YGEN.L Regulatory News (YGEN)

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

Final Results for the year ended 31 March 2013

Pasadena, September 30 2013. ViaLogy PLC (AIM: VIY), is pleased to announce its audited final results for the year ended 31 March 2013.

Chairmans Statement

I am pleased to present the annual report and the financial report for your company for the Fiscal Year ending 31 March 2013. Detailed and comprehensive information on the Fiscal Year activities is contained in the report and we consider it is also relevant to include information about the months since March. As well as the audited financial details you will find comprehensive reviews of the company's activities during this recent period from our CEO, Robert Dean, and our founder and CTO, Sandeep Gulati.

During the year 1 April 2012 to 31 March 2013, and to date, three significant milestones have been achieved:

• Completion of a commercial contract with the Oil and Natural Gas Corporation (ONGC), India's premier national oil company, to apply QuantumRD technology in the country's largest offshore oilfield. This is the culmination of several years' of cooperation and work between the two companies and also the Indian government authorities because approval for a US based company to be involved in highly confidential Indian government projects takes a considerable amount of time. I am delighted to confirm ViaLogy is now accepted as an accredited supplier to ONGC and we anticipate the validation will lead to further commercial projects from this customer.

• Additional commercial contracts signed with global supermajor Chevron. This flagship client has deployed QuantumRD technology on a number of projects in support of Chevron's exploration and appraisal efforts in the US Delaware Basin, a multi-zone play that holds potential for shale, sandstone, and carbonate reservoirs. We work closely with Chevron on some of their most intricate challenges. We have recently delivered results on a project for them to precisely map subsurface reservoirs for horizontal drilling that are well below the resolution of 3D seismic.

• After several months of due diligence and discussions by both organisations ViaLogy has signed a Business and Technical Collaboration Agreement with CGG (NYSE: CGG) (Euronext: CGG: PA) www.cgg.com of France, one of the world's largest geosciences companies. The arrangement provides ViaLogy with global sales and services locations, access to CGG customers, assistance in scaling ViaLogy's QuantumRD technology to large geographical areas, and specialized high tech data processing to prepare seismic datasets for QuantumRD. Our practical involvement with CGG has already started with an introduction to one of their biggest clients.

FINANCES

For the year ending 31 March 2013 ViaLogy results were broadly in line with market expectations. The consolidated financial statements accounts show a net loss of £4.7 million (2012: loss £4.9 million) The loss after tax and after adding back the non-cash items, depreciation and amortisation charge and share based payment expense was £1.9 million (2012: loss £1.5 million)

In May 2012 ViaLogy raised a total of £2,045,000 (before expenses) through the placing of 74,363,637 ordinary shares at a price of 2.75p each with existing and new institutional investors. In February 2013 ViaLogy raised a total of £1,406,250 (before expenses) through the placing of 112,500,000 new ordinary shares at a price of 1.25p each with existing and new institutional investors. As part of this Placing, for every three new shares subscribed for, one warrant to subscribe for one new ordinary share at 1.25p was issued.

THE FUTURE

The directors are agreed that for ViaLogy to maximise its full commercial potential the way forward now is to establish strong partnerships with companies already well established and respected in their fields. This approach is epitomised by our relationship with CGG where, properly managed, our association will considerably enhance ViaLogy's ability to continue making a significant impact in the inherently traditional and often sceptical Oil and Gas exploration industry. It is now vital that, to cope with the anticipated increase in demand for our services, we ensure that our company has the right operational organisation and that it is supported by a firm financial base.

 In the coming year we will also be looking to develop other industry silos and applications for our core technology, QRI. The Board and senior management are currently examining various opportunities to achieve this planned expansion of the business. As far as company structure is concerned researches are already underway and our founder and technical director, Dr Gulati, has been asked to plan the technical framework to support the continuing maturity of the technologies, the patented software and the broadening business application.

This expansion will come at a financial cost, but we believe it is essential if we are to realise ViaLogy's full potential. The directors will therefore seek to obtain further funding for working capital and the expansion of ViaLogy's business operations.

The Board believe that in the coming year ViaLogy will be a stronger, better capitalised business and look forward to providing an update in due course.

On behalf of the directors, thank you for your continued support.

Terry Bond

Chairman

27 September 2013

For further information:

ViaLogy PLC

Terry Bond, Chairman - UK & Europe +44 (0) 1235 834 734

Nominated Advisor to ViaLogy PLC (Cantor Fitzgerald Europe)

Mark Percy / Catherine Leftley Corporate Finance +44 (0) 207 894 7000

Katie Ratner Corporate Broking +44 (0) 207 894 7000

Chief Executive Officer's Report

It has been a year of intense effort to move our technology services forward in the market, and we have made good progress towards achieving the growth of which we believe the business is capable.

QuantumRD's value in reservoir characterization has been demonstrated in multiple projects. Most recently, we achieved success for our client, Gente Oil, in Oriente Basin, Ecuador, where ViaLogy analysis mapped Napo sandstone at a depth of over 5000 feet in a formation that had gone insufficiently exploited because the conventional seismic interpretation was inadequate to the task. Also recently, we successfully completed work for Chevron in the Delaware Basin field, their most important play in the US. We delineated hydrocarbon reservoirs below seismic resolution. Some of the prospective reservoirs were only 8 to 10 feet of sandstone thick. Our results should permit a more precise placement of targeted new horizontal wells, resulting in better and lower cost production. We look forward to presenting the results of this project to the upstream oil & gas exploration community jointly with Chevron. We are optimistic about future significant revenue contracts from Chevron. Also noteworthy is our expectation that we will soon initiate a major pilot project on behalf of one of the largest state owned South American oil companies.

On the financial side, we have increased QuantumRD revenues fivefold year on year. Partly as a result of our progressive development of the QuantumRD code, we have been able to streamline operations further, and to reduce operating costs. The improved QuantumRD software platform attracted the attention of CGG, one of the world's leading geophysical services companies, and led to our April, 2013, agreement with them which provides ViaLogy both a sales channel and technical support. Another important development was the USPTO's allowance for QuantumRD for oil and gas, microseismic, and geothermal applications.

ViaLogy is now at a juncture where business opportunity meets financial reality: the company has achieved a significant foothold in the highly competitive geophysical services industry, and we need to exploit it fully. ViaLogy faces two basic realities:

· The costs associated with customer acquisition in this global industry are high. Securing the company wide commitments of large, far flung clients demands extensive, sustained marketing, sales and technical efforts. One or two contracts with a Supermajor wins a key business opening, but in itself does not ensure future long term business. ViaLogy needs the resources to aggressively maintain and grow its business.

· Like any growing high technology company, ViaLogy must expand its technology's reach and its product lines to adjacent markets. To grow into the burgeoning microseismic market, for example, which uses seismic data to monitor and optimize fracking for extraction of shale gas and oil, further development of our Quantum Resonance Interferometry algorithms and software code is necessary, as are focused campaigns to penetrate those markets.

As the chairman's statement says, we are evaluating a number of initiatives to provide a firm financial future for the company. At the same time we will aim to capture value and protect and grow shareholder interest. ViaLogy's strategic objectives - making QuantumRD a widely used must have tool in the industry, and extending the powerful QRI technology to other applications have not changed.

Dr. Robert W Dean

Chief Executive Officer

27 September 2013

Chief Technology Officer's Review

Today, we see opportunities to position ViaLogy for new growth driven by a step change in the maturation of the QuantumRD software platform over the past year. Contracted project outcomes, successes on some of the most difficult hydrocarbon reservoir discovery and mapping challenges in multiple geologies around the world, and, our sustained technology push to extract and offer more value from seismic than the industry norm, are now creating new revenue channels for the business.

QuantumRD,ViaLogy's core software based seismic signal processing platform, is capable of extracting reservoir properties from ultra-weak seismic amplitudes that have traditionally been discarded and filtered away as 'noise'. Some of this rejected data, previously considered 'random and meaningless' in conventional seismic processing, is actually useful signal. Our technology analyzes reflected seismic signals from subsurface strata by transforming them into the quantum domain. QuantumRD accomplishes this by utilizing a synthetic noise source (that is, a representation suitable for exploitation by quantum resonance algorithms) derived from known rock-physics and well log data. This synthetic noise is then used to probe the transformed seismic data sets in order to detect, amplify and characterize changes in weak amplitudes in low and high frequencies. This previously hidden information can be indicative of the presence of pre-specified levels of porosity, shale and fluid presence. Subtle changes in rock and fluid properties are detected as emergent computational resonances in the quantum domain. As part of the analysis process, QuantumRD deconstructs conventionally processed seismic datasets into millions to billions of smaller volume cells (or voxels). Each voxel is analyzed individually in the quantum domain to detect porosity, shale, and fluid presence, and then reassembled to build a reservoir from the bottom-up. Our workflows for porosity; quantitative volume of shale/carbonate/clay in rock units; hydrocarbon/brine presence and saturation; fracture mapping; algorithmic use of synthetic noise to seek quantum resonances represent a paradigmatic departure from conventional geophysical workflows and offer the potential to see reservoirs and geological events below seismic resolution.

