THE SHOPPINGCENTRE SPECIALIST - Sonae Sierra · SONAE SIERRA ConsolidatedReportandAccounts2008 1...

2008CONSOLIDATED REPORTAND ACCOUNTS

THE

SHOPPING CENTRESPECIALIST

Contents

1 Consolidated balance sheets as of 31 December 2008 and 2007

2 Consolidated statements of profit and loss by nature for theperiods ended 31 December 2008 and 2007

3 Consolidated statement of changes in equity for the periodsended 31 December 2008 and 2007

4 Consolidated statements of cash flows for the periods ended31 December 2008 and 2007

5 Notes to the consolidated financial statements as of31 December 2008

67 Information by business segments

68 Information by geographical segments

69 Statutory audit report consolidated and individualfinancial statements

1SONAE SIERRA Consolidated Report and Accounts 2008

Sonae Sierra, SGPS, SA and subsidiaries

Consolidated balance sheets as of 31 December 2008 and 2007(Translation of balance sheets originally issued in Portuguese – Note 46)(Amounts stated in Euro)

31 December 31 DecemberASSETS Notes 2008 2007

Non current assets:Investment properties 7 3,367,900,315 3,740,142,951Investment properties in progress 7 319,473,774 385,204,256Property, plant and equipment 8 3,157,778 2,352,189Goodwill 9 49,891,134 82,963,317Intangible assets 10 6,018,443 7,107,368Investments in associates and companies excluded from consolidation 5 90,819,350 24,210,873Deferred tax assets 24 29,298,963 24,337,165Derivative financial instruments 19 150,019 14,696,011State and other public entities 27 101,954 101,954Other non current assets 12 21,126,422 35,090,965

Total non current assets 3,887,938,152 4,316,207,049

Current assets:Trade receivables 13 34,016,532 23,827,629State and other public entities 27 50,851,560 44,756,186Other receivables 14 34,613,660 22,449,427Other current assets 15 25,225,551 22,952,381Derivative financial instruments 19 – 4,298,729Cash and cash equivalents 16 110,255,972 65,690,438

Total current assets 254,963,275 183,974,790

Assets held for sale 11 11,565,000 –

Total assets 4,154,466,427 4,500,181,839

EQUITY, MINORITY INTERESTS AND LIABILITIES

Equity:Share capital 17 162,244,860 162,244,860Reserves 17 57,329,112 57,329,112Translation Reserve (44,900,171) 2,642,409Hedging Reserve (17,883,782) 5,697,406Retained earnings 1,062,445,216 896,326,381Consolidated net profit for the period attributable to the equity holders of Sonae Sierra (116,126,337) 214,896,663

Equity attributable to the equity holders of Sonae Sierra 1,103,108,898 1,339,136,831Minority interests 18 419,990,239 448,969,565

Total Equity 1,523,099,137 1,788,106,396

Liabilities:Non current liabilities:Long term debt – net of current portion 19 1,641,263,920 1,670,868,626Debentures loans – net of current portion 19 74,550,091 –Derivative financial instruments 19 32,637,612 1,656,398Other shareholders 21 13,715,980 28,486,087Finance Lease Creditors 22 839,653 –Trade payables 26 860,626 23,194,006Other non current liabilities 23 14,008,647 13,799,187Deferred tax liabilities 24 504,682,107 598,072,642

Total non current liabilities 2,282,558,636 2,336,076,946

Current liabilities:Current portion of long term debt 19 100,502,128 67,165,130Current portion of long term of debentures loans 19 (96,091) –Short term debt and other borrowings 20 12,040,423 9,701,790Other shareholders 21 12,859,662 60,435,757Trade payables 26 68,907,753 64,708,703State and other public entities 27 14,234,365 16,808,381Other payables 28 23,577,969 25,217,338Other current liabilities 29 116,673,263 131,816,833Provisions 30 109,182 144,565

Total current liabilities 348,808,654 375,998,497

Total equity, minority interests and liabilities 4,154,466,427 4,500,181,839

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

The Board of Directors



Consolidated statements of profit and loss by naturefor the periods ended 31 December 2008 and 2007(Translation of balance sheets originally issued in Portuguese – Note 46)(Amounts stated in Euro)

Notes 2008 2007

Operating revenue:Services rendered 31 364,776,068 315,385,962Variation in fair value of the investment properties 7 and 32 (230,413,765) 298,153,700Other operating revenue 33 20,723,757 25,642,651

Total operating revenue 155,086,060 639,182,313

Operating expenses:External supplies and services (153,067,733) (131,039,853)Personnel expenses (52,464,351) (46,623,715)Depreciation and amortisation 8 and 10 (2,368,863) (2,029,862)Provisions and impairment 30 (3,799,994) (1,362,116)Other operating expenses 34 (74,635,983) (22,692,074)

Total operating expenses (286,336,924) (203,747,620)

Net operating profit (131,250,864) 435,434,693

Financial income 35 27,689,403 33,128,394Financial expenses 35 (115,473,331) (79,860,742)Share of results of associated undertakings 5 and 36 (7,208,152) 3,688,686Investment income 37 21,882,988 17,550,427

Profit before income tax (204,359,956) 409,941,458Income tax 25 6,175,529 (109,794,722)

Profit after income tax (198,184,427) 300,146,736Net profit after tax from discontinuing operations – –

Consolidated net profit for the period (198,184,427) 300,146,736

Attributable to:Equity holders of Sonae Sierra (116,126,337) 214,896,663Minority interests 18 (82,058,090) 85,250,073

(198,184,427) 300,146,736

Consolidated net profit per share:Basic (3,572) 6,609Diluted (3,572) 6,609

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




Consolidated statement of changes in equityfor the periods ended 31 December 2008 and 2007(Translation of statements of changes in equity originally issued in Portuguese – Note 46)(Amounts stated in Euro)

Attributable to Equity Holders of Sonae Sierra——————————————————————————————————————————————————

Reserves

Share Legal Translation Hedging Retained Net MinorityNotes capital reserves reserve reserve earnings profit Total interests Total

Balance at 31December 2006 162,244,860 57,329,112 (5,968,021) 2,945,233 766,024,949 160,317,910 1,142,894,043 405,512,640 1,548,406,683

Appropriation ofconsolidated netprofit for 2006:

Transfer to legal reservesand retained earnings – – – – 130,730,170 (130,730,170) – – –

Dividends distributed 42 – – – – – (29,587,740) (29,587,740) (43,986,132) (73,573,872)

Currency translationdifferences:

Created during the period – – 8,610,430 – – – 8,610,430 556,137 9,166,567

Transfer to Profit and loss – – – – – – – – –

Fair value of hedginginstruments 19 – – – 3,517,348 – – 3,517,348 1,678,820 5,196,168

Deferred tax in fair valueof hedging instruments 24 – – – (765,175) – – (765,175) (349,364) (1,114,539)

Capital increase – 1,338,088 1,338,088

Acquisitions/sale ofsubsidiaries effect – (1,535,641) (1,535,641)

Consolidated net profitfor period ended31 December 2007 – – – – – 214,896,663 214,896,663 85,250,073 300,146,736

Others – – – – (428,738) – (428,738) 504,944 76,206

Balance at 31December 2007 162,244,860 57,329,112 2,642,409 5,697,406 896,326,381 214,896,663 1,339,136,831 448,969,565 1,788,106,396

Balance at 31December 2007 162,244,860 57,329,112 2,642,409 5,697,406 896,326,381 214,896,663 1,339,136,831 448,969,565 1,788,106,396

Appropriation ofconsolidated netprofit for 2007:

Transfer to legal reservesand retained earnings – – – – 165,150,243 (165,150,243) – –

Dividends distributed 42 – – – – – (49,746,420) (49,746,420) (5,152,976) (54,899,396)

Currency translationdifferences – – (47,542,580) – – – (47,542,580) (1,732,296) (49,274,876)

Fair value of hedginginstruments 19 – – – (29,661,988) – – (29,661,988) (19,022,085) (48,684,073)

Deferred tax in fair valueof hedging instruments 24 – – – 7,467,395 – – 7,467,395 4,657,783 12,125,178

Capital increase – 74,981,632 74,981,632

Acquisitions/sale ofsubsidiaries effect(Note 3) (1,386,595) 1,386,595 – (905,253) (905,253)

Consolidated net profitfor period ended31 December 2008 – – – – – (116,126,337) (116,126,337) (82,058,090) (198,184,427)

Others – – – – (418,003) – (418,003) 251,959 (166,044)

Balance at 31December 2008 162,244,860 57,329,112 (44,900,171) (17,883,782)1,062,445,216 (116,126,337) 1,103,108,898 419,990,239 1,523,099,137

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




Consolidated statements of cash flowsfor the periods ended 31 December 2008 and 2007(Translation of statement of cash flow originally issued in Portuguese – Note 46)(Amounts stated in Euro)

2008 2007

Operating activities:Received from clients 353,447,863 309,844,339Paid to suppliers (139,023,703) (112,667,039)Paid to personnel (51,739,317) (44,270,969)

Flows from operations 162,684,843 152,906,331

(Payments)/receipts of income tax (20,935,929) (19,423,683)Other (payments)/receipts relating to operating activities (1,334,809) (704,591)

Flows from operating activities [1] 140,414,105 132,778,057

Investing activities:

Receipts relating to:Investments 144,681,870 41,909,671Tangible fixed assets 233,278 620,885Interest income 27,491,278 28,042,029Dividends 721,170 –Other – 173,127,596 3,971,580 74,544,165

Payments relating to:Investments (9,023,465) (190,447,169)Tangible fixed assets (353,087,242) (576,199,613)Intangible fixed assets (382,005) (611,730)Other (13,620,587) (376,113,299) (16,138,425) (783,396,937)

Variation in Loans granted (14,957,249) 119,177,073

Flows from investing activities [2] (217,942,952) (589,675,699)

Financing activities:

Receipts relating to:Capital increase and share premiums 3,216,000 61,092Bank loans obtained 390,373,377 486,258,682Other – 393,589,377 – 486,319,774

Payments relating to:Interest expenses (105,754,859) (79,667,681)Dividends (54,385,691) (74,452,648)Decrease of share capital – nominal value and discounts and premiums – (19,425)Bank loans obtained (112,487,818) (59,767,368)Other – (272,628,368) (213,907,122)

Variation in Loans obtained – others 12,768,026 20,094,442

Flow from financing activities [3] 133,729,035 292,507,094

Variation in cash and cash equivalents [4]=[1]+[2]+[3] 56,200,188 (164,390,548)

Effect of exchange differences (7,360,547) (139,608)

Effect of the acquisitions and sales of companies:SPF (8,244,193) 1,091,447Ploiesti 302 –Gli Orsi 1,631,197 –

Cash and cash equivalents at the beginning of the year 55,988,648 219,427,357

Cash and cash equivalents at the end of the year 98,215,595 55,988,648

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



Notes to the consolidated financial statements as of 31 December 2008(Translation of notes originally issued in Portuguese – Note 46)(Amounts stated in Euro)

1 INTRODUCTION

SONAE SIERRA, S.G.P.S., S.A. (“the company” or “Sonae Sierra”), which has its head office in Lugar do Espido, Via Norte, Apartado1197, 4471-909 Maia – Portugal, is the parent company of a group of companies, as explained in Notes 3 and 4 (“the Group”).

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

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

These financial statements are presented in Euro because that is the currency of the primary economic environment in which the groupoperates. Foreign operations are included in accordance with the policy set out in Note 2.2.e).

2 PRINCIPAL ACCOUNTING POLICIES

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

2.1 Basis of preparation

The accompanying consolidated financial statements have been prepared according to the International Financial Report Standards(“IFRS”) and approved by the European Union, applicable to economic years beginning on 1 January 2008. These correspond tothe International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) andinterpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”) or by the previous StandingInterpretations Committee (“SIC”) and approved by the European Union.

The interim consolidated financial statements have been prepared according to the IAS 34 – Interim financial reporting.

The accompanying consolidated financial statements have been prepared on a going concern basis and under the historical costconvention, except for investment properties and financial instruments which are stated at fair value, from the accounting recordsof the companies included in the consolidation maintained in accordance with generally accepted accounting principles in thecountries of each company adjusted, in the consolidation process, to International Financial Reporting Standards (“IFRS”), as approvedby the European Union.

New accounting standards and their impact in these consolidated financial statements

In 2007 the European Union endorsed the IFRS 8 – Operating Segments, with effective date 1 January 2009.

During 2008 and until the date of approval of these consolidated financial statements, the European Union endorsed thefollowing standards and interpretations:

EffectiveDate

IAS 39/IFRS 7 – Reclassification of Financial Assets 01-Jul-08IFRS 2 – Share Based Payments (Ammendments) 01-Jan-09IAS 1 – Presentation of financial statements (Revised) 01-Jan-09IAS 23 – Borrowing costs (Revised) 01-Jan-09IAS 39/IAS 1 – puttable instruments 01-Jan-09Annual Improvements 2007 (*) 01-Jan-09IFRS 1/IAS 27 – Measuring investments in subsidiaries, jointly controlled entities and associates on first time adoption 01-Jan-09IFRIC 13 – Customer loyalty programmes 01-Jul-08IFRIC 14 – IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction 01-Jan-08

(*) The Annual Improvements 2007, includes the revision of 32 accounting standards, including the IAS 40 – Investment Property

The first time application of IFRIC 14, in 2008, does not have any impact on the accompanying consolidated financial statements.

SONAE SIERRA Consolidated Report and Accounts 2008 5



2 PRINCIPAL ACCOUNTING POLICIES (continued)

2.1 Basis of preparation (continued)

With the exception of IAS 40 – Investment property ( part of the “Annual Improvements 2007” ), which the Group decided adoptyearly in 2008, the other standards endorsed in 2008 by the European Union, as mentioned above, were not adopted by the Groupin 2008, since they are not mandatory in the current economic year and the Group decided by the non yearly adoption. The Groupdoes not anticipate important impacts in the consolidated financial reports as consequence of the full adoption of the new standards,with the exception of the IAS 1 – Presentation of financial statements (revised).

The revision of the IAS 40 – Investment Property, is part of the “Annual Improvements 2007” and has as consequence a changein the treatment of investment properties under – now covered by IAS 40 – Investment Property; whereas previously they werecovered by IAS 16 – Property, Plant and Equipment. Under this change of scope of IAS 40 – Investment Property, the investmentproperties under development will be (if the fair value model is adopted for the subsequent investment property valuation), whenthe conditions to determine a reliable fair value are met), measured at fair value and the counterpart will be booked in the incomestatement. The conditions defined by the Group under which the fair value could be reliably measured are indicated in Note 2.3.

The impact of adopting the new standard IAS 40 – Investment Property, prospectively considered for the periods beginning on1 January 2008, was traduced on an increase of the “Investment Property in progress” and “Variation in fair value of the investmentproperties” captions of Euro 12,739,767 and Euro 15,159,564, respectively; the difference between the two amounts refers toexchange rate differences and it was booked under the caption “Translation Reserve”.

The following standards and interpretations were issued by the IASB and they are not yet endorsed by the European Union:

EffectiveDate

IFRS 3/IAS 27 (Revised 2008) 01-Jul-09IAS 39 – Ammendments (eligible hedged items) 01-Jul-09IFRIC 11 – IFRS 2 Group and treasury share transactions 01-Jan-09IFRIC 12 – Service concession arrangements 01-Jan-08IFRIC 15 – Agreements for the construction of Real Estate 01-Jan-09IFRIC 16 – Hedges of a Net Investment in a Foreign Operation 01-Oct-08IFRIC 17 – Distribution of Non-cash Assets to Owners 01-Jul-09IFRIC 18 – Transfer of assets from customers 01-Jul-09Amendment to IFRS7 – Improving disclosures about financial instruments 01-Jan-09

From these standards and interpretations already issue by the IASB but not approved by the European Union, the Group does notanticipate important impacts in the accompanying consolidated financial statements.

The Group adopted International Financial Reporting Standards in the preparation of consolidated financial statements as from1 January 2001. The effect of the adjustments as of 31 December 2000, relating to changes in accounting principles to IFRS,amounting to Euro 222,683,763, was recorded in the equity captions “Retained earnings” (Euro 223,565,176), “Hedging reserve”(negative amount 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 or indirectly, more than 50% of the voting rights at Shareholders’General Meetings and is able to govern the financial and operating policies so as to benefit from its activities (definition ofcontrol normally used by the Group), are included in the consolidated financial statements by the full consolidation method.The equity and net profit attributable to minority shareholders are shown separately, in the caption “Minority interests”,in the consolidated balance sheet and consolidated statement of profit and loss, respectively.

When losses applicable to the minority in a consolidated subsidiary exceed the minority interest in the equity of the subsidiary,the excess, and any further losses applicable to the minority, are charged against the majority interest except to the extentthat the minority has a binding obligation to, and is able to, make good the losses. If the subsidiary subsequently reports profits,the majority interest is allocated all such profits until the minority’s share of losses previously absorbed by the majority hasbeen recovered.

On acquisition, the assets and liabilities of each subsidiary are measured at their fair values at the date of acquisition. Any excessof the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)).Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired is recognised as incomein the statements of profit and loss of the period of acquisition.

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

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit and lossfrom the effective date of acquisition or up to the effective date of disposal, as appropriate.

All intra-group transactions (including gains/losses obtain in sales within the Group), balances and dividends distributed withinthe Group, are eliminated on consolidation.

The companies included in the consolidated financial statements by the full consolidation method are listed in Note 3.

Investments in Group companies excluded from the consolidation are immaterial and stated at cost (Note 5).

Whenever the Group hold, in substance, the control over other entities created for a specific purpose, even if no share capitalinterest is directly held in those entities, these are consolidated by the full integration method. As of the balance sheet date,no special purpose entities exist.

b) Investments in jointly controlled companies

Investments in jointly controlled companies are included in the accompanying consolidated financial statements in accordancewith the proportional consolidation method as from the date the control is acquired. In accordance with this method the assetsand liabilities, revenue and costs of these companies are included in the accompanying consolidated financial statements ona line-by-line basis, in proportion to the Group’s participation in the companies.

Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill(Note 2.2.d). Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired isrecognised as income in the statements of profit and loss of the period of acquisition.

Intercompany balances and transactions, and dividends distributed have been eliminated, in the proportion of the Group’sparticipation.

Investments in joint ventures (usually 50% owned) are classified as such based on the agreements that regulate the joint control.

The companies included in the accompanying consolidated financial statements in accordance with the proportionalconsolidation method are listed in Note 4.

Investments in jointly controlled companies excluded from the consolidation are immaterial and stated at cost (Note 5).





2.2 Consolidation principles (continued)

c) Investments in associated companies

Investments in associated companies (companies where the Group holds a significant influence but does not hold the controlor the joint control over the decisions, through the participation in the financial and operating decisions – generally in the caseof investments between 20% and 50% in a company’s capital) are accounted for in accordance with the equity method.

Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to the Group’s proportionon the movements in equity (including the net results) of the associated companies and dividends received.

Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill(Note 2.2.d), which is kept in the caption where the investment in associates in recognised. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired is recognised as income in the statements of profitand loss of the period of acquisition.

An assessment of investments in associates is performed when there is an indication that the asset has been impaired. An annualassessment of the goodwill existing under the caption of “associated companies” is also performed. Any impairment lossexisting as of the balance sheet date is recorded as cost in the consolidated statements of profit and loss.

When the group’s share of losses exceeds the carrying amount of the investment, the investment is reported at nil value andrecognition of losses is discontinued except to the extent of the Group’s commitment.

Unrealised gains arising from transactions with associates are eliminated to the extent of the group’s interest in the associateagainst the investment in the associate. Unrealised losses are eliminated similarly but only to the extent that there is no evidenceof impairment of the asset transferred.

Investments in associated companies are listed in Note 5.

d) Goodwill

Differences between cost and the fair value of group, jointly controlled entities and associated companies as of the date oftheir acquisition are recorded in the intangible asset caption of “Goodwill” (in the case of investments in group and jointlycontrolled companies) or as part of the investment in associated companies (in the case of associated companies).

The goodwill relating to acquisitions occurred until 31 March 2004 was, until the end of the exercise of 2004 and accordingto the IFRS 3 – Business Combinations (“IFRS 3”), depreciated during the expected period to recover the investment. Depreciationand impairment losses of goodwill were recorded under the consolidated statement of profit and loss caption “Other operatingexpenses”. After 1 January 2005, this “goodwill” relating to the acquisitions occurred until 31 March 2004 was no longerdepreciated, according to IFRS 3, and is being reviewed for impairment at the balance sheet date. The impairment tests ofgoodwill are based on the Net Asset value (NAV), at the balance sheet date, of the financial investments.

The goodwill related to acquisitions occurred after 31 March 2004 is not depreciated, being reviewed for impairment at leastannually. Any impairment loss is immediately recognised in the consolidated statement of profit and loss under the caption“Other operating expenses”, being that impairment loss never reverted.

Differences between cost and the fair value of the assets and liabilities of group, jointly controlled entities and associatedcompanies located in foreign countries as of the date of their acquisition, are stated in the reporting currency of thatcompanies, being translated to the functional currency of the Group (Euro) at the exchange rate existing as of the balancesheet date. The resulting translation differences are recorded in the equity caption “Translation reserve”.





2.2 Consolidation principles (continued)

e) Translation of financial statements of foreign entities

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

The assets and liabilities of the foreign entities are translated to Euro at the exchange rate existing as of the balance sheetdate and, the income and expenses and also the cash-flow statement are translated to Euro using the average exchange rate.The amount related to the exchange rate difference is recorded in the equity under the caption “Translation reserve”.

Goodwill and fair value adjustments resulting from the acquisition of those foreign entities are considered as assets andliabilities of that foreign entity, being translated to Euro at the exchange rate existing as of the balance sheet date.

Whenever a foreign entity is derecognised, the cumulative exchange difference is recognised as gain or loss in the consolidatedstatements of profit and loss.

The following exchange rates were used to translate the financial statements of the foreign Group and associated companiesto Euro:

2008 2007—————————————————— ——————————————————

08.12.31 Average 07.12.31 Average

Brazilian real 0.308300 0.376570 0.385160 0.375770New Romanian Leu 0.248600 0.271780 0.277180 0.300170

2.3 Investment Properties

Investment properties consist of investments in buildings and other constructions in shopping malls that are held to earn incomerentals or for capital gain, rather than for use in the production or supply of goods or services or for administration purposes orfor sale in the ordinary course of business.

The investment properties in progress are within the scope of IAS 40 – Investment Property, when they fulfil the conditions to measurereliably their fair value.

It is considered that an Investment property in progress fulfils the conditions for its fair value to be reliably measured, when theirexists a high probability that the project will be concluded in a short period. This probability is high when the following events areaccomplished:

> Land acquired

> Construction license obtained

> Financing contract for the property is signed

> Construction started

> Lease contracts with the main anchors stores signed.

Investment properties are recorded at their fair value based on appraisals by an independent specialised entity – Cushman & Wakefield(fair value model). Changes in fair values of investment properties are accounted for in the period in which they occur, under thestatement of profit and loss captions “Variation in fair value of investment properties”.

