CONSOLIDATED REPORT AND ACCOUNTS · I – Consolidated Management Report Message from the Chairman...

I 9 MESES I Lisboa, 25 Outubro 20172017

RESULTADOS

CONSOLIDATED REPORT AND ACCOUNTS

FIRST HALF2019

R&A | 1st Half 2019

INDEX

I – Consolidated Management Report

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

1. Sales Analysis 3

2. Results Analysis 5

3. Balance Sheet 6

4. Outlook for 2019 7

II – Consolidated Management Report Appendix

1. The impact of IFRS 16 on Financial Statements 8

2. Sales Evolution 10

3. Stores Network 10

4. Total Borrowings Detail 11

5. Definitions 11

6. Income Statement - Reconciliation Note 12

7. Balance Sheet - Reconciliation Note 13

8. Free Cash Flow – Reconciliation Note 14

9. Information Regarding Individual Financial Statements 14

III – Other Information

15

IV – Statement of the Board of Directors

17

V – Consolidated Financial Statements

1. Financial Statements 18

2. Notes to the Financial Statements 22

3. Auditor’s Report 34

R&A | 1st Half 2019 3 Consolidated Management Report

When applying, from the 1st of January 2019, the new accounting standard on leases - IFRS16 – the Group decided to adopt the modified retrospective method, according to which there is no restatement of historical data. As the adoption of the new standard also does not change the way Jerónimo Martins manages and measures the operating performance of its businesses, the below analysis does not consider the application of IFRS16. The impact of this accounting standard on the Group financial statements is presented in the Appendix of this Management Report.

I - CONSOLIDATED MANAGEMENT REPORT

Message from the Chairman and CEO

Pedro Soares dos Santos

‘In line with our strategy, consumer focus and sales growth remain the Group's top priorities, without compromising cost discipline and the emphasis on efficiency to ensure the competitiveness and profitability of our business models. These strategic options allowed us to deliver strong growth in the first half of the year in both SALES and EBITDA. I am pleased with the LFL sales performance of our brands in general and Ara in particular. For the remainder of 2019 our goal is to continue to outperform the markets where we operate. To guarantee this outperformance, we will continue reinforcing our operations and working to have the best commercial proposals in order to earn, more and more, the consumer’s recognition and preference.’ 1. Sales Analysis

In the first six months of the year, Group net sales increased 5.7% to €8.9 bn. At constant exchange rates, sales grew 7.1%, with like for like (LFL) at 3.9%. Benefiting from the calendar shift in the Easter season from the first Quarter in 2018 to the second Quarter in 2019, sales in the second Quarter increased 10.3% (+11.1% at constant exchange rates) and LFL growth was 7.8%.

% total % total excl. FX Euro % total % total excl. FX EuroBiedronka 6,064 68.1% 5,762 68.4% 7.0% 5.2% 3,167 67.9% 2,839 67.2% 12.1% 11.5%Pingo Doce 1,893 21.3% 1,818 21.6% 4.1% 988 21.2% 936 22.2% 5.6%Recheio 467 5.2% 458 5.4% 2.0% 253 5.4% 248 5.9% 2.1%Ara 356 4.0% 283 3.4% 31.6% 25.9% 187 4.0% 149 3.5% 34.9% 25.3%Hebe 117 1.3% 94 1.1% 26.4% 24.3% 61 1.3% 47 1.1% 29.4% 28.7%Others & Cons. Adjustments 11 0.1% 12 0.1% -1.2% 6 0.1% 6 0.1% 0.9%Total JM 8,908 100% 8,426 100% 7.1% 5.7% 4,661 100% 4,225 100% 11.1% 10.3%

H1 19 H1 18 D % Q2 19 Q2 18 D %(Million Euro)

5,762

1,818

458 28394 12

8,426

6,064

1,893

467 356117 11

8,908

Biedronka Pingo Doce Recheio Ara Hebe Others &Cons.Adjust.

JMConsolidated

Sales (Million Euro)

H1 18 H1 19

+5.2%

+2.0%

+4.1%

+5.7%

+25.9%+24.3%

3.7%

8.0%

3.3% 3.4%3.9%

LFL Growth(H1 19/18)

* Excl. Fuel LFL: 3.4%

Hebe RecheioBiedronka Pingo JM

Doce *


In Poland, consumer demand remained positive, benefiting from a strong labour market and the approval of new social transfers.

Food inflation in the country increased strongly in the second Quarter (+4.7%) reaching 3.3% in the first Half.

Biedronka remained focused on meeting consumer needs and aspirations, while continuing to work to preserve the efficiency of its business model in a context of cost pressures.

Sales reached €6.1 bn, representing growth of 7.0% in local currency (+5.2% in euro) and market share increased. Despite the impact of 8 additional days of Sunday ban relative to first Half of 2018, LFL was 3.7%.

In the second Quarter, sales grew 12.1% (+11.5% in euros). LFL performance was 8.6%, including the positive calendar impact of Easter. During this season, Biedronka implemented strong commercial campaigns which, together with a favourable sales mix in June due to hot weather, boosted LFL in the quarter. In this period higher food inflation, partially driven by seasonal effects, also contributed to LFL performance.

Biedronka opened 27 new locations and closed 11 (16 net additions over the six months period).

Hebe sales reached €117 mn, growing 26.4% in local currency (+24.3% in euros). Despite 8 fewer trading days due to the Sunday ban, LFL stood at 8.0% in the first Half of 2019.

In the second Quarter, sales were €61 mn, a 29.4% increase (+28.7% in euros), with a LFL performance at 10.3%.

In Portugal, consumer demand remained favourable during the six-month period and intense promotional campaigns by most players continued to dominate the food retail sector.

Food inflation in the country was low at 0.5% (+0.1% in the second Quarter).

Pingo Doce kept leveraging its competitive strengths with reinforced commercial dynamics, delivering a strong performance. Sales grew 4.1% to €1.9 bn. LFL performance (excluding fuel) was 3.4%.

In the second Quarter sales grew 5.6% to €1 bn, with LFL (excluding fuel) at 5.1%, incorporating a positive calendar shift related to Easter.

The banner opened 4 stores in the first six months of the year.

Recheio increased its sales by 2.0% to €467 mn. On a LFL basis, sales grew 3.4%. In the second Quarter sales reached €253 mn, 2.1% ahead of the second Quarter of 2018 with a LFL growth of 3.2%.

In Colombia, the economy reveals signs of improvement and the retail sector remained quite dynamic.

Ara sales increased 31.6% at constant exchange rates (+25.9% in euros) reaching €356 mn. LFL sales growth, which is critical to reach profitability, significantly increased in recent months and the banner ended the first half with double digit LFL.

In the second Quarter sales were at €187 mn, having increased 34.9% (+25.3% in euros).

Ara gave priority to sharply improving sales growth on our current network, opening 25 new locations in the first six months, and ending the period with 557 stores.


2. Results Analysis

Operating Profit (EBITDA)

Group EBITDA at €471mn, increased 5.6% compared to the first Half of 2018. At constant exchange rates, EBITDA grew 6.8%, driven by our sales-focused strategy.

In Poland, Biedronka delivered EBITDA of €428 mn, growing 7.0% in zloty (+5.2% in euros). EBITDA margin was 7.1%, in-line with that of the same period last year.

An effective management of the sales mix allowed for intense commercial activity during the Easter season and for a flat EBITDA margin.

Pingo Doce delivered EBITDA of €86 mn, with the respective margin reaching 4.5%, ahead of the 4.2% registered in the first Half of 2018.This performance reflects the good LFL momentum and a positive margin mix effect in this year’s Easter period which boosted EBITDA margin in the second Quarter.

Ara and Hebe posted EBITDA losses of €41 mn, of which 89% are attributable to Ara. The comparable combined losses in the first Half of 2018 were €45 mn. This evolution

resulted from both the reduction of Hebe's losses and the depreciation of local currencies. In the second Quarter, at constant exchange rates, Ara posted losses in-line with the same period last year.

Financial Results

Net financial costs were €-16 mn, slightly higher than the €-13 mn registered in the first Half of 2018, reflecting the increase in interest-bearing debt denominated in Colombian pesos versus a year ago.

Net Results

Group net profit was €181 mn, 0.7% ahead of the first Half of 2018, despite the impact of 8 fewer days of trading in Poland.

