Final Results

Weatherly International Plc ("Weatherly" or "the Company" or "the Group")

Final Results for Year Ended 30 June 2012

Weatherly is pleased to announce its final results for the year ended 30 June 2012.

These accounts have been approved by the Board on the 12 September 2012 but have not yet been lodged at Companies House

Summary Highlights for the Year Ended 30 June 2012

Financial

·; Profit after tax of US$21.4 million for the year ended 30 June 2012.

·; US$10.4 million of cash generated from operating activities.

·; US$8.5 million cash at bank at 30 June 2012.

Corporate and Operational

·; Mining contracts restructured and new mining contractor appointed at Otjihase.

·; Investment by Namibian interests in the operating subsidiary of Weatherly.

·; Maiden Tschudi reserve statement (JORC) released.

·; Tschudi feasibility study nears completion.

·; Sale of Berg Aukas project to China Africa Resources for profit of US$4.1 million.

·; Payment of dividend by 'in specie' distribution of shares in China Africa Resources worth US$1.2 million.

For further information please contact:

Weatherly International Plc +44 (0) 20 7917 2989

Rod Webster, Chief Executive Officer

Max Herbert, Company Secretary

Dean Friday, Investor Relations

Canaccord Genuity Limited +44 (0) 20 7523 8350

John Prior, Sebastian Jones

Chairman's and Chief Executive's Statement

We are pleased to report Weatherly's results for the year ended 30 June 2012.

Financial Results

During the year, the Group generated a profit after tax of US$21.4 million. Removing the effect of the deferred tax benefit received during the year the Group's profit before tax was US$14.2 million. (See note 14)

Our Central Operations, the Otjihase and Matchless mines, reached 60% of budgeted steady-state production in July 2011 and revenue has been recognised in those mines from that date. As a result our mining activities in Namibia generated an operating profit of US$10.3 million, while corporate costs of US$3.3 million reduced the Group operating profit to US$7.0 million. The Group made a profit on the sale of its subsidiary, which owned the Berg Aukas project, to China Africa Resources of US$4.1 million and it released its provision of US$5.2 million against the section 311 compromise creditors as the agreement has expired. The Namibian dollar depreciated against the US dollar by nearly 20% in the year resulting in a foreign exchange loss of US$1.4 million, most of which is unrealised. The Group also incurred net interest costs of US$0.4 million.

The Group generated US$10.4 million of cash from operating activities and US$0.5 million from the sale of plant. Of this, US$4.0 million was reinvested in property, plant and equipment at Central Operations, US$3.4 million on the Tschudi feasibility study while US$3.1 million was used to repay loans. The Group finished the year with US$8.5 million of cash.

Review of the Year

Weatherly had two main strategic objectives over the period, namely the consolidation of production from its Central Operations, and the progression of the Tschudi feasibility study. The mining operations continued to be profitable throughout despite some difficulties. Tschudi feasibility study results have reinforced its position as our priority project, albeit one requiring further optimisation.

On 1 August 2011, the ordinary shares of China Africa Resources plc (CAR) were admitted to trading on AIM. East China Mineral Exploration & Development Bureau (ECE) acquired 65% of the shares for £4.7 million (US$7.7 million), and Weatherly sold the Berg Aukas project to China Africa Resources in return for a 35% shareholding. Weatherly distributed 10% of the shares to its shareholders as an 'in specie' dividend leaving it with a 25% holding. This represented the commencement of a formal relationship between Weatherly and a capable and ambitious Chinese company in ECE. During the year, Weatherly's management team administered China Africa Resources under the provisions of a management services agreement under the control of the CAR Board. The primary focus of China Africa Resources has been to progress the Berg Aukas feasibility study.

In September 2011, an agreement was executed for the sale of a 2.5% shareholding in our Namibian subsidiary, Ongopolo Mining Limited (OML), to Labour Investment Holdings (LIH), the investment arm of the National Union of Namibian Workers. This agreement was pursuant to a Memorandum of Understanding signed with LIH in 2010, and a Weatherly initiative to promote local participation through direct equity ownership. The sale price of N$ 7.2 million (approximately US$0.9 million) was provided through a vendor finance facility, where the payment of the consideration is to be deferred and deducted from LIH's future dividends. The agreement also provides an option for LIH to increase its shareholding to 5% by paying cash for additional shares at a price based on an independent valuation of OML at the time of exercise.

