1. Profile and Structure 9 2. Strategic Positioning Financial Glossary Contacts 39

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2 Index Message from the Chairman 3 I. The Group Jerónimo Martins 1. Profile and Structure 9 2. Strategic Positioning Financial Glossary Contacts 39 II. Consolidated Management Report - Creating Value and Growth 1. Relevant Facts of the Year Environment Group s Performance Business Areas Performance Outlook for Events After Balance Sheet Date Results Appropriation Proposal Consolidated Management Report Annex 98 III. Consolidated Financial Statements 1. Consolidated Financial Statements Statement of Board of Directors Auditor s Report Report and Opinion of the Audit Committee 155 IV. Corporate Governance 1. Introduction 160 Chapter 0 Statement of Compliance 161 Chapter 1 Shareholders Meeting 165 Chapter 2 Managing and Supervisory Bodies of the Company 168 Chapter 3 Information 199 V. Sustainability in Value Creation 1. Relevant Facts of the Year Jerónimo Martins and Sustainable Development Commitment to our Customers Commitment to our Employees Commitment to our Suppliers Quality and Food Safety Environmental Responsibility Patronage 268 VI. Individual Financial Statements 1. Management Report Individual Financial Statements Auditor s Report Report and Opinion of the Audit Committee 317 Excerpt of the Annual Shareholders Meeting Minutes 319

3 Message from the Chairman Message from the Chairman Dear Shareholders, The general macroeconomic environment was further weakened in 2009, though the financial markets did stabilise to some degree, which could announce the recovery of the world economy and, by extension, the domestic economy. The stabilisation of financial markets was confirmed by the stable Central Banks reference rates as well as the recovery, though slight, of the major financial centres. Jerónimo Martins share was one of the most distinctive cases in this regard, gaining 75.9% in value and breaking through the 7 euro barrier at the end of the year. Despite these positive indicators, the Portuguese economy did not show signs of recovery in On the contrary, Portugal registered the year s highest unemployment rate in the last quarter and Gross Domestic Product recorded negative growth in the region of 3%. However, 2009 was a good year for Jerónimo Martins, a result of the projects started in 2007 and 2008, the benefits of which will extend over time, contributing to the strengthening of the Group's position in the markets where it operates, fostering its growth and expansion over the next years. The Group s operating activity registered an excellent overall performance. Consolidated sales reached 7,317.1 million euros, equivalent to an increase of 6.1% on the previous year; if it were not for the zloty s depreciation, growth would have been of 18.4%, which clearly shows the Group s potential. Net profit attributable to Jerónimo Martins surpassed 200 million euros, a 22.8% increase on In the retail area in Portugal, Pingo Doce once again promptly responded to the challenges it took on: i) the integration of the medium-sized Feira Nova hypermarkets; ii) the restructuring of its operational and commercial areas; iii) the re-branding of Pingo Doce; and iv) the consolidation of the Plus stores acquired in May This combined effort resulted in 8.3% growth of sales on the preceding year, with like-for-like growth registering 0.9%. Recheio strengthened its leadership of the wholesaler market with the integration of a new unit, in Santa Maria da Feira, which was acquired at the end of 2008 and, hence, strengthened its presence in the North Portugal region. The Company reported a notable performance, with sales of million euros, an increase of 5.2% on the previous year, and going against the sector s trend. 3

4 Message from the Chairman In the Retail area in Poland, Jeronimo Martins Dystrybucja strengthened its market position and maintained a high pace of organic expansion, opening a total of 163 stores. 167 former Plus stores, acquired in October 2008, were also integrated. Sales in this area increased by 29.8%, and surpassed the 16 thousand million zlotys mark in 2009, making the Company the largest retail chain operating in the Polish market. It is with great pleasure that we find the performance of this chain recognised in the ranking of Poland s most valuable brands, established and published by the opinionleader newspaper "Rzeczpospolita", with Biedronka occupying 9 th position. In the Manufacturing area, I would like to highlight the continued focus on the consumer, and the maintaining of market shares of the major product categories. In this context, a new company was established Gallo Worldwide, Lda., a spin-off of one of the Unilever Jerónimo Martins, Lda. business units - in order to enhance the domestic and international development of the olive oil and seed oil category. In the Services area, the focus on strengthening the portfolio of representations was maintained, through new brands in segments where it already operates or by entering new business segments. In the Food Service area, the investment in innovation was carried forward as new business models were tested and the value propositions of already established businesses were consolidated. The achieved results are certainly pleasing to our Shareholders: in 2009, our share price increased in 75.9%, the fifth largest rise among PSI-20 companies; and total return in the year reached 78.8%, largely compensating the negative performance observed in All the success achieved in 2009 was the result of a well defined strategy and the notable performance and involvement of the People working for the Jerónimo Martins Group. People we continually value and who are, without doubt, our driving force. It was on the behalf of our People that the internal Social Responsibility area "Jerónimo Martins For Us" carried out an in-depth and detailed study in Portugal that demonstrated the social reality of those who work with us and identified their real needs. I was very pleased to note the very high participation rate in this study (90%), encompassing more than 21 thousand employees. We are capable today of supporting them in the areas of greatest need and, therefore, I have nominated Health and Education as our priorities for

