Brexit Statement

Positive ID Labels have prepared the following statement for customers and suppliers regarding Brexit and the potential impacts on supply chains, service and our operations. This is based on our own risk analysis and research conducted within our industry.

The aim of this statement is to assure our customers that we have taken the necessary steps to ensure the least disruption if any, in the event of a disorderly Brexit.

Our business and how trade will be affected

Obviously, the main area of concern for us and our customers will be the impact of Brexit on the movement of goods, particularly imports and exports.

Outbound Products

Our business is UK based and 99.9% of our finished products are traded within the UK. As a result, we do not conceive there will be any tangible impact to our customers from our factory gate, as a result of any changes in trading arrangements between the UK and the EU.

Inbound Stocks

Our business does import some materials, and finished goods for resale, from the EU. Notably, we import alphanumeric price guns products from Italy (and South Korea to a lesser extent). We also import paper materials from Spain on a regular basis.

These imports may be affected by Brexit but, as a result of closely observing the political situation, we take the view that these imports will not suffer any extreme delays that may result in onerous disruption to supply. Notwithstanding this, we plan for the worst and hope for the best and have taken precautionary steps to minimise any potential impact on trade (see below).

Imported products from the EU and Rest of the World

The company remains as uninformed as the rest of the country regarding the future relationship with the EU. We have, however, undertaken our own assessment of the potential circumstances of 30th March 2019. We believe that there will be little impact despite press reports suggesting the country will come to a standstill. The main political reasons for this are:

• There appears little appetite within the UK government, parliament or the EU or its member states to allow a disorderly Brexit to take place.
• We take the view that the UK government will either ask to extend Article 50 (the negotiating period) or will unilaterally withdraw Article 50.
• We take the view that in any event, the EU and member states are keen to minimise any disruption insofar as it can, by allowing for a political solution to be reached.

See: https://www.bloomberg.com/news/articles/2019-01-09/scale-of-may-s-brexit-defeat-is-big-thing-that-matters-to-eu-now

From a practical perspective, in the event of a hard Brexit, we believe:

The UK will be in control of customs activity for goods inbound to the UK. Positive ID Labels only import a limited amount of products from the EU so in any event, only a fraction of our activities might be affected.

As such, we believe the government will not attempt to incur unnecessary delays on imported goods coming into the UK.

The UK government has within its power the ability to waive formalities for inbound goods if it is in the interest of public safety or economic well-being.

Despite popular belief that all imported goods are subject to customs inspections, our research shows that this is not the case and that imports are inspected on a risk assessed basis by HMRC.

It is often the case even trading with WTO countries, that customs work is completed away from the border in advance of import and export.

The goods we import (materials (paper) and products (labelling guns and label applicators)) are low risk. i.e. They are not drugs or chemicals. As such it is very unlikely that the goods we require would be delayed as a result of being stopped for inspection.

We have experience importing goods from South Korea both before and after the free trade agreement between South Korea and the EU and have not found any substantial delay as a result of customs clearance. These imports are subject to the payment of VAT or duty but these payments are already processed easily by us and the importing agents.

Precautionary Actions

The company has assessed the potential outcomes for our future relationship with the EU. Whilst we take the view that disruption will be minimised on both sides, we have to plan for a worse eventuality. The main precaution we have to take is stock.

As a result, the company has chosen to increase stock levels of specific products that we can control stock levels for. As such, we are confident that there will be limited material disruption to our ability to operate, if any, as a result of our precautions.

We will continue to monitor the situation and take any action required to minimise any potential disruption to our business and that of our customers.

Our Suppliers

The company has discussed in detail with our supliers within the UK who may rely upon imports from the EU or the rest of the world in order to supply their products to us. We have satisfied ourselves that these companies have taken the necessary precautions to protect themselves from disruption and in turn, mitigate any potential problems for our customers.

Please feel free to call your account manager to discuss if you have any further questions.