Jeronimo Martins — Interim / Quarterly Report 2018

Dec 3, 2018

CONSOLIDATED REPORT AND ACCOUNTS

FIRST NINE MONTHS 2018

Unaudited

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	6
4. Cash Flow	6
5. Investment	6
6. Outlook for 2018	7

II – Consolidated Management Report Appendix

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

III – Consolidated Financial Statements

1. Financial Statements	12
2. Notes to the Financial Statements	16

I - CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO

Pedro Soares dos Santos

"Our steady focus on sales growth and consumer preference across all banners produced a very good performance in the first nine months of the year.

In a not-yet-stabilized context of adapting to the Sunday ban, Biedronka continued to gain market share (+1.7p.p. ytd August) and to secure its operational profitability. This performance was achieved with 16 fewer trading days and lower food inflation.

In Portugal, Pingo Doce and Recheio delivered a remarkable performance driven by effective commercial actions.

In Colombia, Ara expanded both its store network and logistic infrastructure. The Company was able to contain its losses at the EBITDA level, and is making progress on key profitability drivers of pivotal relevance for the future.

Based on our performance so far, I am confident that all our models will deliver a solid fourth Quarter in terms of both sales' growth and profitability."

1. Sales Analysis

(Million Euro)	9M 18		9M 17		D %		Q3 18			Q3 17	D %
		% total		% total w/o FX		Euro		% total		% total w/o FX		Euro
Biedronka	8,632	67.4%	8,103	67.9%	6.2%	6.5%	2,871	65.6% 2,798		67.1%	3.7%	2.6%
Pingo Doce	2,829	22.1%	2,692	22.6%		5.1%	1,011	23.1%	954	22.9%		6.0%
Recheio	739	5.8%	713	6.0%		3.5%	281	6.4%	271	6.5%		3.6%
Ara	439	3.4%	289		2.4% 59.6%	52.2%	156	3.6%	104		2.5% 48.0%	50.3%
Hebe	144	1.1%	115		1.0% 24.0%	24.4%	50	1.1%	41		1.0% 23.1%	21.8%
Others & Cons. Adjustments	17	0.1%	14	0.1%		23.5%	6	0.1%	5	0.1%		16.8%
Total JM	12,800		100% 11,926	100%	7.3%	7.3%	4,374		100% 4,172	100%	5.5%	4.8%

Nine months Group sales reached €12.8 bn, up 7.3% (+7.3% at constant exchange rates).

Group like for like (LFL) sales grew 3.4% in the nine months (+2.1% in third Quarter) with positive contributions from all the three geographies in which we operate.

Sales (Million Euro)

In Poland, the food retail industry remained highly promotional and in flux as it adapts to the Sunday ban.

Food inflation was 3.1% in the nine months, having declined to 2.2% in third Quarter, namely driven by deflation in some commodities and fresh produces.

Biedronka continued to adjust to the new shopping patterns resulting from store closures on some Sundays.

In the nine months, Biedronka sales grew 6.5% (+6.2% in local currency) to €8.6 bn. LFL sales increased 3.2%, including some basket deflation. Throughout the first nine months, Biedronka continued to gain market share.

In third Quarter, sales grew 2.6% to €2.9 bn (+3.7% in local currency) and LFL was 0.8%. The LFL performance was influenced by deflation in the average basket, on the one side, and the peak number of Sunday closures over the quarter, on the other.

Deflationary pressures led to an overall basket deflation of more than 1% in the Quarter. Further to the competitive dynamic, these pressures were driven by general price decreases on the supply side of products with important weight on the Company's basket.

The Sunday ban had a particularly negative effect in third Quarter with 8 fewer trading days, impacting the LFL performance in c.2p.p..

In the first nine months, Biedronka opened 54 new stores (27 net additions) and refurbished 153 stores.

Hebe opened 27 new stores and delivered sales of €144 mn, growing 24.4% in nine months of 2018 (+24.0% at constant exchange rate).

In third Quarter, Hebe's sales grew 21.8% (+23.1% at constant exchange rate) to €50 mn.

In Portugal, the food retail industry continued to be highly promotional despite growth in consumer demand. Food inflation remained low at 0.9% in the 9nine months period (+1.0% in third Quarter).

Pingo Doce's sales were €2.8 bn, a 5.1% increase over the nine months of 2017, driven by 3.8% LFL growth (excl. fuel).

In third Quarter, sales increased 6.0% to €1 bn, with a remarkable LFL (excl. fuel) of 4.6%.

