Annual Report • Feb 24, 2010
Annual Report
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3 CEO's Review
8 Markets and Sales
13 Corporate Governance
25 Financial Statements
A business-driven approach to enterprise security is crucial to almost all organizations. Organizations usually take a bottom-up approach in this area, however, despite the fact that it is one that really requires the attention of the CEO – as enterprise security is intimately linked to trust, reputation, brand, shareholder and stakeholder value, marketplace and stock market confi dence, and customer retention and growth.
Information security should be seen as an essential element of corporate governance and a top priority for every board review, and a key requirement for successful business.
Our vision at SSH is to become the market maker in real-time business security solutions, and we believe that we have the ability to secure our customers' businesses with what we call our Circle of Trust. By keeping things simple, we can also deliver solutions rapidly and with a smile.
The key drivers for business-to-business data security are the exponential increase of digital information in fi xed and mobile networks, the fl exible use of integrated business applications between multiple enterprises, the need for 24/7 availability and reliability, as well as auditable and well-managed compliance with data security regulations and legislation.
The market for SSH Tectia solutions has grown ten-fold to more than USD 1 billion after the extension of our SSH Tectia off ering following our change in strategy in 2009. Today, our key market segments are secure applications and protocols, managed fi le transfer, and mobile identifi cation, where we focus on the security, automation, auditing, and governance of identity-managed information in fi xed, mobile, and cloud environments.
Our core business is about securing customers' mission-critical business information on the move.
The market for secure applications and protocols is expected to grow signifi cantly in the future, at more than 10% compound annual growth from today's level of USD 700 million.
While the secure fi le transfer (SFT) market is mature, there are still a number of growth drivers, including the growing pressure on large companies to migrate from proprietary and opensource tools to standards-based, commercial SFT solutions that also off er services.
The size of the managed fi le transfer (MFT) market is estimated to be USD 450 million and it is growing at 20% in terms of compound annual growth, thanks to the automation and governance of real-time data-in-transit in private networks and across the Internet with virtual data centers. We off er visionary MFT security solutions for businesses that value the world's best automation, as well as audit and governance capabilities in business networks where trusted sharing of information is required.
The mobile identity market is estimated to be worth USD 430 million and is growing at more than 8% in terms of compound annual growth. The future focus here will very much be on mobile multi-access security, and our added value comes from the fact that our software-based identifi cation management solutions can be used with any device, in any network, any time, any place, and can be deployed rapidly.
Our customers in fi nance, retail, government, and defense in the U.S., Europe, and APAC are among the most demanding anywhere. Our strategic objective is to secure and strengthen customer satisfaction and the quality of their existing network environments; and our business objective is to increase our number of Global 1,000 key accounts and penetrate the Global 10,000 market. We intend doing this through two business streams, focusing on direct sales based on SSH's core business off ering and indirect sales based on our new business off ering.
Our new business partner network strategy is designed to increase the number of certifi ed sales and service partners that we have globally and generate 50% of net sales during the strategy period through this network.
Our existing geographical markets are the Americas (U.S. and Canada), Europe with a focus on the U.K. and DACH, and APAC, in particular Japan and Singapore. Our new markets will be the Nordic countries, Eastern Europe, Hong Kong, and mainland China.
In addition to regional headquarters in Boston and Helsinki, SSH aims to establish an APAC regional headquarters in Hong Kong in the second quarter 2010 to serve existing customers in the region, build effi cient sales channels, and sign up new customers.
Our strategic themes for 2010 will be customer-focused business excellence, growing business horizons, and enhancing our execution capabilities.
Our business model will continue to be based on technology licensing, generating recurring revenue through maintenance and services. This model is very scalable and does not need major investments after the breakeven point has been passed.
We hold 14 global patents and are the original inventor of the Secure Shell protocol, which remains the heart of our business and forms the basis for open standards in cryptographic security for IP networks. This position allows us to complement our off ering based on customer-proven solutions and world-class technology, as our solutions are compatible with multiple platforms and architectures.
Some 50% of our personnel are involved in customer and market operations today, and sales per head have increased signifi cantly due to the continuous development of high-performance sales culture. We have invested in expanding our off ering to meet new customer challenges and markets, and the technology in-sourcing program that we initiated in 2009 has increased the agility and effi ciency of our R&D.
An internal 'One Company' program introduced in 2009 has seen us give increased focus to unifi ed global business processes, a new leadership model, and cultural change. We have also identifi ed our key business processes as customer and market operations, R&D, and business support and ICT.
Research and development focuses on developing our new off ering using both our own and in-sourced technologies, and enhancing the perceived quality of SSH security solutions among our customers.
Our business support and information technology process focuses on developing world-class back-offi ce services and increasing the ability of our ICT infrastructure to meet the requirements.
SSH's updated leadership model includes a balanced scorecard-based profi t sharing system for all employees, as well as a joint leadership model throughout the entire organization. A new limited company, SSH Management Investment Corp, owned by the members of the Group Management Team, is now the company's fourth-largest owner, holding 4.8% of company shares.
The goal of our cultural change is to build a growth organization dedicated to putting the customer fi rst, and committed to keeping things simple, responding rapidly, and doing so with a smile – through individual responsibility, a focus on profi tability, and customer orientation.
2009 was a turnaround year for SSH, its employees and stakeholders. We announced our intention – and also started the shift from a technology company towards a sales and marketing-oriented security software company.
As part of this, we will change our brand identity in 2010 to underline our commitment to serving our customers and securing their business with the best possible quality through our Circle of Trust.
I would like to thank our existing and new customers, our key business partners, and our professional personnel for their contribution to what proved a tough but rewarding year in 2009.
And I would like to invite all of you to join us on the inspiring journey in building the Circle of Trust.
Jari Mielonen President and CEO SSH Communications Security Corp.
SSH Communications Security Corp. is the market maker in realtime security software for modern, networked organizations. We create an invaluable Circle of Trust for our customers and their stakeholders by securing, automating and governing confi dential information with our Tectia solutions in fi xed, mobile and cloud environments.
We enable and enhance business for thousands of customers in multiple industries in the private and public sectors around the world. We operate in the Americas, Europe, and APAC regions, with headquarters located in Helsinki, Finland. The company was established in 1995, and holds 14 patents. Its shares are quoted on the NASDAQ OMX Helsinki.
In 2009 net sales amounted to EUR 8.8 million with an increase of 3.4 percent compared to the previous year. The fi scal year loss including non-recurring costs was EUR -1.2 million. The loss excluding non-recurring costs was EUR -0.3 million. The company's fi nancial position remained healthy with an equity ratio of 71.4 percent and EUR 6.4 million in liquid assets.
Early 2009, we signed a contract with Gartner, a market analysis company, to establish new market position and off ering. The assignment resulted to the confi rmation of the new vision of SSH and the signifi cance of MFT markets. The value driven nature of MFT solutions was complementing the company's core strengths in security solutions for mission-critical infrastructures.
Starting from the fi rst quarter, the company initiated new offering development. More R&D resources were moved to creating the value added off ering complementing the existing data-intransit security software. At the same time, we decided to start in-sourcing technologies which would accelerate the time-tomarket and fulfi ll the demand from our customers. We signed three strategic technology in-sourcing partners to strengthen our value driven security off ering.
The second quarter was started with a sales review, focusing on the effi ciency evaluation of sales and marketing in the company. As a result, parts of sales were reorganized. A management audit discovered that the company needs new leadership skills and roles to execute the defi ned strategy. The Group management team was renewed. At the end of second quarter the company launched new off ering for the managed fi le transfer and governance market segments.
Both the fi rst and the second quarter ended up with loss, thus resulting to a negative fi rst half of 2009. The customers' low expectations of economic recovery slowed down decision making, and certain U.S. public sector projects that were already in the sales pipeline, were postponed due to funding reasons. Turnaround-related non-recurring costs actualized by the established contingency plan also increased the net loss actualized.
The third quarter was the turning point in the course of the company. The actions defi ned by new group management, initiated change towards a sales and marketing-oriented security software house, the increased eff orts in key account management, and the new off ering introduced to existing and new customers became the success factors for the initial growth. The third quarter was the fi rst profi table quarter with growth in net sales.
In order to boost net sales, the management launched a high performance sales initiative. The key objective of the sales program was to improve the sales estimation accuracy and hit-rate in signing short-listed sales cases.
The company signed agreements with a major U.S. research agency, one of the largest U.S. banks and a mid-size U.S. retailer chain for their security governance and business security solutions. SSH gained reputation also when Gartner published its market research report and named SSH as a visionary MFT (Managed File Transfer) security vendor.
During the fourth quarter the company signed a global license with one of the largest banks in Europe for their global roll-out of SSH security software. The company continued the development of its business-to-business security solutions off ering by enhancing it with new software-based identifi cation technologies provided by a technology in-sourcing partner.
Started at the end of the second quarter, SSH continued the cost cutting program. The cost savings were -15% in expenses during the second half of 2009 compared to the previous year. In December, the company's headquarters moved to new more cost-effi cient premises as part of the cost cutting program.
The company initiated a new brand and communications strategy program with its marketing partner. The results will be launched within the fi rst half of 2010. The company set up the building blocks for the ability to start a journey in creating a new collaboration model among its customer, their partners and endcustomers.
The key strategic objective is to continue eff orts on developing the company into a sales and marketing oriented technology company with strong value-added off ering and customer focus.
For the fi scal year 2010, SSH estimates its net sales to grow from 2009 and expects the net result to be positive.
| 2009 | 2008 Change, % | ||
|---|---|---|---|
| Net sales (MEUR) | 8.8 | 8.5 | 3.4 |
| Operating profi t/loss (MEUR) | –1.5 | –2.2 | 31.8 |
| % of net sales | –17.1 | –25.9 | |
| Profi t/loss before taxes (MEUR) | –1.2 | –1.5 | 22.9 |
| Profi t/loss (MEUR) | –1.2 | –1.8 | 33.3 |
| Return on equity, % | –12.4 | –10.2 | |
| Return on investment, % | –10.8 | –7.4 | |
| Liquid assets | 6.4 | 16.5 | |
| Gearing (%) | –144.2 | –112.8 | |
| Equity ratio (%) | 71.4 | 91.3 | |
| Earnings per share (EUR) | –0.04 | –0.06 | |
| Shareholders' equity per share (EUR) | 0.15 | 0.51 |
EUR million 0.4 0.0 -0.4
OPERATING PROFIT PER QUARTER 2009
OPERATING PROFIT EUR million
By the end of 2009, SSH had 64 employees, 47 were working at the company head offi ce in Helsinki, Finland, 2 were working in the other SSH offi ces in Europe and 15 in the offi ces in the US. The employees represent 13 nationalities.
At the end of the period, 58 per cent of the employees were working in R&D, 22 per cent in sales and marketing, and 20 per cent in administration.
SSH's business operations are guided by a common set of values developed by the employees of SSH. These values are: Select, Solve and Honor. SSH focuses on serving its selected customer segments by solving their data security problems within selected solution areas. SSH aims at developing and sustaining long-term cooperation with the customers based on mutual respect and honoring commitments to customers. The company values lead the way and guide the SSH employees in daily decisions and operations.
One of the most important success factors of SSH, and one of the true core competencies of the company, is the capability to innovate and to develop eff ective technical solutions to the customers' data communications security problems. Most of the jobs require higher education, and 87 percent of the SSH employees have a university degree. Innovative solutions to customers' reallife critical problems are of utmost importance to SSH.
The company endeavors to increase and maintain its innovation capability by investing in employee wellbeing and continuous personal development. Twice a year, everyone has development discussions with the immediate superior. In these discussions, the personal objectives and development plans are composed for every employee. SSH uses job rotation, internal training and external courses, as well as enhancements to the job descriptions as means of maintaining and developing employee competencies.
In 2009 SSH started a new employees' wellbeing program called "Bear Club". The Bear Club activities are arranged together with our occupational health care services and the pension insurance company, who carries out annual employee surveys. The goal of the Bear Club is to increase SSH staff 's fi tness and good health by promoting physical activities in daily life. We want to increase our employees' wellbeing at work and help lower their stress levels.
In November 2009, SSH carried out the annual personnel satisfaction survey. The purpose of the survey was to map the level of occupational wellbeing of our personnel. The target was to fi nd out the strengths of the organization, as well as the development needs for improving job satisfaction on personal and on company level.
Feedback to this web-based questionnaire indicated a high overall job satisfaction. As the most positive aspects the employees named physical wellbeing, work atmosphere, social support and meaningful work.
Areas that could benefi t from further development included how to improve internal communication, how to share the work load more evenly between employees, and how to better develop the employees' ability to cope with busy work and to adapt to changes. The survey results were analyzed and the development areas and actions were defi ned for 2010 accordingly.
EMPLOYEE DISTRIBUTION by business area
R&D 58% Sales and Marketing 22% Management and administration 20%
SSH holds two strong brands – the SSH corporate brand and the SSH Tectia product brand.
The SSH corporate brand is rooted in the initial innovation of the Secure Shell protocol made by the company's founder in the mid-1990s. The SSH brand is associated with the company's expertise the development of software for secure fi le transfers, secure remote administration, and secure application connectivity.
Since the introduction of the SSH Tectia product brand fi ve years ago, we have expanded our product portfolio with real-time software solutions for the automation, management, and governance of secure fi le transfers. In 2009, we introduced several new solutions that improve our customers' ability to establish the Circle of Trust through which they can securely exchange confi dential information with their various stakeholders.
The Americas have been our main source of sales revenue to date. Recently, however, the globalization of businesses, the proliferation of industry-specifi c security standards, and increasing network security breaches have accelerated the market growth in the EMEA and APAC regions.
To better address the growing demand in these markets, we recruited a head of sales for the EMEA region and made a decision to open our own sales and customer services offi ce in the APAC region during 2010.
We also recruited new sales professionals, revised our marketing strategies, and established key account teams to increase our customer knowledge throughout the organization. The new solutions that we introduced multiply our addressable target markets in terms of industries and size of end-customers.
Thanks to our unique ability to manage real-time software requirements in large and complex networks, we have been able to acquire a wide customer base including many of the world's largest enterprises on the Global 1000 list and public organizations.
Many of our customers deploy SSH Tectia software throughout their global networks consisting of heterogenous hardware and software environments. They also often use SSH Tectia for the centralized management of their enterprise security infrastructure. The versatility of SSH Tectia software helps customers drive down the total cost of ownership.
To improve our interaction with customers and serve large customers in both the private and public sectors more eff ectively, we launched a key account management program in 2009. The positive feedback we received, together with the volume of new license orders, encourage us to develop the program further during 2010 and beyond.
Additionally, we also continue selling SSH Tectia software to customers with more limited needs for real-time security through our own sales professionals and our channel partners.
Our channel sales network consists of 70 partners, and includes large distributors such as Patriot Technologies and Lyme Computer Systems in the Americas, Quantiq International in Asia, and DIT in Japan.
We revised our channel strategy to match our expanding offering portfolio. We also developed a channel partner certifi cation program to manage and support our channel partners.
Our new value-added security software solutions have shorter selling cycles and require less engineering resources for evaluation and deployment than our infrastructure products. Our certifi ed channel partners will primarily target Global 10,000 companies. Together with our distribution partners, we aim to increase collaboration with large integrators such as IBM, Fujitsu, and Hitachi that off er security solutions as a part of their outsourcing services to large enterprises.
SSH Communications Security operates on a global basis. We have offi ces in Europe and the US, while a network of our channel partners has provided customer support throughout the Asia Pacifi c region. We will extend our presence in the APAC region in 2010 to off er better regional support for our Asian partners and customers.
Most of our large key accounts are multinational organizations, with demanding global environments that need to be able to rely on our support capabilities, regardless of the time zone. Accordingly, our key account teams serving these customers are also global, with sales, customer support, product development, and business stream management personnel based at offi ces
around the world working together to provide customers with the best solutions for their needs. This key account team approach ensures that we can react rapidly in today's high-velocity business environment and that the best possible expertise and knowhow is always available to our customers.
Building trust with our customers involves continuous, open, and honest communication. When our customers trust us it is possible for us to learn to understand their needs and business challenges, and to allocate the needed resources to fi nd the right solution for their specifi c needs, involving customers in our virtual teams wherever appropriate. This helps create a rewarding working environment for everyone involved and helps us build shared success stories with our customers.
A rapidly deployable solution that was developed to close quickly an audit gap for an American retail company, for example, can provide the inspiration for an infrastructure that dramatically reduces the data exchange costs of an Asian health care provider. Our ability to disseminate quickly this type of experience throughout our organization, while respecting the integrity and confi dentiality of our customer environment specifi cs, is one of our most valuable assets as we extend our reach into new markets.
NET SALES PERFORMANCE EUR million
One of our key technology guidelines for 2009 has been the strategic shift from a strong security protocol provider towards off ering business functionalities and business value. We continued development of our strong infrastructure products, and introduced new Value Driven Security off ering that facilitates day-today operations and off ers versatile and trusted products that are easy to use for our enterprise customers.
In essence, we have transformed our approach from providing technology to IT people to providing solutions for our customers' business end-users, such as auditors, compliance managers, business process owners and many more so they can do their daily tasks better, faster, and more cost effi ciently – and more securely.
We continued to work closely with our key customers during 2009 to improve and develop our core Secure Shell products – SSH Tectia Client and SSH Tectia Server – which form a reliable security communication infrastructure between thousands of servers located at the data centers of SSH's largest customers, many of which are Fortune 500 companies.
The importance and demand for secure and managed fi le transfers continue to grow due to legislative mandates to eliminate FTP and other unsecured transfer methods, and increasing movement from physical delivery to internet communications for faster and more cost-effi cient operations.
The SSH Tectia ConnectSecure success story continued, thanks to its unique ability to convert unsecured FTP to SFTP on-the-fl y, and proved the key to winning some of the company's biggest deals in 2009.
Some studies estimate that unsecured FTP based fi le transfers are still in use in approximately two out of three large companies in their day-to-day data transfers. SSH is committed to help our customers on their way towards more secure and manageable transfers.
In the summer of 2009, we introduced new MFT (Managed File Transfer) products: SSH Tectia MFT Events and SSH Tectia MFT Auditor.
SSH Tectia Events is specifi cally engineered to handle the automation of SFTP transfers and related actions, and provides a fast-to-implement and easy-to-use scheduling and task automation framework that eliminates the need to write complicated scripts for task triggering.
We introduced SSH Tectia MFT Auditor to give IT operations and management a powerful tool to monitor SFTP transfers from a central location and to signifi cantly improve our customers' visibility to their fi le transfer environment.
These new products also refl ect our more open attitude to the whole of the Secure Shell market, as all our new added-value products work with and towards any Secure Shell products. SSH Tectia MFT Event can schedule SFTP transfers and command sets for hosts using SSH Tectia, OpenSSH, or other commercial or open-source Secure Shell tools; while SSH Tectia MFT Auditor can acquire information from any SFTP fi le transfer, regardless of the provider of the Secure Shell version. This move towards more open functionality makes it much easier to use SSH Tectia products without having to replace an entire environment.
