Lombard Risk Management Share Discussion Threads

[rivaldo] 21/11/2014 07:23

Indeed - this is a "world first". and Genpact are a $3.8 billion m/cap....



"Genpact and Lombard Risk Launch New Collateral Management Solution for Capital Markets

Innovative collaboration helps financial institutions streamline their margin and collateral management processes

November 20, 2014: 10:00 AM ET

NEW YORK, Nov. 20, 2014 /PRNewswire/ -- Genpact Limited (NYSE: G), a global leader in designing, transforming, and running intelligent business operations, and Lombard Risk Management plc (LSE: LRM), a leading provider of integrated collateral management, liquidity, and regulatory compliance solutions for the financial services industry, announce their collaboration to provide a new solution to help financial services firms optimize their collateral management operations.

The collaboration between Genpact and Lombard Risk with CARDS and COLLINE addresses major cost pain points in the industry, and significantly improves margin and collateral management efficiencies with a true end-to-end solution. Genpact will integrate its Collateral Agreement and Reference Data Services (CARDS) with Lombard Risk's COLLINE® collateral, clearing, inventory management and optimization solution. This unique solution will enable both buy and sell-side firms to automatically digitize and capture the terms and conditions of various collateral agreements across asset classes, counterparties, and business silos, resulting in a margin and collateral rulebook by counterparty.

More specifically, the digitized data loads COLLINE's agreement management database with the critical counterparty margin and collateral rules needed to efficiently manage and optimize margin and collateral, sharply reducing the time required to manually capture the information from existing and new agreements and amendments. Genpact's service includes the data entry of custom agreement terms which are incapable of being extracted and digitized by CARDS, and management of the data.

In addition, the two companies are launching a joint business processing outsourcing (BPO) service for the collateral management function to include processes such as setup and management of agreements, integrating and verifying positions and inventory, processing of margin calls extending from issuance to settlement, and supported by aging analysis, dispute resolution, and failed settlement and customized reporting—together with comprehensive optimization and inventory management.

Real-time margin management and intra-day collateral management are rapidly becoming the table stakes for financial services firms to survive and grow. They must drive a number of key functions including managing dynamic margin, collateral eligibility rules, settlement systems, exchanges, collateral across multiple counterparties, and clearing venues with diverse margin and collateral requirements. They must also ensure their liquidity and funding capacity through collateral optimization as well as capturing, mitigating, and allocating collateral costs across products and businesses. This joint solution will address these pain points because Lombard Risk's award-winning COLLINE is the leading platform for collateral management and CARDS has the widest coverage of agreement types.

"We are very pleased to partner with a service provider like Genpact given their impressive global client base, collateral management domain expertise and their unique ability to combine process expertise with technology and analytics," said Cliff van Tonder, Global Alliances Director at Lombard Risk. "Having just won Custody Risk's European Awards 2014 'Collateral Technology Vendor of the Year' – and now, in partnership with Genpact, delivering the world's first collateral management solution complete with truly integrated automatic digitization of collateral agreements – exemplifies why we are market leaders in this space."

"Lombard Risk brings its valuable COLLINE solution used by a number of financial institutions, which addresses the real-time enterprise view of inventory," said Monty Singh, senior vice president and business leader, Capital Markets and IT Services, Genpact. "When combined with Genpact's services delivery capabilities and CARDS platform which seamlessly manages collateral relationship, we are filling a huge gap in the market by enabling true collateralization. This service helps firms advance their operating models and make operations more intelligent – able to capture data, execute transactions and provide visibility faster and more time effectively – thereby enabling companies to better sense, react, and continuously learn from their activities in the market."

etc"

[tell it as it is] 20/11/2014 15:54

Genpact announcement today is good news

[rivaldo] 20/11/2014 10:58

Over 4.5m shares just traded in two transactions - doesn't look like a rollover either as the amounts were 2.1m and 2.42m respectively.

