<Page>
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarter ended June 30, 2001
PREEM HOLDINGS AB (PUBL)
(Translation of registrant's name into English)
Sandhamnsgatan 51
P.O. Box 27800
S-11590
STOCKHOLM, SWEDEN
(address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---------- ---------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2 (b) under the Securities Exchange Act of
1934.
Yes. No X
---------- ---------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Preem Holdings AB (publ)
Date: August 29, 2001 By: /s/ Per Hojgard
------------------ -----------------------
Name: Per Hojgard
Title: Chief Financial Officer
<Page>
Table of Contents
<Table>
<Caption>
PAGE
------
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
PREEM HOLDINGS AB AND CONSOLIDATED SUBSIDIARIES
Interim Consolidated income statements for
the three months ended June 30, 2000 and June 30, 2001..................................... 3
the six months ended June 30, 2000 and June 30, 2001....................................... 4
Interim Consolidated balance sheets as of December 31, 2000 and June 30, 2001................. 5-6
Interim Consolidated statements of cash flow for the six month periods ended June 30, 2000
and June 30, 2001.......................................................................... 7
Notes to interim consolidated financial statements............................................ 8-12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................................... 13-19
</Table>
<Page>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 6-K contains forward-looking statements.
The management of Preem Holdings AB (publ) (the "Company") has based these
forward-looking statements on its current expectations and projections about
future events. Although the Company's management believes that the expectations
reflected in such forward-looking statements are reasonable, the Company can
give no assurance that such expectations will prove to be correct. Important
factors that could cause the Company's actual results, performance or
achievements to differ materially from those in the forward-looking statements
include, among others:
o volatility in refining margins and in market prices for crude oil and
refined products;
o unplanned shut-downs due to technical problems at the refineries;
o the Company's future capital needs;
o the Company's ability to hedge against currency, commodity and interest
rate risks;
o the Company's ability to comply with existing or newly implemented
environmental regimes in the countries in which it operates;
o the Company's liability for violations, known and unknown, under
environmental laws;
o the Company's ability to remediate contaminated sites within budgeted
amounts;
o possible adverse effects of the Company's anticipated growth through
joint venture, acquisition or restructuring, including diversion of
management resources, incurrence of additional debt, the terms and
conditions of any joint venture, failure to integrate acquired
businesses and the Company's liability for known and unknown
liabilities of acquired businesses;
o agreements or disagreements among members of OPEC; and
o limitations on the Company's operational flexibility arising under
agreements governing the Company's debt.
All forward-looking statements attributable to the Company or persons
acting on the Company's behalf are expressly qualified in their entirety by
these cautionary statements. Because of the uncertainties associated with
forward-looking statements, you should not place undue reliance on them. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
PRESENTATION OF CERTAIN INFORMATION
Solely for the convenience of the reader, the interim financial
statements for all periods have been translated into U.S. Dollars ($) using the
June 30, 2001 rate of $1.00 = SEK10.85. On August 28, 2001, the exchange rate
for the Krona against the U.S. Dollar was $1.00=SEK10.32, based on data provided
by the Swedish Central Bank.
We present our financial statements in Kronor. Unless otherwise
indicated, all references in this prospectus to "SEK," "Krona" or "Kronor" are
to the lawful currency of Sweden; all references to "$" or "Dollar" are to the
lawful currency of the United States; and all references to "E" or "Euro"
are to the single currency adopted by the member states of the European Union
participating in the European Union's Economic and Monetary Union.
2
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PREEM HOLDINGS AB AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
-----------------------------------------
JUNE 30, 2000 JUNE 30, 2001
PREDECESSOR SUCCESSOR
---------------- -----------------------
SEK SEK $
(IN MILLIONS)
Revenues...................................................... 10,948 12,140 1,119
Excise duties................................................. (1,468) (2,240) (206)
-------- -------- ------
SALES REVENUE................................................. 9,480 9,900 913
Cost of goods sold............................................ (8,855) (9,242) (852)
-------- -------- ------
GROSS PROFIT.................................................. 625 658 61
Selling expenses.............................................. (225) (258) (24)
Administrative expenses....................................... (52) (63) (6)
Other operating income........................................ 67 69 6
-------- -------- ------
OPERATING INCOME.............................................. 415 406 37
Interest income............................................... 16 12 1
Interest expense.............................................. (64) (129) (12)
Other financial expenses...................................... (41) (82) (7)
-------- -------- ------
INCOME BEFORE TAXES........................................... 326 207 19
Income taxes.................................................. 0 0 --
Minority interests............................................ (1) 0 --
-------- -------- ------
NET INCOME.................................................... 325 207 19
======== ======== ======
</Table>
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
3
<Page>
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
---------------------------------------------------
2000 2001 2001
-------------- -------------- ---------------------
SUCCESSOR
PREDECESSOR PRO FORMA SUCCESSOR
-------------- -------------- ---------------------
SEK SEK SEK $
(IN MILLIONS)
Revenues................................................. 21,246 23,738 12,140 1,119
Excise duties............................................ (3,074) (4,535) (2,240) (206)
-------- -------- ------- ------
SALES REVENUE............................................ 18,172 19,203 9,900 913
Cost of goods sold....................................... (17,048) (17,985) (9,242) (852)
-------- -------- ------- ------
GROSS PROFIT............................................. 1,124 1,218 658 61
Selling expenses......................................... (431) (467) (258) (24)
Administrative expenses.................................. (103) (143) (63) (6)
Other operating income................................... 135 149 69 6
-------- -------- ------- ------
OPERATING INCOME......................................... 725 757 406 37
Interest income.......................................... 27 26 12 1
Other financial income................................... -- 33 -- --
