Character Regulatory News (CCT)

Date: Friday 9 November 2012

Immediate Release

The Character Group plc

(the "Group" or "Company")

Trading Update

The Group is currently undertaking the final phase of the audit process for the financial year ended 31 August 2012 and expects to announce its Preliminary results in early December.

Given the abnormally difficult retail market conditions, we are pleased to report a very strong performance. We expect the results to match market expectations for the financial year and furthermore, the Company continues to have adequate working capital and currently has unutilised finance facilities.

As we entered the new financial year, we believed that our current product line up, together with our new scheduled introductions, provided us with a robust portfolio of products which would at least enable us to hold our relative position in the marketplace.

Whilst sales in September were on budget, October sales showed a steep decline. The Group now considers that it will fall materially short of its budgeted sales to Christmas and therefore, will not be in a position to achieve the market forecasts

for the financial year ending 31 August 2013.

Looking at some of the ranges in the portfolio, whilst our leading branded ranges such as Peppa Pig, Fireman Sam and Scooby Doo, for example, have performed well, third-party lines such as Zhu Zhu Pets and Squinkies saw demand fall away much faster than anticipated. We had also expected AppGear, which was thought by the trade to be one of the hottest new categories within the industry, to achieve a niche position but sales to date have fallen well short of expectations.

On a positive, within our portfolio, new scheduled 2012/13 Autumn introductions have included a broad range of toys within our successful Character Building range; one, CB Sports Stars, a football themed-range depicting many of the world's best players from a number of the English Premier League's most successful teams, although launched later than first anticipated, has made a solid start with encouraging sales. Bin Weevils, Angry Birds Star Wars and Construct-a Bugz, the latter being our own-developed concept, are being introduced to the market very late in the calendar year, but each one has great potential for material sales going forward. Indeed, our opportunity for growth internationally throughout 2013 calendar year has never been greater.

In summary, although we are now expecting the first half results of the current financial year to be disappointing, we remain optimistic that overall, with Character's stable of established branded ranges and stronger new product line up, supported by encouraging initial reactions and feedback from our customers both domestically and internationally, trading will generate stronger sales in the 2013 calendar year as a whole and provide a much improved trading position as we move into the 2014 financial year.