Jeronimo Martins — Interim / Quarterly Report 2010

Aug 19, 2010

Consolidated 1st Half Report 2010

INDEX

I – Consolidated Management Report
Message from the CEO	3
1. Introduction	3
2. Sales Analysis	3
3. Results Analysis	5
4. Balance Sheet	6
5. Outlook	7
II – Consolidated Management Report Appendix
1. Sales Evolution	7
2. Stores Network	7
3. EBITDA Margin Breakdown	7
4. Working Capital	8
5. Net Debt	8
6. Definitions	9
7. Information Regarding Individual Financial Statements	9
III – Other Informations	10
IV – Statement of the Board of Directors	13
V – Consolidated Financial Statements
1. Financial Statements	15
2. Notes to the Consolidated Financial Statements	20
3. Auditor's Report	36

I. CONSOLIDATED MANAGEMENT REPORT

Message from the CEO – Pedro Soares dos Santos

"The Group's brands began 2010 well prepared and earning consumer preference. This strength was reflected in the good sales performance posted in the first six months of the year and certified the strategic focus that all our banners are placing on increasing market share.

The positive signs received from the first half results allow us to anticipate a continued solid performance, boosted by a greater sales density for the second semester, that should enable to reach the objectives set by the Group for the full year."

1. Introduction

Consolidated sales grew 19.6% (+12.7% at a constant exchange rate) and EBITDA posted a solid performance, increasing 20.1%, representing a margin of 6.5% of sales.

Cash flow per share, following the good operational performance, increased by 22.2%.

Net debt decreased by Euro189.9 mn in comparison with the first half 2009, reaching Euro752.0 mn.

Consolidated net results reached Euro101.7 mn, an increase of 39.4% compared to the first half of the previous year.

2. Sales Analysis

NET SAL ES AND S ERVIC ES
(Million Euro)	H1 10		H1 09			Δ %	Q2	10	Q2 09			Δ %
		% total		% total	Pln	Euro		% total		% total	Pln	Euro
Retail Mainland	1,400.9	34.6%	1,276.8	37.8%		9.7%	730.7	35.0%	664.6	37.4%		9.9%
Rec heio	336.1	8.3%	324.7	9.6%		3.5%	179.3	8.6%	171.1	9.6%		4.8%
Madeira	61.8	1.5%	60.8	1.8%		1.8%	32.0	1.5%	32.2	1.8%		‐0.9%
Biedronka	2,220.9	54.9%	1,682.2	49.8%	18.1%	32.0%	1,133.2	54.3%	886.5	49.9%	15.3%	27.8%
Manufac turing	117.3	2.9%	118.2	3.5%		‐0.7%	63.9	3.1%	64.0	3.6%		‐0.1%
Mkt. Repr. and Res t. S erv.	42.5	1.1%	40.3	1.2%		5.4%	23.0	1.1%	21.6	1.2%		6.6%
C ons olidation A djus tments	‐136.4	‐3.4%	‐122.3	‐3.6%		11.5%	‐73.8	‐3.5%	‐64.6	‐3.6%		14.3%
T otal J M	4,043.3	100.0%	3,380.6	100.0%		19.6%	2,088.2	100.0%	1,775.4	100.0%		17.6%
p.m. Retail Mainland (s tore s ales )	1,290.6		1,180.3			9.3%	670.7		613.8			9.3%

Consolidated sales reached Euro4,043.3 mn, a growth of 19.6% compared with the same period last year. This performance was the result of the strong LFL growth of the Group (+8.2%), of the contribution of the new stores and also of the 11.8% appreciation of the zloty against the euro.

In Poland, Biedronka's LFL sales grew 8.0% in the second quarter and reflected: i) the effect of the stores' closure for three days, due to the national mourning for the Smolensk plane accident, as well as ii) a negative calendar comparison due to the fact that Easter in 2010 benefited the first quarter of the year, whereas in 2009, Easter was mostly reflected in the second quarter.

In June this year, with the beginning of the good weather having an influence on categories such as drinks, the Polish Company's LFL returned to double-digit growth.

It should also be noted that food inflation in the country slowed down and in H1 10, the Biedronka basket included a deflation of 0.3%.

Biedronka's total sales in H1 10 posted an 18.1% growth in local currency, as a result of the LFL (+10.5%) and the store opening programme, which led to 10.8% sales area increase in H1 10 compared to H1 09.

In Portugal, the competitive environment continued to be dynamic, especially concerning communication campaigns. The relative pricing positions remained stable and the sector's growth in sales area was moderate (c.+1.2% since the beginning of the year).

It should be noted that, in Portugal, with regard to food inflation, there was still negative inflation compared to the first half of the previous year, which, for the average Pingo Doce basket reached 2.3% for the period under review.

The business models in Portugal – Pingo Doce and Recheio – posted a remarkable sales performance in contrast with the macro-economic environment.

Pingo Doce's 8.8% LFL growth reflected a dynamic evolution in volume of c.11%. This performance was the result of the strength of its business model, supported by a strategy focused on increasing market share, which has been helped by communication over the last nine months with an advertising campaign that began at the end of 2009. It should be mentioned that for this LFL performance the increase in the consumers' visits played the main role.

Recheio, which operates in two segments – tradition retail and HoReCa – which are under a lot of pressure from the macro-economic environment, posted a LFL sales growth of 3.1% in the first half (c.4% in volume) helped by a very competitive value proposition and also a remarkable commercial capacity for sales campaigns aimed at its customers.

In Madeira, although total sales increased, sales were affected by the closure of two of the Company's main stores on the island in February 2010, due to the storm that devastated the region. These two stores were re-opened once the recovery work was concluded at the beginning of June.

In Manufacturing, sales in volume continued and accelerated the previous months' positive trend and some categories like olive oil and ice tea performed particularly well. In value terms, in H1 10, the business area's sales posted a reduction of 0.7%, reflecting the price repositioning and promotional campaigns in key categories.

In the area of Marketing, Representations and Restaurant Services, the LFL sales performance (- 4.8%) in H1 10 reflected the pressure felt by some categories as a consequence of increased competitiveness in the market. The new represented brands that entered the Company's portfolio in 2009 contributed towards the total sales performance (+5.4%).

3. Results Analysis

C ONS OL IDAT ED RES UL T S
(Million Euro)	H1 10	H1 09	Δ	Q2 10	Q2 09	Δ
Ne t S ale s & S e rvic e s	4.043,3	3.380,6	19,6%	2.088,2	1.775,4	17,6%
Total Margin	936,8 23,2%	787,6 23,3%	18,9%	490,0 23,5%	411,7 23,2%	19,0%
Operating Cos ts	‐673,0 ‐16,6%	‐568,0 ‐16,8%	18,5%	‐344,5 ‐16,5%	‐292,7 ‐16,5%	17,7%
EBIT DA	263,8 6,5%	219,6 6,5%	20,1%	145,5 7,0%	118,9 6,7%	22,4%
Deprec iation	‐92,3 ‐2,3%	‐81,9 ‐2,4%	12,8%	‐46,6 ‐2,2%	‐40,9 ‐2,3%	14,0%
EBIT	171,5 4,2%	137,8 4,1%	24,5%	98,9 4,7%	78,0 4,4%	26,8%
Net Financ ial Res ults	‐35,5 ‐0,9%	‐35,1 ‐1,0%	1,2%	‐18,5 ‐0,9%	‐17,6 ‐1,0%	5,2%
Non Rec urrent Items	‐1,5 0,0%	‐4,5 ‐0,1%	n.a.	0,3 0,0%	‐5,3 ‐0,3%	n.a.
EBT	134,5 3,3%	98,2 2,9%	37,0%	80,7 3,9%	55,2 3,1%	46,3%
Taxes	‐28,9 ‐0,7%	‐19,7 ‐0,6%	46,8%	‐18,5 ‐0,9%	‐12,4 ‐0,7%	48,9%
Ne t P ro fit	105,7 2,6%	78,5 2,3%	34,5%	62,2 3,0%	42,8 2,4%	45,5%
Non‐c ontrolling interes ts	‐3,9 ‐0,1%	‐5,6 ‐0,2%	‐29,6%	‐2,8 ‐0,1%	‐2,3 ‐0,1%	20,4%
Ne t Profit attr. to J M	101,7 2,5%	73,0 2,2%	39,4%	59,5 2,8%	40,5 2,3%	46,9%
EPS (euro) Cash Flow per s hare (euro)	0,16 0,33	0,12 0,27	39,4% 22,2%	0,09 0,18	0,06 0,14	46,9% 25,9%

Operating Profit

Consolidated EBITDA showed a solid performance in the first six months of the year, reaching Euro263.8 mn, 20.1% higher than the same period in the previous year and a margin of 6.5% of sales.

In Poland, the EBITDA generated by Biedronka grew 27.6% in local currency and represented 7.2% of sales (6.7% in H1 09). The positive EBITDA evolution is due to the dilution of fixed costs as a result of the increasing scale of operations. It should be noted that in H1 10, EBITDA benefited from the easiest comparison in the year.