Interest expense......................................... (125) (195) (129) (12)
Other financial expenses................................. (61) (248) (82) (7)
-------- -------- ------- ------
INCOME BEFORE TAXES...................................... 566 373 207 19
Income taxes............................................. (1) (2) 0 --
Minority interests....................................... (1) (1) 0 --
-------- -------- ------- ------
NET INCOME............................................... 564 370 207 19
======== ======== ======= ======
</Table>
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
4
<Page>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<Table>
<Caption>
PREDECESSOR SUCCESSOR
DECEMBER 31, JUNE 30,
2000 2001
-------------- ---------------------
SEK SEK $
(IN MILLIONS)
ASSETS
FIXED ASSETS
INTANGIBLE FIXED ASSETS
Capitalized turnaround cost................................... 145 114 11
Goodwill...................................................... 420 1,437 132
------- ------- ------
TOTAL INTANGIBLE ASSETS....................................... 565 1,551 143
TANGIBLE ASSETS
Land and building............................................. 837 873 80
Plant and machinery........................................... 3,480 3,351 309
Equipment, tools fixtures and fittings........................ 657 647 60
Construction in progress...................................... 186 321 29
------- ------- ------
TOTAL TANGIBLE FIXED ASSETS................................... 5,160 5,192 478
FINANCIAL ASSETS
Participation in associated companies......................... 190 190 18
Other securities held as fixed assets......................... 2 1 --
Other long-term receivables................................... 56 175 16
------- ------- ------
TOTAL FINANCIAL ASSETS........................................ 248 366 34
TOTAL FIXED ASSETS............................................ 5,973 7,110 655
CURRENT ASSETS
Inventories................................................... 4,495 4,511 416
Accounts receivable........................................... 3,398 2,828 260
Receivables from associated companies......................... 60 52 5
Other receivables............................................. 302 348 32
Prepaid expenses and accrued income........................... 120 140 13
------- ------- ------
Cash and cash equivalent...................................... 370 1,051 97
TOTAL CURRENT ASSETS.......................................... 8,745 8,930 823
------- ------- ------
TOTAL ASSETS.................................................. 14,718 16,040 1,478
======= ======= ======
</Table>
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
5
<Page>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<Table>
<Caption>
PREDECESSOR SUCCESSOR
DECEMBER 31, JUNE 30,
2000 2001
-------------- ---------------------
SEK SEK $
(IN MILLIONS)
SHAREHOLDERS' EQUITY, PROVISIONS
AND LIABILITIES
SHAREHOLDERS' EQUITY
RESTRICTED EQUITY
Share capital................................................ 610 1 --
Restricted reserves.......................................... 1,797 -- --
------- ------- ------
2,407 1 --
NON-RESTRICTED EQUITY
Loss brought forward......................................... (818) 3,518 325
Profit for the year.......................................... 831 370 34
13 3,888 359
------- ------- ------
TOTAL SHAREHOLDERS' EQUITY................................... 2,420 3,889 359
Minority interests........................................... 122 122 11
PROVISIONS
Pension provision............................................ 188 189 17
Deferred tax liability....................................... 254 255 24
Other provisions............................................. 118 119 11
------- ------- ------
TOTAL PROVISIONS............................................. 560 563 52
LIABILITIES
LONG-TERM LIABILITIES
Shareholder loans............................................ 2,259 242 22
Liabilities to credit institutions........................... 2,814 5,599 516
Bank overdraft facility...................................... 135 196 11
------- ------- ------
TOTAL LONG-TERM LIABILITIES.................................. 5,208 6,037 556
------- ------- ------
CURRENT LIABILITIES
Liabilities to credit institutions........................... 1,321 1,313 121
Advanced payment from customers.............................. 134 148 14
Accounts payable............................................. 1,082 1,077 99
Liabilities to parent company................................ 1,001 -- --
Liabilities to associated companies.......................... 53 14 1
Income tax payable........................................... 58 53 5
Other liabilities............................................ 1,748 1,809 167
Accrued expenses and prepaid income.......................... 1,011 1,014 93
------- ------- ------
TOTAL CURRENT LIABILITIES.................................... 6,408 5,428 500
------- ------- ------
TOTAL SHAREHOLDERS' EQUITY, PROVISION
AND LIABILITIES.............................................. 14,718 16,040 1,478
======= ======= ======
</Table>
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
6
<Page>
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
<Table>
<Caption>
SIX MONTH PERIODS ENDED JUNE 30,
---------------------------------------------------
SUCCESSOR
PREDECESSOR PRO FORMA SUCCESSOR
-------------- -------------- ---------------------
2000 2001 2001
-------------- -------------- ---------------------
SEK SEK SEK $
(IN MILLIONS)
INCOME FROM OPERATION
Income after financial items.............................. 566 373 207 19
Adjustments for non-cash items
Deprecation and amortization.............................. 329 369 202 18
Unrealized exchange losses................................ 35 180 74 7
Taxes paid................................................ (5) (6) (2) (0)
------ ------ ------ ------
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN
WORKING CAPITAL........................................... 925 916 481 44
CASH FLOW IN WORKING CAPITAL
Decrease (Increase) in inventories........................ (629) 8 (498) (46)
Decrease (Increase) in current receivables................ (76) 560 650 60
Decrease (Increase) in liabilities........................ (255) (122) (123) (11)
CASH FLOW FROM (USED IN) OPERATING ACTIVITIES............. (35) 1,362 510 47
INVESTMENT ACTIVITIES
Investment in intangible fixed assets..................... (2) (6) (4) (0)
Investment in tangible fixed assets....................... (165) (280) (195) (18)
Sale of tangible fixed assets............................. 8 24 24 2
Increase in financial fixed assets........................ (31) (118) (121) (11)
------ ------ ------ ------
CASH FLOW USED IN INVESTMENT ACTIVITIES................... (190) (380) (296) (27)
FINANCING OPERATION
New loans from credit institutions........................ 1,193 3,440 3,469 319
Payment of loans from credit institutions................. (293) (736) (817) (75)
Payment of loans from parent company...................... -- (2,017) (2,017) (186)
Group contributions paid.................................. (100) (1,000) (100) (9)
------ ------ ------ ------
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES............. 800 (313) 535 49
CASH FLOW OF THE PERIOD................................... 575 669 748 69
Liquid funds at the beginning of the period............... 270 370 299 28
