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1 UNIVERSAL COAL PLC Registration number Consolidated Half Year Financial Statements for the period ended

2 Corporate directory Directors John Hopkins OAM Non-executive Chairman Hendrik Bonsma Non-executive Director Anton Weber Executive Director and Chief Executive Officer Shammy Luvhengo Executive Director David Twist Non-executive Director Carlo Baravalle Non-executive Director Nonkululeko Nyembezi-Heita Non-executive Director Andries Engelbrecht Non-executive Director Joint company secretaries United Kingdom registered office Benjamin Harber (United Kingdom) of SGH Martineau Company Secretarial LLP and Emma Lawler (Australia) of Company Matters Proprietary Limited (ASX Liaison and local agent) One America Square Crosswall London EC3N 2SG United Kingdom Telephone: Facsimile: Australian registered office Level George Street Sydney, NSW, 2000 Australia Telephone: Operational office Auditors Stock exchange listing Share registrars 467 Fehrsen Street Brooklyn, 0182, Pretoria South Africa Telephone: Facsimile: BDO LLP 55 Baker Street London W1U 7EU United Kingdom Australian Securities Exchange (Share code: UNV) Comptershare Investor Services Proprietary Limited Level 2, 45 St. Georges Terrace Perth WA 6000, Australia Computershare Investor Services Plc The Pavilions, Bridgwater Road Bristol BS99 6ZY United Kingdom 1

3 Corporate directory Bankers HSBC Bank Australia Limited Level 1, 190 St. Georges Terrace Perth WA 6000, Australia HSBC Bank Plc Coventry DSC, Harry Weston Road Binley West Midlands CV3 2TQ United Kingdom Company registration number Solicitors Mayer Brown International LLP 201 Bishopgate London EC2M EUG United Kingdom Webber Wentzel Attorneys 10 Fricker Road Illovo Boulevard Illovo, Johannesburg, 2196 South Africa Website 2

4 Index The reports and statements set out below comprise the consolidated half year financial statements presented to the shareholder: Index Page Summary Results 4 Chairman's Statement 5-12 Directors' Declaration 13 Condensed Consolidated Statement of Financial Position 14 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 15 Condensed Consolidated Statement of Changes in Equity 16 Condensed Consolidated Statement of Cash Flows 17 Significant Accounting Policies Notes to the half year unaudited Consolidated Financial Statements Review opinion

5 Summary Results 1. Review of financial results and activities Six months ended 31 Dec Six months ended 31 Dec 2013 Operating loss (2 013) (1 990) Loss for the period (4 728) (2 365) Taxation Total comprehensive income / (loss) for the period attributable to equity shareholders % Movement (1)% (100)% 100 % 34 (2 609) 101 % The underlying result for the period was encouraging given that the Group s first operating asset, the Kangala Colliery, was only at a steady state of production for part of the period under review. Kangala generated a gross profit of A$2.2m but the Group has achieved an overall loss after tax of $4.1m once operating expenses, finance costs and taxation have been deducted. Due to favourable movements in the ZAR:AUD exchange rates, a gain of $4.1m on translation of foreign operations has been recognised providing a total comprehensive income of A$ Dividends The board of directors have resolved that no dividends were decladed or paid for the financial period ended ( A$ nil). 3. Earnings result The total comprehensive income of for the six months ended was A$ ( loss of A$ ). Six months ended 31 Dec Six months ended 31 Dec 2013 Basic and diluted loss per share (cents per share) (0.87) (0.73) Weighted average number of ordinary shares used in the calculation of basic and diluted LPS The amount used as the numerator in calculating basic and diluted loss per share is the same as the loss attributable to the owners of the parent in the consolidated statement of profit or loss and other comprehensive income. 4. Date of authorisation for issue of financial statements The consolidated half year financial statements have been authorised for issue by the directors on 15 March No authority was given to anyone to amend the consolidated half year financial statements after the date of issue. JOHN HOPKINS OAM Non-executive Chairman 15 March

