Stilo Regulatory News (STL)

18 March 2015

STILO INTERNATIONAL PLCPreliminary Announcement of Resultsfor Year Ended 31 December 2014

Stilo International plc ("Stilo", the "Group" or the "Company") today announces its results for the year ended 31 December 2014. The Company provides XML content processing technology and cloud content conversion services to major corporations.

FINANCIAL HIGHLIGHTS

· Sales revenues £1,262,000(2013: £1,504,000)

· EBITDA* £108,000(2013: £238,000)

· Annual software maintenance revenues of £710,000(2013: £728,000)

· Continued investment in product development of £403,000(2013: £406,000)

· Cash position broadly unchanged at £1,089,000 as at 31 December 2014(2013: £1,085,000)

· Final dividend proposed of 0.03 pence per Ordinary Share, making total dividend of 0.06pence for the year

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

BUSINESS HIGHLIGHTS

· 42% growth in revenues for Migrate, the world's first cloud XML content conversion service, with prestigious new customers including Kaplan Professional Education, ADP, Pitney Bowes, Deltek, Ansys, SAP, Intel, Atmel, Vestas, Unicef and Cray

· Orders for OmniMark, a high-performance content processing development platform, received from Embraer (Brazil), Japan Patent Office, European Parliament and National Geospatial (USA)

· Encouraging progress made with the development of AuthorBridge, a ground-breaking XML content authoring solution for non-technical users

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

"We are disappointed to report that our sales revenues and profits decreased year on year. An anticipated reduction in OmniMark software orders was partially offset by a 42% increase in revenues for Migrate, our cloud conversion service, which continues to strengthen its position in the DITA XML conversion market. Unfortunately, the shelving of a major conversion project by a European customer significantly impacted our final results.

However, I am pleased to report that we have made good progress with the development of AuthorBridge, a new content authoring solution for non-technical business users. Its initial release is scheduled for the coming months and we are very encouraged by the preliminary customer feedback that has so far been received. We consider AuthorBridge as a potentially disruptive technology in the world of XML authoring and look forward to it making a significant contribution to our future financial performance."

ENQUIRIES

CHAIRMAN'S STATEMENT

We are disappointed to report that our sales revenues and profits decreased year on year. An anticipated reduction in OmniMark software orders was partially offset by a 42% increase in revenues for Migrate, our cloud conversion service, which continues to strengthen its position in the DITA XML conversion market. Unfortunately, the shelving of a major conversion project by a European customer significantly impacted our final results.

However, I am pleased to report that we have made good progress with the development of AuthorBridge, a new content authoring solution for non-technical business users. Its initial release is scheduled for the coming months, and we are very encouraged by the preliminary customer feedback that has so far been received. We consider AuthorBridge as a potentially disruptive technology in the world of XML authoring and look forward to it making a significant contribution to our future financial performance.

Trading across the Company remains satisfactory. We anticipate a successful launch for AuthorBridge in 2015 although we do not anticipate that it will make a significant contribution to Stilo's results in the current year

David Ashman

Chairman

17 March 2015

BUSINESS OVERVIEW

The content management systems that support digital publishing applications typically necessitate that content is stored in a neutral XML (Extensible Markup Language) format prior to its assembly and publication. Stilo develops tools to help organisations automate the conversion of legacy content to XML, author new content in XML format, and build XML content processing components integral to enterprise-level publishing solutions.

Over recent years, different industries have adopted specific XML standards eg Publishing (DocBook), Aerospace & Defence (S1000D), Finance (XBRL), Life Sciences (SPL), Software and High Tech (DITA). Stilo made the decision some years ago to focus new product development and marketing efforts on the emerging DITA standard. This standard originated within IBM to support the publishing of its technical documentation and has been increasingly adopted by other software and high tech companies. It is now beginning to make inroads into new market sectors including Manufacturing, Life Sciences and Publishing.

The market for DITA-based tools and solutions is growing steadily, with several hundred companies having adopted the standard worldwide. With a strong reputation for excellent products and supporting services, Stilo is well-positioned to be successful in this particular sector, and we will also seek to expand beyond the DITA market, as suitable business opportunities arise.

Products and Customers

OmniMark

Stilo's core technology is OmniMark, a long-established development platform used to build high-performance content processing components integral to enterprise publishing solutions.

