Small Talk: Events company purchase is a reason to be Cheerful

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The Independent Online

If you have had the misfortune to sit in front of a corporate video, highlighting the questionable virtues of whichever corporation has deemed it necessary to advertise, the chances are that the film has been made by the Aim-listed Cheerful Scout.

Despite its name, the group has nothing do to with toggles, badges or campfires. Yet potential clients need not worry that their corporate film is in the hands of that rarest of groups: teenagers who would rather be orienteering than sat in front of a computer screen.

Cheerful Scout is hoping to extend its offering beyond videos after last week announcing that it has bought some of Twentyfirst Century Communications' events divisions. The company declined to say how much it had spent on the businesses.

It hopes to be organising awards events and stands at shopping centre stands, having taken a number of what it calls Twentyfirst's "key members of staff". As the group describes it: "It will ... provide companies with other opportunities and mediums through which to maximise their corporate message."

The news registered with investors, as the shares jumped 8.3 per cent last week, after putting on a very creditable 71.4 per cent over the last 12 months.

"This is an exciting time for Cheerful as we look to increase our market share by offering a broader service to include corporate events, which we hope will ultimately enhance our future financial performance," chairman, Stuart Appleton, pictured left, said last week.

SMEs prove their worth as UK's best asset class

We have not been shy in pointing out how many investors have had their fingers burnt on small-cap stocks over the past 18 months or so, as a plethora of Aim-listed companies tottered in the wake of the financial debacle. But that is so 2008. Research published last week shows that 2009 was the most fruitful for medium- and small-cap equity investors since 1977.

The RBS HGSC Index, which is published jointly by the Royal Bank of Scotland and professors Elroy Dimson and Paul Marsh at the London Business School, and which measures the performance of the lowest tenth-by-value of the main UK equity market, was released last week.

In 2009, the HGSC gave a total return of 54.2 per cent, which is 24.1 percentage points above the FTSE All-Share. The HG1000 XIC "minnows" index, which covers the bottom 2 per cent of the market, ex-investment companies, had an even higher return and beat the FTSE All-Share by 45.7 percentage points.

"The HGSC staged a major recovery in 2009. Mid- and small-cap companies thus ended the decade with cumulative, 10-year performance that is among the best of the major UK asset classes. An investment 55 years ago of £1,000 in the HGSC, with dividends reinvested, would today be worth £2.6m, as compared to £500,000 if the investment had been in the FTSE All-Share," said the professors in a statement.

This will be soothing news to investors, who will be hoping that 2010 is similar to last year. However, and we hate to point it out, the recovery comes only after a terrible 2008, when equities were well and truly bashed.

New entrants to Aim is lowest for a decade

Of course, every silver lining has a cloud. The good news and bonhomie created by the HGSC Index was somewhat checked by the accountancy and advisory group Deloitte, which last week pointed out that, while the index may have improved, the number of Aim admissions last year dropped to their lowest level for more than 10 years. The total number of companies on the exchange fell by 24 per cent from the market's peak, which was seen as recently as 2007.

According to the group, just 36 new entrants came to Aim in 2009, down from 114 in 2008.

The Deloitte analysts also pointed out that Aim outshone the FTSE all-share in 2009, by 66 per cent, while the number of companies with market capitalisations of more than £100m shot up from 77 in 2008, to nearly 150 now; no doubt helped by strong equity prices.

"Although 2008 proved the crunch-point for the economy, the repercussions were felt in 2009," said Richard Thornhill, a capital markets director at Deloitte. "Since the number of companies on Aim peaked in 2007, there has been a steady stream of companies de-listing from the market. The reasons for this are twofold; either the underlying business has suffered through problems in the wider economy, or the management team has decided that their listing is not giving them value for money, and therefore they de-list as a cost-cutting exercise.

"This trend has continued throughout 2009, with 293 companies de-listing compared with 258 during 2008. This leaves the total number of companies on Aim at 1,293 at 31 December 2009 compared with 1,549 at the end of 2008, a net fall of 17 per cent in the year, and a fall of 24 per cent or 401 companies compared to the peak in the market at the end of 2007."