Iguatemi Empresa de Shopping Centers S.A. and Subsidiaries

Transcription

1 (Convenience Translation into English from the Original Previously Issued in Portuguese) Iguatemi Empresa de Shopping Centers S.A. and Subsidiaries Individual and Consolidated Interim Financial Information for the Quarter Ended June 30, 2011 and Report on Review of Interim Financial Information Deloitte Touche Tohmatsu Auditores Independentes

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4 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010 (Amounts in thousands of Brazilian reais - R$) Company (BRGAAP) Consolidated (BRGAAP & IFRS) Consolidated (BRGAAP & IFRS) ASSETS Note LIABILITIES AND SHAREHOLDERS EQUITY Note CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 871, , , ,246 Borrowings and financing 19,965 19,567 22,173 20,840 Inventories Debentures 81,400 1,747 81,400 1,747 Rentals and other receivables 27,926 31,908 75,206 70,319 Trade accounts payable - domestic 2,767 2,976 16,390 8,741 Recoverable taxes 13,940 12,624 15,099 13,589 Taxes payable 7,734 4,056 18,981 12,949 Loans Personnel, payroll taxes, benefits, and rewards 8,961 11,226 10,124 12,968 Dividends receivable - 24, Due to related parties Prepaid expenses , Dividends and interest on capital payable - 35,992-35,992 Other receivables 5,344 9,581 5,612 10,179 Other payables 31,447 31,977 48,003 52,742 Total current assets 919, ,716 1,041, ,472 Total current liabilities 152, , , ,979 NONCURRENT ASSETS NONCURRENT LIABILITIES Rentals and other receivables 1-31,358 20,781 Borrowings and financing 192, , , ,316 Loans 852 6,932 1,042 1,223 Debentures 460, , , ,488 Recoverable taxes and tax credits 9,590 8,822 9,590 8,822 Reserve for tax, labor and civil contingencies 49,638 50,972 60,389 66,497 Due from related parties 103,625 51,678 26,420 15,603 Taxes payable 3,180 1,890 4,521 2,685 Receivables from expropriations 1,402 1,402 1,402 1,402 Deferred income 14,120 15,854 72,929 54,394 Escrow deposits 1,399 1,406 2,420 2,449 Due to related parties 47,215 47,009 40,859 40,095 Other receivables Other payables 11,841 11,000 26,879 20,619 Investments: Total noncurrent liabilities 778, ,745 1,083, ,094 In subsidiaries 647, , Goodwill on acquisition of investments 155, , SHAREHOLDERS EQUITY Other Capital 823, , , ,859 Investment property 611, ,751 1,592,106 1,399,973 Capital reserves: Property, plant and equipment 5,091 4,694 10,551 13,743 Share premium 452, , , ,082 Intangible assets 19,028 16, , ,939 Treasury shares (4,025) (3,140) (4,025) (3,140) Total noncurrent assets 1,555,943 1,407,671 1,784,028 1,570,859 Other 5,413 4,876 5,413 4,876 Earnings reserves 192, , , ,424 Retained earnings 74,467-74,467 - Total Company s shareholders equity 1,544,778 1,488,101 1,544,778 1,488,101 Noncontrolling interests in subsidiaries shareholders equity Total shareholders equity 1,544,778 1,488,101 1,544,956 1,488,258 TOTAL ASSETS 2,475,777 2,049,387 2,825,327 2,294,331 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 2,475,777 2,049,387 2,825,327 2,294,331 Company (BRGAAP) The accompanying notes are an integral part of these financial statements. 3

5 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. STATEMENTS OF INCOME FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010 (In thousands of Brazilian reais - R$, except earnings per share) Company (BRGAAP) Consolidated (BRGAAP & IFRS) Note NET REVENUE FROM RENTALS AND SERVICES 69,212 57, , ,017 COST OF RENTALS AND SERVICES (27,845) (23,997) (38,423) (32,911) GROSS PROFIT 41,367 33, ,111 90,106 OPERATING (EXPENSES) INCOME General and administrative (26,146) (25,717) (32,157) (26,814) Equity in investees 58,066 53, Other operating income, net (526) 4,365 9,031 11,591 31,394 31,848 (23,126) (15,223) OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSES) 72,761 65,162 87,985 74,883 FINANCIAL INCOME (EXPENSES) 6,109 5,500 3,089 6,528 INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 78,870 70,662 91,074 81,411 INCOME TAX AND SOCIAL CONTRIBUTION Current (3,807) (4,531) (15,372) (14,687) Deferred (596) (1,215) (1,214) (1,785) (4,403) (5,746) (16,586) (16,472) NET INCOME 74,467 64,916 74,488 64,939 Attributable to controlling shareholders 74,467 64,916 74,467 64,916 Attributable to noncontrolling shareholders Earnings per share (R$) - Basic Comprehensive income (loss) The Company has no transactions requiring presentation of the statement of comprehensive income. The accompanying notes are an integral part of these financial statements. 4

6 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (Amounts in thousands of Brazilian reais - R$, except earnings per share) Equity Capital reserves Earnings reserves attributable to Total Share Treasury Earnings Retained owners Noncontrolling shareholders' Capital premium Other shares Legal Investments retention earnings of the Company interest equity BALANCES AS OF DECEMBER 31, , ,082 5,141-24,468 17,896 62,582-1,380, ,380,488 Capital increase 5, (5,734) Recognition of reserve for the payment of Share-based compensation - - (265) (265) - (265) Treasury shares (3,140) (3,140) - (3,140) Net income for the year , , ,600 Allocation of income for the year: Legal reserve , (7,577) Interest on capital paid (R$0.416 per share) (32,970) (32,970) - (32,970) Proposed dividends (R$0.093 per share) (7,365) (7,365) - (7,365) Retained earnings, according to capital budget ,635 (103,635) Other (90) (90) BALANCES AS OF DECEMBER 31, , ,082 4,876 (3,140) 32,045 17, ,483-1,488, ,488,258 Capital increase Recognition of reserve for the payment of Share-based compensation Treasury shares (885) (885) - (885) Other Net income for the year Allocation of income for the year: Legal reserve Retained earnings, according to capital budget ,467 74, ,488 Other (17,442) - (17,442) - (17,442) BALANCES AS OF JUNE 30, , ,082 5,413 (4,025) 32,045 17, ,041 74,467 1,544, ,544,956 The accompanying notes are an integral part of these financial statements. 5

7 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010 (Amounts in thousands of Brazilian reais - R$) Company Consolidated (BRGAAP) (BRGAAP & IFRS) CASH FLOWS FROM OPERATING ACTIVITIES Net income for the year 74,467 64,916 74,488 64,939 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,545 6,276 11,066 9,951 Gain (loss) on sale of assets Reserve for tax, labor and civil contingencies (1,592) (7,157) (6,517) (6,757) Deferred income tax and social contribution 596 1,215 1,214 1,785 Reserve for share-based payments Provision for bonus program 3,629 2,340 4,081 2,247 Allowance for doubtful accounts 1, ,766 (109) Interest, inflation adjustment and exchange variation on loans, contingencies and escrow deposits 39,700 14,907 42,693 16,709 Equity in investees (58,066) (53,200) - - Noncontrolling interests - - (21) (23) Deferred income (2,110) - (4,577) - (Increase) decrease in operating assets: Trade receivables, net 2,195 (1,765) (17,495) (7,422) Dividends receivable Loans 6, ,959 Recoverable taxes 2,252 (1,783) (1,510) (2,004) Prepaid expenses (729) (285) (1,282) (27) Other receivables and escrow deposits 4,245 (846) 4,596 (4,146) Increase (decrease) in operating liabilities: Payroll, vacation and related charges (5,894) (1,981) (6,925) (2,902) Trade accounts payable - domestic (209) (589) 7, Taxes payable 36 5,026 5,886 9,268 Due to related parties (59,936) (2,049) (10,823) (12,695) Other payables 5,229 (3,551) 23,867 (1,966) Net cash provided by operating activities 18,748 22, ,862 72,200 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment property, property, plant and equipment, and intangible assets (39,886) (61,971) (197,962) (131,442) Dividends received 52, Capital increase in subsidiaries (38,313) (1,677) - - Reduction of capital in subsidiary Net cash used in investing activities (25,224) (62,831) (197,962) (131,442) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings Borrowings, financing and debentures paid (31,247) (18,465) (38,881) (18,958) Fundraising through issue of securities Dividends and interest on capital paid (53,434) (46,774) (53,434) (46,765) Acquisition of treasury shares 73,673 17, ,306 56,492 Fundraising through issue of debentures 326, ,656 - Other (885) - (885) - Net cash provided by (used in) financing activities 314,763 (48,043) 382,762 (9,231) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 308,287 (88,025) 314,662 (68,473) CASH AND CASH EQUIVALENTS Closing balance 563, , , ,261 Opening balance 871, , , ,788 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (308,287) 88,025 (314,662) 68,473 The accompanying notes are an integral part of these financial statements. 6

8 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. STATEMENTS OF VALUE ADDED FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010 (Amounts in thousands of Brazilian reais - R$) Company Consolidated (BRGAAP) (BRGAAP & IFRS) Revenue from rentals and other operating revenue 78,585 8, ,007 20,266 Other ,753 10, ,418 Allowance for doubtful accounts (1,785) (69) (2,766) ,317 66, , ,793 SERVICES AND MATERIALS PURCHASED FROM THIRD PARTIES Cost of rentals and services (17,045) (17,651) (21,141) (18,429) Materials, electricity, outside services and other (16,853) (9,287) (20,640) (11,642) (33,898) (26,938) (41,781) (30,071) GROSS VALUE ADDED 43,419 39, , ,722 DEPRECIATION AND AMORTIZATION (6,545) (6,276) (11,066) (9,951) WEALTH CREATED 36,874 33, , ,771 WEALTH RECEIVED IN TRANSFER Equity in investees 58,066 53, Financial income 42,420 26,962 44,553 29,500 Other - - 1, ,486 80,162 45,858 29,500 WEALTH FOR DISTRIBUTION 137, , , ,271 WEALTH DISTRIBUTED Personnel: Salaries and wages 8,103 9,095 11,246 11,018 Benefits 4,063 3,109 4,694 3,791 Severance Pay Fund (FGTS) 1, ,384 1,050 13,298 13,128 17,324 15,859 Government: Federal 13,018 13,150 32,474 28,081 State Municipal 697 1,151 2,870 3,283 13,715 14,301 35,344 31,930 Interest on debt: Interest 32,990 20,892 36,762 22,156 Rentals Other 2,807-3,982-35,880 20,953 40,878 22,543 Shareholders: Interest on capital and dividends - - Retained earnings 74,467 64,916 74,467 64,916 Noncontrolling interests ,467 64,916 74,488 64,939 Total 137, , , ,271 The accompanying notes are an integral part of these financial statements. 7

9 (Convenience Translation into English from the Original Previously Issued in Portuguese) IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. NOTES TO THE INTERIM FINANCIAL INFORMATION (Amounts in thousands of Brazilian reais - R$, unless otherwise stated) 1. GENERAL INFORMATION Iguatemi Empresa de Shopping Centers S.A ( Iguatemi or the Company ) is headquartered in São Paulo - SP and is engaged in the commercial exploration and planning of shopping centers, provision of services for managing regional shopping centers and real estate complexes of mixed use, properties purchase and sale, exploration of rotating parking lots, intermediation of promotional space rentals, preparation of studies, projects and promotion and merchandising planning, performance of other activities related to its objective and holding interest in other companies as partner, shareholder or any other form permitted by law. The Company trades its shares on BM&F Bovespa under ticker symbol IGTA3. Projects ( shopping centers ) are mostly comprised of building condominiums, and do not have legal personality. Operations are recorded by the Company in its accounting books proportionally to the interest held by the companies in each project. Iguatemi and its subsidiaries hold an undivided interest ("interest") in specific real estate projects, mostly shopping centers, located in the South, Southeast and Mid-West regions of Brazil, as follows: Interest % Direct Indirect Total Total Total Shopping Center Iguatemi São Paulo ("SCISP") (e) Shopping Center Iguatemi Campinas ("SCIC") Market Place Shopping Center ("MPSC") (f) Market Place Tower I ( MPT-I ) (f) Market Place Tower II ( MPT-II ) (f) Shopping Center Iguatemi São Carlos ("SCISC") Shopping Center Iguatemi Rio ("SCIR") (b) ,66 Praia de Belas Shopping Center ("PBSC") Shopping Center Iguatemi Caxias ("SCICx") Shopping Center Iguatemi Florianópolis ( SCIFLA ) (c) Shopping Center Iguatemi Porto Alegre ("SCIPA") (c) Shopping Center Galleria ( SCGA ) (c) Esplanada Shopping Center ( SCESP ) (d) Shopping Center Iguatemi Alphaville ( SCIAlpha ) Shopping Center Iguatemi Brasília ( SCIBRA ) Shopping Center Iguatemi JK ( JK Iguatemi ) (a) (a) JK Iguatemi project is scheduled to be launched in March

10 (b) Interest in SCIR comprises direct interest of 30.66% and indirect interest of 30.00% held through subsidiary Shopping Centers Reunidos do Brasil Ltda. (c) Indirect interests in SCIFLA, SCIPA and SCGA are held through the subsidiaries Shopping Centers Reunidos do Brasil Ltda., Lasul Empresa de Shopping Centers Ltda. and EDR47 Participações e Empreendimentos Imobiliários Ltda., respectively. (d) Iguatemi hold indirect interest in SCESP of 27.00%, 5.24% and 0.91% through the subsidiaries Amuco Shopping S.A., RAS Shopping Centers Ltda. and Fleury Alliegro Imóveis Ltda., respectively. (e) (f) The indirect interest in SCISP is held through subsidiary SISP Participações S.A. The interests in MPSC, MPT-I and MPT-II are indirectly held through subsidiary Market Place Participações Ltda. 2. SUMMARY OF SIGNIFICANT POLICIES Declaration of conformity Management is responsible for the interim individual and consolidated information, which comprise: The consolidated interim information prepared in accordance with the International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standards Board (IASB) and the accounting practices adopted in Brazil. The individual interim financial information of the Company prepared in accordance with the accounting practices adopted in Brazil. The Brazilian accounting practices comprise the policies set out in Brazilian Corporate Law and the pronouncements, instructions, and technical interpretations issued by the CPC and approved by the Brazilian Securities and Exchange Commission (CVM). The individual interim financial information measures investments in subsidiaries under the equity method of accounting, as required by the Brazilian Corporate Law. Accordingly, the interim individual information is not fully compliant with IFRS, which requires that these investments be measured separately from the Parent at fair value or cost. Since there is no difference between the consolidated shareholders equity and the consolidated net income attributable to the Company s owners disclosed in the consolidated interim financial information prepared in accordance with IFRS and the accounting practices adopted in Brazil, the Company opted to present this individual and consolidated interim financial information in a single set, side by side Basis of preparation The interim financial information has been prepared based on the historical cost and adjusted to reflect the fair value of certain financial instruments against net income for the year. The historical cost is usually based on the fair value of the consideration paid in exchange for assets. 9

11 The significant accounting policies adopted by the Company may be summarized as follows: a) Use of estimates The preparation of interim financial information requires Management to make estimates and assumptions to record certain assets, liabilities and other transactions. The Company and its subsidiaries interim financial information include, therefore, estimates for the useful lives of property, plant and equipment, and investment properties, reserve for tax, labor and civil contingencies, provision for income tax and social contribution, and other similar provisions. Actual results could differ from those estimates. b) Revenue and expense recognition Revenues, costs and expenses are recorded on the accrual basis. Revenue from rentals is recognized over the term of the rental agreements, and revenue from services is recognized when services are provided, regardless of invoicing. Expenses and costs are recognized when incurred. Revenue from assignment of rights to storeowners is deferred and allocated to income over the term of the first rental agreement. c) Cash and cash equivalents Comprise cash, banks and short-term investments. Short-term investments are highly liquid and stated at cost plus income earned through the balance sheet date, with maturities not exceeding 90 days or with no fixed term for redemption, and subject to an immaterial risk of change in value. They are classified as: (i) held for trading, when purchased or originated mainly for the purpose of sale or repurchase in the short term, which are measured at fair value through profit or loss; (ii) held to maturity, which are nonderivative financial assets with fixed or determinable payments with defined maturities; and (iii) available for sale, which refers to nonderivative financial assets that are classified neither as held for trading nor as held to maturity. d) Allowance for doubtful accounts Recognized based on the estimate of potential losses that might occur on collection of receivables and which is considered by management as sufficient to cover possible losses. The allowance for doubtful accounts takes into consideration trade accounts receivable past-due for more than one year and with maturity of less than one year. e) Investments Investments in subsidiaries are accounted for under the equity method. Investments in companies in which management has significant influence or interest of 20% or more in the voting capital, or which are part of the same group or are under common control, are accounted for under the equity method (see note 8). 10

12 11 Investments in joint ventures A joint venture is a contractual agreement through which the Company and other parties exercise an economic activity subject to joint control, where the decisions on financial and operating strategic policies relating to the joint venture activities require the approval of all parties sharing control. Investments in joint ventures are recognized under the proportionate consolidation method, from the date the joint control is acquired. Under this method, assets, liabilities and revenues, costs and expenses are integrated into the interim financial information, line item by line item, proportionally to the Company s share of control. f) Functional and reporting currency The interim financial information of each subsidiary included in the consolidation is prepared using the functional currency (i.e., currency of the primary economic environment in which it operates) of each subsidiary. When defining the functional currency of each subsidiary, management considered which currency significantly influences the sale price of the services rendered and the currency in which most of the cost of services it provides is paid or incurred. The consolidated interim financial information is presented in Brazilian reais, which is the Company s functional and reporting currency. g) Translation of foreign subsidiaries interim financial information The foreign-based subsidiary ( Anwold Malls Corporation ) does not have its own management body and is not independent in terms of management, finances and operations. Accordingly, asset and liability balances are translated at the exchange rate prevailing at the closing date of the consolidated interim financial information; (i) Shareholders equity accounts are translated at the historic foreign exchange rates; (ii) Income and expense accounts (revenues and expenses) are translated at the average monthly exchange rate, provided that no significant fluctuations in the exchange rate have occurred. The effects of exchange variation are recorded in the income statement. h) Foreign currency In preparing the Company s individual and consolidated interim financial information, transactions in foreign currency are recognized at the exchange rates prevailing on the trade dates. At the end of each reporting period, monetary items denominated in foreign currency are translated at the rates prevailing on the balance sheet date. Exchange rate differences on monetary items are recognized in profit or loss in the period they incur. i) Investment properties Investment property is represented by property held for rentals (including construction in progress for such purpose). Investment properties are measured at cost, including transaction costs. Investment properties are disclosed at fair value, according to note 9.

