Rexel S.A.

Patrick Berard - CEO Laurent Delabarre - Group CFO

Lucie Carrier - Morgan Stanley Andreas Willi - JPMorgan Chase Martin Wilkie - Citi Denis Moreau - UBS Alfred Glaser - Oddo Securities Christophe Quarante - Societe Generale Cross Asset Research

Yes. Good morning, ladies and gentlemen.

Welcome to this presentation of Rexel’s second quarter and first half 2017 performance. Today, I am with Laurent Delabarre, our newly appointed Group CFO, whom I would like to welcome back to Rexel.

I will start with an introduction. Laurent will then give you an overview of our Q2 performance by geography and our key financial aggregates for H1.

And I will make few concluding remarks while confirming our outlook. Obviously then we will be happy to take all your questions.

First of all, on Q2 and H1 at a glance; the Q2, 2017 is showing an acceleration in same-day sales growth. H1, 2017 is highlighted by 3.6% adjusted EBITA growth.

And for 2017, the full year financial target is confirmed. This will be the elements of the presentation today.

Regarding Q2, 2017, it shows that the performance was marked by continuous sales growth and an improvement in gross margin, while our profitability remains stable. Constant and same-day sales were up again this quarter, rising 2.8% to a little over €3.3 billion.

This represents the third consecutive quarter of improving sales trends, as you can see on the chart of the upper left end side of this slide. I would like to stress that we are pleased with this performance.

This performance is in line with the priority we presented at our Capital Market Day in February, and as we told you, focusing on organic sales growth, which is materializing. Sales accelerated on a sequential basis in all our geographies, with Europe growing by 3.6%, North America rising by 1.9% and Asia returning to positive territory, with sales up 1.4% in Q2 after being negative in Q1.

While our gross margin is up 10 bps our adjusted EBITA stood at about €150 million in the quarter, resulting in a stable margin of 4.5% in Q2. We saw a strong performance in Europe, where our margin was up 30 basis points year-on-year.

While North America and Asia Pacific margins are impacted by our investments in growth in the U.S. and sales drop in Southeast Asia.

If you move to next slide, the H1, 2017, let’s focus on the global vision of H1. Sales stood at about €6.7 billion, up 1.7% on a constant and same-day basis and the adjusted EBITA margin is up 10 bps, up 4.3%.

In absolute terms our adjusted EBITDA grew by 3.6%, fully in line with our expectations. Also note that reported EBITA benefited from rising copper prices and is up close to 11.9%.

We also boast a sound financial structure, with our indebtedness ratio at June 30, standing at 3.3 times EBITDA, which is in line with our bank covenants. We reiterate our commitment to be below times by the end of the year.

Note that as per our divestment plan we have already sold and terminated two small businesses in Southeast Asia. This performance is the first -- in the first half, that I was asked to confirm the 2017 financial target we presented at our Capital Market Day and I will return to this in my concluding remarks.

Now I will hand over to Laurent Delabarre who is making his making his debut on this call and for more detailed look at our Q2 performance by geography and our key financial aggregates for H1. Please Laurent.

Thank you, Patrick and hello everybody. Let’s now go through our customer review by geography starting with Europe, representing 64% [ph] of good sales on slide six.

In Europe our sales grew 3.6% on a constant and same-day basis and are accelerating sequentially in most of our markets supported by a very favorable environment. Our growth was driven by France where sales rose by a strong 4.7%.

Residential and commercial activity largely contributed to these improving trends. In Germany sales grew by 2.4%, driven by strong sales in industry notably cable sales.

However sales dropped in the UK and were down 0.9%. This represent a significant sequential improvement over 3.2% drop in Q1, mainly related to end of the negative impact from PV sales.

On slide seven, we focused on our profitability in Europe. Gross margin grew by a solid 30 basis points to reach 26.8% of sales in Q2.

This improvement was largely driven by the positive impact of supplier concentration, in line with the strategy presented at the Capital Market Day. This more than offset some temporary effects in France linked to the competitive environment in cable and in the UK where we faced delay in passing on price increases.

In France you should note that new cable norms in effect in July 1st should help us in the second part of the year. As a result adjusted EBITA margin improved by 30 basis points to 5.8% in Q2.

On slide eight, we turn to North America representing 33% of group sales. We continue to see improving sales trends in the region in Q2, with sales up 1.9% on a constant and same-day basis.

In the U.S. sales were up 1%.

On the project side, while the oil and gas business is growing in double-digits, we were affected by the non-renewal of a wind contract with a large contractor and by disruption in the supply chain of a large supplier. However our investments are already paying off with our Proximity business growing very well.

The other piece of good news in Q2 in North America was the return to growth of Canada, where sales increase by 5.3%. This improvement after a 2.1% drop in Q1 was driven mainly by the commercial end markets and we saw strong demand for the wind industry.

We also saw improving trends in our oil and gas industry in Canada, but unlike in the U.S. there were still negative territories.

Let's now look at profitability in North America on slide nine. Gross margin was up in the region as well, with a 15 basis points increase in Q2 to 22.4% of sales coming from both the U.S.

and Canada. Adjusted EBITA margins stood at 3.9% in Q2 dropping by 65 basis points.

This drop reflects investment to support our sales growth strategy. We opened four branches in the U.S.

in Q2 and six in H1, as start of the expansion plan we announced a few months ago and also added to on our commercial force to support our More customers X More SKUs strategy. Rounding out geography overview, we turn to Asia-Pacific on slide 10.

We returned to sales growth on a constant and same-day basis in Q2, with an increase of 1.4%. We however continue to see contrasting sales trends in the region and even within sub-regions.

In Asia, China posted solid growth, with sales up 16.9% on a constant and same-day basis, reflecting stronger sales of automation products, but also favorable comps, which will become more difficult in Q3 and Q4. In Southeast Asia, on the other hand sales fell sharply by 31.8% on a constant and same-day basis, largely due to this big slowdown in oil and gas.

The Pacific region is almost flat with a positive trend in Australia, offsetting the negative evolution in New Zealand. On slide 11, we focus on our profitability in the region.

Gross margins fell by 130 basis points in Q2 to 17.4% of sales, reflecting both the drop in sales in Southeast Asia, I commented on previously but also a country mix effect from China. OpEx and depreciation were down by €2.7 million or 4.8% in the quarter, reflecting lower bad debt expense thanks to better collection.

Adjusted EBITA margin stood at 0.9% of sales in Q2. I will now turn now to our key financial aggregates.

I will start on slide 13 by commenting on our sales growth evolution. On a same-day basis growth is accelerating to 2.8% in Q2 compared to 0.6% in Q1 2017.

Now on H1, as you can see on the chart, sales stood at €6.7 billion. The 2.4% growth is net of 1.7% same-day growth, 0.7% calendar effects, minus 0.6% scope effect, mainly related to the disposal of Baltics, Poland, Slovakia in 2016 and the oil and gas businesses disposed in Q2, 2017, as well as plus 0.6% of currency impact.

On the back of the recent currency market evolution, we anticipate the full year of currency effect to be a negative 0.9% on sales growth, assuming unchanged spot rates until the end of the year. On slide 14, we present on our profitability in H1.

Overall, with adjusted EBITA of about €285 million in H1, up plus 3.6%, our adjusted EBITDA margin at group level rose by 10 basis points to 4.3% of sales, mainly driven by Europe whose 10 basis points rise, offset drops in North America and Asia-Pacific. By geography the H1 trends are very much in line with what I previously described for Q2.

So I will not elaborate on those. Let me just highlight that the growth in group adjusted EBITDA was also helped by lower OpEx at holding level mainly due to a better cost control and also to non-recurring adjustments related to long-term incentive.

On a normalized basis, we estimate the OpEx at holding level to be circa €7 million per quarter. Let's move now to slide 15 with our P&L statement for H1.