This reporting period we focused our engineering effort on two themes:

· QuantumRD Automation & Scaling: Reservoir geophysical interpretation is still an art,a subjective, human intensive and iterative process. Our new workflow engine within QuantumRD, potentially makes it a very collaborative, scalable and automated 3D seismic interpretation tool in the industry. Now end-to-end workflow sequences can be implemented to simultaneously analyze multiple zones in multiple sandstone, carbonate, shale settings while also allowing results to be stress tested under multiple hypothesis. This software engineering accomplishment makes QuantumRD enterprise grade software,allowing multiple analysts in co-located or geographically distributed settings to collaboratively work on one or more prospective reservoir zones.

QuantumRD can be deployed out of departmental server clusters, lights-out data centers, public and private clouds. Our new Distribution Engine incorporated within QuantumRD now autonomously deploys QuantumRD processes to use all available, authorized hardware, dramatically increasing hardware utilization and throughput.

These advances have already had significant operational outcomes for ViaLogy, removing some growth bottlenecks. Rather than spending months, waiting for clearances for overseas seismic data to arrive to our US offices for processing, we can push-out QuantumRD to data centers in different countries for in-country processing and remove the software upon project completion (flexible, dynamic deployment). We can securely move QuantumRD and new project-specific workflows, as enterprises today move data.

· Business & De-Risking Value of QuantumRD results: QuantumRD covers the "last mile" in drill-planning, as our results provide the key reservoir indicators for making well positioning decisions. We continued to reinforce our premium pricing by demonstrating superior information product and reservoir results, and adding more breadth and depth to our services. Our primary customers contract with us to solve their most difficult problems in the areas that are hard to image seismically. This increased capability means that in recent projects we received the same per km2 pricing for QuantumRD services for analyzing thin vertical stratigraphic sections as we did two years ago for sections that were 10 times thicker. This is in part because there is extremely limited capability in the marketplace that can try to see net hydrocarbon pay zones or porosity in tight sands and carbonates (50% to 75% below seismic resolution).

Our technical progress led to significant business outcomes in the past year:

· CGG-ViaLogy Business and Technical Agreement resulted directly from the potential value QuantumRD brings to sophisticated E&P customers, as well as the scalability and automation we have brought to hydrocarbon reservoir characterization. CGG's global network of seismic processing data centers and deep expertise in most basins provides an ideal global deployment platform. CGG's offer and collaboration to take QuantumRD to some of their key customers as a next step to quantify business value changed our marketing plan to focus on this channel. We are currently looking at CGG facilitated initial projects in different continents, to be implemented within CGG best practices. These projects will be extending the reach of our value proposition to deepwater pre-salt, post-salt and salt-dome formations. Notwithstanding the business potential of this relationship, expansion of this collaboration will be driven by technical results; QuantumRD's ability to synergistically leverage high data quality offered by their stateof the art seismic acquisition and processing technology; and our ability to closely work with CGG country managers on basin specific challenges.

· Chevron-ViaLogy Collaboration on Horizontal Well Positioningin the US Delaware Basin. We have continued to stress QuantumRD to map out and characterize pay zones within tight sandstone and unconventional shale. Drilling outcomes in new areas recently analyzed by ViaLogy, and the accompanying rigorous validation for accuracy and predictive performance, could change how horizontal well trajectories are planned. In the last project, we jointly defined a QuantumRD workflow and products that are customized to basin requirements and decision-making. Chevron contractually expanded the scope of our services to include seismic modeling to develop a new process for assessing seismic data quality to mitigate risk and uncertainty. We are currently in discussions regarding the deployment of our workflow customized for Chevron as a standardized offering on their additional leaseholds in different basins.

· Expression of Business Interest in China, Middle East and Latin America. This past year we met with some of the largest oil & gas operators in leading energy markets and presented to their senior technical and management staff. We can confirm their recognition of QuantumRD value, technology and business interest. We will be providing updates as business agreements for QuantumRD services are concluded.

Substantial progress and maturation of QuantumRD coupled with the reach of QRI ultra-weak signal processing creates a point-of-opportunity for broadening our current business by opening new product and revenue lines. In conjunction with our customers and technology partners, we are considering a business expansion in three areas:

(a) Oil & Gas Adjacent Markets in seismic analysis, to include 4D Monitoring, water/CO2 injection monitoring for secondary and enhanced recovery, and microseismic analysis. From a business standpoint, these markets pair QuantumRD usage over the entire life of the well and field. We can deliver value to the hydrocarbon extraction process as well, rather than just being limited to pre-drilling. Our ability to image fluids offers a unique differentiator in monitoring fluid flow, subsurface pressure displacements and fluid recharge that could have a substantial impact in operational costs and production during enhanced recovery.

