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Consolidated Report and Accounts

2003

Sonae Imobiliária Consolidated Report and Accounts

2003

Portugal

PortoLugar do Espido,Via Norte4470 MAIATelephone: +351 22 948 7797Fax: +351 22 940 4452

LisboaRua Amílcar Cabral, 231750-018 LISBOATelephone: +351 21 751 5000Fax: +351 21 758 2813

Spain

MadridC/ Conde de Aranda, 24, 3º28001 MADRIDTelephone: +34 91 575 8986Fax: +34 91 575 7903

BilbaoIbañez de Bilbao, 28, 7º Módulo C48009 BILBAOTelephone: +34 94 435 6070Fax: +34 94 424 3707

Italy

MilanVia Leopardi 1420123 MILANTelephone: +39 02 4391 2517Fax: +39 02 4391 2531

Greece

Athens10. Kapsali Str.,Herodotou Str., N. Douka Str.Kolonaki10674 ATHENSTelephone: +30 21 0727 9907Fax: +30 21 0727 9927

Germany

DüsseldorfKanzlerstrasse 440472 DÜSSELDORFTelephone: +49 211 4361 6201Fax: +49 211 4361 6202

Brazil

São PauloRua Gomes de Carvalho, 1327, 3º, Conj.32Vila Olímpia, São Paulo – SPCEP: 04547 – 005Telephone: +55 11 3845 5399Fax: +55 11 3845 4522

Holland

HoofddorpPolarisavenue, 612132 JH HOOFDDORPTelephone: +31 23568 50 80Fax: +31 23568 50 88

Front cover: Estação VianaBack cover: CascaiShopping

www.sonaeimobiliaria.com

Macroeconomics & Retail Market Overview 01

Notes to the Directors Report as of 31 December 2003 10

Consolidated accounts as of 31 December 2003 13

Notes to the consolidated financial statements as of 31 December 2003 17

Statutory auditors’ report and audit report 48

Report and opinion of the statutory board of auditors consolidated accounts 50

Real Estate Assets Valuation 52

Macroeconomics & RetailMarket Overview

Sonae Imobiliária

2003

PERFORMANCE TRENDS

Source: C&W H&B, European Research Group

The long term trend for yields in all the retail sub-sectors hasbeen downwards, although the economic slowdown gave rise toa marginal softening of high street yields in the second half of2002. However, shopping centre yields remained stable duringthe most recent economic slowdown and, at 6.50% for primestock in the capital, are currently at record lows.

Portugal is one of the few European markets where shoppingcentre yields are lower than for the high street, mainly becauseof the lower risks associated with more modern flexible leases, asopposed to the more tenant-friendly old-style leases, which stillpredominate on many high streets.


Shopping centre rents for the best schemes have continued torise, despite the difficulties being faced by the wider retail andconsumer market during the last two years or so.

In contrast the increasing amount of new, modern space has ledto greater choice for retailers, and lower quality schemes havebeen struggling to lease available space. Rental levels havesoftened as a result.

The high street market has recovered well from the fall in valuesseen in 2001, although rents recorded zero growth during 2003and remain nearly 14% below their peak of March 2001.

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Retail Rental Indices

Headline High Street

Headline Shopping Centre

Average High Street

Average Shopping Centre

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PortugalECONOMIC OVERVIEW

> Economic growth remains relatively weak, with estimates for2003 showing the economy actually contracted by –0.8% overthe year as a result of poor consumer spending, high debt andnegative investment growth levels. However, third quarterdata showed improvements in the level of growth, suggestingthat a tentative recovery has begun.

> The government is currently setting into motion fiscal policiessuch as privatisation, the restructure of the energy sectorand the reform of the tax system, as well as continuing toreduce the budget deficit, in an attempt to improve theunderlying structure of the economy.

> Inflation is declining, following its 4.2% high in February to reachits lowest level (2.3%) since April 2000. This moderation shouldcontinue until demand picks up more significantly in 2005.

RETAIL & CONSUMER TRENDS

Retail sales growth has been poor in recent quarters, with theoverall level contracting over the past four quarters on a year-on-year basis. This pattern of negative growth is echoed in the non-food and clothing sectors, whilst the growth in the food sectorremains subdued yet positive.

As the global economy begins to improve in 2004, the increasein external demand is expected to boost confidence levels andencourage consumer demand within the Portuguese economy.

Demand for retail locations remains relatively strong, althoughthere is a tendency for increasing selectiveness amongstretailers. However, there is the potential for further growth withinthe sector as overseas retailers are continuing to seek entry intothe market.

Source: C&W/H&B, European Research Group

Total retail sales (%)

Consumer spending (%)

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Retail Yield Data

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02/03SONAE IMOBILIÁRIA

SHOPPING CENTRE DEVELOPMENT TRENDS

Key Data

Total GLA: 1.69 million m2

GLA/1000 Population: 162m2 (EU: 180m2)

Pipeline 2004/5: 252,059m2

Out-of-town development is less of an issue in Portugal thanin Spain or Italy due to the relatively recent evolution of theconcept. However, planning legislation is likely to tighten furtherin the coming years, putting the focus back on town centredevelopment opportunities.

Developers are no longer concentrating exclusively on Lisbon andPorto. Approximately two thirds of the shopping centre and othernew format retail space scheduled to open over the next 2-3 yearswill be outside the Greater Lisbon and Porto areas.

The development surge in 2003 occurred ahead of the recenttightening of planning legislation, which also introduced licencerequirements for multiple retailers wishing to open new stores.

RETAIL MARKET OUTLOOK

The slowdown in consumer spending is a concern for theshopping centre sector, although there is firm retailer demand forthe better schemes where vacancy rates are low. Whilst retailerprofitability remains good, retailers are taking a more cautiousapproach to expansion and this has given rise to moreconservative rental growth forecasts.

The sector is likely to become more polarised, with significantdifferences emerging in shopping centre performance. In somesmaller towns, schemes scheduled for completion in the shortterm may lead to over-supply in certain areas. There continuesto be significant cross-border retailer activity, with a number ofoperators actively seeking space in the major towns and cities.

SpainECONOMIC OVERVIEW

> Spanish economic activity has remained robust over the pastyear, with estimated growth of 2.4% (2003), considerably higherthan the Eurozone’s growth of 0.5%. This buoyancy is set tocontinue, with the economy having rebounded from the mildslowdown in 2002-3, and is forecast to rise at 2.9% this year.

> Domestic demand continues to drive the economy, withestimated growth of 3.1% in 2003, supported by tax cuts,job creation and low interest rates.

> Export growth continues to improve and will accelerate asthe Eurozone’s recovery gets underway this year, providinga more significant contribution to growth.

> Inflation remains high at 3.0% (2003). However, upwardpressures such as the recent strong growth in food pricesare expected to moderate in the near-term.


Retail sales growth in 2003 demonstrated a relatively low levelof volatility, remaining between 5.0% and 6.0% (year-on-year) forthe first three quarters. However, recent data suggests a mildslowdown with growth in the third quarter of 5.0% compared to5.9% in Q2. Large retail outlets, however, are continuing toexperience far higher rates of growth, despite also seeingdeclining growth in the third quarter.

On a monthly basis, total retail sales fell in November 2003 to3.6% (year-on-year) from 7.1% in the previous month. This fall wasparticularly marked for the food industry which declined from6.0% to 1.9%.

Despite the slight slowdown in the sector, growth remainsrelatively resilient and should improve as the economystrengthens in 2004.


PERFORMANCE TRENDS


As in a number of other European countries, the gradual maturingof the shopping centre sector and its emergence as anacceptable component of property investment portfolios hasseen yields fall over the longer term.

However, shopping centre yields have seen little movement in thelast three years and remain above those for the best high streetstock, although the latter’s softening late last year has broughtthe two closer together.

At 6.25%, prime Spanish shopping centre yields are just slightlylower than the European average, which is roughly in the rangeof 6.50-7.00%.

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Retail Yield Data



Average High Street


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The Spanish retail property market remains one of the strongestin Western Europe. The buoyant economy and healthy level ofconsumer expenditure growth has helped to maintain a goodlevel of activity in the market.

On the high street, the limited supply of good quality stock hasalso helped to push high street rents to record levels. There is,however, still an element of caution amongst occupiers andalthough December rents were slightly up on September, thepace of growth maybe slowing.

Over the longer term, shopping centre rental growth has fallenwell short of that for high street shops, with rents remainingstatic for long periods. Despite supposedly restrictive planningregulations, there has been a relatively constant flow of newshopping centre space on to the market in the last few yearswhich has boosted the level of provision to significantly abovethe EU average.


Key Data



Pipeline 2004/5: 1.1 million m2

Spain has the fourth highest level of shopping centre floorspacein Europe, ahead of Italy but behind the UK, France and Germany.

Just under 30% of this floorspace has been built in the last 5 years.

Although legislation is generally restrictive, there are no uniformregulations across the country, and planning policy relating tolarge-scale retailing is evolving on a regional basis.

Large-scale developments that contain a leisure element ratherthan being hypermarket-anchored are more likely to gainplanning consent.


High street retail property’s out performance looks set tocontinue (compared with the office and industrial markets), in to2004, with prime values likely to be supported by a strong retailsector. For shopping centres, stronger growth is expected for thebetter schemes in areas of relative under-supply.

Large format retailing is set to do particularly well withcontinuing consolidation leading to increased turnover formultiple operators, although the impact on property values willclearly be linked to localised supply and demand factors.

On the investment side, whilst investor interest is unlikely todiminish, it is difficult to see how much lower yields can fallalthough aggressive bidding is still likely for the best schemesthat are offered to the market.

GreeceECONOMIC OVERVIEW

> The Greek economy has continued to outpace that of theEurozone, with estimated growth in 2003 of 4.0% comparedwith the Eurozone’s 0.5%. This buoyancy is largely a result ofcontinued strength in the investment sector and is furtherenhanced by robust consumer spending.

> Growth should continue to be supported by investment in 2004,particularly in the run-up to this year’s Olympic Games, as thesector is sustained by increased construction activity.

> The government has unveiled a campaign designed to reduceinflation due to recent suggestions of suspected profiteeringby large firms. The policy is intended to toughen up regulationsregarding price increases and also calls for moderationregarding wage increases in the private sector.


Consumer spending has continued to remain strong in 2003, withestimated growth of 3.3% (an increase over the previous year’s2.8%). This strength is underpinned by increases in householdincome resulting from higher real wages and tax cuts. Growth isexpected to accelerate in 2004, to reach a peak of 4.1%.

The latest available quarterly data (Q2 2003) shows a sharpdecline in retail sales growth. However, more recent data,collected on a monthly basis, from September 2003 shows year-on-year growth in retail sales up 9.0%, a significant improvementover the declines that occurred earlier on in the year. This growthis set to continue into the near future as the global economicrecovery progresses in 2004-5.

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Average High Street



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Retailer demand also remains strong, with particular interest inthe sector originating from external investors as a result of theforthcoming Olympic Games.


PERFORMANCE TRENDS


The trend for high street yields over the last 5-10 years has beensteadily downward, with a particular fall prior to Greece’sadmission to EMU. Following some two years of little movement,high street yields came under pressure in mid-2003, with goodquality high street property attracting sub-7% yields.

Yield evidence for shopping centres is very scarce given the lackof stock and limited investment market, but estimates for a largeout-of-town scheme are in the 8-8.5% range.

More standing investment transactions are expected as theamount of shopping centre stock increases. Investors active inor looking at the market include Pradera, Pricoa, Lend Lease andsome new funds such as NGBI.


In common with a number of other European markets, high streetrents peaked in early 2001 before recording falls later that yearand also in 2002. However, values are now more stable andDecember figures showed little change on a year earlier.

Despite these falls, the market has still been enjoying a period ofexpansion and modernisation. Retail development is continuingapace and strong interest from international retailers is beingmaintained.

As with yields, historic rental evidence for shopping centres islimited, although recent negotiations for forthcoming schemes areproviding some idea of what may be achievable on new centres


Key Data

Total GLA: 146,000 m2

GLA/1000 Population: 13 m2 (EU: 180 m2)

Pipeline 2004/5: 230,000 m2

Per capita shopping centre floorspace in Greece remains thelowest in the EU, at just 13m2 per 1,000 inhabitants, withmodern shopping centre space only becoming a feature of themarket from 1999 onwards.

Much of the Greek retail sector remains characterised bytraditional stores trading within a fragmented sector dominatedby independent retailers.

The majority of ‘shopping centre’ floorspace at present consistsof shopping arcades attached to hypermarket-led schemes. Theaverage size of these centres is just 15,000m2. Three existingschemes are anchored by a Carrefour hypermarket.


High street rental growth is expected to pick up in the comingyear on the back of continuing strong retailer interest and theimpetus provided by the Olympic Games. For shopping centres,rents are more difficult to forecast given the absence of anestablished market cycle, but there is undoubtedly too littlemodern stock to satisfy current requirements and medium tolonger term growth is anticipated.

The first standing investment transactions for retail property arebeing concluded (including some potential sale and leasebacks).With the arrival of more modern stock, the market will becomemore liquid which should help boost capital values.

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GermanyECONOMIC OVERVIEW

> 2003 was a difficult year for the German economy, with thecountry entering a brief technical recession in the first halfof the year, leading to an annual year-on-year estimate ofzero-growth.

> The economy demonstrated the beginnings of a tentativerecovery in the third quarter of the year, with a return topositive quarter-on-quarter growth but is expected to remainrelatively subdued in 2004 with forecast growth of 1.8%.

> The government has passed into law an adapted version ofAgenda 2010, which includes legislation designed to increasethe flexibility of the labour market. Tax cuts were alsodeclared, albeit on a reduced scale than originally proposed.


The negative economic conditions are continuing to have aharmful effect on consumer spending levels. The estimated figurefor 2003 suggests that domestic demand actually contracted by -0.1% over the year due to a lack of confidence in both theeconomy and the labour market.

Consumer demand should begin to recover over the next fewquarters as tax cuts and labour reform are implemented, resultingin restrained, yet positive, forecast growth for 2004 of 1.1%.

The lack of consumer confidence has resulted in severe declinesin retail sales growth, with November data showing an overalldecline of -4.9%. However, as confidence in the economystrengthens, the retail sales sector should again begin to expand.


PERFORMANCE TRENDS


Shopping centre yields have remained relatively stable in the lastyear and indeed the last few years. Yields are also low byEuropean standards, but remain slightly higher than for highstreet property. This is largely due the negative impact oncashflows (and therefore yields) caused by expenses such asnon-recoverable service charges. In addition, shopping centresare generally not in A1 town centre locations and their value ismuch more geared to how well they are managed.

Shop yields meanwhile have shown a greater tendency to shiftaccording to market sentiment, indicating the greater sensitivityof the high street market to economic changes (smaller, privateinvestors dominate the high street market). Following a slighthardening in the second half of 2002, high street yields driftedup again as the difficulties being experienced by retailersbecame more apparent.


Retailer demand for secondary locations and smaller towns isweak, with high vacancy rates and re-letting needing the supportof landlord concessions. At the prime end of the market, however,demand is still reasonable for the key high streets and, whilstrents have softened marginally, they remain on a high level.

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The limited availability of good quality shopping centre space hasmeant that retailers still need to compete for the best schemes.This is helping to support rental levels. The increase seen in 2001was largely due to the telecoms retailers who expanded rapidly atthe peak of the market. However, rents have softened slightly inthe last two years or so, with additional shopping centre floorspace but slower retail expenditure growth. As a result, evenrents in prime schemes have come under pressure but shouldstabilise at or around current levels.


Key Data

Total GLA: 11 million m2



Development activity peaked in the mid 1990s followingreunification, with over 1.1 million m2 of shopping centrefloorspace opening in 1995, principally focused on EasternGermany. Due to a shortage in good quality retail space a largeamount of out-of-town retail floorspace was built.

Post-1999, the amount of new shopping centre developmentdeclined, partly due to the restrictive planning legislation whichfocuses on protecting town and city centres.


As yet, there are few signs of a pick-up in the wider retail sector,but the best property is still clearly in demand from bothoccupiers and investors. Whilst the weakness in secondarylocations is likely to persist, rents at the top end of the marketare expected to remain stable. Yields meanwhile are alsoexpected to stay at their current low levels, at least for the nextfew months.

There is little danger of an over-supply of prime space, despitethe weak market and large number of shopping centres in thepipeline. The difficulty in gaining planning consent for out-of-town schemes has meant that developers have been focussingon in-town schemes, of which there are a number in variouscities. There has been a slight increase in overall availability, as aresult of some retail chains releasing poorly performing units,although these tend to be in more secondary locations.

ItalyECONOMIC OVERVIEW

> The economy has experienced a slowdown over the past 24months, with GDP data for 2003 showing growth of only 0.5%.However, recent data shows that the economy has emergedfrom the technical recession of the first half of the year togrow at 0.5% quarter-on-quarter.

> Economic growth should begin to pick up in 2004, as theimplementation of tax cuts starts to take effect, alongsideimprovements in both business and consumer confidencelevels. This should result in growth of approximately 1.6% overthe year, rising to 2.1% in 2005.

> The inflation rate remains above the Eurozone average of 2.1%,with a figure of 2.7% recorded in 2003, a factor that willcontinue to endanger Italy’s competitiveness.


Consumer expenditure improved slightly over the third quarter,growing by 2.5% (year-on-year), higher than the estimatedannual 2003 figure of 2.0%. This level of growth is expected to besustained into 2004-5.

In contrast to the picture of a tentative recovery illustrated bygrowth in consumer spending, there was a contraction of -0.5% inretail sales (in year-on-year volume terms) over the third quarter.This was led in particular by declines in non-food and clothing sales.

As the economy improves in 2004 and 2005, this should boostdemand in the retail sector. However, recent consumerconfidence has been considerably damaged by the Parmalatscandal, which could delay the expected improvement of bothconsumption and retail demand.


PERFORMANCE TRENDS


Following a gradual narrowing of the gap between shoppingcentres and high street property, yields for both have generallyremained unchanged for some time. Shopping centre yieldsremain above those for the high street, although evidence for thelatter is limited given the small number of investmenttransactions over the last few years. In the short term capitalvalues should remain stable, with little change in yields expected.

Retail warehousing is the only retail sub-sector where yields areboth under downward pressure and expected to fall further in themedium term. The increasing number of purpose-built parkscoming on to the market will ensure that this kind of stockbecomes a more familiar feature of the retail landscape and amore acceptable product among investors.

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High street rents continued to rise in the second half of the year,although growth began to slow towards the year-end. Rents arenow widely believed to be at or near their peak and should beginto plateau. Whilst shopping centres are becoming increasinglypopular, the focus of Italian retailing remains the high street. Thisis demonstrated by the fact that retailers are willing to pay muchhigher rents (around 2-3 times more) for high street space thanshopping centres.

Recent growth in headline shopping centre rents has been limitedas far as the general tone of the market is concerned, althoughmany landlords with successful schemes are likely to havebenefited from the additional turnover elements incorporated intomany shopping centre leases.


Key Data




The Italian shopping centre market has the fifth highest level offloorspace in Europe, at over 6.7 million m2 in total. Over 25% ofthis floorspace has opened in the last 5 years.

Following the 2 year moratorium on large-scale retaildevelopment, which came to an end in June 2000, most Italianregions have devised their own retail planning legislation, andretail planning policy is now evolving on a regional basis.

Despite experiencing rapid growth in recent years, shoppingcentre floorspace is still below the European average, at 116m2per 1,000 inhabitants.


Renewed rental growth was seen in the second half of the yeardespite the wider slowdown. However, whilst certain “pressurepoints” may see further uplift, the general view is that retail rentsare in for a period of slower growth. Indeed, secondary locationsare expected to see a further weakening of demand which mayresult in a softening of rents. Rents in key shopping centresshould continue to be under-pinned by strong retailer demand,notably from international occupiers.

On the investment side, whilst investor demand will remain firmfor the best shopping centre and high street stock, further gainsthrough yield falls are unlikely. Yields should therefore remaingenerally stable albeit with more downward pressure on retailwarehouse yields.

BrazilECONOMIC OVERVIEW

> The economy has recently come out of a technical recession,with mild but positive quarter-on-quarter third quarter GDPgrowth of 0.4%. This suggests that annual growth will also havebeen positive, at 0.4%. This tentative recovery is expected tocontinue into 2004, as increased confidence and recentinterest rate cuts begin to have effect, with GDP growthforecast to reach 3.3%.

> Inflation is continuing to decline at a steady pace and reacheda 13-month low of 8.2% in December. The price level is forecastto fall further to 3.9% by end-2005, meeting the government’s4.5% inflation target.

> The government is continuing to implement structural reform,despite its potentially stagnating effect on the economy, butthe effect of this fiscal restriction should be offset bysignificant growth in external demand, resulting from a globaleconomic recovery.


Consumer spending has been declining over recent quarters,resulting in an overall fall in growth of -1.1% in 2003.

Falls in household income in 2003 have impacted significantly onthe retail sales sector, with growth having declined for much ofthe last year. However, recent figures have suggested that therewill be a cautious, yet steady, revival of spending in the retailsector over the near-term.

Recent falls in interest rates have resulted in significantly higherlevels of borrowing by households. This has resulted in a revivalof spending in the consumer durables and automobile sectorsover the latter part of 2003.

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PERFORMANCE TRENDS

The Brazilian property investment market is still in its infancyand hard evidence of transactions is difficult to obtain.

The property investment market remains dominated by thedomestic pension funds, although Law 2720 passed in April 2000restricts their investment in real estate and is leading todisinvestment.


Rents, which are normally quoted in US$, have fluctuated inrecent years because of the instability of the Real.

In the year to December, shopping centre rental growthamounted to 6.7%, despite a slight fall in the second half of theyear. The market appears to have made a good recovery from theeconomic troubles of recent years and the shopping centresector consolidated the gains seen in 2002. On the other hand,the high street continued its lack lustre performance with rentsdeclining by around 4.6% during 2003.

However, there has been considerable polarisation in the marketbetween the strongest and weakest locations, with some areasexperiencing significant increases in values, but others recordingzero growth or indeed falls.


Key Data


GLA/1000 Population: 30.2m2 (EU: 176.4m2)

Pipeline 2004/5: 23 Schemes currently under construction (ABRASCE)

Following the fairly slow pace of growth from the mid-1960s tothe mid-1980s, the modern shopping centre development boombegan in the late 1980s and continued throughout the 1990s.The development peak occurred between 1996 and 2001 whennearly 100 new schemes were opened.

Geographically, the states of São Paulo, Rio de Janeiro and MinasGerais account for 78% of all shopping centres. Indeed, São Pauloaccounts for 36.4% of the total with 92 schemes.

Outside these states and the southern states, retailing tends tobe concentrated on the high street.


During the 2003 Christmas period, shopping centre sales wereslightly higher (1-2%) on a year earlier, although for the year as awhole turnovers were 2-3% down on 2002. The downturn in saleswas blamed largely on high interest rates and high corporatetaxes. However, the outlook for 2004 is somewhat more positive,with sales growth of 3-5% anticipated.

The more stable economic outlook is expected to push up rentallevels for the best schemes over the next 12 months, although itis clear that with greater choice for retailers and consumers,rents in the weaker schemes may come under pressure.

Use of the Internet is growing rapidly, with around 12 millionpeople now estimated to have access. Studies show that retailersbelieve the proportion of their sales transacted online willquadruple within around five years. This may have a considerableimpact on property, with a potentially greater emphasis ondistribution warehouses and call centres.

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Sonae Imobiliária

2003

Notes to the DirectorsReport as of 31 December2003

10/1 1SONAE IMOBILIÁRIA

This annex contains a brief description of the CorporateGovernance practices of Sonae Imobiliária, SGPS, SAand was prepared to satisfy Regulamento nº 11/2003,that replaced Regulamento nº7/2001 of 20 December2001 of the “Comissão do Mercado de ValoresMobiliários”.

This annex should be read in conjunction with the consolidatedmanagement report since it is an annex to it and remissionsare made to it whenever it was felt more appropriate to covermatters there only.

Corporate Governance

Chapter I. Disclosure

1. Attribution of responsibilities to the Directors, in the contextof the decision-making process – see page 43 --- of theManagement Report.

2. The Company does not have a dividend policy, howevera proposal was made in the Management Report.

3. There are no stock option or stock distribution plans.

4. The Company uses the Internet, electronic mail andother technologies for the disclosure of its financialperformances, namely through its Internet page:www.Sonaeimobiliaria.com.

Chapter II. Voting Rights and Shareholding Representation

Each group of one hundred shares corresponds to one vote andshareholders are entitled to a number of votes correspondingto the integer that results from dividing their number of sharesby one hundred.

The General Assembly includes only the shareholders entitledto vote that hold shares and subscription certificates and thatdemonstrates its ownership, in accordance with the law, at leasteight days before the meeting.

Shareholders can appoint as their representative for the meeting,their spouse, a direct relative, a Company director or anothershareholder, through a letter addressed to the President of theAssembly containing the name and address of the representativeand the date of the assembly.

Public entities can appoint any persona as their representativethrough a document that will be assessed, for validity, by thePresident of the Assembly.

A President, a vice-President and a secretary will chairthe Assembly.

Chapter III. Company Statues

The Company’s object is to manage financial investments in othercompanies, and an indirect way to conduct economic activities.

The Company can acquire or dispose of investment in companies,both national and foreign, with an object equal to or differentfrom the one included in article three, in companies, regulatedby special regulations and in companies with unlimited liability,in accordance with the law.

1. The Company has an internal audit service.

2. The Company is aware of the existence of an agreementbetween its two shareholders.

Chapter IV. Corporate Bodies

1. The Board of Directors of SONAE IMOBILIÁRIA includes, at thepresent, nine members of which five are executive and fourare non-executive.

A) In accordance with the Company’s statutes, the Board ofDirectors, further to other obligations attributed by law, mustundertake the management of the business and conduct theoperations related to its object and, for that, a wide rangepowers are attributed to it, namely the following:

a) to represent the Company, in Court and outside it, to startand respond to court proceedings, to accept and withdrawfrom court proceedings and to go into arbitration. Forthese purposes, the Board can delegate its powers in oneof its members;

b) to approve the Company’s plan and budget;

c) to acquire, dispose of or encumber any fixed or currentassets, in accordance with the law. Including shares,stakes, quotas or bonds;

d) to sell or acquire business establishments, in accordancewith the law;

e) to decide on any association between the Company andother parties, as per article five of the statues;

f) to decide to issue bonds, take on loans in the domesticor the international markets and to fulfil any obligationsvis-à-vis the lenders;

g) to appoint any persons, individual or collective, to be partof corporate bodies of other companies;

h) to decide on any technical and financial supportto companies where it holds any shares, quotasor similar participation.