6 Chairman's Statement The Directors submit the unaudited financial statements of (ASX: UNV; the Company) for the six months ended. 1. Directors & officers The names of Directors who held office during or since the end of the half year: John Hopkins OAM Chairman and Non-executive Director Anton Weber Chief Executive Officer and Executive Director Shammy Luvhengo Executive Director Hendrik Bonsma Non-executive Director Carlo Baravalle Non-executive Director David Twist Non-executive Director Nonkululeko Nyembezi-Heita Non-executive Director appointed 16 October Andries Engelbrecht Non-executive Director appointed 16 October 2. Results Universal Coal generated a comprehensive profit for the half year after tax of A$34,305 (six month ended 2013, loss of A$2,608,845). The underlying result for the period was encouraging given that the Group s first operating asset, the Kangala Colliery, was only at a steady state of production for part of the period under review. Kangala generated a gross profit of A$2.2m but the Group has achieved an overall oss after tax of $4.1m once operating expenses, finance costs and taxation have been deducted. Due to favourable movements in the ZAR:AUD exchange rates, a gain of $4.1m on translation of foreign operations has been recognised providing a total comprehensive income of A$ Importantly, the Company was able to deliver its first operation on time and within budget, whilst planting the seeds for growth through securing its next operation, and progressing another project earmarked to become the Company's third mine. That Universal Coal also achieved a positive gross margin from the mining operations for the period is testament to the quality and calibre of the Board and team working together. 3. Review of operations, development and exploration activities Coal assets The Company s coal assets are all located in South Africa. Universal Coal has one operating coal asset (Kangala), another in acquisition and development (NCC Roodekop) and one exploration coal project (Brakfontein) all situated in the Witbank Coalfields in the Mpumalanga Province; and two exploration coking coal projects (Berenice-Somerville and Cygnus) in the Limpopo Province. Thermal Coal Operating Assets Kangala Colliery Kangala is Universal Coal s first operation. The mine is a predominantly domestic thermal coal operation supplying coal primarily to Eskom, the major energy provider in South Africa. Development Kangala Colliery was officially completed in October and handed over to the operation team at a final capital cost of A$48.6m on time and within budget. Further capital was committed to the project development blueprint to cater for an additional 6 kidney shaped conical stockpiles to increase the total product stockpile capacity to 66,000 tonnes. Furthermore in December, the technical completion tests were completed under the banking project financing agreements echoing the resounding successful development of this colliery by the Universal Coal team. 5

7 Chairman's Statement Local Economic Development and Sustainability Initiatives During the period, Kangala established a local community operators skills training programme in collaboration with a Mining Qualification Authority certified training institute. To date, the initiative has successfully trained twelve local residents as qualified heavy mining machinery operators. Eight successful operators have been appointed as Articulate Dump Truck operators for the Kangala Colliery. The programme will train one hundred operators by the end of the next financial year. Construction of the Nkangala FET campus, which is a local economic development project, is also progressing well. The initiative is a joint venture with Exxaro s Leeuwpan Coal Mine, the Department of Education and the Local Municipality. Operating Results For the period, the Kangala Colliery produced 1,083,169 run-of-mine (ROM) tonnes, fed 1,145,187 tonnes to the Coal Handling and Preparation Plant (CHPP) at an average yield of 72% and sold 709,069 product tonnes (691,341 tonnes to Eskom and 17,728 tonnes as export product). The operation performance of the Kangala Colliery is tabulated below: Operational Performance (tonnes) 6 Months ended - 31 Dec Year ended 30 June (5 months production) % Change Run-of-mine (ROM) production Kangala Colliery 1,083, ,384 71% Total ROM production 1,083, ,384 71% Feed to plant Kangala Colliery 1,145, , % Total feed to plant 1,145, , % Plant Yields Kangala Colliery 72% 100% (28%) Domestic sales 691, ,333 84% Export sales 17, % Total sales 709, ,333 89% Group revenue for the period amounted to A$26.7m at a gross profit of A$2.2m or 8% of turnover and a positive Group Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) of A$274,569 (six month ended 2013, loss of A$2,070,879). The average selling price of coal was A$37.60 per sales tonne at an average cost per sales tonne of A$34.54, leaving a gross margin of A$3.06 per tonne. Removing non-cash operating depreciation costs within the sales cost per tonne derives a revised cash cost of A$30.95 per sales tonne and a gross margin of A$6.65 per sales tonne or 18% of turnover. The cost per ROMt for the period under review was A$22.61, deriving a revised cash cost of A$20.26 per ROMt. Whilst the cost per ROMt is slightly higher than anticipated, these costs are expected to decrease going forward and remain in the lowest quartile for the sector - with the operation now having attained steady state. Contained within the administration costs for the period are management fees paid to the 29.5% shareholder; Mountain Rush Trading 6 (Pty) Ltd of A$0.5m per the service fee agreement entered into on 6 May

8 Chairman's Statement Thermal Coal Development Assets NCC Roodekop (NCC acquisition pending) The NCC acquisition is still in progress, please refer to Section 4 Corporate details for the status of the NCC acquisition transaction. During the period, Universal Coal developed a geological model for the integrated NCC Roodekop project and announced a JORC 2012 and SAMREC compliant Coal Resource estimate of million tonnes including a maiden Coal Reserve estimate of 14.1 million tonnes for the combined project. Development Team The Universal Coal team that implemented the Kangala Colliery has now assumed full functional development activities for the NCC Roodekop project. The mine manager, technical engineering manager, health and safety manager, financial assistant, mine geologist and the environmental co-ordinator have been appointed and a full time metallurgical manager is in the process of being recruited. Roodekop All regulatory applications required to obtain the necessary mining authorisation have been awarded and the surface rights have been acquired and transferred into the name of Universal Coal Development IV (Pty) Ltd. Site development activities have begun, with mining activities set to commence immediately after the securing of a Coal Sales Agreement, initially targeted at Eskom as the majority customer for the open pit thermal coal product. A tender process for the opencast contract mining supplier has been commissioned and is in the final stages of adjudication after which an appointment will be made. Thermal Coal Exploration Assets Brakfontein Brakfontein is located 25km east of the 2.4 Mtpa ROM Kangala Mine within the Witbank coal field. The project is earmarked as the company s third operation. During the period, the Company completed a pre-feasibility study and announced a maiden JORC 2012 compliant Coal Reserve estimate of 9.6 million tonnes within the Northern Open-Pit Areas and an updated Coal Resource estimate of 75.8 million tonnes. The current focus remains on optimising the feasibility study including investigating the case for utilising excess capacity at the nearby Kangala operation (capacity up to 4.25Mtpa). With the Mining Right in hand and having already secured the National Environmental Management Act (NEMA) authorisation, Brakfontein only awaits the granting of the Integrated Water Use Licence (IWUL) before development activities can commence. Coking coal exploration assets Berenice/Cygnus The Company is currently seeking funding partners to progress the completion of a prefeasibility study and to complete the necessary technical work in order to lodge a mining right application by mid Donkin The Donkin project held under Universal Coal Development VI (Pty) Ltd was not considered to be prospective and the prospecting licence which expired on 8 December was not renewed. 7

9 Chairman's Statement Universal Coal Global Coal Resources Summary (to be read in conjunction with Competent Person s Statement) Project Gross Reserve Proved Mt Gross Resource Measured Mt Gross Resource Indicated Mt Gross Resource Inferred Mt Gross Total Mt Attributable to Universal Mt Thermal Coal (Witbank) Kangala NCC 2 -Roodekop Brakfontein Total Thermal Coal Coking Coal (Limpopo) Berenice , Cygnus Somerville Total Coking Coal , Total , , Notes: Mineral Resources are stated inclusive of Mineral Reserves. Rounding (conforming to the JORC Code) may cause computational discrepancies. The Resource and Reserve estimates for Kangala, Berenice, Cygnus and Somerville were prepared and first disclosed under the JORC Code It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Resource and Reserve estimates for the NCC project are SAMREC compliant and qualifying foreign estimates for the purpose of ASX Listing Rules. The Resource and Reserve estimates for the Roodekop and Brakfontein projects have been updated to comply with the JORC Code Universal has an attributable interest of 70.5% of the Kangala Project. 2. Universal has an attributable interest of 49% in the NCC project (under acquisition). 3. Universal has an attributable interest of 74% in the Roodekop Project. 4. Universal has an attributable interest of 50.29% in the Brakfontein Project and the right to negotiate to acquire up to a 74% interest upon completion of the BFS and award of a mining right.. 5. Universal has an attributable interest of 50% in the Berenice and Somerville Projects with an option to acquire up to a 74% interest. 6. Universal has an attributable interest of 50% in the Cygnus Project with an option to acquire up to a 74% interest. 8

10 Chairman's Statement 4. Corporate New Clydesdale Colliery acquisition The following conditions precedent are yet to be satisfied, but are expected to be satisfied on or before the final date for satisfaction, which is in the process of being extended to 31 July 2015: i. Exxaro successfully obtaining section 11 consent, being a form of regulatory consent to the transaction required under the South African Minerals and Petroleum Resources Development Act; ii. iii. Universal Coal acquiring all the necessary regulatory environmental approvals; No Material Adverse Change having occurred before completion the company is not aware that any such change has occurred. The acquisition price of A$17.9 million (R170 million) has been fully guaranteed by Rand Merchant Bank, a division of FirstRand Bank Limited, and is reflected in the restricted cash line in the statement of financial position at. The Company considers that Exxaro and Universal Coal Development VIII are on track to complete the sale and acquisition of NCC in accordance with the acquisition agreement. Permitted Cash Distribution from Kangala On 17 December, the Company announced the successful satisfaction of the technical completion testing requirements as determined by debt financier Rand Merchant Bank (RMB), representing another significant milestone for the Company and marking the official transition to steady state operations for the Kangala Colliery. Having fully complied with its performance obligations, Universal Coal now qualifies for more attractive project financing facility terms. Furthermore, the Kangala Colliery is now entitled to, under certain circumstances, make permitted cash distributions to its shareholders in the form of shareholder loan repayments and/or dividend distributions. 5. Prospects Steady state production at Kangala Colliery ROM production for the period was in excess of one million tonnes and the colliery is well on track in achieving its 2.4 Mtpa nameplate capacity for the full year ahead. At a gross cash margin of 18% for the period under review, the Company is well poised to deliver strong cashflow and profits going forward. In the months following the period of review, the Kangala Colliery has exceeded both ROM and sales tonnage targets paving the way for continued positive results. NCC Roodekop set to deliver first coal Development activities have commenced on the joint NCC Roodekop operation and the project development team has been commissioned with a focus on achieving first coal before the end of the 2015 calendar year. This milestone is heavily dependent on the NCC acquisition agreement closing timeously and the award of a Coal Sales Agreement with Eskom. The Company is in negotiations with debt financiers to provide the balance of the funding requirements for the boxcut and infrastructure requirements at Roodekop and the NCC plant upgrade requirements. 9

