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Exhibit 15.2









LOGO

GESTÃO DE EMPRESAS DE
RETALHO SGPS, SA

Registered at the Commercial Registry Office of Lisbon and Tax Number: 501 917 101

Share Capital: Eur 330.000.000

Rua Tierno Galvan, Torre 3,
9o , Letra J

1099-008 Lisboa



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|     |  |                                                                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|LOGO |  |                                                                                                                                                                                                     
|     | 
|     |  | PricewaterhouseCoopers & Associados  Sociedado de Revisores Oficials de Contas, Ltda. Palécio Sollomayor Rue Sousa Martina, 1-3° 1069-316 Lisbon Portugal Tel +351 213 590 000 Fax +351 213 599 999



Report of Independent
Auditors

To the board of Directors and Shareholders of JMR  Gestão de Empresas de Retalho, SGPS, S.A.

We have audited the accompanying consolidated balance sheet of JMR  Gestão de Empresas de Retalho, SGPS, S.A. (the Company) as of
December 31, 2005, and. the related consolidated income statements by functions, statement of changes in shareholders equity, cash flow statement and respective notes, for the year then ended (all expressed in Euro thousand). These
consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financing
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the
Companys Internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of JMR  Gestão de Empresas de
Retalho, SGPS, S.A. and subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the year then ended in conformity, with International Financial Reporting Standards as adopted by the European Union.

Lisbon, 17 February 2006

PricewaterhouseCoopers & Associados, S.R.O.C., Ltda.

represented by:



LOGO

Jorge Manuel Santos Costa, ROC







|                                                                                       |  |                                                               
|-------------------------------------------------------------------------------------- |  | --------------------------------------------------------------
|PricewaterhouseCoopers & Associados - Sociedado de Revisores Oficiale de Contas, Ltda. |  | Insorlle ne lists dos Reviores Oficiale de Contas aob o n° 183
|Sedec Palécio Bollomeyor, Rue Sousa Martina, 1-3°, 316 Lisbon                          |  | NIPC 606 628 782 Capital Social Euroe 217.500                 
|Martrfoulades na Conservaloria do Registo, Comercial aob o 506 628 762 (ex. N°, 11912) |  | Inscrila no Comissao de Valores Mobilliaros aob on n° 9077    



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JMR - GESTÃO DE EMPRESAS DE RETALHO, SGPS, S.A.

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CONSOLIDATED INCOME STATEMENT BY FUNCTIONS

FOR THE YEARS ENDED 31 DECEMBER 2006, 2005 AND 2004



|                                            |  |       |  |               |   |  |            |   |  |               |  
|------------------------------------------- |  | ----- |  | ------------- | - |  | ---------- | - |  | ------------- | -
|                                            |  | Notes |  | 2006Unaudited |   |  | 2005       |   |  | Euro thousand |  
|                                            |  |       |  | 2004Unaudited |  
|Sales and services rendered                 |  |       |  | 1,947,574     |   |  | 1,751,833  |   |  | 1,669,532     |  
|Cost of sales                               |  |       |  | (1,504,866    | ) |  | (1,330,271 | ) |  | (1,247,494    | )
|Supplementary income and costs              |  | 3     |  | 87,089        |   |  | 78,028     |   |  | 72,340        |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Gross profit                                |  |       |  | 529,797       |   |  | 499,590    |   |  | 494,378       |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Distribution costs                          |  | 4     |  | (396,606      | ) |  | (358,326   | ) |  | (345,054      | )
|Administrative costs                        |  | 4     |  | (51,589       | ) |  | (47,587    | ) |  | (51,628       | )
|Exceptional operating profits/losses        |  | 9.1   |  | (764          | ) |  | (772       | ) |  |              |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Operating profit                            |  |       |  | 80,838        |   |  | 92,905     |   |  | 97,696        |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Net financial costs                         |  | 6     |  | (17,061       | ) |  | (16,871    | ) |  | (20,105       | )
|Gains in other investments                  |  | 9.2   |  | 11,439        |   |  |           |   |  |              |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Profit before taxes                         |  |       |  | 75,216        |   |  | 76,034     |   |  | 77,591        |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Income taxes                                |  | 8     |  | (11,056       | ) |  | (10,155    | ) |  | (5,537        | )
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Profit before minority interests            |  |       |  | 64,160        |   |  | 65,879     |   |  | 72,054        |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Attributable to:                            |  |       |  |               |   |  |            |   |  |               |  
|Minority interests                          |  |       |  | 397           |   |  | 2,548      |   |  | 4,748         |  
|JMR Shareholders                            |  |       |  | 63,763        |   |  | 63,331     |   |  | 67,306        |  
|                                            |  |       |  |               |   |  |            |   |  |               |  
|Basic and diluted earnings per share- Euros |  | 21    |  | 0.9661        |   |  | 0.9596     |   |  | 1.0198        |  

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



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JMR - GESTÃO DE EMPRESAS DE RETALHO, SGPS, S.A.

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CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006, 2005 AND 2004



|                                                   |  |       |  |               |  |           |  |              
|-------------------------------------------------- |  | ----- |  | ------------- |  | --------- |  | -------------
|                                                   |  | Notes |  | 2006Unaudited |  | 2005      |  | Euro thousand
|                                                   |  |       |  | 2004Unaudited
|Assets                                             |  |       |  |               |  |           |  |              
|Tangible assets                                    |  | 10    |  | 897,257       |  | 773,058   |  | 747,479      
|Investment properties                              |  | 12    |  | 31,708        |  | 31,514    |  | 46,582       
|Intangible assets                                  |  | 11    |  | 145,090       |  | 140,075   |  | 138,653      
|Available-for-sale financial investments           |  | 14    |  | 5,156         |  | 5,156     |  | 5,156        
|Trade debtors and deferred costs                   |  | 17    |  | 53,188        |  | 53,696    |  | 52,272       
|Derivative financial instruments                   |  | 13    |  | 778           |  | 3,632     |  | 204          
|Deferred tax assets                                |  | 16.1  |  | 8,707         |  | 11,111    |  | 17,098       
|                                                   |  |       |  |               |  |           |  |              
|Total non-current assets                           |  |       |  | 1,141,884     |  | 1,018,242 |  | 1,007,444    
|                                                   |  |       |  |               |  |           |  |              
|Investment properties                              |  | 12    |  | 21,500        |  |          |  |             
|Inventories                                        |  | 15    |  | 112,378       |  | 104,635   |  | 93,937       
|Taxes receivable                                   |  | 16.2  |  | 15,213        |  | 13,409    |  | 10,173       
|Trade debtors, accrued income and deferred costs   |  | 17    |  | 60,654        |  | 53,879    |  | 53,208       
|Cash and cash equivalents                          |  | 18    |  | 45,918        |  | 86,606    |  | 59,492       
|                                                   |  |       |  |               |  |           |  |              
|Total current assets                               |  |       |  | 255,663       |  | 258,529   |  | 216,810      
|                                                   |  |       |  |               |  |           |  |              
|Total assets                                       |  |       |  | 1,397,547     |  | 1,276,771 |  | 1,224,254    
|                                                   |  |       |  |               |  |           |  |              
|Shareholders equity and liabilities               |  |       |  |               |  |           |  |              
|Share capital                                      |  | 20.2  |  | 330,000       |  | 330,000   |  | 330,000      
|Fair value and other reserves                      |  | 20.1  |  | 91,546        |  | 85,945    |  | 84,196       
|Retained earnings                                  |  |       |  | 128,771       |  | 84,259    |  | 40,928       
|                                                   |  |       |  |               |  |           |  |              
|                                                   |  |       |  | 550,317       |  | 500,204   |  | 455,124      
|                                                   |  |       |  |               |  |           |  |              
|Minority interests                                 |  |       |  | 6,182         |  | 5,778     |  | 3,230        
|                                                   |  |       |  |               |  |           |  |              
|Total Shareholders equity                         |  |       |  | 556,499       |  | 505,982   |  | 458,354      
|                                                   |  |       |  |               |  |           |  |              
|Borrowings                                         |  | 22.1  |  | 272,644       |  | 292,390   |  | 280,281      
|Derivative financial instruments                   |  | 13    |  | 17,250        |  | 1,638     |  | 14,728       
|Employee benefits                                  |  | 23    |  | 1,372         |  | 1,389     |  | 1,377        
|Deferred profits- state grants                     |  |       |  | 1,150         |  | 1,263     |  | 1,429        
|Provisions for risks and contingencies             |  | 24    |  | 5,827         |  | 6,286     |  | 5,944        
|Deferred tax liabilities                           |  | 16.1  |  | 27,936        |  | 26,631    |  | 27,873       
|                                                   |  |       |  |               |  |           |  |              
|Total non-current liabilities                      |  |       |  | 326,179       |  | 329,597   |  | 331,632      
|                                                   |  |       |  |               |  |           |  |              
|Trade creditors, accrued costs and deferred income |  | 25    |  | 468,414       |  | 392,067   |  | 387,434      
|Borrowings                                         |  | 22.1  |  | 30,291        |  | 28,878    |  | 28,755       
|Taxes payable                                      |  | 16.2  |  | 16,066        |  | 20,247    |  | 18,079       
|Deferred profits- state grants                     |  |       |  | 98            |  |          |  |             
|                                                   |  |       |  |               |  |           |  |              
|Total current liabilities                          |  |       |  | 514,869       |  | 441,192   |  | 434,268      
|                                                   |  |       |  |               |  |           |  |              
|Total Shareholders equity and liabilities         |  |       |  | 1,397,547     |  | 1,276,771 |  | 1,224,254    
|                                                   |  |       |  |               |  |           |  |              

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



4



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JMR - GESTÃO DE EMPRESAS DE RETALHO, SGPS, S.A.

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY



|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|----------------------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | ------------------------ |  | ------ | --------------------------- |  | ------ | ---------------- |  | ------- | ----- |  | ------- | ----------------- |  | ------ | ------------------- |  | ------- | -
|                                                |  | Notes                                                                                               |  |                          |  |        |                             |  |        | Euro thousand    | 
|                                                |  | Shareholders equity attributable to Shareholders of JMR Gestão de Empresas de Retalho, SGPS,
S.A. |  |                          |  |       
|                                                |  | ShareCapital                                                                                        |  | ConsolidationDifferences |  |        | Fair valueand otherreserves |  |        | RetainedEarnings |  |         | Total |  |         | MinorityInterests |  |        | ShareholdersEquity | 
|Balance Sheet at 1 January 2004 (unaudited)     |  |                                                                                                     |  | 330,000                  |  | 1,364  |                             |  | 84,426 |                  |  | (13,953 | )     |  | 401,837 |                   |  | 3,225  |                     |  | 405,062 |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Equity changes in 2004                          |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Revaluation of fixed assets:                    |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
| from 2004                                     |  | 20.1                                                                                                |  |                          |  |        |                             |  | 581    |                  |  |         |       |  | 581     |                   |  |       |                     |  | 581     |  
| land transfer to investment property          |  | 20.1                                                                                                |  |                          |  |        |                             |  | (811   | )                |  | 811     |       |  |        |                   |  |       |                     |  |        |  
|Consolidation differences derecognised (IFRS 3) |  |                                                                                                     |  |                          |  | (1,364 | )                           |  |        |                  |  | 1,364   |       |  |        |                   |  |       |                     |  |        |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Gains/losses directly recognised in equity      |  |                                                                                                     |  |                         |  | (1,364 | )                           |  | (230   | )                |  | 2,175   |       |  | 581     |                   |  |       |                     |  | 581     |  
|Net profit in 2004                              |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  | 67,306  |       |  | 67,306  |                   |  | 4,748  |                     |  | 72,054  |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Total gains/losses recognised during the year   |  |                                                                                                     |  |                         |  | (1,364 | )                           |  | (230   | )                |  | 69,481  |       |  | 67,887  |                   |  | 4,748  |                     |  | 72,635  |  
|Dividends                                       |  | 20.3                                                                                                |  |                          |  |        |                             |  |        |                  |  | (14,600 | )     |  | (14,600 | )                 |  | (4,743 | )                   |  | (19,343 | )
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Balance Sheet at 31 December 2004 (Unaudited)   |  |                                                                                                     |  | 330,000                  |  |       |                             |  | 84,196 |                  |  | 40,928  |       |  | 455,124 |                   |  | 3,230  |                     |  | 458,354 |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Equity changes in 2005                          |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Revaluation of fixed assets in 2005             |  | 20.1                                                                                                |  |                          |  |        |                             |  | 1,749  |                  |  |         |       |  | 1,749   |                   |  |       |                     |  | 1,749   |  
|Gains/losses directly recognised in equity      |  |                                                                                                     |  |                         |  |       |                             |  | 1,749  |                  |  |        |       |  | 1,749   |                   |  |       |                     |  | 1,749   |  
|Net profit in 2005                              |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  | 63,331  |       |  | 63,331  |                   |  | 2,548  |                     |  | 65,879  |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Total gains/losses recognised during the year   |  |                                                                                                     |  |                         |  |       |                             |  | 1,749  |                  |  | 63,331  |       |  | 65,080  |                   |  | 2,548  |                     |  | 67,628  |  
|Dividends                                       |  | 20.3                                                                                                |  |                          |  |        |                             |  |        |                  |  | (20,000 | )     |  | (20,000 | )                 |  |       |                     |  | (20,000 | )
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Balance Sheet at 31 December 2005               |  |                                                                                                     |  | 330,000                  |  |       |                             |  | 85,945 |                  |  | 84,259  |       |  | 500,204 |                   |  | 5,778  |                     |  | 505,982 |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Equity changes in 2006                          |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Revaluation of fixed assets:                    |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
| from 2006                                     |  | 20.1                                                                                                |  |                          |  |        |                             |  | 6,350  |                  |  |         |       |  | 6,350   |                   |  | 7      |                     |  | 6,357   |  
| land transfer to investment property          |  | 20.1                                                                                                |  |                          |  |        |                             |  | (749   | )                |  | 749     |       |  |        |                   |  |       |                     |  |        |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Gains/losses directly recognised in equity      |  |                                                                                                     |  |                         |  |       |                             |  | 5,601  |                  |  | 749     |       |  | 6,350   |                   |  | 7      |                     |  | 6,357   |  
|Net profit in 2006                              |  |                                                                                                     |  |                          |  |        |                             |  |       |                  |  | 63,763  |       |  | 63,763  |                   |  | 397    |                     |  | 64,160  |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Total gains/losses recognised during the year   |  |                                                                                                     |  |                         |  |       |                             |  | 5,601  |                  |  | 64,512  |       |  | 70,113  |                   |  | 404    |                     |  | 70,517  |  
|Dividends                                       |  | 20.3                                                                                                |  |                          |  |        |                             |  |        |                  |  | (20,000 | )     |  | (20,000 | )                 |  |       |                     |  | (20,000 | )
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  
|Balance Sheet at 31 December 2006 (unaudited)   |  |                                                                                                     |  | 330,000                  |  |       |                             |  | 91,546 |                  |  | 128,771 |       |  | 550,317 |                   |  | 6,182  |                     |  | 556,499 |  
|                                                |  |                                                                                                     |  |                          |  |        |                             |  |        |                  |  |         |       |  |         |                   |  |        |                     |  |         |  

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



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JMR - GESTÃO DE EMPRESAS DE RETALHO, SGPS, S.A.