Recheio continued to deliver a sound sales performance with growth of 3.5% to €739 mn, driven by a 3.7% LFL sales growth. In third Quarter, sales increased 3.6% driven by a LFL of 4.9%.

In Colombia, the consumer outlook improved, while food inflation remained relatively low, reaching 1.4% in nine months (+1.5% in third Quarter).

Ara posted sales of €439 mn, 52.2% ahead of the nine months of 2017 (+59.6% at constant exchange rate). In third Quarter, sales increased 50.3% (+48.0% at constant exchange rate) to €156 mn.

In the first nine months of the year, Ara opened 86 new locations ending the period with a total network of 475 stores. The banner prepared the ground for a very strong fourth Quarter opening program and is on track to deliver the planned 150 stores by the end of 2018. The new distribution centre in Bogota was inaugurated in August and is already serving our operations in the region.

2. Results Analysis

(Million Euro)	9M 18		9M 17		D	Q3 18			Q3 17	D
Net Sales and Services	12,800		11,926		7.3%	4,374		4,172		4.8%
Gross Profit	2,769	21.6%	2,527	21.2%	9.6%	958	21.9%	893	21.4%	7.2%
Operating Costs	-2,060	-16.1%	-1,858	-15.6%	10.9%	-695	-15.9%	-640	-15.3%	8.6%
EBITDA	709	5.5%	669	5.6%	6.0%	263	6.0%	253	6.1%	3.8%
Depreciation	-269	-2.1%	-242	-2.0%	11.6%	-91	-2.1%	-82	-2.0%	11.3%
EBIT	440	3.4%	428	3.6%	2.9%	172	3.9%	172	4.1%	0.2%
Net Financial Costs	-19	-0.2%	- 9	-0.1%	n.a.	- 6	-0.1%	- 5	-0.1%	n.a.
Other Profits/Losses	- 7	-0.1%	-11	-0.1%	n.a.	- 2	-0.1%	- 4	-0.1%	n.a.
EBT	414	3.2%	407	3.4%	1.5%	164	3.7%	163	3.9%	0.8%
Income Tax	-102	-0.8%	-101	-0.8%	1.0%	-40	-0.9%	-39	-0.9%	1.6%
Net Profit	311	2.4%	306	2.6%	1.6%	124	2.8%	124	3.0%	0.6%
Non Controlling Interests	-19	-0.1%	-21	-0.2%	-8.6%	-12	-0.3%	-11	-0.3%	5.3%
Net Profit Attributable to JM	292	2.3%	285	2.4%	2.4%	112	2.6%	112	2.7%	0.1%
EPS (€)	0.46		0.45		2.4%	0.18		0.18		0.1%
EPS without Other Profits/Losses (€)	0.47		0.46		1.2%	0.18		0.18		0.2%

Operating Profit

Group EBITDA totalled €709 mn in the nine months of 2018, a 6.0% growth on the previous year (+5.3% at constant exchange rates). Excluding the impact of Ara and Hebe, EBITDA increased 5.2%.

EBITDA & EBITDA Margin

Biedronka's EBITDA was €622 mn, 6.6% higher than in the nine months of 2017 (+6.2% at constant exchange rate). The EBITDA margin was 7.2%, which is in line with the previous year.

Biedronka's EBITDA margin performance was achieved in a highly competitive environment and despite wage pressures and ongoing operational changes to adapt to the Sunday ban. This performance reflects the effectiveness of the Company's margin mix management and cost discipline.

Pingo Doce and Recheio delivered EBITDA of €178 mn, 0.6% ahead of the nine months of 2017. The EBITDA margin was 5.0%. The decline from the 5.2% margin posted in the nine months of 2017 reflects the wage increases implemented in Pingo Doce throughout the fourth Quarter of 2017, with the impact in third

Quarter of 2018 offset by the strong sales delivery.

Ara and Hebe registered EBITDA losses of €65 mn, with Ara accounting for c.85% of the total. The comparable losses in the nine months of 2017 were €67 mn.

In line with expectations, Ara's start-up losses from its ambitious expansion programme continue to put pressure at the EBITDA level. On the positive side, gross margin consistently shows a positive evolution as the banner works on sales delivery and building the right value perception amongst consumers.

Financial Results

Net financial costs were of €19 mn, increasing from previous year, in line with the higher interest-bearing debt in foreign currencies (Polish Zloty and Colombian Peso). These costs also include losses produced by the depreciation of the Zloty.

Other profit/losses

Other profit/losses were of €-7 mn in the nine months of 2018, mainly attributable to restructuring costs.

Net Results

Group net profit was €292 mn, 2.4% higher than in the nine months of 2017.

3. Balance Sheet

(Million Euro)	9M 18	2017	9M 17
Net Goodwill	639	647	637
Net Fixed Assets	3,797	3,639	3,375
Total Working Capital	-2,355	-2,496	-2,198
Others	74	54	68
Invested Capital	2,155	1,843	1,883
Total Borrowings	604	529	494
Leasings	15	8	6
Accrued Interest	3	4	1
Marketable Sec. & Bank Deposits	-373	-712	-540
Net Debt	250	-170	-39
Non Controlling Interests	229	225	258
Share Capital	629	629	629
Reserves and Retained Earnings	1,047	1,159	1,034
Shareholders Funds	1,905	2,013	1,921
Gearing	13.1%	-8.5%	-2.0%

Net debt reached €250 mn at the end of September, with a gearing of 13.1%.

4. Cash Flow

(Million Euro)	9M 18	9M 17
EBITDA	709	669
Interest Payment	-17	-11
Other Financial Items	0	0
Income Tax	-122	-123
Funds From Operations	570	536
Capex Payment	-528	-468
Change in Working Capital	-53	19
Others	-5	-4
Free Cash-Flow	-16	83

Cash-flow in the nine months was negative at €16 mn, reflecting faster capex execution than in 2017 and a base effect on working capital.

5. Investment

(Million Euro)	9M 18	Weight	9M 17	Weight
Biedronka	283	59%	174	41%
Distribution Portugal	80	17%	82	19%
Ara	75	16%	112	27%
Others	38	8%	54	13%
Total CAPEX	476	100%	422	100%

Group capex amounted to €476 mn, of which 59% were invested in Biedronka and 16% in Ara.

6. Outlook for 2018

The sales performance in our three geographies strengthened our market shares and reinforced our competitiveness in the first nine months of the year.

In Poland, we remain positive about the economic environment and consumer outlook. Biedronka will continue to adjust to changes in the weekly sales pattern caused by the Sunday ban. During this adjustment period, the Company is particularly focused on reinforcing its market position while preserving the effectiveness and efficiency of its business model. Also, the economic growth in the country – one of the strongest in Europe – supports our interest in executing our store opening plan for the year with the addition, in the fourth Quarter, of 40 to 50 new locations.

Pingo Doce and Recheio will strive to reinforce market positions in an environment that should remain favourable for the rest of the year.

In Colombia, Ara will execute its ambitious expansion plan for 2018 with the opening of c.65 stores in the final Quarter.

We reiterate our previous guidance for Ara and Hebe's combined losses. At the EBITDA level, we expect these losses to be slightly lower than in 2017, at constant exchange rates.

Group capex for the year is expected to reach €700-750 million. This level of investment in new and established businesses reflects our strong progress this year and our confidence in our plans for the future.

Lisbon, 29 October 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	Q3 18	9M 18	Q1 18	Q2 18	H1 18	Q3 18	9M 18
Biedronka
Euro	15.6%	2.2%	8.6%	2.6%	6.5%
PLN	11.9%	3.3%	7.5%	3.7%	6.2%	8.6%	0.6%	4.5%	0.8%	3.2%
Pingo Doce	7.1%	2.3%	4.6%	6.0%	5.1%	5.8%	0.7%	3.1%	4.7%	3.7%
Ex-Fuel	7.7%	2.4%	4.9%	5.9%	5.3%	6.4%	0.7%	3.4%	4.6%	3.8%
Recheio	4.2%	2.9%	3.5%	3.6%	3.5%	3.6%	2.6%	3.0%	4.9%	3.7%

2. Stores Network

		Openings 2017			Closings		9M 17
Number of Stores		Q1 18	Q2 18	Q3 18	9M 18	9M 18
Biedronka	2,823	11	19	24	27	2,850	2,753
Pingo Doce	422	0	3	5	0	430	419
Recheio	43	0	1	0	2	42	43
Ara	389	25	25	36	0	475	312
Hebe	182	11	9	7	2	207	166

Sales Area (sqm)	2017		Openings		Closings/ Remodellings	9M 18	9M 17
		Q1 18	Q2 18	Q3 18	9M 18
Biedronka*	1,853,075	8,378	14,676	19,405	6,734	1,888,800	1,802,607
Pingo Doce	503,897	0	764	2,456	0	507,117	500,075
Recheio	131,997	0	3,942	0	2,113	133,826	131,997
Ara	133,692	9,010	8,939	12,185	0	163,827	105,229
Hebe	43,053	2,719	2,376	1,746	462	49,431	39,001

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

3. EBITDA and EBITDA Margin Breakdown

(Million Euro)	9M 18	Mg	9M 17	Mg
Biedronka	622	7.2%	583	7.2%
Distribution Portugal	178	5.0%	177	5.2%
Others & Cons. Adjustments	-90	n.a.	-91	n.a.
JM Consolidated	709	5.5%	669	5.6%

4. Financial Costs Breakdown

(Million Euro)	9M 18	9M 17
Net Interest	-15	-9
Exchange Differences	-1	2
Others	-4	-3
Financial Results	-19	-9

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).

