Ssh Communications Security Corporation Interim Report January 1 -- September 30, 2019

 
TIDMSSH1V 
 
 
   SSH COMMUNICATIONS SECURITY CORPORATION          STOCK EXCHANGE RELEASE 
October 23, 2019 AT 9:00 A.M 
 
   5.7 % SALES GROWTH, OPERATING RESULT IMPROVED SIGNIFICANTLY 
 
   July--September 2019: Net sales increased by 5.7 % compared to the 
previous year. The result for the period was EUR -0.0 million, improving 
significantly compared to previous year. Operating cash flow was clearly 
positive, and our quarter-end cash position remained strong. 
 
 
   -- Net sales totaled EUR 3.6 million (EUR 7--9/2018: 3.4 million) 
 
   -- Operating loss was EUR -0.2 million (EUR -0.8 million) 
 
   -- Loss for the period was EUR -0.0 million (EUR -0.8 million) 
 
   -- Earnings per share was EUR -0.01 (EUR -0.03) 
 
 
   January--September 2019: Net sales decreased by 14.0 % compared to the 
previous year mainly due to the absence of patent licensing revenue. 
Operating cash flow was slightly positive and the cash position remained 
strong at the end of the period. 
 
 
   -- Net sales totaled EUR 10.3 million (EUR 1--9/2018: 11.9 million) 
 
   -- Operating loss was EUR -1.1 million (EUR -0.7 million) 
 
   -- Loss for the period was EUR -1.0 million (EUR -0.8 million) 
 
   -- Earnings per share was EUR -0.04 (EUR -0.04) 
 
 
   Equity ratio remained good at 81.1 % (September 30, 2018: 87.7 %) and 
liquid assets were EUR 11.6 million (EUR 11.5 million). 
 
 
 
 
KEY FIGURES 
 
                                                                       Change 
EUR million                7--9/2019  7--9/2018  1--9/2019  1--9/2018       %  1--12/2018 
 
Net sales                        3.6        3.4       10.3       11.9   -14.0        18.3 
Operating profit/loss           -0.2       -0.8       -1.1       -0.7    44.4         0.5 
 % of net sales                 -5.1      -22.3      -10.5       -6.2    67.9         3.0 
Profit/loss before taxes        -0.0       -0.8       -1.0       -0.8    27.5         0.6 
Profit/loss for the 
 period                         -0.0       -0.8       -1.0       -0.8    25.2         0.5 
 
Return on equity, %                                   -7.4       -6.1    21.3         3.8 
Return on investment, 
 %                                                    -6.9       -5.8    19.3         4.1 
Liquid assets                                         11.6       11.5     0.8        13.5 
Gearing (%)                                          -85.7      -87.7     2.3       -93.5 
Equity ratio (%)                                      81.1       86.4    -6.2        81.6 
 
Earnings per share, EUR        -0.01      -0.03      -0.04      -0.04   -12.7       -0.01 
Shareholders' equity per 
 share, EUR                     0.32       0.33       0.32       0.33    -3.8        0.37 
 
 
 
   CEO'S REVIEW 
 
   Valued shareholders, customers, partners, and co-workers, 
 
   Our software business grew during the third quarter of 2019 and we 
improved our profitability considerably compared to the previous year. 
Our software fees grew 25.0 % compared to the same quarter in 2018. Our 
recurring revenue also grew 3.6 % compared to the same quarter in 2018. 
These results prove that our software business is on solid ground as we 
continue developing it in accordance with our growth vision. 
 
   Professional Services and other sales decreased slightly, mainly due to 
schedule changes in starting and delivering customer projects. 
Furthermore, our customers' tendency to initially start with smaller 
deployment projects had a small effect on the professional services 
revenue. 
 
   Financial Performance 
 
   Q3 sales were EUR 3.6 million (EUR 3.4 million) with 5.7 % year-on-year 
growth. While we continued the careful management of costs during the 
quarter, the slight increase of EUR 0.2 million in administrative costs 
was due to costs affecting comparability, such as consulting costs 
related to the successful EU funding application. Operating loss for the 
quarter was EUR -0.2 million, showing a clear year-on-year (EUR -0.8 
million) improvement. 
 
   Our result for the quarter was EUR -0.0 million, showing a clear 
improvement compared to the same quarter last year 
 
   (EUR -0.8 million). 
 
   Quarterly cash flow from operations was positive. Our balance sheet and 
cash position remain strong and allow us to proceed with the execution 
of our strategy. 
 