(b) fracSense: We are looking at developing and offering a post-frac hydrocarbon flow monitoring solution that combines ultrasensitive QRI-enabled geophones with our Sensor Policy Manager® (SPM) software designed for sensor integration. Combining our two mature software products, this solution will monitor reservoir events and degradation of frac performance and permeability over time. This is currently contemplated as a fabless line of business in conjunction with a geophone OEM.

(c) Electromagnetic Fluid Mapping: To date, signal processing and low cost acquisition has limited commercialization and widespread adoption of electromagnetic imaging in mapping fluid distributions and reservoir boundaries for accurate resource estimation and water invasion. We plan to re-visit this promising but challenged modality with our technology with a view to developing a solution that can provide a strong complement to seismic.

In summary, in the coming year we foresee growing QuantumRD revenues with current and new customers and maximizing sales reach through our CGG channel; and, at the same time, we forsee a course which adds product offerings and results in additional revenues starting in 12 to 15 months. Our choice of new focus areas converges and builds on core competencies and our previous significant investments in QRI and Sensor Policy Manager products, while driving growth in the energy markets where we have anchor customers.

Dr. Sandeep Gulati

Vice President and Chief Technology Officer

ViaLogy PLC

27 September 2013

Report of the Directors

The Directors present their report together with the audited financial statements for the year ended 31 March 2013.

Results and dividends

The statement of comprehensive loss is set out on page 16 and shows the loss for the year.

The Directors do not recommend a final ordinary dividend for the year (2012 - £Nil).

Principal activities, trading review and future developments

A detailed review of the business, post reporting date events and likely future developments is given in the Chairman's Statement and the executive reports on pages 2 to 7

Key performance indicators

The Directors consider the Group's key performance indicators during the fiscal year were the completion of successful initial projects with our existing major oil and gas customers and marketing the Quantum RD technology to the wider oil and gas industry. This belief has been validated by receiving repeat business from our biggest customers and the signing of the business and technical collaboration agreement with CGG.

Research and development

The Group continues to invest in research and development for the continued development of the Quantum RD technology.

Related party transactions

During the year there were no related party transactions, other than those with key management personnel. Key management personnel are considered to be the directors; their emoluments are disclosed in note 6.

Financial instruments

Details and required disclosure of the financial instruments used by the Group are contained in note 15 of the financial statements.

Payments to suppliers

The Group agrees terms and conditions under which business transactions with suppliers are conducted. It is Group policy that, provided a supplier is complying with the relevant terms and conditions, including the prompt and complete submission of all specified documentation, payment will be made within a reasonable period of the invoice being received and in any case within the agreed payment period. The number of days purchases remained outstanding at 31 March 2013 for the Group was 9 days (2012: 6 days).

Events after reporting date

Significant events that have occurred since the reporting date are detailed in the Chairman's Statement on page 2 and within note 21 of these financial statements.

Risks and uncertainties

The main business risk facing the Group is that its technology cannot be viably developed both economically and technically and that competitors emerge which erode the Group's competitive advantage. The Directors continue to monitor developments within the ViaLogy product markets to ensure ViaLogy retains the competitive advantage.

The Directors are fully aware that, as a small research and development company, unforeseen circumstances affecting one or more key employees could cause a hiatus in the progress of the business. To mitigate this risk the Group has arranged a life insurance policy on the founder of the company and is ensuring that senior personnel are trained to utilise and further develop ViaLogy's products.

Note 15 details further risks and uncertainties faced by the Group.

Donations and political contributions

The Group made no donations or political contributions in the current or prior year.

Qualifying third party indemnity provisions

The Group has arranged qualifying third party indemnity for Directors and Officers Liability insurance for the sum of £3 million.

Going concern

Following a successful year of further opportunities and projects with significant international companies the Directors are confident that the Group is well placed to further build on this foundation in order to help to fund the Group's development and working capital requirements. As noted in the Chairman's and Chief Executive's Reports the Board are currently reviewing options to secure the funding requirements of the business. Additional funding will be required in order to support the Group. There can be no certainty that additional funding will be available given the current economic climate. Whilst the Directors are confident that additional funding can be raised to meet the Group's development and working capital needs, and the Group has been successful in the past in this regard, a significant uncertainty exists given the absence of 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.

