SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE April 19, 2005, at 9:00 a.m. SSH'S INTERIM REPORT FOR JANUARY 1-MARCH 31, 2005 - Net sales reported for January-March totaled EUR 1.6 million, down -3.8 percent year on year (EUR 1.7 million in Q1/2004). - The SSH Tectia business grew in Asia and Europe by a strong 66 percent over the previous year. - In January, the company launched the industry's first Secure Shell product for the IBM mainframe environment. - The company introduced in February SSH G3, the 3G Secure Shell software architecture, the company's most advanced new release which provides SSH Tectia products with a number of major new features. - Operating loss came to EUR -1.9 million (a loss of EUR 2.1 million). - During the report period, the company concluded a number of new customer agreements, 2 of which were worth over EUR 100,000. - Since early 2005, SSH has applied IFRS 2 (Share-based Payment) to all stock options granted since November 7, 2002 and to which the right has not accrued prior to January 1, 2005. Comparatives for 2004 were adjusted to be in compliance with IFRS 2. KEY FIGURES 1-3/ 1-3/ 1-12/ 2005 2004 2004 Net sales, EUR million 1.6 1.7 8.2 Net sales, change % -3.8 -53.4 -40.6 Operating profit/loss, -1.9 -2.1 -6.4 EUR million % of net sales -116.2 -127.4 -77.8 Operating profit/loss, 12.3 8.6 -223.7 change % Profit/loss before -1.9 -2.0 -5.9 extraordinary items and taxes, EUR million % of net sales -115.8 -123.7 -71.2 Number of employees 89 106 105 at period-end Earnings per share, EUR -0.07 -0.07 -0.21 Shareholders' 1.20 1.42 1.26 equity/share, EUR NET SALES Consolidated net sales for the period totaled EUR 1.6 million (EUR 1.7 million), remaining almost at the previous year's level. The Q1/2004 net sales are not fully comparable with those recorded a year later because they include sales generated by SSH Certifier sold as a stand- alone product. In November 2004, SSH licensed the further development of its SSH Certifier product to Instasec Oy on an OEM basis, including the transfer of existing SSH Certifier customer accounts. During the first quarter, SSH continued the systematic implementation of its strategy based on the SSH Tectia solution, primarily targeting large enterprises, financial institutions and government agencies, almost all of its Q1 sales stemming from these customer segments. Since the majority of SSH's invoicing is based on the US dollar, the dollar's value and changes in it have a fundamental effect on consolidated net sales. The SSH Tectia business in the USA was flat in US Dollars in the Period, but the average value of the US dollar decreased during the first quarter in 2005 about 5 % compared to the same period in 2004. RESULTS AND EXPENSES Operating loss for the period came to EUR -1.9 million (a loss of EUR 2.1 million) and net loss totaled EUR -1.9 million (a loss of EUR 2.1 million). Exceptional non-recurring expenses were incurred due to the relocation of the company's headquarters from downtown Helsinki to Pitäjänmäki. The lease for these new premises will considerably reduce SSH Finland's rental costs from May 1, 2005 forward. SSH will also incur costs due to a dispute over royalty payments between F-Secure Corporation and Nokia Corporation. Accordingly, F- Secure Corporation is claiming excess royalties paid to SSH for 2001-2004. In December 2004, SSH entered EUR 136,000 in expenses for any such royalty refunds. A pre-agreement was made between F-Secure Corporation and SSH and due to that SSH recorded an additional provision of about EUR 70,000 against such refunds in March 2005. SSH's US subsidiary, SSH Communications Security, Inc., received a claim for recovery, valued at USD 50,000, from the bankruptcy estate of its US customer, Global Crossing Ltd, regarding a license fee paid in 2002. Negotiations were completed with the bankruptcy estate, resulting in final compensation of EUR USD 40,000, with USD 10,000 expensed in the