Jeronimo Martins — Interim / Quarterly Report 2010

Nov 25, 2010

Consolidated Report First Nine Months of2010

Non Audited

INDEX

I – Consolidated Management Report
1. Introduction	3
2. Sales Analysis	3
3. Results Analysis	4
4. Balance Sheet	5
5. Outlook	6
II – Consolidated Management Report Appenix
1. Stores Growth	7
2. Stores Network	7
3. EBITDA Margin Breakdown	7
2. Definitions	8
3. Information Regarding Individual Financial Statements	8
III – Consolidated Financial Statements
1. Financial Statements	10

2. Notes to the Consolidated Financial Statements	14

I. CONSOLIDATED MANAGEMENT REPORT

Message from the CEO – Pedro Soares dos Santos

"We are especially pleased with the Group's performance in the first nine months (9M) of the year. All the business areas obtained strong results and strengthened their market shares.

We believe that the Group is well prepared to ensure its growth, notwithstanding the attention we are paying to the macro-economic and competitive environment.

This solid performance reinforces our confidence in reaching, at the year-end, double-digit sales growth and an even higher earnings evolution."

1. Introduction

The strong sales and earnings performance in the third quarter 2010 reinforces the solid growth trend already demonstrated in the first half of the year.

Consolidated sales, in the first nine months of the year, grew 19.1% (+13.6% at a constant exchange rate) to Euro6,333.1 mn and EBITDA increased 23.6% (+17.5% at a constant exchange rate), a higher rate than that of the sales growth, reaching 7.3% of sales.

Cash flow per share increased by 24.7%.

Consolidated debt was reduced by Euro209.4 mn compared to the same period the previous year.

Consolidated net earnings reached Euro193.9 mn, a year-on-year increase of 39.8%.

2. Sales Analysis

NET SALES AND SERVICES
(Million Euro)	9M 10		9M 09			Δ %	Q 3 10		Q3 09			Δ %
	Eur Tho.	% total	Eur Tho.	% total	Pln	Euro	Eur Tho.	% total	Eur Tho.	% total	Pln	Euro
Retail Mainland	2,191	34.6%	1,973	37.1%		11.0%	790	34.5%	697	36.0%		13.5%
Recheio	542	8.6%	520	9.8%		4.4%	206	9.0%	195	10.1%		5.8%
Madeira	102	1.6%	96	1.8%		6.2%	40	1.8%	35	1.8%		13.7%
Biedronka	3,466	54.7%	2,674	50.3%	18.8%	29.6%	1,245	54.4%	992	51.2%	20.0%	25.5%
Ma nufa cturing	188.1	3.0%	187	3.5%		0.5%	71	3.1%	69	3.6%		2.7%
Mkt. Repr. and Rest. Serv.	66	1.0%	62	1.2%		5.4%	23	1.0%	22	1.1%		5.3%
Consolidation Adjus tments	‐222	‐3.5%	‐194	‐3.7%		14.3%	‐86	‐3.8%	‐72	‐3.7%		19.2%
Total JM	6,333	100%	5,318	100%		19.1%	2,289.9	100%	1,938	100%		18.2%
p.m. Retail Mainland (s tore sales)	2,010		1,820			10.5%	720		639			12.6%

Consolidated sales reached Euro6,333.1 mn, 19.1% more than in the first 9M of the previous year, as a result of a Like-for-Like (LFL) performance of 8.7% of the Group's consolidated sales, of the contribution of the new stores and also of the 9.1% appreciation in the average exchange rate of the Zloty against the Euro.

In the first 9M of 2010, Biedronka's total sales posted a 18.8% growth in local currency, as a result of the strong LFL (+11.1%) and the store opening programme, which provided a 11.5% increase in its selling area compared to 9M of 2009. Biedronka increased its weight on consolidated sales to 54.7%.

It should also be pointed out that food inflation in Poland turned around to positive values during third quarter and in the first 9M of 2010, the Biedronka basket included a positive inflation value of +0.6%.

The business models in Portugal – Pingo Doce and Recheio – recorded another remarkable sales performance in the quarter.

In the first 9M of 2010, Pingo Doce (supermarkets) had a LFL growth of 9.1%, supported by its differentiated value proposal which awareness has been enhanced by the advertising campaign that began at the end of 2009.

It should be noted that average Pingo Doce's food basket posted 1.8% inflation in third quarter following the positive trend registered in the country. However, in comparison with the first 9M of the previous year, there is still negative inflation for the average basket (-0.5%).

