Jeronimo Martins — Interim / Quarterly Report 2018

Aug 9, 2018

CONSOLIDATED REPORT AND ACCOUNTS

FIRST HALF 2018

INDEX

I – Consolidated Management Report

Message from the Chairman and CEO - Pedro Soares dos Santos	3
1. Sales Analysis	3
2. Results Analysis	4
3. Balance Sheet	5
4. Outlook for 2018	6

II – Consolidated Management Report Appendix

1. Sales Evolution	7
2. Stores Network	7
3. EBITDA and EBITDA Margin Breakdown	7
4. Financial Costs Breakdown	7
5. Working Capital	8
6. Net Debt	8
7. Definitions	8
8. P&L - Reconciliation Note	9
9. Balance Sheet - Reconciliation Note	10
10. Cash Flow – Reconciliation Note	11
11. Information Regarding Individual Financial Statements	11
III – Other Information	12

IV – Statement of the Board of Directors	14

V – Consolidated Financial Statements

1. Financial Statements	15
2. Notes to the Financial Statements	19
3. Auditor´s Report	31

I - CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO

Pedro Soares dos Santos

"Our teams delivered strong performances in competitive environments and we posted solid results in the first half of the year. This performance follows the consistent implementation of our strategy and the clear focus on our priorities.

Our banners remained focused on sales growth and committed to reinforcing their positions in the respective markets.

Biedronka added 2pp to its market share in the first half, demonstrating its agility and resilience in dealing with the initial impact of the Sunday trading ban as well as in setting the stage for continued growth. In Colombia, Ara keeps expanding and gaining market relevance.

Aware of the challenges ahead, we will continue to work to deliver sustainable profitable growth."

1. Sales Analysis

(Million Euro)		H1 18		H1 17	D %		Q2 18			Q2 17	D %
		% total			% total w/o FX Euro			% total			% total w/o FX Euro
Biedronka	5,762			68.4% 5,305 68.4%	7.5%			8.6% 2,839 67.2% 2,778 68.2%			3.3%	2.2%
Pingo Doce	1,818			21.6% 1,738 22.4%		4.6%		936 22.2%		915 22.5%		2.3%
Recheio	458	5.4%	442	5.7%		3.5%	248	5.9%	241	5.9%		2.9%
Ara	283	3.4%	185		2.4% 66.8% 53.2%		149	3.5%	98		2.4% 60.3% 52.1%
Hebe	94	1.1%	75		1.0% 24.6% 25.9%		47	1.1%	39		1.0% 22.7% 21.4%
Others & Cons. Adjustments	12	0.1%	9	0.1%		27.0%	6	0.1%	5	0.1%		20.0%
Total JM	8,426		100% 7,754	100%	8.2%			8.7% 4,225 100% 4,075 100%			4.7%	3.7%

Group sales, at €8.4 bn, were 8.7% above the first Half of 2017 (+8.2% at constant exchange rates).

In the first six months, Group like for like (LFL) sales growth was 4.1%, driven by strong competitive positions. In the second Quarter, LFL was at 0.9%. The swing in the LFL performance from the first Quarter to the second Quarter results mainly from a calendar effect: Easter was in the first Quarter in 2018 and in the second Quarter in 2017. The LFL performance also reflects the more demanding comparison base in the second Quarter for both Poland and Portugal.

In Poland, the consumer environment remained favourable. However, the operating landscape continued to be very competitive and there was a slight increase in promotional activity in response to the implementation of the Sunday trading ban. Food inflation was 3.6% in the first Half (+3.2% in the second Quarter).

Biedronka remained consumer oriented and sales driven. In the last three months, special attention was paid to the changes in consumer behaviour caused by the new regulation.

The banner is adjusting its operations to match the higher sales flow registered in certain days of the week because of shifts in shopping patterns caused by the Sunday closures.

In the first Half, Biedronka delivered sales growth of 8.6% (+7.5% in local currency) to €5.8 bn. LFL performance, at 4.5%, included a flattish basket inflation.

In the second Quarter of 2018, sales grew 2.2% to €2.8 bn and LFL was 0.6%, strongly impacted by the negative calendar effect in April. In the months after Easter (May and June), Biedronka showed its resilience, while dealing with the initial impact of the Sunday trading ban, by posting a like-for-like in line with the first Half of 2018 (above 4%). The Company gained 2p.p. of market share in the period up to May 2018.

Biedronka is on track to deliver its expansion programme for 2018. In the first Half of 2018, the Company opened 30 new stores (9 net additions) and refurbished 87 stores.

Hebe delivered sales of €94 mn, a 25.9% growth in the first Half of 2017 (+24.6% at constant exchange rate) and opened 20 new stores.

In the second Quarter, Hebe's sales grew 21.4% (+22.7% at constant exchange rate) to €47 mn.

In Portugal, the Food Retail sector continued to be highly competitive and promotional. Food inflation was low with an average value of 0.8% in the six-month period (+1.0% in the second Quarter).

Pingo Doce registered in the first Half a solid 3.4% LFL sales growth (excl. fuel) which, combined with the expansion in the number of stores, led to a 4.6% sales increase to €1.8 bn.

In the second Quarter, despite the negative calendar impact in April, sales increased 2.3%, with LFL of 0.7%, to €936 mn. In the after-Easter period (May and June), the Company posted a 4.1% LFL.

Recheio maintained a solid performance and delivered in H1 a 3.0% LFL sales increase (+2.6% in the second Quarter). Sales grew 3.5% (+2.9% in the second Quarter) to €458 mn.

In Colombia, consumer confidence continued to improve, reaching positive levels in May and June. Food inflation remained soft across the period, reaching 1.4% in the first Half (+1.6% in the second Quarter).

Ara delivered sales of €283 mn, 53.2% ahead of the first Half of 2017 (+66.8% at a constant exchange rate). In the second Quarter, sales increased 52.1% (+60.3% at constant exchange rate) to €149 mn.

The banner opened 50 stores in the first six months of 2018, which is in line with the plan to open c.150 stores in the year. The construction of the distribution centre in Bogota planned for this year is close to being finished. The centre is expected to start operating in the third Quarter.

