Jeronimo Martins — Interim / Quarterly Report 2014

Nov 27, 2014

Unaudited

INDEX

I – Consolidated Management Report

Message from the Chairman and CEO	3
1. Sales Analysis	3
2. Results Analysis	4
3. Balance Sheet	5
4. Outlook for 2014	6

II – Consolidated Management Report Appendix

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

1. Consolidated Financial Statements	8
2. Notes to the Consolidated Financial Statements	12

I. CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO

'It was a tough third quarter as we anticipated, with a fast acceleration of food deflation in the main markets where we are present.

Although we are aware that deflation will continue to pressure our established businesses' performance, we have now a deeper understanding of the challenges we face in the future and how to overcome them by leveraging on our strengths. I feel we are entering the 4th quarter of the current year fully prepared to keep reinforcing our market positions while maintaining our financial solidity.

Consumer's satisfaction and preference are and will continue to be our number one priority as sales remain the main driver of the choices and decisions we make.'

1. Sales Analysis

(Million Euro)		9M 14		9M 13	D %		Q3 14		Q3 13	D %
		% total		% total Pln	Euro		% total		% total Pln	Euro
Biedronka	6,191			66.3% 5,642 64.9% 9.0% 9.7% 2,162 65.9% 1,950 63.8% 9.0% 10.9%
Pingo Doce	2,391			25.6% 2,353 27.1%	1.6%		835 25.4%		837 27.4%	-0.3%
Recheio	603	6.5%	609	7.0%	-0.9%	229	7.0%	234	7.6%	-1.9%
Mkt. Repr. and Rest. Serv.	5 6	0.6%	5 7	0.7%	-1.8%	2 0	0.6%	2 0	0.7%	-1.2%
Others & Cons. Adjustments	9 2	1.0%	3 8	0.4%	n.a.	3 5	1.1%	1 6	0.5%	n.a.
Total JM	9,333		100% 8,699	100%			7.3% 3,281 100% 3,056 100%			7.3%

Consolidated sales reached €9,333m, a growth of 7.3% on the first nine months of the previous year, +6.9% excluding the positive currency impact.

Poland posted a higher rate of food deflation that reached -1.9% in third quarter (Q3) from the -0.5% registered in second quarter (Q2), partly driven by the Russia's embargo on some Polish exports.

In the food retail sector the competitive landscape remained promotion and proximity driven.

Biedronka like-for-like (LFL) sales' volume grew by c.1% in the quarter, supported by the commercial actions implemented and the introduction of payment cards. In value, LFL performance was -1.3%, impacted by internal basket deflation. In the nine months Biedronka's LFL was -1.2%.

In the same period, Biedronka continued to increase its market share¹ and total sales have grown, in euro, by 9.7% to €6,191m (+10.9% in Q3).

After the opening of 149 stores in the first nine months of the year, Biedronka ended the period with a total of 2,527 stores in the network.

¹ Source: GfK Bimonthly Value Shares FMCG

In Portugal, the rate of food deflation also increased, reaching -2.8% in Q3 (from -1.9% in Q2).

The promotional activities in the food retail sector remained strong. The low levels of consumers' confidence and higher deflation adding up to an already very challenging market.

In the quarter, Pingo Doce registered a significant LFL volume growth which was nevertheless insufficient to offset the impact of the strong basket deflation. With a tougher basis of comparison (LFL of +5.0% in Q3 2013), LFL performance in value, excluding fuel, was -1.4% in Q3 (+1.0% in the 9M).

Pingo Doce's total sales grew 1.6% (+2.0% excluding fuel) to €2,391m. Five new stores were opened in the first nine months and the market share² of the Company strengthened further.

In the current tough market conditions in both Recheio's key segments – Traditional Retail and HoReCa – the Company outperformed the market. Despite the high levels of deflation and the strict credit policy in force, Recheio's sales were just below the prior year and volumes increased.

In the first nine months of the year, Ara and Hebe generated sales of €103m. Ara closed the quarter with 54 stores and Hebe with 117 stores.

