TIDMSSH1V
SSH COMMUNICATIONS SECURITY CORPORATION STOCK EXCHANGE RELEASE OCTOBER 21, 2021, AT 9:00 A.M
SSH COMMUNICATIONS SECURITY CORPORATION INTERIM REPORT JULY 1 --
SEPTEMBER 30, 2021
NET SALES INCREASED 54%, EBITDA POSITIVE
July--September 2021: Net sales increased 53.8% compared to the
previous year. EBITDA was positive for the quarter.
-- Net sales totaled EUR 3.9 million (7-9/2020: EUR 2.6 million)
-- EBITDA was EUR 0.6 million (EUR 0.2 million)
-- Operating loss was EUR -0.3 million (EUR -0.3 million)
-- Net loss for the period was EUR -0.3 million (EUR -0.5 million)
-- Earnings per share was EUR -0.02 (EUR -0.02)
January--September 2021: Net sales increased 19.7% compared to
the previous year. EBITDA was negative due to growth
investments.
-- Net sales totaled EUR 9.9 million (1-9/2020: EUR 8.3 million).
-- EBITDA was EUR -0.3 million (EUR 0.4 million).
-- Operating loss was EUR -2.2 million (EUR -1.2 million).
-- Net loss for the period was EUR -2.7 million (EUR -1.5 million).
-- Earnings per share was EUR -0.10 (EUR -0.06).
Operating cash flow was EUR -1.5 million (EUR -0.2 million).
Equity ratio was 46.3% (76.2%). Liquid assets were EUR 4.2 million
(EUR 9.4 million).
KEY FIGURES
Change Change
EUR million 7--9/2021 7--9/2020 % 1--9/2021 1--9/2020 % 1--12/2020
Net sales 3.9 2.6 53.8 9.9 8.3 19.7 11.3
EBITDA 0.6 0.2 143.8 -0.3 0.4 -177.3 -0.4
% of net sales 14.0 8.8 58.5 -2.8 4.3 -164.6 -3.5
Operating profit/loss -0.3 -0.3 -30.6 -2.2 -1.2 -85.0 -2.5
% of net sales -8.3 -9.8 -15.1 -22.0 -14.2 54.6 -22.1
Profit/loss before
taxes -0.4 -0.5 -24.7 -2.5 -1.5 69.7 -3.1
Profit/loss -0.3 -0.5 -40.7 -2.7 -1.5 84.6 -3.1
Return on equity,
% -27.0 -13.3 -102.6 -30.0
Return on investment,
% -18.0 -12.2 -47.4 -27.3
Liquid assets 4.2 9.4 -55.9 8.5
Gearing (%) -25.8 -82.2 68.6 -85.3
Equity ratio (%) 46.3 76.2 -39.3 69.7
Earnings per share,
EUR -0.02 -0.02 24.5 -0.10 -0.06 -57.0 -0.11
Shareholders' equity
per share, EUR 0.30 0.25 16.5 0.30 0.25 16.5 0.22
Annual Recurring
revenue 14.5 8.6 69.7 8.0
Subscription revenue,
ARR 6.3* 0.8 697.4 1.2
*Subscription revenue ARR reported previously for Q2 2021 was
EUR 6.9 million. During Deltagon's integration process in Q3 2021,
it was discovered that June 2021 contained recognized revenue
belonging to previous months. Because ARR is calculated by
multiplying the period end figure, the Q2 2021 Subscription revenue
ARR was previously overstated, and it has grown during Q3 2021
compared to Q2 2021.
SSH Communications Security provides alternative performance
measures, which are not defined by IFRS standards. Alternative
performance measures should not be considered substitutes for
performance measures in accordance with the IFRS. The alternative
performance measures are:
EBITDA: Operating profit/loss + depreciation and
amortization
Subscription ARR (Annual Recurring Revenue): Subscription
revenue in the last month of a reported quarter multiplied by
12.
Annual Recurring Revenue: Subscription + maintenance revenue at
the end of the last month of the reported quarter multiplied by
12.
CEO REVIEW
Valued shareholders, customers, partners, and colleagues,
In the third quarter we saw a clear pick-up in the cybersecurity
market and increased demand for our solutions. We acquired several
new customers in addition to closing large renewals and generating
new sales with existing customers.
We have continued our investments in growth and R&D to
capitalize on the increased interest in our products from potential
customers.
During the past two years, we have seen customers moving
increasingly toward a "land and expand" purchasing pattern where
customers start small and expand the use of the solutions in a
stepwise manner. There is also a trend towards subscription-based
software purchasing, especially in the US and Europe.
Our installed base continues to grow, and we have accelerated
our growth rate compared to the comparison period as well as
compared to the previous two quarters.
