4. Information and Communication

The External Reporting area within the Planning and Management Control department is responsible for drafting, publishing, implementing and updating the Manual of Accounting Policies of the Group. Such area has, among others, the following duties associated with accounting policies:

• Defining the accounting treatment of the transactions which make up the business of the Group.
• Defining and updating the accounting practices of the Group.
• Addressing accounting doubts raised by any company of the Group.
• Standardizing the accounting practices of the Group.

Such manual covers the different transactions inherent in the Groups’ business and their accounting treatment in accordance with the Inditex Group’s benchmark accounting framework.

The manual is regularly updated. In such updating procedure, the Consolidation and Reporting area includes all accounting changes arisen during the financial year which were advanced to those in charge of drafting the financial statements.

The manual and the remaining documentation are available on the INET portal.

The process for consolidation and preparation of consolidated financial statements is centralized, falling on the External Reporting area which reports to the Planning and Management Control Department.

The Group relies on IT systems for the drafting of financial information of individual companies, and this allows, on the one hand, the automatic recording of the different transactions, with the standard configuration of individual financial statements of each company within the Group, and provides on the other the information required to draft the consolidated financial statements.

In this respect, for the purposes of reporting financial information, the subsidiaries of the Group use SAP BPC tool wherein the individual financial statements are automatically included. Contemporaneously, transactions and inter-group balances are reconciled through another IT tool. The remaining part of the consolidation process (elimination, adjustment, etc.,) is carried out through SAP BPC.

Financial information reported to CNMV is drafted based upon consolidated financial statements gathered through the above referred tool, and based upon certain supplementary information reported by the subsidiaries, required to prepare the annual/half-year report. Contemporaneously, certain specific controls are exerted to confirm integrity of such information.