to determine any write-down requirement on 31 December 2005.In connection with this impairment test, EuroMaint Industry’s discount rate before tax was assessed at 11.9 per cent.

Note 9 Items affecting comparability

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Costs linked to restructuring 23,927

Result of arbitration -11,563

Impact on profit 0 12,364

66

NOTES

Note 12 Participations in Group companies

No. of Percentage of Book value Book valueCompany name, SEK thousands Reg. no. Domicile participations equity and votes 31 Dec 05 31 Dec 04EuroMaint Rail AB 556032-2918 Stockholm 190,000 100 156,761 0

– EuroMaint Industry AB 556232-0134 Stockholm 100,000 100 0 0

– EuroMaint Bemanning AB 556670-3095 Stockholm 1,000 100 0 0

– Underhållsbolaget Pendeln AB 556673-4363 Stockholm 1,000 100 0 0

Total 156,761 0

Note 10 Net financial items

SEK thousands Group Parent company1 Jan 2005 1 Jan 2004 1 Jan 2005 2004-01-01

31 Dec 2005 31 Dec 2004 31 Dec 2005 2004-12-31Interest income 785 570 163 0

Net exchange rate fluctuations 131 0 0 0

Financial income 916 570 163 0

Interest expenses -11,645 -10,585 0 0

Net exchange rate fluctuations -155 0 0 0

Financial expenses -11,800 -10,585 0 0Net financial items -10,884 -10,015 163 0

Note 11 Tax

Group Parent companyTotal recorded tax, SEK thousands 1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004

31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Current tax -1,971 0 0 0

Deferred tax -8,404 13,970 -46 0

Total -10,375 13,970 -46 0

Differences between the recorded tax and calculated tax based on the prevailing tax rate comprise the following components:

Group, SEK thousandsDifference with calculated tax 1 Jan 2005 1 Jan 2004at prevailing tax rate 31 Dec 2005 12 Dec 2004Recorded pre-tax profit/loss 102,839 37,619

Tax in accordance with prevailing tax rate, 28 % -28,795 -10,533

Effects of non-taxable income and non-deductible expensesNon-deductible expenses -13,132 -1,830

Non-taxable income 9,478 3,332

Valuation of loss carry-forward and previouslynon-recognised temporary differences 22,074 23,001

Total -10,375 13,970

The weighted average tax rate was 10 per cent (+38 per cent).The reduction in the Group’s average tax for 2005 to 10 per cent wasprimarily conditional on the Group having a significant tax deficit. In 2004, the Group found it objectively justifiable to adjust deferredincome taxes recoverable as the company can in all likelihood beassumed to have excellent earning capacity in the future. This is thereason why the tax rate is a positive +13,970 (+38 per cent).

Note 13 Long-term receivables

Group, SEK thousands 31 Dec 2005 31 Dec 2004Pensions in accordance with IAS 19 12,800 12,800

Other 129 129

Total 12,929 12,929

See also Note 14, Pension obligations.

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

67

NOTES

Note 14 Pension obligations

In accordance with IAS 19, Employee Benefits, an actuary working onbehalf of EuroMaint has calculated the Group’s pension provision andthe amounts to be allocated for pensions for Group employees on anongoing basis. Pension plans in EuroMaint comprise both definedbenefit and premium-based plans. Premium-based pension promisescomprise what are known as Alternative ITP plans, individual pensionpromises for senior personnel, as well as PA-03.

Defined benefit pension obligationsGeneral description of defined benefit obligations: ITP is a definedbenefit pension plan containing retirement, family and disability/sickness pension. On full entitlement the employee receives a finalretirement pension of 65 per cent of salary. Salaried employees covered by ITP can be insured in Alecta or in Scandia, ITP-S.

Employees previously covered by the state pension plan PA-91,former employees of the SJ Group, have the opportunity to chooseearly retirement in accordance with the transitional rules. Pension ispaid from 60 years at the earliest and the pension level depends onthe salary and length of service. Occupational injury annuities are paidon a continuous basis until the death of the employee.

Furthermore, the EuroMaint Group made a one-off redemptionpayment in 1998 to free itself from obligations with the insurancecompany KPA regarding a defined benefit pension plan. Consequentlythe Group has a claim on KPA. In the terms linked to the redemption,the Group pledges henceforth to compensate KPA for any arisingactuarial costs in accordance with an agreement. To date these costshave been settled via adjustments to the Group’s claim on KPA.

According to a statement from the Swedish Financial AccountingStandards Council’s Emerging Issues Task Force, a commitment secu-red through an insurance policy with Alecta, which relates to retirementpension and family pension for salaried employees in Sweden, is adefined benefit plan covering several employers. The EuroMaint Grouphas not had access to such information for the 2005 financial year thatwould make it possible to enter this plan as a defined benefit plan,which is why it has been entered as a defined contribution plan.

