Coral Products Regulatory News (CRU)

2 July 2014

CORAL PRODUCTS PLC

("Coral" or the "Company")

ACQUISITION AND PLACING

Acquisition of the entire issued share capital of Tatra Plastics Manufacturing Limited

Placing of 12,592,593 new ordinary shares at 13.5 pence per share to raise £1.7 million

Appointment of Executive Director

Preliminary results update

Coral Products plc, a specialist in the design, manufacture and supply of injection moulded plastic products based in Haydock, Merseyside, is pleased to announce that it has conditionally acquired the entire issued share capital of Tatra Plastics Manufacturing Limited ("Tatra") for a consideration of £2.5 million ("Acquisition"), comprising £2.0 million to be satisfied in cash and £0.5 million to be satisfied by the issue of 3,333,333 new ordinary shares to the vendors of Tatra at a price of 15 pence per share ("Consideration Shares").

The cash consideration is being satisfied from the proceeds of (i) a placing of 12,592,593 new ordinary shares at 13.5 pence per share ("Placing Shares") by Hume Capital Securities plc with new and existing investors (the "Placing") to raise £1.7 million for Coral before expenses and (ii) £0.5 million of bank debt, comprising a term cash flow loan of £0.2 million, which accrues interest at a rate of 3.5 per cent. over base, repayable monthly over 12 months, and a commercial mortgage of £0.3 million, which accrues interest at a rate of 2.95 per cent. over base, repayable monthly over 7 years with an initial 6 month capital repayment holiday.

Tatra is one of the UK's longest established specialists in PVC and plastic injection moulding and extrusion. Based near Halifax, West Yorkshire, Tatra is an approved supplier to, and holds current contracts with, major corporations in the telecommunications and rail industries and has, for the last 5 years, been developing and manufacturing products for the fibre optic market. Tatra is the exclusive manufacturer of the Click & Fix range of plastic panel products, a lightweight, self-assembly system which was used in the construction of the stables for the London 2012 Olympics.

In the year ended 31 December 2013, Tatra's audited sales and profit before tax were approximately £3.2 million and £0.2 million respectively. The net asset value of Tatra as at 31 December 2013 was £0.9 million.

In 2014, Tatra has performed ahead of management's expectations. It is anticipated that the Company will be able to reduce Tatra's fixed costs base by utilising manufacturing capacity at the Company's facility in Haydock. The Acquisition will provide Coral with an entry into, inter alia, the rail and telecoms markets and expand Coral's range of products. Tatra is expected to be earnings-enhancing for Coral in its first full year as part of the Coral group of companies.

Pursuant to the share purchase agreement between the Company and the shareholders of Tatra ("Vendors"), the Vendors have given warranties and indemnities in favour of the Company.

Application has been made to the London Stock Exchange for the Consideration Shares and the Placing Shares to be admitted to trading on AIM and it is expected that admission will become effective and that dealings in the Consideration Shares and the Placing Shares will commence at 8.00 a.m. on 8 July 2014 ("Admission"). Completion of the Acquisition will be effective on Admission.

The issued share capital of the Company upon Admission will be 57,861,535 ordinary shares of 1 penny each. The above figure of 57,861,535 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company, under the Disclosure and Transparency Rules.

Pursuant to the terms of the Acquisition, Paul Freud, Chairman of Tatra, will be appointed as Executive Development Director of the Company with effect from Admission. Mr Freud will be responsible, amongst other things, for identifying new markets and possible further acquisitions for the Company.

Under the terms of his service agreement with the Company, Mr Freud will be employed full-time by the Company at a salary of £100,000 per annum for an initial fixed term of 24 months and will continue thereafter unless or until terminated by either party giving the other not less than 3 months' notice in writing.

Mr Freud has over 20 years of management and leadership experience in the manufacturing industry. He has been Chairman of Tatra for over 10 years and led the reorganisation and restructuring of the company from a multi-location to a single location, profitable operation.

The following disclosure on Mr Freud has been made pursuant to Schedule 2(g) of the AIM Rules for Companies.

In November 2003, Tatra Plastics Limited, a company of which Mr Freud was a director at the time, was placed into a creditors' voluntary administration. Creditors received a total of 61p in the £ prior to liquidation in July 2008.

Paul Joseph Freud, aged 48, holds the following directorships:

The Company expects to announce its preliminary results for the year ended 30 April 2014 on or around 11 July 2014 and these are expected to be in line with market expectations before exceptional items.

Joe Grimmond, Chairman of the Company, commented: "The acquisition of Tatra expands Coral's market coverage and product range, is expected to be earnings enhancing in its first year and will enhance the utilisation of the manufacturing capacity at our Haydock site."

For more information on Coral and Tatra, please visit the following websites:

www.coralproducts.com

www.tatra.co.uk

Enquiries: