Directors: F Mutamangira (Chairman); S T Makore* (Managing); N S Chibanguza; J Chininga; I C Haruperi; J Muskwe (Mrs); V Vera ( *Executive) www.hwangecolliery.co.zw

Chairman’s Statement

IntroductionOn behalf of the Board of Directors, I present to the Shareholders, the audited financial results for Hwange Colliery Company Limited for the year ended 31 December 2014.

Operating environmentThe economic environment for the year under review remained very challenging for business in general, and particularly impacted adversely on the financial performance of the Company. The Zimbabwean economy grew by 3.1% and was below the initial projection of 6.1% that was subsequently revised to 4.4%. The further decrease of the capacity utilization from 39% in 2013 to 36% in 2014 meant that the productive sectors experienced low business activity. This coupled with deflation exerted price pressure across the high margin products against the background of tight liquidity conditions and the depreciation of the South African rand against the major trading currencies.

The persistent liquidity challenges and the legacy debts slowed down the Company’s effort to bring up to date staff salaries. Staff salaries therefore remained in arrears for periods ranging from between 6-12 months for the lower grades and more than 12 months for managerial staff. At planned levels of production and sales, the backlog of salaries will be cleared in the second half of 2015.

The persistent liquidity challenges in the operating environment did not deter the Company’s pursuit of its recapitalisation strategy as a permanent and sustainable solution to its challenges.

Following the procurement and commissioning of mining equipment worth US$12 million from Sany Heavy Equipment Company of China late in 2013, the Company finalised a US$18.22 million facility with PTA Bank and a US$13.03 million a line of credit from Export and Import Bank of India, for the importation of mining equipment.

The Company also secured a US$6 million working capital facility structured through a prepayment arrangement with one of the major customers. The Company adopted a judicious working capital management system in order to avail cash for the business. The funds from internal and external sources were mainly applied to productive areas with positive effects on performance showing in the last quarter of the year.

The Company is targeting a production of more than 450 000 tonnes per month, as from June 2015, through own mining and contribution by the contractor. The Company has also adopted an aggressive marketing strategy to push back competition and grow its exports where Massive opportunities exist subject to addressing competitiveness from a logistics perspective. In this regard, the Company has already signed a supplier contract with Glencore, one of the world’s leading commodity companies.

Hwange Colliery Company Limited has fully embraced the country’s economic blueprint, Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET), whose main thrust is the beneficiation of the mineral resources. The Company is one of the key enablers of the economic policy with its anticipated production ramp up of up to five (5) million tonnes of coal per annum.

Operational performance Production for the year was 23% above the volume for the previous year. Sales statistics below show a similar growth trend evidenced by an increase of 6% between the volumes for 2013 and 2014.

Product 2014 2013 (METRIC TONNES) (METRIC TONNES)

HPS coal 996 200 924 659HCC/HIC coal 439 909 393 408Coal Fines 242 802 201 610Total Coal 1 678 911 1 519 677Coke (Incl breeze) 13 070 82 510TOTAL 1 691 981 1 602 187

The improved overall sales performance was attributed to increased production throughput. The major mining contractor, Mota Engil’s contribution was notable in the last quarter of the year following full mobilisation hence attainment of monthly contractual obligations of 200 000 tonnes.

Export sales of coke and coke breeze significantly decreased because of the controlled cooling of the coke oven battery in June 2014 after the antiquated plant developed some drop in temperatures. This product line normally accounts for up to 30% of the Company’s revenue. To mitigate this, the Company entered into toll coking arrangements with South Mining Company and Hwange Coal Gasification Company. HPS coal supplies to Zimbabwe Power Company (ZPC)’s Hwange Power Station increased by 8% and should continue to increase. This coal grade accounted for 58% of coal sales volumes with its contribution to revenue at 38% compared to HCC/HIC coal sales volume of 26% and a revenue contribution of 38%. The re-pricing of HPS coal is long overdue and it must be based on calorifc value of the coal and be benchmarked to regional comparative standards. The current prices of $29 per tonne of HPS coal is unsustainable and Hwange Colliery Company will be pushing for a price increase of up to $35 per tonne. This is essential to ensure that coal supplies to all power stations remain stable. Hwange Colliery Company is of the view that this should not translate into a power tariff increase as the price of our HPS coal is relatively underpriced.