The following defined benefit plans are recognised in the balance sheet:Plan Pension provision/receivable (-/+)in balance sheet, SEK thousands 31 Dec 2005 31 Dec 2004

ITP-S pension plan insured with Skandia 12,800 12,800

Early retirement in accordance with transition rules, non-funded -23,191 -22,709

ITP in FPG/PRI, non-funded -1,730 -2,833

Occupational injury annuities, non-funded -13,527 -15,677

Redeemed pension obligations in KPA 10,383 12,456

Total -15,265 -15,963

GroupPension provision, SEK thousands 31 Dec 2005 31 Dec 2004

Present value of funded obligations 245,313 216,149

Fair value of plan assets 248,024 241,405

Receivable 2,711 25,256

Present value of non-funded obligations 39,590 41,219

Non-reported actuarial profit/loss (-/+) 21,614 0

Pension provision to report in balance sheet 15,265 15,963

GroupNet provision in balance sheet, 31 Dec 2005 31 Dec 2004SEK thousands

Net provision at beginning of year 15,963 20,233

Net cost reported in income statement 10,183 10,658

Remuneration paid 13,735 14,451

Premiums 11,572 11,384

Reimbursement 14,426 10,907

Net provision at year-end 15,265 15,963

GroupCalculation assumptions, % 31 Dec 2005 31 Dec 2004

Discount rate 3,8 4,2

Return on plan assets 4,0 4,0

Expected pay increase 2,5 2,8

Calculation of maturing pensions 1,8 1,8

Personnel turnover 3,0 3,0

Calculation of income base amounts 2,8 2,8

Demographic assumptions P94 P94

Expected remaining period of service for employees 14 years 14 years

Plan assets are invested in insurance schemes with Skandia or KPA.The insurances contain a mixture of shares and bonds.The return in 2005 amounted to 4.3 per cent (SEK 10,033) million.

Group 2005 Group 2004Amount recorded in income Defined benefit Premium-based Defined benefit Premium-basedstatement, SEK thousands plans plans Total plans plans Total

Recorded net cost in income statement 10,183 51,694 61,877 10,658 42,838 53,496

68

NOTES

Note 18 Long-term interest-bearing liabilities

The recorded amounts and fair value for long-term borrowing are as follows:

Group, SEK thousandsBook value Fair value

1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004

Long-termBank loans 340,000 250,000 340,000 250,000

Total 340,000 250,000 340,000 250,000

Short-termBank overdraft 0 0 0 0

Total 0 0 0 0

Bank overdraft facility granted 125,000 125,000 0 0

Total 125,000 125,000 0 0

Unused credit facilities refer to credit facilities of SEK 425 (325) millionwith FöreningsSparbanken and SEK 300 (300) million with theSwedish National Debt Office, of which SEK 85 (75) million remainsin the credit facilities with FöreningsSparbanken and SEK 300 (300)million remains in the Swedish National Debt Office.

The Group has chosen to classify unused credit within existingcredit facilities as long-term, as these agreements run until furthernotice. The Group’s exposure, regarding borrowing, to changes ininterest and contractual time for interest renegotiation are as follows:

Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004

6 months or less 215,000 175,000

6-12 months 125,000 75,000

Total 340,000 250,000

Average fixed interest term in months 4.26 3.7

Weighted average interest on balance sheet date 2.71 % 3.22 %

Note 19 Other provisions

Group Provision guarantees, SEK thousands 31 Dec 2005 31 Dec 2004

Provision at beginning of year 4,975 4,975

Provisions for the year 1,900 0

Used during the year -513 0

Unused amount cancelled 0 0

Provision at year-end 6,363 4,975

Provisions 31 Dec 2005 31 Dec 2004Long-term portion 6,363 4,975

Current portion 0 0

Note 15 Accrued tax assets

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Deferred tax for tax deficit 9,823 20,000

Deferred tax on temporary differences 11,724 0

Total 21,547 20,000

Last year the Group had unused loss carry-forwards amounting toSEK 83,9 million. Following individual assessment of tax deficits, a deferred tax asset of SEK 20 million was recognised. Income isexpected to develop positively in the future which is why this year the Group has recognised a deferred tax asset for the entire amountof unused loss carry-forward of SEK 35,1 million.

Note 16 Inventories

Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004

Gross stock 347,739 350,820

Obsolescence reserve -88,396 -112,895

Net stock 259,343 237,925

Distributed as followsReplacement items 51,293 47,585

Spare parts 138,491 128,480

Other 69,559 61,861

Total 259,343 237,925

The Group has revised the obsolescence model for one of the companies, EuroMaint Rail. All companies use an obsolescencescale in line with their particular circumstances.

The aim of the revision was to reduce the number of parametersin the model and thereby better reflect economic obsolescence basedon current production. The revised model is based for example on articles being regarded as saleable for a longer period than in the former model. Implementation of the new obsolescence modelincreased profit by SEK 23 million during the final quarter of 2005.

