Sampo offers investment, savings and traditional banking services to retail, corporate and institutional customers. These services are provided through Sampo’s web bank and phone bank, through its branch network in nearly 100 cities and towns in Finland, and through the eight Mandatum offices located in the major cities and focusing on private banking services. The branches help customers to plan their finances, while the web bank is the most common channel for routine banking transactions.
Sampo’s business areas are long-term savings (pension and life insurance, asset management and mutual funds), retail, corporate and private banking, and investment banking. Sampo’s goal is to be the leading Finnish company in these areas. There are good prospects for growth because Finns have both more reason and more opportunity to save than they did before. As the population grows older, there is increasing public discussion on the adequacy of pension security. This, combined with the current small amount of household savings in fund and life insurance products, makes Finland the fastest growing investment and savings market in Europe.
Essential to Sampo’s strategy is the conviction that it need not do everything itself. Sampo’s customers will get the best overall service when Sampo links up with strategic partners to provide those products or services it cannot effectively produce itself. These include the partnership with leading foreign asset managers in Sampo’s funds, and the property & casualty insurance services which Sampo integrated into If, the biggest Nordic P&C group, at the beginning of 2002.
Dividend per share, EUR **) 0.35 0.75 –53.3 *) Full tax liability deducted. **) Proposed dividend for 2002. Internal dividends and sales profits between business areas have not been eliminated in analysing the results of banking and investment services or of insurance – in either the breakdowns or the key figures. The above-mentioned items have been eliminated from the Group’s operating profit. In addition, the profit/loss corresponding to the ownership share in the If Group has been added to/deducted from the operating profit. For this reason the Group,s operating profit is not the same as the sum of the operating profits of the business areas
RONAV = Net Operating Profit (taxes 29%) / Net Asset Value 1 Group Key Figures 2 Chief Executive Officer’s
Review 4 Sampo Highlights 2002 5 Business Area Reviews 6 Banking 6 Retail Customers 8 Mandatum Private Bank 9 Corporate Customers 10 Long-term Savings 10 Life Insurance 11 Mutual Funds 11 Asset Management 12 Investment Banking 14 Realty World 15 If P&C Insurance 16 Main legal structure 17 Corporate Governance 20 Board of Directors 22 Group Executive Commitee 24 Staff 26 Corporate Responsibility 28 Shares and Shareholders 32 Financial Statements and Notes 33 Board of Directors’ Report 41 Consolidated Profit and Loss Account 44 Consolidated Balance Sheet 49 Parent Company Profit and
Loss Account 50 Parent Company Balance Sheet 51 Notes to the Accounts 51 Risk Management 61 Accounting Policies 70 Calculation Methods for the
Key Figures 74 Key Figures 77 Other Notes to the Accounts 124 Auditors’ Report 125 Contact Information 128 Analysis of Sampo 129 Financial Information
Statutory pension schemes are a good starting point, but they are not sufficient in themselves to prevent a significant drop in income after retirement. Additional voluntary pension savings will be needed to provide for a reasonable degree of financial freedom. Indeed, Finns seem to have noticed this. Compared with 2001, when 55,000 pension insurance policies were written in Finland, by 2002 the number had risen to 85, 000. Over the same period, the average pension insurance premium, i.e. the sum paid by an individual pension saver in one year, actually decreased. This is a result of the fact that in 2002 pension insurance started to become the preferred way of saving for the average Finn.
Planners of reforms to our tax systems should remember that savings and pension insurance are important means for those with small and medium incomes to prepare for the future. The tax benefits involved are necessary to provide the incentives and indeed the opportunity to save. No tax reform should aim only at shortterm increases in revenue, because such changes may, in the worst case, significantly impair the growth prospects and savings ratio of the economy.
In the corporate customer segment we implemented our focusing strategy, and are now ready to strengthen our market position also among Finnish companies and institutional customers.
Sampo Bank already holds a nearly 40 per cent market share of corporate payment transactions and is a strong player in the supply of financing and cash management services. Sampo is the clear market leader in capital market services for corporate and institutional customers. Sampo’s capital markets unit has long held the number one spot in its own area, while Mandatum dominates in investment banking services for Finnish companies. Sampo also sets the pace in the corporate life insurance market.
Of significance to shareholders is the fact that Sampo dramatically reduced its risk positions in 2002. We transferred our property & casualty insurance businesses to the If Group and sold the majority of the former Finnish Export Credit project and export financing receivables to Landesbank Schleswig-Holstein Girozentral (LB Kiel). Sampo was also able to report a reasonable, if not good, investment performance in difficult capital market conditions.
In September Sampo became the largest fund management company in Finland.
Sampo announced that it had adopted an open architecture in the management of its mutual fund portfolios. The leading international manager in the field is chosen for each mutual fund through a strict selection process.
Rationalisation negotiations concerning the Sampo Group’s administrative and support services were concluded. The number of staff working in Group administration and support services would be reduced by 489, and in Sampo’s associated company If Finland-based staff with similar tasks would be reduced by 250. The main part of this reduction was implemented through support and pension arrangements, the outsourcing of certain functions, and through staff retraining for customer service and sales tasks.
Sampo sold export and project financing receivables with a capital value of EUR 1.3 billion, which represented the majority of its foreign long-term financing receivables, to Landesbank SchleswigHolstein Girozentral (LB Kiel). This was linked to implementation of Sampo’s strategy which was approved in 2001.
Mandatum Asset Management’s hedge fund business and 3C Fund Management merged to form a new company, 3C Asset Management Ltd. In the initial phase Sampo owns 56 per cent of the new company, with the remaining 44 per cent owned by 3C’s key personnel.
Sampo plc announced that it had acquired almost five per cent of the share capital of AS Sampo Pank from minority owners. As a result Sampo owns almost the entire share capital of AS Sampo Pank. Sampo Pank is the third largest bank in Estonia.
Sampo Institutional Liquidity Fund became the first Finnish mutual fund to exceed EUR 1 billion.
Campaigns launched during the spring - to encourage clients to discuss their banking requirements – are reflected in Sampo’s market shares. Sampo Fund Management became Finland’s largest fund management company measured in Finnish capital.
Sampo plc’s fully-owned subsidiaries, Sampo Business Properties Ltd and Mandatum Holding Ltd were merged into Sampo plc.
The demand for Sampo’s financial advice services increased rapidly and 60,000 customers booked an appointment to come to a branch office to discuss their financial plans. The new service approach has been well received by customers, and has helped the bank’s retail customer network to sell a record number of mutual funds and life and pension insurance policies.
During 2002 the public image of Sampo as a bank and as an investment and savings expert became well-established, even though its strong image as a P&C insurance company slowed down the transition. Separating P&C insurance under the If brand will help to build a strong Sampo brand.
Sampo’s banking operations will grow in the future by capitalising on changes in the savings and investment markets. Sampo’s 6 Business Reviews share in its target markets will grow through its active and professional sales efforts.
The uncertain market situation created demand for the “Equity Deposit” product introduced by Sampo, which secures the customer ’s capital and yields a fixed rate of interest. In addition, the “Equity Deposit”offers the opportunity to make a good return as share prices rise.
Baltic region and Poland Sampo has subsidiary banks in Estonia and Lithuania and life insurance companies in all three Baltic states and in Poland. Sampo also has a pension fund management company in Poland.
Retail customers were the main focus of Sampo’s banking operations in the Baltic area in 2002. In Estonia, the number of retail customers was more than doubled to 60,000, while in Lithuania it rose to 4,500. Growth was particularly strong in home loans. With respect to corporate customers, growth was more moderate, with special attention being paid to customer selection and the management of credit risks. In Estonia, a strong position was also achieved in the management of new employee pension funds. By the end of the year, Sampo’s market share had risen to 14.5 per cent.
2002 was a challenging year for asset management. Uncertainty continued in both the fixed income and equity markets and there was increasing concern over economic growth in Europe. For this reason low-risk strategies were emphasised in investment portfolios. Absolute return strategies were introduced as a new, powerful theme in investment. Despite the difficult market, Mandatum Private Bank’s assets and number of customers continued to develop positively. At year’s end assets under management totalled nearly EUR 2 billion.
Close to the customer – access to a wide range of international services
At the end of the year under review, Mandatum Private Bank had branches in Helsinki, Jyväskylä, Kuopio, Lahti, Oulu, Turku, Tampere and Vaasa, and relationship managers in Espoo, Kouvola and Vantaa. The customers of Mandatum Private Bank are also served by the Mandatum Direct telephone bank and web bank. In 2002, the information systems of Mandatum Private Bank were integrated with Sampo Bank’s systems. Thus, the customers of the private bank can benefit from all the services provided by Sampo Group.
In the spring of 2002, Mandatum Private Bank created a new Family Office for the purpose of managing the wealth of extended families and especially the assets of family-owned investment trusts and foundations. In addition to asset management, the Family Office also assists its customers in managing and monitoring other kinds of property.
The more than 80,000 active corporate customers of Sampo Bank are served by over 250 customer account managers in 55 branches. Services for large corporate and institutional customers are provided through specialised units. The named customer account managers in these units cooperate closely with Group companies and with If P&C Insurance Company and Varma-Sampo. They also ensure that customers have access to all the services that suit their needs. The service mix is supplemented by call center units and electronic service channels.
Sampo maintained a strong position in traditional banking products, particularly in customer cash management, deposits and payment transactions. Market shares in investment products continued to grow strongly. Corporate and institutional customers improved their cash management during the year by increasingly using mutual funds.
Sampo withdrew from new lending for export and project financing in 2001. In the spring of 2002, Sampo sold its export and project finance portfolio valued at EUR 1.3 billion. The focus has now shifted to lending for Finnish or Finland-based companies and institutions, and active growth is sought in these customer relationships. Despite the uncertain economic situation, credit losses have been minor.
Financial services of a more comprehensive nature than traditional banking services are provided to large corporate customers through customer teams led by customer account managers. Net lending to large corporate customers declined somewhat due to reduced demand for finance compared to the previous year and tight price competition. Nevertheless, Sampo’s position as a major provider of finance to large Finnish corporations continued to be strong. Moreover, Sampo was able to apply significantly more resources to serving Finnish corporate customers after the sale of its export and project finance portfolio.
Sampo is the market leader in capital market services for corporate and institutional customers. The importance of these services is growing in Finland. In 2002, the capital markets team arranged four syndicated loans and 13 bond issues for its customers in various business sectors in Finland and Sweden. The most significant transactions were the bonds issued by Tornator Finance p.l.c. securitising Stora Enso’s forestlands (the first asset-backed transaction in the euro market using forest as collateral), the subordinated bonds by Rautaruukki and the bonds issued by Myllykoski, which was the first corporate rated by Fennorating.
The sales network’s sustained, dedicated efforts resulted in higher market shares in the areas of focus.
Life insurance – a successful year in a demanding market environment
Sampo Life nearly doubled its premiums written in unit-linked insurance in 2002, achieving growth of 82.9 per cent and raising its market share to 25.3 per cent. Significant factors contributing to this success were efficient sales channels and product development, and good cooperation with the fund management company. Sales of individual pension insurance policies also grew strongly, from 7,911 policies in 2001 to 20,064 policies in 2002, an increase of 154 per cent. In the retail customer segment, Sampo’s market share rose to 15.2 per cent. Excluding with-profit insurance policies, the market share was 25.0 per cent. Sampo Life acted successfully against market trends by increasing its sales of unit-linked policies and reducing the share of with-profit policies in contrast to its competitors, who focused on with-profit insurance.
Total premiums written on industry level in Finland increased by 2.1 per cent from the previous year, totalling EUR 3.3 billion. The decline in share prices made the solvency of life insurance companies a hot topic in Finland as well as elsewhere in Western
Sampo Life sells life and pension products through several distribution channels. Sampo Bank’s branch office network acts as the main distribution channel, and sales to the retail customer segment grew particularly strongly in 2002. In addition, various forms of co-operation with brokers and tied agents were used to increase sales of pension insurance. In sales to corporate customers, Sampo’s associated company, If, and co-operation company, Varma-Sampo, played an important role alongside Sampo Bank’s corporate branch network.
The quality and efficiency of service and production processes are important. The measures carried out in 2002 to improve efficiency lowered Sampo Life’s expense ratio to 97 per cent. The company will continue measures to improve cost efficiency in 2003.
Mutual fund sales were successful in both the retail customer and corporate and institutional customer segments. As in 2001, retail customers put their assets in low-risk alternatives, especially money market and absolute return funds. They invested in equity and balanced funds mainly through continuous fund savings plans. There were about 197,000 fund unit holders in Sampo at the end of 2002, up by 35 per cent from the previous year. With respect to corporate and institutional customers, the trend of using mutual funds as a more efficient liquidity management tool strengthened. In this regard, the Sampo Sweeper grew in popularity, attracting assets to Sampo Yhteisökorko (Sampo Institutional Liquidity Fund) which has become Finland’s biggest mutual fund.
Fund-based investment and saving are expected to become increasingly popular. The historically low interest rates, combined with the long decline in share prices, are expected to drive customers to look for alternatives to pure fixed income funds. Thus, funds with an absolute return objective and those whose investment policy follows the principles of sustainable development will become increasingly popular.
Asset management – still the biggest in Finland In 2002, Sampo strengthened its position in selected growth areas of asset management through acquisitions and by combining certain mutual funds and reorganising its portfolio management. Thus Sampo acquired a majority holding in 3C Asset Management Ltd., a Finnish pioneer in funds with absolute return objectives, and combined it with the corresponding operations of Mandatum. Amanda Capital Plc (former Finvest Plc) and the Sampo Group combined their private equity funds and investments under the management of Mandatum Private Equity Funds Ltd.
In 2002, Mandatum Asset Management Ltd. maintained its position as Finland’s largest asset manager for corporate and institutional customers. Despite the difficult market conditions, the number of asset management agreements and assets under management continued to increase. Including mutual funds and the Group’s own portfolio, the total assets managed by Mandatum Asset Management at the end of 2002 amounted to approximately EUR 15.7 billion (10.1). Group assets accounted for EUR 6.6 billion of this. Mandatum Private Equity Funds Ltd. managed approximately EUR 800 million, and 3C Asset Management Ltd. approximately EUR 400 million.
Sampo’s investment bank operates under the Mandatum brand. The investment bank consists of two separate companies: Mandatum & Co Ltd, which is responsible for corporate finance operations, and Mandatum Stockbrokers Ltd., which is responsible for brokerage and equity research.
In 2002 the operational environment for investment banking continued to be challenging. The economic conditions were difficult and the key stock indices at the Helsinki Exchanges decreased clearly (HEX General index
The economic uncertainty was also reflected in mergers and acquisitions and the number of transactions decreased globally by nearly 50 per cent compared to 2001. The number of share issues and initial public offerings (IPOs) also decreased compared to 2001 and especially to 2000.
Mandatum & Co – leading position in mergers and acquisitions strengthened Mandatum & Co’s year was successful taking into account the prevailing market conditions, and the company maintained its leading position as an advisor in mergers and acquisitions in Finland.
Despite a strong invasion of international brokers at the Helsinki Exchanges, Mandatum Stockbrokers ’ market share remained intact. Its share of HEX Oyj’s overall volume and number of transactions was 2.7 per cent and 5.0 per respectively.
During 2002 Mandatum Stockbrokers managed to increase its market share in several customer segments. In particular, the number of direct retail clients increased.
Mandatum Stockbrokers increased equity research directed mainly at domestic retail clients. In order to better meet customer needs and increased distribution efficiency, the company launched a new Internetbased research library and research database system: Mandatum Research Database (MRD).
In the difficult market conditions of 2002, operational volume and profitability may be seen as relatively good. Profitability was affected both by the challenging operational environment and continued tight competition that has pushed commissions to extremely low levels. Mandatum
During 2003 Mandatum Stockbrokers will develop all three of its business areas
Current resources offer an excellent platform to grow profitably if the market situation normalizes in 2003. Mandatum Stockbrokers is aimimg for significant growth in commissions. However, earnings development will be affected not only by general conditions on the stock markets, but also by prevailing environment for capital market transactions.
The market shares of domestic brokers at the Helsinki Exchanges in 2002
The year 2002 was Realty World’s thirteenth financial year. The chain brokered 9,104 real estate transactions and carried out 2,880 other assignments. The value of all real estate transactions brokered by the chain was EUR 913.8 million, providing gross earnings of EUR 34.6 million. Earnings grew by eight per cent compared with the previous year.
According to the advance information approximately 135,000 real estate transactions were completed in Finland in 2002, roughly the same number as in the previous year. The real estate market was quite active in the first half of the year, but experienced a decline – particularly in the demand for old apartments – in the summer. In the autumn, the number of transactions reached approximately the level of the previous year. The rise in apartment prices that started at the end of 2001 continued until the summer, varying between 7 and 15 per cent depending on the region. Price levels were fairly stable in the latter part of 2002. Despite the rise in nominal prices, the real prices of apartments are still generally lower than, or at the same level as, they were in the late 1980s.
Realty World is organised as a franchise chain and is the fourth largest franchise chain of all business sectors in Finland. At the end of the year, the chain comprised 81 real estate agencies in 50 localities and employed 387 people.
The central unit of the chain provides the agencies with services especially in the fields of bank co-operation, marketing, information systems and training. The independently owned and operated agencies are responsible for Realty World’s customer service and real estate agency activities. The benefits of independent ownership are strong local knowledge, flexibility in the market and cost-efficiency. The chain enables nationwide marketing and selling, and standardised, joint services for customers. Realty World’s values are customer-friendliness, integrity, openness, promptness and a desire for continuous improvement.
Sampo’s property and casualty (P&C) insurance has been a part of the Nordic If P&C Insurance Group since 2 January 2002. If is a long-term strategic partner of Sampo.
If has taken a variety of measures to lower costs and improve profitability. Cost savings have been generated by personnel reductions and synergy benefits in information technology, for example. For the most part, cost savings have occurred in support functions and have thus not affected the level of customer service.
Both the overall results and the results of the business areas have been successfully improved by premium increases and extensive profitability measures. If’s technical result was positive in 2002. The combined ratio fell from 113.1 per cent (pro forma) in 2001 to 106.1 per cent in 2002.
If’s investment results in 2002 were significantly affected by the global decline in share prices, partially offset by positive developments in fixed income markets. The overall return on investment activities was 2.1 per cent. During 2002, If successfully reduced investment risks by decreasing equity investments and increasing fixed income investments.
If’s operating result for 2002 was a loss of EUR 227 million (SEK 2,080 million).
The cost savings and other measures taken last year will also boost competitiveness and profitability in 2003. A cost-conscious approach is being applied in all operations. In the long term, the premium revisions will result in a more sustainable premium level. Premiums will still be increased in some business areas, but in the future these revisions will be largely based on claims experience. The strict underwriting guidelines will be applied also in 2003.
Main legal structure of Sampo 1 January, 2003 16 Main legal structure
3C Asset Management *) If is not part of Sampo Group. Sampo and VarmaSampo together hold 50 per cent of the votes in If.
Sampo’s Board of Directors has approved insider guidelines for Sampo Group. These guidelines are fully compliant with the insider guidelines of the Helsinki Exchanges, the insider and trading guidelines of the Finnish Association of Securities Dealers and the Finnish Association of Mutual Funds, the recommendations for insider guidelines covering investment activities issued by the Federation of Finnish Insurance Companies, and the regulations of the Financial Supervision Authority. Sampo Group’s insider guidelines are even stricter than the above-mentioned in matters concerning the Group Executive Committee, other corporate executives, and other specifically-named persons, as they must ask for separate written permission in advance for each securities transaction.
The Board of Directors approves the business strategy and long-term operating plans of Sampo Group, and the principles governing Sampo Group’s risk management and internal control, and is responsible for the proper management of the Group’s operations. The Board also decides, within the limits of the company’s field of activities, on exceptional and far-reaching matters with respect to the scope and quality of Sampo Group.
