Jeronimo Martins — Interim / Quarterly Report 2012

Nov 23, 2012

Título

First Nine Months Consolidated Report 2012

Non Audited

INDEX

I – Consolidated Management Report

Message from the CEO	3
1. Introduction	3
2. Sales Analysis	3
3. Results Analysis	4
4. Balance Sheet	5
5. Outlook for 2012	5
6. Distribution from Free Reserves Proposal	6

II – Consolidated Management Report Appendix

1. Sales Growth	7
2. Stores Network	7
3. EBITDA Margin Breakdown	7
4. Definitions	7
5. Information Regarding Individual Financial Statements	7

III – Consolidated Financial Statements

1. Consolidated Financial Statements	9
2. Notes to the Consolidated Financial Statements	13

I. CONSOLIDATED MANAGEMENT REPORT

Message from the CEO – Pedro Soares dos Santos

'Biedronka completed, ahead of schedule, its ambitious plan to convert all stores to a new layout, confirming its execution capacity and operational excellence. The Company has now a completely new store network that reinforces the visibility of its perishables operation as an additional key differentiating factor. This gives Biedronka a significant competitive advantage executed at the most efficient cost in the market to build on the strong market share growth already achieved. By anticipating consumption trends and acting fast in responding to the new needs of the Polish consumer, Biedronka has consolidated its position as the preferred food store in the market, and strengthened the pillars of its profitable growth.

In Portugal, the deteriorating socio-economic environment is accentuating the decline of consumer expenditure and shoppers sensitiveness to price. In this context, our focus is to remain competitive in order to reinforce our market share.

Biedronka's strong performance enables us to confirm the positive outlook for the Group in terms of double-digit sales growth (at constant exchange rate) and good earnings growth in 2012, reassuring my confidence that we have the right business model to achieve the growth potential we have identified in Poland.'

1. Introduction

The Group delivers a solid performance in the quarter in tougher conditions, with sales growth in both Poland and Portugal. Biedronka ends the quarter with the entire store network operating with the new layout, maintaining at the same time, in the nine months, a strong growth in sales (+18%) and EBITDA (+23%).

(Million Euro)		9M 12		9M 11		D %		Q3 12		Q3 11	D %
		% total		% total	Pln	Euro		% total		% total	Pln	Euro
Biedronka										4,867 61.2% 4,328 59.1% 17.6% 12.5% 1,734 60.9% 1,483 57.8% 16.8% 16.9%
Pingo Doce		2,476 31.1% 2,377 32.5%				4.1%		884 31.1%		856 33.3%		3.2%
Recheio	601	7.6%	596	8.1%		0.8%	226	7.9%	226	8.8%		0.0%
Manufacturing	182	2.3%	181	2.5%		0.8%	6 8	2.4%	6 6	2.6%		2.2%
Mkt. Repr. and Rest. Serv.	6 2	0.8%	6 4	0.9%		-3.6%	2 2	0.8%	2 3	0.9%		-7.4%
Consolidation Adjustments	-234	-2.9%	-226	-3.1%		3.3%	-87	-3.1%	-87	-3.4%		0.3%
Total JM	7,954		100% 7,320	100%			8.7% 2,846	100% 2,568		100%		10.8%
p.m. Pingo Doce (store sales)	2,266		2,188			3.6%	804		784			2.5%

2. Sales Analysis

Consolidated sales reached €7,953.8 million, 8.7% (+11.7% at a constant exchange rate) ahead of the first nine months of the previous year, as a result of a like-for-like (LFL) Group sales performance of 3.8%, and the contribution from the new stores. Although the zloty has strengthened during the third quarters, compared to first nine months of the previous year it still had a negative impact of €225.2 million on the Group's sales.

Biedronka's sales increased by 17.6% in local currency, as a result of a 6.5% increase in LFL sales and the additional number of stores.

The 5.5% LFL performance in 3rd Quarter, registered, as expected, an acceleration from 2nd Quarter performance and included a positive evolution of both number of visits and average ticket. The average inflation of Biedronka's basket was c.1.5p.p. lower than previous quarters.

