SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE, April 23.
2008, at 9:00 a.m.
- Net sales for January-March totaled EUR 1.9 million, down 28
percent year on year (EUR 2.6 million in Q1/2007).
- Operating loss for January-March amounted to EUR -0.8 million (a
loss of 0.0 million in Q1/2007), resulting in a loss of EUR -0.6
million (profit 0.1 million).
- There were no major license deliveries during Q1/2008.
KEY FIGURES
1-3/2008 1-3/2007 1-12/2007
Net sales (MEUR) 1.9 2.6 14.1
Net sales, change % -28.0 26.4 49.4
Operating profit/loss (MEUR) -0.8 0.0 2.2
% of net sales -45.8 -1.5 15.3
Operating profit/loss, change %
-2 048.7 93.9 343.4
Profit/loss (MEUR) -0.6 0.1 3.0
% of net sales -34.4 4.8 21.5
Number of employees
at period end 82 79 83
Earnings per share (EUR) -0.02 0.00 0.11
Shareholders' equity
per share (EUR) 0.71 0.64 0.73
SSH Communications Security is a world-leading provider of
easy-to-use and centrally managed enterprise security solutions. SSH
Tectia software products secure the critical data communications of
numerous large enterprises, financial institutions and government
agencies
NET SALES
Consolidated net sales for January-March totaled EUR 1.9 million (EUR
2.6 million) down by 28 percent year on year.
The majority of SSH's invoicing is based on the U.S. dollar. During
the reporting period, the U.S. dollar's average exchange rate was
approximately 14 percent weaker than during the same period for 2007.
RESULTS AND EXPENSES
Operating loss for January-March amounted to EUR -0.8 million
(Q1/2007: EUR 0.0 million), with net loss totaling EUR
-0.6 million (a profit of EUR 0.1 million).
The fixed costs increased by approximately 3 % from January-March
2007. Research and development expenses for the report period totaled
EUR 1.0 million (EUR 0.9 million), while sales and marketing expenses
came to EUR 1.3 million (EUR 1.3 million) and administrative expenses
were EUR 0.5 million (EUR 0.5 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 31 March 2008
was EUR 23.7 million (EUR 20.9 million), of which liquid assets
accounted for EUR 21.5 million (EUR 17.1 million) and 90.7 percent of
the balance sheet total. The company has no long-term liabilities. On
31 March 2008, gearing, or the ratio of net liabilities to
shareholders' equity was -106.5% (-94.8%) and the equity ratio was
93.7 percent (93.7 percent).
The Annual General Meeting decided to renounce the share premium
reserve after transferring all its funds to the invested unrestricted
equity fund of the company. The decreasing of the share premium
reserve still requires the procedure of protecting the creditors as
defined in Chapter 14 of the Finnish Companies Act.
The reported gross capital expenditure for the period totaled EUR 0.0
million (EUR 0.0 million). The reported financial income consisted
mainly of interest on fixed-term deposits. Financial income and
expenses totaled EUR 0.2 million (EUR 0.2 million).
During January-March, SSH reported a negative cash flow of EUR -0.7
million (EUR 0.3 million positive) from business operations, and
investments showed a cash flow of EUR 1.0 million (EUR 0.0 million).
Cash flow from financing totaled EUR 0.0 million (EUR 0.0 million).
Cash flow from operations, investments and financing resulted in the
company showing a positive total cash flow of EUR 0.35 million (EUR
0.3 million) during the period.
MARKET DEVELOPMENTS
Large enterprises, financial, and public sector organizations have a
growing need for improved data security. New and existing data
security risks, continuously evolving regulations, and the increasing
security standards and models continue to create new customer needs,
to which we can respond with our versatile product offering.
In large listed companies and government agencies, the demand for
products and services for improving their internal information
security has been strong in the USA, and we expect it to spread to
our target markets in Europe and Asia.
Regulations that currently influence the demand of our products are,
for instance, the Sarbanes-Oxley 404 Act (SOX), the credit card
industry PCI DSS, the health care industry HIPAA. These regulations
demand data security audits, which drive our customers to implement
long-term security upgrade programs in the 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 the demand favorably for
SSH Tectia. In the short term, however, demand in the US and
financial services sectors contain uncertainty.
