2008 Registration Document - Rexel

3. Business descriptionthat its customers’ payment days are in keeping withthe best market practices in the countries in which itoperates; and− improving turnover of accounts receivable.On a comparable basis and excluding non-recurringfavorable events, trade working capital requirements of theRexel Group in percentage of sales, decreased from 13.0%as at December 31, 2007 to 12.6% as at December 31,2008.Increase productivityIn order to continually improve the quality of its services, theRexel Group is progressively increasing the percentage ofits customer-facing employees, which at the end of 2008represented approximately 60% of its total employees,compared to 58% at the end of 2003. In addition, the RexelGroup seeks to improve its support functions, particularlyin the administrative services areas, in order to optimizeoperating costs.3.4.2 Pursue external growthOn the local level, the professional distribution of low- andultra-low voltage electrical products takes place in thecontext of close and recurring relationships with customers.The Rexel Group has historically observed a correlationbetween local market share and local operating profitability,which it attributes, in part, to the optimized use of logisticsinfrastructures.The Rexel Group therefore intends to pursue bolt-onacquisitions of regional distributors in order to strengthenits market share in regions where it is already present andto establish in new markets.In the context of a fragmented market with significantacquisition opportunities, the Rexel Group believes that itssize and its strong local market shares, in particular sincethe acquisition of Hagemeyer, as well as its experience withacquisitions and integration, give it an advantage over itssmaller or less experienced competitors in identifying andacquiring potential targets.Thus, between 2004 and 2008, the Rexel Group carriedout, 31 acquisitions, including 6 acquisitions in NorthAmerica, 14 in Europe and 11 in Asia-Pacific, as well asthe acquisitions of GE Supply (renamed Gexpro) and ofHagemeyer.The Rexel Group will continue to target the acquisition ofsmall to mid-size companies. Furthermore, if the opportunityarises, the Rexel Group may also undertake significantacquisitions.3.4.3 Develop the Rexel Group’spotential marketsAccompany the developmentof emerging countriesThe Rexel Groups intends to develop its presence in emergingcountries along with the development of the professionaldistribution of electrical materials in such countries. TheRexel Group offers contractors and end-users a distributionstructure allowing them to access the quality and diversifiedoffering of international manufacturers, and thus developtheir own activities in these emerging markets.The Rexel Group intends, inter alia, to develop its presencein Asia, where markets with strong growth potentialsare located, although volumes should remain limited inthe medium term compared to mature markets. Thesedevelopments will be implemented in partnership withmanufacturers.Expand the scope of activity of electriciancontractorsIn the context of a growing demand from end-users in thefields of security, comfort and energy savings, the RexelGroup aims at increasing the portion of equipment installedby electricians. This strategy relies on the constant effort ofthe Rexel Group focusing on the training of its teams and onactions aimed at its customers.The Rexel Group thus successfully developed its productoffering in relation to security and communication with,inter alia, the setting-up of a dedicated structure, Conectis.Geothermal and photovoltaic equipment is also subject togrowing demand.3.5 INSURANCEThe Rexel Group’s insurance policy focuses on the coverageof insurable risks likely to significantly affect or endanger itsoperations. Accordingly, the Rexel Group has implementedinsurance programs that cover its activity, distributioncenters and branches against damages (property damageand related operating losses) arising from unforeseeableand hard to control events (such as fire, water damage,lightning, storms, flooding, hurricanes and other naturalcatastrophes, fraud and wrongdoing, etc.), as well as civilliability. These programs cover all the risks relating to theprofessional distribution of electrical products and thelocations of the Rexel Group.PAGE 36 | REXEL 2008