Message from the CEO Pedro Soares dos Santos 3 1. Introduction 3 2. Sales Analysis 3 3. Results Analysis 4 4. Balance Sheet 5 5. Outlook for

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2 First Nine Months 11 INDEX I Consolidated Management Report Message from the CEO Pedro Soares dos Santos 3 1. Introduction 3 2. Sales Analysis 3 3. Results Analysis 4 4. Balance Sheet 5 5. Outlook for II Consolidated Management Report Appendix 1. Stores Growth 7 2. Stores Network 7 3. EBITDA Margin Breakdown 7 4. Definitions 8 5. Information Regarding Individual Financial Statements 8 III Consolidated Financial Statements 1. Consolidated Financial Statements Notes to the Consolidated Financial Statements 14

3 First Nine Months 11 Consolidated Management Report I. CONSOLIDATED MANAGEMENT REPORT Message from the CEO Pedro Soares dos Santos In Poland, Biedronka, our top strategic priority, continued with its outstanding growth in sales and profits, confirming the Company's competitiveness, and strengthening further its leadership in the Polish market. In Portugal, where the macroeconomic climate remains weak with negative impact in the general sentiment and in the consumption, Pingo Doce and Recheio continued to increase their respective market shares, proving the high resilience of their business models. The strong performance in both countries confirms the Group s very positive outlook regarding growth in sales and profits for I also would like to announce that at its meeting of the 25 th and 26 th of October, after analysing different options of geographical diversification, the Board of Directors of Jerónimo Martins decided to choose Colombia as the new market to enter. 1. Introduction The Group s net profit grew by 32%, reaching Euro256 mn in the first nine months (9M) of the year and the third quarter maintained the positive trend of the first half of the year, with Biedronka, Pingo Doce and Recheio delivering sales and results growth above their respective sectors. Consolidated sales, in 9M 11, grew by 15.6% to Euro7,320 mn and EBITDA increased by 19.5%, reaching 7.2% of sales (7.0% in 9M of 2010). Consolidated net debt was reduced by 42% (Euro240 mn) compared to the same period of the previous year. 2. Sales Analysis (Million Euro) 9M 11 9M 10 D % Q3 11 Q3 10 D % % total % total Pln Euro % total % total Pln Euro Biedronka 4, % 3, % 25.3% 24.9% 1, % 1, % 23.0% 19.1% Retail Portugal 2, % 2, % 5.5% % % 5.3% Recheio % % 4.8% % % 4.2% Madeira % % 16.3% % % 10.2% Manufacturing % % -3.9% % % -6.7% Mkt. Repr. and Rest. Serv % % -2.2% % % 1.5% Consolidation Adjustments % % 13.3% % % 11.8% Total JM 7, % 6, % 15.6% 2, % 2, % 12.2% p.m. Retail Mainland 2,097 2, % % (store sales) Consolidated sales reached Euro7,320 mn, +15.6% than the first nine months of the previous year, as a result of the Like-for-Like (LFL) performance of 8.3% of the Group's sales and the contribution from new stores. In Poland, the positive trend in food consumption in the previous quarters was maintained and food inflation remained stable at 5.8% compared to the same period of the previous year. 3

4 First Nine Months 11 Consolidated Management Report Sales (Million Euro) 9M 10 9M 11 LFL Growth (9M 11/9M 10) +24.9% 4,328 3, % % 6,333 7, % 8.3% 2,010 2, % +3.8% % 1.8% Biedronka Retail Portugal Recheio Manuf. & (store sales) Others JM Consolidated Biedronka Retail Portugal Recheio JM Cons. Biedronka grew its net sales by 25.3% in local currency, as a result of the strong LFL (+14.6%) and the 14.9% increase in the sales area compared to 9M of In Portugal, the decline in the levels of consumption continued to impact the food market. In the first 9M of the year, food inflation was 1.2% compared to the same period of the previous year. Pingo Doce continued to deliver results of its strong competitive positioning, with a growth of 4.3% in sales, helped by 6 more stores than in the previous year and the LFL performance of +1.1%. The Company's LFL reflected a growth in traffic, offset, to a certain extent, by the reduction in the average ticket that remained influenced by the trading down. Recheio's sales posted a 4.8% growth as a result of the 1.8% increase in LFL sales and one new food service platform. It should be mentioned that in the two segments in which the Company operates Traditional and HoReCa it continues to increase its sales, despite the fact that there is a negative market trend in both segments. In Madeira, sales for the first 9M of the year were up 16.3% as a result of the strong increase of 6.8% in LFL sales which benefitted from the re-opening of the Company's two main stores in June 2010, following total refurbishment. In Manufacturing, the market conditions continued to be reflected on some categories performance, leading the sales in the 9M to decrease 3.9%. Sales in Marketing, Representations and Restaurant Services posted a decrease of 2.2%, reflecting the impact of the economic context in some categories. 3. Results Analysis (Million Euro) 9M 11 9M 10 (*) D Q3 11 Q3 10 (*) D Consolidated Sales 7,320 6, % 2,568 2, % Total Margin 1, % 1, % 13.5% % % 10.3% Operating Costs -1, % -1, % 10.9% % % 8.8% EBITDA % % 19.5% % % 13.1% Depreciation % % 11.4% % % 8.6% EBIT % % 23.3% % % 14.7% Financial Results % % -23.5% % % -10.4% Non Recurrent Items % % n.a 0 0.0% 0 0.0% n.a EBT % % 27.1% % % 16.4% Taxes % % 21.6% % % 7.6% Net Profit % % 28.6% % % 18.9% Non Controlling Interest % % -11.5% % % 0.0% Net Profit attr. to JM % % 31.9% % % 21.4% EPS ( ) % % Cash Flow per share ( ) % % (*) Restated see Chapter III, note 2 4