(Million Euro)	9M 14		9M 13		D	Q3 14		Q3 13		D
Net Sales and Services	9,333		8,699			7.3% 3,281		3,056		7.3%
Total Margin	1,980	21.2%	1,862	21.4%	6.3%	694	21.1%	655	21.4%	5.9%
Operating Costs		-1,432 -15.3% -1,289 -14.8%			11.2%		-488 -14.9%		-432 -14.1%	13.0%
EBITDA	547	5.9%	573	6.6%	-4.5%	206	6.3%	224	7.3%	-7.9%
Depreciation	-205	-2.2%	-185	-2.1%	11.0%	-70	-2.1%	-63	-2.1%	11.6%
EBIT	342	3.7%	388	4.5%	-11.9%	136	4.1%	161		5.3% -15.5%
Financial Results	-26	-0.3%	-30	-0.3%	-12.7%	-8	-0.3%	-10		-0.3% -12.3%
Profit in Associated Companies	1 5	0.2%	1 4	0.2%	7.1%	7	0.2%	8		0.3% -18.2%
Non-Recurrent Items	-1	0.0%	0	0.0%	n.a.	-1	0.0%	-1	0.0%	n.a.
EBT	330	3.5%	372	4.3%	-11.4%	133	4.1%	158		5.2% -15.8%
Taxes	-74	-0.8%	-78	-0.9%	-5.3%	-30	-0.9%	-34		-1.1% -11.6%
Net Profit	256	2.7%	294	3.4%	-13.0%	104	3.2%	125		4.1% -16.9%
Non Controlling Interests	-19	-0.2%	-13	-0.2%	39.0%	-12	-0.4%	-10	-0.3%	20.0%
Net Profit attributable to JM	237	2.5%	281	3.2%	-15.5%	9 2	2.8%	115		3.8% -20.0%
EPS (€)	0.38		0.45		-15.5%	0.15		0.18		-20.0%

2. Results Analysis

Operating Profit

Consolidated EBITDA, in the nine months, declined 4.5% to €547m. The EBITDA margin was at 5.9%, 70bps below previous year, significantly impacted by the much higher level of deflation in both Poland and Portugal, as well as the promotional effort developed in the period and the evolution of start-up losses registered in Ara and Hebe.

2 Source: Nielsen TSR Research

Higher basket deflation and strong promotional actions are the main reasons why Biedronka's EBITDA margin declined by 100bps to 7.0% in the nine months.

In Portugal, the Distribution business was able to keep a tight cost control despite the strong volume growth and to deliver a broadly flat EBITDA margin compared to the nine months period of previous year. This proves the resilience of Pingo Doce and Recheio in a strong deflationary environment.

Financial Results

Financial charges for the Group were €26m, €4m below 2013.

Net Results

Following the operational performance and the start-up losses in Ara and Hebe, Net Profit attributable to Jerónimo Martins was €237m, 15.5% below prior year.

3. Balance Sheet

(Million Euro)	9M 14	2013	9M 13
Net Goodwill	647	648	643
Net Fixed Assets	3,025	2,940	2,840
Total Working Capital	-1,630	-1,686	-1,669
Others	9 9	9 2	7 6
Invested Capital	2,141	1,995	1,891
Total Borrowings	742	688	741
Leasings	2	6	8
Accrued Interest	1 0	2 0	1 7
Marketable Sec. & Bank Deposits	-305	-368	-458
Net Debt	449	346	308
Non Controlling Interests	271	267	300
Share Capital	629	629	629
Reserves and Retained Earnings	792	753	653
Shareholders Funds	1,692	1,649	1,582
Gearing	26.6%	21.0%	19.5%

Net Debt was at €449m, and gearing stood at 26.6%.

Cash Flow

(Million Euro)	9M 14	9M 13
EBITDA	547	573
Interest Payment	-23	-23
Other Financial Items	1 6	1 0
Income Tax	-85	-78
Funds From Operations	455	483
Capex Payment	-348	-368
Working Capital Movement	0	8 9
Others	1	-1
Free Cash Flow	109	203

The Free Cash Flow in the period was €109m, after Capex payments of €348m. The lower cash flow versus the previous year came mostly from higher working capital associated to commercial initiatives. This is an operational matter already being addressed by the companies.

Investment Programme

The Group Capex was €301m in the first nine months, with Biedronka absorbing 82% of this total investment.

4. Outlook for 2014

Based on the encouraging market performance and volume growth of our main businesses we are confident on the sales' trend for Q4.

However, the low visibility on how key external variables to our business, most notably deflation, will evolve makes it very difficult to commit to a specific margin target for the year.

The Group will reinforce its market positions while maintaining a strong balance sheet. Notwithstanding, and although we remain confident of the growth potential of the Polish market, we have decided to open fewer Biedronka stores in the 4th quarter of the year than originally planned. Therefore store expansion for 2014 will be running only up to the end of October with the consequent reduction of our capex programme for this year.

Lisbon, 28th October 2014

The Board of Directors

II. CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Growth

		Total Sales Growth					LFL Sales Growth
	Q1 14	Q2 14	H1 14	Q3 14	9M 14	Q1 14	Q2 14	H1 14	Q3 14	9M 14
Biedronka
Euro	5.9%	12.3%	9.1%	10.9%	9.7%
PLN	6.6%	11.5%	9.1%	9.0%	9.0%	-2.7%	0.3%	-1.2%	-1.3%	-1.2%
Pingo Doce	2.3%	2.9%	2.6%	-0.3%	1.6%	1.1%	1.9%	1.5%	-2.0%	0.3%
Ex-Fuel	2.7%	3.5%	3.1%	0.1%	2.0%	2.0%	2.7%	2.4%	-1.4%	1.0%
Recheio	-0.1%	-0.4%	-0.3%	-1.9%	-0.9%	-0.4%*	-0.4%	-0.4%	-2.3%	-1.1%

