Título Subtítulo. First Nine Months Consolidated Report Non Audited

Transcription

1 Título Subtítulo First Nine Months Consolidated Report 2012 Non Audited

2 First Nine Months 12 INDEX I Consolidated Management Report Message from the CEO 3 1. Introduction 3 2. Sales Analysis 3 3. Results Analysis 4 4. Balance Sheet 5 5. Outlook for Distribution from Free Reserves Proposal 6 II Consolidated Management Report Appendix 1. Sales Growth 7 2. Stores Network 7 3. EBITDA Margin Breakdown 7 4. Definitions 7 5. Information Regarding Individual Financial Statements 7 III Consolidated Financial Statements 1. Consolidated Financial Statements 9 2. Notes to the Consolidated Financial Statements 13

3 I. CONSOLIDATED MANAGEMENT REPORT Message from the CEO Pedro Soares dos Santos First Nine Months 12 Consolidated Management Report Biedronka completed, ahead of schedule, its ambitious plan to convert all stores to a new layout, confirming its execution capacity and operational excellence. The Company has now a completely new store network that reinforces the visibility of its perishables operation as an additional key differentiating factor. This gives Biedronka a significant competitive advantage executed at the most efficient cost in the market to build on the strong market share growth already achieved. By anticipating consumption trends and acting fast in responding to the new needs of the Polish consumer, Biedronka has consolidated its position as the preferred food store in the market, and strengthened the pillars of its profitable growth. In Portugal, the deteriorating socio-economic environment is accentuating the decline of consumer expenditure and shoppers sensitiveness to price. In this context, our focus is to remain competitive in order to reinforce our market share. Biedronka's strong performance enables us to confirm the positive outlook for the Group in terms of double-digit sales growth (at constant exchange rate) and good earnings growth in 2012, reassuring my confidence that we have the right business model to achieve the growth potential we have identified in Poland. 1. Introduction The Group delivers a solid performance in the quarter in tougher conditions, with sales growth in both Poland and Portugal. Biedronka ends the quarter with the entire store network operating with the new layout, maintaining at the same time, in the nine months, a strong growth in sales (+18%) and EBITDA (+23%). 2. Sales Analysis (Million Euro) 9M 12 9M 11 D % Q3 12 Q3 11 D % % total % total Pln Euro % total % total Pln Euro Biedronka 4, % 4, % 17.6% 12.5% 1, % 1, % 16.8% 16.9% Pingo Doce 2, % 2, % 4.1% % % 3.2% Recheio % % 0.8% % % 0.0% Manufacturing % % 0.8% % % 2.2% Mkt. Repr. and Rest. Serv % % -3.6% % % -7.4% Consolidation Adjustments % % 3.3% % % 0.3% Total JM 7, % 7, % 8.7% 2, % 2, % 10.8% p.m. Pingo Doce 2,266 2, % % (store sales) Consolidated sales reached 7,953.8 million, 8.7% (+11.7% at a constant exchange rate) ahead of the first nine months of the previous year, as a result of a like-for-like (LFL) Group sales performance of 3.8%, and the contribution from the new stores. Although the zloty has strengthened during the third quarters, compared to first nine months of the previous year it still had a negative impact of million on the Group s sales. Sales (Million Euro) 9M 11 9M % +8.7% 7,954 7,320 LFL Growth (9M 12/9M 11) Crescimento LFL (1T 12/1T 11) 9.5% 6.5% 4,867 4,328 Biedronka +3.6% 2,266 2,188 Pingo Doce (store sales) + 0.8% Recheio +5.9% Manuf. & Others JM Consolidated 0.1% * 2.0% Biedronka Pingo Doce 2.6% -0.3% * Ex-petrol LFL: +0.3% 3.8% 5.3% Recheio JM Cons. 3

