Sampo’s goal is to be a long-term partner for its customers, not just to perform banking transactions or sell individual products. The longer the customers stay with Sampo, or the more they concentrate their financial affairs in Sampo, the bigger are the benefits they gain.
Efficiency is a key aspect of Sampo’s operations. New banking technology has no intrinsic value, and gives no competitive edge. It is simply the means to provide customers with convenient, cost-efficient services. Sampo’s real competitive edge comes from its expertise, good service and effective way to work.
RORAC = Net Operating Profit (taxes 29%) / Risk Allocated Capital (7% × Risk Weighted Assets)
C/I -ratio = total expenses / total income (fees and commissions net)
The Finnish economy has survived these uncertain times at the beginning of the new millennium quite well. As I have said on many occasions before, Finland has actually been a success story in this globalising world.
Ahead of us, however, lie even greater challenges in the form of the ageing of our population. Over the next ten years, an enormous number of Finns will retire. They will need health and care services to an extent that has never been experienced before, putting extreme pressure on our pension systems and public expenditure. At the same time, taxes should be lowered to maintain competitiveness.
The only way to handle this situation without an outcome of major disappointment is to start preparing for the future. In other words, to save.
Sampo’s strategy is founded on the strong belief that Finns will significantly increase their saving. The year 2002 showed this strategy to be correct.
In sales of new pension insurance policies Sampo made outstanding progress. During 2002 we concluded more than 20,000 new pension insurance contracts, compared with not quite 8,000 one year earlier. Our market share of new pension insurance policies rose to 23 per cent, up by 9 percentage points over the previous year.
In the mutual fund market we were just as successful. In September Sampo became the largest fund management company in Finland. Sampo’s extraordinary rise in the fund business in 2002 resulted in 44 per cent of total net asset inflow to Finnish funds going into Sampo’s and Mandatum’s funds.
In many matters Sampo out-performed its competitors in 2002. This is a matter for some pride, especially when we remember the enormous changes the company faced in 2001. There is every reason, therefore, to thank
Sampo’s staff for their excellent work. Without you the progress made in 2002 in an extremely challenging environment would not have been possible.
Sampo became the largest owner of the If P&C Insurance Group with an ownership of 38.05 per cent. The Sampo Group’s P&C insurance companies became part of If and were renamed. Sampo Insurance Company Ltd became If P&C Insurance Company Ltd and Sampo Industrial Insurance Company Ltd became If Industrial Insurance Ltd. As previously announced, in spite of the change of ownership both companies remained Finnish.
Sampo published its results for 2001. The operating profit of the Sampo Group was EUR 1,286 million (1,628 ). The Group performed well in every business area. The decrease in operating profit was attributable to the impact of one-off equity sales profits and dividends in the reference year.
Amanda Capital Plc (formerly Finvest Plc) and Sampo Group combined their private equity fund management activities in Mandatum Private Equity Funds Ltd. The aim is to establish the leading private equity fund management organisation in the Nordic countries. Mandatum Private Equity Funds Ltd is a fully-owned subsidiary of Sampo plc.
Sampo became the first Finnish company to launch an absolute return fund also intended for retail investors. The name of the new fund is Eliksir.
Banking 6 Retail customers – Sampo’s new service approach, lauched in spring 2002, was well-received 8 Private bank – Close to the customer, access to a wide range of international services 9 Corporate customers – Financial services of a more comprehensive nature than traditional banking services
Long-term Savings 10 Life Insurance – Successful year in a demanding market environment 11 Mutual Funds – Sampo became the market leader 11 Asset Management – Still the biggest in Finland
Investment Banking 12 Mandatum & Co – Leading position in mergers and acquisitions strengthened 13 Mandatum Stockbrokers – Market position strengthened in many customer segments 14 Realty World (Kiinteistömaailma) – Finland’s second largest real estate agency chain 15 If P&C Insurance – Sampo’s P&C insurance became part of the Nordic If P&C Insurance Group
Sampo continued to work for its chosen strategy throughout 2002. Sampo Bank’s goal is to be the most attractive partner for retail customers in savings and investment decisions.
Looking at the customer’s finances as a whole Sampo’s goal in 2002 was to raise its profile as an expert advisor for household financial planning, which serves the whole spectrum of retail customers. The work done at the branches has changed dramatically and the demand for advisory services has grown enormously. Sampo has responded by increasing the staff available for these services and by continuously investing in staff training.
Sampo Bank serves over one million retail customers. At the end of 2002, Sampo offered financial services through 131 branches, 49 of which also offered the services of If P&C
The increasing automation of banking services has significantly reduced the number of customers handling their daily banking transactions at the branches.
Only three per cent of all Sampo customers do their basic banking in the branches, aided by Sampo staff. As much as 70 per cent of daily customer contacts take place on the Internet. In 2002, Sampo increased the capacity of its web bank and improved its monitoring services.
Sampo out-sourced its web services development to Meridea Financial Software in 2001. Meridea will provide Sampo with new web banking software.
Sales were emphasised in Sampo’s phone service during 2002. The phone service’s sales contacts to customers increased significantly, and it also assisted the branches to attract new customers by arranging appointments. Sampo’s phone service made nearly 500,000 contacts to new and current customers. An improvement was made in the spring when services were concentrated in the Oulu and Helsinki units and tasks were re-divided. The compatibility of web, branch and telephone services and their availability and usability will increase in the future.
Banking – demand for housing loans increased Due to low interest rates, the housing business was more lively than expected, with more new housing loans being granted than in the previous year. The low rates also made long-term fixed rates an attractive option. Despite this growth, not all targets were achieved, so Sampo will focus in 2003 on selling housing loans as part of overall family finance planning. In accordance with Sampo’s new approach, the bank’s housing loans are often linked to offers of more comprehensive management of the customer’s finances through pension insurance and fund savings, for example. Sales of Sampo’s own brand, “Premium Housing Finance”, increased.
Sampo issued an improved selection of international payment cards. Customers were attracted both by the possibility to use cards abroad and by the increased purchasing power provided by the credit limit of Sampo’s Eurocard and Visa credit cards. The use of credit and bank cards as a means of payment increased rapidly. Purchases made with these cards were up by over 15 per cent, while cash withdrawals made by Sampo’s customers decreased by 11 per cent. In 2002, the total value of card purchases easily exceeded the total value of cash withdrawals at cash dispensers and branch offices.
The wealth management services of Mandatum Private Bank include both discretionary and nondiscretionary portfolio management. Each wealth management customer is appointed a relationship manager responsible for surveying his or her wealth management needs, preparing an investment plan and implementing the agreed actions. The relationship manager actively manages each customer’s assets and banking affairs.
The values emphasised in Mandatum Private Bank’s operations are ethicality, individuality and entrepreneurship. The bank’s experts understand that successful wealth management is founded on trust, from which long-term customer relationships can grow.
Mandatum Private Bank also puts its wealth management expertise at the disposal of option holders. The services provided include the monitoring of options and the planning of when to sell or exercise them.
As part of Sampo Bank, Mandatum Private Bank can provide its customers with all basic banking services such as accounts, loans and payment transactions. Mandatum Private Bank also benefits from Sampo’s strong support in investment, pensions and P&C insurance products and in capital market know-how. Thanks to the bank’s network, the customer can gain assistance in legal matters and in issues related to other forms of property such as housing and forest. Customers also have access to the services of the bank’s international partners.
Sampo’s services for corporate and institutional customers are tailored to meet individual customer needs. They are provided through a customer account manager system and feature the broadest selection of financial services in the market, including investment, payment transaction, cash management and financing services. The core services also include risk management and mergers & acquisitions services, as well as insurance and performance bonus systems for corporate executives and staff.
The use of web services grew by almost 25 per cent in 2002. Almost 100 per cent of corporate payment transactions are performed electronically. Sampo’s main emphasis now is in developing web service solutions that support customers’ own web-related business. Examples include an identification service, E and T billing and web payment.
Sampo continuously trains its staff to better serve corporate and institutional customers. One of recent trainings has been an investment specialist programme, developed together with the Helsinki School of Economics, which is completed by all customer account officers.
Europe. Compared with the general market trends, Sampo Life’s investment activities were successful and the company was able to manage the effects of declining share prices on its solvency well. At the end of 2002, the solvency ratio was 12.4 per cent.
The concept “selling through the workplace” launched in co-operation with corporate and institutional customers was well-received. In this concept Sampo and the employer make an agreement which provides company employees with additional benefits if they take out voluntary pension insurance with Sampo. This way of working benefited both Sampo, through increased sales of individual pension insurance, and the companies, because they were able to provide a new kind of employee benefit.In the future, sales will continue to focus on retail customers, unit-linked policies and regular premium contracts in particular. Sampo will also be more active in offering individual and group pension solutions for small and medium-sized companies. These services will continue to be offered through several channels.
The net inflow to mutual funds registered in Finland was approximately EUR 3.4 billion in 2002. However, due to the exceptionally poor performance of share prices, mutual fund assets grew by only EUR 1.2 billion. Sampo accounted for approximately 44 per cent of the net inflow to mutual funds, which means that its mutual fund assets grew significantly faster than those of its competitors. According to the Mutual Fund Report published by HEX and the Finnish Association of Mutual Funds, Sampo became the market leader in September, measured in Finnish capital. By the end of 2002, Sampo held 24.5 per cent of the market, an increase of 6.1 percentage points over 2001.
During 2002, Sampo Fund Management merged and launched several new funds. They were combined to simplify the fund selection, while new ones were started in order to better respond to customer needs. For example, Sampo introduced the Mandatum US Small Cap Value Fund to invest in value companies, and Enhanced Index Funds aimed at institutional customers. Sampo also launched Eliksir, Finland’s first fund of hedge funds. The assets of Eliksir are invested in the absolute return funds of several asset managers analysed and selected by 3C Asset Management.
–34.4 per cent and HEX Portfolio index –16.7 per cent). Decreasing share prices were also reflected in trade volumes and the overall volume at the Helsinki Exchanges decreased by nearly seven per cent. The volume trading was still concentrated on Nokia which took a 70.4 per cent share of the overall volume.
No IPOs were carried out in Finland in 2002 and there were also clearly fewer other capital market transactions than in 2001. Due to market conditions, the year 2002 was modest for Mandatum in the capital markets sector and the company focused on the development of its distribution channels. The year was good for Mandatum in mergers and acquisitions advisory services, however. The company acted as an advisor in several significant mergers and acquisitions and was the market leader in Finland.
In the stock markets, the market situation has continued to be unstable in early 2003. Uncertainty concerning a potential economic recovery has increased and the number of mergers and acquisitions is not expected to increase from the 2002 level. In capital markets, the number of transactions may increase from last year’s low levels provided that stock markets recover towards the end of the year. However, Mandatum & Co’s outlook for 2003 is positive and its strong position in mergers and acquisitions advisory is expected to continue. The company has good potential to strengthen its position in capital market transactions.
Alfred Berg Enskilda Evli Nordea Mandatum 12 Business Reviews Sampo Annual Report 2002 13
Stockbrokers’ earnings were depressed by the fact that no major capital market transactions were carried out in 2002.
– retail operations, institutional operations and derivatives operations – even though the strongest growth will come from domestic retail clients. In equity research, the company will continue enhancing research for retail clients and the research concept will be developed so that it brings value added to institutional investors as well.
Realty World aims to be the market leader in all the localities where it operates.
Services – buyers surf on the net Realty World has consistently introduced new practices in the sector. The chain was the first in Finland to introduce “customeroriented ” agency offices, to post pictures of the properties for sale in the offices and in the marketing media, and to establish a national information system for the purposes of joint selling. Realty World has also been a pioneer in developing realty services for the Internet, the mobile environment and digital TV.
The development of electronic services and marketplaces has quickly changed marketing in the sector. Approximately 200,000 different visitors look at Realty World’s properties for sale on the Internet every month. The latest electronic services allow customers to receive information on properties and showing times through text or picture messages on their mobile phones as well as through e-mail messages.
If is the leading P&C insurance company in Finland, holding a market share of 34 per cent. In 2003, the If brand will be comprehensively launched in Finland. If carries on the traditions of Sampo’s P&C insurance. Its multi-channel services (including claims handling) are available to customers through its approximately 75 branch offices, some of which are shared with Sampo, its telephone contact centres and its Internet service.
If’s operations are divided between three customer segments – Private, Commercial and Industrial. As If operates throughout the Nordic region, it can utilise competence from different countries while, at the same time, adapting its customer contacts and products to local market conditions.
Performance improved according to plan During 2002, If focused on customer orientation and the improvement of profitability in its core business. At the same time, the company quickly and flexibly created a uniform Nordic organisation, into which the Finnish operations were integrated sooner than expected. On 30 September, If Industrial Insurance Ltd was merged into If P&C Insurance Company Ltd.
Sampo complies with the recommendations for the governance of listed companies set out by the Central Chamber of Commerce and the Confederation of Finnish Industry and Employers in 1997. Sampo’s Board of Directors has also approved internal rules concerning corporate governance, internal control and reporting in Sampo Group.
Sampo’s Board of Directors is responsible for the management of the company in compliance with the law, the regulations of the various authorities, Sampo’s Articles of Association and the decisions of its Shareholders’ Meetings. The operating procedures and main duties of the Board of Directors have been defined in the Board’s rules of procedure.
The Board elects the CEO and the executives of Sampo Group, releases them from their duties, and decides on their terms and conditions of employment and on other compensations. In addition, the Board confirms the Group’s staff planning targets and supervises their implementation, determines the grounds for the Group’s compensation system and decides on other farreaching matters concerning the staff.
Election and Terms of Office of Board Members According to Sampo’s Articles of Association, the company’s Board of Directors comprises no fewer than three and no more than ten members elected by shareholders at the Annual General Meeting. The Annual General Meeting of 2002 decided to elect seven members to the Board. The term of office of the Board members is one year, ending at the close of the Annual General Meeting that next follows their election. The members of the Board annually elect a Chairman and Vice Chairman from among their members, at their first meeting following the Annual General Meeting.
The Board of Directors of Sampo plc convened 12 times in 2002.
The Board of Directors may appoint committees, executive committees and other permanent or fixed-term bodies for duties assigned by the Board. The Board confirms the rules of procedure of the Executive Committee, and the guidelines and authorisations given to other bodies appointed by the Board. The Board has established Sampo Group’s Executive Committee, Risk Control Committee, Board Nomination Committee, Asset and Liability Committee (to monitor the Group’s balance sheet risks), Credit Committee (to monitor credit risks) and Investment Committee (to monitor investment risks). The Board has also appointed the members of
these Committees. Information concerning these members is presented as per 31 December, 2002.
Sampo Group’s Executive Committee comprises: Björn Wahlroos, CEO Kari Stadigh, Deputy CEO, Executive Vice President Sten Eklundh, Executive Vice President, Head of Investment Banking Ilona Ervasti-Vaintola, Chief Counsel, Principal Attorney Ilkka Hallavo, Head of Corporate Banking, Managing Director of Sampo Bank Mika Ihamuotila, Executive Vice President, Head of Banking and Distribution Peter Johansson, CFO, Head of Corporate Planning Patrick Lapveteläinen, Head of Treasury and Administration Petri Niemisvirta, Managing Director of Sampo Life Maarit Näkyvä, Executive Vice President, Head of Retail and Private Banking
The Executive Committee convenes once a week in accordance with its rules and at the request of the CEO.
Risk Control Committee The Board of Directors has appointed a Risk Control Committee to control Sampo Group’s risks at the Group level. The Risk Control Committee is responsible for supervising the preparation of and compliance with Sampo Group’s risk management principles and other related guidelines, supervising Sampo Group’s risks and risk accumulations and the quality and scope of risk management, and monitoring the implementation of risk policies, the use of limits and the development of risks and profit in the various business areas.
The Asset and Liability Committee is responsible for preparing the Group’s balance sheet policy for approval by the Board, preparing the banking book, trading limits and authorisations for the Boards of Group companies, and monitoring the use of limits and authorisations and the Group’s consolidated liquidity. The Asset and Liability Committee comprises Patrick Lapveteläinen (Chairman), Martti Porkka, Kai Brander, Aki Palo, Markku Pehkonen, Risto Tornivaara, Jyrki Appelqvist, Pekka Kainulainen and Petri Viertiö, the last three being expert members.
companies, and monitoring the use of limits and authorisations. The Investment Committee comprises Kari Stadigh (Chairman), Patrick Lapveteläinen, Sirpa Mannila, Vesa Nurminen, Ulla Kangas and Petri Viertiö (expert member).
Nomination Committee The Board’s Nomination Committee comprises the Board Chairman as Chairman of the Committee, the Board Vice Chairman and one member elected from among the Board members. The Nomination Committee convenes at the request of the Chairman and is entrusted to prepare proposals for Sampo’s Annual General Meeting on the composition of the Board and the principles by which Board members are to be remunerated and rewarded. The Nomination Committee comprises Olli-Pekka Kallasvuo, Jyrki Juusela and Georg Ehrnrooth.
Chairman of the Boards of F-Secure Corporation, Nextrom Holding S.A and Nokia Tyres plc. He was appointed member of the Board of Directors of Sampo plc and Chairman of the Board on 5 April, 2001.
He holds 10,000 Sampo plc shares directly or through a controlled company.
Chairman of the Board of AvestaPolarit Oyj Abp, member of the Boards of Inmet Mining Corporation, the Confederation of Finnish Industry and Employers, the Federation of Finnish Metal, Engineering and Electrotechnical Industries and the Association of Finnish Steel and Metal Producers, member of the Supervisory Board of Varma-Sampo Mutual Pension Insurance Company. He transferred to the Board of Directors of Sampo plc from the Supervisory Board on 25 May, 2000.
He holds 11,839,890 Sampo plc shares directly or through a controlled company.
Chairman of the Boards of If P&C Incurance Holding Ltd, Kaleva Mutual Insurance Company and Aspo Plc, and Vice Chairman of the Board of Alma Media Corporation.
Sten Eklundh, born 1960 Executive Vice President, Head of Investment Banking
He holds 22,220 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 20,000
She holds 297,720 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 50,000
Ilkka Hallavo, born 1956 Head of Corporate Banking, Managing Director, Sampo Bank plc.
Mika Ihamuotila, born 1964 Executive Vice President, Head of Banking and Distribution
He holds 225,190 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 50,000 22 Group Executive Commitee
He holds 2,500 Sampo plc shares directly or through a controlled company. Options (1998 programme): – Options (2000 programme): 50,000
Petri Niemisvirta, born 1970 Managing Director, Sampo Life Insurance Company Limited
He holds no Sampo plc shares. Options (1998 programme): 15,825 Options (2000 programme): 50,000
Maarit Näkyvä, born 1953 Executive Vice President, Head of Retail and Private Banking.
recruiting service and began to offer training places and thesis-writing opportunities for Helia students.