(Million Euro) D D

Net Sales and Services 8,908 8,426 5.7% 4,661 4,225 10.3%Gross Profit 1,932 21.7% 1,811 21.5% 6.7% 1,006 21.6% 913 21.6% 10.1%Operating Costs -1,461 -16.4% -1,365 -16.2% 7.1% -748 -16.0% -682 -16.1% 9.7%EBITDA 471 5.3% 446 5.3% 5.6% 257 5.5% 231 5.5% 11.3%Depreciation -195 -2.2% -179 -2.1% 9.1% -98 -2.1% -90 -2.1% 9.3%EBIT 276 3.1% 268 3.2% 3.2% 159 3.4% 142 3.3% 12.6%Net Financial Costs -16 -0.2% -13 -0.2% 17.0% -8 -0.2% -9 -0.2% -10.2%Gains in Joint Ventures and Associates 0 0.0% 0 0.0% n.a. 0 0.0% 0 0.0% n.a.Other Profits/Losses -4 0.0% -5 -0.1% n.a. -3 -0.1% -2 -0.1% n.a.EBT 257 2.9% 250 3.0% 2.9% 149 3.2% 130 3.1% 14.3%Income Tax -63 -0.7% -63 -0.7% 1.0% -33 -0.7% -31 -0.7% 6.0%Net Profit 193 2.2% 187 2.2% 3.5% 116 2.5% 99 2.3% 16.9%Non-Controlling Interests -12 -0.1% -7 -0.1% 75.4% -7 -0.1% -4 -0.1% 84.0%Net Profit Attributable to JM 181 2.0% 180 2.1% 0.7% 109 2.3% 95 2.3% 14.2%

EPS (€) 0.29 0.29 0.7% 0.17 0.15 14.2%EPS without Other Profits/Losses (€) 0.29 0.29 0.6% 0.17 0.15 14.2%

Q2 19H1 18H1 19 Q2 18

7.1%

4.2%

5.0% 5.3%

7.1%

4.5%5.0% 5.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0

100

200

300

400

500

Biedronka Pingo Doce Recheio JM Consolidated

H1 18 H1 19 EBITDA Mg H1 18 EBITDA Mg H1 19

EBITDA & EBITDA Margin

EBITDA(Million Euro)

EBITDA Mg(%)


3. Balance Sheet

Net debt, excluding capitalised operating leases, was €158 mn and gearing stood at 7.9%, including the €204 mn May dividend payment.

Free Cash Flow

Free cash flow generated in the period was €152 mn, reflecting a good operational performance and working capital evolution.

Investment

In the first Half of 2019, Group capex (excluding rights of use acquired in accordance with IFRS16) amounted to €238 mn, with 48% allocated to Biedronka.

(Million Euro) H1 19 2018 H1 18

Net Goodwill 641 637 632Net Fixed Assets 3,918 3,842 3,665Total Working Capital -2,495 -2,454 -2,256Others 95 70 87Invested Capital 2,159 2,096 2,129

Total Borrowings 677 624 606Financial Leases 19 15 12Accrued Interest 4 2 2Marketable Securities and Bank Deposits -542 -562 -253Net Debt 158 80 367

Non-Controlling Interests 236 238 217Share Capital 629 629 629Reserves and Retained Earnings 1,136 1,149 916

Shareholders Funds 2,001 2,016 1,762Gearing 7.9% 3.9% 20.8%

(Million Euro) H1 19 H1 18

EBITDA 471 446

Interest Payment -13 -11

Other Financial Items 0 0

Income Tax -86 -96

Funds From Operations 372 339

Capex Payment -262 -337

Change in Working Capital 45 -136

Others -2 -3

Free Cash Flow 152 -137

(Million Euro) H1 19 Weight H1 18 Weight

Biedronka 114 48% 164 56%

Distribution Portugal 75 32% 56 19%

Ara 37 15% 50 17%

Others 13 5% 24 8%

Total CAPEX 238 100% 295 100%


4. Outlook for 2019

The first Half results reflect a robust performance with all our banners reinforcing their market positions and gaining market share.

In this context, the guidance provided in our February 27th release* is kept unchanged.

*https://www.jeronimomartins.com/wp-content/uploads/com/2019/Results2018.pdf

Lisbon, 24 July 2019

The Board of Directors

R&A | 1st Half 2019 8 Consolidated Management Report Appendix

II – CONSOLIDATED MANAGEMENT REPORT APPENDIX

1. The impact of IFRS 16 on Financial Statements

Income Statement by Functions

Income Statement (Management View)

(Million Euro)H1 19

IFRS16H1 19 Excl.

IFRS16H1 18

Net Sales and Services 8,908 8,908 8,426

Cost of Sales -6,976 -6,976 -6,615

Gross Profit 1,932 1,932 1,811

Distribution Costs -1,467 -1,505 -1,410

Administrative Costs -150 -151 -133

Other Operating Profits/Losses -4 -4 -5

Operating Profit 311 272 263

Net Financial Costs -78 -16 -13

Gains in Joint Ventures and Associates 0 0 0

Profit Before Taxes 234 257 250

Income Tax -60 -63 -63

Profit Before Non Controlling Interests 174 193 187

Non-Controlling Interests -11 -12 -7

Net Profit Attributable to JM 163 181 180

(Million Euro)H1 19

IFRS16

H1 19 Excl.

IFRS16H1 18

Q2 19

IFRS16

Q2 19 Excl.

IFRS16Q2 18

Net Sales and Services 8,908 8,908 8,426 4,661 4,661 4,225

Gross Profit 1,932 1,932 1,811 1,006 1,006 913

Operating Costs -1,265 -1,461 -1,365 -648 -748 -682

EBITDA 667 471 446 357 257 231

Depreciation -352 -195 -179 -178 -98 -90

EBIT 315 276 268 179 159 142

Net Financial Costs -78 -16 -13 -37 -8 -9

Gains in Joint Ventures and Associates 0 0 0 0 0 0

Other Profits/Losses -4 -4 -5 -3 -3 -2

EBT 234 257 250 139 149 130

Income Tax -60 -63 -63 -32 -33 -31

Net Profit 174 193 187 108 116 99

Non-Controlling Interests -11 -12 -7 -6 -7 -4

Net Profit Attributable to JM 163 181 180 101 109 95

EPS (€) 0.26 0.29 0.29 0.16 0.17 0.15EPS without Other Profits/Losses (€) 0.26 0.29 0.29 0.16 0.17 0.15


Balance Sheet

Working Capital

Free Cash Flow

(Million Euro)H1 19

IFRS16

H1 19 Excl.

IFRS162018 H1 18

Net Goodwill 641 641 637 632Net Fixed Assets 3,918 3,918 3,842 3,665Net Rights of Use (RoU) 2,341 - - -Total Working Capital -2,500 -2,495 -2,454 -2,256Others 98 95 70 87Invested Capital 4,499 2,159 2,096 2,129Total Borrowings 677 677 624 606Financial Leases 19 19 15 12Capitalised Operating Leases 2,359 - - -Accrued Interest 4 4 2 2Marketable Securities and Bank Deposits -542 -542 -562 -253Net Debt 2,517 158 80 367Non-Controlling Interests 234 236 238 217Share Capital 629 629 629 629Reserves and Retained Earnings 1,118 1,136 1,149 916Shareholders Funds 1,982 2,001 2,016 1,762

(Million Euro)H1 19

IFRS16H1 19 Excl.

IFRS162018 H1 18

Inventories 949 949 978 872

in days of sales 19 19 21 19

Customers 58 58 55 64

in days of sales 1 1 1 1

Suppliers -2,925 -2,925 -2,960 -2,717

in days of sales -59 -59 -62 -58

Trade Working Capital -1,918 -1,918 -1,928 -1,781


Others -582 -576 -526 -475

Total Working Capital -2,500 -2,495 -2,454 -2,256


(Million Euro)H1 19

IFRS16H1 19 Excl.

IFRS16H1 18

EBITDA 667 471 446

Capitalised Operating Leases Payment -130 - -

Interest Payment -79 -13 -11

Other Financial Items 0 0 0

Income Tax -86 -86 -96

Funds From Operations 371 372 339

Capex Payment -262 -262 -337

Change in Working Capital 45 45 -136

Others -2 -2 -3

Free Cash Flow 152 152 -137


EBITDA and EBITDA Margin Breakdown

Financial Costs Breakdown

2. Sales Evolution

3. Stores Network

(Million Euro)H1 19

IFRS16Mg

H1 19 Excl.

IFRS16Mg H1 18 Mg

Biedronka 560 9.2% 428 7.1% 407 7.1%

Pingo Doce 118 6.3% 86 4.5% 77 4.2%

Recheio 27 5.7% 23 5.0% 23 5.0%

Others & Cons. Adjustments -38 n.a. -66 n.a. -60 n.a.