Note 17 Prepaid expenses and accrued income

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Prepaid insurance costs 1,427 1,261

Accrued income relating to maintenance work carried out 18,968 22,443

Prepaid rent and lease fees 1,558 1,505

Other items 6,497 1,121

Total 28,450 26,330

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

69

NOTES

Note 20 Deferred tax liability

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Provision at beginning of year 0 0

Deferred tax for cancelled depreciation/amortisation 7,854 0

Deferred tax for untaxed reserves 4,564 0

Provision at year-end 12,418 0

Note 21 Non interest-bearing current liabilities

Group Parent CompanySEK thousands 1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004

31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Advance payment from customers 9,938 21,454 0 0

Accounts payable 116,954 109,514 0 0

Tax liability 6,690 8,747 46 0

Liabilities to Group companies 7,482 10,705 0 0

Other liabilities 19,120 3,323 66 0

Total 160,184 153,743 112 0

Note 22 Accrued expenses and deferred income

Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004

Special employer’s contribution 30,773 36,096

Social security contributions 31,128 22,237

Trade accounts payable 16,775 9,258

Holiday pay liability 37,989 27,136

Overtime liability 6,850 4,465

Accrued pensions 2,306 5,194

Accrued interest 1,537 1,873

Reserve for obsolete Y1 materials 5,600 5,600

Bonus 7,080 0

Restructuring costs 6,433 31,583

Risk reserve 29,930 29,636

Other 66,349 32,265

Total 242,750 205,343

Note 23 Contingent liabilities

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Pension obligations, FPG/PRI 37 57

Bank guarantees issued 11,772 9,406

Total 11,809 9,463

Floating charges amount to SEK 20 million and are paid toFöreningsSparbanken in Skövde. Furthermore, EuroMaint Rail hasfloating charges of SEK 5,19 million in its own custody.

Note 24 Operating leases

Group, SEK thousands 31 Dec 2005

Future leasing fees 2006 8,463

Future leasing fees 2007 3,541

Future leasing fees 2008 1,097

Future leasing fees 2009 361

Future leasing fees 2010 280

Future leasing fees 2011 and later 295

Total 14,037

Leasing fees taken up as costs 11,260

Total 11,260

The Group’s operating leases include fees for vehicles, computersand certain office equipment.

Note 25 Cash flow analysis, other items not affecting liquidity

Group, SEK thousands 31 Dec 2005 31 Dec 2004

Capital gain -525 -5,003

Utilisation of restructuring reserve -25,300 -74,856

Change in pension provision -2,771 -6,775

Change in other provisions and reserves 3,852 4,873

Other items -9,185 -1,201

Total -33,929 -82,962

70

NOTES

Note 26 Financial instruments and financial risk management

Through its business, EuroMaint is exposed to financial risks, includingthe effects of changes in prices on the credit and capital markets,and fluctuations in exchange rates and interest rates. The Group’soverall risk management focuses on the unpredictability of the finan-cial markets, and strives to minimise potential unfavourable effectson the Group’s financial results. Financial operations in the Groupare centralised in the parent company’s finance function. The financefunction acts as an internal bank and is responsible for the sourcingof capital, cash management and financial risk management. Theoperation is regulated through the Group’s financial rules.

The important areas of financial risk that are dealt with comprise:

Exchange rate risksEuroMaint is exposed to some extent to exchange rate risks due toits relatively large purchase volumes in foreign currencies and lowcustomer invoicing in corresponding currencies. Purchases in foreigncurrencies for large projects are hedged or agreed with variableforeign exchange clauses during the tendering/contract formulationstage. A hedging policy was introduced in 2005. The policy statesthat currency exposure shall be hedged at least to set levels during a rolling 12-month forecast period. This is usually achieved throughforward agreements.

Interest rate risksEuroMaint is affected by general changes in interest rates on its loanportfolio. To counter this the portfolio has been divided and tied todifferent fixed-interest terms. All borrowing agreements re-signedduring the year have a fixed-interest period of 12 months. On 31December, 26 per cent of the total loan amount was subject to vari-able interest rates. See also Note 18. The only interest-bearing assetsare cash and bank balances which have been credited with variableinterest linked to the bank’s VECI interest rate, a weekly interest rateon deposits, less 0.15 percentage points, which equated to 1.37 percent on 31 December 2005.

Credit riskEuroMaint has procedures for minimising ongoing customer creditrisks in the business. These procedures include credit checks, advancepayment and guarantee management, and ongoing credit monitoring.Bad debt losses established in 2005 amounted to SEK 2 (453) million.On the balance sheet date, EuroMaint owned securities of approxi-mately SEK 10 million in the form of advances from customers andbank guarantees. The Group does not consider there to be any signi-ficant concentration of credit risks regarding financial assets.

Liquidity and refinancing riskEuroMaint’s policy is always to have cash and cash equivalents andsecured refinancing available to the extent required for the operation.On 31 December 2005, the company had credit facilities of SEK 300million with the Swedish National Debt Office and credit facilities of SEK 425 million with FöreningsSparbanken. EuroMaint also has a bank overdraft facility with FöreningsSparbanken amounting toSEK 125 million. The company’s total credit facility amounts to SEK 850 million. As of 2006, the credit facilities of SEK 300 millionwith the Swedish National Debt Office will be replaced with creditfacilities of equal magnitude from FöreningsSparbanken.

