Interim Results

QUARTO GROUP PLC
16 September 1999


Interim Results for the Six Months Ended June 30, 1999
                            
The  Quarto  Group  Inc, the international  publisher  of
illustrated  books  in  co-edition  and  under  its   own
imprints,  announces interim results for the  six  months
ended June 30, 1999.

Key Points

*     Operating  profit  £1.805  million  (1998:  £2.257
      million)

*     Earnings  per  share of 2.4p (1998:  2.2p),  before
      exceptional items

*     Dividend per share of 2.2p (1998: 2.2p)

*     Turnover in continuing businesses broadly unchanged

*     Following  a  strategic review the group  has  been
      streamlined  into  two divisions to  reflect  its  core
      activities:  International  Co-edition  Publishing  and
      Publishing

*     A more prudent accounting policy is being adopted to
      sharpen focus on capital allocation

*     Broughton  Hall  matter  now  concluded.  Following
      goodwill write-back and related adjustments, exceptional
      charge of £5.23 million.


Commenting on the outlook, Laurence F. Orbach,  Chairman,
said:

'The first quarter showed some robust growth, but trading
levelled off in the second quarter. The third quarter  is
trending strongly'

Current trading and forward order books suggest that  the
outcome for the year will show a strong advance on 1998s
restated results. Sales from continuing businesses to the
end  of August are 7% ahead of the comparable period last
year.... Supported by a strengthened management team,  we
have  a  clear sense of direction and, having  endured  a
couple  of  very wrenching years, I expect  an  improving
trend.'

Contact:    
Terry Hancock, Chief Operating Officer      0171 700 9014
Mick Mousley,  Finance Director             0171 700 9005
            
Charles Ryland, Buchanan Communications     0171 466 5000

Chairmans Statement


There  are tangible signs of improvement in our business,
and  we see a bright future ahead. I am pleased to report
that  the Broughton Hall matter has been settled, without
any further damage to the Group.

The  first quarter showed some robust growth, but trading
levelled off in the second quarter. The third quarter  is
trending  strongly. At this stage, it  appears  that  the
full  years results will show a significant  advance  on
1998  restated results. Sales in the first half  of  1999
were  7.5%  lower at £31.2 million (1998: £33.8 million).
After  adjusting for the loss of Broughton Halls  sales,
the overall picture was broadly unchanged.

We   have   now   almost  completed  our  strategic   and
operational reviews with the assistance of Terry Hancock,
who  joined  in January as Chief Operating  Officer.   We
have  implemented a number of changes, all of  which  are
designed  to  streamline our operations and to  put  more
responsibility  into  the hands of the  managers  of  our
operating units.

Our  business is very seasonal, and the results  for  the
first  half  are  not necessarily a  good  guide  to  the
results  for the year as a whole. This year,  because  we
have  determined  on a change of accounting  policy  that
requires some explanation, the comparatives may  be  less
meaningful.

Accounting Policy Changes

Since  flotation in 1986 we have operated  an  accounting
policy that capitalised the development costs of our  co-
edition titles, writing these off over a thirty six-month
period  from the date of the first sale of a title.  This
policy  became standard within the industry and  had  the
advantage of reflecting the value of the backlist.

However, this method does not accurately reflect  how  we
make  decisions to produce new titles. It also  fails  to
test  the financial efficacy of our publishing decisions.
We  believe our co-edition business is low-risk,  because
book  concepts  are  sold in advance  of  production.  In
practice,  the  investment decision on  a  new  title  is
governed  by  a simple profit calculation based  only  on
orders  in hand. We have decided,  therefore to  adopt  a
new   accounting  policy  and  shall  expense   all   the
development  costs  of new titles at the  time  of  first
sale.   The  benefits  of  this  change,  which  we   are
implementing now, include:

-     It  ensures  we  account in the  most  prudent  way
      possible;
-     It  further sharpens the focus on the  use  of  and
      return on capital within our publishing businesses;
-     We  are bringing accounting policy in line with the
      way management reaches business decisions;
-     It  moves  closer  to  'cash'  accounting  so  that
      shareholders have a clearer view of our progress;

The  changes  to the accounting policy create  a  taxable
loss,  which will be available to offset against  profits
and shareholders should be aware of the beneficial impact
it  is  likely  to have on future profits. In  accordance
with  current  accounting standards,  this  deferred  tax
asset is not shown on the balance sheet. We will continue
to  incur some tax charges in jurisdictions where  offset
is not available.