At Retail in Portugal, the EBITDA margin reached 5.2% of sales. Compared to the same period in the previous year, the evolution is the reflex of two fundamental effects, the most visible being the new communication campaign. This campaign plays an essential role in the strategy for the sustained increase in Pingo Doce's market share, but in the quarters with less sales densities, it gains substantial weight within the Company's cost structure. Secondly, the sales deflation didn't allow costs to be diluted, especially those that depend on volume evolution or that had a positive inflation.

Although in the first four months of the year, the negative price evolution in the economy was felt more strongly than expected, in May, it began to slow down and in June, prices evolution were already positive in comparison to the same month the previous year.

At Recheio, the good sales response to the commercial campaigns, especially the commercial campaign related to the World Cup, had a positive impact on the EBITDA evolution, which increased by 6.8% in the first six months of 2010, posting a margin of 5.7% of sales (5.5% in H1 09).

In Manufacturing, the EBITDA margin reached 14.8% of sales (16,4% in H1 09) and this evolution essentially reflected the communication support given to the main brands in the portfolio as a means of increasing competitiveness and also the price re-positioning of certain products.

Net Result

Net profit attributable to Jerónimo Martins grew 39.4%, reaching Euro101.7 mn, +34.1% when excluding non-recurrent items.

4. Balance Sheet

(Million Euro)	H1 10	2009 YE	H1 09
Net Goodw ill	733,4	736,6	712,8
Net Fixed A s s ets	2.178,9	2.101,6	1.942,5
Net Working Capital	‐1.203,9	‐1.201,5	‐944,7
Others	100,8	121,0	137,7
Inve s te d C apital	1.809,2	1.757,7	1.848,4
Financ ial Debt	848,1	796,3	974,1
L eas ings	82,3	84,6	91,0
A cc rued interes t	13,0	30,9	15,5
Marketable sec. & Bank depos its	‐191,4	‐219,8	‐138,7
Ne t De b t	752,0	692,0	942,0
Non‐c ontrolling interes ts	276,0	287,6	273,3
S hare Capital	629,3	629,3	629,3
Res erves and Retained Earnings	151,9	148,8	3,9
S hare holde rs Funds	1.057,2	1.065,7	906,4
G earing	71,1%	64,9%	103,9%

Consolidated net debt reached Euro752.0 mn and gearing 71.1%, maintaining the strengthening of the balance sheet as one of the Group's priorities.

With regard to the Group's investment programme, the main priority was still the expansion of the number of stores in Poland, and Biedronka absorbed 65.9% of the total of Euro185.8 mn invested in the first six months of the year.

C APEX
(Million Euro)	H1 10	We ig h t
Dis tribution Portugal	61.3	33.0%
Dis tribution Poland	122.4	65.9%
Manufac turing & Others	2.1	1.1%
T otal C A PEX	185.8	100.0%

The Polish company opened 67 stores during H1 10 and in line with the normal seasonality of the opening programme, the largest number of new stores for the year will be concentrated in H2 10. Biedronka also carried out 47 refurbishments.

Pingo Doce opened three stores in the first six months of 2010 and refurbished 12 stores, five of which were former Plus stores and two were conversions of hypermarkets into Pingo Doce stores.

In April 2010, Recheio acquired a new store in the centre of the country with 1,020 sqm. and another store in May in the south of the country, with 3,200 sqm. Both locations now reinforce the company's offering to the HoReCa channel.

5. Outlook

Since 2009, the Group has been highly focused on increasing market share, especially through LFL performance, considering it to be the sustainable strategy for this more negative phase of the economic cycle, which will enable it not only to outperform the sector but, mainly, to come through it with a stronger market position.

From the results for the first half of the year, with a strong sales performance and solid earnings evolution, we can reinforce our confidence that the banners are entering the second half of the year, - which is the most relevant period for Group's operations -, well prepared for continuing to strengthen the Group's performance in its sales and earnings evolution.

In Poland, the positive performance trend posted in the first six months is expected to be maintained in the second half of the year, although the evolution of the EBITDA margin in the third and fourth quarters of this year is limited by the extremely strong performance posted in the same periods of 2009 and the subsequent tougher comparison.

Biedronka will remain focused on its store opening plan and until the end of the year, apart from a another 70 refurbishments, a further 100 new stores are expected to open, absorbing the largest portion of the Group's investment for this year, which is estimated to reach around Euro400 mn .

In the second half of the year, volumes in Portugal should continue their robust evolution, however reflecting the more demanding comparison for Q3 and Q4. The greater sales concentration associated with the second half of the year, together with the anticipation of a positive inflation evolution, should make it possible to recover the level of cost dilution, thereby contributing towards the improvement of the EBITDA margin.

Lisbon, 27th July, 2010

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Evolution

		Total Sales Growth		LFL Sales Growth
	Q1 10	Q2 10	H 1 10	Q1 10	Q2 10	H 1 10
Retail Portugal	9.4%	9.3%	9.3%	7.9%	6.8%	7.3%
Supermarkets	13.0%	11.1%	12.0%	9.7%	7.9%	8.8%
Hypermarkets	$-14.2%$	$-5.0%$	$-9.6%$	$-7.3\%$ *	$-4,5%$ *	$-5,9%$ *
Recheio	2.1%	4.8%	3.5%	2.2%	4.0%	3.1%
Madeira	4.8%	$-0.9%$	1.8%	16.4%	16.3%	16.4%
Biedronka
Euro	36.7%	27.8%	32.0%
PLN	21.2%	15.3%	18.1%	13.3%	8.0%	10.5%
Manufacturing	$-1.4%$	$-0.1%$	$-0.7%$	$-1.4%$	$-0.1%$	$-0.7%$
Mkt. Repr. and Rest. Serv.	4.0%	6.6%	5.4%	$-2.0%$	$-7.2%$	$-4.8%$

* ex c luding tw o s tore under revamping

2. Stores Network

NUMBER OF STORES
		Openings		Closings *		Network
	09 YE	Q1 10	Q2 10	H 1 10	H1 10	H 1 09
Retail Portugal	343	1	2	1	345	342
Supermarkets	334	1	$\mathcal{P}$	1	336	333
Hypermarkets	9	$\mathbf 0$	$\Omega$	$\Omega$	9	9
Recheio	35	$\mathbf 0$	$\overline{2}$	$\Omega$	37	35
Madeira	15	$\mathbf 0$	0	$\Omega$	15	15
Biedronka	1,466	42	25	6	1,527	1,408

SALES AREA (sqm)
		Openings		Closings *	Network
	09 YE	Q1 10	Q2 10	H 1 10	H 1 10	H 1 09
Retail Portugal	434.744	1,605	1,756	4,992	433,113	431,850
Supermarkets	352,276	1,605	1,756	805	354,832	349,382
Hypermarkets	82,468	0	0	4,187	78,281	82,468
Recheio	114,410	$\mathbf 0$	4,220	$-271$	118,901	115,724
Madeira	14,300	0	0	0	14,300	14,626
Biedronka	814.493	26,951	13,959	3	855,400	772,353

* inc luding changes of s ales area due to remodellings

3. EBITDA Margin Breakdown

	H 1 10	% total	H 1 09	% total
Retail Mainland (store sales)	5,2%	25,6%	5,9%	31,8%
Recheio	5,7%	7,2%	5,5%	8,1%
Madeira	3,7%	0,9%	4,3%	1,2%
Biedronka	7,2%	60,6%	6,7%	51,0%
Manufacturing	14,8%	6,6%	16,4%	8,8%
Mkt, Repr. and Rest. Services	0.1%	0.0%	1,8%	0.3%
Consolidation Adjustments	n.a	n.a	n.a	n.a
JM Consolidated	6.5%	100.0%	6,5%	100.0%

4. Working Capital

(Million Euro)	H 1 10	2009 YE	H 1 09
Inventories	346.1	334.5	324.5
in days of sales	15	17	17
Cus tomers	98.1	76.8	92.7
in days of sales	4	4	5
S uppliers	$-1,328.9$	$-1,345.2$	$-1,150.5$
in days of sales	-59	-67	-62
Working Capital Trade	-884.7	$-933.9$	-733.3
in days of sales	$-40$	-47	-39
Others	$-319.2$	$-267.5$	$-211.4$
Total Working Capital	$-1.203.9$	$-1,201.5$	-944.7
in days of sales	-54	-60	-51

5. Net Debt

(Million Euro)	2S 10	2009 YE
Long Term Debt	655,8	707,6
as % of Financial Debt	77,3%	88,9%
Maturity	2,8	3,1
Bond Loans	375,0	375,0
Private Placement	80,5	151,0
Fair value adjustment	7,4	$-16,9$
Commercial Paper	70,0	70,0
Other Debt	122,9	128,5
Short Term Debt	192,3	88,7
as % of Financial Debt	22,7%	11,1%
Financial Debt	848,1	796,3
Maturity	2,4	2,9
Leasings	82,3	84,6
Accrued Interest & Hedging	13,0	30,9
Marketable Securities & Bank Deposits	$-191,4$	$-219,8$
Net Debt	752,0	692,0

6. Definitions

Like For Like (LFL) sales: sales made by stores, which operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound remodelling are excluded for the remodelling period (store closure).

