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Collagen Solutions to restructure New Zealand operations
Developer and manufacturer of biomaterials for the "enhancement and extension of human life", Collagen Solutions, announced the proposed restructuring of its New Zealand operations on Wednesday.
The AIM-traded firm said its board, having undertaken an in-depth strategic review of its overall operations and capabilities, had decided to explore a re-structure of the New Zealand operations for it to focus its activities in the area of tissue collection and processing - a segment the board believed to be valued in excess of $100m.
A key component would remain the sourcing of both New Zealand and Australian collagen exclusively for both its customers' and proprietary products.
As well as positioning the New Zealand operations for significant growth over the medium term the proposed restructuring would enable the existing collagen production to be consolidated into Glasgow, and for the company's current disparate research and development resource to be more focused.
The proposed restructuring remained subject to an employee consultation process, expected to be concluded before the end of April.
It was anticipated that, by undertaking the plans, the company would be able to reach a profitable state more quickly than previously planned.
The annual cash cost savings were estimated to be £0.2m, with one-off cash costs estimated to be £0.15m.
There would be associated non-cash asset write-downs that were yet to be determined, but would widen the loss for the year beyond current market expectation.
The company said it would provide a trading update on 12 April.
"There are two sides to making this change, firstly there is the human side, and the potential loss of valued and dedicated employees in New Zealand who through no fault of their own may no longer have a job with Collagen Solutions," said CEO Jamal Rushdy.
"The other side is our responsibility to our stakeholders as a whole, and this change will help our key objectives of building a sustainable, profitable and cash-generative company in the near to medium term."