Weatherly continues its prudent risk management strategy of maintaining forward sales of approximately 200 tonnes per month of copper over a 15 to 18-month period. At 30 June 2012, our forward contracts had a mark-to-market value of US$4.9 million. Complementing this, the Company has also fixed the exchange rate of converting US$1.5 million per month into N$ over the same period at an average rate of US$1:N$8.68.

Central Operations

The Company produced 5,208 tonnes of copper in concentrate from Central Operations, which fell short of our target of 7,000 tonnes for the year. This was due to a series of problems at Otjihase, described in the Review of Operations (page 6), which necessitated a change in mining contractor and changes to the structure of the contract. The shortfall in production resulted in higher than expected operating costs, but we anticipate that the changes we have made will have a positive impact on production and costs going forward.

The Company was saddened by two fatalities at Otjihase. Investigations were conducted by management and the Chief Mines Inspector into the circumstances of these accidents. The investigation by the Chief Mines Inspector into the first accident has been completed and all recommendations have been adopted; the investigation into the second accident is ongoing. Safety procedures have been reviewed in detail in light of these accidents.

Tschudi Project

The Company expects to complete the feasibility study by the end of 2012 and be well advanced with the funding arrangements for the project's development. As previously reported, the Company is designing an open pit mine containing 22.5mt @ 0.87% Cu (Ore Reserve-Coffey, Feb. 2012) producing on average 15,000 tonnes per annum of copper for 11 years.. The process to be utilised is heap leaching followed by solvent extraction and electrowinning to produce a 99.99% pure copper cathode. Subject to funding and environmental approval, the first copper could be produced before the end of 2014.

Outlook

Considerable uncertainty exists in the world and it is difficult to predict the course of the copper price in the coming year. Management is therefore focusing on improved performance at its operating mines and the development of a new mine at Tschudi to move the company closer to its stated objective of being a 20,000 tpa copper producer.

We have taken steps to address production issues at the Otjihase mine, both in contractual arrangements and in investment to improve operational flexibility. We will be considering possible future investment at these mines to exploit opportunities that exist to reopen previously mined areas in order to increase production further.

At Tschudi the results that we are obtaining from the optimisation work being carried out by our project team are very encouraging and bode well for the future development of the mine. The completion of the feasibility study and subsequent funding will remain our priority in the coming year.

Whilst it has been a difficult year we would like to thank all our staff for their continuing support and hard work for the benefit of the Company.

John Bryant Rod Webster

Chairman Chief Executive Officer

12 September 2012

Review of Operations

Central Operations

Copper production for the year was 5,208 tonnes, as summarised in the quarterly production table below.

The Matchless mine experienced a speedy ramp up to full production and has been able to maintain solid production performance throughout the year. The mining contractor at Matchless performed well with ore grades and dilution rates meeting expectations.

The Otjihase mine has encountered several issues that have hampered operations. The mine suffered badly from the most severe wet season on record in 2011, equipment downtime interfered with production and sub-standard performance from the primary mining services contractor all contributed to the poor level of production.

In light of this, the operations at Otjihase have been under constant review. A number of steps have been taken throughout the year to deal with issues and improve performance at the mine. Firstly the decision was taken to open up two new working areas in the mine earlier than had been originally planned to afford greater flexibility. Significant work and infrastructure expenditure was incurred in order to bring these areas into production.

Secondly, to deal with the poor performance of the mining contractor, it was decided to break up the lead operating contract into three discrete contracts; mining, crushing/conveying and processing, and to replace the lead mining contractor with the contractor who has been performing to a high standard at the Matchless mine. Notwithstanding that these extensive measures inevitably created an element of disruption and cost, their introduction went smoothly.

We are confident that we have taken the necessary steps to deal with the production issues in the Otjihase mine. Pillar recovery is by its nature technically challenging, but can be carried out safely and economically with the right resources. We have taken some tough decisions as outlined above and expect to see the benefits of this in the coming year. Investigations are continuing into optimising the extraction of the remaining resources. Opportunities exist at both Otjihase and Matchless to reopen previously mined areas, and a decision on the advancement of one or more of these opportunities is expected to be made in the coming months.

Cost of production has been higher than targeted for the year. The full year cost of production (C1 cash cost) was US$5,554 per tonne of copper produced. The higher costs are due to a combination of one-off costs associated with the contractual changes, costs associated with opening up new working areas and lower copper production rates at the Otjihase mine.

