SSH Communications Security — Interim / Quarterly Report 2015

Apr 21, 2015

SSH COMMUNICATIONS SECURITY CORPORATION FINANCIAL STATEMENT RELEASE, JANUARY 1 – MARCH 31, 2015

SSH COMMUNICATIONS SECURITY CORPORATION FINANCIAL STATEMENT RELEASE, JANUARY 1 – MARCH 31, 2015

Helsinki, Finland, 2015-04-21 08:00 CEST (GLOBE NEWSWIRE) -- SSH COMMUNICATIONS
SECURITY CORPORATION FINANCIAL STATEMENT RELEASE April 21, 2015 AT 9:00
A.M

SSH COMMUNICATIONS SECURITY CORPORATION FINANCIAL STATEMENT RELEASE, JANUARY 1
- MARCH 31, 2015

January-March 2015: Significant net sales growth, losses due to high share of
low margin service business and investments to future growth. Cash flow from
operations positive and cash position strengthened strongly due to Convertible
capital securities.

-- Net sales totaled EUR 6.8 million, up by 135.1 % year on year (EUR 2.9
million in 1-3/2014).
-- Operating loss was EUR -0.4 million (EUR -0.9 million in 1-3/2014). There
were no non-recurring items on reporting period. Loss was EUR -0.4 million
(EUR -0.9 million)
-- Earnings per share EUR -0.02 (EUR -0.03).

Equity ratio remained good 69.7 % (75.5 %) and liquid assets increased strongly
to EUR 18.9 million (EUR 5.8 million).

In 2015, SSH Communications Security estimates its revenue to grow
significantly from 2014.

KEY FIGURES

EUR million 1-3/ 1-3/ Change % 1-12/
2015 2014 2014

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---

Net sales (MEUR) 6.8 2.9 135.1 16.2

Operating profit/loss (MEUR) -0.4 -0.9 58.9 0.2

% of net sales -5.4 -31.1 82.5 1.3

Profit/loss before taxes (MEUR) -0.3 -0.9 62.5 0.4

Profit/loss (MEUR) -0.4 -0.9 62.0 0.3

---

Return on equity, % -2.7 -13.5 80.2 4.3

Return on investment, % -2.7 -13.0 78.9 2.7

Liquid assets 18.9 5.8 224.3 6.1

Gearing (%) -99.6 -89.2 -11.6 -77.3

Equity ratio (%) 69.7 75.5 -7.7 63.3

---

Earnings Per Share (EUR) -0.02 -0.03 46.7 -0.00

Shareholders' equity per share (EUR) 0.61 0.21 189.0 0.25

CEO'S REVIEW

Valued customers, partners, coworkers, and shareholders,

The first quarter of 2015 coincided with the twentieth anniversary of the
invention of the SSH protocol and the establishment of SSH Communications
Security. Contemplating on the past is useful at times and it is remarkable to
notice how while the world has changed, the issues that were key to the
invention and the establishment of the company are even more topical today.

Cyber insecurity is a growing concern and needs to be tackled, but the more it
becomes the norm rather than an anomaly, the less it should affect the everyday
flow of events. Information flow can not be disrupted, work flow can not become
more complex, the effortless flow of business must prevail.

The embracing of this flow thinking is the key driver in taking SSH
Communications Security into the future. We realize, that as our products and
services gain an ever more central role in the daily operations of governments
and enterprise, they need to maintain and improve fluidity and efficiency, not
increase complexity. This is the common base in the ongoing streamlining and
updating of our product portfolio and our product development projects will
lead the way to the evolution and redefining of the convenience and efficiency
of access management.

2015 has kicked off with major revenue growth and advances. Closing a
substantial deal with a major UK based financial institution, as well as
signing a significant service contract with a global bank provided for the bulk
of new business. The announcement of cloud functionality for the CryptoAuditor
product proved a major success, with immediate deployments and new partner
contracts, particularly in the APAC region.

Our heightened emphasis on solidifying our immaterial rights portfolio
management has led to ongoing major negotiations with key global players and
will be pursued further with increasing vigor. And the extension of our
government specific offering has gained substantial ground as well and is
broadening our view of the market. Our announcement of a joint secure phone
project with Finnish mobile operating system developer Jolla created
substantial buzz at the Mobile World Congress and numerous enquiries from all
over the world.