SALES PERFORMANCE
SSH'S NET SALES
EUR million 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 1-12/
2008 2007 2007 2007 2007 2007
BY SEGMENT
AMER 1.3 1.4 7.3 1.0 1.8 11.5
APAC 0.2 0.2 0.2 0.2 0.2 0.8
EROW 0.4 0.6 0.3 0.3 0.5 1.8
SSH Group total 1.9 2.2 7.8 1.5 2.6 14.1
BY OPERATION
License sales 0.7 1.1 6.8 0.6 1.6 10.1
Maintenance 1.1 1.1 1.0 0.9 0.9 4.0
Total 1.9 2.2 7.8 1.5 2.6 14.1
The Americas market area accounted for 71 percent (72 percent) of
reported net sales, while 10 percent (8 percent) came from the Asia
Pacific region, and 19 percent (20 percent) from the 'Europe and the
Rest of the World' markets.
During the reporting period, SSH concluded one new license agreement
that was worth more than EUR 100.000. The ten largest customers
accounted for 37 percent of reported net sales, with the largest
single customer accounting for approximately 6 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 main themes of marketing were the company's SSH Tectia product
for the IBM mainframe environment and the new expanded uses of SSH
Tectia for secure, automated file transfers in large organization's
internal networks. 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 for a wide range of enterprise operating
systems, versatile integration capabilities, and centralized
management have made SSH Tectia the most extensive integrated Secure
Shell-based end-to-end communications security solution in the
market.
RESEARCH AND DEVELOPMENT
Research and development expenses for January-March totaled EUR 1.0
million (EUR 0.9 million), the equivalent of 54.8 percent of net
sales (34.9 percent). During the report period SSH didn't capitalize
any research and development expenses.
HUMAN RESOURCES AND ORGANIZATION
At the end of March, the Group had 82 employees on its payroll, up by
3 persons from the previous year, an increase of 3.8 percent.
At the end of the period, 52.4 percent of the employees worked in
R&D, 35.4 percent in sales and marketing, and 12.2 percent in
corporate administration.
BOARD AND AUDITORS
The Annual General Meeting (AGM) on 27 March 2008 re-elected Tomi
Laamanen, Timo Ritakallio and Tatu Ylönen to SSH Communications
Security Corp's Board of Directors. Pyry Lautsuo and Juha Mikkonen
were elected as new members. Mr. Laamanen was 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 1,468,785 (valued at EUR 2,203,622). The highest
quotation was EUR 1.69 and the lowest EUR 1.37. The trade-weighted
average share price for the period was EUR 1.50, and the share closed
at EUR 1.52 (31 March 2008).
During the report period, the ownership structure of the company did
not change essentially. Tatu Ylönen holds, directly and through his
company, Tatu Ylönen Oy, 52.9 percent of the company's shares,
Assetman Oy holds 14.7 % and Tero Kivinen holds 5.2 percent. More
information about the shareholding can be obtained from the company's
web site.
Towards the end of the report period, the Group decided to have the
Japanese subsidiary SSH Communications Security K.K go into voluntary
liquidation. This is a fully owned subsidiary of SSH. This
arrangement is a part of the re-structuring of company's Asian sales
organization, with a goal to sharpen the geographical sales focus, to
increase the role of resellers and to decrease costs.
SHARE CAPITAL AND BOARD AUTHORIZATIONS
The company's registered share capital on March 31, 2008 was EUR
856,148.34, consisting of 28,538,278 shares. During the reporting
period SSH increased its share capital once based on subscription to
new shares under SSH's stock option plans. In total, 750 new SSH
shares were subscribed under the I/1999 stock option plan and 1,416
shares under the I/2003 stock option plan respectively. With these
subscriptions the company's share capital was increased by EUR 64.98.
The Annual General Meeting 27 March 2008 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
GeneralMeeting, but will expire 30 June 2009, at the latest. The
Board has not exercised this authorization.
