2007-04-25 08:17:36 CEST
2007-04-25 08:17:36 CEST
REGULATED INFORMATION
SSH Communications Security - Quarterly report
SSH INTERIM REPORT FOR JANUARY 1 - MARCH 31, 2007
SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE, April 25,
2007, at 9:00 a.m.
- Net sales for January-March totaled EUR 2.6 million, up +26 percent
year on year (EUR 2.0 million in Q1/2006).
- Operating loss for January-March amounted to EUR -0.0 million (a
loss of -0.6 million in Q1/2006), profit EUR 0.1 million (loss -0.4
million).
- The largest license order, worth 0.9 MEUR, was won from a US retail
chain, which is among the largest in the world.
KEY FIGURES
1-3/ 1-3/ 1-12/
2007 2006 2006
Net sales (MEUR) 2.6 2.0 9.5
Net sales, change % 26.4 27.4 1.7
Operating profit/loss (MEUR) -0.0 -0.6 -0.9
% of net sales -1.5 -31.9 -9.4
Operating profit/loss, change % 93.9 65.0 66.5
Profit/loss (MEUR) 0.1 -0.4 -0.2
% of net sales 4.8 -17.8 -2.0
Number of employees
at period end 79 82 80
Earnings per share (EUR) 0.00 -0.01 -0.01
Shareholders' equity per share
(EUR) 0.64 0.88 0.63
SSH Communications Security is a world-leading provider of enterprise
security solutions and end-to-end communications security, and the
original developer of the Secure Shell protocol. The company's SSH
Tectia solution addresses the most critical needs of large
enterprises, financial institutions and government agencies.
NET SALES
Consolidated net sales for January-March totaled EUR 2.6 million (EUR
2.0 million), up by 26% percent, year on year.
The majority of SSH's invoicing is based on the U.S. dollar. During
the reporting period, the U.S. dollar's average exchange rate was
approximately 9 percent weaker than during the same period for 2006.
RESULTS AND EXPENSES
Operating loss for January-March amounted to EUR -0.0 million
(Q1/2006: a loss of EUR -0.6 million), with net profit totaling EUR
0.1 million (a loss of EUR -0.4 million).
The fixed costs remained at the same level as in January-March, 2006.
Research and development expenses for the report period totaled EUR
0.9 million (EUR 0.9 million), while sales and marketing expenses
came to EUR 1.3 million (EUR 1.3 million) and administrative expenses
EUR 0.5 million (EUR 0.5 million).
BALANCE SHEET AND FINANCIAL POSITION
The financial position of SSH remained at a healthy level during the
report period. The consolidated balance sheet total on March 31, 2007
stood at EUR 20.9 million (EUR 27.7 million), of which liquid assets
accounted for EUR 17.1 million (EUR 24.6 million), or 82.2 percent of
the balance sheet total. The company has no long-term liabilities.
On March 31, 2007, gearing, or the ratio of net liabilities to
shareholders' equity, was -94.8 (-98.7) and the equity ratio stood at
93.7 percent (95.3 percent).
The reported gross capital expenditure for the period totaled EUR 0.0
million (EUR 0.1 million). Reported financial income came mainly from
capital gains on fund shares. Financial income and expenses totaled
EUR +0.2 million, compared to EUR +0.3 million a year ago.
During January-March, SSH reported a positive cash flow of EUR 0.3
million from business operations, and investments showed a cash flow
of EUR 0.0 million. Cash flow from financing totaled EUR 0.0 million.
Cash flow from operations, investments and financing resulted in the
company showing a positive total cash flow of EUR 0.3 million during
the period.
MARKET DEVELOPMENTS
Large enterprise, financial, and public sector organizations have a
growing need for improved data security in several ways. New and
existing data security risks, continuously evolving regulations, and
increasing security standards and models continue to create new
needs, to which we can respond with our versatile product offerings.
Regulations that currently influence the demand of our products are,
for instance, the Sarbanes-Oxley Act (SOX), Gramm-Leach-Bliley Act,
HIPAA, as well as the PCI standards of the major credit card
companies. These regulations cause data security audits, which drive
our customers to implement long-term security upgrade programs in the
IT infrastructure against internal and external threats.
Demand for products and services for securing corporate-internal
information security grew and began to spread to Europe from the USA
during last year. We expect the same trend to next trigger faster
growth in the Asian markets.
The new tighter data security regulations now cause customers to
re-assess the risks and hidden costs of deploying non-commercial
software for security, driving many customers to start and/or
increase phase-by-phase migration programs to deploy fully
commercially supported products, such as SSH Tectia.
