Half-year Report

20 October 2016

Lombard Risk Management

("Lombard Risk", the "Company" or the "Group")

Interim results for the six months ended 30 September 2016

Lombard Risk Management plc (AIM: LRM), a leading provider of integrated collateral management and regulatory reporting solutions for the financial services industry, is pleased to announce its interim results for the six months ended 30 September 2016.

Financial Highlights

· Record first-half revenue of £15.2m (2015: £10.8m), up 41.2%

· Order book of contracted revenue at £9.2m (2015: £6.8m)

· Annually recurring revenue up 22% to £6.1m (2015: £5.0m)

· Sales for the period up 58% on the previous year, with software licence sales up 106%

· EBITDA of £1.5m (2015: £0.5m)

· Loss before tax of £0.1m (2015: loss of £1.8m)

· Loss per share of 0.05p (2015: loss per share of 0.66p)

· Cash at period end of £6.9m (2015: £2.7m) with no debt (2015: £Nil)

· Equity placing to raise £8.0m completed in June 2016 and Open Offer raising £0.3m completed in July 2016

Operational Highlights

· Launch of cloud-based collateral management system, AgileCOLLATERAL™

· Investment in state-of-the-art Birmingham offices allowing critical development to be completed on-shore

· Two new clients for AgileREPORTER® for OFSAA

Current trading and outlook

· Trading in line with management's expectations and delivering to plan

· Lombard Risk remains well placed to service all its clients as the Governance, Risk and Compliance sector continues to experience strong growth

Alastair Brown, CEO of Lombard Risk commented:

"With the increasing strength of our recurring revenues, an order book of £9.2m and the transformation of the Lombard Risk organisation largely complete, the Board faces the second half of the year with optimism. Whilst the Financial Services industry as a whole remains under pressure, the Governance, Risk and Compliance sector continues to experience strong growth and the Company remains well placed to service all our clients.

 "I would like to express my sincere thanks to the Lombard Risk staff across our offices in London, Shanghai, New York, Singapore, Hong Kong, Tokyo and Frankfurt who have worked tirelessly to deliver these results. Their efforts are allowing us to deliver an ambitious plan, and collectively they create an organisation which is a privilege to lead. In addition, I would like to thank the Company's investors and shareholders who have supported the Company through this period of change."

For further information, please contact:

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

About Lombard Risk

Lombard Risk is a leading provider of regulatory reporting and collateral management solutions to the financial services industry. Through intelligent automation and optimisation, Lombard Risk's clients are able to improve their approach to risk management, gaining the agility they need to have a competitive advantage. As well as bringing immediate and urgent solutions to clients' needs, Lombard Risk's global team of experts look beyond today's reporting and collateral management to develop technology solutions that help them adapt as industry challenges evolve.

Counting over 30 of the world's 'Top 50' financial institutions among its clients, Lombard Risk has been a trusted partner for 27 years. Founded in 1989 and headquartered in London, it has offices in New York and Asia Pacific (Hong Kong, Shanghai, Singapore and Tokyo), and service centres in Germany, Atlanta, Cape Town and Miami. Find out more at lombardrisk.com

Chief Executive Officer's statement

It gives me great pleasure to report that Lombard Risk has enjoyed a period of strong revenue growth in the six months to 30 September 2016 achieving record first-half revenues of £15.2m, an increase of 41.2%. Following the significant changes to the executive team in the previous financial period, the renewed focus on core product areas has allowed us to deliver in line with the plans set out during our successful equity fundraising earlier this year. We have been executing against our delivery objectives, announcing AgileCOLLATERAL™during the period, and preparing for the opening of the new state-of-the-art technology development centre in Birmingham this November. Our strategic alliance with Oracle continues to develop with a further two sales of AgileREPORTER®as part of the Oracle analytics suite successfully closed in the half. The Board and the executive team remain confident in the markets within which Lombard Risk operates, our two-year plan and our ability to execute it.

Record sales

Sales for the period were up 58% and, importantly software licence sales increased 106%, whilst the increase in services was a more measured 26% leaving these two business lines almost evenly balanced. Sales in EMEA, a region which accounts for circa 50% of the business, grew 44% and in North America a very encouraging 159%. A weaker first quarter in APAC led to a small sales decline in the region; however, recognised revenue in this region grew as a result of major contract wins in previous periods. We closed the period with a backlog of orders contracted but not yet recognised of £9.2m (2015: £6.8m).