In addition to the decision to enter the MFT market, another important factor contributing to SSH's turnaround in 2009 was its technology partnerships. We concluded exclusive OEM and collaboration agreements with three European software houses and developers, with the target to jointly and cost-effi ciently develop and distribute security enhancing solutions to enterprise customers.
We further wanted to leverage the hugely popular security infrastructure of SSH (Secure Shell) and off er easier auditing of connections, more robust controlling and logging for regulatory needs, for instance to meet the PCI-DSS requirements. Also, we learned from our customers that while they have the requirement to secure the connectivity or fi le transfers by encryption, they are also required to inspect the same connectivity or fi le transfer against malicious content before the connection is allowed inside the fi rewall. How do you inspect the content when you are using the strongest software encryption enabled?
This is solved by SSH Tectia Guardian, a unique, market-leading product for controlling, auditing, and inspecting access to selected hosts. SSH Tectia Guardian addresses real-time inspection needs by allowing tightly controlled end-to-end security using Secure Shell and SFTP, and enabling content inspection on the fl y for example to protect credit card servers from unauthorized access.
| PCI-DSS Compliance Area | Req # |
The Payment Card Industry Data Security Standard (PCI-DSS) Requirements | SSH Tectia Solution Support for PCI-DSS |
|---|---|---|---|
| Build and Maintain a Secure | 1 | Install and maintain a fi rewall confi guration to protect cardholder data | |
| Network | 2 | Do not use vendor-supplied defaults for system passwords and other security parameters | |
| Protect Cardholder Data | 3 | Protect stored cardholder data | |
| 4 | Encrypt transmission of cardholder data across open, public networks | ||
| Maintain a Vulnerability | 5 | Use and regularly update anti-virus software | |
| Management Program | 6 | Develop and maintain secure systems and applications | |
| Implement Strong Access Control | 7 | Restrict access to cardholder data by business need-to-know | |
| Measures | 8 | Assign a unique ID to each person with computer access | |
| 9 | Restrict physical access to cardholder data | ||
| Regularly Monitor and Test | 10 | Track and monitor all access to network resources and cardholder data | |
| Networks | 11 | Regularly test security systems and processes | |
| Maintain an Information Security Policy |
12 | Maintain a policy that addresses information security |
Supported partially by SSH Tectia Solution PCI-DSS Compliance can be achieved fully with Software PCI-DSS compliance cannot be achieved by software only
Together with other SSH Tectia products, SSH Tectia Guardian off ers one of the most complete solutions in the market for PCI-DSS (Payment Card Industries Data Security Standards) compliance.
At the end of 2009, we launched SSH Tectia MFT Portal that off ers a secure fi le portal with a web access enabling users to access their fi les virtually anywhere, without needing specifi c software on the computer they are using.
In addition to making things easier for users, SSH Tectia MFT Portal is also great from a corporate IT administration standpoint, as it provides seamless, streaming integration to fi le servers at the corporate back-end using SFTP, FTP/S, POP, SMTP, or even native database connectivity – without exposing their fi le servers to the Internet.
SSH Tectia MFT Portal is targeted to serve business users, fi eld support, sales teams, partners, and various business groups who need to share fi les and information securely, yet conveniently – anywhere where there is a web access available.
SSH Tectia Server for IBM z/OS has been a strong product on IBM mainframes since 2005, and has been a spearhead product in winning some of SSH's largest accounts since then. The introduction of the SSH Tectia MFT z/Optimizer strengthens SSH's off ering in IBM mainframe fi le transfers and forms an integral part of SSH's MFT strategy.
Using SSH Tectia z/Optimizer, companies can replace proprietary Connect: Direct technology with open-standard SFTP by reading existing jobs and converting them to SFTP on the fl y, thus enabling signifi cant savings in licensing and support costs. We expect SSH Tectia z/Optimizer to bring customers a fast ROI with payback times of one year or less.
SSH intends to take a market making position by developing new web and mobile technologies and by creating new product bundling that matches the needs of various industries and their operations more eff ectively.
The market is clearly becoming ripe for SaaS (Software as a Service) off erings, and we will responded to this by off ering the SSH Tectia MFT Portal web fi le transfer portal, featuring integrated 2-factor authentication using our new SSH Tectia MobileID. These two new products bring to the market the best combination of security and user-convenience, while avoiding the most common security issues linked to the anyplace-anytime nature of the web.
SSH Tectia MFT Events, on the other hand provides a powerful fi le transfer automation framework working in perfect unison with SSH Tectia MFT Portal in providing up-to-date logistics for fi le management and provisioning. You would always have the latest data available, for example marketing brochures for partners, daily campaign prices at supermarket chains, or the warehouse and supply chain updates. All delivered timely, securely, guaranteed, and with notifi cations sent to the desired destinations.
The fi rst customer installations of this new technology are now under way, and SaaS providers are preparing their operations to be able to off er MFT Portal off erings very rapidly.
We continue our commitment to move towards more value generating security solutions for our customers to facilitate them in their real-time operations.
SSH Tectia Client SSH Tectia Server SSH Tectia Server for IBM z/OS SSH Tectia Server for Linux on IBM z (NEW in 2009)
SSH Tectia ConnectSecure SSH Tectia MFT Events (NEW in 2009) SSH Tectia MFT Portal (NEW in 2009) SSH Tectia MFT z/Optimizer (NEW in 2009)
SSH Tectia MFT Auditor (NEW in 2009) SSH Tectia Manager SSH Tectia Guardian (NEW in 2009)
The SSH Group comprises SSH Communications Security Corp (SSH) and its subsidiaries. SSH Communications Security Corp is registered in Helsinki, Finland and is a publicly listed company. Its subsidiaries are SSH Communications Security, Inc. (USA) and SSH Operations Ltd that operates in the UK and Germany.
SSH abides by its Articles of Association as well as principles of sound corporate governance, and high ethical standards in its governance and decision-making. The company complies with the Finnish Companies Act and securities market legislation, the rules of the NASDAQ OMX Helsinki Ltd, and the joint recommendations of the NASDAQ OMX Helsinki Ltd, the Helsinki Chamber of Commerce, and the Confederation of Finnish Industries regarding corporate governance of publicly listed companies.
The ultimate decision-making power at SSH is vested in the shareholders' meeting. The Annual General Meeting is held within six months of the completion of the company's fi scal year, at a time decided by the Board. The shareholder's meeting decides the number of members of the Board of Directors, and appoints the members. Additionally, under the Finnish Companies Act, the Annual General Meeting has the authority to amend the company's Articles of Association, adopt the fi nancial statements, approve the amount of dividend, and to select the company's auditors. Each SSH share conveys one vote at the shareholder's meeting.
In accordance with the company's Articles of Association, the Annual General Meeting appoints three to eight members to the Board of Directors. Their term of offi ce ends with the closing of
the next Annual General Meeting following their appointment. The Board has a quorum when more than half of its members are present. The company's Articles of Association do not restrict the members' terms in offi ce or present any specifi c selection criteria for the members. The Board elects a chairperson from among its members.
SSH's Board of Directors is responsible for the company's strategic policies, and the appropriate organization of business operations and administration. The Board of Directors acts in the company's interests at all times. In addition to the tasks and responsibilities provided by the Finnish Companies Act and the company's Articles of Association, in accordance with its agenda, SSH's Board of Directors:
The Annual General Meeting held on 4 March 2009 elected Juho Lipsanen (chairman), Tomi Laamanen, Pyry Lautsuo, Juha Mikkonen and Tatu Ylönen as members of the Board of Directors.
born 1961, M.Sc. (Economics) Board member since 2009, Chairman of the Board 2009 Partner of ValCrea AG
Juho Lipsanen is the chairman of the board or a board member in several Nordic companies. He has been the CEO of TeliaSonera Finland in 2005–2008 and the CEO of Alma Media in 2002– 2005. In 1988–2002 he held various positions at ABB Ltd, among them the CFO of ABB automation and the CEO of ABB New Ventures. Owns 21,865 SSH shares.
born 1946, M.Sc. (Technology) Board member since 2008 IBM Country General Manager in Finland between years 1997–2006
Pyry Lautsuo has 30 years of experience with versatile international tasks in technology industries. In addition, he holds board memberships in several Finnish and international companies, and in business and industries organizations. Owns 12,500 SSH shares.
Tomi Laamanen is Professor at the Institute of Strategy and International Business at the Helsinki University of Technology. He has been a Board member or Advisory Board member of several Finnish technology companies and professional associations. He has acted as a strategic adviser to companies operating in the banking, information and communications, media, metals and machinery, pharmaceuticals, and pulp and paper sectors. Owns 124,000 SSH shares.
born 1962, M.Sc. (Economics) Board member since 2008 Managing Director of Vicus Limited, a real estate development and investment company
Juha Mikkonen has over 20 years of experience in investments and banking. He is the chairman in the board of directors at investment company Assetman Limited. Owns 4,003,000 SSH shares.
Tatu Ylönen born 1968, LicSc (Tech) Board member since 1995
Major shareholder, CTO until September 30, 2004
Tatu Ylönen developed the Secure Shell technology for remote access and founded SSH Communications Security Corp. He is an internationally respected network security expert. Tatu Ylönen owns directly 14,510,149 SSH shares and 44,254 shares indirectly through Tatu Ylönen Oy.
The majority of the Board members have no dependence on the company. Juho Lipsanen, Tomi Laamanen and Pyry Lautsuo are deemed to be independent Board members. Not independent of the company are the Board members Juha Mikkonen and Tatu Ylönen. Juha Mikkonen is the Chairman of the board of directors of Assetman Oy, an investment fi rm that holds more than 10 percent of the total number of the SSH shares. Tatu Ylönen owns directly and indirectly through his company Tatu Ylönen Oy 48,7 per cent of the total number of SSH shares.
The Board works to a predetermined agenda. The themes to be considered in future meetings, and the Board's agenda, are planned at the start of each new term of offi ce. During the spring, the agenda is focused on outlining strategic policies and updating the corporate strategy. In the autumn, the focus is on tactical matters, and in November the budget for the following year is approved. In the beginning of the year, meetings focus on preparations for the Annual General Meeting.
The members of the Board receive regular updates on the company's business and fi nancial performance. In the Board meetings, the CEO, the Chairman of the Board or another person appointed by the CEO, presents business to be considered by the Board. Each Board meeting considers a progress report provided by the CEO in line with the standard agenda. All Board meetings also monitor sales performance, market development and the company's fi nancial performance. The company's General Counsel acts as secretary to the Board.
The SSH Board of Directors convened 13 times in 2009. The average attendance rate of Board members was 99 percent.
The Board evaluates its operations and processes to increase effi ciency and quality. An internal self-evaluation is conducted once a year.
In a corporation, the proper functioning of the administrative and control systems requires that the work of the Board of Directors be organized as eff ectively as possible. The preparation of matters for which the Board of Directors is responsible can be made more eff ective through setting up committees comprising Board members. The Board of Directors will then make its fi nal decisions based on the recommendations of the committees. SSH's Board of Directors has appointed an Audit Committee and a Nomination and Remuneration Committee.
Tomi Laamanen acts as the Chairman and Pyry Lautsuo acts as a member of the Audit Committee. As the CEO, the CFO and the auditor participate in the committee meetings, the Board has deemed two Board members to be suffi cient in the Committee. The Committee convenes a minimum of twice a year, and the Board has confi rmed the principal responsibilities of the Audit Committee to be as follows:
The Nomination and Remuneration Committee plans compensation and reward schemes for the management and employees. Juho Lipsanen acts as the chairman and Juha Mikkonen and Tatu Ylönen act as members of the committee.
Both committees of the Board of Directors convened twice in 2009, and the average attendance rate of the committee members was 100 percent.
SSH's Board of Directors appoints and releases the CEO and decides the terms of his/her service contract. The CEO is in charge of the company's operative management in accordance with the Finnish Companies Act and the instructions and authority provided by the Board of Directors.
During the second quarter 2009, SSH re-organized its operations and the Group Management Team was renewed. The Group Management Team supports the CEO in managing and developing SSH Group, and the members of the Group Management Team report to the CEO. The Group Management Team meets regularly and the meetings are chaired by the CEO. All issues addressed in the meetings and the related decisions are recorded in the meeting minutes.
Jari Mielonen born 1960, M.Sc. (Economics) President and Chief Executive Offi cer
Jari Mielonen joined SSH from Sanako Corporation, a global educational technology company; prior to that, he was e.g. CEO of SysOpen Digia Plc (Digia Plc), taking the software and mobile technology company from a startup phase to a public company with sales of 100 million euros. Earlier, he was CTO of Sonera Telecommunications (TeliaSonera), being responsible for its technology development and participating in new business development, and Director of Software Technology at ICL Data (Fujitsu), with responsibilities including e.g. software development processes. Owns SSH shares indirectly through SSH Management Investment Oy which holds 1,433,750 SSH shares jointly between the CEO and the Group Management Team.
The CEO's retirement age and determination of pension comply with standard rules under the Employees' Pension Act. The period of notice for the CEO is six months. Severance payment is equivalent to twelve months' salary.
Tero Harjula born 1963, BBA
(International Business) Executive Vice President, Value Driven Security and R&D
Tero Harjula is responsible for initiating and developing strategic alliances, product partnerships, and new product and solution concepts within SSH's target market segments. Prior to joining SSH, Tero Harjula held the position of Director of Financial Institutions at Sonera SmartTrust, and he has held several managerial positions in leading international fi nancial institutions. During 1993–2000 he was working in Luxembourg as Vice President of Applications and Services Development at Citibank, and as Manager of Business and Systems Development at Dailchi Kangyo Bank, where he was in key roles in large IT projects, application implementation, and operations development. Owns SSH shares indirectly through SSH Management Investment Oy which holds 1,433,750 SSH shares jointly between the CEO and the Group Management Team.
Mikko Karvinen born 1976, M.Sc. (Economics) Executive Vice President, Chief Financial Offi cer (CFO)
Mikko Karvinen is responsible for SSH's global fi nancial management and ICT. Prior to joining SSH, Mikko Karvinen was CFO at Automaster Oy. Previously, he held several fi nancial management positions at Vaisala Oyj both in Finland and the USA during 2001– 2007. Owns SSH shares indirectly through SSH Management Investment Oy which holds 1,433,750 SSH shares jointly between the CEO and the Group Management Team.
Pekka Rauhala born 1960, LLM, MBA Executive Vice President, General Counsel and Chief Administrative Offi cer
Pekka Rauhala is responsible for Corporate Governance, Human Resources and Business Support including worldwide responsibility to oversee contracts, IPRs and licensing activities at SSH. He also acts as the secretary to SSH's Board of Directors and serves as the President of SSH Operations Oy (the subsidiary operating in Germany and in the UK) and SSH Communications Security, Inc. (the US subsidiary). Prior to joining SSH, Pekka Rauhala served Tellabs Inc., Jaakko Pöyry Group and Helsinki Chamber of Commerce in several key in-house counsel positions during 1988–2000. Owns directly 20,000 SSH shares and 22,500 stock options and additionally, owns SSH shares indirectly through SSH Management Investment Oy which holds 1,433,750 SSH shares jointly between the CEO and the Group Management Team.
born 1965, D.Sc. (Economics) Executive Vice President, Chief Operating Offi cer for Customer and Market Operations
Jouni Leinonen is responsible for SSH's customer and market operations globally. Prior to joining SSH, Jouni Leinonen was General Manager and VP of Operations at PacketVideo Corporation. Previously he has worked for several IT and software companies in Finland, the UK and Japan. Owns SSH shares indirectly through SSH Management Investment Oy which holds 1,433,750 SSH shares jointly between the CEO and the Group Management Team.
The shareholders' meeting confi rms annually in advance the emoluments payable to the members of the Board of Directors. The Board of Directors confi rms the salary and other benefi ts of the CEO, and also determines the salaries and benefi ts payable to the members of the Group Management Team.
Forms of remuneration for the Group Management Team and the CEO involve a performance-related bonus and a new sharesbased incentive plan established on 20 October 2010. For the implementation of the share-based incentive plan, the CEO and the Group Management Team have established a limited liability company SSH Management Investment Oy. The incentive plan includes an agreement on SSH Management Investment Oy's shareholdings and on a loan agreement for fi nancing the purchase of SSH shares by SSH Management Investment Oy. The incentive plan will be valid until fall 2013, at which time the plan is intended to be dissolved in a manner to be determined later. Earlier, stock option plans have been issued to the key employees (see more information about stock option plans below in section "Stock Option Rights"). The company has no other remuneration practices, nor does it have any diff ering pension arrangements for the CEO or other senior management.
The bonus scheme for the CEO and the Group Management Team is based on the company's net sales and EBIT, and on personally defi ned qualitative and quantitative targets. The weighting of the said corporate fi nancial indicators represents 70 percent of the overall targets. The targets for the company's senior management are fi xed for one year at a time.
The Board of Directors decided on 20 October 2009 on a share issue against payment directed to SSH Management Investment Oy on the basis of authorization granted by the Annual General Meeting of the Shareholders on 4 March 2008 in derogation from the shareholders' pre-emptive subscription rights. A total of 1,100,000 new SSH shares was off ered for subscription by SSH Management Investment Oy in the share issue. The subscription price of the SSH share was 0.72 EUR. SSH Management Investment Oy purchased further 337,500 SSH shares from the stock markets during December 2009.
Remunerations to the Board of Directors: Juho Lipsanen EUR 1,400/month Tomi Laamanen EUR 1,400/month Pyry Lautsuo EUR 1,400/month Juha Mikkonen EUR 1,400/month Tatu Ylönen (no salary or remuneration)
The CEO's salary and other benefi ts in 2009 were EUR 227,040. The number of shares and stock options held by the members
of the Board of Directors, CEO and members of the Group Management Team are included in their personal profi les.
SSH has established its own insider guidelines that comply with the Guidelines of Insiders approved for public companies by the NASDAQ OMX Helsinki Ltd. The company maintains a public insider register of the public permanent insiders and the persons closely associated with the said permanent insiders' share and stock option holdings in the SIRE system of the Euroclear Finland Ltd. The public insider register and the principles regulating trading by insiders are available at the company's website and at the company's headquarters.
The public permanent insiders of the company are the members of the Board, the CEO, the members of the Group Management Team, and the auditors. The number of public permanent insiders is currently 11.
The company maintains also a company-specifi c insider register of persons who by virtue of their position regularly receive insider information or could have an opportunity to gain access to insider information through the nature of their work and who are not in the public insider register. These persons include the assistants to the Group Management Team, the sales management, the product management, the fi nancial administration, and the management of information services. In addition, any external legal consultants used by SSH belong to the company-specifi c insider register.
Insiders belonging to the public or company-specifi c insider register are not allowed to trade in securities issued by the company for a period of 21 days prior to the announcement of an interim report or fi nancial statement bulletin (closed window).
The said permanent insiders are allowed to trade in securities issued by the company without a prior approval of the company's General Counsel only for a period of 21 days after the announcement of the interim report and the fi nancial statement bulletin of the company (open window).
Under circumstances where the company is preparing an event that may have a signifi cant impact on the stock price, a project-specifi c insider register is established. Also the projectspecifi c insider register will be based on the insider guidelines of the NASDAQ OMX Helsinki Ltd. Company's General Counsel is responsible for guidance and supervision of the insider matters.