Exchange-rate difference.................................. -- 12 3 0
Cash and cash equivalents at the end of the period........ 845 1,051 1,051 97
SUPPLEMENTARY DISCLOSURES
Cash flow interest and dividend received
Interest received......................................... 26 26 14 1
Interest paid............................................. (125) (211) (76) (7)
Items included in liquid funds
Cash and bank balance..................................... 229 406 406 37
Short-term investment..................................... 616 645 645 60
TOTAL LIQUID FUNDS........................................ 845 1,051 1,051 97
</Table>
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
7
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIOD ENDED JUNE 30, 2001
NOTE 1. BASIS OF PRESENTATION
Preem Holdings AB (publ) (the "Company") was originally established in
1980 as Swedoil AB and is registered with the Swedish Patent and Registration
Office under the number 556206-9673. Swedoil AB was a subsidiary of Preem
Petroleum AB that had been dormant since 1983. On March 1, 2001, its name was
changed from Swedoil AB to Preem Holdings AB, through an amendment to its
Articles of Association and its subsequent registration with the Swedish Patent
and Registration Office. The purpose of this name change was to accurately
reflect its status as a holding company and its position within the overall
corporate structure with respect to Corral Petroleum Holdings AB, its parent
company, and Preem Petroleum AB, its operating subsidiary. Also on March 1,
2001, the Company's status was changed from a private company to a public
company, giving it the ability under Swedish law to raise capital through the
issuance of securities. Corral Petroleum Holdings AB, a Swedish company,
contributed all of the issued and outstanding shares of Preem Petroleum AB to
Preem Holdings AB on March 19, 2001. Preem Holdings AB is wholly-owned by Corral
Petroleum Holdings AB, which is wholly-owned by Moroncha Holdings Company
Limited, which is wholly-owned by Mr. Mohammed Hussein Ali Al-Amoudi.
Preem Holdings AB's principal assets as of June 30, 2001 consist of all
of the issued and outstanding shares of Preem Petroleum AB and an inter-company
loan to Preem Petroleum AB. Preem Holdings AB's principal liability as of June
30, 2001 consists of E250 million aggregate principal amount of 10 5/8%
senior secured notes, due 2011, which Preem Holdings AB issued on April 10,
2001. In the accompanying consolidated financial statements, the term
"Predecessor" is used when the financial information represents Preem Petroleum
AB and subsidiaries and the term "Successor" is used when the financial
statements represent Preem Holdings AB and subsidiaries. The term "Successor
Pro-forma" is used when financial statements are combined with the Predecessor's
first fiscal quarter results and cash flows and the Successor's second fiscal
quarter results and cash flows. The accompanying consolidated financial
statements present the financial position and results of operations and have
been prepared in accordance with Swedish GAAP. These accounting principles
differ in certain significant respects from U.S. GAAP. See Note 7 for a
discussion of the principal differences between Swedish GAAP and U.S. GAAP
affecting the consolidated net income and shareholders' equity of the Company.
The interim financial information included in the interim consolidated
financial statements is unaudited but reflects all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results for the interim periods
presented. Interim results for the six months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2. SALES REVENUE
<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------------------
2001
2000 SUCCESSOR
PREDECESSOR PRO FORMA
-------------- --------------
Supply and Refining..................................................... 16,335 16,805
Swedish Market.......................................................... 4,438 5,214
International........................................................... 527 884
Group eliminations...................................................... (3,128) (3,700)
------- -------
Total................................................................... 18,172 19,203
======= =======
</Table>
8
<Page>
NOTE 3. OPERATING INCOME
<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------------------
2001
2000 SUCCESSOR
PREDECESSOR PRO FORMA
-------------- --------------
Supply and Refining..................................................... 660 658
Swedish Market.......................................................... 21 27
International........................................................... (16) (35)
Other Non-allocated Income (expense), net............................... 60 107
------- -------
Total................................................................... 725 757
======= =======
</Table>
NOTE 4. INVENTORIES
The valuation of inventories has been carried out at the lower of the
acquisition value and the actual value. The actual value for finished products
is the net sales value, and for crude oil it is the replacement costs. At June
30, 2001, the actual value of inventories was SEK137 million higher than the
acquisition value. There is a general practice within the Swedish oil industry
to lend and borrow products to/from other oil companies. The lending portion of
inventory volume is included in the inventory value in an amount of SEK99
million. Borrowed inventory volumes corresponds to an inventory value of SEK27
million, which is not included in the inventory value.
<Table>
<Caption>
AS OF AS OF
DECEMBER 31, JUNE 30,
2000 2001
------------- -----------
PREDECESSOR SUCCESSOR
------------- -----------
Raw materials and supplies............................................... 2,008 2,226
Finished products........................................................ 2,487 2,285
------- -------
TOTAL.................................................................... 4,495 4,511
======= =======
</Table>
NOTE 5. SHAREHOLDERS' EQUITY
The changes in Shareholders' equity in Preem Holdings AB and
Subsidiaries for the period December 31, 2000 to June 30, 2001 are as follows:
<Table>
<Caption>
TOTAL
SHARE RESTRICTED UNRESTRICTED SHAREHOLDERS
CAPITAL RESERVES RESERVES EQUITY
------- ---------- ------------ ------------
(SEK in million)
Balance at December 31,2000....................... -- -- -- 0
New issuance of shares............................ 1 -- -- 1
Shareholder contribution.......................... -- -- 5,516 5,516
Acquisition accounting............................ -- -- (1,998) (1,998)
Net income........................................ -- -- 370 370
Balance at June 30, 2001.......................... 1 -- 3,888 3,889
</Table>
9
<Page>
NOTE 6. LONG-TERM LIABILITIES TO CREDIT INSTITUTIONS
AMORTIZATION PLAN
<Table>
<Caption>
2001 2002 2003 2004 2005 2006
------ ------ ------ ------ ------ ------
Loans..................................... 622 187 46 749 274 3,211
Capital lease obligation.................. 6 13 14 24 30 1,051
--- --- -- --- --- -----
TOTAL..................................... 628 200 60 773 304 4,262
=== === == === === =====
</Table>
The Company has as of June 30, 2001 debt of SEK48 million secured by
real estate mortgages and debt of SEK542 million that is guaranteed by a
financial institution.
