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.

The UK exited the European Union on January 31, 2020. A business-as-usual transition period now follows as negotiations to establish a future relationship beyond December 2020 take place. If these talks fail to produce an agreement, a ‘no-deal’ Brexit is still possible in December 2020.

During this transition period, EU rules and regulations will continue to apply to the UK and the UK will remain part of the EU’s Single Market and Customs Union. There will be no immediate changes for citizens and businesses in their day-to-day dealings.

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 following the end of the transition period.  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 experts who 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 new expanded warehouse facility in the UK should a customer or vendor wish to guarantee continued supply for the early part of the new rules period.

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.

Future recruitment policy will continue as is, i.e. hire the best person for each role regardless of circumstance.  This may be impacted by the new points based immigration system, but we remain steadfast in our aims.

EU Regulations

EU regulations will cease to have a direct effect on the UK once the transition period ends, 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 the transition period.

Currency

CMS will ensure any material price changes caused by the reaction of the Currency Markets 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 at any time to reduce currency uncertainty.

Brexit Checklist and Resources

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 2020

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