INDITEX GROUP CONSOLIDATED ANNUAL ACCOUNTS AS AT 31 JANUARY 2019 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. Consolidated Annual Accounts and Directors’ Report Index CONSOLIDATED INCOME STATEMENT ............................................................................................. 4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME....................................................... 5 CONSOLIDATED BALANCE SHEET ..................................................................................................... 6 CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................................. 7 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................. 8 NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS OF THE INDITEX GROUP ....................... 9 1 Activity and description of the Group ....................................................................................... 10 2 Selected accounting policies ...................................................................................................... 12 2.1 Basis of consolidation ....................................................................................................... 12 2.2 Accounting policies ........................................................................................................... 14 a) Translation of foreign currency balances and transactions .............................................. 19 b) Property, plant and equipment .......................................................................................... 19 c) Rights over leased assets ................................................................................................. 20 d) Other intangible assets ..................................................................................................... 20 e) Financial investments ....................................................................................................... 20 f) Investment property .......................................................................................................... 20 g) Impairment of non-current assets ..................................................................................... 21 h) Trade and other receivables ............................................................................................. 23 i) Inventories ......................................................................................................................... 23 j) Cash and cash equivalents ............................................................................................... 24 k) Employee benefits ............................................................................................................ 24 l) Provisions and contingent liabilities .................................................................................. 24 m) Financial instruments ........................................................................................................ 25 n) Derivatives and hedging operations.................................................................................. 26 o) Revenue recognition ......................................................................................................... 28 p) Leases ............................................................................................................................... 28 q) Finance income and costs ................................................................................................ 29 r) Income tax ......................................................................................................................... 29 s) Current and non-current assets and liabilities .................................................................. 29 t) Treasury shares ................................................................................................................ 30 3 Net Sales .................................................................................................................................... 30 4 Cost of sales .............................................................................................................................. 30 INDITEX 2 Consolidated Annual Accounts and Directors’ Report 5 Operating expenses .................................................................................................................. 31 6 Other losses and income, net................................................................................................... 32 7 Amortisation and depreciation .................................................................................................. 32 8 Financial results ........................................................................................................................ 33 9 Earnings per share .................................................................................................................... 33 10 Segment reporting ..................................................................................................................... 33 11 Trade and other receivables ..................................................................................................... 35 12 Inventories ................................................................................................................................. 36 13 Property, plant and equipment ................................................................................................. 36 14 Rights over leased assets and other intangible assets .......................................................... 38 15 Goodwill ...................................................................................................................................... 40 16 Financial investments ............................................................................................................... 41 17 Other non-current assets .......................................................................................................... 41 18 Trade and other payables ......................................................................................................... 42 19 Net financial position ................................................................................................................. 43 20 Provisions ................................................................................................................................... 44 21 Other non-current liabilities ...................................................................................................... 45 22 Capital and reserves ................................................................................................................. 45 23 Income taxes.............................................................................................................................. 46 24 Operating leases ....................................................................................................................... 50 25 Financial risk management policy and financial instruments ................................................ 51 26 Employee benefits ..................................................................................................................... 57 27 Jointly controlled entities .......................................................................................................... 58 28 Proposed distribution of the profit of the Parent ..................................................................... 59 29 Remuneration of the Board of Directors and related party transactions .............................. 59 30 External auditors ....................................................................................................................... 63 31 Environment ............................................................................................................................... 64 32 Events after the reporting period ............................................................................................. 64 33 Explanation added for translation to English .......................................................................... 64 Annex I – Composition of the Inditex Group ......................................................................................... 65 INDITEX 3 Consolidated Annual Accounts and Directors’ Report INDUSTRIA DE DISEÑO TEXTIL, S.A. AND SUBSIDIARY COMPANIES CONSOLIDATED INCOME STATEMENT (Amounts in millions of euros) (Notes) 2018 2017 Net sales (3) 26,145 25,336 Cost of sales (4) (11,329) (11,076) GROSS PROFIT 14,816 14,260 56.7% 56.3% Operating expenses (5) (9,329) (8,944) Other losses and income, net (6) (30) (38) GROSS OPERATING PROFIT (EBITDA) 5,457 5,277 Amortisation and depreciation (7) (1,100) (963) NET OPERATING PROFIT (EBIT) 4,357 4,314 Financial results (8) 17 (5) Results of companies accounted for using the equity method (16) 54 42 PROFIT BEFORE TAXES 4,428 4,351 Income tax (23) (980) (979) NET PROFIT 3,448 3,372 NET PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 4 5 NET PROFIT ATTRIBUTABLE TO