Placing & Open Offer

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA, NEW ZEALAND, THE REPUBLIC OF IRELAND OR ANY JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

Lombard Risk Management Plc

Placing of New Ordinary Shares to raise £8.0 million (gross)

and

Proposed Open Offer of New Ordinary Shares to raise up to a further £0.76 million (gross)

Lombard Risk Management plc (AIM: LRM) ("Lombard Risk" or the "Company"), a leading provider of integrated collateral management, regulatory compliance and reporting solutions for the financial services industry, is pleased to announce an equity fundraising of £8.0 million by way of a placing (the "Placing") of new Ordinary Shares (the "Placing Shares") at 8.75p per share (the "Issue Price") representing a discount of 1.4 per cent. to the closing mid-market price of 8.875p per Ordinary Share on 16 June being the last practicable date prior to the publication of this announcement. WG Partners and finnCap acted as joint brokers to the Company in relation to the Placing.

The Placing is conditional, inter alia, on admission of the Placing Shares to trading on AIM ("Placing Admission").

In order to provide Shareholders who have not taken part in the Placing with an opportunity to participate, the Company is making an Open Offer to all Qualifying Shareholders to give them the opportunity to subscribe at the Issue Price of 8.75p for an aggregate of up to 8,729,464 New Ordinary Shares. Qualifying Shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price on the basis of:

1 Open Offer Share for every 35 Ordinary Shares held on the Record Date

Assuming full take up under the Open Offer, the gross proceeds of the Open Offer will raise approximately £0.76 million. The Open Offer is not underwritten.

The Company has posted a circular in relation to the proposed Placing and Open Offer to all Qualifying Shareholders later today and this is also available on the Company's website www.lombardrisk.com.

DIRECTORS' PARTICIPATION

Certain Directors of the Company and certain senior managers have agreed to subscribe for shares in the Placing at the Issue Price for a total of approximately £475,000. The Directors' participation and resultant holdings are as set out in Paragraph 4 below.

ADMISSION

Application has been made for the Placing Shares to be admitted to trading on AIM and it is expected that Placing Admission will become effective and trading will commence in the Placing Shares at 8.00 a.m. on 23 June 2016. Following Placing Admission the Company's issued share capital will comprise 396,959,832 Ordinary Shares of which 234 Ordinary Shares are held in treasury. The figure of 396,959,598 may be used by Shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

PROPOSED USE OF PROCEEDS

The proceeds of the Placing (and to the extent received, any additional proceeds of the Open Offer) will be used to further develop and accelerate the Company's product suite and optimise and extend the Company's development capabilities. In particular the net proceeds of the Placing will be used to:

· Accelerate investments in AgileREPORTER (c.£2.35 million) - the Company has an ambitious roadmap, created from dialogue with partners and customers, to: increase jurisdiction and regulator coverage; upgrade legacy data integration and analytics components; and increase support for process automation and data lineage for clients obliged or desiring to comply with the Basel Committee on Banking Supervision (BCBS) document 239 agenda.

· Accelerate investment in COLLINE in the cloud (c.£1.7 million) - the Company plans to extend its existing cloud customer base by delivering a revised collateral Software as a Service (SaaS) offering.

· Investment in the Company's development infrastructure (c.£3.0 million) - the Company's development and testing capabilities are currently centred in Shanghai but meeting the demands of clients and partners going forward will require stronger domain knowledge and very high productivity ratios. The Company intends to diversify its development capabilities, spreading the risk of development and maximising its chance of exploiting the anticipated opportunities as organisations invest in the areas in which the Company specialises.

· Completion of restructuring of Lombard Risk (c.£0.45 million) - the Company has benefitted enormously from recent investment in the sales force and product groups, but has a small number of additional changes to complete this work and ensure it is optimally positioned with respect to the opportunities it has sight of.

It is also the Company's intention to use any additional net proceeds received from the Open Offer to further strengthen the Company's balance sheet.

Philip Crawford, Chairman of the Company commented:

"I am delighted that we have received such strong support from both current and new institutional investors for the acceleration of our plans to capitalise on a rich heritage, a strong client base and a significant level of client and regulator led demand."

