SSH Interim Report for January 1 - March 31, 2008

SSH Communications Security Corp Stock Exchange Release, April 23. 2008, At 9:00 A.M.

Immenstaad, (PresseBox) - .
- Net sales for January-March totaled EUR 1.9 million, down 28 percent year on year (EUR 2.6 million in Q1/2007).
- Operating loss for January-March amounted to EUR -0.8 million (a loss of 0.0 million in Q1/2007), resulting in a loss of EUR -0.6 million (profit 0.1 million).
- There were no major license deliveries during Q1/2008.

SSH Communications Security is a world-leading provider of easy-to-use and centrally managed enterprise security solutions. SSH Tectia software products secure the critical data communications of numerous large enterprises, financial institutions and government agencies.

NET SALES

Consolidated net sales for January-March totaled EUR 1.9 million (EUR 2.6 million) down by 28 percent year on year.

The majority of SSH's invoicing is based on the U.S. dollar. During the reporting period, the U.S. dollar's average exchange rate was approximately 14 percent weaker than during the same period for 2007.

RESULTS AND EXPENSES

Operating loss for January-March amounted to EUR -0.8 million (Q1/2007: EUR 0.0 million), with net loss totaling EUR -0.6 million (a profit of EUR 0.1 million).

The fixed costs increased by approximately 3 % from January-March 2007. Research and development expenses for the report period totaled EUR 1.0 million (EUR 0.9 million), while sales and marketing expenses came to EUR 1.3 million (EUR 1.3 million) and administrative expenses were EUR 0.5 million (EUR 0.5 million).

BALANCE SHEET AND FINANCIAL POSITION

The financial position of SSH remained at a healthy level during the report period. The consolidated balance sheet total on 31 March 2008 was EUR 23.7 million (EUR 20.9 million), of which liquid assets accounted for EUR 21.5 million (EUR 17.1 million) and 90.7 percent of the balance sheet total. The company has no long-term liabilities. On 31 March 2008, gearing, or the ratio of net liabilities to shareholders' equity was -106.5% (-94.8%) and the equity ratio was 93.7 percent (93.7 percent).

The Annual General Meeting decided to renounce the share premium reserve after transferring all its funds to the invested unrestricted equity fund of the company. The decreasing of the share premium reserve still requires the procedure of protecting the creditors as defined in Chapter 14 of the Finnish Companies Act.

The reported gross capital expenditure for the period totaled EUR 0.0 million (EUR 0.0 million). The reported financial income consisted mainly of interest on fixed-term deposits. Financial income and expenses totaled EUR 0.2 million (EUR 0.2 million).

During January-March, SSH reported a negative cash flow of EUR -0.7 million (EUR 0.3 million positive) from business operations, and investments showed a cash flow of EUR 1.0 million (EUR 0.0 million). Cash flow from financing totaled EUR 0.0 million (EUR 0.0 million). Cash flow from operations, investments and financing resulted in the company showing a positive total cash flow of EUR 0.35 million (EUR 0.3 million) during the period.

MARKET DEVELOPMENTS

Large enterprises, financial, and public sector organizations have a growing need for improved data security. New and existing data security risks, continuously evolving regulations, and the increasing security standards and models continue to create new customer needs, to which we can respond with our versatile product offering.

In large listed companies and government agencies, the demand for products and services for improving their internal information security has been strong in the USA, and we expect it to spread to our target markets in Europe and Asia.

Regulations that currently influence the demand of our products are, for instance, the Sarbanes-Oxley 404 Act (SOX), the credit card industry PCI DSS, the health care industry HIPAA. These regulations demand data security audits, which drive our customers to implement long-term security upgrade programs in the IT infrastructure against internal and external threats.

SSH is confident that legislative reforms, new data security standards, as well as many industry and company level data security development programs will continue to drive the demand favorably for SSH Tectia. In the short term, however, demand in the US and financial services sectors contain uncertainty.

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