Occupational health and well-being services were reorganised to correspond to the Group’s current structure. Occupational health services include the statutory occupational health care and primary medical care
In 2002, Sampo employees working in the sales network strengthened the skills they need for the planning of customer finances. Administrative and support functions were also developed and reorganised.
At the end of 2002, Sampo Group employed 5,848 people. The rationalisation negotiations concerning employees in administrative and support services were concluded in March and, as a result, reductions of 489 were made in Sampo Group and 250 in Sampo’s associated company, If, in Finland. The rationalisation negotiations procedure is a statutory procedure in which the employer and employees negotiate on the termination of employment contracts or retraining and reassignment necessitated by reduced work or financial restructuring. Nearly all redundancies were carried out through support and pension arrangements and outsourcing. Retraining for customer service and sales tasks was arranged for some employees. Sampo also co-operated with the employment authorities to promote the quick re-employment of those leaving.
Co-operation projects were arranged with various polytechnics in Finland. In these projects, specially trained students tutored Sampo’s customers on the use of the Internet.
Extensive training on savings and investment was arranged for the entire customer service staff in the corporate customer network.
Sampo and the Helsinki Business Polytechnic, Helia, concluded a partnership agreement in October. In addition to continuing their previous training co-operation, Sampo and Helia started a 24 Staff
voluntarily paid by the employer. Co-operation in occupational safety and the challenges of wellbeing at work were examined in regional meetings of branch managers and safety representatives and experts from the bank’s occupational health care and human resources unit. The issues considered in these meetings included coping at work and procedures to monitor working conditions. An extensive programme for well-being at work (TYVI) was launched in the retail customer network, and health and physical examinations were given to supervisors. TYVI programmes were also started in many other offices and units and as an extensive pilot project in Sampo Life.
Other staff services developed included long service awards, remembrance of special days, holiday sites, club activities and sports services. Sampo agreed with the Finnish Sport-for-All Association on the arranging of sports and other physical activities. Sport services supported by the employer were considerably expanded and are now available in all Sampo branch locations in Finland. Leisure club activities focused especially on cultural activities.
Sampo’s entire staff is covered by a performance bonus system. The system complements the normal remuneration systems and aims to influence the success of the Group by channelling activities in the right direction and motivating and rewarding staff. Collective rewards are given through the personnel fund which is part of the performance bonus system.
Group staff 31 December, 2002 At the end of At end of Change over December, 2002 2001 year permanent temporary total total total
Please note that the number of Sampo Group staff (9,684) stated in the Annual Report for 2001 includes, in the case of insurance services, only permanent staff.
Sampo’s corporate values were reinforced through the revision of the ethical guidelines. The Group’s values are ethicality, loyalty, transparency and enterprise.
The customer can also choose an ethical approach to investment when choosing a mutual fund or unitlinked pension insurance. In 2002, a decision was made to set up a fixed income fund emphasising sustainable development alongside the Sampo Sustainability Fund. The fund’s investment policy, designed for the cautious investor, emphasises the reliability of company accounting or, concerning countries, their participation in the Kyoto Climate Protocol.
Sampo Bank aims to develop its corporate loan decision process to take into account the environmental responsibilities of companies and the measures they have taken to fulfil these responsibilities, when evaluating the creditworthiness of corporate customers.
Long-term customer relationships and the concentration of services in Sampo is rewarded. The entire staff of the retail customer service network participated in training to familiarise themselves with this approach. A staff survey showed that staff are committed to the Group’s goals.
External communications were also developed by supplementing Sampo’s web site with an audio and video archive containing presentations from investor meetings. In a survey conducted by a major Finnish business weekly (Talouselämä, issue 36/02), Sampo was selected as the second best listed company in terms of its attention to investor relations.
Sponsorship, donation relationship management. Training was carried out in co-operation with various institutes.
In 2002, Sampo was included in the FTSE4Good index family along with three other Finnish companies. However, Sampo’s primary goal is not its inclusion in indexes but to integrate sustainability into all of its customer relationships and operating procedures.
By virtue of the authorisation granted by the Annual General Meeting on 10 April, 2002, the Board of Directors decided on 14 August, 2002 to buy back Sampo’s own shares. The shares are to be cancelled at the next Annual General Meeting.
Share buy back During public trading at the Helsinki Exchanges from 29 August to 31 December, 2002, a total of 2,434,400 A shares were bought back by Sampo. The total counter-book value of the shares is approximately EUR 410,000 and they represent approximately 0.44 per cent of the share capital and approximately 0.43 per cent of the total number of votes. Thus, the transactions have had no significant effect on the division of shareholding or voting power between other Sampo shareholders. A consideration of EUR 16.0 million, or an average of EUR 6.59 per share, has been paid for the shares.
1998 Option programme On 22 May, 1998, Sampo issued a bond loan with warrants valued at approximately EUR 1.1 million. All the staff permanently employed by the Sampo Group and Kaleva Mutual Insurance Company were entitled to subscribe. Five Sampo A shares can be subscribed for with each warrant. The subscription period ends on 31 May, 2005.
The subscription price is EUR 6.12 per share. The amount of the dividend is deducted from the subscription price. If the Annual General Meeting accepts the Board of Directors’ proposal concerning the distribution of dividends for 2002, the subscription price will be reduced to EUR 5.77.
A total of 5,200,000 options were issued, of which 2,600,000 are marked with the letter A and 2,600,000 with the letter B. Each option entitles its holder to subscribe for five Sampo A shares. The share subscription period for A options started on 2 January, 2003. At the same time, the options were entered in the book-entry securities system. The A options have been freely conveyable since 2 January, 2003 and the B options will be as of 2 January, 2004, provided that the subscription terms are met. The share subscription period for all options expires on 31 December, 2007.
As a result of the subscriptions, the number of Sampo shares can increase by a maximum of 26,000,000 new shares and the share capital by no more than EUR 4,372,886.09, which equals approximately 4.7 per cent of the share capital as of 31 December, 2002.
Mode of Subscription Terms of subscription after increase / increase / period / or subscriber Number of decrease decrease Registration or reason for decrease new shares EUR m*)
Bonds with Warrants of 1998, Five Conversions in 2002 Warrant conversion 664,750 93.56
Varma-Sampo Mutual Pension Insurance Company announced on 21 February, 2002 that it had sold 20 million Sampo A shares. Therefore, Varma-Sampo Group’s holding of Sampo’s share capital and votes was reduced to less than 10 per cent.
Shareholders whose shares have not been transferred to the book-entry securities system are also entitled to attend the AGM, provided they were registered in Sampo’s share register before 12 September, 1997. In this case, the shareholder must present, upon arrival at the AGM, a share certificate or other proof that ownership of the shares has not been transferred to a book-entry account.
To be entitled to participate in the Annual General Meeting, shareholders and nominee-registered shareholders must register with Sampo’s Equity Issues Department by 12 a.m. on 7 April, 2003.
According to the proposal, only shareholders who are registered in the shareholder register kept by the Finnish Central Securities Depository Ltd on the record date for dividend payment, 14 April, 2003, are entitled to dividends. The proposed dividend payment date is 23 April, 2003.
1 Public companies 0.11% 2 Private companies 3.89% 3 Financial institutions and insurance companies 4.42% 4 Public corporations 52.10% 5 Non-profit corporations 0.93%
Sampo Group’s net asset value per share remained high at EUR 5.26 (5.67). Taking into account the dividend (EUR 0.75 per share) paid in 2002, Sampo’s net asset value per share increased by EUR 0.34, despite the difficult capital market environment. Sampo’s operating profit was EUR 542 million (1,104) in 2002. The comparison figures for 2001 include more than EUR 750 million in sales profits from Nokia shares. The result for 2002 was increased by a profit of EUR 261 million booked in the first quarter as a result of the If arrangements. Earnings per share was EUR 0.63 (1.50). The Board proposes to the Annual General Meeting that a dividend of EUR 0.35 per share (0.75) be distributed.
Changes in Group structure In line with its strategy Sampo re-structured its operations in 2002 to emphasise long-term savings products and retail banking and to gain a more streamlined Group structure. In addition, administrative and support functions were developed and reorganised in a more rational and cost-efficient way.
Sampo’s P&C insurance companies and the If Group were merged on 2 January 2002 to form the largest P&C insurance group in the Nordic countries. In the year under review, however, P&C insurance customers were still also served in Finland under the Sampo brand. At the same time, Sampo became If’s largest owner with a 38.05 per cent holding. The Finnish owners, Sampo and Varma-Sampo, together control 50 per cent of the voting rights in If.
In October, Amanda Capital Plc (formerly Finvest Plc), a company listed on the Helsinki Exchanges, and Sampo Group combined their private equity fund and investment management activities in Mandatum Private Equity Funds Ltd. The aim is to establish the leading private equity fund-offund management organisation in the Nordic countries, serving both retail and institutional customers. Mandatum Private Equity Funds Ltd is a fully-owned subsidiary of Sampo plc and has close to EUR 800 million in private equity assets under management.
Mandatum’s absolute return fund business and 3C Fund Management Ltd merged to form a new company, 3C Asset Management Ltd. The market value of the fund assets managed by the new company at the end of the year under review was EUR 407 million and thus 3C was the second largest Nordic manager in this fund segment. Sampo plc held 56 per cent and the key persons in 3C 44 per cent of the share capital of the company.
Sampo plc’s wholly owned subsidiaries, Sampo Business Properties Ltd and Mandatum Holding Ltd, were merged with all their assets and liabilities into Sampo plc on 31 December 2002. The merger was aimed at streamlining Sampo Group’s structure.
