In Review. passionate. about innovation

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1 In Review 06 passionate about innovation

2 01 Strategy 02 Highlights of The Main Events of Partnerships 10 CEO s Statement 12 Operational Review 14 Sierra Investments 24 Sierra Developments 30 Sierra Management 38 Sonae Sierra Brazil 44 Consolidated Accounts 50 Corporate Responsibility 52 Corporate Governance 54 Board of Directors 56 Other Executives 58 Our Operating Portfolio 59 Our Future Who we are

Sonae Sierra is a specialist international company which owns,

sector. For us, shopping and leisure are indivisible.

practicality, we not only create innovative retail property

environments for our tenants, their customers and the

3 Sonae Sierra is a specialist international company which owns, develops and manages properties in the shopping and leisure sector. For us, shopping and leisure are indivisible. Through a unique combination of energy, imagination and practicality, we not only create innovative retail property solutions that provide stimulating shopping and leisure environments for our tenants, their customers and the communities we serve, we also deliver rewarding results for our investors. We are passionate about innovation.01

Our organisational STRUCTURE Sonae Sierra s four-part structure reflects our three main business areas European shopping centre ownership, development and management and our activities in Brazil.

4 Our organisational STRUCTURE Sonae Sierra s four-part structure reflects our three main business areas European shopping centre ownership, development and management and our activities in Brazil. Sierra Investments owns Sonae Sierra s assets, provides its asset management and is responsible for our investments in Europe. It also holds 50.1% of the Sierra Fund s equity and acts as investment and asset manager of Sierra Fund. Sierra Developments is responsible for the development of our shopping and leisure centres in Europe. Its activities include all aspects of procurement, conceptual development, architectural design and construction management. Sierra Management is responsible for the property management of our European shopping centres, including those owned by Sierra Investments or by third parties. Sonae Sierra Brazil operates autonomously, investing in, developing and managing a number of shopping and leisure centres in Brazil. Sierra Corporate Services provides a comprehensive portfolio of financial, legal, human resources, environmental, communications, safety and health, and back-office services that support our operations. Sonae Sierra Sierra Corporate Services Sierra Investments Sierra Developments Sierra Management Sonae Sierra Brazil Sierra Fund Portugal Spain Italy Germany Greece Portugal Spain Italy Germany Greece Portugal Spain Italy Germany Greece Investment Development Management.02

Our sector FOCUS Sonae Sierra is focused solely on the shopping and leisure centre sector of the property industry, where it creates unique facilities that reflect its belief and the desire of many

5 Our sector FOCUS Sonae Sierra is focused solely on the shopping and leisure centre sector of the property industry, where it creates unique facilities that reflect its belief and the desire of many people that shopping should be more than just an enjoyable experience, it should be a stimulating leisure activity as well. Our investment strategy takes a long-term view of our market, its trends and development. While we prefer to own the assets we develop, we also invest in established shopping centres with potential for improvement through a combination of redevelopment and active, innovative property and asset management. The financial stability which stems from this policy, coupled with our creative approach to design and construction, has earned us an enviable reputation as developers with a real flair for innovation and quality. Our strategy for GROWTH Currently operating in Portugal, Spain, Italy, Germany, Greece and Brazil, with plans in hand for expansion into Central Europe, our strategy for growth is based on the innovative deployment of our specialist skills, organised according to a successful business model, which reflects the three strands of our business: ownership, development and management. We also set great store by our partnerships. Working with a number of international investors and local partners, we are constantly developing the strength of our financial base, improving the quality of our products, and increasing the breadth and depth of our market knowledge. As a result, we are always ready to respond to every new business opportunity with an innovative approach..03

Total Net Asset Value (NAV) at year-end Consolidated Net Profit (before minorities) Asset gearing Interest cover 1,490 million 270.6 million 29.4% 2.

6 Total Net Asset Value (NAV) at year-end Consolidated Net Profit (before minorities) Asset gearing Interest cover 1,490 million million 29.4% has been a remarkable year for Sonae Sierra. Not only have we reinforced the company s portfolio with the inauguration of our RioSul shopping and leisure centre in Seixal, Portugal, we have also launched important new developments in every market we operate in. Performance Indicators Real Estate NAV as of 31 Dec ( million) 934 1, ,060 1,265 1,490 Real Estate NAV as of 31 Dec per share ( ) GLA owned in operating centres (000 s m2) 790 1,140 1,203 1,362 1,586 1,660 GLA under management (000 s m2) 1,128 1,517 1,564 1,839 2,025 2,001 Number of tenant contracts under management 3,949 5,089 5,399 6,134 7,166 7,293 Consolidated EBITDA IAS ( million) Consolidated Net Profit before minorities IAS ( million) Consolidated Net Profit Attributable to Equity Holders IAS ( million) Non-audited accounts % variation Real Estate NAV as of 31 Dec per share 24% 11% 5% 12% 19% 18% GLA (m 2 ) owned in operating centres 35% 44% 5% 13% 17% 5% GLA (m 2 ) under management 18% 34% 3% 18% 10% -1% Number of tenant contracts under management 14% 29% 6% 14% 17% 2% Non-audited accounts.04

Gross Lettable Area (GLA) under management in Portugal, Spain, Italy, Greece and Brazil Visits to shopping centres under management Gross Lettable Area (GLA) owned or co-owned Team of

7 Gross Lettable Area (GLA) under management in Portugal, Spain, Italy, Greece and Brazil Visits to shopping centres under management Gross Lettable Area (GLA) owned or co-owned Team of people operating in six countries 2 million m million 1,660 million m EBITDA of million (+20%) Open Market Value (OMV) 4,728 million (+15%) NAV per share 45.8 (+18%) Luz del Tajo

Jan Sept Partnership with Rockspring managed funds for RioSul and Serra

of 2006 We opened one major centre in Portugal and another was voted Spain s

We won an important social responsibility award in Brazil and formed a new

8 Jan Sept Partnership with Rockspring managed funds for RioSul and Serra Shopping in Portugal Luz del Tajo won the AECC award in Spain The main events of 2006 We opened one major centre in Portugal and another was voted Spain s Best Shopping Centre. We won an important social responsibility award in Brazil and formed a new alliance that will accelerate our progress there. We strengthened our partnerships in Europe and achieved a steady increase in our net profits. RioSul

Oct Oct Personæ won the Echo award in Brazil DDR partnership in Brazil We have consolidated our position in all our markets and are on course to become a 2 billion NAV company.

companies that value our performance. February saw the launch of Freccia Rossa, our 146 million investment in the historic centre of Brescia.

9 Oct Oct Personæ won the Echo award in Brazil DDR partnership in Brazil We have consolidated our position in all our markets and are on course to become a 2 billion NAV company. The year began with our sale to Rockspring managed Funds of a 50% stake in two shopping centres in Portugal, thus confirming our strategy of strengthening our partnerships with renowned international companies that value our performance. February saw the launch of Freccia Rossa, our 146 million investment in the historic centre of Brescia. When it opens in the Autumn of 2007, this new development will be Italy s largest downtown shopping and leisure centre. In March we inaugurated RioSul, our 77 million project in Seixal, Portugal, which began construction in With 137 shops, 22 restaurants and parking for 2,300 cars, we believe this centre will do much to improve the quality of life in its catchment area. In the same month, we made a public presentation of our proposals for the Alexa centre in Berlin. Scheduled for inauguration in late 2007, this development will make an important contribution to the regeneration of Berlin s Alexanderplatz district. May was marked by our victorious bid for the usage rights of the Galatsi Olympic Hall in Athens. This valuable location, which is ideal for a shopping and leisure centre, was won in tandem with Acropole Charagionis and adds an important new dimension to our operations in Greece. In the same month, the Portuguese and Spanish Chamber of Commerce and Industry presented Sonae Sierra with an award as the best Portuguese company operating in Spain. The following month, our Personæ Project won an ECO Award, presented by Amcham, Brazil, in the Corporate Social Responsibility Internal Public category, and we completed a major transaction with America s Developers Diversified Realty that will do much to accelerate our progress in Brazil. During the last two months of 2006 we began the 31 million refurbishment of Valecenter in Italy, inaugurated the final stage of our Shopping Campo Limpo centre in São Paulo, Brazil, and launched Lima Retail Park, our joint venture with Miller Developments, due to open in Viana do Castelo, Portugal, early in By the end of 2006, we could look back on a busy year, with much accomplished and much more to be done. Unfortunately, in February 2007, Deutsche Bahn officially informed us and our partner, Foncière Euris, that they were unable to find an acceptable solution to the problems arising from the building of the Dortmund train station, and consequently of the 3do shopping centre development. In view of this, we decided to include a write-off in our 2006 accounts of the total investment made to date in 3do. Over the following two months we made public presentations of our plans for the development of El Rosal, a 120 million shopping centre in Ponferrada in Spain, and for a new centre for the city of Évora in Portugal. In September the Spanish Shopping Centre Association voted Toledo s Luz del Tajo Best Large Shopping Centre in the country. We can look back on a busy year with much to be pleased about. We are on course to become a 2 billion NAV company..07

10 Our partnerships We have continued our policy of developing partnerships with interested parties based in the countries of the European Union, the USA and Brazil. The table opposite shows the scope of these relationships. Serra Shopping

11 Partnerships Centres in Operation Partners Country Sonae Sierra Viacatarina, Porto, Portugal ING Real Estate Netherlands 50% Centro Colombo, Lisboa, Portugal Centro Vasco da Gama, Lisboa, Portugal Grancasa, Zaragoza, Spain Max Centre, Bilbao, Spain Valle Real, Santander, Spain Zubiarte, Bilbao, Spain La Farga, Hospitalet, Barcelona, Spain GaiaShopping, Porto, Portugal CNP Assurances(25%) France 50% Arrábida Shopping, Porto, Portugal Ecureuil Vie (25%) CascaiShopping, Cascais, Portugal Pan European (25%) U.K. 50% Trans European II (25%) U.S.A Serra Shopping, Covilhã, Portugal Pan European U.K. 50% RioSul, Seixal, Portugal NorteShopping, Porto, Portugal TIAA- CREF U.S.A 50% MadeiraShopping, Funchal, Portugal Estevão Neves Portugal 50% Parque Atlântico, Ponta Delgada, Portugal NSL Group Portugal 50% Parque Principado, Oviedo, Spain LAR Group Spain 50% Shopping Penha, São Paulo, Brazil Local Partners (26,8%) Brazil 73.2% Franca Shopping, São Paulo, Brazil Local Partners (35,5%) Brazil 64.5% Tivoli Shopping, São Paulo, Brazil Tivoli Emp. Part., Ltda. (75%) Brazil 25.0% Shopping Campo Limpo, São Paulo, Brazil Tivoli Emp. Part., Ltda. (80%) Brazil 20.0% Shopping Plaza Sul, São Paulo, Brazil Local Partners (80%) Brazil 20.0% Pátio Brazil, Brasília, Brazil Local Partners (89,6%) Brazil 10.4% Shopping Metrópole, São Paulo, Brazil Local Partners (90%) Brazil 10.0% Mediterranean Cosmos, Thessaloniki, Greece Acropole Charagionis (19,95%) Greece 19.95% Lamda Development (60,1%) Centres under Development Partners Country Sonae Sierra Plaza Mayor Shopping, Malaga, Spain Castle City U.K. 75% El Rosal, Ponferrada, Spain Grupo Mall Spain 70% Setúbal Retail Park, Setúbal, Portugal Miller Developments U.K. 50% Lima Retail Park, Viana do Castelo, Portugal Galatsi, Athens, Greece Acropole Charagionis Greece 50% Freccia Rossa, Brescia, Italy AIG (40%) U.S.A 50% Coimpredil (10%) Italy Alexa, Berlin, Germany Foncière Euris France 50% Weiterstadt, Weiterstadt, Germany Le Terrazze, Spezia, Italy ING Real Estate Development Netherlands 50% Others Partners Country Sonae Sierra Sierra Fund ABP Netherlands 50.1% CDC France CNP Assurances France Ecureuil Vie France TIAA- CREF U.S.A Sonae Sierra Brasil, BV DDR U.S.A. 50% Sonae Sierra Brasil, Ltda. Enplanta Engenharia Brazil 93% Sierra Charagionis Management of Shopping Centres (Greece) Acropole Charagionis Greece 50%.09

