Industria de Diseño Textil, S.A. (ITX) Earnings Call Transcript & Summary

Good morning. Once again, I would like to wish a very good morning to all of you. I started my comments at this meeting by remembering the people who suffered the consequences of coronavirus, and I would like to start my address by recognizing the works of the people who are part of our group, the Inditex group across all the different countries in the world. I want to recognize their hard work, and I want to thank them for their behavior in the last few months because, as you will have heard, the most important asset that our company has is the dedication of the people who are part of this group. In my brief presentation, I will be discussing 4 different topics, apart from making some general reflections on the most significant elements of our company from a strategic point of view. I will refer to FY 2019, the accounts of which are going to be approved at this AGM. 2019 was a very robust year, where company's business model was demonstrated. I'm also going to be referring to 2020 which is being heavily influenced by the pandemic, and I will also speak about the 2022 horizon. And I will also make a reference in the last part of my comments to the most significant aspects to do with sustainability. I would like to start by saying in terms of the current situation of the company, I would like to say that we're still developing our long-term strategy, which we implemented in 2012. This is a strategy that is based on 3 concepts: the concept of flexibility, full integration between the brick-and-mortar and the digital world and the concept of sustainability. For us, these ideas are key. Flexibility is something that's inherent in our business model from the creation of our company. This flexibility, what it means is our capacity to react, our capacity to adapt to the circumstances around us. Flexibility across all different aspects, managing our company, full integration between the brick-and-mortar and digital world, since we started with online sales, for us, this concept has been clear. This full integration between the brick-and-mortar and the digital world has always been something very, very important since we started with online sales. Integration across all different areas, and this has been all possible also thanks to the significant investments that we have made, over EUR 2.5 billion invested in technology and over EUR 10 billion invested in total since 2012. Also in the transformation of our stores in order to make this integration between the physical and the digital world possible. And of course, technology plays a very important role. Technology is crucial in order to be able to have this full integration between brick-and-mortar and digital. And the latest example is, of course, the integration of stocks, being able to offer all our store customers our online stock and offer our brick-and-mortar customers all our online stock. I will refer to 2019. 2019 was a very good year for us. We had a very solid performance in terms of like-for-like sales, and this shows the health of the business. Like-for-like sales grew by 6.5% in 2019, which shows how strong our business model is, how strong our strategy is, also a very strong financial position, which allows us to combine investment in the future growth of the business, which has always been our priority, with the cash generation and an attractive and sustainable dividend payout policy. And online sales grew by 23% over 2019. This slide shows you the main magnitudes of our P&L. You see that net sales exceeded EUR 28 billion, EBIT exceeded EUR 4.7 billion and net profits exceeded EUR 3.6 billion. So a very robust year, which shows how positive our strategy has been. Our sales grew by 8% in 2019. And if we accumulate the -- or if we add up the growth in the last 5 years, you will see that sales have grown by 56% over the last 5 years, so a very sustained increase. And what is very important in terms of the like-for-like sales growth, 6.6 -- 6.5%, this becomes the figure for the like-for-like sales growth over the last 5 years exceeded 38%. And we also had like-for-like sales growth across all the geographies, across all our formats in the online world and in our brick-and-mortar stores. So a very robust year, 2019 was very robust where -- and this is something I would mentioning just now, we also generated a lot of cash flow. We have generated cash flow. The priority has been to plow back this money and also introduce an attractive dividend payout for this year. In terms of online sales, over the year, it grew by 23%, a very significant growth, reaching almost EUR 4 billion in 2019, accounting for 14% of total sales of the group. Online sales have become very, very important for us with this fully integrated approach, integration between stores and the online operation, and I will come back to this because it's very important. Let me speak briefly about the tax contribution of the company over 2019. In AGMs, I always like to refer to the tax contribution of our company at the [ award ] levels. Over EUR 3 billion have been contributed