Final Results

Quarto Group Inc
16 February 2001



                     THE QUARTO GROUP, INC - 2000 PRELIMS


*   Quarto, the London-based international publisher, announces that,
    despite adverse currency circumstances, profit before tax, exceptionals, and
    goodwill amortisation was maintained at £4.1 m on a turnover of £73.6 m     
    (1999: £76.5 m), and underlying EPS increased to 16.1p (1999: 15.8p). The   
    pre-tax profit was £3.6 m  (1999: loss £1.1 m).

*   The International Co-edition Publishing Division made an operating
    profit of the £5.4 m (1999: £5.8 m) on a turnover of £43.5 m (1999: £47.1m),
    with the strength of the dollar and sterling against the euro impacting     
    profit by some £1.5 m and turnover by some £5.3 m.  Towards the year end,
    substantial headway was made in changing and refocusing this business.

*   The Publishing Division increased operating profit by 58% to £1.9 m
    (1999:  £1.2 m) on a turnover of £30.1 m (1999:  £29.4 m).

*   Investment in new titles, which is expensed, increased to £6.1 m (1999:
    £5.8 m) and the return on this will be obtained over the next few years.

*   Laurence Orbach, Chairman and Chief Executive, stated 'The overall
    performance for 2000, in adverse currency circumstances, has revealed the
    continuing strengths of the group.

Our focus for 2001 is on sales, exciting publishing programs across the board,
and strong cash generation.  With a very strong team of people running and
working in our businesses, we are better poised, internally, to achieve this.
January is a quiet month, but I am pleased to be able to report that sales for
January are ahead of budget.  I want to take this opportunity to thank all of
those who contributed to our many achievements in 2000.  Our mission, in 2001,
is to exceed these.

Our short-term objective is to return to historic profit levels, and we are
targeting an operating profit margin of 10%, the effect of which would be to
increase substantially our earnings per share.

We regard improving the trading performance of the group to be the best way of
enhancing shareholder value.  Other options have been considered and are
reviewed by the Board and its advisors on a regular basis.'


Notes for Editors:

Quarto's International Co-edition Publishing Division primarily creates
content for publication internationally by other publishers.  It also includes
Regent and ProVision, which are Far East-based print broking and production
supervision services businesses, serving both third parties and the Group.

Quarto's Publishing Division primarily publishes books, under imprints owned
by the group, and art images, mainly for their domestic markets and from US
locations.   In addition, it includes two UK-based screen printers primarily
serving the point of sale display market, Western and AP Screen.

Although a Delaware registered corporation, Quarto's Head Office is situated
in Islington, London N7 and its shares are fully listed on the London Stock
Exchange.


Enquiries:
The Quarto Group, Inc                                           020-77 00 90 00
  Laurence Orbach (Chairman & Chief Executive)
  Mick Mousley  (Finance Director)

Bankside Consultants Limited
  Charles Ponsonby                                              020-72 20 74 77



                             CHAIRMAN'S STATEMENT

Quarto is an international publishing group, with some 80% of its overall
business overseas, so it is no surprise that the continuing strength of the
dollar and sterling against the euro dashed our expectations, a year ago, to
grow the business in 2000. Given this background, which we have fully
explained to shareholders, the overall performance for the year has revealed
the continuing strengths of the group.

We suffered a major setback in euro-zone sales of our international co-edition
books. As a direct consequence of not making low value sales in the euro-zone,
our co-edition margins have improved, and have helped group profits overall.
If the euro maintains, and improves upon, its current strength, I believe that
some of the sales that were not made in 2000 will prove to be sales deferred,
rather than lost.


Financial Overview



For the year ended December 31 2000, operating profit (before amortization of
goodwill and exceptional items) increased to £6.1 million (8.3% of sales),
from £5.8 million (7.6% of sales), despite a reduction in turnover to £73.6
million from £76.5 million. The pre-tax profit was an unchanged £4.1 million,
before amortization of goodwill and exceptional items.  Underlying earnings
per share increased to 16.1p from 15.8p in 1999, and basic earnings per share
were 13.2p compared with a basic loss per share of 13.5p in 1999.