On the finance front the company's €12 million issue of convertible capital
securities was oversubscribed, leading to the repayment of a previous issue,
substantially strengthening the company's cash position, allowing growth
investment and supporting the defending and monetizing of intellectual property
rights.

As SSH Communications Security welcomed Markku Rossi to the position of Chief
Technology Officer as well as Timi Petersen as Chief Marketing Officer the
organizational restructuring was finalized to better reflect current strategic
initiatives. Product line structure has now been implemented and functions as a
key element in adding capability to absorb and incorporate customer feedback
and insight more inherently into operations.

In retrospect, the first quarter of 2015 saw the setting in place of many of
the key elements for driving long-term success for SSH Communications Security.
We are now well positioned to face the escalation of cybersecurity challenges
and contribute our extensive know-how and experience for the benefit of our
customers and partners.

Harri Koponen
CEO

NET SALES

Consolidated net sales for January-March totaled EUR 6.8 million (EUR 2.9
million), up by 135.1 %, year on year. Net sales grew significantly in Americas
and EMEA, and by all revenue types.

The Americas, the Europe, Middle East and Africa market area and the Asia
Pacific region accounted for 60.4 % (43.2 %), 35.9 % (43.8 %) and 3.7 % (13.0
%) of reported net sales, respectively.

SSH NET SALES

EUR million 1-3/ 1-3/ Change % 1-12/
2015 2014 2014

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BY REGION

AMERICAS 4.1 1.3 228.2 10.2

APAC 0.3 0.4 -32.0 1.8

EMEA 2.4 1.3 92.6 4.2

SSH Group Total 6.8 2.9 135.1 16.2

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BY TYPES

License sales 1.9 0.7 173.6 5.9

Consulting 3.1 0.8 285.5 4.1

Maintenance 1.9 1.4 32.6 6.2

Total 6.8 2.9 135.1 16.2

The majority of company´s invoicing is U.S. dollar based. With comparable
exchange rates, net sales growth would have been 113.2 % compared with 2014
corresponding period

RESULTS AND EXPENSES

Operating loss for January-March was EUR -0.4 million (EUR -0.9 million), with
net loss totaling EUR -0.4 million (EUR -0.9 million). Profitability was
influenced by higher share of service sales in addition to investments to sales
and product development.

There were no non-recurring items during January-March.

Sales, marketing and customer support expenses for the January-March reporting
period amounted to EUR -2.1 million (EUR -1.8 million), while research and
development expenses totaled EUR -1.2 million (EUR -0.9 million) and
administrative expenses EUR -0.4 million (EUR -0.5 million).

BALANCE SHEET AND FINANCIAL POSITION

The financial position of SSH Communications Security strengthened strongly
during the reporting period. The consolidated balance sheet total on March 31,
2015 stood at EUR 32.0 million (31.3.2014 EUR 12.2 million; 31.12.2014 EUR 17.5
million), of which liquid assets accounted for EUR 18.9 million (31.3.2014 EUR
5.8 million; 31.12.2014 EUR 6.1 million, or 59.0 % of the balance sheet total).
During March, convertible capital securities of EUR 12 million were issued. The
capital securities of EUR 4 million issued in December 2012 and interests were
repaid in April. On March 31, 2015, gearing, or the ratio of net liabilities to
shareholders' equity, was -99.6 % (31.3.2014 -89.2 %; 31.12.2014 -77.3 %) and
the equity ratio stood at 69.7 % (31.3.2014 75.5 %; 31.12.2014 63.3 %).

The reported gross capital expenditure for the period totaled EUR 0.5 million
(EUR 0.5 million). The reported financial income and expenses consisted mainly
of interest on deposits and exchange rate gains or losses. Financial income and
expenses totaled EUR 0.0 million (EUR 0.0 million).

During January-March, SSH Communications Security reported a positive cash flow
of EUR 1.7 million (EUR 0.4 million) from business operations, and investments
showed a negative cash flow of EUR -0.5 million (EUR -0.5 million). Cash flow
from financing totaled EUR 11.7 million (EUR 0.0 million).