At Recheio, sales growth accelerated in the third quarter in both segments – Traditional Retail and HoReCa -especially in the latter. In the first 9M of 2010, the Company's LFL sales increased 3.4%, helped by its very competitive price positioning and the Company's commercial strength.

In Madeira, total sales in the 9M of 2010 posted a strong growth of 6.2%, which was even more significant in third quarter (+13.7%) due to the reopening of the Company's two main stores, which had been closed for over 3 months due to the storm that affected the island in February this year. Hence, Pingo Doce continued to consolidate its leadership position in the food retail sector, mainly through the increase in the number of consumers.

In Manufacturing, volume sales reinforced the previous months' positive trend and some categories such as ice creams, olive oil and ice tea performed particularly well. In value terms, this business area accelerated its sales growth compared to the first semester of 2010, with a year-on-year growth of 0.5% in the first 9M of 2010.

In the area of Marketing, Representations and Restaurant Services, total sales grew 5.4%, mostly reflecting the new represented brands, which joined its portfolio in 2009.

CONSOLIDATED RESULTS
(Million Euro)	9M 10		9M 09		Δ	Q3 10		Q3 09		Δ
Net Sales & Services	6,333		5,318		19.1%	2,290		1,938		18.2%
Total Ma rgin	1,484	23.4%	1,241	23.3%	19.6%	548	23.9%	454	23.4%	20.7%
Opera ting Costs		‐1,023 ‐16.1%		‐868 ‐16.3%	17.8%		‐350 ‐15.3%		‐300 ‐15.5%	16.6%
EBITDA	461.9	7.3%	374	7.0%	23.6%	198	8.6%	154	8.0%	28.6%
Depreciation	‐141	‐2.2%	‐125	‐2.3%	13.0%	‐48	‐2.1%	‐43	‐2.2%	13.3%
EBIT	321	5.1%	249	4.7%	28.9%	150	6.5%	111	5.7%	34.4%
Net Financial Results	‐51	‐0.8%	‐53	‐1.0%	‐3.4%	‐16	‐0.7%	‐18	‐0.9%	‐12.3%
Non Recurrent Items	‐2	0.0%	‐6	‐0.1%	n.a	0	0.0%	‐2	‐0.1%	n.a
EBT	268	4.2%	190	3.6%	41.4%	134	5.8%	92	4.7%	46.1%
Taxes	‐58	‐0.9%	‐38	‐0.7%	52.1%	‐29	‐1.3%	‐19	‐1.0%	57.6%
Net Profit	210	3.3%	151	2.8%	38.7%	104	4.6%	73	3.8%	43.1%
Non Controlling Interest	‐16	‐0.3%	‐13	‐0.2%	26.1%	‐12	‐0.5%	‐7	‐0.4%	69.7%
Net Profit attr. to JM	193.9	3.1%	139	2.6%	39.8%	92.1	4.0%	66	3.4%	40.3%
EPS (€)	0.31		0.22		39.8%	0.15		0.10		40.3%
Cash Flow per share (€)	0.57		0.46		24.7%	0.24		0.19		28.1%

3. Results Analysis

Operating Profit

Consolidated EBITDA showed a strong performance in the first 9M of the year, reaching Euro461.9 mn, 23.6% higher than the same period the previous year, and a margin of 7.3% of sales (7.0% in 9M of 2009).

At Biedronka, the benefits in the EBITDA margin inherent to the increasing scale of the operation, already notably important in the first semester of 2010, continued to be reflected throughout the third quarter. Together with a stable competitive environment, a particularly hot Summer (that boosted the drinks category), and the campaign to celebrate Biedronka's 15th anniversary in Poland, enabled the Company to strengthen its performance, leveraging the EBITDA margin in the 9M of 2010 to 7.8% of sales (+7.1% in the same period the previous year). For the period under review, the resulting EBITDA grew 30.2% (+42.1% in Euros), higher than the sales growth.

Net Result

Net profit attributable to Jerónimo Martins grew 39.8%, reaching Euro193.9 mn, +36.4% when excluding non-recurring items.