The composition of the Board of Directors of Sampo plc is as follows: Olli-Pekka Kallasvuo, Chairman Jyrki Juusela, Vice Chairman Tom Berglund, member Georg Ehrnrooth, member Paavo Pitkänen, member Christoffer Taxell, member Björn Wahlroos, member
The Risk Control Committee comprises the Chairman of the Board, one or two members elected from among the Board members, the CEO, the Chairmen of the Group’s Asset and Liability Committee, Investment Committee and Credit Committee, the member of the Group’s Executive Committee responsible for risk control and the Head of Risk Control, and any other members elected at the discretion of the Board. The Chairman of the Board acts as the Chairman of the Risk Control Committee. The Risk Control Committee comprises Olli-Pekka Kallasvuo (Chairman), Paavo Pitkänen, Björn Wahlroos, Kari Stadigh, Ilkka Hallavo, Mika Ihamuotila, Peter Johansson, Patrick Lapveteläinen and Petri Viertiö.
The Credit Committee is responsible for preparing the Group’s credit policy for approval by the Board, preparing credit risk limits and authorisations for the Boards of Group companies, monitoring the use of credit risk limits and authorisations, and making decisions in cases requiring the highest level of authority. The Credit Committee comprises Ilkka Hallavo (Chairman), Jukka Apajalahti, Jarmo Lankinen, Patrick Lapveteläinen and Aki Palo (expert member).
Chief Executive Officer The company has a Managing Director who is simultaneously the CEO of Sampo Group. The Board of Directors elects and releases the CEO, and decides on the terms of employment and other compensation. The Managing Director of the company and the CEO of Sampo Group is Björn Wahlroos.
According to Sampo’s Articles of Association, the Annual General Meeting decides on the remuneration of members of the Board. The Board decides on the employment terms and other compensation of the CEO and other members of Sampo Group’s Executive Committee.
The Chairman, Vice Chairman and members of the Board of Directors will be paid the following remuneration monthly until the close of the Annual General Meeting in 2003: the Chairman EUR 4,200, the Vice Chairman EUR 3,360, and other members of the Board EUR 2,520. In addition, all members of the Board will be paid EUR 420 for each meeting of the full Board or one of its sub-committees. Members of the Board will be paid a daily travel allowance corresponding to the maximum, valid, tax-exempt travel allowance permitted by the tax authorities and will be reimbursed for accommodation and travel expenses.
The CEO was paid a total of EUR 750,300 in salaries and profit bonuses for 2002, and the Deputy CEO a total of EUR 466,172.
Sampo plc’s Board of Directors is appointed annually by the Annual General Meeting. The present members of the Board were elected by the Annual General Meeting on 10 April 2002.
Managing director, Chairman of the Group Executive Committee of Outokumpu Oyj.
He holds 4,905 Sampo plc shares directly or through a controlled company.
He was appointed member of the Board of Directors of Sampo plc on 25 May, 2000.
Chairman of Assa Abloy AB (publ) and VarmaSampo Mutual Pension Insurance Company, Vice Chairman of the Board of Rautaruukki Corporation, member of the Boards of Nokia Corporation, Wärtsilä Corporation, Karl Fazer Oy Ab and Sandvik AB. He was appointed member of the Board of Directors of Sampo plc on 26 June, 1992.
He holds 3,600 Sampo plc shares directly or through a controlled company.
Member of the Boards of Wärtsilä Corporation and Stora Enso Oyj. He was appointed member of the Board of Directors of Sampo plc on 22 January, 1999.
Chairman of the Board of Finnair Oyj (as of 1 January, 2003), member of the Boards of Raisio Yhtymä Oyj (as of 1 January, 2003) and Stockmann Oyj Abp, and Chairman of the Board of Stiftelsen för Åbo Akademi (as of 1 January, 2003). He transferred to the Board of Directors of Sampo plc from the Supervisory Board on 1 January, 1998.
Member of the Board of Varma-Sampo Mutual Pension Insurance Company. He was appointed member of the Board of Directors of Sampo plc on 5 April, 2001.
He holds 60,380 Sampo plc shares directly or through a controlled company. Options (1998 programme): 51,000 Options (2000 programme): 50,000
He holds 500 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 50,000
Petri Niemisvirta, Björn Wahlroos and Peter Johansson. Kari Stadigh, Mika Ihamuotila, Sten Eklundh and Ilona Ervasti-Vaintola.
Member of the Boards of If P&C Incurance Holding Ltd, Meridea Oy, the Research Institute of the Finnish Economy, and the Deposit Insurance Fund of the Commercial Banks and Postipankki Oy.
Member of the Boards of If P&C Incurance Holding Ltd and EQT Finland.
He holds 80,485 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 50,000
Supervisor training started The first group took part in a renewed training programme for supervisors in September. Supervisor training aims to develop the leadership skills of Sampo’s supervisors. In addition, a Supervisor Workshop was constructed on the intranet as another way of supporting the supervisors. It offers answers to practical management questions.
Planning started on the new Sampo Business School education programme during the latter part of the year. It aims to improve Sampo’s competitiveness particularly in the areas of investment and savings, and business expertise. The actual implementation phase will start in the spring of 2003.
Positive results in staff survey The response rate was nearly 70 per cent in the staff survey conducted in September. The overall satisfaction of Sampo employees was rated as 8 on a scale of 4 to 10. Branch managers and department heads were the most satisfied groups of employees.
According to the survey, factors essential to job satisfaction, such as management culture, atmosphere, a sense of being appreciated and having clear goals and the opportunity for development provide a good basis for productive work. The staff feel that they know the strategic focus areas of Sampo and are committed to them. The intention is to follow the development of staff satisfaction each year.
Sampo Group’s Co-operation Board had eight meetings during the year. The purpose of the board is to promote and develop co-operation between the employer and the staff, and within the staff, as well as to implement the Act on Co-operation within Undertakings in the Group. The committee has 15 members, of whom eight represent clerical personnel, two represent supervisors and specialists and five represent the employer.
The participation of staff representatives on the Boards of Directors of Sampo Bank and Sampo Life was continued. The staff representatives have the right to be present and to express opinions.
In 2002, ethical issues received a lot of international attention. The Kyoto Climate Protocol and the resolutions of the Johannesburg World Summit prompted much discussion. Accounting irregularities and malpractice in different parts of the world caused a lot of concern. Declining employment in many countries due to slow economic growth also raised questions concerning the ways in which job reductions are implemented and income is divided. As a result of the anti-terror campaign there was general discussion about defining the line between privacy protection and collective security. In the financial sector, money laundering was particularly in the spotlight in this context.
Ethicality means that Sampo offers customers the solutions that meet their actual needs.
The Union of Salaried Employees (TU) has included voluntary pension saving in their membership benefits. In Finland, this new kind of membership benefit is only available at Sampo and has been offered to TU members since January 2003. The large TU membership (more than 120,000 members) is offered supplemental pension security by means of pension saving or continuous fund saving. The savings can be used to increase income while on pension or already before it in the event of becoming unemployed or unable to work. Sampo was the first in Finland to create a pension saving scheme based on sustainable development.
Sampo fulfilled its duties as a corporate citizen by sponsoring sports, culture and bio-technical research. A new sponsorship target was the Sibelius web site. Other long-term targets were the Finnish Association of People with Mobility Disabilities, the Finnish National Opera and the Salmela Art Centre.
Loyalty Loyalty is closely connected to Sampo’s customeroriented approach. Sampo provides service packages based on customer needs and is transparent in its product pricing policy. Customers are invited to spend “an hour with Sampo” in Sampo’s branches to discuss their money matters. The purpose of these meetings is not to present products, but to find the service packages that best fit the customers’ current situation and future needs.
The content of Sampo’s Internet service channel was expanded and clarified, and the pages were made more interactive than before.
A paperless pilot report was produced as a foundation for future environmental, social and staff reporting. Work will continue on this project. Information was also gathered on sustainability indicators and is available on Sampo’s web site.
Enterprise In order to promote enterprise throughout the organisation, Sampo focused on further developing its incentive systems and staff competence. The idea is to reward initiative and activity in customer
Internally, the Group aims to create and maintain a good and safe working environment. This involves fulfilling legal obligations, promoting recycling, reducing the amount of waste, handling hazardous waste safely and reducing paper consumption. Most purchase invoices are already handled in electronic form.
About a dozen projects are underway to promote recycling and decrease the amount of waste and paper consumption. The environmental training of the staff will be implemented as a part of safety training during 2003. Sampo also monitors the environmental programmes of its partners and subcontractors, and how these programmes are carried out with respect to staff dining arrangements and property maintenance, for example.
Shares and Votes The Articles of Association state that Sampo plc’s share capital can be at minimum EUR 30,105,638.84 and at maximum EUR 120,422,555.30. On 31 December, 2002, the company’s share capital was EUR 93,560,969.79 divided into 556,288,265 shares, of which 555,088,265 were A shares and 1,200,000 were B shares. The approximate counterbook value of the shares is EUR 0.17. Each A share has 1 vote and each B share has 5 votes at a General Meeting. The A shares have been quoted at the Helsinki Exchanges since 1988. Kaleva Mutual Insurance Company owns all the B shares. In addition, Sampo’s A, B and C warrants of 1998 and A warrants of 2000 are quoted on the main list of the Helsinki Exchanges. The C warrants of Sampo plc’s Bonds with Warrants programme of 1998 have been traded since 2 May, 2002 and the A warrants of the programme of 2000 since 2 January 2003.
Changes in share capital During the year under review, 664,750 A shares with a counter value totalling EUR 111,802.92 were subscribed for in five lots with warrants of Sampo’s 1998 Option programme. The new shares have been traded at the Helsinki Exchanges since the entry of each lot in the Trade Register.
