OVERVIEW OF THE REXEL GROUP •Improving operational and financial performance; Reflecting Rexel’s strategy of increasing its focus on geographies and market segments that offer the best •Accelerating its digital transformation. profitable growth and value-creation opportunities, Rexel announced a divestment program that wil l 1.4.3.1 Accelerate organic growth be completed by the end of 2018. Based on ful l- year 2016 consolidated accounts, total divestments, Rexel’s priority on organic growth is based on two once achieved, should have the following financial fundamental pillars: More customers & More SKUs. impacts: Indeed, Rexel targets both net customer gains and A reduction of c. €800 mil l ion in the Group’s • increasing its portfolio share with each customer. consolidated sales; Its customer approach wi l lbe differentiated, A positive contribution of c. 25 bps to the Group’s according to three main customer profiles: • consolidated Adjusted EBITA margin; and •“Proximity” customers (representing c. 60% of Group sales): Rexel will broaden its footprint and • A slight improvement in the indebtedness ratio. expand its presence in selected areas through As regards capital expenditure, Rexel’s investments branch/counter openings, accelerate its multi- wil l be focused on both organic growth enablers channel approach and constantly improve its and productivity enhancers, through increasing service level; digitization and optimization of its branch network, “Projects” customers (representing c. 25% of on the one hand, and automation of logistics and • Group sales): Rexel wi l l industrial ize its offer back-office digitization, on the other hand. process of products and solutions to customers Rexel aims also at strengthening its balance- managing industrial and commercial projects; and sheet through deleveraging, while maintaining an “Specialty” customers (representing c. 15% of attractive dividend policy of paying out at least 40% • Group sales): Rexel will increase its ability to meet of recurring net income. specific requirements for specialized products In the medium-term, Rexel will continue its targeted and solutions. bolt-on acquisition strategy from 2018 onwards, in This “More Customers & More SKUs” strategy wil l line with its deleveraging objective and strict value- be supported by accelerated digitization of sales creation criteria. This acquisition strategy fol lows and operations, including the development and three main objectives: broaden its footprint in the implementation of new tools and applications. most attractive geographies and segments (with a priority on the US market), expand to adjacent Consistent with this strategy, Rexel has aligned its segments in key markets and capture more of the business KPIs and created new scorecards across value chain. the Group, revised its incentive pol icies and is constantly adapting its human resources strategy to ➤ Rexel’s medium-term ambition is to allocate capital reflect the need for new skills. to high growth/high profitability geographies and segments and to use solid cash generation to (by ➤ Rexel’s medium-term ambition is to achieve order of priority): organic sales growth above market growth. • Fund capital expenditure of between €100 and €150 million; 1.4.3.2 Increase selectivity in capital allocation and strengthen financial structure • Pay-out a dividend of at least 40% of recurring Rexel intends to increase selectivity in capital net income; allocation, both in terms of capital expenditure and Finance selective bolt-on acquisitions from 2018 • investment. The Group also intends to strengthen its onwards, with strict value-creation criteria; and financial structure and increase its financial flexibility through deleveraging. • Reduce its indebtedness ratio. REXEL 2017 – REGISTRATION DOCUMENT 26