2008 Registration Document - Rexel

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14. Financial information concerning the assets andliabilities, financial position and profits and lossesof RexelOnerous contractsA provision for onerous contracts is recognized when theexpected benefits to be derived from a contract are lowerthan the unavoidable cost of meeting its obligations underthe contract.Provisions for disputes and litigationsProvisions for disputes and litigation include estimatedcosts for risks, disputes, litigation and third party claims,and the probable costs associated with warranties givenby the Group in the context of the disposal of non-currentassets or subsidiaries.These provisions also include costs of personneldisputes and tax litigation. A provision is not made for taxassessments received or in course of preparation when itis considered that the assessment is not justified or whenthere is a reasonable probability that the Group will succeedin convincing the tax authority of its position.Any accepted assessment is recorded as a liability whenthe amount can be reasonably estimated.2.16 SalesRevenue arising from the sale of goods is presented insales in the income statement. Sales are recognized whenthe significant risks and rewards of ownership have beentransferred to the buyer, which usually occurs with thedelivery or shipment of the product.Sales are recognized net of customer rebates anddiscounts.The Group may enter into direct sales (as opposed towarehouse sales) whereby the product is sent directly fromthe supplier to the customer without any physical transferto and from the group’s warehouse. The Group is acting asprincipal and therefore recognizes the gross amount of thesale transaction.2.17 Financial expenses (net)Financial expenses (net) comprise interest payable onborrowings calculated using the effective interest ratemethod, dividends on preference shares classified asliabilities, interest receivable on funds invested, dividendincome, foreign exchange gains and losses, and gains andlosses on hedging instruments that are recognized in profitor loss (see note 2.9.5).Interest income is recognized in profit or loss as it accrues,using the effective interest rate method. Dividend incomeis recognized in profit or loss on the date the entity’sright to receive payment is established which in thecase of quoted securities is the ex-dividend date. Theinterest expense component of finance lease paymentsis recognized in profit or loss using the effective interestrate method.2.18 Other income and other expensesOperating items which significantly affect the currentoperating performance before financial items and taxationare presented as separate line items “Other income” and“Other expenses”. Income and expenses arising fromabnormal or unusual events are included in these lineitems. They comprise capital gains and losses, significantimpairment losses, certain restructuring expenses,separation costs and other items such as significantprovisions for litigation.2.19 Income taxIncome tax on the profit or loss for the periods presentedcomprises current and deferred tax. Income tax isrecognized in profit or loss except to the extent that itrelates to items recognized directly in equity, in which caseit is recognized in equity.Current tax is the expected tax payable on the taxableincome for the year, using tax rates enacted or substantivelyenacted at the balance sheet date, and any adjustment totax payable in respect of previous years.Deferred tax is provided using the balance sheet liabilitymethod, providing for temporary differences betweenthe carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for taxationpurposes. The following temporary differences are notprovided for: goodwill not deductible for tax purposes,differences relating to investments in subsidiaries to theextent that they will probably not reverse in the foreseeablefuture and the initial recognition of assets or liabilities in atransaction that is not a business combination and thataffects neither accounting nor taxable profit. The amountof deferred tax provided is based on the expected mannerof realization or settlement of the carrying amount of assetsand liabilities, using tax rates enacted or substantivelyenacted at the balance sheet date.A net deferred tax asset is recognized only to the extentthat it is probable that future taxable profits will be availableagainst which the asset can be utilised. Deferred tax assetsare reduced to the extent that it is no longer probable thatthe related tax benefit will be realized.Deferred tax assets and liabilities are offset when there isa legally enforceable right to offset current tax assets andliabilities and when they relate to income tax levied by thesame tax jurisdiction and the Group intends to settle itscurrent tax assets and liabilities on a net basis.Additional income taxes that arise from the distribution ofdividends are recognized at the same time as the liability topay the related dividend.Information as to the calculation of income tax on the profitfor the periods presented is included in note 9.2.20 Segment reportingA segment is a group of assets and operations that isengaged either in providing products or services (businessPAGE 168 | REXEL 2008