5 First Nine Months 11 Consolidated Management Report Operating Profit Consolidated EBITDA posted a 19.5% growth, reaching 7.2% of sales (7.0% in the same period of the previous year). (Million Euros) % 7.2% % Sales 7.5% % M 10 Note: Group and Biedronka EBITDA margin reclassified detail in Chapter III note 2 In Poland, the evolution of Biedronka's margin continued to reflect the benefits of scale of an operation which maintains its pace of sales growth above 20%. EBITDA generated in 9M of 2011 grew by 36.2%, in local currency (+35.7% in Euros) to 7.8% of sales (7.2% in 9M of 2010). In Distribution in Portugal, the EBITDA margin reached 6.3% of sales (6.3% in 9M of 2010), the EBITDA generated having grown 4.1%. It should be noted that this performance is a good proof of the Company's great operational resilience. In Manufacturing, the EBITDA margin drop in 9M of 2011 reflected a decision taken by the company, in previous quarters, to maintain its competitiveness even in the face of the increase in the cost of some essential raw materials. 9M % Net Result Net profit attributable to Jerónimo Martins grew by 31.9%, reaching Euro256 mn (+32.8% when excluding non-recurring items). 4. Balance Sheet (Million Euro) 9M M 10 Net Goodwill Net Fixed Assets 2,262 2,309 2,270 Net Working Capital -1,370-1,425-1,354 Others Invested Capital 1,669 1,709 1,748 Financial Debt Leasings Accrued interest Marketable sec. & Bank deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,338 1,132 1,176 Gearing 24.7% 51.0% 48.6% Consolidated net debt reduced by Euro240 mn to Euro331 mn. Gearing fell to 24.7% (48.6% in 9M of 2010). 5

6 First Nine Months 11 Consolidated Management Report Investment Programme With regards to the Group's investment programme, which reached Euro225 mn in 9M of 2011, 66.6% was allocated to Poland. Being the Group s top strategic priority, Biedronka opened 54 new stores in Poland during 3Q. 5. Outtlook for 2011 Throughout the first 9M of the year, Biedronka strengthened its market leadership in Poland, both through double-digit LFL growth and the execution of its ambitious store-opening plan. In Portugal, Pingo Doce and Recheio, which are operating in a deteriorating macro-economic environment since last year, have shown remarkable resilience and both posted growth in sales and profits. The Polish business already represents 59.1% of the sales and 64.1% of the EBITDA generated by the Group. In 2011, with the respective LFL expected at double-digit and further 200 stores (compared to the end of 2010), Biedronka will again contribute towards what is anticipated to be another year of significant growth. For 2011 the Group maintains the expectation of double-digit consolidated sales growth (at a constant exchange rate), with consolidated EBITDA growing ahead of sales. It should also be mentioned that, notwithstanding the doubts regarding the trend in the Portuguese economy, the Group believes that Pingo Doce and Recheio are prepared to continue the increase of their market shares, as the result of their proven ability to respond to the change in food consumption habits. The Group approaches the end of the year with confidence regarding the soundness that its formats have shown in the Portuguese market and essentially its execution capacity in the Polish market, where Biedronka's growth potential is keeping it at the forefront of the strategic priorities as Jerónimo Martins' main growth driver. At its meeting of the 25 th and 26 th of October, after analysing different options of geographical diversification, the Board of Directors of Jerónimo Martins decided to choose Colombia as the new market to enter. Lisbon, 25 th October, 2011 The Board of Directors 6

