Lombard Risk Management Regulatory News (LRM)

24 Apr 2006 07:00

Lombard Risk Management PLC24 April 2006 For immediate release 24 April 2006 Lombard Risk Management plc (the "Group") Pre-close trading update Lombard Risk Management plc, a leading risk management, valuation and regulatoryreporting software company, announces an update on trading prior to entering itsclose period ahead of the release of its final results for the year to 31 March2006. These are expected to be announced on 26 June 2006. Towards the end of the financial year to 31 March 2006, and in the period since,the Group has traded very strongly with seven significant contracts concluded ororders received. These have an estimated aggregate value in their first yearequivalent in total to just under 40% of the previous year's total revenues forthe Group, of which only around £0.2m is recognizable in the year to 31 March2006. Contract wins have been across all the firm's products with a particularlystrong performance from Lombard Risk Systems, the Group's core risk managementand valuation software business. Three of the contracts mentioned above were forColline, the Group's collateral management product, while a fourth was forColline in conjunction with two of the Group's other products. An ASP servicefor Colline has successfully gone live. STB Systems, the Group's regulatory and compliance software business, hascontinued to make good progress with a growing sales pipeline driven by theBasel II regulatory changes. There has been an excellent start to the newfinancial year with two key orders received in the first half of April. However,as a consequence of the delayed timing of certain significant contracts, thesecond and final earn-out (of a maximum of 5m shares in the Group) is now notexpected to be achieved in full. STB Systems is the market leader for U.K. BankRegulatory Reporting with over 140 out of 350 banks in the U.K. using theSTB-Reporter product for regulatory reporting to the Financial ServicesAuthority. The Group's Independent Valuation business, which since 2005 has operated as aseparate subsidiary, is progressing well with the full implementation of a keycontract with a large international banking group. The Group is currently indiscussions on a number of other prospective orders for the IndependentValuation business. The Board believe there is a clear and importantopportunity, in conjunction with partners, to move beyond the provision of nichevaluations to an industry solution for independent valuations. This transitionwill require a high level of additional investment and the Board believes it isprudent and appropriate that the Independent Valuation subsidiary attracts thirdparty investors to assist with the funding of this further expansion, ratherthan for the Group itself to fund all that investment. Following the sale of ValuSpread in August 2005 for in excess of £6m, the Grouphas invested in a number of its core business areas in order to position thembetter, including major investment in Colline, Firmament, and the IndependentValuation business as well as in the establishment of a development centre inShanghai. The recent contract wins for Colline are clear evidence that thisinvestment is achieving returns. As a consequence of this investment, all ofwhich has been expensed rather than capitalised, but taking into account thesale of the ValuSpread business, it is anticipated that the Group will report asignificant profit before tax for the year to 31 March 2006, but that this willalso be accompanied by a significant operating loss. There is a strong pipeline for Colline as the Group enters the new financialyear in addition to the assured revenues from the contract wins mentioned above.Furthermore, as a result of the Group's recurrent revenues and other identifiedopportunities for all the Group's products, the Board views the forthcoming yearwith confidence, subject to the potential volatility of earnings arising fromthe exact timing of the Group's larger software licence deals, for example fromColline. It is expected that even if revenues rise significantly it will bepossible to contain costs through a progressive emphasis on developing softwarein Shanghai. Enquiries: Lombard Risk Management plcJohn Wisbey, Chairman & CEOTel: +44 20 7384 5000e-mail : john.wisbey@lombardrisk.com Noble & Company (Nominated Advisor)Matthew Hall, DirectorTel: +44 20 7763 2200 Note: a research note on the Group from the independent analysts Hardman & Co.has been produced in conjunction with this announcement and is available on theGroup's website www.lombardrisk.com This information is provided by RNS The company news service from the London Stock Exchange