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Contents

CorporateGovernanceReport2014

01. Application of Corporate Governance PrinciplesGovernance Structure

02. Transactions of the BOD and their relatives of first degree in the Company Securities during the year 2014

Transaction LawTransaction in Securities

03. The Board of DirectorsComposition of the Board of DirectorsProfile of the Members of the Board and Brief overviewRemuneration of the Members of the BoardMeetings of the BoardDelegation to Executive ManagementNames and Remuneration of Senior Executive ManagementDealing with Related Parties

04. External AuditorOverview of the External AuditorExternal Auditor Remuneration

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P.O. Box - 4714,Ras Al Khaimah, United Arab Emirates (U.A.E)Tel : +971 7 2445046 Fax: + 971 7 [email protected]

Board Committees .05Audit Committee

Audit Committee MeetingsNomination and Remuneration Committee

Nomination and Remuneration Committee Meetings

Internal Control Department .06

Violations Committed .07

Corporate Social Responsibility .08

General Information .09Stock Market Data

Distribution of Shareholder OwnershipOwnership of Major Shareholder

Conclusion .10

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2014

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Ras Al Khaimah Ceramics (the “Company”) considers sound corporate governance to be one of the pillars for running a responsible, profitable and sustainable business that creates value. An organisational commitment to corporate governance drives enhanced management accountability, creates value for shareholders and protects the interests of all stakeholders and the community.

RAK Ceramics has adopted a comprehensive set of corporate governance policies and procedures that draws upon global best practice and is in accordance with all relevant UAE legislation including Ministerial Resolution No. 518 of 2009 concerning corporate governance rules and corporate discipline standards. This ensures that the utmost vigilance is exerted by the Board of Directors, Executive Management and Employees of RAK Ceramics.

Major shareholding changes took place in the month of June 2014 whereby an international private equity group, SAMENA CAPITAL (along with their consortium partners) became the single largest shareholder. This has globalised the shareholding base of the Company and provided impetus to strengthen the Corporate Governance in line with global best practices.

RAK Ceramics | Corporate Governance Report 2014

01 Application of Corporate Governance Principles

Application of Corporate Governance Principles

A number of initiatives were undertaken in 2014 to further strengthen the Group’s Corporate Governance framework, the significant ones being:

• Increasing the Board size from five to seven members.• Reconstitution of Board committees including the appointment of an expert to assist the Audit Committee.• Creating an Executive Committee comprising two Executive Directors and the CEO to assist the Board in strategic and monitoring

responsibilities.• Implementation of a Value Creation Plan to enhance shareholder value• Reorganising the Board structures and memberships of select group companies to improve their effectiveness and accountability

to the ultimate parent. • Implementation of a conflict of interest policy to promote transparency and objectivity.• Implementation of a non-audit services policy in relation to work that may be performed by the independent auditor to provide

additional assurance that their independence is not impaired in accordance with the guidance provided in UAE Ministerial Resolution No 518 of 2009.

The roles and responsibilities of the Board are segregated from the functions of executive management, whereby the Board assumes overall supervision for the strategic growth of the Company and provides direction through the approval of strategic initiatives, policies and objectives, while the day to day affairs of the Company are carried out by the executive management led by the Chief Executive Officer (CEO) of the Company.

An Executive Committee has been formed in 2014 to assist the Board in its strategic and monitoring responsibilities. The Committee, comprising two executive directors and the CEO, meets every fortnight to review strategic matters including progress made on the value creation plan and provide guidance to the executive management. It operates under the direction of the Board and provides periodic updates to the Board.

Thus, by exercising best corporate governance practices, the Company ensures that the interests of the stakeholders are protected and the company meets all its statutory and regulatory obligations.

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The annual corporate governance report aims to ensure a transparent disclosure of the governance practices applied by the Company. These practices include monitoring of:

• the capital structure,• internal control processes and systems,• shareholders’ rights,• the charters of the Board and its committees,• related party transactions policy,• auditor independence, rotation, and the periodic review of the principles of professional conduct.

