I - Consolidated Management Report

Message from the CEO – Pedro Soares dos Santos	3
1. Introduction	3
2. Sales Analysis	3
3. Results Analysis	4
4. Balance Sheet	5
5. Outlook 2011	6

II – Consolidated Management Report Appendix

1. Sales Growth	7
2. Stores Network	7
3. EBITDA Margin Breakdown	7
4. Definitions	8
5. 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

"The Group's good results in this quarter clearly reflect two realities with different rates of growth in the two countries in which we operate.

In Poland, Biedronka continues to post notable sales and results growth, in line with our best expectations regarding the potential of the Polish market and confirming our confidence in the Company's execution capacity.

In Portugal, the economic situation has deteriorated. However, I trust that the consistent value propositions of Pingo Doce and Recheio to consumers will allow them to reinforce market shares.

I therefore anticipate, for the Group, another year of very positive performance for the sales and results evolution."

1. Introduction

The Group's distribution formats started 2011 with a strong demonstration of its competitive capacity, as Biedronka confirmed the sustainability of its growth dynamics and the Portuguese models proved their solidity.

Consolidated sales in the first three months of the year grew 14.7% to Euro2,241.6 mn and the EBITDA increased by 24.0%, reaching 6.5% of sales (6.0% in Q1 10).

Consolidated debt was reduced by Euro133.5 mn compared with the same period of the previous year.

The consolidated net profit reached Euro56.4 mn, +33.5% than in the equivalent period of the previous year, with Poland being the source of this growth.

2. Sales Analysis

Net sales and services

(Million Euro)	Q1 11		Q1 10			Δ %
		% total		% total	Pln	Euro
Biedronka	1,336	59.6%	1,088	55.6%	21.7%	22.8%
Retail Mainland	710	31.7%	670	34.3%		6.0%
Recheio	163	7.3%	157	8.0%		3.7%
Madeira	35	1.5%	30	1.5%		15.9%
Manufacturing	51	2.3%	53	2.7%		‐4.6%
Mkt. Repr. and Rest. Serv.	19	0.8%	19	1.0%		‐4.8%
Consolidation Adjustments	‐72	‐3.2%	‐63	‐3.2%		14.8%
Total JM	2,242	100.0%	1,955	100.0%		14.7%
p.m. Retail Mainland (store sales)	649		620			4.6%

Consolidated sales reached Euro2,241.6 mn , +14.7% than in the first three months of the previous year, as a result of LFL growth of 6.9% in the Group's consolidated sales and the contribution of the new stores and even including the negative calendar effect related to Easter.

In Poland, the beginning of the year continued to show dynamic consumer behaviour in line with the positive expectations regarding economic growth.

Biedronka sales grew in the period by 21.7% in local currency, as a result of strong LFL growth (+11.7%) and the 13.0% increase in selling area compared with Q1 10.

At Biedronka, following the market trend, the inflation in the average basket progressively accelerated over the first three months of the year, reaching around 4% in the quarter.

In Portugal, it should be noted that, as a consumer response to the deteriorating macroeconomic conditions, there has been an increasing preference for private brands and a certain trading down within the most expensive categories.

Pingo Doce sales recorded growth of 4.6%, +1.8% on an LFL basis (+0.1% excluding the impact of petrol sales from the LFL). The Company's LFL growth reflected the increase in the number of visits, offset, to a certain extent, by the reduction in the value of the average ticket.

At Recheio, March marked the start of the commercial campaigns planned for the year which, in the first quarter, applied mainly to the beverages category. These commercial activities enabled the Company to counter the declining trend in the markets in which it operates and to post a 3.7% increase in sales, +0.4% on a LFL basis.

In Madeira, sales in Q1 11 reported strong growth of 15.9%, influenced by the closure between February and June of 2010 of two of the Company's stores following the natural catastrophe that affected the Island.

In Manufacturing, sales decreased by 4.6%, reflecting the negative effect of the absence of Easter in Q1 11 and also some decrease of sales to the wholesale segment. Mention should be made of the very positive performance of the olive oil category, with highly dynamic sales to export markets.

In Marketing, Representation and Restaurant Services sales registered a decline of 4.8%, affected by the Easter effect, which has a particular impact on sales of confectionary and chocolates at Hussel.