in direct taxes and over EUR 3.7 billion in indirect taxes collected. In the case of Spain, over EUR 1 billion taxes, an effective rate in the company tax of 22% and specifically, in terms company tax, over EUR 2.2 billion paid in the last 5 years, and this accounts for 2% of the total amount collected in Spain in company tax. I always like to refer to this because the figures are really very significant, both in terms of direct taxes and indirect taxes collected. And in the case of Spain, our tax contribution is very significant because of the headquarter effect because in Spain, since all our teams, all our design teams, all our commercial teams and the headquarters of the different formats are all in Spain. So in addition to our operational profits derived from our stores, you have to add to that since we export products from Spain to the rest of the world as a result of the added value we generate, these exports are made with a very significant margin that goes to Spain. So from the point of view of the overall taxation paid, Spain has a heavier weight than other countries because of the headquarter effect. It has a very strong impact, a very positive impact on the taxes we paid in Spain, and that is why we pay so much taxes in Spain. As I was saying, in 2019, we really made a big bet in this integration between the brick-and-mortar and the digital world. We also took very many strides in the direction of sustainability. And as a company, we feel extremely proud of what we did in 2019. Let me refer briefly to 2020. In the first half of 2020, which is about to come to an end at the end of July for us, this has been very influenced by COVID-19 as we all know. We have -- in April, there were times where almost 90% of our stores in the world were closed. Our collections were very well received by our customers but, unfortunately, as a result of the evolution of the pandemic, we were forced to close our stores in many parts of the world, and this had a very significant impact on the beginning of the year. Online sales did grow very significantly, 50% in the first quarter, February, March and April, and specifically by 95% in April. And we believe that these months have shown the sheer strength, this capacity to react, this capacity to adapt to new circumstances, especially in terms of the relationship, the long-term relationship we're trying to establish with our supply. Later, we were able to gradually open up or were able to open up our stores and, of course, implementing the necessary measures to guarantee the safety of our workers and, obviously, of our customers. At the height of the crisis, the whole company made a big effort to bring medical materials to Spain, 56 cargo planes were freighted to Spain. Face masks, respirators, gloves, all sorts of medical materials, over 150 million units for private, public entities and Inditex, of course, donated its own materials apart from, of course, the medical materials donated by the Amancio Ortega Foundation. So we have harnessed our logistic strength to help the Spanish population weather this crisis in as safe a way as possible. In May, we started to progressively opening our stores in different markets. At Monday -- last Monday, 95 -- 94% of our stores were open. There's still some stores that remain closed in different geographies, but, fortunately, we are moving towards a more normal situation in this first half of the year, which is so badly hit, very badly hit by the lockdown. I was referring to the full integration between our brick-and-mortar stores and our online operation. This is extremely important for us. I've told you how important this concept of full integration is. It's very close to our hearts, I would say, across -- because it affects all the different aspects of our business. It affects our online offering and also our strategy in terms of our brick-and-mortar stores. Nowadays, stores at the online operation are fully integrated in 72 different markets, and the idea is to be able to complete this integration by the end of the year. The latest markets where we have adopted this integrated platform have been Argentina, Uruguay and Paraguay. And in August, we will be doing so in Chile. Little by little, we're going to be doing this across all the markets where we have physical stores. We are going to progressively be incorporating this integrated platform, which allows us, for example, in the case of Argentina, where we only have physical stores in Buenos Aires and Rosario, we have implemented online stores. And 50% of online stores in the country are happening in cities different from Buenos Aires and Rosario. These were probably clients who bought from us when they visited Buenos Aires, Rosario or some other places -- have brought up they couldn't buy our product in their own cities. And now since we have started online sales, they have really taken off. As I say, 50% of sales in Argentina happen outside Buenos Aires and Rosario. And this full integration -- fully integrated approach is a cornerstone of our strategy. In 2019, it's been over 4 billion visits per year. This is a very telling