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Electronics Production | January 26, 2006

Character sells division to Flextronics

The Board of The Character Group plc announces that contracts have today been exchanged with Flextronics Sales and Marketing (A-P) Limited for the sale of the Group's Digital business, trading under the name World Wide Licences Limited (“WWL”).
The consideration for the Digital business is US$16 million for the goodwill and an additional sum for the closing inventory, which will be determined on completion of the transaction, which is expected to be in February 2006.

WWL, based in Hong Kong, is a wholly owned subsidiary of the Group and is engaged in the design, development and manufacture of digital products, which principally consist of digital cameras in addition to managing the Hong Kong and Chinese logistics for the overall Group. The Group shall continue to have a presence in Hong Kong which together with its new facilities in Shenzhen, China will enable the Group to continue the growth of its Toys, Games and Gifts business.

Commenting on the proposed sale of the Digital business, Richard King, Chairman of the Group, said: “The sale of the Digital business will allow the Group to focus entirely upon the development of its toys, games and gifts business which has, and continues to have, a number of very exciting opportunities to build on our strong performance to last Christmas.”

“The Directors also consider that a sale is a better option for the Group than a de-merger, which was previously under consideration.” “The Board is confident that Flextronics is uniquely placed to develop the digital business to a far higher level than Character could achieve in the same timescale.” “The proposed sale of the Digital business is believed to be in the best interests of the Group's shareholders but, as importantly, it gives more opportunity and future development for the employees within WWL who have played a significant role in developing the business to date.”
“We are delighted that The Character Group plc has accepted our offer to purchase its digital business” stated Peter Tan, President and Managing Director of Flextronics Asia.

Mr Tan added: “WWL's talents will provide us with an exciting opportunity to further enhance our capabilities that further support our penetration into the consumer products market”.

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