Ssh Communications Security Corporation Interim Report January 1 -- June 30, 2020

 
TIDMSSH1V 
 
 
   SSH COMMUNICATIONS SECURITY CORPORATION          STOCK EXCHANGE RELEASE 
July 21, 2020, AT 9:00 A.M 
 
   SSH COMMUNICATIONS SECURITY CORPORATION INTERIM REPORT JANUARY 1 -- JUNE 
30, 2020 
 
   SALES DECREASED BUT EBITDA REMAINED POSITIVE FOR THE QUARTER AND THE 
FULL PERIOD THANKS TO STRONG COST CONTROL MEASURES 
 
   April -- June 2020: Net sales decreased 33.5 % compared to previous 
year. EBITDA remained positive and quarter-end cash position remained 
strong. 
 
 
   -- Net sales totaled EUR 2.6 million (4-6/2019: EUR 4.0 million) 
 
   -- EBITDA was EUR 0.2 million (EUR 0.9 million) 
 
   -- Operating loss was EUR -0.4 million (EUR 0.4 million) 
 
   -- Loss for the period was EUR -0.5 million (EUR 0.2 million) 
 
   -- Earnings per share was EUR -0.02 (EUR 0.00) 
 
 
   January--June 2020: Net sales decreased 13.6 % compared to the previous 
year. EBITDA remained on the same level as the previous year and the 
loss narrowed compared to the previous period. 
 
 
   -- Net sales totaled EUR 5.7 million (1-6/2019: EUR 6.6 million). 
 
   -- EBITDA was EUR 0.1 million (EUR 0.1 million). 
 
   -- Operating loss was EUR -0.9 million (EUR -0.9 million). 
 
   -- Loss for the period was EUR -0.9 million (EUR -1.0 million). 
 
   -- Earnings per share was EUR -0.04 (EUR -0.04). 
 
 
   Operating cash flow was EUR 0.0 million (EUR -0.7 million), and our cash 
position remained strong. Equity ratio remained good 74.2 % (81.5 %). 
Liquid assets were EUR 10.2 million (EUR 11.2 million). 
 
 
 
 
KEY FIGURES 
 
                                               Change                        Change 
EUR million             4--6/2020  4--6/2019        %  1--6/2020  1--6/2019       %  1--12/2019 
 
Net sales                     2.6        4.0    -33.5        5.7        6.6   -13.6        14.4 
EBITDA                        0.2        0.9    -78.1        0.1        0.1    15.8         0.9 
 % of net sales               7.3       22.1    -67.1        2.3        1.8    34.0         6.0 
Operating profit/loss        -0.4        0.4   -196.3       -0.9       -0.9     4.4        -1.2 
 % of net sales             -13.5        9.3   -244.8      -16.2      -13.4    20.8        -8.4 
Profit/loss before 
 taxes                       -0.5        0.3   -299.3       -1.0       -1.0     0.4        -1.3 
Profit/loss                  -0.5        0.2   -323.2       -0.9       -1.0    -3.7        -1.5 
 
Return on equity, 
 %                                                          -8.5       -7.1   -18.7       -11.3 
Return on investment, 
 %                                                          -7.8       -6.8   -14.8        -9.8 
Liquid assets                                               10.2       11.2    -8.7        12.0 
Gearing (%)                                                -87.8      -81.6    -7.5       -92.3 
Equity ratio (%)                                            74.2       81.5    -8.9        78.0 
 
Earnings per share, 
 EUR                        -0.02       0.00  3 008.4      -0.04      -0.04    -7.9       -0.06 
Shareholders' equity 
 per share, EUR              0.26       0.32    -18.2       0.26       0.32   -18.2        0.31 
 
 
   SSH Communications Security provides alternative performance measures, 
which are not defined by IFRS standards. Alternative performance 
measures should not be considered as substitutes for performance 
measures in accordance with the IFRS.  From the first quarter of 2020 
onwards, SSH Communications Security has introduced the following new 
alternative performance measures: 
 
   EBITDA = Operating profit/loss + depreciation and amortization 
 
 
 
   CEO REVIEW 
 
   Valued shareholders, customers, partners, and co-workers, 
 
   The COVID-19 pandemic impacted our business significantly in Q2 2020. 
Our sales decreased by 34% compared to Q2 2019. However, our employees' 
well-being was successfully secured: in our offices across four 
countries, we did not have any confirmed cases. 
 