A  further consequence of the accounting policy change is
the  effect  on the balance sheet. We have,  effectively,
placed no value on the intellectual property that we have
created.  This is clearly a commercial nonsense,  as  our
backlist of titles drives a very major part of our  sales
and  as financial markets recognise media content has  an
intrinsic  and  generally  rising  value.  However,   the
treatment   does  have  the  virtue  of  being  extremely
prudent.

In   order   to  eliminate  the  distorting   effect   of
seasonality, we are maintaining our internal financial
records  on a trailing twelve-months, as well  as  fiscal
year  basis.  We  shall be reporting the trailing  twelve
months figure at the interim stage allowing managers  and
shareholders to have a more considered view of the  state
of the business.

Results

Operating profit for the six months ended June 30th, 1999
was  £1.805 million (1998 £2.257 million). Profit  before
taxation and exceptional items in the same period  was  £
0.928  million  (1998 restated: £1.224 million)  .  After
exceptional items the loss before tax was £4.302  million
(1998 restated profit; £1.224 million).

There  is an exceptional charge of £5.23 million relating
to the closure and final resolution of the Broughton Hall
matter. As has been explained before, this is not a  cash
or   trading   item.  In  line  with  current  accounting
standards  we  are  required to  reinstate  the  goodwill
previously  written  off and pass it through  the  income
statement. In the prior year period, Broughton  Hall  had
sales  of  £2.559  million and contributed  a  profit  of
£136,000.

The lower tax charge has resulted in an improved adjusted
earnings  per  share, before exceptional  items  of  2.4p
(1998:  2.2p). The Board has approved an interim dividend
of 2.2p (1998: 2.2p) per share.

Divisional Restructuring

As  a result of the strategic and operational reviews  we
have  been undertaking we have chosen to restructure  our
operating  businesses into two rather than four divisions
to  reflect  more  properly the core  activities  of  the
group.  Our  review  has  also confirmed  the  wisdom  of
maintaining fairly small operating units that are capable
of  reaping  the  benefits of scale while still  enjoying
dynamism  and  flexibility. The Far Eastern international
publishing   services   units   are   now   within    the
International Co-edition Publishing Division,  while  the
UK-based  units  are in the Publishing Division,  because
their activities are, respectively, global, and domestic.

The International Co-edition Publishing Division produces
books  for  the  global market. For  this  division,  the
primary  focus is on content and product, rather than  on
distribution   and   processes.    By   outsourcing   the
distribution  of  our titles, we have a  greater  ability
than most publishers do to capitalize on new channels  to
market.  Sales  through these new channels often  account
for far more copy sales than to the traditional bookstore
market.  For  the  most  part,  our  units  do  not  hold
inventory, and they do not commit to publishing  projects
until  these  are pre-sold to publishers and distributors
that take the risk in the inventory.

Sales  in this division for the first half rose  4.4%  to
£17.764  million (1998: 17.022 million). Having conducted
a  number  of  root and branch business reviews  we  have
taken  steps  to upgrade the creative skills  within  the
division. We have new and talented publishers heading  up
4 of our operating units, we have reduced costs, improved
operating  systems and continued to restrict output  only
to  those concepts that will have an extended shelf life.
Our  focus  on the effective use of capital and  cashflow
will  be maintained. Backlist sales continue to be strong
and were ahead of the corresponding period last year.

I  am pleased to announce that we have established, a new
co-edition  book publishing unit, under the direction  of
Gordon  Cheers,  who  created highly successful,  similar
units  previously  at Random House and  at  Penguin.  His
speciality  is  producing  big,  authoritative  reference
books. Although this new unit has only just started  work
Gordon  and his team expect to publish their first titles
in the second half of next year.

The  Publishing Divisions units operate primarily  on  a
territorial  basis. They publish under their  own  names,
hold  inventory, and achieve the bulk of their  sales  in
their home markets. They include art publishing and  book
publishing  activities  which,  despite  their  differing
customer  base,  have  the same creative  and  production
disciplines.  Excluding Broughton  Hall,  like  for  like
sales  in  the  first  half  were  £13.459million  (1998:
£14.183 million).

Generally  our  book  publishing units  are  making  good
progress,  our  art publishing business in  Australia  is
returning  to  profitability, and those in the  USA  have
been   restructured  to  align  publishing,   sales   and
marketing activities more directly.

