Character Regulatory News (CCT)

Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Friday, 20 August 2010

The Character Group plc

Notice of General Meeting

Proposal to Grant the Company an Authority to Buy-Back Shares

The Character Group plc (the "Company" or "Group") has today posted a circular to its shareholders convening a General Meeting to be held at the offices of Duane Morris, 2nd Floor, 10 Chiswell Street, London, EC1Y 4UQ on Thursday, 9 September 2010 at 11 a.m. to consider and, if thought fit, pass a resolution (the "Resolution") granting the Company an authority to buy back ordinary shares of 5 pence each in the capital of the Company ("Ordinary Shares").

Since June 2006, the Company has followed a policy of buying back its Ordinary Shares in the market, whenever the Directors felt that the share price undervalued the Group and when they considered it to be the best use of Group funds.

As at 31 August 2005, there were approximately 52.8 million Ordinary Shares in issue and today that number has been reduced to approximately 26.4 million. The Directors believe that the implementation of the buy-back programme has been a great success. Earnings per Ordinary Share are now virtually double that which they would have been had it not been for the buy-back programme. It has also, from time to time, created the opportunity for shareholders to sell Ordinary Shares into the market.

During the current financial year, the Company has continued the buy-back programme, authority for which was granted at the Company's Annual General Meeting held in January 2010 (the "2010 AGM"). This has seen a total of 8,619,000 Ordinary Shares in the capital of the Company purchased in the market for cancellation at a total cost of approximately £10,486,000 (excluding dealing costs and stamp duty). As a consequence, the buy-back authority granted at the 2010 AGM has now been fully utilised. The Directors believe that, if stock market conditions permit, a further extension of this programme will be in the interests of shareholders generally. Accordingly, the Directors are seeking a new buy-back authority for the Company before the next Annual General Meeting.

The board of Directors of the Company (the "Board") believes that this buy-back programme has been a successful strategy for the Company and a considerable benefit for shareholders as a whole for a number of reasons, namely that the buy-backs have:

● enhanced the earnings per Ordinary Share;

● returned cash to shareholders who wished to take the opportunity to liquidate some or all of their investment in the Company;

● made better use of cash generated by the Company's businesses than would otherwise have been the case;

● been conducted at times when the Board believed that the price of Ordinary Shares in the market undervalued the Company.

The Board believes that the grant of a buy-back authority, in the terms proposed by the Resolution, will enable the Company to continue to develop these benefits for shareholders generally.

As in the previous buy-back programmes, certain of the Directors (and/or their related parties) may consider selling some of their Ordinary Shares to the Company. Any sale by the Directors or their related parties to the Company in this fashion may be deemed to be a related party transaction for the purposes of Rule 13 of the London Stock Exchange's AIM Rules for Companies. In those circumstances, the Directors who are not party to such transaction are obliged to consult with the Company's nominated adviser, Charles Stanley Securities, to consider whether participation of the relevant Director(s) in any buy-back transaction is fair and reasonable insofar as the Company's shareholders are concerned.

The Resolution to be considered at the General Meeting proposes that the price at which Ordinary Shares may be purchased in exercise of this authority will be subject to a maximum of 150 per cent. of the average middle market values of an issued Ordinary Share in the five business days prior to purchase and a minimum of 5p, being the nominal value of an issued Ordinary Share.

The circular to shareholders contains a unanimous recommendation from the Directors that shareholders vote in favour of the Resolution. The Directors are interested in, in aggregate, 13,818,309 Shares (representing approximately 52.36 per cent. of the voting rights in the Company and of the issued Ordinary Shares at the date of this announcement, excluding Ordinary Shares held in treasury).

A copy of the circular, which contains further details of the proposal, is available to download on the Company's website (www.thecharacter.com). and may also be obtained from the Company Secretary: The Character Group plc, 2nd Floor, 86-88 Coombe Road, New Malden Surrey, KT3 4QS.