KEYHOLE surgery instruments maker Surgical Innovations said it had built a “stronger platform” for the future, after a turbulent year in which it lost its chief executive and faced challenges in the US.
Last year, Surgical also abandoned plans to move to a new clinical training centre in Leeds, which would have been a key element of a new medical park. However, Doug Liversidge, the non-executive chairman, praised the work of entrepreneur Chris Rea, who became the company’s interim managing director last year.
Mr Liversidge said that Mr Rea, who is the founder of AES Engineering, was an expert in product development, and had brought a comprehensive range of skills to the business.
Mr Liversidge added: “He’s a winner and I’m so grateful to have him in the company.”
The Yorkshire Post understands that it could be several months before a permanent MD is found. In September last year, Surgical revealed that its CEO, Graham Bowland had left the company.
In the financial year ended December 31 2014, the Leeds-based company’s revenue was £4.029m, compared with a restated figure of £7.478m in 2013.
The loss before tax was £9.829m, compared with a restated figure of £44,000 in 2013. The company successfully completed a refinancing during November 2014, comprising new investment of £1.5m and the refinancing of an existing £3m term loan.
Mr Liversidge added: “The board and staff of SI have worked tirelessly over the last six months with the key objective of restructuring the business to secure a sustainable future for the group. Following a turbulent 2014, the group now has a stronger platform to support the business over the medium term. The board remains committed to cash generation and the directors are satisfied with the progress made since the refinancing was announced.”
In June 2014, the group secured equity funding of £1.578m from Mr Rea, who also became a non-executive director. Mr Rea was appointed as interim managing director in October last year.
In November 2014, the group raised £0.526m of equity funding and £1m through a fixed rate convertible unsecured loan note from the group’s largest shareholders, Mr Rea and Getz Bros & Co (BVI) Inc. Yorkshire Bank also agreed to convert its £3m revolving credit facility into a term loan, which is due for repayment in 2017. Mr Liversidge said the cash position improved during the first quarter of 2015. Despite this progress, trading profitability remains challenging.
Mr Liversidge added: “In particular, driving down our own inventory levels to maximise cash has a direct, negative impact on our manufacturing productivity.”
The group also said it experienced “severe challenges” within the US market.
The statement added: “During 2013 the group added several new distributors which resulted in initial stocking orders. However projected orders for 2014 failed to materialise as a consequence of over-ambitious hospital conversion rates. To put this in context, only one of these new distributors has been retained.
“However, the US market remains a key focus for the group, as it is the largest market in the world for laparoscopic surgery.”