Authorisations given to the Board of Directors On 10 April, 2002, Sampo’s Annual General Meeting authorised the Board of Directors to buy back and convey Sampo shares. The maximum amount of A shares that can be bought back is 5 per cent of the company’s share capital or of the votes attached to the shares. The shares can be bought back in order to develop the company’s capital structure, to be used as consideration in acquisitions or other arrangements, or to be further conveyed or cancelled.
As a result of the subscriptions, the share capital can increase by a maximum of 16,500,000 A shares, or by no more than EUR 2.8 million, which equals approximately 3 per cent of the company’s share capital as of 31 December, 2002.
The share subscription price is the average trading volume weighted price of Sampo’s A share at the Helsinki Exchanges during the period 15–28 September, 2000, with an addition of 10 per cent and rounded out to the nearest 10 cents. The subscription price thus became EUR 55.70. The share subscription price is reduced by the amount of dividends paid.
Due to the split and dividend distribution implemented in the spring of 2001, the share subscription price is EUR 8.79. If the Annual General Meeting approves the Board’s proposed dividend distribution for 2002, the subscription price will decline to EUR 8.44.
Shareholders There were 45,730 registered shareholders on 31 December, 2002. 1.52 per cent of all shares had not been transferred to the book-entry securities system. 30.47 per cent of the share capital was under foreign ownership, amounting to 30.21 per cent of the votes. Almost all foreign shareholders have nominee-registered holdings.
Decrease in share capital 4 May 2000 Cancellation of shares bought back (1,520,000 A-shares) –1,520,000 50.86
Decrease in share capital 3 July 2000 Technical decrease – 49.85
Merger consideration, A shares 31 December 2000 Leonia shareholders, 44,720,000 87.46 i.e. the State of Finland
Exchange offer consideration, A shares 7 February 2001 Mandatum shareholders 4,754,255 91.46
Bonds with Warrants of 1998, 28 November 2001 Warrant conversion 38,550 93.45
The direct or indirect ownership of Sampo of the Chief Executive Officer and the members of the Board of Directors amounted to 11,858,395 shares. Their total holdings constituted 2.1 per cent of the share capital and of the votes.
Dividends and dividend payment policy According to the dividend payment policy approved by Sampo’s Board of Directors, the company’s goal is to distribute half of its profit for the financial year in dividends. The Board will propose to the Annual General Meeting that a dividend of EUR 0.35 per share be paid for 2002.
In previous years, dividends have been paid as follows (the figures have been split-corrected, converted to EUR and rounded out): *) Board proposal to the Annual General Meeting
Shareholders who have not transferred their share certificates to the book-entry securities system by the dividend record date will be paid their dividends after the shares have been transferred to the book-entry system.
Shareholders at 31 December, 2002 Number of % of share- % of A and B shares shares capital votes
Others in total 61,156,493 10.99 10.90 *) 10,317,955 A shares and 1,200,000 B shares.
Shareholders by number of shares owned at 31 December, 2002 Shareholdings Number of Number of A and B shares shareholders % shares %
*) Each nominee register is included in this figure as one single owner.
Banking profitability remained quite good in the year under review, although the operating profit declined to EUR 252 million (296). The operating profit for life insurance was EUR 86 million (79) and solvency capital amounted to 12.9 per cent of technical provisions on own account (14.7). The operating profit of the holding company was EUR 277 million (372). The share in the result of the associated company, If, weakened the Group’s result by EUR 69 million.
In 2002 Sampo strengthened its market share in its areas of focus. In the mutual fund business Sampo became the market leader achieving a 24.5 per cent (18.4) market share by the end of the year under review. The market share of Sampo Life in unit-linked insurance grew to 25.3 per cent (14.5) and in the retail customer segment to 15.2 per cent (14.1).
Sampo outsourced its insurance business IT services to Primasoft Oy (formerly Tietoleonia Oy), a company jointly owned by Sampo and TietoEnator, on 1 January 2002. Primasoft is owned 20 per cent by Sampo plc and 20 per cent by Sampo Bank plc. The Sampo Group has 60 per cent of the voting rights.
On 2 August 2002, Sampo plc redeemed almost 5 per cent of the share capital of AS Sampo Bank in Estonia from its minority shareholders. Sampo became the sole owner of AS Sampo Bank on 6 February 2003 when the redemption procedure for all outstanding shares was concluded.
Administration On 10 April 2002, the Annual General Meeting reelected the entire Board of Directors, which thus comprises Tom Berglund, Georg Ehrnrooth, Jyrki Juusela, Olli-Pekka Kallasvuo, Paavo Pitkänen, Christoffer Taxell and Björn Wahlroos (CEO of Sampo plc). At its inaugural meeting, the Board re-elected Olli-Pekka Kallasvuo as Chairman and Jyrki Juusela as Vice Chairman.
The Annual General Meeting decided to elect one auditor for the company and that the auditor would be Ernst & Young Oy until the closing of the next Annual General Meeting.
During the period 29 August – 31 December 2002, a total of 2,434,400 A shares were bought back in public trading on the Helsinki Exchanges. The combined counter book value of the shares is approximately EUR 410,000. As the shares thus acquired represent about 0.44 per cent of the share capital and about 0.43 per cent of the votes attached to all shares, the transactions had no significant effect on the proportions of shareholdings and votes of the company’s other shareholders. The total price paid for the shares was EUR 16.0 million, equivalent to an average of EUR 6.59 per share. With respect to the share buy-back programme, Group companies owned 2,434,400 shares of the parent company at the end of the financial year. Sampo’s wholly owned subsidiary, Satura, held 23,175 options issued by the parent company.
mately 4.96 per cent of the votes attached to the shares. The authorisation was not utilised in the financial year.
In spite of falling interest rates and the reduction in balance sheet money and capital market assets, net income from financial operations remained fairly steady at EUR 448 million (469). The 12-month moving average of the interest spread between deposits and lending was 3.4 per cent (3.9). One factor contributing to relative stability of the interest spread is the action taken early in the year under review to bring interest rates in deposits into line with market conditions.
reduced trading volumes in stockbroking in the summer. In the second half of the year profitability and market share developed favourably.
The total assets under the management of Sampo PTE, a pension fund company operating in Poland, grew by over 35 per cent to EUR 227 million. The pension fund managed by the company has > Sampo plc Board of Directors’ Report 2002
440,000 members. The company recorded a profit in the year under review.
Net provisions for bad and doubtful debts in the profit and loss account were EUR 1 million positive (–16). During the financial year, new provisions for bad and doubtful debts and write-offs were made totalling EUR 26 million (36), while recoveries of loans previously written off and releases totalled EUR 27 million (20). At the end of the year, provisions pooled by customer group defined on the basis of credit ratings were EUR 31 million (31). At the end of the year, nonperforming loans totalled EUR 77 million (109) and other non-interest-earning loans EUR 2 million (9). Of these, corporate and institutional customers accounted for EUR 38 million (81) and households for EUR 41 million (38).
Capital adequacy of the Group Because its operations are weighted more towards banking and finance than insurance, the capital adequacy of Sampo Group is calculated according to the provisions of the Act on Credit Institutions. The Group’s capital adequacy ratio was 17.3 per cent (12.7). The Tier 1 capital ratio was strong at 18.7 per cent (15.6). The Tier 1 capital ratio is higher because the parent company ’s holdings in insurance companies, which are deducted from the total capital, are greater than Tier 2 assets. The consolidated group comprises Sampo Bank Group, Sampo Credit plc, AS Sampo Pank, UAB Sampo bankas, Sampo PTE, Sampo Fund Management Ltd, Mandatum Asset Management Ltd, Mandatum Private Equity Funds Ltd, Mandatum Stockbrokers Ltd, Mandatum & Co Ltd, 3C Asset Management Ltd and the parent company Sampo plc.
Life insurance The core of the Group’s life insurance business is Sampo Life, operating in Finland. The business area also includes life insurance companies located in the three Baltic states, and Sampo TU Zycie in Poland.
Sampo Bank plc had following ratings on 28 February 2003: Short-term Long-term funding funding Moody’s Investors Service P–1 A2 Standard & Poor’s A–1 A
element were sold, which is 290 per cent more than the corresponding period last year. The majority, 87 per cent, of new pension policies were unit-linked. 64 per cent of all new sales were focused on unit-linked policies. There was a similar trend in the retail customer segment and 34,448 new insurance policies were sold, which is 48 per cent more than in the previous year.
Despite the difficult capital market situation, the solvency ratio of the Group’s life insurance companies remained good and stood at 12.9 per cent of technical provisions on own account (14.7). The corresponding solvency ratio for Sampo Life was 12.4 per cent (14.5). Sampo Life’s solvency margin was EUR 581 million (639), far above the company’s minimum requirement of EUR 197 million.
In order to prepare for an extension of lifetimes, the technical provisions of Sampo Life’s group pension insurance were increased in the year under review by EUR 21 million. Taking into account the total increases made earlier, the technical provisions include a provision of EUR 48 million for extended lifetimes. The sum is estimated to be sufficient to cover the known effects on technical provisions.
The holding company’s balance sheet total was EUR 3.0 billion. Of this amount, holdings in banking and investment services companies accounted for EUR 1.6 billion and holdings in insurance companies for EUR 0.5 billion. Other investments totalled EUR 0.5 billion. At the end of the year under review, the holding company had 90 full-time employees, compared with over 700 at the end of 2001. Staff numbers have been dramatically reduced, due especially to the outsourcing of IT operations.
Sampo’s associated company If is the leading Nordic P&C insurance company, with 3.7 million customers and a market share of 24 per cent. The company’s premiums written in the year under review totalled EUR 4.2 billion.
The decline in share prices weakened If’s investment income which was, however, partially improved by an upwards trend in the fixed income markets. In order to reduce the level of investment risk, If decreased the proportion of equities in its investment portfolio and increased the proportion of fixed income investments.
The IAS regulation lets member states decide whether they will permit or require the application of IAS/IFRS standards also to the individual annual accounts of listed companies or to the consolidated accounts or individual accounts of non-listed companies.
No decision has yet been made on the above matters in Finland. The Ministry of Trade and Industry has established a committee to clarify the need to amend legislation due to the recent development of the EU’s accounting norms. This IAS Regulation Committee will complete its work on 30 May 2003.