Third quarter highlights:
-- Revenue growth of +54%
-- Annual Recurring Revenue (ARR) reached EUR 14.5 million at the end
of Q3
-- We continued our investments in growth and R&D, with 35% of
revenue invested in R&D during the period
-- We broadened our market reach by expanding our portfolio of solutions
with PrivX technology
-- PrivX OT (Operational Technology) Edition for factories, harbors,
and marine vessel operators
-- PrivX MSP (Managed Service Provider) Edition for Outsourcers and
SaaS software companies
-- UKM Zero Trust Edition makes digital key management more flexible
and cost-effective, especially in large and dynamic customer
environments
-- Tectia Zero Trust Edition provides JIT (Just-In-Time) and JEA
(Just-Enough-Access) connections to servers in hybrid, cloud and
multi-cloud environments
-- NQX PQC Edition, our first Post Quantum Cryptography product was
introduced
-- We introduced the SSH Secure e-communication Suite of products, which
comprises of the products acquired through the Deltagon acquisition
A subscription-based business model generates slower initial
revenue growth compared to a perpetual license model. However,
increasing customer demand and an increasing share of subscription
revenues resulted in a good third quarter overall. The postponement
of cybersecurity investments, common during the pandemic so far,
appears to be diminishing. Our customers are starting to invest in
a more cybersecure future due to the increased digitalization of
their businesses, increased remote work and growing cybercrime and
ransomware risks. We are executing on our growth strategy and enter
the fourth quarter with enthusiasm and momentum.
Financial Performance
-- Net sales for the third quarter were EUR 3.9 million (EUR 2.6 million),
an increase of 54% compared to Q3 2020.
-- EBITDA for Q3 2021 was EUR 0.6 million (EUR 0.2 million), a second
consecutive positive quarter.
-- Operating loss was EUR -0.3 million (EUR -0.3 million), and the net loss
for the period was EUR -0.3 million (EUR -0.5 million).
-- The operating cash flow for the quarter was EUR 0.4 million (-0.2
million).
Sales Performance
Sales in the EMEA region increased 172% compared to Q3 2020.
APAC region sales decreased by 30% compared to Q3 2020, and AMER
region sales increased by 22%.
Subscription revenue grew 765% compared to Q3 2020. PrivX
subscription revenue grew by 170%. The majority of the subscription
revenue growth was driven by the acquisition of Deltagon's Secure
e-communication Suite.
During the quarter, both license revenue and recurring revenue
(subscriptions and maintenance) increased.
PrivX gives customers Just In Time Zero Trust access control
During the quarter, we reached several important milestones with
our Privileged Access Management solution PrivX and its industry
focused PrivX OT and PrivX MSP Editions. We won several new PrivX
enterprise customers. We have secured PrivX OT Edition and PrivX
MSP Edition projects expanding our addressable market outside the
traditional enterprise IT market.
We announced PrivX, UKM and Tectia Zero Trust Editions, which
help customers remove static credentials by enabling PrivX with JIT
(Just In Time) and JEA (Just Enough Access) Zero Trust
technologies. Access is granted only when needed in real time and
the use of the access is monitored and logged to enable auditing of
system level access activities. Our JIT Zero Trust technology is
especially important in the US market and differentiates our
products from the competition. We have accomplished this through
our leading-edge microservices architecture, which is based on
technology superior to that of our competitors.
According to Allied Market Research (7/2021) the global
container and Kubernetes security market was USD 714 million in
2020, and is expected to grow to USD 8 billion by 2030, growing at
a CAGR of 27% over the period. PrivX now supports container
deployment model. PrivX supports wide range of cloud, hybrid and
SaaS deployment models. First customer installations of container
enabled PrivX version have been successful.
At CAGR of 8%, the Managed Security Services market hits USD 51
billion by 2027 says Brandessence Market Research (9/2021). PrivX
MSP Edition has been well received by our existing and new
customers and offers us a market expansion opportunity to medium
size managed services provides especially in Europe and US.
According to Kenneth Research (8/2021) the Global Operational
Technology (OT) Security market was at USD 200 million in 2018 and
is expected to grow at CAGR of 42% during the forecast period and
reach USD 3.5 billion by 2025.
New PrivX OT Edition contracts are being finalized with several
major European customers and we estimate new projects to start
during the last quarter of the year.
NQX, Quantum Safe security, cryptographic products and
services
NQX is gaining traction with security-critical customers. At the
end of the third quarter, we had secured in excess of EUR 0.3
million in customer subscription orders. We have a good visibility
towards larger expected orders as customers' test environments
progress into deployments.
The major contract for the delivery of cryptographic products
and services announced in 12/2020 is now moving into production
deployment. The progress into deployment phase has been slower than
anticipated and that has reflected negatively on revenue generation
this year. We see development being positive for next year.