3. Results Analysis

(Million Euro)	Q1 11		Q1 10		Δ
Consolidated Sales	2,242		1,955		14.7%
Total Margin	508	22.7%	447	22.9%	13.8%
Operating Costs	‐362	‐16.1%		‐329 ‐16.8%	10.1%
EBITDA	147	6.5%	118	6.0%	24.0%
Depreciation	‐52	‐2.3%	‐46	‐2.3%	13.8%
EBIT	95	4.2%	73	3.7%	30.4%
Net Financial Results	‐16	‐0.7%	‐17	‐0.9%	‐8.5%
Non Recurrent Items	‐5	‐0.2%	‐2	‐0.1%
EBT	74	3.3%	54	2.8%	37.5%
Taxes	‐16	‐0.7%	‐10	‐0.5%	49.7%
Net Profit	58	2.6%	43	2.2%	34.6%
Non Controlling Interest	‐2	‐0.1%	‐1	‐0.1%	77.2%
Net Profit attributable to JM	56	2.5%	42	2.2%	33.5%

EPS (€)	0.09		0.07		33.5%
Cash Flow per share (€)	0.19		0.15		30.8%

Net Consolidated Profit

Operating Profit

The consolidated EBITDA increased by 24.0%, reaching 6.5% of sales (6.0% over the same period of the previous year).

In Poland, the evolution of EBITDA margin at Biedronka reflected the increasing benefits of scale recorded over the previous year and which in 2011 find the most favourable comparison in the first quarter of the year. The EBITDA generated by Biedronka in Q1 11 increased 35.7% (+34.5% in local currency) to 7.1% of sales (6.5% on Q1 10).

In Distribution in Portugal, the EBITDA margin reached 5.9% of sales (5.7% on Q1 10) essentially reflecting seasonal oscillations in the sales mix.

In Q1 11, Manufacturing area recorded an EBITDA margin reduction as a consequence of strategic price repositioning in key categories over the course of 2010, as well as the increased price of certain raw materials in respect of specific categories and also reflects the structural need to efficiency improvements in the productive process.

Net Result

The net profit attributable to Jerónimo Martins grew 33.5% to Euro56.4 mn, +36.5% excluding non recurrent items.

4. Balance Sheet

(Million Euro)	Q1 11	2010	Q1 10
Net Goodwill	744	747	756
Net Fixed Assets	2,289	2,309	2,178
Net Working Capital	‐1,320	‐1,425	‐1,186
Others	79	78	112
Invested Capital	1,792	1,709	1,860
Financial Debt	775	782	824
Leasings	62	72	84
Accrued interest	27	25	38
Marketable sec. & Bank deposits	‐262	‐301	‐211
Net Debt	602	578	735
Non Controlling Interests	290	287	285
Share Capital	629	629	629
Reserves and Retained Earnings	271	216	210
Shareholders Funds	1,190	1,132	1,125
Gearing	50.6%	51.0%	65.4%

Consolidated Balance Sheet

The consolidated net debt was Euro601.8 mn, a reduction of Euro133.5 mn over Q1 10. Gearing was 50.6% (65.4% in Q1 10).

Investment Programme

As far as the Group's investment programme is concerned, the expansion of the store network in Poland remained the main priority. Thus, Biedronka completed 19 openings as planned for the first three months of the year and advanced with the construction of stores to be open in the next few quarters.

5. Outlook 2011

In 2011, Poland will continue to reinforce its contribution for Group's growth. Biedronka is expected to increase its store network, in net terms, by around 200 locations, absorbing approximately 75% of the Group total investment programme planned for the year, which is estimated at Euro450-500 mn.

The solid performance of consumption in the Polish market, together with a positive outlook for growth of the economy, supports Biedronka's expectations of maintaining double-digit LFL sales growth.

In Portugal, the negative outlook for household income and unemployment should continue to be reflected on the food market, leading to changes in consumer habits with increasing sensitivity to the price factor.

Despite the concerns about the behaviour of the macroeconomic indicators, the Group believes that Pingo Doce and Recheio are ready to operate in adverse consumption environment and to continue to increase their market shares.

Maintaining as a priority the strengthening of its leading position in Poland, for 2011 Jerónimo Martins keeps its double-digit growth expectation for consolidated sales (at a constant exchange rate), with consolidated EBITDA growth above sales growth.

Along the year, the Group will continue with the prospection works already taking place in the countries which may constitute its new growth pillar.

