CORPORATE GOVERNANCE

THE BOARD REQUESTED THAT AECI'S MANAGEMENT "CONTROL WORKING CAPITAL AGGRESSIVELY". IN THE 2009 FINANCIAL YEAR, THE GROUP'S NET WORKING CAPITAL AS A RATIO OF REVENUE IMPROVED TO 15,9% FROM 19,2% AT THE END OF 2008. CASH MANAGEMENT WAS EXCELLENT AND THE REDUCTION IN WORKING CAPITAL DELIVERED MORE THAN R1 BILLION IN CASH. THE EFFORTS OF CHEMSERVE IN THIS REGARD WERE PARTICULARLY COMMENDABLE.

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KEY RISK PROFILE

The main operational risks currently facing the Group are:

impacts of the recovery from the global economic crisis. The following are of concern to management:
» liquidity of the Company should commodity prices increase sharply and rapidly;
» liquidity of customers as revenue recovers; and
» credit risk in respect of customers, especially those based outside of South Africa.
successful ramp-up of Senmin's polyacrylamide plant and AEL's automated detonator plant;
enabling a Group structure that ensures optimal performance in terms of good corporate governance to support the entrepreneurial spirit of the business; and
safety, health and environmental (SHE) considerations. These are risks which are inherent in AECI's businesses. The well-being of employees and contractors, customers and the community at large is of paramount importance. Further, it is essential that AECI protects the environment in which it operates so as to continue being an acceptable corporate citizen in the territories in which it has a presence.