CONSOLIDATED REPORT & ACCOUNTS First Nine … · II – Consolidated Management Report Appendix 1. Sales Growth ... Mkt. Repr. and Rest. Serv. 56 0.6% 56 0.6% 0.9% 20 0 ... Non Controlling

2013FIRSTHALFRESULTS

CONSOLIDATED REPORT & ACCOUNTS First Nine Months 2015

Unaudited

R&A - First Nine Months 2015

Index

INDEX

I – Consolidated Management Report

Message from the Chairman and CEO - Pedro Soares dos Santos 3

1. Sales Analysis 3

2. Results Analysis 4

3. Balance Sheet 5

4. Outlook 2015 6

II – Consolidated Management Report Appendix

1. Sales Growth 7

2. Store Network 7

3. EBITDA Margin Breakdown 7

4. Financial Costs Breakdown 7

5. Definitions 7

6. Information Regarding Individual Financial Statements 7

III – Consolidated Financial Statements

1. Consolidated Financial Statements 8

2. Notes to the Consolidated Financial Statements 12


Consolidated Management Report

3

CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO – Pedro Soares dos Santos

‘In the first nine months of the year the Group strengthened its competitive position in all markets where i t operates while strongly increasing cash flow generation.

Biedronka strengthened its market share and continues reinforcing the competitiveness of its model for the

future.

In Portugal, Pingo Doce and Recheio continued to outperform their respective markets.

In Colombia, in line with our expansion plan, we opened a second region in the Caribbean Coast, and we had 110 stores operating under the Ara brand at the end of September.

With most of the year behind us, I feel reassured by the proven capacity of all our Companies to leverage

on their differentiated strategies and to keep on track to deliver our targets, with top line growth as their main priority.’

1. Sales Analysis

(Million Euro)

% total % total Pln Euro % total % total Pln Euro

Biedronka 6,836 67.2% 6,191 66.3% 9.8% 10.4% 2,337 66.2% 2,162 65.9% 8.4% 8.1%

Pingo Doce 2,511 24.7% 2,391 25.6% 5.0% 888 25.2% 835 25.4% 6.4%

Recheio 631 6.2% 603 6.5% 4.6% 238 6.7% 229 7.0% 3.9%

Mkt. Repr. and Rest. Serv. 56 0.6% 56 0.6% 0.9% 20 0.6% 20 0.6% 0.3%

Others & Cons. Adjustments 140 1.4% 92 1.0% n.a. 48 1.3% 35 1.1% n.a.

Total JM 10,175 100% 9,333 100% 9.0% 3,531 100% 3,281 100% 7.6%

D % Q3 15 Q3 14 D %9M 15 9M 14

In the first nine months of the year, Group sales increased 9.0% to €10,175m (+8.7% excluding the currency impact).

6.191

2.391

603148

9.333

6.836

2.511

631196

10.175

Biedronka Pingo Doce Recheio Others &Cons.Adjust.

JMConsolidated

Sales (Million Euro)

9M 14 9M 15

+33.1%

+10.4%

+4.6%

+5.0%

+9.0%

The performance in the period was the result of solid delivery across all banners which drove Group LFL sales to increase by 3.3%.

In Poland, the competitive landscape remained intense and promotion oriented. Food deflation was at -2.2%

in the nine months, softening from -2.1% in second quarter of 2015 to -0.9% in third quarter of 2015.

Biedronka total sales grew 10.4% to €6,836m both driven by 2.9% LFL sales increase and by our continued store expansion programme. In the third quarter of the year, Biedronka maintained a strong LFL of 3.5%

with volume growth substantially overcompensating basket deflation which remained close to -3%. In the first nine months of the year, the Company opened 92 stores (72 net additions).

I

2.9%

4.1%* 4.2%

3.3%

LFL Growth (9M 15/9M 14)

* Ex-Fuel LFL: 4.7%

9.5%

2.0%2.6%

5.3%

Biedronka PingoDoce

Recheio JM Cons.

Crescimento LFL (1T 12/1T 11)



4

In third quarter of 2015 Biedronka focused on its revamping programme and its in-store adjustments in

order to benefit fully from the new offer already in place.

In Portugal, while food inflation was 1.2% for the nine months of the year (+1.7% in third quarter of 2015) the market remained very promotion-driven.

Pingo Doce had another very strong quarter with LFL sales growth, excluding fuel, reaching 4.7% in the nine

months of the year (+5.2% in third quarter of 2015).

Pingo Doce maintained its promotional strategy while continuing to improve the shopping experience (21 remodellings in the nine months) and quality and innovation of the overall offer. Pingo Doce opened 19

stores, two of which replaced existing locations.

Recheio delivered another sound quarter with LFL reaching 4.2% in nine months of the year (+3.9% in third quarter of 2015). Total sales increase 4.6% over the nine months of 2014.

In the nine months of the year, Ara and Hebe sales were €83m and €72m, respectively.

In September, Ara opened its second distribution centre entering in the Caribbean Coast region, and ended

the month with a total of 110 stores.