13 The Company periodically reviews the useful life and the residual value of its investment property. j) Property, plant and equipment Stated at cost, less depreciation calculated under the straight-line method, based on the rates disclosed in note 10. k) Intangible assets Goodwill recognized on the acquisition of investments based on the expected future earnings was amortized through December 31, 2008 on a straight-line basis over the period profits would be generated as estimated upon acquisition. The recovery of goodwill is tested for impairment annually or when events or circumstance indicate that this amount is impaired. For impairment testing purposes, goodwill is allocated to the cash generating unit in the way it is monitored by management. Its recoverable amount is determined based on economic valuation models that include discounted future cash flows, and the analysis of comparable market data. Indefinite-lived intangibles are note amortized and are annually tested for impairment. Intangible assets with finite useful lives are amortized over their estimated economic useful lives and are tested for impairment upon indication of an impairment loss in order to determine their recoverable amount (note 11). l) Income tax and social contribution The provision for income tax is recognized at the rate of 15%, plus 10% surtax on annual taxable income exceeding R$240. Social contribution was calculated at the rate of 9% on adjusted net income. Deferred income tax and social contribution were calculated based on temporary differences in the recognition of revenue and expenses for accounting and tax purposes, as permitted by tax law, determined by the consolidated companies that opted for taxation based on deemed income. The tax bases of income tax and social contribution are calculated at the rate of 32% of gross revenues from services, 8% of sales of goods (12% for social contribution on net income (CSLL)), and 100% of financial and other income, on which the regular 15% tax rate - plus a 10% surtax - for income tax and the 9% tax rate for social contribution are applied. As a result, these consolidated companies did not record deferred income tax and social contribution on tax loss carryforwards and temporary differences and are not subject to the noncumulative regime for taxes on revenue (PIS and COFINS). m) Distribution of dividends The distribution of dividends to the Company s shareholders is recognized as liability in the Company s financial statements at year end, according to its bylaws. Any value above the minimum required is only accrued on the date they are approved by the shareholders at a General Meeting. 12

14 n) Financing Financing is stated at known or determinable amounts plus, when applicable, the related interest, inflation adjustments or foreign exchange fluctuations incurred, less transaction costs. o) Reserve for tax, labor and civil contingencies The reserve is recognized whenever, based on the opinion of the legal counsel, cause of action, similarity with previous lawsuits, complexity of the cause, and the position of courts, a loss is considered probable and may result in cash disbursements to settle ensuing obligations, and the amounts involved can be reliably measured. Tax, labor and civil contingencies classified as possible losses are not recognized and should only be disclosed in the interim financial information, whereas those classified as remote do not require provision or disclosure. p) Other assets and liabilities Other assets are stated at cost or realizable values, including, when applicable, income earned. Other liabilities are stated at known or determinable amounts, including, when applicable, interest and inflation adjustments. q) Share-based payment plan The Company offers its employees share-based compensation plans, settled with shares, under which the Company receives services in exchange for the stock options granted. The value of options granted is recognized as expenses over the vesting period, during which certain vesting terms and conditions must be met. At the balance sheet date, the Company reviews its estimated of the number of options that will be vested under specific terms and conditions. The Company recognizes the impact of the revised estimates, if any, in the income statement, as a contra entry to shareholders' equity. r) Adjustment to present value Pursuant to CPC 12 - Adjustment to Present Value, the Company valued the longterm monetary assets and liabilities subject to measurement to present value, and short-term monetary assets and liabilities whose impact is considered material in relation to the financial statements taken as a whole. When recognized, the adjustment to present value is calculated on the balances, considering contractual cash flows and the explicit or implicit interest rate of the respective assets and liabilities. Accordingly, the interest embedded in revenue, expenses and costs related to these assets and liabilities is discounted and recognized on the accrual basis. When an adjustment to present value is recognized, this interest is subsequently transferred to financial expenses or income in the statement of operations, using the effective interest rate method in relation to the contractual cash flows. 13

15 s) Impairment of long-lives assets Under CPC 01 - Impairment of Assets, the Company analyzes if there is evidence that the carrying amount of an asset may not be recovered. If such evidence is identified, the Company estimates the asset recoverable value. The recoverable value of an asset is the higher of: (i) its fair value less costs to sell and (ii) its value-in-use. The value-in-use is equivalent to discounted cash flows (before taxes) arising from the continuous use of the asset up to the end of its useful life. When the residual amount of the asset exceeds its recoverable value, the Company recognizes an impairment loss. For assets recorded at cost, the impairment is recorded in income. If the impairment of an individual asset cannot be determined, the Company tests for impairment the cash-generating unit to which the asset belongs. Except for the impairment of goodwill, previously recognized losses can be reversed. Reversal under these circumstances is limited to the depreciated balance of the asset as at the reversal date, assuming that reversal has not been recorded. t) Financial instruments Classified according to management s intent to hold the financial assets and liabilities acquired or contracted, which is determined at the initial recognition of financial instruments. Financial assets held by the Company are classified into the following categories: Financial assets measured at fair value through profit or loss Held-for-trading financial assets, when acquired for such purpose, mainly in the short term. Derivatives are also classified in this category. Assets in this category are classified in current assets. In the case of the Company, no financial instruments are included in this category. The balances related to gains or losses on unsettled translations are classified in current assets or current liabilities, and gains or losses arising from changes in fair value are recorded under Financial income or Financial expenses, respectively. Financial assets held to maturity Comprise investments in certain financial assets classified when contracted that the Company intends to hold to maturity, which are measured at acquisition cost, plus income earned according to contractual terms and conditions. Financial assets available for sale When applicable, it includes nonderivative financial assets designated as available for sale or not classified as: (a) loans and receivables; (b) investments held to maturity; or (c) financial assets at fair value calculated using net income for the year. Loans and receivables Include nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Recorded in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as noncurrent assets, when applicable. 14

16 Financial liabilities held by the Company are classified into the following categories: Financial liabilities measured at fair value through profit or loss Financial liabilities are classified at fair value through profit or loss when they are held for trading or designated at fair value through profit or loss. Other financial liabilities Other financial liabilities are measured at amortized cost under the effective interest method. As at June 30, 2011 and December 31, 2010, in the case of the Company, they comprise borrowings, financing and debentures (notes 12 and 13) and trade accounts payable to domestic and foreign suppliers. u) Consolidation Subsidiaries are fully consolidated from the date in which control is transferred to the Company and cease to be consolidated when control is no longer exercised, when applicable. In the cases control is jointly held, the consolidation of the financial statements is made proportionally to the interest percentage. Subsidiaries are all the entities with financial and operating policies of which the Company has the power to govern in order to benefit from their activities and in which it owns half or more of the interest. The entities included in our consolidation are as follows: Interest % Direct Indirect Total Total Total Iguatemi Estacionamentos Ltda. ( IESTA ) Lasul Empresa de Shopping Centers Ltda. ( Lasul ) Rio Pinheiros Diversões Ltda. ( Rio Pinheiros ) Leasing Mall Comercialização, Assessoria e Planejamento de Shopping Centers Ltda. ( Leasing Mall ) Shopping Center Reunidos do Brasil Ltda. ( SCRB ) IESC Participações S.A. ( IESCPar ) IESTA Porto Alegre Estacionamentos Ltda. ( IESTAPA ) Administradora Gaúcha de Shopping Centers S.A. ( AGSC ) (a) SISP Participações S.A. ( SISP ) RAS Shopping Centers Ltda. ( RAS ) (c) EDR47 Participações e Empreendimentos Imobiliários Ltda. ( EDR47 ) Amuco Shopping S.A. ( Amuco ) Market Place Participações e Empreendimentos Imobiliários Ltda. ( MPPart ) WTORRE Iguatemi Empreendimentos Imobiliários S.A. ( WTORRE ) (a) CL Brasil S.A. ( CL Brasil ) (a, b) I-Retail Serv. Consult. de Moda e Particip. Ltda. ( I-Retail ) (b) SCIALPHA Participações Ltda. ( SCIALPHA ) Fleury Alliegro Imóveis Ltda. ( FLEURY ) EDSP74 Participações e Empreendimentos Imobiliários Ltda. ( EDSP74 ) Anwold Malls Corporation ( Anwold ) CSC41 Participações Ltda. ( CS41 ) Odivelas SP Participações S.A. ( OSPP ) CSC71 Participações Ltda. ( CS71 ) CSC61 Participações Ltda. ( CS61 ) SCIRP Participações Ltda. ( SCRP )

17 (a) The assets, liabilities, income and expenses of joint ventures have been included proportionally to the Company s interest in their capital, considering the joint control established in the Shareholders Agreements made between the Company and its respective partners in such entity whereby the financial and operating decisions relating to the activity necessarily require the unanimous consent of the parties. CL Brasil was consolidated through April 30, 2010 due to its sale to third parties. (b) Interests sold on April 30, (c) The goodwill on the acquisition of the control of RAS totaled R$1,305 thousand and was recorded in the income statement. The main following information was eliminated in consolidation: The balance between the Company and its subsidiaries, as well as revenues and expenses from their transactions. Interest in subsidiaries shareholders' equity and net income. Unrealized profit between the Company and its subsidiaries, when applicable. Reclassification of goodwill portions attributable to property, plant and equipment items to investment properties and intangible assets. Separate disclosure of shares in net income and shareholders equity related to noncontrolling interests. There are no differences between Company and consolidated shareholders equity and net income. v) Statements of value added (DVA) The purpose of this statement is to disclose the wealth created by the Company and its distribution during a certain reporting period and is presented by the Company, as required by the Brazilian Corporate Law, as an integral part of its individual interim financial information and as additional disclosure of the consolidated interim information, since this statement is not required by IFRS. The statement of value added was prepared based on information obtained in the accounting records that serve as basis for the preparation of interim information and in accordance with the provisions of CPC 09 Statement of Value Added. Firstly, this statement presents the wealth created by the Company, which is represented by revenues (gross sales revenue, including taxes thereon, other revenues and the effects of the allowance for doubtful accounts), inputs acquired from third parties (cost of services provided and purchases of materials, electric power and outsourced services, including taxes levied at the time of the purchase, effects of losses and recovery of assets, depreciation and amortization) and value added received from third parties (equity in earnings (loss) of subsidiaries, financial and other income). The second part of the statement of value added presents the distribution of wealth among personnel, taxes, fees and contributions, lenders and lessors, and shareholders. w) Standards, amendments to and interpretations of standards not yet effective and which were not early adopted by the Company 16

18 The following standards and revised standards have been issued and are mandatory for reporting periods beginning on or after January 1, However, the Company did not early adopt these standards and revised standards. Standard Main requirements Effective date Improvements to IFRS Amendments to IFRS 1 Amendments to several accounting pronouncements. Limited exemption from comparative IFRS 7 disclosures for first-time adopters. Effective for annual periods beginning on or after January 1, Effective for annual periods beginning on or after July 1, Amendments to IFRS 24 Related party disclosures. Effective for annual periods beginning on or after January 1, Amendments to IFRIC 14 Prepayments of minimum funding requirements Effective for annual periods beginning on or after January 1, Amendments to IAS 32 Classification of issue rights. Effective for annual periods beginning on or after February 1, IFRIC 19 Extinguishing liabilities by issues of equity instruments. Effective for annual periods beginning on or after July 1, IFRS 9 - Financial Instruments (effective beginning January 1, 2013). The publication is part of IASB s project issued in November 2009 for improving measurement, classification and recognition of financial instruments, and replaces the part of IAS 39 related to the measurement and classification of financial assets. This pronouncement prescribes the classification of financial assets in two categories: assets measured at fair value and assets recognized at amortized cost, where the classification is determined at the time of recognition of the asset and in accordance with the Company s business model and features of the contracted financial instrument. Due to the features of the financial instruments currently contracted by the Company, no significant effects are expected at the time of adoption of this pronouncement beginning January 1, Considering the current operations of the Company and its subsidiaries, Management does not expect that the adoption of these new rules, interpretations and changes will have a significant impact on the interim financial information. CPC has not issued yet the respective pronouncements and amendments to the new and revised IFRSs presented previously. In view of the commitment assumed by CPC and CVM to maintain this set of standards up-to-date as amendments are made by IASB, these pronouncements and changes are expected to be issued by CPC and approved by CVM up to their effective date. 17

19 3. CASH AND CASH EQUIVALENTS Company Consolidated Cash and banks 4,125 16,578 15,334 33,258 Short-term investments (*) 44,663 42,461 54,553 52,083 Investment funds (**) 822, , , , , , , ,246 (*) Short-term investments are held at Caixa Econômica Federal - CEF with daily liquidity and yield based on the interbank deposit rate (CDI), bearing interest at an average rate of 12.15% per year (8.35% in December 31, 2010). Although these short-term investments meet short-term cash commitments, Management keeps minimum volumes invested as deemed sufficient to cover possible losses on lawsuits, as described in note 15. (**)Represented by investment funds, comprised mainly of fixed-income funds, with daily liquidity and yield indexed to CDI, bearing interest at an average rate of 11.64% p.a. (11.05% p.a. as at March 31, 2011). These funds can be immediately redeemed and are subject to an insignificant risk of change in value. 4. RENTALS AND OTHER RECEIVABLES Company Consolidated Rentals receivable 30,936 31,325 57,515 66,408 Coparticipations receivable (i) 2,111 2,145 30,346 3,339 Other (ii) 2,197 3,980 31,358 30,403 35,244 37, , ,150 Allowance for doubtful accounts (7,317) (5,542) (12,655) (9,050) 27,927 31, ,564 91,100 Current 27,926 31,908 75,206 70,319 Noncurrent 1-31,358 20,781 (i) Comprised mainly of receivables in connection with the right to use property space. Co-participations are billed as stipulated in the contracts and recognized in income (loss) over the term of the lease contract with the respective storeowner. (ii) Mainly represented by sales of properties made by subsidiaries CS41 and SCRP. 18

20 The aging list of trade accounts receivable is as follows: Company Consolidated Current 32,277 32, ,185 89,726 Past-due up to 30 days 716 1,109 1,909 3,023 Past-due from 31 to 60 days , Past-due from 61 to 90 days Over 90 days past-due 1,882 3,309 4,661 6,441 35,244 37, , ,150 Rentals and other receivables are stated at their original amounts, plus income, inflation adjustment gains, and effects of the straight-lining of income, when applicable. The Company s maximum exposure to credit risk is the fair value of the abovementioned balances. To mitigate this risk, the Company adopts the procedure of analyzing the types of revenue, considering the historic average of losses and the allowance for accounts past-due for more than 360 days. The changes in the allowance for doubtful accounts are as follows: Company Consolidated Balance as at December 31, ,542 9,050 Recognitions, net of reversals 1,775 3,605 Balance as at June 30, ,317 12, RECOVERABLE TAXES AND TAX CREDITS Company Consolidated Deferred income tax and social contribution (*) 9,590 8,822 9,590 8,822 Prepaid income tax and social contribution 7,289 3,861 7,645 3,938 Withholding income tax (IRRF) 5,899 7,636 6,326 8,069 Other recoverable taxes 752 1,127 1,128 1,582 23,530 21,446 24,689 22,411 Current 13,940 12,624 15,099 13,589 Noncurrent 9,590 8,822 9,590 8,822 (*) The Company recorded all the deferred tax credits resulting exclusively from temporary differences, as presented in noncurrent assets. 19

21 Total tax credits on tax loss carryforwards not recognized in consolidated is R$1,689 (R$1,684 as at December 31, 2010), as some subsidiaries do not have a history of taxable income. 6. LOANS RECEIVABLE Refer to amounts refundable by other venturers, as a result of expenses incurred in the expansion of projects, bearing interest of 10.52% p.m. 7. RELATED-PARTY TRANSACTIONS The Company conducts, in the normal course of its business, transactions with related parties whose pricing terms, financial charges and other conditions are defined by Management. Related-party balances and transactions Intercompany balances and transactions as at June 30, 2011 and December 31, 2010 are as follows: a) Balances Company Consolidated Charges Current assets: Dividends receivable from subsidiaries: Fleury Alliegro Imóveis Ltda Iguatemi Estacionamentos Ltda Amuco Shopping S.A. - 6, Shopping Centers Reunidos do Brasil Ltda. - 8, Lasul Empresa de Shopping Centers Ltda. - 3, Leasing Mall Comercialização, Assessoria e Planejamento de Shopping Centers Ltda. - 3, SISP Participações S.A - 3, Total dividends receivable - 24, Total current assets - 24,

