Jeronimo Martins — Interim / Quarterly Report 2018

May 29, 2018

CONSOLIDATED REPORT AND ACCOUNTS

FIRST QUARTER 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	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. Definitions	7
6. P&L - Reconciliation Note	8
7. Balance Sheet - Reconciliation Note	9
8. Cash Flow – Reconciliation Note	10
9. Information Regarding Individual Financial Statements	10

III – Consolidated Financial Statements

1. Financial Statements	11
2. Notes to the Financial Statements	15

I - CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO

Pedro Soares dos Santos

"Strong sales performance drove good results in the quarter, with all our banners making the most of the Easter season.

Aware that we still have much to do to reach our targets for the year, we will focus on the main challenges ahead, by (i) responding to the changes caused by the Sunday Trading ban in Poland and (ii) consolidating our expansion rhythm in Colombia.

We have a positive outlook for 2018 and we remain committed to outperform in all our markets."

1. Sales Analysis

(Million Euro)		Q1 18		Q1 17	D %
		% total		% total w/o FX		Euro
Biedronka	2,922	69.6%	2,527	68.7%	11.9%	15.6%
Pingo Doce	882	21.0%	823	22.4%		7.1%
Recheio	210	5.0%	201	5.5%		4.2%
Ara	134	3.2%	87	2.4%	74.5%	54.4%
Hebe	47	1.1%	36	1.0%	26.6%	30.8%
Others & Cons. Adjustments	6	0.1%	5	0.1%		34.2%
Total JM	4,200	100%	3,679	100%	12.1%	14.2%

Group sales totalled €4.2 bn, 14.2% above the first quarter of 2017 (+12.1% at constant exchange rates).

Group like for like (LFL) sales growth was 7.7%, benefiting from the strong performance across all banners and from a particularly successful Easter.

In Poland, consumer demand was strong and the operating environment continued to be very competitive. Food inflation fell from 5.6% in the fourth quarter of 2017 to 4.0% in the first quarter of 2018.

Biedronka maintained its sales-focused consumer-centric approach and achieved excellent results.

In the quarter, LFL growth was 8.6%, benefiting from a calendar effect. Sales in euros increased 15.6% in euros (+11.9% in local currency), reaching €2.9 bn.

Space contribution to sales growth reflected the strong opening programme in the fourth quarter of 2017 when 70 stores were added to the network. In the first quarter of 2018, 11 stores were opened (2 net additions).

Hebe delivered sales of €47 mn, a 30.8% growth in the first quarter of 2017 (+26.6% at constant exchange rate) and opened 11 new stores.

In Portugal, the Food Retail sector continued to be driven by promotions. Food inflation fell from 2.0% in the fourth quarter of 2017 to an average of 0.7% in the first quarter of 2018.

Pingo Doce achieved a remarkable LFL growth (excl. fuel) of 6.4% pushing total sales up by 7.1% to reach €882 mn while reinforcing its market position.

Recheio continued to seize its market opportunities in a favourable HoReCa context. The banner delivered a 3.6% LFL sales increase. Sales grew 4.2% relative to the same period in 2017, reaching €210 mn.

In Colombia, consumer sentiment continued to improve. Food inflation softened from 2.3% registered in the fourth quarter of 2017 to 1.1% in the first quarter of 2018.

Ara delivered sales of €134 mn, 54.4% ahead of the same period in 2017 (+74.5% at a constant exchange rate). The banner opened 25 stores in the first quarter of 2018, running a total network of 414 locations by the end of March. The Company is prepared to fully execute its expansion plan of adding c.150 stores in the year.

2. Results Analysis

(Million Euro)	Q1 18		Q1 17		D
Net Sales and Services	4,200		3,679		14.2%
Gross Profit	898	21.4%	778	21.2%	15.4%
Operating Costs	-683	-16.3%	-586	-15.9%	16.4%
EBITDA	215	5.1%	192	5.2%	12.2%
Depreciation	-89	-2.1%	-78	-2.1%	14.1%
EBIT	126	3.0%	114	3.1%	10.8%
Net Financial Costs	- 5	-0.1%	0	0.0%	n.a.
Gains in Joint Ventures and Associates	0	0.0%	0	0.0%	n.a.
Other Profits/Losses	- 2	-0.1%	- 2	0.0%	n.a.
EBT	119	2.8%	112	3.0%	6.4%
Income Tax	-31	-0.7%	-29	-0.8%	8.4%
Net Profit	88	2.1%	83	2.3%	5.8%
Non Controlling Interests	- 3	-0.1%	- 6	-0.2%	-40.0%
Net Profit Attributable to JM	85	2.0%	78	2.1%	9.1%
EPS (€)	0.13		0.12		9.1%
EPS without Other Profits/Losses (€)	0.14		0.12		9.1%