2. Stores Network

Number of Stores			Openings		Closings	Network
	2013	Q1 14	Q2 14	Q3 14	9M 14	9M 14	9M 13
Biedronka	2,393	1 9	7 3	5 7	1 5	2,527	2,245
Pingo Doce	376	2	1	2	1	380	374
Recheio	4 1	0	0	0	0	4 1	4 1

Sales Area (sqm)	2013		Openings		Closings/ Remodellings		Network
		Q1 14	Q2 14	Q3 14	9M 14	9M 14	9M 13
Biedronka	1,500,038	13,212	50,492	39,001	-1,886	1,604,628	1,392,615
Pingo Doce	457,171	2,400	688	1,750	1,146	460,863	455,175
Recheio	129,295	0	0	0	630	128,665	129,295

3. EBITDA Margin Breakdown

(% of sales)	9M 14	% total	9M 13	% total
Biedronka	7.0%	79.1%	8.0%	78.7%
Distribution Portugal	5.6%	30.5%	5.7%	29.3%
Others & Cons. Adjustments	n.a.	-9.6%	n.a.	-8.0%
JM Consolidated	5.9%	100%	6.6%	100%

4. Financial Costs Breakdown

(Million Euro)	9M 14	9M 13
Net Interest	-23	-23
Exchange Differences	0	-2
Others	-3	-5
Financial Results	-26	-30

5. 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.

6. 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 additional relevant information, compared to the one presented in this report.

III. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS

FOR SEPTEMBER 2014 AND 2013

			Euro thousand
Notes	9 Months 2014	9 Months 2013	rd Quarter 3 2014	rd Quarter 3 2013
3		8,699,287	3,280,860	3,056,243
4	(7,352,746)	(6,837,419)	(2,587,014)	(2,400,991)
		1,861,868	693,846	655,252
5	(1,479,121)	(1,320,779)	(506,006)	(446,257)
5	(158,263)	(152,597)	(51,955)	(48,150)
8.1	(1,170)	(73)	(677)	(951)
	341,273	388,419	135,208	159,894
6	(26,171)	(29,992)	(8,334)	(9,507)
11	14,676	13,701	6,581	8,046
8.2	-	25	-	-
	329,778	372,153	133,455	158,433
7	(73,994)	(78,166)	(29,623)	(33,520)
	255,784	293,987	103,832	124,913
	18,718	13,468	11,687	9,741
	237,066	280,519	92,145	115,172
14	0.3772	0.4464	0.1466	0.1833
			9,332,573 1,979,827

To be read with the attached notes to the consolidated financial statements on page 12 to 21

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

				Euro thousand
	9 Months 2014	9 Months 2013	rd Quarter 3 2014	rd Quarter 3 2013
Net profit	255,784	293,987	103,832	124,913
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation of fixed assets	-	636	-	-
	-	636	-	-
Items that may be reclassified to profit or loss
Currency translation differences	(7,699)	(26,239)	(3,770)	18,607
Change in fair value of cash flow hedges	138	3,202	(390)	877
Change in fair value of hedging instruments on foreign operations	755	(1,656)	(281)	(273)
Change in fair value of available-for-sale financial assets	10	43	(40)	-
	(6,796)	(24,650)	(4,481)	19,211
Income tax effect	20	(177)	199	(624)
Other comprehensive income, net of income tax	(6,776)	(24,191)	(4,282)	18,587
Total comprehensive income	249,008	269,796	99,550	143,500
Attributable to:
Non-controlling interests	19,127	13,752	11,712	9,961
Jerónimo Martins Shareholders	229,881	256,044	87,838	133,539
Total comprehensive income	249,008	269,796	99,550	143,500

To be read with the attached notes to the consolidated financial statements on page 12 to 21

	CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2014, 31 DECEMBER 2013
--	-------------------------------------------------------------------	--

	Euro thousand
	Notes	30 September 2014	31 December 2013
Assets
Tangible assets	9	2,854,225	2,782,821
Investment properties	9	44,071	47,471
Intangible assets	9	817,574	805,849
Investments in joint ventures and associates	11	79,866	81,431
Available-for-sale financial assets		1,464	1,208
Trade debtors and deferred costs		83,807	87,999
Deferred tax assets		46,664	51,013
Total non-current assets		3,927,671	3,857,792
Inventories		544,732	574,992
Income tax receivable		1,297	41,126
Trade debtors, accrued income and deferred costs		291,101	253,578
Derivative financial instruments	10	1	-
Cash and cash equivalents	12	308,535	371,671
Total current assets		1,145,666	1,241,367
Total assets		5,073,337	5,099,159
Shareholders' equity and liabilities
Share capital		629,293	629,293
Share premium		22,452	22,452
Own shares		(6,060)	(6,060)
Revaluation and other reserves	13	21,377	27,312
Retained earnings		753,805	709,661
		1,420,867	1,382,658
Non-controlling interests		270,689	266,604
Total Shareholders' equity		1,691,556	1,649,262
Borrowings	15	607,733	369,073
Trade creditors, accrued costs and deferred income	10	843	861
Derivative financial instruments		5,141	2,953
Employee benefits		37,934	37,464
Provisions for risks and contingencies	16	77,049	77,949
Deferred tax liabilities		78,068	77,750
Total non-current liabilities		806,768	566,050
Trade creditors, accrued costs and deferred income		2,426,928	2,477,738
Derivative financial instruments	10	297	15,599
Borrowings	15	136,770	324,716
Income tax payable		11,018	65,794
Total current liabilities		2,575,013	2,883,847
Total Shareholders' equity and liabilities		5,073,337	5,099,159