22 Noncurrent assets: Related-party credits: Subsidiaries and jointly-owned subsidiaries: Anwold Malls Corporation (iii) 12%p.a 11,568 10, Related parties: With controlling shareholder: La Fonte Telecom S.A. (iii) Exchange variation % p.a ,060 12,682 Related parties: Shopping Center Iguatemi São Paulo (iii) Other related parties 2,638 1,244 1, Total credits with related parties 14,206 12,408 13,948 12,743 Advances for future capital increase (i) IESC Participações S.A Iguatemi Estacionamentos Ltda Rio Pinheiros Diversões Ltda CSC41 Participações Ltda 17,483 11, RAS Shopping Centers Ltda SCIRP Participações Ltda 2, CSC66 Participações Ltda CSC71 Participações Ltda SCIALPHA Participações Ltda. 19,567 5, CSC61 Participações Ltda EDR47 Participações e Empreendimentos Imobiliários Ltda. 4,680 2, WTORRE São Paulo Empreendimentos Imobiliários Ltda ,472 2,860 WTORRE Iguatemi Empreendimentos Imobiliários S.A. 45,072 19, Total advances for future capital increase 89,419 39,270 12,472 2,860 Total noncurrent assets 103,625 51,678 26,420 15,603 Total due from related parties 103,625 75,686 26,441 15,603 21

23 Current liabilities: Dividends and interest on capital payable: Controlling shareholders: La Fonte Telecom S.A Jereissati Participações S.A. - 19,072-19,072 Minority interest: Noncontrolling shareholders - 16,592-16,592 Total dividends and interest on capital payable - 35,992-35,992 Total current liabilities - 35,992-35,992 Noncurrent liabilities: Due to related parties: With subsidiaries Anwold Malls Corporation (iii) 5.91% p.a.+ exchange 6,356 6, EDR47 Participações e Empreendimentos Imobiliários variation Total due to related parties 6,356 6, Controlling shareholders: Jereissati Participações S.A. (ii) IGP-DI 40,859 40,095 40,859 40,095 40,859 40,095 40,859 40,095 Total noncurrent liabilities 47,215 47,009 40,859 40,095 Total due to related parties 47,215 83,001 40,859 76,087 (i) (ii) Advances for future capital increase are interest free. On July 15, 1994, Jereissati Participações S.A. executed an Indenture for Issuance of Debentures, whose fiduciary agent is Pavarini Distribuidora de Títulos e Valores Mobiliários Ltda. and the Company and Itaboraí Participações S.A. are intermediating parties. 5,000 simple and nonconvertible debentures were issued at the amount of R$55,000 and nominal value of R$11, which yield 0.01% of the monthly net income generated by Shopping Center Iguatemi Rio, and are guaranteed by the intermediating parties as guarantors and primary obligors. On the same date, the Company, as borrower, and Jereissati Participações S.A., as lender, entered into an Onlending Contract for the funds raised by Jereissati Participações S.A. with the issuance of debentures. The debt matures in Adjustment is made in accordance with the unit prices disclosed by the fiduciary agent, which are based on the General Price Index - Domestic Supply (IGP-DI) variation. (iii) Refers to loans for the financing of working capital to be repaid by June b) Transactions Company Consolidated Cost of services: Services provided by subsidiaries to the shopping centers: Leasing Mall Comercialização, Assessoria e Planejamento de Shopping Centers Ltda. (i) (2,471) (1,150) - - Shopping Centers Reunidos do Brasil Ltda. (ii) (4,599) (4,103) - - (7,070) (5,253) - - Services provided by the controlling shareholder: Jereissati Participações S.A. (iii) (780) (780) (780) (780) 22

24 Financial income: Loan agreements with shareholder: La Fonte Telecom S.A Loan agreements with subsidiaries: SISP Participações S.A Anwold Malls Corporation 461 1, , Loan agreements with affiliated company: Grande Moinho Cearense S.A Financial expenses: Loan agreements with shareholders: La Fonte Telecom S.A. (126) - (126) - Jereissati Participações S.A. (644) (1,442) (644) (1,442) (770) (1,442) (770) (1,442) Loan agreement with subsidiary: Anwold Malls Corporation (2,453) (2,971) - - (i) (ii) Refer to brokerage services for the rental of stores in own projects. Refer to services provided for the management of projects and parking lots. (iii) Refer to management services provided by the Company to Jereissati Participações S.A., such as financial and tax consulting. The agreements entered into between the Company and related parties are summarized as follows: Agreements with Leasing Mall Leasing Mall is a Company s subsidiary primarily engaged in planning, selling and providing advisory services on shopping centers in Brazil and abroad, in the implementation of shopping centers, and sale of stores. Leasing Mall signed several service agreements with shopping centers in which the Company owns interests and/or which it manages, for the sale and intermediation of promotional spaces and stores. Loan agreements The Company enters into loan and financing agreements as lender to finance the working capital of related companies and, as borrower, to finance its projects. The agreements terms and conditions are described in the table above. c) Management compensation An annual management compensation of R$6,391 was approved by the General Shareholders Meeting held on April 28,

25 The amounts referring to the compensation of key management personnel are as follows: Short-term benefits (i) 3,504 2,444 Share-based compensation (ii) ,590 2,859 (i) Refer basically to management fees and profit sharing (including a performance bonus). (ii) Refers to the cost of options granted to management. d) Guarantee provided to subsidiary On September 30, 2009, the Company s Board of Directors approved the pledge of a collateral in favor of SCIALPHA Participações S.A., a Company s wholly-owned subsidiary, in a financing to be obtained from Banco Bradesco S.A., under a Credit Facility Agreement with Mortgage Guarantee and Other Covenants, in the amount of R$90,000 subject to TR (managed prime rate) plus 10.5% per year. 8. INVESTMENTS Shopping Centers Reunidos do Brasil Ltda. ( SCRB ) Subsidiary engaged in the management of the Group s shopping centers, except for SCESP, SCIPA and SCICx, which are managed by third parties. SCRB holds 30% of the SCIFLA project and 30% of the SCIR project. Lasul Empresa de Shopping Centers Ltda. ( Lasul ) Subsidiary engaged in the operation of shopping centers, provision of market research, traffic study, implementation and related services, shopping center and real estate projects, hotel and leisure services in general, as well as in holding interests in other companies as partner or shareholder. Lasul holds 36% of the SCIPA project. Leasing Mall Comercialização, Assessoria e Planejamento de Shopping Centers Ltda. ( Leasing Mall ) Subsidiary engaged in the intermediation and sale of real estate units in general and in shopping centers and, when applicable, in the purchase and sale of their fixed or removable facilities. EDR47 Participações e Empreendimentos Imobiliários Ltda. ( EDR47 ) Subsidiary organized with the purpose of exploring the SCGA project, in which it owns a 50% interest. 24

26 SISP Participações S.A. ( SISP ) Acquired in August 2007, this subsidiary is engaged in holding interests in shopping centers, particularly in the SCISP project, in which it holds an 11.34% interest. RAS Shopping Centers Ltda. ( RAS ) Subsidiary acquired in August 2007 and engaged in the management of shopping centers, especially the SCESP project, in which it holds an interest of 5.24% interest. The management of RAS is no longer shared in January 2011 when the share was acquired for the participation of BR Malls Participacoes SA. Amuco Shopping S.A. ( Amuco ) On November 30, 2009, Amuco became a direct subsidiary of the Company due the upstream merger of Solway Participações S.A. and its investee EDRJ74 Participações S.A. The subsidiary is engaged in holding interest in shopping centers, notably the SCESP project, in which it holds interest of 27.91% (27% direct interest and 0.91% indirect interest, through its subsidiary Fleury Alliegro Imóveis Ltda.) Iguatemi Estacionamentos Ltda. ( IESTA ) and IESTA Porto Alegre Estacionamentos Ltda. ( IESTAPA ) Subsidiaries engaged in the operation of parking lots and in holding interest in other companies as partners or shareholders. Administradora Gaúcha de Shopping Centers S.A. ( AGSC ) Subsidiary engaged in the management of shopping centers; purchase, sale and lease of properties forming part of shopping centers, for its own account or for third parties; management of condominiums in properties for the operation of shopping centers; provision of services and operations directly or indirectly related with the above mentioned activities; holding interests in other companies as partner or shareholder; and management and operation of parking lots in shopping centers, for its own account or for third parties. It manages the SCIPA project. WTORRE Iguatemi Empreendimentos Imobiliários S.A. ( WTORRE ) As at April 2008, the Company holds an interest of 50% in WTORRE as a result of a capital contribution in cash totaling R$7,404. WTORRE is engaged in the development, implementation and operation of the Shopping Center Iguatemi JK project, scheduled to be launched in 2012, in which it holds a 50% interest. Market Place Participações e Empreendimentos Imobiliários Ltda. ( MPPart ) The subsidiary is engaged in the total or partial acquisition and commercial operation of the properties that form the Market Place Shopping Center building, including its expansion areas, and the properties that are part of the Market Place Tower I and II buildings. MPPart holds 100% of the MPSC, MPT-I and MPT-II projects. 25

27 I-Retail Serviços de Consultoria de Moda e Participações Ltda. ( I-Retail ) Subsidiary engaged in holding interests in other companies, providing fashion consulting services, and retail trade of gift articles. On July 31, 2009, the Company transferred to I-Retail as capital increase 100% of its interest in CL Brasil S.A. ( CL Brasil ), a company engaged in the retail trade of apparel items, as well as in other similar or related activities, and in holding interests in other companies as partner or shareholders. On August 14, 2009, there was a capital increase in CL Brasil of R$681 made by third parties, resulting in a 50% dilution of I-Retail s interest in CL Brasil. This investment was sold to third parties on May 31, Anwold Malls Corporation ( Anwold ) Anwold is a wholly-owned subsidiary headquartered in the Cayman Islands and is engaged, without any restrictions or limitations, in the management of the business of an investment company. Currently, Anwold s operations consist of short-term investments and transactions with related parties. CSC41 Participações LTDA ( CS41 ) The subsidiary is engaged in the operation and planning of shopping centers; provision of regional shopping center and mixed-use real estate project management services; purchase and sale of properties; operation of rotating parking lots; and the performance of other activities related to its purpose. SCIALPHA Participações Ltda ( SCIAlpha ) The subsidiary is engaged in the operation and planning of shopping centers; provision of regional shopping center and mixed-use real estate project management services; purchase and sale of properties; operation of rotating parking lots; and the performance of other activities related to its purpose and holding interests in other companies as partner or shareholder. Rio Pinheiros Diversões Ltda. ( RPD ) The subsidiary is engaged in the operation of amusement parks, games of chance with and without prizes, arcade games, bowling and similar entertainment services; operation of parking lots; and holding interests in other companies as partner or shareholder. Currently, this company is dormant. SCIRP Participações LTDA. ( SCRP ) A specific-purpose entity created to operate the project to be developed in the city of Ribeirão Preto (note 29), in which it will hold an 80% interest. 26

28 Other investments Composed of mainly of interests in the following companies: IESCPr, a subsidiary established to operate real estate projects, in particular shopping centers. Currently, this company is dormant; CSC 61 Participação Ltda., a subsidiary established to operate real estate projects, in particular shopping centers. Currently, this company is dormant. Breakdown of investments Company Consolidated Goodwill on acquisition of investments (a) 155, , Investments in subsidiaries (b) 647, , Other investments , , (a) Breakdown of goodwill Company Accumulated Cost amortization Net Net Goodwill on acquisition of Lasul Empresa de Shopping Centers Ltda. (**) 14,025 (2,221) 11,804 11,804 Goodwill on acquisition of SISP Participações S.A. (**) 89,608 (13,243) 76,365 76,365 Goodwill on acquisition of equity interest (*) 71,004 (3,911) 67,093 55, ,637 (19,375) 155, ,507 (*) Goodwill on the acquisition of equity interests Accumulated Cost amortization Net Net Goodwill on acquisition of SISP Participações S.A. (i) 28,811 (1,194) 27,617 27,715 Goodwill on acquisition of Solway Participações S.A. (ii) 30,058 (2,643) 27,415 27,623 Goodwill on issue of shares - Wtorre (iii) 5,433-5,433 - Acquisition of RAS (iv) 6,702 (74) 6,628-71,004 (3,911) 67,093 55,338 27

29 (i) Goodwill arising on the acquisition of a 100% interest in SISP, based on the expected future earnings of the SCISP project. On a consolidated basis, the appreciation of assets was reclassified to investment property, as mentioned in note 9. (ii) The goodwill was generated on the acquisition of a 100% interest in Solway (merged by Amuco in 2009) and was based on the appreciation of the SCESP project, in which it holds an indirect equity interest through its subsidiary Amuco. On a consolidated basis, the appreciation of assets was reclassified to investment property, as mentioned in note 9. (iii) The goodwill arose on the subscription of 56,000 new ordinary shares of the subsidiary WTorre and is based on the added value of economic development Iguatemi JK. The Company maintained its 50% interest in that subsidiary. On a consolidated basis, the appreciation of assets was reclassified to investment property, as mentioned in note 9. (iv) Refers to appreciation which was recognized in the business combination arising from the acquisition of the control of RAS Participações Ltda. in 2011, which resulted in the equity interest being changed from 34.86% to 100%. On a consolidated basis, the appreciation of assets was reclassified to investment property, as mentioned in note 9. (**) Goodwill classified as intangible assets on a consolidated basis, according to ICPC 09 - Individual, Separate and Consolidated Financial Statements and Application of the Equity Method (note 11). (b) Investments in subsidiaries (i) Information on subsidiaries Capital Shareholders equity Net profit (loss) Number of shares millions Interest - % Total Held SCRB 68,580 68,580 80,056 68,580 16,526 13,317 6,858 6, Lasul 5,000 5,000 33,194 26,474 8,770 8,057 5,000 5, Rio Pinheiros 4,446 4, (12) (1) IESTA ,742 2, Leasing Mall , , Mídia Mall (*) (*) EDR47 26,932 26,932 31,081 29,644 1,437 1,163 26,932 26, SISP 6,441 6,441 33,695 28,679 5,716 3,932 6,441 6, RAS 10, ,514 9, ,180 10, IESTAPA (46) AGSC , MPPart 287, , ,63 287,903 15,340 13, , , WTORRE 169, , , ,571 (568) (234) 169,302 84, I-Retail (81) (**) (**) - - Anwold ,264 8,856 (1,592) Amuco 18,280 18,280 23,536 19,219 4,317 3,105 6,341 6, CS41 34,951 34,951 55,873 55,911 (38) 7,688 34,951 34, SCIALPHA 1 1 (6,997) (260) (6,737) CS (21) - (22) IPAR SCRP 1-10,317-10, Others 4 1 (1,794) (1,262) (532) (327) (*) Merged into by the Company in January (**) Investment sold on May 31,

30 (ii) Calculation of equity in subsidiary Investment Allowance for losses Equity in investees SCRB 80,056 68, ,526 13,317 Lasul 33,194 26, ,770 8,057 Rio Pinheiros (12) (1) IESTA ,742 2,684 Leasing Mall (*) (8,360) (8,554) - - 1,115 (587) EDR47 31,081 29, ,437 1,163 SISP 33,695 28, ,716 3,932 RAS 9,514 3, IESTAPA (46) AGSC MPPart 286, , ,340 13,699 WTORRE (*) 92,405 60, (284) (117) Anwold 7, (1,592) 319 Amuco 23,536 19, ,317 3,105 I-Retail (81) CS41 55,873 55, (38) 7,688 SCIAlpha (*) - - (6.997) (260) (6,458) 103 CS (21) - (22) - IPAR SCRP 10, ,316 - Other - - (1.794) (1,262) (532) (327) 656, ,530 (8.812) (1,522) 58,066 53,200 (*) Investment income or net unrealized cost. (c) Changes in investments Opening balance 580, ,918 Capital increase in subsidiaries 38,313 69,094 Reduction of capital in subsidiaries - (5,710) Write-off of investments - (293) Equity in investees 58, ,663 Dividends (28,967) (102,546) Other 519 (118) Closing balance 647, ,008 29

31 9. INVESTMENT PROPERTY At cost Remaining useful life (years ) Company Cost 45 (*) 767, ,748 Accumulated depreciation (156,489) (151,997) 611, ,751 Remaining useful life Consolidated (years) Cost 45 (*) 1,741,322 1,551,947 Accumulated depreciation (216,309) (207,312) 1,525,013 1,344,635 Goodwill from asset appreciation (**) Acquisition of 100% of SISP 45 (*) 28,811 28,811 Accumulated depreciation (1,194) (1,096) 27,617 27,715 Acquisition of 100% of Solway 45 (*) 30,058 30,058 Accumulated depreciation (2,643) (2,435) 27,415 27,623 Subscription of shares of Wtorre Iguatemi - 5,433 - Acquisition of 65.14% of RASL 45 (*) 6,702 - Accumulated depreciation (74) - 6,628-1,592,106 1,399,973 (*) The remaining useful life of the malls, estimated by independent experts and is 45 years on average and was applied prospectively to January 1, The useful lives of other items classified as investment property was determined based on historical information and reflect the nature of the assets and their use by the Company. (**) As mentioned in note 8(a), refer to the appreciation of the asset, which is presented as investment on an individual basis, as required by ICPC C09, and, due to its origin, as investment property on a consolidated basis. The amounts are net of amortization. As mentioned in note 12.(f) and (g), the Company obtained financing for the construction of SCIBRA and SCIALPHA, and capitalized the charges under such financing until the projects are launched. Through June 30, 2011, the Company contributed the amount of R$4,284, consolidated (R$12,383 at December 31, 2010). 30

