Highlights

• Revenue up 10% on same period last year at £6.4m (2010: £5.8m).

• Significant increase in profit before tax to £1.8m (2010: £0.2m).

• Cash at end of period £1.3m (2010: £1.3m) with no debt (2010: £nil).

• Profitability achieved by both the Regulatory and the Trading and Risk businesses with a particularly strong advance by the Risk business.

• Contract for global application of COLLINE® at Société Générale.

• Launched latest web-enabled version of regulatory product.

• Maiden dividend of 0.03 pence per ordinary share of 0.5p ("Ordinary Share") paid; interim dividend of 0.02 pence per Ordinary Share approved by the Board in respect of the half year to 30 September 2011 and to be paid on 9 November to shareholders on the register as at 7 November 2011.



• Current trading and outlook

• Ongoing demand for COLLINE®: COLLINE® Collateral Management and Clearing software is now the product of choice for two Tier 1 banks with interest shown by a wide range of other banks and financial organisations.

• Regulatory requirements imposed on financial organisations continue to expand: Significant additional regulatory reform such as Basel III, the Dodd-Frank Act and Solvency 2 should benefit the Company appreciably over the next few years.

• Strong balance sheet: The combination of £1.3m cash position, no debt and good recurring revenues is a solid platform for future organic growth.


Report of Philip Crawford, Non-executive Chairman

The rise in profitability in the period is a good outcome, with a particularly strong performance by the collateral and clearing business. The Board continues to see considerable opportunities over the next few years from the areas in which the Company is operating, with the move to clearing of derivatives opening up new revenue streams. In addition, multiple regulatory initiatives, together with a complete refresh of our regulatory technology, offer us significant growthof our regulatory technology, offer us significant growth potential. The clear goal is that Lombard Risk will over the next few years be operating in growing markets and at the same time win an increasing market share of those markets.

Philip Crawford

Chairman

Report of John Wisbey, Chief Executive Officer

Summary

I am pleased to report a 10% rise in revenues and a significant rise in profitability for the six month period, as well as a net cash position of over £1.3m at the end of the period. The collateral management business performed particularly well. The rise in revenue was despite the fact that this financial year is a year of comparatively little regulatory change in the UK.

In the collateral and clearing software business, we continued to win contracts for our COLLINE® software both from existing and new customers. Some of the initiatives in this field, such as the move towards central clearing of derivatives and the integration by more banks of their collateral business with their repo and securities lending business, are proving beneficial to the Company. We signed two major deals for our COLLINE® software in the period, one with Société Générale and the other for clearing with the same major Tier 1 German bank with which we announced a contract in April 2009. These contracts together are worth £3.0 million in revenue to the Company in the first two years. We won several other contracts in the period including a large Austrian bank and a life insurance company in the United States, both for COLLINE®, a major European bank for Chinese regulatory reporting and a major US bank for Irish regulatory reporting.

In July the Board was required to make a public statement following an article in a London newspaper that a competitor had approached the Company with an offer valuing it at £40.0m or 20p per share. In the event, while no offer was formally made, it did highlight the fact that at that time the Company's shares were valued at well below 2 x revenues, whereas M&A activity in our sector has taken place at above 4 x revenues.

The Board considers that the Company's products are well placed in the current and foreseeable market with an emphasis on collateral and clearing, liquidity and regulatory compliance and related management reporting. The sales pipeline is strong and we have continued to win large deals in Europe despite the troubles of Greece and the Eurozone and the possible need for a number of our customers to raise additional capital to accommodate asset write downs.

Financial

Revenues for the six month period ended 30 September 2011 increased by 10% to £6.4m (2010: £5.8m). Profit before tax was sharply higher at £1.8m (2010: £0.2m). In the period the Company capitalised £1.3m of development costs (2010: £nil) with associated amortisation of £0.1m (2010: £nil). This is consistent with the Company's accounting policy and in line with the expectation set out in the Company's latest annual report. The total expenditure on software research and development in the period was £1.8m. The capitalised development costs are being amortised over a five year period. This is a change in our accounting policy that previously stated a three year amortisation period. There is no effect on prior year numbers.

It is pleasing that profit before software capitalisation nearly quadrupled against the same period last year and that in the first half of the financial year we have almost achieved the market's profit before tax expectations for the full financial year to 31 March 2012.

Net cash was £1.3m, a similar level to last year.

Recurring revenues, such as annual licence renewals and support and maintenance fees, have continued to grow. Such revenues have totalled £2.6m for the six month period. In addition, many customers are on term licences in excess of one year (typically three or five years) which are periodically renewed. These revenues significantly increase the percentage of the Company's revenues that may be classified as recurring.