Cash Flow per share: (Net Profit + Depreciation – Deferred tax – Non-recurrent items) / Number of Shares

EBITDA: Earnings before interests, taxes, depreciations and amortisations. See the reconciliation with Operational Result in note 3 of the notes to the Consolidated Financial Statements.

Gearing: Net Debt / Shareholder Funds

7. Information Regarding Individual Financial Statements

In accordance with section b) of paragraph 3 of article 246 of the Portuguese Securities Code, the 1st Half individual financial statements of Jerónimo Martins SGPS, S.A. will not be disclosed as they do not include significant information.

III. OTHER INFORMATIONS

INFORMATION CONCERNING STAKES HELD IN THE COMPANY BY MEMBERS OF THE BOARD OF DIRECTORS AND STATUTORY AUDITOR AS AT JUNE 30th, 2010

(As provided in article 447 of the Portuguese Commercial Companies Code and under the terms of subparagraph b), paragraph 1 of article 7 of the Portuguese Securities Market Commission - CMVM - Regulation nº 24/2000)

BOARD OF DIRECTORS

Members of the Board of Directors	Held on 31.12.2009		Increases during the year		Decreases during the year		Held on 30.06.2010
	Shares	Bonds	Shares	Bonds	Shares	Bonds	Shares	Bonds
Elísio Alexandre Soares dos Santos 1	152,633	-			(15,000)		137,633	-
José Manuel da Silveira e Castro Soares dos Santos	-	-					-	-
Luís Maria Viana Palha da Silva	-	-					-	-
Pedro Manuel de Castro Soares dos Santos	198,305	-					198,305	-
António Mendo Castel-Branco Borges	-	-					-	-
Artur Eduardo Brochado dos Santos Silva	7,680	-					7,680	-
Hans Eggerstedt 2	19,700	-					19,700	-
Marcel Lucien Corstjens	-	-					-	-
Nicolaas Pronk	-	-					-	-
Stefan Kirsten 2 3	n.a.	n.a.					-	-
António Viana-Baptista 2 3	n.a.	n.a.					-	-

1 The 15,000 shares were sold on 28st of April of 2010, with an average unit price of EUR 7.41.

2 Also members of the Audit Committee.

3 Appointed as members of the Board on 9th of April of 2010.

STATUTORY AUDITOR

As at June 30th, 2010, the Statutory Auditor PricewaterhouseCoopers & Associados, SROC, Lda., did not hold any shares and bonds of Jerónimo Martins, SGPS, S.A. and had not made any transactions with Jerónimo Martins, SGPS, S.A. securities.

LIST OF TRANSACTIONS MADE BY PERSONS DISCHARGING MANAGERIAL RESPONSABILITIES AND PEOPLE CLOSELY CONNECTED WITH THEM

Under the terms of paragraph 7 of Article 14 of CMVM Regulation 5 / 2008, Jerónimo Martins, SGPS, S.A. informs about all the transactions made by persons discharging managerial responsibilities in the first six months of 2010.

E. Alexandre Soares dos Santos

Date	Nature	Code ISIN	Volume	Price
28-04-2010	Sale	PTJMT0AE0001	35	7.38
28-04-2010	Sale	PTJMT0AE0001	300	7.38
28-04-2010	Sale	PTJMT0AE0001	375	7.38
28-04-2010	Sale	PTJMT0AE0001	1,959	7.39
28-04-2010	Sale	PTJMT0AE0001	5,331	7.39
28-04-2010	Sale	PTJMT0AE0001	4,371	7.44
28-04-2010	Sale	PTJMT0AE0001	2,629	7.44

LIST OF SHAREHOLDERS WITH QUALIFYING STAKES AS AT JUNE 30th, 2010

(Under the terms of articles 447 and 448 of the Portuguese Commercial Companies Code and for the purposes of section e), paragraph 1 of article 6 of the Portuguese Securities Market Commission – CMVM - Regulation nº 11/2000 and in the terms of the Portuguese Securities Code)

Shareholder	Nº of shares held	% Capital	% of Voting Rights 1
Sociedade Francisco Manuel dos Santos, SGPS, S.A.
Directly	353,119,573	56.114%	56.190%
Asteck, S.A. 2
Directly	62,929,500	10.000%	10.014%
Barclays Plc3
Through Barclays Capital Inc. Through Barclays Capital Securities Ltd Through Barclays Wealth Manageers Portugal - SGFIM, SA	966,722 13,613,386 180,440	0.154% 2.163% 0.029%	0.154% 2.166% 0.029%
Total Attributable	14,760,548	2.346%	2.349%

• ¹ % Voting rights = No. Shares Held / (Total No. JM shares Own shares)
• ² Under the terms articles 16 and 20 of the Portuguese Securities Code (CVM), the stakes held by Asteck, S.A. must be attributed to Heerema Holding Company Inc., which has a 100% holding in that company.
• ³This number of shares indicated refers to 3rd May, 2010, date of the last communication made by this company to Jerónimo Martins, SGPS, S.A.

Statement of the Board of Directors

Within the terms of paragraph c) n.º1 of article 246 of Portuguese Securities Code, we hereby inform you that to the best of our knowledge:

• i) the information contained in the interim management report is a faithful statement of the evolution of the businesses, of the performance and of the position of Jerónimo Martins, SGPS, S.A. and the companies included within the consolidation perimeter, and contains a description of the main risks and uncertainties which they face; and
• ii) the information contained in the consolidated financial statements, as well as their annexes, was produced in compliance with the applicable accounting standards and gives a true and fair view of the assets and liabilities, the financial situation and the results of Jerónimo Martins, SGPS, S.A. and the companies included in the consolidation perimeter.

Lisbon, 27th July, 2010

Elísio Alexandre Soares dos Santos (President of the Board of Directors)

Pedro Manuel de Castro Soares dos Santos (Chief Executive Officer and Member of the Board of Directors)

Luís Maria Viana Palha da Silva (Member of the Board of Directors, Chairman of the Financial Matters Committee and of the Corporate Responsibility Committee and Member of the Evaluation and Nomination Committee)

José Manuel da Silveira e Castro Soares dos Santos (Member of the Board of Directors, Member of the Financial Matters Committee, of the Corporate Responsibility Committee and of the Evaluation and Nomination Committee)

António Mendo Castel-Branco Borges (Member of the Board of Directors)

Artur Eduardo Brochado dos Santos Silva (Member of the Board of Directors and Member of the Evaluation and Nomination Committee)

Hans Eggerstedt (Member of the Board of Directors and Chairman of the Audit Committee)

Marcel Lucien Corstjens (Member of the Board of Directors)

Nicolaas Pronk (Member of the Board of Directors)

António Viana-Baptista (Member of the Board of Directors, of the Audit Commission and of the Corporate Responsibility Commission)

Stefan Kirsten (Member of the Board of Directors, of the Audit Commission and of the Financial Matters Commission)

V. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR JUNE 2010 AND 2009

					Euro thousand
	Notes	1st Half 2010	1st Half 2009	2nd Quarter 2010	2nd Quarter 2009
Sales and services rendered	3	4,043,290	3,380,573	2,088,160	1,775,442
Cost of sales		(3,279,104)	(2,731,978)	(1,691,042)	(1,431,558)
Supplementary income and costs	4	172,659	139,035	92,911	67,780
Gross profit		936,845	787,630	490,029	411,664
Distribution costs	5	(676,868)	(574,957)	(347,655)	(294,238)
Administrative costs	5	(88,503)	(74,897)	(43,458)	(39,390)
Exceptional operating profits/losses	9.1	(1,308)	(4,327)	209	(5,494)
Operating profit		170,166	133,449	99,125	72,542
Net financial costs	6	(35,622)	(35,077)	(18,564)	(17,536)
Gains/Losses in associated companies	14	115	(10)	72	(39)
Gains/Losses in other investments	9.2	(149)	(177)	65	207
Profit before taxes		134,510	98,185	80,698	55,174
Income taxes	8	(28,859)	(19,652)	(18,457)	(12,396)
Profit before non-controlling interests		105,651	78,533	62,241	42,778
Attributable to:
Non-controlling interests		3,908	5,556	2,789	2,318
Jerónimo Martins Shareholders		101,743	72,977	59,452	40,460
Basic and diluted earnings per share- Euros	22	0.1619	0.1161	0.0946	0.0644

To be read with the attached notes to the consolidated financial statements.

CONSOLIDATED BALANCE SHEET AT 30 JUNE 2010 AND DECEMBER 2009

			Euro thousand
	Notes	2010	2009
Assets
Tangible assets	10	2,067,985	2,002,831
Investment properties	12	55,714	63,283
Intangible assets	11	844,375	835,368
Investments in associated Companies	14	1,233	1,118
Available-for-sale financial investments	15	7,090	7,528
Trade debtors and deferred costs	18	71,414	72,305
Derivative financial instruments	13	7,454	351
Deferred tax assets	17.1	67,756	69,021
Total non-current assets		3,123,021	3,051,805
Inventories	16	346,084	334,478
Taxes receivable	17.2	38,007	22,335
Trade debtors, accrued income and deferred costs	18	194,320	190,793
Derivative financial instruments	13	3,831	1,515
Cash and cash equivalents	19	194,421	223,501
Total current assets		776,663	772,622
Total assets		3,899,684	3,824,427
Shareholders' equity and liabilities
Share capital		629,293	629,293
Share premium		22,452	22,452
Own shares		(6,060)	(6,060)
Fair value and other reserves	21.1	46,473	55,184
Retained earnings		89,066	77,189
		781,224	778,058
Non-controlling interests		275,963	287,636
Total Shareholders' equity		1,057,187	1,065,694
Borrowings	23	703,743	756,361
Trade creditors, accrued costs and deferred income	25	340	-
Derivative financial instruments	13	21,802	30,137
Employee benefits		29,781	27,738
Deferred profits- state grants		947	959
Provisions for risks and contingencies	24	20,550	18,480
Deferred tax liabilities	17.1	91,013	88,892
Total non-current liabilities		868,176	922,567
Trade creditors, accrued costs and deferred income	25	1,656,220	1,647,490
Derivative financial instruments	13	2,683	3,084
Borrowings	23	226,634	124,495
Taxes payable	17.2	88,711	61,021
Deferred profits- state grants		73	76
Total current liabilities		1,974,321	1,836,166
Total Shareholders' equity and liabilities		3,899,684	3,824,427

To be read with the attached notes to the consolidated financial statements.

CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY

Euro thousand

	1st Half 2010	1st Half 2009	2nd Quarter 2010	2nd Quarter 2009
Currency translation differences	(3,852)	(23,440)	(33,540)	17,905
Fair value of cash flow hedging	(7,218)	(3,320)	(1,425)	1,658
Fair value of hedging instruments on foreign operations	475	5,119	7,033	(1,591)
Fair value of available-for-sale financial investments	(439)	-	(398)	-
Gains/losses directly recognised in equity	(11,034)	(21,641)	(28,330)	17,972
Net profit	105,651	78,533	62,241	42,778
Total gains/losses recognised	94,617	56,892	33,911	60,750
Attributable to:
Non-controlling interests	1,585	4,408	2,161	2,805
Jerónimo Martins Shareholders	93,032	52,484	31,750	57,945

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Shareholders' equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A.
	Notes	Share Capital	Share Premium	Own Shares	Fair value and other reserves	Retained Earnings	Total	Non controlling Interests	Shareholders' Equity
Balance Sheet at 31 December 2008		629,293	22,452	(6,060)	58,295	(54,162)	649,818	281,307	931,125
Equity changes in 2009
Currency translation differences in the 1st Half of 2009	21.1				(23,440)		(23,440)		(23,440)
Fair value of cash flow hedging	21.1				(2,172)		(2,172)	(1,148)	(3,320)
Fair value of hedging instruments on foreign operations	21.1				5,119		5,119		5,119
Gains/losses directly recognised in equity					(20,493)		(20,493)	(1,148)	(21,641)
Net profit in 1st Half of 2009						72,977	72,977	5,556	78,533
Total gains/losses recognised during the year					(20,493)	72,977	52,484	4,408	56,892
Dividends	21.2					(69,128)	(69,128)	(12,445)	(81,573)
Balance Sheet at 30 June 2009		629,293	22,452	(6,060)	37,802	(50,313)	633,174	273,270	906,444
Balance Sheet at 31 December 2009		629,293	22,452	(6,060)	55,184	77,189	778,058	287,636	1,065,694
Equity changes in 2010
Currency translation differences in the 1st Half of 2010	21.1				(3,852)		(3,852)		(3,852)
Fair value of cash flow hedging	21.1				(4,895)		(4,895)	(2,323)	(7,218)
Fair value of hedging instruments on foreign operations	21.1				475		475		475
Fair value of available-for-sale financial investments	21.1				(439)		(439)		(439)
Gains/losses directly recognised in equity		-	-	-	(8,711)	-	(8,711)	(2,323)	(11,034)
Net profit in 1st Half of 2010						101,743	101,743	3,908	105,651
Total gains/losses recognised during the year		-	-	-	(8,711)	101,743	93,032	1,585	94,617
Dividends	21.2					(89,866)	(89,866)	(13,258)	(103,124)
Balance Sheet at 30 June 2010		629,293	22,452	(6,060)	46,473	89,066	781,224	275,963	1,057,187

To be read with the attached notes to the consolidated financial statements.

Euro thousand

CONSOLIDATED CASH FLOW STATEMENT FOR JUNE 2010 AND 2009

			Euro thousand
	Notes	2010	2009
Operating Activities
Cash received from Customers		4,502,804	3,758,150
Cash paid to Suppliers and Employees		(4,234,677)	(3,566,014)
Cash generated from operations	20	268,127	192,136
Interest paid		(37,718)	(43,791)
Income taxes paid		(14,433)	(14,002)
Cash Flow from operating activities		215,976	134,343
Investment activities
Disposals of tangible assets		3,185	658
Interest received		1,466	1,711
Dividends received		56	33
Acquisition of tangible assets		(165,092)	(156,903)
Disposals of available-for-sale financial investments and
investment property		7,880	-
Acquisition of available-for-sale financial investments and
investment property Acquisition of intangible assets		(5) (15,710)	(17) (4,560)
Cash flow from investment activities		(168,220)	(159,078)
Financing activities
Received from loans		64,635	187,021
Reimbursement of loans		(39,825)	(157,831)
Dividends paid	21.2	(103,124)	(81,573)
Cash Flow from financing activities		(78,314)	(52,383)
Net changes in cash and cash equivalents		(30,558)	(77,118)
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of 1st Half		223,501	227,132
Net changes in cash and cash equivalents		(30,558)	(77,118)
Effect of currency translation differences		1,478	(7,169)
Fair value of financial assets held for trade		-	220
Cash and cash equivalents at the end of 1st Half	19	194,421	143,065

To be read with the attached notes to the consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

Euro thousand

	1st Half	1st Half	2nd Quarter	2nd Quarter
	2010	2009	2010	2009
Cash Flow from operating activities	215,976	134,343	163,365	138,957
Cash Flow from investment activities	(168,220)	(159,078)	(87,980)	(53,080)
Cash Flow from financing activities	(78,314)	(52,383)	(87,171)	(22,518)
Cash and cash equivalents changes	(30,558)	(77,118)	(11,786)	63,359

1	Activity 21
2	Accounting policies 21
3	Segments reporting 22
4	Supplementary income and costs 23
5	Distribution and administrative costs 23
6	Net financial costs 23
7	Financial instruments24
8	Income tax recognised in the income statement24
9	Exceptional operating profits/losses and gains/losses in other investments25
10	Tangible Assets25
11	Intangible Assets 26
12	Investment Property27
13	Derivative financial instruments 27
14	Investments in associated companies 28
15	Available-for-sale financial investments 28
16	Inventories29
17	Taxes 29
18	Trade debtors, accrued income and deferred costs 30
19	Cash and cash equivalents 30
20	Cash generated from operations 31
21	Capital and reserves 31
22	Earnings per share 32
23	Borrowings 32
24	Provisions and adjustments to the net realisable value33
25	Trade creditors, accrued costs and deferred income33
26	Contingencies 33
27	Related parties 34

1 Activity

Jerónimo Martins, SGPS, S.A. (JMH), is the parent Company of Jerónimo Martins Group (Group) and has its head office in Lisbon.

Jerónimo Martins Group is essentially devoted to the production, distribution and sale of food and other fast moving consumer goods products. The Group operates in Portugal and Poland.

Head Office: Rua Tierno Galvan, Torre 3, 9º, J- 1099-008 Lisbon

Share Capital: 629,293,220 euros

Registered at the Commercial Registry Office of Lisbon and Tax Number: 500 100 144

JMH has been listed on Euronext Lisbon (ex-Lisbon and Porto Stock Exchange) since 1989.

The Board of Directors approved these consolidated financial statements on 27th July 2010.

2 Accounting policies

The JMH consolidated financial statements were prepared in accordance with the interim financial reporting standard (IAS 34), and all other International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board (IASB) and with the interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and with the same standards and accounting policies adopted by the Group on the elaboration of the annual financial statements, including mainly an explanation of the events and relevant changes for the understanding of variations in the financial position and Group performance since the last annual report. Thus, some of the notes from the 2009 annual report are omitted because no changes occurred or they are not materially relevant for the understanding of the interim financial statements.

In relation to 2009, the European Union issued the (i) Regulation no. 243/2010, which adopted some improvements to IFRS 2, IFRS 5 IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9 and IFRIC 16 and (ii) Regulation no. 244/2010 which adopted amendments to IFRS 2 - Share-based Payment, clarifying the accounting treatment for group cash-settled share-based payment transactions in the individual financial statements of the entity receiving the goods or services when the entity has no obligation to settle the share-based payment transaction. (iii) Regulation no. 550/2010 which adopted amendments to IFRS 1 – First time adoption of International Financial Reporting Standards, which deals with additional exemptions for firsttime adopters resulting in an amendment on oil and gas assets; and (iv) the Regulation no. 574/2010 which adopted amendments to IFRS 1 – First time adoption of international financial reporting standards and IFRS 7 – Financial Instruments: Disclosures, which clarifies the limited exemption from comparative IFRS 7 Disclosures for first-time adopters.

