grouping by the first char

This is very fundamental but i'm not having much luck in finding out the
answer.
I need to be able to sort, then group based on the 1st character of the
element.
example:
<things>
<thing>bbb<thing>
<thing>aaa<thing>
<thing>abc<thing>
<thing>aab<thing>
<thing>bad<thing>
<thing>baa<thing>
<thing>cca<thing>
<thing>zzz<thing>
</things>
and produce some html so that a <br> occurs when the 1st char changes.
It should "start" with the default being "a" for grouping, and then
detect that the 1st char change and insert the <br>
I've seen the Muenchian grouping, but I don't know if that exactly
applies to this. Its just a simple one-pass to produce the doc.
thanks
-stuart