7 First Nine Months 11 Consolidated Management Report Appendix II. CONSOLIDATED MANAGEMENT REPORT APPENDIX 1. Sales Growth Total Sales Growth LFL Sales Growth Q1 11 Q2 11 H1 11 Q3 11 9M 11 Q1 11 Q2 11 H1 11 Q3 11 9M 11 Biedronka Euro 22.8% 33.1% 28.1% 19.1% 24.9% PLN 21.7% 31.4% 26.6% 23.0% 25.3% 11.7% 20.0% 16.0% 12.2% 14.6% Retail Portugal 4.6% 4.0% 4.3% 4.3% 4.3% 1.8% * 0.1% * 0.9% * 1.4% * 1.1% * Supermarkets 5.6% 4.1% 4.8% 4.4% 4.7% 1.7% -0.2% 0.7% 1.4% 0.9% Hypermarkets -4.2% 3.5% -0.2% 3.7% 1.2% 3.2% 2.9% 3.0% 1.1% 2.4% Recheio 3.7% 6.4% 5.2% 4.2% 4.8% 0.4% 3.3% 2.0% 1.4% 1.8% Madeira 15.9% 24.4% 20.3% 10.2% 16.3% 3.7% 5.3% 4.5% 10.2% 6.8% Manufacturing -4.6% -0.4% -2.3% -6.7% -3.9% -4.6% -0.4% -2.3% -6.7% -3.9% Mkt. Repr. and Rest. Serv. -4.8% -3.8% -4.2% 1.5% -2.2% -7.9% -7.3% -7.6% -1.5% -5.5% * Ex-petrol LFL 0.1% -0.9% -0.4% 0.6% -0.1% 2. Stores Network Number of Stores 2010 Openings Closings Network Q1 11 Q2 11 Q3 11 9M 11 9M 11 9M 10 Biedronka 1, ,756 1,559 Retail Portugal Supermarkets Hypermarkets Recheio Madeira Sales Area (sqm) 2010 Openings Closings * Network Q1 11 Q2 11 Q3 11 9M 11 9M 11 9M 10 Biedronka 938,218 11,989 29,017 35,318 3,739 1,010, ,066 Retail Portugal 437, ,488 3,150 3, , ,317 Supermarkets 359, ,488 3,150 1, , ,036 Hypermarkets 78, ,513 75,768 78,281 Recheio 123, , , ,901 Madeira 14, ,253 14,253 * including changes of sales area due to remodellings 3. EBITDA Margin Breakdown (% of sales) 9M 11 9M 10 (*) Distribuiton Poland 7.8% 7.2% Distribution Portugal 6.3% 6.3% Manufacturing and Services 10.0% 12.3% (*) Restated see Chapter III, note 2 7

8 First Nine Months 11 Consolidated Management Report Appendix 4. 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); Cash Flow per share: (Net Profit + Depreciation Deferred tax Non-recurrent items) / Number of Shares; Gearing: Net Debt / Shareholder Funds; EBITDA Retail Margin in Portugal - Reclassification of Fees to Shareholders: Retail Portugal's EBITDA margin was subject to reclassification, having excluded from the EBITDA, the costs with services from Shareholders. This allows a more accurate analysis of business area performance aligning the information provided to the market with that used internally for assessing the business area's performance. The part of these costs not eliminated in the consolidation process is now included in the Group's Holdings and continue to affect the consolidated EBITDA. 5. 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. will not be disclosed as they do not include significant information. 8

9 III. CONSOLIDATED FINANCIAL STATEMENTS First Nine Months 11

10 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR SEPTEMBER 2011 AND 2010 Euro thousand Notes 9 Months Months 2010(*) 3 rd Quarter rd Quarter 2010(*) Sales and services rendered 3 7,319,767 6,333,148 2,568,263 2,289,858 Cost of sales (6,007,139) (5,127,311) (2,096,562) (1,848,207) Supplementary income and costs 5 348, , ,767 98,938 Gross profit 1,661,363 1,463, , ,589 Distribution costs 6 (1,148,162) (1,032,004) (384,470) (355,136) Administrative costs 6 (142,820) (131,288) (48,359) (42,785) Exceptional operating profits/losses 9.1 (4,683) (1,370) (29) (62) Operating profit 365, , , ,606 Net financial costs 7 (23,714) (30,985) (8,170) (9,126) Gains in associated companies Gains/Losses in other investments 9.2 (1,500) (149) - - Profit before taxes 340, , , ,686 Income taxes 8 (70,953) (58,352) (31,732) (29,493) Profit before non-controlling interests 269, , , ,193 Attributable to: Non-controlling interests 14,126 15,958 12,053 12,050 Jerónimo Martins Shareholders 255, , ,829 92,143 Basic and diluted earnings per share- Euros To be read with the attached notes to the consolidated financial statements (*) Restated see note 2 10

11 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2011 AND DECEMBER 2010 Euro thousand Notes Assets Tangible assets Investment properties Intangible assets Investments in associated Companies Loans to joint-ventures Available-for-sale financial investments Trade debtors and deferred costs Derivative financial instruments Deferred tax assets Total non-current assets Inventories Taxes receivable Trade debtors, accrued income and deferred costs Derivative financial instruments Cash and cash equivalents Total current assets Total assets Shareholders equity and liabilities Share capital Share premium Own shares Fair value and other reserves Retained earnings 10 2,154,502 2,192, ,602 52, , , , ,277 7,015 67,203 71, ,314 67,360 3,158,046 3,255, , ,711 30,992 48, , , , , ,927 1,085, ,433 4,243,866 4,159, , ,293 22,452 22,452 (6,060) (6,060) ,372 63, , ,988 1,039, ,106 Non-controlling interests 298, ,706 Total Shareholders equity Borrowings Derivative financial instruments Employee benefits Deferred profits- state grants Provisions for risks and contingencies Deferred tax liabilities Total non-current liabilities 1,338,414 1,131, , , ,875 16, ,172 30, ,081 22,907 93,319 96, , ,440 Trade creditors, accrued costs and deferred income 1,887,127 1,895,411 Derivative financial instruments ,763 Borrowings , ,217 Taxes payable 104, ,308 Deferred profits- state grants Total current liabilities Total Shareholders equity and liabilities To be read with the attached notes to the consolidated financial statements 2,163,311 2,224,770 4,243,866 4,159,022 11

