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Registered number:
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
COMPANY INFORMATION
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OTTO GROUP HOLDINGS LIMITED
CONTENTS
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OTTO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The principal activity of the group is renting and funding private hire licensed vehicles on short and long term hire through two programmes: short term rentals and Rent to Buy programme providing a one stop solution for finance, insurance and maintenance.
The key financial and other performance indicators during the year were as follows:
2025 2024 Restated Turnover £82.3m £74.3m Gross profit margin 20.0% 20.0% Operating profit £7.7m £8.0m The group remains profitable and we are investing heavily in fleet and risk proprietary technology with our in house software development team to further enhance our competitive advantage. This investment in developing our own technology will help us to maintain and manage our growth trajectory over the coming years. After extensive consultation with our advisers and reviewing industry standard practices, management reviewed the contractual arrangements in respect of Rent to Buy contracts. Management decided to revise the accounting policy adopted in respect of Rent to Buy contracts and it was decided to re-instate operating leases on our balance sheet as finance leases to better reflect the treatment and nature of Rent to Buy contracts. For clarification, short term rental vehicles still remain as tangible assets on our balance sheet. Management consider that the Rent to Buy contracts meet the definition of finance leases under FRS 102 having considered relevant professional guidance and management consider that this better reflects the nature of the business. This decision was not taken lightly and has required extensive work from all parties involved, which led to the delay in filing our financial statements for the year ended 31 March 2025. However, management and their advisers considered that this was the correct treatment for our Rent to Buy contracts. The change in accounting policy has been applied retrospectively in accordance with FRS 102. As a result, the comparative figures for the prior year have been restated to recognise the assets subject to Rent to Buy contracts as finance lease assets. Please see note 30 for further information. Transport for London legislation requires all newly licensed private hire vehicles after January 1st 2023 to be zero emission compliant. In addition, ride hailing providers such as Uber are committed to having their vehicle fleet in London be 100% battery electric compliant by 2025. Currently only approximately 30% of the private hire fleet in London meets this requirement. Therefore we see significant opportunities for growth over the coming years given the size of the market in London and Otto Car being the largest provider of electric vehicles to the London market. We are one of Europe’s largest electric private hire fleet and our stated aim is to maintain our dominant position in the marketplace through providing great customer service and meeting the needs of our customers with the right product mix of vehicles. We have covered over 140+ million electric miles in the preceding 12 months in our fleet of electric vehicles and we aim to increase this significantly in the coming years. In recent months there has been some competition from manufacturers selling direct to our customer base and competing with us. However a number of manufacturers have retreated from selling direct and latest sales data suggests that drivers are returning to our channel to obtain a vehicle. We are already seeing lower priced EVs enter the market with more to follow that will stimulate demand.
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OTTO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Economic Risk
Given the current inflationary pressure there is a risk that there may be an impact on customer earnings from a slowdown in the wider economy. Currently however customer earnings remain strong with arrears and defaults in line with projections. We have not seen any substantial increase in defaults or vehicle returns. Fleet utilisation remains high and collections strong. Credit Risk Credit risk is the risk that a counter party will not meet its obligations under our existing financial contracts leading to a financial loss. The company is exposed to credit risk from its operating activities and from its financing activities including deposits with banks. The company manages its credit risk by ensuring that it is exposed only to customers and financial institutions with good credit quality which is based on their activity on the various ride hailing platforms. The company implements a robust credit control operation to collect outstanding arrears. Liquidity Risk Liquidity risk is the risk that the company will encounter difficulty in meeting its obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The company’s approach to managing liquidity to meet its liability when due under normal and stressed conditions, without incurring unacceptable losses or risk damage to the company’s reputation by maintaining strong cash balances and punctual collection of weekly rentals. Cyber Risk There is a risk that the Group could be targeted by a cyber attack. We have implemented a number of security policies and measures to protect customer data in line with GDPR guidance to mitigate this risk. Supply Risk Supply constraints for new vehicles have eased over the last 12 months and we are working with a wider number of car manufacturers to ensure a constant pipeline of vehicles to meet customer demands. Market forces remain in favour with demand for electric vehicles remaining robust in London and for hybrids in the regions.
