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Inditex Annual Report

In: Business and Management

Submitted By Felicia21
Words 42810
Pages 172
4,607 11,084 74 92,301

stores millions of euros in sales countries with sales presence employees

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nnual Report 2009

6 14 16

Global Reporting Initiative Indicators Letter from the Chairman Inditex business model

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IP

53
IC

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Inditex Commitment

163

Inditex Performance

20 26 28 46

Summary of 2009 financial year Milestones for the year Commercial concepts International presence

56 66 124 136

Customers, shareholders and society Corporate Social Responsibility Human Resources Environmental dimension

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Inditex Annual Report 2009

164
LD

309

Legal Documentation

167 233 296 303

Economic and financial report Corporate governance report Activities Report Audit and Control Committee Activities Report Nomination And Remuneration Committee

308

Verification of the audit of GRI indicators

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G

lobal Reporting Initiative Indicators in 2002. Using this guide, Inditex

With transparency as the fundamental principle in its relationship with society, Inditex has followed the Global Reporting Initiative indicators since it published its first Sustainability Report attempts to provide detailed, organised access to the information on its activity to all its stakeholders. Within the general indicators, specific indicators for the textile and footwear sector have been included, identified in the following way: Specific indicator for the sector

Specific indicator comment for the sector

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Inditex Annual Report 2009

Pages 14-15 267-273, 20-25

1. Strategy and analySiS
1.1 Statement from the most senior decision-maker about the relevance of sustainability to the organisation and its strategy. 1.2 Description of key impacts, risks, and opportunities. Apparel and Footwear Sector Specific Commentary: Where applicable, this should include an assessment of supply chain performance.

2. OrganiSatiOnal PrOfile
17, 175 28-45 215-231 175 46-53, 223-224 225-238 46-53, 223-224 25, 170-173 25, 215-231 26-27

2.1 Name of the organisation. 2.2 Primary brands, products, and/or services. 2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries, and joint ventures. 2.4 Location of organisation's headquarters. 2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 2.6 Nature of ownership and legal form. 2.7 Markets served. 2.8 Scale of the reporting organisation. 2.9 Significant changes during the reporting period regarding size, structure. 2.10 Awards received in the reporting period.

3. rePOrt ParameterS
REPORT PROFILE
14-15, 175 175 175 310 4-5 175-176 175-176 206-211 198-205 N/A

3.1 Reporting period (e.g., fiscal/calendar year) for information provided. 3.2 Date of most recent previous report (if any). 3.3 Reporting cycle (annual, biennial, etc.) 3.4 Contact point for questions regarding the report or its contents REPORT SCOPE AND BOUNDARY 3.5 Process for defining report content. 3.6 Boundary of the report. 3.7 State any specific limitations on the scope or boundary of the report. 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations. 3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. 3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods). 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. GRI CONTENT INDEX 3.12 Table identifying the location of the Standard Disclosures in the report. ASSURANCE 3.13 Policy and current practice with regard to seeking external assurance for the report.

196-205

6-13 168, 196, 308-309

CORE INDICATOR

ADDITIONAL INDICATOR

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4. gOvernance, cOmmitmentS and engagement
Pages 239-263 255 240-241 60-61, 274-282 248-251 264-267 251-253 14-17, 67, 72-73, 86-89 60-61 251-253

GOVERNANCE 4.1 Governance structure of the organisation. 4.2 Executive capacity of the chair person of the maximum governing body. 4.3 Number of members of the highest governance body that are independent and/or non-executive members. 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives, and the organisation's performance. 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. 4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organisation's strategy on economic, environmental, and social topics. 4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. 4.9 Procedures of the highest governance body for overseeing the organisation's identification and management of economic, environmental, and social performance. 4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance. COMMITMENTS TO EXTERNAL INITIATIVES 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation. 4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses. 4.13 Memberships of associations (such as industry associations) and/or national/international advocacy organisation. STAKEHOLDER ENGAGEMENT 4.14 List of stakeholder groups engaged by the organisation. 4.15 Basis for identification and selection of stakeholders with whom to engage. 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 4.17 Key topics and concerns that have been raised through stakeholder engagement.

267-273 86-89 67, 86-89, 122

72-73, 137-163 72-73 72-73 83-89, 137-163

5. management aPPrOach and PerfOrmance indicatOrS
FINANCIAL PERFORMANCE INDICATORS

AppArel And FootWeAr SeCtor-SpeCiFiC diSCloSure on MAnAgeMent ApproACh
CODE OF CONDUCT
72-79

AF1. Code of conduct content and coverage. AUDIT PROCESS AF2. Parties and personnel engaged in code of conduct compliance function. AF3. Compliance audit process. GRIEVANCE PROCEDURES AF4. Policy and procedures for receiving, investigating, and responding to grievances and complaints. CAPACITY BUILDING AF5. Strategy and scope of efforts to strengthen capacity of management, workers and other staff to improve in social and environmental performance. BUSINESS INTEGRATION AF6. Policies for supplier selection, management, and termination.

70-73, 76 75-79 80-82, 89 129-130, 138-139

74-79

Supply ChAin StAndArdS And prACtiCeS perForMAnCe indiCAtorS

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Inditex Annual Report 2009

CODE OF CONDUCT
74 76 N/A N/A N/A N/A N/A N/A N/A

AF7. Number and location of workplaces covered by code of conduct. AUDIT PROCESS AF8. Number of audits conducted and percentage of workplaces audited. NON-COMPLIANCE FINDINGS AF9. Incidents of non-compliance with legal requirements or collective bargaining agreements on wages. AF10. Incidents of non-compliance with overtime standards. AF11. Incidents of non-compliance with standards on pregnancy and maternity rights. AF12. Incidents of the use of child labour. AF13. Incidents of noncompliance with standards on gender discrimination. AF14. Incidents of non-compliance with code of conduct. AF15. Analysis of data from code compliance audits. REMEDIATION AF16. Remediation practices to address non-compliance findings. BUSINESS INTEGRATION AF17. Actions to identify and mitigate business practices that affect code compliance. ECONOMIC PERFORMANCE EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. EC2 Financial implications and other risks and opportunities for the organisation's activities due to climate change. EC3 Coverage of the organisation's defined benefit plan obligations. EC4 Significant financial assistance received from government. MARKET PRESENCE EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation. INDIRECT ECONOMIC IMPACTS EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts. ENVIRONMENTAL PERFORMANCE INDICATORS

79 75-79

122-127, 170

270-274 185, 195-197 N/A

N/A 83-85 251

179-181 123

AppArel And FootWeAr SeCtor-SpeCiFiC diSCloSure on MAnAgeMent ApproACh
MATERIALS
90-91 90-93

AF18. Programmes to replace organic-based adhesives and primers with water-based adhesives and primers. AF19. Practices to source safer alternative substances to those on the restricted substances list, including description of associated management systems. MATERIALS EN1 Materials used by weight or volume. AF20. List of environmentally preferable materials used in apparel and footwear products. EN2 Percentage of materials used that are recycled input materials. ENERGY EN3 Direct energy consumption by primary energy source.

142-143 142-143 142-143 154-163

CORE INDICATOR

ADDITIONAL INDICATOR

9

154-163 140-141, 143-151, 154-163 140-141, 143-151, 154-163 140-141, 143-151, 154-163 140-141, 143-151, 154-163 162-163 162-163 162-163

EN4 Indirect energy consumption by primary source. AF21. Amount of energy consumed and percentage of the energy that is from renewable sources. EN5 Energy saved due to conservation and efficiency improvements. EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives. EN7 Initiatives to reduce indirect energy consumption and reductions achieved. WATER EN8 Total water withdrawal by source. EN9 Water sources significantly affected by withdrawal of water. EN10 Percentage and total volume of water recycled and reused. BIODIVERSITY EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. EN13 Habitats protected or restored. EN14 Strategies, current actions, and future plans for managing impacts on biodiversity. EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk. EMISSIONS, EFFLUENTS AND WASTE EN16 Total direct and indirect greenhouse gas emissions by weight. EN17 Other relevant indirect greenhouse gas emissions by weight. EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. EN19 Emissions of ozone-depleting substances by weight. EN20 NO, SO, and other significant air emissions by type and weight. EN21 Apparel and Footwear Sector Specific Commentary:

137 137 152-153 138-153 137

156-158 156-158 138-153 156-158 156 162-163

For Footwear: report on total chromium discharges. For Apparel: report on the discharge of antimony, arsenic, cadmium, chromium, cobalt, copper, cyanide, lead, mercury, nickel, and zinc.
160-163

EN22 Total water discharge by quality and destination.

Apparel and Footwear Sector Specific Commentary: report on pumice, stones and sand.
N/A N/A N/A

EN23 Total number and volume of significant spills. EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation's discharges of water and runoff. PRODUCTS AND SERVICES EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

144-145

Apparel and Footwear Sector Specific Commentary: Report also on the use of recycled materials and the recyclability of products and packaging.
160-163

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. COMPLIANCE EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

N/A

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Inditex Annual Report 2009

TRANSPORT
144-147, 160-163

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation's operations, and transporting members of the workforce. OVERALL EN30 Total environmental protection expenditures and investments by type. SOCIAL PERFORMANCE INDICATORS

205

AppArel And FootWeAr SeCtor-SpeCiFiC diSCloSure on MAnAgeMent ApproACh
EMPLOYMENT
131 N/A N/A

AF22 Policy and practices regarding the use of employees with non-permanent and non-fulltime status. AF23 Policy regarding the use of home working. AF24 Policy on the use and selection of labour brokers, including adherence to relevant ILO Conventions. WAGES AND HOURS AF25 Policy and practices on wage deductions that are not mandated by law. AF26 Policy on working hours, including definition of overtime, and actions to prevent excessive and forced overtime. DIVERSITY AND EQUAL OPPORTUNITY AF27 Policy and actions to protect the pregnancy and maternity rights of women workers. EMPLOYMENT LA1 Total workforce by employment type, employment contract, and region. LA2 Total number and rate of employee turnover by age group, gender, and region. LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. AF28 Percentage of foreign migrant workers as a portion of total workforce, broken down by region. LABOUR/MANAGEMENT RELATIONS LA4 Percentage of employees covered by collective bargaining agreements. LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements. AF29 Percentage of workplaces where there is one or more independent trade union(s). AF30 Percentage of workplaces where, in the absence of a trade union, there are worker-management committees, broken down by country. OCCUPATIONAL HEALTH AND SAFETY LA6 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programmes. LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region. Apparel and Footwear Sector Specific Commentary: Include: health issues associated with reduced lung function due to dust in “Occupational disease rate”. Include: risk assessments and preventative measures for accidents and injuries. AF31 Initiatives and programmes to respond to reduce, and prevent the occurrence of musculoskeletal disorders. LA8 Education, training, counselling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases. LA9 Health and safety topics covered in formal agreements with trade unions. TRAINING AND EDUCATION LA10 Average hours of training per year per employee by employee category. LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. LA12 Percentage of employees receiving regular performance and career development reviews.

131 131

130-131

128, 131 128, 130-131 132, 193-194 128

N/A N/A N/A N/A

132 132

132 132 132

129-130 129-130 129-130

CORE INDICATOR

ADDITIONAL INDICATOR

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DIVERSITY AND EQUAL OPPORTUNITY
130-131 130-131 130-131

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. LA14 Ratio of basic salary of men to women by employee category. AF32 Actions to address gender discrimination and to provide opportunities for the advancement of women workers. HUMAN RIGHTS PERFORMANCE INDICATORS INVESTMENT AND PROCUREMENT PRACTICES

122 74-85 129-130

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening. HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. NON-DISCRIMINATION HR4 Total number of incidents of discrimination and actions taken. FRREDOM OF ASSOCIATION AND COLLECTIVE BARGAINING HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights. CHILD LABOUR HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour. FORCED AND COMPULSORY LABOUR HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour. SECURITY PRACTICES HR8 Percentage of security personnel trained in the organisation's policies or procedures concerning aspects of human rights that are relevant to operations. INDIGENOUS RIGHTS HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. INDICATORS ON THE PERFORMANCE OF SOCIETY COMMUNITY

130-131

80-82

74-76

74-79

N/A

N/A

94-113 94-113, 122 122

SO1 Nature, scope, and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting. AF33 Priorities in community investment strategy. AF34 Amount of investment in worker communities broken down by location. CORRUPTION SO2 Percentage and total number of business units analyzed for risks related to corruption. SO3 Percentage of employees trained on anti-corruption policies and procedures of the organisation. SO4 Actions taken in response to incidents of corruption. PUBLIC POLICY SO5 Public policy positions and participation in public policy development and lobbying.

233-235 233-235 233-235

80-82 N/A

Apparel and Footwear Sector Specific Commentary: report public policy position on the inclusion of labour and environmental protections in trade agreements and the degree to which lobbying positions integrate considerations about the potential effects on workers, communities, and organisations in the supply chain.
SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

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Inditex Annual Report 2009

ANTI-COMPETITIVE BEHAVIOUR
N/A

SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes. COMPLIANCE SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS CUSTOMER HEALTH AND SAFETY

N/A

90-93 N/A

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes. PRODUCT AND SERVICE LABELLING PR3 Type of product and service information required by procedures and percentage of significant products and services subject to such information requirements. PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes. PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. MARKETING COMMUNICATIONS PR6 Programmes for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes. CUSTOMER PRIVACY PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. COMPLIANCE PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

90-93 N/A 57-65

120-123 N/A

N/A

N/A

CORE INDICATOR

ADDITIONAL INDICATOR

13

L

etter from the Chairman greatest assets. This is true from a human standpoint, of course, since it translates into an incomparable exchange and richness of cultures. It is also the case from a business standpoint, as such diversity is one of Inditex’s best resources for gaining first-hand knowledge of international trends and creating the best-possible fashion collections to keep up with the hottest trends and changing tastes of shoppers worldwide. Each employee’s sense of initiative, the enthusiasm our teams display in the course of their daily work and the motivation they convey to other teams are the real secrets of the Group’s success. Dynamic decision-making, common sense, a sense of commitment and self-criticism guided by motivating leaders are the key values underpinning this shared determination to take fashion to all corners of the globe. In the past year, innovative and dedicated initiatives have arisen from our employees’ character traits and their passion for their work, within the framework of our ongoing drive for responsible performance. An example of the Group’s spirit of innovation is the

amancio Ortega inditex chairman
Dear friends: We are pleased to deliver this 2009 Annual Report, which provides a detailed, albeit not exhaustive, summary of the combined efforts by all individuals making up the Inditex Group to meet the needs of all of our stakeholders: customers, social groups, suppliers, shareholders, and, of course, employees. I thus believe that my initial remarks should highlight the work of the more than 90,000 employees who are the company’s backbone, and without whose efforts and daily contributions these pages would lack soul and be merely a compendium of pointless numbers. The sense of responsibility and the excellent performance of all Inditex Group staff stand out in this report. All employees, with the latest fashion trends foremost in mind, perform their jobs while paying close attention to environmental and social issues, which confers a high degree of responsibility to their creative work. By the end of 2009, the Group consisted of 92,301 individuals of more than 140 nationalities, who spoke 40 different languages and resided in more than 80 countries. This diversity of cultures and career paths is one of Inditex’s

eco-efficient store launched by Zara and Zara Home in November in Portal de l’Àngel (Barcelona, Spain). This is the first store in Europe to obtain LEED certification, a seal of sustainable architecture that is one of the most demanding of its kind in the world. This project is the result of an interdepartmental effort involving everyone from our Environment, Architecture and Building teams to store staff. Store employees have the best understanding of both customer tastes and their stores’ energy consumption, and of where sustainability improvements should be applied. The result is a building in keeping with the stunning surroundings of Barcelona’s Portal de l’Àngel, which also serves as an example of environmental efficiency and as a clear model for future openings by all Group concepts. The responsibility illustrated in our way of doing business was similarly evident in 2009 in our products, with initiatives to enhance the monitoring of all merchandise sold by the Group. These efforts included an update of Inditex’s Clear to Wear and Safe to Wear quality standards, which were created in 2006. These standards, along with Tested to Wear protocols for suppliers, which are based on the obligatory Code of Conduct for External Manufacturers and Workshops, are

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Inditex Annual Report 2009

the methodological foundation for the social audits which Inditex periodically performs on its suppliers. The audits are a useful tool and have become a global benchmark. We are convinced that our supply chain requirements, which are always complemented by monitoring and advisory programmes to encourage improvements in working conditions at our suppliers’ factories, represent significant progress for the entire textile industry. To this end, in addition to the work we do with our suppliers, we believe that it is essential to undertake joint efforts involving all affected parties: suppliers, central governments, trade union organisations and industry companies, among other groups, to ensure that any improvements achieved will be shared by all parties and will ultimately filter into society at large. Based on its commitment to being involved in the entire textile business, Inditex is an active participant, and in many cases a sponsor, of local and international conferences and seminars aimed at encouraging improvements in the industry. Highlights of these efforts include endowing academic chairs at several universities worldwide, as well as participating in professional clusters in countries such as Morocco, India, Turkey and Portugal, among other locations, and signing on to international alliances, such as the Ethical Trading Initiative and the MFA Forum. On this point, I must take a moment to remember Neil Kearney, the general secretary of the International Textile, Garment and Leather Workers’ Federation (ITGLWF), who passed away last November while on the job, specifically while working on a joint project with Inditex. Mr. Kearney was a trailblazer and a leader in the defence of textile industry workers’ rights throughout the world. He spearheaded a pioneering agreement signed in 2007 between Inditex and the ITGLWF to guarantee better working conditions and safeguard workers’ right to collective bargaining worldwide. His inspiring personality and his constant quest for solutions had a great impact on our company in terms of our social commitment, and provided us with additional motivation to work daily to continually improve the way we do business. Rest in peace. Thanks to our ongoing search for ways to foster social dialogue, Inditex made further progress in 2009 by signing an agreement with another international trade union organisation, the UNI Global Union, which advocates for workers’ rights and promotes sustainable corporate growth. The agreement endorses basic principles which are the hallmarks of our company.

With the customer and fashion constantly at the forefront of the decision-making process, I believe that it is important to underscore the rapid evolution in 2009 of what the experts call Web 2.0: new ways of communicating with the customer, social networking, immediacy of information sharing and ever-greater options for finding and managing information thanks to heretofore-unknown technologies for generating feedback online. Inditex is no stranger to this phenomenon. Very much in keeping with our corporate identity, in which the customer has always driven the business model, the Group works hard to meet the information demands of its fans on social networks. These followers in some cases exceed 2 million people -- truly mind-boggling figures. Rising demand for interactive communication via social networking and other technologies has prompted all Inditex retailers to expand their online presence into new media channels. These efforts include new smartphone applications created by Zara and Zara Home, which translate our fast-fashion distribution model to users’ handsets with daily, immediate updates displaying the latest collections hitting the stores. This is just the latest precursor of what will become a reality in 2010: Zara’s online store. The company’s marketing and technical teams have contributed all of their combined experience and know-how to ensure that our collections reach customers in the most satisfying manner possible. This vehicle for growth, set to launch in the second half of 2010, will complement the international expansion strategy the Group continues to roll out on all fronts. Of Inditex’s 11,084 million euros of total net sales in 2009, sales outside Spain accounted for 68%. These are the issues on which we will continue to work hard each day, with the primary goal of satisfying the appetite for fashion of our numerous customers worldwide. This requires a constant quest for innovation, creativity and cultural involvement at all international levels. It is a worthwhile endeavour, because Inditex is undoubtedly the world’s most beautiful company. Gratefully yours,

Amancio ortega gaona Chairman

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18
IP

53
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Inditex Performance

Inditex Commitment

LD

Legal Documentation

I
The Inditex

nditex and the five keys to its business
Group was formally

established in 1985. However, its origins as a fashion distribution group go back to 1975 when Zara opened its first store. The Group has eight commercial formats which all share the same customer orientation and the vertical integration of all of the fashion business phases, from design, manufacture and logistics to sales in its own stores. An ethical and responsible approach is applied to all of the Group’s operations. The Internal Code of Conduct and the Code of Conduct for External Manufacturers and Workshops are a foundation for the management of social matters while the Strategic Environmental Plan shapes the Group’s environmental actions. Inditex has been listed on the stock exchange since 2001 and is included in international sustainability indices such as FTSE4Good, Dow Jones Sustainability and FTSE4Good Ibex. Its sales formats The customer is key. Our work begins with the customer and continues in the store, where the customer’s fashion demands are noted and the design process is launched. The customer’s desires are not only met in terms of fashion but also taken as a whole. We consider all aspects that complement the shopping experience, including the location and design of the stores, which are situated in the main commercial districts of the world’s cities. The Group’s unwavering focus on the customer is the source of the creation and development of its eight brands, each of which has a different and specific appeal to offer to its customers. The store is the place in which the customer’s fashion desires meet the offers of the design teams from each of the chains. The store is where the Group’s specific business model begins and ends. The store’s personnel channel customers’ demands to the designer’s table, thereby setting the production process in motion which, in the shortest period of time possible, will result in tangible offers in the store. Furthermore, the stores constitute the chains’ main advertising medium. Their chief characteristics include: - Preferred locations. - Meticulously displays. - Unique internal and external architectural design. - Tailored coordination of the product. - Excellent customer service designed window

1. customer the heart of the business

2. Store
Where the customer and fashion meet

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Inditex business model

model

3. design/Production rapid response to market needs

4. logistics
Under 48 hours from the distribution centre to the stores
The Group’s distribution process is designed in such a way as to ensure the products on offer in the stores are continuously renewed. All products, regardless of their source of origin, are sent out to the stores from the logistics centres of each of the Group’s chains so that, worldwide, each store receives merchandise twice a week and each delivery includes new models. This model means that the product leaves the distribution centre and reaches European stores in, on average, 24 hours and US and Asian stores in 48 hours. Inditex logistics centres are located in Arteixo (A Coruña), Narón (A Coruña), Zaragoza, Meco (Madrid), Tordera, Palafolls and Sallent de Llobregat (Barcelona), León and Elche (Alicante). Together, their surface area exceeds one million square metres.

5. teams inditex’s 92,301 employees use the customer as their point of reference
Inditex is a multi-cultural and multi-racial company with 92,301 employees representing more than 140 nationalities. All of our employees, regardless of their relationship with a store, act in the interest of our customers’ desire for fashion as well as in accordance with the environmental and corporate social responsibility norms laid down by Inditex. Their day-to-day lives are filled with initiative, enthusiasm and optimism. On-going training plays an essential role, particularly that of store staff. This training, which also includes basics in customer service, focuses on specialist knowledge of fashion trends and the ability to seize and interpret the information that store staff receive from customers every day.

Every second counts and that is why a permanent and fluid relationship between the store’s personnel, the design teams and the production centres is so important. As a large share of our business, including manufacturing in our own centres and by external suppliers, takes place on a local level, we can provide a rapid response to the market’s demands. All of the chains have their own teams of designers and salespeople. Currently, Inditex has over 300 employees in these roles. On 31 January 2010, Inditex had a network of 1,237 suppliers with which it maintains stable relationships under a prism of ethics and responsibility and which are governed by the External Manufacturers and Workshops Code of Conduct, which must be accepted to maintain commercial relations with the Group.

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I

nditex

IP

Performance

18
IP

53
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Inditex Performance

Inditex Commitment

LD

Legal Documentation

2009, a year which ratifies the Inditex business model
The results obtained by the Inditex Group during

The main Inditex figures for the financial year 2009 confirm the strength of the Group business model and how correct the multiformat international growth strategy was.

2009 are the confirmation of the multiformat international growth strategy in a year of increasing efficiency which has highlighted the strengths of the business model. Consequently, it has generated a strong cash flow, which has primarily used to fund the expansion of the business. At the same time, the strong cash flow situation has allowed an increase in shareholder payouts, up to 14% more than in the previous year. All the key items on the profit and loss account have seen positive growth.

relevant data 2009

America 10.2% Europe, (except Spain) 45.7%

Asia 12.2%

employees

92,301

During the year 3,189 people joined the company

Spain 31.8%

Sales by geographical area

74 countries with retail presence
20

Summary of 2009 financial year

Sales trends have been satisfactory, with a growth of 9% at constant exchange rates. Inditex has also maintained comparable sales over the course of the year. The gross margin, which has increased by 7% to 6,300 million euros, meaning a 57.1% on sales, 27 basic points more than in the previous year. Operating expenses remain under strict control, with a growth of mainly due to the new retail areas. Regarding the format to format evolution, Zara still represents approximately two thirds of Inditex sales, with the remaining third in the other formats. The Group’s ongoing overseas expansion translates into a highly diverse sales platform, which allows the Group to reach out to a large client base in an appropriate way. The contribution of sales in stores located outside Spain has reached 68% of the total figure, and all chains have increased their 7%

sales percentages on international markets, demonstrating their desire and ability to expand at a global level. The scale of this effort is clear if we recall that during 2009 alone, we increased our overseas presence to a total of 46 countries. Zara’s sales have seen a net growth from 4% to 6% at constant exchange rates, with a 5% growth in EBIT. The younger lines have also shown positive trends during 2009. In parallel with the commercial expansion, over recent years the Group has invested in the development of the logisitics infrastructure, and it now has the capacity needed to maintain, with the same flexibility as ever, the growth

Financial results
1,314 1,729 2,374 2,187 11,084 10,407 1,253 1,609 1,250 1,652 2,149 9,435 1,002 1,356 1,790 8,196 803 1,094 1,459 6,741

Pablo Isla, First Vice-Chairman and CEO of Inditex.

2009 Sales

2008

2007 EBITDA EBIT

2006

2005 Net income

in commercial space

8% increase
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During 2009, all the key items on the profit and loss account have seen positive growth

of the retail network as forecast for coming years. A strong potential has been achieved to continue growing in a profitable way over the coming years and, in this regard, the expansion in Europe and Asia is a priority. As regards Europe, it is important to indicate firstly that this is the domestic market, the natural area for expansion of all the concepts. In Western Europe there are great opportunities for growth in markets such as Italy, France, Germany and the United Kingdom. There are also significant business opportunities in Eastern Europe and Russia. Overall, Inditex sees great potential for profitable expansion in Europe in the next few years. In Asia, the priority is to deepen the firm strategic presence built up over recent years and which has led sales in this region to represent 12% of Group sales. The expansion has so far been notable for the excellent reaction to the fashion proposals from the public in different Asian markets, and the fact that many of these markets are currently undergoing attractive changes. The Group now has a solid presence in the region and has developed a

significant position in many of the major Asian capitals. A multiconcept expansion strategy is being developed over there, combining Zara openings with those of a number of other formats in most countries. For example, it is worth mentioning that at the close of 2009 five of the formats were present in China, after the first openings of Pull and Bear, Bershka and Stradivarius over the past year. The growth is currently strongest in China, Japan and South Korea. Along these lines, the Group will further penetrate the key markets with the launch of Zara in India in May 2010. New stores will open in New Delhi and Mumbai, which will be followed by other stores in different Indian cities. Expansion in these four markets will be combined with selective store openings in other Asian countries where the Group is already established. In summary, Asian markets show great long-term growth potential for Inditex. It is also worth mentioning our plans for growth in the Americas, fundamentally based on consolidating our existing operations through a selective expansion process.

Oysho 2.5% Stradivarius 6.3% Pull and Bear 7% Massimo Dutti 7.1%

Zara Home 2.2% Uterqüe 0.4%

748
Zara 63.8%

Sales contribution by format

million euros in dividends
(1.20 euros per share)

Bershka 10.6%

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Summary of 2009 financial year

Analysing the perspectives of the overall activity, the priority for Inditex is still to maintain a profitable investment for the sustained expansion of the Group with attractive long-term returns. For the immediate future it should be mentionated the plans to start online selling for Zara products during the Autumn/Winter campaign 2010. Team has been working very hard to ensure the success of the launch and feels sure of the opportunitites which Zara will have in e-commerce. Finally, as for shareholder payouts, the Board of Directors will be proposing to the General Shareholders’ Meeting the payment of a dividend this year of 1.20 euros per share. A dividend of 0.06 euros per share has already been paid out, on 3rd May 2010, plus an additional dividend of 0.60 euros per share, including the extraordinary payment, which will be paid out on 2nd November this year. The total dividend to be distributed to shareholders is 748 million euros, 14% more than in the previous year.

Inditex is in an excellent position to take advantage of the opportunities for growth to be found around the world. It has a well diversified sales platform, with retail operations in 77 countries after the opening of the first stores in Bulgaria, Kazakhstan and India in the first months of 2010. Inditex operates with a business model which gives enormous flexibility, and its chains have a solid commercial basis, with attractive prices. Its business model allows it to take advantage of the opportunities for growth in any market where they can be found.

Inditex has strong potential to continue growing in a profitable way over the coming years and, in this regard, our priority is to focus on expansion in Europe and Asia

4,607 at year end

number of stores at year-end
2009 2008 2007 2006 2005

4,607 4,264 3,691 3,131 2,692

stores

Net openings

343
2,921 703

Balance (in millions of euros)
2009 Net assets Net financial position 5,371 2,380 2008 4,749 1,219 2007 4,217 1,052 2006 3,471 714 2005 TACC 09/05 18% 37%

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Shares during 2009
Shares in Inditex saw a revaluation of 52.7% during the financial year 2009, closing at 45.64 euros per share at 31 January 2010, compared to the 28.9% increase of the Dow Jones Stoxx 600 Retail, or the 29.6% increase of the Spanish index Ibex 35 over the same period. The average negotiated volume of shares exceeded the 1.9 million per day mark. Inditex’s market capitalisation stood at 28,446 million euros at year-end, 210% more than its initial market value on 23rd May 2001, as compared with the 14% rise experienced by IBEX 35 during the same period. In May and November 2009 the dividend for 2008 was paid out, totalling the sum of 1.05 euros per share.

Inditex vs indexes 30/01/2009 160% 29/01/2010

140%

120%

100%

80%
Inditex Ibex 35 DJ Stoxx European Retail

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Summary of 2009 financial year

evolution of main indicators
2009 Turnover (in millions of euros) Sales Store sales (own stores and franchises, without VAT) Percentage of sales in overseas stores Results and cash flow (in millions of euros) Operating profit (EBITDA) Business profit (EBIT) Net Profit Net income attributable to the parent company Cash flow (attributed net profit plus repayments and provisions) Financial structure (in millions of euros) Net Assets attributed to the parent company Net financial position Other relevant information: Number of stores: . In Spain . Overseas Net openings Number of countries with commercial presence Number of employees Financial and management ratios Net financial debt on net attributed assets ROE (Net attributable income on net attributable assets) ROCE (EBIT on average capital used) 26% 34% 28% 36% 33% 43% 32% 43% 30% 41% 29% 42% -45% -26% -25% -21% -24% -21% 74 92,301 73 89,112 68 79,517 64 69,240 62 58,160 56 47046 4,607 1,900 2,707 343 4,264 1,896 2,368 573 3,691 1,747 1,944 560 3,131 1,628 1,503 439 2,692 1,461 1,231 448 2,244 1,321 923 322 5,329 2,380 4,722 1,219 4,193 1,052 3,448 714 2,889 703 2,376 489 1,960 1,831 1,747 1,435 1,169 944 1,314 1,253 1,250 1,002 803 639 2,374 1,729 1,322 2,187 1,609 1,262 2,149 1,652 1,258 1,790 1,356 1,010 1,459 1,094 811 1,227 922 646 11,678 68% 10,997 66% 9,895 63% 8,530 60% 6,997 57% 5,738 54% 11,048 10,407 9,435 8,196 6,741 5,569 2008 2007 2006 2005 2004

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14 July

ilestones for the year

27 March

6 May

2 October 21: Massimo Dutti opens its first stores

february
27: Inditex is included for the second time on the Eco 10 index created by the financial daily El Economista. The index is made up of the securities most recommended by 52 international investment banks.

april
Pull and Bear launches ‘The Pull and Bear World Project’, a competition targeting young people throughout the world that have fresh ideas and the desire to contribute something new to society in areas relating to art, sports, social and environmental commitment.

3:

in Colombia and the Philippines increasing the number of countries where it is present to 41. Pull and Bear and Bershka launch operations in China with stores in Peking. Bershka completes its launch there with stores in Hong Kong, Dalian, and Shanghai.

27:

28: Massimo Dutti opens its first store in
Peking at the Solana shopping centre.

may
6 Oysho launches a project to protect marine animals through in-store sale of the Oysho Summer Playlist CD. The proceeds go to the WWF programme for saving Mediterranean dolphins and turtles. 13:
The FTSE Group keeps Inditex as a member of the FTSE4Good Index following its annual review. The index evaluates listed Spanish companies based on fulfilment of criteria for social, economic and environmental responsibility in the running of the enterprise.

June
4: Zara opens its first store in Egypt where Pull and Bear and Bershka have had operations since 2008.

march
20: Bershka opens an emblematic store in Saint Petersburg (Russia). It is housed in a unique 18th century building on Nevsky Prospect, the best shopping street in the city.

July
14 The Shareholders’ General Meeting approves the financial Statements for 2008 and the issuing of dividends for €654 million - €1.05 per share. 17:
Uterqüe celebrates the first anniversary of its launch with simultaneous opening of three stores in Madrid, Brussels and Dubai.

27 Inditex takes part in Earth Hour environmental awareness activities organised by the WWF by turning off the show window lights in many of its stores located on main shopping streets throughout the world.
Inditex led the Merco 2009 (Corporate Reputation Business Monitor) ranking as the company with the best reputation in Spain. The Chairman of Inditex, Amancio Ortega, is chosen as the most respected director for the sixth year running.

14: Inditex is named ‘Multi-market

31

Retailer of the Year’ at the third meeting of the World Retail Congress. The award recognizes distribution companies that demonstrate successful management of commercial activities in various countries, companies that become global models for the sector.

august
1 Bershka’s new logistics centre in Palafolls (Barcelona), adjoining the chain’s Tordera offices which opened in June, is in full operation .

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Milestones for the year

1 August

15 December

10 November

25 November 30:

17 December 15 Uterqüe opens its first store in Mexico surpassing 50 stores worldwide for the youngest Inditex chain . 17 Zara and Zara Home launch applications for the iPhone and othersmart phones enabling their users to access fashionable new products that arrive daily at both chains’ stores.

September
4: The Inditex Group strengthens its position on the Dow Jones Sustainability Index World (DJSI World) improving its standing in all criteria used for preparation of this leading index for socially responsible investment. 18: Zara improves its position on the Best Global Brands ranking prepared by Interbrand each year. It rose from last year’s 62nd position to position 50. It is the largest increase seen among fashion companies found in the Top 100 on this list.

Zara arrives in Chicago with its largest US store situated at 700 N. Michigan Avenue, an important shopping enclave on the Magnificent Mile.

november
10 The new Massimo Dutti store on Barcelona’s Diagonal receives the first Energy Rating of A granted to a commercial establishment by the Ministry of Industry, Tourism, and Commerce in Spain It is the maximum rating for energy efficiency in buildings. 20:
Inditex launches operations in Syria with the opening of the first Zara, Pull and Bear, Massimo Dutti, Bershka and Stradivarius stores.

January
21: After Haiti’s horrific earthquake,
Inditex agrees to contribute two million euro for aid and reconstruction programmes.

October
1: Business Week recognizes Inditex as the ninth best company in the world for financial performance within the 40 company ranking prepared annually by A.T. Kearney.
Inditex and UNI Global Union sign a world-wide agreement guaranteeing that essential labour rights and regulations be protected by social dialogue with Inditex managers in each of the countries where the Group operates. The agreement supports the fundamental workers rights laid out in the International Labour Organization Conventions.

25 Zara strengthens its presence in Tokyo with a new store at the heart of the Shibuya district (Tokyo). It is Zara’s 50th store in Japan.

27 According to the UGT Business Social Responsibility Observatory, of the companies quoted on the Ibex 35 Index, Inditex along with Red Electrica have the best practices with regard to corporate social responsibility. 28:
For the fourth year running, Inditex appears on the world-wide list of companies showing most concern for the environment. This, according to the Global 100 Most Sustainable Corporations in the World prepared by the Canadian Corporate Knights magazine, is for specialisation in corporate social responsibility.

2

december
2: The new Zara and Zara Home store located in Barcelona’s Portal de l’Angel, is the first textile distribution project in Europe with LEED certification, the US stamp of sustainable architecture and one of the most demanding in the market.

29: Stradivarius opens its first store in
China in the city of Shanghai.

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ommercial concepts

In accordance with the Inditex Group’s international vocation, during 2009 the 8 commercial chains which comprise the group underwent significant international expansion. In this way, 98% of new stores were localised in international markets which means stores have been opened in 46 countries. 2009 was the year Inditex chains were introduced and consolidated on social networks. This applies both for those already present in these virtual areas, such as Pull and Bear or Bershka, and for chains which burst onto the scene over the year, such as Zara ot Uterqüe, among others. This step means Inditex is moving closer to its customers. In this context, the launch of the application for iPhone and smartphones by Zara

and Zara Home, which already have more than 1 million users, is notable. Regarding the environment, the Inditex group chains made several qualitative steps during 2009. Regarding stores, the opening of the first store with LEED certifications in Europe by Zara and Zara Home, or in the case of Massimo Dutti, obtaining energy classification A issued by the Spanish Ministry of Industry, Tourism and Trade to a store for its excellence in terms of energy efficiency, is notable. Other chains such as Pull and Bear or Oysho have undertaken environmental initiatives involving employees or customers. In short, Inditex’s commercial formats have made it clear that the environment is key to the group’s global strategy

Oysho 2.5% Stradivarius 6.3% Pull and Bear 7% Massimo Dutti 7.1%

Zara Home 2.2% Uterqüe 0.4%
Zara (*) Pull and Bear Massimo Dutti Bershka Stradivarius

Bershka 10.6%

Sales contribution by sales format

Zara 63.8%

Oysho Zara Home Uterqüe

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Sales by format (**) 7,077 771 790 1,177 702 280 243 44

Contribution by format 63.8% 7% 7.1% 10.6% 6.3% 2.5% 2.2% 0.4%

No. of stores at the close of 2009 1.608 626 497 651 515 392 261 57

Net openings 2009 88 43 27 60 59 18 22 26

New markets 2009 2 5 6 4 6 1 8

Countries in which it operates 74 44 44 44 37 23 25 11
(**) Millions of euros

(*) At year-end, the number of Zara stores included 213 Zara Kids stores.

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For Zara, 2009 was the year for moving to communication 2.0. Following the philosophy of giving an immediate response to its customers’ wishes, the chain extended its meeting points with its fashion proposals to the most far-reaching social networks. Since 2009, the global image of Zara, in addition to 74 countries, has been present on Facebook, Twitter and YouTube with a very active response by its users. Zara inaugurated its profile on Facebook in September and in a few weeks had more than 1 million fans, a figure which at year end already topped 2 million.

Social networks have turned into yet another shop window for the chain to present its latest novelties and, like any other store, to take its customers’ impressions regarding its fashion supply on board. Zara’s immersion in social networks has been accompanied by a website update (www.zara.com) with updated images of new articles coming into the store and different proposals for looks so as not to lose any details of new trends. These trends are also availablae on the mobile phone via the application for iPhone and other smartphones that the chain launched this year and which at year end had recorded more than 1 million downloads.

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1975 63.8% 1,608 88 74 2

Launch Date Contribution to total sales Number of stores at year-end
(including 213 Zara Kids stores)

Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

7,077 1,105 15.6%

Net Sales EBIT EBIT margin

www.zara.com

During 2009, Zara marked a new environmental milestone, specifically within the scope of the Inditex group’s ecoefficient store project, with the opening in Barcelona of the first fashion store in Europa with LEED certification, one of the most demanding sustainable architecture international quality seals in the world. The store Zara and Zara Home presents progress beyond the group’s first ecoefficient store open in Athens (Greece) in 2008. The stores, in addition to being a model of inspiration for the group’s new openings, are an architectonic reconciliation exercise of an apparently avant-garde building in a classical and urban setting; Portal de l’Àngel

in the heart of Barcelona, with an exceptional result from an urbanistic point of view. Among the openings made over 2009 are the Zara store in the Tokyo district of Shibuya, which leads to a total of 50 brand establishments in Japan; the Zara flagship on Chicago’s Michigan Avenue–in the area known as the Magnificent Mile, and the Zara store in Wangfujing, in Beijing, one of the most emblematic commercial streets in China.

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www.pullbear.com

Pull and Bear has been a source of inspiration for young people most interested in the latest trends for almost 2 decades. The decoration of its stores, music and fashion proposals comprise the ideal setting for the most avantgarde lifestyles. Over 2009, Pull and Bear presented its credentials in 5 new countries (Ukraine, Croatia, Estonia, Syria and China) with the opening of stores in central locations for youngsters. For its premiere in China, the chain opted for the Solana shopping centre northeast of Chaoyang park, the largest urban park in Asia and one of the main commercial areas in the China capital. Pull and Bear introduced itself to Chinese young people with an art-tinged event (music, graffities, design and fashion), just as it did in London with the opening of an emblematic store on Oxford Street, the commercial street par excellence of life in London. The chain, which has been up and running in the UK since 2008, is consolidating its presence in a privileged location. The relationship of Pull and Bear with the restless and innovative mindset of young people, in addition to being clear in its active presence in social networks, is reflected in mould-breaking initiatives closely related to its customers’ activities. Music and chasing dreams are the common denominator of many young people and Pull and Bear has channelled these concerns into projects like the blog Pull The Metal, in collaboration with the Barcelona magazine Metal, specialising in lifestyle content, or The Pull and Bear World Project, the chain’s major social initiative this year. By means of this competition, Pull and Bear compiled original and different ideas relating to the world of art, sport and social and environmental undertakings, values on which to base the brand with the purpose of turning the best into a real project. The undertaking with the environment has materialised in the culmination of the project Pull and Bear Forest, which the chain had commenced the year before and which, in addition to no longer publishing fashion catalogues on paper to avoid felling trees, included an initiative which was finally carried out this year in Querétaro (Mexico). Pull and Bear has collaborated with the reforestation of the Sierra Gorda Biosphere Reserve by planting more than 16,000 trees together with the participation of Inditex Mexico employees.

1991 7% 626 43 44 5

Launch Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

771 101 13.1%

Net Sales EBIT EBIT margin

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www.massimodutti.com

During 2009, Massimo Dutti introduced its fashion proposals for urban and independent men and women to 6 new markets in Europe, America, Africa and Asia. The chain, which has formed part of the Inditex Group since 1991, commenced its activity in Croatia, Colombia, Costa Rica, Egypt, Syria and the Phillipines, demonstrating that a taste for elegant cuts and top quality garments may be shared by citizens from any part of the world singled out for their love of details. The chain, which came into being in China in 2008, opened its first store in Beijing this year in the commercial area of Solana, one of the most notable in the capital. With this opening, Beijing joins a list of large Chinese cities where Massimo Dutti is present, such as Shanghai, Hong Kong or Macao. Over the year, Massimo Dutti has extended its fashion supply with the Baby line, a collection especially designed for babies with soft and comfortable garments. In addition, the chain has presented a new interior image for its stores. The establishment the chain opened on Königsalle avenue in Dusseldorf (Germany) was the first to incorporate new furnishings and lighting which renovate its image and goes further into depth on the warm and elegant setting which is the hallmark of all its stores. The new image is built with noble materials such as walnut, skin and dark marble and has a mixture of moden lines and classical details. For this renovation, which is already present in the chain’s new stores and which will be incorporated into periodic store renovations, lighting plays an essential role. Its treatment which offers more contrasts which boosts the prominence of collections, enables more responsible energy consumption.

Continuing along the lines which Zara started to map out in 2008 with the opening of the first ecoefficient store of the Inditex Group, Massimo Dutti inaugurated at the end of the year a store on number 484 of avenida Diagonal in Barcelona which received Energy Classification A issued by the Spanish Ministry of Industry, Tourism and Trade. This A rating, the first attained in Spain by a commercial establishment, corresponds to the maximum level in terms of energy efficiency in buildings. The improvements provided both to lighting systems and air conditioning and ventilation systems enable a reduction in electricity consumption greater than 30% which will mean reducing CO2 atmospheric emissions by 36 tonnes a year. This energy rating means Massimo Dutti marks a new phase in the development of Inditex’s ecoefficient store project, integrated into the Group’s Environmental Strategic Plan, and makes progress with the aim to reduce the impact of its stores on the environment.

1991 7.1% 497 27 44 6

Purchase Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

790 117 14.8%

Net Sales EBIT EBIT margin

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The latest revolution in Bershka is called ‘Magic’. This is the new concept of image the chain is implementing in its new stores and which began at the beginning of the year in stores in Italy and Holland. The chain therefore correlates its look to the frenetic pace of young people who love daring and latest fashion trends. The new Bershka stores capture the essence of the digital world, expressed by means of materials, furnishings and lighting. Dark colours, pale light and house-dance music are the key aspects of the new image for this chain which has been growing at the pace of latest technologies since 1998.

The direct interaction of Bershka with its customers, especially dynamic by means of social networks, enables it to gain first-hand knowledge of its concerns which translate into constant innovations for its products or their presentation, such as new labels for its garments which are more visual and practical, manufactured with recycled cardboard as part of the group’s measures to reduce its impact on the environment. In 2009 Bershka opened its first stores in 4 new markets: Ukraine, Syria, China and Singapore. The chain opens up

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1998 10.6% 651 60 44 4

Launch Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

1,177 196 16.7%

Net Sales EBIT EBIT margin

www.bershka.com

to South-east Asia by means of the opening in Singapore. Therefore, it selected ION Orchard, the largest shopping centre in Singapore. However, the most emblematic opening of the chain over the year took place in Saint Petersburg. This is an establishment located in a singular 18th century building on Nevsky Prospect, the most spectacular commercial street in the city and one of the most notable avenues because of the concentration of historic buildings situated there. Russia is a priority market for Inditex’s expansion strategy and at year end Inditex had 135 establishments, 22 of them Bershka.

Bershka is the group’s second largest chain in terms of number of establishments, after Zara. Its commercial network totals 651 stores in 44 countries. To respond efficiently to this network of stores, the chain finished in 2009 an important renovation and extension of its logistic facilities in Palafolls (Barcelona), a centre with more than 60,000 square metres adjacent to its headquarters located in Tordera (Barcelona), which has incorporated new incoming and outgoing goods lines and management systems for latest generation processes.

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www.stradivarius.com

1999 6.3% 515 59 37 6

Purchase Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

702 149 21.2%

Net Sales EBIT EBIT margin

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In 2009 Stradivarius held its 15th anniversary as a women’s fashion reference. Throughout this time, the chain’s treble clef image has progressed at the same rhythm, as its customers. It always maintains its essence and aims its products at women. Fifteen years after it came into being, the girl behind Stradivarius is now a young city slicker lady with her own personality and style. For her, Stradivarius is a comfortable and warm store in a sophisticated and relaxed environment where buying becomes an entirely pleasant experience. To commemorate its 15th anniversary, Stradivarius has launched a T-shirt and some special paper bags which have been delivered to all its stores. Fifteen years history has coincided with opening the chain’s store number 500 located in the commercial area of Kolonaki in Athens (Greece) and opening up in six new markets: Ukraine, Latvia, Croatia, Estonia, Syria and China. These openings mean Stradivarius boosts its presence in Eastern Europe and starts to expand into Asia and the Pacific. For its opening night in China the chain opted for Shanghai in which Zara, Pull and Bear, Massimo Dutti and Bershka are also present. One of the chain’s most notable introductions during 2009 was that made in Estonia by the enclave chosen for its very first store in Tallin. This is an establishment which is emblematic for its innovative architectonic concept in an old industrial building with an avant-garde and spectacular result. Over the last few months, Stradivarius has driven forward its collection of complements by broadening its bags, belts, shoes, tights and jewellery supply with the aim of offering its customer the total look. Regarding the social setting, Stradivarius has shown its undertaking in regard to breast cancer by publishing a supportive calendar starring the Spanish actress Elsa Pataky, which has been on sale in 2009. The aim of the campaign is to increase awareness on the importance of this cause and contribute with a contribution towards medical research.

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Oysho was the Inditex Group’s first specialised chain. When it came into being in 2001, it revolutionised the world www.oysho.com of women’s underwear and applied Zara’s hallmark for overwear to lingerie. In 2009, the chain with headquarters in Tordera (Barcelona) took one more step in its singular approach to underwear by extending its supply in a new, welcoming and pleasant setting. The chain has introduced some additional collections to its lingerie and corsetry lines under the concept Homewear. This product line includes fashion proposals to use at home or informally such as jackets and trouser leggings or warm clothes. This new product range is accompanied by renovations to the interior design of its stores. In new Oysho stores, white - a natural furnishing colour - is predominant in addition to golden brass lamps, old busts lined with tapestry

2001 2.5% 392 18 23

Launch Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries

Main indicators 2009 (Millions of euros)

and gold leafing picture frames which add nuances to the setting. The result is a welcoming store which harks back to small establishments of emblematic districts, such as SoHo in Nueva York, Le Marais in Paris or San Telmo in Buenos Aires. Stores opened by Oysho during the latter part of 2009 already have the new image. This is the case of the two most notable establishments which the chain opened in 2009, located in ideal locations such as Rambla Catalunya, in Barcelona, or calle Rioja in Seville (Spain). During 2010, Oysho will stamp its new image both on new stores and on the renovations. In the area of customer services, the chain launched its new gift card in 2009 which has begun to be used in its stores. In 2009 Oysho showed its environmental undertaking in a sea animal protection project with the NGO WWF, publishing a compilation CD whose profits went to a WWF programme to save Mediterranean sea dolphins and tortoises. The CD

280 38 13.6%

Net Sales EBIT EBIT margin

oysho Summer playlist was sold over the summer season in all the chain’s stores.

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2003 2.2% 261 22 25 1

Launch Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

Main indicators 2009 (Millions of euros)

243 25 10.3%

Net Sales EBIT EBIT margin

Zara Home has been incorporating the lastest fashion www.zarahome.com trends in home decoration since 2003 into products such as dinner services, cutlery or textiles (bedclothes, table and bath). During this exercise, its offering for children has increased with full layettes for infants. During 2009, the fashion chain for Inditex has carried out, together with Zara, two pioneering projects which have marked a milestone in the group’s activity and which will be references for the remaining chains in the environment and customer service areas. This is the opening of the first ecoefficient Zara Home store, located in Portal de l’Àngel, Barcelona and the launch of an application for third generation mobile phones.

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Commercial concepts

The ecoefficient store the chain has opened together with Zara in Barcelona is the first European store in the process of LEED certification, one of the most demanding sustainable architecture quality seals in the world. The chain’s architecture equipment and Inditex’ environment equipment have jointly designed this establishment as a model and reference for the chain’s future openings, which will incorporate all measures that enable reducing energy consumption by 30% compared to a traditional store, saving 50% of water and avoiding the emission of more than 150 tonnes of CO2 a year. In this store Zara Home has also made numerous interior design innovations by introducing new materials into its furniture (such as marble or natural wood) and lighting, designed to make products stand out.

The launch of the application for smartphones, which Zara Home made in December with the fashion novelties which arrive at its stores daily is one more step to broaden customer service channels as it did in 2007 with the creation of its online store, which is operational in 15 countries. In 2009, Zara Home opened its first store in Poland which coincided with the Inditex group’s tenth anniversary in this market until year end with presence in 25 countries.