   We stayed in a remote work mode during most of the quarter; in some 
locations, we started returning to office work towards the end of June. 
Even with most of the whole organization working remotely, our 
efficiency and spirits remained high. I would like to thank the entire 
SSH team for their tenacity during these challenging times. 
 
   Despite declined sales, our financial performance remained solid: we 
successfully controlled our operating expenses and achieved positive 
EBITDA for Q2 and the full first half-year. Operating cash flow was 
positive, improving significantly compared to last year. 
 
   Financial Performance 
 
   Net sales for the second quarter were EUR 2.6 million (EUR 4.0 million), 
down 34 % compared to Q2 2019. Most of this decrease was due to a 
decline in license sales as large customers postponed or phased their 
large investments due to their savings initiatives. 
 
   The maintenance renewals business decreased slightly, mainly due to some 
decreases in UKM maintenance renewals and the continuing end-of-life 
process of the CryptoAuditor product. 
 
   Thanks to our continued careful cost management, the company's operating 
expenses decreased by 2% compared to Q2 of 2019 and by 8% compared to 
the previous quarter. Despite the decline in revenue, our EBITDA for Q2 
2020 remained positive at EUR 0.2 million (EUR 0.9 million). The EBITDA 
for the full six-month period was also positive. 
 
   Our operating loss for the period was EUR -0.4 million (EUR 0.4 million), 
and loss for the period was EUR -0.5 million (EUR 0.2 million). The 
losses included EUR -0.3 million in restructuring costs affecting 
comparability. 
 
   We received limited COVID-19 support funding in the US and Hong Kong and 
applied for such funding in Finland. We also received a EUR 1.3 million 
grant for developing quantum-safe crypto technology from Business 
Finland. 
 
   The operating cash flow for the quarter was slightly positive at EUR 0.0 
million (-0.7 million). Our balance sheet and cash position remain 
strong and allow SSH to proceed with the execution of its strategy. 
 
   Sales Performance 
 
   From a regional perspective, sales in the AMER and EMEA regions 
decreased roughly 25% compared to Q2 2019, while the APAC region was hit 
especially hard by the COVID-19 crisis, and sales decreased by 66% 
compared to Q2 2019. 
 
   Sales of all our products except PrivX(R) declined. The decline was 
steepest for our SSH key management product, UKM. A large travel 
technology company did start a UKM phased deployment during the quarter. 
Still, several other large deals were moved forward, as especially large 
financial institutions systematically started to postpone their 
technology investments and difficulties in launching an on-site 
deployment project due to travel restrictions. 
 
   Tectia SSH Client/Server sales were also affected but to a significantly 
smaller degree. Tectia maintenance renewals remained solid, and the 
sales decline came mainly from the APAC area, where large banks 
curtailed their technology investments. 
 
   PrivX sales grew significantly compared to the previous year. Large 
enterprises and mid-market companies increasingly recognize PrivX as a 
compelling, modern alternative to traditional Privileged Access 
Management solutions. During the quarter, PrivX was named an "Overall 
Leader" in the latest iteration of KuppingerCole's prestigious 
Leadership Compass for Privileged Access Management (PAM) report 
 
   During the quarter, we won several significant new customers for PrivX 
(that had not been previous SSH customers)  in the financial, industrial, 
and government sectors. With these new customers, we recorded a 
significant milestone in PrivX sales and booked our 50(th) PrivX 
customer. 
 
   Reshaping the organization 
 
   During the quarter, we reshaped the organization and decreased our 
executive management team's size from seven people to three people. The 
purpose of this change was to accelerate and clarify our decision-making 
and improve our management performance. In concert with this change, we 
also streamlined and flattened our organization and took steps to 
increase our organization's customer-centricity. The organization 
changes will improve decision-making and accountability throughout the 
organization. 
 