11 Chairman's Statement 6. Strategic investments and conversion of notes On 6 October, Shareholders at a General Meeting approved the following transactions: Strategic investment by IchorCoal N.V. On 1 September, entered into a Subscription Agreement with IchorCoal N.V. for the strategic investment of A$24,483,400 comprising as follows: a subscription for 80,440,000 ordinary shares of (and CHESS Depositary Interests to which the ordinary shares relate on a one for one basis) at a price of A$0.145 per Ordinary Share for proceeds of A$11,663,800; and a subscription for 71,220,000 non-voting, non-cumulative convertible preferred shares at a price of A$0.18 per Preferred Share for proceeds of A$12,819,600. Furthermore, on 1 September, entered into a Warrant Instrument with IchorCoal N.V. whereby IchorCoal N.V. would subscribe for 71,220,000 Warrants, exercisable for a period of 18 months at a strike price of A$0.36. As part of the investment and effective from 16 October, we welcome Messrs Nonkululeko Nyembezi-Heita and Andries Engelbrecht to the Board of Universal Coal as nominee directors of IchorCoal N.V. Further investment by Coal Development Holding B.V. An agreement was entered into with Coal Development Holding B.V. on 28 August where, Coal Development Holding B.V. exercised its conversion rights under the existing A$3.25 million Convertible Loan Notes, which converted at an effective price of A$0.125 per Ordinary Share for the issue of 26,000,000 Ordinary Shares and entered into a Subscription Letter Agreement, by which Coal Development Holding subscribed for 6,250,000 Ordinary Shares at A$0.16 per Ordinary Share for total consideration of A$1,000,000. The funds raised from the ordinary and preferred share issues have completed the financing for Universal Coal s acquisition of the New Clydesdale Colliery from Exxaro Coal Mpumalanga (Pty) Ltd, part-funded the development of the Company s Roodekop project of which the New Clydesdale Colliery will form part and, in respect of any balance, has been used to fund general working capital requirements. 7. Going concern The accounts have been prepared on the going concern basis. At the period-end the Group had A$ ( A$ ) of unrestricted cash reserves. As disclosed in note 10 to the financial statements the Group raised A$ 25.5 million during the period through the issue of ordinary shares and preferred shares. The funds raised have been used to fund working capital, to provide a cash backed guarantee on the New Clydesdale Colliery ( NCC ) acquisition and to acquire the surface rights for the Roodekop Project. Despite this additional fund raise, the Group s cash flow projections show that in order for the Group to meet its known commitments, debt repayment schedules and operating cashflow requirements in the short term, the Group is reliant on the successful operation of the Kangala Colliery. The successful operation of the Kangala Colliery is reliant on the Group fulfilling the terms of the off-take arrangement with Eskom with the key deliverable being ensuring the Group deliver the tonnage and quality of coal required by Eskom under the terms of the agreement. The Directors are confident that this milestone will be achieved and the Directors are therefore satisfied that the interim financial statements should be prepared on a going concern basis. 8. Subsequent events No significant subsequent events to report. JOHN HOPKINS OAM Non-executive Chairman 15 March

12 Chairman's Statement Competent Person s Statement The information in this report that relates to Coal Resources for Kangala, Roodekop, Brakfontein, Berenice, Cygnus and Somerville is based on information reviewed and compiled by Mr Nico Denner, who is a registered natural scientist and a member of the South African Council for Natural Scientific Professions (a Recognised Overseas Professional Organisation). Mr Denner is employed by Gemecs (Pty) Ltd and has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Mr Denner consents to the inclusion in this report of this information in the form and context in which it appears. The Kangala Coal Reserve estimate was prepared by Mr Ben Bruwer, who is a Principal Mining Engineer and Co-owner of VBKom Consulting Engineers who are the preferred mining consultants to Stefanutti Stocks Mining Services (Pty) Ltd. He is a member of the Engineering Council of South Africa (ECSA) (a Recognised Overseas Professional Organisation) and member of SAIMM. He has more than 15 years experience in the South African coal and minerals industries. VBKom CE has sufficient experience which is relevant to the type of mineralisation and the Kangala deposit and to the activity which Mr Bruwer is undertaking to qualify as a Competent Person as defined by the SAMREC and JORC Codes for Reporting of Exploration, Mineral Resources and Ore Reserves. The information relating to NCC Coal Resources and Reserves has been provided under ASX Listing Rules to and is an accurate representation of the available data and studies for NCC by Exxaro as certified by the SAMREC compliant report NCC Mine Mineral Resource and Ore Reserve Statement, 2012 as reviewed by Mr. Jaco Malan. Mr Malan is a registered natural scientist and member of the South African Council for Natural Scientific Professions (a Recognised Overseas Professional Organisation). Mr Malan is employed by Universal Coal and has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Mr Malan consents to the inclusion in this report of this information in the form and context in which it appears. The information in this report that relates to the Roodekop and Brakfontein Ore Reserve estimates are based on information compiled and reviewed by Mr Kevin Donaldson. Mr Donaldson is employed by Universal Coal as Chief Development Engineer and is registered with the Engineering Council of South Africa and a member of both the South African Institute of Mining and Metallurgy (Overseas Professional Organisation) and the South African Colliery Managers Association. He has more than 20 years experience in the South African coal mining industry and sufficient experience which is relevant to the type of mineralisation and the Roodekop and Brakfontein deposits and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the JORC Code for Reporting of Exploration, Mineral Resources and Ore Reserves. Reporting on Exploration Results The Resource/Reserve Statement was prepared and first disclosed under the JORC Code It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The statement also complies with the recommendations and guidelines set out in the revised 2007 South African Code for The Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code) and the rules and guidelines relating to the independent expert s reports set by ASIC and ASX. 11

13 Chairman's Statement Summary of Mineral Assets Project Property Permit Type & Number Location Size Kangala Roodekop Brakfontein Berenice & Somerville Cygnus NCC Wolvenfontein 244IR: Portion 1 and RE of Portion 2 Middelbult 235IR: Portions 40 and 82 Modderfontein 236IR: Portion 1 Roodekop 63IS Brakfontein 264IR : Portions 6, 8, 9, 10, 20, 26, 30 and Remaining Extent Berenice 548MS, Celine 547MS, Doorvaardt 355MS, Longford 354MS, Somerville 9MS and adjacent farms Cygnus 543MS and adjacent farms Middeldrift 42 IS (portion 4), Diepspruit 41 IS (RE, RE of portions 1, 2, 3, portions 7, 8, 9, 10), Rietfontein 43 IS (RE, RE of portion 1, portion 3, M/A 2, 3, 4 of RE portion 1), Vaalkrans 29 IS (portions 4, 6, 8, 9, 11, 12, 13, 14, 16, RE of portion 16, M/A 2 of portion 6), Clydesdale 483 IS, Lourens 472 IS, Enkelbosch 20 IS (M/A 4 and 5) and Haasfontein 28 IS (portion 1, M/a 6 and 7 of portion 7) Mining Right: MP30/5/1/2/2/429MR Prospecting Right: MP30/5/1/1/2/641PR Prospecting Right: MP30/5/1/1/2/639PR Mining Right: MP30/5/1/1/2/492MR Mining Right: MP30/5/1/1/2/10027MR Prospecting Right: LP30/5/1/1/2/376PR Prospecting Right: LP30/5/1/1/2/1276PR Mining Right: MP30/5/1/2/2/148MR Delmas, Mpumalanga Province, South Africa Delmas, Mpumalanga Province, South Africa Delmas, Mpumalanga Province, South Africa Kriel, Mpumalanga Province, South Africa Delmas, Mpumalanga Province, South Africa Waterpoort, Limpopo Province, South Africa All Days, Limpopo Province, South Africa Kriel, Mpumalanga Province, South Africa Beneficial Interest Held Change in Interest 951 Ha 70.5% None 942 Ha 70.5% None 127 Ha 70.5% None 835 Ha 74% None 879 Ha 50.29% None 39,484 Ha 12,299 Ha 50% None 50% None The company has an experienced team of directors, senior managers and geoscientists with extensive expertise in both coal exploration and mining in South Africa and who have a proven track record of project development. 4,125 Ha 49% Acquired 49% subject to Section 11 transfer and finalisation of acquisition 12

14 Directors' Declaration In the opinion of the directors: a. The financial statements and notes set out on pages 14 to 36: i. Comply with Accounting Standard IAS 34: Interim Financial Reporting; and ii. Give a true and fair view of the consolidated entity's financial position as at and of its performance for the half year ended on that date. b. There are reasonable grounds to believe that will be able to pay its debts as and when they become due and payable. Ths declaration is made in accoardance with a resolution of directors. JOHN HOPKINS OAM Non-executive Chairman 15 March

15 Condensed Consolidated Statement of Financial Position Notes Audited 30 June 2013 Assets Non-Current Assets Property, plant and equipment Intangible assets Investments in associated undertakings Loans receivable Deferred tax Current Assets Inventories Trade and other receivables Cash and cash equivalents (including restricted amounts) Total Assets Equity and Liabilities Equity Equity Attributable to Equity Holders of Parent Share capital Reserves Accumulated loss (26 190) (22 870) (21 696) Non-controlling interest Liabilities Non-Current Liabilities Borrowings Converting notes Derivative financial liability Deferred tax Provisions Current Liabilities Borrowings Finance lease obligation Trade and other payables Total Liabilities Total Equity and Liabilities

16 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income half year to half year to 2013 Notes Revenue Cost of sales (24 491) - Gross profit Operating expenses (4 184) (1 990) Operating loss (2 013) (1 990) Finance income Foreign exchange losses (8) (7) Derivative financial liability (956) - Finance costs 20 (2 207) (497) Loss before taxation (4 728) (2 365) Taxation Loss for the period (4 067) (2 365) Other comprehensive income: Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations (244) Other comprehensive income / (loss) for the period net of taxation (244) Total comprehensive income / (loss) for the period 34 (2 609) Loss for the period attributable to : Owners of the parent (3 455) (2 343) Non-controlling interest (612) (22) (4 067) (2 365) Total comprehensive income / (loss) attributable to: Owners of the parent (644) (2 587) Non-controlling interest 678 (22) Loss per share 34 (2 609) Per share information Basic and diluted loss per share (cents) 25 (0.87) (0.73) 15

