Character Regulatory News (CCT)

Friday 27 July 2012

Immediate Release

The Character Group plc

(the "Group" or "Company")

Trading Update

Whilst the Directors are pleased to report that the Company's international sales have held up well in the financial year to date, UK sales are proving to be much more difficult than previously anticipated.

Retail trading conditions have remained difficult and have been further adversely affected by a number of factors and major events, namely, the Jubilee celebrations, the Euro 2012 Championship, the abnormally bad UK weather, the deepening Eurozone crisis and the on-going impact of the 2012 Olympics. The combined effect of these factors are being felt in the market generally and on Group sales in particular where we are seeing an increase in the volume of clearance sales, a reduction in normal margin sales and some retailers delaying normal stock intake.

In the Group's half-year results announcement released at the end of April 2012, we anticipated that the Group's sales for the current financial year would be more dependent than ever before on the timing of the orders placed by our major customers in July and August. In view of all the above, the Directors believe that the Group will not at this point be able to achieve its forecasts for the current financial year and, therefore, anticipate the Group's results shall be below current market expectations for the financial year ending 31 August 2012.

However, the Board believes that the Group's current product portfolio as a whole, together with its new scheduled introductions, will lead to a satisfactory outcome for the 2012 Autumn/Christmas selling season and provide a good start for the new financial year commencing 1 September 2012.