[rivaldo] 13/11/2014 11:43

Indeed - a prestigious win, and over the mighty Sungard too :o)) One up for little ol' LRM....interesting comment about COLLINE's usage by the CEO at the end:



"November 13, 2014

Lombard Risk Winner of Custody Risk’s European Award 2014 — “Collateral Technology Vendor of the Year”

London, UK – 13 November 2014: Lombard Risk Management plc (Lombard Risk), a leading provider of integrated collateral management, regulatory compliance and reporting solutions for the financial services industry, today announced that is has been named the “Collateral Technology Vendor of the Year” in the 2014 Custody Risk European Awards.

The Custody Risk European Awards are recognised as the most prestigious in the securities servicing industry and identify the best companies in custody, fund administration and technology. A complete list of winners can be found at

Lombard Risk won the Custody Risk European award for its solution COLLINE®. COLLINE provides firms with a comprehensive end-to-end collateral management, clearing, inventory management and optimisation solution—supporting both house and client-clearing for direct and indirect clearers, and offers flexible functionality, with rule builders, to enable clients to manage their ongoing requirements and reduce counterparty risk.

With regulation such as Dodd-Frank/EMIR, Basel III imposing stricter capital and liquidity requirements, along with the International Organization of Securities Commissions (IOSCO) working with the Basel Committee on Banking Supervision (BCBS) to outline initial margin requirements, the financial industry faces a growing collateral challenge.

COLLINE enables firms to move away from managing collateral in business silos by supporting multiple business lines on a single platform therefore enabling firms to significantly better manage their collateral inventory and optimise to ensure the best use of it—addressing the issues of limited liquidity and lower capital charges.

Contributing to its award win, COLLINE version 13 was recently released with enhancements and new functionality which includes: Regulatory Enhancements to support clients in meeting their IOSCO and Basel III regulatory commitments; a user-definable Optimisation Rule Builder used to create and combine optimisation rules for flexible scenario analysis and optimum allocation of collateral; a configurable Inventory Manager providing real-time scenario analysis across financial products and business lines in order to best manage collateral inventory on a firm-wide basis; and an enhanced Collateral Substitution Workflow automating complex, time-consuming manual processes related to substitutions enabling managers to deal with high volumes more efficiently.

“We are very pleased to have our efforts recognised by the industry in the Custody Risk award,” commented John Wisbey, Lombard Risk CEO and Founder. “This award is a true testament to Lombard Risk’s commitment to providing regulatory, risk and compliance solutions for over 25 years which improve efficiency and reduce risk across global financial markets, as well as to the excellence we endeavour for our COLLINE collateral management solution. We were also delighted to see that four of the other Custody Risk award winning firms use COLLINE as part of their collateral management infrastructure.”"

[techno20] 13/11/2014 08:23

Congrats to JW and team!


Custody, securities services, fund administration and technology providers gathered for annual Custody Risk European Awards in London

The winners of the Custody Risk European Awards 2014 were unveiled at an awards ceremony in central London last night.

Senior industry representatives and guests gathered at the Jumeirah Carlton Tower in London to celebrate a year of achievement in securities services. There was a large number of entries, giving our experienced panel of judges some difficult decisions. Here are the winners:

Collateral Technology Vendor of the Year
Winner: Lombard Risk
Shortlist
SunGard
Lombard Risk

[rivaldo] 10/11/2014 12:47

Interesting to see over 1m shares traded already today. I noticed Broadridge announced pretty good results last week.

We'll get the interim dividend this Friday.

[rivaldo] 05/11/2014 14:47

Hardman have just issued their monthly round-up for November, including a page on LRM as follows, forecasting 1.8p EPS, £3m net cash and a 0.085p dividend this year to March'15:



"Lombard Risk Management (LRM)

Interims were reported on 16th October.

Trading since the year end has been ahead of the same time in the previous year and at the agm Lombard stated that FY15 trading would be H2 weighted.

1H15 reported sales of £9.3m up 27.7%; EBITDA £0.8m (vs small loss);PBT £0.01m (vs small loss); EPS 0.0p (vs loss 0.43p); Net cash £2.2m (£1.8m). We have not changed FY15E numbers (bar a reduction in estimated tax charge hence a FY15E EPS upgrade).