17 Condensed Consolidated Statement of Changes in Equity Share capital Share premium Total share capital Foreign currency translation reserve Share based payments reserve Convertible instrument reserve Total reserves Accumulated loss Total attributable to equity holders of the parent Noncontrolling interest Total equity Balance at 01 July (19 899) Loss for the period (2 343) (2 343) (22) (2 365) Transfer between reserves (546) - (546) Other comprehensive loss (244) - - (244) - (244) - (244) balance at 31 December (21 696) Balance at 01 July (6 844) (22 870) Loss for the period (3 455) (3 455) (612) (4 067) Other comprehensive income Total comprehensive loss for the period (3 455) (644) Issue of ordinary shares (1 392) (1 392) Issue of preferred shares Transfer between reserves (494) (20) 494 (20) Recycling finance charge on convertible loan note Total changes (494) (20) (898) (1 412) balance at 31 December Note (4 527) (26 190)

18 Condensed Consolidated Statement of Cash Flows half year to half year to 2013 Notes Cash flows from operating activities Cash used in operations 21 (1 019) (2 369) Finance income Finance costs (696) (373) Net cash from operating activities (1 347) (2 613) Cash flows from investing activities Property, plant and equipment acquired 3 (9 307) (22 442) Intangible assets acquired 4 (656) (465) Investment in associated undertakings (6) - Movements in loan to shareholder (1 590) - Transfer to restricted cash (15 351) (283) Net cash from investing activities (26 910) (23 190) Cash flows from financing activities Proceeds on share issues, net of share issue expenses Proceeds from RMB project finance facility Net cash from financing activities Total movement in cash and cash equivalents for the period (642) (1 555) Cash and cash equivalents at the beginning of the period Effect of exchange rate movement on cash balances 481 (262) Total unrestricted cash and cash equivalents at the end of the period Restricted cash Total cash and cash equivalents at end of the period

19 Significant Accounting Policies 1. Presentation of Consolidated Half Year Financial Statements The consolidated half year financial statements have been prepared in accordance with International Financial Reporting Standards. The consolidated half year financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Australian Dollars. These accounting policies are consistent with the previous period. 1.1 Basis of preparation The condensed consolidated interim financial information has been prepared using the accounting policies applied by the company in its 30 June annual report which are in accordance with the framework concepts and the recognition and measurement criteria of the International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board ( IASB ) as adopted for use in the EU ( IFRSEU ), the presentation and disclosure requirements of IAS 34: Interim Financial Reporting: During the current interim period the Company issued preference shares. These instruments have been recognised as equity as the contractual terms do not meet the definition of a financial liability. The current and non-current financial assets and financial liabilities carrying values equal their fair values as presented in these condensed consolidated interim financial information. The condensed consolidated interim financial information are prepared in accordance with the historical cost basis as modified by the fair value accounting of certain assets and liabilities where required or permitted under the recognition and measurement criteria of the International Financial Reporting Standards. This condensed consolidated interim financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June and any public announcements by. The accounts have been prepared on the going concern basis. At the period-end the Group had A$ ( A$ ) of unrestricted cash reserves. As disclosed in note 10 to the financial statements the Group raised A$ 25.5 million during the period through the issue of ordinary shares and preferred shares. The funds raised have been used to fund working capital, to provide a cash backed guarantee on the New Clydesdale Colliery ( NCC ) acquisition and to acquire the surface rights for the Roodekop Project. Despite this additional fund raise, the Group s cash flow projections show that in order for the Group to meet its known commitments, debt repayment schedules and operating cashflow requirements in the short term, the Group is reliant on the successful operation of the Kangala Colliery. The successful operation of the Kangala Colliery is reliant on the Group fulfilling the terms of the off-take arrangement with Eskom with the key deliverable being ensuring the Group deliver the tonnage and quality of coal required by Eskom under the terms of the agreement. The Directors are confident that this milestone will be achieved and the Directors are therefore satisfied that the interim financial statements should be prepared on a going concern basis. The condensed interim financial information for the period 01 July to is unaudited. In the opinion of the Directors, the condensed interim financial information for the period presents the financial position, result from operations, changes in equity and cash flows for the period in conformity to IAS 34 'Interim Financial Reporting' consistently applied. The condensed interim financial information incorporates comparative figures for the interim periods to 30 June and 31 December 2013 for the consolidated statement of financial position, the interim period from 01 July 2013 to 2013 for the consolidated statement of profit or loss and other comprehensive income and the consolidated statement of cash flows and the interim period from 01 July 2013 to 2013 for the consolidated statement of changes in equity. The financial information for the year ended 30 June contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act, A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors report on those accounts was unqualified and did not contain a statement under section 498(2) (3) of the Companies Act, It did include references to matters to which the auditors drew attention to the appropriateness of the going concern basis of preparation by way of emphasis without qualifying their opinion. 1.2 Stripping costs As part of its mining operations, the Group incurs stripping (waste removal) costs both during the development phase and production phase of its operations. Stripping costs incurred in the development phase of a mine are capitalised. Stripping costs incurred during the production phase are generally considered to create two benefits, being either the production of inventory or improved access to the coal to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. 18