Lisbon, 3rd May, 2011

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Growth

	Total SalesGrowth	LFL SalesGrowth
	Q1 11	Q1 11
Biedronka
Euro	22.8%
PLN	21.7%	11.7%
Retail Portugal	4.6%	1.8% *
Supermarkets	5.6%	1.7%
Hypermarkets	‐4.2%	3.2%
Recheio	3.7%	0.4%
Madeira	15.9%	3.7%
Manufacturing	‐4.6%	‐4.6%
Mkt. Repr. and Rest. Serv.	‐4.8%	‐7.9%

* Ex‐petrol LFL was +0.1%

2. Stores Network

		Openings	Closings	Network
Number of Stores	2010	Q1 11	Q1 11	Q1 11	Q1 10
Biedronka	1,649	19	3	1,665	1,504
Retail Portugal	349	0	0	349	343
Supermarkets	340	0	0	340	334
Hypermarkets	9	0	0	9	9
Recheio	38	0	0	38	35
Madeira	15	0	0	15	15

		Openings Closings*		Network
SalesArea (sqm)	2010	Q1 11	Q1 11	Q1 11	Q1 10
Biedronka	938,218	11,989	919	949,288	840,068
Retail Portugal	437,317	0	0	437,317	432,354
Supermarkets	359,036	0	0	359,036	353,076
Hypermarkets	78,281	0	0	78,281	79,278
Recheio	123,532	0	0	123,532	114,681
Madeira	14,253	0	0	14,253	14,253

* including changes ofsales area due to remodellings

3. EBITDA Margin Breakdown

	Q1 11	% total	Q1 10	% total
Distribuiton Poland	7.1%	65.0%	6.5%	59.4%
Distribution Portugal	5.9%	33.8%	5.7%	39.1%
Manufacturing and Services	8.6%	4.1%	10.3%	6.4%
JM Consolidated	6.5%	100.0%	6.0%	100.0%

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);

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

Gearing: Net Debt / Shareholder Funds;

EBITDA Retail Margin in Portugal - Reclassification of Fees to Shareholders: Retail Portugal's EBITDA margin was subject to reclassification, having excluded from the EBITDA, the costs with services from Shareholders. This allows a more accurate analysis of business area performance aligning the information provided to the market with that used internally for assessing the business area's performance. The part of these costs not eliminated in the consolidation process is now included in the Group's Holdings and continue to affect the consolidated EBITDA.

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 1st 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 THE QUARTERS ENDED AT 31 MARCH 2011 AND 2010

			Euro thousand
	Notes	2011	2010
Sales and services rendered	3	2,241,568	1,955,130
Cost of sales		(1,845,250)	(1,588,062)
Supplementary income and costs		112,062	79,748
Gross profit		508,380	446,816
Distribution costs	5	(369,302)	(329,213)
Administrative costs	5	(44,436)	(45,045)
Exceptional operating profits/losses	8.1	(5,079)	(1,517)
Operating profit		89,563	71,041
Net financial costs	6	(15,574)	(17,058)
Profit in associated companies		6	43
Losses in other investments	8.2		(214)
Profit before taxes		73,995	53,812
Income taxes	7	(15,573)	(10,402)
Profit before non-controlling interests		58,422	43,410
Attributable to:
Non-controlling interests		1,982	1,119
Jerónimo Martins Shareholders		56,440	42,291
Basic and diluted earnings per share- Euros	14	0.0898	0.0673

JERÓNIMO MARTINS, SGPS, S.A.

CONSOLIDATED BALANCE SHEET AT 31 MARCH 2011 AND DECEMBER 2010

			Euro thousand
	Notes	2011	2010
Assets
Tangible assets	9	2,179,175	2,192,824
Investment properties	9	52,042	52,047
Intangible assets	9	853,631	863,368
Investments in associated Companies		1,219	1,213
Available-for-sale financial investments	11	7,004	7,015
Trade debtors and deferred costs		68,728	71,716
Derivative financial instruments	10	201	46
Deferred tax assets		60,857	67,360
Total non-current assets		3,222,857	3,255,589
Inventories		385,605	368,711
Taxes receivable		17,009	48,947
Trade debtors, accrued income and deferred costs		211,742	181,848
Cash and cash equivalents	12	264,496	303,927
Total current assets		878,852	903,433
Total assets		4,101,709	4,159,022
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	13.1	62,017	63,433
Retained earnings		192,344	135,988
		900,046	845,106
Non-controlling interests		290,143	286,706
Total Shareholders' equity		1,190,189	1,131,812
Borrowings	15	594,415	634,182
Derivative financial instruments	10	12,797	16,649
Employee benefits		31,285	30,839
Deferred profits- state grants		929	935
Provisions for risks and contingencies	16	29,270	22,907
Deferred tax liabilities		96,097	96,928
Total non-current liabilities		764,793	802,440
Trade creditors, accrued costs and deferred income		1,805,591	1,895,411
Derivative financial instruments	10	10,959	7,763
Borrowings	15	242,424	219,217
Taxes payable		87,683	102,308
Deferred profits- state grants		70	71
Total current liabilities		2,146,727	2,224,770
Total Shareholders' equity and liabilities		4,101,709	4,159,022

CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY

		Euro thousand
	March 2011	March 2010
Currency translation differences	(5,530)	29,688
Fair value of cash flow hedging	6,213	(5,793)
Fair value of hedging instruments on foreign operations	-	(6,558)
Fair value of available-for-sale financial investments	(12)	(41)
Gains/losses directly recognised in equity	671	17,296
Net profit	58,422	43,410
Total gains/losses recognised in 1st Quarter	59,093	60,706
Attributable to:
Non-controlling interests	4,069	(576)
Jerónimo Martins Shareholders	55,024	61,282

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

									Euro thousand
					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 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 Quarter of 2010	13.1				29,688		29,688		29,688
Fair value of cash flow hedging	13.1				(4,098)		(4,098)	(1,695)	(5,793)
Fair value of hedging instruments on foreign operations	13.1				(6,558)		(6,558)		(6,558)
Fair value of available-for-sale financial investments	13.1				(41)		(41)		(41)
Gains/losses directly recognised in equity		-	-	-	18,991	-	18,991	(1,695)	17,296
Net profit in 1st Quarter of 2010		-	-	-	-	42,291	42,291	1,119	43,410
Total gains/losses recognised during the year		-	-	-	18,991	42,291	61,282	(576)	60,706
Dividends								(1,630)	(1,630)
Balance Sheet at 31 March 2010		629,293	22,452	(6,060)	74,175	119,480	839,340	285,430	1,124,770

Balance Sheet at 31 December 2010		629,293	22,452	(6,060)	63,433	135,988	845,106	286,706	1,131,812
Equity changes in 2011
Currency translation differences in the 1st Quarter of 2011	13.1				(5,530)		(5,530)		(5,530)
Fair value of cash flow hedging	13.1				4,126		4,126	2,087	6,213
Fair value of available-for-sale financial investments	13.1				(12)		(12)		(12)
Gains/losses directly recognised in equity		-	-	-	(1,416)	-	(1,416)	2,087	671
Net profit in 1st Quarter of 2011		-	-	-	-	56,440	56,440	1,982	58,422
Total gains/losses recognised during the year		-	-	-	(1,416)	56,440	55,024	4,069	59,093
Dividends	13.2							(375)	(375)
Non-controlling interests acquisition	4					(84)	(84)	(257)	(341)
Balance Sheet at 31 March 2011		629,293	22,452	(6,060)	62,017	192,344	900,046	290,143	1,190,189

CONSOLIDATED CASH FLOW STATEMENT FOR THE QUARTERS ENDED AT 31 MARCH 2011 AND 2010

			Euro thousand
	Notes	2011	2010
Operating Activities
Cash generated from operations		83,297	76,038
Interest paid		(15,488)	(17,328)
Income taxes paid		(12,970)	(6,099)
Cash Flow from operating activities		54,839	52,611
Cash flow from investment activities		(85,273)	(80,240)
Cash Flow from financing activities		(7,836)	8,857
Net changes in cash and cash equivalents		(38,270)	(18,772)
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of 1st Quarter		303,927	223,501
Net changes in cash and cash equivalents		(38,270)	(18,772)
Effect of currency translation differences		(1,161)	8,984
Cash and cash equivalents at the end of 1st Quarter	12	264,496	213,713

	Index to the Notes to the Consolidated Financial Statements	Page
1	Activity 15
2	Accounting policies 15
3	Segments reporting 15
4	Businesses acquisitions and changes to the consolidation scope16
5	Distribution and administrative costs 16
6	Net financial costs 17
7	Income tax recognised in the income statement17
8	Exceptional operating profits/losses and losses in other investments 17
9	Fixed assets and investment property 18
10	Derivative financial instruments 18
11	Available-for-sale financial investments 18
12	Cash and cash equivalents 18
13	Capital and reserves 19
14	Earnings per share 19
15	Borrowings 20
16	Provisions and adjustments to the net realisable value20
17	Contingencies 20
18	Related parties 21
19	Events after the balance sheet date22

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 3rd May 2011.