12 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY 9 Months Months rd Quarter 2011 Euro thousand 3 rd Quarter 2010 Currency translation differences (68,450) 15,075 (65,134) 18,927 Fair value of cash flow hedging 2,258 (5,717) (3,057) 1,501 Fair value of hedging instruments on foreign operations 6,757 (3,456) 6,322 (3,931) Fair value of available-for-sale financial investments (738) (402) (438) 37 Gains/losses directly recognised in equity (60,173) 5,500 (62,307) 16,534 Net profit 269, , , ,193 Total gains/losses recognised 209, ,344 61, ,727 Attributable to: Non-controlling interests 15,014 14,118 11,157 12,533 Jerónimo Martins Shareholders 194, ,226 50, ,194 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Euro thousand Notes Shareholders equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A. Share Capital Share Premium Own Shares Fair value and other reserves Retained Earnings Total Noncontrolling Interests Shareholders Equity Balance Sheet at 31 December ,293 22,452 (6,060) 55,184 77, , ,636 1,065,694 Equity changes in 2010 Currency translation differences in the Nine Months of ,075 15,075 15,075 Fair value of cash flow hedging 14.1 (3,877) (3,877) (1,840) (5,717) Fair value of hedging instruments on foreign operations Fair value of available-for-sale financial investments 14.1 (3,456) (3,456) (3,456) 14.1 (402) (402) (402) Gains/losses directly recognised in equity 7,340 7,340 (1,840) 5,500 Net profit in the Nine Months of , ,886 15, ,844 Total gains/losses recognised during the year 7, , ,226 14, ,344 Dividends (89,866) (89,866) (14,804) (104,670) Balance Sheet at 30 September ,293 22,452 (6,060) 62, , , ,950 1,176,368 Balance Sheet at 31 December ,293 22,452 (6,060) 63, , , ,706 1,131,812 Equity changes in 2011 Currency translation differences in the Nine Months of (68,450) (68,450) (68,450) Fair value of cash flow hedging ,370 1, ,258 Fair value of hedging instruments on foreign operations Fair value of available-for-sale financial investments ,757 6,757 6, (738) (738) (738) Gains/losses directly recognised in equity (61,061) (61,061) 888 (60,173) Net profit in the Nine Months of , ,676 14, ,802 Total gains/losses recognised during the year (61,061) 255, ,615 15, ,629 Dividends 14.2 (2,686) (2,686) Non-controlling interests acquisition 4 (84) (84) (257) (341) Balance Sheet at 30 September ,293 22,452 (6,060) 2, ,580 1,039, ,777 1,338,414 To be read with the attached notes to the consolidated financial statements 12

13 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED CASH FLOW STATEMENT FOR SEPTEMBER 2011 AND 2010 Operating Activities Notes 9 Months 2011 Euro thousand 9 Months 2010 (*) Cash generated from operations 575, ,668 Interest paid (22,157) (35,792) Income taxes paid (50,849) (31,213) Cash Flow from operating activities 502, ,663 Cash flow from investment activities (242,353) (278,498) Cash Flow from financing activities (102,163) (185,737) Net changes in cash and cash equivalents 158,363 47,428 Cash and cash equivalents changes Cash and cash equivalents at the beginning of the year 303, ,501 Net changes in cash and cash equivalents 158,363 47,428 Effect of currency translation differences (23,796) 5,344 Cash and cash equivalents at the end of 3 rd Quarter , ,273 To be read with the attached notes to the consolidated financial statements (*) Restated see note 2 CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD Euro thousand 9 Months Months rd Quarter rd Quarter 2010 Cash Flow from operating activities 502, , , ,687 Cash Flow from investment activities (242,353) (278,498) (81,853) (110,278) Cash Flow from financing activities (102,163) (185,737) 12,534 (107,423) Cash and cash equivalents changes 158,363 47, ,801 77,986 13

14 Notes to the Consolidated Financial Statements 30 September 2011 and 2010 Index to the Notes to the Consolidated Financial Statements Page 1 Activity Accounting policies Segments reporting Businesses acquisitions and changes to the consolidation scope Supplementary income and costs Distribution and administrative costs Net financial costs Income tax recognised in the income statement Exceptional operating profits/losses and gains/losses in other investments Fixed assets and investment property Derivative financial instruments Available-for-sale financial investments Cash and cash equivalents Capital and reserves Earnings per share Borrowings Provisions and adjustments to the net realisable value Contingencies Related parties

