SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE, October 24,
2007, at 9:00 a.m.
- Net sales for January-September totaled EUR 11.9 million, up 94.0
percent year on year (EUR 6.1 million in Q1-Q3/2006).
- Third-quarter net sales came to EUR 7.8 million, up 339.9 percent
on a year earlier (EUR 1.8 million in Q3/2006).
- Operating profit for January-September amounted to EUR 3.2 million
(a loss of -1.4 million in Q1-Q3/2006), profit EUR 3.8 million (-0.9
million). Third-quarter operating profit was EUR 4.3 million and net
profit was EUR 4.6 million.
- Two most significant 3rd quarter orders came from US retail chains.
The total value of the largest order was about EUR 4.5 million, of
which licenses EUR 4 million and annual maintenance EUR 0.5 million.
- The diversification of company's customer base was developing
favorably. The five largest new customers of the 3rd quarter came
from two large retail chains, large system integrator, large public
sector organization, and one of the world's largest car
manufacturers.
KEY FIGURES
1-9/ 1-12/
7-9/ 2007 7-9/ 2006 1-9/ 2007 2006 2006
Net sales (MEUR) 7.8 1.8 11.9 6.1 9.5
Net sales, change % 339.9 -24.9 94.0 18.3 1.7
Operating profit/loss
(MEUR) 4.3 -0.5 3.2 -1.4 -0.9
% of net sales 55.6 -27.6 26.9 -23.3 -9.4
Operating profit/loss,
change % 987.0 -166.8 324.3 61.3 66.5
Profit/loss before taxes
(MEUR) 4.6 -0.4 3.8 -0.9 -0.2
% of net sales 58.9 -20.4 32.1 -14.8 -2.0
Number of employees
at period end 84 78 84 78 80
Earnings per share (EUR) 0.13 -0.03 -0.01
Shareholders' equity per
share (EUR) 0.76 0.61 0.63
SSH Communications Security is a world-leading provider of enterprise
security solutions and end-to-end communications security, and the
original developer of the Secure Shell protocol. The company's SSH
Tectia solution addresses the most critical needs of large
enterprises, financial institutions and government agencies.
NET SALES
Consolidated net sales for January-September totaled EUR 11.9 million
(EUR 6.1 million), up by 94.0 % percent, year on year. Net sales for
the third quarter totaled EUR 7.8 million, an increase of 339.9 %
compared to the corresponding quarter for year 2006.
For a system-level IT product, such as SSH Tectia, the sales process
is often long. With major customers, the timing of large orders will
cause fluctuations in sales from quarter to quarter.
The majority of SSH's invoicing is based on the U.S. dollar. During
the report period, the U.S. dollar's average exchange rate was
approximately 8 percent weaker than during the same period a year
ago.
RESULTS AND EXPENSES
Operating profit for January-September amounted to EUR 3.2 million
(Q1-Q3/2006: a loss of EUR -1.4 million), with net profit totaling
EUR 3.8 million (a loss of EUR -0.9 million). Operating profit for
the third quarter totaled EUR 4.3 million (a loss of EUR -0.5
million), with net profit amounting to EUR 4.6 million (a loss of EUR
-0.4 million).
Research and development expenses for the report period totaled EUR
2.6 million (EUR 2.4 million). Sales and marketing expenses came to
EUR 5.0 million (EUR 4.1 million). The difference was caused by
increased marketing activities and sales growth linked expenses.
Administrative expenses were EUR 1.2 million (EUR 1.2 million).
BALANCE SHEET AND FINANCIAL POSITION
The financial position of SSH remained at a healthy level during the
report period. The consolidated balance sheet total on September 30,
2007 stood at EUR 25.2 million (EUR 19.7 million), of which liquid
assets accounted for EUR 20.9 million (EUR 16.8 million), or 83.0
percent of the balance sheet total. The company has no interest
bearing liabilities. On September 30, 2007, gearing, or the ratio of
net liabilities to shareholders' equity, was -96.7 (-96.7) and the
equity ratio stood at 93.5 percent (94.0 percent).
The reported gross capital expenditure for the period totaled EUR 0.1
million (EUR 0.1 million). Reported financial income came mainly from
capital gains on fund shares. Financial income and expenses totaled
EUR +0.6 million, compared to EUR +0.5 million a year ago.