To be read with the attached notes to the consolidated financial statements on page 12 to 21

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Euro thousand
									Shareholders' equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A.
	N						Revaluation and other reserves
	o t e s	Share capital	Share premium	Own shares	Land revaluation	Cash flow hedge	Avalilable for-sale financial assets	Ajust. in joint ventures and assoc.	Currency translation reserves	Retained earnings	Total	Non controlling interests	Shareholders' equity
Balance Sheet at 31 December 2012		629,293		22,452 (6,060)	85,197	(4,097)	(1,437)	4,248	(31,786)		513,721 1,211,531	290,395	1,501,926
Equity changes in 2013
Currency translation differences in the 9 Months of 2013					(892)	10			(24,709)		(25,591)		(25,591)
Revaluation of fixed assets from 2013					636						636		636
Change in fair value of cash flow hedging						2,093					2,093	284	2,377
Change in fair value of hedging instruments on foreign operations									(1,656)		(1,656)		(1,656)
Change in fair value of available-for-sale financial investments							43				43		43
Other comprehensive income		-	-	-	(256)	2,103	43	-	(26,365)	-	(24,475)	284	(24,191)
Net profit in 9 Months of of 2013										280,519	280,519	13,468	293,987
Total comprehensive income		-	-	-	(256)	2,103	43	-	(26,365)	280,519	256,044	13,752	269,796
Dividends										(185,388)	(185,388)	(3,979)	(189,367)
Balance Sheet at 30 September 2013		629,293		22,452 (6,060)	84,941	(1,994)	(1,394)	4,248	(58,151)		608,852 1,282,187	300,168	1,582,355
Balance Sheet at 31 December 2013		629,293		22,452 (6,060)	76,230	(2,453)	(1,251)	2,897	(48,111)		709,661 1,382,658	266,604	1,649,262
Equity changes in 2014
Currency translation differences in the 9 Months of 2014					(133)	4			(7,430)		(7,559)		(7,559)
Change in fair value of cash flow hedging						(391)					(391)	409	18
Change in fair value of hedging instruments on foreign operations									755		755		755
Change in fair value of available-for-sale financial investments							1,260			(1,250)	10		10
Other comprehensive income		-	-	-	(133)	(387)	1,260	-	(6,675)	(1,250)	(7,185)	409	(6,776)
Net profit in 9 Months of 2014										237,066	237,066	18,718	255,784
Total comprehensive income for the year		-	-	-	(133)	(387)	1,260	-	(6,675)	235,816	229,881	19,127	249,008
Dividends	13									(191,672)	(191,672)	(15,042)	(206,714)
Balance Sheet at 30 September 2014		629,293		22,452 (6,060)	76,097	(2,840)	9	2,897	(54,786)		753,805 1,420,867	270,689	1,691,556

To be read with the attached notes to the consolidated financial statements on pages 12 to 21

CONSOLIDATED CASH FLOW STATEMENT FOR SEPTEMBER 2014 AND 2013

			Euro thousand
	Notes	2014	2013
Operating activities
Cash received from customers		10,519,963	9,808,596
Cash paid to suppliers		(9,280,503)	(8,519,643)
Cash paid to employees		(691,119)	(627,730)
Cash generated from operations		548,341	661,223
Interest paid		(25,122)	(24,774)
Income taxes paid		(85,209)	(77,938)
Cash flow from operating activities		438,010	558,511
Cash flow from investment activities		(329,597)	(355,764)
Cash flow from financing activities		(166,366)	(109,971)
Net changes in cash and cash equivalents		(57,953)	92,776
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of the year		371,671	375,072
Net changes in cash and cash equivalents		(57,953)	92,776
Effect of currency translation differences		(5,183)	(6,404)
rd Quarter Cash and cash equivalents at the end of 3	12	308,535	461,444

To be read with the attached notes to the consolidated financial statements on page 12 to 21

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

			Euro thousand
	9 Months 2014	9 Months 2013	rd Quarter 3 2014	rd Quarter 3 2013
Cash Flow from operating activities Cash Flow from investment activities Cash Flow from financing activities	438,010 (329,597) (166,366)	558,511 (355,764) (109,971)	273,099 (113,962) (161,985)	294,450 (133,323) (120,013)
Cash and cash equivalents changes	(57,953)	92,776	(2,848)	41,114