Accordingly the financial statements set out on pages 15 to 49 have been prepared on a going concern basis.

Executive Directors

Terry Bond, (75), Executive Chairman

During the 1960s Terry Bond was Managing Director of a public relations consultancy. Throughout the 1970s he was Sir Chay Blyth's business partner and Managing Director of Chay Blyth Supersail. In 1980 Terry was appointed Managing Director of International Property Marketing Limited ('IPM') and in 1987 he was appointed Sales and Marketing Director for Wimpey Leisure. During the 1990s he was a director of ProShare (UK) Ltd, responsible for building up the British investment club movement to 12,000 clubs. Terry is also a director of Sector Investment Managers, which is investment adviser to Junior Oils Unit Trust and Junior Gold.

Dr. Robert Dean, (70), Chief Executive Officer

Until September 2007 Robert Dean was Senior Vice President, Corporate Market Development, with Science Applications International Corporation (SAIC). Previously he has held senior executive positions in the aerospace industry at Boeing, Lockheed Martin, and Ball Aerospace Corporation. Bob also served in senior executive positions in the US Government at the Central Intelligence Agency, the State Department, and at the White House as Special Assistant to the President during Ronald Reagan's presidency. He is a graduate of Brandeis University, Harvard University, and received his Ph.D. from the University of Denver.

Dr. Sandeep Gulati, (50), Chief Technology Officer

Dr. Sandeep Gulati is a co-founder, Chief Technology Officer and Vice President, Product Development for ViaLogy LLC. Previously, he headed the Ultracomputing Technologies Group at NASA's Jet Propulsion Lab (JPL) in Pasadena, California. During his 12 year tenure at JPL, he led computational advances in spacecraft autonomy, autonomous diagnostics and prognostics of complex systems, sensor fusion, neural networks, signal processing, command decision modelling and intelligence analysis. At JPL he was a Principal Scientist on a number of programs of national relevance such as the Department of Defence's Joint Strike Fighter, NASA's Reusable Launch Vehicle, the oil industry's DEEPLOOK Consortium, predictive intelligence capability for Army's All-Source Analysis System, and subsurface imaging for cleanup of formerly used contaminated defence sites. He collaborated on strategic programs with Lockheed Martin, Boeing, Northrop Grumman, McDonnell Douglas, Rockwell, Pratt & Whitney, and NASA Center.

Non-executive director

Peter Reynolds, (75), Non-Executive Director

Peter Reynolds is an international businessman and investor based in London. He has been involved in directing the growth of several private and publicly quoted businesses and specialises in assisting research and development companies to maximise their commercial potential.

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 prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 of the group and company and of the profit or loss of the group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

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

· state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

· 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 requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Auditors

All of the current directors have taken all the steps necessary to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware.

BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.

On behalf of the Board

Terry Bond

Chairman

27 September 2013

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF VIALOGY PLC

We have audited the financial statements of ViaLogy Plc for the year ended 31 March 2013 which comprise the consolidated income statement, consolidated statement of comprehensive loss, the consolidated statement of changes in equity, the consolidated statement of financial position, the consolidated statement of cash flows, the company balance sheet and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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 auditors

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the 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 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 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 Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

· the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2013 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company's financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

Emphasis of matter - going concern

In forming our opinion on the financial statements which is not modified we have considered the adequacy of the disclosures made in Note 1 of the financial statements concerning the Group's ability to continue as a going concern.

The Group's current pipeline of sales will generate cash inflows but in order to continue the development of the Group's assets and fund its working capital requirements the Group requires additional funding at the date of approval of the financial statements. This condition indicates the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the 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 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· 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.

Anne Sayers (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor

55 Baker Street, London

Date: 27 September 2013

BDO LLP is a limited liability partnership registered n England and Wales (with registered number OC305127).

Consolidated income statement for the year ended 31 March 2013

Consolidated statement of comprehensive loss for the year ended 31 March 2013

Consolidated statement of financial position as at 31 March 2013

Consolidated statement of cash flows for the year ended 31 March 2013

1 Principal accounting policies

ViaLogy PLC ('the Company') is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Ashcome Court, Woolsack Way Godalming, Surrey, GU7 1LQ. The consolidated financial statements of the Company as at and for the year ended 31 March 2013 comprise the Company and its subsidiaries (together referred to as 'the Group'). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements for the year ended 31 March 2013 have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union.

The consolidated financial statements have been drawn up on the basis of accounting policies consistent with those applied in the financial statements for the year to 31 March 2012.