Gearing: Net Debt / Shareholder Funds.

6. 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 Nine Months 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 €-269.4 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

7. Balance Sheet - Reconciliation Note

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

Balance Sheet (page 6)	Balance Sheet in the Consolidated Report & Accounts - First Nine Months 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 (€639.2 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 €-7.0 mn related to 'Others' due to its operational nature. Excludes the value of €-2.8 mn related to Interest accruals and deferrals (note - Financial debt)
Others	Includes the headings Investment property; Investments in joint ventures and associates; Other financial investments; 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 €-7.0 mn related to Others due to its 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 €-2.8 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

8. 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 Nine Months 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 and investment property; Acquisition of tangible fixed assets; Acquisition of intangible assets; Acquisition of financial investments and investment property
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

9. 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. are not 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 30 SEPTEMBER 2018 AND 2017

					Euro thousand
	Notes	9 Months 2018	9 Months 2017	3rd Quarter 2018	3rd Quarter 2017
Sales and services rendered	3	12,799,933	11,926,147	4,374,245	4,172,396
Cost of sales	4	(10,030,836)	(9,398,988)	(3,416,247)	(3,279,004)
Gross profit		2,769,097	2,527,159	957,998	893,392
Distribution costs	4	(2,127,224)	(1,911,315)	(716,865)	(656,518)
Administrative costs	4	(201,946)	(188,150)	(69,000)	(65,092)
Other operating profits/losses	4	(7,076)	(11,286)	(2,219)	(3,799)
Operating profit		432,851	416,408	169,914	167,983
Net financial costs	5	(19,452)	(8,945)	(6,104)	(5,365)
Gains in joint ventures and associates		133	(3)	134	(1)
Gains/ losses in other investments		-	2	-	-
Profit before taxes		413,532	407,462	163,944	162,617
Income tax	6	(102,258)	(101,228)	(39,536)	(38,924)
Profit before non-controlling interests		311,274	306,234	124,408	123,693
Attributable to:
Non-controlling interests		19,174	20,975	12,049	11,438
Jerónimo Martins Shareholders		292,100	285,259	112,359	112,255
Basic and diluted earnings per share - Euros	13	0.4648	0.4539	0.1788	0.1786

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

					Euro thousand
	Notes	9 Months 2018	9 Months 2017	3rd Quarter 2018	3rd Quarter 2017
Net profit		311,274	306,234	124,408	123,693
Other comprehensive income:
Items that will not be reclassified to profit or loss		-	-	-	-
Currency translation differences		(21,954)	33,936	18,635	(15,896)
Change in fair value of cash flow hedges		(199)	501	(4)	(7)
Change in fair value of hedging instruments on foreign operations		3,691	(13,948)	-	66
Related tax		238	(247)	(178)	24
Items that may be reclassified to profit or loss		(18,224)	20,242	18,453	(15,813)
Other comprehensive income, net of income tax		(18,224)	20,242	18,453	(15,813)
Total comprehensive income		293,050	326,476	142,861	107,880
Attributable to:
Non-controlling interests		19,174	20,975	12,049	11,438
Jerónimo Martins Shareholders		273,876	305,501	130,812	96,442
Total comprehensive income		293,050	326,476	142,861	107,880

