Preliminary Results for Year Ended 31 December 2006

15th March 2007

Stilo International plc ("Stilo" or the "Company"), the provider of specialist solutions for product lifecycle management, document management, data migration and e-Publishing, today announces its preliminary results for the year ended 31 December 2006.

Highlights

• Achievement of major milestone - the first full year that Stilo has reported a trading profit
• Trading profit for the year of £9,000 (2005: £185,000 loss)
• Sales revenues from continuing activities increased by 8% to £2.264m (2005: £2.099m)
• Cash balance of £420,000 as at 31 December 2006 (2005: £373,000)
• Operating expenses (excluding exceptional items) reduced by 5% to £2.395m (2005: £2.510m)
• Acquisition and successful integration of the Engineering Solutions business of Proceed Holdings Limited in the UK
• New share issue in November 2006 raised £150,000 at 2p per share
• Annual recurring maintenance revenues of £750,000 in 2006
• Customers during 2006 included Boeing, IBM, International Atomic Energy Agency, Wolters Kluwer, BAe Systems, Westland Helicopters and the European Parliament.

Barry Welck, Chairman, says

"The 2006 financial results are the best in Stilo's history, and the Company continues to evolve as a provider of enterprise solutions to corporate clients. Operating in niche, expanding markets provides us with a firm foundation for growing the business in the future, and we anticipate continued improvement in the Company's performance during 2007. In addition, we will actively pursue acquisition and partnering opportunities that complement our growing range of products, services and solutions."

Enquiries

Les Burnham, Chief Executive, Stilo International plc
01793 441444

Russell Cook, Charles Stanley Securities
020 7 149 6000

CHAIRMAN'S STATEMENT

OVERVIEW & STRATEGY

Stilo provides leading solutions for Product Lifecycle Management, Document Management, Data Migration and e-Publishing to customers in Aerospace & Defence, Manufacturing, IT, Telecommunications, Publishing and Government. Our solutions typically comprise a combination of services and software.

On 31 July 2006 Stilo broadened the range of enterprise solutions offered to corporate customers through the purchase of the Engineering Solutions business of Proceed Holdings Ltd in the UK. The Engineering Solutions team brought to Stilo a deep understanding of the SAP® market-place, associated high-level consulting skills and third-party software applications expertise.

Operating from offices in the UK, France and North America, we support an extensive list of customers including Boeing, IBM, International Atomic Energy Agency, Wolters Kluwer, BAe Systems, Westland Helicopters and the European Parliament.

Our strategy is to grow the company organically and by acquisition, expanding and deepening the range of niche solutions and services we provide to corporate customers.

In November 2006 a new share issue raised £150,000 at 2p per share, providing further working capital for the Company in order to help fund existing and potential future development, and to enable the Company to take advantage of any small acquisition opportunities that may arise.

RESULTS

After several years of reducing losses, in 2006 the group returned a small trading profit (before exceptional items and amortisation of goodwill) for the year of £9,000 (2005: £185,000 loss). This is the first full year that Stilo has reported a trading profit, and represents the achievement of a major milestone in the ongoing advancement of the Company.

Total sales revenue for the period increased by 8% to £2,264,000 (2005: £2,099,000) and the cash position stabilised, with cash of £420,000 as at 31 December 2006 (2005: £373,000).

Operating expenses, excluding exceptional items, were reduced to £2,395,000 (2005: £2,510,000), with savings from cost reductions in Europe offset by the acquisition of personnel in the Engineering Solutions business.

Non-recurring exceptional costs for the year totalled £169,000, consisting of staff redundancy costs and a write-down of irrecoverable costs on a development project.

The goodwill amortisation of £293,000 relates to the purchase of OmniMark Technologies Corporation in 2001, and to the purchase of Xia Systems (Content Engineering Division) in 2004.

