SSH INTERIM REPORT FOR JANUARY 1 - JUNE 30, 2008

SSH COMMUNICATIONS SECURITY CORP STOCK EXCHANGE RELEASE, July 23,
2008, at 9:00 a.m.
 
- Net sales for January-June totaled EUR 4.4 million, up by +8
percent year on year (EUR 4.1 million in Q1-Q2/2007).
- Second-quarter net sales reached EUR 2.6 million, up by +68 percent
on a year earlier (EUR 1.5 million in Q2/2007).
- Operating loss for January-June amounted to EUR -1.0 million (a
loss of -1.1 million in Q1-Q2/2007), loss EUR -0.6 million (-0.8
million). Second-quarter operating loss was EUR -0.1 million and net
profit was EUR 0.0 million.
- The company signed four significant license agreements during the
period. The largest order, value about EUR 0.6 million, came from a
US public sector contractor.
 
KEY FIGURES
                             4-6/                               1-12/
                             2008 4-6/ 2007 1-6/ 2008 1-6/ 2007  2007
 
Net sales (MEUR)              2.6       1.5       4.4       4.1  14.1
Net sales, change %          67.9     -34.3       7.7      -5.9  49.4
Operating profit/loss (MEUR) -0.1      -1.1      -1.0      -1.1   2.2
  % of net sales             -5.8     -71.5     -22.6     -27.6  15.3
Operating profit/loss,
change %                     85.7    -277.1      11.0     -20.4 343.4
Profit/loss before taxes
(MEUR)                        0.0      -0.9      -0.6      -0.8   3.0
  % of net sales              0.4     -58.9     -14.2     -18.8  21.5
Number of employees
at period end                  80        80        80        80    83
 
Earnings per share (EUR)                        -0.02     -0.03  0.11
Shareholders' equity per
share (EUR)                                      0.56      0.60  0.73
 
SSH Communications Security is a world-leading provider of enterprise
security solutions and end-to-end communications security, and the
original developer of the Secure Shell protocol. The company's SSH
Tectia solution addresses the most critical needs of large
enterprises, financial institutions and government agencies.
 
NET SALES
 
Consolidated net sales for January-June totaled EUR 4.4 million (EUR
4.1 million), up by +7.7 percent, year on year. Net sales for the
second quarter totaled EUR 2.6 million, an increase of +67.9 percent
compared to the corresponding quarter for year 2007.
 
The majority of SSH's invoicing is based on the U.S. dollar. During
the report period, the U.S. dollar's average exchange rate to euro
weakened approximately 15 percent compared to the same period a year
ago. At constant currency, net sales would have increased 19 percent
compared to the January-June period and 86 percent compared to the
second quarter of year 2007.
 
RESULTS AND EXPENSES
 
Operating loss for January-June amounted to EUR -1.0 million
(Q1-Q2/2007: a loss of EUR -1.1 million), with net loss totaling EUR
-0.6 million (a loss of EUR -0.8 million). Operating loss for the
second quarter totaled EUR -0.1 million (a loss of EUR -1.1 million),
with net profit amounting to EUR 0,0 million (a loss of EUR -0.9
million).
 
Research and development expenses for the report period totaled EUR
2.0 million (EUR 1.8 million), while sales and marketing expenses
amounted EUR 2.5 million (EUR 2.7 million) and administrative
expenses EUR 0.9 million (EUR 0.9 million).
 
BALANCE SHEET AND FINANCIAL POSITION
 
The financial position of SSH remained at a healthy level during the
report period, which also included a distribution of EUR 4.3 million
to the shareholders. The consolidated balance sheet total on June 30,
2008 stood at EUR 19.3 million (EUR 19.6 million), of which liquid
assets accounted for EUR 16.4 million (EUR 17.6 million), or 85.1
percent of the balance sheet total. The company's interest bearing
liabilities, EUR 0.2 million, comprised lease finance commitments. On
June 30, 2008, gearing, or the ratio of net liabilities to
shareholders' equity, was -102.4 percent (-102.9) and the equity
ratio stood at 91.2 percent (93.5).
 
The reported gross capital expenditure for the period totaled EUR 0.0
million (EUR 0.1 million), plus lease financed commitments EUR 0.2
million (0.0). The reported financial income consisted
mainly of interest on fixed-term deposits. Financial income and
expenses totalled EUR 0.4 million (EUR 0.4 million).
 