   Sales Performance 
 
   On regional teams, the APAC region continued its excellent performance: 
sales in the APAC region grew by 47.4 % compared to the same quarter in 
2018. The EMEA region sales were up by 1.9 % and Americas sales were 
down by 8.5 %. Americas remained the largest region with a 51.3 % share 
of the total revenue. EMEA accounted for 18.2 % and APAC for 30.5 % of 
the total revenue. 
 
   In Q3, we booked new Universal SSH Key Manager(R) (UKM) license orders 
from global enterprise customers, including a major Asian finance sector 
player and a North American Fortune 500 financial institution. We also 
received additional orders from existing customers. 
 
   The license and maintenance sales of our Tectia(R) product family 
remains strong and gives us the ability to execute our growth vision. We 
booked a major enterprise license deal with one of the largest banks in 
South-East Asia and won a significant Tectia SSH Server for IBM z/OS 
license order from a major European automotive manufacturer. 
 
   Our maintenance business remains robust. During Q3, we booked the 
largest maintenance renewal in the company history and made several 
other significant maintenance renewals, as well. 
 
   PrivX Business 
 
   During the third quarter our PrivX Free program was well received in our 
chosen target group and we gained more than 2000 registrations. We also 
gained a number of new paying customers for PrivX during the quarter and 
started proof of concept projects with several new customers. 
 
   One indicator of the increasing demand for PrivX is the 142% growth in 
PrivX-related visitors on our website compared to the same period last 
year. The value of our PrivX sales pipeline also nearly doubled compared 
to last year. 
 
   We keep getting very positive feedback from our customers and new users 
of PrivX about the ease of deployment and use of the product. We are 
constantly gaining new, valuable information about our customers' future 
needs and wishes. 
 
   In their recent report called "Remove Standing Privileges Through a 
Just-in-Time PAM Approach", Gartner named PrivX as a trailblazing 
product that eliminates the risks of static credentials from access 
management. The report was published in late September and it has been 
widely noticed -- during the short time the report has been available on 
our website, it has had more than 30000 impressions. 
 
   We continue working with leading cybersecurity industry analysts. Our 
aim is to increasingly educate the markets about the importance of our 
Zero Trust based access control approach. We also aim to communicate 
more forcefully about our capability to solve the customers' 
cybersecurity challenges with modern technology that provides improved 
security, faster deployment, and increased productivity. 
 
   Since we have made a strategic decision to sell PrivX with a 
subscription-based business model, the impact of the product to our 
revenue during the quarter was still relatively small. Our enhanced lead 
generation and inside sales processes contribute to the growth of the 
opportunity pipeline of PrivX -- as well as our other products -- and 
support the generation of recurring revenue. 
 
   NQX(R) Business 
 
   The technical development of NQX products proceeds well and we have 
demonstrated the latest versions to key customers during the third 
quarter. 
 
   During the quarter, we have participated in a Request for Information 
(RFI) issued by the Finnish Defence Forces Logistics Command for 
STIII-level security requirements compliant VPN devices. This is a major 
step towards commercial cooperation and demonstrates the customer need 
for next-generation VPN devices. Due to the long duration of public 
tendering processes, however, we do not expect significant revenue from 
the NQX products in 2019. 
 
   EU Funding 
 
   During the third quarter, the European Commission awarded us a Horizon 
2020 SME grant of just over EUR2M for development, marketing, and 
go-to-market activities of the PrivX product over the next 24 months. 
The official Grant Agreement related to the award was signed at the end 
of September. 
 
   This funding was not yet recognized during Q3. 
 
   This funding enables us to significantly accelerate PrivX development 
and allows us to increase our go-to-market resources. The awarding of 
this hard-to-win funding to us is a clear validation that PrivX is a 
major European cybersecurity innovation with significant growth 
potential. This funding is also one of the first concrete steps on our 
road to secure the funding and necessary resources to fulfill our SSH200 
growth vision. 
 
   We have started recruitments needed to execute the EU-funded project and 
several new team members have already joined the company. The 
recruitment drive continues in the fourth quarter. 
 
   Outlook for the Year 
 
   The outlook in the cybersecurity segment remains good. We are seeing 
increased awareness of SSH Key Management related risks which heightens 
our prospects' and customers' interest in UKM and related services. 
However, our customers are increasingly starting large deployment 
projects in a gradual manner which means customer wins are reflected in 
our revenue in a likewise gradual way. This results in more stable 
revenue development as opposed to large one-off deals, which we welcome. 
 
   The business fundamentals for PrivX also keep improving. Leading 
analysts such as Gartner and KuppingerCole identify the use of static 
credentials as one of the biggest cybersecurity risks which aligns 
perfectly with our PrivX messaging. At the same time, the constant news 
flow about increasing cybersecurity risks and severe breaches increase 
C-level awareness of this challenge and the importance of finding 

solutions. We believe this will result in continuous, robust market 
growth. 
 