The aim of internal administration and risk management is to ensure effi cient, appropriate operations, dependable fi nancial information and compliance with regulations and internal processes. SSH's Board of Directors ensures that the company has defi ned principles of internal administration, and that the company monitors the eff ectiveness of the administration. The ultimate responsibility for the company's accounting and supervision lies with SSH's Board of Directors. The Board also approves SSH's risk management and reporting procedures and monitors the adequacy, appropriateness and effi ciency of the company's administrative processes.
The CEO, assisted by other operative management, is responsible for the practical arrangements for accounting and administration mechanisms and for compliance with laws, regulations, company processes, and the Board's decisions. To support its operations, the company has a number of rules and guidelines. Process and quality work ensures that there is a description of all processes, and that the various process interfaces are properly defi ned and documented. Processes are also intended to ensure that everyone in the organization knows how the company works, and how the work of each individual is integrated into the company's operations. Supervisory actions ensure compliance with rules, guidelines, and processes.
The company sets annual fi nancial targets in connection with the budget and constantly tracks target achievement. The company's organizational structure supports effi cient planning, implementation, and monitoring of business operations.
Risk management is a part of SSH's internal administration. It aims to ensure that major risks aff ecting the company's business and operating environment are identifi ed and monitored. Since the United States is the main market area, any risks including currency risks associated with that country are considered to be signifi cant. Other major risks are related to product technology, competitor activities and profi tability. Property, business interruption and liability risks are covered by insurance.
SSH's main market area is the United States. To reduce this market dependency risk, the company is actively seeking to expand operations in Europe. Sales operations are supported by the company's own legal unit, which, through continuous management of contracts, seeks to reduce the risks related to the company's business operations. SSH protects its copyrights and trademarks through sales agreements. The company has also an active patent policy to protect its technology. SSH encourages its employees to make and protect inventions.
SSH has a process in place whereby any network security risks found in the company's products are promptly reported to senior management. Corrections are made immediately and updates are supplied to customers without delay. The company's critical information systems are secured and operations can continue, even in the event of an external catastrophe. SSH actively uses its own products to protect the information system architecture. Encryption and strong authentication protect the company's confi dential data communications from both internal and external threats.
Financial risk management is described separately in the Financial Statements section of the annual report. SSH provides no fi nancing for its customers other than by granting normal payment periods. The company has a strong balance sheet and no signifi cant long-term liabilities. Asset managers invest the company's cash reserves in accordance with a policy approved by the Board of Directors: almost all the assets under management are invested in fi xed income funds. Since most of SSH's invoicing
takes place in US dollars, the company is hedged against exchange rate risks.
Because of the relatively small size of the company, SSH has no separate internal audit organization. The continuous monitoring by the auditors in conjunction with the interim reports also aims to assess and develop the eff ectiveness of risk management, monitoring and administration processes, and to support the Board with its monitoring responsibility.
The company's auditors provide shareholders with a report, as required by law, in conjunction with the annual fi nancial statements. The principal aim of the statutory audit is to verify that the fi nancial statements give a true and fair view of the company's fi nancial performance and situation for each fi scal year. In addition to the Auditor's report provided with the annual fi nancial statements, the auditors report on their fi ndings to the company's Board of Directors in connection with the interim reports.
In accordance with the Company's Articles of Associations, SSH has one Principal Auditor authorized by the Chamber of Commerce, and one Deputy Auditor. If a fi rm of Authorized Public Accountants is appointed as the principal auditor, there is no need to appoint a deputy auditor. The auditors are appointed at the Annual General Meeting. In 2009, SSH's auditor was PricewaterhouseCoopers Oy with Henrik Sormunen APA as the principal auditor.
In 2009, the auditor's fees were EUR 33.500 in the Group and EUR 27.500 in the parent company. Other fees charged by the fi rm of auditors were EUR 49.103 in the Group and EUR 20.500 in the parent company. Other fees were mostly related to tax advice.
SSH aims to give the markets a clear view of the company's operations and fi nancial performance in accordance with the regulations on the disclosure obligation for publicly listed companies. The company prefers electronic forms of communication. All stock market releases, other investor information, and the latest company information are available at the SSH website.
SSH Communications Security Corp's Annual General Meeting (AGM) will be held in the 2nd fl oor Auditorium at Valimotie 17– 19, Helsinki, Finland, on Wednesday 3 March 2010 at 10:00 am.
Shareholders registered by Friday 19 February 2010 in the shareholders' register maintained by Euroclear Finland Ltd, and who by 4:00 pm Finnish time on Friday 26 February 2010 have notifi ed the company of their intention to attend the meeting are eligible to attend the AGM.
Shareholders wishing to attend the AGM can register either by a) e-mail to [email protected], b) fax to +358 20 500 7001 or c) mail to SSH Communications Security Oyj, AGM, Kumpulantie 3, FI-00520 Helsinki, Finland
Any proxy, entitling the holder to exercise a shareholder's voting right at the AGM must be submitted to SSH by 4:00 pm on Friday 26 February 2010.
SSH Communications Security Corp will publish the following fi nancial reports during 2010:
| Financial statements bulletin for 2009 | 3 Feb 2010 |
|---|---|
| Annual Report 2009 | Week 8 |
| Interim Report 1 January to 31 March 2010 | 21 Apr 2010 |
| Interim Report 1 January to 30 June 2010 | 21 Jul 2010 |
| Interim Report 1 January to 30 September 2010 | 20 Oct 2010 |
All fi nancial reports are published in Finnish and English as stock exchange releases and on the SSH website at www.ssh.com.
The Annual Report is available in English on the SSH website, and can be downloaded as PDF fi les.
SSH publishes all stock announcements and maintains shareholder information on the company website www.ssh.com. You can also submit questions to SSH about its operations to ir-team@ ssh.com.
| % | Shares | |
|---|---|---|
| Ylönen Tatu Juhani | 48.53 | 14,510,149 |
| Assetman Oy | 13.38 | 4,000,000 |
| Kivinen Tero | 4.91 | 1,467,600 |
| SSH Management Investment Oy | 4.80 | 1,433,750 |
| Keskinäinen Eläkevakuutusyhtiö Ilmarinen | 1.62 | 483,450 |
| Nordea Pankki Suomi Oyj | 1.24 | 370,020 |
| Laakkonen Mikko | 0.48 | 142,187 |
| Laamanen Tomi Matti Mikael | 0.41 | 124,000 |
| Poutanen Jukka | 0.39 | 116,000 |
| Mäkinen Antti Vilho Juhani | 0.30 | 90,000 |
| Total | 76.06 | 22,737,156 |
| Of which nominee-registered | 1.36 | 407,122 |
According to the Company's Articles of Associations, the share capital of SSH Communications Security Corp is a minimum of EUR 600,000 and a maximum of EUR 2,400,000, within which limits it can be increased or reduced without altering the Company's Articles of Associations.
The nominal share value is EUR 0.03 and hence the minimum number of shares is 20,000,000 and the maximum number of shares is 80,000,000.
SSH has one class of shares, and each share entitles its holder to one vote at the shareholders' meeting. The company's registered and fully paid share capital was EUR 896,953.47 consisting of 29,898,449 shares, on 31 December 2009.
The SSH shares are quoted at NASDAQ OMX Helsinki Ltd. The shares have been entered in the book-entry securities system that is maintained by Euroclear Finland Ltd. The offi cial list of SSH shareholders is also kept by Euroclear Finland Ltd.
The SSH Annual General Meeting on 4 March 2009 authorized the Board of Directors to decide until the next Annual General Meeting, however, no later than 30 June 2010, on issuing a maximum number of 5,500,000 shares in one or more new share issues, and on issuing special rights to share subscription defi ned in the Finnish Companies Act Chapter 10, section 1, with or without subscription rights to shareholders.
The Board has exercised this authorization on 20 October 2009 when issuing SSH shares to SSH Management Investment Oy as defi ned in section "Corporate Governance" under "Remuneration and Incentive Plan".
| Number of shares |
Share capital EUR |
|
|---|---|---|
| Dec. 31, 2007 | 28,536,112 | 856,083 |
| Stock option subscriptions 2008 | 47,663 | 1,430 |
| Dec. 31, 2008 | 28,583,775 | 857,513 |
| Stock option subscription 2009 | 146,181 | 4,385 |
| Share issues directed to Management incentives |
1,168,493 | 35,055 |
| Dec. 31, 2009 | 29,898,449 | 896,953 |
| Type of sector | Number of shares |
Percentage of shares and votes, % |
|---|---|---|
| Non-banking corporate sector | 6,045,076 | 20.22 |
| Financial and insurance companies and institutions |
450,524 | 1.51 |
| Public sector organizations | 495,450 | 1.66 |
| Non-profi t organizations | 81,550 | 0.27 |
| Households | 22,757,579 | 76.12 |
| Foreign shareholders | 68,270 | 0.23 |
| Total | 29,898,449 | 100.00 |
CAPITALIZATION AND VOLUME OF SHARES TRADED
Market capitalizations, MEUR Volume of shares traded, million shares
| Shares | Number of Owners | Percentage of owners, % | Number of shares | Percentage of shares, % |
|---|---|---|---|---|
| 1 – 50 |
1,798 | 34.52 | 87,031 | 0.29 |
| 51 – 100 |
411 | 7.89 | 40,121 | 0.13 |
| 101 – 500 |
1,144 | 21.96 | 357,442 | 1.20 |
| 501 – 1,000 |
652 | 12.52 | 564,627 | 1.89 |
| 1,001 – 5,000 |
926 | 17.78 | 2,263,619 | 7.57 |
| 5,001 – 10,000 |
159 | 3.05 | 1,233,758 | 4.13 |
| 10,001 – 50,000 |
102 | 1.96 | 2,098,308 | 7.02 |
| 50,001 – 100,000 |
8 | 0.15 | 606,387 | 2.03 |
| 100,001 – 500,000 |
5 | 0.10 | 1,235,657 | 4.13 |
| 500,001 – 1,000,000 |
0 | 0 | 0 | 0 |
| 1,000,001 – 5,000,000 |
3 | 0.06 | 6,901,350 | 23,08 |
| 5,000,001 – 999,999,999 |
1 | 0.02 | 14,510,149 | 48.53 |
| Total | 5,209 | 100.00 | 29,898,449 | 100.00 |
| of which nominee-registered | 7 | 1.36 | 407,122 | 1.36 |
At the end of 2009, SSH had a total of 5 209 shareholders. 407 122 shares (accounting for 1.36% of shares) were nomineeregistered. The holdings by the ten largest shareholders accounted for approximately 76.05% of the company's shares and voting rights. Foreign shareholding represented 0.23%, of which 65% was based on direct holdings and 35% on nominee-registered shares. SSH holds no treasury shares. SSH's largest shareholder is Mr. Tatu Ylönen, holding 48.7% of the company shares based on personal holdings and holdings through a company wholly owned by him. On 31 December 2009, the company's freely tradable shares accounted for 95.2% of all shares.
The members of the SSH Board of Directors and the company CEO and the Group Management Team owned directly or indirectly through their own companies 67.5% of the SSH company shares and voting rights on 31 December 2009. More information on the SSH Management's shareholding is available in Section Financial Statements, under 32 Group companies and related party transactions.
The SSH Annual General Meetings of 1998, 1999, 2000, 2001, 2002 and 2003 decided to issue stock options and the Board used its authorization on granting options in December 2008. The stock options are part of the SSH Group's employee retention and incentive plan. The stock option plan (I/1999) series C, D, E, F, G, and H are traded in the NASDAQ OMX Helsinki Ltd. More information on the stock option plans is available in Section Financial Statements, under 22 Stock option plans – data.
The SSH share SSH1V closed at EUR 0.77 (2008: EUR 0.70) on 31 December 2009, and the trade-weighted average share price for year 2009 was EUR 0.79 (2008: 1.48). The highest price per share was EUR 1.24 (2008: EUR 1.69) and the lowest price was EUR 0.65 (2008: EUR 0.66). The reported cumulative trading volume of the SSH shares totaled 5.1 million shares, MEUR 4.0. The market value of the SSH shares was MEUR 23.0 at the end of the fi nancial period.
| Jan 1, 2009– Dec 31, 2009 IFRS |
Jan 1, 2008– Dec 31, 2008 IFRS |
Jan 1, 2007– Dec 31, 2007 IFRS |
Jan 1, 2006– Dec 31, 2006 IFRS |
Jan 1, 2005– Dec 31, 2005 IFRS |
|
|---|---|---|---|---|---|
| Earnings per share (Group) | -0.04 | -0.06 | 0.11 | -0.01 | -0.07 |
| Earnings per share (Group) considering dilution eff ect | -0.04 | -0.06 | 0.11 | -0.01 | -0.07 |
| Shareholders' equity per share (Group), | 0.15 | 0.51 | 0.72 | 0.62 | 0.90 |
| Dividends | 0 | 0 | 0 | 0 | 0 |
| Dividends per share | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Dividend pay-out ratio, % | - | - | - | - | - |
| Eff ective dividend yield, % | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Adjusted average number of shares during the period, thousands | 28,791 | 28,545 | 28,460 | 28,310 | 28,166 |
| Adjusted average number of shares at the end of period, thousands |
29,898 | 28,584 | 28,536 | 28,424 | 28,269 |
| Adjusted average number of shares considering dilution eff ect, thousands |
29,919 | 28,913 | 28,720 | 28,787 | 8,614 |
| Price per earnings ratio (P/E) 1 | - | - | 14.8 | - | - |
| Market capitalization, million | 23.0 | 20.0 | 45.9 | 32.7 | 34.8 |
| Share performance in NASDAQ OMX Helsinki Ltd, | |||||
| Average price | 0.79 | 1.48 | 1.63 | 1.43 | 1.23 |
| Share price, year-end | 0.77 | 0.70 | 1.61 | 1.15 | 1.23 |
| Lowest | 0.65 | 0.66 | 1.12 | 0.88 | 0.91 |
| Highest | 1.24 | 1.69 | 2.39 | 2.40 | 1.78 |
| Volume of shares traded, millions | 5.1 | 3.6 | 15.0 | 13.9 | 11.4 |
| Volume of shares traded, % of total number | 17.0 | 12.5 | 52.6 | 48.8 | 40.5 |
| Volume of shares traded, million | 4.0 | 4.5 | 24.5 | 19.9 | 14.0 |
SSH Communications Security Corp
SSH Communications Security Corp. is the forerunning provider of open-standards-based data security and managed fi le transfer solutions for private and public organizations. SSH Tectia solutions enable the customers to secure, automate, and govern their vital business information fl ows in internal and public networks. We want to become the market maker in real-time security software for networked organizations, and to create the Circle of Trust for our customers and their business partners and end customers.
Our innovative SSH Tectia solutions adapt seamlessly to the existing IT infrastructure and business processes, and they accommodate changes in cost-eff ective and fl exible ways. We operate in the Americas, Europe, and APAC regions, with headquarters located in Finland. We have thousands of customers in multiple industries and public sectors around the world. SSH was established in 1995, and its shares are quoted on the NAS-DAQ OMX exchange, under the trading code of SSH1V.
Year 2009 was a turnaround year for SSH meaning the start of a drastic change from technology fi rm into a sales and marketing oriented security software house.
Starting from the fi rst quarter, the company initiated new off ering development. The balance of R&D resources was targeted at creating value added off ering complementing the success of existing data-in-transit security software. SSH signed a contract with Gartner, a market analysis company, to establish new market position and off ering. At the same time the company made a decision towards in-sourcing technologies which would accelerate time-to-market and fulfi ll the demand from customers.
The second quarter was started with sales review, focusing on the effi ciency evaluation of sales and marketing in the company. As a result, part of sales was reorganized. A management audit discovered that the company needs new leadership skills and roles to execute the defi ned strategy. The Group management team was renewed. At the end of second quarter the company launched new off ering for the managed fi le transfer and governance market segments.
Both the fi rst and the second quarter ended up with loss, thus resulting to a negative fi rst half of 2009. The customers' expectations of economic recovery slowed down decision making and certain U.S. public sector projects from the sales pipeline were postponed due to funding reasons. Turnaround related non-recurring costs actualized by the established contingency plan were increasing the net loss actualized. In the end of the fi rst half, company launched new products in MFT and Governance –product segments
The third quarter was the shift in the course of the company. The actions defi ned by new group management, initiated change towards sales and marketing oriented security software house, increased eff orts in key account management and introduced new off ering to existing and new customers were becoming the success factors for initial growth. The third quarter was the fi rst profi table growth quarter by net sales.
In order to boost net sales, the management launched a high performance sales initiative. The key objective of the sales program was to ensure that there would be increasing amount of sales estimation accuracy and better hit-rate in signing shortlisted sales cases.
The company signed agreements with a major U.S. research agency, one of the largest U.S. banks and a mid-size U.S. retailer chain for their security governance and business security solutions. SSH gained reputation also by Gartner published market research report as a visionary MFT (Managed File Transfer) security vendor.
During the fourth quarter the company signed a global license with one of the largest banks in Europe for their global roll-out of SSH security software. The company continued the development of its business-to-business security solutions off ering by enhancing it with new software based identifi cation technologies provided by a technology in-sourcing partner.
Started at the end of the second quarter, SSH continued the cost cutting program. The cost savings were -15% in expenses during second half of 2009 compared to the previous year. In December as part of the cost cutting program the company's headquarters moved to new more cost-effi cient premises.
The company initiated brand and communications strategy program with its marketing partner. The results will be launched within the fi rst half of 2010. The company set up the building blocks for the ability to start a journey in creating a new collaboration model among its customer, their partners and end-customers.
During reporting period the Americas accounted for 62.8% (68.5%) of the reported net sales; the EROW segment accounted for 28.1% (22.7%) and APAC for 9.1% (8.9%).
| EUR million | 10–12/2009 | 7–9/2009 | 4–6/2009 | 1–3/2009 | 1–12/2009 10–12/2008 | 1–12/2008 | |
|---|---|---|---|---|---|---|---|
| GEOGRAPHICAL SEGMENT | |||||||
| Americas (AMER) | 1.4 | 1.7 | 1.2 | 1.2 | 5.5 | 1.6 | 5.8 |
| Asia Pacifi c (APAC) | 0.2 | 0.3 | 0.1 | 0.2 | 0.8 | 0.2 | 0.8 |
| Europe and the rest of the world (EROW) | 1.3 | 0.3 | 0.5 | 0.4 | 2.5 | 0.4 | 1.9 |
| SSH Group total | 2.9 | 2.2 | 1.8 | 1.9 | 8.8 | 2.2 | 8.5 |
| BY OPERATION | |||||||
| License Sales | 1.7 | 1.1 | 0.6 | 0.6 | 4.1 | 1 | 4 |
| Maintenance | 1.2 | 1.2 | 1.2 | 1.2 | 4.7 | 1.2 | 4.5 |
| Total | 2.9 | 2.2 | 1.8 | 1.9 | 8.8 | 2.2 | 8.5 |
See Calculation of Financial Ratios on page 33.
During the report period, SSH concluded 5 new license agreements that were worth more than EUR 100,000 each. The ten largest customers' license sales accounted for 22 percent of the reported net sales, with the largest single customer accounting for approximately 8 percent.
