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CHIEF EXECUTIVE’S REVIEWMike HandleyChief Executive58%SALES TO EUROPE AND THE RESTOF THE WORLD ACCOUNTED FOR 58%OF McBRIDE’S TURNOVERCapitalising on marketopportunities.Developing new channels suchas the convenience sector, growingmargins with value-added rangesand converting niche products tomass-market status are all factorsthat ensure our continued marketleadership in the UK. In ContinentalEurope, we are gaining stronglyfrom the retailer concentration andgrowth in the discount sector thatare driving Private Label forwardin many countries, with significantscope for further penetration.In Central and Eastern Europe weare excellently positioned to helpretailers reach the 75 million newconsumers of the combined EUaccession and candidate nations.It is pleasing to report another year of growth in sales, profits and cashgeneration, which has enabled us to reduce the Group’s net debt byalmost 50% to £31.4 million.The focus on exploiting the growth of Private Label in the recentlyenlarged EU market, maintaining our Private Label leadership in the UK,and improving our operational cost base have all contributed to thisexcellent performance.These results are especially impressive against the background of intenseretail competition and price focus in all markets, whether in ContinentalEurope’s reaction to Hard Discount growth or in the UK market’s reactionto the Morrison take-over of Safeway.By achieving our objectives of improving shareholder value through profitgrowth and reduced external debt, the financial robustness of the Grouphas been reinforced.SalesOverall sales for the Group were £501.3 million compared with£486.8 million for the previous period which have been restated in linewith FRS 5 – Application Note G. Sales growth of 3.0% was driven byour Continental European business, which reported local sales of overa400 million for the first time.The strong performance of our Continental European business now meansthat sales outside the UK account for 58% of Group turnover. This growthwas underpinned once again by a good performance in France assisted bystrong growth from our Italian business.McBride is also expanding its sales in both the Nordic countries andthe large German Private Label market, where it has a sales office. It isalso pleasing that the investments made in our manufacturing facility inPoland since it was acquired in 1998, combined with our existing facilitiesthroughout the Group, have improved McBride’s ability to competeeffectively in terms of quality and price into these markets, and theaccession countries of Central Europe.08McBride plc Annual Report 2004