Proposed Disposals

Milestone Group PLC
01 February 2006


For Immediate Release                                            1 February 2006

                              Milestone Group PLC
                              
                                PROPOSED DISPOSALS

                                  NEW CHAIRMAN

                              FUNDING ARRANGEMENT

Milestone Group PLC ('Milestone' or 'the Company'), the AIM listed media group,
announces the proposed disposal of its three non-wholly owned radio assets and
the appointment of a new Non-Executive Chairman.

The Company proposes to dispose of its 54 per cent. beneficial interest in
Kestrel FM Limited ('Kestrel FM') and assignment of related shareholder loans;
its 55 per cent. beneficial interest in West Berkshire Radio Limited ('Kick FM')
and assignment of related shareholder loans; and its 52 per cent. beneficial
interest in Rugby Broadcasting Company Limited ('Rugby FM'). The Company expects
to receive gross proceeds for the sale of its controlling shareholdings,
shareholder loans and net assets in these radio stations of approximately £2
million.

The sales are subject to the approval of Shareholders in the Company at an
Extraordinary General Meeting to be held on 17 February 2006 ('the EGM'). Full
details of the proposed transactions are set out in a circular to Shareholders
which is being posted today.

Additionally, Milestone is pleased to announce the appointment of John Sanderson
to the Board as Non-Executive Chairman with immediate effect.

John Sanderson is widely recognised as a leading strategy consultant advising
both listed and private media businesses in their developmental stages, having
begun his career as a leisure and media sector analyst.

John currently runs the media merger and acquisition specialist, M&C Ventures
Limited, as well as the consultancy, JFWS Limited, whose past and present
clients include Sporting Index, channel five, The Football League, United
Business Media, The Race Course Association, Close Brothers,
PriceWaterhouseCoopers, Boosey & Hawkes, Endemol UK, Vulcan Ventures, The Mill
and Brunswick Group.

John is currently the Non-Executive Chairman of ABN Holdings Limited - operator
of the African Broadcast Network television service; Eicom plc - the AIM listed
science and technology TV producer; Music Copyright Solutions plc - the AIM
listed music copyright management service provider; and Somethin' Else Sound
Directions Limited - the UK's leading independent radio producer.

John replaces former Milestone Chairman, Julian Blackwell, who resigns from the
Company with immediate effect in order to concentrate on his other business
interests.

The Company also announces that it has entered into loan arrangements with
Manchester Securities Corporation, being a connected company of Elliott
International LP and Elliott Associates LP ('Elliott'), substantial shareholders
in the Company.

The funding of £200,000 has been structured by way of an issue of loan notes of
the Company to Manchester Securities Corporation and is secured by way of a
general debenture and guarantee entered into by the Company and two of its
subsidiaries, Jazztech Limited and the Milestone Radio Company Limited.
The notes bear interest at 15 per cent. per annum and are repayable (subject to
a repayment fee of 5 per cent. of the value of the notes) out of the proceeds of
any disposal by the Milestone group of any group company and accordingly it is
anticipated that such notes will be repaid on completion of the proposed
disposals of Kick FM and Kestrel FM immediately following the EGM.

The Directors (other than Mark Levine who, as the Elliott appointee to the
Board, is deemed to be connected to the loan note holder) believe that these
arrangements have been made at arms' length and on normal commercial terms and,
having consulted with the Company's nomad Arden Partners Limited, consider that
the terms of this financing are fair and reasonable so far as Shareholders are
concerned.

Commenting on the appointment and proposed disposals, Milestone Chief Executive,
Andy Craig, said:

'Kick FM, Kestrel FM and Rugby FM are all radio stations which Milestone has
operated for some time and, whilst successful and popular amongst their
audiences, their continued operation by the Company has taken up considerable
management resource. This proposed reorganisation will enable the Company to
focus on exploiting the more significant growth potential identified within its
wholly owned local media assets.

'Your Board, under its new Chairman, will be discussing with its shareholders
and advisers the ongoing strategy of the Company, in line with its duty to
explore all opportunities to maximise shareholder value. The Board is very
pleased to welcome to the Company someone of John Sanderson's vast experience in
the development of entrepreneurial media businesses and look forward to working
under his guidance.

'On behalf of the Board, I would like to thank our departing Chairman, Julian
Blackwell, for his work and for his ongoing support for the Company.'

John Sanderson added:

'I am excited about joining Milestone as a time when local publishing, local
radio and local television are all converging through new digital applications.

'I am looking forward to working with management to explore the most appropriate
opportunities to ensure Shareholders benefit from the popular local brands which
Milestone has established. I look forward to meeting Shareholders at the
Extraordinary General Meeting and assure you of my commitment to your interests
as your new Chairman.'

