Playing safe after market caught cold over NHS’s sloth

Surgical Innovations started the year at 6.88p and ended it at 6.00p, a fall of 12 per cent.

So what went wrong? To be honest, nothing. In September the keyhole surgery toolmaker reported a sharp rise in profits thanks to strong sales in the UK and the US.

The Leeds-based firm said its “resposable” instruments are proving very popular in both markets. These part reusable and part disposable instruments consist of a long-lasting reusable element and cheap throwaway parts that are only used once.

Surgical said the instruments can save £300 per operation – which could offer the NHS savings of tens of millions of pounds.

The problem is that the NHS is notoriously slow to adopt new technologies and shareholders are wary of that.

This is despite Surgical signing up another 25 hospitals with more to come. In total there are around 450 hospitals in the UK, giving the group a large market to aim for.

At the end of October, Surgical’s shares rose 10 per cent to 7.75p after the group announced plans to build a 58,000 sq ft facility at Thorpe Park in Leeds, but alas since then the market has taken fright and the shares have fallen.

I still maintain the company will prove the market wrong with a strong increase in take-up of its instruments over the coming year.

Having been burnt last year, I’m opting for the safe bet of equipment hire firm Vp for 2014.

The Harrogate-based company reported a leap in half-year profits and has seen a notable improvement in the residential and infrastructure sectors.

The group said this has contributed to a “significant” improvement at its main businesses.

Vp’s chairman Jeremy Pilkington said: “People seem to have made the decision to get on with life. It’s a glass half-full view and we’re seeing the benefits of that.

“We’ve had a fantastic set of results. Profits are up, revenues are up. It’s an extremely good performance.”

Half year pre-tax profits rose 17 per cent to £12.8m and revenue rose nine per cent to £91.3m.

Analyst Nick Spoliar, at WH Ireland, said: “Vp is a leading player in the plant and equipment rental market – but with a difference, the specialist nature of nearly all its businesses. These tend to be very well established and Vp is a market leader in almost everything that it does.”

Vp’s shares closed 2013 at 666p, which I hope is not an ominous sign...