The Annual General Meeting approved the Board’s proposal for an amendment to articles 7, 12 and 16 of the Articles of Association and the deletion of article 22 as unnecessary. An addition was made to the article concerning the company ’s administrative organs to the effect that the Board would appoint the Managing Director. The other changes concerned the right to sign for the company and the provisions concerning General Meetings.
Changes in share capital During the year under review, 664,750 A shares with a total counter value of EUR 111,802.92 were subscribed for in five lots with warrants issued under the 1998 Sampo option scheme. The new shares were accepted for trading in the Helsinki Exchanges as each lot was entered in the Trade Register. As a result of the share subscriptions, the company’s share capital on 31 December 2002 increased to EUR 93,560,969.79. At the end of the financial year the total number of Sampo plc’s shares was 556,288,265, including 1,200,000 B shares.
The C options of the 1998 Sampo option scheme were accepted for trading on 2 May 2002 and the A options of the 2000 option scheme on 2 January 2003.
Sampo’s Annual General Meeting of 10 April 2002 authorised the Board to buy back and convey the company’s own shares. The number of A shares that can be bought back may correspond at most to 5 per cent of the company’s share capital or the votes attached to all shares. Shares can be bought back to develop the company’s capital structure, to use in financing or implementing acquisitions or other restructuring, or otherwise to be conveyed or annulled.
The Annual General Meeting also authorised the Board to decide on increasing the share capital by a rights offering, or by an issue of options or convertible bonds. The increase in share capital may correspond at most to approximately 5 per cent of the company’s share capital and approxi- > Sampo plc Board of Directors’ Report 2002
Staff The number of staff employed by Sampo Group decreased significantly in the first half of 2002 as a result of the rearrangements with respect to If, the outsourcing of certain functions and the co-operation negotiations concerning the streamlining of administrative and support services that were concluded in March. Sales network staff received training in the Group’s areas of focus and Sampo’s new approach to customer service was introduced.
The staff employed in the Group’s administrative and support functions decreased during the year by nearly 500 persons. The staff employed in corresponding jobs by the associated company If also shrank by about 250 persons. Most of the reductions were implemented by voluntary support and pension solutions, by the outsourcing of functions and retraining for customer service and sales duties. Sampo’s rationalisation measures aim at staff cost savings of about EUR 20 million and other operational savings of about EUR 20 million per year. These targets will be exceeded by the end of 2003, and their effects could already be seen in the latter half of 2002.
By the end of the year the Group’s staff had declined to 5,848 persons. One year earlier, the Group’s staff had numbered 9,931 persons, or, excluding the P&C insurance staff, 6,442 persons. This number includes 311 temporary staff (450). 81 per cent of the staff worked in banking and investment services, 8 per cent in life insurance, 2 per cent in the holding company and 10 per cent in Primasoft. Primasoft produces IT services for companies in the Sampo Group and for If’s Finnish operations. The average number of staff in the year under review was 5,977 persons, compared with 10,162 persons in 2001.
Banking and investment services The Group’s most important domestic banking and investment service companies are Sampo Bank plc, Sampo Fund Management Ltd, Mandatum Asset Management Ltd, Mandatum Stockbrokers Ltd, Mandatum & Co Ltd, Sampo
Finance Ltd, Sampo Card Ltd, Sampo Credit plc, Mandatum Private Equity Funds Ltd and 3C Asset Management Ltd. The Group also includes Sampo PTE S.A., a pension fund company located in Poland, and AS Sampo Pank and UAB Sampo bankas, two banks located in Estonia and Lithuania respectively. The branch network also acts as a distribution channel for a wide range of advisory services and long-term savings products.
Performance remained quite good Banking and investment services recorded quite good results for the year under review. The operating profit was EUR 252 million (296). The return on risk allocated capital (RORAC) was 19.2 per cent (19.4), only just short of the 20 per cent target. The return on net asset value (RONAV) was 10.9 per cent (12.4). These return indicators are sensitive to changes in interest rates. A one percentage point change in interest rates is reflected in a 2–3 percentage point change in the values of the indicators.
Both gross and net fees and commissions receivable remained approximately as before. Fees and commissions receivable from asset management rose by 41 per cent due to the brisk growth of this business and the restructuring implemented. They also grew in basic banking operations and, in particular, in payment transactions and deposits, where they were higher than in the comparison year. Fees and commissions receivable from the investment bank’s corporate finance operations were significantly lower than in the comparison year, but profitability was maintained quite well despite the weakened market. Mandatum retained its leading position in Finland in advisory and M&A. The weak performance of the stock markets and seasonal factors
Expenses were lower than in the previous financial year. Staff and other administrative expenses declined by 4 per cent. The cost reductions in Finnish operations were offset by increased investments in banking in Estonia and Lithuania. The concentration of property assets in the holding company in November 2001 weakened the result of banking and investment services by EUR 13 million as incomes decreased by nearly EUR 19 million and costs and depreciation contracted altogether by over EUR 5 million. As incomes decreased more than costs, the cost to income ratio (including net amount of fees and commissions in income) weakened during the financial year to 64 per cent (59). The effect of changes in interest rates on the cost to income ratio is considerable. A one percentage point change in the general interest level affects the cost to income ratio by about 4 per cent.
The subsidiary banks operating in Estonia and Lithuania increased their number of customers substantially and altogether the banks had nearly 75,000 customers at the end of the year under review. The number of housing loans granted in Estonia doubled and the loan portfolio at the end of the year under review was EUR 55 million. The growth in Lithuania was still faster with the number of housing loans rising during the year from EUR 6 million to EUR 32 million. The end-ofyear result of the Estonian bank, AS Sampo Pank, was a profit, while the Lithuanian bank, UAB Sampo bankas, is expected to be profitable from the beginning of 2004.
The mutual fund business, one of Sampo’s core business areas, performed extremely well during the financial year. Sampo’s market share of all new Finnish net investments in Finnishregistered funds was almost 45 per cent. The emphasis on sales in the distribution network and good mutual fund products were the main factors that promoted Sampo’s strategy of tapping the growth potential of long-term savings. According to the mutual fund report of the Finnish Association of Mutual Funds published by the Helsinki Exchanges, Sampo became the largest mutual fund management company in Finland in September and at the end of the year it held a market share of 24.5 per cent (18.4). The market share in the retail customer segment increased even more to 25.5 per cent (17.7).
Assets under management grew The total amount of assets under discretionary management within Sampo Group grew due to new investments and restructuring to about EUR 17 billion (10.1). At the end of 2002, assets held under discretionary management agreements by Mandatum Asset Management, including the mutual funds and the Group’s own portfolios, amounted to around EUR 15.7 billion (10.1). This included about EUR 6.6 billion in Group-related assets. During the year under review, the management of the Group’s life insurance assets was transferred under Mandatum Asset Management, with respect to fixed income and foreign equity investments. Mandatum Private Equity Funds had about EUR 800 million under management and 3C over EUR 400 million.
Growth in retail customer loans With regard to traditional banking products, growth did not reach the level of long-term savings products. The deposit base increased during the financial year by just under 2 per cent and Sampo Bank’s market share of deposits in Finland was 14 per cent at year’s end (14). Sampo Bank’s market share of deposit-taking bank lending in Finland was about 14 per cent on 31 December (14). Sampo Group’s loan portfolio contracted during the year, due to the reduction in the corporate loan portfolio and the strategydriven sale of export and project finance. Loans to households continued to grow, rising to EUR 5,715 million (5,322). Housing loans, which form more than 3/4 of all loans to households, climbed by over 9 per cent. Tightened competition was reflected in a fall in margins. Sampo Bank retained a market share of over 14 per cent in housing loans in Finland. Banking grew strongly in Estonia and Lithuania. Although the subsidiary banks in those countries currently account for only a small share of the Group’s result and balance sheet, rapid growth is expected to continue.
The sale of Sampo Life’s insurance products rose to a record level during the year under review. In accordance with the Group’s strategies, the focal sales areas were the retail customer segment and especially unit-linked insurance. 23,173 new insurance policies including a unit-linked
Capital adequacy of the Group total capital / risk-weighted assets 17.3% 12.7%
Success in the areas of focus was reflected in powerful growth in premium income from regular premium contracts. In 2002, 48 per cent of Sampo Life’s premiums derived from such contracts (32).
The net investment income of the Group’s life insurance companies increased to EUR 193 million (248) and the return on investment assets at current values was 2.8 per cent. The market value of investment assets (excluding unit-linked insurance) on 31 December 2002 was EUR 5.2 billion, of which 62 per cent was invested in fixed income instruments, 30 per cent in equities and 7 per cent in properties. Of all investments, 52 per cent were in Finland, 21 per cent in the rest of the euro zone and 27 per cent in other countries.
From the beginning of 2002 Sampo Life introduced a new accounting method based on the principle of fairness, according to which the owners’ share of valuation differences is standardised at 25 per cent. On 31 December 2002, therefore, EUR 59 million was allocated to shareholders from a total of EUR 234 million in valuation differences. In 2002, 4.5–5.25 per cent returns were credited to insurance savings entitled to customer credits, depending on the type of insurance. Technical provisions include customer credits amounting to EUR 36.7 million > Sampo plc Board Of Directors’ Report 2002
(55.7) awarded for 2002. Earlier reserved credits were used to finance the customer credits and EUR 48.2 million has been reserved for credits in future years. At the end of the year under review, the provision for future additional benefits was EUR 72.3 million (73.2).