   For the year 2019, we expect double-digit percentage growth from our 
software business (software fees, professional services, and recurring 
revenue) at comparable exchange rates, exceeding the projected annual 
cybersecurity market growth of approximately 10 %. In the medium term, 
we expect similar or faster growth and will also explore avenues for 
accelerated growth through inorganic growth opportunities. Possible 
significant quarterly variation in revenue growth is still to be 
expected due to timing of larger deals over the financial year. 
 
   Entering the fourth quarter, our sales pipeline is strong, and we 
maintain our guidance despite the slightly slower than planned growth in 
the first nine months of the year. Achieving our full year target, 
however, requires some key customer wins during Q4. 
 
   Kaisa Olkkonen 
 
   CEO 
 
 
 
   NET SALES 
 
   Consolidated net sales for July--September totaled EUR 3.6 million (EUR 
3.4 million). 
 
   Consolidated net sales for January--September totaled EUR 10.3 million 
(EUR 11.9 million), down by 14.0 %, year on year. 
 
   The Americas accounted for 52.5 % (49.1 %), the Europe, Middle East and 
Africa region (EMEA) 23.5 % (26.6 %), and the Asia Pacific region 24.0 % 
(15.9 %) of reported consolidated net sales. Global royalty income 
accounted for 0.0 % (8.4 %) of reported net sales. 
 
 
 
 
CONSOLIDATED NET SALES 
 
EUR million              7--9/2019  7--9/2018  1--9/2019  1--9/2018  Change %  1--12/2018 
 
BY SEGMENT 
 AMERICAS                      1.9        2.0        5.4        5.8      -8.0         9.0 
 APAC                          1.1        0.7        2.5        1.9      30.0         2.4 
 EMEA                          0.7        0.6        2.4        3.2     -24.2         4.2 
 Global royalty income         0.0        0.0        0.0        1.0    -100.0         2.7 
 Total                         3.6        3.4       10.3       11.9     -14.0        18.3 
-----------------------  ---------  ---------  ---------  ---------  --------  ---------- 
 
BY OPERATION 
 Software fees                 1.3        1.0        3.4        3.5      -1.6         5.6 
 Professional services 
  & other                      0.1        0.2        0.3        2.1     -85.2         4.3 
 Recurring revenue             2.3        2.2        6.5        6.3       3.4         8.5 
 Total                         3.6        3.4       10.3       11.9     -14.0        18.3 
-----------------------  ---------  ---------  ---------  ---------  --------  ---------- 
 
   Most of the company's invoicing is U.S. dollar based. With comparable 
exchange rates, the net sales reduction in January - September would 
have been -17.9 % compared with the corresponding period in 2018. 
 
   RESULTS AND EXPENSES 
 
   Operating loss for July--September was EUR -0.2 million (EUR -0.8 
million), with net profit totaling EUR -0.0 million (EUR -0.8 million). 
 
   Operating loss for January-September was EUR -1.1 million (EUR -0.7 
million), with net profit totaling EUR -1.0 million (EUR -0.8 million). 
 
   Sales, marketing and customer support expenses for July--September 
amounted to EUR -1.7 million (EUR -2.3 million), while research and 
development expenses totaled EUR -1.2 million (EUR -1.2 million) and 
administrative expenses EUR -0.8 million (EUR -0.6 million). Compared to 
July-September 2018 operating expenses decreased by 10.1 %. 
 
   Sales, marketing and customer support expenses for January--September 
amounted to EUR -5.4 million (EUR -6.6 million), while research and 
development expenses totaled EUR -3.5 million (EUR -3.6 million) and 
administrative expenses EUR -2.0 million (EUR -1.8 million). Operating 
expenses decreased by 8.6 % compared to the previous year. 
 
   BALANCE SHEET AND FINANCIAL POSITION 
 
   The financial position of SSH Communications Security was good during 
the reporting period. The consolidated balance sheet total on September 
30, 2019 stood at EUR 21.3 million (September 30, 2018: EUR 21.0 
million; December 31, 2018: EUR 24.2 million), of which liquid assets 
accounted for EUR 11.6 million (September 30, 2018: EUR 11.5 million; 
December 31, 2018: EUR 13.5 million), or 54.1 % of the balance sheet 
total. Interest-bearing liabilities were EUR 0.9 million (September 30, 
2018 EUR 0.2 million, December 31, 2018 EUR 0.2 million). 
Interest-bearing liabilities increased by EUR 0.4 million from December 
31, 2018, due to the application of IFRS 16 Leases -standard and 
increase in lease liability. In June 2019 subordinated loan which 
Kyberleijona Oy has taken out from the non-controlling interest holder, 
State Security Networks Group Finland was increased by EUR 0.4 million 
from EUR 0.2 million to EUR 0.6 million. On September 30, 2019, gearing, 
or the ratio of net liabilities to shareholders' equity, was -85.7 % 
(September 30, 2018: -87.7 %; December 31, 2018: -93.5 %) and the equity 
ratio stood at 81.1 % (September 30, 2018: 86.4 %; December 31, 2018: 
81.6 %). 
 