With regard to Regulations no. 243, no. 244 and no. 550, its implementation is mandatory for financial years beginning after December 31, 2009. The Regulation no. 574 is mandatory for the first financial year starting after June 30, 2010. All the regulations mentioned have no impact on the Group's Financial Statements.

All amounts are shown in thousand euros (EUR thousand) unless otherwise stated.

The amounts presented for quarters, and the corresponding changes are not audited.

2.1. Transactions in foreign currencies

Transactions in foreign currencies are translated into Euros at the exchange rate prevailing on the transaction date.

On the balance sheet date, monetary assets and liabilities expressed in foreign currencies are translated at the exchange rate prevailing on that date and exchange differences arising from this conversion are recognised in the income statement. When qualifying as hedges on investments in foreign subsidiaries the exchange differences are deferred in equity.

The main exchange rates applied on the balance sheet date are those listed below:

	Rate on 30 June 2010	Average rate for the 1st Half
Polish Zloty (PLN)	€ 0.2411	€ 0.2501
US Dollar (USD)	€ 0.8166	-

3 Segments reporting

Segment information is presented in accordance with internal reporting to Management. Based on this report, the Management evaluates the performance of each segment and allocates the available resources.

Management monitors the performance of the business based on a geographical and business nature perspective. In accordance with this, were identified the segments Portugal Retail, Poland Retail, Portugal Cash & Carry and Portugal Manufacturing. Apart from these, there are also other businesses, but due to their reduced materiality are not reported separately.

Business segments:

• Portugal Retail: comprises the business units of JMR (Pingo Doce supermarkets and Feira Nova hypermarkets);
• Portugal Cash & Carry: includes the wholesale business unit Recheio;
• Poland Retail: the business unit with the brand Biedronka;
• Portugal Manufacturing: includes the joint-venture with Unilever, consolidated by the proportional method;
• Others, eliminations and adjustments: includes i) the business units with reduced materiality (Madeira, Marketing Services and Representations, Restaurants and pharmacies in Poland), ii) the Holding companies and iii) the Group's consolidation adjustments.

Management evaluates the performance of segments based on the Earnings Before Interest and Taxes (EBIT). This indicator excludes the effects of non-recurrent results.

	Portugal Retail		Portugal Cash & Carry				Poland Retail		Portugal Manufacturing		Others, eliminations and adjustments			Total JM Consolidated
	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009
Net Sales and Services	1,400,926	1,276,778	336,144		324,698 2,220,941	1,682,186	117,308	118,169	(32,029)		(21,258) 4,043,290	3,380,573
Inter-segments	107,353	93,658	659	441	271	187	21,034	20,233	(129,061)	(114,365)	256	154
External Customers	1,293,573	1,183,120	335,485		324,257 2,220,670	1,681,999	96,274	97,936	97,032		93,107 4,043,034	3,380,419
Operational Cash-Flow (EBITDA)	67,615	69,758	19,005	17,787	159,982	112,084	17,417	19,323	(223)	680	263,796	219,632
Depreciations and Amortisations	(42,905)	(40,415)	(4,389)	(4,244)	(41,046)	(32,499)	(1,591)	(1,951)	(2,391)	(2,747)	(92,322)	(81,856)
Operational Result (EBIT)	24,710	29,343	14,616	13,543	118,936	79,585	15,826	17,372	(2,614)	(2,067)	171,474	137,776
Financial Results											(35,656)	(35,264)
Net Result Attributable to JM											101,743	72,977
TOTAL ASSETS (1)	1,814,850	1,826,021	298,068		291,245 1,442,742	1,093,668	233,319	229,211	110,705		107,129 3,899,684	3,547,274
TOTAL LIABILITIES (1)	1,256,058	1,272,456	241,335	247,378	941,893	672,569	157,992	153,870	245,219		294,557 2,842,497	2,640,830
Investments in Fixed Assets	44,964	35,745	9,106	5,284	122,369	59,966	1,332	1,285	8,045	1,284	185,816	103,564

Detailed Information by Business Segments at June 2010 and 2009

(1) The Comparative report is 31th December of 2009

Reconciliation between EBIT and Operational Result

	June 2010	June 2009
EBIT	171,474	137,776
Non recurrent results	(1,308)	(4,327)
Operational Result	170,166	133,449

Information by Geographical Segments at June 2010 and 2009

	Net Sales and Services
	2010	2009
Portugal	1,819,273	1,696,172
Poland	2,224,017	1,684,401
Total	4,043,290	3,380,573

4 Supplementary income and costs

	June 2010	June 2009
Supplementary gains	166,473	132,862
Cash discount received	18,949	17,951
Cash discount paid	(1,693)	(1,609)
Electronic payment commissions	(7,707)	(6,777)
Other supplementary costs	(2,835)	(3,280)
Provisions for debtors suppliers	(528)	(112)
	172,659	139,035

Supplementary gains concern to profits obtained by the Group through the distribution of goods, namely, rental of spaces, participation in birthday events, rental of shelf's, etc. Supplementary costs concern to the same nature of supplementary gains mentioned, paid by subsidiaries operating in the manufacturing and services segments.

5 Distribution and administrative costs

	June 2010	June 2009
Supplies and services	157,128	137,185
Advertising costs	37,014	29,756
Rents	89,248	79,308
Staff costs	332,095	280,591
Depreciations, amortisations and assets profit/loss	91,855	80,186
Transportation costs	53,124	43,077
Other operational profit/loss	4,907	(249)
	765,371	649,854

6 Net financial costs

	June 2010	June 2009
Interest expense	(32,801)	(35,203)
Interest received	1,462	1,122
Dividends	56	33
Net foreign exchange	(737)	(1,164)
Investment property:
Changes to fair value (note 12)	(9)	(9)
Other financial costs and gains	(3,449)	(2,622)
Fair value of financial investments held for trade
Derivative instruments (note 7)	(144)	2,546
Treasury bonds	-	220
	(35,622)	(35,077)

The interest expense heading includes the interests regarding loans measured at amortized cost, as well as interests on fair value and cash flow hedging instruments (note 13).

Other financial costs and gains include costs with debt issued by the Group.

7 Financial instruments

Fair value of derivative financial instruments

The impact in income statement, is as follows:

	June 2010	June 2009
Derivatives held for trading
Currency swaps	(130)	1,317
Interest rates swaps	(14)	1,229
	(144)	2,546
Income tax recognised in the income statement	38	(675)
Non-controlling interests	52	(381)
Amount recognised in profit/loss	(54)	1,490

The value recognised in reserves referred to hedging of investment in Poland is EUR 474 thousand (net of tax). Changes to the fair value of derivative instruments designated as fair value hedging (note 13) for the amount of positive EUR 24,796 thousand (2009: negative EUR 4,714 thousand) was offset by a symmetrical variation in value for the loan of USD 180 million (note 23.2).

8 Income tax recognised in the income statement

8.1 Income taxes

	June 2010	June 2009
Current income tax
Current tax of the year	(23,348)	(16,947)
Adjustment to prior year estimation	17	121
	(23,331)	(16,826)
Deferred tax (note 17.1)
Temporary differences created and reversed	(6,899)	(3,860)
Change to the recoverable amount of tax losses and temporary differences from previous years	1,371	1,034
	(5,528)	(2,826)
Total income taxes	(28,859)	(19,652)

8.2 Reconciliation of effective tax rate

		June 2010		June 2009
Profit before tax		134,510		98,185
Income tax using the Portuguese corporation tax rate	26.5%	(35,645)	26.5%	(26,019)
Fiscal effect due to:
Different tax rates in foreign jurisdictions	6.7%	9,025	6.6%	6,509
Non taxable or non recoverable results	(0.6%)	(751)	(0.9%)	(862)
Non-deductible expenses and fiscal benefits	(1.1%)	(1,517)	0.5%	451
Adjustment to prior year estimation	0.0%	19	0.1%	121
Change to the recoverable amount of tax losses and
temporary differences of prior years	1.0%	1,371	1.1%	1,034
Results subject to special taxation (including State surcharge)	(1.0%)	(1,361)	(0.9%)	(886)
Income tax	21,5%	(28,859)	20.0%	(19,652)

9 Exceptional operating profits/losses and gains/losses in other investments

9.1 Exceptional operating profits/losses

	June 2010	June 2009
Losses with businesses disposals	(1,235)	-
Losses with organizational restructuring program	-	(3,207)
Losses related to natural disaster in Madeira	(1,000)	-
Reimbursement of notary fees resulting from court decision	1,350	-
Impairment of assets	(402)	(983)
Others	(21)	(137)
	(1,308)	(4,327)

9.2 Gains/Losses in other investments

	June 2010	June 2009
Losses in the fair value of available-for-sale financial investments	-	(177)
Losses with the disposal of available-for-sale financial investments	(149)	-
	(149)	(177)

