Q3 Trading Update

Quarto Group Inc
22 October 2004

                              THE QUARTO GROUP, Inc
                                        
                                        
                                Q3 Trading Update
                                        

Quarto's unaudited results for the third quarter, and nine months, ended
September 30, 2004 continue the substantial growth in profit demonstrated at the
six months' stage. As the company now enters into the busiest period of the
year, we remain confident that we shall meet the board's expectations for 2004.

During the third quarter, we completed the acquisitions of Creative Publishing
International, and Aurum Press, as previously announced, and they have
contributed profits during the period, at the level we expected. Also, during
the quarter, several of our new initiatives generated revenues, and we expensed
the associated capitalized costs.

The Frankfurt Book Fair, the most important trade event in the book publishing
calendar, took place earlier this month. As usual, Quarto had a strong
contingent at the Fair. The Fair is important as a marketing event, as well as
providing opportunities for sales. It is too early to provide a measured
assessment, but initial indications suggest that much serious business was done
and that, in particular, our newer publishing imprints created a lot of interest
from publishers wishing to license their titles.

We also held the second annual pan-European graphic design conference,
GraficEurope, that we launched last year in Barcelona. This time, the location
was Berlin. As expected, the conference, which was held last week, attracted
more delegates and sponsors. Initial feedback indicates that delegates were
impressed with the content, welcomed the sponsorship, and are very keen for the
event to continue.

As you are, no doubt, aware, Quarto's principal trading currency is the US
dollar, in which about 70% of our billing takes place. The average value of the
pound, for the 9 months' ended September 30, 2004, was $1.82, compared with
$1.61 for the corresponding period of 2003. Viewed overall, our sales, taking
into account the 19% that are billed in sterling, and the balance invoiced in
other currencies, rose 8% in constant currency volume terms. Reported in
sterling, they rose by 3.4% to
£56.7 million (2003: £54.8 million). Profit before tax, and goodwill
amortization, increased by a strong 17.8% to £3.7 million (2003: £3.2 million).

Consistent with past practice, Quarto supplies figures on a trailing 12 months'
basis, in order to eliminate seasonal factors. Summary unaudited income
statements for the nine months and 12 months ended September 30, 2004 follow:

              Nine Months to September 30   Trailing 12 Months to September 30
                      2004           2003           2004                  2003
                 £ million      £ million      £ million              £ million
              =================================================================
Sales                56.70          54.80          76.52                 76.89
Gross                19.20          17.20          26.20                 24.63
profit
Overheads           (14.71)        (13.33)        (19.01)               (17.91)
                    -----------------------------------------------------------
Operating
profit                4.49           3.87           7.19                  6.72
Interest             (0.76)         (0.70)         (0.95)                (0.97)
                    -----------------------------------------------------------
Pre-tax profit        3.73           3.17           6.24                  5.75
                    ===========================================================


Commentary

The nine months' results continue to emphasize the strong performance of your
group. Particularly good results came from the established Global, Rockport, and
Quantum lists, and from the new Qu:id and QED imprints. Book Sales improved
sharply, and the art publishing business continues its profit recovery.

Overall, our gross profit margin was up significantly at 34% (2003: 31%), and
the operating profit margin improved to 7.9% (2003: 7.1%). For the trailing 12
months, the operating profit margin, at 9.4% (2003: 8.7%), is coming close to
our target of 10%. We shall not rest when we achieve the target!

We are very happy with the acquisitions we made during the period. They have
performed according to our expectations, contributing approximately £120,000, at
the pre-tax level, on sales of £2.2 million, and they will be benefiting from
our attention. We continue to look at other opportunities. We are also
continuing with organic initiatives to grow the business. In addition to the
Fine Wine bi-monthly, whose first issue appeared in July, Quarto Magazines is
launching a new title in November.

The biggest disappointment, in the third quarter, was our failure to return
Image Factory to profit. We identified the problem earlier in the year, and
appointed a new managing director to run the business. Unfortunately, the
appointment has not worked and, at the nine months' stage, the negative swing in
Image Factory's operating profits was close to £0.6 million. Much effort is now
being put into reversing this.

Finally, we have strengthened the executive tier with the appointment of Michael
Clarke as head of operational and business research. This is part of the
planning that will result in Quarto becoming a second-generation company.
Michael has only been on board for a few weeks, but his contribution is being
recognized already.

It has been a busy year, so far, with our new initiatives, and acquisitions
consuming a great deal of senior management time. We are delighted with the
support we've received within the group, from our independent directors, from
many shareholders, and from our bankers. We will continue to repay this
confidence with prudent stewardship of Quarto, consistent with the strategy for
growth that we outlined earlier this year, by making selective and significant
acquisitions and accelerating organic initiatives.

Notes for Editors:

Quarto is an international book publisher. Listed on the London Stock Exchange
under the symbol QRT, Quarto's head office is situated in City Road, London EC1.
It is a Delaware corporation.

Quarto's International Co-edition Book Publishing Division creates books which
are licensed to other publishers for publication, under their own imprints, in
local markets. It also includes Regent and ProVision, which are Far East-based
print broking and production service businesses, serving both third parties and
the Group.

Quarto's Publishing Division publishes books and art prints, under imprints
owned by the Group, primarily in the US and Australia. July's acquisitions,
Creative Publishing international and Aurum Press, form part of this Division.
In addition, it includes two UK-based publishing services businesses primarily
serving the point of sale display market - Image Factory and AP Screen.

2003 was Quarto's fifth successive year of increase in underlying EPS.

Enquiries:
The Quarto Group, Inc.                                           020-7700 9000
Laurence Orbach (Chairman & CEO)
Mick Mousley (Finance Director)

Bankside Consultants Limited
Charles Ponsonby                                                 020-7444 4166




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