Stilo Regulatory News (STL)

13 March 2014

STILO INTERNATIONAL PLCPreliminary Announcement of Resultsfor Year Ended 31 December 2013

Stilo International plc ("Stilo", the "Group" or the "Company") today announces its results for the year ended 31 December 2013. The Company provides XML content processing technology and cloud content conversion services to major corporations.

FINANCIAL HIGHLIGHTS

· EBITDA* increased to £238,000(2012: £112,000)

· Sales revenues increased by 7% to £1,504,000(2012: £1,409,000)

· Annual software maintenance revenues of £728,000(2012: £735,000)

· Continued investment in product development of £406,000(2012: £368,000)

· Cash position continues to strengthen to £1,085,000 as at 31 December 2013(2012: £976,000)

· Payment of maiden dividend in October 2013 in the form of an Interim dividend of 0.02 pence per Ordinary share and an additional Special dividend of 0.10 pence per Ordinary share

· Final dividend proposed of 0.03 pence per Ordinary Share

* EBITDA comprises profit before taxation, interest, depreciation and the amortisation of software development costs, and excludes non-recurring exceptional costs

BUSINESS HIGHLIGHTS

· New customers for Migrate, the world's first cloud XML content conversion service, include ACI Worldwide, TIBCO Software, Varian Medical Systems, Altera Corporation, Teradata Corporation and VCE

· Introduction of the Migrate Partner Programme to generate additional new business opportunities

· Release of Migrate version 3, providing improved functionality and ease-of-use for non-technical users

· Release of OmniMark version 10.1 providing continued product enhancements

· Major OmniMark orders received from Japan Patent Office and The Boeing Company

David Ashman, Chairman, commenting on the Company's performance, stated:

"The Company has made good progress in 2013.

Sales increased, and included several prestigious new name customers for Migrate, our world-leading cloud XML content conversion service, in addition to significant OmniMark orders from existing customers including the Japan Patent Office and The Boeing Company.

Operating costs were broadly unchanged, profits increased, and with a continued improvement in our cash position, we were able to announce a maiden dividend to shareholders.

With an expert development team, a global customer base, leading technology and a strong cash position, we look forward to making further progress in 2014."

ENQUIRIES

CHAIRMAN'S STATEMENT

The Company has made good progress in 2013.

Sales increased, and included several prestigious new name customers for Migrate, our world-leading cloud XML content conversion service, in addition to significant OmniMark orders from existing customers including the Japan Patent Office and The Boeing Company.

Operating costs were broadly unchanged, profits increased, and with a continued improvement in our cash position, we were able to announce a maiden dividend to shareholders.

With an expert development team, a global customer base, leading technology and a strong cash position, we look forward to making further progress in 2014. 

David Ashman

Chairman

12 March 2014

BUSINESS REVIEW

Large organisations need to process ever increasing amounts of digital content and publish information to multiple media channels including print, web, CD-ROM, smartphones, ebook readers and mobile devices.

They often need to author and publish content in multiple languages, and re-use that content in many different ways, across different publications and document types. Innovative web applications dynamically assemble and deliver content to users that is tailored to their individual purchasing requirements, reading preferences or personal interests.

The content management systems that support such digital publishing applications typically necessitate that content is stored and processed in a 'neutral' XML (Extensible Markup Language) format prior to publication.

Stilo specialises in helping organisations automate the conversion of their existing content into different XML formats. Our solutions are used by commercial publishers, technology companies and government agencies and include organisations involved in the production and maintenance of technical documentation.

The business opportunity for XML content conversion technology and services is global and growing, and it is Stilo's objective to dominate this market sector.

Products and Customers

Stilo's core technology is OmniMark, a leading content processing platform used by customers over many years to develop high-performance, content processing solutions that support large scale publishing applications. Users include Boeing, Pratt and Whitney, EADS, Thomson Publishing, and Wolters Kluwer. Sales for the period were boosted by orders from The Boeing Company, which uses OmniMark for processing technical information, and the Japan Patent Office, which uses OmniMark to process thousands of patent applications on a daily basis.

Over recent years, the Company has made a significant investment in the development of Migrate, the world's first cloud XML content conversion service, based upon OmniMark technology. Through advanced levels of automation, it enables our customers to improve turnaround times, reduce operating costs and take direct control of their conversion processes, providing them with an attractive alternative to traditional in-house or outsourced conversion services. Migrate customers include IBM, Cisco Systems, Oracle and Micron Technology. New customers in 2013 include ACI Worldwide, TIBCO Software, Varian Medical Systems, Altera Corporation,Teradata Corporation and VCE.

We continue to make good progress in the growing DITA XML publishing market, and have recently introduced a marketing partner programme targeting XML technology companies, solutions providers and publishing consultants. This will help us further establish our position in the XML DITA market, and potentially give rise to additional XML market sector opportunities.

Migrate customer highlights include:

· Migrate recommended by central IBM Corporate User Technologies group to over 400 globally dispersed documentation teams

· EMC Corp implemented Migrate conversion portals across five business divisions in USA

· Migrate used extensively by Cisco Systems documentation teams in India and Israel

· ACI Worldwide, a leading payment systems company, has deployed Migrate with documentation teams located in the USA and South Africa

Sales analysis by geographic region

Our customers typically comprise large organisations, and are spread globally. Geographic sales revenues were derived as follows:

Region 2013 2012

UK 3% 5%

Rest of Europe 13% 13%

North America 48% 62%

South America 2% 5%

Asia 34% 15%

Revenues from Asia grew significantly as a result of OmniMark orders received from the Japan Patent Office. North American revenues continue to represent a significant proportion of sales revenues as adoption of the DITA XML standard has been primarily led by corporations with their headquarters based in the USA. It is anticipated that adoption of the DITA XML standard will spread internationally over the coming years.