Report Period and USD 30,000 which SSH had already expensed in December 2004. SSH's fixed costs reported for the period continued to decline year on year, as evidenced by the about EUR 0.5 million reduction in fixed costs recorded for January-March, almost all of which were due to lower payroll costs. Research and development expenses for the period totaled EUR 1.0 million (EUR 1.0 million), while sales and marketing expenses came to EUR 1.9 million (EUR 2.0 million) and administrative expenses EUR 0.5 million (EUR 0.7 million). Since early 2005, SSH has applied IFRS 2 (Share-based Payment) to all of its stock options granted since November 7, 2002 and to which the right has not accrued before January 1, 2005. No expenses for prior stock options are stated on the income statement. Based on the Black- Scholes option-pricing model, stock options are stated at fair value on their granting date. The fair value for stock options to which the right is expected to accrue will be expensed on the income statement for the period during which such a right accrues. Comparatives for 2004 are in compliance with IFRS 2 as if SSH had applied the standard in earlier accounting periods. BALANCE SHEET AND FINANCIAL POSITION SSH's financial position remained at a healthy level during the report period. Consolidated balance sheet total on March 31, 2005 stood at EUR 36.4 million (EUR 41.6 million), of which liquid assets accounted for EUR 32.9 million (EUR 34.9 million), or 90.6 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. In March 31, 2005, gearing, or the ratio of net liabilities to shareholders' equity, was -96.9 (-87.9) and equity ratio stood at 94.5 percent (96.0 percent). The reported gross capital expenditure for the period totaled EUR 0.01 million (EUR 0.1 million), consisting mainly of equipment purchases. Reported financial income came mainly from interest income and exchange rate differences. Financial income and expenses totaled EUR 0.0 million, compared with EUR 0.1 million a year ago. Since SSH, under IAS 39, classifies financial assets and other marketable securities as available-for-sale assets, it recognizes any changes in their value under shareholders' equity. Only after the disposal of an asset does the company recognize interest income in the income statement. During the report period, SSH recognized an increase of EUR 0.2 million in the value of its available-for-sale assets. Instead of recognizing any financial income from financial investments for the first quarter, the company held all such assets in its portfolio. Business operations cash flow showed a negative cash flow of EUR 1.0 million. Investments cash flow and cash flow from financing, were during the first quarter of 2004 very small, and those did not have any impact in to the company's total cash flow. The company showed a negative total cash flow of EUR 1.0 million during the period. MARKET DEVELOPMENTS The number of invitations to tender and projects pending among SSH's customers - large enterprises, financial institutions and government agencies - was on the rise, with target customers, especially in North America and Japan, showing a growing interest in adopting SSH's commercial data security products. Benefits provided by these products, such as significant ongoing product development advances and strong customer support, have come to play a major role when companies compare alternatives. Nevertheless, the conclusion of actual contracts was a slow process. Legislative reforms on data confidentiality and secure data communication are currently taking place both in the US and Europe. Customers are facing an ever-greater challenge in terms of information security management due to deperimeterization, or the gradual disappearance of boundaries between companies' internal and external information networks, with recent surveys suggesting that large enterprises are finding it more difficult to protect their networks and