Disposal

Coral Products PLC
14 August 2007


                                 Press release

                               Coral Products PLC

                         Sale and leaseback of property

For immediate release
                                                                  14 August 2007


The board of Coral Products plc (the 'Company') announces that the Company has
today entered into a conditional agreement to sell the freehold interest in its
property at North Florida Road, Haydock Industrial Estate, Haydock, Merseyside,
(the 'Property' and the 'Disposal'). The Company will concurrently enter into a 
new lease, enabling the Company to continue to operate from most of the
Property.

Under this proposal, the Company will sell the Property for cash consideration
of £3 million to the purchaser of which £250,000 will be held in escrow as a
rental deposit for the duration of the Company's occupation of the Property.

In view of the size of the Disposal relative to the market capitalisation of the
Company, the Disposal is conditional upon the approval of shareholders. This
approval will be sought at an Extraordinary General Meeting to be convened
shortly.

Current trading and future prospects
The Directors issued an unaudited trading update to shareholders on 23rd March
2007, based on management accounts. It included the following text: 'Trading has
remained difficult and the improvement we saw towards the end of 2006 has not
been maintained in 2007. Volumes in media based packaging have reduced and
margins have continued to be affected by discounted selling prices and increases
to the cost base. Consequently the trading account for the year to 30th April
2007 will result in a loss. We are presently moving into other markets where we
are of the opinion that the future may be more predictable'.

The media markets continue to be under strain with lower margins resulting from
market over-capacity. As a result, the Company is developing and seeking out new
relationships in other markets and has a clear strategy for moving forward.

Since the publication of the above trading statement in March 2007 raw material
prices (mainly plastics) have continued to rise. However there are indications
that some raw material prices may stabilise. The Company has been revising its
selling prices upwards in response to increased raw material costs and
anticipates that this will be accepted by its customers. Furthermore the Company
has obtained new contracts for storage boxes and has developed a sub-contracting
relationship with a local company both of which are expected to increase its
sales. These new operations are at better margins than its existing media
products. The future prospects look somewhat better and the Board expects that
by the end of this financial year it will have a better outlook.

The change in emphasis of the business is expected to lead to increases in
working capital requirements as demand builds.

Background to and reasons for the Disposal
The recent trading losses have reduced the Company's cash resources and
borrowing capacity. This led the Board to consider the Company's ability to
service its debts and finance its working capital requirements. Its financial
projections indicate that the working capital needs of the business could exceed
its present facilities by the end of September 2007. Rather than remaining
dependent on the continuing availability of bank overdrafts which are repayable
on demand, the Company sought alternative finance, resulting in offers of
invoice discounting facilities being received, one of which will be accepted.
It is the nature of invoice discounting that the facility fluctuates in line
with business activity and the use of such facilities does not give the Company
as much freedom of action to develop into new markets as would be the case if it
sold the Property and had surplus cash balances to employ as the board sees fit.
The decision to sell the Property would, if approved, lead to the repayment of
all the Company's bank borrowing and leave it with a cash surplus. At the same
time a leaseback of the production facility and main warehouse will enable it to
continue its operations. The Company already rents a warehouse facility, which
has recently been empty, close to the factory and will have enough storage space
to manage without two storage areas which will not be leased back.

The Disposal is expected to generate initial gross cash proceeds of £3 million.
After estimated transaction costs and the retention of a rental deposit, the net
cash proceeds are expected to be approximately £2.6 million. No tax is expected
to be payable as a result of the Disposal.

In the context of the above, the Board gave consideration to the offer by HXRUK
II Ltd, a wholly owned subsidiary of Highcross Limited, to purchase the Property
for £3 million. 

Details of the transaction.
The Sale and Purchase Agreement with HXRUK II Ltd for the Disposal of the
Property was arrived at on a willing buyer willing seller basis after the
Property was put on the open market. This Agreement was conditional upon a
leaseback agreement enabling the Company to have occupancy for another 6 years.
The Property will be sold for a consideration of £3 million, exclusive of VAT.
An amount of £2.75 million will be paid in full in cash at completion with the
remaining £250,000 held as a rental deposit to be held in escrow for the
duration of the occupation.

The main warehouse and factory premises are to be leased back to Coral Products
plc on a 6 year lease at an exclusive rental of £270,000 per annum. The lease is
to provide for a tenant only break option at the end of the third year of the
lease, subject to a break penalty of £135,000. The lease will be held on fully
repairing and insuring terms, subject to a schedule of condition. The lease is
to be contracted out of the security of tenure provisions of the Landlord and
Tenant Act 1954 (Part II). Rights of way have been agreed for the period of the
lease.

The Property currently occupied is 110,769 square feet in total size and the
Company will lease-back 90,630 square feet of this.

Information on the Property
The property is a 4.59 acre site situated next to the A580 which connects
Manchester and Liverpool. It is situated is within 1.5 miles of the M6. The
property consists of a production plant with warehouse and offices combined
together with two further warehouses at separate buildings. The Company
currently owns the freehold title to the property.

The gross and net book value of the property as at 30th April 2006, the date of
the last audited financial statements, was £2,510,000 and £2,127,000 
respectively.

Financial effects of the Disposal and use of proceeds
The Property had an unaudited book value of £2,116,153 as at 31st October 2006
(being the date of the date of the most recently published balance sheet). The
consideration payable under the terms of the Sale and Purchase Agreement is
supported by an independent valuation of the Property dated 1 August 2007 on the
basis of an arms' length sale between a willing buyer and a willing seller at
£2.94million.

If approved, the Disposal for gross proceeds of £3 million would result in a
gain (by reference to the book value as at 31 October 2006) of approximately
£734,000 after providing approximately £150,000 for professional costs relating
to the Disposal.

The net assets of the Company are therefore expected to increase by £734,000 as
a result of the Disposal. The Company does not generate any income from the
property. The rent payable of £270,000 per annum will be partly offset by the
reductions in interest payments of approximately £160,000 and the receipt of
interest on cash deposits, until such time as the cash is employed in the
business. No additional warehouse premises are required as the Company already
leases a building which is presently empty.

The initial gross cash proceeds of the Sale are expected to be £3 million, from
which estimated transaction costs of around £150,000 will be payable. The net
cash received after providing a rental deposit of £250,000 and payment of the
first quarter's rent of approximately £67,500 (or less) are expected to amount
to approximately £2.53 million. Approximately £1.8 million will be applied to
repay borrowings and the balance of approximately £732,000 will be held on
deposit until required as additional working capital.

Quote from Chairman:
'In light of the present circumstances, the Directors confirm this disposal to
be in the best interests of the Company and should provide a better platform for
its future development'.




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