Lombard Risk Management Share Discussion Threads

[tell it as it is] 25/5/2017 06:49

43% revenue growth is stellar, and a wonderful achievement. However 40% cost growth for a mature company not making acquisitions is not stellar, and I suspect this is where the serious questions need to be asked. What real returns are being made on the investments made, how much of the cost increase was simply pay rises, and why oh why is the regulatory business losing money. This could be a fantastic company, but the suspicion has to be that 40% cost growth is simply not the optimal balance. Just think where the share price would be if they had kept cost growth to "only" 15%.

[glawsiain] 24/5/2017 14:51

Its the only way

[simonsaid1] 24/5/2017 14:46

Make them fight to the death?

[glawsiain] 24/5/2017 14:25

Simon thompson rates, Graham neary (stockopedia) hates.
Who will win? There's only one to find out

[aishah] 24/5/2017 13:47

Well, RegTech is the new FinTech. Watch this space for the next couple of years.

[simonsaid1] 24/5/2017 13:46

This is a business undergoing a transformation and that analysis of the figures is rather myopic. Simon Thompson has analysed the business model and is happy that it's sustainable, and today's figures are just a start.

[rathkum] 24/5/2017 13:38

Before you get too excited about the results - read this from Stockopedia

Lombard Risk Management (LON:LRM) – results for the year ended 31 Mar 2017 are out today. This share has been heavily promoted recently, on the back on contract wins. Revenues are up strongly – a 45% increase to £34.3m. However, if you take a closer look at the cashflow statement in particular, things are far from rosy. The company capitalised a staggering £7.5m into intangibles. That must be a hefty chunk of its total payroll. Stripping out capitalisation, the company made a £5.6m loss for the year.

Based on results to date, I seriously question whether this is a viable business. From the numbers to date, I think not. It’s always jam tomorrow. Also, bear in mind that a lot of its impressive-sounding contracts are actually quite small. I don’t rate this share at all.

[chimers] 24/5/2017 10:27

After signalling a record year in an April update, Lombard Risk, the provider of integrated collateral management and regulatory reporting solutions, duly delivered with a step-change in revenue, up 45% to £34.3m and EBITDA up 20%. Losses for the year were reduced, coming in at £1.6m against £2.2m in the previous year. Net cash at the year-end was £7m, the company having raised £7.9m during the year.

While management can be pleased with the figures and the underlying changes in the business which have driven recurring revenue up 21% and doubled revenue from new licences and renewals, they are looking for further substantial progress in the current year. Lots of opportunity beckons as new regulations in Australia and Singapore boost demand in Asia where the company has got its act together. The North American operation also looks set for good growth. Lombard has re-located its development centre, preferring Birmingham to Shanghai and looking for better workflow and access to key talent. Partnerships will play a greater role in driving growth, with the more collaborative relationships with Oracle and Atos increasing in importance. Renewal of installed systems to the cloud-based AgileREPORTER and AgileCOLLATERAL offers additional growth in recurring income, and lower TCO for customers. Brokers are forecasting a breakeven at the pre-tax level for the year.

The management team of Lombard Risk has set out to build a more effective vehicle to support a global customer base as it strives to keep pace with financial markets regulation. This should largely be complete at the end of the current financial year. Given the likely success of its platform and cloud-driven approach, we would expect management to look to partner (or acquire) to address a broader range of regulations – and a greater share of wallet.

[edmonda] 24/5/2017 09:11

We will be hosting a results webinar with the management of Lombard Risk tomorrow (Thursday 25th) at 1.15pm.
To find out more and to register please go to:

We have also published a note today which can be read at:

Thanks,
Equity Development

[chimers] 24/5/2017 08:47

Heres what the speccoid had to say last month.

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 investor 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 target price from 20p to 26p, although Lorne Daniel at finnCap is keeping to his 16.5p target ahead of the full-year results on Wednesday 24 May.
For good measure, the technical set-up is highly supportive of a continuation of the current rally and the April 2016 high of 13.3p is now being tested. Beyond that the all-time high of 15.75p dating back to March 2015 comes into play, and one I expect to be exceeded by some margin if the company maintains its impressive sales momentum. True, the shares have risen sharply since last month's buy recommendation at 9p, but they still offer 50 per cent upside to my upgraded 20p target price. On a bid-offer spread of 12.75p to 13.25p, I rate Lombard's shares a strong buy.

[aishah] 24/5/2017 08:32

Lombard Risk Management delivers "step change" in revenue growth

r oactiveinvestors.co.uk/companies/news/178243/lombard-risk-management-delivers-step-change-in-revenue-growth-178243.html

[aishah] 24/5/2017 08:23

Yes, finnCap ups target to 18.80p from 16.5p

[chimers] 24/5/2017 08:06

Good to go

[aishah] 23/5/2017 17:57

Results tomorrow. Should be good imo.

[brummy_git] 22/5/2017 07:53

Lucky guess - Over the years, I have met a few pretty shrewd investors from Birmingham University. Best of luck with the stock picking - I like your style/optimism.

[chrisdgb] 21/5/2017 19:14

Fraid not, although I did go the university..!!

[brummy_git] 21/5/2017 17:38

chrisgb - I appreciate this is a bit of a long shot, but do you work at Birmingham University by any chance?

[chrisdgb] 19/5/2017 09:11

Nice to see they are doing a conference call on Thursday...........

[chrisdgb] 16/5/2017 09:12

Looking forward to results next week, should give us a bullish update and another leg up..........

[aishah] 08/5/2017 10:53

UKHotViews:

*NEW RESEARCH* Regtech - A Big New Opportunity

In this latest report in TechMarketView’;s fintech series, we delve into “regtech”; which has become an increasingly hot topic over the past 18 months. There is a big market opportunity here, at a relatively early stage of development and this therefore represents an important area of opportunity for SITS providers.

Alongside the established providers of regulatory platforms and outsourced services, there is a thriving start-up community which is actively targeting several areas of the regtech scene with new technology offerings. These will revolutionise the process of regulatory compliance with better solutions for the pervasive issues of KYC (Know Your Customer) and AML (Anti-Money-Laundering) as well as providing new insights and efficiencies through Artificial Intelligence, Big Data/Analytics and new Automation techniques.

A clear understanding of the regtech scene will prove very important as SITS providers look to enhance their product offerings, create new solutions and open up new market opportunities. Subscribers to the FinancialServicesViews research stream can access this report, here.

hxxp://www.techmarketview.com/ukhotviews/archive/2017/05/08/new-research-regtech-a-big-new-opportunity

[mrnumpty] 06/5/2017 17:44

Sorry about the multiple posts - new user of this site . Anyway , hope the information is of interest .

[mrnumpty] 06/5/2017 17:30

The back page of the " Your Money " section of today's Daily Telegraph consists of " Diary of a private investor " , a regular feature which is written by James Bartholmew . Towards the end of the article , he writes " Most recently , I have bought Lombard Asset Management , which goes with the flow of all these new regulations [ he is referring to another investment , in NAHL ] by making money out of helping companies deal with them " . Unfortunately , Mr. Bartholomew does not inform us how many shares he has acquired , nor the price which he paid ( somewhat important , given the 73.5% increase in the mid-price in the last couple of months ( 8.5p in early-March to 14.75p now ) .

[mrnumpty] 06/5/2017 17:21

The back page of the " Your Money " section of today's Daily Telegraph consists of " Diary of a private investor " , a regular feature which is written by James Bartholomew . Towards the end of the article , he writes " Most recently I have bought Lombard Asset Management , which goes with the flow of all these new regulations by making money out of helping companies deal with them " . Unfortunately , Mr. Bartholomew does not inform us how many shares he acquired , nor the price which he paid ( somewhat important , given the 73.5% increase in the mid-price in the last couple of months ( 8.5p in early-March to 14.75p now ) .

[mrnumpty] 06/5/2017 17:21

The back page of the " Your Money " section of today's Daily Telegraph consists of " Diary of a private investor " , a regular feature which is written by James Bartholomew . Towards the end of the article , he writes " Most recently I have bought Lombard Asset Management , which goes with the flow of all these new regulations by making money out of helping companies deal with them " . Unfortunately , Mr. Bartholomew does not inform us how many shares he acquired , nor the price which he paid ( somewhat important , given the 73.5% increase in the mid-price in the last couple of months ( 8.5p in early-March to 14.75p now ) .