Fair values of derivative instruments on the balance sheet date, SEK thousands

31 Dec 2005 31 Dec 2004Contracts with positive fair values:Hedging 61 –

Contracts with negative fair values:Hedging 154 –

The nominal amount of outstanding derivatives on 31 December wasNOK 5,300,000 (Sell) and GBP 305,000 (Buy).

The fair value of the derivative contracts has been calculated asthe costs or revenue which would have arisen if the contract hadexpired on the balance sheet date. The banks’ official exchange rateshave been used.

THE BUSINESS IN FIGURES

THE BUSINESS IN FIGURES

71

NOTES

Note 27 Corporate acquisitions

Effects of the acquisitionThe acquisition has had the following effect on the Group’s assets and liabilities.

The acquired company’s net assets at time of acquisition:SEK thousands Carrying amount in Fair value Fair value

EuroMaint Industry before acquisition adjustment recorded in the Group

Tangible fixed assets 10,567 0 10,567

Intangible assets 0 44,258 44,258

Inventories 27,859 0 27,859

Accounts receivable and other receivables 60,906 0 60,906

Cash and cash equivalents 15,663 0 15,663

Interest-bearing liabilities 0 0 0

Accounts payable, other liabilities -63,996 0 -63,996

Net identifiable assets and liabilities 50,999 44,258 95,257

Purchase price paid, cash* 0 0 -96,197

Cash (acquired) 0 0 15,663

Net cash flow 0 0 -80,534

* including transaction-related costs (SEK 933,000)

On 1 July 2005, the Group acquired 100 per cent of the shares in EuroMaint Industry AB for SEK 96,197 million and paid cash. The companyworks in maintenance, implementation and development of production equipment for industry. During the 6 months following the acquisition,the subsidiary contributed SEK 4,88 million to the Group’s profit after tax. If the acquisition had taken place on 1 January 2005, the Group’sincome would have been SEK 2,017,356,000 and profit for the year would have been SEK 100,777,000 after tax.

Goodwill arose in connection with the acquisition of EuroMaint Industry mainly because acquired know-how did not fulfil the criteria to berecognised as an intangible asset at the time of acquisition. This acquisition analysis is preliminary and may therefore be adjusted in 2006.

Note 28 Disclosure on fair values relating to financial instruments

The fair values of financial instruments correspond to the book values, with the exception of financial loans which are subject to fixed interestrates. The nominal and book value of fixed-interest loans on the balance sheet date amounted to SEK 250 million. Upon valuation at fair valuethe liability increases by SEK 398,000, taking into account any interest penalty that would be payable if the loans were to be settled in advanceon the balance sheet date. The variable interest used in the calculation is 2.52 per cent, which was the rate the company would have had on anew loan at a variable interest rate on 31 December.

Note 29 Definition of key ratios

Operating margin: Operating income as a percentage of operating revenuesEquity/assets ratio: Equity as a percentage of total assets

Stockholm, 15 March 2006

Stig Holm Lennart Käll Elisabeth NilssonChairman

Annika Nordin Richard Reinius Anders Ågren

Lennart Andrén Bertil Hallén Johnny StrömEmployee representative Employee representative Employee representative

Pether WallinPresident

72

To the Annual General Meeting of EuroMaint ABReg. no. 556084-8458

I have audited the annual accounts, the consolidated accounts, theaccounting records and the administration of the Board of Directorsand the President of EuroMaint AB for the year 2005. The Board ofDirectors and President are responsible for these accounts and theadministration of the company, and for ensuring the annual accountsare prepared in accordance with the Annual Accounts Act and that theconsolidated accounts are prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the EU and theAnnual Accounts Act.

My responsibility is to express an opinion on the annual accounts,the consolidated accounts and the administration based on my audit.

I conducted my audit in accordance with generally accepted auditingstandards in Sweden. Those standards require that I plan and performthe audit to obtain high but not complete assurance that the annualaccounts and the consolidated accounts are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts.

An audit also includes assessing the accounting principles used andtheir application by the Board of Directors and President and significantestimates made by the Board of Directors and the President when preparing the annual accounts and consolidated accounts as well as

evaluating the overall presentation of information in the annualaccounts and the consolidated accounts. As a basis for my opinionconcerning discharge from liability, I examined significant decisions,actions taken and circumstances of the company in order to be able todetermine the liability, if any, to the company of any Board member orthe President. I also examined whether any Board member or thePresident has, in any other way, acted in contravention of the CompaniesAct, the Annual Accounts Act or the Articles of Association. I believethat my audit provides a reasonable basis for my opinion set out below.

The annual accounts have been prepared in accordance with theAnnual Accounts Act and, thereby, give a true and fair view of the com-pany’s financial position and results of operations in accordance withgenerally accepted accounting principles in Sweden. The consolidatedaccounts have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the EU and theAnnual Accounts Act and give a true and fair view of the Group’s financialposition and results of operations. The Report of the Directors is consistent with the other parts of the annual accounts and consolidatedaccounts.

I recommend to the general meeting of shareholders that the incomestatement and balance sheet for the parent company and Group beadopted, that the profit be dealt with in accordance with the proposal inthe Report of the Directors and that the members of the Board of Directorsand the President be discharged from liability for the financial year.

