Financial Highlights

· Revenue increased by 10.3% to £23.7m (2015: £21.5m)

· Recurring revenue grew 12.4% to £10.2m (2015: £9.1m), representing c. 43.1% of revenue (2015: 42.3%)

· Adjusted EBITDA decreased to £2.1m (2015: £4.6m)

· Loss before tax of £2.2m (2015: profit £2.3m)

· Cash and cash equivalents at 31 March 2016 of £3.3m (31 March 2015: £2.2m)

Operational Highlights

· Launched AgileREPORTER® for Global Regulatory Reporting

· Signed Technology License Agreement with Oracle America Inc.

· Unveiled new global identity and launched new website

· Refreshed leadership team with appointment of Alastair Brown to the Board as Chief Executive Officer and, post year-end, appointment of Mike Payne as Chief Technology Officer

Alastair Brown, CEO of Lombard Risk commented:

"After a year of significant change, we have great confidence in our plans in both the regulatory reporting and collateral management markets. Significant investment in our products and team, coupled with a key strategic relationship with Oracle, put Lombard Risk in a position of strength. With a leadership team in place that can deliver those plans we look forward to continue helping our clients to reduce the cost, complexity and constraints of trading in today's markets."


Chairman's Statement

I am pleased to report on a year of considerable development and growth for Lombard Risk. Against a background of substantial change, not least in the executive leadership team, the Group has posted record revenues, albeit alongside a significant increase in costs as this programme of change has been, and continues to be, implemented.

Results

The Group achieved revenue growth of 10.3%, giving a five-year compound annual revenue growth rate of 15.0%. Annually recurring revenues made up 43.1% (2015: 42.3%) of total revenues. Substantial change has come at a cost, which has resulted in the Group recording a loss before tax for the year of £2.2m (2015: profit £2.3m). Net cash at 31 March 2016 was £3.3m (2015: £2.2m), following a successful placing of new shares to raise £3.8m in May 2015.

Dividend

The Group has pursued a progressive dividend policy for a number of years; however, it is the view of the Board that the Group is at a stage in its development where its resources can be best utilised to accelerate the substantial opportunities that the Group is in a position to exploit in the coming months and years. Consequently, the Board does not propose to pay a final dividend. The Board will review its dividend policy in future, with the intention of reinstating its progressive dividend policy when appropriate.

Strategy

The Group recognises the continuing evolution of the regulatory landscape in both of its key business segments and the Board believes the Group is well placed to meet the increasing regulatory obligations its clients are facing which is driving demand for the Group's products. The announcements of the rebranded AgileREPORTER® (7 March 2016) and the Technology License Agreement with Oracle America Inc. (18 March 2016) are clear indicators of the Board's commitment to providing a market-leading regulatory reporting suite. At the same time, the Group continues to invest in the functions and features of its COLLINE® product, to provide a multi-asset collateral management solution for its clients, available both as an installed and cloud-based implementation.

The Group has continued to invest in its direct sales function, and will continue to do so, and sees a highly complementary relationship between this and the Group's global network of partners.

Employees

During the year I have had the opportunity to work closely with many of the Group's valued employees and I continue to be impressed by the excellence I have seen in terms of market knowledge, commitment and desire.

On behalf of the Board, I would like to thank all of our employees for their valued contribution.

Board of Directors

Since the Annual General Meeting held in 2015, there have been a number of changes to the Board. John Wisbey, who had served as Non-executive Director since 18 May 2015, resigned from the Board on 17 August 2015. John McCormick, who had resigned from the Board in May 2015, re-joined the Board as Non-executive Director on 7 September 2015. Sandy Broderick joined the Board as Non-executive Director on 9 September 2015. These appointments bring valuable industry experience to the Group.

I am pleased to say that Alastair Brown joined the Board as Executive Director and Chief Executive Officer with effect from 1 December 2015. Alastair brings a wealth of experience from his career as a senior technology leader within the Royal Bank of Scotland Group and the Board is delighted that he will be leading Lombard Risk through a period of substantial change and development.

In January 2016, Nick Davies, the Group's Chief Technology Officer, resigned from the Board after almost six years of service, during which time he helped guide the Group through some years of substantial change.

Governance

In addition to the Board changes described above, the Group has made changes to its advisory team, with the appointment of finnCap as nominated adviser (Nomad) and broker.

Outlook

The Board believes that the Group is well placed to take advantage of a market landscape that remains highly attractive. The Board does not see any slowdown in the pace of regulatory change and believes that its clients and target customers remain in need of technical solutions to address this rapid change, both in terms of introducing greater efficiency in managing regulatory reporting obligations and in embracing technology-based risk management as a contributor to front office revenue generation, rather than merely a back office tool. The signing of the Group's Technology License Agreement with Oracle Americas Inc. provides significant momentum to deliver the Group's strategy of becoming the regulatory reporting technology of choice both for the Global Systemically Important Banks ("G-SIBs") and also for the wider banking market. At the same time, the successful implementation of the Group's collateral management product to keep abreast of forthcoming regulatory developments gives the Board confidence for the year ahead and beyond. As I commented in our trading statement of 19 April, these initiatives will require continued investment into the new financial year as the Company positions itself to take advantage of these and other opportunities.