number. Over 10 million per day, visits, hits on our apps, on our website all of the world. So this is the way not only ensuring online sales but also in staying -- keeping in touch with our customers. We have practically 200 million social media followers. And as I say, it's not just a way of selling, it's not just a way of placing the goods in their hands, it's also a very useful way of keeping in touch with our customers in an ongoing way and the different countries in the world show that this is the case. And as a complement to online sales, something that has always been a part of our strategy, which continues to be key is location, location, location. Not only the best locations possible, but also the best possible image of our stores within those locations. There's an ongoing investment in our stores in any country in the world. Soon, in upcoming months, apart from other very relevant openings such as our recent opening of our Pull&Bear in Hague in the Netherlands, which has become a very important element of the format, or the reopening of our Zara in Paris in Pont Neuf, on Rue de Rivoli, which has been completely renewed from an image point of view. But in upcoming months, we want to have other very telling, very important openings. Let me just say, Passeig de Gracia in Barcelona, we have reopened after major, major refurbishment and growth, women and kids, we will in upcoming months be reopening the gentlemen's with an independent, completely independent, store, on the right corner of Passeig de Gracia of the and Gran Via and then another very important event for us this year is going to be our activity in Beijing in October on Wangfujing, which is a pedestrian area, a complete building. This is definitely going to be very, very important for us in Asia. So I repeat, it is this combination of that comprehensive joining of the digital world, the bricks-and-mortar world, investments in the digital world, but also investments in bricks-and-mortar stores. I repeat, the importance of location and I underscore the importance of the look of the brand. As of June, we have launched our 2022 Horizon Investment Plan, EUR 2.7 billion, of which EUR 1 billion goes to boost online sales so as to ensure that it represents more than 25% of sales and then EUR 1.7 billion for in-store investments, of course, but especially for new technology for logistics for a truly integrated platform. We need to think about these investments that have been performed, which, as I said, are in excess of those EUR 10 billion in the past few months. We have pretty well completely refurbished 90% of our services of the world over, of our stores the world over. And we are currently launching an open platform. It's called Inditex Open Platform, our proprietary platform. We believe that this is the best way of growing our online business, and the platform has the characteristics, the flexibility and integration, which are so characteristic for us. It's going to be up and running in 2021, but at this point in time, it's already covering 60% of the online activities under way. It's a beautiful internal in-house project, very ambitious, I know. And as I say, for us, absolutely a must if we are to continue to grow our online presence as we want. And in order to guarantee this individual experience, what we want is for the app to ensure that you have access to the stores, see where the product is, benefit from the advantages of in-store shopping and benefiting also from all of the advantages of online shopping. So as I say, store mode means that you are in the store via the app and you're also bringing with you the Internet world whenever you're in the store. It works both ways. It's important for all of the brands to boost their online sales, so this is going to be important for us. The philosophy. Well, the philosophy is to have an integrated sales network, fully integrated in global terms by 2022, 100% integration. All brands shoppable in 100 markets, all brands shoppable online as of this year with comprehensive integration. As I say, it's the 2022 Horizon. I said at the beginning of my address that, of course, the third very important element for us is the sustainability aspect. Everything that has to do with sustainability matters. We've been addressing this issue for years now, and our first strategic plan was for the years from 2006 to 2010, but we have continued to grow in our ambition. And remember back in 2019, our announcements regarding our very ambitious objectives with everything that has to do with raw material, thinking about 2025. In 2020, we have a very ambitious objective, which is that 25% of our garments be cataloged as Join Life. These are garments that, either because of the materials used or because of the manufacturing process, have some specificities regarding sustainability which are truly, truly loved. And of course, we are fully aligned to making good on this objectives. 