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Press Releases

Interim Announcement

"satisfactory results"

Quarto (QRT.L), the fully-listed international specialist book publisher based in London, announces its results for the six months to June 30, 2009. The first half of the year is traditionally much the weaker of the two.

Financial Highlights

• For the half year to June 30, 2009, revenue decreased by 5% to £41.8m, adjusted* EBITDA increased by 14% to £8.4m, adjusted* operating profit reduced by 6% to £2.1m, and adjusted* pre-tax profit declined by £0.1m to £0.3m.
• Publishing segment operating profit rose by 5% to £2.4m on revenue down 2% at £29.9m.
• Co-Edition segment operating profit was down £0.2m at £0.5m on revenue 12% lower at £11.8m.
• For the trailing 12 months to June 30, 2009, revenue was up 3% at £110.7m, adjusted* EBITDA increased by 7% to £23.0m, adjusted* operating profit was 1% higher at £11.2m, adjusted* pre-tax profit was 1% lower at £7.5m, and adjusted* diluted earnings per share increased by 7% to 26.6p.
• The Board has declared an unchanged interim dividend per share of 3.15p, in the light of the robust performance and annualised cash generation.
  
  * adjusted excludes amortization of non-current intangibles and exceptional items

Commercial Highlights

• In Publishing, the US, which accounts for over 60% of segmental revenue, has been our most difficult and volatile market. Volumes were down and, although most of our retail customers have completed their inventory reduction programmes, to date, there has been no sustained improvement in orders.
• The UK book publishing businesses performed well and their revenue was up 23%.
• In Co-Edition Publishing, there was another strong performance at QED, our educational publishing unit, with revenue up 81%.

Laurence Orbach, Chairman and Chief Executive, commented "Given the retail environment in the United States, our largest market, and in other large markets, the results for the period, and for the trailing 12 months to June 30, 2009, are satisfactory.

Last year's second half was particularly strong for our Co-Edition segment, which gives good visibility through its long forward order book. I'm happy to report that its prospects look generally encouraging for the balance of the year. The Publishing segment remains soft.

We have reviewed our expectations for the full year's results. To date, trading has been very subdued in our major publishing US market and currency has moved against us since the budget was prepared. The budget was prepared at an exchange rate of £1.00: US$1.46. If sterling remains at about its current level in relation to the US dollar, and trading does not improve substantially, the translation of the earnings of our overseas subsidiaries will fall below budgeted expectations; and the co-edition segment, with the overwhelming part of its business in currency, will be affected in a similar manner. We expect the effect on earnings per share to be smaller than on profits, but not materially adrift of budget, because of the minority shareholdings in certain businesses.

Of course, it's one thing to identify the problems, and define the issues. The challenge, whilst retaining a low risk model, is to make and seize opportunities. I believe that we have as good a track record as most in demonstrating that we can do this. We shall certainly continue to focus on these."

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, 2008, Quarto increased revenues by 13% to £112.7 m and adjusted EBITDA by 10% to £22.0 m. Adjusted pre-tax profit was marginally increased at £7.7 m – an eighth successive annual increase - and adjusted diluted earnings per share increased by 9% to 26.5p. Unchanged total dividends per share of 7.15p were paid.