4 First Nine Months 12 Consolidated Management Report Biedronka's sales increased by 17.6% in local currency, as a result of a 6.5% increase in LFL sales and the additional number of stores. The 5.5% LFL performance in 3 rd Quarter, registered, as expected, an acceleration from 2 nd Quarter performance and included a positive evolution of both number of visits and average ticket. The average inflation of Biedronka's basket was c.1.5p.p. lower than previous quarters. Biedronka opened, in the 3 rd Quarter, 66 new stores and inaugurated its eleventh distribution centre at the beginning of October, now operating 10 logistic regions in Poland. In Portugal, food retail sales fell by 1.3% in July and August reflecting the decline in consumer expenditure in a market that remains highly promotionally intense. However, Pingo Doce continues to reinforce its market share, posting a growth of 2.5% of sales in 3 rd Quarter, helped by an additional five stores compared to the previous year and a LFL performance of -0.8%, excluding fuel. Recheio's sales in 3 rd Quarter were in line with same quarter previous year, with LFL of -0.1%. Within the two segments in which the company operates - Traditional and HoReCa it benefitted from its strong competitive position. The positive performance of the Traditional channel was offset by the negative impact of the HoReCa channel, which has been in decline since March However Recheio is doing better than the market and continues to gain share. In Manufacturing, market conditions continued to be extremely demanding but the growth of some categories led to a 2.2% increase in sales in the quarter. Marketing, Representations and Restaurant Services, posted a sales decrease of 3.6% in the first nine months, affected by the difficult market conditions. 3. Results Analysis (Million Euro) 9M 12 9M 11 D Q3 12 Q3 11 D Consolidated Sales 7,954 7, % 2,846 2, % Total Margin 1, % 1, % 6.9% % % 7.4% Operating Costs -1, % -1, % 7.7% % % 8.6% EBITDA % % 5.2% % % 5.4% Depreciation % % 7.3% % % 7.2% EBIT % % 4.3% % % 4.9% Financial Results % % -6.7% % % 0.8% Non Recurrent Items % % n.a 0 0.0% 0 0.0% n.a EBT % % 2.8% % % 4.9% Taxes % % 5.5% % % 9.4% Net Profit % % 2.0% % % 3.8% Non Controlling Interest % % -73.4% % % -26.0% Net Profit attr. to JM % % 6.2% % % 7.0% EPS ( ) % % Cash Flow per share ( ) % % Operating Profit In the first nine months, consolidated EBITDA increased by 5.2% to million, reaching 7.0% of sales. At a constant exchange rate, EBITDA was up by 8.6%. (Million Euro) % 7.0% (% Sales) 8% % 0 9M 11 9M 12 0% 4

5 First Nine Months 12 Consolidated Management Report In Poland, the positive evolution of Biedronka's EBITDA margin in the quarter reflected the benefits of the scale of the operation and the strict control over operating expenses. EBITDA generated by Biedronka in the first nine months increased by 23.3% in local currency (+17.9% in euros). In Distribution in Portugal, EBITDA decreased by 11.2%, to million, mostly reflecting Pingo Doce's investment supporting its promotional plan, which has been essential in strengthening the banner s competitive position. Operating costs are being well managed despite high inflation in a number of costs, particularly energy. In the area of Manufacturing and Services, the decline of the EBITDA margin reflected the decision to improve the price competitiveness in some key categories. Net Result Net profit attributable to Jerónimo Martins increased by 6.2% to million (+7.6% excluding non-recurring items) 4. Balance Sheet (Million Euro) 9M M 11 Net Goodwill Net Fixed Assets 2,662 2,411 2,262 Net Working Capital -1,650-1,542-1,370 Others Invested Capital 1,826 1,650 1,669 Total Borrowings Leasings Accrued interest Marketable sec. & Bank deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,574 1,422 1,338 Gearing 16.0% 16.0% 24.7% Consolidated net debt was reduced from million to million. Gearing fell to 16.0%. In view of the strength of the Balance Sheet, the Board of Directors will request an extraordinary Shareholders meeting to approve the distribution in 2012 of approximately 150 million from free reserves to shareholders. Investment Programme The Group invested million in the first nine months, 87.4% of which was allocated to Biedronka. 5. Outlook for 2012 In the first nine months, the sales performance of all the business areas ahead of the markets resulted in an increase in the market shares. In Poland, Biedronka set itself very ambitious targets. Despite the significant challenges associated with remodelling the entire store network in 12 months, the Company maintained a strong sales performance, controlling operating expenses and executing the plan for store openings, which is on track to open 250 new stores in the year. At the end of September, Biedronka was operating all its stores with a new layout and equipment that will allow it to meet the consumer trends in the market better than any other retailer. This was another important step towards the sustainable differentiation of Biedronka s value proposition, by integrating aspects that are increasingly valued by the Polish consumer into Biedronka's business model. 5

6 First Nine Months 12 Consolidated Management Report As such, we believe that Biedronka is in an excellent position to maintain its growth momentum ahead of the market. In Portugal, the extremely fragile economic environment is reflected in weaker consumption. In this context, Pingo Doce will continue to reinforce its price positioning and strengthen its competitiveness in the market. We expect this strategy to support the above-market sales performance with a positive LFL for the year. The Group's investment programme for 2012 is forecast to reach around 650 million euros, 80% of which will be invested in Poland. Despite the difficulties in Portugal and the slowdown of the growth of the Polish economy, the Group remains confident that 2012 will be another good year. We expect double-digit consolidated sales growth (at a constant exchange rate) and a healthy improvement in profitability. With the decision to invest in strengthening our business in Portugal, we estimate that the Group's EBITDA margin will be slightly below the previous year. 6. Distribution from Free Reserves Proposal 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 150,195, from free reserves, payable in This is equivalent to the gross amount of per share, to be distributed to the Shareholders proportionally to their holdings, excluding own shares. Lisbon, 24 th October 2012 The Board of Directors 6