During January-June, SSH reported a negative cash flow of EUR -1.6
million from business operations, and investments showed a positive
cash flow of EUR +6.1 million. Cash flow from financing totaled EUR
-4.3 million. Cash flow from operations, investments and financing
resulted in the company showing a positive total cash flow of EUR 0.3
million during the period.
 
MARKET DEVELOPMENTS
 
Large enterprise, financial, and public sector organizations have a
growing need for improved data security in several ways. New and
existing data security risks, continuously evolving regulations, and
increasing security standards and models continue to create new
needs, to which we can respond with our versatile product offerings.
 
The world-leading market for developing and deploying new data
security policies and practices is the USA.
 
Regulations that currently influence the demand of our products are,
for instance, the Sarbanes-Oxley Act (SOX), HIPAA, as well as the PCI
DSS data security standards of the major credit card companies. These
regulations cause data security audits, which drive our customers to
implement security upgrade programs for their IT infrastructure
against internal and external threats.
 
SSH is confident that legislative reforms in developed countries,
global data security standards, as well as many industry and company
level data security development programs will continue to drive
demand favorably for SSH Tectia. In the short term, however, demand
in the US and financial services sectors contain uncertainty.
 
SALES PERFORMANCE
 
SSH'S NET SALES
EUR million          4-6/     1-3/    10-12/    7-9/    4-6/    1-12/
                     2008     2008      2007    2007    2007     2007
 
BY SEGMENT
  AMER                1.8      1.3       1.5     7.3     1.0     11.6
  APAC                0.1      0.2       0.2     0.2     0.2      0.8
  EROW                0.7      0.5       0.6     0.3     0.3      1.8
  SSH Group
total                 2.6      1.9       2.2     7.8     1.5     14.1
 
BY OPERATION
  License sales       1.5      0.7       1.1     6.8     0.6     10.1
  Maintenance         1.1      1.1       1.1     1.0     0.9      4.0
  Total               2.6      1.9       2.2     7.8     1.5     14.1
 
The Americas, the Asia Pacific region, and the 'Europe and Rest of
the World' market area accounted for 69 percent (68 percent), 5
percent (11 percent) and 26 percent (21 percent) of reported net
sales, respectively.
 
During the report period, SSH concluded four new license agreements
that were worth more than EUR 100,000. The ten largest customers
accounted for 40 percent of reported net sales, with the largest
single customer accounting for approximately 11 percent.
 
PRODUCTS AND MARKETING
 
During the report period, SSH focused its sales and marketing efforts
on large enterprises, financial institutions, and government agencies
in the USA, Europe, and Asia, in line with its long-term strategy.
The company continued also developing its partner network in the same
focus markets.
 
The marketing focus was on the company's new Tectia security
solutions of IBM mainframe environment and SSH Tectia's enhanced file
transfer applications for large internal enterprise networks. The
company continued the development of the new third generation
architecture-based products. The company also made further
development of the productisation to provide higher value, new
features and expanded uses, as well as enabling easier purchasing for
the customers.
 
New applications, support of all essential enterprise OS platforms
including IBM mainframes, versatile integration capabilities, and
centralized management have made SSH Tectia the most extensive
integrated end-to-end communications security solution in the market.
 
RESEARCH AND DEVELOPMENT
 
Research and development expenses for January-June totaled EUR 2.0
million (EUR 1.8 million), the equivalent of 45.6 percent of net
sales (43.8 percent). During the report period SSH didn't capitalize
any research and development expenses.
 
HUMAN RESOURCES AND ORGANIZATION
 
At the end of June, the Group had 80 employees on its payroll. The
number of employees remained at the same level as in the previous
year.
 
At the end of the period, 51.2 percent of the employees worked in
R&D, 36.3 percent in sales and marketing, and 12.5 percent in
corporate administration.
 
BOARD AND AUDITORS
 
The Annual General Meeting (AGM) on March 27, 2008 re-elected Tomi
Laamanen, Timo Ritakallio and Tatu Ylönen to SSH Communications
Security Corp.'s Board of Directors. New board members, Pyry Lautsuo
and Juha Mikkonen were elected to the board. Tomi Laamanen continues
as chairman.
 
The AGM again elected to have PricewaterhouseCoopers Oy, authorized
public accountants, as the company's auditor, with Henrik Sormunen,
authorized public accountant, acting as the principal auditor.
 