B) All the documents binding the Company, including cheques,bills of exchange, promissory notes, will only be valid ifsigned by:

a) two directors;

b) a director and an attorney;

c) a director, if is so appointed pursuant to a decisionrecorded in the Board minutes

d) two attorney

e) an attorney, in accordance with point a) of theprevious article;

f) an attorney if he signs the document or documentspursuant to a decision recorded in the Board minutesor if a director was given powers by the Board, as recordedin Board minutes, to appoint him for that.

Also in accordance with the Company statues, the Board ofDirectors will meet, normally, once per quarter and, further

to that, every time the Chairman, the executive director or twoother members ask for it, and all the decisions taken will beincluded in the respective minutes.

During 2003, the Board met eleven times.

A Remuneration Committee that meets at least once a yearsets the remuneration of the members of corporate bodies.The Committee includes Eng. Belmiro Mendes de Azevedo,Prof. José Manuel Neves Adelino and Jeremy Henry MooreNewsum.

The remuneration of the executive members of the Boardof Directors in the year 2003 was as follows:

Fixed remuneration = u960.617,78 Variable remuneration = u350.539,00

Non-executive members were not remunerated.

The remuneration of the Auditors in the year 2003 wasu22.560,00 and the remuneration for consulting servicesamounted to u27.250,00.

Consolidated accounts asof 31 December 2003

Sonae Imobiliária

2003

Sonae Imobiliária, SGPS, SA and subsidiariesConsolidated balance sheets as of 31 December 2003 and 2002(Amounts stated in Euro)

Assets Notes 2003 2002

Non current assets:Investment properties 7 1,582,305,537 1,498,889,202Investment properties in progress 7 221,157,549 151,962,163Property, plant and equipment 8 5,410,716 21,270,171Intangible assets 9 19,646,090 20,907,394Investments in associates and companies excluded from consolidation 5 3,037,256 1,607,618Deferred tax assets 23 17,513,364 17,032,523Other non current assets 10 19,508,246 25,401,899

Total non current assets 1,868,578,758 1,737,070,970

Current Assets:Inventories 11 97,610 215,584 Trade receivables 12 19,551,238 13,555,360Accounts receivable from shareholders 13 105,000,000 –Other receivables 14 75,181,417 84,448,004Other current assets 15 9,588,272 18,480,695 Cash and cash equivalents 16 185,266,796 90,669,560

Total current assets 394,685,333 207,369,203

Total assets 2,263,264,091 1,944,440,173

Equity, minority interests and liabilities

Equity:Share capital 17 162,244,860 187,125,000Reserves 2,068,229 (24,171,806)Retained earnings 374,239,613 390,543,770Consolidated net profit for the year 208,667,527 144,392,362

Total equity 747,220,229 697,889,326

Minority interests 18 194,629,961 26,116,597

Liabilities:Non current liabilities:Long term debt - net of current portion 19 669,954,483 715,493,776Other loans 20 58,076 116,152Accounts payable to other shareholders 21 86,321,812 5,038,334Other non current liabilities 22 7,891,751 5,369,156Deferred tax liabilities 23 265,252,967 298,814,811

Total non current liabilities 1,029,479,089 1,024,832,229

Current liabilities:Current portion of long term debt 19 94,027,333 69,584,507Short term debt and other borrowings 20 440,791 2,242,134Trade payables 25 53,196,768 38,741,200Accounts payable to other shareholders 21 49,650,756 4,557,911Other payables 26 33,824,783 32,316,147Other current liabilities 27 60,079,543 47,207,259Provisions 28 714,838 952,863

Total current liabilities 291,934,812 195,602,021

Total equity, minority interests and liabilities 2,263,264,091 1,944,440,173

The accompanying notes form an integral part of these consolidated balance sheets.

The Board of Directors.


Sonae Imobiliária, SGPS, SA and subsidiariesConsolidated statements of profit and loss by nature for the yearsended 31 December 2003 and 2002 (Amounts stated in Euro)

Notes 2003 2002

Operating revenue

Sales 29 – 5,516,596

Services rendered 29 216,862,652 210,588,859

Variation in fair value of the investment properties 30 91,033,123 176,558,814

Other operating revenue 31 140,246,392 21,122,649

Total operating revenue 448,142,167 413,786,918

Operating expenses:

Cost of inventories sold 11 – (5,086,749)

External supplies and services (103,953,289) (105,062,770)

Personnel expenses (26,215,803) (20,078,008)

Depreciation and amortisation (1,662,955) (1,783,008)

Provisions and impairment 28 (1,582,526) (1,342,608)

Other operating expenses 32 (26,492,875) (20,578,024)

Total operating expenses (159,907,448) (153,931,167)

Net operating profit 288,234,719 259,855,751

Net financial expenses 33 (31,499,347) (29,887,846)

256,735,372 229,967,905

Income tax 24 (7,658,852) (80,501,458)

Profit after income tax 249,076,520 149,466,447

Minority interests 18 (40,408,993) (5,074,085)

Consolidated net profit for the year 208,667,527 144,392,362

The accompanying notes form an integral part of these consolidated statements of profit and loss.


Sonae Imobiliária, SGPS, SA and subsidiariesConsolidated statement of changes in equity for the years ended31 December 2003 and 2002 (Amounts stated in Euro)

Reserves

Share Treasury Legal Translation Hedging Retained NetNotes capital stock reserves reserve reserve earnings profit Total

Balance at 31 December 2001 187,125,000 – 31,324,364 (3,402,737) (2,330,358) 277,361,190 120,883,289 610,960,748

Appropriation of consolidatednet profit for 2001:

Transfer to legal reservesand retained earnings – – 399,341 – – 112,896,472 (113,295,813) –

Dividends distributed – – – – – (2,162,524) (7,587,476) (9,750,000)

Currency translation differences – – – (48,811,607) – – – (48,811,607)

Fair value of hedging instruments 19 – – – – (2,016,136) – – (2,016,136)

Deferred tax in fair valueof hedging instruments 23 – – – – 665,327 – – 665,327

Consolidated net profit for 2002 – – – – – – 144,392,362 144,392,362

Others – – – – – 2,448,632 – 2,448,632


Appropriation of consolidatednet profit for 2002:

Transfer to legal reservesand retained earnings – – 279,369 (1,304,302) – 140,109,277 (139,084,344) –

Dividends distributed – – – – – (5,191,982) (5,308,018) (10,500,000)Acquisition of treasury stock 17 – (150,028,740) – – – – – (150,028,740)

Decrease of share capital byextinguishment of shares 17 (24,880,140) 150,028,740 24,880,140 – – (150,028,740) – –

Currency translation differences – – – 222,635 – – – 222,635

Fair value of hedging instruments 19 – – – – 1,221,023 – – 1,221,023

Deferred tax in fair value ofhedging instruments 19 and 23 – – – – (619,411) – – (619,411)

Transference to minorityinterests, net of tax – – – – 234,595 – – 234,595

Transference to net result of thetrading portion of the financialinstruments, net of tax 19 and 23 – – – – 1,325,986 – – 1,325,986

Consolidated net profit for 2003 – – – – – – 208,667,527 208,667,527

Others – – – – – (1,192,712) – (1,192,712)


The accompanying notes form an integral part of these statements of changes in equity.


Sonae Imobiliária

2003

Notes to the consolidatedfinancial statements asof 31 December 2003(Amounts expressed in Euro)

1. INTRODUCTION

SONAE IMOBILIÁRIA, S.G.P.S., S.A. (“the Company” or “SonaeImobiliária”), which has its head office in Lugar do Espido,Via Norte, Apartado 1197, 4471-909 Maia – Portugal, is theparent company of a group of companies, as explainedin Notes 3 and 4 (“the Group”).

The Group’s operations consist of investment, managementand development of shopping centres.

The Group operates in Portugal, Brazil, Spain, Greece, Germany,Italy and Netherlands.

2. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in preparing theaccompanying consolidated financial statements are as follows:

2.1 BASIS OF PREPARATION

The accompanying consolidated financial statements havebeen prepared on a going concern basis and under thehistorical cost convention, except for investment propertiesand financial instruments which are stated at fair value (Notes2.3 and 2.13), from the accounting records of the companiesincluded in the consolidation (Notes 3 and 4) maintainedin accordance with generally accepted accounting principles inPortugal adjusted, in the consolidation process, to InternationalFinancial Reporting Standards (“IFRS”), issued by theInternational Accounting Standards Board (“IASB”), in forceas of 31 December 2003.

The Group adopted International Financial Reporting Standardsin the preparation of consolidated financial statements as from1 January 2001 and, consequently, some of the generallyaccepted accounting principles in Portugal, as defined in theOfficial Plan of Accounts (Plano Oficial de Contas - “POC”), werenot applied, namely the historical cost convention relating toinvestment properties and financial instruments, which arestated at their fair value.

The effect of the adjustments as of 30 December 2000, relatingto changes in accounting principles to IFRS, amounting to Euro222,683,763, was recorded in the equity captions “Retainedearning” (Euro 223,565,176), “Hedging reserve” (negativeamount of Euro 946,300) and “Translation reserve” (Euro 64,887).

2.2 CONSOLIDATION PRINCIPLES

The consolidation methods adopted by the Group are as follows:

a) Investments in Group’s companies

Investments in companies in which the Group owns, directly orindirectly, more than 50% of the voting rights at Shareholders’

General Meetings and is able to govern the financial andoperating policies so as to benefit from its activities (definitionof control normally used by the Group), are included in theconsolidated financial statements by the full consolidationmethod. The equity and net profit attributable to minorityshareholders are shown separately, in the caption Minorityinterests, in the consolidated balance sheet and consolidatedstatement of profit and loss, respectively.

Minority interests include their proportion of the fair values ofidentifiable assets and liabilities recognised upon acquisitionof subsidiaries.

When losses applicable to the minority in a consolidatedsubsidiary exceed the minority interest in the equity of thesubsidiary, the excess, and any further losses applicable to theminority, are charged against the majority interest except tothe extent that the minority has a binding obligation to, and isable to, make good the losses. If the subsidiary subsequentlyreports profits, the majority interest is allocated all such profitsuntil the minority’s share of losses previously absorbed by themajority has been recovered.

The purchase method of accounting has been used forbusinesses acquired. The results of companies acquired orsold during the year are included in the consolidated financialstatements as from the date of their acquisition or up to thedate of their sale. Intercompany balances and transactions,and dividends distributed have been eliminated.

The companies included in the consolidated financialstatements by the full consolidation method are listedin Note 3.

Investments in Group companies excluded from theconsolidation (Note 5) are stated at cost.

b) Investments in jointly controlled companies

Investments in jointly controlled companies are includedin the accompanying consolidated financial statementsin accordance with the proportional consolidation methodas from the date of control is acquired. In accordancewith this method the assets and liabilities, revenueand costs of these companies are included in theaccompanying consolidated financial statements on aline-by-line basis, in proportion to the Group’s participationin the companies.

Intercompany balances and transactions, and dividendsdistributed have been eliminated, in the proportion of theGroup’s participation.

Investments in joint ventures are classified as such basedon the agreements that regulate the joint control.

Notes to the consolidated financial statementsas of 31 December 2003 (Amounts expressed in Euro)


The companies included in the accompanying consolidatedfinancial statements in accordance with the proportionalmethod are listed in Note 4.

Investments in jointly controlled companies excluded fromthe consolidation (Note 5) are stated at cost.

c) Investments in associated companies

Investments in associated companies (generally in thecase of investments between 20% and 50% in a company’scapital) are accounted for in accordance with the equitymethod.

Under this method investments are increased or decreasedannually by the amount corresponding to the Group’sproportion of the net results of the associated companiesand dividends received.

An assessment of investments in associates is performedwhen there is an indication that the asset has been impairedor the impairment losses recognised in prior years nolonger exist.

When the group’s share of losses exceeds the carryingamount of the investment, the investment is reported atnil value and recognition of losses is discontinued exceptto the extent of the Group’s commitment.

Unrealised gains arising from transactions with associatesare eliminated to the extent of the group’s interest inthe associate against the investment in the associate.Unrealised losses are eliminated similarly but only tothe extent that there is no evidence of impairment of theasset transferred.

Investments in associated companies are listed in Note 5.

2.3 INVESTMENT PROPERTIES

Investment properties consist of investments in buildingsand other constructions in shopping malls that are heldto earn income rentals or for capital gain, rather than foruse in the production or supply of goods or services or foradministration purposes or for sale in the ordinary courseof business.

Investment properties are initially recorded at cost and thenadjusted to their fair value based on annual appraisals by anindependent specialised valuer (fair value model). Changes infair values of investment properties are accounted for in theperiod in which they occur, under the statement of profit andloss captions “Variation in fair value of investment properties”.

Developed and constructed assets which qualify as investmentproperties are recognised as such when they start being used.

Up to the end of the construction or development periodof assets which will become investment properties, theyare accounted for at cost under the caption Investmentproperties in progress. At the end of the development andconstruction period, the difference between cost and thefair value at that date is accounted for in the consolidatedstatement of profit and loss caption “Variation in fair valueof investment properties”.

Expenses relating to investment properties in use, such asmaintenance, repairs, insurance and property taxes arerecognised in the consolidated statement of profit and lossfor the period to which refer.

2.4 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost lessaccumulated depreciation and any accumulated impairmentlosses.

Depreciation is provided on a straight-line basis, as from thedate the assets start being used, over the estimated periodof useful life of each group of assets.

The rates of depreciation used correspond the following periodsof useful life of the assets:

Current maintenance and repair costs are charged to thestatement of profit and loss of the period in which theyoccur. Improvements of significant cost, which increasethe use of the assets, are capitalised and depreciated overthe remaining estimated useful lives of the correspondingassets.

2.5 INTANGIBLE ASSETS

Intangible assets are stated at cost less accumulatedamortisation and any accumulated impairment losses.Intangible assets are only recognised if it is probablethat future economic benefits attributable to the assetswill flow to the Group and the cost of the asset can bemeasured reliably.

Intangible assets as of 31 December 2003 relate essentiallyto management rights of installations, which are amortisedon a straight-line basis over the estimated period of themanagement right (periods ranging from 10 to 15 years)and goodwill arising on the concentration of businesscombinations.

Differences between cost and the fair value of group andassociated companies as of the date of their acquisition arerecorded in the intangible asset caption “Goodwill”, thesebeing amortised during the expected period to recover theinvestment (Note 9). Depreciation and impairment lossesof goodwill are recorded under the statement of profit andloss caption “Other operating expenses”.

Depreciation of intangible assets (other than goodwill,which is recorded as above mentioned) is recorded underthe statement of profit and loss caption “Depreciationand amortisation”.

Years

Buildings and other constructions 50

Machinery and equipment 10

Transport equipment 5

Tools and utensils 4

Administrative equipment 10

Other property, plant and equipment 5

2.6 INVESTMENTS

Investments are classified into the following categories:– Held to maturity– Trading– Available-for-sale

Held to maturity investments are included in non-currentassets unless they mature within 12 months of thebalance sheet date. Investments held for trading areincluded in current assets. Available-for-sale investmentsare classified as current assets if management intendsto realise them within 12 months of the balancesheet date.

All purchases and sales of investments are recognisedon the trade date.

Investments are initially measured at cost, which is thefair value of the consideration given for them, includingtransaction costs.

Available-for-sale and trading investments aresubsequently carried at fair value without any deductionfor transaction costs which may be incurred on its saleby reference to their quoted market price at the balancesheet date.

Gains or losses on measurement to fair value ofavailable-for-sale investments are recognised directlyin the fair value reserve in shareholders equity, until theinvestment is sold or otherwise disposed of, or until it isdetermined to be impaired, at which time the cumulativegain or loss previously recognised in equity is includedin net profit or loss for the period.

Changes in the fair values of trading investments areincluded in the profit and loss statement for the year.

Held to maturity investments are carried at amortisedcost using the effective interest rate method.

2.7 ACCOUNTING FOR LEASES

A lease is classified as (i) a finance lease if the risksand rewards incident to ownership lie with the lesseeand as (ii) as an operating lease if the risks and rewardsincident to ownership do not lie with the lessee.

Classifying a lease as a finance or an operating leasedepends upon the substance of transaction rather thanthe form of the contract.

Accounting for leases where a Group is the lessee

The existing situations where the Group is the lessee areoperating leases (usually for cars) and as such the leasepayments are recognised as an expense on a straight-line basis over the lease term.

Accounting for leases where a Group is the lessor

The existing situations where the Group is the lessorrelate to the contracts with the tenants of the shoppingcentres. These contracts are usually for a period of sixyears and establish the payment by the tenant of amonthly fixed rent - invoiced in advance –, a variable

rent, invoiced if the monthly sales of the tenant arehigher than the limit established in the contract andthe payment of tenant’s share in the shopping centreloperating expenses (common charges). The contractwith the tenant also establishes the payment of anentrance fee in the shopping centre (key income).These contracts can be renewed or cancelled by anyof the parties involved (the company or the tenant).If the cancellation is made by the tenant it must paya cancellation fee to the company established inthe contract.

In accordance to the conditions of these contracts, theyare classified as operating leases, being the rents (fixedand variable rents) and the common charges recorded inthe statement of profit and loss in the year to which theyrespect. The expenses as well the key income and thecancellation fee related with the operating leases arerecorded as expenses or income in the statement ofprofit and loss to which they respect.

2.8 INVENTORIES

Inventories, including work-in-progress, are valued atthe lower of cost and net realisable value. Net realisablevalue is the selling price in the ordinary course ofbusiness, less the costs of completion, marketingand distribution.

The cost of inventories, which is computed on a specificbasis, includes value added tax when this may not berecoverable and all direct and indirect production costs.

2.9 RECEIVABLES

Receivables are stated at their nominal value lessimpairment losses (recorded under the caption“Impairment losses in accounts receivable”),so that they reflect their net realisable values.

2.10 CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, cashat banks in demand and term deposits and other treasuryapplications which mature in less than three months thatare subject to insignificant risk of change in value.

For purposes of the statement of cash flows, cash andcash equivalents also include bank overdrafts, which areincluded in the balance sheet caption “Other loans”.

2.11 LOANS

Loans are stated as liabilities at their nominal value.Costs incurred to obtain the loans are amortised ona straight-line basis over their term and are classified,after 2003, as a deduction to the balance sheet caption“Bank loans”.

2.12 BORROWING COSTS

Borrowing costs are normally expensed as incurred.Borrowing costs relating directly to the acquisition,construction or production of fixed assets are capitalisedas part of the cost of the qualified asset. Borrowingcosts are capitalised from the time of preparation of theactivities to construct or develop the asset to the timethe production or construction is completed.


2.13 DERIVATIVES

The Group uses derivatives in the management of its financialrisks, only to hedge such risks. Derivatives are usually notused by the Group for trading (speculation) purposes.

Cash flow hedges in the form of swaps are used by the Groupto hedge interest rate risks on loans obtained. The conditionsestablished in the hedging swaps are identical to those of theloans in terms of the amount of the loans, maturity dates ofthe interest and repayment schedules of the loans.

The Group’s criteria for classifying a derivative instrumentas a cash flow hedges include:– the hedge transaction is expected to be highly effective

in achieving offsetting changes in fair value or cash flowsattributable to the hedged risk;

– the effectiveness of the hedge can be reliably measured;– there is adequate documentation of the hedging

relationships at the inception of the hedge;– the forecasted transaction that is subject of the hedges

is highly probable

Swaps used by the Group to hedge the exposure to changesin the interest rate of its loans are initially accounted foras assets or liabilities at their fair value by correspondingentry to the equity caption Hedging reserves, and thenrecognised in the statement of profit and loss over theperiod of the swaps.

The variation in fair value of the swap components that do notqualify as perfect hedging are recorded in the consolidatedstatement of profit and loss of the year.

2.14 PROVISIONS

Provisions are recognised when, and only when, the Grouphas an obligation (legal or implicit) resulting from a past eventand it is probable that an outflow of resources will be requiredto settle the obligation, and a reliable estimate can be madeof the amount of the obligation. Provisions are reviewed andadjusted at the balance sheet to reflect the best estimateas of that date.

2.15 INCOME TAX

Income tax is computed based on the taxable results of thecompanies included in the consolidation and considersdeferred taxes.

Current income tax is determined based on the taxableresults of companies included in the consolidation, inaccordance with the tax rules in force where their headoffices are located.

Deferred taxes are calculated using the balance sheet liabilitymethod, reflecting the net tax effects of temporary differencesbetween the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used forincome tax purposes.

Deferred tax assets and liabilities are calculated and valuedannually at the tax rates that are expected to apply to theperiod when the asset is realised or the liability is settled,based on tax rates (and tax laws) that have been enactedor substantively enacted by the balance sheet date.

Deferred tax assets are recognised only when it is probablethat sufficient taxable profits will be available against whichthe deferred tax assets can be utilised. At each balance sheetdate a review is made of the deferred tax assets and they arereduced whenever their future use is no longer probable.

2.16 REVENUE RECOGNITION

Revenue from the sale of goods is recognised in theconsolidated statement of profit and loss when the risks andrewards of ownership have been transferred to the buyer andthe amount of the provisions can be reasonably quantified.Sales are recognised net of sales taxes and discounts.

Revenue from services rendered, which corresponds essentiallyto fixed and variable rent from tenants (Note 2.7), commonexpenses recovered from the tenants and revenue fromoperation of the car parks, is recognised in the year to whichit relates.

Revenue relating to the right of entry to the stores (key money)is recognised in the statement of profit and loss caption“Other operating income”, when invoiced to the tenants(Note 2.7).

2.17 BALANCE SHEET CLASSIFICATION

Assets and liabilities due in more than one year are classifiedin the balance sheet as non current assets and non currentliabilities, respectively.

2.18 BALANCES AND TRANSACTIONS EXPRESSED IN FOREIGN

CURRENCIES

All assets and liabilities expressed in foreign currencies weretranslated to Euro at the exchange rates prevailing as of thebalance sheet dates.

Exchange gains and losses arising due to differences betweenthe historical exchange rates and those prevailing at the dateof collection, payment or the date of the balance sheet, arerecorded as profits or losses in the consolidated statementof profit and loss for the year.

2.19 TRANSLATION OF FINANCIAL STATEMENTS

OF FOREIGN ENTITIES

The entities that operate abroad and are financially, economicallyand organisationally autonomous are considered as foreignentities.

The assets and liabilities of the foreign entities are translatedto Euro at the rates of exchange in force as of the balance sheetdate, and income and expenses in their statements of profit andloss are translated to Euro at the average rates for the year.The resulting translation differences are recorded in the equitycaption “Translation reserve”.

The following exchange rates were used to translate thefinancial statements of the foreign Group and associatedcompanies to Euro:

2003 2002___________________________________________________________ _________________________________________________________03.12.31 Average 02.12.31 Average

Brazilian Real 0.272880 0.289180 0.269370 0.378280

2.20 IMPAIRMENT OF ASSETS

Assets are assessed for impairment at each balance sheetdate and whenever events or changes in circumstancesindicate that the carrying amount of an asset may not berecoverable. Whenever the carrying amount of an assetexceeds its recoverable amount, an impairment loss isrecognised under the statement of profit and loss caption“Other operating expenses”. The recoverable amount is thehigher of an asset’s net selling price and value in use. The netselling price is the amount obtainable from the sale of an assetin an arm’s length transaction less the costs of disposal. Valuein use is the present value of estimated future cash flowsexpected to arise from the continuing use of an asset and fromits disposal at the end of its useful life. Recoverable amountsare estimated for individual assets or, if this is not possible,for the cash-generating unit to which the asset belongs.

Reversal of impairment losses recognised in prior years isrecorded when there is an indication that the impairment lossesrecognised for the asset no longer exist or have decreased. Thereversal is recorded in the statement of profit and loss asoperating result. However, the increased carrying amount of anasset due to a reversal of an impairment loss is recognised tothe extent it does not exceed the carrying amount that wouldhave been determined (net of amortisation or depreciation) hadno impairment loss been recognised for that asset in prior years.

In particular annual impairment tests are made relating fitout contracts, entered into with some tenants. Fit out contractsare contracts through which the Group supports part of theexpenses incurred with the fit out expenses and the tenantassumes the responsibility to reimburse the Group by theamount invested, in terms and conditions that are specific toeach contract. The amounts paid by the Group on each fit outcontract are recorded at cost under the caption “Other noncurrent assets”. On an annual basis impairment tests areperformed and that consist in comparing the nominal value

due as of that balance sheet date with the correspondingrecoverable amount determined by a specialised independententity (Cushman & Wakefield Healey & Baker). The eventualimpairment losses arising are recorded in the consolidatedstatements of profit and loss under the caption “Otheroperating expenses”.

2.21 CONTINGENCIES

Contingent liabilities are not recognised in the consolidatedfinancial statements. They are disclosed unless the possibilityof an outflow of resources embodying economic benefitsis remote

A contingent asset is not recognised in the consolidatedfinancial statements but disclosed when an inflow of economicbenefits is probable.

2.22 SUBSEQUENT EVENTS

Post-year-end events that provide additional information aboutconditions that exist at the balance sheet date (adjusting events),are reflected in the consolidated financial statements. Post-year-end events that are not adjusting events are disclosedin the notes when material.

2.23 SEGMENT INFORMATION

All business and geographic segments of the Group areidentified annually.

Information regarding the business and geographic segmentsidentified is included in Note 36.