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CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEARS ENDED 31 DECEMBER 2006, 2005 AND 2004



|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|------------------------------------------------------------------------------- |  | ----- |  | -------------- | - |  | ---------- | - |  | ------------- | -
|                                                                                |  | Notes |  | 2006 Unaudited |   |  | 2005       |   |  | Euro thousand |  
|                                                                                |  |       |  | 2004 Unaudited |  
|Operating Activities                                                            |  |       |  |                |   |  |            |   |  |               |  
|Cash received from Customers                                                    |  |       |  | 2,171,084      |   |  | 1,956,303  |   |  | 1,858,198     |  
|Cash paid to Suppliers and Employees                                            |  |       |  | (2,002,969     | ) |  | (1,812,588 | ) |  | (1,751,444    | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Cash generated from operations                                                  |  | 19    |  | 168,115        |   |  | 143,715    |   |  | 106,755       |  
|Interest paid                                                                   |  |       |  | (17,068        | ) |  | (14,370    | ) |  | (18,522       | )
|Income taxes paid                                                               |  |       |  | (8,209         | ) |  | (4,594     | ) |  | (2,982        | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Cash Flow from operating activities                                             |  |       |  | 142,838        |   |  | 124,751    |   |  | 85,251        |  
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Investment activities                                                           |  |       |  |                |   |  |            |   |  |               |  
|Disposals of tangible assets                                                    |  |       |  | 1,782          |   |  | 145        |   |  | 384           |  
|Disposals of available-for-sale financial investments and investment property   |  |       |  |               |   |  | 5,421      |   |  | 4,063         |  
|Interest received                                                               |  |       |  | 1,317          |   |  | 667        |   |  | 210           |  
|Dividends received                                                              |  | 6     |  | 54             |   |  | 18         |   |  | 8             |  
|Acquisition of tangible assets                                                  |  |       |  | (150,286       | ) |  | (71,329    | ) |  | (40,436       | )
|Acquisition of available-for-sale financial investments and investment property |  |       |  | (202           | ) |  | (207       | ) |  | (68           | )
|Acquisition of intangible assets                                                |  |       |  | (7,327         | ) |  | (4,555     | ) |  | (8,484        | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Cash flow from investment activities                                            |  |       |  | (154,662       | ) |  | (69,840    | ) |  | (44,323       | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Financing activities                                                            |  |       |  |                |   |  |            |   |  |               |  
|Received from other non-current loans                                           |  |       |  |               |   |  |           |   |  | 151,007       |  
|Reimbursement of loans                                                          |  |       |  | (8,864         | ) |  | (7,796     | ) |  | (160,787      | )
|Dividends paid                                                                  |  | 20.3  |  | (20,000        | ) |  | (20,000    | ) |  | (19,343       | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Cash Flow from financing activities                                             |  |       |  | (28,864        | ) |  | (27,796    | ) |  | (29,123       | )
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Net increase in cash and cash equivalents                                       |  |       |  | (40,688        | ) |  | 27,115     |   |  | 11,805        |  
|Cash and cash equivalents changes                                               |  |       |  |                |   |  |            |   |  |               |  
|Cash and cash equivalents at the beginning of the year                          |  |       |  | 86,606         |   |  | 59,491     |   |  | 47,687        |  
|Net changes in cash and cash equivalents                                        |  |       |  | (40,688        | ) |  | 27,115     |   |  | 11,805        |  
|                                                                                |  |       |  |                |   |  |            |   |  |               |  
|Cash and cash equivalents at the end of the year                                |  | 18    |  | 45,918         |   |  | 86,606     |   |  | 59,492        |  
|                                                                                |  |       |  |                |   |  |            |   |  |               |  

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



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Index to the Notes to the Consolidated Financial Statements



|   |  |                                                                     |  |   
|-- |  | ------------------------------------------------------------------- |  | --
|   |  | Page                                                               
|1  |  | Activity                                                            |  | 7 
|2  |  | Accounting policies                                                 |  | 7 
|3  |  | Supplementary income and costs                                      |  | 15
|4  |  | Distribution and administrative costs                               |  | 15
|5  |  | Staff costs                                                         |  | 15
|6  |  | Net financial costs                                                 |  | 16
|7  |  | Financial instruments                                               |  | 16
|8  |  | Income tax recognised in the income statement                       |  | 17
|9  |  | Exceptional operating profits/losses and gains in other investments |  | 17
|10 |  | Tangible Assets                                                     |  | 18
|11 |  | Intangible Assets                                                   |  | 20
|12 |  | Investment Property                                                 |  | 21
|13 |  | Derivative financial instruments                                    |  | 21
|14 |  | Available-for-sale financial investments                            |  | 21
|15 |  | Inventories                                                         |  | 21
|16 |  | Taxes                                                               |  | 22
|17 |  | Trade debtors, accrued income and deferred costs                    |  | 23
|18 |  | Cash and cash equivalents                                           |  | 23
|19 |  | Cash generated from operations                                      |  | 24
|20 |  | Capital and reserves                                                |  | 24
|21 |  | Earnings per share                                                  |  | 25
|22 |  | Borrowings                                                          |  | 25
|23 |  | Employee benefits                                                   |  | 26
|24 |  | Provisions and adjustments to the net realisable value              |  | 27
|25 |  | Trade creditors, accrued costs and deferred income                  |  | 27
|26 |  | Guarantees                                                          |  | 28
|27 |  | Operational lease                                                   |  | 28
|28 |  | Capital commitments                                                 |  | 28
|29 |  | Contingencies                                                       |  | 28
|30 |  | Related parties                                                     |  | 29
|31 |  | Group companies                                                     |  | 30
|32 |  | Interest in joint ventures                                          |  | 31
|33 |  | Events after the balance sheet date                                 |  | 31



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|1 | Activity
|- | --------

JMR Group consists on several companies, which are devoted to the distribution and sale
of food and other fast moving consumer goods products.

JMR  Gestão de Empresas de Retalho, SGPS, S.A., is a Group Holding,
with a significant influence in the decision-making of all companies including the ones which has just a minority interest.

Head Office:
Rua Tierno Galvan, Torre 3, 9o, J- 1099-008 Lisbon

Share Capital: 330,000,000 euros

Registered at the Commercial Registry Office of Lisbon and Tax Number: 501917101

JMR shareholders are Jerónimo Martins, SGPS, SA with 33,660,000 shares, representing 51% of the share capital and Koninklijke Ahold NV, with
32,340,000 shares representing 49%.

The consolidated financial statements for the
year ended at 31 December 2006 were approved by the Board of Directors on 21stFebruary of 2007 and the
consolidated financial statements for the year ended at 31 December 2005 were approved by the Board of Directors on 17thFebruary of 2006.



|2 | Accounting policies
|- | -------------------

The principal accounting policies adopted in the preparation of these
consolidated financial statements are as follows:



|2.1. | Basis for preparation
|---- | ---------------------

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

The consolidated financial statements of JMR were prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

IFRS differs in certain significant respects
from US GAAP. The most significant items in reconciling net income and group equity are the following:

 Under IFRS, land is revalued,
with increases in the carrying amount arising from revaluation credited to fair value reserves in shareholders equity. Decreases that offset previous increases of the same asset are charged against fair value reserves. All other decreases are
charged to the income statement. Land is stated at cost under US GAAP.

 Tangible assets are recorded under IFRS at acquisition cost
net of accumulated depreciation and impairment losses, excluding borrowing costs incurred during construction. Under US GAAP, tangible assets are recorded at acquisition cost net of accumulated depreciation and impairment losses, and may
include borrowing costs incurred during construction.

 Pursuant to the exemption available under IFRS 1  First-Time Adoption of
International Financial Reporting Standards, the Company elected not to restate the carrying amount of goodwill arising from business combinations completed prior to 2004. Prior to the adoption of IFRS 3  Business Combinations as of 2004,
goodwill was capitalized and amortized on a straight-line basis. Starting 2004, goodwill is no longer amortized but rather tested for impairment based on triggering events and at least annually. Under US GAAP, goodwill was capitalized and
amortized on a staight line basis over a period not exceeding 40 years with respect to businesse combinations completed prior to June 30, 2001. Effective 2002, goodwill is no longer amortized but rather tested for impairment based on triggering
events and at least annually.

 In addition, companies subject to joint control are consolidated by proportional method under IFRS
(i.e., the consolidated financial statements include the share attributable to the Group in these companys assets, liabilities and accumulated earnings and losses from the date when joint control starts to the date when it effectively ends).
Under US GAAP, these companies are recorded by the equity method (, i.e., the consolidated financial statements include the Groups interest in the associated companys total recognised gains and losses from the date when significant
influence starts to the date when it effectively ends). This difference between IFRS and US GAAP, however, does not result in a difference between net income and group equity.

The JMR consolidated financial statements were prepared in accordance with the historical cost principle, except for land recorded in tangible assets,
investment property, derivative financial instruments and available-for-sale financial investments, that includes equity holdings referred in note 2.8, which were stated at their fair value (market value).

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



these estimates are based on managements best knowledge of current event and actions, actual results ultimately may differ from those estimates. It is,
however, firmly believed by the management that the estimates and assumptions adopted do not involve significant risks that may, over the course of the coming financial year, cause material adjustments in the value of the assets and liabilities.

Change in Accounting Policy and Bases for Presentation

The amendments to IAS 19  Employee Benefits are mandatory for periods beginning on 1 January 2006. This amendments introduces the option of an
alternative recognition approach for actuarial gains and losses, which was not adopted by the Group, maintaining the immediate recognition in the profit & Loss of all actuarial gains and losses (as mentioned in the note 2.17), it also
introduces additional recognition requirements for multi-employers plans, which are not the case of any of the Group plans.

Also in 2006,
some standards, amendments and interpretations became mandatory but without any material effects on the financial statements of the Group, and in most cases are not applicable to the activities of the Group Companies.

Are the cases of the amendments to the standards IAS 21  The Effects of Changes in Foreign Exchange Rates, IAS 39  Financial Instruments:
Recognition and Measurement, IFRS 1  First-Time Adoption of International Financial Reporting Standards, IFRS 4  Insurance Contracts and IFRS 6  Exploration for and Evaluation of Mineral Resources, and the interpretations issued by
the International Financial Reporting Interpretations Committee (IFRIC), IFRIC 4  Determining whether an Arrangement contains a Lease, IFRIC 5  Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds and IFRIC 6  Liabilities arising from Participating in a Specific Market.

The new standard IFRS 7 
Financial Instruments: Disclosures as well as the amendments to IAS 1  Presentation of Financial Statements are mandatory for accounting periods beginning on 1 January 2007. Since they have a reduced impact on the financial statements of
the Group, bearing in mind the actual disclosures, the early adoption prescribed in the standards were not followed.

The IFRIC also issued
a set of interpretations to the actual standards, effective for accounting periods beginning after 1 December 2005, namely IFRIC 6  Liabilities arising from Participating in a Specific Market, IFRIC 7  Applying the Restatement
Approach under IAS 29, IFRIC 8  Scope of IFRS 2, IFRIC 9  Reassessment of Embedded Derivatives, IFRIC 10  Interim Financial Reporting and Impairment, and IFRIC 11  IFRS 2  Group and Treasury Share Transactions. These
interpretations are not materially relevant and the majority are not applicable to the Group activities.



|2.2. | Basis of consolidation
|---- | ----------------------

Reference dates

The consolidated financial statements include, as of 31 December 2006, assets, liabilities and results of Group companies,
i.e., the ensemble consisting of JMR and its subsidiaries and associated companies, which are presented in note 31.

Investments in
Group companies

Group companies (subsidiaries) are those controlled by JMR. There is control when JMR, directly or indirectly,
holds more than half of the voting rights, or has the power to conduct the companys financial and operating policy with the purpose of deriving benefits from its activity. It is assumed that there is control when the percentage of the holding
exceeds 50%.

Group companies are included in the consolidation by the full consolidation method, from the date when control was acquired to
the date when it effectively ends. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of the acquisition is measured as the fair value of the assets given up, shares issued and liabilities undertaken
at the date of the acquisition plus costs attributable to the acquisition.

In cases where the share capital of subsidiaries is not held at
100%, a minority interest is recognised relative to the portion of results and net value of assets attributable to third parties.

Where
necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

Investments in associated companies

Associated companies are those over whose financial and operating policy JMR
exercises significant influence. Such influence is presumed to exist when the percentage of participation exceeds 20%.

These investments
are consolidated by the equity method, i.e., the consolidated financial statements include the Groups interest in the associated companys total recognised gains and losses from the date when significant influence starts to the date when
it effectively ends.

When the Groups share of losses in an associate equals or exceeds its interest in the associate, the Group does
not recognise further losses, unless the Group has incurred obligations or made payments on behalf of the associates.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Investments in companies subject to joint control

Companies subject to joint control are those over which the Group exercises joint control as established in shareholder agreements.

These companies are consolidated by proportional method, i.e., the consolidated financial statements include the share attributable to the Group in these
companys assets, liabilities and accumulated earnings and losses from the date when joint control starts to the date when it effectively ends.

Goodwill

Goodwill represents the surplus of acquisition cost over the fair value of
identifiable assets and liabilities at the date of acquisition or first consolidation. If the cost of acquisition is lower than the fair value of the net assets of the acquired subsidiary, the difference is recognised directly in the income
statement.

The Group makes an assessment for goodwill impairment indicators. If those indicators exist, an evaluation of the recoverable
amount is made, and the respective impairment losses recognised whenever goodwill exceeds its recoverable amount (note 2.13). Goodwill is tested for impairment at balance sheet date, regardless of the existence of indications that the book value
will not be recoverable.

The gain or loss on disposal of an entity includes the carrying amount of goodwill related to the entity sold,
unless the business to which that goodwill is related is maintained generating benefits to the Group.

Foreign currency translation

The financial statements of foreign entities are translated into Euros based on the closing exchange rate for assets and
liabilities and historical exchange rates for equity. Costs and income are translated at the average monthly exchange rate, which basically corresponds to the exchange rate on the date of the respective transaction. Exchange differences arising are
entered directly in equity net of the effect generated by the respective hedging instrument (see accounting policy described in note 2.5).

When a foreign entity is sold, accumulated exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Balances and transactions between Group companies

Balances and transactions as well as unrealised gains between Group companies and between these and the parent company are eliminated in the consolidation. Unrealised losses are also eliminated unless the cost cannot
be recovered.

Unrealised gains arising from transactions with associated companies or companies subject to joint control are eliminated in
the consolidation proportionally to the share attributable to the Group. Unrealised losses are also eliminated except when providing proof of impairment of the asset transferred.



|2.3 | 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, assets and
liabilities expressed in foreign currencies are translated at the exchange rate prevailing on that date and exchange differences arising from this conversion are recognised in the income statement. When qualifying as hedges on investments in foreign
subsidiaries the exchange differences are deferred in equity.