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Application of Corporate Governance Principles

Organisation Structure:

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(02.1) Transaction LawThe Company has adopted rules regarding dealing in the Company’s securities by the members of the Board, their first degree relatives and key management personnel. These rules are based on Article (38) and (39) of the Federal Law No. (4) Of 2000 concerning Securities and Commodities Authority, and Article (14) of Resolution No. (2) of 2001 concerning the regulations as to trading, clearing, settlement, transfer of ownership and custody of securities, and Article (36) of Decision No (3) of 2000 concerning the regulation on transparency and disclosure and Article (3.14) of the ministerial resolution No (518) of 2009 concerning the Corporate Governance and Corporate Discipline Standards. The above mentioned rules were approved and endorsed by the Board and approved by the Securities and Commodities Authority (SCA). The rules specifically require directors and key management personnel not to engage, without prior approval of the Board, in any trade of Company shares held by them for less than three years.

Name Relation Type of Transaction Number of Quantity

H.H. Sh. Saud Bin Saqr Al Qasimi Father of the Chairman Sell 250,000,000

Emirates Rock and Marbles (Sole Proprietary Owned by H.H. Sh Saud Bin Saqr Al Qasimi)

Father of the Chairman Sell 27,622,394

(02.2) Transactions in SecuritiesThe following information shows the dealings of the members of the Board, their first degree relatives and the key management personnel, in the Company securities during the year 2014:

Transactions by the members of the BoardFollowing were the transactions by the Members of the Board, and their first degree relatives, in the company securities during the year 2014.

(03.3) Transactions by Key Management PersonnelThere are no transactions by key management personnel, in the company securities during the year 2014.


02 Transactions of the Board and their relatives of first degree in the Company Securities during the year 2014

Transactions of the BoD and their relatives of first degree in the Company Securities during the year 2014

7Transactions of the BoD and their relatives of first degree in the Company Securities during the year 2014

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The Board is responsible to the Company’s shareholders for creating and delivering sustainable value through prudent management of its business and associated risks. In particular, the Board is responsible for strategic direction, supervision of management and adequate controls to drive the success and long term value creation of the company. The Board plays a central role in the corporate governance framework by ensuring that the Company complies with obligations arising from its legal and regulatory requirements; its memorandum and articles of association and duties towards the shareholders.

(03.1) Composition of the Board of DirectorsThe current Board consists of seven members:• the Chairman (Non-Executive, Independent),• four Non-executive and Independent Directors, and• two Executive Directors.

The majority of the Directors meet the requirement for being non-executive and independent. Therefore, the Board composition satisfies the requirements of Article (3.2) of Ministerial Resolution No. (518) of 2009.The term of current members of the Board will expire on 27 May 2015.

Five members were elected in the General Assembly Meeting held on 28 May 2012 for a term of three years. Two members were subsequently elected on 13 July 2014 after the Board strength was increased from five to seven with shareholders approving the amendment of the articles of association in an Extraordinary General Assembly.

The following table describes the composition of the Board of Directors:


03

The Board of Directors


Sr Name Category QualificationsPeriod as

Board MemberOther Current

Position in any P.S.Cs.Positions at any

Governments Dept.

1 H.H. Sh. Mohammad Bin Saud Al Qasimi

Chairman Non-Executive, Independent

- Bachelor’s degree in Political Science from the University of California, USA

April 2009(6 years) - Chairman of Investment Development Office (IDO)

RAK, Chairman of Board of RAK Gas Commission

2 Shirish Saraf Vice ChairmanNon-Executive, Independent

- BSc (Economics) from London School of Economics and political Science

June 2014(First Year) - -

3 Sh. Ahmed Bin Humaid Al Qasimi

MemberNon-Executive, Independent - Bachelor’s degree from military college in Egypt. January 1996

(19 Years) Chairman of RAK White Cement (P.S.C) -

4 Mr. Khalid Ali Saif Al Yahmadi MemberNon-Executive, Independent

- Bachelor of Science in Finance- Master of Science in Accountancy and Finance - CPA, USA - CIFP, Malaysia

July 2014(First Year) - -

5 Mr. Ramesh Venkataraman MemberExecutive Non-Independent

- MPA, Economics and Public Policy.- MPhil, International Relations.- BTech, Electronics and Communication Engineering.


6 Mr. Khaled Abdulla Yousef Abdulla Aal Abdulla

MemberExecutive Non-Independent

- Bachelor’s degree in Business Management majoring in Management Information System, from University of Arkansas, USA

May 2012(3years) - -

7 Sh. Kayed Bin Omar Al Qasimi MemberNon-Executive, Independent - Bachelor’s programme, Sharjah University August 2014

(First Year) - -

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Sr Name Category QualificationsPeriod as

Board MemberOther Current

Position in any P.S.Cs.Positions at any

Governments Dept.

