Q3 2014 Financial Results November 2014 Company Confidential 1 - PowerPoint PPT Presentation

Q3 2014 Financial Results November 2014 Company Confidential 1

Executive Summary – Financial Performance In Q3 2014, we continued executing our re-focused strategy to scale down less profitable Non-Core businesses and focus on Core operations. However the change in the distribution strategy in Saudi Arabia is affecting our sales in the short term until our direct sales infrastructure is rolled out  Consolidated Q3 2014 revenues decreased by 10.7% QoQ to AED 823.2mn (6.6% decline YoY to AED 2,484.4mn) with core revenues declining by 2.0% to AED 685.9mn (0.5% decline YoY to AED 2,118.3mn) and non-core revenues declining by 38.2% to AED 137.3mn (31.2% decline YoY to AED 366.1mn)  Tiles revenues decreased by 3.7% to 574.0mn QoQ (2.3% decline YoY to AED 1,781.4mn)  Sanitaryware revenues increased by 7.8% to 111.9mn (10.8% increase YoY to AED 336.9mn)  Consolidated gross profit margins decreased by 0.8% to 26.9% in Q3 2014 (27.3% YTD) with gross margins for core operations decreasing by 4.5% to 27.5% (29.1% YTD) while non-core margins increasing by 9.0% to 23.0% (16.4% YTD)  Tiles gross margins decreased by 8.4% to 22.7% in Q3 (26.0% YTD) on account of higher costs due to maintainence of plants, lower ASP due to sale of old stocks, product mix change and hyper inflation accounting  Sanitaryware gross margins increased by 10.2% to 47.4% in Q3 (45.6% YTD)  Rough grading division commenced operations in July and positively impacted the contracting profitability  Consolidated EBITDA increased by 32.0% to AED 154.3mn in Q3 (13.7% increase to AED 464.6mn YTD) with EBITDA margin enhancements from 12.7% to 18.8% QoQ (18.7% YTD)  Reported net profit declined by 18.3% to AED 57.4mn in Q3 (AED 207.3mn YTD) mainly on account of hyper-inflation accounting losses of AED 19.5mn (AED 46.8mn YTD) in Sudan and Iran. However, adjusted net profits after adding hyper-inflation losses for Q3 2014 increase by 9.4% to AED 76.9mn (15.3% increase to AED 254.1mn YTD) Company Confidential 2

Executive Summary – Financial Performance (cont’d) Consolidated Q3 2014 revenues decreased by 10.7% YoY to AED 823.2mn while consolidated EBITDA increased by 32.0% to AED 154.3mn. Reported net profit declined by 18.3% to AED 57.4mn however adjusted net profit (excluding hyperinflation losses) increased by 9.4% to AED 76.9mn Total Core Revenue: Tiles and SWD (AED mn) Total Revenue: Core & Non-Core (AED mn) 2,660.1 2,500 2,127.9 2,484.4 2,118.3 3,000 532.2 2,000 304.0 336.9 366.1 10.8% 2,500 1,500 2,000 (31.2%) 922.3 699.9 685.9 (2.3)% 1,500 823.2 1,000 1,823.9 1,781.4 103.8 111.9 222.4 2,127.9 2,118.3 1,000 (38.2)% 7.8% 137.3 (0.5)% 500 500 (3.7)% 596.1 574.0 699.9 685.9 (2.0%) 0 0 Q3 13 Q3 14 YTD 13 YTD 14 Q3 13 Q3 14 YTD 13 YTD 14 SWD Tiles Non Core Core Total Net Profit: Core & Non-Core (AED mn) Total EBITDA: Core & Non-Core (AED mn) 500 254.1 300 464.6 220.4 450 408.9 50.1 250 400 220.4 71.1 207.3 (29.5%) 350 200 300 76.9 150 70.3 250 154.3 414.5 200 100 70.3 116.9 22.7% 57.4 337.8 150 36.2 12.4 50 191.9% 100 118.1 50 104.5 0 13.0% 0 Q3 13 Q3 14 YTD 13 YTD 14 Q3 13 Q3 14 YTD 13 YTD 14 Reported Net Profit Adjusted Net Profit Non Core Core * Adjusted Net profit is calculated after adding back hyperinflation accounting impact: AED 19.5 for Q3 and AED 46.8mn Company Confidential 3 for YTD Sep 14.

Executive Summary – Q4 and 2015 Focus In the near future, we will focus on turning around the sales in Saudi Arabia, continue to scale down non-core operations and execute the expansions in sanitaryware. We are also considering strategic options for the operations in Sudan and China with decisions to be announced before year end  As part of the revised Saudi market strategy, we are upgrading the registered representative office in Riyadh to a fully operational subsidiary, a 91,000sqm warehouse has been rented, a dedicated sales team is being deployed on the ground and the existing JV arrangements are being restructured  Strategic options for RAK Sudan and RAK China are being considered with decisions expected to be announced during Q4 2014. Sudan issues relate to difficulties in importing raw materials and spares, fund remittances and hyperinflation accounting while the Chinese operations are facing difficulties in cost competitiveness  Expansion plans  India sanitaryware capacity expansion from 1,000 pcs/day to 2,100 pcs/day was implemented in July 2014 and a further expansion to 3,500 pcs/day is expected to come on-stream in Q1 2015  Bangladesh sanitaryware capacity expansion from 3,350 pcs/day to 4,350 pcs/day is under way and expected to come on-stream in Q1 2015. Tiles capacity expansion of 10,000 sqm/day is also under implementation and will be executed by Q3 2015  UAE Sanitaryware production expansion is currently under review and an announcement regarding this will be made once board approval is received Company Confidential 4

