Half Yearly Report

ViaLogy PLC ("ViaLogy" or "the Company")

Interim Report and Unaudited accounts for six months ended 30 September 2012

Chairman's statement for the six months ended 30 September 2012

The Interim Report covers the six-month period to 30 September 2012. The figures show a

loss for the period of £2,839,110 which includes a non-cash loss of £1,611,829 for amortisation

and depreciation. The amortisation charges relate to the value of ViaLogy's Intellectual Property

and associated research and development which is amortised over a period of six years. The

cash outflow from operations during the period was £1,177,164.

The period under review has been one of the most significant in ViaLogy's history. In the

annual report published in July 2012, we were able to announce that we had signed three

binding commercial contracts, the first with the Supermajor energy company Chevron, a second

Supermajor which prefers to remain anonymous, and a third with the Indian national oil and

natural gas company, ONGC. These are major steps in our strategy of making QuantumRD,

our breakthrough seismic analysis software platform, a standard industry tool. After considerable

'show me' demonstrations and blind analysis exercises to overcome scepticism towards what

is a new technology as far as the O&G industry is concerned, these three multi-national firms

separately agreed to place their faith and their exploration funds in ViaLogy's QuantumRD

technology.

Since these announcements, our team of geophysicists and mathematicians in Pasadena, CA,

led by our founder and technical director, Dr. Sandeep Gulati, has been working diligently to

fulfill the contract analysis delivery commitments. In conjunction with our clients' own expert

staff and advisers we have applied QuantumRD to seismic data on a variety of offshore and

onshore formations. Importantly, because our approach to seismic analysis is unique, we have

been involved in detailed technical exchanges to explain how our technology improves the

accuracy of prediction for porosity, fluid presence, and shale formations, all key hydrocarbon

indicators. Our aim has always been to embed QuantumRD into accepted industry practices

as a high leverage add-on to assist the overall drilling decision.

As our CEO, Dr. Robert W. Dean, made clear in his recently issued end-of-year overview, our

efforts with all three of our major clients are proceeding positively. By the end of ViaLogy's

fiscal year we will have delivered - as promised and on time - detailed QuantumRD results to all of them.

Specifically, our achievements during the period and to date are:

1. Delivered to Chevron, QuantumRD seismic analysis demarcating potential hydrocarbon-bearing reservoirs in tight sandstone formations in the US Delaware Basin for orienting and positioning long-reach horizontals. Previous drilling by operators in the same field has yielded sub-optimal recovery as they have ended in highly water saturated zones. These deliverables are under review by the client's reservoir development teams. A successful technical assessment, expected in the near-term, would lead to more commercial work.

2. As part of the milestone delivery, ViaLogy was given the additional responsibility of reprocessing vintage seismic acquired in 1996 to meet QuantumRD's requirements for data quality. ViaLogy's ability to provide high resolution areal and vertical mapping of porosity, compartmentalization, and fluid saturation using legacy seismic is attractive for operators as it eliminates expense and complexity of acquiring new surveys for high-grading prospects.

3. For the first time in commercial contracts, QuantumRD demonstrated the ability to map hydrocarbon distribution for formations below seismic resolution of two different formations. Given its implications, this work continues to be evaluated.

4. Jointly with Chevron geophysicists, at the 2012 American Association of Petroleum Geologists energy industry conference in Singapore, gave a presentation indicating how QuantumRD was able to identify porosity trends in tight dolomite carbonate formations to increase primary recovery of oil over currently achieved yields on a Permian prospect. QuantumRD was presented as a credible alternative for moving beyond drilling to grid-patterns. 

5. Implementing QuantumRD seismic analysis on a 100 sq km section in the Mumbai High Basin, India's largest offshore oilfield, to discover reservoirs missed by conventional seismic processing.

6. Under contract to a Supermajor client QuantumRD is part of a major effort to discover and map sandstone reservoirs below several thousand feet of permafrost in the arctic.

