Trading Update

Character Group PLC
22 August 2006







Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Tuesday, 22 August 2006
                                                               Embargoed: 7.00am

                            The Character Group plc
                         ('the Company' or 'the Group')
        Designers, developers and distributors of toys, games and gifts

                        Trading Update and Board Changes

Statement by Richard King, Executive Chairman
I am delighted to announce that the Board now expects a very satisfactory finish
to the financial year ending 31 August 2006. Trading for the key month of August
has been particularly strong and is likely to result in the Group exceeding
market expectations.

In order to comply both with 'Best Practice' and to take a positive step towards
succession planning as well as the general development of the Group I have
relinquished my role of Joint Managing Director and the Board has appointed Jon
Diver as Joint Managing Director to join Kiran Shah. Jon will concentrate on the
trading activities whilst Kiran will continue to fulfill the financial role as
he has done so successfully over the past years. I will remain as Executive
Chairman of the Group.

Following the recent acquisition of a 24.1% interest in the Group's shares by 3i
plc, we are delighted that Alan MacKay has accepted our invitation to become a
Non-Executive Director of the Company with immediate effect.

Having joined 3i plc ('3i') in 1987, Alan was appointed to the Board of 3i in
1994. In 2001, he led 3i's acquisition of the Swedish listed company Atle AB and
became CEO before returning to London in 2004 where he became Managing Director
of 3i's European investment business. Prior to 3i, Alan founded, grew and sold
his own marketing services business.

Alan's appointment to the Character Group's Board broadens the Board's skills as
well as adding significant knowledge to the Board whilst also potentially
opening trading and investment opportunities.

I would emphasise, however, that we are continuing to benefit from focusing on
our core business and intend to grow organically at least for the immediate
future.

The Directors believe that the appointments mentioned above are positive moves
for the future development of the Group.

It remains the Board's stated objective to enhance shareholder value through the
repurchase of its own shares and the Directors will continue to monitor the position
and will, when appropriate, make further market purchases.

Against this background and with our order position looking robust, we expect
the new financial year commencing 1 September will continue to be strong leading
up to the Christmas season.

continued...

                                      -2-

FORMAL DISCLOSURE
The Company makes the following formal disclosure in connection with the
appointment of Mr. Mackay (aged 44) who is or has been a director or partner of
the following companies and partnership at any time in the previous 5 years:


Current Directorships                                                Appointed

ICT Technologieholding GmbH (Germany)                                 14.06.00

Technologieholding Central and Eastern European Fund NV
(Netherlands)                                                         29.12.00

Technologieholding Central and Eastern European Parallel Fund BV
(Netherlands)                                                         29.12.00

3TS Capital Partners Oy (Finland)                                     20.03.03

Former Five Years' Directorships                                      Resigned

3i Nordic Plc                                                         30.04.04

3i Investment Partner Limited                                         13.01.06

3i Finland Oy (Finland)                                               May 2004

Woodrose Invest AB (Sweden)                                         April 2004

Atle AB (Sweden)                                                    April 2004

Atle Industri AB (Sweden)                                           April 2004

Partnerships
Pan European Buy-outs 2004-06 LP                                    March 2004

Save as disclosed above, there is no other information requiring to be disclosed
under Schedule 2, paragraph (g) of the AIM Rules.

Enquiries:
The Character Group plc             Charles Stanley Securities       Citigate Dewe Rogerson Ltd
Richard King, Executive Chairman    Philip Davies / Anthony Noakes   Fiona Tooley
Kiran Shah, Group Finance Director
Tel: [phone]           Tel: [phone]        Tel: [phone]
Mobile: [phone] (RK)                                     Mobile:[phone]
        [phone] (KS)




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