Total cash flow from operations, investments and financing was positive EUR
12.8 million (EUR -0.1 million).

Fair value of short term investment is determined from quoted prices available
from markets. Financial investment belongs to level 1 according to IFRS 7.
Market value of financial investment was EUR 0.0million (EUR 2.0 million) and
nominal value EUR 0.0 million (EUR 2.0 million).

RESEARCH AND DEVELOPMENT

Research and development expenses for January-March totaled EUR -1.2 million
(EUR -0.9 million), the equivalent of 18.2 % of net sales (31.3 %). During
January-March, the company has capitalized new product R&D costs EUR 0.4
million (EUR 0.5 million).

HUMAN RESOURCES AND ORGANIZATION

At the end of March, the Group had 95 employees on its payroll. The number of
employees decreased by 6 persons from the previous year (-5.9 %). Compared to
year end, the number of employees stayed the same.

At the end of the period, 47.9 % of the employees worked in sales, marketing
and customer services, 37.2 % in R&D, and 14.9 % in corporate administration.

BOARD AND AUDITORS

At the Annual General Meeting, March 25, 2015, Jukka Manner was elected and
Päivi Hautamäki, Timo Syrjälä and Tatu Ylönen were re-elected to directors of
the company. Timo Syrjälä was elected as the Chairman of the Board of Directors
in the board´s organizing meeting.

The Authorized Public Accountants KPMG Oy Ab was re-elected as the auditor of
the company with Kirsi Jantunen, KHT, as the accountant with the main
responsibility.

SHARES, SHAREHOLDING AND CHANGES IN GROUP STRUCTURE

The reported trading volume of SSH Communications Security shares totaled
1,386,093 shares (valued at EUR 5,142,854). The highest quotation was EUR 4.73
and the lowest EUR 2.52. The trade-weighted average share price for the period
was EUR 3.71 and the share closed at EUR 4.73 (March 31, 2015).

Company's principal owner Tatu Ylönen holds directly and through his company,
Clausal Computing Oy, 56.9 % of the company's shares, Assetman Oy holds 10.3 %
and Gaselli Capital Oy holds 3.3 %. More information about the shareholding can
be obtained from the company´s web site.

No dividend or return of capital has been distributed during the reporting
period.

SHARE CAPITAL AND BOARD AUTHORIZATIONS

The company's registered share capital on March 31, 2015 was EUR 929,220.99
consisting of 30,974,033 shares.

The Annual General Meeting approved the Board of Directors' proposal to
authorize the Board of Directors to decide upon the issuing of a maximum of
4,000,000 shares as a share issue against payment or by giving stock options or
other special rights entitling to shares, in accordance with Chapter 10 Section
1 of the Finnish Limited Liability Companies Act, either according to the
shareholders' pre-emptive right to share subscription or deviating from this
right, in one or more tranches. Based on the authorization, it can be either
issuing of new shares or transfer of own shares which the company possibly has
in its possession. Based on the authorization, the Board of Directors shall
have the same rights as the Annual General Meeting to decide upon the issuing
of shares against payment and special rights (including stock options) in
accordance with Chapter 10 Section 1 of the Finnish Limited Liability Companies
Act. Thereby, the authorization to be given to the Board of Directors includes,
inter alia, the right to deviate from the shareholders' pre-emptive rights with
directed issues providing that the company has a weighty financial reason for
the deviation in respect of the share issue against payment.

Furthermore, the authorization includes the Board of Directors' right to decide
upon who are entitled to the shares and/or stock options or special rights in
accordance with Chapter 10 Section 1 of the Finnish Limited Liability Companies
Act as well as upon the related compensation, subscription and payment periods
and upon the registering of the subscription price into the share capital or
invested non-restricted equity fund within the limits of the Finnish Limited
Liability Companies Act.

The authorization will be valid until the next Annual General Meeting, but will
however expire at the latest on June 30th 2016.