32 Changes in investment property are as follows: Company Consolidated Balance as at December 31, ,751 1,399,973 Addition 23, ,592 Write-offs - (18) Transfers - 3,937 Depreciation (4,492) (9,378) Balance as at June 30, ,030 1,592,106 The Company annually engages independent experts to appraise the fair value of investment property. The fair value of investment property as at 31 December 2010 is as follows: In millions of reais Malls launched Malls announced Total Value of 100% of project 5,609 1,731 7,340 Company s equity interest 2,948 1,233-4,181 Total ABL ( 000 m 2 ) Owned ABL ( 000 m 2 ) The fair value of investment property is annually assessed by independent experts who adopted the methods established by The Royal Institution of Chartered Surveyors - R.I.C.S., of the United Kingdom, and the Appraisal Institute, of the United States, which are used and acknowledged worldwide for appraisals and other analyses. These methods were used together with Standard NBR 14653/04 issued by the Brazilian Association of Technical Standards (ABNT). The fair value of the announced shopping centers that have not yet been launched was assessed by the Company based on the same criteria used by CB Richard Ellis. All calculations are based on an analysis of the physical features of the properties under analysis and information available in the market, which are properly treated for being used in determining the real estate project value. The calculations do not include potential expansions, exchanges of land, and projects not announced (even when included in the guidance). 31

33 The following assumptions were used for the appraisal: Discount rate 9-12%p.a. Effective growth rate in perpetuity 2% - 2.5% 10. PROPERTY, PLANT AND EQUIPMENT Company Annual depreciation Accumulated Net book Net book rate - % Cost depreciation value value Facilities, machinery and equipment 10 1,362 (1,142) Furniture and fixtures 10 2,790 (1,174) 1, IT equipment ,565 (2,604) 2,961 3,231 Other 20 2,325 (2,031) ,042 (6,951) 5,091 4,694 Consolidated Annual depreciation Accumulated Net book Net book rate - % Cost depreciation value value Facilities, machinery and equipment 10 6,901 (1,444) 5,457 5,631 Furniture and fixtures 10 2,856 (1,240) 1, IT equipment ,854 (2,674) 3,180 3,240 Other 20 2,544 (2,246) 298 4,234 18,155 (7,604) 10,551 13,743 Changes in property, plant and equipment are as follows: Company Net book Net book value Additions Transfers Depreciation value Facilities, machinery and equipment (221) 220 Furniture and fixtures (4) 1,616 IT equipment 3, (435) 2,961 Other (151) ,694 1,057 - (660) 5,091 32

34 Consolidated Net book Net book value Additions Write-offs Transfers Depreciation value Facilities, machinery and equipment 5, (234) 5,457 Furniture and fixtures (4) 1,616 IT equipment 3, (2) - (436) 3,180 Other 4, (3,937)(*) ,743 1,421 (2) (3,937) (674) 10,551 (*) Balance transferred to investment property. 11. INTANGIBLE ASSETS Company Accumulated Cost amortization Net Net Project Ícaro (SAP ) (*) 10,130 (3,039) 7,091 8,265 Software under development 11,261-11,261 7,877 Other 824 (148) ,215 (3,187) 19,028 16,801 Consolidated Accumulated Cost amortization Net Net Goodwill on acquisition of Lasul Empresa de Shopping Centers Ltda. 14,025 (2,221) 11,804 11,804 Goodwill on acquisition of SISP Participações SA. 89,608 (13,243) 76,365 76,365 Project Ícaro (SAP) (*) 10,130 (3,039) 7,091 8,265 Software under development 11,261-11,261 7,877 Other 1,794 (157) 1,637 1, ,818 (18,660) 108, ,939 (*) Implementation of the SAP System, whose amortization, started in 2010, will be made on a straight-line basis for five years. 33

35 Changes in intangible assets are as follows: Company Consolidated Opening balance 16, ,939 Additions 3,240 3,233 Amortization (1,013) (1,014) Closing balance 19, , BORROWINGS AND FINANCING Company Consolidated Financial institution Maturity Charges Ref In local currency: Financing not subject to settlement in cash Repayable monthly against part of IGP-DI rent for the use of the property BNDES May 16, 2011 TJLP (*) % p.a. (a) BNDES October 15, 2012 TJLP (*) % p.a. (b) 3,358 4,618 3,358 4,618 Banco Santander August 8, % of the CDI (c) 4,028 4,394 4,028 4,394 Banco Santander August 31, 2016 TR % p.a. (d) 12,300 13,406 12,300 13,406 Banco Santander October 27, 2016 TR % p.a. (e) 10,672 11,604 10,672 11,604 Banco Santander January 26, 2019 TR % p.a. (f) 87,766 89,989 87,766 89,989 Banco Bradesco September 25, 2019 TR % p.a (g) ,766 69,263 BNDES June 17, 2017 TJLP % p.a. (h) ,767 80,052 BNDES June 17, % p.a. (h) - - 3, BNDES June 17, % p.a. (h) 2, , BNDES October 17, 2017 TJLP (*) % p.a. (i) 44,537 20,014 44,537 20,014 Banco Itaú March 10, 2020 TR+10.50% p.a. (j) 45,554-45, , , , ,156 Current 19,965 19,567 22,173 20,840 Noncurrent 192, ,532 41, ,316 (*) TJLP - Long-term interest rate 6.0% p.a. (6.0% p.a. as at December 31, 2010). (a) On May 9, 2006, the Company entered into a credit facility agreement in the amount of R$10,000 with BNDES, through Banco Santander Brasil S.A., subject to interest rate of 4.4% to 5.13% p.a. above TJLP. The agreement is effective for 60 months, has a six-month grace period, and is repayable in 54 installments. The promissory note granted to BNDES is guaranteed by Jereissati Participações S.A. The funds obtained from this agreement were used to expand SCISP. (b) The Company entered into a credit facility agreement of R$10,000 with BNDES, through Banco Alfa de Investimentos S.A. This agreement is subject to interest of 2.85% p.a. above TJLP and % p.m. above TJLP, including the financial commission of 0.55% p.a. The agreement is effective for 60 months, has a 12-month grace period, and is repayable in 48 installments. The promissory note granted to the BNDES was guaranteed by Jereissati Participações S.A. The funds obtained from this agreement were used to expand the project called MPSC (Stage III). (c) On August 8, 2006, the Company entered into a Purchase and Sale Deed, Loan and Attached Conditional Sale with Fundação dos Economiários Federais (FUNCEF) and Banco Santander, as creditor. Under this deed, FUNCEF sold to the Company: (i) an undivided interest of % of Âncora 3; and (ii) an undivided interest of 3.775% of the other properties forming project PBSC. The Company contracted with Banco Santander a financing in the full amount of the acquisitions. In exchange, the Company entered into an agreement for Assignment of Receivables and Other Covenants with Banco Santander on August 8, 2006 to repay the debt arising from the financing, under which the Company assigns to Banco Santander as collateral receivables from the interest in PBSC, corresponding to 4.718% of the net amounts monthly paid by the managing company the Condomínio Civil do Praia de Belas. Interest is being paid monthly since September 2006 and principal is being repaid in 96 monthly installments since September 8,

36 (d) To build project SCIFLA, on August 31, 2006the Company entered into a financing agreement of R$18,000 with Banco Santander and Encopar Engenharia, Construções e Participações Ltda., released in two installments. As collateral, the Company pledged to Banco Santander: (i) the financed properties (Company s interest of 20%) and all additions and improvements made thereto, (ii) the undivided interest of 3.1% of each property described in the agreement which are part of the Praia de Belas project, and (iii) assignment of the Company s receivables arising from the PBSC project. The Company submitted to the creditor an insurance policy related to the coverage of damages to the entire property pledged as collateral, totaling R$118,569 and maturing on September 28, 2009, thus the Company is required to maintain the insurance in effect at said minimum amount until the full repayment of financing. Interest is being paid monthly since November 2006 and principal is being repaid in 96 monthly installments since November 27, (e) On October 27, 2006, the Company entered into a Purchase and Sale Deed, Loan and Attached Conditional Sale with Fundação Sistel de Seguridade Social (SISTEL) and Banco Santander, as creditor. Under this deed, SISTEL sold to the Company: (i) an undivided interest of % of Âncora 3; and (ii) an undivided interest of 10% of the other properties forming project PBSC. The Company contracted with Banco Santander a financing in the full amount of the acquisition. In exchange, the Company entered into an agreement for the Assignment of Receivables and Other Covenants with Banco Santander on October 27, 2006 to repay the debt arising from the financing, under which the Company assigns to Banco Santander, as collateral, receivables from the interest in PBSC, corresponding to 4.718% of the net amounts monthly paid to the Company by the managing company of Condomínio Civil do Praia de Belas. Interest is being paid monthly since November 2006 and principal is being repaid in 96 monthly installments since November 27, (f) On December 30, 2008, the Company entered into a financing agreement with Banco Santander, amended on June 25, 2009, totaling R$97,519, whose funds are being used to build project SCIBRA. Until June 30, 2011, R$97,470 was released. As collateral, the Company pledged building MPT-I, including office suites 41, 51, 61, 71, 81, 91, 101, 111, 121, 131, 141 and 151, and 45% of the individual registrations of the properties that form the MPSC project. This financing will be amortized in 115 monthly installments starting June 25, 2010 under the Constant Amortization System (SAC). (g) To build Shopping Iguatemi Alphaville, SCIAPLHA entered into a financing agreement with Banco Bradesco S.A. on September 25, 2009, totaling R$90,000. Until June 30, 2011, R$85,515 was released. As collateral, the Company pledged the property Condomínio Iguatemi Alphaville, which is registered under no with the Registry of Deeds of Barueri, referring to the title to the urban property in Lot 3 of the Tamboré Farm, located in Barueri, State of São Paulo, comprised of lots and 12.4, block 2, street Alphaville Centro Industrial e Empresarial. This financing will be amortized in 90 monthly installments starting April 25, 2012 under the Constant Amortization System (SAC). (h) On July 6, 2010, Iguatemi contracted with BNDES a financing in the amount of R$138,760 for the construction of Iguatemi Alphaville shopping mall. This transaction bears interest at the TJLP % p.a., totaling 9.45% p.a., on construction works and facilities, and 4.5% p.a. on domestic equipment. The agreement provides for a 24-month grace period starting on the execution date, amortized over 60 months. Through June 30, 2011, R$138,260 had been released. Shopping Iguatemi Alphaville was launched in April (i) On October 5, 2010, Iguatemi contracted with BNDES a financing in the amount of R$89,798 for the construction of Iguatemi JK. This transaction bears interest at the TJLP % p.a., totaling 9.82% p.a., on construction works and facilities, and 5.5% p.a. on domestic equipment and TJLP on social investments. The agreement provides for a 24-month grace period starting on the execution date, amortized over 60 months. By June 30, 2011, R$46,086 had been released. (j) To build the JK Mall, the Company entered into a loan with Banco Itau SA on March 31, 2010, totaling R$60,000. Until June 30, 2011, R$45,128 had been released. As collateral, the Company presented the ideal portion of the 60.66% of the autonomous units described in the Bank Credit Credit Opening for Building Enterprise real estate mortgage and other Agreements, still called CondomínioShopping Iguatemi Rio logged in enrollment to to of the 10th Oficio Property Registry of Rio de Janeiro. The amortization will occur within 76 months from December 10, 2013, by Constant Amortization System (SAC). Long-term debts with third parties will be repaid as follows: Company Consolidated (Only 6 months as at June 30, 2011) 9,672 18,466 29,944 32, to ,762 58, , , to ,489 31, ,377 74, to ,464 19,571 57,681 36, , , , ,316 35

37 Changes in borrowings and financing Company Consolidated Balances as at December 31, , , , ,416 Borrowings 73,673 36, , ,794 Payments (19,126) (30,296) (26,760) (34,005) Accrued interest 10,706 15,435 19,850 20,951 Balances as at June 30, , , , ,156 Covenants The financing transactions referred to in letters (e), (f), (g) and (i) are subject to covenants that establish maximum indebtedness and leverage ratios and minimum ratios of coverage for the installments falling due and require maintenance of minimum balances receivable in a checking account. As at June 30, 2011, the Company was compliant with these covenants 13. DEBENTURES Company and Consolidated First issue 201, ,235 Second issue 340, , ,235 Current 81,400 1,747 Noncurrent 460, ,488 First issue On June 1, 2007 the Company made the first issue in single series, for the public offering ( Offering ), of 20,000 registered, nonconvertible debentures, maturing on June 1, 2014 and with par value of R$10, totaling R$200,000 on June 1, The debenture issue was based on the resolutions of the Board of Directors Meetings held on May 16 and June 15, The Company used the proceeds of the offering to finance the (a) expansion of the operations of the shopping centers in which the Company holds interests; (b) acquisition of more interest; (c) acquisition of interest in existing third parties shopping centers and smaller chains; (d) design, acquisition and management of new shopping centers; and (e) refinancing of falling-due financial liabilities. 36

38 The debentures were provided in the public offering under the firm guarantee regime, pursuant to the Public Offering Agreement, and through the intermediation of the financial institutions that participate in the securities distribution system, There were no early reservations nor minimum or maximum allotments, and the Offering was based on the results of the bookbuilding procedure. The debentures were recorded for trading in the secondary market through the National Debenture System (SND) and BOVESPA FIX. The debentures are effective for seven years from the issue date, thus maturing on June 1, 2014, and the grace period for repayment of principal - which is repayable in 3 annual, equal and consecutive installments is four years. The nominal balance of the debentures is subject to interest of 104.5% of the interbank deposit rate (CDI), payable semiannually from the issue date, as approved by the Debenturesholders Meeting held on April 22, From June 1, 2008, first debenture maturity date, interest of 110% of the CDI will be charged. The Debentureholders Meeting also approved the early redemption, at the Company s sole discretion, of any debentures, at any time, after 180 days from June 1, 2008, provided that at least 30 days prior notice is given. First interest payment was on December 1, 2007 and final payment is due on the maturity date. The balance of accrued interest in the short term as at June 30, 2010 is R$1,791 (R$1,747 as of December 31, 2010). The debentures issuance costs are amortized to income under the effective cost method and as of June 30, 2011 are recognized in line account Debentures, as a decrease in debt, as prescribed by CPC 08 - Transaction Costs and Premiums on Issuance of Securities. Costs to be amortized as at June 30, 2011 total R$614 (long-term - R$409). The balances classified in the short-term are as follows: Company and Consolidated Debentures payable 66,667 - Accrued interest - CP 1,996 1,952 Unrecognized issuance cost (205) (205) Balance as at June 30, ,458 1,747 The principal will be repaid as follows: Company and Consolidated , ,667 66, ,666 66, , ,000 Unrecognized issuance costs (409) (512) 132, ,488 37

39 Second issue On March 1, 2007 the Company held the second issue through public offer, in a single series of 33,000 registered, nonconvertible debentures, maturing on March 1, 2016 and with par value of R$10, totaling R$330,000. The issue of debentures was made based on the deliberations of the Board of Directors Meeting held on February 1, The proceeds received by the Company with the offering will be used to finance acquisition of interests in shopping centers and / or acquisition of property. The debentures were provided in the public offering under the guarantee regime, pursuant to the Public Offering Agreement, and through the intermediation of the financial institutions comprising the securities distribution system. There were no early reserves nor minimum or maximum lots, and the Offering was based on the bookbuilding procedure result. The debentures were registered for trading in the secondary market through the National Debenture System (SND) and BOVESPA FIX. The maturity of the bonds is five years from the date of issue, with a grace period of four years for the repayment of principal, which will occur in two equal annual installments and subsequent on 1 March 2015 and March 1, The nominal balance of the debentures is subject to interest of 100% of the interbank deposit rate (CDI) plus surtaxes equivalent to 1.35% p.a, payable semiannually from the issue date. First interest payment is due on September 1, 2011 and final payment is due on the maturity date. The balance of accrued interest in the short-term, net of transaction costs, as at June 30, 2011 is R$12,942. First interest payment will be September 1, 2011 and final payment is due on the maturity date. The balance of accrued interest in the short term as at June 30, 2011 is R$12,942. The debentures issuance costs are amortized to income under the effective cost method and as at June 30, 2011 are recognized in line account Debentures, as a decrease in debt, as prescribed by CPC 08 - Transaction Costs and Premiums on Issuance of Securities. Costs to be amortized as at June 30, 2011 total R$614 (long-term - R$409). The balances classified in the short-term are as follows: Company and Consolidated Debentures payable - Accrued interest - CP 13,706 Unrecognized issuance cost (764) Balance as at June 30, ,942 38