4. Balance Sheet

BALANCE SHEET
(Million Euro)	9M 10	09 YE	9M 09
Net Goodwill	746.0	736.6	727.3
Net Fixed Assets	2,269.6	2,101.6	2,011.0
Net Working Capital	‐1,353.9	‐1,201.5	‐1,097.4
Others	86.1	121.0	129.2
Invested Capital	1,747.9	1,757.7	1,770.1
Financial Debt	731.7	796.3	863.7
Lea sings	81.3	84.6	89.4
Accrued interest	32.0	30.9	32.5
Marketable sec. & Bank deposits	‐273.4	‐219.8	‐204.6
Net Debt	571.5	692.0	780.9
Non Controlling Interests	287.0	287.6	278.3
Share Capital	629.3	629.3	629.3
Reserves and Retained Ea rnings	260.1	148.8	81.6
Shareholders Funds	1,176.4	1,065.7	989.1
Gearing	48.6%	64.9%	79.0%

Consolidated net debt reached Euro571.5 mn, a reduction of Euro209.4 million in comparison to 9M of 2009, benefiting from the increase in the cash flow generation and also from a strict working capital management. Gearing was 48.6% and the strengthening of the balance sheet remains as one of the Group's priorities.

Investment Programme

With regard to the Group's investment programme, the main priority was the expansion of the number of stores in Poland. Thus, Biedronka absorbed 65.8% of the total of Euro288.9 mn invested in the first 9M of the year.

The Polish company opened 105 locations, reaching 1,559 stores in the first 9M of 2010 and in line with the normal seasonality of expansion, the opening of the largest number of new stores will be concentrated in the fourth quarter. Biedronka also carried out 80 refurbishments in the first 9M of 2010.

Pingo Doce opened six stores since the beginning of the year and refurbished 18 stores, 10 of which were former Plus stores and two were conversions of hypermarkets into Pingo Doce stores.

In August 2010, Recheio opened a new store in the outskirts of Lisbon with 4,000 sqm, bringing the Company's total number of stores to 38.

5. Outtlook

The results for the first 9M of 2010 make possible to reinforce the confidence in the strategies adopted by the Group's main banners.

In Poland, Biedronka continues to benefit from its market leadership position and has increased its advantage, in store numbers and sales volume, against its main competitors, which is reflected in efficiencies of scale and in profitability increases. For the fourth quarter of 2010, LFL sales and EBITDA should continue to reflect the positive trend already demonstrated in the first 9M.

Biedronka will remain focused on its store opening plan and until the end of the year, apart from around 30 more refurbishments, the Company is expecting to open c.80 new stores in the fourth quarter.

Although being prudent on the impact of the austerity measures under discussion in Portugal, the Group maintains its confidence on the competitiveness of its business models.

As suggested by the performance in the first 9M of 2010, the Group has expectations of a new record year regarding sales and results.

Lisbon, 26th October, 2010

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Growth

			Total Sales Growth					LFL Sales Growth
	Q 1 10	Q2 10	H1 10	Q3 10	9M 10	Q1 10	Q2 10	H1 10	Q3 10	9M 10
Retail Portugal	9.4%	9.3%	9.3%	12.6%	10.5%	7.9%	6.8%	7.3%	8.7%	7.8%
Supermarkets	13.0%	11.1%	12.0%	14.1%	12.8%	9.7%	7.9%	8.8%	9.7%	9.1%
Hypermarkets	‐14.2%	‐5.0%	‐9.6%	0.9%	‐6.1%			‐7.3% * ‐4.5% * ‐5.9% * ‐0.7% *		‐4.1% *
Recheio	2.1%	4.8%	3.5%	5.8%	4.4%	2.2%	4.0%	3.1%	3.9%	3.4%
Madeira	4.8%	‐0.9%	1.8%	13.7%	6.2%	16.4%	16.3%	16.4%	13.8%	15.3%
Biedronka
Euro	36.7%	27.8%	32.0%	25.5%	29.6%
PLN	21.2%	15.3%	18.1%	20.0%	18.8%	13.3%	8.0%	10.5%	12.1%	11.1%
Ma nufa cturing	‐1.4%	‐0.1%	‐0.7%	2.7%	0.5%	‐1.4%	‐0.1%	‐0.7%	2.7%	0.5%
Mkt. Repr. and Rest. Serv.	4.0%	6.6%	5.4%	5.3%	5.4%	‐2.0%	‐7.2%	‐4.8%	1.8%	‐2.5%

* excluding two store under revamping

2. Stores Network

Number of Stores			Openings		Closings	Network
	09 YE	Q1 10	Q2 10	Q3 10	9M 10	9M 10	9M 09
Retail Portugal	343	1	2	3	1	348	342
Supermarkets	334	1	2	3	1	339	333
Hypermarkets	9	0	0	0	0	9	9
Recheio	35	0	2	1	0	38	35
Madeira	15	0	0	0	0	15	15
Biedronka	1,466	42	25	38	12	1,559	1,432