2. Results Analysis

(Million Euro) 9M 15 9M 14 D Q3 15 Q3 14 D

Net Sales and Services 10,175 9,333 9.0% 3,531

3,281

7.6%

Total Margin 2,169 21.3% 1,980 21.2% 9.5% 757 21.5% 694 21.1% 9.2%

Operating Costs -1,581 15.5% 1,432 15.3% 10.4% -533 -15.1% -488 -14.9% 9.3%

EBITDA 588 5.8% 547 5.9% 7.3% 224 6.4% 206 6.3% 8.9%

Depreciation -221 -2.2% -205 -2.2% 7.6% -74 -2.1% -70 -2.1% 5.4%

EBIT 367 3.6% 342 3.7% 7.1% 151 4.3% 136 4.1% 10.8%

Financial Results -20 -0.2% -26 -0.3% -24.7% -7 -0.2% -8 -0.3% -18.8%

Profit in Associated Companies 15 0.1% 15 0.2% -0.4% 7 0.2% 7 0.2% 1.6%

Non-Recurrent Items -7 -0.1% -1 0.0% n.a. -3 -0.1% -1 0.0% n.a.

EBT 354 3.5% 330 3.5% 7.4% 148 4.2% 133 4.1% 10.7%

Taxes -83 -0.8% -74 -0.8% 11.5% -34 -0.9% -30 -0.9% 13.2%

Net Profit 272 2.7% 256 2.7% 6.2% 114 3.2% 104 3.2% 10.0%

Non Controlling Interests -20 -0.2% -19 -0.2% 4.3% -11 -0.3% -12 -0.4% -2.0%

Net Profit attributable to JM 252 2.5% 237 2.5% 6.4% 103 2.9% 92 2.8% 11.5%

EPS (€) 0.40 0.38 6.4% 0.16 0.15 11.5%

Operating Profit

At the Group level, in the nine months of the year consolidated EBITDA grew 7.3% to €588m. The respective margin was 5.8%, 10bps down from the margin registered in the same period last year. In third

quarter of 2015, EBITDA grew 8.9% with an EBITDA margin of 6.4%, 10bps higher than in third quarter of 2014.

547588

5.9% 5.8%

0%

6%

0

300

600

9M 159M 14

+7.3%

(Million Euro) (% Sales)



5

In the first nine months, Biedronka’s EBITDA reached €474m, posting an increase of 9.4% on previous year

(+10.8% in third quarter of 2015). EBITDA margin was at 6.9%, 10bps down in the nine months of 2014, reflecting the investments made in the value proposition.

The distribution businesses in Portugal reached an EBITDA of €169m, 1.3% ahead of the same period last

year. EBITDA margin was at 5.4%, 20bps down on previous year impacted by the investments in the value proposition and in the top line.

Financial Results

Financial charges for the Group were €20m, €6m below the nine months of 2014 due to lower average net debt and lower cost of debt.

Net Results Net Profit attributable to Jerónimo Martins in the nine months of the year was €252m, 6.4% ahead of the

same period last year. The nine months of the year net profit includes start-up losses in Ara and Hebe which at EBITDA level amounted to €42m.

3. Balance Sheet

(Million Euro) 9M 15 2014 9M 14 (1)

Net Goodwill 642 640 647

Net Fixed Assets 2,997 2,940 2,895

Total Working Capital -1,829 -1,778 -1,630

Others 114 111 119

Invested Capital 1,924 1,912 2,031

Total Borrowings 689 714 742

Leasings 0 1 2

Accrued Interest 5 4 10

Marketable Sec. & Bank Deposits -519 -446 -305

Net Debt 176 273 449

Non Controlling Interests 248 243 240

Share Capital 629 629 629

Reserves and Retained Earnings 871 767 713

Shareholders Funds 1,748 1,639 1,582

Gearing 10.1% 16.7% 28.4%

(1) Change of accounting policies The Group changed the previous accounting policy for Land (classified as

Tangible Assets) and adopted the historical cost for Land in the financial statements prepared as at December 31, 2014, as explained in the 2014 Annual Report. The Balance Sheet presented for September 2014 was restated in line with the new accounting policy.

Net Debt for the Group was €176m and Gearing was 10.1%.

Cash Flow

(Million Euro) 9M 15 9M 14

EBITDA 588 547

Interest Payment -20 -23

Other Financial Items 11 16

Income Tax -84 -85

Funds From Operations 496 455

Capex Payment -283 -348

Working Capital Movement 51 0

Others -5 1

Free Cash Flow 258 109

The Free Cash Flow in the period, after capex payments, was €258m, €150m above the same period in

2014.



6

Investment Programme The Group Capex was €283m in the first nine months of the year, c.50% of which was invested in

Biedronka.

Distribution from Free Reserves At its meeting on November 4, 2015, the Board of Directors decided to request the Chairman of the General Meeting to summon an Extraordinary Shareholders’ Meeting to present a proposal for the distribution of an

amount of €235,662,832.50 from free reserves payable in 2015. This includes the dividends that would be paid in 2016 and is equivalent to the gross amount of €0.375 per share, to be distributed to the

Shareholders proportionally to their holdings, excluding own shares.

4. Outlook for 2015

The solid performance in the first nine months of the year reinforces our confidence that the banners will

deliver their targets. Our commitment to top line performance across the markets where we operate

remains unchanged.

For Ara and Hebe EBITDA losses are still expected in the range €60-70m (excl. F/X).

Our capex for the year is estimated to be no higher than €450m following an efficient execution of the

revamping plan in Biedronka.

The store opening programme in Biedronka is confirmed in line with the planned 100 new stores for the

year.

Due to both strong volume growth and tightly controlled execution plan, Biedronka’s EBITDA margin for the

year is expected to be above the established floor of 6.5% on sales.