Core Revenues Snapshot Q3 14 tiles revenue decreased by 3.7% to 574.0mn mainly due to decrease in sales in Saudi Arabia; the roll-out of our direct sales infrastructure in the Kingdom is expected to be concluded by year end. SW revenues increased by 7.8% to AED 111.9mn in Q3 Tiles Revenue: By Production location Tiles Revenue: By End Markets Tiles Tiles QoQ YoY QoQ YoY (AED mn) Q3 13 Q3 14 change YTD 13 YTD 14 change (AED mn) Q3 13 Q3 14 change YTD 13 YTD 14 change UAE 88.8 118.1 33.0% 309.2 339 9.6% UAE 443.4 393.9 (11.2%) 1305.7 1195.3 (8.5%) India 108.3 104.9 (3.1%) 325.6 309.8 (4.9%) India 116.3 105.5 (9.3%) 340.2 315.7 (7.2%) Saudi Arabia 109.2 86.8 (20.5%) 341.8 259.9 (24.0%) Bangladesh 33.6 32.2 (4.2%) 103.3 109.8 6.3% Bangladesh 33.6 32.2 (4.2%) 103.3 109.8 6.3% Germany 31.1 30.0 (3.5%) 92.1 98.1 6.5% China, Iran & Sudan 86.3 61.0 (29.3%) 236.9 208.4 (12.0%) 119.6 156 30.4% China, Iran & Sudan 48.6 43.0 (11.5%) Total Gross 679.6 592.6 (12.8%) 1,986.1 1,829.2 (7.9%) Rest of GCC 27.4 33.2 21.2% 97.6 103.5 6.0% Less: Elimination (83.6) (18.5) (77.9%) (162.2) (47.7) (70.6%) Others 149.1 125.9 (15.6%) 434.7 405.3 (6.8%) Total Net 596.1 574.0 (3.7%) 1,823.90 1,781.4 (2.3%) Total 596.1 574.0 (3.7%) 1823.9 1781.4 (2.3%) SW Revenue: By Production Locations SW Revenue: By End Markets SWD SWD QoQ YoY QoQ YoY Q3 13 Q3 14 change YTD 13 YTD 14 change (AED mn) Q3 13 Q3 14 change YTD 13 YTD 14 change UAE 24.7 29.0 17.4% 75.9 94.6 24.6% UAE 78.2 80.7 3.2% 224.1 239.8 7.0% Bangladesh 22.0 22.0 0.0% 64.2 69.6 8.4% India 8.3 10.4 25.3% 26.1 30.1 15.3% UK 17.5 18.9 8.0% 51.6 59.1 14.5% Bangladesh 22.0 22.0 0.0% 64.2 69.6 8.4% India 8.3 10.4 25.3% 26.1 30.1 15.8% Total Gross 108.5 113.1 4.2% 314.4 339.5 8.0% Saudi Arabia 9.0 7.7 (14.4%) 22.5 20.4 (9.3%) Rest of GCC 3.1 3.5 12.9% 8.9 8.7 (2.2%) Less: Elimination (4.6) (1.2) (73.9%) (10.3) (2.6) (74.8%) Jordan 1.3 1.5 15.4% 3.1 4.2 35.5% Total Net 103.8 111.9 7.8% 304.0 336.9 10.8% Others 17.8 18.7 5.1% 51.9 50.4 (2.9%) Total 103.8 111.9 7.8% 304.0 336.9 10.8% Company Confidential 5

Gross Profits Snapshot Consolidated gross profit margin decreased by 0.8% to 26.9% QoQ with core margins decreasing by 4.5% to 27.5% due to sales of old stock in the UAE and increase in sales of lower priced models in Bangladesh. Non-core margins increased by 9.0% to 23.0% due to the profitable rough grading operations. Sanitaryware margins increased by 10.2% QoQ to 47.4% Total Gross Margins: Core & Non-Core (%) Core Gross Margins: Tiles and SWD (%) 27.7% 26.9% 27.8% 27.3% 32.0% 27.5% 30.4% 29.1% 47.4% 50.0% 45.6% 32.0% 35.0% 30.4% 41.6% 29.1% 45.0% 27.5% 37.2% 30.0% 40.0% 23.0% 31.1% 35.0% 25.0% 28.6% 26.0% 30.0% 22.7% 17.3% 20.0% 16.4% 25.0% 14.0% 20.0% 15.0% 15.0% 10.0% 10.0% 5.0% 5.0% 0.0% 0.0% Q3 13 Q3 14 YTD 13 YTD 14 Q3 13 Q3 14 YTD 13 YTD 14 Tiles SWD Core Non Core Tiles Gross Margins: By Production Locations SWD Gross Margins: By Production Location Q3 13 Q3 14 YTD 13 YTD 14 Q3 13 Q3 14 YTD 13 YTD 14 UAE 33.0% 31.9% 31.6% 32.9% UAE 33.8% 49.7% 41.2% 46.8% B'desh 29.4% 26.4% 29.8% 28.6% B'desh 44.6% 47.2% 43.3% 48.1% India 13.3% 10.7% 13.8% 10.7% India 29.6% 23.4% 24.9% 26.9% China , Iran and Sudan 15.7% (24.1%) 13.2% 2.1% SWD Gross Margin 37.2% 47.4% 41.6% 45.6% Tiles Gross Margin 31.1% 22.7% 28.6% 26.0% Company Confidential 6