10 Tangible Assets

10.1 Changes occurred during the year

	Land and	Buildings and	Plants,	Transport	Work in	Total
	natural resources	other constructions	machinery and tools	equipment and others	progress and advances
Cost
Opening balance	414,757	1,513,352	928,342	179,614	114,211	3,150,276
Foreign exchange differences	(1,124)	(7,586)	(2,847)	(862)	(1,376)	(13,795)
Increases	4,581	48,012	52,140	3,621	61,752	170,106
Disposals	(427)	(1,063)	(9,086)	(1,492)	(1,577)	(13,645)
Transfers and write off's	7,113	28,491	(2,110)	453	(39,851)	(5,904)
Transfers from investment properties	954	2,863	-	-	-	3,817
Closing balance	425,854	1,584,069	966,439	181,334	133,159	3,290,855
Depreciation and impairment losses
Opening balance	-	413,296	602,737	131,412	-	1,147,445
Foreign exchange differences	-	(2,202)	(1,448)	(710)	-	(4,360)
Increases	-	38,984	39,926	9,691	-	88,601
Disposals	-	(34)	(8,750)	(1,455)	-	(10,239)
Transfers and write off's	-	(840)	(3,531)	(363)	-	(4,734)
Transfers from investment properties	-	531	-	-	-	531
Impairment losses	-	3,392	2,065	169	-	5,626
Closing balance	-	453,127	630,999	138,744	-	1,222,870
Net value
As at 1 January 2010	414,757	1,100,056	325,605	48,202	114,211	2,002,831
As at 30 June 2010	425,854	1,130,942	335,440	42,590	133,159	2,067,985

The impairment losses are related to the natural disaster in Madeira island. These impairments are covered by insurance and were recognised as an exceptional operating profits/losses in the financial statements.

10.2 Guarantees

No tangible assets have been pledged as security for the fulfilment of bank or other obligations.

10.3 Revaluation

No changes occurred in the market value of land allocated to the operating activity.

11 Intangible Assets

11.1 Changes occurring during the year

	Goodwill	R&D expenses	Software, ind. property and other rights	Key money	Work in progress	Total
Cost
Opening balance	736,633	26,066	53,425	72,254	7,693	896,071
Foreign exchange differences	(3,202)	(210)	(425)	(653)	(219)	(4,709)
Increases	-	611	2,406	6,331	6,362	15,710
Transfers and write off's	-	(686)	1,332	1,562	(3,307)	(1,099)
Closing balance	733,431	25,781	56,738	79,494	10,529	905,973
Depreciation and impairment losses
Opening balance	-	24,533	4,735	31,435	-	60,703
Foreign exchange differences	-	(207)	(15)	(167)	-	(389)
Increases	-	372	632	2,720	-	3,724
Transfers and write off's	-	(2,242)	(201)	(5)	-	(2,448)
Impairment losses	-	-	8	-	-	8
Closing balance	-	22,456	5,159	33,983	-	61,598
Net value
As at 1 January 2010	736,633	1,533	48,690	40,819	7,693	835,368
As at 30 June 2010	733,431	3,325	51,579	45,511	10,529	844,375

The Group identified as intangible assets of indefinite useful life, besides Goodwill, the trademarks Pingo Doce and Feira Nova, for which there is no time limit for how long they will continue to create economic benefits to the Group. Their net value is EUR 9,228 thousand for Pingo Doce brand and EUR 4,489 thousand for Feira Nova brand, which are not being amortised and are subject to impairment tests annually, using the same assumptions applied in Goodwill (note 11.4).

11.2 Guarantees

No intangible assets have been pledged as security for the fulfilment of bank or other obligations.

11.3 Intangible assets in progress

The implementation of projects for processes simplification, usufruct rights of assets not yet operational and key money are considered in intangible assets work in progress.

11.4 Goodwill

Goodwill is allocated to the Groups' business areas as presented bellow:

Business Areas	June 2010	December 2009
Portugal Retail	239,386	239,386
Portugal Cash & Carry	82,460	82,460
Madeira	8,509	8,509
Portugal Manufacturing	93,809	93,809
Services	57	57
Poland Retail	309,210	312,412
	733,431	736,633

As a consequence of the currency translation adjustment of assets in the Group's business in Poland, the Goodwill related to this business, totalling PLN 1,282,278 thousand, was decreased by EUR 3,202 thousand.

12 Investment Property

	June 2010
Opening balance	63,283
Increases	5
Transfers to tangible assets	(3,286)
Changes to fair value	(9)
Impairment Losses	(4,215)
Disposals	(64)
Closing balance	55,714

The investment property relates to plots of land initially acquired for use in Group operations and others actually used for that purpose for a period of time but which became redundant, either because they could not be used to build cash-generating units or because they became superfluous as a result of the restructuring of operations.

This category also includes recently acquired land, whose use has still not been determined, being, therefore, considered has investment expecting for a market value increase.

As non-current assets are all the investment properties that are not expectable to be sold within a period below 12 months.

13 Derivative financial instruments

				June 2010			December 2009
	Notional		Assets		Liabilities	Notional		Assets		Liabilities
		Current	Non Current	Current	Non Current		Current	Non Current	Current	Non Current
Derivatives held for trading
Interest rate swap	10 millions EUR	-	-	-	512	10 millions EUR	-	-	-	564
Currency Forwards (PLN)		-	-	-		- 14.1 millions	115	-	-	-
Currency Forwards (USD)		-	-	-		PLN - 0.6 millions USD	15	-	-	-
Fair value hedging derivatives
USD loan hedging	180 millions USD	588	7,442	-		- 180 millions USD	-	-	-	16,766
Cash flow hedging derivatives
Interest rate swap (EUR)	525.9 millions EUR	-	-	976	20,862	527.7 millions	-	-	-	12,807
Interest rate swap (PLN)	256.5 millions PLN	-	12	-		EUR 428 171 millions PLN	-	351	-	-
Foreign operation investments hedging derivatives
Currency swap (PLN)	400 millions PLN	3,243	-	-		- 400 millions PLN	1,385	-	-	-
Currency Forwards (PLN)	110 millions PLN	-	-	1,707		- 197 millions PLN	-	-	3,084	-
Total derivatives held for trading		-	-	-	512		130	-	-	564
Total hedging derivatives		3,831	7,454	2,683	21,290		1,385	351	3,084	29,573
Total assets/liabilities derivatives		3,831	7,454	2,683	21,802		1,515	351	3,084	30,137

In June 2010 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 2,004 thousand.

Derivatives held for trading

Interest rate swap

At 30 June 2010, the Group had derivatives financial instruments held for trading with a notional of EUR 10,000 thousand (December 2009: EUR 10,000 thousand). The fair value of these instruments at 30 June 2010 was negative EUR 512 thousand (December 2009: negative EUR 564 thousand).

Currency Forwards

The Group hedges the economic risk of its exposure to the exchange rate of Zloty and US Dollar, regarding the purchase of goods in foreign currency. To do so, the Group entered into currency forwards, with maturities in the 1st quarter 2010. The derivative financial instruments held at 31 December 2009 had a notional of PLN 14,107 thousand and USD 609 thousand. The fair value of these instruments at 31 December 2009 was EUR 130 thousand positive. At 30 June 2010 there were no derivative instruments in this category.

Fair value hedge

Currency swap

The Group hedges its exposure to the fair value of its loans in the total amount of USD 180,000 thousand, through two cross currency swaps that have the same characteristics as the debt that was issued. The purpose of this hedge is to convert the fixed rate into a variable rate, and to hedge exposure to the US dollar, thus reflecting changes to the debt fair value. Credit risk is not hedged. The fair value of the two cross currency swaps at 30 June 2010 was positive EUR 8,030 thousand (December 2009: negative EUR 16,766 thousand).

Cash flow hedge

Interest rate swap

The Group enters into interest rate swaps to hedge interest rate risk, regarding future interest payments on the loans. At 30 June 2010, the total loans with derivative hedge instruments were EUR 643,157 thousand (2009: EUR 647,007 thousand) and PLN 285,000 thousand (December 2009: 285,000).

The Group set a portion of future interest payments on loans, through entering into interest rate swaps. The hedged risk is indexed to the variable rate associated with the loans. The purpose of the hedge is to convert the loans with variable interest rate into fixed interest rate. The credit risk is not hedged. The Group had interest rate swaps in Euro and Zlotys.

Interest rate swaps in Euro have a notional EUR 525,875 thousand (December 2009: EUR 527,675 thousand), and the fair value of these instruments at 30 June 2010 was negative EUR 21,838 thousand (December 2009: negative EUR 12,807 thousand).

On the other hand, the interest rate swaps in Zlotys have a notional PLN 256,500 thousand (December 2009: PLN 171,000 thousand), and its fair value at 30 June 2010 was negative EUR 416 thousand (December 2009: positive EUR 351 thousand).

Hedging of investments in foreign entities

Currency Swap

The Group hedges part of its exposure to the variation of the Zloty due to its net investment in Poland through an exchange rate swap of PLN 400,000 thousand (December 2009: PLN 400,000 thousand). The fair value of the derivative at 30 June 2010 was positive EUR 3,243 thousand (December 2009: positive EUR 1,385 thousand). The changes in the derivative fair value were recognised in equity currency translation reserve.

