Jerónimo Martins SGPS, S.A. First Half 2016 Results

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1 Jerónimo Martins SGPS, S.A. First Half 2016 Higher sales growth in Biedronka resulted in another very strong quarter for the Group. Consolidated sales in H1 16 grew 4.7% to 7.0 billion euro (+9.1% at constant exchange rates). Group EBITDA increased 6.8% (+10.3% at constant exchange rates) to million euro. Biedronka sales, in local currency, increased 9.8% (+10.2% in Q2), with LFL growth at 8.8% (+9.9% in Q2) Pingo Doce sales (excluding fuel) grew 4.3% (+2.5% in Q2), with LFL at 0.3% (-1.4% in Q2) Recheio sales increased by 4.2% (+4.1% in Q2), with a healthy LFL performance of 3.6% (+3.4% in Q2) Net Profit to JM increased 15.1% to million euro Net Debt as at end of June stood at million euro after the dividend payment of million euro in May Lisbon, 27 July 2016 Message from the Chairman and CEO Pedro Soares dos Santos The first half 2016 performance reflects our focus on top line growth and our commitment to cost efficiency in a food deflationary context. In Poland, the reinforced competitiveness of Biedronka is allowing the banner to maximize the benefits from a stimulant consumer demand. In Portugal, Pingo Doce and Recheio continued to increase market shares in a highly competitive landscape and a consumption slowdown. In Colombia, Ara performed according to plan and is now preparing to enter its third operating region while speeding up expansion in the market. The first half results confirm our strong belief in the ability of our banners to overcome the challenges in the markets where they operate and to deliver against their targets for the year. (Million Euro) H1 16 H1 15 Δ% (Euro) FINANCIAL CALENDAR 9M 2016 : 24 November 2016 Investor Relations Office investor.relations@jeronimo-martins.pt Cláudia Falcão Hugo Fernandes Δ% (w/o F/X) Consolidated Sales 6, , EBITDA EBITDA Mg (%) Net Profit JM w/o non-recurrent EPS ( ) Net Debt Gearing (%) claudia.falcao@jeronimo-martins.pt hugo.fernandes@jeronimo-martins.pt Jerónimo Martins, SGPS, S.A. Public Company Head office: Rua Actor António Silva, n. º7, Lisbon Share Capital: Euro 629,293, Registered at the C.R.C. of Lisbon and Tax Number:

2 Key Performance Figures NET CONSOLIDATED PROFIT (Million Euro) H1 16 H1 15 D Q2 16 Q2 15 D Net Sales and Services 6,959 6, % 3,583 3, % Gross Profit 1, % 1, % 4.1% % % 3.1% Operating Costs -1, % -1, % 3.1% % % 3.0% EBITDA % % 6.8% % % 3.5% Depreciation % % -0.7% % % -2.1% EBIT % % 11.9% % % 6.9% Net financial costs % % -18.7% % % -17.3% Gains in joint ventures and associates 8 0.1% 8 0.1% -4.5% 5 0.1% 4 0.1% 6.3% Non-Recurrent Items % % n.a % % n.a. EBT % % 14.2% % % 10.9% Income tax % % 9.6% % % 6.5% Net Profit % % 15.6% % % 12.3% Non Controlling Interests % % 25.6% % % 23.1% Net Profit attributable to JM % % 15.1% % % 11.8% EPS ( ) % % SALES EVOLUTION EBITDA EVOLUTION 2

