Jeronimo Martins — Interim / Quarterly Report 2012

Aug 31, 2012

Título

1 ST HALF CONSOLIDATED REPORT 2012

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	8
2. Stores Network	8
3. EBITDA Margin Breakdown	8
4. Working Capital	9
5. Net Debt	9
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 Financial Statements	20
	3. Auditor's Report	36

I. CONSOLIDATED MANAGEMENT REPORT

Message from the CEO – Pedro Soares dos Santos

'Even in a context of slowdown of economic growth, the strength of Biedronka's business model in Poland and its clear leadership in the market support my firm belief that the Company will continue to deliver strong sales and earnings.

In Portugal, we made an important investment in the second quarter, targeting long-term competitiveness. Sales and market share improvements are being delivered and remain important strategic targets.

The strong performance in Poland confirms the Group's positive outlook regarding the growth in sales and earnings for 2012.'

1. Introduction

Consolidated sales increased by 7.5% to €5,108m (+12.3% at a constant exchange rate) and EBITDA increased by 5.0% (+10.6% at a constant exchange rate).

Net profit increased by 5.6% in the half year, reaching €152m. The total cash flow (after investment activities) generated in the period was €44m.

Biedronka maintained its growth trend with sales and EBITDA in local currency, increasing by 18.1% and 24.8%, respectively.

Pingo Doce has grown strongly in the second quarter although the EBITDA margin, as anticipated, has declined versus prior year reflecting the investment in strong promotional campaigns.

Consolidated net debt at €352m, reduced by €152m compared with the same period last year.

(Million Euro)	H1 12		H1 11		D %		Q2 12		Q2 11		D %
		% total		% total	Pln	Euro		% total		% total	Pln	Euro
Biedronka	3,133	61.3% 2,845				59.9% 18.1% 10.1% 1,622		60.8% 1,508		60.1% 15.6%		7.6%
Pingo Doce	1,592	31.2% 1,521		32.0%		4.7%	841	31.5%	791	31.5%		6.3%
Recheio	375	7.3%	370	7.8%		1.3%	198	7.4%	200	8.0%		-1.0%
Manufacturing	115	2.2%	115	2.4%		0.1%	6 4	2.4%	63.6	2.5%		1.3%
Mkt. Repr. and Rest. Serv.	4 0	0.8%	4 1	0.9%		-1.3%	2 2	0.8%	2 2	0.9%		-1.0%
Consolidation Adjustments	-147	-2.9%	-140	-2.9%		5.2%	-80	-3.0%	-76	-3.0%		5.6%
Total JM		5,108 100.0% 4,752 100.0%						7.5% 2,668 100.0% 2,510 100.0%				6.3%
p.m. Pingo Doce	1,462		1,404			4.2%	772		728			6.1%
(store sales)

2. Sales Analysis

Consolidated sales reached €5,108m, 7.5% ahead of the first six months of the previous year (+12.3% at constant exchange rate). Like-for-like (LFL) Group sales grew 4.2% and new stores contributed, to total growth, of 8.2p.p.. The devaluation of the Zloty had a €228m negative impact on sales, a dilution of 4.8p.p. of the Group's growth.

In first half of 2012, Biedronka's sales increased by 18.1% in local currency, as a result of the +7.0% in LFL sales growth and the additional number of stores. In second quarter 2012, Biedronka's LFL growth, which was 4.7%, compared with a very tough comparison in second quarter 2011 where LFL was +20%.

The recent slowdown in the growth of the Polish economy led to weaker retail sales in the country, from +9.5% at the end of March 2012 to +6.5% at the end of May 2012, and this also impacted Biedronka´s performance in the quarter.

Biedronka continued with its store layout changes, with 1,149 locations now operating with the new format. The converted stores continue to perform well, in line with expectations. We expect to complete the conversions by the end of October 2012.

The evolution of the sales mix at Biedronka continues to show positive signs, with perishable categories growing above the average for the Company.

In the first half of the year Biedronka opened 76 new stores and is on target to open c.250 stores by the end of the year.

In Portugal, the negative trend in food consumption continued and consumers remain very price-sensitive.

As previously announced, Pingo Doce began to reinforce its price positioning in the quarter. At the beginning of May, a marketing investment was made to immediately increase Pingo Doce's price competitiveness profile with a significant one-day store promotion campaign. This investment resulted in an increase in Pingo Doce's awareness as a brand.

As from May, a promotional activity plan has been executed, designed with short-term campaigns on specific products, which have received a positive response from the consumers.

In the first half, as a result of the price reinforcement, Pingo Doce posted a 4.2% increase in sales, including contribution from 5 additional stores, and a LFL performance of +0.8%, excluding fuel. In the second quarter sales grew by 6.1% with a LFL of 2.4% (excluding fuel) in a market that recorded a drop of 2.4% in April and May, which indicates a market share improvement.

Recheio's sales were up by 1.3%, with a LFL of -0.4%. Since March, sales to HoReCa have suffered from the difficulties the sector has been facing since the increase in the VAT rate in January 2012. Recheio's weaker sales to this channel were only partially compensated by some growth obtained in the other channels.

In Manufacturing market conditions continued to be highly challenging but the brands have gained market share in declining markets, and total sales grew by 1.3% in the second quarter 2012 and by +0.1% in first half 2012.

3. Results Analysis

(Million Euro)	H1 12		H1 11		D	Q2 12			Q2 11	D
Consolidated Sales	5,108		4,752		7.5%	2,668		2,510		6.3%
Total Margin	1,136	22.2%	1,065	22.4%	6.6%	584	21.9%	564	22.5%	3.5%
Operating Costs		-809 -15.8%		-754 -15.9%	7.3%		-409 -15.3%		-392 -15.6%	4.4%
EBITDA	327	6.4%	311	6.5%	5.0%	174	6.5%	172	6.8%	1.5%
Depreciation	-112	-2.2%	-104	-2.2%	7.4%	-56	-2.1%	-52	-2.1%	6.6%
EBIT	215	4.2%	207	4.4%	3.8%	119	4.5%	120	4.8%	-0.7%
Financial Results	-14	-0.3%	-15		-0.3% -10.6%	-9	-0.3%	-7	-0.3%	16.7%
Non Recurrent Items	-14	-0.3%	-6	-0.1%	n.a.	-13	-0.5%	-1	0.0%	n.a.
EBT	187	3.7%	185	3.9%	0.9%	9 8	3.7%	111		4.4% -12.2%
Taxes	-40	-0.8%	-39	-0.8%	2.4%	-21	-0.8%	-24		-0.9% -12.0%
Net Profit	147	2.9%	146	3.1%	0.5%	7 7	2.9%	8 7		3.5% -12.3%
Non Controlling Interest	5	0.1%	-2	0.0%	n.a.	7	0.3%	0	0.0%	n.a.
Net Profit attr. to JM	152	3.0%	144	3.0%	5.6%	8 4	3.1%	8 7	3.5%	-4.2%
EPS (€)	0.24		0.23		5.6%	0.13		0.14		-4.2%
Cash Flow per share (€)	0.43		0.42		4.1%	0.23		0.23		0.2%

Operating Profit

Consolidated EBITDA posted a 5.0% growth, to €327m, reaching 6.4% of sales. EBITDA was up by 10.6% at a constant exchange rate.