Lombard Risk Management sales growth in the past two full years is 31.4% and 21.6% respectively. We estimate a slow down to 10.3% FY15E and 12.0% FY16E but the risk to these estimates is on the upside. Circa 46% of group turnover is recurring and of our H2 estimates, over 60% was already either recurring or in the end September order backlog or term renewals. Judging by past performance this should underpin full year estimates strongly. The order book has gone sideways from its particularly high level of March 2014, standing at £5.1m September 2014 and somewhat higher currently. At end FY12, the order book stood at £2.7m.

We anticipate ongoing growth opportunities from regulatory drivers but importantly, also new product areas e.g. the ComplianceASSESSOR product being developed currently to guide clients as to which compliance issues they need to be acting on – delivery 2015. Further, Asset Encumbrance is a core new area for
future revenue growth. Lombard Risk offers templates and instructions to ensure harmonised reporting of asset encumbrance across the organisation. Whilst our estimates point to steadier growth in top line, there are ever more opportunities as legislative drivers continue strongly. The clients themselves have ‘in-house’ risk management requirements as well as regulatory requirements.
Geographic expansion, particularly in USA and Japan into the crucial
Far East market, will be probably an even greater feature in coming
years."

[rivaldo] 04/11/2014 12:28

Ticking up, and looking good online - you can only buy 10k shares maximum at the full 13.5p offer, whilst you can sell 70k shares at a premium at 12.75p.

[igoe104] 03/11/2014 12:50

These are extremely cheap, they are operating in a fast growing market place where you can expect loads more business/contracts coming LRM way.

P/E (march 2016) of 6 and that's at the moment.

[rivaldo] 03/11/2014 09:56

Nice 80k buy at the full 13p offer price following this morning's tick up.

[rivaldo] 31/10/2014 11:29

Good to see LRM tick upwards after a 50k buy at the full 12.75p offer price.

And LRM went ex-div yesterday without the price being affected at all. The divi will be paid on 14th November, so not long to wait.

[rivaldo] 27/10/2014 14:19

In view of the weekend's ECB Asset Quality Review of European banks, it's good to see LRM at the heart of this massive growth in regulation and control:



"Lombard Risk on focused panel at 8th annual collateral management forum – Amsterdam

London, UK – 23 October 2014: Lombard Risk Management plc (Lombard Risk), a leading provider of integrated collateral management, regulatory compliance and reporting solutions for the financial services industry, sponsored the 8th annual collateral management forum, organised by Fleming Europe between 15-17th October in Amsterdam, where around 150 collateral business practitioners gathered to discuss key topical issues: regulation and optimisation included.

Elaine MacAllan, Head of Functional Development, COLLINE, sat on the Focused Panel Discussion on the 2nd day which was hosted by Chris Hunt, previously Global Head of Counterparty and Market Risk Operations at UBS. The panel discussed: Keeping up with higher standards for technology, processes and integrations; Margin optimisation, a function of collateral optimisation; Advanced risk management, activity monitoring and computation of intra-day margins on a real-time basis; and Finding the optimal strategy to comply with different regional legal requirements.

Elaine kicked off the panel discussion by highlighting the difficulty many institutions have in sourcing data of good quality. This is becoming increasingly important as we move towards real time single platforms where multiple data feeds are required in order for Elaine MacAllanorganisations to have access to an holistic view of their inventory and exposures. Providers also face challenges in developing solutions to meet regulatory issues when the regulators take a long time to finalise the detail, but the deadlines remain the same.

Elaine said: “Our team of collateral business matter experts are constantly monitoring the regulatory demands, and we work closely with our clients to incorporate relevant functionality to enable them to meet the regulatory requirements, but new features, however straight-forward, need specifying, developing and thorough testing before we can release them, and our clients also need to carry out testing. We therefore work towards the proposed deadlines, even though we appreciate that these may be delayed.”

