Ann: Appendix 4E and Full Year Statutory Accounts, page-38

Has anyone noticed Morgan has stated ANP as an EMERGING COMPANY from the last 2 reports?

Webster defines “emerging” as follows and let’s elaborate on these definitions in the context of an investable company:

1. To rise from an obscure or inferior position or condition - Emerging companies are, in their most common and interesting form, small and obscure. Microsoft and Google were once just a small group of programmers and were deep under-the-radar. And if you were invested in them then, your life changed dramatically for the better as they emerged.
2. To rise from or to come out into view - Emerging companies are often ones that have fallen on hard times and are seeking to “rise from” their current distress via turning around and restructuring their businesses. The banking and real estate sectors are right now treasure troves of fantastic distress and turnaround opportunities, as are arenas like publishing and the automotive industry. As adversity intensifies, so does emerging opportunity.
3. To become manifest - Here we need Webster’s help again – to become manifest, or to be “readily perceived,” or to be “easily understood or recognized.” Emerging company businesses are SIMPLE businesses. They make things or provide services, and sell them for more than they cost to make or deliver. And every quarter and every year, they just “chop more wood” and “carry more water,” and thus drive revenue and earnings growth.
4. To come into being through evolution - This is perhaps my favorite because it references the essence of any business – the talent of its people and the quality of its corporate culture. The best emerging companies are always run by a group of hard-working, thoughtful, creative, persistent, and fantastically committed owner-operators. They devote their lives to their businesses for multiple, non-contradictory motives. They want to offer true value to the marketplace with their product and service offerings. They want to leave a legacy via building enterprises of lasting value and character. And they want to make a lot of money. Accomplishing these 3 objectives in a big way involves a lot of trial-and-error and a lot of figuring out all of the ways not to invent the light bulb. While popular business culture is fascinated with the “golden boy entrepreneur” stories (i.e. Microsoft and Google), these are much more the exceptions than the rule. Far more common are stories like Amazon, Kinkos, The Body Shop, Outback Steakhouse, or even Wal-Mart and Hewlett-Packard – companies that had reasonably long gestation periods, and a lot of slow or no growth periods, before evolving to successful forms. And then continuing to evolve as market and competitive conditions dictate.

If you are a fundamental investor, look for the above qualities in companies you are considering for your portfolio. Look for them quantitatively with the key metric of operating cash flow growth (everything else is subject to accounting whim) and look for them qualitatively in the mindset of management and in the tenor of the corporate culture. If both the numbers and the business tone align and you can get in before the whole world knows about it, then you have yourself a money-maker. Or, another way of saying it, an emerging company.


Yes , as Morgan said: Big year, but even bigger one ahead !