SSH is confident that legislative reforms, new data security
standards, as well as many industry and company level data security
development programs will continue to drive demand favorably for SSH
Tectia.
SALES PERFORMANCE
SSH'S NET SALES
EUR
million 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 1-12/
2007 2006 2006 2006 2006 2006
BY SEGMENT
AMER 1.8 2.0 1.1 1.4 1.2 5.7
APAC 0.2 0.2 0.3 0.3 0.2 0.9
EROW 0.5 1.2 0.4 0.6 0.6 2.8
SSH Group total 2.6 3.3 1.8 2.3 2.0 9.5
BY OPERATION
License Sales 1.6 2.4 0.8 1.4 1.2 5.8
Maintenance 0.9 0.9 0.9 0.9 0.9 3.6
Total 2.6 3.3 1.8 2.3 2.0 9.5
For a system-level IT product, such as SSH Tectia, the sales process
is often long. With major customers, the timing of large orders will
cause 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 72 percent (60 percent), 8
percent (12 percent) and 20 percent (28 percent) of reported net
sales, respectively.
During the report period, SSH concluded 1 new license agreement that
was worth more than EUR 100,000. The ten largest customers accounted
for 52 percent of reported net sales, with the largest single
customer accounting for approximately 32 percent.
PRODUCTS AND MARKETING
During the report period, SSH focused its sales and marketing efforts
on large enterprises, financial institutions, and government agencies
in the USA, Europe, and Asia, in line with its long-term strategy.
The company continued also developing its partner network in the same
focus markets.
The main themes of marketing were the company's new Tectia product
for the IBM mainframe environment, and the new expanded uses of SSH
Tectia for secure, automated file transfers in large organization's
internal networks. The company continued the development of the new
third generation architecture-based products. The company also made
further development of the productisation to provide higher value,
new features and expanded uses, as well as enabling easier purchasing
for the customers.
New applications, support of all essential enterprise OS platforms
including IBM mainframes, versatile integration capabilities, and
centralized management have made SSH Tectia the most extensive
integrated end-to-end communications security solution in the market.
RESEARCH AND DEVELOPMENT
Research and development expenses for January-March totaled EUR 0.9
million (EUR 0.9 million), the equivalent of 34.9 percent of net
sales (42.4 percent). During the report period SSH didn't capitalize
any research and development expenses.
HUMAN RESOURCES AND ORGANIZATION
At the end of March the Group had 79 employees on its payroll, down
by 3 persons from the previous year, a decrease of 3.7 percent.
At the end of the period, 49.4 percent of the employees worked in
R&D, 36.7 percent in sales and marketing, and 13.9 percent in
corporate administration.
BOARD AND AUDITORS
The Annual General Meeting (AGM) on March 29, 2007, 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 7,260,901 (valued at EUR 11,043,973.62). The highest
quotation was EUR 1.75 and the lowest EUR 1.15. The trade-weighted
average share price for the period was EUR 1.52, and the share closed
at EUR 1.30 (March 30, 2007).
In March SSH Communications Security Corp received a notification in
accordance with the Securities Market Act 2:9, according to which the
total of Assetman Oy's shares in SSH Communications Security Corp has
on February 13, 2007 risen above one tenth part (1/10) of the total
of all shares and related voting rights. Assetman OY held 10.6
percent of the company's shares at the end of the period. There were
no other substantial changes in SSH Communications Security Corp.'s
shareholding during the report period. Tatu Ylönen holds, directly
and through his company, Tatu Ylönen Oy, 53.1 percent of the
company's shares, and Tero Kivinen holds 5.7 percent. More
information about the shareholding can be obtained from the company's
Web site.
There were no changes in the group structure during the period.
SHARE CAPITAL AND BOARD AUTHORIZATIONS
The company's registered share capital on March 31, 2007 was EUR
852,716.85, consisting of 28,423,895 shares. There were no changes in
the share capital during the period.
The General Meeting decided, in accordance with the proposal made by
the Board of Directors, to authorize the Board of Directors to decide
on issuing the maximum of 5.500.000 shares in one or more new share
issues or on issuing special rights to share subscription as defined
in the Finnish Companies Act Chapter 10, section 1, with or without
subscription rights to shareholders. This authorization is effective
until the next Annual General Meeting, but will expire June 30, 2008,
at the latest. The Board has not exercised this authorization.
