Helsinki, Finland -
July 21, 2004
SSH Interim Report January 1 - June 30, 2004
SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE
July 21, 2004, at 9:00 a.m.
SSHS INTERIM REPORT FOR JANUARY 1 - JUNE 30, 2004
- Net sales for January-June totaled EUR 4.2 million, down 44.9
percent from the same period of the previous year (EUR 7.7 million in
2003). The net sales for 2004 are not comparable to the figure for
2003 due to the sale of the OEM business.
- The first quarter of 2004 was the first period to consist solely of
SSH Tectia business. Compared to this period, consolidated net sales
increased by 53.7%.
- Operating loss for January-June totaled EUR -3.8 million (EUR -3.2
million).
- During the second quarter, SSH concluded with an US system
integrator its largest agreement in the company's 9 year history.
- As of the beginning of the year, SSH has applied the International
Financial Reporting Standards (IFRS), instead of the Finnish
Accounting Standards. More detailed information on the adoption of
IFRS was given in a stock exchange release dated March 18, 2004.
KEY FIGURES
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
Net sales, EUR million 2.6 4.1 4.2 7.7 13.9
Net sales, change % -37.5 -1.2 -44.9 -10.0 -17.6
Operating profit/loss, -1.7 -1.3 -3.8 -3.2 5.2
EUR million
% of net sales -65.7 -31.2 -89.8 -42.1 37.5
Operating profit/loss, -31.7 81.7 17.4 -67.0 136.9
change %
Profit/loss before -1.5 -1.0 -3.5 -3.1 5.5
extraordinary items and
taxes, EUR million
% of net sales -57.3 -24.6 -83.2 -40.9 40.0
Number of employees 106 133 106 133 104
at period-end
Earnings per share, EUR -0.13 -0.11 0.20
Shareholders 1.35 1.19 1.48
equity/share, EUR
NET SALES
Consolidated net sales for January-June totaled EUR 4.2 million (EUR
7.7 million), down by 44.9 percent, year on year. Compared to the net
sales of products belonging to the SSH Tectia solution during the same
period of the previous year, EUR 4.4 million, net sales fell by about
4 percent.
During Q2, SSH continued the systematic implementation of its strategy
based on its Tectia solution. The primary target groups for the SSH
Tectia solution are large enterprises, financial institutions, and
government agencies. These customer groups accounted for the majority
of SSHs sales during the second quarter.
Compared to the first quarter of 2004, net sales grew by 53.7 percent,
from EUR 1.7 million to EUR 2.6 million.
Net sales of EUR 2.6 million equal the net sales of products belonging
to SSHs Tectia business during the corresponding period in 2003, even
though the value of the US dollar against the euro has dropped by
almost 11 percent since then. Most SSH invoicing is done in US
dollars.
RESULTS AND EXPENSES
The operating loss the period January-June was EUR -3.8 million (EUR -
3.2 million). The net loss was EUR -3.5 million (EUR -3.1 million).
The companys second-quarter cost structure included exceptional non-
recurring expenses arising from the establishment of new offices in
Germany and the UK and costs related to recruitment.
Salary expenses were increased by the using of holiday pay reserve for
2004 mostly during the third quarter and not the second as in 2003.
Operating loss for the second quarter was EUR -1.7 million (EUR -1.3
million) and overall loss was EUR -1.5 million (EUR -1.0 million).
During the period under review, fixed costs fell further compared with
the first half of 2003. The result of the first half of 2003 was still
weakened by costs arising from the closure of the Kuopio office, and
the costs of the OEM business. Year on year, fixed expenses decreased
by about EUR 1.4. million, half of them stemming from payroll costs
and half from other costs.
Research and development expenses for January-June totaled EUR 2.2
million (EUR 2.9 million). Sales and marketing expenses totaled EUR
4.4 million (EUR 4.8 million). Administrative expenses totaled EUR 1.3
million (EUR 1.6 million).
Research and development expenses for the second quarter were EUR 1.1
million (EUR 1.2 million). Sales and marketing expenses totaled EUR
2.4 million (EUR 2.3 million). Sales and marketing expenses were
increased during the second quarter of this year by costs related to
the strengthening of sales offices in the UK and Germany.