To be read with the attached notes to the consolidated financial statements on page 12 to 21

	Index to the Notes to the Consolidated Financial Statements	Page
1	Activity 13
2	Accounting policies 13
3	Segments reporting14
4	Costs of sales 15
5	Distribution and administrative costs 15
6	Net financial costs 16
7	Income tax recognised in the income statement16
8	Exceptional operating profits/losses and gains/losses in other investments 16
9	Fixed assets, intangible assets and investment property 17
10	Derivative financial instruments 17
11	Investments in joint ventures and associates 18
12	Cash and cash equivalents 18
13	Dividends 18
14	Basic and diluted earnings per share18
15	Borrowings 18
16	Provisions and employee benefits19
17	Contingencies 19
18	Related parties20
19	Events after the balance sheet date21

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

Head Office: Rua Actor António Silva, n.º 7, 1649-033 Lisboa

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 since 1989.

The Board of Directors approved these consolidated financial statements on 28th October 2014.

2 Accounting policies

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

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) as adopted by the European Union.

The consolidated financial statements were prepared in accordance with the same standards and accounting policies adopted by the Group in the preparation of the annual financial statements, including 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 2013 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 2013 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 2014, there were no material changes in addition to the notes detailed below, that could significantly change the assessment of the risks that the group is exposed to.

2.1 New standards, amendments and interpretations adopted by the Group

Between 2012 and 2014, the European Union (EU) issued the following Regulations, which were adopted by the Group from January 1st 2014:

EU Regulation	IASB Standard or IFRIC Interpretation endorsed by European Union	Issued in	Mandatory for financial years beginning on or after
Regulation no. 1256/2012	IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amendment)	December 2011	January 1, 2014
Regulation no. 1174/2013	IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements: Investment Entities (Amendment)	October 2012	January 1, 2014
Regulation no. 1374/2013	IAS 36 Impairment of Assets: Recoverable Amount Disclosures for Non-Financial Assets (Amendment)	May 2013	January 1, 2014
Regulation no. 1375/2013	IAS 39 Financial Instruments: Recognition and Measurement: Novation of Derivatives and Continuation of Hedge Accounting (Amendment)	June 2013	January 1, 2014
Regulation no. 634/2014	IFRIC 21 – Levies (New)	May 2013	January 1, 2014

The Group adopted the new interpretation and improvements, with no significant impact on the consolidated financial statements of the Group.

2.2 New standards, amendments and interpretations issued by IASB, but not yet endorsed by European Union

IASB issued in 2014 the following standards and amendments that are still pending endorsement by the European Union:

IASB Standard or IFRIC Interpretation	Issued in	Expected application for financial years beginning on or after
IFRS 14 Regulatory Deferral Accounts (New)	January 2014	January 1, 2016
IFRS 15 Revenue from Contracts with Customers (New)	May 2014	January 1, 2017
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation (Amendment)	May 2014	January 1, 2016
IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations (Amendment)	May 2014	January 1, 2016
IAS 16 Property, Plant and Equipment and IAS 41 Agriculture: Bearer Plants (Amendment)	June 2014	January 1, 2016
IFRS 9 Financial Instruments (Amendment)	July 2014	January 1, 2018
IAS 27 Separate Financial Statements: Equity Method in Separate Financial Statements (Amendment)	August 2014	January 1, 2016
IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendment)	September 2014	January 1, 2016
Annual Improvements to IFRS's 2012–2014 Cycle: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting (Amendment)	September 2014	January 1, 2016

The application of these new standards and amendments will not have a significant impact on the Group's Consolidated Financial Statements.

2.3 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 (foreign exchange units per 1 Euro)	Rate on 30 September 2014	Average rate for the 9 Months
Polish Zloty (PLN)	4.1776	4.1754
Swiss Franc (CHF)	1.2063	-
Colombian Peso (COP)	2,552.4400	2,615.4100

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 analyses separately 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), and 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 (Marketing Services and Representations, Restaurants, Pharmacies and Drugstores in Poland and retail business in Colombia), ii) the Holding companies and iii) the Group's consolidation adjustments.

Management evaluates the performance of segments based on the Earnings Before Interest and Taxes (EBIT). This indicator excludes the effects of exceptional operating profits/losses.

