SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE July 27, 2005, at 9 a.m. SSH'S INTERIM REPORT FOR JANUARY 1 - JUNE 30, 2005 - Net sales reported for January - June totaled EUR 2.8 million, down 33.1 percent year on year (EUR 4.2 million in Q1-Q2/2004). Invoicing for the most important customer projects in 2005 will take place in the second half of the year. - In January, the company launched the industry's first Secure Shell product for the IBM mainframe environment. - In February, the company introduced SSH G3, the 3G Secure Shell software architecture, which provides SSH Tectia products with a number of new features. - Operating loss was EUR 3.5 million (Q1-Q2/2004: a loss of EUR 3.8 million). KEY FIGURES 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ 2005 2004 2005 2004 2004 Net sales (MEUR) 1.2 2.6 2.8 4.2 8.2 Net sales, change % -52.1 -37.5 -33.1 -44.9 -40.6 Operating profit/loss -1.6 -1.7 -3.5 -3.8 -6.4 (MEUR) % of net sales -134.8 -66.1 -124.2 -90.3 -77.8 Operating profit/loss, 2.3 -32.6 7.9 -18.0 -223.7 change % Profit/loss before -1.2 -1.5 -3.1 -3.5 -5.9 extraordinary items and taxes (MEUR) % of net sales -100.8 -57.7 -109.3 -83.2 -71.2 Number of employees 81 106 81 106 105 at period end Earnings per share (EUR) -0.11 -0.13 -0.21 Shareholders' equity per 0.86 1.35 1.26 share (EUR) NET SALES Consolidated net sales for January - June totaled EUR 2.8 million (EUR 4.2 million), down 33.1 percent year on year. The Q1-Q2/2004 net sales are not fully comparable with those recorded a year later because they include sales generated by sales of SSH Certifier as a standalone 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. The biggest change in net sales affected the Americas, with net sales in this market area falling by just over 42 percent during the report period. Such major fluctuations in net sales are attributable to the ongoing changes in the sales structure and the timing of the deals. The change in sales structure is reflected by the fact that the value of one or two major single-customer projects may represent over half of the company's invoicing for an entire quarter. In the first half of 2005, only three sales agreements reached the invoicing stage over EUR 100 000, as compared with six in 2004, one of which was an exceptionally large one. Second-quarter net sales for 2005 came to EUR 1.2 million, down by 52.1 percent year on year. During Q2, SSH continued the systematic implementation of its strategy based on the Tectia solution, primarily targeting large enterprises, financial institutions, and government agencies, with almost all of the company's Q2 sales stemming from these customer categories. Since the majority of SSH's invoicing is based on the U.S. dollar, the dollar's value and changes in it have a fundamental effect on consolidated net sales. During the report period, the average value of the dollar decreased by almost 5 percent as compared to the same period in 2004. RESULTS AND EXPENSES January through June saw an operating loss of EUR 3.5 million (Q1-Q2/2004: a loss of EUR 3.8 million), with net loss coming to EUR 3.1 million (Q1-Q2/2004: a loss of EUR 3.5 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 during the second half of 2005. The company also incurred costs arising from 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 a reserve for EUR 136,000 in expenses for any such royalty refunds. An agreement was reached on this matter in April, resulting in an additional expenditure of approximately EUR 70,000 for SSH. Operating loss for the second quarter amounted to EUR 1.6 million (Q2/2004: a loss of EUR 1.7 million), while the net loss totaled EUR 1.2 million (EUR 1.5 million loss). The fixed costs SSH reported for the period continued their year-on-year decline, as evidenced by the reduction of about EUR 1.5 million in fixed costs recorded for the first half, due to cuts in both payroll costs and the use of external services. Research and development expenses for the period totaled EUR 1.9 million (EUR 2.2 million), while sales and marketing expenses came to EUR 3.5 million (EUR 4.4 million) and administrative expenses EUR 1.1 million (EUR 1.3 million). Second-quarter research and development expenses totaled EUR 0.9 million, compared with EUR 1.1 million a year earlier. Sales and marketing expenses in Q2 came to EUR 1.6 million (EUR 2.4 million), and administrative expenses totaled EUR 0.5 million (EUR 0.6 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 rights