1 H.H. Sh. Mohammad Bin Saud Al Qasimi

Chairman Non-Executive, Independent

- Bachelor’s degree in Political Science from the University of California, USA

April 2009(6 years) - Chairman of Investment Development Office (IDO)

RAK, Chairman of Board of RAK Gas Commission

2 Shirish Saraf Vice ChairmanNon-Executive, Independent

- BSc (Economics) from London School of Economics and political Science

June 2014(First Year) - -

3 Sh. Ahmed Bin Humaid Al Qasimi

MemberNon-Executive, Independent - Bachelor’s degree from military college in Egypt. January 1996

(19 Years) Chairman of RAK White Cement (P.S.C) -

4 Mr. Khalid Ali Saif Al Yahmadi MemberNon-Executive, Independent

- Bachelor of Science in Finance- Master of Science in Accountancy and Finance - CPA, USA - CIFP, Malaysia


5 Mr. Ramesh Venkataraman MemberExecutive Non-Independent

- MPA, Economics and Public Policy.- MPhil, International Relations.- BTech, Electronics and Communication Engineering.


6 Mr. Khaled Abdulla Yousef Abdulla Aal Abdulla

MemberExecutive Non-Independent

- Bachelor’s degree in Business Management majoring in Management Information System, from University of Arkansas, USA

May 2012(3years) - -

7 Sh. Kayed Bin Omar Al Qasimi MemberNon-Executive, Independent - Bachelor’s programme, Sharjah University August 2014

(First Year) - -

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Members of the Board have the requisite expertise and management skills to perform their duties in furthering the best interest of the Company. Members of the Board are selected through a cumulative voting process as per the guidelines issued by the SCA.

(03.2) Board Member Profiles:

SHIRISH SARAFVICE CHAIRMANNON-EXECUTIVE, INDEPENDENT

Board member since 2014. Founder & Vice Chairman of Samena Capital. In June 2014 led the a acquisition of a significant stake in RAK Ceramics PSC. Prior to founding Samena Capital, he was a Co-Founder and Managing Director of Abraaj Capital, which grew to become one of the largest global private equity firms managing in excess of US$6 billion. In 1998 founded Oriel Investment Company, which emerged as one of the leading regional corporate finance firms. Currently Vice Chairman of Samena Capital and RAK Ceramics P.S.C and has previously held numerous directorships including Aramex Holdings, Abraaj Capital, Commercial Bank of Oman SAOG, EFG Hermes and Amwal Capital (Qatar). In September 2013, listed as one of Asia’s 25 most influential people in Private Equity by Asian Investor’s Mr. Saraf was educated at Charterhouse (England) and holds a BSc (Economics) from the London School of Economics.



03 The Board of Directors

SHEIKH MOHAMMAD BIN SAUD AL QASIMICHAIRMANNON-EXECUTIVE, INDEPENDENT

Crown Prince of the Emirate of Ras Al Kamiah. Chairman of the Board since 2011. Appointed to the Board in 2009, becoming Vice-Chairman later that year. Also Chairman of Investment Development Office, Chairman of the Board of Directors of RAK Gas Commission and Chairman of Majan Printing and Packaging. Holds a Bachelor’s Degree in Political Science from the University of California, USA.

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SHEIKH AHMED BIN HUMAID AL QASIMIBOARD MEMBERNON-EXECUTIVE, INDEPENDENT

Board member since 1996; reappointed at the 2012 Annual General Assembly. Also Chairman of RAK White Cement and RAK Porcelain (a RAK Ceramics Group Company). Holds a Bachelor’s Degree from the Military College in Egypt.


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SHEIKH KAYED BIN OMAR BIN SAQR AL QASIMIBOARD MEMBERNON-EXECUTIVE, INDEPENDENT

Board member since 2014. Sheikh Kayed is a young businessman with multiple business interests in the UAE.

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(03.2) Board Member Profiles:

KHALED ABDULLA YOUSEF ABDULLA AAL ABDULLABOARD MEMBEREXECUTIVE, NON-INDEPENDENT

Board member since 2012. Also supports RAK Ceramics’ international manufacturing plants. Has over 23 years of experience providing fiscal, strategic and operations leadership with expertise in finance, budgeting and cost management, public relations and media, strategic planning, sales and marketing, profitability and cost analysis and policy and procedure development. Executive Member of the Board for RAKIA, RAKFTZ and RAK Chamber of Commerce. Founder of KAY Invest, a locally based investment company with a diverse portfolio including finance, properties and trading. Currently, CEO and Member of the Board of Directors, Majan Printing and Packaging Co. one of the largest printing and packaging company’s in the Middle East. Holds a Bachelor’s Degree in Business Management from the University of Arkansas, USA.