			Openings		Closings *	Network
Sales Area (sqm)	09 YE	Q1 10	Q2 10	Q3 10	9M 10	9M 10	9M 09
Retail Portugal	434,744	1,605	1,756	3,204	4,992	436,317	433,426
Supermarkets	352,276	1,605	1,756	3,204	805	358,036	350,958
Hypermarkets	82,468	0	0	0	4,187	78,281	82,468
Recheio	114,410	0	4,220	4,000	‐271	122,901	114,410
Madeira	14,300	0	0	0	47	14,253	14,300
Biedronka	814,493	26,951	13,959	24,126	‐536	880,066	789,038

* including changes of sales area due to remodellings

3. EBITDA Margin Breakdown

(% of sales)	9M 10	9M 09
Distribution Portugal	6.2%	6.3%
Poland ‐ Biedronka	7.8%	7.1%
Ma nufa cturing and Services	12.3%	13.6%

4. Definitions

Like For Like (LFL) sales: sales made by stores that 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).

EBITDA: operating profit (consolidated income statement by functions) excluding exceptional operating profits/losses and depreciations of the period.

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

Gearing: Net Debt / Shareholder Funds.

5. Information Regarding Individual Financial Statements

In accordance with number 3 of article 10 of the Regulation number 5/2008 of the Portuguese Securities Market Commission (CMVM), the Quarter Individual Financial Statements of Jerónimo Martins SGPS, S.A. will not be disclosed as they do not include significant information.

III. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR SEPTEMBER 2010 AND 2009

					Euro thousand
	Notes	9 Months 2010	9 Months 2009	3rd Quarter 2010	3rd Quarter 2009
Sales and services rendered	3	6,333,148	5,318,319	2,289,858	1,937,746
Cost of sales		(5,127,311)	(4,296,509)	(1,848,207)	(1,564,531)
Supplementary income and costs		278,590	219,587	105,931	80,552
Gross profit		1,484,427	1,241,397	547,582	453,767
Distribution costs	4	(1,032,004)	(875,516)	(355,136)	(300,559)
Administrative costs	4	(131,288)	(116,753)	(42,785)	(41,856)
Exceptional operating profits/losses	7.1	(1,370)	(6,208)	(62)	(1,881)
Operating profit		319,765	242,920	149,599	109,471
Net financial costs	5	(51,741)	(53,302)	(16,119)	(18,225)
Gains in associated companies		321	76	206	86
Gains/Losses in other investments	7.2	(149)	-	-	177
Profit before taxes		268,196	189,694	133,686	91,509
Income taxes	6	(58,352)	(38,369)	(29,493)	(18,717)
Profit before non-controlling interests		209,844	151,325	104,193	72,792
Attributable to:
Non-controlling interests		15,958	12,655	12,050	7,099
Jerónimo Martins Shareholders		193,886	138,670	92,143	65,693
Basic and diluted earnings per share- Euros	13	0.3085	0.2207	0.1466	0.1045

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

CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2010 AND DECEMBER 2009

			Euro thousand
	Notes	2010	2009
Assets
Tangible assets	8	2,154,478	2,002,831
Investment properties	8	53,251	63,283
Intangible assets	8	861,101	835,368
Investments in associated Companies		888	1,118
Available-for-sale financial investments	10	7,127	7,528
Trade debtors and deferred costs		72,144	72,305
Derivative financial instruments	9	51	351
Deferred tax assets		67,711	69,021
Total non-current assets		3,216,751	3,051,805
Inventories		340,080	334,478
Taxes receivable		42,369	22,335
Trade debtors, accrued income and deferred costs		183,898	190,793
Derivative financial instruments	9	-	1,515
Cash and cash equivalents	11	276,273	223,501
Total current assets		842,620	772,622
Total assets		4,059,371	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	12.1	62,524	55,184
Retained earnings		181,209	77,189
Non-controlling interests		889,418 286,950	778,058 287,636
Total Shareholders' equity		1,176,368	1,065,694
Borrowings	14	596,761	756,361
Derivative financial instruments	9	19,171	30,137
Employee benefits	15	30,388	27,738
Deferred profits- state grants		941	959
Provisions for risks and contingencies	15	21,408	18,480
Deferred tax liabilities		91,984	88,892
Total non-current liabilities		760,653	922,567
Trade creditors, accrued costs and deferred income		1,798,385	1,647,490
Derivative financial instruments	9	10,260	3,084
Borrowings	14	216,190	124,495
Taxes payable		97,443	61,021
Deferred profits- state grants		72	76
Total current liabilities		2,122,350	1,836,166
Total Shareholders' equity and liabilities		4,059,371	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