5 Message from the Chairman I was especially pleased, besides all the work of the Jerónimo Martins Training School and Biedronka Academies, to hand over a further 600 diplomas to the employees who completed the 9 th and 12 th grades under our internal Learning and Evolving - New Opportunities Initiative programme. In Jerónimo Martins, the rigour and enthusiasm engaged in this project have allowed the achievement of results beyond expectations. Seeing our People s will to learn and availability to continue with lifelong learning is truly remarkable. In a year of profound economic crisis, the Group has not forgotten those who come face-to-face with the consumers. My message was clear and the pledge we made to our employees has been kept: not only were no jobs lost, but a further 1,700 employees were hired in Portugal. We are proud to be a Group that today has 53,797 employees. When analysing the various dimensions, both managing and operational, in the market context in which the Group operates, I cannot help but feeling great satisfaction towards the results achieved in I hope our shareholders feel the same. Concluding this brief assessment of the Group s operational results, I now turn to some matters I consider relevant towards the company s development and which I would like to share with you. On the one hand, the CMVM (Portuguese Securities Market Commission) published the new Corporate Governance Code and CMVM Regulation No. 1/2010 on the Corporate Governance of Listed Companies, earlier this year. The changes mainly concern the functioning of general meetings, internal control and risk management systems, specialised committees, auditing, and the disclosure of the remuneration of members of the management and supervisory bodies. On the other hand, the draft Code of Good Corporate Governance promoted by the Portuguese Institute of Corporate Governance (IPCG) was disclosed. Jerónimo Martins identifies with the structural principles of the IPCG, in particular those concerning the adoption of best practices of corporate governance and transparency with the goal of a healthy market structure. Nonetheless, it considers that the solutions proposed by the IPCG in the Code can be counterproductive, even putting the proper functioning of companies and, consequently, of the market itself at risk. Any of the abovementioned codes has excessive limitations on the activities of the Board of Directors, applying as much to Executive Directors as Non-Executive Directors. The recommendations are increasingly more comprehensive on the composition, operation and duties allocated to the management body, without taking 5

6 Message from the Chairman into account the specific nature of the most common shareholder structure in Portugal and seeming to be founded on the one size fits all principle, with which we disagree. In particular, the presence of Non-Executive Directors linked to key shareholders in the Board of Directors, which is a feature of the corporate culture of many listed companies in Portugal, tends to have been overlooked. Instead, we should take advantage of this distinctive trace, as well as of the role of the Chairman in articulating both the interests of the Company and of its Shareholders. Jerónimo Martins, being one of the oldest companies in the country, listed since 1989, is known for its way of managing business and communicating with the market, which is underpinned by the principles of accuracy and transparency. We have a strong corporate culture that has always assimilated the ethical principles intrinsic to its solid shareholder structure and which have led to the company s sustainability and its pioneering standards in the field of governance. We were, in fact, among the first listed companies to consistently submit to the regulator and the market reliable and transparent information, as has actually been publicly acknowledged. I therefore believe that the supervisory entities should not assume the legislator s role, extrapolating their original functions, importing governance models and suffocating companies with rules that do not correspond to market practices or take into consideration the particular aspects of the country and its business environment. Closer supervision and aware self-regulation will surely be more recommendable vectors for a more transparent and healthier market. Another issue that was worthy of my special consideration was the status quo of private enterprise in Portugal. I notice, aware that the strength and dynamism of a democratic society can be wholly measured by the spirit of entrepreneurship of its private sector, with a certain degree of dismay, the role intended for the Portuguese business community in the recent economic, political and social environment. A living, proactive and innovative business network must be deeply aware of its core role in sustaining economic progress and, as a result, creating value for society as a whole. Thus, private initiative has to be a guiding principle of the best individual incentive of its citizens, a buffer against economic and social inertia, a repository of fundamental ethical values, as well as be capable of structural strategic thinking that combines a long-term business vision oriented towards an increasingly complex and competitive global market with a sectoral identity that fosters the sustainability of the economies where it operates. In a free and evolved society it is up to the State to foster private enterprise, recognising that this is the driving force of economic development and social renewal. 6

7 Message from the Chairman Hence, some of the key vectors to be assimilated by the State in order to propagate private initiative are the creation of supporting infrastructures, of a regulatory framework that ensures its structured development and the enhancement of a sectoral and economic identity that inspires and respects private initiative. This is the only way in which a business structure can responsibly take on its essential mission in society. Unfortunately, the assessment that can be made of the vitality of private initiative in Portugal during this last year is not positive. The economic environment that existed in 2009 was not, in itself, fertile ground for economic growth. The measures to foster and recover private initiative in Portugal, which are absolutely necessary and critical to stimulate investment and create jobs, continued to fall short of that required by the specific circumstances of this period. Beholding the year which now begins, I look with expectation on the consistency of the first signs of international economic recovery in this year just beginning. I also eagerly look for signs of the strengthening of the identity, pro-activeness and confidence of private initiative, since I believe that such an economic recovery will hardly be sustainable in Portugal without the participation and in-depth involvement of its private sector. The last decade was of great importance to Jerónimo Martins. It was a decade marked by the focus on the strategic development of its core business in Portugal and Poland. It was a time of rethinking markets and formats and setting challenges in order to ensure the expansion of the Group during that period. In the decade now starting, Jerónimo Martins is adequately prepared to assume its role in international markets; the fact that we are among the world s 100 largest Retail companies, as well as part of the small group of the 50 fastest growing and value creating companies, is the most tangible proof of this. We are now faced with the challenge of defining the way forward to guarantee the future development and growth of Jerónimo Martins. It is a time to study new markets, allocate resources and implement the defined strategy. To achieve that, we rely on the support of our shareholders, who have accompanied us and always trusted in the decisions of the Board of Directors, and our employees, in whom we place our confidence and who we know will accompany us in this new challenge. My sincerest gratitude to you all. 7