15 1 Activity Notes to the Consolidated Financial Statements 30 September 2011 and 2010 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 is essentially devoted to the production, distribution and sale of food and other fast moving consumer goods products. The Group operates in Portugal and Poland. Head Office: Rua Tierno Galvan, Torre 3, 9º, J Lisbon Share Capital: 629,293,220 euros Registered at the Commercial Registry Office of Lisbon and Tax Number: JMH has been listed on Euronext Lisbon (ex-lisbon and Porto Stock Exchange) since The Board of Directors approved these consolidated financial statements on 25 th October Accounting policies All amounts are shown in thousand euros (EUR thousand) unless otherwise stated. The amounts presented for quarters, and the corresponding changes are not audited. The 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). The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and with the same standards and accounting policies adopted by the Group on the elaboration of the annual financial statements, including mainly 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 2010 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 Corporate Governance chapter of 2010 Annual Report, the Company, as a result of its normal activity, is exposed to several risks which are monitored and mitigated throughout the year. During the first nine months of 2011, there were no material changes in addition to the notes discriminated in this annex, that could significantly change the assessment of the risks that the group is exposed to. In relation to 2010, the European Union issued the Regulation no. 149/2011, which adopted some improvements to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34 and IFRIC 13. Its implementation is mandatory for financial years beginning on January 1, 2011, having no material impact on the Group s Financial Statements. In May 2011 the IASB issued IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements, IFRS 12 Disclosures of Interests in Other Entities, IFRS 13 - Fair Value Measurement, in June 2011 were issued amendments to IAS 1 - Presentation of Financial Statements and IAS 19 - Employee Benefits. All these standards are still waiting to be endorsed by the European Union, and its mandatory implementation should occur for annual periods beginning on January 1 st, The most relevant impacts of its implementation regard, changes in consolidation method for joint ventures as well as changes in the presentation of financial information. Their application will not result in changes to the Group s Equity. Changes in Basis for Preparation (Reclassifications) Over the past years, with the development observed in the Polish market s operations, the Management has privileged the establishment of long-term relationships with its suppliers, namely through the negotiation of prices, volumes, packages and payment terms. In this sense it has agreed with the majority of its suppliers, to extend payment terms, bearing, in compensation, financial expenses, thereby obtaining greater flexibility in the management of its working capital. Respecting their accounting nature, these financial expenses have been, until now, classified in the Net financial costs line. However, this value has been gaining relevance with the growth of Biedronka s operations and the management sees this flow as part of its cash flow generation and dependent on the evolution of its activity, as such, the Group decided to classify this amount as Supplementary costs which contribute to the total margin. In order to have comparable financial information, we have restated the financial statements of the previous year, as shown below: 15

16 Notes to the Consolidated Financial Statements 30 September 2011 and Months rd Quarter 2010 Published Reclassification Restated Published Reclassification Restated Sales and services rendered 6,333,148-6,333,148 2,289,858-2,289,858 Cost of sales (5,127,311) - (5,127,311) (1,848,207) - (1,848,207) Supplementary income and costs 278,590 (20,756) 257, ,931 (6,993) 98,938 Gross profit 1,484,427 (20,756) 1,463, ,582 (6,993) 540,589 Distribution costs (1,032,004) - (1,032,004) (355,136) - (355,136) Administrative costs (131,288) - (131,288) (42,785) - (42,785) Exceptional operating profits/losses (1,370) - (1,370) (62) - (62) Operating profit 319,765 (20,756) 299, ,599 (6,993) 142,606 Net financial costs (51,741) 20,756 (30,985) (16,119) 6,993 (9,126) Gains/Losses in associated companies Gains/Losses in other investments (149) - (149) Profit before taxes 268, , , , 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 in equity. The main exchange rates applied on the balance sheet date are those listed below: Rate on Average rate for the 30 September Months 2011 Polish Zloty (PLN) US Dollar (USD) Segments reporting Management monitors the performance of the business based on a geographical and business nature perspective. Due to the fact that the business units in the distribution area in Portugal share a set of competences, the Group analyse, on a quarterly basis, its segments in an aggregate performance perspective. In addition, the Group also separate the distribution business unit in Poland. Apart from these, there are also other businesses, but due to their minor materiality they are not reported separately. Business segments: Portugal Distribution: comprises the business unit of JMR (Pingo Doce supermarkets), the wholesale business unit Recheio and Madeira business unit (Pingo Doce supermarkets and Recheio Cash & Carry); Poland Distribution: the business unit using the brand Biedronka; Others, eliminations and adjustments: includes i) the business units with minor materiality (Unilever Jerónimo Martins, Gallo Worldwide, Marketing Services and Representations, Restaurants and pharmacies in Poland), ii) the Holding companies and iii) the 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 non-recurrent results. 16

17 Notes to the Consolidated Financial Statements 30 September 2011 and 2010 Detailed Information by Segment at September 2011 and 2010 Portugal Distribution Poland Distribution Others, eliminations and adjustments Total JM Consolidated (*) (*) Net Sales and Services 2,787,563 2,658,350 4,327,874 3,465, , ,858 7,319,767 6,333,148 Inter-segments (271) (345) External Customers 2,787,368 2,658,080 4,327,433 3,465, , ,203 7,319,402 6,332,771 Operational Cash-Flow (EBITDA) 175, , , ,830 14,348 24, , ,110 Depreciations and Amortisations (81,287) (74,579) (71,678) (62,336) (3,854) (3,816) (156,819) (140,731) Operational Result (EBIT) 93,892 93, , ,494 10,494 20, , ,379 Financial Results (24,943) (30,813) Net Result Attributable to JM 255, ,886 TOTAL ASSETS (1) 2,210,455 2,248,883 1,698,069 1,660, , ,639 4,243,866 4,159,022 TOTAL LIABILITIES (1) 1,539,918 1,615,821 1,066,500 1,147, , ,862 2,905,452 3,027,210 Investments in Fixed Assets 71,447 94, , ,148 3,615 3, , ,683 (1) The comparable amounts of total assets and liabilities are reported to 31 December 2010 (*) Restated see note 2 Reconciliation between EBIT and the Operational Result of the Income Statement by Functions September 2011 September 2010 (*) EBIT 370, ,379 Non recurrent results (4,683) (1,370) Operational Result 365, ,009 (*) Restated see note 2 Information by Geographical Segments at September 2011 and 2010 Net Sales and Services Portugal 2,985,471 2,862,444 Poland 4,334,296 3,470,704 Total 7,319,767 6,333,148 4 Businesses acquisitions and changes to the consolidation scope On March 15 th 2011, 51% of the share capital of the company Caterplus Comercialização e Distribuição de Produtos de Consumo, Lda., were acquired by the company Jerónimo Martins Distribuição de Produtos de Consumo, Lda., which now owns 100% of the share capital of that company. The difference between the price paid and the value of the non-controlling interests acquired, were recognized directly in equity as the Group had already control over the acquired company. 17

