Disposal Agreement

Milestone Group PLC
29 August 2006


For Immediate Release                                             29 August 2006


                              Milestone Group PLC

                               DISPOSAL AGREEMENT


AIM listed Milestone Group PLC ('Milestone' or 'the Company') announces it has
written to Shareholders having finalised agreements to dispose of its entire
loss making publishing division for an aggregate consideration of £1,450,000.

On 4 August 2006, Milestone announced it was in negotiation to sell the whole of
its publishing division, of which the Property Weekly series of publications
(the 'Property Weekly Business') is a significant part, for an aggregate
consideration of just over £1 million (subject to a net asset price adjustment),
to Letterbronze Limited ('Letterbronze').

On 21 August 2006, Milestone announced negotiations with Letterbronze had been
terminated and it had entered into a different agreement to dispose of the
Property Weekly Business to Tindle Newspapers Limited ('Tindle') for a
consideration of £1,400,000 (the 'Property Weekly Consideration'), whilst
seeking to identify a third party buyer for its remaining publishing assets.

The Company is pleased to confirm that, on 25 August 2006, it successfully
reached agreement to dispose of what will be left of its publishing division,
following the sale of the Property Weekly Business. The Company has entered into
an agreement, subject to the approval of Milestone Shareholders, to sell the
entire issued share capital of Tri Media Publishing Limited ('TMP') to Howard
Taylor, who is currently employed by the Company in the role of Group Publishing
Manager, for a nominal consideration of £50,000.

TMP is a wholly owned subsidiary of the Company and acts as the immediate parent
holding company for Milestone's two newspaper trading companies; Courier
Newspapers (Oxford) Limited ('CNL') and Basingstoke Observer Limited ('BOL').
Under the terms of the proposed sale, TMP and its subsidiaries will be sold free
of Milestone debt and with net liabilities at the date of completion not
exceeding £1. Further consideration will be payable if Howard Taylor sells on
any major part of TMP's business within six months of completion.

The two separate disposals of (i) the Property Weekly Business to Tindle (the
'Property Weekly Disposal') and (ii) TMP to Howard Taylor (the 'TMP Disposal')
are both subject, inter alia, to the approval of Milestone Shareholders at an
Extraordinary General Meeting ('EGM') to be held on 11 September 2006. A
circular setting out the main terms of the two disposals, a notice of EGM, and
the two ordinary resolutions to be proposed at the EGM was posted to Milestone
Shareholders this weekend. Selected extracts from the circular are reproduced at
the end of this announcement.

The aggregate consideration of £1.45 million for the Property Weekly Disposal
and the TMP Disposal represents an increase in total of approximately £425,000
over the original offer received for the Company's publishing assets from
Letterbronze.

Milestone Chief Executive, Andy Craig, said:

'Having agreed to sell Property Weekly for a consideration of £1.4 million, the
Board is delighted to have managed to quickly reach a further agreement to
dispose of the remainder of the group's publishing assets which have been a
major contributor to the Company's cash burn over recent times, having
considerably underperformed management expectations at what is a challenging
time for the industry.

'By agreeing to sell TMP before the end of this financial year, the Board has
acted decisively to protect the positive cash position of the Company following
the sale of Property Weekly. Indeed, the Board felt strongly that, following the
Property Weekly sale, a rapid disposal of the Company's remaining publishing
assets would avoid a damaging period of continued uncertainty for investors,
staff and clients.

'Property Weekly is, in particular, a product which Milestone has made great
effort to support and expand, having in recent months launched Newbury Property
Weekly in West Berkshire and a sophisticated on-line web portal for both clients
and consumers. The significant interest and ultimate consideration received for
the Property Weekly Business reflects the commitment we have put into developing
attractive media assets despite the current difficult trading environment.

'The Board offers its best wishes to the Company's employee, Howard Taylor,
following his decision to acquire TMP as a going concern after the Property
Weekly sale.'

An EGM has been convened for 10.00 a.m. on 11 September 2006 at the offices of
Lawrence Graham LLP, 190 Strand, London WC2R 1JN at which resolutions will be
proposed to approve the Property Weekly Disposal and the TMP Disposal. The
Directors have recommended that Shareholders vote in favour of the resolutions
to be proposed at the EGM. Subject to the appropriate resolution being carried,
the Property Weekly Disposal is expected to complete on 11 September 2006, or
shortly thereafter. Subject to the prior completion of the Property Weekly
Disposal and the appropriate resolution being carried, the TMP Disposal is
expected to complete on 15 September 2006, or shortly thereafter.