Lisbon, 4th November 2015

The Board of Directors


Consolidated Management Report Appendix

7

CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. Sales Growth

Total Sales Growth LFL Sales Growth

Q1 15 Q2 15 H1 15 Q3 15 9M 15 Q1 15 Q2 15 H1 15 Q3 15 9M 15

Biedronka

Euro 11.2% 12.1% 11.7% 8.1% 10.4%

PLN 11.4% 9.8% 10.6% 8.4% 9.8% 2.9% 2.4% 2.6% 3.5% 2.9%

Pingo Doce 3.9% 4.7% 4.3% 6.4% 5.0% 3.4% 4.2% 3.8% 4.5% 4.1%

Ex-Fuel 4.7% 5.2% 4.9% 7.1% 5.6% 4.2% 4.7% 4.5% 5.2% 4.7%

Recheio 4.1% 5.8% 5.0% 3.9% 4.6% 4.7% 4.1% 4.4% 3.9% 4.2%

2. Stores Network

Closings

Q1 15 Q2 15 Q3 15 9M 15 9M 15 9M 14

Biedronka 2,587 58 25 9 20 2,659 2,527

Pingo Doce 380 2 4 13 2 397 380

Recheio 41 0 0 0 0 41 41

Closings/

Remodellings

Q1 15 Q2 15 Q3 15 9M 15 9M 15 9M 14

Biedronka 1,649,889 40,870 17,991 6,250 4,465 1,710,534 1,604,628

Pingo Doce 460,863 1,252 4,540 12,486 1,018 478,123 460,863

Recheio 128,665 0 0 0 524 128,141 128,665

Number of Stores 2014Openings

Sales Area (sqm) 2014Openings Network

Network

3. EBITDA Margin Breakdown

(% of sales) 9M 15 % total 9M 14 % total

Biedronka 6.9% 80.7% 7.0% 79.1%

Distribution Portugal 5.4% 28.8% 5.6% 30.5%

Others & Cons. Adjustments n.a. -9.4% n.a. -9.6%

JM Consolidated 5.8% 100% 5.9% 100%

4. Financial Costs Breakdown

(Million Euro) 9M 15 9M 14

Net Interest -17 -23

Exchange Differences 0 0

Others -3 -3

Financial Results -20 -26

5. Definitions

Like For Like (LFL) sales: sales made by stores that operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound

remodelling are excluded for the remodelling period (store closure);

Cash Flow per share: (Net Profit + Depreciation – Deferred Tax – Non-recurrent Items) / Number of Shares;

Gearing: Net Debt / Shareholder Funds.

6. 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 additional relevant information, compared to the one presented

in this report.

II


Consolidated Financial Statements

8

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS

FOR SEPTEMBER 2015 AND 2014

Euro thousand

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Euro thousand

To be read with the attached notes to the consolidated financial statements (*) Restated – see note 2.3

Notes 9 Months 2015

9 Months 2014

3rd Quarter 2015

3rd Quarter 2014

Sales and services rendered 3 10,174,588 9,332,573 3,530,590 3,280,860

Cost of sales 4 (8,005,875) (7,352,746) (2,773,139) (2,587,014)

Total margin 2,168,713 1,979,827 757,451 693,846

Distribution costs 4 (1,636,627) (1,479,121) (550,924) (506,006)

Administrative costs 4 (165,266) (158,263) (56,004) (51,955)

Exceptional operating profits/losses 4 (7,448) (1,170) (2,735) (677)

Operating profit 359,372 341,273 147,788 135,208

Net financial costs 5 (19,707) (26,171) (6,768) (8,334)

Gains in joint ventures and associates 9 14,610 14,676 6,686 6,581

Profit before taxes 354,275 329,778 147,706 133,455

Income taxes 6 (82,523) (73,994) (33,535) (29,623)

Profit before non-controlling interests 271,752 255,784 114,171 103,832

Attributable to:

Non-controlling interests 19,528 18,718 11,457 11,687

Jerónimo Martins Shareholders 252,224 237,066 102,714 92,145

Basic and diluted earnings per share - euros 14 0.4014 0.3772 0.1634 0.1466

9 Months

2015

9 Months

2014 (*)

3rd Quarter

2015

3rd Quarter

2014 (*)

Net profit 271,752 255,784 114,171 103,832

Other comprehensive income:

Items that will not be reclassified to profit or loss

- - - -

Items that may be reclassified to profit or loss

Currency translation differences 19,388 (7,534) (5,732) (3,621)

Change in fair value of cash flow hedges 2,533 138 955 (390)

Change in fair value of hedging instruments on foreign operations (14,615) 755 65 (281)

Change in fair value of available-for-sale financial assets (124) 10 (192) (40)

Related tax (792) (11) 49 170

6,390 (6,642) (4,855) (4,162)

Other comprehensive income, net of income tax 6,390 (6,642) (4,855) (4,162)

Total comprehensive income 278,142 249,142 109,316 99,670

Attributable to:

Non-controlling interests 19,996 19,127 11,646 11,712

Jerónimo Martins Shareholders 258,146 230,015 97,670 87,958

Total comprehensive income 278,142 249,142 109,316 99,670

III



9

CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2015 AND 31 DECEMBER 2014

Euro thousand

Notes 30 September 2015

31 December 2014

Assets

Tangible assets 7 2,822,954 2,773,324

Investment properties 7 42,901 42,947

Intangible assets 7 815,509 806,194

Investments in joint ventures and associates 9 77,532 74,272

Available-for-sale financial assets 1,579 1,252

Trade debtors, accrued income and deferred costs 10 118,103 102,112

Deferred tax assets 50,629 51,349

Total non-current assets 3,929,207 3,851,450

Inventories 606,675 572,004

Income tax receivable 8,472 2,217

Trade debtors, accrued income and deferred costs 10 269,845 313,463

Derivative financial instruments 8 73 2,627

Cash and cash equivalents 11 487,927 430,660

Total current assets 1,372,992 1,320,971

Total assets 5,302,199 5,172,421

Shareholders’ equity and liabilities

Share capital 629,293 629,293

Share premium 22,452 22,452

Own shares (6,060) (6,060)