Sales of coal fines of 242 735 tonnes were 20% above the 201 610 tonnes sold the previous year. This was attributed to the increased demand for coal fines from cement manufacturers.

The Company signed an offtake agreement with Co-Ash Resources (Private) Limited for the beneficiation of coal fines and use as primary energy for the generation of electricity.

Financial PerformanceThe Company recorded a turnover for the year of US$72.0 million which is US$0.5 million above the US$71.5 million turnover achieved in the previous year. Though production and sales volumes showed an incremental trend, the product prices for both local and export markets continued to decrease hence eroding the anticipated sales value. The production volumes were also below the expected levels because the Company’s plant and equipment requires major overhauls and replacements.

The impact of the legacy debts on current cash flows continued to inflict pain on the operations of the Company and torpedoed the turnaround initiatives. During the year under review, a total of US$25 million was paid towards liquidation of legacy debts whose balance has come down to US$136 million. This is in addition to $35 million which was applied to legacy debts in 2013. A review of the legacy debts established delinquent conduct on the part of the parties involved and in due course, the Company will take appropriate action.

The Company’s gross loss was US$10.3 million against a comparable gross loss of US$10.4 million for the same period last year.

The Company incurred a loss for the year ended 31 December 2014 of US$37.2 million compared to a loss of US$31.6 million posted in 2013. Included in the loss for the year are non-recurring items amounting to US$13.4 million comprising of assets impairment of US$3.4 million, accrued retrenchment costs of US$5 million and Palehouse (Private) Limited contract costs of US$4.9 million.

The Company’s loss position excluding non-recurring items was US$23.7 million which is less than the US$31.6 million posted in the previous year.

Property, plant and equipment decreased from US$139.1 million to US$129.1 million because of impairment of the coke oven battery and depreciation. The amount is expected to increase when the new equipment is commissioned.

There was a 43% reduction in borrowings following the repayment of the BancABC loan which left the loan balance at US$10.6 million as at 31 December 2014. Trade payables increased because of the continued reliance on creditors to finance the business. Some of the creditors ended up litigating against the Company and settlement agreements were successfully negotiated and implemented.

Though the legal risk continues to be glaring, the Company has put in place mutually agreed payment plans such that the Company’s ability to continue as a going concern remains intact.

Quality, safety, health and environmentThe Company continues to be certified with the ISO 9001:2008 Quality Management System by the Standards Association of Zimbabwe (SAZ).

The safety programmes continue to guarantee an accident free working environment. The Company’s “no fatal accident” record now stretches over a period of seven (7) years.

The provision for rehabilitation of the mined out areas at the opencast mines was increased from US$3.9 million to US$4.9 million. Actual rehabilitation work was done on containing the underground fire at the old No 3 Underground mine.

The Company was compliant with most of the Environmental Management Agency (EMA) regulations with no reported incidents of environmental pollution. There were no incidents of surface and underground water pollution.

The Company’s health delivery systems and public health programmes were successfully divisionalised and are now operating on a self-sustenance financial model. The Colliery Hospital met stakeholder expectations as the referral medical facility for Matebeleland North province.

Corporate social responsibilityDespite the challenges facing the Company, the corporate social responsibility programmes continued to be given priority in line with good corporate governance practice.

For the year under review, the Company undertook a number of projects. The Company performed medical outreach to outlying areas in the district and conducted routine clinics at no charge to the patients. The district and provincial awards for best performing primary and secondary schools were financed by the Company. The Company’s municipal responsibilities of housing, social amenities and schooling continued but this time under the auspices of the new divisionalised structure of the stand alone Estates and Medicals.

The two hundred (200) bed hospital and its five (5) satellite industrial clinics were refurbished to enhance health service delivery not only for Company employees, but the community in the Hwange District and its traditional leaders.