Proposed sale of interests in Kestrel FM, Kick FM (the 'Kick/Kestrel Disposals')
and Rugby FM (the 'Rugby Disposal')

The Company has conditionally agreed to sell the 54 per cent. beneficial
interest which it holds in Kestrel FM and the 55 per cent. beneficial interest
which it holds in Kick FM, to Provincial Broadcasting Companies Limited
('Provincial') which is a wholly owned subsidiary of Tindle Radio Holdings
Limited. The aggregate consideration is approximately £1.084 million (the
'Consideration'), approximately £1.024 million of which is payable in cash upon
completion of the Kick/Kestrel Disposals ('Completion') with a further £60,000
of deferred consideration payable on 30 September 2006. In addition, Provincial
has agreed to pay the Company and other group companies approximately £278,000
in respect of the assignment of outstanding loans due to them from Kestrel FM
and Kick FM.

The Company is also finalising terms for the sale of its 52 per cent. beneficial
interest which it holds in Rugby Broadcasting Company Limited ('Rugby FM') to CN
Group Limited ('CN Group') for a consideration of approximately £645,000 subject
to the completion of satisfactory due diligence, payable in cash upon completion
(the 'Rugby Consideration').

As at 30 January 2006 (being the latest practicable date prior to publication)
the closing mid market price of a Milestone Ordinary Share was 2.63p,
capitalising the Company at approximately £0.7 million. In view of the
Consideration and the associated assignments of outstanding loans and the Rugby
Consideration relative to the market capitalisation of the Company, both the
Kick/Kestrel Disposals and the Rugby Disposal require the prior approval of
Shareholders under the AIM Rules at the EGM.

Certain Shareholders and the Directors have irrevocably undertaken to vote in
favour of the resolutions to be proposed at the EGM (the 'Resolutions') in
respect of an aggregate of 12,134,539 Ordinary Shares (representing
approximately 44 per cent. of the issued share capital of the Company).

Reasons for the disposals

In June 2005, the Company announced a comprehensive review of ongoing strategy,
which was to rationalise its portfolio of operating assets and pursue all
avenues to increase shareholder value. This quickly led to the sale of
Milestone's minority investment in Reading Broadcasting Company Limited in
August 2005.

Kick FM, Kestrel FM and Rugby FM all operate in relatively small towns with
total adult populations under 100,000 (based on official Ofcom Measured Coverage
Areas, or total adult populations under 150,000 based on RAJAR Total Survey
Areas). The headline operating results for the companies are summarised below.

   •In the unaudited management accounts for the year ended 30 September
    2005, Kick FM made a loss of £118,712 on turnover of £343,499 (2004: loss of
    £93,743 on turnover of £427,576).


   •In the unaudited management accounts for the year ended 30 September
    2005, Kestrel FM made a loss of £10,385 on turnover of £514,924 (2004:
    profit of £81,348 on turnover of £605,855).


   •In the unaudited management accounts for the year ended 30 September
    2005, Rugby FM made a profit of £6,033 on sales of £466,213 (2004: loss of
    £47,234 on sales of £431,621).

Provincial are existing minority shareholders in Kick FM and Kestrel FM.
Milestone has agreed to enter into a continuing services agreement with
Provincial, whereby Milestone will continue to provide programme management and
accounting services to both Kick FM and Kestrel FM for a period of at least 2
months following Completion. In addition, Milestone and Provincial have entered
into a further agreement whereby both Kestrel FM and Basingstoke Observer
Limited, the Milestone-owned local newspaper for North Hampshire, will continue
to cooperate on joint-promotions and advertising for a period of 12 months
following Completion.

The Directors consider that the sale of Milestone's non-wholly-owned radio
assets in Berkshire, Hampshire and Warwickshire will enable management to focus
on realising the significant growth potential within the Company's wholly owned
local media assets, primarily concentrated within the county of Oxfordshire.
Following Completion, the Company will continue to 100 per cent. own its two
publishing companies; Courier Newspapers (Oxford) Limited and Basingstoke
Observer Limited; and the two broadcasting companies; Passion Radio (Oxford)
Limited and Oxford Broadcasting Limited (trading as SIX TV).

Although the Directors expect the Rugby Disposal to proceed upon the terms
offered, if the Company is not successful in finalising terms for the sale of
Rugby FM to CN Group, who are existing minority shareholders in Rugby FM, it
intends to offer its shares to third parties on similar terms.

The Directors intend that the proceeds from the Kick/Kestrel Disposals and the
Rugby Disposal will initially be used to reduce Company debt and for general
working capital purposes. However, the Directors will be discussing with
shareholders and advisers the ongoing strategy of the Company, including the
best use of these funds, in line with the duty to consider all options to
maximise shareholder value.

The Kick/Kestrel Disposals

Under the terms of a share purchase agreement dated 1 February 2006 entered into
between Milestone Pictures Limited ('Milestone Pictures') (1) The Milestone
Radio Company Limited ('Milestone Radio') (2) (which are both wholly owned
subsidiaries of the Company), the Company (3) and Provincial (4), Milestone
Pictures and Milestone Radio have conditionally agreed to sell the aggregate 54
per cent. interest which they hold in Kestrel FM for approximately £594,000 (the
'Kestrel Share Purchase Agreement'). In addition the Company and related group
companies have agreed to assign the outstanding loans due to them in
consideration for the payment by Provincial of £110,000.