NOTE 7. U.S. GAAP INFORMATION
The accompanying interim consolidated financial statements have been
prepared in accordance with Swedish GAAP which differs in certain significant
respects from U.S. GAAP. The following is a summary of the adjustments to net
income and Shareholders' equity that would have been required if U.S. GAAP had
been applied instead of Swedish GAAP in the preparation of the interim
consolidated financial statements.
<Table>
<Caption>
SIX MONTH PERIODS ENDED
--------------- --------------
JUNE 30, JUNE 30,
2000 2001
--------------- --------------
(SEK IN MILLION)
Net income under Swedish GAAP (A)......................................... 564 370
Adjustments to reconcile to U.S. GAAP:
Pensions............................................................... 2 2
Pension refund......................................................... -- 6
Goodwill amortization.................................................. (66) (33)
Computer software for internal use..................................... -- 25
Income taxes (D)....................................................... (158) (113)
Income tax effect of U.S. GAAP adjustments............................. 1 (9)
----------- ----------
Net income under U.S. GAAP............................................. 343 248
=========== ==========
Basic and diluted income per share in accordance with US GAAP (SEK)(B).... 68,600 49,600
=========== ==========
Weighted-average number of shares outstanding (thousands) (B)............. 5 5
=========== ==========
</Table>
10
<Page>
<Table>
<Caption>
AS OF AS OF
DECEMBER 31, JUNE 30,
2000 2001
------------- -------------
(SEK IN MILLION)
Shareholders' equity under Swedish GAAP (C)................................ -- 3,889
Adjustments to reconcile to U.S. GAAP:
Shareholders' equity of Preem Petroleum AB according to Swedish GAAP.... 2,420 --
Pensions................................................................ 50 52
Pension refund.......................................................... (89) (83)
Goodwill amortization................................................... 1,098 (33)
Computer software for internal use...................................... -- 25
Income taxes (D)........................................................ -- (113)
Tax effect of U.S. GAAP adjustments..................................... 10 2
---------- ---------
Shareholders' equity U.S. GAAP.......................................... 3,489 3,739
========== =========
</Table>
(A) Net income under Swedish GAAP for the six month period ended June 30,
2000 represents the Predecessor net income and for the six month period
ended June 30, 2001, represents the Successor Pro-forma net income
(B) Basic and diluted income per share data in accordance with U.S. GAAP is
presented assuming the current capitalization of Preem Holdings AB for
all periods.
(C) Shareholders' equity under Swedish GAAP represents the Successor
shareholders' equity as of December 31, 2000 and June 30, 2001. The
shareholders' equity in accordance with Swedish GAAP as of March 31,
2001, was affected by the difference between the goodwill in accordance
with U.S. GAAP accounting for the transaction as a purchase and the
goodwill recorded on the Parent company accounts. From April 1, 2001,
there is no difference between the goodwill recorded in accordance with
Swedish GAAP and U.S. GAAP.
(D) Under Swedish GAAP, no imputed tax has been included in the Interim
Consolidated Statements of Operations for the three months ended March
31, 2000 and 2001. Under U.S. GAAP, income taxes for the three months
ended March 31, 2000 and 2001, were determined in accordance with
Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting."
A description of differences between Swedish GAAP and U.S. GAAP which
significantly affect the determination of net income and Shareholders'
equity of the Company is set forth in Note 24 to the Consolidated Financial
Statements of Preem Petroleum AB included in the Company's registration
statement on Form F-4.
The Company has adopted Statement of Financial Accounting ("SFAS") No.
130, "Reporting Comprehensive Income." Comprehensive income includes net income,
net unrealized gains or losses on available for sale securities and foreign
currency translation adjustments. Comprehensive income for the six months ended
June 30, 2000 and 2001 was SEK346 million and SEK248 million, respectively.
11
<Page>
NOTE 8. INTERIM SEGMENT INFORMATION
Financial information by segment is as follows:
<Table>
<Caption>
THREE MONTHS ENDING SIX MONTHS ENDING
JUNE 30, JUNE 30,
-------------------------- --------------------------
2001
2000 2001 2000 SUCCESSOR
PREDECESSOR SUCCESSOR PREDECESSOR PRO FORMA
------------- ----------- ----------- ------------
(IN MILLIONS)
SALES REVENUE:
Supply and refining............................... 8,548 8,598 16,335 16,805
Swedish market.................................... 2,141 2,546 4,438 5,214
International..................................... 313 488 527 884
SEGMENT SALES REVENUE............................. 11,002 11,632 21,300 22,903
Intersegment sales revenue........................ (1,522) (1,732) (3,128) (3,700)
-------- -------- -------- --------
Sales revenues.................................... 9,480 9,900 18,172 19,203
SEGMENT OPERATING PROFIT:
Supply and refining............................... 392 461 660 658
Swedish market.................................... (14) (15) 21 27
International..................................... (8) (20) (16) (35)
Segment operating profit.......................... 370 426 665 650
Other non-allocated income net(1)................. 45 (20) 60 107
Income from operations............................ 415 406 725 757
Non-allocated items(2)............................ (89) (199) (159) (384)
-------- -------- -------- --------
Income before income taxes........................ 326 207 566 373
</Table>
(1) Other non-allocated income (expense) includes the corporate cost
center, non-recurring items and exchange rate differences.
