INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC

 

Report on the audit of the financial statements

 

Opinion

 

In our opinion:

•     the financial statements give a true and fair view of the state of Company's affairs as at 31 March 2026 and of its profit and cash flows for the year then ended;

•     the Company financial statements have been properly prepared in accordance with UK adopted international accounting standards; and

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

We have audited the financial statements of LendInvest Secured Income II PLC (the 'Company') for the year ended 31 March 2026 which comprise of the following:

 

1	Statement of profit and loss
2	Statement of comprehensive income
3	Statement of financial position
4	Statement of changes in equity
5	Statement of cash flows
6	Notes 1 to 15 to the financial statements
7	Material accounting policy information

 

The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

 

Basis for opinion

 

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

Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

 

We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

Conclusions relating to going concern

 

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. Our evaluation of the Directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included:

 

·      reviewing minutes of meetings of those charged with governance and correspondence with regulators, such as the Financial Conduct Authority, for any factors which could be of higher risk in relation to going concern;

·      challenging the appropriateness of the Directors' assumptions and judgements made in the base forecast and stress-tested forecast. In doing so we agreed key assumptions such as forecast growth to historic actuals and relevant data and considered the historical accuracy of the Directors' forecasts by comparing them to actual results;

·      enquiring with the Directors to determine whether there were any breaches of borrowing covenants within the year or subsequent to year end and the ability for the Company to meet the requirements of the covenants;

·      performing a review of compliance with borrowing covenants which comprised obtaining and reviewing covenant compliance statements to verify that no covenant breaches have occurred which may trigger penalties or repayment of borrowings ahead of the maturity dates;

·      obtaining and assessing the Directors plans in respect of funding lines which are approaching maturity within the next 12 months by considering the Company's past experience of extending the maturity of facilities, their discussions with new providers of funding and experience of portfolio sales;

·      inspecting the latest post period end management accounts and reviewed minutes of the meeting to determine if there were any significant matters which could affect the going concern of the Company; and

·      reviewing the going concern disclosure in note 1 to the financial statements to assess that it gives a complete and accurate description of the Directors' assessment of going concern.

 

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 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.

 

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

 

Overview

 

Key audit matters	2026 2025 Determination of expected credit loss (ECL) - individually assessed Stage 3 (credit impaired) loans   P P Determination of expected credit loss (ECL) - Accuracy of forward-looking information *   O P Valuation techniques of loans and advances *   O P   *Accuracy of forward‑looking information is no longer considered a key audit matter, as our risk assessment indicates that changes to the assumption have a low impact on the overall ECL balance.   *Valuation techniques of loans and advances is no longer considered a key audit matter, as our risk assessment indicates that changes in the key assumption i.e. discount rates have a low impact on the overall fair value adjustment of the company's loan products
Materiality		£564,000 (2025: £1,109,000) based on 1% of total assets

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Company and its environment, the applicable financial reporting framework and the Company's system of internal control. We identified and assessed the risks of material misstatement of the Company's financial statements. We then applied professional judgement to focus our audit procedures on the areas that posed the greatest risks to the Company financial statements. We continually assessed risks throughout our audit, revising the risks where necessary, with the aim of reducing the Company's risk of material misstatement to an acceptable level, in order to provide a basis for our opinion.

How Climate change affected the scope of our audit

 

The Company has determined that climate change does not currently have a material impact on its operations. Our work on the assessment of potential impacts of climate-related risks on the Company's operations and financial statements included:

 

·      Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements;

·      Our own qualitative risk assessment taking into consideration the sector in which the Company operates and how climate change affects this particular sector;

·      Review of the entity's loan book to identify collateral types and exposures vulnerable to climate related risks such as flooding and assess whether these factors materially impact expected recoveries and in turn the expected credit loss; and

·      Review of the minutes of Board related to climate change and performed a risk assessment as to how this may affect the financial statements and our audit.

 

The management disclosures on page 5 form part of the strategic report. Our responsibilities in relation to these disclosures are described in the relevant section of this report and our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained from the audit or otherwise appear to be materially misstated. 

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

Key audit matter		How the scope of our audit responded to the risk
Determination of expected credit loss (ECL) - individually assessed Stage 3 (credit impaired) loans The Company's accounting policies are disclosed in note 1 with detail about judgements in applying accounting policies and critical accounting estimates in note 1. The ECL Provision at year-end is disclosed in Note 8	The carrying value of loans and advances to customers may be materially misstated if credit‑impaired exposures (Stage 3) are not appropriately identified and individually assessed. The assessment of impairment for these exposures involves complex and highly judgemental recoverability analyses, as management is required to consider multiple potential recovery scenarios, including restructuring of existing exposures and collateral realisation.   Management judgement and assumptions are prevalent in:   -  The timing of the sale or realisation of collaterals underpinning the Stage 3 individually assessed exposures; and   -  The probability weightings applied to different recovery scenarios, reflecting alternative paths of recovery.   Variations in expected disposal timelines can have a significant impact on the present value of estimated future cash flows. In addition, the probability scenario weightings are inherently subjective and can differ materially between individual cases, depending on borrower circumstances and collateral characteristics.   Given the high degree of judgements and estimation uncertainty in timing of sale and realisation of collaterals, the sensitivity of outcome on the probability weightings, and the quantum of the ECL from the Stage 3 exposures, this area is considered to be of significant audit focus, a significant risk and represents a key audit matter.	We performed granular and detailed risk assessment procedures over the ECL balance. As part of these risk assessment procedures, we identified the specific assumptions in the individually assessed ECL associated with the risk of material misstatement.   The procedures we performed to address the key audit matter included the following:   Tested the design and implementation of relevant controls related to the determination of the credit impaired individually assessed accounts.   Performed completeness and accuracy checks on the data feeding into the Stage 3 individually assessed models. This involved reconciling key data fields to source systems and documents, checking the integrity of inputs used in the models.   Reviewed credit files of all individually assessed exposures and challenged management on the key inputs into the scenarios by obtaining supporting evidence for recovery scenarios, collateral values, exit strategies, scenario weighting and expected timing of cash flows.   Performed back-testing and post-period review procedures on the Time to Sale assumption and actual realisation on the collaterals that have been disposed to evaluate the predictive power of management's models and identify any systematic biases. This included comparing the historical assumptions applied by management against actual outcomes observed and assessed the accuracy and reliability of these assumptions.   Engaged our internal valuation experts to perform an independent assessment of the reasonableness of the values attributed to sampled collaterals. This included reviewing the valuation methodologies applied, assessing key assumptions and inputs by benchmarking against relevant market data and comparable transactions where available.   Performed sensitivity analysis on key assumptions applied to the individually assessed exposures, including probability weightings and Time to Sale of the underlying collateral to determine the impact of these assumptions on the overall ECL balance under stressed scenarios.   Assessed whether the disclosures appropriately reflect and describe the key judgements and assumptions when determining the expected credit losses on the individually assessed accounts.   Key observations: Based on our audit work performed, we consider the estimates and judgements made by management in the calculation of the stage 3 Individually assessed ECL to be reasonable.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