18 Notes to the Consolidated Financial Statements 30 September 2011 and Supplementary income and costs September 2011 September 2010 (*) Supplementary gains 363, ,187 Cash discount received 30,859 29,256 Cash discount paid (2,473) (2,684) Electronic payment commissions (12,890) (12,087) Other supplementary costs (29,905) (25,361) Provisions for debtors suppliers (695) (477) 348, ,834 (*) Restated Supplementary gains concern to profits obtained by the Group through the distribution of goods, namely, rental of spaces, participation in birthday events, rental of shelf s, etc. Supplementary costs concern to the same nature of supplementary gains mentioned, paid by subsidiaries operating in the manufacturing and services segments, as well as financial expenses incurred by Poland Retail (see note 2 - changes in Basis for preparation). 6 Distribution and administrative costs September 2011 September 2010 Supplies and services 271, ,338 Advertising costs 49,600 54,515 Rents 152, ,098 Staff costs 558, ,943 Depreciations, amortisations and assets profit/loss 155, ,762 Transportation costs 97,769 84,390 Other operational profit/loss 5,362 7,246 1,290,982 1,163,292 7 Net financial costs September 2011 September 2010 (*) Interest expense (24,436) (28,473) Interest received 6,025 2,897 Dividends Net foreign exchange (1,563) (328) Investment property: Changes to fair value (note 10) (14) (14) Other financial costs and gains (3,762) (4,977) Fair value of financial investments held for trade: Derivative instruments 17 (146) (*) Restated (23,714) (30,985) The interest expense heading includes the interests regarding loans measured at amortized cost, as well as interests on fair value and cash flow hedging instruments (note 10). As explained in note 2, financial expenses related to the extension of payment terms from suppliers in the retail segment of Poland were restated to Supplementary costs. Other financial costs and gains include costs with debt issued by the Group. 18

19 Notes to the Consolidated Financial Statements 30 September 2011 and Income tax recognised in the income statement September 2011 September 2010 Current income tax Current tax of the year (60,540) (52,591) Adjustment to prior year estimation Deferred tax (60,440) (52,444) Temporary differences created and reversed (12,514) (7,283) Change to the recoverable amount of tax losses and temporary differences from previous years 2,001 1,375 (10,513) (5,908) Total income taxes (70,953) (58,352) 9 Exceptional operating profits/losses and gains/losses in other investments 9.1 Exceptional operating profits/losses September 2011 September 2010 Losses with businesses disposals - (1,218) Losses related to natural disaster in Madeira - (1,008) Indemnities related to termination of lease agreement (4,907) - Losses with organizational restructuring program (173) - Impact of actuarial assumptions changes Reimbursement of notary fees resulting from court decision 119 1,379 Impairment of assets (496) (402) Others 51 (121) (4,683) (1,370) 9.2 Gains/Losses in other investments September 2011 September 2010 Impairment of investment properties (1,500) - Losses with the disposal of available-for-sale financial investments - (149) (1,500) (149) 10 Fixed assets and investment property Tangible assets Investment property Intangible assets Total Net value at 31 December ,192,824 52, ,368 3,108,239 Foreign exchange differences (90,902) - (40,091) (130,993) Increases 211, , ,759 Disposals and write-offs (8,073) - (7,128) (15,201) Transfers (916) Depreciation and impairment losses (150,009) (1,500) (7,269) (158,778) Fair value changes - (14) - (14) Net value at 30 September ,154,502 50, ,958 3,028,062 As a consequence of the currency translation adjustment of the assets in the Group s business in Poland, the Goodwill related to this business, totalling PLN 1,282,278 thousand, was updated negatively in EUR 31,490 thousand. No valuations were made on the land allocated to operational activities, which are recognised at their market value. 19

20 Notes to the Consolidated Financial Statements 30 September 2011 and 2010 From the disposals and write-offs made in the 2 st recognised as a loss in the profit and loss. Quarter 2011, an amount of EUR 496 thousand were 11 Derivative financial instruments Notional September 2011 December 2010 Assets Liabilities Notional Assets Liabilities Non Non Non Non Current Current Current Current Current Current Current Current Derivatives held for trading Interest rate swap Currency forwards (USD) 10 millions EUR 1.9 millions USD 10 millions EUR Fair value hedging derivatives USD loan hedging 96 millions USD millions USD - - 6,776 1,243 Cash flow hedging derivatives Interest rate swap (EUR) millions EUR , millions EUR ,783 Interest rate swap (PLN) 189 millions PLN millions PLN Foreign operation investments hedging derivatives Currency Forwards (PLN) 375 millions PLN 3, Total derivatives held for trading Total hedging derivatives 3, , ,763 16,201 Total assets/liabilities derivatives 3, , ,763 16,649 In September 2011 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 1,596 thousand. 12 Available-for-sale financial investments Regarding the financial assets available-for-sale, the reduction of EUR 738 thousand respects to changes in the fair value of listed equity holdings, at the reporting date of these financial statements. 13 Cash and cash equivalents September 2011 December 2010 Bank deposits 308, ,609 Short-term investments 127, ,445 Cash and cash equivalents 2,904 2, , ,927 The short-term investments include short-term bank deposits and other negotiable funds for which provisions were booked to reduce it to the realizable value (note 17). 20

