FINANCIAL AND ACCOUNTING INFORMATION 3.14 Sales of acquired companies, separation costs, acquisition Revenue arising from the sale of goods is presented related costs from business combinations and gains in sales in the income statement. Sales are or losses on earn out as wel l as other significant recognized when the significant risks and rewards items such as disputes. These items are presented of ownership have been transferred to the buyer, separately in the income statement in order to allow which usually occurs with the delivery or shipment the Chief Executive Officer and the Deputy Chief of the product. Executive Officer acting as Chief operating decision maker within the meaning of IFRS 8 “Operating Sales are recognized net of customer rebates and Segments”, to assess the trading performance of the discounts. business segments. The Group may enter into direct sales (as opposed 3.17 Financial expenses (net) to warehouse sales) whereby the product is sent directly from the supplier to the customer without Financial expenses (net) comprise interest payable any physical transfer to and from the Group’s on borrowings calculated using the effective warehouse. The Group is acting as principal and interest rate method, dividends on preference therefore recognizes the gross amount of the sale shares classified as liabilities, interest receivable on transaction. funds invested, dividend income, foreign exchange gains and losses, and gains and losses on hedging 3.15 Supplier rebates instruments that are recognized in profit or loss (see In line with industry practice, Rexel enters into annual note 3.8.5). agreements with a number of suppliers whereby Interest income is recognized in profit or loss as it volume-based rebates, marketing support and accrues, using the effective interest rate method. other discounts are received in connection with the Dividend income is recognized in profit or loss on purchase of goods for resale from these suppliers. the date the entity’s right to receive payment is Rebates relating to the purchase of goods for resale established which in the case of quoted securities are accrued and recognized as a deduction of cost is the ex-dividend date. The interest expense of goods sold or a deduction of inventory for the component of finance lease payments is recognized goods in stock at the balance sheet date. in profit or loss using the effective interest rate method. Part of volume-based rebates are determined by reference to guaranteed rates of rebate 3.18 Income tax (unconditional rebates). These are calculated through a mechanical process with minimal judgement. Income tax on the profit or loss for the periods Another part of volume-based rebates is subject to presented comprises current and deferred tax. stepped targets the rebate percentage increases as Income tax is recognized in profit or loss except volumes purchased reach agreed targets within a to the extent that it relates to items recognized set period of time (conditional rebates). The majority directly in other comprehensive income or in equity, of suppliers’ rebate agreements apply to annual in which case it is recognized respectively in other purchases eligible to rebates. Determination of the comprehensive income or in equity. rebate amount recorded in the income statement at Current tax is the expected tax payable on the the balance sheet date relies on estimate of purchases taxable income for the year, using tax rates enacted subject to rebates by category of products. or substantively enacted at the balance sheet date, Marketing support, which represents a smaller part and any adjustment to tax payable in respect of of the Group’s supplier rebates is recognized in the previous years. cost of goods sold once al l relevant performance Deferred tax is provided using the balance sheet criteria have been met. liability method, providing for temporary differences between the carrying amounts of assets and liabilities 3.16 Other income and other expenses for financial reporting purposes and the amounts Other operating income and expenses include, used for taxation purposes. The following temporary irrespective of their amount, gains and losses on differences are not provided for: (i) goodwil l not asset disposals, asset impairment and write-offs, deductible for tax purposes, (ii) differences relating expenses arising from the restructuring or integration to investments in subsidiaries to the extent that they REXEL 2017 – REGISTRATION DOCUMENT 228