David Rudnick – IR Jia Dong Huang – CEO Edmund Hen – CFO

Howard Flinker – Flinker and Company James Kahn – Oppenheimer

Ladies and gentlemen, this is the operator. Today’s conference is scheduled to begin momentarily, until that time your lines will again be tied to a music code. Thank you for your patience. Good morning my name is Arnica [ph] and I will be conference operator today. At this time I’d like to welcome everyone to the China Ceramics Third Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. (Operator Instructions) Thank you. I would now like to turn the conference over to David Rudnick.

Thank you Arnica [ph]. Good morning ladies and gentlemen, and good evening to those of you who are joining us from China. Welcome to China Ceramics Third Quarter 2013 Earnings Conference Call. With us today are China Ceramics Chairman, Chief Executive Officer Mr. Jia Dong Huang and Chief Financial Officer, Mr. Edmund Hen. Before I turn the call over to Mr. Huang, may I remind our listeners that during this call, management’s prepared remarks contain forward-looking statements which are subject to risk and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore the company claims protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today. Refer to more detailed discussion of the risks and uncertainties with the company’s filings with the Securities and Exchange Commission. In addition, any projections as the company’s future performance represent management’s estimates as of today November 13, 2013. China Ceramics assumes no obligation to update these projections in the future as market conditions changed. To supplement its financial results presented in accordance with IFRS, management may make reference to certain non-GAAP financial measures, which the company believes to provide meaningful additional information to understand the company’s performance. As statement reconciling any non-GAAP measures to nearest GAAP equivalents can be found in the earnings press release issued earlier today. And now, it’s my pleasure to turn the call over to China Ceramics, Chairman, CEO, Mr. Jia Dong Huang and China Ceramics, CFO, Mr. Edmund Hen. Precept’s [ph] Sandy Jin [ph] will be translating for Mr. Huang. Mr. Huang, you may proceed.

[Foreign Language] [Interpreted] Thank you David. On behalf of the company, I would like to welcome everyone to our Third Quarter 2013 Earnings Conference Call.

[Foreign Language] [Interpreted] We are pleased to report strong top-line financial performance for the third quarter as our revenue grew at 53% over that of the second quarter. The increase was driven by a 50% sequential rise in the sales volume of our ceramic tiles as well as a moderate increase in our average selling price. We believe that the market environment in the real estate and construction sectors has begun to normalize, although some pricing sensitivity among our customers continues. For the fourth quarter, we expect a seasonal slowdown consistent with the construction building cycle and an opportunity it involved our business into higher-margin sector through additional product options [ph] for both current and new potential customers.

[Foreign Language] [Interpreted] Well, our top line was strong to promote products that meet current and expected customer demand, we wrote-down asset attributes for the replacement of certain components at our Hengda facility in the third quarter that affected the quarter’s profitability.

[Foreign Language] [Interpreted] However, our past growth [ph] was strong with a 50% increase in EBITDA from the second quarter. In addition, with our upgraded and new facilities we continue to differentiate ourselves from our competition due to our capability to operate efficiently and produce new lines of innovative and high performance ceramic tiles.

[Foreign Language] [Interpreted] In the third quarter, we utilized plant production facilities capable of producing 35 million square meters of ceramic tiles out of an annual production capacity of 72 million square meters of ceramic tiles. This represents an increase from the second quarter where we utilized the plant production facilities capable of producing 28 million square meters per year. As market conditions improve, we will look to bring additional capacity online.

[Foreign Language] [Interpreted] We are also intent upon regaining the product pricing levels that were in place prior to the macroeconomic difficulties that began in late 2012. Our modern facilities enable us to optimize our product mix and develop hundreds of customized products including those of our better performing products which could ultimately enhance our margins. We believe that we continue to be well positioned in our industry and that our superb name-brand recognition, customer-centric focus and strategic marketing optimally positions us to ultimately improve our pricing power as market conditions strengthen. Further company development in the quarter was that, we established our new subsidiary, Fujian Hengdali Construction Material Company Limited for future trading activities with such entities as China State Decoration Group Company Limited. With that I would like to turn over the call to the company’s Chief Financial Officer, Mr. Edmund Hen who will discuss the company’s third quarter results in more detail. Thank you.