Collateral and Clearing Software Products

COLLINE®, our collateral management and clearing software product, has performed very well. This product now handles substantially all of the key requirements of a collateral and clearing business including margining, repo and securities lending, trade reconciliation, inventory management and reporting including regulatory reporting (e.g. for Fed-15 reports and outputs to regulatory liquidity reporting). We extended our COLLINE® contract with a Tier 1 German bank to include Clearing, a contract worth £1.0 million in revenue to the Company over its first two years, and we expect a number of contracts with existing and prospective customers to follow. Another Tier 1 bank, Société Générale, became a customer in the summer, a contract worth more than £2.0 million in revenue to the Company in the first two years. We also signed up Erste Bank, a major Austrian bank, and PGA, a subsidiary of Pacific Life.

Volumes in the market have risen appreciably during the Eurozone crisis and COLLINE® has coped with increased volumes extremely well. A key element of our product is that it remains scalable from the smallest collateral user to the largest global bank using us for all its collateral and clearing.

OBERON®, our most established product, continues to move forward with functional and performance enhancements and remains profitable. With the recent financial crisis, money market rates for Swiss Francs and Singapore Dollars turned negative for a while and we ensured that our option models coped.

Our LISA® product, launched last year, continues to make progress as we move it towards a liquidity risk solution as well as a product for stress testing regulatory reports. LISA® was part of our solution for several of the more than thirty clients that used us for the FSA's liquidity reporting.

Regulatory and Compliance Software Products

Lombard Risk's Reporter product remains the market leader of any single solution for UK bank regulatory reporting with approximately 130 of the 350 banks in the UK and approximately fifteen investment firms in the UK using the product for regulatory reporting to the FSA.

Last year, the UK made the most significant contribution to this division, but this year we are in between the Liquidity Rules of 2010 and the COREP and Basel 3 and Solvency 2 Rules of 2012 onwards. With no major UK regulatory change this year, we made a concerted effort to increase our focus on foreign markets. We obtained a major US bank client for Irish reporting, while a European bank extended its existing use of Reporter in several Asian countries including China. With regulatory change also imminent in India in 2012 we are busy producing an Indian solution that meets the new rules and identifying likely initial clients.

Our technology team has been working hard on the transition to a web-based version of our Reporter product. In producing the resultant Version 5, we listened carefully to our 250+ large and small clients alike in various countries and to other firms that were looking for a robust, multi-country reporting solution architecture to cope with all the regulatory change that is occurring. This enhanced, web-based version is driven by our own vision of modern regulatory reporting and aims to address the major business issues raised by the many firms to whom we have talked. The initial client feedback to Version 5 has been positive both from existing customers and prospective ones and, as a result, the Board expects Version 5 to make a positive contribution to future revenue of the Company. Our aim is simple but ambitious - to make our product attractive to all serious firms that are looking at regulatory reporting, whether in one country or across multiple jurisdictions.

Personnel and Premises

We have continued to make several new hires appropriate to the expected growth of parts of the business but we continue to focus resources on those parts of the business where we see the best prospects. With 120 people now in our Shanghai development centre and over 200 employees overall, there has also been an appreciable focus on making processes more efficient.

We have moved to new premises in New York.

Prospects

The Group has seen some significant contract wins in the first half of the current financial year and has a strong pipeline of new business going into the second half. The Board sees no end in sight to the increase in bank and securities firm regulation at a national, supranational and international level. We are optimistic that this will have a positive effect on the Group's regulatory compliance business, albeit that this benefit will fluctuate as demand is driven by regulatory deadlines. The climate for the next few years is for mandatory additional spend on regulation.

However strong our pipeline, it is clearly a matter of concern for any company in any sector when the Bank of England Governor speaks of the current financial crisis as being the worst since the 1930s or possibly ever. We are fully aware of the current economic environment and it cannot be ruled out that our bank customers or prospective customers will reduce or delay their spending programmes, even though we have not seen this have a significant effect on our business thus far. We take comfort from the fact that regulatory spending is mostly mandatory and that collateral is one of the more important areas for many banks' spending at present.

The Board views the next two years with cautious optimism despite the difficult backdrop of the sovereign debt crisis in Europe and the impact that sovereign debt provisioning will have on the need to recapitalise the banking sector. The expectation remains that Lombard Risk's chosen markets of collateral and clearing, liquidity and regulatory compliance and related management reportingwill continue to be growing markets over the next few years and that at the same time we will win an increasing share of those markets.

Finally, we are pleased to announce that the Directors are recommending an interim dividend of 0.02 pence per Ordinary Share in respect of the half year to 30 September 2011. The interim dividend is payable on 9 November to shareholders on the register as at 7 November 2011.

John Wisbey

Chief Executive Officer