Operating Profit

Group EBITDA totalled €215 mn in the first quarter of 2018, 12.2% up relative to the previous year (+7.5% at constant exchange rates), despite the continued pressure on labour costs, particularly in Biedronka and Pingo Doce. Excluding the impact of Ara and Hebe, EBITDA increased 11.4%.

EBITDA & EBITDA Margin

Biedronka's EBITDA was €198 mn, up 15.7% relative to the first quarter of 2017 (+12.0% at a constant exchange rate). EBITDA margin was 6.8%, which is in line with the previous year.

Pingo Doce and Recheio had a combined EBITDA of €49 mn, 3.5% below the first quarter of 2017. EBITDA margin for the distribution businesses in Portugal was 4.5%. The decline from the 5.0% margin posted in the first quarter of 2017 reflected the wage increases implemented in Pingo Doce throughout the fourth quarter of 2017.

Ara and Hebe, recorded losses of €24 mn at EBITDA level, with Ara accounting for 85% of the total. The comparable losses in the first quarter of 2017 were €23 mn.

Financial Results

Net financial costs were €-5 mn, reflecting the higher interest bearing' debt in foreign currencies (Polish Zloty and Colombian Peso).

Other profits/losses

Other profits/losses were €-2 mn in the first quarter of 2018, mainly driven by restructuring costs.

Net Results

Group net profit was €85 mn, 9.1% above the first quarter of 2017, driven by the strong operating performance.

3. Balance Sheet

(Million Euro)	Q1 18	2017	Q1 17
Net Goodwill	644	647	643
Net Fixed Assets	3,682	3,639	3,284
Total Working Capital	-2,377	-2,496	-2,027
Others	51	54	77
Invested Capital	1,999	1,843	1,977
Total Borrowings	680	529	403
Leasings	10	8	6
Accrued Interest	3	4	11
Marketable Sec. & Bank Deposits	-773	-712	-555
Net Debt	-80	-170	-135
Non Controlling Interests	213	225	256
Share Capital	629	629	629
Reserves and Retained Earnings	1,237	1,159	1,226
Shareholders Funds	2,080	2,013	2,112
Gearing	-3.9%	-8.5%	-6.4%

The Group ended the quarter with a positive cash position of €80 mn, with gearing standing at -3.9%.

Cash Flow

(Million Euro)	Q1 18	Q1 17
EBITDA	215	192
Interest Payment	-4	-2
Other Financial Items	0	0
Income Tax	-27	-60
Funds From Operations	184	129
Capex Payment	-176	-123
Change in Working Capital	-89	-206
Others	-2	-1
Free Cash Flow	-83	-200

Cash flow in the period was negative at €83 mn, reflecting the normal seasonality of working capital after the Christmas season.

Investment

(Million Euro)	Q1 18	Weight	Q1 17	Weight
Biedronka	79	56%	49	48%
Distribution Portugal	30	21%	22	22%
Ara	20	14%	18	18%
Others	12	9%	11	11%
Total CAPEX	141	100%	101	100%

Group capex amounted to €141 mn, of which 56% was invested in Biedronka and 14% in Ara.

4. Outlook for 2018

We had a strong start to the year, with a sound underlying performance in the first quarter, in line with our expectations, and the impact of a good Easter trading. Biedronka and Pingo Doce enjoyed a particularly strong season, driven by adjusted commercial approaches that were successfully executed.

In Poland we maintain a positive outlook on the economy and consumer demand for the quarters ahead. Biedronka will remain focused on capturing all sales opportunities and growing market share. On the Sunday trading ban we are confident that our plans to adapt to the new rules in the sector will prove to be effective.

In Portugal, Pingo Doce and Recheio are well prepared to benefit from a positive economic environment and to continue to reinforce their market positions.

In Colombia, consumer sentiment is recovering and Ara will keep focused on expanding the scale of operations.

At constant exchanges rates, Ara and Hebe's EBITDA losses are expected to be slightly lower than in 2017.