SHARES, SHAREHOLDING AND CHANGES IN GROUP STRUCTURE
 
The reported trading volume of SSH Communications Security Corp.
shares totaled 2,335,381 (valued at EUR 3,377,572). The highest
quotation was EUR 1.69 and the lowest EUR 1.15. The trade-weighted
average share price for the period was EUR 1.45, and the share closed
at EUR 1.17 (June 27, 2008).
 
During the report period, the ownership structure of the company did
not change essentially. Tatu Ylönen holds, directly and through his
company, Tatu Ylönen Oy, 51.6 percent of the company's shares,
Assetman Oy holds 14.7 % and Tero Kivinen holds 5.2 percent. More
information about the shareholding can be obtained from the company's
web site.
 
During the report period, the Group decided to have the
Japanese subsidiary SSH Communications Security K.K go into voluntary
liquidation. This is a fully owned subsidiary of SSH. This
arrangement
is a part of the re-structuring of company's Asian sales
organization,
with a goal to sharpen the geographical sales focus, to increase the
role of resellers and to decrease costs.
 
SHARE CAPITAL AND BOARD AUTHORIZATIONS
 
The company's registered share capital on June 30, 2008 was EUR
856,448.34, consisting of 28,548,278 shares. During the report
period,
SSH increased its share capital twice, based on subscription to
the new shares under SSH's stock-option plan. In total, 750 new
SSH shares were subscribed under the I/1999 stock option plan,
1,416 shares under the I/2003 stock option plan and 10,000 shares
under the II/2003 stock option plan respectively. With these
subscriptions the company's share capital was increased by EUR
364.98.
 
The Annual General Meeting 27 March 2008 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 defined in the Finnish Companies Act Chapter 10,
section 1, with or without subscription rights to shareholders.
This authorization is effective until the next Annual General
Meeting, but will expire 30 June 2009, at the latest. The Board has
not exercised this authorization.
 
The Annual General Meeting also authorized the Board of Directors to
decide on dividend distribution and/or on distribution of assets from
the invested unrestricted equity fund. By virtue of the
authorization,
the distributed assets can be a maximum of 0.15 euro per share and
EUR
4,350,000.00 in total. The authorization is valid until 31 December
2008. Further, the Board of Directors was authorized to lower the
subscription price of shares that can be subscribed on the grounds of
the stock option plans released by the Company between years 2000 and
2003, at an amount which equates the distribution of assets. On 2
April 2008, after the end of the report period, the Board of
Directors
decided to distribute 0.15 euro per share from the invested
unrestricted equity fund to the shareholders, and to lower the
subscription price of the 2000 - 2003 stock option plans by the same
amount. The date of payment was 15 April, 2008.
 
CORPORATE GOVERNANCE
 
The company complies with the corporate governance recommendations
for
listed companies issued by the OMX Nordic Exchange Helsinki, the
Central Chamber of Commerce of Finland, and the Confederation of
Finnish Industry and Employers. More information on corporate
governance is available on the company's Web site (www.ssh.com).
 
PROSPECTS
 
The US dollar exchange rate and speculations about the US economy
contain some factors of uncertainty that are hard to estimate. Our
active sales prospect base is at a high level, especially in the US
markets. However, time needed for completing the sales has
grown longer.
 
In spite of the 1st half loss, the company estimates that it still
has chances to make a profitable full year.
 
Due to the large size of individual orders and depending on the
timing
of customer projects, significant variation of the quarterly revenue
may occur.
 
INCOME STATEMENT
EUR million                    4-6/    4-6/             1-6/    1-12/
                               2008    2007 1-6/ 2008   2007     2007
 
  Net sales                     2.6     1.5    4.4       4.1     14.1
  Purchasing and production
  costs                         0.0     0.0    0.0       0.0      0.0
  Gross profit                  2.6     1.5    4.4       4.1     14.1
  Other operating income        0.0     0.0    0.1       0.1      0.1
  Expenses
    Product development        -1.0    -0.9   -2.0      -1.8     -3.7
    Sales and
    marketing                  -1.3    -1.3   -2.6      -2.7     -6.5
    Administration             -0.4    -0.4   -0.9      -0.9     -5.3
                                                         4.1     14.1
  Operating profit/loss        -0.1    -1.1   -1.0       0.0      0.0
 
  Financial income and
  expenses                      0.2     0.2    0.4       0.4      0.9
 
  Profit/loss before taxes      0.0    -0.9   -0.6      -0.8      3.0
  Taxes                         0.0     0.0    0.0       0.0      0.0
 
  Net profit/loss for the
  period                        0.0    -0.9   -0.6      -0.8      3.0
 
EARNINGS PER SHARE                1-6/   1-6/ 1-12/
                                  2008   2007  2007
 
Earnings per share (EUR)          -0.02 -0.03    0.11
Earnings per share, diluted (EUR) -0.02 -0.03    0.11
 
BALANCE SHEET
EUR million                                  6/30/ 6/30/ 12/31/
                                              2008  2007   2007
 
  ASSETS
 
  Fixed and other non-current assets
    Tangible assets                            0.4   0.1    0.1
    Intangible assets                          0.0   0.2    0.1
    Deferred tax assets                        0.2   0.2    0.2
  Total fixed and other
  non-current assets                           0.7   0.6    0.5
 
  Inventories and current assets
    Short-term receivables                     2.2   1.4    3.0
    Short-term investments                    14.5  15.3   20.3
    Cash and cash equivalents                  1.9   2.3    1.7
  Total inventories and current assets        18.6  19.1   25.1
 
  Total assets                                19.3  19.6   25.5
 
  LIABILITIES AND SHAREHOLDERS' EQUITY
 
  Shareholders' equity                        15.9  17.1   20.8
  Long-term liabilities
    Provisions                                 0.2   0.0    0.2
    Long-term financial
    liabilities                                0.2   0.0    0.0
  Total long-term liabilities                  0.4   0.0    0.2
 
  Short-term liabilities                       3.0   2.5    4.5
 
  Total liabilities and shareholders' equity  19.3  19.6   25.5
 
CASH FLOW STATEMENT
EUR million                            1-6/ 2008 1-6/ 2007 1-12/ 2007
 
  Cash flow from business operations        -1.6       0.7        5.1
  Cash flow from investments                 6.1      -0.1       -5.0
  Cash flow from financing                  -4.3       0.0        0.0
 
  Increase(+) / decrease (-) in liquid
  assets                                     0.3       0.6        0.1
 
  Liquid assets at period start              1.7       1.7        1.7
  Adjustment for translation
  difference                                -0.1       0.0       -0.1
  Liquid assets at period end                1.7       2.3        1.7
 
STATEMENT ON CHANGES IN
SHAREHOLDERS' EQUITY
EUR million      Share    Share      Fair Trans-lation Unrest-ricted Total
              Capi-tal Premi-um    value         diff.  equity funds
                                reser-ves              and retain-ed
                                                           ear-nings
 
Shareholders'
equity
Jan. 1, 2007       0.9     11.5       0.1         -0.8           6.3  18.0
Change             0.0      0.0       0.0          0.0          -0.8
 
Shareholders'
equity
Jun. 30, 2007      0.9     11.5       0.1         -0.9           5.5  17.1
Change             0.0      0.0       0.0         -0.3           3.8
 
Shareholders'
equity
Dec. 31, 2007      0.9     11.5       0.1         -1.1           9.4  20.8
Change             0.0      0.0       0.0          0.0          -4.3
Net profit                                                      -0.7
 
Shareholders'
equity
Jun. 30, 2008      0.9     11.5       0.1         -1.0           4.5  15.9
 
NET SALES BY SEGMENT
EUR million          4-6/ 4-6/ 1-6/ 1-6/ 1-12/
                     2008 2007 2008 2007  2007
 
AMER                  1.8  1.0  3.1  2.8  11.5
APAC                  0.1  0.2  0.4  0.4   0.8
EROW                  0.7  0.3  0.9  0.9   1.8
SSH Group total       2.6  1.5  4.4  4.1  14.1
 
OPERATING PROFIT/LOSS BY SEGMENT
EUR million                      4-6/ 4-6/ 1-6/ 1-6/ 1-12/
                                 2008 2007 2008 2007  2007
 
AMER                              1.0  0.3  1.5  1.4   7.6
APAC                              0.1  0.1  0.2  0.2   0.3
EROW                              0.3 -0.1  0.4  0.0  -0.1
Common Group expenses*           -1.5 -1.4 -3.1 -2.7  -5.6
SSH Group total                  -0.1 -1.1 -1.0 -1.1   2.2
 
* Common Group expenses include Group administration expenses (e.g.,
management and finance) and product management and R&D expenses for
corporate headquarters.
 