2. Results Analysis

(Million Euro)		H1 18		H1 17	D		Q2 18	Q2 17		D
Net Sales and Services	8,426		7,754			8.7% 4,225		4,075		3.7%
Gross Profit	1,811		21.5% 1,634	21.1%	10.9%	913	21.6%	856	21.0%	6.7%
Operating Costs		-1,365 -16.2% -1,218 -15.7%			12.0%		-682 -16.1%		-632 -15.5%	8.0%
EBITDA	446	5.3%	416	5.4%	7.4%	231	5.5%	224	5.5%	3.2%
Depreciation	-179	-2.1%	-160	-2.1%	11.7%	-90	-2.1%	-82	-2.0%	9.4%
EBIT	268	3.2%	256	3.3%	4.6%	142	3.3%	142	3.5%	-0.3%
Net Financial Costs	-13	-0.2%	- 4	0.0%	n.a.	- 9	-0.2%	- 4	-0.1%	n.a.
Gains in Joint Ventures and Associates	0	0.0%	0	0.0%	n.a.	0	0.0%	0	0.0%	n.a.
Other Profits/Losses	- 5	-0.1%	- 7	-0.1%	n.a.	- 3	-0.1%	- 6	-0.1%	n.a.
EBT	250	3.0%	245	3.2%	1.9%	130	3.1%	133	3.3%	-1.9%
Income Tax	-63	-0.7%	-62	-0.8%	0.7%	-31	-0.7%	-33	-0.8%	-6.0%
Net Profit	187	2.2%	183	2.4%	2.4%	99	2.3%	99	2.4%	-0.5%
Non Controlling Interests	- 7	-0.1%	-10		-0.1% -25.3%	- 4	-0.1%	- 4	-0.1%	-4.1%
Net Profit Attributable to JM	180	2.1%	173	2.2%	3.9%	95	2.3%	95	2.3%	-0.3%
EPS (€)	0.29		0.27		3.9%	0.15		0.15		-0.3%
EPS without Other Profits/Losses (€)	0.29		0.28		2.7%	0.15		0.16		-2.3%

Operating Profit

Group EBITDA totalled €446 mn in the first Half of 2018, growing 7.4% relative to the previous year (+5.5% at constant exchange rates).

EBITDA & EBITDA Margin

Excluding the impact of Ara and Hebe, EBITDA increased 6.3%, despite the pressure on operating costs, coming mostly from wage rises.

Biedronka's EBITDA was €407 mn, up 8.4% relative to the first Half of 2017 (+7.3% at a constant exchange rate). EBITDA margin was 7.1%, in line with the previous year.

This performance was achieved despite ongoing operational changes necessary to adapt to the ban on Sunday trading.

Pingo Doce registered an EBITDA of €77 mn, 4.5% below the first Half of 2017. EBITDA margin was at 4.2%. The decline from the 4.7% margin posted in the first Half of 2017 reflected the wage increases implemented in Pingo Doce throughout the fourth Quarter of 2017.

Recheio posted EBITDA of €23 mn, 4.6% ahead of the first Half of 2017, with the respective margin at 5.0% (5.0% in the first Half of 2017).

Ara and Hebe, registered EBITDA losses of €45 mn, with Ara accounting for 85% of the total. The comparable losses in the first Half of 2017 were €47 mn.

Financial Results

Net financial costs were €-13 mn, reflecting the higher interest-bearing debt in foreign currencies (Polish Zloty and Colombian Peso). It also includes losses from exchange differences due to the Zloty depreciation.

Other profits/losses

Other profits/losses were €-5 mn in the first Half of 2018, mainly attributed to restructuring costs.

Net Results

Group net profit was €180 mn, 3.9% above the first Half of 2017, driven by the solid operating performance.

3. Balance Sheet

(Million Euro)	H1 18	2017	H1 17
Net Goodwill	632	647	643
Net Fixed Assets	3,665	3,639	3,324
Total Working Capital	-2,256	-2,496	-2,142
Others	87	54	74
Invested Capital	2,129	1,843	1,899
Total Borrowings	606	529	467
Leasings	12	8	6
Accrued Interest	2	4	1
Marketable Sec. & Bank Deposits	-253	-712	-390
Net Debt	367	-170	84
Non Controlling Interests	217	225	248
Share Capital	629	629	629
Reserves and Retained Earnings	916	1,159	938
Shareholders Funds	1,762	2,013	1,815
Gearing	20.8%	-8.5%	4.6%

Net debt was €367 mn as at the end of June, reflecting the dividend payment in May in the amount of €385 mn and the working capital seasonality, with gearing at 20.8%.

Cash Flow

(Million Euro)	H1 18	H1 17
EBITDA	446	416
Interest Payment	-11	- 7
Other Financial Items	0	0
Income Tax	-96	-91
Funds From Operations	339	317
Capex Payment	-337	-288
Change in Working Capital	-136	-67
Others	- 3	- 3
Free Cash-Flow	-137	-40

Cash flow in the period was negative at €137 mn reflecting the seasonality in the working capital and faster capex execution than in the first Half of 2017.

Investment

(Million Euro)	H1 18	Weight	H1 17	Weight
Biedronka	164	56%	86	35%
Distribution Portugal	56	19%	55	22%
Ara	50	17%	62	25%
Others	24	8%	45	18%
Total CAPEX	295	100%	249	100%

Group capex amounted to €295 mn, of which 56% was invested in Biedronka and 17% in Ara.

4. Outlook for 2018

The results for the the first half-year show that our businesses are well placed to continue delivering robust performances.

The Polish economy is growing, and we maintain a positive outlook on consumer demand. Biedronka will remain focused on meeting consumer expectations and continue to grow despite having 13 fewer trading days in the second half of 2018 as a result of the new trading regulation.

Pingo Doce and Recheio are well prepared to further reinforce their market positions and to take advantage of favourable consumer and HoReCa environments.

In Colombia, Ara will continue to expand quickly and gain scale. It expects to open 100 stores in the second Half.

Supported by our first Half results, we reiterate our previous guidance: Ara and Hebe's combined losses, at EBITDA level, will be slightly lower than in 2017 at constant exchange rates and capex for the year is expected to amount to €700-750 million. This level of investment in new and established businesses is essential to guarantee future growth and solid returns.

Lisbon, 24 July 2018

The Board of Directors

II – CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Evolution

	Total Sales Growth			LFL Sales Growth
	Q1 18	Q2 18	H1 18	Q1 18	Q2 18	H1 18
Biedronka
Euro	15.6%	2.2%	8.6%
PLN	11.9%	3.3%	7.5%	8.6%	0.6%	4.5%
Pingo Doce	7.1%	2.3%	4.6%	5.8%	0.7%	3.1%
Ex-Fuel	7.7%	2.4%	4.9%	6.4%	0.7%	3.4%
Recheio	4.2%	2.9%	3.5%	3.6%	2.6%	3.0%

2. Stores Network

Number of Stores	2017	Openings		Closings	H1 18	H1 17
		Q1 18	Q2 18	H1 18
Biedronka	2,823	11	19	21	2,832	2,741
Pingo Doce	422	0	3	0	425	417
Recheio	43	0	1	1	43	43
Ara	389	25	25	0	439	269
Hebe	182	11	9	2	200	160

Sales Area (sqm)	2017	Openings		Closings/ Remodellings	H1 18	H1 17
		Q1 18	Q2 18	H1 18
Biedronka*	1,853,075	8,378	14,676	5,325	1,870,804	1,788,918
Pingo Doce	503,897	0	764	0	504,661	498,692
Recheio	131,997	0	3,942	2,860	133,079	131,996
Ara	133,692	9,010	8,939	0	151,642	89,672
Hebe	43,053	2,719	2,376	462	47,685	37,516

