equity_dev
02 Jun 2017
See management present If you would like to hear Alastair Brown, CEO, present on behalf of Lombard Risk Management he will be at our next investor forum on the evening of Wednesday 21st June. Other companies also presenting are Accsys Technologies and Carclo.In order to find out more and to register for free please visit: [link]
r21442
30 May 2017
Another Thompson / IC update I had an informative results call with the directors of Lombard Risk Management (LRM:13.75p), which provides collateral management and regulatory reporting software products to clients including 30 of the top 50 global banks, hedge funds and asset managers.I first advised buying the shares at 9p ('Banking on regulation', 13 March 2017) after it became clear that sales momentum was building, a trend highly likely to continue for some time yet. For instance, at the tail end of last year, Lombard signed an agreement with Atos, an international leader in digital services, to facilitate the delivery of its award-winning collateral management solution, Colline, to the German market. In layman's terms, collateral management helps to reduce counterparty credit exposure, and is normally used with over-the-counter (OTC) derivatives such as swaps and options.It's proving incredibly popular, as Lombard's results for the 12 months to end-March 2017 revealed that revenues from Colline surged by 83 per cent to £20.5m, the key driver behind the 45 per cent hike in the company's revenues to £34.3m. Importantly, all of the increase was organic and reflects not only a favourable regulatory environment, but also a hefty investment in product development - Lombard invested £7.5m in the last financial year and plans to spend a further £6.3m this year. In turn, its leading edge software is attracting major companies to the benefits of a product that delivers more efficient collateral optimisation, and provides clients with the capability to manage liquidity and trading book capital. Product innovation is playing its part, too, as Lombard launched a new exchange-traded derivative (ETD) module so that Colline could extend its reach to all asset classes and products, covering activities in OTC, exchange traded funds, repo and securities lending. Demand has been strong across the board, with Lombard extending its global strategic partnership with Societe Generale, one of the largest financial services groups in the world, and reporting a record number of clients across both the buy and sell side in the US and Canada.Trading prospects look well underpinned for another strong year of growth, too. Annual recurring revenue of £12.9m and an order book worth £10.1m, up 35 per cent year on year, account for more than half analysts' current-year revenue expectations of £40m. If achieved, the company's adjusted cash profits are expected to more than double to £6.3m (before capitalisation of research and development spend) based on forecasts from analyst Paul Hill at Equity Development, to deliver an underlying pre-tax profit of £916,000. The point being that with a relatively fixed cost base, a high percentage of incremental sales will fall straight down to the bottom line from this point onwards. This explains why Mr Hill expects underlying cash profits (pre R&D) to surge from £6.3m to £10.5m in the 2018-19 financial year, based on revenues rising from £40m to £46.5m. If anything those estimates could prove conservative given that retention rates are running at 90 per cent-plus, and the company is looking to boost sales from third-party channels from around 5-10 per cent of the mix to around 25 per cent. Of course, this ongoing build-up of sales has to be funded, but there are no issues on this score as the company has net funds of £7m and access to untapped debt facilities of £4.5m. Importantly, finance director Nigel Gurney and chief executive Alastair Brown assured me during our call that the company is more than fully funded to support the forecast sales growth with absolutely no need to tap shareholders. Analysts expect the company to be cash-flow positive in the current year, which is reassuring, too.So, having last recommended buying Lombard's shares at 13.25p after a bullish pre-close trading update ('Four undervalued growth plays', 24 April 2017) and raised my target price to 20p at the time, I have no reason to change my b
equity_dev
23 May 2017
Results webinar We will be hosting a results webinar with the management of Lombard Risk on Thursday 25th May at 1.15pm.To register please visit: [link] you would like to send questions before the webinar please email them to [email protected]
r21442
24 Apr 2017
Re: What is going on with this share? Another positive write up in the IC on top of the news release....Lombard Risk Management (LRM:13.25p), a leading provider of collateral management and regulatory reporting software products to 30 of the top 50 global banks, as well as hedge funds, asset managers and other institutions, has absolutely smashed analysts' forecasts for the full year to the end of March 2017. It's clearly a good time to be servicing their needs given they have been slammed with over $200bn (£155bn) of fines for their previous misdemeanours during the light touch years in the run up to the 2008 global financial crisis, and are now facing an unprecedented wave of new regulations to keep their operations in check. At the same time, the top brass of these global banks prefer to source vendor software solutions rather than self build