12 CEO s Statement Sonae Sierra s first shopping centre development was completed in Since then our continuing passion for innovation has been the driving force behind the successful development of pioneering concepts in Portugal, Spain, Germany, Italy, Greece and Brazil. For us, shopping and leisure go hand in hand. We are guided by our belief that the people who visit our centres want to enjoy more than just a satisfying shopping experience. They also want to take pleasure from a variety of leisure facilities at the same location. Today, our vibrant portfolio of award-winning shopping and leisure centres is recognised as one of the most dynamic in the sector was a very good year for Sonae Sierra. Despite the generally poor performance of retail sales across much of Europe which led to increased competition for market share in all the continent s retail sectors we achieved a 22% increase in our direct net profits and a 20% increase in EBITDA. At the end of the year our total net profits stood at 271 million. We were also able to report a 19.7% return on equity, which we consider to be very good, and an increase in our NAV of 17.8%. These results, which outstripped our expectations, are due as much to the inspirational hard work of our people as they are to the increase in the underlying value of our assets and the progress we have made in opening new shopping centres and adding value to our existing portfolio. New and stronger partnerships In addition to our year-end figures, one of the most rewarding features of the year has been the way in which we have strengthened our financial base. At the start of the year, Grosvenor acquired an additional 17.04% of our share capital, which increased their holding to 50% and put their nine-year-old partnership with Sonae SGPS onto an equal footing. Not only does this move reinforce our position in the market, it is I believe a direct reflection of the mutual trust and respect that exists between both our shareholders, and an expression of Grosvenor s belief in our ability to perform at the highest level. Towards the end of the year we established a new power base for our business in Brazil by entering into a new 50/50 partnership with Developers Diversified Realty, a leading player in the shopping centre sector in the United States and one of that country s largest shopping centre REITs. This partnership does more than bring together two strong organisations with like-minded beliefs and ambitions. The resulting injection of some R$ 600 million over the next three years will give Sonae Sierra Brazil the financial muscle needed to accelerate the progress of our joint business in Brazil. It also signals our intention of becoming the leader in Brazil s shopping and leisure centre industry. My colleague, João Pessoa Jorge, who runs Sonae Sierra Brazil, reports on this partnership in more detail on page 39. Other joint venture shareholding increases during the year, such as those of Miller Developments and Rockspring managed Funds, have added to our financial standing and point to our partners confidence in our ability to deliver high quality, well managed product at the right price. Significant new investments Our two most important investments during the year have been in Greece where, following a very competitive bidding process, we won the usage rights for the Galatsi Olympic Hall for the next 40 years and in Germany, where we secured the acquisition of the Münster Arkaden shopping centre from Sparkasse Münsterland Ost. The Athens Galatsi development a 69 million joint venture with Acropole Charagionis will become our second Greek shopping and leisure centre development. Capitalising on the experience gained through our successful inauguration of Mediterranean Cosmos in Thessaloniki, we expect this exciting project to give us an opportunity to provide Athens with a first class development designed to benefit both the local people and the city s visitors. Münster Arkaden is a high quality shopping centre located in the heart of a city with a number of centres of innovative research and technology, a modern infrastructure and a population of 270,000. Progress in Germany and Italy Securing the acquisition of Münster Arkaden is only one of several encouraging developments in Germany. We also acquired a well-located site in Weiterstadt, where we have already started to build a large shopping and leisure centre, and we are making good progress with our Alexa centre in Berlin..10

2006 was an exceptionally successful and rewarding year during which we made good progress towards our goal of becoming a 2 billion NAV company.

13 2006 was an exceptionally successful and rewarding year during which we made good progress towards our goal of becoming a 2 billion NAV company. Álvaro Portela Chief Executive Officer The opening of Freccia Rossa in Brescia in the autumn of 2007 will be a milestone in the development of our market share in Italy. We have increased our investment in both these countries in recent years, to the point where they account for 11% of our capitalisation, as at 31 December Given each one s economic strength and consumer spending power, we expect both markets to offer further opportunities for profitable acquisitions and developments. Professionalism recognised As a company involved in a very competitive business, we have always taken awards seriously, believing they are presented in recognition of our professionalism and creativity. Last year we were pleased to be recognised by the Portuguese and Spanish Chamber of Commerce and Industry as the best Portuguese company operating in Spain, where we own 11 shopping centres one of which, in Toledo, was considered by the Spanish Shopping Centre Association to be the best in the country. It was satisfying, too, that our Personæ Project, which aims to make us the shopping and leisure centre company with the highest standards and practices of health, safety and social responsibility, won the 2006 ECO award in the Corporate Social Responsibility Internal Public category. This award, which was launched by the American Chamber of Commerce in 1982, acknowledges the development of Business Citizenship in Brazil. The 2006 presentation ceremony, which took place in São Paulo, was attended by the former Vice President of the United States, Al Gore. It was also gratifying to be placed third in Portugal s Euronatura environmental ranking, which covers every aspect of corporate responsibility and environmental management in our sector, including ratings for the construction materials we use, our lighting and heating systems and our transport arrangements. I do believe that all these competitions particularly those which relate to the environment, for which are all responsible are a good idea. In many cases, they set the pace ahead of our various governments moves to encourage improved corporate social behaviour. Against this backdrop, we have continued our environmental management programme and were pleased that a further eight of our operating shopping centres received ISO certification during the year, as well the two new centres under construction and completed in Our plan is that all our centres will have this accreditation. Challenging year ahead Looking ahead, we see a challenging year in front of us. Despite minimal growth in retail industry sales over the past year, the investment markets show no signs of loosing their buoyancy and the demand for retail property is high. As a result, we may find it difficult to identify and secure good investment opportunities as we face stiff competition in all our markets. However, we can look forward to the inauguration of six brand new centres and one expansion in Europe which will bring their own operational pressures and to the acceleration of our development programme in Brazil. We are also actively exploring new markets in Central Europe, where we recently appointed a new Expansion Manager, Jorge Morgadinho. Here, as elsewhere, we shall pursue our objective of creating innovative destinations designed to fulfil our belief that shopping and leisure are one and the same thing; that the people who visit our centres do so to shop and to enjoy themselves. My expectation is that despite the competitive market conditions with the quality of our people and their commitment to our way of doing things as well as to our future, coupled with the support we enjoy from our partners, we can anticipate another year of progress towards our stated aim of becoming a 2 billion NAV company by Álvaro Portela CEO.11

14 Operational Review > SIERRA INVESTMENTS 2006 was another active year for Sierra Investments, with operations strengthened in all our markets and a 12% growth in the value of our portfolio. The acquisition of a new centre in Portugal and the opening of the first phase of another in Italy were highlights of the year. The division has also secured an agreement for its first investment in Germany. > SIERRA DEVELOPMENTS The inauguration of RioSul in Seixal, Portugal, was a landmark for Sierra Developments. The acquisition of a green-field site in Weiterstadt near Frankfurt for the development of an outof-town shopping centre, and the successful bid for the right to develop a new shopping centre on the site of the Galatsi Olympic Hall in Athens also played their part in a successful year A year of steady expansion in Europe and exciting new developments in Brazil. The continuing expansion of our operations in Europe reflects well on our ability to direct and supervise the core strands of our business: ownership, development and management. Our new relationship with America s Developers Diversified Realty gives us a strong partner able and willing to help us develop our business in Brazil..12

15 > SIERRA MANAGEMENT 2006 was marked by the addition of three new centres to the Sierra Management portfolio, and by the start of leasing activities for ten centres under development. With operations in Portugal and Spain benefiting from the economies of scale and years of experience, the challenge is to accelerate the growth of its activities in Italy, Germany and Greece and reach the comparable levels of efficiency. > SONAE SIERRA BRAZIL 2006 will be remembered for the establishment of the new partnership between Sonae Sierra and Developers Diversified Realty of America, a relationship that will do much for the acceleration of Sonae Sierra Brazil s development programme. The year was also marked by the inauguration of the third and final phase of Shopping Campo Limpo, located in one of São Paulo s fastest-growing districts. development vision focus inspiration management ownership innovation communities international partnerships expansion passion.13

16 Operational Review Sierra Investments RioSul The acquisition of RioSul, a brand new shopping centre created by Sierra Developments on the outskirts of Lisbon, and securing the acquisition of two other centres in the Algarve has strengthened our position in Portugal.

Acquisition of RioSul shopping centre from Sierra Developments Contribution of Spain s Zubiarte and Avenida M40 shopping centres to the Sierra Fund Opening of the expanded food court at Arrábida

17 Acquisition of RioSul shopping centre from Sierra Developments Contribution of Spain s Zubiarte and Avenida M40 shopping centres to the Sierra Fund Opening of the expanded food court at Arrábida Shopping in Portugal Opening of the first phase of the Valecenter refurbishment in Italy Securing of the acquisition in Germany of Münster Arkaden from third parties with formal acquisition scheduled for the first quarter of 2007 Securing of the acquisition, in conjunction with GREP Fund, of Modelo de Albufeira and Continente de Portimão shopping centres in Portugal Increase of 567 million in the portfolio s market value, a growth of 12% for the year Ana Guedes Oliveira Sierra Investments, Managing Director Sierra Investments owns the company s shopping and leisure centres and manages its European investment business. Business activities Sierra Investments owns the company s shopping and leisure centres, manages its investment business in Europe, and actively supports the exploration of new markets. Its principal objective is to increase the asset value of all the company s shopping and leisure centres. The division contributes to the company s results through a combination of rental income and the rising market values of the shopping centres it owns. Sierra Asset Management, a company within Sierra Investments, also provides income-producing asset management services to the properties. Acting on behalf of the company, the division takes a long-term view, investing in assets developed by Sierra Developments as well as established centres acquired from third parties for their potential increase in value. Sierra Investments holds 50.1% of the Sierra Fund, thus maintaining its position as co-owner and manager of the Fund s underlying assets. Sierra Investments in 2006 The transactions carried out during 2006 and the strengthening of our operations across all our markets made 2006 another active year for Sierra Investments. One of the highlights was the start of our investment activity in Germany, begun through securing the acquisition of Münster Arkaden, a shopping centre in the heart of the city of Munster, built around a mall that serves as an important link between the city s main pedestrian areas. In the beginning of 2007, we also strengthened Sonae Sierra s position in the Algarve through the acquisition of two shopping centres. Shopping Centre Modelo de Albufeira has 10,471 m 2 of GLA and a total of 43 shops. Shopping Centre Continente de Portimão, on the main access road to Portimão, has 13,492 m2 GLA and 60 shops. During the year we also acquired RioSul, a shopping centre on the outskirts of Lisbon, from Sierra Developments..15

Operational Review Sierra Investments The total rental income of Sierra Investment s owned or co-owned portfolio increased by 17.5 million during 2006, an improvement of 12% on the previous year.

court in Porto s Arrábida Shopping at the end of August, adding a further 4,257 m 2 GLA to the overall scheme. In Italy, we completed the first phase of the refurbishment of Valecenter in Venice.

Rental income and property values During the year, the total rental income of Sierra Investment s owned or co-owned portfolio increased by 17.

1% on a like-for-like basis has been achieved through a combination of acquisitions and organic growth within the existing portfolio. Turnover rents in 2006 reached 5% of total fixed rents.

18 Operational Review Sierra Investments The total rental income of Sierra Investment s owned or co-owned portfolio increased by 17.5 million during 2006, an improvement of 12% on the previous year. CascaiShopping Sierra Investments Performance 06 In line with our policy of active management aimed at achieving consistent value creation within our portfolio, we completed the expansion of the food court in Porto s Arrábida Shopping at the end of August, adding a further 4,257 m 2 GLA to the overall scheme. In Italy, we completed the first phase of the refurbishment of Valecenter in Venice. With 6,650 m2 GLA and 13 units, this phase which brings a modern and appealing atmosphere to the centre opened in December. Rental income and property values During the year, the total rental income of Sierra Investment s owned or co-owned portfolio increased by 17.5 million on the previous year, an improvement of 12% vis-à-vis This increase 4.1% on a like-for-like basis has been achieved through a combination of acquisitions and organic growth within the existing portfolio. Turnover rents in 2006 reached 5% of total fixed rents. As usual, the company continues to assess the performance of its properties through the growth of their market value. When compared with 2006, the increase in the valuation of the operating properties is 318 million. The increase in total value is a result of the general decrease in exit yields of shopping centres in the portfolio, coupled with their consolidation in their respective catchment areas. It is believed there is still room for further yield compression in the portfolio, most notably in Portugal, but also in Spain, Italy and Greece. Occupancy Rate Portugal 98% 97% Spain 96% 94% Italy 79% 94% Greece 98% 78%.16

19 Rents & Sales Fixed rents Variable rents Total rents % 06/05 rents Sales % 06/05 sales total like-for-like total like-for-like Portugal 166, ,133 8,435 10, , , % 1.3% 2,029,478 1,845, % 2.5% Spain 64,642 61,968 3,384 2,360 68,026 64, % 4.3% 828, , % 7.1% Italy 1) 6,901 7, ,901 7, % -7.4% 42,281 53, % -20.8% Greece 12,353 1, ,346 1, % 877.7% 118,779 23, % 415.4% Figures in Euro (thousands) 1) Italy sales only include Valecenter as tenants do not declare sales on other centres. The -20% variation is due to the end of the leasing of a single large store. Retail market outlook The retail market outlook suggests that the strengthening of our core activities will carry on, on the back of an economically healthier 2006 across our target markets. In Portugal, economic activity recovered moderately in 2006, with much of the performance driven by healthier domestic conditions. Following the two successive falls in volumes seen in 2004 and 2005, 2006 recorded a resumption of growth in investment activity, with shopping centres recording additional yield falls. Consumer spending growth remained weak over the year as a whole, largely due to tight fiscal policies and relatively weak confidence levels. Prime shopping centre yields fell further during 2006 on the back of continuing strong investor demand. In Spain, while consumer spending and housing demand currently drive growth, activity is expected to moderate over the next year proved to be the strongest year on record for property investment, with yield compression continuing to be a major driver of performance. Investor interest remains strong, notably for high street property, which continues to benefit from steady rental growth, and for well-located shopping centres and retail parks. In the shopping centre sector, some of the older/weaker schemes will continue to struggle, notably those lacking good management, which may present opportunities for those investors willing to play a more active role in asset management. All in all, Spain will continue to out-perform the Eurozone. Economic growth stabilised in Italy during 2006, with consumer sentiment remaining optimistic and private spending strong. The economy looks set to decelerate somewhat in 2007 and will continue to under-perform its European counterparts as a result of tighter fiscal policies and higher interest rates. The property investment market had another strong year in Shopping centre yields hardened and the emerging retail warehouse investment market is now beginning to impact on yields. In terms of rental growth, Italy remains one of the best performing markets in Europe. The investment market for Italian shopping centres ended the year very positively, with investor interest still outweighing available stock, but high levels of development are gradually boosting the amount of investible stock. International investors are continuing to build a presence in Italy, with retail sales performance relatively robust and occupier interest from foreign retailers also growing. Economic activity in Greece has rebounded from the relatively mild growth of 2005, underpinned primarily by buoyant investment growth which remains the chief driver of economic growth. Yield compression was experienced across the country. Yet, despite these falls, yields remain high, although recent shopping centre and retail park deals show them to be more in line with the more mature European retail markets. The investment market remains dominated by local private investors, with a limited number of shopping centre and retail park transactions to date. This is expected to change as more modern stock comes on to the market. Overall, market sentiment is good and the long-term prospects are bright. In Germany, economic growth accelerated over the final quarter of the year. The positive performance was largely underpinned by the strength of both domestic and foreign demand. The economy is, however, set to ease slightly in 2007, although it will remain relatively robust as net export growth slows and the recent VAT hike moderates consumer spending. Capital values remained on an upward curve during the second half of 2006, driven by downward yield shifts caused by the huge weight of capital flowing into German property. As the German investment market broke all records in 2006, the weight of available capital has attracted a swarm of international players to a market with more willing sellers than most. Overall, from an investment point-of-view, 2007 is expected to match 2006 in terms of investment volumes. The retail sector is again set to play a major part as demand for retail assets remains exceptionally strong. Development activity is healthy and the market for new schemes and those still under construction is highly competitive, as many modern in-town schemes are fully let and performing very strongly..17

Open Market Value Figures in Euro (thousands) Shopping Centres in Operation % Sierra* Open Market Value OMV Variation OMV Variation 31 Dec. 2006 31 Dec.

