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CHIEF EXECUTIVE’S REVIEWCONTINUEDSALESGROWTHSURCARE SALES INCREASED 36%OVER 2003Purchasing2003-04 has been a year of uncertainty in the feedstock markets drivenprimarily by the uncertainties in the Middle East and Venezuela and theresulting upward trend in oil prices, which has impacted a number ofdownstream raw materials. The Group Purchasing Director and his teamhave had a challenging but successful year minimising the impact of theseprice movements on McBride’s input costs.Measures to mitigate raw material cost pressures include the jointtechnical/purchasing project reported last year. In addition other factorsthat have helped withstand selling price deflation and input price includepurchasing longer on certain materials, a weaker US Dollar, weaknesses inother commodities and improvements in manufacturing efficiencies.PlanningWe are now in the third year of the Group Strategic plan, havingachieved a number of key goals in terms of sales growth outside the UK,and improvements in profit, working capital, cash flow and net debtreduction across the Group. These improvements have been realisedthrough organic growth and internal cost control.A full review and update of the markets in which we operate and our keyperformance indicators (KPI’s) which underpin the plan was undertakenduring the year.Two of the main outputs from the review included the decision to closethe Breda factory in The Netherlands and also the decision to establish asales office in Russia in line with our plans to identify new growth markets.The next phase of our planning process will investigate the opportunitiesavailable to the company to further accelerate growth through theexamination of expansion into new geographic markets and in-fillingproduct ranges whether organically or by acquisition.Social & Ethical PolicyIt has always been the Group’s practice to set standards of performance andbehaviour in the way we run the business. This goes beyond financial andoperational aspects into how we behave with those in whose communitieswe operate and how we treat each other as colleagues. This year we havebrought together all our best practices and formalised them as policy. This isan area where we will endeavour to improve our awareness and performancewith, we believe, positive commercial effects. Our exhaustive benchmarkingagainst best practice in the area of Corporate Governance has led us toupdate several of our policies and procedures as well as the design of aformal “whistleblowing” policy to enable employees to speak in confidenceabout issues of real concern that may affect the performance of the business.SUSTAINABLEDEVELOPMENTMcBRIDE HAS PRODUCED ITS FIRSTCORPORATE SUSTAINABILITY REPORTWHICH WILL BE ISSUED SEPARATELYTO THIS YEAR’S ANNUAL REPORTSustainable developmentMcBride has produced its first Corporate Sustainability Report which willbe issued separately to this year’s Annual Report, building on the CorporateSocial Responsibility section in past Annual Reports and includes a moredetailed description of our policies and activities in these vital areas. Ourapproach to managing the business is focussed on clear and measurableKPI’s, most of which benefit from a common sense approach to the driversof sustainable development.For instance increasing yields and reducing waste, more efficient use ofenergy, light weight packaging, controlled dosage formats e.g. tablets andsachets, elimination of half full vehicles etc, are all ways of reducing variablecosts which simultaneously are less harmful to the environment. Even loweroverheads and stock require fewer buildings resulting in less heating andlighting energy consumption.At McBride we practice sustainable development by being business efficientthereby running a good, efficient, effective and profitable business.We are committed across Europe to the aims and requirements of theA.I.S.E. Charter on Sustainable Development, in whose creation we havebeen closely involved. The Charter requires participating companies todevelop and implement policies, procedures, indicators and output coveringthe management of economic, social and environmental activities.As Board members of A.I.S.E. (The European Detergents Industry Association),the Group fully supports the Detergent Industry Charter on SustainableDevelopment.Health Safety and EnvironmentThe Group’s documented policies and procedures across the diversebusinesses that operate in six countries with differing legal frameworks arewell conceived. In the UK RoSPA is used to audit safety management, andwe are pleased to report improved ratings at all UK sites assessed during2003-04 with some sites reaching outstanding performance. Investors inPeople is used to ensure our approach to training and development is ofgood professional standard. This year’s upward trend in lost time incidents(LTI’s) reverses the 4 prior years’ continuous reduction. Investigations intothe causes of this disappointing performance is part of our continuousimprovement programme.12McBride plc Annual Report 2004