   Major ownership change and a change in our Board of Directors 
 
   During Q2 2020, the investment fund Accendo Capital acquired 29.2% of 
SSH shares from the company founder Tatu Ylönen. As a result of 
these transactions, Accendo became the largest shareholder of SSH during 
the quarter. Tatu Ylönen is now the second-largest shareholder of 
SSH after the sale with 18.0% of the company. 
 
   An extraordinary general meeting was held on June 26, and Accendo 
representatives Henri Österlund and Kai Tavakka were elected to the 
Board of Directors of SSH. The new Board elected Mr. Österlund as 
the Chairman of the Board. 
 
   Looking forward and new guidance 
 
   While the COVID-19 crisis has stabilized in Finland and parts of Europe 
and Asia, the situation is still critical globally, with the number of 
daily new cases growing rapidly. The situation is especially challenging 
in our largest market, the US. While it is challenging to predict the 
pandemic's course, it looks inevitable that we will have to deal with 
adverse effects caused by the pandemic at least for the remainder of 
2020. 
 
   Our new guidance is: 
 
   We expect our revenue to decrease compared to 2019. During the second 
half of the year we will invest increasingly towards future growth and 
expect our EBITDA for the full year to be negative. 
 
   Our earlier guidance, issued in the Financial Statement Release on 14 
February 2020 and withdrawn on 23 March 2020, was: 
 
   For the year 2020, we expect revenue growth of 10-15 percent and an 
improving operating result. The growth rates and profitability vary 
significantly between our product lines as the products are in different 
stages of maturity and investment phases. We expect clearly faster 

growth rates for PrivX(R) and NQX(R), steady growth for UKM(R) matching 
the industry growth rate, and modest growth for Tectia(R), which is our 
most mature product. The combined effect of these growth rates will 
result in moderate short-term growth, which we expect to accelerate over 
the next several years. 
 
   Teemu Tunkelo 
 
   Chief Executive Officer 
 
   CONSOLIDATED NET SALES 
 
   Consolidated net sales for April -- June totaled EUR 2.6 million (EUR 
4.0 million). 
 
   Consolidated net sales for January--June totaled EUR 5.7 million (EUR 
6.6 million), decreased by 13.6 %, year on year. 
 
   The Americas region accounted for 53.6 % (53.2 %); the Europe, Middle 
East, and Africa region 25.5 % (26.3 %); and the Asia Pacific region 
20.9 % (20.5 %) of reported net sales. 
 
 
 
 
                                               Change                        Change 
EUR million              4--6/2020  4--6/2019       %  1--6/2020  1--6/2019       %  1--12/2019 
 
BY SEGMENT 
 AMERICAS                      1.5        2.0   -24.6        3.1        3.5   -12.9         7.8 
 APAC                          0.3        0.9   -66.1        1.2        1.4   -12.1         2.9 
 EMEA                          0.9        1.1   -23.6        1.5        1.7   -16.2         3.6 
 Total                         2.6        4.0   -33.5        5.7        6.6   -13.6        14.4 
-----------------------  ---------  ---------  ------  ---------  ---------  ------  ---------- 
 
BY OPERATION 
 Software fees                 0.6        1.7   -63.1        1.6        2.2   -27.0         5.2 
 Professional services 
  & other                      0.0        0.1   -95.5        0.0        0.2   -81.5         0.6 
 Recurring revenue             2.0        2.2    -8.0        4.1        4.3    -3.4         8.6 
 Total                         2.6        4.0   -33.5        5.7        6.6   -13.6        14.4 
-----------------------  ---------  ---------  ------  ---------  ---------  ------  ---------- 
 
 
   Most of the company's invoicing is U.S. dollar based. With comparable 
exchange rates, net sales reduction would have been 15.4 % compared with 
the corresponding period in 2019. 
 
