FINANCIAL AND ACCOUNTING INFORMATION Notes to the Company’s financial statements subject to an al lowance to cover the risk of non- recovery. 1. Description of business Assets and l iabi l ities denominated in foreign Rexel SA incorporated in December 2004 is the currencies are converted at the year-end exchange holding company of Rexel Group. As such Rexel SA rate. Exchange rate differences arising from this owns Rexel Développement SAS shares and provides adjustment are recorded on the balance sheet as the financing of its direct and indirect subsidiaries. “unrealized exchange rate gains or losses”. 2. Accounting principles For assets and liabilities denominated in foreign currencies and subject to foreign exchange hedge The financial statements for the year ended (hedge fixing the foreign currency at the maturity December 31, 2017 are presented with comparative date) two cases should be considered: amounts for the year ended December 31, 2016 and have been prepared in accordance with French law, •Perfect hedge (the nominal amount of the hedging with the principles and policies defined in Autorité instrument is equal to the nominal amount of the des Normes Comptables (ANC) Regulation 2014- underlying at the closing date): no unreal ized 03, approved by government order of September 8, exchange differences should be recognized since 2014, relating to the French general Accounting the unreal ized exchange gains and losses on standards, and with accounting principles generally the underlying asset and liability is offset by the accepted in France. unrealized gains and losses linked to the hedging instrument. The accounting principles set out below have been applied in a prudent manner, and in conformity with •Imperfect hedge (the nominal amount of the the following concepts: hedging instrument is different than the nominal amount of the underlying at the closing date): 5 •going concern, Only the unrealized exchange loss is provided for consistency of accounting method, through the income statement. • •independence of accounting period. 2.4 Short-term investments Main accounting principles used are described Short-term investments are recorded at acquisition hereafter. cost, with a provision to cover any unrealized losses. 2.1 Long-term financial assets Own shares held and already attributed to free Long-term investments are initial ly measured at shares plans are recorded at acquisition cost until acquisition cost. A valuation allowance is recorded their delivery to recipients. when carrying value exceeds value in use. Rexel determines the value in use of long-term investments 2.5 Borrowings and related issuing cost in subsidiaries on the basis of projected cash flows Borrowings are recognized at nominal value. Bonds less net debt. When the carrying amount exceeds issue costs are recognized through the income value in use, an impairment write-down is recognized statement. Bonds premiums are amortized, either for the difference. over the life of bonds, or in proportion to accrued interests. Bonds in foreign currency are converted at 2.2 Loans and other long-term financial assets closing exchange rates. Loans and other long-term financial assets are initially measured at nominal amount. When considered 2.6 Financial instruments covering currency and necessary, a valuation al lowance is recorded to interest rate risks cover the risk of non-recovery. Own shares held are In order to optimize the cost of its financial debts, measured at the year-end closing price. Rexel uses derivatives instruments to hedge against foreign exchange and interest rate risks, in particular 2.3 Receivables and payables foreign exchange and interest rate swaps, forward Receivables and payables are recorded at historical exchange contracts, and interest rate and foreign cost. When considered necessary, receivables are exchange options. REXEL 2017 – REGISTRATION DOCUMENT 281