STADLER FINANCIAL REPORT 2018 - stadlerrail.com

1 STADLER FINANCIAL REPORT 2018 STADLER FINANCIAL REPORT 2018 1 FINANCIAL Management REPORT Business development order backlog 4 Staff (total full-time equivalents) 4 Research and Development 4 Special events 4 Risk analysis 4 Situation and outlook 4 Consolidated FINANCIAL statements Consolidated income statement 5 Consolidated balance sheet 6 Consolidated cash flow statement 7 Consolidated statement of changes in equity 8 Notes to the consolidated FINANCIAL statements Information on the REPORT and general information 9 1 Operating performance Segment reporting 11 Work in progress 13 Compensation claims from work in progress 14 Personnel expenses 15 Earnings per share 16 2 Operating assets and liabilities Trade receivables and payables 17 Inventories 17 Property, plant and equipment 18 FINANCIAL assets 21 Intangible assets 22 Provisions and contingent liabilities 24 Other operating assets and liabilities 26 3 Financing and risk management FINANCIAL liabilities 27 Guarantees and pledged assets 27 Share capital and reserves 28 Derivative FINANCIAL instruments 29 4 Group structure Changes in the scope of consolidation 31 Scope of consolidation and consolidation principles 33 Investments in associated companies and joint ventures 35 List of investments 36 Related parties and companies 37 Goodwill 37 5 Other information FINANCIAL result 38 Other operating income / expenses 38 STADLER FINANCIAL REPORT 2018 2 Income taxes 39 Employee benefits 40 Events after the reporting date 41 Approval of the consolidated FINANCIAL statements 41 REPORT of the Statutory Auditor REPORT of the Statutory Auditor 42 STADLER FINANCIAL

2 REPORT 2018 3 FINANCIAL statements of STADLER Rail AG Income statement 44 Balance sheet 45 Notes to the FINANCIAL statements 46 Appropriation of profit proposed to the Annual General Meeting 50 REPORT of the Statutory Auditor 51 STADLER FINANCIAL REPORT 2018 4 FINANCIAL Management REPORT Business development order backlog In the FINANCIAL year 2018 STADLER recorded an order intake of CHF billion and had an order backlog of more than CHF billion at the end of the year. At CHF 2 billion, the Group s annual revenue was lower than in the previous year (CHF billion). This figure is in contrast to the increase in the level of employment due to the high order backlog. In 2018, a consider-able number of hours were already spent on orders that will not be invoiced until 2019. This is due to STADLER s very conserva-tive revenue recognition policy. As a rule, revenue from orders is not recognized until the individual units have been accepted by the customer.

3 Operating profit (EBIT) amounted to CHF 151 million, corresponding to a margin of (previous year: ). The costs of bank guarantees are no longer reported as project management costs, but instead as financing costs. This effect amounts to approx. EBIT was negatively impacted by higher sales expenses due to the high order intake and higher depreciation following investments in property, plant and equipment and software for the next growth phase in the coming years. Group liquidity remains high. Net current assets remain structurally negative, but are higher than in the previous year. It is in the nature of our business that there may be temporary deferrals in advance payments for new orders received. Staff (total full-time equivalents) The STADLER Group had 8,874 employees at the end of the year (annual average). The previous year s figure was 7,748. The year-on-year increase (+ ) is attributable to strong organic growth.

4 The provision of services for deliveries in 2019 is in full progress. Research and Development STADLER strives to create sustainable added value for its customers with its innovative solutions and products. To this end, STADLER is investing considerable effort in the further development of existing solutions. STADLER s goal is to understand the situation from the customer s perspective in order to optimize the customer s total costs. This also enables us to provide cus-tomers with further innovations. The majority of development costs are incurred on orders and are therefore not shown sepa-rately in the income statement. Special events No special events occurred in the year under review. Risk analysis STADLER carries out a formal risk assessment each year. The most important business risks are assessed and classified ac-cording to damage potential and probability of occurrence. In the year under review, the following risks were assessed in par-ticular: currency risks, investment risks, IT failures and dependence on the global economic situation.

5 Situation and outlook The situation in the rail industry remains dynamic and the markets are still competitive. Further consolidation is to be ex-pected among providers. Price pressure must be countered with innovative and competitive solutions. STADLER is well equipped to meet these challenges. The very high order backlog will lead to a strong increase in revenue in the coming years. Assuming that the economic envi-ronment remains stable, we anticipate a stable EBIT margin for the coming year with the prospect of further improvement in the years to come. Production capacities must be expanded. For this reason, investment activity in the coming year will again remain above the long-term average. The number of employees will increase steadily. The service business will continue to grow at an above-average rate. Automation will become increasingly important for STADLER . STADLER FINANCIAL REPORT 2018 Consolidated FINANCIAL Statements 5 Consolidated Income Statement in thousands of CHFNote20182017restatedNet 000 806 428 038 and external services(1 105 444) (1 441 512) Material overheads(68 885) (77 452) Warranty (29 585) (45 260) Production costs(386 334) (436 200) Engineering costs(101 800) (100 724) Project management costs(18 032) (16 561) Cost of goods sold and services provided(1 710 080) (2 117 709) margin290 726 329 costs(6 138) (6 682) Marketing & Sales costs(56 196) (48 439) Administration costs(79 528) (70 773) Other operating 509 12 655 Other operating (7 430) (6 239)