8 The Group Jerónimo Martins Index I The Group Jerónimo Martins 1. Profile and Structure Identity and Competencies Asset Portfolio Core Competencies Innovative and Pioneering Culture Operating and Financial Highlights Corporate Bodies and Structure Corporate Bodies Business and Ownership Structure Management Structure Public Recognition Strategic Positioning Mission An Integrated Vision of Sustainable Development Assessment of the External Environment Main Effects of Jerónimo Martins Activity Sustainability in Company Management System Relationship with Stakeholders Commitment to Value Creating and Growth Commitment to Sustainability in Value Creation Financial Glossary Contacts 39

9 The Group Jerónimo Martins Profile and Structure 1. Profile and Structure 1.1. Identity and Competencies Asset Portfolio Jerónimo Martins is the largest Portuguese food retail Group, with a turnover in 2009 of 7.3 thousand million euros, a total of 53,797 employees at the end of the year and the sixth largest market capitalisation on the Euronext Lisboa Stock Exchange. With more than fourteen years of international experience, the business outside Portugal accounts for 50.9% of sales and 50.5% of employees. The Group holds a sound portfolio of businesses focused on the food area, and which combines the strength of the market positions of its retail and wholesale operations in Portugal with the growth potential of the Biedronka operation in the Polish market and the maturity and capability of generating cash flow fostered by its manufacturing partnership with Unilever in Portugal. In Portugal, at the end of 2009 Jerónimo Martins held a leading position in the Food Distribution sector, achieving a merged turnover of 3.3 thousand million euros. The Group s Banners are Pingo Doce (334 supermarkets in mainland Portugal and 13 in Madeira), Feira Nova (9 hypermarkets) and Recheio (33 Cash & Carry stores and 2 Food Service platforms in mainland Portugal; 1 Cash & Carry store and 1 Food Service platform in Madeira). It continues to be the leading supermarket and cash & carry player, combining the strength of its Banners with the leadership in sales area and turnover. Moreover, Jerónimo Martins has been investing in the development in Portugal of new projects that are complementary to the Food Retail business, which involved the launch of New Code (adult and children s clothing), Electric Co (electrical appliances), GET (books, music, electronics and telecommunications), petrol stations, Bem-Estar parapharmacies and No Sítio do Costume restaurant areas in Pingo Doce stores. In Poland, Biedronka, a chain of stores with a variety of food products combining quality with an everyday-low-price policy, is market leader in Food Retail and holds a substantial lead over competitors with similar formats, through its high number of stores and the brand s strength. At the end of 2009, Biedronka had 1,466 stores, with 720 million customer purchases and 3,725 thousand million euros turnover for the year under review. Also in Poland, a further five pharmacies were opened in 2009 under the Apteka Na Zdrowie brand, as a result of the partnership agreement signed in February 2006 with the National Association of Pharmacies in Portugal. These new units increased the number of pharmacies in the network to 24 units. Jerónimo Martins is also the largest manufacturing group of fast moving consumer goods in Portugal, through its partnership with Unilever, in the Food, Personal Care, Home Care and Consumption Outside of the House products. In 2007, this partnership was strengthened by the merger of FimaVG, Bestfoods, LeverElida and IgloOlá into a single Company - Unilever Jerónimo Martins. The Company maintains its leadership position in the margarines, iced tea, ice creams and washing detergents markets, among others. 9

10 The Group Jerónimo Martins Profile and Structure In 2009, Unilever Jerónimo Martins spun-off the olive oil and seed oil business, which led to the establishment of the Gallo Worldwide Lda.. This Company assumed the leadership position of the Gallo brand in the domestic market and in Brazil. The Group s portfolio also includes a business area in Portugal providing Marketing Services, Representations and Food Services, integrating the following businesses: Jerónimo Martins Distribuição de Produtos de Consumo, which is the representative in Portugal of international brands, some of which are market leaders in the fast-moving consumer food, food service area (through Caterplus), in selective cosmetics and in the fast-moving cosmetics market, (through its partnership with the Puig Group). Some of the those brands are market leaders in the fast moving consumer food market; Hussel, a Specialised Retail chain selling chocolates and confectionary, with 24 stores at the end of 2009; Jerónimo Martins Restauração e Serviços, which is focused on the development of projects in the food service sector, which at the end of 2009 included the Jeronymo chain of kiosks and coffee-shops with 26 points of sale, the Olá chain of ice-cream stores with 33 stores and a further five franchised out, the Chili s restaurant in Lisbon, a franchising of the Brinker Group, and the Ben & Jerry s store Core Competencies Over its long history, Jerónimo Martins has been adopting values and demonstrating core competencies which enable it to look into the future with confidence and determination. The Group is very proud of its DNA, which has been a determining factor both in periods of fast growth and in periods of tough environments. Values Transparency Rigour PRIORITY MANAGEMENT INITIATIVE CUSTOMER FOCUS BUSINESS FOCUS JM GROUP SELF-MOTIVATION SELF EFFECTIVENESS PRESSURE AND CHANGE MANAGEMENT COLLABORATION & RELATIONSHIP BUILDING Innovation Lead by Example Commitment PROBLEM SOLVING ATTITUDE COMMUNICATION LEADERSHIP DECISION MAKING INFLUENCE AND INSPIRATION EAGERNESS TO LEARN Integrity 10

11 The Group Jerónimo Martins Profile and Structure Jerónimo Martins also has vast experience in the Food area, rich in terms of business sectors, markets, geographies and value chains. Its capacity to establish strategic partnerships has been a determining factor in various periods of the Group s history, and for entering new business areas. Also, its experience in mergers and acquisitions and its capacity to carry out successful integration processes are among its core competencies. In recent years, Jerónimo Martins has gained new competencies with the internationalisation of its businesses into large, very dynamic and competitive markets where it directly competes with players of international renown. The Jerónimo Martins business portfolio is robust. It is focused on the Food area and balanced in terms of growth perspectives and cash flow generation. The business models are adapted to the markets and consumption trends, and they primarily embody proximity formats that are very price competitive and have a commercial focus on Private Brands and Perishables (areas in which the Group has always been at the forefront) and the development of new projects. The core businesses are supported by strong brands which are market leaders in their formats. The operational activity is set on ongoing cost optimisation, productivity, exploitation of the Group s scale and synergies and on being constantly up-to-date technologically. The Group s management capabilities in uncertain and volatile environments have been strengthened through ever more dynamic, flexible and pro-active planning mechanisms, which lead to the establishment of well defined priorities and the alignment of the Organisation in relation to such Innovative and Pioneering Culture Jerónimo Martins has always proven itself to be pioneering within the Portuguese business context. Innovative and Pioneering Culture in Management Practices In its more recent history, Jerónimo Martins has excelled, among other reasons, for being the first Food Distribution Group in Portugal to implement various innovative management practices. This willingness to innovate has been kept and is now an integral part of the management culture in Jerónimo Martins. In 2009, embodying that culture, the Group substantially improved its supply chain processes in technological terms. In Portugal, Jerónimo Martins optimised its logistics automation with voice picking technology and also strengthened its resupply processes with solutions developed inhouse. In Poland it innovated in its radio frequency logistics infrastructure, which had already been pioneering in this market, and increased the productivity of its Distribution Centres as a result. 11

12 The Group Jerónimo Martins Profile and Structure Innovative and Pioneering Market Initiatives Jerónimo Martins has also been highlighted by its great dynamism and market leadership, illustrated by the countless initiatives that it has implemented over the years to cement its leadership of the market, winning over growing numbers of consumers. In this field in 2009, the innovative range of Ready Meals, Pingo Doce à Casa was introduced in Portugal, quality fresh meals at accessible prices. Pingo Doce, reinforcing its focus on the excellence of its Private Brands, initiated a pioneering programme to continuously improve their nutritional profile in order to achieve healthier compositions and ingredients, using the following parameters: The gradual reduction of salt, sugar and fat content; The total removal of any potentially allergy-causing colouring; The review of the ingredients, raw materials, additives and size of the portions. In Poland, the Biedronka Banner implemented the Guideline Daily Amount (GDA) system, providing labels on its products with information on the calorie content and quantity of each nutrient and comparing it to the guideline daily amount for a healthy and balanced diet. The Tu Biedronka mobile telephone card service was also inaugurated in

13 The Group Jerónimo Martins Profile and Structure 1.2. Operating and Financial Highlights Sales & Services ' ,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,348 2, ,715 2, ,392 2, ,521 3, ,725 3,321 ' Δ % Distribution Portugal 3,321 3, % Distribution Poland 3,725 3, % Manufacturing, Services & Others % Consolidated Sales 7,317 6, % Distribution Portugal Distribution Poland Manufacturing,Services&Others EBITDA & EBITA Margin ' Pre-Tax ROIC ' ,000 7,000 6,000 5,000 4,000 3,000 2,000 1, % 3, % 7.2% 4, % 5, % 4.2% 6, % 4.6% 7, % 4.9% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% ,249 1,358 1,510 1,762 1,929 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0 0% 0 0% Sales & Services EBITDA Margin EBITA Margin Average OIC EBITA Margin ROIC Net Results and Cash Flow ' ' Net Results Cash Flow Nr. Common Shares 629,293, ,293,220 Nr.Own Shares 859, , Data per Share ( ) Net Results Cash Flow Share Price (ye) * Before minority interests Net Results * Cash Flow * 13

14 The Group Jerónimo Martins Profile and Structure Consolidated Balance Sheet ' Invested Capital 1, ,777.0 Financial Debt * ,069.5 (Marketable Securities and Bank Loans) Net Debt Minority Interests Equity Shareholders Funds 1, Gearing 64.9% 90.8% Interest Cover * including leasings and accured interest and hedging Net Debt ' 000, % % 100% % Debt Debt / EBITDA Gearing 0% Employees 30,000 25,000 20,000 15,000 10,000 17,281 13,472 19,184 15,491 21,951 19,349 24,903 28,472 26,621 27, Nr. Associates Year End 53,797 53,375 Average 52,156 47,608 5, Portugal Poland 14

