Stock purchase | Hearth Products

Hearth Products has been an innovator in the UK gas fire market for nearly twelve years. We have now developed a revolutionary new gas fire product: a large format gas appliance which can be installed into a conventional fireplace opening without the requirement for extensive building work. This new concept (which has been IP protected with a patent application) is now being applied to more new products currently under development. The first product is due to launch in February 2017.

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Spreading innovation

At Hearth, we have been responsible for intellectual property developments used in fireplace products in the UK and North America with a high level of success. In 2011 the company took the decision to develop it's own range of gas appliances and market them through a network of independent retailers across the UK. The product range has been very well received and we are steadily growing this customer database.

Hearth Products is continually developing new technologies for the fireplace industry. All products currently manufactured are protected by patent applications, a position we take wherever possible to protect our sales. We manufacture at cost levels, thus providing higher margins at about 50% gross, and run the business at much lower overhead levels than any of our competitors.

We were one of the first companies to import UK developed gas appliances from overseas, which provided enormous cost advantages. Our growth is only restrained by capital restrictions, as all imported stock is paid for in full prior to arrival in our warehouse.

Another important part of the business strategy was to introduce a third party distributor. This customer would badge the product range and market the appliances independently, through their own distribution channels. Hearth Products is now successfully supplying products to these clients, with this additional sales revenue strengthening the company's position.

The market has slowly seen the introduction of more European styling in its products, generally in the form of larger glass fronted appliances. These products, although very attractive and designer looking, are expensive and require substantial remedial work to facilitate their installation. The new 'widescreen' product allows a large format appliance to be installed into a standard fireplace opening without any modifications. This provides for a much lower installation cost and a much lower appliance cost.

Typically, this type of fireplace installation, for a complete supply and fit, retails at circa £2500-£3500. The new Wildfire 'widescreen' product will retail at an expected level of £1500, a considerable saving for the consumer.

We are now looking for working capital to buy more stock of gas flued fireplaces, gas flueless fireplaces, stoves and electric fireplaces from our manufacturer in Ningbo, China. We have sourced over 70,000 products from this company for distribution into the UK, Europe and U.S.A.

The new 'widescreen' gas fire development is innovative and cost effective. It has IP protection in place and is already fully CE marked. The product is highly efficient (85% net), an important consideration for consumers buying heating products. The business is looking for funding to help provide sufficient stock levels to exploit the new product from early 2017.

We need the stock to be in our warehouse to provide next day delivery for our customers. This stock will allow us to introduce a new product this year, as well as allow the business to grow further. The stock needs to be in place by May 2017, which will coincide with the arrival of the new product in the range. This will help with our aim to gain 10% of the domestic gas living flame market share within five years.

HEARTH PRODUCTS

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