The holding company recorded an operating profit of EUR 277 million (372) for the year under review. The majority of the operating profit, EUR 261 million, arose as a result of the rearrangements with respect to If. In 2001 the operating profit included one-off sales profits from Nokia shares in particular.
If started several projects to lower costs and improve profitability. During the year under review, significant cost savings were achieved by reducing the number of staff, by utilising IT synergies in the Nordic countries and by renegotiating external service contracts. In addition, insurance premiums were raised, particularly in Sweden and Norway, and underwriting was tightened by new instructions. The technical result was a profit of EUR 35 million for the year under review (–215) and the combined ratio fell to 106.1 per cent (113.1 per cent, proforma).
The result for the year under review was a loss and Sampo’s share of If’s loss for 2002 was EUR 69 million.
Preparation for implementing IAS The European Parliament and the Council of the European Union approved the Final Regulations on IAS on 14 September 2002, according to which member states’ listed companies should prepare their consolidated accounts for each financial year starting on or after 1 January 2005 in conformity with the International Accounting Standards (IAS/IFRS).
Sampo has established an on-going IAS Project, to create the framework for the Group’s flexible transfer to consolidated accounts in conformity with the standards in 2005. The work is advancing on schedule.
The result prospects for banking are clouded by low interest rates. If short-term rates do not rise, net income from financial operations will be weaker than last year. The quality of Sampo’s credit portfolio is good, and provisions for bad and doubtful debts are not expected to grow significantly. Net fees and commissions receivable are likely to continue their steady development, but fees and commissions related to long-term savings will grow faster than those related to investment banking.
The substantial one-off items that have influenced Sampo Group’s result in recent years are not in sight for 2003. Nevertheless, the result is expected to be good. In producing the shareholder value, the main emphasis is on return on invested capital, which increases as business becomes more efficient and as the Group returns to its shareholders capital released from business operations.
Income from companies accounted for by the equity method 4 4
Net income from transactions in securities and foreign exchange dealing 16 from transactions in securities –4 401 from foreign exchange dealing –1 –4
Depreciation and write-down of tangible and intangible assets 19 –29 –45
Income from companies accounted for by the equity method 3 4
EUR m Notes 2002 2001 > Consolidated Profit and Loss Account
Loans and advances to customers 27, 30, 66, 67 12,490 13,597
Depreciation and write-down of tangible and intangible assets 19 –8 –5
Loans and advances to customers 48, 50, 84, 85 13 24
Sampo Group regularly evaluates the risks of its business areas and the sufficiency of the companies ’ capitalisation in relation to their risks. These evaluations are made at the individual company level and at Group level.
Collateral rating Collateral is divided into four quality categories according to the probability of a full recovery in the event of possible realisation. Each type of collateral, e.g. securities by issuer, is given a valuation percentage, and this is used to place the share of the collateral pledged to the Bank, at its fair value, in a quality category. The collateral values are regularly updated.
The creditworthiness of retail customers is assessed by comparing the customer’s income, or that of his or her family, with living expenses and debt repayment obligations. Uncertainties related to the estimation of creditworthiness are covered by collateral which, in the case of longterm loans, is usually a dwelling. In the case of smaller unsecured loans, the creditworthiness of personal customers is assessed by credit scoring, which estimates the customer’s ability to repay the loan. The incidence of delayed loan repayments and the development of non-performing loans are monitored and reported on continuously.
Sampo Group’s outstanding exposures to customers decreased by about EUR 2.3 billion or 9 per cent during the year, and stood at EUR 24 billion at the end of the year. Exposures to retail customers and to financial institutions increased by 9 per cent and 14 per cent respectively, while exposures to public sector customers and to corporate customers decreased by 42 per cent and 15 per cent respectively. The decrease in exposures to the public sector was mainly because Sampo Bank decreased its investments in Finnish Government bonds. The decrease in exposures to the corporate sector was due to the fact that, on 23 April 2002, Sampo Credit and Sampo Bank contracted to sell an export and project finance portfolio valued at approximately EUR 1.3 billion to Landesbank Schleswig-Holstein Girozentral (LB Kiel). This was secured by a bank guarantee supplied by LB Kiel on 7 May 2002. By the end of 2002 nearly one third had not yet been transferred to the purchaser, but will be transferred in accordance with the agreement by 7 May 2003. The majority of the sold portfolio was on Sampo Credit’s balance sheet.
the beginning of the year. At the end of the year, these exposures totalled EUR 134 million and were secured by I–IV category collateral amounting to EUR 75 million. Non-performing loans fell by nearly one half from the level at the beginning of the year. The relatively large share of non-rated exposures is due to the inclusion in the figures of life insurance counterparties and the customers of Baltic area banks.
76 per cent of the retail loan portfolio and most of the new lending was used to finance the purchase of dwellings. 74 per cent of lending and the total of its growth was in areas of net in-migration of population. 2 per cent of lending was in areas with significant net out-migration. About 96 per cent of lending to retail customers was secured by category I–IV collateral, which are mainly dwellings and government guarantees, while 4 per cent of the total was unsecured credits.
Exposures to customers in default (due to bankruptcy, corporate or debt restructuring, failure to perform, non-interest earning loans, booked provisions for bad and doubtful debts) stood as follows: Corporate and institutional
The above exposures totalling EUR 164 million are secured with category I–IV collateral totalling EUR 116 million. Additionally, the Group has made specific provisions pooled by customer group, totalling EUR 35 million. These provisions have not been deducted from the above figures.
Total exposures to corporate and institutional customers in default decreased by EUR 95 million, including non-performing loans of EUR 38 million. The latter decreased by EUR 42 million during the year. This customer group includes customers whose loans are only partly non-performing. As the non-performing part is removed, the customer is returned its original rating category. The decrease in non-performing loans was mainly due to the customer or guarantor making the payments that were in default.
Total exposures to retail customers in default, as shown in the above table, increased by EUR 2 million and include non-performing loans of EUR 41 million. As non-performing loans increased by EUR 3 million, the contribution of other items to total exposures to retail customers in default decreased by EUR 1 million.
The Group’s Asset & Liability Committee (ALCO) sets limits, control parameters and risk taking authorisations for market risks in banking activities and formulates the main risk-taking policies for the Boards of operating companies.
ALCO monitors the market and liquidity risks of non-trading activities – the so-called banking book – on a monthly basis. With respect to market risks, the main focus is on the effects of interest rate movements on the economic value of the banking book and on the annual net income from financial operations. In liquidity risk monitoring, the main focus is on the so called funding gap – the difference between customer assets and liabilities, the maturing of assets and liabilities over time and the ratio of liquid assets to different types of liabilities.
Market risks in trading are measured and limited by using a technique called Value-at-Risk (VaR). VaR figures are calculated, with a confidence level of 99 per cent, for overnight risk. The volatility and correlation parameters required by the model are calculated daily on the basis of 60-banking day historical market observations. Risks are also monitored and limited by means of stress testing and exposure limits, thus ensuring that agreed levels of risk are also not exceeded in exceptional market conditions.
The interest rate and liquidity risk related to banking book is concentrated mainly in Sampo Bank’s euro-denominated balance sheet. The interest rate risks of foreign currency-denominated balance sheets are minor. Thus, the currency-denominated net income from financial operations is based mainly on credit margins. In the other companies the interest rate risks of banking books are small. The foreign subsidiaries fund themselves from the market and the other companies from Sampo Bank.
Market risks in trading of Sampo Group’s banking operations for 2000–2002 (1% daily VaR figures)
Finnish customers favour loans with variable interest rates. Thus, most of the bank’s loans to customers are tied to Euribor market rates, contrary to the majority of retail demand deposits, the interest rates of which are determined by the bank itself based on general interest levels and the competitive situation. When low rates prevail, the interests paid on deposits are slower to adapt to decreases in market rates than interests received on loans. This results in a slimming in interest margins and thus decreased profitability for customer business. The basic risk is thus a situation in which Euribor rates remain at a low level for a long time. A key task for Asset and Liability management is to maintain a hedge, the yield of which compensates a contraction in net income from core customers operations.
Sampo Bank’s loans and advances to customers totalled about EUR 9.5 billion. When the corresponding assets of Sampo Bank’s subsidiaries and Sampo Credit are added, a total of EUR 12.2 billion in loans and advances required funding by Sampo Bank. The funding gap between assets and liabilities to customers was thus about EUR 1.7 billion at the end of 2002. The basis of liquidity management is the forecasted funding gap. In addition, ALCO also regularly monitors other indicators of liquidity position, of which one of the most important is the maturity-specific asset and liability risk position.
In 2002 the proportion of long term funding was considered sufficient and Sampo Bank was not active in issuing long-term bonds.
Structure of Sampo Bank’s liabilities 31 Dec. 2002 % 31 Dec. 2001
Technical risks are limited through careful risk selection, pricing to reflect the risks and costs, and reinsurance. Reinsurance hedging is used
EUR m 0–1 m 1–12 m 1–2 y 2–5 y >5 y Total
Assets denominated in other currencies 1,057 632 44 68 103 1,904
Liabilities denominated in other currencies 1,019 319 99 370 282 2,089
Net of items denominated in other currencies 38 313 –56 –302 –179 –184
The calculations only include balance sheet items. For example, undrawn loans or overdraft facilities are not included.
Operational risks Operational risks are defined as the risks of losses attributable to defective processes or systems, to mistakes or abuses, or to unexpected external events.