AUDIT REPORT

THE BUSINESS IN FIGURES

Stockholm, 16 March 2006Ernst & Young

Magnus FredmerAuthorised Public Accountant

0505

Corporate Governance

74

EUROMAINT AB CORPORATE GOVERNANCE REPORT 2005

The company has commenced work in line with theSwedish Code of Corporate Governance and a corporategovernance report has been produced. The corporategovernance report has not been examined by the com-pany’s auditors. The company does deviate in somerespects, and this is attributable to the guidelines andinstructions issued by the ultimate owner – Sweden’sMinistry of Industry, Employment and Communications– which the company is bound to follow. A report oninternal controls has also been produced.

EuroMaint’s decision-making body comprises the general meeting

of shareholders, the Board of Directors, the President and the

auditors. The general meeting of shareholders elects the Board of

Directors and auditors.

The Board of Directors appoints the President and Vice

Presidents.

Parent company Swedcarrier proposes Board members in

accordance with the Swedish state’s ownership directive.

On behalf of the general meeting of shareholders, the auditors

examine the accounts and the administration of the Board of

Directors and President during the year.

ARTICLES OF ASSOCIATION

The Articles of Association state that EuroMaint’s business is to own,

manage and administrate shares and securities in subsidiaries

and associated companies in the transport sector and engineering

and processing industry, and to manage real and movable estate,

and to pursue business compatible therewith.

The Board of Directors shall comprise at least three and at

most eight members with a maximum of three deputies. The Board

members and deputies are selected each year at the Annual

General Meeting of shareholders for the period until the next

Annual General Meeting.

Notice to attend annual general meetings and extraordinary

general meetings, where the issue of changes to the articles of

association will be dealt with, shall be announced by letter by post no

earlier than six weeks and no later than two weeks before the meeting.

Other messages to shareholders must also be issued by letter

by post.

GENERAL MEETING OF SHAREHOLDERS

The general meeting of shareholders is EuroMaint’s highest decision-

making body.

The Annual General Meeting shall be held within six months of

the end of the financial year and shall be the forum for approving the

income statement and balance sheet, determining the dividend,

electing the Board of Directors and, where appropriate, the auditors

and deciding their fees, and for dealing with other statutory matters.

Notice to attend the extraordinary general meeting on 16 December

2005 was issued by letter in the post in accordance with the require-

ments set out in the articles of association.

The notice provides a detailed agenda including election of the

Board of Directors and auditors. Katja Elväng chaired the general

meeting of shareholders on 16 December 2005.

The Board of Directors was elected at the general meeting as

described below.

The extraordinary general meeting on 16 December 2005 decided:

• to elect Stig Holm, Elisabeth Nilsson, Annika Nordin, Lennart Käll,

Anders Ågren and Richard Reinius to the Board of Directors.

• to appoint Stig Holm Chairman of the Board.

• to appoint Ernst & Young AB as auditors and deputy auditors

until the 2009 Annual General Meeting. Magnus Fredmer is

the principal auditor.

• that fees with the following fixed amounts be paid to the Board

members elected at the general meeting of shareholders:

Chairman SEK 120,000. Board members who are not

Board members of AB Swedcarrier SEK 80,000. Board members

who are also Board members of AB Swedcarrier SEK 0.

BOARD OF DIRECTORS

The EuroMaint Board of Directors, which is appointed by the

general meeting of shareholders, currently comprises six members.

All members are independent in relation to EuroMaint.

When necessary, employees of the company present reports

to the Board meetings.

The Board is ultimately responsible for the company’s

organisation and administration, and shall also make decisions

in strategic issues.

In general terms the Board of Directors deals with issues

of considerable importance, such as:

• Establishing rules of procedure

• Strategy planning, and business and profitability goals

• Organisation and management structure

75

In addition to the inaugural Board meeting, which is held in connec-

tion with the general meeting of shareholders, the Board usually

convenes five times a year (ordinary meetings).

Extra meetings are called if necessary.

The inaugural meeting establishes the rules of procedure for

the Board and decisions on authorised signatories for the company,

verification of the minutes and allocation of the Board fee.

In connection with the Board meeting that deals with the annual

accounts, the report of the directors and proposed treatment of

unallocated earnings, the principal auditor reports on the auditors’

observations and assessments from their audit.

At the ordinary meetings held during the year, interim reports are

either finalised and published, or this task is commissioned from

the President.

The ordinary meetings encompass various standard reporting

points, such as the latest financial results of the operation.

Each year the Board evaluates the financial reporting it receives

from the company and sets out requirements for its content and

presentation.

DIRECTORS’ ATTENDANCE AT BOARD MEETINGS

This report pertains to the Boards of Directors of EuroMaint Rail AB

(formerly EuroMaint AB) and EuroMaint AB. The attendance applies

for the whole of 2005 and includes the parent company and the

Group. Eight ordinary Board meetings took place during the year

with the following attendance:

Stig Holm 8

Lennart Käll 8

Elisabeth Nilsson 7

Annika Nordin 6

Richard Reinius 7

Anders Ågren 8

Bertil Hallén 8

Johnny Ström 8

Lennart Andrén 8

IMPORTANT ISSUES DURING THE 2005 FINANCIAL YEAR

In 2005, the Board held one meeting for EuroMaint AB and eight

meetings for EuroMaint Rail AB in addition to the inaugural

Board meeting.