Biedronka opened, in the 3 rd Quarter, 66 new stores and inaugurated its eleventh distribution centre at the beginning of October, now operating 10 logistic regions in Poland.

In Portugal, food retail sales fell by 1.3% in July and August reflecting the decline in consumer expenditure in a market that remains highly promotionally intense. However, Pingo Doce continues to reinforce its market share, posting a growth of 2.5% of sales in 3rd Quarter, helped by an additional five stores compared to the previous year and a LFL performance of -0.8%, excluding fuel.

Recheio's sales in 3rd Quarter were in line with same quarter previous year, with LFL of -0.1%. Within the two segments in which the company operates - Traditional and HoReCa – it benefitted from its strong competitive position. The positive performance of the Traditional channel was offset by the negative impact of the HoReCa channel, which has been in decline since March 2012. However Recheio is doing better than the market and continues to gain share.

In Manufacturing, market conditions continued to be extremely demanding but the growth of some categories led to a 2.2% increase in sales in the quarter.

Marketing, Representations and Restaurant Services, posted a sales decrease of 3.6% in the first nine months, affected by the difficult market conditions.

(Million Euro)	9M 12		9M 11		D	Q3 12		Q3 11		D
Consolidated Sales	7,954		7,320		8.7%	2,846		2,568		10.8%
Total Margin		1,776 22.3%		1,661 22.7%	6.9%		641 22.5%		597 23.2%	7.4%
Operating Costs		-1,222 -15.4%		-1,134 -15.5%	7.7%		-413 -14.5%		-380 -14.8%	8.6%
EBITDA	554	7.0%	527	7.2%	5.2%	228	8.0%	216	8.4%	5.4%
Depreciation	-168	-2.1%	-157	-2.1%	7.3%	-56	-2.0%	-53	-2.0%	7.2%
EBIT	386	4.9%	370	5.1%	4.3%	172	6.0%	164	6.4%	4.9%
Financial Results	-22	-0.3%	-23	-0.3%	-6.7%	-8	-0.3%	-8	-0.3%	0.8%
Non Recurrent Items	-14	-0.2%	-6	-0.1%	n.a	0	0.0%	0	0.0%	n.a
EBT	350	4.4%	341	4.7%	2.8%	163	5.7%	156	6.1%	4.9%
Taxes	-75	-0.9%	-71	-1.0%	5.5%	-35	-1.2%	-32	-1.2%	9.4%
Net Profit	275	3.5%	270	3.7%	2.0%	129	4.5%	124	4.8%	3.8%
Non Controlling Interest	-4	0.0%	-14		-0.2% -73.4%	-9	-0.3%	-12		-0.5% -26.0%
Net Profit attr. to JM	272	3.4%	256	3.5%	6.2%	120	4.2%	112	4.4%	7.0%
EPS (€)	0.43		0.41		6.2%	0.19		0.18		7.0%
Cash Flow per share (€)	0.74		0.70		5.3%	0.31		0.29		7.2%

3. Results Analysis

Operating Profit

In the first nine months, consolidated EBITDA increased by 5.2% to €554.5 million, reaching 7.0% of sales. At a constant exchange rate, EBITDA was up by 8.6%.

In Poland, the positive evolution of Biedronka's EBITDA margin in the quarter reflected the benefits of the scale of the operation and the strict control over operating expenses. EBITDA generated by Biedronka in the first nine months increased by 23.3% in local currency (+17.9% in euros).

In Distribution in Portugal, EBITDA decreased by 11.2%, to €155.5 million, mostly reflecting Pingo Doce's investment supporting its promotional plan, which has been essential in strengthening the banner's competitive position. Operating costs are being well managed despite high inflation in a number of costs, particularly energy.

In the area of Manufacturing and Services, the decline of the EBITDA margin reflected the decision to improve the price competitiveness in some key categories.

