OVERVIEW OF THE REXEL GROUP professional distribution of low and ultra-low voltage Rexel has key attributes that wil l al low the Group electrical products. to achieve its medium-term ambitions, focusing on profitable growth and value creation. A costs structure favorable to profitable growth In a fast-changing energy world that opens up new The Rexel Group considers that its mainly fixed growth opportunities, Rexel plays a key role in the cost structure is an important driver for profitability, value chain between manufacturers and customers favoring improvements to its operating margin in and can count on: growth periods. Indeed, as the cost base is mainly A broad and valuable customer base: in 2017, Rexel • fixed, the Rexel Group is in a position to increase its managed 650,000 active customer accounts in 1 business volumes without increasing in the same three end-markets (residential, commercial and proportions its costs; growth therefore comes industrial); with higher marginal profitability. The Rexel Group has engaged in improving its fixed costs flexibility • A strong footprint in key geographies: Rexel holds through the development of digitalization and a leading or strategic positions in most markets in sales organization relying on shared structures. which it operates; Based on 2017 financial information, the Rexel Group • Key partnerships with globaland leading considers that the structure of its operating costs manufacturers: Rexel manages long-term before amortization comprises: relationships with its suppl iers, notably strong partnerships with the top 25 suppliers representing •Variable costs depending on the level of activity of close to 52% of Rexel’s total purchases; 76% (transport, commissions, etc.); and Fixed costs, flexible in the short- to medium-term • Best-in-class core capabi l ities: Rexel offers a • of 24% (salaries, rents, information systems costs, unique combination of local reach, broad offer etc.). of products and solutions, deep expertise, high level of service, robust logistics capabilities and IT The Rexel Group also aims at streaml ining its backbone; and expenses through the use of cloud-based solutions, An increasingly multichannel customer approach, which tend to replace fixed amortization expenses • by variable operating expenses. including a strong digital presence with digital sales already reaching 1.9 billion euros. An ability to integrate acquisitions Over the medium-term, Rexel aims to be a company In the context of a fragmented market with numerous that: acquisition opportunities, the Rexel Group considers • Is more focused in terms of geographies and that its size and strong local market shares, as market segments; wel l as its experience in terms of acquisitions and integration, al low it to better identify targets and • Structurally generates sales growth above that of carry out these acquisitions more effectively than the market; its smal ler-sized competitors or those with less • Is more profitable; experience in identifying synergies at the time of acquisitions. • Boasts a stronger financial structure, al lowing greater flexibility; Since 2010, the RexelGroup carried out 40 Rests on strengthened and committed teams; and consolidating acquisitions. • The risks associated with acquisitions are described • Creates value for its stakeholders. in paragraph 2.1.1.2 “Risks relating to acquisitions and To achieve these aims, Rexel continues implementing disposals” in this Registration document. a strategy based on three priorities and a driving force for implementing such priorities: 1.4.3 The Rexel Group’s strategy • Accelerating organic growth; The Rexel Group continues implementing its strategy • Increasing selectivity in capital al location and developed by the new management team. strengthening financial structure; REXEL 2017 – REGISTRATION DOCUMENT 25