Currency Forwards

The Group hedges the economic risk of its exposure to the exchange rate of Zloty. To do so, the Group entered currency forwards, with monthly maturities up to December 2010, involving a notional of PLN 110,000 thousand (December 2009: PLN 197,000 thousand). The fair value of these derivatives at 30 June 2010 was negative EUR 1,707 thousand (December 2009: negative EUR 3,084 thousand). The changes in the derivative fair value were recognised in equity currency translation reserve.

14 Investments in associated companies

During the 1st half of 2010, the movement under this heading was as follows:

	June 2010
Opening balance	1,118
Equity method	115
Closing balance	1,233

15 Available-for-sale financial investments

Regarding the financial assets available-for-sale, the reduction of EUR 438 thousand respects to changes in the fair value of listed equity holdings, at the reporting date of these financial statements.

16 Inventories

	June 2010	December 2009
Raw and subsidiary materials and consumables	6,164	4,779
Goods and work in progress	906	669
Finished and semi-finished goods	1,170	242
Goods	352,419	340,915
	360,659	346,605
Fair value adjustment (note 24)	(14,575)	(12,127)
Net inventories	346,084	334,478

No inventories have been pledged as guarantee for the fulfilment of contractual obligations.

17 Taxes

17.1 Deferred tax assets and liabilities

Change in deferred tax accounts

	June 2010
Opening balance	(19,871)
Currency translation difference (note 21.1)	(420)
Revaluation and reserves (note 21.1)	2,562
Result of the year (note 8.1)	(5,528)
Closing balance	(23,257)

Deferred taxes are presented in balance sheet as follows:

	June 2010	December 2009
Deferred tax assets	67,756	69,021
Deferred tax liabilities	(91,013)	(88,892)
	(23,257)	(19,871)

Movement in deferred taxes during the year

	Opening balance	Impact on results	Impact on equity	Currency translation differences	Closing balance
Deferred tax liabilities
Revaluation of assets	32,550	(396)	-	(43)	32,111
Deferred income for tax purposes	3,584	2,427	-	(124)	5,887
Differences on accounting policies in other countries	12,297	139	-	(131)	12,305
Deferred taxation of results	35,745	-	-	(366)	35,379
Other temporary differences	4,716	615	-	-	5,331
	88,892	2,785	-	(664)	91,013
Deferred tax assets
Excess over legal provisions	18,820	(2,023)	-	(61)	16,736
Revaluation of assets	1,225		-	-	1,225
Employee benefits	4,009	82	-	-	4,091
Costs with foreign exchange risk hedging operations	3,665	409	2,562	(787)	5,849
Recoverable losses	7,675	(885)	-	(5)	6,785
Profit in inventories	426	(4)	-	-	422
Fair value adjustments on inventories	2,367	525	-	(30)	2,862
Other deferred costs for tax purposes	24,394	(1,202)	-	(164)	23,028
Differences on accounting policies in other countries	2,324	369	-	(37)	2,656
Other temporary differences	4,116	(14)	-	-	4,102
	69,021	(2,743)	2,562	(1,084)	67,756
Net change in deferred tax	(19,871)	(5,528)	2,562	(420)	(23,257)

17.2 Receivable and payable taxes

	June 2010	December 2009
Taxes receivable
Income tax receivable	16,558	15,030
VAT receivable	20,574	6,453
Others	875	852
	38,007	22,335
Taxes payable
Income tax payable	24,290	14,752
VAT payable	34,812	20,079
Income tax withheld	5,418	4,585
Social security	18,330	15,899
Other taxes	5,861	5,706
	88,711	61,021

18 Trade debtors, accrued income and deferred costs

	June 2010	December 2009
Non-current
Other debtors	66,090	66,326
Deferred costs	5,324	5,979
	71,414	72,305
Current
Commercial customers	99,753	78,274
Suppliers	18,019	13,226
Staff	1,628	1,539
Other debtors	42,326	54,919
Accrued income	18,947	31,309
Deferred costs	13,647	11,526
	194,320	190,793

Non-current debtors balance of EUR 66,072 thousand is related to additional tax liquidation, as well as advances on account of tax. The Group has already contested the amount paid and made a legal claim for reimbursement.

Accrued income essentially respects to the recognition of supplementary gains contracted with suppliers, in the amount of EUR 17,006 thousand.

The debtor's amount is registered by the recoverable value, i.e., the Group constitutes provisions for impairment losses whenever there are signs of uncollectable amounts (note 24).

19 Cash and cash equivalents

	June 2010	December 2009
Bank deposits	135,298	187,497
Short-term investments	56,062	32,272
Cash and cash equivalents	3,061	3,732
	194,421	223,501

The short-term investments include short-term bank deposits and other negotiable funds for which provisions were booked to reduce it to the realizable value (note 24).

20 Cash generated from operations

	June 2010	June 2009
Net results	101,743	72,977
Adjustments for:
Non-controlling interests	3,908	5,556
Taxes	28,859	19,652
Depreciations	92,322	81,856
Provisions	7,639	2,502
Net financial costs	35,622	35,077
Profit/ Losses in associated companies	(115)	10
Profit/ Losses on financial investment disposals	149	177
Profit/ Losses on tangible assets disposals	1,547	1,115
	271,674	218,922
Changes in working capital:
Inventories	(16,538)	55,757
Trade debtors, accrued income and deferred costs	(21,908)	(21,932)
Trade creditors, accrued costs and deferred income	34,899	(60,611)
	268,127	192,136

21 Capital and reserves

21.1 Fair value and other reserves

	Land and buildings	Cash-flow Hedging reserve	Available-for sale financial investments	Currency translation reserve	Total
Balance as at 1 January 2010	84,931	(4,985)	58	(24,820)	55,184
Fair value adjustment of financial investments: - Gross value - Deferred/current tax - Non-controlling interests		(9,780) 2,562 2,323		692 (217)	(9,088) 2,345 2,323
Fair value adjustment of available-for-sale financial investments: - Gross value			(439)		(439)
Currency translation differences: - In the year - Deferred tax	(228) 43	5 (1)		(3,468) (203)	(3,691) (161)
Balance as at 30 June 2010	84,746	(9,876)	(381)	(28,016)	46,473

	Land and buildings	Cash-flow Hedging reserve	Currency translation reserve	Total
Balance as at 1 January 2009	93,783	(1,082)	(34,406)	58,295
Fair value adjustment of financial investments: - Gross value - Deferred tax - Non-controlling interests	- - -	(4,368) 1,048 1,148	6,966 (1,847) -	2,598 (799) 1,148
Currency translation differences: - In the year - Deferred tax	- -	- -	(22,870) (570)	(22,870) (570)
Balance as at 30 June 2009	93,783	(3,254)	(52,727)	37,802

21.2 Dividends

Dividends distributed in 2010 in the amount of EUR 103,124 thousand, were paid to Jerónimo Martins, SGPS, S.A. shareholders an amount of EUR 89,866 thousand and to non-controlling interests in the Group companies an amount of EUR 13,258 thousand.

22 Earnings per share

22.1 Basic and diluted earnings per share

Basic net results per share are calculated based on the net profit of EUR 101,743 thousand (2009: profit of EUR 72,977 thousand) and on weighted average outstanding ordinary shares, numbering 628,434,220 (2009: 628,434,220).

22.2 Weighted average ordinary shares

	June 2010	June 2009
Ordinary shares issued at the beginning of the year	629,293,220	629,293,220
Own shares at the beginning of the year	859,000	859,000
Shares issued during the year	-	-
Weighted average number of ordinary shares	628,434,220	628,434,220

22.3 Diluted net results attributable to ordinary shares

	June 2010	June 2009
Weighted average ordinary shares	628,434,220	628,434,220
Diluted net results of the year attributable to ordinary shares	101,743	72,977
Basic and diluted earnings per share – Euros	0.1619	0.1161

23 Borrowings

Throughout the second quarter, Jerónimo Martins, SGPS, SA, has renegotiated some commercial paper programs, on what maturities, amounts and pricings concerns.

New financial leasing operations were contracted for 48-month periods in the amount of EUR 18,700 thousand, with quarterly amortisation.

23.1 Current and non-current loans

	June 2010	December 2009
Non-current loans
Bank loans	192,902	198,487
Bond loans	462,907	509,127
Financial lease liabilities	47,934	48,747
	703,743	756,361
Current loans
Bank overdrafts	21,616	21,563
Bank loans	99,695	67,119
Bond loans	71,000	-
Financial lease liabilities	34,323	35,813
	226,634	124,495

23.2 Loan terms and maturities

	Average rate	Total	Less than 1 year	Between 1 and 5 years	More than 5 years
Bank loans
Commercial Paper in EUR	3.13%	114,000	44,000	70,000	-
Loans in EUR	1.28%	79,055	17,643	61,412	-
Loans in PLN	5.16%	99,542	38,052	61,490	-
Bond Loans
Loans	4.04%	526,007	70,470	455,537	-
Fair value adjustment		7,900	530	7,370
Bank overdrafts	3.80%	21,616	21,616		-
Financial lease liabilities	1.17%	82,257	34,323	47,934	-
		930,377	226,634	703,743	-

The amount of EUR 7,900 thousand, adjusted to the total of bond loans, refers to the updating of the bond loan for USD 180,000 thousand, for which the Group contracted a hedging instrument, presented in note 13, with a symmetrical value.