25% of our garments will be duly labeled as Join Life. And actually, the garment provides an explanation as to what the features are of these Join Life elements. Something else which is very important is zero discharge commitment. There's 3 projects which are very relevant. One is the list by Inditex. I apologize, by the way, for all of this nomenclature being in English, but these are international global projects. We have partners from all over the world, and we, of course, address them in English. But the list, very straightforward in Spanish, the list -- we're very proud of this project. We've developed it with all of the companies in the chemicals sector whom we work with, and this actually determines what substances may or may not be added to the chemicals that are used in the manufacturing and production of the textiles. And this actually is spelling a global transformation in sectorial terms for the kind of chemicals that are used in order to ensure that no harm is caused to the environment. And then we have Ready to Manufacture, also Green to Wear, which has to do with water management. As I say, our sustainability policy and our zero discharge pledge is very important when we think about our production change. We work shoulder to shoulder with our suppliers because we want zero discharges, and all of us agree on the importance of sustainability. And then waste. Waste, which of course results from our activities, the idea of recovering and recycling everything. The cardboard, the hangers, the wrapping, of course also when we cut the garments. We're very far advanced in achieving zero waste. We do not want any of the waste to go to landfills. And then packaging, as of this year, no more plastic bags are going to be used by the Inditex Group. We will be no longer using single-use plastics by 2023 and, of course, we will be recycling the cardboard. And within this circular economy, reusing, reusing and recycling our products. We have collected in '19, over 60,000 tons of garments. If you remember, in more and more stores, we encourage our customers when they order online. We have agreements with NGOs, and they can actually hand over in those special containers which we have. The garments can go to different recovery elements. This also creates jobs located in Spain. We work with Caritas and this is important in terms of social employment. And then everything that we're doing in the field of recycling, we're focusing more and more. And we have an agreement actually with the MIT, the Massachusetts entity. We, together with them, select projects that have been in turn worked upon with Spanish universities, and this has to do with recycling. Recycling has got to be increasingly important. Recycling of the textiles which we use. And of course, we pay close attention to decarbonization. We're committed to energy efficiency. We're committed to renewables. In 2019, actually, 63% of the energy used was renewable, and our target is 80% by 2025. Eco-efficient stores. This is a fact of our lives now. In 2020, we are using 20% less energy, 40% water -- less water, and now the progressive incorporation of these stores to the Energy platform. Energy is a platform to centralize control of the stores' energy consumption. We've got over 3,500 stores connected. And then our head offices, our logistics platforms are completely sustainable with our different certificates, gold and platinum LEED. If we think about the new canteen, which we have here on site, everything that has to do with light, well, we want to use as least energy as possible or in proximity because we source our food locally. This is important for our headquarters and for our logistics. As I say, very global. Our approach is very global. Our sustainability strategy is that encompasses all of the different aspects of our business. Our headquarters, logistics, production processes, textiles used, energies consumed, everything we do in our business calls for paying close attention to everything that has to do with sustainability. And of course, we very much focus on talent. We're committed to talent. As I said before, all of the persons who are part of the company are very important. We believe that internal promotion matters. We want to really zoom in on our in-house intelligence and skills, thinking about projects and areas of activity for the company and joining that up with recruiting external talent. Very briefly, let me address the issue of our community programs. Over EUR 49 million have been invested. Practically, 2.5 million persons have benefited directly from these programs. As you know, we work jointly with Caritas, for instance; InterCulturas, Doctors Without Borders, Water.org, Every Map Counts. So entities with which we work, and we combine this with internal projects. Afar and from, that's already 13 stores or SALTA. We're present in 13 markets. That's practically 1,500 persons who are with the company. We're onboarding onto the company persons who, for different reasons, have had a very difficult time. We began in France, now we have a presence in a number of other countries. I'm talking about SALTA, and practically 1,500 persons have joined the company thanks to this program. So I'd like to say that this facet, together with sustainability, are very telling when you think about our