Acquisition

Real Good Food Company Plc (The)
20 April 2004


                                                          For Immediate Release
                                                                 20 April, 2004
                         The Real Good Food Company Plc

                      ('Real Good Food' or 'the Company')

Proposed Acquisition of Five Star Fish Limited ('Five Star Fish') and Admission
                                     to AIM


Introduction and Background

The Company announces that it has agreed to acquire the entire issued share
capital of Five Star Fish (the 'Target Group') for an aggregate initial
consideration of approximately £16.6 million, to be satisfied by the issue of
695,410 new ordinary shares, the payment of approximately £13.7 million in cash
and the assumption of Five Star Fish's existing bank borrowing liabilities ('the
Acquisition'). In addition, the vendors, the directors and a senior employee of
Five Star Fish will be granted options over 465,924 ordinary shares in the
capital of the Company at 143.8p per share. Furthermore, deferred consideration
may also become payable on the terms set out under the heading 'Principal Terms
of the Acquisition' set out below.

Under the AIM Rules, the Acquisition is subject to shareholder approval in view
of its size. A resolution will be proposed at the Extraordinary General Meeting
('EGM') to be held on 13 May, 2004 which, if duly passed, will result in the
existing AIM trading facility being cancelled and a new trading facility being
granted contemporaneously. It is anticipated that dealings on AIM in the
Enlarged Issued Share Capital will commence on 14 May, 2004 ('Admission').

Prior to completion of the Acquisition, Pieter Totte, Chairman, and John Gibson,
Chief Executive, will join the board of Five Star Fish and the Company intends
to change its accounting reference date to 31 December to coincide with that of
Five Star Fish.

Information on Five Star Fish
Five Star Fish is a supplier of high quality, added value whitefish products to
the food service sector. The directors of Real Good Food ('Directors') believe
Five Star Fish holds a market leading position in the frozen food service sector
which it achieves by continuously monitoring its quality standards, improving
processing techniques, maintaining hygiene standards and developing its staff to
achieve these objectives.

Background
Five Star Fish was incorporated in 1985, commenced trading in 1986 and operates
from purpose built premises on the Great Grimsby Business Park. Five Star Fish
has historically invested heavily in premises and processing equipment focussed
on the supply of food service products.

During the last 10 years there has been consolidation in the food service
sector. Five Star Fish has adapted to this changing market place by virtue of
its investment in premises and processing equipment which have enabled it to
consolidate its market leading position in the frozen food service sector.

Havelock Seafoods Limited, a competitor, was acquired by Five Star Fish in 1999
and Danny Burton, a director of and shareholder in that company joined Five Star
Fish following the acquisition, initially as a production director, and now
serves as joint managing director. Another competitor, Tom Darwood, was acquired
by Five Star Fish in two tranches, between 2002 and 2003.

The Directors believe that Five Star Fish has one of the best catering fish
processing units in the UK and operates this with strict processing control
resulting in a high quality product while maintaining tight cost control. Five
Star Fish is consistently investing in developing its existing lines and
bringing new products to the market.

Products
Five Star Fish differentiates its product range into seven categories: battered,
breaded, dusted, formed and speciality products, Individually Quick Frozen
fillets and goujons. The majority of its sales are products made from haddock,
plaice and cod.

Battered
Five Star Fish produces a range of battered fish products, including; cod, beer
battered cod, haddock fillets and smaller ranges of Alaskan pollock, plaice
fillets and battered filleted cod.

Breaded
Five Star Fish's breaded range includes plaice fillets, cod fillets, haddock
fillets, Alaskan pollock fillets, lemon sole fillets and whole boneless plaice.

Dusted
Dusted products include salmon escalopes, haddock products, salmon goujons and
tuna steak.

Formed
Formed products include fish cakes, sea burgers and fish fillet squares, two
rosti products, salmon and dill and Thai cod and other shaped fish products.

Speciality
Speciality products include boned kippers, vacuum packed hot smoked mackerel,
mussels in their shells, salmon fillets in hollandaise sauce, skinless boneless
salmon portions, plaice filled with prawns and mushrooms, cod nuggets,
fisherman's medley and seafood platter.

Individually Quick Frozen Fillets

These filleted products include skin on cod fillets, skinless boneless cod
fillets, skin on haddock fillets, skinless boneless haddock fillets, plaice
fillets, lemon sole fillets, hake fillets and Alaskan pollock and saithe.

