Arran Isle Group: Strong Results for 2014 & Further Growth Potential

Our parent company Arran Isle, the international, market leading, branded building products Group, today reports strong financial results for 2014 coupled with significant investments in the group to underpin further growth plans.

All of Arran Isle’s UK & European businesses occupy a top three position by market share, in each geographical location they serve. Each provides a comprehensive range of door and window hardware products to fabricators, builders merchants, architectural ironmongers and online retailers, through their own well known brands including Mila, Window Ware, Carlisle Brass, and Eurospec.

In the USA, Arran Isle’s US business, La Salle Bristol is the recognised market leader in the distribution of specialist plumbing and building products to the recreational vehicle and manufactured housing sectors, with 5 manufacturing locations and 16 distribution centres covering the country.

2014 Highlights:

• Sales up 1% to £208.7 million, 5% up using constant exchange rates 
• Underlying operating profit up 31% to £6.4 million
• Retained profit up by £2.3 million to £2.6 million
• Year end net debt reduced by 6% to £16.1 million
• Debt to EBITDA ratio of 2.2, down from 2.9 last year
• The Group’s return on capital employed (ROCE) increased 250bp to 13.0%

We are proud to be a Yorkshire headquartered Group and continue to drive growth in the region. Mila Maintenance, based in Barnsley, grew sales by 56%, in no small part due to achieving 98.4% positive resident and client feedback rate from customers right across the UK

Our Mila UK business signed another 2 year supply agreement with Bradford based, Safestyle UK plc and played its part in supporting their 9% sales growth. This latest contract extends our relationship to more than 20 years of continuous supply.

We were also pleased to be ranked in the Top Track 250 of fastest growing private companies in the UK, based on our sales and earnings growth in 2013.

In Ireland, Mila Ireland worked successfully with Irish fabricators to help them supply both export markets and a modestly resurgent local market. Our Locks & Hardware architectural business also saw a decent improvement in sales as commercial and merchant activity steadily recover.

Investing in the Future

2014 was also saw significant investment in initiatives that will benefit the group in the years ahead:  

• Revitalising the Carlisle Brass brand, our market leading range of architectural hardware. This included a new Ecommerce site, additional marketing investment in completely new marketing collateral, and attendance at end user exhibitions such as Grand Designs and the Home improvement Show
• Further investment in Ecommerce sites across the Group, especially at LaSalle Bristol and Window Ware
• Opening our own local architectural hardware business in Dubai - Carlisle Brass Ironmongery Trading LLC - to provide customers in the Gulf region with faster service and more access to innovation
• Recruiting senior executives from international blue chip organisations to help us grow further in the Far East and North America, and increasing investment in training and development of our customer facing staff
• Investing over £1 million in new product development and product launches, including the new Mila ProSecure door hinge in the UK, which reduces the fit time for fabricators by over 50%.

Outlook

The Group has market leading positions in the UK, North America, Ireland, Scandinavia and the Baltics.

All of these markets have started to grow modestly since the depths of the Great Recession, but are still well below their long term norm.

Our focus on class leading on-time delivery, exactly on the date specified by our customers, allied to our innovation and new product development has helped us to continue growing our market share.

This approach to serving our customers works, and we are privileged and delighted to have many very long-term customer relationships, some extending for more than 30 years.

We independently survey our customers on a regular basis. Customers consistently highlight five main reasons why they choose to work with Arran Isle Group companies:

1. The Group has the structure and scale, whether it is via a national footprint of distribution centres across North America, or the capability to offer customers the widest range of hardware, delivered next day in the UK market.

2. Our businesses consistently deliver outstanding service, with successful order fill rates of over 95%, which means that our customers get their products when they need them. Over £40 million of product is in stock, on average, across our warehouse network to make sure we can rapidly meet customer needs.

3. Constant innovation is a feature of all our businesses, as evidenced by launching sixteen new product ranges in the last two years, but also in working with customers as they develop new ways of working with their end customer.

4. We have the infrastructure to offer local design linked to global sourcing so that we can provide customers, in all our markets, access to the benefits of our integrated global sourcing and manufacturing capabilities. The Group also has its own internationally accredited door lock, hinge and emergency door hardware manufacturing facility in China.

5. We believe we have the best teams in the markets we serve, as it is only possible to consistently deliver the service and product innovations we are achieving for customers, if we have the most knowledgeable and experienced teams.

All our businesses are led by customer orientated leaders, who typically have at least ten years experience in their local market.

Commenting on the results, Robert Barr, Group Chief Executive, said: "We are delighted that our focus on service and innovation produced excellent results in 2014. What was particularly pleasing was that we invested significantly for the future, while at the same time increasing earnings by 31% and reducing debt."