The value returned by your lookup formula, 03, is that a
text value or a number value with a custom format that
uses the leading zero?
If 03 is really a text value then:
=IF(AE3<10 = FALSE
If it is really a numeric value formatted with a leading
zero then yes, the leading zero will be truncated in a
formula unless the target cell is also formatted the same
because the true underlying value is 3 not 03.
Check and make sure all your cell formats are the same in
your lookup table.