During January-September, SSH reported a positive cash flow of EUR
3.9 million from business operations, whereas investments showed a
cash flow of EUR -0.2 million. Cash flow from financing was EUR 0.0
million. Cash flow from operations, investments and financing
resulted in the company showing a positive total cash flow of EUR 3.7
million during the period.
MARKET DEVELOPMENTS
Large enterprise, financial, and public sector organizations have a
growing need for improved data security in several ways. New and
existing data security risks, continuously evolving regulations, and
increasing security standards and models continue to create new
needs, to which we can respond with our versatile product offerings.
Demand for products that secure internal information transfers in
large listed enterprises and public sector organizations has
continued growing in USA. A similar demand growth trend is expected
to spread in the next phase to the largest European and Asian
enterprises.
Regulations that currently influence the demand of our company's
products are, for instance, the Sarbanes-Oxley Act (SOX), the PCI
standards of the major credit card companies, as well as HIPAA for
the patient data in the health care industry. These regulations cause
data security audits, which drive our customers to implement security
upgrade programs for their IT infrastructure against internal and
external threats.
SSH is confident that legislative reforms, new data security
standards, as well as many industry and company level data security
development programs will continue to drive demand favorably for SSH
Tectia.
SALES PERFORMANCE
SSH'S NET SALES
EUR million 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 1-12/
2007 2007 2007 2006 2006 2006
BY SEGMENT
AMER 7.3 1.0 1.8 2.0 1.1 5.7
APAC 0.2 0.2 0.2 0.2 0.3 0.9
EROW 0.3 0.3 0.5 1.2 0.4 2.8
SSH Group
total 7.8 1.5 2.6 3.3 1.8 9.5
BY OPERATION
License sales 6.8 0.6 1.6 2.4 0.8 5.8
Maintenance 1.0 0.9 0.9 0.9 0.9 3.6
Total 7.8 1.5 2.6 3.3 1.8 9.5
The Americas, the Asia Pacific region, and the 'Europe and Rest of
the World' market area accounted for 85 percent (62 percent), 5
percent (12 percent) and 10 percent (26 percent) of reported net
sales, respectively.
During the report period, SSH concluded six new license agreements
that were worth more than EUR 100,000. The ten largest customers
accounted for 68 percent of reported net sales, with the largest
single customer accounting for approximately 34 percent.
PRODUCTS AND MARKETING
During the report period, SSH focused its sales and marketing efforts
on large enterprises, financial institutions, and government agencies
in the USA, Europe, and Asia, in line with its long-term strategy.
The company continued also developing its partner network in the same
focus markets.
The marketing focus was on the company's new Tectia security
solutions of IBM mainframe environment and SSH Tectia's enhanced file
transfer applications for large internal enterprise networks. The
company continued the development of the new third generation
architecture-based products. The company also made further
development of the productisation to provide higher value, new
features and expanded uses, as well as enabling easier purchasing for
the customers.
New applications, support of all essential enterprise OS platforms
including IBM mainframes, versatile integration capabilities, and
centralized management have made SSH Tectia the most extensive and
highest performance integrated end-to-end communications security
solution in the market.
RESEARCH AND DEVELOPMENT
Research and development expenses for January-September totaled EUR
2.6 million (EUR 2.4 million), the equivalent of 22.1 percent of net
sales (39.8 percent). During the report period SSH did not capitalize
any research and development expenses.
HUMAN RESOURCES AND ORGANIZATION
At the end of September, the Group had 84 employees on its payroll,
up by 6 from the previous year, an increase of 7.7 percent.
At the end of the period, 50.0 percent of the employees worked in
R&D, 38.1 percent in sales and marketing, and 11.9 percent in
corporate administration.
BOARD AND AUDITORS
The Annual General Meeting (AGM) on March 29, 2007 re-elected Tapio
Kallioja, Tomi Laamanen, Timo Ritakallio and Tatu Ylönen to SSH
Communications Security Corp.'s Board of Directors, with Laamanen
re-elected as chairman.
The AGM again elected to have PricewaterhouseCoopers Oy, authorized
public accountants, as the company's auditor, with Henrik Sormunen,
authorized public accountant, acting as the principal auditor.
SHARES, SHAREHOLDING AND CHANGES IN GROUP STRUCTURE
The reported trading volume of SSH Communications Security Corp.
shares totaled 11,796,009 (valued at EUR 17,963,737.46). The highest
quotation was EUR 2.00 and the lowest EUR 1.12. The trade-weighted
average share price for the period was EUR 1.51, and the share closed
at EUR 1.92 (September 28, 2007).
In February SSH Communications Security Corp received a notification
in accordance with the Securities Market Act 2:9, according to which
the total of Assetman Oy's shares in SSH Communications Security Corp
has on February 13, 2007 risen above one tenth part (1/10) of the
total of all shares and related voting rights. Assetman OY held 12.6
percent of the company's shares at the end of the period. There were
no other substantial changes in SSH Communications Security Corp.'s
shareholding during the report period. Tatu Ylönen holds, directly
and through his company, Tatu Ylönen Oy, 53.0 percent of the
company's shares, and Tero Kivinen holds 5.7 percent. More
information about the shareholding can be obtained from the company's
Web site.
There were no changes in the group structure during the period.
SHARE CAPITAL AND BOARD AUTHORIZATIONS
The company's registered share capital on September 30, 2007 was EUR
855,206.85, consisting of 28,506,895 shares. During the report
period, SSH increased its share capital twice, based on subscription
to the new shares under SSH's stock-option plan. In total, 2,500 new
SSH shares were subscribed to under the I/1999 stock-option plan and
80,500 shares under the I/2003 stock-option plan, respectively. With
these subscriptions the company's share capital was increased by EUR
2,490.00.
On March 29, 2007, the Annual General Meeting decided, in accordance
with the proposal made by the Board of Directors to authorize the
Board of Directors to decide on issuing the maximum of 5.500.000
shares in one or more new share issues or on issuing special rights
to share subscription as defined in the Finnish Companies Act Chapter
10,
section 1, with or without subscription rights to shareholders.
This authorization is effective until the next Annual General
Meeting, but will expire June 30, 2008, at the latest. The Board has
not exercised this authorization.
CORPORATE GOVERNANCE
The company complies with the corporate governance recommendations
for listed companies issued by the Helsinki Stock Exchange, the
Central Chamber of Commerce of Finland, and the Confederation of
Finnish Industry and Employers. More information on corporate
governance is available on the company's Web site (www.ssh.com).
PROSPECTS
New data security regulations and risks continue driving our
customers in all target markets to long-term development programs for
the security of the IT infrastructure. We have received significant
new orders this year, diversifying our customer base and expanding
the ways the customers use our products. Large, successful deliveries
of our software products have reinforced our reference base both
technically and commercially. These and many other positive factors
make us expect good sales results also in the near term.
The US dollar exchange rate and speculations about the US economy
contain some factors of uncertainty that are hard to estimate.
However, as can be seen from our 3rd quarter results, the company's
sales and profitability have had no impact. Our active sales prospect
base is at a historically high level, especially in the US markets.
The most important near future challenge of the company is the growth
of the European and Asian sales. On geographical and industry basis
target markets that are in different network security adoption phases
can provide a good long-term growth scenario for the company. We
trust us to be in a good position to utilize the trends and
regulations of internal enterprise data security, spreading from the
USA and creating growing demand for our products also in Europe and
Asia.
Thanks to the significant growth of sales the full year results will
be clearly profitable.
Due to the large size of individual orders and depending on timing of
customer projects, significant variation of the quarterly revenue may
occur.
