FINANCIAL AND ACCOUNTING INFORMATION arrangements with customers whereby the Group rate used to determine those payments). These engages a third party supplier to ship the products remeasurements wil l be general ly recognized as to the customer, based on Rexel’s purchase order an adjustment to the right-of-use asset against the with the customer, without any physical transfer lease liability. IFRS 16 applies to reporting period to and from the Group’s warehouse. Direct sales beginning on or after January 1, 2019. Entities can represent approximatively 20% of Rexel’s total choose to apply the new standard using either a full sales. Under IAS 18 guidance based on risks and retrospective or a modified retrospective approach. rewards analysis, the Group carries in particular the I FRS 16 should significantly impact Rexel’s financial credit risk on receivables attached to such sales situation and performance presentation as the and therefore is currently acting as a principal. Group entered into lease arrangements for most Accordingly, Rexel recognizes the gross amount of its properties including branch network, logistic of direct sales transactions in revenue. IFRS 15 centers and administrative buildings. The Group moves away from a risks and rewards approach to has initiated the identification of lease agreements a transfer of control approach. and measurement of lease liabilities and rights to In direct sales transactions, the Group: use leased assets within Group entities. In addition, – is ultimately responsible for fulfi l lment of the Group has launched a request for proposal to the customer’s order and has discretion in acquire a system to manage lease agreements establishing pricing; in compliance with IFRS 16 requirements. Rexel expects to complete the implementation of such – obtains controls of the goods at the point in system in the second half of 2018 and thus does time they are shipped by the third party supplier not currently plan to early adopt IFRS 16. When but does not transfer control of the products initial ly applying IFRS 16, the Group has not yet to the customer until they are delivered to the decided whether to apply the ful l retrospective customer’s site. Rexel has inventory risk relating method or the modified retrospective approach 5 to the specified goods as it bears the risk of loss with the cumulative effect recognized at the date during the transit and the risk of return from the of 1stapplication, i.e. as of January 1, 2019 with customer subsequent to the delivery. no comparative information for the year ended For the vast majority of its direct sales transactions, December 31, 2018. Rexel is deemed to act as a principal and wil l continue to recognize revenues derived from 3.2.3 Accounting standards and interpretations direct sales for their gross amount in revenue. issued by IASB and IFRS Interpretation Committee but not yet endorsed by the European Union The Group has completed the assessment of the quantitative impacts resulting from the adoption The following standards and interpretations issued of IFRS 15 which are limited to circa 0.20% of the by IASB and IFRS Interpretation Committee are not 2017 sales. yet approved by the European Union. Their potential impact is currently under review by the Group. •IFRS 16 “Leases”: this new standard published the IASB on January 13, 2016 represents a major revision • On June 20, 2016, the IASB issued amendments to account for leases. The standard provides a to IFRS 2 “Share-based Payment” which clarify single lessee accounting model requiring to how to account for certain types of share-based recognize assets and liabilities for all leases unless payment transactions. The amendment provides the term is twelve months or less, or the underlying requirements on the accounting for: asset has a low value. At the commencement date – the effects of vesting and non-vesting conditions of a lease, a lessee will recognize a liability to make on the measurement of cash-settled share- lease payments and an asset representing the right based payments; to use the underlying asset during the lease term. Lessees wil l be required to separately recognize – share-based payment transactions with the interest expense on the lease liability and the a net settlement feature for withholding tax depreciation expense on the right-of-use asset. obligations; and Lessees will be also required to remeasure the lease – a modification to the terms and conditions liability upon the occurrence of certain events (e.g., of a share-based payment that changes the a change in the lease term, a change in future lease classification of the transaction from cash- payments resulting from a change in an index or settled to equity-settled. REXEL 2017 – REGISTRATION DOCUMENT 221