QRT.L Regulatory News (QRT)

Immediate Release 22 October 2010

THE QUARTO GROUP, INC

Q3 INTERIM MANAGEMENT STATEMENT

Strong 9 month performance

Quarto (QRT.L), the fully-listed international specialist book publisher, announces its Q3 Interim Management Statement which includes unaudited revenues and profits for the 9 months ended 30 September 2010.

Financial Highlights (9 months to 30.09.10, unaudited)

·; Revenues up 9% to £81.5m (equivalent period 2009 - £74.7m)

·; EBITDA up 4% to £15.8m (2009 - £15.2m)

·; Operating Profit up 6% to £6.0m (2009 - £5.7m)

·; Profit before tax up 17% to £3.6m (2009 - £3.1m)

Operational Highlights

·; International Co-Edition book publishing - fewer new titles published than last year but healthy pipeline.

·; Publishing - uneven but generally positive. Strong performance in Australia.

·; Developing markets - explosive growth in Brazil, Russia growing steadily. Concerted efforts to establish a larger presence in China and India under consideration.

·; Very encouraging Frankfurt Book Fair - strong interest in upcoming titles.

·; World of Fine Wine magazine won the Louis Roederer award for best wine publication.

Chairman and CEO Laurence Orbach, said :

"Our business remains solid and we are comfortable that we shall meet or improve upon our expectations for the full year. Conditions do remain extremely demanding. Our cash position grows stronger with net debt down comfortably and interest cover improving……we remain well funded and able to act when we discover exciting opportunities."

For further information, contact :

The Quarto Group Inc 0207 700 9004

Laurence Orbach, Chairman and CEO

Mick Mousley, CFO

Buchanan Communications 0207 466 5000

Mark Edwards, Christian Goodbody

Notes for Editors:

Quarto is an international book publisher and producer with two principal strands of activity: its Publishing segment publishes books, under imprints owned by the Group, in the US, Australia and the UK; and its Co-Edition Publishing segment creates books that are licensed to other publishers for publication under their own imprints in many languages around the world.

For the year ended December 31, 2009, Quarto reported revenues of £106.6 m and adjusted EBITDA of £22.8 m. Adjusted pre-tax profit was £6.9 m and adjusted diluted earnings per share were 26.0p. Total dividends per share of 7.15p were paid.

"Our business remains solid," said Laurence F Orbach, chairman and chief executive of Quarto. "There remains considerable concern about the slowness of the economic recovery, and trading is somewhat uneven. Most of Quarto's business is in the developed world, and it is becoming clear that consumers in steady employment are opening their wallets a little wider, perhaps after a sustained period of savings fatigue. We shall have to see whether current budgetary squeezes change consumer sentiment markedly.

"Revenues, at £81.5 million for the 9 months to September 30th, 2010, are up 9% from last year's £74.7 million (5% at constant currency). Unaudited results show pre-tax profit up by 17%, operating profit by 6%, and EBITDA by 4%.

"For the trailing twelve months, ended September 30 2010, we are 8% ahead of the 2009 full-year pre-tax profit, and are comfortable that we shall meet or improve upon our expectations for the full year.

Unaudited results*

Segmental Performance

"Good performances were turned in by both operating segments. International Co-Edition Book Publishing has published slightly fewer new titles in 2010 than in the prior year. This reflects the nervousness in the market following the 2008 global financial crisis. Reprints of existing titles, which remain the regular source of fully two-thirds of the segment's business, have allowed our customers to recover strength while deferring investment in new titles, and have maintained Quarto's revenues. There is now considerable hunger for our new offerings.

"The Publishing segment, with its concentration in the US, Australasia, and the UK, has been uneven, but generally positive. In the US, the most recent statistics we have of what is happening to our titles at point of sale, shows Amazon up 11%, and the world's largest bricks-and-mortar retailer, Barnes and Noble, up 2%. In the specialty retailing channels, where books form only a minor part of the mix of merchandise, performance is just as varied. For instance, our sales out of the door at the Tractor Supply Company's 1,000 stores are up 4% and, unsurprisingly, at the retailers serving the battered housing market, Lowes and Home Depot, with their almost 4,000 massive stores, they're down 2%.

"Performance in Australasia has been very strong, and was aided by the rising local currencies. Lifetime and Premier have both reported extremely good operating profits. The laggard is the UK market that, at best, is dull and lackluster, despite some new titles that have received strong critical acclaim and wide publicity. Although backlist sales have held up, and we anticipate a stronger final quarter, there is no disguising the concern at the dominance of a single retailer with an indifferent track record.

Prospects

"The Frankfurt Book Fair, which concluded earlier this month, and is the book industry's biggest international event, was extremely successful for Quarto. Interest in upcoming titles exceeded our expectations. Our stand was very well attended, and we received numerous compliments. The vitality and inventiveness of our new publishing programs is the essential driver of the business.

"It was also gratifying to learn, last month, that our multiple award-winning World of Fine Wine magazine not only won the Louis Roederer Award for Best Wine Publication, but also the top Awards for the unit's first book titles, the Finest Wines of Bordeaux and Tuscany.

"With an output of many hundreds of new titles each year, it's hard, and invidious, to single out personal favorites, but exciting when a title breaks new ground, after an arduous birth. Art: The Whole Story, licensed and published in the UK by Thames and Hudson, and in the US by Rizzoli, from our Quintessence unit, producer of the bestselling 1001 series of things one must see or do before one dies, is the standard bearer for a solid new series, and its has excited potential licensees around the world."

"We are keenly conscious of the important developing markets. Russia is growing steadily for Quarto; Brazil is showing explosive growth; and we hope that our concerted efforts to establish more of a presence in the burgeoning Chinese market will finally bear fruit. The Indian market is probably nearing the inflection point at which we must consider licensing it separately from the British Commonwealth.

"Conditions do remain extremely demanding. To date, our bad debt experience has been muted. Our cash position grows stronger, with net debt down comfortably, and our covenant cover improving. We have the systems, and personnel, to monitor what's going on. We remain well funded, and able to act when we discover exciting opportunities."