In Poland, the positive evolution of Biedronka's EBITDA margin, benefits from a positive margin mix, and continues to reflect the scale benefits of the operation and strong cost control. EBITDA increased by 24.8% in local currency (+16.5% in Euros) representing 7.7% of the sales (7.3% in first half 2011).

At Pingo Doce, the EBITDA fell by 14.2% to €64m. This performance reflected the implementation of the Company's promotional plan which began in May.

In Manufacturing, the decline in the EBITDA margin reflected the additional investments to increase price competitiveness in key categories and increased marketing support, which is driving market shares gains in home care and personal care.

Net Result

Non-recurring items of €14m, include €10m of one-off costs incurred by Pingo Doce on the 1st of May to reinforce and strengthen its brand and competitive position in the market. This investment has resulted in a significant increase in the brand awareness of Pingo Doce and together with the promotional campaigns being executed, is expected to drive sales growth ahead of the market.

Net profit attributable to Jerónimo Martins increased by 5.6%, reaching €152m (+15.5% excluding non-recurring items and currency impact).

4. Balance Sheet

(Million Euro)	H1 12	2011	H1 11
Net Goodwill	735	721	746
Net Fixed Assets	2,544	2,411	2,319
Net Working Capital	-1,582	-1,542	-1,350
Others	7 9	6 1	6 8
Invested Capital	1,776	1,650	1,782
Total Borrowings	767	702	688
Leasings	2 7	3 8	5 4
Accrued interest	1 2	1 5	1 7
Marketable sec. & Bank deposits	-454	-527	-254
Net Debt	352	228	504
Non Controlling Interests	293	301	289
Share Capital	629	629	629
Reserves and Retained Earnings	502	492	360
Shareholders Funds	1,424	1,422	1,278
Gearing	24.7%	16.0%	39.5%

Consolidated net debt was reduced by €152m to €352m, and gearing stood at 24.7% (39.5% at the end of June 2011).

The Group continues to generate strong cash flow, with Biedronka being the main contributor. It is worth mentioning that the reduction in payment terms to a selection of Portuguese suppliers of perishables is being implemented. Despite this, the working capital position improved and the positive movement more than offset the higher capex payments in the period. The tax paid was €31m above last year due to the higher advanced payments in Poland which are based on the strong performance of 2011.

The Group invested €197m in the first half of the year, 87% of which was allocated to Poland.

(Million Euro)	H1 12	Weight
Distribution Poland	171	86.8%
Distribution Portugal	2 4	12.2%
Manufacturing & Others	2	1.0%
Total CAPEX	197	100.0%

5. Outlook

The first semester of 2012 confirmed our businesses increased competitiveness which has resulted in sales growing ahead of the markets and strengthening market shares.

In Poland, Biedronka's business model is now even more relevant and competitive in view of the slowdown of the growth of the economy.

The market research concluded in June confirmed the strength of Biedronka's value proposition in Poland and this supports our ambition to maintain growth ahead of the market.

In view of the slowdown in economic growth we consider that the LFL for the year will not reach the low double-digit ambition. Nevertheless, we expect LFL for the year to remain strong and ahead of the market.

We are confident that Biedronka's execution capacity, with strong cost control and continued improvements in the efficiency levels will mean that a slight slowdown in sales growth will not have a material impact on the results and cash flow expected for the year.

Pingo Doce will continue the reinforcement of its price position and its competitive strength in the market. We expect the strategy will result in a positive LFL growth.

The capital investment programme for 2012 is forecast to reach c. €650m, c.80% of which will be invested in Poland.

Overall for the Group, despite the difficulties in the Portuguese economy and the slowdown we are seeing in Polish economy, we are confident that 2012 will be another good year. We expect double-digit consolidated sales growth (at a constant exchange rate) and healthy growth in profitability. With the decision to invest to strengthen our business in Portugal, we expect the Group's EBITDA margin to be stable or just below the previous year.

Lisbon, 24th July, 2012

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Evolution

		Total Sales Growth		LFL Sales Growth
	Q1 12	Q2 12	H1 12	Q1 12	Q2 12	H1 12
Biedronka
Euro	13.1%	7.6%	10.1%
PLN	21.0%	15.6%	18.1%	9.5% *	4.7% *	7.0% *
Pingo Doce	2.1%	6.1%	4.2%	-1.6% **	2.4% **	0.5% **
Recheio	4.0%	-1.0%	1.3%	2.6%	-2.9%	-0.4%
Manufacturing	-1.5%	1.3%	0.1%	-1.5%	1.3%	0.1%
Mkt. Repr. and Rest. Serv.	-1.8%	-1.0%	-1.3%	-1.7%	0.1%	-0.7%

* Excluding days of closure for store layout conversion ** Ex-petrol LFL -0.8% 2.4% 0.8%

2. Stores Network

Number of Stores	2011	Openings		Closings	Network
		Q1 12	Q2 12	H1 12	H1 12	H1 11
Biedronka	1,873	3 7	3 9	8	1,941	1,707
Pingo Doce	369	0	2	0	371	364
Recheio	4 1	0	0	0	4 1	4 1

		Openings		Closings *	Network
Sales Area (sqm)	2011	Q1 12	Q2 12	H1 12	H1 12	H1 11
Biedronka	1,113,192	22,276	26,402	2,501	1,159,369	995,334 **
Pingo Doce	451,207	0	2,248	2,118	451,337	449,168
Recheio	128,975	0	0	305	128,670	128,975

* Including changes of sales area due to remodellings

**Restated

3. EBITDA Margin Breakdown

	H1 12	H1 11
Biedronka	7.7%	7.3%
Pingo Doce (store sales)	4.4%	5.3%
Recheio	5.7%	5.7%
Manufacturing	10.6%	12.0%
Mkt. Repr. and Rest. Services	-0.2%	0.3%
JM Consolidated	6.4%	6.5%

4. Working Capital

(Million Euro)	H1 12	2011	H1 11
Inventories	430	388	419
in days of sales	1 5	1 5	1 6
Customers	100	7 9	102
in days of sales	4	3	4
Suppliers	-1,718	-1,596	-1,539
in days of sales	-61	-60	-59
Working Capital Trade	-1,188	-1,129	-1,018
in days of sales	-42	-43	-39
Others	-395	-413	-332
Total Working Capital	-1,582	-1,542	-1,350
in days of sales	-56	-58	-51

5. Net Debt

(Million Euro)	H1 12
Long Term Debt	319
as % of Total Borrowings	41.7%
Average Maturity (years)	1.9
Bond Loans	153
Private Placement	8 1
Fair Value Adjustment	1
Commercial Paper	5 0
Other Debt	3 5
Short Term Debt	447
as % of Total Borrowings	58.3%
Total Borrowings	767
Average Maturity (years)	1.2
Leasings	2 7
Accrued Interest & Hedging	1 2
Marketable Securities & Bank Deposits	-454
Net Debt	352
% Debt in Euros (Financial Debt + Leasings)	85.2%
% Debt in Zlotys (Financial Debt + Leasings)	14.8%

6. 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.