Strategic thrustHwange Colliery Company Limited’s grand strategy is to grow the business by first fully recapitalizing its operations. In the three (3) years to 31 December 2014 an amount of US$33 million was injected into the business for capital projects. A further US$31.2 million has been secured and equipment currently under delivery and commissioning bringing the total capital injected in the past 3 years to US$66.2 million.

The Company takes cognizance of the importance of its human capital on its brand, and in the short term all efforts will be directed at addressing the plight of the employees in bringing all salaries to date. For this to be sustainable, Hwange Colliery Company will relaunch a staff rationalization exercise which will see the head count reducing by at least a third. Rationalisation will be subject to funding and will be implemented in the least disruptive manner, cordial and on a win win basis.

The Company is at advanced stages of a fully underwritten rights offer for an amount of US$88 million and a conditional private placement of US$51 million. The main objective is to restructure the Company’s balance sheet, complete the recapitalization programme and retire the Government and other legacy debts. The shareholder consultations have been completed and subject to further approvals, stakeholders will be informed by way of the usual and relevant notices.

The business model has been reviewed and a divisionalisation strategy implemented. The Estates and Medical Divisions are now separate strategic business units fully discharging of their monthly financial obligations including staff salaries. The financial statements of the Company have also been divisionalised. As from 2015, the financial reporting will reflect this new model.

OutlookThe Board and Management will continue with endeavors to achieve a sustainable and permanent solution to the challenges of the Company envisaging the improvement in the performance of the economy driven by ZIMASSET and its enabling policies.

Mota Engil, the Company’s major mining contractor, commenced operations at the beginning of August 2014 and contribution to coal production at contractual capacities will have a significant and positive impact on Hwange Colliery Company’s performance for 2015.

As previously reported, the Company finalised a US$18.2 million facility with PTA Bank for the importation of mining equipment from Europe. Delivery of the mining equipment is currently underway and the commissioning is expected to be done by 31 May 2015. The acquisition of additional mining equipment worth US$13.03 million through a Government guaranteed line of credit from Export and Import Bank of India is in progress and delivery and commissioning is expected to be effected by 30 June 2015.

The interventions and recapitalisation initiatives mentioned above will result in improved production performance expected to be at least 450 000 tonnes per month.

In line with the beneficiation thrust of the national economic blueprint, the Company has signed a memorandum of understanding with an international consultancy firm for the rebuild and refurbishment of the existing coke oven battery and the resuscitation of the gas pipeline plant. This will be done through vendor financing.

The target market for the Company’s coal and coke products remain the local and regional markets but now with deliberate inclination to supply Asian markets.

With the current pressure on commodity prices, the Company will intensify its cost containment strategies to attain margins that would yield profitability at the end of the year 2015.

The Company’s current initiatives will no doubt overturn the loss position and return to profitability in the medium-to-short term given the strong operational base attributed to capitalisation and contractor capacity.

With the economy forecasted to grow by 3.2% in 2015 driven by increased agricultural and mining activities, there is opportunity for increased demand for coal and coke. A strong branding based marketing strategy will see the Company gradually regaining its market share.

The demand for coal on domestic and export markets is expected to begin to firm up in the second half of the year 2015. The sales mix to be adopted will be in favour of the high contribution coal and coke grades while maintaining the contractual volume for thermal coal. This will ensure significant improvements in the gross margins which is currently in the negative.

The Company’s new business model will be key in increasing production and rationalisation of direct and overhead costs.

The Company is at advanced stages of being allocated new coal concessions which are located west of the mine. The new reserves will boost the Company’s life of mine and ability to attract new investment. This will also augment Hwange Colliery Company’s capacity to supply coal to Hwange Power Station stage 3 and other thermal power stations. Coke requirements for iron and steel furnaces and ferro alloy smelters would be adequatley covered.

Hwange Colliery Company has adopted the dematerialization of its shares on the Zimbabwe Stock Exchange through the Central Securities Depository system, in line with the new listing requirements and the global trends.

DividendsThe Board resolved not to consider payment of a dividend in view of the current Company’s performance, the current recapitalization initiatives and the need to turnaround the business in a sustainable manner.