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 2010 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 2010, the European Union issued the Regulation no. 149/2011, which adopted some improvements to IFRS 1, IFRS 3 IFRS 7, IAS 1, IAS 27, IAS 34 e IFRIC 13. Its implementation is mandatory for financial years beginning on January 1, 2011, having no material 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 31 March 2011	Average rate for the 1st Quarter
Polish Zloty (PLN)	€ 0.2493	€ 0.2534
US Dollar (USD)	€ 0.7042	-

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 minor materiality they are not reported separately.

Business segments:

Portugal Distribution: comprises the business unit of JMR (Pingo Doce supermarkets), 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 minor 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.

				Poland		Others, eliminations
		Portugal Distribution		Distribution		and adjustments		Total JM consolidated
	2011	2010	2011	2010	2011	2010	2011	2010
Net Sales and Services	847,163	807,940	1,336,116	1,087,776	58,289		59,414 2,241,568 1,955,130
Inter-segments	38	85	152	136	(89)	(128)	101	93
External Customers	847,125	807,855	1,335,964	1,087,640	58,378	59,542	2,241,467	1,955,037
Operational Cash-Flow (EBITDA)	49,548	45,335	95,290	70,214	1,812	2,713	146,650	118,262
Depreciations and Amortisations	(26,645)	(24,067)	(24,090)	(20,372)	(1,273)	(1,265)	(52,008)	(45,704)
Operational Result (EBIT)	22,903	21,268	71,200	49,842	539	1,448	94,642	72,558
Financial Results	-	-	-	-	-	-	(15,568)	(17,229)
Net Result Attributable to JM	-	-	-	-	-	-	56,440	42,291
TOTAL ASSETS (1)		2,194,231 2,248,883	1,644,472	1,660,500	263,006		249,639 4,101,709 4,159,022
TOTAL LIABILITIES (1)		1,551,734 1,615,821	1,094,499	1,147,527	265,287		263,862 2,911,520 3,027,210
Investments in Fixed Assets	7,921	21,186	41,102	52,413	347	994	49,370	74,593

Detailed information by segment at March 2011 and 2010

(1) The comparable amounts of total assets and liabilities are reported to 31 December 2010

Reconciliation between EBIT and the operational result of the income statement by functions

	March 2011	March 2010
EBIT	94,642	72,558
Non recurrent results	(5,079)	(1,517)
Operational Result	89,563	71,041

Information by geographical segments at March 2011 and 2010

	Net sales and services
	2011	2010
Portugal	903,274	865,832
Poland	1,338,294	1,089,298
Total	2,241,568	1,955,130

4 Businesses acquisitions and changes to the consolidation scope

On March 15th 2011, 51% of the share capital of the company Caterplus – Comercialização e Distribuição de Produtos de Consumo, Lda., were acquired by the company Jerónimo Martins – Distribuição de Produtos de Consumo, Lda., which now owns 100% of the share capital of that company. The difference between the price paid and the value of the non-controlling interests acquired, were recognized directly in equity as the Group had already control over the acquired company.

5 Distribution and administrative costs

	March 2011	March 2010
Supplies and services	87,264	78,845
Advertising costs	16,410	17,902
Rents	50,244	44,139
Staff costs	175,621	161,059
Depreciations, amortisations and assets profit/loss	51,477	45,638
Transportation costs	29,827	25,355
Other operational profit/loss	2,895	1,320
	413,738	374,258

6 Net financial costs

	March 2011	March 2010
Interest expense	(15,838)	(16,598)
Interest received	1,786	669
Net foreign exchange	(282)	669
Investment property:
Changes to fair value	(5)	(5)
Other financial costs and gains	(1,238)	(1,654)
Fair value of financial investments held for trade:
Derivative instruments	3	(139)
	(15,574)	(17,058)

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

7 Income tax recognised in the income statement

	March 2011	March 2010
Current income tax
Current tax of the year	(11,588)	(9,801)
Adjustment to prior year estimation	(49)	(100)
	(11,637)	(9,901)
Deferred tax
Temporary differences created and reversed	(3,936)	(1,749)
Change to the recoverable amount of tax losses and temporary differences from previous years	-	1,248
	(3,936)	(501)
Total income taxes	(15,573)	(10,402)

