Character Regulatory News (CCT)

Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Wednesday, 19 January 2011

Embargoed: 7.00am

The Character Group plc

("Character" or "the Group")

Major new product launch and Trading update

·; Revenues likely to be ahead by 33% in first half compared to 2010

·; Character unveils major new licensed ranges of character construction toys

The Group, through its principal trading subsidiary Character Options Limited ("Character Options"), is pleased to announce its move into the toy construction category, which is one of the most popular and fastest growing areas within the toy industry.

The new 'Character Building' range, based on licensed themes has been developed internally and will be branded under our own 'CB - Character Building' brand.

We have focused on establishing a brand offering that is designed to capture the imagination of both the consumers as well the toy market as a whole.

Character Building ranges will be released in time for Spring this year and will feature unique figures and play sets from Doctor Who and H.M. Armed Forces, two of the Group's leading licences.

The Character Building portfolio, which will be exhibited at The Toy Fair next week (Olympia, 25-27 January), will instantly stand out in the market place, as each licensed 3D micro-figure is brought to life through sculpted facial features and play sets which will be uniquely tailored to both the licence and theme.

It is anticipated that the Character Building brand will grow rapidly and become a significant factor in the continued growth of Character as a whole.

Character Group's Joint Managing Director, Jon Diver said:

"The Character Building ranges will be produced to the same high standard as our current ongoing collections, which are renowned in the marketplace for their quality and detail.

"Distinctive to the Character Building range will be the use of texture on some of the building blocks, pivotal in recreating each environment with a much more natural look. This innovative styling gives a new option to the child constructor who will now have a construction toy that has all the excitement and appeal that licensed property features can bring with them."

"This new project represents a major investment for us and we are delighted to be increasing our highly successful Doctor Who® and H.M. Armed Forces® portfolios yet further."

"In addition to the investment in product development, our commitment will also include a fully integrated launch plan to coincide with the transmission of the new Doctor Who Series 6."

Group Trading Update

At today's Annual General Meeting (11.00am, 19 January 2011) Richard King, Chairman, the Character Group will provide the following update to shareholders:

"I am pleased to announce that all the Group's key brands sold well and that sales to Christmas were very strong. Despite the set back from the inclement weather, revenues for the first six months of the current financial year (September 2010 to February 2011) are likely to increase by at least 33% against the comparable period in 2010.

"Our key brands (as detailed in the published accounts) - ZhuZhu Pets®, Kung Zhu®, Peppa Pig®, Doctor Who®, H.M. Armed Forces®, Fireman Sam®, Postman Pat®, Let's Cook® and Scooby-Doo®, - have all performed well and shall continue to be part of our product offering in 2011. These ranges will be joined by Bob the Builder, Squinkies and Character Building.

"The feedback, enthusiasm and demand to our 2011 product line up from our customers continues to be very encouraging, especially for Character Building our new construction toy range. All our lines will be exhibited at the forthcoming London Toy Fair next week.

"As we have already highlighted, the Group will continue to focus on its core strategy - developing key brands through strong innovative product introductions which are priced to sell well in the current difficult economic conditions. This will see the business exploit its current success by developing cost efficient, high quality, innovative and 'in-demand' product.

"Our business is not without its challenges but recent history indicates that, provided we continue to bring new innovative product to the market which is manufactured to a high standard and provides good value for money, we should be able to cope with the difficulties of far eastern manufacturing and currency fluctuations, whilst at the same time building our market share.

"We continue to try to become more efficient and reduce cost and, to that end, we are looking to purchase new warehouse facilities in the North of England and new office facilities in the South. Both purchases should result in a more efficient and economic operation.

"At this stage, following this strong performance of our product ranges at Christmas, we believe that the Group will continue to make good progress and deliver another solid performance in both this financial year (ending 31 August 2011) and the 2011 calendar year as a whole.

"We look forward to updating shareholders on developments at the time of publication of the half-year results for the period to the end of February 2011."

Notes to Editors

The Character Group is a designer, developer and international distributor of toys, games and giftware.

The business wasfounded in 1991 and, in 2003, the Group made a strategic decision to increase the development of its own products. Today, around 70% of all products marketed by the Group are developed in-house. A major benefit of this strategy has been the opening of international markets, with Character's products now being sold in over 30 countries worldwide.

The Character Group operates mainly in the United Kingdom and China and has offices in Surrey, Oldham, Hong Kong and Shenzhen, China. It employs around 156 people worldwide.