The assets of the Group which qualify as investment properties are recognized as such when they start being used or, in the caseof the investment properties in progress, when their development is considered irreversible, as mentioned in the above conditions.Until the moment this asset can be qualified as investment property, the asset is booked at historical or production cost under thecaption “Investment Property in progress” in the same way as a tangible asset (Note 2.4). Since that moment, the investmentproperties in progress are recorded at their fair value. The difference between cost (of acquisition or production) and the fairvalue at that date is accounted for in the consolidated statement of profit and loss caption “Variation in fair value of investmentproperties” and the same for the subsequent changes in the fair value.

Expenses relating to investment properties in use, such as maintenance, repairs, insurance and property taxes are recognized inthe statement of profit and loss for the period to which refer. Beneficiations that are estimated to generate additional economicbenefits are capitalised under the caption “Investment properties”.





2.3 Investment Properties (continued)

Fit out contracts are contracts through which the Group supports part of the expenses incurred with the fit out expenses of shopsand the tenant assumes the responsibility to reimburse the Group by the amount invested along the contract period, in terms andconditions that are specific to each contract. The amounts paid by the Group on each fit out contract are recorded at cost underthe caption “Investment properties”, being subsequently adjusted to the corresponding fair value, at each balance sheet date, asdetermined by a specialised independent entity (Cushman & Wakefield). The methodology used to determine the fair value of thefit out contracts is similar to the one used in determining the fair value of the investment property to which the fit out contractrelates. Variations in fair value of the fit out contracts are recorded in the consolidated statements of profit and loss under thecaption “Variation in fair value of the investment properties”.

2.4 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is provided on a straight-line basis, as from the date the assets start being used, over the estimated period of usefullife of each group of assets.

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

Years

Buildings and other constructions 50Machinery and equipment 10Transport equipment 5Tools and utensils 4Administrative equipment 10Other property, plant and equipment 5

Fixed assets in progress and the investment properties in progress that have not fulfilled the conditions for their fair value to bereliably measured, are stated at cost of acquisition or production, deducted by eventual impairment losses. As fixed assets in progressrelate mainly to tangible fixed assets, that will qualify in the future as investment properties, those are classified separately in theconsolidated balance sheet, under the caption “Investment properties in progress”.

Gains and losses relating the sale or write-off of items of property, plant and equipment are determined as being the differencebetween the sale price and the corresponding carrying amount as of the sale date, being recorded in the consolidated statementof profit and loss, under the captions “Other operating income” or “Other operating expenses”.

2.5 Intangible assets

Intangible assets are stated at cost less accumulated depreciation and any accumulated impairment losses. Intangible assets are onlyrecognised if it is probable that future economic benefits attributable to the assets will flow to the Group, are controlled by theGroup and the cost of the asset can be measured reliably.

Intangible assets as of 31 December 2008 relate essentially to management rights of installations, which are depreciatedon a straight-line basis over the estimated period of the management right (periods ranging from 10 to 15 years).

Depreciation of intangible assets is recorded under the statement of profit and loss caption “Depreciation and amortisation”.

2.6 Assets held for sale

The non-current assets (and all the assets and liabilities related with those sales) are recorded as held for sale if the Group expectedthat the book value will be recovered through the sale and not through the use in the operations. This condition is achieved onlyif the sale is unconditional and the asset (and all the assets and liabilities related with that sale) is available for the immediate salein the actual conditions. Additionally, there should be in place negations related with the sale and that sale should occur in a12 months period.

The non-current assets (and all the assets and liabilities related with those sales) recorded as held for sale are booked by the loweramount of the historical cost or the fair value deducted from the sale costs. These assets are not depreciated.





2.7 Financial assets and liabilities

a) Investments

Investments are classified into the following categories:

> Held to maturity

> Investments measured at fair value through results

> Held-for-sale

Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheetdate. The investments classified as held to maturity have defined maturity and the Group has intention and capacity to maintainthem until the maturity date.

Investments measured at fair value through results are classified as current assets.

Held-for-sale investments are classified as non current assets.

All purchases and sales of investments are recognised on the trade date, independently of the liquidation date.

Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs.

Held-for-sale and investments measured at fair value through results are subsequently carried at fair value without anydeduction for transaction costs which may be incurred on its sale by reference to their quoted market price at the balancesheet date. Whenever this investment is non listed equity investments, and it is not possible to estimate reliably thecorresponding fair value, they are stated at cost deducted by eventual impairment losses.

Gains or losses on measurement to fair value of available-for-sale investments are recognised directly in the fair value reservein shareholders equity, until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at whichtime the cumulative gain or loss previously recognised in equity is included in net profit or loss for the period.

Changes in the fair values of investments measured at fair value through results are included in the consolidated statementof profit and loss for the year.

Held to maturity investments are carried at depreciated cost using the effective interest rate method, net of capitalreimbursements and interest income received.

b) Receivables

Receivables are stated at their nominal value less eventual impairment losses (recorded under the caption “Impairment lossesin accounts receivable”), so that they reflect their net realisable values. Usually these receivables do not bear interests.

c) Loans

Loans are stated as liabilities at their nominal value, net of eventual expenses incurred on its issuance.

Costs incurred to obtain the loans are depreciated according to the amortised cost method over their term and are classifiedas a deduction to the balance sheet caption “Bank loans”.

Financial expenses with interest expenses and similar expenses (namely stamp tax), are recorded in the consolidated statementof profit and loss on an accrual basis. The amounts due and not paid at the balance sheet date are recorded under “Othercurrent liabilities”.

d) Payables

Payables are stated at their nominal value. Usually these payables do not bear interest.

e) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, cash at banks in demand and term deposits and other treasury applicationswhich mature in less than three months that are subject to insignificant risk of change in value.

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





2.7 Financial assets and liabilities (continued)

f) Derivatives

In term of financial risks, the Group is mainly exposed to risks derived from exchange rate and interest rate fluctuations. TheGroup uses derivatives in the management of its financial risks relating interest rate fluctuations, only to hedge such risks.Derivatives are usually not used by the Group for trading (speculation) purposes.

Cash flow hedge instruments in the form of swaps or zero cost collars are used by the Group to hedge interest rate risks onloans obtained. The conditions established for these cash flow hedge instruments are identical to those of the correspondingloans in terms of the amount of the loans, maturity dates of the interest and repayment schedules of the loans and for thesereason they qualify as perfect hedges.

The Group’s criteria for classifying an interest rate derivative instrument as a cash flow hedge instrument 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

Cash flow hedge instruments used by the Group to hedge the exposure to changes in the interest rate of its loans are initiallyaccounted for at cost, if any, and subsequently adjusted to the corresponding fair value. Changes in fair value of these cashflow hedge instruments are recorded in equity under the caption “Hedging reserves”, and then recognised in the statementof profit and loss over the period of the cash flow hedge instrument.

Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivativeinstrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption“Hedging reserve” are transferred to profit and loss of the year or to the carrying amount of the asset; subsequent variationsin fair value are recorded in the statement of profit and loss.

In the cases were the derivative is a component of a hybrid financial instrument that includes both the derivative and a hostcontract, the embedded derivative should be separated from the host contract and accounted for as a derivative if theeconomic characteristics and risks of the embedded derivative are not closely related to the host contract and if the hostcontract is not measured at fair value with changes in fair value reported in net profit and loss.

The Group also used until 19 December 2008 (their due date) derivatives contracts of type Non-Deliverable Forward (NDF) forthe future acquisition of Brazilian real to cover its exchange rate risk due to its investment plan for Brazil. The fair value of thesederivatives was recorded in the statements of profit and loss, because the conditions for it inclusion under the scope of theIAS 39 – Financial Instruments were not fulfilled.

2.8 Accounting for leases

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

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

Accounting for leases where a Group is the lessee

The assets acquired through finance lease contracts, as well as the corresponding responsibilities, are posted by the financial method,posting in the balance sheet the acquired asset and the pending debts according to the contractual financial plan. In addition,the interests included in the rents amount and the changes in the fair value of the investment property or the depreciationof the tangible assets, are posted in the profit and loss of the year.

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





2.8 Accounting for leases (continued)

Accounting for leases where a Group is the lessor

The existing situations where the Group is the lessor relate to the contracts with the tenants of the shopping centres. Thesecontracts are usually for a period of six years and establish the payment by the tenant of a monthly fixed rent – invoiced inadvance –, a variable rent, invoiced if the monthly sales of the tenant are higher than the limit established in the contract and thepayment of tenant’s share in the shopping centre operating expenses (common charges). The contract with the tenant may alsoestablish the payment of an entrance fee in the shopping centre (key money income) and some discounts (usually in the first threeyears of the contract) to the fixed rent. These contracts can be renewed or cancelled by any of the parties involved (the companyor the tenant). If the cancellation is proposed by the lessor he must pay a cancellation fee to tenant.

In accordance to the conditions of these contracts, they are classified as operating leases, being the rents (fixed and variable rents)and the common charges recorded in the statement of profit and loss in the year to which they respect. The expenses as well asthe key income and the cancellation fee related with the operating leases are recorded as expenses or income in the statementof profit and loss to which they respect. This procedure is consistent with the one followed by the specialized independent entitywho determines the fair value of the investment property with which the contacts are associated (Note 2.3).

2.9 Borrowing costs

Borrowing costs are normally expensed as incurred.

Borrowing costs related directly to the acquisition, construction or production of tangible assets (usually investment properties inprogress) are capitalised as part of the cost of the qualified asset. Borrowing costs are capitalised from the time of preparation ofthe activities to construct or develop the asset to the time the production or construction is completed or when the developmentis suspended. Any eventual financial income derived from a loan obtained earlier and allocable to a qualifying asset, are deductedto the financial expenses that qualify for capitalisation.

2.10 Provisions

Provisions are recognised when, and only when, the Group has an obligation (legal or implicit) resulting from a past event and it isprobable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amountof the obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.

Restructuring provisions are recorded by the Group whenever a formal and detailed plan for the restructuring exists and that planhas been communicated to the involved parties.

2.11 Income tax

Income tax is computed based on the taxable results of the companies included in the consolidation and considers deferred taxes.

Current income tax is determined based on the taxable results (which are different from accounting results) of companies includedin the consolidation, in accordance with the tax rules in force where their head offices are located.

Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differencesbetween the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income taxpurposes. Deferred tax assets and liabilities are not recognised when the corresponding temporary differences arise from goodwillor from the initial recognition of assets and liabilities other than in a business combination.

Deferred tax assets and liabilities are calculated and valued annually at the tax rates that are expected to apply to the period whenthe asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted bythe balance sheet date.

Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferredtax assets can be utilised. At each balance sheet date a review is made of the deferred tax assets and they are reduced whenevertheir future use is no longer probable.

Deferred tax assets and liabilities are recorded in the statements of profit and loss, except if they relate to items directly recordedin equity captions. In these situations the corresponding deferred tax is recorded in the same corresponding caption.





2.12 Balance sheet classification

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

2.13 Revenue recognition and costs

Revenue from services rendered, which corresponds essentially to fixed and variable rent from tenants

(Note 2.8), common charges recovered from the tenants and revenue from operation of the car parking, is recognised in the yearto which it relates.

Revenue relating to the right of entry to the stores (key money) and the contract transfer fee are recognised in the statement ofprofit and loss caption “Other operating income” and “Services rendered” respectively, when invoiced to the tenants (Note 2.8).The discounts granted to the tenants over the fixed rents and the contract renewal costs are recognised in the statement of profitand loss caption “Services rendered” and “Other operating costs”, respectively (Note 2.8)

Revenues related to other services rendered are recognised in the statement of profit and loss with reference to the degree of deliveryof the service at the closing balance sheet date.

Dividends are recognised as income in the year they are attributed to the shareholders.

Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding paymentor receipt. Income and expenses for which its real amount is not known are estimated.

The captions of “Other current assets” and “Other current liabilities” include income and expenses related to the reporting yearbut for which the corresponding receipt or payment will occur only in the future. Those captions also include revenue and expensesthat have already occurred but the corresponding income or cost relate to future years, being in this case recognised in the statementof profit and loss of the year to which they will relate.

2.14 Balances and transactions expressed in foreign currencies

Transaction in currencies other than Euro, are translated to Euro using the exchange rate prevailing as of the transaction date.

At each balance sheet date, all monetary assets and liabilities expressed in foreign currencies are translated to Euro at the exchangerates prevailing as of that date.

Exchange gains and losses arising due to differences between the historical exchange rates and those prevailing at the date ofcollection, payment or the date of the balance sheet, are recorded as profits or losses in the consolidated statement of profit andloss for the year.

2.15 Impairment of non current assets, except goodwill

Assets are assessed for impairment at each balance sheet date and whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised under the statementof profit and loss caption “Other operating expenses”.

The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainablefrom the sale of an asset in an arm’s length transaction less the costs of disposal. Value in use is the present value of estimatedfuture cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverableamounts are 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 is recorded when there is an indication that the impairment losses recognisedfor the asset no longer exist or have decreased. The reversal is recorded in the statement of profit and loss as operating result.However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does notexceed the carrying amount that would have been determined (net of depreciation or depreciation) had no impairment loss beenrecognised for that asset in prior years.





2.16 Contingent assets and liabilities

Contingent liabilities are not recognised in the consolidated financial statements. They are disclosed unless the possibility of an outflowof resources embodying economic benefits is remote

A contingent asset is not recognised in the consolidated financial statements but disclosed when an inflow of economic benefitsis probable.

2.17 Risk management policies

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial marketsand seeks to minimise potential adverse effects on the Group’s financial performance.

Risk management is carried out by a central treasury department of the Group Sonae Sierra, under policies approved by the Boardof Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas,such as foreign exchange risk, interest rate risk, and credit risk.

a) Foreign exchange risk

The main activity of each company is developed inside its country and consequently the majority of the company transactionsare maintained in the same currency of its country. The policy to cover this specific risk is to avoid, if possible, the contractingof services in foreign currency.

In the particular case of Brazil, the Group assumed in 2006 a commitment with its partner DDR to increase, within a 3 yearperiod, the equity of the Brazilian operation by R$ 600 million (each partner undertaking to cover 50%). So as to cover theforeign exchange risk that is implicit in this undertaking, the Group signed, in early 2007, a number of “non-deliverableforward” contracts for future acquisition of Brazilian Real. The last of these contracts were closed in 19 December 2008.

The investment undertaking with DDR merely establishes the total amount and the timeframe for it to occur. The uncertaintyabout the precise dates when investment will take place mean that it is difficult to measure upfront the degree of efficiency ofthe instruments. This led to the instruments not being qualified as hedging instruments. As a consequence, the gains or lossesor any changes in its fair value, are booked in the Income Financial Statements.

As the operational activity of the company is maintained in Euros, the company policy is to obtain its borrowings also in Euros,in order to eliminate the foreign currency risk.

b) Credit risk

Credit risk arises mainly from the credit exposures to the tenants of the shopping centres managed by the company and otherreceivables. The risk control related to the tenant’s credit is made by an adequate evaluation of the quality of the tenant beforeits acceptance in the shopping centre and the limits of credit attributed to each tenant are regularly monitored.

c) Liquidity risk

The needs of treasury are managed by the financial department of the Group that manages the surplus and deficits of liquidityin each one of the companies of the Group Sonae Sierra. The punctual needs of treasury are covered by an adequate controlof the accounts receivables and by the maintenance of adequate limits of credit contracted by the Group with banking entities.





2.17 Risk management policies (continued)

d) Interest rate risk

The Group’s income and operating cash-flows are substantially independent of changes in market interests rates, in the measurethat its cash and cash equivalents and its financing granted to other companies of the Group are dependent only of the evolutionof the interest rates in Euro which have had a minimum change.

The Group’s interest rate risk arises from long-term borrowings. To cover this risk the company uses cash flow hedge instrumentsin the form of swaps or zero cost collars to hedge this interest rate risk, which represents perfect covers of those long-termborrowings; in certain loans the company chose to have a fixed rate in the first years of the financing contract and studyafterwards the possibility of negotiating a interest rate swaps.

Interest rate sensitivity analysis:

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the following:

> Amount of liability outstanding at the balance sheet was outstanding for the whole year and the contractual re-pricingdates occur in the beginning of the year;

> Changes in market interests rates affect the interest income or expense of floating rate interest financial instruments;

> Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixedinterests rates if these are recognize at their fair value;

> Changes in market interest rates affect the fair value of derivatives designated as hedging instruments and all interest rateshedges are expect to be highly effective;

> Changes in the fair values of derivative financial instruments (swaps) and other financial assets and liabilities are estimatedby discounting the future cash flows to net present values using appropriate market rates prevailing at the year end andassuming a parallel shift in yield curves;

> Changes in the fair values of derivative financial instruments (zero cost collars or cap’s) are estimated by projecting theforward rates and their volatility and discounting the expected cash-flows to the present using appropriate market ratesprevailing at the year end and assuming a parallel shift in yield curves.

The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice thisis unlikely to occur and changes in some of the assumptions may be correlated.

If interest rates had been 75 basis points higher/lower and all other variables were held constant, assumption unlikely occurdue to interest rates correlation with other variables, the impact in the Group net profit and equity would be the following:

2008 2007—————————————————— ——————————————————

–75 b.p. +75 b.p. –75 b.p. +75 b.p.

Net Profit (1) 2,822,045 –2,655,739 3,237,239 –2,629,862Reserves (2) –13,909,668 13,784,842 –8,947,651 8,944,174

(1) This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings;

(2) This is mainly as a result of the changes in the fair value of derivatives entered as cash flow hedges.





2.18 Financial instruments by category

The financial instruments, according to the policies described n the Note 2.7. were classified as follows:

Financial Assets

DerivativesLoans and Assets at fair used for cashaccounts value through flow hedging

Notes receivable profit or loss (Note 19) Total

As of 31 December 2008Non current assetsDerivatives 19 – 150,019 150,019Other non-current assets 12 21,126,422 21,126,422

21,126,422 – 150,019 21,276,441

Current assetsTrade account receivables 13 34,016,532 34,016,532Other debtors 14 34,613,660 34,613,660Cash and cash equivalents 16 110,255,972 110,255,972

178,886,164 – – 178,886,164

200,012,586 – 150,019 200,162,605

As of 31 December 2007Non current assetsDerivatives 19 – 14,696,011 14,696,011Other non-current assets 12 35,090,965 35,090,965

35,090,965 – 14,696,011 49,786,976

Current assetsTrade account receivables 13 23,827,629 23,827,629Other debtors 14 22,449,427 22,449,427Investments – 4,298,729 – 4,298,729Cash and cash equivalents 16 65,690,438 65,690,438

111,967,494 4,298,729 – 116,266,223

147,058,459 4,298,729 14,696,011 166,053,199





2.18 Financial instruments by category (continued)

Financial liabilities

Derivativesused for cash Financialflow hedging liabilities at

Notes (Note 19) amortised cost Total

As of 31 December 2008Non current liabilities:Bank loans 19 1,641,263,920 1,641,263,920Bonds 19 74,550,091 74,550,091Finance Lease creditors 22 839,653 839,653Derivatives 19 32,637,612 32,637,612Other non-current liabilities 23 28,585,253 28,585,253

32,637,612 1,745,238,917 1,777,876,529

Current liabilities:Bank loans 19 112,542,551 112,542,551Bonds 19 (96,091) (96,091)Trade creditors 26 68,907,753 68,907,753Other creditors 28 36,437,631 36,437,631

– 217,791,844 217,791,844

32,637,612 1,963,030,761 1,995,668,373

As of 31 December 2007Non current liabilities:Bank loans 19 1,670,868,626 1,670,868,626Derivatives 19 1,656,398 1,656,398Other non-current liabilities 23 65,479,280 65,479,280

1,656,398 1,736,347,906 1,738,004,304

Current liabilities:Bank loans 19 76,866,920 76,866,920Trade creditors 26 64,708,703 64,708,703Other creditors 28 85,653,095 85,653,095

– 227,228,718 227,228,718

1,656,398 1,963,576,624 1,965,233,022





2.19 Judgments and estimates

In the preparation of the accompanying consolidated financial statements estimations were used which are affecting the assetsand liabilities and also the amounts booked as income and costs during the reporting period.

The estimates were calculated using the best information available, at the date of approval of the financial statements, of theevents and transactions in course and of the experience from current and/or past events. However, events may occur in subsequentperiods that were not expectable as of the date of this statements and, consequently were not included in those estimates. Changesin the estimates after the closing of the consolidated financial statements will be booked on a prospect basis, as defined in IAS 8.

The most important estimations of the Group relates with the fair value, namely the fair value of the investment properties,the goodwill, the derivatives and deferred tax assets, as follows:

a) Investment property

The investment properties are recorded at their fair value based on annual appraisals by an independent specialised entity –Cushman & Wakefield (fair value model). That valuations assumed several assumptions, including the estimation of futureincome and cost of each property and uses an appropriated discount rate.

b) Derivatives

The derivatives are usually used by the Group to hedge the cash flow in form of swaps (“interest rate swap”) or zero costcollars. The fair value of those derivatives is, in each reporting period, calculated by independent entities (usually the financialinstitution where the derivative was contracted with). The fair value calculated by them is internally tested in order to validatethe calculation performed by the third parties.

c) Goodwill

The imparity tests to the goodwill are based on the open market value (OMV) at balance sheet date of the financial investment.

d) Deferred tax assets

The deferred tax assets are recognized only if it is expectable that future fiscal profits will be enough to use the deferred taxassets. By the end of each reporting period the deferred tax assets are assessed, and they are reduced if it future recoverabilityis not expectable. This revision is based on projections of the future activity of each company where it is applicable.

The main assumptions used in the Group estimations are disclosed in the each related note.

2.20 Subsequent Events

Post-year-end events that provide additional information about conditions 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 (non adjusting events) aredisclosed in the notes when material.

2.21 Segment information

All business and geographic segments of the Group are identified annually.

Information regarding the business and geographic segments identified is included in Note 44.