businesses from sophisticated worms and back doors. The SSH Tectia solution's features and management capabilities align well with this trend, and SSH is confident that reforms will have favorable effects in terms of customers planning secure remote management of their information systems and solutions for protecting their business applications. The number of companies actively testing new data security solutions increased in North America, SSH's main market area, with demand mainly focusing on solutions for secure remote management of network servers and various kinds of data communication equipment. Currently, SSH Tectia Manager is included in practically all major SSH Tectia installations. In addition, rules under Sarbanes-Oxley 404 Section in the US have obviously begun to contribute to SSH's target customers' data security plans for 2005 and the related investment plans. In Europe, the SSH Tectia solution attracted growing interest, especially among financial institutions and government organizations. Customers' interest in securing their business applications grew during the report period. For SSH, the most interesting markets in Europe include Germany, the UK and the Nordic countries. In Japan, a new law on distributing and storing personal data is expected to increase both public and private-sector investments in data security. During the first quarter, there was a clear indication in Asia of large enterprises' growing interest in adopting commercial solutions for remote management of network servers and various data communication equipment. The report period saw no major changes in competition in the market for secure remote management solutions. SALES PERFORMANCE SSH'S NET SALES EUR million 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 1-12/ 2005 2004 2004 2004 2004 2004 BY SEGMENT* AMER 0.9 1.4 1.4 2.0 1.0 5.7 APAC 0.2 0.2 0.1 0.1 0.2 0.6 EROW 0.5 0.3 0.6 0.5 0.5 2.0 SSH Group total 1.6 1.9 2.1 2.6 1.7 8.2 SSH TECTIA BUSINESS Net sales / license 1.0 1.4 1.5 2.1 1.2 6.2 sales Net sales / 0.6 0.5 0.6 0.4 0.5 2.0 maintenance SSH Tectia total * 1.6 1.9 2.1 2.6 1.7 8.2 * The 2004 net sales are not fully comparable because they include sales generated by SSH Certifier sold as a stand-alone product. In line with its strategy, SSH continued to sell its SSH Tectia solution to selected customer segments, this solution enabling customer companies to protect their information systems' remote management, data transfer and business application data communications against both external and internal risks, cost-efficiently. Q1/2005 net sales generated by products based on the SSH Tectia solution remained almost the same as in Q1/2004. In 2004, Q1 showed the poorest sales performance. SSH's recently launched Tectia solutions have met with an extraordinary favorable reception in the market, and product launches have paved the way for growing interest in SSH's products. The sales process for a system-level product for major customers is a long one, and sales talks may take up to several months at their shortest. The Americas, Asia Pacific, Europe and Rest of the World accounted for 55.9 percent (59.1 percent), 13.2 percent (9.2 percent) and 30.9 percent (31.7 percent) of reported net sales, respectively. Asia Pacific and Europe and Rest of the World saw a year-on-year increase in their share of net sales. SSH completed the reinforcement of these areas' sales organization at the end of 2004, and training of sales personnel in the SSH Tectia solution is progressing as planned. During the report period, SSH concluded a number of new customer agreement, 2 of which were each worth more than EUR 100,000. SSH's ten largest customers accounted for 49.4 percent of reported net sales, with the largest single customer accounting for around 15.1 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 US, Europe and Asia, in line with its long-term strategy. The company strengthened its sales organization by