To fully capture the growth opportunities, both in terms of organic expansion and LFL progression, we confirm our investment programme at €700-750 million. This programme includes the net addition of 70-80 Biedronka stores, the opening of c.150 Ara stores and the major refurbishment programmes of both Biedronka and Pingo Doce.

Lisbon, 24 April 2018

The Board of Directors

II – CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Evolution

	Total Sales Growth	LFL Sales Growth
	Q1 18	Q1 18
Biedronka
Euro	15.6%
PLN	11.9%	8.6%
Pingo Doce	7.1%	5.8%
Ex-Fuel	7.7%	6.4%
Recheio	4.2%	3.6%

2. Stores Network

Number of Stores	2017	Openings Closings		Q1 18	Q1 17
		Q1 18	Q1 18
Biedronka	2,823	11	9	2,825	2,729
Pingo Doce	422	0	0	422	415
Recheio	43	0	0	43	42
Ara	389	25	0	414	244
Hebe	182	11	2	191	159

Sales Area (sqm)	2017	Openings Q1 18	Closings Remodellings Q1 18	Q1 18	Q1 17
Biedronka*	1,853,075	8,378	4,147	1,857,306	1,775,511
Pingo Doce	503,897	0	0	503,897	495,331
Recheio	131,997	0	0	131,997	130,597
Ara	133,692	9,010	0	142,702	79,079
Hebe	43,053	2,719	462	45,310	37,294

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

3. EBITDA and EBITDA Margin Breakdown

(Million Euro)	Q1 18	Mg	Q1 17	Mg
Biedronka	198	6.8%	171	6.8%
Distribution Portugal	49	4.5%	51	5.0%
Others & Cons. Adjustments	-32	n.a.	-30	n.a.
JM Consolidated	215	5.1%	192	5.2%

4. Financial Costs Breakdown

(Million Euro)	Q1 18	Q1 17
Net Interest	-4	-2
Exchange Differences	0	3
Others	-1	-1
Financial Results	-5	0

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 by Functions in the Consolidated Report & Accounts - First Quarter 2018 Results
Net sales and services
Gross profit
Includes headings of Distribution costs; Administrative costs; Other operating costs and excludes Depreciations of €-88.9 mn
Value reflected in the Segments reporting note
Net financial costs
Gains (Losses) in joint ventures and associates
Includes headings of Other operating profits/losses; Gains in disposal of business and Gains/Losses in other investments
Income tax
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 5)	Balance Sheet in the Consolidated Report & Accounts - First Quarter 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 (€644.1mn)
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 €4.1 mn Cash and cash equivalents (note - Cash and cash equivalents) and the value of €-3.7 mn related to 'Others' due to its operational nature. Excludes the value of €-3.1 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 €-3.7 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 €-3.1 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 €4.1 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 Quarter 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 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 THE QUARTERS ENDED AT 31 MARCH 2018 AND 2017

			Euro thousand
	Notes	March	March
		2018	2017
Sales and services rendered	3	4,200,284	3,678,670
Cost of sales	4	(3,302,382)	(2,900,510)
Gross profit		897,902	778,160
Distribution costs	4	(705,345)	(603,753)
Administrative costs	4	(66,287)	(60,495)
Other operating profits/losses	4	(2,328)	(1,746)
Operating profit		123,942	112,166
Net financial costs	5	(4,594)	(47)
Gains in joint ventures and associates		(4)	(1)
Gains/ losses in other investments		-	2
Profit before taxes		119,344	112,120
Income tax	6	(31,340)	(28,917)
Profit before non-controlling interests		88,004	83,203
Attributable to:
Non-controlling interests		3,376	5,629
Jerónimo Martins Shareholders		84,628	77,574
Basic and diluted earnings per share - Euros	13	0.1347	0.1234

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE QUARTERS ENDED AT 31 MARCH 2018 AND 2017

			Euro thousand
	Notes	March	March
		2018	2017
Net profit		88,004	83,203
Other comprehensive income:
Items that will not be reclassified to profit or loss		-	-
Currency translation differences		(9,757)	49,532
Change in fair value of cash flow hedges	8	(212)	580
Change in fair value of hedging instruments on foreign operations	8	3,691	(10,310)
Related tax		18	(93)
Items that may be reclassified to profit or loss		(6,260)	39,709
Other comprehensive income, net of income tax		(6,260)	39,709
Total comprehensive income		81,744	122,912
Attributable to:
Non-controlling interests		3,376	5,629
Jerónimo Martins Shareholders		78,368	117,283
Total comprehensive income		81,744	122,912