15 The Group Jerónimo Martins Profile and Structure Number of Stores and Sales Area Pingo Doce* sqm 352, , , , ,158 Feira Nova* sqm 82,468 82, , , ,684 Madeira sqm 14,300 14,626 14,626 13,697 13,697 Recheio sqm 114, , , , ,202 Biedronka 1,466 1,359 1, sqm 814, , , , ,536 *In 2008, 37 Feira Nova compact stores w ere converted into Pingo Doce Sales Sales/sqm ' ,134 1,311 1,558 1,944 2, ,348 1,715 2,392 3,521 3,725 Supermarkets Hyper Madeira Recheio Biedronka Local currency ('000) Supermarkets Hyper Madeira Recheio Biedronka , EBITDA Margin % of Sales 12.0% 10.0% 9.7% 8.0% 6.0% 4.0% 8.2% 7.0% 6.7% 7.0% 6.7% 6.0% 6.0% 6.1% 6.0% 8.0% 5.5% 4.6% 3.6% 4.8% 5.1% 5.3% 5.9% 6.9% 7.3% 2.0% 0.0% Retail Cash & Carry Madeira Biedronka

16 The Group Jerónimo Martins Profile and Structure Ow nership Participação Consolidation Consolidação Sales (Million Euro) EBITDA Margin Δ Δ% % Nr. Stores 09 Sales Area (sqm) 09 Sales/ sqm * 09 LFL Δ% 09/08 Food Distribution Portugal Mainland Portugal Madeira Supermarkets (Leader) ** 51% I 2, , % , % 7.0% 6.7% Hypermarkets (3 rd Player) ** 51% I % 9 82, % Cash & Carry (Leader) 100% I % 6.0% 6.1% , % (Lidosol) Supermarkets 75.5% I % 4.8% 3.6% 15 14, % (J.G.Camacho) Cash & Carry Poland Retail Stores (Leader) 100% I 3, , % 7.3% 6.9% 1, , % Manufacturing & Services Portugal Margarine Ready to Drink Tea & Savoury Home Care & Personal Care Ice Cream Olive Oil, Seed Oil Mkt, Repr. and Rest. Services 45% 100% P I Chocolates 51% I % 11.6% 11.2% CONSOLIDATED 7, , % 7.2% 6.9% * in local currency ('000) I - Integral ** including the conversion of 37 Feira Nova compact stores into Pingo Doce P - Proportional 16

17 The Group Jerónimo Martins Profile and Structure 1.3. Corporate Bodies and Structure Corporate Bodies Election Date: 30 th March 2007 Composition of the Board of Directors elected for the term President of the Board of Directors Elísio Alexandre Soares dos Santos 75 years old; President of the Group since February Executive Board Members: CEO and Responsible for the Financial Area (CFO) Luís Maria Viana Palha da Silva 54 years old; President of the Executive Committee since 2004; Executive Member of Jerónimo Martins, SGPS, S.A. Board since Responsible for Food Distribution Operations Pedro Manuel de Castro Soares dos Santos 50 years old; Member of the Executive Committee; Executive Member of Jerónimo Martins, SGPS, S.A. Board since Responsible for Manufacturing Operations, Services, Representations and Specialized Retail José Manuel da Silveira e Castro Soares dos Santos 47 years old; Member of the Executive Committee; Executive Member of Jerónimo Martins, SGPS, S.A. Board since Non-Executive Board Members: António Mendo Castel-Branco Borges 61 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since Hans Eggerstedt 71 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since Rui de Medeiros d Espiney Patrício 77 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since

18 The Group Jerónimo Martins Profile and Structure Artur Eduardo Brochado dos Santos Silva 68 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since Nicolaas Pronk 47 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since Marcel L. Corstjens 59 years old; Non-Executive Member of the Jerónimo Martins, SGPS, S.A. Board since Statutory Auditor and External Auditor: PricewaterhouseCoopers & Associados Sociedade de Revisores Oficiais de Contas, Lda. Palácio Sottomayor, Rua Sousa Martins, 1 3.º, Lisboa Represented by: Jorge Manuel Santos Costa, R.O.C. Substitute: José Manuel Henriques Bernardo Corporate Secretary: Henrique Manuel da Silveira e Castro Soares dos Santos Substitute Secretary: António Neto Alves President of the Shareholder s General Meeting: João Vieira de Castro Secretary of the Shareholder s General Meeting: Tiago Ferreira de Lemos 18

19 The Group Jerónimo Martins Profile and Structure Business and Ownership Structure Business Structure PINGO DOCE - Supermarkets PORTUGAL FEIRA NOVA - Hypermarkets DISTRIBUTION RECHEIO - Cash & Carry POLAND BIEDRONKA Retail Stores BLISKA (Apteka Na Zdrowie) Pharmacies MANUFACTURING PORTUGAL UNILEVER JERÓNIMO MARTINS - Spreads & Cooking, Ready to Drink Tea, Soups, Savoury, Home & Personal Care, Ice Cream and Food Products GALLO WORLDWIDE Olive Oil and Seed Oils JMD - Agency & Marketing Services Food and Cosmetics SERVICES PORTUGAL JM RESTAURAÇÃO Specialised Retail Coffee Shops, Ice Cream Stores, Sandwich Stores and Restaurants HUSSEL - Specialised Retail Sweets & Chocolates 19