JM Consolidated 667 7.5% 471 5.3% 446 5.3%

(Million Euro)H1 19

IFRS16H1 19 Excl.

IFRS16H1 18

Net Interest -12 -12 -9

Interests on Capitalised Operating Leases -66 - -

Exchange Differences 3 -1 -2

Others -3 -3 -2

Financial Results -78 -16 -13

Q1 19 Q2 19 H1 19 Q1 19 Q2 19 H1 19Biedronka Euro -0.8% 11.5% 5.2% PLN 2.0% 12.1% 7.0% -1.1% 8.6% 3.7%Hebe Euro 19.8% 28.7% 24.3% PLN 23.3% 29.4% 26.4% 5.4% 10.3% 8.0%Pingo Doce 2.6% 5.6% 4.1% 1.7% 4.9% 3.3%

Excl. Fuel 2.5% 5.8% 4.2% 1.6% 5.1% 3.4%Recheio 1.9% 2.1% 2.0% 3.7% 3.2% 3.4%

Total Sales Growth LFL Sales Growth

Closings

Q1 19 Q2 19 H1 19Biedronka 2,900 8 19 11 2,916 2,832Hebe * 230 8 9 0 247 200Pingo Doce 432 2 2 0 436 425Recheio 42 0 0 0 42 43Ara 532 9 16 0 557 439* H1 19: 247 stores: 30 pharmacies and 217 drugstores (21 of which include a pharmacy)

Closings

RemodellingsQ1 19 Q2 19 H1 19

Biedronka 1,933,104 5,783 14,182 3,436 1,949,632 1,870,804Hebe 55,035 2,000 2,791 0 59,826 47,685Pingo Doce 506,754 1,458 1,681 -142 510,035 504,661Recheio 133,826 0 0 0 133,826 133,079Ara 182,005 2,503 4,808 0 189,316 151,642

H1 19

H1 19

Number of Stores 2018Openings

Sales Area (sqm) 2018Openings

H1 18

H1 18


4. Total Borrowings Detail

5. Definitions

Like for like (LFL) sales: sales made by stores that operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound remodelling are excluded for the remodelling period (store closure).

Gearing: Net Debt / Shareholders’ Funds.

(Million Euro) H1 19 H1 18

Long Term Borrowings 296 217as % of Total Borrowings 43.7% 35.8%Average Maturity (years) 2.2 2.0

Other Borrowings 296 217

Short Term Borrowings 381 389as % of Total Borrowings 56.3% 64.2%

Total Borrowings 677 606Average Maturity (years) 1.3 1.0

% Total Borrowings in Euros 7.4% 14.9%% Total Borrowings in Zlotys 44.8% 45.9%% Total Borrowings in Colombian Pesos 47.8% 39.3%


6. Income Statement – Reconciliation Note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Income Statement (page 8)

Income Statement by Functions in the Consolidated Report & Accounts – First Half 2019 Results

Net Sales and Services Net sales and services

Gross Profit Gross profit

Operating Costs Includes headings of Distribution costs; Administrative costs; Other operating costs and excludes Depreciations of €-351.9 mn

EBITDA

Depreciation Value reflected in the note - Operating costs by nature

EBIT

Net Financial Costs Net financial costs

Gains in Joint Ventures and Associates Gains (Losses) in joint ventures and associates

Other Profits/Losses Includes headings of Other operating profits/losses; Gains in disposal of business (when applicable) and Gains/Losses in other investments (when applicable)

EBT

Income Tax Income tax

Net Profit

Non-Controlling Interests Non-Controlling interests

Net Profit Attributable to JM


7. Balance Sheet - Reconciliation Note


Balance Sheet (page 9)

Balance Sheet in the Consolidated Report & Accounts - First Half 2019 Results

Net Goodwill Included in the heading of Intangible assets

Net Fixed Assets Includes the headings Tangible and Intangible assets excluding the Net goodwill (€641.2 mn) and Financial leases (€18.3 mn)

Net Right-of-Use Assets (RoU) Includes the heading of Net rights of use excluding the Financial leases (€18.3 mn)

Total Working Capital Includes the headings Current trade debtors, Accrued income and Deferred costs; Inventories; Biological assets; Trade creditors, Accrued costs and Deferred income; Employee benefits; the value of €3.9 mn Cash and cash equivalents (note - Cash and cash equivalents) and the value of €-13.2 mn related to 'Others' due to its operational nature. Excludes the value of €-2.7 mn related to Interest accruals and deferrals (note – Net financial debt)

Others Includes the headings Investment property; Investments in joint ventures and associates; Other financial investments; Non-Current trade debtors, Accrued income and Deferred costs; Deferred tax assets and liabilities; Income tax receivable and payable; and Provisions for risks and contingencies.

Excludes the value of €19.4 mn related to collateral Deposits associated to Financial debt (note - Trade debtors, Accrued income and Deferred costs); and also the value of €-13.2 mn related to Others due to its operational nature

Invested Capital

Total Borrowings Includes the heading Borrowings current and non-current

Financial Leases Value reflected in the headings of Lease liabilities current and non-current

Capitalised Operating Leases Value reflected in the headings of Lease liabilities current and non-current excluding Financial leases liabilities (€18.8 mn)

Accrued Interest Includes the heading Derivative financial instruments and the value of €-2.7 mn related to Interest accruals and deferrals (value reflected in note – Net financial debt)

Marketable Securities and Bank Deposits Includes the heading Cash and cash equivalents and the value of €19.4 mn related to collateral deposits associated to Financial debt (reflected in note - Trade debtors) and excludes the value of €3.9 mn in Cash and cash equivalents (reflected in note - Cash and cash equivalents)

Net Debt

Non-Controlling Interests Non-Controlling interests

Share Capital Share capital

Reserves and Retained Earnings Includes the heading Share premium, Own shares, Other reserves and Retained earnings

Shareholders’ Funds


8. Free Cash Flow - Reconciliation Note


9. Information Regarding Individual Financial Statements

In accordance with section b) of paragraph 3 of article 246 of the Portuguese Securities Code, the first Half 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.

Free Cash Flow (page 9)

Cash Flow in the Consolidated Report & Accounts - First Half 2019 Results

EBITDA Included in the heading of Cash generated from operations

Capitalised Operating Leases Payment Included in the heading Leases paid

Interest Payment Includes the headings of Loans interest paid, Leases interest paid and Interest received

Income Tax Income tax paid

Funds from Operations

Capex Payment Includes the headings Disposal of tangible assets; Disposal of intangible assets; Disposal of financial and investment property; Acquisition of tangible fixed assets; Acquisition of intangible assets; Acquisition of financial investments and investment property. It also includes acquisitions of tangible assets classified as finance leases under previous regulations (€6.0 mn)

Change in Working Capital Included in the heading of Cash generated from operations

Others Includes the headings disposal of business (when applicable), being the remaining amount included in the heading Cash generated from operations

Free Cash Flow

R&A | 1st Half 2019 15 Other Information

III – OTHER INFORMATION

Disclosures required by sub-paras. a) and c) of no. 1 of Article 9 and no. 7 of Article 14 of Securities Market Commission (CMVM) regulation no. 5/2008 (with reference to the first Half of 2019)

1. Securities issued by the Company, Controlled or Controlling Companies or Companies in the same Group held by Company Officers Board of Directors

Members of the Board of Directors

Held on 31.12.18

Increases during the period

Decreases during the period

Held on 30.06.19

Shares Bonds Shares Bonds Shares Bonds Shares Bonds

Pedro Manuel de Castro Soares dos Santos 274,805 - - - - - 274,805 -

Andrzej Szlezak - - - - - - - -

António Pedro de Carvalho Viana-Baptista - - - - - - - -

José Soares dos Santos n/a3 - - - - - 20,509 -

Artur Stefan Kirsten - - - - - - - -

Belonging to company in which they are Directors (sec. d), § 2 of Article 447 Commercial Companies Code) 1 353,260,814 - - - - - 353,260,814 -

Clara Christina Streit 800 - - - - - 800 -

Francisco Manuel Seixas da Costa - - - - - - - -

Sérgio Tavares Rebelo - - - - - - - -

Elizabeth Ann Bastoni n/a3 - - - - - - -

María Ângela Holguín n/a3 - - - - - - -

Hans Eggerstedt 19,700 - - - - - n/a4 -

Henrique Manuel da Silveira e Castro Soares dos Santos 26,455 2 - - - - - n/a4 -

1 Sociedade Francisco Manuel dos Santos, B.V. 2 Of which 1,500 shares held by spouse 3 Appointed in April 11, 2019 to the Board of Directors 4 Ceased his duties as Director on April 11, 2019

Statutory Auditor

As at June 30th 2019, the Statutory Auditor Ernst & Young Audit & Associados - SROC, S.A., did not hold any shares and bonds of Jerónimo Martins, SGPS, S.A. and had not made any transactions with Jerónimo Martins, SGPS, S.A. securities.