The US dollar is the group's major trading currency, and the currency in which
the major part of our assets is denominated. As a matter of prudence, our
syndicated bank loan and most of our borrowings are also in dollars. At the
end of 2000, net debt was unchanged at
$34.3 million. In sterling, however, reflecting the decline of sterling
against the dollar, it increased to £23.0 million (1999: £20.9 million).
Committed facilities at the year end approximated $60 million, providing very
substantial headroom. Net interest payable increased to £2.0 million from £1.7
million as a result of an increased average interest rate and the strength of
the US dollar. The net interest charge was covered 3.0 times (1999:3.4 times)
by underlying operating profits.



Commentary on Results



The reduction in turnover is substantially explained by the decline in sales
to the euro-zone. At the beginning of last year, we anticipated that these
would fall by £1 million. At the interim stage in August, when it was evident
that the euro was still very weak, we revised the shortfall to £4 million. In
November, it became clear that the impact was greater and, in the event, group
sales to the euro-zone were off by £5.3 million, on which, under normal
trading conditions, the gross contribution would have been about £1.5 million.
The impact of this cannot be understated. Since this reflects investment and
work done in prior periods, the contribution would have dropped almost
entirely to the bottom line.



The shortfall in euro-zone sales impacted the International Co-edition Book
Publishing Division, where sales of £43.5 million were down by £3.6 million
(1999: £47.1 million). Despite this, operating profit before amortisation of
goodwill and exceptional items, as a percentage of sales, increased to 12.5%
(1999: 12.3%), as the gross margin improved to 34% (1999:32%).



Investment in new titles, which is expensed, increased to £6.1 million (1999:
£5.8 million) and the return on this will be earned over the next few years.
This investment drives our backlist sales of co-editions in future years. Even
in 2000, with the dramatic fall we experienced in co-edition sales to the
euro-zone, backlist sales (derived from investment in new titles in prior
years) were responsible for 64% of the division's revenue (1999: 69%).



As businesses within the group trade with each other, the consolidated figures
do not reflect accurately the volume of sales or the performance of individual
units, which I cover below, in my operational summary.



The Publishing Division's sales, at £30.1 million (1999: £29.4 million), were
mostly in currencies other than sterling. Sterling has weakened against the US
dollar, so the sterling figure misleadingly suggests that sales for the
division moved ahead. On the book and services sides, sales did advance. On
the art publishing side, in our efforts to turn around this business, sales
were allowed to decline in a successful effort to reduce losses while
returning the business to profitability. Overall, the division's operating
profit improved by 58% to £1.9 million (1999: £1.2 million).



Exceptional costs were incurred in the considerable restructuring that took
place during the year, mostly relating to the operational issues discussed
below. The costs were in line with our expectations. In 2001, we have already
placed our art publishing businesses under common management, but most of the
groundwork for this was done, and the costs were expensed, in 2000.



Review of the Year



I advised you in November that Terry Hancock had left Quarto, and that the
board had decided not to appoint a replacement Chief Operating Officer. Since
Terry's departure, I have resumed direct responsibility for the international
co-edition book publishing part of the group, which continues to be our core
activity, and the one most affected by currency issues.



International Co-edition Book Publishing



In the second half of the year and, especially, towards the very end of the
period, substantial headway was made in changing and refocusing the business.



Rockport and RotoVision were more closely integrated. They have separate
editorial identities and visions, but now share sales forces, production, and
accounting, under the overall direction of Ken Fund. Design Eye and Quarto
Children's Books have been organized into a children's publishing division,
headed by Sally Gritten, who joined us in late November. Design Eye had never
fully recovered from the tragic, early death of one of its founders, in August
1999, and we have now relocated it to London.



Quarto Publishing produced a vigorous range of titles and goes from strength
to strength. It has a new editorial voice, new titles are performing well, and
margins are improving. Quantum, whose business is to exploit our older
material in tertiary and special markets, rebounded from an ill-advised effort
in 1999 to generate a great deal of its own, new material. Quintet suffered
from a lack of direction and I am still searching for a new publisher who will
bring new vitality and an individual voice to Quintet's publishing program,
which it surely needs. The first books appeared from Global Publishing, and
made a very useful contribution to the results.