	Portugal Distribution		Poland Distribution		Others, eliminations and adjustments		Total JM Consolidated
	2014	2013	2014	2013	2014	2013	2014	2013
Net sales and services				2,998,452 2,965,890 6,191,011 5,642,431 143,110				90,966 9,332,573 8,699,287
Inter-segments	104	192	1,182	1,094	(1,286)	(1,286)	-	-
External customers	2,998,348	2,965,698	6,189,829	5,641,337	144,396	92,252		9,332,573 8,699,287
Operational cash-flow (EBITDA)	166,813	167,782	433,232		451,100 (52,577)	(45,667)	547,468	573,215
Depreciations and amortisations	(81,779)	(82,061)	(114,640)	(97,956)	(8,606)	(4,706)	(205,025)	(184,723)
Operational result (EBIT)	85,034	85,721	318,592		353,144 (61,183)	(50,373)	342,443	388,492
Exceptional operating profits/losses							(1,170)	(73)
Financial results							(11,495)	(16,266)
Income tax							(73,994)	(78,166)
Net result attributable to JM							237,066	280,519
Total assets (1)	2,070,858	2,171,943	2,652,878	2,631,255	349,601	295,961		5,073,337 5,099,159
Total liabilities (1)	1,450,124	1,547,585	1,949,657	1,837,811	(18,000)	64,501		3,381,781 3,449,897
Investments in fixed assets	29,223	45,796	245,855	291,451	25,573	39,148	300,651	376,395

Detailed information by segment at September 2014 and 2013

(1) The comparable amounts of total assets and liabilities are reported to 31 December 2013

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

	September 2014	September 2013
EBIT	342,443	388,492
Exceptional operating profits/losses	(1,170)	(73)
Operational result	341,273	388,419

4 Costs of sales

	September 2014	September 2013
Net cost of products sold	7,331,903	6,821,250
Net cash discount and interest paid to suppliers	3,549	904
Electronic payment commissions	12,441	10,059
Other supplementary costs	4,853	5,206
	7,352,746	6,837,419

5 Distribution and administrative costs

	September 2014	September 2013
Supplies and services	341,970	306,182
Advertising costs	51,314	36,052
Rents	225,955	198,944
Staff costs	694,571	637,469
Depreciation and amortisation	203,328	182,942
Profit/loss with tangible and intangible assets	1,676	1,374
Transportation costs	111,820	106,036
Other operational profit/loss	6,750	4,377
	1,637,384	1,473,376

6 Net financial costs

	September 2014	September 2013
Interest expense	(25,206)	(25,074)
Interest received	1,723	1,900
Dividends	30	23
Net foreign exchange	(147)	(1,618)
Other financial costs and gains	(2,556)	(5,206)
Fair value of financial investments held for trade:
Derivative instruments	(15)	(17)
	(26,171)	(29,992)

The interest expense heading includes the interests regarding loans measured at amortized cost, as well as interests on fair value and cash flow hedging instruments (note 10).

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

7 Income tax recognised in the income statement

	September 2014	September 2013
Current income tax
Current tax of the year	(71,551)	(69,426)
Adjustment to prior year estimation	1,171	731
	(70,380)	(68,695)
Deferred tax
Temporary differences created and reversed	(4,077)	(10,607)
Change to the recoverable amount of tax losses and temporary differences from previous years	(611)	703
	(4,688)	(9,904)
Other gains/losses related to taxes
Impact of changes in estimates for tax litigations	1,074	433
	1,074	433
Total income taxes	(73,994)	(78,166)

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

8.1 Exceptional operating profits/losses

	September 2014	September 2013
Gains/losses from legal contingencies	-	1,054
Losses from organizational restructuring programmes	(1,146)	(3,010)
Assets write-offs	(24)	(25)
Others	-	1,908
	(1,170)	(73)

8.2 Gains/losses in other investments

	September 2014	September 2013
Gains in sale of investment properties	-	25
	-	25

9 Fixed assets, intangible assets and investment property

	Tangible assets	Investment property	Intangible assets	Total
Net value at 31 December 2013	2,782,821	47,471	805,849	3,636,141
Foreign exchange differences	(7,206)	-	(2,491)	(9,697)
Increases	278,145	-	22,506	300,651
Disposals and write-offs	(2,666)	(3,382)	(61)	(6,109)
Transfers	(2,278)	-	2,278	-
Depreciation and impairment losses	(194,562)	-	(10,507)	(205,069)
Transfers to/from investment properties	(29)	29	-	-
Fair value changes	-	(47)	-	(47)
Net value at 30 September 2014	2,854,225	44,071	817,574	3,715,870

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 negatively by EUR 1,722 thousand;
• the Goodwill related to Polish pharmacies business (Bliska), totalling PLN 38,796 thousand, was updated negatively by EUR 52 thousand.

10 Derivative financial instruments

				September 2014					December 2013
	Notional		Assets	Liabilities		Assets Notional			Liabilities
		Current	Non current	Current	Non current		Current	Non current	Current	Non current
Derivatives held for trading
Interest rate swap		-	-	-	-	10 million EUR	-	-	66	-
Currency forwards (PLN)	11 million EUR	-	-	15	-		-	-	-	-
Fair value hedging derivatives
USD loan hedging		-	-	-	-	96 million USD	-	-	9,104	-
Cash flow hedging derivatives
Interest rate swap (EUR)	225 million EUR	-	-	-	2,351	438 million EUR	-	-	2,385	1,933
Interest rate swap (PLN)	500 million PLN	-	-	-	2,790	500 million PLN	-	-	-	1,020
Foreign operation investments hedging derivatives
Currency forwards (PLN)	240 million PLN	1	-	282	-	960 million PLN	-	-	4,044	-
Total derivatives held for trading		-	-	15	-		-	-	66	-
Total hedging derivatives		1	-	282	5,141		-	-	15,533	2,953
Total assets/liabilities derivatives		1	-	297	5,141		-	-	15,599	2,953

At September 2014 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 609 thousand (December 2013: payable EUR 745).