The Annual General Meeting approved the Board of Directors' proposal to
authorize the Board of Directors to decide upon the acquiring of a maximum of
2,000,000 own shares of the company with assets belonging to the company's
non-restricted equity. This amount corresponds approximately to 6.5 % of all
the shares of the company. The shares can also be acquired otherwise than in
proportion to the holdings of the existing shareholders (targeted repurchase).
The maximum compensation to be paid for the acquired shares shall be the market
price at the time of purchase, which is determined in the public

trading.

The authorization for the acquiring of the company's own shares will be used,
inter alia, to strengthen the company's capital structure, to finance and
realize corporate acquisitions and other arrangements, to realize the
share-based incentive programs of the company or otherwise to be kept by the
company, to be transferred for other purposes or to be cancelled. The
acquisition of shares reduces the company's distributable non-restricted
equity.

Decision concerning the acquiring of own shares cannot be made so that the
combined amount of the own shares which are in the possession of, or held as
pledges by, the company or its subsidiaries exceeds one-tenth of all shares.
The Board of Directors shall decide upon all other matters related to the
acquisition of shares.

The authorization will be valid until the next Annual General Meeting, but will
however expire at the latest on June 30th 2016.

RISKS AND UNCERTAINTIES

Largest risks that might impact the profitability of the company have remained
by and large the same than in previous reporting period and are listed below.
Other risks, which are currently either unknown or considered immaterial to SSH
Communications Security may, however, become material in the future.

Largest risks:
- continuing uncertainty of the macroeconomic environment
- delays on product development and closing new business
- competitiveness of the product portfolio including intellectual property (IPR)
- litigation, especially in U.S. market
- competitive dynamics in the industry
- ability of the organization to scale up operations with the growth
- large portion of the company revenue is invoiced in USD currency so possible
large fluctuation in USD currency rates during 2015 could have unpredictable
effects for profitability that are at the time difficult to estimate. Currently
USD currency position is not hedged, and company decides hedging of USD based
contracts case by case.

Utilization of the company´s patent portfolio may have significant positive
and/or negative impacts.

Principles and organization of risk management of SSH Communications Security
can be read from company´s webpage: www.ssh.com.

FUTURE OUTLOOK

In 2015, SSH Communications Security estimates its revenue to grow
significantly from 2014.

RELATED PARTY TRANSACTIONS

Clausal Computing Oy, a fully owned company of SSH Communications Security's
Chief Innovation Officer Tatu Ylönen, has delivered the company mainly R&D
services valued in total EUR 0.1 million during January-March 2015. During the
reporting period, there have not been any other significant transactions with
related parties. Chief Innovation Officer Tatu Ylönen subscribed EUR 0.5
million of the hybrid capital securities issued by the company on March 30th.
In December 2012 issued hybrid capital securities (EUR 4.0 million) were
subscribed by Chief Innovation Officer Tatu Ylönen.

EVENTS AFTER THE BALANCE SHEET DATE

As announced on April 13, 2015, SSH Communications Security partners with
Fujitsu in Japan. In April, hybrid capital securities ( EUR 4 million) issued
in December 2012 was repaid. The SSH Communications Security management is not
aware of any other significant transactions after the reporting period.

REPORTING

This financial statement release is prepared according to IAS 34. Financial
statement release follows the same principles and standards as the previous
financial statement release. Additionally the effective changes in IAS/IFRS
standards during the reporting period have been adopted. These changes have no
material impact on the interim report. The information presented in this
interim report has not been audited.

SSH Communications Security has changed the operational mode into global
operational mode and thus ceasing to report regional segments during 2015.

TABLES

SHORT COMPREHENSIVE INCOME STATEMENT

EUR million 1-3/ 1-3/ 1-12/
2015 2014 2014

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---

Net sales 6.8 2.9 16.2

Cost of goods sold -3.3 -0.6 -3.3

Gross profit 3.4 2.3 12.9

Other operating income 0.0 0.0 0.0

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Sales, marketing and customer support costs -2.1 -1.8 -7.3