AGM

The Annual General Meeting will be held at the offices of Memery Crystal LLP at 9.30am on Wednesday 6 July 2016. My fellow Directors and I look forward to meeting shareholders at that time.

Philip Crawford

Group Non-executive Chairman

Chief Executive Officer's statement

This has been a year of tremendous development for Lombard Risk with major changes to the leadership team, a strategic review leading to explicit focus on two core product areas, the launch of AgileREPORTER®, a fresh new brand identity and a major strategic addition to our alliance network.

These changes have not been implemented without incurring cost, and we are consequently reporting a loss before tax of £2.2m. This loss is primarily the result of one-off costs which include impairment of software no longer marketed as well as the impact of the changes noted above. On a positive note, revenue did increase by 10.3% to £23.7m and we enter 2016/17 with a record order book of £7.5m and recurring revenues standing at £10.2m.

The revenue of £23.7m means that our compound annual revenue growth rate over the last five years is a healthy 15%. However, in the context of large and growing markets, driven by client and regulator-led demand, this is still less than we should expect. Since I joined the Group in December, I have reviewed the entire business and started to implement the changes that we believe will lead to substantial revenue growth and create a cash-generating business delivering shareholder value. The disciplined focus on two key product areas has allowed us to create credible roadmaps that our clients can build into their own plans. This intense focus and increased understanding of the size of the opportunity required leadership changes and I have made two critical appointments in technology and product to help deliver against our ambitions, along with some reorganisation of the talent already in the organisation.

Notwithstanding the need for these major changes, we are very proud of the support we have given the Group's customers during a turbulent year, with four of our top seven deals involving delivering COLLINE® or AgileREPORTER® to major new clients. The other three underline our ability to extend our products in a rapidly evolving industry, and to retain existing clients at their renewal events. This track record of deepening relationships with longstanding customers, coupled with the ability to attract top-flight financial institutions, has sown the seeds for the Group's long-term success.

Strategic product review

We completed a review and rationalisation of our products, which resulted in the management focusing exclusively on the regulatory reporting (AgileREPORTER®) and collateral management (COLLINE®) needs of our extensive 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 business lines. The 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 Group. This new product supports our clients meeting challenges around process automation and data lineage, mandated by the Basel Committee on Banking Supervision ("BCBS") document 239 for the 30 Global Systemically Important Banks ("G-SIBs") and desired by 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 Group's regulatory reporting business into the same league as the collateral management business.

With another two contracts signed for OFSAA, and others at advanced stages of negotiation, Lombard Risk has clearly demonstrated an ability to supply regulatory reporting solutions to tier 1 banks. This development is translating into direct sales as well, with conversations underway for new global and regional mandates. The development plan to support this new business will also create exciting 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.

We have been equally active in the collateral management space, where our 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 in the business and 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 Group 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 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.

A refreshed leadership team

Lombard Risk has achieved much of its success thanks to the extraordinary efforts and expertise of its employees, but taking the Group to the next level required an additional investment in leadership. I was delighted to be able 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 executives have created a clarity around the product roadmaps which has allowed us to make important delivery commitments to critical current and potential clients, and create alignment with our major partners, ensuring that our joint activities are complementary and additive.

Investment in the sales force and building our brand

Connecting clients with our product suite and enabling them to exploit the benefits we can bring to their organisations requires a skilled sales force with global coverage. We enjoy a physical presence in New York, London, Frankfurt, Singapore, Hong Kong and Tokyo, and support clients across North America, EMEA and Asia Pacific (including India) from these bases. This year we invested heavily in our sales organisation, with new hires across the board, the introduction of more structured processes and sales analytics and a global training programme, bringing colleagues across the organisation together for development, coaching and strategic planning. This work continues as we pursue our aspiration to bring our clients advantage by delivering them our agile solutions.

To reflect the significant transformation that Lombard Risk has undergone, it was important to invest in our brand as a visible mirror of the evolving product suite, the team and our vision. We are a firm focussed on leading in a constantly changing market environment, adapting to our clients' requirements and supporting them as a trusted partner. Our solutions use technology as a tool, rather than as an end, to ensure that the scarce capital and people resources of our clients are optimised. We chose the key words Agile and Advantage to express the flexibility of our problem solving and our style of product delivery and implementation, but always with the same goal in mind - to ensure our clients have a competitive advantage.