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

CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2018 AND 31 DECEMBER 2017

			Euro thousand
	Notes	September 2018	December 2017
Assets
Tangible assets	7	3,640,149	3,474,835
Intangible assets	7	796,453	811,040
Investment property	7	11,686	13,714
Investments in joint ventures and associates		3,190	1,557
Other financial investements		1,321	1,417
Trade debtors, accrued income and deferred costs	9	106,257	111,383
Derivative financial instruments	8	23	227
Deferred tax assets		116,675	106,025
Total non-current assets		4,675,754	4,520,198
Inventories		839,874	841,565
Biological assets		6,452	5,498
Income tax receivable		3,180	5,094
Trade debtors, accrued income and deferred costs	9	465,246	387,833
Derivative financial instruments	8	60	294
Cash and cash equivalents	10	342,424	681,333
Total current assets		1,657,236	1,921,617
Total assets		6,332,990	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		(69,333)	(51,109)
Retained earnings		1,100,189	1,193,319
		1,676,541	1,787,895
Non-controlling interests		228,666	225,298
Total Shareholders' equity		1,905,207	2,013,193
Borrowings	14	177,970	237,762
Trade creditors, accrued costs and deferred income	16	776	779
Employee benefits	15	69,572	66,482
Provisions for risks and contingencies	15	28,689	29,308
Deferred tax liabilities		94,344	71,579
Total non-current liabilities		371,351	405,910
Borrowings	14	441,971	299,505
Trade creditors, accrued costs and deferred income	16	3,595,899	3,662,293
Derivative financial instruments	8	565	2,805
Income tax payable		17,997	58,109
Total current liabilities		4,056,432	4,022,712
Total Shareholders' equity and liabilities		6,332,990	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				(6)	33,790		33,784		33,784
Change in fair value of cash flow hedging				406			406		406
Change in fair value of hedging instruments on foreign operations					(13,948)		(13,948)		(13,948)
Other comprehensive income	-	-	-	400	19,842	-	20,242	-	20,242
Net profit						285,259	285,259	20,975	306,234
Total comprehensive income	-	-	-	400	19,842	285,259	305,501	20,975	326,476
Dividends						(380,203)	(380,203)	(15,480)	(395,683)
Balance Sheet as at 30 September 2017	629,293	22,452	(6,060)	163	(76,786)	1,094,247	1,663,309	257,995	1,921,304
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				(4)	(21,750)		(21,754)		(21,754)
Change in fair value of cash flow hedging				(161)			(161)		(161)
Change in fair value of hedging instruments on foreign operations					3,691		3,691		3,691
Other comprehensive income	-	-	-	(165)	(18,059)	-	(18,224)	-	(18,224)
Net profit						292,100	292,100	19,174	311,274
Total comprehensive income	-	-	-	(165)	(18,059)	292,100	273,876	19,174	293,050
Dividends (note 12)						(385,230)	(385,230)	(15,806)	(401,036)
Balance Sheet as at 30 September 2018	629,293	22,452	(6,060)	19	(69,352)	1,100,189	1,676,541	228,666	1,905,207

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

CONSOLIDATED CASH FLOW STATEMENT FOR 30 SEPTEMBER 2018 AND 2017

			Euro thousand
	Notes	9 Months 2018	9 Months 2017
Operating Activities
Cash received from customers		14,427,545	13,437,544
Cash paid to suppliers		(12,710,077)	(11,826,431)
Cash paid to employees		(1,067,855)	(925,411)
Cash generated from operations	11	649,613	685,702
Interest paid		(18,521)	(13,744)
Income taxes paid		(122,026)	(122,727)
Cash flow from operating activities		509,066	549,231
Investment activities
Disposals of tangible fixed assets		1,545	1,617
Disposals of other financial investments and investment property		2,096	187
Interest received		1,490	2,370
Dividends received		46	79
Acquisition of tangible fixed assets		(522,811)	(459,112)
Acquisition of intangible assets		(7,245)	(9,095)
Acquisition of financial investments and investment property		-	(551)
Acquisition of joint ventures and associates		(1,500)	(1,000)
Cash flow from investment activities		(526,379)	(465,505)
Financing activities
Net change in loans	14	84,947	171,153
Dividends paid	12	(400,999)	(395,553)
Cash flow from financing activities		(316,052)	(224,400)
Net changes in cash and cash equivalents		(333,365)	(140,674)
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		(333,365)	(140,674)
Effect of currency translation differences		(5,544)	6,422
Cash and cash equivalents at the end of 9 Months	10	342,424	509,260

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

CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

				Euro thousand
	9 Months 2018	9 Months 2017	3rd Quarter 2018	3rd Quarter 2017
Cash Flow from operating activities	509,066	549,231	311,499	303,042
Cash Flow from investment activities	(526,379)	(465,505)	(191,060)	(179,273)
Cash Flow from financing activities	(316,052)	(224,400)	(3,238)	27,060
Cash and cash equivalents changes	(333,365)	(140,674)	117,201	150,829

2.	Accounting policies17
3.	Segments reporting 20
4.	Operating costs by nature 21
5.	Net financial costs21
6.	Income tax recognised in the income statement 22
7.	Tangible assets, intangible assets and investment property 22
8.	Derivative financial instruments23
9.	Trade debtors, accrued income and deferred costs 23
10.	Cash and cash equivalents 23
11.	Cash generated from operations 24
12.	Dividends 24
13.	Basic and diluted earnings per share24
14.	Borrowings24
15	Provisions and employee benefits 25
16	Trade creditors, accrued costs and deferred income 26
17	Contingencies, contingent assets and contingent liabilities 26
18	Related parties 26
19	Events after the balance sheet date 27

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 29 October 2018.