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, 2012

(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 31.12.11		Increases during the year		year	Decreases during the	Held on 30.06.12
	Shares	Bonds	Shares	Bonds	Shares	Bonds	Shares	Bonds
Elísio Alexandre Soares dos Santos1	141,609	-	14,922	-	-	-	156,531	-
Pedro Manuel de Castro Soares dos Santos	216,305	-	-	-	-	-	216,305	-
José Manuel da Silveira e Castro Soares dos Santos	-	-	-	-	-	-	-	-
Luís Maria Viana Palha da Silva	-	-	-	-	-	-	-	-
António Pedro Viana-Baptista	-	-	-	-	-	-	-	-
Artur Eduardo Brochado dos Santos Silva2	7,680	-	-	-	7,680	-	-	-
António Mendo Castel-Branco Borges	-	-	-	-	-	-	-	-
Marcel Lucien Corstjens	-	-	-	-	-	-	-	-
Alan Johnson3	-	-	7,100	-	-	-	7,100	-
Hans Eggerstedt	19,700	-	-	-	-	-	19,700	-
Nicolaas Pronk	-	-	-	-	-	-	-	-

1 The 14,922 shares were acquired on 16th and 21st of May 2012, with an respective average unit price of EUR 13,61 and 13,45.

2 The 7,680 shares were sold on 30th of April 2012, with an average unit price of EUR 14,11.

2 The 7,100 shares were acquired on 4th of May 2012, with an average unit price of EUR 14,01.

Note: Mr. António Mendo Castel-Branco Borges was appointed to the Board of Directors (Non-Executive Director) on 30th of March 2012, and on that same date Mr. Alan Johnson was appointed as Executive Board Member.

STATUTORY AUDITOR

As at June 30th, 2012, 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 in securities with Jerónimo Martins, SGPS, S.A.

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 2012.

E. Alexandre Soares dos Santos

Date	Nature	Code ISIN	Volume	Price	Local
16-05-2012	Acquisition	PTJMT0AE0001	570	13.585	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	54	13.555	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	510	13.580	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	1,157	13.590	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	587	13.595	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	350	13.610	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	120	13.615	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	824	13.620	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	117	13.630	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	935	13.625	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	1,079	13.635	Euronext Portugal
16-05-2012	Acquisition	PTJMT0AE0001	1,173	13.640	Euronext Portugal
TOTAL			7,476
Date	Nature	Code ISIN	Volume	Price	Local
21-05-2012	Acquisition	PTJMT0AE0001	1,600	13.415	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	1,866	13.418	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	1,368	13.423	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	318	13.425	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	330	13.430	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	219	13.485	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	845	13.490	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	290	13.500	Euronext Portugal
21-05-2012	Acquisition	PTJMT0AE0001	610	13.505	Euronext Portugal
TOTAL			7,446

Alan Johnson

Date	Nature	Code ISIN	Volume	Price	Local
04-05-2012	Acquisition	PTJMT0AE0001	7,100	14.008	Euronext Portugal
TOTAL			7,100

Artur Santos Silva

Date	Nature	Code ISIN	Volume	Price	Local
30-04-2012	Sell	PTJMT0AE0001	1,795	14.090	Euronext Portugal
30-04-2012	Sell	PTJMT0AE0001	4,415	14.100	Euronext Portugal
30-04-2012	Sell	PTJMT0AE0001	1,470	14.130	Euronext Portugal
TOTAL			7,680

LIST OF SHAREHOLDERS WITH QUALIFYING STAKES AS AT JUNE 30th, 2012

(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	N.º of shares held	% Capital	% of Voting Rights1
Sociedade Francisco Manuel dos Santos, SGPS, S.A.
Through Sociedade Francisco Manuel dos Santos, B.V.	353,260,814	56.136%	56.213%
Heerema Holding Company Inc.
Through Asteck, S.A.	62,929,500	10.000%	10.014%
Carmignac Gestion
Directly	17,254,270	2.679%	2.683%
BNP Paribas
Through Investment Funds Managed by BNP Paribas	14,089,507	2.239%	2.242%

¹ % Voting rights = No. Shares Held / (Total No. JM shares – Own shares)

TRANSACTIONS WITH OWN SHARES DURING THE 1ST HALF OF 2012

(Under the terms of section d), paragraph 5 of article 66 and paragraph 2 of article 448 of the Portuguese Commercial Companies Code)

During the 1st Half of 2012 there were no acquisitions or disposal of own shares. As at June 30th , 2012 there were 859,000 own shares in the portfolio.

1 st Half 2012

IV. STATEMENT OF THE BOARD OF DIRECTORS

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, 24 th July, 2012

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

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

Alan Johnson (Chief Financial Officer and Member of the Board of Directors)

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

António Pedro de Carvalho Viana-Baptista (Member of the Board of Directors, Member of the Audit Committee and Member of the Committee on Corporate Responsibility)

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

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

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

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

Marcel Lucien Corstjens (Member of the Board of Directors)

Nicolaas Pronk (Member of the Board of Directors)

V. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR JUNE 2012 AND 2011

					Euro thousand
	Notes	st Half 1 2012	st Half 1 2011	nd Quarter 2 2012	nd Quarter 2 2011
Sales and services rendered	3	5,108,111	4,751,504	2,668,176	2,509,936
Cost of sales	4	(3,972,581)	(3,686,609)	(2,084,280)	(1,945,941)
Gross profit		1,135,530	1,064,895	583,896	563,995
Distribution costs	5	( 816,551)	(763,692)	( 410,506)	(394,390)
Administrative costs	5	( 104,461)	(94,461)	( 54,629)	(50,025)
Exceptional operating profits/losses	9.1	( 13,820)	(4,654)	( 12,628)	425
Operating profit		200,698	202,088	106,133	120,005
Net financial costs	6	( 13,836)	(15,544)	( 8,613)	(7,450)
Gains in associated companies	14	30	97	28	91
Losses in other investments	9.2	-	(1,500)	-	(1,500)
Profit before taxes		186,892	185,141	97,548	111,146
Income taxes	8	( 40,181)	(39,221)	( 20,814)	(23,648)
Profit before non-controlling interests		146,711	145,920	76,734	87,498
Attributable to:
Non-controlling interests		( 5,166)	2,073	( 6,979)	91
Jerónimo Martins Shareholders		151,877	143,847	83,713	87,407
Basic and diluted earnings per share- Euros	22	0.2417	0.2289	0.1332	0.1391

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

JERÓNIMO MARTINS, SGPS, S.A.

