Inditex Group Consolidated Annual Accounts As at 31 January 2018
Total Page：16
File Type：pdf, Size：1020Kb
INDITEX GROUP CONSOLIDATED ANNUAL ACCOUNTS AS AT 31 JANUARY 2018 Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain and of consolidated annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see initial Note and Note 33). In the event of a discrepancy, the Spanish-language version prevails. 1 Deloitte, S.L. Ferrol 1 15004 A Coruña España Tel: +34 981 12 46 00 www.deloitte.es Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails. INDEPENDENT AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS To the Shareholders of Industria de Diseño Textil, S.A., Report on the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Industria de Diseño Textil, S.A. (“the Parent”) and its subsidiaries (“the Group”), which comprise the consolidated balance sheet as at 31 January 2018, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the consolidated financial statements for the year then ended (“2017”). In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated equity and consolidated financial position of the Group as at 31 January 2018, and its consolidated results and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRSs) and the other provisions of the regulatory financial reporting framework applicable to the Group in Spain. Basis for Opinion We conducted our audit in accordance with the audit regulations in force in Spain. Our responsibilities under those regulations are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements, including those pertaining to independence, that are relevant to our audit of the consolidated financial statements in Spain pursuant to the audit regulations in force. In this regard, we have not provided any services other than those relating to the audit of financial statements and there have not been any situations or circumstances that, in accordance with the aforementioned audit regulations, might have affected the requisite independence in such a way as to compromise our independence. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Deloitte, S.L. Inscrita en el Registro Mercantil de Madrid, tomo 13.650, sección 8ª, folio 188, hoja M-54414, inscripción 96ª. C.I.F.: B-79104469. Domicilio social: Plaza Pablo Ruiz Picasso, 1, Torre Picasso, 28020, Madrid. Measurement of inventories Description Procedures applied in the audit As indicated in Note 12, the value of the In response to this key matter, our audit included, Group’s inventories at year-end was EUR among others, the following procedures: 2,685 million, representing 13.3% of the - An assessment of the consistency of the Group’s total assets. These inventories relate accounting principles and rules applied by the mainly to finished goods and are distributed Group to measure its inventories at 31 January among the various points of sale, distribution 2018 with the applicable regulatory financial centres and other warehouses managed by reporting framework. the Group. Given the nature of the business of Inditex, a very high volume of stock- - An assessment of the design, implementation and operational effectiveness of the key controls keeping units (SKUs) is designed and put on in place in the inventory management and sale over the course of the year; these SKUs measurement process, with the involvement of rotate based on the season and customer our IT experts in performing the tests on tastes and demand, generating, therefore, a automatic controls applied to the relevant high volume of movements of inventories. software involved in the process. We identified this matter as key in our audit, - For a representative sample, verification that the due to the importance of the judgements and finished goods inventories were correctly assumptions applied by the Group to measured, using a recomposition of the determine the cost and recoverable amount measurement of those inventories based on the of each SKU and the complexity of the cost of acquiring them from suppliers and logistics activities carried on by the Group in considering the costs directly attributable to such order to manage its products, which give rise goods. to numerous SKU movements between - Assessment of the key estimates used by Group various different locations. management to determine the net realisable value and the consistency thereof with Group policies and actual historical and other information, such as sales and returns after the reporting date. - Assessment of consolidated Notes to the financial statements disclosure compliance with the regulatory financial reporting framework. The results of the procedures performed in relation to the analysis of the accounting principles and rules and estimates applied by the Group, to the assessment of the key controls in place in the measurement process, to the disclosures included in the consolidated notes to the financial statements and to the performance of specific substantive tests were satisfactory. - 2 - Impairment of non-current assets (stores) Description Procedures applied in the audit As indicated in the Note 13, at 31 January In response to this key matter, our audit included, 2018, the Group’s property, plant and among others, the following procedures: equipment amounted to EUR 7,644 million - An assessment of whether the methodology and related mainly to investments made in established by management to identify stores operated by the Group and to the value indications of impairment and the of the investments in corporate non-current quantification thereof for each cash- assets (logistics centres, offices, etc.). generating unit are appropriate, comparing their consistency with the applicable financial Under EU-IFRSs, the Group must perform an reporting framework. impairment test on its portfolio of stores when there are indications of potential impairment - An assessment of the design, implementation or reversals thereof. and operational effectiveness of the relevant controls implemented by the Group to ensure The definition of indications that the stores’ the accuracy of the estimation of impairment non-current assets may have suffered and the completeness of its recognition for impairment and the performance of an accounting purposes. impairment test thereon were identified as - Involvement in the audit team of valuation key in our audit, since management's experts to evaluate the methodologies and assessment of possible impairment is a assumptions used by the Group, in particular complex process that includes a significant those permitting the calculation of the level of estimates, judgements and discount rates in the various geographical assumptions. areas. The main assumptions used by the Group - Analysis of the consistency and were as follows: reasonableness of the assumptions used by Group management in the impairment tests, - determination of the cash-generating units; including, inter alia, a detailed review of the sensitivity tests in which management - the income and expense growth rates by stresses those assumptions considered key. country and cash-generating unit; - Based on a representative sample of cash- generating units, a review of the correctness - the specific discount rates used in each and accuracy of the calculations performed to country; determine the recoverable amount of the aforementioned cash-generating units. - the estimated terms of the leases of the stores operated under leases; and - Assessment of consolidated Notes to the financial statements disclosure compliance - the tax rates to be applied to the cash with the regulatory financial reporting flows generated. framework. The results of the procedures performed in relation to the analysis of the methodology, criteria and assumptions applied by the Group, to the assessment of the key controls in place in the process for calculating and recognising the impairment of stores, to the disclosures included in the consolidated notes to the financial statements and to the performance of specific substantive tests on the calculations made were satisfactory. - 3 - IT systems Description Procedures applied in the audit The significant volume of transactions, the In response to this key matter, our work included high level of automation of business the following procedures in which our audit team IT processes and the importance of the IT specialists were involved: