OVERVIEW OF THE REXEL GROUP The choice of one of these distribution modes for productivity gains, generate economies of scale a given region depends on numerous parameters, in logistics; benefit from the supplier’s marketing in particular the customer concentration, market resources as wel l as their support in introducing size,the density of the branch network, the innovations on the market. The Rexel Group’s active product offer, competition as wel l as the type and suppl ier management has resulted in a gradual diversity of services to be suppl ied. In addition, concentration in its purchases. the Rexel Group can adapt each of these variants to take into account the characteristics of each The Rexel Group’s supplier relations are governed region. by short- to medium-term contracts. If the sales density allows it, the Rexel Group seeks The Rexel Group considers that it has general ly to centralize flows through logistics centers. favorable relations of interdependence with most of its major suppliers, thus limiting the inherent risks in The risks associated with the Rexel Group’s logistics a concentration of suppliers, as shown in the table structure are described in paragraph 2.1.1.5 “Risks below: relating to the Rexel Group’s logistical structure” in this Registration document. DECEMBER 31, Strategic relations with suppliers (# of suppliers to achieve) 2017 2016 In order to adapt its supply structure to the 50% of purchases 23 25 specificities of each country or geographical zone, 80% of purchases 261 327 and to optimize its purchasing conditions, the 100% of purchases 10,065 10,897 Rexel Group has implemented partnerships with its suppliers at several levels: The risks associated with suppl ier dependence On a global level, around thirty international are described in paragraph 2.1.1.6 “Risks relating • suppliers are considered “strategic suppliers” by to suppl ier dependence” in this Registration the Rexel Group. These suppliers are present in document. different countries on one or several continents and are committed with the RexelGroup in An economic model that generates cash flows international development programs; The Rexel Group’s operating profitability, associated •At each country level, the Rexel Group subsidiaries with the rigorous management of its working capital negotiate specific purchasing conditions with requirements and low capital intensity, al low it to national suppliers; and generate significant cash flows. •At a local level, the branches may also negotiate A component of the managers’ variable specific sales conditions with their suppliers. compensation is based on efficiently managing The Rexel Group has a policy of concentrating its working capital requirements, aimed at reducing suppliers, with the aim of rationalizing its purchasing inventories and customer payment terms thanks to pol icy and strengthening its relations with the the continuous optimization of logistics and credit most important suppliers. Thus, the Rexel Group management. The deployment of the logistics model organizes supplier relations around a limited number to a structure based on hub branches and regional of strategic suppliers – global players in the low and distribution centers as wel l as the implementation ultra-low voltage electrical products industry – and of debt recovery monitoring software are examples a certain number of suppliers operating in a given of initiatives that have led to a reduction in working region or country. capital requirements for the Rexel Group in percentage of sales. In this way, the Rexel Group promotes the development of sustainable relations with its In addition, the Rexel Group has maintained its strategic suppliers who have the ability to contribute gross capital expenditure over the last three years to the growth of its business both on global and to an annual level of between €110 and €120 million local levels. These privileged relations enable the of its consolidated sales. This investment policy is Rexel Group to have more bargaining power, obtain representative of the low capital intensity of the REXEL 2017 – REGISTRATION DOCUMENT 24