	9 Months 2010	9 Months 2009	3rd Quarter 2010	3rd Quarter 2009
Currency translation differences	15,075	(4,095)	18,927	19,345
Fair value of cash flow hedging	(5,717)	(8,629)	1,501	(5,309)
Fair value of hedging instruments on foreign operations	(3,456)	1,760	(3,931)	(3,359)
Fair value of available-for-sale financial investments	(402)	382	37	382
Gains/losses directly recognised in equity	5,500	(10,582)	16,534	11,059
Net profit	209,844	151,325	104,193	72,792
Total gains/losses recognised Attributable to:	215,344	140,743	120,727	83,851
Non-controlling interests	14,118	10,568	12,533	6,160
Jerónimo Martins Shareholders	201,226	130,175	108,194	77,691

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

	Notes	Share Capital	Share Premium	Own Shares	Shareholders' equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A. 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 Nine Months of 2009	13.1				(4,095)		(4,095)		(4,095)
Fair value of cash flow hedging	13,1				(6,542)		(6,542)	(2,087)	(8,629)
Fair value of hedging instruments on foreign operations	13.1				1,760		1,760		1,760
Fair value of available-for-sale financial investments	13.1				382		382		382
Gains/losses directly recognised in equity					(8,495)		(8,495)	(2,087)	(10,582)
Net profit in the Nine Months of 2009						138,670	138,670	12,655	151,325
Total gains/losses recognised during the year					(8,495)	138,670	130,175	10,568	140,743
Dividends	13.2					(69,128)	(69,128)	(13,635)	(82,763)
Balance Sheet at 30 September 2009		629,293	22,452	(6,060)	49,800	15,380	710,865	278,240	989,105
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 Nine Months of 2010	12.1				15,075		15,075		15,075
Fair value of cash flow hedging	12.1				(3,877)		(3,877)	(1,840)	(5,717)
Fair value of hedging instruments on foreign operations	12.1				(3,456)		(3,456)		(3,456)
Fair value of available-for-sale financial investments	12.1				(402)		(402)		(402)
Gains/losses directly recognised in equity					7,340		7,340	(1,840)	5,500
Net profit in the Nine Months of 2010						193,886	193,886	15,958	209,844
Total gains/losses recognised during the year					7,340	193,886	201,226	14,118	215,344
Dividends	12.2					(89,866)	(89,866)	(14,804)	(104,670)
Balance Sheet at 30 September 2010		629,293	22,452	(6,060)	62,524	181,209	889,418	286,950	1,176,368

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

Euro thousand

CONSOLIDATED CASH FLOW STATEMENT FOR SEPTEMBER 2010 AND 2009

			Euro thousand
	Notes	9 Months 2010	9 Months 2009
Operating Activities
Cash generated from operations		598,715	452,597
Interest paid		(55,839)	(58,010)
Income taxes paid		(31,213)	(22,938)
Cash Flow from operating activities		511,663	371,649
Cash flow from investment activities		(278,498)	(220,700)
Cash Flow from financing activities		(185,737)	(159,822)
Net changes in cash and cash equivalents		47,428	(8,873)
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of the year		223,501	227,132
Net changes in cash and cash equivalents		47,428	(8,873)
Fair value of financial assets held for trade		-	220
Effect of currency translation differences		5,344	(3,208)
Cash and cash equivalents at the end of 3rd Quarter	11	276,273	215,271

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

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

				Euro thousand
	9 Months 2010	9 Months 2009	3rd Quarter 2010	3rd Quarter 2009
Cash Flow from operating activities	511,663	371,649	295,687	237,306
Cash Flow from investment activities	(278,498)	(220,700)	(110,278)	(61,622)
Cash Flow from financing activities	(185,737)	(159,822)	(107,423)	(107,439)
Cash and cash equivalents changes	47,428	(8,873)	77,986	68,245

	Index to the Notes to the Consolidated Financial Statements	Page
1	Activity 15
2	Accounting policies 15
3	Segments reporting 16
4	Distribution and administrative costs 17
5	Net financial costs 17
6	Income tax recognised in the income statement17
7	Exceptional operating profits/losses and gains/losses in other investments18
8	Fixed assets and investment property 18
9	Derivative financial instruments 19
10	Available-for-sale financial investments 19
11	Cash and cash equivalents 19
12	Capital and reserves 20
13	Earnings per share 20
14	Borrowings 21
15	Provisions and adjustments to the net realisable value21
16	Contingencies 21
17	Related parties 22