Net Result

Net profit attributable to Jerónimo Martins increased by 6.2% to €271.5 million (+7.6% excluding non-recurring items)

4. Balance Sheet

(Million Euro)	9M 12	2011	9M 11
Net Goodwill	746	721	715
Net Fixed Assets	2,662	2,411	2,262
Net Working Capital	-1,650	-1,542	-1,370
Others	6 8	6 1	6 2
Invested Capital	1,826	1,650	1,669
Total Borrowings	732	702	711
Leasings	2 2	3 8	4 5
Accrued interest	1 6	1 5	1 1
Marketable sec. & Bank deposits	-518	-527	-436
Net Debt	252	228	331
Non Controlling Interests	301	301	299
Share Capital	629	629	629
Reserves and Retained Earnings	644	492	410
Shareholders Funds	1,574	1,422	1,338
Gearing	16.0%	16.0%	24.7%

Consolidated net debt was reduced from €331.1 million to €251.8 million. Gearing fell to 16.0%.

In view of the strength of the Balance Sheet, the Board of Directors will request an extraordinary Shareholders meeting to approve the distribution in 2012 of approximately €150 million from free reserves to shareholders.

Investment Programme

The Group invested €326.6 million in the first nine months, 87.4% of which was allocated to Biedronka.

5. Outlook for 2012

In the first nine months, the sales performance of all the business areas ahead of the markets resulted in an increase in the market shares.

In Poland, Biedronka set itself very ambitious targets. Despite the significant challenges associated with remodelling the entire store network in 12 months, the Company maintained a strong sales performance, controlling operating expenses and executing the plan for store openings, which is on track to open 250 new stores in the year.

At the end of September, Biedronka was operating all its stores with a new layout and equipment that will allow it to meet the consumer trends in the market better than any other retailer. This was another important step towards the sustainable differentiation of Biedronka's value proposition, by integrating aspects that are increasingly valued by the Polish consumer into Biedronka's business model.

As such, we believe that Biedronka is in an excellent position to maintain its growth momentum ahead of the market.

In Portugal, the extremely fragile economic environment is reflected in weaker consumption. In this context, Pingo Doce will continue to reinforce its price positioning and strengthen its competitiveness in the market. We expect this strategy to support the above-market sales performance with a positive LFL for the year.

The Group's investment programme for 2012 is forecast to reach around 650 million euros, 80% of which will be invested in Poland.

Despite the difficulties in Portugal and the slowdown of the growth of the Polish economy, the Group remains confident that 2012 will be another good year. We expect double-digit consolidated sales growth (at a constant exchange rate) and a healthy improvement in profitability. With the decision to invest in strengthening our business in Portugal, we estimate that the Group's EBITDA margin will be slightly below the previous year.

6. Distribution from Free Reserves Proposal

The Board of Directors decided to request the Chairman of the General Meeting to summon an extraordinary Shareholders' meeting to present a proposal for the distribution of an amount of €150,195,778.58 from free reserves, payable in 2012. This is equivalent to the gross amount of €0.239 per share, to be distributed to the Shareholders proportionally to their holdings, excluding own shares.

Lisbon, 24 th October 2012

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Growth

		Total Sales Growth					LFL Sales Growth
			Q1 12 Q2 12 H1 12 Q3 12 9M 12			Q1 12	Q2 12	H1 12	Q3 12	9M 12
Biedronka
Euro			13.1% 7.6% 10.1% 16.9% 12.5%
PLN			21.0% 15.6% 18.1% 16.8% 17.6%			9.5% *	4.7% *	7.0% *	5.5% *	6.5% *
Pingo Doce	2.1%	6.1%	4.2%	2.5%	3.6%				-1.6% ** 2.4% ** 0.5% ** -0.6% ** 0.1% **
Recheio	4.0%	-1.0%	1.3%	0.0%	0.8%	2.6%	-2.9%	-0.4%	-0.1%	-0.3%
Manufacturing	-1.5%	1.3%	0.1%	2.2%	0.8%	-1.5%	1.3%	0.1%	2.2%	0.8%
Mkt. Repr. and Rest. Serv.			-1.8% -1.0% -1.3% -7.4% -3.6%			-1.7%	0.1%	-0.7%	-7.6%	-3.3%

* Excluding days of closure for store layout conversion

** Ex-petrol LFL -0.8% 2.4% 0.8% -0.8% 0.3%

2. Stores Network

Number of Stores	2011		Openings		Closings	Network
		Q1 12	Q2 12	Q3 12	9M 12	9M 12	9M 11
Biedronka	1,873	3 7	3 9	6 6	9	2,006	1,756
Pingo Doce	369	0	2	1	0	372	367
Recheio	4 1	0	0	0	0	4 1	4 1

			Openings		Closings *	Network
Sales Area (sqm)	2011	Q1 12	Q2 12	Q3 12	9M 12	9M 12	9M 11
Biedronka	1,113,192	22,276	26,402	46,585	1,111	1,207,345	1,030,626 **
Pingo Doce	451,207	0	2,248	1,500	2,118	452,837	451,936
Recheio	128,975	0	0	0	0	128,975	128,975

* Including changes of sales area due to remodellings

**Restated

3. EBITDA Margin Breakdown

(% of sales)	9M 12	9M 11
Distribution Poland	8.2%	7.8%
Distribution Portugal	5.4%	6.3%
Manufacturing and Services	9.3%	10.0%

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.

5. Information Regarding Individual Financial Statements

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

First Nine Months'12

III. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS

FOR SEPTEMBER 2012 AND 2011

					Euro thousand
	Notes	9 Months 2012	9 Months 2011	rd Quarter 3 2012	rd Quarter 3 2011
Sales and services rendered	3	7,953,799	7,319,767	2,845,688	2,568,263
Cost of sales	4	(6,177,479)	(5,658,404)	(2,204,898)	(1,971,795)
Gross profit		1,776,320	1,661,363	640,790	596,468
Distribution costs	5	(1,234,110)	(1,148,162)	(417,559)	(384,470)
Administrative costs	5	(156,069)	(142,820)	(51,608)	(48,359)
Exceptional operating profits/losses	8.1	(14,095)	(4,683)	(275)	(29)
Operating profit		372,046	365,698	171,348	163,610
Net financial costs	6	(22,016)	(23,714)	(8,180)	(8,170)
Gains in associated companies	11	146	271	116	174
Gains/Losses in other investments	8.2	-	(1,500)	-	-
Profit before taxes		350,176	340,755	163,284	155,614
Income taxes	7	(74,880)	(70,953)	(34,699)	(31,732)
Profit before non-controlling interests		275,296	269,802	128,585	123,882
Attributable to:
Non-controlling interests		3,756	14,126	8,922	12,053
Jerónimo Martins Shareholders		271,540	255,676	119,663	111,829
Basic and diluted earnings per share-euros	14	0.4321	0.4068	0.1904	0.1779

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

CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2012 AND AT 31 DECEMBER 2011

			Euro thousand
	Notes	2012	2011
Assets
Tangible assets	9	2,531,300	2,300,501
Investment properties	9	52,080	52,128
Intangible assets	9	876,495	830,620
Investments in associated companies		736	1,052
Available-for-sale financial investments	11	6,011	6,157
Trade debtors and deferred costs		87,826	85,407
Derivative financial instruments	10	515	10
Deferred tax assets		57,837	57,957
Total non-current assets		3,612,800	3,333,832
Inventories		436,651	388,262
Taxes receivable		49,200	33,834
Trade debtors, accrued income and deferred costs		277,793	195,200
Derivative financial instruments	10	68	-
Cash and cash equivalents	12	521,589	530,155
Total current assets		1,285,301	1,147,451
Total assets		4,898,101	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	13.1	52,221	(1,162)
Retained earnings		575,059	476,338
		1,272,965	1,120,861
Non-controlling interests		300,958	300,824
Total Shareholders' equity		1,573,923	1,421,685
Borrowings	15	325,535	385,553
Derivative financial instruments	10	9,341	8,785
Employee benefits	16	34,800	33,954
Deferred profits - state grants		892	910
Provisions for risks and contingencies	16	49,261	49,597
Deferred tax liabilities		115,942	105,155
Total non-current liabilities		535,771	583,954
Trade creditors, accrued costs and deferred income		2,228,326	2,006,336
Derivative financial instruments	10	3,364	4,038
Borrowings	15	428,827	354,672
Taxes payable		127,865	110,543
Deferred profits - state grants		25	55
Total current liabilities		2,788,407	2,475,644
Total Shareholders' equity and liabilities		4,898,101	4,481,283