CONSOLIDATED BALANCE SHEET AT 30 JUNE 2012 AND DECEMBER 2011

			Euro thousand
	Notes	2012	2011
Assets
Tangible assets	10	2,420,821	2,300,501
Investment properties	12	52,096	52,128
Intangible assets	11	858,453	830,620
Investments in associated Companies	14	621	1,052
Available-for-sale financial assets	15	6,080	6,157
Trade debtors and deferred costs	18	86,050	85,407
Derivative financial instruments	13	1,110	10
Deferred tax assets	17.1	61,832	57,957
Total non-current assets		3,487,063	3,333,832
Inventories	16	430,293	388,262
Taxes receivable	17.2	23,914	33,834
Trade debtors, accrued income and deferred costs	18	263,715	195,200
Cash and cash equivalents	19	456,551	530,155
Total current assets		1,174,473	1,147,451
Total assets		4,661,536	4,481,283
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	29,714	(1,162)
Retained earnings		455,396	476,338
		1,130,795	1,120,861
Non-controlling interests		293,197	300,824
Total Shareholders' equity		1,423,992	1,421,685
Borrowings	23	329,640	385,553
Trade creditors, accrued costs and deferred income		7	-
Derivative financial instruments	13	7,971	8,785
Employee benefits		34,681	33,954
Deferred profits- state grants		898	910
Provisions for risks and contingencies Deferred tax liabilities	24 17.1	49,429 110,017	49,597 105,155
Total non-current liabilities		532,643	583,954
Trade creditors, accrued costs and deferred income	25	2,137,917	2,006,336
Derivative financial instruments	13	3,661	4,038
Borrowings	23	464,076	354,672
Taxes payable	17.2	99,222	110,543
Deferred profits- state grants		25	55
Total current liabilities		2,704,901	2,475,644
Total Shareholders' equity and liabilities		4,661,536	4,481,283

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

JERÓNIMO MARTINS, SGPS, S.A.

CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY

				Euro thousand
	st Half 1 2012	st Half 1 2011	nd Quarter 2 2012	nd Quarter 2 2011
Currency translation differences	36,957	(3,316)	(13,684)	2,214
Fair value of cash flow hedging	757	5,315	374	(898)
Fair value of hedging instruments on foreign operations	(6,414)	435	(1,503)	435
Fair value of available-for-sale financial investments	(77)	(300)	(83)	(288)
Gains/losses directly recognised in equity	31,223	2,134	(14,896)	1,463
Net profit	146,711	145,920	76,734	87,498
Total gains/losses recognised	177,934	148,054	61,838	88,961
Attributable to:
Non-controlling interests	(4,819)	3,857	( 6,676)	(212)
Jerónimo Martins Shareholders	182,753	144,197	68,514	89,173

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 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 Half of 2011	21.1				(3,316)		(3,316)		(3,316)
Fair value of cash flow hedging	21.1				3,531		3,531	1,784	5,315
Fair value of hedging instruments on foreign operations	21.1				435		435		435
Fair value of available-for-sale financial investments	21.1				(300)		(300)		(300)
Gains/losses directly recognised in equity		-	-	-	350		350	1,784	2,134
Net profit in 1st Half of 2011						143,847	143,847	2,073	145,920
Total gains/losses recognised during the year		-	-	-	350	143,847	144,197	3,857	148,054
Dividends								(1,548)	(1,548)
Non-controlling interests acquisition						(84)	(84)	(257)	(341)
Balance Sheet at 30 June 2011		629,293	22,452	(6,060)	63,783	279,751	989,219	288,758	1,277,977
Balance Sheet at 31 December 2011		629,293	22,452	(6,060)	(1,162)		476,338 1,120,861	300,824	1,421,685
Equity changes in 2012
Currency translation differences in the 1st Half of 2012	21.1				36,957		36,957		36,957
Fair value of cash flow hedging	21.1				410		410	347	757
Fair value of hedging instruments on foreign operations	21.1				(6,414)		(6,414)		(6,414)
Fair value of available-for-sale financial investments	21.1				(77)		(77)		(77)
Gains/losses directly recognised in equity					30,876		30,876	347	31,223
Net profit in 1st Half of 2012						151,877	151,877	(5,166)	146,711
Total gains/losses recognised during the year					30,876	151,877	182,753	(4,819)	177,934
Dividends	21.2					(172,819)	(172,819)	(2,808)	(175,627)
Balance Sheet at 30 June 2012		629,293	22,452	(6,060)	29,714		455,396 1,130,795	293,197	1,423,992

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

Euro thousand

CONSOLIDATED CASH FLOW STATEMENT FOR JUNE 2012 AND 2011

			Euro thousand
	Notes	2012	2011
Operating Activities
Cash received from Customers		5,697,051	5,288,409
Cash paid to Suppliers and Employees		(5,356,676)	(5,010,477)
Cash generated from operations	20	340,375	277,932
Interest paid		(19,108)	(18,358)
Income taxes paid		(59,861)	(29,815)
Cash Flow from operating activities		261,406	229,759
Investment activities
Disposals of tangible assets		1,207	1,557
Disposals of intangible assets		-	7,242
Interest received		4,635	3,873
Dividends received		19	672
Acquisition of group and associated companies		-	(341)
Acquisition of tangible assets		(208,492)	(163,955)
Acquisition of intangible assets		(14,680)	(9,548)
Cash flow from investment activities		(217,311)	(160,500)
Financing activities
Received from loans		74,216	46,003
Reimbursement of loans		(26,135)	(159,152)
Dividends paid	21.2	(175,627)	(1,548)
Cash Flow from financing activities		(127,546)	(114,697)
Net changes in cash and cash equivalents		(83,451)	(45,438)
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of 1st Half		530,155	303,927
Net changes in cash and cash equivalents		(83,450)	(45,438)
Effect of currency translation differences		9,846	(1,070)
Cash and cash equivalents at the end of 1st Half	19	456,551	257,419

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

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

Euro thousand 1st Half 2012 1st Half 2011 2nd Quarter 2012 2nd Quarter 2011

Cash Flow from operating activities	261,406	229,759	144,979	174,920
Cash Flow from investment activities	(217,311)	(160,500)	(107,896)	(75,227)
Cash Flow from financing activities	(127,546)	(114,697)	(126,318)	(106,861)
Cash and cash equivalents changes	(83,451)	(45,438)	(89,235)	(7,168)

4	Cost of sales23
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 investments 25
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 assets 28
16	Inventories28
17	Taxes 29
18	Trade debtors, accrued income and deferred costs 30
19	Cash and cash equivalents 30
20	Cash generated from operations 30
21	Capital and reserves 31
22	Basic and diluted earnings per share31
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 parties34
28	Events after the balance sheet date35

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 24 th July 2012.

2 Accounting policies

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

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

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 2011 annual report are omitted because no changes occurred or they are not materially relevant for the understanding of the interim financial statements.

As mentioned in the Corporate Governance chapter of the 2011 Annual Report, the Company, as a result of its normal activity, is exposed to several risks which are monitored and mitigated throughout the year. During the first half of 2012, there were no material changes in addition to the notes in this annex, that could significantly change the assessment of the risks that the group is exposed to.

In relation to 2011, the European Union issued the Regulation no. 475/2012, which adopted some improvements to IAS 1 – presentation of financial statements and IAS 19 – employee benefits . Its implementation is mandatory for financial years beginning on July 1st, 2012 and January 1 st , 2013 respectively, having no material impact on the Group's Financial Statements.

In March 2012 the IASB issued alterations to the IFRS 1 – First-time Adoption of International Financial Reporting Standards. This alterations concern the way government loans should be booked and it becomes effective for the annual periods beginning on January 1st, 2013, having no material impact on the Group's Financial Statements.

In May 2012, IASB issued improvements to the norms IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34. The respective alterations become effective for the annual periods beginning on January 1st, 2013, having no material impact on the Group's Financial Statements.

In June 2012, IASB issued improvements to the norms IFRS 10, IFRS 11 and IFRS 12 concerning guidance for the transition to the new norms. The respective alterations become effective for the annual periods beginning on January 1st, 2013, having no material impact on the Group's Financial Statements.