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Uterqüe celebrated its first birthday in 2009. In barely 12 months, the Inditex group’s youngest chain has turned into a reference in the field of fashion complements and accessories. It came into being with a very clear premise: that complements at the back of a woman’s wardrobe become a basic necessity. Uterqüe takes maximum care in the manufacture of its products with the best properties and looks after the finest details like its stores which are sophisticated and natural areas in which elegance cohaibts with functionality. To celebrate its first birthday, last July, the chain simultaneously opened 3 emblematic stores located on the Gran Vía in Madrid (Spain); at Zaventem airport, in Brussels (Belgium); and in Dubai, in one of the most relevant shopping centres in the United Arab Emirates, Mall of the Emirates. In addition, during this exercise Uterqüe renewed its website with a new more minimalist and conceptual image in which the product participates more. Just as for the remaining commercial formats of the Inditex group, Uterqüe is a chain with significant international vocation. During 2009, the chain underwent an important international expansion by entering into 8 countries in Europe, the Middle East and America: Belgium, Cyprus, Saudi Arabia, United Arab Emirates, Lebanon, Kuwait, Qatar and Mexico. By launching its brand in these markets, Uterqüe ends the year with commercial presence in 11 countries after receiving a warm commercial welcome in all of them. With the opening in Mexico last December in the exclusive shopping centre Antara Polanco in Mexico DF, the chain exceeded 50 stores and used the opportunity to present its latest fiesta collection which is available in all its stores. At first complete year end, Uterqüe had 57 stores and a turnover of 44 million euros. In 2010, the chain plans to increase its commercial area within a range of between 25 and 30 stores. 65% of this new area will be in international markets.
Main indicators 2009 (Millions of euros) www.uterque.com 2008 0.4% 57 26 11 8

Launch Date Contribution to total sales Number of stores at year-end Number of net openings in the financial year countries new countries in the financial year

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nternational presence
Inditex began to expand outside Spain in 1988, at a time when the company only had a few dozen stores. Gaining a global presence was not only a strategic move, it also formed part of the essence of Inditex. The Group ended the financial year of 2009 with a presence in 74 countries on four continents, operating in the whole of the European market as a natural place for all of its chains to expand and with a strong commitment to the Asia-Pacific region as an area of strategic growth, particularly in Japan, China and Korea. The weight of international markets in the Group’s turnover has risen to 68.2%. In the case of Zara, the chain with the greatest presence abroad, the international market already accounts for 77% of its turnover. Between 1 February 2009 and 31 January 2010, Inditex added 343 new stores to its sales network, reaching at year end a total of 4607 stores in 74 countries, following the opening of the Group’s first stores in Syria. The structure of each opening has been very different. During the financial year, Inditex increased its commercial presence in 46 markets. International expansion has concerned all of the sales formats and has been especially significant in the case of Uterqüe, the most recent format, which at the end of the financial year, only one and a half years since its launch, was already operating in 11 countries.

Asia and Africa 485 stores

16 countries

America 366 stores Europe 3,756 stores
37 countries

21 countries

inditex’s commercial presence by geographic area at year end 2009

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countries in which the chains started commercial activity during 2009

Egypt Syria

Croatia China Syria Ukraine

Colombia Costa Rica Croatia Egypt The Philippines Syria

China Singapore Syria Ukraine

Croatia China Estonia Latvia Syria Ukraine

Poland

Saudi Arabia Belgium Cyprus United Arab Emirates Kuwait Lebanon Mexico Qatar

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3,756 stores financial year 2009

Europe
Inditex has a significant commercial presence in European markets, which the Group considers to be its domestic market and the natural area of growth for all formats. In the financial year of 2009, Inditex opened 200 new stores in this region. Growth was particularly significant in countries like Russia (37 openings), Poland (34), Greece (18), Portugal (18) and Turkey (15). Growth abroad in this region materialised with the opening of new chains in countries such as Poland, Belgium, Cyprus, Ukraine, Latvia, Croatia and Estonia.

In August, Massimo Dutti opened a store in the heart of London’s shopping district, Oxford Street, thereby increasing to 11 the number of stores in the UK

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number of stores at year end 2009
Zara Germany Andorra Austria Belgium Cyprus Croatia Denmark Slovakia Slovenia Spain Estonia Finland France Greece The Netherlands Hungary Ireland Iceland Italy Latvia Lithuania Luxemburg Malta Monaco Montenegro Norway Poland Portugal United Kingdom Czech Republic Romania Russia Serbia Sweden Switzerland Turkey Ukraine Total 64 1 11 26 4 3 3 2 4 328 2 4 114 43 15 6 9 2 78 4 4 2 1 1 1 3 28 60 65 6 9 35 4 8 10 27 4 991 213 15 3 527 411 23 15 61 4 3 7 24 2 1 2 6 41 11 1 2 10 2 3 5 12 1 16 3 541 15 2 464 336 224 49 13 10 20 45 4 4 6 22 2 1 6 23 2 4 15 2 3 6 18 37 10 31 1 19 7 6 1 1 1 5 12 34 3 4 1 2 1 1 7 40 3 4 24 1 4 53 22 4 5 1 4 6 19 21 16 12 43 25 7 5 5 4 2 1 19 15 10 15 18 7 1 4 168 1 2 285 1 1 246 1 2 265 1 2 3 275 1 178 120 35 2 4 1 20 2 1 1 Zara Kids Pull and Bear Massimo Dutti 8 1 1 6 5 2 6 1 2 6 2 3 1 1 1 1 Bershka Stradivarius Oysho Zara Home Uterqüe Total 72 6 12 63 26 8 3 6 12 1,900 5 4 243 148 23 20 22 2 270 11 16 3 10 1 5 5 98 323 91 15 37 135 14 11 16 108 12

3,756

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485 stores financial year 2009

Asia and Africa
Asia is a strategic geographical area for Inditex´s growth. Chinese, Japanese and Korean markets, which are key in the expansion in the area, absorbed most of the new openings, with 63 new stores. The strong growth in China, with a total of 41 new stores, must be underscored, including the first Pull and Bear, Bershka and Stradivarius points of sale. In Japan, there were 50 stores as of fiscal year end, whereas in Korea the company tripled its presence with 17 Zara stores. In FY2009 Syria was added to the list of countries where the Group is present. The entry of new formats was completed with the launching of Zara and Massimo Dutti in Egypt, a market first entered by Pull and Bear and Bershka in 2008.

Zara opened in Shibuya, Tokyo, a store with a striking store front in one of the busiest intersection in the world. It marked Zara´s 50th store in Japan, a very relevant market for the format.

number of stores at year end 2009
Zara Pull and Bear Massimo Dutti Saudi Arabia Bahrain China South Corea Egypt The United Arab Emirates Philippines Indonesia Israel Japan Jordan Kuwait Lebanon Malaysia Morocco Oman Qatar Singapore Siria Thailand Tunisia Total 21 2 44 17 3 8 6 8 19 50 2 5 4 5 4 1 2 7 1 5 2 216 60 54 51 46 27 24 7 2 3 1 2 4 1 2 1 1 1 2 4 4 2 2 2 4 4 1 3 1 1 1 2 2 1 2 1 1 2 4 2 3 4 1 3 4 1 2 4 1 1 2 19 2 5 1 8 2 3 1 2 5 7 5 7 2 8 2 4 9 2 6 Bershka 19 1 13 Stradivarius 22 1 1 Oysho 10 1 Zara Home 4 1 Uterqüe 2 Total 95 10 68 17 8 47 8 13 39 50 11 22 29 11 10 4 14 15 5 7 2

485

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366 stores financial year 2009

America
In the financial year of 2009, Massimo Dutti opened its first stores in Colombia and Costa Rica while Uterqüe opened its first store in Mexico, the American market in which Inditex is most prevalent. Mexico, the United States and Colombia saw the largest number of openings in 2009. In total, Inditex opened 28 new stores on the American continent, bringing to 366 the number of stores in this region.

Zara opened on the magnificent mile in chicago, its biggest store in the United States with an imposing façade 15 metres high and 60 metres wide on the intersection of Michigan Avenue and Huron Street

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number of stores at year end 2009
Zara Pull and Bear Massimo Dutti Argentina Brazil Canada Chile Colombia Costa Rica El Salvador United States Guatemala Honduras Mexico Panama Puerto Rico Dominican Republic Uruguay Venezuela Total 8 26 18 7 8 2 2 48 2 2 48 2 1 1 2 11 188 3 39 32 11 59 5 29 13 1 33 28 41 29 13 1 2 1 2 1 1 2 1 1 4 4 Bershka Stradivarius Oysho Zara Home Uterqüe Total 8 26 18 7 18 3 4 48 8 2 193 2 1 1 2 25

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ustomers, shareholders and society customers Our customers are the central characters around which all Inditex operations revolve. This not only includes the stores where personnel are the first line of contact, but the rest of the Group as well; from designers and commercial people to corporate professionals that seem to be far from the store activity. The Inditex motor starts humming once customer demand reactions are analysed. Inditex has a flexible, dynamic and innovative organisation which respond to new trends and tastes in fashion in record time and at heady speeds, meaning that customer expectations can be met by the stores quickly. This link with our customer is not seen just from a fashion perspective; it also makes its mark with localization, store design, ethical and responsible production environments. There is also a social and environmental point of view as reflected in the chapters on CSR and the Environment. Inditex sees customer service as the key enabling chains to attend to and process customer desires as swiftly as possible. It is one of the most important day-to-day aspects for store personnel. In order that customers enjoy their encounter with fashion in a free and comfortable environment, all of the personnel that work in the Group’s stores receive periodic training to help with requests and questions in an efficient and enjoyable manner. In fact, more than 80% of the investment Inditex makes in training targets store staff. In recent years the Store Management Terminal (TGT), which is operative in all Inditex stores, has become an effective tool for continuous training in-store and the best place for daily queries regarding collections available in-store and new products received or at the point of being received, so facilitating information for the customer. Store personnel have access to information about product and warehouses and communication with chain management via the TGT. It improves service.

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In addition, customers have other communication channels with the Group for resolving any questions regarding product or the organisation that could not be dealt with in the store. Both the chains and the Group’s headquarters have specialised professional teams who offer personalised service to all customers who require it, by phone, email or post and in several languages so as to make the query easier. In 2009, more than 54,000 queries were attended to. They were received by e-mail from the chains or Inditex.com, and over the phone. Just a very low percentage were received by post.
Queries handled by channel in 2009 Phone 24%

Origin of electronic queries received in 2009 (in %)

Spain United Kingdom Mexico USA Italy France Germany India Australia Portugal Argentina Canada 8.35 7.47 6.18 5.01 3.36 2.74 2.4 2.4 2.34 2.19 1.58 1.55 1.52 15.9
0 10 20 30

37.02

Email 76%

Brazil China Other

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Electronic queries received in 2009(*), by chain Pull and Bear 4% Massimo Dutti 5%

Offering fast effective customer service through store personnel and other enabled communication channels is one of the Inditex Group tenets. The limited number of complaints received each year by the chains indicates that

Uterqüe 2% Bershka 20%

the service is meeting needs. In 2009, the Spanish consumer authorities registered a total of 4,344 complaints to the Inditex chains from their customers. This represents one complaint per 56,201 garments sold, clearly demonstrating

Zara 37%

Inditex 32%

the high degree of satisfaction.

(*) Due to a change in methodology, queries received by Oysho and Stradivarius are not included.

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internet
As can be seen by the number of queries received through email, the Internet has become one of the best showcases the chains can use to demonstrate their fashion offerings and maintain a direct close relationship with their customers. During 2009, this virtual relationship got a big push thanks to the launch and entrenchment of all the Inditex chains in social networking sites. Customers are more involved in activities of the Group now that these new medias provide a direct connection to the chains. The effort that all of the chains made during 2009 to continuously update their web site content with the latest fashion offerings at their stores has been significant. This is the case with Zara.com where there is a new page with the most recent styles available in the stores. This area, called

affinity card 2009
Affinity Card is the Inditex Group card, a payment method valid for its holders in any Group establishment: Zara, Massimo Dutti, Bershka, Pull and Bear, Stradivarius, Oysho, Zara Home and Uterqüe. Available in Spain for more than 15 years, the Affinity Card is also held by customers in Mexico and Greece where it was launched in 2007, and in Portugal where it has been available since 2008. Currently there are more than a million Affinity Card holders in these four countries. All of them have a card that offers financial advantages and methods of payment based on the holders’ needs. In 2009 the Affinity Card celebrated its 15th anniversary by rewarding the loyalty of its holders through a series of initiatives. Among them was a promotion where the holder received a percentage through their accumulated purchases, as well as the personal Shopper, through which the holder could enjoy an exclusive service from a professional image consultant, making a trip through Group stores with a budget of a thousand euros for purchase with the Affinity Card in Inditex stores in Spain. The Affinity Card has a web site in each of the countries where it is used. In Spain, the affinitycard.es site had more than 250,000 visits in 2009, 25% more than in 2008. The website has become a communication tool as well as a tool customers can use to easily query accounts and transactions online.
Zara 33.48 5.68 5.14 4.07 2.66 2.65 1.01 0.37

lookbook, has become the most visited area of the web site in just a few months. All the chains have specialist Internet teams who are continually developing and implementing better tools so that the customer online service is as suitable and effective as possible. In 2009, the Inditex web sites, including both chain sites and inditex.com, received 55 million visits with more than 264 million pages viewed.
Visits to Inditex websites (in millions)

More than 200,000 people in Spain receive monthly information at their home regarding the latest news about Group fashion brands, and more than 150,000 card holders receive e-mail communications from the chains containing information about fashion trends and the latest products.

Bershka Pull and Bear Stradivarius Massimo Dutti Inditex Oysho Uterqüe

The visit data for Inditex websites does not include Zarahome.com, the online store for Zara Home, which has been available since October 2007. At the close of 2009, the Zara Home online store was receiving 38,000 visits a day and had 170,383 users subscribed to its newsletter.

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inditex corporate governance introduction Generally, the tendency is to define Corporate Governance as the way in which companies are organised, managed and controlled. In this context, good corporate governance refers to the administrators and managers responsible for governance acting diligently, ethically and transparently in performing their functions. Article 5.4. of the Regulations of the Board of Directors of Inditex says that “the Board of directors will perform its functions in accordance with the corporate interest, defined as the long-term viability and maximisation of the value of the company in the common interest of all shareholders, which should not impede other legitimate public or private interests being taken into consideration as they affect the performance of company activity and especially those that affect other stakeholders in the company: employees, customers, suppliers and society in general. the Board will determine and review the company’s business and financial strategies in the light of this principle, attempting to establish a reasonable balance between the chosen proposals and the risks taken.” The maximisation of company value may therefore only be understood as the continuous creation of value for each and every stakeholder: employees, shareholders, customers, business partners, suppliers and society in general, i.e. a model of a socially responsible company involved in a continuous two-way dialogue that benefits every related agent. There thus appears a concept of good corporate governance as a necessary instrument to meet the objective of long-term, net total wealth creation, which has to be expressed through management acting ethically and transparently, while being subject to internal and external checks and controls. Such good corporate governance is an element of corporate social responsibility, understood in its widest sense, and thus becomes a strategic instrument for company efficiency to achieve competitive advantages in conjunction with social action and social responsibility in the strictest sense and with environmental sustainability. As such, the Annual Corporate Governance Report approved by the Inditex Board of Directors, in accordance with the legally established model, is designed as a document that provides complete and reasoned information on the company’s governing structure and practices, so that the market and interest groups can form a faithful image and complete, well-founded judgement on the corporate government of the Inditex Group and on the degree to which the recommendations of good governance approved to this effect have been observed.

corporate governance report
These consist of: - Articles of Incorporation, approved in their latest version by the General Shareholders’ Meeting of 16th July 2004 and partially modified by agreement of the General Meeting of the 18th July 2006. - Regulations of the General Meeting of Shareholders, approved by this body at its meeting on 18th July 2003 and partially modified through various agreements of the General Meetings of 18th July 2006 and 17th July 2007. - Regulations of the Board of Directors, of which the latest revised text was approved by the Board on 11th December 2007. - Internal Regulations for Conduct for Inditex and the company group in relation to the stock markets, of which the latest revised text was approved by the Board of Directors on 13th June 2006. - Internal Code of Conduct and Code of Conduct for Inditex External Manufacturers and Workshops, approved by the Board of Directors on 23rd February 2001, the latter being rewritten at the meeting of the 17th July 2007. - Internal Directive on Responsible Staff Practices for the Inditex Group, approved by the Board of Directors on 13th June 2006. During 2009, Inditex has continued with practical application and consolidation of the reforms realised in the above-mentioned standard for adaptation to the Unified Code of Good Governance, keeping on Inditex’s part, a degree of practically complete compliance with recommendations of the cited Code.

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Bodies and mechanisms of corporate governance
Inditex corporate governance is expressed through the following institutional and operational bodies and mechanisms: 1.- The General Shareholders Meeting.- Inditex puts into practice the principle of “one share, one vote”, attendance at General Meetings is not conditional on the possession of a minimum number of shares and there are no blocking provisions in the Articles of Incorporation, with the result that the degree of good governance obtained is optimum. 2.- The Board of Directors.- As it consists of an Executive Director Representing Controlling Shareholders, who is its Chairman and the founder of the company, two executive directors, a director representing controlling shareholders and five independent directors, to the extent that they are all people of professional prestige and completely separate from the executive team and main shareholders, a majority percentage of independent directors is obtained that is much higher than would correspond proportionally to the company’s floating capital. During the six meetings held throughout the year, the Board of Directors, among other things, accepted the matters dealt with by the Audit and Control Committee and the Appointments and Remuneration Commission, analysed and approved the results that the company is regularly required to provide to the market and its supervisory bodies, approved the

Annual Corporate Governance Report for the year 2008 and the Triple Report as well as the Report on the policy of remuneration of the Board of Directors itself. 3.- The Audit and Control Committee.- Beyond legal requirements and the recommendations, this Committee consists of five directors, all independent as explained above. During 2009, it met on five occasions and, as well as examining the results of the company and the information supplied to the market, it considered such relevant issues for good governance as the protection and supervision of the function of the Inditex Group Internal Audit, the identification and evaluation of threats to the Group and the analysis of the third annual report presented by the Ethics Committee. 4.- Appointments and Remuneration Commission.- This consists of five independent directors and during the tax year it held five meetings where it analysed and reported on, among other matters, the appointment of managers, transactions with related parties and the human resources policy. 5.- The Committee and Management of Regulatory Compliance.- Reporting directly to the Audit and Control Committee, the Regulations Compliance Committee, consisting of the company’s CEO, who is its Chairman, the General Secretary, who is also the Regulation Compliance Manager, the Capital Market Manager and the Human Resources Manager, has the general function of promoting knowledge and ensuring compliance with the Internal

Members of the Board of Directors during the Annual General Meeting held at the company’s headquarters in July 2009.

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Conduct Regulations for Inditex and its Group of Companies in matters relating to the Securities Market. During the year, it met on four occasions in relation to specific operations with Inditex shares. 6.- The Ethics Committee.- During its third year, this Committee, made up of the General Secretary and the Regulations Compliance Manager, the Human Resources Manager and the Corporate Social Responsibility Manager, supervised the application by Inditex Staff of the Responsible Practices Directive, an instrument designed to ensure the professional, ethical and responsible behaviour of its employees in carrying out company activities in any part of the world.

relationship with shareholders the Shareholder body
Inditex shares are represented by means of account annotations. Keeping the register of these annotations is the responsibility of the Management Company for Share Registration, Compensation and Liquidation Systems (Iberclear). Inditex had 67,439 shareholders according to data from form X-25 that the company requested from Iberclear for the Ordinary General of Shareholders Meeting of 2009. Of these, 56,242 were individual shareholders and the remainder investment institutions. With the incorporation of significant holdings registered in the Spanish National Securities Market Commission, the approximate summary of the shareholder structure is as follows:
Shareholder body Individuals Institutional investors Partler 2006 SL Gartler SL Total Shares 24,060,555 229,669,782 57,872,465 311,727,598 623,330,400 % 3.86% 36.85% 9.28% 50.01% 100.00%

transparency and information
Good governance requires stakeholders to have regular, prompt access to relevant, sufficient and reliable information, both in relation to the rules and practice of governance and to the results achieved. To do this, and in order to provide maximum corporate transparency, the Company, as well as including all relevant information and communications on its corporate website, kept the market informed as necessary throughout 2009 by sending out relevant market releases (an extensive distribution list with market investors, analysts and sources of market information), press releases (to media outlets and agencies) and through webcast conference calls and road-shows in the main European and American financial marketplaces, which were held following the recommendations of the National Stock Market Commission contained in its letter dated 22 December 2005: “Recommendations regarding information meetings with analysts, institutional investors and other stock-market professionals”, for the purposes of avoiding the selective diffusion of relevant information and of fulfilling the principle of equality of treatment of investors.

Inditex has among its operating principles the fulfilment of a policy of transparency and maintenance of communication channels guaranteeing that all of its current and potential shareholders have clear, complete, homogeneous and simultaneous information, which is sufficient to value the management of the company and its economic and financial results. The Rules of the Board set down, in Article 41, a series of measures which regulate the relations with the shareholders.

Shareholders’ Office
Any individual shareholder can visit the Shareholders’ Office to request detailed information on the performance of the business and future strategy. Through this channel individual shareholders can formulate any request for information that they deem relevant on the performance of Inditex. The Shareholders’ Office dealt with more than 750 petitions from individual investors during 2009. The Shareholders’ Office takes on special relevance during the period for the calling and holding the General Shareholders Meeting that is traditionally held halfway

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through July in Inditex’s corporate headquarters in Arteixo (A Coruña). Information and documentation is sent specifically to provide shareholders with appropriate knowledge on the convening and content of the General Meeting as well as to facilitate their participation in the process of the taking of decisions by the group’s maximum governing body .

means of the corporate web page and is distributed to a database of investors and analysts with more than 1100 registrations. Among institutional investors, Inditex complements this information with quarterly freely accessible multiconferences to explain the quarterly results and performance of the business. It is important to mention the presentations of annual results to analysts and investors in London and Madrid, with an audience of some 70 persons. The company also holds information meetings in the principal financial capitals and visits to corporate facilities.

corporate web page
The corporate web page includes all the relevant information for shareholders and investors and is a vehicle of communication with shareholders, providing them with current information on all significant aspects of the Group. Any user can gain access to the corporate web page to view, among other information, daily and historical share pricing, Inditex annual public reports since 1998, financial information registered in the Spanish National Securities Market Commission (CNMV) via Periodic Public Information and the financial calendar, among other things. In 2009, the section on information for shareholders and investors on the corporate web page received 561,238 visits. In addition to the corporate website, www.inditex.com, there are Group websites for each of the following store formats: www.zara.com www.massimodutti.com www.e-stradivarius.com www.zarahome.com www.pullandbear.com www.bershka.com www.oysho.com www.uterque.com

activities with institutional investors
a) Roadshows Inditex holds two annual roadshows in which it presents the results of the first semester (spring-summer season) and the whole year (after the autumn-winter season) visiting the world’s principal financial capitals. Over two and a half weeks, the principal investors have access - mainly by means of individual meetings - to the strategic viewpoint of the management team. During these visits direct contact is established with more than 200 investors. b) Sector conferences Another forum of communication with investors is the sector conferences organised by financial institutions, participating in the main events that are held in Europe, with an average attendance of 50 leading institutional investors at each of them. c) Individual meetings Apart from the programmed occasion, a large number of meetings were held with investors during the year. In the case of specific requests, visits to investors from a certain country or geographical area are also organised. In the past year presentations have been made in the principal financial capitals of Europe and Asia to more than 100 institutional investors. d) Visits of investors to the corporate installations Equally numerous are visits of institutional investors to Inditex facilities to gain deeper knowledge of our organisation, its business model and corporate strategy. Throughout 2009, meetings have been held with approximately 50 institutional investors from all over the world. 90 videoconferences and multiconferences have also been held.

department of relations with investors and analysts
• Some 50 financial and stock-market bodies publish analytical reports relating to Inditex shares. Inditex is the third Spanish company by the number of covers. • Some 11,200 institutional investors, holding 36.85% of corporate capital, play a key role in formation of the share price and its liquidity. Relevant information on the performance of the business is communicated quarterly both to the CNMV and to all the shareholders and the financial community and the media, with special attention to those specialising in economic information. This relevant information includes the Balance Sheet, P&L Account and Management Report. This same procedure is followed with information referring to relevant events that affect the performance of the business. This information is accessible immediately by

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Open to society
Inditex is committed to transparency and access to group information. The media, with its role as primary social intermediary, is one of the main external communicators of information regarding the Group corporate strategy. Its knowledge of macroeconomic scenarios, the sector and the company itself enable it to analyze Inditex’s direction and performance with a critical spirit and communicate this information to society. The General Directorate of Communication and Institutional Relations at Inditex is the channel the Group uses to give the media access to relevant information about the company. It has a team at the corporate headquarters specialized in financial information and with broad knowledge of the textile industry and fashion tendencies. Inditex is adding a series of professionals to this central structure. They are specialized in Communications and Public Relations and are joining affiliate offices where company operations are most relevant or in the countries where the communication media is especially developed. The purpose is to facilitate media accessibility and the availability of relevant information regarding the company. Currently, the Communications Department is present on three continents where it maintains a fluid relationship with the local communication media: America (US and Mexico), Europe (Spain, the United Kingdom, Russia, Italy, Greece, Germany, Poland, France, and Turkey) and Asia (Japan, China, Korea, and India). During 2009 Inditex made thirty releases to the media in more than 70 countries, via this team. All of the press releases were also available on the corporate website, www.inditex.com, in order to guarantee that the maximum number of interested people would have access to the information. These communications include details regarding important questions about Inditex’s performance such as the agreement reached to open the first Zara stores in India in 2010, the agreements adopted by the General Shareholders Meeting, the quarterly reports of results, and the main milestones arising from expansion and activities in the social and environmental area. The corporate web page makes available a specific press area which has become one of the main sources of company information. In addition to the cited communications, there are informative materials available such as the Annual Report since it began being published, corporate presentations, and corporate governance and stock market information. For their part, the chains’ web pages provide the media with information about collections. During 2009 Inditex maintained press conferences with national and international media in order to make the annual presentation of results and to report on the General Shareholders Meeting, among others. In these conferences, Pablo Isla, Vice-chairman and CEO of Inditex, kept close contact with the communications media in order give these professionals periodic access to the highest executive level of the organisation. Inditex tries to respond to all those requests for information arising from the media around world. Just by email, more than 1,500 requests for information from the press, radio, television and internet have been attended to. This very significant volume demonstrates Inditex’s high exposure and the interest its activities generate at an international level. Inditex periodically monitors the information published by the media in about thirty countries. Just in those markets, the Group has counted 35,250 articles in which it was mentioned in 2009. The European communications media published 86% of these articles as a consequence of Inditex’s important presence in that region. Nevertheless, articles out of Asia grew from 4% last year to 8% of the total, a result of the significant expansion the Group made in these markets.