40 The principal will be repaid as follows: Company and Consolidated , , ,000 Unrecognized issuance costs (2,580) 327,420 Calculation of internal rate of return Date Nominal value Issuance expenses Net Expected interest rate (*) TIR Second issue 03/15/ ,285 (3,338) 327, % p.a % p.a % p.a Until % p.a 13.73% p.a (*) Selic projected average (average of March-December 2011). 14. TAXES PAYABLE Company Consolidated Income tax 3,633-8,052 5,276 Social contribution 1,089 1,234 2,777 3,231 Deferred income tax and social contribution 1,364-2, PIS, COFINS and FINSOCIAL (taxes on revenue) 1,695 2,131 2,447 2,970 Taxes in installments (*) 2,260 2,334 5,189 2,474 Other taxes and contributions ,394 1,019 10,914 5,946 23,502 15,634 Current 7,734 4,056 18,981 12,949 Noncurrent 3,180 1,890 4,521 2,685 (*) In May 2008, the Company filed a request for the payment in installments of the Business Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) for the periods 2001 and 2003 totaling R$1,903, arising from a tax deficiency notice. The installments plan consists of 60 installments and the amount of each monthly installment is added of interest equivalent to the Central Bank overnight rate (Selic) accrued in the month and to 1% relatively to the month in which the payment is made. 39

41 Taxes in installments are broken down as follows: Company Consolidated Income tax , Social contribution , PIS 1,320 1,067 1,396 1,076 COFINS ISS Other ,260 2,334 5,189 2,474 Current , Noncurrent 1,816 1,890 1,872 2,014 Program for Payment in Installments of Federal Taxes - Law 11941/09 On November 30, 2009, the Company and its subsidiaries joined the tax installment program created by the Federal Revenue Service and National Treasury Attorney General called REFIS da Crise, comprising taxes totaling R$10,095. In the period ended June 30, 2011, the Company had its debts consolidated by the Federal Revenue Service and started paying the outstanding amounts. The Company opted for the payment of these debts in 30 months, and will not use tax credits arising from tax loss carryforwards for the settlement of interest and fine. No guarantees have been provided nor have any assets been pledged with regard to the amounts under the installment payment. 15. RESERVE FOR TAX, LABOR AND CIVIL CONTINGENCIES The Company and its subsidiaries are parties to tax, labor and civil administrative proceedings and lawsuits. Accordingly, reserves have been recognized in amounts considered sufficient to cover any probable future disbursements. 40

42 a) Breakdown of the account balance Company Consolidated Noncurrent: Caixa Econômica Federal - CEF (i) 27,488 28,978 33,559 35,379 PIS and COFINS (iii) 14,470 14,231 18,253 17,932 Corella (ii) 9,963 10,228 9,963 10,228 Disallowance of expenses and taxation on foreign earnings (iv) 5,654 5,648 5,654 5,648 Labor Other (v) 2,683 2,759 3,427 8,017 60,302 61,901 71,053 77,426 Asset recognized arising from the possibility of reacquiring the interest in Corella (ii) (9,963) (10,228) (9,963) (10,228) Escrow deposits: Tax and labor (701) (701) (701) (701) (10,664) (10,929) (10,664) (10,929) 49,638 50,972 60,389 66,497 b) Summary of the main proceedings Civil (i) Condomínio Shopping Center Iguatemi filed a lawsuit against Caixa Econômica Federal - CEF requesting an injunction and claiming a court decision to withdraw from the outstanding balance of the loan granted the inflation adjustment made on April 16, 1990 (84.32% referring to Consumer Price Index (IPC) in March 1990), recalculate the outstanding balance of the debt using the National Treasury Bond Index (BTNF) prevailing on the anniversary of the loan agreement (7.10%), and determine the falling due installments. The lawsuit awaits a decision from the Federal Supreme Court. (ii) The Company is a defendant in an ordinary action that claims the enforcement of a clause whereby the paintiff s ownership interest in SCIR, equivalent to 3.58% of the project, could be repurchased. The Company s legal counsel assessed loss as possible. The lawsuit, which may result in the Company s ownership interest in the project being increased, involves R$9,963 as at June 30, 2011 (R$10,228 as at December 31, 2011). The lawsuit awaits judgment by the higher court. 41

43 Tax (iii) The Company is a defendant in tax assessments related to nonpayment of PIS and COFINS on rental income in periods prior to The Company s legal counsel assessed loss as possible. As at June 30, 2010, in the Company, the amount involved is R$11,270 (12/31/10 - R$11,084) for COFINS and R$3,200 (12/31/10 - R$3,147) for PIS and, based on the opinion of its legal counsel, the Company recorded a provision to cover possible losses. In consolidated, amounts total R$14,840 (12/31/10 - R$14,577) for COFINS and R$3,413 (12/31/019- R$3,355) for PIS. The COFINS administrative proceeding was determined by the appellate administrative court, and the Federal Revenue Service s appeal was not granted. The PIS and COFINS lawsuits (foreclosures) are collateralized by bank guarantees and are at procedural fact-finding phase at the lower court. (iv) On November 21, 2006, the Company was assessed by the Federal Revenue Service in São Paulo for events occurred in the period These tax assessments total R$100,234 and refer to income tax, social contribution, PIS, and COFINS. The Company filed defense arguments at the administrative level and obtained a partial favorable decision from the higher court and, for the amounts assessed as probable loss, a provision of R$5,654 (R$5,648 as at December 31, 2010) was recognized). Amounts assessed as possible loss total R$7,031. The lawsuit awaits the publication of the higher court s decision. (v) Refers to several provisions recognized to cover potential losses on taxes and contributions such as PIS, COFINS, income tax and social contribution, which total R$2,683, Company, as at June 30, 2011 (R$2,759 as at December 31, 2010) and R$3,427 (R$8,017as at December 31, 2010), consolidated. Labor The Company and its subsidiaries are defendants in several labor lawsuits filed by former employees and outsourced companies employees in which the Company is jointly liable. The total amount involved in the lawsuits is approximately R$2,601, assessed as possible loss by the Company s legal counsel. As at June 30, 2011, a reserve of R$44 (R$7 as at December 31, 2010), Company, and R$197, consolidated (R$222 as at December 31, 2010) was recognized for the lawsuits assessed as probable loss. Tax, civil and indemnity risks assessed as possible loss The Company and its subsidiaries are parties to other tax, civil, and pain and suferring lawsuits arising from the normal course of its business and whose likelihood of loss is possible. As at June 30, 2011, estimated losses amount to R$9,212, R$2,603 and R$751, respectively. 42

44 c) Changes in the reserve for tax, labor and civil contingencies Changes in the reserve for tax, labor and civil contingencies are as follows: Company Consolidated Opening balance 50,972 54,605 66,497 69,461 Reversal of provisions, net, (1,592) (6,058) (6,517) (5,817) Financial charges 258 2, ,853 Closing balance 49,638 50,972 60,389 66, OTHER PAYABLES Company Consolidated Income from debentures - Previ-Banerj (a) 10,524 10,358 10,524 10,358 Barter of the land in Alphaville (b) 23,434 23,434 23,434 23,434 Payables land in Votorantim (c) ,562 27,000 Barter of the land in Ribeirão Preto (d) ,000 - Other payables 9,330 9,185 12,362 12,569 43,288 42,977 74,882 73,361 Current 31,447 31,977 48,003 52,742 Noncurrent 11,841 11,000 26,879 20,619 (a) Refers to the provision for guarantee of payment of interest on the debenture transfer transaction, described in note 7 (b). (b) Refers to the plot of land land for the construction of SCIAlpha. (c) Refers to the purchase of a 50.2 thousand square-meter plot in the city of Votorantim, on the border with Sorocaba. On this plot, the Company will develop a new shopping center project whose works will be carried out in two stages. Additionally, four commercial towers will be built on such land until (d) Refers to a plot of land for the construction of the project in Ribeirão Preto, as mentioned in note DEFERRED INCOME The proceeds from the assignment of rights (assignment of shopping centers technical structure) are accounted for as deferred revenue, net of taxes accrued considering the taxation system to which the holder of the receivables is subject, and will be recognized in the statement of income on a straight-line basis over the term of the lease agreements of the related stores, from the opening date of the related projects. 43

45 18. FINANCIAL INSTRUMENTS General considerations and policies The Company and its subsidiaries conduct transactions involving financial instruments, where applicable, all of which are recorded in balance sheet accounts, which are intended to meet their operating and financial needs. The Company contracts short-term investments, borrowings and financing, as well as debentures. As at June 30, 2011 and December 31, 2010, the Company and its subsidiaries did not have any outstanding transaction involving derivatives. These financial instruments are managed based on policies, definition of strategies, and establishment of control systems, which are monitored by the Company s management. Treasury procedures set by the policy in effect include monthly projection routines and assessment of the consolidated foreign exchange exposure of the Company and its subsidiaries, based on which Management makes its decisions Financial instruments by category The Company's financial instruments were classified into the following categories: Fair value Loans and through receivables profit or loss Held to maturity Total Fair value Loans and through receivables profit or loss Held to maturity Assets Available for trading 927, , , ,988 Customers - 95,317-95,17-87,611-87,611 Other accounts receivable - 11,247-11,247-3,489-3,489 Loans receivable - 1,562-1,562-1,711-1,711 Credits with other related parties - 26,420-26,420-15,603-15,603 Receivables from expropriations - 1,402-1,402-1,402-1,402 Total 927, ,948-1,063, , , ,804 Total Liabilities Payroll and related taxes ,124 10, ,968 12,968 Trade accounts payable ,390 16, ,741 8,741 Borrowings and financing , , , ,156 Debentures and charges , , , ,235 Minimum mandatory dividends payable ,992 35,992 Other accounts payable ,882 74, ,361 73,361 Due to related parties ,859 40, ,095 40,095 Total - - 1,123,551 1,123, ,48 669, Risk factors The Company s and its subsidiaries main source of revenues are rentals received from shopping malls' storeowners. According to their nature, financial instruments may involve known or unknown risks and the Company's and its subsidiaries' judgment is important for the risk assessment. Thus, risks may exist with or without guarantees depending on circumstantial or legal aspects. The main market risk factors that may affect the Company's and its subsidiaries' business include the following: 44

46 a) Credit risk The Company and its subsidiaries have a large number of customers and constantly monitor accounts receivable through internal controls, thus limiting the default risk. When assessing potential customers credit quality, the Company considers the following assumptions: the amount of the guarantee given should cover the cost of occupancy for a minimum of 12 months (rental plus common charges and promotion fund multiplied by 12), acceptable forms of guarantee (real estate, letter of guarantee, insurance, etc.), good standing of individuals and legal entities involved in the lease (partners; guarantors; debtors), the use of the credit rating agency SERASA as a reference for searches. b) Liquidity risk The cash flow forecast is made at the Company's operating entities by finance professionals that continuously monitor liquidity to make sure that the Company has enough cash to meet its operating needs. This forecast takes into consideration the Company s debt financing plans, compliance with internal balance sheet ratio goals and external regulatory or legal requirements, if applicable. c) Capital management The objectives of the Company in managing its capital are to ensure that the Company is continuously capable of offering return to its shareholders and benefits to other related stakeholders, and maintain an ideal capital structure to reduce this cost. The net financial position corresponds to the total cash and cash equivalents less the total amount of borrowings and financing and short- and long-term debentures Cash and cash equivalents 942, ,246 Borrowings, financing and debentures (981,296) (498,391) Financial position, net (38,388) 129,855 Shareholders equity 1,544,956 1,488,258 d) Price variation risk The rental agreements, in general, are adjusted based on the annual IGP-M variation, as set forth in such agreements. The rental levels may vary according to adverse economic conditions and, consequently, the revenue level may be affected. Management monitors these risks in order to minimize impacts on its business. 45

47 e) Interest rate risk The Company s interest rate risk results substantially from debentures and short- and long-term borrowings and financing, as described in the previous notes. These financial instruments are subject to interest rates linked to indices such as TJLP and CDI, as well as balances of taxes payable subject to interest based on the SELIC and TJLP rates. The risk inherent in these liabilities arises from the possibility of fluctuations in these rates. The Company and its subsidiaries have no derivative contracts to hedge against this risk, as it is assumed that the risk is mitigated by the existence of assets indexed to the CDI. f) Sensitivity analysis - Loans, financing and CCIs Considering the financial instrument previously described, the Company has developed a sensitivity analysis, according to CVM Instruction 475/08, which requires the presentation of two additional scenarios based on 25% and 50% fluctuations in the risk variable taken into consideration. These scenarios may generate impact on the Company s income and future cash flows, as described below: Base scenario: maintenance of interest at the same levels as at June 30, Adverse scenario: a 25% fluctuation of the main risk factor of the financial instrument compared to the level as at June 30, Remote scenario: a 50% fluctuation of the main risk factor of the financial instrument compared to the level as at June 30, Financial Scenario Risk factor instrument Risk Base Adverse Remote Assumptions 12.63% 15.79% 18.95% Santander g) Fair values Interest rate swap Increase in CDI rate (165.13) (536.02) As at June 30, 2011 and December 31, 2010, the fair value of cash and cash equivalents approximate their carrying amounts disclosed in the interim financial information as they are pegged to the interbank deposit rate (CDI) fluctuation. Borrowings and financing, as well as debentures, are adjusted for inflation based on interest rates contracted according to the usual market conditions and, therefore, balances payable at the balance sheet date substantially approximate their fair values, including those classified as noncurrent. It is estimated that the amounts of rentals and other trade accounts receivable and trade accounts payable recognized at their carrying amounts approximate their fair value in view of the short term of the transactions conducted. 46

48 The Company and its subsidiaries apply hierarchy rules to assess the fair values of their financial instruments according to the accounting practices of CPC 40 for financial instruments measured in the balance sheet, which requires disclosure of fair value measurements based on the following hierarchy: (i) (ii) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). In addition to the quoted prices included in Level 1, inputs used by the market for assets or liabilities, whether directly (e.g. prices) or indirectly (e.g., derived from prices) (Level 2). (iii) Inputs for assets or liabilities that are not based on the data adopted by the market (i.e., unobservable inputs) (Level 3). 19. INCOME TAX AND SOCIAL CONTRIBUTION Income tax and social contribution are calculated based on the rates prevailing as follows: a) Breakdown of income tax and social contribution credit (expenses) in the six-month period: Company Consolidated Current income tax and social contribution (2,893) (4,531) (14,429) (14,687) Income tax and social contribution prior years (914) - (943) - Deferred income tax and social contribution (596) (1,215) (1,214) (1,785) (4,403) (5,746) (16,586) (16,472) b) Reconciliation of income tax and social contribution expense in the six-month period: Company Consolidated Income (loss) before income tax and social contribution 78,870 70,662 91,074 81,411 statutory rate 34% 34% 34% 34% Income tax and social contribution expense at statutory tax rate (26,816) (24,025) (30,965) (27,680) Tax effects on: Equity in investees 19,742 18, Interest on capital Difference in tax base for companies taxed under the deemed income regime ,523 8,289 Income tax and social contribution - prior periods Permanent deductions and others 1, ,913 2,919 Income tax and social contribution expense at statutory rate (4,403) (5,746) (16,586) (16,472) Effective rate - % -5.6% -8.1% -18.2% -20.2% 47

49 20. SHAREHOLDER S EQUITY - COMPANY a) Capital As at June 31, 2011, the Company s paid capital is R$836,363 (12/31/ R$830,363) and is represented by 79,255,489 common shares without par value (79,255,489 common shares as at December 31, 2010). The Company s capital is R$823,859 (03/31/ R$823,859), due to the recording of expenses on the issuance of shares in the amount of R$12,505 (12/31/ R$12,505) as a reduction of shareholders equity. On September 22, 2009 and October 5, 2009, the Company requested to Associação Nacional dos Bancos de Investimento - ANBID and the Brazilian Securities and Exchange Commission (CVM) the registration of the primary public offering of 13,600,000 registered common shares without par value, issued by the Company. The share price was set at R$28,50 on October 22, 2009, totaling R$387,600. On November 19, 2009, the Board of Directors' meeting approved a capital increase of R$22,800 through the issuance of 800,000 registered common shares without par value, for public subscription, at the issue price of R$28.50 per share, paid up in cash, according to the procedures established by the applicable rules and the public offering prospectus. On November 11, 2010, the Board of Directors meeting approved an increase in the Company s capital, without the issuance of common shares, through partial capitalization of the retained earnings reserve in the amount of R$5,734, in view of the resolution adopted at the Board of Directors' meeting held on March 18, Authorized capital The Company is authorized to increase its capital up to the limit of 100,000,000 common shares, regardless of any amendment to the bylaws, upon resolution of the Board of Directors, which will establish the issue conditions, the price and the payment conditions. The Board of Directors may: (i) Reduce or terminate the period for exercise of the shareholders preemptive right upon the issue of shares, debentures convertible into shares, and subscription warrants, the placement of which is made: (a) by sale in a Stock Exchange or by public subscription; and (b) in exchange for shares, in a public takeover offer, according to the law; (ii) Grant, according to the stock option plan approved in a Shareholders' Meeting, stock options to its officers, employees and service providers, as well as the officers and employees of other companies that are directly or indirectly controlled by the Company, without granting any preemptive rights to the shareholders. b) Capital reserves Share premium The Company allocated R$393,111 and R$58,971 of the IPO proceeds to the capital reserve, pursuant to the minutes of the Board of Directors meetings held on February 9 and March 1, 2007, respectively, totaling R$452,