3. GROUP COMPANIES INCLUDED IN THE CONSOLIDATION

The companies included in the consolidation, their head offices,and the percentages of their share capital held by the Group asof 31 December 2003 and 2002, are as follows:

Percentage of share capital heldCompany Head office 03.12.31 02.12.31

Mother companySonae Imobiliária, SGPS, S. A. Maia – –

Subsidiaries

Corporate servicesSonae Imobiliária III- Serviços de Apoio a Empresas, S.A. Maia 100.00% 100.00%Imopraedium, B.V. Amsterdam (Netherlands) 100.00% 100.00%

Investment companies3) AlgarveShopping - Empreendimentos Imobiliários, S.A. Lisbon 50.10% 100.00%4) Amarras, SGPS, S.A. Maia – 100.00%

Ameia, SGPS, S.A. Maia 100.00% 100.00%5) Ascendente, SGPS, S.A. Maia – 100.00%3) Caisgere, SGPS, S. A. Maia 50.10% 100.00%

Castelo do Queijo, SGPS, S.A. Maia 100.00% 100.00%6) Centerstation – Imobiliária, S.A. Maia 100.00% 50.00%

Circe, SGPS, S.A. Maia 100.00% 100.00%Conquista, SGPS, S.A. Maia 100.00% 100.00%Datavénia - Gestão de Centros Comerciais, S.A. Maia 100.00% 100.00%

8) Elmo, SGPS, S.A. Maia – 100.00%Esteiros, SGPS, S.A. Maia 100.00% 100.00%

3) GuimarãesShopping - Empreendimentos Imobiliários, S.A. Maia 50.10% 100.00%Imocolombo, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain, B.V. Amsterdam (Netherlands) 100.00% 100.00%



Investment companies (continued)

3) Imospain V, B.V. Amsterdam (Netherlands) 50.10% 100.00%Imospain VIII, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imovalue, B.V. Amsterdam (Netherlands) 100.00% 100.00%

3) MaiaShopping - Empreendimentos Imobiliários, S.A. Maia 50.10% 100.00%Mosquete, SGPS, S.A. Maia 100.00% 100.00%

3) Omala - Imobiliária e Gestão, S.A. Oporto 50.10% 100.00%Paracentro - Plan.Comerc.e Gestão de Centros Comerciais, S.A. Maia 100.00% 100.00%

11) 3) Plaza Mayor Parque de Ocio, S.A Amsterdam (Netherlands) 50.10% 75.00%Prediguarda - Sociedade Imobiliária, S.A. Maia 100.00% 100.00%

3) RPU, SGPS, S.A. Maia 50.10% 100.00%3) Rule, SGPS, S.A. Maia 50.10% 100.00%2) Sonae Imobiliária European Retail Real Estate Assets Holdings, BV Amsterdam (Netherlands) 50.10% –

Sonae Imobiliária Asset Management, S. A. Maia 100.00% 100.00%Sonae Imobiliária Assets, SGPS, S. A. Maia 100.00% 100.00%Vilalambert - Sociedade Imobiliária, S.A. Maia 100.00% 100.00%

Management companies7) Colombogest - Gestão de Centros Comerciais, S.A. Lisbon – 100.00%

Consultoria de Centros Comerciales, S.A. Madrid (Spain) 100.00% 100.00%Grama - Grandes Armazéns, S.A. Lisbon 100.00% 100.00%Norteshopping - Gestão de Centro Comercial, S.A. Maia 100.00% 100.00%Pridelease Investments Ltd Cascais 100.00% 100.00%Sonae Imobiliária - Gestão, S.A. Lisbon 100.00% 100.00%

1) Sonae Imobiliária Itália - Prop. Management, Srl Sondrio (Italy) 100.00% 100.00%Sonae Imobiliária Property Management, SGPS, S. A. Maia 100.00% 100.00%

7) Vasco da Gama Dois Gest- Gestão de Centros Comerciais, S.A. Lisbon – 100.00%7) Viacatarina Gest - Gestão de Centros Comerciais, S.A. Maia – 100.00%

Development companies9) 5ª Coluna – Gestão e Promoção Empreend. Imobiliários, S.A. Maia – 100.00%

Alfange - Imobiliária e Gestão, S.A. Maia 100.00% 100.00%Avenida M40, S.A. Madrid (Spain) 60.00% 60.00%Ciclop - Gestão de Centros Comerciais, S.A. Maia 100.00% 100.00%Comercial de San Javier Shopping, S.A. Madrid (Spain) 65.00% 65.00%Comercial de Pinto Shopping, S.A. Madrid (Spain) 65.00% 65.00%Fimaia-Serviços na Área Económica e Gestão de Invest., S.A. Maia 100.00% 100.00%

12) Gal Park, S.A. Madrid (Spain) 75.00% 100.00%10) Sonae Projekt Berlin, Gmbh Dusseldorf (Germany) 100.00% 100.00%

Imoconstruction, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imocontrol, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imogermany, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imodeveloment, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imoground, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imoitalie II, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain III, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain VII, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain IX, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain X, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imospain XII, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imostructure, B.V. Amsterdam (Netherlands) 100.00% 100.00%

12) Inmo Development and Investment, S.A. Madrid (Spain) 75.00% 100.00%LouresShopping - Empreendimentos Imobiliários, S.A. Maia 100.00% 100.00%

2) Naviglio, Srl Sondrio (Italy) 100.00% 100.00%Nó Górdio, SGPS. S.A. Maia 100.00% 100,00%Parque de Famalicão - Empreendimentos Imobiliários, S.A. Maia 100.00% 100.00%PA-Zehnte, Beteiligungsverwaltungs, GmbH Vienna (Austria) 100.00% 100.00%Procoginm, S.A. Madrid (Spain) 100.00% 100.00%Proyecto Park, S.A. Madrid (Spain) 100.00% 100.00%Proyecto Shopping 2001, S.A. Madrid (Spain) 65.00% 65.00%Querubim-Gestão de Centros Comerciais, S.A Maia 100.00% 100.00%Sonae Germany, GmbH Dusseldorf (Germany) 100.00% 100.00%Sonae Imobiliária Development II, S.A. Maia 100.00% 100.00%Sonae Imobiliária Development, SGPS, S. A. Maia 100.00% 100.00%Sonae Imobiliária Desarrollo, S.L. Madrid (Spain) 100.00% 100.00%Sonae Imobiliária Itália, Srl Sondrio (Italy) 100.00% 100.00%Sonae West Shopping AG Dusseldorf (Germany) 95.00% 95.00%

Companies in BrazilDom Pedro I, B.V. Amsterdam (Netherlands) 100.00% 100.00%Dom Pedro II, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imobrasil I, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imobrasil II, B.V. Amsterdam (Netherlands) 100.00% 100.00%Imoretail, B.V. Amsterdam (Netherlands) 100.00% 100.00%Parque Dom Pedro Shopping, S.A. São Paulo (Brazil) 97.90% 98.47%Parque Jockey Shopping, Ltda São Paulo (Brazil) 99.99% 90.00%Pátio Boavista Shopping, Ltda. São Paulo (Brazil) 99.99% 99.91%

2) Pátio Penha Shopping, Ltda. São Paulo (Brazil) 99.99% 99.91%Sonae Imobiliária Brasil, B.V. Amsterdam (Netherlands) 100.00% 100.00%

4. JOINTLY CONTROLLED COMPANIES

The jointly controlled companies included in the consolidation, their head offices, and the percentages of their share capital held by the Groupas of 31 December 2003 and 2002, are as follows:


Companies in Brazil2) Sonae Imobiliária Brasil, Ltda São Paulo (Brazil) 100.00% 100.00%13) Sonaeimo- Empreendimentos Comerciais, S.A. São Paulo (Brazil) 100.00% 100.00%

Sonaeimo, B.V. Amsterdam (Netherlands) 100.00% 100.00%

1) Companies excluded from the consolidation in 2002 due to their immateriality2) Companies incorporated in 20033) Sale of 49.9%, through the sale of 49.9% of the share capital of Sierra BV, which holds these investments (Note 6)4) Company that was incorporated in Empreendimentos Imobiliários Colombo, S.A., with effect since 1 January 20035) Company that was incorporated in Vasco da Gama – Promoção de Centros Comerciais, S.A., with effect since 1 January 20036) Acquisition of 50% during the second half of 20037) Company that was incorporated in Sonae Imobiliária - Gestão, S.A., with effect since 1 January 2003.8) Company sold in July 20039) Company sold in January 200310) Ex Imno Project, Gmbh11) Acquisition of 25% of the share capital in January 200312) Acquisition of 25% of the share capital in January 200313) Company which assets and liabilities were transferred to Pátio Penha, Parque Jockey Shopping, Ltda and Sonae Imobiliária Brasil, SA, on 31 August 2003

and subsequently incorporated in Sonae Enplanta, SA.

These companies were included in the consolidation by the full consolidation method, as explained in Note 2.2.a).


Car Parking 4) SPEL - Sociedade de Parques de Estacionamento, S.A. Maia – 50.00%

Investment companies3) Capital Plus - Investimentos e Participações, S.A. Vila Nova de Gaia 25.05% 50.00%3) C.C.G. - Centros Comerciais de Gaia, S.A. Vila Nova de Gaia 25.05% 50.00%3) Empreendimentos Imobiliários Colombo, S.A. Lisbon 25.05% 50.00%

Grupo Lar Parque Principado, S.L. Madrid (Spain) 25.00% 25.00%3) Hospitalet Center S.L. Madrid (Spain) 12.49% 25.05%3) Iberian Assets, S.A Madrid (Spain) 24.94% 50.00%3) Imo R - Companhia Imobiliária, S.A. Oporto 25.05% 50.00%

5) 6) Viacatarina Holdings, SGPS, S.A. Lisbon – 50.00%3) 7) Inmolor, S.A Madrid (Spain) 24.94% 25.05%

3) Inparsa - Indústria e Participações, S.A. Maia 25.05% 50.00%Lisedi - Urbanização e Edifícios, S.A. Maia 25.05% 50.00%LL Porto Retail SGPS, S.A. Vila Nova de Gaia 25.05% 50.00%MadeiraShopping - Sociedade de Centros Comerciais, S.A. Funchal (Madeira) 25.05% 50.00%Micaelense Shopping- Empreendimentos Imobiliários, S.A. Ponta Delgada (Azores) 50.00% 50.00%Omne - Sociedade Gestora de Participações Sociais, S.A. Cascais 25.05% 50.00%Sintra Retail Park - Parques Comerciais, S.A. Maia 25.05% 50.00%SM - Empreendimentos Imobiliários, S.A. Cascais 25.05% 50.00%Sóguia - Sociedade Imobiliária, S.A. Maia 50.00% 50.00%Teleporto - Empreendimentos Imobiliários, S.A. Maia 25.05% 50.00%Torre Colombo Ocidente- Imobiliária, S.A. Lisbon 25.05% 50.00%Torre Colombo Oriente- Imobiliária, S.A. Lisbon 25.05% 50.00%Viacatarina - Empreendimentos Imobiliários, S.A. Maia 25.05% 50.00%

3) 8) Vasco da Gama - Promoção de Centros Comerciais, S.A. Lisbon 25.05% 100.00%

Management companies1) Oriogest, Srl Sondrio (Italy) 40.00% 100.00%1) Segest - Sonae Espansione Gestione, S.r.l. Sondrio (Italy) 50.00% 100.00%

Development companiesAegean Park Constructions Real Estate and Development, S.A. Athens (Greece) 50.00% 50.00%

9) Centro Retail Park- Parques Comerciais, S.A. Maia 50.00% 100.00%Imogreece II, B.V. Amsterdam (Netherlands) 50.00% 50.00%Imogreece III, B.V. Amsterdam (Netherlands) 50.00% 50.00%Imogreece IV, B.V. Amsterdam (Netherlands) 50.00% 50.00%Sonae Charagionis Services, S.A. Athens (Greece) 50.00% 50.00%

10) Transalproject 2000, Srl Sondrio (Italy) 50.00% 100.00%Victoria Park, S.A. Athens (Greece) 50.00% 50.00%Zubiarte Inversiones Inmobiliarias, S.A Barcelona (Spain) 49.80% 50.00%


5. ASSOCIATED COMPANIES

The associated companies included in the consolidation, their head offices, percentages of their share capital held by the Group and balanceas of 31 December 2003 and 2002, are as follows:


Companies in BrazilSonae Enplanta, S.A. São Paulo (Brazil) 50.00% 50.00%Unishopping Administradora, Ltda São Paulo (Brazil) 50.00% 50.00%Unishopping Consultoria, Ltda São Paulo (Brazil) 50.00% 50.00%

1) Companies excluded from the consolidation in 2002 due to their immateriality2) Companies incorporated in 20033) Sale of 24.95%, through the sale of 49.9% of the share capital of Sierra BV, which holds these investments (Note 6)4) Company sold in January 20035) Company that was incorporated in Viacatarina - Empreendimentos Imobiliários, S.A., with effect since 1 January 20036) Ex. - ING RPFI Porto Inv.- Gest. e Prom. Centros. Com.,SGPS, Lda.7) Acquisition of 49.9% by Iberian on April 20038) Sale of 50% on April 20039) Sale of 50% on April 200310) Sale of 50% on December 2003

These companies were included in the consolidation by the proportional consolidation method, as explained in Note 2.2.b).

Percentage of share capital held Balance sheet amountCompany Head office 03.12.31 02.12.31 03.12.31 02.12.31

Associated companies:Sonaegest - Soc. Gestora de Fundos de Investimento, S.A. Maia 20% 20% 281,047 289,050

1) Pylea, S.A Athens (Greece) 19.95% 39.9% 2,660,611 1,271,569

2,941,658 1,560,619

Associated companies excluded from consolidation:2) Ercasa Cogeneración S.A Grancasa (Spain) 5% N/A 48,098 –

48,098 –

Jointly controlled companies excluded from consolidation:2) 3) Sonae Charagionis Property Management, S.A Athens (Greece) 50% N/A 30,000 –

30,000 –

Group companies excluded from consolidation:1) Oriogest, Srl Sondrio (Italy) N/A 100% – 2,0001) Segest - Sonae Espansione Gestione, S.r.l. Sondrio (Italy) N/A 100% – 7,500

1) 2) SIC Indoor - Gestão de Suportes Publicitários, S.A. Lisbon 35% 35% 17,500 17,500 1) Sonae Imobiliária Itália - Prop. Management, Srl Sondrio (Italy) N/A 100% – 19,999

17,500 46,999

3,037,256 1,607,618

1) Company excluded from the consolidation of 31 December 2002 due to their immateriality2) Company excluded from the consolidation of 31 December 2003 due to their immateriality3) Company created in 2003

The associated companies were included in the consolidationby the equity method, as explained in Note 2.2.c).

The Group and jointly controlled companies excluded fromthe consolidation above mentioned were excluded from theconsolidation due to their immateriality, both individuallyand in total, in relation to the financial position and resultsof operations of the Group and are accounted for in theaccompanying consolidated financial statements at cost(Note 2.2.a) and b)).

6. ACQUISITION AND SALE OF COMPANIES

The main acquisitions and sales of companies occurred duringthe years ended 31 December 2003 and 2002 were as follows:

ACQUISITION OF SUBSIDIARIES

During the first half year of 2003, the Group acquired theremaining 25% of the subsidiary Plaza Mayor – Parque de Ócio,S.A. (“Plaza Mayor”), starting being the only shareholder of thissubsidiary, and the jointly controlled company Iberian Assets,

S.A. acquired the remaining 49.9% of the share capital ofInmolor, S.A. (“Inmolor”). After this last acquisition the Groupstarted owning effectively 50% of the share capital of Inmolor.Both acquisitions were effective on 1 January 2003. With theacquisition of Plaza Mayor by Euro 6,054,410 and Inmolor byEuro 9,538,754, goodwill in the amounts of Euro 576,355 andEuro 1,667,583, respectively were computed (Note 9). Theseacquisitions had no impact on the assets, liabilities, revenueand expenses included in the consolidation of the Group asthese companies at the date of the acquisition, were alreadyincluded in the consolidation by the full integration methodand proportional method, respectively. The variation inperimeter derived from these acquisitions only had impacton the movement in minority interests (Note 19).

In September 2002, the Group acquired 50% of the share capitalof the companies Iberian Assets, S.A. (“Iberian Assets”) andZubiarte Inversiones Inmobiliarias, S.A. (“Zubiarte”), by Euro119,808,384. Iberian Assets is the owner of 4 operativeshopping centres located in Spain, two of them (Kareaga andGrancasa) held directly and the other two (La Farga and ValleReal) held indirectly through its subsidiaries Hospitalet Center,SL and Inmolor, S.A. held by Iberian Assets at 50.1% and 100%(50.1% in 2002), respectively. Zubiarte is a developmentcompany and is actually the owner of a shopping centre thatis under construction and is expected to open to the public inNovember 2004. These companies were included in the

consolidation by the proportional method, as they are jointlycontrolled companies. A goodwill of Euro 19,255,246 (Note 9)arose with the acquisition of these four companies. Thegoodwill resulting from Zubiarte acquisition in the amount ofEuro 9,176,151 was wrote off in 2003 as it became fullydepreciated in 2002 (Note 9). As this acquisition was reportedto 30 September 2002, profits and losses of these companiesfor the fourth quarter of 2002 were included in the consolidatedstatement of profit and loss.

In December 2002, the Group acquired the remaining 40%of the share capital of Consultoria de Centros Comerciales, S.A.(“CCC”), by Euro 1,227,434, resulting in a goodwill amountingto Euro 1,274,080 (Note 9). This subsidiary, held in 60% beforethis acquisition, was already included in the consolidatedfinancial statements by the full consolidation method.

In December 2002, the Group acquired 19.9% of the sharecapital of Sonae West Shopping, AG by Euro 10,000, resulting ina goodwill amounting to Euro 153,996 (Note 9). This subsidiary,held in 75% before this acquisition, was already included in theconsolidated financial statements by the full integration method.

SALE OF SUBSIDIARIES

On 29th September 2003, the Group sold 49.9% of theshare capital of its subsidiary Sierra BV, which holds thefollowing investments:

This sale was made by a total amount of Euro 235,267,910 (ofwhich Euro 2,251,753 relate to interest income of the periodbetween 1 July 2003 (date in which the sale is effective) and29 September 2003 (date of the formalisation of the sale)). To thatamount, expenses directly related to the sale in the amount of4,104,298 were deducted and an estimated price adjustment ofEuro 562,945, was added. The price adjustment is expected to

be received in 2004. As Sierra BV is controlled by SonaeImobiliária, the consolidated financial statements of Sierra BVwere included in the consolidated financial statements of SonaeImobiliária by the full integration method.

With the sale of 49.9% of the share capital of Sierra BV, theGroup also sold 49.9% of the shareholders loans granted

Percentage of share capitalCompany Head office held by Sierra BV

Algarveshopping – Empreendimentos Imobiliários, S.A. Lisbon 100%Caisgere, SGPS, S.A. Lisbon 100%Capital Plus – Imobiliária, S.A. Vila Nova de Gaia 50%Empreendimentos Imobiliários Colombo, S.A. Lisbon 50%Guimarãeshopping – Empreendimentos Imobiliários, S.A. Maia 100%IMO R – Sociedade Imobiliária, S.A. Oporto 50%Imospain V, BV Amsterdam 100%Inparsa, SGPS, S.A. Maia 50%Lisedi – Urbanização e Edifícios, S.A. Maia 50%LL Porto Retail, SGPS, S.A. Vila Nova de Gaia 50%Madeirashopping – Sociedade de Centros Comerciais, S.A. Funchal 50%Maiashopping – Empreendimentos Imobiliários, S.A. Maia 100%Omala – Imobiliária e Gestão, S.A. Oporto 100%Omne, Sociedade Gestora de Participações Sociais, S.A. Maia 50%Plaza Mayor – Parque de Ócio, S.A. Madrid 100%RPU, SGPS, S.A. Maia 100%Rule, SGPS, S.A. Maia 100%Sintra Retail Park – Parques Comerciais, S.A. Maia 50%SM – Empreendimentos Imobiliários, S.A. Lisbon 50%Teleporto – Empreendimentos Imobiliários, S.A. Maia 50%Vasco da Gama – Promoção de Centros Comerciais, S.A. Maia 50%Viacatarina – Empreendimentos Imobiliários, S.A. Maia 50%CCG – Centros Comerciais de Gaia, S.A. Vila Nova de Gaia 50%Torre Colombo Ocidente – Imobiliária, S.A. Lisbon 50%Torre Colombo Oriente – Imobiliária, S.A. Lisbon 50%Iberian Assets, S.A. Spain 50%Inmolor, S.A. Spain 50%Hospitalet Center, S.L. Spain 25%

to the participated companies of Sierra, BV, by its nominalamount (Euro 111,174,314).

On 1 April 2003, the Group sold 50% of the share capitalof Ascendente, SGPS, S.A. (“Ascendente”), which held 100%of the share capital of Vasco da Gama – Promoção de CentrosComerciais, S.A. (“Vasco da Gama”), owner of the Centro Vascoda Gama. With the sale of Ascendente, both companies startedbeing classified as jointly controlled companies and includedin the consolidated financial statements by the proportionalmethod of consolidation. The Group also sold 50% of theshareholder loans granted to Ascendente, by its nominalamount (Euro 24,279,358).

During the first quarter of 2003, the Group sold the jointlycontrolled company SPEL – Parques de Estacionamento, S.A.(“SPEL”), discontinuing with this sale the car parking business,which was classified as Unallocated in the business segment

information of the notes to the consolidated financialstatements as of 31 December 2002. The Group also sold theshareholder loans granted to SPEL, by its nominal amount(Euro 6,000,000).

On April 2002 the Group sold the investment held inPraedium – Desenvolvimento Imobiliário, S.A. (“Praedium DI”),which through its subsidiaries, operated in the Residential RealEstate promotion business. With the sale of these subsidiariesthe group discontinued the Residential Real Estate promotionbusiness.

EFFECT OF THE ACQUISITIONS AND SALES

The effect of the acquisitions (acquisition of Zubiarte andIberian in 2002) and sales (sale of Ascendente and SPELin 2003 and Praedium DI and its subsidiaries in 2002)occurred during the years ended 31 December 2003 and2002 was as follows:


Cash and cash equivalents 73,368,110 Investment properties 1,294,441,500 Investment properties in progress 16,819,168 Goodwill 10,356,233 Other non current assets 12,852,149 Deferred income tax assets 7,840,874 Trade receivables 5,519,216 Other current assets 15,468,930 Minority interests (6,138,548)Bank loans - non current portion (580,181,047)Shareholder loans - non current portion (96,757,316)Deferred income tax liabilities (266,101,718)Bank loans - current portion (12,674,969)Shareholder loans - current portion (145,824,810)Accounts payable (55,086,926)

Identifiable assets and liabilities at acquisition date 273,900,846 % sold 49.9%

Minorities (Note 18) (136,676,522)

Total sale amount 231,726,557 Interest income from 1 July 2003 to the payment date (Note 33) (2,251,753)

229,474,804 Profit on sale (Note 31) 92,798,282

03.12.31 02.12.31__________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________

Sales Acquisitions Sales__________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________ _________________________________________________________

Ascendente and Zubiarte andVasco da Gama SPEL Total Iberian Praedium DI

Cash and cash equivalents (I) 1,336,449 609,994 1,946,443 3,364,601 573,581 Investment properties (Note 7) 102,049,000 – 102,049,000 195,000,000 – Tangible fixed assets – 16,296,175 16,296,175 1,571,789 2,213,144 Investments – – – 15,622,795 – Other non current assets – – – 8,557,139 7,668,681 Accounts receivable from Group companies – – – 22,257,351 – Inventories – – – – 52,964,754 Trade receivables 165,549 185,442 350,991 927,675 1,892,236 Other current assets 804,314 447,292 1,251,606 17,287,478 9,994,791 Bank loans and shareholder loans - non current (78,364,108) (12,503,010) (90,867,118) (36,014,660) (68,092,763)Accounts payable (31,091,600) (1,695,280) (32,786,880) (117,536,536) (10,724,772)

Identifiable assets and liabilities at acquisition date (5,100,396) 3,340,613 (1,759,783) 111,037,632 (3,510,348)Minorities (Note 18) – – – (12,601,342) 1,544,553 Goodwill – – – 19,255,246 – Profit/ (loss) on sale (Note 31) 21,121,408 2,359,387 23,480,795 – 3,048,795

Amount of purchase/sale (II) 16,021,012 5,700,000 21,721,012 117,691,536 1,083,000

Net cash flow (II-I) 14,684,563 5,090,006 19,774,569 (114,326,935) 509,419

The effect of sale of 49.9% of the share capital of Sierra, BV with effect on 30 June 2003 was as follows:

Impairment losses relate to the project “Vienna Mitte” whichwas abandoned in 2003.