DirectorateMr Stenjwa Thomas Makore was appointed Managing Director of the Company with effect from 01 June 2014. Mr Jemister Chininga, who acted as Managing Director since 01 August 2013, reverted back to his position as Non Executive Director.

There have been no other changes to the Board of Directors since the last Annual General Meeting.

AppreciationI express my sincere gratitude to my fellow Board Members, all our stakeholders, the management team and staff for their commitment and dedication to the Company.

F MUTAMANGIRACHAIRMAN26 March 2015

Auditor’s StatementThese summary financial statements should be read in conjunction with the complete set of the audited financial statements of Hwange Colliery Company Limited for the year ended 31 December 2014, which have been audited by Messrs Grant Thornton Chartered Accountants (Zimbabwe). The audit opinion on the financial statements is unqualified with an emphasis of matter on going concern. As disclosed in note 14, these summary financial statements do not include the financial results of Hwange Coal Gasification Company (Private) Limited (HCGC). These results are not likely to have a material effect on these financial statements. The auditor’s report on the financial statements is available for inspection at the Company’s registered office.

Statement of profit or loss and other comprehensive income for the year ended 31 December 2014 Notes 2014 2013 USD USD Revenue 72 031 451 71 540 667Cost of sales (82 320 263) (81 957 758)Gross loss (10 288 812) (10 417 091)Other income 694 761 936 849Other gains and losses (5 425 101) (504 314)Marketing costs (1 486 861) (2 738 360)Administrative costs (26 527 782) (27 652 799)Redundancy costs (5 053 909) - Impairment loss (3 452 516) -Operating loss before interest and tax (51 540 220) (40 375 715)Finance costs (3 701 723) (3 432 092)Share of profit from equity accounted investments (450 964) (915 000)Loss before tax (55 692 907) (44 722 807) Income tax credit 10 18 499 846 13 108 780Loss for the year (37 193 061) (31 614 027)

Other comprehensive income: Share of other comprehensive income of equity accounted investments, net of tax - -Other comprehensive income, net of tax - - Total comprehensive loss for the year (37 193 061) (31 614 027) Attributable earnings per share - basic 11 (0.20) (0.17) - diluted 11 (0.20) (0.17)Headline earnings per share - basic 11 (0.19) (0.17) - diluted 11 (0.19) (0.17)

Statement of financial position as at 31 December 2014

Notes 2014 2013 USD USD

ASSETS Non Current AssetsProperty, plant and equipment 12 129 078 977 139 129 468Investment property 13 3 700 000 3 700 000Investments accounted for using the equity method 14 17 267 492 17 718 455Intangible assets 1 590 041 1 802 904Deferred tax asset 9 367 557 - 161 004 067 162 350 827

Current AssetsStripping activity asset 15 7 290 468 6 774 204Inventory 16 41 446 180 42 869 241Trade and other receivables 17 37 784 545 34 618 515Financial assets at fair value through profit or loss 18 - 4 645Cash and cash equivalents 19 956 810 830 420 87 478 003 85 097 025

Total assets 248 482 070 247 447 852

EQUITY AND LIABILITIES

Capital and ReservesShare capital 20 45 962 789 45 962 789Share premium 577 956 577 956Non-distributable reserve 4 358 468 4 358 468Revaluation reserve 39 948 518 39 948 518Accumulated losses (52 952 366 ) (15 759 305 ) 37 985 365 75 088 426

Non current liabilitiesLease liability 21 800 000 900 000Deferred income tax - 9 132 289 800 000 10 032 289Current liabilitiesBorrowings 22 11 051 683 19 410 020Trade and other payables 23 187 482 799 132 889 579Provisions 24 10 848 723 8 950 441Current income tax liability 403 500 1 077 097 209 786 705 162 327 137

Total equity and liabilities 248 482 070 247 447 852

Statement of changes in equity for the year ended 31 December 2014 Non- Share Share distributable Revaluation Retained capital premium reserve reserve earnings Total USD USD USD USD USD USD

