11 February 2009

Lees Foods plc ('Lees' or the 'Group')

Trading Update Announcement

We are pleased to report that both Lees of Scotland and Waverley Bakery achieved record levels of sales turnover for the year ended 31 December 2008; a strong performance given the current difficult economic environment. This has resulted in Group sales being in line with expectations.

We are also pleased to report that the underlying profit for the Group is in line with market expectations for the year, despite the Group having to absorb substantial raw material and power cost increases during the year. In addition the Group continues to have strong cash generation which has resulted in a reduction in net bank debt from the previous year.

Due to the administration of Woolworths, we have had to make a full provision for a bad debt, the net effect of which is £69,000. This is a one off amount but will consequently reduce the reported net profit for the year ended 31 December 2008. 

The performance of our Patisserie UK subsidiary has been disappointing in 2008, primarily due to the loss of a major customer. The Directors are considering its future position within the Lees Group and will make a further announcement in due course.

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