Let's start from our reported EBITDA of €292 million, up €11.9 million year-on-year, which benefitted from a positive copper contribution. Other income and expense amounted to €49.9 million in H1 versus €32 million in the same period last year, which is the result of a €12.8 million of goodwill impairment in Finland and a loss on the asset disposal and the termination of business in Southeast Asia of €20.4 million This was partly offset by the decrease in restructuring cost, which stood at €13.9 million in H1 of this year versus €23 million H1, 2016.

Operating income stood at €232.4 million versus €219.7 million in H1, 2016, plus nearly 6%. Net financial expense amounted to €63.3 million in H1, that is €76.9 million in H1, 2016.

This includes a one-off charge relating to refinancing operations of €6.3 million in H1, 2016, versus a one-off of €10 million charge in H1, 2016. This charge is linked to the early redemption of the remaining outstanding U.S.

dollar bonds line issued in 2013 at a coupon of 5.25%. Excluding that one-off, net financial expense stood at €57 million in H1, 2017 versus €66.9 million in H1, 2016.

This decrease largely reflects lower average debt and a reduction in the average effective interest rate on gross debt from 3.7% in H1, 2016 to 3.2% in H1, 2017. Income tax amounted to €72.7 million in H1 versus €47 million in H1, 2016.

The rise in income tax mainly reflects the rise in profit before tax and non-tax deductible charges from goodwill impairment and asset disposal. The effective tax rate rose to 43% above the normalized tax rate of 36%.

As a result, net income stood at €96.4 million versus €95.8 million in H1, 2016, an increase of 0.7%. Recurring net income is up 4% to €139.3 million.

Slide 16, details of free cash flow before interest and tax for H1, which as you know is habitually [ph] marked by strong seasonality. Free cash flow before interest and tax in H1 was an outflow of €76.5 million above the €6.8 million outflow in H1, 2016, mainly impacted by the trade-offs in capital evolution, which stand at 14% of sales in 2017 compared to 13% in H1, 2016.

This increase reflects the rise in inventory, notably in the U.S. This higher inventory is to support a deeper larger offer and the opening of branches/counter as presented at the Capital Market Day.

In addition, the build-up in inventory is also explained by better sales momentum in major geographies. Net CapEx stood at €53 million, with an increased part of digitalization.

On a full year basis we target CapEx related to IT and digital to increase by close to 28% in 2017 compared to 2016 and to represent around 57% of total 2017 CapEx. Slide 17 present the usual bridge of our net debt over the years.

You will note that despite the negative free cash flow evolution, our net debt, a little over €2.3 billion is improving by €73.5 million, helped by the absence of acquisition and favorable currency effects. Our indebtedness ratio stood at 3.3 times at the end of June versus 3.2 times one year ago, reflecting traditional seasonality.

This is below our banking covenants and we confirm our commitment to below three times at the end of 2017. Slide 18 details our net debt at the end of June.

We have redeemed in June, our U.S. bond maturing in 2020, and issued in March, a 7 year €300 million senior notes due June 2024 at a coupon of 2.625%.

Thanks to this bond issuance and the extension of two bilateral lines our average maturity now stands at 4.2 years with no significant repayment before June 2022. This active financing management is reflected in the average effective interest rate on gross debt, as already pointed out down 50 basis points year-on-year from 3.7% in H1, 2016 to 3.2% in H1, 2017.

We also maintain strong financial flexibility with liquidity of around €1.2 billion at the end June. Let me now hand back to Patrick Berard for his concluding remarks.

Thank you, Laurent. On page 20, we have the summary.

We expect the second part of the year to be supported by sales growth acceleration in our major countries, where we are seeing signs of recovery notably France and the U.S. Our first half performance, which is in line with our expectations as well as our expectations for the remainder of the year allow us to confirm our annual financial target as announced on February 13.

We target resuming organic growth with sales up in the low single-digits on a constant and same-day basis. We also target a mid-to-high single-digit increase in adjusted EBITA.