Financial instruments that matured during the period

In the first nine months of 2014 the following interest rate swaps matured:

	Currency	Loan amount	Hedged amount	Index hedged	Rate review date	Loan and hedge maturity
JMR/2014	EUR	52,500	52,500	6-months Euribor	April	April 2014
JMR/2014	EUR	80,537	60,375	6-months Euribor	June	June 2014
JMH/2014	EUR	100,000	100,000	6-months Euribor	March	September 2014

Also matured the total coverage of the risk exposure on the fair value of the USD loan (totaling USD 96,000 thousand) as well as the economic hedge of the foreign exchange risk exposure to Zloty that started in 2013.

11 Investments in joint ventures and associates

During the first nine months of 2014, the movement under this heading was as follows:

	Joint ventures		Associates		Total
	September 2014	December 2013	September 2014	December 2013	September 2014	December 2013
Opening balance	80,536	76,351	895	1,006	81,431	77,357
Equity method:
Net result	14,673	18,477	3	361	14,676	18,838
Dividends and other income received	(16,241)	(13,209)	-	(472)	(16,241)	(13,681)
Other comprehensive income	-	(1,083)	-	-	-	(1,083)
Closing balance	78,968	80,536	898	895	79,866	81,431

12 Cash and cash equivalents

	September 2014	December 2013
Bank deposits	175,200	188,489
Short-term investments	129,705	179,376
Cash and cash equivalents	3,630	3,806
	308,535	371,671

Bank deposits correspond to amounts in banks to meet current cash needs as well as receipts from customers in transit.

Short-term investments correspond to short term deposits in financial institutions that, at September 30, 2014 had a rating between BBB- and A+.

13 Dividends

Dividends distributed in 2014 in the amount of EUR 206,714 thousand, include an amount of EUR 191,672 thousand paid to JMH Shareholders, and an amount of EUR 15,042 thousand paid to non-controlling interests in the Group companies.

14 Basic and diluted earnings per share

		September 2014 September 2013
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	237,066	280,519
Basic and diluted earnings per share – euros	0.3772	0.4464

15 Borrowings

In March 2014, Jeronimo Martins Colombia (JMC) negotiated an increase of the credit line with Citibank Colombia to the amount of COP 100,000,000 thousand. The interest rate is floating and indexed to the IBR.

In June 2014, JMC contracted a short term loan with Banco Santander Colombia, in a total amount of COP 15,500,000 thousand, with the interest rate indexed to the DTF.

JMC renewed the short term credit line held with BBVA Colombia, extending the maturity until September 2015 and reducing the spread applied.

Jeronimo Martins Polska contracted several loans on a total amount of PLN 1,000,000 thousand with maturity in 2017. The Polish companies also contracted overdrafts facilities for a total amount of PLN 355,000 thousand.

In April 2014, JMR-Gestão de Empresas de Retalho, SGPS, S.A. (JMR) reimbursed the EUR 52,500 thousand from the 2009 Bond Loan as well as the final tranche of the US Private Placement in the amount of USD 96,000 thousand, that matured in June 2014.

The contracts of Commercial Paper held with Banco Santander by JMH and JMR were renegotiated, with a reduction of the spread applied.

In September 2014, JMH reimbursed the Bond Loan 2011-2014 on the amount of EUR 100,000 thousand.

15.1 Current and non-current loans

	September 2014 December 2013
Non-current loans
Bank loans	382,537	142,910
Bond loans	225,000	225,000
Financial lease liabilities	196	1,163
	607,733	369,073
Current loans
Bank overdrafts	87,739	74,021
Bank loans	46,846	22,243
Bond loans	-	223,852
Financial lease liabilities	2,185	4,600
	136,770	324,716

15.2 Financial debt

The Group entered several foreign exchange rate risk and interest risk hedging operations, as well as short-term investments. The net consolidated financial debt at the balance sheet date is as follows:

	September 2014	December 2013
Non-current loans (note 15.1)	607,733	369,073
Current loans (note 15.1)	136,770	324,716
Derivative financial instruments (note 10)	5,437	18,552
Interest on accruals and deferrals	4,198	1,367
Bank deposits (note 12)	(175,200)	(188,489)
Short-term investments (note 12)	(129,705)	(179,376)
	449,233	345,843

16 Provisions and employee benefits

	Risks and contingencies	Employee benefits
Balance at 1 January	77,949	99,859
Set up, reinforced and transfers	2,048	24,549
Unused and reversed	(2,236)	(20,618)
Foreign exchange difference	(8)	(64)
Used	(704)	(25,777)
Balance at 30 September	77,049	77,949