Prospects

Current trading and forward order books suggest that  the
outcome for the year will show a strong advance on 1998s
restated results. Sales from continuing businesses to the
end  of August are 7% ahead of the comparable period last
year.   Although  improvements  in  printing  technology,
coupled with a different emphasis on inventory control by
the  new,  mammoth, bookstore chains, and  by  publishers
have  led to orders being placed on much shorter  cycles,
we  can be reasonably confident that the buoyancy in  our
major trading markets will continue.

Across  the  board  now, thanks to  significant  internal
changes,   and   management  attention,  our   publishing
services  units  are now performing extremely  well.  The
only  significant area in which much remedial work  still
has  to  be done is art publishing. This is taking longer
to  turn  around  than I had expected.  As  noted  above,
Australia  is now trading at break-even, and  we  have  a
clear strategy for improvement elsewhere.

Supported  by a strengthened management team, we  have  a
clear sense of direction and, having endured a couple  of
very wrenching years, I expect an improving trend.

I  would like to conclude on a sad note. On August  16th,
at  the early age of 42, Michael Tout, founder and  joint
managing  director of Design Eye, died suddenly.  Michael
was an immensely talented, well-respected, and much-loved
individual.  He  is irreplaceable, and  his  loss  is  an
immense  sadness  for his family, his  friends,  and  his
business. We have an enormous challenge at Design Eye  to
live  up to the high expectations and great projects that
he  fostered. Mike was creative, a very fine businessman,
and  a  good person. Our hearts go out to his  family,  a
family of which he was justifiably proud. We shall try to
build on his legacy.

L F Orbach
Chairman & Chief Executive


UNAUDITED PROFIT AND LOSS ACCOUNT
for the six months to June 30, 1999

                              Six months Six months        Year
                                   ended      ended       ended
                                June 30,   June 30,  December 31,
                                    1999       1998        1998
                                        (as restated)(as restated)
                                   £000      £000       £000
                                                               
Turnover                          31,223     33,764      79,156
                                                               
Operating Profit                                               
Continuing operations              1,805      2,277       5,014
                                                               
Share of loss of associate             -        (20)        (20)
Exceptional item                  (5,230)         -        (580)
                                  (3,425)     2,257       4,414
Net interest payable                (877)    (1,033)     (1,931)
Profit on ordinary activities     
before taxation                   (4,302)     1,224       2,483
                                                               
Taxation                             (83)      (339)       (849)
Profit on ordinary activities     
after taxation                    (4,385)       885       1,634
                                                               
Minority interests                  (195)      (240)       (555)
                                                               
Profit for the period             (4,580)       645       1,079
                                                               
Dividends                                                      
Ordinary                            (394)      (411)       (823)
Preference                          (228)      (228)       (455)
                                                               
(Deficit)/Retained profit         (5,202)         6        (199)
                                                               
Earnings per share : Basic         (26.8)p      2.2p        3.3p

                   : Adjusted        2.4p       2.2p        6.5p


UNAUDITED CONSOLIDATED BALANCE SHEET
at June 30, 1999


                                  June 30,  June 30, 31, December
                                     1999      1998        1998  
                                         (as restated)(as restated)
                                   £000      £000       £000
                                                               
Fixed assets                                                   
Tangible assets                    6,734      6,677       6,519
Investments                            -        197           -
                                   6,734      6,874       6,519
Current assets                                                 
Stocks and work in progress       18,256     19,576      17,175
Debtors                           25,529     24,573      29,021
Investments                            1          1           1
Cash at bank and in hand           3,858      4,948       5,355
                                  47,644     49,098      51,552
                                                               
Creditors:  Amounts falling      (21,773)   (24,624)    (27,281)
due within one year
Net current assets                25,871     24,474      24,271
                                                               
Total assets less current         
liabilities                       32,605     31,348      30,790
                                                               
Creditors:  Amounts falling                                    
due after more than one year     (30,771)   (28,189)    (28,496)
                                                               
Provisions for liabilities                                     
and charges
Deferred taxation                 (1,230)    (1,312)     (1,188)
                                                               
Net assets                           604      1,847       1,106
                                                               
Capital and reserves                                           
Called up share capital            1,341      1,341       1,341
Reserves                          (3,694)    (1,894)     (2,830)
                                                               
Shareholders funds               (2,353)      (553)     (1,489)
Minority interests                 2,957      2,400       2,595
                                     604      1,847       1,106


