SWISS PRIME INSIGHT ANNUAL REPORT AS AT 31 DECEMBER

SWISS PRIME INSIGHT ANNUAL REPORT AS AT 31 DECEMBER 2003

Pictures: Max Doerfliger, aerial view of Solothurn

CONTENTS SWISS PRIME INSIGHT AS AT 31 DECEMBER 2003 2 3 Brief summary of the main items 4 Corporate Governance 7 Financial commentary 21 Valuation expert s report 29 Consolidated annual financial statements Group auditor s report 34 Consolidated income statement 35 Consolidated balance sheet 36 Consolidated cash flow statement 37 Notes to the consolidated cash flow statement 38 Consolidated statement of changes in shareholders equity 40 Notes to the consolidated annual financial statements 41 Annual financial statements of Swiss Prime Site AG Auditor s report 74 Income statement 75 Balance sheet 76 Notes to the annual financial statements 77 Proposed appropriation of retained earnings 79 Property details Figures taken from the balance sheet and income statement as at 31.12.2003 82/84/86 General property details 83/85/87 Property structure part 1, commercial properties 88/90/92 Property structure part 2, residential properties 89/91/93 Translation: The original of this annual report is written in German. In the case of inconsistencies between the German original and this English translation, the German version shall prevail.

BRIEF SUMMARY OF THE MAIN ITEMS Group Financial year Financial year Change 01.01. 31.12.2003 01.01. 31.12.2002 % Investment properties CHF m 2,232.9 2,003.8 11.43 Rental income from investment properties CHF m 109.8 98.0 12.04 Earnings before interest, taxes, depreciation and amortisation (EBITDA) CHF m 88.5 71.8 23.26 Operating profit before interest and taxes (EBIT) CHF m 88.5 71.8 23.26 Change in fair market value (IAS 40) CHF m 6.6 (3.3) Profit for the period CHF m 47.0 35.0 34.29 Shareholders equity CHF m 1,043.3 1,037.2 0.59 Equity ratio % 45.88 50.97 (9.99) Borrowed capital CHF m 1,230.8 997.7 23.36 Borrowed capital ratio % 54.12 49.03 10.38 ROE (weighted) % 4.52 4.00 13.00 ROIC (weighted) % 3.76 3.81 (1.31) Net cash inflow from operational activity CHF m 45.2 29.8 Net cash outflow from investment activity CHF m 124.7 276.2 Net cash inflow from financing activity CHF m 86.1 244.3 Details without effect of revaluation* Operating profit before interest and taxes (EBIT) CHF m 81.9 75.1 9.05 EBIT margin % 74.16 75.76 (2.11) Profit for the period CHF m 47.5 41.2 15.29 Earnings per share (weighted) CHF /share 11.84 12.75 (7.14) ROE (weighted) % 4.79 4.97 (3.62) *No account has been taken of the revaluations (IAS 40) and the resulting deferred taxes.

BRIEF SUMMARY OF THE MAIN ITEMS 4 5 Development of the (reinvested) SPS share total return 01.01. 31.12.2003 130 120 Source: Bloomberg 110 100 90 80 70 31.12.2002 13.01.2003 26.01.2003 08.02.2003 21.02.2003 06.03.2003 19.03.2003 01.04.2003 14.04.2003 27.04.2003 10.05.2003 23.05.2003 05.06.2003 18.06.2003 01.07.2003 Share price 01.01. 31.12.2003 per 31.12.2003 CHF 230.00 high CHF 248.00 low CHF 227.50 SPSN SPI TR SWX IG Real Estate TR 14.07.2003 27.07.2003 09.08.2003 22.08.2003 04.09.2003 17.09.2003 30.09.2003 13.10.2003 26.10.2003 08.11.2003 21.11.2003 04.12.2003 17.12.2003 31.12.2003 Details of the share Share price (01.01. 31.12.2003) as at 31.12.2003 CHF 230.00 high CHF 248.00 low CHF 227.50 Market capitalisation as at 31.12.2003 CHF 926.1 m NAV (before deferred taxes) as at 31.12.2003 CHF 273.08 as at 31.12.2002 CHF 266.69 change 2.40% NAV (after deferred taxes) as at 31.12.2003 CHF 260.46 as at 31.12.2002 CHF 258.68 change 0.69% Earnings per share as at 31.12.2003 CHF 11.72 (weighted) as at 31.12.2002 CHF 10.83 Share statistics total registered shares 4,026,667 securities no. 803 838 ISIN no. CH 000 803 838 9 SWX symbol SPSN first trading day 05.04.2000