Oher reserves (61,345) (67,267)

Retained earnings 13 915,656 817,398

1,499,996 1,395,816

Non-controlling interests 247,838 242,875

Total Shareholders’ equity 1,747,834 1,638,691

Borrowings 15 286,548 373,877

Trade creditors, accrued costs and deferred income 17 819 836

Derivative financial instruments 8 - 2,681

Employee benefits 16 42,659 42,460

Provisions for risks and contingencies 16 79,443 81,828

Deferred tax liabilities 52,526 58,890

Total non-current liabilities 461,995 560,572

Borrowings 15 402,927 340,925

Trade creditors, accrued costs and deferred income 17 2,659,729 2,616,004

Derivative financial instruments 8 2,560 1,715

Income tax payable 27,154 14,514

Total current liabilities 3,092,370 2,973,158

Total Shareholders’ equity and liabilities 5,302,199 5,172,421




10

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Euro thousand

Shareholders’ equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A.

N

o

t e

s

Share

capital

Share

premium

Own

shares

Other reserves

Retained

earnings Total

Non-

controlling interests

Shareholders’

equity Cash flow

hedge

Available-for-

sale financial

assets

Currency

translation

reserves

Balance Sheet as at 31

December 2013 (*) 629,293 22,452 (6,060) (2,453) (1,251) (48,111) 709,661 1,303,531 235,835 1,539,366

Equity changes in the 9

Months of 2014

Currency translation differences

5 (7,430) (7,425) (7,425)

Change in fair value of cash

flow hedging (391) (391) 409 18

Change in fair value of

hedging instruments on

foreign operations

755 755 755


available-for-sale financial

investments

1,260 (1,250) 10 10

Other comprehensive

income - - - (386) 1,260 (6,675) (1,250) (7,051) 409 (6,642)

Net profit 237,066 237,066 18,718 255,784

Total comprehensive

income - - - (386) 1,260 (6,675) 235,816 230,015 19,127 249,142

Dividends (191,672) (191,672) (15,042) (206,714)


September 2014 (*) 629,293 22,452 (6,060) (2,839) 9 (54,786) 753,805 1,341,874 239,920 1,581,794


December 2014 629,293 22,452 (6,060) (2,548) (157) (64,562) 817,398 1,395,816 242,875 1,638,691

Equity changes in the 9

Months of 2015

Currency translation

differences (13) 19,105 19,092 19,092

Change in fair value of cash flow hedging

1,541 1,541 468 2,009


hedging instruments on

foreign operations

(14,615) (14,615) (14,615)


available-for-sale financial

investments

(96) (96) (96)

Other comprehensive

income - - - 1,528 (96) 4,490 - 5,922 468 6,390

Net profit 252,224 252,224 19,528 271,752

Total comprehensive income for the year

- - - 1,528 (96) 4,490 252,224 258,146 19,996 278,142

Dividends 13 (153,966) (153,966) (15,033) (168,999)


September 2015 629,293 22,452 (6,060) (1,020) (253) (60,072) 915,656 1,499,996 247,838 1,747,834


(*) Restated – see note 2.3



11

CONSOLIDATED CASH FLOW STATEMENT

FOR SEPTEMBER 2015 AND 2014

Euro thousand


CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD

Euro thousand

9 Months 2015

9 Months 2014

3rd Quarter 2015

3rd Quarter 2014

Cash Flow from operating activities 528,018 438,010 290,630 273,099

Cash Flow from investment activities (284,977) (329,597) (109,619) (113,962)

Cash Flow from financing activities (183,920) (166,366) (37,410) (161,985)

Cash and cash equivalents changes 59,121 (57,953) 143,601 (2,848)


Notes 2015 2014

Operating activities

Cash received from customers 11,466,183 10,519,963

Cash paid to suppliers (10,058,916) (9,280,503)

Cash paid to employees (775,374) (691,119)

Cash generated from operations 12 631,893 548,341

Interest paid (20,330) (25,122)

Income taxes paid (83,545) (85,209)

Cash flow from operating activities 528,018 438,010

Cash flow from investment activities (284,977) (329,597)

Cash flow from financing activities (183,920) (166,366)

Net changes in cash and cash equivalents 59,121 (57,953)

Cash and cash equivalents changes

Cash and cash equivalents at the beginning of the year 430,660 371,671

Net changes in cash and cash equivalents 59,121 (57,953)

Effect of currency translation differences (1,854) (5,183)

Cash and cash equivalents at the end of 3rd Quarter 11 487,927 308,535


Notes to the Consolidated Financial Statements

12

Index to the Notes to the Consolidated Financial Statements Page

1 Activity ................................................................................................................................................ 13

2 Accounting policies ................................................................................................................................ 13

3 Segments reporting ............................................................................................................................... 15

4 Total margin and operating costs ............................................................................................................ 16

5 Net financial costs ................................................................................................................................. 17

6 Income tax recognised in the income statement ........................................................................................ 17

7 Fixed assets, intangible assets and investment property ........................................................................... 17

8 Derivative financial instruments .............................................................................................................. 18

9 Investments in joint ventures and associates ............................................................................................ 18

10 Trade debtors, accrued income and deferred costs .................................................................................... 18

11 Cash and cash equivalents ..................................................................................................................... 19

12 Cash generated from operations ............................................................................................................. 19

13 Dividends ............................................................................................................................................. 19

14 Basic and diluted earnings per share........................................................................................................ 19

15 Borrowings ........................................................................................................................................... 19

16 Provisions and employee benefits ............................................................................................................ 20

17 Trade creditors, accrued costs and deferred income ................................................................................... 20

18 Contingencies ....................................................................................................................................... 20

19 Related parties...................................................................................................................................... 21

20 Events after the balance sheet date ......................................................................................................... 21



13

1 Activity

Jerónimo Martins, SGPS, S.A. (JMH), is the parent Company of Jerónimo Martins Group (Group) and has its head office in Lisbon.

