2008 Registration Document - Rexel

7. Liquidity and capital resourcespremium for the Senior Subordinated Notes pursuantto the refinancing operations following the initial publicoffering of Rexel, paid on April 4, 2007. From the secondquarter of 2008, interest paid reflects the terms of the newSenior Credit Agreement entered into for the Hagemeyertransaction.In the year 2008, €109.8 million income taxes were paidcompared to €41.8 million paid in the year 2007. Thesecond quarter of 2007 included a non-recurring tax refundfrom the French authorities for an amount of €53.4 million.Changes in working capital requirementCash generated by changes in working capital requirementamounted to €133.7 million in the year 2008 compared to€13.0 million used in 2007. As a percentage of the last twelvemonth sales, the working capital requirement decreasedfrom 13.0% at December 31, 2007 on a constant basis to12.0% at December 31, 2008. At the end of 2008, workingcapital includes the effect of the decrease in copper-basedcables for an estimated 60 basis points, i.e. a 12.6% levelbefore such decrease. The remaining 40 basis pointsimprovement corresponds to the adaptation of the RexelGroup’s working capital to a lower level of activity from thefourth quarter onwards.7.1.2 Cash flow from investing activitiesRexel’s cash flow from investing activities consists ofacquisitions and disposals of fixed assets, as well asfinancial investments. Cash flow from investing activitiesamounted to a €1,476.1 million outflow in 2008 comparedto a €184.2 million outflow in 2007.Year ended December 31,(in millions of euros)2008 2007Acquisitions of operating fixed assets (1) (8.7) (20.6)Acquisitions of financial fixed assets (1) (2,321.0) (111.9)Net change in long-term investments 853.6 (51.7)Net cash flow from investment activities (1,476.1) (184.2)(1) Net of disposals.Acquisitions and disposal of tangible fixed assetsAcquisitions of operating fixed assets, net of disposals,were a €8.7 million outflow in the year 2008 compared to a€20.6 million outflow in 2007.In 2008, gross capital expenditures amounted to€88.6 million, i.e. 0.7% of the sales of the period, of which€28.7 million related to IT systems, €36.3 million to therenovation of existing branches and the opening of newbranches, €20.6 million to logistics and €3.0 million toother investments. Disposals of fixed assets in the year2008 amounted to €88.1 million and mainly related toa sale and leaseback transaction in the year 2008, on7 logistic centers in France for an amount of €62.9 million,to company cars in the United Kingdom for an amountof €10.1 million and a building in The Netherlands foran amount of €3.1 million. Net changes in the relatedpayables and receivables amounted to €8.2 million,accounting for an increase in the capital expenditures ofthe period.In 2007, gross capital expenditures amounted to€82.5 million, i.e. 0.8% of the sales of the period, including€29.3 million related to IT systems, €26.6 million to therenovation of existing branches and the opening of newbranches, €24.9 million to logistics and €1.7 million toother investments. Disposals of fixed assets amountedto €52.1 million, mainly including a sale and leasebacktransaction of commercial premises in Switzerland foran amount of €45.8 million (€42.0 million net of relatedtaxes). Net changes in the related payables and receivablesamounted to €9.8 million, accounting for a reduction in thecapital expenditures of the period.Financial investmentsRexel’s net financial investments represented a net outflowof €2,321.0 million in 2008 compared to €111.9 million in2007.In 2008, outflows in respect of financial investments mainlyconcerned the completion of the Offer for an amount of€3,082.2 million net of cash acquired. The Assets Salesin June 2008 resulted in an inflow of €732.0 million.The net proceeds resulting from the Assets Swaps arecomprised of a €177.0 million cash inflow in respect ofthe disposal of Rexel’s historical business in Germany anda €83.8 million cash outflow in respect of the acquisitionof Sonepar’s business in Sweden. The other investmentsare comprised of the acquisition of Beacon in the UnitedStates for US $19.3 million (€12.6 million), ABK ElectricWholesale Pty. Ltd Company in Australia for AUD 3.3million (€1.8 million), Egley in New Zealand for NZD 11.5million (€6.3 million), Espace Elec and NFM SA in Francefor €6.6 million and €4.4 million respectively, and B.V.Electrotechnische Groothandel J.K. Busbroek in TheNetherlands for €4.3 million. They also included earnoutrelating to the acquisition of Huazhang in China for€7.3 million, of ElettroBergamo for €2.0 million, of ABM, aHagemeyer entity, for €11.2 million, as well as a €2.5 millionprice adjustment related to the EIW company in Australia.PAGE 82 | REXEL 2008