17 Contingencies

Following the contingencies mentioned in the 2013 Annual Report, changes occurred on the headings as follows:

a) Proherre Internacional, Lda. claimed an indemnity payment of EUR 2,500 thousand from Pingo Doce – Distribuição de Produtos Alimentares, S.A. (Pingo Doce), alleging the termination of a lease agreement by Pingo Doce, without the minimum period agreed between the parties having elapsed. Lisbon Court of Appeal determined an amount of compensation of EUR 1,100 thousand to be paid by Pingo Doce. Proherre filed an appeal to the Supreme Court of Justice. The parties are awaiting the decision;

• b) Rui Ribeiro Construções, S.A., filed indemnity proceedings with the Arbitration Court of the Lisbon Commercial Association, with a view to condemning Pingo Doce to pay approximately EUR 800 thousand for breaking a contracted work services agreement. After partial condemnation of Pingo Doce, the Group appealed to the Court of Appeal, which revoked the decision of the Arbitration Court on the ground that the decision was substantiated in facts that were not carried into the process and that were not to be dealt by the Court. Rui Ribeiro did not appeal to the Supreme Court. Accordingly the decision is now final;
• h) The Portuguese Tax Authorities carried out some corrections to the CIT amount concerning 2011 from companies included in the perimeter of the Tax Group headed by JMR – Gestão de Empresas de Retalho, SGPS, S.A. (JMR SGPS). With this corrections the total assessments concerning 2002 to 2011, amount to EUR 58,389 thousand. We believe that the Tax Authorities have no grounds to request this payment and these assessments have been challenged. The Lisbon Tax Court has already ruled partially in favour of JMR regarding the 2002 and 2005 assessments. The Board of Directors believes strongly in its arguments, and all remaining cases follow their court proceedings;
• k) The Portuguese Tax Authorities carried out some corrections of VAT rates applied to certain goods sold by Pingo Doce and Recheio in 2011. With these corrections the total amount of assessments for the years 2005 to 2011 in Pingo Doce and Recheio amount to EUR 1,814 thousand and EUR 551 thousand, respectively. We believe that the Tax Authorities have no grounds to request this payment and these assessments have been challenged;
• n) The Portuguese Tax Authorities carried out some corrections to the CIT amount concerning 2011 from companies included in the perimeter of the Tax Group headed by Recheio SGPS, S.A.. With this corrections the total assessments concerning 2008 to 2011, amount to EUR 10,600 thousand. We believe that the Tax Authorities have no grounds to request this payment and these assessments have been challenged. The Lisbon Tax Court has already ruled partially in favor of Recheio regarding the 2008 assessment. The Board of Directors believes strongly in its arguments, and all remaining cases follow their court proceedings;
• p) At the end of 2012, DST, SGPS, S.A. (DST) initiated judicial proceedings against Pingo Doce, claiming that Pingo Doce breached a promissory share purchase agreement dated 2000, regarding a company that owns real estate in Barcelos. The plaintiff (promissory seller) claimed to be entitled to keep part of the purchase price paid by the defendant (promissory buyer) in the amount of EUR 5,000 thousand, as indemnity. Pingo Doce presented a counterclaim, alleging that the contract was no longer in force and asking for the reimbursement of the amount paid, plus interest accrued in a total amount of EUR 6,062 thousand. The trial took place by the end of 2013. Meanwhile the Court has decided in favor of Pingo Doce and determined DST to pay EUR 5,000 thousand plus interest as of 2011. DST filed an appeal to the Supreme Court of Justice. After submitting such appeal, DST entered into an agreement with Pingo Doce, accepting to pay EUR 5,257 thousand. Such payment was made in July and the judicial suit is now closed;
• q) Sociedade Ponto Verde (SPV) claims an amount of EUR 3,397 thousand (outstanding interest included), related to the management of the secondary and tertiary packaging waste system. SPV does not manage those kind of waste, therefore no amount is due. Judicial proceeding started in September 2014, following their way.

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 2014, neither were there any amounts payable or receivable between them on September 30th, 2014.

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

	Sales and services rendered			Stocks purchased and services supplied
	September 2014	September 2013	September 2014	September 2013
Joint ventures	346	16	69,658	63,531
Associates	-	-	9	9
Other related parties (*)	73	-	191	-

	and deferred costs	Trade debtors, accrued income	Trade creditors, accrued costs and deferred income
	September 2014	December 2013	September 2014	December 2013
Joint ventures	488	477	21,268	7,253
Associates	-	-	-	10
Other related parties (*)	11	6	-	-

(*) Entities controlled by the major Shareholder of Jerónimo Martins and entities owned or controlled by members of the Board of Directors.

All the transactions with these related parties 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 adjustments for doubtful debts and no costs were recognised during the year related with bad or doubtful debts with these related parties.

19 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, 28th October, 2014

The Certified Accountant The Board of Directors