These alterations are still under the European Union approval process.

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 as follows:

Euro foreign exchange reference rates (x foreign exchange units per 1 Euro)	Rate on 30 June 2012	Average rate for the year
Polish Zloty (PLN)	4.2488	4.2401
US Dollar (USD)	1.2659	-
Swiss Franc (CHF)	1.2030	-
Colombian Peso (COP)	2,273.2500	2,325.1500

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 perspective. In accordance with this, the segments are defined as Portugal Retail, Poland Retail, Portugal Cash & Carry and Portugal Manufacturing. Apart from these, there are also other businesses, but due to their low materiality are not reported separately.

Business segments:

• Portugal Retail: comprises the business unit of JMR (Pingo Doce supermarkets)(*);
• 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 (Marketing Services and Representations, Restaurants and Pharmacies and Drugstores in Poland), ii) the Holding companies and iii) the Group's consolidation adjustments.

(*) In 2012 Madeira business unit (Pingo Doce supermarkets and Recheio Cash & Carry) was integrated, respectively, in JMR and Recheio business areas.

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	Cash & Carry	Portugal	Poland Retail		Portugal Manufacturing		Others, eliminations and adjustments		Total JM Consolidated
	2012	2011	2012	2011	2012	2011	2012	2011	2012	2011	2012	2011
Net Sales and Services	1,591,962	1,520,945	375,132	370,339	3,133,055	2,844,523	114,683	114,613	(106,721)	(98,916)	5,108,111	4,751,504
Inter-segments	127,011	114,276	663	733	348	305	17,881	17,342	(145,787)	(132,437)	116	219
External Customers	1,464,951	1,406,669	374,469	369,606	3,132,707	2,844,218	96,802	97,271	39,066	33,521	5,107,995	4,751,285
Operational Cash-Flow (EBITDA)	64,066	74,700	21,452	20,933	242,130	207,850	12,201	13,782	(13,331)	(6,260)	326,518	311,005
Depreciations and Amortisations	(50,868)	(48,030)	(5,686)	(5,739)	(52,553)	(47,923)	(1,688)	(1,603)	(1,205)	(968)	(112,000)	(104,263)
Operational Result (EBIT)	13,199	26,670	15,767	15,194	189,578	159,927	10,513	12,179	(14,539)	(7,228)	214,518	206,742
Financial Results											(13,806)	(16,947)
Net Result Attributable to JM											151,877	143,847
TOTAL ASSETS (1)	1,902,663	1,894,121	364,510	351,437	1,915,330	1,864,433	224,316	194,233	254,717	177,059	4,661,536	4,481,283
TOTAL LIABILITIES (1)	1,298,543	1,272,878	305,247	282,859	1,347,930	1,215,220	149,908	113,932	135,916	174,709	3,237,544	3,059,598
Investments in Fixed Assets	21,978	34,364	2,080	3,158	170,557	86,944	1,180	1,889	873	917	196,668	127,272

Detailed Information by Business Segments at June 2012 and 2011

(1) The Comparative report is 31th December of 2011

Reconciliation between EBIT and Operational Result

	June 2012	June 2011
EBIT	214,518	206,742
Non recurrent results	(13,820)	(4,654)
Operational Result	200,698	202,088

Information by Geographical Segments at June 2012 and 2011

		Net Sales and Services
	2012	2011
Portugal	1,963,072	1,902,675
Poland	3,145,039	2,848,829
Total	5,108,111	4,751,504

4 Cost of sales

	June 2012	June 2011
Net cost of products sold	(3,961,703)	(3,677,243)
Net cash discount and interest paid to suppliers	114	1,864
Electronic payment commissions	(8,202)	(8,241)
Other supplementary costs	(2,790)	(2,989)
	(3,972,581)	(3,686,609)

5 Distribution and administrative costs

	June 2012	June 2011
Supplies and services	(190,193)	(177,851)
Advertising costs	(37,081)	(35,740)
Rents	(113,961)	(101,457)
Staff costs	(398,526)	(373,175)
Depreciations, amortisations and assets profit/loss	(110,288)	(103,280)
Transportation costs	(69,281)	(63,543)
Other operational profit/loss	(1,682)	(3,107)
	(921,012)	(858,153)

6 Net financial costs

	June 2012	June 2011
Interest expense	(16,459)	(16,640)
Interest received	4,977	3,628
Dividends	19	19
Net foreign exchange	818	(71)
Other financial costs and gains	(3,187)	(2,479)
Fair value of financial investments held for trade
Derivative instruments (note 7)	(4)	(1)
	(13,836)	(15,544)

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 2012	June 2011
Derivatives held for trading
Currency swaps	-	-
Interest rates swaps	(4)	(1)
	(4)	(1)
Income tax recognised in the income statement	1	-
Non-controlling interests	1	1
Amount recognised in profit/loss	(2)	-

The value recognised in reserves referred to hedging of investment in Poland is negative EUR 6,414 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 1,770 thousand (2011: positive EUR 631 thousand) was offset by a symmetrical variation in value for the loan of USD 96 million (note 23.2).

8 Income tax recognised in the income statement

8.1 Income taxes

	June 2012	June 2011
Current income tax
Current tax of the year	(38,993)	(33,902)
Adjustment to prior year estimation	(1,280)	424
	(40,273)	(33,478)
Deferred tax (note 17.1)
Temporary differences created and reversed	(666)	(5,743)
Change to the recoverable amount of tax losses and temporary differences from previous years	470	-
	(196)	(5,743)
Other gains/losses related to taxes
Impact of changes in estimates for tax litigations	288	-
	288
Total income taxes	(40,181)	(39,221)

8.2 Reconciliation of effective tax rate

		June 2012		June 2011
Profit before tax		186,892		185,141
Income tax using the Portuguese corporation tax rate	26.5%	(49,526)	26.5%	(49,062)
Fiscal effect due to:
Different tax rates in foreign jurisdictions	(8.5%)	15,830	(7.1%)	13,095
Non taxable or non recoverable results	0.8%	(1,487)	0.3%	(646)
Non-deductible expenses and fiscal benefits	0.6%	(1,042)	0.3%	(612)
Adjustment to prior year estimation	0.7%	(1,280)	0.2%	424
Change to the recoverable amount of tax losses and temporary differences of prior years	(0.3%)	470	0.0%	-
Results subject to special taxation (including State surcharge)	1.7%	(3,146)	1.3%	(2,420)
Income tax	21.5%	(40,181)	21.2%	(39,221)

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

9.1 Exceptional operating profits/losses

	June 2012	June 2011
One-Off costs Pingo Doce	(10,350)	-
Organizational reestructuring costs	(1,280)	-
Indemnities related to termination of lease agreement	-	(4,907)
Impact of actuarial assumptions changes	-	723
Reimbursement of notary fees resulting from court decision	-	119
Impairment of assets	(470)	(496)
Write-off Electric Co	(1,552)	-
Others	(168)	(93)
	(13,820)	(4,654)

9.2 Gains/Losses in other investments

	June 2012	June 2011
Impairment of investment properties	-	(1,500)
	-	(1,500)

10 Tangible Assets

10.1 Changes occurred during the year

	Land and natural resources	Buildings and other constructi	Plants, machinery and tools	Transport equipment and others	Work in progress and advances	Total
Cost		ons
Opening balance		451,987 1,777,015	1,087,563	181,250	204,794	3,702,609
Foreign exchange differences	6,031	36,112	12,664	3,581	8,507	66,895
Increases	106	29,862	70,652	2,595	78,773	181,988
Disposals	-	(122)	(14,430)	(1,651)	(959)	(17,162)
Transfers and write off's	5,188	35,550	(465)	2,062	(50,151)	(7,816)
Closing balance		463,312 1,878,417	1,155,984	187,837	240,964	3,926,514
Depreciation and impairment losses
Opening balance	-	543,076	711,351	147,681	-	1,402,108
Foreign exchange differences	-	10,226	6,274	2,785	-	19,285
Increases	-	49,354	49,848	7,373	-	106,575
Disposals	-	(78)	(14,320)	(1,627)	-	(16,025)
Transfers and write off's	-	(2,003)	(4,479)	(238)	-	(6,720)
Impairment losses	-	297	173	-	-	470
Closing balance	-	600,872	748,847	155,974	-	1,505,693
Net value
As at 1 January 2012		451,987 1,233,939	376,212	33,569	204,794	2,300,501
As at 30 June 2012		463,312 1,277,545	407,137	31,863	240,964	2,420,821

10.2 Guarantees

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

10.3 Revaluation

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

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	720,563	26,162	58,983	88,281	8,012	902,001
Foreign exchange differences	14,591	984	1,966	2,561	354	20,456
Increases	-	322	(97)	10,706	3,749	14,680
Transfers and write off's	-	192	736	672	(1,681)	(81)
Closing balance	735,154	27,660	61,588	102,220	10,434	937,056
Depreciation and impairment losses
Opening balance	-	22,425	6,213	42,743	-	71,381
Foreign exchange differences	-	915	79	833	-	1,827
Increases	-	762	796	3,861	-	5,419
Transfers and write off's	-	-	(24)	-	-	(24)
Closing balance		24,102	7,064	47,437	-	78,603
Net value
As at 1 January 2012	720,563	3,737	52,770	45,538	8,012	830,620
As at 30 June 2012	735,154	3,558	54,524	54,783	10,434	858,453

The Group identified as intangible assets of indefinite useful life, besides Goodwill, the trademark Pingo Doce, whose net value is EUR 9,228 thousand, for which there is no time limit for how long they will continue to create economic benefits to the Group. This intangible asset is not 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 below:

Business Areas	June 2012	December 2011
Portugal Retail	246,519	246,519
Portugal Cash & Carry	83,836	83,836
Portugal Manufacturing	93,809	93,809
Services	57	57
Poland Pharmacies	9,131	8,702
Poland Retail	301,802	287,640
	735,154	720,563

As a consequence of the currency translation adjustment of the assets in the Group's businesses in Poland:

• the Goodwill related to Poland business (Biedronka), totalling PLN 1,282,278 thousand, was updated positively by EUR 14,162 thousand;
• the Goodwill related to Poland Pharmacies business (Bliska), totalling PLN 38,796 thousand, was updated positively by EUR 429 thousand.

12 Investment Property

	June 2011
Opening balance	52,128
Transfers	-
Changes to fair value	(32)
Impairment Losses	-
Closing balance	52,096

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 the next 12 months.

				June 2012				December 2011
	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	-	-	-	261	10 millions EUR	-	-	-	324
Fair value hedging derivatives
USD loan hedging	96 millions USD	-	1,091	-	-	96 millions USD	-	-	-	680
Cash flow hedging derivatives
Interest rate swap (EUR)	521.8 millions EUR	-	-	3,661		7,655 440 millions EUR	-	-	4,038	7,629
Interest rate swap (PLN)	189 millions PLN	-	19	-	55	189 millions PLN	-	10	-	152
Total derivatives held for trading		-	-	-	261		-	-	-	324
Total hedging derivatives		-	1,110	3,661	7,710		-	10	4,038	8,461
Total assets/liabilities derivatives		-	1,110	3,661	7,971		-	10	4,038	8,785

13 Derivative financial instruments

In June 2012 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 1,571 thousand.

Derivatives held for trading

Interest rate swap

At 30 June 2012, the Group had derivatives financial instruments held for trading with a notional value of EUR 10,000 thousand (December 2011: EUR 10,000 thousand). The fair value of these instruments at 30 June 2012 was negative EUR 261 thousand (December 2011: negative EUR 324 thousand).

Fair value hedge

Currency swap

The Group hedges its exposure to the fair value of its loans of USD 180,000 thousand, through two crosscurrency swaps that have the same characteristics as the debt that was issued (one for 7 years and other for 10 years). 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. One of the cross-currency swaps, of 7 years for the amount of USD 84,000 thousand, was due in June 2011, and at 30th June 2012, there was the remaining cross-currency swap for 10 years in the amount of USD 96,000 thousand. The fair value of

the cross currency swap at 30 June 2012 was positive EUR 1,091 thousand (December 2011: negative EUR 680 thousand).

Cash flow hedge

Interest rate swap

The Group enters into interest rate swaps to hedge the interest rate risk, regarding future interest payments on the loans. At 30 June 2012, the total loans with derivative hedge instruments were EUR 615,477 thousand (December 2011: EUR 519,777 thousand) and PLN 210,000 thousand (December 2011: 210,000).

The Group fixed 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 value of EUR 521,845 thousand (December 2011: EUR 439,970 thousand), and the fair value of these instruments at 30 June 2012 was negative EUR 11,316 thousand (December 2011: negative EUR 11,667 thousand).

The interest rate swaps in Zlotys have a notional value of PLN 189,000 thousand (December 2011: PLN 189,000 thousand), and its fair value at 30 June 2012 was negative EUR 36 thousand (December 2011: negative EUR 142 thousand).

Hedging of investments in foreign entities

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 maturity in April 2012, involving a notional of PLN 1,000,000 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 2012, the movement under this heading was as follows:

	June 2012
Opening balance	1,052
Equity method	(432)
Closing balance	620

From the application of equity method a gain of EUR 30 thousand was recognised, which was deducted from the dividends received in 2012 in the amount of EUR 462 thousand.

15 Available-for-sale financial assets

Regarding the financial assets available-for-sale, the reduction of EUR 77 thousand relates to changes in the fair value of listed equity holdings, at the reporting date of these financial statements.