The key strategic objective is to continue eff orts on developing the company into a sales and marketing oriented technology company with strong value-added off ering and customer focus.
SSH core business is securing customer's mission-critical business information on the move. The key drivers for businessto-business data security are the exponential increase of digital information in fi xed and mobile networks and the fl exible use of integrated business applications between multiple enterprises. The need for 24/7 high availability and reliability, as well as auditable and well-managed compliance with data security regulations and legislation drive a global sense of urgency in keeping our businesses safe.
The addressable market for SSH has ten-folded to more than 1 Billion USD with the new SSH off ering based on the strategy shift. The key market segments for SSH are the secure applications and protocols market, the managed fi le transfer market and the mobile identifi cation market. In these markets, we focus on the security, automation, auditing and governance of identitymanaged information in fi xed, mobile and cloud environments.
The secure applications and protocols market is estimated to grow signifi cantly over the future years with more than 10 percent CAGR (compound annual growth rate) from the existing 700 MUSD level. The secure fi le transfer (SFT) market is mature but several drivers are still creating further growth for the datain-transit business.
The size of the managed fi le transfer (MFT) market is estimated to be 450 MUSD and growing at 20 percent CAGR. The MFT business is focusing on the automation and governance of real-time data-in-transit in private networks and across the Internet with virtual data centers. We off er visionary MFT security solutions for businesses that value the world's best automation, as well as audit and governance capabilities in business networks where trusted sharing of information is required.
For the fi scal year 2010, SSH estimates its net sales to grow from 2009 and expects the net result to be positive.
The consolidated net sales for 2009 totaled EUR 8.8 million (EUR 8.5 million), up by 3.4 percent, year on year. Net sales for the fourth quarter totaled EUR 2.9 million.
The majority of SSH's invoicing is based on the US dollar. During the reporting period, the US dollar's average exchange rate was approximately 5.2 percent stronger than during the same period for 2008.
Operating loss for 2009 amounted to EUR -1.5 million (a loss of EUR -2.2 million) with net loss totaling EUR -1.2 million (a loss of EUR -1.8 million).
Research and development expenses for the report period totaled EUR 3.8 million (EUR 4.0 million). Sales and marketing expenses were EUR 4.3 million. (EUR 5.0 million). Administration expenses were EUR 2.3 million (EUR 1.9 million).
The result of the reporting period is infl uenced by a EUR 1.0 million one-time expenses were charged as costs. One-time expenses occurs from personnel related costs, headquarters move and management incentive plan establishment.
The fi nancial position of SSH remained at a healthy level during the report period, despite the capital returned to shareholders. The consolidated balance sheet total on December 31, 2009 stood at EUR 9.4 million (EUR 19.1 million), of which liquid assets accounted for EUR 6.4 million (EUR 16.5 million), or 68.2 percent of the balance sheet total. On December 31, 2009, gearing, or the ratio of net liabilities to shareholders' equity, was -144.2 percent (-112.8) and the equity ratio stood at 71.4 percent (91.3).
The reported gross capital expenditure for the period totalled EUR 0.1 million (EUR 0.3 million). The reported fi nancial income consisted mainly of interest on fi xed-term deposits and exchange rate gains. Financial income and expenses totalled EUR 0.3 million (EUR 0.7 million).
During January-December, SSH reported a negative cash fl ow of EUR -1.6 million (EUR -2.0 million) from business operations, and investments showed a positive cash fl ow of EUR 12.0 million (EUR 6.5 million). Cash fl ow from fi nancing totaled EUR -8.5 million (EUR -4.3 million), mainly consisting of capital returned to shareholders. Total cash fl ow from operations, investments and fi nancing was positive EUR 1.9 million (EUR 0.2 million) during the period.
Research and development expenses for 2009 totaled EUR 3.8 million (EUR 4.0 million), the equivalent of 43.0 percent of net sales (46.6 percent). The company has not capitalized any research and development expenses during the report period.
Risk management is part of SSH's control system. The purpose of risk management is to recognize and monitor signifi cant risks relating to the company's operations and business environment. The company operates in the fast evolving data security software market. Changes in the overall IT-market and especially in the data security software market directly aff ect the Company's business risks. The main market area is the USA, whose market and currency risks are signifi cant. Other signifi cant risks relate to product technology, competitors' activities and profi tability.
Our sales operations are supported by the Company's own legal unit, who seek to reduce the risks related to the Company's business operations through continuous management of contracts. SSH protects its copyrights and trademarks through sales agreements. The Company has an active patent policy to protect its technology and encourages its employees to make and protect inventions. Risks regarding property, operation interruptions and liability are protected through insurance.
SSH has a process in place whereby any security risks found in the Company's products are promptly reported to senior management. Repairs are carried out immediately and updates are supplied to customers without delay. The Company's critical information systems are secured and backed up. SSH actively uses its own products to protect its own information system infrastructure. Strong encryption and authentication protect the Company's confi dential data communications.
The Company does not provide fi nancing for its customers other than by granting normal payment periods. The consolidated balance sheet is strong and has no signifi cant long-term liabilities recorded. The Company's cash reserves have been invested in accordance with a policy approved by the Board of Directors. Most of SSH's invoicing takes place in US dollars. At the end of the reporting period, the Company had no hedges against exchange rate risks.
SSH bears responsibility for the environment. SSH's environmental policy seeks to ensure the company meets statutory obligations, promotes recycling and reduces overall waste. The company sorts and recycles all recyclable material.
At the end of December 2009 the Group had 64 employees on its payroll, down by 10 from the previous year, a decrease of 11.0 percent. Of the employees, 47 were based in Finland, 2 elsewhere in Europe and 15 in the USA. On average, SSH had 66 (77) employees on its payroll. Salaries and bonuses, including all other personnel expenses, totaled EUR 6.2 million (EUR 6.5 million).
The average age of the employees was 39 years. 87 percent have an academic degree. 22 percent of the employees were women and 78 percent men. At the end of the period, 58 percent of employees worked in R&D, 22 percent in sales and marketing, and 20 percent in corporate administration.
At the end of the reporting period, the parent company had 47 (47) employees on its payroll, on average 46 (52) employees during the period. In 2009, salaries and bonuses, and other personnel expenses, totaled EUR 4.1 million (EUR 4.2 million).
The Annual General Meeting (AGM) on March 4, 2009 reelected Tomi Laamanen, Pyry Lautsuo, Juha Mikkonen and Tatu Ylönen to the Board of Directors. Juho Lipsanen was elected as a new member to the board. He also chairs the board.
The AGM also re-elected PricewaterhouseCoopers Oy, authorized public accountants, as the company's auditor for fi nancial period 2009, with Henrik Sormunen, authorized public accountant, acting as the principal auditor.
According to the Articles of Association, the highest decision power in the Company is used by the shareholders in the shareholders' meeting. The Annual General Meeting is held every year within six months after the end of the reporting period on a date decided by the Board of Directors. The Annual General Meeting decides on the number of members in the Board of Directors, and the Meeting also elects the members. As defi ned in Chapter 10 Section 1 of the Finnish Companies Act, the AGM also decides about amendments to the Company's Articles of Association, approval of the fi nancial statements, determining the dividends, and the election of the auditor. Each SSH share bears one vote in the Annual General Meeting. The Company CEO is nominated by the Board of Directors.
SSH follows the recommendations and regulations for corporate governance given by NASDAQ OMX Helsinki, the Helsinki Chamber of Commerce, and the Confederation of Finnish Industries. More detailed information on the SSH corporate governance is available on the Company website at www.ssh.com.
The reported trading volume of SSH Communications Security Corp. shares totaled 5,087,614 (valued at EUR 4,031,109). The highest quotation was EUR 1.24 and the lowest EUR 0.65 The trade-weighted average share price for the period was EUR 0,79 and the share closed at EUR 0,77 (December 31, 2009).
On 20th of October 2009 The Board of Directors of SSH decided to establish a limited company SSH Management Investment Corp, which purpose is to function as SSH management incentive plan. Consequently the board decided on a share issue against payment directed to the company to be formed on the basis of authorization granted by the Annual General Meeting of Shareholders of the Company on 4 March 2009 in derogation from the shareholders' pre-emptive subscription rights. The incentive plan will be valid until fall 2013, at which time the plan is intended to be dissolved in a manner to be determined later.
Total of 1,100,000 new shares in SSH was off ered for subscription by the company formed in the share issue. The subscription price of the new share was 0.72 EUR (the trade volume weighted average quotation of SSH´s share on the NASDAQ OMX Helsinki Ltd. during 22 October—12 November 2009). During December 2009 SSH Management Investment Corp acquired from stock markets total of 337,500 company shares. Share subscription was fi nanced with management group EUR 266,640 investments and loan EUR 792,000 granted by SSH Communications Security Corp. The owned shares will be held in management investment company until it is dissolved.
The management investment plans lead to dissolving the CEO option plan and consequently the company redeemed option plan I/2008 in market value, 53,400 EUR.
CEO invested the net gain to subscription of the new shares in SSH Management Investment Corp. Company CEO is part of the management investment plan and according to the company policy the management group is part of only one long-term incentive plan. CEO's indirect ownership is through the incentive plan approximately 1.8%.
During the reporting period, company's principal owner Tatu Ylönen holdings directly and through his company, Tatu Ylönen Oy, decreased under 50%. Tatu Ylönen holds now 48.7 percent of the company's shares, Assetman Oy holds 13.4 percent and Tero Kivinen 4.9 percent. More information about the shareholding can be obtained from the company´s web site.
SSH Management Investment Corp is now fourth largest owner holding 4.8 of the company and it is part of the SSH Group due to shareholder agreement.
During reporting period no other changes occurred in SSH group structure.
The company's registered share capital on December 31, 2009 was EUR 896,953.47 consisting of 29,898,449 shares. During the reporting period SSH increased its share capital four times. The share capital increases are based on subscriptions to the new shares under stock option plans and new shares off ered in CEO and management investment plans. In total, 2,600 new SSH shares were subscribed under the I/1999 stock option plan and 143,581 shares under I/2003 stock option plan respectively. In the fi rst quarter CEO incentive plan subscribed 68,493 new shares in subscription price of 0.73 EUR. During the fi nancial period were subscribed total of 1,314,674 new shares. As a result company's share capital increased with 39,440 EUR.
The Annual General Meeting approved the Board of Directors' proposal to authorize the Board of Directors to decide upon the issuing of in total 5,500,000 shares in one or more tranches as share issues against payment or by giving stock options or
other special rights defi ned in Chapter 10 Section 1 of the Finnish Companies Act, which entitle to shares either according to the shareholders' pre-emptive right to share subscription or deviating from this right. The authorization will be valid until the next Annual General Meeting, but will expire on June 30th 2010 at the latest. During the reporting period the Board of Directors exercised this authorization as part of the management investment plan by issuing new shares for SSH Management Investment Corp subscription against payment.
In addition the Annual General Meeting authorized the Board of Directors to decide upon acquiring a maximum of 2,000,000 of the company's own shares in one or more tranches, which amount corresponds approximately to seven (7) per cent of all shares of the company. The compensation to be paid for the acquired shares shall be determined on the date of acquisition on the basis of a trading rate determined for the company's share in a public trading arranged by NASDAQ OMX Helsinki Ltd. The authorization to acquire the shares shall be valid at most for eighteen (18) months after the decision of the Annual General Meeting.
More information on new share issue and granted option rights in notes 22 and 32.
The Annual General Meeting decided upon the distribution of assets from the invested non-restricted equity fund to the shareholders in such a way that assets shall be distributed 0.30 euro per share. The amount to be distributed is in total 8,595,680.40 euro. The return of equity was paid to the shareholders who on the record date on March 9th 2009 were registered in the shareholders' register of the company held by Euroclear Finland Oy, and the payment date was on March 16th 2009.
Furthermore, the Annual General Meeting decided to lower the subscription price of the shares that can be subscribed based on the option plans released by the company between years 2000–2008, with an amount corresponding to the distribution of assets, i.e. 0.30 euro per option right. The subscription price of the shares shall, however, always have at least the same value as the par value.
The share-based payments of SSH Group are stock options granted to the management and employees, as decided by Annual General Meetings in 1998, 1999, 2000, 2001, 2002, 2003 and 2008.
Each option gives the right to subscribe to one new share at a price and at a time specifi ed in the terms of the stock option plan. The option rights will be cancelled in case the employee leaves the company before the subscription time has begun. There are no other conditions to the beginning of the option rights.
The shares subscribed with the granted option rights include the rights to any dividend payable for the reporting period during which the shares were subscribed. Other shareholder rights commence as soon as the increase in the share capital has been registered in the Trade Register. Option rights of plan I/1999 series C, D, E, F, G and H are in public trading at NASDAQ OMX Helsinki.
More information on the option plans is available in Note 22 of the Consolidated Financial Statements.
The SSH management is not aware of any transactions that happened after the reporting period that would have impacted the presented fi nancial statement.
SSH s Board of Directors will propose to the Annual General Meeting that no dividend be distributed. It is proposed that the loss of the fi nancial year shall be entered to the shareholders equity in the profi t/loss account. The Board of Directors proposes to the Annual General Meeting that assets from the invested non-restricted equity fund would be distributed to the shareholders of the company at 0.05 euro per share. The date of payment shall be 15 March 2010.
Relating to the distribution of assets, the Board of Directors proposes to the Annual General Meeting that at the same time the subscription price of the shares, which can be subscribed for and which belong to the option plans released by the company between years 2000–2002, shall be lowered with an amount corresponding to the distribution of assets, i.e. 0.05 euro per option right. The subscription price of the shares shall, however, always have at least the same value as the par value. Thereby, the amendment of the option terms by lowering the subscription price (with 0.05 euro) concerns the following option plans released by the company: I/2000, Plan July 10th 2000, II/2000, II/2002 and III/2002.