The acquisition of Euromation on 1 July was discussed during

the first half of the year.

Discussions regarding the future Group structure took place

continuously during the year, one result being that a new Group

structure was decided upon and introduced on 31 December 2005.

THE ROLE OF THE CHAIRMAN

In addition to leading the work of the Board of Directors, the

Chairman monitors the Group’s ongoing development through

continuous contacts with the President in strategic issues, and

represents the company in issues of interest to the owners.

PRESIDENT AND VICE PRESIDENTS

President Pether Wallin has been an employee of EuroMaint since

2002. The President is responsible for EuroMaint’s ongoing

administration. There are also rules for the President’s decision-

making authority regarding investments and financing issues.

These rules have been established by the Board. Executive Vice

President Åke Finn is responsible for economy, finance and IT.

Executive Vice President Björn Sundén is responsible for business

development.

AUDITORS

At the extraordinary general meeting on 16 December 2005,

Ernst & Young AB was appointed the company’s auditor until the

2009 Annual General Meeting. The principal auditor is Authorised

Public Accountant Magnus Fredmer.

Stockholm, 15 March 2006

Stig Holm Elisabeth Nilsson Annika Nordin

Chairman

Lennart Käll Richard Reinius Anders Ågren

Bertil Hallén Johnny Ström Lennart Andrén

Employee Employee Employee

representative representative representative

76

“Stable long-term development”

“Stable long-term development”

expertise and awareness within the Group is important for

EuroMaint and its customers alike.

During the year EuroMaint has also laid the foundation for a good

strategy. Here I would particularly like to mention the outstanding

efforts of the Group management in performing the groundwork.

In conclusion, I am very pleased with the increased attention

EuroMaint has enjoyed. Many parties have contacted us spont-

aneously or in connection with press information, and following

Elmia Nordic Rail 2005.

Myself and the other Board members have actively supported

the development that has strengthened EuroMaint’s market

position during the past year. The results for 2004 turned losses

into profits. The results for 2005 confirm the company’s ability to

be competitive and profitable. I can therefore express my and the

Board’s full confidence in the fine work and good results achieved

by EuroMaint and the company’s management.

STIG HOLM

Chairman of the Board

In 2005, EuroMaint has fulfilled its goals and met theBoard of Directors’ expectations. I can see with greatsatisfaction that customer confidence in the Group isbeing maintained and strengthened. This is particularlyclear from the volume of incoming orders, the importantcontract with SL crowning the year’s successes.One major development, which is of great importanceto the future, was the acquisition of Euromation.

Financial development in terms of profits and margins has been

satisfactory. Financial control has been improved and control over

the cash flow has increased. The goal of considerably reducing

purchasing costs wherever possible has been achieved.

The acquisition of Euromation facilitates cross-fertilisation

between various areas of experience and expertise in the industry,

producing benefits all round. The new Group structure, with two

companies focusing on the rail industry and engineering industry

respectively, strengthens EuroMaint’s overall position as a leading

maintenance partner and bodes well for continued solid development.

I would also like to comment on the ISO 14001 environmental

certification. The commendable job of establishing environmental

Stig Holm – Chairman of the Board

THE CHAIRMAN’S COMMENTS

77

STYRELSENTHE EUROMAINT BOARD OF DIRECTORS

LENNART ANDRÉNBERTIL HALLÉN JOHNNY STRÖM

ANNIKA NORDIN RICHARD REINIUS ANDERS ÅGREN

ELISABETH NILSSONLENNART KÄLLSTIG HOLM

78

LENNART ANDRÉN1941. BSc.

Employee representative.Board member since 2001.

Current employment: IT/IS training co-ordinator, EuroMaint AB

Other important assignments:Chairman of the SACO-association for Traffic and Railway at EuroMaint ABVice Chairman of the SACO-association for Traffic and Railway

Committee member: –Board meetings attended: 8(8)

BERTIL HALLÉN1954.

Employee representative.Board member since 2001.

Current employment:EuroMaint AB

Other important assignments:Board member of AB Swedcarrier, Chairman of SEKO EuroMaint AB andDepartment Chairman of SEKO EuroMaintGothenburg

Committee member: –Board meetings attended: 8(8)

JOHNNY STRÖM1945.

Employee representative.Board member since 2004.

Current employment: EuroMaint AB

Other important assignments:Club chairman of the SEKO CV clubEuroMaint Örebro, Commissions of trust in FONUS

Committee member: –Board meetings attended: 8(8)

ELISABETH NILSSON1953. Master of Science, Mining andMinerals Processing.

Board member since 2004.

Current employment:President of Jernkontoret Swedish SteelProducers’ Association

Other important assignments:Board member of the Swedish MaritimeAdministration Chairman of the Mefos Foundation for Metallurgical Research

Committee member: –Board meetings attended: 7(8)

ANNIKA NORDIN1954. BSc economics.