16 Inventories

	June 2012	December 2011
Raw and subsidiary materials and consumables	9,582	7,581
Goods and work in progress	927	1,010
Finished and semi-finished goods	1,057	387
Goods	429,557	394,019
	441,123	402,997
Fair value adjustment (note 24)	(10,830)	(14,735)
Net inventories	430,293	388,262

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 2012
Opening balance	(47,198)
Currency translation difference (note 21.1)	(569)
Revaluation and reserves (note 21.1)	(222)
Result of the year (note 8.1)	(196)
Closing balance	(48,185)

Deferred taxes are presented in balance sheet as follows:

	June 2012	December 2011
Deferred tax assets	61,832	57,957
Deferred tax liabilities	(110,017)	(105,155)
	(48,185)	(47,198)

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	34,046	9		291	34,346
Deferred income for tax purposes	18,293	2,194		973	21,460
Differences on accounting policies in other countries	11,652	53		574	12,279
Other temporary differences	41,164	768			41,932
	105,155	3,024	-	1,838	110,017
Deferred tax assets
Excess over legal provisions	20,067	(1,708)		611	18,970
Revaluation of assets	3,051	-		-	3,051
Employee benefits	5,008	40		-	5,048
Derivative instruments	2,888	(17)	(222)	7	2,656
Recoverable losses	884	5,830		44	6,758
Other deferred costs for tax purposes	18,691	(874)		472	18,289
Differences on accounting policies in other countries	2,660	(279)		131	2,512
Other temporary differences	4,708	(164)		4	4,548
	57,957	2,828	(222)	1,269	61,832
Net change in deferred tax	(47,198)	(196)	(222)		(569) (48,185)

17.2 Receivable and payable taxes

	June 2012	December 2011
Taxes receivable
Income tax receivable	18,429	22,302
VAT receivable	4,534	10,585
Others	951	947
	23,914	33,834
Taxes payable
Income tax payable	33,922	55,784
VAT payable	29,739	24,079
Income tax withheld	8,189	6,778
Social security	24,192	20,606
Other taxes	3,180	3,296
	99,222	110,543

18 Trade debtors, accrued income and deferred costs

	June 2012	December 2011
Non-current
Other debtors	81,302	80,460
Deferred costs	4,748	4,947
	86,050	85,407
Current
Commercial customers	102,526	80,296
Associated Companies	670	0
Suppliers	39,673	15,565
Staff	1,792	2,059
Other debtors	40,507	38,706
Accrued income	50,332	45,690
Deferred costs	28,215	12,884
	263,715	195,200

Non-current debtors balance of EUR 81,268 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 (note 26).

Accrued income essentially relates to the recognition of supplementary gains contracted with suppliers, in the amount of EUR 46,917 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 2012	December 2011
Bank deposits	189,205	340,517
Short-term investments	264,398	186,597
Cash and cash equivalents	2,948	3,041
	456,551	530,155

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 2012	June 2011
Net results	151,877	143,847
Adjustments for:
Non-controlling interests	(5,166)	2,073
Income tax	40,181	39,221
Depreciations and amortisations	112,000	104,263
Provisions and other operational gains and losses	(4,090)	(1,611)
Net financial costs	13,836	15,544
Profit in associated companies	(30)	(97)
Profit/ Losses on other investments	-	1,500
Profit/ Losses on tangible and intangible assets	3,042	2,261
	311,650	307,001
Changes in working capital:
Inventories	(28,758)	(49,331)
Trade debtors, accrued income and deferred costs	(22,811)	(30,476)
Trade creditors, accrued costs and deferred income	80,294	50,738
	340,375	277,932

21 Capital and reserves

21.1 Fair value and other reserves

	Land revaluation reserves	Cash-flow Hedging	Available-for sale financial assets	Currency translation reserve	Total
Balance as at 1 January 2012	90,399	(5,114)	(1,313)	(85,134)	(1,162)
Fair value adjustment of financial investments: - Gross value - Deferred/current tax - Non-controlling interests		979 (222) (347)		(6,414)	(5,435) (222) (347)
Fair value adjustment of available-for-sale financial investments: - Gross value			(77)		(77)
Currency translation differences: - In the year - Deferred tax	1,531 (291)	(36) 7		36,031 (285)	37,526 (569)
Balance as at 30 June 2012	91,639	(4,733)	(1,390)	(55,802)	29,714

	Land revaluation reserves	Cash-flow Hedging reserve	Available-for sale financial assets	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 - Deferred/current tax - Non-controlling interests	- - -	7,146 (1,831) (1,784)	- - -	591 (156) -	7,737 (1,987) (1,784)
Fair value adjustment of available-for-sale financial investments: - Gross value	-	-	(300)	-	(300)
Currency translation differences: - In the year - Deferred tax	(95) 18	18 (4)	- -	(3,419) 166	(3,496) 180
Balance as at 30 June 2011	83,039	(3,236)	(755)	(15,265)	63,783

21.2 Dividends

Dividends distributed in 2012 in the amount of EUR 175,627 thousand, were paid to JMH Shareholders an amount of EUR 172,819 thousand, and to non-controlling interests in the Group companies in the amount of EUR 2,808 thousand.

22 Basic and diluted earnings per share

Basic net results per share are calculated based on the net profit of EUR 151,877 thousand (2011: profit of EUR 143,847 thousand) and on the weighted average outstanding ordinary shares, numbering 628,434,220 (2011: 628,434,220).

	June 2012	June 2011
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 results of the year attributable to ordinary shares	151,877	143,847
Basic and diluted earnings per share – Euros	0.2417	0.2289

23 Borrowings

JMR - Gestão de Empresas de Retalho, SGPS, S.A. have renegotiated in the second quarter a commercial paper programme on what pricing and maturity concerns, for a period of five more years.

Jerónimo Martins Colombia contracted a short term credit line.

23.1 Current and non-current loans

	June 2012	December 2011
Non-current loans
Bank loans	85,304	83,647
Bond loans	234,075	284,798
Financial lease liabilities	10,261	17,108
	329,640	385,553
Current loans
Bank overdrafts	65,329	8,085
Bank loans	94,321	90,468
Bond loans	287,500	235,000
Financial lease liabilities	16,926	21,119
	464,076	354,672

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	2.95%	65,750	15,750	50,000	-
Loans in EUR	3.24%	62,645	62,645	-	-
Loans in PLN	5.95%	49,426	14,122	35,304	-
Loans in COP	8.42%	1,804	1,804	-	-
Bond Loans
Loans	4.27%	520,537	287,500	233,037	-
Fair value adjustment		1,038	-	1,038	-
Bank overdrafts	5.64%	65,329	65,329	-
Financial lease liabilities	3.15%	27,187	16,926	10,261	-
		793,716	464,076	329,640	-

The amount of positive EUR 1,038 thousand, adjusted to the total of bond loans, refers to the updating of the bond loan for USD 96,000 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 2012	December 2011
Non-current loans (note 23.1)	329,640	385,553
Current loans (note 23.1)	464,076	354,672
Derivative financial instruments (note 13)	10,522	12,813
Interest on accruals and deferrals	1,251	1,791
Bank deposits (note 19)	(189,205)	(340,517)
Short-term investments (note 19)	(264,398)	(186,597)
	351,886	227,715

24 Provisions and adjustments to the net realisable value

	Opening balance	Set up and reinforced	Unused and reversed	Foreign exchange difference	Used	Closing balance
Doubtful debtors (note 18)	22,932	1,647	(1,556)	158	(323)	22,858
Inventories (note 16)	14,735	138	(4,439)	396	-	10,830
Available-for-sale assets (note 15)	3,429	-	77	-	-	3,506
Short term investments (note 19)	57	-	-	-	-	57
Total fair value adjustments to net realisable value	41,153	1,785	(5,918)	554	(323)	37,251
Employee benefits	33,954	1,747	(88)		(932)	34,681
Other risks and contingencies	49,597	4,053	(4,131)	284	(374)	49,429
Total of provisions	83,551	5,800	(4,219)	284	(1,306)	84,110

25 Trade creditors, accrued costs and deferred income

	June 2012	December 2011
Other commercial creditors	1,760,235	1,615,771
Other non-commercial creditors	169,727	179,878
Accrued costs	204,587	207,514
Deferred income	3,368	3,173
	2,137,917	2,006,336

26 Contingencies

Under non-current debtors (note 18), an amount of EUR 80,588 thousand relates to tax liquidations claimed by the Tax Administration.