Administrative expenses amounted to EUR 0.6 million (EUR 0.7 million).
BALANCE SHEET AND FINANCIAL POSITION
SSHs financial position remained solid and strong during the report
period. The consolidated balance sheet total on June 30, 2004 stood at
EUR 40.3 million (EUR 36.9 million), of which liquid assets accounted
for EUR 32.5 million (EUR 29.6 million), or 80.7 percent of the
balance sheet total. Except for the subordinated loan of EUR 0.2
million granted by the National Technology Agency (Tekes), the company
has no other long-term liabilities.
Gearing, or the ratio of net liabilities to shareholders equity, was
-85.4 (-89.8 percent) at the end of the second quarter. Equity ratio
on June 30, 2004 was 95.2 percent (92.6 percent).
The reported gross capital expenditure for the period totaled EUR 0.2
million (EUR 0.5 million), consisting mainly of software investments.
Reported financial income consisted of interest income and profits
from the sales of fund units. Financial income and expenses totaled
EUR 0.3 million, compared to a year ago when they totaled EUR -0.1
million.
Since SSH, under IAS 39, classifies most of its financial assets and
other similar assets as available-for-sale assets, it recognizes
changes in their value under shareholders equity. Only after the sale
of an asset does the company recognize income in the income statement.
During the report period, the company recognized an increase of EUR
0.1 million in the value of its financial assets.
Business operations for the period showed a negative cash flow of
around EUR 4.3 million, resulting in a negative total cash flow of EUR
4.3 million. Cash flow from investments and financing had only a minor
impact on total cash flow.
MARKET DEVELOPMENTS
During the second quarter, cautious signs of recovery in IT
investments continued. The number of invitations to tender, and
projects pending among SSHs customers - large enterprises, financial
institutions, and government agencies - also continued to grow. SSH
Tectia product tests were also launched at a brisk rate, although the
conclusion of contracts was a slow process.
Legislative reforms on data confidentiality and secure data transfer
are taking place both in the USA and Europe. SSH believes that these
changes will have positive effects on SSHs operations as customers
focus on the secure remote management of their data systems and on
solutions for securing their business applications. Further, new
legislation requiring tighter control of data access and auditing
capabilities fit well with Tectia Managers control and logging
facilities.
The number of companies actively testing new data security solutions
increased in North America, SSHs main market area. Demand was mainly
focused on solutions for secure remote management of network servers
and various kinds of data communication equipment. The new SSH Tectia
Manager product, which enables centralized management, was well
received in the market, and is now being tested by more than 40
customers. SSH Tectia Manager is currently an integral part of almost
all large SSH Tectia installations.
In Europe, interest in the SSH Tectia solution increased, especially
among financial institutions and government agencies. Customers
continued to show interest in user authentication solutions, based on
Public Key Infrastructure (PKI) as well as in securing their business
applications during the second quarter. The most interesting countries
in Europe for SSH continue to be Germany, the UK and the Nordic
countries.
In Asia, financial institutions continued to form the most important
target customer group for SSH during the second quarter as well. SSHs
Asian customers were primarily interested in the secure remote
management of traditional network servers and various kinds of data
communication equipment.
There was no substantial change in the competitive situation in any
geographic market during the period under review. Both in the US and
Europe, bitter price competition in the markets for secure remote
management solutions continued.
SALES PERFORMANCE
SSHS NET SALES
EUR million 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-12/
2004 2004 2003 2003 2003 2003
BY SEGMENT *
AMER 2.0 1.0 1.6 1.2 1.8 6.5
APAC 0.1 0.2 0.5 0.7 0.7 2.2
EROW 0.5 0.5 0.8 1.4 1.6 5.1
SSH Group total 2.6 1.7 2.9 3.3 4.1 13.9
SSH TECTIA BUSINESS
Net Sales** 2.6 1.7 2.3 1.6 2.5 8.3
* The figures for 2003 according to segment are not fully comparable
with those for 2004 because they also include the OEM business
divested in Q4/2003.
** The SSH Tectia solution was launched during the last quarter of
2003. The net sales figures of previous quarters include the net sales
of those products that were integrated as part of the SSH Tectia
solution.