2. Accounting policies

2.1 Basis for preparation

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

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 nine months of 2018, 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.

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 1 January 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 September 2018	4.2774	1.1316	3,460.7400
Average rate for the period	4.2483	-	3,445.4300
Rate at 30 September 2017	4.3042	1.1457	3,472.2300
Average rate for the period	4.2627	-	3,284.1600

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. Due to the fact that the business units in the distribution area in Portugal share a set of competences, the Group analyses, on a quarterly basis, its segments in an aggregate performance perspective. In addition, the Group also separates the distribution business unit in Poland. Apart from these there are also other businesses which due to their low materiality, 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 which operates under the Biedronka banner;
• Others, eliminations and adjustments: includes i) business units with reduced materiality (Coffee Shops, Chocolate Stores and 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 at September 2018 and 2017

	Portugal Distribution		Poland Distribution		Others, eliminations and adjustments		Total JM Consolidated
	2018	2017	2018	2017	2018	2017	2018	2017
Net sales and services	3,571,803	3,409,538	8,632,451	8,102,673	595,679	413,936	12,799,933	11,926,147
Inter-segments	442	51	1,052	1,085	(1,494)	(1,136)	-	-
External customers	3,571,361	3,409,487	8,631,399	8,101,588	597,173	415,072	12,799,933	11,926,147
Operational cash flow (EBITDA)	177,655	176,564	621,565	583,331	(89,862)	(90,686)	709,358	669,209
Depreciations and amortisations	(84,929)	(83,167)	(160,434)	(140,762)	(24,068)	(17,586)	(269,431)	(241,515)
Earnings before interest and taxes (EBIT)	92,726	93,397	461,131	442,569	(113,930)	(108,272)	439,927	427,694
Other operating profits/losses							(7,076)	(11,286)
Financial results and gains in investments							(19,319)	(8,946)
Income tax							(102,258)	(101,228)
Net result attributable to JM							292,100	285,259
Total assets (1)	2,553,856	2,189,269	3,568,523	3,743,785	210,611	508,761	6,332,990	6,441,815
Total liabilities (1)	2,076,765	1,724,394	2,700,434	2,762,900	(349,416)	(58,672)	4,427,783	4,428,622
Investments in fixed assets	80,026	81,578	282,614	173,694	111,615	166,337	474,255	421,609

(1) The comparative report is 31th December of 2017

Reconciliation between EBIT and Operational Result

	Sep 2018	Sep 2017
EBIT	439,927	427,694
Other operating profits/losses	(7,076)	(11,286)
Operational result	432,851	416,408

4. Operating costs by nature

	Sep 2018	Sep 2017
Cost of goods sold and materials consumed	10,022,112	9,392,164
Changes in inventories of finished goods and work in progress	(6,884)	(1,747)
Net cash discount and interest paid to suppliers	(23,774)	(25,843)
Electronic payment commissions	23,981	21,020
Other supplementary costs	3,354	2,221
Supplies and services	464,674	444,285
Advertising costs	77,155	78,515
Rents	291,571	267,680
Staff costs	1,085,594	949,388
Depreciations and amortisations	269,431	241,517
Profit/loss with tangible and intangible assets	1,757	8,218
Transportation costs	139,129	125,147
Other natures of profit/loss	18,982	7,174
Total	12,367,082	11,509,739

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:

	Sep 2018	Sep 2017
Losses from organizational restructuring programmes	(6,330)	(5,103)
Assets write-offs and gains/losses in sale of tangible assets	(746)	(2,835)
Donations of educational sponsorship	-	(3,000)
Others	-	(348)
Total	(7,076)	(11,286)

5. Net financial costs

	Sep 2018	Sep 2017
Interest expense	(16,043)	(11,025)
Interest received	1,445	2,365
Dividends	46	79
Net foreign exchange	(1,112)	2,909
Other financial gains and losses	(3,127)	(3,063)
Fair value of financial investments held for trade:
Derivative instruments (nota 8)	(661)	(210)
Total	(19,452)	(8,945)