50 Other capital reserves The Company recognized a reserve for the share-based compensation plan totaling R$5,413 (R$4,876 as at December 31, 2010). Treasury shares The Board of Directors' meeting held on August 11, 2010 approved the buyback of 1,545,480 own shares through the Company. The maximum period for the acquisition of said shares is 365 days from said date. For purposes of consolidation of the interim financial statements, they are recorded under the caption treasury shares in shareholders equity. In the year ended December 31, 2010, 101,000 shares were acquired for the minimum price of R$38.76 and the maximum price of R$ The average price weighted by the amount acquired in the period was R$ In the six months ended June 30, 2011, the Company acquired 32,000 shares at the average price of R$36,623. From the shares acquired, 27,000 shares were assigned to shareholders who opted for the share-based compensation plan. As at June 30, 2010, the value of the Company s treasury shares is R$4,025, divided into 106,000 common shares. The market price of these treasury shares as at June 30, 2011 is R$4,042.40, R$38,13 per share ( R$41.50 per share). c) Earnings reserves Legal reserve The legal reserve is recognized by allocating 5% of net income for the year. Investment reserve - expropriation of properties Refers to the gain on the expropriation of a Company land, which was used in subsequent years to purchase the land where projects MPSC and SCIR were built. Retained earnings reserve The retained earnings reserve, which corresponds to the remaining earnings after the allocation to the legal reserve and the proposed dividends, is designed mainly to fund the budgeted investment plans for expansion, renewal and maintenance of shopping malls. 49

51 d) Dividends and interest on capital Dividend policy The mandatory dividend is equivalent to a certain percentage of the Company's net income, adjusted pursuant to the Corporate Law. Under Company's by-laws currently effective, at least 25% of net income accrued in the previous year will be distributed as a mandatory dividend. For Corporate Law purposes, net income is defined as the income for any given year which remains after the deduction of the amounts related to income tax and social contribution, net of any prior year accumulated losses, and any amounts used to pay officers and employees' profit sharing. Additionally, the Company committed to pay dividends of at least 50% of net income for the year from 2008 to Ratification of proposed interest on capital and dividends The Shareholders' Meeting held on April 27, 2011 approved by majority of votes the allocation of net income for the year, including the payment of dividends as proposed by management for the year ended December 31, 2010, totaling R$24,807, and interest on capital totaling R$32,970 (R$28,056 - less Withholding Income Tax (IRRF)). Dividends and interest on capital totaling R$57,777 were paid on May 18, EARNINGS PER SHARE Company and Consolidated Basic earnings per share from operations Diluted earnings per share from operations a) Basic earnings per share Net income and the weighted average number of common shares used to calculate basic earnings per share are as follows: Company Consolidated Net income from the year attributable to the Company s owners and used in the calculation of basic earnings per share 74,467 74,467 74,488 74,488 Weighted average number of common shares for basic earnings per share calculation purposes 79,147,156 79,255,489 79,147,156 79,255,489 50

52 b) Diluted Net income used to calculate diluted earnings per share is as follows: Company Consolidated Net income used to calculate basic and Diluted earnings per share 74,467 74,467 74,488 74,488 The weighted average number of common shares used to calculate diluted earnings per share is reconciled with the weighted average number of common shares used to calculate basic earnings per share, as follows: Weighted average number of common shares used to calculate basic earnings per share 79,147,156 79,255,489 79,147,156 79,255,489 Employee stock options 1,057, ,000 1,057, ,000 Weighted average number of common shares for diluted earnings per share Company Consolidated calculation purposes 80,204,156 80,157,489 80,204,156 80,157, INSURANCE The Company has a risk management program designed to limit risks, seeking in the market coverage that is compatible with its size and operations (not reviewed by independent auditors). The insurance coverage was obtained for the amounts described below, considering the type of the Company s operations and advice from insurance brokers. As at June 30, 2011, the Company and its projects have the following insurance policies obtained from third parties: a) Named perils insurance The Company has named perils insurance which covers the usual risks that may have an impact on its operations. The policy obtained from Allianz Seguros S.A. (60%) and Itaú Seguros S.A. (40%), prescribes a maximum compensation limit of: (i) R$205,000, related to material damages; and (ii) R$139,488, related to loss of profits. The period of coverage extends through September 28,

53 Locations Property Damage Loss of Profits Total Shopping Center Praia de Belas 146,607 41, ,628 Shopping Center Iguatemi São Paulo 165, , ,165 Shopping Center Iguatemi São Carlos 42,868 7,814 50,682 Shopping Center Iguatemi Rio de Janeiro 118,853 25, ,301 Shopping Center Iguatemi Porto Alegre 138,563 77, ,426 Shopping Center Iguatemi Campinas 194,753 76, ,194 Power Center Campinas 36,313 2,878 39,191 Iguatemi Empresa de Shopping Centers S.A. 84,814-84,814 Shopping Center Iguatemi Florianópolis 97,132 27, ,474 Market Place Shopping Center 126,451 37, ,129 Market Place Tower I 60,000 13,864 73,864 Market Place Tower II 60,000 11,694 71,694 Shopping Center Galleria 63,000 15,636 78,636 Shopping Center Iguatemi Brasília 194,700 40, ,858 Shopping Center Iguatemi Alphaville 211,000 35, ,133 b) General civil liability The Company has a general civil liability insurance which covers the usual risks applicable to its operations. The insurance policy obtained from Allianz Seguros S.A. refers to the amounts for which the Company may become liable in an unappealable final court decision or in a settlement reached by the insurer with regard to the compensation for bodily injury and/or property damage caused to third parties. The period of the general civil liability insurance coverage extends through September 28, The insured amount will have a maximum compensation of R$8 million and may be divided into: (i) shopping centers; (ii) employees' personal effects (sublimit of R$40); (iii) employer's civil liability; (iv) contingent risks of vehicles; (v) damages to store contents; (vi) medical malpractice (sublimit of R$800); (vii) civil liability of garage attendants for: fire/theft of vehicles for establishments without a valet service system, and fire/theft/collision for establishments with a valet service system (sublimit of R$250); and (viii) pain and suffering for all the coverage. 52

54 23. NET REVENUE FROM RENTALS AND SERVICES The Company holds interests in several shopping centers, whose revenue from rentals, parking lots and services was as follows: Company Consolidated Shopping Center Iguatemi São Paulo 27,680 22,930 35,592 29,557 Shopping Center Iguatemi Campinas 22,514 18,901 22,514 18,901 Market Place Shopping Center ,410 16,260 Market Place Tower I - - 6,434 6,052 Market Place Tower II - - 5,358 5,014 Shopping Center Iguatemi São Carlos 1,448 1,183 1,448 1,183 Shopping Center Iguatemi Rio 3,089 2,714 5,969 5,370 Shopping Center Iguatemi Brasilia (*) 11,192 4,097 11,192 4,097 Praia de Belas Shopping Center 6,533 5,509 6,533 5,509 Shopping Center Iguatemi Caxias Shopping Center Iguatemi Porto Alegre ,557 11,151 Shopping Center Iguatemi Florianópolis - - 4,060 3,098 Shopping Center Galleria - - 3,792 2,740 Esplanada Shopping Center - - 5,438 4,118 Shopping Center Iguatemi Alphaville - - 4,697 - Total revenue from rentals and parking lots 73,232 55, , ,701 Revenue from other services 5,353 8,494 22,238 23,707 Gross revenue from rentals and services 78,585 64, , ,408 Taxes payable (7,540) (6,091) (13,221) (11,106) Other deductions (1,833) (1,077) (4,253) (3,285) (9,373) (7,168) (17,474) (14,391) Net revenue from rentals and services 69,212 57, , , COST OF SERVICES AND EXPENSES BY NATURE The Company elected to present the consolidated statement of operations by nature. As required by IFRSs, below are the costs of services and administrative expenses detailed by nature: a) Company Cost of services Administrative expenses Total Total Depreciation and amortization 4,650 1,895 6,545 6,276 Personnel 7,066 10,764 17,830 15,605 Outside services 2,934 8,140 11,074 10,810 Promotion fund 1,755-1,755 1,634 Parking 5,767-5,767 3,378 Others 5,673 5,347 11,020 12,011 27,845 26,146 53,991 49,714 53

55 b) Consolidated Cost of services Administrative expenses Total Total Depreciation and amortization 8,168 2,898 11,066 9,951 Personnel 9,407 11,987 21,394 17,413 Outside services 2,552 9,934 12,486 11,456 Promotion fund 2,767-2,767 2,546 Parking 10,575-10,575 6,944 Others 4,954 7,338 12,292 11,415 38,423 32,157 70,580 59, FINANCIAL INCOME (EXPENSES) Financial income (expenses) are broken down as follows: Company Consolidated Financial income: Interest receivable (194) 1, ,823 Inflation and exchange gains 981 1, ,703 Income from short-term investments 41,229 24,333 43,619 25,770 Other financial income ,420 26,962 44,553 29,500 Financial expenses: Interest payable (8,240) (5,947) (11,681) (6,236) Inflation and exchange loss (455) (2,031) (1,165) (2,243) Interest in contingencies (258) (1,933) (409) (2,013) Debentures interest (24,752) (9,433) (25,083) (9,563) Financial taxes (305) (745) (391) (793) Other financial expenses (2,301) (1,373) (2,735) (2,124) (36,311) (21,462) (41,464) (22,972) 6,109 5,500 3,089 6, SEGMENT REPORTING The Company has a single business segment (real estate lease), which is reported consistently with the internal reports provided to the Chief Operating Decision-maker - CODM. 54

56 27. EMPLOYEE BENEFIT a) Pension plan The Company sponsors a defined contribution pension plan at Unibanco-AIG - Previdência Prever. This plan is optional for employees and the Company contributes 100% of the monthly amount. The Company does not have any obligation or right related to any surplus or deficit arising from the plan. In the period ended June 30, 2011, the Company s contributions totaled R$695 (R$118 as at June 30, 2010). b) Iguatemi bonus plan The Company has a bonus plan linked to the attainment of budget and operational objectives, granted to eligible employees. The amount paid to eligible employees in 2011 totaled approximately R$4,124. Payments are made annually, part with deposits in a pension fund account. c) Share-based plan On March 22, 2007, a stock option plan ( Plan ) was approved for preselected employees. The Plan is managed by the Board of Directors, which meets periodically to review the terms, the eligible employees, and the price for which the shares may be acquired. The stock options under the Stock Option Plan ( 2007 Plan ) may be exercised in five equal annual lots, each equivalent to 20% of the total options granted, from the date of execution of the stock option agreements and for a period of 7 years after said date. The exercise price of the stock options under the 2007 Plan as of the grant date is R$27.00 per share, which corresponds to the share issue price upon the initial public offering of our shares on BM&FBOVESPA, to which a 10% discount was applied, pursuant to the 2007 Plan. The 2008 plan was established on March 18, The stock options under the Stock Option Plan ( 2008 Plan ) may be exercised in five equal annual lots, each equivalent to 20% of the total options granted, one year after the date of execution of the stock option agreements and for a period of 7 years after said date. The exercise price of the stock options under the 2008 Plan is R$27,56 per share, corresponding to the average price of the Company s shares in the last 30 trading sessions on BM&FBOVESPA prior to the 2008 Plan approval date. The rights to vested stock options can be exercised within 90 days in case of employment termination. On August 11, 2010, the Board of Directors approved the buyback of up to 1,545,480 outstanding shares in the Company that will be held in treasury to cover the Plan. The buyback period is 365 days from said date. 55

57 In compliance with CPC 10 - Share-based payment and in connection with CPC 13 - Firsttime adoption of Law 11638/07 and Provisional Act 449/08 (later converted into Law 11941/09), the Company recognized in its financial statements as at June 30, 2011 the amounts related to equity instruments granted to employees of R$464 (R$118 as at June 30, 2010), taking into consideration their maturities and using the Black & Scholes pricing method. The fair values and assumptions adopted are as follows: Number of stock options at year end 1,057, ,000 Fair value - R$ 36,12 36,12 Share price - R$ 34,00 34,00 Exercise price - R$ (i) 29,15 29,15 Dividend 5% 5% Risk-free interest rate 9.87% 9.87% Volatility (ii) 34.39% 34.39% (i) Exercise price as defined by the agreement; when the beneficiary s right is vested, it will be adjusted based on the IPC until the exercise date. (ii) The volatility was determined based on the daily closing price of the period after the initial public offering. Changes in the Plan: Number Balance as at December , ,000 Options granted 228,000 - Options exercised (15,000) - Balance as at June 30 1,057, , STATEMENTS OF CASH FLOWS a) Cash and cash equivalents The breakdown of cash and cash equivalents is stated in note 3. b) Supplementary information In the six-month period ended June 30, 2011, income tax and social contribution in the amount of R$743 (R$13,158, consolidated) and interest in the amount of R$21,203 (R$28,713, consolidated) were paid. In the six-month period ended June 30, 2010, income tax and social contribution in the amount of R$4,328 (R$14,346, consolidated) and interest in the amount of R$12,290 (R$12,901, consolidated) were paid. 56

58 c) Non-cash transactions In the periods ended June 30, 2011 as mentioned in note 9, the Company capitalized the amount of R$4,284 in consolidated (there was no interest capitalization in the parent company). On June 30, 2010 the Company contributed the amount of R$3,867, Parent and consolidated. 29. COMMITMENTS ASSUMED In March 2007, the Company agreed with WTORRE the general terms and conditions that will guide the development, implementation and operation of a shopping mall, which will be administered by IGUATEMI, located at the corner of Avenida das Nações Unidas and Avenida Presidente Juscelino Kubitschek, in the city of São Paulo - SP. The total investment is estimated at approximately R$243,300 million, of which the Company is responsible for R$160,000. The project is expected to be launched in March In May 2008, the Company announced that it will develop a shopping mall in Ribeirão Preto, SP, together with the group s entrepreneurial Residential Condominium Complex Village of Golf. The agreement foresees the construction of a shopping mall attached to the condominium in a highlighted area of 100,000 square meters, belonging to a region with high growth potential and population density, especially in classes A and B. In June 2011, the Company disclosed the new premises of the project, which will have a gross leasable area of 41.1 thousand square meters and will be launched in April The total investment is estimated at R$278.1 million. In July 2008, the Company announced that it will build a shopping center in Jundiaí, SP, together with the F A Oliva Group, through Oliva OS Administração de Bens Ltda. The project includes, in addition to the shopping mall, office towers and a high-end residential complex. The total area of the land is 225,000 square meters, of which square meters will be used to build the mall. The Company will own a 79% interest in the mall and will be responsible for its development and management. Total investment is estimated in R$112,200. On February 22, 2010, the Company announced that it will build a shopping center in São José do Rio Preto, São Paulo. The mall will have 34,600 square meters of gross leasable area and the land for the project is 100 thousand square meters. Iguatemi will own 88% of the mall and will be responsible for the development, sale and management of the future mall. Depending on the land swap agreement, Iguatemi will pay 100% of the investment project, estimated at R$135,100. The mall is scheduled to open in In January 2011, the Company announced that it will develop a shopping center in Votorantim, São Paulo. The shopping mall will have a gross leasable area of 43,900 square meters, with an expansion that will add an additional gross leasable area of 13,700 square-meter, expected for 2018,. Iguatemi will own 100% of the shopping mall and will be responsible for the development, sale and management of the future mall. Opening is scheduled for

59 30. EVENTS AFTER THE REPORTING PERIOD On July 14, 2011, the Company bought back 20,000 shares, totaling R$700, to meet future stock option plan requirements and held such shares in treasury. 31. APPROVAL OF THE INTERIM FINANCIAL INFORMATION The interim financial information was approved by the Company s Board of Directors and authorized for filing on August 2, NOTAS 58

60 PRESS RELEASE MESSAGE FROM MANAGEMENT We had strong sales and revenue growth indicators in 2Q11. Year-on-year comparisons were high, also because in June of 2010 came the Soccer World Cup and retail sales were weaker. In some of our malls, sales were up 25% YoY. At the beginning of the quarter, when Iguatemi Brasília celebrated one year of operation, the annual adjustment was applied to its rental contracts for the first time. Same-store sales were up 30% YoY in the quarter, and revenues up 22% YoY. Iguatemi Brasília introduced several brands to Brazil s capital that had not been seen there before; it is the first mall outside Rio and São Paulo to offer the leading international luxury brands. At the end of April we inaugurated one more greenfield project, the Iguatemi Alphaville mall. The region makes the third-highest contribution to GDP in the State of São Paulo. Iguatemi Alphaville has 178 stores, with 30,200 sqm of GLA, adding 23,600 sqm of owned GLA to Iguatemi s portfolio. It was opened with 95% of GLA leased. In June, as part of our strategy of densifying areas around our malls and to generate additional revenue, we made a swap transaction exchanging 5.4% of our land holding in Ribeirão Preto (São Paulo State) for a percentage of the PSV (potential sales value) of two office towers to be built on the land exchanged. It s important to say that there is potential for us to make more land exchanges for PSV, and we expect these to be more frequent over the coming years. They are possible because we have top-line malls, located in regions that are dense and have high income levels. These exchanges will not compete with the construction potential that we need for expansions of our existing malls. We have enough construction potential to double our present GLA through expansions. To respond to the growing demand in the city of Ribeirão Preto, we are also publishing the new plan for the Iguatemi Ribeirão Preto mall. Not only will it now include office towers as from the opening, but it has increased in size and will be inaugurated with 44,200 sqm of GLA. Iguatemi will own 80% of the projects and will be the manager of the complex (more information on our greenfield projects on page 17). Sales of contracts at the JK Iguatemi mall are in progress, and 85% of its area has been leased. It will be part of one of the largest retail complexes in São Paulo, inaugurating in March 2012, and including more than 20 store operators that are new to Brazil. 1