| 1 Jan 2009– | 1 Jan 2008– | 1 Jan 2007– | 1 Jan 2006– | 1 Jan 2005– | |
|---|---|---|---|---|---|
| EUR million | 31.Dec.09 IFRS |
31.Dec.08 IFRS |
31.Dec.07 IFRS |
31.Dec.06 IFRS |
31.Dec.05 IFRS |
| Net Sales, € | 8,811,906 | 8,521,902 | 14,193,302 | 8,976,660 | 9,296,985 |
| Operating profi t/loss, € | -1,487,043 | -2,205,918 | 2,222,705 | -1,364,925 | -2,645,377 |
| % of net sales | -16.9 | -25.9 | 15.7 | -15.2 | -28.5 |
| Result before extraordinary items, appropriations and taxes, € | -198,543 | -1,532,328 | 3,105,166 | -671,878 | -2,015,209 |
| % of net sales | -2.3 | -18.0 | 21.9 | -7.5 | -21.7 |
| Result before taxes, € | -1,163,879 | -1,532,328 | 3,105,166 | -671,878 | -2,015,209 |
| % of net sales | -13.2 | -18.0 | 21.9 | -7.5 | -21.7 |
| Return on equity, % | -12.4 | -10.2 | 17.1 | -2.7 | -15.4 |
| Return on investments, % | -10.8 | -8.5 | 15.8 | -3.1 | -13.6 |
| Net interest-bearing debt, € 1,000 | -6,385 | -16,368 | -22,005 | -16,698 | -22,485 |
| Gearing, % | -144,2 | -112.8 | -107.8 | -95.5 | -88.4 |
| Equity-to-assets ratio, % | 71.4 | 91.3 | 91.3 | 92.3 | 92.8 |
| Capital expenditure, € | 112,643 | 0 | 106,105 | 115,186 | 83,174 |
| % of net sales | 1.3 | 0.0 | 0.7 | 1.3 | -0.9 |
| Research and development expenditure, € | 3,788,917 | 3,973,307 | 3,679,305 | 3,356,617 | 3,423,812 |
| % of net sales | 43.0 | 46.6 | 25.9 | 37.4 | 49.9 |
| % of net sales (without investments) | 43.0 | 46.6 | 25.9 | 37.4 | 46.7 |
| Personnel, average | 66 | 77 | 81 | 81 | 83 |
| Personnel at the end of the period | 64 | 73 | 83 | 80 | 75 |
| 1.1.-31.12.2009 | 1.1.-31.12.2008 | 1.1.-31.12.2007 | |
|---|---|---|---|
| € | IFRS | IFRS | IFRS |
| Earnings per share (Group), € | -0.04 | -0.06 | 0.11 |
| Earnings per share (Group), considering dilution eff ect, € | -0.04 | -0.06 | 0.11 |
| Shareholders' equity per share (Group), € | 0.15 | 0.51 | 0.72 |
| Dividends, € | 0 | 0 | 0 |
| Dividends per share, € | 0 | 0 | 0 |
| Dividend pay-out ratio, % | - | - | - |
| Eff ective dividend yield, % | 0 | 0 | 0 |
| Return of capital, € | 8,595,680 | 4,280,742 | - |
| Return of capital per share, € | 0.30 | 0.15 | - |
| Adjusted average number of shares during the period, thousands | 28,791 | 28,545 | 28,460 |
| Adjusted average number of shares at the end of period, thousands | 29,898 | 28,584 | 28,536 |
| Adjusted average number of shares considering dilution eff ect, thousands | 29,919 | 28,913 | 28,720 |
| Price per earnings ratio (P/E) | - | - | 14.8 |
| Market capitalization, million € | 23 | 20 | 45.9 |
| Share performance in Helsinki Exchanges, € | |||
| Average price | 0.79 | 1.48 | 1.63 |
| Share price, year-end | 0.77 | 0.70 | 1.61 |
| Lowest | 0.65 | 0.66 | 1.12 |
| Highest | 1.24 | 1.69 | 2.39 |
| Volume of shares traded, millions | 5.1 | 3.6 | 15.0 |
| Volume of shares traded, % of total number | 17.0 | 12.5 | 52.6 |
| Volume of shares traded, million € | 4.0 | 4.5 | 24.5 |
| Profi t | ||
|---|---|---|
| Return on Equity, % (ROE) | Shareholders' equity (average for the year) | x 100 |
| Profi t before extraordinary items and taxes + interest and other fi nancial expenses | ||
| Return on investment, % (ROI) | Total assets – non-interest bearing debt (average for the year) | x100 |
| Shareholders' equity | x 100 | |
| Equity-to-assets ratio, % | Total assets – advances received | |
| Profi t | ||
| Earnings per share (EPS) | Share issue adjusted average number of shares at the end of accounting period | |
| Dividend | ||
| Dividend per share | Share issue adjusted number of shares at the end of accounting period | |
| Dividend per share | ||
| Dividend pay-out ratio % | Earnings per share (EPS) | x 100 |
| Shareholders' equity | ||
| Shareholders' equity per share | Share issue adjusted number of shares at the end of accounting period | |
| Interest – bearing debt – cash and cash equivalents | ||
| Gearing % | Shareholders' equity + minority interest | x 100 |
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| NET SALES | 4 | 8,811,906 | 8,521,902 |
| Purchasing and production costs | 63,333 | 22,008 | |
| GROSS MARGIN | 8,748,572 | 8,499,894 | |
| Other operating income | 5 | 136,846 | 155,824 |
| Product development costs | 3,788,917 | 3,973,307 | |
| Sales and marketing costs | 4,258,165 | 5,011,923 | |
| Administration costs | 2,325,380 | 1,876,406 | |
| OPERATING PROFIT/LOSS | -1,487,043 | -2,205,918 | |
| Financial income | 8 | 443,690 | 890,686 |
| Financial expenses | 9 | 120,526 | 217,096 |
| PROFIT/LOSS BEFORE TAXES | -1,163,879 | -1,532,328 | |
| Taxes | 10 | 9,568 | 253,515 |
| PROFIT/LOSS FOR THE FINANCIAL PERIOD | -1,173,447 | -1,785,843 | |
| Other comprehensive income/expenses | |||
| Currency translation diff erences | -108,169 | 153,286 | |
| COMPREHENSIVE PROFIT/LOSS FOR THE YEAR | -1,281,616 | -1,632,557 | |
| Profi t/Loss for the fi nancial period attributable to: | |||
| Equity holders of parent company | -1,173,447 | -1,785,843 | |
| Minority interest | - | - | |
| Earnings per share for loss attributable to the equity holders of the parent company: | |||
| Basic earnings per share (€ per share) | 11 | -0.04 | -0.06 |
| Diluted earnings per share (€ per share) | 11 | -0.04 | -0.06 |
| € | Note* | 31.12.2009 | 31.12.2008 |
|---|---|---|---|
| ASSETS | |||
| FIXED AND NON-CURRENT ASSETS | |||
| Tangible assets | 12 | ||
| Machinery and equipment | 229,639 | 318,995 | |
| Other fi xed assets | 2,623 | 3,550 | |
| Tangible assets, total | 232,262 | 322,545 | |
| Intangible assets | 13 | ||
| Intangible rights | 30,489 | 8,574 | |
| Intangible assets, total | 30,489 | 8,574 | |
| Investments | |||
| Other shares | 11,000 | 0 | |
| Investments, total | 11,000 | 0 | |
| FIXED AND NON-CURRENT ASSETS, TOTAL | 273,751 | 331,119 | |
| CURRENT ASSETS | |||
| Short-term receivables | |||
| Trade receivables | 15 | 2,455,457 | 1,983,447 |
| Other receivables | 16 | 306,508 | 288,814 |
| Prepaid expenses and accrued income | 17 | 25,132 | 35,448 |
| Current receivables, total | 2,787,097 | 2,307,709 | |
| Short-term investments | |||
| Investments held to maturity | 18 | 2,520,100 | 14 500 000 |
| Investments, total | 2,520,100 | 14,500,000 | |
| Cash and cash equivalents | 3,841,366 | 1,978,620 | |
| INVENTORIES AND CURRENT ASSETS, TOTAL | 9,148,563 | 18,786,328 | |
| ASSETS, TOTAL | 9,422,314 | 19,117,447 |
| € | Note* | 31.12.2009 | 31.12.2008 |
|---|---|---|---|
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| EQUITY ATTRIBUTABLE TO THE PARENT COMPANY SHAREHOLDERS | |||
| Share capital | 896,953 | 857,513 | |
| Fair value reserve | 125,574 | 127,671 | |
| Translation diff erences | -997,205 | -889,036 | |
| Unrestricted equity fund | 5,393,806 | 13,182,542 | |
| Fund for own shares | -1,051,927 | 0 | |
| Retained profi t/loss | 61,469 | 1,234,916 | |
| SHAREHOLDERS' EQUITY, TOTAL | 20 | 4,428,672 | 14,513,606 |
| LONG-TERM LIABILITIES | |||
| Deferred tax liabilities | 14 | 1,083 | 0 |
| Provisions | 23 | 138,089 | 0 |
| Long-term fi nancial liabilities | 24 | 40,715 | 110,973 |
| LONG-TERM LIABILITIES, TOTAL | 179,887 | 110,973 | |
| SHORT-TERM LIABILITIES | |||
| Advances received | 25 | 3,222,854 | 3,218,981 |
| Trade payables | 26 | 247,815 | 123,214 |
| Accrued expenses and deferred income | 27 | 766,028 | 770,887 |
| Other liabilities | 28 | 577,058 | 379,786 |
| SHORT-TERM LIABILITIES, TOTAL | 4,813,755 | 4,492,868 | |
| LIABILITIES, TOTAL | 4,993,642 | 4,603,841 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | 9,422,314 | 19,117,447 |
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| Cash fl ow from operating activities | |||
| Cash receipts from customers | 4, 15, 25 | 8,336,022 | 9,160,456 |
| Cash receipts from other operating income | 136,846 | 155,824 | |
| Cash paid to suppliers and employees | 6, 7, 23, 26, 27, 28 | -10,045,394 | -11,359,681 |
| Interest paid | -78,447 | -119,467 | |
| Interest received | 91,634 | 199,737 | |
| Income taxes paid | 2,704 | 0 | |
| Cash fl ow from operating activities, total | -1,556,634 | -1,963,131 | |
| Cash fl ow from investing activities | |||
| Purchase of tangible and intangible assets | 12, 13 | -96,136 | -90,669 |
| Purchase of investments | -11,000 | ||
| Proceeds from sale of investments | 19 | 11,979,900 | 5 802 172 |
| Interest received | 163,358 | 772 732 | |
| Cash fl ow from investing activities, total | 12,036,122 | 6,484,235 | |
| Cash fl ow from fi nancing activities | |||
| Proceeds from issuance of share capital | 54,385 | 8,685 | |
| Return of capital | 20 | -8,595,680 | -4,280,742 |
| Cash fl ow from fi nancing activities, total | -8,541,295 | -4,272,057 | |
| Net increase in cash and cash equivalents | 1,938,194 | 249,047 | |
| Cash and cash equivalents at beginning of period | 19 | 1,978,620 | 1,714,708 |
| Adjusted translation diff erence | -11,022 | 14,865 | |
| Net increase in cash and cash equivalents | 1,938,194 | 249,047 | |
| Cash and cash equivalents at end of period | 19 | 3,905,791 | 1,978,620 |
| 2008 | Share capital | Share premiums |
Fair value reserves |
Translation diff erences |
Unrestricted equity funds |
Fund for own shares |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|---|
| Shareholders' equity 1 Jan | 856,083 | 11,529,315 | 125,574 | -1,042,322 | 5,926,714 | 3,020,760 | 20,416,124 | |
| Translation diff erences | 153,286 | 153,286 | ||||||
| Net profi t / loss for the period | -1,785,843 | -1,785,843 | ||||||
| Income and expenses recognized for the period, total |
153,286 | -1,785,843 | -1,632,557 | |||||
| Subscribed shares based on stock options | 1,430 | 425 | 6,830 | 8,685 | ||||
| Transfer to other shareholders' equity item | -11,529,740 | 11,529,740 | ||||||
| Return of capital | -4,280,742 | -4,280,742 | ||||||
| Granted stock option rights | 2,097 | 2,097 | ||||||
| Shareholders' equity 31 Dec | 857,513 | 0 | 127,671 | -889,036 | 13,182,542 | 1,234,916 | 14,513,606 | |
| 2009 | ||||||||
| Shareholders' equity 1 Jan | 857,513 | 127,671 | -889,036 | 13,182,542 | 1,234,916 | 14,513,606 | ||
| Translation diff erences | -108,169 | -108,169 | ||||||
| Net profi t / loss for the period | -1,173,447 | -1,173,447 | ||||||
| Income and expenses recognized for the period, total |
-108,169 | -1,173,447 | -1,281,616 | |||||
| Elimination of own shares* | -1,051,927 | -1,051,927 | ||||||
| Subscribed shares based on stock options | 4,385 | 4,385 | ||||||
| Share issue related to management incentives plan |
35,055 | 806,945 | 842,000 | |||||
| Return of capital | -8,595,680 | -8,595,680 | ||||||
| Granted stock option rights | -2,097 | -2,097 | ||||||
| Shareholders' equity 31 Dec | 896,953 | 125,574 | -997,205 | 5,393,806 | -1,051,927 | 61,470 | 4,428,672 |
* Elimination of consolidated group company SSH Management Investment Corp. More information on SSH Management Investment Corp in Note 32.
SSH Communications Security Corp. is the forerunning provider of open-standards-based data security and managed fi le transfer solutions for private and public organizations. SSH Tectia solutions are sold as licensed software with maintenance and support agreements.
The SSH Group consists of SSH Communications Security Corp and its fully owned subsidiaries. SSH Communications Security Corp is domiciled in Helsinki, Finland and is a publicly traded company. The subsidiaries of SSH are SSH Communications Security Inc. (USA), SSH Management Investment Oy (Corp) and SSH Operations Oy (Corp), which has operations in Finland, Germany and Great Britain. SSH Communications Security Corp has its registered offi ce at address Kumpulantie 3, 00520 Helsinki, Finland.
The Board of Directors of SSH Communications Security Corp has accepted the publication of these fi nancial statements in its meeting of 2 February 2010. A copy of the fi nancial statements is published as a part of the company's annual report. The annual report is available on the company's web pages (www.ssh.com) or at the head offi ce of SSH Communications Security Corp. All stock announcements can be obtained from the company's web pages.
The consolidated fi nancial statements have been prepared in compliance with the Finnish Accounting Act and International Financial Reporting Standards (IFRS) as adopted by the EU (EC regulation No 1606/2002) observing the International Accounting Standard (IAS) and the interpretations by Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) eff ective on 31 December 2009. The notes to the consolidated fi nancial statements are also in compliance with Finnish Accounting Standards and Companies Act.
The amounts in the consolidated fi nancial statements are based on the original acquisition cost with the exception of assets available-for-sale and derivative fi nancial instruments which are stated at fair value. The consolidated fi nancial statements are presented in full euros unless otherwise stated.
The consolidated accounts include the parent company SSH Communications Security Corp and all its subsidiaries. Subsidiaries include those companies over which the Group has a control. A control is established if the parent company holds, directly or indirectly, more than 50 percent of the voting power or controls through management agreements with majority shareholders. In addition to these holdings, the consolidated accounts include possible holdings that are of a controlling-right nature. A control is defi ned as a power to govern the fi nancial and operating policies of a company to receive economic benefi ts from its operations.
Intra-group shareholdings have been eliminated by using the purchase method. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date on which that control ceases. Intragroup transactions, balances and unrealized gains on transactions between Group companies are eliminated.
Items of each subsidiary included in the consolidated fi nancial statements are measured using the currency of the operating environment of that subsidiary ("functional currency"). The consolidated fi nancial statements are presented in euros, which is the functional and reporting currency of the parent company.
Foreign currency denominated transactions are recorded at the exchange rate of the functional currency on the transaction date. In practice the used exchange rate is approximately the rate of the transaction date. Outstanding receivables and payables in foreign currencies are stated using the exchange rates on the balance sheet date. Exchange rate gains and losses on actual business operations are treated as adjustment items of sales costs or purchase and production costs above the operating profi t. Exchange rate gains and losses on fi nancing are entered as fi nancial income and expenses.
The income statements of subsidiaries whose functional currency is other than euro are translated into euros using the exchange rate of the transaction dates. In practice, the translations are done once a month using the monthly average exchange rate. Balance sheet items are translated into euros with the exchange rate of the balance sheet date. Translation diff erences are recorded in equity. When a subsidiary is sold, accumulated translation diff erences are recognized in the income statement as part of the gain or loss on the sale.
SSH's net sales derive mainly from software license sales and maintenance fees. Net sales comprise the invoiced value for the sale of goods and services adjusted with any discounts given, sales taxes, and exchange rate diff erences.
The revenue from product sales is recognized at the time when signifi cant risks and rewards of the product or the right of use of the product have been transferred to the buyer and there is a binding contract between the parties, the delivery has taken place in accordance with the contract, the amount of revenue can be measured reliably and it is probable that the economic
benefi ts associated with the transaction will fl ow to the company.
Maintenance agreements are recognized evenly throughout the contract period. Revenues from services are recognized when the service has been delivered.
Government grants, for example grants received from the government for a purchase of tangible assets, are recorded as a deduction of the carrying amount of the asset when there is reasonable assurance that the company will receive the grant and will comply with the conditions attaching to the grant. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge.
Government grants that are intended to compensate costs are recognized as income over the same period as the related costs are recognized. These government grants are presented in other operating income.
Group companies' property, plant and equipment are measured at cost less accumulated planned straight-line depreciation and any impairment losses. When a part of a property is treated as a separate asset, expenses related to its replacement are capitalized. Expenses incurring at a later date are included in the class of property, plant and equipment only if it is probable that the property will provide future economic benefi ts to the Group and that the acquisition cost can be measured reliably. Other repair and maintenance expenses are recognized as incurred.
Depreciation is calculated on a straight-line basis to reduce the asset's carrying value to its residual value over its estimated useful life.
An asset's residual value and useful life are reviewed for all fi nancial statements and, if necessary, adjusted to indicate changes expected in the asset's economic benefi ts.
The depreciation on property, plant and equipment is ceased when the asset is classifi ed as held for sale in accordance with standard IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
Capital gains and losses are determined by comparing proceeds received with carrying amounts of sold assets. Capital gains and losses are included in operating profi t.
The cost of asset is amortized on a straight-line method to reduce its carrying value to its residual value over its estimated useful life.
Research costs are expensed as incurred. Development costs (related to the design and testing of new or improved products) are recognized as intangible assets if it is probable that their economic benefi ts will fl ow to the company. Other development costs are expensed as incurred. Previously expensed development costs are not recognized as an asset for a subsequent period.
Amortization begins when the asset is ready to be used. Incomplete assets are tested annually for impairment. After measurement at recognition, the capitalized development costs are valued at the original acquisition cost less depreciation and impairment. Capitalized development costs are amortized on a straight-line basis over their economic lifetime, which is estimated to be from three to fi ve years.
Other intangible assets include patents, trademarks and software licenses. Patents, trademarks and licenses are entered in the balance sheet and expensed in the income statement on a straight-line basis over their economic lifetime. The residual value and useful life of assets are reviewed for all fi nancial statements and, if necessary, adjusted to indicate changes expected in the asset's economic benefi ts. The economic lifetime does not generally exceed fi ve years. Software programs acquired for internal use are expensed in a period from three to fi ve years.
The Group will review on each balance sheet date whether there is any indication of an impaired asset. Whenever indicators of impairment exist, the asset's carrying value is compared with its recoverable amount. The recoverable amount is the asset's fair value less the selling expenses or its value in use, if this value exceeds the fair value. The value in use is the present value of the future cash fl ows expected to be derived from an asset or cash-generating unit. The discount rate is pre-tax rate that refl ects the current market assessments of the time value of money and the risks specifi c to the asset.
Whenever the asset's carrying amount exceeds its recoverable amount, it will be impaired, and the resulting impairment loss will be recognized in the income statement. After the recognition of an impairment loss, the depreciation charge for the asset is adjusted for the future periods by estimating the economic lifetime of the asset. An impairment loss recognized in prior periods for an asset other than goodwill is reversed if there is a change in the estimates that have been used in assessing the recoverable amount of that asset.
The Group has classifi ed its fi nancial assets into the following categories in accordance with IAS 39: fi nancial assets recorded at fair value through profi t or loss, investments held to maturity, loans and receivables, and fi nancial assets available for sale. The assets are classifi ed on initial recognition. The assets are initially recognized at fair value. Transaction costs are included in the original carrying amount of an asset other than assets held for sale. Financial assets are derecognized from the balance sheet when the contractual right to cash fl ows from an asset included in fi nancial assets ends or when the signifi cant risks and rewards related to the asset are transferred outside the Group.
An asset is classifi ed as fi nancial asset recorded at fair value through profi t or loss when the asset is acquired for held for trading purposes or the asset is classifi ed as fi nancial asset recorded at fair value through profi t or loss at initial recognition. Derivative instruments on which hedge accounting is not applied (according to IAS 39), are classifi ed as assets available for sale. Derivative instruments available for sale and all fi nancial assets with maturities under twelve months are included in current assets in the balance sheet. These assets are stated at fair value. Any change in fair value and a profi t or a loss, realized or unrealized, is recognized in the income statement in the period it is incurred.
Investments held to maturity are fi nancial assets other than derivative assets and their payments are made according to a fi xed plan, they mature on a defi ned date and the Group is capable of and intends to keep the assets until they mature. The held-to-maturity investments are measured at amortized cost and they are recorded in the current assets.
Loans and other receivables are assets other than derivative assets and with a fi xed or defi nite series of payments. These assets are unlisted and not held for trading. They are valued at amortized cost. Loans and other receivables are presented as current or non-current fi nancial assets depending on their nature. The assets expiring after twelve months are presented in non-current assets.
Available-for-sale fi nancial assets are non-derivative assets which are either determined to be available-for-sale assets or for which other classifi cation is not applicable. These assets are included in non-current assets unless the intention is to hold the investment for less than 12 months from the balance sheet date. Available-for-sale fi nancial assets can include shares, investments on interest bearing instruments and participations of investment funds. These assets are measured at fair value or at cost if the fair value cannot be measured reliably. The change in fair value is recognized in shareholders' equity net of tax. When an asset is sold or it is impaired (the fair value is lower than the carrying amount of asset), the change in fair value is re-recognized from shareholders' equity and recognized in the income statement.
Cash and cash equivalents include cash balances, short-term deposits with banks and other short-term liquid investments with maturity up to three months at the time of acquisition. Transaction costs are included in the carrying amount at initial recognition when the asset is not classifi ed as fi nancial asset recorded at fair value through profi t or loss. All purchases and sales are recognized on the trade date. Cash and cash equivalents are derecognized from the balance sheet when the contractual right to cash fl ows ceases or when the signifi cant risks and rewards related to the asset are transferred.
The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset or group of fi nancial assets is impaired. Signifi cant and long-term decrease in the value of a share, when the fair value falls below the acquisition cost, may be an indication of an impairment of available-for-sale share. If any such evidence exists, the amount recorded in the shareholders' equity is unrecognized and recognized in the income statement. Impairment loss on available-for-sale fi nancial assets categorized as equity instruments are not reversed through the income statement. A reversal of impairment loss for fi nancial asset other than equity instrument is recognized in the income statement.
The group recognizes an impairment loss on trade receivables, when there is objective evidence that a receivable is not fully collectible. Borrower's fi nancial diffi culties, probability of a bankruptcy or delays exceeding 90 days in payment are evidence of impairment loss for a receivable. The impairment loss recognized in the income statement is the diff erence measured between the carrying amount and the present value of estimated future cash fl ows of a receivable. If impairment loss is decreased during any later period and the basis for this can objectively be related to an event occurred after the original impairment, the reversal is recognized in the income statement.
Financial liabilities are originally recognized at their fair value on the basis of the consideration received. Transaction costs are included in the original carrying amount of fi nancial liabilities. Non-current fi nancial liabilities are later valued at amortized cost using the eff ective interest rate method.
The fair values of publicly quoted derivative contracts and fi nancial assets classifi ed as held for trading or available for sale, are based on the quoted prices on balance sheet date. In the determination of fair value of fi nancial instruments that are not publicly quoted in active market, the Group uses diff erent valuation techniques and makes assumptions that are based on data from observable markets on balance sheet date.