Thank you Mr. Huang. I would now move on to a more detailed discussion of our preliminary financial results for the third quarter in September 30, 2013. Our revenue for the third quarter ended September 30, 2013 was RMB340.7 million or U.S. $55.3 million, an increase of 53% from the second quarter but down 11.8% from the third quarter of 2012. The sales volume of ceramic tiles in the third quarter was 12.5 million square meters, an increase of 50.6% as compared to the second quarter of 2012 and a 2.9% increase from the 12.2% million square meters of ceramic tiles sold in the year of both quarter. The average selling price or ASP in the second quarter rose 1.9% to RMB27.2 per square meters from the second quarter’s ASP of RMB24.4 per square meter but is still represents 14.2% decrease from the ASP of the comparable year-ago quarter. The Company attributes its substantially improved revenue to the second quarter to more normalized business conditions in China’s real estate and construction sector although pricing has proved to be more resistant to recovery due to pricing concession institute to address the difficult market conditions that began in late 2012. Gross profits for the third quarter of 2013was RMB33.3 million or U.S. $5.4 million, a substantial rise of 50% from second quarter but still can see [ph] lower than the RMB 110 million or U.S. $17.7 million records for the third quarter of 2012. Although the sales volume have been quoted. The year-over-year decrease in gross profit was due to the comparable year of third quarter or still showed the decrease in the average selling price of the company’s ceramic tiles in the quarter. Our gross profit margin for the third quarter was 9.8% compared it to 28.5% for the same period of 2012 was forced by decrease in average selling price of ceramic tiles in the quarter. We incurred a write down asset in the quarter of RMB$18.9 million or U.S. $3.1 million attributable to the replacement and updating of plant production equipment at the company’s Hengda facility to replace one of the kilns. Whereas, certain molding and casting component were updated, so that new and modern ceramic tiles products more appropriates to customers’ preference and market demand could be manufactured. On shared profits from operations before taxes, which excluded the quarter’s non GAAP – non-cash treatment of asset write-down. And share based commendation expenses was RMB24.8 million or U.S. $4.1 million in the third quarter as compared to RMB$99.2 million or U.S. $60 million in the last year’s third quarter. However this represent a strong and sequential improvement of about 138% from the second quarter’s results of RMB 10.4 million or U.S. $1.7 million. Non-GAAP net profit, which excluded the quarter’s non-cash treatment of the asset write-down and share-based to compensation expenses, was RMB23.2 million or U.S. $3.9 million in the third quarter end September 30, 2013 as compared to RMB24.1 million or U.S. $11.9 million in the third quarter of 2012. However, this also represent a strong sequential improvement from the second quarter of about 130% from the first quarter’s result of RMB 101 million or U.S. $1.6 million. On a GAAP basis, net profit for the third quarter 2013 gross RMB4.4 million or U.S. $0.7 million as compared to RMB72.8 million or U.S. $11.7 million in the same period of 2012. The year-over-year decrease in net profit was the result of lower gross profit and right only [ph] in the current quarter. Earnings for a fully diluted share where RMB0.21 or U.S.$0.03 for the third quarter of 2013 as compared to RMB0.47 or U.S. $0.08 in the second quarter of 2013 and RMB3.56 or U.S. $0.57 in the third quarter of 2012. Per share calculations for the three quarters were compared to using 24.4 million shares for the nine months end September 30, 2013. Revenue was RMB712.6 million or U.S. $115.4 million, a decrease of 40.6% as compared to the nine months end September 30, 2012. Gross profit was RMB 60.3 million or U.S. $9.8 million down 82.8% from the same period of 2012. Gross margin for the first nine months was 8.5% compared to 29.3% for the same period of 2012. Net profit for the nine months was RMB8.6 million or U.S. $1.4 million compared to RMB230.5 million or U.S. $36.7 million for the same period of 2012. Non-GAAP net profits adjusting for the quarters non-cash asset write-down and share-based compensation expenses, was RMB28.6 million or U.S. $4.7 million. For the nine month end September 30, 2013 as compared it to RMB234.9 million or U.S. $37.4 million in the same period of 2012. Fully valued EPS for the nine months end September 30, 2013 with RMB 0.42 or U.S. $0.07 million and on the non-GAAP adjusted basis, fully diluted EPS was RMB1.14 or U.S. $ 0.23. Now in to our balance sheet. As of September 30, 2013, we had a cash and bank balances of RMB40.1 million or U.S. $6.5 million compared to RMB89.4 million or U.S. $14.4 million as of December 31, 2102. The decrease in cash and bank balances was the result of an increased level of receivables and of increments and repayment or bank borrowings in the third quarter of 2013 and the payment of a dividend. As of the end of the third quarter our total debt was RMB65.6 million or U.S. $10.7 million as compared it to total debt of RMB 60 million or U.S. $9.6 million as of year-end of fiscal 2012. As of September 30, 2013 we had an inventory turnover of 126 days compared