Tschudi Feasibility Study

Work continues on the feasibility study and the Company remains on track for its first copper cathode production in 2014. As previously reported, the Company is targeting a mine life of 11 years producing an average of 15,000 tonnes per annum of copper cathode. The process to be utilised is heap leaching followed by solvent extraction and electrowinning.

A new project team was appointed in May to investigate opportunities for reducing the capital and operating costs in addition to improving copper recovery. This work has focussed on the:

·; re-design of the pit and waste dumps to minimise waste handling;

·; re-design of the leach pads to minimise the number of pad lifts and associated costs;

·; soliciting tenders for the contracting of both the mining and crushing activities;

·; soliciting tenders for a lump sum bid for the build of the solvent extraction and electrowinning plant; and

·; optimising ore blends and crush sizes to increase copper recovery and reduce leach times.

While the additional work associated with these initiatives has extended the feasibility study timetable, it is expected to deliver a leaner, more attractive project. The Company is expecting to announce the results of the feasibility study by the end of the year.

Berg Aukas and China Africa Resources

Weatherly has a 25% shareholding in China Africa Resources, and administers the business under the provisions of a management services agreement. The primary focus of China Africa Resources has been the progression of the Berg Aukas feasibility study.

Safety

The vast majority of mine labour is employed by three major contracting groups although they have changed during the year in question. Weatherly as the principal sets the standards and procedures applying to all contracting groups active at the mine sites. Taking all the contracting groups into account there were 24 lost time injuries and 2 fatalities.

The circumstances of each of these fatalities have been investigated both externally by the Inspector of Mines and internally by the Company's management and advisors. The inspector of Mines has delivered his findings on the first fatality where he found no wrongdoing on the part of the company. It did however recommend the replacement of manual scaling with purpose designed equipment, a recommendation that has already been implemented. The company is still awaiting the second finding. Whilst the Company has always operated under the appropriate Namibian Safety Standards, the Board has taken the decision to upgrade the company's entire safety management system to meet the international standard (OSHAS18001).

Environment

Weatherly is committed to maintaining the highest environmental standards and during the coming year, the Company will be reviewing its environmental management and reporting systems to ensure it continues to do so. Weatherly is in full compliance with all appropriate Namibian legislation at all its sites, and there were no environmental incidents on any of our sites during the year.

As a result of changes in environmental legislation in Namibia (in February 2012), Weatherly, along with all other existing mining companies, has been asked to submit a revised environmental impact statement and management plan for both Central Operations and Tschudi by February 2013. Weatherly has engaged environmental consultants Synergistics to assist with the submissions

John Bryant Rod Webster

Chairman Chief Executive Officer

12 September 2012

Table A

Table B

Weatherly Mining Namibia: Mineral Resources as at 30 June 2012

All reserves and resources in tables A and B above have been updated by a competent person, A Thomson BSc (Hons) Geology, Country Manager & Technical Director, Weatherly Mining Namibia, member of South African Council for Natural Scientific Professions (registered number 400052/86), in accordance with the Australian Code of Reporting Mineral Resources and Reserves (JORC).

Note: *In addition to the reserves and resources contained in the table above, Old Matchless has a historical (non compliant) reserve (Chaplin, TCL, 1984) of 812,639t at 2.4% equating to 19,506t of copper.

Table C

Note: reserves contained in Table C are "historical" and although most were prepared at the time in accordance with South African reporting standards (SAMREC) they will not comply with current standards until a further process of independent verification has been carried out.

* Remaining resource/reserve calculated by Gold Fields in 1984.

Directors' Report

The directors present their report, together with the Group and Parent Company financial statements and auditor's reports, for the year ended 30 June 2012.

Principal Activity and Review of the Business

The principal activity of Weatherly International plc during the year was to act as a holding company for the Group's activities in mining and production of base metals, primarily copper.

The subsidiary and associated undertakings principally affecting the profits or net assets of the Group in the year are listed in note 18(a).

A review of business can be found in the Chairman's and Chief Executive's Statement on pages 4 to 5 and the Review of Operations on pages 6 to 7.

The Directors

The directors during the year ended 30 June 2012 were:

J Bryant (Non-executive Chairman)

R J Webster (Chief Executive Officer)

W G Martinick (Non-executive)

A J Stephens (Senior Independent Non-executive)

Going Concern

The Company expects to generate sufficient funds to operate as a going concern for the next 12 months, based on its projected production levels and prevailing exchange rates and copper prices. Exchange rates and the price of copper will continue to have a significant impact on the Group's cash flow.