20 Open Market Value Figures in Euro (thousands) Shopping Centres in Operation % Sierra* Open Market Value OMV Variation OMV Variation 31 Dec Dec Dec Total % AlgarveShopping 100% 140, ,977 24,199 21% Arrábida Shopping 50% 73,926 67,240 6,686 10% CascaiShopping 50% 169, ,772 26,514 19% Centro Colombo 50% 361, ,399 49,851 16% Centro Vasco da Gama 50% 137, ,028 19,924 17% CoimbraShopping 100% 35,025 37,239-2,214-6% Estação Viana 100% 82,167 73,301 8,866 12% GaiaShopping 50% 81,632 71,103 10,529 15% GuimarãeShopping 100% 46,243 42,592 3,651 9% LoureShopping 100% 119, ,419 8,786 8% MadeiraShopping 50% 38,549 36,301 2,249 6% MaiaShopping 100% 57,555 56,453 1,102 2% NorteShopping 50% 188, ,301 19,932 12% Parque Atlântico 50% 37,044 30,914 6,130 20% Viacatarina 50% 35,854 35, % Serra Shopping 50% 22,426 20,370 2,056 10% RioSul 1) 50% 55,516 55,516 Edifício Grandela 100% 5,727 5, % Gare do Oriente 100% 1,182 1, % Total Portugal 1,688,945 1,444, ,601 17% Avenida M40 100% 82,506 92,077-9,571-10% Dos Mares 100% 55,308 48,056 7,252 15% Grancasa 50% 89,734 80,490 9,244 11% La Farga 50% 29,949 28,747 1,202 4% Luz Del Tajo 100% 102,295 89,460 12,835 14% Max Centre 50% 87,491 77,547 9,944 13% Parque Principado 50% 88,966 78,492 10,474 13% Plaza Eboli 100% 56,702 54,647 2,055 4% Plaza Mayor 100% 81,721 80,222 1,499 2% Valle Real 50% 48,128 45,256 2,872 6% Zubiarte 50% 43,826 43, % Total Spain 766, ,758 47,866 7% Valecenter 100% 116,159 99,258 16,901 17% Airone 100% 18,506 17,257 1,249 7% Total Italy 134, ,515 18,150 16% Mediterranean Cosmos 19.95% 29,682 22,353 7,329 33% Total Greece 29,682 22,353 7,329 33% Total 2,619,916 2,301, ,947 14% * In Centres owned by SIERRA Fund, it means control 1) Opened during

We aim to keep a close eye on developments in Central Europe, where potentially interesting properties are beginning to emerge and our

Centro Colombo Future prospects Our objective is to stay focused on value creation through active asset management, thus enhancing the

The coming year will see us working on several refurbishments such as Centro Colombo in Lisbon, Grancasa in Zaragoza and the second phase of

21 We aim to keep a close eye on developments in Central Europe, where potentially interesting properties are beginning to emerge and our special expertise and experience should release significant value. Centro Colombo Future prospects Our objective is to stay focused on value creation through active asset management, thus enhancing the maximum potential of each property. The coming year will see us working on several refurbishments such as Centro Colombo in Lisbon, Grancasa in Zaragoza and the second phase of Valecenter. We aim to acquire new operating centres in Germany and Italy, where we have reinforced our asset management teams. We will also keep a close eye on developments in Central Europe, where potentially interesting properties are beginning to emerge and our special expertise and experience should release significant value..19

22 Operational Review Sierra Investments Centro Vasco da Gama.20

23 Sierra Investments Asset Market Values The Sierra Fund in 2006 The Sierra Fund was established in 2003 with a total committed equity of 1.08 billion. Sonae Sierra holds 50.1% of the Fund and Sierra Investments manages its assets. The objective of the Sierra Fund is to provide its investors with dividends and capital growth from investments in high quality, actively managed shopping centres in the Fund s target markets of Portugal, Spain, Italy, Germany and Greece. Our five partner investors in the Fund are Stichting Pensioenfonds ABP of Holland, the French companies Caisse des Dépôts et Consignations EP, CNP Assurances and Ecureuil Vie, and TIAA-CREF which is based in the USA. The commitment of these international institutional investors not only validates the quality of Sonae Sierra s existing assets and development programme, but also provides new knowledge sources which will help Sonae Sierra improve its performance going forward. Two shopping centres in Spain were acquired from Sierra Investments Zubiarte in Bilbao and Avenida M40 in Madrid bringing the Fund s total investment to 368 million. This growth was totally financed out of additional debt. No capital calls were made on investors during 2006, and the Fund still has 172 million of undrawn equity that is committed until The Fund also contributed to the development of the enlarged Arrábida Shopping centre in Porto, and to the first phase of the refurbishment of the Valecenter near Venice. The Fund played an important part in securing the acquisition of the Münster Arkaden shopping centre in Germany. This acquisition will be completed in the first quarter of was another very good year for the Fund, with the investors return reaching 27%. 1,802 1,055 2,390 1,376 2,672 1,469 3,101 1,754 3,748 2,302 4,329 2, Open Market Value of Centres in Operation ( millions) Total Value Sonae Sierra Control.21

24 Operational Review Sierra Investments The value created on investment properties in 2006 reached 221 million. 156 million relate to assets in Portugal, 50 million to assets in Spain and 14 million to assets in Italy. LoureShopping Sierra Investments Financial Report 06 Sierra Investments 2006 Net Profits Sierra Investments contributed million to the consolidated profit of Sonae Sierra. The company consolidates the Sierra Fund in full, given that it holds effective control with 50.1% of the capital. Direct profits The direct profits of Sierra Investments are derived from the operation of shopping and leisure centres that are part of its portfolio, including those assets that are in the Sierra Fund. The direct profits also include the asset management services provided to the properties by Sierra Asset Management. The growth in turnover over 2005 is largely due to growth in the portfolio on two fronts. The first includes the acquisition, in Portugal, from Sierra Developments in 2006 of the RioSul project, which began operations in the same year, and of LoureShopping and Serra Shopping, both in Portugal, which were acquired and began operations in The second is the full-year effects of 2005 s three acquisitions in Italy and of Plaza Éboli in Spain. The increase in asset management income over 2005 is also the result of the increase in the portfolio of the Sierra Fund. EBITDA increased by 13%. Net financial costs rose 9% compared to 2005 due to an increase in bank debt from million to a total of million. This increase is largely the result of the acquisition of assets during 2006 and of new financing/ refinancing of the existing portfolio. Indirect profits Indirect profits arise either from the change in value of the investment properties or the realisation of capital gains on the sale of assets and/or shareholding positions. The value created on investment properties reached 221 million in 2006, of which 156 million relate to value creation on assets in Portugal, 50 million in Spain and the remaining 14 million on asset value creation in Italy. Minority interests of million correspond mainly to 49.9% ownership of our five partners in the Sierra Fund results..22

Retail operating income of 173 million EBITDA increased by 13% to 138.3 million Value created on properties of 221 million Net profit of 240.9 million, representing a growth of 39%, of which 131.

25 Retail operating income of 173 million EBITDA increased by 13% to million Value created on properties of 221 million Net profit of million, representing a growth of 39%, of which million attributable to equity holders Sierra Investments Profit & Loss Account ( 000) (*) % 06/05 Fixed Rental Income 152, ,002 13% Turnover Rental Income 7,600 8,234-8% Key-Money Income 6,264 7,665-18% Other Income 7,103 5,682 25% Retail Operating Income 173, ,584 11% Property Management Services 8,719 7,946 10% Asset Management Services 18,093 14,205 27% Letting & Promotion 4,037 2,914 39% Capital Expenditures 3,088 4,572-32% Other Costs 14,220 13,510 5% Retail Operating Costs 48,157 43,148 12% Retail Net Operating Margin 124, ,436 11% Parking Net Operating Margin 3,027 3,321-9% Co-generation Net Operating Margin 1,217 1,180 3% Shopping Net Operating Margin 129, ,937 10% Offices Net Operating Margin % Income from Asset Management Services 18,661 14,266 31% Total Overheads 9,824 9,117 8% EBITDA 138, ,448 13% Depreciation % Provisions 1,240 2,353-47% Recurrent net financial costs/(income) 46,511 42,491 9% Non-recurring costs/(income) 200 (361) 155% Results Before Corporate Taxes 90,179 77,763 16% Corporate Taxes 18,771 15,182 24% Direct Profit 71,408 62,581 14% Realised Property Profit (9) 18, % Non -Realised Property Profit 221, ,200 53% Total Indirect Income from Investments 221, ,421 36% Deferred tax 51,560 52,218-1% Indirect Profit 169, ,203 54% Net Profit for the Period 240, ,783 39% Attributable to: Equity holders 131, ,629 27% Minority interests 109,458 69,155 58% Non-audited accounts (*) 2005 has been restated in order to detail the Asset Management activity Sierra Investments Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 var. (06 05) Investment Properties & Others 2,661,406 2,350, ,500 Tenants 10,849 10, Tax Shelter 15,677 16, Other Assets 80,562 97,683-17,121 Deposits & Short Term Investments 281, , ,800 Total Assets 3,050,339 2,874, ,644 Net Worth 832, ,687 44,579 Minorities 398, , ,530 Bank Loans 1,175,106 1,106,952 68,153 Shareholder Loans 73,041 89,252-16,211 Deferred Taxes 446, ,000 62,430 Other Liabilities 125, ,321-87,837 Total liabilities 1,820,060 1,793,525 26,535 Net Worth, Minorities and Total Liabilities 3,050,339 2,874, ,644 Non-audited accounts.23

26 Operational Review Sierra Developments Centro Vasco da Gama Despite increased competition in all our markets, we not only opened a brand new shopping centre in Portugal but also approved several new developments.

Inauguration of RioSul in Seixal, Portugal Acquisition of green-field site in Weiterstadt, Germany, for the development of a major out-of-town shopping centre Successful bid for the right to develop

27 Inauguration of RioSul in Seixal, Portugal Acquisition of green-field site in Weiterstadt, Germany, for the development of a major out-of-town shopping centre Successful bid for the right to develop new shopping centre on the site of the Galatsi Olympic Hall in Athens New joint venture with Foncière Euris for the ongoing development of Weiterstadt project Six inaugurations planned for 2007 Fernando Guedes Oliveira Sonae Sierra, Executive Director, Developments Europe Sierra Developments has responsibility for all aspects of the development of the company s portfolio of shopping and leisure centres in Europe. Business activities Sierra Developments activities cover land procurement, concept creation and development management services designed to ensure the successful development of each new shopping centre. Sierra Developments contributes to Sonae Sierra s consolidated income in two principal ways: through the supply of development services to our projects and by adding value to each project during the development phase. On completion, the full value of each project is realised when the property is sold to Sierra Investments at market value. The most added value is created during the development phase of each shopping and leisure centre. Through the constant recycling of capital, backed by a rigorous procurement policy and excellent management standards, we are able to create innovative assets which are also attractive investments. Effective marketing and letting are other key factors for the success of our developments. These services are contracted out to our sister division, Sierra Management. During the past year, we have expanded our search for new projects to include the countries of Central Europe, where we are looking for development opportunities that will add value to our portfolio. Sierra Developments in was a positive year for Sierra Developments. Despite increased competition in all our markets, we not only opened a new shopping centre RioSul in Seixal, Portugal but also approved several new developments. As a result, we now have six shopping and leisure centres due to open in 2007, another three under construction and four more in the planning stage. The inauguration of RioSul was a landmark for our company. This new centre, with 39,734 m 2 of GLA and 137 shops serving a densely populated area, has generated 920 new jobs and has already proved to be very popular among tenants and consumers alike. The acquisition of a green-field site in Weiterstadt for the development of a major out-of-town shopping centre south of Frankfurt, and our successful bid in conjunction with Acropole Charagionis for the right to develop a new shopping centre on the site of the Galatsi Olympic Hall in Athens, were also important milestones. We also negotiated a new joint venture with Foncière Euris for the ongoing development of Weiterstadt project in Germany..25

Operational Review Sierra Developments Of the countries in which we operate, Italy and Germany remain the more important, mainly due to their economic standing within the European Union.