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

CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY

9 Months 2012 9 Months 2011 3 rd Quarter 2012 3 rd Quarter 2011 Currency translation differences 60,165 (68,450) 23,208 (65,134) Fair value of cash flow hedging 817 2,258 60 (3,057) Fair value of hedging instruments on foreign operations (6,863) 6,757 (449) 6,322 Fair value of available-for-sale financial investments (146) (738) (69) (438) Gains/losses directly recognised in equity 53,973 (60,173) 22,750 (62,307) Net profit 275,296 269,802 128,585 123,882 Total gains/losses recognised 329,269 209,629 151,335 61,575 Attributable to: Non-controlling interests 4,346 15,014 9,165 11,157 Jerónimo Martins Shareholders 324,923 194,615 142,170 50,418

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 Nine Months of 2011	13.1				(68,450)		(68,450)		(68,450)
Fair value of cash flow hedging	13.1				1,370		1,370	888	2,258
Fair value of hedging instruments on foreign operations	13.1				6,757		6,757		6,757
Fair value of available-for-sale financial investments	13.1				(738)		(738)		(738)
Gains/losses directly recognised in equity					(61,061)		(61,061)	888	(60,173)
Net profit in the Nine Months of 2011						255,676	255,676	14,126	269,802
Total gains/losses recognised during the year					(61,061)	255,676	194,615	15,014	209,629
Dividends								(2,686)	(2,686)
Non-controlling interests acquisition						(84)	(84)	(257)	(341)
Balance Sheet at 30 September 2011		629,293	22,452	(6,060)	2,372	391,580	1,039,637	298,777	1,338,414
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 Nine Months of 2012	13.1				60,165		60,165		60,165
Fair value of cash flow hedging	13.1				227		227	590	817
Fair value of hedging instruments on foreign operations	13.1				(6,863)		(6,863)		(6,863)
Fair value of available-for-sale financial investments	13.1				(146)		(146)		(146)
Gains/losses directly recognised in equity					53,383		53,383	590	53,973
Net profit in the Nine Months of 2012						271,540	271,540	3,756	275,296
Total gains/losses recognised during the year					53,383	271,540	324,923	4,346	329,269
Dividends	13.2					(172,819)	(172,819)	(4,212)	(177,031)
Balance Sheet at 30 September 2012		629,293	22,452	(6,060)	52,221	575,059	1,272,965	300,958	1,573,923

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

Euro thousand

Euro thousand

CONSOLIDATED CASH FLOW STATEMENT FOR SEPTEMBER 2012 AND 2011

			Euro thousand
	Notes	9 Months 2012	9 Months 2011
Operating Activities
Cash generated from operations		599,181	575,885
Interest paid		(27,405)	(22,157)
Income taxes paid		(84,455)	(50,849)
Cash Flow from operating activities		487,321	502,879
Cash flow from investment activities		(340,250)	(242,353)
Cash Flow from financing activities		(169,648)	(102,163)
Net changes in cash and cash equivalents		(22,577)	158,363
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of the year		530,155	303,927
Net changes in cash and cash equivalents		(22,577)	158,363
Effect of currency translation differences		14,011	(23,796)
rd Quarter Cash and cash equivalents at the end of 3	12	521,589	438,494

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

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

				Euro thousand
	9 Months 2012	9 Months 2011	rd Quarter 3 2012	rd Quarter 3 2011
Cash Flow from operating activities	487,321	502,879	225,915	273,120
Cash Flow from investment activities	(340,250)	(242,353)	(122,939)	(81,853)
Cash Flow from financing activities	(169,648)	(102,163)	(42,102)	12,534
Cash and cash equivalents changes	(22,577)	158,363	60,874	203,801