Publishing



The group's publishing businesses are mostly located in the United States. On
the book side, Book Sales had a very successful year, and Walter Foster
launched an innovative range of journals and ancillary products under the My
Chaotic Life imprint. This range is a complete departure from anything that
Walter Foster, or any group company, has published before, and we are all very
impressed and excited by the range. We now have to find the way to market it
effectively.



Our art publishing is still not where it should be. This is a disappointment,
as the marketplace has been solid and we haven't capitalized on all of the
opportunities. What we have focused on, namely the images we publish, we have
improved significantly. We now have to bolster the sales side. We have
simplified the business structurally, and now operate essentially from just
New York and Melbourne as the Art Publishing Group, having wound down our
presence in Sydney and San Diego. This rationalization did, of course,
distract management somewhat, but it is now behind us.



Publishing Services



The group's publishing services, which provide production services to
publishers, and point of sale materials for marketing support, were very
successful in 2000. Regent and ProVision, which are in the international
co-edition book division, worked hard, and successfully, to deal with the twin
challenges of a strong dollar and very high paper and raw material prices. In
the UK, Western and AP, whose results are recorded in the Publishing Division,
had very good years, and are continuing to invest in future growth
opportunities.



Group Direction



Quarto has played a leading role in the illustrated co-edition book publishing
industry for nearly all its 25 years. Our business model has stood the test of
time, and of repeated re-examinations. Provided that it is applied in a
disciplined, not slavish, manner, it assists us by focusing our attention on
the markets for our books.  Our success has been to marry this discipline to a
keen ability to anticipate the market and produce exciting, relevant, and
useful books.



Our short-term objective is to return to historic profit levels, and we are
targeting an operating profit margin of 10%, the effect of which would be to
increase substantially our earnings per share. When we have achieved this
target - which is neither unrealistic, nor undemanding, as a short-term
objective - we hope that this will give us a greater freedom of maneuver to
pursue longer-term strategic ambitions.



We regard improving the trading performance of the group to be the best way of
enhancing shareholder value.  Other options have been considered and are
reviewed by the Board and its advisors on a regular basis.



Our most important assets are our book properties. This is self-evident, but
it cannot be overemphasized. The vast majority of the books we publish have to
earn revenue over many years in order to satisfy our business model. They must
have the integrity to stand the tests of time.  I have long maintained that,
in our efforts to keep the primacy of our products at the core of our
illustrated co-edition book publishing, we must limit the size of our
publishing units.  Ideally, they should be small enough to be managed by
someone whose major focus is creative, but large enough to obtain some
economies of scale. We are a product-rich business and must nurture the
vitality, inventiveness, and individuality that are necessary in publishing.



We have been performing below par, and our core business has suffered. We
cannot do much about unfavorable exchange rates, but we can pay close
attention to our own publishing programs.  We must bring greater vitality, and
return inventiveness, to some of our lists. Quarto Publishing's adult list
stands as a stellar example of what can be done, even in tough times. New
appointments, and sweeping away some of the cumbersome bureaucracy that has
been developed, will help the re-invigoration that we are all seeking. I
expect people to establish, more clearly, their objectives, and to test their
actions against these objectives. I have absolute confidence that we will
restore luster to our co-edition publishing business. Its weaker than expected
performance this year has been a problem for the group, and turning this
around is of the utmost priority.



What about our other activities? The book publishing businesses, operating
almost entirely in their domestic UK and US markets, have been performing to
plan. Sales growth has been anemic, and this is a concern, but operating
margins have improved.  The art publishing units, historically such a
profitable part of the group but, for the last few years, loss-making, are
showing clear signs of improvement. Their revival is taking longer than I
expected. I failed to appreciate the extent of drift, and the difficulties of
turning things around. The most crucial oversight was not to highlight to
shareholders and staff that, precisely because the art publishing units
derived over 70% of their annual revenues from backlist sales, the impact of
several seasons of poor publishing programs would take considerable time to
overcome. Finally, the publishing services units, involved in printing and
print broking for group but, predominantly, third-party customers, are
continuing to perform well.