However, delays have been encountered in supply of hardware
components due to the global shortage in semiconductors, which may
affect our lead times in delivering devices for customer
orders.
During the quarter, we released the Quantum Safe solution for
Data-in-Transit by bringing NQX PQC Edition to the market. NQX PQC
is our first commercially available Post Quantum safe solution.
Next steps are to expand the use of PQC technologies in the rest
of our portfolio.
Secure e-communication Suite
The Secure e-communication Suite gives customers secure digital
communication. The suite consists of Secured Email, Secure
Workspace, Secure Signature and Secure Forms. The Secure
e-communication Suite contributes to SSH's subscription revenue
growth, and we signed over thirty new customers during the
quarter.
JIT (Just in Time) Zero Trust
SSH is a leading company in providing JIT Zero Trust privileged
access, digital key management, secure data-in-transit and
communication solutions. We have expanded our portfolio with two
new Zero Trust Editions. UKM Zero Trust and Tectia Zero Trust based
on PrivX technology enable our customers with controlled key
management and secure server connections in dynamic cloud and
hybrid infrastructures and help customers to make a smooth and safe
transition to the cloud era with increased amount of remote work
and 3(rd) party suppliers.
Continuing with the recurring revenue transition
Recurring revenue accounted for 87% of total revenue, increasing
its share from the previous quarter and giving SSH a solid base for
further growth.
To complement the Subscription ARR metric, we publish a broader
metric, Annual Recurring Revenue. This metric is a snapshot of the
last month of the reporting period multiplied by 12, presenting an
annualized revenue figure for SSH's recurring revenue base. Our
Annual Recurring Revenue at the end of Q3 reached EUR 14.5
million.
Outlook
Our 2021 guidance remains unchanged:
We expect net sales to increase significantly during 2021. We
are accelerating our transition from license and support service
sales to a recurring revenue business model, which we expect will
provide more stable revenue in the long term.
Even though the growth strategy will require operational
investments, we estimate EBITDA and cash flow from operations to be
positive for 2021.
CONSOLIDATED NET SALES
Consolidated net sales for July -- September totaled EUR 3.9
million (EUR 2.6 million).
Consolidated net sales for January -- September totaled EUR 9.9
million (EUR 8.3 million).
The Americas region accounted for 48.1% (54.1%); the Europe,
Middle East, and Africa region 42.0% (26.1%); and the Asia Pacific
region 9.9% (19.8%) of reported net sales.
CONSOLIDATED NET SALES
Change Change
EUR million 7--9/2021 7--9/2020 % 1--9/2021 1--9/2020 % 1--12/2020
BY SEGMENT
AMERICAS 1.7 1.4 21.9 4.8 4.5 6.1 5.9
APAC 0.3 0.4 -30.3 1.0 1.6 -40.3 2.1
EMEA 1.9 0.7 172.1 4.2 2.2 92.3 3.2
Total 3.9 2.6 53.8 9.9 8.3 19.7 11.3
------------------------- --------- --------- ------ --------- --------- ------ ----------
BY OPERATION
Subscription sales 1.6 0.2 765.4 3.0 0.5 463.8 0.8
License sales 0.4 0.4 1.3 1.4 1.7 -18.7 2.2
Maintenance sales 1.8 1.9 -7.1 5.4 6.1 -11.4 7.8
Professional services
& others 0.1 0.0 349.8 0.2 0.1 209.6 0.4
Total 3.9 2.6 53.8 9.9 8.3 19.7 11.3
------------------------- --------- --------- ------ --------- --------- ------ ----------
The majority of SSH Communications Security's invoicing is US
dollar-denominated. During the financial year to-date, the average
exchange rate of the US dollar against the euro declined by 6.5%
compared to the January-September 2020 period. With comparable
exchange rates, the net sales increase in 2021 YTD would have been
24.2% compared to 2020 YTD, instead of reported 19.3%.
RESULT AND EXPENSES
Operating loss for July -- September was EUR -0.3 million (EUR
-0.3 million), with net profit totaling EUR -0.3 million (EUR -0.5
million).
Operating loss for January -- September was EUR -2.2 million
(EUR -1.2 million), with net loss totaling EUR -2.7 million (EUR
-1.5 million).
Selling, marketing, and customer support expenses for July --
September amounted to EUR -2.0 million (EUR -1.2 million), while
research and development expenses totaled EUR -1.4 million (EUR
-1.1 million) and administrative expenses EUR -1.1 million (EUR
-0.6 million).
Selling, marketing, and customer support expenses for January --
September amounted to EUR -6.1 million (EUR -4.5 million), while
research and development expenses totaled EUR -4.1 million (EUR
-3.7 million) and administrative expenses EUR -2.8 million (EUR
-1.9 million). Operating expenses increased by 28% compared to the
previous year.