Development and Technical Expertise

Continued investments in Migrate have served to reinforce its market leading position. New DocBook to DITA conversion functionality was released in February 2013, to help users convert from older XML content management systems to content management systems supporting the new XML DITA standard. A major upgrade, Migrate version 3, was released in August 2013, providing improved functionality and ease-of-use for non-technical users.

OmniMark version 10.1 was released in February 2013, reflecting ongoing product development efforts.

Our technical team includes leading experts in the development of content conversion tools, and by association, the solving of complex SGML/XML content processing problems.

Operations

Stilo operates from offices located in Swindon, UK and Ottawa, Canada. The development team is based in our Ottawa office.

As of 31 December 2013, there were 16 permanent employees in the Company, complemented by the use of contractors. In 2014 we will be making additional investments in the recruitment of development and sales personnel, but it is not anticipated that we will be growing headcount significantly, as we look to contain our costs and scale the business through technology sales and partnering agreements.

The results for the year ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

In 2013, the results for Stilo show an increased EBITDA (excluding exceptional costs) of £238,000 (2012: £112,000). The non-recurring exceptional costs were £34,000, incurred in relation to legal and other costs of the capital reduction exercise which has enabled the Company to commence the payment of dividends.

Total sales revenues for the period increased by 7% to £1,504,000 (2012: £1,409,000), a result largely of increased OmniMark software sales.

The Company continued to benefit from revenue from software maintenance contracts of £728,000 (2012: £735,000) which represents 48% of annual sales revenue. The increase in the sales of OmniMark software and the continued change in the mix of types of revenue towards technology sales meant that the company was able to achieve a further improvement in profits.

Operating expenses were broadly unchanged over the year at £1,253,000 (2012: £1,270,000).

Investment in research and development continued in 2013, with research and development expenditure for the year increasing to £406,000 (2012: £368,000). As a result of this investment, Stilo continues to benefit from research and development tax credits.

Stilo had a cash balance of £1,085,000 as at 31 December 2013 (31 December 2012: £976,000), and remains entirely un-geared. This further strengthening of the balance sheet provides a stable financial base for the Company and will support continued investment in product development, sales and marketing. However, overall costs will continue to be carefully managed in order to maintain cash reserves at a satisfactory level.

In October 2013 the Company paid a maiden dividend to shareholders of 0.12 pence per Ordinary Share. This comprised of a Special Dividend of 0.10 pence per Ordinary Share, and an Interim Dividend of 0.02 pence per Ordinary Share. The payment of this dividend followed a capital reduction approved at a General Meeting of shareholders held on 31 July 2013, and by a hearing of the High Court Chancery Division on 4 September 2013. Exceptional costs of £34,000 representing legal and professional fees were incurred as part of the capital reduction process.

The Board recommends payment of a Final Dividend for the year of 0.03 pence per Ordinary Share which, if approved, will be paid on 19 May 2014 to shareholders on the register on 22 April 2014. The shares will be marked ex-dividend on 16 April 2014. If approved, payment of the Final Dividend will bring the total dividends paid to shareholders for the year to 0.15 pence per Ordinary Share.

The Board's policy is to maintain payment of a steady and progressive dividend, well covered and paid subject to maintaining sufficient funds within the business with regard to prudent forecasts of future capital requirements, without the need for debt funding.

The global market for dynamically publishing digital content to desktop computers, laptops, tablets and mobile devices is expanding rapidly. Trading in the two months of the current year has been in line with management forecasts. We look forward to continuing to build upon our leading position in the DITA XML content conversion market, and to press ahead with the development of new XML content processing solutions.

Group Income Statement

Year Ended 31 December 2013

Group Statement of Comprehensive Income

Year Ended 31 December 2013

Group Statement of Financial Position

as at 31 December 2013

Group Statement of Changes in Equity

for the year ended 31 December 2013

Group Cash Flow Statement

for the year ended 31 December 2013

1. The figures for the year ended 31 December 2013 and 2012 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 December 2013 have been extracted from the statutory accounts for that year on which the auditor has issued an unqualified audit report which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 December 2012 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts. This announcement was approved by the board of directors on 12 March 2014 and authorised for issue on 13 March 2014.

2. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2013 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').

3. Earnings per Share. The basic earnings per share is calculated on the profit for the financial year of £207,000 (2012: profit of £118,000), and on the weighted average number of shares in issue during the year of 109,808,470 (2012: 109,808,470). The fully diluted earnings per share in 2013 takes account of outstanding options which results in a weighted average number of shares in issue during the prior year of 114,283,845 (2012: 117,949,316).

4. DIVIDENDS

Ordinary 2013 2012

£'000 £'000

Interim paid (0.02 pence per share (2012: nil)) 22 -

Special paid (0.10 pence per share (2012: nil)) 110 -

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The directors recommend the payment of a final dividend of 0.03 pence per Ordinary Share (2012: £nil) to be paid on 19 May 2014 to those shareholders on the register on 22 April 2014.

The proposed dividend is not included as a liability in these financial statements as it is subject to shareholder approval.

5. These financial statements are presented in sterling as that is the currency of the primary economic environment in which the Group operates.

6. Copies of the 2013 Annual Report and Accounts will be posted to shareholders in April. Further copies may be obtained by contacting the Company Secretary at the registered office. The 2013 Annual Report and Accounts will also be available to download from the investor relations section on the Company's website www.stilo.com. The annual general meeting is due to be held at the offices of Baker Tilly, 25 Farringdon Street, London EC4A 4AB at 11.30am on 15 May 2014.