Page 8 - AMANGO MODEL ANSWER 2

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employees and investor confidence! To resolve this strategic uncertainty, we have worked from the
best model available: the S-score, and summarized our findings below (detailed workings are in
Appendix 2):

In March 2016, our S-score was -2.64, far below zero, hence it is obvious why we were downgraded
by as much as 2 notches to junk. Today, we are at +0.77, outside the +0.5 cut-off, to signify we are
ready for an upgrade. S-core is a corporate failure prediction model and may have its limitations as it

may ignore qualitative factors e.g. quality of leadership, systems, processes, competitive position,
etc. However, as the S-score uses market values of equity and debt rather than book values, it could
be argued that given our LSE market which exhibits semi strong form efficiency, our share and bond

prices should reflect all available information.

Recommendation: Suspend further disposals of our major assets/businesses.

Justification: The strategic rationale was to raise money to de-leverage our balance sheet, in a
desperate bid to avoid ejection from the London equity 100 index, and return our rating to investment

grade. Our share price has recovered by almost 235% since then (US$3.75 to US$8.8) and that risk
has now subsided; furthermore, our S-score has moved from negative 2.64 when we were
downgraded to now +0.77, above the 0.5 point required to trigger an upgrade.

Actions: Contact the parties with whom we have been in talks to negotiate our exit from those talks.
In the case of Sibanye Gold, and other minor disposals, as the proceeds have been pinned on
complementing our investment in Canada, allow those talks to proceed.

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2017'
www.charterquest.co.za | Email: thecfo@charterquest.co.za