* Restated figure from 1,856,992 published in 2017 FY

3. EBITDA and EBITDA Margin Breakdown

(Million Euro)	H1 18	Mg	H1 17	Mg
Biedronka	407	7.1%	375	7.1%
Pingo Doce	77	4.2%	81	4.7%
Recheio	23	5.0%	22	5.0%
Others & Cons. Adjustments	-60	n.a.	-62	n.a.
JM Consolidated	446	5.3%	416	5.4%

4. Financial Costs Breakdown

(Million Euro)	H1 18	H1 17
Net Interest	-9	-6
Exchange Differences	-2	4
Others	-2	-2
Financial Results	-13	-4

5. Working Capital

(Million Euro)	H1 18	2017	H1 17
Inventories	872	847	777
in days of sales	19	19	18
Customers	64	56	57
in days of sales	1	1	1
Suppliers	-2,717	-2,849	-2,526
in days of sales	-58	-64	-59
Trade Working Capital	-1,781	-1,946	-1,691
in days of sales	-38	-44	-39
Others	-475	-551	-450
Total Working Capital	-2,256	-2,496	-2,142
in days of sales	-48	-56	-50

6. Net Debt

(Million Euro)	H1 18	H1 17
Long Term Debt	217	177
as % of Total Borrowings	35.8%	38.0%
Average Maturity (years)	2.1	2.4
Bond Loans	0	0
Commercial Paper	0	0
Other Debt	217	177
Short Term Debt	389	290
as % of Total Borrowings	64.2%	62.0%
Total Borrowings	606	467
Average Maturity (years)	1.0	0.9
Leasings	12	6
Accrued Interest & Hedging	2	1
Marketable Securities & Bank Deposits	-253	-390
Net Debt	367	84
% Debt in Euros (Total Borrowings + Leasings)	14.6%	31.7%
% Debt in Zlotys (Total Borrowings + Leasings)	47.0%	40.6%
% Debt in Colombian Pesos (Total Borrowings + Leasings)	38.5%	27.7%

7. 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).

Gearing: Net Debt / Shareholder Funds.

8. P&L – Reconciliation Note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Income Statement (page 4)	Income Statement by Functions in the Consolidated Report & Accounts - First Half 2018 Results
Net Sales and Services	Net sales and services
Gross Profit	Gross profit
Operating Costs	Includes headings of Distribution costs; Administrative costs; Other operating costs and excludes Depreciations of €-178.6 mn
EBITDA
Depreciation	Value reflected in the Other operating costs by nature note
EBIT
Net Financial Costs	Net financial costs
Gains in Joint Ventures and Associates	Gains (Losses) in joint ventures and associates
Other Profits/Losses	Includes headings of Other operating profits/losses; Gains in disposal of business and Gains/Losses in other investments
EBT
Income Tax	Income tax
Net Profit
Non-Controlling Interests	Non-Controlling interests

Net Profit Attributable to JM

9. Balance Sheet - Reconciliation Note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Balance Sheet (page 5)	Balance Sheet in the Consolidated Report & Accounts - First Half 2018 Results
Net Goodwill	Included in the heading of Intangible assets
Net Fixed Assets	Includes the headings Tangible and Intangible assets excluding the Net goodwill value (€632.4 mn)
Total Working Capital	Includes the headings Current trade debtors, Accrued income and Deferred costs; Inventories; Biological assets; Trade creditors, Accrued costs and Deferred income; Employee benefits; the value of €3.9 mn Cash and cash equivalents (note - Cash and cash equivalents) and the value of €-5.5 mn related to 'Others' due to its operational nature. Excludes the value of €-2.1 mn related to Interest accruals and deferrals (note - Financial debt)
Others	Includes the headings Investment property; Investments in joint ventures and associates; available-for-sale Financial assets; Non Current trade debtors, Accrued income and Deferred costs; Deferred tax assets and liabilities; Income tax receivable and payable; and Provisions for risks and contingencies. Excludes the value of €34.4 mn related to collateral deposits associated to Financial debt (note - Trade debtors, Accrued income and Deferred costs); and also the value of €-5.5 mn related to others due to their operational nature
Invested Capital
Total Borrowings	Includes the heading Borrowings excluding Leasings
Leasings	Value reflected in Borrowings note
Accrued Interest & Hedging	Includes the heading Derivative financial instruments and the value of €-2.1 mn related to Interest accruals and deferrals (value reflected in note - Financial debt)
Marketable Sec. & Bank Deposits	Includes the heading Cash and cash equivalents and the value of €34.4 mn related to collateral deposits associated to Financial debt (reflected in Trade debtors note) and excludes the value of €3.9 mn in Cash and cash equivalents (reflected in note - Cash and cash equivalents)
Net Debt
Non-Controlling Interests	Non-Controlling interests
Share Capital	Share capital
Reserves and Retained Earnings	Includes the heading Share premium, Own shares, Other reserves and Retained earnings
Shareholders' Funds

10.Cash Flow - Reconciliation Note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Cash Flow (page 6)	Cash Flow in the Consolidated Report & Accounts - First Half 2018 Results
EBITDA	Included in the heading of Cash generated from operations
Interest Payment	Includes the headings of Interest paid and Interest received
Other Financial Items	Dividends received
Income Tax	Income tax paid
Funds From Operations
Capex Payment	Includes the headings disposal of Tangible assets; disposal of Intangible assets; disposal of Financial assets and Investment property; acquisition of Tangible assets; acquisition of Intangible assets; acquisition of Financial assets and Investment properties
Change in Working Capital	Included in the heading of Cash generated from operations
Others	Includes the headings disposal of business (when applicable), being the remaining amount included in the heading Cash generated from operations
Free Cash Flow

11.Information Regarding Individual Financial Statements

In accordance with section b) of paragraph 3 of article 246 of the Portuguese Securities Code, the first half 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 – OTHER INFORMATION

Disclosures required by sub-paras. a) and c) of no. 1 of Article 9 and no. 7 of Article 14 of Securities Market Commission (CMVM) regulation no. 5/2008 (with reference to the first Half of 2018)

1. Securities issued by the Company, Controlled or Controlling Companies or Companies in the same Group held by Company Officers

Board of Directors

Members of the Board of Directors	Held on 31.12.17		Increases during the period		Decreases during the period		Held on 30.06.18
	Shares	Bonds	Shares	Bonds	Shares	Bonds	Shares	Bonds
Pedro Manuel de Castro Soares dos Santos	274,805	-	-	-	-	-	274,805	-
Andrzej Szlezak	-	-	-	-	-	-	-	-
António Pedro de Carvalho Viana-Baptista	-	-	-	-	-	-	-	-
Artur Stefan Kirsten Belonging to company in which is a Director (sec. d), § 2 of Article 447 Commercial Companies Code)1	353,260,814	-	-	-	-	-	353,260,814	-
Clara Christina Streit	800	-	-	-	-	-	800	-
Francisco Manuel Seixas da Costa	-	-	-	-	-	-	-	-
Hans Eggerstedt	19,700	-	-	-	-	-	19,700	-
Henrique Manuel da Silveira e Castro Soares dos Santos	26,455 2	-	-	-	-	-	26,455 2	-
Sérgio Tavares Rebelo	-	-	-	-	-	-	-	-

¹ Sociedade Francisco Manuel dos Santos, B.V.