61 PRESS RELEASE 2Q 2011 The leases for the expansion of Galleria Mall, in Campinas, interior of São Paulo reached 54% of total GLA. At the end of July one of Brazil s most important newspapers, O Estado de São Paulo, published a ranking of the best shopping malls in the São Paulo city area. Iguatemi s three São Paulo malls were among those reported as the four best in the city. With the end of the first half of the year, we reassure our guidance: to grow net revenue in a range between 25% to 30% and EBITDA margin between 70% and 72%. We are also starting to announce long term financial objectives. In 2014 we expect an EBITDA between R$ 450 R$ 500 million, and up to 520 thousands sqm. of own GLA. This implies an expected average annual growth between 25% and 28% which has been our actual level of annual growth in nominal terms since 2006, one year before our IPO. It is also a level of growth that is similar in real terms to the growth Iguatemi has delivered since it was formed in EBITDA Guidance (R$ Million) R (Before IPO) 26% 25-27% % R Guidance for 2014 EBITDA* (R$ Million) Real values as december/ ,2 10,2 25% 59,1 CAGR% 184, R 1990 R 2000 R 2010 R * EBITDA numbers for 1979, 1990 and 2000 are pro forma and not audited. 2

62 PRESS RELEASE 2Q 2011 MAIN INDICATORS Perfomance Indicators 2Q11 2Q10 Var 6M11 6M10 Var Total GLA (Sq.m.) 469, , % 469, , % Own GLA (Sq.m.) 265, , % 265, , % Own GLA average (Sq.m.) 225, , % 218, , % Total GLA Shopping 435, , % 435, , % Own GLA Shopping 234, , % 234, , % Number of malls¹ % % Total sales (R$ mn) 1,787,864 1,495, % 3,202,030 2,806, % Same-store sales per Sq. m. (R$/Sq.m.) 1,456 1, % 1,391 1, % Same-area sales per Sq. m. (R$/Sq.m.) 1,338 1, % 1,269 1, % Same-store rent per Sq. m. (R$/Sq.m.) % 85,2 77,7 9.7% Same-area rent per Sq. m. (R$/Sq.m.) % 83,1 75,7 9.8% Occupancy cost as a % of sales 11.2% 11.3% -0.1 p.p. 11.4% 11.5% -0.1p.p. Occupancy Rate 96.6% 97.2% -0.6 p.p. 97.0% 96.7% 0.3 p.p. Default Rate 3.3% 3.7% -0.4 p.p. 3.3% 3.7% -0.4 p.p. Financial indicators 2Q11 2Q10 Var 6M11 6M10 Var Gross revenue (R$ K) 90,095 74, % 167, , % Net revenue (R$ K) 80,647 66, % 149, , % EBITDA (R$ K) 57,731 49, % 99,030 84, % EBITDA margin 71.6% 74.5% -2.9 p.p. 66.2% 68.9% -2.7 p.p. FFO (R$ K) 48,989 43, % 85,533 74, % FFO Margin 60.7% 64.8% -4.1 p.p. 57.2% 60.9% -3.7 p.p. Net profit (R$ K) 42,979 37, % 74,467 64, % 3

63 PRESS RELEASE 2Q 2011 THE IGUATEMI PORTFOLIO Shopping Center Iguatemi s Total GLA* Own GLA # Stores # Parking Stake (sqm.) Spaces Iguatemi São Paulo 50.6% 42,725 21, ,430 Market Place 100.0% 26,017 26, ,998 Iguatemi Campinas 65.0% 55,386 36, ,980 Boulevard¹ 77.0% 29,176 22, Iguatemi São Carlos 45.0% 19,020 8, Boulevard Iguatemi Rio 60.7% 26,225 15, ,344 Praia de Belas² 37.8% 28,866 10, ,266 Galleria 50.0% 23,941 11, ,996 Iguatemi Porto Alegre 36.0% 39,307 14, ,400 Iguatemi Florianópolis 30.0% 20,180 6, Iguatemi Caxias 8.4% 29,101 2, ,003 Esplanada 33.1% 27,663 9, ,950 Área proprietária³ 100.0% 3,678 3, Iguatemi Brasília 64.0% 33,800 21, ,673 Iguatemi Alphaville % 30,178 23, ,690 Subtotal retail 53.8% 435, ,098 2,391 25,570 Market Place Tower I 100.0% 15,685 15,685 Market Place Tower II 100.0% 13,395 13,395 Tower Iguatemi São Paulo 50.6% 4,875 2,467 Subtotal commercial 100.0% 33,955 31,547 Total 56.6% 469, ,645 * Excludes the area of store operators that are also proprietors. ¹ Boulevard, located next to the Iguatemi Campinas Mall. ² Weighted percentage interest in owned GLA. We own 37.5% of the mall (27,700sqm) and 47.8% of the expansion (1,100sqm). ³ Area in the Esplanada Mall owned by Iguatemi through a subsidiary. 4 Opened on April 28,

64 PRESS RELEASE 2Q 2011 OPERATIONAL PERFORMANCE Shopping Center* Revenue 2Q11 NOI 2Q11 Mg. % Revenue 2Q10 NOI 2Q10 Mg. % Iguatemi São Paulo ,1% ,5% Market Place ,8% ,8% Torre I ,4% ,4% Torre II ,9% ,0% Iguatemi Campinas ,2% ,9% Iguatemi São Carlos ,8% ,0% Iguatemi Rio de Janeiro ,7% ,4% Praia de Belas ,5% ,0% Galleria ,9% ,4% Iguatemi Porto Alegre ,0% ,4% Iguatemi Florianópolis ,3% ,0% Iguatemi Caxias ,1% ,3% Esplanada ,9% ,2% Brasília ,8% ,5% Iguatemi Alphaville ,3% Total ,9% ,7% * Takes into account 100% of the results of the mall, without linearization. Shopping Center* Revenue 6M11 NOI 6M11 Mg. % Revenue 6M10 NOI 6M10 Mg. % Iguatemi São Paulo ,9% ,0% Market Place ,8% ,3% Torre I ,1% ,1% Torre II ,9% ,4% Iguatemi Campinas ,4% ,9% Iguatemi São Carlos ,1% ,1% Iguatemi Rio de Janeiro ,9% ,5% Praia de Belas ,5% ,0% Galleria ,8% ,7% Iguatemi Porto Alegre ,1% ,5% Iguatemi Florianópolis ,2% ,4% Iguatemi Caxias ,5% ,2% Esplanada ,5% ,3% Brasília ,6% ,5% Iguatemi Alphaville ,3% Total ,1% ,9% * Takes into account 100% of the results of the mall, without linearization. 5

65 PRESS RELEASE 2Q 2011 Total sales in our shopping malls in 2Q11 were 19.6% higher than in 2Q10, with the entry of Iguatemi Alphaville (2 months of operation in the quarter), maturing of Iguatemi Brasília, and good figures for same-area sales and same-store sales in the malls as a whole. Same-store sales were up 10.4% year-on-year, while same-area sales were up 13.6% yearon-year, reflecting the renewal of the mix. Same-store rents were up 11.6% year-on-year, and same-area rents up 12.9% YoY reflecting not only inflation but also the leasing spread achieved in 2010 (our contracts are adjusted 50% by the IGP-M inflation index, and 50% by the IPCA inflation index). Malls with the highest year-on-year same-area sales growth in the quarter were Iguatemi Brasília, Iguatemi Florianópolis, Galleria and Iguatemi São Paulo. Malls with the highest YoY growth in same-area rents in 2Q11 were Iguatemi Brasília, Iguatemi São Paulo, Iguatemi Florianópolis and Market Place. The retail area with the highest sales growth in the quarter was jewelry, followed by services and entertainment, with significant figures also for footwear and leather goods. Occupancy cost in the second quarter was 11.2%, 0.1 of a percentage point lower than in 2Q10, and 1 p.p. lower than in 1Q11. Occupancy cost Occupancy rate 12.7% 11.4% 11.7% 10.7% 12.0% 10.7% 12.2% 11.3% 11.3% 11,2% 96.4% 95.8% 95.8% 96.6% 97.2%97.2% 97.9% 97.1% 96.7%96,6% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 The occupancy rate in the quarter was 96.6%, 0.6 p.p. lower than in 2Q10, and 0.1 p.p. lower than in 1Q11. Store operators demand for new spaces continues to be strong, as shown by the continual increase in the leasing rates of our greenfield projects, and the high occupancy rates in all the malls in our portfolio. 6

66 PRESS RELEASE 2Q 2011 ECONOMIC AND FINANCIAL PERFORMANCE INCOME STATEMENT (R$ OOO) A.V. 2Q11 2Q10 Var 2Q11 2Q10 Gross revenue 90,095 74, % 111.7% 112.1% Taxes, contributions and other deductions (9,448) (8,041) 17.5% -11.7% -12.1% Net revenue 80,647 66, % 100.0% 100.0% Cost of rentals and services (19,967) (19,795) 0.9% -24.8% -29.7% Gross income 60,680 46, % 75.2% 70.3% Administrative expenses (17,469) (14,159) 23.4% -21.7% -21.2% Other operating income (expenses), net 8,522 11, % 10.6% 17.1% Operational result 51,733 44, % 64.1% 66.2% Financial income 25,628 14, % 31.8% 21.8% Financial expenses (27,330) (13,953) 95.9% -33.9% -20.9% Income before taxation 50,031 44, % 62.0% 67.0% Income tax and social contribution (7,040) (6,989) 0.7% -8.7% -10.5% Minority interest (12) (12) 0.0% 0.0% 0.0% Net income 42,979 37, % 53.3% 56.5% EBITDA 57,731 49, % 71.6% 74.5% FFO 48,989 43, % 60.7% 64.8% INCOME STATEMENT (R$ OOO) A.V. 6M11 6M10 % 6M11 6M10 Gross revenue 167, , % 111.7% 111.7% Taxes, contributions and other deductions (17,473) (14,391) 21.4% -11.7% -11.7% Net revenue 149, , % 100.0% 100.0% Cost of rentals and services (38,423) (32,911) 16.7% -25.7% -26.8% Gross income 111,111 90, % 74.3% 73.2% Administrative expenses (32,157) (26,814) 19.9% -21.5% -21.8% Other operating income (expenses), net 9,031 11, % 6.0% 9.4% Operational result 87,985 74, % 58.8% 60.9% Financial income 44,553 29, % 29.8% 24.0% Financial expenses (41,464) (22,972) 80.5% -27.7% -18.7% Income before taxation 91,074 81, % 60.9% 66.2% Income tax and social contribution (16,586) (16,472) 0.7% -11.1% -13.4% Minority interest (21) (23) -8.7% 0.0% 0.0% Net income 74,467 64, % 49.8% 52.8% EBITDA 99,030 84, % 66.2% 68.9% FFO 85,533 74, % 57.2% 60.9% 7

67 PRESS RELEASE 2Q 2011 GROSS REVENUE Iguatemi s gross revenue in 2Q11 was R$ 90.1mn, 20.5% more than in 2Q10. Gross revenue in the whole first half of the year (1H11) was R$ 167.0mn, 21.5% higher than in 1H10. Gross Revenue 2Q11 2Q10 % 6M11 6M10 % Rent 63,274 53, % 118, , % Management Fee 5,995 5, % 11,618 8, % Parking 14,313 10, % 26,688 20, % Others 6,513 5, % 10,619 7, % Total 90,095 74, % 167, , % Rental revenues in 2Q11, comprising minimum rent (including linearization), overage (percentage proportion of rentals) and temporary rents, were 17.7% higher YoY in 2Q11, and represented 70.2% of total gross revenue. In 1H11, rent revenues totaled R$ 118.1mn, up 17.2% YoY. Rent Revenue 2Q11 2Q10 % 6M11 6M10 % Minimum Rent 53,390 46, % 101,116 87, % Percentage Rent 4,801 3, % 7,695 6, % Temporary Rent 5,083 3, % 9,271 6, % Total 63,274 53, % 118, , % The growth in rent revenue in the quarter was mainly due to the following factors: Start of operation of Iguatemi Alphaville, opened on April 29, Annual adjustment of contracts Iguatemi Brasília, on completion of its first year of operation at the end of March. Increase in minimum rent, as a result of: (i) negotiations with leasing spreads higher than inflation, both in renewals and in new leases; and (ii) automatic adjustment of contracts by inflation for the period, resulting in growth of 12.9% in same-area rents. Revenue from the percentage portion of rents (overage) 27.0% higher than in 2Q10. The highest growth was in June, since last year the Soccer World Cup reduced sales. The malls that contributed most to the increase of overage revenue in the quarter were Iguatemi Brasília and Iguatemi São Paulo. Growth of temporary rents (kiosks and media), of 36.4%, mainly reflecting the opening of Iguatemi Alphaville, and higher growth in three other malls: Iguatemi Brasília, Iguatemi Campinas and Galleria. 8

68 PRESS RELEASE 2Q 2011 Revenue from parking was 33.7% up year-on-year, reflection four factors: (i) start of charging for parking at Shopping Center Galleria; (ii) maturing and increase of flow at Iguatemi Brasília; (iii) increases of rates at Market Place, Iguatemi São Paulo and Iguatemi Campinas; and (iv) opening of Iguatemi Alphaville. Administration fees were 5.9% higher in 2Q11 than 2Q10, mainly reflecting the entry of Iguatemi Alphaville. The increase in other revenues is mainly due to key money of Alphaville, which will be amortized monthly during the period of the contracts (five years). DEDUCTIONS, TAXES AND CONTRIBUTION Deductions and taxes in 2Q11 totaled R$ 9.5mn, or 11.7% of net revenue. In the first half of the year, they totaled R$ 17.5mn, up 21.4% year-on-year. NET SALES REVENUE Net revenue in 2Q11 was R$ 80.6mn, 20.9% more than in 2Q10. In the first half of 2011 net revenue totaled R$ 149.5mn, 21.6% more than in COST OF RENTALS AND SERVICES, AND ADMINISTRATIVE EXPENSES* (R$ 000) Cost 2Q11 SG&A 2Q11 Total 2Q11 Cost 2Q10 SG&A 2Q10 Total 2Q10 Depreciation and amortization 4,079 1,931 6,010 4,218 1,319 5, % Personnel 5,404 4,873 10,277 4,018 5,309 9, % Third-party services 1,017 4,222 5,239 3,241 4,091 7, % Parking 5,437-5,437 3,642-3, % Fund for promotion 1,420-1,420 1,327-1, % Others 2,610 6,443 9,053 3,349 3,440 6, % Total 19,967 17,469 37,436 19,795 14,159 33, % *Accounting of costs and expenses was affected by adoption of IFRS, which changed the accounting of depreciation. The 2010 numbers were reclassified according to IFRS and are comparabale to the 2011 numbers (R$ 000) Cost 6M11 SG&A 6M11 Total 6M11 Cost 6M10 SG&A 6M10 Total 6M10 Depreciation and amortization 8,168 2,898 11,066 7,334 2,617 9, % Personnel 9,407 11,987 21,394 7,171 10,242 17, % Third-party services 2,552 9,934 12,486 3,922 7,534 11, % Parking 10,585-10,585 6,944-6, % Fund for promotion 2,767-2,767 2,546-2, % Others 4,944 7,338 12,282 4,994 6,420 11, % Total 38,423 32,157 70,580 32,911 26,814 59, % % % 9

69 PRESS RELEASE 2Q 2011 Costs and expenses in 2Q11 totaled R$ 37.4mn, 10.3% more than in 2Q10. This reflects the following items: Depreciation and amortization 8.5% higher, mainly due to the startup of Iguatemi Alphaville. Personnel expenses 10.2% higher, due to the increase in headcount, and the annual negotiated wage increase. Lower cost of outsourced services, mainly on lower brokerage fees and lower expenses on legal counsel. Increase in parking, mainly reflecting the opening of Iguatemi Alphaville, and the start of charging for parking at Galleria, and higher expenses at Iguatemi Brasília. The higher Others line mainly reflects higher pre-operational expenses. Pre-operational expenses in the quarter totaled R$ 4.6mn, compared with an expense of R$ 3.4mn in 2Q10, allocated mainly in the third-party services and others. The main preoperational expenses in the quarter were due to the inauguration of Iguatemi Alphaville at the end of April In the first half of the year, costs and expenses totaled R$ 70.6mn, 18.2% more than in the first half of FINANCIAL REVENUE (EXPENSES) We reported net financial expenses of R$ 1.7mn in 2Q11. In the first half of the year, however, we had financial revenues, of R$ 3.1mn which was 52.7% less than in 1H10, mainly due to inauguration of Iguatemi Brasília and Iguatemi Alphaville. In spite of the increase in the Company s debt, interest expenses on the financings contracted for the greenfield projects are being capitalized, and will start to be amortized when each of the malls opens. For this reason, after the opening of Iguatemi Brasília, we had increased financial expenses, since the interest was now included in this line. Net financial revenue 2Q11 2Q10 Var 6M11 6M10 Var Financial revenues ,5% ,0% Financial expenses (27.330) (13.953) 95,9% (41.464) (22.972) 80,5% Net financial revenue (1.702) ,8% ,7% 10