KHALID ALI SAIF AL YAHMADIBOARD MEMBERNON-EXECUTIVE, INDEPENDENT

Board member since 2014. Investment Director, Oman Investment Fund, leading the resources, manufacturing, and investment team. Previously Chief Investment Officer at Almadina Financial Services. More than 12 years’ experience in investment banking, corporate finance, and private equity investments. Lectured in Economics at Sultan Qaboos University, Oman. Studied at the University of Illinois, USA.

RAMESH VENKATARAMANBOARD MEMBEREXECUTIVE, NON-INDEPENDENT

Board member since 2014. Senior Managing Director of Samena Capital. Previously, Co-Founder and Managing Partner of Avest, an Asian direct investments platform. From 2007 to 2010 was a Managing Director with Bridgepoint Capital, the leading European mid-market buyout firm, responsible for leading technology and digital media investing and developing Bridgepoint Asia. Prior to joining Bridgepoint Capital was a Partner with McKinsey and Company for 14 years and led the firm’s High Tech and Telecom practice for Asia. Educated at the Indian Institute of Technology, Kharagpur. He also holds an M.Phil in International Relations from Oxford University and an M.P.A in Economics and Public Policy from Princeton University’s Woodrow Wilson School of Public and International Affairs.



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03

(03.3) Remuneration of the members of the BoardRemuneration for members of the Board is calculated as a percentage of the net profit of the Company and is approved by the shareholders of the Company in a general assembly meeting based upon the recommendation from the Board. The remuneration is governed by the requirements of Article (7) of the ministerial decision No. (518) of 2009 concerning governance rules and corporate discipline standards, and Article (118) of the commercial companies Law No. (8) for 1984.

Board remuneration for the year 2013 was AED 2,400,000.

For 2014, AED 3,050,000 has been proposed as Board remuneration for shareholders’ approval in the General Assembly Meeting to be held on 26 April 2015.

The Board members were eligible for sitting fees for attending meetings of the Board and its committees until September 11, 2014 as follows:

The Chairman of the Board and any of its committees – AED 10,000 per meeting

Members of the Board and any of its committees – AED 5,000 per meeting

The Board decided to discontinue the sitting fees in their meeting held on September 11, 2014.

Mr. Khaled Abdulla Yousef Abdulla Aal Abdulla draws a monthly salary of AED 100,000 for his services rendered.

Mr. Ramesh Venkataraman draws a monthly salary of AED 141,667 for his services rendered.



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(03.4) Meetings of the Board of DirectorsBoard Meetings are held regularly, or when requested by the Chairman, or when demanded by at least two thirds of members of the Board. Notice of a meeting is communicated to all Directors at least one week prior to the meeting. In this regard, any member can add a subject to the meeting agenda. The Company’s Articles of Association also provide detailed information on the attendance, quorum, voting and meeting requirements. The Board periodically undertakes a review to ensure that it is adequately fulfilling its roles and responsibilities.

In 2014, the Board held seven (7) meetings as follows:

Date of meeting Attendance

13-Mar-2014 100%30-Apr-2014 100%20-May-2014 100%28-Jun-2014 100%10-Aug-2014 100%11-Sep-2014 100%12-Nov-2014 100%

The attendance of members of the Board at these meetings and the General Assembly Meeting held on 17th April 2014 is as follows:

13-Mar-2014

30-Apr-2014

20-May-2014

28-Jun-2014

10-Aug-2014

11-Sep-2014

12-Nov-2014

H.H.Sh. Mohammad Bin Saud Al Qasimi P P P P P P PShirish Saraf N/A* N/A* N/A* N/A* P** P PSh. Ahmed Bin Humaid Al Qasimi P P P P P** P** P**Hamad Abdullah Al Muttawa P P P N/A* N/A* N/A* N/A*Ramesh Venkataraman N/A* N/A* N/A* N/A* P** P PKhalid Ali Saif Al Yahmadi N/A* N/A* N/A* N/A* P** P** PDr. Mohammad Abdulatif Al Shehhi P P P P N/A* N/A* N/A*Khaled Abdulla Yousef Abdulla P P P P P** P PSh. Kayed Bin Omar Al Qasimi N/A* N/A* N/A* N/A* N/A* P PFees (AED) 30,000 30,000 30,000 25,000 40,000 40,000 --

Attendance Date

N/A* Not a member of the Board at the time of the meeting P** Participated through conference call.