Helen Nicol, Product Director, COLLINE, demonstrated the latest version of COLLINE (V13), which was released just last week and includes the following functionality:
Regulatory Enhancements - supporting clients in meeting their IOSCO and Basel III regulatory commitments.
User-definable Optimisation Rule Builder - used to create and combine optimisation rules for flexible scenario analysis and optimum allocation of collateral.
Configurable Inventory Manager - providing real-time scenario analysis across financial products and business lines in order to best manage collateral inventory on a firm-wide basis.
Enhanced Collateral Substitution Workflow - automating complex, time-consuming manual processes related to substitutions enabling managers to deal with high volumes more efficiently."

[rivaldo] 22/10/2014 07:37

Cheers Techno20, great news - with NTT operating in over 40 countries, plus the huge Broadridge also pushing COLLINE, we should see some big revenues coming through soon.

[rivaldo] 21/10/2014 11:29

Here's the new Hardman note - you probably have to register to read it:



The forecasts have been increased to 1.8p EPS and 2p EPS largely due to a lower tax charge, which is good news. Some good extracts:

"Riding the regulatory surge: Interim results

Lombard Risk Management’s product suite is focused on GRC (governance, risk and compliance) solutions and is thus an essential part of the ‘plumbing’ in the global banking system. The September 2014 order backlog of £5.1m remained near its all-time high reported six months prior. Strong new contract growth came through 1H15, e.g. 121 COREP contracts including 62 new names over the life of the programme (27 new last year)."

"Lombard Risk Management’s core client base has always been large banks. 30 of the top 50 global banks currently are customers. Across the eight segments where the company is strategically positioned, none of the other top five competitors (all of which are much larger organisations such as IBM, SunGard etc) have a good offering in more than five (mostly in only three or four)."

"Visibility: In addition to strong software spending, Lombard Risk Management is expanding on two fronts. Regulatory frameworks remain core and in more recent years, collateral and commercial risk management has driven client demand also. New partnerships have been set up: early days but upside from here. Regulatory updating and change is the only constant really and this creates ongoing demand in Lombard Risk’s marketplace, hence underpinning the metrics behind its strong software development cost which of course impacts profits today but fuels sales growth, which stood at 21% last year."

[rivaldo] 21/10/2014 08:33

Hardman have just increased their forecasts for this year to 1.8p EPS (from 1.5p EPS).

They've also introduced a forecast of 2p EPS for next year.

Now to read the new report.

[rivaldo] 20/10/2014 08:22

Agreed igoe104.

A new article from Shareprophets says Buy:



"Lombard Risk Management – Interims: Buy
Sunday 19 October 2014

Lombard Risk Management (LRM) has announced results from “a busy six months” to 30th September 2014 as financial services industry regulatory change continues apace.

Along with the company’s own development, this helped revenue more than 27.7% higher than in the corresponding 2013 period, to £9.27 million, though this was somewhat offset by increased staffing levels to deliver additional contracts – with a pre-tax profit of £13k stated. However, this reflects a significant second half year weighting and is improved from a prior year period £523k loss. The interim dividend – to be paid on 14th November to shareholders on the register on 31st October – is to be increased from 0.03p to 0.035p per share (cost - £92k).

Net cash declined after particularly £1.34 million of capitalised development expenditure more than amortisation, though partially offset by a £0.62 million increase in deferred income (to £5.79 million) and at the period end there were net current liabilities (including the noted deferred income liability) of £1.26 million, though no long-term liabilities.

There have been some minor prior year accounting restatements following a review by the Financial Reporting Council which identified errors in the company's accounting policies for capitalising and amortising product development costs. Having spoken to the company it reassures that this issue is now addressed, and we note a new CFO, Nigel Gurney, is in place as of 1st September following his predecessor’s departure earlier this year. However, this again raises the general question of the effectiveness of auditors.

Noting “a continued substantial order book/backlog of contracted revenue totalling £5.1m. Much of this revenue will be recognised in the second half of the year along with in excess of £4.5m of annually recurring revenue” and an “over 95%” client retention rate for all products, the company is confident looking ahead.

Last year the half year performance was turned into a stated full-year pre-tax profit of £4.42 million (though £0.31 million from a half year loss of £2.34 million when incorporating the in-excess-of-amortisation capitalised development expenditure) on revenue of £20.40 million and there are forecasts for £5 million on £22.50 million this time.