In the e-Publishing solutions business, sales increased by 10% in North America to £1,389,000 (2005: £1,262,000). However, this was offset by a lower level of sales in Europe to £451,000 (2005: £828,000), primarily as a result of declining software orders. During the course of the year, overheads in Europe were reduced significantly through a lowering of staff numbers, the closure of our Belgium office, and a move to smaller offices in Paris. Sales operations have been re-located from Paris to the UK. The e-publishing business overall was underpinned by recurring annual software maintenance revenues of £750,000 in 2006, generated from 170 customer contracts.

The Engineering Solutions business got off to a good start in 2006, achieving sales revenues of £412,000 in the five month period following acquisition, and making a positive contribution to overall profitability.

Provision has been made in the accounts for the first part of the contingent consideration relating to the purchase of the Engineering Solutions business. This consideration is £90,000, payable in August 2007. The consideration will be used by the vendor to subscribe for 4,500,000 new Stilo 1p Ordinary Shares. This consideration has been provided as there is a reasonable expectation that the first performance target for the business (a sales turnover in excess of £750,000 for the year ended 31 July 2007) will be met.

At the end of 2006, the group employed 30 staff, with 13 based in the UK, 14 in North America and 3 in Europe.

PRODUCTS, SERVICES and SOLUTIONS

e-Publishing

OmniMark

OmniMark provides an application development and high performance run-time environment for XML content processing applications. Users of OmniMark are able to reduce significantly the time and costs of developing and maintaining new content processing applications, whilst ensuring high-performance levels of execution which is especially critical to major web applications. OmniMark has been deployed by customers around the world over a fifteen year period, and is a robust, well-proven technology.

Solution Components

In 2007 Stilo is bringing to market a range of Stilo solution components, for use by those responsible for implementing e-Publishing solutions including system integrators, solutions architects, application developers and publishing managers. The solution components are intended to assist organisations leverage the power of XML in their publishing strategies - reducing production costs, shortening cycle-times and improving the quality of published information.

Integrated Solutions

Stilo combines services and technology to build integrated e-Publishing solutions, including the Stilo Interactive Technical Information Publisher (iTIP) and the Stilo Conversion Factory. Stilo's iTIP has evolved over a ten year period as a proven approach to distributing complex technical information to large and widely-distributed user communities. The Stilo Conversion Factory reduces costs, improves quality, mitigates risk and shortens schedule times for content conversion projects.

Solutions for SAP Customers

Product Lifecycle Management

mySAP^™ Product Lifecycle Management (mySAP PLM) provides the most comprehensive end-to-end solution available to help manage the product lifecycle at every stage from design to disposal. Stilo is one of the UK's leading specialists in mySAP PLM, delivering innovative and practical solutions to many of the leading names in the European and global aerospace, defence, manufacturing, pharmaceutical and telecommunications industries.

Document Management Solutions

Stilo has teamed up with market-leading solution providers to integrate, where necessary, proven tools and techniques at every stage of the document management process; from capturing, indexing, storage, retrieval, formatted output and archiving - saving time and money, boosting business process efficiency and helping customers get more out of their SAP systems.

Data Migration Services

Stilo provides a professional and cost-effective data migration service that ensures a coherent, consistent and effective process for transferring data into SAP systems. Combining our proven best practices and templates with standard SAP tools and load methods, we can customise a data migration solution to suit customer specific needs - reducing the risks and costs involved, while helping to maximise the return from customer SAP investments.

Software Partners

In the UK Stilo is a reseller of solutions from Easy Software (UK) plc and SEAL Systems AG.

Solutions from SEAL Systems simplify and speed up the generation, administration and distribution of documents and technical papers. EasySoftware is the world's second largest provider of data archiving and document capture solutions to SAP customers.

OUTLOOK

The 2006 financial results are the best in Stilo's history, and the Company continues to evolve as a provider of enterprise solutions to corporate clients.

Operating in niche, expanding markets provides us with a firm foundation for growing the business in the future, and we anticipate continued improvement in the Company's performance during 2007. In addition, we will actively pursue acquisition and partnering opportunities that complement our growing range of products, services and solutions.