News

FIRST QUARTER STRONGER THAN EXPECTED

The favourable development of SSH net sales continued in the
Group´s major markets North America, Europe and Asia in the
first quarter of 2001. Net sales rose to EUR 6.4 million from
last year´s EUR 2.8 million. The operating profit still
remained slightly negative (EUR -0.1 million) but financial
income generated by the strong cash position turned the net
result into profit (EUR +0.3 million). The outlook for the
full fiscal year is in line with previous forecasts.

·    The first quarter was stronger than expected, net sales
     grew by 128.6% and the consolidated net result was profitable.
·    The expenses for the first quarter were lower than
     expenses in the fourth quarter of 2000.
·    SSH announced its first hardware-based data security
     product, the SSH Complete VPN, and also the company´s first
     data security program for wireless devices such as palm
     computers and mobile phones.
·    The growth and profit forecast for the year remains
     unchanged.
·    Bo Harald, Nordea, Tapio Kallioja, SanomaWSOY/SWelcom and
     Tomi Laamanen, The Technical University of Helsinki, were
     elected as new Board members.

MARKETS

Growth of the global IT-market was slowed in the first months
of the year. The levelling off of the strongest economical
growth trend made companies postpone their investment
decisions and in some cases it also including a downsizing of
operations. SSH fared even better than expected in this
difficult market.  This was mainly due to the Groups
versatile product range and the key role its products are
playing in building data security for the information society.
Because of active marketing and well-focused activities, SSH
also managed to broaden its customer base both geographically
and by sector. Cases were i.e. the IPSec-toolkit orders from
th US, South-Korea and Norway, some major Secure Shell end-
user agreements in Europe and the US as well as the first
significant orders for the SSH Sentinel OEM-version and the
Secure Shell for Windows Servers -product.

NET SALES

SSH net sales grew to EUR 6.4 million in the first quarter for
2001 as compared with EUR 2.8 million in the corresponding
period a year ago.  The growth rate, 128.6%, is in line with
earlier estimates made for the year. Sales developed well in
the major markets and product groups. The royalties paid by F-
Secure for Secure Shell sales decreased from the last quarter
in 2000. SSH was, however, able to compensate this royalty
income reduction by its own Secure Shell sales. 43.5%, a
larger proportion of net sales from earlier levels, came now
from royalties, maintenance fees and down payments on royalty
contracts. During the period a total of 21 license agreements
in excess of EUR 50,000 were signed. Seven of those were so
called one-time license payments.

RESULTS

The operating result for the first quarter was EUR -0.1
million. Last year the corresponding result was EUR +0.5
million. In order to strengthen its position in the rapidly
expanding data security market SSH initiated a dedicated
program for the development of new products and solutions
during the year 2000. This program temporarily increased R & D
expenses to a record level, as much as 45% of net sales.
Investments in R & D also grew in the first quarter of 2001
but at a rate that reduced the proportion of R & D to net
sales. In the first quarter of 2001 the expenses incurred for
product development, sales, marketing and administration were
smaller (-3,2%) than in the last quarter of 2000 and the
continued strong net sales therefore produced a result that
was better than expected.

A grant from TEKES, EUR 0.2 million, was entered as other
income in the income statement.

BALANCE SHEET AND FINANCING

The total balance sheet at the end of the first quarter was on
the same level as at the end of the fiscal year 2000, almost
EUR 60 million. In comparison with the situation at the end of
March 2000 the balance sheet more than tripled. The shares
issued to personnel and the listing on the Helsinki Exchange
at the end of the year increased the Groups cash and solidity
significantly. The equity to assets ratio at the end of the
first quarter 2001 was 93.1%. Cash and cash equivalents stood
at EUR 49.7 million at the end of the period, which equals
83.6% of the total balance sheet. The Group has no other long-
term debt than the TEKES subordinated loan entered under
equity.

PERSONNEL

SSH more than tripled its personnel during 2000. Presently
around 55% of personnel are engaged in technical R&D and
product support assignments. Recruitment efforts were
successful and key employees are also shareholders of the
parent company. In the first quarter of 2001 personnel grew by
seven employees and at the end of the quarter total personnel
was 179.  The average number of employees in the first quarter
2001 was 180 as compared with 78 in the corresponding period
last year.

PRODUCT DEVELOPMENT AND PRODUCT LAUNCHES

SSH launched several new products and product improvements in
the first quarter of 2001. The most significant new product
was the SSH Complete VPN system. It is the first product from
SSH that includes a hardware solution expressly designed for
the system. The equipment for the system will be built in
cooperation with one of the leading contract manufacturers.
The SSH Complete VPN product makes the establishment of safe
data connections easier than before for telecommunications
operators and enterprise users. It marks a significant step
for SSH by expanding its offering to complete data security
solutions. This key new product also paves the way for SSH to
enter the new, fast-growing VPN services market.