In our regulatory reporting business, we closed two new Oracle Financial Services Analytical Applications ("OFSAA") deals, one cross-sold to an existing (globally systemically important bank) collateral management customer, the other to a new client for Lombard Risk. This brings the number of deals closed under the Oracle strategic alliance to five, and the Board is encouraged by the pipeline for AgileREPORTER® for OFSAA for the second half of the year. Direct regulatory reporting business was also brisk, with an encouraging number of clients taking additional reports in key jurisdictions in line with the continued rollout of various regulatory programmes and Lombard Risk's investment to support banks navigating the continuing waves of regulation.

Our world-class collateral management solution, COLLINE®, continued to enjoy strong growth with significant new wins in North America and a number of existing clients extending their licences to take advantage of both previously available modules and new regulatory and Exchange Traded Derivatives enhancements. All clients affected by the regulation changes in September purchased the regulatory module and were ready for the go-live date, and we face the next deadline for uncleared margin rules (January 2017) with confidence for our clients and optimism for our collateral business.

Overall 125 contracts were executed in the first half, demonstrating the return on the investment made in salesforce personnel and training. There is good visibility of strong pipeline for Q3, and the final sales vacancies in Asia were filled with new joiners starting on 1 October, giving Lombard Risk the execution capability it needs to capitalise on the market opportunities we anticipate.

A diverse portfolio

Our business is spread across North America, EMEA and Asia Pacific, and the recognised revenue for the period is split almost evenly between collateral management and regulatory reporting (53% collateral management; 47% regulatory reporting). EMEA is the largest region at 50% of the business, but the split between Euro and Sterling denominated business means that globally 58% of our revenues are non-sterling.

This position gives us a natural hedge against any potential impact of BREXIT, and to date we are yet to experience any identifiable impact on our business. European clients, who paused to reflect post the referendum result, quickly resumed normal project activities, and much of our sales are driven by non-negotiable regulatory timetables. The rest of our business is driven by banks' desire to reduce operational costs and risks, and again these pressures are only amplified by anticipation of the impact of BREXIT on the European macro-economies. Were BREXIT to introduce more diversity into the regulatory landscape, we would of course be beneficiaries, but at this time we consider that to be unlikely.

Raising funds to invest for growth

The equity placing in June and the subsequent open offer raised £8.3m gross, giving us the opportunity to accelerate development of both our product lines and invest in the Company's development facilities. This has allowed us to launch AgileCOLLATERAL, a cloud-based collateral management system which offers the functionality of our market-leading COLLINE® solution in a modular, light-touch delivery format. The speed with which we are developing this product, designed to help buy-side clients meet the stricter uncleared collateral margin requirements being extended from January 2017, underlines the new focus on delivery at Lombard Risk. This is evidenced further by the investment in a state-of-the-art software development facility in Birmingham, allowing us to move critical user interface, domain intensive, rapid and iterative development from our existing technology centre in Shanghai to the UK. We have secured excellent premises, made offers to the first new staff members and are due to open the facility in November. As we enter the second half, we are also continuing the acceleration of the feature set and jurisdictional coverage of AgileREPORTER® as planned. Lombard Risk continues to invest and maintain its world-class software, upholding its position as a leading provider of regulatory reporting and collateral management solutions.

Financial review

Recognised revenue rose by 41.2% against the comparable period last year to £15.2m (2015: £10.8m). Annually recurring revenues for the half year totalled £6.1m (2015: £5.0m), representing 40.1% (2015: 46.3%) of total revenues. Regulatory Reporting revenues rose by 22.3% to £7.1m (2015: 5.8m) and Risk Management revenues rose by 63.1% to £8.1m (2015: £5.0m). The Company experienced revenue growth across all regions: EMEA revenues rose by 33.9% to £7.6m (2015: £5.7m); North America revenues rose by 50.1% to £5.2m (2015: £3.4m); and APAC revenues rose by 47.9% to £2.4m (2015: £1.6m).

Net cash at 30 September 2016 is £6.9m (2015: £2.7m) following the fundraise of £8.3m of gross proceeds at 8.75p per share. The proceeds of the fundraise have enabled investment in both the Company's products and its infrastructure and as a result of this we have experienced some increases in the cost base of the Group. This has resulted in a loss before tax of £0.1m (2015: loss before tax of £1.8m). Earnings before interest, taxation, depreciation and amortisation ("EBITDA") were £1.5m (2015: £0.5m).

Headcount as at 30 September was 378 (2015: 319) as the Company has strengthened its resources across a number of key areas, in particular sales, product and development.