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OTTO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
The Directors of the Group, in line with section 172 of the Companies Act 2006, and in promoting the success of the Group, act in the way that they consider, in good faith, would be most likely to promote the success of the Group for the benefit of all stakeholders. In doing so, they have regard to:
(a) the likely consequences of any decision in the long term; (b) the interests of the Group's employees; (c) the need to foster the Group's business relationships with suppliers, customers and others; (d) the impact of the Group's operations on the community and the environment; (e) the desirability of the Group maintaining a reputation for high standards of business conduct; and (f) the need to act fairly as between members of the Group. We maintain a culture and have values that are reflected in our decision making. All decisions and matters of strategic importance to the Group are informed by these factors and reflected in the strategy, budgets and plans of the Group.
This report was approved by the board and signed on its behalf.
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OTTO GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The director presents his report and the financial statements for the year ended 31 March 2025.
The director is responsible for preparing the Group strategic report, the Director's report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the director is 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 director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.
The profit for the year, after taxation, amounted to £5,799,132 (2024 Restated - £3,155,110).
There were dividends of £930,664 paid during the year (2024- £Nil).
The director who served during the year was:
In determining the appropriate basis of preparation for the financial statements, the Director is required to consider whether Otto car can continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of approval of these financial statements.
Otto Car has been profitable for the last three years and has considerable cash reserves. Based on the latest financial forecast, with the fleet size expected to continue to growth Director believes that the company will continue to trade profitably. Otto Car has secured further finance facilities that will enable it to fund its new purchases for the next 12 months comfortably. Market forces remain in favour with demand for electric vehicles remaining robust in London and for hybrids in the regions.
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OTTO GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Transport for London legislation requires all newly licensed private hire vehicles after January 1st 2023 to be zero emission compliant. In addition, ride hailing providers such as Uber are committed to having their vehicle fleet in London be 100% battery electric compliant by 2025.
Currently only approximately 30% of the private hire fleet in London meets this requirement. Therefore we see significant opportunities for growth over the coming years given the size of the market in London and Otto Car being the largest provider of electric vehicles to the London market.
The Group's policy is to consult and discuss with employees at meetings, matters likely to affect employees' interests.
Information on matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Group's performance.
We promote responsible business practice. The directors consider the consequences of all decisions and the impact on the Group's stakeholders. We promote relationships with our suppliers which are fair and we seek to benefit to the communities and environments in which we operate.
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OTTO GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Statement of carbon emissions in compliance with Streamlined Energy and Carbon Reporting (SECR) covering energy use and associated greenhouse gas emissions relating to gas, electricity and transport, intensity ratios and information relating to energy efficiency actions.
ESG Reporting 2025 2024
Electricity Usage (kwh) 102,205 69,571 Fuel Usage (kwh) 82,049 156,643 Total (kwh) 184,254 228,679 Carbon Footprint Summary Emission Source Calculated Emissions (CO2e) / tonne Car Emissions from fossil fuels (scope 1) 19.9 36.5 Scope 2 (Indirect gas house emissions - electricity and gas) 20.7 16.8 Total Carbon Emissions 40.6 53.3 Energy Efficiency Action No action taken. Intensity Ratio - Tonnes of C02 / £ million of income 0.71 1.04 Methodology Electricity Usage – we have collated information from all our energy providers invoices over the accounting period. Fuel Usage – we have collected all our fuel invoices over the accounting period and using DEFRA conversion table we have multiplied the fuel litre usage by 9.6 to calculate the equivalent kwh energy usage. Carbon Emissions calculated using DEFRA conversion table electricity – 0.233kg of CO2e per kwh. To calculate the GHG emissions associated with each activity we have converted the data using the calculation: Data x Emission factor = Greenhouse Gas Emissions.
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OTTO GROUP HOLDINGS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
The company made an investment in the entire ordinary share capital of a newly incorporated subsidiary company, Otto SPV 2 Limited, on 14 April 2025 for £100.
The auditors, MHA, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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OTTO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OTTO GROUP HOLDINGS LIMITED
We have audited the financial statements of Otto Group Holdings Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2025, which comprise the Consolidated Statement of comprehensive income, the Consolidated and Company Balance sheets, the Consolidated Statement of cash flows, the Consolidated and 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 director's 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 director with respect to going concern are described in the relevant sections of this report.
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OTTO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OTTO GROUP HOLDINGS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The director is 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 Director's 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 Director's 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 Director's report.