R&A | 1st Half 2019 16 Other Information

2. List of Shareholders with Qualifying Holdings as at 30th June 2019 (Pursuant to sub-paragraph c) of paragraph 1 of Article 9 of the Portuguese Securities Code Regulations no. 5/2008)

Source: Last communications made by the shareholders with qualifying holdings to Jerónimo Martins, SGPS, S.A. up to the said date.

ShareholderNo. of Shares

Held% Capital

No. of Voting Rights

% of Voting Rights *

Sociedade Francisco Manuel dos Santos, SGPS, S.E.

Through Sociedade Francisco Manuel dos Santos, B.V.

Heerema Holding Company Inc.

Through Asteck, S.A.

BNP Paribas Asset Management Holding S.A. 21,775,581 3.460% 17,893,668 2.843%

Through Investment Funds Managed by BNP Paribas

JP Morgan Asset Management Holdings 14,815,917 2.354% 14,815,917 2.354%

Through Investment Funds Managed by JP Morgan

Through JP Morgan Investment Management n.a. n.a. n.a. 2.040%

T. Rowe Price Group, Inc.

Through T. Rowe Price International Ltd

BlackRock, Inc.

* Based on the total number of shares under the terms of section b), paragraph 3 of article 16 of the Portuguese Securities Code.

n.a. n.a. 12,676,760 2.014%

353,260,814 56.136% 353,260,814 56.136%

31,464,750 5.000% 31,464,750 5.000%

12,821,174 2.037% 12,694,305 2.017%

R&A | 1st Half 2019 17 Statement of the Board of Directors

IV – STATEMENT OF THE BOARD OF DIRECTORS

Statement of the Board of Directors Within the terms of paragraph c) n.1 of article 246 of Portuguese Securities Code, we hereby inform you that to the best of our knowledge:

i) the information contained in the interim management report is a faithful statement of the evolution of the businesses, of the performance and of the position of Jerónimo Martins, SGPS, S.A. and the companies included within the consolidation perimeter, and contains a description of the main risks and uncertainties which they face; and

ii) the information contained in the consolidated financial statements, as well as their annexes, was produced in compliance with the applicable accounting standards and gives a true and fair view of the assets and liabilities, the financial situation and the results of Jerónimo Martins, SGPS, S.A. and the companies included in the consolidation perimeter.


Pedro Manuel de Castro Soares dos Santos (Chairman of the Board of Directors and Chief Executive Officer) Andrzej Szlezak (Member of the Board of Directors)

António Pedro de Carvalho Viana-Baptista (Member of the Board of Directors)

Artur Stefan Kirsten (Member of the Board of Directors)

Clara Christina Streit (Member of the Board of Directors and Member of the Audit Committee)

Elizabeth Ann Bastoni (Member of the Board of Directors and Member of the Audit Committee)

Francisco Seixas da Costa (Member of the Board of Directors)

José Soares dos Santos (Member of the Board of Directors)

María Ángela Holguín (Member of the Board of Directors)

Sérgio Tavares Rebelo (Member of the Board of Directors and Chairman of the Audit Committee)

R&A | 1st Half 2019 18 Consolidated Financial Statements

V – CONSOLIDATED FINANCIAL STATEMENTS

The Group adopted for the first time on 1 January 2019 the new standard IFRS 16 Leases, having applied the modified retrospective method. The comparative information for the year 2018 is not restated (See note 2.1.1.).

CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR THE QUARTERS ENDED AT 30 JUNE 2019 AND 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE QUARTERS ENDED AT 30 JUNE 2019 AND 2018

Euro thousand

June June 2nd Quarter 2nd Quarter2019 2018 2019 2018

Sales and services rendered 3 8,908,334 8,425,688 4,661,231 4,225,404 Cost of sales 4 (6,975,840) (6,614,589) (3,655,714) (3,312,207)

Gross profit 1,932,494 1,811,099 1,005,517 913,197

Distribution costs 4 (1,467,282) (1,410,359) (746,337) (705,014)Administrative costs 4 (149,738) (132,946) (79,773) (66,659)Other operating profits/losses 4.1 (4,073) (4,857) (2,851) (2,529)

Operating profit 311,401 262,937 176,556 138,995

Net financial costs 5 (77,711) (13,348) (37,437) (8,754)Gains (losses) in joint ventures and associates 139 (1) 136 3 Gains (losses) in other investments 46 - 46 -

Profit before taxes 233,875 249,588 139,301 130,244

Income tax 6 (59,737) (62,722) (31,780) (31,382)

Profit before non-controlling interests 174,138 186,866 107,521 98,862

Attributable to:Non-controlling interests 11,025 7,125 6,206 3,749 Jerónimo Martins Shareholders 163,113 179,741 101,315 95,113

Basic and diluted earnings per share - Euros 13 0.2596 0.2860 0.1612 0.1513

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

Notes

Euro thousand


Net profit 174,138 186,866 107,521 98,862 Other comprehensive income:

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

Currency translation differences 13,592 (40,589) 12,264 (30,832)Change in fair value of cash flow hedges 8 (214) (195) (213) 17 Change in fair value of hedging instruments on foreign operations 8 (2,504) 3,691 (1,714) -

Related tax 127 416 126 398

Items that may be reclassified to profit or loss 11,001 (36,677) 10,463 (30,417)

Other comprehensive income, net of income tax 11,001 (36,677) 10,463 (30,417)

Total comprehensive income 185,139 150,189 117,984 68,445

Attributable to:Non-controlling interests 11,025 7,125 6,206 3,749 Jerónimo Martins Shareholders 174,114 143,064 111,778 64,696

Total comprehensive income 185,139 150,189 117,984 68,445

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

Notes


CONSOLIDATED BALANCE SHEET AT 30 JUNE 2019 AND 31 DECEMBER 2018

Euro thousand

June December2019 2018

AssetsTangible assets 7 3,745,188 3,687,053 Intangible assets 7 795,425 792,514 Investment property 7 11,686 11,676 Right-of-use assets 7 2,359,802 -Biological assets 3,877 3,398 Investments in joint ventures and associates 4,835 3,245 Other financial investments 1,321 1,321 Trade debtors, accrued income and deferred costs 9 85,783 84,713 Deferred tax assets 118,847 114,840

Total non-current assets 7,126,764 4,698,760

Inventories 940,752 970,653 Biological assets 4,084 3,790 Income tax receivable 5,562 5,035 Trade debtors, accrued income and deferred costs 9 361,213 435,642 Derivative financial instruments 8 - 59 Cash and cash equivalents 10 526,990 545,988

Total current assets 1,838,601 1,961,167

Total assets 8,965,365 6,659,927 Shareholders’ equity and liabilities

Share capital 629,293 629,293 Share premium 22,452 22,452 Own shares (6,060) (6,060)Other reserves (66,045) (77,046)Retained earnings 12 1,168,131 1,209,259

1,747,771 1,777,898

Non-controlling interests 234,121 238,356

Total Shareholders’ equity 1,981,892 2,016,254

Borrowings 14 295,599 288,390 Lease liabilities 15 1,999,745 -Trade creditors, accrued costs and deferred income 18 767 774 Derivative financial instruments 8 - 62 Employee benefits 17 68,357 65,069 Provisions for risks and contingencies 17 27,689 26,565 Deferred tax liabilities 61,536 75,627

Total non-current liabilities 2,453,693 456,487

Borrowings 14 381,162 350,814 Lease liabilities 15 378,237 -Trade creditors, accrued costs and deferred income 18 3,734,342 3,794,411 Derivative financial instruments 8 1,652 159 Income tax payable 34,387 41,802

Total current liabilities 4,529,780 4,187,186

Total Shareholders’ equity and liabilities 8,965,365 6,659,927

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

Notes


CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´EQUITY FOR THE PERIODS ENDED 30 JUNE 2019 AND 2018

Euro thousand

Cash flow

hedge

Currency

translation

reserves

Balance Sheet as at 1 January 2018 629,293 22,452 (6,060) 184 (51,293) 1,193,319 1,787,895 225,298 2,013,193

Equity changes in 2018

Currency translation differences (2) (40,208) (40,210) (40,210)