Outlook No strong recovery can yet be seen in the European economy. The Group will continue to implement its strategy. The focus will be on establishing new customer relationships and expanding the offering to old customers. In addition, the efficiency programme that has started well will be continued. Instability in the capital markets will complicate assessment of the business development of Sampo Group in 2003.
Strong growth in the sale of long-term savings products is forecast to continue. The market shares in Sampo’s areas of focus – the mutual fund business and selected life insurance segments – will probably increase further, but more moderately than in 2002.
Life insurance results are expected to develop favourably and the solvency ratio to remain good. In contrast to the actions normally taken in the sector, Sampo Life has, in practice, discounted its whole technical provisions at a 3.5 per cent interest rate. This will provide the company with a strong financial position in the future.
The profitability of the associated company If is expected to improve. Throughout 2003 the combined ratio will probably decline below the best quarterly level of 2002 (103.6 per cent). The company’s result is expected to be positive overall.
Net income from transactions in securities and foreign exchange dealing 2 from transactions in securities 15 25 from foreign exchange dealing 14 17
Depreciation and write-down of tangible and intangible assets 4 –32 –35
Write-offs in respect of debt securities held as financial fixed assets 5 0 0
Income from companies accounted for by the equity method 0 0
Cash and balances at central banks 25, 32, 66, 67 1,292 1,383
Loans and advances to customers 48, 50, 84, 85 13 23
P&C insurance operating protif (for period 1 Jan.–31 March 2001) – 423
Notes to the Accounts Risk Management 51 Notes to the Accounts 51 Risk Management 61 Accounting Policies 70 Calculation of Key Figures 74 Key Figures 77 Other Notes to the Accounts 124 Auditors’ Report
Management of credit risks Credit risks refer to variations in results caused by customers or counterparties failing to meet their commitments. Credit risks include counterparty, country and settlement risks.
The Group’s guidelines lay down uniform principles for credit risk taking, with the aim of ensuring good quality in the credit process. Sampo’s Board of Directors annually approves the credit risk policy which sets the parameters for risk appetite (expressed by economic capital) and allocation of credit risks. The targeted economic capital is set at a level below actual capital in the balance sheet. Lending is focused on customers operating in Finland. Limits are set for risk concentrations, measured by the ratio of a customer group’s nominal exposures to the Bank’s total capital as well as by the ratio of a customer group’s economic capital, calculated by a credit risk model, to the total economic capital.
The Group’s Rating Committee, which is independent of the credit decision process, decides on all significant ratings. The use of the credit decision -making authority is controlled by the limits set for countries, customers, customer groups and products and by reporting requirements.
The credit risk management system for corporate customers has the following elements. Each significant customer has a customer account officer who is familiar with the customer’s business and monitors its development. In addition, the customers with the biggest credit risks or largest exposures are analysed continually by a credit analyst, who is independent of the customer business units. The Group has an internal 12-stage creditworthiness rating scale, which covers more than 98 per cent of loans and other exposures to corporate and institutional customers in domestic banking and about 92 per cent of the corresponding loans and exposures in Sampo Group. The internal rating system has existed in its current form since 1997 and the defaults detected in the bank’s customer portfolio during the years 1997–2002 clearly support the default probabilities given to the rating categories. These refer to the possibility of future counterparty defaults, i.e. that customers will be unable to pay interest and loan instalments, and will be forced into corporate or debt restructuring or bankruptcy.
ment initiative has led to a better risk-return consciousness throughout the organisation and has therefore improved the quality of risk management.
Monitoring credit risks of corporate customers Credit risk monitoring is based on the continuous monitoring of both the macro-economy and individual customer business sectors, and customer creditworthiness, collateral values and covenants. In addition, the ratings of listed customers are monitored by Moody’s KMV® model which estimates Expected Default Frequencies (EDF) by combining information on company financial statements and stock market. Country, customer and product limits are monitored daily. To reduce credit risks, customer account officers draw up action plans for customers in the two lowest rating categories (L4 and L4–). The credit risks of the customer business units are reviewed systematically at least once a year, monitoring the appropriateness of credit decisions, categorising the customers and collateral, and implementing action plans created to reduce the risks of the customers in the lowest rating categories. The achievement of credit policy targets is followed monthly.
Credit risks in 2002 The figures in the tables describe the outstanding exposures of customers of Sampo Group, excluding the life insurance business outside Finland. The internal receivables of Sampo Group companies have been eliminated from the figures.
In terms of geographical area, 93 per cent of all credit risks were in EU countries. By the end of the year, Latin America exposures had fallen to EUR 19 million (118) and Asian exposures to EUR 153 million, a decrease of one quarter. Of the Asian exposures, Indonesia accounted for EUR 24 million (17) and Pakistan for EUR 3 million (4). Of Eastern European exposures, Estonia accounted for EUR 244 million (217) and Russia for EUR 2 (29) million. Exposures to Middle East countries were reduced by over a third to EUR 20 million, of which Turkey accounts for EUR 16 million (29).
Exposures to corporate customers were reduced during the year by EUR 1.4 billion. Analysed by industry, the greatest relative reductions were
Wholesale and retail distribution 866 11 960 10 35 per cent in information and communications technology (ICT) and 30 per cent in the forest industry. The ICT sector accounted for 6 per cent of corporate customer exposures and 1.9 per cent of all customer exposures. Abroad, Sampo Bank participated in financing for the network investments of several GSM operators, but the shares were small and did not include finance for any UMTS licences. About 69 per cent of the banking business exposures to corporate customers are secured by category I–IV collateral.
According to Moody’s KMV® model (figure) the median expected default frequency estimate for Finnish public corporates has remained at a substantially stronger level than the corresponding estimates for US and Western European corporates. Measured by Sampo’s credit risk model, the credit risk of corporate and institutional customers was maintained at the level of the beginning of the year. The average probability of default, weighted by exposures, rose slightly from 0.8 per cent to 0.9 per cent. The expected credit loss of corporate exposures remained at 0.4 per cent and the economic capital declined from 5.3 per cent to 5.1 per cent, which is substantially lower than the minimum capital adequacy level prescribed by > Risk Management
Median EDF™ of all listed companies, 1994 through 2002 1-year EDF (%)
Exposures in categories L4 and L4– by size of exposure 2002 2002 2001 2001
Size of exposure EUR m No. of customers EUR m No. of customers
Exposures in categories L4 and L4– by customer category 2002 2002 2001 2001
Exposures of customers in default by industry 2002 2002 2001 2001
Wholesale and retail distribution 8 8 24 12 authorities (8). Total economic capital decreased by 19 per cent from the level at the beginning of the year, due almost entirely to reduced exposures to corporate customers.
Analysed by rating categories, the relative share of exposures belonging to at least the L2– (BBB–) category stayed at 78 per cent. The total exposures included in the two lowest categories (L4, L4–) fell by one quarter from the level at
Exposures to customers in default and provisions for bad and doubtful debts
Due to recoveries, provisions for bad and doubtful debts were reduced by EUR 1 million compared with an increase of EUR 16 million in 2001. Net provisions for the bad and doubtful debts of corporate customers totalled EUR 2 million (18). New provisions for bad and doubtful debts have been on the decline for the past three years. The recoveries of provisions made for retail customers’ bad and doubtful debts were EUR 2.5 million higher than new provisions. In 2001, recoveries had exceeded new provisions by EUR 2 million. The amount of recoveries was significantly affected by the post-collection sale of receivables.
Trading-unit operates within limits and authorisations, which are monitored daily by an independent risk control function. ALCO guides the risk-taking of trading through limit setting.
Market risks arising from trading activities Market risks in trading arise from foreign exchange activity with customers and risk and liquidity management services related to customer business. A further source of risk is small-scale proprietary trading which supports the Bank’s ability to serve customers. Very little liquidity risk arises from trading.
In Sampo Group the credit institutions are Sampo Bank Group, Sampo Credit plc and the subsidiary banks in Estonia and Lithuania.
Retail market demand deposits and loans for customers comprise the core of the Sampo Bank’s euro-denominated banking book. The banking book also includes wholesale funding items, investments in money market and fixed income instruments and hedging derivatives. All of these items are used to modify the liquidity- and the interest rate risk exposures of the banking book and capital adequacy in general.
Market risks of the banking book The main market risk of euro-denominated banking book is the interest rate risk. This is
Portfolio effect –59 –99 –89 –285 –397 –642 –7 –14 0
manifested, when rates are falling, in a deterioration in the net income from financial operations and in the value of banking book.
Interest rates fell in all maturities in 2002, apart from a slight rebound in the spring. The hedging contracts made in previous years, when interest rates were higher, supported net interest income as the rates decreased. During the year the interest rate exposure of euro-denominated banking book was kept as small as possible, due to uncertainty about interest rate trends. On 31 December, a hypothetical 1 percentage point interest rate rise would have improved the value of Sampo Bank’s euro-denominated non-trading position by EUR 40 million. With respect to the whole of Sampo’s banking and investment services the improvement would have been EUR 34 million.
Liquidity risks in banking book Liquidity risks can be defined as earnings volatility caused by changes in funding costs, or as problems in the availability of funding. Liquidity risks arise in situations of general credit market turmoil or a lack of confidence in individual borrowers.
The great majority of Sampo Bank’s funding comes from liabilities to customers. This includes deposits in the current and payment transaction accounts of private persons and companies and other deposits on market terms. Sampo Bank’s liquidity structure on 31 December 2002 was as in the enclosed table.
The investment operations of Sampo Life aim at achieving the highest possible returns at acceptable levels of risk, to ensure that Sampo Life will always and under all circumstances exceed the required solvency ratio and will have sufficient and structurally suitable investment assets to cover the company’s technical provisions. The biggest risks threatening investment performance are decreases in the value of the investment, and returns that are lower than that required by technical provisions. The intention is to limit these risks by diversifying the investment portfolio as far as possible by instrument, sector and country. Currency risks are managed by keeping assets and liabilities sufficiently balanced across currencies or by using derivatives to hedge against currency risks. If necessary, derivatives are also used to hedge the investment portfolio against value decreases.