21 Notes to the Consolidated Financial Statements 30 September 2011 and Capital and reserves 14.1 Fair value and other reserves Land and buildings Cash-flow Hedging reserve Available-forsale financial translation Currency investments reserve Balance as at 1 January ,116 (6,781) (455) (12,447) 63,433 Fair value adjustment of financial investments: - Gross value - 3,062-9,194 12,256 - Deferred/current tax - (804) - (2,437) (3,241) - Non-controlling interests - (888) - - (888) Fair value adjustment of available-for-sale financial investments: - Gross value - - (738) - (738) Currency translation differences: - In the year (2,411) (70,392) (72,673) - Deferred tax 458 (25) - 3,790 4,223 Balance as at 30 September ,163 (5,306) (1,193) (72,292) 2,372 Total Land and buildings Cash-flow Hedging reserve Available-forsale financial translation Currency investments reserve Balance as at 1 January ,931 (4,985) 58 (24,820) 55,184 Fair value adjustment of financial investments: - Gross value - (7,760) - (4,626) (12,386) - Deferred/current tax - 2,043-1,170 3,213 - Non-controlling interests - 1, ,840 Fair value adjustment of available-for-sale financial investments: - Gross value - - (402) - (402) Currency translation differences: - In the year 671 (13) - 16,251 16,909 - Deferred tax (127) 3 - (1,710) (1,834) Balance as at 30 September ,475 (8,872) (344) (13,735) 62,524 Total 14.2 Dividends Dividends distributed in 2011 in the amount of EUR 2,686 thousand, were paid to non-controlling interests in the Group companies. 15 Earnings per share September 2011 September 2010 Ordinary shares issued at the beginning of the year 629,293, ,293,220 Own shares at the beginning of the year 859, ,000 Shares issued during the year - - Weighted average number of ordinary shares 628,434, ,434,220 Diluted net result attributable to ordinary shares 255, ,886 Basic and diluted earnings per share Euros

22 Notes to the Consolidated Financial Statements 30 September 2011 and Borrowings In June 2011 the seven years issue of the Bond Loan in the amount of USD 84,000 thousand placed by JMR Gestão de Empresas de Retalho, SGPS, S.A., on the US market (Private Placement), was reimbursed. In September 2011 the four years issue of the bond Loan in the amount of EUR 35,000 thousand placed by Jerónimo Martins, SGPS, S.A., was reimbursed. On the third quarter 2011 Jerónimo Martins has renegotiated a commercial paper program on what maturities, amounts and pricing concerns Current and non-current loans Non-current loans September 2011 December 2010 Bank loans 78, ,746 Bond loans 485, ,228 Financial lease liabilities 21,676 39,208 Current loans 584, ,182 Bank overdrafts 13,294 7,671 Bank loans 99,915 80,536 Bond loans 35,000 98,643 Financial lease liabilities 22,969 32, , , Financial debt Since the Group entered several foreign exchange rate risk and interest risk hedging operations, as well as shortterm investments, the net consolidated financial debt at the balance sheet date is as follows: September 2011 December 2010 Non-current loans (note 16.1) 584, ,182 Current loans (note 16.1) 171, ,217 Derivative financial instruments (note 11) 8,704 24,366 Interest on accruals and deferrals 2, Bank deposits (note 13) (308,184) (131,609) Short-term investments (note 13) (127,406) (169,445) 331, , Provisions and adjustments to the net realisable value Opening balance Set up and reinforced Unused and reversed Foreign exchange difference Used Closing balance Doubtful debtors 21,825 2,752 (312) (354) (650) 23,261 Inventories 15, (2,299) (779) - 12,973 Financial Investments (note 12) 2, ,309 Short terms investments Total fair value adjustments 40,132 3,862 (2,611) (1,133) (650) 39,600 Employee benefits 30,839 2,237 (742) - (1,162) 31,172 Provisions for risks and contingencies 22,907 1,286 (1,365) (637) (2,110) 20,081 Total of provisions 53,746 3,523 (2,107) (637) (3,272) 51, Contingencies Following the contingencies mentioned in the 2010 Annual Report, changes occurred on the headings a), h), l), o), and p), as well as a new contingency described bellow: 22