Strategy



What is our strategy? The group has been, for many years, a portfolio of
related businesses, as is commonplace in the book publishing industry, and is
explained by the need to keep the creative edge. This will not change, and the
board is keen to ensure that the businesses are related to our core
activities, that they bring real benefits to the group, and that the group can
bring definite advantages to the individual units. These considerations will
guide the board's assessment of each operating unit and division.



In the broadest sense, the core activities of the group have been focused in
informational and instructional publishing. The how-to and reference books
that made our reputation were, initially, produced for the broad consumer
audience. Over time, we have branched out into publishing instructional and
informational books for semi-professionals and professionals, particularly in
the graphics and commercial arts fields. There are sound reasons for us to
build upon this core direction, not least of which are our strengths in making
these books, our understanding of their markets, and the evident need for good
instructional and informational material. People and businesses today require
useful, relevant information and instruction. This means that skilled editing,
allied with a clear sense of market needs, is the direction for informational
publishers to pursue.



Our longer-term strategy is to focus on the growth potential for Quarto in the
informational and instructional areas. We don't intend to confine ourselves to
books, or even to print media. The potential for us to expand in
quasi-educational, professional training, and even educational areas, is
immense. It does require that we identify our target areas very carefully,
with due regard to what the group can bring to the party.



Prospects



The board is determined to improve the cash flow of the group, and to drive
down our borrowings. Capital allocation is a major preoccupation of
management. We will allocate capital and resources to successful businesses.
Of course, all units have their ups and downs. A temporary setback will not
disqualify a business, but the inability of a unit to establish its growth
potential will. Successful businesses will be supported, and will be
encouraged to grow. We shall make decisions about our units on the basis of
their potential under group ownership, and we will support what we expect to
be our winners.



I am proposing to abandon, as group-wide projects, our Internet and e-commerce
initiatives. This does not mean that Quarto is turning its back on such
ventures. Rather, they will proceed under the normal commercial and budgetary
criteria of our operating units. We shall confine new initiatives to our
operating units, at least for the  time being. This will ensure that they are
considered in the context of fairly short-term returns.



The impact of these developments will not be sudden. I must stress once again
that, with our heavy reliance on selling our backlists (i.e. books and art
prints first published in prior years), the turnaround must be incremental,
and depends upon making good publishing decisions.



I am more comfortable now, than at any previous time, that we have a very
strong team of people running and working in our businesses. Publishing is at
its best when it is organized creatively on a small scale. This, of course,
requires having publishers who are creative and entrepreneurial - a difficult
combination, when added to the need to work within the commercial disciplines
of a group.  We have those people now. I believe that they will continue to
attract and nurture the people who join us.



It would be rash to say that the 'threat' posed to book publishing by the
digital revolution is over. But, the industry has recovered from its bout of
nerves and, as when new media, such as newspapers, magazines, serial
publications, radio, movies, and television, previously challenged it, book
publishing is redefining its purpose and uniqueness. CD-ROMs have largely come
and gone, the downloadable book is perceived as a minority taste and, to date,
the Internet revolution has not done to the industry much more than to
rearrange the retail outlets.



Quarto has always tried to draw a distinction between data and information.
Editing information is our real skill, and it remains where we define
ourselves in publishing terms. The opportunities are vast and, accordingly, we
have terminated group wide Internet initiatives in favor of letting each
individual business develop its web activities in its own way.



As I write this Chairman's Statement, it is still too soon to know whether the
United States is entering a period of recession, or of slower growth. Much as
there is ringing talk of the European economies taking over as the locomotive
of growth, I remain a skeptic but, as with many things, the possible cloud of
economic slowdown also has a silver lining. Historically, during periods of
recession, book publishing has done well. Books offer relatively cheap
information and entertainment, so I am hopeful that our business will continue
its steady underlying improvement.