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03 The Board of Directors


(03.5) Delegation to Executive Management:In accordance with the corporate governance code issued by the SCA, the Board has adopted a clear policy on segregation of duties between the Chairman of the Board and the CEO.

The CEO is appointed by the Board. The primary role of the CEO is to define and execute the business vision, mission, strategy and manage the organisation. He is responsible for the overall operations, profitability, and achievement of objectives set by the Board.

In line with this policy, the day-to-day operations of the Company are managed by Mr. Abdallah Massaad, CEO of the Company since June 2012. He is assisted in his duties by an experienced and qualified executive management team. Executive management of the Company is committed to strengthening the governance framework in the organisation by strict adherence to the Company’s policies and procedures.

The Board of Directors gives executive management the authority to represent the Company in certain financial and administrative transactions and sign on its behalf within prescribed limits.

Names, positions, date of appointment and remuneration of Senior Executive Management as of 31 December 2014 in AED thousands:

# The CEO is also eligible for company performance and profitability based incentive.$ The amounts pertain to part of the year.* Resigned in March 2014

Name PositionAppointed

DateTotal Salary Paid for 2014

Total Inc. bonus and incentive

Abdallah Massaad CEO# 2-Jun-2004 1,358 4,936Manish Joshi CSO 1-Aug-2004 1,273 1,488Pramod Kumar Chand CFO$ 17-Jul-2012 908 998Manoj Aheeray CFO* 16-Jun-2003 515 515Total 4,054 7,937

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(03.6) Dealing with Related Parties:Related parties represent some of the members of the Board of Directors, major shareholders and key management. The details of the transactions which occurred in 2014 are as follows:

Transactions with Major Shareholders:(Other than Payment of Dividend)

Description 31 December 2014 (AED)

Sales -Purchases 4,054,978

Transaction with members and their association with other companies:


Sales 849,192Purchases 91,398

Transactions with Key Management: (Other than Payment of Salary)


Sales -Purchases -

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04 External Auditor

According to the Commercial Companies Law No.8 of 1984, and corporate governance code, the General Assembly appoints an independent external auditor for the fiscal year based on recommendations made by the Audit Committee. The General Assembly also approves the remuneration of the external auditors. The General Assembly Meeting held on 17 April 2014, appointed KPMG Lower Gulf (KPMG) as external auditors of the Company for the year ending on 31 December 2014. The external auditors are invited to the Audit Committee meetings and also attend the General Assembly Meeting to present their report and answer shareholders’ questions.

The external auditors conduct quarterly reviews and an annual audit of the financial statements in accordance with relevant international standards. The external auditors present their report to the Board and the General Assembly in compliance with the Laws of the United Arab Emirates.

In 2014 the Company instituted a non-audit services policy in relation to work that may be performed by the independent auditor to provide additional assurance that their independence is not impaired in accordance with the guidance provided in UAE Ministerial Resolution No 518 of 2009.

(04.1) Overview of the External Auditor:KPMG is one of the largest professional services networks in the world, and one of the “big four” audit firms. KPMG is the auditor of most of the Group’s consolidated entities around the globe and where they are not, they undertake appropriate review procedures as part of their work to meet their obligation to report on the overall Group financial statements.

(04.2) External Auditors’ Remuneration:

There is no other auditor providing any services to the company.

External Auditor

Audit Office Name KPMG Lower Gulf Limited

Number of Years spent as an external auditor of the company 4 yearsTotal fees for auditing the financial statement for the year 2014 AED 498,500 plus out of pocket outlays up to 5% of audit fees

Total fees for other services other than auditing the financial statement for the year 2014. AED 22,500

Nature of other provided services. Services to the Group on XBRL reporting at end of each quarter and the year at ADX.