BALANCE SHEET AND FINANCIAL POSITION
The financial position of SSH Communications Security was
satisfactory during the reporting period. The consolidated balance
sheet total on September 30, 2021, was EUR 32.0 million (September
30, 2020: EUR 18.1 million; December 31, 2020: EUR 18.6 million),
of which liquid assets accounted for EUR 4.2 million (September 30,
2020: EUR 9.4 million; December 31, 2020: EUR 8.5 million), or 13.0
% of the balance sheet total. Interest-bearing liabilities were EUR
1.2 million (September 30, 2020: 1.3 million; December 31, 2020:
EUR 1.3 million). Interest-bearing liabilities include a
subordinated loan of EUR 0.6 million (September 30, 2020: 0.6
million; December 31, 2020: 0.6 million) granted by the
non-controlling interest holder State Security Networks Group
Finland. On September 30, 2021 gearing, or the ratio of net
liabilities to
shareholders' equity, was -25.8% (September 30, 2020: --82.2%; December 31, 2020: -85.3%) and the equity ratio stood at 46.3% (September 30, 2020: 76.2%; December 31, 2020: 69.7%).
The reported gross capital expenditure for January -- September
totaled EUR 1.8 million (EUR 1.5 million). The reported financial
income and expenses of EUR -0.3 million (EUR -0.3 million)
consisted mainly of exchange rate gains or losses, interest
expenses, sales and leasing expenses.
During January -- September, SSH Communications Security
generated cash flow of EUR -1.5 million (EUR -0.2 million) from
business operations, and investments generated cash flow of EUR
-4.7 million (EUR -1.0 million). Cash flow from investments
includes the acquisition of Deltagon Oy for EUR -4.6 million and
received government grants of EUR 1.8 million (EUR 0.6 million).
Cash flow from financing totaled EUR 1.7 million (EUR -1.2
million). Cash flow from financing includes the payment of hybrid
instrument interest of EUR -1.4 million (EUR -0.9 million), and a
received loan 2.5 million. Total cash flow from operations,
investments, and financing was EUR -4.5 million (EUR -2.4
million).
There were no short-term investments at the end of the reporting
period.
RESEARCH AND DEVELOPMENT
Research and development expenses for July -- September totaled
EUR -1.4 million (EUR -1.1 million), the equivalent of 34.9 % of
net sales (43.2 %). During July -- September, the company has
capitalized new product R&D costs in the amount of EUR 0.4
million (EUR 0.3 million). Capitalized product development expenses
were reduced by EUR 0.1 million received as funding from the EU in
2020 (EUR 0.1 million).
Research and development expenses for January -- September
totaled EUR -4.1 million (EUR -3.7 million), the equivalent of
40.8% of net sales (45.1%). During January -- September, the
company has capitalized new product R&D costs in the amount of
EUR 0.9 million (EUR 1.0 million). Capitalized product development
expenses were reduced by EUR 0.3 million received as funding from
the EU in 2020 (EUR 0.4 million). Depreciation expense from
capitalized R&D assets was EUR -0.9 million (EUR -0.9
million).
HUMAN RESOURCES AND ORGANIZATION
At the end of September, the Group had 123 employees (September
30, 2020: 82; December 31, 2020: 94). The number of employees
increased by 41 persons from the comparison period and by 29
persons from the year-end 2020 (3 %). The change was mainly driven
by the Deltagon acquisition.
At the end of the period, 39.0% (29.3%) of the employees worked
in sales, marketing and customer service, 51.2% (53.7%) in R&D,
and 9.8% (17.1%) in corporate administration.
BOARD AND AUDITORS
The Annual General Meeting of SSH Communications Security Oyj
was held on March 25, 2021. The Annual General Meeting unanimously
adopted the consolidated financial statements and discharged from
liability the Board members and CEO who have been active during the
accounting period between January 1, 2020, and December 31, 2020.
Henri Österlund, Kai Tavakka, Sampo Kellomäki, and Christian
Fredrikson (new member) were elected as directors of the company's
Board of Directors. At the inaugural meeting of the Board of
Directors, Henri Österlund was elected Chairman.
The Authorized Public Accountants Ernst & Young Oy were
re-elected as the auditor of the company. Ernst & Young Oy
informed the company that Erkka Talvinko, Authorized Public
Accountant, will continue as the principal auditor.
GROUP MANAGEMENT TEAM
On September 30, 2021, the Group Management Team comprised:
Teemu Tunkelo, Chief Executive Officer
Niklas Nordström, Chief Financial Officer
Rami Raulas, Head of EMEA Region
SHARES, SHAREHOLDING, AND CHANGES IN GROUP STRUCTURE
The reported trading volume of SSH Communications Security
shares totaled 7,076,597 shares (valued at EUR 18,022,658) during
the reporting period. The highest quotation was EUR 3.26 and the
lowest EUR 1.60. The trade-weighted average share price for the
period was EUR 2.51, and the share closed at EUR 2.35 (September
30, 2021).