(2) Non-allocated items consist of interest income and expenses, other
financial income and expense and minority interest.
NOTE 9. SUBSEQUENT EVENTS
On July 20, 2001, Preem Holdings AB issued additional senior secured
notes in an amount of E55 million leading to an aggregate amount of E305
million of notes issued. These notes are senior debt secured by a first priority
pledge of all outstanding shares of capital stock of Preem Petroleum AB and a
first priority security assignment of a subordinated inter-company loan from
Preem Holdings AB to Preem Petroleum AB.
There was an unplanned shut-down at the Scanraff refinery in August
2001 as a result of overheated heater tubes in the gasoline production unit of
the refinery. Tests indicate extensive tube-scaling in the heater tubes. The
duration of the shut-down is estimated to be approximately four weeks.
12
<Page>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
HIGHLIGHTS OF THE FIRST SIX MONTHS OF 2001
RESTRUCTURING OF THE CORRAL PETROLEUM HOLDINGS GROUP
On March 19, 2001, Corral Petroleum Holdings AB contributed all of the
issued and outstanding shares of Preem Petroleum AB to Preem Holdings AB. Preem
Holdings AB is wholly-owned by Corral Petroleum Holdings AB.
On April 10, 2001, Preem Holdings AB issued senior secured notes in an
aggregate principal amount of E250 million. Preem Holdings AB loaned part of
the net proceeds of that offering of notes, which totaled approximately E223
million, to Preem Petroleum AB pursuant to a subordinated intercompany loan
denominated in Kronor. Preem Petroleum AB used approximately E220 million of
the proceeds received to repay all but approximately E27 million of an
existing SEK2,259 million subordinated shareholder loan it owed to Corral
Petroleum Holdings AB. The right to receive the remaining unpaid amount was
assigned to Preem Holdings AB. The remaining amount of proceeds received by
Preem Petroleum AB, approximately E3 million, was used for general corporate
purposes.
On July 20, 2001, Preem Holdings AB issued an additional tranche of
senior secured notes in an amount of E55 million creating a single series of
E305 million aggregate principal amount outstanding. Preem Holdings AB
intends to distribute approximately E10 million of the proceeds from this
second offering of notes to Corral Petroleum Holdings AB in the form of an
interest-free intercompany loan. The Company intends to use the remaining
proceeds for general corporate purposes, and to the extent permitted under the
Indenture governing the notes, it intends to distribute additional proceeds from
this issue to Corral Petroleum Holdings AB.
SUPPLY & REFINING DIVISION
During the first six months of 2001, consumption of oil decreased by 2
million barrels per day compared to the previous six months. OPEC has been
relatively successful in keeping the price of crude oil between US$24 and US$30
per barrel. The decrease in consumption of oil will according to many industry
experts keep the crude price in the lower part of this range during the second
half of 2001.
The year 2001 started with extremely low stocks of gasoline. Concerns
of supply shortages of gasoline heading into the summer driving season caused
the price to increase, which significantly benefited refining margins. The
prices for gasoil and fuel oil have been relatively stable in 2001.
Demand for city gasoline and city diesel increased steadily in Europe
leading to strengthening refining margins.
The Supply & Refining Division operates the majority-owned Scanraff
refinery and the wholly-owned Preemraff refinery. The Company owns 78.5% of the
Scanraff refinery with the exception of the catalytic cracker, of which its owns
50%. The remainder is owned by the Company's joint venture partner, Hydro R&M
Holding AS, an affiliate of Norsk Hydro AS. These refineries refined
approximately 24.1 million barrels of oil in the second quarter of 2001 compared
to 24.8 million barrels of oil in the second quarter of 2000. During the first
six months of 2001 these refineries refined approximately 49.9 million barrels
of oil compared to 47.3 million barrels the same period of 2000.
The following tables show the calculation of margins for the Scanraff
and Preemraff refineries. The information for Scanraff shows the Company's share
of the refinery's production.
13
<Page>
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ---------------------------
2000 2001 2000 2001
-------------- -------------- ------------ -------------
(IN USD/BARREL)
SCANRAFF
Gross refining margin.......................... $3.40 $2.57 $2.62 $2.38
Variable refining costs........................ (0.24) (0.17) (0.25) (.018)
-------- -------- ------- -------
Refining margin................................ 3.16 2.40 2.37 2.20
Fixed operating costs.......................... (0.56) (0.47) (0.55) (0.53)
-------- -------- ------- -------
Net cash margin................................ 2.60 1.93 1.82 1.67
Depreciation................................... (0.35) (0.26) (0.36) (0.30)
-------- -------- ------- -------
Net refining margin............................ $2.25 $1.67 $1.46 $1.37
-------- -------- ------- -------
Total production (000 barrels)................. 14,185 13,790 28,578 27,610
PREEMRAFF
Gross refining margin.......................... $1.92 $1.72 $1.48 $1.44
Variable refining costs........................ (0.12) (0.19) (0.18) (0.17)
Natural gas, refining fuel..................... (0.09) (0.13) (0.14) (0.09)
-------- -------- ------- -------
Refining margin................................ 1.71 1.40 1.16 1.18
Fixed operating costs.......................... (0.37) (0.35) (0.39) (0.37)
-------- -------- ------- -------
Net cash margin................................ 1.34 1.05 0.77 0.81
Depreciation................................... (0.46) (0.37) (0.59) (0.42)
-------- -------- ------- -------
Net refining margin............................ $0.88 $0.68 $0.27 $0.39
-------- -------- ------- -------
Total production (000 barrels)................. 10,610 10,279 20,510 20,820
</Table>
The Supply & Refining Division generated EBITDA of SEK581 million in
the second quarter of 2001 compared to SEK513 million in the second quarter
2000. The division generated EBITDA of SEK897 million in the first six months
of 2001 as compared to SEK901 million in the first six months of 2000.
SWEDISH MARKET DIVISION
In the Swedish market division, the decrease in consumption is
primarily notable in the home-heating oil sector. The decrease in consumption is
partly due to the mild winter, and partly due to the high price level of crude
oil and thus higher heating oil prices, which in turn has led to consumers
relying more heavily on the electricity market for their home-heating needs.
Recently, the price of electricity has risen considerably, which can decrease
the negative effect on the home heating volumes. However, the Company has kept
its market leading position with a market share of approximately 33%.
The Company's sale of diesel fuel continues to increase. Volumes in the
first six months of 2001 were 11% higher than the same period of 2000. Also the
sales volumes of gasoline has increased nominally.
In August 2000, our Swedish Market Division began implementing its
plans to restructure our regional sales organization. The restructuring consists
of the eventual replacement of all 25 of our regional sales offices with a
centralized national call center in Stockholm, Sweden. The restructuring
involves the reduction of our current regional sales force by 154 employees on
all levels and the recruiting and training of 70 qualified individuals to staff
the centralized call center. We expect to complete the restructuring by January
2002.
The Swedish Market Division generated EBITDA of SEK23 million in the
second quarter of 2001 compared to SEK25 million in the second quarter of
2000. The Division generated EBITDA of SEK103 million in the first six months
of 2001 as compared to SEK98 million the same period in 2000.
14
<Page>
INTERNATIONAL MARKET DIVISION
Although sales volumes continued to grow in Poland in 2001, sales
levels for the International Division continue to remain below a level of
profitability for the Company. Sales margins have also been put under
pressure. The International Division therefore generated a negative EBITDA of
SEK13 million in the second quarter of 2001 compared to a negative EBITDA of
SEK4 million in the second quarter of 2000. The International Division
generated a negative EBITDA of SEK23 million in the first six months of 2001
compared to a negative EBITDA of SEK9 million for the same period in 2000.
RESULTS OF OPERATIONS
The following table shows the sales revenues and operating income
for the three divisions discussed above:
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ---------------------------
2000 2001 2000 2001
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
-------------- -------------- ------------ -------------
(IN MILLIONS)
SALES REVENUE:
Supply & Refining.............................. 8,548 8,598 16,335 16,805
Swedish Market................................. 2,141 2,546 4,438 5,214
International Market........................... 313 488 527 884
TOTAL SALES REVENUE............................ 9,480 9,900 18,172 19,203
OPERATING INCOME (LOSS):
Supply & Refining.............................. 392 461 660 658
Swedish Market................................. (14) (15) 21 27
International Market........................... (8) (20) (16) (35)
Other non-allocated income (expense)........... 45 (20) 60 107
TOTAL OPERATING INCOME......................... 415 406 725 757
</Table>
CONSOLIDATED STATEMENT OF OPERATIONS:
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ---------------------------
2000 2001 2000 2001
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
-------------- -------------- ------------ -------------
(IN MILLIONS)
PRO FORMA
Revenues....................................... 10,948 12,140 21,246 23,738
Excise duties.................................. (1,468) (2,240) (3,074) (4,535)
------- -------- ------ -------
SALES REVENUE.................................. 9,480 9,900 18,172 19,203
Costs of goods sold............................ (8,855) (9,242) (17,048) (17,985)
GROSS PROFIT................................... 625 658 1,124 1,218
Selling and administrative expenses............ (277) (321) (535) (610)
Other operating income......................... 67 69 136 149
------- -------- ------ -------
OPERATING INCOME............................... 415 406 725 757
Financial expense, net(2)...................... (89) (199) (159) (384)
------- -------- ------ -------
Income before taxes............................ 326 207 566 373
INCOME TAXES(3)................................ (0) (0) (1) (2)
Minority interests............................. (1) (0) (1) (1)
------- -------- ------ -------
NET INCOME..................................... 325 207 564 370
======= ======== ====== =======
</Table>
15
<Page>
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
REVENUES. Our revenues for the three months ended June 30, 2001 were
SEK12,140 million, an increase of SEK1,192 million, or approximately 11%, from
SEK10,948 million for the three months ended June 30, 2000. This increase is
almost entirely attributable to the strong Dollar, which increased by 18%
against the Krona during this period. Because our sales are made principally in
Dollars, a stronger Dollar, when translated into Kronor, will result in an
increase in revenues if all other factors remain constant over time. This
increase in revenues was offset, to a very limited extent, by a slight decrease
in product prices.
SALES REVENUE. Sales revenue for the three months ended June 30, 2001
was SEK9,900 million, an increase of SEK420 million, or approximately 4%, from
SEK9,480 million for the three months ended June 30, 2000, primarily as a result
of, and in the same proportions as, the factors discussed above.
COST OF GOODS SOLD. Cost of goods sold for the three months ended June
30, 2001 was SEK9,242 million, an increase of SEK387 million, or approximately
4%, from SEK8,855 million for the three months ended June 30, 2000. The increase
was attributable to, and in the same proportions as, the factors discussed
above.
GROSS PROFIT. Gross profit for the three months ended June 30, 2001 was
SEK658 million, an increase of SEK33 million, or approximately 5%, from SEK625
million for the three months ended June 30, 2000, primarily as a result of, and
in the same proportions as, the factors discussed above.
SELLING AND ADMINISTRATIVE EXPENSES. Selling expenses for the three
months ended June 30, 2001 were SEK258 million, an increase of SEK33 million, or
approximately 15%, from SEK225 million for the three months ended June 30, 2000.
Approximately half of the increase in selling expenses is attributable to the
sales activities in Poland and approximately half is attributable to our
assuming the operations of formerly franchised service stations and
reclassification of costs related to our reorganization. Administrative expenses
for the three months ended June 30, 2001 were SEK63 million, an increase of
SEK11 million, or approximately 21%, from SEK52 million for the three months
ended June 30, 2000. The increase is a result of the depreciation of goodwill in
Preem Holdings, SEK33 million, and to the implementation of an information
technology project related to the business operations at our head office in
Stockholm, Sweden. The remaining positive difference is to a large extent a
result of the reclassification of costs related to our reorganization.