² Of which 1,500 shares held by spouse

Statutory Auditor

As at June 30th 2018, the Statutory Auditor Ernst & Young Audit & Associados - SROC, S.A., did not hold any shares and bonds of Jerónimo Martins, SGPS, S.A. and had not made any transactions with Jerónimo Martins, SGPS, S.A. securities.

2. List of Shareholders with Qualifying Holdings as at 30th June 2018

(Pursuant to paragraph 4 of Article 448 of the Commercial Companies Code and in sub-paragraph b) of paragraph 1 of Article 8 of the Portuguese Securities Code Regulations no. 5/2008)

Shareholder	No. of Shares Held	% Capital	No. of Voting Rights	% of Voting Rights *
Sociedade Francisco Manuel dos Santos, SGPS, S.E. Through Sociedade Francisco Manuel dos Santos, B.V.	353,260,814	56.136%	353,260,814	56.136%
Heerema Holding Company Inc. Through Asteck, S.A.	31,464,750	5.000%	31,464,750	5.000%
BlackRock, Inc.	14,909,703	2.369%	14,909,703	2.369%
Baillie Gifford & Co. Through Baillie Gifford Overseas Limited	12,723,138	2.022%	12,723,138	2.022%
BNP Paribas Investment Partners, Limited Company Through Investment Funds Managed by BNP Paribas	13,536,757	2.151%	12,604,860	2.003%

Source: Last communications made by the shareholders with qualifying holdings to Jerónimo Martins, SGPS, S.A.

* Based on the total number of shares under the terms of section b), paragraph 3 of article 16 of the Portuguese Securities Code.

Statement of the Board of Directors

Within the terms of paragraph c) n.1 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 July 2018

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

Andrzej Szlezak (Member of the Board of Directors)

António Pedro de Carvalho Viana-Baptista (Member of the Board of Directors)

Artur Stefan Kirsten (Member of the Board of Directors)

Clara Christina Streit (Member of the Board of Directors and Member of the Audit Committee)

Francisco Seixas da Costa (Member of the Board of Directors)

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

Henrique Soares dos Santos (Member of the Board of Directors)

Sérgio Tavares Rebelo (Member of the Board of Directors and Chairman of the Audit Committee)

Jerónimo Martins, SGPS, S.A. Rua Actor António Silva, nº 7 • 1649-033 Lisbon • Portugal • T.: +351 21 752 61 33 www.jeronimomartins.com

V – CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR THE PERIODS ENDED AT 30 JUNE 2018 AND 2017

					Euro thousand
	Notes	June 2018	June 2017	2nd Quarter 2018	2nd Quarter 2017
Sales and services rendered	3	8,425,688	7,753,751	4,225,404	4,075,081
Cost of sales	4	(6,614,589)	(6,119,984)	(3,312,207)	(3,219,474)
Gross profit		1,811,099	1,633,767	913,197	855,607
Distribution costs	4	(1,410,359)	(1,254,797)	(705,014)	(651,044)
Administrative costs	4	(132,946)	(123,058)	(66,659)	(62,563)
Other operating profits/losses	4	(4,857)	(7,487)	(2,529)	(5,741)
Operating profit		262,937	248,425	138,995	136,259
Net financial costs	5	(13,348)	(3,580)	(8,754)	(3,533)
Gains in joint ventures and associates		(1)	(2)	3	(1)
Gains/ losses in other investments		-	2	-	-
Profit before taxes		249,588	244,845	130,244	132,725
Income tax	6	(62,722)	(62,304)	(31,382)	(33,387)
Profit before non-controlling interests		186,866	182,541	98,862	99,338
Attributable to:
Non-controlling interests		7,125	9,537	3,749	3,908
Jerónimo Martins Shareholders		179,741	173,004	95,113	95,430
Basic and diluted earnings per share - Euros	13	0.2860	0.2753	0.1513	0.1519

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIODS ENDED AT 30 JUNE 2018 AND 2017

					Euro thousand
	Notes	June 2018	June 2017	2nd Quarter 2018	2nd Quarter 2017
Net profit		186,866	182,541	98,862	99,338
Other comprehensive income:
Items that will not be reclassified to profit or loss		-	-	-	-
Currency translation differences		(40,589)	49,832	(30,832)	300
Change in fair value of cash flow hedges		(195)	508	17	(72)
Change in fair value of hedging instruments on foreign operations		3,691	(14,014)	-	(3,704)
Related tax		416	(271)	398	(178)
Items that may be reclassified to profit or loss		(36,677)	36,055	(30,417)	(3,654)
Other comprehensive income, net of income tax		(36,677)	36,055	(30,417)	(3,654)
Total comprehensive income		150,189	218,596	68,445	95,684
Attributable to:
Non-controlling interests		7,125	9,537	3,749	3,908
Jerónimo Martins Shareholders		143,064	209,059	64,696	91,776
Total comprehensive income		150,189	218,596	68,445	95,684

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

CONSOLIDATED BALANCE SHEET AT 30 JUNE 2018 AND 31 DECEMBER 2017

			Euro thousand
	Notes	June	December
Assets		2018	2017
Tangible assets	7	3,511,433	3,474,835
Intangible assets	7	786,419	811,040
Investment property	7	11,695	13,714
Investments in joint ventures and associates		2,556	1,557
Other financial investements		1,321	1,417
Trade debtors, accrued income and deferred costs	9	112,071	111,383
Derivative financial instruments	8	28	227
Deferred tax assets		109,546	106,025
Total non-current assets		4,535,069	4,520,198
Inventories		866,021	841,565
Biological assets		6,127	5,498
Income tax receivable		4,713	5,094
Trade debtors, accrued income and deferred costs	9	402,599	387,833
Derivative financial instruments	8	503	294
Cash and cash equivalents	10	222,541	681,333
Total current assets		1,502,504	1,921,617
Total assets		6,037,573	6,441,815
Shareholders' equity and liabilities
Share capital		629,293	629,293
Share premium		22,452	22,452
Own shares		(6,060)	(6,060)
Other reserves		(87,786)	(51,109)
Retained earnings		987,830	1,193,319
		1,545,729	1,787,895
Non-controlling interests		216,617	225,298
Total Shareholders' equity		1,762,346	2,013,193
Borrowings	14	226,515	237,762
Trade creditors, accrued costs and deferred income	16	775	779
Employee benefits	15	67,651	66,482
Provisions for risks and contingencies	15	28,229	29,308
Deferred tax liabilities		80,101	71,579
Total non-current liabilities		403,271	405,910
Borrowings	14	391,642	299,505
Trade creditors, accrued costs and deferred income	16	3,462,620	3,662,293
Derivative financial instruments	8	30	2,805
Income tax payable		17,664	58,109
Total current liabilities		3,871,956	4,022,712
Total Shareholders' equity and liabilities		6,037,573	6,441,815

