Character Regulatory News (CCT)

Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Thursday, 9 September 2010

Embargoed: 7.00am

The Character Group plc

Trading Update

Whilst it is too early for a detailed update on profitability for the financial year which ended on 31 August 2010, we are pleased to report that sales are ahead of current market forecasts for the second half and for the year as a whole. These figures reflect the strength of our brands and were achieved during a difficult trading environment. As a result the Company expects to report a strong return to profitability for the year.

We cannot ignore the likely difficulties which the economic cycle will throw at us, however, the new financial year, which has just commenced, provides us with a great opportunity for further growth. We are fortunate that our previous focus on the development of our brands, the production and the sourcing of good value for money and exciting products has enabled us to increase our market share with our existing brands.

Sales in the new year have started well and are likely to substantially out-perform our internal forecasts for September. Hopefully, this trend will continue throughout the Christmas season.

In addition, we continue to strengthen our product and brand portfolio and expect to announce shortly the addition of a further major pre-school brand. We anticipate making further additions to our product range during the current financial year and will announce details at the relevant times.

We believe that our strong product and brand portfolio will continue to provide the Group with the opportunity to drive further growth in the current financial year.