P R E S E N T A T I O N T O AMANGO’S B O A R D Kolawole Ogunkola Akinsete Oladeji Temidayo Taiwo Mayowa Qudus Highstein Obafemi Awolowo University s o l u t i o n 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 1 VIEW POINT 2 VERSUS X Z‐ Score 1.006 PRIORITY 1 BCG & APD Non core core Nickel, N&P, I&M, C & others Platinum Diamond Copper Coal 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 Share buy back Board decision Criteria Deleverage 6.0% The group’s financial performance 9% 5.5% Cost of capital and Market Value Socio‐ Political Compliance with laws Huge downsize in labour developments in S.A 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 Discontinue the JV Discontinue the JV Continue the JV and operate alone with for local with the partners infrastructure 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 Operational risk and industrial action in Australia Managers’ unethical Decisions Tucker 5 question model • Local communities • Government • Employees • Trade unions • Investors Recommendation 1. Have a closed door meeting with the trade unions in Australia 2. Start operation on the new shaft
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
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