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OTTO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OTTO GROUP HOLDINGS 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:
∙Obtaining an understanding of the legal and regulatory frameworks that the company operates in;
∙Reviewing key correspondence with regulatory authorities;
∙Testing for evidence of management override;
∙Enquiry of management to identify any instances of non-compliance with laws and regulations;
∙Enquiry of management around actual and potential litigation and claims;
∙Enquiry of management to identify any instances of known or suspected instances of fraud;
∙Discussing among the engagement team regarding how and where fraud might occur.
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.
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OTTO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OTTO GROUP HOLDINGS LIMITED (CONTINUED)
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
Statutory Auditors
MHA is the trading name of MHA Audit Services LLP, a limited liability partnership in England and Wales (registered number OC455542).
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OTTO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 14189860
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 14189860
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 43 form part of these financial statements.
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OTTO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 14189860
COMPANY BALANCE SHEET
AS AT 31 MARCH 2025
The company has taken advantage of the exemption under s.408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income. The profit after tax of the parent company for the year was £930,664 (2024: £Nil).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 43 form part of these financial statements.
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OTTO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
FOR THE YEAR ENDED 31 MARCH 2025
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Otto Group Holdings Limited is a private company, limited by shares, registered in England and Wales. The company's registered number and registered address can be found on the Company Information page of the financial statements.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and loss account in these financial statements.
The financial statements are presented in pounds sterling, the functional currency, rounded to the nearest £1.
The financial statements reflect a prior period adjustment as a result of a change in accounting policy, see note 31.
The following principal accounting policies have been applied:
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Otto Group Holdings Limited was incorporated on 22 June 2022 and acquired the entire share capital of Otto Car Limited on 11 August 2022 via a share for share exchange and acquired the entire share capital of Otto Car SPV1 Limited on 27 July 2022. The company undertook no trade from incorporation.
The acquisitions have resulted in the need for consolidated financial statements to be prepared, which has been accounted for as a merger under the provisions of Financial Reporting Standard 102. These are adjusted, where appropriate, to conform to Group accounting policies. Under merger accounting, the identifiable assets, liabilities, contingent liabilities and reserves are initially recognised at the book value in the merged business within the consolidated balance sheet. The results of the subsidiaries have been included in the Consolidated Statement of comprehensive income and Consolidated Statement of cash flows for the year ended 31 March 2025. All subsidiaries are consolidated. As a Consolidated Statement of comprehensive income is published, a separate profit and loss account for the company is omitted from the Group accounts by virtue of Section 408 of the Companies Act 2006.
The group has net current liabilities of £3,368,408 (2024 restated - net current assets £5,328,999) however there are net assets of £24,950,568 (2024 restated - £20,082,100) at the balance sheet date. Overall, the net asset base is primarily driven by the finance lease debtors which represents the net investment in contractual Rent to Buy agreements with drivers and for which there are contractually agreed cash flows over the term of the agreement. The total value of these agreements are more than sufficient to cover the cash outflows of the business. The directors do not consider that there are any immediate short term cash flow issues based on their forecasts which are reviewed regularly. The directors consider that in the event that an agreement is cancelled by a driver, the underlying vehicle under the Rent to Buy contract would be returned to the Group and would be initially held as stock. The vehicle would then be available to be sold under a further Rent to Buy agreement or may be used on a short term rental basis in the meantime. Demand is strong and stock utilisation is good. Based on these assessments and having regard to the post year end trading status of the Group, which is now more than a year from the balance sheet date, the Directors have concluded that there is no material uncertainty and that they can continue to adapt the going concern basis in preparing the annual report and accounts.
In making their assessment the directors have considered possible events or conditions that might cast significant doubt on the ability of the Group to continue as a going concern. The directors have made this assessment for a period of at least twelve months from the date of the approval of these financial statements. The directors have concluded that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and there are no material uncertainties about the Group's ability to continue as a going concern. The directors, therefore, continue to adopt the going concern basis in preparing these financial statements.