The Group is devoted to the production, distribution and sale of food and other fast moving consumer goods products. The Group operates in Portugal, Poland and Colombia.

Head Office: Rua Actor António Silva, n.º 7, 1649-033 Lisboa

Share Capital: 629,293,220 euros

Registered at the Commercial Registry Office and Tax Number: 500 100 144

JMH has been listed on Euronext Lisbon since 1989.

The Board of Directors approved these consolidated financial statements on 4th November 2015.

2 Accounting policies

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

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) as adopted by the European Union.

The consolidated financial statements were prepared in accordance with the same standards and accounting policies adopted by the Group in the preparation of the annual financial statements, including an explanation of

the events and relevant changes for the understanding of variations in the financial position and Group performance since the last annual report. Thus, some of the notes from the 2014 annual report are omitted

because no changes occurred or they are not materially relevant for the understanding of the interim financial statements.

As mentioned in the Consolidated Financial Statements chapter of the 2014 Annual Report, point 30 - Financial risks, 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 2015, there was no material changes in addition to the notes detailed below, that could significantly change the assessment of the risks that the group is exposed

to.

2.1 New standards, amendments and interpretations adopted by the Group

In 2014, the EU issued the following Regulations, which were adopted by the Group from January 1st 2015:

EU Regulation IASB Standard or IFRIC Interpretation endorsed by EU

Issued in Mandatory for financial years

beginning on or after

Regulation no. 1361/2014

Annual Improvements to IFRS’s 2011–2013 Cycle: IFRS 1 First-time Adoption of IFRS, IFRS 3 Business Combinations,

IFRS 13 Fair Value Measurement and IAS 40 Investment Property (Amendment)

December 2013 January 1, 2015

The Group adopted the new improvements, with no significant impact on the Consolidated Financial Statements.

2.2 New standards, amendments and interpretations endorsed by EU but not effective for the financial year beginning 1 January 2015 and not early adopted

The EU adopted several improvements to IFRS’s, issued by the IASB and Interpretations issued by the IFRIC:

EU Regulation IASB Standard or IFRIC Interpretation

endorsed by EU

Issued in Mandatory for

financial years beginning on or after

Regulation no. 28/2015

Annual Improvements to IFRS’s 2010–2012 Cycle: IFRS 2

Share-Based Payment, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment, IAS 24 Related Party

Disclosures and IAS 38 Intangible Assets (Amendment)

December 2013 February 1, 2015

Regulation no. 29/2015 IAS 19 Employee Benefits: Defined Benefit Plans - Employee

Contributions (Amendment) November 2013 February 1, 2015

These amendments to standards are effective for annual periods beginning on or after February 1st, 2015, and

have not been applied in preparing these consolidated financial statements. None of these amendments is

expected to have a significant impact on the Group’s Consolidated Financial Statements.



14

2.3 Restatement of financial statements (change of accounting policies)

The Group has decided to adopt the historical cost for land (classified as tangible assets) in the financial

statements prepared as at December 31, 2014, with restatement of the opening balances at January 1, 2014 and January 1st, 2013.

In accordance with IAS 8, the effects of the change in the accounting policy were applied retrospectively. There

are no impacts on the Income Statement for the first nine months of 2014. The Balance Sheet opening and closing balances for the year 2014, Statement of Comprehensive Income and Statement of Changes in

Shareholders’ Equity were impacted as follows:

CONSOLIDATED BALANCE SHEET

30 September 2014

Published

Change of accounting

policies Restated

Assets

Tangible assets 2,854,225 (129,728) 2,724,497

Investment property 44,071 - 44,071

Intangible assets 817,574 - 817,574

Investments in joint ventures and associates 79,866 (2,897) 76,969

Other non-current assets 131,935 - 131,935

Total non-current assets 3,927,671 (132,625) 3,795,046

Inventories 544,732 - 544,732

Other current assets 292,399 - 292,399

Cash and cash equivalents 308,535 - 308,535

Total current assets 1,145,666 - 1,145,666

Total assets 5,073,337 (132,625) 4,940,712

Shareholders’ equity and liabilities

Attributable to Jerónimo Martins Shareholders 1,420,867 (78,993) 1,341,874

Non-controlling interests 270,689 (30,769) 239,920

Total shareholders’ equity 1,691,556 (109,762) 1,581,794

Borrowings 607,733 - 607,733

Deferred tax liabilities 78,068 (22,863) 55,205

Other non-current liabilities 120,967 - 120,967

Total non-current liabilities 806,768 (22,863) 783,905

Borrowings 136,770 - 136,770

Other current liabilities 2,438,243 - 2,438,243

Total current liabilities 2,575,013 - 2,575,013

Total shareholders’ equity and liabilities 5,073,337 (132,625) 4,940,712

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

30 September

2014

Published

Change of

accounting policies

Restated

Net profit 255,784 - 255,784

Other comprehensive income:

Items that will not be reclassified to profit or loss - - -

- - -

Items that may be reclassified to profit or loss

Currency translation differences (7,699) 165 (7,534)

Change in fair value of cash flow hedging 138 - 138

Change in fair value of hedging instruments on foreign operations 755 - 755

Change in fair value of available-for-sale financial assets 10 - 10

Related tax 20 (31) (11)

(6,776) 134 (6,642)

Other comprehensive income, net of income taxes (6,776) 134 (6,642)

Total comprehensive income 249,008 134 249,142

Attributable to:

Non-controlling interests 19,127 - 19,127

Jerónimo Martins Shareholders 229,881 134 230,015

Total comprehensive income 249,008 134 249,142



15

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

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

Non-

controlling interests

Shareholders’ equity

Land

revaluation

Cash flow

hedge

Available-for-sale

financial

assets

Adj. in joint

ventures

and

assoc.