7 First Nine Months 12 Consolidated Management Report Appendix II. CONSOLIDATED MANAGEMENT REPORT APPENDIX 1. Sales Growth Biedronka 2. Stores Network Total Sales Growth LFL Sales Growth Q1 12 Q2 12 H1 12 Q3 12 9M 12 Q1 12 Q2 12 H1 12 Q3 12 9M 12 Euro 13.1% 7.6% 10.1% 16.9% 12.5% PLN 21.0% 15.6% 18.1% 16.8% 17.6% 9.5% * 4.7% * 7.0% * 5.5% * 6.5% * Pingo Doce 2.1% 6.1% 4.2% 2.5% 3.6% -1.6% ** 2.4% ** 0.5% ** -0.6% ** 0.1% ** Recheio 4.0% -1.0% 1.3% 0.0% 0.8% 2.6% -2.9% -0.4% -0.1% -0.3% Manufacturing -1.5% 1.3% 0.1% 2.2% 0.8% -1.5% 1.3% 0.1% 2.2% 0.8% Mkt. Repr. and Rest. Serv. -1.8% -1.0% -1.3% -7.4% -3.6% -1.7% 0.1% -0.7% -7.6% -3.3% * Excluding days of closure for store layout conversion ** Ex-petrol LFL -0.8% 2.4% 0.8% -0.8% 0.3% Number of Stores 2011 Openings Closings Network Q1 12 Q2 12 Q3 12 9M 12 9M 12 9M 11 Biedronka 1, ,006 1,756 Pingo Doce Recheio Sales Area (sqm) 2011 Openings Closings * Network Q1 12 Q2 12 Q3 12 9M 12 9M 12 9M 11 Biedronka 1,113,192 22,276 26,402 46,585 1,111 1,207,345 1,030,626 ** Pingo Doce 451, ,248 1,500 2, , ,936 Recheio 128, , ,975 * Including changes of sales area due to remodellings **Restated 3. EBITDA Margin Breakdown (% of sales) 9M 12 9M 11 Distribution Poland 8.2% 7.8% Distribution Portugal 5.4% 6.3% Manufacturing and Services 9.3% 10.0% 4. Definitions Like For Like (LFL) sales: sales made by stores that operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound remodelling are excluded for the remodelling period (store closure); Cash Flow per share: (Net Profit + Depreciation Deferred tax Non-recurrent items) / Number of Shares; Gearing: Net Debt / Shareholder Funds. 5. Information Regarding Individual Financial Statements In accordance with number 3 of article 10 of the Regulation number 5/2008 of the Portuguese Securities Market Commission (CMVM), the Quarter Individual Financial Statements of Jerónimo Martins SGPS, S.A. will not be disclosed as they do not include significant information. 7

8 III. CONSOLIDATED FINANCIAL STATEMENTS First Nine Months 12

9 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED INCOME STATEMENT BY FUNCTIONS FOR SEPTEMBER 2012 AND 2011 Euro thousand Notes 9 Months Months rd Quarter rd Quarter 2011 Sales and services rendered 3 7,953,799 7,319,767 2,845,688 2,568,263 Cost of sales 4 (6,177,479) (5,658,404) (2,204,898) (1,971,795) Gross profit 1,776,320 1,661, , ,468 Distribution costs 5 (1,234,110) (1,148,162) (417,559) (384,470) Administrative costs 5 (156,069) (142,820) (51,608) (48,359) Exceptional operating profits/losses 8.1 (14,095) (4,683) (275) (29) Operating profit 372, , , ,610 Net financial costs 6 (22,016) (23,714) (8,180) (8,170) Gains in associated companies Gains/Losses in other investments (1,500) - - Profit before taxes 350, , , ,614 Income taxes 7 (74,880) (70,953) (34,699) (31,732) Profit before non-controlling interests 275, , , ,882 Attributable to: Non-controlling interests 3,756 14,126 8,922 12,053 Jerónimo Martins Shareholders 271, , , ,829 Basic and diluted earnings per share-euros To be read with the attached notes to the consolidated financial statements. 9

10 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2012 AND AT 31 DECEMBER 2011 Euro thousand Assets Notes Tangible assets 9 2,531,300 2,300,501 Investment properties 9 52,080 52,128 Intangible assets 9 876, ,620 Investments in associated companies 736 1,052 Available-for-sale financial investments 11 6,011 6,157 Trade debtors and deferred costs 87,826 85,407 Derivative financial instruments Deferred tax assets 57,837 57,957 Total non-current assets 3,612,800 3,333,832 Inventories 436, ,262 Taxes receivable 49,200 33,834 Trade debtors, accrued income and deferred costs 277, ,200 Derivative financial instruments Cash and cash equivalents , ,155 Total current assets 1,285,301 1,147,451 Total assets 4,898,101 4,481,283 Shareholders equity and liabilities Share capital 629, ,293 Share premium 22,452 22,452 Own shares (6,060) (6,060) Fair value and other reserves ,221 (1,162) Retained earnings 575, ,338 1,272,965 1,120,861 Non-controlling interests 300, ,824 Total Shareholders equity 1,573,923 1,421,685 Borrowings , ,553 Derivative financial instruments 10 9,341 8,785 Employee benefits 16 34,800 33,954 Deferred profits - state grants Provisions for risks and contingencies 16 49,261 49,597 Deferred tax liabilities 115, ,155 Total non-current liabilities 535, ,954 Trade creditors, accrued costs and deferred income 2,228,326 2,006,336 Derivative financial instruments 10 3,364 4,038 Borrowings , ,672 Taxes payable 127, ,543 Deferred profits - state grants Total current liabilities 2,788,407 2,475,644 Total Shareholders equity and liabilities 4,898,101 4,481,283 To be read with the attached notes to the consolidated financial statements. 10