BRIEF SUMMARY OF THE MAIN ITEMS Portfolio according to type of use Based on the net rental income as at 31.12.2003 Based on the net rental income as at 31.12.2002 Commercial 21% Cinemas Restaurants 6% Commercial 18% Cinemas Restaurants 3% Store rooms 5% Store rooms 5% Apartments 2% Other 3% Apartments 2% Parking 5% Other 3% Parking 5% Offices 58% Offices 64% Portfolio according to region Based on the market value as at 31.12.2003 Zurich 41% Eastern Switzerland 6% Central Switzerland 10% Northwestern Switzerland 18% Based on the market value as at 31.12.2002 Zurich 42% Eastern Switzerland 6% Central Switzerland 11% Northwestern Switzerland 15% Berne 13% Berne 13% Western Switzerland 1% Southern Switzerland 0% Geneva 11% Western Switzerland 1% Southern Switzerland 0% Geneva 12% Portfolio by contractual end of rental relationship Basis: Target rent income 31.12.2003 31.12.02 end of contract over number of years 10 9 8 7 6 5 4 3 2 1 0 17.15 % 9.20 % 8.35% 9.19 % 5.41% 6.55 % 6.87 % 5.28% 10.71% 7.51% 13.78 % 21.08% 11.93% 8.64% 6.40% 9.44% 3.73% 5.71% 7.39% 8.79% 6.47% 10.42% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00 % 18.00 % 20.00% as a percentage of net rental income

6 7 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Group structure Holding Financing Company SPS Finance Limited, Jersey Investment Company SPS Immobilien AG, Olten Business properties with no or very little residential space Investment Company SPS Immobilien Residenz AG, Olten Business properties with a larger amount of residential space Investment Companies Frey Group being: Arthur Frey AG Frewa AG Métropole-Monopole AG Société Immobilière Rue Céard No. 14 all with headquarters in Wangen b. Olten Business and residential properties Participations Share capital Holding % Participations in 1,000 CHF (direct or indirect) SPS Immobilien AG real estate company with headquarters in Olten, Switzerland 225,000 100.00 SPS Immobilien Residenz AG real estate company with headquarters in Olten, Switzerland 36,000 100.00 SPS Finance Ltd. financing company with headquarters in Jersey, United Kingdom 1,630 100.00 Arthur Frey AG real estate company with headquarters in Wangen b. Olten, Switzerland 3,000 100.00 Frewa AG real estate company with headquarters in Wangen b. Olten, Switzerland 300 100.00 Métropole-Monopole AG real estate company with headquarters in Wangen b. Olten, Switzerland 400 100.00 Société Immobilière Rue Céard No.14 real estate company with headquarters in Wangen b. Olten, Switzerland 50 100.00 All the participations are unlisted companies subject to 100% consolidation. The holding company itself, Swiss Prime Site AG, is listed on the SWX Swiss Exchange. For details please refer to the chapter on "Details of the share" in the section "Brief summary of the main items".

