Trading Update

Character Group PLC
18 January 2000


Trading Update


At today's Annual General Meeting (18 January 2000) Chairman, Richard King
told shareholders:-

Sales in the first four months are down 5% as against the same period last
year. Despite this challenging start to the year, it is expected, however,
that we shall enjoy a strong second half and that the outcome for the year as
a whole will be satisfactory.

The major factors for this decline are:-

* The generally difficult trading conditions at retail.

* The under performance of the sales of the Star Wars products across the
Group where we had taken an aggressive position in line with the industry.

* Sales of computer accessories aimed at the very young proved not to be as
popular as envisaged.  Development in this area has been refocused to an older
age group and more technical products, such as digital cameras and licensed
software and additional products of a similar nature.  As a direct result the
Group will not be able to recoup approximately £1.0m in unused license fee
advances against future sales and, accordingly, this amount will be
written-off at the interim stage.

* We have also reached a position, as in many businesses, which go through
strong growth, where the old infrastructure had to be changed to enable us to
continue our profitable growth.

The re-organisation of certain subsidiaries has taken longer to achieve than
anticipated.  Although sales in the first half will not benefit from the
re-organisation, improved trading should be reflected in the second half
performances as the effects of our actions begin to come through in improved
product range, sales and profitability.

If we were to compare the anticipated results for the calendar year 2000
against those for 1999, we would expect it to show, despite poorer than
expected current trading, that the Group has re-established the pattern of
continued growth.


We also have a number of exciting opportunities for example:

* Our initial entry into the world of e-commerce in Hong Kong via our
subsidiary World Wide Licenses.  From its website www.characterpc.com it will
sell a new complete package consisting of a character licensed computer, based
on 'Hello Kitty' (an exceedingly popular character in the Far East), together
with software and accessories.  If this pilot programme meets expectations it
will be expanded to include additional licences and territories;

* The range of Pokemon licensed stationery, bas and gifts shortly to be
introduced;

* A new range of technologically advanced toys for the launch of the Toy Story
2, Dinosaurs and 102 Dalmatians movies;

* The launch of a wide range of Cartoon Network products across the Group;

* A range of toys based on the movie The Chicken Run by Aardman the creators
of Wallace and Grommitt;

* Wuvvies, a unique range of interactive soft toy.


Enquiries:

Richard King, Chairman       Fiona Tooley
Kiran Shah, Group Finance Director       Citigate Dewe Rogerson
The Character Group plc        Tel:       [phone]
Tel:       [phone]       Mobile:    [phone]
Mobiles:   0956 278522 (KS)    0836 250150 (RK)