Sampo Life’s Board of Directors annually approves the company’s investment policy which defines the target distribution of the investment portfolio, the limits by instrument, the organisation of investment activities and the authorities to make and execute decisions. In allocating assets, the structure of the company’s technical provisions and risk bearing ability at any given time are taken into account. The investment risks are monitored by sensitivity analysis. In this case, standard deviations by types of asset, approved by Sampo’s Board of Directors, are used in calculating the long-term risk of value changes in the investment portfolio. In calculating the overall risk, it is assumed that all markets calculate their standard deviations at the same time.
The investment policy also includes guidelines on the use of derivatives. The maximum possible risk when using derivatives is monitored every month using the Value-at-Risk technique.
Sampo Life’s Board of Directors annually approves the risk management plan concerning the risks of the entire insurance company.
The year 2002 was challenging one for investment operations. The investment portfolio was slightly re-allocated to increase the proportion of equities by about 2 per cent and decrease the amount of interest-bearing instruments and the interest risk, while keeping the proportion of property investments roughly unchanged. The distribution, current values or valuation differences of the investments of life insurance operations are presented in note 40 in the notes to the accounts. The largest shareholdings are listed in note 42.
Trading items are reported at the shortest maturity and market value. Account assets are reported at different maturities.
Due to changes in exchange rates, assets and liabilities in different currencies do not balance, because the table does not include derivative instruments.
to limit both individual compensations and the catastrophe accumulation to be paid for a single loss. The company’s Board of Directors determines the maximum amount of compensation for its own account.
The recommendations of the Basel Committee on capital adequacy calculations for banks will take effect at the end of 2006. The European Commission is currently preparing new European legislation for the implementation of the reform. The new legislation will form a foundation for changes in the national legislation of all EU member countries. The new regulations on capital adequacy will concern all credit institutions and investment services companies in the countries of the EU. The relevant EU directives are to take effect simultaneously with the recommendations of the Basel Committee.
The consolidated accounts of Sampo Group have been prepared in accordance with the Decree of the Finnish Government on the consolidated accounts of financial services and insurance groups. The annual and consolidated accounts of the parent company and the banking and investment services companies of the Group have been drawn up in accordance with the provisions of Chapter 4 of the Act on Credit Institutions, the Decree of the Ministry of Finance on the annual and consolidated accounts of credit institutions and investment services companies, and the regulations of the Financial Supervision Authority. The annual accounts of the insurance companies of the Group have been prepared in accordance with the provisions of Chapter 10 of the Insurance Companies Act, the Decree of the Ministry of Social Affairs and Health on the annual and consolidated accounts of insurance companies, and the instructions and regulations of the Ministry of Social Affairs and Health and the Insurance Supervision Authority.
Companies which have no material impact on the performance, financial position and distributable capital and reserves of the Group have been excluded from consolidation. Such companies are Sampo Bank’s subsidiary and associated undertakings with a balance sheet total under EUR 10 million, as well as the 20–50 per cent owned housing and property companies of insurance companies and mutual insurance companies, where the owner of guarantee capital is entitled only to the guarantee capital and the interest paid on it.
Details of the subsidiary and associated undertakings included in the Group accounts are given in note 94.
Those of Sampo Bank’s subsidiaries which are engaged in other than banking and investment services have been dealt with by using the equity method of accounting. Primasoft Oy, the 60 per cent owned IT subsidiary of the Group, is treated using the equity method and included in the figures of banking and investment services and holding company business in proportion of their holding in Primasoft.
Minority interests in the profits for the financial year and capital and reserves of subsidiary companies are presented as a separate item in the profit and loss account and in the balance sheet.
Associated undertakings Associated undertakings are included in the Group accounts by using the equity method of accounting.
The amount of the valuation difference corresponding to Sampo Group’s shareholding is treated as a change in accounting practice and included in
Exchange rate differences arising from investments and insurance business are broken down in note 13 “Net investment income”.
In the consolidated profit and loss account, the lease payments less depreciation according to plan is included in “Interest receivable”. The additional depreciation, which is actually write-downs of lease assets, is included in “Provisions for bad and doubtful debts”. Other income from and expenses on lease assets are included in the item that corresponds with their nature.
In the profit and loss accounts of individual Group companies, “Net income from leasing activities” includes additional depreciation and profits and losses on the disposal of lease assets, fees and commissions, and other income and expenses relating to leasing activities.
The market value of listed securities is regarded as the last transaction price on the balance sheet date. The market value of unlisted debt securities is estimated as the net present value of future cash flows discounted at the current market rate, and that of equity shares as the acquisition cost or the lower probable market value.
The unrealised profits and losses arising from valuation of the securities held for trading purposes are included in “Net income from transactions in securities”.
Securities held as financial fixed assets: Securities held as financial fixed assets consist of treasury bills and other eligible bills and debt securities acquired with the intention of holding them until maturity. In addition, shares and participations in companies needed in order to acquire services ancillary to banking, and in subsidiary and associated undertakings, are treated as securities held as financial fixed assets.
Tangible assets Properties are stated at cost, less depreciation according to plan. The cost includes the direct expenses of purchase and improvements in properties.
Other tangible assets are stated at cost, less depreciation according to plan.
The fair values of properties and property companies are estimated following the Group principles, which are presented below under “Life insurance business”.
Other investments Shares and participations that can be characterised as investments are stated at the lower of cost and current value. Shares and participations that can be characterised as fixed assets are stated at the lower of cost and current value, less any permanent diminution in value.
Debt securities include bonds and money-market instruments. They are primarily stated at cost. The premium or discount at which securities have been purchased, is amortised over the period to maturity, adjusting the cost of the security and interest income.
The current value of publicly traded shares and debt securities is stated as the latest selling price on the balance sheet date or, if this is not available, the buying rate.
Revaluations and reversals of them made on investments that can be characterised as fixed assets are included in the revaluation reserve under “Undistributable capital and reserves”. If the current value increases, write-downs made before are written back, but only to the amount of the initial cost of the item.
Intangible and tangible assets Intangible and tangible assets are stated at cost less amortisation according to plan. Long-term expenditure includes IT systems and improvements made in rented premises. Tangible assets include equipment.
The zillmerisation of individual life and pension insurance and capital redemption policies, which has been deducted from the premium reserve, has been planned in such a manner that the future expense loading will be sufficient to cover related amortisations and future operating expenses. The amortisation period of zillmerisation is no longer than the insurance period. However, in a Finnish life insurance company it is no longer than six years.
Principle of fairness in life insurance According to Chapter 13, Section 3 of the Insurance Companies’ Act, the Principle of Fairness must be observed in life insurance with respect to policies > Accounting Policies
Provisions for bad and doubtful debts Provisions for bad and doubtful debts consist of specific provisions made for loans and advances to credit institutions and customers, and for contingent liabilities and commitments and amounts written off these items.
The loans classified as bad debts are written off when the authorities have confirmed the insolvency of a customer. In assessing the amount of a provision, the assets pledged as collateral have been valued at their fair values.
Recoveries of loans and advances and other items previously written off, releases of provisions, and
Non-performing loans Loans are regarded as non-performing if either the principal or the interest on a loan become overdue by 90 days. Loans to companies declared bankrupt are classified as non-performing on the date that the bankruptcy is declared. Bank guarantees are treated as non-performing when the bank has made a payment on the basis of a guarantee.
Unpaid interest on loans recorded as nonperforming is not accrued, except for loans to public sector customers or loans which are secured by a public body.
With respect to leased assets, the cost less depreciation according to plan is recognised as nonperforming when a payment becomes overdue by 90 days.
In the life insurance business, the organisation’s own operating expenses, amortisations on capitalised IT systems and depreciation on equipment are included in the profit and loss account allocated to activities. Part of them are allocated directly, part on the basis of an annual study on working hours. Accordingly, the percentage share of activities varies from year to year. Expenses by activity are presented under “Operating expenses” (policy acquisition costs, policy management expenses, and administrative expenses), under
Pension schemes For those employed by the Finnish Group companies, statutory pension cover has been arranged through the Employees’ Pensions Act, TEL. In some Group companies there is additional pension cover arranged through insurance companies. In foreign subsidiaries, pension schemes have been arranged in accordance with local practice. Pension costs are included in the profit and loss account on an accrual basis.
Deferred taxes Deferred tax liabilities and assets arise from timing differences between different accounting and taxation periods of individual Group undertakings. In calculating them, following the primary principles of IAS 12, other differences than those impacting on the profit and loss account have also been taken into consideration more comprehensively than is required by the Accounting Act. The deferred tax is calculated on the basis of the tax rate prevailing in each country. In Finland it is 29 per cent.
Appropriations In accordance with the Finnish regulations on accounting and taxation, companies are allowed to include in the accounts certain untaxed reserves and depreciation in excess of plan, which impact on the taxation of the companies.
In the Group accounts the untaxed reserves and the depreciation difference are shown in the balance sheet under “Deferred tax liability” and “Capital and reserves” and, correspondingly, the changes in them are shown in the profit and loss account under “Changes in deferred tax” and “Profit for the financial year”.
Assets and liabilities arising from derivative contracts are presented in “Other assets” and
Life insurance Derivative contracts are valued at the current value on the balance sheet date. The difference between the current value of a hedging derivative instrument and the lower book value / contract rate is recognised as income up to an amount which corresponds to the amount recognised as expense from the hedged balance sheet item. If the value of the hedging contract is negative, the valuation difference has not been recognised as an expense to the extent that the negative valuation difference corresponds to the unrealised gain from valuation of the underlying balance sheet item. However, both valuation differences are taken into account at their full amount in calculating the solvency margin.
Hedging instruments include foreign exchange derivatives which have been designated and documented as hedging instruments at the inception of the hedge, and which have been highly effective, evidenced by hedge accounting.
Holding company Calculated using the formula shown above for banking and investment services revenue.