Goujons

Five Star Fish produces goujons of plaice, lemon sole, cod and salmon in lime
and coriander.

Management

John Fenty, chairman of Five Star Fish, aged 43, formed Five Star Fish in 1985.
He has overseen the rapid growth of Five Star Fish since that date, working as
chairman on a full time basis.

Roy Mathews, joint managing director of Five Star Fish, aged 64, has worked in
food manufacturing for 46 years, mainly with a large publicly quoted company. He
trained as a work study practitioner where he gained knowledge of accounting and
cost accounting. He then moved into production and also gained some selling
experience as a sales representative for two years. He joined Five Star Fish in
1988 and has concentrated his efforts on developing the commercial activities of
Five Star Fish.

Danny Burton, joint managing director of Five Star Fish, aged 43, joined Five
Star Fish in 1999 as a result of the acquisition by Five Star Fish of Havelock
Seafoods Limited, where he was Managing Director. His early career was with a
major fish company, where he gained extensive experience in all aspects of fish
processing as well as purchasing raw material. He moved to Havelock Seafoods
Limited as a director, becoming managing director and a shareholder.

Andrew Smith, finance director of Five Star Fish, aged 35, joined Five Star Fish
in 1999 after qualifying as a certified chartered accountant. Prior to joining
Five Star Fish, he was in practice with its auditors, where he audited Five Star
Fish's accounts for eight years. Since joining Five Star Fish, he has played a
major role in its acquisition strategy and is responsible for the accounting and
reporting functions of the Five Star Fish group.

Bill Ridgway, Sales and Marketing Director, aged 46, joined Five Star Fish in
1994. Prior to joining Five Star Fish he worked as a general manager of William
Jackson & Sons Plc (a Hull based food service company trading under the name of
Tryton Foods) between 1988 and 1994.

Financial History

                                        Year Ended 31 December

                                  2001                2002                2003
                                     £                   £                   £

Turnover                    16,514,046          17,043,144          19,081,896

Gross Profit                 6,550,874           6,994,379           7,559,385

Gross Margin %                   39.67%              41.04%              39.62%

Operating Profit*            2,310,000           2,166,697           2,608,730

Operating Margin %              13.99%              12.71%              13.67%

*before non-trading expense adjustments

Current Trading of Five Star Fish

Sales in the first two months of the current financial year are slightly below
Five Star Fish's management expectations owing to the recent poor weather, an
increase in consumer spending during the festive season and a subsequent decline
in spending in the new year. This has been mitigated by improvements in gross
margin as a result of favourable raw material prices and efficiencies achieved
in product processing.

Sales by Five Star Fish during March and the gross margin for the first quarter
are ahead of budgeted levels. During the second quarter Five Star Fish's
management team expects to gain several new significant customers and for the
financial performance of Five Star Fish to improve as a result.

At present, the cost of raw material supplies, particularly cod and haddock, is
very favourable and Five Star Fish's management team has taken steps to secure
cod supplies on favourable terms for the remainder of the financial year so that
further margin improvements can be achieved.

Background to and reasons for the Acquisition
The Company was incorporated in February 2003 to build, through acquisition and
organic growth, a food group focused upon the supply of chilled, frozen and
ambient products to food retailers and the food services market. The Board
recognised that an opportunity existed to acquire companies or businesses which
are considered to be non-core operations of larger food groups and private
companies which require investment in management or infrastructure.

In July 2003 the Company completed the acquisitions of Hayden's Bakeries
Limited, Eurofoods Plc, Cool Fresh Distribution Limited and Cakes.co.uk Limited.

On 26 September, 2003 the Company's ordinary shares were admitted to trading on
AIM following a placing of 1,090,909 Ordinary Shares at 110 pence per share to
raise £1.2 million (before expenses).

Following admission to AIM, the Company raised a further £10 million (before
expenses) in December 2003 by way of a placing of 7,407,407 Ordinary Shares at
135 pence per share.

At the time of the latter placing the Directors were aware of a number of
companies which represented potential acquisitions and following the receipt of
the placing funds have been actively considering those opportunities which meet
the criterion set out above.

Following their deliberations, the Board selected Five Star Fish as their
preferred acquisition target and appointed advisers to commence legal and
financial due diligence. Following the completion of this due diligence, the
Board consider that Five Star Fish possesses qualities which justify the Board's
recommendation of the Acquisition to Shareholders.