had not accrued prior to January 1, 2005. No expenses for prior stock options are included on the income statement. Based on the Black-Scholes option-pricing model, stock options are recorded at their fair value on their granting date. The fair value for stock options to which the rights are 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 The financial position of SSH remained at a healthy level during the report period. The consolidated balance sheet total on June 30, 2005, stood at EUR 26.3 million (EUR 40.3 million), of which liquid assets accounted for EUR 23.3 million (EUR 32.5 million), or 88.4 percent of the balance sheet total. The company has no long-term liabilities. In May 2005, SSH paid out over EUR 8.1 million in dividends. On June 30, 2005, gearing, or the ratio of net liabilities to shareholders' equity, was -95.8 (-85.4) and the equity ratio stood at 94.9 percent (95.2 percent). The reported gross capital expenditure for the period totaled EUR 0.1 million (EUR 0.2 million), consisting mainly of equipment purchases. Reported financial income came mainly from capital gains on fund units. Financial income and expenses totaled EUR 0.4 million, compared with EUR 0.3 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 on the income statement. During the report period, SSH recognized an increase of EUR 0.04 million in the value of its available-for-sale assets. The cash flow for SSH's business operations for the period showed a negative cash flow of EUR 2.5 million, whereas investments showed a positive cash flow of EUR 0.6 million, the latter stemming from capital gains on investments. Cash flow from financing, EUR -8.1 million, comprised dividends paid in May, resulting in the company showing a negative total cash flow of EUR 10.0 million during the period. MARKET DEVELOPMENTS The number of invitations to tender and that of projects pending among SSH's customers - large enterprises, financial institutions, and government agencies - continued their upward trend in the first half of the year, as evidenced by a major year-on-year increase in the related prospect portfolio. The shift to becoming a supplier to very large organizations in line with the selected market focus involves considerably lengthy technical and commercial negotiations. For this reason, the conclusion of major contracts in particular takes longer than was anticipated earlier. Legislative reforms concerning data confidentiality and secure data communication are occurring in the United States, Japan 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 corporations are finding it more difficult to protect their networks and businesses from sophisticated worms and backdoor-based attacks. The SSH Tectia solution's features and management capabilities align well with this trend, and SSH is confident that the reforms will have favorable effects in terms of customers planning secure remote management of their information systems and solutions for protecting their business applications. In SSH's main market area, North America, demand focused primarily on solutions for secure remote management of network services and various kinds of data communication equipment. Currently, SSH Tectia Manager is included in practically all major SSH Tectia installations. In addition, rules in Section 404 of the Sarbanes-Oxley Act in the U.S. have begun to contribute to SSH's target customers' data security plans for 2005 and the related investment plans. From SSH's viewpoint, the European market is currently the most challenging one since European customers continue to pursue a very cautious investment policy. Product launches made by the company in early 2005 have attracted growing interest in the SSH Tectia solution in Europe, with Germany, the U.K., and the Nordic countries continuing to be the most interesting countries for SSH. In Japan, a new law on the distribution and storage of personal data is expected to increase both public and private-sector investments in data security. 