And also we target indebtedness ratio of below three times at December 31st. A few updates on our key initiatives on page 21.

Let me take the opportunity to confirm our medium term target and share with you where we stand on the key initiative we presented at the Capital Market Day. First of all, this is a medium term plan, so returns will come gradually especially if you consider that projects like the transformation of our U.S.

business take time to translate into our numbers. However a number of actions are already underway that show the momentum inside the company.

I could tell you for example in the U.S. that the total management team just returned from a 10-day trip, which included a deep dive into the business and an internal road show during which we met about 2,000 of our employees to make sure that everybody is committed and on the same page, and everybody is acting to gain new customers.

And they are doing so. In addition, since the beginning of the year, we have opened six new branches and we also have transferred 10 counters.

We have recruited 305 people, of which 170 is sales persons. This is to sustain the next coming growth.

In the UK, we’re almost finished with the merger of five banners, from five down to two and the focus now is on margin strategy. In Germany, we’ve a new CEO in place and we will implement a new strategic plan by the end of the year.

By the way, the disposal process is underway with a dedicated team in place. Last but not least, digitalization is a clear focus of our mid-term journey, where the [indiscernible] sales account for 14% of group sales with the four best countries above 40%.

Sales calls via this channel increased by about 13% in the first half, outperforming the group average. Also eight countries representing 72% of group sales are now on-boarded on our company e-commerce platform and the acceleration we are seeing in online sales marks a clear inflection point.

We have the right strategy in place to capitalize on our unit multichannel strategy. It is a clear differentiating factor compared to pure web players.

And we will keep you updated on further progress of our initiatives. At that point, it concludes our presentation of the first half results.

I thank you for your attention and Laurent and myself are ready to answer your questions.

Hi, good morning, gentlemen. I’ll have a couple of question.

The first one actually is regarding pricing, and I was wondering whether you could comment how much pricing you were able to pass in the second quarter and whether or not you are able to pass fully the pricing versus raw material increase? Just also to have a sense of your view for also the second half pricing was.

So, that's the question number one.

Thank you. In Q2, prices increased by 1.2% on non-cable products compared to 1% in Q1 and compared to 0.7% in Q4 previous year.

And if you look at the price increase it can be splitted as follow: Europe, plus 1% of which plus 3% in the UK; North America, plus 1.8% mainly in the automation products. And Asia-Pacific plus 0.1%, but there was a negative trend in New Zealand.

Excluding UK prices would have been up around 1% on non-cable product. Does it answer your question Lucie?

Yes, partially, but I was wondering whether you had passed fully the pricing into your final customer versus the price increase of your suppliers? Just to get a sense whether there is a bit of delay for you in passing prices and whether you could have more pricing power potentially in the second half?

Yes, at the beginning prices coming from the supplier were pretty major and the first wave we couldn’t get all the price increases through, and especially in the UK and in certain products in France. In the UK, because it was raw material price increase from the supplier plus the currency effect that we have to pass in one-time and there were let’s say resistance from the marketplace.

We don’t give-up. We continue to get the complement portion of the price increases.

It’s virtually done in France now, it’s nearing down in the UK. Should the market continue to behave like it is.

Yes, it took some more time, but we will never give-up. We are getting there.

Thank you very much. My second question was related to the gross margin and this is up 20 basis points, I think in the quarter.

Especially in North America it’s up quite nicely. And I was wondering whether you could put shed light on, why you were able to increase your gross margin so nicely in North America, while some of your -- some of the other industrial distributors, notably Granger, Fastenal are taking big hits on the gross margin at the moment.

So in what are you different to these guys please.

The growth that we had is heavily in the Proximity business due to the strategy of opening branches, refreshing the counter, getting the Proximity business has a different mix than the project business and because the proximity business has developed nicely and we will continue to do so. This is the first fundamental driver -- structural in our gross margin improvement.