At 31 December 2003 and 2002 investment propertiesin operation corresponded to the fair value of the Group’sproportion of the following shopping centres:

7. INVESTMENT PROPERTIES

The movement in investment properties during the years ended 31 December 2003 and 2002 was as follows:

2003 2002__________________________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________________________

Investment properties Investment properties__________________________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________________________

In operation In progress Total In operation In progress Total

Opening balance 1,498,889,202 151,962,163 1,650,851,365 1,061,571,619 185,362,003 1,246,933,622

Increases 112,323 168,032,688 168,145,011 – 73,555,470 73,555,470

Transfers 4,042,759 (4,042,759) – – 12,307,874 12,307,874

Impairment losses (Note 32) – (2,969,609) (2,969,609) – – –

Increases by transfer frominvestment properties in progress:

Production cost 89,629,992 (89,629,992) – 134,263,184 (134,263,184) –

Adjustment to fair value(Note 30) 30,564,518 – 30,564,518 78,864,107 – 78,864,107

Variation in fair value of theinvestment propertiesbetween years: – – – – – –

Gains (Note 30) 68,008,605 – 68,008,605 95,063,639 – 95,063,639

Losses (Note 30) (7,540,000) – (7,540,000) (1,125,000) – (1,125,000)

Increases through concentrationof business activities (Note 6)- – – 180,000,000 15,000,000 195,000,000

Sale of investment properties(Note 6) (102,049,000) (2,194,942) (104,243,942) (8,456,840) – (8,456,840)

Currency translation differences 647,138 – 647,138 (41,291,507) – (41,291,507)

Closing balance 1,582,305,537 221,157,549 1,803,463,086 1,498,889,202 151,962,163 1,650,851,365

03.12.31 02.12.31__________________________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________________________

% of % ofconsolidation Yield Amount consolidation Yield Amount

Portugal: Algarveshopping 100% 7.75% 87,518,000 100% 8.00% 81,927,000 Arrabidashopping 50% 7.50% 63,236,000 50% 7.50% 59,048,500 Cascaishopping 50% 7.00% 128,455,000 50% 7.00% 97,359,000 Centro Colombo 50% 6.75% 283,873,000 50% 6.75% 278,573,500 Centro Vasco da Gama 50% 6.75% 104,060,500 100% 6.75% 204,098,000 Coimbra Retail Park 50% 8.00% 7,890,500 N/A N/A – Coimbrashopping 100% 8.00% 32,949,000 100% 8.00% 31,475,000 Estação Viana 100% 8.00% 58,884,000 N/A N/A – Gaiashopping 50% 7.50% 63,121,000 50% 7.50% 58,206,500 Guimarãeshopping 100% 7.85% 36,031,000 100% 8.00% 33,231,000 Madeirashopping 50% 8.15% 34,658,500 50% 8.50% 32,460,000 Maiashopping 100% 7.85% 52,137,000 100% 8.00% 49,245,000 Norteshopping 50% 6.75% 147,776,000 50% 7.00% 134,462,000 Parque Atlântico 50% 8.50% 24,884,000 N/A N/A – Sintra Retail Park 50% 14,850,000 50% 8.25% 14,712,500 Viacatarina 50% 7.75% 34,095,000 50% 7.75% 33,025,500

1,174,418,500 1,107,823,500

Brazil: Parque Dom Pedro Shopping 100% 105,789,845 100% 12.00% 91,634,476 Sonae Enplanta 50% 6,136,354 50% 5,388,226 Sonae Imobiliária Brasil 100% 1,532,838 N/A N/A –

113,459,037 97,022,702

Spain: Grancasa 50% 6.50% 65,750,000 50% 6.50% 63,250,000 Kareaga 50% 6.85% 64,750,000 50% 6.85% 61,000,000 La Farga 50% 8.00% 22,750,000 50% 8.00% 22,750,000 Valle Real 50% 6.85% 34,300,000 50% 6.85% 33,000,000 Plaza Mayor 100% 7.50% 74,878,000 100% 7.50% 82,418,000 Parque Principado 25% 6.75% 32,000,000 25% 7.00% 31,625,000

294,428,000 294,043,000

1,582,305,537 1,498,889,202


The fair value of each investment property was determinedby means of a valuation as of the balance sheet date madeby an independent specialised entity (Cushman & WakefieldHealey & Baker).

The valuation of these investment properties was made inaccordance with the Practice Statements of the RICS Appraisaland Valuation Manual published by The Royal Institution ofChartered Surveyors (“Red Book”), located in England.

The methodology used to compute the market value of theinvestment properties consists in preparing 10 yearsprojections of income and expenses of each shopping mallwhich are then discounted to the balance sheet date usinga discount market rate. The residual amount at the end ofyear 10 is computed by applying a return rate (“Exit yield” or“cap rate”) on the projected net income of year 11. The marketvalues so obtained are then tested by calculating and analysingthe capitalisation yield that is implicit in those values –corresponding to the yield shown in the list above. Projectionsare intended to reflect the actual best estimate of the valuatorregarding future revenues and costs of each shopping mall.Both the return rate and discount rate are defined inaccordance to the real estate local market conditions.

In the valuation of investment properties some assumptions,that in accordance with the Red Book are considered to be

special were in addition considered, namely that in thecase of recently inaugurated shopping malls, in which thepossible costs still to be incurred were not considered, as theaccompanying financial statements already include a provisionfor them.

At 31 December 2003 and 2002 the following investmentproperties had been given in guarantee of bank loans:• Centro Colombo • Centro Vasco da Gama• Norteshopping • Cascaishopping• Gaiashopping • Viacatarina• Maiashopping • Coimbrashopping• Guimarãeshopping • Sintra Retail Park• Arrabidashopping • Algarveshopping• Madeirashopping • Parque Principado• Plaza Mayor • Grancasa• Kareaga • Valle Real• La Farga • Coimbra Retail Park• Parque Atlântico • Estação Viana

At 31 December 2003 and 2002 there were no materialcontractual obligations to purchase, construct or developinvestment properties or for repairs or maintenance, otherthan those referred above.

Investment properties in progress at 31 December 2003 and2002 are made up as follows:

03.12.31 02.12.31

Portugal: Expansão do Cascaishopping – 2ª fase – 4,147,588

Parque de Famalicão 2,924,416 2,885,116

Parque Atlântico – 8,046,297

Coimbra Retail Park – 2,024,348

Setubal Retail Park 1,241,754 1,269,665

Loureshopping 11,392,277 9,307,059

Estação Viana – 6,809,393

Torres Colombo 8,344,762 8,780,307

Germany: Vienna Mitte – 2,186,767

Berlin Alexanderplatz 5,508,599 3,143,160

3DO 4,766,162 2,673,845

Brazil: Penha Shopping 6,788,254 2,230,492

Boavista Shopping 12,911,625 1,451,085

Parque Jockey 1,645,273 –

Spain: Avenida M40 63,548,201 35,913,166

Plaza Mayor Shopping 6,491,248 4,380,805

Luz del Tajo 26,734,567 5,091,891

Plaza Éboli 12,500,191 9,164,387

Dos Mares 13,082,226 5,661,908

Zubiarte 22,588,208 15,000,000

Greece: Aegean Park 18,101,447 17,405,000

Italy: Brescia Centre 2,588,339 4,389,884

221,157,549 151,962,163

Changes in consolidation perimeter in 2003 are related with SPEL, which as mentioned in Note 6, was sold during the year ended 31 December 2003.

9. INTANGIBLE ASSETS

The movement in intangible assets and corresponding accumulated amortisation during the years ended 31 December 2003 and 2002 was as follows:

8. PROPERTY, PLANT AND EQUIPMENT

The movement in property, plant and equipment and corresponding accumulated depreciation during the years ended 31 December 2003 and2002 was as follows:

2003 2002________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ______________________________________

Land Buildings Machinery Other Tangibleand natural and other and Transport Administrative Tools and tangible fixed assets

resources constructions equipment equipment equipment utensils fixed assets in progress Total Total

Assets:

Opening balance – 17,629,591 2,744,980 175,658 2,349,200 129,306 764,301 1,366,394 25,159,430 39,510,455

Increases – 139,570 69,072 37,236 372,294 38,543 69,420 498,706 1,224,841 4,826,577

Sales – – (1,091) (50,759) (32,896) (15) (84,534) (169,295) (4,309,823)

Transfers and disposals – – – (57,632) 43,547 2,676 (22,661) (121,234) (155,304) (13,914,308)

Currency translation differences – – 386 954 1,625 – – – 2,965 (171,013)

Change in consolidation perimeter – (14,580,024) (1,451,535) (1,564) (111,327) (8,784) (12,945) (1,344,195) (17,510,374) (782,458)

Closing balance – 3,189,137 1,361,812 103,893 2,622,443 161,726 798,115 315,137 8,552,263 25,159,430

Accumulated depreciation and impairment losses:

Opening balance – 1,563,254 1,066,162 70,687 710,216 83,945 394,995 – 3,889,259 4,087,680

Depreciation for the year – 74,394 111,770 19,840 261,191 30,347 89,452 – 586,994 1,383,695

Sales – – (338) (35,685) (11,203) (15) – – (47,241) (556,582)

Transfers and disposals – (21,539) 8 (16,234) (13,925) (413) (22,154) – (74,257) (1,545,469)

Currency translation differences – – 279 324 388 – – – 991 (32,927)

Change in consolidation perimeter – (734,777) (394,227) (966) (67,025) (8,148) (9,056) – (1,214,199) 552,862

Closing balance – 881,332 783,654 37,966 879,642 105,716 453,237 – 3,141,547 3,889,259

Net assets – 2,307,805 578,158 65,927 1,742,801 56,010 344,878 315,137 5,410,716 21,270,171

2003 2002__________________________________________________________________________________________________________________________________________________________________________________ _______________________________________________________

OtherGoodwill rights Total Total

Assets:

Opening balance 21,665,831 12,701,175 34,367,006 10,567,536

Increases:

Acquisitions 2,243,938 – 2,243,938 29,295,098

Price adjustments 308,286 – 308,286 160,581

Sales, disposals and regularisations (8,229,245) 8 (8,229,237) (5,656,209)

Closing balance 15,988,810 12,701,183 28,689,993 34,367,006

Accumulated depreciation and impairment losses:

Opening balance 11,605,418 1,854,194 13,459,612 7,913,442

Depreciation for the year 3,960,850 960,182 4,921,032 10,812,778

Sales and disposals (9,336,732) (9) (9,336,741) (5,266,608)

Closing balance 6,229,536 2,814,367 9,043,903 13,459,612

Net assets 9,759,274 9,886,816 19,646,090 20,907,394


Disposals in 2003 relates to the write off of goodwill that was fully depreciated as of 31 December 2002.

At 31 December 2003 and 2002 goodwill was made up as follows:

03.12.31 02.12.31_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ____________________________________________

Depreciationand impairment Accumulated

losses depreciationYear of Depreciation of the year and impairment Book Book

acquisition Amount rate (Note 32) losses value value

Consultoria de Centros Comerciales, SL 1999 1,518,231 20% 303,647 1,518,231 – 303,647

Fimaia – Serv. Econ. e Gestão de Inv. S.A. 1999 365,973 20% 73,193 365,973 – 73,193

Consultoria de Centros Comerciales, SL 2000 45,211 20% 9,042 36,168 9,043 18,085

Consultoria de Centros Comerciales, SL(Note 6) 2002 1,274,080 20% 254,816 509,632 764,448 1,019,264

Sonae West Shopping AG (Note 6) 2002 153,996 20% 30,799 61,598 92,398 123,197

Iberian Assets, S.A (Note 6) 2002 10,961,199 20% 2,394,462 2,740,301 8,220,898 6,570,937

Hospitalet Center S.L. (Note 6) 2002 132,194 20% 17,748 33,049 99,145 290,719

Inmolor, S.A (Note 6) 2002 (1,014,298) 20% (341,015) (253,574) (760,724) 1,661,371

Zubiarte Inversiones Inmobiliarias, S.A(Note 6) 2002 – 100% – – – –

Inmolor, S.A (Note 6) 2003 1,667,583 20% 333,517 333,517 1,334,066 –

Plaza Mayor – Parque de Ócio, S.A.(Note 6) 2003 576,355 100% 576,355 576,355 – –

Price adjustment 2003 308,286 100% 308,286 308,286 – –

15,988,810 3,960,850 6,229,536 9,759,274 10,060,413

As of 31 December 2003, “Other rights” include the amount of Euro 8,710,080 (Net of accumulated depreciation of Euro 1,009,183), relating themanagement right to operate five shopping centres in Spain, four of which (Grancasa, Kareaga, La Farga and Valle Real) are actually in operation.This right is being depreciated over a period of twelve years (corresponding to the established contract period plus an equal period for renewal),which is the expected period to recover the investment.

10. OTHER NON CURRENT ASSETS

At 31 December 2003 and 2002 other non current assets were made up as follows:

03.12.31 02.12.31

Amount paid relating fit out contracts 10,898,297 –

Impairment losses on fit out contracts (Note 32) (4,968,297) –

5,930,000 –

Loans to group companies that were included in the consolidationby the proportional method or excluded from consolidation:

Imo R – Sociedade Imobiliária, S.A. – 14,877,278

Zubiarte – 4,294,389

Lamda Pylea – 259,350

Other 109,360 1,543,964

Advances on account of investments 1,502,530 1,761,880

Municipal Council of Lisbon 7,776,954 –

Municipal Council of Málaga 1,669,083 –

Rent deposits of tenants 1,496,157

Fun Entertainment International – 1,237,921

Other non current assets 1,024,162 1,427,117

13,578,246 25,401,899

19,508,246 25,401,899

The recoverable amount of the fit out contracts was determinedby means of a valuation as of the balance sheet date made byan independent specialised entity (Cushman & Wakefield Healey& Baker). The methodology used to compute the recoverableamount of the fit out contracts consisted in determining thediscounted estimated cash flows of each one of the fit out

contracts, using a discounted marked rate, similar to the one usedin determining the fair value of the investment property to whicheach fit out contract relates.

As of 31 December 2003 the recoverable amount of the fit outcontracts existing in each investment property was as follows:

The amount of Euro 7,776,954 due by the Municipal Councilof Lisbon, relates to works developed by the jointly controlledcompany Empreendimentos Imobiliários Colombo, S.A.(“Colombo”) in the area surrounding the Centro Colombo. Theseworks were developed on behalf of the Municipal Council ofLisbon (“CML”) in accordance with protocols signed betweenthe technical services of CML and Colombo in 1993 and 1998.On the other hand, the item Other non current liabilities, at 31December 2003, includes the amount of Euro 3,242,373 (Note22) relating to works developed by CML on behalf of Colombo andlicenses. A legal action against CML was presented, reclaimingthe totality of the improvements made by Colombo on accountof CML and corresponding interests and other expenses incurredby Colombo under the above mentioned protocols. The Colombo’sBoard of Directors believes that the legal action will be favourableto Colombo and consequently did not record any impairment lossto face eventual losses on this account receivable.

The amount of Euro 1,669,083 receivable from the MunicipalCouncil of Malaga relates to the excess cost of the roads builtby Plaza Mayor on account of that entity at the Plaza Mayorshopping centre.

The amount of Euro 1,496,157 relates to the deposit in officialentities of the Kareaga, Grancasa, La Farga, Valle Real and

Parque Principado rents deposits received from tenants. Therent deposits received from tenants are classified under “Othernon current payables” (Note 22).

Loans to group companies included in the consolidationby the proportional method are not eliminated during theconsolidation process when the shareholders’ contributionsare not proportional to its ownership percentage.

1 1. INVENTORIES

At 31 December 2003 and 2002 this caption was madeup as follows:

The movement in work in progress and finished goods duringthe years ended 31 December 2003 and 2002 was as follows:

03.12.31 02.12.31

Work in progress 76,447 194,421Merchandise 21,163 21,163

97,610 215,584

03.12.31__________________________________________________________________________________________________________________________________________________________________________________

% of consolidation Yield Amount

Portugal: Estação Viana 100% 8.00% 1,964,000

Gaiashopping 50% 7.50% 373,000

Parque Atlântico 50% 8.50% 471,000

2,808,000

Spain: Plaza Mayor 100% 7.50% 3,122,000

3,122,000

5,930,000

03.12.31 02.12.31_______________________________________________________ __________________________________________________________________________________________________________________________________________________________________________________

Work in Work in Finishedprogress progress goods Total

Opening balance 194,421 27,172,853 – 27,172,853

Amounts capitalised during the year 44,711 2,257,641 2,257,641

Sales – – (5,086,749) (5,086,749)

Change in consolidation perimeter 194,421 (24,149,324) – (24,149,324)

Transfers (357,106) (5,086,749) 5,086,749 –

Closing balance 76,447 194,421 – 194,421


12. TRADE RECEIVABLES

At 31 December 2003 and 2002 trade receivables were made up as follows:

03.12.31 02.12.31

Accounts receivable from customers:Portugal 10,587,284 5,268,467 Brazil 5,190,962 2,480,407 Spain 5,016,745 3,867,990 Other customers 578,811 1,230,587

Notes receivable from customers 445,931 568,324 Doubtful accounts receivable 7,274,495 8,107,862

29,094,228 21,523,637Accumulated impairment losses on accounts receivable from customers (Note 28) (9,542,990) (7,968,277)

19,551,238 13,555,360

03.12.31 02.12.31

Municipal Council of Lisbon (Note 10) – 7,776,954 State and other public entities 25,622,384 21,310,144 Soconstrução BV – 32,807,843 Imoconti, S.A 234,772 2,288,300 Contacto SGPS, S.A. 28,051,152 – Accounts receivable from group companies that were included in the consolidation by the proportional method – 7,783,497 SABA Aparcamientos, S.A. 6,014,346 – ING Real Estate Bishop BV 4,424,178 – ING RPFI Holding ACI, SL e ING RPFI Holding Spain, SL 1,441,724 – Estação Shopping – 1,175,000 ING Soparfi – 1,987,249 Rent deposits of tenants 1,065,492 – Tax notification paid 791,418 791,418 Municipal Council of Málaga (Note 10) – 1,649,415 MBO La Farga 986,018 986,000 Advances to suppliers 800,125 840,485 Other 6,352,813 5,475,996

75,784,422 84,872,301Accumulated impairment losses on other receivables (Note 28) (603,005) (424,297)

75,181,417 84,448,004

13. ACCOUNTS RECEIVABLE FROM SHAREHOLDERS

As of 31 December 2003 the amount of Euro 105,000,000 relates to a short term loan granted to the Sonae Imobiliária’s shareholder, SonaeInvestments, BV. This short term shareholder loan granted bears interests at market interest rates and is expected to be reimbursed during thefirst half of 2004.

14. OTHER RECEIVABLES

At 31 December 2003 and 2002 this item was made up as follows:

The amount of Euro 25,622,384 receivable from state entitiesrelates basically to Value Added Tax (“VAT”) receivable. Inaccordance to tax legislation, the Group follows the procedure ofrecord under this item the VAT included in the invoices from thirdparties during the period of construction of the shopping centresand the reimbursement of that VAT is asked to state entitiesonly after the beginning of operation of the shopping centres.

The amount of 28,051,152 relates to a short term loan grantedto Contacto, SGPS, S.A. which bears interests at market interestrates. This loan was granted following the renegotiation of theaccount receivable by the Group relating the sale in 2002, ofthe investment and shareholder loans granted to Praedium BV,mentioned in Note 6. The corresponding amount that was dueon 31 December 2002 amounted to Euro 32,807,843.

The amount of Euro 6,014,346 receivable from SABAAparcamientos, S.A. relates to the amount still pending toreceive relating the sale of the investment and shareholderloans granted to SPEL, mentioned in Note 6. The Group expectsto receive this account receivable in 2004.

The amounts of Euro 4,424,178 and Euro 1,441,724, relate toaccounts receivable by the other join venturer of Zubiarte –Inversionnes Inmobiliárias, S.A. and Iberian Assets, S.A.,respectively.

The amount of Euro 1,065,492 relates to the deposit in officialentities of the Plaza Mayor rents deposits received fromtenants. The rent deposits received from tenants are classifiedunder “Other non current payables” (Note 26).

At 31 December 2003, treasury applications relate to termdeposits made by several companies included in theconsolidation and bear interests at market interest rates.

17. SHARE CAPITAL

Following the deliberation of the Shareholders General Meetingoccurred on 29 November 2003, the share capital of SonaeImobiliária was decreased from Euro 187,125,000 to Euro162,244,860, through the extinguishment of 4,986,000ordinary shares acquired to the Sonae Imobiliária’sshareholders by Euro 30.09/share through net assetsthat can be distributed to the shareholders.

Following this deliberation, Sonae Imobiliária acquired4,986,000 shares to its shareholders, by the total amount ofEuro 150,028,740, of which 3,342,614 shares were acquiredto Sonae Investments, BV and 1,643,386 shares were acquiredto Grosvenor Investments, (Portugal), SA.

After this acquisition of treasury stock and favourabledeliberation of the Shareholders General Meeting occurred

on 4 December 2003, Sonae Imobiliária in a public deed dated17 December 2003, decreased its share capital through theextinguishment of that treasury stock.

As mentioned in the Portuguese commercial legislation,Sonae Imobiliária constituted a special reserve to which therules of the legal reserve applies, by an amount equivalentto the nominal amount of the shares extinguished(Euro 24,880,140).

At 31 December 2003 share capital was made up of32,514,000 fully subscribed and paid up ordinary sharesof Euro 4.99 each.

The following entities own more than 20% of the share capitalat 31 December 2003 and 2002:

Entity 2003 2002

Sonae Investments, BV 67,04% 67,04%

Grosvenor Investments, (Portugal), SA 32,96% 32,96%

16. CASH AND CASH EQUIVALENTS

At 31 December 2003 and 2002 cash and cash equivalents was made up as follows:

The amount of Euro 791,418 relates to tax notifications on theincome tax statements relating to years 1991 to 1997 of SMpaid at the end of 2002 to tax authorities. The correctionsproposed by tax authorities related to the depreciation policyof improvements made in third parties land that for taxpurposes were being depreciated in five years and the taxdeductibility of the estimated property tax expensed in thatyears. SM contested the tax notifications received and did notrecord any impairment loss to face eventual losses on thoseamounts as the Board of Directors believes that thecontestation will be favourable to SM.

Loans to group companies included in the consolidationby the proportional method are not eliminated duringthe consolidation process when the shareholders’contributions are not proportional to its ownershippercentage.

15. OTHER CURRENT ASSETS

At 31 December 2003 and 2002 this item was madeup as follows:

03.12.31 02.12.31

Interest income receivable 377,849 1,374,286Variable rents receivable 1,985,827 4,411,124Recovery costs receivable 625,197 254,634Deferred rents 1,057,184 4,800,653Deferred bank expenses – 3,950,382Deferred costs with projects 437,119 –Management and administration services receivable 2,535,413 2,788,501Others 2,569,683 901,115

9,588,272 18,480,695

03.12.31 02.12.31

Cash 462,908 157,557Bank deposits payable on demand 24,819,815 67,045,755Treasury applications 159,984,073 23,466,248

185,266,796 90,669,560Bank overdrafts (Note 20) (4,697) (938,697)

185,262,099 89,730,863


Variation

Variation in in hedging Effect

Balance as of Net translation Increase of reserve of changes Acquisitions Sales Balance as of

02.12.31 Profit reserve share capital (Note 19) in perimeter (Note 6) (Note 6) Others 03.12.31

Avenida M40, SA 4,830,100 – – – – – – – – 4,830,100

Comercial de Pinto Shopping, SA 924,735 – – 475,265 – – – – – 1,400,000

Comercial de San Javier, S.A. 654,675 – – 395,325 – – – – – 1,050,000

Galpark, S.A. – – – 550,000 – – – 14,855 366 565,221

Hospitalet Center, SL 5,777,644 93,538 – – – – – – 34,580 5,905,762

Inmolor, SA 7,019,571 – – – – – (7,019,571) – – –

Parque D. Pedro Shopping 1,235,953 289,196 (217,405) 63,837 – – – – 747,394 2,118,975

Plaza Mayor – Parque de Ócio, SA 5,372,007 – – – – – (5,372,007) – – –

Proyetto Shopping, S.A. 397,580 – – 1,698,200 – – – – – 2,095,780

Sierra BV – 40,024,751 – – (87,912) – – 136,676,522 (273,268) 176,340,093

Outros (95,668) 1,508 (408,630) – – – – – 826,820 324,030

26,116,597 40,408,993 (626,035) 3,182,627 (87,912) – (12,391,578) 136,691,377 1,335,892 194,629,961

Variation

Variation in in hedging Effect

Balance as of Net translation Increase of reserve of changes Acquisitions Sales Balance as of

01.12.31 Profit reserve share capital (Note 19) in perimeter (Note 6) (Note 6) Others 02.12.31

Avenida M40, SA 4,830,100 – – – – – – – – 4,830,100

Comercial de Pinto Shopping, SA – – – – – 924,735 – – – 924,735

Hospitalet Center, SL – 68,249 – – – – 5,709,395 – – 5,777,644

Inmolor, SA – 127,624 – – – – 6,891,947 – – 7,019,571

Parque D. Pedro Shopping 1,754,872 446,008 (625,795) – – – – – (339,132) 1,235,953

Plaza Mayor – Parque de Ócio, SA 891,468 4,480,539 – – – – – – – 5,372,007

Praedium DI 1,031,201 – – – – – – (1,544,553) 513,352 –

Outros (121,073) (48,335) (240) – – 1,052,255 – – 73,980 956,587

8,386,568 5,074,085 (626,035) – – 1,976,990 12,601,342 (1,544,553) 248,200 26,116,597

18. MOVEMENT IN MINORITY INTERESTS

During the years ended 31 December 2003 and 2002 the movement in minority interests was as follows:

19. BANK LOANS

At 31 December 2003 and 2002 bank loans obtained were made up as follows:

03.12.31 02.12.31____________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________

Used amount Used amount________________________________________________________________________________________ ________________________________________________________________________________________

Medium and Medium and ReimbursementEntity Limit Short term long term Limit Short term long term Due date plan

Bond LoansSonae Imobiliária/98 bonds – 11,939,990 27,963,842 11,939,990 Jan/2005 FinalSonae Imobiliária/99 bonds 50,000,000 – – 50,000,000 Dec/2006 Final

