The directors present their annual report and financial statements for the year ended 31 May 2023.
Software Alliance Limited (“SAL”) is a specialist software house focused on the development of financial modelling and related software primarily for the life insurance industry. Our principal software product is the Mo.net Financial Modelling Platform, which is used by actuaries and other risk professionals to perform a range of critical business activities, including but not limited to product pricing, profit testing, valuation & reserving, capital management, and front / back-office policy illustrations & servicing.
The global marketplace for SAL’s products is dominated by the first generation of financial modelling software released in the mid-1990s. These products are now approaching end-of-life, with many customers actively looking at alternatives to these legacy tools. The flexible, modern & open architecture of the Mo.net platform, together with an increasing range of accelerator tools to help support the migration effort, leaves us well placed to respond to the next generation of financial modelling requirements.
Business Structure
In April 2023 SAL became an independent software house for the first time in its history. This followed the restructuring of OAC and the divestment of any interest in SAL. This change in business structure provides an opportunity to develop new strategic propositions & partnerships and removes any dependency on services historically provided by OAC.
Philosophy
SAL’s business philosophy is encapsulated as follows:
focus on what we’re good at – financial modelling software & related services.
integrate with everything – allowing Mo.net to be used with a range of best-in-class tools already in use at the client.
Strategic Focus
The strategic focus for the business continues to be developing a range of innovative and extensible on-premise, cloud-based and hybrid financial modelling software & associated services appropriate to the current and emerging needs of the global life insurance industry. We continue to target all stages of the life insurance lifecycle, include front-office illustrations & quotations, back-office policy administration calculations, and more traditional actuarial pricing, valuation, and reserving activities. By closely aligning our tools & services to the needs of our strategic markets & territories we can offer a genuine alternative to the traditional tools & vendors.
Growth
Over the last 12 months our recurring annual license revenue has grown by 12.8%. There has also been encouraging growth of new clients in emerging strategic markets, as well as steady interest from the domestic market enabling a positive outlook for the coming year.
Cost Management
During the year, we have continued to focus on minimising all operational costs and to streamline many of our key business processes. However, we have also invested in people and initiatives where there are clear and tangible benefits to the business.
Customers
Providing exceptional customer service & support remains a cornerstone of the business, and key to our strategic goal of winning new clients who are considering moving away from legacy platforms & providers. We have continued to increase visibility of our brand across our target markets & segments through a diverse selection of industry events and by engaging with a broader range of technology & consulting partners.
Products & Services
New versions of the core Mo.net platform continue to be released in line with our strategic product roadmap, which is heavily influenced by customer requirements and our own R&D activity. We have also extended our product set to offer a more diverse range of components to complement the core modelling platform, with specific focus on end-user computing. Following the demerger from OAC we have formed our own consulting practice to offer a range of consultancy support & training to existing & new clients.
Opportunities
The most significant opportunities relate to the replacement of first generation / legacy financial modelling platforms. Many insurers are now actively investigating alternative technologies offering more flexibility, lower cost of ownership, better vendor support, and a clear pathway for migration.
Risks & Challenges
The principal risk to our business is the loss of any of our major clients to a competitor. We are therefore focusing on maintaining client satisfaction and ensuring clients receive exemplary customer service & support.
People
Following our demerger from OAC we sought to bolster our management team by the appointment of an Operations Director and a Finance Director as well as a new Chairperson on the Board. These positions have now been filled.
The satisfaction of all staff is monitored through a quarterly satisfaction survey, as well as indirectly through our performance management framework. Staff satisfaction continues to be high.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
Software Alliance Limited is a private company limited by shares incorporated in Scotland.
The registered office is Summit House, 4-5 Mitchell Street, Edinburgh, EH6 7BD.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Share capital
Ordinary shares are classified as equity. equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Dividends
Dividend distributions to the company's ordinary shareholders are recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
Fixed dividends to the company's preference shareholders are accrued as a liability over the period they are due, irrespective of when payment is to be made.
Income recognition with regard to licence fees.
The average monthly number of persons (including directors) employed by the company during the year was:
Preference dividends in arrears total £17,500 (2022 - £52,500).