11 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED STATEMENT OF GAINS AND LOSSES RECOGNISED IN EQUITY 9 Months Months rd Quarter 2012 Euro thousand 3 rd Quarter 2011 Currency translation differences 60,165 (68,450) 23,208 (65,134) Fair value of cash flow hedging 817 2, (3,057) Fair value of hedging instruments on foreign operations (6,863) 6,757 (449) 6,322 Fair value of available-for-sale financial investments (146) (738) (69) (438) Gains/losses directly recognised in equity 53,973 (60,173) 22,750 (62,307) Net profit 275, , , ,882 Total gains/losses recognised 329, , ,335 61,575 Attributable to: Non-controlling interests 4,346 15,014 9,165 11,157 Jerónimo Martins Shareholders 324, , ,170 50,418 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Euro thousand Notes Shareholders equity attributable to Shareholders of Jerónimo Martins, SGPS, S.A. Share Capital Share Premium Own Shares Fair value and other reserves Retained Earnings Total Noncontrolling Interests Shareholders Equity Balance Sheet at 31 December ,293 22,452 (6,060) 63, , , ,706 1,131,812 Equity changes in 2011 Currency translation differences in the Nine Months of (68,450) (68,450) (68,450) Fair value of cash flow hedging ,370 1, ,258 Fair value of hedging instruments on foreign operations Fair value of available-for-sale financial investments ,757 6,757 6, (738) (738) (738) Gains/losses directly recognised in equity (61,061) (61,061) 888 (60,173) Net profit in the Nine Months of , ,676 14, ,802 Total gains/losses recognised during the year (61,061) 255, ,615 15, ,629 Dividends (2,686) (2,686) Non-controlling interests acquisition (84) (84) (257) (341) Balance Sheet at 30 September ,293 22,452 (6,060) 2, ,580 1,039, ,777 1,338,414 Balance Sheet at 31 December ,293 22,452 (6,060) (1,162) 476,338 1,120, ,824 1,421,685 Equity changes in 2012 Currency translation differences in the Nine Months of ,165 60,165 60,165 Fair value of cash flow hedging Fair value of hedging instruments on foreign operations Fair value of available-for-sale financial investments 13.1 (6,863) (6,863) (6,863) 13.1 (146) (146) (146) Gains/losses directly recognised in equity 53,383 53, ,973 Net profit in the Nine Months of , ,540 3, ,296 Total gains/losses recognised during the year 53, , ,923 4, ,269 Dividends 13.2 (172,819) (172,819) (4,212) (177,031) Balance Sheet at 30 September ,293 22,452 (6,060) 52, ,059 1,272, ,958 1,573,923 To be read with the attached notes to the consolidated financial statements. 11

12 JERÓNIMO MARTINS, SGPS, S.A. CONSOLIDATED CASH FLOW STATEMENT FOR SEPTEMBER 2012 AND 2011 Operating Activities Notes 9 Months 2012 Euro thousand 9 Months 2011 Cash generated from operations 599, ,885 Interest paid (27,405) (22,157) Income taxes paid (84,455) (50,849) Cash Flow from operating activities 487, ,879 Cash flow from investment activities (340,250) (242,353) Cash Flow from financing activities (169,648) (102,163) Net changes in cash and cash equivalents (22,577) 158,363 Cash and cash equivalents changes Cash and cash equivalents at the beginning of the year 530, ,927 Net changes in cash and cash equivalents (22,577) 158,363 Effect of currency translation differences 14,011 (23,796) Cash and cash equivalents at the end of 3 rd Quarter , ,494 To be read with the attached notes to the consolidated financial statements. CONSOLIDATED CASH FLOW STATEMENT FOR THE INTERIM PERIOD Euro thousand 9 Months Months rd Quarter rd Quarter 2011 Cash Flow from operating activities 487, , , ,120 Cash Flow from investment activities (340,250) (242,353) (122,939) (81,853) Cash Flow from financing activities (169,648) (102,163) (42,102) 12,534 Cash and cash equivalents changes (22,577) 158,363 60, ,801 12