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 26th October 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 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 not disclosed 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, over the first nine months of 2010, the following regulations:

• 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;
• 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 first-time adopters resulting in an amendment on oil and gas assets;
• 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;
• v) the Regulation no. 632/2010 which adopted the revised IAS 24 Related Party Disclosures, with the aim of simplifying the definition of a related party while removing certain internal inconsistencies and providing some relief for government-related entities;
• vi) the Regulation no. 633/2010 which adopted amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement, with the objective of removing an unintended consequence of IFRIC 14 where, under certain circumstances, an early payment of contributions was required to be recognised as an expense;
• vii) the Regulation no. 662/2010 which adopted the IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, providing guidance on how a debtor should account for its equity instruments issued in full or partial settlement of a financial liability following renegotiation of the terms of the liability.

With regard to Regulations no. 243, no. 244 and no. 550, its implementation is mandatory for financial years beginning after December 31, 2009. The Regulations no. 574 and no. 662 are mandatory for the first financial year starting after June 30, 2010. The Regulations no. 632 and no. 633 are mandatory for the first financial year starting after December 30, 2010. Non of the regulations mentioned have impact on the Group's Financial Statements.

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

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 September 2010	Average rate for the 9 Months 2010
Polish Zloty (PLN)	€ 0.2510	€ 0.2498
US Dollar (USD)	€ 0.7333	-

3 Segments reporting

Management monitors the performance of the business based on a geographical and business nature perspective. Due to the fact that the business units in the distribution area in Portugal share a set of competences, the Group analyse, on a quarterly basis, its segments in an aggregate performance perspective. In addition, the Group also separate the distribution business unit in Poland. Apart from these, there are also other businesses, but due to their reduced materiality they are not reported separately.

Business segments:

• Portugal Distribution: comprises the business units of JMR (Pingo Doce supermarkets and Feira Nova hypermarkets), the wholesale business unit Recheio and Madeira business unit (Pingo Doce supermarkets and Recheio Cash & Carry);
• Poland Distribution: the business unit using the brand Biedronka;
• Others, eliminations and adjustments: includes i) the business units with reduced materiality (Unilever Jerónimo Martins, Gallo Worldwide, 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.

Detailed Information by Segment at September 2010 and 2009
------------------------------------------------------------

	Portugal		Poland			Others, eliminations	Total JM
		Distribution		Distribution		and adjustments	Consolidated
	2010	2009	2010	2009	2010	2009	2010	2009
Net Sales and Services	2,658,350	2,438,903	3,465,940	2,674,199	208,858	205,217	6,333,148	5,318,319
Inter-segments	270	133	452	337	(345)	(198)	377	272
External Customers	2,658,080	2,438,770	3,465,488	2,673,862	209,203	205,414	6,332,771	5,318,046
Operational Cash-Flow (EBITDA)	165,189	153,328	269,586	189,769	27,091	30,597	461,866	373,694
Depreciations and Amortisations	(74,579)	(70,224)	(62,336)	(49,978)	(3,816)	(4,364)	(140,731)	(124,566)
Operational Result (EBIT)	90,610	83,104	207,250	139,791	23,275	26,233	321,135	249,128
Financial Results							(51,569)	(53,226)
Net Result Attributable to JM							193,886	138,670
TOTAL ASSETS (1)	2,273,894	2,173,663	1,551,132	1,428,051	234,345	222,713	4,059,371	3,824,427
TOTAL LIABILITIES (1)	1,640,486	1,534,514	1,008,325	932,252	234,192	291,967	2,883,003	2,758,733
Investments in Fixed Assets	95,619	75,672	190,148	102,454	3,416	3,143	289,183	181,269

(1) The comparable amounts of total assets and liabilities are reported to 31 December 2009

Reconciliation between EBIT and the Operational Result of the Income Statement by Functions

	September 2010	September 2009
EBIT	321,135	249,128
Non recurrent results	(1,370)	(6,208)
Operational Result	319,765	242,920

Information by Geographical Segments at September 2010 and 2009

	Net Sales and Services
	2010 2009
Portugal	2,862,444	2,640,662
Poland	3,470,704	2,677,657
Total	6,333,148	5,318,319

4 Distribution and administrative costs

	September 2010	September 2009
Supplies and services	239,338	211,303
Advertising costs	54,515	42,154
Rents	135,098	121,865
Staff costs	502,943	426,229
Depreciations, amortisations and assets profit/loss	139,762	122,118
Transportation costs	84,390	68,268
Other operational profit/loss	7,246	332
	1,163,292	992,269