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 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-12/ 2005 2005 2004 2004 2004 2004 BY SEGMENT* AMER 0.8 0.9 1.4 1.4 2.0 5.7 APAC 0.1 0.2 0.2 0.1 0.1 0.6 EROW 0.3 0.5 0.3 0.6 0.5 2.0 SSH Group total 1.2 1.6 1.9 2.1 2.6 8.2 SSH TECTIA BUSINESS Net sales / license 0.8 1.0 1.4 1.5 2.1 6.2 Sales Net sales / 0.4 0.6 0.5 0.6 0.4 2.0 maintenance SSH Tectia total 1.2 1.6 1.9 2.1 2.6 8.2 * The 2004 net sales are not fully comparable because they include sales generated by sales of SSH Certifier as a standalone product. In line with its strategy, SSH continued to sell its SSH Tectia solution to selected categories of customers. This solution enables customer companies to protect their information systems' remote management, data transfer, and business application data communications against both external and internal risks in a cost-efficient manner. The sales process for a system-level product for major customers is a long one. In line with its strategy, SSH aims at a major increase in the average size of contracts. Due to sales processes with major customers being particularly slow and substantial growth occurring in the size of future contracts, as judged by tenders submitted, the future is going to see major fluctuations in sales from quarter to quarter. The Americas, the Asia Pacific region, and the 'Europe and Rest of the World' market area accounted for 60.0 percent (69.7 percent), 10.6 percent (5.9 percent), and 29.4 percent (24.4 percent) of reported net sales, respectively. During the report period, SSH concluded a number of new customer agreements, three of which were each worth more than EUR 100,000. The 10 largest customers accounted for 45.4 percent of reported net sales, with the largest single customer accounting for around 9.9 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 U.S., 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. In April, SSH announced that it will initiate a global partnership arrangement with SoftLink, aiming at enhancing secure file transfer in cross-platform environments. Integration of SSH Tectia with SoftLink's B-Hub allows large enterprises to secure their file transfers in heterogeneous IT environments. This year marks the 10th anniversary of the Secure Shell technology developed by SSH - Tatu Ylönen launched the first version of the Secure Shell protocol on July 12, 1995. The Secure Shell protocol is the basis of the SSH Tectia solution. RESEARCH AND DEVELOPMENT Research and development expenses in the first half totaled EUR 1.9 million (EUR 2.2 million), the equivalent of 66.1 percent of net sales (52.2 percent). In accordance with IFRS principles, 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 period under review. At the end of June, the company held 10 patents, and 17 were pending. HUMAN RESOURCES AND ORGANIZATION At the end of June, the Group had 81 employees on its payroll, down 25 from the previous year's number, a decrease of 23.6 percent. The number of administrative personnel decreased by 15 and sales and marketing by 10 employees, year on year. The number of people working in R&D remained unchanged. At the end of the period, 42.0 percent of the employees worked in R&D, 43.2 percent in sales and marketing, and 14.8 percent in corporate administration. BOARD AND AUDITORS The Annual General Meeting (AGM) on April 26, 2005, 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 5,956,070 (valued at EUR 8,172,816.54); i.e., 21.19 percent of the shares changed hands. The highest quotation was EUR 1.78 and the lowest EUR 1.00. The trade-weighted average share price for the period was EUR 1.37, and the share closed at EUR 1.07 (June 30, 2005). There were no substantial changes in SSH Communications Security Corp.'s shareholding information during the report period. Tatu Ylönen and Tero Kivinen are the largest shareholders. The former holds, directly and through his company, Tatu Ylönen Oy, 53.7 percent of the company's shares, and Kivinen holds 8.4 percent. Ylönen and Kivinen owned Applied Computing Research (ACR) Oy, which previously held 60.4 percent of SSH shares. As a consideration in Applied Computing Research (ACR) Oy's merger with SSH on October 31, 2004, ACR's shareholders - Ylönen and Kivinen - received 14,344,639 and 2,597,848 new SSH shares, respectively, or a total of 16,942,487 shares. This equals the number of SSH shares then held by ACR. SHARE CAPITAL AND BOARD AUTHORIZATIONS The company's registered share capital on June 30, 2005, was EUR 843,323.73, consisting of 28,110,791 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, 4,250 and 4,999 new SSH shares were subscribed to under the 1999 and 2003 stock-option plan, respectively, with the result that the company's share capital increased by EUR 277.47. The SSH Annual General Meeting of April 26, 2005, authorized the Board of Directors to decide by April 26, 2006, to increase the share capital through a rights issue