Balance at 1 January 2013 45 928 393 529 802 4 358 468 39 948 518 15 854 722 106 619 903 Total comprehensive loss for the year - - - - (31 614 027) (31 614 027) Exercise of share options 34 396 48 154 - - - 82 550 Balance at 1 January 2014 45 962 789 577 956 4 358 468 39 948 518 (15 759 305) 75 088 426

Total comprehensive loss for the year - - - - (37 193 061) (37 193 061) Balance at 31 December 2014 45 962 789 577 956 4 358 468 39 948 518 (52 952 366) 37 985 365

2014 2013

Production Volumes

1 802 362 tonnes

1468 566tonnes

23%

2014 2013

Revenue

$72.0 Million

$71.5 Million

1%

2014 2013

Recapitalisation

$31Million

$10 Million

65%

2014 2013

Sales Volumes

6%1 691 981 tonnes

1 602 187 tonnes

2014 2013

Loss (excluding non-recurring items)

25%$23.8Million

$31.6 Million

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HIGHLIGHTS

Directors: F Mutamangira (Chairman); S T Makore* (Managing); N S Chibanguza; J Chininga; I C Haruperi; J Muskwe (Mrs); V Vera ( *Executive) www.hwangecolliery.co.zw

Statement of cash flows for the year ended 31 December 2014

2014 2013 Notes USD USD

CASH FLOWS GENERATED FROM OPERATIONSLoss before tax (55 629 907 ) (44 722 807 )Adjustment for non-cash items 20 276 403 15 937 744

Operating cash flow before changes in working capital (35 416 504 ) (28 785 063 ) Changes in working capital 53 558 672 66 676 940 Cash generated from operations 18 142 168 31 891 877 Interest paid (3 249 810 ) (3 432 092 ) Tax paid (673 597 ) - Net cash flows generated from operating activities 14 218 761 28 459 785 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (346 840 ) (22 993 932 )Proceeds from the disposal of assets - 260 080 Net cash flows utilised in investing activities (346 840 ) (22 733 852 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings (10 631 690 ) (11 201 576 )Proceeds from loans raised 1 511 204 873 000

Net cash flows utilised in financing activities (9 120 486 ) (10 328 576 )

Net increase/(decrease) in cash and cash equivalents 4 751 435 (4 602 643)Cash and cash equivalents at beginning of the year (3 989 511 ) 613 132 Cash and cash equivalents at end of year 19 761 924 (3 989 511 )

11 Earnings per share

11.1 Basic Loss attributable to Shareholders (37 193 061 ) (31 614 027 ) Weighted average number of ordinary shares in issue 183 851 154 183 851 154 Basic earnings per share (0.20 ) (0.17 ) Basic earnings per share is calculated by dividing the loss attributable to Shareholders

by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the Company and held as treasury shares.

11.2 Diluted For diluted earnings per share the weighted average number of ordinary shares in issue

is adjusted to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares being share options granted to employees.

The earnings used in the calculation of all diluted earnings per share measures are the

same as those for the equivalent basic earnings per share measures, as outlined above. 2014 2013 USD USD Loss used to determine diluted earnings per share (37 193 061 ) (31 614 027 ) The weighted average number of ordinary shares for the purpose of diluted earnings per share, reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Weighted average number of ordinary shares in issues 183 851 154 183 713 570 Adjustments for share options - 137 584 Weighted average number of ordinary shares for diluted earnings per share 183 851 154 183 851 154 Diluted earnings per share (0.20 ) (0.17 ) 11.3 Headline earnings per share Headline earnings per share excludes all items of a capital nature and represents an

after tax amount. It is calculated by dividing the headline earnings shown below by the number of shares in issue during the year:

Reconciliation between headline earnings and basic earnings:

2014 2013 USD USD IAS 33 - Earnings (37 193 061 ) (31 614 027 ) Non - recurring items: Proceeds on sale of scrap (352 848 ) (329 352 ) Impairment of property, plant and equipment 3 452 516 - Headline earnings (34 093 393 ) (31 943 379 ) Weighted average number of ordinary shares in issue 183 851 154 183 851 154 Headline earnings per share (0.19 ) (0.17 )