23 Notes to the Consolidated Financial Statements 30 September 2011 and 2010 a) In 1999, as a result of the acquisition of two companies that held establishments previously owned by former franchisees of ITMI Norte-Sul Portugal Sociedade de Desenvolvimento e Investimento, S.A., which together with Regional de Mercadorias Sociedade Central de Aprovisionamento, S.A., filed a case against various Group companies, holding them liable for those ex-franchisees' alleged noncompliance with the contract they had signed with ITMI, demanding an indemnity payment of EUR 14,600 thousand. The court ruled in favour of the defendants, denying the plaintiff s claim. Meanwhile the plaintiff appealed to the Court of Appeal, which is still pending. The Board of Directors maintains its belief that the amount requested will probably not be granted, and so as referred to in the Group's affiliates annual reports of previous years, no provision has been set up for any indemnity; h) The Portuguese Tax Authorities assessed Feira Nova Hipermercados, S.A. (merged into Pingo Doce Hipermercados, S.A.) and Pingo Doce Distribuição Alimentar, S.A. the amounts of EUR 2,966 thousand and EUR 2,324 thousand, respectively. These additional assessments are related to the amount booked by these companies as shrinkage (loss of inventory through crime or wastage), which was not accepted as a tax deductible cost, for CIT purposes and also the associated VAT, since there are no evidence that the goods were not sold. These assessments respect to the years of 2002, 2003 and Feira Nova and Pingo Doce s Management, supported by their lawyers and tax consultants, have challenged these assessments, believing that the Tax Authorities have no arguments to request these payments. In consequence, Feira Nova was notified by the Lisbon Tax Court that the judicial claim filed against the Portuguese tax authorities assessment, regarding Value Added Tax (VAT), for the tax year 2002, an amounting to, approximately, EUR 1,200 thousand, was ruled in favour of the company. Since the tax authorities did not react against it, this Court decision is final; l) The Tax Authorities assessed JMR Gestão de Empresas de Retalho, SGPS, S.A. for the amount of EUR 16,078 thousand due to the fact that JMR should restate the dividends received, in 2003 and 2004, from its subsidiary in the Madeira Free Zone, considering them as interest for tax purposes. According to the Portuguese Tax Authorities the said income should be subject to Corporate Income Tax in opposition to the dividends received that are exempt. JMR s Management, supported by their tax consultants and legal advisors, consider that the report issued by the Tax Authorities does not have any legal basis or validity, and will use all the resources at its disposal to challenge it. The judicial claims presented were ruled in favour of the Portuguese tax authorities, therefore JMR s Management, supported by its lawyers and tax advisors opinion, still believing that those decisions are not valid nor have any legal grounds has challenged and opposed to any consequences that they may cause. Moreover, no changes will be introduced to its financial statements; o) The Fiscal Authorities claimed from Unilever Bestfoods Portugal Produtos Alimentares, S.A., the amount of EUR 4,343 thousand for non-acceptance of withholding tax exemption carried out by the company, regarding the payment of dividends in The Management of the company, supported by its lawyers and fiscal consultants, has contested these charges, believing that the Fiscal Authorities are not justified in requesting this payment. By decision dated on March 24 th 2011 the court has decided in favour of the Company. This decision has become final, and this matter is definitively closed. p) The Tax Authorities assessed JMR Gestão de Empresas de Retalho, SGPS, S.A. and Jerónimo Martins, SGPS, S.A for the amounts of EUR 507 thousand and EUR 480 thousand, respectively, both for the year The assessments concern swap payments, treated as interest in that year, which the tax authorities consider that should have been subject to withholding tax. Both JMR and Jerónimo Martins, supported by its tax consultants, have challenged these assessments, believing that the tax authorities have no grounds to request the payment of such amounts; s) In the beginning of September Néstle filed a lawsuit against Unilever Jerónimo Martins, Lda., claiming an indemnity payment of EUR 2,100 thousand for alleged similarity and confusion in the packaging of competing products. The lawsuit was contested within the deadline established thereto, and now awaits further development. This lawsuit follows the injuction proceeding filed by Néstle, which was decided in its favour and appealled by Unilever Jerónimo Martins, Lda. to the Court of Appeal. 19 Related parties 56.13% of the Group is owned by the Sociedade Francisco Manuel dos Santos and no transactions occurred between this Company and any company of the Group in the first nine months of 2011, neither were there any amounts payable or receivable between them on September 30 th, Balances and transactions of Group companies with related parties are as follows: Sales and services rendered Stocks purchased and services supplied September 2011 September 2010 September 2011 September 2010 Joint-Ventures ,549 71,405 Associated companies

24 Notes to the Consolidated Financial Statements 30 September 2011 and 2010 Accounts payable Accounts receivable September 2011 December 2010 September 2011 December 2010 Joint-Ventures ,118 8,565 Associated companies Balances and transactions with related parties not eliminated in the consolidation process, were as follows: Sales and services rendered Stocks purchased and services supplied September 2011 September 2010 September 2011 September 2010 Joint-Ventures , Associated companies Accounts payable Accounts receivable September 2011 December 2010 September 2011 December 2010 Joint-Ventures ,064 4,710 Associated companies All the transactions with the jointly controlled companies (joint ventures) and associate companies were made under normal market conditions, i.e., the transaction value corresponds to prices that would be applicable between non related parties. Outstanding balances between Group companies and related parties, being a result of a trade agreement, are settled in cash, and are subject to the same payment terms as those applicable to other agreements celebrated between Group companies and their suppliers. The amounts receivable are not covered by insurance and no guarantees are given or received, as the Group holds a relevant influence over these companies. 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. Lisbon, 25 h October, 2011 The Certified Accountant The Board of directors 24