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

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

									Euro thousand
			Shareholders' equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A.
				Other reserves
	Share capital	Share premium	Own shares	Cash flow hedge	Currency translation reserves	Retained earnings	Total	Non-controlling interests	Shareholders' equity
Balance Sheet as at 1 January 2017	629,293	22,452	(6,060)	(237)	(96,628)	1,189,191	1,738,011	252,500	1,990,511
Equity changes in 2017
Currency translation differences				(11)	49,668		49,657		49,657
Change in fair value of cash flow hedging				412			412		412
Change in fair value of hedging instruments on foreign operations					(14,014)		(14,014)		(14,014)
Other comprehensive income	-	-	-	401	35,654	-	36,055	-	36,055
Net profit						173,004	173,004	9,537	182,541
Total comprehensive income	-	-	-	401	35,654	173,004	209,059	9,537	218,596
Dividends						(380,203)	(380,203)	(13,562)	(393,765)
Balance Sheet as at 30 June 2017	629,293	22,452	(6,060)	164	(60,974)	981,992	1,566,867	248,475	1,815,342
Balance Sheet as at 1 January 2018	629,293	22,452	(6,060)	184	(51,293)	1,193,319	1,787,895	225,298	2,013,193
Equity changes in 2018
Currency translation differences				(2)	(40,208)		(40,210)		(40,210)
Change in fair value of cash flow hedging				(158)			(158)		(158)
Change in fair value of hedging instruments on foreign operations					3,691		3,691		3,691
Other comprehensive income	-	-	-	(160)	(36,517)	-	(36,677)	-	(36,677)
Net profit						179,741	179,741	7,125	186,866
Total comprehensive income	-	-	-	(160)	(36,517)	179,741	143,064	7,125	150,189
Dividends (note 12)						(385,230)	(385,230)	(15,806)	(401,036)
Balance Sheet as at 30 June 2018	629,293	22,452	(6,060)	24	(87,810)	987,830	1,545,729	216,617	1,762,346

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

CONSOLIDATED CASH FLOW STATEMENT FOR JUNE 2018 AND 2017

			Euro thousand
	Notes	June 2018	June 2017
Operating Activities
Cash received from customers		9,497,323	8,732,567
Cash paid to suppliers		(8,463,026)	(7,764,789)
Cash paid to employees		(727,994)	(621,521)
Cash generated from operations	11	306,303	346,257
Interest paid		(12,741)	(8,752)
Income taxes paid		(95,995)	(91,316)
Cash flow from operating activities		197,567	246,189
Investment activities
Disposals of tangible fixed assets		425	706
Disposals of available-for-sale financial assets and investment property		2,096	187
Interest received		1,252	1,660
Dividends received		46	37
Acquisition of tangible fixed assets		(334,443)	(283,862)
Acquisition of intangible assets		(3,695)	(3,909)
Acquisition of financial investments and investment property		-	(551)
Acquisition of joint ventures and associates		(1,000)	(500)
Cash flow from investment activities		(335,319)	(286,232)
Financing activities
Net change in loans	14	88,185	142,174
Dividends paid	12	(400,999)	(393,634)
Cash flow from financing activities		(312,814)	(251,460)
Net changes in cash and cash equivalents		(450,566)	(291,503)
Cash and cash equivalents changes
Cash and cash equivalents at the beginning of the year		681,333	643,512
Net changes in cash and cash equivalents		(450,566)	(291,503)
Effect of currency translation differences		(8,226)	7,721
Cash and cash equivalents at the end of 1st Half	10	222,541	359,730

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

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

				Euro thousand
	June 2018	June 2017	2nd Quarter 2018	2nd Quarter 2017
Cash Flow from operating activities	197,567	246,189	105,459	324,303
Cash Flow from investment activities	(335,319)	(286,232)	(160,215)	(164,235)
Cash Flow from financing activities	(312,814)	(251,460)	(461,369)	(312,677)
Cash and cash equivalents changes	(450,566)	(291,503)	(516,125)	(152,609)

The amounts presented for quarters are not audited.

2.	Accounting policies20
3.	Segments reporting 23
4.	Operating costs by nature 24
5.	Net financial costs24
6.	Income tax recognised in the income statement25
7.	Tangible assets, intangible assets and investment property 25
8.	Derivative financial instruments26
9.	Trade debtors, accrued income and deferred costs 26
10.	Cash and cash equivalents 26
11.	Cash generated from operations 27
12.	Dividends 27
13.	Basic and diluted earnings per share27
14.	Borrowings27
15	Provisions and employee benefits 28
16	Trade creditors, accrued costs and deferred income 29
17	Contingencies29
18	Related parties 29
19	Events after the balance sheet date 30

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 operates in the food area, particularly in the distribution and sale of food and other fast-moving consumer goods products. The Group has operations 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 24 July 2018.

2. Accounting policies

2.1 Basis for preparation

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

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

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 (EU).

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, except for the adoption of new standards, amendments and interpretations, effective as of 1 January 2018, and 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 2017 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 Consolidated Financial Statements chapter of the 2017 Annual Report, point 31 - Financial risks, the Group, as a result of its normal activity, is exposed to several risks which are monitored and mitigated throughout the year. During the first six months of 2018, there was 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.

Change in accounting policies and basis for presentation:

2.1.1 New standards, amendments and interpretations adopted by the Group

Between January 2016 and March 2018, the EU issued the following Regulations, which were adopted by the Group from 1 January 2018:

EU Regulation	IASB Standard or IFRIC Interpretation endorsed by EU	Issued in	Mandatory for financial years beginning on or after
Regulation no. 1905/2016	IFRS 15 Revenue from Contracts with Customers (new)	May 2014	1January 2018
Regulation no. 2067/2016	IFRS 9 Financial Instruments (new)	July 2014	1January 2018
Regulation no. 1987/2017	IFRS 15 Revenue from Contracts with Customers: Clarifications (amendment)	April 2016	1January 2018
Regulation no. 1988/2017	IFRS 4 Insurance Contracts: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (amendment)	September 2016	1January 2018
Regulation no. 182/2018	Annual Improvements to IFRS's 2014–2016 Cycle: IFRS 1 First Time Adoption of International Financial Reporting Standards and IAS 28 Investments in Associates and Joint Ventures (amendment)	December 2016	1January 2018
Regulation no. 289/2018	IFRS 2 Share-based Payment: Classification and Measurement of Transactions (Amendment)	June 2016	1January 2018
Regulation no. 400/2018	IAS 40 Investment Property: Transfers (Amendment)	June 2016	1January 2018
Regulation no. 519/2018	IFRIC 22 Foreign Currency Transactions and Advance Consideration (New)	December 2016	1January 2018

The Group adopted the amendments to the existing accounting standards before the beginning of 2018, with no significant impact on its Consolidated Financial Statements.