Currency

translation

reserves

Balance Sheet as at 1 January 2014 - Published

629,293 22,452 (6,060) 76,230 (2,453) (1,251) 2,897 (48,111) 709,661 1,382,658 266,604 1,649,262

Change of accounting policies - - - (76,230) - - (2,897) - - (79,127) (30,769) (109,896)

Balance Sheet at at 1

January 2014 - Restated 629,293 22,452 (6,060) - (2,453) (1,251) - (48,111) 709,661 1,303,531 235,835 1,539,366

Comprehensive income restated - - - - (386) 1,260 - (6,675) 235,816 230,015 19,127 249,142

Dividends (191,672) (191,672) (15,042) (206,714)


September 2014 - Restated 629,293 22,452 (6,060) - (2,839) 9 - (54,786) 753,805 1,341,874 239,920 1,581,794

2.4 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:

3 Segments reporting

Management monitors the performance of the business based on a geographical and business nature. Due to the fact that the business units in the distribution area in Portugal share a set of competences, the Group analyses,

on a quarterly basis, its segments in an aggregate performance perspective. In addition, the Group also analyses separately the distribution business unit in Poland. Apart from these, there are also other businesses, but due to

their low materiality they are not reported separately.

Business segments:

Portugal Distribution: comprises the business unit of JMR (Pingo Doce supermarkets), and the wholesale business unit Recheio;

Poland Distribution: the business unit using the brand Biedronka;

Others, eliminations and adjustments: includes i) the business units with low materiality (Marketing Services and Representations, Restaurants, Pharmacies and Drugstores in Poland and retail business in Colombia), 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 exceptional operating profits/losses.

Euro foreign exchange reference rates

(foreign exchange units per 1 Euro)

Rate at 30 September

2015

Average rate for the

9 Months

Polish Zloty (PLN) 4.2448 4.1532

Swiss Franc (CHF) 1.0915 -

Colombian Peso (COP) 3,497.5100 2,934.9200



16

Detailed information by segment at September 2015 and 2014

Portugal Distribution

Poland Distribution

Others, eliminations and adjustments

Total JM Consolidated

2015 2014 2015 2014 2015 2014 2015 2014

Net sales and services 3,143,285 2,998,452 6,836,051 6,191,011 195,252 143,110 10,174,588 9,332,573

Inter-segments 169 104 1,121 1,182 (1,290) (1,286) - -

External customers 3,143,116 2,998,348 6,834,930 6,189,829 196,542 144,396 10,174,588 9,332,573

Operational cash-flow (EBITDA) 168,952 166,813 473,936 433,232 (55,371) (52,577) 587,517 547,468

Depreciations and amortisations (80,163) (81,779) (130,164) (114,640) (10,370) (8,606) (220,697) (205,025)

Operational result (EBIT) 88,789 85,034 343,772 318,592 (65,741) (61,183) 366,820 342,443

Exceptional operating profits/losses (7,448) (1,170)

Financial results (5,097) (11,495)

Income tax (82,523) (73,994)

Net result attributable to JM 252,224 237,066

Total assets (1) 2,074,120 1,986,221 2,769,929 2,826,930 458,150 359,270 5,302,199 5,172,421

Total liabilities (1) 1,518,706 1,440,543 2,054,648 2,100,836 (18,989) (7,649) 3,554,365 3,533,730

Investments in fixed assets 100,241 29,223 144,898 245,855 37,714 25,573 282,853 300,651

(1) The comparable amounts of total assets and liabilities are reported to 31 December 2014.

Reconciliation between EBIT and the operational result of the income statement by functions

September 2015 September 2014

EBIT 366,820 342,443


Operational result 359,372 341,273

4 Total margin and operating costs


Net sales and services 10,174,588 9,332,573

Net cost of products sold (7,979,824) (7,331,903)

Net cash discount and interest paid to suppliers (4,840) (3,549)

Electronic payment commissions (14,853) (12,441)

Other supplementary costs (6,358) (4,853)

Cost of sales (8,005,875) (7,352,746)

Total margin 2,168,713 1,979,827

Supplies and services (374,544) (341,970)

Advertising costs (54,103) (51,314)

Rents (247,516) (225,955)

Staff costs (785,274) (694,571)

Amortization (219,002) (203,328)

Profit/loss with tangible and intangible assets (1,344) (1,676)

Transportation costs (111,443) (111,820)

Other operational profit/loss (8,667) (6,750)

Distribution and administrative costs (1,801,893) (1,637,384)

Legal contingencies (291) -

Losses from organizational restructuring programmes (6,386) (1,146)

Assets write-offs and gains/losses in sale of tangible assets (981) (24)

Others 210 -


Operating profit 359,372 341,273



17

5 Net financial costs


Interest expense (18,792) (25,206)

Interest received 1,710 1,723

Dividends 68 30

Net foreign exchange 109 (147)

Other financial costs and gains (2,810) (2,556)

Fair value of financial investments held for trade:

Derivative instruments 8 (15)

(19,707) (26,171)

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 8).