13 Notes to the Consolidated Financial Statements 30 September 2012 and 2011 Index to the Notes to the Consolidated Financial Statements Page 1 Activity Accounting policies Segments reporting Costs of sales Distribution and administrative costs Net financial costs Income tax recognised in the income statement Exceptional operating profits/losses and gains/losses in other investments Fixed assets and investment property Derivative financial instruments Available-for-sale financial investments Cash and cash equivalents Capital and reserves Earnings per share Borrowings Provisions and adjustments to the net realisable value Contingencies Related parties

14 Notes to the Consolidated Financial Statements 30 September 2012 and Activity Jerónimo Martins, SGPS, S.A. (JMH), is the parent Company of Jerónimo Martins Group (Group) and has its head office in Lisbon. Jerónimo Martins Group is essentially devoted to the production, distribution and sale of food and other fast moving consumer goods products. The Group operates in Portugal and Poland. Head Office: Rua Tierno Galvan, Torre 3, 9º, J Lisbon Share Capital: 629,293,220 euros Registered at the Commercial Registry Office of Lisbon and Tax Number: JMH has been listed on Euronext Lisbon (ex-lisbon and Porto Stock Exchange) since The Board of Directors approved these consolidated financial statements on 24 th October Accounting policies All amounts are shown in thousand euros (EUR thousand) unless otherwise stated. The amounts presented for quarters, and the corresponding changes are not audited. The JMH consolidated financial statements were prepared in accordance with the interim financial reporting standard (IAS 34), and all other International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board (IASB) and with the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and with the same standards and accounting policies adopted by the Group on the elaboration of the annual financial statements, including mainly an explanation of the events and relevant changes for the understanding of variations in the financial position and Group performance since the last annual report. Thus, some of the notes from the 2011 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 Corporate Governance chapter of the 2011 Annual Report, the Company, as a result of its normal activity, is exposed to several risks which are monitored and mitigated throughout the year. During the first nine months of 2012, there were no material changes in addition to the notes in this annex, that could significantly change the assessment of the risks that the group is exposed to. In relation to 2011, the European Union issued the Regulation no. 475/2012, which adopted some improvements to IAS 1 presentation of financial statements and IAS 19 employee benefits. Its implementation is mandatory for financial years beginning on July 1 st, 2012 and January 1 st, 2013 respectively, having no material impact on the Group s Financial Statements. In March 2012 the IASB issued alterations to the IFRS 1 First-time Adoption of International Financial Reporting Standards. This alterations concern the way government loans should be booked and it becomes effective for the annual periods beginning on January 1 st, 2013, having no material impact on the Group s Financial Statements. In May 2012, IASB issued improvements to the norms IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34. The respective alterations become effective for the annual periods beginning on January 1st, 2013, having no material impact on the Group s Financial Statements. In June 2012, IASB issued improvements to the norms IFRS 10, IFRS 11 and IFRS 12 concerning guidance for the transition to the new norms. The respective alterations become effective for the annual periods beginning on January 1 st, 2013, having no material impact on the Group s Financial Statements. These alterations are still under the European Union approval process 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. 14

15 Notes to the Consolidated Financial Statements 30 September 2012 and 2011 The main exchange rates applied on the balance sheet date are those listed below: Euro foreign exchange reference rates (x foreign exchange units per 1 Euro) Rate on 30 September 2012 Average rate for the year Polish Zloty (PLN) US Dollar (USD) Swiss Franc (CHF) Colombian Peso (COP) 2, , 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 separates 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), 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 (Unilever Jerónimo Martins, Gallo Worldwide, Marketing Services and Representations, Restaurants, Pharmacies and Drugstores in Poland), ii) the Holding companies and iii) the Group s consolidation adjustments. (*) In 2012 Madeira business unit (Pingo Doce supermarkets and Recheio Cash & Carry) was integrated, respectively, in JMR and Recheio business areas. Management evaluates the performance of segments based on the Earnings Before Interest and Taxes (EBIT). This indicator excludes the effects of non-recurrent results. Detailed information by segment at September 2012 and 2011 Portugal Distribution Poland Distribution Others, eliminations and adjustments Total JM Consolidated Net sales and services 2,870,622 2,787,563 4,866,993 4,327, , ,330 7,953,799 7,319,767 Inter-segments (782) (271) External customers 2,870,314 2,787,368 4,866,351 4,327, , ,601 7,953,631 7,319,402 Operational cash-flow (EBITDA) 155, , , , , , ,200 Depreciations and amortisations (84,550) (81,287) (79,205) (71,678) (4,569) (3,854) (168,324) (156,819) Operational result (EBIT) 70,951 93, , ,995 (3,582) 10, , ,381 Financial results (21,870) (24,943) Net result attributable to JM 271, ,676 Total assets (1) 2,293,125 2,245,558 2,115,914 1,864, , ,292 4,898,101 4,481,283 Total liabilities (1) 1,607,732 1,555,736 1,434,806 1,215, , ,642 3,324,178 3,059,598 Investments in fixed assets 34,692 71, , ,678 7,626 3, , ,740 (1) The comparable amounts of total assets and liabilities are reported to 31 December 2011 Reconciliation between EBIT and the operational result of the income statement by functions September 2012 September 2011 EBIT 386, ,381 Non recurrent results (14,095) (4,683) Operational result 372, ,698 15

