Stilo Regulatory News (STL)

17 March 2011

STILO INTERNATIONAL PLCPreliminary Announcement of Results for Year Ended 31 December 2010

Stilo International plc ("Stilo", the "Group" or the "Company") (LSE:STL), the AIM quoted software and services company, today announces its results for the year ended 31 December 2010. The Company operates two complementary business divisions, providing Digital Publishing Technology and Services and Product Lifecycle Management Solutions for SAP®.

FINANCIAL HIGHLIGHTS

è Sales revenues increased by 15% to £2,384,000(2009: £2,071,000)

è Profit after taxation achieved of £142,000(2009: loss £457,000)

è Administrative expenses reduced by 11% to £1,823,000(2009: £2,042,000)

è Exchange rate losses calculated at £35,000(2009: loss £84,000)

è Investment made in product development of £337,000(2009: £385,000)

è Cash position strengthened to £494,000 as at 31 December 2010(2009: £436,000)

BUSINESS HIGHLIGHTS

è Stilo introduced version 2 of Migrate, its onlineXML content conversion solution

è IBM, the originators of the XML DITA standard,evaluated and endorsed Migrate v2

è Stilo's OmniMark product celebrated its 20th anniversaryand continues to provide a robust solution for processinghigh volumes of content

è SAP® certified Stilo's Product Change Impact Analysis solution

è Major services contracts undertaken with AgustaWestland, BAe Systems Insyte,Micromass UK and ALLDATA

è Significant OmniMark software orders received from Japan Patent Office

ENQUIRIES

CHAIRMAN'S STATEMENT

Stilo's customers span many different sectors - including manufacturing, engineering, publishing, technology, defence and government. Yet customers share a common requirement: the need for high quality content and accurate information, quickly.

Organisations in industries such as manufacturing, aerospace and automotive also continually publish large amounts of information. This information will often comprise complex technical documentation, operating manuals and product catalogues and is required to be accessed and utilised in a variety of forms. Our technology provides Stilo customers with a robust platform for converting and re-purposing vast amounts of content at high speed - while maintaining content quality.

Businesses need accurate, up-to-date information to help them make better informed business decisions. Our Product Lifecycle Management (PLM) solutions deliver services and technology for SAP® customers to enable more rapid access to disparate data held across manufacturing and engineering disciplines. With accurate, meaningful information at their fingertips, managers across all business divisions can better understand the implications of product changes, minimise stock obsolescence and reduce the total lifecycle cost of their products.

Through two separate business divisions, Stilo will continue to develop and deliver solutions and technologies that meet business demand for high quality content and accurate information, quickly.

David Ashman

Chairman

BUSINESS REVIEW

Digital Publishing Technology & Services

Stilo specialises in helping organisations to automate the conversion of their content into different XML standards, so that they can get the content they need, in the format they want, more quickly and more accurately. Our solutions are used by commercial publishers, technology companies and government organisations that need to convert existing document formats into new digital standards, as well as organisations involved in the production and maintenance of technical documentation.

Our flagship product is Migrate, the world's first online content conversion service. This 'in the cloud' service provides an attractive alternative to traditional outsourcing business models. Through automation, it enables our customers to improve turnaround times, reduce operating costs and take better control of their content quality.

The Migrate service has been built using OmniMark, Stilo's proven high-performance content processing tool. OmniMark is used by customers around the world for the development of high-performance, complex content conversion solutions.

Our customers include Boeing, Airbus, AutoZone, GLOBALFOUNDRIES, IBM, British Library, Wolters Kluwer, Japan Patent Office and the European Parliament.

Product Lifecycle Management Solutions for SAP®

Stilo offers software, consulting and implementation services to organisations using SAP® Enterprise Resource Planning (ERP) solutions across industry sectors including aerospace and defence, manufacturing and engineering.

Our services engagements typically include the migration of data between ERP systems, and the integration of corporate data with engineering and product design data held in disparate systems.

Stilo's Product Change Impact Analysis software is the core module in the Stilo Product Change Management Suite. Accredited by SAP® for use with SAP® systems, the Impact Analysis solution helps organisations to identify and address all possible impacts of a product change decision upon manufacturing and supply chain logistics, and implement changes quickly and cost effectively.

Customers include AgustaWestland, BAe Systems Insyte, EADS Defence and Security Systems and Micromass UK.

The results for the year ended 31 December 2010 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

In 2010, the results for Stilo show a profit, after taxation, of £142,000 (2009: loss after taxation £457,000). There was an operating profit from continuing operations of £108,000 (2009: loss of £380,000). Included within operating costs are foreign exchange losses of £35,000 (2009: losses £84,000).