50,000,000 11,939,990 27,963,842 61,939,990

Bank Loans:Sierra BV JP Morgan Chase 34,353,496 1,226,000 18,830,504 – – – May/2010 QuarterlyAlgarveshopping – Emp.Imobiliários, S.A. JP Morgan Chase (b) – 34,353,496 – – – Algarveshopping – Emp.Imobiliários, S.A. BCP, CGD (b),(e) – – – 33,668,858 – 33,668,858 Apr/2013 QuarterlyAvenida M40, S.A. Commerzbank (b) – – – 28,000,000 11,818,153 – 2,003 VariousAvenida M40, S.A. Sindicated Loan 56,700,000 – 26,001,778 – – – Oct/2005 FinalAvenida M40, S.A. Sindicated Loan 9,000,000 2,493,544 – – – – Oct/2006 FinalCaisgere, SGPS, S.A. CGD (c) 13,467,543 13,467,543 – 13,467,543 – 13,467,543 Sep/2004 FinalCapital Plus – Inv. eParticipações, S.A. Eurohypo, BBVA, DB (a), (b) 27,750,000 1,375,000 22,625,000 27,750,000 1,375,000 24,000,000 Mar/2017 QuarterlyComercial de Pinto Shopping Hypo Real Estate (b), (c) 30,485,000 – – – – – Jan/2011 QuarterlyComercial de Pinto Shopping Hypo Real Estate (b), (c) 6,000,000 – – – – – Jan/2007 FinalComercial de SanJavier Shopping, S.A. Aareal Bank (b) 9,000,000 – 3,000,000 – – – Apr/2013 QuarterlyComercial de SanJavier Shopping, S.A. Aareal Bank (b) 2,700,000 396,115 – – – – Oct/2006 FinalEmpreendimentos ImobiliáriosColombo, S.A. Eurohypo (a), (b) 112,250,000 – 112,250,000 112,250,000 – 112,250,000 Sep/2026 AnnualGrupo Lar Principado, SL Eurohypo (a), (b) 24,040,483 555,936 22,958,662 24,040,483 – 24,040,483 Mar/2005 Half yearHospitalet Center Eurohypo (a), (b) 12,774,037 826,392 9,691,320 12,774,037 751,265 10,517,712 Apr/2013 Half yearIberian Assets Eurohypo (a), (b) 39,967,305 1,126,898 27,646,559 39,967,305 976,645 28,773,456 Jun/2019 Half yearIberian Assets Eurohypo (a), (b) 26,369,406 400,000 25,219,406 26,369,406 300,000 25,619,406 Nov/2020 Half yearIberian Assets Eurohypo (a), (b) 12,500,000 427,500 12,072,500 – – – Jul/2018 AnnualIberian Assets Eurohypo (a), (b) 6,500,000 222,500 6,277,500 – – – Jul/2018 AnnualIberian Assets Eurohypo (a), (b) 8,500,000 – 8,500,000 – – – Jul/2018 AnnualImo R – Sociedade Imobiliária, S.A. BEI (a), (d) 17,608,363 2,196,411 9,851,415 17,608,363 2,177,876 12,047,827 Jun/2009 QuarterlyImo R – Sociedade Imobiliária, S.A. BPI (a), (b) 3,673,033 458,162 2,054,964 3,673,033 454,296 2,513,127 Jun/2009 QuarterlyImo R – Sociedade Imobiliária, S.A. Eurohypo, BPI (a), (b) 18,750,000 935,547 16,372,065 18,750,000 935,547 17,307,612 Jun/2011 QuarterlyImo R – Sociedade Imobiliária, S.A. Citibank (a) – – – 24,939,895 14,877,277 – Dec/2003 FinalInmolor Eurohypo (a), (b) 15,025,303 – 15,025,303 15,025,303 – 15,025,303 Jan/2026 Half yearInparsa – Ind. e Participações,SGPS, S.A. Eurohypo (a), (b) 27,500,000 – 27,500,000 27,500,000 – 27,500,000 Nov/2016 AnnualMadeirashopping – Soc. Cent.Comerciais, S.A. BCP (a), (b) 14,253,148 1,839,116 10,115,138 14,253,148 1,839,116 11,954,254 May/2010 QuarterlyMicaelense – Emp. Imobiliários, S.A. CGD, BCP (a), (b) 11,500,000 – 11,431,784 – – – Apr/2013 Half yearMicaelense – Emp. Imobiliários, S.A. CGD, BCP (a), (b) 2,000,000 1,923,688 – – – – Jun/2006 FinalOMNE – SGPS, S.A. Eurohypo (a), (b) 61,428,000 – 61,428,000 61,428,000 – 50,000,000 2028 AnnualPlaza Mayor – Parque de Ocio, S.A. Eurohypo (b) 35,459,714 1,141,923 34,317,791 35,459,714 – 34,257,719 Oct/2017 AnnualPlaza Mayor – Parque de Ocio, S.A. BPI (b) – – – 9,975,960 1,976,098 – Aug/2003 FinalRule, SGPS, S.A. Eurohypo (b) 64,843,727 972,656 63,871,071 64,843,727 – 64,843,727 Jul/2026 AnnualSintra Retail Park – ParquesComerciais, S.A. BPI (a), (b) 6,234,974 5,455,602 – 6,234,974 545,560 5,455,602 Aug/2010 Half yearSóguia – Sociedade Imobiliária, S.A. CGD, MG (a), (b) 4,500,000 – 3,571,891 – – – Nov/2013 Half yearSóguia – Sociedade Imobiliária, S.A. CGD, MG (a), (b) 1,150,000 645,093 – – – – Nov/2006 FinalSonae Enplanta, S.A. Unibanco (a) – 323,527 315,180 – 279,236 535,203 Nov/2005 QuarterlySonae Enplanta, S.A. BNDES (a) – 9,167 – – 109,998 9,167 Jan/2004 QuarterlySPEL – Soc. P. Estacionamento, S.A. BPI (a),(f) – – – 1,683,445 374,098 1,122,294 Half yearSPEL – Soc. P. Estacionamento, S.A. BPI (a),(f) – – – – – 5,380,713 in renegotiationVasco da Gama – P. CentrosComerciais, S.A. BBVA (b), (d) 55,500,000 1,581,750 52,503,000 111,000,000 2,830,500 108,169,500 2028 AnnualViacatarina – EmpreendimentosImobiliários, S.A. Eurohypo (a), (b) 19,600,000 – 19,600,000 19,600,000 – 19,600,000 Oct/2021 AnnualZubiarte Santander Spain 2,300,000 575,687 – – – – Jul/2005 FinalZubiarte Santander Spain (a), (b) 18,000,000 – 3,550,837 – – – Jul/2015 Monthly

811,683,532 40,575,757 660,935,164 750,263,194 41,620,665 648,059,506

Total 90,575,757 672,875,154 69,584,507 709,999,496 Fair value of the financial hedging instruments 3,735,944 631,050 – 5,494,280 Deferred bank expenses incurred on the issuance of bank debt (284,368) (3,551,721)

94,027,333 669,954,483 69,584,507 715,493,776

(a) These amounts are considered at the control proportion held by the Group(b) To guarantee the repayment of these loans, the Group pledged the real estate properties owned by these companies(c) To guarantee the repayment of this loan, the Group pledged the shares of this subsidiary(d) The Group constituted bank guarantees as guarantee of the repayment of this loan(e) This loan was repaid before its term(f) Company sold in 2003


Bank loans bear interests at market interest rates and were allcontracted in Euro, except for the bank loans relating SonaeEnplanta, which were contracted in Brazilian Reais andtranslated to Euro using the exchange rate prevailingat balance sheet date (Note 2.19).

The debenture loan contract of Sonae Imobiliária (SonaeImobiliária 99/Bonds), includes a clause through which theentities that subscribed the Bond loan can exercise a put optionof the total loan or the remaining amount due at thereimbursement date of the 10th coupon, which will occur inDecember 2004. In accordance to the information obtained bythe Board of Directors it is expected that the put option will beexercised by the entity that subscribed the loan andconsequently the amount due as of 31 December 2003 (Euro50,000,000) was classified as short term liability.

At 31 December 2003 loans classified as medium and long termwere repayable as follows:

At 31 December 2003 and 2002 the Group’s financialinstruments relate to interest rate swaps were as follows:

2005 57,394,048

2006 20,870,781

2007 22,865,017

2008 24,618,792

2009 and following years 547,126,516

672,875,154

03.12.31 02.12.31______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

Fair value Fair valueof the financial of the financial

Loan instrument Loan instrument

Financial hedging instruments:

Sonae Imobiliária/98 Bonds 11,939,990 20,349 39,903,832 286,254

Sonae Imobiliária/99 Bonds 50,000,000 1,628,164 50,000,000 3,959,879

Caisgere SGPS/CGD 13,467,543 278,834 13,467,543 493,000

Imo R/BEI 12,047,826 218,922 14,225,703 436,036

Imo R/BPI 2,513,126 45,408 2,967,423 53,154

Imo R/Eurohypo 17,307,612 364,258 18,243,159 265,957

Iberian/Eurohypo 12,500,000 (8,755) – –



2,538,048 5,494,280

Not perfect hedging financial instruments:

Sonae Imobiliária/99 Bonds (Note 33) 50,000,000 1,828,946 – –

4,366,994 5,494,280

The fair value of the financial hedging instruments wasrecorded under hedging reserves of the Group (Euro 2,094,170)and hedging reserves of the minorities (Euro 443,878).

These interest rate swaps are stated at their fair value at thebalance sheet date, determined by the valuation made by thebank entities with which the interest swaps were contracted.The computation of the fair value of these financial instrumentswas made taking into consideration the actualisation to thebalance sheet date of the future cash-flows relating to thedifference between the contracted interest rate with the bankentity with which the swap was negotiated and the variableinterest rate negotiated with the bank entity that grantedthe loan.

The interest rate swap relating the Sonae Imobiliária’sdebenture loan (Sonae Imobiliária 99/Bonds), was contractedfor the totality reimbursement period initially expected (withreimbursement date on December 2006), because there wasthe conviction that the put option on that loan would not beexercised by the entity that subscribed the loan. As, at thebalance sheet date exists the conviction that the entity that

subscribed the loan will exercise the put option, the amountdue of that loan as of 31 December 2003 (Euro 50.000.000)was classified in the short term and the valuation amount ofthe interest rate swap corresponding to the period betweenDecember 2004 (date on which the anticipated reimbursementis expected, through the exercise of the put option by the entitythat subscribed the loan) and December 2006 (date of the finalreimbursement of that loan) was recorded by debited to theconsolidated statements of profit and loss, as it was consideredthat this portion of the interest rate swap valuation does notqualify as perfect hedging.

The main hedging principles used by the Group whennegotiating these hedging financial instruments are as follows:• Perfect matching between the cash-flows paid and received:

there is coincidence between the dates of interest paymentsof the loans obtained and changed with the bank;

• Perfect matching in the index interest rate used: thereference index interest rate used in the in interest rate swapand in the loan are coincident;

• In a scenario of increase or decrease in interest rates, themaximum amount of interest charges is perfectly calculated.

The amounts payable to LuxCo 1 and LuxCo 2,relate to shareholder loans payable by thesubsidiaries and jointly controlled companies

of Sierra BV, to the other shareholders of Sierra BV.These loans bear interests at market interest ratesand were contracted in Euro.

Bank loans bear interests at market interest rates and were all contracted in Euro, except for the bank loan relating Unishopping Administradora,Ltda. which was contracted in Brazilian Reais and translated to Euro using the exchange rate prevailing at balance sheet date (Note 2.19).

21. ACCOUNTS PAYABLE TO OTHER SHAREHOLDERS


20. OTHER LOANS

At 31 December 2003 and 2002 other loans obtained were made up as follows:

03.12.31 02.12.31______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

Medium and Medium andShort term long term Short term long term

Bank loans:Imo R - Sociedade Imobiliária, S.A. 24,950 24,950 24,950 49,900Maiashopping - Empreendimentos Imobiliários, S.A. 16,563 33,126 16,563 66,252SM – Empreendimentos Imobiliários, S.A. – – 869,507 –Unishopping Administradora, Ltda 14,714 – – –Grupo Lar Principado, SL 379,867 – 392,417 –

436,094 58,076 1,303,437 116,152Bank overdrafts (Note 16) 4,697 – 938,697 –

440,791 58,076 2,242,134 116,152

03.12.31 02.12.31______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

Medium and Medium andShort term long term Short term long term

SIERRA Investments (Luxembourg) 1 Sarl (“Luxco 1”):AlgarveShopping – Empreendimentos Imobiliários, S.A. – 50,541 – – Empreendimentos Imobiliários Colombo, SA 9,985,970 26,008,435 – – Iberian Assets, S.A – 607,643 – – Imo R – Companhia Imobiliária, S.A. – 8,248,624 – – Inparsa, SGPS, S.A. – 1,706,164 – – LL Porto Retail SGPS, S.A. – 1,250,045 – – MadeiraShopping – Sociedade de Centros Comerciais, S.A. 216,233 682,992 – – Rule, SGPS, S.A. 5,240,332 – – – Sintra Retail Park – Parques Comerciais, S.A. 152,472 – – –Vasco da Gama – Promoção de Centros Comerciais, S.A. – 6,730,778 – –

15,595,007 45,285,222 – –

SIERRA Investments (Luxembourg) 1 Sarl ("Luxco 2"):AlgarveShopping – Empreendimentos Imobiliários, S.A. – 40,433 – – Empreendimentos Imobiliários Colombo, SA 7,988,776 20,806,748 – – Iberian Assets, S.A – 486,114 – – Imo R – Companhia Imobiliária, S.A. – 6,598,899 – – Inparsa, SGPS, S.A. – 1,364,931 – – LL Porto Retail SGPS, S.A. – 1,000,036 – – MadeiraShopping – Sociedade de Centros Comerciais, S.A. 172,987 546,393 – – Rule, SGPS, S.A. 4,192,708 – – – Sintra Retail Park – Parques Comerciais, S.A. 121,978 – – – Vasco da Gama – Promoção de Centros Comerciais, S.A. – 5,384,622 – –

12,476,449 36,228,176 – –

Other Shareholder’s:Avenida M40, S.A. 8,087,854 – – 4,144,449 Comercial Pinto Shopping, S.A. 671,682 2,520,000 – – Comercial de San Javier Shopping, S.A. 1,951,194 – – – Proyecto Shopping 2001, S.A. 4,037,820 2,288,414 – – Zubiarte Inversiones Inmobiliarias, S.A 6,724,669 – 4,134,362 – Others 106,081 – 423,549 893,885

21,579,300 4,808,414 4,557,911 5,038,334

49,650,756 86,321,812 4,557,911 5,038,334


22. OTHER NON CURRENT LIABILITIES


03.12.31 02.12.31

Municipal Council of Lisbon (Note 13) 3,243,373 – Rent deposits from tenants (Note 10) 4,510,144 2,210,895 Other non current accounts payable 138,234 3,158,261

7,891,751 5,369,156

23. DEFERRED INCOME TAXES

Deferred income tax assets and liabilities at 31 December 2003 and 2002 in accordance to the temporary differences that generate them,are made up as follows:

Deferred tax assets Deferred tax liabilities______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

03.12.31 02.12.31 02.12.31 02.12.31

Difference between fair value and tax cost of tangible fixed assets – – 270,072,049 296,437,397

Write-off of intangible assets – – (5,622,639) (3,118,747)

Write-off of deferred income relating key income and expensesrelating the opening of shopping centres – – 803,557 5,496,161

Fair value of hedging financial instruments 696,622 1,813,113 – –

Fair value of especulation financial instruments 502,960 – – –

Tax losses carried forward 16,196,927 15,219,410 – –

Impairment losses on accounts receivable from customers 116,855 – – –

17,513,364 17,032,523 265,252,967 298,814,811

2003 2002

Opening balance 281,782,288 215,646,740

Effect in net result:Difference between fair value and tax cost of tangible fixed assets 37,404,409 66,498,369Write-off of intangible assets (712,242) 908,793Write-off of deferred income relating key income and expenses relating the opening of shopping centres (4,206,533) (669,464)Decrease/Increase of impairment losses not accepted for tax purposes (140,226) –Decrease/Increase of tax losses carried forward (1,187,845) (2,891,555)Fair value of speculation financial instruments (502,960) –Effect of change in income tax rate from 33% to 27.5% (Note 24) (41,933,975) –Other – –

Sub-total (Note 24) (11,279,372) 63,846,143Effect in equity:

Valuation of hedging financial instruments 1,116,491 (665,327)Currency translation differences (200,941) (7,064,362)Adjustment in the opening balance of deferred income tax 2,155,340 –Changes in perimeter:

Sales (26,738,388) 2,087,169Acquisitions:

Deferred income tax liabilities 692,042 18,173,214Deferred income tax assets – (11,358,899)

Others 212,143 1,117,610

Closing balance 247,739,603 281,782,288

Deferred income tax assets related with the fair value of thefinancial hedging instruments were recorded under hedgingreserves of the Group (Euro 575,196) and hedging reservesof the minorities (Euro 121,426).

The movement in deferred income tax assetsand liabilities (net balance) during the yearsended 31 December 2003 and 2002 wasas follows:

The numerical reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rate is as follows:

24. INCOME TAX

Income tax for the years ended 31 December 2003 and 2002 is made up as follows:

At the balance sheet date the Group reviewed the taxlosses carried forward, and only recorded the deferredincome tax assets related with tax losses carried forward

which will probably be recovered in the future. The limit expiredate of that tax losses existing as of 31 December 2003is as follows:

The deferred income tax assets relating to tax losses carried forward are made up as follows:

03.12.31 02.12.31

Parque Dom Pedro Shopping, S.A 3,204,110 3,647,977Spel-Sociedade Parques Estacionamento,SA – 210,328 Iberian Assets, S.A 8,054,326 7,683,012Zubiarte Inversiones Inmobiliarias, S.A 4,855,832 3,675,885Other companies 82,659 2,208

16,196,927 15,219,410

03.12.31 02.12.31

Current tax 18,938,224 16,655,315Deferred tax (Note 23) (11,279,372) 63,846,143

7,658,852 80,501,458

Tax Limitloss expire date

Spain:Generated in 1996 21,070,622 2011Generated in 1997 6,539,811 2012Generated in 1998 4,052,256 2013Generated in 2002 526,595 2017

32,189,284

Brazil:Generated in 1999 149,965 no limit dateGenerated in 2002 9,419,452 no limit date

9,569,417

Others:Generated in 2002 194,617 2007Generated in 2003 5,844 2008

200,461

41,959,162

03.12.31 02.12.31

Profit before income tax 256,735,372 229,967,905 Gains related to the sale of companies (Note 6):

Sierra BV (added of expenses, accepted for tax purposes) (99,154,333)Ascendente (21,121,408)SPEL (2,359,387)Praedium DI (3,048,795)

Depreciation of goodwill (Note 9) 3,960,850 10,456,811Other permanent differences and tax losses for which the recuperability is not probable 11,029,804 3,134,847

Taxable profit 149,090,898 240,510,768Effect of different income tax rates in other countries 1,190,395 3,433,044

150,281,293 243,943,812Income tax rate in Portugal 33.0% 33.0%

49,592,827 80,501,458

Effect of change in income tax rate from 33% to 27.5% (Note 23) (41,933,975)

7,658,852 80,501,458


25. TRADE PAYABLES

At 31 December 2003 and 2002 trade payables were made up as follows:

03.12.31 02.12.31

Trade suppliers 13,223,939 12,622,948

Suppliers of fixed assets 39,972,829 26,054,071

Other suppliers – 64,181

53,196,768 38,741,200

03.12.31 02.12.31

Advances from customers 2,068,337 1,525,223

State and other public entities 15,932,659 21,382,620

Municipal Council of Lisbon (Note 10) – 3,242,373

ING RPFI Spain, BV 4,402,932

Refer 3,343,000

Rent deposits from tenants (Note 14) 1,109,815

ING Soparfi – 1,986,344

Other payables 6,968,040 4,179,587

33,824,783 32,316,147

03.12.31 02.12.31

Payable interest expense 5,656,365 4,613,787

Other accrued borrowing expenses 1,698,560

Vacation pay and vacation bonus 6,600,192 4,848,739

Accrued Real Estate tax 6,223,124 10,740,841

Accrued services payables 5,363,642 4,581,308

Condominium margin 1,244,144 1,406,996

Accrued recovery costs 577,505

Accrued fixed asset expenses 11,732,789 2,916,526

Key income, invoiced in advance 5,459,391

Rental income invoiced in advance 7,797,285 7,499,495

Others 7,726,546 10,599,567

60,079,543 47,207,259

26. OTHER PAYABLES

At 31 December 2003 and 2002 other payables were made up as follows:

The amount of Euro 4,402,932 corresponds to the amount due relating to the sale of Ascendente, which had occurred during the first half year of 2003.

The amount of Euro 3,343,000 corresponds to the amount due relating to the acquisition of the surface right of Estação Viana.

27. OTHER CURRENT LIABILITIES

At 31 December 2003 and 2002 other current liabilities were made up as follows:

Sales in 2002 relate to sales of Praedium DI, which through its subsidiaries operated in the residential real estate promotion business (Note 6).

30. VARIATION IN FAIR VALUE OF THE INVESTMENT PROPERTIES

The variation in fair value of the investment properties in 2003 and 2002 is made up as follows:

29. SALES AND SERVICES RENDERED

Sales and services rendered for the years ended 31 December 2003 and 2002 are made up as follows:

28. PROVISIONS AND IMPAIRMENT LOSSES ON ACCOUNTS RECEIVABLE

The movement in provisions and impairment losses on accounts receivable during the years ended 31 December 2003 and 2002 is madeup as follows:

Balance as of Changes in Translation Balance as ofCaptions 02.12.31 Increase Decrease perimeter differences 03.12.31

Impairment losses on accounts receivable:Customers (Note 12) 7,968,277 1,727,824 (85,981) (22,970) (44,160) 9,542,990Other debtors (Note 14) 424,297 194,103 (15,395) – – 603,005

8,392,574 1,921,927 (101,376) (22,970) (44,160) 10,145,995 Provisions for risks and costs:

Other risks and costs 952,863 588,444 (826,469) – – 714,838

9,345,437 2,510,371 (927,845) (22,970) (44,160) 10,860,833

Balance as of Changes in Translation Balance as ofCaptions 01.12.31 Increase Decrease perimeter differences 02.12.31

Impairment losses on accounts receivable:Customers 6,992,770 1,310,876 (676,450) 574,118 (233,037) 7,968,277Other debtors 119,570 31,732 (6,548) 279,543 – 424,297

7,112,340 1,342,608 (682,998) 853,661 (233,037) 8,392,574Provisions for risks and costs:

Other risks and costs 388,482 167,217 (22,024) 419,188 – 952,863

7,500,822 1,509,825 (705,022) 1,272,849 (233,037) 9,345,437

03.12.31 02.12.31

Sales – 5,516,596

Services rendered:Fixed rents 105,362,591 101,563,999Variable rents 8,095,819 10,167,281Mall income 3,080,582 3,826,897Common charges 56,131,782 53,171,741Management and administration fees 6,058,476Co-generation 2,744,060Parking lot income 5,590,101 9,229,582Others 29,799,241 32,629,359

216,862,652 210,588,859

216,862,652 216,105,455

03.12.31 02.12.31

Transfers from “in progress” (Note 7) 30,564,518 78,864,107Variation in fair value between years (Note 7):

– Gains 68,008,605 95,063,639– Losses (7,540,000) (1,125,000)

Adjustment of the estimated construction cost at the date of the transfer to investment properties in operation – 3,756,068

91,033,123 176,558,814


31. OTHER OPERATING REVENUE

Other operating revenue for the years ended 31 December 2003 and 2002 is made up as follows:

32. OTHER OPERATING EXPENSES

Other operating expenses for the years ended 31 December 2003 and 2002 are made up as follows:

03.12.31 02.12.31

Key income 12,558,878 5,993,778Gains obtained on the sale of companies (Notes 6): – –

Sierra BV 92,798,282 –Ascendente 21,121,408 –SPEL 2,359,387 –Praedium DI – 3,048,795Other 545,484 –

Gains obtained on the sale of properties (Notes 7 and 8) – 372,988Gains obtained on the sale of other assets – 2,531,595Other 10,862,953 9,175,493

140,246,392 21,122,649

03.12.31 02.12.31

Real estate tax 4,418,388 3,129,282Amortisation and impairment losses of goodwill (Note 9) 3,960,850 10,456,811Indemnities paid to tenants 1,939,094 1,071,917Foreign currency exchange losses 1,360,706 –Impairment losses (Note 7) 2,969,609 –Impairment losses on “fit-out” contracts (Note 10) 4,968,297 –Other 6,875,931 5,920,014

26,492,875 20,578,024

03.12.31 02.12.31

Expenses:Interest expense 43,275,111 34,269,769Transfers from equity relating to hedging financial instruments (Note 19) 1,828,946 –Losses in associated companies 135,164 –Foreign currency exchange losses 907,843 7,798,134Other 1,336,810 3,070,642

47,483,874 45,138,545Net financial expenses (31,499,347) (29,887,846)

15,984,527 15,250,699

Income:Interest income 12,721,619 11,767,947Interest income on the sale of 49.9% of the share capital Sierra BV (Note 6) 2,251,753 –Gains on investments in associated companies – 4,385Dividends received – 2,408,981Foreign currency exchange gains 137,083 84,088Other 874,072 985,298

15,984,527 15,250,699

33. NET FINANCIAL RESULTS

Net financial results are made up as follows:

34. RELATED PARTIES

The Group just identified as related parties its shareholders.

The transactions with these entities relates only to loansgranted or obtained and distribution of dividends.

35. COMPROMISES NOT REFLECTED IN THE BALANCE SHEET

Following the sale of 49.9% of the share capital of SierraHoldings BV to a group of Investors, Sonae Imobiliária hasagreed to revise the sale price of such shares if certainof the shopping malls are sold by any of the participatedcompanies of Sierra Holdings BV. The price revision can occurwhether with a sale of the asset (investment property in thecase) or with a sale of the shares of the company that isdirectly or indirectly the owner of such asset. The price revisionshall occur if the sale will be lower than the Market Value orNet Asset Value of the shares of the company that owns theasset (“price difference”).

In that case, the price revision will correspond to the maximumpotential income tax on the profit that would arise if, instead ofthe sale of the shares of company that owns the asset to SierraHoldings BV, the sale of the asset had occurred.

The price revision shall be computed considering the Investors’ownership percentage of the asset and is limited to:

(i) in the case of the asset sale, to a maximum amountof 119,341 thousands Euro;

(ii) in the case of a sale of shares of the company thatdirectly or indirectly owns the asset, to a maximumamount of 59,670 thousand Euro. The price revisionwill only take place if the price difference will cannot be attributed to other reason than deferredincome taxes;

(iii) in either cases, the price revision cannot result in a newprice that is greater than the Market value or the Net AssetValue, as applicable, of the transfer of the asset or of theshares respectively.

Furthermore, Sonae Imobiliária has the right to make a proposalfor the acquisition of the asset or the shares in stake before thesame are offered for purchase to a third party.

The Group believes that the direct sale of the asset is not anattractive solution for this kind of operations as it is subjectto certain encumbrances that are inexistent in the sale of theshares of the company that owns the asset.

36. SEGMENT INFORMATION

In 2003 and 2002 the following business segments wereidentified:

– Investment in Shopping Centres;– Management of Shopping Centres;

The remaining Group activities and administrative services areclassified as unallocated.

In 2003 and 2002 the following geographical segmentswere identified:

– Europe– Brazil

The intra-segment transactions in 2003 and 2002 wereeliminated in the consolidation process.

The significant information relating to the business andgeographical segments at 31 December 2003 and 2002is presented in an appendix.

37. NOTE ADDED FOR TRANSLATION

The accompanying financial statements are a translationof financial statements originally issued in Portuguese inaccordance with generally accepted accounting principlesin Portugal, some of which may not conform with or berequired by generally accepted accounting principlesin other countries. In the event of discrepancies thePortuguese language version prevails.


