Lombard Risk Management plc, a leading
risk management, valuation and regulatory reporting software
company, announces an update on trading prior to entering
its close period ahead of the release of its final results
for the year to 31 March 2006. 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 or orders received.
These have an estimated aggregate value in their first year
equivalent in total to just under 40% of the previous year's
total revenues for the Group, of which only around £0.2m
is recognizable in the year to 31 March 2006. Contract wins
have been across all the firm's products with a particularly
strong performance from Lombard Risk Systems, the Group's
core risk management and valuation software business. Three
of the contracts mentioned above were for Colline, the Group's
collateral management product, while a fourth was for Colline
in conjunction with two of the Group's other products. An
ASP service for Colline has successfully gone live.
STB Systems, the Group's regulatory and compliance software
business, has continued to make good progress with a growing
sales pipeline driven by the Basel II regulatory changes.
There has been an excellent start to the new financial year
with two key orders received in the first half of April. However,
as a consequence of the delayed timing of certain significant
contracts, the second and final earn-out (of a maximum of
5m shares in the Group) is now not expected to be achieved
in full. STB Systems is the market leader for U.K. Bank Regulatory
Reporting with over 140 out of 350 banks in the U.K. using
the STB-Reporter product for regulatory reporting to the Financial
Services Authority.
The Group's Independent Valuation business, which since 2005
has operated as a separate subsidiary, is progressing well
with the full implementation of a key contract with a large
international banking group. The Group is currently in discussions
on a number of other prospective orders for the Independent
Valuation business. The Board believe there is a clear and
important opportunity, in conjunction with
partners, to move beyond the provision of niche valuations
to an industry solution for independent valuations. This transition
will require a high level of additional investment and the
Board believes it is prudent and appropriate that the Independent
Valuation subsidiary attracts third party investors to assist
with the funding of this further expansion. rather than for
the Group itself to fund all that investment.
Following the sale of ValuSpread in August 2005 for in excess
of £6m, the Group has invested in a number of its core
business areas in order to position them better, including
major investment in Colline, Firmament, and the Independent
Valuation business as well as in the establishment of a development
centre in Shanghai. The recent contract wins for Colline are
clear evidence that this investment is achieving returns.
As a consequence of this investment, all of which has been
expensed rather
than capitalised, but taking into account the sale of the
ValuSpread business, it is anticipated that the Group will
report a significant profit before tax for the year to 31
March 2006, but that this will also be
accompanied by a significant operating loss.
There is a strong pipeline for Colline as the Group enters
the new financial year in addition to the assured revenues
from the contract wins mentioned above. Furthermore, as a
result of the Group's recurrent
revenues and other identified opportunities for all the Group's
products, the Board views the forthcoming year with confidence,
subject to the potential volatility of earnings arising from
the exact timing of the
Group's larger software licence deals, for example from Colline.
It is expected that even if revenues rise significantly it
will be possible to contain costs through a progressive emphasis
on developing software in
Shanghai.
Enquires:
Lombard Risk Management plc:
John Wisbey, Chairman and CEO
Tel : +44 (0)20 7384 5000
Click here to email Lombard Risk's Investor Relations team