Accendo Capital is the largest shareholder of SSH, with 29.2% of
the company shares and votes. Tatu Ylönen is the second-largest
shareholder of SSH with 18.0%, and Juha Mikkonen holds directly
5.2% of the company's shares. More information about the
shareholding can be obtained from the company's web site
www.ssh.com.
On January 29, 2021, SSH announced the acquisition of Deltagon
Oy through its subsidiary Kyberleijona Oy. The transaction was
closed on April 26, 2021.
No dividend or return of capital has been distributed during the
reporting period.
SHARE CAPITAL AND BOARD AUTHORIZATIONS
The company's registered share capital on September 30, 2021,
was EUR 1,176,206.99, consisting of 38,826,233 shares.
The Annual General Meeting approved the Board of Directors'
proposal to authorize the Board of Directors to decide upon the
issuing of a maximum of 6,000,000 shares as a share issue against
payment or by giving stock options or other special rights
entitling to shares, in accordance with Chapter 10 Section 1 of the
Finnish Companies Act, either according to the shareholders'
pre-emptive right to share subscription or deviating from this
right, in one or more tranches. Based on the authorization, it can
be either issuing of new shares or transfer of own shares, which
the company may have in its possession.
Based on the authorization, the Board of Directors shall have
the same rights as the Annual General Meeting to decide upon the
issuing of shares against payment and special rights (including
stock options) in accordance with Chapter 10 Section 1 of the
Finnish Companies Act. Thereby, the authorization to be given to
the Board of Directors includes, inter alia, the right to deviate
from the shareholders' pre-emptive rights with directed issues
providing that the company has a compelling financial reason for
the deviation with respect to the share issue against payment.
Furthermore, the authorization includes the Board of Directors'
right to decide upon who is entitled to the shares and/or stock
options or special rights in accordance with Chapter 10 Section 1
of the Finnish Companies Act as well as upon the related
compensation, subscription, and payment periods and the registering
of the subscription price into the share capital or invested
non-restricted equity fund within the limits of the Finnish
Companies Act.
The authorization will be valid until the next Annual General
Meeting but will expire at the latest on June 30, 2022.
The Annual General Meeting approved the Board of Directors'
proposal to authorize the Board of Directors to decide upon
acquisition of a maximum of 2,000,000 own shares of the company
with assets belonging to the company's non-restricted equity, which
amounts to approximately 5.2 percent of the company's total shares.
The shares can also be acquired other than in proportion to the
holdings of the existing shareholders. The maximum compensation to
be paid for the acquired shares shall be the market price at the
time of purchase, which is determined by public trading.
The Board of Directors proposes that the authorization for the
acquiring of the company's own shares would be used, inter alia, in
order to strengthen the company's capital structure, to finance and
realize corporate acquisitions and other arrangements, to realize
the share-based incentive programs of the company or otherwise to
be kept by the company, to be transferred for other purposes or to
be cancelled. The acquisition of shares reduces the company's
distributable non-restricted equity.
A decision concerning the acquisition of own shares must be made
so that the combined amount of the own shares, which are in
possession of, or held as pledges by, the company or its
subsidiaries does not exceed 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 expire at the latest on June 30, 2022.
RISKS AND UNCERTAINTIES
The ongoing COVID-19 pandemic remains a macro-level risk which,
if prolonged, may affect SSH Communications Security through
challenges it poses on new license sales. The most substantial
risks that might otherwise affect the profitability of the company
have remained the same as in the previous reporting period and are
listed below.
Largest risks:
-- Uncertainty of the macroeconomic environment, such as the impact of
COVID-19 pandemic
-- Refinancing risk/liquidity risk such as being unable to pay obligations
due to insufficient liquidity or difficulties in raising financing.
-- Cybercrime, including, e.g., ransomware
-- Delays in product development and closing new business as well as phasing
of new business cases
-- Ability to execute the strategy
-- Due to the global shortage in semiconductors hinder supply of hardware
components and indirectly initiation of customer IT project
-- Ability to retain and recruit key personnel
-- Maintaining the ability to innovate and develop the product portfolio
including intellectual property rights (IPR)
-- IPR litigation and utilization of the patent portfolio
-- A large portion of the company revenue is invoiced in USD currency, and
possible significant fluctuation in USD currency rates during 2021 could
have unpredictable effects on profitability. The company decides on
hedging of USD-based contracts case by case.
Principles and organization of risk management of SSH
Communications Security are available on the company's web page:
www.ssh.com.
RELATED PARTY TRANSACTIONS
During the reporting period, there have not been any significant
transactions with related parties.