   The reported gross capital expenditure for January-September totaled EUR 
1.5 million (EUR 1.5 million). The reported financial income and 
expenses in total to EUR 0.2 million (EUR -0.0 million) consisted of 
exchange rate gains or losses, interest expenses on advances from 
customers with significant financing component and interest expenses on 
lease liability. 
 
   During January--September, SSH Communications Security reported a cash 
flow of EUR 0.1 million (EUR -1.5 million) from business operations, and 
investments showed a cash flow of EUR -1.5 million (EUR -1.5 million). 
Cash flow from financing totaled EUR -0.7 million (EUR 0.9 million). 
Total cash flow from operations, investments and financing was negative 
EUR-2.2 million (EUR -2.1 million). 
 
   There were no short-term investments by the end of the reporting period. 
 
   RESEARCH AND DEVELOPMENT 
 
   Research and development expenses for July--September totaled EUR -1.2 
million (EUR -1.2 million), the equivalent of 34.2 % of net sales (33.9 
%). During July--September, the company has capitalized R&D costs EUR 
0.5 million (EUR 0.5 million). 
 
   Research and development expenses for January--September totaled EUR 
-3.5 million (EUR -3.6 million), the equivalent of 34.4 % of net sales 
(30.1 %). During January -- September, the company has capitalized R&D 
costs EUR 1.5 million (EUR 1.4 million). The depreciation of R&D 
capitalization assets was EUR -1.1 million (EUR -1.3 million). 
 
   HUMAN RESOURCES AND ORGANIZATION 
 
   At the end of September, the Group had 86 employees on its payroll 
(September 30, 2018: 80; December 31, 2018: 85). The number of employees 
increased by six persons from the previous year and by one person from 
the year-end (1.2 %). 
 
   At the end of the period, 36.0 % (38.8 %) of the employees worked in 
sales, marketing and customer services, 50.0 % (46.3 %) in R&D, and 14.0 
% (15.0 %) in corporate administration. 
 
   BOARD AND AUDITORS 
 
   The Annual General Meeting of SSH Communications Oyj was held on March 
26, 2019. The Annual General Meeting unanimously adopted the financial 
statement and consolidated financial statement and granted discharge 
from liability to the Board members and CEO who have been active during 
the accounting period between January 1, 2018 and December 31, 2018. In 
the meeting, it was decided that the Board of Directors would consist of 
six members. Petri Kuivala, Tatu Ylönen, Timo Syrjälä, 
Anne Marie Zettlemoyer and Sam Curry were re-elected and Sauli Kiuru was 
elected as a new member of the Board of Directors. Petri Kuivala was 
elected as the Chairman of the Board of Directors at the Board's 
organizing meeting and Sauli Kiuru was elected as the Vice Chairman of 
the Board of Directors. 
 
   The Authorized Public Accountants Ernst & Young Oy was re-elected as the 
auditor of the company. Ernst & Young Oy has informed that Erkka 
Talvinko, Authorized Public Accountant, will continue to act as the 
principal auditor. 
 
   SHARES, SHAREHOLDING, AND CHANGES IN GROUP STRUCTURE 
 
   The reported trading volume of SSH Communications Security shares 
totaled 2,542,028 shares (valued at EUR 3,745,681). The highest 
quotation was EUR 1.97 and the lowest EUR 1.11. The trade-weighted 
average share price for the period was EUR 1.47 and the share closed at 
EUR 1.36 (September 30, 2019). 
 
   The company's principal owner Mr. Tatu Ylönen holds directly 47.2 %, 
Mr. Timo Syrjälä holds directly and through his company Acme 
Investments SPF S.a.r.l. 9.2 %, and Mr. Juha Mikkonen holds directly 5.2 
% of the company's shares. More information about the shareholding can 
be obtained from the company's web site https://www.ssh.com. 
 
   No dividend or return of capital has been distributed during the 
reporting period. 
 
   SHARE CAPITAL AND BOARD AUTHORIZATIONS 
 
   The company's registered share capital on September 30, 2019 was EUR 
1,164,066.99 consisting of 38,802,233 shares. 
 
   The Annual General Meeting approved the Board of Directors' proposal to 
authorize the Board of Directors to decide upon the issuing of a maximum 
of 6,000,000 shares as a share issue against payment or by giving stock 
options or other special rights entitling to shares, in accordance with 
Chapter 10 Section 1 of the Finnish Companies Act, either according to 
the shareholders' pre-emptive right to share subscription or deviating 
from this right, in one or more tranches. Based on the authorization, it 
can be either issuing of new shares or transfer of own shares, which the 
company possibly has in its possession. 
 
   Based on the authorization, the Board of Directors shall have the same 
rights as the Annual General Meeting to decide upon the issuing of 
shares against payment and special rights (including stock options) in 
accordance with Chapter 10 Section 1 of the Finnish Companies Act. 
Thereby, the authorization to be given to the Board of Directors 
includes, inter alia, the right to deviate from the shareholders' 

pre-emptive rights with directed issues providing that the company has a 
weighty financial reason for the deviation in respect of the share issue 
against payment. 
 
 
 
   Furthermore, the authorization includes the Board of Directors' right to 
decide upon who are entitled to the shares and/or stock options or 
special rights in accordance with Chapter 10 Section 1 of the Finnish 
Companies Act as well as upon the related compensation, subscription and 
payment periods and upon the registering of the subscription price into 
the share capital or invested non-restricted equity fund within the 
limits of the Finnish Companies Act. 
 
 
 
   The authorization will be valid until the next Annual General Meeting, 
but will however expire at the latest on June 30, 2020. 
 
 
 
   The Annual General Meeting approved the Board of Directors' proposal to 
authorize the Board of Directors to decide upon acquisition of a maximum 
of 2,000,000 own shares of the company with assets belonging to the 
company's non-restricted equity, which amounts to approximately 5.2 
percent of the company's total shares. The shares can also be acquired 
otherwise than in proportion to the holdings of the existing 
shareholders. The maximum compensation to be paid for the acquired 
shares shall be the market price at the time of purchase, which is 
determined in public trading. 
 
 
 
   The Board of Directors proposes that the authorization for the acquiring 
of the company's own shares would be used, inter alia, in order to 
strengthen the company's capital structure, to finance and realize 
corporate acquisitions and other arrangements, to realize the 
share-based incentive programs of the company or otherwise to be kept by 
the company, to be transferred for other purposes or to be cancelled. 
The acquisition of shares reduces the company's distributable 
non-restricted equity. 
 
 
 
   A decision concerning the acquiring of own shares cannot be made so that 
the combined amount of the own shares, which are in the possession of or 
held as pledges by the company or its subsidiaries exceeds one-tenth of 
all shares. The Board of Directors shall decide upon all other matters 
related to the acquisition of shares. 
 
 
 
   The authorization will be valid until the next Annual General Meeting 
but will however expire at the latest on June 30, 2020. 
 
   RISKS AND UNCERTAINTIES 
 
   Largest risks that might impact the profitability of the company have 
remained by and large the same as in the previous reporting period and 
are listed below. Other risks, which are currently either unknown or 
considered immaterial to SSH Communications Security may, however, 
become material in the future. 
 
   Largest risks: 
 
   - uncertainty of the macroeconomic environment 
 
   - cybercrime, including e.g. ransomware 
 
   - delays in product development and closing new business as well as 
phasing of new business cases 
 
   - ability to execute the strategy 
 
   - ability to retain and recruit key personnel 
 
   - maintaining the ability to innovate and develop the product portfolio 
including intellectual property rights (IPR) 
 
   - IPR litigation and utilization of the patent portfolio 
 
   - large portion of the company revenue is invoiced in USD currency so 
possible large fluctuation in USD currency rates during 2019 could have 
unpredictable effects for profitability that are at the time difficult 
to estimate. The company decides on hedging of USD based contracts case 
by case. 
 
 
 
 
 
   Principles and organization of risk management of SSH Communications 
Security can be read from the company's web site: www.ssh.com. 
 
   RELATED PARTY TRANSACTIONS 
 
   During the reporting period July--September 2019, there have not been 
any significant transactions with related parties. 
 
 
 
   EVENTS AFTER THE BALANCE SHEET DATE 
 
   After the balance sheet date, there have not been any significant 
transactions. 
 
 
 
   REPORTING 
 
   The interim report for the nine months reporting period ended September 
30, 2019 has been prepared in accordance with IAS 34 Interim Financial 
Reporting. This interim report does not include all the information and 
disclosures required in the annual financial statements and should be 
read in conjunction with the consolidated financial statements for the 
year ended December 31, 2018.  The information presented in this interim 
report is unaudited. 
 
