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CONTENTS

Book1 Economic and Financial Performance

Chronology of the year 7 The Costumer, the Focus of Inditex´s Activities 15 Key Data 23 International Expansion 29 Sales by Format 37 Stock Market 45 Other Indicators of Financial Activity 51 Auditor’s Report and Consolidated Annual Accounts 57 Consolidated Management Report 111

Book2 Corporate Performance

Introduction. The Corporate Governance in Inditex 5 Corporate Governance Report 13 Audit and Control Committee Report 101 Nomination and Remuneration Committee Report 115

Book3 Social and Environmental Performance

Corporate Cash Flow 5 Human Resources Report 9 Social Report 25 Environmental Report 61 Verification of the GRI indicators audit 79

LEGAL DOCUMENTS

Consolidated Annual Accounts 57 Consolidated Management Report 111 Corporate Governance Report 13 Audit and Control Committee Report 101 Nomination and Remuneration Committee Report 115 Cuadriptico del presi EN.qxp 30/6/06 14:16 Página 8

Book 1. Economic and Financial Pe r fo r m a n ce. Book 2. Co r p o rate Pe r fo r m a n ce. GRI INDICATORS Book 3. Social and Env i ro n m e ntal Pe r fo r m a n ce. Report Guide and Letter from the Chairman. The whole Re p o r t. p a g e 1. VISION AND ST R AT EGY 1 . 1 St ate m e nt of the org a n i sation’s vision and st rategy re g a rding its co ntribution to sustainable deve l o p m e nt. 1 . 2 Chairman’s st ate m e nt

2. PRO F I L E O RG A N I SATION´S PRO F I L E 6 5 2 . 1 Name of the reporting org a n i sat i o n . 3 8- 4 3 2 . 2 Main products and/or services . 3 0 -3 5 2 . 3 O p e rational st r u c t u re of the org a n i z at i o n . 1 0 6 -1 0 8 2 . 4 D es c r i ption of the major divisions, operating co m p a n i es, subsidiaries and joint ve nt u res . 3 2-3 3 2 . 5 Co u nt r i es in which the org a n i sation’s operations are locate d . 1 9 -2 3 2 . 6 N at u re of ownership; legal form. 3 0 -3 5 2 . 7 N at u re of markets serve d . 2 4 -2 5 2 . 8 Scale of the reporting org a n i sat i o n . 1 9 2 . 9 L i st of st a ke h o l d e r s, key att r i b u tes of each and 1 1, 2 6, 4 6 re l ationship to the co m p a ny. S COPE OF THE REPORT 2 . 1 0 Co ntact person(s) for matters re l ated to the re p o r t . 2 . 1 1 Reporting period for info r m ation prov i d e d . 2 . 1 2 D ate of most re ce nt previous re p o r t . 2 . 1 3 B o u n d a r i es of report and any specific limitations on sco p e. 2 . 1 4 S i g n i f i c a nt c hanges in size, st r u c t u re, ow n e r s h i p, pro d u c t s / s e r v i ces that have occu r red since the previous re p o r t. 2 . 1 5 Basis for reporting on joint re p o r t s, partially owned subsidiaries and other situations that could affect co m p a rability f rom period to period. N / A 2 . 1 6 D es c r i ption of any re-st ate m e nts of info r m ation provided in previous reports rea s o n s . R E P O RT´S PRO F I L E N / A 2 . 1 7 Decisions to not apply GRI principles in the pre p a ration of the re p o r t. 6 6 -6 9 2 . 1 8 C r i teria used in the acco u nting of eco n o m i c , env i ro n m e ntal and social co sts and benef i t s . 7, 6 3, 7 2 9 4 -1 0 0 2 . 1 9 C h a n g es with respect to previous years in the mea s u re m e nt met h o d s . 4 6- 4 7 2 . 2 0 Po l i c i es and internal pra c t i ces to guara ntee the co m p l ete n ess and accu racy the info r m ation pres e nted in the re p o r t. 5 8- 5 9 2 . 2 1 Policy and cu r re nt pra c t i ce with re g a rd to providing independent mechanisms for the ve r i f i c ati on of the re p o r t . 8 0 -8 1 2 . 2 2 M eans by which report users can obtain additional info r m at i o n .