The main exchange rates applied on the balance sheet date are those listed
below:



|             |  |                          |        |                          |   |                          |  |   |       
|------------ |  | ------------------------ | ------ | ------------------------ | - | ------------------------ |  | - | ------
|             |  | Rate on 31 December 2006 |        | Rate on 31 December 2005 |   | Rate on 31 December 2004
|Polish Zloty |  |                         | 0.2610 |                          |  | 0.2591                   |  |  | 0.2448
|US Dollar    |  |                         | 0.7593 |                          |  | 0.8477                   |  |  | 0.7342



|2.4 | Derivatives
|--- | -----------

The Group uses derivatives with the
sole intention of managing any financial risks to which it is subject. In accordance with its financial policies, the Group does not enter into speculative positions.

Although derivatives carried currently in its books correspond to effective economic hedges against risks to be hedged, not all of them qualify as hedge instruments for accounting purposes, according to IAS 39 rules.
Those that do not qualify as hedge instruments are booked on the Balance sheet at fair value and changes to that amount are recognized in the financial results.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Whenever available, fair values are estimated based on quoted instruments. In absence of quotes, fair
values are estimated through discounted cash flow methods and option valuation models, in accordance with generally accepted assumptions.



|2.5 | Hedging operations
|--- | ------------------

Interest rate risk (cash
flow hedge)

Whenever expectations surrounding movements in interest rates so justify, the Group tries to anticipate any adverse
impact through the use of derivatives, such as, interest rates swaps, caps and floors, forward rates agreements, etc. The selection process that each instrument is subject to, praises economic contribution more than anything else. The implications
of adding any new instrument to a portfolio of derivatives are also taken into account, namely, in terms of volatility reduction it brings to the earnings.

The instruments that qualify as cash flow hedging instruments are booked at fair value on the Balance sheet, and to the degree that they are considered effective, changes to their fair value are initially booked
against equity and afterwards reclassified as financial expenses.

The ineffective part of any hedging instrument is recognised directly in
the profit and loss. This way, in net terms, all costs associated to the underlying exposure are carried at the interest rate fixed by the derivative instruments.

The profits or losses incurred with the unwinding of any of these interest rate swaps are recognised, through the income statement, on the unwinding date.

Interest rate risk (fair value hedge)

For financing operations in foreign currency or fixed interest rate that are not natural hedgings of investments in foreign operations, whenever justifies, the Group uses fair value hedging operations, as instruments to neutralise the
volatility of those financing operations in the Group financial statements.

That way, hedging instruments that are designated so and that
qualifies as fair value hedging, are recognised in the balance sheet at its fair value, with changes recognised in the profit and loss. At the same time, changes to the fair value of the hedged instrument, in the component that is being hedged, are
recognised in profit and loss. Consequently, any ineffectiveness of the hedging operations are immediately recognised in results.

Foreign exchange risk

With respect to foreign exchange risks, the Group follows a natural hedge policy, raising debt
in local currency whenever market conditions are judged to be convenient (namely, taking into consideration the level of interest rates).



|2.6 | Tangible assets
|--- | ---------------

Assets other than land are
recorded at acquisition cost net of accumulated depreciation and impairment losses (note 2.13).

Assets classified as land are stated as per
the respective revaluation carried out by independent agents.

Increases in the carrying amount arising from revaluation of land are
credited to fair value reserves in shareholders equity. Decreases that offset previous increases of the same asset are charged against fair value reserves. All other decreases are charged to the income statement.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the operating profit. When revalue assets
are sold, the amounts included in fair value and other reserves are transferred to retained earnings.

Repairs and maintenance costs that do
not extend the useful life of these assets are charged directly to the income statement during the financial period in which they are incurred. The cost of major store renovation is included in the carrying amount of the asset when it is probable
that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group.

Financial lease agreements

Assets used under financial lease contracts relative to which the Group substantially
assumes all the risks and rewards of ownership of the leased asset are classified as tangible assets.

Financial lease contracts are
recorded at the time they are entered into as assets and liabilities for the lower of fair value of leased assets or present value of outstanding lease payments.

The depreciation of leased assets is based on the policy established by the Group for tangible assets.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Rental payments are split into a financial charge and a reduction of liability. Financial charges are
recognised as costs over the lease period, so as to produce a constant periodic rate of return on the lessors remaining net investment.

Depreciation

Depreciation is calculated by the straight-line method, on a duodecimal basis on acquisition cost
according to the useful life estimated for each class of asset. The most important annual depreciation rates are as follows (in %):



|                                  |  |                
|--------------------------------- |  | ---------------
|                                  |  | %              
|Land                              |  | Not depreciated
|Buildings and other constructions |  | 2-4            
|Plants and machinery              |  | 10-20          
|Transport equipment               |  | 12.5-25        
|Office equipment                  |  | 10-25          



|2.7 | Intangible assets
|--- | -----------------

Intangible assets are stated at
acquisition cost net of accumulated amortisation and impairment losses (note 2.13).

Costs with internally generated goodwill and own brands
are taken to the income statement as they are incurred.

Research and development expenditure

Research expenditure incurred in the search for new technical or scientific knowledge or alternative solutions are recognised in the income statement as
incurred.

Development expenditure is recognised as intangible assets when the technical feasibility of the product or process being
developed can be demonstrated and the Group has the intention and capacity to complete their development and start trading or using them.

Capitalised development expenditure includes the cost of materials used, direct labour costs and a share of general expenditure.

Computer software

Costs associated with developing or maintaining computer software programmes are recognised as an
expense as incurred. If those costs are directly associated with development projects that will probably generate future economic benefits (reliably measured), they are recognised as research and development in intangible assets.

Other intangible assets

Expenses to acquire key money, trademarks, patents and licences are capitalised when expect to be used by the Group.

Intangible assets with indefinite useful life

The Goodwill is the only intangible asset with indefinite useful life,
where there is no foreseeable limit to the period over which this asset is expected to generate economic benefits for the Group.

Depreciation

Depreciations are recognized in the income statement on a linear basis over the estimated useful life
of the intangible assets, except if that life is considered indefinite. Goodwill and the intangible assets with indefinite useful life are tested for impairment at balance sheet date, and whenever there is an indication that the book value will not
be recoverable.

Depreciation of the other intangible assets is calculated by the straight-line method, on a duodecimal basis on acquisition
cost. The most important annual depreciation rates are as follows (in %):



|                         |  |         
|------------------------ |  | --------
|                         |  | %       
|Development expenditure  |  | 20-33.33
|Key money and trademarks |  | 5-6.66  



|2.8 | Investments
|--- | -----------

The Group classifies its investments
into the following categories: financial investments held for trading, loans and receivables, held-to-maturity investments and available-for-sale financial investments. The classification depends on the purpose for which the investments were
acquired.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Financial investments held for trading

An asset is classified in this category if it was acquired with the principal intention of being sold in the short term. This category also includes those
Derivatives that do not qualify for hedge accounting. Changes to their fair value are recognised directly in the income statement.

Loans and receivables

These correspond to non-derivative financial assets, with fixed or determined payments, that
are not quoted in an active market. The assets are those that result from the normal operational activities of the Group, such as the supply of goods or services, and that the group has no intention of selling.

Held-to-maturity investments

These correspond to non-derivative financial assets, with fixed or determined payments and with fixed maturity, for which there is, the intention and the capacity to hold them until maturity. The Group does not own any asset that falls into
this category.

Available-for-sale financial investments

In this category are included all the remaining financial assets not included in the above categories. They are recognised as non-current assets, except
if there is the intention to sell them within 12 months of the balance sheet date.

Equity holdings

Equity holdings other than Groups companies, joint ventures or associates, are classified as available-for-sale financial investments and recognised
in the accounts as non-current assets.

These financial investments are marked to market, i.e., they are stated at the respective listed
value as at balance sheet date. When there is medium term expectation of significant decrease of the value below the listed value, provisions for impairment losses are set up to reflect permanent losses.

If the investments are unlisted, the Group uses, whenever possible, valuation techniques to obtain the fair value of those investments. These include the
use of recent arms length transactions, reference to other instruments that are substantially the same or estimation of discounted cash flow to be received in the future. Not being possible the use of any of these valuation techniques, they
are stated at cost. When so justified, provisions for impairment losses are recognised.

Unrealised capital gains and losses are recognised
directly in equity, until the financial asset is de-recognised, at which time the accumulated gain or loss previously recognised in equity is included in net gains or losses for the period.



|2.9 | Investment Property
|--- | -------------------

Investment property is
registered at fair value, determined by specialised independent entities, with appropriate recognised professional qualification and experience in valuations of these kinds of assets.

The fair value is based on market values, being this the amount that two independent willing parties would be interested in making a transaction of the
asset.

Changes to fair value of investment property are recognised in the income statement, in net financial costs, in accordance with IAS
40, since it is related with the expected return of a financial investment in assets owned for appreciation.

Whenever, as a result of
changes in their expected use, tangible assets are transferred to investment property, the transfer value corresponds to their carrying amount, which should correspond to the respective market value on the date of transfer.

If an investment property starts to be used by the business operations of the Group, it is transferred to tangible assets and its fair value at the date
of transfer becomes its acquisition cost for accounting purposes.



|2.10 | Customers and debtors
|---- | ---------------------

Customers and debtor
balances are recorded at fair value of the originated transaction, net of any provision for impairment losses required to restate their expected recoverable amount.



|2.11 | Inventories
|---- | -----------

Inventories are valued at the lower of
cost or net realisable value. The net realisable value corresponds to the selling price in the ordinary course of business, less the estimated selling expenses.

Inventories are usually valued at the last acquisition cost, which, considering the high rotation of Inventories corresponds approximately to the actual cost that would be determined based on the FIFO method.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|2.12 | Cash and cash equivalents
|---- | -------------------------

The cash and cash
equivalents heading includes cash, deposits on hand and short-term investments with high liquidity. Bank overdrafts are presented as current Borrowings.



|2.13 | Impairment
|---- | ----------

Except for investment property (note
2.9), inventories (note 2.11) and deferred tax assets (note 2.22), all other Group assets are considered at each balance sheet date in order to assess for indicators of possible impairment losses. If such indication exists, the assets recoverable
amount is estimated.

For Goodwill and other assets with indefinite useful life, the recoverable amount is estimated annually at balance
sheet date.

Regarding cash-generating units in operation for less than a certain time period (2 to 3 years, depending on the business
segment), the Group decided not to make impairment tests as the respective businesses have not yet reached sufficient maturity, for revaluation to be proved credible.

It is determined the recoverable amount of assets with indication of potential impairment loss. Whenever the carrying value of an asset, or the cash-generating unit to which the same belongs, exceeds its recoverable
amount, its value is reduced to the recoverable amount and the impairment loss recognised in the income statement.

Determining the
recoverable amount of assets

The recoverable amount of medium and long-term receivables corresponds to the present value of
estimated future receipts, using as discount rate the actual interest rate implicit in the original operation. For all other assets, the recoverable amount is the higher of net selling price and value in use.

The value in use of an asset is calculated as the present value of estimated future cash flows. The discount rate used is a pre-tax rate that reflects
current market assessments of the time value of money and the specific risks of the asset in question.

The recoverable amount of assets
that by them do not generate independent cash flow is determined together with the cash-generating unit to which these assets belong.

Reversal of impairment losses

An impairment loss recognised in a medium and long-term receivable is only reversed if
justification for the increase in the respective recoverable amount is based on an event taking place after the date the impairment loss was recognised.

An impairment loss recognised as related to goodwill is not reversed.

Impairment losses for other assets
are reversed whenever there are changes in the estimates used to determine the respective recoverable amount. Impairment losses are reversed to the extent of the amount (net of amortisation or depreciation) that would have been determined for the
asset if no impairment loss was recognised.



|2.14 | Capital
|---- | -------

Costs incurred with the issuance of new
shares are recognised directly in reserves, net of respective taxes.



|2.15 | Dividends
|---- | ---------

Dividends are recognised as liabilities
when they are declared.



|2.16 | Loans
|---- | -----

Loans are registered as liabilities at their
nominal value. Issuance costs are recognised in the income statement during the loans life. This procedure, without material differences, corresponds to the application of amortised cost method, i.e., the costs recorded reflect the application
of the effective interest rate on the loans.



|2.17 | Employees benefit
|---- | -----------------

Post-employment benefits
(Retirement)

Defined benefit plans

Defined benefit plans are pension plans where the Group guarantees the attribution of a certain benefit to the employees included in the plan at the time such employees retire.

The Groups obligation for defined benefit plans is estimated, for each plan separately, every semester at the accounts closing date by a specialised
independent agent.



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|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Actuarial valuation is made using the immediate rents method, having present that the plans includes
only retired ex-workers. The discount rate is the interest rate on medium and long-term risk-free bonds. The obligation thus determined is shown in the balance sheet net of plan assets.

The years current service costs, interest, return on plan assets and actuarial gains or losses are recognised as costs or income for the year.



|2.18 | Provisions
|---- | ----------

Provisions are booked in the balance
sheet whenever the Group has a present obligation (legal or implicit) as a result of a past event and it is probable that a rationally estimated outflow of resources embodying economic benefits will be required to settle the obligation.

Restructuring provision

Provisions for restructuring costs are set up whenever a formal restructuring plan has been approved by the Group and the restructuring has started to be implemented or has been publicly announced.



|2.19 | Suppliers and other creditors
|---- | -----------------------------

Suppliers and other
creditors balances are stated at their nominal value, due to the fact that are short term payables, and the impact of applying the amortised costs would not be material. The benefits from the application of this procedure in the financial
statements, would not compensate the costs incurred with that.



|2.20 | Recognition of revenue
|---- | ----------------------

Sales and services
rendered

Revenues from sales are recognised in the income statement when significant risks and rewards of ownership are transferred
to the buyer. Revenues from the services rendered are recognised as income in accordance with their stage of completion as of the balance sheet date. Revenues relating to the purchase of goods for resale are recognised when these are sold.

Government grants

Government grants are only recognised after it has been safely established that the Group will comply with the inherent conditions and that the grants will be received.

Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs they are
intended to compensate.

Government grants related to the purchase of fixed assets are included in non-current liabilities and are
recognised in the income statement during the estimated useful life of the respective subsidised asset, for a maximum of 10 years.

Rents

Rents received for the lease of investment property are recognised as financial revenues in the income
statement in the period to which they relate.

Dividends

Dividends are recognised as revenues at the time they are declared.



|2.21 | Costs
|---- | -----

Operational Leasing

Payments made for operational leasing contracts are recognised in the income statement on a linear basis for the duration of same
contracts.

Net financial costs

Net financial costs represent the interest on borrowings, the interest on investment made, dividends, foreign exchange gains and losses, potential gains and losses in financial instruments that do not qualify for
hedging accounting, gains and losses in the valuation of investment property and costs and income with financing operations. Net financial costs are accrued in the income statement in the period in which they are incurred.



|2.22 | Income tax
|---- | ----------

Income tax includes current and
deferred taxes. Income tax is recognised in the income statement except when relating to gains or losses directly recognised in equity, in which case it is also stated directly in equity.

Tax on current income is calculated in accordance with tax criteria prevailing as of the balance sheet date.