The Board of Directors, supported by its tax and legal advisers, believes the company has acted entirely within the law and maintains the claims filed against such settlements, without waiving its legitimate right to appeal against them and expect their full recovery.

In this context, the Group immediately demanded total reimbursement of the amounts paid, as well as indemnity interest at the legal rate for the period between the payment date and its effective restitution date.

In January 2012, one of the judicial proceedings was held to be well-grounded by the Court of Appeal (TCAS), which ruled the cancelation of the referred liquidations and the payment of compensatory interests and of a compensation for the guarantees granted within the proceedings.

Following the contingencies mentioned in the 2011 Annual Report, changes occurred on the headings as follows:

• a) In 1999, as a result of the acquisition of two companies that held establishments previously owned by former franchisees of ITMI Norte-Sul Portugal – Sociedade de Desenvolvimento e Investimento, S.A., which together with Regional de Mercadorias – Sociedade Central de Aprovisionamento, S.A., filed a case against various Group companies, holding them liable for those ex-franchisees' alleged non-compliance with the contract they had signed with ITMI, demanding an indemnity payment of EUR 14,600 thousand. The court ruled in favour of the defendants, denying the plaintiff's claim. The plaintiff appealed to the Court of Appeal, which confirmed the ruling of the court. Meanwhile the plaintiff filed an appeal to the Supreme Court of Justice, which is still pending. The Board of Directors maintains its belief that the amount requested will probably not be granted;
• b) Proherre Internacional, Lda. claimed an indemnity payment of EUR 2,500 thousand from Pingo Doce – Distribuição de Produtos Alimentares, S.A., alleging the termination of a lease agreement by Pingo Doce, without the minimum period agreed between the parties having elapsed. Pingo Doce contested this claim based on the fact that the lease was terminated through mutual agreement. In the meantime, a curative act was pronounced, and the trial was set for October 2012. Pingo Doce is convinced that the Court will reduce the amount that would result from the penalty clause, as it is manifestly excessive;
• l) The Tax Authorities assessed JMR Gestão de Empresas de Retalho, SGPS, S.A. for the amount of EUR 16,078 thousand due to the fact that JMR should restate the dividends received, in 2003 and 2004, from its subsidiary in the Madeira Free Zone, considering them as interest for tax purposes. According to the Portuguese Tax Authorities the said income should be subject to Corporate Income Tax in opposition to the

dividends received that are exempt. JMR's Management, supported by their tax consultants and legal advisors, consider that the report issued by the Tax Authorities does not have any legal basis or validity, and will use all the resources at its disposal to challenge it. The judicial, as well as the appeal, claims presented were ruled in favour of the Portuguese tax authorities, JMR's Management, supported by its lawyers and tax advisors' opinion, still believe that those decisions are not valid nor have any legal grounds and has challenged and opposed the ruling;

r) At the beginning of September 2011, Néstle initiated judicial proceedings against Unilever Jerónimo Martins, Lda., claiming a compensation of EUR 2,100 thousand for alleged similarity and confusion in the packaging of competing products. The defendant filed its statement of defense. Meanwhile the parties reached an agreement to terminate the judicial proceedings, which was confirmed by the court.

This lawsuit followed the injunction proceedings filed by Néstle, which was ruled in its favour by the court and confirmed by the Court of Appeal. Pursuant to the decision of the Court of Appeal, the plaintiff commenced the enforcement proceedings of the injunction decreed against Unilever Jerónimo Martins, Lda., which was also settled by agreement and is still awaiting the respective judicial confirmation;

s) Tengelmann KG filed arbitration proceedings against Jerónimo Martins, SGPS, S.A. before the German Institute of Arbitration, in Cologne. The plaintiff argues that Jerónimo Martins, SGPS, S.A. is liable for the non-payment of rents and contractual penalties, plus accrued interests, by Dystrybucja Integrator Sp. Z o.o. (previously Plus Discount Sp. z o.o. – Plus Poland), in the amount of EUR 2,716 thousand, under the guarantee granted by Jerónimo Martins, SGPS, S. A. in the SPA regarding Plus Discount Sp. z o.o.. Jerónimo Martins, SGPS, S.A. considers the allegations ungrounded, therefore presented its statement of defense in the arbitral proceedings. Tengelmann KG presented its response and expanded the amount claimed to EUR 5.640 thousand, plus accrued interest from June 1, 2012. Presently, the arbitration proceedings are awaiting the presentation of a rejoinder by Jerónimo Martins.

27 Related parties

56.14% 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 first half of 2012, neither were there any amounts payable or receivable between them on June 30th, 2012.

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

		Sales and services rendered	Stocks purchased and services supplied
	June 2012	June 2011	June 2012	June 2011
Joint-Ventures	209	423	39,537	38,011
Associated companies	-	-	220	355

	Accounts payable		Accounts receivable
	June 2012	December 2011	June 2011	December 2011
Joint-Ventures	244	372	20,551	6,642
Associated companies	1	-	353	505

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 2012	June 2011	June 2012	June 2011
Joint-Ventures	116	219	21,746	20,906
Associated companies	-	-	220	355

	Accounts payable		Accounts receivable
	June 2012	December 2011	June 2012	December 2011
Joint-Ventures	134	205	11,303	3,653
Associated companies	1	-	353	505

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 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.

28 Events after the balance sheet date

At the conclusion of this Report there were no relevant events to highlight that are not disclosed in the Financial Statements.

Lisbon, 24 th July, 2012

The Certified Accountant The Board of directors

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 June 30, 2012, of Jerónimo Martins, SGPS, S.A., included: in the Directors' report, the consolidated balance sheet (which shows a total of Euro 4,661,536 thousand, and a total shareholders' equity of Euro 1,423,992 thousand, including non-controlling interests of Euro 293,197 thousand and a profit for the period of Euro 151,877 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, the consolidated results of their operations, the gains and losses recognised in equity, the changes in equity and the consolidated cash flow; (b) to prepare historical financial information in accordance with International Financial Reporting Standards as adopted by the EU and which is complete, true, timely, clear, objective and lawful, 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 lawful, as required by the Portuguese Securities Market Code, and to issue a professional and independent report based on our work.

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 lawful.

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069-316 Lisboa, Portugal Tel +351 213 599 000, Fax +351 213 599 999, www.pwc.com/pt Matriculada na Conservatória do Registo Comercial sob o NUPC 506 628 752, Capital Social Euros 314.000

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente. Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na Comissão do Mercado de Valores Mobiliários sob o nº 9077 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 2012 is not free of material misstatements that affects its conformity with International Financial Reporting Standards, as adopted by the EU and that it is not complete, true, timely, clear, objective and lawful.

Report on other legal requirements

9 Also based on our work, nothing came to our attention that leads us to believe that the information included in the Directors' report is not consistent with the consolidated financial statements for the period.

July 31, 2012

PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. represented by:

Abdul Nasser Abdul Sattar, R.O.C.

(This is a translation, not to be signed)