28 Operational Review Sierra Developments Of the countries in which we operate, Italy and Germany remain the more important, mainly due to their economic standing within the European Union. Weiterstadt Sierra Developments Performance 06 Regional review Of those countries in which we operate, Italy and Germany remain the more important markets for us, mainly due to their economic standing within the European Union. While the highlight of our year in Portugal was the inauguration of RioSul, we have made good progress on the construction of Lima Retail Park in Viana do Castelo. This project is due for completion in the Spring of We have also started the construction of 8ª Avenida, a new shopping centre in S. João da Madeira, which is due to open in the Autumn of In Spain, we are on schedule with the construction of El Rosal in Ponferrada, and Plaza Mayor Shopping in Malaga is progressing well. Both of these projects are due for completion by the end of the year. Early in 2007, we also entered into an agreement with our partners, Miller Developments, to purchase a plot in Pulianas, near Granada, where we plan to develop a shopping centre and retail park with a total GLA of 45,000 m2. We have also signed an agreement with IKEA to sell them a plot for a store of 30,000 m2 adjacent to our project. We plan to start the construction of a further new project in Portugal and another in Spain, and are hoping to commence development of two more projects in Portugal and one in Spain. In Italy, we have started the construction of Freccia Rossa, a 146 million development in Brescia s downtown, which is due to open later in Work is also progressing at Gli Orsi in Biella, a shopping centre offering 40,000 m 2 of GLA, which will open in late Likewise, land reclaiming works are under way in La Spezia where Le Terrazze, a 38,000 m 2 shopping centre, is under development in a joint venture with ING REDI. We believe the prospects in Italy look good. Our ambition is to progress the planning of projects already approved, so that we can start construction, and we will be seeking to secure two additional development projects during the course of the year. In Germany, construction has already started at Weiterstadt site, a 50/50 joint venture with Foncière Euris. This is due for completion in the later part of In spite of having continued our efforts to conclude a final agreement with Deutsche Bahn on the 3do development in Dortmund, we were surprised by their decision to terminate negotiations in February On a more positive note, the successful inauguration of our Alexa project in Berlin, scheduled for Autumn 2007, will be a major milestone in our development in the German market. Having established a business base on which to build on, we believe that the prospects are good. Nevertheless, we expect to face stiff competition for good development opportunities..26

In Greece, our successful bid for the right to develop the Galatsi project on the site of the Galatsi Olympic Hall in Athens opens new doors in a promising market.

The year ahead 2007 will be a busy year for Sierra Developments. Lima Retail Park will be inaugurated in Spring.

João da Madeira, El Rosal in Ponferrada and Plaza Mayor Shopping in Malaga. The inauguration of Freccia Rossa in Brescia is scheduled for November.

The general economic outlook is not only improving, but also creating a positive environment for companies like ours.

29 In Greece, our successful bid for the right to develop the Galatsi project on the site of the Galatsi Olympic Hall in Athens opens new doors in a promising market. Retailers across the country are becoming more aware of the benefits of shopping centres to the local market. We will be preparing the ground for one or two new projects during The year ahead 2007 will be a busy year for Sierra Developments. Lima Retail Park will be inaugurated in Spring. In September we expect to open the Alexa shopping centre in Berlin and, in October, we anticipate the inauguration of 8ª Avenida in S. João da Madeira, El Rosal in Ponferrada and Plaza Mayor Shopping in Malaga. The inauguration of Freccia Rossa in Brescia is scheduled for November. Despite the increased level of competition, we believe we will be able to approve more new projects in 2007 than we did in The general economic outlook is not only improving, but also creating a positive environment for companies like ours. We are determined to maintain our reputation for innovative shopping and leisure centre concepts, the quality of our designs and the tenant mix and range of services at our centres. Alexa Our plan is to build on the sound base we have established in Italy, Germany and Greece, and to establish ourselves as a significant player in the Central European markets. Sierra Developments contributed 11.8 million to Sonae Sierra s consolidated profits for These profits have two components. The first is direct profit, which is a product of our project development services in connection with the regular activity of property development. The second indirect profit corresponds to the value created in our assets during the development process..27

Operational Review Sierra Developments Despite the steady pace in our business activity and the increase in our workforce, operational costs have decreased 11% over the previous year.

30 Operational Review Sierra Developments Despite the steady pace in our business activity and the increase in our workforce, operational costs have decreased 11% over the previous year. RioSul Sierra Developments Financial Report 06 Direct net profit The value of our project development services capitalised on projects under development remains at a high level. Following the successful inaugurations of 2006, we renewed our portfolio of projects under development, with new developments in Portugal, Germany and Greece, and increased our activity in Italy. Indirect net profit Realised property profit was negatively influenced by the write-off of the 3do project, in Germany. Nevertheless, such impact was flattened by the gains registered with the opening of RioSul in 2006 and the increase in the Open Market Value (OMV) of the shopping centres inaugurated in Despite the steady pace in our business activity and the increase in our workforce, operational costs have decreased 11% over the previous year. This is the result of our economies of scale, which are increasing as we consolidate our position and expertise in the markets we operate in. The net financial income derives from the capital we invest in our portfolio, which reduces as we increase the leveraging of our projects. The value created in centres under development reached an impressive 49 million, of which 17 million have been recognised in previous years. This was the outcome of a decline in real estate yields combined with our outstanding project management, enhanced by the successful leasing of projects both completed or still under development..28

Development services delivered 12.9 million Value created on assets 28 million Net profit attributable to equity holders 11.

Depreciation and provisions 78 149-48% Net financial costs/(income) (2,912) (4,088) 29% Non-recurring costs/(income) 65 6 - Results Before Corporate Taxes (6,726) (8,122) 17% Corporate Taxes (2,265)

28,401 59,075-52% Deferred tax 12,101 16,752-28% Indirect Net Profit 16,299 42,324-61% Net Profit for the Period 11,838 35,499-67% Attributable to: Equity holders 11,838 35,500-67% Minority interests

31 Development services delivered 12.9 million Value created on assets 28 million Net profit attributable to equity holders 11.8 million Sierra Developments Profit & Loss Account ( 000) % 06/05 Project Development Services Rendered 12,942 13,136-1% Operating costs 22,438 25,191-11% EBITDA (9,496) (12,055) 21% Depreciation and provisions % Net financial costs/(income) (2,912) (4,088) 29% Non-recurring costs/(income) Results Before Corporate Taxes (6,726) (8,122) 17% Corporate Taxes (2,265) (1,296) -75% Direct Net Profit (4,461) (6,825) 35% Realised Property Profit (3,768) 47, % Anticipated Non -Realised Property Profit 32,169 12, % Total Indirect Income from Investments 28,401 59,075-52% Deferred tax 12,101 16,752-28% Indirect Net Profit 16,299 42,324-61% Net Profit for the Period 11,838 35,499-67% Attributable to: Equity holders 11,838 35,500-67% Minority interests (0) (1) 100% Non-audited accounts Sierra Developments Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 Var. (06 05) Properties under Development 348, , ,051 Customers 1,248 3,420-2,171 Other Assets 106, ,595-34,513 Deposits 33,210 13,310 19,900 Total Assets 489, ,756 87,267 Net Worth 92,845 96,476-3,631 Minorities 2,229 2, Bank Loans 125,820 58,297 67,523 Shareholder Loans 162, ,379 1,078 Deferred Taxes 8,784 5,859 2,925 Other Liabilities 96,886 77,500 19,387 Total Liabilities 393, ,036 90,913 Net Worth, Minorities and Total Liabilities 489, ,756 87,267 Non-audited accounts.29

32 Operational Review Sierra Management Mediterranean Cosmos With Europe experiencing a degree of economic stability, 2006 was a positive year in terms of tenant sales, with ten centres being leased simultaneously.

Added three new centres to managed portfolio in Portugal and Spain Began leasing activities for ten centres under development Achieved almost 99% leasing of Plaza Mayor Shopping Alexa in Berlin more

Executive Director, Key Accounts, Marketing and New Technologies Business Sierra Management is responsible for managing, marketing and letting a portfolio of shopping and leisure centres owned in

33 Added three new centres to managed portfolio in Portugal and Spain Began leasing activities for ten centres under development Achieved almost 99% leasing of Plaza Mayor Shopping Alexa in Berlin more than 88% leased Visitor flow and tenant sales substantially increased at Mediterranean Cosmos Pedro Caupers Sonae Sierra Executive Director, Property Management Europe António Casanova Sonae Sierra Executive Director, Key Accounts, Marketing and New Technologies Business Sierra Management is responsible for managing, marketing and letting a portfolio of shopping and leisure centres owned in Europe by Sonae Sierra and third parties. Business activities Sierra Management is responsible for managing, marketing and letting a wide range of shopping and leisure centres either owned by Sonae Sierra or by third parties in Portugal, Spain, Italy Greece and Germany. Our role is to maintain vital links between owners and tenants and thus contribute to Sonae Sierra profits through the various management services we provide in the shopping centres we are responsible for. As a pioneer in our sector, we have long recognised that services like these must be maintained at the highest levels if the shopping centres in our care are to increase in value over time. This approach is particularly important in matters relating to tenant mix, where we have achieved some notable successes. Sierra Management in was a year of consolidation for Sierra Management. We added three new centres to our portfolio RioSul in Seixal, Portugal, Alcala de Guadaira Retail Park near Seville and La Trocha in Cocha, near Malaga, in Spain and we began the leasing activities for ten centres under development. These included Lima Retail Park at Viana do Castelo and 8ª Avenida at S. João da Madeira, both in Portugal, Plaza Mayor Shopping and El Rosal, in Spain, Freccia Rossa, Gli Orsi and Le Terrazze in Italy, Alexa and Weiterstadt centres in Germany, and the former Galatsi Olympic Hall in Athens, Greece. RioSul, is owned by Sonae Sierra, both Alcala de Guadaira Retail Park and La Trocha are owned by third parties..31

Operational Review Sierra Management The challenge for us is to accelerate our growth in Italy, Germany and Greece. We hope to have seven centres under management in Italy by the end of 2008.

34 Operational Review Sierra Management The challenge for us is to accelerate our growth in Italy, Germany and Greece. We hope to have seven centres under management in Italy by the end of NorteShopping Sierra Management Performance 06 A positive year With Europe experiencing a degree of economic stability, and private consumption picking up in Portugal after a couple of years stagnation, as well as in Spain, 2006 was a positive year in terms of tenant sales, with ten centres being leased simultaneously. Portugal remains our most important operational territory, with 27 properties under management, of which 17 are owned by Sonae Sierra. However, as the group builds more centres in other countries, our portfolio s weighting towards Portugal will change. At present, our next most important territories are Spain, where we have 16 centres under management, and Italy, where we manage four centres. Our operations in Portugal and Spain are now very efficient and effective, with both territories benefiting from our years of experience and our economies of scale. The challenge for us now is to accelerate our growth in Italy, Germany and Greece, so that we achieve critical mass as quickly as possible. We hope to do this in Italy by the end of 2008, when we expect to have seven centres under management. It will take a little longer to reach this number in Germany, although we anticipate managing four centres there by the end of We plan to have three centres under management in Greece before We will, of course, be enlarging and training our local teams in all these three countries, so that we can manage the expected growth efficiently and effectively. We will also sustain our drive for innovative marketing activities at all our centres, including the development of individual centre web sites, on-site entertainment programmes and other schemes designed to capitalise on our customer data base and increase footfall. The small reduction in both GLA and contracts under management is due to the termination of a number of third-party management contracts. These include Oriocenter in Italy, MN4 and El Teller in Spain, and several Modelo Galleries (supermarket store galleries) in Portugal, only partially compensated for by the new openings in the Sonae Sierra portfolio..32

35 Sales and Visits Visits % 06/05 Sales % 06/ total like-for-like total like-for-like Portugal 230, , % -0.7% 2,229,748 2,075, % 2.4% Spain 77,049 78, % 1.2% 886, , % 6.8% Italy 7,210 15, % -10.0% 42, , % -20.8% Greece 7,314 1, % 376.7% 118,779 23, % 415.4% Sales in Euro (thousands) Portfolio under management Portfolio under management Portugal Spain Italy GLA owned (000 m 2 ) GLA third-party (000 m 2 ) Greece GLA (000 m 2 ) No. of Contracts ,015 1,293 1,342 1,576 1,732 1,682 Collections Rate Letting (Number of Units) % 45.1% % 99.9% 98.2% 97.3% 95.4% 96.2% 90.2% Portugal Spain Italy Greece Portugal Spain Italy Collections 2006 Collections 2005 Centres in Operation New Projects Greece Germany.33

Sierra Management Performance 06 Portugal Clearly, the most important event of the year in Portugal was the opening in March of RioSul, with 99.3% of the total GLA leased.

We have also concentrated our efforts on leasing the two projects that will be inaugurated in 2007 Lima Retail Park, due to open in the Spring, and 8ª Avenida, due to open later in the year.

We also added Alcala de Guadaira and La Trocha to our portfolio of centres under management, and continued to strengthen our local management team.

36 Sierra Management Performance 06 Portugal Clearly, the most important event of the year in Portugal was the opening in March of RioSul, with 99.3% of the total GLA leased. So far as our other centres under management are concerned, a 99.6% collections index is a fine achievement. We have also concentrated our efforts on leasing the two projects that will be inaugurated in 2007 Lima Retail Park, due to open in the Spring, and 8ª Avenida, due to open later in the year. Spain In Spain, we achieved a 98.2% collections index for the year. We also added Alcala de Guadaira and La Trocha to our portfolio of centres under management, and continued to strengthen our local management team. By the end of the year, almost 99% of Plaza Mayor Shopping was leased and we were pursuing the leasing of El Rosal, which is now 74% leased. Both these centres are expected to open in the fourth quarter of Italy Our activities in Italy were mainly focused on consolidating our operations and strengthening our team in readiness for the future expansion planned for 2007 and We had a good year for letting activities, having leased some 88% of the total GLA of the Freccia Rossa project in Brescia, as well as most of the large stores of the Gli Orsi project in Biella..34

Germany While we did not manage any shopping centres in Germany at the end of 2006 although Sonae Sierra has since secured the acquisition of Münster Arkaden we have been active in leasing the

Alexa, in Berlin, is now more than 88% leased and we are concentrating our efforts on signing contracts with top brands as anchor stores for our new project at Weiterstadt, which is due to open in

37 Germany While we did not manage any shopping centres in Germany at the end of 2006 although Sonae Sierra has since secured the acquisition of Münster Arkaden we have been active in leasing the company s two projects under construction. Alexa, in Berlin, is now more than 88% leased and we are concentrating our efforts on signing contracts with top brands as anchor stores for our new project at Weiterstadt, which is due to open in Greece We expect to be close to fully let by the summer of 2007 at Mediterranean Cosmos, our first shopping and leisure centre in Greece, where we have substantially increased the visitors flow and tenant sales during the past year. The year ahead Our six new centres two in Portugal, two in Spain, one in Italy and one in Germany and the Münster Arkaden centre in Germany will ensure we have a busy year ahead as we work to complete the leasing of all these projects before their inaugurations and transfer to our management in The possibility of further acquisitions which may enlarge our geographical scope also suggests that we may see additional growth in our management portfolio. Our overall ambition is to become the best pan-european shopping centre management company by We believe we are already the best in Iberia and that we must step up to the same level in Italy, Germany and Greece..35

Operational Review Sierra Management An increase in our business activity through new centre openings in Portugal and Spain resulted in total income growing by 3% overall between 2005 and 2006.

38 Operational Review Sierra Management An increase in our business activity through new centre openings in Portugal and Spain resulted in total income growing by 3% overall between 2005 and Luz del Tajo Sierra Management Financial Report 06 Sierra Management 2006 Net Profits Sierra Management contributed 4.5 million to Sonae Sierra s consolidated profit. An increase in our business activity through new centre openings in Portugal and Spain resulted in total income growing by 3% overall between 2005 and The existence of several major projects scheduled to open in 2007 in Germany, Italy, Spain and Portugal contributed with an 8% increase in letting services income. The sharp decrease in other income is justified by the transfer of the backoffice services to the new corporate centre, with both its income fees and costs having a neutral impact on results. Operating costs, including staff costs, grew by 2% in Since the back-office costs were transferred to the new corporate centre, the small difference is justified by an increase in property management costs. This cost growth was due to the staffing-up of operations in Italy, Greece and Germany, where few or no operating shopping centres exist. The benefits of the economies of scale will be felt in the future, with the expected increase in the portfolio under management. As a result of the growth of the Sierra Management structure, operational profits (EBITDA) increased by only 6% between 2005 and However, Net Profit increased by 37%, due to a reduction in depreciation and an increase in financial income..36

Income from management services 31.4 million EBITDA 6.6 million Net profit of 4.5 million, representing a growth of 39%, of which 4.

Income 3,215 4,528-29% Total Income from Management Services 31,374 30,560 3% Operating Costs 24,801 24,331 2% EBITDA 6,573 6,229 6% Depreciation and Provisions 830 1,412-41% Net financial

Attributable to: Equity holders 4,424 3,226 37% Minority interests 66 (2) - Net profit 4,424 3,226 37% Non-audited accounts Sierra Management Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 var.

39 Income from management services 31.4 million EBITDA 6.6 million Net profit of 4.5 million, representing a growth of 39%, of which 4.4 million attributable to equity holders Sierra Management Profit & Loss Account ( 000) % 06/05 Property Management Income 24,008 22,171 8% Letting Services Income 4,151 3,861 8% Other Income 3,215 4,528-29% Total Income from Management Services 31,374 30,560 3% Operating Costs 24,801 24,331 2% EBITDA 6,573 6,229 6% Depreciation and Provisions 830 1,412-41% Net financial costs/(income) (938) (728) -29% Non-recurring costs/(income) (62) % Results Before Corporate Taxes 6,742 5,375 25% Corporate taxes 2,253 2,151 5% Net Profit for the Period 4,489 3,224 39% Attributable to: Equity holders 4,424 3,226 37% Minority interests 66 (2) - Net profit 4,424 3,226 37% Non-audited accounts Sierra Management Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 var. (06 05) Net Fixed Assets Goodwill 6,282 7, Tenants 12,665 11, Tax Shelter Other Assets 8,253 11,429-3,177 Deposits 20,564 16,393 4,171 Total Assets 48,420 47, Net Worth 4,246 6,114-1,869 Minorities Shareholder Loans Other Liabilities 44,111 41,491 2,620 Total Liabilities 44,111 41,491 2,620 Net Worth, Minorities and Total Liabilities 48,420 47, Non-audited accounts.37

40 Operational Review Sonae Sierra Brazil Parque D. Pedro The inauguration of the final phase of the new Shopping Campo Limpo adds another valuable asset to our portfolio, which includes the Parque D. Pedro centre, above.

New partnership formed with Developers Diversified Realty, one of the United States largest REITs Opening of the final phase of Shopping Campo Limpo Shopping Campo Limpo first shopping centre in

41 New partnership formed with Developers Diversified Realty, one of the United States largest REITs Opening of the final phase of Shopping Campo Limpo Shopping Campo Limpo first shopping centre in Brazil to achieve the green ISO certification New project begun in Manaus, capital of the State of Amazon João Pessoa Jorge Sonae Sierra Executive Director, Brazil Sonae Sierra Brazil is a 50/50 partnership between Sonae Sierra and DDR, where both partners have agreed to jointly implement their shopping and leisure centres businesses in Brazil. The partnership is focused on owning and managing shopping and leisure centres in Brazil, as well as on developing new projects in this sector. Business activities Sonae Sierra Brazil has recently become the power base for the Brazilian business of Sonae Sierra and Developers Diversified Realty (DDR), one of the largest REITs in the United States, which like Sonae Sierra is also focused on the shopping and leisure centre sector. The 50/50 partnership owns and operates a total of nine income-generating shopping centres eight located in the State of São Paulo area and one in Brasilia offering a total of 1,846 stores. Sonae Sierra Brazil s aim is to become one of Brazil s leading companies and a partner of choice in the shopping and leisure centre sector. This objective is being achieved through a combination of organic growth and acquisition, which is being accelerated following the acquisition of 50% of Sonae Sierra Brazil by DDR. While many international investors have, until recently, perceived Brazil as a too risky market, the country s current and forecast economic situation has significantly improved. As a result, there is a growing interest in Brazil amongst several major international institutional investors. We anticipate that, as the shopping centre market matures over the coming years and the economic conditions change, more international real estate investors will be encouraged to include Brazil in their portfolios. Sonae Sierra Brazil in 2006 For Sonae Sierra Brazil, the most significant event of 2006 was the establishment in October of a new partnership, on an equal footing, between Sonae Sierra SGPS and Developers Diversified Realty (DDR), a highly successful United States shopping and leisure centre developer and one of the country s largest REITs, which is listed on the New York Stock Exchange. This new partnership, which as we reported last year we had been seeking for some time, was created through DDR s acquisition of 50% of our Brazilian business. Since the ratification of the partnership and the completion of the resultant restructuring process, the shareholding in the new joint venture known as Sonae Sierra Brazil BV is split 50/50 between Sonae Sierra SGPS S.A. and DDR. Sonae Sierra Brazil BV holds 49% of the equity in Parque D. Pedro shopping centre and 93% of Sonae Sierra Brasil Ltda, the holding company responsible for all our Brazilian operations. The other 7% of the equity in Sonae Sierra Brasil Ltda remains with Enplanta Engenharia, our local partner..39

Operational Review Sonae Sierra Brazil In line with the increase in occupancy rates, our tenants achieved a significant increase in their sales income. The like-for-like figure of 15.

42 Operational Review Sonae Sierra Brazil In line with the increase in occupancy rates, our tenants achieved a significant increase in their sales income. The like-for-like figure of 15.1% is much higher than the inflation rate for the year. Parque D. Pedro Sonae Sierra Brazil Performance 06 DDR s investment in the joint venture amounted to some R$300 million. The two companies, Sonae Sierra and DDR, agreed to contribute up to R$300 million each, thus creating a commitment to the new partnership of some R$600 million, to be used for acquisitions or development projects in Brazil over the next three years. We are confident that this new venture will not only strengthen Sonae Sierra Brazil s financial base and standing in the Brazilian market, it will also do much to accelerate our development programme over the next three years. New São Paulo centre opened The second most important event of the year was the opening in November 2006 of the third and final phase of the development of Shopping Campo Limpo. Located in one of São Paulo s fastest growing neighbourhood, Shopping Campo Limpo is the result of an investment of 29 million by Sonae Sierra Brazil (20%) and Tivoli Empreendimentos e Participações Ltda (80%). The first two phases of this investment were completed in October 2005 and July 2006, while the third and last phase was completed in November..40

43 Open Market Value Figures in Euros (thousands) Open Market Value OMV Variation OMV Variation Shopping Centres in Operation 31 Dec Dec Total % Boavista Shopping 20,576 18,687 1,889 10% Franca Shopping 5,953 3,814 2,139 56% Parque D. Pedro 150, ,601 15,092 11% Pátio Brasil Shopping 6,875 3,073 3, % Plaza Sul 9,141 8, Shopping Metropole 4,542 1,875 2, % Shopping Penha 27,166 22, Tivoli Shopping 4,303 1,675 2, % Shopping Campo Limpo 1) 20, ,304 - Total 249, ,611 53,942 28% 1) Phase I opened in 2005 and Phases II and III in 2006 Shopping Campo Limpo is a good example of our commitment to the environment and Brazilian society. Not only is it the first shopping centre in Brazil to achieve ISO certification the green ISO for its construction but its development was also the subject of a special campaign which gave priority to the community it serves. Higher occupancy rates and OMV growth During 2006 we achieved an increase in our occupancy rate, in terms of area, from 84.4% to 94.0%, including the new Shopping Campo Limpo, which has a occupancy rate of 89.1% as at the year end. On a strictly like-for-like basis, our occupancy rate increased from 84.4% to 94.3%. Our results for the year also benefited from a substantial increase in the value of our assets. The significant increases in the Open Market Value (OMV) in Euros, of our stake in the assets in our portfolio is due to three factors: the effects of foreign exchange rates; the improved performance of our shopping centres; and yield compression in the Brazilian market. Medium term goal After several years of neglect by foreign investors, Brazil is finally becoming one of the markets of choice. Several foreign investors are betting on the Brazilian real estate market, and the shopping centre sector is enjoying a consolidation process as many of the new international partnerships announce their willingness to grow their businesses in Brazil. We believe that, in three to five years time, there will be just six or eight major players in the shopping centre sector. Our plan over the next three years is to double the size of Sonae Sierra Brazil s net assets so that we become one of the major two. Our big challenge, with some R$600 million to invest, is to find the right product. This means looking for new developments or existing shopping centres where we could either buy a new participation and get the corresponding property management contract, or increase our present participation and retain the property management. Short term outlook Despite these challenges, we expect to see further growth in our total revenues and sales over the coming year. On the acquisition front, we foresee new moves either in shopping centres already in our portfolio, or in new properties. On the development front, in the second quarter of 2007, we are planning to start the construction of our tenth shopping and leisure centre, located in Manaus, the capital of the State of Amazon, where we are investing approximately 58 million in some 43,000 m2 of GLA arranged over three floors, with 250 shops and 2,700 parking places. We also expect to close a new deal for a new project development. We are also putting great efforts into increasing the occupancy rates of our shopping centres, particularly in Boavista Shopping, Shopping Penha and Shopping Campo Limpo. Sonae Sierra Brazil s contribution to Sonae Sierra s consolidated profits was 21.5 million. Tenant sales up In line with the increase in our occupancy rates, our tenants have achieved a significant increase in their sales income. When we include Shopping Campo Limpo, the figures are up by 19.2%. The like for like increase stands at 15.1%, which is much higher than the Brazilian inflation rate of around 3.8% for the year. Much of this success is due to the way we conduct annual market studies in our individual centres and their catchments areas, and to our development of specific marketing and strategic plans for each shopping centre. In every case, our aim is to improve their performance and increase traffic and sales. Sales and Visits Visits % 06/05 Sales % 06/ total like-for-like total like-for-like Brazil 79,718 82, % -3.8% 826, , % 15.1% Figures in Euros (thousands) Visits in thousands Rents Fixed rents Variable rents Total rents % 06/05 rents total like-for-like Brazil 41,177 33,101 2,502 2,238 43,680 35, % 17.7% Figures in Euros (thousands) We also develop commercial strategies that aim to increase our occupancy rate and bring in new tenants and new operations that will make our shopping centres more attractive, more profitable and as a result more valuable as assets. Occupancy Rate Occupancy rate Brazil 94.3% 84.4%.41

Operational Review Sonae Sierra Brazil Our retail operating income grew by 39% during 2006 while the year also saw a 46% increase in our operating margin.