and/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 yet exercised this authorization. Due the company's withdrawal from the VPN-hardware business, the sale of its OEM business, and stopping its Certifier business, the Board of Directors decided, February 9 2005, to start preparations for the potential reduction of the tied equity and the distribution of part of its assets to shareholders. There are no technical obstacles in this matter and the Board of Directors will make the final proposal still during this year. CORPORATE GOVERNANCE The company complies with the 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 Web site (www.ssh.com). PROSPECTS Legislative reforms (for example Sarbanes-Oxley Act) are constantly creating, within SSH's current customer base, new projects especially in the U.S. During the summer of 2005, SSH launched a new generation of SSH Tectia -products, which will increase both the usefulness and the market for its products. The number of active sales cases has increased during the first half of the year and the pipeline is bigger than ever. It is still possible to reach the revenue estimation given earlier (EUR 8-10 million), but there is uncertainty in it, because the value of a single contract in the pipeline may continue to account for as much as half of an entire quarter's invoicing. Therefore, SSH has decided not to issue a net sales forecast for the whole of 2005 until the timing and the size for those sales cases in the pipeline can better be estimated. The whole year results will be negative. INCOME STATEMENT EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ 2005 2004 2005 2004 2004 Net sales 1.2 2.6 2.8 4.2 8.2 Purchasing and production 0.0 0.0 0.0 -0.1 -0.1 costs Gross profit 1.2 2.5 2.8 4.1 8.1 Other operating income 0.1 0.0 0.1 0.0 0.3 Expenses Product development -0.9 -1.2 -1.9 -2.2 -3.8 Sales and -1.6 -2.4 -3.5 -4.4 -8.5 marketing Administration -0.5 -0.7 -1.1 -1.4 -2.4 Operating profit/loss -1.6 -1.7 -3.5 -3.8 -6.4 Financial income and expenses 0.4 0.2 0.4 0.3 0.5 Profit/loss before taxes -1.2 -1.5 -3.1 -3.5 -5.9 a Taxes 0.0 0.0 0.0 0.0 0.0 Net profit/loss for the -1.2 -1.5 -3.1 -3.5 -5.9 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/ 2005 2004 2004 Earnings per share (EUR) -0.11 -0.13 -0.21 Earnings per share, diluted -0.11 -0.12 -0.21 (EUR) BALANCE SHEET EUR million 6/30/ 6/30/ 12/31/ 2005 2004 2004 ASSETS Fixed and other non-current assets Tangible assets 0.3 0.4 0.4 Intangible assets 0.7 1.1 0.9 Deferred tax assets 0.2 0.2 0.2 Total fixed and other 1.3 1.7 1.6 non-current assets Inventories and current assets Short-term receivables 1.8 6.1 2.6 Short-term investments 22.3 30.6 32.3 Cash and cash equivalents 1.0 2.0 1.5 Total inventories and current 25.1 38.6 36.4 assets Total assets 26.3 40.3 38.0 LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity 24.2 37.8 35.4 Long-term liabilities Provisions 0.1 0.0 0.2 Long-term financial 0.1 0.3 0.3 liabilities Total long-term liabilities 0.2 0.3 0.6 Short-term liabilities 1.9 2.2 2.0 Total liabilities and 26.3 40.3 38.0 shareholders' equity STATEMENT ON CHANGES IN SHAREHOLDERS' EQUITY EUR million Share Issue Fair Transl Retained Total capital premium value ation earnings fund* and differ other ence reserves Shareholders' 0.8 39.3 0.0 -0.7 1.7 41.1 equity Jan. 1, 2004 Change 0.0 -14.9 15.1 0.1 -3.5 Shareholders' 0.8 24.4 15.1 -0.6 -1.9 37.8 equity June 30, 2004 Change 0.0 0.0 0.0 -0.2 -2.4 Shareholders' 0.8 24.4 15.1 -0.8 -4.2 35.4 equity Dec. 31, 2004 Change 0.0 0.0 0.0 0.1 -8.1 Net loss -3.1 Shareholders' 0.8 24.4 15.1 -0.7 -15.5 24.2 equity June 30, 2005 * Transfer to the retained loss account has resulted in a reduction in the issue premium fund. CASH FLOW STATEMENT EUR million 1-6/ 1-6/ 1-12/ 2005 2004 2004 Cash flow from business operations -2.5 -4.2 -2.6 Cash flow from investments 0.6 -0.1 -0.4 Cash flow from financing -8.1 0.1 0.1 Increase(+) / decrease (-) in -10.0 -4.2 -2.8 liquid assets Liquid assets at period start 33.0 35.9 35.9 Adjustment for translation 0.1 0.0 0.0 difference b Liquid assets at period end 23.0 31.7 30.0 b) Liquid assets consist of cash and cash equivalents, as well as the amount invested in the interest-bearing funds from other marketable securities. NET SALES BY SEGMENT EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ 2005 2004 2005 2004 2004 AMER 0.8 2.0 1.7 2.9 5.7 APAC 0.1 0.1 0.3 0.3 0.6 EROW 0.3 0.5 0.8 1.0 2.0 SSH Group total 1.2 2.6 2.8 4.2 8.2 OPERATING PROFIT/LOSS BY SEGMENT EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ 2005 2004 2005 2004 2004 AMER 0.1 1.0 0.3 1.1 2.1 APAC -0.1 0.0 0.0 0.1 0.2 EROW -0.3 -0.4 -0.5 -0.9 -1.6 Common Group expenses* -1.4 -2.2 -3.3 -4.1 -7.1 SSH Group total -1.6 -1.7 -3.5 -3.8 -6.4 * 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 1-6/ 1-6/ 1-12/ 2005 2004 2004 Net sales (MEUR) 2.8 4.2 8.2 Operating profit/loss (MEUR) -3.5 -3.8 -6.4 Operating profit/loss, as % of -124.2 -90.3 net sales -77.2 Profit/loss before extraordinary -3.1 -3.5 -5.9 items and taxes (MEUR) Profit/loss before extraordinary -109.3 -83.7 -71.2 items and taxes, as % of net sales Profit/loss before taxes (MEUR) -3.1 -3.5 -5.9 Profit/loss before taxes, as -109.3 -83.7 -71.2 % of net sales Return on investment (%) -13.5 Return on equity (%) -15.1 Interest-bearing net liabilities -23.2 -32.3 (MEUR) -33.5 Equity ratio (%) 94.9 95.2 94.8 Gearing (%) -95.8 -85.3 -94.8 Gross capital expenditure (MEUR) 0.1 0.2 0.5 % of net sales 2.3 4.8 5.6 R&D expenses (MEUR) 1.9 2.2 3.8 % of net sales 66.1 52.2 46.7 Personnel, period average 89 107 105 Personnel, period end 81 106 105 PER-SHARE DATA 1-6/ 1-6/ 1-12/ 2005 2004 2004 Earnings per share, undiluted -0.11 -0.13 -0.21 (EUR) Earnings per share, diluted -0.11 -0.12 (EUR) -0.21 Equity per share (EUR) 0.86 1.35 1.26 No. of shares at period end 28,111 28,066 28,102 (thousands) Share performance (EUR) Average price 1.37 1.95 1.69 Low 1.00 1.20 1.18 High 1.78 2.69 2.69 Share price, period end 1.07 1.47 1.28 Market capitalization, period 30.1 41.8 end (MEUR) 36.0 Volume of shares traded 6.0 5.7 (in millions) 9.3 Volume of shares traded, as 21.2 20.4 % of total 33.3 Value of shares traded, in 8.2 11.2 millions of euros 15.8 Price-to-earnings ratio (P/E) -6.1 CONTINGENT LIABILITIES EUR million 6/30/ 6/30/ 12/31/ 2005 2004 2004 Rental liabilities 0.2 0.2 0.1 Leasing liabilities 0.1 0.2 0.1 Other contingent liabilities 0.7 2.4 0.6 Currency derivatives (not 0.0 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 IAS 34 (Interim Financial Reporting) accounting principles. The table below shows the effects of IFRS 2 (Share-based Payment) on the 2004 comparatives. 2. RECONCILIATION OF INCOME STATEMENT EUR million 1-6/ Effect 1-12/ IFRS 1-12/ 2004 on 1-3/ 2004 2 2004 IFRS 2 2004 Net sales 4.2 4.2 8.2 8.2 Purchasing and -0.1 -0.1 -0.1 -0.1 production costs Gross profit 4.1 4.1 8.1 8.1 Other operating 0.0 0.0 0.3 0.3 income Operating expenses -8.0 -0.02 -8.0 -14.7 -0.04 -14.8 Operating -3.8 -0.02 -3.8 -6.4 -0.04 -6.4 profit/loss Total financial 0.3 0.3 0.5 0.5 income and expenses Net profit/loss for -3.5 -0.02 -3.5 -5.8 -0.04 -5.9 the period Earnings per share -0.13 -0.13 -0.21 -0.21 (EUR) Earnings per share, -0.12 -0.12 -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 6/30/ IFRS 2 2004 6/30/ 2004 Fixed and other non-current assets Tangible assets 0.4 0.4 Intangible assets 1.1 1.1 Deferred tax assets 0.2 0.2 Total fixed and other 1.7 1.7 non-current assets Inventories and current assets Short-term receivables 6.1 6.1 Available-for-sale 30.6 30.6 assets Cash and cash 2.0 2.0 equivalents Total inventories and 38.6 38.6 current assets Total assets 40.3 40.3 LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity Share capital 0.8 0.8 Issue premium fund 24.4 24.4 Fair value reserve 15.1 0.04 15.1 Retained earnings -2.5 -0.04 -2.5 Total shareholders' 37.8 37.8 equity Long-term liabilities Long-term financial 0.3 0.3 liabilities Deferred tax liability 0.0 0.0 Total long-term 0.3 0.3 liabilities Short-term liabilities 2.2 2.2 Total liabilities and 40.3 40.3 shareholders' equity SHAREHOLDERS On June 30, 2005, the company's 10 largest shareholders, excluding nominee-registered shares, were as follows: Tatu Ylönen 52.4% Tero Kivinen 8.4% Assetman Oy 5.0% Markus Jaakonsaari 2.3% Ilmarinen Mutual Pension Insurance Company 1.7% Promotion Capital I Ky 1.7% Tatu Ylönen Oy 1.3% Pohjola Finland Value Investment Fund 1.3% Kalle Kaukonen 0.8% Arto Vainio 0.5% eQ Extreme Mutual Fund 0.4% Total 75.8% FINANCIAL REPORTING The company will hold a briefing on its interim report for equity analysts and the media in its head office, Cabinet 204, 2nd floor, Valimotie 17, Helsinki, on Tuesday, July 27, 2005, starting at 11:00 a.m. The next interim report for SSH Communications Security Corp., covering January 1 - September 30, 2005, will be released on October 19, 2005. Helsinki, on July 27, 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 Distribution: Helsinki Exchanges Major media