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

	Sep 2018	Sep 2017
Current income tax
Current tax of the year	(93,796)	(106,430)
Adjustment to prior year estimation	(1,786)	1,724
	(95,582)	(104,706)
Deferred tax
Temporary differences created and reversed	(13,723)	2,031
Change to the recoverable amount of tax losses and temporary differences from previous years	1,369	239
	(12,354)	2,270
Other gains/losses related to tax
Impact of changes in estimates for tax litigations	5,678	1,208
	5,678	1,208
Total income tax	(102,258)	(101,228)

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

	Tangible assets	Intangible assets	Investment property	Total
Net value at 31 December 2017	3,474,835	811,040	13,714	4,299,589
Foreign exchange differences	(40,230)	(10,547)	-	(50,777)
Increases	466,999	7,256	-	474,255
Disposals and write-offs	(3,299)	(21)	(2,000)	(5,320)
Transfers	1,328	(1,328)	-	-
Depreciation and impairment losses	(259,484)	(9,947)	-	(269,431)
Fair value changes	-	-	(28)	(28)
Net value at 30 September 2018	3,640,149	796,453	11,686	4,448,288

Net value of intangible assets at 30 September 2018 include Goodwill amounted EUR 639,209 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 50,577 thousand, which includes a decreased of EUR 7,423 thousand related to Goodwill from businesses in Poland.

8. Derivative financial instruments

	Notional	Sep 2018				Dec 2017
		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 (PLN/EUR)	77 million EUR	-	-	561	-	28 million EUR	-	-	269	-
Currency forwards - stock purchase (PLN/USD)	13 million USD	60	-	4	-		-	-	-	-
Currency forwards - intercompany loans (PLN)	-	-	-	-	-	75 million EUR	294	-	-	-
Cash flow hedging derivatives
Interest rate swap (PLN)	180 million PLN	-	23	-	-	189 million PLN	-	227	-	-
Foreign operation investments hedging derivatives
Currency forwards (PLN)	-	-	-	-	-	600 million PLN	-	-	2,536	-
Total derivatives held for trading		60	-	565	-		294	-	269	-
Total hedging derivatives		-	23	-	-		-	227	2,536	-
Total assets/liabilities derivatives		60	23	565	-		294	227	2,805	-

9. Trade debtors, accrued income and deferred costs

	Sep 2018	Dec 2017
Non-current
Other debtors	70,144	74,664
Collateral deposits associated to financial debt	34,367	34,367
Deferred costs	1,746	2,352
Total	106,257	111,383
Current
Commercial customers	62,170	56,424
Other debtors	112,304	122,316
Other taxes receivable	9,367	16,019
Accrued income and deferred costs	281,405	193,074
Total	465,246	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

	Sep 2018	Dec 2017
Bank deposits	291,830	460,235
Short-term investments	46,720	217,199
Cash and cash equivalents	3,874	3,899
Total	342,424	681,333

11. Cash generated from operations

	Sep 2018	Sep 2017
Net results	292,100	285,259
Adjustments for:
Non-controlling interests	19,174	20,975
Income tax	102,258	101,228
Depreciations and amortisations	269,431	241,517
Provisions and other operational gains and losses	18,300	10,049
Net financial costs	19,452	8,945
Gains/Losses in associated companies	(133)	3
Gains/Losses in other investments	-	(2)
Profit/ Losses in tangible and intangible assets	1,757	8,228
	722,339	676,202
Changes in working capital:
Inventories	(20,599)	(17,960)
Trade debtors, accrued income and deferred costs	(5,492)	(13,619)
Trade creditors, accrued costs and deferred income	(46,635)	41,079
Total	649,613	685,702

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

	Sep 2018	Sep 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	292,100	285,259
Basic and diluted earnings per share – Euros	0.4648	0.4539

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 nine months of the year, some emissions were carried out for short periods to meet specific cash requirements and to refinance the bank loans that mature which totalized EUR 180,000 thousand.

Some regular uses of the Money Market line, with a limit of EUR 70,000 thousand contracted this year, have also been made in the companies Jerónimo Martins, SGPS, S.A. and JMR, SGPS, SA. .

An existing credit line was renegotiated, increasing the global limit to PLN 300,000 thousand with Jerónimo Martins Polska and JM Nieruchomości, SKA as borrowers.

The utilization of short-term lines that Jerónimo Martins Colombia SAS holds with local banks were increased in COP 282.000.000 thousand, around EUR 81,500 thousand. In the medium/long term lines the increase was in the amount of COP 57,000,000 thousand i.e., around EUR 16,500 thousand, and up to 3 years maturity.