The business has taken steps to manage its exposure to the commodity markets; at 30 June 2012 it had sold forward 3,550 tonnes of copper at an average price of US$8,361/tonne of copper, which it is currently delivering. The Group maintains forward contracts extending out to between 15 and 18 months. These forward sales were negotiated to preserve the profitability of the mines in the face of an economic crisis similar in scale to that of 2008-2009. In addition, the Group has fixed the US$:N$ exchange rate for US$1.5 million of revenue per month over the same period at an average exchange rate of 8.68.

The business has a debt financing facility of US$5.9 million with Louis Dreyfus. The loan is linked to an offtake agreement and is structured with repayment terms linked to the production of concentrate at the Central Operations. The Board considers this financing model reduces risk by better matching its debt service obligations with projected cash flows. 

Results and Dividends

The consolidated profit for the year after taxation was US$21.4 million.

Key Performance Indicators

Production: the Board monitors monthly production against budgeted figures, which management monitors on a daily basis. Production concentrate grades are monitored by management on a shipment basis and the Board monitors ore grades on a monthly basis. For the year ended 30 June 2012 367,000 tonnes of ore was extracted producing 5,200 tonnes of copper contained in concentrate.

Costs: the Board and management monitor actual against budgeted costs on a monthly basis.

Finance:the liquidity requirements of the Company are monitored on a weekly basis by management, monthly and quarterly by the Board, and semi-annually by external parties.

Key Risk Factors and Mitigations

Commodity price risk and foreign exchange risks: the Company's revenues and expenses are affected by changes in the price of copper and exchange rate movements between the US dollar and the Namibian dollar.

Management and directors review trends in the copper price and exchange rates on a regular basis when considering the Company's risk management strategy.

The Company mitigates the risk by placing forward contracts to sell approximately 200 tonnes of copper per month and to convert US$1.5 million into Namibian dollars per month for 15 to 18 months. At 30 June 2012 the average price of its forward contracts was US$8,362/tonne of copper and the average exchange rate of the fixed currency conversions was US$1:N$8.68.

Liquidity risk: the directors monitor cash flow on a daily basis and at monthly Board meetings in the context of their expectations for the business, in order to ensure sufficient liquidity is available to meet foreseeable needs. At present, equity funding from the share issue and loans from Louis Dreyfus Commodities Metals Suisse SA are the main methods of funding.

Project development risk:all potential projects are subject to an investment appraisal procedure that involves the Board at the key stages of initiation, mandate and sanction. Projects are constantly monitored as new data is obtained and reassessed to ensure further expenditure is worthwhile.

Risks Relating to Investing in Namibia

Political: Namibia is considered one of the lowest-risk economies on the African continent. The Government pursues a consistent strategy of encouraging investment in the country, and is keen to keep the climate attractive for foreign investors. Weatherly maintains strong links with the Prime Minister, Minister for Mines, and other Government members and officials. The Board reviews the strategic impact of political changes within the country on an ongoing basis.

Black Economic Empowerment and local participation: there is currently no Black Economic Empowerment legislation embodied in Namibian law; however, the Government encourages local participation through a number of avenues. Weatherly has adopted a proactive stance in making equity in its projects available to appropriate empowerment groups. Accordingly, Labour Investment Holdings Inc (LIH), the investment arm of the National Union of Namibian Workers, hold a 2.5% stake in Ongopolo Mining Ltd, Weatherly's wholly-owned subsidiary which owns and operates our Namibian mines. LIH also have an option to purchase a further 2.5%. Additionally we continue to discuss with the Government of Namibia its 5.10% shareholding in Weatherly and its transfer to Epangelo, the state-owned mining company. These arrangements will be for the long-term benefit of the community and the Company.

Substantial Holdings

Shareholdings of 3% and more of the issued share capital of the Company were extracted from the shareholders' register at close of business on 31 August 2012 as follows:

Major Shareholders' Information

(*Director)

Post Balance Sheet Events

The directors are not aware of any matters or circumstances arising since the end of the financial period not dealt with in the annual financial statements which significantly affect the financial position of the Group or the results of the operations.

Future Developments

Discussion of future developments can be found in the Chairman's and Chief Executive's Statement on pages 4 and 5 and the Review of Operations on pages 6 to 7.