44 Operational Review Sonae Sierra Brazil Our retail operating income grew by 39% during 2006 while the year also saw a 46% increase in our operating margin. Shopping Penha Sonae Sierra Brazil Financial Report 06 Sonae Sierra Brazil 2006 Net Profits Sonae Sierra Brazil contributed with 21.5 million to the Consolidated Net Profit of Sonae Sierra, almost five times more than in the previous year. Income from our property management business grew by 84% during 2006 as a result of the increase in our portfolio created by the addition of Shopping Plaza Sul, higher occupancy rates in several of our shopping centres and the reorganisation that includes Enplanta Engenharia roll up. Direct profit Indirect profit.42 In our investment business, retail operating Income grew by 39% during This success owes much to the first full year of operations of Shopping Plaza Sul and good performance of Parque D. Pedro, an overall increase in the occupancy rates and the positive evolution of the Real exchange rate. The year also saw a 46% increase in our operating margin. The development business has had a stable year with a 2% increase in income. Indirect profit, which reached 10.2 million, represents the growth in Open Market Value (OMV) of our assets in Asset valuation was positive, as explained above. Balance sheet The improvement in the exchange rate of the Real, together with a net profit of 21.5 million and the positive property valuations, led to an increase in the net worth of 10.5 million. The value of Investment properties has benefited from the positive effect of a better exchange rate, as this demonstrates.

Shopping centre operating margin up by 46% to 19 million EBITDA increased by 55% to 17.8 million Net profit of 21.5 million, representing a growth of 370%, of which 20.

45 Shopping centre operating margin up by 46% to 19 million EBITDA increased by 55% to 17.8 million Net profit of 21.5 million, representing a growth of 370%, of which 20.5 million attributable to equity holders Sonae Sierra Brazil Profit & Loss Account ( 000) % 06/05 Fixed Rental Income 21,780 16,260 34% Turnover Rental Income 1,557 1,063 47% Key-Money Income 1, % Other Income % Retail Operating Income 25,973 18,720 39% Property Management Services 1, % Letting & Promotion Services % Other Costs 5,013 4,061 23% Retail Operating Costs 7,060 5,715 24% Parking Net Operating Margin % Shopping Net Operating Margin 19,123 13,054 46% Income from Project Development Services % Income from Property Management Services 3,410 1,857 84% Total Income from Services Rendered 3,564 2,008 78% Overheads 4,933 3,611 37% EBITDA 17,753 11,450 55% Depreciation % Provisions 1,189 2,561-54% Net financial costs/(income) 1,534 1,689-9% Non-recurring costs/(income) % Results Before Corporate Taxes 14,477 6, % Corporate taxes 3, % Direct Profit 11,385 6,158 85% Realised Property Profit (3,623) 0 - Non -Realised Property Profit (Inv. Propert.) 27,266 (14,386) 290% Non -Realised Property Profit (Under Dev.) 0 (751) - Total Indirect Income from Investments 23,644 (15,137) 256% Deferred tax 13,492 (13,562) 199% Indirect profit 10,151 (1,576) - Net Profit for the Period 21,536 4, % Attributable to: Equity holders 20,476 4, % Minority interests 1, Non-audited accounts Sonae Sierra Brazil Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 var. (06 05) Properties 233, ,782 36,570 Tenants 4,107 3, Tax Shelter 6,399 6, Other Assets 4,541 6,287-1,746 Deposits 5,952 6, Total Assets 254, ,264 34,086 Net Worth 207, ,187 10,521 Minorities 10,401 3,157 7,244 Bank Loans Shareholder Loans -88 2,361-2,449 Deferred Taxes 27,980 13,292 14,688 Other Liabilities 7,396 3,855 3,541 Total liabilities 36,242 19,921 16,321 Net Worth, Minorities and Total Liabilities 254, ,264 34,086 Non-audited accounts.43

46 Accounts AlgarveShopping Net profits totalled a record 271 million while the return for our shareholders reached 19.7%, some way above our long-term average of 13%.

Total net profits up 23% at 271 million EBITDA increased by 20% from 125.7 million to 150.3 million Net Asset Value (NAV) increased by 225.5 million or 18% Leveraging of portfolio decreased from 31.

47 Total net profits up 23% at 271 million EBITDA increased by 20% from million to million Net Asset Value (NAV) increased by million or 18% Leveraging of portfolio decreased from 31.9% to 29.4% loan-to-value Interest cover ratio maintained at 2.81 level José Edmundo Figueiredo Sonae Sierra Executive Director, CFO Sonae Sierra Consolidated Accounts In purely financial terms, 2006 was one of the best years in Sonae Sierra s history. Our net profits totalled a record 271 million while the return for our shareholders equity reached 19.7%, some way above our longterm average of 13%. The leveraging of the company s portfolio decreased from 31.9% to 29.4% loan-tovalue and we are still far from our target of 50%. This gap is a reflection of two main trends. On the one hand, property values continue to increase at a steady pace, which reduces leveraging. On the other, portfolio growth through acquisitions is below our objectives. As a consequence, we continue to hold significant levels of liquidity in our balance sheet. Overall, the shopping centre market is still perceived as extremely attractive in our chosen markets, which means there is reduced scope for growth. This is one of the main reasons for our in-depth analysis of new markets in Central Europe. We have always taken a long-term view of financial performance and believe that, if we are to sustain our performance over the medium-term, we must maintain a rigorous cost-control discipline. At the same time, we need to invest for the future in innovation, new skills and capabilities in our teams, as well as in new information systems. Ratios 31/12/06 31/12/05 Asset Gearing 29.4% 31.9% Interest Cover Development Risk 21.3% 25.8% Good year for property The past year has been good for the property sector, as reflected in our results and achievements. While the role of property as a mainstream asset class has been reflected in prices in the markets, interest rates in the Eurozone even after several increases remain at levels that are historically low. This has helped support the after-debt returns at high levels. Positive outlook The property markets are going through a good phase, which is reflected in yields that in many cases have reached record low levels. While we maintain a positive view of the sector, we know we must be especially disciplined in our approach to acquisitions. We believe there are still interesting opportunities in new developments, in the re-positioning of older properties and even in acquisitions in selected markets..45

50 40 30 934 1,037 948 20 10 0 Dec 01 Dec 02 Dec 03 Dec 04 1,060 1,265 1,490 Dec 05 Dec 06 NAV ( million) Nav per share Our ambitions for 2007 are in line with our objectives for the past few years.

In this regard, our team is focussed on helping the business teams by rigorously and innovatively assessing the processes through which value is created within the company.

Net Asset Value In 2001, the company decided to adopt International Accounting Standards (IAS) in the preparation of its consolidated accounts.

48 , Dec 01 Dec 02 Dec 03 Dec 04 1,060 1,265 1,490 Dec 05 Dec 06 NAV ( million) Nav per share Our ambitions for 2007 are in line with our objectives for the past few years. We aim to improve our financial performance through better balance sheet management, and to contribute to the growth of the company as a whole. In this regard, our team is focussed on helping the business teams by rigorously and innovatively assessing the processes through which value is created within the company. We know we must remain focussed on this discipline if we are to succeed in today s ever more competitive markets. Net Asset Value In 2001, the company decided to adopt International Accounting Standards (IAS) in the preparation of its consolidated accounts. This led to the Open Market Value (OMV) of the investment properties being reflected in the company s consolidated balance sheet. However, the company does not believe that the Net Asset Value (NAV) resulting from such a consolidated balance sheet truly reflects its value, for two reasons. In the first instance, under IAS rules, properties being developed and properties held for sale are not booked at market value. In the case of Sonae Sierra, shopping centres under development are therefore booked at historic cost. The undervaluation of these assets can be significant. In the second instance, under IAS rules, deferred taxes on unrealised gains on investment properties are accounted for in the balance sheet. From the company s point of view, the deduction of this deferred tax is arguable, as the transactions of Coimbra Retail Park in Coimbra, Serra Shopping in Covilhã, and RioSul in Seixal, all of which are in Portugal, have once again confirmed. When a property is sold, the market practice is not to sell the property as such, but to sell the holding company which owns it. Moreover, in various jurisdictions, capital gains arising from the sale of shares are sheltered from tax. For these reasons, the company calculates and publishes an NAV which results from valuing all its properties at Open Market Value and does not include a deduction for deferred taxes on unrealised capital gains. Neither does the NAV include the value of its operating businesses, other than that resulting from acquisitions. The calculation now presented is consistent with the NAV calculation published in previous years. The NAV on 31 December 2006 of the properties attributable to Sonae Sierra was 1,490 million compared with 1,265 million on 31 December The NAV per share of the properties attributed to the company is 45,82 against 38,90 on 31 December 2005, an increase of 17.8%..46

Accounts Total direct income from investment increased by 21.

Investment properties 2,771,845 Properties under development & others 473,811

49 Accounts Total direct income from investment increased by 21.9 million to 242 million, reflecting the growth in the company s portfolio during the year. Avenida M40 Net Asset Value (NAV) 2006 Total Open market value 3,245,656 Investment properties 2,771,845 Properties under development & others 473,811 Total bank debt -1,294,504 Cash & Deposits 332,313 Minorities -613,236 Other net liabilities -156,299 Dividend paid -24,028 NAV ,489,901 Figures in Euro (thousands).47

Consolidated Profit and Loss Accounts The total direct income from investments increased by 21.9 million, from 220.2 million to 242 million.

acquisition of Valecenter in metropolitan Venice, and Airone near Padova, both in Italy.

50 Consolidated Profit and Loss Accounts The total direct income from investments increased by 21.9 million, from million to 242 million. This reflects the increase in the portfolio resulting mainly from the full year effect of the four inaugurations in 2005, the opening of RioSul in Seixal in Portugal and full year effect of the 2005 acquisition of Valecenter in metropolitan Venice, and Airone near Padova, both in Italy. These favourable effects were partially offset by the 50% sale of the Brazilian portfolio in October 2006 with the consequent change in the consolidation method, from full consolidation to proportional consolidation. The company presented an indirect profit from investments of 187 million resulting from the increase in the OMV of the investment properties and the gains from the opening of shopping centres during During the same period, the market yields have fallen, resulting in a considerable increase in value of the investment properties which are part of the company s portfolio. Sierra Developments recognises as nonrealised gains the margins in the projects under development, but these margins are not recognised at Sonae Sierra consolidated level, given that, under IAS rules, the value created is only recognised at the time of the opening of the shopping centre. The company also realised the following transactions (net loss of 13.9 million): Sale of 50% of Sonae Sierra Brazil to DDR Sale of 100% of Avenida M40 to the Sierra Fund Sale of 100% of Zubiarte to the Sierra Fund Write-off of 3do project, in Germany The transactions completed during 2006 have confirmed, once again, that the Open Market Value, less company liabilities and excluding the deferred taxes, reflects the Net Asset Value. The total net profit attributable to minorities has also increased by 55% to 110 million and corresponds, almost exactly, to the direct and indirect profits attributable to the Sierra Fund s external investors. Consolidated Balance Sheet The total assets amounted to 3,602 million at the end of This represents an increase of 397 million compared with the previous year, and results mainly from an increase in the investment portfolio arising from the openings and the value created in the existing portfolio, partially compensated by the 50% sale of all the properties in Brazil (consolidated by the proportion method instead of the full method in the previous year) and to the higher amount of properties under development. The increase in bank debt for the year amounts to 97 million and results from the re-financing policy for operating investment properties and the financing of the projects under development. During the 2006 year, several operating shopping centres were refinanced Parque Principado, GaiaShopping, Arrábida Shopping and Serra Shopping. The development risk, measured as the amount invested and to be invested to conclude projects under development as a percentage of total assets, plus the amount needed to conclude those same projects, reduced from 25.8% to 21.3%, due to the new openings during the year. The minority interests result, mostly, from the external investor shareholdings at the Sierra Fund..48

Sonae Sierra Consolidated Profit and Loss Account ( 000) 2006 2005 % 06/05 Direct Income from Investments 242,052 220,175 10% Operating costs 84,773 82,983 2% Other costs 6,974 11,532-40% Direct

taxes 104,193 84,867 23% Corporate tax 20,548 16,084 28% Direct net profit 83,645 68,783 22% Indirect Income from gains on sale of Investments -13,861 24,378-157% Indirect Income from valuation of

Holders 160,318 148,149 8% Minority Interests 110,265 71,324 55% Non-audited accounts Sonae Sierra Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 Var.