Lease liabilities on tangible assets, which expose the Group to signifi cant risks and rewards inherent in holding such assets, are classifi ed as fi nance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. An asset based on a fi nance lease will be depreciated over its useful life or within the shorter lease term. Lease payments are apportioned between the fi nance charge and the reduction of the outstanding liability so that the fi nance charge is allocated to each period during the lease term to produce a constant periodic rate of interest on the remaining balance of the liability. Rental obligations are included in interest bearing liabilities.
Leases where a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as other operating leases. Payments made under operating leases, included in other operating expenses, are charged to the income statement on a straight-line basis over the period of the lease.
Borrowing costs are recognized as an accrual-based expense.
The undiluted earnings per share is calculated by dividing the net result for the fi nancial year by the weighted average number of ordinary shares outstanding during the fi nancial year. The amounts of treasury shares held by the Group are not included
in the amount of outstanding shares. A dilutive eff ect caused by share options exists when the subscription price of share is lower than the fair value the share. In the calculation of diluted earnings per share the potential ordinary shares are anti-dilutive when their conversion to ordinary shares would increase earnings per share or decrease loss per share from continuing operations. When the result of the Group is negative, no dilutive eff ect will be calculated.
Ordinary shares are presented as share capital. Dividends paid to the ordinary shares are deducted from shareholders' equity in the period during which the decision to distribute dividends is made.
Costs directly related to share issue, other than costs attributable to a business combination, are deducted, net of tax, from the proceeds recorded to shareholders' equity. Share issue costs directly attributable to business combinations are included in acquisition cost.
If SSH Security Corp or its subsidiaries purchases SSH shares, the consideration paid including any related incremental external costs, net of tax, is deducted from total shareholders' equity as treasury shares until the shares are cancelled. If treasury shares are subsequently sold, any consideration received is included in shareholders' equity.
Tax expenses in the income statement comprise tax based on taxable income for the period and deferred tax. Income tax is recorded in the income statement, except for taxes related to items recorded directly to the shareholders' equity. These items are recorded net of tax. Tax based on taxable income for the period is calculated using the corporate income tax rate eff ective in each country, adjusted to any taxes from previous periods.
Deferred taxes are calculated on all temporary diff erences between the carrying amount and taxable value. The largest temporary diff erences arise from the depreciation diff erences of property, plant and equipment, revaluation of certain assets and derivative contracts, provisions deductible at a later date, unused tax losses and measurement at fair value in connection with acquisitions.
Deferred taxes are calculated using the statutory tax bases or the tax bases whose confi rmed content has been announced by the closing date. Deferred tax assets are recognized to the extent that it is probable that taxable income, against which the temporary diff erence can be applied, will materialize in the future.
The Group's pension schemes comply with each country's rules and regulations. Pension expenses for the Group's personnel are managed in external insurance companies. The Group applies defi ned contribution pension plans, as classifi ed under IAS 19 (Employee Benefi ts). Contributions under the defi ned contribution plan will be recognized in the income statement for the accounting period during which such contributions were made.
The Group has granted share options to its management and employees at a fi xed subscription price specifi ed in the terms of the share option scheme. The Group has applied IFRS 2 Sharebased Payment to all share option schemes in which options have been granted after November 7, 2002, and to which rights have not vested before January 1, 2005. No expenses on prior share option schemes have been presented in the income statement.
The fair value of share options is determined as at the time granted and expensed in even installments in the income statement over the vesting period of the rights. The expense determined at the time of granting the option is based on the Group's estimate of the number of options to which it is assumed that rights will vest by the end of the vesting period. The fair value is determined using the Black-Scholes pricing model. The nonmarket criteria are not included in the fair value of the option but taken into account in the number of options that are assumed to vest at the end of the vesting period. The Group updates at each closing the estimate of the fi nal amount of the options that will vest. When the options are exercised, the proceeds received, net of any transaction costs, are credited to share capital and share premium account.
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outfl ow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the Group expects a provision to be reimbursed, for example, by a third party, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The Group recognizes a provision for onerous contracts when the expected benefi ts to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Provisions are stated at a present value of the obligation. The discount rate is determined to refl ect current market assessments of the time value of money and the risks specifi c to the obligation.
The following interpretations published 2009 has aff ect on Company's fi nancial statements
The following interpretations published 2009 are not estimated to have any essential eff ect on the Company's fi nancial statements:
IFRIC 13, Customer Loyalty Programmes
IFRIC 14, IAS 19 The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction
The Company will start using the following standards and interpretations in 2010. Their eff ect on the fi nancial statement will not be material
The Company will start using the following standards and interpretations in 2011. SSH estimates no aff ects on its fi nancial statements:
• IAS 32 (Amendment), Financial Instruments: Presentation – Classifi cation of Rights Issues
* The standard, interpretation or amendment to published standard or interpretation is still subject to endorsement by the European Union.
When preparing the fi nancial statements, the Group's management has to make estimates and assumptions infl uencing the content of the fi nancial statements. Although these estimates are based on management's best knowledge of current events and actions, the actual results may diff er from the estimates. The management must also exercise its judgment regarding the application of accounting policies. Possible eff ects of changes in estimates and assumptions are recorded in the income statement and balance sheet in the period during which estimates and assumptions are adjusted, and also in all the following periods.
The most important of these estimates and assumptions are related to the credit risk of trade receivables and the utilisation of deferred tax assets.
The Group's segment information is presented according to business and geographical segments. The Group's primary reporting format is based on geographical segments, based on the Group's internal organizational structure and fi nancial reporting. The nature of markets and risks diff er from segment to segment.
Segment assets and liabilities are items which are used by the segment in its business or which can be allocated to the segment. Unallocated items include items shared by the Group. Capital expenditure comprises additions to tangible assets used during several periods. Market pricing is used for intra-segment transactions.
Geographical segments:
The Group's geographical segments are as follows:
The geographical segments are presented according to the location of the assets.
The Group is organized into one business segment.
| Unallocated | ||||||
|---|---|---|---|---|---|---|
| 2008 | EROW | AMERICAS | APAC | costs Eliminations | Group total | |
| NET SALES | 1,932,823 | 5,834,425 | 754,655 | 0 | 0 | 8,521,902 |
| Purchasing and production costs | -18,453 | -389 | -3,062 | -104 | 0 | -22,008 |
| GROSS MARGIN | 1,914,370 | 5,834,036 | 751,593 | -104 | 0 | 8,499,894 |
| Other operating income | 0 | 18,210 | 110 | 137,504 | 0 | 155,824 |
| Segment costs and depreciations | -804,277 | -3,165,270 | -6,575,455 | -5,131,237, | 0 | -10,861,626 |
| OPERATING PROFIT/LOSS | 1,110,093 | 2,686,975 | 435,068, | -6,438,055 | 0 | -2,205,918 |
| Financial income | 890,686 | |||||
| Financial expenses | -217,097 | |||||
| PROFIT BEFORE TAXES | -1,532,328 | |||||
| Taxes | -253,515 | |||||
| PROFIT FOR THE FINANCIAL PERIOD | -1,785,843 | |||||
| Segment assets | 1,001,644 | 1,832,369 | 154,395 | 16,129,040 | 0 | 19,117,447 |
| Segment liabilities | 2,278,329 | 8,679,194 | 154,395 | -601,868 | -5,906,209 | 4,603,841 |
| Capital expenditure | 94,914 | 14,545 | 109,458 | |||
| Depreciations | 193,190 | 11,016 | 204,206 |
Group-level costs mainly comprise group-level R&D and administration expenses.
| Unallocated | |||||
|---|---|---|---|---|---|
| EROW | AMERICAS | APAC | Group total | ||
| 2,477,979 | 5,530,053 | 803,874 | 0 | 0 | 8,811,906 |
| -62,459 | -55 | -820 | 0 | 0 | -63,333 |
| 2,415,520 | 5,529,998 | 803,054 | 0 | 0 | 8,748,572 |
| 0 | 0 | 0 | 136,846 | 0 | 136,846 |
| -1,323,300 | -3,017,881 | -346,674 | -5,684,607 | 0 -10,372,462 | |
| 1,092,220 | 2,512,118 | 456.379 | -5,547,760 | 0 | -1,487,043 |
| 443,690 | |||||
| -120,526 | |||||
| -1,163,879 | |||||
| -8,485 | |||||
| -1,173,447 | |||||
| 1,728,116 | 1,558,316 | 154,395 | 5,981,487 | 0 | 9,422,314 |
| 2,481,743 | 8,331,817 | 154,395 | -541,642 | -5,432,671 | 4,993,642 |
| 105,090 | 7,553 | 112,643 | |||
| 158,503 | 11,262 | 169,765 | |||
| costs Eliminations |
| 2009 | 2008 | |
|---|---|---|
| Income from license sales | 3,941,100 | 3,996,501 |
| Income from maintenance | 4,730,993 | 4,479,701 |
| Other Income | 139,812 | 45,701 |
| Total | 8,811,906 | 8,521,902 |
| 2009 | 2008 | |
|---|---|---|
| Rental income | 136,846 | 128,283 |
| Other | 0 | 27,541 |
| Total | 136,846 | 155,824 |
| 2009 | 2008 | |
|---|---|---|
| Wages and salaries | 5,286,335 | 5,668,966 |
| Pensions, defi ned contribution plan | 583,260 | 625,419 |
| Other personnel expenses | 308,945 | 153,997 |
| Granted stock option rights | -2,097 | 2,097 |
| Total | 6,176,442 | 6,450,478 |
The Group applies defi ned contribution pension plans. Note 32 comprises information on management benefi ts.
| Personnel | 2009 | 2008 |
|---|---|---|
| On average | 66 | 77 |
| At period-end | 64 | 73 |
| Personnel distribution by | ||
|---|---|---|
| business area on 31 Dec | 2009 | 2008 |
| R&D | 37 | 40 |
| Sales and Marketing | 14 | 25 |
| Administration | 13 | 8 |
| Total | 64 | 73 |
| 2009 | 2008 | |
|---|---|---|
| On machinery and equipment | 79,004 | 78,146 |
| On fi nancial assets | 77,340 | 44,054 |
| On other tangible assets | 837 | 600 |
| On software | 12,585 | 69,219 |
| On capitalized development expenses | 0 | 12,186 |
| Total | 169,765 | 204,206 |
| Depreciations by activity, € | 2009 | 2008 |
| On R&D expenses | 68,383 | 130,768 |
| On sales and marketing expenses | 11,906 | 22,435 |
| On administration expenses | 89,476 | 51,003 |
| Total | 169,765 | 204,206 |
| 2009 | 2008 | |
|---|---|---|
| Interest income | 11,385 | 42,784 |
| Gains on held-to-maturity investments | 159,640 | 772,732 |
| Gains on exchange rate diff erences | 270,796 | 75,170 |
| Total | 443,690 | 890,686 |
| 2009 | 2008 | |
|---|---|---|
| Interest on fi nancial leases | 7,294 | 5,214 |
| Losses on exchange rate diff erences | 113,223 | 211,816 |
| Other interest expenses | 9 | 66 |
| Total | 120,526 | 217,096 |
| 2009 | 2008 | |
|---|---|---|
| Deferred tax | -1,083 | 244,574 |
| Other direct taxes | -8,485 | 8,941 |
| Total | -9,568 | 253,515 |
Comparison of taxes based on the valid tax rate in Finland with those stated in the income statement:
| 2009 | 2008 | |
|---|---|---|
| Profi t/Loss before taxes, total | -1,163,879 | -1,532,328 |
| Tax at 26% | 302,609 | 398,405 |
| Eff ect of foreign subsidiaries' diff ering tax | ||
| rates | 11,033 | -111,634 |
| Expenses not deductible for tax purposes | -125,482 | 107,899 |
| Tax-free income | 90,396 | -261,519 |
| Use of previously unrecognized tax losses | 178,727 | 207,041 |
| Tax assets not recognized for reported losses | -464,065 | -387,530 |
| Use of previously recognized tax assets | 0 | -244,574 |
| Deferred taxes | -1,083 | 0 |
| Taxes from earlier reporting periods | -1,702 | 38,397 |
| Tax charge in income statement | -9,568 | 253,515 |
| 2009 | 2008 | |
|---|---|---|
| Profi t/loss attributable to the equity holders of the parent company |
-1,173,447 | -1,785,843 |
| Weighted average number of shares in issue (thousands) |
28,791 | 28,545 |
| Earnings per share (basic) (€ per share) | -0.04 | -0.06 |
| Adjusted average number of shares considering dilution eff ect (thousands) |
29,919 | 28,913 |
| Earnings per share (diluted) (€ per share) | -0.04 | -0.06 |
| Machinery & equipment, € | 2009 | 2008 |
|---|---|---|
| Acquisition cost 1 Jan | 1,192,883 | 1,102,664 |
| Conversion diff erence | -5,226 | 7,615 |
| Increase | 67,972 | 82,605 |
| Decrease | -72 | 0 |
| Acquisition cost 31 Dec | 1,255,557 | 1,192,883 |
| Accumulated depreciation 1 Jan | 1,060,353 | 977,707 |
| Conversion diff erence | -4,596 | 6,797 |
| Depreciation for the period | 81,330 | 75,326 |
| Conversion diff erence of depreciation | -432 | 523 |
| Accumulated depreciation 31 Dec | 1,136,655 | 1,060,353 |
| Book value 31 Dec | 118,902 | 132,530 |
| Other tangible assets, € | 2009 | 2008 |
|---|---|---|
| Acquisition cost 1 Jan | 21,729 | 16,594 |
| Conversion diff erence | -596 | 959 |
| Increase | 4,176 | |
| Acquisition cost 31 Dec | 21,133 | 21,729 |
| Accumulated depreciation 1 Jan | 18,180 | 16,594 |
| Conversion diff erence | -505 | 985 |
| Depreciation for the period | 837 | 600 |
| Accumulated depreciation 31 Dec . | 18,511 | 18,180 |
| Book value 31 Dec | 2,623 | 3,550 |
| Balance sheet value of tangible assets, 31 Dec, € |
232,262 | 322,545 |
| Software, € | 2009 | 2008 |
|---|---|---|
| Acquisition cost 1 Jan | 1,802,212 | 1,798,655 |
| Conversion diff erence | -425 | 684 |
| Increase | 34,500 | 2,874 |
| Acquisition cost 31 Dec | 1,836,287 | 1,802,212 |
| Accumulated depreciation 1 Jan | 1,793,638 | 1,723,736 |
| Conversion diff erence | 0 | 684 |
| Depreciation for the period | 12,160 | 69,219 |
| Accumulated depreciation 31 Dec | 1,805,798 | 1,793,638 |
| Book value 31 Dec | 30,489 | 8,574 |
| Charged in income | ||||
|---|---|---|---|---|
| 1.1.2008 | statement | Charged in equity | ||
| Deferred tax receivables | ||||
| From losses | 244 960 | -244 960 | 0 | 0 |
| Deferred tax liabilities | ||||
| Fair valuation of available-for-sale investments | 0 | 0 | 0 | 0 |
| Other | 386 | -386 | 0 | 0 |
| Total | 386 | -386 | 0 | 0 |
| Charged in income | ||||
|---|---|---|---|---|
| 1.1.2009 | statement | Charged in equity | 31.12.2009 | |
| Deferred tax receivables | ||||
| From losses | 0 | 0 | 0 | 0 |
| Deferred tax liabilities | ||||
| Fair valuation of available-for-sale investments | 0 | 0 | 0 | 0 |
| Other | 0 | 0 | 1,083 | 1,083 |
| Total | 0 | 0 | 1,083 | 1,083 |
Confi rmed losses from earlier years that are not recognized as deferred tax assets by the Group, amount to EUR 22.5 million. Of these, EUR 16.4 are domestic and EUR 6.2 million from the operations in the USA. The domestic confi rmed losses will begin to expire from 2012–2019 onwards and the confi rmed losses in the USA from 2020–2029 onwards. Unrecognized deferred tax assets from taxable losses amounts to EUR 6.9 million
There is not any taxable profi t in subsidiaries.
| 2009 | 2008 |
|---|---|
| 2,455,457 | 1,983,447 |
| Recognized as losses on loans |
Recognized as losses on loans |
|||||
|---|---|---|---|---|---|---|
| 2009 | and advances | Net value 2009 | 2008 | and advances | Net value 2008 | |
| Non-matured | 2,212,763 | 0 | 2,212,763 | 1,641,575 | 1,641,575 | |
| Matured | ||||||
| Less than 30 days | 104,211 | 0 | 104,211 | 170,192 | 170,192 | |
| 30–50 days | 19,966 | 0 | 19,966 | 52,213 | 52,213 | |
| Over 50 days | 118,520 | 0 | 118,520 | 119,548 | -81 | 119,467 |
| Total | 2,455,457 | 0 | 2,455,457 | 2,459,242 | -81 | 1,983,447 |
| Trade receivables by currency, € | 2009 | 2008 |
|---|---|---|
| Euro | 157,087 | 216,872 |
| USD | 1,135,050 | 1,519,547 |
| JPY | 0 | 0 |
| GBP | 185,293 | 152,814 |
| CHF | 978,027 | 94,215 |
| Total | 2,455,457 | 1,983,447 |
| 2009 | 2008 | |
|---|---|---|
| Prepayments | 81,523 | 103,011 |
| VAT receivables | 156,159 | 181,352 |
| Other current receivables | 68,826 | 4,450 |
| Total | 306,508 | 288,814 |
| 2009 | 2008 | |
|---|---|---|
| Personnel related | 2,341 | 2,341 |
| Other prepaid expenses and accrued income | 22,791 | 33,107 |
| Total | 25,132 | 35,448 |
| 2009 | 2008 | |
|---|---|---|
| Nominal value 1 Jan | 14,500,000 | 20,302,557 |
| Additions | 18,030,687 | 54,200,033 |
| Reductions | 30,010,586 -60,002,590 | |
| Change in fair value | -11,979,900 | -5,802,557 |
| Fair value Dec 31 | 2,520,100 | 14,500,000 |
| Current investments | 2,520,100 | 14,500,000 |
Realized capital gains and losses on available-for-sale investments and fi xed-term deposits are presented in notes 8 and 9.
| Balance sheet item 31.12.2008 € | Loans and receivables |
Financial assets held to maturity |
Financial liabilities measured at amortized cost |
Total | Note |
|---|---|---|---|---|---|
| Current fi nancial assets: | |||||
| Trade and other receivables | 2,272,261 | 2,272,261 | 15, 16 | ||
| Investments held to maturity | 14,500,000 | 14,500,000 | 19 | ||
| Cash and cash equivalents | 1,978,620 | 1,978,620 | |||
| Current fi nancial assets total: | 4,250,881 | 14,500,000 | 0 | 18,750,881 | |
| Long-term fi nancial liabilities: | |||||
| Financial lease liabilities | 110,973 | 110,973 | 24 | ||
| Current fi nancial liabilities: | |||||
| Trade and other payables | 503,000 | 503,000 | 26, 28 | ||
| Financial liabilities, total: | 0 | 0 | 613,973 | 613,973 |
| Financial liabilities, total: | 0 | 0 | 1,077,537 | 1,077,537 | |
|---|---|---|---|---|---|
| Trade and other payables | 962,962 | 962,962 | 26, 28 | ||
| Current fi nancial liabilities: | 73,860 | 73,860 | |||
| Financial lease liabilities | 40,715 | 40,715 | 24 | ||
| Long-term fi nancial liabilities: | |||||
| Current fi nancial assets total: | 6,603,331 | 2,520,100 | 0 | 9,123,431 | |
| Cash and cash equivalents | 3,841,366 | 3,841,366 | |||
| Investments held to maturity | 2,520,100 | 2,520,100 | 19 | ||
| Trade and other receivables | 2,761,965 | 2,761,965 | 15, 16 | ||
| Current fi nancial assets: | |||||
| Balance sheet item 31.12.2009 € | Loans and receivables |
Financial assets held to maturity |
Financial liabilities measured at amortized cost |
Total | Note |
According to the Corporate Bylaws SSH Communications Security Corp's share capital is a minimum of EUR 600,000 and a maximum of EUR 2,400,000, within which limits it can be increased or reduced without altering the Corporate Bylaws. The nominal per share value is EUR 0.03, hence the minimum number of shares is 20 million and maximum number of shares 80 million. SSH has one class of shares. Each share entitles its holder to one vote at the shareholders' meeting. The company's registered and fully paid share capital December 31, 2009 amounted to EUR 896,953, and the number of shares was 29,898,499.