14.1 Current and non-current loans

				Foreign
Sep 2018	Opening balance	Cash flows	Transfers	exchange	Closing balance
				difference
Non-current loans
Bank loans	231,508	16,505	(76,776)	(4,687)	166,550
Financial lease liabilities	6,254	9,713	(4,364)	(183)	11,420
Total	237,762	26,218	(81,140)	(4,870)	177,970
Current loans
Bank overdrafts	6	35,402	-	(241)	35,167
Bank loans	297,526	25,561	76,776	2,900	402,763
Financial lease liabilities	1,973	(2,234)	4,364	(62)	4,041
Total	299,505	58,729	81,140	2,597	441,971
				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
Total

14.2 Net financial debt

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

	Sep 2018	Dec 2017
Non-current loans (note 14.1)	177,970	237,762
Current loans (note 14.1)	441,971	299,505
Derivative financial instruments (note 8)	482	2,284
Interest on accruals and deferrals	2,761	2,019
Bank deposits (note 10)	(291,830)	(460,235)
Short-term investments (note 10)	(46,720)	(217,199)
Collateral deposits associated to financial debt (note 9)	(34,367)	(34,367)
Total	250,267	(170,231)

15 Provisions and employee benefits

	Risks and	Employee
	contingencies	benefits
Balance at 1 January	29,308	66,482
Set up, reinforced and transfers	3,360	6,461
Unused and reversed	(2,607)	-
Foreign exchange difference	(72)	(529)
Used	(1,300)	(2,842)
Balance at 30 September	28,689	69,572

16 Trade creditors, accrued costs and deferred income

	Sep 2018	Dec 2017
Non-current
Other commercial creditors	32	17
Accrued costs and deferred income	744	762
Total	776	779
Current
Other commercial creditors	2,873,613	2,913,196
Other non-commercial creditors	241,693	302,020
Other taxes payables	100,140	92,920
Contracts liabilities with customers	1,151	-
Accrued costs and deferred income	379,302	354,157
Total	3,595,899	3,662,293

17 Contingencies, contingent assets and contingent liabilities

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 65,079 thousand relates to tax liquidations paid to the Tax Administration, already claimed.

The variation compared to the amount presented in December 2017 (EUR 72,689 thousand) reflects mainly a reimbursement received from the Tax Administration in the amount of EUR 5,174 thousand, due to a Judgment of the Court of Appeal (Tribunal Central Administrativo Sul) that ruled in favor of the Company.

Contingent liabilities

• h) Sociedade Ponto Verde (SPV) claimed through a judicial proceeding against Pingo Doce, in September 2014, an amount of EUR 3,397 thousand (including outstanding interest), related to the Management of the secondary and tertiary packaging waste system. Pingo Doce contested considering that SPV does not manage that kind of waste and therefore no amount is due. The first Instance decided in favour of Pingo Doce. However, SPV filed an appeal and won the appeal. Pingo Doce lodged an appeal of this decision at the Supreme Court of Justice, which, based on the facts established, confirmed the decision by this later Court, thus condemning Pingo Doce in the petition, although acquitting him of approximately m EUR 70 that had prescribed;
• i) The Food and Veterinary Department (Direcção-Geral de Alimentação e Veterinária) claimed from Pingo Doce, Recheio and Hussel an amount of EUR 13,732 thousand, EUR 1,207 thousand and EUR 30 thousand, respectively, in respect of the Food Safety Tax (Taxa de Segurança Alimentar Mais – TSAM) assessed for the years 2012 to 2017. The values at stake have been challenged in Court, since it is understood that this tax is not due, namely on the grounds of the unconstitutional nature of the Statute that approved the TSAM. The disputes are still running their course. Despite in four cases the court having decided that the Food Safety Tax is not unconstitutional, the Companies maintain their understanding and have presented the respective appeal to higher courts. In one case, referring to the 2nd instalment of 2012 and the first of 2013, the Court of Appeal (Tribunal Central Administrativo do Sul) maintained the conviction. Pingo Doce complained against the decision for not considering an issue raised and kept open the possibility of appealing to the Constitutional Court.

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 nine months of 2018, neither were there any amounts payable or receivable between them on 30 September 2018.

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

	Other related parties (*)
	Sep 2018	Sep 2017
Sales and services rendered	171	141
Stocks purchased and services supplied	91,505	88,587
	Other related parties (*)
	Sep 2018	Dec 2017
Trade debtors, accrued income and deferred costs	25	237
Trade creditors, accrued costs and deferred income	6,944	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 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.

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, 29 October 2018

The Certified Accountant The Board of Directors