In line with its long-term strategy, SSH continued its strong sales
and marketing efforts in the second quarter. SSH's netsales increased
53.7 % compared to the previous, weaker than expected quarter. In
comparison to the corresponding period in the previous year, the net
sales of products belonging to the SSH Tectia solution remained
unchanged.
The sales process of a system-level product for major customers
continues to be a long one, but the average size of contracts has
continued to grow in accordance with SSHs long-term strategy.
The Americas, Asia Pacific, and Europe and Rest of the World accounted
for 69.7 percent (49.6 percent), 5.9 percent (12.7 percent) and 24.4
percent (37.7 percent) of reported net sales in the first half of
2004, respectively. The US continued to strengthen its position as
SSHs main market area during the report period.
Asia Pacific and Europe and Rest of the World experienced a decrease
in their share of net sales year on year, as a result of the
divestment of the OEM business. SSH is currently taking measures to
reinforce and train its sales organization to sell the SSH Tectia
solution in these market areas.
In June, SSH signed its largest single licensing agreement in the
companys's 9 year history. The other contracting party is an US system
integrator and the agreement concerns an extensive SSH Tectia
solution, including the new SSH Tectia Manager. SSHs solution will be
used as part of a large data security solution for the secure
management of data communications networks formed by thousands of
users and hundreds of network servers.
During the first half of the year, SSH concluded 6 customer
agreements, each worth more than EUR 100,000, 5 of which were
concluded during the second quarter. SSHs ten largest customers
accounted for 52.0 percent of reported net sales. The share of SSHs
main customer was about 25 percent of net sales during the first half
of the year. As the average size of contracts continues to grow,
single contracts may also represent a large share of net sales in the
future.
PRODUCTS AND MARKETING
In line with its long-term strategy, SSH continued to focus its sales
and marketing efforts during the first half of 2004 with regard to
serving large enterprises, financial institutions, and government
agencies in the USA, Europe, and Asia.
During Q2, SSH sales were boosted by strengthening its network of
partners complementing the SSH Tectia solution. In addition, the
company exhibited at major trade fairs in the USA, Europe, and Asia.
In April, Swisscom Eurospot announced that the SSH Tectia
client/server product had passed their compatibility tests along with
Check Point and Nortel Networks products.
In June, SSH announced that Computer Associates has granted
certification to the SSH Tectia Certifier product for compatibility
and interoperability with the CA eTrust Admin user administration
product. The combination of SSH and CA products makes the
administration of PKI certificates part of routine user rights
management and, hence, makes the introduction of data security
solutions based on electronic certificates considerably easier.
In June, SSH also announced that it had concluded a contract on sales
and marketing cooperation with SAS Institute, a major supplier of
business intelligence solutions in Finland. During the first contract
period, product marketing cooperation will begin, for example, by
organizing joint customer events.
During the second quarter, SSH launched its new training services. The
courses ensure that the customer gets the full benefit from SSH
solutions, and that the introduction of SSH products within the client
company is as smooth as possible.
The company also launched a new version of the SSH Tectia data
security solution during the second quarter. Based on award-winning
SHH Secure Shell technology, SSH Tectia is a data security solution
for large enterprises. The new version is even easier to integrate
with various user data management systems. The SSH Tectia solution
enables enterprises to replace conventional, insufficient
authentication methods easily and cost-effectively with electronic
certificates and strong two-factor authentication.
From SSH market research, the relevant data security markets can be
roughly divided into three application areas - encryption of data
communications, secure remote management, and Public Key
Infrastructure. According to SSH's estimation, the size of the market
where SSH operates is worth EUR 250 million in 2004. This estimation
is based on the reports of international market research agencies and
SSH's own research.
RESEARCH AND DEVELOPMENT
January-June R&D expenses totaled EUR 2.2 million (EUR 2.9 million),
accounting for 59.1 percent of net sales (37.3 percent). The main
reason for this monetary decline was the divestment of the OEM
business in October 2003. The fact that the company closed its Kuopio
office and concentrated its product development resources on its
Helsinki site in Q1/2003 also had the effect of lowering R&D expenses.
In accordance with IAS, SSH capitalizes only product development
expenses caused by the commercialization of new products at the end of
R&D processes. Such R&D expenses incurred in the first half of 2004
totaled EUR 0.3 million. These capitalized expenses related to the
commercialization of the new SSH Tectia Manager solution. SSH will
continue to charge the majority of its R&D as expenses.
At the end of June, the company held nine patents while 18 were
pending.
HUMAN RESOURCES AND ORGANIZATION
During the second quarter, SSH reinforced its European sales
organizations. The UK sales organization is now ready and the
strengthening of German sales organization proceeded well.
In June, Mr Juha Saksi, M.Sc. (Eng.) and eMBA, was appointed Vice
President of Sales, Europe and Asia, and SSH Management Team Member.
Prior to joining SSH, Juha Saksi held positions at Okmetic as VP of
Sales and Marketing and prior to that at F-Secure as Director of
Wireless Security Business. He was also a member of the management
team in both companies. In his new position, Saksi has responsibility
for the sales of SSH Tectia products in the European and Asian
markets, and for sales development in cooperation with SSHs local
partners.
At the end of June, the Group had 106 employees on its payroll. The
number of employees decreased by 27 over the previous year (-20.3
percent).
At the end of the period, 39.6 percent of personnel worked in R&D,
42.5 percent in sales and marketing, and 17.9 percent in
administration.
SHARES, SHAREHOLDING AND CHANGES IN THE GROUP STRUCTURE
The reported trading volume of SSH Communications Security Corp shares
totaled 5,736,603 (valued at EUR 11,212,741.13), i.e. 20.4 percent of
the shares changed hands. The highest quotation was EUR 2.69 and the
lowest EUR 1.20. The weighted average share price for the period
amounted to EUR 1.95, and the share closed at EUR 1.47 (on June 30,
2004).
There was no substantial change in SSH Communications Security Corps
shareholding during the financial year. Applied Computing Research
(ACR) Oy holds 60.4 percent of the companys shares.
In March, the company announced that the Boards of SSH and Applied
Computing Research (ACR) had signed a merger agreement whereby ACR
would merge with SSH. At the implementation of the merger, SSH shall
issue 16,942,487 new shares of SSH for the current shareholders of
ACR, Mr. Tatu Ylönen and Mr. Tero Kivinen, as a consideration of the
merger. The amount of these shares equals the amount of shares of SSH
currently owned by ACR. The shares owned by ACR will be transferred to
SSHs ownership.
The Annual General Meeting of SSH on April 27, 2004 approved in
accordance with the proposal of the Board of Directors the merger plan
between ACR and SSH, the increase of the share capital required by the
merger as well as the merger of ACR to SSH. The General Meeting
decided also on the conditional nullification of own shares being
transferred from ACR to SSH as a consequence of the merger, as well as
on the decrease of the tied equity.
The General Meeting decided also to decrease the premium fund and to
transfer a total of EUR 15,000,000 to the fund belonging to free
equity. To carry out the transfer permission granted by the
registration authority will be needed. The process of getting the
permission is proceeding in schedule.
The key objective of this merger is to streamline the corporate
structure and enhance the transparency of SSHs shareholding. The plan
is to implement the merger on October 31, 2004.
SHARE CAPITAL AND BOARD AUTHORIZATIONS
The companys registered share capital on June 30, 2004 came to EUR
841,974.30, consisting of 28,065,810 shares. During the period under
review, share capital was increased once. This increase was based on
the subscription of the new shares under SSHs stock-option scheme. On
the basis of the 1999 stock-option scheme, a total of 330,000 new SSH
shares were subscribed, with the result that the companys share
capital increased by EUR 9,900.
SSHs AGM of April 27, 2004 authorized the Board to decide to increase
share capital through a rights issue and/or grant stock options or
issue bonds with warrants, or convertible bonds, in such a way that
the resultant share capital may increase by a maximum of EUR 165,000.
The authorization has not been applied.
PROSPECTS
The growth of net sales during the second quarter gives SSH a good
basis for the rest of 2004. During the rest of the year, SSH will
continue to place particular emphasis on expanding its SSH Tectia
business and catering for the needs of the companys selected customer
segments: large enterprises, financial institutions, and government
agencies.
