2008 Registration Document - Rexel

6. Operating and financial reviewExclude the non-recurring effect relatedto changes in copper pricesFor the analysis of financial performance on a constant andAdjusted basis, the estimated non-recurring effect relatedto changes in copper-based cables price, as describedin paragraph 6.1.3 – “Effects of changes in copper prices”above, is excluded from the information presented for boththe current and the previous periods. Such information isreferred to as “Adjusted” in the rest of this document.Exclude the effects of different numbers of workingdays in each period to analyze salesThe Rexel Group’s sales in a given period compared toanother period are affected by the number of workingdays, which changes between periods. In the analysis ofits consolidated sales, the Rexel Group neutralizes theeffect of different numbers of working days between thetwo periods presented by comparing its historical figuresfor each month in the current year against the prior yearfigures, adjusted proportionally to the number of workingdays during the current year. This analysis by number ofworking days is not deemed relevant to the Rexel Group’sother consolidated income statement items.Exclude the amortization of intangible assetsrecognized during the provisional allocationof the purchase price of HagemeyerSince the completion of the Offer and in order to make theinformation comparable to the one of the previous periods,the amortization of the intangible assets recognized in thepurchase price of Hagemeyer allocation is excluded fromthe Adjusted figures. This restatement takes effect afterthe completion of the Offer, i.e., from the second quarter of2008 onward. This restatement has an effect on EBITA only,as defined below, which is then referred to as “AdjustedEBITA”.Accordingly, in the following discussion of the RexelGroup’s consolidated results, the following information maybe provided for comparison purpose:− On a constant basis, meaning excluding the effect ofacquisitions and disposals and the effect of fluctuations inexchange rates. Such information is used for comparisonon sales and headcounts;− On a constant basis and same number of working days,meaning on a constant basis and restated for the effectof different numbers of working days in each period.Such information is used only for comparison related tosales;− On a constant basis, Adjusted, meaning on a constantbasis and adjusted for the two following elements:• The estimated non-recurring effect related to changesin copper-based cable price;• The amortization of the intangible assets recognized inthe allocation of the purchase price of Hagemeyer.Such information is used for comparison related to grossprofit, distribution and administrative expenses and EBITA.This information does not derive from accounting systemsbut is an estimate of comparable data in accordance withthe principles set out above. The non-recurring effect relatedto changes in copper-based cables price is determined inaccordance with the internal monthly reporting proceduresof the Rexel Group by comparing the historical purchaseprice and the supplier’s price effective at the date of the saleof the cables by the Rexel Group. This calculation is appliedto a representative sample of cable references and thenextrapolated to all cables sold during the period. Data inrelation to the non-recurring effect are subject to the reviewof the statutory auditors pursuant to Article L.225-235 § 3of the French Commercial Code, on the basis of the otherinformation contained in the management report.EBITA is used to monitor the Rexel Group’s performance.EBITA is defined as operating income before other incomeand expenses and is not an accepted accounting measureunder IFRS. The table below sets out the reconciliation fromactual operating income to Adjusted EBITA on a constantbasis:(in millions of euros)Year ended December 31,2008 2007EBITA 630.0 648.4External growth – 80.7Foreign exchange effect – (21.5)Non-recurring effect related to copper 60.9 1.5Amortization of intangible assets recognized as part of the allocation of the purchase priceof Hagemeyer 8.5 9.0Adjusted EBITA on a constant basis 699.4 718.1PAGE 70 | REXEL 2008