3. GOVERNANCE STRUCTURE AND MANAGEMENT SY ST E M S STRUCTURE AND GOV E R N M E N T 2 6 -3 4 3 . 1 G ove r n a n ce st r u c t u re and management sy ste m s . 2 8 3 . 2 Pe rce ntage of the board of dire c tors that are independent, exe cu t i ve dire c to r s . 6 6 -7 6 3 . 3 P ro cess for determining the expertise board members need to guide the st rategic direction of the org a n i sation in matters such as env i ro n m e ntal and social opportunities risks . 6 6 -7 6 3 . 4 B o a r d - l evel pro cess es for overseeing the ident i f i c ation and management of eco n o m i c, env i ro n m e ntal and social opportunities and r i s ks . 3 7-3 9 3 . 5 5 Linkage bet ween exe cu t i ve co m p e n sation and achieve m e nt of financial and financial goals. 8, 1 5, 1 7 3 . 6 O rg a n i sational st r u c t u re and key individual responsible for ove r s i g ht, implement ation and audit of eco n o m i c , env i ro n m e ntal and social policies . 3 . 7 M i ssion and value st ate m e nt, inte r n a l ly developed co d es of conduct and policies re l eva nt to eco n o m i c , env i ro n m e ntal and social perfo r m a n ce and the st atus of implement at i o n . 9-1 0, 8 4 -8 6 3 . 8 Mechanisms for shareholders to provide re co m m e n d ations to the Board of Dire c to r s . COM M I TMENT WITH STA K E H O L D E R S 3 . 9 Basis for the ident i f i c ation and selection of st a ke h o l d e r s . 9-1 0 3 . 1 0 A p p ro a c h es to st a keh older’s co n s u l t ati on . 2 0 -2 1 2 6, 4 4, 5 2- 5 5 2 6, 4 4, 5 2- 5 5 3 . 1 1 Type of info r m ation generated by st a keholder co n s u l t at i o n s . 2 6, 4 4, 5 2- 5 5 3 . 1 2 Use of the info r m ation obt a i n e d . Cuadriptico del presi EN.qxp 30/6/06 14:16 Página 9

ancial Pe r fo r m a n ce. m a n ce. n m e ntal Pe r fo r m a n ce. p a g e G LO BAL POLICIES AND MANAGEMENT SY ST E M S rom the Chairman. 6 5 -7 6 3 . 1 3 Ex p l a n ati on of whether and how the precautionary approach or principle addressed by the org a n i sat i o n . 5 4 - 5 5 3 . 1 4 Ex te r n a l ly developed co m m i t m e nts or other vo l u ntary initiat i ves that the org a n i sation supports. 4 6- 4 7, 5 4 - 5 5 3 . 1 5 Membership in business and industrial ass o c i ations and / or national and inte r n ational advocacy org a n i sat i o n s . 2 6- 5 5 3 . 1 6 Po l i c i es for managing upst ream and dow n st ream impacts. 5 1, 6 7-6 8 3 . 1 7 Reporting org a n i s ation’s approach to managing indirect eco n o m i c , env i ro n m e ntal and social impacts resulting f rom its activities . N / A 3 . 1 8 Major decisions during the reporting period re g a rding the location of, or changes in, operat i o n s . 3 . 1 9 P ro g ra m m es and pro ce d u res pertaining to eco n o m i c , env i ro n m e ntal and social perfo r m a n ce. 6 3, 6 7-6 8 3 . 2 0 St atus of ce r t i f i c ation pertaining to eco n o m i c , env i ro n m e nta l management sy ste m s . 4 8- 5 1