Our application of materiality

 

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.  We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

 

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

 

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

 

	Company financial statements
	2026	2025
Materiality	£564,000	£1,109,000
Basis for determining materiality	Materiality is based on 1 % of total assets.	Materiality is based on 1 % of total assets.
Rationale for the benchmark applied	The entity is primarily an investment entity as it was established to issue listed debt and from its proceeds, issue financing to customers.  As such a total assets basis, which in turns drives the funding of the entity, is considered to be the most appropriate.	The entity is primarily an investment entity as it was established to issue listed debt and from its proceeds, issue financing to customers.  As such a total assets basis, which in turns drives the funding of the entity, is considered to be the most appropriate.
Performance materiality	£423,000	£832,000
Basis for determining performance materiality	75%	75%
Rationale for the percentage applied for performance materiality	Determined on the basis of our risk assessment together with our assessment of the overall control environment Determined on the basis of our risk assessment together with our assessment of the overall control environment.

 

 

Reporting threshold 

 

We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of £28,200 (2025: £55,000).  We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

 

Other information

 

The directors are responsible for the other information. The other information comprises the information included in the Annual Report and Financial Statements other than the financial statements and our auditor's report thereon. 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.

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

Other Companies Act 2006 reporting

 

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. 

 

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit: ·      the information given in the 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 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:   ·      adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or ·      the Parent Company financial statements are not in agreement with the accounting records and returns; or ·      certain disclosures of Directors' remuneration specified by law are not made; or ·      we have not received all the information and explanations we require for our audit.

 

 

Responsibilities of Directors

 

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

 

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 auditor's 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 financial statements.

 

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management.

 

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

Extent to which the audit was capable of detecting irregularities, including fraud

 

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:

 

Non-compliance with laws and regulations

 

Based on:

·      Our understanding of the Company and the industry in which it operates;

·      Discussion with management and those charged with governance; and

·      Obtaining and understanding of the Company's policies and procedures regarding compliance with laws and regulations,

 

·      we considered the significant laws and regulations to be:

·      London Stock Exchange Listing rules;

·      UK tax legislation; and

·      UK-adopted International Accounting Standards.

 

The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the Financial Conduct Authority rules.

Our procedures in respect of the above included:

 

·      enquires of management whether there were any litigations and claims;

·      enquires of the legal team of the Company

·      review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;

·      review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;

·      review of financial statement disclosures and agreeing to supporting documentation;

·      involvement of tax specialists in the audit; and

·      Review of legal expenditure accounts to understand the nature of expenditure incurred.

 

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

·      enquiry with management and those charged with governance regarding any known or suspected instances of fraud;

·      obtaining an understanding of the Company's procedures relating to:

o  Detecting and responding to the risks of fraud; and

o  Internal controls established to mitigate risks related to fraud.

·      review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;

·      discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and

·      performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.

 

 

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls and in relation to accounting estimates within the loss given default of individually assessed Stage 3 loans.

 

Our procedures in respect of the above included:

·    testing journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;

·    Involvement of forensic specialists in the audit to review our risk assessment on fraud risks identified;

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LENDINVEST SECURED INCOME II PLC (CONTINUED)

 

·      involvement of property valuation experts in the areas of high estimation by management which is covered in the KAM section under 'Determination of expected credit loss (ECL) - individually assessed Stage 3 (credit impaired) loans';

·      evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and

·      Assessing significant estimates made by management for bias which is covered in the KAM section under 'Determination of expected credit loss (ECL) - individually assessed Stage 3 (credit impaired) loans'

 

 

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

 

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

 

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.  This description forms part of our auditor's report.

 

Other matters which we are required to address

 

We were appointed by the Board of Directors on 5 April 2023 to audit the financial statements for the year ended 31 March 2023.

 

Our total uninterrupted period of engagement is 4 years, covering the periods ended 31 March 2023 to 31 March 2026.

 

Our audit opinion is consistent with the additional report to the Board of Directors.

 

 

Use of our report

 

This report is made solely to the Parent 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 Parent Company's members those matters we are required to state to them in an auditor's 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 Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.15R - 4.1.18R, these financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with DTR 4.1.15R - DTR 4.1.18R. This auditor's report provides no assurance over whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R - DTR 4.1.18R.

 

 

Stefan Beyers (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, United Kingdom

28 July 2026

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).