REXEL IN 2017 To achieve these aims, Rexel continues implementing value-creation opportunities, Rexel announced a a strategy based on three priorities and a driving divestment program that will be completed by the force for implementing such priorities: end of 2018. Based on ful l-year 2016 consolidated Accelerating organic growth; accounts, total divestments, once achieved, should • have the following financial impacts: •Increasing selectivity in capital al location and strengthening financial structure; • A reduction of c. €800 mil l ion in the Group’s Improving operational and financial performance; consolidated sales; • and • A positive contribution of c. 25 bps to the Group’s Accelerating its digital transformation. consolidated Adjusted EBITA margin; and • • A slight improvement in the indebtedness ratio. Accelerate organic growth As regards capital expenditure, Rexel’s investments Rexel’s priority on organic growth is based on two wil l be focused on both organic growth enablers fundamental pillars: More customers & More SKUs. and productivity enhancers, through increasing Indeed, Rexel targets both net customer gains and digitization and optimization of its branch network, increasing its portfolio share with each customer. on the one hand, and automation of logistics and Its customer approach wi l lbe differentiated, back-office digitization, on the other hand. according to three main customer profiles: Rexel aims also at strengthening its balance •“Proximity” customers (representing c. 60% of sheet through deleveraging, while maintaining an Group sales): Rexel wi l l broaden its footprint attractive dividend policy of paying out at least 40% and expand its presence in selected areas of recurring net income. through branch/counter openings, accelerate its In the medium-term, Rexel will continue its targeted multichannel approach and constantly improve its bolt-on acquisition strategy from 2018 onwards, in service level; line with its deleveraging objective and strict value- •“Projects” customers (representing c. 25% of creation criteria. This acquisition strategy fol lows Group sales): Rexel wi l l industrial ize its offer three main objectives: broaden its footprint in the process of products and solutions to customers most attractive geographies and segments (with managing industrial and commercial projects; and a priority on the US market), expand to adjacent “Specialty” customers (representing c. 15% of segments in key markets and capture more of the • Group sales): Rexel will increase its ability to meet value chain. specific requirements for specialized products ➤ Rexel’s medium-term ambition is to allocate capital and solutions. to high growth/high profitability geographies and This “More Customers & More SKUs” strategy wil l segments and to use solid cash generation to (by be supported by accelerated digitization of sales order of priority): and operations, including the development and Al locate between €100 and €150 mil l ion in • implementation of new tools and applications. capex; Consistent with this strategy, Rexel has aligned its Pay-out a dividend corresponding to at least • business KPIs and created new scorecards across 40% of recurring net income; the Group, revised its incentive pol icies and is constantly adapting its human resources strategy to • Finance selective bolt-on acquisitions from 2018 reflect the need for new skills. onwards, with strict value-creation criteria; and ➤ Rexel’s medium-term ambition is to achieve • Reduce its indebtedness ratio. organic sales growth above market growth. Improve operational and financial performance Increase selectivity in capital allocation and Rexel aims at continuously increasing its profitability strengthen financial structure through gross margin enhancement and strict cost Rexel intends to increase selectivity in capital control. Gross margin improvement will be driven by allocation, both in terms of capital expenditure and systematic implementation of pricing initiatives and investment. The Group also intends to strengthen its supplier relationship management. Rexel wil l also financial structure and increase its financial flexibility strictly manage its cost base, reducing overhead through deleveraging. Reflecting Rexel’s strategy and improving productivity, while, at the same time, of increasing its focus on geographies and market reallocating operating expenses to accelerate sales segments that offer the best profitable growth and growth and digitization. CONVENING NOTICE OF THE COMBINED SHAREHOLDERS’ MEETING 13