Total sales revenues for the period increased by 15% to £2,384,000 (2009: £2,071,000). Administrative expenses decreased by 11% in the year to £1,823,000 (2009: £2,042,000).

The increase in sales revenues was due to an increase in professional services undertakings across both business divisions. In the PLM Solutions division, projects were undertaken with AgustaWestland, BAE Insyte, EADS and Micromass UK. In the Digital Publishing division, a significant project was undertaken with ALLDATA LLC in the United States.

Revenues from the sale of software in the Digital Publishing division also increased and included orders from the Japan Patent Office, Honeywell and the European Parliament for OmniMark software and maintenance.

The decrease in operating costs was primarily due to cost reduction measures and restructuring which took place in 2009. As of 31 December 2010, Stilo employed 18 permanent employees, based in the UK and Canada. On an ongoing basis, extensive use is made of contractors for the delivery of professional services engagements.

Investment in research and development continued in 2010. Research and development expenditure for the year was £337,000 (2009: £385,000). As a result of this investment, Stilo continues to benefit from research and development tax credits.

Stilo had a cash balance of £494,000 as at 31 December 2010 (31 December 2009: £436,000). Costs continue to be carefully managed in order to maintain cash reserves at a satisfactory level.

COMMERCIAL & TECHNICAL ACHIEVEMENTS

Digital Publishing Technology & ServicesOver a period of several months in 2010, Stilo's Migrate service was assessed by the IBM Corporate User Technologies team in the USA. Following this in-depth evaluation, IBM placed an initial order in 2011 for the conversion of FrameMaker documents to the DITA XML standard. This is a very prestigious contract win, given that IBM was the originator of the DITA standard, which is becoming increasingly popular with publishers of technical documentation.

Stilo continued to enhance its Migrate service during 2010. New conversion services aimed at commercial publishers have been added, including conversion to the DocBook XML and EPUB standards. These are very significant new services. The EPUB standard is rapidly becoming the defacto publishing standard for the iPad, iPhone, smartphones and other tablet devices.

Product Lifecycle Management Solutions for SAP®

Also in 2010, Stilo's Product Change Impact Analysis solution was certified by SAP®. In order to receive certification, proposed solutions have to undergo rigorous testing and stand up to meticulous technical scrutiny by SAP®. Achieving this accreditation will be a considerable help to future marketing efforts, providing prospective customers with the technical reassurance that comes with such an endorsement.

The market for digital publishing technology and services is expanding as the use of the iPad, iPhone, eReaders, smartphones and tablet devices increases. This demand is driving the requirement for publishers to ensure their content is optimised for delivery across all these platforms. In addition, the adoption of the DITA standard by technology companies for technical documentation is accelerating. The flexibility and performance of our Stilo Migrate service puts us in a strong position to capitalise on these market trends.

Additionally, we will seek to complement our publishing technology through the building of strategic relationships with offshore service providers, and to seek acquisition opportunities.

Sales of SAP®-related services are expected to reduce in 2011 as our UK Defence customers face government budget cuts. We will be seeking to offset the impact of this, primarily with increased sales of our Product Change Impact Analysis tool to new customers in the UK and international markets.

Overall, we look forward to growing the profitability of the company in 2011, and continuing the strategy of becoming primarily a technology supplier with a highly scalable business model.

Group Income Statement

Group Statement of Comprehensive Income

Year Ended 31 December 2010

Group Statement of Financial Position

as at 31 December 2010

Group Statement of Changes in Equity

for the year ended 31 December 2010

Group Cash Flow Statement

for the year ended 31 December 2010

1. The figures for the year ended 31 December 2010 and 2009 do not constitute statutory accounts within the meaning of S.434 of the Companies Act 2006. The figures for the year ended 31 December 2010 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 2009 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 489(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 and authorised for issue on 16 March 2011.

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 2010 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 / (loss) per Share. The basic earnings / (loss) per share is calculated on the profit for the financial year of £142,000 (2009: loss of £457,000), and on the weighted average number of shares in issue during the year of 109,728,470 (2009: 109,428,470). The fully diluted earnings per share in 2010 takes account of outstanding options which results in a weighted average number of shares in issue during the prior year of 118,579,470. As there was a loss per share in 2009 there was no dilution.

4. The directors do not recommend the payment of a final dividend (2009: £nil).

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 2010 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. Alternatively the 2010 Annual Report and Accounts will 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 22-25 Farringdon Street, London EC4A 4AB at 11.30am on 19 May 2011.