to 101 days as of December 31, 2012. The increase in inventory turnover reflects the decrease in sales volume of ceramic tiles which result in slower moving of finished goods at September 30, 2013 and the products we’ve assumed in the first nine months of 2013. Trade receivable turnover was 164 days as of September 30, 2013 compared with 119 days as of December 2012. The company extended the credit period for certain customers to address funding pressure of those customers since the quarter end December 31, 2012. In terms of our CapEx, we expand RMB10.2 million or U.S. $1.7 million in the third quarter for the acquisition of equipment at Hengdali facility and expand RMB28.4 million or U.S. $4.6 million to modify an existing production line at the Hengdali facility to enable the manufacturer of products that are in market demand. Although business conditions are subject to change, Management anticipated a minimal level of capital expenditure for the remainder of 2013 that will be associated with small repairs and maintenance of equipment. Moving on to our business outlook. As discussed by our CEO, Mr. Huang. As the economic climate for the real estate development and construction in China imported [ph] in the third quarter, we deployed additional capacity from utilized in second quarter. The company is currently utilizing plants facility capable of producing 35 million square meters of ceramic tiles out of an annual production capacity out of 72 million square meters that is available to the company up from 28 million meters square meters of annual capacity in the second quarter. As a result of asset marketing environment the company’s sales volume rose 50.6% to 12.5 million square meters for ceramic tiles as compared to the second quarter and was 2.9% ahead for sales volume for the third quarter in 2012. However, our first selling price or ASP increased a moderate 2.9% increase over that of the second quarter and you’re still substantially lower than a year ago comparable [ph] quarter. As many of you recalled, due to the challenging matter around the elite [ph] to rebuild our ASP beginning in December of last year, in order to meet [indiscernible], and we think [ph] market share. And although the quarter sales volume reflect substantially improved level of business activity, we have yet to recover or our pricing power from the economical slowdown that took only in the fourth quarter in 2012 and continued into this year. However, we are deploying strategy such as a more intensive and sophisticated marketing in further product diversification to recoup our previous ASP level, which we believe we will meet with progress over the next few quarter. Our backlog of orders for delivery in October and November of 2013 is approximately RMB155.5 million or U.S. $25.3 million. We estimate that our sales volume of ceramic tiles in October and November of 2013 will be approximately 5.7 million square meters, as compared to sales volume of 6 million square meters for the same period of 2012. In addition, we estimate that our ASP is RMB27.1 per square meters on ceramic tile for October and November 2013. This compared with our ASP of RMB27.2 per square meters of ceramic tiles in the third quarter of 2013 and RMB28.2 per square meters in the fourth quarter of 2012. The company believes that the real estate and construction sector continue to be vital area for the Chinese government to encourage in order to sustain economic growth. And that regulation have stabilize in terms of curbing some of the speculative buying occurring for investment purposes. This has been conducive to be, to a rebound in the sector as certain Tier 1 cities record sales growth from the second quarter and several cities reported record high prices in the land sales market. Return signals [ph] obtained a sustainable and focus US certain [ph] continue construction therefore reported to be within reasonable level as seen by the government. The company believes that the strategy of implementing price cuts on select product during the market downturn uptakes [ph] last year. And early this year, in order to retain customers and maintain our reputation was successful. Although we market a wide range of both premium and value-oriented products, price sensitivity has become a factor with our customers. However, as we believe that we are entering a period of more stable market conditions, we have the ability shift sales emphasis among the wide range of products offering. And we will strive to recoup our pricing power and regain margin, quarters ahead. Further, we think that our new marketing showroom, development and new products from our R&D program and upgraded and modern plant facilities with customized design and product capability offering as a sustainable comparative advantage in the market place. We also believe that our comprehensive products suite continue to differentiate it from our competitors, where some smaller producer have discontinued or contract operation and offer us the potential for expansion and growth in the market share. In summary, we will continue to stay very close to our customers and work with them to meet their building materials needs as well as to operate efficiency, so as to generate [ph] all the retail for our shareholders. With that, I would like to open up the call to any questions pertaining to our third quarter’s financial and holding conference. Operator.