1	Activity 14
2	Accounting policies 14
3	Segments reporting15
4	Costs of sales 16
5	Distribution and administrative costs 16
6	Net financial costs 16
7	Income tax recognised in the income statement17
8	Exceptional operating profits/losses and gains/losses in other investments 17
9	Fixed assets and investment property 17
10	Derivative financial instruments 18
11	Available-for-sale financial investments18
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 21
18	Related parties21

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 October 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 nine months 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 1st, 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 those listed below:

Euro foreign exchange reference rates (x foreign exchange units per 1 Euro)	Rate on 30 September 2012	Average rate for the year
Polish Zloty (PLN)	4.1038	4.2033
US Dollar (USD)	1.2852	-
Swiss Franc (CHF)	1.2099	-
Colombian Peso (COP)	2,324.9200	2,299.6600

3 Segments reporting

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

Business segments:

• Portugal Distribution: comprises the business unit of JMR (Pingo Doce supermarkets), the wholesale business unit Recheio(*);
• Poland Distribution: the business unit using the brand Biedronka;
• Others, eliminations and adjustments: includes i) the business units with low materiality (Unilever Jerónimo Martins, Gallo Worldwide, Marketing Services and Representations, Restaurants, 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 Distribution		Poland Distribution		Others, eliminations and adjustments	Consolidated	Total JM
	2012	2011	2012	2011	2012	2011	2012	2011
Net sales and services				2,870,622 2,787,563 4,866,993 4,327,874 216,184				204,330 7,953,799 7,319,767
Inter-segments	308	195	642	441	(782)	(271)	168	365
External customers	2,870,314	2,787,368	4,866,351	4,327,433	216,966	204,601		7,953,631 7,319,402
Operational cash-flow (EBITDA)	155,501	175,185	397,977	337,673	987	14,342	554,465	527,200
Depreciations and amortisations	(84,550)	(81,287)	(79,205)	(71,678)	(4,569)	(3,854)	(168,324)	(156,819)
Operational result (EBIT)	70,951	93,898	318,772	265,995	(3,582)	10,488	386,141	370,381
Financial results							(21,870)	(24,943)
Net result attributable to JM							271,540	255,676
Total assets (1)				2,293,125 2,245,558 2,115,914 1,864,433 489,062				371,292 4,898,101 4,481,283
Total liabilities (1)				1,607,732 1,555,736 1,434,806 1,215,220 281,640				288,642 3,324,178 3,059,598
Investments in fixed assets	34,692	71,447	285,336	149,678	7,626	3,615	327,654	224,740

Detailed information by segment at September 2012 and 2011

(1) The comparable amounts of total assets and liabilities are reported to 31 December 2011

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

	September 2012	September 2011
EBIT	386,141	370,381
Non recurrent results	(14,095)	(4,683)
Operational result	372,046	365,698

Information by geographical segments at September 2012 and 2011

		Net sales and services
	2012	2011
Portugal	3,066,857	2,985,471
Poland	4,886,942	4,334,296
Total	7,953,799	7,319,767

4 Costs of sales

	September 2012	September 2011
Net cost of products sold	(6,162,247)	(5,643,995)
Net cash discount and interest paid to suppliers	1,020	3,144
Electronic payment commissions	(12,186)	(12,890)
Other supplementary costs	(4,066)	(4,663)
	(6,177,479)	(5,658,404)

5 Distribution and administrative costs

	September 2012	September 2011
Supplies and services	(288,716)	(271,844)
Advertising costs	(55,196)	(49,600)
Rents	(173,328)	(152,632)
Staff costs	(596,985)	(558,315)
Depreciations and profit/loss with fixed assets	(166,121)	(155,460)
Transportation costs	(106,722)	(97,769)
Other operational profit/loss	(3,111)	(5,362)
	(1,390,179)	(1,290,982)

6 Net financial costs

	September 2012	September 2011
Interest expense	(24,938)	(24,436)
Interest received	6,354	6,025
Dividends	19	19
Net foreign exchange	1,478	(1,563)
Other financial costs and gains	(4,911)	(3,762)
Fair value of financial investments held for trade:
Derivative instruments	(18)	17
	(22,016)	(23,714)

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 9).