CORPORATE GOVERNANCE 8 9 Shareholder structure As of 31.12.2003 Breakdown according to Registered shareholders Registered shares shares Number % Number %* 1 to 1,000 475 78.26 101,941 2.53 1,001 to 10,000 95 15.65 301,773 7.49 10,001 to 100,000 32 5.27 838,031 20.81 100,001 to 201,333 3 0.49 456,000 11.33 201,334 and more 2 0.33 1,838,400 45.66 Total registered shares 607 100.00 3,536,145 87.82 Unrecorded shares 490,522 12.18 Total shares issued 4,026,667 100.00 * in % of shares issued Breakdown according to Registered shareholders Registered shares country/region Number % Number % Switzerland 585 96.38 3,340,386 94.47 Europe (excl. Switzerland) 19 3.13 193,859 5.48 Other countries 3 0.49 1,900 0.05 Total registered shares 607 100.00 3,536,145 100.00 Breakdown according to Registered shareholders Registered shares shareholder categories Number % Number % Natural persons 387 63.75 74,125 2.10 Legal entities 78 12.85 451,922 12.78 Pension funds 91 14.99 1,730,328 48.92 Insurance companies 12 1.98 1,183,868 33.48 Funds 16 2.64 47,254 1.34 Others 23 3.79 48,648 1.38 Total registered shares 607 100.00 3,536,145 100.00 As of the balance sheet date, the Company is aware of the following major shareholders: Limit values Major shareholders % Pension fund of Credit Suisse Group > 20.00 Winterthur Leben > 20.00

CORPORATE GOVERNANCE Cross-investments At present, there are no cross-investments. Capital structure as at 31.12.2003 Capital Total Number of shares Nominal per share Share capital CHF 732,853 m 4,026,667 registered shares CHF 182.00 Authorised capital CHF 91,607 m 503,333 registered shares CHF 182.00 Conditional capital CHF 164,892 m 906,000 registered shares CHF 182.00 All outstanding shares are voting and dividend shares. There are no preferential rights whatsoever. Details on authorised capital The Board of Directors is empowered to increase the share capital to the above-mentioned extent at any time up to 29.04.2004, while retaining the shareholders subscription rights. The precise wording can be found in the Company s Articles of Association. Details on conditional capital The conditional capital is divided into an amount of up to CHF 109,928,000.00 for the exercise of option and/or conversion rights granted in connection with bonds and similar commitments, and an amount of up to CHF 54,964,000.00 for option rights granted to the shareholders. The precise wording can be found in the Company s Articles of Association. Capital changes over the last three years Nominal per Total registered nominal value Changes share in CHF Number of shares in CHF 1,000 Share capital as at 31.12.2000 200.00 3,020,000 604,000 Share capital as at 31.12.2001 200.00 3,020,000 604,000 Reduction of nominal value as at 29.07.2002 (8.00) 3,020,000 (24,160) Share capital increase as at 11.10.2002 192.00 1,006,667 193,280 Share capital as at 31.12.2002 192.00 4,026,667 773,120 Reduction of nominal value as at 28.07.2003 (10.00) 4,026,667 (40,267) Share capital as at 31.12.2003 182.00 4,026,667 732,853 Supplementary details on the capital changes can be found under Note 24, "Shareholders equity". At present Swiss Prime Site AG only has registered shares outstanding. Restrictions on transferability and nominee registrations The corresponding details can be found on the Internet under www.swx.com/admission/publicity_criteria_de.html Convertible bonds and options At present the Company has not issued any outstanding convertible bonds and options.