3 Sales & Profit Analysis Consolidated sales reached 6,958.5m, a growth of 4.7% versus the same period last year (+9.1% at constant exchange rates). All banners maintained sales performance as its main focus, leading Group LFL growth to reach 6.3% in H1 16 (+6.6% in Q2 16). In Poland, the recent increase in disposable income has supported the positive trend in food consumption. That said, the operating environment continued to be dominated by promotional campaigns. Food inflation in the country was marginally positive, reaching 0.6% in the first six months. Biedronka total sales grew 9.8% (in local currency), fuelled by the remarkable 8.8% LFL sales increase. In Euro, sales reached 4,678.3m, 4.0% higher than in the previous year. In the second quarter of this year, Biedronka s LFL sales growth registered a significant increase to 9.9% that reflected the interest generated by the improved offer (implemented in H1 15) and the renewed promotional dynamics carried out by the Company this year. The favourable consumer environment in Poland due to the increase in the families available income, together with a strong month of June, have also contributed positively to the performance of the Company. In the first six months of the year, Biedronka opened 40 stores (26 net additions) and refurbished 94 locations. In Portugal, a high level of promotional intensity persisted, and food inflation was flat in H1 16. Pingo Doce sales grew by 3.9% to reach 1,686.5m. The LFL (excl. fuel) at 0.3% reflected the still negative basket inflation and the tough comparison against previous year s performance. The banner continued reinforcing its market share 1. In Q2 16, the LFL of -1.4% was also impacted by the negative calendar effect related to Easter. In the first six months of this year, Pingo Doce opened five new stores. Recheio benefited from an improving HoReCa sector and leveraged on its commercial strength. The result was a healthy sales performance in the second quarter that contributed to the 3.6% LFL growth registered in the first six months. Total sales were at 407.0m, 4.2% more than in H1 15. The Company opened one new store in June. 1 Source: TSR Nielsen Total Store Read 3

4 Ara reached sales of 101.5m in the first six months of the year. The Company, in line with the plan, opened 19 stores while preparing the opening of its third operating region. At the Group level, consolidated EBITDA reached 387.8m, 6.8% more than in the previous year (+10.3% at constant exchange rates). The respective margin was 5.6% (5.5% in H1 15), reflecting the strong sales performance and strict cost management. Biedronka s EBITDA, in the first six months, grew 7.3% (+13.3% in local currency) to reach 327.3m with the respective margin at 7.0% (6.8% in H1 15). In the second quarter, Biedronka s EBITDA, in local currency, increased 12.0% and 4.8% in euro terms. Pingo Doce delivered EBITDA of 79.1m, registering a growth of 3.1% on H1 15. EBITDA margin, in line with the same period last year, was at 4.7% in H1 16. Recheio posted EBITDA of 20.4m with its margin increasing to 5.0% (4.8% in H1 15). Losses generated by Ara and Hebe, at EBITDA level, came in at 28.0m in the first six months of the year. Financial charges for the Group were 10.5m, 2.4m below the same period last year due to a reduction in average net debt and a lower cost of debt. The strong operational performance led Net Profit attributable to Jerónimo Martins to grow 15.1% to 172.0m despite the devaluation of the zloty, which had a particularly strong effect in Q2 16. The Group Capex was 179.6m in the first six months of the year, 42.6% of which invested in Biedronka. The Free Cash Flow in the period was 99.0m, 37.6m above the same period in After the dividend payment of 166.5m in May 2016, Net Debt for the Group at end June was 274.3m and Gearing stood at 17.6%. Outlook for 2016 In Poland, growth in consumption demand is still expected. However, in an environment of low food inflation, competition will remain fierce. Biedronka is focused on capturing growth opportunities while preserving the strong price and cost positioning in the Polish market. In Portugal, food inflation is also very low and the market remains promotionally driven. Pingo Doce s priority is to consolidate its competitive positioning whilst improving shopping experience. In Colombia, Ara will open, in H2, its third distribution centre (Bogota) and will focus on its store opening programme for this year. 4

5 Losses in Ara and Hebe, at the EBITDA level, are expected not to surpass their 2015 level ( 55.5m), at constant exchange rate. Some socio-economic and political uncertainty, intensified by measures implemented by the Governments, is expected to put pressure on the Companies cost structures, namely in labour costs. Notwithstanding, the first half results validate our expectations that, focusing on top line growth, our businesses will deliver their targets. As such, in 2016, the Group expects to invest m, with Biedronka absorbing c.45% of this value. Disclaimer Statements in this release that are forward-looking statements are based on current expectations of future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties relate to factors that are beyond Jerónimo Martins ability to control or estimate precisely, such as general economic conditions, credit markets, foreign exchange fluctuations and regulatory developments. Except as required by any applicable law or regulation, Jerónimo Martins assumes no obligation to update the information contained in this release or to notify a reader in the event that any matter stated herein changes or becomes inaccurate. 5