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

7 Income tax recognised in the income statement

	September 2012	September 2011
Current income tax
Current tax of the year	(64,767)	(60,540)
Adjustment to prior year estimation	(1,296)	100
	(66,063)	(60,440)
Deferred tax
Temporary differences created and reversed	(9,806)	(12,514)
Change to the recoverable amount of tax losses and temporary differences from previous years	597	2,001
	(9,209)	(10,513)
Other gains/losses related to taxes
Impact of changes in estimates for tax litigations	392	-
	392	-
Total income taxes	(74,880)	(70,953)

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

8.1 Exceptional operating profits/losses

	September 2012	September 2011
One-off Costs Pingo Doce	(10,350)	-
Indemnities related to termination of lease agreement	-	(4,907)
Losses with organizational restructuring programme	(1,854)	(173)
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	131	51
	(14,095)	(4,683)

8.2 Gains/Losses in other investments

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

9 Fixed assets and investment property

	Tangible assets	Investment property	Intangible assets	Total
Net value at 31 December 2011	2,300,501	52,128	830,620	3,183,249
Foreign exchange differences	88,442	-	33,069	121,511
Increases	305,901	-	21,753	327,654
Disposals and write-offs	(3,163)	-	(120)	(3,283)
Transfers	(11)	-	(441)	(452)
Depreciation and impairment losses	(160,370)	-	(8,386)	(168,756)
Fair value changes	-	(48)	-	(48)
Net value at 30 September 2012	2,531,300	52,080	876,495	3,459,875

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

• the Goodwill related to polish business (Biedronka), totalling PLN 1,282,278 thousand, was updated positively by EUR 24,826 thousand;

• the Goodwill related to polish pharmacies business (Bliska), totalling PLN 38,796 thousand, was updated positively by EUR 751 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 first nine months of 2012, an amount of EUR 470 thousand was recognised as a loss in the profit and loss.

10 Derivative financial instruments

		September 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	-	-	-	263	10 millions EUR	-	-	-	324
Currency forwards (USD)	0.5 millions USD	-	-	12	-		-	-	-	-
Fair value hedging derivatives
USD loan hedging	96 millions USD	-	515	-	-	96 millions USD	-	-	-	680
Cash flow hedging derivatives
Interest rate swap (EUR)	494.6 millions EUR	-	-	2,637	9,078	440 millions EUR	-	-	4,038	7,629
Interest rate swap (PLN)	135 millions PLN	-	-	197	-	189 millions PLN	-	10	-	152
Foreign operation investments hedging derivatives
Currency Forwards (PLN)	357 millions PLN	68	-	518	-		-	-	-	-
Total derivatives held for trading		-	-	12	263		-	-	-	324
Total hedging derivatives		68	515	3,352	9,078		-	10	4,038	8,461
Total assets/liabilities derivatives		68	515	3,364	9,341		-	10	4,038	8,785

As at 30 September 2012 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 3,014 thousand.

11 Available-for-sale financial investments

Regarding the financial assets available-for-sale, the reduction of EUR 146 thousand relates to changes in the fair value of listed equity holdings, at the reporting date of these financial statements.

12 Cash and cash equivalents

	September 2012	December 2011
Bank deposits	200,361	340,517
Short-term investments	317,835	186,597
Cash and cash equivalents	3,393	3,041
	521,589	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 16).

13 Capital and reserves

13.1 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	- - -	1,061 (244) (590)	- - -	(6,863) - -	(5,802) (244) (590)
Fair value adjustment of available-for-sale financial investments: - Gross value	-	-	(146)	-	(146)
Currency translation differences: - In the year - Deferred tax	2,682 (510)	(62) 12	- -	58,999 (956)	61,619 (1,454)
Balance as at 30 September 2012	92,571	(4,937)	(1,459)	(33,954)	52,221

	Land revaluation reserves	Cash-flow Hedging	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	- - -	3,062 (804) (888)	- - -	9,194 (2,437) -	12,256 (3,241) (888)
Fair value adjustment of available-for-sale financial investments: - Gross value	-	-	(738)	-	(738)
Currency translation differences: - In the year - Deferred tax	(2,411) 458	130 (25)	- -	(70,392) 3,790	(72,673) 4,223
Balance as at 30 September 2011	81,163	(5,306)	(1,193)	(72,292)	2,372

13.2 Dividends

Dividends distributed in 2012 totaling EUR 177,031 thousand, were paid to JMH Shareholders in the amount of EUR 172,819 thousand, and to non-controlling interests in the Group companies in the amount of EUR 4,212 thousand.