segment), or in providing products or services within aparticular economic environment (geographical segment),which is subject to risks and rewards that are different fromthose of other segments.The Group operates in the single business segment of thedistribution of electrical products so that the Group onlydiscloses segment reporting information for geographicalsegments.Operations that are substantially similar are combined asa single segment. Factors considered in identifying suchsegments include the similarity of economic and politicalconditions, the proximity of operations, and the absenceof special risks associated with operations in the variousareas where the Group operates. Segments are alsodetermined to be similar when they exhibit similar longtermfinancial performance. In addition, operations, whichare deemed non-material, non-specific, unallocated,or non-core are presented under the segment “otheroperations”.2.21 Earnings per shareThe Group presents basic and diluted earnings per sharedata for its ordinary shares.Basic earning per share is calculated by dividing theprofit or loss attributable to ordinary shareholders of thecompany by the weighted average number of ordinaryshares outstanding during the period. Diluted earningsper share is calculated by adjusting the profit or lossattributable to ordinary shareholders and the weightedaverage number of ordinary shares outstanding for theeffects of all dilutive potential ordinary shares, whichcomprise convertibles notes and share options grantedto employees.3. BUSINESS COMBINATIONS3.1 Hagemeyer AcquisitionFollowing the tender offer on Hagemeyer’s shares andbonds in the Netherlands, ended on March 25, 2008initiated in accordance with the agreement entered intoon November 22, 2007 between Rexel, Kelium (the offerorand an indirect subsidiary of Rexel S.A.), Sonepar, andHagemeyer, Rexel acquired control of Hagemeyer N.V,a Netherland based company operating as a worldwidedistributor of electrical supplies. This offer was for all ofthe outstanding shares of Hagemeyer, with a par value of1.20 euro each, at a price of €4.85 per share (with coupon)and all of the subordinated convertible bonds issued andoutstanding bearing interest at a fixed rate of 3.50% andmaturing in 2012. All of the required authorizations underthe antitrust regulations have been obtained, subject to thedivestiture of the Electrical products Distribution businessof Hagemeyer in Ireland.Following the offer period which ended on March 4,2008 and the additional post closing acceptance periodended on March 25, 2008, Rexel, through Kelium holds,as of December 31, 2008, 585,045,822 of Hagemeyer’soutstanding shares, or 99.13% of the ordinary shares ofHagemeyer and 100% of the convertible bonds issued byHagemeyer, i.e. 133,965 bonds.Kelium holding more than 95% of the shares and 100% ofthe bonds, Kelium requested delisting of the shares andconvertible bonds of Hagemeyer in accordance with Dutchlaw. The delisting therefore occurred on April 21, 2008.Furthermore, Rexel has initiated a takeover squeeze-outprocedure in accordance with the Dutch Civil Code in orderto acquire the remaining shares not tendered and not heldby Kelium or Hagemeyer.Hagemeyer retained activities have been consolidated asfrom March 31, 2008.3.1.1 Assets disposals to SoneparConcurrently with the offer on Hagemeyer, Rexel enteredinto an agreement with Sonepar, on October 23, 2007,to transfer to Sonepar of the businesses of Hagemeyer(other than those of its ACE “Agencies/ ConsumerElectronics” division) located in the United States, Canada,Mexico, Australia, Switzerland, Austria, Sweden, China,and Southeast Asia (Malaysia, Thailand and Singapore),as well as of six branches located in Germany (the“Sonepar Entities”). Under this agreement the control ofHagemeyer’s businesses was transferred to Sonepar fromthe completion of the offer, as managing directors of therelated entities could be appointed upon nomination bySonepar. In addition, upon transfer of such businesses toSonepar, independent members of the Management Boardof Hagemeyer (Hold Separate Manager and Trustee) havebeen appointed to supervise these entities and in particularrespect of competition rules in Hagemeyer’s activities andto manage their divestiture process.This agreement provided for a formula for calculating theprices of these disposals, based on the same sales andEBITDA (calculated on the basis of the financial statementsfor the 2007 financial year) multiples as those on which theprice of the tender offer was based. Besides, this divestitureprice was increased by (i) the aggregate arrangementfees after tax paid by Rexel for financing the acquisitionof Hagemeyer’s entities transferred to Sonepar and (ii) anotional interest charge at Euribor +1% after tax applied tothe equity value for such entities.On June 30, 2008, Rexel executed separate agreementswith Sonepar to dispose the non-retained Hagemeyerentities. The overall selling price of the divestitures amountedto €731.5 million in aggregate, including arrangement feesand a notional interest charge for €18.6 million net of taxrecorded as a reduction of financial expenses. Concurrentlywith these disposals, loans granted to the Sonepar Entitiesby Hagemeyer were redeemed when closing thesetransactions in an amount of €852.6 million.At the acquisition date, Hagemeyer non-retained assetswere classified as assets held for sale on the balance sheetand accounted for at fair value of assets disposed of lesscosts to sell.REXEL 2008 | PAGE 169
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Leadership and proximityDocument de
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General informationIn this Document
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1. Selected financial dataThe follo
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2. Information about the Rexel Grou
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3. Business description3.1 Professi
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3. Business description− security
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3. Business descriptioni.e., approx
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3. Business descriptionIn each of t
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3. Business description− growing
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3. Business description3.2.2 The Re
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3. Business description3.3.2 Divers
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3. Business descriptionin a profita
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3. Business descriptionthat its cus
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3. Business description3.7 RESEARCH
