KEYHOLE surgery instruments maker Surgical Innovations said there is a “strong likelihood” it will shelve plans to relocate to a state-of-the-art clinical training centre in Leeds after what it described as “very disappointing” results.
The Leeds-based company was seen as a key player in the creation of a new medical park of international standing in Yorkshire, based at Thorpe Park in Leeds.
The group had secured a £5m Regional Growth Fund grant to build a state-of-the-art 10,000 sq ft clinical training centre in Leeds, as part of a 58,000 sq ft facility.
Surgical’s chief executive Graham Bowland said a decision over the park will be taken in the next few weeks.
The group’s chief financial officer Mike Thornton said: “The project is at risk. We wouldn’t flag it up unless there was a strong likelihood it will be terminated. It is very much at risk.”
Surgical said that given the recent performance of the business, the project will be reviewed with key stakeholders over the coming weeks which may lead to it being terminated. It has written off its £420,000 investment to date as an exceptional item.
Surgical was due to be one of the first tenants at the new medical park.
A spokeswoman for the project’s developer Scarborough Development Group said: “Scarborough continues to maintain regular contact with Surgical Innovations and is committed to working alongside them to deliver their new showcase facility in the Leeds Medi Park quarter of Thorpe Park.
“Thorpe Park is one of the most successful business parks in the north of England. The forthcoming phases of the scheme will include an additional 1,500,000 sq ft of development including a foodstore, further retail, hotels, leisure and restaurants alongside business space and 145 acres of parkland.
“As part of this major, transformative, scheme Scarborough intend to bring forward Leeds Medi Park in the near future, and the new Surgical Innovations building is an important catalyst in this regard.
“The vast majority of the development at Thorpe Park however does not rely on Leeds Medi Park proceeding.”
A spokesman for Leeds City Council said: “Planning permission for Thorpe Park creates an opportunity for a range of exciting developments to come forward. Leeds City Council will continue to work with Thorpe Park to support their ambitions and to ensure they come to fruition.”
Leeds Chamber of Commerce declined to comment and Leeds and Partners, which attracts investment to the area, was unavailable for comment.
Surgical reported a £3.2m pre-tax loss for the six months to June 30, down from a £600,000 profit last year.
The group has been hit by problems with its entry into the US market.
Surgical makes products for big US conglomerates to sell under their own brand names, but it has found itself at the whim of large US companies that have changed their minds over orders.
“It’s very hard to push a large American corporation to drive a product,” said Mr Bowland.
The group will now only develop products for firms that will add value to the SI brand.
Surgical is now running its inventory down and an impairment review has led to a charge of £1.7m.
Mr Bowland said: “We’re all extremely disappointed, but it’s best for the company to undertake the rebalancing.”
He added that the group’s bankers Yorkshire Bank are being “supportive” and major investor Chris Rea, the founder of AES Engineering, is “supportive of the changes we’re making to the company”.
Asked whether there is investor pressure for members of the board to step down, Mr Bowland said: “Not at this point. There’s no evidence to suggest investors think that.”