Company's Policy on Payment of Creditors

It is the Group's policy to settle terms of payment with suppliers when agreeing the terms of each transaction, to ensure that suppliers are made aware of these terms of payment, and to endeavour to adhere to them. Trade creditors of the Group at 30 June 2012 were equivalent to 42 days' purchases (2011: 37 days), based on the average daily amount invoiced by suppliers during the year. The Company does not have significant trade creditor balances.

Exchange Rates

The following rates have been used in the compilation of the financial statements and notes supporting the accounts:

Statement of Directors' Responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors confirm that, in so far as each of the directors is aware:

·; there is no relevant audit information of which the Company's auditors are unaware; and

·; the directors have taken all steps that they ought to have taken in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditor

Grant Thornton UK LLP have expressed their willingness to continue in office as auditor, and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

On behalf of the Board:

Rod Webster

Chief Executive Officer

12 September 2012

Corporate Governance Report

Introduction

The Board of Directors is committed to high standards of corporate governance.

The Board is accountable to its shareholders for good governance, and the statement below is based on the review of corporate governance that was carried out by the Audit Committee and describes how the principles of good governance have been applied.

Constitution of the Board

During the year ended 30 June 2012, the Board was comprised of the following:

John Bryant Chairman

Rod Webster Chief Executive Officer

Alan Stephens Senior Independent Non-executive Director

Wolf Martinick Non-executive Director

Non-executive Directors

During the year, the Board had three non-executive directors: John Bryant (Non-executive Chairman), Alan Stephens, (Senior Independent Non-executive Director), and Wolf Martinick. Alan Stephens and John Bryant were considered to be independent. Due to the size of Wolf Martinick's shareholding of 3.59%, he is not considered to be an independent director. The relatively small number of share options that have been granted to the other two non-executive directors does not, in the opinion of Weatherly's advisers or its directors, impair their independence.

Committees of the Board

The Board has three Standing Committees, each of which has terms of reference setting out its authority and duties, as follows:

The Audit Committee was made up of John Bryant as Chairman and Alan Stephens for the year ended 30 June 2012.

The Audit Committee meets as required. It reviews the financial reports and accounts and the preliminary and interim statements, including the Board's statement on internal financial control in the annual report, prior to their submission to the Board for approval. The Audit Committee also reviews corporate governance within the Group and reports on this to the Board. In addition, it assesses the overall performance of the external auditor including scope, cost-effectiveness and objectivity of the audit.

The Audit Committee is also charged with reviewing the independence of the external auditor and monitors the level of non-audit fees. These fees are disclosed in note 10 to the accounts. In the opinion of the Audit Committee, which has reviewed these fees and the procedures that Grant Thornton UK LLP have in place to ensure they retain their independence, the auditor's independence is not compromised. The Audit Committee met three times during the period, and John Bryant and Alan Stephens were present on all occasions.

The Audit Committee can meet for private discussion with the external auditor, who attends these meetings as required. The Company Secretary acts as secretary to the Committee.

The Remuneration Committee was made up of Alan Stephens as Chairman and John Bryant during the year, with the Company Secretary serving as secretary.

The Remuneration Committee determines, on behalf of the Board, the Group's policy on executive remuneration and the remuneration packages for executive directors. It also approves and administers the executive share option scheme, the long-term incentive plan (LTIP) and the grant of options as part of the remuneration package. The Remuneration Committee met four times during the period, with Alan Stephens and John Bryant in attendance on each occasion.

The Nominations Committee is made up of John Bryant and Rod Webster with either Wolf Martinick or Alan Stephens.

In addition to its role of considering the appointment of directors and senior managers, the Nominations Committee is also charged with reporting to the Board on the effectiveness of the Board, its sub-committees and its directors, and it does this at the end of the annual audit cycle. The Nominations Committee did not meet during the year.

Attendance at Meetings

During the year, there were a large number of substantive Board meetings. Directors' attendance at meetings of the Board and its sub-committees during the period was as follows:

John Bryant Board 15/15 Audit Committee 2/2 Remuneration Committee 4/4

Rod Webster Board 15/15

Alan Stephens Board 13/15 Audit Committee 2/2 Remuneration Committee 4/4

Wolf Martinick Board 13/15

Of the fifteen Board meetings, seven were of a procedural nature and eight were substantive meetings.