   The accounting policies adopted for this interim report are consistent 
with those applied in 2018 consolidated financial statements except for 
the adoption of new standards effective as of January 1, 2019. The Group 
has not early adopted any other standard, interpretation or amendment 
that has been issued but is not yet effective. 
 
   New and amended standards adopted 
 
   A few new standards and amendments to standards are effective for the 
annual period beginning on January 1, 2019 and the Group had to change 
its accounting policies and make retrospective adjustments as a result 
of adopting IFRS 16 Leases. 
 
   The impact of the adoption of the leasing standard and the new 
accounting policies are disclosed below. The other changes in standards 
did not have any impact on the group's accounting policies and did not 
require retrospective adjustments. 
 
   Changes in accounting policies 
 
   The Group has adopted the new IFRS 16 standard using modified 
retrospective approach and the comparative information has not been 
restated. The reclassifications and adjustments arising from the new 
accounting rules have been recognized in the opening balance sheet on 
January 1, 2019. 
 
   The Group leases mainly offices. Rental contracts are typically made for 
fixed periods from two to three years but may have extension options. 
The Group continues to treat leases of 12 months or less and leases of 
low-value assets as other leases. 
 
   Until the year 2018, leases of property, plant, and equipment were 
classified as operating leases. Payments made under operating leases 
were recognized in the income statement on a straight-line basis over 
the period of the lease. 
 
   From January 1, 2019, according to the new IFRS 16 Leases -standard, 
leases are recognized in the balance sheet as a right-of-use asset and a 
corresponding financial liability at the date at which the leased asset 
is available for the use by the Group. Each lease payment is allocated 
between the liability and finance costs. The finance cost is recognized 
in the income statement over the lease period. The right-of-use asset is 
depreciated over the shorter of the asset's useful life and the lease 
term on a straight-line basis. The lease liabilities were discounted at 
the borrowing rate as of January 1, 2019. The weighted average discount 
rate was 7.5 %. 
 
   The change in accounting policy affected the following items in the 
balance sheet on January 1, 2019: 
 
 
   -- right-of-use asset -- increase by EUR 0.5 million 
 
   -- non-current liabilities -- increase by EUR 0.2 million 
 
   -- current liabilities  -- increase by EUR 0.3 million 
 
 
   The recognized leases in the balance sheet as of September 30, 2019, and 
in the income statement for the first three quarters of the year are as 
follows: 
 
 
 
 
LEASES IN THE BALANCE SHEET 
 
                                     30 September 
EUR million                              2019 
ASSETS 
Non-current assets 
    Right-of-use assets - property            0.3 
----------------------------------- 
Total                                         0.3 
 
EQUITY AND LIABILITIES 
Lease liabilities, non-current                0.1 
Lease liabilities, current                    0.2 
Total                                         0.4 
 
 
 
 
 
 
LEASES IN THE INCOME STATEMENT 
 
EUR million                              7-9/2019  1-9/2019 
Other lease expenses                         -0.0      -0.0 
Depreciation of right-of-use assets          -0.1      -0.2 
Interest expense on lease liabilities        -0.0      -0.0 
Total amounts recognized in the income 
 statement                                   -0.1      -0.3 
 
 
 
   TABLES 
 
 
 
 
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME 
 STATEMENT 
 
EUR million                               7--9/2019  7--9/2018  1--9/2019  1--9/2018  1--12/2018 
 
Net sales                                       3.6        3.4       10.3       11.9        18.3 
Cost of sales                                  -0.1       -0.1       -0.4       -0.7        -1.4 
Gross margin                                    3.5        3.3        9.9       11.2        16.9 
Other operating income                          0.0        0.0        0.0        0.0         0.0 
 
Selling, marketing and customer support 
 expenses                                      -1.7       -2.3       -5.4       -6.6        -8.5 
Research and development expenses              -1.2       -1.2       -3.5       -3.6        -5.1 
Administrative expenses                        -0.8       -0.6       -2.0       -1.8        -2.7 
Operating profit/loss                          -0.2       -0.8       -1.1       -0.7         0.5 
 
Financial income and expenses                   0.2       -0.0        0.1       -0.0         0.0 
Profit/loss before taxes                       -0.0       -0.8       -1.0       -0.8         0.6 
Taxes                                          -0.0       -0.0       -0.0       -0.0        -0.0 
Profit/loss for the period                     -0.0       -0.8       -1.0       -0.8         0.5 
----------------------------------------  ---------  ---------  ---------  ---------  ---------- 
 
Attributable to: 
    Owners of the parent company                0.0       -0.8       -0.8       -0.8         0.8 
    Non-controlling interest                   -0.1       -0.0       -0.2       -0.0        -0.3 
                                               -0.0       -0.8       -1.0       -0.8         0.5 
                                          ---------  ---------  ---------  ---------  ---------- 
 