The Company's accounting policies allow for the capitalisation and amortisation of certain software development costs. Capitalised development costs in the period totalled £2.8m (2015: £2.8m), representing 46.6% (2015: 66.5%) of total technology and support costs. The increase in total technology spending reflects the accelerated investment in the Company's next generation products in both the risk management and regulatory reporting segments of the business.

The capitalisation of development costs has an impact on the interpretation of the financial performance of the Company. Internally, the Company's operating budget and monthly management accounts measure financial performance assuming no such capitalisation. Applying this assumption would result in negative EBITDA for the six-month period of £1.2m (2015: negative EBITDA of £2.3m) and a loss before tax of £1.4m (2015: loss of £2.5m).

Dividend

The Company suspended dividends at the end of the period to 31 March 2016 reflecting the considerable investment being made during the growth phase of the business. The Company does not propose to pay an interim dividend.

Outlook

The second half of the financial year will be a period of sustained investment for Lombard Risk, as we fully engage in the delivery of our next-generation products and our new software development facility. Notwithstanding this, with the increasing strength of our recurring revenues, an order book of £9.2m and the transformation of the Lombard Risk organisation largely complete, the Board faces the second half of the year with optimism. Whilst the Financial Services industry as a whole remains under pressure, the Governance, Risk and Compliance sector continues to experience strong growth and the Company remains well placed to service all our clients.

I would like to express my sincere thanks to the Lombard Risk staff across our offices in London, Shanghai, New York, Singapore, Hong Kong, Tokyo and Frankfurt who have worked tirelessly to deliver these results. Their efforts are allowing us to deliver an ambitious plan, and collectively they create an organisation which is a privilege to lead. In addition, I would like to thank the Company's investors and shareholders who have supported the Company through this period of change.

Alastair Brown

Chief Executive Officer

19 October 2016

Consolidated unaudited interim statement of comprehensive income

For the six months ended 30 September 2016

Consolidated unaudited interim statement of financial position

As at 30 September 2016

Consolidated unaudited interim statement of changes in equity

For the six months ended 30 September 2016

Consolidated unaudited interim statement of cash flow

For the six months ended 30 September 2016

Notes to the interim report

For the six months ended 30 September 2016

1. Basis of preparation

This interim report was approved by the Board on 19 October 2016.

These unaudited consolidated financial statements are for the six months ended 30 September 2016. They have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretation Committee ("IFRIC") interpretations as at 30 September 2016, as adopted by the European Union. They do not include any of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2016.

The preparation of financial statements under IFRS requires the Board to make judgements, estimates and assumptions that affect the application of accounting policies, the reported amounts of statement of financial position items at the period end and the reported amount of revenue and expense during the reporting period. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily apparent from other sources. However, the actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2016 were approved on 25 May 2016. These accounts, which contain an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

2. Loss per share

Basic loss per share has been calculated by dividing the loss on ordinary activities after taxation attributable to the owners of the Parent by the weighted average number of ordinary shares of 0.5p each (Ordinary Shares) in issue during each period.

Diluted loss per share is calculated by adjusting the weighted average number of Ordinary Shares in issue on the assumption of conversion of all dilutive potential Ordinary Shares. The Group has only one category of dilutive potential Ordinary Shares, being share options granted under the Enterprise Management Incentive Plan and Unapproved Scheme.

3. Taxation

The taxation charge is based on the effective tax rate expected to apply for the full year, taking into account the anticipated benefit of brought forward tax losses. The effective tax rate is higher than the standard tax rate, principally as a result of movements in the deferred tax asset recognised within the Group. In addition, the charge for this interim period includes £34,000 of current tax paid by overseas subsidiaries.

Company information

Company registration number

3224870

Directors

Alastair Brown

Chief Executive Officer

Nigel Gurney

Chief Financial Officer

Philip Crawford

Non-executive Chairman

John McCormick

Senior Non-executive Director

Steve Rogers

Non-executive Director

Alexander (Sandy) Broderick

Non-executive Director

Company Secretary

Nigel Gurney

Registered office

7th Floor60 Gracechurch StreetLondon EC3V 0HR

Nominated adviser and joint broker

finnCap Limited

60 New Broad StreetLondon EC2M 1JJ

Joint broker

WG Partners LLP

85 Gresham Street

London EC2V 7NQ

Auditor

Grant Thornton UK LLP

Grant Thornton HouseMelton StreetEuston SquareLondon NW1 2EP

Corporate solicitors

Memery Crystal

44 Southampton BuildingsLondon WC2A 1AP

Registrars

Computershare Investor Services PLC

PO Box 859The PavilionsBridgwater Road