Alastair Brown, CEO of Lombard Risk commented:

"This fundraise is the cash injection that Lombard Risk needs to deliver on its potential to clients, staff and shareholders. Over the last six months we have built a strong new leadership team, developed robust client-led roadmaps for our core products, and signed a major partnership agreement with Oracle. We are delighted to have received the backing of our major institutional shareholders to support our two year plan, and we face the future with optimism and excitement."

Further details of the Placing and Open Offer can be found below.

Defined terms used in this announcement will have the meaning (unless the context otherwise requires) as set out in this announcement and the Circular posted to shareholders today which is available on the Company's website www.lombardrisk.com. 

For further information, please contact:

FURTHER DETAILS OF THE PLACING AND OPEN OFFER

1. INTRODUCTION

The Company is pleased to announce a placing of 91,428,572 Placing Shares at 8.75p per New Ordinary Share to raise £8.0 million for the Company (before expenses).

The proceeds of the Placing will be used to further develop and accelerate the Company's product suite and optimise and extend the Company's development capabilities, enabling the Company to increase productivity and allow future product enhancements to be delivered by smaller teams to accelerated timescales.

The Board considers it important to allow existing Shareholders to participate at the same price as investors who participated under the Placing and, to that end, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Issue Price for an aggregate of 8,729,464 Open Offer Shares, to raise up to approximately £0.76 million. The Directors have confirmed that they do not intend to apply for any Open Offer Shares.

The Issue Price is at a discount of 1.4 per cent. to the closing mid-market price of 8.875p per Ordinary Share on 16 June 2016 (being the last practicable date prior to the publication of this announcement of the Placing and the Open Offer).

2. BACKGROUND ON THE COMPANY

The last year has seen tremendous development for Lombard Risk with major changes to the Board and senior management; a strategic review leading to explicit focus on two core product areas, namely regulatory reporting and collateral management; the launch of AgileREPORTER; a new brand identity; and a major strategic addition to our alliance network.

Strategic Product Review

We completed a review and rationalisation of our products, which resulted in the Company focusing exclusively on the regulatory reporting (AgileREPORTER) and collateral management (COLLINE) needs of its client base. This new strategic focus, coupled with key executive appointments in product and technology, has presented us with an unrivalled opportunity to leverage our expertise across both of our core business lines. The recent implementation of regulations in the collateral management industry has allowed us to draw on our extensive regulatory experience to support our clients. Key functional enhancements for AgileREPORTER in process automation and workflow have been influenced as a direct result of our long history supporting collateral operations. With many banks moving towards a group-wide Procurement and Technology led purchasing process, these connections are increasingly relevant as clients look for consistency across their platforms.

The launch of AgileREPORTER was a critical milestone for the Company. This new product supports our clients in meeting challenges relating to process automation and data lineage, mandated by the Basel Committee on Banking Supervision document 239 for the thirty Global Systemically Important Banks and a benchmark for almost all other financial institutions. AgileREPORTER, as a testament to its flexible integration architecture, was the solution implemented to support our first Oracle Financial Services Analytical Applications ("OFSAA") client. The landmark partnership deal with Oracle America Inc. lays the foundation for a step change in performance for Lombard Risk and propels the Company's regulatory reporting business into the same league as our collateral management group.

With three contracts signed for OFSAA before the end of the last financial year, and another now announced, Lombard Risk has clearly demonstrated an ability to supply regulatory reporting solutions to the Tier 1 banks. This development is translating into direct sales as well, with discussions underway for new global and regional mandates. The development plan to support this new business will also create upgrade options for clients seeking to move beyond expedient tactical decisions post the Global Financial Crisis ("GFC") and implement a strategic solution to the global regulation challenge.

The Company has been equally active in the collateral management space, where the COLLINE product has continued to win new business thanks to its comprehensive asset class coverage and rich feature set. This market has also been affected by the fallout from the GFC as regulators increase their demands for real-time and more granular management of liquidity and risk where we are well placed to support the evolving needs of our clients. As in-house developed solutions come under increased cost scrutiny and some of our competitors struggle to keep pace, our continuous investment coupled with a close working relationship with our existing clients, has allowed the Company to maintain a delivery flow and future roadmap that is relevant and indeed urgently required.