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The Board is assisted by the Audit Committee and the Nomination and Remuneration Committee which comprise the following non-executive independent members:

(05.1) Audit Committee:• Shirish Saraf (Chairman),• Sheikh Ahmed bin Humaid Al Qasimi (Member), and• Sheikh Kayed bin Omar bin Saqr Al Qasimi (Member)

(05.2) Nomination and Remuneration Committee:• Sheikh Ahmed bin Humaid Al Qasimi (Chairman),• Shirish Saraf (Member), and• Sheikh Kayed bin Omar bin Saqr Al Qasimi (Member)

(05.3) Audit Committee Tasks: The primary function of the Audit Committee is to provide advice with respect to the Company’s financial matters and to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing:

• the financial reports and other financial information provided by the Company, either directly or indirectly, to any governmental body or the public;

• the Company’s systems of internal control regarding finance, accounting, legal compliance and ethics that management and the Board have established; and

• the Company’s auditing, accounting and financial reporting processes.

Consistent with this function, the Audit Committee encourages continuous improvement of, and fosters adherence to, the Company’s policies and procedures at all levels. The Committee’s primary duties and responsibilities are:

• Serve as an independent and objective body to monitor the Company’s financial reporting process and internal control system. • Review and appraise the Company’s external auditors and its internal control department.• Review and evaluate the Company’s quarterly and annual financial statements as well as its compliance with laws and regulations.• Oversee the establishment and enforcement of financial policies and business practices.• Provide an open avenue of communication between the external auditors, financial and senior management, counsel, the internal

control department, and the Board of Directors.

Board Committees

05Board Committees

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05 Board Committees

PHILIP GORE-RANDALLAUDIT COMMITTEE EXPERT

Philip Gore-Randall has many years of experience at a senior level in large private and publicly held international organisations and has a portfolio of advisory and Board roles. He is currently Chairman of several international companies, Chairman of two Audit Committees of other businesses (including Samena Capital) and an adviser to several others. He spent most of his executive career at Andersen where he was an audit partner for 25 years; and where he ran the Firm’s UK practice and subsequently became the Global COO. He is a UK Chartered Accountant and holds an MA from University College, Oxford.

(05.4) Audit Committee MeetingsThe Committee is required to meet once every quarter. The Committee held five (5) meetings during the year 2014, as detailed below:

N/A* Not member in that time; P** Participated through conference call; A*** Absent

Meeting Date

Dr. Mohammad Abdullatif Al

Shehhi

Mr. Hamad Al Muttawa

Sh. Ahmed Bin Humaid Al

QasimiShirish Saraf

Sh. Kayed Bin Omar Bin Saqr

Al Qasimi

06 Mar 2014 P P P N/A* N/A*20 May 2014 P P P N/A* N/A*28 Jun 2014 P A*** P N/A* N/A*10 Aug 2014 N/A* N/A* P P N/A*12 Nov 2014 N/A* N/A* P** P A***Fees (AED) 30,000 10,000 20,000 10,000 -

Board Committees

To strengthen corporate governance internal controls and for ensuring adherence to best practices, RAK Ceramics Board has engaged an Audit Committee Expert to provide the necessary advice and assistance to the Audit Committee. Mr. Philip Gore-Randall is the designated Audit Committee Expert. His brief profile is presented below:

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(05.5) Nomination and Remuneration CommitteeThe Nomination and Remuneration Committee is composed of three non-executive independent members of the Board.

Nomination and Remuneration Committee Tasks:

The Nomination and Remuneration Committee’s primary functions are to:-

• Assess necessary and desirable competencies of Board members• Verify the independence of Board members• Review Board succession plans• Evaluate the Board’s performance• Make recommendations to the Board on: - executive remuneration and incentive policies

- remuneration packages for senior management

- recruitment, retention and termination policies for senior management

- incentive schemes

- superannuation arrangements; and

- remuneration framework for directors.

(05.6) Nomination and Remuneration Committee MeetingsThe Committee is required to meet once annually. The Committee held five (5) meetings during the year 2014, as detailed below:

N/A* Not member in that time; P** Participated through conference call; A*** Absent

Meeting Date

Dr. Mohammad Abdullatif Al

Shehhi

Mr. Hamad Al Muttawa

Sh. Ahmed Bin Humaid Al

QasimiShirish Saraf

Sh. Kayed Bin Omar Bin Saqr

Al Qasimi

06 Mar 2014 P P P N/A* N/A*20 May 2014 P P P N/A* N/A*28 Jun 2014 P A*** P N/A* N/A*10 Aug 2014 N/A* A*** P P N/A*11 Sep 2014 N/A* A*** P P N/A*Fees (AED) 15,000 10,000 50,000 10,000 -

Board Committees

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06 Internal Controls

(06.1) Board ResponsibilityThe Board assumes overall responsibility for the internal control mechanism in the Company including mandating the requirements, where appropriate, for policies, guidelines and controls (including authority levels and segregation of duties).