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Some mentions of inditex in the international press
News about Inditex by geographical area America 6% Spain 30%

Asia 8%

Rest of Europe 56%

The Group headquarters in Arteixo (A Coruña, Spain) keeps an open door policy that resulted in 289 visits being organised in 2009. These visits, attended by personnel with broad knowledge of the company and long professional careers in the organisation, are directed to diverse types of institutions (mainly educational, corporate, communications media, and employees). The visits include all the main divisions and departments (design, commercial, pattern design, pilot stores, show window design, manufacturing and logistics) enabling acquisition of a deep understanding of the Inditex business model. A total of 4,348 people visited the company installations between 1 February 2009 and 31 January 2010.
Visits to the installations by type Institutional 20 The Media 7 Educational 152

Companies 79

Employees 31

Origin of the visits by geographical area Rest of Europe 53 America 18

Asia 18 Other 8

Spain 192

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orporate Social Responsibility large-scale development
For one more year, the practical exercise of the strategy of Social Responsibilty by Inditex has been articulated through the management of a broad concept of development, understood as the expansion process of those liberties which should be enjoyed by all those persons who, directly or indirectly, have been influenced by the implantation of the Inditex business model. A broad development which is the result of an increase in certain capacities in which the level of income does not exclusively constitute the key indicator and, on the contrary, other variables are relevant, such as the enjoyment of a long and decent life, deriving from the exercise of employment which is respectful of Fundamental Human and Employment Rights, and free, in a peaceful and safe community. A development in which freedom is the primordial axis enabling us to encourage the role of the working woman both in the factories which make up the Inditex production chain and in the communities in which their families live, as essential factors for social change. In short, a development that, articulated through the international framework agreement achieved with the International Textile, Garment and Leather Workers’ Federation (ITGLWF), makes it possible in the short-term to create a social fabric, inside and outside the factories, which is responsible and generates the processes in which social participation, through the free exercise of the Principles of Freedom of Association (87 Convention of the ILO) and Collective Negotiation (98 Convention of the ILO), is not considered to be a means to achieve small-scale development, but must be considered as constituent parts of its own ends.

Javier Chércoles, Manager of Corporate Social responsibility at inditex.

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from decent Work comes the five Wins neil Kearney - former general Secretary (1988 – 2009) international textile, garment and leather Workers’ federation (itglWf)
This text is an extract from a conference held during the tenth anniversary of ETI in October 2008.

In memoriam
On 18th November 2009, Neil Kearney, Secretary General of the International Textile, Garment and Leather Workers Federation (ITGLWF) died. Kearney was the main instigator of the collaboration agreement, a pioneer in the sector, signed by Inditex with the trade union organisation in 2007, with the main objective of ensuring trade union freedom and the right to collective negotiation in all countries.

“…30 years ago there was little talk of Corporate Social responsibility. employers were expected to take responsibility for those they employed. And they usually did - after a fashion. then along came the globalisation of industries like textiles and footwear. production moved to countries with few rules and little respect for their application. Worker exploitation became intense. Child labour, beatings, deaths in factory fires, all led to consumer revulsion forcing brands and retailers to begin an effort to clean up their supply chains. rules for suppliers were set down in codes of conduct with compliance policed by an army of social auditors. today, this process constitutes a large part of the CSr business, now a uS$ 60 billion industry. this is where Freedom of Association comes into its own, where workers have the right to organise themselves into trade unions and where their trade union representatives enter into dialogue, negotiate and bargain collectively with Management on their behalf. in the absence of such representation there is a huge potential for misunderstanding and conflict. take Bangladesh where a couple of years ago in a very modern factory workers received lower wages than in the previous month when they had worked less hours. Without industrial relations systems in place and without representation none had the courage to raise the issue with the management. however, they stopped work and began discussing among themselves. outraged at the stoppage one manager struck out at the workers creating a riot situation in the factory in which one worker was killed, a large part of the factory was trashed and led to 18 months of disruption throughout Bangladesh’s garment industry. these are the consequences of

the absence of industrial relations management systems and a dearth of communication. Freedom of Association and Collective Bargaining are not just human rights. they are also key constituents of good management practice. in reality, Freedom of Association and Collective Bargaining are the foundations of “mature industrial relations” where management and workforce combine their efforts, recognising their interdependence and working together for their common interests. Again this doesn’t happen by chance. in these sectors there is huge hostility to workers exercising their right to join trade unions. When even suspected of thinking about unionisation workers are threatened, harassed and fired. As a result, they are then generally afraid to exercise their rights. At the same time trade unions are denied access to workers. the itglWF recommends employers give an individual written right to unionise guarantee to every worker and to all new recruits. Such a guarantee makes clear that the employer supports the right of the workforce to join a trade union, indicates that the employer will recognise and bargain with that union and will not discriminate against workers who become members. the itglWF also recommends that employers conclude access agreements with trade unions permitting them to meet their workforce at mutually agreed times. A key part of industrial relations management systems should include a protocol to prevent conflicts and other issues based on relations between Management and trade union spelling

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out the rights and responsibilities of each. A central part of these protocols should aim to promote dialogue and not just about the demands of both sides but concentrating on short daily briefings and de-briefings on production problems; solutions; and upcoming challenges, and how to meet them. it should include a weekly review of developments including bottlenecks; challenges; and progress. Finally, it should include regular monthly meetings where important industrial relations issues are examined in greater depth. All this is time well spent. take Cambodia, where there have been many disputes and labour stoppages. Some factories have adopted industrial relations management systems and have recognised trade unions and bargain with them. in an enterprise, for example, not a single day’s work has been lost in the two years since these systems were adopted. there trade unions consult and recommend how work be allocated between lines, a continual source of dispute in the past. in other words, mature industrial relations do not eliminate problems but they provide a mechanism where these can be anticipated, identified and dealt with before they escalate into disputes. So, where can Suppliers as employers get advice and assistance? the itglWF would recommend going first to labour Ministries, also seek advice from key international Buyers and do not hesitate to approach local and national trade unions seeking information and advice on how to build systems to minimise the potential for dispute. the itglWF has itself developed a number of components of industrial relations management systems, including grievance and disciplinary procedures and protocols for relations between trade unions and Managements and works with international Buyers, trade unions and Management to put in place mature systems of industrial relations. We also provide training on the use of such systems to both trade unions and Managements. this support approach is gaining ground. Many key buyers now believe the uS$ 60 billion expenditure on CSr could be better spent by switching from policing and auditing to support. For example, the biggest retailers in the world publicly say that the

present approach is not sustainable in the long term and that the future lies in mature systems of industrial relations. inditex has gone a step further and concluded a global Framework Agreement with the itglWF and both are working together to make “mature industrial relations” a reality in key inditex’s Suppliers across the world. this represents a major switch handing back responsibility for working conditions to where it belongs – the workplace. properly undertaken this should result in continuous monitoring of conditions from within an enterprise as opposed to irregular visits by external auditors. But this approach can only be effective in situations of mature industrial relations with real social dialogue and where the energies of both managers and workforce have been harnessed for the monitoring process enhancing both its effectiveness and credibility. the objective is decent work and mature industrial relations is the route to that decent Work. of course, some will question Why bother about decent Work? Why bother indeed? Analysis shows a direct correlation between bad working conditions and low productivity, poor quality, and late delivery. inattention to conditions of work and industrial relations usually means poor or weak managements failing to realise the full potential of an enterprise. “decent Work”, on the other hand, is usually accompanied by above average productivity, better quality production and ability to deliver on time, all elements necessary for a viable, profitable and internationally competitive business. From decent work come the five rights. Workers win

through better wages and conditions. the employer wins through improved productivity, quality and profitability. the international Buyers, such as inditex, wins through reliable supplies and protection of their reputation and the Community and the country of production win through stability of employment and enhanced resources. in other words, right Working Conditions (Compliance), right health and Safety, right Quality, right delivery time and, finally right price...”. in other words, correct employment conditions, correct health and safety, correct quality, correct delivery date and finally the correct price.

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Our team: managers of the inditex cSr model
1
internal team 13

cSr directorate inditeX compliance 7 inditeX health and safety

external team

236

compliance
Romania 3 1 4 11

59

health and safety

EU

Bulgaria Italy Portugal

EU

Spain Germany Portugal

14 1 2

19
(itS, pWC, SgS)

17
(Colormoda – technical Advice, uSg, SgS)

NON-EU EUROPE 18
(itS, SgS)

Turkey

18

NON-EU
Mexico 5 1 3

EUROPE 15
(Bureau Veritas, SgS)

Turkey

15

AMERICA

9
(itS)

Argentina Brazil

Egypt

2 9 5

AMERICA

USA

1

AFRICA

16
(itS, SgS)

Morocco Tunisia

1
(SgS)

China India Bangladesh Pakistan Vietnam

94 31 14 2 9 4 3 3 5 6 3

Bangladesh

5 5 11 5

ASIA

Vietman China India

26
(Bureau Veritas, SgS)

ASIA

174
(itS, SgS, KpMg)

Thailand Cambodia Singapore/ Sri Lanka Malaysia Indonesia The Philippines

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Corporate Social Responsibility

1

inditeX corporate investment

47

emergencies

487

community development

21

integration

ASIA

47
(MSF)

Sumatra (Indonesia)

EU
47

21
(MSF, entreculturas, Cáritas)

Greece Spain

13 8

EU

21
(el Molí d’en puigvert Foundation and CogAMi)

Spain

21

Perú Chile Argentina Brazil

68 19 12 22 24 19 17 26 6 4

AMERICA

Venezuela Central America Dominican Republic Colombia Ecuador Panamá

217
(entreculturas, SJr)

Malawi Sudan Central African Republic Burundi Burkina Faso Morocco Somalia

27 48 4 12 4 19 103

AFRICA

217
(MSF, Cáritas, SJr)

Our team
22 internal external

ASIA

32
(Cáritas)

Cambodia

32

850

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inditex, a model of cSr of global intervention:
In the sphere of Corporate Social Responsibility, Inditex opts for a model of global intervention starting from the Inditex Internal Code of Conduct, and attempts to reach all those who, directly or indirectly, are influenced by the conduct of its activity: suppliers, international institutions, customers and society in general.

inditex internal code of conduct 1 Suppliers
Code of Conduct for Manufacturers and External Workshops. Methodology to monitor the process of implementing the Code of Conduct for External Manufacturers and Workshops: tested to Wear Compliance Programmes Clusters

2

institutions
Dialogue Platforms

FtSe4good and dow Jones Sustainability Indexes
Social Council Ethics committee

Key tools in the activity of inditex and its relations with employees, suppliers and customers 1 internal inditex code of conduct 2 code of conduct for external manufacturers and Workshops 3 tested to Wear

Formal declaration of values which regulate the relations of Inditex with each one of its interest groups (shareholders, employees, customers, business partners, suppliers and society in general).

Formal declaration of values developed from the Internal Code of Conduct which sets the principles which regulate the relationship between Inditex and its suppliers. Modified in 2007, after joining the Ethical Trading Initiative and the incorporation of its Base Code, it includes among others the following ILO agreements: 1, 14, 26, 29, 79, 87, 98, 100, 105, 111, 131, 135, 138, 142, 155, 164 and 182.

The methodology for the conduct of the corporate audits of Inditex which uses as a framework of reference the new Code of Conduct for External Manufacturers and Workshops, after the inclusion in it of the Base Code of the Ethical Trading Initiative.

Main activities carried out in the field of CSR in 2009 Inclusion on the FtSe4 good for the seventh consecutive year. Application of the international framework agreement between ITGLWF, Inditex and a factory in Dhaka (Bangladesh) for the conduct of mature industrial relations. Emergency Programmes in Sumatra (Indonesia). Establishment of the Corporate Social Responsibility office in Morocco. Inclusion on the dow Jones Sustainability Index for the sixth consecutive year. Launch of the Better Work programme in Morocco. Signing of the first collaboration agreement with the University of Dhaka for the training of compliance teams. Application of the international framework agreement between ITGLWF, Inditex and a factory in Phnom Penh (Cambodia) for the conduct of mature industrial relations. Design and application of the methodology of the SJr planning tool for planning programmes of social investment in complex geographical scenarios (refugee camps in Colombia and Central Africa).

Quarter I I I II II II II II II

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3

customers
Product health protocol:

4

Society
Community Development Programmes Escort Programmes Emergency Programmes Project for&from Sponsorship and Patronage Programmes

Clear to Wear
Product safety protocol: Safe to Wear

4

clear to Wear

5

Safe to Wear

6

Social investment

A product safety standard which has been developed by Inditex in accordance with the most demanding legislation on the subject. It regulates those substances of legally limited use and which, if they are present in the product above certain levels, might be harmful to health.

This is a product safety standard developed by Inditex, in accordance with the most demanding regulations in the matter of product safety, and of general and obligatory application for all clothing and footwear products and accessories.

Collaboration with social institutions and non governmental organisations.

Main activities carried out in the field of CSR in 2009

Quarter III III III III IV IV IV IV

data Mining of the production chains at clusters from India and Portugal.
Signing of the first collaboration agreement with the national institute of Fashion technology in Delhi (India) for the training of compliance teams. Application of the international framework agreement between ITGLWF, Inditex and a factory in Lima (Peru) for the conduct of mature industrial relations. Monitoring programmes for vulnerable groups in Greece and Morocco.

data Mining of the production chain in Italy.
Design and application of the new standards of product health and safety and of the internal regulations of the ph standard. Emergency Programme in Haiti. Incorporation of the first employee of a for&from Massimo Dutti store (Mataró, Spain).

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1.- Suppliers
The relationships between Inditex and its suppliers are set by two key texts which are obligatory for both employees and suppliers. They are as follows:
Number of suppliers in 2009 (*) Geographical area Africa America Asia Suppliers 31/1/2010 94 51 481 99 512 1,237 Suppliers 31/1/2009 101 61 417 91 516 1,186

in-depth study of the inditex production chain

Inditex Internal Code of Conduct:
Formal declaration of values which regulate the relations of Inditex with each one of its interest groups (shareholders, employees, customers, business partners, suppliers and society in general).

Non-EU Europe EU TOTAL

(*) suppliers producing more than 20,000 units/year. Number of suppliers ruled out in 2009

Code of Conduct for External Manufacturers and Workshops.
Formal declaration of values developed from the Internal Code of Conduct which sets the principles which regulate the relationship between Inditex and its suppliers. Modified in 2007, after joining the Ethical Trading Initiative and the incorporation of its Base Code, it includes among others the following ILO agreements: 1, 14, 26, 29, 79, 87, 98, 100, 105, 111, 131, 135, 138, 142, 155, 164 and 182.

Suppliers ruled out for breaches of the Code of Conduct for External Manufacturers and Workshops or commercial reasons.
Geographical area Africa America Asia Non-EU Europe EU TOTAL 2009 11 20 57 7 50 145 2008 19 7 67 16 66 175

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the compliance Programme of the inditex conduct code
The Inditex Compliance Programme is a procedure designed by Inditex in collaboration with the International Textile, Garment and Leather Workers’ Federation (ITGLWF), the University of Northumbria (United Kingdom), the Centre CSR and Inditex Commercial teams to evaluate the potential supplier through specific indicators that have been specially designed to comply with the requirements of the Code of Conduct for Manufacturers and External Workshops, with the product health and safety standards in force at Inditex (Clear to Wear and Safe to Wear) and the required response in terms of units/time. The questionnaire gives a response to the five key points on which the sustainability of the Inditex production chain relies, after the approval of the Internal Code of Conduct in February 2001: - Optimum compliance. - Health and safety - Good quality. - Correct delivery date. - Suitable price.

for Business and public Sector ethics of Cambridge (United
Kingdom) and the ethical trading initiative. Its objective is to implant the Code of Conduct for Manufacturers and External Workshops and the Principles and Conventions of the ILO and the United Nations, with special attention to the Principles of Freedom of Association and Collective Negotiation (ILO Conventions Numbers 87, 98 and 135) at the centres of production of the suppliers of Inditex, as well as those others of an external nature which complement their chain of production.

tested to Wear is the methodology of corporate audits which is used in the Compliance Programme for the control of the process of implantation of the Inditex Code of Conduct.

the phases of the compliance Programme
PhaSe i. raising awareness
Training of the potential suppliers of the Inditex chain of production in all those aspects related to the process of implantation of the Code of Conduct for External Manufacturers and Workshops, the Internal Directive on Responsible Practices of the staff of Inditex and the health and safety standards for Inditex products Clear to Wear (CTW) and Safe to Wear (STW), respectively.

PhaSe iii.- corporate audit
Social audits are processes of evaluation of the level of compliance with the Code of Conduct for External Manufacturers and Workshops of Inditex, through corporate audits carried out by accredited external consultants, in accordance with SA 8000 and with the Inditex methodology

tested to Wear (TTW) based on:
- Code of Conduct for Inditex External Manufacturers and Workshops. - Base Code of the ethical trading initiative. - The Principles of the global Compact of the United Nations. - The International Labour Organisation Programme of the Better Work programme. - The recommendations of Social Accountability

PhaSe ii. Self-evaluation of suppliers.
The potential supplier carries out a prior self-diagnosis

(pre-Assessment) as a necessary condition in order to form part of the Inditex production chain. The self-diagnostic process is articulated through a questionnaire which includes questions which permit the

international.
- The principles of the global reporting initiative. - The recommendations of the ITGLWF.

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Social audits carried out in 2009 Accreditation SA 8000 Yes Number of initial social auditors 200 15 1 28 34 4 29 1 65 1 21 1 526 7 56 6 4 4 171 2 1 125 10 3 1 1 7 8 11 20 1 2 2 7 53 24 Yes 153 10 15 26 1 101 74 74 12 12 965 Monitoring programmes 126 10 79 1 26 1 9 108 2 18 1 48 3 6 3 2 6 16 3 40 5 22 13 62 62 1 1 337

Auditing firm and geographical area Inditex internal auditors Bangladesh China Spain India Italy Morocco Pakistan Portugal Turkmenistan Turkey Vietnam Intertek Group Argentina Bangladesh Brazil Bulgaria Cambodia China Egypt The Philippines India Indonesia Italy Malaysia Morocco Mexico Pakistan Portugal Romania Syria Sri Lanka Thailand Tunisia. Turkey Vietnam SGS Group China India Morocco Moldavia Turkey PricewaterhouseCoopers Portugal Iloper Auditores Portugal TOTAL

TOTAL 326 25 1 107 35 4 55 2 74 1 21 1 634 7 58 6 4 4 189 3 1 173 13 3 1 1 13 11 13 26 1 2 2 7 69 27 193 10 20 48 1 114 136 136 13 13 1,302

Yes

No

No

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PhaSe iv.- Suppliers’ rating
Using the tested to Wear methodology and the execution of corporate audits and in consonance with the demands set down by ETI, the consolidated evaluation per supplier of the degree of compliance of each one of the sections of the Code of Conduct for External Manufacturers and Workshops is undertaken. The evaluation is made using the following scale: - Evaluation 4: There is no evidence of any breach of a particular section of the Code of Conduct for External Manufacturers and Workshops. - Evaluation 3: Reasonable compliance with a section of the Code of Conduct for External Manufacturers and Workshops. - Evaluation 2: Specific breach of a section of the Code of Conduct for External Manufacturers and Workshops. - Evaluation 1: Significant breach of a section of the Code of Conduct for External Manufacturers and Workshops. With the specific evaluation of each one of the principles of the Code of Conduct, four levels are set to measure the final degree of fulfilment of the Code of Conduct by the supplier. This rating is the starting point to articulate the design and

the subsequent execution of the plans of corrective action and to verify the correction of the breaches detected in the corresponding monitoring audits. The compliance programme has been developed by the CSR team at Inditex, in collaboration with the ITGLWF and the University of Northumbria.

Levels of degree of fulfilment of the Code of Conduct by the supplier

rating a rating B rating c rating d

Complies with the New Code of Conduct for External Manufacturers and Workshops. Breaches a non-relevant aspect of the Code of Conduct. Breaches a non-exclusive aspect of the Code of Conduct. Breaches a number of aspects of the Code of Conduct.

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Rating of suppliers per geographical area 2009 No. of suppliers Africa A B C D PR(*) TOTAL 65 13 8 5 3 94 % suppliers 69.15 13.83 8.51 5.32 3.19 100% 2008 No. of suppliers 67 11 11 9 3 101 % suppliers 66.34 10.89 10.89 8.91 2.97 100%

America

A B C D PR(*) TOTAL

33 7 5 1 5 51

64.71 13.73 9.80 1.96 9.80 100%

47 8 4 0 3 62

75.81 12.90 6.45 0 4.84 100%

Asia

A B C D PR(*) TOTAL

139 177 88 72 5 481

28.90 36.80 18.30 14.97 1.04 100%

105 115 100 92 6 418

25.12 27.51 23.92 22.01 1.44 100%

Non-EU Europe

A B C D PR(*) TOTAL

22 52 15 8 2 99

22.22 52.53 15.15 8.08 2.02 100%

40 34 10 7 0 91

43.96 37.36 10.99 7.69 0 100%

European Union

A B C D PR(*) TOTAL

302 152 22 32 4 512

58.98 29.69 4.30 6.25 0.78 100%

364 95 8 42 8 517

70.41 18.38 1.55 8.12 1.55 100%

TOTAL (*) PR: Pending rating.

1,237

1,189

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Corporate Social Responsibility

PhaSe v. Plans of corrective action
The objective of this phase is to develop responsible and committed working environments with the fulfilment of the main Conventions of the International Labour Organisation and the United Nations. Following the completion of an audit and the subsequent approval by the manager of the factory of the conclusions reached therein, both teams, social auditors and the management, should reach a consensus on the extent of the breaches and the actions designed to correct the breaches detected, the periods of time for them to be corrected and the date to carry out a second monitoring audit to verify correctness.

Classification of the suppliers according to the years of commercial relations with Inditex
34.51 36.28 14.16 11.68 3.36

less than one year
50.99 30.24 11.07 7.71

between one and three years
65.45 25.45 1.21 7.88

over three years 0
A 20% B 40% C 60% D 80% 100% PR

90% of suppliers which have formed part, for more than three years, of the Inditex production chain, obtain optimum or reasonable compliance from the Code of Conduct for External Manufacturers and Workshops in their facilities.

PhaSe vi.- monitoring programmes
After the conduct of the corporate audits, the monitoring programmes are started up to verify, in the periods of time decided by the management of the production centres of the Inditex suppliers, accredited external consultants and the CSR team (in some countries, such as Spain, Portugal, Turkey, Morocco, India, Bangladesh and Cambodia representatives of the ITGLWF also participate), the necessary actions to correct the breaches detected.
Supplier Rating A B C D Period of time for the conduct of the audits 24 months 18 months 12 months 6 months Period of time for the conduct of the monitoring audits

Initial and monitoring audits conducted in 2009 2009 Geographical area Africa America Asia Non-EU Europe European Union TOTAL Monitoring audits 49 6 94 29 159 337 Initial audits 65 20 483 176 221 965 Total 114 26 577 205 380 1,302 Monitoring audits 45 0 46 7 90 188 2008 Initial audits 46 18 335 67 189 655 Total 91 18 381 74 277 841 % variation 08/09 Monitoring audits 8.89% 104.35% 314.29% 76.67% 79.26% Initial audits 41.30% 11.11% 44.18% 162.69% 16.93% 47.33% Total 25.27% 44.44% 51.44% 177.03% 37.18% 54.82%

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reinforcing alliances with the parties involved: manufacturers, employees and local trade union representatives
Inditex considers that the relationship with suppliers must be based on cooperation between all the parties involved (manufacturers, workers and local trade union representatives). Only in this way is it possible to achieve a basis of consensus, commitments, which benefit both the suppliers and their communities and the sector in general. This principle of action led Inditex to sign, in October 2007, an agreement with the ITGLWF, which constituted a new way of intervening in values and rights in the textile factories which make up the Inditex production chain. This framework agreement is designed to develop mature industrial relations between all interested parties through the promotion and protection of Fundamental Human and Employment Rights and, especially, those contemplated in the main Conventions of the International Labour Organisation (numbers 29, 87, 98, 100, 105, 111, 135, 138, 155 and 159, mainly), the Universal Declaration of the Human Rights, the United Nations Convention on the Rights of the Child and the Directives of the OECD for multinational companies in the factories of their suppliers. This international framework convention is articulated through the seven lines of action: • The proper implantation, in form and time, of the Code of Conduct for External Manufacturers and Workshops. • The participative and transparent management of the Corrective Action Plans, designed to implant the Code of Conduct in a sustainable manner in the centres of Inditex suppliers. • The start up of shared programmes for the creation of “Social Capital” (Trust) for managers and representatives of workers (Peru, Bangladesh, India and Cambodia, mainly). • The development of protocols and procedures for the prevention of possible conflicts in the production centres of the suppliers. • The development of protocols and procedures for the eradication of child labour and respect for the rights of emigrant workers (migrant workers). • The research and systematisation of good practices in the processes of implantation of codes of conduct at the University of Northumbria, through the Inditex Chair of Ethical Fashion. • The search for formulas of intervention from the business point of view for the implantation of the ILO concept of

decent Work in domestic work (homeworkers) of the embroidery centres in the North Capital Region of Delhi (India).

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Programmes for the prevention of conflicts
Among the commitments taken on by Inditex after signing the framework agreement with the ITGLWF, the creation of the Inditex Chair of Ethical Fashion at the University of Northumbria (Newcastle, United Kingdom) stands out as an instrument for the innovation in values and citizenship in the university sphere. During the 2009/2010 academic year, over 400 students have registered. The most important objectives of the professorship are: • To raise awareness of Fundamental Human and Employment Rights in fashion students at the University of Northumbria. • To innovate in methodologies and processes for the implantation of codes of conduct of multinational textile companies in their production chains. • To develop practical cases related with the above processes. During the 2009/10 academic year, the chair has carried out the following activities: • Adaptation of methodologies for the eradication of child labour in complex geographic areas (India and Morocco).