reinforcing its partner network complementing the SSH Tectia solution and continued to implement targeted marketing campaigns in the market for secure remote management solutions. In January, SSH introduced the industry's first SSH Tectia Server- based product for the IBM mainframe environment. This new product included support for the IBM z/OS operating system with SSH's Secure Shell data security protocol, enabling secure remote management, data transfer and data communication protection for business applications. Market reports suggest that over 90 percent of Fortune 1,000 companies use mainframe environments for their business applications and more than 70 percent store their business data on mainframe computers. The company also launched in February SSH G3, a third-generation Secure Shell software architecture based on a Secure Shell data security protocol designed by SSH. This architecture incorporates myriad new features, such as considerably higher-performance encrypted data transfer, higher scalability and the world's first high-speed CryptiCore encryption algorithm. SSH G3 is fully compatible with the SSH2 standard. SSH Tectia's users will reap the benefits provided by the SSH G3 architecture in terms of productivity gains and higher information system performance, applying in particular to large data mass transfers, mainframe servers and critical applications. In February, SSH also announced a new version of its SSH Tectia solution that supports Linux running on the board range of IBM eServer platforms. In cooperation with IBM, SSH developed its SSH Tectia support for eServer platforms by participating in a pilot program for the IBM eServer Application Advantage for Linux offering. Both February launches will offer a significant supplement to IBM's data- security solution offerings. In March, SSH announced a partnership with BMC Software, Inc., enabling BMC Software CONTROL-M customers to achieve secure file transfers, based on SSH Tectia's SFTP (Secure File Transfer Protocol) technology, in their integrated scheduling environments. This combined solution allows enterprises to manage their file transfers using BMC Software's industry-leading job scheduling solution while ensuring the confidentiality, integrity and authentication of mission-critical data. In March, SSH announced new products for upgrading unsecured FTP connections to secure file transfer connections with high-performance encryption throughout heterogeneous enterprise networks. RESEARCH AND DEVELOPMENT January-March R&D expenses totaled EUR 1.0 million (EUR 1.0 million), accounting for 61.6 percent of net sales (63.1 percent). In accordance with IFRS, SSH capitalizes only product development expenses caused by the commercialization of completely new products at the end of R&D processes. No development expenses were capitalized during the report period. At the end of March, the company held nine patents while 18 were pending. HUMAN RESOURCES AND ORGANIZATION At the end of March, the Group had 89 employees on its payroll, down by 17 over the previous year (-16.0 percent). At the end of the report period, 40.5 percent of the employees worked in R&D, 43.8 percent in sales and marketing, and 15.7 percent in corporate administration. BOARD AND AUDITORS The Annual General Meeting (AGM) on April 27, 2004 re-elected Tapio Kallioja, Tomi Laamanen, Timo Ritakallio and Tatu Ylönen to SSH Communications Security Corp's Board of Directors, with Tomi Laamanen re-elected as Chairman. The AGM re-elected PricewaterhouseCoopers Oy, an authorized public accountants firm, as the company's auditor, with Henrik Sormunen, an authorized public accountant, acting as the principal auditor. In a stock exchange release on March 23, 2005, Tatu Ylönen and Tero Kivinen, whose combined holding exceeds 50 percent of company shares and votes, announced that they would put forward a proposal to SSH Communications Security Corp's Annual General Meeting of April 