Other new launches in the first quarter included the new SSH
Sentinel for end users, which improves data security for
mobile Internet users regardless of the network environment, a
new generation of the SSH Secure Shell product family and the
new localized SSH Secure Shell versions in German, French and
Japanese.

After the close of the interim period, on April 23, 2001, SSH
announced the Secure Shell for Handhelds data security
program. This is the first Secure Shell application for
wireless platforms. The new program extends password and
identification protection to i.e. palm computers and mobile
phones.

SHARES AND OWNERSHIP

The stock exchange quotations for IT companies were on a
strong downward trend in the first quarter of 2001. The
development of SSHs share quotation in the first quarter was
unsatisfactory. In the first quarter the share turnover was
3,763,847 shares (36,959,816 euros), which meant that 13.6% of
the share capital changed hands. The highest quotation in the
period was 15.99 euros and the lowest 5.75 euros. The weighted
average quotation in the period was 9.82 euros and the
quotation on the last trading day of the period (March 30,
2001) was 7.00 euros.

There were no material changes in the ownership of SSH
Communications Security Corp in the first quarter of 2001.

ANNUAL GENERAL MEETING

Financial Statements

The AGM of SSH Communications Security Corp on April 19, 2001
adopted the Financial Statements and discharged the Board
Members and the Managing Director from liability. No dividend
was declared for 2000.

Board and auditors

George Adams, Bo Harald, Tapio Kallioja, Markku Kangas, Arto T
Karila, Tomi Laamanen and Tatu Ylönen were elected Board
members. At its first meeting the Board elected Tatu Ylönen
Chairman.

The authorized auditing firm of SVH PricewaterhouseCoopers Oy
was elected auditors. The chief auditor in charge is chartered
accountant Henrik Sormunen.

Articles of Association

The AGM resolved to amend the Articles of Association to
stipulate that the company does not need to elect a deputy
auditor if the ordinary auditor is an auditing firm authorized
by the Central Chamber of Commerce. The meeting also resolved
that the notice of the AGM must be issued at the latest 17
days before the meeting and that the latest date for the
announcement of participation may be at the earliest 10 days
before the meeting.

Authorizations

The AGM authorized the Board to decide on an increase of the
share capital in a new share issue and/or granting of option
rights or by issuing option- or convertible bonds so, that the
share capital may increase by a maximum of 108,000 euros as a
result of the action. The authorization is valid until April
19, 2002.

Warrant program

The AGM approved the new warrant program that makes it
possible to grant a total maximum of one million warrants to
personnel. Each warrant entitles to the subscription of one
SSH Communications Security Corp share with a nominal value of
three cents. The subscription periods start in several stages
depending on the type of warrant, on May 1, 2002, May 1, 2003,
May 1, 2004 and May 1, 2005 and end within two years from the
start of each stage. The subscription price is the average of
the closing price of the companys share on trading days in
Helsinki Exchanges during February 1, 2001-April 12, 2001,
i.e. 7.63 euros. The share capital may increase in total a
maximum of 30,000 euros due to the share subscriptions based
on warrants.

OUTLOOK

The uncertainty prevailing on the IT market and the moves that
customers have made to postpone their development projects
also affect SSH`s business operations. Should the uncertainty
in the IT sector be extended there are evident risks that
customers may postpone their investment decisions and the
closing of orders may be moved forward. On the other hand SSH,
being a small, specialist technology supplier, is in a
position to find new customers in its global market place.

The estimate presented earlier, a growth of net sales in the
full fiscal year by some 110-150% is still valid although
reaching the upper half of the range requires a significant
improvement in the market conditions towards the end of the
year. The major part of net sales and results for the year are
estimated to accumulate in the second half.

INTERIM STATEMENTS

The consolidated accounts are presented in million euros with
one decimal and the sums of the columns therefore do not
necessarily match.