6 Appendix INCOME STATEMENT BY FUNCTIONS (Million Euro) H1 16 H1 15 Net sales and services 6,959 6,644 Cost of sales -5,490-5,233 Gross profit 1,469 1,411 Distribution costs -1,111-1,086 Administrative costs Exceptional operating profits/losses -2-5 Operating profit Net financial costs Gains/losses in other investments -1 0 Gains in joint ventures and associates 8 8 Profit before taxes Income tax Profit before non controlling Interests Non controlling interests Net profit attributable to JM SALES BREAKDOWN (Million Euro) H1 16 H1 15 D % Q2 16 Q2 15 D % % total % total Pln Euro % total % total Pln Euro Biedronka 4, % 4, % 9.8% 4.0% 2, % 2, % 10.2% 3.0% Pingo Doce 1, % 1, % 3.9% % % 2.2% Recheio * % % 4.2% % % 4.1% Ara % % 83.0% % % 83.9% Hebe % % 15.4% % % 15.1% Mkt. Repr. and Rest. Serv % % 8.1% % % 9.3% Others & Cons. Adjustments * % % n.a % % n.a. Total JM 6, % 6, % 4.7% 3, % 3, % 3.6% * Restated figures for Q2 15 and H1 15, see note 2.2. SALES GROWTH Total Sales Growth LFL Sales Growth Q1 16 Q2 16 H1 16 Q1 16 Q2 16 H1 16 Biedronka Euro 5.1% 3.0% 4.0% PLN 9.3% 10.2% 9.8% 7.6% 9.9% 8.8% Pingo Doce 5.8% 2.2% 3.9% 1.9% -1.5% 0.1% Ex-Fuel 6.3% 2.5% 4.3% 2.1% -1.4% 0.3% Recheio * 4.4% 4.1% 4.2% 3.8% 3.4% 3.6% * Restated figure for Q1 16, see note

7 STORE NETWORK Number of Stores 2015 Openings Closings Q1 16 Q2 16 H1 16 H1 16 H1 15 Biedronka 2, ,693 2,655 Pingo Doce Recheio Ara Hebe Sales Area (sqm) 2015 * Openings Closings/ Remodellings Network Q1 16 Q2 16 H1 16 H1 16 H1 15 Biedronka 1,721,897 19,329 10,743 5,421 1,746,547 1,707,535 Pingo Doce 479,113 3,500 1, , ,155 Recheio 128, , , ,665 Ara 43,891 2,732 3, ,306 28,639 Hebe 30, ,282 1,311 31,150 27,709 * Restated figure from 1,717,944 published in 2015 FY. EBITDA MARGIN BREAKDOWN (% of sales) H1 16 % total H1 15 % total Biedronka 7.0% 84.4% 6.8% 84.0% Pingo Doce 4.7% 20.4% 4.7% 21.1% Recheio 5.0% 5.3% 4.8% 5.2% Others & Cons. Adjustments n.a % n.a % JM Consolidated 5.6% 100% 5.5% 100% BALANCE SHEET (Million Euro) H H1 15 Net Goodwill Net Fixed Assets 3,026 3,060 3,002 Total Working Capital -1,919-2,001-1,732 Others Invested Capital 1,833 1,780 2,026 Total Borrowings Leasings Accrued Interest Marketable Sec. & Bank Deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,558 1,593 1,640 Gearing 17.6% 11.7% 23.5% 7

8 CASH FLOW (Million Euro) H1 16 H1 15 EBITDA Interest Payment Other Financial Items 3 11 Income Tax Funds From Operations Capex Payment Working Capital Movement Others 0-4 Free Cash Flow FINANCIAL COSTS BREAKDOWN (Million Euro) H1 16 H1 15 Net Interest Exchange Differences -3 1 Others -2-2 Financial CAPEX (Million Euro) H1 16 Weight H1 15 Weight Biedronka 77 43% 98 55% Distribution Portugal 74 41% 54 30% Others 29 16% 25 14% Total CAPEX % % WORKING CAPITAL (Million Euro) H H1 15 Inventories in days of sales Customers in days of sales Suppliers -2,233-2,320-2,088 in days of sales Trade Working Capital -1,518-1,628-1,411 in days of sales Others Total Working Capital -1,919-2,001-1,732 in days of sales DEBT BREAKDOWN (Million Euro) H1 16 H1 15 Long Term Debt as % of Total Borrowings 70.3% 45.0% Average Maturity (years) Bond Loans Commercial Paper 65 0 Other Debt Short Term Debt as % of Total Borrowings 29.7% 55.0% Total Borrowings Average Maturity (years) Leasings 0 0 Accrued Interest & Hedging 1 6 Marketable Securities & Bank Deposits Net Debt % Debt in Euros (Total Borrowings + Leasings) 47.2% 30.3% % Debt in Zlotys (Total Borrowings + Leasings) 34.5% 58.5% % Debt in Pesos (Total Borrowings + Leasings) 18.3% 11.2% 8