The Sampo Group’s various business areas are responsible for organising and monitoring the management of operational risks. These risks are primarily controlled by making processes efficient and clear, by maintaining personnel competence and by regular reporting. At the Group level, internal auditing monitors the adequacy and efficiency of the Group’s internal control, while the Compliance function monitors the adherence to regulations and guidelines and the validity of financial information.
Preparations have been made for unexpected external events by drawing up operational contingency plans and through insurance. The focus is especially on information security and systems reliability.
Sampo plc has initiated a project to improve the co-ordination and management of Group-level operational risks. The aim is also to create a framework for the collection and analysis of actual event information concerning the Group’s operational risks.
The Basel 2 compliance project currently underway in Sampo is responsible for Sampo Group’s full compliance with the new framework. Sampo’s project is divided as follows: – Credit risk – Operational risk – Market risk and interest rate risk of banking book – Capital adequacy and allocation
As a part of the preparation process Sampo Bank has analysed the proposals of the Basel Committee, especially in terms of the bank’s own portfolio. During autumn 2002, Sampo Bank participated in the Quantitative Impact Study 3 set up by the Basel Committee. The aim of this study was to estimate the capital impact of the proposed rules by using actual exposure data provided by banks. Additionally, Sampo’s internal risk management was developed in conformance with the proposals on capital adequacy during 2002.
The provisions of the Companies Act and Accounting Act and the Decree on Accounting are followed as is prescribed in the Act on Credit Institutions, the Insurance Companies Act and the Decree of the Ministry of Social Affairs and Health. In addition, the rules and recommendations concerning companies listed on the Helsinki Exchanges have been taken into account.
Comparability of data The Group’s parent company is Sampo plc, which was converted from an insurance company into a holding company on 31 March 2001.
Up to that date, the parent company’s profit and loss account for 2001 has been prepared in accordance with the Decree of the Ministry of Social Affairs and Health on the annual and consolidated accounts of insurance companies, while since that date they have been prepared in accordance with the Decree of the Ministry of Finance on the annual and consolidated accounts of credit institutions and investment services companies. The parent company’s results for the period when it was an insurance company are shown as a separate item in the company’s comparative profit and loss account.
Companies of whose equity voting rights the Group holds more than 50 per cent, either directly or indirectly, have been treated as subsidiary undertakings. Companies of whose equity voting rights the Group owns 20–50 per cent have been treated as associated undertakings.
Subsidiaries acquired during the financial year have been consolidated as from the date of acquisition, and subsidiaries sold until the date of disposal.
The accounts of the Group companies are included in the consolidated accounts using uniform accounting policies where possible. Differences arise in particular from the different valuation principles applied in banking and investment services and holding company business on the one hand and in the life insurance business on the other. Assets and liabilities in the same line of business are valued using the same principles.
Inter-business transactions and assets and liabilities have not been eliminated line by line, but are shown as a separate item by line of business.
Intra-Group shareholdings have been eliminated by using the acquisition method. Accordingly, the difference between the acquisition cost and capital and reserves of the subsidiary companies at the date of acquisition has been allocated to the identifiable balance sheet items and is depreciated according to the plan applied to those items. The unidentifiable part of the difference has been treated as goodwill and capitalised as an intangible asset. It will be amortised through the profit and loss account over its expected useful economic life.
In the ownership rearrangements carried out, the amount of the valuation difference of assets and liabilities disposed of by the Group in an exchange of shares with If, and valued according to Finnish and Swedish valuation practices, and the sales profit on the part paid for in cash are recognised in the profit and loss account as a sales profit of Sampo Group in relation to the shareholding of the external owners in If, under the item “Other operating income”.
Items denominated in currencies other than euro Banking and investment services and holding company business
The assets, liabilities and off-balance sheet items denominated in other currencies than euro have been translated into euro at the European Central Bank’s middle rate on the balance sheet date. Assets and liabilities, which have been hedged by currency swaps are stated at the rate of the original currency. Exchange rate differences arising from translating the items in other currencies into euro and the valuation of exchange rate contracts are included in “Net income from foreign exchange dealing”.
Other investments have been valued at the exchange rates on the date of acquisition or on the balance sheet date, whichever is lower, with the exception of shares characterised as investments, which have been valued without separating the changes in exchange rates and market values. Exchange rate differences resulting from receivables and investments are included in the profit and loss account under the items “Investment income” or “Investment charges”.
The exchange rate differences relating to underwriting business have been derived from the differences in figures calculated according to the floating and fixed exchange rates of the foreign reinsurance business. The differences have been calculated from premiums and claims, including changes in the provisions for unearned premiums and outstanding claims, the reinsurance commissions earned and interest on deposit. Exchange rate differences from underwriting business are included in “Investment income” or “Investment charges”.
Assets and liabilities Loans and advances and liabilities are stated in the balance sheet at the value paid or received for them at the time of acquisition, adjusted for the amortisation of premiums and discounts arising on acquisition. In the profit and loss account, the amortisation of premiums and discounts is accrued as interest receivable or interest payable over the life of the contract. If the probable value of a loan or advance is estimated at lower than the book value, the loan or advance has been stated in the balance sheet at this estimated value and the difference is included in the profit and loss account under the item “Provisions for bad and doubtful debts”.
The items “Other assets”, “Prepayments and accrued income”, “Other liabilities” and “Accruals and deferred income” in the balance sheet have been stated at their nominal value.
Securities which are sold or purchased under commitments to resell or repurchase them, or lent securities, are included in the original balance sheet item irrespective of the contract. The purchase price is treated as a loan and the selling price as a liability in the relevant balance sheet item with respect to each counterparty. The difference between the resale price and the purchase price of a purchased
Lease assets Lease assets are stated in the balance sheet at cost less depreciation according to plan. The depreciation is stated at the amount of capital recovered from the lease payments.
Securities held for trading purposes Securities held for trading purposes consist of treasury bills and other eligible bills, other debt securities and equity shares which are included in the trading book, and other securities which are held for trading.
Securities included in the trading book have been stated at market value, and other securities held for trading purposes at the lower of cost and market value.
Securities held as financial fixed assets are stated at cost less any permanent diminution in value. The permanent diminution in value of these securities is shown separately in the profit and loss account under the heading “Write-offs in respect of securities held as financial fixed assets”. The item also includes the potential write-backs of these securities.
The shares and participations in property companies are stated at cost, less any permanent diminution in value.
Investments Investments in properties and property companies Shares in property companies are stated at the lower of acquisition cost and current value. Buildings and their components are stated at cost less depreciation according to plan or at current value, whichever is lower. The cost includes the direct expenses of purchase and improvements in properties. The write-downs of the values of properties and property companies that can be characterised as fixed assets are based on the permanency and materiality of the diminution. Revaluations have been made in the book values of certain properties and property companies.
Current values of properties and property companies: Properties and property companies are classified as those occupied for the Group’s own activities and those for other activities. If only a part is occupied for the Group’s activities, the classification is made in relation to the square metres occupied.
The current value of not publicly traded shares and debt securities is stated as the net asset value, or the lower of the remaining acquisition cost and the estimated probable transaction price. The current value of shares in other insurance companies is stated as the estimated probable transaction price or, if not available, the net asset value. The current value of shares in Group companies is stated as the net asset value or book value, while that of shares in associated companies is regarded as the value calculated according to the equity method of accounting or the net asset value.
Revaluations and adjustments to them made on investments that can be characterised as invest-
The difference between the book value and the remaining acquisition cost of investments, which is shown in notes, consists of revaluations and accumulated changes in the net assets of the associated undertakings, having been accounted for by the equity method.
Technical provisions In calculating technical provisions, various methods are applied involving assumptions on matters such as mortality, morbility, yield level of investments, future operating expenses and the settlement of claims. Technical provisions are annually revised on the basis of assumptions and new data received.
The change in the technical provisions of reinsurance has been calculated at fixed rates of exchange. Therefore, the impact of the exchange rates in the underwriting business on the results has been included in “Investment income” in the profit and loss account.
Sampo Life aims at giving a total return before charges and taxes on policyholders’ with-profit insurance savings, which is at least the yield of a Finnish government long-term bond. The total return consists of the guaranteed interest rate and bonuses determined annually on the basis of the company’s performance. As for the level of the total return, continuity is pursued.
The Board of Directors of Sampo Life has made a decision on the interpretation of the Principle of Fairness in life insurance, and thus of the share of the valuation differences of the company’s investments allocated to the owners. From the start of 2002, the company has applied a new interpretation of the Principle of Fairness, according to which the share of the owners in the valuation differences of investments is a constant 25 per cent. Previously the interpretation applied was that 0–60 per cent of the valuation differences was allocated to the owners, depending on the company’s solvency. This computational distribution of valuation differences does not entitle individual shareholders or policyholders to claim these valuation differences.
Depreciation and amortisation The depreciation plan is made on a uniform basis within the Group. Assets are amortised or depreciated on a straight-line basis according to plan over their estimated useful economic lives, as follows: Intangible rights 4–10 years Goodwill 5–10 years Goodwill arising from consolidation and negative consolidation difference 3–20 years Other long-term expenditure 3–10 years
Provisions for bad and doubtful debts and non-performing loans Banking and investment services and holding company business
The amount also includes the unrealised losses arising from valuation of the assets acquired in settlement of unpaid loans, and the losses on the sale of such assets. In addition, in the Group accounts, the additional depreciation on lease assets is included in “Provisions for bad and doubtful debts”.
profits on the sale of assets acquired in settlement of unpaid loans have been deducted from “Provisions for bad and doubtful debts”.
“Claims paid” (claims settlement expenses) and under “Investment charges” (management expenses arising from property investments and other investments).