16 Notes to the Consolidated Financial Statements 30 September 2012 and 2011 Information by geographical segments at September 2012 and 2011 Net sales and services Portugal 3,066,857 2,985,471 Poland 4,886,942 4,334,296 Total 7,953,799 7,319,767 4 Costs of sales September 2012 September 2011 Net cost of products sold (6,162,247) (5,643,995) Net cash discount and interest paid to suppliers 1,020 3,144 Electronic payment commissions (12,186) (12,890) Other supplementary costs (4,066) (4,663) (6,177,479) (5,658,404) 5 Distribution and administrative costs September 2012 September 2011 Supplies and services (288,716) (271,844) Advertising costs (55,196) (49,600) Rents (173,328) (152,632) Staff costs (596,985) (558,315) Depreciations and profit/loss with fixed assets (166,121) (155,460) Transportation costs (106,722) (97,769) Other operational profit/loss (3,111) (5,362) (1,390,179) (1,290,982) 6 Net financial costs September 2012 September 2011 Interest expense (24,938) (24,436) Interest received 6,354 6,025 Dividends Net foreign exchange 1,478 (1,563) Other financial costs and gains (4,911) (3,762) Fair value of financial investments held for trade: Derivative instruments (18) 17 (22,016) (23,714) 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 9). Other financial costs and gains include costs with debt issued by the Group. 16

17 Notes to the Consolidated Financial Statements 30 September 2012 and Income tax recognised in the income statement September 2012 September 2011 Current income tax Current tax of the year (64,767) (60,540) Adjustment to prior year estimation (1,296) 100 Deferred tax (66,063) (60,440) Temporary differences created and reversed (9,806) (12,514) Change to the recoverable amount of tax losses and temporary differences from previous years 597 2,001 (9,209) (10,513) Other gains/losses related to taxes Impact of changes in estimates for tax litigations Total income taxes (74,880) (70,953) 8 Exceptional operating profits/losses and gains/losses in other investments 8.1 Exceptional operating profits/losses September 2012 September 2011 One-off Costs Pingo Doce (10,350) - Indemnities related to termination of lease agreement - (4,907) Losses with organizational restructuring programme (1,854) (173) Impact of actuarial assumptions changes Reimbursement of notary fees resulting from court decision Impairment of assets (470) (496) Write-off Electric Co (1,552) - Others (14,095) (4,683) 8.2 Gains/Losses in other investments September 2012 September 2011 Impairment of investment properties - (1,500) - (1,500) 9 Fixed assets and investment property Tangible assets Investment property Intangible assets Total Net value at 31 December ,300,501 52, ,620 3,183,249 Foreign exchange differences 88,442-33, ,511 Increases 305,901-21, ,654 Disposals and write-offs (3,163) - (120) (3,283) Transfers (11) - (441) (452) Depreciation and impairment losses (160,370) - (8,386) (168,756) Fair value changes - (48) - (48) Net value at 30 September ,531,300 52, ,495 3,459,875 As a consequence of the currency translation adjustment of the assets in the Group s businesses in Poland: - the Goodwill related to polish business (Biedronka), totalling PLN 1,282,278 thousand, was updated positively by EUR 24,826 thousand; 17

18 Notes to the Consolidated Financial Statements 30 September 2012 and the Goodwill related to polish pharmacies business (Bliska), totalling PLN 38,796 thousand, was updated positively by EUR 751 thousand. No valuations were made on the land allocated to operational activities, which are recognised at their market value. From the disposals and write-offs made in the first nine months of 2012, an amount of EUR 470 thousand was recognised as a loss in the profit and loss. 10 Derivative financial instruments Notional September 2012 December 2011 Assets Liabilities Notional Assets Liabilities Non Non Non Non Current Current Current Current Current Current Current Current Derivatives held for trading Interest rate swap Currency forwards (USD) 10 millions EUR 0.5 millions USD 10 millions EUR Fair value hedging derivatives USD loan hedging 96 millions USD millions USD Cash flow hedging derivatives Interest rate swap (EUR) millions EUR - - 2,637 9, millions EUR - - 4,038 7,629 Interest rate swap (PLN) 135 millions PLN millions PLN Foreign operation investments hedging derivatives Currency Forwards (PLN) 357 millions PLN Total derivatives held for trading Total hedging derivatives ,352 9, ,038 8,461 Total assets/liabilities derivatives ,364 9, ,038 8,785 As at 30 September 2012 the values shown include interest receivable or payable related with these financial instruments that are due. The net payable amount is EUR 3,014 thousand. 11 Available-for-sale financial investments Regarding the financial assets available-for-sale, the reduction of EUR 146 thousand relates to changes in the fair value of listed equity holdings, at the reporting date of these financial statements. 12 Cash and cash equivalents September 2012 December 2011 Bank deposits 200, ,517 Short-term investments 317, ,597 Cash and cash equivalents 3,393 3, , ,155 The short-term investments include short-term bank deposits and other negotiable funds for which provisions were booked to reduce it to the realizable value (note 16). 18

