Trading Statement

Character Group PLC
18 August 2000

THE CHARACTER GROUP PLC ('THE GROUP')

GROUP TRADING STATEMENT

The Group has continued to experience difficult trading conditions throughout
the second half of this financial year.  The results for the full year ending
31 August 2000 are therefore likely to be substantially worse than market
expectations.  Indeed, the losses experienced in the second half are unlikely
to be significantly less than those experienced in the first half.

Several factors have contributed to this disappointing performance:

-  the slower than normal uplift in August sales for Christmas as retailers
   have deferred orders;

-  lower than anticipated sales, principally due to abnormally poor weather,
   resulting in significantly lower sales of Summer goods;

-  the costs incurred in writing down and clearing excess stocks throughout
   the Group;

-  the costs associated with the relocation of Universal Concepts to
   Downpace's premises which have now been completed (headcount has been
   reduced from 50 to 9);

-  the cost of integrating Character Games into the Group;

-  the reorganisation costs of World Wide Licenses Far East (headcount has
   been reduced and a new MD has been appointed);

-  the cost of writing down the Group's Employee Share Ownership Trust; and

-  the costs of rationalising Delta Millennium Inc.

The above costs are 'one-offs' and will not be repeated.

To summarise, the Group is very disappointed by the poor performance in the
current year, which has been exacerbated by the recent poor sales of Summer
goods and deferral of orders for Christmas goods by retailers. 

However, the Group has a comprehensive range of products which has enabled it
to secure good Christmas listings.  Furthermore, it is developing products not
only for children but also teenagers and young adults.  Certain of these have
already been introduced such as a digital camera which is enjoying
considerable success in Japan.

Having undertaken a number of measures to reduce costs, the Group is now in
much better shape to enter the new financial year and enjoy the benefits of
the reinforced trading links with Giochi Preziosi S.p.A. which should emanate
from the investment by Toys Investment SA who will, subject to shareholder
approval at today's Extraordinary General Meeting, have an interest in
approximately 15 per cent. of the enlarged Group.

Enquiries:
Richard King            Character Group          0836 250150
Kiran Shah              Character Group          0956 278522
Fiona Tooley            Citigate                 020 7282 8000