Taxes on ordinary activities and on extraordinary items are shown separately in note 22.
Companies use them in planning their accounts and taxation. The amount of those appropriations or changes in them do not reflect the risks of the companies.
In the accounts of the individual Group undertakings, the untaxed reserves and the difference between the depreciation according to plan and the amount deductible in corporate taxation are shown as a separate item in companies’ profit and loss accounts under “Appropriations” and in balance sheets under “Accumulated appropriations”. The appropriations shown in the individual profit and loss accounts and balance sheets are presented without deducting the deferred tax liability arising from them.
Off-balance sheet items and derivative contracts Banking and investment services and holding company business
Off-balance sheet items Off-balance sheet items consist of contingent liabilities and commitments. Contingent liabilities comprise transactions in which companies have underwritten the obligations of third parties, including guarantees and assets pledged as collateral security. Commitments consist of irrevocable commitments such as sale and option-to-resell transactions, underwriting commitments, undrawn formal standby facilities, credit lines and other commitments to lend.
Derivative contracts Derivative contracts made for trading purposes are marked to market and the resultant profits and losses are included in “Net income from transactions in securities and foreign exchange dealing”.
In notes 2 and 16, “Net income from securities transactions”, the item “Net income from transactions in debt securities” also includes the profits and losses on interest rate contracts. Profits and losses on equity contracts are included in “Net income from transactions in equity shares”. Profits and losses on exchange rate contracts are included in “Net income from foreign exchange dealing”.
The negative valuation difference between the current value and the higher book value / contract rate of a non-hedging derivative instrument is recognised as an expense. The positive valuation difference is taken into account only in calculating the solvency margin. In addition, the maximum loss arising from the non-hedging derivatives, calculated with the Value-at-Risk method, is deducted from the solvency margin.
The key figures relating to life insurance have been calculated in accordance with the decree issued by the Ministry of Finance and with supplementary instructions issued by the Ministry of Social Affairs and Health on 23 September 2002.
Banking and investment services revenue + life insurance revenue + holding company revenue
Banking and investment services + interest income + net leasing income + dividend income + fees and commissions receivable + net income from transactions in securities and foreign exchange dealing + other operating income
Operating profit Banking and investment services operating profit + life insurance operating profit + holding company operating profit
Profit before extraordinary items and tax + banking and investment services operating profit + life insurance operating profit + holding company operating profit ± change in the life insurance equalisation provision ± life insurance bonuses and rebates
Return on assets (at current values), % + operating profit + interest and other financial charges + calculated interest on technical provisions ± revaluation entered into / withdrawn from revaluation reserve ± change in valuation differences on investments *)
Equity/assets ratio (at current values), % + capital and reserves (excl. preferred capital notes in banking operations) + minority interest ± valuation differences on investments after deduction of deferred tax *)
Average number of staff Average of month-end figures, adjusted for part-time staff *) In calculating the returns on equity and assets and net asset value per share, the valuation differences have been adjusted for the “other required items (Ministry of Finance decree)” component of the solvency margin, which includes derivative contracts pertaining to the life insurance operations.
Revenue Formula shown above in connection with calculation of Group key figures.
+ net income from financial operations + dividend income + fees and commissions receivable + net income from transactions in securities and foreign exchange dealing + other operating income
Operating profit Formula shown above in connection with calculation of Group operating profit.
Solvency margin + capital and reserves after proposed profit distribution ± valuation differences on investments – intangible assets ± deferred tax ± other required items (Ministry of Finance decree)
Earnings per share + profit before extraordinary items and tax – tax ± minority interest adjusted average number of shares
Net asset value per share + capital and reserves (excl. preferred capital notes in banking operations) ± valuation differences on investments *)
± deferred tax and minority interest relating to valuation differences on investments adjusted number of shares at balance sheet date
Relative share trading volume number of shares traded through the Helsinki Exchanges
× 100 adjusted average number of shares *) In calculating the returns on equity and assets and net asset value per share, the valuation differences have been adjusted for the “other required items (Ministry of Finance decree)” component of the solvency margin, which includes derivative contracts pertaining to the life insurance operations.
Pro forma Sampo Sampo Sampo Sampo Sampo Sampo Group Group Group Group Group Group
Profit before appropriations and tax EUR m 545 1,078 1,175 512 308 123
Return on equity (at fair values) % 1.4 –15.3 3.5 37.5 67.1 33.1
Net asset value per share less full deferred tax from the Group’s valuation differences EUR 5.26 5.67 8.40 8.74
Adjusted average number of shares 1,000 555,730 555,588 522,535 – 304,000 304,000
Counter-value of shares at 31 Dec. approx. EUR 0.17 0.17 0.17 – 0.17 0.17
Adjusted number of shares at 31 Dec. 1,000 552,654 554,423 518,800 – 302,800 302,800
Weighted average share price EUR 8.16 10.11 8.96 – 6.19 7.34
Adjusted share price. high EUR 9.95 12.70 12.20 – 8.20 10.46
Adjusted share price. low EUR 6.02 7.70 5.87 – 5.14 3.87
Furthermore, the profit or loss corresponding to the share held in the associated company If has been added or deducted in the operating profit. Therefore, the Group operating profit is not equal to the sum of business area operating profits.
***) The dilution effect for 2002 has beeen calculated as if all the remaining subscriptions (3,159,340) entitled to would have been realised. One subscription right entitles to subscribe for 5 shares. In 2001, there were 3,261,450 possible subscription rights.
The number of shares used is 553,853,865. The amount includes the number of shares after the split on 20 April 2001, i.e. 555,584,965, to which 703,300 A shares subscribed in 2001 and 2002 under the warrant certificates of the 1998 option programme have been added and the 2,434,400 mother company shares owned by the Group companies have been deducted. The number of shares of the reference periods have been adjusted to comply with the current share capital and number of shares.
In calculating the key figures the tax corresponding to the results for the accounting period has been taken into account. In calculating the net asset value per share, return on equity and equity/assets ratio as per 31 Dec. 2002, the deferred tax liability of 29%, which is estimated to be realised during the next three years, has been deducted from the holding company’s valuation differences. A deferred tax liability of 18.6% has been deducted from the valuation differences of P&C insurance in the reference periods. The net asset value per share has furthermore been presented per 29%, i.e. less full deferred tax in all reference periods.
Notes to the profit and loss account Banking and Investment Services 1 Interest receivable and payable ..........................................................78 2 Net income from transactions in securities ......................................78 3 Other operating income and expenses ..............................................78 4 Depreciation and write-downs of tangible and intangible assets.....78 5 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets ...................................79 6 Segmental information .......................................................................79 Life Insurance Business 7 Premiums written ...............................................................................80 8 Claims paid ..........................................................................................80 9 Total operating expenses by activity...................................................81 10 Staff costs ............................................................................................81 11 Emoluments of members of administrative and supervisory bodies ..............................................................................81 12 Average staff numbers ........................................................................81 13 Net investment income .......................................................................82 14 Other income and charges..................................................................83 Holding Business 15 Interest receivable and payable ..........................................................83 16 Net income from transactions in securities ......................................83 17 Other operating income and expenses ..............................................83 18 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets..................84 19 Depreciation and write-downs of tangible and intangible assets.....84 20 Segmental information .......................................................................84 Sampo Group 21 Extraordinary items.............................................................................85 22 Income taxes........................................................................................85 23 Segmental information of the group by class of business ................85 24 Elimination items in consolidated profit and loss account ...............86
Equities and equity derivatives 4 16 3 Other operating income and expenses Other operating income
Rental and dividend income from properties and property companies 2 20
Banking and Investment Services 5 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets
Recoveries of loans and guarantees written off in previous years –16 –11
Provisions pooled by customer group included in the specific provisions for the year – 6 6 Segmental information
By geographical segment *) Income from the group companies accounted for by the equity method
Impact on the technical result of bonuses and rebates attached to life and pension insurance policies reserved during the year 36 37
Other social security costs 2 2 11 Emoluments of members of administrative and supervisory bodies Managing Directors and Deputy Managing Directors 0.6 0.3
Members and deputy members of the Board of Directors 0.5 –
Members and deputy members of the Supervisory Board – 0.1 12 Average staff numbers By class of business
Liabilities to credit institutions and central banks 7 7 – 5
Debt securities in issue 12 7 12 7 16 Net income from transactions in securities Debt securities and interest rate derivatives 2 0 2 0
Equities and equity derivatives –5 401 –5 401 17 Other operating income and expenses Other operating income
Loss on disposal of properties and property companies 15 2 2 1
Parent Parent Parent Parent Group Group Group Group Company Company Company Company
Loans and advances to customers 0 – – 0 0 – – 0
Average staff Average staff Average staff Average staff Income number Income number Income number Income number
*) The figures do not include the revenue of 108 EUR m nor the staff of 611 of the group company Primasoft Oy. The company provides computer services and is owned by Sampo plc and Sampo Bank Plc. In the consolidated figures it is accounted for by the equity method.