Users include Boeing, Pratt and Whitney, EADS, Thomson Publishing, and Wolters Kluwer. Sales for the period included orders from the European Parliament, Embraer, National Geospatial and the Japan Patent Office.

Migrate

Migrate is the world's first cloud XML content conversion service, and utilises OmniMark technology. Through advanced levels of automation, it enables organisations to improve turnaround times, reduce operating costs and take direct control of their work schedules, providing an attractive alternative to traditional outsourced conversion services.

Migrate users include IBM, Cisco, EMC and Oracle. New customers in 2014 include Kaplan Professional Education, Pitney Bowes, Deltek, ADP, SAP, Intel, Ansys, Atmel, Vestas, Unicef and Cray.

AuthorBridge

AuthorBridge is a low-cost, web-based XML authoring solution designed for occasional contributors who have no knowledge of DITA or its complexities. It incorporates CK Editor, the world's leading open source HTML editor, and provides a guided DITA authoring experience for non-technical users.

It is targeted at large enterprises, who are looking to extend the use of DITA across potentially thousands of users. We are currently engaged in a pilot project with a very prestigious customer, with the initial release of AuthorBridge planned for later in 2015.

Sales analysis by geographic region

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

North America continues 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.

Technical Expertise

Our development team includes leading experts in the development of XML content processing technologies and solutions, and are very highly regarded by customers. Our support services are similarly regarded, as we support and train customers on a worldwide basis.

OmniMark is used in the development of Migrate, and both Migrate and OmniMark technologies are used in AuthorBridge, which results in very efficient integrated development and support activities.

Operations

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

As of 31 December 2014, there were 16 permanent employees in the Company, complemented by the use of contractors. In 2015 we will be making additional investments in the recruitment of development and support 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 opportunities.

The results for the year ended 31 December 2014 have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union.

In 2014, the results for Stilo show a decreased EBITDA (excluding exceptional costs) of £108,000 (2013: £238,000). Pre-tax profits were £95,000 (2013: £153,000).

Total sales revenues for the period were £1,262,000 (2013: £1,504,000). The decrease in revenue was due primarily to an expected reduction in OmniMark software licence sales which was partially offset by an increase in Migrate sales. The Company continued to benefit from revenue from software maintenance contracts of £710,000 (2013: £728,000) which represents 56% of annual sales revenue. Adverse foreign currency effects across the year meant that revenue was depressed by approximately £51,000 compared to 2013.

Despite the decrease in sales revenue, careful control over operating costs and the continued change in the revenue mix towards technology sales meant that the company was again able to record a profit in the year.

Operating expenses, excluding capitalised development costs were £1,152,000 (2013: £1,255,000).

Investment in R & D continued in 2014, with total expenditure for the year of £403,000 (2013: £406,000). Of this expenditure, £114,000 relating to the development of AuthorBridge has been capitalised. The development of AuthorBridge continues with initial revenues anticipated in 2015. As a result of this investment, Stilo continues to benefit from research and development tax credits.

There was a cash balance of £1,089,000 as at 31 December 2014 (31 December 2013: £1,085,000), and Stilo remains entirely un-geared. This balance sheet stability provides a sound 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.

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 2015 to shareholders on the register on 24 April 2015. The shares will be marked ex-dividend on 23 April 2015. If approved, payment of the Final Dividend will bring the total dividends paid to shareholders for the year to 0.06 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.

Group Income Statement

Year Ended 31 December 2014

Group Statement of Comprehensive Income

Year Ended 31 December 2014

Group Statement of Financial Position

as at 31 December 2014

Group Statement of Changes in Equity

for the year ended 31 December 2014

Attributable to the equity shareholders of the parent

Group Cash Flow Statement

for the year ended 31 December 2014

1. The figures for the year ended 31 December 2014 and 2013 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 December 2014 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 2013 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 17 March 2015 and authorised for issue on 18 March 2015.

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 2014 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 £153,000 (2013: profit of £207,000), and on the weighted average number of shares in issue during the year of 109,808,470 (2013: 109,808,470). The fully diluted earnings per share in 2014 takes account of outstanding options which results in a weighted average number of shares in issue during the prior year of 113,383,710 (2013: 114,283,845).

4. DIVIDENDS

The directors recommend the payment of a final dividend of 0.03 pence per Ordinary Share (2013: 0.03 pence per share) to be paid on 19 May 2015 to those shareholders on the register on 24 April 2015.

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 2014 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 2014 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 14 May 2015.