The executive management is responsible for the implementation of internal controls in co-ordination with the Heads of Functions, General Managers, Divisional Managers and domestic and overseas Branch Managers. The responsibility for implementing efficient internal control systems in the Company rests with each employee.

(06.2) Internal Control DepartmentAccording to corporate governance requirements and the directions of the SCA, an Internal Control Department has been established with sufficient independence and appropriate staffing to meet its obligations. The department reports to the Audit Committee of the Board.

(06.3) Work Mechanism of Internal Control and Dealing with ProblemsThe Board believes that the Group’s internal control system provides reasonable assurance on the completeness, integrity, accuracy and presentation of financial information/statements, safeguarding and preservation of assets, detection of fraud and compliance with applicable laws and regulations.

The Audit Committee, on behalf of the Board, reviews the system of internal control and assesses the framework by evaluating the work carried out by the internal control department and the external auditors. The Board confirms the adequacy of the existence of effective internal controls in the Group based on the recommendations and advice presented by the Audit Committee

The internal control department conducts reviews of internal control systems in the Company and submits its assessment and recommendations to the Audit Committee. The review process is done as per applicable international standards including ministerial resolution no. 518 of 2009. The department presents quarterly and annual updates on internal controls to the Audit Committee and to the Board.

The Internal Control Department is headed by Mr. Vibhuti Bhushan, an engineer and MBA with 25 years international working experience in the fields of internal audit, risk management, corporate governance and finance. Vibhuti is also serving as Chief Compliance Officer.

Internal Controls

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07Violations Committed

During 2014, there were no instances or the imposition of any fine for any violation by the Company.

Violations Committed

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08 Corporate Social Responsibility 2014

The company continued to re-affirm its commitment towards the protection of the environment and socio-economic development in the following ways:

• Supported the Rashid Centre for Disabled in publishing their book “Hopes and Expectations for our Handicapped Children” aiming to support children with special needs and their families.

• Participated in Can Collection Day, organised by the Emirates Environmental Group, whereby employees collected waste aluminium cans from within the company premises which were then sent for recycling.

• Co-sponsored RAK Terry Fox Run, aimed towards raising funds for cancer research projects in the UAE at University Hospital, Al Ain.

• Sponsored the SP Jain School of Global Management, Dubai Campus Blood Donation Campaign that seeks to save thousands of lives by encouraging people to donate blood and motivates young people to give back to the community through their donations.

• Observed Earth Hour by switching off the lights in its production facilities, employee accommodation building and offices for one hour in order to spread awareness of environmental sustainability.

• Sponsored the 7th ‘Al Basma Camp for Diabetic Children’, organised by RAK Medical Department to promote health awareness among community members through a series of programmes and events.

• Hosted a wide range of educational tours throughout the year. The tours included showroom and manufacturing plant visits for a variety of local universities and schools including SP Jain Dubai Campus; Higher College of Technology RAK; Dibba Fujairah School; Swiss Business School; The Al Beyt Mitwahid Association and RAK Academy. The tours allowed students to gain first-hand knowledge about the organisational structure and manufacturing processes in the ceramics industry, bridging the gap between classroom theory and the real world.

• Became the first ceramics manufacturer to produce a GRI-G4 Sustainability Report adopting the latest global reporting best practice in sustainability management.

• Organised a Health Screening Programme for factory employees. The programme was organised in line with RAK Ceramics’ HSSE initiatives to avoid ill-health in the work place.

• Launched in collaboration with RAK Hospital and Arabian Wellness and Lifestyle Management, the Health Awareness Booklet containing symptoms, health tips and actions to be taken in emergency situations.

• Organised a tree planting ceremony to commemorate World Environment Day by planting another 2,000 trees in and around the RAK Ceramics manufacturing location in Ras Al Khaimah.

• Other Group companies were also involved in various activities to support their local communities.