• The beginning of the Jamuna project, designed to implant the concept of decent Work in domestic work in embroidery production (homeworkers) in Delhi (India). • Design of an innovative project (the northumbria

university Sweatshop project1), which simulates a day’s work in a production centre so as to awaken feelings of co-responsibility among the students, the future heads of purchasing teams. • Creation of university networks which make it possible to connect other geographical spaces linked to the Inditex production chain and to share business and educational experiences from a global perspective such as the University of Santiago de Compostela (Santiago de Compostela, Spain), ISEM (Madrid, Spain), ESADE (Barcelona, Spain), Universidad Antonio Ruiz de Montoya (Lima, Peru), University of Dhaka (Bangladesh) and the national institute of Fashion technology in Delhi (India), among others.

(1) For more information about the northumbria university Sweatshop project please visit (http://www.northumbria.ac.uk/sd/academic/scd/beenthere/).

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Joint interventions by Inditex and the ITGLWF in 2009 for the solution of conflicts deriving from impediments to the free exercise of the principles of freedom of association and collective negotiation.
Bangladesh Factory No. of employees Reasons for the conflict Non-exercise of the Principle of Association (Convention 87 of the ILO) Dismissal of trade union representatives (Convention 87 of the ILO) Non-exercise of the Principle of Collective Negotiation (Convention 98 of the ILO) Improvement in the working conditions (Conventions 161 and 187 Y of the ILO) Health and safety at work (Conventions 161 and 187 of the ILO) Inadequate remuneration (Conventions 95 and 131 of the ILO) Calculation of compensation for a workplace accident resulting in death, in accordance with the standards of the international insurance industry itself (Spectrum Protocol) Temporary workers The parties involved Offices of the ITGLWF involved in the decision Brussels (Belgium) Brussels (Belgium) Brussels (Belgium) Kuala Lumpur (Malaysia) Brussels (Belgium) and Kuala Lumpur (Malaysia) Brussels (Belgium) and Kuala Lumpur (Malaysia) Brussels (Belgium) and Kuala Lumpur (Malaysia) Brussels (Belgium), Caracas (Venezuela) and Madrid (Spain) FNTTP N/A N/A N/A N/A N/A N/A N/A N/A Factory 1 1,100 Factory 2 175 Factory 3 2,410 Factory 4 1,189 Factory 5 6,790 Cambodia Factory 6 4,000 Factory 7 4,000 Peru Factory 8 1,200

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Local trade union organisations Management of the factory Local business organisations

BNC

NGWF

BNC

BNC

C.Cadaw.

C.Cadaw.

Kremmer Youth y C. Cadaw.

Local BGMEA Present but did not participate

Local BGMEA No

Local BGMEA Present but did not participate Present but did not participate February 2009

Local BGMEA Present but did not participate Present but did not participate June 2008 November 2009

International International International and Local and Local and Local No No No

Local No

International purchasers

Present but did not participate January 2009 November 2009

Present but did not participate February 2009

Date of commencement of the conflict Date of the joint intervention of the ITGLWF and Inditex

June 2009

June 2009 October 2008 March 2009

June 2009 August 2009

March 2009 March/June/ September/ December 2009 y January 2010 April-May January 2010 2009

December/ December/ January 2009 January 2009

Date of settlement of the conflict

November 2009

Pending resolution

January 2010 January 2009

March 2009

August 2009

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clusters of suppliers: an instrument to share change
In the sphere of production, Inditex maintains selective and lasting relationships with its suppliers. In order to achieve this kind of stable relationships, Inditex promotes and participates in clusters with suppliers. These clusters are defined as those working groups which, made up of suppliers, trade unions, business associations and international purchasers, aim to generate productive and sustainable environments which are respectful of Fundamental Human and Employment Rights in those geographical areas that are strategic for the development of the Inditex business model. Parties involved in the clusters: These are the main objectives achieved by activity of the • Representatives of business associations (BGMEA, ANIVEC/ APIV and AMITH, among others). • Representatives of supra-national organisations such as the ILO or IFC, among others. • Members of Dialogue Platforms such as the ethical • Developing mature industrial relations between all the interested parties, from the application of methodologies for the prevention of conflicts in factories belonging to the suppliers that make up the Inditex production chain. • Generating new sources of competitive advantages for the textile and footwear industries through the product health and safety standards of Inditex, Clear to Wear clusters in 2009:

The clusters constitute an important forum to debate the changes and adaptations necessary to the employment practices which give rise to an improvement of competitiveness.

training initiative (ETI) or Multifiber Agreement Forum
(MFA). • Representatives of the Ministries of Industry, Trade and Employment of each country. • Factory managements. • Representatives of local and international trade unions (C.CADAW, NGWF, BNC, CC.OO. and ITGLWF, among others). • NGOs specialising in the resolution of employment conflicts(Maquila Solidarity and Clean Clothes

and Safe to Wear, respectively. During the financial year, the adaptation of these standards to the Bengali textile industry, through the pin project has been outstanding. • Adapting methodologies for compliance in the factories of Moroccan and Portuguese suppliers through the compliance standards Fibre Citoyenne for Morocco, and

portugal Standard (Portugal).
• Encouraging bilateral and multilateral relationships between all the interested parties: Better Work projects in Vietnam and Morocco.

Campaign, among others).
• Departments of Purchasing and of Corporate Social Responsibility at Inditex.

The total activity of the Inditex clusters during 2009
Suppliers involved External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex and involved in the clusters 511 731

308,508

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the activity of the inditex clusters during 2009
Bangladesh turkey

Suppliers External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex in Bangladesh

47 120

Suppliers External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex in Turkey

97 170

161,080

43,275

Activities of the Bangladesh cluster during 2009: • Training of social auditors in the tested

Activities of the Turkey cluster during 2009: plan of action was established so as to correct the breaches detected. The plan concluded with the transfer of the production and the workers to a new factory in accordance with the Code of Conduct for External Manufacturers and Workshops of Inditex, the valuation of the management systems of this supplier and the creation of instruments to prevent new conflicts. • Standardisation of the social and employment conditions in the factories of a supplier in Dhaka (Bangladesh): Development of a corrective plan of action for the correction of the breaches detected, in view of the irregularities detected in a social audit related with health, safety and remuneration of the workers. The case was closed with the resolution of all the breaches of the Inditex Code. • Training of social auditors in the tested

to Wear methodology.
• 71 initial social audits. • 12 monitoring programmes. • Increase in the CSR team of the Inditex office in Dhaka (Bangladesh) and training: The new members of the team have received training for the execution of social audits and the use of the computer tools developed by the Department of CSR for the management of the process of implantation of the Code of Conduct for External Manufacturers and Workshops in the Inditex production chain. • Standardisation of the social and employment conditions in the factory of a supplier in Dhaka (Bangladesh): After a social audit in which the installations of the factory showed breaches in the health and safety of the workers, the application of a corrective

to Wear methodology.
• 175 initial social audits. • 29 monitoring programmes. • Development of a of the

Apprentice group Scheme working group: Creation recurrent working for the establishment of relative improvement measures for the social and employment situation of the figure of the apprentice in the textile sector. The working group is made up of international corporations and trades unions and the ethical

trading initiative, for the study of the government occupational training law in turkey 3308.

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Portugal

morocco

india

Suppliers External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex in Portugal

184 217

Suppliers External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex in Morocco

80 115

Suppliers External workshops Workers who make up the staff of the external manufacturers and workshops working for Inditex in India

103 109

14,264

36,804

53,085

Activities of the Portugal cluster during 2009: • Training of social auditors in the tested

Activities of the Morocco cluster during 2009: • Training of social auditors in the tested

Activities of the India cluster during 2009: • Training of social auditors in the tested

to Wear methodology.
• 162 initial social audits. • 74 monitoring programmes. • Guimaraes Project: Aimed at learning more about the production line in this country. It comprises the geo-referencing of manufacturers and external workshops engaged in dressmaking, patternmaking, embroidery, laundry and dry cleaners´ and cutting activities.

to Wear methodology.
• 56 initial social audits. • 48 monitoring programmes. • Creation of the CSR office of Inditex in Tangiers (Morocco) and training of the new teams. • Implantation of the protocol agreed by the ITGLWF and Inditex for the eradication of child labour in the productive installations which make up the Inditex production chain.

to Wear methodology.
• 174 initial social audits. • 53 monitoring programmes. • Trident Project I, II and III. Aimed at learning more about the production line in this country. It comprises, inter alia: - The geo-referencing of manufacturers and external workshops engaged in dressmaking, patternmaking, embroidery, laundry and dry cleaners’, and cutting activities. - Measuring the degree of water drinkability in suppliers´ factories. Measuring the degree of

compliance with the Indian laws and regulations of environmental and product health and safety systems in laundries, patternmaking facilities and dry cleaners’ used by the suppliers.

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2.- Institutions dialogue Platforms
Dialogue platforms are an efficient tool for collective action and for formulating public policies that promote and protect Basic Human and Employment Rights. They are spaces for reflection made up of representatives of trade union organisations, business organisations, ordinary society and international purchasers which encourage debate on processes of implantation of responsible strategies within the business models of the participating companies. The three most representative platforms in the sector, with which Inditex habitually participates, are:

multifiber agreement forum (www.mfa-forum.net)
Multifiber Agreement Forum (MFA) is a dialogue platform which promotes social responsibility and competitiveness of national textile industries in countries that are vulnerable to the end of the quota process. It is made up of international purchasers, suppliers, local and international trade union organisations, ministries of Industry, Trade and Employment and representatives of civil society. Currently, Inditex is actively promoting the MFA in Morocco and studying the possibility of extending this initiative to other complex social and employment scenarios, such as Bangladesh. The Morocco MFA is made up of companies such as Mango, Marks & Spencer and Next, among others; the Ministries of Trade and Employment, the Employers’ Organisation from the Textile Sector in Morocco and local and international representatives of the ILO. Its objective is to give a boost to the Better Work programme as a source of competitive advantage for the national textile sector.

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ethical trading initiative (www.ethicaltrade.org)
ETI is an organisation with its headquarters in the United Kingdom which brings together international distribution companies, large suppliers, trade unions and NGOs, and which aims to improve the living conditions of the workers in the supplying companies. Its members are: - 56 international corporations such as Inditex, Gap, and Tesco, among others. - Nine trade union organisations of a global nature such as the ITGLWF. - 15 organisations that are representative of the third sector in the encouragement and protection of Basic Human and Employment Rights. Among the main objectives the most important are: - Promoting the Base Code (adopted by Inditex in 2006) - Supporting joint initiatives of NGOs, trade unions and businesses which promote decent working in the chains of production of the member companies. - Developing processes which make it possible to share experiences and cases of good practices among the members. - Designing corporate practices related to processes of responsible purchase. - Studying cases of good practices for the implantation of Convention 29 of the ILO relating to the elimination of forced labor and those other recommendations related with domestic work in the production chains. - Defining protocols for the exercise of responsible purchasing of cotton in producing countries.

Better Work Programme (www.betterwork.org)
In 2007, the International Labour Organisation in collaboration with the World Bank, put forward the Better Work programme with the aim of increasing, in a sustainable manner, the competitiveness of certain emerging countries, such as Cambodia, Vietnam, Jordan, Lesotho, Haiti, Indonesia and Morocco, based on the promotion, respect and encouragement of Basic Human and Employment Rights. It contemplates the following lines of intervention: - Offering training and cases of good practices to the manufacturers so as to improve the productivity of their manufacturing centres through other experiences learned by the ILO and the World Bank. - Training trade union representatives in all those matters related to the exercise of Principles of Association and Collective Negotiation. - Training employment inspectors on whom to subsequently base the process of implantation of the Better Work programme. - Reducing redundant work (duplication of social audits) through the use of the conclusions of the different intervention programmes of the Better Work programme. During 2009 the Better Work programme enjoyed the participation of thirty organisations in the following actions: - Consolidation of the Better Work programme in Vietnam, especially in the footwear sector. - Training of the intermediate management in Cambodia so that they can develop environments which permit the development of mature industrial relations between supervisors and workers. - Creation of an online tool in Cambodia and Vietnam which enables member international purchasers to have access to the conclusions that are derived from the work in the field concerned.

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commitment to securities markets
Inditex has remained on the sustainability indexes, FTSE4Good and Dow Jones Sustainability Index for the eighth and the seventh consecutive year, respectively. Dow Jones Sustainability Indexes are a family of stock exchange FTSE4Good is a stock exchange sustainability index that includes the most committed multinational companies in the field of corporate responsibility. This index evaluates the social responsibility of its listed companies in accordance mainly with their activities related to sustainable development and respect for Human Rights. Twice yearly, the FTSE4Good Policy Committee reviews the behaviour of the member companies in relation to sustainability, based on a thorough questionnaire that the Ethical Investment Research Service draws up, as well as on the data that indexes reflecting the activities of participating companies in the field of sustainability and corporate responsibility. As a prerequisite for entry, and for subsequent listing on the abovementioned indexes, the participants must undergo a rigorous analysis and selection process led by an independent external agency. This analysis evaluates the quality of management at companies in areas related to corporate governance, risk management and branding, employment practices and environmental actions, among others. Inditex has been a member of these indexes since 2003. the companies publish and other sources of information. Inditex has been a member of this index since 2002.

result obtained by inditex in the most recent dow Jones Sustainability indexes evaluation

2009 Inditex score (%) Total 72 Average score (%) 47

2008 Inditex score (%) 67 Average score (%) 46

Dimensions studied Economic Environmental Social 60 90 74 53 38 45 54 77 74 54 35 46

Social dimension Criteria Employment practices Development of human capital Gaining and retaining talent Philanthropy Corporate Report Standards for suppliers Commitment with interest groups 77 52 60 74 48 99 87 56 29 35 35 37 62 50 82 46 58 74 48 92 95 58 23 38 36 36 60 55

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the inditex Social council
The Inditex Social Council was set up as an instrument to encourage, propose and arbitrate proposals from interest groups involved in its business. The Council ensures that the Inditex External Manufacturers and Factories Code of Conduct is enforced in order to guarantee that the interests of vulnerable groups are not only protected but that they become part of the agenda for the Inditex Board of Directors’ and every employee in the company. The Inditex Social Council members must be independent and transmit the interests and aspirations of civil society, helping Inditex to develop an open business model, with values and committed to its environment. systems that encourage, oversee and, where applicable, guarantee fulfilment thereof. c) Providing information about the Corporate Social Responsibility Department’s plans of action. d) Informing on awareness and/or development programmes launched in the Inditex production and selling chains, and any other investment made in the field of Corporate Social Responsibility. e) Encouraging talking, dialogue and communications between local and international society and Inditex, wherever its business model is implemented. f) Promoting methods of disseminating the Internal Code of Conduct to each of the interest groups. g) Proposing any ideas or recommendations to the Board of Directors, after hearing the Audit and Control Committee, that it deems suitable in order to better fulfil the Inditex Corporate Social Responsibility programme.

Social council members
D. Alfred Vernis - ESADE Business School D. Ezequiel Reficco - University of los Andes D. Víctor Viñuales -Fundación Ecología y Desarrollo Dña. Adela Cortina - Valencia University Dña. Cecilia Plañiol - Ex-Chairwoman of the Fundación Española Contra el Cáncer

inditex Social council duties
a) Giving advice on promoting, implementing and developing the Inditex Corporate Social Responsibility Model. b) Giving advice on interpreting and applying the Internal Code of Conduct and proposing measures and control

meetings held in 2009
Date held 03- 06-2009 Venue ESADE Business School (Madrid) % of members present at the meeting 60

ethics committee
The Ethics Committee is in charge of overseeing proper compliance with the Internal Directive on Responsible Staff Practices at Inditex. It is made up of: General Board Secretary, Antonio Abril; Human Resources Manager, Begoña López-Cano; and Corporate Social Responsibility Manager, Javier Chércoles. It can act on its own initiative, at the request of any duly identified employee and, exceptionally, as a result of an anonymous complaint from an employee made in good faith. The Ethics Committee is attached to the Board of Directors, through the Audit and Control Committee and it has the following functions: • The internal dissemination of the Directive among all Inditex staff. • Receiving all kinds of documents related to the application of the Directive. • Putting through dossiers related to the application of the Directive until the corresponding decision is taken. • The interpretation of any doubt arising through the application of the Directive. • Proposal to the Board of Directors, with a prior report from the Audit and Control Committee, of all the clarifications and rules of development required by the application thereof. In 2009, all of the incidents that Inditex employees reported to the Ethics Committee were suitably resolved.

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3.- Customers health and safety of the product
If, in its relations with suppliers, Inditex promotes and demands compliance with the Code of Conduct for External Manufacturers and Workshops and its verification tool is the Tested to Wear methodology, its product policy guarantees that its articles do not involve risks for the health and safety of the user. For this purpose, it encourages technological innovations in this field which it shares with all the external manufacturers and workshops which make up its production chain. These innovations have led to the creation and implantation of two internal standards that are obligatory for all suppliers: Clear to Wear, regarding product health, and Safe to Wear, to ensure product safety.

clear to Wear
It is the product health standard created in 2006 by the Inditex CSR Department in collaboration with the University of Santiago de Compostela (Spain) in accordance with the most demanding legislation in the field of product safety anywhere in the world. It is of general and obligatory application for all those products including clothing, footwear, accessories, complements and textiles supplied to Inditex. Apart from matters relating to composition, pH and colourfastness, it regulates substances that have limited legal uses such as formaldehyde, arylamines, phenols (PCP and TeCP), cadmium, lead, mercury, chromium, chromium (VI), nickel, phthalates, fire resistant polybrominates, pesticides, chlorinated short-chain paraffins, perfluorooctane sulfonates (PFOS), dimethyl fumarate, organostannic compounds and artificial colours linked to allergic reactions. It also limits the use of two parameters not contemplated in the current legislation, the organochlorinated compounds and the isocyanates. Finally, it includes the registration, evaluation, The product quality standards of Inditex are under constant review with the aim of always being in accordance with the most demanding legislation in the matter of product health around the world. CTW was created in 2006 and in 2007 its first review took place. During the 2009 financial year, the Inditex CSR Department, in collaboration with the Organic Chemistry teams of the University of Santiago de Compostela, introduced technical and scientific innovations and updatings into CTW which will begin to be applied in the analyses carried out during 2010.

Standard under constant review

technical and scientific innovations and updatings of the ctW 2010 standard
- Regulation of new legally limited substances due to the new legislative developments in the field of health of textile articles or their presence in new industrial applications that are the result of innovation in the textile industry.

Authorisation and restriction of Chemicals (REACH) as an obligatory community regulation for all Inditex suppliers. After the approval of the CTW in February 2006, as well as its subsequent updatings, Inditex, as a responsible and sociallycommitted organisation, accepts the commitment to implant its standard through its production chain. In order to facilitate the implantation of the standard in the chain of production, Inditex has developed specific and detailed documentation: implementation toolkit guidelines. Each Toolkit is a guide of obligatory compliance for all Inditex suppliers.

Category Legally limited substance

Parameter Mercury Chrome Perfluorooctane sulfonates (PFOS) Dimethyl fumarate (DMF) Organostannic compounds

Limited use substance

Isocyanates

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- Modification to the limits of the regulated substances depending on the material or compound in which they are present.
Regulated substance Limit contemplated in CTW 2007 Arylamines Cadmium 20 ppm for textile and leather products. No detection for all complements, and metallic and plastic accessories. Limit contemplated in CTW 2010 20 ppm for textile products. 30 ppm for leather products. 1 ppm for textile and leather products. Maximum of 75 ppm for metallic and plastic elements. Maximum of 75 ppm for paints and metallic coatings. Lead Maximum of 100 ppm for accessories, metallic and plastic elements. Maximum of 100 ppm for textile products and furs without direct contact with the skin, for children older than three years and metallic and plastic elements. Maximum of 90 ppm for all dyed materials and those with superficial coatings: metal, plastic, wood and raffia, among others. Maximum of 1 ppm for textile products, for children under three years, and for those others that are in direct and prolonged contact with the skin, for children of over three years. Maximum of 30 ppm for textile products made mainly with PVC, neoprene and plastics. Phthalates No detection in articles for children under the age of two. Maximum of 500 ppm for articles for children older than two years (clothing, footwear, non-metallic accessories and household textiles). Fire resistant fabrics No detection for fire-resistant fabrics detailed in Appendix II of CTW 2007, except DecaBDE. Maximum of 1000 ppm for DecaBDE for textile products. Organochlorate compounds Maximum of 5 ppm for textile products for children under two years and in textile products that are in direct and prolonged contact with the skin. No detection for fire-resistant fabrics such as: TRIS, TEPA, PBB AND BIS-(2,3.DIBROMOPROPYL PHOSPHATE), for textile products. Maximum of 1000 ppm for fire-resistant fabrics such as: PentaBDE, DecaBDE and OctaDBE, for textile products. Maximum of 1 ppm for textile products for children under three years and in textile products that are in direct and prolonged contact with the skin. No detection for all textile, plastic and synthetic products (mainly clothing, footwear, accessories and household textiles).

- Modification in the classification/denomination of the substances regulated
Regulated substance Allergenic colouring materials Organochlorate compounds Pesticides Short-chain Chlorinated Paraffins Classification contemplated in CTW 2007 • Substances of limited recommendable use • Substances of limited recommendable use Classification contemplated in CTW 2010 • Legally limited substances • Substances of limited use

• Other substances not contemplated in the CTW 2007 • Legally limited substances • Other substances not contemplated in the CTW 2007 • Legally limited substances

- New legally limited parameters (colour solidities): The Asiatic legislation regarding product health includes new textile product quality parameters related with the fixing of dyeing products to the fibres of the fabric.
Category Legally limited parameters Legally limited parameters Legally limited substance Legally limited substance Parameter Colour fastness in water Colour fastness in perspiration Colour fastness to rubbing Colour fastness to saliva

- New obligatory community regulation: registration,

evaluation, Authorisation and restriction of Chemicals
(REACH), a new European regulation which has come into force and which makes the industry responsible for the risks which attach to chemicals. It sets down tools for the control of the products manufactured or imported into the European Union, it provides constant means of updating and mechanisms for applying for information from users.

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Safe to Wear
This is defined as a product safety standard developed by the Inditex CSR Department, in accordance with the most demanding regulations in the matter of product safety, and of general and obligatory application for all clothing and footwear products and accessories. Apart from all those aspects relating to control of metallic contamination (mainly broken needles), STW limits the design of laces and cords in clothes targeted at children under 14 years old; the size and pulling and twisting forces of small parts of clothes targeted at children under 3 years old, and the presence of cutting or sharp objects in them. It also limits the flammability of clothing for children under 14 years old. • Dutch regulations: netherland Mandatory Fire Safety requirements. • Norwegian regulations: “For 1984-02-13 nr 427 Forskrifter om forbud mot svaert brannbare tekstiler 13-02-1984” directive on prohibition of highly flammable textiles. • Swiss regulations: “Swiss ordinance 817.043.1”. c. Modification in the acceptable limits of inflammability of textile articles:

technical and scientific innovations and updatings of the StW standard
- Modifications in the legally limited parameters: a. Modification in the requirements in sleeping clothes: Inclusion of adult textile articles within the scope. b. Modification in the legislation which regulates the inflammability of textile articles: Inclusion of the following legislation on inflammability of textiles:

Requirements in children’s sleeping clothes (up to 14 years) Garment type Legislation Netherlands. Mandatory Fire. Safety Requirements. Netherlands. Mandatory Fire. Safety Requirements.

Pyjamas (1) Pyjamas (2)

Nightdresses, dressing-gowns and bathrobes (1) Netherlands. Mandatory Fire. Safety Requirements, when they are verified with EN 1103. Nightdresses, dressing-gowns and bathrobes (2) UK Regulations, BS 5722 when they are verified with BS 5438. Nightdresses, dressing-gowns and bathrobes (3) UK Regulations, BS 5722 when they are verified with BS 5438. Baby’s bathrobe (1) Baby’s bathrobe (2) Bathrobe Baby nightclothes Requirements in adult sleeping clothes Garment type Sleeping clothes Legislation Netherland Mandatory Fire Safety Requirements when they are verified with EN 1103. Mandatory Fire Safety Requirements, when they are verified with EN 1103. Mandatory Fire Safety Requirements, when they are verified with EN 1103. Mandatory Fire Safety Requirements, when they are verified with EN 1103. No

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Requirements in daytime wear Garment type Plain surface fabric Plain surface fabric Age of user Children under fourteen years. Adults Limit Combustion time greater than seven seconds. Combustion time greater than five seconds. Combustion time between 0 and 7 seconds if the base of the textile does not burn. Combustion time greater than four seconds if the base of the textile burns.

Raised surface fabric

Children and adults.

cPSia reference manual for the United States
After the approval of the Consumer product Safety

Indicators of implantation
Programmes of external training for Inditex suppliers 2007 No. of suppliers 190 2008 128 2009 250

improvement Act of 2008 by the Government of the United
States of America, and with the objective of carrying out a proper compliance with its requirements, Inditex certifies the compliance of those products which it imports into the United States of America with the above-mentioned regulation, as well as any other applicable regulation. For this purpose, and with the object of helping its suppliers in the process of implantation of the CPSIA, Inditex has published a manual which includes requirements of the standards of product health and safety (CTW and STW) and provides a special procedure to ensure compliance with the requirements of the CPSIA for those articles sold in the United States. The CSR Department has developed a specific procedure of implantation of the CPSIA requirements by means of the certification of all the articles which go onto the American market through the active participation between Inditex, the supplier and accredited external laboratories. The procedure includes articles targetted at children under fourteen for all the parameters and substances regulated in the CPSIA and articles targetted at adults only for inflammability.

Programmes of training for Inditex sales teams 2007 No. of attendees 70 2008 350 2009 220

Programmes of external training for teams from the external laboratories accredited by Inditex 2007 No. of attendees 2008 6 2009 14

Policy in relation to fur products
In 2002, in response to animal rights protection demands, Inditex passed its fur prohibition policy, which lays down a ban on the use of fur in the products that it sells. This policy requires that fur in the products that Inditex sells must come from animals raised on farms for human food consumption and, under no circumstances, from animals killed exclusively to sell their fur.