   RESULTS AND EXPENSES 
 
   Operating loss for April -- June was EUR -0.4 million (EUR 0.4 million), 
with net profit totaling EUR -0.5 million (EUR 0.2 million). 
 
   Operating loss for January -- June was EUR -0.9 million (EUR -0.9 
million), with net loss totaling EUR -0.9 million (EUR -1.0 million). 
 
   Selling, marketing, and customer support expenses for the April -- June 
reporting period amounted to EUR -1.5 million (EUR -1.7 million), while 
research and development expenses totaled EUR -1.4 million (EUR -1.1 
million) and administrative expenses EUR -0.6 million (EUR -0.6 
million). 
 
   Selling, marketing, and customer support expenses for the January -- 
June reporting period amounted to EUR -3.3 million (EUR -3.7 million), 
while research and development expenses totaled EUR -2.6 million (EUR 
-2.3 million) and administrative expenses EUR -1.2 million (EUR -1.3 
million). Operating expenses decreased by 1 % compared to 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 June 30, 
2020, stood at EUR 19.8 million (June 30, 2019: EUR 20.6 million; 
December 31, 2019: EUR 23.8 million), of which liquid assets accounted 
for EUR 10.2 million (June 30, 2019: EUR 11.2 million; December 31, 
2019: EUR 12.0 million), or 51.6 % of the balance sheet total). 
Interest-bearing liabilities were EUR 1.3 million (June 30, 2019 EUR 1.0 
million, December 31, 2019 EUR 0.9 million). On June 30, 2020, gearing, 
or the ratio of net liabilities to shareholders' equity, was -87.8 % 
(June 30, 2019 -81.6 %; December 31, 2019 -92.3 %) and the equity ratio 
stood at 74.2 % (June 30, 2019 81.5 %; December 31, 2019 78.0 %). 
 
   The reported gross capital expenditure for the period totaled EUR 1.1 
million (EUR 1.0 million). The reported financial income and expenses 
amounting in total to EUR -0.0 million (EUR -0.1 million) consisted 
mainly of exchange rate gains or losses and interest expenses from sales 
and leasing contracts. 
 
   During January -- June, SSH Communications Security reported a cash flow 
of EUR 0.0 million (EUR -0.7 million) from business operations, and 
investments showed a cash flow of EUR -0.7 million (EUR -1.0 million). 
Cash flow from investments includes receipt of government grants with 
EUR 0.3 million. Cash flow from financing totaled EUR --1.1 million (EUR 
-0.6 million). Cash flow from financing includes the payment of hybrid 
instrument interest of EUR 0.9 million and the cash payment for the 
principal portion of the lease liability of EUR 0.2 million. Total cash 
flow from operations, investments, and financing was negative EUR -1.8 
million (EUR -2.3 million). 
 
   There were no short-term investments at the end of the reporting period. 
 
   RESEARCH AND DEVELOPMENT 
 
   Research and development expenses for April -- June totaled EUR -1.4 
million (EUR -1.1 million), the equivalent of 52.2 % of net sales (28.8 
%). During April -- June, the company has capitalized new product R&D 
costs EUR 0.3 million (EUR 0.5 million). Capitalized product development 
expenses were reduced by the amount of EUR 0.2 million received as 
funding from the EU in 2019 (EUR 0.0 million). 
 
   Research and development expenses for January -- June totaled EUR -2.6 
million (EUR -2.3 million), the equivalent of 45.9 % of net sales (34.5 
%). During January -- June, the company has capitalized new product R&D 
costs EUR 0.7 million (EUR 1.0 million). Capitalized product development 
expenses were reduced by the amount of EUR 0.3 million received as 
funding from the EU in 2019 (EUR 0.0 million). Depreciation from R&D 
capitalization assets was EUR -0.7 million (EUR -0.7 million). 
 
   HUMAN RESOURCES AND ORGANIZATION 
 
   At the end of June, the Group had 92 employees on its payroll (June 30, 
2019: 86; December 31, 2019: 90). The number of employees increased by 
six persons from the previous year and by two persons from the year-end 
(2.2 %). 
 