With capitalised development costs expected to continue coming down as a proportion of revenue and a trade sale - where metrics such as multiple of (the currently fast growing) revenues likely come into play - continuing to look a logical longer-run outcome, we continue to consider that the shares – marginally ahead on our initial share tip – look attractive. The shares have nudged ahead to 12.5p-13p on the back of the interim results release and, at up to 14p, we continue to consider that this remains a stock to tuck away.

A low double digit multiple would see the shares at 20p which remains our target."

[igoe104] 17/10/2014 15:28

Should see a big improvement in pre-tax profit in Q3-4, the company is going in the right direction. with all the new regulations lots more in the pipeline, to come.

[rivaldo] 17/10/2014 10:45

Good coverage here:



"Lombard Risk unveils record H1 revenues

16 October 2014 | 07:53am

StockMarketWire.com - Lombard Risk Management's revenues rose by 27.7% to £9.3m in the six months to the end of September supported by an order book of contracted revenue at £5.1m (2013: £5.4m).

The group posts a pre-tax profit of £0.01m against a restated loss of £0.5m and earnings before interest, tax, depreciation and amortisation of £0.8m (2013 restated: loss of £0.02m) following revenue growth partially offset by increased staffing levels to deliver additional contracts.

Chief executive John Wisbey said: "The company achieved a record first half revenue of £9.3 million, up 27.7% on the previous year, and as we again expect our revenues to be weighted towards the second half, this bodes well for our full year performance. The revenue rise was driven, in part, by our regulatory programme for the European Banking Authority's COREP exceeding management expectations, with 121 clients now signed up for COREP, but we also signed some useful deals for COLLINE our collateral management platform." "The outlook for revenue growth remains promising, with market and regulatory environments continuing to favour the Company's product positioning in regulation, compliance and risk management despite a tough budgetary environment in the financial sector. In addition, the investment we have made in the last year can be expected to stand us in good stead in the years to come."

[woodcutter] 17/10/2014 08:39

H1 results
Amortisation £600K
Capitalised development spend £2m
profit £(11K)

copied from my post 392

2012
capitalised spend £3318K
profit £2505

2013
capitalised spend £4278K
profit £3714

2014
capitalised spend £5333
profit £5154

I figure it tells you everything you need to know about whether the business is making any money and clearly it isn't. I sold sometime ago based on the history of no meaningful earnings and i can't see a reason to reinvest at this stage.

When LRM begin to capitalise spend at a similar rate to amortisation and can still show a profit then i'll get interested. Great products and looks like a good business with solid clients but just doesn't generate any cash.

Woody

[rivaldo] 16/10/2014 22:58

Following today's good results, more good news with a new software release. I also like this from the appendix:

"Our clients include banking businesses - over 30 of the world's "Top 50" financial institutions - almost half of the banks operating in the UK, as well as investment firms, asset managers, hedge funds, fund administrators, insurance firms and large corporations worldwide."



"LOMBARD RISK ANNOUNCES THE RELEASE OF COLLINE V13
Enhanced and new functionality to streamline operations and
support increasing regulatory demands

London, UK – 16th October 2014:

Lombard Risk Management plc (Lombard Risk), a leading provider of integrated
collateral management, regulatory compliance and reporting solutions for the financial services industry, is pleased to announce its latest release of COLLINE—the company’s award-winning collateral management, clearing, inventory
management and optimisation solution.

Lombard Risk’s COLLINE enables firms to move away from managing collateral in business silos by supporting multiple business lines on a single platform therefore enabling firms to significantly better manage their collateral inventory and optimise to ensure the best use of it—addressing the issues of limited liquidity and lower capital charges.

COLLINE version 13 enhancements and new functionality includes:
Regulatory Enhancements - supporting clients in meeting their IOSCO and Basel III regulatory commitments.
User-definable Optimisation Rule Builder - used to create and combine optimisation rules for flexible scenario analysis and optimum allocation of collateral.
Configurable Inventory Manager - providing real-time scenario analysis across financial products and business lines in order to best manage collateral inventory on a firm-wide basis.
Enhanced Collateral Substitution Workflow - automating complex, time-consuming manual processes related to substitutions enabling managers to deal with high volumes more efficiently.

