David Rudnick - Precept Investor Relations Jia Dong Huang - Chairman & Chief Executive Officer Edmund Hen - Chief Financial Officer

Good morning. My name is Angie, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2016 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]. I would now like to turn the conference over to David Rudnick. Please go ahead, sir.

Thank you, Angie. Good morning, ladies and gentlemen, and good evening to those of you who are joining us from China. Welcome to China Ceramics first quarter 2016 earnings conference call. With us today are China Ceramics' Chairman and Chief Executive Officer, Mr. Jia Dong Huang; and its Chief Financial Officer, Mr. Edmund Hen. Before I turn the call over to Mr. Huang, I remind our listeners that during this call, management's prepared remarks contain forward-looking statements which are subject to risks 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 in 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, June 2, 2016. China Ceramics assumes no obligation to update these projections in the future as market conditions change. To supplement the financial results presented in accordance with U.S. GAAP management will make reference to earnings before interest, taxes, depreciation and amortization which we will call by its abbreviated name EBITDA. EBITDA is a non-GAAP financial measure reconciled from net income, which the Company believes provide meaningful additional information to better understand its operating performance. A table reconciling net income to EBITDA can be found in the earnings press release issued earlier today. And now, it's my pleasure to turn the call over to China Ceramic's Chairman and CEO, Mr. Jia Don Huang; and China Ceramic's CFO, Mr. Edmund Hen. Wei Shi Dai will be translating for Mr. Huang. Mr. Huang, you may proceed.

Thank you, David. On behalf of the Company, I would like to welcome everyone to our first quarter 2016 earnings conference call. As anticipated, our first quarter 2016 revenue was substantially down from the year ago period reflecting the currently challenging market conditions in our sector in China. However, despite a 41% contraction in sales volume compared to the first quarter of 2015, we were able to report a reasonable level of cash flow in the first quarter. In addition, a decrease in our cost of sales including lower depreciation expenses enabled us to achieve improved profitability as compared to the year ago quarter. In the first quarter, we maintained a reduced utilization of existing plant capacity based on the market environment in order to keep our operating costs low. We utilized the production facilities capable of producing 13 million square meters of ceramic tiles per year out of a total annual production capacity of 72 million square meters. We will bring additional capacity online as the business environment improves. Although sales volume in the first quarter was lower than in past periods. We saw sound demand for our higher margins ceramic tiles which sustained the average selling price of our product. We believe that while China’s urbanization and demographic trends are sustainable, occasional volatility will occur due to imbalances in housing supply and demand. We continue to believe that the operating environment for the rest of the year will be challenging due to abundant real estate still in inventory and unsold. However, once the current inventory of real estate properties is worked through the sales channels, we expect a rebound in the construction and building materials sectors will materialize. 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 first quarter earnings results in more detail. Thank you.