20 The Group Jerónimo Martins Profile and Structure Ownership Structure DISTRIBUTION 100% JMR - Prestação de Serviços 100% Pingo Doce para a Distribuição 51% JMR 100% JG Camacho JERÓNIMO MARTINS, SGPS, S.A. 100% RECHEIO 50% Funchalgest 41.5% 58.5% Lidosol II 50% 100% Recheio C&C 100% Tand B.V. 100% JM Dystrybucja (Biedronka) 50% BLISKA (Apteka Na Zdrow ie) MANUFACTURING & SERVICES 100% Fima 45% UNILEVER JM 100% Lever 100% Olá 45% GALLO WORLDWIDE 100% Victor Guedes 49% Caterplus 100% JMDPC 100% JM Restauração e Serviços 51% Hussel 27.5% PUIG Portugal 20

21 The Group Jerónimo Martins Profile and Structure Management Structure Jerónimo Martins, SGPS, S.A. is the Group's Holding Company, which encompasses three distinct business areas: Food Distribution, Manufacturing and Marketing Services, Representations and Restaurant Services. Food Distribution is divided into geographical areas of operation, in Portugal and Poland. The Food Distribution structure is close to a matrix model, where it should be noted that there are Retail Functional Divisions grouped into JMR that provide services across the Operational Companies. JMR is organized into five business areas: Operations, Commercial, Financial, Human Resources and Information Technologies. The Operational Companies and the Food Distribution Functional Divisions are represented on the Distribution Portugal Executive Board, an entity that chairs the coordination and deliberation of strategic decisions regarding the business. In Portugal, the Operations Department of Pingo Doce is organized by regions, each Regional Division encompassing the areas of Marketing, Operational Control, Human Resources, Health and Safety at Work, Maintenance and Technical Issues. These areas have a direct report to the Regional Operations Manager and a functional report to the respective JMR Functional Divisions, with a view to thereby ensuring greater proximity to the business. The hypermarkets operating under the Feira Nova Banner are the only commercial units with a single, national Operations Department of their own. At Recheio, apart from the Operations Department, the following Departments are highlighted: Commercial, Marketing, Financial, Human Resources and Information Technologies. For the operation in Madeira, it should be noted that the Commercial, Financial, Quality Control and Human Resources areas need to be represented in the structure, although on a more reduced scale, adapted to the size of the business. In each case, the above-mentioned functional areas have a direct report to the General Manager of the Company. Within the organizational structure of Biedronka, the model adopted, conciliates the autonomy of the Regional Business Units with the co-ordinating role of the Company's Central Structure. Each of the 8 Regional Business Units is responsible for the performance of a group of 150 to 200 stores and the respective logistic infra-structure. In this way, these Units include Operations, Logistics and Supply Chain, Expansion and Technical Issues, Accounting and Finance, Human Resources, Health and Safety in the Workplace, Information Technology Support and Safety structures within their regional organisation. Thus, all the regions are autonomous in their operational management. The Central Structure of the Company is the direct responsibility of the General Manager of the Company, and ensures the support and co-ordination of all the Regional Units, through the Operations Managers and other Central Functional Departments of the Company: Financial, Legal, Marketing, Public Relations, Sourcing and Category Management, Quality Control, Human Resources and Information Technologies. 21

22 The Group Jerónimo Martins Profile and Structure In the area of Manufacturing, Unilever Jerónimo Martins and Gallo Worldwide should be mentioned. The management structure of Unilever Jerónimo Martins is based on a Management Board, comprised of members nominated by the partners Jerónimo Martins SGPS, S.A. and Unilever. An Executive Board reports to this entity, which is made up of the Business Units Food, Personal and Home Care, and Out of Home Divisions, as well as the Functional Divisions of Sales, Human Resources, Supply Chain (which encompasses Purchasing, Planning, Logistics, Customer Service, Quality Control and Productive Units), Financial, Legal, Communications and Information Technologies. The management structure of Gallo Worldwide Lda. is based on a Management Board, comprised of members nominated from the partners Jerónimo Martins SGPS, S.A. and Unilever. An Executive Board reports to this entity, which is made up of the Functional and Business Divisions: Financial, Customer Service and Information Technologies, Sales (Domestic Market), Marketing, Purchasing and Planning, Manufacturing and Logistics and Exports. The CEO of the Company is also responsible for the Human Resources Department. In the area of Services, Jerónimo Martins Distribuição is in charge of Jerónimo Martins Distribuição de Produtos de Consumo, Jerónimo Martins Restauração e Serviços, as well as the Puig Portugal, Caterplus and Hussel joint ventures. The various Companies guarantee all the Businesses operations and management, although Jerónimo Martins Distribuição provides its sister companies with Financial, Information Technologies, Human Resources and Logistics services. The top management structure of Jerónimo Martins, SGPS, S.A. is headed by its Board of Directors. This corporate body consists of ten members, three of which are part of the Executive Committee. It is also the responsibility of the Non-Executive Members of the Board of Directors to evaluate the performance of the Members that comprise the Executive Committee and the other existing committees. The Jerónimo Martins, SGPS, S.A. structure also includes a number of Functional Divisions which provide support and advice to the Executive Board, the Board of Directors and the remaining Companies of the Group, about specific issues in each area: Strategy and Planning, Financial Operations and Risk Management, Consolidation and Accountancy, Internal Auditing, Investor Relations, Tax, Legal Affairs, Communications, Human Resources, and Safety. It is the responsibility of each Functional Division of the Group's Holding to ensure consistency between the different objectives that are defined. Their activities are described in a specific chapter, within the scope of Corporate Governance. 22

23 The Group Jerónimo Martins Profile and Structure 1.4. Public Recognition Throughout 2009, the activity of the Jerónimo Martins Group, its Companies and Banners was recognised and awarded by various entities, in the markets in which they operate. Jerónimo Martins Mr. Soares dos Santos, Chairman of the Board, was given the Personality of the Year Award by the 2009 HR Awards, whose objective is to distinguish professionals and companies for their work in Human Resources; Jerónimo Martins was distinguished with the Family Company Award, a prize awarded by APEF (Portuguese Association of Family Companies) which rewarded the exemplary manner in which Jerónimo Martins has conducted its businesses in Portugal and Poland, providing solid and sustained growth; Jerónimo Martins is the largest Portuguese Group amongst the Retail companies, holding the 94 th position in the ranking of the 250 largest retailers in the world, which means it has risen 22 places in relation to the previous year, according to the most recent edition of the Global Powers of Retailing Report, prepared by Deloitte; Forbes distinguished Jerónimo Martins as one of the five companies in the entire World that over the last five years has presented the highest performance and the highest growth potential in the Food Retail sector; Jerónimo Martins has received the Award for the Best Investor Relations Office by Deloitte and the newspapers Diário Económico and Seminário Económico; Jerónimo Martins received the prize for Best Investor Relations Office in Portugal, attributed by the IR Magazine Continental Europe Awards; Jerónimo Martins was distinguished with the Awards for Best European Investor Relations Office and Best Portuguese Investor Relations Office, attributed by the Institutional Investor. Distribution Portugal In 2009, Recheio received recognition as the best Portuguese wholesaler, by the magazine Distribuição Hoje; The Pingo Doce Banner won the Rebranding and Distribution awards, attributed in the first edition of the Awards by the magazine Marketeer; Following its new advertising campaign, Pingo Doce was the most remembered brand in the last few months of the year, according to a Publivaga Marktest survey. Distribution Poland Jeronimo Martins Dystrybucja is in 20th place in the list of the 500 largest companies in Central and Eastern Europe, published by Newsweek Magazine, and in 8 th place in the list of the 500 largest Polish companies in terms of sales, published by the magazine Polityka; 23

24 The Group Jerónimo Martins Profile and Structure Jeronimo Martins Dystrybucja was distinguished with the award for Trustworthy Employer in the category Retail Chains. The objective of this ranking is to distinguish market leaders in the different sectors of the economy, that adopt employment policies that deserve to be highlighted; Jeronimo Martins Dystrybucja received the prize Leader on the Food Market, attributed by Rynek Spozywczy magazine and Internet Portals and For the second year running, the Biedronka Banner won the Trade and Services MasterCard 2009 award, in the My Favorite Store category, based on a market survey carried out in Poland, which distinguishes retail companies that set and form this market s future trends; Biedronka received the Trade Crown Award, a prize attributed in Poland since 1997 by the retail magazine FMCG, to companies that implement new solutions with an impact on local and national commercial activity; The Biedronka brand is in 9 th place in the ranking of the highest value brands in Poland, prepared by the Rzeczpospolita Newspaper. In the Most Often Chosen Brand and Top of Mind Brand categories, Biedronka came in 1 st place; Forbes Magazine distinguished Biedronka with the title Leader of Polish transformation in the last 20 years, for the best company in the Fast Moving Consumer Goods Market; Biedronka received the award Ubi Caritas with distinction in the Donor and Cooperation with Caritas categories, as a result of the co-operation that has taken place over the last few years with Caritas Polska within the scope of Corporate Social Responsibility activities; For the second year running, Biedronka won the Golden Consumer s Laurel 2009 award in the Customer-Friendly Stores category, which is attributed based on questionnaires and market surveys of the magazine s readers; Biedronka s advertising campaign Products which recommend themselves was given the Euromarka certificate, a programme promoting entrepreneurship and exports promoted by the Polish Ministry of the Economy and the Polish Agency for Enterprise Development; Biedronka s advertising campaign Products which recommend themselves" was once again distinguished with the Silver Statue at the EFFIE Awards, the global symbol of the effectiveness of Marketing campaigns. Manufacturing and Services Unilever Jerónimo Martins received the Award for Best Creative Multimedia Solution, attributed by the Clube de Criativos de Portugal, for its campaign Ideal Night Out from the Dove Go-Fresh range; The Dove Go-Fresh advertising campaign won the 2009 Silver Prize for Effectiveness in the Non-food Consumer Goods category, attributed by APAN (Portuguese Association of Advertisers) and by the Grupo Consultores; The Knorr Brand / Chilled Soups was awarded the prize Masters in Distribution in the Chilled Meals category; 24

25 The Group Jerónimo Martins Profile and Structure The Dove, Becel, Confort and Skip brands, of Unilever Jerónimo Martins, were nominated as Reliable Brands, in their respective categories, by readers of Selecções do Reader s Digest; Gallo Colheita ao Luar (Moonlight Harvest) Olive Oil was chosen as one of the Best Extra Virgin Olive Oils in the World by Marco Oreggia, in the Flos Oleis 2010 Guide, published in 2009; Gallo Olive Oil was voted on of the Best Extra Virgin Olive Oils in the World in the publication Der Feinschmecker Magazin 2009; The Gallo brand won the competition Most Magnetic Brands in the Olive Oil category, an initiative of Brandia Central in partnership with Marklab - Laboratório de Investigação Aplicada às Ciências do Marketing, which assesses the reputation and attractiveness of brands amongst consumers; Gallo was distinguished with the award Top of Mind in the Olive Oil Category, by the newspaper Folha de São Paulo; The Heinz Ketchup Top and Down brand represented in Portugal by Jerónimo Martins Distribuição de Produtos de Consumo, Lda., was awarded the prize Masters in Distribution in the Sauces and Condiments category; The Kellogg s brand, represented in Portugal by Jerónimo Martins Distribuição de Produtos de Consumo, Lda., was voted Brand of Excellence 2009 by Superbrands. 25

