RE: Results out5 Dec 2023 17:44
How can revenues be £170m but transactional value hit £1b?
TTV is the total value of the holiday. The revenues recognised / margin is only a portion of the TTV. This is split between the agent and principal as per the OTB accounting policies.
Seems both reasonable, prudent and conservative (not a recommendation). As the recovery continues the ad spend of last year seems to be money well spent
Group booked TTV (‘TTV’) is the total transaction value of holidays booked in the period before cancellations and adjustments.
As an agent, revenue is accounted on a “booked” rather than “travelled” basis (unlike tour operators and airlines)
As a principal, revenue is accounted on a "travelled" basis and reported on a gross basis and the Group is reporting bookings which departed
Revenue from contracts with customers
The Group applied the following key judgements on the agent vs principal status of each segment as well as the number of performance objections in each.
Performance obligations
Revenue in the OTB, International and CPH segments is recognised based on there being a single performance obligation
at the point of booking. This is to arrange and facilitate the customer entering into individual contracts with principal
suppliers providing holiday related services including flights, hotels and transfers. For the OTB, International and CPH
segments, there is not a significant integration service and responsibility for providing the services remains with the
principal suppliers.
Under IFRS 15 for revenue in the CCH segment, a package holiday constitutes the delivery of one distinct performance
obligation which includes flights, accommodation, transfers and other holiday-related services. In formulating this
conclusion, management has determined that it provides a significant integration service to collate all of the elements
within a customer’s specification to produce one integrated package holiday. Management has further analysed the
recognition profile and concluded that under IFRS 15, revenue and corresponding cost of sales should be recognised over the period a customer is on holiday.
Agent vs Principal
Determining whether an entity is acting as a principal or as an agent requires judgement and has a significant effect on the timing and amount (gross or net basis) of revenue by the Group. As an agent, revenue is recognised at the point of
booking on a net basis. As a principal, revenue is recognised on a gross basis over the duration of the holiday.
In accordance with IFRS 15, revenue for the OTB, International and CPH segments is recognised as an agent on the basis
that the performance obligation is to arrange for another entity to provide the goods or services. This assessment has
given consideration that there is no inventory risk and limited discretion in establishing prices. Revenue in the CCH
segment is recognised as a principal on the basis that CCH have the primary responsib
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