EVENTS AFTER THE BALANCE SHEET DATE
After the balance sheet date, there have not been any
significant events.
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
EUR million 7--9/2021 7--9/2020 1--9/2021 1--9/2020 1--12/2020
Net sales 3.9 2.6 9.9 8.3 11.3
Cost of sales 0.0 -0.1 0.1 -0.2 -0.3
Gross margin 4.0 2.5 10.0 8.1 11.0
Other operating income 0.2 0.2 0.8 0.8 1.0
Selling, marketing and customer
support expenses -2.0 -1.2 -6.1 -4.5 -6.7
Research and development expenses -1.4 -1.1 -4.1 -3.7 -5.0
Administrative expenses -1.1 -0.6 -2.8 -1.9 -2.7
Operating profit/loss -0.3 -0.3 -2.2 -1.2 -2.5
Financial income and expenses -0.1 -0.3 -0.3 -0.3 -0.6
Profit/loss before taxes -0.4 -0.5 -2.5 -1.5 -3.1
Taxes 0.1 0.0 -0.2 0.0 0.0
Profit/loss for the period -0.3 -0.5 -2.7 -1.5 -3.1
------------------------------------------ --------- --------- --------- --------- ----------
Attributable to:
Owners of the parent company -0.4 -0.5 -2.7 -1.3 -2.8
Non-controlling interests 0.1 -0.1 0.0 -0.2 -0.2
-0.3 -0.5 -2.7 -1.5 -3.1
--------- --------- --------- --------- ----------
Other comprehensive income
Items which might be later transferred
to profit or loss:
Foreign subsidiary translation
differences -0.1 0.1 0.0 0.1 0.3
Total comprehensive income -0.4 -0.4 -2.7 -1.4 -2.8
------------------------------------------ --------- --------- --------- --------- ----------
Attributable to:
Owners of the parent company -0.5 -0.3 -2.6 -1.2 -2.6
Non-controlling interest 0.1 -0.1 0.0 -0.2 -0.2
-0.4 -0.4 -2.7 -1.4 -2.8
--------- --------- --------- --------- ----------
Earnings per share
Earnings per share (EUR) -0.02 -0.02 -0.10 -0.06 -0.11
Diluted earnings per share (EUR) -0.02 -0.02 -0.10 -0.06 -0.11
CONDENSED CONSOLIDATED BALANCE SHEET
EUR million Sep 30. 2021 Sep 30. 2020 Dec 31. 2020
ASSETS
Non-current assets
Property, plant and equipment 0.1 0.1 0.1
Right-of-use assets 0.6 0.7 0.7
Goodwill and intangible assets 21.7 5.3 5.4
Investments 0.0 0.0 0.0
------------------------------------
Total non-current assets 22.4 6.2 6.3
Current assets
Inventories 0.0 0.0 0.0
Trade and other receivables 5.3 2.4 3.8
Financial assets 0.0 0.0 0.0
Cash and cash equivalents 4.2 9.4 8.5
------------------------------------
Total current assets 9.5 11.9 12.3
Total assets 32.0 18.1 18.6
------------------------------------ ------------ ------------ ------------
EQUITY AND LIABILITIES
Equity
Attributable to parent company's
shareholders 5.2 9.4 8.1
Non-controlling interest 6.2 0.4 0.4
------------------------------------
Total equity 11.5 9.9 8.5
Non-current liabilities
Borrowings 0.6 0.6 0.6
Lease liabilities 0.3 0.4 0.4
Other non-current liabilities 3.6
Advances received and deferred
revenue 1.0 0.7 0.8
Deferred tax liabilities 1.6
------------------------------------
Total non-current liabilities 7.1 1.7 1.7
Current liabilities
Trade and other payables 6.9 1.8 2.4
Lease liabilities 0.3 0.3 0.3
Advances received and deferred
revenue 6.1 4.4 5.7
------------------------------------
Total current liabilities 13.3 6.5 8.4
Total equity and liabilities 32.0 18.1 18.6
------------------------------------ ------------ ------------ ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Attributable to the owners of the Company
Hybrid Unrestricted
Share capital Translation invested Retained Non-controlling Total
EUR million capital securities difference equity fund earnings Total interests equity
Equity Jan 1,
2020 1.2 12.0 -1.4 22.7 -23.0 11.4 0.6 12.0
Change 0.1 -0.8 -0.7 -0.7
Net profit -1.3 -1.3 -0.2 -1.5
Equity Sep 30,
2020 1.2 12.0 -1.3 22.7 -25.1 9.4 0.4 9.9
Change 0.0 0.0 0.2 0.0 -1.5 -1.3 -1.3
Net profit 0.0 0.0 -0.1 0.0
Equity Dec 31,
2020 1.2 12.0 -1.2 22.7 -26.6 8.1 0.4 8.5
Change 0.0 0.0 0.8 -1.1 -0.2 -0.2
Net profit -2.7 -2.7 0.0 -2.7
Acquisition of
subsidiary 5.9 5.9
Equity September
30, 2021 1.2 12.0 -1.1 23.6 -30.3 5.2 6.2 11.5
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
EUR million 1--9/2021 1--9/2020 1--12/2020
Cash flow from operations -1.5 -0.2 -0.2
whereof change in working capital 2.5 0.3 1.1
Cash flow from investing activities -4.7 -1.0 -1.5
Cash flow from financing activities 1.7 -1.2 -1.3
Increase (+) / decrease (-) in cash -4.5 -2.4 -3.0
Cash at period start 8.5 12.0 12.0
Effect of exchange rate 0.1 -0.2 -0.4
Cash at period end 4.2 9.4 8.5
NOTES TO THE FINANCIAL STATEMENT RELEASE
The interim report for the nine months reporting period ended
September 30, 2021 has been prepared in accordance with IAS 34
Interim Financial Reporting. This interim report does not include
all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
consolidated financial statements for the year ended December 31,
2020. The information presented in this interim report is
unaudited.