15



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Deferred tax is calculated in accordance with the balance sheet liability method on temporary
differences between the book value of assets and liabilities and the respective tax base. No deferred tax is calculated on goodwill and initial recognition differences of an asset and liability if the same does not affect book or tax results.

The measurement of deferred tax assets and liabilities should reflect the tax consequences that would follow from the manner in which the
Group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

The rate used to
determine deferred tax is that in force during the period when temporary differences are reversed.

Deferred tax assets are recognised to
the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised. Deferred tax assets are revised on an annual basis and reduced when it is no longer probable that they may be used.



|2.23 | Business combinations
|---- | ---------------------

A Business combination
involving entities under common control, before and after the combination takes effect, it is applied the book value measurement method to the transactions of the business combination.



|3 | Supplementary income and costs
|- | ------------------------------



|                                     |  |                  |   |  |         |   |  |                  |  
|------------------------------------ |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                     |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Supplementary gains                  |  | 76,044           |   |  | 67,891  |   |  | 63,080           |  
|Cash discount received               |  | 21,324           |   |  | 19,785  |   |  | 19,892           |  
|Cash discount paid                   |  | (2               | ) |  | (3      | ) |  | (3               | )
|Credit card commissions              |  | (10,523          | ) |  | (10,250 | ) |  | (10,478          | )
|Other supplementary income and costs |  | 246              |   |  | 605     |   |  | (151             | )
|                                     |  |                  |   |  |         |   |  |                  |  
|                                     |  | 87,089           |   |  | 78,028  |   |  | 72,340           |  
|                                     |  |                  |   |  |         |   |  |                  |  

The supplementary gains concern profits obtained by the Group through the distribution of goods,
namely, rental of spaces, participation in birthday events, rental of shelfs, etc.



|4 | Distribution and administrative costs
|- | -------------------------------------



|                                                    |  |                  |   |  |         |   |  |                  |  
|--------------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                                    |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Supplies and services                               |  | 117,729          |   |  | 101,128 |   |  | 97,616           |  
|Advertising costs                                   |  | 14,655           |   |  | 14,315  |   |  | 14,997           |  
|Rents                                               |  | 65,527           |   |  | 62,081  |   |  | 57,855           |  
|Staff costs                                         |  | 184,248          |   |  | 169,800 |   |  | 163,435          |  
|Depreciations, amortisations and assets profit/loss |  | 54,246           |   |  | 52,567  |   |  | 53,930           |  
|Transportation costs                                |  | 19,372           |   |  | 15,396  |   |  | 13,978           |  
|Other operational profit/loss                       |  | (7,582           | ) |  | (9,374  | ) |  | (5,129           | )
|                                                    |  |                  |   |  |         |   |  |                  |  
|                                                    |  | 448,195          |   |  | 405,913 |   |  | 396,682          |  
|                                                    |  |                  |   |  |         |   |  |                  |  



|5 | Staff costs
|- | -----------



|                            |  |                  |  |         |  |                 
|--------------------------- |  | ---------------- |  | ------- |  | ----------------
|                            |  | 2006 (unaudited) |  | 2005    |  | 2004 (unaudited)
|Wages and salaries          |  | 146,258          |  | 132,255 |  | 128,848         
|Social security             |  | 30,267           |  | 27,303  |  | 27,077          
|Employee benefits (note 23) |  | 60               |  | 86      |  | 86              
|Other staff costs           |  | 7,663            |  | 10,156  |  | 7,424           
|                            |  |                  |  |         |  |                 
|                            |  | 184,248          |  | 169,800 |  | 163,435         
|                            |  |                  |  |         |  |                 

Other staff costs include, namely, labour accident insurance, social action costs, training costs
and indemnities.

Of total staff costs EUR 4,572 thousand (2005: EUR 4,747 thousand and 2004: EUR 4,650 thousand) corresponds to
staff costs of subsidiaries and associated companies consolidated by the proportional method, the total amount of which was EUR 9,144 thousand (2005: EUR 9,493 thousand and 2004: EUR 9,300 thousand).



16



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



The average number of Group employees during the year was 15,737 (2005: 13,849 and 2004: 14,147),
from which 780 (2005: 801 and 2004: 791) were employed by subsidiaries and associated companies consolidated by the proportional method.

The number of employees at the end of 2006 was 16,078 (2005: 14,229 and 2004: 14,072), of which 790 (2005: 790 and 2004: 781) were employed by subsidiaries and associated companies consolidated by the proportional method.



|6 | Net financial costs
|- | -------------------



|                                                                                                   |  |                  |   |  |         |   |  |                  |  
|-------------------------------------------------------------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                                                                                   |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Interest expense                                                                                   |  | (16,623          | ) |  | (14,076 | ) |  | (15,966          | )
|Interest received                                                                                  |  | 540              |   |  | 464     |   |  | 52               |  
|Dividends                                                                                          |  | 54               |   |  | 18      |   |  | 8                |  
|Net foreign exchange                                                                               |  | (4               | ) |  | 12      |   |  | (100             | )
|Investment property:                                                                               |  |                  |   |  |         |   |  |                  |  
|Profit/loss on disposal                                                                            |  |                 |   |  | 23      |   |  | 133              |  
|Changes to fair value (note 12)                                                                    |  | (9               | ) |  | (9      | ) |  | (159             | )
|Other financial costs and gains                                                                    |  | (1,780           | ) |  | (1,867  | ) |  | (3,419           | )
|Changes to fair value in financial instruments that do not qualify for hedge accounting (note 7.3) |  | 761              |   |  | (1,436  | ) |  | (654             | )
|                                                                                                   |  |                  |   |  |         |   |  |                  |  
|                                                                                                   |  | (17,061          | ) |  | (16,871 | ) |  | (20,105          | )
|                                                                                                   |  |                  |   |  |         |   |  |                  |  

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



|7 | Financial instruments
|- | ---------------------



|7.1 | Interest rate risk
|--- | ------------------

The Group uses derivatives,
such as swaps and options, to manage its exposures to interest rate risks. Derivatives are efficient tools to hedge against adverse effects on cash flows associated with debt service payments.

Changes to fair values on derivatives that qualify for hedge accounting, are recognised in results (note 6).



|7.2 | Foreign Exchange Risks
|--- | ----------------------

On 31st December 2006
the Group had contracted two cross currency swaps EUR/USD totalling EUR 151,007 thousand. These operations were outlined in detail in point 11.2 of the accounts appendix of the 2004 Annual Report and there were no changes throughout the years of
2006 and 2005.



|7.3 | Fair value of financial instruments
|--- | -----------------------------------

The impact in
results (net of taxes), is as follows:



|                                |  |                  |   |  |        |   |  |                  |  
|------------------------------- |  | ---------------- | - |  | ------ | - |  | ---------------- | -
|                                |  | 2006 (unaudited) |   |  | 2005   |   |  | 2004 (unaudited) |  
|Interest rates swaps            |  | 761              |   |  | (1,436 | ) |  | (654             | )
|                                |  |                  |   |  |        |   |  |                  |  
|Deferred taxes                  |  | (202             | ) |  | 395    |   |  | 180              |  
|                                |  |                  |   |  |        |   |  |                  |  
|Value recognised in profit/loss |  | 559              |   |  | (1,041 | ) |  | (474             | )



17



---

##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|8 | Income tax recognised in the income statement
|- | ---------------------------------------------



|8.1 | Income taxes
|--- | ------------



|                                                                                             |  |                  |   |  |         |   |  |                  |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                                                                             |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Current income tax                                                                           |  |                  |   |  |         |   |  |                  |  
|Current tax of the year                                                                      |  | (7,651           | ) |  | (5,262  | ) |  | (2,645           | )
|Adjustment to prior year estimation                                                          |  | (29              | ) |  | (9      | ) |  | (10              | )
|                                                                                             |  |                  |   |  |         |   |  |                  |  
|                                                                                             |  | (7,680           | ) |  | (5,271  | ) |  | (2,655           | )
|                                                                                             |  |                  |   |  |         |   |  |                  |  
|Deferred tax                                                                                 |  |                  |   |  |         |   |  |                  |  
|Temporary differences created and reversed                                                   |  | (1,237           | ) |  | (5,022  | ) |  | (3,470           | )
|Tax rate decrease                                                                            |  | (533             | ) |  |        |   |  |                 |  
|Change to the recoverable amount of tax losses and temporary differences from previous years |  | (1,606           | ) |  | 138     |   |  | 588              |  
|                                                                                             |  |                  |   |  |         |   |  |                  |  
|                                                                                             |  | (3,376           | ) |  | (4,884  | ) |  | (2,882           | )
|                                                                                             |  |                  |   |  |         |   |  |                  |  
|Total income taxes                                                                           |  | (11,056          | ) |  | (10,155 | ) |  | (5,537           | )
|                                                                                             |  |                  |   |  |         |   |  |                  |  



|8.2 | Reconciliation of effective tax rate
|--- | ------------------------------------



|                                                                                        |  |                  |    |  |         |   |  |                  |    |  |         |   |  |      |    |  |         |  
|--------------------------------------------------------------------------------------- |  | ---------------- | -- |  | ------- | - |  | ---------------- | -- |  | ------- | - |  | ---- | -- |  | ------- | -
|                                                                                        |  | 2006 (unaudited) |    |  | 2005    |   |  | 2004 (unaudited) |   
|Profit before tax                                                                       |  |                  |    |  | 75,216  |   |  |                  |    |  | 76,034  |   |  |      |    |  | 77,591  |  
|                                                                                        |  |                  |    |  |         |   |  |                  |    |  |         |   |  |      |    |  |         |  
|Income tax using the Portuguese corporation tax rate                                    |  | 27.5             | %  |  | (20,684 | ) |  | 27.5             | %  |  | (20,909 | ) |  | 27.5 | %  |  | (21,338 | )
|Fiscal effect due to:                                                                   |  |                  |    |  |         |   |  |                  |    |  |         |   |  |      |    |  |         |  
|Different tax rates in foreign jurisdictions                                            |  | 10.7             | %  |  | 8,026   |   |  | 6.3              | %  |  | 4,791   |   |  | 2.0  | %  |  | 1,543   |  
|Non taxable or non recoverable results                                                  |  | 1.3              | %  |  | 993     |   |  | 8.4              | %  |  | 6,366   |   |  | 15.3 | %  |  | 11,871  |  
|Non-deductible expenses and fiscal benefits                                             |  | 1.0              | %  |  | 779     |   |  | (0.6             | %) |  | (448    | ) |  | 3.0  | %  |  | 2,338   |  
|Tax rate decrease                                                                       |  | (0.7             | %) |  | (533    | ) |  | 0.0              | %  |  |        |   |  | 0.0  | %  |  |        |  
|Adjustment to prior year estimation                                                     |  | 0.0              | %  |  | (29     | ) |  | 0.0              | %  |  | (9      | ) |  | 0.0  | %  |  | (10     | )
|Change to the recoverable amount of tax losses and temporary differences of prior years |  | 2.1              | %  |  | (1,606  | ) |  | 0.2              | %  |  | 138     |   |  | 0.8  | %  |  | 588     |  
|Results subject to special taxation                                                     |  | 2.7              | %  |  | 1,998   |   |  | (0.1             | %) |  | (84     | ) |  | (0.7 | %) |  | (529    | )
|                                                                                        |  |                  |    |  |         |   |  |                  |    |  |         |   |  |      |    |  |         |  
|Income tax                                                                              |  | 14.7             | %  |  | (11,056 | ) |  | 13.4             | %  |  | (10,155 | ) |  | 7.1  | %  |  | (5,537  | )
|                                                                                        |  |                  |    |  |         |   |  |                  |    |  |         |   |  |      |    |  |         |  



|9 | Exceptional operating profits/losses and gains in other investments
|- | -------------------------------------------------------------------



|9.1. | Exceptional operating profits/losses
|---- | ------------------------------------



|                                                                       |  |                  |   |  |      |   |  |                 
|---------------------------------------------------------------------- |  | ---------------- | - |  | ---- | - |  | ----------------
|                                                                       |  | 2006 (unaudited) |   |  | 2005 |   |  | 2004 (unaudited)
|Assets impairment                                                      |  |                 |   |  | (261 | ) |  |                
|Stamp-duty related to business areas restructuring                     |  |                 |   |  | (511 | ) |  |                
|Gain/losses adjustment on investment properties sold in previous years |  | (764             | ) |  |     |   |  |                
|                                                                       |  |                  |   |  |      |   |  |                 
|                                                                       |  | (764             | ) |  | (772 | ) |  |                
|                                                                       |  |                  |   |  |      |   |  |                 



|9.2. | Gains in other investments
|---- | --------------------------



|                                                                              |  |                  |  |      |  |                 
|----------------------------------------------------------------------------- |  | ---------------- |  | ---- |  | ----------------
|                                                                              |  | 2006 (unaudited) |  | 2005 |  | 2004 (unaudited)
|Extraordinary increase in value of investment with preliminary sale agreement |  | 11,439           |  |     |  |                
|                                                                              |  |                  |  |      |  |                 
|                                                                              |  | 11,439           |  |     |  |                
|                                                                              |  |                  |  |      |  |                 



