13th May 2014 14:29
LONDON (Alliance News) - Lombard Risk Management PLC Tuesday reported a 13% increase in full-year pretax profit, thanks to a jump in revenue driven by increased regulation on financial services firms that's pushing up demand for its software.
The profit increase lagged its revenue rise as it hired experienced senior sales executives that it hopes will drive further growth. That helped push up administrative costs by a quarter and, along with higher costs for servicing more clients, weighed on margin.
In a statement, Lombard Risk Management, which is comprised of a risk management division and regulatory compliance division, reported a GBP4.4 million pretax profit for the year ended March 31, compared with GBP3.9 million a year earlier. Revenue grew by 22% to GBP20.4 million, with GBP12.0 million of that attributable to the operations in the UK, which enjoyed an 84% increase.
Nevertheless, Lombard said that, longer term, the proportion of revenues from the Americas "could and should" be nearer to the 40-50% range. In its last financial year, the proportion from the Americas fell to 20% from 25% the previous year, as revenue dropped by 0.4% to GBP4.1 million. The remainder of Lombard's revenue is made in the rest of Europe, Middle East and Africa, and Asia Pacific.
New European rules for the financial services industry have been a boost to Lombard, which provides software to help firms comply with the regulatory environment. Lombard Risk Management said it closed 34 new contracts to provide its product for COREP, the European Banking Authority?s common regulatory reporting framework.
"We have entered the new financial year with recurrent revenues at another all-time high of around GBP8.6 million, our highest ever year-end level of order book at GBP5.2 million, and with a good sales pipeline," John Wisbey, chief executive, said in a statement.
"There is continued new European regulation in the UK beyond COREP, such as FINREP and Asset Encumbrance, and also regulatory change in several of the countries in which we operate," the CEO added.
"We expect research and development costs to reduce in the 2014/15 financial year as a percentage of revenues but at the same time it would be very short sighted not to invest in our future growth," Wisbey said.
Meanwhile, Non-Executive Chairman Philip Crawford said Lombard Risk Management is "actively" seeking a chief financial officer to replace Paul Tuson, who departed in May after serving three months' notice.
In an interview with Alliance News, Wibey said Tuson's successor is likely to be recruited externally, adding that Lombard Risk Management has compiled a shortlist of candidates.
Lombard Risk Management increased its full-year dividend to 0.075 pence a share, from 0.065 pence.
Lombard Risk Management shares were Tuesday quoted at 11.00 pence, up 3.5%.
By Samuel Agini; [email protected]; @samuelagini
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