The accounting policies adopted for this interim report are
consistent with those applied in 2020 consolidated financial
statements except for the adoption of new standards effective as of
January 1, 2021. The Group has not early adopted any standard,
interpretation, or amendment that has been issued but is not yet
effective. The new standards and amendments had no impact on the
interim condensed consolidated financial statements of the SSH
Group.
BUSINESS COMBINATIONS
Acquisition of Deltagon Oy
On April 26, 2021, the Group's subsidiary Kyberleijona Oy
acquired 100% of the voting shares of Deltagon Oy, an unlisted
company based in Finland that develops and sells secure messaging
and transaction solutions to various industries, including finance
and the public sector. A majority of Deltagon's revenue is
generated from the secure email messaging solution Sec@GW that has
been certified by the National Cyber Security Authority at the
Finnish Transport and Communications Agency (NCSA-FI) for
protecting classified information according to the Finnish national
(FI) ST III and ST IV security requirements. The Group has acquired
Deltagon because it complements SSH's product and services
portfolio and creates synergies in product development, developing
future quantum resistance, and leveraging international sales and
marketing channels. The acquisition has been accounted for using
the acquisition method. The interim condensed consolidated
financial statements include the results of Deltagon from the
acquisition date April 26 until September 30, 2021.
Details of purchase consideration, the net assets acquired, and
goodwill are as follows:
Purchase consideration EUR million
Cash paid 5.0
Deferred purchase price 4.9
Considerations shares 5.4
Closing adjustments 1.5
Earnout consideration 0.4
Total purchase consideration 17.1
-----------
Fair value recognised
Assets on acquisition
Intangible assets
Customer related intangible assets 8.1
Technology related intangible assets 0.4
Trade and other receivables 2.0
Cash 1.4
11.9
---------------------
Liabilities
Trade and other payables -1.3
Deferred tax liability -1.7
-3.0
---------------------
Total identifiable net assets at fair value 8.8
Goodwill arising on acquisition 8.3
Purchase consideration transferred 17.1
---------------------
Analysis of cash flows on acquisition:
Net cash acquired with the subsidiary (included in
cash flows from investing activities) 1.4
Cash paid -6.0
Net cash flow on acquisition -4.6
---------------------
The total purchase price was EUR 17.1 million. Cash component of
EUR 5.0 million was paid at closing, EUR 1.0 million in July and
EUR 5.4 million of consideration shares were recognized in equity.
Deferred purchase price EUR 4.9 million consists out of the present
value of three additional installments of EUR 1.67 million paid in
years 2022, 2023 and 2024. The installments have been discounted at
the estimated cost of debt (2.1%). A closing adjustment of EUR 1.5
million was based on the net cash position and net working capital
adjustment on the closing date.
The goodwill recognized is attributed to Deltagon's profitably
growing business with a strong position in the domestic messaging
security market, new international business, and a wide customer
base.
Transaction costs were not significant and have been expensed
and included in the administrative expenses in profit or loss.
CHANGES IN PROPERTY, PLANT AND
EQUIPMENT
September 30, September 30, December
EUR million 2021 2020 31, 2020
Carrying amount in the beginning of
the period 0.1 0.1 0.1
Increase 0.1 0.1 0.1
Depreciation and impairment -0.1 -0.1 -0.1
Foreign exchange rate differences 0.0 0.0 0.0
Carrying amount at the end of the
period 0.1 0.1 0.1
------------------------------------- ------------- ------------- ---------
CHANGES IN RIGHT-OF-USE ASSETS
September 30, September 30, December
EUR million 2021 2020 31, 2020
Carrying amount in the beginning of
the period 0.7 0.3 0.3
Increase 0.2 0.7 0.8
Decrease -0.0
Depreciation and impairment -0.3 -0.3 -0.4
Foreign exchange rate differences 0.0 0.0 0.0
Carrying amount at the end of the
period 0.6 0.7 0.7
------------------------------------- ------------- ------------- ---------
Right-of-use assets include leased offices and software.