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4.- Society
1 Programmes of community development
At Inditex we believe that development must start by building an equal, participative, co-responsible and egalitarian civil society - both inside and outside factories. We believe that development involves strengthening the human capital of the communities targeted by our social investment programmes. After the approval of the Inditex Internal Code of Conduct by the Board of Directors in 2001, the CSR Department developed its strategy of Corporate Social Responsibility together with a limited group of corporate entities of a global nature, in geographical areas in which it traditionally carried out its business model. These entities are mainly Fundación Entreculturas-Fe y Alegría, Servicio Jesuita a Refugiados (SJR), and international networks of Cáritas and Médecins Sans Frontières, with which initiatives are started up through the following lines of intervention: The aim of the community development programmes is to supply the tools necessary for the harmonious exercise of a wide concept of development, based on the extension of political, social, training and economic capacities of those communities, institutions and organised groups that are close to our activity. Traditionally, these programmes are articulated in the following areas of intervention: - Increase in educational cover: The right to education is understood as a fundamental right for development. Within this section, those educational projects are included which aim generally for the universalisation of education and specifically the construction, alteration and equipping of educational institutions for disadvantaged and vulnerable populations. - Improvement in the quality of education: The objective is to permit access to a decent, quality education for vulnerable groups through the development of processes which permit the training of teachers and the adaptation of training plans for teachers, mainly. - Technical training for work: It concentrates on equipping educational centres which facilitate the development of technical abilities which make it possible for the students to have access to a decent job which is suitable for their environment, once their training is complete. - Institutional strengthening: Programmes aimed at improving systems of administration, computing, planning and communication of those civil associations (local collaborators with Inditex on the ground) which are responsible for the effective and efficient execution of the programmes of social investment.

1 - Community development programmes 2 - Monitoring programmes 3 - Emergency Programmes 4 - for&from programmes

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Honduras Guatemala Haiti El Salvador Venezuela Nicaragua Panama Peru Brazil Mali Burkina Faso Cambodia

Chile

Argentina

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list of projects of community development 2009 argentina entreculturas-fe y alegría
Project: Integral training and social promotion of vulnerable groups in the provinces of Corrientes, Chaco, Salta, Jujuy and Buenos Aires. The aim is the training for work of 272 pupils and the equipping of five centres of vocational training and five open classrooms, and the conduct of educational constructions in four centres. Total duration of the project: 30 months Investment 2009: 162,634 euros Beneficiaries: 1.553 Results obtained during 2009: • Conduct of 69 hours of training for work and an open classroom. • 341 persons attended the training activities (employment and affective training, and re-insertion into school). • Purchase of 35 % of the equipment for five centres of vocational training and five open classrooms. • Construction of 45% of the educational infrastructure. Achievement of 120% of planned goals.

Brazil entreculturas-fe y alegría
Project: Construction of the people’s cultural centre, Fe y Alegría, in Grajaú, Sao Paulo, for the training of fifty-four young people as community cultural agents. Total duration of the project: 30 months Investment 2009: 49,210 euros Beneficiaries: 217 Results obtained during 2009: • Conduct of nine cultural events. • Equipping of educational spaces. • 63 persons attended the training activities. Achievement of 91% of planned goals.

Brazil entreculturas-fe y alegría
Project: Construction of a centre for education and culture in Santa Catarina, analysis of the educational needs of the population and multidisciplinary training for children and young people as well as their families and communities. Total duration of the project: 30 months Investment 2009: 57,437 euros Beneficiaries: 80 Results obtained during 2009: • Monitoring of forty families from five districts. • Termination of 55% of the construction of the centre. • 1,164 hours of training for minors. Achievement of 100% of planned goals.

Brazil entreculturas-fe y alegría
Project: Creation of an alternative school for school back-up and training for young people from marginal districts. It also includes the establishment of alliances with other institutions for the operation, dissemination and sustainability of the school and the conduct of 1,144 hours of additional training for young people with scarce resources. Total duration of the project: 30 months Investment 2009: 51,218 euros Beneficiaries: 87

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Results obtained during 2009: Termination of the adaptation and rehabilitation of the alternative school. Establishment of seven alliances with other institutions as a guarantee of the sustainability of the school.

1,380 hours of additional training for young people with limited resources to favour their access to advanced education. Achievement of 99% of planned goals.

guatemala entreculturas-fe y alegría
Project:Central American programme for the improvement of the quality of education and teachers’ living conditions. To give an incentive to educators and support staff of the Fe y Alegría centres in Guatemala for a better performance in their educational work. Total duration of the project: 30 months Investment 2009: 24,742 euros This project will begin in the 2010/2011 financial year.

honduras entreculturas-fe y alegría
Project: Central American programme for the improvement of the quality of education and teachers’ living conditions in the “department” of Yoro. The programme includes the development of diploma courses and certifications for the educators and giving them training in the management of pre-school centres. For this purpose, a diploma holder in Psycho-pedagogy and a diploma holder in Management of Projects have been hired. Total duration of the project: 30 months Investment 2009: 24,749 euros Beneficiaries: 74 Results obtained during 2009: Conduct of 346 hours of training for teachers. Achievement of 103% of planned goals.

haiti entreculturas-fe y alegría
Project: Central American programme for the improvement of the quality of education and teachers’ living conditions. in the regions of Jean-Rabel, Balán, Ouanaminthe and Anse-á Pitre. The project includes the training of eighty teachers in the field of management of the centres and the purchase and application of teaching resources. Total duration of the project: 30 months Investment 2009: 17,684 euros The situation in Haiti after the earthquake has halted the project. The priority of Fe y Alegría during the financial year was to attend to the emergency and planning and to contribute to social and educational reconstruction in the country.

nicaragua entreculturas-fe y alegría
Project: Central American programme for the improvement of the quality of education and teachers’ living conditions in the localities of Ocotal, Estelí, Diriamba, Chinandega, León, Ciudad Sandino, Mateare, Bello Amanecer, Las Cuaresmas and Somotillo. It includes: The training of teaching staff in the matter of management of the educational centres, access to credits of 23 teaching staff, medical attention for forty persons and certified training for eighteen persons. Total duration of the project: 30 months Investment 2009: 24,749 euros Beneficiaries: 224 Results obtained during 2009: • Access to credit for 43 teachers. • Medical attention for 163 teachers in ophthalmology, odontology and surgeries. • Training of 18 teachers. Achievement of 159% of planned goals.

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Panama fe y alegría
Project: Central American programme for the improvement of the quality of education and teachers’ living conditions in Pedregal and Costa Abajo. Details: Training seventeen persons and facilitating the access of seventeen persons to a joint savings and credit fund which will contribute to an improvement in the quality of life of the teaching staff of the educational centres. Total duration of the project: 30 months Investment 2009: 24,749 euros Beneficiaries: 35 Results obtained during 2009: • Access of seven teachers to resources to carry out training on university diploma courses in Psychopedagogy and Teaching in Education and Learning. • Participation of seven teachers in training activities. • Thirteen loans made to the administrative staff of the educational centres. Achievement of 31% of planned goals.

el Salvador fe y alegría
Project: Central American programme for the improvement of the quality of education and teachers’ living conditions as well as the creation and promotion of a savings and credit fund for educators from San Salvador, San Miguel and Santa Ana. Total duration of the project: 18 months Investment 2009: 24,749 euros Beneficiaries: 90 Results obtained during 2009: • Creation of a savings and credit committee. • Design of a qualification programme. Achievement of 76% of planned goals.

chile fe y alegría
Project:Strengthening of the programmes of technical and professional education of Fe y Alegría Chile - PHASE II in the Metropolitan Region and Valparaiso. Details: Vocational training for young people and teachers belonging to the educational centres and the establishment of alliances with companies to increase the number of internships and jobs in companies for the students. Total duration of the project: 30 months Investment 2009: 29,197 euros Beneficiaries: 667 Results obtained during 2009: • Training for insertion into the workplace for 230 pupils. • Conduct of 4,500 evaluations of pupils. • Conduct of internships by 115 students. • Conduct of a workshop on insertion into the world of work for 150 students. • Increase of 90% in the number of internships undertaken by students. Achievement of 113% of planned goals.

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regional international federation of fe y alegría latin america
Project: Training of managerial teams (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru, Dominican Republic and Venezuela); improvement of the processes of project management (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru, Dominican Republic and Venezuela); and evaluation of strategic planning (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru, Dominican Republic and Venezuela). Total duration of the project: 30 months Investment 2009: 158,157 euros Beneficiaries: 139 Results obtained during 2009: • Training of 78 persons in social management. • Conduct of ten related publications. • Training of 18 persons in the application of the software for project administration and accounts. • Drawing up of a draft evaluation guide. • Holding of an international training meeting for heads of planning and projects. Achievement of 95% of planned goals.

Peru fe y alegría
Project: Construction and restoration of School 6” in Tingo Marí (Huánuco). Total duration of the project: 12 months Beneficiaries: 240 Investment 2009: 90,421 euros Results obtained during 2009: This project is to be carried out in the 2010/2011 financial year.

Peru fe y alegría
Project: Strengthening of education for networking in educational institutions of Fe y Alegría Peru. Total duration of the project: 24 months Investment 2009: 271,384 euros Beneficiaries: 3,304 Results obtained during 2009: • Conduct of 120 hours of training through a plan for the qualification of teachers. • Distribution of two technological literacy modules. • Holding of workshops for the development of technical and productive skills for students at ten educational institutions. Achievement of 98% of planned goals.

Peru fe y alegría
Project: Alternative proposal of rural education in the departments of Cusco, Loreto, Piura and Ancash (4th phase). Total duration of the project: 30 months Investment 2009: 149,265 euros Beneficiaries: 2,992 Results obtained during 2009: • Conduct of 90 productive projects by the students. • Attendance of 1,455 parents at workshops on human rights, interculturality and sexuality, among other subjects. • Conduct of 18 hours of teacher training for working in training in rural environments. Achievement of 161% of planned goals.

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Peru network for attention to children and young People
Project: Project of attention and training for children and young people. Consolidation and cohesion of the organisations that make up the network and work with the young people. Total duration of the project: 30 months Investment 2009: 110,301 euros Beneficiaries: 716 Results obtained during 2009: • Conduct of health attention for 4,188 young people. • Conduct of 539 actions of social promotion for young people. • Making of 44 updates on the web page of the infancy network. • Conduct of 269 inter-institutional meetings. Achievement of 129% of planned goals.

Peru vicariato de Jaén
Project: Training in tutoring, assessment and methodologies for increasing the development of capabilities and values in the Jaén education network. Total duration of the project: 30 months Investment 2009: 33,492 euros Beneficiaries: 6,000 Results obtained during 2009: • Conduct of 1,320 hours of teacher training for innovation projects and workplace insertion. • Training of 18,276 parents, pupils and teachers. • Conduct of 49 productive projects. Achievement of 112% of planned goals.

Peru
PeBal
Project: Development of the PEBAL of la Inmaculada in Lima. Total duration of the project: 24 months Investment 2009: 62,321 euros Beneficiaries: 9,990 Results obtained during 2009: • Training of 1,003 persons in alternative basic education, technical education and training in matters related to health and hygiene. • Conduct of 14 activities of institutionalization of the area of social promotion of PEBAL (creation of the web page and updating of the accounting system, among other matters). • Health attention for 905 persons. Achievement of 140% of planned goals.

Peru
SePSi
Project: Training of educators from the sector of education of the people from the Compañía de Jesús. Total duration of the project: 24 months Investment 2009: 44,793 euros Beneficiaries: 40 Results obtained during 2009: • Training of 124 people’s educators from 14 centres. • Construction of a virtual classroom for advice and constant monitoring of the teachers. • Drawing up of a document on people’s education in Peru. Achievement of 221% of planned goals.

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Peru cSS Project: Strengthening of educational initiatives in the social sector. Total duration of the project: 30 months Investment 2009: 26,083 euros Beneficiaries: 400 Results obtained during 2009: • Creation of ten working groups on social justice and people’s education. • Production of four training materials. Achievement of 200% of planned goals.

venezuela fundación centro gumilla
Project: Training for democracy and citizen involvement in educational centres, local government and social organisations in Distrito Capital, Anzoátegui, Apure, Aragua, Barinas, Bolívar, Carabobo, Lara, Mérida, Miranda, Monagas, Sucre, Táchira and Zulia. Total duration of the project: 30 months Investment 2009: 152,329 euros Beneficiaries: 590 Results obtained during 2009: • Conduct of 542 hours of training in associative capacities. • Conduct of 200 hours of training in social leadership. • Participation of 1,281 persons in training sessions to strengthen their associative capacities and those of management in communities of people. • Training of 135 persons in matters related with social leadership. Achievement of 162% of planned goals.

venezuela fundación centro gumilla
Project: National public incidence for community and citizen participation in Distrito Capital, Anzoátegui, Apure, Aragua, Barinas, Bolívar, Carabobo, Lara, Mérida, Miranda, Monagas, Sucre, Táchira and Zulia. Total duration of the project: 30 months Investment 2009: 59,239 euros Beneficiaries: 183 Results obtained during 2009: • Creation of six regional networks of social action. • Participation in 367 social events on violence in schools and community work. • Conduct of a national campaign oriented towards promoting social co-existence. Achievement of 22% of planned goals.

venezuela fe y alegría
Project: Proposal for the technical training and integration into the community of young people from five slum areas and one rural area (State of Mérida, Distrito Federal, Zulia, Lara, Miranda and Mérida). Total duration of the project: 30 months Investment 2009: 51,097 euros Beneficiaries: 1,128 Results obtained during 2009: • Conduct of 11 teacher training workshops with a total duration of 6,312 hours. • Participation of 377 teachers in training activities. • Distribution of 581 educational materials. • Preparation of educational materials related to the conduct of social and community projects. Achievement of 86% of planned goals.

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cambodia cáritas Projects: Community Health programme in Battambang and Siem Reap (Mother-and-Child Health Programme). Details: • Health care in the community, including health education (seminars and periodic workshops on maternal health and infant survival, analysis of health needs and vaccination campaigns, among other matters). • Immunization and reduction of malnutrition in children and pregnant or lactating women (includes workshops on healthy nutrition, with incidence on the importance of checking weight and height in children). • Training in basic community health (hygiene, dental health, dengue fever, diarrhea, malaria…) and prevention and attention to those affected by chronic illnesses, especially tuberculosis and HIV/AIDS (training of voluntary health agents in chronic illnesses, HIV/AIDS and tuberculosis). Total duration of the project: January 2008 - December 2010 Investment 2009: 79,367 euros Beneficiaries: Over 7,500 Results obtained during 2009: • In Battambang: Vaccination for tetanus, measles, DTP1/ DTP2/DTP3, BCG, HBP1/HBP2, and polio of 1,824 persons (336 pregnant women and 1,488 niños). • At Siem Reap: Vaccination of 349 children and 80 pregnant women. • Training of 2,655 persons from 38 villages (mothers of two-year-old children, pregnant women and parents) in immunisation activities. • Distribution of foodstuffs for 1,017 children, 388 pregnant women and 476 lactating mothers. • Distribution of breakfasts in schools. • Creation of a kitchen garden for nine schools. • Repairs in 33 dwellings (135 persons). • Training of midwives among the population in remote areas. • Construction of a maternity facility. • Training of mothers regarding the importance of breastfeeding and the symptoms of illness in the newly-born child. • Regular fumigations for the reduction of contagion of AIDS, tuberculosis, malaria and dengue fever. • Training regarding drinking water to 38 communities and distribution of water filters to families in seven localities. Observations: Reduction in deaths of mothers before and after birth, deaths of the newly-born and illnesses due to malnutrition in children under five years. Increase in the population with access to health centres, percentage of vaccination in risk groups (mainly children and women). The remote geographical situation of the localities, the lack of qualified staff and of time for the conduct of training programmes, and the limited educational level has made the conduct of the programme difficult.

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cambodia cáritas Projects: Programmes of community development in Siem Reap, Preah Vihea and Kompong Thom. The objective of this programme is to create a network of coordination to prevent and mitigate disasters, promote social participation by means of the creation of structures of community social organisation, reduce illiteracy among adults and guarantee food safety by starting up alternative ways of life. For this purpose, the programme contemplates training activities, workshops for farmers on the improvement of productivity and courses on Basic Human Rights, among other matters. Total duration of the project: January 2008 - December 2010 Investment 2009: 191,049 euros Beneficiaries: 5.400 Results achieved during the first two quarters of 2009 (at the close of this Annual Report, the results of the financial year were being consolidated): • Second training workshop on disaster prevention. • Increase in the number of community committees for disaster management. • Classes for the reduction of the rate of illiteracy for 281 peasants. • Training for six new teachers. • Construction of small infrastructures and development of water systems. • Increase in family economic resources and creation of small companies. • Training in sustainable agriculture. • Creation of community banks of rice, complementary crops such as green vegetables and fruit trees, raising of animals and fish farming, creation of a community bank of cows. • Construction of drains, tanks, manual water pumps, wells and roads.

mali cáritas Projects: Improvement in food safety and improvement of the nutritional level deriving from the lack of water in the regions of San and Kati through the purchase and distribution of agricultural materials, the creation of infrastructures and the distribution of food. Total duration of the project: 6 months Investment 2009: 297,000 euros Beneficiaries: Over 15,000 Results obtained during 2009: • Acquisition of 120 donkeys, 120 ploughs, 120 carts and 120 seed drills. • Refurbishing 100 wells and digging two wells. • Purchase and installation of 18 mills for nine villages. • Construction of a micro-reservoir. • Acquisition and distribution of foods for 15,885 persons. Achievement of 100% of the expected objectives in the financial year.

Burkina faso cáritas Project: Nutritional improvements in the dioceses of Koupéla, Koudougou and Diébougou. Total duration of the project: 24 months Investment 2009: 188,696 euros Beneficiaries: 91.840 Results obtained during 2009: • Refurbishing 91 wells and digging three wells. • Construction of 75 pits. • Distribution of nine solar dryers. • Building a central warehouse in Ouagadougou. • Allocation of farming equipment. • Wire fencing. • Provision of fertilizers and seeds. • Provision of wheat mills. • Holding of training courses. Achievement of 100% of the expected objectives in the financial year.

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2 monitoring programmes
Since 2005, Inditex has supported programmes of social investment which encourage a culture of peace and, as a consequence, the recovery and rehabilitation of the social fabric through the funding of certain health, social and educational projects in countries such as Burundi, Malawi, the Central African Republic, Sudan, Colombia, Ecuador, Panama and Venezuela. In 2009, Inditex extended this commitment to new geographical areas such as Greece and Morocco, due to their situation as countries receiving immigration from the former Soviet Union, the Balkans, Iraq, Afghanistan and Somaila and, in the case of Greece and Morocco, immigration from Sub-Saharan Africa.

Greece Morocco Venezuela Sudan Panama Ecuador Colombia Central African Republic Burundi Malawi

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greece médecins Sans frontières
Project: It concentrates on improving the mental and physical wellbeing of undocumented immigrants in Patras, Evros, Rodopi and Mitilini. The objective is to improve the conditions of reception, especially those of a medical and health-related nature, of the immigrants; to compile data on the physical and mental condition of the groups at the moment of reception; and to create a lobby to gain humane treatment in the processes of reception and attention, in accordance with the internationally-recognised Basic Medical Rights. Total duration of the project: 12 months Investment 2009: 400,000 euros Beneficiaries: Over 10,000 Results obtained during 2009: • Conduct of 3,806 primary consultations and 1,337 mental health consultations. • 576 patients sent to hospitals. • Vaccination of 520 persons for tetanus and diphtheria. • Distribution of materials such as sleeping bags, hygiene kits, food and water containers, among other items (over 1,880 units) • Repair of latrines and showers. • Conduct of 262 therapeutic sessions. • Conduct of 190 sessions of recreational activities. • Distribution of leaflets with information on legal and social services in Greece. • 30 meetings with the national government and five meetings with organs of decision at the international level. • Signing of an agreement with the Ministry of Health and the Ministry of the Interior to guarantee the conduct of the activities. • Conduct of bilateral meetings with the local, regional and national governments to inform of the medical and humanitarian needs of the undocumented immigrants.

morocco médecins Sans frontières
Project: Monitoring programme to improve the state of health of the sub-Saharan immigrants in transit or forced to stay and for their participation in processes of improvement of their health-related conditions, both in urban environments (Rabat and Casablanca) and rural environments (province of Oujda). Total duration of the project: 12 months Investment 2009: 300,000 euros Beneficiaries: Pending evaluation Results obtained during 2009: • Signing of an agreement with the Moroccan government to guarantee health attention to immigrants in transit or held in Casablanca and Rabat. • The project has facilitated access to health to 95% of the immigrants located. With regard to the programmes of preventive health, the objective of access to sub-Saharan immigrants has been 65% achieved. Observations: This project is pending global evaluation.

Somalia médecins Sans frontières
Project: Primary and secondary health care for the most vulnerable population groups (children and women) in Middle Shabelle. Total duration of the project: 12 months Investment 2009: 300,000 euros Beneficiaries: 225,600 Results obtained during 2009: • 2,461 patients admitted to the maternity hospital. • Care taken at 1,666 births. • Conduct of 25,109 pre-natal consultations. • Conduct of 1,433 post-natal consultations. Observations: The project has been affected by the worsening of the security situation in the country. Despite this, through the management of the project by the national staff, the planned objectives have been achieved.

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Burundi
Jesuit refugee Service
Project: Social and economic reintegration of returning refugees in the province of Muyinga, through training in agriculture and fishing, the promotion of food safety among the refugees and the creation of local groups to encourage the creation of associations. Total duration of the project: 24 months Investment 2009: 483,587 euros Beneficiaries: 1,500 Results obtained during 2009: • Training of 1,220 persons as community veterinary agents. • Conduct of 4,000 monitoring visits for primary attention in the homes involved. • Training of 1,473 families in work for levelling of land. • Distribution of 2.8 million stocks of forage plants and 6,000 head of goats. Achievement of 53% of planned goals.

malawi
Jesuit refugee Service
Project: Support for quality formal education for refugees at the Dzaleka camp and urban refugees in Lilongwe, through the restoration and construction of infrastructures and the conduct of psycho-social support activities. Total duration of the project: 24 months Investment 2009: 354,370 euros Beneficiaries: 2,614 Results obtained during 2009: • Improvement to the health and level of nutrition of 150 children of less than 5 years of age, as well as two blocks of classrooms and latrines in a secondary school. • Construction of twelve classrooms in a primary school for 2,541 pupils and a vocational training workshop for 736 adults. • Registration of 246 students in the Accelerated Learning Programme. • Psycho-social assistance by 21 community counsellors for the population of the refugee camps. Achievement of 70% of planned goals.

central african republic
Jesuit refugee Service
Project: Construction and restoration of primary schools for internal displaced people and other young people affected by the war in the provinces of Haute Kotto and Ouham, through the support for the implantation of the SJR in the country. Total duration of the project: 24 months Investment 2009: 260,703 euros Beneficiaries: 662 Results obtained during 2009: • Construction of three schools in Yangou Bamara, Kotto III and Mouka Schools for 408 beneficiaries, restoration of a school in Ouadda and construction of a house for the teachers. • Construction of latrines in four primary schools. • Purchase and distribution of 290 school desks and tables for the students, teachers and management. Achievement of 100% of planned goals.

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Sudan
Jesuit refugee Service
Project: Support for quality primary and secondary education in southern Sudan, Central and Eastern Equatoria States. Total duration of the project: 24 months Investment 2009: 403,340 euros Beneficiaries: 24,000 Results obtained during 2009: • Access to education for 2,209 students in seven schools. • Construction of a pavilion, a primary school, renewal of four primary schools, construction of latrines, a laboratory block and a dormitary block for children in new schools. • Distribution of sports and school materials in six schools. • Registration of 5,700 secondary students. • Training of 558 teachers in educational techniques. • Material, health and financial support for 2,327 secondary pupils. • Holding of seminars on prevention of conflicts for 675 persons. Achievement of 70% of planned goals.

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monitoring programmes developed with the Jesuit refugee Service for latin america and the caribbean (SJr lac)
The Jesuit Refugee Service (JRS) is an international organisation which looks after displaced persons and refugees in over 50 countries, especially in those areas where there are armed conflicts and situations of natural catastrophes. In Latin America, it acts as the Jesuit Refugee Service for Latin America and the Caribbean (JRS LAC) and it works mainly with those displaced as a result of the situation in Colombia and with those affected by the earthquake in Haiti. Inditex, which has been collaborating with JRS in Africa, began in 2009 to work with JRS LAC for displaced persons from Colombia in Colombia itself, Venezuela, Ecuador and Panama and for this purpose it has developed the JRS LAC Planning Tool.

This is an instrument designed for planning strategies of intervention and/or humanitarian aid in the face of certain humanitarian crises or conflicts using the principles and the vision of JRS LAC and those other principles contemplated in the United Nations Conventions or Regulations (Protection and Promotion of Basic Human Rights); Humanitarian Law; the Law of Refugees; the main Codes of Conduct and Best Practices of the NGOs and other recommendations (the Sphere Project and the Minimum Regulations for Education in Emergency Situations). This methodological tool has been applied experimentally in the workshop carried out in Cartagena de Indias (Colombia) in April 2009, by a multidisciplinary team of professionals to establish the lines of intervention and to design the framework of financing for future programmes of social investment by Inditex in the areas of influence of JRS LAC. This methodology makes it possible to identify the priorities of social intervention in the countries affected by the displacements caused by the situation in Colombia, to understand the global nature of the humanitarian crisis, and to evaluate the capacities of the social agents to be managers of their destination from a multi-relational perspective. In short, the workshop has made it possible to carry out an exercise of planning to build, among other things, a model of supra-regional intervention.

JrS lac Planning tool
This is a new methodology specifically designed by Inditex and the Jesuit Refugee Service for Latin America and the Caribbean, in collaboration with Entreculturas-Fe y Alegría Foundation, which collects the joint experiences of both organisations in similar processes of planning carried out by their teams in other complex scenarios, such as the projects for intervention in refugee camps in Africa and Asia.