The Annual General Meeting 4th of March 2009 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 defi ned in the Finnish Companies Act Chapter 10, section 1, with or without subscription rights to shareholders. This authorization is eff ective until the next Annual General Meeting, but will expire 30
June 2010, at the latest. During the reporting period the Board of Directors exercised this authorization as part of the management investment plan by issuing new shares for SSH Management Investment Corp subscription against payment.
The Annual General Meeting decided upon the distribution of assets from the invested non-restricted equity fund to the shareholders in such a way that assets shall be distributed 0.30 euro per share. The amount distributed was in total 8,595,680.40 euro. The return of equity was paid to the shareholders who on the record date on March 9th 2009 were registered in the shareholders' register of the company held by Euroclear Finland Oy, and the payment date was on March 16th 2009. Furthermore, the Annual General Meeting decided to lower the subscription price of the shares that can be subscribed based on the option plans released by the company between years 2000– 2008, with an amount corresponding to the distribution of assets, i.e. 0.30 euro per option right. The subscription price of the shares shall, however, always have at least the same value as the par value.
| premium fund: | Number of shares | Share capital | Share premium fund | Total |
|---|---|---|---|---|
| 31.12.2008 | 28,583,775 | 857,513 | 0 | 857,513 |
| New shares issue for CEO incentive plan | 68,493 | 2,055 | 0 | 2,055 |
| Subscriptions under stock option plan I/1999 | 2,600 | 78 | 0 | 78 |
| Subscriptions under stock option plan I/2003 | 143,581 | 4,307 | 0 | 4,307 |
| New shares issue for management incentive plan |
1,100,000 | 33,000 | 0 | 33,000 |
| 31.12.2009 | 29,898,449 | 896,953 | 0 | 896,953 |
The translation diff erences comprise the foreign exchange diff erences arising from the translation of the fi nancial statements of the foreign subsidiaries.
Fair value and other reserves consist of three diff erent funds: fair value reserve for available-for-sale investments, a hedging reserve for changes in the fair value of cash fl ow hedging instruments and a reserve for the costs of granted stock option rights.
Unrestricted equity funds comprise the parent company's unrestricted invested equity fund.
The Company's objective when managing capital is to secure the ability to continue operating. The structure of the capital can be managed through decision concerning, for instance, dividend and other distribution of assets, purchase of the company's own shares and share issues. The indicators depicting the capital structure are the equity-to-assets ratio and gearing.
SSH's share-based payments consist of the following stock option plans.
| Stock option plan | Warrant | Date of issue | Subscription period | Share subcription price, € |
Unexercised option rights |
|
|---|---|---|---|---|---|---|
| Start | End | |||||
| I/1999 | I/1999C | 05.08.1999 | 01.05.2001 | 01.05.2011 | 0.03 | 375 |
| I/1999D | 05.08.1999 | 01.11.2001 | 01.11.2011 | 0.03 | 375 | |
| I/1999E | 05.08.1999 | 01.05.2002 | 01.05.2012 | 0.03 | 6,112 | |
| I/1999F | 05.08.1999 | 01.11.2002 | 01.11.2012 | 0.03 | 4,862 | |
| I/1999G | 05.08.1999 | 01.05.2003 | 01.05.2013 | 0.03 | 4,239 | |
| I/1999H | 05.08.1999 | 01.11.2003 | 01.11.2013 | 0.03 | 3,612 | |
| 19,575 | ||||||
| 10.7.2000 | 10.07.2000 | 01.11.2000 | 01.11.2010 | 5.51 | 32,000 | |
| I/2000 | I/2000A | 10.07.2000 | 01.05.2001 | 01.05.2011 | 5.51 | 41,900 |
| I/2000B | 13.09.2000 | 01.11.2001 | 01.11.2011 | 5.51 | 66,628 | |
| I/2000C | 22.03.2001 | 01.05.2002 | 01.05.2012 | 5.51 | 40,062 | |
| II/2000 | II/2000A | 22.03.2001 | 01.11.2001 | 01.11.2011 | 14.01 | 3,250 |
| II/2000B | 22.03.2001 | 01.05.2002 | 01.05.2012 | 14.01 | 1,625 | |
| II/2000C | 22.03.2001 | 01.11.2002 | 01.11.2012 | 14.01 | 875 | |
| II/2000D | 22.03.2001 | 01.05.2003 | 01.05.2013 | 14.01 | 875 | |
| II/2000E | 22.03.2001 | 01.11.2003 | 01.11.2013 | 14.01 | 875 | |
| II/2000F | 22.03.2001 | 01.05.2004 | 01.05.2014 | 14.01 | 875 | |
| II/2000G | 22.03.2001 | 01.11.2004 | 01.11.2014 | 14.01 | 875 | |
| 9,250 | ||||||
| II/2002 | II/2002A | 11.04.2002 | 06.06.2002 | 11.04.2012 | 1.01 | 1,375 |
| II/2002B | 11.04.2002 | 06.05.2003 | 11.04.2012 | 1.01 | 250 | |
| II/2002C | 11.04.2002 | 06.05.2004 | 11.04.2012 | 1.01 | 1,500 | |
| II/2002D | 11.04.2002 | 06.05.2005 | 11.04.2012 | 1.01 | 1,500 | |
| 4,625 | ||||||
| III/2002 | III/2002A | 26.06.2002 | 06.05.2004 | 26.06.2012 | 0.91 | 6,124 |
| III/2002B | 26.06.2002 | 06.05.2005 | 26.06.2012 | 0.91 | 6,125 | |
| III/2002C | 26.06.2002 | 06.05.2006 | 26.06.2012 | 0.91 | 6,625 | |
| III/2002D | 26.06.2002 | 06.05.2007 | 26.06.2012 | 0.91 | 6,625 | |
| 25,499 | ||||||
| II/2003 | II/2003A | 29.04.2003 | 01.05.2004 | 29.04.2013 | 0.03 | 749 |
| II/2003B | 29.04.2003 | 01.05.2005 | 29.04.2013 | 0.03 | 501 | |
| II/2003C | 29.04.2003 | 01.05.2006 | 29.04.2013 | 0.03 | 1,124 | |
| II/2003D | 29.04.2003 | 01.05.2007 | 29.04.2013 | 0.03 | 1,126 | |
| 3,500 |
On the balance sheet date, SSH had 243,039 (2008: 893,348) stock options outstanding. Excercisable stock options entitle to 0.01% share ownership and represent 0.01% of votes. The weighted average exercise price of remaining stock options was EUR 4.80 (2008: EUR 2.21). The weighted average of the remaining subscription period was 1.9 years (2008: 1.9 years). The exercise price varies from EUR 0.03 to EUR 14.01 and the remaining subscription period from 10 months to 4.8 years.
| 2009 | 2008 | |||
|---|---|---|---|---|
| Weighted average exercise price, € |
Number of stock options | Weighted average exercise price, € |
Number of stock options | |
| At the beginning of period | 3.18 | 893,348 | 2.98 | 1,052,760 |
| Granted stock options | 0 | 0 | 1.46 | 500,000 |
| Forfeited stock options | 0.03 | 5,666 | 2.96 | 611,749 |
| Cancelled stock options | 0.03 | 501,062 | ||
| Exercised stock options | 0.18 | 146,181 | 0.33 | 47,663 |
| At the end of period | 4.80 | 240,439 | 2.21 | 893,348 |
| Exercisable stock option rights at the end of period |
4.80 | 240,439 | 3.18 | 393,348 |
SSH's weighted average share price was EUR 0.79 in 2009 and EUR 1.48 in 2008.
| 2009 | 2008 |
|---|---|
| 385,904 | 123,214 |
| Restructuring provisions |
Onerous contracts |
|
|---|---|---|
| 31.12.2008 | 0 | 0 |
| Increases in provisions | 138,089 | |
| 31.12.2009 | 138,089 | 0 |
| payments, € | 2009 | 2008 |
|---|---|---|
| Not later than 1 year | 82,205 | 80,784 |
| 1–5 years | 55,380 | 110,676 |
| Total | 137,585 | 191,460 |
| Finance lease liabilities – the present value of | ||
|---|---|---|
| minimum lease payments, € | 2009 | 2008 |
| Not later than 1 year | 73,860 | 77,607 |
| 1–5 years | 40,715 | 110,973 |
| Total | 114,575 | 188,580 |
| Future fi nance charges, € | 3,808 | 10,512 |
| Total fi nance lease liabilities, € | 2009 | 2008 |
| Short-term | 73,860 | 77,607 |
| Long-term | 40,715 | 110,973 |
The Group has leased offi ce and IT equipment under long-term agreements. The lease agreements for IT equipment contain renewal options and purchase options at market price. The other lease agreements do not contain renewal nor purchase options. All rents are fi xed. The duration of the agreements is usually 3–5 years, and the liabilities as of 31 December 2009, are due until 30th of May 2012.
| 2009 | 2008 |
|---|---|
| 3,222,854 | 3,218,981 |
| 2009 | 2008 | |
|---|---|---|
| Personnel related | 750,713 | 762,725 |
| Tax payables | 10,866 | 8,162 |
| Other accrued expenses and deferred income | 30 | 0 |
| Total | 766,028 | 770,887 |
| 2009 | 2008 | |
|---|---|---|
| Personnel related | 386,065 | 195,006 |
| Finance lease liabilities | 73,860 | 77,607 |
| Other current liabilities | 117,133 | 107,174 |
| Total | 577,058 | 379,786 |
Personnel related liabilities include SSH Management Investment Corp's share capital totaling EUR 266,640 which is eliminated from the Group fi nancial statement."
The group is exposed to fi nancial risks in its normal business. The aim of the group's risk management is to minimize negative impacts of changes on fi nancial markets to the group's income.
The Group operates internationally and is exposed to foreign exchange risk, with the most signifi cant currency being USD. Transaction risks are managed based on the net position using, when required, forward contracts or options. On the balance sheet date, the Company has not made any hedging operations to avoid exchange risks.
The Group has no interest bearing debt and therefore no need for debt protection. The Group's money market investments expose it to interest rate risks, but the exposure is not signifi cant as a whole.
The Company's cash reserves have been invested in accordance with the policy approved by the Board of Directors. At the end of the fi nancial reporting period, almost all the assets are invested in fi xed income funds and cash in fi nancial institutions with high credit ratings.
The Group has no signifi cant concentrations of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.
There is no liquidity risk related to the group, since the invested funds are large and are available on a one-day notice.
Other rental agreements are lease agreements not classifi ed as fi nance lease agreements.
| Non-cancellable rental agreements for offi ce | ||
|---|---|---|
| facilities – minimum lease payments, € | 2009 | 2008 |
| Not later than 1 year | 338,372 | 619,145 |
| 1–5 years | 945,612 | 491,270 |
| Total | 1,283,984 | 1,110,415 |
| commitments for vehicles – minimum lease payments, € |
2009 | 2008 |
|---|---|---|
| Not later than 1 year | 70,249 | 85,715 |
| 1–5 years | 65,244 | 118,251 |
| Total | 135,493 | 203,966 |
The Group rents the offi ces it utilizes. The duration of the rental agreements are usually 3–5 years, and normally the agreements include prolongation options past the original ending date. The index, renewal and other terms and conditions diff er from agreement to agreement. The income statement for year 2009 contains rents based on rental agreements for a total of EUR 802,813 (EUR 675,887 in 2006), which includes restructuring provision total of EUR 138,089. The Group has sublet part of its offi ces. The rental income related to the subleases is EUR 136,846 in 2009 (EUR 128,283 in 2008). The minimum future rental income related to the subleases was EUR 41 876 as of 31 December 2009 (EUR 167,504 on 31 December 2008).
The Group also leases vehicles. The lease rents are fi xed and the duration of the agreements are on average 3–4 years. The income statement for year 2009 contains expenses based on vehicle lease agreements for a total of EUR 101,279 (EUR 95,987 in 2008).
| Rental guarantees, € | 2009 | 2008 |
|---|---|---|
| Rental guarantees (monetary pledge) | 86,091 | 24,038 |
| The Group has in previous years received public funding com |
prising a possible payback obligation.
| Group companies | Native country | Group holding,% | Share of voting Right, % |
|---|---|---|---|
| SSH Communications Security Oyj, Helsinki | Finland | ||
| SSH Communications Security Inc., Los Altos | USA | 100 | 100 |
| SSH Operations Oy, Helsinki | Finland | 100 | 100 |
| SSH Management Investment Oy, Helsinki | Finland | 0 | 100 |
| Board and Management benefi ts, € | 2009 | 2008 | |
| Managing director/Jari Mielonen | 227,040 | 367,220* | |
| Board/Tomi Laamanen | 16,800 | 16,800 | |
| Board/Pyry Lautsuo | 16,800 | 12,600 | |
| Board/Juho Lipsanen | 14,000 | 0 | |
| Board/Juha Mikkonen | 16,800 | 12,600 | |
| Board/Timo Ritakallio | 4,200 | 16,800 | |
| Board/Tatu Ylönen | 0 | 0 |
*Arto Vainio managing director until 31.10.2008. Jari Mielonen managing director from 17.11.2008.
| 31.12.2009 | 31.12.2009 | 31.12.2008 | 31.12.2008 |
|---|---|---|---|
| Shares | Options | Shares | Options |
| 124,000 | 2,000 | 22,000 | 4,000 |
| 12,500 | 0 | 0 | 0 |
| 21,865 | |||
| 4,003,000 | 0 | 4,203,000 | 0 |
| 14,554,963 | 0 | 15,103,280 | 0 |
| 18,716,328 | 2,000 | 19,336,280 | 4,000 |
| 31.12.2009 | 31.12.2009 | 31.12.2008 | 31.12.2008 | |
|---|---|---|---|---|
| The share and stock option holdings of the management team |
Shares | Options | Shares | Options |
| Jari Mielonen (managing director) | 531,138* | 0 | 0 | 500,000 |
| Tero Harjula | 225,653* | 0 | 0 | 0 |
| Mikko Karvinen | 225,653* | 0 | 0 | 0 |
| Jouni Leinonen | 225,653* | 0 | 0 | 0 |
| Pekka Rauhala | 245,653* | 22,500 | 20,000 | 22,500 |
| Total | 1,453,750 | 22,500 | 20,000 | 522,500 |
* Includes in-direct holdings which are formed with ownership of SSH Management Investment Corp.
The Company's directors are rewarded based on stocks, which is utilized with SSH Management Investment Corp. There are not any other reward practices or any extraordinary pension programs for the CEO or management.
SSH Management Investment Corp owns total of 1,433,750 company shares. Total of 1,100,000 shares were subscribed with separate new share issue. During December 2009 SSH Management Investment Corp acquired from stock markets total of 337 500 company shares. Share subscription was fi nanced with management group EUR 266,640 investments and loan EUR 792,000 granted by SSH Communications Security Corp. The owned shares will be held in management investment company until it is dissolved. The incentive plan will be valid until fall 2013, at which time the plan is intended to be dissolved in a manner to be determined later. SSH Communications Security Corp. loan interest is defi ned as 12 months euribor rate added with loan margin of 0.65 percentages. Interest is paid on yearly basis. The loan will be covered by the date of dissolve at the latest. The loan capital can be disbursed in advance. SSH Communications Security Corp. is entitled to demand advanced payment if SSH Management Investment Corp violates terms of the loan agreement. Collateral for the loan has been agreed to be the company shares possessed by SSH Management Investment Corp. SSH Communications Security Corp will request from Annual General Meeting to be held on 3 March 2010 for a mandate to hold the Company's own shares as collateral.
As of 31 December 2009, SSH's Board members and CEO hold, directly or indirectly through companies they own, 64.4 percent of Company shares and votes. The Board members and CEO hold 2,000 stock options. Options included, SSH's Board members and CEO hold at most 64.4 percent of shares and votes.
Other management team members hold directly or in-directly approximately 3.1 percent of the company's shares and they hold 22 500 options in total.
Management salaries and rewards are also stated in annual report.
Auditor's fees in 2009 were:
Changes in Share capital
| Number of Shares |
Share capital |
|
|---|---|---|
| 31.12.2005 | 28,268,813 | 848,064 |
| Stock option subscriptions | 155,082 | 4,652 |
| 31.12.2006 | 28,423,895 | 852,717 |
| Stock option subscriptions | 112,217 | 3,366 |
| 31.12.2007 | 28,536,112 | 856,083 |
| Stock option subscriptions | 47,663 | 1,430 |
| 31.12.2008 | 28,583,775 | 857,513 |
| Stock option subscriptions | 146,181 | 4,385 |
| New share issue for management incentives plan |
1,168,493 | 35,055 |
| 31.12.2009 | 29,898,449 | 896,953 |
| Type of sector | Number of shares | Percentage of shares and votes, % |
|---|---|---|
| Non-banking corporate sector | 6,045,076 | 20.22 |
| Financial and insurance companies and institutions | 450,524 | 1.51 |
| Public sector organizations | 495,450 | 1.66 |
| Non-profi t organizations | 81,550 | 0.27 |
| Households | 22,757,579 | 76.12 |
| Foreign shareholders | 68,270 | 0.23 |
| Total | 29,898,449 | 100.00 |
| Shares | Number of owners | Percentage of owners, % | Number of shares | Percentage of shares, % |
|---|---|---|---|---|
| 1–50 | 1798 | 34.52 | 87,031 | 0.29 |
| 51–100 | 411 | 7.89 | 40,121 | 0.13 |
| 101–500 | 1144 | 21.96 | 357,442 | 1.20 |
| 501–1,000 | 652 | 12.52 | 564,627 | 1.89 |
| 1,001–5,000 | 926 | 17.78 | 2,263,619 | 7.57 |
| 5,001–10,000 | 159 | 3.05 | 1,233,758 | 4.13 |
| 10,001–50,000 | 102 | 1.96 | 2,098,308 | 7.02 |
| 50,001–100,000 | 8 | 0.15 | 606,387 | 2.03 |
| 100,001–500,000 | 5 | 0.10 | 1,235,657 | 4.13 |
| 500,001–1,000,000 | 0 | 0 | 0 | 0.00 |
| 1,000,001–5,000,000 | 3 | 0.06 | 6,901,350 | 23.08 |
| 5,000,000–999,999,999 | 1 | 0.02 | 14,510,149 | 48.53 |
| Total | 5,209 | 100 | 29,898,449 | 100 |
| Of which nominee registered | 7 | 407,122 | 1.36 |
| % | Shares | |
|---|---|---|
| Ylönen Tatu Juhani | 48.53 | 14,510,149 |
| Assetman Oy | 13.38 | 4,000,000 |
| Kivinen Tero | 4.91 | 1,467,600 |
| SSH Management Investment Oy | 4.80 | 1,433,750 |
| Keskinäinen Eläkevakuutusyhtiö Ilmarinen | 1.62 | 483,450 |
| Nordea Pankki Suomi Oyj | 1.24 | 370,020 |
| Laakkonen Mikko | 0.48 | 142,187 |
| Laamanen Tomi Matti Mikael | 0.41 | 124,000 |
| Poutanen Jukka | 0.39 | 116,000 |
| Mäkinen Antti Vilho Juhani | 0.30 | 90,000 |
| Total | 76.05 | 22,737,136 |
| Nominee registered | 1.36 | 407,122 |
The Company management does not know of any essential events that would have occurred after the balance sheet date and that would have aff ected the fi nancial situation of the company.