CORPORATE GOVERNANCE 10 11 Board of Directors Stefan Mächler lic. iur. HSG (1960), Forch President of the Board of Directors Member since: 11.05.1999 elected until: GA 2005 Managing Director of Credit Suisse Asset Management, President of the Board of Directors of Prime New Energy AG, Olten Since Swiss Prime Site AG was founded, until end of 2001, played a decisive role in the management of the Company Thomas Wetzel Dr. iur. Attorney-at-law (1956), Küsnacht Vice-President of the Board of Directors Member since: 11.05.1999 elected until: GA 2005 Partner in the Wenger Plattner Chamber of Attorneys, Küsnacht, President of the Board of Directors of EBV Immobilien AG, Urdorf, member of the Board of Directors of tk3 AG, Basle, of Geschäftshaus City AG Dübendorf, Dübendorf, of Kappel Immobilien AG, Kappel, and member of other Boards of Directors Urs Bracher Engineer HTL, Graduate Swiss Pension Insurance Expert (1955), Lindau Member of the Board of Directors Member since: 11.05.1999 elected until: GA 2005 Managing Director of PK Credit Suisse Group (Schweiz) and lecturer in actuarial mathematics at the Technical College for Administration, Olten, member of the Board of Directors of Prime New Energy AG, Olten Reinhard Giger dipl. Kultur-Ing. ETH (1949), Uster Member of the Board of Directors Member since: 21.05.2001 elected until: GA 2004 Managing Director, head of Real Estate Investment Management at Credit Suisse Financial Services, Chairman of the Board of Directors Stadion Zürich AG, Zurich, member of the Board of Directors of Wincasa AG, Winterthur Bernhard Hammer Dr. iur. Advocate and Notary (1950), Kammersrohr Member of the Board of Directors Member since: 29.04.2002 elected until: GA 2005 President of the Board of Directors of Comet Holding AG, Flamatt, and of Bator Holding AG, Herzogenbuchsee, member of the Board of Directors of Flumroc AG, Flums, of Banque Degroof (Suisse) SA, Geneva, of Eberspächer AG, Affoltern am Albis, of WEMA AG, Affoltern am Albis, and of SOFISA AG, Fribourg

CORPORATE GOVERNANCE Rudolf Huber Dr. oec. publ. (1955), Wilen SZ Member of the Board of Directors Member since: 29.04.2002 elected until: GA 2005 Member of the Group Management and CFO of Geberit International AG, Jona Hans Peter Wehrli Prof. Dr. oec. publ. (1952), Zurich Member of the Board of Directors Member since: 29.04.2002 elected until: GA 2005 Professor of Business Management, Chair in Marketing at the University of Zurich, President of the Board of Directors of Belimo Holding AG, Hinwil, and of Greater Zurich Area AG, Zurich, and member of other Boards of Directors Peter Wullschleger Bookkeeper with Swiss Specialist Qualification (1965), Oftringen Secretary of the Board of Directors and CFO (not member of the Board of Directors) In this function since: 11.05.1999 Director, head of finance and accounting Real Estate Asset Management at Credit Suisse Asset Management All members of the Board of Directors are Swiss nationals. Retirements during the period under review None

CORPORATE GOVERNANCE 12 13 Cross links At present, there are no reciprocal seats on Boards of Directors. Elections and period of office After expiry of the personal period of office of three years, the member must be re-elected by the General Assembly of Shareholders. Members of the Board of Directors shall submit their resignation at the ordinary General Assembly of the year in which they reach the age of 65. Regulation of the powers and duties of the Board of Directors The Board of Directors is responsible for the control of the Company and the supervision and monitoring of the Management Board. The Board of Directors adopts the fundamental decisions that determine the activity of the Company. Within the framework of its activities, the Board of Directors ensures a profit-focused and competent conduct of the Company by the Management Board according to the provisions of the Articles of Association, the regulations and the applicable legislation. The Board of Directors exercises its powers jointly. If needed, it can elect a committee from amongst its members and allocate powers to this committee in a separate set of regulations or by amending the existing Organisational Regulations. The Board of Directors acts as a collective body. Unless the contrary is laid down in the resolutions of the Board of Directors and the Organisational Regulations, its members shall have no personal powers vis-à-vis the Company and for this reason cannot issue any instructions of their own accord. The Board of Directors exercises the control, supervision and monitoring of the management of the Company. It issues guidelines for business and investment policy and is regularly informed about the course of business. The Board of Directors delegates the conduct of the business in full to the Management Board unless laid down otherwise by law, the Articles of Association or the Organisational Regulations. The Board of Directors can allocate the preparation and performance of its resolutions or the monitoring of transactions to one or more committees, individual members or the Management Board. It shall ensure appropriate reports to its members. The Board of Directors can entrust functions for the conduct of the business to third parties on a contractual basis. On the basis of the Organisational Rules, the Board of Directors currently has two committees (the Audit Committee and the Compensation Committee), which are described in detail below.