Finally, cloud solutions and revenue from Software as a Service (Saas) will be increasingly important for software companies in the future. We have already deployed COLLINE in the cloud for five clients, but for most organisations currently looking for cloud solutions the power of COLLINE makes the interface overly complex. We are working with a small group of future clients on delivering the power of COLLINE through a very modern, lightweight system deployed in the cloud. As well as meeting the needs of this key community, this allows us to build in beneficial network effects supporting clients of all sizes as they do business together. In a rapidly evolving market segment, we believe this will keep COLLINE relevant for the future, and at the top of any platform selection list.

Strengthened leadership team

Lombard Risk has achieved much of its success thanks to the extraordinary efforts and expertise of our people, but taking the Company to the next level required an additional investment in leadership. We were therefore delighted to appoint Alastair Brown as CEO in December 2015 and to create the role of Global Head of Product as well as welcome a new Chief Technology Officer. In conjunction with the sales organisation, these new senior executives have created a clarity around the product roadmaps which has allowed the Company to make important delivery commitments to critical current and potential clients, and create alignment with our major partners ensuring that Lombard Risk's joint activities are complementary and additive.

3. REASONS FOR THE PLACING AND OPEN OFFER AND USE OF PROCEEDS

The Placing will raise £8.0 million before expenses. In addition, the Company could receive up to approximately £0.76 million through the Open Offer. As referred to above, the Company intends to utilise the net proceeds of the Placing (and to the extent received, any additional proceeds of the Open Offer) to:

· Accelerate investments in AgileREPORTER (c.£2.35 million) - the Company has an ambitious roadmap, created from dialogue with partners and customers, to: increase jurisdiction and regulator coverage; upgrade legacy data integration and analytics components; and increase support for process automation and data lineage for clients obliged or desiring to comply with the Basel Committee on Banking Supervision (BCBS) document 239 agenda.

· Accelerate investment in COLLINE in the cloud (c.£1.7 million) - the Company plans to extend its existing cloud customer base by delivering a revised collateral SaaS offering.

· Investment in the Company's development infrastructure (c.£3.0 million) - the Company's development and testing capabilities are currently centred in Shanghai but meeting the demands of clients and partners going forward will require stronger domain knowledge and very high productivity ratios. The Company intends to diversify its development capabilities, spreading the risk of development and maximising its chance of exploiting the anticipated opportunities as organisations invest in the areas in which the Company specialises.

· Completion of restructuring (c.£0.45 million) - the Company has benefitted enormously from recent investment in the sales force and product groups, but has a small number of additional changes to complete this work and ensure it is optimally positioned with respect to the opportunities it has sight of.

It is also the Company's intention to use any additional net proceeds received from the Open Offer to further strengthen the Company's balance sheet.

4. DIRECTORS' PARTICIPATION

Certain Directors of the Company and certain senior managers have agreed to subscribe for shares in the Placing at the Issue Price for a total of approximately £475,000. The Directors' participation and resultant holdings are as set out below.

* Assumes full take up of the Open Offer

†As a percentage of Existing Share Capital and Enlarged Share Capital which includes 234 Ordinary Shares held in treasury

5. RELATED PARTY TRANSACTION

The participation of certain Directors in the Placing is deemed a related party transaction pursuant to the AIM Rules. The Independent Director considers, having consulted with the Company's nominated adviser, finnCap, that the terms of the Directors' participation in the Placing is fair and reasonable insofar as the Company's Shareholders are concerned.

6. THE PLACING AND THE PLACING AGREEMENT

The Company has raised £8.0 million (before expenses) through the Placing, conditional on (inter alia) Placing Admission, at the Issue Price. The Issue Price represents a discount of 1.4 per cent. to the closing mid-market price of 8.875p per Ordinary Share on 16 June 2016, being the last practicable date prior to the announcement of the Placing. The Placing is being conducted through a "cash box" structure as summarised below.

Under the "cash box" structure, investors will, as in a normal placing, apply for the Placing Shares subject (inter alia), to admission to trading on AIM of the Placing Shares and will pay cash, at the Issue Price, for the Placing Shares to finnCap. However, instead of finnCap receiving such monies as agent of the Company, they will, as principal, use such proceeds (less agreed fees, commissions and expenses) to subscribe for redeemable preference shares ("RP Shares") in a newly incorporated subsidiary of the Company incorporated in Jersey ("JCo") and immediately following Placing Admission, transfer the RP Shares to the Company. It is the Board's intention to then exercise its rights, as holder of the RP Shares, to redeem them and thereby become entitled to proceeds from the issue of Placing Shares.

The consideration received by the Company for the allotment of the Placing Shares will not be cash, but the receipt of the RP Shares. The allotment of the Placing Shares for non-cash consideration is not subject to the statutory pre-emption rights in the Act and this has enabled the Company to proceed with the Placing without the time and expense of convening a general meeting.

The Placing is not conditional, inter alia, on the completion of the Open Offer. The Placing is not underwritten.

On 17 June 2016, the Company, finnCap and WG Partners entered into the Placing Agreement pursuant to which, conditional (inter alia) on Placing Admission, WG Partners and finnCap have agreed to use their reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price and on satisfaction of all conditions in the Placing Agreement, finnCap will subscribe in cash (being an amount equivalent to the proceeds from the issue of the Placing Shares) for the RP Shares and transfer the RP Shares to the Company under a separate subscription and transfer agreement entered into on 17 June 2016 between the Company, JCo and finnCap.

The Company has given certain warranties and indemnities to each of finnCap and WG Partners in the Placing Agreement and the Company and JCo have given certain warranties pursuant to other agreements in connection with the "cash box" structure. The Company has also agreed to pay finnCap and WG Partners commissions and to pay certain other third party costs in relation to the Placing.

7. THE OPEN OFFER

In addition to the Placing, the Company is proposing to raise up to approximately £0.76 million (before expenses) through the Open Offer to Qualifying Shareholders. The Board considers it important that Qualifying Shareholders have an opportunity to participate at the same price as investors in the Placing. Qualifying Shareholders can subscribe for, in aggregate, up to 8,729,464 Open Offer Shares at the Issue Price.

Qualifying shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price on the basis of:

1 Open Offer Shares for every 35 Ordinary Shares held on the Record Date

and so in proportion for any number of Ordinary Shares held on the Record Date.

Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholder but will be aggregated and made available for the Excess Application Facility.

Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in a Restricted Jurisdiction will not qualify to participate in the Open Offer.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form for certified shareholders. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy or to scale back any applications for Excess Shares on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 20 June 2016. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 5 July 2016. Application through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Open Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST Applications and payment in respect of the Open Offer is 11.00 a.m. on 5 July 2016.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Open Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

The Open Offer is conditional, inter alia, upon:

(i) Placing Admission; and

(ii) Open Offer Admission becoming effective by no later than 8.00 a.m. on 8 July 2016.

If any of the above conditions are not met, the Open Offer Shares will not be issued and all monies received by the Receiving Agent will be returned to the applicants (at the applicants' risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Open Offer Shares will be issued free of all liens, charges and encumbrances and will when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

The Company's annual general meeting for 2016, details of which were announced on 26 May 2016, will take place on 6 July, two days before the expected date of Open Offer Admission. Accordingly, any Qualifying Shareholder receiving Open Offer Shares will not be able to submit a vote in respect of those shares at that meeting.

8. DEALINGS AND SETTLEMENT ON AIM

The Open Offer Shares and the Placing Shares will be allotted and issued fully paid and will, on issue, rank pari passu with the Existing Ordinary Shares then in issue, including the right to receive, in full, all dividends and other distributions thereafter declared, made or paid after the date of issue together with all rights attaching to them and free from all liens, charges and encumbrances of any kind.

Application has been made for the Placing Shares to be admitted to trading on AIM and it is expected that Placing Admission will become effective and trading will commence in the Placing Shares at 8.00 a.m. on 23 June 2016. Following Placing Admission, the Company's issued share capital will comprise 396,959,832 Ordinary Shares of which 234 Ordinary Shares are held in treasury. The figure of 396,949,598 may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Application will be made for the Open Offer Shares to be admitted to trading on AIM following the completion of the Open Offer period on 5 July 2016. Open Offer Admission is expected to become effective and trading will commence in the Open Offer Shares on or around 8 July 2016. The Company will make an announcement regarding take up pursuant to the Open Offer and this announcement will include the Company's issued share capital following Open Offer Admission.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

PLACING STATISTICS

OPEN OFFER STATISTICS

All of the above have been calculated assuming completion of the Placing, 234 Ordinary Shares in treasury and full take up under the Open Offer at the Issue Price.

* Closing mid-market price on 16 June 2016, being the latest practicable Business Day prior to the publication of this announcement and the circular.

DEFINITIONS