CONSOLIDATED BALANCE SHEET AT 31 MARCH 2018 AND 31 DECEMBER 2017

			Euro thousand
	Notes	March	December
		2018	2017
Assets
Tangible assets	7	3,520,422	3,474,835
Intangible assets	7	805,717	811,040
Investment property	7	13,705	13,714
Investments in joint ventures and associates		2,053	1,557
Other financial investements		1,417	1,417
Trade debtors, accrued income and deferred costs	9	112,407	111,383
Derivative financial instruments	8	15	227
Deferred tax assets		112,205	106,025
Total non-current assets		4,567,941	4,520,198
Inventories		860,566	841,565
Biological assets		5,556	5,498
Income tax receivable		3,635	5,094
Trade debtors, accrued income and deferred costs	9	364,157	387,833
Derivative financial instruments	8	32	294
Cash and cash equivalents	10	743,131	681,333
Total current assets		1,977,077	1,921,617
Total assets		6,545,018	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		(57,369)	(51,109)
Retained earnings		1,277,947	1,193,319
		1,866,263	1,787,895
Non-controlling interests		213,447	225,298
Total Shareholders' equity		2,079,710	2,013,193
Borrowings	14	235,953	237,762
Trade creditors, accrued costs and deferred income	16	780	779
Employee benefits	15	67,781	66,482
Provisions for risks and contingencies	15	28,353	29,308
Deferred tax liabilities		68,899	71,579
Total non-current liabilities		401,766	405,910
Borrowings	14	454,122	299,505
Trade creditors, accrued costs and deferred income	16	3,542,376	3,662,293
Derivative financial instruments	8	14	2,805
Income tax payable		67,030	58,109
Total current liabilities		4,063,542	4,022,712
Total Shareholders' equity and liabilities		6,545,018	6,441,815

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	Available-for sale financial assets	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				(10)		49,559		49,549		49,549
Change in fair value of cash flow hedging				470				470		470
Change in fair value of hedging instruments on foreign operations						(10,310)		(10,310)		(10,310)
Other comprehensive income	-	-	-	460	-	39,249	-	39,709	-	39,709
Net profit							77,574	77,574	5,629	83,203
Total comprehensive income	-	-	-	460	-	39,249	77,574	117,283	5,629	122,912
Dividends							-	-	(1,767)	(1,767)
Balance Sheet as at 31 March 2017	629,293	22,452	(6,060)	223	-	(57,379)	1,266,765	1,855,294	256,362	2,111,656
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				-		(9,779)		(9,779)		(9,779)
Change in fair value of cash flow hedging				(172)				(172)		(172)
Change in fair value of hedging instruments on foreign operations						3,691		3,691		3,691
Other comprehensive income	-	-	-	(172)	-	(6,088)	-	(6,260)	-	(6,260)
Net profit							84,628	84,628	3,376	88,004
Total comprehensive income	-	-	-	(172)	-	(6,088)	84,628	78,368	3,376	81,744
Dividends (note 12)							-	-	(15,227)	(15,227)
Balance Sheet as at 31 March 2018	629,293	22,452	(6,060)	12	-	(57,381)	1,277,947	1,866,263	213,447	2,079,710

CONSOLIDATED CASH FLOW STATEMENT FOR THE QUARTERS ENDED AT 31 MARCH 2018 AND 2017

			Euro thousand
	Notes	March	March
		2018	2017
Operating Activities
Cash received from customers		4,763,709	4,144,270
Cash paid to suppliers		(4,308,451)	(3,882,767)
Cash paid to employees		(330,510)	(276,080)
Cash generated from operations	11	124,748	(14,577)
Interest paid		(5,300)	(3,615)
Income taxes paid		(27,340)	(59,922)
Cash flow from operating activities		92,108	(78,114)
Investment activities
Disposals of tangible fixed assets		383	49
Disposals of available-for-sale financial assets and investment property		-	187
Interest received		1,318	1,137
Acquisition of tangible fixed assets		(173,584)	(121,289)
Acquisition of intangible assets		(2,721)	(1,476)
Acquisition of financial investments and investment property		-	(105)
Acquisition of joint ventures and associates		(500)	(500)
Cash flow from investment activities		(175,104)	(121,997)
Financing activities
Net change in loans	14	148,555	62,984
Dividends paid	12	-	(1,767)
Cash flow from financing activities		148,555	61,217
Net changes in cash and cash equivalents		65,559	(138,894)
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		65,559	(138,894)
Effect of currency translation differences		(3,761)	19,447
Cash and cash equivalents at the end of March	10	743,131	524,065

