2008 Registration Document - Rexel

2. Information about the Rexel Group2.2.2 The integrationof the Retained EntitiesThe operational integrationof the Retained EntitiesAll of the Retained Entities have been integrated into theRexel network and the Group’s financial reporting sinceJune 30, 2008.April 2008 June 2008The performance and follow-up of the synergies are subjectto a process organized at country level and managed bya central steering committee and a governance organizingquarterly meetings of the Management Board and theconcerned members of the Executive Committee. Theintegration process is subject to a regular specific reporting.The main stages of these synergy extraction processes areas follows:December 2008 December 2009 End of 2011Business vision &financial targetsAdministrationHQ optimization/Management appointmentSG&A streamliningPurchasingAlignment of supplier conditionsImplementation of scale effectsLogisticsFreight cost renegotiationAnalysis of network reorganizationImplementation of logistics model migrationITRevenueRenegotiation of IT contractsConvergence scenariosSet-up new commercial organizationArchitecture migrationSystems convergenceIdentification of new revenueopportunitiesStart leveraging new business opportunitiesThe Rexel Group business in each country is managed bya unique team resulting from the merger of the historicalteams of Rexel and Hagemeyer.As of the registration date of this Document de Référence,the following integration actions have in particular beencompleted:− The full integration of the Retained Entities in respect tofinancial reporting;− The closure of the historical head offices of the Hagemeyergroup located in Naarden (The Netherlands);− The negotiations with the key suppliers in order to alignthe purchase conditions;− The extension of the main Rexel Group’s contracts to all ofthe Retained Entities;− In Spain, the decrease in the number of commercial regionsand the preparation of a pooling of the IT systems;− In the United Kingdom, the decrease in the number ofcommercial regions and the implementation of the firsttransport synergies; and− In The Netherlands, the implementation of transportationsynergies.The synergies expected from the integrationof the Retained EntitiesRexel expects a ramp-up in synergies and believes thatthese synergies may amount, before tax, to approximately€50 million per year between the date hereof and 2011,i.e., approximately 1.5% of 2007 sales of the RetainedEntities. These synergies would concern the administrativeservices (approximately 45%), purchases (approximately35%), logistics (approximately 13%), information systems(approximately 5%) and the impact on sales of the sharingof specific commercial know-how (approximately 2%). Rexelalso believes that the non-recurring expenses derivingfrom the integration of the Retained Entities will accountfor approximately €70 million between 2008 and 2011, ofwhich approximately €45 to 50 million in 2008 and 2009.Over the year 2008, Rexel believes that the achievedsynergies amounted to approximately €11 million, ofwhich half concerned purchases and half concernedadministrative services.PAGE 12 | REXEL 2008