INCOME STATEMENT (Meur)  1-3/2001  1-3/2000  1-12/2000
                                             -%

NET SALES                  6.4      2.8      15.6

Materials and services    -1.4     -0.0      -1.8

GROSS MARGIN               5.0      2.8      13.9

Product development costs -2.1     -1.2      -6.7

Sales and marketing costs -2.3     -0.8      -6.5

Administrative costs      -1.0     -0.3      -2.6

Other operating income    +0.3     +0.0      +0.3

OPERATING PROFIT/LOSS     -0.1     +0.5      -1.7

Financial income and
expenses                  +0.5     +0.1      +0.8

PROFIT/LOSS BEFORE
EXTRAORDINARY ITEMS       +0,4     +0,6      -0,9

Extraordinary items        0,0      0,0      -1,6

PROFIT/LOSS BEFORE TAXES  +0.4     +0.6    -2,5

Taxes *)                  -0.1     -0.2       0,0

NET INCOME FOR THE PERIOD +0.3     +0.4      -2.5

Taxes are proportionate to the result for the period.


BALANCE SHEET (Meur)          31.3.2001 31.3.2000  31.12.2000

ASSETS
FIXED ASSETS
Intangible assets                  0.8       0.1          0.7
Tangible assets                    1.9       0.4          1.4
FIXED ASSETS TOTAL                 2.7       0.5          2.1

CURRENT ASSETS
Short-term receivables             7.1       3.8          6.1
Cash and cash equivalents         49.7      13.3         51.1
CURRENT ASSETS TOTAL              56.8      17.1         57.2
ASSETS TOTAL                      59.5      17.5         59.3

SHAREHOLDERS´ EQUITY AND LIABILITIES
EQUITY                            54.6      15.4         54.3
LIABILITIES
Short-term liabilities             4.9       2.1          5.1
LIABILITIES TOTAL                  4.9       2.1          5.1
SHAREHOLDERS´ EQUITY AND
LIABILITIES TOTAL                 59.5      17.5         59.3

KEY RATIOS                      1-3/2001   1-3/2000 1-12/2000

PER SHARE DATA
Earnings/share, eur              +0.01      +0.02       -0.04
Earnings/share, eur, diluted     +0.01
Equity/share, eur                +1.97      +0.66       +1.96
P/E                                                      -429

FINANCIAL INDICATORS            1-3/2001   1-3/2000  1-12/2000

Net sales, Meur                    6.4       2.8       15.6
Operating profit/loss, Meur        -0.1      +0.5      -1.7
Operating profit, % of net sales   -1.4      +18.8     -10.7
Profit before extraordinary
items and taxes,Meur               +0.4      +0.6      -0.8
Profit before extraordinay items
and taxes, % of net sales          +6.5      +21.4     -5.5
Profit/loss before taxes, Meur     +0.4      +0.6      -2.5
Profit/loss before taxes,
% of net sales                     +6.5      +21.4     -16.1
Return on equity, %                                    -2,5
Return on investment,%                                 -2.4
Interest-bearing net debt, Meur    -49.5     -13.0     -50.9
Net gearing,%                      -91.1     -86.0     -94.2
Equity/assets ratio, %             +93.1     +87.7     +93.0
Gross investments in
fixed assets, Meur               0.2          0.1         2.4
Gross investments in
fixed assets, % of net sales      3.1          2.2       15.6
R & D expenses, Meur              2.2          1.2        7.1
R & D expenses,
% of net sales                   33.0         42.1       45.2
R & D expenses as a % of
Net sales (investments incl.)    33.7         42.1       42.9
Personnel, on average             180           78        130
Personnel, end of period          179           93        172
Shares, 1,000 kpl, av.*)       27,578       22,885     24,083
Shares, 1,000 kpl,
end of period *)               27,578       22,910     27,578

*) adjusted for new share issue

The order book is not material information in SSH
Communications Security Corp´s line of business.

CONTINGENT COMMITMENTS (Meur) 31.3.2001  31.3.2000  31.12.2000

Guarantees:
Rent guarantees                   1.2          0.0        1.2
Leasing fees                      0.1          0.3        0.2

The social overhead expenses on warrants exercisable in the
future would be EUR 0.2 million as estimated on the basis of
the closing share quotation on March 30, 2001 (7.00 euros).

The figures are unaudited.

The Interim Report for the period January-June is published on
August 1, 2001.

Helsinki, May 2, 2001

SSH COMMUNICATIONS SECURITY CORP
Board of Directors


Markku Kangas
President & CEO


Distribution:
Helsinki Exchanges
The main media

The company arranges a presentation of 1Q financial statements
in its own office at the address Fredrikinkatu 42, Helsinki,
7th floor on Wednesday May 2 at 2 p.m. The hosts are Markku
Kangas, Tatu Ylönen and Johanna LamminenERMS AND CONDITIONS
 OF SHARE SUBSCRIPTION

© 2002 SSH Communications Security Corp. All rights reserved. ssh® is a registered trademark of SSH Communications Security Corp in the United States and in certain other jurisdictions. All other names and marks are property of their respective owners.