2008 Registration Document - Rexel

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4. Risk factors4.1 Risks relating to the Rexel Group’s industry . . . . . . . . . . . . 414.1.1 Risks relating to the general economic environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414.1.2 Risks relating to acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414.1.3 Risks relating to changes in prices of certain raw materials . . . . . . . . . . . . . . . . . . . . . . . . . 414.1.4 Competition risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424.2 Risks relating to the Rexel Group’s operations .......... 434.2.1 Risks relating to the Rexel Group’s information technology systemsand logistical structure ......................................................434.2.2 Risks relating to commercial dependence .......................................434.2.3 Risks relating to the international scope of the Rexel Group’s activities . . . . . . . . . . . . . . . . 434.3 Legal and regulatory risks .............................. 444.3.1 Risks relating to pending litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444.3.2 Risks relating to legal and regulatory developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444.3.3 Risks relating to pension plans ................................................444.4 Risks relating to the Rexel Group’s sourcesof financing .............................................. 454.4.1 Risks relating to indebtedness ................................................454.4.2 Risks relating to bank financing (excluding securitizations) ..........................454.4.3 Risks related to securitization programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5 Market risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5.1 Interest rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5.2 Exchange rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5.3 Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464.5.4 Counterparty risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474.5.5 Share risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474.6 Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47PAGE 40 | REXEL 2008
Investors are urged to carefully review the risks described in this Chapter, aswell as all of the other information set forth in this Document de Référence.Such risks are, on the date hereof, the risks that the Rexel Group believesthe occurrence of which could have a material adverse effect on its financialcondition or its results of operations. Rexel conducted a review of these riskfactors and considers that there are no other significant risks than the onesdescribed in this section. Note that there may, however, be other risks that havenot yet been identified as of the date of this Document de Référence, or whoseoccurrence as of the date hereof is not considered likely to have a materialadverse effect.4.1 RISKS RELATING TO THE REXEL GROUP’S INDUSTRY4.1.1 Risks relating to the generaleconomic environmentThe Rexel Group’s end markets are the industrial market,the commercial building market and the residentialbuilding market. These markets can be further subdividedinto investment and construction, on the one hand, andmaintenance and renovation, on the other hand. TheRexel Group’s business is sensitive to changes in generalmacroeconomic conditions and, more particularly, thoseaffecting industrial investments and the construction,renovation and maintenance of residential and commercialbuildings. In addition, the demand for the productsdistributed by the Rexel Group, the prices of such productsand the Rexel Group’s margins depend on many factors,such as inflation, interest rates, bank credit availability, orchanges in economic and monetary policy.The impact of changes in macroeconomic conditionsvaries depending on the end-markets and geographicareas in which the Rexel Group operates. Europe, NorthAmerica, Asia-Pacific and Other Operations accountedfor approximately 32%, 58%, 6% and 4% of the RexelGroup’s pro forma sales respectively. Moreover, theRexel Group believes that the industrial, commercial andresidential markets, respectively, represented 32%, 43%and 25% of its 2008 sales. However, this distribution variesdepending on geographical areas (see paragraph 3.2.3of this Document de Référence). In particular, in NorthAmerica, the residential market accounts for approximately8% of 2008 sales in this area. In each geographical area,construction, renovation, and maintenance activities evolvedifferently. For example, renovation, which is less sensitiveto economic cycles, is more significant in the residentialbuilding and commercial building markets in Europe than isthe case in North America.An economic downturn in one or more of the Rexel Group’smarkets, or across all of its markets, could have an adverseeffect on its financial condition or results of operations.4.1.2 Risks relating to acquisitionsIn the last few years, the Rexel Group has carried out boltonacquisitions allowing the development of its local andregional market shares.In respect of bolt-on acquisitions, the Rexel Group mayhowever be unable to identify appropriate companies,complete acquisitions under satisfactory terms, integrateacquired companies or achieve expected synergies withinplanned timeframes. Lastly, the Rexel Group may bearcharges or liabilities undisclosed in its due diligence andacquisition processes.The Rexel Group intends to integrate the acquired entities.However, Rexel cannot guarantee that the integration of theseentities will occur within the planned timeframes. In addition,integration costs could be higher than initially anticipatedand expected synergies may not be fully achieved (seeparagraph 2.2 of this Document de Référence). Finally, onMarch 19, 2008, Kelium began a compulsory squeeze-outprocedure in relation to the shares and convertible bondsof Hagemeyer in accordance with Dutch law. Rexel cannottake any commitment in relation to the date of closing ofthis procedure or to the absence of disputes with respectthereto.The occurrence of one of the above difficulties may have anadverse effect on the Rexel Group’s financial condition orresults of operations.4.1.3 Risks relating to changes in pricesof certain raw materialsIn connection with the distribution of cable products, whichaccount for 18% of its sales, the Rexel Group is exposedto fluctuations in cable prices. As copper accounts for58% of the composition of cables, cable prices changein accordance to copper prices. These changes arenot, however, solely and directly linked to copper pricesfluctuations to the extent that cable prices also depend onREXEL 2008 | PAGE 41
Page 1: Leadership and proximityDocument de
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Page 8 and 9: General informationIn this Document
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Page 46 and 47: 4. Risk factors4.3 LEGAL AND REGULA
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Page 77 and 78: In the year 2008, sales increased b
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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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12. Shareholders12.1 Principal shar
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12. ShareholdersMerrill Lynch Globa
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12. ShareholdersThe total number of
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12. Shareholdersemployees of Rexel
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12. ShareholdersDuring the financia
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12. Shareholdersindebtedness of Rex
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12. ShareholdersThe table below sum
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12. ShareholdersFCE20070042, on beh
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12. Shareholdersleast €150 millio
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13. Related party transactions13.1
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15. Additional informationRexel is
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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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