The reinforcement of SSHs sales organization in Germany will be
completed at the end of the summer. In addition to this, product
development and technical customer service in Finland will be
developed.
The company will continue to develop new forms of cooperation with its
current customers. SSH is geared up for sharp competition, ready to
strengthen its position across all markets.
A number of legislative programs are underway both in the USA and
Europe, which will impact the way enterprises implement and manage
their data security and data systems. The development of the SSH
Tectia product concept has considered the impacts of these legislative
changes so as to allow customers to adapt to the new requirements as
easily as possible. The management of SSH believes that these
amendments to the legislation will have a positive effect on the
demand for the SSH Tectia solution.
Despite the subtle signs of optimism, markets are still looking
challenging for the near future. However, as markets continue to perk
up and customer companies put their investments into action, SSH will
retain a sound basis for increasing its net sales.
SSH maintains its estimation for net sales for the whole year 2004 to
be between EUR 10 million and EUR 12 million. The companys management
expects that the SSH Tectia solution, including the new products SSH
Tectia Manager and SSH Tectia Connector, which were well received by
the markets, will make it possible to increase the average size of
contracts while contributing towards achieving SSH's revenue target
for the year. Companys management estimates that the operating
results for the full fiscal year 2004 will be negative.
PROFIT AND LOSS ACCOUNT
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
Net sales 2.6 4.1 4.2 7.7 13.9
Purchasing and production 0.0 -1.2 -0.1 -2.0 -2.5
costs
Gross profit 2.5 2.8 4.1 5.7 11.3
Other operating income 0.0 0.2 0.0 0.3 11.3
Costs
Product development -1.1 -1.2 -2.2 -2.9 -5.2
Sales and marketing -2.4 -2.4 -4.4 -4.8 -9.6
Administration -0.7 -0.7 -1.3 -1.6 -2.6
Operating profit/loss -1.7 -1.3 -3.8 -3.2 5.2
Financial income and expenses 0.2 0.3 0.3 0.1 0.4
Profit/loss before taxes -1.5 -1.0 -3.5 -3.1 5.5
a Taxes 0.0 0.0 0.0 0.0 0.0
Net profit/loss for the -1.5 -1.0 -3.5 -3.1 5.5
period
a) Taxes are proportionate to the net profit for the period, and no
deferred tax assets are recorded for the accrued loss.
1-6/ 1-6/ 1-12/
2004 2003 2003
Earnings per share, EUR -0.13 -0.11 0.20
Earnings per share (diluted), -0.12 -0.11 0.19
EUR
BALANCE SHEET
EUR million June June Dec.
30, 30, 31,
2004 2003 2003
ASSETS
Fixed and non-current assets
Tangible assets 0.4 0.8 0.5
Intangible assets 1.1 0.9 1.2
Deferred tax assets 0.2 0.2 0.2
Total long-term assets 1.7 1.9 2.0
Inventories and current
assets
Inventories 0.0 0.6 0.0
Short-term receivables 6.1 4.8 5.2
Short-term investments 30.6 25.3 33.8
Liquid assets 2.0 4.6 2.9
Total short-term liabilities 38.6 35.2 41.9
Total assets 40.3 37.2 43.8
LIABILITIES AND SHAREHOLDERS'
EQUITY
Shareholders equity 37.8 32.9 41.1
Long-term liabilities
Long-term financial 0.2 0.2 0.2
liabilities
Total long-term liabilities 0.3 0.2 0.2
Short-term liabilities 2.2 4.0 2.4
Total liabilities and 40.3 37.2 43.8
shareholders' equity
STATEMENT ON CHANGES IN
SHAREHOLDERS EQUITY
Share Issue Revalua Transl Retained Total
capital premium tion ation earnings
fund* and differ
other ence
EUR million funds
Shareholders 0.8 53.0 0.0 -0.3 -17.5 36.0
equity Jan.
1, 2003
Change 0.0 -13.6 0.3 -0.2 10.5
Shareholders 0.8 39.3 0.3 -0.5 -7.0 32.9
equity June
30, 2003
Change 0.0 0.0 -0.3 0.2 8.3
Shareholders 0.8 39.3 0.0 -0.4 1.3 41.1
equity Dec.