14 Earnings per share

		September 2012 September 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 result attributable to ordinary shares	271,540	255,676
Basic and diluted earnings per share – euros	0.4321	0.4068

15 Borrowings

JMR-Gestão de Empresas de Retalho, SGPS, S.A. renegotiated in the 2 nd Quarter a commercial paper programme, regarding pricing and maturity, for an extended period of more five years. In the 3rd Quarter the Company has contracted a Mutual Loan, with maturity of three years.

Jerónimo Martins Colombia formalised a short-term credit line.

Jerónimo Martins, SGPS, S.A., reimbursed the 5-years bond loan issued in 2007 that matured in September 2012.

15.1 Current and non-current loans

	September 2012 December 2011
Non-current loans
Bank loans	85,000	83,647
Bond loans	232,705	284,798
Financial lease liabilities	7,830	17,108
	325,535	385,553
Current loans
Bank overdrafts	46,105	8,085
Bank loans	115,691	90,468
Bond loans	252,500	235,000
Financial lease liabilities	14,531	21,119
	428,827	354,672

15.2 Financial debt

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

	September 2012	December 2011
Non-current loans (note 15.1)	325,535	385,553
Current loans (note 15.1)	428,827	354,672
Derivative financial instruments (note 10)	12,122	12,813
Interest on accruals and deferrals	3,528	1,791
Bank deposits (note 12)	(200,361)	(340,517)
Short-term investments (note 12)	(317,835)	(186,597)
	251,816	227,715

16 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	22,932	1,984	(2,165)	262	(507)	22,506
Inventories	14,735	258	(4,049)	598	-	11,542
Financial Investments (note 12)	3,429	146	-	-	-	3,575
Short terms investments	57	-	-	-	-	57
Total fair value adjustments	41,153	2,388	(6,214)	860	(507)	37,680
Employee benefits	33,954	2,507	(88)	-	(1,573)	34,800
Provisions for risks and contingencies	49,597	3,643	(3,873)	413	(519)	49,261
Total of provisions	83,551	6,150	(3,961)	413	(2,092)	84,061

17 Contingencies

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 as opposed 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. Jerónimo Martins presented a rejoinder. Presently, the arbitration proceedings are awaiting the Court's decision on which witnesses (presented by the parties and with written statements filed) will be heard in oral hearings. tribunal

18 Related parties

Sociedade Francisco Manuel dos Santos owns 56.14% of the Group. No transactions occurred between this Company and any company of the Group in the first nine months of 2012, neither were there any amounts payable or receivable between them on September 30th, 2012.

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

	Sales and services rendered		Stocks purchased and services supplied
	September 2012	September 2011	September 2012	September 2011
Joint-Ventures	305	699	62,289	62,549
Associated companies	-	-	262	603

	Trade debtors, accrued income and deferred costs		Trade creditors, accrued income and deferred costs
	September 2012	December 2011	September 2012	December 2011
Joint-Ventures	310	372	19,448	6,642
Associated companies	-	-	68	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
	September 2012	September 2011	September 2012	September 2011
Joint-Ventures	168	365	34,259	34,402
Associated companies	-	-	262	603

	Trade debtors, accrued income and deferred costs		Trade creditors, accrued income and deferred costs
	September 2012	December 2011	September 2012	December 2011
Joint-Ventures	170	205	10,697	3,653
Associated companies	-	-	68	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 celebrated between Group companies and their suppliers.

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

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

Lisbon, 24 th October 2012

The Certified Accountant The Board of directors