AMANGOS B O A R D Kolawole Ogunkola Akinsete Oladeji Temidayo - - PowerPoint PPT Presentation

s o l u t i o n s

Highstein

Obafemi Awolowo University

Kolawole

Taiwo

Oladeji

Qudus

Akinsete

Mayowa

Ogunkola

Temidayo

P R E S E N T A T I O N T O B O A R D

AMANGO’S

Prioritization of issues

• Corporate Reconstruction and Re‐ organization.
• Balance Sheet Deleverage or Share buy back
• Strategic disposal in Brazil
• Strategic Joint venture Decision in Canada

Priority 1

Corporate Reconstruction

VIEW POINT 2

VIEW POINT 1

VERSUS

X

Z‐ Score 1.006 PRIORITY 1

BCG & APD

core Non core Platinum Diamond Copper Coal Nickel, N&P, I&M, C & others

Recommendations

1. Maintain the identified core business units 2. Monitor the non‐core till 2018 3. Activity based costing for corporate & others.

Priority 2

Balance sheet deleverage or share buy back Deleverage Board decision Criteria Share buy back

6.0% The group’s financial performance Cost of capital and Market Value 5.5% 9% Compliance with laws Socio‐ Political developments in S.A Huge downsize in labour workforce

Applicable Accounting Standard

Investment Portfolio of 21% : IAS 40 Held for sale Portfolio of 71% : IFRS 5 Property Portfolio of 50% : IAS 16

Priority 3

Strategic disposal in Brazil

• Accept the offer of CMOC
• Reject the offer

Benefits

• Total elimination of intra‐group debt
• No additional investment in working capital
• Total avoidance of political risk
• No foreign exchange risk
• More returns of investors of AMA‐NP

Recommendation

Dispose AMA‐NP to CMOC

Priority 4

ERM

Framework Continue the JV with the infrastructure Discontinue the JV with for local partners Discontinue the JV and operate alone Suitability: Pillar C&G Acceptability: High and expected immediate returns Feasibility: Low establishment cost and prevailing market condition

Traditional management accounting systems

• Environmental activity based

costing

• Environmental life cycle costing
• Tripple bottom line reporting

Recommendation

Environmental activity based costing

Ethical Issue 1

• Local communities
• Government
• Employees
• Trade unions
• Investors

Managers’ unethical Decisions Tucker 5 question model Recommendation

• 1. Have a closed door meeting with the trade unions in Australia
• 2. Start operation on the new shaft

Operational risk and industrial action in Australia

Ethical Issue 2 Managing divisional performance group‐wide

Bonus system to divisional managers Professional due care & competence

Recommendation

• 1. Scrap the cash bonus system and employ share option as the new incentives
• 2. Independent ethics compliance committee to be set up.

Ethical Issue 3 PIC’s threat

• Agency theory
• Pillar C

Recommendation

Amango should not dispose its coal and iron ore mones in South Africa

CONCLUSION

• Maintain the core and monitor the non‐core
• Embark on Balance sheet deleverage
• Dispose AMA‐NP to CMOC
• Discontinue the JV with CEPHAS for local partners
• Employ share options as new incentives
• Have a closed door meeting with the trade unions and discontinue

production on the current shaft