Standards adopted for the first time in 2013

Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:

 *not yet been endorsed by the European Union at the date that these financial statements were approved and authorised for issue by the Board.

The Group is evaluating the impact of the above pronouncements but they are not expected to have a material impact on the Group's income or equity.

Going concern

Following a successful year of further opportunities and projects with significant international companies the Directors are confident that the Group is well placed to further build on this foundation in order to help to fund the Group's development and working capital requirements. As noted in the Chairman's and Chief Executive's Reports the Board are currently reviewing options to secure the funding requirements of the business. Additional funding will be required in order to support the Group. There can be no certainty that additional funding will be available given the current economic climate. Whilst the Directors are confident that additional funding can be raised to meet the Group's development and working capital needs, and the Group has been successful in the past in this regard, a significant uncertainty exists given the absence of committed funding at the date of approval of these financial statements. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Revenue

Service fees arising from analytical surveys using ViaLogy's patented computational software products are recognised once the report is delivered to the customer.

Service fees arising from government contracts are billed at the end of each month based on man hours worked on the project.

Revenue arising from sales of ViaLogy's direct entitlement of oil and gas production is recognised by reference to the quantity and price of oil sold by the customer into the market at the date of transfer of the risk and reward.

Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as Dr Robert Dean, Chief Executive Officer.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ('the Group') as if they form a single entity. Inter-company transactions and balances between Group companies are therefore eliminated in full.

Critical accounting estimates and judgments

The preparation of consolidated financial statements under IFRS requires the Group to make estimates and judgments that effect the application of policies and reported amounts. In applying these policies the directors are required to make estimates and subjective judgements that may affect the reported amounts of assets and liabilities at the reporting date and reported profit or loss for the year. Although the directors base these on combination of past experience and any other evidence that is relevant to the particular circumstance, the actual results could ultimately differ from those estimates.

Included in the note are accounting policies which cover areas that the directors consider require estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. These policies together with references to the related notes to the financial statements can be found below:

Intangible assets and amortisation Note 10

The group capitalises development costs based on the recognition criteria identified in IAS 38. Internally generated intangible assets are amortised over a period of six years on a straight line basis. The key judgement relates to the demonstrability of the capitalisation criteria for these costs which are dependent upon the belief of management in the feasibility of the product.

Share based payments and warrants Note 18

The fair value is measured by use of a Black-Scholes model which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Management are also required to apply their judgement in assessing a reasonable volatility figure to be applied in the model.

Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and identifiable intangibles are reviewed for impairment at the reporting date in addition to whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected discounted future cash flow from the use of the assets and their eventual disposition is less than the carrying amount of the assets, an impairment loss is recognised and measured using the asset's fair value or discounted cash flows.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the income statement.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts are arrived at by using appropriate valuation techniques.

In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria specified in the policy for research and development costs above are not met.

The significant intangible asset recognised by the Group and its useful economic life is shown in the table below:

Internally generated intangible assets (research and development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

· it is technically feasible to develop the product to be sold;

· adequate resources are available to complete the development;

· there is an intention to complete and sell the product;

· the Group is able to sell the product;

· sale of the product will generate future economic benefits; and

· expenditure on the project can be measured reliably.

Capitalised development costs are amortised on a straight line basis over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within administrative expenses in the income statement.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the income statement as incurred.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost.

Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful lives. Depreciation is applied at the following rates:

Office equipment 20% per annum reducing balance

Computer equipment 33.3% per annum reducing balance

Motor vehicles 33.3% per annum reducing balance

Furniture 20% per annum reducing balance

Oil and gas assets

ViaLogy follows a successful efforts based accounting policy for oil and gas assets.

Interests acquired in successful production wells are initially recognised at cost within property, plant and equipment. Where interests in such wells are acquired as the success fee element of the revenue from an analytical contract, no cost is initially recognised.

Subsequent expenditure is capitalised only where it enhances the economic benefits of the producing asset.

Depletion

ViaLogy depletes oil and gas assets on a unit of production basis, based on proved and probable reserves on a field by field basis.

Impairment

Impairment reviews on Oil and Gas assets are carried out on each cash generating unit. ViaLogy's cash generating units are those assets which generate largely independent cash flows and are normally, but not always, single development areas.

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.

Share-based payments (continued)

The company issued 37,500,000 warrants as part of a share placing on 8 February 2013. The warrants have a conversion price of 1.25p per share and expire on 23 February 2014. Warrants issued in connection with the share issues are measured at the fair value on recognition using the Black-Scholes model and are accounted for as a deduction from equity.