Thank you, Mr. Huang. I will now move on to a more detailed discussion of our financial results for the first quarter and fiscal year 2016. Our revenue for the first quarter ended March 31, 2016, was RMB134.2 million or US$20.8 million, a decrease of 36% from RMB209.8 million or US$33.8 million in the first quarter of 2015. The year-over-year decrease in revenue was primarily due to a 41.4% decrease in sales volume to 4.1 million square meters of ceramic tiles from 7 million square meters of ceramic tiles in the year-ago quarter, slightly offset by a 10.1% increase in average selling price to RMB32.8 per square meters from RMB29.8 per square meters the year ago quarter. Gross profit for the first quarter ended March 31, 2016 was RMB18 million or US$2.8 million, an increase of 30.4% from RMB13.8 million or US$2.2 million in the year ago quarter. The gross profit margin was 13.4% for the first quarter compared to a gross profit margin of 6.6% in the year ago quarter. The improvement in gross profit margin was primarily driven by the 40.7% decrease in the cost of sales attributable to a decrease in depreciation due to the Company’s taking an asset impairment charge in the fourth quarter of 2015 that reduced the value of the Company’s plant, property and equipment, and a 10.1% increase in average selling price. The profit from operations before taxes for the first quarter of 2016 was RMB8.5 million or US$1.3 million, up 97.7% from RMB4.3 million or US$0.7 million in the year ago quarter. The year-over-year increase in profit from operations was primarily the result of a decrease of RMB5.9 million in depreciation and amortization in the first quarter of 2016 due to the asset impairment taken in the fourth quarter of 2015, partially offset by the year-over-year increase in selling and distribution and administrative expenses in the current period. Net profit for the first quarter of 2016 was RMB6 million or US$0.9 million in the current quarter, as compared to RMB2.8 million or US$0.4 million in the first quarter of 2015. Earnings per fully diluted share for the first quarter of 2016 on a basic and fully diluted basis were RMB0.28 or US$0.04 and RMB0.26 or US$ 0.04 respectively, as compared to basic and fully diluted RMB0.14 or US$0.02 in the first quarter of 2015. EBITDA was RMB18.8 million or US$2.9 million for the first quarter and to March 31, 2016, down 16.4% from EBITDA of RMB22.5 million or US$3.6 million in the first quarter of 2015. For a detailed reconciliation of the EBITDA, a non-GAAP measure to its nearest GAAP equivalent, please see the financial table at the end of this release. Turning to our balance sheet. As of March 31, 2016, we had a cash and bank balances of RMB1.5 million or US$0.2 million as compared to RMB0.5 million or US$0.08 million as of fiscal yearend 2015. As of March 31, 2016, inventory turnover was 226 days compared to 131 days as of December 31, 2015. Trade receivables turnover was 292 days compared with 263 days as of fiscal yearend 2015. The increase in inventory turnover days was primarily due to 36% decrease in sales to RMB134.2 million or US$20.8 million in the first quarter of 2016 from RMB208.3 million in the fourth quarter of 2015. The Company believes that this inventory is within reasonable aging parameters and the currently challenging economic environments has caused a higher inventory turnover than normal. Trade receivables turnover was 292 days as of March 31, 2016, compared with 163 days as of December 31, 2015. This sequential quarter-over-quarter increase in trade receivables turnover days was primarily due to the 36% decrease in revenue to RMB134.2 million or US$20.8 million from RMB208.3 million in the fourth quarter of 2015. The currently challenging and economic environment has prompted us to offer extended credit terms to certain customers resulting in a higher trade receivable turnover figure than normal. The Company had sound relationships with its customers and does not believe that it will experience difficulties associated with collections from these accounts. As a capital expenditure update, we review the level of capital expenditures throughout the year and make adjustments subject to market conditions. Although business conditions are subject to change, we anticipate a modest level of capital expenditures for 2016 other than those associated with minimal upgrades, small repairs and maintenance of equipment. Moving on to our business outlook. In the first quarter of 2016, we experienced a substantial contraction in our sales volume compared to the first quarter of 2015 due to the effects of a slowdown in China's construction and real estate sectors. In the first quarter of 2016, the Company's sales volume was 4.1 million square meters of ceramic tiles, a decrease 41.4% as compared to sales volume of 7 million square meters of ceramic tiles in the year ago quarter. We view the current quarter's decrease in sales volume as due to difficult macroeconomic and real estate conditions in China as evidenced by an increase in unsold housing, a reduction in new construction and a decrease in residential properties sold in recent months. However, the average selling price for our products increased from the first quarter, which we believe is attributable to our strong brand name and quality of our products and service. In the first quarter, the Company's average selling price per square meter was RMB32.8, an increase of 10.1% as compared to an average selling price to RMB29.8 per square meter of ceramic tile in the year-ago quarter. We expect the currently challenging market conditions to continue for the rest of 2016 as housing construction has recently recorded its first-ever declines. Further, as of the end of the first quarter, the number of homes that remain unsold rose 7.4% year-over-year. However, we believe that in the long-term the economic fundamentals for growth are still in place, as the real estate and construction sectors continue to be essential to China's economy. Over the last two years, the Chinese government has taken a variety of actions to stimulate the real estate sector. The most recent measure was the lowering of the reserve requirement ratio for banks of 50 basis points in February 2016 to stimulate the economy as well as to spur mortgage lending. This includes lowering the reserve requirement ratio for banks cutting interest rates [indiscernible] reducing the minimum mortgage down payment for the first-time buyers and lowering the minimum capital ratio for fixed asset investments. However, there is no assurance that the Chinese government will continue to adopt these or similar measures. We typically receive orders from customers two months in advance of production on a rolling basis. We enter into a dealership agreement with customers and a sales or purchase contract each time a customer places an order. As of March 31, 2016, our backlog was approximately RMB136.2 million or US$ 21.1 million, which represents the next two months of revenue as of the end of the first quarter. This compares to a backlog of two months' revenue of RMB165.6 million as of March 31, 2015, a year-over-year decrease of 17.7%. Under normal circumstances, our backlog is an indicator of revenues that might be expected in the next quarter, though it is subject to change as a result of unforeseen business conditions and events including credit payment terms. In our view, the real estate and construction sector will continue to exhibit sound fundamentals long-term due China's urbanization trend and a shift towards a more consumer-led economy. Government support for both affordable and senior housing is also expected to generate opportunities for real estate companies. We believe that our ability to offer our customers' a wide breadth of customized products that include new roofing products gives us a competitive advantage as does our state-of-the-art manufacturing facilities. As an update to the Class Action Litigation. The Company previously disclosed that it had reached an agreement to settle the outstanding class action litigation brought against the Company of $850,000, consisting of $310,000 payable in cash and $540,000 to be issued in the Company's common shares. On January 6, 2016, the United States District Court for the Southern District of New York held a final hearing to consider approval of the settlement, and on April 22, 2016, it issued a final order approving the settlements. Under the terms of Court’s final order approving the settlement issued on April 22, 2016, the number of common shares issuable by the Company is determined by the dividing $540,000 by the average closing price of the Company’s common shares on the ten days preceding the final approval hearing, which would result in the Company being obligated to issue 554,415 common shares, all of which will be freely tradable. Since January 6, 2016, the market value of the Company’s common stock has dropped substantially. Counsel for the Lead Plaintiffs in the litigation sought to renegotiate the date for the determination of the number of shares issuable in the settlement, the Company believes that the settlement is final and binding, and cannot be modified without the Company’s consent, and the Company has refused to agree to such a modification. More recently Lead Plaintiffs have notified the Court of their intention to ask the Court to modify the formula governing the number of shares issuable by the Company in the settlement, such that the number of shares would be determined by the dividing $540,000 by the average closing price of the Company’s common shares on the ten days preceding on final approval order, which would increase the number of shares issuable by the Company in the settlement by 734,368 common shares. The Company is resisting the Lead Plaintiffs efforts to modify the settlement, but there can be no assurance that the Company’s position will be sustained. At this point, we would like to open up the call to any questions pertaining to the first quarter 2016 financial and operating performance. Operator?

Thank you, Angie. On behalf of the entire China Ceramics’ management team, we want to thank all of you for your interest and participation on this call. This concludes China Ceramics’ first quarter 2016 earnings call. Thank you all very much.

Thank you for participating in today’s conference call. You may now disconnect your lines at this time.