18



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|10 | Tangible Assets
|-- | ---------------



|10.1 | Changes occurred during the year
|---- | --------------------------------



|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|----------------------------------------------------- |  | ------------------------ | - |  | ------------------------------- | - |  | ------------------------- | - |  | ---------------------------- | - |  | --------------------------- | - |  | --------- | -
|                                                      |  | Land andnaturalresources |   |  | Buildings andotherconstructions |   |  | Plants,machinery andtools |   |  | Transportequipment andothers |   |  | Work inprogress andadvances |   |  | Total     |  
|Cost                                                  |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Opening balance as at 31 of December 2004 (unaudited) |  | 221,648                  |   |  | 482,446                         |   |  | 372,742                   |   |  | 49,112                       |   |  | 5,454                       |   |  | 1,131,402 |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Increases                                             |  | 8,525                    |   |  | 22,851                          |   |  | 25,620                    |   |  | 2,968                        |   |  | 17,113                      |   |  | 77,077    |  
|Revaluation                                           |  | 1,610                    |   |  |                                |   |  |                          |   |  |                             |   |  |                            |   |  | 1,610     |  
|Disposals                                             |  |                         |   |  | (21                             | ) |  | (4,371                    | ) |  | (979                         | ) |  |                            |   |  | (5,371    | )
|Transfers and write offs                             |  |                         |   |  | (1,586                          | ) |  | (7,202                    | ) |  | (953                         | ) |  | (2,359                      | ) |  | (12,100   | )
|Reclassifications                                     |  |                         |   |  | 38                              |   |  | 55                        |   |  | 359                          |   |  | (50                         | ) |  | 402       |  
|Impairment losses                                     |  | (57                      | ) |  | (205                            | ) |  |                          |   |  |                             |   |  |                            |   |  | (262      | )
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Opening balance as at 31 of December 2005             |  | 231,726                  |   |  | 503,523                         |   |  | 386,844                   |   |  | 50,507                       |   |  | 20,158                      |   |  | 1,192,758 |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Increases                                             |  | 31,044                   |   |  | 59,460                          |   |  | 43,380                    |   |  | 4,991                        |   |  | 42,475                      |   |  | 181,350   |  
|Revaluation                                           |  | 6,690                    |   |  |                                |   |  |                          |   |  |                             |   |  |                            |   |  | 6,690     |  
|Disposals                                             |  |                         |   |  | (488                            | ) |  | (2,225                    | ) |  | (289                         | ) |  |                            |   |  | (3,002    | )
|Transfers and write offs                             |  |                         |   |  | 4,317                           |   |  | 1,693                     |   |  | 4                            |   |  | (5,972                      | ) |  | 42        |  
|Land transferred to investment property               |  | (2,804                   | ) |  | (8,411                          | ) |  |                          |   |  |                             |   |  |                            |   |  | (11,215   | )
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Closing balance as at 31 of December 2006 (unaudited) |  | 266,656                  |   |  | 558,401                         |   |  | 429,692                   |   |  | 55,213                       |   |  | 56,661                      |   |  | 1,366,623 |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Depreciation and impairment losses                    |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Opening balance as at 31 of December 2004 (unaudited) |  |                         |   |  | 88,674                          |   |  | 256,839                   |   |  | 38,410                       |   |  |                            |   |  | 383,923   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Increases                                             |  |                         |   |  | 13,357                          |   |  | 31,761                    |   |  | 4,530                        |   |  |                            |   |  | 49,648    |  
|Disposals                                             |  |                         |   |  | (18                             | ) |  | (4,030                    | ) |  | (971                         | ) |  |                            |   |  | (5,019    | )
|Transfers and write offs                             |  |                         |   |  | (812                            | ) |  | (7,430                    | ) |  | (609                         | ) |  |                            |   |  | (8,851    | )
|Reclassifications                                     |  |                         |   |  | (1                              | ) |  |                          |   |  |                             |   |  |                            |   |  | (1        | )
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Opening balance as at 31 of December 2005             |  |                         |   |  | 101,200                         |   |  | 277,140                   |   |  | 41,360                       |   |  |                            |   |  | 419,700   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Increases                                             |  |                         |   |  | 16,203                          |   |  | 32,222                    |   |  | 4,282                        |   |  |                            |   |  | 52,707    |  
|Disposals                                             |  |                         |   |  | (112                            | ) |  | (1,546                    | ) |  | (260                         | ) |  |                            |   |  | (1,918    | )
|Transfers and write offs                             |  |                         |   |  | 11                              |   |  | 37                        |   |  | (18                          | ) |  |                            |   |  | 30        |  
|Land transferred to investment property               |  |                         |   |  | (1,153                          | ) |  |                          |   |  |                             |   |  |                            |   |  | (1,153    | )
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Closing balance as at 31 of December 2006 (unaudited) |  |                         |   |  | 116,149                         |   |  | 307,853                   |   |  | 45,364                       |   |  |                            |   |  | 469,366   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|Net value                                             |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|As at 31 December 2004 (unaudited)                    |  | 221,648                  |   |  | 393,772                         |   |  | 115,903                   |   |  | 10,702                       |   |  | 5,454                       |   |  | 747,479   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|As at 31 December 2005                                |  | 231,726                  |   |  | 402,323                         |   |  | 109,704                   |   |  | 9,147                        |   |  | 20,158                      |   |  | 773,058   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  
|As at 31 December 2006 (unaudited)                    |  | 266,656                  |   |  | 442,252                         |   |  | 121,839                   |   |  | 9,849                        |   |  | 56,661                      |   |  | 897,257   |  
|                                                      |  |                          |   |  |                                 |   |  |                           |   |  |                              |   |  |                             |   |  |           |  

An impairment loss of EUR 57 thousand was recorded in 2005, related to a land in Madeira and
of EUR 205 thousand that refers to a store closed.



19



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|10.2 | Equipment under financial lease
|---- | -------------------------------

The Group has a
variety of equipment under financial lease. Financial lease payments do not include values relative to contingent rentals. Unsettled liabilities on financial lease contracts are referred in note 22.4. The value of assets under financial lease are
shown below:



|                                               |  |                  |   |  |         |   |  |                  |  
|---------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                               |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Land and natural resources                     |  |                  |   |  |         |   |  |                  |  
|Tangible assets                                |  | 34               |   |  | 903     |   |  | 903              |  
|                                               |  |                  |   |  |         |   |  |                  |  
|                                               |  | 34               |   |  | 903     |   |  | 903              |  
|                                               |  |                  |   |  |         |   |  |                  |  
|Buildings and other constructions              |  |                  |   |  |         |   |  |                  |  
|Tangible assets                                |  | 9,679            |   |  | 5,067   |   |  | 2,725            |  
|Accumulated depreciation                       |  | (953             | ) |  | (344    | ) |  | (243             | )
|                                               |  |                  |   |  |         |   |  |                  |  
|                                               |  | 8,726            |   |  | 4,723   |   |  | 2,482            |  
|                                               |  |                  |   |  |         |   |  |                  |  
|Plants and machinery                           |  |                  |   |  |         |   |  |                  |  
|Tangible assets                                |  | 32,656           |   |  | 22,154  |   |  | 14,255           |  
|Accumulated depreciation                       |  | (7,764           | ) |  | (3,991  | ) |  | (1,686           | )
|                                               |  |                  |   |  |         |   |  |                  |  
|                                               |  | 24,892           |   |  | 18,163  |   |  | 12,569           |  
|                                               |  |                  |   |  |         |   |  |                  |  
|IT and office equipment and tools and utensils |  |                  |   |  |         |   |  |                  |  
|Tangible assets                                |  | 15,014           |   |  | 13,842  |   |  | 13,525           |  
|Accumulated depreciation                       |  | (12,775          | ) |  | (11,057 | ) |  | (8,700           | )
|                                               |  |                  |   |  |         |   |  |                  |  
|                                               |  | 2,239            |   |  | 2,785   |   |  | 4,825            |  
|                                               |  |                  |   |  |         |   |  |                  |  
|Transport equipment                            |  |                  |   |  |         |   |  |                  |  
|Tangible assets                                |  | 1,407            |   |  | 951     |   |  | 607              |  
|Accumulated depreciation                       |  | (424             | ) |  | (215    | ) |  | (73              | )
|                                               |  |                  |   |  |         |   |  |                  |  
|                                               |  | 983              |   |  | 736     |   |  | 534              |  
|                                               |  |                  |   |  |         |   |  |                  |  
|Work in progress                               |  |                 |   |  | 662     |   |  | 119              |  
|                                               |  |                  |   |  |         |   |  |                  |  



|10.4 | Guarantees
|---- | ----------

No assets have been pledged as security
for the fulfilment of bank or other obligations.



|10.4 | Tangible assets in progress
|---- | ---------------------------

Tangible assets in
progress refers to the Building and refurbishment of stores.



|10.5 | Revaluation
|---- | -----------

The Group records land allocated to
its operating activity at market value, determined by specialist and independent entities. In 2006 new revaluations were carried out, creating an increase of EUR 6,690 thousand (in 2005 was EUR 1,610 thousand) (note 20.1).

In 2004 no changes were made in the land value registered.

Revaluation values under fixed assets amount to EUR 117,584 thousand (EUR 111,848 thousand in 2005 and EUR 110,238 thousand in 2004), with the following impact on shareholders equity:



|                            |  |                  |   |  |         |   |  |                  |  
|--------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                            |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Revaluation of land         |  | 117,584          |   |  | 111,848 |   |  | 110,238          |  
|Deferred taxes              |  | (26,031          | ) |  | (25,903 | ) |  | (26,042          | )
|Minority interests          |  | (7               | ) |  |        |   |  |                 |  
|                            |  |                  |   |  |         |   |  |                  |  
|Net revaluation (Note 20.1) |  | 91,546           |   |  | 85,945  |   |  | 84,196           |  
|                            |  |                  |   |  |         |   |  |                  |  



20



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|11 | Intangible Assets
|-- | -----------------



|11.1 | Changes occurring during the year
|---- | ---------------------------------



|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|----------------------------------------------------- |  | -------- |  | ----------- | - |  | ------------------------------------- | - |  | --------- | - |  | --------------- | - |  | ------- | -
|                                                      |  | Goodwill |  | R&Dexpenses |   |  | Software,ind.property andother rights |   |  | Key money |   |  | Work inprogress |   |  | Total   |  
|Cost                                                  |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Opening balance as at 31 of December 2004 (unaudited) |  | 127,420  |  | 9,343       |   |  | 5,908                                 |   |  | 19,805    |   |  | 2,647           |   |  | 165,123 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Increases                                             |  |         |  | 364         |   |  |                                      |   |  | 758       |   |  | 3,433           |   |  | 4,555   |  
|Transfers and write offs                             |  |         |  | (4,770      | ) |  | (3,012                                | ) |  | (1,272    | ) |  | (1,930          | ) |  | (10,984 | )
|Reclassifications                                     |  |         |  |            |   |  |                                      |   |  |          |   |  | (402            | ) |  | (402    | )
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Opening balance as at 31 of December 2005             |  | 127,420  |  | 4,937       |   |  | 2,896                                 |   |  | 19,291    |   |  | 3,748           |   |  | 158,292 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Increases                                             |  |         |  | 312         |   |  | 520                                   |   |  | 6,108     |   |  | 387             |   |  | 7,327   |  
|Transfers and write offs                             |  |         |  | (135        | ) |  | (2,421                                | ) |  | 2,638     |   |  | (3,075          | ) |  | (2,993  | )
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Closing balance as at 31 of December 2006 (unaudited) |  | 127,420  |  | 5,114       |   |  | 995                                   |   |  | 28,037    |   |  | 1,060           |   |  | 162,626 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Depreciation and impairment losses                    |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Opening balance as at 31 of December 2004 (unaudited) |  |         |  | 8,387       |   |  | 5,306                                 |   |  | 12,777    |   |  |                |   |  | 26,470  |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Increases                                             |  |         |  | 1,014       |   |  | 336                                   |   |  | 1,380     |   |  |                |   |  | 2,730   |  
|Transfers and write offs                             |  |         |  | (6,700      | ) |  | (3,012                                | ) |  | (1,272    | ) |  |                |   |  | (10,984 | )
|Reclassifications                                     |  |         |  | 1           |   |  |                                      |   |  |          |   |  |                |   |  | 1       |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Opening balance as at 31 of December 2005             |  |         |  | 2,702       |   |  | 2,630                                 |   |  | 12,885    |   |  |                |   |  | 18,217  |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Increases                                             |  |         |  | 955         |   |  | 85                                    |   |  | 1,149     |   |  |                |   |  | 2,189   |  
|Transfers and write offs                             |  |         |  | (449        | ) |  | (2,421                                | ) |  |          |   |  |                |   |  | (2,870  | )
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Closing balance as at 31 of December 2006 (unaudited) |  |         |  | 3,208       |   |  | 294                                   |   |  | 14,034    |   |  |                |   |  | 17,536  |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|Net value                                             |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|As at 31 December 2004 (unaudited)                    |  | 127,420  |  | 956         |   |  | 602                                   |   |  | 7,028     |   |  | 2,647           |   |  | 138,653 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|As at 31 December 2005                                |  | 127,420  |  | 2,235       |   |  | 266                                   |   |  | 6,406     |   |  | 3,748           |   |  | 140,075 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  
|As at 31 December 2006 (unaudited)                    |  | 127,420  |  | 1,906       |   |  | 701                                   |   |  | 14,003    |   |  | 1,060           |   |  | 145,090 |  
|                                                      |  |          |  |             |   |  |                                       |   |  |           |   |  |                 |   |  |         |  



|11.2 | Guarantees
|---- | ----------

No assets have been pledged as security
for the fulfilment of bank or other obligations.



|11.3 | Intangible assets in progress
|---- | -----------------------------

The implementation
of projects for processes simplification and key money are considered in intangible assets- work in progress.



|11.4 | Impairment tests for Goodwill
|---- | -----------------------------

In 2006 and 2005
evaluations were made according to the Discounted Cash Flows (DCF) evaluation models, thereby sustaining the recoverability of Goodwill value.

The values of these evaluations are reached through past performances and through expectations for market development, with future cash-flow projections being drawn up for each of the businesses, based on medium/long term plans approved by
the Board of Directors.

These estimates were made considering a discount rate of between 7,8% and 7,9% and a perpetual growth rate of
0.25%.



21



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|12 | Investment Property
|-- | -------------------



|                                       |  |                  |  |         |   |  |                  |  
|-------------------------------------- |  | ---------------- |  | ------- | - |  | ---------------- | -
|                                       |  | 2006 (unaudited) |  | 2005    |   |  | 2004 (unaudited) |  
|Opening balance                        |  | 31,514           |  | 46,582  |   |  | 79,944           |  
|                                       |  |                  |  |         |   |  |                  |  
|Increases due to acquisitions          |  | 203              |  | 207     |   |  | 68               |  
|Transfers from tangible assets         |  | 10,061           |  |        |   |  | 11,584           |  
|Other transfers (taxes)                |  |                 |  |        |   |  | (9               | )
|Changes to fair value (note 6 and 9.2) |  | 11,430           |  | (9      | ) |  | (159             | )
|Disposals                              |  |                 |  | (15,266 | ) |  | (44,846          | )
|                                       |  |                  |  |         |   |  |                  |  
|Closing balance                        |  | 53,208           |  | 31,514  |   |  | 46,582           |  
|                                       |  |                  |  |         |   |  |                  |  

The investment property relates to plots of land initially acquired for use in Group operations,
and others actually used for that purpose for a period of time but which became redundant, either because they could not be used to build cash-generating units or because they became superfluous as a result of the restructuring of operations carried
out in them.

This category also includes recently acquired land, whose use has still not been determined, being, therefore, considered has
investment expecting for a market value increase.

In 2006 the Group has recognised as current assets in the amount of EUR
21,500 thousand investment properties with preliminary sale agreements, which are expected to be sold within a period below 12 months.

As non-current assets are all the investment properties that are not expectable to be sold within a period below 12 months.



|13 | Derivative financial instruments
|-- | --------------------------------



|                    |  |                  |  |             |  |                  |  |             |  |        |  |            
|------------------- |  | ---------------- |  | ----------- |  | ---------------- |  | ----------- |  | ------ |  | -----------
|                    |  | 2006 (unaudited) |  | 2005        |  | 2004 (unaudited)
|                    |  | Assets           |  | Liabilities |  | Assets           |  | Liabilities |  | Assets |  | Liabilities
|Non-current         |  |                  |  |             |  |                  |  |             |  |        |  |            
|Interest rates Swap |  | 778              |  | 2,270       |  | 164              |  | 1,638       |  | 204    |  | 525        
|USD loan hedging    |  |                 |  | 14,980      |  | 3,468            |  |            |  |       |  | 14,203     
|                    |  |                  |  |             |  |                  |  |             |  |        |  |            
|                    |  | 778              |  | 17,250      |  | 3,632            |  | 1,638       |  | 204    |  | 14,728     
|                    |  |                  |  |             |  |                  |  |             |  |        |  |            

In 2006 the values shown include EUR 23 thousands of interest receivable or payable that is due
and are related with these financial instruments.



|14 | Available-for-sale financial investments
|-- | ----------------------------------------

There were no changes throughout the years of 2006 and
2005 in Available-for-sale financial investments, totalling EUR 5,156 thousand.



|15 | Inventories
|-- | -----------



|                                             |  |                  |   |  |         |   |  |                  |  
|-------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                             |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Raw and subsidiary materials and consumables |  | 382              |   |  | 99      |   |  |                 |  
|Goods                                        |  | 113,330          |   |  | 106,157 |   |  | 95,978           |  
|                                             |  |                  |   |  |         |   |  |                  |  
|                                             |  | 113,712          |   |  | 106,256 |   |  | 95,978           |  
|                                             |  |                  |   |  |         |   |  |                  |  
|Fair value adjustment (note 24)              |  | (1,334           | ) |  | (1,621  | ) |  | (2,041           | )
|                                             |  |                  |   |  |         |   |  |                  |  
|Net inventories                              |  | 112,378          |   |  | 104,635 |   |  | 93,937           |  
|                                             |  |                  |   |  |         |   |  |                  |  

No inventories have been pledged as guarantee for the fulfilment of contractual obligations.