Change in fair value of cash flow hedging (158) (158) (158)

Change in fair value of hedging instruments on

foreign operations3,691 3,691 3,691

Other comprehensive income - - - (160) (36,517) - (36,677) - (36,677)

Net profit 179,741 179,741 7,125 186,866

Total comprehensive income - - - (160) (36,517) 179,741 143,064 7,125 150,189

Dividends (385,230) (385,230) (15,806) (401,036)

Balance Sheet as at 30 June 2018 629,293 22,452 (6,060) 24 (87,810) 987,830 1,545,729 216,617 1,762,346

Balance Sheet as at 1 January 2019 629,293 22,452 (6,060) (50) (76,996) 1,209,259 1,777,898 238,356 2,016,254

Equity changes in 2019

Currency translation differences (3) 13,681 13,678 13,678

Change in fair value of cash flow hedging (173) (173) (173)

Change in fair value of hedging instruments on

foreign operations (2,504) (2,504) (2,504)

Other comprehensive income - - - (176) 11,177 - 11,001 - 11,001

Net profit 163,113 163,113 11,025 174,138

Total comprehensive income - - - (176) 11,177 163,113 174,114 11,025 185,139

Dividends (note 12) (204,241) (204,241) (15,260) (219,501)

Balance Sheet as at 30 June 2019 629,293 22,452 (6,060) (226) (65,819) 1,168,131 1,747,771 234,121 1,981,892


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

Non-controlling

interests

Shareholders’

equityShare capital

Share

premiumOwn shares

Other reserves

Retained

earningsTotal


CONSOLIDATED CASH FLOW STATEMENT FOR THE QUARTERS ENDED AT 30 JUNE 2019 AND 2018

Euro thousand

June June2019 2018

Operating ActivitiesCash received from customers 10,039,997 9,497,323 Cash paid to suppliers (8,553,243) (8,463,026)Cash paid to employees (776,479) (727,994)Cash generated from operations 11 710,275 306,303 Loans interest paid (14,644) (12,741)Leases interest paid (66,009) -Income taxes paid (86,437) (95,995)

Cash flow from operating activities 543,185 197,567

Investment activities

Disposals of tangible fixed assets 1,058 425

Disposals of other financial investments and investment property - 2,096

Interest received 1,568 1,252 Dividends received 96 46 Acquisition of tangible fixed assets (251,548) (334,443)Acquisition of intangible assets (4,312) (3,695)Acquisition of joint ventures and associates (1,500) (1,000)

Cash flow from investment activities (254,638) (335,319)

Financing activitiesNet change in loans 14 40,503 88,185 Leases paid 15 (132,758) -Dividends paid 12 (219,501) (400,999)

Cash flow from financing activities (311,756) (312,814)

Net changes in cash and cash equivalents (23,209) (450,566)

Cash and cash equivalents changes

Cash and cash equivalents at the beginning of the year 545,988 681,333 Net changes in cash and cash equivalents (23,209) (450,566)Effect of currency translation differences 4,211 (8,226)

Cash and cash equivalents at the end of 1st Half 10 526,990 222,541


Notes

Euro thousand


Cash Flow from operating activities 543,185 197,567 372,865 105,459 Cash Flow from investment activities (254,638) (335,319) (110,854) (160,215)

Cash Flow from financing activities (311,756) (312,814) (332,113) (461,369)

Cash and cash equivalents changes (23,209) (450,566) (70,102) (516,125)

The amounts presented for quarters are not audited.

R&A | 1st Half 2019 22 Notes to the Consolidated Financial Statements

INDEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Activity .............................................................................................................................................................................................. 23

2. Accounting policies ...................................................................................................................................................................... 23

3. Segments reporting ..................................................................................................................................................................... 26

4. Operating costs by nature ........................................................................................................................................................ 27

5. Net financial costs ........................................................................................................................................................................ 27

6. Income tax recognised in the income statement ............................................................................................................. 28

7. Tangible assets, intangible assets, investment property and right-of-use assets ............................................ 28

8. Derivative financial instruments ............................................................................................................................................. 29

9. Trade debtors, accrued income and deferred costs ....................................................................................................... 29

10. Cash and cash equivalents ...................................................................................................................................................... 29

11. Cash generated from operations ........................................................................................................................................... 30

12. Dividends ......................................................................................................................................................................................... 30

13. Basic and diluted earnings per share ................................................................................................................................... 30

14. Borrowings ...................................................................................................................................................................................... 30

15. Lease liabilities .............................................................................................................................................................................. 31

16. Financial debt ................................................................................................................................................................................. 31

17. Provisions and employee benefits ......................................................................................................................................... 31

18. Trade creditors, accrued costs and deferred income ..................................................................................................... 32

19. Contingencies................................................................................................................................................................................. 32

20. Related parties .............................................................................................................................................................................. 32

21. Events after the balance sheet date ..................................................................................................................................... 33


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 operates in the food area, particularly in the distribution and sale of food and other fast-moving consumer goods products. The Group has operations in Portugal, Poland and Colombia.

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

Share Capital: 629,293,220 euros

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

JMH has been listed on Euronext Lisbon since 1989.

The Board of Directors approved these consolidated financial statements on 24 July 2019.

2. Accounting policies

2.1. Basis for preparation

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

The amounts presented for quarters, and the corresponding changes are not audited.

JMH consolidated financial statements were prepared in accordance with the interim financial reporting standard (IAS 34), and all other International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board (IASB) and with the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union (EU).

The consolidated financial statements were prepared in accordance with the same standards and accounting policies adopted by the Group in the preparation of the annual financial statements, except for the adoption of new standards, amendments and interpretations, effective as of 1 January 2019, and including an explanation of the events and relevant changes for the understanding of variations in the financial position and Group performance since the last annual report. Thus, some of the notes from the 2018 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 2018 Annual Report, point 29 - Financial risks, the Group, as a result of its normal activity, is exposed to several risks which are monitored and mitigated throughout the year. During the first six months of 2019, there was no material changes in addition to the notes detailed below, that could significantly change the assessment of the risks that the Group is exposed to.

Change in accounting policies and basis for presentation:

2.1.1. New standards, amendments and interpretations adopted by the Group

Between November 2017 and March 2019, the EU issued the following Regulations, which were adopted by the Group from 1 January 2019: EU Regulation IASB Standard or IFRIC Interpretation

endorsed by EU Issued in Mandatory for financial

years beginning on or after

Regulation no. 1986/2017 IFRS 16 Leases (new) January 2016 1 January 2019

Regulation no. 498/2018 IFRS 9 Financial Instruments: Prepayment Features with Negative

Compensation (amendments)

October 2017

1 January 2019

Regulation no. 1595/2018 IFRIC 23 Uncertainty over Income Tax Treatments (new) June 2017 1 January 2019

Regulation no. 237/2019 IAS 28 Investments in Associates and Joint Ventures: Long-term

Interests in Associates and Joint Ventures (amendments)

October 2017

1 January 2019

Regulation no. 402/2019 IAS 19: Employee Benefits: Plan Amendment, Curtailment or

Settlement (amendments)

February 2018

1 January 2019

Regulation no. 412/2019 Annual Improvements to IFRS’s 2015–2017 Cycle: IFRS 3 Business

Combinations; IFRS 11 Joint Arrangements; IAS 12 Income Taxes and IAS 23 Borrowing Costs (amendments)

December 2017

1 January 2019

The Group adopted the amendments and the new interpretation, with no significant impact on its Consolidated Financial Statements, except for the adoption of the new standard IFRS 16 Leases.


The Group adopted for the first time the new standard IFRS 16 Leases, with no restatement of the comparative Financial Statements. As required by IAS 34, the nature and effect of these changes are disclosed below:

IFRS 16 Leases

The new standard IFRS 16 eliminated the classification of leases as either operating leases or finance leases for lessees, as it was required by IAS 17 and, instead, introduced a single accounting model, very similar to the previous treatment that was given to finance leases in lessee accounts.

This single accounting model provides for the lessee the recognition of: i. assets and liabilities in the Balance Sheet for all leases with a term of more than 12 months, unless the underlying asset is of low value, regardless of the lease term; and ii. depreciation of lease assets separately from interest on lease liabilities in the Income Statement.

The Group adopted the new standard from 1 January 2019, using the modified retrospective approach in its consolidated accounts, with no restatement of the 2018 comparative accounts and no impact on Group’s Shareholder Equity at transition date.