CHANGES IN GOODWILL AND INTANGIBLE
ASSETS
September 30, September 30, December
EUR million 2021 2020 31, 2020
Carrying amount in the beginning of
the period 5.4 5.5 5.5
Increase 1.1 1.0 1.6
Acquisition of subsidiary 16.8
Amortization and impairment -1.6 -1.2 -1.6
Foreign exchange rate differences 0.0 0.0 0.0
Carrying amount at the end of the
period 21.7 5.3 5.4
------------------------------------- ------------- ------------- ---------
CONTINGENT LIABILITIES
September September
30, 30, December
EUR million 2021 2020 31, 2020
Interest on hybrid capital securities 0.7 0.9 1.0
Rent security deposits 0.1 0.2 0.2
KEY FIGURES AND RATIOS
SSH Communications Security provides an alternative performance
measure EBITDA, which is not defined by IFRS standards. Alternative
performance measures should not be considered as substitutes for
performance measures in accordance with IFRS.
EBITDA = Operating profit/loss + depreciation and impairment
KEY FIGURES AND RATIOS
EUR million 1--9/2021 1--9/2020 1--12/2020
Net sales 9.9 8.3 11.3
EBITDA -0.3 0.4 -0.4
% of net sales -2.8 4.3 -3.5
Operating profit/loss -2.2 -1.2 -2.5
% of net sales -22.0 -14.2 -22.1
Profit/loss before taxes -2.5 -1.5 -3.1
% of net sales -25.1 -17.7 -27.5
Return on equity (%) -27.0 -13.3 -30.0
Return on investment (%) -18.0 -12.2 -27.3
Interest-bearing net liabilities -3.0 -8.1 -7.2
Equity ratio (%) 46.3 76.2 69.7
Gearing (%) -25.8 -82.2 -85.3
Gross capital expenditure 1.8 1.5 2.1
% of net sales 17.7 18.6 18.8
R&D expenses -4.1 -3.7 -5.0
% of net sales 40.8 45.1 44.9
Personnel, period average 111 88 88
Personnel, period end 123 82 94
PER SHARE DATA
EUR 1--9/2021 1--9/2020 1--12/2020
Earnings per share undiluted(1) -0.10 -0.06 -0.11
Earnings per share diluted(1) -0.10 -0.06 -0.11
Equity per share 0.30 0.25 0.22
No. of shares at period average (thousand) 38,810 38,802 38,802
No. of shares at period end (thousand) 38,826 38,802 38,802
Share performance
Average price 2.51 1.26 1.28
Low 1.60 0.65 0.65
High 3.26 1.90 1.97
Share price period end 2.35 1.45 1.70
Market capitalization period end (EUR
million) 91.2 56.1 65.8
Volume of shares traded (million) 7.2 17.7 19.4
Volume of shares traded as % of total 18.5 45.6 50.1
Value of shares traded (EUR million) 18.0 22.4 24.9
Price per earnings ratio (P/E) neg. neg. neg.
Dividend per share 0.00 0.00 0.00
Dividend per earnings, % 0.00 0.00 0.00
Effective return on dividend, % 0.00 0.00 0.00
(1) Earnings per share is impacted by unpaid interest
of hybrid capital securities
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
The following table presents the reconciliation of EBITDA to the
operating profit/loss.
EUR million 1--9/2021 1--9/2020 1--12/2020
EBITDA -0.3 0.4 -0.4
Depreciations and amortizations -1.9 -1.5 -2.1
Operating profit/loss -2.2 -1.2 -2.5
-------------------------------- --------- --------- ----------
DISCLAIMER
The contents of this report are provided by SSH Communications
Security and its third-party content providers for your personal
information only and do not constitute an offer or invitation to
purchase any securities nor does this report provide any form of
advice (investment, tax, legal) amounting to investment advice nor
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 financial reporting
calendar for 2022 later during the year.
Helsinki, October 21, 2021
SSH COMMUNICATIONS SECURITY
Board of Directors
Teemu Tunkelo
CEO
For further information, please contact:
Teemu Tunkelo, CEO tel. +41 79 227 8362
Niklas Nordström, CFO tel. +358 50 541 0543
Distribution:
NASDAQ Helsinki Ltd.
Major media
www.SSH.com
(END) Dow Jones Newswires
October 21, 2021 01:59 ET (05:59 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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