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| NET SALES | 1 | 4,793,170.53 | 4,246,862.34 |
| Purchasing and production costs | 63,278.67 | 21,514.84 | |
| GROSS MARGIN | 4,729,891.86 | 4,225,347.50 | |
| R&D expenses | 3,215,815.11 | 3,403,531.73 | |
| Sales and marketing expenses | 1,637,780.80 | 1,892,997.66 | |
| Administrative expenses | 2,116,809.61 | 1,678,537.97 | |
| Other operating income | 7 | 484,523.65 | 770,888.57 |
| OPERATING PROFIT/LOSS | -1,755,990.01 | -1,978,831.30 | |
| Financial income and expenses | 8 | ||
| Other interest and fi nancial income | 358,938.86 | 985 846,41 | |
| Interest and other fi nancial expenses | 40,016.46 | 86 679,78 | |
| Financial income and expenses, total | 318,922.40 | 899,166.63 | |
| PROFIT/LOSS BEFORE EXTRAORDINARY ITEMS | -1,437,067.61 | -1,079,664.67 | |
| PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES | -1,437,067.61 | -1,079,664.67 | |
| APPROPRIATIONS | |||
| Change in depreciation diff erence | -4,166.66 | 0.00 | |
| PROFIT/LOSS BEFORE TAXES | -1,441,234.27 | -1,079,664.67 | |
| PROFIT/LOSS FOR THE FINANCIAL PERIOD | -1,441,234.27 | -1,079,664.67 |
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| Assets | 1 | ||
| NON-CURRENT ASSETS | |||
| Intangible assets | 9 | ||
| Intangible rights | 30,489.20 | 8,573.74 | |
| Intangible assets, total | 30 489.20 | 8,573.74 | |
| Tangible assets | 9 | ||
| Machinery & equipment | 102,282.26 | 107 741.94 | |
| Tangible assets, total | 102 282.26 | 107,741.94 | |
| Investments | |||
| Shares in Group companies | 9 | 100,841.75 | 100,841.75 |
| Other shares | 11,000.00 | 0.00 | |
| Investments total | 111,841.75 | 100,841.75 | |
| NON-CURRENT ASSETS, TOTAL | 244,613.21 | 217,157.43 | |
| CURRENT ASSETS | |||
| Current | |||
| Accounts receivable | 199,775.03 | 295,474.21 | |
| Receivables from the Group companies | 10 | 581,191.20 | 356,819.85 |
| Prepaid expenses and accrued income | 11 | 1,785.45 | 11,529.37 |
| Other receivables | 12 | 74,666.08 | 85,743.46 |
| Current receivables, total | 857,417.76 | 749,566.89 | |
| Long-term receivables | |||
| Receivables from the Group companies | 10 | 792,000.00 | 0,00 |
| Long-term receivables, total | 792,000.00 | 0,00 | |
| Financial investments | |||
| Other securities | 13 | 2,520,100.30 | 14,500,500.00 |
| Cash in hand and bank deposits | 3,092,007.70 | 1,087,907.46 | |
| CURRENT ASSETS, TOTAL | 7,261,525.76 | 16,337,474.35 | |
| ASSETS, TOTAL | 7,506,138.97 | 16,554,631.78 | |
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | 14 | ||
| Share capital | 896,953.47 | 857,513.25 | |
| Share premium fund | 7,036,806.42 | 14,825,541.61 | |
| Retained profi t/loss | -165,228.06 | 914,436.61 | |
| Net profi t/loss for the period | -1,441,234.27 | -1,079,664.67 | |
| SHAREHOLDERS' EQUITY, TOTAL | 6,327,297.56 | 15,517,826.80 | |
| LIABILITIES | |||
| Appropriations | |||
| Depreciation diff erence | 4,166.66 | ||
| 16 | 138,089.00 | ||
| Provisions | |||
| Other provisions | |||
| Current liabilities | |||
| Advances received | 181,031.79 | ||
| Accounts payable | 199,693.03 | ||
| Accrued expenses and deferred income | 523,374.83 | ||
| Other liabilities | 132,486.10 | ||
| Current liabilities, total | 1,036,585.75 | ||
| LIABILITIES TOTAL | 1,178,841.41 | 1,036,804.98 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL | 7,506,138.97 | 16,554,631.78 |
| € | Note* | 1.1.-31.12.2009 | 1.1.-31.12.2008 |
|---|---|---|---|
| Cash fl ow from operating activities | |||
| Sales revenue | 4,787,683.31 | 4,968,037.77 | |
| Revenue from other operations | 136,846.36 | 137,504.01 | |
| Payments from operating expenses | -6,409,776.97 | -6,976,963.94 | |
| Cash fl ow from operations before fi nancial items and taxes | -1,485,247.30 | -1,871,422.16 | |
| Interest and other fi nancial expenses paid | -40,016.46 | -86,679.78 | |
| Interest and other fi nancial income received | 29,153.88 | 281,791.53 | |
| Cash fl ow from operating activities, total | -1,496,109.88 | -1,676,310.41 | |
| Cash fl ow from investing activities | |||
| Investments in tangible and intangible assets | -90,752.92 | -70,934.34 | |
| Loans granted | -792,000.00 | 0.00 | |
| Purchase of investments | -11,000.00 | 0.00 | |
| Proceeds from sale of investments | 11,979,899.70 | 5,802,557.37 | |
| Interest received | 163,358.00 | 594,291.23 | |
| Cash fl ow from investing activities, total | 11,249,505.09 | 6,325,914.26 | |
| Cash fl ow from fi nancing activities | |||
| Share subscriptions | 846,385.43 | 8,684.74 | |
| Return of capital | -8,595,680.40 | -4,280,741.70 | |
| Cash fl ow from fi nancing activities, total | -7,494,294.97 | -4,272,056.96 | |
| Change in liquid assets | 2,004,100.24 | 377,546.89 | |
| Liquid assets at beginning of period | 1,087,907.46 | 710,360.57 | |
| Change in liquid assets | 2,004,100.24 | 377,546.89 | |
| Liquid assets at end of period | 3,092,007.70 | 1,087,907.46 |
The fi nancial statements of the parent company SSH Communications Security Corporation are prepared in accordance with Finnish Accounting Standards (FAS). All fi gures in the fi nancial statements are stated in Euros. Information on fi nancial risk management and use of derivatives are also presented in the consolidated fi nancial statements.
Revenue is principally entered in net sales once delivery has occurred or services have been rendered, the contract has been completed or the buyer has placed a written order and it has been assured that the buyer is solvent. Maintenance agreements are recognized evenly on an accrual basis throughout the contract period.
Expenses have been divided among functions according to their causative principles.
R&D expenses are expensed as incurred, excluding certain product development expenses, which are capitalized once certain criteria are met. Capitalized development expenses are amortized systematically over their useful lives.
Fixed assets are entered in the balance sheet at acquisition cost less depreciation and possible write-downs according to plan. Planned depreciations are calculated by type on a straight-line basis according to their economic life.
Machinery and equipment: 5 years from month of acquisition Computer hardware: 3 years from month of acquisition Intangible rights: 5 years from year of acquisition R&D expenses: 5 years from year of acquisition Other capitalized expenditure: 5 years from year of acquisition Basic repairs on rental premises: According to length of the rental agreement, but maximum 7 years from year of acquisition
The fi nancial assets are classifi ed as held-to-maturity assets. Held-to-maturity assets, which comprise investments in money market funds are stated at fair value. Changes in the fair value are recognized under the fair value reserves in shareholders' equity, adjusted with deferred tax liabilities or receivables. Heldto-maturity assets, which mainly comprise commercial papers and fi xed-term deposits, are measured at original cost.
Foreign currency denominated transactions are recorded at the exchange rate on the transaction date. Outstanding receivables and payables in foreign currencies are stated using the exchange rates on the balance sheet date. Exchange rate gains and losses on actual business operations are treated as sales adjustment items or adjustment items to materials and services. Exchange rate gains and losses on fi nancing are entered as fi nancial income and expenses in net terms.
The employees of the parent company and its subsidiaries have been granted stock option rights. The stock option rights entitle their holders to subscribe for shares at a fi xed subscription price specifi ed in the terms of the stock option scheme. Received proceeds from share subscriptions based on stock option plans enforced when the old Finnish Companies Act applied, are credited to share capital and share premium. When an employee exercises a stock option right, the company is obliged to deduct a withholding tax and to record a social expense in the income statement.
| 2009 | 2008 | |
|---|---|---|
| Finland | 420,065 | 406,962 |
| Rest of Europe | 1,123,086 | 980,208 |
| North America | 2,454,741 | 2,222,487 |
| Other | 795,279 | 637,206 |
| Total | 4,793,171 | 4,246,862 |
| 2009 | 2008 | |
|---|---|---|
| Wages and salaries | 3,330,241 | 3,466,281 |
| Pension costs | 570,383 | 611,577 |
| Other personnel expenses | 151,442 | 129,392 |
| Total | 4,052,066 | 4,207,250 |
| 2009 | 2008 | |
|---|---|---|
| Personnel on average | 46 | 52 |
| 2009 | 2008 | |
|---|---|---|
| R&D | 32 | 34 |
| Sales and marketing | 4 | 8 |
| Administration | 11 | 7 |
| Total | 47 | 49 |
| 2009 | 2008 | |
|---|---|---|
| Managing director * | 227,040 | 367,220* |
| Board of directors: | ||
| Tomi Laamanen | 16,800 | 16,800 |
| Pyry Lautsuo | 16,800 | 4,200 |
| Juho Lipsanen | 14,000 | 16,800 |
| Juha Mikkonen | 16,800 | 12,600 |
| Timo Ritakallio | 4,200 | 12,600 |
| Tatu Ylönen | 0 | 0 |
*Arto Vainio managing director until 31.10.2008. Jari Mielonen managing director from 17.11.2008.
| 2009 | 2008 | |
|---|---|---|
| On intangible rights | 12,585 | 84,419 |
| On capitalized development expenses | 0 | 12,186 |
| On machinery and equipment | 65,879 | 66,381 |
| Total | 78,464 | 162,986 |
Other income comprises rental income of EUR 138,846 as the group has sublet part of its offi ces. 2009 other operating income also includes return of cancelled receivables total of EUR 347,667.
In 2008 Other income comprised rental income of EUR 109,963. Other operating income also includes EUR 633,385 of returned receivables from fully owned subsidiaries that has been written down earlier, as well as EUR 27,540 of utilized provisions recognized in the balance sheet earlier years.
| 2009 | 2008 | |
|---|---|---|
| Interest income | 2,102 | 29,487 |
| Capital gains on held-to-maturity assets | 159,640 | 772,732 |
| Net exchange rate diff erences | 157,180 | 96,948 |
| Total | 318,922 | 899,167 |
| Intangible rights | 2009 | 2008 |
|---|---|---|
| Acquisition cost 1 Jan | 1,865,697 | 1,862,823 |
| Increase | 34,500 | 2,874 |
| Acquisition cost 31 Dec | 1,900,197 | 1,865,697 |
| Accumulated depreciation 1 Jan | 1,857,123 | 1,772,704 |
| Depreciation for the period | 12,585 | 84,419 |
| Accumulated depreciation 31 Dec | 1,869,708 | 1,857,123 |
| Book value | 30,489 | 8,574 |
| Development expenses | ||
| Acquisition cost 1 Jan | 315,905 | 315,905 |
| Acquisition cost 31 Dec | 315,905 | 315,905 |
| Machinery & equipment | ||
| Acquisition cost 1 Jan | 1,025,423 | 957,362 |
| Increase | 60,420 | 68,060 |
| Acquisition cost 31 Dec | 1,085,842 | 1,025,423 |
| Accumulated depreciation 1 Jan | 917,680 | 851,299 |
| Depreciation for the period | 65,879 | 66,381 |
| Accumulated depreciation 31 Dec. | 983,560 | 917,680 |
| Book value | 102,282 | 107,742 |
| Investments | ||
| Fair value 1.1. | 100,842 | 100,842 |
| Increase | 11,000 | 0 |
| Fair value 31.12. | 111,842 | 100,842 |
| 2009 | 2008 | |
|---|---|---|
| Accounts receivable | 581,191 | 356,820 |
| Loan receivables | 792,000 | 0 |
| Total | 1,373,191 | 356,820 |
Loan receivables include SSH Communications Security Corp loan to SSH Management Investment Corp.
| 2009 | 2008 | |
|---|---|---|
| Interest receivables | 945 | 10,688 |
| Personnel related | 841 | 841 |
| Total | 1,785 | 11,529 |
| 2009 | 2008 | |
|---|---|---|
| Advances paid | 10,005 | 22,581 |
| VAT receivables | 0 | 63,003 |
| Other current receivables | 64,661 | 159 |
| Total | 74,666 | 85,743 |
| Investments held to maturity | 2009 | 2008 |
|---|---|---|
| Fair value 1 Jan | 14,500,000 | 20,302,557 |
| Net increase/decrease | -11,979,900 | -5,802,557 |
| Fair value 31 Dec | 2,520,100 | 14,500,000 |
| Short-term | 2,520,100 | 14,500,000, |
| At the end of the reporting period, the held-to-maturity invest |
ments comprised fi xed-term deposits.
| 2009 | 2008 | |
|---|---|---|
| Share capital 1 Jan | 857,513 | 856,083 |
| Share issues | 39,440 | 1,430 |
| Share capital 31 Dec | 896,953 | 857,513 |
| Share premium fund 1 Jan | 0 | 13,172,315 |
| Subscription of shares | 0 | 425 |
| Transfer to unrestricted invested equity | 0 | -13,172,740 |
| Share premium fund 31 Dec | 0 | 0 |
| Unrestricted invested equity fund 1 Jan | 14,825,542 | 5,926,714 |
| Transfer from share premium fund | - | 13,172,740 |
| Return of capital | -8,595,680 | -4,280,742 |
| Subscription of shares | 806,945 | 6,830 |
| Unrestricted invested equity fund 31 Dec | 7,036,806 | 14,825,542 |
| Profi t/loss from earlier periods | -165,228 | 914,437 |
| Profi t/loss for the period | -1,441,234 | -1,079,664 |
| Shareholders' equity total | 6,327,298 | 15,517,827 |
| 2009 | 2008 | |
|---|---|---|
| Retained earnings | -165,228 | 914,437 |
| Net profi t/loss for the period | -1,441,234 | -1,079,665 |
| Unrestricted invested equity fund | 7,036,806 | 14,825,542 |
| Total | 5,430,344 | 14,660,314 |
| Provisions, € | Restructuring provisions |
Onerous contracts |
|---|---|---|
| 31.12.2008 | 0 | 0 |
| Increases in provisions | 138,089 | |
| 31.12.2009 | 138,089 | 0 |
In 2009 was recorded a restructuring provision in SSH Communications Security Inc. total of EUR 138,089 related to headquarters move. Provision will be reversed during spring 2010.
The parent company has confi rmed losses of EUR 15.6 million that have not been recorded as deferred tax receivables.
| 2009 | 2008 | |
|---|---|---|
| Personnel related | 523,345 | 534,021 |
| Other accrued liabilities and deferred income | 30 | 0 |
| Total | 523,375 | 534,021 |
| 2009 | 2008 | |
|---|---|---|
| Personnel related | 119,275 | 194,933 |
| VAT liabilities | 13,029 | 0 |
| Total | 132,486 | 194,933 |
| facilities – minimum lease payments | 2009 | 2008 |
|---|---|---|
| Not later than 1 year | 228,081 | 504,249 |
| 1–5 years | 742,478 | 168,083 |
| Total | 970,559 | 672,332 |
| payments | 2009 | 2008 |
|---|---|---|
| Not later than 1 year | 58,191 | 59,134 |
| 1–5 years | 59,110 | 82,802 |
| Total | 117,301 | 141,936 |
| for utilities– minimum lease payments | 2009 | 2008 |
|---|---|---|
| Not later than 1 year | 73,860 | 77,607 |
| 1–5 years | 40,715 | 110,973 |
| Total | 114,575 | 188,580 |
| Rental guarantees | 2009 | 2008 |
| Rental guarantees (monetary pledge) | 64,425 | 1,521 |
Helsinki 3 February 2009
Juho Lipsanen Tomi Laamanen Chairman of the Board Of Directors
Pyry Lautsuo Juha Mikkonen
Tatu Ylönen
Jari Mielonen CEO
We have today issued an auditors' report based on our audit.
Helsinki 10 February 2010
Henrik Sormunen, APA
PricewaterhouseCoopers Oy Authorised Public Accountants
We have audited the accounting records, the fi nancial statements, the report of the Board of Directors and the administration of SSH Communications Security Oyj for the year ended on 31 December, 2009. The fi nancial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, cash fl ow statement and notes to the consolidated fi nancial statements, as well as the parent company's balance sheet, income statement, cash fl ow statement and notes to the fi nancial statements.
The Board of Directors and the Managing Director are responsible for the preparation of the fi nancial statements and the report of the Board of Directors and for the fair presentation of the consolidated fi nancial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the fi nancial statements and the report of the Board of Directors in accordance with laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and fi nances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its fi nancial aff airs have been arranged in a reliable manner.
Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company's fi nancial statements, on the consolidated fi nancial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Board of Directors of the parent company and the Managing Director have complied with the Limited Liability Companies Act.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the fi nancial statements and of the report of the Board of Directors, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the fi nancial statements and the report of the Board of Directors in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the report of the Board of Directors.
The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
In our opinion, the fi nancial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's fi nancial performance and fi nancial position in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the fi nancial statements.
Helsinki, 10 February 2010
PricewaterhouseCoopers Oy Authorised Public Accountants
Henrik Sormunen Authorised Public Accountant
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