2.	Accounting policies16
3.	Segments reporting19
4.	Operating costs by nature 20
5.	Net financial costs20
6.	Income tax recognised in the income statement21
7.	Tangible assets, intangible assets and investment property 21
8.	Derivative financial instruments21
9.	Trade debtors, accrued income and deferred costs 22
10.	Cash and cash equivalents 22
11.	Cash generated from operations 22
12.	Dividends 22
13.	Basic and diluted earnings per share23
14.	Borrowings23
15	Provisions and employee benefits24
16	Trade creditors, accrued costs and deferred income24
17	Contingencies24
18	Related parties 25
19	Events after the balance sheet date25

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 fastmoving 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 April 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 three 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	1 January 2018
Regulation no. 2067/2016	IFRS 9 Financial Instruments (new)	July 2014	1 January 2018
Regulation no. 1987/2017	IFRS 15 Revenue from Contracts with Customers: Clarifications (amendment)	April 2016	1 January 2018
IFRS 4 Insurance Contracts: Applying IFRS 9 Financial Instruments Regulation no. 1988/2017 with IFRS 4 Insurance Contracts (amendment)		September 2016	1 January 2018
Annual Improvements to IFRS's 2014–2016 Cycle: IFRS 1 First Regulation no. 182/2018 Time Adoption of International Financial Reporting Standards and IAS 28 Investments in Associates and Joint Ventures (amendment)		December 2016	1 January 2018
Regulation no. 289/2018	IFRS 2 Share-based Payment: Classification and Measurement of Transactions (Amendment)	June 2016	1 January 2018
Regulation no. 400/2018	IAS 40 Investment Property: Transfers (Amendment)	June 2016	1 January 2018
Regulation no. 519/2018	IFRIC 22 Foreign Currency Transactions and Advance Consideration (New)	December 2016	1 January 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 will continue to qualify as hedge accounting with the adoption of IFRS 9, hence, the application of IFRS 9 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 the International Accounting Standards Board (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	1 January 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 31 March 2018	4.2106	1.1779	3,446.6900
Average rate for the year	4.1813	-	3,517.3800
Rate at 31 March 2017	4.2265	1.0696	3,079.2600
Average rate for the year	4.3195	-	3,113.2200

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 other operating profits/losses.

Detailed Information by Business Segments as at March 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	1,092,920	1,025,950	2,922,113	2,527,165	185,251	125,555	4,200,284	3,678,670
Inter-segments	26	18	352	353	(378)	(371)	-	-
External customers	1,092,894	1,025,932	2,921,761	2,526,812	185,629	125,926	4,200,284	3,678,670
Operational cash flow (EBITDA)	49,111	50,888	197,908	171,035	(31,813)	(30,098)	215,206	191,825
Depreciations and amortisations	(28,008)	(26,953)	(53,458)	(45,556)	(7,470)	(5,404)	(88,936)	(77,913)
Operational result (EBIT)	21,103	23,935	144,450	125,479	(39,283)	(35,502)	126,270	113,912
Other operating profits/losses							(2,328)	(1,746)
Financial results and gains in investments							(4,598)	(46)
Income tax							(31,340)	(28,917)
Net result attributable to JM							84,628	77,574
Total assets (1)	2,206,888	2,189,269	3,394,021	3,743,785	944,109	508,761	6,545,018	6,441,815
Total liabilities (1)	1,777,396	1,724,394	2,732,998	2,762,900	(45,086)	(58,672)	4,465,308	4,428,622
Investments in fixed assets	29,652	24,989	79,239	48,658	32,010	27,069	140,901	100,716

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

Reconciliation between EBIT and Operational Result

	Mar 2018	Mar 2017
EBIT	126,270	113,912
Other operating profits/losses	(2,328)	(1,746)
Operational result	123,942	112,166