The Annual General Meeting also authorized the Board of Directors to
decide on dividend distribution and/or on distribution of assets from
the invested unrestricted equity fund. By virtue of the
authorization, the distributed assets can be a maximum of 0.15 euro
per share and EUR 4,350,000.00 in total. The authorization is valid
until 31 December 2008. Further, the Board of Directors was
authorized to lower the subscription price of shares that can be
subscribed on the grounds of the stock option plans released by the
Company between years 2000 and 2003, at an amount which equates the
distribution of assets. On 2 April 2008, after the end of the report
period, the Board of Directors decided to distribute 0.15 euro per
share from the invested unrestricted equity fund to the shareholders,
and to lower the subscription price of the 2000 - 2003 stock option
plans by the same amount. The date of payment was 15 April, 2008.
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
The US dollar exchange rate and speculations about the US economy
contain some factors of uncertainty that are hard to estimate. Our
active sales prospect base is at a historically high level,
especially in the US markets. However, time needed for completing the
sales has grown longer.
In spite of the 1st quarter negative results, the company expects the
full year results to be profitable.
Due to the large size of individual orders and depending on the
timing of customer projects, significant variation of the quarterly
revenue may occur.
INCOME STATEMENT
EUR million 1-12/
1-3/ 2008 1-3/ 2007 2007
Net sales 1.9 2.6 14.1
Purchasing and production costs 0.0 0.0 0.0
Gross profit 1.8 2.6 14.1
Other operating income 0.0 0.1 0.1
Expenses
Product development -1.0 -0.9 -3.7
Sales and marketing -1.3 -1.3 -6.5
Administration -0.5 -0.5 -1.9
Operating profit/loss -0.8 0.0 2.2
Financial income and expenses 0.2 0.2 0.9
Profit/loss before taxes -0.6 0.1 3.0
Taxes 0.0 0.0 0.0
Net profit/loss for the period -0.6 0.1 3.0
EARNINGS PER SHARE 1-3/2007
1-3/2008 1-12/2007
Earnings per share (EUR) -0.02 0.00 0.11
Earnings per share, diluted (EUR) -0.02 0.00 0.11
BALANCE SHEET
EUR million 31 Mar 31 Mar 31 Dec
2008 2007 2007
ASSETS
Fixed and other non-current assets
Tangible assets 0.2 0.1 0.1
Intangible assets 0.1 0.2 0.1
Deferred tax assets 0.2 0.2 0.2
Total fixed and other
non-current assets 0.5 0.6 0.5
Inventories and current assets
Short-term receivables 1.8 3.1 3.0
Short-term investments 19.5 15.2 20.3
Cash and cash equivalents 2.0 2.0 1.7
Total inventories and current assets 23.3 20.3 25.1
Total assets 23.7 20.9 25.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity 20.2 18.1 20.8
Long-term liabilities
Provisions 0.2 0.0 0.2
Long-term financial
Liabilities 0.0 0.0 0.0
Total long-term liabilities 0.2 0.0 0.2
Short-term liabilities 3.3 2.8 4.5
Total liabilities and shareholders' equity 23.7 20.9 25.5
CASH FLOW STATEMENT
EUR million 1-3/ 1-3/ 1-12/
2008 2007 2007
Cash flow from business operations -0.7 0.3 4.8
Cash flow from investments 1.0 0.0 -4.8
Cash flow from financing 0.0 0.0 0.0
Change in liquid assets 0.4 0.3 0.1
Liquid assets at period start 1.7 1.7 1.7
Adjustment for translation difference 0.0 0.0 -0.1
Liquid assets at period end 2.0 2.0 1.7
STATEMENT ON CHANGES IN
SHAREHOLDERS' EQUITY
EUR million Share Share Fair Trans-lation Unrest-ricted Total
capital premium value diff. equity funds
fund reserves and retained
earnings
Shareholders'
equity
1 Jan 2007 0.9 11.5 0.1 -0.8 6.3 18.0
Change 0.0 0.0 0.0 0.0 0.1
Shareholders'
equity
31 Mar 2007 0.9 11.5 0.1 -0.8 6.4 18.1
Change 0.0 0.0 0.0 -0.3 3.0
Shareholders'
equity
31 Dec 2007 0.9 11.5 0.1 -1.1 9.4 20.8
Change 0.0 0.0 0.0 0.0
Net profit -0.6
Shareholders'
equity
31 Mar 2008 0.9 11.5 0.1 -1.0 8.7 20.2
NET SALES BY SEGMENT
EUR million 1-3/ 2008 1-3/ 2007 1-12/ 2007
AMER 1.3 1.8 11.5
APAC 0.2 0.2 0.8
EROW 0.4 0.5 1.8
SSH Group total 1.9 2.6 14.1
OPERATING PROFIT/LOSS BY SEGMENT
EUR million 1-3/ 2008 1-3/ 2007 1-12/ 2007
AMER 0.5 1.1 7.6
APAC 0.1 0.1 0.3
EROW -0.1 0.1 -0.1
Common Group expenses* -1.4 -1.3 -5.6
SSH Group total -0.8 0.0 2.2
* 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
1-3/ 1-3/ 1-12/
2008 2007 2007
Net sales (MEUR) 1.9 2.6 14.1
Operating profit/loss (MEUR) -0.8 0.0 2.2
Operating profit/loss, % of net sales -45.8 -1.5 15.3
Profit/loss before extraordinary items and taxes
(MEUR) -0.6 0.1 3.0
Profit/loss before extraordinary items and taxes,
% of net sales -34.4 4.8 21.5
Profit/loss before taxes (MEUR) -0.6 0.1 3.0
Profit/loss before taxes,
% of net sales -34.4 4.8 21.5
Return on investment (%) -11.8 0.7 15.1
Return on equity (%) -12.5 0.7 15.6
Interest-bearing net liabilities (MEUR) -21.5 -17.1 -22.0
Equity ratio (%) 93.7 93.7 91.4
Gearing (%) -106.5 -94.8 -105.8
Gross capital expenditure (MEUR) 0.0 0.0 0.1
% of net sales 0.2 0.3 0.8
R&D expenses (MEUR) 1.0 0.9 3.7
% of net sales 54.8 34.9 26.0
Personnel, period average 80 80 81
Personnel, period end 82 79 83
PER-SHARE DATA
1-3/ 1-12/
1-3/ 2008 2007 2007
Earnings per share, undiluted
(EUR) -0.02 0.00 0.11
Earnings per share, diluted (EUR) -0.02 0.00 0.11
Equity per share (EUR) 0.71 0.64 0.73
No. of shares at period end
(thousands) 28 538 28 424 28 536
Share performance (EUR)
Average price 1.50 1.52 1.63
Low 1.37 1.15 1.12
High 1.69 1.75 2.39
Share price, period end 1.52 1.30 1.61
Market capitalization, period end (MEUR) 43.4 37.0 45.9
Volume of shares traded
(in millions) 1.5 7.3 15.0
Volume of shares traded, % of total 5.1 25.5 52.6
Value of shares traded (MEUR) 2.2 11.0 24.5
Price-to-earnings ratio (P/E) - 299.9 15.2
CONTINGENT LIABILITIES
EUR million 31 Mar 31 Mar 31 Dec
2008 2007 2007
Rental and lease liabilities - minimum lease
payments
Maturing within 1 year 0.7 0.7 0.7
Maturing between 1 and 5
years 1.1 1.1 1.1
Currency derivatives (not
included in hedge accounting)
Fair value 0.0 0.0 0.0
Nominal value 0.0 0.9 0.0
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 AVAILABILITY, ACCURACY OR RELIABILITY 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 Scandic Simonkenttä, 1st floor,
Cabinet Lönkka; at address Simonkatu 9, 00100 Helsinki on Wednesday,
23 April 2008, starting at 11:00 a.m.
SSH Communications Security Corp will release its next interim report
and financial statements for 1 January - 30 June 2008 on 23 July
2008. Further information will be available on the company's web site
in due course.
Helsinki, 23 April 2008
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:
Helsinki Stock Exchange
Major media
www.ssh.com