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4. Risk factors4.1 Risks relating t
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4. Risk factorsthe commercial polic
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4. Risk factors4.3 LEGAL AND REGULA
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4. Risk factorsNon-compliance by th
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5. Corporate responsibility5.1 empl
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5. Social responsibilityHeadcount b
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5. Social responsibilityAware of th
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5. Social responsibilityaccount for
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eality of the market and the low le
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− promotion days at branches or a
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5.3.2.1 Consumption of raw material
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Emissions per item on the basis of
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5.4 STATUTORY AUDITOR’S REPORT ON
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6. Operating and financialreview6.1
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6.1.2 SeasonalityNotwithstanding th
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6.2 COMPARISON OF THE FINANCIAL RES
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The following table analyzes the ch
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In the year 2008, sales increased b
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In the year 2008, sales in North Am
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to 2007, while sales grew 6.3%. Adj
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Pursuant to article 28 of the Commi
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Financial investments also included
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− Facility C, which was a multi-c
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The main characteristics of these p
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7.2.4.1 Operating leasesThe above t
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The trends and objectives presented
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9. Profit forecastsor estimates9.1
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9.2 REXEL GROUP FORECASTS FOR 2009G
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Rexel is a company with limited lia
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Jean-Dominique Perret has been a me
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10.2 SUPERVISORY BOARD10.2.1 Compos
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Surname, name,professional addressa
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10. Management and Supervisory Bodi
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15. Additional informationRexel is
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15. Additional informationAuthoriza
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15. Additional informationDeclarati
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15. Additional informationTransacti
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15. Additional informationEach Mana
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15. Additional information− propo
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15. Additional informationmeeting b
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15. Additional information15.2.8 Sp
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17. Documents availableto the publi
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18. Responsibility forthe Document
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19. Statutory auditors19.1 Principa
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Annex 1Report of the Chairman of th
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Annex 1− authorization of regulat
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Annex 1This contractual indemnity i
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Annex 1− the payment of 50% of th
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Annex 1Additional retirement planA
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Annex 1− authorization to be give
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Annex 12. Implemented internal cont
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Annex 1defined a set of procedures,
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Annex 2Report of the Statutory Audi
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Annex 3Report of the Supervisory Bo
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Annex 4Report of the Management Boa
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Annex 42. Resolutions requiring the
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Annex 4Group, which may be existing
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Annex 4AuthorizationIssuance in con
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Annex 5Having reviewed the report o
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Annex 5II. Resolutions to be submit
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Annex 5of the proper performance of
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Annex 5Board in accordance with the
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Annex 5accordance with the provisio
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Annex 55. Decided that this delegat
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Annex 6DateTitleDecember 11, 2008Re
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Annex 7Regulation (EC) 809/2004 of
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Annex 7Regulation (EC) 809/2004 of
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2008 Registration Document - Rexel

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