7. As announced, in one of our ongoing contracts the scope was increased to discover oil in unconventional shale formations. This means that QuantumRD's reach now covers both conventional and unconventional formations, another of the company's strategic objectives.

8. Initiated work on a North Sea project for one of the world's largest geosciences companies. This project challenges ViaLogy's QuantumRD technology to discover and delineate producible hydrocarbon bearing sand bodies that have not been found with sufficient precision by other seismic processing techniques.

9. Launched exploratory sales initiatives with major Chinese, Brazilian and West African exploration and production firms.

Finance

Revenue in the period under review was £84,691 (2011: £40,915), an increase of some 107

per cent. However, as the three contracts dominating our activities during the period under

review are commercial arrangements charged in the conventional manner whereby invoices

are submitted when analysis is completed and presented to the client, income for work done

from May through to September is only partly reflected in the interim accounts. The majority

of the income will be included in the next set of accounts for the 12 months to 31 March

2013. At that time we expect to announce financial results consistent with our three year

business plan and in line with market expectations.

Terry Bond

Chairman

ViaLogy PLC

30 December 2012

Enquiries: 

Mark Percy/Catherine Leftley (Corporate Finance)

Katie Ratner (Corporate Broking)

Consolidated income statement for the six months ended 30 September 2012

Consolidated statement of comprehensive income for the six months ended 30 September 2012

Consolidated statement of changes in equity for the six months ended 30 September 2012

Consolidated statement of financial position at 30 September 2012

Consolidated statement of cash flows for six months ended 30 September 2012

Notes forming part of the unaudited consolidated accounts for the six months ended 30 September 2012

1 Accounting policies

Basis of preparation

The interim financial information has been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial information for the year ended 31 March 2013.

The interim financial information for the period 1 April 2012 to 30 September 2012 is unaudited. In the opinion of the Directors the interim financial information for the period presents fairly the financial position, results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied. The interim financial information incorporates comparative figures for the interim period 1 April 2011 to 30 September 2011 and the audited financial year to 31 March 2012.The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. The comparatives for the full year ended 31 March 2012 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, but did include references to any matters to which the auditor drew attention by way of emphasis in respect of going concern, without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

Going concern

Following the signing of three significant contracts with international companies since the year end the directors are confident that the Group's pipeline of sales from current clients and potential new customers will help to fund the Group's development and working capital requirements. However additional funding will be required in order to support the Group until we begin to see the benefits from this pipeline of contracts. There can be no certainty that additional funding will be available given the current economic climate and the risks associated with the oil and gas industry. While the directors are confident that additional funding can be raised in order to meet its development and working capital requirements, and ViaLogy's capital development history demonstrates that this confidence is well founded, a significant uncertainty exists given the absence of any committed funding at the date of approval of these financial statements. This condition indicates the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern.

The financial information does not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

2 Segmental analysis

The Group has two reportable segments:

·; Head office - this segment is the head office of the Group.

·; Operations - this segment is involved in sales and technology development in the USA.

The operating results of these segments are regularly reviewed by the Group's chief operating decision maker in order to make decisions about the allocation of resources and assess their performance.

All material non-current assets are owned by the USA subsidiary and are located in the USA.

3 Deferred Tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 35%.

4 Loss per share

Basic

The calculation of loss per share is based on the loss for the period of £2,839,110 (2011 - loss £2,389,096 full year loss £4,903,395) and on 899,549,947, (2011 - 734,191,944, 2012 full year - 762,556,327) ordinary shares, being the weighted average number of ordinary shares in issue during the period.

Diluted

Diluted loss per share dilutes the basic loss per share to take into account share options and warrants. The calculation includes the weighted average number of ordinary shares that would have been issued on the conversion of all the dilutive share options and warrants into ordinary shares. 106,020,272 options and 1,193,654 warrants (2011 - 97,572,756 options and 1,193,654 warrants, 2012 full year 96,162,368 options and 1,193,654 warrants) have been excluded from this calculation as this would reduce the loss per share.

5 Share capital -unaudited

6 Post Reporting date events

There are no post reporting date events.