Change of accounting polices due to the If business transaction 108 –
25 Treasury bills and other eligible bills Treasury bills – 5
Bad and doubtful debt provisions based on credit rating –31 –31
Differences between the market value and the lower book value of securities 1 –
Book value at end of year 29 13 25 35 Intangible Assets Goodwill 7 12
Banking and Investment Services 37 Other assets Items in transit 13 35
Water areas and agricultural and forest land – – – –
Accumulated depreciation on decreases and appropriations 1 2 – 1 4
40 Fair value and valuation difference on investments 2002 2002 2002 2001 2001 2001 Remaining Remaining acquisition Book Fair acquisition Book Fair cost value value cost value value
Life Insurance Business 41 Changes in investments in land and buildings Land and buildings Loans to and shares in associated property companies undertakings
Swiss Life Relative Value Strategies Class C Cayman Islands 12,051 – 17 17
Duke Street Capital IV UK L.P. UK – – 14 14
Nexit Infocom 2000 Fund Limited Partnership UK – – 6 6
Procuritas Capital Partners II - B, L.P. Sweden – – 5 5
Life Insurance Business 44 Other loans by security Bank guarantee – 0
Investments pertaining to unit-linked insurances, corresponding to technical provisions 462 370 343 299 46 Derivative contracts shown on the balance sheet
Holding Business 47 Loans and advances to central banks included in loans and advances to credit institutions Loans and advances to credit institutions 51 260 50 240 of which to central banks – – – –
Book value of assets pledged as collateral security and acquired by the Bank in settlement of unpaid loans
Shares and participations acquired in connection with the reorganisation of a customer’s business operations 0 – 0 0 50 Subordinated loans Loans and advances to customers 4 5 4 5
52 Shares and participations Book value of shares and participations, total 169 89 170 93
Credit institutions – – 1,454 1,505 53 Movements in shares and participations held as financial fixed assets and in tangible assets
Land and buildings, shares and Equipment and Shares and participations other tangible Group participations in property companies assets
Holding Business 54 Intangible assets Group Group Parent Company Parent Company
Properties and shares in property companies occupied for other than own activities 31 December 2002
Total 171 Total 168 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 space to all spaces which can be let out. Unlet spaces are spaces which can be let out, but which yield no rental income based on a lease on the balance sheet date.
– Amount of appropriations of the Group’s companies entered in the capital and reserves in the consolidated accounts –77
At the end of the financial year, EUR 10 million of the preferred capital notes issued in 1998 by Sampo Bank were outstanding.
60 Movements in parent company capital and reserves 1 Jan.–31 Dec. 2002 Share capital, 1 Jan. 93
Information about Sampo’s shares and shareholders is presented in the Annual Report, pages 28–31.
Other – 141 63 Other liabilities Items in transit 268 412
Other subordinated liabilities 39 68 of which amount of perpetuals 100 119
Banking and Investment Services 67 Assets and liabilities denominated in domestic and foreign currencies
Debt securities in issue 3,526 773 3,789 1,525 68 Deferred tax
Intra-day overdraft limit of the Bank of Finland’s settlement account 700 1,045
Debt securities 10 12 70 Pension liabilities The basic and supplementary pensions of the staff in the domestic Group companies have been arranged with insurances, while those in foreign subsidiary companies have been arranged according to the local practice.
Banking and Investment Services 71 Rental commitments The rental payments in 2003 13 10
The rental payments after year 2003 84 97 72 Off-balance sheet items Guarantees and assets pledged as collateral security 1,739 1,970 on behalf of Group undertakings – –
of which to or on behalf of associated undertakings 2 0
that may possibly be returned is as on the balance sheet date.
For other purposes underlying instruments 315 325 fair value 7 0
For hedging purposes underlying instruments – 46 fair value – –5
For other purposes underlying instruments – 220 fair value – –
For hedging purposes underlying instruments – 93 fair value – –4
The current values of option contracts include received and paid premiums. Negative valuation differences of derivative contracts made for other than hedging purposes have been charged to the Profit and Loss Account (fair value = 0).
Holding Business 84 Maturity analysis of assets and liabilities, by remaining maturity Group Group Parent Company Parent Company
Liabilities to credit institutions and central banks 70 – 70 –
Liabilities to credit institutions and central banks 77 – – –
Off-balance sheet items 1 1 1 1 88 Pension liabilities The basic and supplementary pensions of the staff in the domestic Group companies have been arranged through insurance in Varma-Sampo Mutual Pension Insurance Company and Sampo Life Insurance Company, while those in foreign subsidiary companies have been arranged according to local practice.
89 Off-balance sheet items to Group companies – – – –
Part-time staff 220 –33 253 –5 of which in banking and investment services 4,747 –129 4,876 –14 full-time 4,567 –130 4,697 –23 in life insurance 492 –296 788 438 part-time 23 –2 25 –10 in holding company 127 –682 809 –20 full-time 125 –639 764 –16 part-time 2 –43 45 –4
Sampo plc, Sampo Life Insurance Company Limited and the Baltic banks include only permanent staff in 2001.
Part-time staff 2 –43 45 –4 92 Emoluments of members of administrative and supervisory bodies Group Group Parent Company Parent Company
Sampo Group 93 Loans and advances to and guarantees on behalf of members of administrative and supervisory bodies
MB Mezzanine Fund II Ky 1, 6 Helsinki Finland 62.50 – 23
Sampo Life Insurance Company Limited 1, 6 Helsinki Finland 100.00 90.10 433
Kiinteistö Oy Hervannan Tieteenkatu 1 1 Tampere Finland 100.00 100.00 8
Kiinteistö Oy Salon Meriniitty Oy 1 Salo Finland 100.00 – 2
Realty World Ltd 2, 6 Helsinki Finland 100.00 – 1 1 1 *) Share of votes has been announced in brackets if different from the holding.
In addition, a total of 51 property and housing companies have been accounted for in the consolidated accounts. By virtue of regulations for credit institutions 36 property companies have been excluded from consolidation, the balance sheet total of which is less than EUR 10 million.
Sampo Group 95 Associated undertakings of the Group 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
MB Equity Fund Ky 2, 6 Helsinki, Finland 32.52 11.63 2
Kaleva Mutual Insurance Company 4, 5, 6 Helsinki, Finland 50.00 30.00 5 154 0
HEX Back Office and Custody Service Oy Helsinki, Finland 5.00 – 0 5*) 0
To the Shareholders of Sampo plc We have audited the accounting records and the financial statements, as well as the administration by the Board of Directors and the Managing Director of Sampo plc for the financial year 2002. The financial statements, which include the report of the Board of Directors, consolidated and parent company income statements, balance sheets and notes to the financial statements, have been prepared by the Board of Directors and the Managing Director. Based on our audit we express an opinion on these financial statements and on the company’s administration.
We have conducted the audit in accordance with Finnish Generally Accepted Auditing Standards. Those standards require that we plan and perform the audit in order to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting policies used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. The purpose of our audit of administration has been to examine that the Board of Directors and the Managing Director have legally complied with the rules of the Finnish Companies Act.
Sampo plc Visiting address: Unioninkatu 22, Helsinki Postal address: FIN-00075 SAMPO, Finland www.sampo.com E-mail: firstname.lastname@sampo.fi Telephone service: +358 200 2590
Sampo Fund Management Ltd Visiting address: Bulevardi 10 A, Helsinki Postal address: P.O.Box 1396, FIN-00075 SAMPO, Finland Telephone: +358 10 236 10
Sampo Credit plc Visiting address: Unioninkatu 22, Helsinki Postal address: FIN-00075 SAMPO, Finland
Mandatum Asset Management Ltd. Visiting address: Bulevardi 10 A, Helsinki Postal address: P.O.Box 152, FIN-00121 HELSINKI, Finland
Mandatum Private Equity Funds Ltd. Visiting address: Bulevardi 10 D, Helsinki Postal address: P.O.Box 152, FIN-00121 HELSINKI, Finland
Mandatum Private Bank Visiting address: Bulevardi 10, Helsinki Postal address: P.O.Box 152, FIN-00121 HELSINKI,Finland 3C Asset Management Ltd. Visiting address: Bulevardi 10 B, Helsinki Postal address: P.O.Box 152, FIN-00121 HELSINKI
UAB Sampo bankas Geležinio Vilko g. 18a, LT-2004 Vilnius, Lithuania www.sampo.lt
Sampo Towarzystwo Ubezpieczen na Zycie S.A. ul. Domaniewska 41, Orion 5th floor, PL-02-672 Warsaw, Poland www.sampo.pl
Amanda Capital Plc Visiting address: Bulevardi 10, Helsinki Postal address: P.O.Box 152, FIN-00121 HELSINKI, Finland www.amandacapital.fi
CO-OPERATION COMPANIES: Kaleva Mutual Insurance Company Visiting address: Bulevardi 56, Helsinki Postal address: FIN-00075 SAMPO, Finland Telephone: +358 10 515 225 Fax: +358 10 516 7454
Deutsche Bank Mark Cathcart Telephone: +44 207 547 6355 Spencer Horgan
Customers, pages 6–7, 10–11 and 129: Tiina Forssell, Lari Tuovinen and Pauli Takki Branch manager, pages 6 and 129: Ari Turunen Mobile sales manager, page 10: Tuija Järvenkallas Stockbroker, page 12: Patrik Kanerva Real estate agent, page 14: Carita Piippo Cover: Sampo’s office at Esplanadi, Helsinki
Pictures: Petri Artturi Asikainen, page 2 Lehtikuva/Heikki Saukkomaa and page 12 Ken Fisher/Stone/Getty Images Press cutting, page 8–9: Financial Times, 6 Jan, 2003 page 23 Design and layout: Kreab Oy Printing: Hansaprint Turku/302661/2003 Sampo plc, registered domicile Turku, Business ID 0142213-3
The Annual Report is published on Sampo’s Internet pages at the address Printed Annual Reports can be ordered by e-mail at the above Internet address, by post from Sampo Communications, P.O. Box 1026, FIN-00075 SAMPO, or by calling +358 10 516 0042.