   At the end of the period, 33.7 % (36.0 %) of the employees worked in 
sales, marketing and customer services, 48.9 % (50.0 %) in R&D, and 17.4 
% (14.0 %) in corporate administration. 
 
   BOARD AND AUDITORS 
 
   The Annual General Meeting of SSH Communications Security Oyj was held 
on March 26, 2020. 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, 2019, and 
December 31, 2019. Tatu Ylönen was re-elected, and Aino-Mari 
Kiianmies and Sampo Kellomäki were elected as new members of the 
Board of Directors. Tatu Ylönen was elected as the Chairman of the 
Board of Directors at the Board's organizing meeting. 
 
   The Authorized Public Accountants Ernst & Young Oy was re-elected as the 
auditor of the company. Ernst & Young Oy have informed that Erkka 
Talvinko, Authorized Public Accountant, will continue to act as the 
principal auditor. 
 
   The Extraordinary General Meeting of SSH Communications Security Oyj was 
held on June 26, 2020. The Extraordinary General Meeting approved that 
the members of the Board of Directors is five (5) and elected Tatu 
Ylönen, Aino-Mari Kiianmies, Sampo Kellomäki, Henri 
Österlund (new member) and Kai Tavakka (new member) as members of 
the Board of Directors. Henri Österlund was elected as the Chairman 
of the Board of Directors at the Board's organizing meeting. 
 
   SHARES, SHAREHOLDING, AND CHANGES IN GROUP STRUCTURE 
 
   The reported trading volume of SSH Communications Security shares 
totaled 16,374,431 shares (valued at EUR 20,520,562). The highest 
quotation was EUR 1.90 and the lowest EUR 0.65. The trade-weighted 
average share price for the period was EUR 1.25, and the share closed at 
EUR 1.60 (June 30, 2020). 
 
   Tatu Ylönen sold 6.4 million shares in SSH to investment fund 
Accendo Capital SICAV, SIF on May 22, 2020 and further 4.93 million 
shares on June 3, 2020. Accendo Capital became the largest shareholder 
of SSH, with 29.2 % of the company. Tatu Ylönen is the 
second-largest shareholder of SSH after the sale with 18.0 %. Timo 
Syrjälä holds directly and through his company Acme 
Investments SPF S.a.r.l. 9.2 % and 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 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 June 30, 2020, 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 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, 2021. 
 
 
 
   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 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, 2021. 
 
   CHANGES IN GROUP MANAGEMENT TEAM 
 
   On May 28, 2020 SSH Communications Security announced new Executive 
Management Team. The new Executive Management Team is: 
 
   Teemu Tunkelo, Chief Executive Officer 
 
   Niklas Nordström, Chief Financial Officer 
 
   Jussi Mononen, Chief Commercial Officer 
 
   RISKS AND UNCERTAINTIES 
 
   The ongoing COVID-19 pandemic is a major new macro-level risk that may 
affect SSH Communications Security. Otherwise, the most substantial 
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. 
 
   Largest risks: 
 
   - uncertainty of the macroeconomic environment, such as the impact of 
coronavirus disease 
 
   - 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 
 
   - a large portion of the company revenue is invoiced in USD currency, 
and possible significant fluctuation in USD currency rates during 2020 
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 webpage: www.ssh.com. 
 
   RELATED PARTY TRANSACTIONS 
 
   During the reporting period, 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. 
 
 
 
 
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT 
 
EUR million                                  4--6/2020  4--6/2019  1--6/2020  1--6/2019  1--12/2019 
 
Net sales                                          2.6        4.0        5.7        6,6        14.4 
Cost of sales                                     -0.1       -0.1       -0.1       -0.3        -0.5 
Gross margin                                       2.6        3.9        5.6        6.4        13.9 
Other operating income                             0.5        0.0        0.7        0.0         0.1 
 
Selling, marketing and customer support 
 expenses                                         -1.5       -1.7       -3.3       -3.7        -7.5 
Research and development expenses                 -1.4       -1.1       -2.6       -2.3        -4.9 
Administrative expenses                           -0.6       -0.6       -1.2       -1.3        -2.9 
Operating profit/loss                             -0.4        0.4       -0.9       -0.9        -1.2 
 