Other financial costs and gains include costs with debt issued by the Group.

6 Income tax recognised in the income statement


Current income tax

Current tax of the year (90,392) (71,551)

Adjustment to prior year estimation 356 1,171

(90,036) (70,380)

Deferred tax

Temporary differences created and reversed 6,842 (4,077)

Change to the recoverable amount of tax losses and temporary differences from previous years

(404) (611)

6,438 (4,688)

Other gains/losses related to taxes

Impact of changes in estimates for tax litigations 1,075 1,074

1,075 1,074

Total income taxes (82,523) (73,994)

7 Fixed assets, intangible assets and investment property

Tangible assets

Investment

property

Intangible

assets Total

Net value at 31 December 2014 2,773,324 42,947 806,194 3,622,465

Foreign exchange differences (2,551) - 2,888 337

Increases 265,430 2 17,423 282,855

Disposals and write-offs (3,328) - (134) (3,462)

Transfers (348) - 348 -

Depreciation and impairment losses (209,573) - (11,210) (220,783)

Fair value changes - (48) - (48)

Net value at 30 September 2015 2,822,954 42,901 815,509 3,681,364

As a consequence of currency translation adjustment of the assets in the Group’s businesses reported in foreign

currency, the net amount of tangible and intangible assets increased by EUR 337 thousand, of which the amount of EUR 2,069 thousand is related to Goodwill.

The difference to total of amortisations stated in note 4, relates mainly to the production activities that were

attributable to the cost of the goods sold.



18

8 Derivative financial instruments

Notional

September 2015 Notional

December 2014

Assets Liabilities Assets Liabilities

Current Non-

current Current

Non-

current Current

Non-

current Current

Non-

current

Derivatives held for trading

Currency forwards (PLN) 5 million PLN 8 - - - - - - -

Cash flow hedging derivatives

Interest rate swap (EUR) 225 million

EUR - - 994 -

225 million EUR

- - 1,715 -

Interest rate swap (PLN) 500 million

PLN - - 1,566 -

500 million

PLN - - - 2,681

Foreign operation investments hedging derivatives

Currency forwards (PLN) 50 million PLN 65 - - - 600 million

PLN 2,627 - - -

Total derivatives held for trading 8 - - - - - - -

Total hedging derivatives 65 - 2,560 - 2,627 - 1,715 2,681

Total assets/liabilities derivatives 73 - 2,560 - 2,627 - 1,715 2,681

At September 2015 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 1,104 thousand (December 2014: payable EUR 423).

9 Investments in joint ventures and associates

During the first nine months of 2015, the movement under this heading was as follows:

Joint ventures Associates Total

September 2015

December 2014

September 2015

December 2014

September 2015

December 2014

Opening balance 73,537 77,639 735 895 74,272 78,534

Equity method:

Net result 14,586 14,973 24 208 14,610 15,181

Dividends and other income received (11,350) (19,159) - (368) (11,350) (19,527)

Other comprehensive income - 84 - - - 84

Closing balance 76,773 73,537 759 735 77,532 74,272

10 Trade debtors, accrued income and deferred costs

September 2015 December 2014

Non-current

Other debtors 80,378 79,131

Collateral deposits associated to financial debt 34,367 19,367

Deferred costs 3,358 3,614

118,103 102,112

Current

Commercial customers 57,303 50,868

Other debtors 89,209 97,649

Other taxes receivable 8,132 16,011

Accrued income and deferred costs 115,201 148,935

269,845 313,463

Non-current debtors are mainly related to additional tax liquidation as well as pre-paid tax, which the Group has

already contested and made a legal claim for reimbursement.

The debtor’s amount is registered at the recoverable value. The Group constitutes provisions for impairment

losses whenever there are signs of uncollectable amounts.



19

11 Cash and cash equivalents


Bank deposits 200,286 171,790

Short-term investments 284,071 255,043

Cash and cash equivalents 3,570 3,827

487,927 430,660

12 Cash generated from operations


Net results 252,224 237,066

Adjustments for:

Non-controlling interests 19,528 18,718

Income tax 82,523 73,994

Depreciations and amortisations 220,697 205,025

Provisions and other operational gains and losses 6,709 1,924

Net financial costs 19,707 26,171

Profit/ Losses in associated companies (14,610) (14,676)

Profit/ Losses on tangible and intangible assets 2,122 1,706

588,900 549,928

Changes in working capital:

Inventories (36,565) 28,589

Trade debtors, accrued income and deferred costs (8,695) (7,607)

Trade creditors, accrued costs and deferred income 88,253 (22,569)

631,893 548,341

13 Dividends

Dividends distributed in 2015 in the amount of EUR 168,999 thousand, include an amount of EUR 153,966

thousand paid to JMH Shareholders, and an amount of EUR 15,033 thousand paid to non-controlling interests in the Group companies.

14 Basic and diluted earnings per share


Ordinary shares issued at the beginning of the year 629,293,220 629,293,220

Own shares at the beginning of the year (859,000) (859,000)

Shares issued during the year - -

Weighted average number of ordinary shares 628,434,220 628,434,220

Diluted net result attributable to ordinary shares 252,224 237,066

Basic and diluted earnings per share – euros 0.4014 0.3772

15 Borrowings

JM Nieruchomosci - Sp. Komandytowo-akcyjna contracted a loan on a total amount of PLN 415.000 thousand

with maturity in 2020.

Renewal of the Commercial Paper Programme held by JMH and Recheio, SGPS until August 2020 with

improvement of the financial conditions associated.

Jeronimo Martins Polska negotiated a new credit facility in a total amount of PLN 300.000 thousand for one year,

renewable until 2020.

Early redemption of the loan held by Jeronimo Martins Polska that would end in 2017, in a total amount of PLN 150.000 thousand.

Jeronimo Martins Colombia issued new short term credit facilities in a total amount of COP 56.000.000 thousand and renewed other existing short term facility of COP 60.000.000 thousand for one more year.



20

15.1 Current and non-current loans


Non-current loans

Bank loans 286,425 373,651

Financial lease liabilities 123 226

286,548 373,877

Current loans

Bank overdrafts 16,348 58,327

Bank loans 161,435 56,544

Bond loans 225,000 225,000

Financial lease liabilities 144 1,054

402,927 340,925

15.2 Financial debt

The Group entered into several foreign exchange rate risk and interest risk hedging operations, as well as short-term investments. The net consolidated financial debt at the balance sheet date is as follows:


Non-current loans (note 15.1) 286,548 373,877

Current loans (note 15.1) 402,927 340,925

Derivative financial instruments (note 8) 2,487 1,769

Interest on accruals and deferrals 2,922 2,622

Bank deposits (note 11) (200,286) (171,790)

Short-term investments (note 11) (284,071) (255,043)

Collateral deposits (34,367) (19,367)

176,160 272,993

16 Provisions and employee benefits

Risks and

contingencies

Employee

benefits

Balance at 1 January 81,828 42,460

Set up, reinforced and transfers 3,301 2,372

Unused and reversed (2,446) -

Foreign exchange difference (15) -

Used (3,225) (2,173)

Balance at 30 September 79,443 42,659

17 Trade creditors, accrued costs and deferred income


Non-current

Other non-commercial creditors 1 -

Accrued costs and deferred income 818 836

819 836

Current

Other commercial creditors 2,189,044 2,182,406

Other non-commercial creditors 164,426 175,726

Other taxes payables 81,748 79,456

Accrued costs and deferred income 224,511 178,416

2,659,729 2,616,004

18 Contingencies

Following the contingencies mentioned in the 2014 Annual Report, changes occurred on the headings as follows:

f) The Portuguese Tax Authorities carried out some corrections of VAT rates applied to certain goods sold by

some Group companies. With these corrections the total amount of assessments for the years 2005 to 2012 in Pingo Doce, Feira Nova and Recheio amounted to EUR 1,814 thousand, EUR 1,300 thousand and EUR 551



21

thousand, respectively. The Board of Directors believes that the Tax Authorities have no grounds to request this payment and these assessments have been challenged;

i) Sociedade Ponto Verde (SPV) claimed through a judicial proceeding against Pingo Doce, in September 2014,

an amount of EUR 3,397 thousand (including outstanding interest), related to the Management of the secondary and tertiary packaging waste system. Pingo Doce contested considering that SPV does not

manage that kind of waste and therefore no amount is due. The Civil Court, having the same understanding of Pingo Doce, declared itself materially incompetent to decide the case, saying that it should be judged by

the administrative courts. SPV filed an appeal to the Court of Appeal. The Court of Appeal ruled in favor of SPV and the case returned to the Civil Court, where the procedure stands by;

j) The Food and Veterinary Department (Direcção-Geral de Alimentação e Veterinária) claimed from Pingo

Doce the amount of EUR 8.654 thousand, in respect of the Food Safety Tax (Taxa de Segurança Alimentar Mais – TSAM) assessed for the years 2012 to 2015. The values at stake have been challenged in Court by

Pingo Doce, since it understands that this tax is not due, namely on the grounds of the unconstitutional nature of the Statute that approved the TSAM.

19 Related parties

Sociedade Francisco Manuel dos Santos owns 56.14% of the Group. No transactions occurred between this Company and any company of the Group in the first nine months of 2015, neither were there any amounts payable or receivable between them on September 30th, 2015.

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

Sales and services rendered Stocks purchased and services supplied

September 2015 September 2014 September 2015 September 2014

Joint ventures 46 346 75,055 69,658

Associates - - - 9

Other related parties (*) 69 73 89 191

Trade debtors, accrued income and

deferred costs Trade creditors, accrued costs and

deferred income

September 2015 December 2014 September 2015 December 2014

Joint ventures 263 640 17,741 5,774

Associates - - - -

Other related parties (*) 34 17 - -

(*) Entities controlled by the major Shareholder of Jerónimo Martins and entities owned or controlled by members of the Board

of Directors.

All the transactions with these related parties were made under normal market conditions, i.e. the transaction

value corresponds to prices that would be applicable between non-related parties.

Outstanding balances between Group companies and related parties, being a result of a trade agreement, are

settled in cash, and are subject to the same payment terms as those applicable to other agreements celebrated between Group companies and their suppliers.

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 adjustments for doubtful debts and no costs were recognised during the year related with bad or doubtful debts with these related parties.

20 Events after the balance sheet date

At the conclusion of this Report there were no relevant events to highlight that are not disclosed in the Financial Statements.

Lisbon, 4th November, 2015

The Certified Accountant The Board of Directors

Documents

CONSOLIDATED REPORT & ACCOUNTS First Nine … · II – Consolidated Management Report Appendix 1. Sales Growth ... Mkt. Repr. and Rest. Serv. 56 0.6% 56 0.6% 0.9% 20 0 ... Non Controlling