Our focus for 2001 is on sales, exciting publishing programs across the board,
and strong cash generation. We are better poised, internally, to achieve this.
January is a quiet month, but I am pleased to be able to report that sales for
January 2001 are ahead of budget. I want to take this opportunity to thank all
of those who contributed to our many achievements in 2000. Our mission, in
2001, is to exceed these.





Laurence F Orbach

Chairman and Chief Executive
                    16 February 2001



                           PROFIT AND LOSS ACCOUNT
                     for the year ended 31 December 2000


                                                              2000         1999
                                                              £000         £000

Turnover                                                    73,564       76,456

Gross profit                                                25,925       25,932
Net operating expenses                                     (19,837)     (20,107)
Amortisation of goodwill                                      (58)         (12)
Exceptional items                                            (457)     -

Operating profit
Operating profit before amortisation of goodwill and
exceptional items
                                                             6,088        5,825
Amortisation of goodwill                                      (58)         (12)
Exceptional items                                            (457)            -
                                                             5,573        5,813


Loss on discontinued operations                                  -      (5,230)
                                                             5,573          583

Net interest payable                                        (2,023)      (1,716)


Profit / (loss) on ordinary activities before taxation

Profit before amortisation of goodwill, exceptional items
and loss on discontinued operations
                                                             4,065        4,109
Amortisation of goodwill                                      (58)         (12)
Exceptional items                                            (457)            -
Loss on discontinued operations                                         (5,230)
                                                                 -
                                                             3,550      (1,133)

Taxation                                                     (314)        (390)

Profit / (loss) on ordinary activities after taxation        3,236      (1,523)
Minority interests - equity                                  (413)        (440)
Profit / (loss) for the year                                 2,823      (1,963)

Dividends (including non-equity)                            (1,262)      (1,262)
Retained profit/(deficit) for the year                       1,561      (3,225)
Earnings/(loss) per share                                    13.2p      (13.5)p
Underlying earnings per share                                16.1p        15.8p

Diluted earnings/(loss) per share                            13.2p       (9.3)p
Diluted underlying earnings per share                        15.8p        15.6p




                          CONSOLIDATED BALANCE SHEET
                                                            at 31 December 2000

                                                               2000       1999
                                                               £000       £000

Fixed assets
Goodwill                                                      1,201        792
Tangible assets                                               6,141      6,341
                                                              7,342      7,133
Current assets

Stocks and work in progress                                  18,709     16,849
Debtors                                                      26,503     26,243

Investments                                                       1          1

Cash and deposits                                             9,691      9,567
                                                             54,904     52,660

Creditors: Amounts falling due within one year             (26,642)   (26,362)



Net current assets                                           28,262     26.298

Total assets less current liabilities                        35,604     33,431

Creditors: Amounts falling due after more than one year    (31,337)   (29,833)

Provision for liabilities and charge

Deferred taxation                                           (1,202)    (1,151)

Net assets                                                    3,065      2,447


Capital and reserves

Called up share capital                                       1,341      1,341
Reserves  -     paid in surplus                              23,891     23,891
          -     revaluation                                   1,018      1,018
          -     profit and loss                             (25,852)   (26,097)
Treasury stock                                                (461)      (461)

Shareholders' funds                                            (63)      (308)


Equity                                                      (5,267)    (5,512)
Non equity                                                    5,204      5,204
                                                               (63)      (308)
Minority interests - equity                                   3,128      2,755

                                                              3,065      2,447



CONSOLIDATED CASH FLOW STATEMENT

                                            for the year ended 31 December 2000

                                                                 2000      1999
                                                                 £000      £000

Net cash inflow from operating activities                       6,409     8,259

Net cash outflow from return on investment and servicing of
finance
                                                              (2,478)   (2,191)

Taxation                                                        (627)     (594)


Capital expenditure                                             (450)     (465)

Acquisitions                                                  (1,471)      (67)
                                                                           
Equity dividends paid                                           (877)     (928)

Management of liquid resources                                     -         -
Movement of short term deposits                                 (115)   (1,418)