The Board is responsible for reviewing and approving the adequacy and effectiveness of the Group's internal controls, including financial and operational control, risk management and compliance.

In order to establish effective procedures for internal control and communicate these throughout the Group, including its subsidiaries, the Board has issued two important documents to all staff known as the Board Protocol and the Manual of Internal Control.

The key elements of the Group's internal control are set out in these documents, and contain:

·; a clearly defined structure for the Group, its subsidiaries and management teams;

·; powers which the Board has reserved to itself. These include the approval of all business plans and budgets for the Group and all its subsidiaries, the establishment of subsidiary companies and appointment of directors to them, and the process for project approval and capital expenditure;

·; terms of reference for the Audit, Remuneration and Nominations Committees, which define the roles of their members;

·; information about how often the Board should meet (as a minimum) and an annual cycle of meetings. This covers the process for the preparation of Board agendas and Board papers, and their prior consideration by the management team at its weekly meetings;

·; detailed business plans and budgets to be approved annually and performance monitored by the management team and the Board at its monthly meetings; and

·; procedures for the approval of expenditure, the levels of authority and the management controls.

The directors acknowledge their responsibility for the Group's system of internal financial control and risk management, and place considerable importance on maintaining this. The Manual of Internal Control and the process for authorisation that it imposes, together with the Board Protocol setting out the process for authorising business plans, budgets and projects, form an important part of our decision-making process; however, this can only provide reasonable and not absolute assurance against material errors, losses or fraud.

There is currently no internal audit function within the Group owing to the small size of the administrative function. However, Ernst and Young were engaged to perform an internal audit review of our procedures in Namibia. There is also a high level of review by directors and a clear requirement for them to authorise transactions. Should the need for a separate internal audit function become apparent, the Board will establish one.

The Board Protocol and the Manual of Internal Control have both been updated and refined as Weatherly's business evolves and grows.

Bribery Act Compliance

In response to the introduction of the Bribery Act 2010 and in order to ensure compliance, the Board approved a suite of documentation that included a policy statement on anti-corruption and bribery, a code of conduct for employees, a set of management procedures, a note defining responsibilities within the Company and an implementation plan which has been rolled out in the Company. Progress on the implementation has been reported to the Audit Committee. The Audit Committee noted that documentation has been circulated and meetings to explain the procedures have been held with all staff and contractors on site including our operating mines in Namibia. Notices have been displayed at our locations with the "whistle-blowing" procedure. The implementation and effectiveness of these procedures is continually monitored and reported to the Board.

Relations with Shareholders

The Company endeavours to maintain regular communications with shareholders through regulatory announcements, via the Weatherly International website and by direct contact with its major shareholders. Rod Webster has also participated in conference calls with groups of smaller shareholders. The Board values the views of its shareholders and fosters continuing dialogue with investment and fund managers, other investors and equity analysts to ensure that the investing community receives an informed view of the Group's prospects, plans and progress.

Directors' Remuneration Report

Remuneration Committee

The Company has established a Remuneration Committee which is constituted in accordance with the recommendations of the UK Corporate Governance Code (June 2010). The members of the Committee for the year ended 30 June 2012 were Alan Stephens and John Bryant, who are both independent non-executive directors, and the Committee was chaired by Alan Stephens.

Neither member of the Committee has any personal financial interest (other than as a shareholder), conflicts of interests arising from cross-directorships, or day-to-day involvement in running the business. The Committee makes recommendations to the Board. No director plays a part in any discussion about his own remuneration.

In determining the directors' remuneration for the year, the Committee consulted Rod Webster (Chief Executive) and Max Herbert (Company Secretary) about its proposals. The Committee also appointed PricewaterhouseCoopers to provide options valuation advice.

Remuneration Policy for the Executive Directors

Executive remuneration packages are designed to attract, motivate and retain directors of the highest calibre to lead the Company and to reward them for enhancing value to shareholders. The performance management of the executive directors and key members of senior management, and the determination of their annual remuneration package, are undertaken by the Committee.

There are five main elements of the remuneration package for executive directors and senior management:

·; basic annual salary;

·; benefits in kind;

·; annual bonus payments;

·; share option incentives;

·; pension arrangements.

The Company's policy is that a substantial proportion of the remuneration of the executive directors should be performance related. Executive directors may earn an annual bonus payment together with the benefits of participation in share option schemes.