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Rent to Buy contracts are finance leases where the risks and rewards over the vehicle pass to the customer. Rent to Buy contracts gives rise to two types of income: profit or loss equivalent to the profit or loss resulting from outright sale of the asset being leased, at normal selling prices, reflecting any applicable discounts, and finance income over the lease term where the finance lease asset is held under amortised cost. The capital element of customer payments offsets against the finance lease debtor and the interest element of the payment is recognised as revenue. Vehicles sold under a Rent to Buy contract are expensed as a cost of sale through the Profit and Loss Account. Rental contracts are short term operating leases and are recognised on a straight line accruals basis as the income is earnt. Other income is recognised on the same basis.
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Where an asset is obtained for the purpose of Rent to Buy contracts it is recognised as stock at acquisition. Once the Rent to Buy contract is agreed with the customer the group recognises as a receivable an amount equal to the net investment in the lease i.e. the minimum lease payments receivable under the lease discounted at the interest rate implicit in the lease. This receivable is reduced as the lessee makes capital payments over the term of the lease. Where an asset is obtained for the purpose of short term rental contracts, the assets are capitalised as tangible fixed assets at acquisition. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the group. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Page 23
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Page 24
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Page 25
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
When a vehicle is first acquired the vehicle is recognised as stock and valued at cost, unless it has been purchased for the purpose of short term rental contracts in which case it is capitalised as tangible fixed assets. Where vehicles were thought to be intended for Rent to Buy contracts and recognised in stock but the intention subsequently changes, or where vehicles were on Rent to Buy contracts which are terminated and moved back to stock, and subsequently are used on short term rental contracts, these vehicles are transferred to fixed assets.
Once recognised as a fixed asset a vehicle is valued at cost less any principal payments made by a customer during any previous Rent to Buy contract and then depreciated in line with the above policy, and then remains classified as such until the short term rental comes to an end or the decision is made to sell the vehicle outright. Vehicles sold under a Rent to Buy contract are expensed as a cost of sale through the Profit and Loss Account.
Page 26
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are
Page 27
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary
Page 28
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Page 29
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 30
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 31
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 32
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
11.Taxation (continued)
Page 33
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 34
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 35
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 36
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 37
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Obligations under hire purchase agreements are secured on the assets to which they relate.
Bank loans of £6,471,938 (2024: £7,391,301) contain an amount of £466,666 (2024: £1,266,666) that relates to The Coronavirus Business Interruption Loan Scheme and are secured by a debenture over the assets held by the company. The director has given a personal guarantee in relation to this loan limited to £400,000. All other bank loans are secured over the assets to which they relate.
Page 38
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 39
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 40
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Profit and loss account
The group is currently in ongoing discussions with HMRC to resolve issues that have been raised relating to the group’s application of recovery of input VAT, the treatment of insurance income and utilisation of capital allowances. On the basis of discussions and advice to date, the directors believe that no material loss to the company will occur. However, at this stage, the value of any potential adjustments, if any, cannot be quantified and so it is impracticable to calculate any liability that may arise.
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund in the period and amounted to £56,587 (2024 - £52,763). Contributions totaling £15,088 (2024 - £14,409) were payable to the fund at the balance sheet date and are included in other creditors.
Page 41
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
The group and company were under the control of Mr G Dhillon throughout the current and prior year.
Page 42
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OTTO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
During the year and post year end, the Directors reviewed the accounting treatment applied to the Group's Rent to Buy vehicle contracts. In prior years, the vehicles subject to these contracts were accounted for as operating leases.
Following a review of the contractual arrangements and consideration of relevant professional guidance, the Directors concluded that the Rent to Buy contracts meet the definition of finance leases under FRS 102. Accordingly, the Group has revised its accounting policy and now accounts for these arrangements as finance leases. The change in accounting policy has been applied retrospectively in accordance with FRS 102. As a result, the comparative figures for the prior year have been restated to recognise the assets subject to Rent to Buy contracts as finance lease assets. The effect of the prior year adjustment on the statement of financial position is set out below: £ Property, plant and equipment (49,536,277) Inventory 11,388,017 Receivables due in more than one year 42,128,472 Receivables due within one year 40,454,021 Liabilities due within one year (41,102,696) Brought forward retained earnings as at 1 April 2023 (4,258,981) Carried forward retained earnings as at 31 March 2024 (4,332,537) The effect of the prior year adjustment on the statement of comprehensive income is set out below: Revenue (21,348,550) Cost of sales 21,287,472 Administrative expenses (10,478) The comparative figures and corresponding notes to the financial statements have been restated to reflect the above change in acounting policy.
Page 43
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