RISK FACTORS AND INTERNAL CONTROL Considering the status of pending tax litigations tax reassessments or lower-than-expected results and discussions with the tax authorities, Rexel could have a negative impact on the Rexel Group’s believes that no material effect is to be expected financial condition or results. As at December 31, with regards to its financial condition or its results 2017, the Rexel Group’s deferred tax assets linked of operations. However, Rexel cannot predict the to tax loss carry-forwards amount to €252.2 million, outcome of these cases with certainty or assess depreciated in an amount of €132.4 million (for more potential tax adjustments. information regarding deferred tax see note 11.2 of judicial the Notes to the consolidated financial statements There are no other governmental, or of the Rexel Group for the financial year ended arbitration proceedings (including any outstanding December 31, 2017, which are set out in section 5.2 or threatened proceedings of which Rexel is aware “Consol idated Financial Statements” of this of) that might have or that had during the last twelve Registration document). months a material impact on the financial condition or profitability of Rexel or the Rexel Group. Management of risk 2 The Rexel Group cannot rule out the possibil ity In order to limit the risks related to legal and tax rules that new claims or lawsuits may arise as a result of applicable in the various countries where the Rexel facts or circumstances that are not known and the Group is established, the legal and tax management risks of which cannot, therefore, be ascertained or of the Rexel Group, as well as tax experts assist local quantified at the date of this Registration document. management in their transactions in respect of local Such claims may have an adverse effect on its or international applicable laws. financial condition or results of operations. 2.1.2.3 Risks relating to non-compliance 2.1.2.2 Risks relating to legal and tax regulations Risk As any other company, the Rexel Group is exposed to Risk the risk of non-compliance with laws and regulations, Like any international group operating in multiple in a context where regulations are constantly jurisdictions, the Rexel Group has structured its evolving and where the judicial authorities are more commercial and financial activities in a manner and more active. which takes into consideration various legal and tax Rexel cannot guarantee that none of its employees requirements. Such requirements are derived from or partners wi l l ever violate these laws and internal laws of countries where the Group is set regulations or procedures potential ly voluntary or up, as wel l as international treaties between these involuntarily, which may impact its reputation or countries. financial situation. The appl ication of tax regimes to the Rexel Group’s operations, intra-Group transactions Management of risk or reorganizations may require reasoned The Rexel Group implements pol icies and interpretations. The Rexel Group cannot guarantee procedures to ensure compliance with applicable that such interpretations will not be questioned by local and international laws, such as, but not the relevant tax authorities, which may adversely limited to, preventing and combating corruption, affect its financial condition or results of operations. export control, combating money-laundering, data Furthermore, the Rexel Group may record deferred protection, or competition law. In 2017, the Rexel tax assets on its balance sheet, reflecting future Group continued to rol l out training sessions to tax savings resulting from discrepancies between employees (via e-learning and on-site sessions) in the tax and accounting valuation of the assets and addition to regular communication on compliance liabilities or in respect of tax loss carry-forwards topics. from its entities. The actual recognition of these As regulations evolve, regarding in particular, assets in future years depends on tax laws and international sanctions, combating corruption regulations, the outcome of potential tax audits and (French regulation Sapin I I which came into force in on the expected future results of the relevant entities. June 2017), and data protection (European General Any reduction in the ability to use these assets due Data Protection Regulation which wil l come into to changes in local laws and regulations, potential force in May 2018), the Rexel Group ensures that REXEL 2017 – REGISTRATION DOCUMENT 41