Basic Salary

An executive director's basic salary is reviewed by the Committee prior to the beginning of each year and when an individual changes position or responsibility. In deciding appropriate levels, the Committee considers the Group as a whole and relies on objective research which gives up-to-date information on a comparable group of companies. In considering the Chief Executive's basic salary, the Remuneration Committee took into account his extensive responsibilities.

Benefits in Kind

The executive director receives benefits in kind, principally private medical insurance.

Annual Bonus Payments

The Committee establishes the objectives that must be met for each financial year if a cash bonus is to be paid. In setting appropriate bonus parameters, the Committee refers to the objective research on a comparator group of companies, as noted above. The Committee believes that any compensation awarded should be tied to the interests of the Company's shareholders and that the principal measure of those interests is total shareholder return. Account is also taken of the relative success of the different parts of the business for which the executive directors are responsible and the extent to which the strategic objectives set by the Board are being met. The maximum performance-related bonus that can be achieved is 100% of basic annual salary. The strategic objectives, control system and indicators are also aligned to total shareholder return.

Share Options

The Company has issued share options to its staff under an unapproved share option scheme. The Remuneration Committee has responsibility for the administration of the scheme and the granting of options under its terms. This includes setting the performance criteria when appropriate and the strike price of the options. The details of these awards are set out below and their accounting treatment is dealt with in note 30 to the financial statements.

On 11 October 2011, the directors agreed to change the rules of the Weatherly International plc 2006 unapproved share option plan under the terms of Rule 25 so that under Rule 23 invested share options that have been awarded will vest immediately on a change of control of ownership of the business.

Pension Arrangements

Executive directors receive pension contributions to their own private pension schemes.

Directors' Contracts

All the directors have signed contracts with the Company. Rod Webster's appointment does not have a fixed term but is subject to 12 months' notice by either party. The non-executive directors are appointed for a fixed term: John Bryant and Wolf Martinick for two years and Alan Stephens for three years. These may be terminated by giving two months' notice, without compensation for loss of office. All newly appointed directors are required to offer themselves for election at the next Annual General Meeting of the Company and their appointments are subject to them being so elected. Non-executive remuneration is determined by the Board within the limits set by the Articles of Association and is based on independent salary surveys of fees paid to non-executive directors of similar companies. The basic salary paid to each non-executive director in the year was £30,000. The non-executive directors receive further fees for additional work performed for the Company on the basis of the number of additional days worked.

Aggregate Directors' Remuneration

The total amounts for directors' remuneration, paid by Weatherly International plc and its subsidiaries, were as follows:

* this relates to period ending 30 June 2011

Directors' Share Options

Aggregate directors' remuneration disclosed above does not include any amounts for the value of options to acquire ordinary shares in the Company granted to or held by the directors. No options have been granted to directors since 2010. Details of the total number of options granted to date are set out below.

Each director's options are exercisable as one third on 1/4/2011, one third on 1/4/2012, and one third on 1/4/2013, and remain exercisable over a ten-year period.

The share price movements during the year were as follows: high of 10.4 pence, low of 3.85 pence and a closing share price at 30 June 2012 of 4.1 pence.

There have been no variations to the terms and conditions or performance criteria for directors' share options during the financial year.

Approval

This report was approved by the Board of Directors on 12 September 2012 and signed on its behalf by:

Rod Webster

Chief Executive Officer

Independent Auditor's Report to the Members of Weatherly International plc

We have audited the Group financial statements of Weatherly International plc for the year ended 30 June 2012, which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 13, the directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statements

In our opinion, the Group financial statements:

·; give a true and fair view of the state of the Group's affairs as at 30 June 2012 and of its profit for the year then ended;

·; have been properly prepared in accordance with IFRS as adopted by the European Union; and

·; have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report, in the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters, where the Companies Act 2006 we are required to report to you if, in our opinion:

·; certain disclosures of directors' remuneration specified by law are not made; or

·; we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the Parent Company financial statements of Weatherly International plc for the year ended 30 June 2012.

Nicholas Page

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Gatwick

12 September 2012

Consolidated Income Statement

For the year ended 30 June 2012

The notes on pages 26 to 59 form part of these financial statements.

Consolidated Statement of Comprehensive Income

At 30 June 2012

Consolidated Statement of Financial Position

At 30 June 2012

.......................................................................

On behalf of the Board:

R J Webster

Chief Executive Officer

Approved by the Board on 12 September 2012

The notes on pages 26 to 59 form part of these financial statements.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2012