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 Groupas of 31 December 2008 and 2007, are as follows:

Percentage of share capital held——————————————————

Company Head office 08.12.31 07.12.31

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

SubsidiariesCorporate servicesSierra Corporate Services – Apoio a Gestão, S.A Lisbon 100.00% 100.00%Sierra Corporate Services Holland, BV Amsterdam (Netherlands) 100.00% 100.00%

Investment companies3shoppings – Holding, SGPS, S.A Maia 50.10% 50.10%

2) 8ª Avenida Centro Comercial, S.A. Maia – 100.00%Airone – Shopping Centre, Srl Milan (Italy) 50.10% 50.10%Algarveshopping – Centro Comercial, S.A. Maia 50.10% 50.10%Avenida M-40 B.V. Amsterdam (Netherlands) 50.10% 50.10%Avenida M-40, S.A. Madrid (Spain) 50.10% 50.10%Cascaishopping Holding I, SGPS, S.A. Maia 50.10% 50.10%Clérigoshopping – Gestão do Centro Comercial, S.A. Maia 100.00% 100.00%Coimbrashopping – Centro Comercial, S.A. Maia 50.10% 50.10%Dos Mares – Shopping Centre B.V. Amsterdam (Netherlands) 50.10% 50.10%Dos Mares-Shopping Centre, S.A. Madrid (Spain) 50.10% 50.10%El Rosal Shopping, S.A. Madrid (Spain) 70.00% 70.00%Estação Viana – Centro Comercial, S.A. Viana do Castelo 50.10% 50.10%Gil Orsi – Shopping Centre Srl Milan (Italy) 100.00% 100.00%

3) Gil Orsi 1 Shopping Centre Srl Milan (Italy) 100.00% –Guimarãeshopping – Centro Comercial, S.A. Maia 50.10% 50.10%Inparsa – Gestão de Galeria Comercial, SA Maia 100.00% 100.00%Luz del Tajo – Centro Comercial S.A. Madrid (Spain) 50.10% 50.10%Luz del Tajo B.V. Amsterdam (Netherlands) 50.10% 50.10%Maiashopping – Centro Comercial, S.A. Maia 50.10% 50.10%Münster Arkaden, B.V. Amsterdam (Netherlands) 50.10% 50.10%Paracentro – Gestão de Galerias Comerciais, S.A. Maia 100.00% 100.00%Plaza Eboli B.V. Amsterdam (Netherlands) 100.00% 100.00%Plaza Eboli – Centro Comercial S.A. Madrid (Spain) 100.00% 100.00%Plaza Mayor Holding, SGPS, S.A. Maia 50.10% 50.10%Plaza Mayor Parque de Ócio B.V. Amsterdam (Netherlands) 50.10% 50.10%Plaza Mayor Parque de Ocio, S.A Madrid (Spain) 50.10% 50.10%Plaza Mayor Shopping B.V. Amsterdam (Netherlands) 100.00% 100.00%Plaza Mayor Shopping, S.A. Madrid (Spain) 75.00% 75.00%Project Sierra 6 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Brazil 1 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Spain 2 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Srl Bucharest (Romania) 100.00% 100.00%River Plaza B.V. Amsterdam (Netherlands) 100.00% 100.00%River Plaza Mall, Srl Bucharest (Romania) 100.00% 100.00%Shopping Centre Parque Principado B.V. Amsterdam (Netherlands) 50.10% 50.10%Sierra Asset Management – Gestão de Activos, S.A. Maia 100.00% 100.00%Sierra Developments Germany Holding B.V. Amsterdam (Netherlands) 100.00% 100.00%Sierra European Retail Real Estate Assets Holdings BV Amsterdam (Netherlands) 50.10% 50.10%Sierra GP Limited Guernesey 99.99% 99.99%Sierra Investments (Holland) 1 BV Amsterdam (Netherlands) 100.00% 100.00%Sierra Investments (Holland) 2 BV Amsterdam (Netherlands) 100.00% 100.00%Sierra Investments Holding B.V. Amsterdam (Netherlands) 100.00% 100.00%Sierra Investments SGPS, S.A. Maia 100.00% 100.00%




3 GROUP COMPANIES INCLUDED IN THE CONSOLIDATION (continued)



Investment companies2) 5) Sierra Portugal Real Estate Luxemburg – 100.00%4) SPF – Sierra Portugal Luxemburg 100.00% 100.00%

Valecenter, Srl Milan (Italy) 50.10% 50.10%

Management companiesPridelease Investments Ltd Cascais 100.00% 100.00%Sierra Management Germany GmbH Dusseldorf (Germany) 100.00% 100.00%Sierra Management II, Gestão de Centros Comerciais, S.A. Lisbon 100.00% 100.00%Sierra Management Italy S.r.l. Milan (Italy) 100.00% 100.00%Sierra Management New Tech. Business-Serv.Comun. em C. C., S.A. Lisbon 100.00% 100.00%Sierra Management Portugal – Gestão de Centros Comerciais, S.A. Lisbon 100.00% 100.00%Sierra Management Spain – Gestión de Centros Comerciales SA Madrid (Spain) 100.00% 100.00%Sierra Management, SGPS, S.A. Maia 100.00% 100.00%

6) Sierra Property Management, Srl Bucharest (Romania) 100.00% 100.00%Sierra Property Management Greece, SA Athens (Greece) 100.00% 100.00%

Development companies3DO Holding GmbH Dusseldorf (Germany) 100.00% 100.00%3DO Shopping Centre GmbH Dusseldorf (Germany) 100.00% 100.00%

1) Craiova Mall, B.V. Amsterdam (Netherlands) 100.00% –Dortmund Tower GmbH Dusseldorf (Germany) 100.00% 100.00%Ioannina Development of Shopping Centres, S.A. Athens (Greece) 100.00% 100.00%KLC Holdings XII, SA Luxembourg 100.00% 100.00%Lembo Services, Ltd Cyprus 100.00% 100.00%Parque de Famalicão – Empreendimentos Imobiliários, S.A. Maia 100.00% 100.00%

1) Ploi Mall, B.V. Amsterdam (Netherlands) 100.00% –Project 4 Srl Milan (Italy) 100.00% 100.00%Project SC 2 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra 1 – Shopping Centre GmbH Vienna (Austria) 100.00% 100.00%

1) Project Sierra 10 B.V. Amsterdam (Netherlands) 100.00% –Project Sierra 2 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra 5 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra 7 B.V. Amsterdam (Netherlands) 100.00% 100.00%

1) Project Sierra 8 B.V. Amsterdam (Netherlands) 100.00% –1) Project Sierra 9 B.V. Amsterdam (Netherlands) 100.00% –7) Project Sierra Four, Srl Bucharest (Romania) 100.00% –

Project Sierra Germany 2 (two) – Shopping Centre, GmbH Dusseldorf (Germany) 100.00% 100.00%Project Sierra Germany 3 (three) – Shopping Centre, GmbH Dusseldorf (Germany) 100.00% 100.00%Project Sierra Germany 4 (four) – Shopping Centre, GmbH Dusseldorf (Germany) 100.00% 100.00%Project Sierra Germany Shopping Centre 1 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Germany Shopping Centre 2 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Holding Portugal V, SGPS, S.A. Maia 100.00% 100.00%Project Sierra Italy 1 – Shopping Centre Srl Milan (Italy) 100.00% 100.00%Project Sierra Italy 2 – Development of Shopping Centre Srl Milan (Italy) 100.00% 100.00%Project Sierra Italy 3 – Shopping Centre, Srl Milan (Italy) 100.00% 100.00%Project Sierra Italy 5 – Development of Shopping Centre Srl Milan (Italy) 100.00% 100.00%Project Sierra One, Srl Bucharest (Romania) 100.00% 100.00%Project Sierra Portugal II – Centro Comercial, S.A. Maia 100.00% 100.00%Project Sierra Portugal IV – Centro Comercial, S.A. Maia 100.00% 100.00%Project Sierra Portugal V – Centro Comercial, S.A. Maia 100.00% 100.00%Project Sierra Portugal VI – Centro Comercial, S.A. Maia 100.00% 100.00%Project Sierra Portugal VII – Centro Comercial, SA Maia 100.00% 100.00%Project Sierra Portugal VIII – Centro Comercial, S.A. Maia 100.00% 100.00%Project Sierra Spain 1 B.V. Amsterdam (Netherlands) 100.00% 100.00%Project Sierra Spain 2 – Centro Comercial S.A. Madrid (Spain) 100.00% 100.00%Project Sierra Spain 3 B.V. Amsterdam (Netherlands) 100.00% 100.00%




3 GROUP COMPANIES INCLUDED IN THE CONSOLIDATION (continued)



Development companies1) Project Sierra Spain 6 B.V. Amsterdam (Netherlands) 100.00% –1) Project Sierra Spain 6 – Centro Comercial S.A. Madrid (Spain) 100.00% –1) Project Sierra Spain 7 B.V. Amsterdam (Netherlands) 100.00% –1) Project Sierra Spain 7 – Centro Comercial S.A. Madrid (Spain) 100.00% –

Project Sierra Three, Srl Bucharest (Romania) 100.00% 100.00%Project Sierra Two, Srl Bucharest (Romania) 100.00% 100.00%S.C. Microcom Doi, Srl Bucharest (Romania) 100.00% 100.00%Sierra Development of Shopping Centres Greece, S.A. Athens (Greece) 100.00% 100.00%

1) Sierra Development Romania, Srl Bucharest (Romania) 100.00% –Sierra Developments Germany GmbH Dusseldorf (Germany) 100.00% 100.00%Sierra Developments Holding B.V. Amsterdam (Netherlands) 100.00% 100.00%Sierra Developments Iberia 1, Promoção Imobiliária, S.A. Maia 100.00% 100.00%Sierra Developments Italy S.r.l. Milan (Italy) 100.00% 100.00%Sierra Developments – Serviços de Promoção Imobiliária, S.A. Maia 100.00% 100.00%Sierra Developments Spain – Promociones de Centros Comerciales SL Madrid (Spain) 100.00% 100.00%Sierra Developments, SGPS, S.A. Maia 100.00% 100.00%Sierra Italy Holding B.V. Amsterdam (Netherlands) 100.00% 100.00%Weiterstadt Shopping B.V. Amsterdam (Netherlands) 100.00% 100.00%

1) Companies created in 20082) During 2008, these companies were sold to the company Sierra Portugal Real Estate (“SPF”). Afterwards it was sold to third parties 58%

of the share capital of SPF. As consequence of this transaction, this company and its subsidiaries have been included in the consolidatedfinancial statements by the Equity method.

3) Company acquired in October 20084) Ex – Sierra Asset Management Luxembourg, Sarl5) Ex – SPF – Sierra Portugal Fund, Sarl6) Ex – Sierra Management Romania, Srl7) Company acquired in June 2008

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




4 JOINTLY CONTROLLED COMPANIES

The jointly controlled companies included in the consolidation, their head offices, and the percentages of their share capital held by theGroup as of 31 December 2008 and 2007, are as follows:



Investment companiesALEXA Administration GmbH Berlin (Germany) 50.00% 50.00%ALEXA Holding GmbH Dusseldorf (Germany) 50.00% 50.00%ALEXA Shopping Centre GmbH Dusseldorf (Germany) 50.00% 50.00%

4) ALEXA Side GmbH & Co. KG Berlin (Germany) – 50.00%3) Arrábidashopping – Centro Comercial, S.A. Maia 25.05% 75.05%

Cascaishopping – Centro Comercial, S.A. Maia 25.05% 25.05%Centro Colombo – Centro Comercial, S.A. Maia 25.05% 25.05%Centro Vasco da Gama – Centro Comercial, S.A. Maia 25.05% 25.05%Colombo Towers Holding, B.V. The Hague (Netherlands) 50.00% 50.00%Freccia Rossa – Shopping Centre S.r.l. Milan (Italy) 50.00% 50.00%

3) Gaiashopping I – Centro Comercial, S.A. Maia 25.05% 75.05%3) Gaiashopping II – Centro Comercial, S.A. Maia 25.05% 75.05%

Iberian Assets, S.A Madrid (Spain) 24.95% 24.95%La Farga Shopping Centre, S.L Madrid (Spain) 24.95% 24.95%Larissa Development of Shopping Centres, SA Athens (Greece) 50.00% 50.00%

2) Loureshopping – Centro Comercial, S.A. Maia – 50.00%Madeirashopping – Centro Comercial, S.A. Funchal (Madeira) 25.05% 25.05%Norte Shopping Retail and Leisure Centre B.V. Amsterdam (Netherlands) 25.05% 25.05%Norteshopping – Centro Comercial, S.A. Maia 25.05% 25.05%

2) Oeste Retail Park – Gestão Galerias Comerciais, SA Maia – 50.00%5) Pantheon Plaza 1, S.A Amsterdam (Netherlands) – 50.00%5) Pantheon Plaza 2, S.A Amsterdam (Netherlands) – 50.00%5) Pantheon Plaza 3, S.A Amsterdam (Netherlands) – 50.00%

Pantheon Plaza B.V. Amsterdam (Netherlands) 50.00% 50.00%Parque Atlântico Shopping – Centro Comercial, SA Ponta Delgada (Azores) 25.05% 25.05%Parque Principado, S.L. Madrid (Spain) 25.05% 25.05%

2) Rio Sul – Centro Comercial, S.A. Lisbon – 50.00%6) SC Mediterranean Cosmos B.V. Amsterdam (Netherlands) 25.05% 50.00%2) Serra Shopping – Centro Comercial, S.A. Covilhã – 50.00%

Shopping Centre Colombo Holding B.V. Amsterdam (Netherlands) 25.05% 25.05%2) Sol Retail Park – Gestão Galerias Comerciais, SA Maia – 50.00%

Torre Ocidente – Imobiliária, S.A. Maia 25.00% 25.00%Torre Oriente – Imobiliária, S.A. Maia 25.00% 25.00%Via Catarina – Centro Comercial, S.A. Maia 25.05% 25.05%Zubiarte Inversiones Inmobiliarias, S.A Madrid (Spain) 24.96% 24.96%

Management companiesMC Property Management, S.A. Athens (Greece) 37.50% 37.50%Sierra Charagionis Property Management S.A. Athens (Greece) 50.00% 50.00%




4 JOINTLY CONTROLLED COMPANIES (continued)



Development companiesAegean Park Constructions Real Estate and Development, S.A. Athens (Greece) 50.00% 50.00%Le Terrazze – Shopping Centre S.r.l. Milan (Italy) 50.00% 50.00%Loop 5 – Shopping Centre, GmbH Dusseldorf (Germany) 50.00% 50.00%Park Avenue Developement of Shopping Centers S.A. Athens (Greece) 50.00% 50.00%Project SC 1 B.V. Amsterdam (Netherlands) 50.00% 50.00%Project Sierra Portugal I – Centro Comercial, S.A. Maia 50.00% 50.00%Project Sierra Spain 3 – Centro Comercial S.A. Madrid (Spain) 50.00% 50.00%SC Aegean B.V. Amsterdam (Netherlands) 50.00% 50.00%Sierra Charagionis Development of Shopping Centers, S.A Athens (Greece) 50.00% 50.00%SRP – Parque Comercial de Setúbal, S.A. Maia 50.00% 50.00%

Companies in Brazil7) Fundo Investimento Imobiliário Shop. Parque Dom Pedro Shopping, SA São Paulo (Brazil) 48.73% 48.67%

Parque D. Pedro 1 BV Sarl Luxembourg 50.00% 50.00%Parque D. Pedro 2 BV Sarl Luxembourg 50.00% 50.00%

7) Pátio Boavista Shopping, Ltda. São Paulo (Brazil) 47.51% 47.39%1) Pátio Goiânia Shopping, Ltda. São Paulo (Brazil) 47.51% –1) Pátio Londrina Empreendimentos e Participações, Ltda. São Paulo (Brazil) 47.51% –7) Pátio Penha Shopping, Ltda. São Paulo (Brazil) 47.51% 47.39%7) Pátio São Bernardo Shopping Ltda São Paulo (Brazil) 47.51% 47.39%7) Pátio Sertório Shopping Ltda São Paulo (Brazil) 47.51% 47.39%7) Pátio Uberlândia Shopping Ltda São Paulo (Brazil) 47.51% 47.39%

Sierra Brazil 1 B.V. Amsterdam (Netherlands) 50.00% 50.00%7) Sierra Enplanta, Ltda São Paulo (Brazil) 47.51% 47.39%7) Sierra Investimentos Brasil Ltda São Paulo (Brazil) 47.51% 47.39%7) Sonae Sierra Brasil, SA São Paulo (Brazil) 47.51% 47.39%

Sonae Sierra Brazil BV Sarl Luxembourg 50.00% 50.00%7) Unishopping Administradora Lda São Paulo (Brazil) 47.51% 47.39%7) Unishopping Consultoria Imobiliária Lda São Paulo (Brazil) 47.51% 47.38%

1) Company created in 20082) During 2008, these companies were sold to the company Sierra Portugal Real Estate (“SPF”). Afterwards it was sold to third parties 58%

of the share capital of SPF. As consequence of this transaction, this company and its subsidiaries have been included in the consolidatedfinancial statements by the Equity method.

3) During 2008, 50% of these companies were sold to the company Sierra Portugal Real Estate (“SPF”). Afterwards it was sold to thirdparties 58% of the share capital of SPF. As consequence of this transaction, 50% these companies have been included in the consolidatedfinancial statements by the Equity method.

4) Company merged into ALEXA Shopping Centre GmbH with effects since 1 January 20085) Companies merged into Larissa Development of Shopping Centres, SA with effects since 1 January 20086) Sale to the company Sierra European Retail Real Estate Assets Holdings BV.7) Ownership changed due to the capital increase in Sonae Sierra Brasil SA, not subscribed by e realized by its partner proportionally

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




4 JOINTLY CONTROLLED COMPANIES (continued)

The effect of the consolidation of these companies by the proportional consolidation method is as follows:

08.12.31 07.12.31

Non current assets 2,300,010,067 2,306,783,370Current assets 72,180,536 63,592,170Non current liabilities 1,293,110,570 1,276,838,289Current liabilities 101,489,548 97,417,133

2008 2007

Income 132,432,343 399,339,255Expenses (134,434,251) (169,854,762)

5 INVESTMENTS IN ASSOCIATES AND COMPANIES EXCLUDED FROM CONSOLIDATION

The associated companies and other companies excluded from consolidation, their head offices, percentages of their share capital heldby the Group and balance as of 31 December 2008 and 2007, are as follows:

31 December 2008

Head Net Balance sheet Net profitOffice Assets Liabilities Equity Profit % own amount held

Associated companies:Campo Limpo Lda S. Paulo (Brazil) 29,144,678 6,419,124 22,725,554 5,109,965 10.00% 2,272,558 510,996Mediterranean Cosmos ShoppingCentre Investments S.A. Athens (Greece) 205,964,757 131,419,616 74,545,141 12,576,854 19.95% 14,871,756 2,509,084SIC INDOOR – Gestão de Suportesde Publicidade, S.A. Lisbon 182,686 1,376,426 (1,193,740) (149,634) 35% – –Sierra Portugal Real Estate (“SPF”) (*) Luxemburg 410,203,997 266,291,257 143,912,740 (24,412,469) 42% 60,443,352 (10,253,237)Goodwill SPF 12,823,766 –Sonaegest – Soc. Gestora de Fundosde Investimento, S.A. Maia 1,939,235 140,099 1,799,136 125,023 20% 359,827 25,005

90,771,259 (7,208,152)

Other participations:Ercasa Cogeneración S:A Grancasa (Spain) 5% 48,091 –

48,091 –

90,819,350 (7,208,152)

(*) Amounts related to the consolidated accounts of “SPF”. This company owns the following investments:

% own

8ª Avenida Centro Comercial, S..A. 100%Arrábidashopping – Centro Comercial, S.A. 50%Gaiashopping I – Centro Comercial, S.A. 50%Gaiashopping II – Centro Comercial, S.A. 50%Loureshopping – Centro Comercial, S.A. 50%Oeste Retail Park – Gestão Galerias Comerciais, SA 50%Rio Sul – Centro Comercial, S.A. 50%Serra Shopping – Centro Comercial, S.A. 50%Sol Retail Park – Gestão Galerias Comerciais, SA 50%




5 INVESTMENTS IN ASSOCIATES AND COMPANIES EXCLUDED FROM CONSOLIDATION (continued)

31 December 2007

Head Net Balance sheet Net profitOffice Assets Liabilities Equity Profit % own amount held

Associated companies:Campo Limpo Lda S. Paulo (Brazil) 29,742,114 6,577,553 23,164,561 5,073,532 10.00% 2,316,582 507,353Mediterranean Cosmos ShoppingCentre Investments S.A. Athens (Greece) 203,074,222 95,310,432 107,763,790 17,274,225 19.95% 21,498,878 3,446,208SIC INDOOR – Gestão de Suportesde Publicidade, S.A. Lisbon 994,749 2,038,853 (1,044,104) 112,287 35% – –Sonaegest – Soc. Gestora de Fundosde Investimento, S.A. Maia 1,858,032 183,920 1,674,112 276,873 20% 334,822 55,375

24,150,282 4,008,936

Other participations:Ercasa Cogeneración S:A Grancasa (Spain) 5% 48,091 –

48,091 –

Group companies excluded from consolidation:Portlux Assets 1 Sarl Luxembourg 100% 12,500 –

12,500 –

24,210,873 4,008,936

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

During the years ended 31 December 2008 and 2007, the movement occurred in associated companies was as follows:

2008 2007

Opening balance 24,150,282 19,849,937SPF – entry effect on associated companies (Note 6)– Equity held 74,624,956 –– Goodwill 12,823,766 –Capital decrease (7,978,005) –Capital increase – 325,257Effect of the application of the equity method:

Hedging reserve (4,365,399) 136,297Translation reserve (555,019) 150,105Net profit (Note 36) (7,208,152) 4,008,936Dividends (721,170)Accumulated impairment losses (Note 36) – (320,250)

90,771,259 24,150,282




6 ACQUISITION AND SALE OF COMPANIES

The main acquisitions and sales of companies occurred during the years ended 31 December 2008 and 2007 were as follows:

Acquisition of subsidiaries:

In June 2008 the Group acquired 100% of the company S.C. SRP Development S.A. (now Project Sierra Four, Srl) (“Ploiesti”) for theamount of Euro 22,361,523, with a Goodwill of Euro 3,434,798.

In October 2008 the Group acquired 100% of the company Gli Orsi 1 Shopping Centre, Srl (the owner of the shopping centre“Gli Orsi” in Italy) (“Gli Orsi”), for the amount of Euro 96,220,321, with a Goodwill of Euro 4,164,977.

In January 2007, a jointly controlled company by Sonae Sierra Brasil BV sold Project Sierra Brasil 1 BV to Sierra Investments Holding BV(100% owned by the Group). Before this operation the financial statements of this company were integrated in the consolidated accountsby the proportional method, after the transaction the company was consolidated by the full consolidation method. The “Goodwill”generated on this transaction in the amount of Euro 15,676, was considered in the financial statements as operational expense ofthe year.

In March 2007, the jointly controlled company Larissa Development of Shopping Centers, SA (“Larissa”), acquired 100% of thecompanies Pantheon Plaza 1, SA, Pantheon Plaza 2, SA and Pantheon Plaza 3, SA (“Larissa subsidiaries”) for the amount of Euro7,729,500 with a goodwill of Euro 1,956,461.

In April 2007, the Group acquired 100% of the company River Plaza Mall, Srl (the owner of the shopping centre “River Plaza”in Romania) (“River Plaza”) for the amount of Euro 23,236,133, with a goodwill of Euro 1,333,614.

In September 2007, Sierra Development Holding, BV acquired 41.74% of the company S.C. Microcom Doi, Srl (the owner of the assetrelated with the “Craiova” project in Romania) and 100% of the following companies: KLC Holdings XII, SA and Lembo Services Ltd,the owners of the remaining 58.26% of the share capital of S.C. Microcom Doi, for the amount of Euro 32,033,132, with a goodwillof Euro 5,139,604.

In November 2007, the jointly controlled company Project SC 1 BV sold the company Ioannina Development of Shopping Centres, SA(“Ioannina”) to the company Project SC 2 BV (100% owned by the Group) by the amount of Euro 80,177. Before this operation thefinancial statements of the company were integrated in the consolidated financial statements by the proportional consolidation methodand after the transaction started to be consolidated by the full consolidation method.

In December 2007, the Group acquired the remaining 50% of the companies Gaia Shopping I-Centro Comercial, SA (owner of theshopping centre “GaiaShopping”) and ArrábidaShopping-Centro Comercial, SA (owner of the shopping centre “ArrábidaShopping”)for the amount of Euro 55,270,291 and Euro 49,915,091, respectively, with a goodwill of Euro 17,911,231 and Euro 12,229,864,respectively.