Product development expenses -1.2 -0.9 -4.0

Administrative expenses -0.4 -0.5 -1.3

---

Operating profit/loss -0.4 -0.9 0.2

---

Financial income and expenses 0.0 0.0 0.2

---

Profit/loss before taxes -0.3 -0.9 0.4

Taxes 0.0 -0.1 -0.1

---

Net profit/loss for the financial period -0.4 -0.9 0.3

Non-controlling interest 0.0 0.0 0.0

Other profit and loss account items:

Items which might be later transferred to P/L statement

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Foreign subsidiary translation differences -0.4 0.0 -0.4

Net change in fair value of available-for-sale
financial assets

---

                                                   0.0    0.0    0.0

-------------------------------------------------------------------------

Total comprehensive income -0.7 -0.9 -0.1

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---

Net profit/loss attributable to:

Owners of the Company -0.7 -0.9 -0.1

Non-controlling interest 0.0 0.0 0.0

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EARNINGS PER SHARE

Earnings per share (EUR) -0.02 -0.03 -0.00

Earnings per share diluted (EUR) -0.01 -0.03 -0.00

BALANCE SHEET

EUR million

                                            31.3.2015  31.3.2014  31.12.2014

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ASSETS

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Non-current assets

Tangible assets 0.2 0.2 0.2

Intangible assets 3.9 3.3 3.8

Investments 0.0 0.0 0.0

Total non-current assets 4.2 3.5 4.0

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Current assets

Trade and other receivables 8.9 2.9 7.5

Short-term financial assets 0.0 0.0 0.0

Cash and cash equivalents 18.9 5.8 6.1

Total current assets 27.8 8.7 13.6

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Total assets 32.0 12.2 17.5

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LIABILITIES AND SHAREHOLDERS' EQUITY

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Shareholders' equity

Equity attributable to the parent company 19.0 6.5 7.9
shareholders
total

---

---

Non-controlling interest 0.0 0.0 0.0

Shareholders' equity total 19.0 6.5 7.9

---

Non-current liabilities

Provisions 0.0 0.0 0.0

Non-current interest-bearing liabilities 0.0 0.0 0.0

Total long-term liabilities 0.0 0.0 0.0

---

Current liabilities 13.0 5.7 9.7

---

Liabilities total 13.0 5.7 9.7

---

Total equity and liabilities 32.0 12.2 17.5

CASH FLOW STATEMENT

EUR million 1-3/2015 1-3/2014 1-12/2014

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Cash flow from business operations 1.7 0.4 1.8

Cash flow from investments -0.5 -0.5 -1.8

Cash flow from financing 11.7 0.0 2.1

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Increase(+) / decrease(-) in cash 12.8 -0.1 2.1

---

Cash at period start 6.1 3.8 3.8

Effect of exchange rate 0.2 0.0 0.1

Cash at period end* 18.9 3.7* 6.1

* cash at period end does not include investments other than mutual funds of
short term interest, thus investment of 2.0 million EUR is excluded from cash
at period end in corresponding reporting period.

STATEMENT ON
CHANGES IN
SHAREHOLDERS'
EQUITY

---

EUR Share Fair Other Transla Fund Non-con Unrestricted Total
milli capita value fund + tion for trollin equity funds
on l reserv other differe own g and retained
es equity nce shares interes earnings
fund t

---

Shareh 0.9 0.4 4.1 -1.3 0.0 0.0 3.3 7.4
olders
'
equit
y
Jan
01,
2014

---

--------------------------------------------------------------------------------

Change 0.0 0.0 0.0

Net -0.9 -0.9
profi
t

---

---

Shareh 0.9 0.4 4.1 -1.3 0.0 0.0 2.4 6.5
olders
'
equit
y
Mar
31,
2014

---

---

Change 0.0 0.4 0.0 -0.4 0.1

Net 1.2 1.2
profi
t

---

---

Shareh 0.9 0.9 4.1 -1.7 0.0 0.0 3.6 7.9
olders
'
equit
y
Jan
01,
2015

---

---

Change 0.1 11.7 -0.4 11.5

Net -0.4 -0.4
profi
t

---

---

Shareh 0.9 1.0 15.8 -2.0 0.0 0.0 3.3 19.0
olders
'
equit
y
Mar
31,
2015

---

KEY FIGURES AND RATIOS

EUR million 1-3/ 1-3/ 1-12/
2015 2014 2014

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---

Net sales 6.8 2.9 16.2

Operating profit/loss -0.4 -0.9 0.2

Operating profit/loss, as % of net sales -5.4 -31.1 1.3

Profit/loss before extraordinary items and taxes -0.3 -0.9 0.4

Profit/loss before extraordinary items and taxes, as % of -4.9 -30.7 2.5
net sales

