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STATEMENT FROM LEES FOODS PLC

Lees Foods Plc has confirmed today, 9th March 2009, the outcome of a review of its Patisserie UK subsidiary. As a result of the review Patisserie UK has been placed in administration with immediate effect. The Group's main businesses, operating under the Lees of Scotland and Waverley Bakery brands, are not affected and continue to trade in line with expectations.

The announcement follows a trading update issued by Lees on 11th February 2009 in which it confirmed a disappointing performance by Patisserie UK in 2008 and the resultant need for the Board to consider its future position within the Group.

The same trading update confirmed that the Group's other subsidiaries, Lees of Scotland and Waverley Bakery, achieved record sales for 2008. Underlying profits for the Group are in line with market expectations and strong cash generation has reduced Net Bank Debt from the previous year.

Attempts to sell Patisserie UK as a going concern have not proved successful in the current climate.
Given the subsidiary's loss making position, the Directors of the Group have reluctantly decided that the 
appointment of an administrator was the most appropriate action. 

The Directors also announced that Patisserie UK's problems were caused by the loss of business from its major customer, being Costa Coffee. At the time of the acquisition this business represented 75% of the Company's turnover, and within three weeks of the acquisition Patisserie UK were informed that approximately one quarter of this business was to be sourced elsewhere. In late December 2008 Costa Coffee notified Patisserie UK that it would be transferring all of its then remaining requirements from Patisserie UK to other suppliers. It has not been possible to replace this level of sales in an appropriate time frame and consequently the company is in a loss making situation.

Lees Foods plc acquired Rock Cake Ltd (the holding company of Patisserie UK) in December 2007.  The Group has served notice of a claim against the vendors of Rock Cake Ltd under the warranties contained within the acquisition agreement.

Patisserie UK currently employs 41 people at its facility in Livingston, West Lothian, engaged in the manufacture of speciality bakery and desserts. Patisserie UK's unaudited results for the 12 months to 31 December 2008 showed a loss of £20,878, with net assets being £347,935.

Raymond Miquel, Chairman and Managing Director of the Lees Group said, 'At a time when the other parts of the Group have been performing satisfactorily, it is with regret that the Board had to arrive at this disappointing decision.''

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