Sale of subsidiaries

In the 27 of March, 27 of June and 25 of July, the Group sold 40%, 9.692% and 8.305%, respectively, of its share in the Sierra PortugalReal Estate (“SPF”), which owns or co-owns the following assets:

Percentage of shareCompany Head office capital held by SPF

8ª Avenida Centro Comercial, S..A. Maia 100.00%Arrábidashopping – Centro Comercial, S.A. Maia 50.00%Gaiashopping I – Centro Comercial, S.A. Maia 50.00%Gaiashopping II – Centro Comercial, S.A. Maia 50.00%Loureshopping – Centro Comercial, S.A. Maia 50.00%Oeste Retail Park – Gestão Galerias Comerciais, SA Maia 50.00%Rio Sul – Centro Comercial, S.A. Lisbon 50.00%Serra Shopping – Centro Comercial, S.A. Covilhã 50.00%Sol Retail Park – Gestão Galerias Comerciais, SA Maia 50.00%

This sale generated a net gain of Euro 19,047,917. With the sale of the 8.305% occurred in July 2008, the SPF became an associatedcompany. As consequence, and with reference to 30 June 2008, the SPF was incorporated in the enclosed consolidated financialstatements by the equity method.




6 ACQUISITION AND SALE OF COMPANIES (continued)

In July 2008 the company Sierra Investments Holdings, BV (held at 100% by the Group) sold the 50% of the investment held in thejointly controlled Mediterrean Cosmos, BV. (which owns 39.9% of the company Pylea, S.A, from Greece) to Sierra Sierra EuropeanRetail Real Estate Assets Holdings, BV (“Sierra BV”), (held by the Group at 50,1%) by Euro 14,137,309. Considering that Sierra BV isheld by the Group in 50,1%, 49,9% of the total gain in this sale was recorded (Euro 1,683,647)) (Note 37). The company MediterreanCosmos, BV is still consolidated in the group accounts using the proportional consolidation method.

In January 2007, Sierra Investments Holdings, BV (100% owned by the Group) sold 50% of the financial position in the companiesOeste Retail Park, SA and Sol Retail Park, SA for the amount of Euro 25,000 each one, generating a gain on sale of Euro 15 each.After this transaction the companies were to be consolidated in the financial statements by the proportional consolidation method.

In January 2007, the Group sold 50% of the financial investment in the company Project Sierra Spain 3, SA for the amount of Euro61,000, with a gain on sale of Euro 2,397. After the sale the company was to be consolidated in the financial statements by theproportional consolidation method.

In January 2007, the Group sold 50% of the financial investment in the company Pantheon Plaza, BV, for the amount of Euro 9,100,with a gain on sale of Euro 1,429. After the sale the company was to be consolidated in the financial statements by the proportionalconsolidation method.

In August 2007, the Group sold 50% of the financial investment in Torre Ocidente, Imobiliária, SA (“Torre Ocidente“) and Torre Oriente,Imobiliária, SA (“Torre Oriente”) for the amount of Euro 5,925,797, with a gain on sale of Euro 2,248,095. Before this transaction thecompanies were integrated in the consolidated financial statements by the proportional consolidation method on a percentage of 50%and now that percentage is 25%.

In November 2007, the Group sold the financial investment owned (50%) in the join controlled company Lima Retail Park, SA (“LimaRetail Park”), for the amount of Euro 5,077,119. This sale was reported to 30 November 2007, with a gain on sale of Euro 1,639,149.The gain includes a reduction related with the cancellation of the goodwill accounted in the consolidated financial statements in theyear of the acquisition of the company, in the amount Euro 671,367.

In December 2007, the Group sold 50% of the financial investment in the company Loureshoping – Centro Comercial, SA (“LoureShopping”),for the amount of Euro 29,982,677, with a gain on sale of Euro 8,644,862. After the sale the company was consolidated in thefinancial statements by the proportional method.

Effect of the acquisitions and sales

The effect of the acquisitions and sales occurred during the years ended 31 December 2008 and 2007 was as follows:

2008—————————————————————————————

Acquisitions———————————————————

Ploiesti Gli Orsi Total

Cash and cash equivalents (I) 302 1,631,197 1,631,499Investment properties (Note 7) – – –Investment properties under construction (Note 7) 32,261,433 105,844,218 138,105,651Other current assets 17,740 5,133 22,873Deferred tax liabilities (Note 24) (3,600,278) (7,880,977) (11,481,255)Accounts payable and other liabilities – current (9,752,472) (7,544,227) (17,296,699)Minorities – – –

Identifiable assets and liabilities at acquisition date 18,926,725 92,055,344 110,982,069Goodwill:

Recorded as asset (Note 9) 3,434,798 4,164,977 7,599,775Recorded as cost – – –

Purchase amount (II) 22,361,523 96,220,321 118,581,844

Net cash flow (II-I) 22,361,221 94,589,124 116,950,345





2007———————————————————————————————————————————

Acquisitions———————————————————————————————————————————

Acquisitions 50%

Project Sierra Gaia Arrábida Larissa RiverBrasil 1, BV Ioannina Shopping Shopping Subsidiaries Plaza Craiova Total

Cash and cash equivalents (I) 650 50,266 569,402 6,211 1,304,371 215,560 294,107 2,440,567Investment properties (Note 7) – – 92,715,500 89,516,000 – 42,122,616 – 224,354,116Investment properties underconstruction (Note 7) – 22,889 – 2,375,011 12,792,000 – 39,755,203 54,945,103Tangible fixed assets – – – – 292 – – 292Other non current assets – – 74,371 87,239 189,311 – – 350,921Trade receivables – – 127,720 361,782 – 40,181 – 529,683Other current assets – 21,091 220,479 478,109 4,631 60,077 144,618 929,005Bank loans and shareholderloans – non current – – (35,341,459) (35,519,198) (5,324,967) (15,620,422) (8,129,900) (99,935,946)Deferred tax liabilities (Note 24) – – (20,370,783) (15,462,704) (1,956,461) (4,044,288) (5,140,193) (46,974,429)Other non current liabilities – – – (823) (823)Accounts payable and otherliabilities – current (7,226) (14,069) (2,036,170) (5,157,223) (1,236,138) (871,205) (29,484) (9,351,515)

Minorities – – – – – – – –Identifiable assets and liabilitiesat acquisition date (6,576) 80,177 35,959,060 36,685,227 5,773,039 21,902,519 26,893,528 127,286,974Dividends – – 1,400,000 1,000,000 – – – 2,400,000Goodwill:Recorded as asset (Note 9) – – 17,911,231 12,229,864 1,956,461 1,333,614 5,139,604 38,570,774Recorded as cost 15,676 – – – – – 15,676

Purchase amount (II) 9,100 80,177 55,270,291 49,915,091 7,729,500 23,236,133 32,033,132 168,273,424

Net cash flow (II-I) 8,450 29,911 54,700,889 49,908,880 6,425,129 23,020,573 31,739,025 165,832,857

The effect of the SPF sale occurred during 2008, was as follows:

31.03.08 30.06.08 30.06.08 Total

Cash and cash equivalents (I) 6,594,942 8,244,193 8,244,193Investment properties (Note 7) 419,751,000 425,876,000 425,876,000Investment properties under construction (Note 7) 3,589,678 47,831 47,831Deferred tax assets (Note 24) 2,352,305 2,534,304 2,534,304Derivative financial instruments 894,746 – –Trade receivables 1,794,493 1,746,304 1,746,304Other current assets 1,798,445 3,041,900 3,041,900Deferred tax liabilities (Note 24) (59,458,181) (61,880,291) (61,880,291)Bank loans and shareholder loans – non current (189,542,658) (190,817,356) (190,817,356)Bank loans and shareholder loans – current (5,628,432) (3,807,169) (3,807,169)Accounts payable and other liabilities – current (18,271,697) (14,542,330) (14,542,330)

Identifiable assets and liabilities at sales date 163,874,641 177,678,465 177,678,465% sold 40.000% 9.692% 8.305%

Minorities (II) 65,549,856 17,220,597 14,756,197

Profit/ (loss) on sale (III) 25,469,904 6,041,039 5,243,803 36,754,746(12,212,238) (2,959,025) (2,535,566) (17,706,829)

13,257,666 3,082,014 2,708,237 19,047,917

Sale amount (IV)=(II+III) 91,019,760 23,261,636 20,000,000 134,281,396

Net cash flow (IV-I) 84,424,818 15,017,443 11,755,807





With the sale of the 8.305% occurred in July 2008, the SPF became an associated company. As consequence, and with reference to30 June 2008, the SPF was incorporated in the enclosed consolidated financial statements by the equity method. The effect relatedto the consideration of the SPF as associated company, with reference at 30 June 2008, consisted in removing the net assets of theSPF (which includes the assets of the company and of its subsidiaries mentioned above),in the amount of Euro 74,624,956 (Note 5).The remaining goodwill related to this subgroup, in the amount of Euro 12,823,766 was also reclassified from the caption of “goodwill”to the caption “Investments in associates and companies excluded from consolidation” (Notes 5 and 9).

The effect of the sales occurred during 2007 was as follows:

2007————————————————————————————————————————————————————————

Sales————————————————————————————————————————————————————————

Sales of 50%

Sol Retail Oeste Retail Shopping C. Project Sierra Torre Torre Pantheon Lima RetailPark, SA Park, SA Colombo, BV Spain 3, SA LoureShopping Oriente Ocidente Plaza, BV Park Total

Cash and cash equivalents (I) 25,000 25,000 8,177 246,026 1,573,145 534,482 13,851 8,177 12,638 2,446,496

Investment properties (Note 7) – – – – 65,362,000 1,565,750 1,777,000 – 7,983,000 76,687,750

Investment properties underconstruction (Note 7) – – – 1,289,296 – 256,829 14,064 – – 1,560,189

Tangible fixed assets – – – – – 55 – – – 55

Goodwill (Note 9) – – – – – – – – 671,367 671,367

Deferred tax assets (Note 24) – – – – 900,685 – – – – 900,685

Trade receivables – – – – 149,439 29,624 20,612 – 57,594 257,269

Other current assets – – – 234,079 223,901 16,706 6,337 – 78,042 559,065

Deferred tax liabilities (Note 24) – – – – (9,654,198) 67,634 18,201 – (1,036,221) (10,604,584)

Bank loans and shareholderloans – non current – – – – (36,111,909) – – – (4,051,335) (40,163,244)

Accounts payable andother liabilities – current (15) (15) (506) (1,741,298) (1,105,248) (414,959) (27,771) (506) (277,116) (3,567,434)

Identifiable assets andliabilities at sales date 24,985 24,985 7,671 28,103 21,337,815 2,056,121 1,822,294 7,671 3,437,969 28,747,614

Minorities (Note 18) – – – – – (164,328) (36,385) – – (200,713)

Profit/ (loss) on sale (Note 37) 15 15 1,429 2,397 8,644,862 1,225,362 1,022,733 1,429 1,639,150 12,537,391

Sale amount (II) 25,000 25,000 9,100 30,500 29,982,677 3,117,155 2,808,642 9,100 5,077,119 41,084,292

Net cash flow (II-I) – – 923 (215,526) 28,409,532 2,582,673 2,794,791 923 5,064,481 38,637,796




7 INVESTMENT PROPERTIES

The movement in investment properties during the years ended 31 December 2008 and 2007 was as follows:

2008————————————————————————————————————————————————

Investment properties————————————————————————————————————————————————

in progress in progress atin operation “Fit Out” at cost fair value Advances Total

Opening balance 3,730,358,451 9,784,500 380,985,835 – 4,218,421 4,125,347,207Increases 42,208,338 550,000 215,581,603 – 5,000,000 263,339,941Write-off (Note 34) – – (53,037,911) – – (53,037,911)Fit-out receivables – (797,378) – – (797,378)Transfers 839,653 – (22,473,158) – (914,483) (22,547,988)Increases by transfer from investmentproperties in progress:

Production cost 299,959,140 1,400,000 (440,444,416) 139,796,306 (711,030) –Adjustment to fair value (Note 32) 37,433,441 (129,500) – 15,159,565 – 52,463,506

Variation in fair value of the investmentproperties between years (Note 32):

Gains 34,721,480 122,104 – – – 34,843,584Losses (316,328,629) (1,392,226) – – – (317,720,855)

Increases through concentrationof business activities (Note 6) – – 91,310,191 – – 91,310,191Sales of companies (Note 6) (423,869,500) (2,006,500) (47,831) – – (425,923,831)Currency translation differences (44,953,059) – (7,171,009) (7,778,309) (59,902,377)

Closing balance 3,360,369,315 7,531,000 164,703,304 147,177,562 7,592,908 3,687,374,089

2007

Investment properties

In operation “Fit Out” In progress Advances Total

Opening balance 2,687,017,137 10,910,802 344,216,421 2,330,408 3,044,474,768Increases 254,449,962 1,880,335 323,950,555 1,888,013 582,168,865Write-off – (650,000) (4,596,071) – (5,246,071)Fit-out receivables – (2,304,935) – – (2,304,935)Transfers – – (4,454,647) – (4,454,647)Increases by transfer from investmentproperties in progress:

Production cost 331,769,345 – (331,769,345) – –Adjustment to fair value (Note 32) 56,545,609 – – – 56,545,609

Variation in fair value of the investmentproperties between years (Note 32):

Gains 267,953,508 1,097,698 – – 269,051,206Losses (26,830,715) (612,400) – – (27,443,115)

Increases through concentrationof business activities (Note 6) 224,263,116 91,000 54,945,103 – 279,299,219Sale of companies (Note 6) (76,059,750) (628,000) (1,560,189) – (78,247,939)Currency translation differences 11,250,239 – 254,008 – 11,504,247

Closing balance 3,730,358,451 9,784,500 380,985,835 4,218,421 4,125,347,207

In 2008, the amount related to Increases through concentration of business activities of Euro 91,310,191 related to the effect of theentry in the consolidated accounts of the subsidiaries Ploiesti (Euro 32,261,433) and Gli Orsi (Euro 59,048,758). This last amount isdeducted of the advance payment made in 2007 and is already included in the opening balance (Euro 46,795,460).

The global crisis led to a reassessment of the risk profile of the emerging markets like Romania and, consequently, to an upwards shiftin the local market yields. As a consequence in the year ended in 31 December 2008 an impairment loss was recorded in the investmentproperties in progress “Ploiesti” and “Craiova”, in the amount of Euro 21,977,949 and Euro 31,059,962 (Note 34).

It was transferred from Investment Properties in progress to Assets held for sale the amount of Euro 14,641,984 related to the AlexaTower, property of the company Alexa Shoping Center, GmbH (Note 11). The Alexa Tower was classified as held for sale, because itsfuture sale is highly probable.




7 INVESTMENT PROPERTIES (continued)

At 31 December 2008 and 2007 investment properties in operation corresponded to the fair value of the Group’s proportion of thefollowing shopping centres:

08.12.31 07.12.31———————————————————————— ————————————————————————

% of 10 yr Exit % of 10 yr Exitconsolidation discount rate Yield Amount consolidation discount rate Yield Amount

Portugal:8ª Avenida – – – – 100% 8.60% 6.35% 70,838,000

AlgarveShopping 100% 7.90% 5.65% 149,053,000 100% 7.40% 5.15% 157,632,000

ArrábidaShopping 50% 8.25% 6.00% 90,530,500 100% 7.80% 5.55% 179,032,000

C C Continente de Portimão – – – – 50% 8.75% 6.50% 11,804,000

C C Modelo de Albufeira – – – – 50% 8.85% 6.60% 7,001,000

CascaiShopping 50% 7.75% 5.50% 175,940,000 50% 7.20% 4.95% 191,232,500

Centro Colombo 50% 7.75% 5.50% 396,941,500 50% 7.15% 4.90% 408,755,500

Centro Vasco da Gama 50% 7.30% 5.40% 157,613,500 50% 7.15% 4.90% 156,939,500

CoimbraShopping 100% 9.35% 7.10% 25,325,000 100% 8.65% 6.40% 35,120,000

Estação Viana 100% 8.75% 6.50% 82,513,000 100% 8.25% 6.00% 85,757,000

GaiaShopping 50% 8.20% 5.95% 87,267,000 100% 7.65% 5.40% 185,249,000

GuimarãeShopping 100% 8.80% 6.55% 46,653,000 100% 8.25% 6.00% 49,730,000

LoureShopping – – – – 50% 7.75% 5.50% 64,734,000

MadeiraShopping 50% 9.15% 6.90% 37,722,000 50% 8.55% 6.30% 40,090,500

MaiaShopping 100% 9.10% 6.85% 54,690,000 100% 8.45% 6.20% 60,827,000

NorteShopping 50% 7.70% 5.45% 203,064,000 50% 7.15% 4.90% 212,746,500

Parque Atlântico 50% 9.15% 6.90% 34,416,000 50% 8.55% 6.30% 36,855,000

RioSul Shopping – – – – 50% 7.75% 5.50% 57,773,000

Serra Shopping – – – – 50% 8.25% 6.00% 23,339,500

Torre Colombo Ocidente 25% 9.75% 7.50% 1,691,500 25% 9.25% 7.00% 1,801,250

Torre Colombo Oriente 25% 9.75% 7.50% 1,827,500 25% 9.25% 7.00% 1,576,500

ViaCatarina 50% 8.95% 6.70% 32,490,500 50% 8.35% 6.10% 34,348,500

1,577,738,000 2,073,182,250

Brazil:Parque D. Pedro 50% 13.45% 8.25% 108,067,905 50% 12.50% 10.50% 111,297,374

Pátio Boavista 50% 14.95% 9.75% 9,638,630 50% 13.50% 9.50% 11,960,687

Shopping Metrópole (83%) 50% 13.70% 8.50% 26,373,554 50% 12.50% 8.50% 30,246,860

Shopping Penha (73,18%) 50% 14.45% 9.25% 15,851,504 50% 13.00% 9.00% 18,353,723

Shopping Plaza Sul (30%) 50% 13.70% 8.50% 11,746,751 50% 12.50% 8.50% 11,084,751

Sierra Enplanta 50% 11,652,318 50% 12,384,806

183,330,662 195,328,201

Spain:Avenida M40 100% 12.35% 9.35% 30,742,000 100% 9.15% 6.45% 63,820,000

Dos Mares 100% 9.25% 6.25% 54,110,000 100% 8.15% 5.45% 59,329,000

El Rosal 100% 9.90% 6.90% 110,921,000 100% 8.85% 6.15% 131,130,000

Grancasa 50% 8.70% 5.70% 94,548,000 50% 7.70% 5.00% 100,507,000

Max Center 50% 8.75% 5.75% 83,196,500 50% 8.05% 5.35% 90,584,500

La Farga 50% 10.40% 7.40% 27,594,000 50% 8.65% 5.95% 31,673,500

Luz del Tajo 100% 9.35% 6.35% 96,798,000 100% 8.05% 5.35% 106,904,000

Plaza Éboli 100% 10.60% 7.60% 46,424,000 100% 8.80% 6.10% 57,994,000

Plaza Mayor 100% 11.80% 8.80% 57,965,000 100% 9.60% 6.90% 76,381,000

Plaza Mayor Shopping 100% 9.60% 6.60% 63,582,000 – – – –

Parque Principado 50% 9.20% 6.20% 84,997,000 50% 7.80% 5.10% 95,554,500

Valle Real 50% 9.10% 6.10% 48,979,000 50% 8.05% 5.35% 49,573,500

Zubiarte 50% 11.00% 8.00% 25,353,500 50% 8.65% 5.95% 41,600,000

825,210,000 905,051,000





08.12.31 07.12.31———————————————————————— ————————————————————————

% of 10 yr Exit % of 10 yr Exitconsolidation discount rate Yield Amount consolidation discount rate Yield Amount

Italy:Airone 100% 8.70% 7.70% 17,796,000 100% 8.15% 6.15% 18,642,000

Valecenter/Warner Village 100% 8.00% 6.90% 147,302,000 100% 8.00% 5.50% 149,868,000

Freccia Rossa 50% 8.10% 5.80% 76,427,000 – – – –

Gli Orsi 100% 8.50% 6.20% 123,679,000 – – – –

365,204,000 168,510,000

Germany:Alexa 50% 6.50% 6.00% 171,461,653 50% 5.50% 5.50% 176,950,000

Münster Arkaden 100% 6.50% 5.75% 156,290,000 100% 5.50% 5.50% 168,634,000

327,751,653 345,584,000

Romania:River Plaza Mall 100% 9.75% 8.00% 37,542,000 100% 8.50% 6.75% 42,703,000

37,542,000 42,703,000

Greece:Pantheon Plaza 50% 10.75% 7.00% 43,593,000 – – – –

43,593,000 –

3,360,369,315 3,730,358,451

The fair value of each investment property was determined by means of a valuation as of the balance sheet date made by an independentspecialised entity (Cushman & Wakefield).

The valuation of these investment properties was made in accordance with the Practice Statements of the RICS Appraisal and ValuationManual published by The Royal Institution of Chartered Surveyors (“Red Book”), located in England.

The methodology used to compute the market value of the investment properties consists in preparing 10 years projections of incomeand expenses of each shopping mall which are then discounted to the balance sheet date using a discount market rate. The residualamount at the end of year 10 is computed by applying a return rate (“Exit yield” or “cap rate”) on the projected net income of year11. The market values so obtained are then tested by calculating and analyzing the capitalization yield that is implicit in those values –corresponding to the yield shown in the list above. Projections are intended to reflect the actual best estimate of the valuer regardingfuture revenues and costs of each shopping. Both the return rate and discount rate are defined in accordance to the local real estateand institutional market conditions, being the reasonability of the market value thus obtained tested in terms of initial return.

In the valuation of investment properties some assumptions, that in accordance with the Red Book are considered to be special, werein addition considered, namely in the case of recently inaugurated shopping centres, in which the possible costs still to be incurredwere not considered, as the accompanying financial statements already include a provision for them.

The open market value of the investment properties under development as at the reporting date is calculated by subtracting from theopen market value at opening, calculated using the methodology described above, the investment necessary to finish the project andweighted by a risk factor defined by the valuer.





Market uncertainty

According to the valuer whenever uncertainty could have a material effect on an opinion of value, the valuation needs to drawattention to this, indicating the cause of the uncertainty and the degree to which this is reflected in the valuation reported.

Since September 2008 we have seen unprecedented events, such as the failure of several major banks, the effective nationalization ofothers, and substantial reductions in interest rates. The global banking crisis and consequent hiatus of the debt markets, coupled withthe downturn in the world economies, have caused unusually high levels of volatility in the European property market in recentmonths. The market has experienced sharp fall and is also far less liquid, with fewer transactions being completed.

As a consequence, there has been a significant reduction in market evidence upon which to base the valuation and so a greater degreeof judgment had to be exercised.

The valuer considers that although most recent transactions could be considered distressed, it is inappropriate to conclude all recentmarket activity represents forced transactions. An imbalance between supply and demand (for example, fewer buyers than sellers) isnot always a determinant of a forced transaction. A seller might be under financial pressure to sell, but it is still available to sell at amarket price if there is more than one potential buyer in the market and a reasonable amount of time is available for marketing.Similarly, transactions initiated during bankruptcy should not automatically be assumed to be forced.