22



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|16 | Taxes
|-- | -----



|16.1 | Deferred tax assets and liabilities
|---- | -----------------------------------

Change
in deferred tax accounts



|                         |  |                  |   |  |         |   |  |                  |  
|------------------------ |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                         |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Opening balance          |  | (15,520          | ) |  | (10,775 | ) |  | (8,473           | )
|Revaluation and reserves |  | (333             | ) |  | 139     |   |  | 580              |  
|Results of the year      |  | (3,376           | ) |  | (4,884  | ) |  | (2,882           | )
|                         |  |                  |   |  |         |   |  |                  |  
|Closing balance          |  | (19,229          | ) |  | (15,520 | ) |  | (10,775          | )
|                         |  |                  |   |  |         |   |  |                  |  

Deferred taxes are presented in balance sheet as follows:



|                         |  |                  |   |  |         |   |  |                  |  
|------------------------ |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                         |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Deferred tax assets      |  | 8,707            |   |  | 11,111  |   |  | 17,098           |  
|Deferred tax liabilities |  | (27,936          | ) |  | (26,631 | ) |  | (27,873          | )
|                         |  |                  |   |  |         |   |  |                  |  
|                         |  | (19,229          | ) |  | (15,520 | ) |  | (10,775          | )
|                         |  |                  |   |  |         |   |  |                  |  

Movement in deferred taxes during the year



|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|---------------------------------------------------- |  | ------------------------------------------ | - |  | ---------------- | - |  | --------------- | - |  | ------------------------------ | - |  | ---------------- | - |  | --------------- | - |  | ------------------------------------------ | -
|                                                     |  | Openingbalance as at31/12/2004 (unaudited) |   |  | Impact onresults |   |  | Impact onequity |   |  | Openingbalance as at31/12/2005 |   |  | Impact onresults |   |  | Impact onequity |   |  | Closingbalance as at31/12/2006 (unaudited) |  
|Deferred tax liabilities                             |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|Revaluation of fixed assets and investments property |  | 27,424                                     |   |  | (1,093           | ) |  | (139            | ) |  | 26,192                         |   |  | 991              |   |  | 333             |   |  | 27,516                                     |  
|Differences in depreciation rates                    |  | 443                                        |   |  | (11              | ) |  |                |   |  | 432                            |   |  | (20              | ) |  |                |   |  | 412                                        |  
|Other temporary differences                          |  | 6                                          |   |  | 1                |   |  |                |   |  | 7                              |   |  | 1                |   |  |                |   |  | 8                                          |  
|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|                                                     |  | 27,873                                     |   |  | (1,103           | ) |  | (139            | ) |  | 26,631                         |   |  | 972              |   |  | 333             |   |  | 27,936                                     |  
|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|Deferred tax assets                                  |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|Excess over legal provisions                         |  | 911                                        |   |  | (34              | ) |  |                |   |  | 877                            |   |  | 14               |   |  |                |   |  | 891                                        |  
|Recoverable losses                                   |  | 12,440                                     |   |  | (6,047           | ) |  |                |   |  | 6,393                          |   |  | (1,853           | ) |  |                |   |  | 4,540                                      |  
|Provisions for inventories                           |  | 555                                        |   |  | (114             | ) |  |                |   |  | 441                            |   |  | (90              | ) |  |                |   |  | 351                                        |  
|Pension costs                                        |  | 79                                         |   |  | 6                |   |  |                |   |  | 85                             |   |  | (2               | ) |  |                |   |  | 83                                         |  
|Revaluation of fixed assets and investments property |  | 764                                        |   |  | 106              |   |  |                |   |  | 870                            |   |  | 83               |   |  |                |   |  | 953                                        |  
|Differences in depreciation rates                    |  | 1,053                                      |   |  | 16               |   |  |                |   |  | 1,069                          |   |  | (180             | ) |  |                |   |  | 889                                        |  
|Costs with foreign exchange risk hedging operations  |  | 89                                         |   |  | 318              |   |  |                |   |  | 407                            |   |  | (157             | ) |  |                |   |  | 250                                        |  
|Other temporary differences                          |  | 1,207                                      |   |  | (238             | ) |  |                |   |  | 969                            |   |  | (219             | ) |  |                |   |  | 750                                        |  
|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|                                                     |  | 17,098                                     |   |  | (5,987           | ) |  |                |   |  | 11,111                         |   |  | (2,404           | ) |  |                |   |  | 8,707                                      |  
|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  
|Net change in deferred tax                           |  | (10,775                                    | ) |  | (4,884           | ) |  | 139             |   |  | (15,520                        | ) |  | (3,376           | ) |  | (333            | ) |  | (19,229                                    | )
|                                                     |  |                                            |   |  |                  |   |  |                 |   |  |                                |   |  |                  |   |  |                 |   |  |                                            |  

The Group recognised these deferred tax assets on tax losses based on projections for the
respective businesses that show that tax profits will be realised in the future ensuring their recoverability.



|16.2 | Receivable and payable taxes
|---- | ----------------------------



|                      |  |                  |  |        |  |                 
|--------------------- |  | ---------------- |  | ------ |  | ----------------
|                      |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Taxes receivable      |  |                  |  |        |  |                 
|Income tax receivable |  | 2,274            |  | 4,126  |  | 1,690           
|VAT receivable        |  | 11,825           |  | 9,266  |  | 8,468           
|Others                |  | 1,114            |  | 17     |  | 15              
|                      |  |                  |  |        |  |                 
|                      |  | 15,213           |  | 13,409 |  | 10,173          
|                      |  |                  |  |        |  |                 
|Taxes payable         |  |                  |  |        |  |                 
|Income tax payable    |  | 731              |  | 3,112  |  |                
|VAT payable           |  | 6,786            |  | 8,752  |  | 9,267           
|Income tax withheld   |  | 1,384            |  | 1,351  |  | 1,560           
|Social security       |  | 3,588            |  | 3,070  |  | 3,008           
|Other taxes           |  | 3,577            |  | 3,962  |  | 4,244           
|                      |  |                  |  |        |  |                 
|                      |  | 16,066           |  | 20,247 |  | 18,079          
|                      |  |                  |  |        |  |                 



23



---

##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|17 | Trade debtors, accrued income and deferred costs
|-- | ------------------------------------------------



|               |  |                  |  |        |  |                 
|-------------- |  | ---------------- |  | ------ |  | ----------------
|               |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Non-current    |  |                  |  |        |  |                 
|Other debtors  |  | 52,187           |  | 52,272 |  | 52,272          
|Deferred costs |  | 1,001            |  | 1,424  |  |                
|               |  |                  |  |        |  |                 
|               |  | 53,188           |  | 53,696 |  | 52,272          
|               |  |                  |  |        |  |                 



|                       |  |                  |  |        |  |                 
|---------------------- |  | ---------------- |  | ------ |  | ----------------
|                       |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Currents               |  |                  |  |        |  |                 
|Commercial customers   |  | 36,172           |  | 31,627 |  | 32,087          
|Subsidiaries companies |  | 560              |  | 570    |  | 423             
|Suppliers              |  | 25               |  | 21     |  | 244             
|Staff                  |  | 725              |  | 118    |  | 7               
|Other debtors          |  | 11,852           |  | 12,188 |  | 10,239          
|Accrued income         |  | 5,896            |  | 5,059  |  | 3,713           
|Deferred costs         |  | 5,424            |  | 4,296  |  | 6,495           
|                       |  |                  |  |        |  |                 
|                       |  | 60,654           |  | 53,879 |  | 53,208          
|                       |  |                  |  |        |  |                 

Non-current debtors balance of EUR 52,187 thousand (2005 and 2004: EUR 52,272 thousand) is
related to tax liquidation. The Group has already contested the amount paid and made a legal claim for reimbursement (note 29).

Accrued
income essentially respects to the recognition of supplementary gains contracted with suppliers, in the amount of EUR 3,085 thousand (2005: EUR 2,623 thousand and 2004: EUR 1,701 thousand) and rents receivable in the amount of EUR
2,792 thousand (2005: EUR 2,382 thousand and 2004: EUR 1,973 thousand).

The deferred costs heading includes EUR
2,026 thousand (2005: EUR 2,096 thousand and 2004: EUR 2,307 thousand) of pre-paid rents, EUR 1,455 thousand (2005: EUR 1,444 thousand and 2004: EUR 3,119 thousand) of bond issue and credit opening costs, EUR 2,944 thousand
(2005: EUR 2,176 thousand and 2004: EUR 1,069 thousand) relative to other costs attributable to future years and paid in 2006, or, when not paid, were already charged by the competent entities.

The debtors amount is registered by the recoverable value, i.e., the Group constitutes provisions for impairment losses whenever there are signs of
uncollectible amounts (note 24).



|18 | Cash and cash equivalents
|-- | -------------------------



|                          |  |                  |  |        |  |                 
|------------------------- |  | ---------------- |  | ------ |  | ----------------
|                          |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Bank deposits             |  | 34,811           |  | 20,086 |  | 18,132          
|Short-term investments    |  | 9,640            |  | 64,251 |  | 39,972          
|Cash and cash equivalents |  | 1,467            |  | 2,269  |  | 1,388           
|                          |  |                  |  |        |  |                 
|                          |  | 45,918           |  | 86,606 |  | 59,492          
|                          |  |                  |  |        |  |                 

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 24).



24



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|19 | Cash generated from operations
|-- | ------------------------------



|                                                   |  |                 |   |  |         |   |  |                  |  
|-------------------------------------------------- |  | --------------- | - |  | ------- | - |  | ---------------- | -
|                                                   |  | 2006 (unaudited |   |  | 2005    |   |  | 2004 (unaudited) |  
|Net results                                        |  | 63,763          |   |  | 63,331  |   |  | 67,306           |  
|Adjustments for:                                   |  |                 |   |  |         |   |  |                  |  
|Minority interests                                 |  | 397             |   |  | 2,548   |   |  | 4,748            |  
|Taxes                                              |  | 11,056          |   |  | 10,155  |   |  | 5,537            |  
|Depreciations                                      |  | 54,896          |   |  | 52,379  |   |  | 53,824           |  
|Provisions                                         |  | 106             |   |  | 487     |   |  | 1,322            |  
|Net financial costs                                |  | 17,061          |   |  | 16,871  |   |  | 20,105           |  
|Impairment of assets                               |  |                |   |  | 262     |   |  | 218              |  
|Profit/ Losses on financial investment disposals   |  | (11,439         | ) |  |        |   |  |                 |  
|Profit/ Losses on tangible assets disposals        |  | (648            | ) |  | 281     |   |  | (111             | )
|                                                   |  |                 |   |  |         |   |  |                  |  
|                                                   |  | 135,192         |   |  | 146,314 |   |  | 152,949          |  
|                                                   |  |                 |  
|Changes in working capital:                        |  |                 |   |  |         |   |  |                  |  
|Inventories                                        |  | (7,744          | ) |  | (10,698 | ) |  | (2,184           | )
|Trade debtors, accrued income and deferred costs   |  | (8,122          | ) |  | (3,090  | ) |  | (4,770           | )
|Trade creditors, accrued costs and deferred income |  | 48,789          |   |  | 11,189  |   |  | (39,240          | )
|                                                   |  |                 |   |  |         |   |  |                  |  
|                                                   |  | 168,115         |   |  | 143,715 |   |  | 106,755          |  
|                                                   |  |                 |   |  |         |   |  |                  |  



|20 | Capital and reserves
|-- | --------------------



|20.1 | Fair value and other reserves
|---- | -----------------------------



|                                           |  |                   |  
|------------------------------------------ |  | ----------------- | -
|                                           |  | Land andbuildings |  
|Balance as at 1 January 2004 (unaudited)   |  | 84,426            |  
|                                           |  |                   |  
|Land transferred to investment property:   |  |                   |  
| Gross value                              |  | (617              | )
| Deferred tax                             |  | (194              | )
|Revaluation:                               |  |                   |  
| Deferred tax                             |  | 581               |  
|                                           |  |                   |  
|Balance as at 31 December 2004 (unaudited) |  | 84,196            |  
|                                           |  |                   |  
|Revaluation:                               |  |                   |  
| Gross value                              |  | 1,610             |  
| Deferred tax                             |  | 139               |  
|                                           |  |                   |  
|Balance as at 31 December 2005             |  | 85,945            |  
|                                           |  |                   |  
|Land transferred to investment property:   |  |                   |  
| Gross value                              |  | (954              | )
| Deferred tax                             |  | 205               |  
|Revaluation:                               |  |                   |  
| Gross value                              |  | 6,690             |  
| Deferred tax                             |  | (333              | )
| Minority interests                       |  | (7                | )
|                                           |  |                   |  
|Balance as at 31 December 2006 (unaudited) |  | 91,546            |  
|                                           |  |                   |  



|20.2 | Share capital and share premium
|---- | -------------------------------

Authorised share
capital is represented by 66,000,000 ordinary shares (2005 and 2004: 66,000,000), at a nominal value of EUR 5 (five Euros) each.



|20.3 | Dividends
|---- | ---------

In each of the years 2006 and 2005 were
distributed dividends of EUR 20,000 thousand to JMR shareholders.

In 2004 were distributed dividends of EUR 19,343, from which EUR
4,743 thousand were paid to minority interests.