CORPORATE GOVERNANCE
The company complies with the corporate governance recommendations
for listed companies issued by the Helsinki Stock Exchange, the
Central Chamber of Commerce of Finland, and the Confederation of
Finnish Industry and Employers. More information on corporate
governance is available on the company's Web site (www.ssh.com).
PROSPECTS
As new data security regulations and risks continue driving our
customers to increase their investments for better data security, we
expect to see new and continued growth of the demand in all markets.
Our target markets are in different network security adoption phases
according to geography and industry, enabling a good growth base for
our company. We are set both technically and in timing to a good
position to utilize the trend of internal enterprise data security,
spreading from the USA and creating growing demand for our products
also in Europe and Asia. In the same way, we can leverage the
experience we have gained in the finance and government sectors, when
the new practices and requirements spread to other industries.
We believe in a phased diversification of our customer base so that
parallel to strong finance sector customers, for instance, we will
see new major customers in the retail, pharmaceutical, and high
technology sectors. Continuously expanding use of the products will
also generate growing software maintenance revenue for us.
Thanks to the high volume of tenders, broad customer base, and new
products, the company is in a good position to continue improving its
financial results by growing sales and profitability. In 2007, SSH
aims to be a profitable company.
Due to the large size of individual orders and depending on timing of
customer projects, variation of the quarterly revenue may occur.
INCOME STATEMENT
EUR million
1-3/ 1-3/ 1-12/
2007 2006 2006
Net sales 2.6 2.0 9.5
Purchasing and production
costs 0.0 0.0 -0.1
Gross profit 2.6 2.0 9.4
Other operating income 0.1 0.0 0.4
Expenses
Product development -0.9 -0.9 -3.4
Sales and
marketing -1.3 -1.3 -5.7
Administration -0.5 -0.5 -1.6
Operating profit/loss 0.0 -0.6 -0.9
Financial income and
expenses 0.2 0.3 0.7
Profit/loss before taxes 0.1 -0.4 -0.2
Taxes 0.0 0.0 0.0
Net profit/loss for the
period 0.1 -0.4 -0.2
EARNINGS PER SHARE 1-3/ 1-3/ 1-12/
2007 2006 2006
Earnings per share
(EUR) 0.00 -0.01 -0.01
Earnings per share,
diluted (EUR) 0.00 -0.01 -0.01
BALANCE SHEET
EUR million 3/31/ 3/31/ 12/31/
2007 2006 2006
ASSETS
Fixed and other non-current assets
Tangible assets 0.1 0.2 0.1
Intangible assets 0.2 0.5 0.3
Deferred tax assets 0.2 0.2 0.2
Total fixed and other
non-current assets 0.6 0.9 0.7
Inventories and current assets
Short-term receivables 3.1 2.1 3.9
Short-term investments 15.2 20.9 15.0
Cash and cash equivalents 2.0 3.7 1.7
Total inventories and current assets 20.3 26.7 20.7
Total assets 20.9 27.7 21.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity 18.1 24.9 18.0
Long-term liabilities
Provisions 0.0 0.1 0.0
Long-term financial
liabilities 0.0 0.0 0.0
Total long-term liabilities 0.0 0.1 0.1
Short-term liabilities 2.8 2.6 3.3
Total liabilities and shareholders'
equity 20.9 27.7 21.3
CASH FLOW STATEMENT
EUR million 1-3/ 1-3/
2007 2006 1-12/
2006
Cash flow from business
operations 0.3 2.0 0.9
Cash flow from
investments 0.0 0.2 6.5
Cash flow from financing 0.0 0.0 -7.0
Change in liquid assets 0.3 2.3 0.4
Liquid assets at period
start 1.7 1.4 1.4
Adjustment for
translation difference 0.0 0.0 -0.1
Liquid assets at period
end 2.0 3.7 1.7
STATEMENT ON CHANGES IN
SHAREHOLDERS' EQUITY
EUR million Share Share
Capi-tal Premi- Fair Trans- Unrest- Retain- Total
um value lation ricted ed
reser- diff. equity Ear-
ves funds nings
Shareholders'
equity
Jan. 1, 2006 0.8 24.4 0.2 -0.7 0.0 0.6 25.4
Change 0.0 0.0 -0.1 0.0 -0.4
Shareholders'
equity
Mar. 31, 2006 0.8 24.4 0.2 -0.7 0.0 0.2 24.9
Change 0.0 -13.0 -0.0 -0.1 5.9 0.2
Shareholders'
equity
Dec. 31, 2006 0.9 11.5 0.1 -0.8 5.9 0.4 18.0
Change 0.0 0.0 0.0 0.0
Net profit 0.1
Shareholders'
equity
Mar. 31, 2007 0.9 11.5 0.1 -0.8 5.9 0.5 18.1
NET SALES BY
SEGMENT
EUR million
1-3/ 1-3/ 1-12/
2007 2006 2006
AMER 1.8 1.2 5.7
APAC 0.2 0.2 0.9
EROW 0.5 0.6 2.8
SSH Group
total 2.6 2.0 9.5
OPERATING PROFIT/LOSS BY SEGMENT
EUR million 1-3/ 1-3/ 1-12/
2007 2006 2006
AMER 1.1 0.5 2.9
APAC 0.1 0.1 0.4
EROW 0.1 0.1 0.6
Common Group expenses* -1.3 -1.4 -4.8
SSH Group total -0.0 -0.6 -0.9
* Common Group expenses include Group administration expenses (e.g.,
management and finance) and product management and R&D expenses for
corporate headquarters.