Board member since 2004.

Current employment:VP Category Product Development AFH, SCA Tissue Europe

Other important assignments: –

Committee member: –Board meetings attended: 6(8)

RICHARD REINIUS1967. MSc economics.

Board member since 2004.

Current employment:Ministry of Industry, Employment andCommunications

Other important assignments:Board member SweMaint AB, Jernhusen

Committee member: –Board meetings attended: 7(8)

LENNART KÄLL1958. MSc economics.

Board member since 2005.

Current employment: President & CEO Ticket Travel Group AB

Other important assignments:Advisor Segulah

Committee member: –Board meetings attended: 8(8)

ANDERS ÅGREN1947. Engineer.

Board member since 2005.

Current employment: Nerga AB

Other important assignments:Board member Swedesurvey AB, AxentiHolding AB, PJ Järnförädling AB

Committee member: –Board meetings attended: 8(8)

STIG HOLM1951. MSc engineering.

Chairman of the Board.Board member since 2004.

Current employment: Group Director Tekniska Verken i Linköping AB

Other important assignments:MD of Parkeringsaktiebolaget Dukaten, Linköping Chairman of Stadspartner AB, LinköpingKraftnät AB, Östkraft AB, Svensk Biogas i Linköping AB, Utsikt Linköping AB, Katrineholm Energi AB and SweMaint ABBoard member of Mjölby – SvartådalenEnergi AB,CityLink AB, ÖstkraftEnergihandel AB, AB Swedcarrier

Committee member: –Board meetings attended: 8(8)

THE EUROMAINT BOARD OF DIRECTORS CONTD.

79

NICKLAS FALK1973. BSc Engineering.

Vice President, Maintenance Development & Change Management.Employed since 2003.

Previous positions:Train Tech AB

Other important assignments: –

PER-OLOF RENGSTEDT1953. MSc engineering.

President of EuroMaintIndustry.Employed since 2003.

Previous positions:CEO of JK Group, MD of Fredrik Mogensen AB

Other important assignments: –

JONAS SAMUELSON1960. MSc engineering.

President of EuroMaint Rail.Employed since 2002.

Previous positions:ABB Process Industries

Other important assignments: –

ÅKE FINN1959.

Executive Vice President & CFO.Employed since 2002.

Previous positions:Head of Finance AlphaHelix AB and MD ofABB Switchgear Egypt

Other important assignments: –

THE EUROMAINT GROUP MANAGEMENT

BJÖRN SUNDÉN1944. BSc.

Executive Vice President,Strategy & BusinessDevelopment.Employed since 2001.

Previous positions:MD Saab NygeAero andFöretagsfinans, CFO Linjeflyg,Business ControllerNitroNobel

Other important assignments: –

PETHER WALLIN1956. MSc engineering.

President & CEO.Employed since 2002.

Previous positions: MD of OmniNova Vehicle ABand OmniNova CompositeAB, Vice President HydroAutomotive Structures andVolvo Car Corporation

Other important assignments: –

Standing

Sitting

80

EUROMAINT RAIL MANAGEMENT

HÅKAN BJÖRK1966. Electrical Engineer.

Vice President, Engineering & Planning.Employed since 2002.

Previous positions:Scania CV AB

Other important assignments: –

KRISTINA NYHOLM1943. BSc.

Vice President, Human Resources.Employed since 1962.

Previous positions:Swedish State Railways

Other important assignments: –

HANS-ÅKE ELFWING1962. Mechanical engineer.

Vice President, Train Maintenance.Employed since 1984.

Previous positions: Swedish State RailwaysMachine Division

Other important assignments: –

ANN-CHARLOTTE ÅGREN1960. BSc.

Executive Vice President & CFO.Employed since 2001.

Previous positions:ICL

Other important assignments: –

STEVEN DAVIDSSON1956. Mechanical engineer.

Vice President, Sourcing & Supply.Employed since 2003.

Previous positions:Ericsson AB

Other important assignments: –

THOMAS ANDERSSON1953. MSc engineering.

Vice President, Quality & Environment.Employed since 1991.

Previous positions:Swedish State Railways andPlockmatic International

Other important assignments: –

JONAS SAMUELSON1960. MSc engineering.

President.Employed since 2002.

Previous positions:ABB Process Industries

Other important assignments: –

NICLAS FLODIN1966. MSc engineering.

Acting Vice President, Maintenance CommuterTrains Stockholm.Employed since 2005.

Previous positions:President ABB Service

Other important assignments: –

TORSTEN NEDERMAN1964. MSc engineering.

Vice President,Refurbishment & ComponentOverhaul.Employed since 1991.

Previous positions:TGOJ and RPL

Other important assignments: –

Standing

Sitting

81

EUROMAINT INDUSTRY MANAGEMENT

PER-OLOF RENGSTEDT1953. MSc engineering.

President.Employed since 2003.

Previous positions:CEO of JK Group, MD ofFredrik Mogensen AB

Other important assignments: –

THOMAS GRÖNLUND1963. MSc in IndustrialEngineering and Management.