For further information

Milestone                             Tel: [phone]
Andy Craig/Daniel Cass

Arden Partners                        Tel: [phone]
Richard Day

Buchanan Communications               Tel: [phone]
Bobby Morse/Suzanne Brocks


Edited extracts from circular sent to the holders of ordinary shares in the
Company ('Shareholders') dated 25 August 2006:


*The Property Weekly Business*

Property Weekly is a free broadsheet newspaper containing advertisements for
homes to buy and rent with three separate editions covering north Oxfordshire,
south Oxfordshire and Newbury, together with an associated website.
Approximately 75,000 copies of Property Weekly are currently printed each week
and distributed via a mixture of door-to-door delivery and dispensers that are
located in outlets such as estate agents and retailers. Property Weekly is
currently published by CNL, a wholly owned subsidiary of the Company. No
goodwill carrying value is directly attributable to Property Weekly in the
accounts of CNL.


*The TMP business*

TMP is a holding company for the publishing division of Milestone and trades
through its two wholly owned subsidiaries, CNL and BOL.

Apart from Property Weekly, CNL publishes the Courier Journal series, a weekly
free newspaper with four editions covering south Oxfordshire, north Oxfordshire,
west Oxfordshire and Oxford City (the latter branded Oxford City Journal). The
Courier Journal series primarily obtains revenue by selling advertising within
the series to local companies. CNL also publishes Auto Weekly, a free weekly
supplement distributed within the Courier Journal series containing motors
advertising. The Courier Journal series and Auto Weekly currently have a total
weekly print run of approximately 77,000.

In addition, CNL publishes Oxfordshire Living, a monthly magazine targeting
ABC1s in Oxfordshire as well as occasional special publications including those
produced on behalf of clients and third parties. CNL has a contract with West
Berkshire District Council to publish West Berkshire News, a quarterly magazine.

BOL publishes the Basingstoke Observer, a weekly free newspaper for North
Hampshire distributed via dispensers placed at retail outlets with a total
weekly print run of approximately 25,000.

*Financial summary*

The table below sets out the revenue and estimated profit/loss for all of TMP's
main publications, including the Property Weekly Business, for the ten months
ended 31 July 2006. As a large proportion of the overheads of the Property
Weekly Business have traditionally been absorbed by CNL, the table below is
based upon a management estimate of the profitability of each of the main
publishing units of the Company if they had been operating as largely autonomous
businesses, as is proposed following completion of the Property Weekly Disposal.

Business Unit    Property Weekly      CNL (excluding Property Weekly         BOL
                        Business                            Business)
Revenue                 £856,000                            £798,000    £366,000
Profit / (loss)         £138,000                           (£536,000)  (£141,000)


Notes: 'Revenue' is based on the unaudited management accounts of the Company.
'Profit / (loss)' has been adjusted by management based upon an estimate of the
costs that would have been incurred had Property Weekly been acting as a stand
alone business unit, responsible for its own distribution and providing
distribution to CNL.



The sale of the Property Weekly Business and TMP will complete the strategic  
review of Milestone's publishing divisionwhich, in the twelve months ended   
30 September 2005, made consolidated losses of £0.9 million on sales of £2.9 
million as set out below:

   •CNL made an operating loss of £762,000 on turnover of £2,332,000 (2004:
    loss of £147,000 on turnover of £2,998,000).


   •BOL made an operating loss of £152,000 on turnover of £600,000 (2004:
    loss of £103,000 on turnover of £768,000).


The goodwill carrying value of CNL in the books of the Company at 31 July 2006
was approximately £1.7 million. The goodwill carrying value of BOL in the books
of the Company at 31 July 2006 was approximately £0.5 million.


*The Property Weekly Disposal*

Pursuant to the terms of the Property Weekly Disposal, CNL has agreed to sell
and Tindle has agreed to purchase the Property Weekly Business for £1.4 million
payable in cash on completion. Major contracts relating to the Property Weekly
Business and CNL's newspaper distribution department will be assigned from CNL
to Tindle.

Tindle has paid a 100 per cent. deposit which is being held by the Company's
solicitors. The agreement is conditional upon the Shareholders of Milestone
approving the Property Weekly Disposal, the release of certain bank charges and
there being no material breach of warranty.

CNL has given limited warranties in respect of the Property Weekly Business and
CNL's liability is capped at the amount of the Property Weekly Consideration.
Under the terms of the PW Business Sale Agreement, CNL and the Company are
restricted from competing with Property Weekly in Oxfordshire and West
Berkshire. As part of the Property Weekly Consideration, Tindle has agreed not
to compete with CNL's main publications in Oxfordshire and West Berkshire.

A key element of the Property Weekly Disposal is the entering into by CNL
 of a cooperation agreement with Tindle that guarantees continued door-to-door 
delivery for CNL's free newspapers in Oxfordshire, substantially reducing CNL's 
distribution costs from that which it had previously been paying. These reduced 
rates will apply for a minimum period of two years following completion of the 
Property Weekly Disposal. As part of this cooperation agreement, CNL agrees to 
make available to Tindle a number of services currently provided by CNL to the 
Property Weekly Business, such as advertisement design services, on commercial 
terms.


*The TMP Disposal*

Pursuant to the terms of the TMP Disposal, Howard Taylor has agreed to acquire
the entire issued share capital of TMP for £50,000 payable in cash on
completion.

As Milestone has previously not made any contribution towards rent, rates,
service charges or utilities for partial use of CNL's offices and equipment at
Marcham Road in Abgindon, the Company has agreed to make an exceptional payment
to CNL of £29,000 net of VAT, reflecting one quarter's current rental costs to
CNL, in return for continued use of certain of these facilities for a three
month period following completion.

The Company has also agreed to repay or waive any outstanding inter-group loans
prior to completion, and to facilitate that TMP is acquired with a balance sheet
showing net liabilities of not more than £1. Milestone will therefore be
effectively paying down approximately £200,000 of creditors of CNL and BOL.

Milestone has given minimal warranties and restrictive covenants. Howard Taylor
has given undertakings in respect of certain ongoing obligations, including the
continued publication within certain of CNL's titles of programme listings for
SIX TV, the local television channel for Oxfordshire operated by Oxford
Broadcasting Limited, a wholly owned subsidiary of the Company.


*Reasons for the disposals*

As set out in the circular dated 4 August 2006, in its interim results statement
released on 30 June 2006, the Board announced that a number of parties had
indicated strong interest 'in acquiring some or all of the group's assets' and
stated that it hoped to be 'in a position to report back to shareholders in the
near future'.

Since June 2005, the Board has consistently stated that it will maintain a
continuous review of strategy with a view to exploring all opportunities to
maximise shareholder value. In recent months, Milestone has disposed of its
controlling interests in four radio stations (only one of which was wholly
owned), successfully achieving an aggregate consideration of approximately £2.3
million.

Overall, the Board believe that CNL and BOL are loss making businesses with a
number of high fixed costs and that considerable additional losses are likely to
be incurred in restructuring these companies to generate significant profits.

The Board recognised that the Property Weekly Business was likely to be the most
attractive asset held within its publishing division and, once disposed of, the
remainder of the Company's main publishing assets are loss making. Having
identified Tindle as a buyer for the Property Weekly Business, the Board was
keen to identify a buyer for the remainder of the publishing assets who would
potentially be in a position to complete rapidly.

Howard Taylor is currently employed by CNL in the role of Group Publishing
Manager, responsible for the operational management of both CNL and BOL. Howard
Taylor is not a director of the Company or any of its subsidiaries and is not
therefore a connected party in relation to the TMP Disposal.

By reaching agreement with Howard Taylor, the Board has managed to agree terms
for the TMP Disposal on the basis of minimal due diligence and warranties. This
will enable the Company to complete the TMP Disposal shortly after the Property
Weekly Disposal and before the end of Milestone's financial year, saving the
Company the additional losses that would be incurred in negotiating the disposal
of TMP to any third party undertaking a full due diligence exercise.

Having conducted a comprehensive strategic review on an extended period, the
Board considers that the consideration for both the Property Weekly Disposal and
the TMP Disposal is fair. This view has been reached in light of the current
challenging nature of the newspaper industry in general and, in particular, the
ongoing losses of CNL and BOL.

By disposing of TMP shortly after the Property Weekly Disposal, the Board
believes it is acting decisively to reduce the cash burn and protect the cash
position of the Company's listed vehicle, thereby maximising the benefit of the
increased aggregate consideration over that offered by Letterbronze.

Following the Property Weekly Disposal and TMP Disposal, the Company's main
trading unit will be Oxford Broadcasting Limited trading as SIX TV ('OBL'). OBL
operates 'SIX TV' branded local television channels in Oxford and Southampton on
a low overhead. Although the Board believes OBL has ongoing business potential,
this company carries no ongoing goodwill value in the books of the Company.


*Use of proceeds*

The Board intends to use approximately £200,000 of the Property Weekly
Consideration to meet existing liabilities within the Company's publishing
division and to enhance the balance sheet of CNL. The Board notes that the
Company would have been committed to a broadly similar level of cash outlay to
reduce the net liabilities of CNL under the terms of the original offer to
dispose of CNL and BOL to Letterbronze for an (unadjusted) aggregate
consideration of £1,025,000. Following this cash contribution to CNL and BOL,
the remainder of the proceeds of the Property Weekly Disposal will be
transferred by CNL to the Company, prior to completion of the TMP Disposal.


The balance of the aggregate proceeds from the Property Weekly Disposal and TMP
Disposal will be used, in part, to meet the general working capital requirements
of the Company and its subsidiaries. However, it is the intention of the
Directors that a significant proportion of the proceeds will be retained, either
to be distributed to Shareholders or to be re-invested developing new business
opportunities. The Board continues to consider and will be discussing with its
Shareholders and nominated adviser, Arden Partners PLC, the ongoing strategy of
the Company, including the best use of these funds, in line with its duty to
consider all options to maximise shareholder value. This will be done under the
chairmanship of John Sanderson, the Company's Non-Executive Chairman and
independent director.




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