INCOME STATEMENT
EUR million 7-9/ 7-9/ 1-9/ 1-12/
2007 2006 1-9/ 2007 2006 2006
Net sales 7.8 1.8 11.9 6.1 9.5
Purchasing and production
costs 0.0 0.0 0.0 0.0 -0.1
Gross profit 7.8 1.8 11.9 6.1 9.4
Other operating income 0.0 0.1 0.1 0.3 0.4
Expenses
Product development -0.8 -0.7 -2.6 -2.4 -3.4
Sales and
marketing -2.3 -1.2 -5.0 -4.1 -5.7
Administration -0.3 -0.4 -1.2 -1.2 -1.6
Operating profit/loss 4.3 -0.5 3.2 -1.4 -0.9
Financial income and
expenses 0.3 0.1 0.6 0.5 0.7
Profit/loss before taxes 4.6 -0.4 3.8 -0.9 -0.2
Taxes 0.0 0.0 0.0 0.0 0.0
Net profit/loss for the
period 4.6 -0.4 3.8 -0.9 -0.2
a)
EARNINGS PER SHARE 1-9/ 1-9/ 1-12/
2007 2006 2006
Earnings per share (EUR) 0.13 -0.03 -0.01
Earnings per share, diluted (EUR) 0.13 -0.03 -0.01
BALANCE SHEET
EUR million 9/30/ 9/30/ 12/31/
2007 2006 2006
ASSETS
Fixed and other non-current assets
Tangible assets 0.1 0.1 0.1
Intangible assets 0.1 0.4 0.3
Deferred tax assets 0.2 0.2 0.2
Total fixed and other
non-current assets 0.5 0.7 0.7
Inventories and current assets
Short-term receivables 3.7 2.2 3.9
Short-term investments 15.5 14.8 15.0
Cash and cash equivalents 5.4 1.9 1.7
Total inventories and current assets 24.7 19.0 20.7
Total assets 25.2 19.7 21.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity 21.6 17.3 18.0
Long-term liabilities
Provisions 0.0 0.1 0.0
Long-term financial
liabilities 0.0 0.0 0.0
Total long-term liabilities 0.0 0.1 0.1
Short-term liabilities 3.6 2.3 3.3
Total liabilities and shareholders' equity 25.2 19.7 21.3
CASH FLOW STATEMENT
EUR million 1-9/ 1-9/ 1-12/
2007 2006 2006
Cash flow from business operations 3.9 1.0 0.9
Cash flow from investments -0.2 6.6 6.5
Cash flow from financing 0.0 -7.1 -7.0
Change in liquid assets 3.7 0.5 0.4
Liquid assets at period start 1.7 1.4 1.4
Adjustment for translation difference -0.1 -0.1 -0.1
Liquid assets at period end 5.4 1.9 1.7
STATEMENT ON CHANGES IN
SHAREHOLDERS' EQUITY
EUR million Share Share Fair Trans- Unrest- Retain-ed Total
Capi- Premi- value lation ricted Ear-nings
tal um reser-ves diff. equity
funds
Shareholders'
equity
Jan. 1, 2006 0.8 24.4 0.2 -0.7 0.0 0.6 25.4
Change 0.0 -13.0 -0.1 -0.1 0.0 5.0
Shareholders'
equity
Sep. 30, 2006 0.8 11.5 0.2 -0.8 0.0 5.6 17.3
Change 0.0 0.0 0.0 0.0 5.9 -5.2
Shareholders'
equity
Dec. 31, 2006 0.9 11.5 0.1 -0.8 5.9 0.4 18.0
Change 0.0 0.0 0.0 -0.2 0.0
Net profit 3.8
Shareholders'
equity
Sep. 30, 2007 0.9 11.5 0.1 -1.0 5.9 4.2 21.6
NET SALES BY SEGMENT
EUR million 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2007 2006 2007 2006 2006
AMER 7.3 1.1 10.1 3.8 5.7
APAC 0.2 0.3 0.6 0.8 0.9
EROW 0.3 0.4 1.2 1.6 2.8
SSH Group total 7.8 1.8 11.9 6.1 9.5
OPERATING PROFIT/LOSS BY SEGMENT
EUR million 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2007 2006 2007 2006 2006
AMER 5.6 0.4 7.0 1.7 2.9
APAC 0.0 0.1 0.3 0.4 0.4
EROW 0.0 -0.1 -0.1 0.0 0.6
Common Group expenses* -1.3 -1.0 -4.0 -3.5 -4.8
SSH Group total 4.3 -0.5 3.2 -1.4 -0.9
* Common Group expenses include Group administration expenses (e.g.,
management and finance) and product management and R&D expenses for
corporate headquarters.