Marketing Manager.Employed since 2002.

Previous positions:Management consultant, MD Prido AB Head of Sales &Marketing, LVI Produkter ABHead of Marketing, RapidGranulator AB

Other important assignments: –

URBAN EKMARK1964. MSc engineering, Eng. Lic.

Technical Manager.Employed since 2000.

Previous positions:Department Head, University of Skövde

Other important assignments: –

PATRIK SAHLBERG1962. Mechanical engineer.

Executive Vice President,Sales.Employed since 1982.

Previous positions:Volvo

Other important assignments: –

BO LENNARTSSON1952. Electrical &TelecommunicationsEngineer.

Manager Maintenance.Employed since 1973.

Previous positions: Volvo

Other important assignments: –

ULF SANDÉN1959. Economist.

Executive Vice President & CFO.Employed since 1989.

Previous positions:Volvo Controller, Källbergs Industri AB, Bank clerk, Sparbanken

Other important assignments: –

Standing

Sitting

ADDRESSES

GROUP OFFICES:

EuroMaint ABBox 1555SE-171 29 Solna, Sweden

Visiting address:

Svetsarvägen 10

DESIGN AND PRODUCTION: Collaboration between EuroMaint AB and Care of Haus, Västerås. PHOTOGRAPHY: Lasse Fredriksson, Thomas Harrysson, Ulf B. Jonsson, Melker Larsson, Anders Roth, Håkan Röjder, Getty Images and archive photos from EuroMaint. REPRO: Turbin, Västerås. PRINTING: Edita, Västerås.

BORLÄNGE

EuroMaint Rail ABBangårdsgatan 8SE-781 71 BorlängeSweden

Visiting address:

Bangårdsgatan 8

GÄVLE

EuroMaint Industry ABLötängsgatanSE-801 31 GävleSweden

Visiting address:

Lötängsgatan

EuroMaint Rail ABLötängsgatanSE-801 31 GävleSweden

Visiting address:

Lötängsgatan

GOTHENBURG

EuroMaint Rail ABBox 36 136SE-400 13 GöteborgSweden

Visiting address:

Partihandelsgatan

HALLSBERG

EuroMaint Industry ABKraftvärmegatan 1SE-694 32 Hallsberg, Sweden

Visiting address:

Kraftvärmegatan 1

EuroMaint Rail ABLokvägen 2SE-694 35 HallsbergSweden

Visiting address: Lokvägen 2

LINKÖPING

EuroMaint Rail ABSödra Oscarsgatan 2SE-582 73 LinköpingSweden

Visiting address:Södra Oscarsgatan 2

LULEÅ

EuroMaint Rail ABKontorsgatan 37SE-993 42 LuleåSweden

Visiting address:

Kontorsgatan 37

EuroMaint Rail ABLokstallsvägen 2SE-972 45 LuleåSweden

Visiting address:

Lokstallsvägen 2

MALMÖ

EuroMaint Rail ABBox 124SE-201 21 MalmöSweden

Visiting address:

Carlsgatan, infart 6

EuroMaint Rail ABBox 3503SE-200 22 MalmöSweden

Visiting address:Södra Bulltoftavägen 51

NÄSSJÖ

EuroMaint Rail ABBox 37SE-571 21 NässjöSweden

Visiting address: Gölgatan

SKÖVDE

EuroMaint Industry ABSE-541 87 SkövdeSweden

Visiting address:

Kavelbrovägen 2

SOLNA

EuroMaint Rail ABVäxlarevägen 29SE-170 63 SolnaSweden

Visiting address:

Växlarevägen 29

EuroMaint Rail ABBox 1555SE-171 29 SolnaSweden

Visiting address:

Svetsarvägen 10

SUNDSVALL

EuroMaint Rail ABParkgatan 5SE-852 29 SundsvallSweden

Visiting address:

Parkgatan 5

VÄNNÄS

EuroMaint Rail ABVästra Järnvägsgatan 8SE-911 34 VännäsSweden

Visiting address: Västra Järnvägsgatan 8

ÅMÅL

EuroMaint Industry ABBox 302SE-662 27 ÅmålSweden

Visiting address:

Västra Bangatan 2

EuroMaint Rail ABBox 302SE-662 27 ÅmålSweden

Visiting address:

Västra Bangatan 2

ÖREBRO

EuroMaint Rail ABBox 1502SE-701 15 ÖrebroSweden

Visiting address:Södra Grev Rosengatan 1

EuroMaint Rail ABBox 1403SE-701 14 ÖrebroSweden

Visiting address: Södra Grev Rosengatan 1

OPERATIONS AND WORKSHOPS:

82

83

0505

www.euromaint.se

EuroMaint unites innovative thinking with a long past. Through creative technical system

services, customised total solutions and partnerships, we contribute to our customers’

competitiveness and success. The EuroMaint Group consists of EuroMaint Rail, which

helps strengthen profitability in the rail transport sector, and EuroMaint Industry, which

helps increase customers’ productivity.

www.euromaint.se