It has been held that valuers may properly conclude within a range of values. This range is likely to be greater in an illiquid marketwhere inherent uncertainty exists and a greater degree of judgment must therefore be applied. The valuers strongly recommend thatthe company keep the valuation of the subject properties under review. The company should also anticipate a longer marketing periodthan would previously have been expected in the event that any property is offered for sale.

As of 31 December 2008 and 2007 the recoverable amount of the fit out contracts existing in each investment property was as follows:

08.12.31 07.12.31———————————————————————— ————————————————————————

% of 10 yr % of 10 yrconsolidation discount rate Yield Amount consolidation discount rate Yield Amount

Portugal:8ª Avenida – – – – 100% 8.60% 6.35% 647,000

AlgarveShopping 100% 7.90% 5.65% 260,000 100% 7.40% 5.15% 357,000

Estação Viana 100% 8.75% 6.50% 1,013,000 100% 8.25% 6.00% 1,222,000

Centro Vasco da Gama 50% 7.30% 5.40% 439,000 – – – –

CoimbraShopping 100% 9.35% 7.10% 38,000 – – – –

GaiaShopping 50% 8.20% 5.95% 43,000 100% 7.65% 5.40% 182,000

LoureShopping – – – – 50% 7.75% 5.50% 628,000

MadeiraShopping 50% 9.15% 6.90% 112,000 50% 8.55% 6.30% 172,000

NorteShopping 50% 7.70% 5.45% 649,000 50% 7.15% 4.90% 675,000

Parque Atlântico 50% 9.15% 6.90% 487,500 50% 8.55% 6.30% 526,500

RioSul Shopping – – – – 50% 7.75% 5.50% 505,500

Serra Shopping – – – – 50% 8.25% 6.00% 249,500

3,041,500 5,164,500

Spain:Avenida M40 100% 12.35% 9.35% 794,000 100% 9.15% 6.45% 1,286,000

Dos Mares 100% 9.25% 6.25% 39,000 100% 8.15% 5.45% 62,000

El Rosal 100% 9.90% 6.90% 539,000 100% 8.85% 6.15% 800,000

Plaza Mayor 100% 11.80% 8.60% 1,888,000 100% 9.60% 6.90% 2,472,000

3,260,000 4,620,000

Italy:Freccia Rossa 50% 8.10% 5.80% 1,229,500 – – – –

7,531,000 9,784,500





The fair value of the fit out contracts was determined by means of a valuation as of the balance sheet date made by an independentspecialised entity (Cushman & Wakefield). The methodology used to compute the fair value of the fit out contracts consisted in determiningthe discounted estimated cash flows of each one of the fit out contracts, using a discounted marked rate, similar to the one used indetermining the fair value of the investment property to which each fit out contract relates.

During the years ended on 31 December 2008 and 2007, the income (fixed rents (net of possible discounts), variable rents, commonspaces rents, key income and transfer fees) and the corresponding direct operating expenses (property tax, insurance expense, maintenanceexpense, management fee and asset management fee and other direct operating expenses), relating the investment properties of theGroup, had the following detail:

Rents Direct operating expenses—————————————————— ——————————————————

08.12.31 07.12.31 08.12.31 07.12.31

Portugal:AlgarveShopping 10,091,625 10,116,260 454,923 541,253ArrabidaShopping 9,383,700 5,635,861 438,733 554,418C C Modelo de Albufeira 348,295 682,182 5,952 15,698CascaiShopping 11,670,079 11,540,026 512,849 1,273,249Centro Colombo 23,329,973 23,816,245 1,541,114 2,493,906Centro Vasco da Gama 9,526,815 9,348,504 562,079 944,131CoimbraShopping 2,394,059 2,511,123 115,999 275,935Estação Viana 5,596,497 5,611,000 426,934 466,141GaiaShopping 9,166,692 6,221,339 375,403 465,515GuimarãeShopping 3,825,418 3,967,360 222,600 258,544LoureShopping 1,747,789 7,055,735 66,790 1,340,759MadeiraShopping 3,451,399 3,443,044 176,053 226,471MaiaShopping 4,608,491 4,629,010 327,327 431,9198ª Avenida 2,139,485 3,047,257 134,960 1,342,190NorteShopping 13,436,175 13,171,253 621,023 1,074,298Parque Atlântico 2,705,678 2,707,887 83,072 170,787C C Continente de Portimão 649,709 1,147,959 58,947 27,635RioSul Shopping 1,775,526 3,587,401 (222,392) 383,280Serra Shopping 747,138 1,519,507 55,771 57,440Viacatarina 2,401,928 2,615,128 138,095 214,821

Brazil:Parque D. Pedro Shopping 11,353,444 9,719,644 32,361 33,779Pátio Boavista 3,895,518 3,492,833 215,948 161,312Pátio Penha (73.18%) 1,918,847 1,748,118 148,981 137,726Plaza Sul (30%) 1,132,360 843,756 67,516 46,121Sierra Enplanta 1,477,718 1,256,394 95,434 74,728

Spain:Avenida M 40 4,156,149 4,697,855 538,454 360,140El Rosal 7,698,816 1,070,004 46,550 1,498,548Dos Mares 3,679,598 3,591,808 233,217 143,731Iberian (Grancasa, Kareaga e Valle Real) 14,445,470 13,797,775 348,666 176,400Plaza Éboli 3,426,921 3,456,982 345,978 242,399La Farga 2,073,483 1,985,064 85,315 55,728Luz del Tajo 6,822,283 6,582,772 464,855 269,481Plaza Mayor 4,795,047 4,754,037 443,054 208,930Plaza Mayor Shopping 1,142,267 – 1,180,533 –Parque Principado 5,586,810 5,436,741 283,871 534,496Zubiarte 2,176,221 2,458,080 177,383 91,813

Italy:Airone 1,203,055 1,350,454 52,668 53,575Valecenter 7,906,481 5,288,104 550,882 (247,638)Freccia Rossa 4,130,252 – 1,036,011 –Gli Orsi 2,373,449 – 725,051 –





Rents Direct operating expenses—————————————————— ——————————————————

08.12.31 07.12.31 08.12.31 07.12.31

Germany:Münster Arkaden 8,572,904 5,227,610 51 201,074Alexa 9,089,454 2,391,683 741,174 3,085,550

Romania:River Plaza Mall 3,039,206 2,057,365 320,043 142,433

Greece:Pantheon Plaza 1,550,977 – 210,102 –

232,643,201 203,581,160 14,440,330 19,828,716

At 31 December 2008 and 2007 the following investment properties had been given in guarantee of bank loans:

> Airone > Leiria

> Alexa > Loop 5

> Algarveshopping > Luz del Tajo

> Alverca > Madeirashopping

> Arrabidashopping > Maiashopping

> Avenida M40 > Max Center

> Cascaishopping > Munster Arkaden

> Centro Colombo > Norteshopping

> Centro Vasco da Gama > Parque Atlântico

> Coimbrashopping > Parque Principado

> Dos Mares > Plaza Éboli

> El Rosal > Plaza Mayor

> Estação Viana > Plaza Mayor Shopping

> Freccia Rossa > River Plaza Mall

> Gaiashopping > Torre Ocidente

> Gli Orsi > Torre Oriente

> Grancasa > Valecenter

> Guimarãeshopping > Valle Real

> La Farga > Viacatarina

> Airone > Zubiarte

At 31 December 2008 and 2007 there were no material contractual obligations to purchase, construct or develop investmentproperties or for repairs or maintenance, other than those referred to above.





Investment properties in progress at 31 December 2008 and 2007 are made up as follows:

08.12.31 07.12.31

Investment property at cost:Portugal:Alverca 6,010,683 5,990,071Arrábidashopping – expansion – 4,750,022Cacém Shopping 2,169,920 2,073,838Centro Bordalo 2,860,384 2,385,075Parque de Famalicão 1,255,000 1,255,000Setubal Retail Park 1,466,531 1,572,328GuimarãeShopping – expansion 208,634 –Others – 171,180

Germany:Alexa – 14,641,984

Brazil:Uberlândia Shopping 2,832,749 3,061,213Boulevard Londrina Shopping 225,163 –Goiânia Shopping 4,665,931 –Pátio Boavista 1,292,352 –

Spain:Plaza Mayor Shopping – 35,467,867Pulianas Shopping 12,786,749 11,493,694Dos Mares – expansão 2,809,804 2,809,804Alfaz del Pi 19,448,408 –Los Barrios 6,402,127 –

Greece:Aegean Park 9,763,211 9,690,412Pantheon Plaza 1,765,343 27,711,214Galatsi Shopping 8,154,296 6,318,553Ioannina 24,850,480 20,791,597

Italy:Freccia Rossa – 64,526,976Gli Orsi – 46,795,459Le Terraze 7,635,583 3,782,358Caldogno 9,325,000 8,277,310Pavia 7,510,471 7,282,978Others 12,913 –

Romania:Craiova Shopping 24,691,249 40,959,750Ploiesti Shopping 13,452,316 –

172,296,212 321,808,683Investment property at fair value:Portugal:LeiriaShopping 13,762,501 528,462Torres Oriente and Ocidente 6,620,569 384,851

Brazil:Manauara Shopping 35,885,040 11,257,692

Germany:Loop 5 90,909,452 51,224,568

147,177,562 63,395,573

319,473,774 385,204,256





The Aegean Park investment property in progress corresponds to the value of a site in Athens, Greece. In accordance with the informationreceived, the local Municipal Authorities intention is to classify part of the site as green area, and the Management is being involvedin negations with the local Municipal Authorities with the objective of determining which will be the final use of that site. The Boardof Directors still believes that there are no losses in the realization value of the site.

Investment properties in progress include borrowing expenses incurred during the construction period. As of 31 December 2008 and2007, total borrowing expenses capitalised amounted to Euro 17,087,140 and Euro 17,764,867, respectively.

8 PROPERTY, PLANT AND EQUIPMENT

The movement in property, plant and equipment and corresponding accumulated depreciation during the years ended 31 December2008 and 2007 was as follows:

2008 2007———————————————————————————————————————————— —————

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

constructions equipment equipment equipment utensils fixed assets in progress Total Total

Assets:Opening balance 1,035,426 1,222,946 157,236 3,676,592 308,297 912,496 63,035 7,376,028 6,077,703Increases 436,185 442,266 103,409 802,725 44,849 144,864 9,189 1,983,487 1,366,854Sales – – (12,655) (94,860) – – – (107,515) (75,570)Transfers and disposals (22,034) 22,673 – 3,199 (200) – (63,035) (59,397) (30,631)Currency translation differences – (88,379) (39,442) (82,819) – (346) – (210,986) 39,239Change in consolidation perimeter – – – (292) – – – (292) (1,567)

Closing balance 1,449,577 1,599,506 208,548 4,304,545 352,946 1,057,014 9,189 8,981,325 7,376,028

Accumulated depreciationand impairment losses:Opening balance 522,901 988,836 72,587 2,551,519 184,728 703,268 – 5,023,839 4,323,185Depreciation for the year 163,963 138,803 34,116 514,218 24,283 85,955 – 961,338 732,552Impairment Losses for the year – – – – – – – – –Sales – – (12,655) (24,627) – – – (37,282) (32,608)Transfers and disposals (3,543) (1,022) – (32,020) – – – (36,585) (20,813)Currency translation differences – (25,155) (10,836) (51,731) – (41) – (87,763) 23,327Change in consolidation perimeter – – – – – – – – (1,804)

Closing balance 683,321 1,101,462 83,212 2,957,359 209,011 789,182 – 5,823,547 5,023,839

Net assets 766,256 498,044 125,336 1,347,186 143,935 267,832 9,189 3,157,778 2,352,189




9 GOODWILL

The movement in goodwill during the years ended 31 December 2008 and 2007 was as follows:

2008 2007

Assets:Opening balance 96,294,760 58,395,353Increases (Note 6) 7,765,255 38,570,774Sales (Note 6) (17,706,829) (671,367)Transfer to associated companies (Note 5 and 6) (12,823,766) –Price adjustment 389,500 –Exchange rate change (165,480)Disposals and regularisations (2,847,064) –

Closing balance 70,906,376 96,294,760

Accumulated depreciation andimpairment losses:Opening balance 13,331,443 13,331,443Impairments for the year (note 34) 10,530,863 –Sales and disposals (2,847,064) –

Closing balance 21,015,242 13,331,443

Net assets 49,891,134 82,963,317

During the period ended 31 December 2008 the goodwill of Sierra Management Spain was written-off given that its net amount was zero.




9 GOODWILL (continued)

At 31 December 2008 and 2007 goodwill was made up as follows:

08.12.31 07.12.31——————————————————————— ———————————————————————

Depreciation Accumulatedand impairment depreciation

Year of losses of the and impairment Book Bookacquisition Amount year (Note 34) losses value value

Sierra Management Spain, SA1999 1,518,231 – 1,518,231 – –2000 45,211 – 45,211 – –2002 1,274,080 – 1,274,080 – –2003 9,542 – 9,542 – –

(2,847,064) (2,847,064) – –

– – – – – –

Iberian Assets, S.A:Grancasa 2002 2,673,793 1,203,207 1,470,586 1,470,586Max Center 2002 8,287,406 3,729,334 4,558,072 4,558,072Valle Real 2002 (1,014,298) – (456,434) (557,864) (557,864)Valle Real 2003 1,667,583 – 667,034 1,000,549 1,000,549

11,614,484 – 5,143,141 6,471,343 6,471,343

La Farga 2002 132,194 – 59,488 72,706 72,7062005 406,310 – 159,433 246,877 246,877

538,504 – 218,921 319,583 319,583

Alexa 2004 10,876,616 – – 10,876,616 10,876,6162005 (7,995,503) – – (7,995,503) (7,995,503)

2,881,113 – – 2,881,113 2,881,113

ArrábidaShopping 2007 12,229,864 – – 12,229,864 12,229,8642008 389,500 – – 389,500 –2008 (7,318,853) – – (7,318,853) –2008 (5,300,511) – – (5,300,511) –

– – – – 12,229,864

GaiaShopping 2007 17,911,231 – – 17,911,231 17,911,2312008 (10,387,977) – – (10,387,977) –2008 (7,523,254) – – (7,523,254) –

– – – – 17,911,231Parque Principado 2004 997,416 – – 997,416 997,416Avenida M40 2005 1,180,575 – 1,180,575 – –Plaza Eboli 2005 3,355,876 – 2,190,514 1,165,362 1,165,362Luz del Tajo 2005 3,655,115 – 736,126 2,918,989 2,918,989Dos Mares 2005 1,298,307 – – 1,298,307 1,298,307Valecenter 2005 29,355,532 – 1,015,102 28,340,430 28,340,430River Plaza Mall 2007 1,333,614 – – 1,333,614 1,333,614Craiova 2007 5,139,604 5,139,604 5,139,604 – 5,139,604Larissa 2007 1,956,461 1,956,461 1,956,461 – 1,956,461Ploiesti (Note 6) (*) 2008 3,434,798 3,434,798 3,434,798 – –Gli Orsi (Note 6) 2008 4,164,977 – – 4,164,977 –

70,906,376 10,530,863 21,015,242 49,891,134 82,963,317

(*) includes a negative exchange rate variation since the acquisition date of Euro 165.480

The impairment tests made to the goodwill are based on the “Net Asset Value” (“NAV”) at the balance date of the participations held.

The impairment losses recorded during 2008 were made directly in goodwill.




10 INTANGIBLE ASSETS

The movement in intangible assets and corresponding accumulated depreciation during the years ended 31 December 2008 and 2007was as follows:

2008 2007————————— —————————

Other rights Other rights

Assets:Opening balance 14,073,663 13,466,398Increases 487,158 604,623Currency translation differences (11,725) –Sales, disposals and regularisations (162,404) 2,642

Closing balance 14,386,692 14,073,663

Accumulated depreciation and impairment losses:Opening balance 6,966,295 5,668,926Depreciation for the year 1,407,524 1,297,310Currency translation differences (5,570) –Sales, disposals and regularisations – 59

Closing balance 8,368,249 6,966,295

Net assets 6,018,443 7,107,368

As of 31 December 2008, “Other rights” include the amount of Euro 4,660,387 (net of accumulated depreciation and impairmentlosses in the amount of Euro 5,058,876), relating the management right acquired in September 2002 of five shopping centres locatedin Spain, four of which (Grancasa, Max Center, La Farga and Valle Real) are currently in operation. This right is being depreciated duringa period of 12 years (corresponding to the initial contract period plus an additional equal period), this being the estimated period torecover the investment.

11 ASSETS HELD FOR SALE

At 31 December 2008 assets held for sale were made up as follows:

2008

Alexa Tower:Opening balance –Increase 565,000Transfer 14,641,984Impairment (Note 34) (3,641,984)

Closing balance 11,565,000




12 OTHER NON CURRENT ASSETS

At 31 December 2008 and 2007 other non current assets were made up as follows:

08.12.31 07.12.31

Advances on account of investments 917,193 16,310,602Municipal Council of Lisbon 7,776,954 7,776,954Municipal Council of Malaga 1,024,216 1,024,216Rent deposits of tenants 10,070,174 8,788,470Other non current assets 1,600,777 1,453,615

21,389,314 35,353,857Accumulated impairment losses on non current assets (Note 30) (262,892) (262,892)

21,126,422 35,090,965

The amount of Euro 16,310,602 corresponds to an advance payment for the acquisition of the share capital of the company that ownsthe investment property in progress “Ploiesti”, in Romania, which has occurred in 2008.

The amount of Euro 7,776,954 due by the Municipal Council of Lisbon, relates to works developed by the jointly controlled companyEmpreendimentos Imobiliários Colombo, S.A. (“Colombo”) in the area surrounding the Centro Colombo. These works were developedon behalf of the Municipal Council of Lisbon (“CML”) in accordance with protocols signed between the technical services of CML andColombo at the end of 2001. On the other hand, the caption “Other noncurrent liabilities”, as of 31 December 2008 and 2007 includesthe amount of Euro 3,243,374 (Note 23) relating to works developed by CML on behalf of Colombo, and licenses. A legal action againstCML was presented in 2001, reclaiming the totality of the improvements made by Colombo on account of CML and correspondinginterests and other expenses incurred by Colombo under the above mentioned protocols. The Colombo Board of Directors believes thatthe legal action will be favourable to Colombo and consequently did not record any impairment loss to cover eventual losses on thisaccount receivable.

The amount of Euro 1,024,216 receivable from the Municipal Council of Malaga relates to the cost of the roads built by Plaza Mayoron account of that entity at the Plaza Mayor shopping centre.

The amount of Euro 10,070,174 and Euro 195,292 (Note 14) relates to the deposit in official entities of rents deposits received fromtenants of shopping centres located in Spain (Max Center, Grancasa, La Farga, Valle Real, Plaza Mayor, Parque Principado, AvenidaM40, Luz del Tajo, Plaza Éboli, Plaza Mayor, Dos Mares, El Rosal and Zubiarte). The rent deposits received from tenants are classifiedunder “Other non current payables” (Note 23) and “Other payables” (Note 28).

13 TRADE RECEIVABLES

At 31 December 2008 and 2007 trade receivables were made up as follows:

08.12.31 07.12.31

Accounts receivable from customers:Portugal 24,174,223 17,229,320Brazil 4,497,938 7,773,086Spain 12,484,699 8,014,158Italy 5,330,726 3,218,416Germany 1,842,964 1,403,599Other customers 3,037,050 1,285,931

51,367,600 38,924,510Accumulated impairment losses on accounts receivable from customers (Note 30) (17,351,068) (15,096,881)

34,016,532 23,827,629

The Group’s exposure to credit risk is attributed to accounts receivable relating to the operating activity of the Group. The amountsshown in the balance sheet are net of the corresponding impairment losses on accounts receivable, which were estimated by theGroup, based on the past experience of the Group and assessment of the economic environment. The Board of Directors believes thatthe carrying amount of its trade receivables is similar to the corresponding fair value. The Group has not a significant concentration ofcredit risk, as that risk is diluted over a variety of different customers.




13 TRADE RECEIVABLES (continued)

According to the information included in the balance sheet, the ageing of the trade receivables is as follows:

08.12.31 07.12.31

Not due 6,940,976 7,608,083Due but not impaired:0-30 days 10,058,429 5,595,36730-90 days 10,340,241 5,209,451+ 90 days 6,309,979 5,567,158Due and impaired:0-30 days 1,208,172 804,49790-180 days 948,107 667,024180-360 days 6,165,028 2,824,013+ 360 days 9,396,668 10,648,917

51,367,600 38,924,510

14 OTHER RECEIVABLES

At 31 December 2008 and 2007 this caption was made up as follows:

08.12.31 07.12.31

RI Management SPV6 15,000,000 –Rent deposits of tenants (Note 12) 195,292 490,777Luxco1 e Luxco2 – 205,556TIIA – 275,909Paneuropeia, SGPS – 2,057,576Tax notification paid 1,501,294 1,501,294Escrow account 2,224,081 2,224,081Advances to suppliers 6,469,430 3,016,340Gift cheques (Note 28) – 5,111,034Other 9,315,098 7,773,888

34,705,195 22,656,455Accumulated impairment losses on other receivables (Note 30) (91,535) (207,028)

34,613,660 22,449,427

The amount of Euro 15,000,000 refers to an advance made for the acquisition of a project in Romania. This advance is guaranteeby a pledge of the land made in favour of the Group.

The amount of Euro 1,501,294 includes:

> The amount of Euro 791,418 related to tax notifications on the income tax statements relating to years 1991 to 1997, paid byCascaishopping – Centro Comercial, SA (“Cascaishopping”) to tax authorities. The corrections proposed by tax authorities relatebasically to the depreciation policy of improvements made in third parties property that, for tax purposes, were being depreciatedin five years, and that the Tax Authorities believe should be depreciated in 50 years. Cascaishopping contested the tax notificationsreceived and did not record any impairment to cover eventual losses on those amounts, as the Board of Directors believes that theresult will be favourable to Cascaishopping;

> The amount of Euro 709,876 (of which Euro 597,830 relates to corporate tax and Euro 112,046 relates to interest), relates withthe payment in 2007 by Colombo, of the note of liquidation of 2002 corporate tax, consequence of the non acceptance by the taxauthorities of the improvements depreciation policy in 2001, applicable to improvements made in property of the Municipal Councilof Lisbon. Colombo contested the tax notifications received and did not record any impairment loss to face eventual losses on thoseamounts, as the Board of Directors believes that the result will be favourable to Colombo.

The Group’s exposure to credit risk is attributed to accounts receivable relating the operating activity of the Group. The amounts shownin the balance sheet are net of the corresponding impairment losses on accounts receivable, which were estimated by the Group, basedon the past experience of the Group and assessment of the economic environment. The Board of Directors believes that the carryingamount of its trade receivables is similar to the corresponding fair value. The Group has not a significant concentration of credit risk,as that risk is diluted over a variety of different customers.

According to the information included in the balance sheet, the average ageing of these receivables is less than 90 days.




15 OTHER CURRENT ASSETS


08.12.31 07.12.31

Interest income receivable 2,204,398 3,283,309Variable rents receivable 3,315,789 3,255,029Recovered costs receivable 4,650,593 1,510,175Deferred rents 142,342 108,867Deferred costs with projects 3,990,208 5,040,107Deferred costs with financing 354,057 569,436Management and administration services receivable 1,958,924 3,230,520Others 8,609,240 5,954,938

25,225,551 22,952,381

The amount of Euro 3,990,208 includes expenses related to marketing, administrative expenses and development fees which willbe considered as cost on the shopping centre opening date.

16 CASH AND CASH EQUIVALENTS

At 31 December 2008 and 2007 cash and cash equivalents was made up as follows:

08.12.31 07.12.31

Cash 323,339 313,631Bank deposits payable on demand 36,756,924 44,660,500Treasury applications 73,175,709 20,716,307

110,255,972 65,690,438Short term facilities (Note 20) (10,700,853) (9,146,138)Bank overdrafts (Note 20) (1,339,570) (555,652)

98,215,549 55,988,648

The treasury applications relate to term deposits made by several companies included in consolidation reimbursable in less than threemonths of inception and that bear interest at market interest rates.

17 SHARE CAPITAL AND LEGAL RESERVES

At 31 December 2008 the share capital was made up of 32,514,000 fully subscribed and paid up ordinary shares of Euro 4.99 each.

The following entities own the share capital at 31 December 2008 and 2007:

Entity 2008 2007

Sonae SGPS, S.A. 50.00% 50.00%Grosvenor Investments, (Portugal), Sarl 50.00% 50.00%

At 31 December 2008 and 2007 the legal reserves were as follows:

08.12.31 07.12.31

Legal reserve 32,448,972 32,448,972Special reserve 24,880,140 24,880,140

57,329,112 57,329,112




17 SHARE CAPITAL AND LEGAL RESERVES (continued)

Legal reserve: According to the company law, at least 5% of the annual net profit, if positive, should be used in the reinforcementof the legal reserve until it represents 20% of the capital. This reserve can only be distributed in case of liquidation of the company,but can be used to cover losses after the other reserves have been used, or can be incorporated in the share capital.

As mentioned in the Portuguese company law, Sonae Sierra constituted a special reserve related to the 2003 capital reduction, to whichthe rules of the legal reserve apply, by an amount equivalent to the nominal amount of the shares extinguished (Euro 24,880,140).

18 MOVEMENT IN MINORITY INTERESTS

During the years ended 31 December 2008 and 2007 the movement in minority interests was as follows:

Variation in Increase/ Variation in Acquisitions/Balance as of Net translation decrease of hedging Sales Balance as of

07.12.31 Profit reserve share capital reserve Dividends (Note 6) Others 08.12.31

Fundo Parque D. Pedro 2,507,175 682,960 (277,450) – – (493,706) – (157,566) 2,261,413Sierra Investimentos Brasil, Ltda 206,025 (101,169) (3,953) 22,749 – – – (52,079) 71,573Plaza Mayor Shopping, SA 1,224,605 202,930 – – – – – – 1,427,535Pátio Boavista Shopping, Ltda. 2,152,679 162,816 (439,597) (82,335) – – – (57,462) 1,736,101Pátio Penha Shopping, Ltda. 902,864 100,593 (177,294) (84,254) – (21,320) – (50,759) 669,830Pátio Sertório Shopping Ltda 629,137 462,423 (210,200) 17,428 – – – 103,691 1,002,479Pátio São Bernardo Shopping Ltda 488,311 157,413 (116,033) – – (13,083) – (47,259) 469,349Sierra Enplanta, Ltda 517,633 114,793 (110,458) 10,027 – (32,135) – (45,617) 454,243Sonae Sierra Brasil SA 30,698 (33,087) (6,651) (34,407) – (9,116) – 84,592 32,029El Rosal Shopping, SA 2,091,681 (8,122,387) – – (648,235) – – 54 (6,678,887)Sierra BV 437,595,624 (76,167,354) – 74,850,000 (12,495,970) (4,583,616) (1,683,827) 574,916 418,089,773Sierra Portugal Fund – 441,523 – – (1,220,097) – 778,574 – –Others 623,133 40,456 (390,660) 282,424 – – – (100,552) 454,801

448,969,565 (82,058,090) (1,732,296) 74,981,632 (14,364,302) (5,152,976) (905,253) 251,959 419,990,239

Variation in Increase/ Variation in Acquisitions/Balance as of Net translation decrease of hedging Sales Balance as of

06.12.31 Profit reserve share capital reserve Dividends (Note 6) Others 07.12.31

Alexa Holding + Side 316,772 – – – – – (316,772) – –Fundo Parque D. Pedro 2,302,325 788,966 151,950 – – (239,906) (526,163) 30,003 2,507,175Sierra Investimentos Brasil, Ltda 290,952 (53,225) 220,576 (242,947) – – (68,681) 57,839 204,514Plaza Mayor Shopping, SA 1,224,605 – – – – – – – 1,224,605Pátio Boavista Shopping, Ltda. 951,663 331,520 64,122 1,007,724 – – (218,681) 29,330 2,165,678Pátio Penha Shopping, Ltda. 889,863 162,334 26,093 – – – (204,480) 34,593 908,403Pátio Sertório Shopping Ltda 6,036 – 15,644 609,229 – – (1,387) (6,421) 623,101Pátio São Bernardo Shopping Ltda 324,035 143,397 32,556 88,436 – – (74,460) (25,653) 488,311Sierra Enplanta, Ltda 476,541 122,507 57,479 17,196 – (19,038) (109,771) (23,277) 521,637Sonae Sierra Brasil SA (40,049) 17,515 17,646 (131,607) – – (15,246) 182,439 30,698El Rosal Shopping, SA 687,516 1,404,165 – – – – – – 2,091,681Sierra BV 398,867,387 82,482,962 – (9,943) 1,328,723 (43,727,188) – – 438,941,941Others (785,006) (150,068) (29,929) – 733 – – 226,091 (738,179)

405,512,640 85,250,073 556,137 1,338,088 1,329,456 (43,986,132) (1,535,641) 504,944 448,969,565




19 BANK LOANS

At 31 December 2008 and 2007 bank loans obtained were made up as follows:

08.12.31 07.12.31————————————————— —————————————————

Used amount Used amount Reim-——————————— ——————————— burse-

Financing Medium and Medium and mentEntity Limit Short term long term Limit Short term long term Due date plan

Bond Loans:

Sonae Sierra SGPS Caixa BI – 75,000,000 – 75,000,000 – – – Jul/2013 Half Year

Bank Loans:

3shoppings – Holding,

SGPS, S.A Eurohypo (b) 59,007,790 1,296,875 57,710,915 60,304,665 1,296,875 59,007,790 Jul/2026 Annual

8ª Avenida – C.C., SA Santander (b), (c) – – – 41,500,000 – 32,735,458 – –

Airone Shopping Centre, SA Eurohypo (b), (c) 8,000,000 – 8,000,000 8,000,000 – 8,000,000 May/2012 Quarterly

ALEXA ShoppingCentre GmbH Eurohypo (a), (b), (c) 98,904,582 – 98,904,582 100,000,000 – 98,479,582 Oct/2015 Annual

ALEXA ShoppingCentre GmbH Eurohypo (a), (b) 4,000,000 – – 4,000,000 9,909 – Sep/2009 Final

Algarveshopping – C.C., S.A. European PropertyCapital 3 p.l.c. (b), (c) 14,092,496 1,580,000 12,512,496 15,594,496 1,502,000 14,092,496

May/2010 QuarterlySierra B.V. European PropertyCapital 3 p.l.c. 45,460,880 427,960 45,032,920 45,880,201 419,321 45,460,880

Arrábidashopping – C.C., S.A. Eurohypo (a), (b), (c) 17,647,500 1,277,500 16,370,000 37,815,000 2,520,000 35,295,000 Mar/2017 Quarterly

Arrábidashopping – C.C., S.A. Eurohypo (a), (b) 9,362,517 339,573 9,022,944 19,404,181 679,146 18,725,035 Mar/2017 Annual

Arrábidashopping – C.C., S.A. Eurohypo (a) – – – 3,250,000 2,304,000 – – –

Avenida M-40, S.A. WestdeutscheImmobank (b) 55,861,250 34,341,850 21,519,400 57,823,438 12,249,238 45,574,200 Dec/2014 Quarterly

Cascaishopping – C.C., S.A. Eurohypo (a), (b) 56,206,620 1,535,700 54,670,920 57,742,500 1,535,700 56,206,620 May/2027 Annual

Cascaishopping – C.C., S.A. Eurohypo (a), (b), (c) 26,000,000 – 26,000,000 26,000,000 – 26,000,000 Jan/2016 Final

Centro Colombo – C.C., S.A. Eurohypo (a), (b) 112,250,000 – 112,250,000 112,250,000 – 112,250,000 May/2017 Final

Centro Colombo – C.C., S.A. Eurohypo, ING (a), (b), (c) – 500,000 – 500,000

Shopping C. Colombo, BV Eurohypo, ING (a), (b), (c) 50,000,000 49,500,000 50,000,000 49,500,000 May/2017 Final

Centro Vasco da Gama, S.A. ING BelgiumSA/NV (a), (b), (c) 58,175,000 1,950,000 56,225,000 60,125,000 1,950,000 58,175,000 Aug/2016 Quarterly

Dos Mares – Shop. Centre S.A. Aareal Bank (b) 19,625,000 900,000 18,725,000 20,525,000 900,000 19,625,000 Sep/2012 Quarterly

El Rosal Shopping, SA Eurohypo (b) 79,472,500 4,150,000 75,322,500 83,000,000 2,621,774 71,438,226 Jul/2017 Quarterly

El Rosal Shopping, SA Eurohypo – – – – 12,132,000 6,942,000 – Oct/2008 Final

Estação Viana – C.C., S.A. BES (b), (c) 36,624,000 2,016,000 34,608,000 38,640,000 2,016,000 36,624,000 Dec/2015 Half Year

Freccia Rossa – Shop.C. S.r.l. Unicredit (a), (b), (c) 67,828,676 756,436 67,072,240 68,289,500 620,436 48,497,636 Dec/2025 Half Year

Gaiashopping I – C.C., S.A. Eurohypo (a), (b) 35,650,000 625,000 35,025,000 72,450,000 1,150,000 71,300,000 Nov/2026 Annual

Gli Orsi – ShoppingCentre S.r.l. Bayern LB (a), (b), (c) 80,000,000 – 76,520,214 – – – Dec/2017 Half Year

Iberian Assets, SA Eurohypo (a), (b) 84,180,647 3,277,163 80,903,484 87,157,555 2,976,910 84,180,645 Jun/2019 Half Year

Iberian Assets, SA BBVA (a) 4,500,000 2,900,055 – 4,500,000 4,207,971 – May/2010 Final

La Farga – ShoppingCenter, SL Eurohypo (a), (b) 15,000,000 – 15,000,000 15,000,000 – 15,000,000 Apr/2014 Annual

Loureshopping – C.C., S.A. CGD (b) – – – 36,250,000 – 36,250,000 – –

Loop 5-ShoppingCentre, Gmbh Bayern LB (a), (b) 93,750,000 – 41,923,491 93,750,000 – 22,405,043 Jan/2017 Quarterly

Luz del Tajo C.C. S.A. Hypo Real Estate (b), (c) 45,700,000 – 45,700,000 45,700,000 – 45,700,000 Jun/2014 Final

Madeirashopping – C.C., S.A. ING Real EstateFinance (a), (b) 18,000,000 – 18,000,000 18,000,000 – 18,000,000 Aug/2015 Quarterly

Münster Arkaden, BV Nord LB (b), (c) 140,000,000 1,870,814 125,487,240 140,000,000 1,651,475 127,358,053 Dec/2016 Quarterly

Norteshopping – C.C., S.A. BPI (a), (b) 45,685,144 3,270,574 42,414,570 48,246,353 2,561,209 45,685,144 Jun/2009 Quarterly

Norte Shopping B.V. Eurohypo (a), (b) 42,912,081 815,730 42,096,351 43,727,811 815,730 42,912,081 Jun/2009 Quarterly

Oeste Retail Park-C.C., SA BPI (a), (b) – – – 11,700,000 – 6,300,000 – –

Park Avenue, Develop.Sh.C., SA Eurohypo (a), (c) 6,000,000 6,000,000 – 15,000,000 2,750,000 – Jun/2008 Quarterly

Parque Atlântico Shop. –C.C., SA CGD, BCP (a), (b) 17,500,000 1,400,000 16,100,000 17,500,000 – 17,500,000 Dec/2015 Quarterly

Parque Principado S.L. Calyon (a), (b), (c) 56,700,000 – 56,700,000 57,352,050 – 56,700,000 Jul/2013 Final

Pátio Sertório Shopping Ltda Banco Itaú (a) 3,853,750 1,104,713 – – – Feb/2009 Final

Pátio Sertório Shopping Ltda Unibanco (a) 1,325,750 1,325,750 – – – – Feb/2009 Final

Pátio Sertório Shopping Ltda BASA (a) (b) (d) 17,311,139 – 13,958,941 – – – Dec/2020 Monthly

Pátio Sertório Shopping Ltda BANIF (a) (c) 770,750 770,750 – – – – Mar/2009 Final

Plaza Eboli – C.C. S.A. Hypo Real Estate (b), (c) 34,741,409 1,107,863 33,633,546 35,775,000 1,033,591 34,741,409 Nov/2010 Quarterly




19 BANK LOANS (continued)

08.12.31 07.12.31————————————————— —————————————————

Used amount Used amount Reim-——————————— ——————————— burse-

Financing Medium and Medium and mentEntity Limit Short term long term Limit Short term long term Due date plan

Bank Loans:

Plaza Mayor Shopping, SA Eurohypo (b) 37,000,000 – 32,335,600 37,000,000 – – Apr/2019 Quarterly

Plaza Mayor Shopping, SA Eurohypo – 4,500,000 2,632,535 – 4,500,000 – – Oct/2009 Monthly

Plaza Mayor Shopping, SA Eurohypo (b) – – – 4,000,000 4,000,000 – – –

Plaza Mayor Shopping, SA Eurohypo – – – – 7,000,000 7,000,000 – – –

Plaza Mayor – Parque deOcio, S.A. Eurohypo (b) 29,149,087 1,442,429 27,706,658 30,531,415 1,382,328 29,149,087 Apr/2018 Annual

Rio Sul – C.C., S.A. Eurohypo (a), (b), (c) – – – 37,500,000 650,000 36,850,000 – –

Serra Shopping – C.C., S.A. CGD (b) – – – 11,775,000 480,000 11,295,000 – –

Sierra Investimentos, Ltda. Banco Itaú (a) 3,853,750 3,545,001 – – – – Feb/2009 Final

Project Sierra Portugal I SA CGD (b) 10,500,000 – 3,998,622 – – – Aug/2011 Quarterly

Project Sierra Portugal VI SA CGD (b) 50,000,000 – 9,425,525 – – – Aug/2011 Quarterly

Project Sierra Portugal VI SA CGD 3,700,000 405,180 – – – – Aug/2011 Quarterly

Project Sierra Srl Société Générale/BRD (b), (c) 14,860,811 75,000 14,785,811 – – – May/2018 Quarterly

RiverPlaza Srl Société Générale/BRD (b), (c) 14,860,811 1,843,500 13,017,311 – – – May/2018 Quarterly

Sol Retail Park-C.C., SA BPI (a), (b) – – – 6,300,000 – 3,950,000 – –

Sonae Sierra SGPS Caixa BI – 15,000,000 15,000,000 – – – – – –

Torre Ocidente Imobiliária, S.A. CGD (a), (b) 12,250,000 – 1,937,310 – – – Feb/2017 Half Year

Torre Oriente Imobiliária, S.A. CGD (a), (b) 12,500,000 – 5,958,720 – – – Feb/2017 Half Year

Valecenter Srl Eurohypo (b), (c) 97,600,000 1,830,000 95,770,000 97,600,000 – 92,839,682 Jun/2015 Quarterly

Via Catarina – C.C., S.A. Eurohypo (a), (b) 18,718,000 294,000 18,424,000 19,012,000 294,000 18,718,000 Feb/2027 Annual

Zubiarte InversionesInmobil.,SL. ING Real Estate

Finance (a), (b) 23,800,000 – 23,800,000 29,800,000 – 29,800,000 Jun/2017 Quarterly

Total Bank Loans 1,910,391,940 102,107,951 1,654,569,311 1,949,403,165 68,519,613 1,682,821,067

Deferred bank expenses incurred on the issuance of bank debt (1,701,914) (13,755,300) (1,354,483) (11,952,441)

100,406,037 1,715,814,011 67,165,130 1,670,868,626

Fair value of the financial hedging instruments – asset – (150,019) – (14,696,011)

Fair value of the financial hedging instruments – liability – 32,637,612 – 1,656,398

100,406,037 1,748,301,604 67,165,130 1,657,829,013

(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) To guarantee the repayment of this loan, the Group has a bank guarantee.

Bank loans bear interests at market interest rates and were all contracted in Euro, except for the bank loans of Sierra Investimentos,Ltda and Pátio Sertório, Ltda, which were contracted in Brazilian Real and translated to Euro using the exchange rate prevailing atbalance sheet date (Note 2.2 e)).

At 31 December 2008 and 31 December 2007, loans classified as medium and long term are repayable as follows:

08.12.31 07.12.31—————————————————— ——————————————————

Repayment Interest Repayment Interest

N+1 102,107,951 84,593,976 68,519,613 97,328,754N+2 133,856,358 79,398,774 38,493,365 95,356,783N+3 51,704,433 74,400,947 134,833,935 91,572,967N+4 70,410,262 72,594,908 49,040,486 85,077,222N+5 198,674,472 67,826,004 84,511,776 82,921,759N+6 and following years 1,274,923,785 225,148,109 1,375,941,505 331,790,975

1,831,677,262 603,962,718 1,751,340,680 784,048,460





At 31 December 2008 and 2007, the Group’s financial instruments related to interest rate swaps, zero cost collars and exchange ratenon deliverable forwards were as follows:

08.12.31 07.12.31——————————————————————— ———————————————————————

Fair value of the financial instrument Fair value of the financial instrument——————————————— ———————————————

Loan Asset Liability Loan Asset Liability

Financial hedging instruments:“Swaps”:Airone/BBVA 8,000,000 – 387,029 8,000,000 (19,177) –Alexa/Eurohypo 100,000,000 – 4,511,398 – – –ArrábidaShopping/BBVA 17,647,500 – 43,529 37,815,000 (174,478) –ArrábidaShopping/BBVA 9,362,518 – 301,509 – – –Colombo/BBVA 112,750,000 – 6,736,801 112,750,000 – 1,146,099Shopping Colombo BV/ BBVA 49,500,000 – 2,957,620 49,500,000 – 503,165El Rosal/BES 39,736,250 – 1,366,495 – – –El Rosal/BES 39,736,250 – 1,720,080 – – –Estação Viana/BES 36,624,000 (45,390) – 38,640,000 (1,800,246) –Freccia Rossa/Unicredit 32,644,776 – 473,621 33,504,627 (1,319,534) –Freccia Rossa/Unicredit 4,980,919 – 243,081 3,500,000 (2,223) –Gaiashopping/Caixa BI 25,850,000 – 713,747 – – –Iberian/Eurohypo 10,838,500 12,446 – 10,986,000 (158,797) –Iberian/Eurohypo 8,225,000 11,923 – 8,500,000 (116,014) –Iberian/Eurohypo 5,636,000 6,472 – 5,712,500 (82,573) –Iberian/Eurohypo 15,025,303 (34,349) – 15,025,303 (172,676) –Münster Arkaden/BPI 127,358,053 – 6,086,979 129,009,529 (3,323,290) –Norteshopping/BPINorteshopping/Eurohypo/BPI 45,685,144 – 412,452 48,246,353 (1,836,907) –Norteshopping/EurohypoNorteshopping BV/Eurohypo 42,912,081 – 402,172 43,727,811 (1,821,659) –Oeste Retail Park/BES – – – 6,300,000 (5,789) –Parque Atlântico/BBVA 17,500,000 – 168,490 17,500,000 (45,953) –Rio Sul/BPI – – – 32,500,000 (430,331) –Project Sierra Srl/Société Générale 15,000,000 – 1,209,617 – – –River Plaza/Société Générale 15,000,000 – 1,209,658 – – –Sol Retail Park/BES – – – 3,950,000 (3,630) –Valecenter/Eurohypo 6,600,000 – 40,775 6,600,000 (244,636)Valecenter/Eurohypo 14,250,000 – 88,037 14,250,000 (554,214)Viacatarina/BPI 18,718,000 – 872,091 19,012,000 (361) –

(48,898) 29,945,181 (12,112,488) 1,649,264

“Zero Cost Collars”:8ª Avenida/BBVA – – – 15,500,000 (690,177) –Cascaishopping/Santander 26,000,000 – 328,583 26,000,000 (566,057) –Centro Vasco da Gama/ING 57,200,000 – 181,282 60,125,000 (261,079) –Dos Mares/BBVA 19,625,000 – 109,828 20,525,000 (96,433) –Gaiashopping/BBVA 9,800,000 – 200,463 19,925,000 (148,742) –Luz del Tajo/Hypo Real Estate 36,560,000 – 130,000 45,700,000 (320,000) –MadeiraShopping/BBVA 9,000,000 – 21,896 18,000,000 (14,464) –Parque Principado/Calyon 56,700,000 (101,121) – 56,700,000 (514,571) –Plaza Eboli/Hypo Real Estate 30,485,000 – 355,000 35,775,000 (4,000) –Rio Sul/BBVA – – – 5,000,000 – 7,134Valecenter/Eurohypo 52,750,000 – 1,365,379 52,750,000 32,000 –

(101,121) 2,692,431 (2,583,523) 7,134

(150,019) 32,637,612 (14,696,011) 1,656,398

Foreign exchange instruments (Note 35):NDF/BNP Paribas – – – R$ 11,900,000 (472,398) –NDF/BNP Paribas – – – R$ 5,200,000 (197,963) –NDF/BNP Paribas – – – R$ 13,642,000 (533,447) –NDF/Citibank – – – R$ 184,397,050 (2,475,458) –NDF/Citibank – – – R$ 14,900,000 (619,463) –

– – (4,298,729) –

(150,019) 32,637,612 (18,994,740) 1,656,398





The fair value of the financial hedging instruments was recorded under hedging reserves of the Group (Euro -20,883,705 and Euro7,834,221 in 31 December 2008 and 2007 respectively) and hedging reserves of the minorities (Euro -11,603,888 and Euro 5,205,392in 31 December 2008 and 2007 respectively).

By 31 December 2008, all of Non Deliverable Forwards (“NDF”) contracts were terminated.

The interest rate swaps and zero cost collars are stated at their fair value at the balance sheet date, determined by the valuation madeby the bank entities with which the derivatives were contracted. The computation of the fair value of these financial instruments wasmade taking into consideration the actualisation to the balance sheet date of the future cash-flows relating the difference between theinterest rate to be paid by the company to the bank entity with which the swap or collar was negotiated and the variable interest rateto be received by the company from the bank entity that granted the loan.

The main hedging principles used by the Group when negotiating these hedging financial instruments are as follows:

> Perfect matching between the cash-flows paid and received: there is coincidence between the dates of interest payments of theloans obtained and their date of the derivatives flows with the bank;

> Perfect matching in the index interest rate used: the reference index interest rate used in the derivatives and in the loan are coincident;

> In a scenario of increase or decrease in interest rates, the maximum amount of interest payable is perfectly calculated.