4. INDICATORS OF ECO N OMIC PERFO R M A N C E C L I E N TS 2 5 -2 6, 3 9- 4 3 EC. 1 N et sa l es . 3 2-3 5 EC. 2 G e o g raphic brea kd own of market s . S U P P L I E R S 5 3 - 5 4 EC. 3 Co sts of all goods, materials and services purc h a s e d . 5 3 EC. 4 Pe rce ntage of the co nt racts paid in acco rd a n ce with agreed te r m s, excluding agreed penalty arra n g e m e nt s . E M P LOY E E S 5 4 EC. 5 Total salary co sts bro ken down by co u ntry or re g i o n . C A P I TAL SUPPLIERS 5 4 EC. 6 D i stribution to providers of capital. 5 5 EC. 7 I n c rease / Decrease in retained ea r n i n g s . A DM I N I ST R AT I O N 5 5 EC. 8 Total sum of taxes of all types paid, bro ken down by co u ntry . ( 1 ) EC. 9 S u b s i d i es re ce i ved , bro ken down by co u nt r y. 2 7 EC.10 Donations to co m m u n i t y, civil society or other gro u p s, in cash and in kind donat i o n s, bro ken down per type of gro u p.

5. INDICATORS OF ENVIRO N M E N TAL PERFO R M A N C E R AW MAT E R I A L S 7 6 -7 7 E N . 1 Total raw material used other than wate r, by type. 77 EN.2 Percentage of raw materials used which are wastes derived from sources external to the reporting organisation. E N E RGY 7 3 E N . 3 D i rec t energy use, segmented by primary sources . 7 3 E N . 4 I n d i rect energy use. WAT E R 7 4 E N . 5 Total water use. B I O D I V E R S I T Y N / A E N . 6 Lo c ation and size of land owned, re nted or managed in biodive r s i t y-rich habitat s . N / A E N . 7 Analysis of the main impacts on biodiversity ass o c i ated with activities or products in te r restrial, fresh water and marine env i ro n m e nt s . E M I SS I O N S, SPILLAGE AND WAST E 7 5 E N . 8 G reen house gas emiss i o n s . 7 5 E N . 9 Use and emission of ozo n e-d e p l eting subst a n ces . 7 4 E N . 1 0 N Ox, SOx and other significant air emiss i o n s, by type . 7 7 E N . 1 1 Total amount of wa ste, bro ken down by type and dest i n at i o n . 7 6 -7 7 E N . 1 2 S i g n i f i c a nt discharg es to wate r, by type. 7 6 E N . 1 3 S i g n i f i c a nt spillage of chemicals, oils and fuels, ex p ressed in total figures and vo l u m e. P RO D U C TS AND SERVICES 7 2-7 7 E N . 1 4 S i g n i f i c a nt env i ro n m e nta l impact of principal products and service. ( 2 ) E N . 1 5 Pe rce ntage of the we i g ht of the products sold that is reclaimable at the end of the products’ useful life and perce ntage t h at is actually re c l a i m e d. COM P L I A N C E ( 3 ) E N . 1 6 I n c i d e nts of and fines ass o c i ated with non-co m p l i a n ce with applicable inte r n ational agre e m e nts and local re g u l ations a ss o c i ated with env i ro n m e ntal matte r. Cuadriptico del presi EN.qxp 30/6/06 14:16 Página 10