OTHER OPERATING INCOME. Other operating income for the three months
ended June 30, 2001 was SEK69 million, an increase of SEK2 million, or
approximately 3%, from SEK67 million for the three months ended June 30, 2000.
The increase in other operating income for the three months ended June 30, 2001
is almost entirely attributable to an increase in deliveries of waste heat sold
by our Preemraff refinery to the City of Gothenburg.
OPERATING INCOME (LOSS). Operating income for the three months ended
June 30, 2001 was SEK406 million, a decrease of SEK9 million, or approximately
2%, from SEK415 million for the three months ended June 30, 2000. The operating
income of our Supply and Refining Division was SEK461 million for the three
months ended June 30, 2001, an increase of SEK69 million, or approximately 18%,
from SEK392 million for the three months ended June 30, 2000. This increase in
operating income is almost entirely attributable to the strong Dollar for the
same reasons as discussed under "Revenues" above. Our Swedish Market Division
generated an operating loss of SEK15 million for the three months ended June 30,
2001, an increased loss of SEK1 million, or approximately 7%, from an operating
loss of SEK14 million for the three months ended June 30, 2000. The increase in
the Swedish Market Division's operating loss is to a large extent attributable
to lower volumes of heating oil in the Home-Heating Segment. The operating loss
of our International Division was SEK20 million for the three months ended June
30, 2001, an increased loss of SEK12 million, or approximately 150%, from an
operating loss of SEK8 million for the three months ended June 30, 2000. The
increased operating loss was largely attributable to our International
Division's lower margins in the Polish market.
FINANCIAL EXPENSE, NET. Financial expense, net, for the three months
ended June 30, 2001 was SEK199 million, an increase of SEK110 million, or
approximately 124%, from SEK89 million for the three months ended June 30, 2000.
The principal component of this increase was the interest on the Preem Holdings
note issuance of SEK73 million and foreign exchange losses on Dollar-denominated
loans that are restated in Kronor, which increased from SEK39 million for the
three months ended June 30, 2000 to SEK64 million for the three months ended
June 30, 2001 as a result of the strengthening of the Dollar against the Krona.
16
<Page>
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
REVENUES. Our revenues for the six months ended June 30, 2001 were
SEK23,738 million, an increase of SEK2,492 million, or approximately 12%, from
SEK21,246 million for the six months ended June 30, 2000. This increase is
almost entirely attributable to the strong Dollar, which increased by 16%
against the Krona during this period.
SALES REVENUE. Sales revenue for the six months ended June 30, 2001 was
SEK19,203 million, an increase of SEK1,031 million, or approximately 6%, from
SEK18,172 million for the six months ended June 30, 2000, primarily as a result
of, and in the same proportions as, the factors discussed above.
COST OF GOODS SOLD. Cost of goods sold for the six months ended June
30, 2001 was SEK17,985 million, an increase of SEK937 million, or approximately
5%, from SEK17,048 million for the six months ended June 30, 2000. The increase
was attributable to, and in the same proportions as, the factors discussed
above.
GROSS PROFIT. Gross profit for the six months ended June 30, 2001 was
SEK1,218 million, an increase of SEK94 million, or approximately 8%, from
SEK1,124 million for the six months ended June 30, 2000, primarily as a result
of, and in the same proportions as, the factors discussed above.
SELLING AND ADMINISTRATIVE EXPENSES. Selling expenses for the six
months ended June 30, 2001 were SEK467 million, an increase of SEK35 million, or
approximately 8%, from SEK432 million for the six months ended June 30, 2000.
Approximately half of the increase in selling expenses is attributable to sales
activities in Poland and approximately half is attributable to our assuming the
operations of formerly franchised service stations and reclassification of costs
related to our reorganization. Administrative expenses for the six months ended
June 30, 2001 were SEK143 million, an increase of SEK40 million, or
approximately 39%, from SEK103 million for the six months ended June 30, 2000.
This increase in administrative expenses is largely a result of the depreciation
on goodwill in Preem Holdings, SEK33 million and to the implementation of an
information technology project related to the business operations at our head
office in Stockholm, Sweden. The increase is, to a certain extent, offset by a
positive difference due to the reclassification of costs related to our
reorganization.
OTHER OPERATING INCOME. Other operating income for the six months ended
June 30, 2001 was SEK149 million, an increase of SEK13 million, or approximately
10%, from SEK136 million for the six months ended June 30, 2000. The increase in
other operating income for the six months ended June 30, 2001 is a result of an
increase of SEK11 million in the sale of storage certificates to other oil
companies for their compulsory storage obligations and an increase of SEK3
million in deliveries of waste heat sold by our Preemraff refinery to the City
of Gothenburg.
OPERATING INCOME (LOSS). Operating income for the six months ended June
30, 2001 was SEK757 million, an increase of SEK32 million, or approximately 4%,
from SEK725 million for the six months ended June 30, 2000. The operating income
of our Supply and Refining Division was SEK658 million for the six months ended
June 30, 2001, a decrease of SEK2 million from SEK660 million for the six months
ended June 30, 2000. This decrease in operating income is attributable to lower
price gains on inventory in the six months ended June 30, 2001 compared to the
price gains on inventory for the six months ended June 30, 2000. This decrease
was almost entirely offset by higher income resulting from the strong Dollar.
