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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2025
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The directors present their strategic report for Step One Finance Limited ("the Company") and its subsidiaries SOFL Funding III Limited, SOFL Funding IV Limited, SOFL Funding V Limited and SOFL Funding VI Limited (together "the Group") for the year ended 31 December 2025.
Established in 2010, Step One Finance Limited is a specialist non-bank UK consumer and mortgage finance business offering a range of loan products to customers in the UK including second charge mortgages and residential bridging loans. The Company designs and delivers specialist loan products based on traditional values of fairness, transparency and responsibility. Targeted markets include areas where customers may have historically been underserved or where the Group’s specialist lending capabilities add value to customers and shareholders.
The Group originates loans through the Company which are then long term funded by way of both wholly owned and non-wholly owned special purpose vehicles (SPVs) in partnership with high quality institutional investors. Since 2023, the group has also been selling loans through structured forward flow programmes. The Company has provided loan administration services for all new loans originated since 2018. During 2025, the Group was able to successfully secure new customers, while ensuring all loans meet the Company’s strict underwriting criteria. This was achieved despite challenging macroeconomic conditions, characterised by cost-of-living pressures and sustained high interest rates. The structure of the funding transactions, along with the Company’s investments in technology, enabled it to effectively respond to the interest rate movements following Bank of England base rate changes. As at 31 December 2025, the Group carried a loan loss provision amounting to £3.2m (2024: £2.6m) which is mainly with respect to loans sold through structured forward flow programmes and loans held by the company. The goal of the Company is to create a scalable, institutional quality business that can operate efficiently in small, unreserved portions of the UK mortgage markets. Customer service is a top priority and the Company aims to treat all customers fairly while pro-actively reaching out to those that may need help in meeting their contractual obligations. The Group’s long-term strategy is to scale a best in class, technology led, multifaceted specialist lender anchored by stable funding and liquidity. The Company also looks at continuous improvement in the technology it deploys for origination and servicing of loans. The Company has a diverse workforce with a culture that actively fosters inclusiveness and fairness in all dealings with its employees.
The Group actively and closely monitors macro-level and individual micro-level risks in granular detail and the board meets frequently to assess the effectiveness of mitigating strategies affecting the business.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
The Group defines this as the risk that it will not be able to raise funds in order to originate new loans or to pay on its operational commitments. The Group has effectively managed this by entering into long-term funding arrangements with stable institutional investors through orphan SPVs, as previously mentioned. In addition, the Group has utilised onward financing arrangements for its mortgage loans through "forward flow" programmes.
This refers to the risk that the Group's customers will not be able to meet their contractual commitments when they are due. This is addressed by originating loans only to customers who pass through the rigorous underwriting criteria which includes a full assessment of each customer's affordability, a review of their credit history and, for mortgage secured loans, ensuring there is sufficient value in the underlying mortgage collateral at the time of origination.
The Group defines this as the risk of the Company or its employees and officers acting in a way detrimental to customer interests. The Group addresses this by a strong control framework and an unyielding treating customers fairly (TCF) mindset inculcated amongst its employees and senior management. This is backed up by a robust review process and a follow-up on mitigating actions, should a risk element be identified.
The Group refers to the failure of internal processes, employees, systems and external factors as operational risk. This is addressed by rigorous and periodic testing of systems, ensuring employees go through a suite of training programmes each year, annual review of internal processes and weekly inter-functional management meetings to help identify any emerging risks.
The directors have had regard to the matters set out in section 172 (1) (a) to (f) when performing their duties including having regard (amongst others matters) to:
∙the likely consequences of any decision in the long term;
∙the interest of the Company's employees;
∙the need to foster the Company's business relationships with suppliers, customers and others;
∙the impact of the Company's operations on the community and the environment;
∙the desirability of the Company maintaining a reputation for high standards of business conduct; and
∙the need to act fairly between members of the Company.
This report was approved by the board on 22 April 2026 and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The directors present their report and the financial statements for the year ended 31 December 2025.
The directors who served during the year were:
The profit for the year, after taxation, amounted to £611,640 (2024 restated - £1,405,370).
During the year, the Group paid a dividend of £Nil (2024 - £20,000,000).
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
This report was approved by the board on
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEP ONE FINANCE LIMITED
We have audited the financial statements of Step One Finance Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2025, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEP ONE FINANCE LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEP ONE FINANCE LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙We determined that the laws and regulations which are directly relevant to the financial statements are those that relate to the reporting framework FRS 102 and the relevant tax compliance regulations in the jurisdictions in which the Company operates. We evaluated the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙As required by the auditing standards, auditing procedures in respect of non-compliance with these identified laws and regulations are limited to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any.
∙The Company is subject to a number of other laws and regulations where consequences of non-compliance could have a material effect on the financial statements, for example imposition of fines or litigation, or the loss of the Company’s licence to trade. We identified the following areas as those most likely to have such an effect: compliance with the FCA rules. The following procedures were performed to ensure there were no material misstatements as a result of non compliance:
°Reviewed correspondence received from the FCA;
°Walked through systems and controls; and
°Enquired with management,
∙We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to areas of estimate and judgement in the financial statements.
∙Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations and fraud risks identified in the paragraphs above. In addition to the audit procedures, we remained alert to any indications of non-compliance throughout the audit. The specific audit procedures performed included:
°Review of Board minutes;
°Review of large and unusual bank transactions; and
°Identifying and testing journal entries; and
°Challenging assumptions and judgements made by management in its significant accounting estimates, in particular in relation to the assessment of impairment of assets and provisions.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STEP ONE FINANCE LIMITED (CONTINUED)
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants and Statutory Auditor
3rd Floor, Waverley House
7-12 Noel Street
London
W1F 8GQ
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 22 April 2026.
The notes on pages 16 to 36 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 36 form part of these financial statements.
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