Disposal

Character Group PLC
1 September 2000

 
The Character Group sells Delta Millennium to the Local Management 
 
 
The Character Group plc ('the Group') announces that, as part of its strategy
to concentrate on the Group's core activities as indicated in the statement
issued on 18th August 2000, it has sold the Group's 51% holding in Delta
Millennium (Far East) Ltd ('DMFE'), the holding company of Delta Millennium
Inc. ('DMI') based in the USA, to Mike Pahuta, one of the executive
management team of DMI. 
 
DMI was specifically established to distribute licensed computer accessories
in the United States. The Group's 51% holding is represented by 510,000
ordinary shares of HK$1 each in DMFE, the remaining 49% being owned by the
executive directors of DMI, namely, Mike Pahuta (441,000 shares) and Mark
Harris (49,000 shares). 
 
Mr Pahuta has acquired the Group's entire holding at par, with HK$10,000 paid
on completion, and the balance of HK$500,000 to be paid on 31st August 2001.
The Subscription and Shareholders Agreement dated 4th March 1998 between the
Group, Mike Pahuta and Mike Harris has been terminated. 
 
In the year ended 31st August 1999, DMFE made a loss before tax of HK$68,000
on sales of HK$62,000, whilst DMI produced a loss before tax of US$2,436,000
on sales of US$3,831,000. The net asset position at 31st August 1999 of DMFE
was HK$848,000, and US$2,245,000 negative for DMI. 
 
For the six months to 29th February 2000, DMFE made a pre-tax profit of
HK$4,361,000 on sales of HK$15,536,000, whilst DMI made a loss before tax of
US$515,000 on sales of US$3,118,000. DMI continued to make losses in the
second half. 
 
Commenting on the transaction and recent successful product launches, Richard
King, Chairman, The Character Group said: 
 
'This operation has, since the joint venture was established in 1998,
experienced a number of challenging situations, which have adversely affected
its performance and more recently this has contributed to the Group's
disappointing results in the financial year ended 31st August 2000. 
 
'We believe that it is prudent, at this stage of our recovery, to eliminate
the losses in the USA. Future sales will be made to US customers on an FOB
basis via World Wide Licenses Limited from Hong Kong, thus avoiding the risk
of stock holding and warehousing in the US.' 
  
 
'We are entering the new financial year with a strong, comprehensive range of
new and exciting products which have already enabled us to secure good
Christmas listings. 
 
'In addition, our digital camera, which is the first in our new range of
hi-tech digital products, has been successfully launched in Japan. Marketed
in this region under the 'CHE-EZ' brand, it has become the No. 2 best selling
digital camera in its first 8 weeks of sale. Here in the UK, where it is
marketed under our 'Cool-iCam' brand, we are already experiencing a very
encouraging response to the product from most of the UK major electronic
retailers. Other new products in the range are being launched to the UK
market this weekend at the ECTS show at London Olympia.' 
 
'Later this month, we shall commence distribution in the UK of 'RoboNagi' a
revolutionary interactive intelligent robot. This product is not only fun but
educational with its pre-programmed software which allows the user to teach
the robot - the more you teach it, the more it becomes able to do. 
 
'With a number of opportunities that we see ahead of us and the strong
trading link established with Giochi Preziosi, the Directors believe the
future bodes well for the Group' 
 
 
 
Exchange Rates: 
HK$ 11.3476 = £1 
US$ 1.455 = £1 
 
  
 
Enquiries: 
Kiran Shah, Group Finance Director 
The Character Group plc    Tel: [phone] 
 
Fiona Tooley 
Citigate Dewe Rogerson     Tel: [phone]