The key qualities can be summarised as follows:

   • Five Star Fish has strong operating cashflow;


   • The Acquisition will enable Real Good Food to consolidate its position
    in the food service sector. In addition, Five Star Fish's expertise in this
    sector will complement certain of the Company's existing activities in other
    parts of this market;


   • Five Star Fish's future growth will be facilitated by being part of a
    larger, broader based food group;


   • The Directors anticipate synergies will be achieved in the areas of
    production, administration, project management and distribution and measures
    will be put in place to maximise these following completion of the
    Acquisition; and


   • In the longer term, the Directors of Real Good Food intend to apply Five
    Star Fish's processing expertise across the manufacturing activities of Real
    Good Food in order to further improve operating margins. The Directors also
    expect to be able to develop cross selling opportunities through the
    customer base of the Enlarged Group.

Principal Terms of the Acquisition
The Company is proposing to acquire the entire issued share capital of Five Star
Fish for an initial aggregate consideration of approximately £16,600,000 payable
as to £13,719,218 in cash, the assumption of Five Star Fish's estimated
borrowing liabilities as at 31 January, 2004 of £1,903,782 and the balance to be
satisfied by the issue of new Ordinary Shares, which will rank pari passu in all
respects with the existing Ordinary Shares. In addition, the vendors, the
directors and a senior employee of Five Star Fish will be granted options over
465,924 ordinary shares in the capital of the Company at 143.8p per share.

Furthermore, the vendors may receive deferred consideration up to a maximum of
£4,000,000, to be satisfied in cash.

The calculation of the deferred consideration is dependent upon the adjusted
profit before interest and taxation of the Target Group ('EBIT') for each of the
two years ending 31 December, 2005. The deferred consideration is calculated as
follows:

a further payment will be due to the vendors equal to 6 times EBIT for the year
ending 31 December, 2004 less £17,000,000 as adjusted pursuant to the terms of
the Acquisition Agreement (up to a maximum deferred consideration of
£3,000,000).

where EBIT for the year ending 31 December, 2004 exceeds £3,333,333 and EBIT for
the year ending 31 December, 2005 exceeds the previous years EBIT, then a
further payment will be due to the vendors equal to 6 times the amount by which
EBIT for the year ending 31 December, 2004 exceeds £3,333,333 (up to a maximum
deferred consideration of £1,000,000).

A further payment will be made to the vendors, as a deferred working capital
adjustment, of a sum not exceeding £1,081,886 in cash to reflect the excess
working capital in the Target Group as at 31 January 2004.

The initial cash consideration will be satisfied as to £8,000,000 from the
Company's existing cash resources and the balance from banking facilities which
are currently being negotiated. Any deferred consideration payable will be
satisfied from operating cash flows and such banking facilities.

The Acquisition agreement is conditional, inter alia, on the passing of a
resolution to be proposed at the EGM, confirmation of lending facilities from
the Company's bankers to finance the Acquistion being obtained and Admission.

Current Trading of the Company
Haydens Bakeries
Sales to major customers, Waitrose and Marks & Spencers, were ahead of the
Board's expectations in the weeks leading up to Christmas, with a record level
being achieved in the last full week before the holiday period. Since the start
of the year the Company has taken steps to bring labour costs in line with
expected sales volumes and significant progress has been made in raw material
control. In addition, capital expenditure budgeted for the first quarter of 2004
is expected to improve operating margins further.

The outlook for volumes in the medium term is positive as specific developments
with the Company's largest customers are expected to come on stream in the
spring and summer of this year. The acquisition of 19 additional stores by
Waitrose as part of the sale of Safeway stores by Morrison, announced as
representing 20 per cent. additional floor space for Waitrose, will
significantly impact upon sales during the remainder of 2004. During March 2004,
Haydens Bakeries also received confirmation of new product listings with Marks &
Spencer.

Weekly turnover is currently running at £280,000 which represents an increase of
38 per cent. compared with the first week of January and is ahead of the Board's
expectations.

Eurofoods/Cool Fresh

While sales to the Company's largest customer Caffe Nero are in line with the
Board's expectations, Eurofoods has agreed to terminate a supply contract 3
months ahead of its planned termination date in order to replace those sales
with sustainable higher margin business, which has now started to flow through.

Weekly turnover is currently running at £128,000 which represents an increase of
68 per cent. compared with the first week of January and is in line with
management expectations.