The financing, we work heavily on limiting certain of the rise -- scheduled prices in order to make sure there is a price discipline in place by which both the growth and the gross margin variation, one is not done totally at the cost of the other. Meaning growing for lower margin is an easy job, growing and maintaining or improving the gross margin it takes a bit more let’s say managerial discipline and selectiveness, which we are doing.

And last question, this is on your U.S. related investments, it has impacted a little bit the profitability.

I was wondering related to this investment whether in relative terms you expect more impact in the second half from this investment versus the first half or the other way around? And could you comment on the first uptake of this investment on your performance, whether this is working.

One thing is clear we invested heavily in U.S. as I told you the number of headcounts 170 sales people, more new branches and counter refresh and these things, have cost more including in OpEx and in working capital that we have put, like inventory.

And you do not see fully yet the results and nobody see it the results we expect from this, because we first invested. And we expect already in the second half some of the pay back, whether this is the increase in service level that we will obtain from higher inventories, as much as the net present identification in the region that we have presented with the Capital Market Day.

Therefore there is a delay between the expense or investments and the results. However we go by step.

This is the first level of investments made. Once we see the result of this one we go to further, especially in California for example where we will not give up on increased market share in our California plant.

So just I am sure that I understand well, are you saying that the impact of investments on your margin in the second half shouldn't be as large then in the first half considering that you expect to see some of the benefits already coming through?

Yes, on the OpEx side, we have roughly 50% of the increase in our OpEx in the U.S. That is coming from the investment in growth and that will continue in the second part of the year.

so you expect -- so you are saying you expect the same dilution in profitability from your investment in the second half versus the first half?

Yes, more or less, yes.

Okay.

Good morning, thanks for the time. I have two questions, please.

On the investments, could you give an envelope, sort of how much that is in total. And in terms of what you capitalize and what goes through the P&L this year?

And then how does the capitalized work itself through the P&L over the years? And the second question is on Canada, which had a very strong performance and a strong improvement relative to Q1.

What part of that, if it is only part of that, is sustainable, were there some one-offs in there particularly given it relates also to wind power, specific projects and also the non-residential market in Canada, that are -- so what happened in Canada in Q2 and to what degree is it sustainable for the second half?

Let me answer first on the Canadian situation. Canada suffered from the oil and gas and we decided to be less dependent on oil and gas.

And by the way, nothing [ph] has really recovered from the oil and gas yet, contrary to other parts like in the U.S. And we decided very early to invest in certain regions, Quebec for example, or in certain activities and obviously the wind is an activity in which we have started investing and collecting.

And as I told you some regions like Quebec and where we were in the average lower represented then for the Ontario for example. Therefore we are rebalancing the mix of regions and the mix of activity.

Canada is up for growth right now in the non-oil and gas business and we’d like to capture as much as we can. We do well in automation.

We do well in the non-resi market, commercial in Quebec. And obviously we expect sales in wind to continue, however not at same level of good Wind seen Q2 because it was a little bit higher than our expectation for the balance of the year.

On the first question I am sorry it was --

Can you repeat please the first question, it’s about…

Yes, I mean, if we look at the overall investment budget because obviously some is going through the P&L for IT and digitalization. Some is going through the P&L, some is going through the CapEx if you can give an overall number for this year and how that compares to last year and what part of that is capitalized and what part of it is expense?

Well we capitalized our capital investments and then on the OpEx side, it’s more of the fact having more sales force people and opening branches where you have day one salary and benefits and rents, but you don’t have the full profitability. We consider that it takes 12 to 18 months to breakeven branches.

So we will continue to invest in the second part and we’ll have this impact on the OpEx in second half and…

However the IT portion is increasing and more we see the need for going digital, digital content, digital transaction and so forth. The IT portion continues to be growing within the CapEx, the next largest consumption which is in logistics which is very much CapEx transitional CapEx driven and some branch fixed assets belong also to traditional CapEx at the moment we do branch openings there is those installation that goes along with it.