70 PRESS RELEASE 2Q 2011 OTHER OPERATIONAL REVENUES (EXPENSES) Other operational revenues were R$ 8.5mn in 2Q11, 25.3% less than in 2Q10. In 2Q11 we made a land swap where Iguatemi Ribeirão Preto will be built, on the same terms as our exchanges in 2Q10 and 3Q10 in the vicinity of the Praia de Belas mall in Porto Alegre. We made an exchange with the construction company of 5.4% of the site, on which two office towers will be built, in return for which we received a guarantee of a percentage of the PSV (potential sale value) of the units, in the net amount of R$ 10.7mn. In 2Q10 we also had resale of retail location points. The revenue from these locations, and a reversal of a provision were the main contributors to the operational revenues line in this quarter. In the whole of the first half of 2011, we reported net operational revenues of R$ 9.0mn. INCOME TAX AND SOCIAL CONTRIBUTION (CURRENT AND DEFERRED) Expenses on income tax and the Social Contribution tax in the second quarter of 2011 were R$ 7.0mn, representing an effective tax rate of 14.1%. The lower effective rate than in the first quarter (when the effective tax rate was 23.3%) results from three factors: (i) rebates on taxes of prior periods; (ii) start of the operation of Iguatemi Alphaville, reporting for taxation by the Presumed Profit method; and (iii) a lower taxation rate on the revenue from the site exchange in Ribeirão Preto. NET PROFIT AND FFO Iguatemi s net profit in 2Q11 was R$ 43.0mn, 14.0% more than in 2Q10. Net margin was 53.3%. In the half-year, net profit was R$ 74.5mn, 14.7% more than in 1Q10. FFO was R$ 49.0mn in 2Q11, and R$ 99.0mn in 1H11. EBITDA Em R$ mil 2Q11 2Q10 Var. 6M11 6M10 Var. Net revenue 80,647 66, % 149, , % Net Income 42,979 37, % 74,467 64, % (+) Income tax and social contribution (+) Depreciation and amortization 7,040 6, % 16,586 16, % 6,010 5, % 11,066 9, % (+) Financial expenses 27,330 13, % 41,464 22, % (-) Financial revenues (25,628) (14,517) 76.5% (44,553) (29,500) 51.0% EBITDA 57,731 49, % 99,030 84, % EBITDA Margin 71.6% 74.5% -2.9p.p. 66.2% 68.9% -2.7p.p. 11

71 PRESS RELEASE 2Q 2011 Iguatemi reports 2Q11 Ebitda of R$ 57.7mn, up 16.2% YoY from 2Q10, with Ebitda margin of 71.6%. In 2Q11 we had pre-operational expenses of R$ 4.6mn, mainly due to the inauguration of Iguatemi Alphaville. Excluding this expenditure, Ebitda for the quarter would be R$ 62.4mn, and Ebitda margin would be 77.3%. Ebitda in this quarter was positively affected by the land swap in Ribeirão Preto, in the amount of R$ 10.7mn, as described in Other operational revenues and expenses. Total Ebitda in the first half of the year was R$ 99.0mn, with Ebitda margin of 66.2%. Adjusted for the half-year s pre-operational expenses, Ebitda in 1H11 would be R$ 104.2mn, representing Ebitda margin of 69.7%. DEBT Iguatemi s gross debt on June 30, 2011 was R$ 981.3mn, which compares to R$ 906.6mn on March 31, The increase is mainly due to entry of cash from the financings from the Brazilian Development Bank (BNDES), and real estate loans, for Iguatemi Alphaville and JK Iguatemi. The cash position at the end of the second quarter was R$ 942.9mn, resulting in a net cash position of R$ 97.7mn. The average tenor of our debt is 3.5 years, and its average cost is 102.6% of the CDI rate. Not subject to settlement in cash Currency Cost Maturity 2Q11 2Q11 Amortized R$ IGP-DI monthly from real estate 1,865 1,936 rental BNDES R$ TJLP % a.a. May/ BNDES R$ TJLP a.a October / ,358 3,988 BNDES R$ TJLP % a.a. June / ,767 89,779 BNDES R$ TJLP % a.a. October/ ,537 27,687 BNDES R$ 4.50% a.a. July/2017 3,667 1,905 BNDES R$ 5.50% a.a. July/2017 2,272 2,252 Santander R$ 99% of CDI August / ,028 4,209 Santander R$ TR % a.a. August / ,300 12,847 Santander R$ TR % a.a. October / ,672 11,138 Santander R$ TR % a.a. January / ,766 90,028 Bradesco R$ TR % a.a. September/ ,766 83,588 Itaú R$ TR % a.a. March/ ,554 39,773 Debêntures 1 st Issue R$ 110% of CDI December/ , ,160 Debêntures 2 nd Issue R$ CDI % March/ , ,902 Short term 103,573 28,239 Long term 877, ,330 Total debt (981,296) (906,569) Cash and equiv. 942,908 1,004,289 Net cash (38,388) 97,720 12

72 PRESS RELEASE 2Q 2011 Debt amortization timetable Short term 2012 (12 months) (6 months) Financing Debentures CASH FLOW Iguatemi s cash position was R$ 61.4mn lower at the end of the second quarter of 2Q11 than on March 31, The main components of the change are: Net cash generated by operational activities of R$ 52.0mn, comprising: R$ 68.2mn generated by the Company s operations, and a negative R$ 16.2mn from changes in assets and liabilities. Net outflow of R$ 9.9mn in financing activities. Dividends totaling R$ 53.4mn, in the form of Interest on Equity, were paid in the quarter. Capital expenditure of R$ 103.5mn, mainly on our greenfield and expansion projects. 2Q11 Cash Flow 1,004,289 52,006 (9,917) 942,908 (103,470) Initial balance Operational Financings Investments Final Balance 13

73 PRESS RELEASE 2Q 2011 INVESTMENTS FOR GREENFIELD PROJECTS Our capital expenditure* on our greenfield projects in 2Q11 was R$ 40.0mn, as shown below. We expect to invest R$ 116.8mn in the projects in the whole of Shopping Center Realized 2Q M After 2013 Total Greenfields JK Alphaville Ribeirão Preto Votorantim Jundiaí S. J. Rio Preto Total ,122.8 * The capex figures shown are net of key money. ¹ Disbursement of cash by counterparties involved in constructing access roads. Note: Iguatemi has additional capex for (i) expansions, and (ii) maintenance of the malls in the existing portfolio. GREENFIELD PROJECTS Inauguration of Iguatemi Alphaville On April 28, 2011 we inaugurated the Iguatemi Alphaville Mall. The mall was born already ranked among the 4 best malls in the city of São Paulo, the most competitive market of Brazil (according to a research made by the leading newspaper Estado de S. Paulo), demonstrating the quality of Iguatemi s new projects. The mall is a major public facility space uniting leisure, shopping, entertainment, culture, gastromony and services, in accordance with the most recent criteria for corporate sustainability, and complying with the Iguatemi standard of excellence. It is located at the entry to Alphaville, a very large high-end community condominium in the city of Barueri, which has the third largest GDP in São Paulo State, and the ninth largest in Brazil. Iguatemi owns 78% of the project and is responsible for its management. The total investment in the project, net of key money, was R$ 180.8mn, and the operational profit expected in the first year of operation is R$ 24.3mn, providing an estimated real, delevered internal rate of return (IRR) of 18.0%. 14

74 PRESS RELEASE 2Q 2011 The mall has 30,200sqm of total GLA, with 178 stores, and was 95% leased before opening. Below we give details of the five greenfield projects that Iguatemi has so far announced. The figures for expected total investment include the cost of building works, net of key money. JK Iguatemi Structure of the mall completed. Covering of the façade in progress. Store dividers and electrical and water services being finalized. Total GLA is already 85% leased. Iguatemi Ribeirão Iguatemi Jundiaí Iguatemi S.J.R.P Iguatemi Votorantim New plan published and approved by local municipal authority. Sales begin in September Plans at approval stage with local municipal authority. Detailing of architectural plans in progress; documents being prepared for local planning approval. Plans approved by municipal authority. Executive project being developed. 15

75 PRESS RELEASE 2Q 2011 DETAILS OF THE NEW PROJECT FOR IGUATEMI RIBEIRÃO PRETO To make the best use of increasing population density around the site, and the growing demand in both Ribeirão Preto and the region, Iguatemi has revised the plan for its Ribeirão Preto Mall, which will now be opened with 44,200sqm of GLA, 11,700sqm more than in the original plan. The mall is being built on a site of 100,000m², with construction potential for five times the site area. The project is part of the largest real estate development in the interior of Brazil which will comprise one shopping mall, 8 office towers, 9 corporate buildings, 18 residential towers, one hotel, 7 horizontal condominiums, one school, one events centre, and one golf course. All the projects in the master plan of the development have been approved by the local authorities. 16

76 PRESS RELEASE 2Q 2011 The mall has potential to reach 73,000m² of GLA, and an expansion is planned for 2018, to add a further 7,000m² of GLA to the project (34 new stores). The mall is located in an area of growth of the city s population in the A and B income groups, and is bordered by state highways (the Anhanguera and the Cândido Portinari) which facilitate access to neighbouring towns. The Iguatemi mall will bring new brands to the region, as well as a multiplex cinema, an indoor park, a state-of-the-art fitness centre, and a gourmet food court with high-quality restaurants, digital TV and an external sitting area. The main distinguishing features of the new plan are its architecture and design, with broad skylights, providing a perfect integration between the mall and nature in the local environment, and integration of the mall s services with the commercial and residential towers. Our partner in the project, Vila do Ipê Empreendimentos, exercised its option to increase its equity position in the project and will now have 20% ownership of the mall. Iguatemi will have 80% and will be the project s administrator. With its increased interest (in the original project the partner received 12% of the mall in exchange for land), Iguatemi will pay for 91% of the building works, and Vila do Ipê will pay for 9% [calculation method: 8%/88% = 9%, or similarly (additional participation) / (Iguatemi s original participation)]. The total investment for the mall will be R$ 269.6mn, net of key money. The mall will have 176 stores. NOI is expected to be R$ 36.3mn in the first year of operation, and to stabilize at R$ 58.9mn in the fourth year. It will be opened in April Technical details Stores and facilities Opening April 2013 Number of stores 176 GLA (m²) 44,161 Anchor stores 7 Iguatemi interest 80.0% Semi-anchor stores 8 IRR of the project (real, delevered) 61.1% Satellite stores 134 Capex¹ (whole project) R$ M Services 4 Iguatemi capex¹ R$ 245.1M Cinema 1 NOI, 1 st year (R$ mn) R$ 36.3mn Kids leisure 2 NOI, stabilized in 4th year (R$ mn) R$ 58.9mn Restaurants 20 Management Iguatemi Parking spaces 2,406 ¹ Net of key money. An expansion of the mall is planned to take place in 2018, adding 7000 m² of GLA and 34 stores, bringing the total GLA of the mall to 51,200 m², with 210 stores. 17

77 PRESS RELEASE 2Q 2011 ABOUT RIBEIRÃO PRETO Ribeirão Preto is the center of a region of very fast development, high standards of living and excellent social and economic indicators. The region is one of the world s leading producers of sugar and alcohol, and one of Brazil s principal agricultural centers. Specifically, it produces a very high output of sugarcane, oranges, soya beans, peanuts and every type of fruit. The Iguatemi Ribeirão Preto Mall will further enrich the retail and trading center of the city of Ribeirão Preto by bringing to the city everything that is most up-to-date and sophisticated in terms of the shopping mall market. The city has a population of 600,000, contributes R$ 13.9 billion* to Brazilian GDP, and enjoys the sixth highest economic growth rate in São Paulo state. It has a high standard of education, with distinguished universities and professional training schools. Its location in the northern part of the State is commercially strategic, at an intersection of leading state highways, approximately 300km from São Paulo city and close to the most important towns and cities of the interior of the states of both São Paulo and Minas Gerais. * IBGE (Brazilian Statistics Institute), 2008: expectation for 2010 = 600,169. The figures below refer to 100% of each project. JK Iguatemi Iguatemi Ribeirão² Iguatemi Jundiaí Iguatemi SJRP Iguatemi Esplanada³ Opening Mar/12 Apr/ Sep/23 GLA (sq. m.) 35,246 44,161 30,000 34,600 43,853 Total investment R$243.3 MM R$269.6MM R$112.2 MM R$135.1 MM R$311.3 mn NOI year 1 R$40 MM R$36.3 MM R$19.2 MM R$21.6 MM R$40.4 mn NOI/sq. m. (month) R$94.6 R$68.44 R$53.33 R$52.02 R$76.77 Iguatemi stake 50% 80% 79% 88% 100% Estimate IRR¹ 20.5% 16.1% 21.5% 22.2% 15.2% Other partners 50% 20% 21% 12% - ¹ Real, unlevered. ² Iguatemi Ribeirão has na expasion planned for 2018, wich will add 7 thousand sqm of GLA to the mall ³ Iguatemi Esplanada has na expasion planned for 2018, wich will add 13.7 thousand sqm of GLA to the mall 18

78 PRESS RELEASE 2Q 2011 EXPANSIONS OF THE EXISTING MALLS In 2Q11 we inaugurated the expansion of Iguatemi São Paulo, which included 600 valet parking spaces, two restaurants the Ritz and the Rodeio and three floors of offices which will house the Company s head office. The expansion adds 6.5 thousands sqm of GLA to the mall (4.9 thousands sqm offices and 1.6 thousand sqm two restaurants). Iguatemi has 2 other expansion projects in progress, which will strengthen the existing malls and increase their attractiveness by creating additional space in projects that already have established flows and allowing opportunities for repositioning. Below we give details of these expansions. The figures refer to 100% of each project. Iguatemi will maintain its equity holdings in the malls, hence the Company's investment is proportional to its holding in each mall. The investments are net of key money. Praia de Belas: Two office buildings, a new parking deck, a new multiplex cinema, and refurbishment of the third story for addition of 88 new stores. The project will be carried out in phases. The first phase is the delivery of an office building, with 1,100 sqm of GLA for retailing (we have no equity interest in the offices). The second phase is the delivery of the cinema, freeing the former space of the cinema on the ground floor for new retail operations. The third phase is the construction of a new office building, a deck parking and the refurbishment of the third story for inclusion of the new stores. Inauguration of the first phase was completed in July 2010, with the addition of four new stores. The total additional 19

79 PRESS RELEASE 2Q 2011 GLA of the second and third phases is 16,500 sqm. Steel and masonry construction works on the cinema are in progress. The cinema is already commercialized. Galleria Shopping Center: Two new anchor stores, four megastores, two restaurants and 55 satellite stores a total of 63 additional stores. The project will add 8,200 sqm to the mall s GLA. Works status: foundations and earthmoving in progress. The mall is 54% commercialized. Praia de Belas Galleria Openning Total GLA (sq.m.) Total Investment Dec/11 (Second phase) 17,624 (total) R$ 62.8 mn (total) Apr/12 8,198 R$ 30.4 mn % Iguatemi 37.6% 50.0% 20

80 PRESS RELEASE 2Q 2011 CAPITAL MARKETS Iguatemi is listed on the Novo Mercado of the BM&F Bovespa, with ticker IGTA3. The table below shows the Company s principal stockholders, and the free float. Shareholders Shares ( 000) % Jereissati Participações 41, % La Fonte Telecom % Petros 8, % Fidelity 8, % Ações em Tesouraria % Outros 19, % Total 79, % At June 30, 2011 Iguatemi s stock price was R$ 38.35, 3.2% lower than at the end of 1Q11. The stock price appreciated 23.1% in the 12 months to June 30, IGTA 2Q11 Final price, R$ Highest price, R$ Lowest price, R$ Price change in 2Q11-3.2% Appreciation in 1 year 23.1% Number of shares 79,255,489 Market Cap. 3,039,448,003 Average daily liquidity 5,739, STRATEGY AND GUIDANCE Iguatemi continues to focus on Brazil s South and Southeast, and Brasilia the country s regions with the highest purchasing power and per capita consumption and, predominantly, on the A and B income groups, which are less susceptible to crises and more demanding in terms of quality of products and services offered. In 2010, we once again exceeded our guidance. Our net revenue grew 20.4%, above our guidance of 15% to 17% growth in net revenue and our EBITDA margin was 70.1% (in accordance to our guidance of achieving a margin of 70% - 72%). 21

81 PRESS RELEASE 2Q 2011 For 2011, we are expecting net revenue to increase by 25% to 30%, with an Ebitda margin between 70% and 72%. In this quarter we are starting to announce long term financial objectives. In 2014 we expect an EBITDA between R$ 450 R$ 500 million, and up to 520 thousands sqm. of own GLA. This implies an expected average annual growth between 25% and 28% which has been our actual level of annual growth in nominal terms since 2006, one year before our IPO. It is also a level of growth that is similar in real terms to the growth Iguatemi has delivered since it was formed in EBITDA Guidance (R$ Million) R (Before IPO) 26% 25-27% % R Guidance for 2014 EBITDA* (R$ Million) Real values as december/ ,2 10,2 25% 59,1 CAGR% 184, R 1990 R 2000 R 2010 R * EBITDA numbers for 1979, 1990 and 2000 are pro forma and not audited. 22