20 OTHER BANK LOANS


08.12.31 07.12.31—————————————————— ——————————————————

Limit Short term Limit Short term

Short term facilities (Note 16):Cascaishopping – C.C., S.A. 2,495,793 – 750,000 246,478Centro Colombo – C.C., S.A. 5,234,974 1,092,698 6,234,974 223,932Sierra B.V. 10,000,000 9,515,635 10,000,000 –Sierra Management Portugal, SA 249,399 – 249,399 –Sonae Sierra, SGPS, SA 88,907,438 – 73,907,438 8,675,728Via Catarina – C.C., S.A. 1,000,000 92,520 – –

Bank overdrafts (Note 16) – 1,339,570 – 555,652

107,887,604 12,040,423 91,141,811 9,701,790




21 ACCOUNTS PAYABLE TO OTHER SHAREHOLDERS


08.12.31 07.12.31—————————————————— ——————————————————

Medium and Medium andShort term long term Short term long term

SIERRA Investments (Luxembourg) 1 Sarl (“Luxco 1”):Arrábidashopping – Centro Comercial, S.A. 17,477 1,250,045 – 1,250,045Centro Colombo – Centro Comercial, S.A. – – – 9,004,715Centro Vasco da Gama – Centro Comercial, S.A. – 3,838,523 – 3,838,523SC Mediterranean Cosmos B.V. – 827,996 – –Sierra European Retail Real Estate Assets Holdings BV 7,023,425 – 33,543,890 –Zubiarte Inversiones Inmob,SA – 1,703,480 – 1,575,053

7,040,902 7,620,044 33,543,890 15,668,336

SIERRA Investments (Luxembourg) 1 Sarl (“Luxco 2”):Arrábidashopping – Centro Comercial, S.A. 13,981 1,000,036 – 1,000,036Centro Colombo – Centro Comercial, S.A. – – – 7,201,173Centro Vasco da Gama – Centro Comercial, S.A. – 3,070,719 – 3,070,719SC Mediterranean Cosmos B.V. – 662,398 – –Sierra European Retail Real Estate Assets Holdings BV 5,618,739 – 26,835,109 –Zubiarte Inversiones Inmob,SA – 1,362,783 – 1,260,043

5,632,720 6,095,936 26,835,109 12,531,971

Others 186,040 56,758 285,780

186,040 – 56,758 285,780

12,859,662 13,715,980 60,435,757 28,486,087

The amounts payable to Luxco 1 and Luxco 2, relate to shareholder loans payable by the subsidiaries and jointly controlled companiesof Sierra BV, to the other shareholders of Sierra BV. These loans bear interests at market interest rates and were contracted in Euro.Their reimbursement is not expected before 5 years.

22 FINANCE LEASE CREDITORS


08.12.31—————————

Medium andlong term

Finance Lease Alexa Arches 839,653

839,653

This finance lease contract pays interest at market rates and its minimum reimbursement plan as of 31 of December, 2008 is:

Minimum paymentsfor finance lease

N+1 77,038N+2 81,790N+3 86,834N+4 92,190N+5 97,876>N+5 403,925

839,653

On the 31 December, 2008, the fair value of the financial obligations related with this financial lease contract corresponds, approximately,to its book value.




23 OTHER NON CURRENT LIABILITIES


08.12.31 07.12.31

“Câmara Municipal de Lisboa” (Note 12) 3,243,374 3,243,374Rents deposits from tenants (Note 12) 10,424,469 10,336,250Other non current accounts payable 340,804 219,563

14,008,647 13,799,187

24 DEFERRED INCOME TAXES

Deferred income tax assets and liabilities at 31 December 2008 and 2007, in accordance with the temporary differences that generatethem, are made up as follows:

Deferred tax assets Deferred tax liabilities—————————————————— ——————————————————

08.12.31 07.12.31 08.12.31 07.12.31

Difference between fair value and tax cost of tangiblefixed assets and intangible assets 1,440,194 129,881 502,634,188 590,717,372Difference between fair value and tax cost of thefit-out contracts – – (912,077) (1,048,138)Write-off of deferred income related to key income, expensesrelated to the opening of shopping centers and differencebetween the valuation value and tax cost of the fit out contracts – – 2,946,915 3,562,233Fair value of hedging financial instruments 8,122,979 443,496 13,081 3,702,012Fair value of speculation financial instruments – – – 1,139,163Tax losses carried forward 16,977,782 22,197,051 – –Impairment losses on accounts receivable from customers 255,866 34,257 – –Gains/losses reinvested 971,928 971,928 – –Impairment losses on other assets and write-off of deferred costs 1,530,214 560,552 – –

29,298,963 24,337,165 504,682,107 598,072,642

Deferred income tax assets relating to the fair value of the financial hedging instruments were recorded under hedging reserves of theGroup (Euro -5,271,273 and Euro 1,984,008 at 31 December 2008 and 2007 respectively) and hedging reserves of the minorities(Euro -2,838,625 and Euro 1,274,508 at 31 December 2008 and 2007 respectively).




24 DEFERRED INCOME TAXES (continued)

The movement in deferred income tax assets and liabilities during the years ended 31 December 2008 and 2007 was as follows:

2008 2007—————————————————— ——————————————————

Asset Liability Asset Liability

Opening balance 24,337,165 598,072,642 27,314,914 468,399,474

Effect in net result:Difference between fair value and tax cost oftangible fixed assets and intangible assets 1,310,313 (26,246,969) 129,881 93,920,264Difference between fair value and tax cost of thefit-out contracts 60,635 (141,526) – 1,192,166Write-off of movements occurred regarding deferred incomerelated to key income and expenses relatedto the opening of shopping centers (111,928) 952,796 – (285,179)Increase/(Decrease) of impairment losses not acceptedfor tax purposes 229,453 – (653,868) –Increase/(Decrease) of tax losses carried forward (2,273,267) – (2,220,940) –Fair value of speculation financial instruments – (1,139,163) – 1,139,163Other assets impairment and deferred costs write-off 1,099,721 4,205 456,042 –Tax rate change effect – 212 (322,743) (6,569,732)

Sub-total (Note 25) 314,927 (26,570,445) (2,611,628) 89,396,682

Effect in equity:Valuation of hedging financial instruments 7,715,576 (1,771,276) 292,867 1,525,079Tax rate change effect related to the hedging (361) (163,105)Currency translation differences (534,401) (9,176,367) 241,968 1,173,344Goodwill adjustment – – – 1,438,525

Changes in perimeter:Sales (Note 6) (2,534,304) (61,880,291) (900,685) (10,604,584)Acquisitions (Note 6) – 11,481,255 – 46,974,429Others – (5,473,050) (271) (67,202)

Closing balance 29,298,963 504,682,107 24,337,165 598,072,642

The amount Euro 5,473,050 relates to the reversal of the deferred taxes made at the date of acquisition of the subsidiaries Ploiesti(Euro 3,563,175) (Note 34)and Larissa (Euro 1,909,875), due to the fact that the fair value adjustment made at that time was alsoreversed and due to the opening of the shopping centre Pantheon Plaza, respectively.

As consequence of the change in the corporate tax rate in 2007 in Italy (decrease from 37.25% to 31.4%) and to the corporate taxchange in Madeira (from 22.5% to 20%), both from 1 January 2008, the Italian companies included in the consolidated financialstatements and Madeirashopping – Centro Comercial, S.A. updated, in 2007, the calculation of its assets and liabilities for deferredtaxes with these new income tax rates and the effects of these changes have been recorded in the statement of profit and loss underthe caption of “Income tax” or in the caption “Hedging reserve” in the case of the update of the deferred taxes related to derivatives.





The deferred income tax assets related to tax losses carried forward reported in 31 December 2008 and 2007 are made up as follows:

08.12.31 07.12.31

Portugal:8ª Avenida, SA – 181,269Loureshopping – Centro Comercial, S.A. – 900,685Project Sierra Portugal I – C.Comerc., SA 40,897 34,356Rio Sul – Centro Comercial, S.A. – 587,715Serra Shopping – Centro Comercial, SA – 312,750SRP-Parque Comercial de Setúbal, SA 16,556 9,447

Spain:Avenida M40, S.A. – 5,648,580Dos Mares – Shopping Centre, SA 126,968 85,336El Rosal Shopping, SA 2,215,039 294,765Iberian Assets, S.A 1,058,345 2,022,331La Farga Shopping Centre, S.L 448,141 440,325Luz del Tajo – Centro Comercial S.A. 445,514 273,053Parque Principado, S.L. 4,210 177,342Plaza Eboli – Centro Comercial S.A. 3,109,639 1,838,135Plaza Mayor Parque de Ocio, S.A 1,370,862 1,113,223Plaza Mayor Shopping, SA 367,582 –Project Sierra Spain 7, SA 699 –Zubiarte Inversiones Inmobiliarias, S.A 2,086,210 3,159,281Sierra Man.New Tech.Bus.-Serv.Comu.CC,SA (sucursal) 183 183

Italy:Freccia Rossa 352,333 138,847Gli Orsi – Shopping Centre, Srl 528,868 528,868Le Terrazze – Shopping Centre, Srl 37,421 22,014Airone Shopping Centre Srl 144,241 144,241Proj.Sierra Italy 2 – Develop. Sh.Centre Srl 4,392 4,392Proj.Sierra Italy 1 – Shop.Centre Srl 5,100 5,100Project Sierra Italy 3, Srl 3,575 3,575Sierra Developments Italy S.r.l. 51,302 51,302Sierra Management Italy S.r.l. 289,760 246,297Valecenter Srl 1,642,628 1,072,560Sierra Management II, SA (sucursal) 9,802 –Sierra Asset Management, SA (sucursal) 69,681 826

Germany:Münster Arkaden BV 73,696 403,875

Greece:Larissa Development of Shopping Center, SA 728,130 –Sierra Property Management Greece, SA 138,245 –

Brazil:Sierra Investmentos Brasil Ltda 865,611 1,452,984Pátio Boavista Shopping, Ltda. 742,152 1,043,394

16,977,782 22,197,051





At the balance sheet date, the Group reviewed the tax losses carried forward, and only recorded the deferred income tax assets relatingto the tax losses carried forward which will probably be recovered in the future. The expiration date limit of the tax losses existing as of31 December 2008 is as follows:

Tax Limitloss expire date

Portugal:Generated in 2005 26,938 2011Generated in 2006 137,423 2012Generated in 2007 10,850 2013Generated in 2008 54,602 2014

229,813

Spain:Generated in 1996 3,323,162 2011Generated in 1997 2,610,410 2012Generated in 1998 4,300,404 2013Generated in 2000 86,977 2015Generated in 2001 6,012 2016Generated in 2002 2,213,990 2017Generated in 2003 358,305 2018Generated in 2004 581,870 2019Generated in 2005 3,897,351 2020Generated in 2006 2,442,895 2021Generated in 2007 4,155,114 2022Generated in 2008 13,439,306 2023

37,415,796

Italy:Generated in 2006 944,854 2011Generated in 2007 3,807,382 2012Generated in 2008 3,306,652 2013

8,058,888Without limit of use 3,308,384

11,367,272

Germany:Without limit of use 465,695

Greece:Generated in 2008 3,465,497

Brazil:Without limit of use 4,728,716

57,672,789

According to the Portuguese law in place, the tax losses carried forward can be deducted from future taxable gains during the next 6years after the year of generation. These deductions can, however, be questioned by the Tax Authorities, if a change in the shareholdersof the company representing 50% or more occurs. During the year 2007 a change of ownership involving the share capital ofLoureshopping – Centro Comercial, S.A., Rio Sul – Centro Comercial, S.A. and Serra Shopping – Centro Comercial has occurred and aformal request for the deduction of the tax losses generated until 2007 was submitted to the Tax Authorities, in the total amounts ofEuro 7,789,870 (corresponding to the tax losses generated by the above companies in proportion to the ownership by SPF – the groupcompany owning the shares), of which Euro 5,212,343 was recognized as generating deferred tax assets. This request is pending as ofthe date of this report. The Board of Directors believes this request will be accepted by the fiscal authorities, and therefore decided tokeep the corresponding deferred tax assets in the current financial statements.




25 INCOME TAX

Income tax for the years ended 31 December 2008 and 2007 is made up as follows:

2008 2007

Current tax 20,709,843 17,786,412Deferred tax (Note 24) (26,885,372) 92,008,310

(6,175,529) 109,794,722

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

2008 2007

Profit before income tax (204,359,956) 409,941,458Gains related to the sale of companies (21,882,988) (17,550,427)Net result of associated undertakings 7,208,152 (3,688,686)Impairment of goodwill 10,530,863 –Other permanent differences and tax losses for which the recuperability is not probable 139,931,268 34,972,527

Taxable profit (68,572,661) 423,674,872Effect of different income tax rates in other countries 43,870,544 14,218,377

(24,702,117) 437,893,249Income tax rate in Portugal 25.0% 26.5%

(6,175,529) 116,041,711Tax rate change effect – (6,246,989)

(6,175,529) 109,794,722

The amount of Euro 139,931,268 relates mainly to the following effects:

(i) Non recognition of the deferred tax related to the temporary differences derived by the revaluations of the investment propertiesAvenida M40 and Zubiarte;

(ii) Non recognition of the deferred tax assets related to the tax losses carried forward of the companies for which the Group haddoubts about its future recuperation (Avenida M40);

(iii) Write-off of deferred tax assets related to the tax losses carried forward recognized in previous years and for which the Group,in 2008, had doubts about its future recuperation (Avenida M40 and Loureshopping).




26 ACCOUNTS PAYABLE TO SUPPLIERS

At 31 December 2008 and 2007 accounts payable to suppliers were made up as follows:

08.12.31 07.12.31—————————————————— ——————————————————

Medium and Medium andShort term long term Short term long term

Trade suppliers 28,612,373 – 21,440,179 –Suppliers of fixed assets 40,295,380 860,626 43,268,524 23,194,006

68,907,753 860,626 64,708,703 23,194,006

As of 31 December 2008 and 2007, this caption related to amounts payable resulting from acquisitions made in the normal courseof the Group’s activities. As of 31 December 2008, the Board of Directors believes that the carrying amount of these accounts payableis similar to its corresponding fair value.

The amounts reported above have the following reimbursement plan:

08.12.31 07.12.31

Short term:0-90 days 37,747,785 53,426,32590-180 days 6,656,880 2,367,688+ 180 days 24,503,088 8,914,690

68,907,753 64,708,703

Medium long term:n+1 833,598 3,000,000n+2 – 20,194,006n+3 27,028 –

860,626 23,194,006

27 STATE AND OTHER PUBLIC ENTITIES

At 31 December 2008 and 2007 state and other public entities were made up as follows:

08.12.31 07.12.31——————————————————————— ———————————————————————

Asset Liability Asset Liability———————————————— ———————— ———————————————— ————————

Medium MediumShort term long term Short term Short term long term Short term

Income tax 6,546,113 – 4,821,589 6,219,754 – 6,291,045VAT 43,957,994 101,954 7,428,337 37,981,275 101,954 8,481,312Social security contributions 16,733 – 901,196 19,195 – 737,202Other taxes 330,720 – 1,083,243 535,962 – 1,298,822

50,851,560 101,954 14,234,365 44,756,186 101,954 16,808,381

According the current law, the tax returns of Portuguese companies are subject to a revision and correction by the fiscal authoritieswithin a period of four years, exception made when fiscal losses have occurred, fiscal incentives have been granted or auditing orclaims are in course, in cases, depending on circumstances, the final dates can be extended or suspended. Because of that the taxreturns of the Portuguese companies of the years 2004 until 2008 can still be changed.

The Board of Directors considers that the possible changes to the tax returns will not have a significant impact in the financialstatements as of 31 December 2008.

The amounts of Euro 43,957,994 and Euro 37,981,275 as of 31 December 2008 and 2007, respectively, receivable from state entities,relates basically to Value Added Tax (“VAT”) receivable. In accordance to tax law, the Group follows the procedure of recording underthis caption the VAT included in the invoices from third parties during the period of construction of the shopping centres and requeststhe reimbursement of that VAT only after the beginning of operation of the shopping centres.




28 OTHER PAYABLES

At 31 December 2008 and 2007 other payables were made up as follows:

08.12.31 07.12.31

Advances from customers 3,782,125 1,918,732Efanor Investimentos, SGPS, S.A. – 1,103,636Sonae Capital,SGPS,SA 1,450,110 2,949,828Ploiesti acquisition 6,124,422 –River Plaza acquisition 990,721 3,002,026Craiova acquisition – 715,985Gaia and Arrábida acquisition – 2,044,690Advance made for land acquisition 1,725,000 –Gift cheques 3,228,667 7,252,230Rent deposits from tenants (Note 12) 1,031,202 2,095,590Other payables 5,245,722 4,134,621

23,577,969 25,217,338

The amount of Euro 3,228,667 of gift cheques relates with the deposits received until the balance sheet date on the sale of those giftcheques, net of gift cheques expired or compensated until the date (recorded in “Other payables” in 2007). The Group recognises in aaccount to be paid all gift cheques sold, and this account is settled when the cheques are compensated by the tenants (in this case thefee charged is recognised too) or when the cheques expire (in this case the income corresponds to the amount of the expire cheques).

The amount of Euro 6,124,422 refers to the debt related to the acquisition in July 2008 of the company owning the Project “Ploiesti”.

As of 31 December 2008 and 2007, this caption related to amounts payable resulting from acquisitions made in the normal courseof the Group’s activities. As of 31 December 2008, the Board of Directors believes that the carrying amounts of these accounts payableis similar to its fair value.

The above balance for other creditors shows an average payment period below 90 days.

29 OTHER CURRENT LIABILITIES

At 31 December 2008 and 2007 other current liabilities were made up as follows:

08.12.31 07.12.31

Payable interest expense 13,795,745 10,572,470Vacation pay and vacation bonus 14,628,216 13,797,345Accrued Real Estate tax 4,734,333 5,300,716Accrued services payables 16,307,896 17,166,745Condominium margin 4,216,430 2,605,979Cascaishopping price adjustment 1,480,388 2,800,000Accrued fixed asset expenses 34,394,175 54,017,124Key income, invoiced in advance 2,488,639 1,966,119Rental income invoiced in advance 9,943,941 10,642,521Others 14,683,500 12,947,814

116,673,263 131,816,833

As of 31 December 2008 and 2007, the amounts of Euro 34,394,174 and Euro 54,017,124, respectively, relate to the estimate, madeby the Board of Directors, for liabilities associated with the investments made in the investment properties, for which the correspondinginvoices had not been received by the balance sheet date.

Vacation pay and vacation bonus as of 31 December 2008 and 2007, include the amounts of Euro 3,583,140 and Euro 4,214,379,respectively, related to remuneration bonus attributed to some employees of the Group, which will be paid two years after thecorresponding attribution date, as long as the employees involved are still employees of the Group as of the payment date. Thisremuneration bonus will be adjusted, until the corresponding payment date, by the annual variation of the Net Asset Value (NAV)of the Group. These remuneration premiums are, since 2005, deferred over three years (from the year of attribution until the yearof payment) and recorded as expense, on the basis of the gross amount that was attributed to those employees, and any subsequentadjustment, derived from the variation of the Group’s NAV, recorded in the statements of profit and loss of the year in which thevariation occurs.




30 PROVISIONS AND IMPAIRMENT LOSSES ON ACCOUNTS RECEIVABLE

The movement in provisions and impairment losses on accounts receivable during the years ended 31 December 2008 and 2007 is madeup as follows:

2008——————————————————————————————————————————————Balance as of Changes in Translation Balance as of

Captions 07.12.31 Increase Decrease perimeter differences 08.12.31

Impairment losses on accounts receivable:Customers (Note 13) 15,096,881 3,784,329 (852,186) (187,566) (490,390) 17,351,068Other debtors (Note 12 and 14) 469,920 15,665 (131,158) – – 354,427

15,566,801 3,799,994 (983,344) (187,566) (490,390) 17,705,495Provisions for risks and costs:

Other risks and costs 144,565 – (35,383) – – 109,182

15,711,366 3,799,994 (1,018,727) (187,566) (490,390) 17,814,677

2007——————————————————————————————————————————————Balance as of Changes in Translation Balance as of

Captions 06.12.31 Increase Decrease perimeter differences 07.12.31

Impairment losses on accounts receivable:Customers 14,008,020 1,160,920 (943,694) 543,301 328,334 15,096,881Other debtors 360,723 142,014 (32,817) – – 469,920

14,368,743 1,302,934 (976,511) 543,301 328,334 15,566,801Provisions for risks and costs:

Other risks and costs 2,033,159 59,182 (1,947,776) – – 144,565

16,401,902 1,362,116 (2,924,287) 543,301 328,334 15,711,366

Impairment losses on accounts receivable are deducted from the amount of the corresponding asset.

31 SALES AND SERVICES RENDERED

Sales and services rendered for the years ended 31 December 2008 and 2007 are made up as follows:

2008 2007

Services rendered:Fixed rents 209,421,518 182,032,394Turnover rents 9,301,750 8,781,843Mall income 7,167,582 6,137,248Common charges 79,927,619 69,811,851Management and administration fees 31,714,631 29,113,530Co-generation 4,009,707 3,131,474Parking lot income 8,441,925 7,574,659Other 14,791,336 8,802,963

364,776,068 315,385,962




32 VARIATION IN FAIR VALUE OF THE INVESTMENT PROPERTIES

The variation in fair value of the investment properties in 2008 and 2007 is made up as follows:

2008 2007

Transfers from “in progress” (Note 7) 37,303,941 56,545,609Variation in fair value between years in investment properties under development (Note 7): 15,159,565 –Variation in fair value between years (Note 7):

– Gains 34,721,480 267,953,508– Losses (316,328,629) (26,830,715)

Variation in fair value on “fit-out” contracts (Note 7) (1,270,122) 485,298

(230,413,765) 298,153,700

33 OTHER OPERATING REVENUE

Other operating revenue for the years ended 31 December 2008 and 2007 is made up as follows:

2008 2007

Key income 4,996,570 7,832,814Development fees 9,769,729 9,401,308Other 5,957,458 8,408,529

20,723,757 25,642,651

34 OTHER OPERATING EXPENSES

Other operating expenses for the years ended 31 December 2008 and 2007 are made up as follows:

2008 2007

Real estate tax 6,196,051 5,964,682Depreciation and impairment losses of goodwill (Note 9) 10,530,863 –Indemnities paid to tenants 1,319,473 4,461,802Imparity losses in the investment properties in progress 49,474,735 3,457,835Imparity losses in assets available for sale (Note 11) 3,641,984 –Other 3,472,877 8,807,755

74,635,983 22,692,074

The imparity losses in the investment properties in progress, in 2008, relate with the losses recorded in the projects Craiova (Euro 31,059,962)and Ploiesti (Euro 18,414,774); this last impairment is net of deferred tax (Euro 3,563,175) (Note 24). In 2007 they relate basically tothe loss in the Parque Famalicão project (Euro 1,741,475) and Torres Oriente e Ocidente (Euro 1,716,360).