“There are many regulatory issues such as Dodd-Frank/EMIR, IOSCO and Basel III that firms need to adhere to and COLLINE is constantly being enhanced to meet both market and regulatory requirements,” commented John Wisbey, Chief Executive Officer, Lombard Risk. “Thanks to the experience of our dedicated collateral team and the detailed insight provided by our clients we aim
to ensure that COLLINE remains the system-of-choice for firms to manage all aspects of their collateral efficiently.”

“It is Lombard Risk’s strategy to provide clients with one solution that combines multiple aspects of optimisation—trade, inventory and collateral—on a single platform,” commented Helen Nicol, Product Director, COLLINE, Lombard Risk. “COLLINE’S strengths in collateral optimisation focuses on its flexible and configurable rule builder offering several algorithms, which in turn drives the allocation process according to the rules selected. The ‘what if’ functionality provides pre-trade and impact analysis for front office decision making.”

COLLINE® - collateral management, clearing, inventory management and optimisation.
Designed by experienced business practitioners for consolidated end-to-end, cross-product collateral management, clearing, inventory aggregation and optimisation."

[rivaldo] 16/10/2014 11:13

Positive stuff from the respected Techmarketview web site:



"Thursday 16 October 2014

Risk Rewards Lombard Risk Management

logoFirst half results from Lombard Risk Management, the provider of regulatory and compliance solutions across the financial services sector, show that the progress of the past year continues, see here and work back. The growing success of the company’s portfolio is providing the management with good visibility over second half figures and continued revenue and profit growth.

Six-month revenue was up 28% to £9.3m, with EBITDA of £0.8m after break-even at the half-way mark last year. Additional impetus to growth was provided by a greater than expected take-up of Lombard Risk’s solutions to meet the European Banking Authority’s Common Reporting requirements (COREP), with 121 customers signing up, half of which were new to the company.

The management has several reasons to be confident that it will not suffer from some of the problems met by other companies entering a growth phase. It has cash in the bank, implementation costs are funded by the customer and contracts are generally multi-year and often lead to the sale of further products as regulatory pressures increase. Also, meeting regulatory deadlines is a crucial priority for the customer base, so Lombard Risk will not be plagued by extended contract negotiations or budget restrictions. Visibility over revenue progress is further enhanced by a shift towards a higher proportion of the typical contract value coming from annual fees.

Regulation is a vitally important fact of life across the wider Financial Services sector with a continual flow of new regulatory initiatives. Lombard Risk has established itself as a leading market player, serving 60% of the top banks, with a broad range of standardised approaches to regulatory reporting and compliance requirements. They look to have built a solid base from which they should be able to generate consistent advances in revenue and profit."

[rivaldo] 16/10/2014 10:44

Perhaps because (a) the overall effect was immaterial, and (b) part of the historic re-statement was because LRM were actually OVER-prudent in amortising capitalized expenditure too soon, thus REDUCING the top line :o))

[cockerhoop] 16/10/2014 09:28

No-one has mentioned that they have had to re-state their 'prudent' capitalization policy for 2012 & 2013 after discussions with the Financial Reporting Council. Gives the appearance of a company trying to maximize the top line.

[rivaldo] 16/10/2014 09:20

From today's RNS:

"it is useful to note that revenues in the 12 months to 30th September 2014 were also our highest ever at £22.4m against £16.4m in the 12 months to 30th September 2013, a year on year gain of 36.9%."

The big seasonality should not be ignored. The above extract gives the truer picture and points to how well LRM are doing.

I completely understand the points made, but the fundamentals and the market positioning of the business, and the evident success it's had and continues to have, together with the potential for much more, make LRM an extremely attractive bid target.

And the defensive aspects, such as the high recurring income, the regulatory environment and the client base, make it a sound proposition in a negative stock market such as the current one imo.