The Group's operating leases relate mostly to store and warehouse rent contracts. In respect to its previous commitments regarding operating leases, in transition, the Group recognised at 1 January 2019 in the consolidated Balance Sheet right-of-use assets in the amount of EUR 2,402,949 thousand, lease liabilities in the amount of EUR 2,398,006 thousand and an adjustment in accruals and deferrals in the amount of EUR 4,943 thousand.

In respect to its previous commitments regarding finance leases, in transition, the carrying amount recognised in lease assets and lease liabilities as at 31 December 2018 (EUR 14,211 thousand and EUR 15,149 thousand, respectively) were considered as right-of-use assets and lease liabilities under IFRS 16 on 1 January 2019.

When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at 1 January 2019. The weighted-average rate applied is in the range of 2.5% – 8.9%, based on the features of the agreement (underlying asset and guarantees, currency and term).

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

i) the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

ii) the accounting for operating leases with a remaining lease term of less than 12 months at transition date as short-term leases;

iii) the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application;

iv) the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The reconciliation between the amount of the Group's operating lease commitments as disclosed in the previous year's financial statements and the amount of lease liabilities recognised on the date of initial application is as follows:

Operating lease commitments disclosed as at 31 December 2018 3,063,579

Add: service contracts reassessed as lease contracts 47,865

(Less): short-term leases recognised on a straight-line basis as expense (7,711)

(Less): low-value leases recognised on a straight-line basis as expense (97)

Add/(less): adjustments as result of a different treatment of extension and termination options 527,141

Add/(less): other adjustments relating to first time application of IFRS 16 6,372

Undiscounted lease liability recognised as at 1 January 2019 3,637,149

Discounted using the group's incremental borrowing rate (average 5.67%) (1,239,143)

Add: finance lease liabilities recognised as at 31 December 2018 15,149

Lease liability recognised as at 1 January 2019 2,413,155


The impact of the adoption of the new standard IFRS 16 in the opening balances at 1 January 2019 was as presented:

2.1.2. New standards, amendments and interpretations endorsed by EU but not effective for the financial year beginning 1 January 2019 and not early adopted

During the first six months of 2019, the EU did not issue any Regulation regarding the endorsement of new standards, amendments or interpretations that have not yet been implemented by the Group.

2.1.3. New standards, amendments and interpretations issued by IASB and IFRIC, but not yet endorsed by EU

During the first six months of 2019, the IASB/IFRIC did not issued any new standards, amendments or interpretations.

Euro thousand

Transition Adj.

31/12/2018 IFRS 16 01/01/2019

Assets

Tangible assets 3,687,053 (14,211) 3,672,842 Intangible assets 792,514 792,514 Investment property 11,676 11,676 Right-of-use assets - 2,417,160 2,417,160 Biological assets 3,398 3,398 Investments in joint ventures and associates 3,245 3,245 Other financial investments 1,321 1,321 Trade debtors, accrued income and deferred costs 84,713 84,713 Deferred tax assets 114,840 114,840

Total non-current assets 4,698,760 2,402,949 7,101,709

Inventories 970,653 970,653 Biological assets 3,790 3,790 Income tax receivable 5,035 5,035 Trade debtors, accrued income and deferred costs 435,642 (4,943) 430,699 Derivative financial instruments 59 59 Cash and cash equivalents 545,988 545,988

Total current assets 1,961,167 (4,943) 1,956,224

Total assets 6,659,927 2,398,006 9,057,933

Shareholders’ equity and liabilities

Share capital 629,293 629,293 Share premium 22,452 22,452 Own shares (6,060) (6,060)Other reserves (77,046) (77,046)Retained earnings 1,209,259 1,209,259

1,777,898 - 1,777,898

Non-controlling interests 238,356 238,356

Total Shareholders’ equity 2,016,254 - 2,016,254

Borrowings 288,390 (10,866) 277,524 Lease liabilities - 2,042,191 2,042,191 Trade creditors, accrued costs and deferred income 774 774 Derivative financial instruments 62 62 Employee benefits 65,069 65,069 Provisions for risks and contingencies 26,565 26,565 Deferred tax liabilities 75,627 75,627

Total non-current liabilities 456,487 2,031,325 2,487,812

Borrowings 350,814 (4,283) 346,531 Lease liabilities - 370,964 370,964 Trade creditors, accrued costs and deferred income 3,794,411 3,794,411 Derivative financial instruments 159 159 Income tax payable 41,802 41,802

Total current liabilities 4,187,186 366,681 4,553,867

Total Shareholders’ equity and liabilities 6,659,927 2,398,006 9,057,933


2.2. Transactions in foreign currencies

Transactions in foreign currencies are translated into Euros at the exchange rate prevailing on the transaction date.

On the balance sheet date, monetary assets and liabilities expressed in foreign currencies are translated at the exchange rate prevailing on that date and exchange differences arising from this conversion are recognised in the income statement. When qualifying as hedges on investments in foreign subsidiaries the exchange differences are deferred on the Company’s equity.

The main exchange rates applied on the balance sheet date are as follows:

3. Segments reporting Segment information is presented in accordance with internal reporting to Management. Based on this report, the Management evaluates the performance of each segment and allocates the available resources.

Management monitors the performance of the business based on a geographical and business perspective. In accordance with this, the segments are defined as Portugal Retail, Portugal Cash & Carry and Poland Retail. Apart from these there are also other businesses which due to their low materiality, are not reported separately.

Business segments:

▪ Portugal Retail: comprises the business unit of JMR (Pingo Doce supermarkets);

▪ Portugal Cash & Carry: includes the wholesale business unit Recheio;

▪ Poland Retail: the business unit which operates under the Biedronka banner;

▪ Others, eliminations and adjustments: includes i. business units with reduced materiality (Coffee Shops, Chocolate Stores and Agribusiness in Portugal, Health and Beauty Retail in Poland, Retail business in Colombia; ii. the Holding Companies; and iii. Group’s consolidation adjustments.

Management evaluates the performance of segments based on the Earnings Before Interest and Taxes (EBIT). This indicator excludes the effects of other operating profits/losses.

Detailed Information by Business Segments as at June 2019 and 2018

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018

Net sales and services 2,105,919 2,018,696 466,857 457,707 6,064,011 5,761,571 271,547 187,714 8,908,334 8,425,688

Inter-segments 208,528 196,982 2,250 1,324 790 705 (211,568) (199,011) - -

External customers 1,897,391 1,821,714 464,607 456,383 6,063,221 5,760,866 483,115 386,725 8,908,334 8,425,688

Operational cash flow (EBITDA) 118,376 77,234 26,816 22,930 560,426 406,504 (38,291) (60,237) 667,327 446,431

Depreciations and amortisations (74,440) (49,189) (10,416) (7,286) (225,327) (106,650) (41,670) (15,512) (351,853) (178,637)

Earnings before interest and taxes (EBIT) 43,936 28,045 16,400 15,644 335,099 299,854 (79,961) (75,749) 315,474 267,794

Other operating profits/losses (4,073) (4,857)

Financial results and gains in investments (77,526) (13,349)

Income tax (59,737) (62,722)

Net result attributable to JM 163,113 179,741

Total assets (1) 2,181,875 1,755,330 468,908 754,050 5,196,609 3,885,422 1,117,973 265,125 8,965,365 6,659,927

Total liabilities (1) 1,707,360 1,272,571 461,645 735,172 4,318,610 2,805,321 495,858 (169,391) 6,983,473 4,643,673

Investments in tangible and intangible assets 63,194 40,677 11,860 15,192 107,600 164,395 47,810 73,335 230,464 293,599

(1) The comparative report is 31 December of 2018

Portugal Retail Portugal Cash & Carry Poland RetailOthers, eliminations and

adjustmentsTotal JM Consolidated

Euro foreign exchange reference rates ( x foreign exchange units per 1 euro ) Polish Zloty (PLN)

Swiss Franc

(CHF)

Colombian Peso

(COP)

Rate at 30 June 2019 4.2496 1.1105 3,638.4500

Average rate for the year 4.2913 - 3,602.7400

Rate at 30 June 2018 4.3732 1.1569 3,433.3900

Average rate for the year 4.2209 - 3,446.5300


Reconciliation between EBIT and operational result

4. Operating costs by nature

4.1. Other operating profits/losses

Operating costs by nature include the following other operating losses and gains considered material, which are excluded from the Group's performance indicators, to assure a better comparability between financial periods:

5. Net financial costs

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

Jun 2019 Jun 2018

EBIT 315,474 267,794

Other operating profits/losses (4,073) (4,857)

Operational result 311,401 262,937

Jun 2019 Jun 2018

Cost of goods sold and materials consumed (6,969,550) (6,603,779)