20 Significant Accounting Policies 1.2 Stripping costs (continued) Where the benefits are realised in the form of improved access to coal to be mined in the future, the costs are recognised as a non-current asset, referred to as a stripping activity asset, if the following criteria are met: future economic benefits (being improved access to the coal body) are probable the component of the coal body for which access will be improved can be accurately identified the costs associated with the improved access can be reliably measured If one of the criteria is not met, the production stripping costs are charged to the statement of profit or loss as operating costs as they are incurred. The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the identified component of coal, plus an allocation of directly attributable overhead costs. If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a relevant production measure is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This production measure is calculated for the identified component of the coal body and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place. The Stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, being the Mine asset in the statement of financial position. The stripping activity asset is subsequently depreciated using the units of production method over the life of the identified component of the coal body that became more accessible as a result of the stripping activity. The stripping activity asset is then carried at cost less depreciation and any impairment losses. 1.3 Fair value disclosure A number of assets and liabilities included in the Group s financial statements require measurement at, and/or disclosure of, fair value. The fair value measurement of the Group s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the fair value hierarchy ): Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the company can access at measurement date. Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. The Group measures a number of financial instruments at fair value. All instruments are categorised as level 3, there are no level 1 or level 2 instruments. Refer to note 26 for details. 1.4 Preferred shares Where the contractual terms of preferred shares do not meet the the definition of a financial liability, they are recognised in equity. 19

21 Notes to the half year unaudited Consolidated Financial Statements 2. Segmental report All investments in associates and subsidiaries operate in one geographical location being South Africa, and are organised into two business units from which the Group s expenses are incurred and revenues are earned, being (1) for the exploration and extraction of coal and (2) mining and sale of coal. The reporting on these investments to the Chief Operating Decision Makers, the Board of Directors, focuses on the use of the profit and loss and capitalisation of the coal projects. The non-current assets relating to the capitalisation expenditure associated with the coal projects are located in South Africa. All corporate expenditure, assets and liabilities relate to incidental operations carried out in the United Kingdom, Australia and South Africa. For the half year to Production and sale of coal Indirect interest in exploration and development of coal Corporate (Unallocated) Revenue Cost of sales (24 491) - - (24 491) Gross profit Operating expenses (excluding share based (1 935) (200) (2 049) (4 184) payments) Foreign exchange loss - - (8) (8) Finance income Finance cost (1 529) - (678) (2 207) Derivative financial liability - - (956) (956) Loss before taxation (1 209) (200) (3 319) (4 728) Taxation Loss after taxation (548) (200) (3 319) (4 067) Total non current assets Total assets Total liabilities (50 591) (162) (6 994) (57 747) For the half year to 2013 Operating expenses (excluding share based payments) (56) (1 934) (1 990) Foreign exchange loss - (7) (7) Finance income Finance cost - (497) (497) Loss before and after taxation (56) (2 309) (2 365) Total non current assets Total assets Total liabilities (34 335) (6 146) (40 481) Total 20

22 Notes to the half year unaudited Consolidated Financial Statements 3. Property, plant and equipment Cost Accumulated depreciation Carrying value Cost 30 June Accumulated depreciation Carrying value 6 Capital work in progress Computer equipment 88 (45) (34) 35 Development and production (388) (153) assets Furniture and fixtures 40 (24) (20) 16 Land rehabilitiation assets (279) (114) Mine development (842) (295) Mine owners assets (466) (140) Mineral properties (313) (110) Mining infrastructure (943) (332) Motor vehicles 211 (59) (31) 170 Processing plant (765) (180) Total (4 124) (1 409) Reconciliation of property, plant and equipment - Opening balance Additions Transfers Foreign exchange movements Depreciation Total Capital work in progress (6 162) Computer equipment (9) 43 Development and production (228) assets Furniture and fixtures (3) 16 Land rehabilitation asset (159) Mine development (533) Mine owners assets (319) Mineral properties (198) Mining infrastructure (594) Motor vehicles (27) 152 Processing plant (575) (2 645) Dec 30 June 31 Dec 2013 Details of mineral properties Portion 1 of farm Wolvenfontein, 244 IR Mpumalanga Province Portion 1 of farm Roodekop, 63 IS Mpumalanga Province

23 Notes to the half year unaudited Consolidated Financial Statements 4. Intangible assets Cost Accumulated amortisation Carrying value Cost 30 June Accumulated amortisation Carrying value Mining and prospecting rights Universal Coal Development I Proprietary Limited Universal Coal Development II Proprietary Limited Universal Coal Development III Proprietary Limited Universal Coal Development IV Proprietary Limited Universal Coal Development V Proprietary Limited Other intangible assets Computer software 410 (170) (103) 232 Total (170) (103) Reconciliation of intangible assets - Opening balance Additions Foreign exchange movements Amortisation Total Universal Coal Development I Proprietary Limited Universal Coal Development II Proprietary Limited Universal Coal Development III Proprietary Limited Universal Coal Development IV Proprietary Limited Universal Coal Development V Proprietary Limited Computer software (62) (62)