However one thing is also clear the digitalization front makes the OpEx going up also because we have less of hardware CapEx and more of consumption of platforms and access to and licenses which are in the OpEx flow. Therefore we live through a shift in the CapEx to the OpEx for certain IT, digitalization, however the CapEx for maintenance for example what we know what we have is 57% of our total CapEx and 43% is CapEx to sustain our value creation renew right now.

We find a sort out differently way maintenance above 50% and 43% value creation is for another way of looking at it.

Thank you very much.

Good morning everybody Denis Moreau from UBS. Three questions please.

The first relates to the change in working capital. Perhaps you could detail the change in North America compared to Europe, that could be a full [indiscernible] show.

The increase of 100 bps that we've seen as a percentage of sales, is that something on which we should count for the full year? Secondly could you detail the trends in July are very comparable to what we seen in the second quarter?

And my last question relates to the restructuring, we have had a new charge, could you detail in which regions it relates please?

Laurent you take the working capital, I take July.

On the inventory side, we increased our inventory to support different and larger offer and the opening of branch counter as presented at the Capital Market Day. And this is mainly half of the increase in inventory is indeed coming from the U.S.

Okay.

The July preliminary number trend are in the continuity of our Q2 and we don't see a change in the pattern of what we have experienced throughout Q2, May-June and continued in July. And on the restructuring side, on the other income and expense, we have two impacts as already commented.

The first one is the impairment of goodwill in Finland for €40 million. The other one is the impact of two businesses one that has disposed the other one that has been wind up in South-East Asia, which is the top most set of our disposal process.

And that has a €20 million negative impact on the other expense. And then we have restructuring cost that are spread over is up to-date, we have €2 million in China for the biggest part.

All right, .thank you very much.

Thank you.

Yes, thanks good morning. This is Martin from Citi.

Just a question on the U.S. oil and gas business.

You saw a growth there of 16% in the quarter. Obviously when that business originally fell two or three years ago, it tracked very closely the decline in the rig count.

And obviously people use the rig count as a very sort of rough proxy for activity in the North American oil and gas business. But when you look at your activity now, and obviously you've grown double-digit in the quarter, but obviously you've not seen the same acceleration as the rig count has.

When you look at that business, do you think the oil and gas improvement that you see will come at something of a lag and therefore we should expect that number to continue to improve into the second half, or has there been a sort of structural change in the way that you sell into oil and gas either through your choice or through the way that your customers operate. Just to understand how we should think about the developments of that number.

Thank you.

The oil and gas in the U.S. which has rig counted the build interest is mainly maintenance either of stopped facilities or low level activity, which need to be refreshed.

We're not going after new investments, major investments and what we have experienced in the past. Therefore as we speak and it will continue like this probably throughout the rest of the year this is the restart and all the refreshing of existing, which is heavy maintenance, no more no less.

To be totally transparent, we will be prudent in not becoming heavily dependent from major investment that go up and down in the oil and gas and would create a distraction from our decisions to be developing both our proximity business, the proximity project and specialty business throughout the U.S. not distract from the region where we want to be at the cost of other things.

We stay on our existing Capital Market Day strategy, where we go deeper regionally, where we take every advantage we can and when oil and gas comps as -- but generally the percentage are nice because it went so far down that obviously getting a double-digit growth is just let's say some demand that it’s not per se an exit strategy.

Okay, that's helpful. And if I could just clarify something, you mentioned about your branch increases and how the new branches get to breakeven in 12 to 18 months, just to clarify by that do you mean they are loss making in the first 12 to 18 months or is that they are margin dilutive for the first 12 to 18 months?

I'm not sure, I understood.

So do the new branches have a negative margin for the first 12 to 18 months or is it just that they are lower than the regional average?

Now let's say every branch opening has negative result in the first 12 months is the average, almost for all of them and they breakeven between 12 and 18. Now price wise, we don't buy at low price, we go in this market at let's say good, I mean, normal market pricing not to create price distraction, just to get more volume immediately in the region where we open up.

