Sunday, April 26, 2009

NCP Services driven into the red as debts pile up

NCP Services driven into the red as debts pile up
Simon English

NCP Services, the parking-tickets and car-clamping business owned by private-equity house 3i, has plunged into a loss after running up hefty debts.

Accounts just filed at Companies House show that the firm has accrued losses of £23 million, partly thanks to a £103 million debt pile.
It is paying almost £10 million a year just to service this debt.

A note in the accounts reveals that it recently agreed revisions to its senior debt facility, although the company strongly denies suggestions it was close to breaching any of its covenants.

The company was spun out of National Car Parks in 2007 and relies largely on contracts from local councils such as Westminster. It has deals with 60 councils at present.

Alongside the traffic-wardens business, it operates six London bus routes and runs a debt-recovery arm.
A new management team was parachuted in last year to overhaul the company, since when it claims to have turned in a strong performance.

Chief financial officer Steve Dolton said: "We have refinanced on excellent commercial terms. We have turned the business around and are looking to expand. The business is extremely solvent."
The company has just bought 17 new buses - a sign of its own confidence in the future, says Dolton.
Contracts with Camden and Westminster are up for tender next year, with NCP optimistic that it is in a good position to retain the business.
"I would say our relationship with our customers is very good," says Dolton.

The debt is equally held by Royal Bank of Canada and Lloyds Banking Group. Dolton says the banks are happy with the finances and are not applying any pressure for an early repayment of the debt.
A hedge against interest-rate movements cost the firm £2.9 million.
According to the accounts, the highest-paid director - assumed to be chief executive Mark Underwood - got £450,000 last year.
He joined the company last June from the Geo Group.
NCP Services was founded in 2000 to take advantage of the increasing demand for parking enforcement services from local councils.
It is majority owned by private-equity house 3i, while management has a minority holding.
Former parent company NCP is now owned by Australia's Macquarie Bank, which bought the business from 3i in 2007 for £790 million.

The traffic services business has faced trade union disputes in the recent past, with GMB in particular riled by what it sees as asset-stripping and profiteering by 3i.

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