4. Operating costs by nature

	Mar 2018	Mar 2017
Cost of goods sold and materials consumed	3,299,305	2,893,134
Changes in inventories of finished goods and work in progress	(771)	(130)
Net cash discount and interest paid to suppliers	(9,021)	(3,341)
Electronic payment commissions	7,838	6,506
Other supplementary costs	1,000	731
Supplies and services	151,172	140,715
Advertising costs	27,179	23,905
Rents	96,692	87,309
Staff costs	363,861	298,206
Depreciations and amortisations	88,936	77,918
Profit/loss with tangible and intangible assets	290	1,413
Transportation costs	44,503	39,644
Other natures of profit/loss	5,358	494
Total	4,076,342	3,566,504

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:

	Mar 2018	Mar 2017
Losses from organizational restructuring programmes	(2,201)	(1,794)
Assets write-offs and gains/losses in sale of tangible assets	(127)	37
Others	-	11
Total	(2,328)	(1,746)

5. Net financial costs

	Mar 2018	Mar 2017
Interest expense	(4,907)	(3,321)
Interest received	1,003	1,103
Net foreign exchange	346	3,000
Other financial gains and losses	(901)	(744)
Fair value of financial investments held for trade:
Derivative instruments (note 8)	(135)	(85)
Total	(4,594)	(47)

The interest expense heading includes the interest regarding loans measured at amortised cost, as well as interest on cash flow hedging instruments (note 8).

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

	Mar 2018	Mar 2017
Current income tax
Current tax of the year	(40,963)	(40,253)
Adjustment to prior year estimation	(2,416)	473
	(43,379)	(39,780)
Deferred tax
Temporary differences created and reversed	8,318	9,820
Change to the recoverable amount of tax losses and temporary differences from previous years	523	640
	8,841	10,460
Other gains/losses related to tax
Impact of changes in estimates for tax litigations	3,198	403
	3,198	403
Total income tax	(31,340)	(28,917)

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	(7,453)	(3,574)	-	(11,027)
Increases	138,180	2,721	-	140,901
Disposals and write-offs	(667)	(7)	-	(674)
Transfers	1,087	(1,087)	-	-
Depreciation and impairment losses	(85,560)	(3,376)	-	(88,936)
Fair value changes	-	-	(9)	(9)
Net value at 31 March 2018	3,520,422	805,717	13,705	4,339,844

Net value of intangible assets at 31 March 2018 include Goodwill amounted EUR 644,109 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 11,027 thousand, which includes a decrease of EUR 2,523 thousand related to Goodwill from business in Poland.

8. Derivative financial instruments

			Mar 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 (PLN)	121 million PLN	32	-	14	-	118 million PLN	-	-	269	-
Currency forwards - intercompany loans (PLN)	-	-	-	-	-	315 million PLN	294	-	-	-
Cash flow hedging derivatives
Interest rate swap (PLN)	186 million PLN	-	15	-	-	189 million PLN	-	227	-	-
Foreign operation investments hedging derivatives
Currency forwards (PLN)	-	-	-	-	-	600 million PLN	-	-	2,536	-
Total derivatives held for trading		32	-	14	-		294	-	269	-
Total hedging derivatives		-	15	-	-		-	227	2,536	-
Total assets/liabilities derivatives		32	15	14	-		294	227	2,805	-

9. Trade debtors, accrued income and deferred costs

	Mar 2018	Dec 2017
Non-current
Other debtors	75,709	74,664
Collateral deposits associated to financial debt	34,367	34,367
Deferred costs	2,331	2,352
Total	112,407	111,383
Current
Commercial customers	57,695	56,424
Other debtors	117,516	122,316
Other taxes receivable	6,654	16,019
Accrued income and deferred costs	182,292	193,074
Total	364,157	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

	Mar 2018	Dec 2017
Bank deposits	691,210	460,235
Short-term investments	47,823	217,199
Cash and cash equivalents	4,098	3,899
Total	743,131	681,333

11. Cash generated from operations

	Mar 2018	Mar 2017
Net results	84,628	77,574
Adjustments for:
Non-controlling interests	3,376	5,629
Income tax	31,340	28,917
Depreciations and amortisations	88,936	77,918
Provisions and other operational gains and losses	5,994	5,321
Net financial costs	4,594	47
Gains/Losses in associated companies	4	1
Gains/Losses in other investments	-	(2)
Profit/ Losses in tangible and intangible assets	290	1,422
	219,162	196,827
Changes in working capital:
Inventories	(26,997)	(51,682)
Trade debtors, accrued income and deferred costs	(1,905)	(4,861)
Trade creditors, accrued costs and deferred income	(65,512)	(154,861)
Total	124,748	(14,577)

12. Dividends

Dividends in the amount of EUR 15,227 thousand were attributed and not yet paid to non-controlling interests in the Group companies.