8 Exceptional operating profits/losses and losses in other investments

8.1 Exceptional operating profits/losses

	March 2011	March 2010
Gains/Losses with businesses disposals and acquisitions	-	(1,114)
Gains/Losses related to natural disaster in Madeira	-	(1,074)
Reimbursement of notary fees resulting from court decision	-	798
Indemnities related to termination of lease agreement	(5,000)	-
Others	(79)	(127)
	(5,079)	(1,517)

8.2 Losses in other investments

	March 2011	March 2010
Losses in the fair value of available-for-sale financial investments	-	(214)
	-	(214)

9 Fixed assets and investment property

	Tangible assets	Investment property	Intangible assets	Total
Net value at 31 December 2010	2,192,824	52,047	863,368	3,108,239
Foreign exchange differences	(7,952)	-	(3,544)	(11,496)
Increases	45,958	-	3,412	49,370
Disposals and write-offs	(2,043)	-	(7,242)	(9,285)
Transfers	-	-	1	1
Depreciation and impairment losses	(49,612)	-	(2,364)	(51,976)
Fair value changes	-	(5)	-	(5)
Net value at 31 March 2011	2,179,175	52,042	853,631	3,084,848

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 2,863 thousand.

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

From the disposals and write-offs made in the 1st Quarter 2011, an amount of EUR 426 thousand were recognised as a loss in the profit and loss.

10 Derivative financial instruments

				March 2011			December 2010
	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	-	-	-	445	10 millions EUR	-	-	-	448
Fair value hedging derivatives
USD loan hedging	180 millions USD	-	-	10,270		5,466 180 millions USD	-	-	6,776	1,243
Cash flow hedging derivatives
Interest rate swap (EUR)	523 millions EUR	-	-	689	6,865	524.1 millions EUR	-	-	987	14,783
Interest rate swap (PLN)	229.5 millions PLN	-	201	-		21 229.5 milions PLN	-	46	-	175
Total derivatives held for trading		-	-	-	445		-	-	-	448
Total hedging derivatives		-	201	10,959	12,352		-	46	7,763	16,201
Total assets/liabilities derivatives		-	201	10,959	12,797		-	46	7,763	16,649

In March 2011 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 2,739 thousand.

11 Available-for-sale financial investments

Regarding the financial assets available-for-sale, the reduction of EUR 11 thousand respects to changes in the fair value of listed equity holdings, at the reporting date of these financial statements.

12 Cash and cash equivalents

	March 2011	December 2010
Bank deposits	143,094	131,609
Short-term investments	118,517	169,445
Cash and cash equivalents	2,885	2,873
	264,496	303,927

13 Capital and reserves

13.1 Fair value and other reserves

	Land and buildings	Cash-flow Hedging	Available for-sale financial investments	Currency translation reserve	Total
Balance as at 1 January 2011	83,116	(6,781)	(455)	(12,447)	63,433
Fair value adjustment of financial investments: - Gross value - Tax - Non-controlling interests		8,356 (2,143) (2,087)			8,356 (2,143) (2,087)
Fair value adjustment of available-for-sale financial investments: - Gross value			(12)		(12)
Currency translation differences: - In the year - Deferred tax	(219) 42	25 (5)		(5,783) 410	(5,977) 447
Balance as at 31 March 2011	82,939	(2,635)	(467)	(17,820)	62,017

	Land and buildings	Cash-flow Hedging	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 - Tax - Non-controlling interests		(7,395) 1,602 1,695		(8,874) 2,316	(16,269) 3,918 1,695
Fair value adjustment of available-for-sale financial investments: - Gross value			(41)		(41)
Currency translation differences: - In the year - Deferred tax	1,368 (260)	(27)		30,358 (1,751)	31,699 (2,011)
Balance as at 31 March 2010	86,039	(9,110)	17	(2,771)	74,175

13.2 Dividends

Dividends distributed in 2011 in the amount of EUR 375 thousand, of which only EUR 218 thousand were paid to non-controlling interests in the Group companies.

14 Earnings per share

14.1 Basic and diluted earnings per share

	March 2011	March 2010
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	56,440	42,291
Basic and diluted earnings per share – Euros	0,0898	0.0673

15 Borrowings

15.1 Current and non-current loans

	March 2011	December 2010
Non-current loans
Bank loans	147,528	175,746
Bond loans	414,419	419,228
Financial lease liabilities	32,468	39,208
	594,415	634,182
Current loans
Bank overdrafts	20,274	7,671
Bank loans	97,663	80,536
Bond loans	94,692	98,643
Financial lease liabilities	29,795	32,367
	242,424	219,217

15.2 Financial debt

The net consolidated financial debt at the balance sheet date is as follows:

	March 2011	December 2010
Non-current loans (note 15.1)	594,415	634,182
Current loans (note 15.1)	242,424	219,217
Derivative financial instruments (note 10)	23,555	24,366
Interest on accruals and deferrals	2,997	821
Bank deposits (note 12)	(143,094)	(131,609)
Short-term investments (note 12)	(118,517)	(169,445)
	601,780	577,532

16 Provisions and adjustments to the net realisable value

	Opening balance	Set up and reinforced	Used and reversed	Foreign exchange difference	Closing balance
Doubtful debtors	21,825	167	(760)	(24)	21,208
Inventories	15,679	670	(2,202)	(53)	14,094
Financial Investments	2,571	12	-	-	2,583
Short terms investments	57	-	-	-	57
Total fair value adjustments	40,132	849	(2,962)	(77)	37,942
Employee benefits	30,839	816	(370)	-	31,285
Provisions for risks and contingencies	22,907	6,897	(374)	(160)	29,270
Total of provisions	53,746	7,713	(744)	(160)	60,555

Throughout the first quarter of 2011 the Group increased its provisions for risks and contingencies to meet responsibilities committed and estimates for compensation in litigations, where stands the agreement with Landlords for the termination of leases of commercial spaces used by the Group already closed, in the amount of EUR 5,000 thousand (note 8.1).

17 Contingencies

Following the contingencies mentioned in the 2010 Annual Report, changes occurred on the headings as follows:

f) Recheio SGPS, S.A. (Recheio) recurred by different means, namely through a Special Administrative Action against the Order of authorization for initializing the tax inspection under the anti-avoidance clause. The said Special Administrative Action was not ruled in favour of Recheio by the Tax and Administrative Court, therefore Recheio appealed to the Central Administrative Court, which once again ruled in favour of the tax authorities, and consequently, stated that the order to make the inspection was valid. Nevertheless, Recheio still considers that the restatement of dividends for fiscal purposes has no validity, and will keep its judicial claim against the assessments issued, since the Central Administrative Court's decision has no relation to the facts discussed on that judicial claim;

o) The Fiscal Authorities claimed from Unilever Bestfoods Portugal – Produtos Alimentares, S.A., the amount of EUR 4,343 thousand for non-acceptance of withholding tax exemption carried out by the company, regarding the payment of dividends in 2002. The Management of the company, supported by its lawyers and fiscal consultants, have contested these charges, believing that the Fiscal Authorities are not justified in requesting this payment. By decision dated on March 24th 2011 the court has decided in favour of the Company.

18 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 1st Quarter of 2011, neither were there any amounts payable or receivable between them on March 31st, 2011.

As stated in the the Annual Report, reported on December 31, 2010, the Sociedade Francisco Manuel dos Santos as a result of a public sale, conducted at the end of the year by a financial intermediary, acquired EUR 30,000 thousand of the JM commercial paper issued. At the end of the 1st Quarter of 2011, the Company held the same investment in its portfolio, now with a maturity of 32 days, which bear interest at Euribor rate plus 70 basis points.

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

		Sales and services rendered		Stocks purchased and services supplied
	March 2011	March 2010	March 2011	March 2010
Joint-Ventures	196	180	18,216	21,517
Associated companies	-	40	-	188

	Accounts payable			Accounts receivable
	March 2011	December 2010	March 2011	December 2010
Joint-Ventures	471	734	14,719	8,565
Associated companies	-	2	293	757

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

		Sales and services rendered		Stocks purchased and services supplied
	March 2011	March 2010	March 2011	March 2010
Joint-Ventures	101	93	10,019	11,834
Associated companies	-	40	161	188

	Accounts payable			Accounts receivable
	March 2011	December 2010	March 2011	December 2010
Joint-Ventures	243	388	8,095	4.710
Associated companies	-	2	293	757

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.

19 Events after the balance sheet date

On the 30th of March 2011 was held the Annual Shareholders Meeting of Jerónimo Martins, SGPS, S.A., in which was approved the Results Appropriation Proposal presented by the Board of Directors, and was decided that no dividends will be distributed.