The Group adopted for the first time the new standards IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments, with no restatement of the comparative Financial Statements. As required by IAS 34, the nature and effect of these changes are disclosed below:

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. According with the standard, revenue is recognized at the amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The Group adopted this new standard from 1 January 2018, using the modified retrospective method, with the cumulative effect of the adoption of this standard recognized in the Group's Retained earnings at that date. From the adoption, there was no effect in the Group's Retained earnings at that date.

According with the modified retrospective method, IFRS 15 was applied only to contracts that were not completed at the date of initial adoption, the practical expedient related with contract modifications was not used.

In preparing to adopt and applying IFRS 15, the Group considered the following relevant aspects:

i) Sale of goods

In most of Groups' sales of goods, there is only one performance obligation, resulting in the immediate recognition of revenue with the delivery of the goods to the customer.

A performance obligation is a promise to transfer to the customer goods or services that are distinct.

When there are promotional campaigns that offer, to the customers, performance obligations to be satisfied in future moments, the Group defers the portion of revenue related to the future obligation, and revenue is recognized in profit or loss only when that future obligation is satisfied or expires.

The Group also implemented loyalty programs using customer cards. According to IFRIC 13 Customer Loyalty Programmes, the Group estimates, for sales made using the customer card, the fair value of the benefits attributed to customers, and the revenue is deferred until the moment the benefit is satisfied or expires.

The deferred revenue related with future performance obligations, is shown in the Balance Sheet in the line "Trade creditors, accrued costs and deferred income", and is detailed in the Notes to the Consolidated Financial Statements in an autonomous line designated "Contract liabilities with customers".

Some sales to customers include commercial discounts based on quantity purchased. The Group recognizes the revenue from the sale of goods net of the estimated commercial discount expected to be achieved by the customer for the entire year.

The responsibility with commercial volume discounts expected to be delivered to customers in a future moment is also shown in the line "Trade creditors, accrued costs and deferred income", and is detailed in the Notes to the Consolidated Financial Statements in an autonomous line designated "Contract liabilities with customers".

The application of IFRS 15 did not had a significant impact on how the Group recognizes the revenue from sales of goods to customers.

ii) Rights of return

With the application of IFRS 15, in the sales to customers should be estimated the goods that could be returned by customers, being recognized: a) a responsibility of return, represented by the obligation to deliver to the customer the amount related to the goods returned; and b) a return asset - with adjustment of cost of sales - for the right to receive the goods returned by the customer.

The returns of assets whose responsibility is assumed directly by the Group, does not have the materiality that can impact significantly the Consolidated Financial Statements of the Group.

iii) Warranty obligations

In the sale of goods, the Group provides the warranties arising from the Law, together with the suppliers, and does not sell extensions of warranties that should be recognized as a separate performance obligation.

In this sense, also regarding this aspect, the adoption of IFRS 15 did not had any significant impact on the Group's Consolidated Financial Statements.

iv) The Group as principal or agent

The Group operates in some stores outside the major urban areas through Commercial Mandate contracts celebrated with third parties, with the Group acting as principal, recognizing to that extent the full revenue from sales of these stores.

The application of IFRS 15 did not changed the Group's designation as principal, so it continues to recognize the sales revenue from this group of stores.

IFRS 9 Financial Instruments

The new standard IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement, is mainly focused on the following aspects: i) Classification and measurement; ii) Impairment; and iii) Hedge accounting.

The Group adopted this new standard using the retrospective method from 1 January 2018, date when its adoption became mandatory, without restatement of comparative information, nor any effect being recognized in the Group Retained earnings at that date.

i) Classification and measurement

The application of the classification and measurement requirements of IFRS 9, did not have any significant impact on its Consolidated Financial Statements.

ii) Impairment

IFRS 9 requires the Group to record expected credit losses on trade receivables, based on an expected losses model (either on a 12-month expected losses or lifetime basis expected losses), replacing the incurred losses model under IAS 39. The Group applied the simplified approach to trade receivables, recognizing the estimated losses for the entire life of the receivables.

Group's accounting policy already provided for the recognition of a general impairment charge on trade receivables, considering the uncollectable history of each business.

In addition, considering that most of the Group's sales are made on a cash basis, the application of this new impairment recognition model did not have any material impact on its Consolidated Financial Statements.

iii) Hedge accounting

The Group determined that all hedging relationships that were designated as hedge under IAS 39 will continue to qualify as hedge accounting with the adoption of IFRS 9, hence, the application of IFRS 9 hedge requirements did not have any significant impact on the Group's Consolidated Financial Statements.

2.1.2 New standards, amendments and interpretations endorsed by EU but not effective for the financial year beginning 1 January 2018 and not early adopted

The EU endorsed in 2018 several amendments, issued by IASB, to be applied in subsequent periods:

EU Regulation	IASB Standard or IFRIC Interpretation endorsed by EU	Issued in	Mandatory for financial years beginning on or after
Regulation no. 498/2018	IFRS 9 Financial Instruments: Prepayment Features with Negative Compensation (Amendments)	October 2017	1January 2019

These amendments are effective for annual periods beginning on or after January 1, 2019 and have not been applied anticipatedly in preparing these Consolidated Financial Statements. They are not expected to have a significant impact on the Group's Consolidated Financial Statements.

2.1.3 New standards, amendments and interpretations issued by IASB and IFRIC, but not yet endorsed by EU

IASB issued in 2018 the following amendments that are still pending endorsement by the EU:

IASB Standard or IFRIC Interpretation	Issued in	Expected application for financial years beginning on or after
IAS 19: Plan Amendment, Curtailment or Settlement (Amendments)	February 2018	1 January 2019
Amendments to References to the Conceptual Framework in IFRS Standards (Amendments)	March 2018	1 January 2020

Management is evaluating the impact of adopting the amendments and does not expect any significant impact on the Group's Consolidated Financial Statements.

2.2. 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 on the Company's equity.

The main exchange rates applied on the balance sheet date are as follows:

Euro foreign exchange reference rates	Polish Zloty	Swiss Franc	Colombian Peso
( x foreign exchange units per 1 euro )	(PLN)	(CHF)	(COP)
Rate at 30 June 2018	4.3732	1.1569	3,433.3900
Average rate for the period	4.2209	-	3,446.5300
Rate at 30 June 2017	4.2259	1.093	3,467.2600
Average rate for the period	4.2656	-	3,165.2500

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, Portugal Cash & Carry and Poland Retail. Apart from these there are also other businesses which 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 which operates under the Biedronka banner;
• Others, eliminations and adjustments: includes i) business units with reduced materiality (Coffee Shops, Agribusiness in Portugal, Health and Beauty Retail in Poland, Retail business in Colombia; ii) the Holding Companies; and iii) 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 results recognised under the heading other operating profits/losses.