35 NET FINANCIAL RESULTS

Net financial results are made up as follows:

2008 2007

Expenses:Interest expense 105,666,678 74,334,117Tax stamp related to financing 1,581,572 1,475,331Foreign currency exchange losses 1,604,445 89,519Loss on NDF’s 4,298,729 –Other 2,321,907 3,961,775

115,473,331 79,860,742Net financial expenses (87,783,928) (46,732,348)

27,689,403 33,128,394

Income:Interest income 26,260,957 22,772,076Foreign currency exchange gains 950,013 19,101Gain on NDF’s – 9,885,308Other 478,433 451,909

27,689,403 33,128,394

The amount of Euro 4,298,729 recorded in the caption “losses on NDF’s”, relate with the losses generated with the termination of the“Non Deliverable Forwards” (“NDF”) contracted by the Group.

36 SHARE OF RESULTS OF ASSOCIATED UNDERTAKINGS

Share of results of associated companies are made up as follows:

2008 2007

Share of results of associated undertakings (Note 5):Net profit (7,208,152) 4,008,936Impairment losses – (320,250)

(7,208,152) 3,688,686

37 INVESTMENT INCOME

Investment income is made up as follows:

2008 2007

Gains obtain on the sale to Sierra BV:Mediterranean Cosmos (Note 6) 1,683,647 –

Cascaishopping price adjustment 1,319,612 –Sale of 58% of the Sierra Portugal Fund (Note 6) 19,047,917 –Sale of 50% of Weiterstadt (Note 6) – (3,370)Sale of 50% of Torre Ocidente e Torre Oriente (Note 6) – 2,248,095Sale of 50% of Loureshopping (Note 6) – 8,644,862Sale of Lima Retail Park (76,347) 1,639,150RioSul price adjustment – 2,018,783Serra Shopping price adjustment (38,793) 888,9423DO – Write-off of advances – 2,730,140Norteshopping price adjustment (53,048) (622,171)Other – 5,996

21,882,988 17,550,427




38 OPERATING LEASES

In the operating leases where the Group is the lessor, the minimal lease payments (fixed rents) recorded during the years ended31 December 2008 and 2007 amounted to Euro 209,421,518 and Euro 182,032,394, respectively (Note 31).

In addition, as of 31 December 2008, the Group has celebrated, as lessor, operating lease contracts, for which the minimal leasepayments (fixed rent) are due as follows:

08.12.31 07.12.31

Due in N+1 195,325,421 227,988,035Due in N+2 174,245,690 212,151,594Due in N+3 153,688,887 180,234,319Due in N+4 134,186,748 155,378,295Due in N+5 109,927,882 122,449,778Due after N+5 86,236,396 99,957,682Contracts automatically renew 21,158 –

853,632,182 998,159,703

In the Operational Leases where the Group is the lessee, the minimum lease payments recognized as expense during the years ended31 December 2008 and 2007 reached the amounts of Euro 3,094,442 and Euro 1,518,553, respectively.

In addition, as of 31 December 2008, the Group had celebrated as lessee, operating lease contracts, for which the minimum leasepayments are due as follows:

08.12.31 07.12.31

Due in N+1 4,241,065 2,098,392Due in N+2 2,169,818 1,048,330Due in N+3 1,752,699 695,994Due in N+4 700,160 316,789Due in N+5 655 12,048Due after N+5 – (11,393)Due after N+5 307,466 12,048

9,171,863 4,172,208




39 RELATED PARTIES

Balances and transactions that existed with related parties during the years ended 31 December 2008 and 2007, in addition to theloans obtained from the shareholders mentioned in Note 21, are detailed as follows:

Balances———————————————————————————————————————

Accounts receivable Accounts payable Other liabilities———————————— ———————————— ————————————

08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31

Mother companies and other shareholders:Modelo Continente Hipermercados, S.A. 116,792 15,769 527,510 352,271 (606,588) (590,317)Sesagest – Proj.Gestão Imobiliária,SA 265 – – – 1,271,665 –Sport Zone – Comércio de Artigos de Desporto, S.A. 15,562 5,237 52,414 44,052 (363,291) (104,381)Infofield – Informática, S.A. 20,627 – 30,845 22,360 (14,774) 75,266Worten – Equipamentos para o Lar, S.A. 139,106 61,837 125,230 32,475 (249,689) 36,489Safira Services – Limpeza e Espaços Verdes, S.A. – 1,423 11,714 307,071 – (39,508)Star – Viagens e Turismo, S.A 12,300 2,224 531,719 552,943 (44,335) 82,301Sonae Investments BV – – – – – 1,536,287Efanor – Industria de Fios,S.A 72,347 8,763 15,332 3,737 (99,648) (95,006)Estêvão Neves – Hipermercados Madeira,S.A – – 6,816 (839) 12,796 16,250Sonae SGPS, S.A. 3,636 – 101,195 92,566 – (161,065)MDS – Corrector de Seguros,SA 25,787 – – – – –Sempre à Mão – Sociedade Imobiliária,SA 307,543 – – – – –Sonaecom – Serviços de Comunicação,SA 238,820 – 262,132 – (72,689) –Continente Hipermercados,SA 875,316 – – – – –Digitmarket – Sistemas de Informação,SA 3,357 – – – 125,050 –Contimobe – Imobil. Castelo Paiva,SA 1,240,854 – – – – –SMP – Serv Manutenção Planeamento – – 438,868 – – –Media Plannig,SA – – – – (505,433) –Sierra Portugal Real Estate 2,297,000 1,974,161 (203,731)

5,369,312 95,253 4,077,936 1,406,636 (750,667) 756,316

Jointly controlled entities and associate companiesModelo Continente Hipermercados, S.A. 281,036 296,830 15,962 15,962 – –Sesagest – Proj.Gestão Imobiliária,SA 155,429 – – – – –Safira Services – Limpeza e Espaços Verdes, S.A. – – – 1,238 – –Star – Viagens e Turismo, S.A – – 1,224 – – –Sonae SGPS, S.A. – – – 168 – –Sonaecom – Serviços de Comunicação,SA 26 – – – – –Contimobe – Imobil. Castelo Paiva,SA 1,091,216 – – – – –SMP – Serv Manutenção Planeamento – – 13,289 – – –

1,527,707 296,830 30,475 17,368 – –




39 RELATED PARTIES (continued)

Transactions—————————————————————————————————————————————————————Sales and services rendered Purchases and services obtained Interest income Interest expense

———————————— ———————————— ———————————— ————————————08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31

Mother companies andother shareholders:

Modelo ContinenteHipermercados, S.A. 6,673,355 5,799,461 (75,412) 566,142 – – – –Modelo – Dist. de Materiasde Construção, SA 1,236,798 – (1,537) – – – – –Sport Zone – Comércio deArtigos de Desporto, S.A. 5,491,211 5,426,887 (46,886) (59,116) – – – –Infofield – Informática, S.A. 1,341,178 1,387,226 (54,560) (38,875) – – – –Worten – Equipamentos parao Lar, S.A. 4,805,623 5,390,476 (83,687) (108,008) – – – –Safira Services – Limpezae Espaços Verdes, S.A. – – 6,853 1,585,208 – – – –Star – Viagens e Turismo,S.A 320,445 332,309 3,489,110 2,893,650 – – – –Sonae Investments BV – – – – – – – –Efanor – Industria de Fios,S.A 1,169,764 947,707 (11,185) (5,997) – – – –Estêvão Neves – HipermercadosMadeira,S.A 944,855 1,010,637 – – – –Sonae SGPS, S.A. – – 339,347 495,616 – 1,890,079 – –Sonaecom – Serviços deComunicação,SA 1,133,244 – 1,430,265 – – – – –Solinca III – Desporto eSaúde,SA 940,966 – (229,391) – – – – –Modalfa – Comercio e Serviços 666,400 – – – – – – –Sierra Portugal Real Estate 6,755,259 (141,485) – (229,509) – – –SIERRA Investments(Luxembourg)1 Sarl (“Luxco 1”) – – – – – – 1,297,187 959,374SIERRA Investments(Luxembourg)1 Sarl (“Luxco 2”) – – – – – – 1,037,749 767,499

31,479,098 20,294,703 4,621,432 5,328,620 (229,509) 1,890,079 2,334,936 1,726,873

Jointly controled entities andassociate companies

Modelo ContinenteHipermercados, S.A. 747,556 602,152 – – – – – –Sport Zone – Comércio deArtigos de Desporto, S.A. 58,180 – – – – – – –Infofield – Informática, S.A. 25,488 – – – – – – –Worten – Equipamentospara o Lar, S.A. 115,984 – – – – – – –Star – Viagens e Turismo,S.A 435 – – – – –Sonaecom – Serviços deComunicação,SA 17,095 2,194 – – – – –SIERRA Investments(Luxembourg)1 Sarl (“Luxco 1”) – – – – – 387,720 837,791SIERRA Investments(Luxembourg)1 Sarl (“Luxco 2”) – – – – – 310,136 670,156

964,303 602,152 2,629 – – – 697,856 1,507,947




39 RELATED PARTIES (continued)

The remuneration of the Board of Directors, during the years ended 31 December 2008 and 2007, was as follows:

2008 2007

Fixed remuneration 1,883,000 1,529,080Variable remuneration 2,600,810 2,240,151

4,483,810 3,769,231

40 CONTINGENT ASSETS AND LIABILITIES

As of 31 December 2008 and 2007, the main contingent liabilities related to bank guarantees and had the following detail:

08.12.31 07.12.31

Bank guarantees:Relating tax processes in course 1,530,343 2,965,596Relating legal processes in course 2,420,749 2,285,932Other 47,893,582 48,741,649

51,844,674 53,993,177

The caption “Others” include the following guarantees:

> Euro 15,025,302 to support part of the debt of El Rosal Shopping,S.A. to the Grupo Mall Empresarial, S.L. related to the acquisitionand exchange of the land for the project El Rosal;

> Euro 2,163,645 to support part of the debt of El Rosal Shopping,S.A. to Ponferrada Gestión Urbanística, S.A related to theacquisition and exchange of the land for the project El Rosal;

> Euro 2,320,000 to support the debt of El Rosal Shopping,S.A. to Centros Comerciales Carrefour, S.A related to the fit-outs contractsof de El Rosal;

> Euro 2,001,000 to support the receivable related to the sale of part of the land related to project Pulianas to Ikea;

> Euro 2,500,000 to support the payment of the land for the project Le Terraze;

No provision to face risks derived from the tax and legal processes in course above mentioned was recorded, as the Board of Directorsbelieves that the corresponding risk is not probable.




41 COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET

Following the sale of 49,9% of the share capital of Sierra Holdings BV to a group of Investors, Sonae Sierra has agreed to revise thesale price of such shares if certain of the shopping centres are sold by any of the participated companies of Sierra Holdings BV. Theprice revision can occur whether with a sale of the asset (investment property in the case) or with a sale of the shares of the companythat is directly or indirectly the owner of such asset. The price revision shall occur if the sale is made for price that is lower than theMarket Value or Net Asset Value of the shares of the company that owns the asset (“price difference”).

In that case, the price revision will correspond to the maximum potential income tax on the profit that would arise if, instead of thecontribution or sale of the shares of company that owns the asset to Sierra Holdings BV, the contribution or sale of the asset hadoccurred.

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 amount of 119,341 thousands Euro;

(ii) in the case of a sale of shares of the company that directly or indirectly owns the asset, to a maximum amount of 59,670 thousandEuro; the price revision will only take place if the price difference can not be attributed to a reason than deferred income taxes;

(iii) in either case, the price revision cannot result in a new price that is greater than the Market Value or the Net Asset Value,applicable to the transfer of the asset or of the shares respectively.

These guarantees are valid while the current agreements with the other stockholders of Sierra BV are maintained.

Furthermore, Sonae Sierra has the right to make a proposal for the acquisition of the asset or the shares at stake before the same areoffered for sale to a third party.

The Group believes that the direct sale of the asset is not an attractive solution for this kind of operations as it is subject to certainencumbrances that are inexistent in the sale of the shares of the company that owns the asset.

42 DIVIDENDS

Following the Shareholders General Meeting deliberation, dated 7 March 2008, the dividends related to the net profit of 2007 thatamounted to Euro 49,746,420 (Euro 1.53/share), were paid during 2008.

As for the dividends related to the net profit of 2008, the Board of Directors proposes an amount of Euro 47,795,580 (Euro 1.47 pershare) to be paid as dividends. This proposal depends however of the approval by the Shareholders General Meeting and for thatreason the dividends that are proposed to be distributed were not classified as liabilities in the accompanying balance sheet.

43 EARNINGS PER SHARE

As of 31 December 2008 and 2007, basic earnings per share correspond to the net profit divided by the weighted average numberof ordinary shares of Sonae Sierra during the year, and was computed as follows:

2008 2007

Profit considered to compute the basic earnings per share (net profit of the year) (116,126,337) 214,896,663Number of shares 32,514,000 32,514,000

Earning per share (3.57) 6.61

Sonae Sierra has no potential diluted shares and for that reason the diluted earning per share is similar to the basic earning per share.




44 SEGMENT INFORMATION

In 2008 and 2007 the following business segments were identified:

> Investment in Shopping centres;

> Development in Shopping centres;

> Management of Shopping centres; and

> Brazil.

The remaining Group activities and administrative services are classified as unallocated.

In 2008 and 2007 the following geographical segments were identified:

> Europe; and

> Brazil

The intra-segment transactions in 2008 and 2007 were eliminated in the consolidation process.

The average number of employees in 2008 e 2007, by business segment is detailed as follows:

2008 2007

Investment in shopping centres 13 10Development of shopping centres 98 78Management of shopping centres 390 373Brazil 54 42Non allocated 243 213

798 716

2008 2007

Europe 744 674Brazil 54 42

798 716

The significant information relating to the business and geographical segments at 31 December 2008 and 2007 is presented in an appendix.

45 APPROVAL OF THE FINANCIAL STATEMENTS

The accompanying financial statements were approved by the Board of Directors and authorised for issuance on the 10 of March 2009.However these financial statements are still depending on the approval by the Shareholders General Meeting, in accordance with companylaw prevailing in Portugal.

46 NOTE ADDED FOR TRANSLATION

This is a translation of financial statements originally issued in Portuguese in accordance with Portuguese Statutory requirements, someof which may not conform to or be required in other countries. In the event of discrepancies, the Portuguese language version prevails.


Information by business segments(Amounts stated in Euro)

Investment in Development of Management ofshopping centres shopping centres shopping centres Brazil Unallocated Total

—————————— —————————— —————————— —————————— —————————— ——————————08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31

Revenue:

Sales – – – – – – – – – – – –

Services rendered 249,631,749 205,522,412 5,522,035 9,204,771 107,224,889 101,671,402 24,167,475 20,152,147 31,259,354 29,431,443 417,805,502 365,982,175

Variation in fairvalue of theinvestmentproperties (277,343,671) 251,486,190 1,091,568 1,400,280 – – 45,838,337 45,267,230 – – (230,413,766) 298,153,700

Other operating income 40,054,721 40,750,707 18,056,529 14,488,132 (6,761,128) (3,689,887) 795,662 414,423 (27,389,531) (28,650,388) 24,756,253 23,312,987

12,342,799 497,759,309 24,670,132 25,093,183 100,463,761 97,981,515 70,801,474 65,833,800 3,869,823 781,055 212,147,989 687,448,862

Inter-segment revenue (31,174,440) (26,285,988) (10,096,150) (9,426,999) (12,430,867) (11,981,241) (268,147) (269,481) (3,092,325) (302,840) (57,061,929) (48,266,549)

Total revenue (18,831,641) 471,473,321 14,573,982 15,666,184 88,032,894 86,000,274 70,533,327 65,564,319 777,498 478,215 155,086,060 639,182,313

Operating resultof the segment (81,159,131) 417,246,150 (73,620,887) (9,957,782) (3,887,986) 703,724 58,760,320 57,618,878 (31,343,180) (30,176,277) (131,250,864) 435,434,693

Unallocated expenses

Net interest expense (79,405,721) (51,562,041)

Other financial results (15,586,359) 8,518,379

Income investment 21,882,988 17,550,427

Income tax 6,175,529 (109,794,722)

Minority interests 82,058,090 (85,250,073)

Net consolidatedprofit for the year (116,126,337) 214,896,663

Segment assets:

Investmentproperties 3,195,974,000 3,567,572,589 263,168,187 348,127,510 – – 228,231,902 209,647,108 – – 3,687,374,089 4,125,347,207

Other assets 204,100,241 211,840,093 59,149,991 87,389,678 33,927,168 31,432,432 14,665,003 10,416,317 64,430,585 9,545,239 376,272,988 350,623,759

Investmentin associatedcompanies 88,546,792 21,894,291 – – – – 2,272,558 2,316,582 – – 90,819,350 24,210,873

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

3,488,621,033 3,801,306,973 322,318,178 435,517,188 33,927,168 31,432,432 245,169,463 222,380,007 64,430,585 9,545,239 4,154,466,427 4,500,181,839

Segment liabilities:

Segment liabilities 2,330,092,057 2,467,655,065 93,161,710 143,979,384 42,491,930 40,094,087 61,078,862 34,218,381 104,542,731 26,128,526 2,631,367,290 2,712,075,443

Unallocatedliabilities – –

2,330,092,057 2,467,655,065 93,161,710 143,979,384 42,491,930 40,094,087 61,078,862 34,218,381 104,542,731 26,128,526 2,631,367,290 2,712,075,443

Cash flows:

Cash flows fromoperating activities 187,926,782 147,706,265 (15,926,819) 857,541 (3,122,797) (603,677) 7,517,688 9,308,714 (35,980,749) (24,490,786) 140,414,105 132,778,057

Cash flows frominvesting activities (45,280,610) (366,101,256) (148,235,089) (195,609,655) (68,811) 20,889 (27,841,614) (35,714,222) 3,483,172 7,728,545 (217,942,952) (589,675,699)

Cash flows fromfinancing activities 36,560,400 303,912,195 35,776,181 18,685,141 (61,011) (14,705) 23,684,964 (359,879) 37,768,501 (29,715,658) 133,729,035 292,507,094

179,206,572 85,517,204 (128,385,727) (176,066,973) (3,252,619) (597,493) 3,361,038 (26,765,387) 5,270,924 (46,477,899) 56,200,188 (164,390,548)


Information by geographical segments(Amounts stated in Euro)

Europe Brazil Total—————————————————— —————————————————— ——————————————————

08.12.31 07.12.31 08.12.31 07.12.31 08.12.31 07.12.31

Segment revenue 84,552,733 573,617,994 70,533,327 65,564,319 155,086,060 639,182,313

Segment assets 3,909,296,964 4,280,038,159 245,169,463 220,143,680 4,154,466,427 4,500,181,839



Statutory audit report consolidated and individual financial statements(Translation of a report originally issued in Portuguese)

INTRODUCTION

1. We have examined the consolidated and individual financial statements of Sonae Sierra, S.G.P.S., (the “Company”) which comprise theconsolidated and individual balance sheet as of 31 December 2008, that presents a total of 4,154,466,427 Euros and 1,276,095,491Euros, respectively and consolidated and individual shareholders’ equity of 1,523,099,137 Euros and 949,092,766 Euros, respectively,including a consolidated net loss attributable to the shareholders of the Company of 116,126,337 Euros and an individual net profit of54,963,550 Euros, the consolidated and individual statements of profit and loss by nature, changes in equity and cash flows for theyear then ended and the corresponding notes.

RESPONSIBILITIES

2. The preparation of consolidated financial statements that present a true and fair view of the financial position the Company and of thecompanies included in the consolidation and the consolidated and individual results of their operations and their cash flows, as well asthe adoption of adequate accounting principles and criteria and the maintenance of appropriate systems of internal control are theresponsibility of the Company’s Board of Directors. Our responsibility is to express a professional and independent opinion on theseconsolidated and individual financial statements, based on our examination.

SCOPE

3. Our examination was performed in accordance with the auditing standards (“Normas Técnicas e as Directrizes de Revisão/Auditoria”)issued by the Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais de Contas”), which require that the examinationbe planned and performed with the objective of obtaining reasonable assurance about whether the consolidated and individualfinancial statements are free of material misstatement. An examination includes verifying, on a sample basis, evidence supporting theamounts and disclosures in the financial statements and assessing the significant estimates, based on judgements and criteria definedby the Board of Directors, used in their preparation. An examination also includes verifying the consolidation procedures used and theapplication of the equity method and that the financial statements of the companies included in the consolidation have beenappropriately examined, assessing the adequacy of the accounting policies used and their uniform application and disclosure, takinginto consideration the circumstances, verifying the applicability of the going concern concept and assessing the adequacy of the overallpresentation of the consolidated and individual financial statements. An examination also comprises verifying that the financialinformation contained in the Management report is in accordance with the consolidated and individual financial statements. We believethat our examination provides a reasonable basis for expressing our opinion.

OPINION

4. In our opinion, the consolidated and individual financial statements referred to in paragraph 1 above, present fairly, in all materialrespects, the consolidated and individual financial position of Sonae Sierra, S.G.P.S., S.A., as of 31 December 2008 and the consolidatedand individual results of its operations and cash flows for the year then ended, in conformity with International Financial ReportingStandards as adopted by the European Union.

Porto, 10 March 2009

DELOITTE & ASSOCIADOS, SROC S.A.Represented by António Marques Dias


www.sonaesierra.com

PORTUGALPORTOLUGAR DO ESPIDO, VIA NORTE4471 – 909 MAIATELEPHONE: +351 22 948 7522FAX: +351 22 010 4698

LISBOARUA AMÍLCAR CABRAL, 231750 – 018 LISBOATELEPHONE: +351 21 751 5000FAX: +351 21 758 2688

BRAZILAV. DR. CARDOSO DE MELO,1184 (12TH,13TH AND 14TH FLOOR)VILA OLÍMPIA, SÃO PAULO – SPCEP: 04548 – 004TELEPHONE: +55 11 3371-4133FAX: +55 11 3845-4522

GERMANYPETER-MÜLLER-STR., 1840468 DÜSSELDORFTELEPHONE: +49 211 4361 6201FAX: +49 211 4361 6202

GREECECHATZIYIANNI MEXI, 5 (6TH FLOOR)11528 ATHENSTELEPHONE: +30 210 725 63 60FAX: +30 210 729 25 00

ITALYCORSO GARIBALDI, 8620121 MILANTELEPHONE: +39 02 6236 9001FAX: +39 02 62369 0230/1

ROMANIABANEASA BUSINESS &TECHNOLOGY PARKBUILDING B, THIRD FLOOR, WING 142 – 44 BUCURESTI PLOIESTI SECTOR 1013696 BUCURESTITELEPHONE: +40 21 36 10 910FAX: +40 21 36 10 988

SPAINC/ CONDE DE ARANDA, 24 (5TH FLOOR)28001 MADRIDTELEPHONE: +34 91 575 8986FAX: +34 91 781 1960

OTHER OFFICES

NETHERLANDSPOLARISAVENUE, 612132 JH HOOFDDORPTELEPHONE: +31 23568 50 80FAX: +31 23568 50 88

LUXEMBOURGAV. JOHN F. KENNEDY, 46 A1855 LUXEMBOURGTELEPHONE: +352 (26) 00 52 13FAX: +352 (26) 005 803

http://www.sonaesierra.com

THE SHOPPINGCENTRE SPECIALIST - Sonae Sierra · SONAE SIERRA ConsolidatedReportandAccounts2008 1...

Documents

Transcript of THE SHOPPINGCENTRE SPECIALIST - Sonae Sierra · SONAE SIERRA ConsolidatedReportandAccounts2008 1...