26, 2005 for the election of Board members. Accordingly, the number of Board members would be fixed at four and Tapio Kallioja, Tomi Laamanen, Timo Ritakallio and Tatu Ylönen would be re-elected to the Board. All of the proposed Board members have agreed to their re-election. SHARES, SHAREHOLDING AND CHANGES IN THE GROUP STRUCTURE The reported trading volume of SSH Communications Security Corp shares for the period totaled 3,678,170 (valued at EUR 5,056,381.04) i.e. 13.4 percent of the shares changed hands. The highest quotation was EUR 1.59 and the lowest EUR 1.13. The trade-weighted average share price for the period amounted to EUR 1.37, and the share closed at EUR 1.55 (March 31, 2005). There were no substantial changes in SSH Communications Security Corp's shareholding during the report period. With Tatu Ylönen and Tero Kivinen being the largest shareholders, the former holds, directly and through his company, Tatu Ylönen Oy, 43.7 percent of company shares and the latter 8.4 percent. Ylönen and Kivinen owned Applied Computing Research (ACR) Oy that previously held 60.4 percent of SSH shares. Based on Applied Computing Research (ACR) Oy's merger with SSH on October 31, 2004, Tatu Ylönen and Tero Kivinen, ACR's shareholders, received 14,344,639 and 2,597,848 new SSH shares, respectively, as a consideration of the merger, or a total of 16,942,487 shares. The number of these shares equaled SSH shares then held by ACR. SHARE CAPITAL AND BOARD AUTHORIZATIONS The company's registered share capital on March 31, 2005 came to EUR 843,208.74, consisting of 28,106,958 shares. During the report period, SSH increased its share capital once, based on the subscription of the new shares under SSH's stock-option scheme. A total of 1,750 and 3,666 new SSH shares were subscribed under the 1999 and 2003 stock-option schemes, respectively, with the result that the company's share capital increased by EUR 162.48. SSH's Annual General Meeting of April 27, 2004 authorized the Board to decide by April 27, 2004 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 Board has not exercised this authorization. CORPORATE GOVERNANCE SSH applies corporate governance recommendations for listed companies issued by HEX Ltd, the Central Chamber of Commerce of Finland and the Confederation of Finnish Industry and Employers in December 2003. More information on corporate governance is available on the company's website at www.ssh.com. EVENTS AFTER THE REPORT PERIOD SSH and F-Secure Corporation have come to an agreement on royalty payments for 2001-2004. The reason behind this agreement was the dispute over royalty payments between F-Secure Corporation and Nokia Corporation from 2001-2004. PROSPECTS The underlying factors behind SSH's forecast for sales growth in 2005 are based on several legislative reforms underway in both the US and Europe and the reinforcement in 2004 of the company's sales organizations, especially in the UK and Germany. SSH's partner network expansion in 2004 is also expected to enhance recognition of the SSH Tectia solution. The ongoing development of the SSH Tectia solution and new product applications will pave the way for wider target markets from the perspective of both existing and new customers. SSH's management is confident that all these factors will have a favorable effect on demand for the SSH Tectia solution. SSH's updated net sales forecast for 2005 is EUR 8-10 million. The company's management expects that the SSH Tectia solution, including the SSH Tectia Manager and SSH Tectia Connector products, which met with a favorable reception in the market, will increase the average size of contracts while contributing to the achievement of the company's net sales target. The management estimates that SSH will still have the opportunity to make a positive operating profit in the second half of the year 2005. INCOME STATEMENT EUR million 1-3/ 1-3/ 1-12/ 2005 2004 2004 Net sales 1.6 1.7 8.2 Purchasing and