51 Sonae Sierra Consolidated Profit and Loss Account ( 000) % 06/05 Direct Income from Investments 242, ,175 10% Operating costs 84,773 82,983 2% Other costs 6,974 11,532-40% Direct costs from investments 91,747 94,516-3% EBITDA 150, ,659 20% Depreciation 1,950 1,743 12% Recurrent net financial costs 44,162 39,049 13% Non recurrent net financial costs Direct profit before taxes 104,193 84,867 23% Corporate tax 20,548 16,084 28% Direct net profit 83,645 68,783 22% Indirect Income from gains on sale of Investments -13,861 24, % Indirect Income from valuation of Investments 269, ,753 47% Indirect income 256, ,131 23% Deferred tax 69,094 57,440 20% Indirect net profit 186, ,691 24% Total Net Profit 270, ,474 23% Attributable to: Equity Holders 160, ,149 8% Minority Interests 110,265 71,324 55% Non-audited accounts Sonae Sierra Consolidated Balance Sheet ( 000) 31/12/06 31/12/05 Var. (06 05) Investment properties 2,729,662 2,491, ,264 Properties under development and others 354, ,910 99,634 Goodwill 51,345 52,346-1,001 Deferred taxes 25,483 27,673-2,190 Other assets 108, ,843-13,101 Deposits 332, ,841 75,471 Total assets 3,602,089 3,205, ,078 Net worth 1,142,894 1,002, ,741 Minorities 405, , ,617 Bank loans 1,294,504 1,196,942 97,562 Shareholder loans from minorities 64,255 77,254-12,999 Deferred taxes 468, ,727 66,065 Other liabilities 226, , Total liabilities 2,053,682 1,903, ,720 Net worth, minorities and liabilities 3,602,089 3,205, ,078 Non-audited accounts.49

Corporate Responsibility The Personæ project won the 2006 ECO award for Corporate Social Responsibility Internal Public, presented by the American Chamber of Commerce in Brazil Centro Vasco da Gama

52 Corporate Responsibility The Personæ project won the 2006 ECO award for Corporate Social Responsibility Internal Public, presented by the American Chamber of Commerce in Brazil Centro Vasco da Gama Sonae Sierra Corporate Responsibility Sonae Sierra s Corporate Responsibility (CR) strategy is fundamental to achieving our mission. In the past year, we have reviewed the focus of our CR Strategy, to prioritise efforts on those issues that represent the greatest business challenges or opportunities. Through a series of tests, we have identified the following issues as being the most meaningful to our business in the short to medium term: Climate change Land use Water Waste Safety & Health Community relations (including visitors) Business chain (suppliers and tenants) Employees The table on page 52 identifies what we consider to be the principal risks and opportunities associated with these particular issues. In keeping with our rigorous approach to risk management, we continue to put in place measures that both minimise our risk profile and maximise our ability to create and sustain value in the long-term. During 2006, we continued to govern our CR activities under the overall supervision of a CR Working Group made up of senior representatives across different disciplines and countries of operation. In January 2007, we introduced a revised governance structure, with a CR Steering Committee overseeing the entire strategy, and individual CR Working Groups to address each of the eight material issues listed above, as well as additional Working Groups for Brazil and Risk Management. This should ensure more embedded ownership and responsibility for these areas across the business..50

Awarded ten new ISO 14001 certifications Joined the core group of the World Business Council for Sustainable Development s project, Energy Efficiency In Buildings Risk management At Sonae Sierra we

Interestingly, the results of this exercise suggest that we face as many social and environmental risks as we do financial, and that these three categories of risk are more significant than the

During the year, risk management controls were implemented as follows: Environmental, insurance, technical, legal, fiscal and financial audits were performed on the shopping centres which opened

Security audits were carried out on all the shopping centres in all the countries where Sonae Sierra operates, and corrective actions implemented.

53 Awarded ten new ISO certifications Joined the core group of the World Business Council for Sustainable Development s project, Energy Efficiency In Buildings Risk management At Sonae Sierra we have identified social and environmental risks facing the business alongside financial, technological, political and governance risks both today and in the future. Interestingly, the results of this exercise suggest that we face as many social and environmental risks as we do financial, and that these three categories of risk are more significant than the others. During the year, risk management controls were implemented as follows: Environmental, insurance, technical, legal, fiscal and financial audits were performed on the shopping centres which opened during Environmental management procedures were implemented in all our shopping centres in all the countries where Sonae Sierra operates. Security audits were carried out on all the shopping centres in all the countries where Sonae Sierra operates, and corrective actions implemented. Bi-annual real-time simulations of emergency procedures, including fire and bomb threats and the total evacuation of the building, were undertaken in operating centres during opening hours with the participation of the relevant local authorities, including the police, firebrigades, and civil protection units. The company maintains a policy of hedging its interest rate risk, generated by the loans to operating shopping centres, through derivatives with an average period of five years. Further information on Sonae Sierra s management of corporate responsibility and its detailed performance in practice can be found in the Corporate Responsibility Report Further details of our environmental performance can be found on our recently re-launched environment portal at

54 Corporate Responsibility Key Impact Area Issues Business Challenges and Opportunities Climate Change Carbon Management, Increasing legislation regulating CO2 and other greenhouse gas emissions, particular focus Emissions to air & Transport on buildings, national and international targets. Long-term physical and financial impacts of climatic disruption on the built environment (e.g. weathering, subsidence, insurance losses, maintenance costs etc). Increasing media attention and public awareness on climate change and CO2 emissions higher stakeholder expectations. Increasing media attention and public awareness on the issue of air quality in relation to human health. Rapidly growing trend of peer companies pledging to go Carbon Neutral. Sonae Sierra has a policy commitment to safeguard the environment for both current and future generations; including prevention of pollution and emission reduction. Energy Efficiency Rising energy prices; energy efficiency often leads to cost savings and pay-back periods for efficient equipment are becoming shorter. Increasing legislation regulating energy efficiency, in particular the EU Energy Performance of Buildings Directive. Rising energy demands, and greater reliance on imported fuels, results in growing insecurity in energy supplies. Sierra policy commitment to continuously improve the environmental performance of undertakings, products, processes and activities. Land Use Use of previously Use of previously developed or brownfield land facilitates the obtention of planning permission, developed land and reduces risk of negative response from the local community, thus enhancing corporate brand and reputation. May result in cost savings to the company as some necessary components of urban infrastructure are already in place. Biodiversity Peer group companies increasingly recognise business benefits of conserving biodiversity, as all companies rely on functions performed by natural systems. Innovative concepts such as green roofs are more common in the industry due to additional climatisation benefits. Sonae SGPS policy commitment to safeguard the environment for both current and future generations. Societal norms increasingly require stringent protection of the natural environment (National Plans, legislation, NGO campaigns). Emissions to land Reputational and financial risk of non-compliance with pollution legislation (e.g. EU Environmental Liability Directive and subsequent national laws). Environmental and reputational opportunities of remediating previously polluted land, and bringing it back to life through careful restoration techniques. Water Water efficiency & Water quality Water availability is becoming a major problem in parts of the Mediterranean region, resulting in increasing shortages and strong stakeholder concerns. Direct short term cost savings from grey water reuse and water saving devices; pay-back periods for efficient equipment are becoming shorter. Waste Waste Production Tightening legislation relating to quantities of waste sent to landfill/recycled in view of Waste Management national targets. Direct short term cost savings from reducing landfill charges by recycling and reusing waste from construction and management activities. Peer group companies increasingly seeking ways of reducing waste sent to landfill and reporting and measuring waste recycled. Increasing stakeholder concerns and expectations; company can enhance its reputation among stakeholders if it endeavours to be proactive on the issue of waste management. Safety & Health Safety and Health of Incidents of non-compliance could damage the reputation of the company among a employees, tenants & visitors wide-range of stakeholders. Direct short term financial impact by way of fines for non-compliance. Policy commitment through the company s Safety & Health policy. Community Relations Community Consultation Policy commitment to supporting local communities in areas where we invest. Community Investment Peer companies increasingly seeking to engage with local communities, both at the Community Engagement development and management stages. Visitors to shopping centres Community consultation increases buy-in for our schemes from local people, and speeds up the planning process. Community investment and community engagement enhance the reputation of the company and increase number of visitors to shopping centres. Visitor satisfaction is paramount to the continued financial performance of our shopping centres. Business Chain Tenant Satisfaction Growing stakeholder expectations for companies to implement responsible procurement practices Supplier Relations and engage with suppliers/contractors to address their own environmental and social impacts. Responsible Procurement Tenants businesses underpin Sierra s own business success so engaging with them, and ensuring that we are responsive to their needs and concerns, is a critical aspect of our service provision. Employees Employee Engagement Recruiting and retaining the best calibre employees requires the employment of staff friendly Equality & Diversity policies, and competitive remuneration and benefits packages. Fair remuneration Continued innovation and improvements are dependent on a learning workforce, with growing Employee Satisfaction skills and diverse backgrounds. Employee relations are an important stakeholder concern, and a critical component of corporate brand and reputation..52

La Farga Corporate Governance A revised organisation With the aim of improving our efficiency, we have made some changes to the way we organise and run our business, as outlined here.

55 La Farga Corporate Governance A revised organisation With the aim of improving our efficiency, we have made some changes to the way we organise and run our business, as outlined here. The ultimate governing body of the Sonae Sierra Group is the Shareholders General Assembly, which appoints the Board of the General Assembly, the Fiscal Board, the Remuneration Committee and the Boards of Directors of the Sonae Sierra Group and its operating companies. The Sonae Sierra Board of Directors, which is headed by a Chairman and comprises 11 members of which five are non-executive, including the Chairman reports to the General Assembly. This Board includes a Chief Executive Officer (CEO) and five other Executive Directors, each with designated responsibilities. The Sonae Sierra Board of Directors has delegated some of its corporate decisionmaking to specialised Committees. The Executive Committee is chaired by the CEO, as are the Investment Committee and the Finance Committee. The Audit & Compliance Committee is chaired by an independent individual. The Executive Committee has responsibility for Sonae Sierra s day-to-day operations and for actions and decisions which have not been reserved for the Board of Directors or another of the three Committees. This Executive Committee, whose members include the CEO Álvaro Portela, Pessoa Jorge, Edmundo Figueiredo, Pedro Caupers, Fernando Oliveira and Antonio Casanova, reports to the Board and is able to invite other senior executives and executives of Sonae Sierra to attend its meetings. The Board of Directors meets five times each year. The Investment Committee and the Finance Committee each meet 11 times each year and the Executive Committee meets every fortnight. The Audit & Compliance Committee meets three times each year..53

Board of Directors Non-Executive Directors Belmiro de Azevedo Non-Executive Chairman Belmiro de Azevedo joined Sonae in 1965 as a chemical engineer and in the same year was appointed Managing

A graduate in Chemical Engineering from Oporto University, Belmiro also attended a Programme for Management Development at Harvard Business School, a Financial Management Programme at Stanford

He is an Honorary Fellow of the London Business School and a member of the World Business Council for Sustainable Development s Order of Outstanding Contributors to Sustainable Development.

His main executive responsibilities are as Executive Vice Chairman of the Sonae Group holding company, Group CFO, Executive Chairman of Sonae Capital and Sonae Turismo, and Board Director of Modelo

Jeremy Newsum Non-Executive Director Jeremy Newsum is Group Chief Executive of Grosvenor, the international property company.

56 Board of Directors Non-Executive Directors Belmiro de Azevedo Non-Executive Chairman Belmiro de Azevedo joined Sonae in 1965 as a chemical engineer and in the same year was appointed Managing Director. Between 1967 and 1984 he was President of the Sonae Group. He was appointed President of the Board of Sonae SGPS in A graduate in Chemical Engineering from Oporto University, Belmiro also attended a Programme for Management Development at Harvard Business School, a Financial Management Programme at Stanford University and a Strategic Management course at Wharton University. He is an Honorary Fellow of the London Business School and a member of the World Business Council for Sustainable Development s Order of Outstanding Contributors to Sustainable Development. Ângelo Paupério Non-Executive Director Ângelo has been a non executive Board Director of Sonae Sierra since His main executive responsibilities are as Executive Vice Chairman of the Sonae Group holding company, Group CFO, Executive Chairman of Sonae Capital and Sonae Turismo, and Board Director of Modelo Continente, all of which are sub holdings of Sonae. He graduated as a Civil Engineer from Porto University and has an MBA from Porto Management School. Jeremy Newsum Non-Executive Director Jeremy Newsum is Group Chief Executive of Grosvenor, the international property company. Jeremy originally joined Grosvenor in 1976, having graduated from Reading University. He left the company after two years, but returned in 1987 and was appointed Chief Executive in As a specialist in real estate investment and development, he is a director of TR Property Investment Trust Plc, a member of the Council of Imperial College London and a Trustee of the Urban Land Institute. Neil Jones Non-Executive Director Neil Jones is Chief Executive of Grosvenor Continental Europe. He is based in Paris, from where he oversees all the company s operations, including the work of their offices in Madrid and Milan. Neil joined Grosvenor in 1997 and has worked in London, Brussels and Hong Kong. He is a non-executive director of Sonae Sierra SGPS and executive director of Grosvenor Group Ltd. Benoit Prat-Stanford Non-Executive Director Benoît Prat-Stanford has been with Grosvenor since 2000 and is the Finance Director for Continental Europe. His career includes a period as military attaché to the French Embassy in Italy. He has also worked for Arthur Andersen and United Technologies. With a Business degree and an MBA gained in Boston, he has lived and worked in Paris, Boston, Rome, Brussels and London..54

Executive Directors Álvaro Portela Chief Executive Officer Álvaro Portela was appointed CEO of Sonae Sierra in 1999.

Álvaro has a degree in Mechanical Engineering from the Faculdade de Engenharia da Universidade do Porto, an MBA from the Universidade Nova de Lisboa and an AMP/ISMP from Harvard Business School.