UNAUDITED CASH FLOW STATEMENT
For the six months to June 30, 1999

                                     Six        Six        Year
                                  months     months       ended
                                   ended      ended    
                                June 30,   June 30, December 31,
                                    1999       1998        1998
                                        (as restated)(as restated)
                                   £000      £000       £000
                                                               
Operating profit                   1,805      2,277       5,014
                                                               
Non-cash items                       658        526       1,067
                                                               
Working capital movement, net     (2,563)      (880)       (174)
                                                               
Net cash inflow/(outflow)                                      
from operating activities           (100)     1,923       5,907
                                                               
Interest, net                       (877)    (1,043)     (1,962)
                                                               
Dividends                           (761)      (772)     (1,410)
                                                               
Taxation                            (462)      (339)       (678)
                                                               
Capital expenditure, net            (857)      (679)     (1,017)
                                                               
Purchase of subsidiary                                         
undertakings and associates            
net of cash acquired                   -          -          30
                                                               
Purchase of shares                     -          -        (461)
                                                               
Net cash (outflow)/inflow         (3,057)      (910)        409
                                                               
Translation difference            (1,410)       316         221
                                                               
Net debt at beginning of         
period                           (23,818)   (24,448)    (24,448)
                                                               
Net debt at end of period        (28,285)   (25,042)    (23,818)


Notes:

1.   The  financial information contained in this interim
     statement does not constitute statutory accounts within
     the meaning of Section 240 of the Companies Act 1985.
     The interim accounts for the six months ended June 30,
     1999 and the comparative figures for the six months ended
     June 30, 1998 are unaudited.  The comparative figures for
     the year ended December 31, 1998 are extracted from the
     accounts for the period which have been reported on by
     the Companys auditors and delivered to the Registrar of
     Companies.  The report of the auditors was unqualified
     and did not contain a statement under Section 237 (2) or
     (3) of the Companies Act 1985.  The interim accounts have
     been prepared using accounting policies consistent with
     the previous year with the exception of the change in
     accounting policy with regard to the development costs of
     books as set out in note 2 below.

2.   The    accounting   policy   of   capitalising   the
     development costs of books and amortising them over the
     estimated economic life of the books (not more than three
     years) was changed during the half year.  The Directors
     consider the new policy of charging all development costs
     against  the first printing of a book to be  a  more
     appropriate and fair presentation of the results and
     financial position of the Group.  The comparative figures
     have been restated to reflect the new policy.

     The effect of the change in accounting policy is  as
     follows:
     
     a)   The consolidated operating profit and profit on
          ordinary activities before taxation was increased by
          £392,000 for the six months ended June 30, 1999, £317,000
          for the six months ended June 30, 1998 and reduced by
          £1,196,000 for the year ended December 31, 1998.
     
     b)   The taxation charge for the six months ended June
          30, 1998 was increased by £112,000 to reflect the actual
          tax rate for the year.

     c)   The  consolidated net assets  were  reduced  by
          £12,920,000 at June 30, 1999, £11,678,000 at June 30,
          1998 and £13,315,000 at December 31, 1998.

3.   The  exceptional item in the six months  ended  June
     30, 1999 relates to the closure costs on Broughton Hall.
     It  includes  £4,937,000 relating  to  the  goodwill
     previously written off to reserves on acquisition.

4.   Taxation  is  based on the estimated  effective  tax
     rate for the year.

5.   The  interim  dividend is 2.2 per share  net  (1998:
     2.2p)  and  will  be  paid on October  22,  1999  to
     shareholders on the register at the close of business on
     October 1, 1999.

6.   The  calculation of earnings per share is  based  on
     17,925,306 shares (June 30, 1998: 18,675,306; December
     31,  1998:  18,644,844) and a loss,  after  minority
     interests and preference dividends, of £4,808,000 (June
     30,  1998: Earnings of £417,000, December 31,  1998:
     Earnings  of £624,000).  The calculation of adjusted
     earnings per share for the six months ended June 30, 1999
     and  the  year ended December 31, 1998 are based  on
     earnings  of  £422,000 and £1,204,000  respectively,
     calculated as follows:

                                     June 1999     December
                                                       1998
                                         £000        £000
     Earnings after minority                               
     interests and preference dividends (4,808)         624
     Exceptional item                    5,230          580
                                                           
     Earnings after minority                               
     interests and preference              
     dividends before exceptional item     422        1,204
     item