Detailed Information by Business Segments as at June 2018 and 2017

	Portugal Retail		Portugal Cash & Carry		Poland Retail		Others, eliminations and adjustments		Total JM Consolidated
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
Net sales and services	2,018,696	1,920,301	457,707	442,280	5,761,571	5,304,839	187,714	86,331	8,425,688	7,753,751
Inter-segments	196,982	178,670	1,324	934	705	723	(199,011)	(180,327)	-	-
External customers	1,821,714	1,741,631	456,383	441,346	5,760,866	5,304,116	386,725	266,658	8,425,688	7,753,751
Operational cash flow (EBITDA)	77,234	80,868	22,930	21,913	406,504	374,990	(60,237)	(61,925)	446,431	415,846
Depreciations and amortisations	(49,189)	(48,111)	(7,286)	(6,874)	(106,650)	(93,518)	(15,512)	(11,431)	(178,637)	(159,934)
Earnings before interest and taxes (EBIT)	28,045	32,757	15,644	15,039	299,854	281,472	(75,749)	(73,356)	267,794	255,912
Other operating profits/losses									(4,857)	(7,487)
Financial results and gains in investments									(13,349)	(3,580)
Income tax									(62,722)	(62,304)
Net result attributable to JM									179,741	173,004
Total assets (1)	1,782,025	1,789,365	774,460	399,904	3,284,589	3,743,785	196,499	508,761	6,037,573	6,441,815
Total liabilities (1)	1,343,440	1,335,184	770,565	389,210	2,545,800	2,762,900	(384,578)	(58,672)	4,275,227	4,428,622
Investments in fixed assets	40,677	47,136	15,192	7,764	164,395	86,418	73,335	107,200	293,599	248,518

(1) The comparative report is 31 December of 2017

Reconciliation between EBIT and Operational Result

	Jun 2018	Jun 2017
EBIT	267,794	255,912
Other operating profits/losses	(4,857)	(7,487)
Operational result	262,937	248,425

4. Operating costs by nature

	Jun 2018	Jun 2017
Cost of goods sold and materials consumed	6,603,779	6,113,359
Changes in inventories of finished goods and work in progress	(1,619)	(266)
Net cash discount and interest paid to suppliers	(13,710)	(15,688)
Electronic payment commissions	15,782	13,704
Other supplementary costs	2,161	1,465
Supplies and services	302,099	284,381
Advertising costs	51,674	53,019
Rents	193,890	177,150
Staff costs	725,122	625,161
Depreciations and amortisations	178,637	159,952
Profit/loss with tangible and intangible assets	1,741	5,072
Transportation costs	91,324	81,927
Other natures of profit/loss	11,871	6,090
Total	8,162,751	7,505,326

4.1 Other operating profits/losses

Operating costs by nature include the following other operating losses and gains considered material, which are excluded from the Group's performance indicators, to assure a better comparability between financial periods:

	Jun 2018	Jun 2017
Legal contingencies	(15)	-
Losses from organizational restructuring programmes	(4,297)	(3,196)
Assets write-offs and gains/losses in sale of tangible assets	(545)	(2,932)
Donations of educational sponsorship	-	(1,000)
Others	-	(359)
Total	(4,857)	(7,487)

5. Net financial costs

	Jun 2018	Jun 2017
Interest expense	(10,574)	(7,689)
Interest received	1,239	1,667
Dividends	46	37
Net foreign exchange	(2,341)	3,983
Other financial gains and losses	(2,055)	(1,787)
Fair value of financial investments held for trade:
Derivative instruments	337	209
Total	(13,348)	(3,580)

The interest expense heading includes the interest regarding loans measured at amortised cost, as well as interest on cash flow hedging instruments.

Other financial costs and gains include costs with debt issued by the Group, booked in results through effective interest method.

6. Income tax recognised in the income statement

	Jun 2018	Jun 2017
Current income tax
Current tax of the year	(60,782)	(67,772)
Adjustment to prior year estimation	(1,712)	1,784
	(62,494)	(65,988)
Deferred tax
Temporary differences created and reversed	(6,260)	2,251
Change to the recoverable amount of tax losses and temporary	841	628
differences from previous years
	(5,419)	2,879
Other gains/losses related to tax
Impact of changes in estimates for tax litigations	5,191	805
	5,191	805
Total income tax	(62,722)	(62,304)

In 2018, JMH reviewed the probabilities of success of the tax litigations processes. The net effect from expected gains and potential losses is disclosed as other gains (losses) related to taxes.

Income tax expense is calculated based on the weighted average annual income tax rate expected for the year.

In 2018 the income tax rates for Group companies were the same applied in 2017, except for Jerónimo Martins Colombia, where the rate decreased from 34% in 2017 to 33%.

7. Tangible assets, intangible assets and investment property

			Investment
	Tangible assets	Intangible assets	property	Total
Net value at 31 December 2017	3,474,835	811,040	13,714	4,299,589
Foreign exchange differences	(80,730)	(20,082)	-	(100,812)
Increases	289,904	3,695	-	293,599
Disposals and write-offs	(2,162)	(11)	(2,000)	(4,173)
Transfers	1,213	(1,213)	-	-
Depreciation and impairment losses	(171,627)	(7,010)	-	(178,637)
Fair value changes	-	-	(19)	(19)
Net value at 30 June 2018	3,511,433	786,419	11,695	4,309,547

Net value of intangible assets at 30 June 2018 include Goodwill amounted EUR 632,443 thousand.

Due to currency translation adjustment of the assets in the Group's businesses reported in foreign currency, the net amount of tangible and intangible assets decreased by EUR 100,812 thousand, which includes a decrease of EUR 14,189 thousand related to Goodwill from business in Poland.

8. Derivative financial instruments

		Jun 2018				Dec 2017
	Notional	Assets		Liabilities		Notional	Assets		Liabilities
		Current	Non current	Current	Non current		Current	Non current	Current	Non current
Derivatives held for trading
Currency forwards - stock purchase (EUR/USD)	0.3 million USD	3	-	-	-	-	-	-	-	-
Currency forwards - stock purchase (PLN/EUR)	39 million EUR	219	-	30	-	28 million EUR	-	-	269	-
Currency forwards - stock purchase (PLN/USD)	16 million USD	281	-	-	-		-	-	-	-
Currency forwards - intercompany loans (PLN)	-	-	-	-	-	75 million EUR	294	-	-	-
Cash flow hedging derivatives
Interest rate swap (PLN)	183 million PLN	-	28	-	-	189 million PLN	-	227	-	-
Foreign operation investments hedging derivatives
Currency forwards (PLN)	-	-	-	-	-	600 million PLN	-	-	2,536	-
Total derivatives held for trading		503	-	30	-		294	-	269	-
Total hedging derivatives		-	28	-	-		-	227	2,536	-
Total assets/liabilities derivatives		503	28	30	-		294	227	2,805	-

9. Trade debtors, accrued income and deferred costs

	Jun 2018	Dec 2017
Non-current
Other debtors	75,957	74,664
Collateral deposits associated to financial debt	34,367	34,367
Deferred costs	1,747	2,352
Total	112,071	111,383
Current
Commercial customers	64,506	56,424
Other debtors	106,673	122,316
Other taxes receivable	8,555	16,019
Accrued income and deferred costs	222,865	193,074
Total	402,599	387,833

Non-current debtors are mainly related to additional corporate income tax liquidation as well as pre-paid corporate income tax, which the Group is disputing and regarding which made a legal claim for reimbursement.