Therefore yes it’s 12 months of let's say negative contribution that part of the plan as we explained it.

And when would a branch expected to reach the average for the region. So I realized that obviously a lot of the overhead is central, but if would think of the gross margin of a new branch, if it is breakeven within 12 to 18 months, when would it reach the average margin for the North America region, is it sort of sometime a year two or three or is it sometime later than that?

No, end of year two it’s the average.

Okay, no that's very helpful. Thank you.

And so the enterprises question, I need to give you the restructuring guidance for 2017, we are expecting a €50 million of restructuring cost.

Yes, good morning. I wanted to ask you about France, could you go a bit into more detail explaining how has you published strong acceleration in Q2?

For France we expected the market let's say, stabilization and positive outlook now for almost couple of quarters in a raw and we got prepared for it, the team allocation, the customer list allocation and the detail work, because given our presence we didn’t wanted to mix that. And we focused on segment, regions, geography and we got it and we got it in May, June, which you could see visible in our Q2, this is probably the country where we could capture the growth when was available and the first quarter was mainly driven was mainly the time stamp at getting the price increases through to their max that we could.

And the second was to take that price level as much as getting the growth available and some market share gains, above the growth, which gives us the natural market growth, what you see in our Q2.

And did you register more acceleration in residential or non-residential and could you say a few words about larger projects, did you accelerate revenues in other projects not specifically ?

No we gained let’s say the industry business was about flat and mainly we had to get the price increases full, the residential business we grew in and but it’s not geography because it’s residential and commercial and it’s very uneven depending where and it’s subject that the metropolitan areas in France are capturing and showing signs of growth or some local businesses that we were able to capture. It’s less big project yes, we have a few big projects it’s nice to have because it shows that our model is also able to cope with this as we always told you in the past and we are on the main project.

But so far the main project in France are infrastructure projects and less electrical products driven. However we have the [indiscernible], but most of the growth is also in the medium size fragmented markets in the main region where they are we took them.

All right thank you very much. And could I just follow-up on your CapEx you commented detailed numbers for IT logistics for the full year you still expect kind of range of €130 million to €160 million?

We expect to have yes something a bit north of €100 million and again €57 million of that will be related to IT and digitalization. During the Capital Market Day we said that the range for the next few years will be €100 million to €150 million per year.

And the first half is telling us we will respectively spend that amount depending year-on-year on where that digital proportion will be increasing and we’ll keep going not to give up on any need for digital content, digital transaction, and digital back office as it was said. And what we said in the Capital Market Day is being confirmed those remember that total CapEx and even more in terms of digital structure or back office automation and probably throughout the coming half year to come from digital and logistics and like the automation I am sorry automation and logistics.

But the global envelop remain the proportion digital increase.

Okay. And for the full year is it right to say that you expect to be closer to €100 million than to €160 million in 2017?

We be close to 2016 around €120 million.

Okay, thank you.

Yes good morning everybody Chris Quarante, Societe Generale, few question if I may the first one is regarding Europe as there is a new regulation entering into service as of 1st July you have mentioned that then could you give us your view about the evolution about that. Is there any issue with regard to the ability of distributors to sell all their cables out of the CHR regulation during six months?

Does it imply potential pricing pressure with regard to the destocking of the distributors related to this regulation? And that’s my first question.

Second question is about competitive environment could you give us your view about what’s going on in the main regions? Third question is about net debt-to-EBITDA as you are lower than last year we have understood that it may -- it came from mainly your inventories but what is your view about landing at below the level you mentioned?

i.e. below three times if I'm right.

That’s it at this point of time.

Well about the norm, yes first of all the norm was made for manufacturer and in order to increase quality, fire resistance or freshability of the product. These norms are in place since July 1st.

And for distributor, we have a six months period after July 1st in order to eliminate or get rid of whatever of the existing inventories. Now, six months of inventory of old products and hopefully nobody in any case we don’t.