Investment in Management of Residentialshopping centres shopping centres real estate Unallocated Total

03.12.31 02.12.31 03.12.31 02.12.31 03.12.31 02.12.31 03.12.31 02.12.31 03.12.31 02.12.31

Revenue:

Sales – – 5,516,596 – – – 5,516,596

Services rendered 130,536,914 128,304,693 82,447,402 75,365,303 – 406,413 3,878,336 6,512,450 216,862,652 210,588,859

Variation in fair valueof the investmentproperties 91,033,123 176,558,814 – – – – – – 91,033,123 176,558,814

Other operating income 18,245,727 13,752,226 3,292,707 3,344,162 – 39,608 118,707,958 3,986,653 140,246,392 21,122,649

18,245,727 318,615,733 85,740,109 78,709,465 – 5,962,617 122,586,294 10,499,103 448,142,167 413,786,918

Inter-segment revenue – – – – – – – – – –

Total revenue 239,815,764 318,615,733 85,740,109 78,709,465 – 5,962,617 122,586,294 10,499,103 448,142,167 413,786,918

Operating resultof the segment 196,109,843 271,097,228 2,414,362 (1,052,918) – (42,633) 89,710,514 (10,145,926) 288,234,719 259,855,751

Unallocated expenses (30,553,492) (22,501,822)

Net interest expense (945,855) (7,386,024)

Other financial results (7,658,852) (80,501,458)

Minority interests (40,408,993) (5,074,085)

Net consolidatedprofit for the year 208,667,527 144,392,362

Segment assets:

Investmentproperties 1,582,305,537 1,498,889,202 – – – – 221,157,549 151,962,163 1,803,463,086 1,650,851,365

Other assets 225,983,049 137,969,455 25,706,797 27,693,066 – – 205,073,903 126,318,669 456,763,749 291,981,190

Investment inassociated companies 48,098 1,271,569 47,500 37,499 – – 2,941,658 298,550 3,037,256 1,607,618 8

Unallocated assets – – – – – – – – – –

1,808,336,684 1,638,130,226 25,754,297 27,730,565 – – 429,173,110 278,579,382 2,263,264,091 1,944,440,173

Segment liabilities:

Segment liabilities 1,124,392,245 1,035,499,601 27,734,054 29,289,223 – – 169,287,602 155,645,426 1,321,413,901 1,220,434,250

Unallocated liabilities – – – – – – – – – –

1,124,392,245 1,035,499,601 27,734,054 29,289,223 – – 169,287,602 155,645,426 1,321,413,901 1,220,434,250

Cash flows:

Cash flows fromoperating activities 92,508,382 82,045,631 5,116 (5,553,344) – 733,106 (16,458,209) (4,365,111) 76,055,289 72,860,282

Cash flows frominvesting activities 113,913,977 (146,375,616) (217,937) (9,000,026) – (12,926,565) (71,121,597) (35,431,254) 42,574,443 (203,733,461)

Cash flows fromfinancing activities 121,954,095 105,930,517 10,725 (340,441) – 5,796,731 (144,246,594) (36,494,280) (22,281,774) 74,892,527

328,376,454 41,600,532 (202,096) (14,893,811) – (6,396,728) (231,826,400) (76,290,645) 96,347,958 (55,980,652)


Information by Business Segments(Amounts stated in Euro)

Europe Brazil Total

03.12.31 02.12.31 03.12.31 02.12.31 03.12.31 02.12.31

Segment revenue 422,047,532 349,442,572 26,094,635 64,344,346 448,142,167 413,786,918

Segment assets 2,118,787,105 1,836,105,684 144,476,986 108,334,489 2,263,264,091 1,944,440,173


Information by Geographical Segments(Amounts stated in Euro)


Sonae Imobiliária, SGPS, SA and subsidiariesConsolidated statements of cash flows for the years ended31 December 2003 and 2002 (Amounts stated in Euro)

2003 2002

Operating activities:Received from customers 213,996,074 194,236,441

Paid to suppliers (103,925,262) (94,399,668)

Paid to personnel (26,317,836) (22,920,108)

Flows from operations 83,752,976 76,916,665

(Payments)/receipts of income tax (15,407,332) (10,093,738)

Other (payments)/receipts relating to operating activities 7,709,645 6,037,354

Flows from operating activities [1] 76,055,289 72,860,281

Investing activities:

Receipts relating to:

Investments 289,088,870 12,985,062

Tangible fixed assets 3,471,958 16,458,096

Interest income 16,662,908 10,488,480

Dividends – 746,976

Other – 309,223,736 584,107 41,262,721

Payments relating to:

Investments (12,098,460) (140,515,045)

Tangible fixed assets (151,576,397) (96,917,649)

Intangible fixed assets – (9,719,263)

Loans granted (102,623,488) 2,155,775

Other (350,948) (266,649,293) – (244,996,182)

Flows from investing activities [2] 42,574,443 (203,733,461)

Financing activities:

Receipts relating to:

Loans obtained 175,782,172 121,230,570

Capital increase and share premiums 3,118,792 –

Sale of treasury stock – –

Other – 178,900,964 35,351 121,265,921

Payments relating to:

Interest expenses (40,276,288) (35,730,968)

Dividends (10,500,000) (9,750,000)

Decrease of share capital - nominal value (24,880,140) –

Decrease of share capital - discounts and premiums (125,148,600) –

Other (377,710) (201,182,738) (892,426) (46,373,394)

Flow from financing activities [3] (22,281,774) 74,892,527

Variation in cash and cash equivalents [4]=[1]+[2]+[3] 96,347,958 (55,980,653)

Effect of exchange differences 329,762 (3,633,670)

Effects of changes in the perimeter:

Change in the consolidation method (460,968) 2,322

Acquisition/sale of companies (685,515) (1,146,483) 5,937,895 5,940,217

Cash and cash equivalents at the beginning of the year 89,730,862 143,404,968

Cash and cash equivalents at the end of the year 185,262,099 89,730,862

The accompanying notes form an integral part of these consolidated statements of cash flows.


Sonae Imobiliária

2003

Statutory auditors’ reportand audit report


INTRODUCTION

1. 1. In compliance with the applicable legislation we herebypresent our Statutory Auditors’ Report and Audit Report on theconsolidated financial information contained in the consolidatedManagement Report and consolidated financial statementsfor the year ended 31 December 2003 of Sonae Imobiliária,S.G.P.S., S.A. (“the Company”), which comprise the consolidatedBalance Sheet as of 31 December 2003, that reflects totalof 2,263,264,091 Euros and shareholders’ equity of747,220,229 Euros, including a net profit of 208,667,527 Euros,the consolidated Statement of Profit and Loss by nature, theconsolidated Statement of Cash Flows and the consolidatedStatement of Changes in Equity for the year then ended andthe corresponding Notes.

RESPONSIBILITIES

2. 2. The Company’s Board of Directors is responsible for: (i) thepreparation of consolidated financial statements that presenta true and fair view of the financial position of the companiesincluded in the consolidation, the consolidated result of theiroperations and their consolidated cash flows; (ii) the preparationof historical financial information in accordance with generallyaccepted accounting principles and that is complete, true, up-to-date, objective and licit, as required by the Securities MarketCode; (iii) adopting adequate accounting policies and criteriaand the maintenance of appropriate internal control systems;(iv) informing any significant facts that have influenced theoperations, financial position or results of operations of thecompanies included in the consolidation.

3. 3. Our responsibility is to examine the financial informationcontained in the documents of account referred to above,including the verification that, in all material respects, theinformation is complete, true, up-to-date, objective and licit,as required by the Securities Market Code, and issuing aprofessional and independent report based on our work.

SCOPE

4. Our examination was performed in accordance with the TechnicalStandards issued by the Portuguese Institute of StatutoryAuditors, which require that the examination be planned andperformed with the objective of obtaining reasonable assurance

about whether the consolidated financial statements are free ofmaterial misstatement. Such an examination includes verifying,on a test basis, evidence supporting the amounts anddisclosures in the financial statements and assessing theestimates, based on judgements and criteria defined by theCompany’s Board of Directors, used in their preparation. Suchan examination also includes: verification of the consolidationprocedures used and application of the equity method, as well asverifying that the financial statements of the companies includedin the consolidation have been appropriately examined;assessing the adequacy of the accounting principles usedand their uniform application and disclosure, taking intoconsideration the circumstances; the applicability of the goingconcern concept; the adequacy of the overall presentation of theconsolidated financial statements; and assessment that, in allmaterial respects, the financial information is complete, true,up-to-date, objective and licit. Our examination also includedverifying that the information included in the consolidatedManagement Report is consistent with the other consolidateddocuments of account. We believe that our examination providesa reasonable basis for expressing our opinion.

OPINION

5. In our opinion, the consolidated financial statements referredto in paragraph 1 above, present fairly, in all material respects,the consolidated financial position of Sonae Imobiliária, S.G.P.S.,S.A. as of 31 December 2003 and the consolidated resultsof their operations and their consolidated cash flows for theyear then ended, in conformity with the International FinancialReporting Standards, issued by the International AccountingStandards Board, in force as of 31 December 2003 and theinformation contained therein is, in terms of the definitionsincluded in the technical standards and review recommendationsreferred to in paragraph 4 above, complete, true, up-to-date,objective and licit.

Oporto, 12 March 2004

Magalhãs, Neves & Associados, SROC S.A.Represented by Jorge Manuel Araújo de Beja Neves

Sonae Imobiliária

2003

Report and opinion of thestatutory board ofauditors consolidatedaccounts


TO THE SHAREHOLDERS OF

SONAE IMOBILIÁRIA, S.G.P.S., S.A .

In compliance with the applicable legislation and our mandatewe hereby submit our Report and Opinion which covers ourwork and the documents of presentation of the consolidatedannual accounts of Sonae Imobiliária, S.G.P.S., S.A. (“SonaeImobiliária”) and Subsidiaries (“Group”) for the year ended31 December 2003, which are the responsibility of the SonaeImobiliária’s Board of Directors.

We accompanied the operations of Sonae Imobiliária and thatof its principal participated companies, the writing up of theiraccounting records and their compliance with statutory andlegal requirements, having obtained, from the Board of Directorsand personnel of Sonae Imobiliária and from the StatutoryBodies and personnel of its principal participated companies,all the information and explanations required.

In performing our work, we examined the consolidated balancesheet as of 31 December 2003, the consolidated statement ofprofit and loss by nature, the consolidated statement of cashflows and the statement of changes in equity for the year thenended and the related notes, which were prepared based onthe accounting records of the companies included in theconsolidation, maintained in accordance with generally acceptedaccounting principles in Portugal, adjusted, in the consolidationprocess, to the International Financial Reporting Standards(“IFRS”) issued by the International Accounting Standards Board(“IASB”) in force as of 31 December 2003. We also analysedthe consolidated Directors’ Report prepared by the Board ofDirectors. In addition, we analysed the consolidated StatutoryAuditors’ Report and Audit Report, prepared by the StatutoryAuditor, president of this Board, with which we agree.

Considering the above, in our opinion, and although the matterdescribed in paragraph 6 of the statutory Auditors’ Report andAudit Report, the consolidated financial statements referredto above and the consolidated Directors’ Report, as well theproposal therein, are in accordance with accounting, legaland statutory requirements and so can be approved by theShareholders’ General Meeting.

We wish to thank the Board of Directors of Sonae Imobiliáriaand the personnel of the companies of the Group for theassistance provided to us.

Oporto, 12 March 2004

Magalhãs, Neves & Associados, SROC S.A.Represented by Jorge Manuel Araújo de Beja NevesPresident

Teresa Alexandra Martins TavaresMember

Benoit François Pierre Prat-StanfordMember

Sonae Imobiliária

2003

Real Estate AssetsValuation


In accordance with your instructions, we have pleasure in reportingto you as follows:

1. SCOPE OF INSTRUCTIONS

1.1 We have considered those properties as set out inAppendix 1 which we understand are held by the Companyor its subsidiaries.

1.2 We are instructed to prepare this valuation for a managementreview of the Company’s property values at the end of 2003.It should be noted that Cushman & Wakefield Healey & Bakerhave in the past undertaken valuations of properties. Thisvaluation has been prepared on the basis of informationrelating to the properties received from the Company.

1.3 The valuation of all the properties has been prepared inaccordance with the Practice Statements contained in theRICS Appraisal and Valuation Manual published by The RoyalInstitution of Chartered Surveyors (“The Red Book”), subjectto our comments in Section 3.0 below. The valuations of theproperties in Brazil (property nºs 23 - 28 and 46 - 48) alsocomply with the Code of Practice of the ABNT (BrazilianAssociation for Technical Standards) code number-NBR-5676/90.The valuation has been prepared by Valuers who conform to therequirements as set out in the RICS Appraisal and ValuationManual, acting in the capacity of external valuers.

2. BASIS OF VALUATION

2.1 As instructed and in accordance with the requirements of theRICS Appraisal and Valuation Manual, the valuation has beenprepared on the basis of Market Value as defined in the RICSAppraisal and Valuation Manual as:

MARKET VALUE

“The estimated amount for which an asset should exchange onthe date of valuation between a willing buyer and a willing sellerin an arm’s-length transaction after proper marketing wherein theparties had each acted knowledgeably, prudently and withoutcompulsion.”

2.2 With respect to those properties in the Course of Developmentas set out in Appendix 1, it should be noted that the valuationhas been prepared on the basis of the Market Value of the landand buildings in their existing state at the date of valuation.In assessing the Market Value of the properties in the Courseof Development we have therefore assumed that the existingcontractual arrangements of the ongoing construction continueuninterrupted and would be assignable to a third party. Thevaluation of such properties has been prepared on the basis ofthe details of the cost of works incurred to the date of valuationand the estimated costs to complete as supplied by theCompany, as well as having regard to any contracted lettings orsales and the current project timetable. In addition, allowancehas been made for financing outstanding development costsuntil completion of the project and for an assumed profit giventhe risk to be taken by a purchaser of the development in itsexisting state.

2.3 The values reported relate to the entire property in each instanceand no adjustment is made to reflect a shared ownership. Itshould be noted that in a number of cases, the Company doesnot own 100% of the property and it is possible that a part stakein any of the properties may not realise a value which is strictlypro-rata to the value of the entire property.

3. SPECIAL ASSUMPTIONS

3.1 In the preparation of this valuation the Company has specificallyinstructed Cushman & Wakefield Healey & Baker to make anumber of Special Assumptions. Contrary to the requirementsof the Red Book, the Company has instructed us not to preparean additional valuation of the properties on the basis of MarketValue without the Special Assumptions described below. TheSpecial Assumptions are as follows:

3.2 Concerning Torre Ociente and Torres Oriente (Property nºs 42& 43), we are aware that the Company awaits the re-issueof the Construction Licence, which is legally required beforeconstruction may commence. We understand that the LocalAuthority has so far withheld consent. We have made the SpecialAssumption that the Construction Licence is forthcoming on areasonable timescale and without any financial penalty.

The Directors,Sonae Imobiliária S.G.P.S. S.A.Lugar do Espido,Via Norte,4471 Maia Codex,Portugal

Lisbon, 27th February 2004

Dear Sirs,

Property valuation as at 31st December 2003

Sonae Imobiliária S.G.P.S. S.A. (“the company”)

3.3 Concerning Aegean Park (Property n° 45), we understand thatthere remains an outstanding purchase payment of u4,600,000.It should be noted that our valuation does not take account ofthis outstanding payment. Furthermore, we have assumed thatplanning permission for construction of a shopping centre isforthcoming.

3.4 It should be noted that the valuation prepared subject to thisSpecial Assumptions may differ materially from the Market Valueand as such it is imperative that the values expressed within thisvaluation certificate, when published or disclosed to any thirdparty, are supported by the full explanatory notes setting out allthe assumptions utilised. Such publication or disclosure will notbe permitted unless, where relevant, it incorporates the SpecialAssumptions referred to herein.

4. TENURE AND TENANCIES

4.1 We have not had access to the Title Deeds of the properties andour valuation has been based on various reports on title andinformation which the Company’s Portuguese legal advisers,Carlos Osório de Castro, Eduardo Verde Pinho e J.J. Vieira Peres -Sociedade de Advogados, have supplied to us as to tenure andstatutory notices. It should be noted, however, that we havereceived reports on title only in relation to selected properties.Where we have not been supplied with such reports we haverelied upon information supplied by the Company. For thoseproperties previously valued by us no additional legal informationhas been supplied by the legal adviser for the purposes of thisrevaluation as at 31st December 2003. For those properties notpreviously valued we have been instructed to rely on such newinformation as has been supplied by the Company.

4.2 With respect to properties currently let, we have had access tosample utilisation contracts and have reviewed those utilisationcontracts pertaining to the anchor tenants.

4.3 Unless disclosed to us to the contrary and recorded within thisValuation Certificate, our valuation is on the basis that:

a) each property possesses a good and marketable title, freefrom any unusually onerous restrictions, covenants or otherencumbrances;

b) in respect of leasehold properties where we have not reviewedthe lease there are no unreasonable or unusual clauses whichwould affect value and no unusual restrictions or conditionsgoverning the assignment or disposal of the interest;

c) in respect of utilisation contracts and leases subject toimpending or outstanding rent reviews and renewals, we haveassumed that all notices have been served validly and withinthe appropriate time limits; and

d) vacant possession can be given of all accommodation whichis unlet, or occupied either by the Company or by itsemployees on service occupancies.

4.4 It should be noted that the utilisation contracts for the shoppingcentres do not provide for the full recovery of all repairing andinsuring costs incurred in the operation of the property from the

tenants. Accordingly due provision has been made within ourvaluation for such non-recoverable costs.

4.5 It should be noted that the properties that are held asinvestments in Brazil (Property nºs 26 - 31) are leased on avariety of lease terms to multiple tenants. In particular the leaseterms vary in relation to the non-recoverable out-goings andwe have therefore estimated the operational costs of eachproperty based on the information provided in relation to theirtrack record.

4.6 The interest held in properties held as investments in Brazil(Property nºs 26 - 31) is in the form of shares in a “ProindivisoCondominio”. This form of condominium is the standard form ofownership of shopping centres in Brazil and signifies that thecondominium owners jointly own the freehold of the wholeproperty. The interests in the ownership may be traded, but theproperty itself remains indivisible, no shareholder having anyindividual claim on any part.

5. TOWN PLANNING

5.1 We have not made formal searches, but have generally relied oninformation supplied by the Company together with any verbalenquiries and any informal information received from the LocalPlanning Authority.

5.2 In the absence of information to the contrary our valuation is onthe basis that the properties are not affected by any proposalsfor road widening or compulsory purchase.

5.3 Our valuation is on the basis that each property has been erectedeither prior to planning control or in accordance with a validplanning permission and is being occupied and utilised withoutany breach of the same.

5.4 With respect to those properties in the Course of Development,our valuation is on the basis that each property is beingconstructed in accordance with both a valid planning permissionand a valid building permission for construction.

5.5 With respect to the properties Held for Development, ourvaluation is on the basis that each property will be constructedin accordance with both a valid planning permission and a validbuilding permission for construction.

6. STRUCTURE

6.1 We have neither carried out a structural survey of any property,nor tested any services or other plant or machinery. We aretherefore unable to give any opinion on the condition of thestructure and services. However, our valuation takes into accountany information supplied to us and any defects noted during ourinspection. Otherwise, our valuation is on the basis that there areno latent defects, wants of repair or other matters which wouldmaterially affect our valuation.

6.2 We have not inspected those parts of any property which arecovered, unexposed or inaccessible and our valuation is on thebasis that they are in good repair and condition.


6.3 We have not investigated the presence or absence of HighAlumina Cement, Calcium Chloride, Asbestos and otherdeleterious materials. In the absence of information to thecontrary, our valuation is on the basis that no hazardousor suspect materials and techniques have been used in theconstruction of any property. You may wish to arrange forinvestigations to be carried out to verify this.

6.4 For those properties in the Course of Development or Held forDevelopment we have assumed that all buildings will beconstructed with good workmanship, using good materials andthat, upon completion, a structural survey would not reveal anydefects to any part of the property. Our valuation is made on theassumption that the buildings will be constructed using materialswhich will meet the current requirements of occupiers andinvestors in the marketplace. This comment is made from acommercial perspective rather than a technical one and thereforedoes not take into account the adequacy of engineering andstructural design matters.

7. SITE AND CONTAMINATION

7.1 We have not investigated ground conditions/stability andour valuation is on the basis that all buildings have beenconstructed having appropriate regard to existing groundconditions. In respect of the properties with developmentpotential, our valuation is on the basis that there are no adverseground conditions which would affect building costs and whereyou have supplied us with a building cost estimate, we haverelied on it being based on full information regarding existingground conditions.

7.2 We have not carried out any investigations or tests, nor beensupplied with any information from you or from any relevantexpert that determines the presence or otherwise of pollutionor contaminative substances in any property or any other land(including any ground water). Accordingly, our valuation hasbeen prepared on the basis that there are no such mattersthat would materially affect our valuation. Should this basisbe unacceptable to you or should you wish to verify that thisbasis is correct, you should have appropriate investigationsmade and refer the results to us so that we can review ourvaluation.

8. PLANT AND MACHINERY

8.1 In respect of the freehold properties, usual landlord’s fixturessuch as lifts, escalators and air conditioning have been treatedas an integral part of the building and are included within theasset valued. In the case of the leasehold properties, unlessadvised to the contrary, these items have been treated asbelonging to the landlord upon reversion of the lease.

8.2 With respect to the following properties: Centro Colombo(Property nº4), MaiaShopping (Property nº15) and NorteShopping(Property nº16) we have assessed and included within the valuereported income producing co-generation plant.

8.3 Process related plant/machinery and tenants’ fixtures/tradefittings have been excluded from our valuation.

9. INSPECTIONS

9.1 We have inspected the properties internally and externally fromground level during the months of June and July 2003.

9.2 As agreed, in analysing the prevailing rental levels and inassessing our views on the Open Market Value for the completedshopping centres, we have substantially relied upon the floorareas supplied to us by the Company. However, we have takencheck measurements of a representative sample of lettable unitsand those figures compare with those supplied to us to a rangeof approximately +/- 3%. The presumption is therefore that it isreasonable to assume that the remaining figures supplied to usby the Company are equally accurate but we are unable towarrant to this effect.

In accordance with local practice the floor areas are calculatedon the basis of the lettable retail area of the unit, including allexternal walls and to the centre line of any party walls. Toiletsused exclusively by an occupier are also included. We wouldspecifically highlight that this is not in accordance with theCode of Measuring Practice prepared by The Royal Institution ofChartered Surveyors but that it does follow established marketpractice in the respective countries. Both the areas and anyreference to the age of buildings in this valuation areapproximate.

9.3 With respect to the properties in the Course of Developmentwe have assumed the existing project areas as supplied bythe Company and originating from the appropriate planningpermissions and current development plans. With respect tothose properties Held for Development we have assumed thesite areas supplied by the Company.

10. GENERAL PRINCIPLES

10.1 Our valuation is based on the information which either theCompany has supplied to us or which we have obtained from ourenquiries. We have relied on this being correct and complete andon there being no undisclosed matters which would affect ourvaluation.

10.2 In respect of tenants’ covenants, whilst we have taken intoaccount information of which we are aware, we have not receiveda formal report on the financial status of the tenants. We havehad regard to any information supplied by the Company’sproperty management division regarding the current status ofthe relevant income for each property. Our valuation is on thebasis that this is correct. You may wish to obtain furtherinformation to verify this.

10.3 Our valuation has been prepared on the basis of the localcurrency relevant to the country in which the properties aresituated, namely the Euro (u) and Brazilian Real (R$).

10.4 We have converted the values of the properties in Brazil to Euros,using the exchange rate provided by the Banco de Portugal as at31st December 2003 of (R$1 = u0,27288). All values that havebeen converted are rounded to the nearest whole digit. We havemade no allowance for any benefits or burdens that may flowfrom exchange rate fluctuations.

1 1. VALUATION

11.1 Subject to the foregoing, and based on values current as at31st December 2003 we are of the opinion that the Market Valueof the freehold and leasehold interests in the properties as setout in Appendix 1 is the total sum of u3,214,962,503 (Threethousand, two hundred and fourteen million, nine hundred andsixty-two thousand, five hundred and three euros).

11.2 We set out the value ascribed to each property in Euros inAppendix 1, and the individual property schedules in Appendix 2.It should be noted that our total valuation comprises theaggregate of the Market Value attributable to each individualproperty. We have not valued the portfolio as a whole in thecontext of a sale as a single lot.

The contents of this Valuation Certificate are intended to beconfidential to the addressees. Consequently, and in accordancewith current practice, no responsibility is accepted to any otherparty in respect of the whole or any part of its contents. Wenote that this report will be reproduced in its entirety in theCompany’s annual report and we hereby give our permissionfor this. Such permission is not intended to extend our liability.

Yours faithfully,

CUSHMAN & WAKEFIELD HEALEY & BAKER

10.5 No allowances have been made for any expenses of realisationor any taxation liability arising from a sale or development ofany property.

10.6 No account has been taken of any leases granted betweensubsidiaries of the Company, and no allowance has been madefor the existence of a mortgage, or similar financial encumbranceon or over any property.

10.7 Our valuation is exclusive of IVA (VAT) or any other taxes ofa similar nature.

10.8 A purchaser of the properties is likely to obtain further adviceor verification relating to certain matters referred to abovebefore proceeding with a purchase. You should therefore notethe conditions on which this valuation has been prepared.The valuation of the properties has been undertaken byMr. Eric van Leuven FRICS and Mr. Martin Trodden MRICS ofCushman & Wakefield Healey & Baker along with respectivelocal valuers within the Cushman & Wakefield network whereappropriate.

10.9 Where grants have been received, no allowance has been madein our valuation for any requirement to repay the grant in theevent of a sale of any property.

10.10 Our valuation does not make allowance either for the cost oftransferring sale proceeds outside of the respective countryor for any restrictions on doing so.