Changes in inventories of finished goods and work in progress 5,473 1,619

Net cash discount and interest paid to suppliers 19,196 13,710 Electronic payment commissions (17,847) (15,782)Other supplementary costs (2,794) (2,161)Supplies and services (331,167) (302,099)Advertising costs (50,201) (51,674)Rents (7,525) (193,890)Staff costs (781,548) (725,122)Depreciation and amortisation of tangibles and intangibles assets (193,070) (178,637)Amortisation of right-of-use assets (158,783) -Profit/loss with tangible and intangible assets (2,074) (1,741)Profit/loss with right-of-use assets 272 -Transportation costs (98,211) (91,324)Other natures of profit/loss (9,104) (11,871)

Total (8,596,933) (8,162,751)

Jun 2019 Jun 2018

Legal contingencies - (15)Losses from organizational restructuring programmes (3,136) (4,297)

Assets write-offs and gains/losses in sale of tangible assets (937) (545)

Total (4,073) (4,857)

Jun 2019 Jun 2018

Banks interest expense (13,159) (10,574)Leasing interest expense (66,009) -Interest received 1,555 1,239 Dividends - 46 Net foreign exchange (721) (2,341)Net foreign exchange on leasing 3,733 -Other financial gains and losses (2,417) (2,055)Fair value of financial investments held for trade:

Derivative instruments (note 8) (693) 337

Total (77,711) (13,348)


Other financial gains and losses include costs with debt issued by the Group, booked in results through effective interest method.

6. Income tax recognised in the income statement

Income tax expense is calculated based on the weighted average annual income tax rate expected for the year. In 2019 the income tax rates for Group companies were the same applied in 2018.

7. Tangible assets, intangible assets, investment property and right-of-use assets

Net value of intangible assets at 30 June 2019 include Goodwill amounted EUR 641,229 thousand.

Due to currency translation adjustment of the assets in the Group’s businesses reported in foreign currency, the net amount of tangible and intangible assets and right-of-use assets increased by EUR 69,242 thousand, which includes an increase of EUR 3,743 thousand related to Goodwill from businesses in Poland.

Jun 2019 Jun 2018

Current income taxCurrent tax of the year (81,129) (60,782)Adjustment to prior year estimation 2,896 (1,712)

(78,233) (62,494)

Deferred taxTemporary differences created and reversed 16,507 (6,260)Change to the recoverable amount of tax losses and temporary differences from previous years 1,453 841

17,960 (5,419)

Other gains/losses related to taxImpact of changes in estimates for tax litigations 536 5,191

536 5,191

Total income tax (59,737) (62,722)

Tangible assets Intangible assetsInvestment

property

Right-of-use

assetsTotal

Net value at 31 December 2018 3,687,053 792,514 11,676 - 4,491,243

Foreign exchange differences 35,619 5,278 - 28,345 69,242 Changes in accounting policies (14,211) - - 2,417,160 2,402,949 Increases 226,151 4,313 - 68,219 298,683 Contracts update - - - 40,164 40,164 Disposals and write-offs (3,133) - - - (3,133)Contracts cancellation - - - (35,174) (35,174)Transfers (100) 229 - (129) -Depreciation, amortisation and impairment losses (186,161) (6,909) - (158,783) (351,853)Transfers from/to investment property (30) - 30 - -Fair value changes - - (20) - (20)

Net value at 30 June 2019 3,745,188 795,425 11,686 2,359,802 6,912,101


8. Derivative financial instruments

9. Trade debtors, accrued income and deferred costs

Non-current debtors are mainly related to additional corporate income tax liquidation as well as pre-paid corporate income tax, which the Group is disputing, and regarding which made a legal claim for reimbursement.

The debtor’s amount is registered at the recoverable value. Debtors with overdue amounts are subject to an analysis of the probability of future losses, based on historical information, taking into account the nature of the commercial relationship established, as well as to existing collateral and credit insurance, with reinforcements/reversals of adjustments for impairment losses recognized when justified.

10. Cash and cash equivalents

CurrentNon-

current Current

Non-

current Current

Non-

current Current

Non-

current

Derivatives held for trading

Currency forwards - stock purchase (COP/USD) 1 million USD - - 41 - - - - - -

Currency forwards - stock purchase (EUR/USD)0,3 million

USD- - 2 - - - - - -

Currency forwards - stock purchase (PLN/EUR)94 million

EUR- - 655 -

68 million

EUR33 - 31 -

Cash flow hedging derivatives

Interest rate swap (PLN)172 million

PLN- - 49 -

177 million

PLN- - - 62

Currency forwards - stock purchase (PLN/USD)14 million

USD- - 230 - - - - -

Foreign operation investments hedging derivatives

Currency forwards (PLN)279 million

PLN- - 675 -

567 million

PLN26 - 128 -

Total derivatives held for trading - - 698 - 33 - 31 -

Total hedging derivatives - - 954 - 26 - 128 62

Total assets/liabilities derivatives - - 1,652 - 59 - 159 62

Notional Assets Liabilities Assets LiabilitiesNotional

Jun 2019 Dec 2018

Jun 2019 Dec 2018

Non-currentOther debtors 64,445 63,522 Collateral deposits associated to financial debt 19,367 19,367 Deferred costs 1,971 1,824

Total 85,783 84,713

CurrentCommercial customers 62,784 58,417 Other debtors 115,728 128,523 Other taxes receivable 5,550 7,945 Accrued income and deferred costs 177,151 240,757

Total 361,213 435,642

Jun 2019 Dec 2018

Bank deposits 402,954 394,279 Short-term investments 120,096 147,870 Cash and cash equivalents 3,940 3,839

Total 526,990 545,988


11. Cash generated from operations

12. Dividends

Dividends distributed in 2019 totalling EUR 219,501 thousand, were paid to JMH shareholders in the amount of EUR 204,241 thousand, and to non-controlling interests in the Group Companies in the amount of EUR 15,260 thousand.

13. Basic and diluted earnings per share

14. Borrowings

The Group has negotiated commercial paper programs in the total amount of EUR 335,000 thousand, of which EUR 135,000 thousand are committed. The utilizations under these programs are remunerated at the Euribor rate for the respective issue period, plus variable spreads.

During the first Half of the year, some emissions were carried out for short periods to meet specific cash requirements, but without any utilization at the end of June 2019.

Last year Money Market lines were contracted by Jerónimo Martins, SGPS, S.A. and JMR, SGPS, S.A., with a limit of EUR 70,000 thousand, and a regular utilization has been made in the first months of the current year.

A new loan was negotiated for the JM Nieruchomości company with a two-year PLN 400,000 thousand limit (around EUR 94,100 thousand), which was partially used to pay the financing of PLN 300,000 thousand that the company already held with the same bank and that matured in April.

The financing lines that Jerónimo Martins Colombia, SAS holds with local banks were increased for an amount above COP 165,000,000 thousand, around EUR 45,000 thousand, with maturity of 1 year.

Jun 2019 Jun 2018

Net results 163,113 179,741 Adjustments for:

Non-controlling interests 11,025 7,125 Income tax 59,737 62,722 Depreciations and amortisations 351,853 178,637 Provisions and other operational gains and losses 15,747 10,727 Net financial costs 77,711 13,394 Gains/Losses in associated companies (139) 1 Gains/Losses in other investments (46) (46)Profit/ Losses in tangible, intangible and right-of-use assets 1,802 1,741

680,803 454,042

Changes in working capital:Inventories 26,638 (54,815)Trade debtors, accrued income and deferred costs (3,342) (8,275)Trade creditors, accrued costs and deferred income 6,176 (84,649)

Total 710,275 306,303

Jun 2019 Jun 2018

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)

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

Diluted net results of the year attributable to ordinary shares 163,113 179,741

Basic and diluted earnings per share – Euros 0.2596 0.2860


14.1. Current and non-current loans

15. Lease liabilities

16. Financial debt

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

17. Provisions and employee benefits

Jun 2019Opening

balance

Change acc.

policyCash flows Transfers

Foreign

exchange

difference

Closing

balance

Non-current loansBank loans 277,524 - (50,870) 65,144 3,801 295,599 Financial lease liabilities 10,866 (10,866) - - - -

Total 288,390 (10,866) (50,870) 65,144 3,801 295,599

Current loansBank overdrafts - - 16,417 - 161 16,578 Bank loans 346,531 - 74,956 (65,144) 8,241 364,584 Financial lease liabilities 4,283 (4,283) - - - -

Total 350,814 (4,283) 91,373 (65,144) 8,402 381,162

Dec 2018Opening

balance

Change acc.