Other comprehensive income 
Items which may be reclassified to 
 profit or loss: 
 Foreign subsidiary translation 

  differences                                  -0.1       -0.0       -0.1       -0.1        -0.1 
Total comprehensive income                     -0.1       -0.8       -1.1       -0.9         0.4 
----------------------------------------  ---------  ---------  ---------  ---------  ---------- 
 
 
Attributable to: 
    Owners of the parent company               -0.1       -0.8       -1.0       -0.8         0.7 
    Non-controlling interest                   -0.1       -0.0       -0.2       -0.0        -0.3 
                                               -0.1       -0.8       -1.1       -0.9         0.4 
 
Earnings per share 
Basic earnings per share (EUR)                -0.01      -0.03      -0.04      -0.04       -0.01 
Diluted earnings per share (EUR)              -0.01      -0.03      -0.04      -0.04       -0.01 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
 
                                               September  September  December 
EUR million                                     30, 2019   30, 2018   31, 2018 
ASSETS 
Non-current assets 
 Property, plant and equipment                       0.1        0.1        0.2 
 Right-of-use assets                                 0.3          -          - 
 Intangible assets                                   5.5        4.9        5.2 
 Investments                                         0.0        0.0        0.0 
Total non-current assets                             6.0        5.0        5.4 
 
Current assets 
    Inventories                                      0.0        0.0        0.0 
 Trade and other receivables                         3.8        4.5        5.4 
    Financial assets                                 0.0        0.0        0.0 
 Cash and cash equivalents                          11.6       11.5       13.5 
Total current assets                                15.4       16.0       18.9 
 
Total assets                                        21.3       21.0       24.2 
---------------------------------------------  ---------  ---------  --------- 
 
EQUITY AND LIABILITIES 
 
Equity 
 Attributable to parent company's 
  shareholders                                      11.7       11.8       13.4 
 Non-controlling interest                            0.7        1.1        0.8 
Total equity                                        12.4       12.9       14.2 
 
Non-current liabilities 
    Borrowings                                       0.6        0.2        0.2 
    Other non-current liabilities                    0.1        0.0        0.0 
--------------------------------------------- 
Total non-current liabilities                        0.7        0.2        0.2 
 
Current liabilities 
    Current liabilities                              8.3        7.9        9.8 
--------------------------------------------- 
Total current liabilities                            8.3        7.9        9.8 
 
Total equity and liabilities                        21.3       21.0       24.2 
---------------------------------------------  ---------  ---------  --------- 
 
 
 
 
 
 
                               Attributable to the owners of the Company 
                               Hybrid                  Unrestricted 
                    Share      capital    Translation    invested    Retained          Non-controlling   Total 
EUR million         capital   securities   difference   equity fund   earnings  Total     interests      equity 
Equity January 
 1, 2018                1.2         12.0         -1.3          22.1      -21.2   12.8                -     12.8 
 
Change                  0.0                      -0.1           0.6       -0.7   -0.2                -     -0.2 
Change in Group 
 structure(1)                                                             -0.1   -0.1              1.1      1.0 
Net profit                                                                -0.8   -0.8              0.0     -0.8 
Equity September 
 30, 2018               1.2         12.0         -1.4          22.7      -22.7   11.8              1.1     12.9 
 
Change                  0.0          0.0          0.0           0.0        0.1    0.0                -      0.0 
Net profit                                                                 1.6    1.6             -0.3      1.3 
Equity December 
 31, 2018               1.2         12.0         -1.4          22.7      -21.1   13.4              0.8     14.2 
 
Change                                           -0.1                     -0.7   -0.9                -     -0.9 
Net profit                                                                -0.8   -0.8             -0.2     -1.0 
Equity September 
 30, 2019               1.2         12.0         -1.5          22.7      -22.6   11.7              0.7     12.4 
 
 
   (1) State Security Networks Group Finland became a non-controlling 
interest holder of Kyberleijona Oy with 35 % ownership. The amount of 
investment was EUR 1.0 million and additionally, State Security Networks 
Group Finland has issued a subordinated loan of EUR 0.6 million to 
Kyberleijona Oy. 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF 
 CASH FLOWS 
EUR million                           1--9/2019  1--9/2018  1--12/2018 
 
Cash flow from operations                   0.1       -1.5         1.2 
 whereof change in working capital         -0.4       -2.2        -1.2 
Cash flow from investing activities        -1.5       -1.5        -2.3 
Cash flow from financing activities        -0.7        0.9         0.9 
 