KEY FIGURES AND RATIOS
1-3/ 1-3/ 1-12/
2007 2006 2006
Net sales (MEUR) 2.6 2.0 9.5
Operating profit/loss (MEUR) 0.0 -0.6 -0.9
Operating profit/loss, as % of net sales -1.5 -31.9 -9.4
Profit/loss before extraordinary items
and taxes (MEUR) 0.1 -0.4 -0.2
Profit/loss before extraordinary items
and taxes, as % of net sales 4.8 -17.8 -2.0
Profit/loss before taxes (MEUR) 0.1 -0.4 -0.2
Profit/loss before taxes, as
% of net sales 4.8 -17.8 -2.0
Return on investment (%) 2.7 -5.5 -0.8
Return on equity (%) 2.7 -5.7 -1.0
Interest-bearing net liabilities (MEUR) -17.1 -24.6 -16.7
Equity ratio (%) 93.7 95.3 92.4
Gearing (%) -94.8 -98.7 -93.0
Gross capital expenditure (MEUR) 0.0 0.1 0.1
% of net sales 0.3 2.9 1.2
R&D expenses (MEUR) 0.9 0.9 3.4
% of net sales 34.9 42.4 35.5
Personnel, period average 80 78 81
Personnel, period end 79 82 80
PER-SHARE DATA
1-3/ 1-3/ 1-12/
2007 2006 2006
Earnings per share, undiluted
(EUR) 0.00 -0.01 -0.01
Earnings per share, diluted
(EUR) 0.00 -0.01 -0.01
Equity per share (EUR) 0.64 0.88 0.63
No. of shares at period end
(thousands) 28 424 28 269 28 424
Share performance (EUR)
Average price 1.52 1.54 1.43
Low 1.15 1.24 0.88
High 1.75 1.71 2.40
Share price, period end 1.30 1.71 1.15
Market capitalization, period
end (MEUR) 37.0 48.3 32.7
Volume of shares traded
(in millions) 7.3 4.5 13.9
Volume of shares traded, as
% of total 25.5 16.0 48.8
Value of shares traded, in
millions of euros 11.0 6.9 19.9
Price-to-earnings ratio (P/E) -
CONTINGENT LIABILITIES
EUR million
3/31 3/31 12/31
2007 2006 2006
Rental liabilities 0.2 0.2 0.2
Leasing commitments
outside
the balance sheet
Maturing within 1
year 0.7 0.9 0.8
Maturing between 1
and 5
years 1.1 1.7 1.3
Currency derivatives
(not
included in hedge
accounting)
Fair value 0.0 0.0 -0.0
Nominal value 0.9 0.0 0.7
FINANCIAL REPORTING
The company will hold a briefing on its interim report for equity
analysts and the media in Hotel Scandic Simonkenttä's Lönkka-cabinet,
1st floor, address Simonkatu 9, 00100 Helsinki on Wednesday, April
25, 2007, starting at 11:00 a.m.
SSH Communications Security Corp will release its next interim report
and financial statements for January 1-June 30, 2007 on July 25,
2007. Further information will be available on the company's website
in due course.
Helsinki, on April 25, 2007
SSH COMMUNICATIONS SECURITY CORP
Board of Directors
Arto Vainio
CEO
For further information, please contact:
Arto Vainio, CEO tel. +358 (0)20 500 7400
Mika Peuranen, CFO tel. +358 (0)20 500 7419
Distribution:
Helsinki Stock Exchange
Major media
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