In addition, in February and March 2004, new business has been agreed which is
expected to generate further annualised sales in excess of £3 million: this
would represent an increase in weekly turnover of an additional £60,000.

The Company has appointed an experienced divisional managing director to this
division who, while progressing with the cost control programme initiated by the
Board since the acquisition in July 2003, has already generated a number of new
business opportunities.

Seriously Scrumptious

Following the closure of the old sites in Glastonbury and the commissioning of
the new factory nearby, the Board has focused on rationalising the customer base
and the product range of this division. This has now been completed and
management changes have been implemented. The new team is now refocusing the
business and workforce towards those product ranges that generate the highest
margins.

The Directors expect to receive final technical approval from the British Retail
Consortium later this month. This will allow the unit to act as a production
facility for major retailers and is expected to lead to increased sales from the
group's customer base and provide cross-selling opportunities throughout the
Company's divisions.

Directors and Senior Management of the Group
Directors
Pieter Willem Totte (Non-executive Chairman), aged 53, has considerable
knowledge of the food sector and has acted as a corporate finance adviser in a
large number of transactions within the food industry over the last 20 years and
more recently has been retained as an adviser to various companies operating in
the food sector including Glisten Plc, Finsbury Food Group Plc and Napier Brown
Holdings Limited.

John Frederick Gibson (Chief Executive), aged 52, has spent his entire working
life in the food industry. He has been employed in both sales and operational
roles for a number of the UK's leading food producers including Grand
Metropolitan, Unigate Plc (renamed Uniq Plc) and Muller UK Limited. Since 1998
he has worked as chief executive officer or chief operating officer for a number
of smaller unquoted and publicly quoted companies including Elizabeth the Chef
Limited and S Daniels Plc, several of which have been in turnaround situations.
He has also worked with several companies which have been engaged in acquisitive
expansion programmes.
James Campbell Mitchell (Non-executive Director), aged 54, was formerly managing
director of Eurofoods and Nicholas & Harris Limited (the former holding company
of Eurofoods). He has over 30 years of experience in the food sector during
which time he has established trading links with many of the major retailers. He
has a strong management background with companies who specialise in the
manufacture of high quality cakes, prestige bakery goods and allied products and
is recognised as one of the leading developers of the quality celebration cake
market in the UK.

Senior Management
Lee Camfield (Financial Controller), aged 36, qualified as a management
accountant in 1991. He has held a number of financial appointments with food
manufacturing companies including Coca-Cola & Schweppes Beverages Limited, The
Cheese Company Limited, H.J Heinz Limited and more recently Golden West Foods
Limited. Positions held have included group financial controller, finance
controller and business planning and development manager.

Andrew Pocock (Divisional Managing Director Eurofoods/Cool Fresh), aged 43, has
spent all of his working life in the catering trade. He has held various
positions including catering and camp services manager for a major American
petrol chemical company in Sudan and Gabon and cost accountant with the Sheraton
Gulf Chain of hotels in Qatar and Bahrain. In 1988 he set up the The Sandwich
Box Limited, a supplier of sandwiches and freshly prepared food, where he grew
annual sales to approximately £6 million before selling the business in 2000 to
Go Foods Limited. Following the disposal he remained a director of Go Foods
Limited before joining the Company in February 2004.

Irrevocable Undertakings
The Company has received irrevocable undertakings from certain Directors and
Menton Investments Limited to vote in favour of the resolutions to be proposed
at the EGM in respect of an aggregate of 2,511,567 existing Ordinary Shares
representing 19.84 per cent. of the existing Ordinary Shares.

Recommendation
The Directors believe that the Acquisition is fair and reasonable, is in the
best interests of the Company and the shareholders and unanimously recommend
that you vote in favour of the resolutions to be proposed at the EGM as they
intend to do in respect of their aggregate shareholdings of 761,567 existing
Ordinary Shares, representing approximately 6.02 per cent. of the existing
Ordinary Shares.

Copies of the document will shortly be posted to shareholders and are available
from the offices of John East & Partners Limited, Crystal Gate, 28-30 Worship
Street, London EC2A 2AH.

Further Enquiries

The Real Good Food Company Plc
Pieter Totte, Chairman                                   Tel: [phone]           
John Gibson, Chief Executive                             Tel: [phone]
                                                                        
J M Finn & Co.
Sam Smith                                                Tel: [phone]
                                                                        
John East & Partners Limited
Simon Clements                                           Tel: [phone]
                                                                          





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