9 NOTES 1. 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 2. Restatement sales in Recheio Recheio sales in 2015 included when reported intercompany sales that are now being corrected, with impact in the headings Recheio Sales and Other and Consolidated Adjustments. 2.1 Sales Evolution Sales Reported Restated H1 15 H1 15 Recheio Others & Cons. Adjustments Sales Breakdown Sales Reported Restated Q2 15 H1 15 Q1 16 Q2 15 H1 15 Q1 16 Recheio Others & Cons. Adjustments Sales Growth Reported Restated Total Sales Growth Q1 16 Q1 16 Recheio 4.3% 4.4% 9

10 3. P&L - Reconciliation note P&L in page 2 Income Statement by Functions in page 6 Non Recurrent Items in the Net Consolidated Profit Includes the values in Exceptional Operating Profit/Loss and in Gains/Losses in other investments 4. Balance Sheet - Reconciliation note (Following ESMA guidelines on Alternative Performance Measures from October 2015) Balance Sheet in this Release Net Goodwill Net Fixed Assets Total Working Capital Others Invested Capital Total Borrowings Leasing Accrued Interest Marketable Sec. & Bank Deposits Net debt Non-Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds Balance Sheet in the Annual Report Includes the value reflected in Note - Fixed assets, intangible assets and investment property Includes the Balance Sheet headings: Tangible and Intangible assets excluding the net goodwill value Includes the Balance Sheet headings: Current Trade debtors, accrued income and deferred costs; Inventories; Biological assets; Trade creditors, accrued costs and deferred income; Employee benefits; the value of Cash and cash equivalents in note Cash and cash equivalents; the value transferred from 'Others' due to its operational nature ( -7.3m in Dec 2015, - 7.3m in Jun 2016 and -9.7m in Jun 2015). Excludes: Interest accruals and deferrals in note - Financial debt Includes the Balance Sheet headings: Investment property; Investments in joint ventures and associates; Loans to associates; Available-for-sale financial assets; Non-current Trade debtors, accrued income and deferred costs; Deferred tax assets and liabilities; Income tax receivable and payable; and Provisions for risks and contingencies. Excludes: Collateral deposits associated to financial debt (Note - Trade debtors, accrued income and deferred costs); values that were transferred to working capital due to its operational nature ( -7.3m in Dec 2015, -7.3m in Jun 2016 and -9.7m in Jun 2015) Includes the Balance Sheet heading: Borrowings excluding leasings Includes the value of Financial lease liabilities on Note - Current and non-current loans Includes the Balance Sheet heading Derivative financial instruments and the value in Interest accruals and deferrals in note - Financial debt Includes: the Balance Sheet heading Cash and cash equivalents and the value of Collateral deposits associated to financial debt (note - Trade debtors, accrued income and deferred costs). Excludes the value in Cash and cash equivalents in note - Cash and cash equivalents Includes the Balance Sheet heading Non-controlling interests Includes the Balance Sheet heading: Share capital Includes the Balance Sheet heading: Share premium, Own shares, Other reserves and Retained earnings 10

11 5. Cash Flow - Reconciliation note (Following ESMA guidelines on Alternative Performance Measures from October 2015) Cash Flow in this Release EBITDA Interest Payment Other Financial Items Cash Flow in the Annual Report Included in the Cash Flow Statement heading: Cash generated from operations Includes the Cash Flow Statement headings: Interest paid and Interest received Includes the Cash Flow Statement heading: Dividends received Income Tax Funds From Operations Capex Payment Working Capital Movement Others Free Cash Flow Includes the Cash Flow Statement heading: Income tax paid Includes the Cash Flow Statement 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 Included in the Cash Flow Statement heading: Cash generated from operations Included in the Cash Flow Statement heading: Cash generated from operations 11