23.3 Financial debt

As the Group contracted several foreign exchange rate risk and interest risk hedging operations, as well as short-term investments, the net consolidated financial debt as at 30 June is as follows:

	June 2010	December 2009
Non-current loans (note 23.1)	703,743	756,361
Current loans (note 23.1)	226,634	124,495
Derivative financial instruments (note 13)	13,200	31,355
Interest on accruals and deferrals	(186)	(442)
Bank deposits (note 19)	(135,298)	(187,497)
Short-term investments (note 19)	(56,062)	(32,272)
	752,031	692,000

24 Provisions and adjustments to the net realisable value

	Opening balance	Provisions set up	Provisions used	Foreign exchange difference	Closing balance
Doubtful debtors (note 18)	22,342	676	(481)	(34)	22,503
Inventories (note 16)	12,127	3,608	(1,003)	(157)	14,575
Financial Investments (note 15)	2,058	438	-	-	2,496
Short terms investments	57	-	-	-	57
Total fair value adjustments	36,584	4,722	(1,484)	(191)	39,631
Employee benefits	27,738	2,777	(734)	-	29,781
Other risks and contingencies	18,480	4,279	(2,105)	(104)	20,550
Total of provisions	46,218	7,056	(2,839)	(104)	50,331

25 Trade creditors, accrued costs and deferred income

	June 2010	December 2009
Other commercial creditors	1,350,972	1,361,115
Other non-commercial creditors	96,039	89,083
Accrued costs	203,104	194,110
Deferred income	6,105	3,182
	1,656,220	1,647,490

26 Contingencies

Following the contingencies mentioned in the 2009 Annual Report, changes occurred on the headings a), b), e) and p), as well as a new contingency described bellow:

• a) Concerning the lawsuit filed in 1999, as a result of the acquisition by the Group of two companies that held stores previously owned by former franchisees of ITMI – Norte-Sul Portugal – Sociedade de Desenvolvimento e Investimento, S.A., the Court has ruled, in July, on the several issues considered proved and basically, considered that there were no losses which confirmed the belief of the Board of Directors that the amount requested was not owed.
• b) In the lawsuit filed by Leirimundo Construção Civil, Lda. for the judicial annulment of the arbitration ruling that was won by JMR - Prestação de Serviços para Distribuição, S.A. (previously known as Gestiretalho - Gestão e Consultoria para a Distribuição a Retalho, S.A.) concerning the litigation involving both parties, the Judicial Court of the District of Lisbon ruled, as expected, in JMR's favour, dismissing Leirimundo's claim.
• e) On the process that opposes Tengelmann KG and the companies Jerónimo Martins, SGPS, S.A. and Pingo Doce - Distribuição de Produtos Alimentares, S.A., has changed. Regarding this procedure, the parties reached an agreement on the first week of March, which also encompassed other issues that were discussed between the two Groups. This agreement was ratified by the Arbitration Court on March 12th.

The amount paid by Jerónimo Martins Group is not material if compared with the value of the claim and, as mentioned, includes the settlement of other outstanding issues between the two Groups, like the pipeline stores in Portugal.

p) During the second quarter of 2010, the Portuguese tax authorities have partially ruled in favour of Feira Nova – Hipermercados, S.A. and Pingo Doce – Distribuição Alimentar, S.A., a total amount of EUR 460 thousand. These additional assessments, related to years 2006 and 2007, were issued because the tax authorities argue that some goods were sold at a lower VAT rate than the one due. Nevertheless, since these assessments were not yet totally ruled in favour of the companies, Feira Nova and Pingo Doce supported by their tax consultants, will continue challenging these assessments, believing that the tax authorities have no grounds to request these payments.

The Portuguese tax authorities claim from Recheio, SGPS, S.A. the amount of EUR 582 thousands, regarding Corporate Income Tax (CIT) – fiscal year of 2007. The Portuguese Tax Authorities following their own internal understanding argue that Recheio should have not deducted part of its financial costs. Recheio, supported by its tax consultants, believes that the report issued by the tax authorities has no grounds, and it will be challenged, meanwhile no changes were made on the financial statements.

27 Related parties

56.11% of the Group is owned by the Sociedade Francisco Manuel dos Santos, and no transactions occurred between this Company and any other company of the Group in the 1st half of 2010, neither were there any amounts payable or receivable between them on June 30th, 2010.

Balances and transactions of Group companies with related parties are as follows:

	Sales and services rendered		Stocks purchased and services supplied
	June 2010	June 2009	June 2010	June 2009
Joint-Ventures	489	295	46,376	44,059
Associated companies	41	315	429	228

	Accounts payable		Accounts receivable
	June 2010	December 2009	June 2010	December 2009
Joint-Ventures	525	607	19,842	8,900
Associated companies	1	1	669	678

Balances and transactions with related parties not eliminated in the consolidation process, were as follows:

	Sales and services rendered		Stocks purchased and services supplied
	June 2010	June 2009	June 2010	June 2009
Joint-Ventures	256	154	25,507	24,232
Associated companies	41	315	429	228

	Accounts payable		Accounts receivable
	June 2010	December 2009	June 2010	December 2009
Joint-Ventures	274	319	10,912	4,894
Associated companies	1	1	669	678

All the transactions with the jointly controlled companies (joint ventures) and associate companies were made under normal market conditions, i.e., the transaction value corresponds to prices that would be applicable between non related parties.

Outstanding balances between Group companies and related parties, being a result of a trade agreement, are settled in cash, and are subject to the same payment terms as those applicable to other agreements celebrated between Group companies and their suppliers.

The amounts receivable are not covered by insurance and no guarantees are given or received, as the Group holds a relevant influence over these companies.

There are no provisions for doubtful debts and no costs were recognised during the year related with bad debts or doubtful debts with these related parties.

Lisbon, 27th July, 2010

The Certified Accountant The Board of directors

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. Palácio Sottomayor Rua Sousa Martins, 1 - 3º 1069-316 Lisboa Portugal Tel +351 213 599 000 Fax +351 213 599 999

Limited Review Report for Stock Exchange Regulatory Purposes in respect of the Consolidated Financial Information

(Free translation from the original version in Portuguese)

Introduction

1 We present our Limited Review Report on the consolidated information for the period of six months ended 30 June 2010, of Jerónimo Martins, SGPS, SA., included: in the Directors' Report, the consolidated balance sheet (which shows a total of euros 3.899.684 thousand, and a total shareholders' equity of euros 1.057.187 thousand, including noncontrolling interests of euros 275.963 thousand and a profit for the period of euros 101.743 thousand), the consolidated statement of income by functions, the consolidated statement of gains and losses recognised in equity, the consolidated statement of changes in equity and the consolidated cash flow statements for the period then ended and the respective notes.

2 The amounts in the consolidated financial statements, as well as the financial information, were obtained from the accounting records.

Responsibilities

3 It is the responsibility of the Company's Board of Directors: (a) to prepare the consolidated financial information that present a true and fair view of the financial position of the companies included in the consolidation and the consolidated results of their operations; (b) to prepare historical financial information in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the EU that is complete, true, timely, clear, objective and licit, as required by the Portuguese Securities Market Code; (c) to adopt adequate accounting policies and criteria; (d) to maintain appropriate systems of internal control; and (e) to disclose any relevant matters which have influenced their activity, financial position or results.

4 Our responsibility is to verify the financial information included in the above mentioned documents, namely if, it is complete, true, timely, clear, objective and licit, as required by the Portuguese Securities Market Code, and to issue a professional and independent report based on our work.

Jerónimo Martins, SGPS, SA.

Scope

5 Our work was performed, with the objective of obtaining moderate assurance about whether the financial information referred to above is free of material misstatement. Our work, which was performed in accordance with the Standard and Technical Recommendations approved by the Portuguese Institute of Statutory Auditors, was planned in accordance with that objective, and consisted mainly of inquiries and analytical procedures to review: (i) the reliability of the assertions included in the financial information; (ii) the adequacy of the accounting policies adopted considering the circumstances and their consistent application; (iii) the applicability, or otherwise, of the going concern basis of accounting; (iv) the presentation of the financial information; and (v) if, the consolidated financial information is complete, true, timely, clear, objective and licit.

6 Our work also covered verification of the consistency of the consolidated financial information included in the Directors' Report with the remaining documents referred to above.

7 We believe that our work provides a reasonable basis for issuing this report on the half yearly financial information.

Conclusion

8 Based on our work, which was performed with the objective of obtaining moderate assurance, nothing came to our attention that leads us to believe that the consolidated financial information for the period of six months ended 30 June 2010 is not free of material misstatements that affects its conformity with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the EU and that it is not complete, true, timely, clear, objective and licit.

Lisbon, 3 August 2010

PricewaterhouseCoopers & Associados, S.R.O.C., Lda. represented by:

Abdul Nasser Abdul Sattar, R.O.C.