KEY FIGURES AND RATIOS
1-9/ 1-9/ 1-12/
2007 2006 2006
Net sales (MEUR) 11.9 6.1 9.5
Operating profit/loss (MEUR) 3.2 -1.4 -0.9
Operating profit/loss, as % of net sales 26.9 -23.3 -9.4
Profit/loss before extraordinary items and taxes
(MEUR) 3.8 -0.9 -0.2
Profit/loss before extraordinary items and taxes,
as % of net sales 32.1 -14.8 -2.0
Profit/loss before taxes (MEUR) 3.8 -0.9 -0.2
Profit/loss before taxes, as
% of net sales 32.1 -14.8 -2.0
Return on investment (%) -0.8
Return on equity (%) -1.0
Interest-bearing net liabilities (MEUR) -20.9 -16.7 -16.7
Equity ratio (%) 93.5 94.0 92.4
Gearing (%) -96.7 -96.7 -93.0
Gross capital expenditure (MEUR) 0.1 0.1 0.1
% of net sales 0.7 1.2 1.2
R&D expenses (MEUR) 2.6 2.4 3.4
% of net sales 22.1 39.8 35.5
Personnel, period average 81 81 81
Personnel, period end 84 78 80
PER-SHARE DATA
1-9/ 1-9/ 1-12/
2007 2006 2006
Earnings per share, undiluted
(EUR) 0.13 -0.03 -0.01
Earnings per share, diluted (EUR) 0.13 -0.03 -0.01
Equity per share (EUR) 0.76 0.61 0.63
No. of shares at period end
(thousands) 28 507 28 293 28 424
Share performance (EUR)
Average price 1.51 1.67 1.43
Low 1.12 1.20 0.88
High 2.00 2.40 2.40
Share price, period end 1.92 1.25 1.15
Market capitalization, period end (MEUR) 54.7 35.4 32.7
Volume of shares traded
(in millions) 11.8 9.0 13.9
Volume of shares traded, as
% of total 41.4 31.7 48.8
Value of shares traded, in millions of euros 18.0 15.0 19.9
Price-to-earnings ratio (P/E) 10.8 - -
CONTINGENT LIABILITIES
EUR million 9/30 9/30 12/31
2007 2006 2006
Rental liabilities 0.0 0.2 0.2
Leasing commitments outside
the balance sheet
Maturing within 1 year 0.6 0.9 0.8
Maturing between 1 and 5
years 0.8 1.4 1.3
Currency derivatives (not
included in hedge accounting)
Fair value 0.0 0.0 -0.0
Nominal value 1.8 0.3 0.7
This interim report has been compiled observing IAS 34 (Interim
Financial Reporting) accounting standard. The same accounting
principles have been used in the interim report as in the financial
statement for 2006. These data are based on unaudited figures.
DISCLAIMER
The content in this report is provided by SSH Communications Security
Corp ("SSH") and its third party content providers for your personal
information only, and does not constitute an offer or invitation to
purchase any securities. Nor does it provide any form of advice
(investment, tax, legal) amounting to investment advice, or make any
recommendations regarding particular investments or products. SSH
does not provide investment advice or recommendations to buy or sell
its shares or the shares of others. If you are interested in
investing in SSH, please contact your financial adviser for further
details and information. Past performance of SSH shares is not
indicative of future results. EXCEPT AS PROVIDED BY APPLICABLE
COMPULSORY LAW SSH EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESSED OR
IMPLIED, AS TO THE ACCURACY OF ANY OF THE CONTENT PROVIDED, OR AS TO
THE FITNESS OF THE INFORMATION FOR ANY PURPOSE.
FINANCIAL REPORTING
The company will hold a briefing on its interim report for equity
analysts and the media in Hotel Seurahuone's Keltainen huone-cabinet,
2nd floor, address Kaivokatu 12, 00100 Helsinki on Wednesday, October
24, 2007, starting at 11:00 a.m.
SSH Communications Security Corp will release its next interim report
and financial statements for January 1-December 31, 2007 in February
2008. Further information will be available on the company's website
in due course.
Helsinki, on October 24, 2007
SSH COMMUNICATIONS SECURITY CORP
Board of Directors
Arto Vainio
CEO
For further information, please contact:
Arto Vainio, CEO tel. +358 (0)20 500 7400
Mika Peuranen, CFO tel. +358 (0)20 500 7419
Distribution:
OMX Nordic Exchange Helsinki
Major media
www.ssh.com
