Comtec closes in on refinancing deal as it sets sights on future ‘Utopia’

Comtec closes in on refinancing deal as it sets sights on future ‘Utopia’

Travel technology specialist Comtec says it is hopeful of a successful conclusion to refinancing talks with its bank after it lost a major north american customer.

Travel Impressions sale in April last year, by American Express to Apple Leisure Group, saw a major project suspended and the closure of Comtec’s Canada office to cut costs.

According to the latest report, filed with Companies House last month outlining trading to December 2012, business was due to be adversely affected in 2013 and early 2014.

Comtec’s 2012 figures show total sales were up marginally on the previous year to £10.92 million and of this £2.76 million came from non-UK business.

Profitability as measured by EBITDA, before restructuring costs were taken into account, was up 21% to £2.47 million.

Comtec said this strong growth in both revenue and EBITDA was primarily driven by more work with existing clients.

The 2012 accounts showed an operating loss of £6.62 million in 2012, up from £2.49 million in 2011.

This came after restructuring costs of £124,000 for the year, plus depreciation and amortisation of goodwill of £3.96 million.

It added that an impairment review of goodwill – an assessment of a company’s worth beyond its assets – was undertaken during the year resulting in a write down of £4.92 million.

In 2008 RJD Partners completed a management buyout of Comtec with financing provided by HSBC.

The firm’s auditor KPMG states in the 2012 report that Comtec’s future performance was subject to hitting increased cashflow targets as well as agreeing a refinancing with HSBC.

It said it would be materially affected if it is not able to reach an agreement on loan repayments, an overdraft facility and further support from its lead investor.

Kevin Gordon, Comtec chief executive, said he was expecting a positive outcome to be reached by next month ahead of the filing of the firm’s 2013 accounts.

“The bank is happy; we have got our debt down to an all-time low level because we have been paying back quite aggressively over the last couple of years.

“They [HSBC] are very supportive and our private equity backers are supportive of the business.

“The major focus of the business now that the major [restructuring] changes have been done is focusing on solutions for the future for customers and prospects.

“We have been getting fantastic feedback from customers and prospects. We needed to reinvest in the product and that’s what Comtec’s future will be built on.

“The market is probably aware that the products have not moved forward as they could have done over the last four to five years.”

Gordon said the loss of the Travel Impressions business coincided with Comtec’s original five-year financing arrangements coming to an end.

However, he was confident that project will restart this year following the acquisition by Apple Leisure Group.

“It was appropriate to review all our options and make the right decision for the future of the company,” he said.

Internally a project known as ‘Utopia’ is already seeing new functionality made available to tour operator partners using its Travelink system.

“This is about providing solutions for the big boys but also a really competitive product in the mid-market and for more repeat implementations than we’ve got at the moment.

“The likes of Thomas Cook are already starting to see the benefits of some of the performance enhancements to support peak trading.”

Gordon said that Comtec was now focusing on the needs of its customers’ customers, developing technology that allows websites to work faster and across devices

“If customers do not get the experience they want, everything else is pretty pointless. We have started with the consumer and worked backwards.”

Comtec was one of the early pioneers of travel technology and its systems are used widely in the UK by tour operators and travel agencies including the big two, Cook and Tui Travel.

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