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regional (latin america and the caribbean)
Jesuit refugee Service lac
Project: Programme for the local integration of the population in a situation of displacement and refuge in the receiving communities for Colombian displaced persons. Total duration of the project: 36 months Investment 2009: 54,358 euros Beneficiaries: 116 Results obtained during 2009: • Holding of a training workshop for the teams from the four countries involved (Colombia, Venezuela, Ecuador and Panama). • Twelve monitoring visits • Design of a programme for the identification of child soldiers. Achievement of 90% of planned goals.

colombia
Jesuit refugee Service lac
Project: Programme for the local integration of the population in a situation of displacement and refuge in the receiving communities for Colombian displaced persons, through the identification of persons in this situation. Total duration of the project:36 months Investment 2009: 109,061 euros Beneficiaries: Over 18,500 Results obtained during 2009: • Drawing up of two reports on the situation regarding Human Rights and fifteen workshops. • Holding of forty-six meetings of political debate with young students and the creation of a debate group regarding management of rights. Achievement of 90% of planned goals.

ecuador, Panama and venezuela
Jesuit refugee Service lac
Project: Programme for the local integration of the population in a situation of displacement and refuge in the receiving communities for Colombian displaced persons. Total duration of the project: 36 months Investment 2009: 169,915 euros Beneficiaries: 2,794 Results obtained during 2009: • Conduct of 1,722 legal consultations and 210 psychosocial consultations. • Holding of ten workshops on Human Rights and five on local integration. • Preparation of four organisations for access to credit and assignment of 19 alternative credits for ninety beneficiaries. • Commencement of contacts to promote a law of human mobility which will help with the rights of displaced persons. • Access to school for 98 minors and psycho-therapeutic monitoring for 48 displaced children. • Documentation for 39 persons. • Granting of humanitarian assistance for thirteen families. • Attention to 592 persons with need for protection. • Conduct of an awareness-raising campaign on the frontier on Human Rights and refuge. Achievement of 110% of planned goals.

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3 emergency Programmes
Through the Emergency Programmes, Inditex actively participates in projects of intervention designed to alleviate the negative consequences of natural catastrophes which have occurred anywhere in the world. The development of the strategy of intervention involves both national or international partners and the teams of CSR of the Group in the development of the following activities: • Identification of the main vulnerable groups affected by the humanitarian emergency and determination of the needs in the short and long-term. • Identification of the social agents who act on the ground and on whom the project can be subsequently based. • Evaluation of the capacities of these social agents to respond to the needs in the short and long-term of the previously identified vulnerable groups. • Identification of the basic lines of intervention and of the possible intervention projects. What is more, the costs per activity and the equipment necessary for effective and efficient execution are calculated. • Planning of the agenda for the execution in the short and long-term of the projects. In the 2009 financial year, Inditex activated emergency projects in Sumatra (Indonesia) and Haiti to alleviate the effects of the earthquakes that were suffered by both regions in September 2009 and January 2010.
Haiti

the haiti earthquake
On 12th January 2010, an earthquake with a magnitude of 7 on the Richter scale hit the island of Haiti. Its epicentre was at a distance of 15 kilometres from the capital, Port-au-Prince. Five days after the tragedy, Inditex signed a collaboration agreement with the organisations, Entreculturas and Cáritas Española, with which the work on its project of help for the reconstruction of Haiti was begun, funded with the contribution by Inditex of two million euros. The project concentrates on giving support to the most vulnerable groups mainly in the medium and long-term and in the particular areas in which this help may be most necessary. • The project, duration, objectives, activities, results achieved and the beneficiaries will be published in the 2010 Annual Report.

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the earthquake in Sumatra (indonesia)
In September 2010, an earthquake with a magnitude of 7.6 on the Richter scale hit the island of Sumatra,
Indonesia
Sumatra

at a distance of forty-five kilometres from the coast of the city of Padang. A few days later, an aftershock of 6.3 degrees again hit the same area at a distance of 150 kilometres from the epicentre of the first earthquake. The earthquake caused serious damage to the infrastructure and buildings in this area with large loss of human life. The official estimates one week after the catastrophe identified 704 dead, over 1,000 missing and 1,000 injured. Inditex acted rapidly with an immediate health aid project together with Médicins Sans Frontières and the Indonesian Ministry of Health.

indonesia médecins Sans frontières
Project: Emergency intervention for the victims of the earthquake on the island of Sumatra. Details: Identification of the surgical and primary health needs in the hospitals of Padangy Pariaman; management of mobile clinics and provision of medical materials, vaccinations for tetanus and measles, development of a post-catastrophe mental health plan and donation of urgently required materials. Total duration of the project: 2 months (September-November 2009). Investment 2009: 200,000 euros Beneficiaries: 100,000 Results obtained during 2009: • Conduct of over 180 surgical operations. • Use of seventeen organised mobile clinics, over 1,200 consultations carried out in them and distribution of over 500 anti-tetanus vaccines. • Attention to over 9,000 victims. • Distribution of 20,000 cooking kits. • Distribution of 730,000 litres of drinking water and distribution of two sources and tanks of water, installation of a gravitational system and cleaning and disinfection of 27 wells. • Construction of six new wells, seven water tanks in public areas and systems of irrigation using rainwater in eleven different locations.

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4 for&from Programmes
Since 2005, Inditex has been collaborating with the El Molí d’en Puigvert Foundation and the Galician Confederation of the Disabled (COGAMI) in projects for the creation of spaces for giving jobs to persons with physical and/ or mental disabilities. From these collaborations, three stores have arisen which show the economic and social profitability.

for&from massimo dutti Palafolls (Barcelona) - 2002

chronology
2001 First contacts between the el Molí d’en puigvert Foundation and inditex to explore formulas of social and employment insertion for vulnerable groups.
This is the first for&from store. It was opened in collaboration with the El Molí d’en Puigvert Foundation with the aim of making it possible to find work for patients with severe mental disturbances. After eight years of activity, this project is: • Sustainable.- The economic results of the store reflect a

2002 inauguration of the first for&from Massimo dutti store in palafolls (Barcelona)

2006 enlarging of the store, for&from
Massimo dutti in palafolls.

financial equilibrium in acordance with its dimensions and comparable with any other Inditex point of sale in the area. • Integrating.- The store supplies stable jobs to nine professionals (seven of whom have TMS). The fact of working in a place serving the public with a high rate of rotation of customers makes it possible for them to have constantly interpersonal relations with the customers, which leads to an improvement in their mental health, a significant reduction in medication and a reduction of hospital resources. • Efficient.- The working experience deriving from the project has made it possible to put one patient with TMS in a job in a Massimo Dutti store in Mataró and another three patients in another three companies in the region. • Measurable.- The project generates direct social savings which can be proven through the measurement of the economic and social impacts generated by the store.
Indicators Net amount of the turnover (in euros) Area (in m2) Average number of workers Number of equivalent complete working days 2007 703,695 140 7 3.5 2008 728,104 140 8 4 2009 784,492 140 9 4.5

2007 inauguration of a new for&from Massimo dutti store in Allariz (ourense)

2008 inauguration of the first for&from
Bershka store in palafolls (Barcelona)

2009 First incorporation of an employee from the for&from project into the normal workforce as an employee of a Massimo dutti store in Mataró (Barcelona).

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for&from massimo dutti allariz (Ourense) - 2007

for&from Bershka Palafolls (Barcelona) - 2008

This is the second initiative of the for&from project, on this occasion implemented by the Galician Confederation of the Disabled (COGAMI) and the Concello de Allariz (Ourense). The staff is currently made up of five employees, all of whom have different degrees of physical disability and are in a disability range of between 30 and 70 percent. The store has an architectural development, adaptation of the furniture and numerous technical solutions which, apart from making the work of the staff easier, converts the store into a commercial space which is a reference regarding accessibility and elimination of barriers. For the choice of the specific technical materials for this project, Inditex has taken advantage of the specialist advice of Via Libre (Fundación ONCE) and of COGAMI. Together with the store, a cultural classroom has been installed on the first floor of the building which specialises in the dissemination and promotion of social matters, in which exhibitions and talks are held which are linked with the Third Sector.
Indicators Net amount of the turnover (in euros) Area (in m2) Average number of workers 2007 96,987(*) 120 6 2008 757,008 120 6 2009 859,178 120 5

This is the first Bershka for&from store and the third initiative of the for&from project conducted jointly by the El Molí d’en Puigvert Foundation and Inditex. The store has different architectural and technical solutions to facilitate the movement of any person. The solutions have been taken on the initiative of for&from Massimo Dutti in Allariz and have had the advice of the Vía Libre team (Fundación ONCE).
Indicators Net amount of the turnover (in euros) Area (in m2) Average number of workers Number of equivalent complete working days 2008 125,327(*) 80 3 1.5 2009 275,247 80 7 3.2

(*) Turnover since it opened in August 2008, until the end of the 2008 financial year.

(*) Turnover since it opened in October 2007, until the end of the 2007 financial year.

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Objectives achieved in 2009
Portugal Production chain Social audits in accordance with Tested to Wear Monitoring audits Strengthen local CSR teams in the cluster Extension of the Fibre Citoyenne programme to the suppliers that work for Inditex Portugal Standard pilot programme for suppliers who work for Inditex Rationalise the chain of production Implement the pilot programme of homeworking in the clusters Direct management of the compliance department in the cluster Generally implement the Pre-Assessment programme Manage the proper implantation of the international framework agreement Product health - Clear to Wear (CTW) Extend the training and awareness programmes of suppliers relating to CTW Working groups to correct the legislative loopholes relating to use of chemicals Training courses in the clusters to communicate and raise awareness about the use of green chemicals Working groups to identify alternatives to replace PVC in positional stamping Obtain the commitment to comply with CTW from suppliers through the declaration of agreement Courses to carry out the technical specifications of products Participate actively in forums of debate related with the conduct of policies of product health Product safety - Safe to Wear (STW) Obtain the commitment to comply with STW from suppliers through the declaration of agreement Actively participate in forums of debate related with the conduct of product safety policies Participation in dialogue platforms Participate on the board of the Ethical Trading Initiative Working groups of: Ethical Trading Initiative MFA Forum (Bangladesh) MFA Forum (Morocco) MFA Forum (Lesotho) ASEPAM (Global Compact) Better Work Morocco 80 0 30 0 80 80 80 80 10 10 10 10 30 30 30 30 0 0 0 0 X X X X N/A 25 35 Planned 37 28 Achieved 162 74 170 71 China Planned Achieved 182 18 25 18 Morocco Planned Achieved 56 48

Better Factories programme in Cambodia portugal Standard ethical Fashion Chair at the university of northumbria
Programmes for creation of social capital Strengthening of the trade union fabric of the factories of Inditex suppliers Community Developement Programmes

new initiatives for&from
Expansion Emergency programmes in refugee camps Development and implementing of the methodology for planning social investment programmes in refugee camps Termination of the Programme Spectrum

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Turkey Planned 60 30 Achieved 175 29

Cambodia/Vietnam Planned 25 11 Achieved 29 3

Bangladesh Planned 20 14 Achieved 71 12 28 24

India Planned Achieved 174 53 10 7

Spain Planned Achieved 28 79

Venezuela, Colombia, Ecuador and Panamá Planned Achieved 75 47

Others Planned Achieved 88 21

N/A X X

N/A

N/A N/A

30 30 30 30

0 0 0 0

30 30 30 30

0 0 0 0

30 30 30 30

10 10 10 10

80 80 80 80

15 15 15 15

30

0

30

0

30

0

80

0

N/A

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Objectives planned for 2010
Portugal Chain of production. Conduct of Initial Audits Conduct of Monitoring Audits Strengthening of the local CSR teams Creation of the local CSR teams Conduct of the Data Mining project in the second and consecutive lines of the production chain Rationalisation of the production chain Reduction of the number of manufacturers and external workshops D Application of the Framework Agreement between ITGLWF and Inditex for the solution of employment conflicts Implementation of the Pre-Assessment Programme Product Health - Clear to Wear (CTW) Extension of the training and awareness-raising programmes of suppliers relative to CTW Commitment of compliance with CTW obtained from the suppliers, through the declaration of agreement Participating actively in forums of debate and committees related to the development of policies of product health Implementation of Inditex CTW “Reasonable & Responsible Testing Programme” in the chain of production Creation of a laboratory of internal analysis Conduct of technical audits on dry cleaners, printers and laundries Design and implementation of corrective action plans Conduct of Monitoring Audits on dry cleaners, printers and laundries Product Safety - Safe to Wear (STW) Extension of the training and awareness-raising programmes of suppliers relative to CTW Commitment of compliance with STW obtained from the suppliers, through the declaration of agreement Participating actively in forums of debate and committees related with the development of policies of product safety Implementation of the Inditex STW Reasonable and Responsible Testing Programme Conduct of technical audits on clothing workshops Design and implementation of corrective action plans Conduct of Monitoring Audits Product Health and Safety - Consumer Product Improvement Act (CPSIA) Implementation of the Inditex CPSIA Reasonable and Responsible Testing Programme Planned 55 20 China Planned 140 35 Morocco Planned 25 20

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Turkey Planned 70 30

Cambodia/ Vietnam Planned 25 10

Bangladesh Planned 35 15

India Planned 50 20

Spain Planned 10 10

Venezuela, Colombia, Ecuador and Panamá Planned

Rest of the production chain Planned 70 25

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Portugal Chain of production. pH - Guideline & Implementation Toolkit Extension of the training and awareness-raising programmes of suppliers relative to CTW Commitment of compliance with CTW obtained from the suppliers, through the declaration of agreement Technical audits in verfication of actions proposed in dry cleaners, printers and laundries Design and implementation of corrective action plans Conduct of Monitoring Audits on dry cleaners, printers and laundries Arylamines - Guideline & Implementation Toolkit Extension of the training and awareness-raising programmes of suppliers relative to CTW Commitment of compliance with CTW obtained from the suppliers, through the declaration of agreement Technical audits in verification of actions proposed in dry cleaners, printers and laundries Design and implementation of corrective action plans Conduct of Monitoring Audits on dry cleaners, printers and laundries Dialogue Platforms Active participation in the following dialogue platforms: Ethical Trading Initiative MFA Forum ASEPAM (Global Compact) Better Work Better Factories Ethical Fashion Chair at the University of Northumbria Rates of Sustainability Inclusion on the Dow Jones Sustainability Indexes Inclusion on the FTSE4Good index Programmes of creation of social capital Strengthening of the trade union fabric in the factories of Inditex suppliers Programmes of social investment Inauguration of new for&from stores Increase in the range of the programmes of community development to key countries in terms of the chain of production Optimization of the system of indicators for monitoring the programmes of community development Emergency Programme in Haiti. Planned

China Planned

Morocco Planned

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Turkey Planned

Cambodia/ Vietnam Planned

Bangladesh Planned

India Planned

Spain Planned

Venezuela, Colombia, Ecuador and Panamá Planned

Rest of the production chain Planned

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Sponsorship and patronage
The commitment of Inditex to society in general and, in particular, to the communities in which its activity is undertaken is completed with the actions of sponsorship and patronage that the Group carries out throughout each financial year. In this field, Inditex collaborates by giving support to institutions of a number of kinds and geographical areas which have a solid link to society and experience in the conduct of their activities. The Sponsorship and Patronage Commission is the internal body in Inditex which makes itself responsible for valuing the social projects. This Commission is made up of the Secretary General of the Board, Antonio Abril, the General Manager of Communication and Institutional Relations, Jesús Echevarría, and the Manager of Corporate Social Responsibility, Javier Chércoles. The collaboration is not restricted to a particular area of action or to a specific geographical environment; instead it covers a wide range of areas such as health, culture, sport, training, social help and business promotion, with the aim that the contribution should reach social groups with different needs. During the 2009 financial year, in the field of sponsorship and patronage, Inditex collaborated actively with over forty recognised national and international institutions. In the majority of cases, it is a matter of stable collaborations initiated in previous financial years which allow the start up of solid social actions with continuity over time such as the promotion of basic-level sports in the area of A Coruña, research in the struggle against cardiovascular disease, through the collaboration with the National Centre for Cardiovascular Research Foundation (Fundación Pro-CNIC), or the promotion of social actions in Latin America, giving support to initiatives from such institutions as Fundación Alternativas, among others. In total, Inditex devoted 2.77 million euros to programmes of sponsorship and patronage, 33.6% more than in the previous year. As in previous years, culture was the main area of investment, with 64% of the funds.
Culture 64% Business promotion 4% Social assistance 11% Training 9% Sport 6% Health 6% Investment by area of intervention, in percentage terms Total: 2.77 million euros Investment in programmes of sponsorship and patronage by area of intervention (in euros) Health Culture Sport Training Social assistance Business promotion Total 2009 156,796 1,794,254 158,197 259,242 304,362 101,841 2,774,693 2008 733,474 778,870 134,397 248,108 93,010 89,515 2,077,374

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culture
Inditex collaborates with the promotion of different cultural disciplines. In the field of music, the link of the Inditex Group with Galician cultural organisations such as the Galician Symphony Orchestra and the Association of Friends of the Opera of Coruña, among others, is particularly important and it is collaborating with them in a stable and ongoing manner. One of the innovations for the 2009 financial year is the beginning of collaboration of the Group with the Spanish Royal Academy, an institution whose objective is to watch over the Spanish language, the most solid basis of union of Spanish-speaking countries, where Inditex has a notable presence. In the cultural sphere, Inditex kept up, during 2009, its collaboration with other institutions such as the Carolina Foundation, which promotes cultural relationships and cooperation in educational and scientific matters between Spain and the countries of the Latin American Community of Nations, among others.

health
The Fundación Centro Nacional de Investigaciones Cardiovasculares (Fundación Pro-CNIC) is the main beneficiary of the contributions of Inditex in the field of health. The Group has been a member of the trust of this foundation since its creation in December 2005 and is involved together with another fourteen Spanish private companies in the fight against cardiovascular diseases. The CNIC, under the chairmanship of the cardiologist, Valentín Fuster, is an institution which covers all of Spain and is attached to the Instituto de Salud Carlos III, whose mission is to be an international point of reference in research into cardiovascular diseases, the primary cause of death in Spain with over 120,000 deaths annually. In 2009, the contribution of Inditex to health institutions was completed with support for a training project of the Complexo Hospitalario Universitario A Coruña.

training and business promotion
Inditex completes its investment in sponsorship and patronage by participating in numerous educational programmes which serve as a link between university and the business world, with the aim of bringing these two areas together as they are those which can give a boost to the development of the business fabric.

Sport
With its stable link to basic-level sport in Galicia, Inditex contributes to the promotion and assurance of sports activities among the youngest members of society in sports activities such as basketball, handball, football and hockey.

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Social investment consolidated by year and project
Social investment consolidated by year Project Type (Data in euros) Community development Collaborating organisation Entreculturas-Fe y Alegría Argentina Brazil Peru Venezuela Chile Guatemala Honduras Haiti Nicaragua Panama El Salvador Latin Américan regional project Cambodia Mali Burkina Faso 2009 162,634 157,865 788,090 262,665 29,197 24,742 24,749 17,684 24,749 24,749 24,749 158,157 270,416 297,000 188,696 137,592 2,593,734 Sudan Burundi Malawi Central African Republic Colombia, Ecuador, Panama, Venezuela Grecee Morocco Somalia 403,340 483,587 354,370 260,703 333,334 400,000 300,000 300,000 2,835,334 1,794,254 158,197 259,242 101,841 156,796 304,362 2,774,693 8,203,761 200,000 2,000,000 2,200,000 10,403,761 2008 168,291 167,602 756,786 439,676 60,080 19,572 18,567 16,835 19,073 19,073 19,073 195,372 237,679 297,000 188,696 137,592 2,760,967 278,000 367,000 242,000 113,000 -

Cáritas Internacional

Carolina Foundation Total community development Monitoring programmes JRS Internacional

JRS LAC MSF

Total programmes in refugee camps Sponsorship and patronage Culture Sport Training Business promotion Health Social assistance Total sponsorship Total (*) Emergencies Sumatra earthquake (Indonesia) Haiti earthquake Earthquake in Ica (Peru) Spectrum (Bangladesh) Sichuan earthquake (China) Total emergencies (**) Total

1,000,000 778,870 134,397 248,108 89,515 733,474 93,010 2,077,374 5,838,341 737,634 77,000 2,236,000 3,050,634 8,888,975

(*) This sum corresponds to the social investment of a recurrent nature, excluding that devoted to emergency programmes, in such a manner that the comparison between financial years is homogeneous. (**) Given the non-recurrent nature of the social investment linked to emergencies, its comparative evolution is offered independently.

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company cash flow
(millions of Euros) Net cash received for sale of products and services Flow received from investments made Cash received for sales of assets Total value-added flow 2009 Financial Year 11,084 8 10 11,101 2008 Financial Year 10,407 17 1 10,425

Distribution of value-added flow Employee wages Tax payments Financial debt return Dividends paid out to shareholders Corporate social investment Cash withheld for future growth External payments made outside the group for purchasing goods, raw materials and services Payments made for investments in new productive assets Total distribution of value-added flow 1,792 391 197 662 10 953 6,587 510 11,101 1,703 360 155 662 9 20 6,579 937 10,425

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H
2009 2008 2007 2006 2005 2004 2003 2002

uman resources

In 2009 3,189 people joined Inditex, making 92,301 employees at year end. Inditex has a marked multicultural and multiracial nature. The more than 140 nationalities working together on a daily basis at stores as well as offices and logistics platforms make freedom and respect for difference the basis for Group corporate culture.
Change in number of employees over time 92,301 89,112 79,517 69,240 58,190 47,066 39,179 32,535

Stores are Inditex’s primary activity centre, and as such the main employment engine of the company. They represent 87.4 % of the Group’s employees.
Employees by activity Central Services 5.5% Manufacturing 1.3% Logistics 5.9%

Stores 87.4%

2009

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Inditex is comprised of 92,301 people that share initiative, enthusiasm, and optimism in their day to day activities

The spirit of freedom and respect for the Inditex culture is present in all areas and activities. But, in addition, the people that make up this company have common characteristics. - They are self-critical. - They are always exploring simple practical new solutions to problems. - They like what they do. - They enjoy commitment. - There are flexible and adaptable. - They are different and they are free. The people of Inditex like freedom and common sense; they like to try and make mistakes and try again and improve.

1. Shiori morita ginza manager marronnier tokyo (Japan)

2. miguel garea group leader Zara logistics arteixo (Spain)

What is Zara’s customer in Japan like? Zara’s clients in Japan love fashion and know that they can always find what they are looking for in our stores, from the trendiest to the basic quality garment. They demand a high-level of customer service, meaning that in the stores we always try to give them the best service possible. They don’t come just to find clothes, they also enjoy the Zara shopping experience. What is the store day-to-day routine like? Before we open we go over general store coordination. Fifteen minutes before opening we have a team meeting to talk about the day’s organisation and to remind ourselves of basic points of customer service. Once open, my role as manager is to make sure that everything goes smoothly, to organise orders and maintain constant communication with the design and commercial teams, as well as to be available to customers.

What was Inditex like when you started working for the company? I started working at the company in 1997 when obviously, it was much smaller. The logistics centre was smaller and many work areas that we have now scarcely existed. I always remember when we came to Japan in 1998. It was then we really saw the spectacular growth of the company. The tremendous success, especially in the logistics area, was always due to team work and the dedication of all employees. What role do logistics play in the Inditex business model? All the departments are important, but logistics are key for serving the stores. We can place products in any store in the world in barely 48 hours. The teams clearly understand that fast efficient service to the stores is of utmost important. Don’t forget that distribution is the last link in getting clothing to the store.

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3. andrew Brown
Salesperson at Zara 5th ave. - 42nd St. new york (USa)

4. moira chiarelli
Stradivarius Stores management milan (italy)

5. maria mendes
Uterqüe designer arteixo (Spain)

Is there much communication between the Zara stores and design teams? Yes, its constant and very fruitful. In the last few days several clients asked for one of the Woman line of jackets we carry in white, in cream. We transmitted a suggestion to the design teams and in two weeks we had the jacket in that colour in the store. Are New York customers more demanding than in other cities? Rather than demanding, New York customers have a lot of criteria and knowledge about fashion. This the city of fashion and consumption of excellence. Customers are very informed regarding changing trends. They know what they want and where to get it.

What are Italian customers like? Our customer is always looking for the fashion component, loves trendy clothes, and has specific somewhat extravagant taste. Customers visit our stores to get a full-blown shopping experience: they pick out clothes to the beat of music and seek advice to achieve a look totally tailored to their demands. What’s the day-to-day routine in the company? My day is a combination of emotions and experiences: being the point of reference for so many people and trying to transmit my enthusiasm is the greatest satisfaction I can have. Working in stores in different cities gives you unique experiences. But the most important thing in our company is the emphasis placed on people, the way that open communication is established, and the constant interaction with colleagues.

What’s it like to participate in the creation of a new chain? Being part of the Uterqüe founding team was an unforgettable experience. Our team spirit is really strong and we are very exacting. Each department plays an active fundamental role. Our direct contact with the stores and the important contributions made by our colleagues that work with the public, make our understanding of customer needs very real. After having had the unique opportunity to see the birth of Uterqüe, we now have the responsibility to make sure that the chain becomes a global standard, and that is very motivating. How would you define Uterqüe? Uterqüe is cosmopolitan and elegant. A complete life style concept and without a doubt, a name in the fashion world. We carefully select our suppliers making sure that the manufacturing quality of our products is very high. We work with the latest trends and interpret them using fine materials and caring for every detail.