Growing through partnerships

We have always believed that product partners are an essential part of the growth story of our business, combining critical complementary features with access to an enlarged client community. Our partnership with Oracle America Inc. not only demonstrates our ability to add value to the largest organisations, but the early execution of three major contracts under this partnership underlines our ability to make strategic commercial agreements a delivered reality to our shared customers. With other product partners already engaged, and further dialogues underway, we remain convinced that partnerships offer us an exciting way of delivering significant extra revenue in addition to our ambitious organic growth plans.

Rapid and professional execution of the flow of new business will always be a key focus for the

Group. Delivering the benefits that Lombard Risk software brings to the heart of a financial services enterprise as rapidly as possible is our primary goal, and we retain a team of highly skilled professional services experts to achieve this. We complement our in-house team with key partners to deliver critical capacity at peak times, which is particularly important given the regulator-driven deadlines that underpin many of our commitments. As well as providing much flexibility and scalability to our in-house experts, these relationships allow us to make sure we are not distracted from our primary business purpose as a financial services software house.

Conclusion

We are very confident in our future plans, with product enhancements scheduled and commitments made to clients to maintain the industry-leading position our collateral management product enjoys and make our new regulatory reporting solution best-in-class. It has been a privilege to join Lombard Risk at such an exciting time, and I would like to thank the Board for their unwavering support during this transition and, in particular, Philip Crawford who led the Group as Executive Chairman prior to my arrival on 1 December 2015.

Alastair Brown

Chief Executive Officer


Financial Review

Group Results

Group revenue increased by 10.3% to a record £23.7m compared with £21.5m in the prior year, with strong growth recorded in the Regulatory Reporting division, which saw revenues increase by 25.6%. Risk Management revenues were down by 3.0% as a result of declining revenues for the Group's legacy Oberon product. Licence revenues were broadly flat at £9.5m (2015: £9.5m), representing 40% of revenues (2015: 44%). Recurring revenues grew 12.4% to £10.2m (2015: £9.1m) and represented approximately 43.1% of revenue (2015: 42.3%). Recurring revenues now have a current annual run rate in excess of £10.6m.

Operating profit before share-based payment charges, depreciation and amortisation (adjusted EBITDA) was £2.1m (2015: £4.6m). The Group recorded a loss before tax of £2.2m (2015: profit before tax of £2.3m), resulting in a basic loss per share of 0.98p (2015: basic earnings per share of 0.87p).

The effective rate of tax for the year was 33.0% (2015: 0.1%). This was primarily driven by a significant reduction in the deferred tax asset to £0.3m (2015: £1.0m). The unrecognised deferred tax asset was £3.2m (2015: £1.5m).

Cash flow

Cash generated from operations was £3.7m (2015: £5.7m). Balancing working capital requirements with investing in longer-term growth remains an integral part of the Group's financial responsibilities, as is the case for many growth technology companies. The Group produces weekly cash forecasts which are monitored closely. The Group has in place a £2.5m revolving loan agreement with Barclays Bank Plc at a margin of 3.85%. There were no amounts owing under this agreement at the end of the financial year and no amounts drawn under the agreement during the year.

Investment in development expenditure that was capitalised was £5.9m (2015: £5.1m).

The Group raised £4.0m (net) from the issue of new shares (2015: £0.03m) with £0.2m (2015: £0.03m) resulting from the exercise of employee stock options.

Net Group cash, being cash and cash equivalents less borrowings, of £3.3m is up on the prior year (2015: £2.2m) following the placing of shares to raise £3.8m (net) of new equity in May 2015.

Balance Sheet

Non-current assets at 31 March 2016 increased to £23.1m (2015: £22.6m), primarily as a result of the continued investment in capitalised development costs. This investment was applied across the Group's suite of products and included £1.7m of investment in COLLINE®, £2.2m in global regulatory reporting and £1.5m in the software platform to support its regulatory reporting products. The Directors remain confident that this investment will bring future benefits to the business by enabling clients to both continue to meet their regulatory reporting obligations and more effectively manage risk in an increasingly regulated environment and by broadening the reach of the Group's products through both direct and indirect sales channels. The carrying value of non-current assets includes £5.9m in respect of goodwill arising on previous acquisitions, £5.1m in respect of the written-down value of the Group's investment in COLLINE®, £5.5m in respect of the Group's regulatory reporting products and £3.2m relating to the development of the software platform that supports these products. During the year the Group's technical team incurred costs of £3.2m that did not meet the criteria for capitalisation and were therefore recorded as an expense in the profit and loss account.

Net Group cash at 31 March 2016 was £3.3m (2015: £2.2m). The Group had no borrowings at the balance sheet date (2015: £nil).

Trade receivables were 16% of revenues as at 31 March 2016, compared to 17% and 14% for 2015 and 2014 respectively.