Preliminary results for twelve months ended December 31, 2004

3 March 2005

Stilo International plc ("Stilo" or the "Company"), the AIM quoted Content Engineering solutions company, today announces its preliminary results for the year ended 31 December 2004.

Highlights

• Sales revenues from continuing operations (Content Engineering Division) increased by 9% to £1.92m (2003: £1.76m), despite a weak US$.
• Trading loss for the Company reduced to £663k (2003: £1.18m), including trading losses for the Content Engineering Division of £260k (2003: £690k)
• Knowledge Engineering Division closed, reducing ongoing trading losses, and providing increased management focus on core Content Engineering business
• Cash balance of £659k as at 31 December 2004
• Significant progress made with new product development of StiloCF2, however later than planned release adversely impacted sales in 2004
• Acquisition of the Content Engineering Division of Xia Systems Corporation, Ottawa, strengthening Stilo's professional services and sales capability in North America
• Customers during 2004 included IBM, Toshiba, Sun Microsystems and the Institute of Atomic Energy Agency

Barry Welck, Chairman, commenting upon the results, said:

"Future growth will be driven by sales of content engineering solutions including Stilo consultancy services and software products, with initial implementations of StiloCF2 anticipated during 2005. Its successful market acceptance will have a significant positive impact upon future company earnings."

Enquiries

Les Burnham, Chief Executive, Stilo International plc	01793 441444
Russell Cook, Charles Stanley Corporate Finance	020 7739 8200

Chairman's Statement

2004 was a period of major change and continued improvement for the Company. In March 2004 we successfully placed an additional 40,000,000 New Ordinary Shares, raising £900,000 after costs. The Knowledge Engineering Division was closed as of 30 November 2004 in order to reduce costs and focus resources exclusively on the core business of Content Engineering. In December 2004 we completed the acquisition of the Content Engineering division of Xia Sytems Corporation, Ottawa, Canada which significantly improves Stilo's professional services and sales capability in North America. This division has integrated well with the existing North American operation.

Board Changes

Changes were made to the Board during the period. David Ashman, a major investor in Stilo, joined as a Non-Executive Director, whilst Stephen Buswell and Professor Roy Pike, two of the original founders of Stilo, subsequently stepped down as executive Director and non-executive Director, respectively.

Results

Combined sales revenues for the Content Engineering and Knowledge Engineering Divisions totalled £2.08m (2003: £.28m), whilst the total trading loss, before goodwill amortisation and exceptional costs, was significantly reduced to £663,000 (2003: £1.18m).

Sales revenues from continuing operations in the Content Engineering Division increased by 9% to £1.92m (2003: £1.76m), despite difficult market conditions and a weak US$ which adversely impacted sales by approximately £90,000 when compared with 2003. There was a trading loss in the Content Engineering Division of £260,000 (2003: £690,000).

The Group retained a positive cash balance of £659,000 at 31 December 2004 (2003: £474,000). This included receipt, after costs, of £900,000 from a placing of 40m shares at 2.5p per share in March 2004.

Non-recurring exceptional costs for the year totaled £372,000. The company incurred redundancy and office closure costs of £254,000 relating to the Knowledge Engineering Division. The Company also incurred costs of £118,000 comprising staff redundancy costs in the Content Engineering Division.

The Content Engineering business of Xia Systems Corporation was acquired in December 2004 for a cash consideration of £101,000, plus associated costs of £9,000, funded exclusively from Company cash reserves.

Strategy

Stilo is a specialist provider of content engineering solutions, helping major organizations to solve complex publishing problems. This typically involves the large-scale conversion of information content to XML format, prior to its high performance processing, storage and output to multiple media channels including web, print or CDRom.

Stilo's products and expert professional services complement those offered by vendors of content management systems and leading systems integrators. Software technology partners include Documentum, SAP and Toshiba distributes Stilo products in Japan.

Products

OmniMark

OmniMark provides an application development and high performance run-time environment for XML content processing applications. Users of OmniMark products are able to significantly reduce the time and costs of developing and maintaining new content processing applications, whilst ensuring high-performance execution levels especially critical to major web applications. OmniMark version 8 is planned for release during 2005.

StiloCF2

StiloCF2 enables organizations to improve the management of what can be typically hundreds of inter-related content processing applications, reducing the time and costs of implementing and maintaining enterprise publishing systems. StiloCF2 v2.1 is just coming out of development, with initial customers anticipated in 2005.

Markets and Customers

Key target markets include publishing, aerospace & defence, automotive, engineering, IT, Telco and government agencies. Our customers include Wolters Kluwer, Airbus, Boeing, BAe, IBM, European Parliament and the International Atomic Energy Agency.

Stilo's offices are located in the UK, France, Benelux and North America.

Prospects

Stilo's content engineering business has over 170 customers subscribing to annual maintenance contracts for OmniMark software. In 2004 this accounted for 35% of annual revenues. Future growth will be driven by sales of content engineering solutions including Stilo consultancy services and software products, with initial implementations of StiloCF2 anticipated during 2005. Its successful market acceptance will have a significant positive impact upon future company earnings.

Barry Welck
Chairman