Under the terms of a second share purchase agreement dated 1 February 2006
entered into between Milestone Radio (1) Newbury Community Radio (Investment)
Limited (a wholly owned subsidiary of the Company) ('Newbury') (2) the Company
(3) and Provincial (4), Milestone Radio and Newbury have conditionally agreed to
sell the aggregate 55 per cent. interest which they hold in Kick FM for
approximately £490,000 (the 'Kick Share Purchase Agreement'). In addition the
Company and related group companies have agreed to assign the outstanding loans
due to them in consideration for the payment by Provincial of approximately
£168,000.

Under the terms of the Kestrel Share Purchase Agreement and the Kick Share
Purchase Agreement (together the 'Kick/Kestrel Share Purchase Agreements')
approximately £564,000 and £460,000 respectively of the Consideration is payable
in cash upon Completion. A further £30,000 of deferred consideration is payable
in respect of each of the Kick/Kestrel Disposals on 30 September 2006. The
consideration in each case is subject to an adjustment (upwards or downwards)
based on the net asset value of the relevant company upon Completion.

The Kick/Kestrel Share Purchase Agreements are inter-conditional and in addition
are conditional upon, inter alia, the passing of Resolution 1. In each case
certain warranties are being given by the Company and the relevant selling group
companies to Provincial. The maximum aggregate liability of the relevant selling
group companies (which in each case includes claims in respect of tax) is capped
at the value of the consideration actually paid by Provincial under the relevant
Share Purchase Agreement. Under each of the Kick/Kestrel Share Purchase
Agreements, certain of the obligations of the relevant selling group company
under such agreement have been guaranteed by the Company.

Provincial has the right to terminate the relevant Kick/Kestrel Share Purchase
Agreement prior to completion if the relevant selling group company is in
material breach of any of the warranties or any other material term of the
relevant Kick/Kestrel Share Purchase Agreement.

Under the terms of each of the Kick/Kestrel Share Purchase Agreements various
restrictive covenants have been given by the Company and the relevant selling
group companies in favour of Provincial.

The Rugby Disposal

Under the proposed sale, Milestone Pictures and Milestone Radio will dispose of
their shareholdings in Rugby Broadcasting Company Limited (comprising in
aggregate 208,052 ordinary shares in Rugby FM and representing 52 per cent. of
the issued share capital of Rugby FM) for £644,961.20 to CN Group. This
represents a price of £3.10 a share and the offer is conditional, inter alia,
upon CN Group carrying out satisfactory due diligence and upon the acceptance of
these terms by all other existing shareholders in Rugby FM. The Company and
Milestone Radio will give certain warranties to CN Group and their maximum
aggregate liability is capped at the value of the Rugby Consideration. The sale
is not inter-conditional to the completion of the Kick/Kestrel Share Purchase
Agreements and it is intended that it will be completed as soon as possible
after the EGM and in any event by 24 February 2006.

The EGM

The EGM has been convened for 9 a.m. on 17 February 2006 at the offices of
Lawrence Graham LLP, 190 Strand, London WC2R 1JN at which the Resolutions will
be proposed to approve the Kick/Kestrel Disposals and the Rugby Disposal in
accordance with Rule 15 of the AIM Rules. The Resolutions will be proposed as
ordinary resolutions.

Recommendation

The Directors consider that the disposals are the best interests of the Company
and its Shareholders as a whole and accordingly recommend that Shareholders vote
in favour of the Resolutions to be proposed at the EGM, as they have irrevocably
undertaken to do so in respect of the Ordinary Shares in which they are
beneficially interested.

For further information:

Milestone Group                                 Tel: [phone]
Andy Craig/Daniel Cass

Arden Partners                                  Tel: [phone]
Richard Day

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



                             REGULATORY INFORMATION


This announcement contains certain information required to be disclosed in
respect of Mr Sanderson's appointment in accordance with Schedule Two paragraph
(g) of the AIM Rules:

Full Name: John Frederick Waley Sanderson

Occupation: Management Consultant

Date of Birth: 10 September 1954

Current Shareholding in the Company: 0

Current Directorships:
ART VPS Ltd
Audio Network plc
Butler and Tanner Ltd
Cartezia Ltd
Echo Publishing Ltd
JFWS Ltd
Location Network Ltd
Merlin Board Ltd
Netherton Family Ltd
Pilotlight
Plain English Group Ltd
Screen Digest Ltd
Whetstone Group Ltd
Workaide Ltd

Current Directorships (Non-Executive Chairman):
ABN Holdings Ltd
Eicom plc
Music Copyright Solutions plc
Somethin' Else Sound Directions Ltd

Past Directorships (in the previous 5 years):
Bubble Group Ltd
East India Company Ltd
Flippa.com Ltd (in liquidation)
Gamingking plc
Hydra Associates Ltd
Hydra Associates Financial Services
Hydrama Media Ltd
MA Media Partners Ltd
Mission Today Ltd (in liquidation)
Muzantiks Ltd
Personal News Network
PlanetRecruit Ltd
Sanderson Family Nominees
SRU Ltd
The Business Information Zone Ltd
the hotgroup plc
Xtempus Ltd

John Sanderson has confirmed that there are no other disclosures required
pursuant to Schedule Two paragraph (g) of the AIM Rules.




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