Increase (+) / decrease (-) in cash        -2.2       -2.1        -0.2 
 
Cash at period start                       13.5       13.5        13.5 
Effect of exchange rate                     0.3        0.1         0.2 
Cash at period end                         11.6       11.5        13.5 
 
 
 
 
 
 
CONTINGENT LIABILITIES 
                                          September  September  December 
EUR million                                30, 2019   30, 2018   31, 2018 
Interest on hybrid capital securities           0.5        0.5        0.7 
Rent security deposits                          0.1        0.1        0.1 
 
Leasing commitments outside the balance 
 sheet 
 Maturing within 1 year                         0.0        0.3        0.3 
 Maturing between 1 and 5 years                 0.0        0.3        0.2 
 
 
 
 
 
 
KEY FIGURES AND RATIOS 
 
EUR million                                  1--9/2019  1--9/2018  1--12/2018 
Net sales                                         10.3       11.9        18.3 
Operating profit/loss                             -1.1       -0.7         0.5 
 % of net sales                                  -10.5       -6.2         3.0 
Profit/loss before taxes                          -1.0       -0.8         0.6 
 % of net sales                                   -9.4       -6.3         3.0 
Return on equity (%)                              -7.4       -6.1         3.8 
Return on investment (%)                          -6.9       -5.8         4.1 
Interest-bearing net liabilities                 -10.6      -11.3       -13.3 
Equity ratio (%)                                  81.1       86.4        81.6 
Gearing (%)                                      -85.7      -87.7       -93.5 
Gross capital expenditure                          1.5        1.5         2.3 
 % of net sales                                   14.8       12.5        12.3 
R&D expenses                                      -3.5       -3.6        -5.1 
 % of net sales                                   34.4       30.1        27.9 
Personnel, period average                           87         82          82 
Personnel, period end                               86         80          85 
 
PER SHARE DATA 
 
EUR                                          1--9/2019  1--9/2018  1--12/2018 
Earnings per share undiluted(2)                  -0.04      -0.04       -0,01 
Earnings per share diluted(2)                    -0.04      -0.04       -0.01 
Equity per share                                  0.32       0.33        0.37 
No. of shares at period average (thousand)      38 802     38 506      38 578 
No. of shares at period end (thousand)          38 802     38 802      38 802 
Share performance 
 Average price                                    1.47       2.03        2.00 
 Low                                              1.11       1.72        1.60 
 High                                             1.97       2.27        2.27 
Share price period end                            1.36       1.87        1.68 
Market capitalization period end (EUR 
 million)                                         52.6       72.6        65.2 
Volume of shares traded (million)                  2.5       11.1         7.8 
Volume of shares traded as % of total              6.6       28.9        20.2 
Value of shares traded (EUR million)               3.7       22.6        15.6 
Price per earnings ratio (P/E)                    neg.       neg.        neg. 
Dividend per share                                0.00       0.00        0.00 
Dividend per earnings, %                          0.00       0.00        0.00 
Effective return on dividend, %                   0.00       0.00        0.00 
(2) Earnings per share is impacted by unpaid interest 
 of hybrid capital securities. 
 
 
 
   DISCLAIMER 
 
   The content in this report is provided by SSH Communications Security 
and its third-party content providers for your personal information 
only. And does not constitute an offer or invitation to purchase any 
securities. Nor does it provide any form of advice (investment. tax. 
legal) amounting to investment advice. Or make any recommendations 
regarding particular investments or products. SSH Communications 
Security does not provide investment advice or recommendations to buy or 
sell its shares or the shares of others. If you are interested in 
investing in SSH Communications Security, please contact your financial 
advisor for further details and information. Past performance of SSH 
Communications Security shares is not indicative of future results. 
EXCEPT AS PROVIDED BY APPLICABLE COMPULSORY LAW SSH COMMUNICATIONS 

SECURITY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED. AS TO 
THE AVAILABILITY, ACCURACY OR RELIABILITY OF ANY OF THE CONTENT PROVIDED, 
OR AS TO THE FITNESS OF THE INFORMATION FOR ANY PURPOSE. 
 
   SSH Communications Security will release its financial reporting 
calendar for 2020 later during the year. 
 
   Helsinki, October 23, 2019 
 
   SSH COMMUNICATIONS SECURITY 
 
   Board of Directors 
 
   Kaisa Olkkonen 
 
   CEO 
 
   For further information, please contact: 
 
   Kaisa Olkkonen, CEO tel. [phone] 
 
   Niklas Nordström, CFO tel. [phone] 
 
   Distribution: 
 
   NASDAQ Helsinki Ltd. 
 
   Major media 
 
   www.SSH.com 
 
 
 
 
 
 

(END) Dow Jones Newswires

October 23, 2019 02:00 ET (06:00 GMT)

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