OCS sells Envirocomp back to owners after writing down value to zero

OCS Group has sold Envirocomp back to the original owners after writing down the value of the Christchurch-based composting firm to zero last year.

Frontier Group Partners, a consortium including Envirocomp founder Karen Ashby, bought the local firm for an undisclosed sum, and plans to review the operations with a view to introducing new technology to expand the business, OCS said in a statement.

The New Zealand unit of UK facilities management group OCS bought Envirocomp in February 2011 for $979,000, attributing $705,000 of goodwill to the New Zealand company. At the time of purchase, the company's accounts said Envirocomp generated annual revenue of $185,000 a year.

In calendar 2015, OCS Group NZ wrote down that subsidiary's goodwill to zero and said Envirocomp's closure meant the group will repay the bank loan and other liabilities attached to the unit and an intercompany receivable will potentially be written off in 2016.

In February last year, OCS New Zealand took out a $1.5 million loan from HSBC secured over Envirocomp, and as at December 31 owed $1.2 million to related parties.

OCS managing director Gareth Marriott said his company had made a "significant investment in research and development in Envirocomp over the past five years" and is still committed to operating in an environmentally sustainable manner across its remaining businesses.

In 2010, Envirocomp received a $30,000 grant from the government's waste minimisation fund to identify a market and location for a nappy composting facility in the Wellington region, and a year later received a $700,000 grant to build a facility in the Wellington region.

Envirocomp operates facilities in Canterbury and Wellington, collecting and processing residential and commercial sanitary, incontinence and nappy waste which it estimates reduces each region's landfill waste by about 7,200 tonnes.

OCS New Zealand generated a profit of $2.2 million on revenue of $127 million in calendar 2015, compared with a profit of $4 million on sales of $118.9 million a year earlier.

(BusinessDesk)

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