26 The Group Jerónimo Martins Strategic Positioning 2. Strategic Positioning 2.1. Mission Jerónimo Martins is a Portuguese Group with international projection operating in Food Distribution and Food Manufacturing, with a view to satisfying the legitimate interests of its Shareholders in the short, medium and long term, while simultaneously contributing to the sustainable development of the regions in which it operates. Within the scope of its mission, the Group aims to: Promote maximum operational efficiency across all business areas so as to optimise the results generated through its financial, material and human resources; Ensure customer satisfaction and loyalty by improving their quality of life through a firm commitment to innovation and by offering the best possible quality/price ratio on the products and services provided; Ensure the entire Organisation operates to the highest standards of conduct and Social Responsibility, through the building of relationships of trust with all the Group's stakeholders; Conduct business through dynamic and flexible organisations that are endowed with human capital that knows how to match experience and accrued knowledge with the ongoing need for change; Invest in continuous training and the most up-to-date management practices, thereby guaranteeing that the entire organisation is capable of tackling the strategic challenges of the present and the future. 26

27 The Group Jerónimo Martins Strategic Positioning 2.2. An Integrated Vision of Sustainable Development In its vision, Jerónimo Martins assumes an objective of sustainability based on ongoing value creation, on preserving the environment and natural resources, on improving the quality of life within the communities where its businesses operate, on safeguarding human rights and working conditions, and on promoting a fairer and more balanced social structure. Within the scope of its vision, the Group assumes four axes of development: The assessment of the external environment, which gives in-depth knowledge on the sector and the markets and the capacity to foresee the trends that are going to determine how sound businesses are in the future; The assessment of the economic, social and environmental impact of the activity, which ultimately ensures the sustainability of its licence to operate and determines major development priorities; Sustainability in the management of the company, reflected in the Group s governance model; The availability of efficient channels of communication with strategic stakeholders, which are determining factors in the match-up of expectations and in building solid commitments Assessment of the External Environment The Jerónimo Martins Group has a strong food-based identity as a result of its presence in the Distribution and Manufacturing sectors of fast moving consumer goods. These two sectors show great diversity and dynamism, but they are quite sensitive to the macroeconomic climate. Economies are increasingly interconnected as a result of globalisation and this is a reality that brings risks and opportunities that are often of extreme relevance and materiality, which requires their constant monitoring. In the food business, the growing demands of the consumer dictate the progressively faster cycles of development, favouring brands that inspire trust and a sound value proposition. Moreover, most players of the Food Sector have been going through successive processes of restructuring and optimisation of their business portfolios. This fact brings about the constant mutation of the competition panorama and increases an aggressive competitiveness. In this environment, the investment in technological development, innovation and the differentiation of business models are key factors in the positioning of the successful operators. Organisational growth, merger and acquisition operations, and international expansion are central themes in the growth strategies of Food Sector companies, in accordance 27

28 The Group Jerónimo Martins Strategic Positioning with the positioning and local, regional or even global scale that each company envisages for itself. The relationship among retailers and manufacturers is increasingly characterised by a vision that promotes interdependence, collaboration and the development of strategic partnerships in the search for greater efficiency, productivity and innovation. The partnerships developed under sector associations also take on a progressively more relevant role in the technological development of the sector and the promotion of common interests. Simultaneously, market operators are focusing increasingly more on integrating sustainable development into their business strategies, according to the following five key priorities: Understand how environmental and social issues affect the purchase decisions of its customers and consumers; Outline a communication strategy that promotes its sustainability credentials, in order to reinforce the strength of its Brands and Banners; Introduce environmental and social criteria into the selection and negotiation with its business suppliers; Identify the critical points in the sustainability of its value chain and set out development plans accordingly; Implement actions with immediate results alongside structural projects steered towards broader time horizons Main Effects of Jerónimo Martins' Activity By operating in the food business and selling fast moving consumer goods and services it is pertinent that Jerónimo Martins assumes "Sustainable Consumption" as one of its strategic guidelines and, with this perspective in mind, identifies the major impacts of its activity. It is important to mention that the economic, environmental and social effects are identified according to the Organisation's in-depth knowledge of the nature of its business and that they mirror the relevance that the Operational and Functional Divisions attribute them in the performance of its activity. The identification of the effects presented in this report is developed having the Food Distribution Business in mind, which represents more than 95% of the Group's turnover. Economic Effects Jerónimo Martins is one of the largest domestic employers, responsible for a high volume of direct and indirect employment in diverse areas, and equally operating as a driver of the local economy of the communities in which it operates. It is also one of the largest companies in the supply of fast-moving food goods, with relevant impact on national production. It operates as a catalyst for competitiveness, technological development and innovation. It also holds a vast portfolio of real estate and operates a significant group of rented stores. 28