13. Basic and diluted earnings per share

	Mar 2018	Mar 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)
Shares issued during the year	-	-
Weighted average number of ordinary shares	628,434,220	628,434,220
Diluted net results of the year attributable to ordinary shares	84,628	77,574
Basic and diluted earnings per share – Euros	0.1347	0.1234

14. Borrowings

The Group has negotiated several commercial paper programmes in the total amount of EUR 365,000 thousand, of which EUR 165,000 thousand are committed. The utilizations under these programmes are remunerated at the Euribor rate for the respective issue period, plus variable spreads. During the first quarter of 2018, some emissions were carried out for short periods to meet specific cash requirements.

In Jerónimo Martins, SGPS, S.A. and JMR-Prestação de Serviços para a Distribuição, S.A. were contracted new bank loans in the total amount of EUR 80,000 thousand, for a tenure up to 6 months.

The short-term lines that Jerónimo Martins Colombia, SAS holds with local banks were increased by COP 150,000,000 thousand, around EUR 43,500 thousand, with one-year maturity.

14.1 Current and non-current loans

					Foreign
	Mar 2018	Opening balance	Cash flows	Transfers	exchange	Closing balance
					difference
Non-current loans
Bank loans		231,508	-	(2,086)	(1,605)	227,817
Financial lease liabilities		6,254	2,877	(932)	(63)	8,136
Total		237,762	2,877	(3,018)	(1,668)	235,953
Current loans
Bank overdrafts		6	(6)	-	-	-
Bank loans		297,526	146,350	2,086	5,940	451,902
Financial lease liabilities		1,973	(666)	932	(19)	2,220
Total		299,505	145,678	3,018	5,921	454,122
					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		224,581	67,622	20,694	(13,392)	299,505

14.2 Financial debt

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

	Mar 2018	Dec 2017
Non-current loans (note 14.1)	235,953	237,762
Current loans (note 14.1)	454,122	299,505
Derivative financial instruments (note 8)	(33)	2,284
Interest on accruals and deferrals	3,076	2,019
Bank deposits (note 10)	(691,210)	(460,235)
Short-term investments (note 10)	(47,823)	(217,199)
Collateral deposits associated to financial debt (note 9)	(34,367)	(34,367)
Total	(80,282)	(170,231)

15 Provisions and employee benefits

	Risks and
	contingencies	Employee benefits
Balance at 1 January	29,308	66,482
Set up, reinforced and transfers	901	2,177
Unused and reversed	(640)	-
Foreign exchange difference	(24)	(180)
Used	(1,192)	(698)
Balance at 31 March	28,353	67,781

16 Trade creditors, accrued costs and deferred income

	Mar 2018	Dec 2017
Non-current
Other commercial creditors	24	17
Accrued costs and deferred income	756	762
Total	780	779
Current
Other commercial creditors	2,772,466	2,913,196
Other non-commercial creditors	290,686	302,020
Other taxes payables	94,762	92,920
Contracts liabilities with customers	962	-
Accrued costs and deferred income	383,500	354,157
Total	3,542,376	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 69,692 thousand relates to tax liquidations claimed by the Tax Administration.

The amount considered above, was reduced in EUR 2,997 thousand since 31 December 2017, through a reimbursement from the Tax Administration, due to the fact that in 2016 one of the judicial proceedings was held to be well-grounded by the Court of Appeal (Tribunal Central Administrativo Sul), which ruled the cancellation of the referred liquidations.

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 quarter of 2018, neither were there any amounts payable or receivable between them on 31 March 2018.

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

		Other related parties (*)
	Mar 2018	Mar 2017
Sales and services rendered	39	52
Stocks purchased and services supplied	27,212	27,497
		Other related parties (*)
	Mar 2018	Dec 2017
Trade debtors, accrued income and deferred costs	19	237
Trade creditors, accrued costs and deferred income	20,787	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

On the 12 of April 2018 the Shareholders Meeting approved the distribution of dividends in the amount of EUR 385,230 thousand. This amount will be paid to shareholders on the 10 of May 2018.

Lisbon, 24 April 2018

The Certified Accountant The Board of Directors