12 Property, plant and equipment

Carrying amount at the beginning of the year 139 129 468 127 346 098 Additions 5 638 479 22 993 932 Disposals - (122 447 ) Impairment (3 452 516) - Depreciation charge for the year (12 236 454) (11 088 115 ) Carrying amount at the end of the year 129 078 977 139 129 468

17 Trade and other receivables 2014 2013 USD USD

Trade receivables - gross 23 116 766 19 092 310 Allowance for credit losses (7 743 731 ) (6 397 028) Trade receivables - net 15 373 035 12 695 282 Other receivables 22 411 510 21 923 233 37 784 545 34 618 515

18 Financial assets at fair value through profit or loss 2014 2013 USD USD Listed equity securities - held for trading - Zimbabwe - fair value as at 1 January 4 645 2 868 - fair value adjustment (4 645 ) 1 777 Fair value - 4 645

19 Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents include cash

on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:

2014 2013 USD USD Bank and cash balances 956 810 830 420 Bank overdrafts (note 22) (194 886 ) (4 819 931 ) 761 924 (3 989 511 )

20 Share capital

Authorised 204 000 000 Ordinary shares of USD0.25 each 51 000 000 51 000 000 Issued and fully paid 110 237 432 Ordinary shares of USD0.25 each 27 559 358 27 559 358 4 404 850 ordinary shares issued under share option scheme 1 514 039 1 514 039 67 557 568 ‘’A’’ Ordinary shares of USD0.25 each 16 889 392 16 889 392 45 962 789 45 962 789

21 Finance lease liability

Finance lease liability 1 061 570 1 000 000 Less: Short term portion (261 570 ) (100 000 ) Long term portion 800 000 900 000 22 Borrowings Current Bank overdrafts (note 19) 194 886 4 819 931 Loans payable within one year 10 595 227 14 490 089 Finance lease liability 261 570 100 000 Total borrowings 11 051 683 19 410 020

23 Trade and other payables Trade payables 106 604 119 86 840 255 Other payables 80 878 680 46 049 324 187 482 799 132 889 579

24 Provisions Provision for rehabilitation - At 1 January 3 893 360 2 893 360 - Charged to the profit or loss : - Additional provisions made during the year 1 000 000 1 000 000 - Amounts used during the year - - - At 31 December 4 893 360 3 893 360

Other provisions: Death benefits 2 491 991 1 633 282 Leave pay provisions 3 463 372 3 423 799 Total provisions 10 848 723 8 950 441

25 Financial risk management objectives and policies The Company’s principal financial liabilities comprise finance lease liabilities, loans payable,

bank overdrafts and trade payables. The main purpose of these financial liabilities is to raise finance for the Company’s operations. The Company has various financial assets such as trade receivables and cash and short term deposits, which arise directly from its operations. Exposure to credit, interest rate and currency risk arises in the normal course of Company’s business and these are main risks arising from the Company`s financial instruments.

26 Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on

an ongoing basis. The Company assumes foreign credit risk only on customers approved by the Board and follows credit review procedures for local credit customers.

Investments are allowed only in liquid securities and only with approved financial institutions. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amounts of each financial asset in the statement of financial position.

27 Interest rate risk The Company’s exposure to the risk of changes in market interest rates relates primarily to

the Company’s long and short term debt obligations and bank overdrafts. The Company’s policy is to manage its interest cost using a mix of fixed and variable rate debts.

28 Currency risk The Company is exposed to foreign currency risk on transactions that are denominated in a

currency other than the United States Dollar. The currency giving rise to this risk is primarily the South African Rand.In respect of all monetary assets and liabilities held in currencies other than the United States Dollar, the Company ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.

The Company’s exposure to foreign currency changes is not significant. 29 Liquidity risk Liquidity risk is that the Company might be unable to meet its obligations. The Company

manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business.

Annual Report and Audited Financial Statements

The annual report and audited financial statements for the year ended 31 December 2014 will be distributed to Shareholders on or before 29 May 2015 and the Annual General Meeting will be held on Tuesday 30 June 2015.