Tax

The major components of income tax on the profit or loss from ordinary activities include current and deferred tax.

Current tax is based on the profit or loss from ordinary activities adjusted for items that are non assessable or disallowed and is calculated using tax rates that have been enacted or substantively enacted by the year end date.

Income tax is charged or credited to the income statement, except when the tax relates to items credited or charged directly to equity, in which case the tax is also dealt with in equity.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs to its tax base, except for differences arising on:

· the initial recognition of goodwill;

· goodwill for which amortisation is not tax deductible;

· the initial recognition of an asset or liability which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

· investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that the taxable profit will be available against which the differences can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax balances are not discounted.

Foreign currency

The functional currency of the parent entity is pounds sterling. The functional currency of the subsidiary is US dollars. Transactions entered into by Group entities in a currency other than the reporting currency are recorded at the rates ruling when the transaction occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Exchange differences arising on the re-translation of the unsettled monetary assets and liabilities are similarly recognised in the income statement.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date.

Presentation currency

These accounts have been presented in Sterling as the directors consider this to be most useful form of presentation to the shareholders.

Financial assets

The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group accounting policy for each category is as follows:

Loans and receivables:

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at cost less any provision for impairment.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled by the Group using its equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Financial liabilities

At initial recognition, financial liabilities (trade and other payables), are measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial liability. These financial liabilities are subsequently carried at amortised cost.

Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.

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 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.

2 Segmental analysis continued

All sales in the current and previous year were to external customers..

£257,681 of total external revenues arose from four customers (2012: two customers attributed £51,256).

3 Loss for the year before taxation

4 Company profit and loss account 

ViaLogy PLC has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these accounts. The Company's loss after tax was £21,098,814 (2012 - loss £649,881) which is dealt with in the financial statements of the parent company.

5 Staff costs

The average number of employees during the year, including executive directors were:

Staff costs (including directors) comprise:

Of the amounts in the disclosure above, an amount of £341,222 (2012: £371,456) was capitalised as R&D rather than expensed to the income statement:

6 Directors

The remuneration of the directors during the year was as follows:

The directors listed above are deemed to be the key management personnel of the Group.

Emoluments of the highest paid director were £531,406 (2012: £295,666).

7 Taxation on profits from ordinary activities

The Group is required to estimate the income tax in each of the jurisdictions in which it operates. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and tax treatments. These temporary differences result in deferred tax assets or liabilities which are included within the statement of financial position. Deferred tax assets and liabilities are measured using substantially enacted tax rates expected to apply when the temporary differences reverse. Management judgement is required to determine the total provision for income tax. Amounts accrued are based on management's interpretation of country specific tax law and the likelihood of settlement.

7 Taxation on losses from ordinary activities continued

Factors that may affect future tax charges

Deferred tax assets relating to UK revenue losses and UK capital losses of £4,363,392 and £1,934,399 respectively (2012: £3,849,755 and £1,934,399) have not been recognised as these losses can only be offset against future taxable profits and at present there is insufficient evidence to justify recognition.

Deferred tax assets relating to US revenue losses of £7,486,221 (2012: £5,156,537) have not been recognised as these losses can only be offset against future taxable profits and at present there is insufficient evidence to justify recognition. In addition ViaLogy LLC may be entitled to further tax losses. The maximum amount of losses available is $6,000,000, however this is subject to an annual limitation which is estimated at $250,000 per year. At the reporting date the accrued potential losses claimable are estimated at $1,750,000 (2012 - $1,500,000). The losses disclosed in relation to the US have not been agreed with the US taxation authorities and thus are the best estimate of management as at 31 March 2013.

8 Loss per share

Basic

Basic loss per share is calculated by dividing the loss after tax attributable to the equity holders of the parent company for the year of £4,664,186 (2012: loss £4,903,395) by the weighted average number of ordinary shares in issue during the year 921,224,058 (2012: 762,556,327).

Diluted

Diluted earnings per share dilute the basic earnings 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 operations and warrants into ordinary shares. 125,535,913 options (2012: 96,162,368) and 38,693,654 (2012: 1,193,654) warrants have been excluded from this calculation as the effect would be anti-dilutive.

9 Plant, property and equipment

10 Intangible assets

In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets.

11 Subsidiaries

ViaLogy PLC has one subsidiary, ViaLogy LLC, which has been included in these consolidated financial statements: ViaLogy LLC is a company whose principal activity is developing applications for its patented Quantum Resonance Interferometry (QRI) technology. QRI is a technology which separates the background 'noise' that envelopes weak signals.