production 0.0 0.0 -0.1 costs Gross profit 1.6 1.6 8.1 Other operating income 0.0 0.0 0.3 Expenses Product development -1.0 -1.0 -3.8 Sales and -1.9 -2.0 -8.5 marketing Administration -0.5 -0.7 -2.4 Operating profit/loss -1.9 -2.1 -6.4 Financial income and expenses 0.0 0.1 0.5 Profit/loss before taxes -1.9 -2.0 -5.8 a Taxes 0.0 0.0 0.0 Net profit/loss for the -1.9 -2.0 -5.8 period a) Taxes are proportionate to the net profit for the period, and no deferred tax assets are recorded for the accrued loss. 1-3/ 1-3/ 1-12/ 2005 2004 2004 Earnings per share, EUR -0.07 -0.07 -0.21 Earnings per share (diluted), -0.06 -0.07 -0.21 EUR BALANCE SHEET EUR million Mar. Mar. Dec. 31, 31, 31, 2005 2004 2004 ASSETS Fixed and other non-current assets Tangible assets 0.4 0.5 0.4 Intangible assets 0.8 1.2 0.9 Deferred tax assets 0.2 0.2 0.2 Total fixed and non-current 1.4 1.9 1.6 assets Inventories and current assets Short-term receivables 2.0 4.7 2.6 Short-term investments 31.1 33.4 32.3 Cash and cash equivalents 1.8 1.5 1.5 Total inventories and current 35.0 39.7 36.4 assets Total assets 36.4 41.6 38.0 LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity 33.7 39.4 35.4 Long-term liabilities Provisions 0.3 0.0 0.2 Deferred tax liability 0.1 0.1 0.0 Long-term financial 0.3 0.3 0.3 liabilities Total long-term liabilities 0.7 0.4 0.6 Short-term liabilities 2.0 1.8 2.0 Total liabilities and 36.4 41.6 38.0 shareholders' equity STATEMENT ON CHANGES IN SHAREHOLDERS' EQUITY EUR million Share Issue Fair Translat Retained Total capital premium value ion earnings fund* and differen other ce reserves Shareholders' 0.8 39.3 0.0 -0.7 1.7 41.1 equity Jan. 1, 2003 Change 0.0 0.1 0.2 0.1 -2.1 Shareholders' 0.8 39.4 0.2 -0.6 -0.4 39.4 equity Sept.30, 2003 Change 0.0 -15.0 15.0 -0.2 -3.8 Shareholders' 0.8 24.4 15.1 -0.8 -4.2 35.4 equity Dec. 31, 2003 Change 0.0 0.0 0.2 0.0 Net loss -1.9 Shareholders' 0.8 24.4 15.3 -0.8 -6.1 33.7 equity Sept. 30, 2004 * Transfer to the retained loss account has resulted in a reduction in the issue premium fund. CASH FLOW STATEMENT EUR million 1-3/ 1-3/ 1-12/ 2005 2004 2004 Cash flow from business operations -1.0 -1.9 -2.6 Cash flow from investments 0.0 0.0 -0.4 Cash flow from financing 0.0 0.1 0.1 Increase(+), decrease (-) in -1.0 -1.8 -2.8 liquid assets Liquid assets at period-start 33.0 35.9 35.9 Adjustment for translation 0.0 0.0 0.0 difference b Liquid assets at period-end 32.0 34.1 33.0 b) Liquid assets consist of cash and cash equivalents, as well as from other marketable securities the part that is invested into the interest funds. NET SALES BY SEGMENT EUR million 1-3/ 1-3/ 1-12/ 2005 2004 2004 AMER 0.9 1.0 5.7 APAC 0.2 0.2 0.6 EROW 0.5 0.5 2.0 SSH Group total 1.6 1.7 8.2 OPERATING PROFIT/LOSS BY SEGMENT EUR million 1-3/ 1-3/ 1-12/ 2005 2004 2004 AMER 0.2 -0.3 2.1 APAC 0.1 0.1 0.2 EROW -0.3 0.1 -1.6 Common Group expenses* -1.9 -2.0 -7.1 SSH Group total -1.9 -2.1 -6.4 * Common Group expenses include Group administration expenses (e.g. Management and Finance) and the headquarters' Product Management and R&D expenses. Capital gains on the OEM business divestment have been divided among these segments. KEY FIGURES AND RATIOS 1-3/ 1-3/ 1-12/ 2005 2004 2004 Net sales, MEUR 1.6 1.7 8.2 Operating profit/loss, MEUR -1.9 -2.1 -6.4 Operating profit/loss, % of net -116.2 -127.4 -77.2 sales Profit/loss before extraordinary -1.9 -2.0 -5.9 items and taxes, MEUR Profit before extraordinary -115.8 -123.0 -71.2 items and taxes, % of net sales Profit/loss before taxes, MEUR -1.9 -2.1 -5.9 Profit/loss before taxes, -115.8 -123.7 -71.2 % of net sales Return on investment, % -13.5 Return on equity, % -15.1 Interest-bearing net -32.6 -34.6 -33.5 liabilities, MEUR Equity ratio, % 94.5 96.0 94.8 Gearing, % -96.9 -87.9 -94.8 Gross capital expenditure, MEUR 0.0 0.1 0.5 % of net sales 0.0 4.0 5.6 R&D expenses. MEUR 1.0 1.0 3.8 % of net sales 61.6 63,1 46.7 Personnel, period-average 94 106 105 Personnel, period-end 89 106 105 For the company's line of business, the value of outstanding orders presents no significant reference stated in the notes to the accounts. PER-SHARE DATA 1-3/ 1-3/ 1-12/ 2005 2004 2004 Earnings per share, -0.07 -0.07 -0.21 EUR (undiluted) Earnings per share, EUR -0.06 -0.07 -0.21 (diluted) Equity/share, EUR 1.20 1.42 1.26 No. of shares at period-end, 28,107 28,066 28,102 1,000 Share performance, EUR Average price 1.37 2.27 1.69 Low 1.13 1.69 1.18 High 1.59 2.69 2.69 Share price, period-end 1.55 1.90 1.28 Market capitalization, period- 43.6 53.3 36.0 end, MEUR Volume of shares traded, 3.7 3.8 9.3 million Volume of shares traded, 13.4 13.4 33.3 % of total Value of shares traded, MEUR 5.1 8.5 15.8 Price-earnings ratio (P/E) -6.1 CONTINGENT LIABILITIES EUR million Mar. 31, Mar. Dec. 2005 31, 31, 2004 2004 Rental liabilities 0.2 0.2 0.1 Leasing liabilities 0.1 0.2 0.1 Other contingent liabilities 0.6 2.4 0.6 Currency derivatives (not 0.7 2.0 0.7 included in hedge accounting) These data are based on unaudited figures. NOTES TO THE CONSOLIDATED ACCOUNTS 1. ACCOUNTING PRINCIPLES This interim report is based on accounting principles under IAS 34 (Interim Reports). The table below shows the effects of IFRS 2 (Share-based Payment) on the 2004 comparatives. 2. RECONCILIATION OF INCOME STATEMENT EUR million 1-3/ Effect 1-12/ Effect 1-12/ 2004 of 1-3/ 2004 of 2004 IFRS 2 2004 IFRS 2 Net sales 1.7 1.7 8.2 8.2 Purchasing and 0.0 0.0 -0.1 -0.1 production costs Gross profit 1.6 1.6 8.1 8.1 Other operating income 0.0 0.0 0.3 0.3 Operating expenses -3.8 -0.01 -3.8 -14.7 -0.04 -14.8 Operating profit/loss -2.1 -0.01 -2.1 -6.4 -0.04 -6.4 Total financial income 0.1 0.1 0.5 0.5 and expenses Net profit/loss for -2.1 -0.01 -2.1 -5.8 -0.04 -5.9 the period Earnings per share, -0.07 -0.07 -0.21 -0.21 EUR Earnings per share -0.07 -0.07 -0.21 -0.21 (diluted), EUR The table below shows the effects of IFRS 2 (Share-based Payment) on the 2004 comparatives. 3. RECONCILIATION OF BALANCE SHEET EUR million March IFRS 2 31, March 2004 31, 2004 Fixed and other non- current assets Tangible assets 0.5 0.5 Intangible assets 1.2 1.2 Deferred 0.2 0.2 tax assets Total fixed and non- 1.9 1.9 current assets Inventories and current assets Short-term receivables 4.7 4.7 Available-for-sale 33.4 33.4 Assets Cash and cash 1.5 1.5 equivalents Total inventories and 39.7 39.7 current assets Total assets 41.6 41.6 LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity Share capital 0.8 0.8 Share premium fund 39.4 39.4 Fair value reserve 0.2 0.03 0.2 Retained earnings -1.0 -0.03 -1.0 Total shareholders' 39.4 39.4 equity Long-term liabilities Long-term 0.3 0.3 financial liabilities Deferred tax liability 0.1 0.1 Total long-term 0.4 0.4 liabilities Short-term liabilities 1.8 1.8 Total liabilities and 41.6 41.6 shareholders' equity SHAREHOLDERS On March 31, 2005, the company's ten largest shareholders, excluding nominee-registered shares, were as follows: Ylönen Tatu and Tatu Ylönen Oy 53.7% Kivinen Tero 8.4% Assetman Oy 5.0% Jaakonsaari Markus 2.2% Ilmarinen Mutual Pension Insurance Company 1.7% Promotion Capital I Ky 1.7% Pohjola Finland 1.3% Kaukonen Kalle 0.9% Arto Vainio 0.5% eQ Extreme Mutual Fund 0.4% Total 75.8% FINANCIAL REPORTING SSH will hold a briefing on its interim report for equity analysts and the media in its head office, Cabinet no. 204, 2nd floor, Valimotie 17, Helsinki, on Tuesday, April 19, 2005, starting at 11:00 a.m. SSH Communications Security Corp will release its next interim report for January 1-June 30, 2005 on July 27, 2005. Further information will be available on the company's website in due course before that date. Helsinki, April 19, 2005 SSH COMMUNICATIONS SECURITY CORP Board of Directors Arto Vainio CEO For further information, please contact: Arto Vainio, CEO tel. +358 (0)20 500 7400 Johanna Lamminen, CFO tel. +358 (0)20 500 7419 or visit www.ssh.com/investors Distribution: Helsinki Stock Exchange Major media