By Order of the Board

T K NcubeCOMPANY SECRETARY26 March 2015

REGISTERED OFFICE 7th Floor, Coal House17 Nelson Mandela AvenueHarareZIMBABWE

13 Investment property 2014 2013 USD USD

Valuation at 1 January 3 700 000 3 700 000 Fair value gains (included in other gains and losses) - - Valuation at 31 December 3 700 000 3 700 000

14 Investments accounted for using the equity method Investments in associates (note 14.1) 446 204 897 168 Investments in joint venture 16 821 288 16 821 287 17 267 492 17 718 455 14.1 Investments in associates Carrying amount as at 1 January 897 168 1 062 468 Share of loss (450 964 ) (165 300 ) Carrying amount as at 31 December 446 204 897 168 The financial results for Hwange Coal Gasification Company (Private) Limited were not

available for inclusion in these summary financial statements.

2014 2013 USD USD

15 Stripping activity asset Balance at beginning of year 6 774 204 4 522 518 Current year pre-stripping costs 1 796 730 2 251 686 Costs charged to cost of sales (1 280 466 ) - Balance at end of year 7 290 468 6 774 204

16 Inventory Raw materials 4 881 326 5 596 027 Consumables 72 895 72 897 Finished goods - Coal and coal fines 34 282 926 32 127 882 - Coke 2 209 033 5 072 435 41 446 180 42 869 241

Notes to the audited financial statementsfor the year ended 31 December 2014

1. General information Hwange Colliery Company Limited is a Company that extracts, processes and distributes

coal and coal products. The Company operates a coal mine situated in Hwange and sells its products mainly within Zimbabwe and in Sub Saharan Africa. The Company is a limited liability Company incorporated and domiciled in Zimbabwe. It is listed primarily on the Zimbabwe Stock Exchange (ZSE), and has secondary listing on the Johannesburg Stock Exchange (JSE) and London Stock Exchange (LSE).

The Company’s financial statements were authorised for issue by the board of directors on the Thursday 19th of March 2015.

Presentation currency These financial statements are presented in United States Dollars being the functional

and reporting currency of the primary economic environment in which the Company operates.

2 Basis of preparation of the abridged financial statements The summary financial statements for the year ended 31 December 2014 have been

prepared in accordance with IAS 34, Interim Financial Reporting and in terms of Zimbabwe Stock Exchange (ZSE) listing rules and the Companies Act (Charter 24:03). They do not include all of the information required for full annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards.

3 Statement of compliance In the current year, the Company has adopted amendments to the following International

Accounting Standards: Adoption of ‘Presentation of Items of Other Comprehensive Income’ (Amendments to lAS 1) (i) Offsetting financial assets and financial liabilities (amendments to IAS 32) (ii) Recoverable amount disclosures for non-financial assets (amendments to IAS 36).

4 Summary of accounting policies The financial statements have been prepared using the measurement bases specified by

IFRS for each type of asset, liability, income and expense. The accounting policies are consistent with those adopted in the company’s last annual financial statements.

5 Revenue recognition Revenue comprises revenue from the sale of goods and the rendering of services. Revenue

is measured by reference to the fair value of consideration received orreceivable by the Company for goods supplied and services provided, excluding sales taxes, rebates, and trade discounts.

6 Earnings per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary

shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

7 Property, plant and equipment Freehold land and buildings and plant and machinery are shown at fair value, based on

periodic, but at least annual, valuations by external independent valuers, less subsequent accumulated depreciation for buildings. All other property, plant and equipment is stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

8 Depreciation Land, capital work in progress and prestripped overburden are not depreciated. All other

property, plant and equipment are depreciated on a straight line basis or amortised at rates estimated to write-off the cost or valuation of such assets over their expected useful lives.

9. Intangible assets Intangible assets include acquired mining rights and acquired and internally developed

software used in production or administration that qualify for recognition as an intangible assets. They are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing.

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10 Taxation 2014 2013 USD USD

Income tax: Current tax - -

Deferred tax (18 499 846 ) (13 108 780 ) Income tax credit (18 499 846 ) (13 108 780 )