25



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|21 | Earnings per share
|-- | ------------------



|21.1 | Basic and diluted earnings per share
|---- | ------------------------------------

Basic net
results per share are calculated based on the net profit of EUR 63,763 thousand (2005: profit of EUR 63,331 thousand and 2004: profit of EUR 67,306 thousand) attributable to ordinary shareholders and on weighted average outstanding
ordinary shares, numbering 66,000,000 (2005 and 2004: 66,000,000). The diluted earnings per share are equal to basic earnings per share as there are no dilution events.



|21.2 | Diluted weighted average ordinary shares
|---- | ----------------------------------------



|                                             |  |                  |  |            |  |                 
|-------------------------------------------- |  | ---------------- |  | ---------- |  | ----------------
|                                             |  | 2006 (unaudited) |  | 2005       |  | 2004 (unaudited)
|Diluted weighted average ordinary shares     |  | 66,000,000       |  | 66,000,000 |  | 66,000,000      
|                                             |  |                  |  |            |  |                 
|Basic and diluted earnings per share  Euros |  | 0.9661           |  | 0.9596     |  | 1.0198          
|                                             |  |                  |  |            |  |                 



|22 | Borrowings
|-- | ----------

Funding in leasing was also contracted amounting to M EUR 22.5, and for the time
limits of 48 months with monthly amortisation.



|22.1 | Current and non-current loans
|---- | -----------------------------



|                                             |  |                  |  |         |  |                 
|-------------------------------------------- |  | ---------------- |  | ------- |  | ----------------
|                                             |  | 2006 (unaudited) |  | 2005    |  | 2004 (unaudited)
|Non-current loans                            |  |                  |  |         |  |                 
|Bank loans                                   |  | 4,000            |  | 12,000  |  | 20,000          
|Bond loans                                   |  | 251,013          |  | 269,380 |  | 251,804         
|Financial lease liabilities                  |  | 17,631           |  | 11,010  |  | 8,477           
|                                             |  |                  |  |         |  |                 
|                                             |  | 272,644          |  | 292,390 |  | 280,281         
|                                             |  |                  |  |         |  |                 
|Current loans                                |  |                  |  |         |  |                 
|Bank overdrafts                              |  | 806              |  | 2,234   |  | 809             
|Bank loans                                   |  | 8,000            |  | 8,000   |  | 8,000           
|Loans from subsidiaries and parent companies |  | 11,699           |  | 11,145  |  | 12,364          
|Financial lease liabilities                  |  | 9,786            |  | 7,499   |  | 7,582           
|                                             |  |                  |  |         |  |                 
|                                             |  | 30,291           |  | 28,878  |  | 28,755          
|                                             |  |                  |  |         |  |                 



|22.2 | Loan terms and maturities
|---- | -------------------------



|                                  |  |             |   |  |         |   |  |                 |  |                 |  
|--------------------------------- |  | ----------- | - |  | ------- | - |  | --------------- |  | --------------- | -
|                                  |  | Averagerate |   |  | Total   |   |  | Less than 1year |  | More than 1year |  
|2005                              |  |             |   |  |         |   |  |                 |  |                 |  
|Bank loans                        |  |             |   |  |         |   |  |                 |  |                 |  
|Loans in EUR                      |  | 3.33        | % |  | 20,000  |   |  | 8,000           |  | 12,000          |  
|Bond Loans                        |  |             |   |  |         |   |  |                 |  |                 |  
|Loans                             |  | 3.56        | % |  | 266,007 |   |  |                |  | 266,007         |  
|Fair value adjustment             |  |             |   |  | 3,373   |   |  |                |  | 3,373           |  
|Bank overdrafts                   |  | 3.16        | % |  | 2,234   |   |  | 2,234           |  |                |  
|Subsidiaries and parent companies |  | 3.40        | % |  | 11,145  |   |  | 11,145          |  |                |  
|Financial lease liabilities       |  | 3.27        | % |  | 18,509  |   |  | 7,499           |  | 11,010          |  
|                                  |  |             |   |  |         |   |  |                 |  |                 |  
|                                  |  |             |   |  | 321,268 |   |  | 28,878          |  | 292,390         |  
|2006 (unaudited)                  |  |             |   |  |         |   |  |                 |  |                 |  
|Bank loans                        |  |             |   |  |         |   |  |                 |  |                 |  
|Loans in EUR                      |  | 3.39        | % |  | 12,000  |   |  | 8,000           |  | 4,000           |  
|Bond Loans                        |  |             |   |  |         |   |  |                 |  |                 |  
|Loans                             |  | 4.25        | % |  | 115,000 |   |  |                |  | 115,000         |  
|Private placement                 |  | 4.20        | % |  | 151,007 |   |  |                |  | 151,007         |  
|Fair value adjustment             |  |             |   |  | (14,994 | ) |  |                |  | (14,994         | )
|Bank overdrafts                   |  | 3.95        | % |  | 806     |   |  | 806             |  |                |  
|Subsidiaries and parent companies |  | 3.80        | % |  | 11,699  |   |  | 11,699          |  |                |  
|Financial lease liabilities       |  | 3.53        | % |  | 27,417  |   |  | 9,786           |  | 17,631          |  
|                                  |  |             |   |  |         |   |  |                 |  |                 |  
|                                  |  |             |   |  | 302,935 |   |  | 30,291          |  | 272,644         |  
|                                  |  |             |   |  |         |   |  |                 |  |                 |  



26



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



The amount of EUR (14,994) thousand (2005: EUR 3,373 thousand), adjusted to the total of bond
loans, refers to the updating of the bond loan for 180 million USD, for which the Group contracted a hedging instrument, presented in note 13, with a symmetrical value.



|22.3 | Bond loans
|---- | ----------

In June 2003, 23 million JMR bonds
were issued at the nominal value of 5 Euros. They were issued with a deadline of 5 years. The maturity date of these bonds was fixed for June 2008. The interest rate is variable. In 2005 the conditions of this loan were renegotiated. On the one hand
their maturity was prolonged for another two years, now maturing in June 2010, and on the other hand the spread to add to the base rate for calculating the interest to be paid on each coupon was reduced.

In June 2004 a Private Placement was carried out by JMR on the US market, in the amount of USD 180,000 thousand, at a fixed rate. These
Notes issued by JMR are equivalent to Bond Loans in Portuguese law. The total amount was divided between a 7-year issue of USD 84,000 thousand and a 10-year one of USD 96,000 thousand. Immediately after the contracting of this
amount a EUR/USD Cross Currency Swap was carried out.

The redemption dates of the bond loans are as follows:



|      |  |        
|----- |  | -------
|2010  |  | 115,000
|2011  |  | 70,470 
|2014  |  | 80,537 
|      |  |        
|Total |  | 266,007
|      |  |        



|22.4 | Financial lease liabilities
|---- | ---------------------------



|                               |  |                  |   |  |        |   |  |                  |  
|------------------------------ |  | ---------------- | - |  | ------ | - |  | ---------------- | -
|                               |  | 2006 (unaudited) |   |  | 2005   |   |  | 2004 (unaudited) |  
|Payments in less than 1 year   |  | 10,579           |   |  | 7,946  |   |  | 8,288            |  
|Payments between 1 and 5 years |  | 18,298           |   |  | 11,404 |   |  | 8,515            |  
|                               |  |                  |   |  |        |   |  |                  |  
|                               |  | 28,877           |   |  | 19,350 |   |  | 16,803           |  
|Payment of future interest     |  | (1,460           | ) |  | (841   | ) |  | (744             | )
|                               |  |                  |   |  |        |   |  |                  |  
|Present value of liabilities   |  | 27,417           |   |  | 18,509 |   |  | 16,059           |  
|                               |  |                  |   |  |        |   |  |                  |  



|22.5 | Financial debt
|---- | --------------

As the Group contracted several
foreign exchange risk and interest risk hedging operations, as well as short-term investments, the net consolidated financial debt as at 31 December is:



|                                                    |  |                  |   |  |         |   |  |                  |  
|--------------------------------------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                                                    |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Non-current loans (note 22.1)                       |  | 272,644          |   |  | 292,390 |   |  | 280,281          |  
|Current loans (note 22.1)                           |  | 30,291           |   |  | 28,878  |   |  | 28,755           |  
|Derivative financial instruments (note 13)          |  | 16,472           |   |  | (1,994  | ) |  | 14,524           |  
|Interest on accruals and deferrals (note 17 and 25) |  | 80               |   |  | (720    | ) |  | (1,333           | )
|Bank deposits (note 18)                             |  | (34,811          | ) |  | (20,086 | ) |  | (18,132          | )
|Short-term investments (note 18)                    |  | (9,640           | ) |  | (64,251 | ) |  | (39,972          | )
|                                                    |  |                  |   |  |         |   |  |                  |  
|                                                    |  | 275,036          |   |  | 234,217 |   |  | 264,123          |  
|                                                    |  |                  |   |  |         |   |  |                  |  



|23 | Employee benefits
|-- | -----------------

Defined benefit plans paid for by the group

The Group has direct responsibility for these plans. Independent actuaries evaluate them twice a
year. According to the actuarial calculation reported on 31stDecember 2006, the responsibility totals EUR
1,372 thousand (EUR 1,389 thousand in 2005 and EUR 1,377 thousand in 2004), and is totally included in the heading employee benefits.



27



---

##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



Movement in the years:



|                                           |  |       |  
|------------------------------------------ |  | ----- | -
|Balance as at 31 December 2004 (unaudited) |  | 1,377 |  
|                                           |  |       |  
|Interest costs                             |  | 41    |  
|Actuarial (gains)/losses                   |  | 45    |  
|Retirement pensions paid in                |  | (74   | )
|Balance as at 31 December 2005             |  | 1,389 |  
|Interest costs                             |  | 60    |  
|Retirement pensions paid in                |  | (77   | )
|Balance as at 31 December 2006 (unaudited) |  | 1,372 |  
|                                           |  |       |  

Actuarial assumptions used:



|                    |  |                  |   |  |            |  
|------------------- |  | ---------------- | - |  | ---------- | -
|                    |  | 2006 (unaudited) |   |  | 2005       |  
|Mortality table     |  | TV  73/77       |   |  | TV  73/77 |  
|Discount rate       |  | 5.0              | % |  | 4.5        | %
|Pension growth rate |  | 2.0              | % |  | 3.0        | %



|24 | Provisions and adjustments to the net realisable value
|-- | ------------------------------------------------------



|                              |  |                                            |  |                  |  |                |   |  |                                |  |                  |  |                |   |  |                                           
|----------------------------- |  | ------------------------------------------ |  | ---------------- |  | -------------- | - |  | ------------------------------ |  | ---------------- |  | -------------- | - |  | ------------------------------------------
|                              |  | Openingbalance as at31/12/2004 (unaudited) |  | Provisionsset up |  | Provisionsused |   |  | Openingbalance as at31/12/2005 |  | Provisionsset up |  | Provisionsused |   |  | Closingbalance as at31/12/2006 (unaudited)
|Doubtful debtors (note 17)    |  | 12,495                                     |  | 17               |  | (3,026         | ) |  | 9,486                          |  | 106              |  | (956           | ) |  | 8,636                                     
|Inventories (note 15)         |  | 2,041                                      |  |                 |  | (420           | ) |  | 1,621                          |  | 36               |  | (323           | ) |  | 1,334                                     
|Other securities (note 18)    |  | 57                                         |  |                 |  |               |   |  | 57                             |  |                 |  |               |   |  | 57                                        
|                              |  |                                            |  |                  |  |                |   |  |                                |  |                  |  |                |   |  |                                           
|Total fair value adjustments  |  | 14,593                                     |  | 17               |  | (3,446         | ) |  | 11,164                         |  | 142              |  | (1,279         | ) |  | 10,027                                    
|Employee benefits (note 23)   |  | 1,377                                      |  | 86               |  | (74            | ) |  | 1,389                          |  | 60               |  | (77            | ) |  | 1,372                                     
|Other risks and contingencies |  | 5,944                                      |  | 433              |  | (91            | ) |  | 6,286                          |  | 44               |  | (503           | ) |  | 5,827                                     
|                              |  |                                            |  |                  |  |                |   |  |                                |  |                  |  |                |   |  |                                           
|Total of provisions           |  | 7,321                                      |  | 519              |  | (165           | ) |  | 7,675                          |  | 104              |  | (580           | ) |  | 7,199                                     
|                              |  |                                            |  |                  |  |                |   |  |                                |  |                  |  |                |   |  |                                           

Provision for risks and contingencies includes essentially amounts related to litigious cases,
which are not expected to be resolved within the year.



|25 | Trade creditors, accrued costs and deferred income
|-- | --------------------------------------------------



|                               |  |                  |  |         |  |                 
|------------------------------ |  | ---------------- |  | ------- |  | ----------------
|                               |  | 2006 (unaudited) |  | 2005    |  | 2004 (unaudited)
|Other commercial creditors     |  | 385,300          |  | 335,133 |  | 341,636         
|Other non-commercial creditors |  | 39,726           |  | 16,182  |  | 6,529           
|Accrued costs                  |  | 42,330           |  | 39,450  |  | 38,269          
|Deferred income                |  | 1,058            |  | 1,302   |  | 1,000           
|                               |  |                  |  |         |  |                 
|                               |  | 468,414          |  | 392,067 |  | 387,434         
|                               |  |                  |  |         |  |                 

The heading accrued costs is composed essentially of salaries and wages to be paid to
the employees, in the amount of EUR 23,980 thousand (2005: EUR 24,341 thousand and 2004: EUR 22,771 thousand), rents in the amount of EUR 3,788 thousand (2005: EUR 3,404 thousand and 2004: EUR 2,041 thousand), royalties in the
amount of EUR 3,068 thousand (2005: EUR 2,802 thousand and 2004: EUR 2,652 thousand) and interest payable in the amount of EUR 1,500 thousand (2005: EUR 1,593 thousand and 2004: EUR 1,769 thousand). The remaining EUR
9,994 thousand (2005: EUR 7,310 thousand and 2004: EUR 9,036 thousand) respects to sundry costs (utilities, insurance, consultants, etc), for 2006 and 2005, which had not been invoiced by the respective entities prior to the end of the
year.

The heading deferred income comprises essentially supplementary revenues in the amount of EUR 340 thousand (2005:
EUR 845 thousand and 2004: EUR 999 thousand), which are deferred until the respective goods are sold.



28



---

##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|26 | Guarantees
|-- | ----------

The bank guarantees are as follows:



|                                                     |  |                  |  |       |  |                 
|---------------------------------------------------- |  | ---------------- |  | ----- |  | ----------------
|                                                     |  | 2006 (unaudited) |  | 2005  |  | 2004 (unaudited)
|Guarantees provided to EDP (Electricity company)     |  | 76               |  | 25    |  | 25              
|Guarantees provided to suppliers                     |  | 100              |  | 97    |  | 464             
|Guarantees for D.G.C.I. (Portuguese tax authorities) |  | 3,229            |  | 1,065 |  | 7,129           
|Other guarantees provided                            |  | 9,200            |  | 6,209 |  | 6,867           
|                                                     |  |                  |  |       |  |                 
|Total Guarantees                                     |  | 12,605           |  | 7,396 |  | 14,485          
|                                                     |  |                  |  |       |  |                 



|27 | Operational lease
|-- | -----------------

The amounts of liabilities related to medium and long-term contracts which
have penalty clauses if broken, are the following:



|                               |  |                  |  |        |  |                 
|------------------------------ |  | ---------------- |  | ------ |  | ----------------
|                               |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Payments in less than 1 year   |  | 17,591           |  | 14,899 |  | 13,671          
|Payments between 1 and 5 years |  | 42,499           |  | 37,874 |  | 37,357          
|Payments in more than 5 years  |  | 29,408           |  | 21,482 |  | 20,221          
|                               |  |                  |  |        |  |                 
|                               |  | 89,498           |  | 74,255 |  | 71,249          
|                               |  |                  |  |        |  |                 

These amounts respect to stores and warehouses rent contracts, with initial term between 5 and 20
years, with an option to renegotiate after that period. The payments are annually updated, reflecting inflation and/or market valuation.