6 Operating result (EBIT)150 943 851 (21 351) 10 867 Share of results from 325 708 Profit before taxes131 917 426 (12 724) (30 526) Profit for the year119 193 900 thereof attributable to shareholders of STADLER Rail AG117 779 171 457 - thereof attributable to non-controlling interests (minority shareholders)1 414 443 Basic and diluted earnings per share (in CHF)(after consideration of share split) STADLER FINANCIAL REPORT 2018 Consolidated FINANCIAL Statements 6 Consolidated Balance Sheet in thousands of and cash equivalents694 638 1 058 023 Trade 580 264 379 Other current 852 72 209 Compensation claims from work in 933 42 604 587 180 813 Work in 629 398 645 Accrued income and deferred expenses4 750 7 248 Total current assets2 164 969 023 921.

7 Plant and 776 432 287 FINANCIAL 397 160 922 Investments in associates and joint 027 10 059 Intangible assets 458 35 886 Total non-current assets719 658 154 assets2 884 627 663 075 & equityCurrent FINANCIAL 094 17 015 Trade 779 91 696 Liabilities from work in 349 872 1 275 048 Other current 592 109 620 Current 310 110 900 Deferred income and accrued 521 88 297 Total current liabilities1 874 168 692 576 FINANCIAL 626 81 358 Other non-current 501 28 417 Non-current 829 95 285 Total non-current liabilities206 956 060 liabilities2 081 124 897 636 000 20 000 Capital reserves16 376 17 650 Treasury (2 187) (4 091) Retained earnings646 320 552 988 Profit for the year117 779 171 457 STADLER Rail AG shareholders equity798 288 004 interests (minority interests)5 215 7 435 Total equity803 503 439 liabilities & equity2 884 627 663 075 FINANCIAL REPORT 2018 Consolidated FINANCIAL Statements 7 Consolidated Cash Flow Statement Accounting principles Cash and cash equivalents include cash on hand, postal and bank deposits as well as sight deposits and deposits with a residual term of 90 days or less.

8 These are valued at nominal values. in thousands of CHFNote20182017restatedCash flow from operating activitiesProfit for the year119 193 171 900 Depreciation and amortization57 481 54 547 Non-recurring impairment(1 155) - Share of results from (2 325) (708) Reversal of non-cash items9 630 (21 032) Addition / (Reduction) other non-current 182 4 920 Addition / (Reduction) non-current 583 6 653 Reduction / (Addition) employer contribution 145 (30 000) Change in net current assets Reduction / (Addition) trade 492 (36 457) Reduction / (Addition) other current (13 354) (6 129) Reduction / (Addition) compensation claims from work in (237 329) 113 514 Reduction / (Addition) (87 133) (21 501) Reduction / (Addition) work in (190 694) 11 270 Reduction / (Addition) accrued income and deferred expenses1 507 (2 150) Addition / (Reduction) trade 016 (55 550) Addition / (Reduction) liabilities from work in 270 183 540 Addition / (Reduction) other current (33 155) 49 492 Addition / (Reduction) current (11 022) 23 462 Addition / (Reduction) deferred income and accrued 389 6 025 Net cash flow from operating activities(193 279) 451 796 Cash flow from investing activitiesInvestments in property, plant and (174 406) (64 972)

9 Proceeds from sales of property, plant and 290 2 328 Investments in FINANCIAL (21 419) (45 946) Proceeds from sales of FINANCIAL 720 14 611 Acquisition of subsidiaries, net of cash (7 269) 458 Proceeds from sales of subsidiaries, net of cash (23) 7 414 Investments in associates and joint (18 144) Purchase of minority (1 153) - Investments in intangible (13 749) (10 925) Proceeds from sales of intangible 2 Net cash flow from investing activities(150 949) (115 174) Cash flow from financing activitiesProceeds from / (repayment of) current FINANCIAL 677 (74 467) Proceeds from / (repayment of) non-current FINANCIAL 193 634 (Purchase) / Sale of treasury (1 941) 45 443 Dividends paid to (69 708) (58 320) Net cash flow from financing activities(3 779) (86 710) Total net cash flow(348 007) 249 912 Cash and cash equivalents at 1 January1 058 023 801 012 Currency translation differences on cash and cash equivalents(15 378)

10 7 099 - - Cash and cash equivalents at 31 December694 638 1 058 023 STADLER FINANCIAL REPORT 2018 Consolidated FINANCIAL Statements 8 Consolidated Statement of Changes in Equity in thousands of CHFNoteShare capitalCapital reservesTreasury sharesGoodwill offsetOther retained earningsTotal retained earningsStadler Rail AG share-holders equity Non-controlling interestTotalequityBalance at 1 January 201720 000 (10 206) (24 023) (148 617) 752 056 603 439 589 211 2 600 591 811 Profit for the year - - - - 171 457 171 457 171 457 443 171 900 Dividends paid - - - - -58 320 -58 320 -58 320 - -58 320 Offsetting goodwill - - - -7 763 - -7 763 -7 763 - -7 763 Transactions with non-controlling interests.