policyCash flows Transfers

Foreign

exchange

difference

Closing

balance

Non-current loans

Bank loans 231,508 - 133,226 (79,390) (7,820) 277,524

Financial lease liabilities 6,254 - 10,487 (5,649) (226) 10,866

Total 237,762 - 143,713 (85,039) (8,046) 288,390

Current loans

Bank overdrafts 6 - (6) - - -

Bank loans 297,526 - (12,125) 79,390 (18,260) 346,531

Financial lease liabilities 1,973 - (3,260) 5,649 (79) 4,283

Total 299,505 - (15,391) 85,039 (18,339) 350,814

Jun 2019Opening

balance

Change acc.

policyNew contracts Cash flows Transfers

Contracts

change/

cancel

Foreign

exchange

difference

Closing

balance

Lease liabilities - non-current - 2,042,191 58,734 (1,140) (122,498) 1,629 20,829 1,999,745 Lease liabilities - current - 370,964 9,485 (131,618) 122,498 3,088 3,820 378,237

Total - 2,413,155 68,219 (132,758) - 4,717 24,649 2,377,982

Jun 2019 Dec 2018

Non-current loans (note 14.1) 295,599 288,390 Current loans (note 14.1) 381,162 350,814 Financial lease liabilities - non-current (note 15) 1,999,745 -Financial lease liabilities - current (Note 15) 378,237 -Derivative financial instruments (note 8) 1,652 162 Interest on accruals and deferrals 2,725 1,750 Bank deposits (note 10) (402,954) (394,279)Short-term investments (note 10) (120,096) (147,870)Collateral deposits associated to financial debt (note 9) (19,367) (19,367)

Total 2,516,703 79,600

Risks and

contingencies

Employee

benefitsBalance at 1 January 26,565 65,069

Set up, reinforced and transfers 4,690 4,238 Unused and reversed (3,392) - Foreign exchange difference 83 288 Used (257) (1,238)

Balance at 30 June 27,689 68,357


18. Trade creditors, accrued costs and deferred income

19. Contingencies

Following the contingencies mentioned in the 2018 Annual Report, occurred the following changes:

Contingent liabilities

b) The Portuguese Tax Authorities carried out some corrections to the CIT amount from Companies included in the perimeter of the Tax group headed by JMR SGPS, which led to additional assessments concerning 2002 to 2015, amounting to EUR 81,304 thousand, of which an amount of EUR 71,200 thousand is still in dispute. In the meantime, the Lisbon Tax Court has ruled partially in favour of the Group regarding the 2002, 2003, 2004, 2005 and 2007 assessments. The Group appealed to a higher court;

i) The Food and Veterinary Department (Direcção-Geral de Alimentação e Veterinária) claimed from Pingo Doce, Recheio and Hussel an amount of EUR 18,782 thousand, EUR 1,886 thousand and EUR 41 thousand, respectively, in respect of the Food Safety Tax (Taxa de Segurança Alimentar Mais – TSAM) assessed for the years 2012 to 2019. The values at stake have been challenged in Court, since it is understood that this tax is not due, namely on the grounds of the unconstitutional nature of the Statute that approved the TSAM. Despite the court having decided that the Food Safety Tax is not unconstitutional, the Companies maintain their understanding and presented the respective appeal to the Constitutional Court, which kept the decision. Pingo Doce complained of the decision to the Conference of Judges, and at the same time filed a complaint with the European Commission based on illegal state aid. The disputes are still running their course. The Group regularly assesses the risk and likelihood of its conclusion. However, in order to protect its legitimate interests and not to harm its position in these disputes, it does not disclose the amounts that could be provisioned.

In a lawsuit brought by a former landlord of the subsidiary Jeronimo Martins Polska SA (JMP) the plaintiff claims from the company the amount of PLN 10,360 thousand, as compensation for loss of profit, corresponding to rents that would have been due if the underlying lease agreement had not been terminated by the company. Given that the property has been sold in the meantime, JMP considers that the compensation claimed is not due, at least in the amount claimed since it must be taken into account that the former landlord was able to dispose of the property, which, incidentally, could have alternatively leased to a third party. The case is running its course and the court has referred the parties to mediation, whose first session is scheduled for August 2019.

20. Related parties

56.136% of the Company is owned by the Sociedade Francisco Manuel dos Santos, B.V., and no transactions occurred between this Company and any other company of the Group in the first Half of 2019, neither were there any amounts payable or receivable between them on 30 June 2019.

Jun 2019 Dec 2018

Non-currentOther commercial creditors 42 37 Accrued costs and deferred income 725 737

Total 767 774

CurrentOther commercial creditors 2,987,084 3,039,806 Other non-commercial creditors 216,097 233,232 Other taxes payables 127,087 113,996 Contracts liabilities with customers 4,961 3,722 Refunds liabilities to customers 751 1,041 Accrued costs and deferred income 398,362 402,614

Total 3,734,342 3,794,411


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

All the transactions with these related parties were made under normal market conditions, i.e. the transaction value corresponds to prices that would be applicable between non-related parties.

Outstanding balances between Group companies and related parties, being a result of trade agreements, are settled in cash, and are subject to the same payment terms as those applicable to other agreements celebrated between Group companies and their suppliers.

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

21. 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.


The Certified Accountant The Board of Directors

Jun 2019 Jun 2018 Jun 2019 Jun 2018

Sales and services rendered - - 54 98

Interest income 23 - - -

Stocks purchased and services supplied 2,065 - 58,297 58,820

Jun 2019 Dec 2018 Jun 2019 Dec 2018

Trade debtors, accrued income and deferred costs 15 28 21 58

Trade creditors, accrued costs and deferred income 975 518 7,606 2,484 (*) Other related parties corresponds to Other financial investments ,entities participated and/or controlled by the major Shareholder of Jerónimo Martins

and entities owned or controlled by members of the Board of Directors.

Joint ventures Other related parties (*)

Joint ventures Other related parties (*)

Sociedade Anónima - Capital Social 1.335.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 20161480 na Comissão do Mercado de Valores Mobiliários

Contribuinte N.º 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número

A member firm of Ernst & Young Global Limited

Ernst & Young Audit & Associados - SROC, S.A. Avenida da República, 90-6º 1600-206 Lisboa Portugal

Tel: +351 217 912 000 Fax: +351 217 957 586 www.ey.com

(Translation from the original Portuguese language. In case of doubt, the Portuguese version prevails.)

Limited review report on the consolidated financial statements

Introduction

We have performed a limited review on the consolidated financial statements of Jerónimo Martins, S.G.P.S., S.A., which comprise the consolidated statement of financial position as at 30 June 2019 (showing a total of 8.965.365 thousand Euros and a shareholder’s equity total of 1.981.892 thousand Euros, including a consolidated net profit attributable to equity holders of the parent of 163.113 thousand Euros), consolidated income statement by functions, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the six month period then ended, and the notes to the consolidated financial statements which includes a summary of significant accounting policies.

Board of Directors responsibilities

The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with the International Financial Reporting Standards as endorsed by the European Union for Interim Financial Reporting (IAS 34), and for the design and maintenance of an appropriate system of internal control to enable the preparation of consolidated financial statements which are free from material misstatement due to fraud or error.

Auditor’s Responsibilities

Our responsibility is to express an opinion on these consolidated financial statements based on our review. We conducted our review in accordance with the International Standard on Review Engagements 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and other rules and technical and ethical requirements issued by the Institute of Statutory Auditors. Those standards require that our work is performed in order to conclude that nothing has come to our attention that causes us to believe that the consolidated financial statements have not been prepared in all material respects in accordance with the International Financial Reporting Standards as endorsed by the European Union for Interim Financial Reporting (IAS 34) A review of financial statements is a limited assurance engagement. The procedures performed consisted primarily of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluating the evidence obtained. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these consolidated financial statements.

Conclusion

Based on our review procedures, nothing has come to our attention that causes us to believe that the consolidated financial statements of Jerónimo Martins, S.G.P.S., S.A., as at 30 June 2019, have not been prepared, in all material respects, in accordance with the International Financial Reporting Standards as endorsed by the European Union for Interim Financial Reporting (IAS 34). Lisbon, 2 August 2019 Ernst & Young Audit & Associados – SROC, S.A. Sociedade de Revisores Oficiais de Contas (n.º 178) Represented by: (Signed) João Carlos Miguel Alves - ROC n.º896 Registered with the Portuguese Securities Market Commission under license nr 20160515

CONSOLIDATED REPORT AND ACCOUNTS · I – Consolidated Management Report Message from the Chairman...

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