investment in community programs. So let me just share with you 4 ideas that are essential, we believe. We have that very interesting unique model. It's flexible, integrated, sustainable, always thinking about the importance of creating social and environmental value. This is essential for us. I'd like to say that we devoted a lot of time and energy to this. We generate our own funds so as to reinvest them in our business and its growth. This is essential for us, continue to invest. And I talked about this new Investment Plan 2022. It's EUR 2.7 billion, in order to continue to be able to grow forward-looking. And as a company, we center on our people, our customers, our shareholders and society as a whole without ever allowing anyone of these elements to fall behind, those groups whom we feel we should pay more attention to. So thank you very much, ladies and gentlemen, for having accompanied us and we proceed with our AGM. It seems that there have been no requests for the floor. No shareholder or proxy holder present in the auditorium has said so. So no requests for the floor or clarifications made by shareholders or proxy holders present in the auditorium have been made, and it is then on record. No addresses or clarifications have been received from shareholders or proxy holders via the remote attendance platform. So I so state that it is on the record for all relevant purposes that no addresses or clarifications have been received from shareholders or proxy holders via the remote attendance platform. So once the round of discussions, in accordance with the Recommendation Number 3 of the Good Governance Code of Listed Companies approved by CNMV, I inform shareholders of the most relevant aspects of the company's corporate governance. Detailed and recent information on the company's structured and corporate governance practices are provided in the 2019 annual corporate governance report available in the company's and CNMV's websites for the purposes of allowing the market and the stakeholders to have a full and informed view of the group's corporate governance and of the company's level of compliance with the applicable recommendations of the GGC. In 2019, the company has fully complied with all the recommendations, except for Recommendation 26 regarding the number of Board meetings, which has been complied in part. In 2019, the company has continued adding to its internal regulations statutory requirements as well as the most exacting standards, recommendations and international practices in the field of corporate governance and compliance. Special mention should be made of the following improvements: one, the number of board members has increased from 9 to 11, in line with the groups and its businesses' dimensions and complexity, and so that it is not a part with that of comparable companies; two, the composition of the board has been reinforced in particular through the majority presence of nonexecutive independent directors on the supreme governing body of the company and its components, a more balanced distribution of male and female directors with 36.36% female representation and with the appointment of a CEO in the executive business management has been reinforced in the field of new technologies and sustainability. Closely related to the foregoing, the Board of Directors resolved in the meeting held on June 11, 2019, to form a new committee, the Sustainability Committee. In addition, proceedings named that promoting compliance culture have continued, in particular by reinforcing the powers of the Audit and Compliance Committee in the field of corporate governance and compliance. Finally, the company has noted that the update of the Good Governance Code of Listed Companies has been recently approved by CNMV's board in June 2020. Consequently, the company will review its regulations, policies and practices in the field of corporate governance to bring them into line with the new recommendations of the updated code and then from shareholders that are following AGM. The floor is given to the secretary.

Thank you very much. The final quorum is now obtained -- from the list of presentees shall be confirmed next. It is hereby confirmed that it shall be attached to the minutes of the meeting taken down by the notary. 162 shareholders are present, holding an aggregate number of 12.8 million shares, which represent a nominal value of EUR 306,000, in account of 0.1% of the share capital. Of these, 146 shareholders holding 10.5 million shares, representing 0.34% of the social capital, have cast their vote through the distance or postal media. 1.770 thousand shareholders are represented, holding a total of 2.7 billion shares representing a nominal capital of EUR 82.5 million accounting for 88.31% of the share capital. Consequently, taking into account what I have mentioned regarding our own shares count, [ 1.9 thousand ] shareholders have attended the meeting, holding 2.7 billion shares, which represent a nominal value of EUR 82.9 billion and 88.72% of the share capital, so therefore the Chairman may declare that a quorum is present to hold the AGM on first call.

