LEES FOODS PLC

 Interim Results for the Six Months Ended 30 June 2011

 HIGHLIGHTS

• Sales up 6% to £10.2m (2010: £9.6m)
• Adjusted pre-tax profit* of £505k (2010: £564k) 
• Gross Profit up 5% to £3.4m (2010: £3.2m)
• Net Cash increased to £1.1m (2010: £0.5m)

*Pre-tax profit is prior to one-off items and share based payment deductions

 Group Sales for the first six months of 2011 exceeded last year’s figures by £600k, increasing from £9.62m to £10.22m. Pre-tax profit before one-off items and share based payments for the first six-month period of this year was £505k compared with last year’s figure of £564k.

 Clive Miquel, Chief Executive commented, “We are very pleased with the results for the first half of this year especially the increase in sales to our key customers.”

 ‘’Lees of Scotland has shown good growth over the period, across most product categories. The Waverley Bakery achieved new listings which would have resulted in this business being well ahead of last year, had it not been for very poor weather in May and June which adversely  affected ice cream cone and wafer sales.’’

“Pre-tax profit is down on the same period last year, predominantly as a result of raw material costs. As previously reported there has been a natural time lag in the process to mitigate the impact of these increases. However, the steps we took to address this issue earlier in the year have been successful.’’

‘’Our cash reserves have doubled since this time last year as we remain strongly cash generative, whilst at the same time maintaining an investment programme in plant and equipment in order to improve efficiencies.’’

 “Looking ahead to the full year performance, despite the raw material cost increases experienced in the first six months and the potential for further cost increases, we expect pre-tax profits to be well ahead of current market forecasts.”

 “The biggest challenge in the short and medium term for Lees and other manufacturers of confectionery and sweet products is the rising price of sugar, caused by the ongoing shortage of supply in Europe.

 “The management team at Lees will continue to focus on new product development and our stated objective of moving into new product categories, in order to maintain the growth we have achieved over recent years.”