19 Notes to the Consolidated Financial Statements 30 September 2012 and Capital and reserves 13.1 Fair value and other reserves Land revaluation reserves Cash-flow Hedging Available-forsale financial assets Currency translation reserve Balance as at 1 January ,399 (5,114) (1,313) (85,134) (1,162) Fair value adjustment of financial investments: - Gross value - 1,061 - (6,863) (5,802) - Deferred/current tax - (244) - - (244) - Non-controlling interests - (590) - - (590) Fair value adjustment of available-for-sale financial investments: - Gross value - - (146) - (146) Currency translation differences: - In the year 2,682 (62) - 58,999 61,619 - Deferred tax (510) 12 - (956) (1,454) Balance as at 30 September ,571 (4,937) (1,459) (33,954) 52,221 Total Land revaluation reserves Cash-flow Hedging Available-forsale financial assets Currency translation reserve Balance as at 1 January ,116 (6,781) (455) (12,447) 63,433 Fair value adjustment of financial investments: - Gross value - 3,062-9,194 12,256 - Deferred/current tax - (804) - (2,437) (3,241) - Non-controlling interests - (888) - - (888) Fair value adjustment of available-for-sale financial investments: - Gross value - - (738) - (738) Currency translation differences: - In the year (2,411) (70,392) (72,673) - Deferred tax 458 (25) - 3,790 4,223 Total Balance as at 30 September ,163 (5,306) (1,193) (72,292) 2, Dividends Dividends distributed in 2012 totaling EUR 177,031 thousand, were paid to JMH Shareholders in the amount of EUR 172,819 thousand, and to non-controlling interests in the Group companies in the amount of EUR 4,212 thousand. 14 Earnings per share September 2012 September 2011 Ordinary shares issued at the beginning of the year 629,293, ,293,220 Own shares at the beginning of the year 859, ,000 Shares issued during the year - - Weighted average number of ordinary shares 628,434, ,434,220 Diluted net result attributable to ordinary shares 271, ,676 Basic and diluted earnings per share euros

20 Notes to the Consolidated Financial Statements 30 September 2012 and Borrowings JMR-Gestão de Empresas de Retalho, SGPS, S.A. renegotiated in the 2 nd Quarter a commercial paper programme, regarding pricing and maturity, for an extended period of more five years. In the 3 rd Quarter the Company has contracted a Mutual Loan, with maturity of three years. Jerónimo Martins Colombia formalised a short-term credit line. Jerónimo Martins, SGPS, S.A., reimbursed the 5-years bond loan issued in 2007 that matured in September Current and non-current loans Non-current loans September 2012 December 2011 Bank loans 85,000 83,647 Bond loans 232, ,798 Financial lease liabilities 7,830 17,108 Current loans 325, ,553 Bank overdrafts 46,105 8,085 Bank loans 115,691 90,468 Bond loans 252, ,000 Financial lease liabilities 14,531 21, , , Financial debt Since the Group entered several foreign exchange rate risk and interest risk hedging operations, as well as shortterm investments, the net consolidated financial debt at the balance sheet date is as follows: September 2012 December 2011 Non-current loans (note 15.1) 325, ,553 Current loans (note 15.1) 428, ,672 Derivative financial instruments (note 10) 12,122 12,813 Interest on accruals and deferrals 3,528 1,791 Bank deposits (note 12) (200,361) (340,517) Short-term investments (note 12) (317,835) (186,597) 251, , Provisions and adjustments to the net realisable value Opening balance Set up and reinforced Unused and reversed Foreign exchange difference Used Closing balance Doubtful debtors 22,932 1,984 (2,165) 262 (507) 22,506 Inventories 14, (4,049) ,542 Financial Investments (note 12) 3, ,575 Short terms investments Total fair value adjustments 41,153 2,388 (6,214) 860 (507) 37,680 Employee benefits 33,954 2,507 (88) - (1,573) 34,800 Provisions for risks and contingencies 49,597 3,643 (3,873) 413 (519) 49,261 Total of provisions 83,551 6,150 (3,961) 413 (2,092) 84,061 20