---

Profit/loss before taxes -0.3 -0.9 0.4

Profit/loss before taxes, as % of net sales -4.9 -30.7 2.5

Return on equity (%) -2.7 -13.5 4.3

Return on investment (%) -2.7 -13.0 2.7

Interest-bearing net liabilities -18.9 -5.8 -6.1

Equity ratio (%) 69.7 75.5 63.3

Gearing (%) -99.6 -89.2 -77.3

Gross capital expenditure 0.5 0.5 1.9

% of net sales 8.1 15.7 11.5

R&D expenses 1.2 0.9 4.0

% of net sales 18.2 31.3 25.0

Personnel period average 95 100 97

Personnel period end 95 101 95

Calculation for key figures and ratios are presented in 2014 financial
statement and annual report. There have not been changes in calculation rules
after that.

PER SHARE DATA

EUR 1-3/ 1-3/ 1-12/
2015 2014 2014

---

---

Earnings per share undiluted -0.02 -0.03 -0,00

Earnings per share diluted -0.01 -0.03 -0,00

Equity per share 0.61 0.21 0.25

No. of shares at period average (thousand) 30,974 30,751 30,817

No. of shares at period end (thousand) 30,974 30,751 30,974

Share performance

Average price 3.71 3.05 2.85

Low 2.52 2.71 2.31

High 4.73 3.74 3.74

Share price period end 4.73 3.20 2.51

Market capitalization period end (EUR million) 146.5 98.4 77.8

Volume of shares traded (million) 1.4 1.2 3.6

Volume of shares traded, as % of total number 4.5 3.9 11.7

Value of shares traded (EUR million) 5.1 3.8 10.3

Price per earnings ratio (P/E) neg. neg. neg.

Dividend per share 0.00 0.00 0.00

Dividend per earnings, % 0.00 0.00 0.00

Effective return on dividend, % 0.00 0.00 0.00

* earnings per share is impacted by unpaid interest of hybrid capital securities

CONTINGENT LIABILITIES

EUR million 31.3.2015 31.3.2014 31.12.2014

Hybrid Loan, Interest 0.7 0.3 0.6

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Rent security deposits 0.1 0.1 0.1

Leasing commitments outside the balance sheet

Maturing within 1 year 0.4 0.5 0.4

Maturing between 1 and 5 years 0.8 0.4 0.8

DISCLAIMER

The content in this report is provided by SSH Communications Security and its
third party content providers for your personal information only. And does not
constitute an offer or invitation to purchase any securities. Nor does it
provide any form of advice (investment. tax. legal) amounting to investment
advice. Or make any recommendations regarding particular investments or
products. SSH Communications Security does not provide investment advice or
recommendations to buy or sell its shares or the shares of others. If you are
interested in investing in SSH Communications Security, please contact your
financial adviser for further details and information. Past performance of SSH
Communications Security shares is not indicative of future results. EXCEPT AS
PROVIDED BY APPLICABLE COMPULSORY LAW SSH COMMUNICATIONS SECURITY EXPRESSLY
DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED. AS TO THE AVAILABILITY,
ACCURACY OR RELIABILITY OF ANY OF THE CONTENT PROVIDED, OR AS TO THE FITNESS OF
THE INFORMATION FOR ANY PURPOSE.

SSH Communications Security will release its next interim report for period
January 1 - June 30, 2015 on July 23rd, 2015.

Helsinki, April 21st, 2015

SSH COMMUNICATIONS SECURITY

Board of Directors

Harri Koponen
CEO

For further information, please contact:
Harri Koponen, CEO. tel. +358 20 500 7000
Jyrki Lalla, CFO, tel. +358 45 340 4641

Distribution:
NASDAQ OMX Helsinki Ltd.
Major media
www.SSH.com