As a quorum is present, we shall proceed next to submit the resolutions on the items in the agenda proposed by the Board of Directors for the AGM for approval. The Secretary shall forthwith proceed to explain such resolutions. It is hereby stated that in order to avoid unnecessary repetitions upon declaring the final result of the votes cast regarding the proposed resolutions included in the terms of the agenda, I shall be -- it shall be understood, unless otherwise stated, that where a motion is carried in respect to the resolutions proposed, it has been carried: one, with a vote for of the working majority of the shares present or representing; two, with the votes against blank votes or abstentions resulting from the vote by proxy and absentee voting costs received by both prior to this meeting, shareholders and proxy holders are hereby reminded that absentee voting and granting of proxy through electronic means have been made available to them; and three, with the vote against blank votes and abstentions recorded before the notary, where appropriate, by shareholders and proxy holders physically present at the meeting as well as those sent via the remote attendance platform by shareholders and proxy holders remote attending this AGM, whose existence and the percentage of the share capital they represent shall be duly recorded in the minutes of the meeting. Therefore, should any shareholder or proxy holder present in the auditorium wish to vote against or return a blank ballot or abstain during the casting of votes regarding any of the items on the agenda, they should come by the table where the notary is sitting, whereas shareholders or proxy holders remote attending shall place such matter on record by the remote attendance platform. Likewise, should any shareholder present in the auditorium leave the meeting, in which to -- wish such absence to be put on record, they shall expressly address the notary for such purposes. In turn, shareholders or proxy holders remotely attending the meeting wishing to have it based on record that they leave the meeting so that their vote is not taken into account, may do so by the remote attendance platform. So we shall hereinafter proceed to read out the resolutions prepared regarding the different items on the agenda and to put them to vote. Shareholders are hereby reminded that the resolution proposed by the Board of Directors, [ the relevant ] proposal relating thereto the remaining financial information and the information on the structure of the operation of the company's corporate governance system have been continuously available to them since June 11, 2020. Likewise, a copy of the above referred documentation has been made available to the shareholders and proxy holders present in the auditorium today and handed to the notary to be made a part of the notarial instrument. It is expressly stated that pursuant to Section 12.6 of the Regulations of the AGM, unless otherwise stated by the proxy planter, where the proxy holder is involved in any conflict of interest situation regarding any of the resolutions with those in the AGM for approval and the proxy granter would have failed to provide any accurate voting instruction, it shall be assumed the proxy granter as appointed as proxy holder joins in separately, and in succession, the Chairman of the AGM and should he or she be involved in any conflict of interest, the secretary of the AGM and should he/she be involved in any conflict of interest, the capital markets rep of the company, also physically present in the auditorium, the proxy holder that's designated shall vote in the manner that in his view best suits the interest of the proxy granter considering the interest of the company. Likewise, mention is made of the fact that pursuant to the provisions of Section 12.7 of the Regulations of the AGM, if no voting instructions regarding the proposals included in the agenda were given, it shall be understood that the proxy holders shall vote for the proposals in question. As stated in the notice calling the meeting, shareholders and proxy holders remote attending may not vote on the proposed resolution corresponding to agenda items by the remote attendance platform from the beginning of the AGM and until the moment that closure voting time for purposes -- and for the purposes, resolutions is announced after reading out loud the last item on the agenda. Pursuant to Section 23.3 of the regulations of the AGM, the Secretary need not read out in advance the full text of the proposed resolutions which were made available to the shareholders on the company's website as of the date notice calling the AGM was posted. Thus, the consolidated proceedings, I will read out where appropriate an abridged version of the resolution proposed to the AGM explaining, when necessary, their intended purpose. So I will now pass on to Item 1 on the agenda. The following resolution is proposed to the AGM to approve the annual account, balance sheet, income statement, statement of changes in equity, statement of cashouts and notes to the account and director's report of Industria de Diseño Textil for financial year 2019 stated by the Board of Directors in the meeting held on March 17, 2020, and signed by all the directors. Second point in the agenda. The following resolution is proposed to the AGM, to approve the consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the consolidated account, and consolidated director's report of Inditex stated by the Board of Directors in the meeting held on March 17, 2020 and signed by all the directors, to