31, 2003
Change 0.0 0.1 0.1 0.1
Net loss -3.5
Shareholders 0.8 39.4 0.1 -0.3 -2.2 37.8
equity June
30, 2004
* Transfer to the retained loss account has resulted in a reduction in
the share premium fund.
STATEMENT OF SOURCES AND USES OF
FUNDS
EUR million 1-6/ 1-6/ 1-12/
2004 2003 2003
Cash flow from business operations -4.3 -4.5 3.3
Cash flow from investments -0.1 -0.5 -1.0
Cash flow from financing 0.1 0.3 0.0
Change/addition(+). extraction (-) -4.2 -4.7 2.3
of funds
Funds at the beginning of the 36.7 34.7 34.7
fiscal year
Adjustment for translation 0.0 -0.1 -0.2
difference
b Funds at the end of the fiscal 32.5 29.8 36.7
year
b) liquid assets consist of cash in hand and at bank, as well as other
securities.
NET SALES PER SEGMENT
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
AMER 2.0 1.8 2.9 3.8 6.5
APAC 0.1 0.7 0.3 1.0 2.2
EROW 0.5 1.6 1.0 2.9 5.1
SSH Group total 2.6 4.1 4.2 7.7 13.9
OPERATING PROFIT/LOSS
BY SEGMENT
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
AMER 1.0 -0.2 1.1 0.1 1.0
APAC 0.0 0.2 0.1 0.1 0.7
EROW -0.4 0.5 -0.6 0.9 11.3
Common Group expenses* -2.2 -1.8 -4.3 -4.3 -7.8
SSH Group total -1.7 -1.3 -3.8 -3.2 5.2
* Common Group expenses include the Groups administration expenses
(e.g. Management, Finance) and headquarters Product Management and
R&D expenses. The profit from the sale of the OEM business has been
divided into these segments.
FINANCIAL INDICATORS
1-6/ 1-6/ 1-12/
2004 2003 2003
Net sales, MEUR 4.2 7.7 13.9
Operating loss, MEUR -3.8 -3.2 5.2
Operating loss, % of net sales -89.8 -42.1 37.5
Profit before extraordinary -3.5 -3.1 5.5
items and taxes, EUR million
Profit before extraordinary -83.2 -40.9 40.0
items and taxes, % of net sales
Result before taxes, MEUR -3.5 -3.1 5.5
Result before taxes,% of net -83.2 -40.9 40.0
sales
Return on investment, % 15.0
Return on equity, % 14.4
Interest-bearing net -32.3 -29.6 -36.5
liabilities, MEUR
Equity ratio, % 95.2 92.6 94.7
Gearing, % -85.4 -89.9 -88.7
Gross capital expenditure, MEUR 0.2 0.5 0.8
% of net sales 4.8 6.6 6.2
R&D expenses, MEUR 2.2 2.9 5.2
% of net sales 51.9 37.3 37.4
Personnel, on average 108 139 131
Personnel, period-end 106 133 104
PER-SHARE DATA
1-6/ 1-6/ 1-12/
2004 2003 2003
Earnings per share -0.13 -0.11 0.20
EUR (undiluted)
Earnings per share, EUR -0.12 -0.11 0.19
(diluted)
Shareholders equity/share, EUR 1.35 1.19 1.48
No. of shares at period-end, 28 066 27 726 27 736
1,000
Share performance, in EUR
Average price 1.95 0.74 1.31
Lowest 1.20 0.61 0.61
Highest 2.69 0.93 2.36
Share price, period-end 1.47 0.67 1.70
Market capitalization, period- 41.8 15.2 47.2
end, MEUR
Volume of shares traded, 5.7 2.3 7.6
million
Volume of shares traded, 20.4 8.3 27.5
% of total
Value of shares traded, MEUR 11.2 1.7 10.0
Price-earnings ratio (P/E) 8.35
CONTINGENT LIABILITIES
EUR million June 30, June Dec.
2004 30, 31,
2003 2003
Rental liabilities 0.2 0.8 0.2
Leasing liabilities 0.2 0.3 0.2
Other contingent liabilities 2.4 0.0 2.4
Currency derivatives (not 2.0 0.0 2.0
included in the hedging
calculations)
The figures are unaudited.