As
mentioned all these contracts are breakable through the payment of penalty clauses. The liabilities inherent to these penalties were, in the end of 2006, of EUR 9,899 thousand and, in the end of 2005 were EUR 15,090 thousand.

Operational lease contracts were recognised as costs during the year in the amount of EUR 65,527 thousand. The amounts in 2005 were EUR
62,077 thousand and in 2004 were 57,849 thousand.

The distribution is as follows:



|                           |  |                  |  |        |  |                 
|-------------------------- |  | ---------------- |  | ------ |  | ----------------
|                           |  | 2006 (unaudited) |  | 2005   |  | 2004 (unaudited)
|Buildings and other const. |  | 61,115           |  | 58,253 |  | 55,197          
|Transport equipment        |  | 1,346            |  | 1,373  |  | 1,238           
|IT equipment               |  | 389              |  | 298    |  | 140             
|Others                     |  | 2,675            |  | 2,153  |  | 1,274           
|                           |  |                  |  |        |  |                 
|                           |  | 65,525           |  | 62,077 |  | 57,849          
|                           |  |                  |  |        |  |                 

The difference from the rents stated in note 4 are costs with occasional renting in
the amount of EUR 2 thousand. In 2005 were EUR 4 thousand and in 2004 were EUR 6 thousand.

The amount of EUR 38,968 thousand
(2005: EUR 38,176 thousand and 2004: EUR 37,845 thousand) included in Buildings and other constructions respects to related entities and the Group received rents in the same amount.

From the remascent the amount of EUR 19,084 thousand (2005: EUR 17,092 thousand and 2004: EUR 14,511 thousand) respects to store rents and EUR
3,063 thousand (2005: EUR 2,985 thousand and 2004: EUR 2,841 thousand) are logistics and headoffice related.



|28 | Capital commitments
|-- | -------------------

Capital expenditure contracted for at the balance sheet date amount EUR
34,869 thousand (2005: EUR 3,148 thousand and 2004: EUR 909 thousand), and referred essentially to work in progress.



|29 | Contingencies
|-- | -------------

 An amount of EUR 52,187 thousand is recognised in the financial
statements under non-current debtors (note 17) relative to tax liquidations claimed by the Tax Administration which were liquidated in previous years in line with the exceptional regularisation process of tax debts (as outlined in note 35 of the
2004 Notes to the Consolidate Financial Statements).



29



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



The Groups Board of Directors, supported by its tax and legal advisers, believes it has acted
entirely within the law and maintains the claims filed against such settlements, without waiving its legitimate right to appeal against them and expecting their full recovery.

In this context the Group, immediately, demanded total reimbursement of the amounts paid, as well as indemnity interest at the legal rate for the period
between the payment date and its effective restitution date.

According to the principle of prudence, the Group has not recognised the
amount of indemnity interest over this credit.

 Besides several claims related to normal Group activities, the following materially
relevant situations are pending:



| | a) | In 1999, as a result of the acquisition of two companies that held establishments previously owned by exfranchised of ITMI  Norte-Sul Portugal  Sociedade de
Desenvolvimento e Investimento, S.A., this company, together with Regional de Mercadorias  Sociedade Central de Aprovisionamento, S.A., has brought an action against several subsidiaries of the Group, holding them responsible for the alleged
non fulfilment, by those exfranchised, of the contract they had set up with ITMI, already solved at the date of the acquisitions, demanding an indemnity of EUR 14,600 thousand. This procedure is still pending a court date. Considering both the
complexity of the process and the fact that a relevant part of prove has not yet been produced, it is not possible, with assurance, to determine its outcome. Nevertheless, it is the belief of the Board of Directors that the amount requested will
probably not be granted, thus, as referred to in the Groups affiliates annual reports of previous years, no provision has been set up.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | The Company Leirimundo  Construção Civil, Lda claims an indemnity of EUR 8,196 thousand from Gestiretalho, as a result of the termination of the rental
contract entered into by the parties. Gestiretalho refutes the claim filed by Leirimundo, having filed its own claim for an indemnity of EUR 31,441 thousand for losses and lost revenues. Gestiretalho claims non-fulfilment by Leirimundo as basis
for terminating the contract. At the moment the process is in the arbitral court.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | The company Proherre Internacional, Lda claimed an indemnity payment of EUR 2,500 thousand from Pingo Doce  Distribuição Alimentar, S.A., alleging
rescission of the lease contract by Pingo Doce, without having elapsed the minimum period agreed between the parties. Pingo Doce contests this claim based on the fact that the contact was terminated through mutual agreement. The case is in a
preliminary phase.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | The Tax Authorities claim from Feira Nova  Hipermercados, S.A. the amount of EUR 743 thousands concerning to Special Contribution officious liquidations, the reasons for which
are the Bela Vista complex land plots valuation. The Management of Feira Nova, backed up by their lawyers and tax consultants, contest those liquidations considering that they are entirely right concerning this matter.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | The Fiscal Authorities claimed from Feira Nova  Hipermercados, S.A. and Pingo Doce  Distribuição Alimentar, S.A. the amounts of EUR 526 thousands and EUR
260 thousands, respectively, relative to Corporate Income Tax (IRC) for the financial year of 2002, for payments made to non-resident entities for taxation purposes in Portugal. The companies did not possess on the stipulated date the forms that
would have enabled the reduction/elimination of withholding tax. The Management of Feira Nova and Pingo Doce, backed up by their lawyers and fiscal consultants, have contested these claims, believing that the Fiscal Authorities have no grounds to
request this payment.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | The Fiscal Authorities charged Feira Nova  Hipermercados, S.A. and Pingo Doce  Distribuição Alimentar, S.A. the sums of EUR 1,222 thousands and EUR 726
thousands, respectively, with regard to the year 2002 and the value added tax (VAT) on the values registered by both companies in relation to the non-food products inventory losses. The Management of Feira Nova and Pingo Doce, backed up by their
lawyers and fiscal consultants, have contested these charges, believing that the Fiscal Authorities have no grounds to request this payment.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | The Fiscal Authorities made some corrections to the Corporate Income Tax amount (IRC), in companies belonging to the perimeter of Tax group headed the company JMR 
Gestão de Empresas de Retalho, SGPS, S.A. (JMR), which led to an additional fiscal charge, relative to 2002, totalling EUR 619 thousands. The Management of JMR backed up by their lawyers and fiscal consultants have contested these charges,
believing that the Fiscal Authorities have no grounds to request this payment.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|30 | Related parties
|-- | ---------------



|30.1 | Transactions with directors
|---- | ---------------------------

JMR directors do not
receive any remuneration in the exercise of their functions.



30



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



|30.2 | Transactions with shareholders
|---- | ------------------------------

Shareholders
related amounts payable and receivable:



|                                                   |  |                  |   |  |        |   |  |                  |  
|-------------------------------------------------- |  | ---------------- | - |  | ------ | - |  | ---------------- | -
|                                                   |  | 2006 (unaudited) |   |  | 2005   |   |  | 2004 (unaudited) |  
|Trade creditors, accrued costs and deferred income |  | (5,598           | ) |  | (6,947 | ) |  | (6,652           | )
|Trade debtors, accrued income and deferred costs   |  | 1,172            |   |  | 1,000  |   |  | 823              |  
|                                                   |  |                  |   |  |        |   |  |                  |  
|                                                   |  | (4,426           | ) |  | (5,947 | ) |  | (5,829           | )
|                                                   |  |                  |   |  |        |   |  |                  |  

Shareholders related amounts in the income statement:



|                        |  |                  |   |  |        |   |  |                  |  
|----------------------- |  | ---------------- | - |  | ------ | - |  | ---------------- | -
|                        |  | 2006 (unaudited) |   |  | 2005   |   |  | 2004 (unaudited) |  
|Payed Management fees   |  | (4,597           | ) |  | (4,329 | ) |  | (3,897           | )
|Payed Royalties         |  | (4,317           | ) |  | (3,819 | ) |  | (4,536           | )
|Other operational costs |  | (254             | ) |  | (302   | ) |  | (83              | )
|Other income            |  | 1,346            |   |  | 1,629  |   |  | 964              |  
|                        |  |                  |   |  |        |   |  |                  |  
|                        |  | (7,822           | ) |  | (6,821 | ) |  | (7,552           | )
|                        |  |                  |   |  |        |   |  |                  |  



|31 | Group companies
|-- | ---------------

Group control is ensured by the parent company, JMR  Gestão de
Empresas de Retalho, SGPS, S.A..

The tables below list the companies that form part of JMR. These tables were organised according to the
consolidation method used, and where there are exclusions, the relevant reasons are given.



| | a) | Full consolidation method
| | -- | -------------------------



|                                                                        |  |                                                                                     |  |                  |  |       
|----------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------- |  | ---------------- |  | ------
|Company                                                                 |  | Business area                                                                       |  | Headoffice       |  | %Owned
|JMR  Gestão de Empresas de Retalho, SGPS, S.A.                         |  | Business portfolio management in the area of retail distribution                    |  | Lisbon           |  | 100.00
|Pingo Doce  Distribuição Alimentar, S.A.                               |  | Retail sales in supermarkets                                                        |  | Lisbon           |  | 100.00
|Supertur  Imobiliária, Comércio e Turismo, S.A.                        |  | Real estate purchase and sale                                                       |  | Lisbon           |  | 100.00
|Feira Nova  Hipermercados, S.A.                                        |  | Retail sales in hypermarkets                                                        |  | Lisbon           |  | 100.00
|Bazar Novo  Distribuição de Produtos Não Alimentares, Lda              |  | Retail sales of durable consumer goods                                              |  | Lisbon           |  | 100.00
|Gestiretalho  Gestão e Consultoria para a Distribuição a Retalho, S.A. |  | Retail management, consultancy and logistics                                        |  | Lisbon           |  | 100.00
|Imoretalho  Gestão de Imóveis, S.A.                                    |  | Real estate management and administration                                           |  | Lisbon           |  | 100.00
|Casal de São Pedro  Administração de Bens, S.A.                        |  | Real estate management and administration                                           |  | Lisbon           |  | 100.00
|Jerónimo Martins Finance Company (2), Limited                           |  | Financial services                                                                  |  | Dublin (Ireland) |  | 100.00
|EVA  Sociedade de Investimentos Mobiliários e Imobiliários, Lda        |  | Provision of services in the economic and financial areas and investment management |  | Funchal          |  | 89.00 
|Cunha & Branco  Distribuição Alimentar, S.A.                           |  | Retail sales in supermarkets                                                        |  | Lisbon           |  | 100.00
|Electric Co  Distribuição de Produtos não Alimentares, Lda.            |  | Distribution of non-food and consumer goods                                         |  | Lisbon           |  | 100.00
|Dantas & Vale, S.A.                                                     |  | Distribution of food products                                                       |  | Lisbon           |  | 100.00



| | b) | Proportional consolidation method
| | -- | ---------------------------------



|                                                                 |  |                                           |  |             |  |       
|---------------------------------------------------------------- |  | ----------------------------------------- |  | ----------- |  | ------
|Company                                                          |  | Business area                             |  | Head Office |  | %Owned
|Funchalgest Sociedade Gestora de Participações Sociais, S.A.    |  | Business portfolio management             |  | Funchal     |  | 50.00 
|João Gomes Camacho, S.A.                                         |  | Wholesale of food and consumer goods      |  | Funchal     |  | 50.00 
|Lidosol II  Distribuição de Produtos Alimentares, S.A.          |  | Retail sales in supermarkets              |  | Funchal     |  | 50.00 
|IdoleUtilidades, Equipamentos e Investimentos Imobiliários, Lda |  | Real estate purchase and sale             |  | Lisbon      |  | 50.00 
|Lidinvest  Gestão de Imóveis, S.A.                              |  | Real estate management and administration |  | Funchal     |  | 50.00 



| | c) | In 2006, the company Moser & Branco  Distribuição Alimentar, S.A. was wound up.
| | -- | --------------------------------------------------------------------------------



| | d) | Companies excluded from the consolidation
| | -- | -----------------------------------------

Monte
Dourado, S.A. considered as an advance on account of investment and AMS BV company held by 10% by JMR were not included in consolidation purposes.



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##### Table of Contents

|     |                                 |                                               
|---- | ------------------------------- | ----------------------------------------------
|LOGO |                                 | Notes to the Consolidated Financial Statements
|     | 31 December 2006, 2005 and 2004

---



| | e) | Company dissolved and wound up in 2004 whose results contributed to the Groups consolidated results
| | -- | ----------------------------------------------------------------------------------------------------



|                     |  |                             |  |             |  |       
|-------------------- |  | --------------------------- |  | ----------- |  | ------
|Company              |  | Business area               |  | Head Office |  | %Owned
|Bento & Martins, Lda |  | Wholesale of consumer goods |  | Lisbon      |  | 100.00



|32 | Interest in joint ventures
|-- | --------------------------

The Group has interests in the following joint ventures:

 Funchalgest  The object of this Group is to manage retail and cash&carry business in Madeira island. This Group has 13 retail stores
and 2 cash & carry. JMR Group held 50% of Funchalgest Group.

The consolidated financial statements include the following amounts
relative to assets and liabilities appropriated as a result of participation in the above-mentioned joint venture, consolidated by the proportional method:



|                        |  |                  |   |  |         |   |  |                  |  
|----------------------- |  | ---------------- | - |  | ------- | - |  | ---------------- | -
|                        |  | 2006 (unaudited) |   |  | 2005    |   |  | 2004 (unaudited) |  
|Non-current assets      |  | 22,470           |   |  | 22,931  |   |  | 23,762           |  
|Current assets          |  | 9,015            |   |  | 7,897   |   |  | 7,817            |  
|Non-current liabilities |  | (1,383           | ) |  | (1,229  | ) |  | (874             | )
|Current liabilities     |  | (24,855          | ) |  | (23,483 | ) |  | (24,243          | )
|                        |  |                  |   |  |         |   |  |                  |  
|Net assets              |  | 5,247            |   |  | 6,116   |   |  | 6,462            |  
|                        |  |                  |   |  |         |   |  |                  |  
|Income and gains        |  | 57,477           |   |  | 54,797  |   |  | 53,482           |  
|Costs and losses        |  | (56,601          | ) |  | (53,297 | ) |  | (51,663          | )
|                        |  |                  |   |  |         |   |  |                  |  
|Net result              |  | 876              |   |  | 1,500   |   |  | 1,819            |  
|                        |  |                  |   |  |         |   |  |                  |  



|33 | Events after the balance sheet date
|-- | -----------------------------------

On
February 1st, 2007, Pingo Doce  Distribuição Alimentar, S.A. bought
Simões & Freitas, Lda, owner of a retail store in Évora, after receiving, in January 23rd,2007, clearance from the Portuguese anti-trust Authority.

Lisbon, 21 February 2007



|                         |  |                       
|------------------------ |  | ----------------------
|The Certified Accountant |  | The Board of directors



32