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distribution of employees by geographical areas
America 10.3% Asia 4.2%

Rest of Europe 44%

2009

Spain 41.6%

distribution of employees by country
Europe Germany Austria Belgium Croatia Denmark Slovakia Spain France Greece Holland Hungary Ireland Italy Luxembourg Monaco Norway Poland Portugal UK Czech Republic Romania Russia Sweden Switzerland Turkey Ukraine Total 2009 2,995 622 1,109 212 95 113 38,358 5,538 3,143 744 427 663 4,723 72 33 166 2,232 5,219 3,772 338 917 4,027 443 500 2,079 393 78,933 Europe America Asia-Pacific Total 2009 78,934 9,520 3,848 92,301 Asia-Pacific China South Korea Japan Total 2009 1,788 401 1,659 3,848 America Argentina Brazil Canada Chile USA Mexico Puerto Rico Uruguay Total 2009 564 1,540 832 628 2,200 3,488 86 182 9,520

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Social commitment

Equality, diversity and reconciliation

Health and safety

People in inditex

Labour policy

Compensation policy

Training

Personal and professional development

Internal promotion

Personal and professional development training The Inditex Group views training and internal promotion of its people as key to its activities. Its business model requires continuous innovation and team work. To maintain this environment, the Group’s personnel management policy encourages promotion from within, training and development, performance evaluation and constant adaptation of the business. In support of this ideal, internal training plans are adapted to the needs of the Group’s employees depending on their jobs, and are by nature diverse: • Orientation for new employees • Team management. • Languages • Information systems • New technologies • Individual training plans • Store management systems. • Training in products, raw materials, and collection presentation.

in store
More than 80% of the Inditex training budget targets store personnel. They are the largest teams and are in direct contact with the customer. The most frequent training activity for these groups is the orientation of new employees joining the Group. Their training continues via the Store Management terminal (TGT) and courses on preventing occupational hazards among others. In store training programmes have a particularly practical focus. The management of in-store teams got a qualitative boost in 2009 with the in-store implementation Human Resource management modules in the TGT, the computer terminal which acts as a channel of communication between the stores and corporate areas. These modules offer the heads of the stores the most suitable tools for the daily management of the shop, including the organisation of the staff, their performance and their training needs. The TGT has been operative since 2009 in all Inditex stores around the world.

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In order to provide guidelines and guarantee the quality and standardisation of job training, instructional materials including guides, advice, periodic evaluations, and more were developed to help both trainers and learners. Among these materials, the chains’ store organisation manuals are particularly important and are constantly updated. The manuals include detailed information on all aspects of the in-store work, such as human resources, activity at the till, the environment, or detailed information on the chain and the Group. All the store managers have the manuals available for use by the employees in any concrete situation.

internal promotion
Talent management is a strategic value at all Inditex corporate levels, from the store to corporate positions. From its beginnings, the Group has encouraged the creation of suitable working environments so that employees can develop their professional abilities and grow within the company. Indeed, the vast majority of store managers began as store assistants in Inditex. This is an example of the Group’s team management which is used to evaluate the performance of each responsibility for each position, as well as the appropriate attitudes for getting the best results.

in classroom
Here is an example of this policy. During 2009, 554 Classroom training programmes, primarily for languages and data processing, are another of the Group’s large training blocks designed to improve the work skills of employees. Continuing with the trend of prior years, nearly a million hours of classroom training were carried out in 2009. The materials taught on each course varied according to the nature of the activity of each professional and the specific vocabulary required. Apart from specific training according to the professional activity performed by each employee, Inditex offers general courses in corporate social responsibility, the environment and occupational hazard prevention policies either on-line or through personally-attended courses. shop assistants were promoted to different positions of responsibility within the stores or to positions of responsibility within the structure of Zara Spain, while another 331 people, also from the stores, took on positions of responsibility in the offices of other chains or with Inditex central services. In general about 10% of the Inditex staff, primarily from stores, are promoted from within each year. Each business unit at Inditex sets down its own lines of activity in terms of staff motivation and on the basis of the characteristics of their activity or geographical location, with the result that it is very normal to find policies and projects whose sphere of action is local and is conducted wholly by the teams of that business unit. If the result of that policy is satisfactory, it is transferred to the global ambit of the company. In practice, these lines of action constitute a true value within the Group, which grants great autonomy and freedom of action to its different teams.

logistics, design, commercial and corporate areas
In addition to general training courses, Inditex has personalised training programmes for both new employees and those that need updated training at specific times due to job requirements. These programmes, designed jointly by the Human Resources Department and the direct superior of the new employee, include a period of in-store training, the core of Inditex’s activity and the leading figure in its business culture and model. During 2009 the directors of the various Inditex affiliates participated in a training programme designed to deepen the skills and responsibilities of the position.

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equality, diversity and reconciliation
Inditex is made up of 92,301 people with 140 nationalities. The staff is 81.4% women and 18.6% men. At Inditex, men and women compete equally for opportunities in the recruitment processes, and apply for internal promotion based on the same criteria for assessment, development, talent and dedication to their work. employees by gender
Male 18.6%

The number of women at management level corresponds to the percentage of women on staff (more than 80%)
Inditex has an explicit commitment to equality and non-discrimination. The commitment to both vertical and horizontal equality was endorsed in 2006 with the ratification of the Equal project, Active Diversity, co-financed by the European Commission and with its social responsibility activities managed by the Spanish Coordinator from the Women’s European Lobby and the Carolina Foundation which promote the implementation of measures for reducing inequalities between men and women in businesses. Finally, the approval of a performance protocol against possible gender discrimination and sexual harassment by the Group’s management should be emphasised. Using this protocol any employee may begin an internal investigation procedure with the aim of establishing the facts and deal with any possible responsibilities. Inditex made a significant effort to incorporate equality programmes in the Group companies during 2009. The programmes include measures favouring reconciliation between work and family life, such as facilities for reincorporation of women after pregnancy leave and corresponding measures for paternity, ways to adjust work days to school calendars, social assistance and others. Follow-up of the equality programmes was created by a commission that analyzes their application and their results.

Female 81.4%

2009

Male 19.6%

Female 80.4%

2008

employees by gender in each commercial format (%) in 2009
Zara Pull and Bear Massimo Dutti Bershka Stradivarius Oysho Zara Home Uterqüe 0 25% 50% 75% 100%

Female

Male

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During the year equality programmes were signed at Zara Logística, joining the 2008 signatures for the Zaragoza logistics centre and the manufacturing centres at Arteixo and Narón (A Coruña). Likewise, situation diagnostics were agreed by the Meca (Madrid) logistics centre and the Bershka and Massimo Dutti centres in Tordera (Barcelona).

labour policy
In 2009, the number of part-time employees, as opposed to full-time, increased slightly to 60% of the workforce. This shows that more workers are choosing this formula in order to combine work with studies or family. One of

Acknowledgment through the incorporation of measures and policies aimed at equal opportunities within Inditex
Group activities in this area have been recognised by the Social Action Council of the Zaragoza city government. In 2009, it awarded Inditex for the implementation of measures and policies promoting equal opportunity.

the main characteristics of the Inditex business model is flexibility, which is reflected in the human resource policy. The company offers a range of positions with different working hours so as to facilitate, to the extent possible, stable work shifts. employees by type of working day in 2009
Full time 40%

Part time 60%

2009

Full time 41%

Part time 59%

2008

On the other hand, Inditex is making a commitment to the creation of stable employment. In 2009, the ratio of permanent contracts remained stable with respect to 2008 and represents 79% of the total.
Staff structure by type of contract in 2009
Temporary 21%

2009

Indefinite 79%

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Inditex is always working to emphasise reconciliation of work and family life; the protection of pregnant and nursing women, the prevention of occupational hazards during pregnancy, compatibility of part-time work and caring for younger children and older dependent people or extended periods of leave for the same reasons.

compensation policy
All the areas of Group activity, independently of their direct or indirect relationship with the store, are aimed at responding to the demands of the customers. This means that, apart from the variable part of the salary associated with sales for store employees, those who work in logistics and production also have elements of pay linked with productivity and a large number of jobs in the corporate structure also have a variable component to their salary. Within the variable pay policy of the employees of the central services, new criteria have been set for fixing objectives. All positions will have: - Part of the variable portion with specific common

Inditex and UNI Global Union sign global deal to guarantee workers’ rights
In 2009 Inditex took a qualitative step in this area by signing a Global Agreement with the UNI Global Union, formally committing its collaboration for guaranteeing workers rights and sustainable growth of the company. This agreement assures that essential workers rights and labour regulations are protected through social dialogue with the managers of Inditex in each of the countries where the Group operates. The agreement supports the fundamental workers rights laid out in the International Labour Organisation Conventions.

objectives. - Part of the variable portion may be for specific area and project objectives as chosen by managers.
Staffing costs (in thousands of euro) Fixed and variable salaries Social security contributions by Inditex Total staffing costs

2009 1,461,952 329,680 1,791,632

2008 1,389,177 314,010 1,703,187

Var. % 5.2% 5% 5.2%

Several variable compensation programmes and services with advantageous conditions for employees were put in place by Inditex in 2009.

Social dialogue
Respect for the freedom of labour unions and dialogue are key aspects of Inditex social policy. In 2009 the company agreements in Spain were maintained in the logistics centres of Massimo Dutti and Bershka in Tordera (Barcelona), Zara Home in Meco (Madrid), and at the logistics platform in Zaragoza, having the same social representation as in 2008.

health and safety
The occupational hazard prevention organisational chart for 2009 continued being integrated and extended with the incorporation of two experts in Alicante and Barcelona and training of 115 basic technicians.
Agreement signature in October 2nd 2009.

In addition, the following actions were taken throughout the year:

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1. training activities
- Online training regarding occupational hazards in stores and offices for 17,000 Inditex Spain employees. - Prevention Week: On-site training at Massimo Dutti Spain, Zara Spain, and Zara Home Spain regarding occupational hazards in stores. - Organisation and execution of evacuation drills for 4,500 store employees and 1,500 employees a logistics centres. - Training activities for “Back Care and Relaxation” at logistics and manufacturing centre offices. - Training of maintenance teams at the logistics centres for Bershka, Oysho, Zara, Pull and Bear and Stradivarius. - Training for using electric pallet transports at manufacturing plants.

- Implementation of a store visit checklist for Store and Human Resources Management at Zara Home Spain and Pull and Bear Spain.. - Training programme in “Functions for managing the PRL of managers” at Zara Home Spain, Uterqüe Spain, Zara Spain, Massimo Dutti Spain, and Pull and Bear Spain. - Communication campaign regarding work conditions for minors and pregnant women at Massimo Dutti Spain and Bershka Spain.

5. international area
- Implementation of TGT based occupational hazard prevention management systems in Great Britain, Italy, Portugal, the Netherlands, Sweden, Norway, and Denmark. - Translation of the PRL training module to Italian and Portuguese in offices and implementation in all chains of the Group in the United Kingdom, Italy, Portugal, the Netherlands, Sweden, Norway, and Denmark. - Creation of an Occupational Hazard Prevention area on all Store Management Terminals (TGTs) making PRL information available. - Translation and implementation of the online training

2. type a flu campaign
Communication campaigns for Type A Flu were developed for all work centres in the world. They included a management protocol and delivery of preventative material.

3. health and safety studies
- Preliminary and research studies for implementing OHSAS 18001 at the Zaragoza logistics centre. - Electrostatic studies, specific ergonomic and

module at in-store workstations in Italy and Portugal. - Creation of the Safety Champions figure for all work centres in the United Kingdom and Ireland as internal monitoring resources for compliance with hazard prevention policies. - Internal communications campaign regarding work safety in Italy.

psychosocial evaluations at work centres. - Written procedures for job rotation in manufacturing and logistics centres. - Emergency procedures for 130 stores and four logistics centres, as well as participation in the plans for thirty shopping centres. An action diagram for emergencies was implemented in 1,900 stores in all of the Group chains.

4. Other projects that were carried out
- Implementation of a specific area for occupational hazard through the TGT in all Group stores. This is to make sure that all management operations are available.

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Social commitment
All of the activities that the Inditex Group launches with its teams in the area of Human Resources are topped-off by corporate alignment with society. In addition to the Corporate Social Responsibility activities carried out by the Group, the people that comprise Inditex show constant dedication by proposing and participating in many voluntary social activities. Here are some examples of activities that Inditex people have led and promoted in 2009:

recruiting erasmus
As an international company Inditex emphasises the professional value of people with world concerns and participates in the Recruiting Erasmus programme. This PeopleMatters initiative gives Spanish students doing studies abroad and foreign students studying in Spain the opportunity to work with collaborators in the project, such

Projet jeunes, solidarity programme
Zara France, in collaboration with Force Ouvrière, launched the Projet Jeunes solidarity programme in 2008 for the purpose of giving job opportunities to young people from disadvantaged neighbourhoods in the Paris metropolitan area. The young people received five weeks of theoretical, personal, and practical training in preparation for joining the workforce. At the end of 2009 Zara France had given five courses of the programme to a total of 70 young people, 42 of which are now permanent full-time members of the Zara store team.

as Inditex.

Other solidarity initiatives
Tempe, the Inditex footwear and accessories centre in Elche (Alicante) has been carrying out corporate voluntary activities for several years. These programmes are developed by employees with regional social organisations like the Alicante Association for the Mentally Ill among others, or Valencian Community institutions. They focus on different solidarity activities like donating food or footwear, or organising sports activities. In 2009, Tempe launched a solidarity scholarship programme for the participation of employees in Inditex Peru projects, together with the Intercultural institution. Additionally, during the year the different Inditex work centres (central offices or chain offices and logistic centres) have launched different social activities like solidarity markets.

internal motivation
During FY2009, Inditex has set in train a number of internal initiatives revolving around employees’ motivation, among which, a number of benefit programs for employees involving IT or health services, inter alia, must be pointed out. Other family actions may be underscored, such as organised visits to the work centres and a Christmas party for the children of the employees in the different work places.

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he environmental dimension

meeting a tremendous challenge: integrating sustainability into the business model
The environmental variable is key in the global strategy of Inditex. Conscious that it operates on a global scale with economic, social and environmental implications, Inditex works to reconcile economic growth and respect for the communities where it does business with protecting the environment. In 2006 Inditex launched its Environmental Strategy Plan 2007-2010 (PEMA 2007-2010) with the intent of integrating the environmental variable into all of its business processes. At the time, the Group was aware of the difficulty of involving all teams and getting them to think of sustainability as a strategic concept, particularly in view of the company’s rapid growth and the inertia behind it. Now, a year before PEMA ends, Inditex has met the challenge: Sustainability is one more component of the business model. The effort from all the teams enabled us to go further than just meeting specific objectives or taking particular action. The sustainability variable has been incorporated into planning and decision making for areas key to the

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Inditex model such as stores, logistics, fashion design and manufacture, and teams of people in general. During 2009, the group saw important progress regarding environmental issues in all its operational areas, progress supported by the advances made in previous years. For the commercial area the design process and launch of new store models integrate sustainability at this stage, guaranteeing compliance during execution. In the case of logistics, 70% of the fleet of vehicles providing service to Zara comply with the Euro5 standard, the most rigorous standard in place regarding motor vehicle emissions, and the remaining 30% comply with Euro4. With respect to product, primarily in the footwear area, designers have a tool for rating the ecological footprint of a particular article. The information is used to make decisions regarding materials and production processes, developing products that are more sustainable throughout their life cycle. These are some of the lines that have been followed during 2009 within the PEMA framework. Planned objectives were reached and environmental efficiency and CO2 emission reduction indicators improved. This is described in the following pages. The Environmental Strategy Plan emerged after a review of all areas involved in the business model’s processes in terms of efficiency and the environment. It assumes the following commitments: • To achieve 50% usage of renewable or high-efficiency energy sources in the logistics centres and head offices of the chains. • To reduce CO2 emissions associated with distribution by road by 20% based on the Group emissions in 2005. • To reduce the electricity consumption in stores built from 2008 onwards by 20%, based on consumption in stores operating in 2005. In order to achieve these ambitious goals, PEMA is organised in five large programmes designed for each one of the Group’s productive areas:

inditex lines of action corporate office and factories

environmental projects integrated into every business area

iema
Energy integration with environmental criteria

Product

ecological footprint
Footwear and textile life cycle

logistics

inditex Pro Kyoto
Sustainable mobility

3S
Store
Sustainable store

terra
Society
Compensating for emissions

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Environmental dimension

impact area
Central headquarters, headquarters of the chains, factories and logistical centres

description
Integration of efficient energy consumption variables, renewable energies sources, and atmospheric emissions into a single management model.

2009 activities
Energy efficiency programmes in the logistics centres. Installation of cogeneration plants at the Meco (Madrid) and Palafolls (Barcelona) logistic platforms.

2010 Objectives
Development of an energy web page. Implementation of photovoltaic installations in Meco (Madrid) and Palafolls (Barcelona).

Product

Analysis of garment manufacturing variables that affect the environment in order to design a production evaluation tool with sustainable criteria.

- Finalisation of the project, making available to footwear designers a tool incorporating ecological criteria into the design.

Design and manufacture of the first ecological footwear.

Transport and logistics

Control and reduction of indirect greenhouse gas emissions (GHG) generated by logistical activity. Develop compensation mechanisms for GHG emissions. Integration of energy sustainability and efficiency criteria in all the Group’s stores.

Finalisation of the Sustainable Mobility Plan for employees, customers and logistics.

Implementationn of the Sustainable Mobility Plan for employees, customers and logistics. Efficient driving training for professional drivers.

Stores

- Progressive implementation of the eco-efficient store model, adapting it to the characteristics of the location as Inditex stores are expanded, . Reduction of 1% in the emissions of greenhouse gases associated with stores. Opening of a Zara store conforming to LEED criteria. Continuation of the collaboration agreement between the Galician Government and Inditex for creating new nurseries of suitable forest seeds in Carboeiro and O Seixo in A Coruña (Spain). Inditex commitment to the 2009 edition of “The Earth Hour”, an initiative promoted by the WWF for raising society’s awareness of the importance of the fight to prevent climate change. Collaboration of Oysho with the WWF in a campaign to raise awareness of protecting the oceans.

Continuation of progressive implementation of the eco-efficient store model, adapting it to the characteristics of the location as Inditex stores are expanded. Plan for adapting existing stores to the Inditex eco-efficiency model.

Society

Planting of the forests necessary to absorb 100% of the CO2 generated by the Inditex central services in Arteixo (A Coruña).

Continuation of the collaboration agreement between the Galician Government and Inditex for creating new nurseries of forest seeds. Inditex commitment to the 2010 edition the “Earth Hour” initiative promoted by WWF. New projects for reducing CO2.

PEMA will be concluded in 2010, finishing the development and implementation of pilot projects and preparing material documenting these best practices so that they can be spread throughout all the chains in the Group.

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Objectives 2010
Planned completion of construction at Palafolls and Meco in June 2010. Development of an energy web page. Implementation of photovoltaic installations in Meco (Madrid) and Palafolls (Barcelona).

IEMA Project energy integration using environmental criteria
The purpose of this project is the application of eco-innovation to energy consumption management. It involves the integration of efficient energy consumption variables, renewable energy sources, atmospheric emissions and climate change within a single management model that will allow for control and coordinated decision making for all of them.

Strategic objectives
- Overall optimization and minimisation of energy consumption, particularly reduction of fossil fuel consumption (diesel). - Minimisation of direct and indirect emissions of greenhouse gases generated by company operations. Development of for mechanisms greenhouse for gas

compensating emissions.

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Environmental dimension

2009 activities energy efficiency plans for the logistics centres in meco (madrid), león and Palafolls (Barcelona)
The plans include installation of lighting control systems. These technologies are emphasised: • Lighting timers that can be activated for 10 minutes with a button. • Lighting programmes with remote control that can activate and deactivate lighting in function with the time and type of zone.

energy exploitation in the Palafolls and meco plants
PEMA 2007-2010 compliance: an agreement with Cummins Power Generation was signed for the construction of energy generation plants through cogeneration in the Palafolls (Barcelona) and Meco (Madrid) logistics centres. The agreement is for long-term exploitation, including thermal and refrigeration energy transfer. The plants will cover 230,000 square meters and will have the latest generation of engines powered by C995 N5D natural gas. Each of the engines will produce 996Kw of electricity, capable of providing the logistics centres with basic heat and air-conditioning.

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Objectives 2010
Design and manufacture of the first ecological footwear.

Ecological footprint project analysis of textiles and footwear life cycles
The project analyses and defines the main variables that influence the environment in the manufacture of the garments and footwear, and presents the design of a simplified analysis tool enabling consistent evaluation of production with sustainability criteria. This analysis will include criteria about the efficiency of the consumption of production resources, use of harmful substances and optimisation of production processes.

2009 activities
Development of an ecological shoe taking into account environmental impact at all stages of the life cycle of the shoe: raw materials, design, manufacture, and recycle. During project development an environmental impact study of shoe production processes was made for all stages of the life cycle, developing and testing the tools that enable us to make the analysis.

analysis of the life cycle
Production Process evaluation
An exhaustive analysis of the shoe production process was done, localizing energy and raw materials. The analysis allowed for gathering energy consumption data for each phase of production, identifying critical points where energy efficiency methods can be applied.

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Environmental dimension

developing a specific methodology
A calculation methodology was developed from the data and the shoe production analysis. It integrates the three best known eco-design tools: Ecological Footprint (EF), Carbon Footprint (CF), Environmental Risk Assessment (ERA). This enables us to obtain a unique Eco-design index indicating the degree of environmental impact of the shoe analyzed.

‘tempe ecofootdesign’ tool

the ecological shoe

The tool uses the information regarding The TempeEcoFootDesign computerized tool has been developed. It enables the designer to easily obtain an indicator showing the degree of impact on the environment from the composition of the shoe and as such creates the most environmentally friendly shoe designs. harmful substances provided by the Inditex specific product health standard, Clear

to Wear, and information from analysis of the model being studied. Analyzing developed models, the tool provides knowledge regarding what materials are more environmentally friendly and where to focus design of the footwear.

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Objectives 2010
Implementation of the Sustainable Mobility Plan for employees, customers and logistics. The pilot test for cities will be progressively broadened in the international area and will be available for customers on the web sites of each of the Group chains. Professional driver training in efficient driving, including the joint training plan with Mercedes-Benz Spain and several logistics operators.

Inditex Project Pro Kyoto 2009 activities
Inditex ProKyoto puts into practice the commitment to sustainability, climate change and the other commitments deriving from the Kyoto Protocol regarding transport and logistics. The ultimate goal of the project is reduction of the CO2 emissions associated with transport and logistics using the following methods: - A 20% reduction in greenhouse gas (GHG) emissions associated with logistics and distribution by 2020. - Sensitising of all company personnel. - Promotion of sustainable mobility among employees, customers, and logistics. Implementation of the Sustainable Mobility Plan was completed in 2009. It was initiated in previous years to pursue the reduction of CO2 emissions. The activities established for this area are set out in the “Focus on Completely Sustainable Mobility” manual. The content of the manual is intended for employees and logistics professionals with the purpose of informing them, training them, and making them aware of sustainable mobility and the behaviours and measures they can take to that end.

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Environmental dimension

+

+

=

-CO2

1.- employees and sustainable mobility
In 2009 several proposals and solutions to facilitate easy and ecological daily commuting for employees were developed. The “Focus on Completely Sustainable Mobility” manual includes best practices for personal travel with advice about sustainable transport and efficient driving. The plan contemplates, among other things, the use of public transport, transport pooling, and bicycles. Specifically, online web tools were developed for Inditex Group employees which facilitate and promote sustainable mobility. These are some of the web applications:
Carpooling site

Ecological transport

Web

application

showing

users

the

advantageous of using public transport and bicycles as opposed to individual cars. The application gives interactive advice for efficient environmentally friendly driving as well as recommendations for a safer healthier life.

2.- clients and sustainable mobility
Customers can get information about using public transportation and the benefits provided to the city and society in general by using the web application “Find your eco-route to Inditex”. It improves the image of the city, saves on trips, reduces accidents, reduces energy consumption and emission contaminants, and improves quality of life. The application shows the geographic location of stores, public transport services, public bus stops, underground and train stations, and bicycle parking near the store locations in different Spanish cities. In addition links are provided for those cities where the government makes available online public transport route searches. A pilot test was made of the application for Madrid, A Coruña, and Barcelona during 2009.

Online tools that help people who make the same daily trip and could carx…...

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...of 750 stores around the globe. This seamless system allows UNIQLO to consistently offer its customers high-quality products at reasonable prices. b FAST RETAILING CO., LTD. b UNIQLO(U.K.)LTD. b FAST RETAILING (JIANGSU) APPAREL CO., LTD. b UNIQLO USA, Inc. b FRL Korea Co., Ltd. b UNIQLO HONG KONG, LIMITED b G.U. CO., LTD. b CABIN CO., LTD. (Listed on First Section of the TSE) b Créations Nelson S.A.S. b COMPTOIR DES COTONNIERS JAPAN CO., LTD. b PETIT VEHICULE S.A. b ONEZONE CORPORATION b ASPESI Japan Co., Ltd. b LINK THEORY HOLDINGS CO.,LTD. (Listed on TSE Mothers, Equity-method affiliate) b VIEWCOMPANY CO.,LTD. (Listed on JASDAQ Securities Exchange, Equity-method affiliate) FAST RETAILING ANNUAL REPORT 2006 13 The UNIQLO Business Overview of the UNIQLO Business In Japan’s highly competitive retail market, UNIQLO has positioned large-format stores as its growth driver and is accelerating their opening. Overseas, UNIQLO is carrying on its campaign to become a global brand and opened its first flagship store in New York’s Soho district in 2006. Market Environment In the Japanese economy over the past year, corporate profitability and consumer confidence have improved, but expenditures on apparel have remained sluggish. According to government surveys, consumption expenditures per household for the one-year period to August 2006 were 1.6% lower than for the previous year, while expenditures on apparel were 2.8%......

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Annual Report

...Note to the user: This Word document provides a structured template for preparing your responses to the questions in the annual report project. If you did not purchase the workbook you are not permitted to use this template. INTRODUCTION TO THE CORPORATE ANNUAL REPORT: A Business Application with IFRS Content 3rd edition Copyright 2011 by Applied Accounting Analytics. All rights reserved. Reproduction or translation of this book beyond that permitted by the applicable copyright law without Applied Accounting Analytics’ permission is prohibited. Requests for permission to reprint or for further information should be directed to bstanko@luc.edu or tzeller@luc.edu. ISBN: 978-0-9841839-2-0 To be completed by the student and submitted with the completed annual report project according to your instructor’s requirements. Complete the following before you submit your assignment. This step is required to validate your compliance with sections 107 or 108 of the 1976 United States Copyright Act.  1. Remove the front cover of the workbook and identify: Student Name: Wesley Franklin | Term: First Term |   Selected Company: Pepsico | Instructor: Brandy Havens | 2. Print your completed electronic template.   3. Attach the following: * This page completed with all required information. * Completed Word template. Template boxes expand as you input responses. Adjust page breaks as necessary to submit a professional......

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