to comply with banking regulations, having slimmed down their IT departments in cost-cutting measures since the financial crisis. Lombard has clearly been exploiting the business opportunity.Building on an excellent set of half-year results that revealed an eye-catching 43 per cent hike in revenue to £15.2m, the company has just announced that full-year revenue is expected to be in the region of £34m to £34.4m, easily beating analysts' expectations of £31.8m (Equity Development) and £32m (finnCap). This implies that second-half revenue increased by 49 per cent to £19m, so outpacing the heady first-half growth rate. Moreover, upgraded management guidance is for adjusted cash profit to be in the range £2.4m to £2.8m, rather than the small loss that analysts had anticipated. It gets better because a strong focus on debt collection and working capital management, combined with strong licence sales which account for about a third of total revenue, has led to a much better cash-flow performance. In fact, the company ended the financial year with net cash of £7m, or five times higher than analysts had forecast.The trading update is significant for a number of reasons. Analysts Paul Hill and Hannah Crowe at research firm Equity Development rightly point out that Lombard's burgeoning cash pile removes "any lingering investors concerns that the business might need to raise fresh capital to fund its future growth plans", and add that the ramp up in second-half sales indicates "beyond doubt that the first-half performance was not a flash in the pan". I wholeheartedly agree and would flag up that the impressive cash performance was after capitalising £7.5m of research and development spend, and investing in a new state of the art centre in Birmingham.Impact of operational gearing The other obvious take from the trading update is that if the sales momentum can be maintained at these heady growth rates, then analysts' predictions of revenue rising to £40m in the current financial year are now looking far too conservative. That's worth noting because the step change in revenue from £34m to £40m would see an underlying operating loss of £1.5m turn into a profit of £1.6m, thus highlighting the operational leverage in the business. Indeed, based on Equity Development's revenue target of £46.6m for the 12 months to the end of March 2019, operating profit is forecast to rocket to £5.6m.So, with the company continuing to win a raft of contracts for its software that automates the tedious and expensive tasks of regulatory reporting for clients, and also optimises collateral management to reduce the costs, complexity and constraints of trading in financial markets, I feel that the 18p target price I highlighted when I initiated coverage at 9p is now looking too conservative ('Banking on regulation', 13 Mar 2017). Indeed, net of cash on the balance sheet I feel the equity should be worth around 12 times what could prove to be conservative operating profit forecasts for the 2018-19 financial year, suggesting a target price of 20p is in order. Analysts at Equity Development are even more bullish, having just raised their
Mr Papillon
24 Apr 2017
Re: What is going on with this share? Well since my last post in February, this share has now moved. I feel sure it will soon become a takeover target if it carries on winning new business and impressing with results.
estiente
24 Apr 2017
Huge potential....high growth and way, way ahead of expectations I only had a punt with LRM after doing some research back in March and I was expecting some good news...but I wasn't quite expecting such phenomenally positive news. [link] only I could find a few more shares like this one!!!
r21442
16 Mar 2017
Re: What is going on with this share? The full text for anyone unable to see... I have a feeling that investors are likely to warm to another small-cap that I have monitoring for some time, too - Lombard Risk Management (LRM:9p). The company is a leading provider of collateral management and regulatory reporting software products, which automate tedious and expensive tasks of regulatory reporting and optimisation of collateral management in order to reduce the costs, complexity and constraints of trading in financial markets.Founded in the late 1980s, the company employs 378 staff and offers software solutions to more than 340 corporations, including 30 of the top 50 global banks, as well as hedge funds, asset managers and other institutions. This is a good time to be servicing their needs given these institutions have been slammed with over $200bn (£164bn) of fines for their previous misdemeanours during the light touch years in the run up to the 2008 global financial crisis, and are now facing an unprecedented wave of new regulations to keep their operations in check. At the same time, the top brass of these global banks prefer to source vendor software solutions rather than self build to comply with banking regulations, having slimmed down their IT departments in cost-cutting measures since the financial crisis.Moreover, irrespective of whether the new Republican administration decides to pander to the needs of the Wall Street banks and ease some of the more onerous conditions placed on their activities by the Dodd-Frank Act, which was passed by the Obama administration in 2010 in direct response to the financial crisis, a host of new directives covering their trading activities, risk management, conduct and reporting compliance of financial institutions