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Halma says Brexit could cause supply chain disruptions

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(Reuters) – Safety equipment maker Halma Plc <HLMA.L> said on Tuesday its business could face short-term supply disruptions when Britain leaves the European Union in March.

Halma said it had identified certain risks from Brexit including potential changes to UK- and EU-based law and regulations such as product approvals, patents and import-export tariffs. Mobility of the workforce and availability of talent could also be a pain point, it added.

“Business could also experience shorter-term disruption around the time of Brexit in its supply chain, including disruption associated with customer buying patterns, customs and border clearances and uncertainty over UK and EU product approvals,” Halma said in a statement.

Halma, which traces its roots to a tea company in Sri Lanka in 1894, also reported a 19 percent jump in adjusted pretax profit at 112.9 million pounds for the six months ended Sept. 30.

There is little clarity over Britain’s future relationship with the world’s biggest trading block, creating a headache for companies that rely on the smooth flow of goods and parts across borders.

Adding to the uncertainty, Prime Minister Theresa May unveiled a draft divorce deal with the European Union last Wednesday. Several ministers, including her Brexit minister, resigned and some of her own members of parliament are seeking to oust her.

About 9 percent of Halma’s revenue came from direct sales between the UK and the European Union in the financial year 2017/18.

(Reporting by Noor Zainab Hussain and Adil Bhat in Bengaluru; Editing by Bernard Orr and Gopakumar Warrier)

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