Banking and investment services: + interest income – interest charges + dividend income + fees and commissions receivable – fees and commissions payable + net income from transactions in securities and foreign exchange dealing + other operating income – administrative expenses – depreciation and write-downs of tangible and intangible assets – other operating expenses – provisions for bad and doubtful debts – write-offs in respect of debt securities held as financial assets ± income from companies accounted for by the equity method
Life insurance ± technical result before bonuses and rebates and change in the equalisation provision ± other income and charges ± income from companies accounted for by the equity method
Return on equity (at current values), % + profit before extraordinary items and tax ± revaluation entered into / withdrawn from revaluation reserve ± change in valuation differences on investments*)
– tax (incl. change in deferred tax relating to valuation differences on investments) × 100
× 100 + balance sheet total – technical provisions relating to unit-linked insurance ± valuation differences on investments *)
× 100 + balance sheet total ± valuation differences on investments *)
Revenue Formula shown above in connection with calculation of Group revenue.
Solvency capital + solvency margin + equalisation provision + minority interest
× 100 + technical provisions – equalisation provision – 75% × technical provisions relating to unit-linked insurance > Calculation of Key Figures
Profit before extraordinary items and tax EUR m 534 1,075 1,183 499 308 123
Return on assets (at fair values) % 0.8 –1.6 1.4 6.8 27.6 12.4
Capital and reserves per share EUR 5.15 5.18 5.52 4.91 3.28 2.49
Net asset value per share less full deferred tax from holding company’s valuation differences EUR 5.29 5.87 8.81 9.31
Dividend per share for shares not owned by the Group EUR 0.49
Adjusted number of shares at 31 Dec. 1,000 553,854 555,623 520,000 – 304,000 304,000
Adjusted average number of shares 1,000 554,530 554,388 521,335 – 302,800 302,800
Number of shares at 31 Dec. 1,000 552,654 554,423 518,800 – 302,800 302,800
Share trading volume during accounting period 1,000 179,173 231,389 170,689 – 182,495 239,510
Adjusted average number of shares 1,000 1,200 1,200 1,200 – 1,200 1,200
Adjusted number of shares at 31 Dec. 1,000 1,200 1,200 1,200 – 1,200 1,200 > Key Figures *) The internal dividends and sales profits between the different lines of business have not been eliminated in the result analysis and specifications or key figures of banking and investment services and life insurance business. In the Group operating profit they have been eliminated.
****) The Board of Director’s proposal to the Annual General Meeting for the accounting period 2002. The dividend for 2001 was EUR 0.75.
In calculating the net asset value per share and the return on equity, an interpretation of the Principle of Fairness in life insurance has been taken into account. At the beginning of 2002 a new calculation method for the principle of fairness was taken into use, according to which the owners’ share of the valuation differences is a standard 25%. According to the previous calculation method the owners were not entitled to a share of the valuation differences per 31 December 2001. As the valuation differences of life insurance are not included in the Balance Sheet, their deferred tax and the change in deferred tax are not entered in the Profit and Loss Account or in the Balance Sheet. Other items of the solvency margin, including derivative contracts, have been deducted from/added to the valuation differences when calculating the key figures. The capital and reserves of life insurance, including a share of untaxed reserves and accumulated depreciation in excess of / less than plan, is considered to belong entirely to the owners.
The “Result of P&C operations” in consolidated Profit and Loss Account includes the result of the If Group, acting as an associated company. The P&C insurance results for the comparison years have also been presented on one line similar to the associated company and the key figures have been changed accordingly.
Balance Sheet Notes Banking and Investment Services 25 Treasury bills and other eligible bills.................................................87 26 Loans and advances to central banks included in loans and advances to credit institutions ...........................................................87 27 Loans and advances to customers ....................................................87 28 Non-performing and other non-interest earning loans ....................88 29 Assets acquired in settlement if unpaid loans and those acquired in connection with the reorganisation of a customer’s business operations ........................................................88 30 Subordinated loans..............................................................................88 31 Lease assets ........................................................................................88 32 Debt securities ....................................................................................89 33 Shares and participations ..................................................................89 34 Movements in shares and participations held as financial fixed assets and in tangible assets .............................................................90 35 Intangible Assets ................................................................................90 36 Properties and shares in property companies...................................90 37 Other assets ........................................................................................91 38 Prepayments and accrued income ..................................................91 Life Insurance Business 39 Changes in intangible and tangible assets ........................................92 40 Fair value and valuation difference on investments .........................93 41 Changes in investments in land and buildings .................................94 42 Shares and participations in other than subsidiaries and associated companies ........................................................................95 43 Investments in group undertakings and associated undertakings ..98 44 Other loans by security ......................................................................99 45 Investments covering unit-linked insurance .....................................99 46 Derivative contracts shown on the balance sheet .............................99 Holding Business 47 Loans and advances to central banks included in loans and advances to credit institutions .........................................................100 48 Loans and advances to customers ...................................................100 49 Assets acquired in settlement of unpaid loans and those acquired in connection with the reorganisation of a customer’s business operations ......................................................100 50 Subordinated loans............................................................................100 51 Debt securities ..................................................................................100 52 Shares and participations .................................................................101 53 Movements in shares and participations held as financial fixed assets and in tangible assets ...........................................................101 54 Intangible assets ...............................................................................102 55 Properties and shares in property companies.................................102 56 Other assets ......................................................................................103 57 Prepayments and accrued income ..................................................103 Capital and Reserves 58 Movements in consolidated capital and reserves 1 Jan.–31 Dec. 2002 and distributable profit at 31 Dec. 2002.........104 59 Preferred capital notes ....................................................................105 60 Movements in parent company capital and reserves 1 Jan.–31 Dec. 2002 and distributable profit at 31 Dec. 2002.........105 Banking and Investment Services 61 Unamortised discounts and premiums on liabilities ......................106 62 Debt securities in issue.....................................................................106 63 Other liabilities ..................................................................................106 64 Accruals and deferred income..........................................................106 65 Subordinated liabilities .....................................................................106 66 Maturity analysis of assets and liabilities, by remaining maturity .107 67 Assets and liabilities denominated in domestic and foreign currencies.............................................................................108 68 Deferred tax .......................................................................................108 69 Assets pledged as collateral security and secured liabilities as well as other assets pledged on behalf of the company and other group undertakings ................................................................108 70 Pension liabilities ..............................................................................108 71 Rental commitments.........................................................................109 72 Off-balance sheet items....................................................................109 73 Derivative contracts...........................................................................110 74 Other liabilities and contingent liabilities ........................................111 75 Asset management services.............................................................111 Life Insurance Business 76 Technical provisions ..........................................................................111 77 Long-term liabilities (5 years or longer) ..........................................111 78 Deferred tax .......................................................................................111 79 Contingent liabilities, pledged assets and derivatives ....................112 Holding Business 80 Unamortised discounts and premiums on liabilities ......................114 81 Debt securities in issue.....................................................................114 82 Other liabilities .................................................................................114 83 Accruals and deferred income..........................................................114 84 Maturity analysis of assets and liabilities, by remaining maturity .115 85 Assets and liabilities denominated in domestic and foreign currencies.............................................................................116 86 Deferred tax .......................................................................................116 87 Assets pledged as collateral security and secured liabilities as well as other assets pledged on behalf of the company and other group undertakings ................................................................117 88 Pension liabilities ..............................................................................117 89 Off-balance sheet items....................................................................117 90 Other liabilities and contingent liabilities ........................................117 Sampo Group 91 Staff numbers ....................................................................................118 92 Emoluments of members of administrative and supervisory bodies ............................................................................118 93 Loans and advances to and guarantees on behalf of members of administrative and supervisory bodies ............................................119 94 Group subsidiaries ............................................................................120 95 Associated undertakings of the group .............................................121 96 Elimination items in the consolidated balance sheet......................122
Banking and Investment Services 1 Interest receivable and payable Interest receivable
Other interest payable –19 28 2 Net income from transactions in securities Debt securities and interest rate derivatives 11 10
Other expenses 22 14 4 Depreciation and write-downs of tangible and intangible assets Depreciation according to plan on tangible assets 8 16 on intangible assets 24 19
Income Average Income Average EUR m staff number EUR m staff number
9 Total operating expenses by activity Claims settlement expenses (claims paid) 3 2
Interest and other expenses on liabilities to Group undertakings 0 0
Interest and other expenses on liabilities to other than Group undertakings –1 –2
Profit on disposal of properties and property companies 44 18 4 18
18 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets
Gross Releases and Gross Releases and Gross Releases and Gross Releases and amount recoveries amount recoveries amount recoveries amount recoveries
Recoveries of loans and guarantees written off in previous years – – – 0 – – – 0
Charge to profit and 19 Depreciation and write-downs of tangible and intangible assets
Write-downs of properties and property companies – 6 – 0 20 Segmental information Parent Parent Parent Parent Group Group Group Group Company Company Company Company
Sampo Group 23 Segmental information of the group by class of business
Banking and investment services 814 4,747 745 4,876 *) See notes 6 and 20 **) Average ***) Revenue
Sampo Group 24 Elimination items in consolidated profit and loss account Banking and investment services account
Certificates of deposit issued by other banks 375 466 26 Loans and advances to central banks included in loans and advances to credit institutions Loans and advances to credit institutions 944 999 of which to central banks – 200 27 Loans and advances to customers Loans and advances to customers by geographical area
Banking and Investment Services 28 Non-performing and other non-interest earning loans
Non- Other Non- Other performing non-interest performing non-interest loans earning loans Total loans earning loans Total *) Sampo Bank Plc’s non-performing loans to households include loans which are subject to debt restructuring programmes, in which customers follow confirmed repayment schedules. (Under Finnish regulations, loans which are subject to debt restructuring programmes, in which customers follow confirmed schedules, should not be classified as non-performing loans.)