12 Trade and other receivables

There has been no provision made for doubtful receivables, as the Board consider all receivables to be recoverable.

The book values of trade and other receivables approximate to the fair values.

13 Trade and other payables

The book value of trade and other payables approximate to the fair values. See note 15 for maturity analysis.

14 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 35% as the deferred tax is expected to be offset against profits in the US.

The movement on the deferred tax account is as shown below:

On 26 October 2006 the Group acquired the remaining 56.74% of the share capital in ViaLogy Corp, a company whose principal activity is developing applications for its patented Quantum Resonance Interferometry (QRI) technology.

The accounting policy of the acquired entity was not to recognise internally generated intangibles; however, it is the policy of the Group to recognise such an intangible.

A deferred tax liability was recognised in respect of the increase in the intangible asset on acquisition. The deferred tax liability is released over a period of 6 years in accordance with the amortisation period of the acquired intangible assets.

15 Financial instruments

Principal financial instruments

The principal instruments used by the group, from which the financial instrument risk arises, include cash and cash equivalents, trade receivables and trade payables.

A summary of the financial instruments held by category is shown below:

Categories of financial assets

Categories of financial liabilities

Risk and sensitivity analysis

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

The Group and Company are exposed through their operations to one or more of the following financial risks: foreign currency risk, liquidity risk, credit risk and investment risk. The policy for managing these risks is set by the Board and all such risks are managed at a Group level within the organisation. There have been no changes in the way the Group and Company manages risks from previous years. The policies for these risks are described further below:

Foreign currency risk

Foreign currency risk arises because the Group has operations located in the USA whose functional currency is not the same as the parent company's functional currency (sterling). The net assets from such overseas operations are exposed to currency risk giving rise to gains or losses on retranslation to sterling for the purposes of the consolidated financial statements. In the future it is planned that the foreign exchange risk will be mitigated by sales in US dollars.

A US$0.25 increase in the value of the US dollar against sterling will result in a fall in pre-tax losses by £554,973 (2012: decrease in loss of £555,384).

The table below shows the split between currency that balances are denominated in:

Liquidity risk

Liquidity risk is the risk that the company fails to have sufficient funds to meet its debts as they become due. The liquidity risk of the Group is managed centrally. The Group holds funds in short-term bank deposits so that they are available when required.

15 Financial instruments continued

Maturity analysis of financial liabilities

All financial liabilities (trade and other payables) are due for payment within one year as follows:

The Board believe the current level of financial liabilities to be in line with expectations. The level of cash balances and trade and other receivables is sufficient to discharge the Group's financial liabilities.

Credit Risk

During the year, the Group's credit risk was primarily attributable to its cash balances, and its trade receivables. Credit risk, is the risk that the counterparty fails to discharge its obligation in respect of the instrument. The credit risk on liquid funds is limited as the funds are held at banks with high credit ratings. The risk to the Group of trade receivables going bad is low due to the size and stature of the customers the company now trades with. . There were no allowances for debt recovery as at 31 March 2013 or 31 March 2012.

The Group's maximum exposure to credit risk by class of financial instruments amounts to their carrying value of £1,390,421 (2012 £567,289). The Group deems that entities from whom credit exposure arises are of adequately strong credit quality and will therefore be able to pay the amounts due when they arise.

Investment risk

Investment risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk).

The Group is exposed to interest rate risk from its interest earning financial assets. The floating rate assets are held in a money market account earning interest at Bank of England base rate less 0.3%. The interest rate risk is mitigated by the fact cash is held in short-term deposits allowing rapid transfer of funds to alternative commercial banks to obtain improved interest rates. There are no financial assets earning interest at fixed rates.

Capital

As described in note 16 the Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained deficit as its capital reserves. In managing its capital the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through capital growth. In order to achieve this objective, the Group seeks to commercialise the development which has been undertaken to date, through major sales in a number of markets.

There have been no other significant changes to the Group's capital management objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital.

16 Share capital

The Group raised £1.045 million before expenses via a private placing of 38,000,000 shares at 2.75 pence per share on 21 May 2012.

The Group also raised £1 million before expenses via a private placing of 36,363,637 shares at 2.75 pence per share on 15 June 2012.

The Group also raised £1.406 million before expenses via a private placing of 112,500,000 shares at 1.25 pence per share on 8 February 2013.

All shares in issue have equal voting rights.

Share Options

At 31 March 2013, the following share options were outstanding in respect of Ordinary shares:

Share options vest over differing periods from date of issue to three years.

The options held by the directors at the beginning and end of the year are as detailed below