• Assess necessary and desirable competencies of Board members;• Verify the independence of Board members• Review Board succession plans;• Evaluate the Board’s performance;• Make recommendations to the Board on:

CSR 2014

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09General Information

General Information

Month High Low Number of Shares Traded Closing

January 3.49 3.00 21,696,834 3.26February 4.15 3.16 24,056,489 4.02March 4.02 3.70 16,092,326 3.95April 4.00 3.48 22,590,225 3.80May 3.89 3.20 13,111,047 3.70June 3.75 3.00 11,814,911 3.35July 3.35 3.02 7,049,260 3.24August 4.00 3.06 5,115,455 3.72September 3.80 3.50 21,799,117 3.67October 3.70 3.31 12,884,955 3.33November 3.44 3.15 54,347,274 3.15December 3.44 2.66 4,825,163 3.00

Total 215,383,056

The Company reports financial results and other material information on the relevant webpage of Abu Dhabi Stock Exchange (ADX) at www.adx.ae. The Company also publishes invitations to General Assembly Meetings and other material information in English and Arabic newspapers.

The annual audited accounts and the report of the Board are circulated to the shareholders at the General Assembly Meeting. The report of the Board is provided in the annual report, and includes Management Discussion and Analysis of periodic performance.

The quarterly financial statements of the Company are not sent to individual shareholders of the Company, but are uploaded on the designated web page of Abu Dhabi Stock Exchange under the Company symbol “RAKCEC”

(09.1) Stock Market data for the period from 1st January to 31st December 2014 and Statement of the Performance of the Company’s Share

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09 General Information

General Information

Statement of the comparative performance of the company’s share with the general market index and sector index.

The ADX general index increased by 5.56% during the year 2014 whereas the ADX industrial sector index increased by 5.64%. The price of the share of the Company increased by 5.10%. The following table depicts the high-low and range of the indices and the price of the Company share during the year 2014.

Chart of General Market Index for the year 2014:

Chart of Sector Index for the year 2014: Chart of the Movement of RAK Ceramics Share Price for the year 2014:




• Assess necessary and desirable competencies of Board members;• Verify the independence of Board members• Review Board succession plans;• Evaluate the Board’s performance;• Make recommendations to the Board on:

Index and Price High Low Range

General Index 5,253.41 4,528.93 724.48Industrial Sector Index 3,629.72 2,387.44 1,242.28RAKCEC Share 4.15 2.66 1.49

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General Information

Core events the company encountered during the year 2014.

• The General Assembly in its meeting held on 17 April 2014 approved issuance of 10% stock dividend. This increased the issued capital from 743 million to 817 million shares of face value of AED 1 each.

• On 28 June 2014, founding shareholder (H.H. Sheikh Saud Bin Saqr Al Qasimi) sold 250 million shares (30.6% of the issued share capital) to a Consortium of investors headed by Samena Limestone Company.

Sr Categories No. of Shares Held % of Share Holding

A

Individual Shareholders’Local GCC ArabForeign

254,530,89636,718,7003,893,7514,925,437

31.134.490.480.60

Subtotal – A 300,068,784 36.70

B

Companies Shareholders’Local CompaniesGCC CompaniesArab CompaniesForeign Companies

99,562,071112,150,5835,074,460

260,025,808

12.1813.730.62

31.80Sub Total – B 476,812,922 58.33

C Government Shareholders’Local Government 40,641,000 4.97

Sub Total – C 40,641,000 4.97

Grand Total 817,522,706 100

Sr Name of Share Holders Number of Shares % of Holding

1 Samena Limestone Co. 155,781,917 19.062 H.H. Sh. Saud Bin Saqr Al Qasimi 76,005,014 9.303 Limestone L.L.C. 52,400,000 6.414 Sheikh Omar Bin Saqr Al Qasimi 43,205,622 5.285 RAK Government 40,641,000 4.976 Others 449,489,153 54.98

Total 817,522,706 100

(09.2) Distribution of Shareholders’ Ownership as of 31 Dec 2014:

(09.3) Ownership of Major Shareholders as of 31 Dec 2014:

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10 Conclusion

Conclusion

RAK Ceramics is committed to respecting the rights of all its stakeholders through the adoption of the highest standards of governance resulting in transparency and integrity in all its dealings and disclosures.

The Board reinforces the concept of equal opportunity by the adoption of a remuneration and compensation policy that motivates all employees to continuously improve their performance in line with the strategic objectives of the Company. As a responsible corporate citizen, the Company actively promotes CSR initiatives and various other activities focused on giving back to and improving its communities. The Company continues to develop trustworthy relationships with its customers and all other stakeholders by establishing appropriate channels for receiving complaints and their swift resolution, enhancing its corporate governance, and managing the business with wisdom.

For RAK Ceramics,

Sheikh Mohammad Bin Saud Al QasimiChairman of the Board of Directors

Date: 22 APR 2015

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CorporateGovernanceReport2014

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