Proposed Disposals

Milestone Group PLC
04 August 2006


For Immediate Release                                              4 August 2006


                              Milestone Group PLC

                               PROPOSED DISPOSALS


AIM-listed Milestone Group PLC ('Milestone' or 'the Company') today announces
the proposed disposal of its publishing division for a cash consideration of
over £1m. Details of the proposed transactions are set out in a circular to
Shareholders which is being posted today.


Milestone Chief Executive, Andy Craig, said:


'Following a comprehensive review of strategy, the Board is pleased to recommend
to Shareholders the acceptance of an offer for its loss-making publishing
division. Milestone is proud to have developed local publishing brands that are
well respected by their readers and advertisers. Whilst the Board continues to
believe in the concept of cross media cooperation in local markets, it
recognises that the current advertising climate is proving challenging to a
number of much larger media groups than Milestone.


'Following completion of the proposed disposals, the Company will be a listed
vehicle with significant cash reserves and an ongoing television division, which
now operates with a very low overhead. Overall, the Board believes that the
recommended disposals reflect a fair price for the group's local publishing
assets in the current climate and protect the interests of Shareholders and
staff across the group. The Board intends to consult widely with Shareholders on
how best to continue to maximise shareholder value from the newly streamlined
group's cash and other assets.'


Proposed sale of the entire issued share capital of Courier Newspapers (Oxford)
Limited and Basingstoke Observer Limited (together the 'Disposals')


The Company Board has agreed terms, subject to contract, due diligence and the
approval of Shareholders, for the disposal of the entire issued share capitals
of Courier Newspapers (Oxford) Limited ('CNL') and Basingstoke Observer Limited
('BOL') to Letterbronze Limited ('Letterbronze'). The aggregate consideration is
approximately £1,025,000 (the 'Consideration'), approximately £775,000 of which
is payable in cash upon completion of the disposal of CNL and £250,000 on
completion of the sale of BOL. The Disposals will be inter-conditional and it is
intended that the Disposals are completed simultaneously on 21 August 2006 or as
soon as possible thereafter ('Completion').


As at 2 August 2006, the closing mid market price of the Company's shares was
4.38p, capitalising the Company at approximately £1,210,000. In view of the
Consideration relative to the market capitalisation of the Company, the
Disposals require the prior approval of Shareholders under the AIM Rules at an
Extraordinary General Meeting (the 'EGM'), notice of which is set out at the end
of the circular which is being posted to Shareholders today.


Certain Shareholders and Directors have irrevocably undertaken to vote in favour
of the resolution to be proposed at the EGM (the 'Resolution') in respect of an
aggregate of 10,411,841 ordinary shares (representing approximately 37.7 per
cent. of the issued share capital of the Company).


Reasons for the Disposals and use of proceeds


In its interim results statement released 30 June 2006, the Board announced that
a number of parties had indicated strong interest 'in acquiring some or all of
the group's assets' and stated that it hoped to be 'in a position to report back
to shareholders in the near future.'


The Board has consistently stated, since June 2005, that it will maintain a
continuous review of strategy with a view to exploring all opportunities to
maximise shareholder value. In recent months, Milestone has disposed of its
controlling interests in four radio stations (only one of which was wholly
owned), successfully achieving an aggregate consideration of approximately
£2,300,000.


Milestone has continued to operate its wholly-owned publishing and television
divisions. However, the Board believes that the current advertising climate has
made it challenging for a small publisher of free newspapers to operate
independently of long term financial support. The group's publishing division
has underperformed management expectations and has seen revenues decline over a
number of years. The Directors believe that additional investment is likely to
be required to significantly develop the assets, expand the operation and move
the business to profitability.


Through CNL and BOL, the Board is pleased to have been able to develop strong
local publishing brands that have attracted a wide range of interest from a
number of companies.