10.11 Our valuation is subject to a number of Special Assumptions,referred in Paragraph 3 herein.


Sonae Imobiliária, SGPS, SAValuation as at 31 December 2003Appendix 1

Net initial 10 year 10 year Freehold (OMV)A PROPERTIES HELD AS INVESTMENTS yield discount rate* cap rate (u)

(i) Portugal

1. AlgarveShopping 7.48% 10.25% 7.75% 86,319,000

Fit out Reimbursement 1,199,000

2. Arrábida Shopping 7.24% 10.00% 7.50% 126,472,000

3. CascaiShopping 7.00% 9.75% 7.00% 256,910,000

4. Centro Colombo 6.88% 9.50% 6.75% 567,746,000

Torre Oriente (existing) 6,572,000

Torre Ocidente (existing) 6,167,000

5. Centro Vasco da Gama 6.60% 9.50% 6.75% 208,121,000

6. ClérigoShopping (1) N/a N/a N/a 581,000

7. Coimbra Retail Park 6.02% 11.00% 8.00% 15,781,000

8. CoimbraShopping 8.44% 10.50% 8.00% 32,949,000

9. Estação Viana 7.11% 10.50% 8.00% 58,884,000


10. GaiaShopping 7.30% 10.00% 7.50% 126,242,000

Fit out Reimbursement 746,000

11. Gare do Oriente(1) N/a N/a N/a 971,000

12. GuimarãeShopping 7.81% 10.25% 7.85% 36,031,000

13. Grandella(1) N/a N/a N/a 4,566,000

14. MadeiraShopping 7.73% 10.75% 8.15% 69,317,000

15. MaiaShopping 7.87% 10.50% 7.85% 52,137,000

16. NorteShopping 6.66% 9.50% 6.75% 295,552,000

17. Parque Atlântico 7.54% 10.75% 8.50% 49,768,000

Fit out Reimbursement 942,000

18. Sintra Retail Park N/a N/a N/a 29,700,000

19. ViaCatarina Shopping 7.79% 10.25% 7.75% 68,190,000

(ii) Spain

20. Parque Principado 6.90% 9.75% 6.75% 128,000,000

21. Plaza Mayor, Málaga 6.95% 10.95% 7.50% 74,878,000


22. CC La Farga, Hospitalet, Barcelona(2) 7.51% 11.00% 8.00% 45,500,000

23. CC Kareaga Max Centre & Ocio, Bilbao 6.90% 9.75% 6.85% 129,500,000

24. CC Valle Real, Santander 7.09% 9.75% 6.85% 68,600,000

25. CC Grancasa, Zaragoza 6.66% 9.50% 6.50% 131,500,000

(iii) Brazil

26. Parque D. Pedro 13.50% 11.00% 105,789,845

27. Pátio Brasil 13.00% 11.00% 36,307.230

28. Franca Shopping 15.00% 13.00% 4,700,630

29. Metrópole Shopping 13.00% 11.00% 25,933,424

30. Penha Shopping 16.00% 13.00% 11,683,084

31. Tivoli Shopping 14.00% 12.00% 10,954,222

FreeholdB Properties in the course of development (u)

(i) Portugal

32. LoureShopping 11,241,000

(ii) Spain

33. Avenida M40, Leganes 71,167,000

34. Dos Mares 23,790,000

35. Luz del Tajo 31,278,000

36. Plaza Eboli 16,078,000

37. Zubiarte 61,892,000

38. Málaga Shopping 6,504,000

(iii) Greece

1. Pylea 11,934,000

(iv) Brazil

1. Boavista 13,340,285

FreeholdC Properties held for development (u)

(i) Portugal

41. Arrábida Shopping – expansion 411,000

42. Parque Famalicão 4,175,000

43. Torre Oriente (future development rights) 4,245,000

44. Torre Ocidente (future development rights) 4,245,000

(ii) Germany

45. Alexander Platz 9,755,000

(iii) Greece

46. Aegean Park 36,297,000

(iv) Italy

47. Brescia 5,639,000

(v) Brazil

48. Parque D. Pedro – expansion 17,537,998

49. Penha Shopping – expansion 5,137,785

* Compounded Monthly

1 Held Leasehold

2 Held by Surface Right Agreement


A (I): PROPERTIES HELD AS INVESTMENTS – PORTUGALNet operating

income (Year 1)(excluding key

money and contractTerms of renewal fee Market value

Ref Property Description Tenure existing tenancies (u) (u)

Sonae Imobiliária, SGPS, SAProperty valuation as at 31 December 2003Appendix 2

1. AlgarveShoppingGuiaAlgarve,Portugal

Two-storey shopping centre with open malls,features a total GLA of 42,350m2. A hypermarketunit of 15,490m2 has been sold to owner-occupierContinente. (NB. The aforementioned unit isexcluded from this valuation.) The cinema(2,720m2) is operated by Socorama-Castello Lopesand the centre has also 9,590m2 of anchor units,including Worten (1,605m2), Sportzone (715m2),Zara (2,025m2), amongst others. In addition, thereare 93 unit shops providing 10,690m2 GLA and 30restaurant and catering units providing 3,860m2

GLA. There is an additional 964m2 of storage area.

AlgarveShopping opened in April 2001.

Freehold

The property isowned byAlgarveShopping

(100% held by theSIERRA Fund –50.1% held bySonae Imobiliária).

Anchor units let onutilisation contractsof 10 to 15 years from2001. Cinemas let on 15-year utilisation contractfrom 2001.

Unit shops let on 6-yearutilisation contractsexpiring 2007.

Fit out reimbursementpaid by cinemasuntil 2016.

86,319,000

Fit outreimbursement

1,199,000

6,457,311

2. Arrábida ShoppingVila Nova de Gaia,Portugal

A three-storey shopping centre with two basementcar parking levels, providing 56,370m2 GLA and3,456 car spaces. Within the centre, thehypermarket unit of 23,500m2 has been sold toowner-occupier Auchan and a restaurant unit of975m2 has been sold to owner-occupier Flunch.(NB. Both the aforementioned units are excludedfrom the valuation.) The remaining shoppingcentre totals 31,895m2 GLA, of which 7,500m2 isoccupied by an AMC cinema, and 24,395m2

consists of 170 retail and catering units, includingthe following anchors: Fabio Lucci (1,540m2 ),Giaco Sports (1,530m2 ), Tribo (700m2), Bershka(440m2), Stradivarius (350m2), MacModa (770m2)and Worten (1,190m2) amongst others. 270m2 ofstorage area is also let to occupiers.

Arrábida Shopping opened in October 1996.

Freehold

The property isowned by CapitalPlus.


Anchor units let onutilisation contracts ofvarying lengths expiringbetween 2004 and 2021.The cinema is held on autilisation contractexpiring 2021.

Unit shops let on 6-yearutilisation contractsexpiring generally 2008.

126,472,0009,160,813

3. CascaiShoppingAlcabidecheCascais,Portugal

CascaiShopping provides 72,230m2 GLA followingthe recent completion of Expansion Phase 2B with4,269 car parking spaces. The main building of thecentre trades over two levels with the Sportzoneanchor on the second upper level accessed byescalator from the first floor.

The ground floor is anchored by a 22,000m2

Continente hypermarket (excluded from thecurrent valuation) and the other following units,also owner occupied and excluded from thevaluation: C&A (3,730m2), Worten (2,000m2),Conforama (7,250m2), Toys R Us (3,160m2),McDonalds and two retail banks units.

The remaining 33,230m2 includes anchors FNAC(2,655m2), Zara (2,390m2) and a seven screenWarner Lusomundo cinema (2,915m2) amongstothers. Expansion Phase 2B has added a net6,800m2 which includes anchors Habitat(1,035m2) and H&M (1,538m2).

CascaiShopping opened in May 1991. The final stageof expansion was concluded in September 2003.

Freehold

The property isowned by SMEmpreendimentosImobiliários.


Anchor stores let onutilisation contractsexpiring May 2006.

Unit shops let on 6-yearutilisation contractsgenerally expiring May2009.

256,910,00017,972,558





4. Centro ColomboLisbon,Portugal

Centro Colombo is a three-storey shopping centrewith a total of 120,000m2 of GLA and 6,850 carparking spaces in three basement levels. A29,490m2 hypermarket unit is sold to Continenteand a 3,815m2 anchor unit to C&A. (NB. Theaforementioned units are excluded from ourvaluation.)

The remaining accommodation provides anchorunits for the following: AKI (2,640m2), Toys ‘R’ Us(3,295m2), Worten (2,830m2), Sport Zone(2,350m2), San Luis (1,830m2), Cortefiel(1,210m2), Zara (1,795m2 and 1,370m2), Fnac(3,755m2), Habitat (1,880m2), Vobis (915m2),Tribo (1,080m2), MacModa (1,225m2), amongstothers. There is also an Autocentre (980m2), ahealth club (2,480m2), 12,310m2 of commercialleisure and a 10-screen Warner-Lusomundo cinema(5,200m2). The unit shops number some 410 andtotal 35,885m2, which includes 60 restaurant andcatering units providing 7,360m2. In addition to theabove, Centro Colombo has a co-generation plantproducing electricity that is sold to thecondominium and to EDP. We understand there ispotential for a Golf Driving Range on the roof of thecentre, the project for which extends to 3,665m2.We are not aware of current plans to develop outthis project but it should be noted that this area isincluded in the total GLA of the centre shownabove. There is also 2,894m2 of storage area.

We include the bases of Torre Oriente and TorreOcidente, office towers to be constructed abovethe centre. The bases were constructed with theshopping centre and include ground and firstfloors, both with mezzanine levels. The groundfloor extends to 1,170m2 GLA and the first floorextends to 1,760m2 and 1,760m2 respectivelyincluding mezzanine. The ground floors are let toretail banks and the first floors are currently inshell condition and unlet. These office areas formintegral parts of the Colombo development but areshown separately here for presentation purposes.

Centro Colombo opened in September 1997.

Freehold

The property isowned byEmpreendimentosImobiliários Colombo

(50% held by theSIERRA Fund – 50.1%held by SonaeImobiliária).

Anchor stores let on 10 to20-year utilisationcontracts expiringbetween September 2006and September 2016.

Mall units let generally onsix year utilisationexpiring 2009.

Torre Oriente is let toBanco ComercialPortuguês on a leasecontract expiring in 2012.

There is 1,761m2 vacant at1st floor level.

Torre Ocidente is let to anumber of majorPortuguese banksgenerally expiring 2007 to2012.

There is 408m2 vacant atground level and 1,758m2

vacant at 1st floor.

ShoppingCentre

567,746,000

TorreOrienteOffices

6,572,000

TorreOcidente

Offices6,167,000

Total580,485,000

ShoppingCentre

39,207,252

TorreOrienteOffices

421,578

TorreOcidente

Offices344,951

Total33,973,781

5. Centro Vascoda GamaParque dasNações,Lisbon,Portugal

Shopping centre arranged over 4 levels, totalling47,625m2 GLA with 2,559 car parking spaces.Within the centre there is an 11,410m2

hypermarket area owned by Continente, a2,660m2 anchor unit owned by C&A and a4,410m2 anchor unit owned by Worten. (NB. Theaforementioned units are excluded from thevaluation of this property.) The cinemas(3,830m2) are operated by Warner-Lusomundo.Anchor units total 5,265m2 and include Sportzone(1,535m2), Zara (2,055m2), Vobis (710m2),amongst others. Furthermore, the centre provides124 mall units totalling 15,235m2, plus 34restaurant and catering units totalling 5,265m2.The centre provides an additional 1,305m2 ofstorage area.

Centro Vasco da Gama opened in April 1999.

Freehold

The property isowned by Vascoda Gama


Unit shops are let on 6or 10-year utilisationcontracts generallyexpiring in either 2005 or2009. Anchor stores are leton 6 to 15 year utilisationcontracts expiring between2005 and 2014. The WarnerLusomundo cinema andMcDonald’s restaurant arelet on 20-year utilisationagreements expiring in2019.

208,121,00013,744,726






6. ClérigoShoppingPorto,Portugal

Single storey open-air retail area of 1,425m2 GLAsituated above two storey public car park. Thecentre currently has a significant vacancy butis due to be remarketed in 2004.

ClérigoShopping originally opened in 1992.

Leasehold

Prediguarda (100%held by SonaeImobiliária) has thebenefit of a 20-yearconcession expiring2012.

Unit shops let on licenseagreements generallyexpiring in 2012.

581,00044,916

7. CoimbraRetail ParkEiras,Coimbra,Portugal

Coimbra Retail Park opened in the final quarterof 2003 and is located 5 km from Coimbra citycentre next to Modelo supermarket. The mainaccess is the IC2 national road. The Retail Park hasa total GLA of 12,760 m2, anchored by DIY retailerMestre Maco (3,000 m2), and San Luis, electricalretailer (1,375 m2). There are further 10 units andtwo catering units. There is a total of 560 carparking spaces.

Tenancies: Anchor let on 15-year utilisationcontracts expiring in 2018, units held on 10 yearutilisation contracts, catering units held on 6 yearutilisation contracts expiring 2009.

Freehold

The property isowned by Sóguia –Sociedade Imobiliária,S.A.

(50% held by SonaeImobiliária).

Tenancies: Anchor leton 15-year utilisationcontracts expiring in 2018,units held on 10 yearutilisation contracts,catering units held on 6year utilisation contractsexpiring 2009.

15,781,000949,712

8. CoimbraShoppingCoimbra,Portugal

Two-storey shopping centre totalling 26,485m2

GLA with 1,111 car parking spaces. Within thecentre, a 20,000m2 hypermarket has been soldto owner occupier Continente. (NB. Theaforementioned unit is excluded from thevaluation of this property.) The remainingshopping centre totals 6,485m2 of which 760m2

is occupied by a Macmoda anchor store and910m2 by a Worten anchor store. Besides thetwo anchors, there are 66 catering and retail unitsarranged around a two-storey mall, which accountfor 4,815m2 GLA. The centre also has an additional572m2 of storage space.

CoimbraShopping opened in September 1993.

Freehold

The property isowned by Omala.


Unit shops are let on 6year utilisation contractsgenerally expiring in either2005. Anchor stores are leton 6 year utilisationcontracts expiring 2005.

32,949,0002,779,394

9. Estação VianaShoppingViana do Castelo,Portugal

A new shopping centre which opened in the finalquarter of 2003 in Viana do Castelo. Estação Vianais well located in the city centre, taking advantageof pedestrian flow, next to the railway and busstation. The centre is arranged over three levelsabove ground with a total GLA of 18,515m2. Thescheme is anchored by a Modelo supermarket(2,055m2), Zara (1,460m2), Sportzone (725m2),Worten (855m2), Modalfa (400m2) and a 5 screenCastello Lopes cinema (1,430m2). One anchor unitof 1,180m2 remains vacant. The remaining10,410m2 provides 16 catering units (1,395m2),86 mall units (9,000m2) and one kiosk (15m2).

The centre has 600 paying car parking spaces.

Freehold

The property isowned byCenterStation –Imobiliária, S.A.


The cinema and Inditexgroup are let on a 15-yearutilisation contractsexpiring 2018. Other unitsare let on 6 year utilisationcontracts expiring 2009.The cinema, supermarketand Inditex Group tenantspay fit out reimbursementin addition to base rent.

58,884,000


1,964,000

4,151,472





10. GaiaShoppingVila Nova daGaia,Portugal

GaiaShopping totals 59,195 m2 GLA with 2,984 carparking spaces and consists of two phasesconstructed at different times. The first, originallyknown as Galeria Comercial de Gaia opened in1989 and includes 1,990 car parking spaces andtotals 32,890 m2 GLA.

An area of 18,450 m2 has been sold to hypermarketoperator Continente and an anchor unit of 2,040 m2

is owner occupied by Worten. A standalone unit of4,580 m2 has been sold to Toys ’R’ US. These unitsare excluded from the valuation. The remaining7,820 m2 consist of a further standalone unitoccupied by Autocenter (785 m2) a MaxMat DIYanchor (2,165 m2), Sportzone anchor (1,225 m2)and 3,645 m2 GLA divided between 41 mall unitsand 2 kiosks.

There is also an upper link mall that providesdirect access into the adjoining second phase.The second phase provides an additional twostorey shopping centre totalling 26,305 m2 GLAwith a further 994 basement and roof car parkingspaces. Within the centre, a two storey anchorunit of 3,380 m2 has been sold to owner occupierC&A. (NB: The aforementioned unit is excludedfrom the valuation of this property.) The remainingGLA totals 22,925 m2 and is occupied by Zara(1,985 m2), Cortefiel (930 m2), Macmoda (955 m2),Tribo (880 m2), Sephora (570 m2), Warner-Lusomundo nine screen cinema (3,290 m2) andFNAC (2,510 m2) and 11,805 m_ consists of 109retail and catering units. An additional 475 m2 ofstorage space is let to occupiers.

The second phase of GaiaShopping opened inOctober 1995, and refurbished in 2003. The FNACunit opened in the final quarter of 2003.

Freehold

The property isowned by twocompanies.The first phase isowned by LisediThe second phase isowned by Teleporto.

(Both 50% held bythe SIERRA Fund –50.1% held by SonaeImobiliária).

Anchor stores let on 5to 20-year utilisationcontracts expiringbetween October 2005and October 2015.

Unit shops let on 6-yearutilisation contractsgenerally expiringOctober 2007.

Fit out reimbursementis payable by FNAC.

126,242,000


746,000

9,9263,821

11. Gare do OrienteParque dasNações,Lisbon,Portugal

3,795 m2 GLA of convenience retail and restaurantfacilities within the Gare do Oriente railway stationadjoining the Centro Vasco da Gama shoppingcentre.

Gare do Oriente opened in 1998.

Leasehold

The Gare do Orienteretail and restaurantfacilities are held byParacentro (100%held by SonaeImobiliária), on alease from G.I.L.at a rent of 50% ofthe rents received upto u78,241 and 85%of rents receivableover u78,241 witha minimum rentpayable ofu680,202.84per annum.

Unit shops let on 6 yearlicense agreementsgenerally expiring in May2004

971,000135,545






12. GuimarãeShoppingGuimarães,Portugal


GLA with 1,750 car parking spaces. Within thecentre, a 16,145m2 hypermarket area has beensold to owner occupier Continente, an anchor unitof 1,450m2 has been sold to owner occupierWorten and a 6 screen cinema (1,940m2) is inseparate ownership and operated by CastelloLopes cinemas which is located adjacent to thescheme. (NB. The aforementioned units areexcluded from the valuation of this property.) Theremaining shopping centre area totals 7,330m2

GLA, with anchors MacModa (755m2) and Tribo(750m2). The remaining 5,825m2 consists of 88catering and retail units arranged around a two-storey mall and five retail units, totalling 360m2,located within the adjoining bus station. 107m2 ofstorage space is let to occupiers.

GuimarãeShopping opened in February 1995.

Freehold

The property isowned byGuimarãeShopping.


Anchor stores let on 15-year utilisation contractsexpiring February 2010.

Unit shops let on 6-yearutilisation contractsgenerally expiring February2007.

36,031,0002,812,366

13. GrandellaLisboa,Portugal

Four retail units situated within the Grandellabuilding in the Chiado area of Lisbon with a totalGLA of 5,905m2. Occupiers include H&M(4,225m2) Perfumes & Companhia (855m2) andStradivarius (210m2). A restaurant unit of 615m2

remains vacant.

The property was originally developed in 1996.

Leasehold

Head Lease held byDatavenia, (100%owned by SonaeImobiliária). A fifteenyear lease of theformer Printempsdepartment storethat commenced on19th August 1996.Upon termination ofthe original lease, theleaseholder has theoption to renew it forsuccessive one-yearterms. The minimumrent payable to thefreeholder, MGAM, isu922,603 perannum.

Utilisation agreements foran initial term of six years,generally expiring in 2005.

H&M held on 18-yearutilisation contractexpiring 2021. Stradivariusheld on 9-year utilisationcontract expiring 2010 andPerfumes & Companhiaheld on 6-year utilisationcontract expiring 2005.

4,566,000482,329

14. MadeiraShoppingFunchal,Madeira,Portugal

Shopping centre with a total GLA of 26,585m2,located on the island of Madeira, 10 minutes fromthe centre of Funchal. The cinema (2,865m2) isoperated by Socorama-Castello Lopes and bowling(1,175m2) by Microlândia. The centre also has11,020m2 of anchor units, including Zara(1,675m2), Modelo supermarket (4,210m2),Maxmat (2,280m2), amongst others. In addition,there are 76 unit shops, providing 8,370m2 GLA,and 25 restaurant and catering units providing3,155m2 GLA. The centre also provides 825ofstorage area.

MadeiraShopping opened in March 2001.

Freehold

The property isowned byMadeiraShopping


Anchor units let onutilisation contracts of 6 to15 years from 2001.Cinemas let on 10-yearutilisation contract from2001.

Unit stores let on 6-yearutilisation contractsexpiring 2007.

69,317,0005,356,661





15. MaiaShoppingErmesinde,Maia,Portugal


GLA with 2,300 car parking spaces. Within thecentre there is a 14,790m2 hypermarket owned byContinente (NB. The aforementioned unit isexcluded from the valuation of this property). Thecentre provides a 3,145m2 11 screen Warner-Lusomundo cinema, three anchor units leased toWorten (2,145m2), Sportzone (760m2) andAutocenter (1,040m2) and approximately 105 unitshops, restaurant food court and kiosks totalling9,035m2. In addition to the above, MaiaShoppinghas a co-generation plant producing electricitythat is sold to the condominium and to EDP. 103m2

of storage space is let to occupiers.

MaiaShopping opened in November 1997.

Freehold

The property isowned byMaiaShopping.


Cinema let on 20 yearutilisation contractexpiring November 2017.

Medium size anchor andunit shops generally let on6-year utilisation contractsexpiring 2009

52,137,0004,066,805

16. NorteShoppingMatosinhos,Porto,Portugal

Two-storey regional shopping centre, totalling71,905m2 GLA with 5,000 car parking spaces,adjoining an existing Continente hypermarket andtwo office buildings. The centre provides a4,360m2 8 screen Warner-Lusomundo multiplexcinema, Funcenter (1,780m2) and anchor unitstotalling 20,745m2, including Toys ‘R’ Us(3,280m2), Fnac (2,480m2), Zara (2,155m2),Modelo-Bonjour supermarket (2,030m2), Habitat(1,480m2), Macmoda (955m2), amongst others.The centre also provides 204 unit shops(21,850m2) and 37 restaurants (4,285m2). Anadditional 1,270m2 of storage is let to occupiers.

The centre adjoins a Continente Hypermarket andvarious support retail units totalling 18,885m2.These units and the Hypermarket are in separateownership and excluded from the valuation.

In addition to the above NorteShopping has a co-generation plant producing electricity that is soldto the condominium and to EDP.

NorteShopping opened in October 1998.

Freehold

The property is heldby IMO-R.


Anchor stores let on 10-15year utilisation contractsexpiring in October 2008and October 2013.

Unit shops let on 6-yearutilisation contractsgenerally expiring inOctober 2004.

295,552,00019,535,643

17. Parque AtlânticoPonta Delgada,Azores,Portugal

A shopping centre recently completed in PontaDelgada in the Azores archipelago. The centre hasa total GLA of 22,315m2. A Modelo Supermarket of5,980m2 is excluded from valuation. Theremaining 16,335m2 includes a 4 screen CastelloLopes cinema (1,150m2), Zara (1,680m2),Sportzone (705m2), Worten (655m2) and MaxMat(1,790m2), and 10,355m2 of mall and cateringunits. The centre has 1,100 car parking spaces.

Parque Atlântico opened in October 2003.

Freehold

The property isowned by MicaelenseShopping –EmpreendimentosComerciais.


Anchor tenant cinemasheld on 15-years utilisationcontract expiring 2018,Inditex Group brands heldon 15-year utilisationcontract, expiring 2018.The cinema and InditexGroup tenants pay fit outreimbursement.

49,768,000

Fitoutreimbursement

942,000

3,745,596

18. Sintra Retail ParkSintra,Portugal

Sintra Retail Park, the first retail park to be openedin Portugal, consists of 12 retail units totalling17,600m2 GLA, ranging from 1,000m2 to 4,000m2,5 restaurants (1,240m2), including a ‘drive-thru’restaurant (610m2), and 650 car parking spaces.The centre is anchored by Mestre Maco DIY(3,930m2) and Radio Popular (Electricals)(2,595m2).

Sintra Retail Park opened in November 2000. Atthe date of valuation the entire property wassubject to a Promissory Sale Contract at theMarket Value indicated.

Freehold

The property isowned by SintraRetail Park


Retail units are let on 10 to15 year utilisationcontracts expiring in 2010onwards. Restaurants arelet on six-year utilisationcontracts expiring in 2006.

29,700,000N/A






A (II): PROPERTIES HELD AS INVESTMENTS – SPAIN

19. ViaCatarinaRua de SantaCatarina,Porto,Portugal

Four-storey shopping centre, totalling 11,610m2

GLA with 578 car parking spaces, situated withinsix upper levels to the rear of the scheme. Theshopping centre area features the followinganchor stores: Modelo-Champion supermarket(885m2), Zara (1,890m2), Mango (630m2),Sportzone (550m2) and Worten (760m2). Thereare a further 65 mall units totalling 4,585m2 GLAand 26 restaurant and catering units providing afurther 2,310m2 GLA. An additional 199m2 ofstorage area is let to occupiers. A H&M anchor unitwill replace Mango in 2004.

ViaCatarina Shopping opened in September 1996.

Freehold

The property isowned by Viacatarina.


Anchor stores let on 15-year utilisation contractsexpiring September 2011.

Unit shops let on 6-yearutilisation contractsgenerally expiring 2008.

68,190,0005,310,667

20. ParquePrincipadoOviedo,Spain

A regional shopping centre with 76,840m2 GLA Thecentre includes a 20,970m2 Eroski supermarket,which has been sold and is excluded from thevaluation.

The centre is mainly arranged on one level butthe leisure element is arranged on two levels withthe restaurant and catering units and FamilyEntertainment Centre (FEC) situated below themain cinema area. Anchors include a Warnermultiplex cinema (8,055m2), Planet Bowling(3,360m2), C&A (2,475m2), Cortefiel (1,220m2),Zara (1,925), FNAC (2,695m2), Forum Sport(4,015m2), Media Market (4,815m2), NorAuto(1,040m2) and Los Telares (1,075m2). There are5,000 car spaces located to the front of thescheme at surface level.

Parque Principado opened in April 2001.

Freehold

The property isowned by WXIGrupo Lar ParquePrincipado

(25% held bySonae Imobiliária).

Anchor stores aregenerally let on utilisationcontracts agreements ofbetween 10 and 20 yearsfrom 2001.

Unit stores are generallylet on 5-year utilisationcontracts, expiringApril 2006.

