Half Yearly Report

11thSeptember 2014

STILO INTERNATIONAL PLC

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2014

Stilo International plc ("Stilo" or the "Company"), the AIM quoted provider of XML content processing technology and cloud content conversion services, today announces its unaudited Interim Results for the six months ended 30 June 2014.

· Sales revenues for six months to 30 June 2014 £617,000(2013: £733,000)

· EBITDA* £48,000(2013: £97,000)

· Operating costs, net of capitalised development costs, £567,000(2013: £627,000)

· Cash position further strengthened to £1,091,000 as at 30 June 2014(2013: £1,035,000)

· Payment of an interim dividend of 0.03 pence per share

 * EBITDA comprises profit before taxation, interest, depreciation and the amortisation of software development costs.

BUSINESS HIGHLIGHTS

· New customers for Migrate, the world's first cloud XML content conversion service, include Kaplan Professional Education, ADP, Pitney Bowes, CD-Adapco and Deltek

· New Migrate customers through marketing partners include Unicef and Cray Inc

· Migrate functionality enhanced to include DITA for Learning topics

· OmniMark software orders include the European Parliament, Embraer and the Japan Patent Office

· OmniMark maintenance revenues remain broadly level at constant currency

· Encouraging progress made with the development of AuthorBridge - a new, ground-breaking XML web authoring solution for large enterprises, planned for general release in 2015

· Recruitment of additional sales resource to help progress new business opportunities

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

"Sales decreased slightly during the period, primarily due to a reduction in OmniMark software license sales, which are expected to be offset by increased Migrate sales in the second half of 2014.

Significant progress has been made with the development of AuthorBridge, a new, ground-breaking web-based authoring solution for large enterprises, with customer pilot projects scheduled for later this year, and general release planned for early 2015.

With a continuing healthy cash position and encouraging business outlook, I am pleased to announce the payment by Stilo of an interim dividend of 0.03 pence per share."

ENQUIRIES

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.

These organisations 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 included orders from the European Parliament, Embraer and the Japan Patent Office.

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 2014 include Kaplan Professional Education, Pitney Bowes, CD-Adapco, Deltek and ADP. The recently introduced Migrate Partner Programme has generated additional new business in 2014 with customers including Unicef in Switzerland and Cray Inc. in the USA, and ongoing will serve to generate incremental business opportunities in new geographic territories and market sectors.

We have recently initiated the development of AuthorBridge, a low-cost, web-based XML authoring solution for occasional contributors to enterprise content management systems, who have no prior knowledge of XML or its complexities. AuthorBridge is a server-based application that integrates with CK Editor, the world's leading open source HTML editor, and utilises OmniMark and Migrate technology to convert from HTML to XML, and back again. Pilot projects are currently scheduled with customers later in 2014, with the planned general release of AuthorBridge early in 2015.

OPERATIONS

At 30 June 2014, Stilo employed 15 permanent staff, based in the UK and in Canada. Additionally, use is made of contractors for the delivery of professional service engagements. Although we plan to make some additional investments in the recruitment of further development personnel, we do not currently plan to expand the headcount significantly in the near future, but remain focused upon revenue growth predominantly through sales of technology and cloud based services.

EBITDA for the first six months of the year was £48,000 (2013: £97,000), and pre-tax profits were £39,000 (2013: £72,000).

Total sales revenue for the period was £617,000 (2013: £733,000). The slight decrease in revenue was due primarily to a reduction in OmniMark software licence sales, which is expected to be offset by increased Migrate sales in the second half of 2014. Revenue generated from software maintenance contracts held broadly level at £344,000 (2013: £371,000). In addition, adverse foreign currency effects meant that total revenue was depressed by approximately £43,000 compared to the same period in 2013.

The Board continues to maintain careful control over operating costs which in the period were £567,000, net of capitalised development costs (2013: £627,000). Total development expenditure, including capitalised costs, in the period was £200,000 (2013: £216,000).

Staff costs and overheads which were directly attributable to the development of AuthorBridge in the period were £71,000 and these costs have been capitalised and recognised as an intangible asset which is expected to generate revenue in 2015.

The Company continues to further strengthen its balance sheet, and remains entirely un-geared with a cash balance of £1,091,000 as at 30 June 2014 (31 December 2013: £1,085,000, 30 June 2013: £1,035,000).

The results for the period ended 30 June 2014 have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union.

DIVIDENDS

During the period, the final dividend for the year ended 31 December 2013 was paid, at the rate of 0.03 pence per share.

The Board is pleased to declare the payment of an Interim dividend for the year ended 31 December 2014 to shareholders at the rate of 0.03pence per share (2013: 0.02pence per share) which will be paid on 15 October 2014 to those shareholders on the register as at 26 September 2014.

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.

OUTLOOK

The global market for dynamically publishing digital content to desktop computers, laptops, tablets and mobile devices is rapidly expanding. Trading in 2014 continues 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 explore further opportunities for automated XML content processing solutions.

11th September 2014

All profits are attributable to owners of the parent.

Unaudited Group Statement of Comprehensive Income

for the six months ended 30 June 2014

All comprehensive income is attributable to owners of the parent.

Unaudited Group Statement of Financial Position

as at 30 June 2014

Unaudited Group Statement of Changes in Equity

for the six months ended 30 June 2014

Unaudited Group Cash Flow Statement

for the six months ended 30 June 2014

Notes to the Interim Results

for the six months ended 30 June 2014

1. The interim results (approved by the Board of Directors and authorised for issue on 10 September 2014) are neither audited nor reviewed and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2013. Those accounts, upon which the auditors issued an unqualified opinion, and did not contain a statement under Section 498 (2) and (3) of the Companies Act 2006, have been delivered to the Registrar of Companies. As permitted, this interim report has been prepared in accordance with UK AIM listing rules and not in accordance with IAS 34 'Interim Financial Reporting', therefore it is not fully in compliance with IFRS.

2. Stilo International plc is a public limited company incorporated in the United Kingdom. The Company is domiciled in the United Kingdom and its ordinary shares are traded on the AIM market of the London Stock Exchange plc. Stilo provides specialist software and professional services.

The consolidated interim results have been prepared in accordance with the recognition and measurement principles of IFRS including standards and interpretations issued by the International Accounting Standards Board, as adopted by the European Union. They have been prepared using the historical cost convention.

The preparation of the interim results requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. If in the future such estimates and assumptions, which are based on management's best judgement at the reporting date, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. The interim results are presented in sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

The interim results of the Group for the period ended 30 June 2014 have been prepared in accordance with the accounting policies expected to apply in respect of the financial statements for the year ended 31 December 2014.

3. There is no tax charge for the period due to the availability of tax losses brought forward.

4. The basic earnings per share is calculated on the weighted average number of shares in issue during the period. The fully diluted earnings per share takes account of outstanding options. The weighted average number of ordinary shares in issue for the six months to 30 June 2014 was 109,808,470 shares (30 June 2013 and 31 December 2013: 109,808,470 shares). The weighted average number of ordinary shares in issue for the six months to 30 June 2014, for the fully diluted earnings per share, taking account of outstanding options was 113,599,756 (30 June 2013: 114,363,623, 31 December 2013: 114,283,845).

5. Copies of this report will be sent to shareholders and will be available to the public from the Company's registered office, Regus House, Windmill Hill Business Park, Whitehill Way, Swindon, SN5 6QR. The report is also available to download from the investor relations section of the Company's website www.stilo.com.