(Operator Instructions) we’ll pause for a just a moment to compile the Q&A roster. Your first question comes from Howard Flinker with Flinker and Company. Howard Flinker – Flinker and Company: I have three questions. First, is the write off of plant and equipment not tax deductible?

Yes, it’s a tax deductible. Howard Flinker – Flinker and Company: It is?

It is. Howard Flinker – Flinker and Company: It seems that you added the whole write off to post tax earnings to get to the adjusted earnings per share. Did I make a mistake in calculation? Because it was what? 4.1 million or 3.1 million pretax and 25% less after tax, is that correct?

Yes, 25% after tax. Howard Flinker – Flinker and Company: 25% in this. Then I must have made a mistake in the calculation. Second, are your increases in receivables, inventory receivable or is that going to be a new continues level?

You mean the inventory receivable? The account receivable is maintaining 150 days and all this account receivable are collected within this period. So, and this policy was since the end of last year. So, it actually has no extension for our account receivable. And for the inventory, we always maintain at reasonable level for our inventory level. And it still keeps that about especially in our press release. Howard Flinker – Flinker and Company: When your turn over of inventory is slower now than it was before, so does that mean you’re adding more inventory to serve your customers or is that somewhat related to the summer season?

This is a seasonal increase. Howard Flinker – Flinker and Company: Okay. And finally, what’s that new subsidiary Hengdali Construction or something like that? What’s it going to do?

This company will majorly focusing on the trading activity for the company. And also the area we established that we have benefits from certain kind of cast [ph] benefit. So, that will give more benefit to the company for future trading with some – Howard Flinker – Flinker and Company: And the trading activity mean that you might by some tiles form other companies to sell to the China Decoration Company or whatever it’s called?

Not necessarily, the tiles. So, some stoneware or some other type of products [ph]. Howard Flinker – Flinker and Company: Oh, I get it.

Company is for certain special specific type of product. Howard Flinker – Flinker and Company: Has the company placed orders or not yet? The China Decoration Company?

They have not placed the order at the end of the third quarter yet. Howard Flinker – Flinker and Company: But they obviously indicated that they will?

Yes. Howard Flinker – Flinker and Company: Okay. Thank you very much. [Foreign Language]

[Foreign Language]

Again. (Operator Instructions) Your next question comes from James Kahn with Oppenheimer. James Kahn – Oppenheimer: [Foreign Language]. My question is, have you noticed yet any pick up in business from competitors that’s suffered in the downturn?

Yes, we do. We do see a lot of this small competitor suffering right now and some of them even closed their production line. And also, some second tier competitor also stopped their production line – a few production line within their factory. James Kahn – Oppenheimer: Thank you. Also, are there any international companies with whom you compete? And is there – do you foresee in the next decade for example, any possibility of expanding overseas, away from China?

Yes. We always look into new opportunity. First of all, should be inside China and also we visited some overseas country like Middle East, Japan, et cetera, to see the latest opportunity, while at this level, as our overseas sales is to maintaining at a single digit. So, the challenge to expand into overseas will be a bit remote from now. But we still look in to the new opportunity if there’s any chance for us to expand further. James Kahn – Oppenheimer: Thank you. [Foreign Language]

At this time, there are no further questions. You may continue with your presentation or closing remarks.

Okay. Thank you very much. On behalf of the entire China Ceramics management team, we’d like to thank all of you for your interest and participation on this call. This concludes China Ceramic’s third quarter 2013 earnings conference call. Thank you all very much.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.