FINANCIAL AND ACCOUNTING INFORMATION Impact of changes in copper price Comparability of the Group’s operating results and adjusted EBITA The Group is indirectly exposed to fluctuations in copper price in connection with its distribution of The Group undertakes acquisitions and disposals cable products. Cables represent approximately that may alter its scope of consolidation from one 14% of the Group’s sales and copper accounts for period to another. Second, currency exchange rates approximately 60% of the composition of cables. may also fluctuate significantly. In addition, the This exposure is indirect since cable prices also number of working days in each period also has an reflect suppl iers’ commercial pol icies and the impact on the Group’s consolidated sales. Lastly, the competitive environment of markets in which the Group is exposed to fluctuations in copper price. For Group operates. Changes in copper price have an these reasons, a comparison of the Group’s reported estimated “recurring” and “non-recurring” effect operating results over different periods may not on the Group’s performance, assessed as part of provide a meaningful comparison of its underlying the monthly internal reporting process of the Rexel business performance. Therefore, in the analysis of Group: the Group’s consolidated results presented below, financial information is also restated to give effect to The recurring effect related to the change in the following adjustments. • copper-based cable prices corresponds to the Excluding the effects of acquisitions and disposals change in the value of the copper included in the sales price of cables from one period to another. The Group adjusts its results to exclude the effects This effect mainly relates to sales. of acquisitions and disposals. Generally, the Group includes the results of an acquired company in its The non-recurring effect related to the change consol idated financial statements at the date of • in copper-based cable prices corresponds to the the acquisition and ceases to include the results of effect of copper price variations on the sales price a divested company at the date of its disposal. To 5 of cables between the time they are purchased neutralize the effects of acquisitions and disposals and the time they are sold, until such inventory on the analysis of its operations, the Group compares has been rebuilt (direct effect on gross profit). the results of the current year against the results of In practice, the non-recurring effect on gross the preceding financial year, as if the preceding profit is determined by comparing the historical financial year had the same scope of consolidation purchase price for copper-based cable and the for the same periods as the current year. supplier price effective at the date of the sale of In 2017, as part of its divestment program aiming the cables by the Rexel Group. Additional ly, the at focusing on more attractive geographies and non-recurring effect on EBITA corresponds to businesses, the Group disposed of all of its operations the non-recurring effect on gross profit, which in South East Asia including Thailand, Indonesia, may be offset, where appropriate, by the non- Singapore, Vietnam, the Phil ippines, Macau and recurring portion of changes in distribution and Malaysia. These divestments were completed in two administrative expenses (principal ly the variable separate sale transactions as follows: portion of compensation of sales personnel, which accounts for approximately 10% of the change in •On May 25, 2017, the Group completed the gross profit). sale of Lenn International Pte Ltd, an Oil & Gas cable distributor based in Singapore. Results of The impact of these two effects is assessed for as operations and cash flows were consolidated until much of the Group’s total cable sales as possible May 31, 2017. over each period, and in any case covering at Effective on December 19, 2017, Rexel sold to least a majority of sales. Group procedures require • entities that do not have information systems American Industrial Acquisition Corporation, a capable of such comprehensive calculation to private equity firm, its interest in Rexel South East estimate these effects based on a sample Asia, a subsidiary control ling the overal l Rexel’s representing at least 70% of sales during the operations in South East Asia. Results of operations period. The results are then extrapolated to al l in South East Asia and cash flows for the year cables sold during the period for that entity. On ended December 31, 2017, were consolidated until the basis of the sales covered, the Rexel Group November 30, 2017. considers such estimates of the impact of the In 2016, South East Asia contributed for €157.2 million two effects to be reasonable. in sales and €1.0 mil lion in EBITA. In 2017, South REXEL 2017 – REGISTRATION DOCUMENT 199