And otherwise you would see that in our inventory level, which is absolutely another case. But as a distributor we allowed to sell the remaining until the end of the year and by the way the contractors are allowed to install this product, once the building permit has been should be for the new regulation is unforced meaning the market will empty the pipelines, both from the distributor before the end of the year and the contractor, they could still use them next year, should they have a working permit passed before July 1st.

And should they find product in the pipeline. Full furnace we don’t replenish and we didn’t replenish and we didn’t build any inventory in the old product first of all because we believe the new product will be also prescribed.

And it’s part of the working permit and the demand by mini contractor. Therefore, we will have all inventories eliminated before the end of the year for sure.

There will be no inventory issue around this month for us. And we so sell and yes there will be some competitive situation price pressure, but it’s our job to get renewed norm at the right price, which we’ve announced in our cable pricing -- we’ve announced to the market already.

About the competitive situation throughout Europe, well no major changes if you compare to the last 12 months. Some people not having coal blast to get the price increases through competitive being both distributor but also the direct business vendors who were passing price increases to us and not always in their own direct business at the same time.

Therefore we took the six months period of time to get some clarity on this front, but it’s usual we are used too and actually it’s not what we like, but it’s our job also first to convince and second to make sure that there is not a dual behavior but not too long in any case by some manufacturer, that's one thing. And regarding our net debt-to-EBITDA, Laurent.

Yes I will take it, as you there is some seasonality for the three months at the end of June is always higher than at the end of December, this time in June as presented at the Capital Market Day, and we start in specific country and especially in the U.S. And we may consider that we have also high level of touch, because we are preparing the Q3 and we are sticking eyes on the terms that's why we have a bit more inventory at the end of June.

But of course we are managing our inventories very closely on a monthly basis. And that is on our focus today we fully confirm that we will be below three by the end of the year as announced at the Capital Market Day.

Yes, hello.

Yes.

Thank you very much. May I ask another one, about the potential risk with Amazon business, we are seeing that some papers highlighting that Amazon is taking place in some region of the U.S.

for dedicated businesses. Could you come back on your view about this potential threat medium term please?

Well, without commenting how we would done, the fact that some of the view is static that 60% of the Rexel business would be threaten by Amazon, it’s absolutely not, the right calculation would that I would agree with absolutely not. Now, it doesn’t mean Amazon is not entering into our business, they decided to enter the B2B and as well will become third player in the game for certain products.

First the MRO business and some commodity business, which is largely distributed volume wise and it could be made available to them I mean nobody should be regard this now is it 60% absolutely not. But let’s put it this way, Amazon coming to this world this is raising the bar, this is the bar in the speed at which digital has to be done and will be done and we are doing.

At the same time we are multichannel, increasing our own capability in the proximity business presence for immediate availability, doing project with the full supply chain able to deliver within two hours under the pricing any place at any time in any format. At the same time becoming digitally intrigued [ph] in term of interface with [indiscernible] Amazon traditionally like or it’s call and collect and not just click and collect the people use their phone including the mobility by it in apps on tablet and mobile phone, including available to more and more of our customers.

We continue to believe in this multichannel interface to customer and should Amazon become more present, we feel we are also equipped with different argument in order to help them in the battle, as much as it could be expected. It’s not Amazon that we feel everybody it’s Amazon coming to our field and we have to play our cards and we have to accelerate our transformation in the digital, it raise the bar, some people will not be able to get it done, coming from the traditional and we plan to be in this game with our argument.

Therefore we accelerate the digital, but it raise the bar and it creates further selectiveness all is to be under side of the winners.

Okay, thanks a lot.

Well, if there is no other question. First of all thank you for having taken the time on the busy moment of the year and busy day.

And I would like to thank you for having being on this call. And it’s time now for me to wish you a happy holiday, if it’s not yet done still to come and for the one returning good work.

And we will have you later on during the year on October 27th for our third quarter 2017 results. Because this is now the next date of our next call.

And thanks a lot. Bye-bye.