The debtor's amount is registered at the recoverable value. The Group registers adjustments for impairment losses whenever there are signs of uncollectable amounts.

10. Cash and cash equivalents

	Jun 2018	Dec 2017
Bank deposits	205,571	460,235
Short-term investments	13,024	217,199
Cash and cash equivalents	3,946	3,899
Total	222,541	681,333

11. Cash generated from operations

	Jun 2018	Jun 2017
Net results	179,741	173,004
Adjustments for:
Non-controlling interests	7,125	9,537
Income tax	62,722	62,304
Depreciations and amortisations	178,637	159,952
Provisions and other operational gains and losses	10,727	11,897
Net financial costs	13,348	3,580
Gains/Losses in associated companies	1	2
Gains/Losses in other investments	-	(2)
Profit/ Losses in tangible and intangible assets	1,741	5,082
	454,042	425,356
Changes in working capital:
Inventories	(54,815)	(50,502)
Trade debtors, accrued income and deferred costs	(8,275)	(12,449)
Trade creditors, accrued costs and deferred income	(84,649)	(16,148)
Total	306,303	346,257

12. Dividends

Dividends distributed in 2018 totaling EUR 401,036 thousand, were paid to JMH shareholders in the amount of EUR 385,230 thousand, and to non-controlling interests in the Group Companies in the amount of EUR 15,806 thousand.

13. Basic and diluted earnings per share

	Jun 2018	Jun 2017
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)
Weighted average number of ordinary shares	628,434,220	628,434,220
Diluted net results of the year attributable to ordinary shares	179,741	173,004
Basic and diluted earnings per share – Euros	0.2860	0.2753

14. Borrowings

The Group has negotiated several commercial paper programmes in the total amount of EUR 395,000 thousand. Emissions under these programmes are remunerated at the Euribor rate for the respective issue period, plus variable spreads. During the first half of the year, some emissions were carried out for short periods to meet specific cash requirements and to refinance the EUR 100,000 thousand bank loan that had been contracted in December last year.

Jerónimo Martins, SGPS, S.A. and JMR - Prestação de Serviços para a Distribuição, S.A. contracted new bank loans in the total amount of EUR 80.000 thousand, for a tenor up to 6 months.

The short-term lines that Jerónimo Martins Colombia SAS holds with local banks were increased for an amount above COP 260.000.000 thousand, around EUR 75,700 thousand, with one-year maturity, and in COP 60.000.000, around EUR 17,500 thousand, up to 3 years maturity.

14.1 Current and non-current loans

				Foreign
Jun 2018	Opening balance	Cash flows	Transfers	exchange	Closing balance
				difference
Non-current loans
Bank loans	231,508	(909)	(4,133)	(9,765)	216,701
Financial lease liabilities	6,254	6,041	(2,062)	(419)	9,814
Total	237,762	5,132	(6,195)	(10,184)	226,515
Current loans
Bank overdrafts	6	60,740	-	(2,116)	58,630
Bank loans	297,526	23,592	4,134	5,121	330,373
Financial lease liabilities	1,973	(1,279)	2,061	(116)	2,639
Total	299,505	83,053	6,195	2,889	391,642
				Foreign
Dec 2017	Opening balance	Cash flows	Transfers	exchange	Closing balance
				difference
Non-current loans
Bank loans	111,823	132,822	(18,254)	5,117	231,508
Financial lease liabilities	3,006	5,464	(2,440)	224	6,254
Total	114,829	138,286	(20,694)	5,341	237,762
Current loans
Bank overdrafts	-	6	-	-	6
Bank loans	73,622	219,098	18,254	(13,448)	297,526
Bond loans	150,000	(150,000)	-	-	-
Financial lease liabilities	959	(1,482)	2,440	56	1,973

14.2 Net financial debt

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

	Jun 2018	Dec 2017
Non-current loans (note 14.1)	226,515	237,762
Current loans (note 14.1)	391,642	299,505
Derivative financial instruments (note 8)	(501)	2,284
Interest on accruals and deferrals	2,113	2,019
Bank deposits (note 10)	(205,571)	(460,235)
Short-term investments (note 10)	(13,024)	(217,199)
Collateral deposits associated to financial debt (note 9)	(34,367)	(34,367)
Total	366,807	(170,231)

15 Provisions and employee benefits

	Risks and	Employee benefits
	contingencies
Balance at 1 January	29,308	66,482
Set up, reinforced and transfers	2,451	4,327
Unused and reversed	(2,160)	-
Foreign exchange difference	(151)	(1,054)
Used	(1,219)	(2,104)
Balance at 30 June	28,229	67,651

16 Trade creditors, accrued costs and deferred income

	Jun 2018	Dec 2017
Non-current
Other commercial creditors	26	17
Accrued costs and deferred income	749	762
Total	775	779
Current
Other commercial creditors	2,766,546	2,913,196
Other non-commercial creditors	251,406	302,020
Other taxes payables	99,633	92,920
Contracts liabilities with customers	1,068	-
Accrued costs and deferred income	343,967	354,157
Total	3,462,620	3,662,293

17 Contingencies

Following the contingencies mentioned in the 2017 Annual Report, occurred the following changes:

Assets recognised in the Consolidated Financial Statements

• Under non-current debtors (note 9), an amount of EUR 69,799 thousand relates to tax liquidations paid to the Tax Administration, already claimed.

That amount reflects the reimbursement received by the Tax Administration in the amount of EUR 3,554 thousand, through a Judgment of the Court of Appeal (Tribunal Central Administrativo Sul) of 2016, relating to one of the judicial appeals presented, which it considered fully valid, ordering the annulment of the related liquidation, and also the counting of compensatory interest in favor of the Group in other cases still in litigation.

18 Related parties

56.136% of the Company is owned by the Sociedade Francisco Manuel dos Santos, B.V., and no transactions occurred between this Company and any other company of the Group in the first Half of 2018, neither were there any amounts payable or receivable between them on 30 June 2018.

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

	Other related parties (*)
	Jun 2018	Jun 2017
Sales and services rendered	98	93
Stocks purchased and services supplied	58,820	59,145
	Other related parties (*)
	Jun 2018	Dec 2017
Trade debtors, accrued income and deferred costs	51	237
Trade creditors, accrued costs and deferred income	27,975	3,735

(*) Other financial investements ,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 trade agreements, 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.

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

19 Events after the balance sheet date

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

Lisbon, 24 July 2018

The Certified Accountant The Board of Directors