CMS Distribution Brexit Statement

Since the decision made in June 2016 by the UK to leave the European Union, CMS Distribution has been closely monitoring developments in the negotiations between the EU and the UK Government to mitigate any issues that may arise following the Exit. As the possibility of a “No Deal” Brexit still exists, we are stepping up our key contingency plans as March 29th comes closer.

Firstly, I would like to reassure our customers and vendors that we are here to assist you through these uncertain times and are keen to talk to you about mutually beneficial options to protect our businesses.

CMS is working closely with its supply chain and global partners to suitably prepare and plan for differing scenarios.  The following is a summary of our actions to date, managed in conjunction with our partners.

Supply of IT Goods & Services

The biggest concern with Brexit is that British ports and HM Customs may not be adequately prepared for a no-deal Brexit.  This could potentially result in significant delays to supply of IT goods in the UK and Ireland as non-perishable goods may be de-prioritised in the event of border delays or backlog.

To overcome possible delays, we are in discussion with many of our vendors with respect to potentially increasing their UK stock-holding at CMS. CMS has a team of in-house expertise to process imports and exports from/to the EU and non-EU countries alike and are currently investigating goods affected by tariffs (controlled goods).  Whilst it appears at this time that all IT and Consumer Electronics goods do not attract WTO tariffs, barriers currently being created between the USA and China may have a direct effect on some goods and deserve attention as the situation develops.

Following HMRC advice, CMS has relevant EORI numbers in place, we have partnerships in place with large Customs Agents, and we have regular contact with our logistics partners as the deadline approaches.

We are confident that we can continue the provision of goods and services abroad via our global supply chain. We are suitably prepared to hold increased stock in our own warehouse facilities should a customer or vendor wish to guarantee continued supply for the period March – June 2019 or beyond.

Personnel

CMS currently has a small number of employees classified as EU27 citizens and we will support these staff with visa applications via the EU Settlement Scheme, operable March 2019 – June 2021.

Future recruitment policy will continue as is, i.e. hire the best person for each role regardless of circumstance.  This may be impacted by whatever result Brexit delivers but we remain steadfast in our aims.

EU Regulations

EU regulations will cease to have a direct effect on the UK once it leaves the EU, however, the UK has taken steps already to transpose most EU regulations into English Law (e.g. personal data).  We, therefore, do not anticipate a significant effect on the UK’s ability to comply with matters such as safety or transfer of personal data post departure from the EU.

Currency

In the case of a no-deal Brexit, the effects on currency exchange may be dramatic and might result in significant fluctuations to the prices of IT goods with immediate price rises from vendors.   CMS will ensure such rises are well communicated with as much notice as the vendor allows. If you are a customer of CMS, please talk to your account manager today if you want to increase your purchases in March to reduce currency uncertainty.

Brexit Checklist and Resources

Whilst the situation may currently be very uncertain, we believe planning for every business is appropriate. The British Chamber of Commerce and the Irish Government provide good starting point, which can be found at: https://www.britishchambers.org.uk/page/brexit/business-brexit-checklist and https://www.gov.ie/en/publication/16638f-brexit-and-business/

Finally, I would like to remind you again to talk to your CMS Account Manager or Partner Manager, who will be more than happy to assist you in these uncertain times.

Tom Burke

CFO

February 2019

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