NOTES TO THE CONSOLIDATED ACCOUNTS
1. ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with the IAS 34
standard (Interim Reports).
2. RECONCILIATION OF NET
PROFIT/LOSS
EUR million FAS CHANGE IFRS FAS CHANGE IFRS
4-6/ 4-6/ 1-6/ 1-6/
2003 2003 2003 2003
Net sales 4.1 4.1 7.7 7.7
Purchasing and -1.2 -1.2 -2.0 -2.0
production costs
Gross profit 2.8 2.8 5.7 5.7
Other operating income 0.2 0.2 0.3 0.3
Operating expenses -4.3 -4.3 -9.3 -9.3
Operating profit/loss -1.3 -1.3 -3.2 -3.2
Total financial income 0.3 0.3 0.1 0.1
and expenses
Net result for the -1.0 -1.0 -3.1 -3.1
period
Earnings per share, -0.11 -0.11
EUR
Earnings per share 1.18 0.01 1.19
(diluted), EUR
The reconciliation of net profit/loss for the entire fiscal period
2003 is presented in connection with the interim report for the first
quarter of 2004, dated April 20, 2004.
3. RECONCILIATION OF BALANCE SHEET
EUR million FAS CHANGE IFRSIFRS
June 30, June 30,
2003 2003
Long-term assets
Tangible assets 0.4 0.5 0.8
Intangible assets 1.3 -0.5 0.9
Deferred tax assets 0.2 0.2
Long-term assets total 1.7 1.9
Short-term assets
Deferred tax assets 0.2 -0.2
Inventories 0.6 0.6
Short-term receivables 4.8 4.8
Available-for-sale 25.0 0.3 25.3
assets
Trading assets 0.0
Liquid assets 4.6 4.6
Total short-term 35.2 35.2
liabilities
Total assets 36.9 37.2
LIABILITIES AND
SHAREHOLDERS' EQUITY
Shareholders equity
Share capital 0.8 0.8
Share premium fund 41.0 -1.6 39.3
Revaluation reserve 0.2 0.3
Retained profit/loss -9.2 1.6 -7.5
Subordinated loan 0.2 -0.2
Shareholders equity 32.9 32.9
total
Long-term liabilities
Provisions 0.0
Deferred tax 0.0
assets
Long-term 0.0 0.2 0.2
financial liabilities
Total long-term 0.0 0.2
liabilities
Short-term liabilities 4.0 4.0
Total liabilities 36.9 37.2
Further information about the transition has been published in a press
release dated March 18, 2004.
SHAREHOLDERS
On June 30, 2004, the companys ten largest shareholders, excluding
nominee-registered shares, were as follows:
Applied Computing Research (ACR) Oy 60.4 %
Assetman Oy 5.0 %
Tatu Ylönen Oy 2.3 %
Mutual Pension Insurance Company Ilmarinen 1.7 %
Promotion Capital I Ky 1.7 %
Nixu OyNixu Oy 1.4 %
Ylönen TatuYlönen Tatu 1.3 %
Jaakonsaari Markus 1.3 %
Kaukonen KalleKaukonen Kalle 1.2 %
Adams George 1.2 %
Total 77.6 %
FINANCIAL REPORTING
A briefing on this interim report for analysts and the media will be
presented at the auditorium on the 1st floor of SSHs head office at
Fredrikinkatu 42, Helsinki, on Wednesday, July 21, 2004, starting at
11:00 a.m. The entrance is at the corner of Fredrikinkatu and
Malminkatu.
SSH Communications Security Corp will release its next interim report
for the period January 1 - September 30, 2004, on October 20, 2004.
Helsinki, July 21, 2004
SSH COMMUNICATIONS SECURITY CORP
Board of Directors
Arto Vainio
CEO
For further information, please contact:
Arto Vainio, CEO tel. +358 20 500 7400
Johanna Lamminen, CFO tel. +358 20 500 7419
Kare Laukkanen, Director, IR tel. +358 20 500 7433
Distribution:
Helsinki Exchanges
Major media
CEO
Arto Vainio
Tel: +358 20 500 7400
Investor Relations/CFO
Mika Peuranen
Tel: +358 20 500 7419
E-mail: 
© 2004 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.