From its Abingdon base, CNL publishes:


   •Courier Journal series and Oxford City Journal, Oxfordshire - newspapers
    distributed via a mixture of door-to-door delivery and through dispensers in
    local outlets with a total weekly print run of approx. 77,000
   •Auto Weekly, Oxfordshire - a motors supplement distributed as part of the
    Courier Journal series with a weekly print run of approx. 77,000
   •Property Weekly series, Oxfordshire and West Berkshire - a property paper
    distributed via a mixture of door-to-door delivery and through dispensers in
    local outlets with a total weekly print run of approx. 75,000, together with
    an associated website
   •Oxfordshire Living, a monthly magazine for Oxfordshire, as well as
    occasional special or contract publications such as Good Restaurant Guide,
    Breakout and West Berkshire News


From its Basingstoke base, BOL publishes:


   •Basingstoke Observer, North Hampshire - a newspaper distributed via
    dispensers in local outlets with a total weekly print run of approx. 25,000

The sale of CNL and BOL will complete the strategic review of Milestone's publishing 
division which, in the twelve months ended 30 September 2005, made consolidated 
losses of £0.9 million on sales of £2.9 million as set out below:


   •CNL made an operating loss of £762,000 on turnover of £2,332,000 (2004:
    loss of £147,000 on turnover of £2,998,000). In the unaudited management
    accounts for the nine months ended 30 June 2006, CNL made a loss of £379,000
    on turnover of £1,497,000


   •BOL made an operating loss of £152,000 on turnover of £600,000 (2004:
    loss of £103,000 on turnover of £768,000). In the unaudited management
    accounts for the nine months ended 30 June 2006, BOL made a loss of £115,000
    on turnover of £340,000


Having considered a range of options, the Board believes it is in the best
interests of Shareholders for Milestone to realise the value of the group's two
publishing companies, disposing of the companies to Letterbronze which is the
party that has most clearly expressed a commitment to complete rapidly on the
proposed transactions.


It is intended that Completion will take place as soon as possible after the EGM
on 21 August 2006. However, if, for whatever reason, it appears that there may
be any delay in completion of the Disposals, the Board reserves its right to
discuss with third parties disposals upon similar terms to those that have been
offered by Letterbronze.

The sale of CNL will represent a non-cash loss of approximately £950,000 to the 
Company in respect of a write down of unamortised goodwill. The sale of BOL will 
represent a non-cash loss of approximately £230,000 to the Company in 
respect of a write down of unamortised goodwill.

Following Completion, Milestone's sole operating business will be its wholly-owned 
television division, with two channels operating under the 'SIX TV' brand in Oxford 
and Southampton.


The proceeds from the Disposals will be used, in part, to meet the costs of
restructuring the Company following Completion and for general working capital
purposes. However, it is the intention of the Directors that a significant
proportion of the proceeds will be retained, either to be returned to
Shareholders or to be re-invested in developing new businesses. The Board is
considering and will be discussing with its shareholders and nominated adviser,
Arden Partners PLC, the ongoing strategy of the Company, including the best use
of these funds, in line with its duty to consider all options to maximise
shareholder value. This will be done under the chairmanship of John Sanderson,
the Company's non-executive chairman and independent director.


The Disposals - principal terms


The principal terms for the proposed Disposals are as follows:


Under the proposed terms of the first share purchase agreement Tri Media
Publishing Limited ('TMP'), a wholly owned subsidiary of the Company, will sell
the entire issued share capital of CNL for £775,000 payable on Completion. The
agreement will be conditional upon the Company waiving any outstanding loans due
to it or any related group companies.


Under the proposed terms of the second share purchase agreement TMP will sell
the entire issued share capital of BOL for £250,000 payable on Completion. The
agreement will be conditional upon the Company waiving any outstanding loans due
to it or any related group companies.


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 Disposals will be inter-conditional and each share purchase agreement will,
inter alia, be conditional upon the passing of the Resolution. In each case
certain warranties will be given by TMP and the Company to Letterbronze. The
maximum aggregate liability of TMP and the Company (which in each case includes
claims in respect of tax) will be capped at the value of the consideration
actually paid by Letterbronze under the relevant share purchase agreement. Under
each of the share purchase agreements, certain of the obligations of TMP will be
guaranteed by the Company.


Under the proposed terms of each share purchase agreement various restrictive
covenants will be given by the Company and TMP in favour of Letterbronze.


The Company will make an announcement as soon as possible after share purchase
agreements in respect of the Disposals are signed.


Extraordinary General Meeting


The EGM has been convened for 9.00 a.m. on 21 August 2006 at the offices of
Lawrence Graham LLP, 190 Strand, London WC2R 1JN at which the Resolution will be
proposed to approve the Disposals in accordance with Rule 15 of the AIM Rules.


Recommendation


The Directors have recommended that Shareholders vote in favour of the
Resolution to be proposed at the EGM.


For further information


Milestone                                         Tel: [phone]
Andy Craig/Daniel Cass

Arden Partners                                    Tel: [phone]
Richard Day

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



                      This information is provided by RNS
            The company news service from the London Stock Exchange