Brexit Statement from Allgood plc

20th January 2021

Brexit Statement From Allgood Plc

The UK Government has concluded negotiations with the EU over a trade deal.  Allgood has reviewed the implications of the new arrangements on all aspects of our business and remains able to support all our partners in the EU and worldwide.

The key business areas affected are:

  1. Supply chain resilience
    •  Availability of product
    •  Lead times for supply of product
    •  Cost implications for imported goods
  2. Currency risk
  3. Taxation risk
  4. Certification & standards

 

Supply chain resilience

Allgood maintains a policy of ‘UK first’ in its manufacturing and sourcing decisions and has done for years.

We are unique in the industry because we source almost 90% of our products from UK-based suppliers, including our own factory in Birmingham which manufactures around 25% of what we sell. The factory only supplies Allgood’s UK projects and its appointed international distributors and does not sell into the open market.

We are therefore largely insulated from potential product shortages should there be UK or EU border delays caused by the new arrangements, although we recognise that some of our UK suppliers are importers of raw materials and finished product. We have been in discussions with them to understand their own contingency plans – such as to increase stock holdings – to best manage the move to the new trading arrangements.

As such, we increased our stockholding of these products to cover three months demand and will remain in weekly dialogue to foresee any issues and mitigate the risk of potential problems.

 

Breakdown of spend (As at end 09/20, previous 12 months spend)

Spend By Location

% Spend

Spend By Currency

% Spend

CHINA

4.77

£

87.68

EU

7.88

5.37

INDIA

0.35

$

6.95

UK

86.75*

US

0.25

* Of which 24.37% is from our own factory.

Additionally, we maintain stock holdings in our central warehouse, as below:

  • We stock 6-8 weeks of all our own ‘UK stock’ SKU’s.
  • We forward-buy and maintain WIP with our UK/Euro suppliers, an additional 8-12 weeks.
  • We stock 4-6 months of all our own ‘China stock’ SKU’s.
  • We forward-buy and maintain WIP with our Chinese suppliers, an additional 8-12 weeks.
  • We forward-buy currency at preferential rates based on our projected annual spend.

 

Currency risk

For non-GBP denominated purchases, we forward-buy currency based on our projected annual spend, and also negotiate 12-month forward material purchase rates for material used by our own factory.

 

Taxation risk

Taxation (e.g. VAT) arrangements on our trade to and from the EU have been re-aligned to the procedures and rules relating to trading with non-EU countries, which Allgood already has in place.

 

Certification and standards

All existing harmonised European standards will become UK ‘designated standards’. This will mean that immediately after the end of the transition period harmonised European standards and UK designated standards will be identical.

This applies to hinges [EN 1935], panic hardware [EN 179, EN 1125], locks [EN 12209, EN 14846], closing devices [EN 1154, EN 1155, EN 1158], and Pedestrian Operated Doorsets [EN16034, EN 16005]. All other EN hardware standards have already been adopted by BSi as BS ENs. The government will publish and maintain the list of these designated standards on a UK database.

We are reviewing the requirements for CE and the new UKCA marked products to meet the implementation deadline of 1st Jan 2022 to ensure our products can continue to be sold to UK and EU markets. In readiness, we have taken measures to transfer our CE registration over to an EU notified body.

In conclusion, having reviewed the terms of the new trading arrangement with the EU, we are confident there will be minimal impact on our business and the services we provide to our customers and partners in the UK, EU and worldwide.

Alistair Higgins

Chief Executive, Allgood plc

20th January 2020