29 Assets acquired in settlement of unpaid loans and those acquired in connection with the reorganisation of a customer’s business operations
Book value of assets pledged as collateral security and acquired by the bank in settlement of unpaid loans
Other shares and participations 2 3 30 Subordinated loans Loans and advances to customers 47 59
34 Movements in shares and participations held as financial fixed assets and in tangible assets
Land and buildings, Equipment shares and and other Shares and participations tangible participations in property companies assets
Other intangible assets *) 66 61 *) Incl. intra-group items arising from IT systems.
Banking and Investment Services 36 Properties and shares in property companies Capital Book value employed Fair value *)
*) Properties and shares in property companies occupied for other than own activities.
Derivative contracts 239 93 38 Prepayments and accrued income Accrued interest 114 231
Properties and shares in property companies occupied for other than own activities
Capital employed in properties occupied for Net Capital other than own activity by net income % income % employed1)
Total 62 1) The capital employed is the depreciated cost of an asset which, in case of shares in property companies, is added by Group’s share of liabilities relating to equity shares in these companies and/or share of debts of these companies. 2) The net income % is a proportion of the net income to the capital employed and has been calculated by property. 3) The unlet space % is a proportion of the unlet spaces to all spaces which can be let out. Unlet spaces are spaces which can be let out, but which yield no rental income on the balance sheet date based on a lease.
Shares in property companies, associated 2 2 3 3 3 4
Other shares in property companies 9 9 9 9 9 9
The remaining acquisition cost of debt securities comprises: Amortised premiums and discounts added to (+) or deducted from interest income (–) 33 18
Valuation difference (difference between fair value and book value) 230 366
Life Insurance Business 42 Shares and participations in other than subsidiaries and associated companies Holding Book value Fair value
Holdings exceeding EUR 5 million (fair value) and holdings in listed companies exceeding five per cent specified.
Samsung Electronics Co. Ltd Republic of Korea 26,900 0.02 6 7
Sapic II Reference Fund 14 Limited Cayman Islands 500,000 – 50 50
Life Insurance Business 43 Investments in group undertakings and associated undertakings
Debt securities issued by Shares in and loans to associated EUR m Group undertakings undertakings
Total of other loans 0 5 45 Investments covering unit-linked insurance
Original Fair value Original Fair value acquisition cost (=book value) acquisition cost (=book value)
48 Loans and advances to customers Loans and advances to customers by geographical area
49 Assets acquired in settlement of unpaid loans and those acquired in connection with the reorganisation of a customer’s business operations
Properties and shares and participations in property companies – 0 – –
Amounts include due from Group undertakings 37 2 37 2 due from associated undertakings – – – –
Differences between the market value and the lower book value of securities. 0 – 0 –
55 Properties and shares in property companies Parent Parent Parent Group Group Group Company Company Company Book Capital Fair Book Capital Fair value employed value*) value employed value*)
Shares and participations in property companies *) Properties and shares in property companies occupied for other than own activities 31 December 2002.
Parent Group Parent Company Parent Parent Group Capital Group Group Company Capital Company Company Area employed 1) Net income 2) Unlet space 3) Area employed 1) Net income 2) Unlet space 3)
Group Group Parent Company Parent Company 57 Prepayments and accrued income Accrued interest 0 0 0 0
Capital and Reserves 58 Movements in consolidated capital and reserves 1 Jan.–31 Dec. 2002 Share capital, 1 Jan. 93
Capital and Reserves 59 Preferred capital notes Euro-denominated loans 10 10
The loan totalled EUR 94 million, of which Leonia Corporate Bank had subscribed for EUR 84 million when it merged with Sampo Bank on 31 December 2000. The notes bear interest at the Helibor 12-month rate plus 100 basis points for 5 years, and thereafter the Helibor 12-month rate plus 225 basis points. The interest on the loan can be paid only from the distributable capital. The interest is paid annually in arrears. The loan is undated and is repayable, with the consent of the
Finnish Financial Supervisory Authority, 5 years after the date of issue. The preferred capital notes are included in the Tier 1 capital of the Bank.
Derivative contracts 277 88 64 Accruals and deferred income Deferred interest 174 230 65 Subordinated liabilities Subordinated liabilities with a book value more than 10% of the total amount of such liabilities 282 413
Sampo Bank plc 3) 100 USD 2.60 Perpetual 1) Repayable on any interest payment date after year 2002. As a debtor in the balance sheet of Sampo plc. 2) Repayable on due date. 3) Repayable on any interest payment date.
Liabilities to credit institutions and central banks 102 460 171 1,686
Arising from consolidation procedures – 2 69 Assets pledged as collateral security and secured liabilities as well as other assets pledged on behalf of the company and other group undertakings
Other commitments 3 1 of which to or on behalf of Group undertakings – –
Credit equivalent Risk weighted Credit equivalent Risk weighted amount of amount of amount of amount of contracts contracts contracts contracts *) Options for hedging purposes are embedded options attached to funding and derivatives hedging funding. The values of underlying instruments are included both in purchased and written options and in items interest rate swaps, interest rate and cross currency swaps and other equity contracts. No separate credit equivalent amounts have been calculated for embedded options attached to derivative contracts, but the market values of the embedded options are included in the credit equivalent amounts of those contracts.
Banking and Investment Services 74 Other liabilities and contingent liabilities VAT deductions, section 33 of the VAT Act *) 9 6 *) In cases of property acquisition, Group undertakings have deducted the VAT which they are obliged, pursuant to section 33 of the VAT Act, to return to the State if the property is sold or if it is purchased for other than a tax-deductible use before five years have passed from the end of the calendar year in which the construction service was completed. The amount of VAT
Asset management services based on an agreement between the customer and the company
Deferred insurance policy acquisition costs deducted from the life insurance premium reserve
77 Long-term liabilities (5 years or longer) Amounts owed to credit institutions 0 0 78 Deferred tax Deferred tax liablities
From new construction and property refurbishments during 1998–2002 / 1997–2001 19 19
Futures and forward exchange, open underlying instruments – 3 fair value – 0
For other purposes underlying instruments – 437 fair value – 2
Debt securities in issue 2 1 2 1 81 Debt securities in issue Book value at end of year 82 Other liabilities Derivative contracts 1 – 1 –
Liabilities to credit institutions and central banks 7 – – –
Liabilities to credit institutions and central banks 70 – – –
of which to or on behalf of Group companies – – – –
90 Other liabilities and contingent liabilities Amount of joint liability pertaining to VAT group registration 3 – 5 –
Directors/Management and President and of which performance-related bonuses 2 1 1 0
The Managing Director and Deputy Managing Director of Sampo plc have been insured with a supplementary insurance. The earnings for the positions of trust of the members of the Board of Directors have been insured with a voluntary pension insurance.
Members and deputy members of the Supervisory Board 0 – – –
of which from banking and investment services 8 – 8 –
Members and deputy members of the Supervisory Board – – – –
94 Group subsidiaries Book value of Profit/ Group Parent shares in the Capital and loss for the Domicile/ holding company Group reserves financial year Name of company Ref. No country % *) holding %*) EUR m EUR m EUR m
Housing Loan Bank of Finland plc 1 Helsinki Finland 100.00 – 6
UAB Sampo Lietuva Gyvbes Draudimas 1 Vilnius Lithuania 100.00 100.00 3
MB Equity Fund II Ky 2, 6 Helsinki, Finland 18.03 9.99 5
WD Power Management Oy 3 Helsinki, Finland 21.74 – 0 0 0
Tapio Technologies Oy 3 Espoo, Finland 20.00 – 0 0 0
Pickala Golf Oy 6 Siuntio, Finland 0.64 0.29 0 6*) 0
Other companies, total number 68 **) 11 *) Based mainly on information from year 2001.
In our opinion, the final accounts have been prepared in accordance with the Finnish Accounting Act and other rules and regulations governing the preparation of financial statements in Finland. The financial statements give a true and fair view, as defined in the Accounting Act, of both the consolidated and parent company result of operations, as well as of the financial position. The financial statements can be adopted and the members of the Board of Directors and the Managing Director of the parent company can be discharged from liability for the period audited by us. The proposal made by the Board of Directors regarding the disposition of distributable profit is in compliance with the Finnish Companies Act.
Sampo Bank plc Visiting address: Unioninkatu 22, Helsinki Postal address: FIN-00075 SAMPO, Finland Telephone: +358 10 515 15
The contact information of Sampo Bank’s subsidiaries can be viewed on the Internet address www.sampo.fi/group
Sampo Life Insurance Company Limited Visiting address: Bulevardi 56, Helsinki Postal address: FIN-00075 SAMPO, Finland Telephone: +358 10 515 225 Fax: +358 10 516 7449
Mandatum & Co Ltd Visiting address: Eteläesplanadi 8, Helsinki Postal address: P.O.Box 95, FIN-00131 HELSINKI, Finland
Sampo Gyvybes Draudimas Geležinio Vilko g. 18a, LT-2004 Vilnius, Lithuania www.sampo.lt
Sampo Powszechne Towarzystwo Emerytalne S.A. ul. Domaniewska 41, Orion 5th floor, PL-02-672 Warsaw, Poland
ASSOCIATED COMPANIES: If P&C Insurance Group: If P&C Insurance Company Ltd. Visiting address: Vattuniemenkuja 8 A, Helsinki Postal address: FIN-00025 IF, Finland www.ifvakuutus.fi
Varma-Sampo Mutual Pension Insurance Company Visiting address: Annankatu 18, Helsinki Postal address: P.O.Box 1, FIN-00098 VARMA-SAMPO, Finland Telephone: +358 10 515 13 Fax: +358 10 514 4752 www.varma-sampo.fi
The official financial statements can be inspected in full at Sampo Legal Affairs, Unioninkatu 22, Helsinki and at the address Yliopistonkatu 27, Turku.
Sampo will publish three Interim Reports in 2003, on 8 May, 12 August and 5 November. The Interim reports are published on the Internet at
Press and stock exchange releases, the monthly updated list of shareholders and other investor information published by Sampo is available on the Internet at www.sampo.com
Jarmo Salonen, Vice president, IR Telephone: +358 10 516 0030 jarmo.o.salonen@sampo.fi