5 Net financial costs

	September 2010	September 2009
Interest expense	(49,229)	(50,992)
Interest received	2,897	1,770
Dividends	56	33
Net foreign exchange	(328)	(1,163)
Investment property:
Changes to fair value (note 8)	(14)	(14)
Other financial costs and gains	(4,977)	(4,258)
Fair value of financial investments held for trade:
Derivative instruments	-	1,102
Treasury bonds	(146)	220
	(51,741)	(53,302)

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

6 Income tax recognised in the income statement

	September 2010	September 2009
Current income tax
Current tax of the year	(52,591)	(33,402)
Adjustment to prior year estimation	147	127
	(52,444)	(33,275)
Deferred tax
Temporary differences created and reversed	(7,283)	(6,129)
Change to the recoverable amount of tax losses and temporary differences from previous years	1,375	1,035
	(5,908)	(5,094)
Total income taxes	(58,352)	(38,369)

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

7.1 Exceptional operating profits/losses

	September 2010	September 2009
Losses with businesses disposals	(1,218)	-
Losses with organizational restructuring program	-	(3,420)
Losses related to natural disaster in Madeira	(1,008)	-
Impairment of assets	(402)	(2,539)
Reimbursement of notary fees resulting from court decision	1,379	-
Others	(121)	(249)
	(1,370)	(6,208)

7.2 Gains/Losses in other investments

	September 2010	September 2009
Losses with the disposal of available-for-sale financial investments	(149)	-
	(149)	-

8 Fixed assets and investment property

	Tangible assets	Investment property	Intangible assets	Total
Net value at 31 December 2009	2,002,831	63,283	835,368	2,901,482
Foreign exchange differences	21,088	-	11,350	32,438
Increases	270,345	5	18,838	289,188
Disposals and write-offs	(5,007)	(64)	(115)	(5,186)
Transfers	78	-	1,423	1,501
Depreciation and impairment losses	(140,601)	(4,215)	(5,763)	(150,579)
Transfers to/from investment properties	5,744	(5,744)	-	-
Fair value changes	-	(14)	-	(14)
Net value at 30 September 2010	2,154,478	53,251	861,101	3,068,830

As a consequence of the currency translation adjustment of the assets in the Group's business in Poland, the Goodwill related to this business, totalling PLN 1,282,278 thousand, was updated positively in EUR 9,393 thousand.

No valuations were made on the land allocated to operational activities, which are recognised at their market value.

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

9 Derivative financial instruments

		September 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	-	-	-	514	10 millions EUR	-	-	-	564
Currency Forwards (PLN)	-	-	-	-		- 14.1 millions PLN	115	-	-	-
Currency Forwards (USD)	-	-	-	-	-	0.6 millions USD	15	-	-	-
Fair value hedging derivatives
USD loan hedging	180 millions USD	-	51	6,539	-	180 millions USD	-	-	-	16,766
Cash flow hedging derivatives
Interest rate swap (EUR)	525 millions EUR	-	-	1,483		18,166 527.7 millions EUR	-	-	-	12,807
Interest rate swap (PLN)	229.5 millions PLN	-	-	-	491	171 millions PLN	-	351	-	-
Foreign operation investments hedging derivatives
Currency swap (PLN)	400 millions PLN	-	-	800	-	400 millions PLN	1,385	-	-	-
Currency Forwards (PLN)	55 millions PLN	-	-	1,438	-	197 millions PLN	-	-	3,084	-
Total derivatives held for trading		-	-	-	514		130	-	-	564
Total hedging derivatives		-	51	10,260	18,657		1,385	351	3,084	29,573
Total assets/liabilities derivatives		-	51	10,260	19,171		1,515	351	3,084	30,137

In September 2010 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 3,148 thousand.

10 Available-for-sale financial investments

Regarding the financial assets available-for-sale, the reduction of EUR 402 thousand respects to changes in the fair value of listed equity holdings, at the reporting date of these financial statements.

11 Cash and cash equivalents

	September 2010	December 2009
Bank deposits	152,634	187,497
Short-term investments	120,789	32,272
Cash and cash equivalents	2,850	3,732
	276,273	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 15).