Net cash flow from financing                                  (1,388)       478
                                                                            
(Decrease) / increase in cash                                   (997)     3,074

Reconciliation of net cashflow to movement in net debt
Movement in cash                                                (997)     3,074
Movement in debt and lease financing                            1,388     (478)
Management of liquid resources                                    115     1,418
                                                                  506     4,014

New finance leases                                              (324)     (726)
Translation differences                                       (2,286)     (364)
Net cash (outflow)/inflow                                     (2,104)     2,924

Movement in debt for year
Net debt at beginning of year                                (20,894)  (23,818)

Net debt at end of year                                      (22,998)  (20,894)



NOTES

 1. Segmental analysis

Geographical analysts of turnover by destination

                                                            2000          1999
                                                            £000          £000

United Kingdom                                            14,189        15,177
United States of America                                  39,783        36,605
Canada                                                     1,838         1,988
Europe                                                     9,319        14,576
Australasia and the Far East                               6,383         5,628
Rest of the World                                          2,052         2,482
                                                          73,564        76,456

Turnover and operating profit before amortisation of goodwill and exceptional
items

                               Operating profit before amortisation of goodwill
                                                          and exceptional items
                   Turnover
                 2000  1999                      2000                      1999
                 £000  £000                      £000                      £000
Class of
business

Co-edition      43,472 47,106                    5,429                     5,810
publishing
Publishing      30,092 29,350                    1,902                     1,208
                73,564 76,456                    7,331                     7,018
Group overheads                                (1,243)                   (1,193)
                                                 6,088                     5,825


2. Exceptional items comprise restructuring costs with regard to the
   co-edition businesses.

3. Dividends comprise:


                                                              2000         1999
                                                              £000         £000

Non equity:  Preference:                                       455          455
Equity:      Ordinary:       Interim                           395          395
                             Final proposed                    412          412
                                                             1,262        1,262


The Board proposes a final dividend of 2.3p net (1999: 2.3p) per share of
common stock of par value US$0.10 each ('ordinary shares') which is expected
to be paid on 4 May 2001 to shareholders on the register on 6 April 2001.

4. The calculation of earnings per share is based on 17,925,306 shares (1999:
    17,925,306) and a profit after minority interests and preference dividends
    of £2,368,000 (1999: loss of £2,418,000).


The calculation of underlying earnings per share is based on earnings of £
2,883,000 (1999: £2,824,000) calculated as follows:

                                                                  2000     1999
                                                                  £000     £000

Earnings after minority interest and preference dividends        2,368  (2,418)
Exceptional items                                                  457        -
Amortisation of goodwill                                            58       12
Loss on discontinued operations                                      -    5,230
                                                                 2,883    2,824


Diluted earnings per share is based on 17,972,702 shares (1999: 21,063,732)
and earnings of £2,368,000 (1999: loss of 1,963,000).  The number of shares
for 2000 incorporates 47,396 with regard to dilutive options (1999: 3,122,414
with regard to the conversion of the preference shares and 16,012 with regard
to dilutive options).  Diluted underlying earnings per share is based on
21,095,116 shares (incorporating 3,122,414 with regard to the conversion of
preference shares and 47,396 with regard to dilutive options) and earnings of
£3,338,000 (1999: 21,063,732 shares and earnings of £3,279,000).

5. The financial information contained in the preliminary announcement does
   not constitute the Company's statutory accounts for the years ended 31
   December 2000 or 1999 but is derived from those accounts.  Statutory
   accounts for 1999 have been delivered to the Registrar of Companies; those
   for 2000 will be delivered following the Company's Annual General Meeting.
   The auditors have reported on those accounts, their reports were
   unqualified and did not contain a statement under Section 237(2) or (3) of
   the Companies Act 1985.

6. The Annual Report will be sent out to shareholders in early March.
   Additional copies can be obtained from the Finance Director, The Quarto
   Group, Inc., The Old Brewery, 6 Blundell Street, London, N7 9BH. Tel:
   020-7 700 9000,
  (E-mail [e-mail]).