Our Swedish Market Division generated an operating income of SEK27 million for
the six months ended June 30, 2001, an increase of SEK6 million, or
approximately 29%, compared to an operating income of SEK21 million for the six
months ended June 30, 2000. The increase in the Swedish Market Division's
operating income resulted to a large extent from higher volumes of diesel sales
in our Station and Consumer Segment. The increase in the Swedish Market
Division's operating income also is attributable to slightly improved margins in
the Home-Heating and Business-to-Business Segment. This increase is also the
result of our focus on maintaining product prices in an environment of
decreasing crude oil prices. The operating loss of our International Division
was SEK35 million for the six months ended June 30, 2001, an increased loss of
SEK19 million, or approximately 119%, from an operating loss of SEK16 million
for the six months ended June 30, 2000. The increased operating loss was largely
attributable to our International Division's lower margins in the Polish market.
The overall decrease in operating income for these three divisions for the six
months ended June 30, 2001 compared to the six months ended June 30, 2000 was
more than offset by an increase of SEK47 million in other non-allocated income.
This increase in other non-allocated income resulted primarily from an increase
in foreign exchange gains made on our inventory, which is priced in Dollars.
17
<Page>
FINANCIAL EXPENSE, NET. Financial expense, net, for the six months
ended June 30, 2001 was SEK384 million, an increase of SEK225 million, or
approximately 142%, from SEK159 million for the six months ended June 30, 2000.
The principal component of this increase was foreign exchange losses on
Dollar-denominated loans that are restated in Kronor, which increased from SEK59
million for the six months ended June 30, 2000 to SEK198 million for the six
months ended June 30, 2001 as a result of the strengthening of the Dollar
against the Krona.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
Our primary sources of liquidity are internal cash generation,
long-term debt, short-term working capital financing and short-term use of
excise duties collected. We operate in an environment in which liquidity and
capital resources are impacted by changes in the prices for crude oil and
refined products, and a variety of additional risks, including currency and
regulatory risks. In particular, because we purchase crude oil on the spot
market and prices can be volatile, the availability of cash or short-term credit
is crucial to our business. Historically, our cash and short-term credit have
been sufficient to finance such purchases. For the six months ended June 30,
2001, EBITDA was SEK1,126 million, compared to SEK1,054 million for the six
months ended June 30, 2000. We believe the cash flow from operating activities,
bank borrowings and other available sources of funds, will be adequate to enable
us to make required payments on our debt and to fund anticipated expenditures
and working capital requirements for the foreseeable future.
For the year ended December 31, 2000, we declared a group contribution
of SEK1,356 million. Of this amount, we paid SEK1,000 million (which is
reflected on the June 30, 2001 interim consolidated statements of cash flows).
The remaining SEK356 million of this group contribution will appear as an
increase in shareholder loans on the December 31, 2001 balance sheet. Generally,
group contributions are paid in the year after declaration. Accordingly, the
SEK1,000 million payment is reflected on Preem Holdings AB's interim
consolidated statements of cash flows for the six-month period ended June 30,
2001.
CASH FLOW
Cash flow from operating activities before changes in working capital
was SEK916 million for the six-month period ended June 30, 2001 a decrease of
SEK9 million from SEK925 million for the six-month period ended June 30, 2000.
This decrease reflects the combination of a decrease in income before taxes,
which was more than offset in our statement of cash flow by the addition of
unrealized exchange losses. We believe that this line-item represents a more
informative description of our underlying cash generation capability since it
excludes changes in working capital, which are primarily driven by differences
between product prices and volumes at period end. Cash flow from operating
activities before changes in working capital is not a GAAP-based measure of
liquidity or financial performance and should not be considered as a substitute
for operating earnings, net income, or other statements of operations data
computed in accordance with Swedish GAAP or U.S. GAAP. Funds depicted by this
measure may not be available for management's discretionary use.
Cash flow from operating activities was SEK1,362 million for the
six-month period ended June 30, 2001, an increase of SEK1,397 million from
negative SEK35 million for the six-month period ended June 30, 2000. This
increase occurred as a result of a release in working capital caused by a
decrease in inventory volumes through sales of previously stocked crude oil and
refined products.
In Sweden, we collect government excise duties imposed on petroleum
products at the time of retail sale and subsequently remit them on a monthly
basis to the Swedish government. Excise duties were SEK4,535 million for the
six-month period ended June 30, 2001 compared to SEK3,074 million for the
six-month period ended June 30, 2000. The delay between the time we collect
these funds and the time we are required to remit them to the government enables
us to use the cash to finance a significant portion of our working capital
needs.
Cash flow used in investing activities was SEK380 million for the
six-month period ended June 30, 2001 compared to SEK190 million recorded for the
six-month period ended June 30, 2000. This increased use of cash flow in
investing activities is the result of ordinary, variable investments related to
maintenance of the two refineries and day-to-day investments made during the
course of the period.
Cash flow from financing activities. As a result of group contributions
paid in 2001, there was negative cash flow used in financing activities of
SEK313 million for the six-month period ended June 30,
18
<Page>
2001 compared to a positive cash flow from financing activities of SEK800
million for the six-month period ended June 30, 2000.
CREDIT ARRANGEMENTS, SHAREHOLDER INVESTMENT AND INTERCREDITOR
ARRANGEMENTS
As of June 30, 2001, we had total debt of SEK5,387 million and an
additional SEK1,852 million of available unused commitments. Our long-term debt
(excluding long-term bank overdraft facilities and shareholder loans) amounted
to SEK3,302 million as of June 30, 2001, the current portion of which was SEK807
million. We also had drawings under long-term bank overdraft facilities of
SEK196 million and drawings under short-term debt of SEK1,889 million. These
loans and facilities are provided by various international banks. Our long-term
debt as of June 30, 2001 included SEK1,138 million incurred to finance the
desulphurization plant at Preemraff that became operational in 1997. This plant
was financed through a sale and leaseback financing that runs through the year
2023. As of June 30, 2001, our indebtedness bore interest at a weighted average
rate per year of 5.8%.
In addition, as of December 31, 2000, we owed SEK2,259 million to
Corral Petroleum Holdings AB in the form of an interest-free subordinated
intercompany loan with no maturity date. We used a portion of the proceeds from
the offering of the existing notes to repay a portion of this loan.
19