12 Capital and reserves

12.1 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	- - -	(7,760) 2,043 1,840	- - -	(4,626) 1,170 -	(12,386) 3,213 1,840
Fair value adjustment of available-for-sale financial investments: - Gross value	-	-	(402)	-	(402)
Currency translation differences: - In the year - Deferred tax	671 (127)	(13) 3	- -	16,251 (1,710)	16,909 (1,834)
Balance as at 30 September 2010	85,475	(8,872)	(344)	(13,735)	62,524

	Land and buildings	Cash-flow Hedging reserve	Available-for sale financial investments	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/current tax - Non-controlling interests	- - -	(11,437) 2,808 2,087	- - -	2,395 (635) -	(9,042) 2,173 2,087
Fair value adjustment of available-for-sale financial investments: - Gross value	-	-	382	-	382
Currency translation differences: - In the year - Deferred tax	- -	- -	- -	(3,702) (393)	(3,702) (393)
Balance as at 30 September 2009	93,783	(7,624)	382	(36,741)	49,800

12.2 Dividends

Dividends distributed in 2010 in the amount of EUR 104,670 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 14,804 thousand.

13 Earnings per share

		September 2010 September 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
Diluted net result attributable to ordinary shares	193,886	138,670
Basic and diluted earnings per share – Euros	0.3085	0.2207

14 Borrowings

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

On the third quarter Jerónimo Martins issued a new commercial paper program in the amount of EUR 100,000 thousand with 5 years maturity.

New financial leasing operations were contracted for 48 and 60-month periods in the amount of EUR 26,700 thousand, with quarterly amortisation.

14.1 Current and non-current loans

		September 2010 December 2009
Non-current loans
Bank loans	131,005	198,487
Bond loans	419,832	509,127
Financial lease liabilities	45,924	48,747
	596,761	756,361
Current loans
Bank overdrafts	23,474	21,563
Bank loans	59,021	67,119
Bond loans	98,335	-
Financial lease liabilities	35,360	35,813
	216,190	124,495

14.2 Financial debt

Since the Group entered several foreign exchange rate risk and interest risk hedging operations, as well as shortterm investments, the net consolidated financial debt at the balance sheet date is as follows:

	September 2010	December 2009
Non-current loans (note 14.1)	596,761	756,361
Current loans (note 14.1)	216,190	124,495
Derivative financial instruments (note 9)	29,380	31,355
Interest on accruals and deferrals	2,595	(442)
Bank deposits (note 11)	(152,634)	(187,497)
Short-term investments (note 11)	(120,789)	(32,272)
	571,503	692,000

15 Provisions and adjustments to the net realisable value

	Opening balance	Set up and reinforced	Used and reversed	Foreign exchange difference	Closing balance
Doubtful debtors	22,342	563	(982)	110	22,033
Inventories	12,127	2,180	(1,552)	237	12,992
Financial Investments	2,058	402	-	-	2,460
Short terms investments	57	-	-	-	57
Total fair value adjustments	36,584	3,145	(2,534)	347	37,542
Employee benefits	27,738	3,744	(1,094)	-	30,388
Provisions for risks and contingencies	18,480	5,226	(2,436)	138	21,408
Total of provisions	46,218	8,970	(3,530)	138	51,796

16 Contingencies

Following the contingencies mentioned in the 2009 Annual Report, changes occurred on the headings a), b), e), d), l) 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., 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.

• d) In the lawsuit filed by Sodisnasa, there was reached an agreement with their lawyer, where Lidosol II Distribuição de Produtos Alimentares, S.A. accepted to pay the amount of EUR 25 thousand.
• l) The Portuguese tax authorities carried out some corrections to the CIT amount from companies included in the perimeter of the Tax group headed by JMR – Gestão de Empresas de Retalho, SGPS, S.A. (JMR), which led to additional assessments, concerning 2002 to 2007 and 2009, amounting to EUR 34,587 thousands. JMR's Management supported by their lawyers and tax consultants have challenged these assessments, assuming that the tax authorities have no grounds to request this payment.
• 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.

17 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 company of the Group in the first nine months of 2010, neither were there any amounts payable or receivable between them on September 30th, 2010.

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

	Sales and services rendered		Stocks purchased and services supplied
	September 2010	September 2009	September 2010	September 2009
Joint-Ventures	719	522	71,405	69,479
Associated companies	40	407	857	370

	Accounts payable		Accounts receivable
	September 2010	December 2009	September 2010	December 2009
Joint-Ventures	427	607	20,167	8,900
Associated companies	-	1	371	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
	September 2010	September 2009	September 2010	September 2009
Joint-Ventures	377	272	39,273	38,214
Associated companies	40	407	857	370

	Accounts payable		Accounts receivable
	September 2009 December 2009		September 2009	December 2009
Joint-Ventures	219	319	11,091	4,894
Associated companies	-	1	371	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, 26^h October, 2010

The Certified Accountant The Board of directors