discharge the Board of Directors from Industria de Diseño Textil from liability for financial year 2019. Item 3 on the agenda. The following resolutions is proposed to the AGM, to approve the statement of nonfinancial information for financial year 2019, which is an integral part with the consolidated director's support in the Inditex Group for said year, stated by the Board of Directors at its meeting on the 17th of March 2020. Item 4 on the agenda, the following resolutions proposed to the AGM, to approve the proposed distribution of the income of financial year 2019 in the amount of EUR 10,418,000,000 to be distributed as follows in million of euros: to the capitalization reserve, EUR 119 million; to voluntary reserves, EUR 10.2 billion. Total EUR 10.418 billion. Item 5 in the agenda. The following resolution is proposed to the annual general meeting. To approve the declaration of a dividend in cash charged against unrestricted reserves for the gross amount of EUR 0.35 per share. Said dividend shall be paid to shareholders as of November 2020 through those entities linked to the Spanish Central Securities Depository in charge of the register of securities and the clearing and settlement of all trades. Item 6 in the agenda. Pursuant to Section 197 of the Companies Act and in accordance with best practices on corporate governance, the following resolutions on the reelection, ratification and appointment of directors as proposed the AGM following the relevant report, or as the case may be, motion of the nomination committee. Each of them shall be separately put to vote: A, the election appointed Pontegadea Inversiones, S.L. to the Board of Directors as nonexecutive proprietary director and appointment of Ms. Flora Pérez Marcote as its legal representative; B, reelection of Baroness Denise Patricia Kingsmill to the Board of Directors as nonexecutive independent director; C, ratification and appointment of Ms. Anne Lange to the Board of Directors as non-executive independent director. Ms. Lange has been co-opted to the Board of Directors further to a resolution of such body passed on December 10, 2019. Item 7 on the agenda. The following resolution is proposed to the board: To reelect Deloitte S.L., with registered office in Madrid, at Madrid, Plaza Pablo Ruiz Picasso 1 registered with the Official Register of Auditors, under number S-0692 to be the statutory auditor of the company in order to review the annual accounts in the management report of the company and the consolidated annual accounts and reports of the Inditex Group for the period running from February 1, 2020 through January 31, 2021. Item 8 on the agenda. The following resolution is proposed to the AGM: To approve the following amendments of the Articles of Association in order to expressly provide for the possibility of remote attendance in the AGM in accordance with the terms set forth in the explanatory report issued by the Board of Directors for the purpose of the Section 286 of the Companies Act: A, to approve the amendment of Article 16, eligibility to attend the AGM, right to vote, and Article 17, representation of the AGM in Part 1 general shareholders meeting, Chapter 3 governing bodies of the company, consequently, to approve the revised text of Articles of Association resulting from the said amendment, which has been made available to the shareholders on the company's website as of the date of publication of the notice following the AGM together with the remaining documentation of the AGM, pursuant to the provisions of the Section 197 and Article 1, Article 19.5 of the Articles of Association as it is considered that proposed amendments to deal with the same topic are related, they're not bundled in independent sections. The proposed amendment seek to authorize the Board of Directors so that it may, considering the circumstances from time to time, allow shareholders remote attendance at the AGM upon calling in and ensures that remote attendance at the AGM prevails over any proxy granted. Item 9 of the agenda. The following resolutions proposed to the AGM: To approve the following amendments to the regulations of the GMS in order to bring it into line with new wording of the Articles of Association subject to approval on Item 8 on the agenda, if approved, and to include the approval of the statement on nonfinancial information among the powers of the GMS in accordance with the legal reform introduced by Act 11/2018 of 28 December, amending the Companies Act, the Spanish Code of Commerce and Act on Statutory Audit. All of the foregoing pursuant to terms set forth in the explanatory report issued by the Board of Directors: A, to approve the amendment of Article 6, Powers of the GMS in Chapter 2, the general meeting of shareholders; B, to approve the addition of article 11bis, Remote Attendance in Part 1, Attendance and Proxies and the amendment of Article 12, Proxy Representation of the GMS in Part 1, Attendance and Proxies Article 19, Quorum and Part 2, the GMS and Article 20, Requests by shareholders to take the floor Identification in Part 3, Use of the floor by Shareholders, all of them in Chapter 4, Holding of the GMS. Consequently, to approve the revised texts of the regulations of the GMS resulting from said amendments, which has been made available to the shareholders on the company's website as of the date of publication of the notice following the AGM, together with the remaining documentation of the AGM pursuant to Section 197bis LSC and Section 23.1 of the regulations of the GMS, the amendments to the regulations of the GMS are