Financial income and expenses                     -0.2       -0.1       -0.0       -0.1        -0.1 
Profit/loss before taxes                          -0.5        0.3       -1.0       -1.0        -1.3 
Taxes                                             -0.0       -0.0        0.0       -0.0        -0.1 
Profit/loss for the period                        -0.5        0.2       -0.9       -1.0        -1.5 
-------------------------------------------  ---------  ---------  ---------  ---------  ---------- 
 
Attributable to: 
    Owners of the parent company                  -0.5        0.3       -0.8       -0.9        -1.3 
    Non-controlling interests                     -0.1       -0.1       -0.1       -0.1        -0.2 
                                                  -0.5        0.2       -0.9       -1.0        -1.5 
                                             ---------  ---------  ---------  ---------  ---------- 
 
Other comprehensive income 
    Items which might be later transferred 
     to profit or loss: 
    Foreign subsidiary translation 
     differences                                   0.1        0.0       -0.0       -0.0        -0.0 
Total comprehensive income                        -0.5        0.3       -1.0       -1.0        -1.5 
-------------------------------------------  ---------  ---------  ---------  ---------  ---------- 
 
 
Attributable to: 
    Owners of the parent company                  -0.4        0.3       -0.9       -0.9        -1.3 
    Non-controlling interest                      -0.1       -0.1       -0.1       -0.1        -0.2 
                                                  -0.5        0.3       -1.0       -1.0        -1.5 
                                             ---------  ---------  ---------  ---------  ---------- 
 
Earnings per share 
Earnings per share (EUR)                         -0.02       0.00      -0.04      -0.04       -0.06 
Diluted earnings per share (EUR)                 -0.02       0.00      -0.04      -0.04       -0.06 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
 
                                                 June 30,  June 30,  Dec 31, 
EUR million                                        2020      2019      2019 
ASSETS 
Non-current assets 
 Property, plant and equipment                        0.1       0.1      0.1 
 Right-of-use assets                                  0.7       0.4      0.3 
 Intangible assets                                    5.4       5.4      5.5 
 Investments                                          0.0       0.0      0.0 
Total non-current assets                              6.2       6.0      5.9 
 
Current assets 
 Inventories                                          0.0       0.0      0.0 
 Trade and other receivables                          3.4       3.4      5.9 
 Financial assets                                     0.0       0.0      0.0 
 Cash and cash equivalents                           10.2      11.2     12.0 
Total current assets                                 13.6      14.6     17.9 
 
Total assets                                         19.8      20.6     23.8 
-----------------------------------------------  --------  --------  ------- 
 
EQUITY AND LIABILITIES 
 
Equity 
 Attributable to parent company's shareholders        9.7      11.7     11.4 
 Non-controlling interest                             0.5       0.7      0.6 
Total equity                                         10.2      12.4     12.0 
 
Non-current liabilities 
    Borrowings                                        0.6       0.6      0.6 
    Lease liabilities                                 0.4       0.1      0.1 
    Advances received and deferred revenue            1.2       0.7      2.4 
----------------------------------------------- 
Total non-current liabilities                         2.2       1.4      3.0 
 
Current liabilities 
    Trade and other payables                          2.3       1.8      2.5 
    Lease liabilities                                 0.3       0.3      0.2 
    Advances received and deferred revenue            4.8       4.6      6.0 
----------------------------------------------- 
Total current liabilities                             7.4       6.7      8.7 
 
Total equity and liabilities                         19.8      20.6     23.8 
-----------------------------------------------  --------  --------  ------- 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES 
 IN EQUITY 
 
                              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 Jan 1, 

 2019                  1.2         12.0         -1.4          22.7      -21.1   13.4              0.8     14.2 
 
Change                   -            -         -0.0             -       -0.8   -0.8                -     -0.8 
Net profit                                                               -0.9   -0.9             -0.1     -1.0 
Equity June 30, 
 2019                  1.2         12.0         -1.4          22.7      -22.7   11.7              0.7     12.4 
 
Change                   -            -         -0.0             -        0.1    0.1                -      0.1 
Net profit                                                               -0.4   -0.4             -0.1     -0.5 
Equity Dec 31, 
 2019                  1.2         12.0         -1.4          22.7      -23.0   11.4              0.6     12.0 
 
Change                   -            -         -0.0             -       -0.9   -0.9                -     -0.9 
Net profit                                                               -0.8   -0.8             -0.1     -0.9 
Equity June 30, 
 2020                  1.2         12.0         -1.5          22.7      -24.7    9.7              0.5     10.2 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF 
 CASH FLOWS 
EUR million                           1--6/2020  1--6/2019  1--12/2019 
 
Cash flow from operations                   0.0       -0.7         0.3 
 whereof change in working capital          0.6       -0.8        -0.6 
Cash flow from investing activities        -0.7       -1.0        -1.1 
Cash flow from financing activities        -1.1       -0.6        -0.8 
 
Increase (+) / decrease (-) in cash        -1.8       -2.3        -1.6 
 
Cash at period start                       12.0       13.5        13.5 
Effect of exchange rate                     0.1        0.0         0.1 
Cash at period end                         10.2       11.2        12.0 
 
 
 
 
   NOTES TO THE INTERIM REPORT 
 
   The interim report for the six months reporting period ended June 30, 
2020, 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, 2019.  The information presented in this interim 
report is unaudited. 
 
   The accounting policies adopted for this interim report are consistent 
with those applied in 2019 consolidated financial statements except for 
the adoption of new standards effective as of January 1, 2020. The Group 
has not early adopted any standard, interpretation or amendment that has 
been issued but is not yet effective. 
 
   Several amendments and interpretations apply for the first time in 2020, 
but do not have an impact on the interim condensed consolidated 
financial statements of the SSH Group. 
 
 
 
 
CHANGES IN PROPERTY, PLANT, AND 
EQUIPMENT 
 
EUR million                            30 June 2020  30 June 2019  31 Dec 2019 
Carrying amount in the beginning of 
 the period                                     0.1           0.2          0.2 
Increase                                        0.0           0.0          0.0 
Depreciation and impairment                    -0.0          -0.0         -0.1 
Foreign exchange rate differences              -0.0           0.0          0.0 
Carrying amount at the end of the 
 period                                         0.1           0.1          0.1 
-------------------------------------  ------------  ------------  ----------- 
 
 
 
 
 
 
CHANGES IN RIGHT-OF-USE ASSETS 
 
EUR million                            30 June 2020  30 June 2019  31 Dec 2019 
Carrying amount in the beginning of 
 the period                                     0.3           0.5          0.5 
Increase                                        0.6           0.1          0.1 
Decrease                                          -          -0.0          0.0 
Depreciation and impairment                    -0.2          -0.2         -0.3 
Foreign exchange rate differences               0.0           0.0          0.0 
Carrying amount at the end of the 
 period                                         0.7           0.4          0.3 
-------------------------------------  ------------  ------------  ----------- 
 
 
   Right-of-use assets include leased offices. The Helsinki office moved to 
new premises in April 2020. The new lease contract is for the period of 
three years and added right-of-use assets and lease liabilities with EUR 
0.6 million in April 2020. 
 
 
 
 
CHANGES IN INTANGIBLE ASSETS 
 
EUR million                            30 June 2020  30 June 2019  31 Dec 2019 
Carrying amount in the beginning of 
 the period                                     5.5           5.2          5.2 
Increase                                        0.7           1.0          2.0 
Amortization and impairment                    -0.8          -0.8         -1.7 
Foreign exchange rate differences               0.0           0.0          0.0 
Carrying amount at the end of the 
 period                                         5.4           5.4          5.5 
-------------------------------------  ------------  ------------  ----------- 
 
 
 
 
 
