2008 Registration Document - Rexel

6. Operating and financial reviewPursuant to article 28 of the Commission Regulation (EC)N°809/2004 of April 29, 2004, the following information isincorporated by reference in this Document de Référence:− the operating and financial review for the year endedDecember 31, 2007 which is included in pages 80 to 87of the Document de Référence filed by Rexel with theAutorité des marchés financiers on April 30, 2008, undernumber R.08-046; and− the operating and financial review for the year endedDecember 31, 2006 which is included in pages 81 to 109of the Document de Base filed by Rexel with the Autoritédes marchés financiers on February 21, 2007 undernumber I.07-011.The information of these documents that is not incorporatedby reference in this Document de Référence is eitherirrelevant for the investor or is covered in another section ofthis Document de Référence.6.1 GENERAL OVERVIEWThe Retained Entities (as defined in paragraph 2.2 ofthis Document de Référence) were consolidated fromMarch 31, 2008. As a consequence, the assets andliabilities of these entities are included in the RexelGroup consolidated balance sheet while their revenues,costs and cash flows are included in the consolidatedincome statement and cash flow statement only sinceApril 1, 2008. The former business of the Rexel Group inGermany, transferred to Sonepar in the second quarter,has been excluded from the scope of consolidation sinceMarch 31, 2008. The business acquired from Sonepar inSweden is consolidated from July 1, 2008. In addition, apro forma income statement is disclosed in section 14.2in order to reflect the effect of these transactions as ifthey had occurred on January 1, 2008. This pro formaincome statement also reflects the effect of the disposalof the electrical distribution business of Hagemeyer inIreland because of Rexel’s commitment to the Europeancompetition authorities to such disposal.Numbers and percentages in this document are calculatedon the basis of numbers expressed in thousands of euros,or other currencies, and accordingly, may differ from thenumbers and percentages calculated on the basis of thenumbers presented.6.1.1 Rexel Group overviewThe Rexel Group is a worldwide leader in the professionaldistribution of low- and ultra-low voltage electricalproducts based on sales and number of branches.The Rexel Group’s business is organized around thethree main geographic areas in which it operates:Europe, North America, and the Asia-Pacific zone. Thisgeographic segmentation was determined on the basisof long-term economic trends, market characteristics,technical standards, products and suppliers operatingin the countries within each geographic zone, as well asthe proximity of markets. Operations deemed of lowermateriality relative to the Rexel Group’s operations asa whole and non-core operations are aggregated andpresented under a separate segment called “OtherOperations”, as defined below. This segment also includesunallocated corporate overhead expenses.In the year 2008, the Rexel Group recorded consolidatedsales of €12,861.6 million, of which €7,166.6 million weregenerated in Europe (56% of sales), €4,404.8 million inNorth America (34% of sales), €881.9 million in the Asia-Pacific zone (7% of sales), and €408.3 million related toOther Operations (3% of sales).The Europe zone consists of France (which accounts forapproximately 35% of Rexel Group consolidated sales inthis zone), Germany, the United Kingdom, Ireland, Austria,Switzerland, The Netherlands, Sweden, Italy, Belgium,Spain, and Portugal, as well as several Central Europeancountries (Slovenia, Hungary, Slovakia, the Czech Republic,Poland and Russia). Following the acquisition of Hagemeyer,the Europe zone also includes Finland, Norway and theBaltic States from the second quarter of 2008.The North America zone consists of the United States andCanada. The United States represents approximately 77%of the Rexel Group’s consolidated sales in this zone andCanada the remaining 23%.The Asia-Pacific zone consists of Australia, New Zealandand China, as well as India and certain countries inSoutheast Asia (Indonesia, Malaysia, Singapore, Thailandand Vietnam). Australia accounts for approximately 70% ofthe Rexel Group’s consolidated sales in this zone and NewZealand close to 15%.The Other Operations segment includes ACE, the Agencies/ Consumer Electronics division acquired in the scope of theHagemeyer Transaction from the beginning of the secondquarter of 2008, which represented approximately 3% of theRexel Group’s sales on a yearly basis. It also includes Chile,which represented less than 0.5% of the Rexel Group’ssales in the same period and certain businesses managedat Group level (Bizline, Citadel and Conectis). Unallocatedcorporate overheads (mainly occupancy and personnel costsof the Paris headquarters) are also included in this segment,as well as elimination of inter-segments operations.The analysis below covers the Rexel Group’s sales, grossprofit, distribution and administrative expenses and operatingincome before other income and other expenses (EBITA)separately for each of the three geographic segments, aswell as the Other Operations segment.PAGE 68 | REXEL 2008