Since 1998 he has been living in São Paulo, where he is responsible for all aspects of the company s business in Brazil.

Edmundo Figueiredo Director, CFO Edmundo Figueiredo is the CFO of Sonae Sierra and a member of the Sonae Group Finance Committee.

Edmundo joined the Sonae Group in 1989, as Financial Controller of the company s Real Estate activities, which later became Sonae Sierra.

Pedro Caupers Director, Property Management and Leasing Pedro Caupers joined Sonae Sierra in April 1997 and was appointed Board Director in 1999.

57 Executive Directors Álvaro Portela Chief Executive Officer Álvaro Portela was appointed CEO of Sonae Sierra in His particular responsibilities include Safety & Health, Corporate Communications, Environmental & Institutional Relations, Investments & Asset Management. Álvaro has a degree in Mechanical Engineering from the Faculdade de Engenharia da Universidade do Porto, an MBA from the Universidade Nova de Lisboa and an AMP/ISMP from Harvard Business School. João Pessoa Jorge Director, CEO of Sonae Sierra Brazil João Pessoa Jorge joined the Sonae Group in 1983 and was one of the executives involved in starting the Group s Real Estate business. Since 1998 he has been living in São Paulo, where he is responsible for all aspects of the company s business in Brazil. João has a degree in Civil Engineering gained at the University of Porto and a MBA from Kent State University in Ohio. Edmundo Figueiredo Director, CFO Edmundo Figueiredo is the CFO of Sonae Sierra and a member of the Sonae Group Finance Committee. His particular responsibilities include Internal Audit; Legal, Fiscal and Mergers & Acquisitions; Finance, Planning & Control; HR & Back-Office. Edmundo joined the Sonae Group in 1989, as Financial Controller of the company s Real Estate activities, which later became Sonae Sierra. He has a degree in Finance from the Lisbon School of Economics (ISCEF). Pedro Caupers Director, Property Management and Leasing Pedro Caupers joined Sonae Sierra in April 1997 and was appointed Board Director in He is responsible for all Property Management and Leasing activities across the European markets where Sonae Sierra is active. Pedro has a degree in Electrical Engineering from Instituto Superior Técnico, a PhD from Paris University and an MBA from INSEAD. Fernando Guedes Oliveira Director, Developments Europe. Fernando Oliveira joined the Sonae Group in 1984 and moved to Sonae Sierra in He was Project Leader of two of the company s award-winning shopping Centres: ViaCatarina and Centro Vasco de Gama. Currently he is responsible for the implementation of Sonae Sierra s shopping and leisure centre development programme in Europe. With a degree in Civil Engineering from the University of Porto and an MBA from ISEE, University of Porto. Fernando also gained an AMDP at Harvard Business School. António Casanova Director, Marketing, Key Account Management and New Technologies António Casanova joined Sonae Sierra in 1998, having previously been CEO of Optimus, a mobile phone joint venture between Sonae Group, Orange and EDP, Portugal s electricity utility. He was appointed a Board Director of Sonae Sierra in 2005 and has particular responsibilities for Marketing, Key Account Management and New Technologies. António has a BSc from the London School of Economics, an MBA from Universidade Nova de Lisboa and a AMP from Harvard Business School..55

Other Executives Ana Guedes Oliveira Responsible for Investment and Asset Management in Europe Ana Guedes Oliveira joined Sonae Sierra in 1987 and later took over the development of two major

She has particular responsibilities for the portfolio of shopping centres in Europe. She also acts as manager of the Sierra Fund, of which 50.1% is owned by Sonae Sierra.

Adrian Ford Responsible for Expansion in Europe (except Iberia) Adrian Ford has worked with Sonae Sierra since its inception.

Adrian studied business studies at Plymouth Polytechnic and has a Masters Degree in Management and Business Studies from the University of Warwick.

He is responsible for the Legal, Tax, Mergers and Acquisitions activities of Sonae Sierra.

José Quintela Responsible for Conceptual Development and Architecture José Quintela joined Sonae Sierra in 1987 and has since led the team responsible for the concept and design of all the company s

58 Other Executives Ana Guedes Oliveira Responsible for Investment and Asset Management in Europe Ana Guedes Oliveira joined Sonae Sierra in 1987 and later took over the development of two major shopping centres in Portugal,. In 1999 she moved to portfolio management and is now in charge of the company s investment division. She has particular responsibilities for the portfolio of shopping centres in Europe. She also acts as manager of the Sierra Fund, of which 50.1% is owned by Sonae Sierra. Ana has a degree in Civil Engineering from the University of Porto, an MBA from ISEE, University of Porto and an AMP from INSEAD in France. Adrian Ford Responsible for Expansion in Europe (except Iberia) Adrian Ford has worked with Sonae Sierra since its inception. He assumed responsibility for the company s new business in Europe outside of Iberia in Adrian studied business studies at Plymouth Polytechnic and has a Masters Degree in Management and Business Studies from the University of Warwick. Joaquim Pereira Mendes Responsible for Legal, Tax, Mergers & Acquisitions Joaquim Mendes joined Sonae Sierra in He is responsible for the Legal, Tax, Mergers and Acquisitions activities of Sonae Sierra. Joaquim has a law degree gained at the Faculdade Direito Universidade Coimbra in 1980 and is a visiting professor at Universidade Portucalense in Porto. José Quintela Responsible for Conceptual Development and Architecture José Quintela joined Sonae Sierra in 1987 and has since led the team responsible for the concept and design of all the company s shopping and leisure centres. He is currently involved in more than 14 projects at different stages of development in all the countries where Sonae Sierra is active. José has a degree in Architecture, an MBA from Universidade Nova de Lisboa and an AMP from Harvard Business School. José Falcão Mena Responsible for Development in Iberia José Mena has been responsible for the company s expansion in Iberia since 1998 and for its development in the same region since José has a degree in Civil Engineering from Portugal s Instituto Superior Técnico and a post-graduate qualification in Management from the Instituto Superior de Ciências do Trabalho e da Empresa. He is also successfully completed an Advanced Marketing Programme for Executives at the Universidade Católica de Lisboa. Luís Carvalho Marques Responsible for Human Resources and Back Office Luis Carvalho Marques joined Sonae Sierra in His previous career as an army officer had focused on administration, teaching and training. Since 1998, his responsibilities at Sonae Sierra have covered all facets of the company s human resources and back office functions, including information systems and logistics. With degrees in Military Sciences and Business Administration, the latter gained at the Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE), Luis is a qualified Chartered Accountant and, for 16 years, was visiting professor of Auditing and Accounting at ISCTE..56

João Correia de Sampaio Responsible for Management in Portugal and Spain João Correia de Sampaio joined Sonae Sierra in 1992 following a military career during which he taught at the Portuguese

He is currently Managing Director of Sierra Management Portugal and Sierra Management Spain, with responsibilities for the management and leasing of 33 shopping centres, four retail parks and several

Pietro Malaspina Responsible for Developments in Italy Pietro Malaspina joined Sonae Sierra at the end of 2000 and has since been responsible for the company s development business in Italy.

He has a degree in Political Sciences from the Sacred Heart Catholic University in Milan.

From there, he moved to London for six years to work for Sonae International.

59 João Correia de Sampaio Responsible for Management in Portugal and Spain João Correia de Sampaio joined Sonae Sierra in 1992 following a military career during which he taught at the Portuguese Military Academy and was commanding officer of several operational and training units. He is currently Managing Director of Sierra Management Portugal and Sierra Management Spain, with responsibilities for the management and leasing of 33 shopping centres, four retail parks and several small retail galleries across the Iberian peninsular. João has a degree in Military Sciences gained at the Academia Militar in Lisbon and an MBA from Universidade Nova de Lisboa. Pietro Malaspina Responsible for Developments in Italy Pietro Malaspina joined Sonae Sierra at the end of 2000 and has since been responsible for the company s development business in Italy. From 2003 to 2006, he was a member of the ICSC Europe Advisory Board and is currently President of its Italian branch, CNCC. Pietro has lived and studied in Italy and the United States. He has a degree in Political Sciences from the Sacred Heart Catholic University in Milan. Joaquim Ribeiro Responsible for Finance, Planning and Control Joaquim Ribeiro joined the Sonae Group in 1985, starting in the holding company and then moving to Sonae Indústria. From there, he moved to London for six years to work for Sonae International. In 1995 he joined Sonae Sierra to work in the financial department, becoming Director, Finance, Planning and Control, in Joaquim has a degree in Economics from Faculdade de Economia do Porto, an MBA from Universidade Nova de Lisboa and an MSc in Property Investment from the City University, London. Ingo Nissen Responsible for project management in Germany Ingo Nissen joined Sonae Sierra in 2000, when the company began operations in Germany, and he was appointed as project manager. In 2005 he was appointed Director, Development Germany, with particular responsibilities for the project management in that country. Ingo has a degree in Civil Engineering from the Technical University in Braunschweig. He gained his PhD at the Technical University in Munich. Thomas Binder Responsible for Developments in Germany With more than 20 years experience gained in project and lease management in the German shopping centre, business parks and commercial property sector, Thomas Binder joined Sonae Sierra as CEO of Sonae Sierra Developments Germany GmbH in Thomas has a degree in German law from the Universities of Berlin, Bochum and Kiel, and a real estate management degree gained at Wirtschaftsakademie Kiel..57

Portugal Airone (Padova) Our operating portfolio Greece Italy Valecenter (Venice) Mediterranean Cosmos (Thessalonica) CascaiShopping (Cascais)

Centro Colombo (Lisboa) NorteShopping (Matosinhos, Porto) Centro Vasco da Gama (Lisboa) MadeiraShopping (Funchal, Madeira) AlgarveShopping (Guia,

Serra Shopping (Covilhã) Spain Plaza Mayor (Malaga) Grancasa (Zaragoza) Max Center (Bilbao) Valle Real (Santander) La Farga (Barcelona) Parque

Brazil Shopping Penha (São Paulo) Shopping Franca (Franca, SP) Shopping Metrópole (S.

60 Portugal Airone (Padova) Our operating portfolio Greece Italy Valecenter (Venice) Mediterranean Cosmos (Thessalonica) CascaiShopping (Cascais) CoimbraShopping (Coimbra) GuimarãeShopping (Guimarães) GaiaShopping (Vila Nova de Gaia, Porto) ViaCatarina (Porto) MaiaShopping (Maia, Porto) Centro Colombo (Lisboa) NorteShopping (Matosinhos, Porto) Centro Vasco da Gama (Lisboa) MadeiraShopping (Funchal, Madeira) AlgarveShopping (Guia, Albufeira) Arrábida Shopping (Vila Nova de Gaia, Porto) Parque Atlântico (Ponta Delgada) Estação Viana (Viana do Castelo) LoureShopping (Loures) Serra Shopping (Covilhã) Spain Plaza Mayor (Malaga) Grancasa (Zaragoza) Max Center (Bilbao) Valle Real (Santander) La Farga (Barcelona) Parque Principado (Oviedo) Dos Mares (San Javier, Murcia) Avenida M40 (Madrid) Luz del Tajo (Toledo) Zubiarte (Bilbao) Plaza Éboli (Pinto, Madrid) Brazil Shopping Penha (São Paulo) Shopping Franca (Franca, SP) Shopping Metrópole (S. Bernardo do Campo, SP) Pátio Brasil (Brasília, DF) Tivoli Shopping (Santa Bárbara, SP) Parque D.Pedro (Campinas, SP) Boavista Shopping (Stº Amaro, SP) Shopping Plaza Sul (São Paulo) Shopping Campo Limpo (São Paulo).58

Our ambition Our ambition is to be one of the world s leading companies specialising in the shopping and leisure centre sector, and a preferred partner in any market in which

We aim to explore new markets and other opportunities for expansion, not only through the constant growth of our shopping and leisure centre development pipeline, but also by

We also plan to create new alliances with local partners and influential institutional investors wherever and whenever appropriate.

We also know we can continue to climb the ladder of success by developing and using our know-how and imagination, and by maintaining the highest standards of professionalism

61 Our ambition Our ambition is to be one of the world s leading companies specialising in the shopping and leisure centre sector, and a preferred partner in any market in which we operate. We aim to explore new markets and other opportunities for expansion, not only through the constant growth of our shopping and leisure centre development pipeline, but also by acquiring new, up-and-running shopping centres. We also plan to create new alliances with local partners and influential institutional investors wherever and whenever appropriate. Our prospects We know we will only be able to achieve our future goals by paying close attention to the way we conduct our present business. We also know we can continue to climb the ladder of success by developing and using our know-how and imagination, and by maintaining the highest standards of professionalism and innovation in everything we do. Our thanks We would like to thank all our shopping and leisure centre tenants, our suppliers and the many financial institutions and official bodies we have worked with for their continuing support and trust. Our thanks also go to the certified auditors for their co-operation in monitoring our activities. Last but not least, we would like to express our appreciation to all our employees for their efforts throughout Their contribution is clearly reflected in Sonae Sierra s achievements during the year..59

SONAE SIERRA. Introduction

SONAE SIERRA. Introduction Sonae Sierra SGPS, SA Lugar do Espido - Via Norte Apartado 1197 4471-909 Maia - Portugal Tel (+351) 22 010 44 58 (+351) 22 010 44 36 Geral (+351) 22 948 75 22 FAX (+351) 22 010 46 98 www.sonaesierra.com