put to separate vote by parts as they are essentially independent. Likewise, in accordance with Section 23.3 of the regulations of the general meeting to facilitate proceedings of the AGM, I would explain next the purpose of this proposed resolution. Please take into account that the full text thereof has been continuously available to shareholders in the company's website since the date the AGM was called, together with the relevant report issued by the Board of Directors and the revised text of the regulations of the GMS: A, the first group of amendments seeks to encourage remote participation of shareholders and in line with amendment to the Articles of Association approved under Item 8A above, it intends to propose to authorize the Board of Directors so that it may, in view of the circumstances prevailing at any given time, allow shareholders to remotely attend the AGM in accordance with sections 182 and 521 of the Companies Act; B, additionally, a reference was introduced to the approval and statement of nonfinancial information among the powers of the GMS in accordance with the legal reform of the Companies Act, the Spanish Code of Commerce and the Act on Statutory Audit introduced by at Act 11/2018 of 28 December on mandatory disclosure of nonfinancial information. Item 10 on the agenda. The following resolution is proposed to the AGM to approve by means of an advisory note say-on-pay, the annual report on the remuneration of directors of Industria de Diseño Textil, S.A., Inditex S.A., approved by the Board of Directors last March 17, 2020, the full text of which was made available to the shareholders together with the remaining documentation for the AGM as of the date the notice of the AGM is published. Item 11 on the agenda the following resolution is proposed to the AGM: To delegate to the Board of Directors expressly empowering it to be substituted by the Ex Co or by any of its members as well as to any other person expressly authorized for these purposes by the board all necessary and broadest powers as required in statute for the correction development and implementation, at the time that it may deem most appropriate of each and every resolution passed by this AGM, and, specifically, to authorize the Executive Chairman, Mr. Pablo Isla Álvarez de Tejera; and the Executive Director, Mr. Carlos Crespo González; and to grant a special power of attorney as broad as might be required in statute, to the Secretary of the Board, Mr. Antonio Abril Abadín, so that any of them may jointly and separately, without distinction, and as widely as is necessary at law, do and perform all acts and things that may be required to implement the resolutions passed by this AGM in order to record them with the company's register and with any other public registries including, in particular without limitation, the power of appearing before a notary to execute the public deeds and notary certificates that are necessary or expedient for such purpose, correct, change, ratify, construe or supplement the agreements and execute any other public or private document which may be necessary or expedient so that the resolutions passed are implemented and fully registered without the need for a new resolution of the AGM to be passed and to proceed to the mandatory filing of the individual and consolidated annual accounts with the company's register. Item 12. Reporting to the AGM on the amendment of the Board of Directors' regulations. Pursuant to provisions of Section 528 of the Companies Act, the AGM is hereby informed that the Board of Directors resolved in the meeting held on July 16, 2019, following a favorable report of the Audit and Compliance Committee to approve the amendment to the current Board of Directors' regulations pursuant to the terms addressed in the explanatory report drafted by the Board of Directors on this issue. Such amendments allow exclusively to extend the maximum number of members sitting on the Ex Co provided Section 14.1 of its regulations up to 8 for the purposes of allowing Mr. Carlos Crespo González to become a member thereof following his appointment as new Executive Director and CEO and, consequently, bring the size and structure of the Committee of Ethics into line with that of the Board of Directors. This being an informational item, it is not put to vote. Having read out loud, all the proposed resolutions corresponding to items on the agenda, time allotted for voting on all of them is over now. Sir?

Pursuant to the information provided by the panel and considering the votes cast by proxy and the absentee votes received by post or by electronic means prior to this AGM, and regardless of the votes for, against, blank ballots or abstentions cast by shareholders or proxy holders attending in person or remotely, the existence of a working majority in respect of each item on the agenda is confirmed to approve all the proposed resolutions submitted by the Board of Directors to the AGM. Therefore, each and every proposed resolution has been approved. Therefore, I repeat, each and every proposed resolution has been approved. Final voting results shall be recorded on the notarial instrument that the notary will authorize regarding this AGM and will be posted on the corporate website within the time provided by statute. The website is www.inditex.com. On both occasions, votes for, against, blank ballots and abstentions cast by any available means must be tallied. I hereby declare the meeting closed, and I do thank you all very much for your attendance. Good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]