128,000,0008,924,550

21. Plaza MayorMalaga,Spain

A leisure and entertainment centre, opened inApril 2002, totalling 33,325m2 GLA with 2,200 car-parking spaces. The scheme is of an open-airdesign and the facades of the different unitsare used to replicate a typical Andalucian village.The scheme is divided up into four distinct areas;Plaza Brava, which consists mainly of bars andis anchored by Big Fun Bowling (3,565m2) and thesoon to be opened Pacha nightclub (1,140m2),Calle de la Redonda/Plaza del Azahar, whichconsists of more traditional restaurants, Calle delZoco, which consists mainly of retail units andwhich is anchored by a Solinca Gymnasium(4,270m2) and a Nike Factory (1,015m2) andfinally Plaza Mayor, which consists of mainly fastfood restaurants and is anchored by a Yelmo 20screen multiplex cinema (7,810m2) with 4,783seats, FEC (3,565m2), Solinca Health Club(4,270m2). In addition there are 51 restaurantsand 26 unit shops.

Plaza Mayor opened on 19 April 2002

Freehold

The property is heldby Plaza Mayor –Parque de Ocio S.A.


Anchor stores let onutilisation contracts ofbetween 12 and 25 yearsfrom 2002.

Unit shops let onutilisation contractsof 6 years from 2002.

74,878,000


3,122,000

4,990,477

A (II): PROPERTIES HELD AS INVESTMENTS – SPAINNet operating




22. CC La FargaBarcelona,Spain

A neighbourhood shopping centre located in thearea of L’Hospitalet, on the outskirts of Barcelona.The centre has a total GLA of 18,565m2,comprising 128 units. There are no owneroccupied units in this centre.

The centre is arranged on four levels, with themain leisure element on the fourth floor. Anchorsinclude a Max Centre multiplex cinema (2,045m2),Caprabo Supermarket (2,665m2), Intersport(975m2), Los Telares (645) and Burger King(280m2). There are 1,148 paid car parking spaces.

La Farga opened in 1996.

Surface RightAgreement for 75years, expiring in2067.

The property isowned by HospitaletCenter SL


The scheme is currently91.5% let.

Anchor stores aregenerally let on utilisationcontracts of between 10and 20 years, generallyexpiring 2016 and 2021.

Unit stores are generallylet on 5-year utilisationcontracts, expiring atvarious dates.

45,500,0003,418,784

23. CC KareagaMax Center& OcioBilbao,Spain

A shopping and leisure centre located in the area ofBarakaldo, on the edge of the city of Bilbao. Thecentre has a total GLA of 59,370m2 GLA. The Eroskihypermarket (18,560m2), Bowling Sur (2,850m2)and four mall units (815m2) have been sold torespective owner-occupiers and are excluded fromthis valuation. The remaining GLA is 37,145m2.

The main centre is arranged on two levels but theleisure element is situated in a separate buildingand is arranged on three levels. Both buildingsare joined via a bridge link at first floor level.Anchors in both schemes include a multiscreencinema (6,270m2), H&M (2,355m2), Decathlon(2,910m2), Zara (1,945m2), Cortefiel (820m2) andMcDonald’s (385m2). There is a combined total of4,150 car spaces located at basement level and tothe front of the main scheme at surface level.

Max Center opened in 1994 without the leisureextension, Max Ocio opened in July 2002.

Freehold

The property isowned by IberianAssets.


Anchor stores aregenerally let on utilisationcontracts of between 10and 20 years will variousexpiring dates.

Unit stores are generallylet on 5-year utilisationcontracts with variousexpiring dates.

129,500,0008,931,764

24. CC Valle RealSantander,Spain

A shopping centre located in the city of Santanderwith a total GLA of 47,740m2 GLA. Of this, an Eroskihypermarket (15,950m2), Leroy Merlin (6,255m2)and three mall units (350m2) have been sold torespective owner occupiers and are not includedin this valuation. The ownership, subject of thisvaluation, therefore totals 25,185m2.

The centre is arranged on two levels, with 2,500car parking spaces. Anchors include an 8-screenCines Valle Real cinema (2,540m2), Forum Sport(2,740m2), Zara (1,890m2), Gables (1,720m2), LosTelares (1,020m2), Mango (930m2) and Cortefiel(700m2).

Valle Real opened in 1994 with an extension to theground floor opening in 1999.

Freehold



Anchor stores aregenerally let on utilisationcontracts of between 10and 20 years expiring atvarious dates.

Unit stores are generallylet on 5-year utilisationcontracts expiring atvarious dates

68,600,0004,866,499


A (II): PROPERTIES HELD AS INVESTMENTS – SPAINNet operating




A (III): PROPERTIES HELD AS INVESTMENTS – BRAZIL

27. Pátio BrasilShopping CenterBrasilia,Brazil

Shopping centre situated in the heart of thecommercial centre of the city, adjacent to thehotel district. It is situated on a site with 8,000m2

and with a total GLA of 31,390m2 on four levelsplus three parking levels. The expansion on the3rd level was completed and opened in March2001. An anchor unit of 2,990m2 has been sold toowner occupier C&A. (NB. The aforementionedunit is not included in the valuation.)

The centre comprises a further 6 anchor units,168 mall unit shops, 1 bank, 26 restaurants, a 6screen cinema, 43 kiosks, a children’s play area,bowling alley and fitness centre. There isunderground car parking on three levels for1,800 cars.

The centre originally opened in October 1997.

“CondominiumProindiviso”

The property isowned byCondominium PátioBrasil ShoppingCenter.

10.42% of thecondominium is heldby Sonae Enplanta(50% of which is heldby Sonae Imobiliária).

Anchor stores Grupo Otochand Lojas Riachuelo are leton 6 and 10-year leasesrespectively.

Unit shops are let on 3 or5-year leases.

R$133,052,000or

u36,307,230

R$15,215,000Or

u4,151,869

26. Parque D. PedroShopping Phase ICampinas,São Paulo,Brazil

Shopping centre situated in the city of Campinas,São Paulo, Brazil. The shopping is situated on asite of 476,490m2 with a total constructed area of178,695m2 and a GLA of 115,047m2, constructedin the first phase, mainly distributed on theground floor. Restaurants, cinemas, leisure andtheatre are placed on the lower ground floor. Twoanchor units totalling 5,855m2 have been sold toowner-occupier C&A. Parque D. Pedro consists of12 anchor stores (4 department stores), whichinclude a hypermarket, a multiplex cinema with 15screens, a health club, theatre and a bowling area.There are a further 301 unit-stores, 12restaurants, 28 fast-food units, 36 kiosks and8,300 car parking spaces.

Freehold

Sonae Imobiliáriaowns directly 95.04%and Sonae Enplantaowns the remaining4.96%.

Mall units generally let onutilisation contracts forterms of 5 years from2002 and anchor storesgenerally let on utilisationcontracts for terms of tenyears from 2002.

R$387,679,000or

u105,789,845

R$39,718,492Or

u10,838,382

25. CC Gran CasaZaragoza,Spain

A regional shopping centre located in the city ofZaragoza. The centre has a total GLA of 79,440m2,of which the El Corte Ingles department store(36,000m2) and Warner Lusomundo cinema(3,445m2) have been sold to the respectiveoccupiers and are not included in this valuation.The remaining centre has a total GLA of 39,995m2,which is included in this valuation.

The centre is arranged on three levels aboveground with a further three levels of basement carparking (2,500 spaces). Anchors include a PlanetBowling (1,945m2), Media Markt (4,455m2), Miro(1,110m2), Cortefiel (1,000m2) Zara (1,280m2),Mango (630m2), H&M (2,725m2) and Decathlon(2,970m2). The property has electricity producingco-generation plant, excluded from the valuation.

CC Gran Casa opened in 1997

Freehold



The scheme is currently98.4% let.

Anchor stores aregenerally let on utilisationcontracts of between 10and 20 years expiring atvarious dates.

Unit stores are generallylet on 5-year utilisationcontracts expiring atvarious dates.

131,500,0008,574,307

A (III): PROPERTIES HELD AS INVESTMENTS – BRAZILNet operating




28. Franca ShoppingCenterFranca,Brazil

Shopping centre situated in the Municipality ofFranca in the north east of the state of São Paulo.The shopping centre lies close to the town centreand fronts a dual-carriageway linking into themain regional highways.

The Property is situated on a site of 70,000m2 andwith a total GLA of 19,000m2 on one level. Thetrading units comprise: 4 anchor stores, 86 mallunit shops, 12 restaurants, a 3 screen cinema, 11kiosks, a children’s´ play area, bingo hall andbowling alley. There is open car parking aroundthe perimeter of the Centre for 1,100 cars.

This centre opened in October 1993.


The property isowned byCondominiumShopping CenterFranca.


Anchor stores SéSupermercados andMagazine Luiza are let on10-year leases.

Unit shops are let on 3 or5-year leases except forMcDonald’s which has a20-year lease.

R$17,226,000or

u4,700,630

R$1,414,721or

u386,049

29. ShoppingMetrópoleSão Bernardodo Campo,São Paulo,Brazil

Shopping centre situated in the central area of SãoBernardo do Campo fronting a large square whichserves as the intersection of major avenues andnumerous bus routes. The Property is situated ona site of 88,342m2 and has a total GLA of25,380m2 over two levels.

The trading units are on a single ground floor leveland comprise: 3 anchor stores, 141 unit shops, 15restaurants, one bank agency, a 3-screen cinema,20 kiosks and a children’s´ play area. There is carparking on ground level for 1,200 cars.

This centre originally opened in May 1980as a much smaller mall but after considerableexpansion and upgrading reopened on April 1997in its present form.


The property isowned byCondominiumShopping CenterMetrópole.

10% of thecondominium is heldby Sonae Enplanta,(50% of which is heldby Sonae Imobiliária).

Anchor stores LojasAmericanas and LojasRenner (JC Penny) are leton 10-year leases as arethe Blockbuster and theMcDonald’s units.

Unit shops are let on 3 or5-year leases.

R$95,306,000or

u25,933,424

R$11,044,721or

u3,013,883

30. Shopping PenhaSão Paulo,Brazil

Shopping centre located immediately adjacent tothe traditional shopping streets of the Penhasuburban centre situated in the east of São Paulo.Access to the centre is facilitated by some majorhighways close-by as well as the proximity of thePenha Metro Station.

The Property is situated on a site of 19,195m2 andwith a GLA of 18,421m2 on two levels. The tradingunits comprise: 1 anchor, 165 unit shops, 15restaurants, a 3-screen cinema and 20 kiosks.There is underground car parking on three levelsfor 1,200 cars.

This centre originally opened in October 1992.


The propertyis owned byCondominiumShopping CenterPenha.


Anchor store LojasAmericanas is let on a 10-year lease and theMcDonald’s unit on a 20-year lease.

Other unit shops are let on3 or 5-year leases.

R$42,814,000or

u11,683,084

R$7,699,909or

u2,092,964

31. Tivoli ShoppingSanta Bárbarado Oeste,São Paulo,Brazil

Shopping centre situated some 130 km to thenorth of the city of São Paulo, fronting onto theSanta Bárbara Avenue linking the towns of SantaBárbara and Americana. The centre has a totalGLA of 22,112m2 on one level.

The trading units comprise: 4 anchor stores,106 unit shops, one bank agency, 16 restaurants,a 3 screen cinema, 21 kiosks, a children’s’ playarea and bingo hall. There is open car parkingaround the perimeter of the Centre for 1,578 cars.The McDonald’s restaurant is a free-standing unit.

This centre opened in November 1998.


The propertyis owned byCondominium TivoliShopping Center.

25% of thecondominium is heldby Sonae Enplanta(50% of which is heldby Sonae Imobiliária).

Anchor stores SéSupermercados andMagazine Luiza are leton a 10 year leases andthe McDonald’s unit ona 20 year lease.

Other unit shops are leton 3 or 5-year leases.

R$40,143,000or

u10,954,222

R$2,299,273or

u627,425


B (I) PROPERTIES IN THE COURSE OF DEVELOPMENT – PORTUGALEstimated annual

Estimated Estimated net operating Marketcompletion costs of income when value when

Sales/ Market value in and completing completed completedtenancies existing state occupation development and let and let

Ref Property Description Tenure arranged (u) dates (u) (u) (u)

B (II) PROPERTIES IN THE COURSE OF DEVELOPMENT – SPAIN

32. LoureShoppingLoures,Portugal

A shopping and leisurecentre, grantedconstruction permissionin January 2004, with atotal GLA ofapproximately 37,830m2.It is located in Loures,within the GreaterMetropolitan area ofLisbon. The centre willhave a hypermarket ofsome 14,480m2 (owneroccupied and excludedfrom the currentvaluation). Theremaining 23,350m2

includes a cinemamultiplex (2,825m2),anchor units (7,495m2),restaurants (2,545m2),leisure area - bowling(830m2) and unit shops(9,655m2).

Freehold

(100% heldby SonaeImobiliária).

A numberof anchortenancies havebeen agreed andthe centre iscurrently in theearly stages ofletting.

11,261,000 September 2005 52,889,006 4,386,748 66,614,000


1,334,000

33. Avenida M40Barrio de laFortuna,Leganés,Madrid,Spain

A shopping and leisurecentre nearingcompletion, located inLeganés, a suburb insouthern Madrid. Thecentre is located nextto the M40 circularmotorway and will havea total GLA of 48,275m2.An Eroski hypermarketand Forum Sport anchorunit totalling 16,495m2

are held by the owneroccupiers and excludedfrom the currentvaluation. The remainingGLA of 31,780m2 includesa Yelmo 12 screenmultiplex cinema(4,250m2) a FEC(1,750m2) anchors(4,320m2) including H&Mand Zara, restaurants(3,175m2) terraces(1,165m2) and unit shops(17,120m2). The centrewill be distributed overthree floors and have2,404 parking spaces.

Freehold

The property isheld by AvenidaM-40 S.A.

(60% held bySonaeImobiliária).

Most anchortenancies havebeen agreed andthe centre iscurrently 90%committed interms of GLA,including Headsof Terms agreed.

71,167,000 March 2004 27,793,659 7,379,698 102,638,000


2,966,000

B (II) PROPERTIES IN THE COURSE OF DEVELOPMENT – SPAINEstimated annual




34. Dos MaresMurcia,Spain

A shopping and leisurecentre in the finalstages of constructionlocated in themunicipality of SanJavier in Murcia.The scheme willhave a total GLAof approximately24,575m2 includinga hypermarket of8,970m2 held inseparate ownership andexcluded from thecurrent valuation. Theremaining 15,605m2

consists of a Neoccinesmultiplex (2,265m2),bowling (875m2),Inditex Group tenants(1,490m2) and some78 mall unitsand restaurants.

Freehold

The propertyis held byComercial deSan JavierShopping SL.

Anchor unitshave beensigned andthe centre isapproximately86% letincludingHeads of Terms

23,790,000 Spring 2004 10,241,123 2,383,210 34,336,000

Fit ourcontribution

477,000

35. Luz del TajoToledo,Spain

A shopping and leisurecentre currently inconstruction located onthe outskirts of Toledo.The scheme willcomprise a total GLAof 41,045m2 includingan Eroski hypermarket(13,200m2) and Cinesurcinema multiplex(3,860m2) which areboth sold to owneroccupiers and excludedfrom this valuation. Theremaining 23,985m2

includes Inditex Groupbrands (4,205m2) and128 mall units andrestaurants. The centrewill have 2,000 carspaces at ground level.

Freehold.

The propertyis held byProyectoShopping2001 S.A(60% heldby SonaeImobiliária)

Anchortenancies aresigned.

The scheme iscurrently 75%let includingHeads of Terms

31,278,000 Mid 2005 30,304,616 4,398,006 62,155,000


1,029,000


B (II) PROPERTIES IN THE COURSE OF DEVELOPMENT – SPAINEstimated annual




36. Plaza EboliPinto,Spain

The town of Pinto islocated 20 km southof Madrid, along the N-IVmotorway (Autovia deAndalucia). This is aretail and leisure centreproject destined for thelocal market. The projectwill comprise a totalGLA of 32,870m2, whichincludes a 11,390m2

Eroski hypermarket,cinemas (2,075m2). Thescheme will haveparking for 1,000 cars.

Freehold.

The propertyis owned byComercial PintoShopping S.A

(65% heldby SonaeImobiliária)

Inditextenancies andthe cinema areagreed. Thescheme iscurrently 14%let includingHeads of Terms

16,078,000 Late 2005 28,498,685 3,482,926 45,185,000


1,007,000

37. ZubiarteBilbao,Spain

A shopping centrecurrently underconstruction that willextend to approximately20,745m2 and that willbe anchored by Zara(1,240m2) as well asother fashion anchorsand a cinema multiplexof 4,450m2. The centrewill comprise a further68 mall units andrestaurants, distributedover five floors, with thecinema located at thetop. 1,000 paid carparking spaces arelocated at basementlevel. The schemeoccupies an excellenturban site next to theGuggenheim Museum inthe centre of the city ofBilbao.

Freehold

The propertyis owned byZubiarteInversionesInmobiliáriasS.A.

(50% heldby SonaeImobiliária)

The scheme is71% let with theremainder innegotiations. Itis expected tobe 100% uponopening.

61,892,000 It is foreseenthat the

development willbe completed by

October 2004.

35,105,003 6,547,705 102,500,000

38. MálagaShoppingMálaga,Spain

A new shopping centreto be constructedadjacent to the existingPlaza Mayor Leisurescheme (Property No.21). The centre will havea total GLA of 16,800m2,anchored by asupermarket (2,450m2),Inditex brands(4,250m2), otheranchors (4,770m2) andfurther unit shops(5,330m2).

Freehold Preletting hasyet tocommence.

6,504,000 October 2005 34,452,000 3,096,040 45,135,000

B (III) PROPERTIES IN THE COURSE OF DEVELOPMENT – GREECEEstimated annual




B (IV) PROPERTIES IN THE COURSE OF DEVELOPMENT – BRAZIL

C (I): PROPERTIES HELD FOR DEVELOPMENT – PORTUGAL

Market ValueRef Property Description Tenure (u)

39. MediterraneanCosmosPylea,Salónica,Greece

A shopping centrebranded MediterraneanCosmos located in Pylea,Greece. The scheme willbe arranged on twoprincipal floors with atotal GLA of 45,715m2.The scheme will beanchored by Inditexbrands (4,000m2) aMasoutis supermarket(3,200m2), Villagecinemas multiplex(6,100m2), bowling(2,300m2) amongstothers.

The scheme will have atotal of 2,800 carparking spaces

Leasehold fora term of 30-years fromopening.

(50% held bySonaeImobiliária).

Anchortenancies arecurrently innegotiation andletting of mallunits willcommenceshortly.

11,934,000 Completionexpected March

2005

93,449,400 11,367,033 118,694,000


795,000

40. BoavistaShoppingSanto Amaro,São Paulo,Brazil

A site located in thesuburb of Santo Amaroin the city of São Paulo,held for the developmentof a regional shoppingcentre with a total GLAof 23,700m2. This GLAwill include a Sondahypermarket (9,900m2),4 anchor stores, 1 semi-anchor, 22 restaurantand catering units and167 mall units. Thecentre will consist ofthree levels aboveground and 1,350 carparking spaces locatedin the basement and onthe roof.

Freehold

SonaeImobiliáriaowns 97.5%.

Anchortenancies havebeen agreed andthe centre iscurrently in theadvancedlettings process.

R$48,887,000or

u13,340,285

Mid 2004 R$27,536,000or

u7,514,023

Year 1R$4,040,150

oru1,102,476

Year 2R$10,124,911

Oru2,762,885

R$77,396,000or

u21,119,820

41. ArrábidaShoppingExpansionVila Novade Gaia,Portugal

An expansion to the current Arrábida Shopping (Property N° 2). It will beconstructed at second floor level over an existing flat roof and consist of6,090GLA, destined for a Lifestyle anchor (2,200m2), Entertainment anchor(1,795m2), Café/Bars/Restaurants (1,066m2), Restaurants/Terrace (760m2),Counter service (60m2), Kiosks (89m2) and a Creche (120m2). A furtheramount of 1,255m2 of mall circulation space is included within theconstructable area of the project.

We have been informed that the Expansion possesses a building licence butthat a construction licence remains outstanding.

Freehold

The property is owned by Capital Plus.(50% held by Sonae Imobiliária).

411,000

42. ParqueFamalicãoFamalicão,Portugal

Two plots of agricultural land totalling approximately 212,638m2 situated onthe South East of the A3/A7 motorway junction. It does not currently benefitfrom planning permission but has development potential given the strategiclocation.

Freehold

The property is owned by Parque de Famalicão(100% held by Sonae Imobiliária).

4,175,000


C (I): PROPERTIES HELD FOR DEVELOPMENT – PORTUGAL

Market ValueRef Property Description Tenure (u)

43. Torre OrienteCentroColombo,Lisbon,Portugal

We understand that it is the Company’s intention to constructtwo office towers over the Centro Colombo shopping centre. Thefoundations, ground and first floors have already been constructed(excluded from this part of the valuation). However, the Companyawaits the necessary Construction Licence to continue with theupper floors of the towers.

The Torre Oriente project consists of a total of 14 floors (an additional12 floors above existing ground and first) which will extend to a totalof 23,978 of GLA offices (2,933m2 already constructed.)

Freehold

The property is owned by EmpreendimentosImobiliários Colombo, S.A.(50% held by Sonae Imobiliária).

4,245,000

44. Torre OcidenteCentroColombo,Lisbon,Portugal

We understand that it is the Company’s intention to constructtwo office towers over the Centro Colombo shopping centre. Thefoundations, ground and first floors have already been constructed(excluded from this part of the valuation). However, the Companyawaits the necessary Construction Licence to continue with theupper floors of the towers.

The Torre Ocidente project consists of a total of 14 floors (anadditional 12 floors above existing ground and first) which willextend to a total of 23,975 of GLA offices (2,930m2 alreadyconstructed).

Freehold

The property is owned by EmpreendimentosImobiliários Colombo, S.A.(50% held by Sonae Imobiliária).

4,245,000

45. First AlexanderPlatzBerlin,Germany

First Alexander Platz is a development site situated in the heartof the city and is the largest development area for retailing in allof Berlin comprising 53,175m2 of GLA. The area currently includesthe Kaufhof department store (30,000m2) and Saturn Media Markt.The centre will be divided into three levels above ground and intotwo levels below ground destined for car parking offering 1,600 carparking spaces.

Freehold

The property is owned by Sonae Project Berlin GmbH(100% held by Sonae Imobiliária)

9,755,000

46. Aegean ParkAthens,Greece

A development site located in Athens, Greece and situated in themunicipality of Pireaus close to the Port of Piraeus, which is linkedto Omonia, Central Athens by Piraeus Street. It consists of two plotsof 33,000m2 and 12,000m2 divided by a minor road. The smaller ofthe two sites consists of rough scrub-land and the larger a mixture ofindustrial and warehouse properties in various states of repair andoccupation. Part of the large site is currently being let to the AthensWater Authority on an annual tenancy that can be terminated atany time.

There are outline plans to join the two sites and develop a shoppingcentre featuring a total of 60,590m2 GLA to include retail, restaurantand leisure units.

Freehold

The property is owned by Aegean Park, S.A.(50% held by Sonae Imobiliária).

We have been informed that there is an outstandingpurchase payment of u4,600,000. Our valuationfigure provided here does not take account of thisand shows the value of the site with full ownership.

36,297,000

47. BresciaRetail &EntertainmentCentreBrescia,Italy

Located on the former site of the old Lucchini plants with a total sitearea of over 600.000m2, this re-development project lays on twoplots of land, separated by a public road and linked by a bridge.

The project comprises a retail and leisure complex with a total GLAof 28,825m2 and will include a supermarket with a total area of4,000m2 and a cinema of 4,100m2.

The site is strategically placed on the edge of Brescia´s ring-roadthat circles the downtown area of the city.

Freehold

The Property is owned by Transalproject 2000 S.r.l.(100% held by Sonae Imobiliária)

5,639,000

48. Parque D. PedroExpansionCampinas,SP Brazil

An additional 23,212m2 to be constructed in the second phase of theParque Dom Pedro shopping centre located at Campinas, São Paulo.Construction of this Expansion has not yet begun.

Freehold

Sonae Imobiliária owns directly 95.04% andSonae Enplanta owns the remaining 4.96%

R$64,270,000or

u17,537,998

49. PenhaShoppingExpansionPenha,São Paulo,Brazil

An additional 15,079m2 GLA to be constructed in Penha Shopping,located immediately adjacent to the traditional shopping streetsof the Penha suburban centre situated in the east of São Paulo.

The property is owned by Condominium ShoppingCenter Penha.

14.10% of the condominium is held by SonaeEnplanta (50% of which is held by Sonae Imobiliária).

R$18,828,000or

u5,137,785

Designed and produced by MAGEEPrinted by CTD

Consolidated Report and Accounts

2003

Sonae Imobiliária Consolidated Report and Accounts

2003

Portugal

PortoLugar do Espido,Via Norte4470 MAIATelephone: +351 22 948 7797Fax: +351 22 940 4452

LisboaRua Amílcar Cabral, 231750-018 LISBOATelephone: +351 21 751 5000Fax: +351 21 758 2813

Spain

MadridC/ Conde de Aranda, 24, 3º28001 MADRIDTelephone: +34 91 575 8986Fax: +34 91 575 7903

BilbaoIbañez de Bilbao, 28, 7º Módulo C48009 BILBAOTelephone: +34 94 435 6070Fax: +34 94 424 3707

Italy

MilanVia Leopardi 1420123 MILANTelephone: +39 02 4391 2517Fax: +39 02 4391 2531

Greece

Athens10. Kapsali Str.,Herodotou Str., N. Douka Str.Kolonaki10674 ATHENSTelephone: +30 21 0727 9907Fax: +30 21 0727 9927

Germany

DüsseldorfKanzlerstrasse 440472 DÜSSELDORFTelephone: +49 211 4361 6201Fax: +49 211 4361 6202

Brazil

São PauloRua Gomes de Carvalho, 1327, 3º, Conj.32Vila Olímpia, São Paulo – SPCEP: 04547 – 005Telephone: +55 11 3845 5399Fax: +55 11 3845 4522

Holland

HoofddorpPolarisavenue, 612132 JH HOOFDDORPTelephone: +31 23568 50 80Fax: +31 23568 50 88

Front cover: Estação VianaBack cover: CascaiShopping

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