6. INDICATORS OF SOCIAL PERFO R M A N C E WORK PRACTICES AND DECENT WO R K p a g e E M P LOYM E N T 1 1-1 4, 1 8 L A . 1 B rea kd own of wo r k fo rce 1 1-1 2, 1 7 L A . 2 N et employ m e nt creation and ave rage turnover bro ken down bro ken down by co u nt r y. R E L ATIONSHIP COM PANY / EMPLOY E E S 14 LA.3 Percentage of employees represented by trade unions broken down geographically or percentage of employees covered by collective bargaining agreements by countries. 1 5 L A . 4 Policy and pro ce d u res of info r m ation, co n s u l t ati on and negot i ation with employe es on the changes in the co m p a ny’s o p e rat i o n s . H EA LTH AND SA F ET Y ( 2 ) L A . 5 M ethods for re g i st ration and not i f i c ation of occu p ational acc i d e n ts and disea s es . 1 4 -1 5 L A . 6 D es c r i ption of the joint co m m i ttee on health and safet y. ( 2 ) L A . 7 A b s e nte e , acc i d e nt and occu p ational injury and lost day rates and number of wo r k- re l ated fat a l i t i es . ( 4 ) L A . 8 D es c r i ption of policies and pro g ra m m es on HIV/AIDS. TRAINING AND EDUCAT I O N 1 9 -2 0 L A . 9 Ave rage of hours of training per year per employe e. DIVERSITY AND OPPORT U N I T Y 1 5, 1 7 L A .10 Des c r i ption of equal opportunities policies and pro g ra m m es . 3 8 L A .11 Composition of senior management departments and co r p o rate gove r n a n ce bodies including the female / male ratio or other i n d i c ators of dive r s i t y. ST R AT EGY AND MANAG E M E N T 4 6- 4 7 H R. 1 L i st of policies and guidelines as re g a rds human rights re l eva nt to the operat i o n s . 5 0 - 5 1 H R. 2 Ev i d e n ce that impacts on human rights are taken into co n s i d e ration when investing or choosing suppliers. 4 8- 5 1 H R. 3 L i st of the policies for eva l u ating the action on human rights in the supply chain. NO DISCRIMINAT I O N 4 7, 50- 5 1 H R. 4 L i st of the global policies dedicated to preve nting all forms of discrimination in operat i o n s . F R E E D OM OF ASS O C I ATION AND CO L L ECTIVE BA RG A I N I N G 4 7, 50- 5 1 H R. 5 Analysis on the policy of freedom of ass o c i ati on and the ex te nt of its application (apart from the local law s ) . CHILD LABO U R 4 7, 50- 5 1 H R. 6 P res e nt ation of the policy of rejection of child labour. FO RCED AND COM P U L S O RY LABO U R 4 7, 50- 5 1 H R.7 Pres e nt ation of the policy of rejection of fo rced and compulsory labour. S O C I ET Y COM MU N I T Y ( 5 ) S O. 1 D es c r i ption of policies to manage impacts on co m m u n i t i es in the regions affe c ted by the activities . CO R R U PT I O N 99 S O. 2 D es c r i ption of co m p l i a n ce policies as re g a rds co r r u ption and bribes, dire c ted at both the org a n i sation and employe es . POLITICAL CO N T R I B U T I O N S 9 9 S O. 3 D es c r i ption of policy and management sy stems / pro ce d u res, and co m p l i a n ce mechanisms dedicated to political lobbying and co nt r i b u t i o n s . P RODUCT RESPONSIBILITY H EA LTH AND SA F ETY OF CUSTOM E R S 2 0 P R . 1 D es c r i ption of the policy on cu stomer health and safety during the use of products / services . 1 8-2 1 P R . 2 D es c r i ption of policies and mechanisms for co m p l i a n ce referring to product info r m ation and labell i n g . R E S P ECT FOR INTIMAC Y ( 2 ) P R . 3 D escripción de políticas y mecanismos de cu m p l i m i e nto co n ce r n i e ntes a la intimidad del cliente.

( 1 ) I m m ate rial figure. (2) Data not ava i l a b l e. (3) I n d i tex was not sanctioned in financial years 2004 and 2005 for any fa i l u re to comply with inte r n at i o n a lly applicable agre e m e nt s or local legislation in re l ation to env i ro n m e nta l iss u es. (4) N ot put into effect in this financial yea r. (5) The evolution of Inditex’s business model does not pro d u ce any significant n e g at i ve impact. N/A Not ava i l a b l e.

The Annual Report 2005 is comprised of The Annual Report 2005 is fully availa- CONTACT DATA Corporate Contact: four supports: this Manual that includes ble at the Internet site, where additio- co m u n i c a c i o n @ i n d i tex. co m the Letter of the Chairman and three nal useful information can be accessed. Shareholders Office: Tel.: +34 981 185 400 more books: The Economic and Financial http://www.inditex.com [email protected] Fax: +34 981 185 544 Performance, the Corporate Performan- Tel.:+34 901 120 101 ce and the Social and Environmental Fax: +34 981 185 365 Inditex S.A. Performance. It has been prepared pur- Edificio Inditex suant to the BSCI 2002 guidelines and it Contact with Investors: Avda. Diputación, s/n covers the activities of Inditex during [email protected] 15142 Arteixo FY2005 (1 February 2005 - 31 January Tel.: +34 981 185 364 A Coruña, Spain 2006). The previous document is the Fax: +34 981 185 365 +34 981 185 400 Annual Report 2004.