are forcing a major overhaul of their IT requirements.And this sea change can be seen in a raft of contract wins for Lombard, which delivered record revenues of £15.2m in the six months to the end of September 2016, up by 41 per cent on the same period in 2015, and posted a 35 per cent rise in the closing contracted order book to £9.2m. Software license sales more than doubled in the six month trading period and, importantly, recurring revenue now accounts for over 40 per cent of total revenues, so covering a chunk of the fixed cost base. Contract momentum buildingA raft of recent announcements suggest that contract momentum is building, too. For instance, at the end of last year, the company signed an agreement with Atos, an international leader in digital services, to facilitate the delivery of Lombard Risk's award-winning collateral management solution, COLLINE®, to the German market from early 2017.In layman's terms, collateral management helps to reduce counterparty credit exposure, and is normally used with over-the-counter (OTC) derivatives such as swaps and options. When two parties agree to collaterisation, they execute a collateral support document with terms and conditions. The trades are regularly marked to market, net valuations agreed and the party with the negative mark-to-market liability on the trade delivers collateral to the party with the positive one. providing a single platform, COLLINE® delivers more efficient collateral optimisation, and provides clients with the capability to manage liquidity and trading book capital.Bearing this in mind, Atos has an established client network across Germany, including major corporations across the manufacturing, banking and financial services, energy, insurance and public sectors; all of which need collateral management solutions. Financial services firms in Germany, like the rest of the world, are under increasing pressure to cut costs while upgrading their legacy systems and ensuring compliance, so tapping into this market through Atos' client network is smart business.The software is proving very popular in North America as a key take in the company's recent trading update has been "the substantial growth o
gerihatric
13 Mar 2017
Re: What is going on with this share? Simon Thompson of the IC has just issued a write up on the company. Hence the SP rise.
Mr Papillon
16 Feb 2017
What is going on with this share? It has hardly moved in 12 months?
equity_dev
17 Jan 2017
Hear management present If you would like to hear management present on behalf of Lombard Risk Management we will be hosting a webinar on Thursday January 19th at 12.45pm. Alastair Brown, Chief Executive, and Nigel Gurney, Chief Financial Officer, will give a presentation lasting approximately 30 mins and there will then be an opportunity for Q&A.To join please register at: [link] If you would like to submit any questions for management ahead of the meeting please send them to [email protected] regards,The Equity Development Team
Simbr
17 Jun 2016
new management "New management, and subsequent restructuring, sees the compliance and reporting solutions supplier set for a change in fortunes based on greater sales efforts and focus, allied to a partnership with global giant Oracle Inc. A proposed placing will allow it to complete restructuring, accelerate investment in new products – notably the exciting AgileREPORTER – and also to enhance and diversify its development capabilities. The increased cost is likely to lead to a loss this year, but with sales already ramping from the Oracle sales and support, revenue should grow rapidly to cover the relatively fixed base and return an adj. EBITDA profit in FY 2018 at a c17% margin – more representative of the model and the software sector than the 8% margin seen in its last year."finnCap view this morning up on research tree
gretel
17 Mar 2015
New Hardman report out As follows:[link] now go for 0.9p historic EPS and 1.4p EPS to March'16, with 0.085p and 0.095p dividends.They expect LRM to have net cash which will rise this year.This is the key paragraph for me - a predator would pay handsomely for a client base and potential growth like this: "Lombard Risk’s core client base has always been large banks and it currently has 30 of the top 50 global banks as its customers. These are driven by a combination of 1) regulatory and clients’ risk management requirements 2) Authorities’ regulatory timetables 3) competitive markets. As to the last point, LRM is gaining rather than losing market share and pricing is robust. Slippage in Authorities’ planned timetable of requirements is referred to in yesterday’s update (after a very strong FY14). The core risk product, constantly updated, COLLINE, showed excellent growth in FY14 and also is strong in FY15E."
gretel
11 Mar 2015
Trading update now out Disappointing trading update for the 31/3 year end just out. Revenues just behind expectations due to delays, plus some additional costs, means EBITDA will be materially below.I'm happy to hold as the outlook remains extremely good imo, and the miss seems to be mostly due to time lag rather than anything meaningful, particularly as LRM themselves comment that the next 12 months are both "extremely promising" and "very promising".Share price-wise LRM are simply back to square one after the steady rise. News flow re the delayed revenues should mean a good year this year and hopefully a rise back to 15p and beyond as regulation and legislation is finally implemented.
gretel
10 Mar 2015
News of increasing demand "Increasing demand" for another of LRM's solutions to new regulatory requirements:[link] "March 9, 2015 REPORTER actively in use by firms to meet EBA and PRA liquidity coverage reporting More firms use Lombard Risk REPORTER for end-to-end regulatory reporting in UK than any other solution European Banking Authority (EBA) Common Reporting: COREP – FINREP – ‘LIQREP’ LONDON, UK – 9th March 2015: Lombard Risk Management plc (LSE: LRM) (“Lombard Risk”
, a leading provider of integrated regulatory reporting, collateral management and compliance solutions for the financial services industry, is pleased to announce that REPORTER is actively in use by firms for the creation and submission of regulatory liquidity reporting in line with both the European Banking Authority’s pan-European and local UK regulatory Prudential Regulatory Authority requirements. As part of the European Banking Authority’s (EBA) harmonisation of European regulatory reporting, local competent authorities are implementing a new expanded liquidity regime at European and ‘local’ levels (Bank of England, PRA in UK), designed to monitor current processes as well as provide insight into future operations. The CO(mmon) REP(orting) framework initially comprised reporting about Capital Adequacy, Large Exposures, IP Losses, Leverage, Liquidity Coverage and Stable Funding and Asset Encumbrance and firms had to dig deep to produce more, and more detailed, calculations and reports for the regulator (electronically in XBRL). COREP was closely followed for many firms by FIN(ancial) REP(orting)..... ....At the same time, the UK PRA’s liquidity regime is changing to take account of the changing European landscape. Firms need to realise that, for many, the existing regime continues for some time, at least in part, but other firms, especially certain foreign branches, may be impacted quite significantly..... ....Many new firms have turned to Lombard Risk REPORTER to implement a single, comprehensive EBA Common Reporting solution (which includes COREP, FINREP and ‘LIQREP’ in place of continuing with either in-house, spreadsheet-style reporting, or previous vendor solutions that are no longer able to keep pace with the regulations or the technology platform now required. Robert Markham, EMEA Sales Director – REPORTER, at Lombard Risk explains: “Lombard Risk is seeing an increasing demand in the market for a truly modular solution with comprehensive core coverage and functionality, combined with flexibility in terms of multi-source integration, configurable workflow and analytics. The accelerating growth of Lombard Risk’s regulatory market share once more validates our strong solution roadmap.”etc!
gretel
06 Mar 2015
Hardman feature on LRM Hardman's monthly newsletter is just out for March and has a nice page on LRM.They continue to go for 1.8p EPS to March'15, with 2p EPS for the year starting next month, and 0.085p and 0.095p dividends.LRM should also have £3m net cash, which is building nicely.Their summary is as follows:[link] "A trading update is due in a month’s time, followed by full year results likely mid May. LRM by its nature is second half weighted in its profit recognition. The positive level of sales activity H1 resulted in a continued substantial order book/backlog of contracted revenue of £5.1m, supporting our confidence in H2 sales. LRM entered H2 with a strong and visible short term pipeline. It referred previously to European Banking Authority's Asset Encumbrance and Liquidity Coverage Ratio regulations as creating further opportunities in H2 and into FY16. As at the last interims: “The Company achieved a record first half revenue of £9.3 million, up 27.7% on the previous year, and this bodes well for our full year performance.” We see our top line estimate to be conservative, whilst full year margins should be rising at both EBITDA and PBT levels. This is all about 1) delivery of current backlogs, 2) expanding the suite and 3) expanding routes to market via partnerships and ‘organically’ for the more medium term. We note how LRM’s expenditure on product development is high by comparable industry standards. The product expansion, growth in partnering (expanding the geographical footprint) and the strategic alliances such as Genpact (November 2014) are supportive to medium term growth. H1 growth was driven by COREP, a well established product. This had 121 clients at that stage: far more than originally might have been anticipated. COLLINE will be boosted in all likelihood with the Genpact roll-out. At the last Interim statement, LRM made the following comment regarding its market positioning. We consider this to be one of the most important features of that Statement:“The Company is now well into its major investment cycle, prompted by opportunities arising from recent regulatory and market changes. Such changes will in all probability continue and the Company will continue to look carefully at the opportunities that these changes bring.” Non Executive Chairman."