24 Notes to the half year unaudited Consolidated Financial Statements Supplementary information on intangible assets The following detailed schedule provides additional information pertaining specifically to the interests held by Universal Coal Plc in the identifiable Mining Rights (MR) and Prospecting Rights (PR) as at : Project and entity Asset Permit number Interest (%) Licence expiry date Area (ha) Kangala Project: Universal Coal Development I Proprietary Limited Middelbult 235 IR, Portions 40 and 82 MP30/5/1/1/641 PR 70.5 % 09/07/ Kangala Project: Universal Coal Development I Proprietary Limited Kangala Project: Universal Coal Development I Proprietary Limited Berenice and Somerville Project: Universal Coal Development II Proprietary Limited Brakfontein Project: Universal Coal Development III Proprietary Limited Wolvenfontein 244 IR, Portion 1 and RE, Portion 2 Modderfontein 263 IR, Portion 1 Berenice and Somerville Projects, several farms Brakfontein 264 IR, Protions 6, 8-10, 20, 26, 30 and RE, 264 IR MP30/5/1/2/2/429 MR 70.5 % 02/05/ MP30/5/1/1/2/639 PR 70.5 % 09/07/ LP30/5/1/1/2/376 PR 50 % 19/03/ ,484 MP30/5/1/2/2/10027 MR % 01/01/ Roodekop Project: Universal Coal Development IV Proprietary Limited Cygnus Project: Universal Coal Development V Proprietary Limited Roodekop 63 IS IR MP30/5/1/1/2/492 MR 74 % 05/02/ Cygnus Project LP30/5/1/1/2/1276 PR 50 % In renewal 12,299 On review during the period, the Directors have noted no circumstances which would suggest that at this time an impairment is necessary given the preliminary results on surveys obtained to date. The situation will be closely monitored and adjustments made in future periods if there are indications that the assets held are not recoverable. The Donkin project held under Universal Coal Development VI Proprietary Limited was not considered to be prospective and the prospecting licence which expired on 08 December was not renewed. 23

25 Notes to the half year unaudited Consolidated Financial Statements Audited 30 June Loans receivable Loans and receivables Ndalamo Resources Proprietary Limited The above loan is unsecured, bears interest at prime plus 7.5% per annum and is fully repayable by 30 June 2020 in 16 equal quarterly capital installments. 6. Inventories ROM stockpiles Coal product stock piles Diesel on hand Trade and other receivables Trade receivables Prepayments Deposits Value-added tax Loan - Xakwa Investments Land rehabilitation guarantee Prepayments: Universal Coal Development VII Proprietary Limited On 19 April 2012, Universal Coal & Energy Holdings South Africa Proprietary Limited acquired 1 (one) ordinary share (50%) of Universal Coal Development VII Proprietary Limited, a special purpose entity formed with the intention of acquiring additional prospecting rights in South Africa. The contribution of A$ continues to be treated as a prepayment as certain conditions precedent still have to be concluded. 8. Cash and cash equivalents (including restricted amounts) Cash and cash equivalents consist of: Bank balances Fixed term deposits Restricted cash

26 Notes to the half year unaudited Consolidated Financial Statements Audited 30 June Cash and cash equivalents (including restricted amounts) (continued) Restricted cash and cash equivalents Restricted cash and cash equivalents consist of standby equity and financial guarentees. Financial guarantees Standby equity account Acquistion guarantees Debt service reserve account Financial guarantees Certain financial guarantees have been entered into by Universal Coal and Energy Holdings South Africa Proprietary Limited in relation to rehabilitation guarantees for the Department of Minerals and Energy and are secured against a cash at bank balance of A$ (30 June - A$ ; A$ ). Standby equity account The balance of the standby equity account has been released by RMB as a result of the successful technical completion testing and transferred to the Debt Service Reserve Account. Acquisition guarantees A deposit guarantee in the amount of A$ (30 June - A$ ; A$ nil) has been provided to Exxaro Coal Mpumalanga Proprietary Limited as a non-refundable deposit and a provisional purchase price guarantee of A$ (30 June - A$ nil; A$ nil) for the acquisition of the assets of the New Clydesdale Colliery. The deposit guarantee has been provided by Rand Merchant Bank and is repayable in 18 equal monthly repayments from the date the guarantee is called upon. This deposit guarantee is not collateralised by cash, however the provisional purchase price guarantee is fully collateralised by cash. Debt service reserve account The DSRA is a restricted cash account held in favour of RMB which is funded to the extent required to cover the following quarter s capital and interest repayments to RMB under the Project Financing Facility agreement. 9. Financial assets by category The accounting policies for financial instruments have been applied to the line items below: Amortised cost Non-financial instrument Total Loans receivable Trade and other receivables Cash and cash equivalents