 
CONTINGENT LIABILITIES 
 
EUR million                            30 June 2020  30 June 2019  31 Dec 2019 
Interest on hybrid capital securities           0.3           0.2          0.7 
Rent security deposits                          0.2           0.1          0.1 
 
 
 
 
   KEY FIGURES AND RATIOS 
 
   SSH Communications Security provides alternative performance measures, 
which are not defined by IFRS-standards. Alternative performance 
measures should not be considered as substitutes for performance 
measures in accordance with the IFRS.  From the first quarter of 2020 
onwards, SSH Communications Security has introduced the following new 
alternative performance measures: 
 
   EBITDA = Operating profit/loss + depreciation and amortization 
 
 
 
 
EUR million                        1--6/2020  1--6/2019  1--12/2019 
Net sales                                5.7        6.6        14.4 
EBITDA                                   0.1        0.1         0.9 
 % of net sales                          2.3        1.8         6.0 
Operating profit/loss                   -0.9       -0.9        -1.2 
 % of net sales                        -16.2      -13.4        -8.4 
Profit/loss before taxes                -1.0       -1.0        -1.3 
 % of net sales                        -16.7      -14.3        -9.3 
Return on equity (%)                    -8.5       -7.1       -11.3 
Return on investment (%)                -7.8       -6.8        -9.8 
Interest-bearing net liabilities        -8.9      -10.2       -11.1 
Equity ratio (%)                        74.2       81.5        78.0 
Gearing (%)                            -87.8      -81.6       -92.3 
Gross capital expenditure                1.1        1.0         2.0 
 % of net sales                         19.1       15.7        13.9 
R&D expenses                            -2.6       -2.3        -4.9 
 % of net sales                         45.9       34.5        34.0 
Personnel, period average                 89         87          88 
Personnel, period end                     92         86          90 
 
 
 
 
 
 
PER SHARE DATA 
 
EUR                                          1--6/2020  1--6/2019  1--12/2019 
Earnings per share undiluted(1)                  -0.04      -0.04       -0.06 
Earnings per share diluted(1)                    -0.04      -0.04       -0.06 
Equity per share                                  0.26       0.32        0.31 
No. of shares at period average (thousand)      38 802     38 802      38 802 
No. of shares at period end (thousand)          38 802     38 802      38 802 
Share performance 
 Average price                                    1.25       1.48        1.34 
 Low                                              0.65       1.11        0.97 
 High                                             1.90       1.97        1.97 
Share price period end                            1.60       1.46        1.04 
Market capitalization period end (EUR 
 million)                                         61.9       56.5        40.2 
Volume of shares traded (million)                 16.4        2.2         5.3 
Volume of shares traded as % of total             42.2        5.7        10.2 
Value of shares traded (EUR million)              20.5        3.3         4.0 
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 
 
  (1) Earnings per share is impacted by the unpaid 
  interest of hybrid capital securities 
 
 
 
 
   RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES 
 
   The following table presents the reconciliation of EBITDA to the 
operating profit/loss. 
 
 
 
 
EUR million                       1--6/2020  1--6/2019  1--12/2019 
EBITDA                                  0.1        0.1         0.9 
Depreciations and amortizations        -1.1       -1.0        -2.1 
Operating profit/loss                  -0.9       -0.9        -1.2 
--------------------------------  ---------  ---------  ---------- 
 
 
 
   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 

adviser 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 next interim report for the 
period January 1 -- September 30, 2020, on October 22, 2020. 
 
   Helsinki, July 21, 2020 
 
   SSH COMMUNICATIONS SECURITY 
 
   Board of Directors 
 
   Teemu Tunkelo 
 
   CEO 
 
   For further information, please contact: 
 
   Teemu Tunkelo, CEO tel. [phone] 
 
   Niklas Nordström, CFO tel. [phone] 
 
   Distribution: 
 
   NASDAQ Helsinki Ltd. 
 
   Major media 
 
   www.SSH.com 
 
 
 
 
 
 

(END) Dow Jones Newswires

July 21, 2020 02:00 ET (06:00 GMT)

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