21 Notes to the Consolidated Financial Statements 30 September 2012 and Contingencies Following the contingencies mentioned in the 2011 Annual Report, changes occurred on the headings as follows: a) In 1999, as a result of the acquisition of two companies that held establishments previously owned by former franchisees of ITMI Norte-Sul Portugal Sociedade de Desenvolvimento e Investimento, S.A., which together with Regional de Mercadorias Sociedade Central de Aprovisionamento, S.A., filed a case against various Group companies, holding them liable for those ex-franchisees' alleged non-compliance with the contract they had signed with ITMI, demanding an indemnity payment of EUR 14,600 thousand. The court ruled in favour of the defendants, denying the plaintiff s claim. The plaintiff appealed to the Court of Appeal, which confirmed the ruling of the court. Meanwhile the plaintiff filed an appeal to the Supreme Court of Justice, which is still pending. The Board of Directors maintains its belief that the amount requested will probably not be granted; b) Proherre Internacional, Lda. claimed an indemnity payment of EUR 2,500 thousand from Pingo Doce Distribuição de Produtos Alimentares, S.A., alleging the termination of a lease agreement by Pingo Doce, without the minimum period agreed between the parties having elapsed. Pingo Doce contested this claim based on the fact that the lease was terminated through mutual agreement. In the meantime, a curative act was pronounced, and the trial was set for October Pingo Doce is convinced that the Court will reduce the amount that would result from the penalty clause, as it is manifestly excessive; l) The Tax Authorities assessed JMR Gestão de Empresas de Retalho, SGPS, S.A. for the amount of EUR 16,078 thousand due to the fact that JMR should restate the dividends received, in 2003 and 2004, from its subsidiary in the Madeira Free Zone, considering them as interest for tax purposes. According to the Portuguese Tax Authorities the said income should be subject to Corporate Income Tax in as opposed to the dividends received that are exempt. JMR s Management, supported by their tax consultants and legal advisors, consider that the report issued by the Tax Authorities does not have any legal basis or validity, and will use all the resources at its disposal to challenge it. The judicial, as well as the appeal, claims presented were ruled in favour of the Portuguese tax authorities, JMR s Management, supported by its lawyers and tax advisors opinion, still believe that those decisions are not valid nor have any legal grounds and has challenged and opposed the ruling; r) At the beginning of September 2011, Néstle initiated judicial proceedings against Unilever Jerónimo Martins, Lda., claiming a compensation of EUR 2,100 thousand for alleged similarity and confusion in the packaging of competing products. The defendant filed its statement of defense. Meanwhile the parties reached an agreement to terminate the judicial proceedings, which was confirmed by the court. This lawsuit followed the injunction proceedings filed by Néstle, which was ruled in its favour by the court and confirmed by the Court of Appeal. Pursuant to the decision of the Court of Appeal, the plaintiff commenced the enforcement proceedings of the injunction decreed against Unilever Jerónimo Martins, Lda., which was also settled by agreement and is still awaiting the respective judicial confirmation; s) Tengelmann KG filed arbitration proceedings against Jerónimo Martins, SGPS, S.A. before the German Institute of Arbitration, in Cologne. The plaintiff argues that Jerónimo Martins, SGPS, S.A. is liable for the non-payment of rents and contractual penalties, plus accrued interests, by Dystrybucja Integrator Sp. Z o.o. (previously Plus Discount Sp. z o.o. Plus Poland), in the amount of EUR 2,716 thousand, under the guarantee granted by Jerónimo Martins, SGPS, S. A. in the SPA regarding Plus Discount Sp. z o.o.. Jerónimo Martins, SGPS, S.A. considers the allegations ungrounded, therefore presented its statement of defense in the arbitral proceedings. Tengelmann KG presented its response and expanded the amount claimed to EUR thousand, plus accrued interest from June 1, Jerónimo Martins presented a rejoinder. Presently, the arbitration proceedings are awaiting the Court s decision on which witnesses (presented by the parties and with written statements filed) will be heard in oral hearings. tribunal 18 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 2012, neither were there any amounts payable or receivable between them on September 30 th,

22 Notes to the Consolidated Financial Statements 30 September 2012 and 2011 Balances and transactions of Group companies with related parties are as follows: Sales and services rendered Stocks purchased and services supplied September 2012 September 2011 September 2012 September 2011 Joint-Ventures ,289 62,549 Associated companies Trade debtors, accrued income and deferred costs Trade creditors, accrued income and deferred costs September 2012 December 2011 September 2012 December 2011 Joint-Ventures ,448 6,642 Associated companies Balances and transactions with related parties not eliminated in the consolidation process, were as follows: Sales and services rendered Stocks purchased and services supplied September 2012 September 2011 September 2012 September 2011 Joint-Ventures ,259 34,402 Associated companies Trade debtors, accrued income and deferred costs Trade creditors, accrued income and deferred costs September 2012 December 2011 September 2012 December 2011 Joint-Ventures ,697 3,653 Associated companies All the transactions with the jointly controlled companies (joint ventures) and associate companies were made under normal market conditions, i.e., the transaction value corresponds to prices that would be applicable between non related parties. Outstanding balances between Group companies and related parties, being a result of a trade agreement, are settled in cash, and are subject to the same payment terms as those applicable to other agreements celebrated between Group companies and their suppliers. The amounts receivable are not covered by insurance and no guarantees are given or received, as the Group holds a relevant influence over these companies. There are no provisions for doubtful debts and no costs were recognised during the year related with bad debts or doubtful debts with these related parties. Lisbon, 24 th October 2012 The Certified Accountant The Board of directors 22