KEY FIGURES AND RATIOS
                                                   1-6/   1-6/  1-12/
                                                   2008   2007   2007
 
Net sales (MEUR)                                    4.4    4.1   14.1
Operating profit/loss (MEUR)                       -1.0   -1.1    2.2
Operating profit/loss, as % of net sales          -22.6  -27.6   15.3
Profit/loss before extraordinary items and taxes
(MEUR)                                             -0.6   -0.8    3.0
Profit/loss before extraordinary items and
taxes, as % of net sales                          -14.2  -18.8   21.5
Profit/loss before taxes (MEUR)                    -0.6   -0.8    3.0
Profit/loss before taxes, as
% of net sales                                    -14.2  -18.8   21.5
Return on investment (%)                           -6.1   -8.5   15.1
Return on equity (%)                               -6.9   -8.8   15.6
Interest-bearing net liabilities (MEUR)           -16.3  -17.6  -22.0
Equity ratio (%)                                   91.2   93.5   91.4
Gearing (%)                                      -102.4 -102.9 -105.8
Gross capital expenditure (MEUR)                    0.0    0.1    0.1
  % of net sales                                    0.0    1.2    0.8
R&D expenses (MEUR)                                 2.0    1.8    3.7
  % of net sales                                   45.6   43.8   26.0
Personnel, period average                            80     80     81
Personnel, period end                                80     80     83
 
PER-SHARE DATA
                                               1-6/   1-6/  1-12/
                                               2008   2007   2007
 
Earnings per share, undiluted
(EUR)                                         -0.02  -0.03   0.11
Earnings per share, diluted (EUR)             -0.02  -0.03   0.11
Equity per share (EUR)                         0.56   0.60   0.73
No. of shares at period end
(thousands)                                  28 548 28 444 28 536
Share performance (EUR)
  Average price                                1.45   1.49   1.63
  Low                                          1.15   1.15   1.12
  High                                         1.69   1.75   2.39
Share price, period end                        1.17   1.19   1.61
Market capitalization, period end (MEUR)       33.4   33.8   45.9
Volume of shares traded
(in millions)                                   2.3    8.1   15.0
Volume of shares traded, as
% of total                                      8.2   28.5   52.6
Value of shares traded, in millions of euros    3.4   12.1   24.5
Price-to-earnings ratio (P/E)                                15.1
 
CONTINGENT LIABILITIES
EUR million                     6/30 6/30 12/31
                                2008 2007  2007
  Rental liabilities             0.0  0.2   0.1
  Leasing commitments outside
  the balance sheet
     Maturing within 1 year      0.7  0.7   0.7
     Maturing between 1 and 5
     years                       0.8  0.9   1.1
  Currency derivatives (not
  included in hedge accounting)
  Fair value                     0.0  0.0   0.0
  Nominal value                  0.0  0.4   0.0
 
This interim report has been compiled observing IAS 34 (Interim
Financial Reporting) accounting standard. The same accounting
principles have been used in the financial statements for 2007. These
data are based on unaudited figures.
 
DISCLAIMER
 
The content in this report is provided by SSH Communications Security
Corp ("SSH") 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
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, please contact your financial adviser for further details and
information. Past performance of SSH shares is not indicative of
future results. EXCEPT AS PROVIDED BY APPLICABLE COMPULSORY LAW SSH
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.
 
FINANCIAL REPORTING
 
The company will hold a briefing on its interim report for equity
analysts and the media in Hotel Scandic Simonkenttä's Lönkka-cabinet,
1st floor, address Simonkatu 9, 00100 Helsinki on Wednesday, July 23,
2008, starting at 11:00 a.m.
 
SSH Communications Security Corp will release its next interim report
and financial statements for January 1-September 30, 2008 on 22
October 2008. Further information will be available on the company's
website in due course.
 
Helsinki, on July 23, 2008
 
SSH COMMUNICATIONS SECURITY CORP
Board of Directors
 
Arto Vainio
CEO
 
For further information, please contact:
Arto Vainio, CEO                  tel. +358 (0)20 500 7400
Mika Peuranen, CFO                tel. +358 (0)20 500 7419
 
Distribution:
OMX Nordic Exchange Helsinki
Major media
www.ssh.com