CORPORATE GOVERNANCE Audit Committee The functions, duties and powers of the Audit Committee are set out in separate rules and essentially comprise the following fields: Monitoring the management of Swiss Prime Site AG with respect to financial reporting, compliance with legislation, requirements, internal rules and guidelines and with respect to risk management as well as monitoring external corporate activities. Monitoring and assessing the independence and the work, auditing costs, extent of audit and the results of the external auditors and/or the external group auditor, the quality, implementation and disclosure of the accounting principles and the suitability of the financial control mechanisms. Monitoring and assessing the independence and the work of the valuation experts and the valuation principles. The Audit Committee exercises its powers as a joint collective body. Its members have no personal powers as against the Company, and for this reason cannot of themselves issue instructions. The Audit Committee has a right of proposal vis-à-vis the Board of Directors as a whole. The Audit Committee reports regularly to the Board of Directors about its activities and submits the necessary motions. The Audit Committee is at present composed as follows: Thomas Wetzel, President Bernhard Hammer, member Rudolf Huber, member Compensation Committee The functions, duties and powers of the Compensation Committee are set out in separate rules and essentially comprise the following fields: Preparation of the guidelines and proposals for the compensation payable to the Board of Directors and its committees and to the management (including participation plans), the Real Estate Asset Managers and the property administration, related persons and the external valuation experts. The Compensation Committee monitors compliance with the compensation principles determined by the Board of Directors, the committee itself and the management. The Compensation Committee exercises its powers as a joint collective body. Its members have no personal powers vis-à-vis the Company, and for this reason cannot issue instructions of their own accord. The Compensation Committee has a right of proposal vis-à-vis the Board of Directors as a whole. The Compensation Committee reports regularly to the Board of Directors about its activities and submits the necessary motions. The Compensation Committee is at present composed as follows: Hans Peter Wehrli, President Urs Bracher, member Stefan Mächler, member

CORPORATE GOVERNANCE 14 15 Management Board Markus Graf (1949), Feldbrunnen CEO In this function since: 01.12.2000 Managing Director, head of Real Estate Asset Management at Credit Suisse Asset Management, member of the Board of Directors of Wincasa, Winterthur, and of Société Internationale de Placements, Basle, member of the Supervisory Board of Credit Suisse Asset Management Immobilien Kapitalanlagegesellschaft, Frankfurt am Main (D), Chairman of the "Real Estate Investment Funds" expert committee of the Swiss Funds Association Peter Wullschleger (1965), Oftringen, CFO and Secretary to the Board of Directors In this function since: 11.05.1999 Director, head of Finance and Accounting Real Estate Asset Management at Credit Suisse Asset Management Peter Lehmann (1958), Wilen SZ CIO In this function since: 01.03.2002 Director, head of Sales and Acquisition Real Estate Asset Management at Credit Suisse Asset Management All members of the Management Board are Swiss nationals. Principles of the distribution of powers between Board of Directors and Management Board The separation of functions and powers between the Board of Directors and the Management Board is regulated in detail in organisational and competence rules. Arrangement of the information and control instruments applied to the Management Board The Management Board informs the Board of Directors regularly (at least every quarter) in detail about the course of business by means of a standardised report. In addition, meetings are held regularly with the Audit and Compensation Committees. Remuneration, shareholdings and loans to members of the Board of Directors and the Management Board Basic fee Expenses Function Basic Fee lump sum BD President CHF 100,000.00 CHF 3,000.00 BD Vice President CHF 50,000.00 CHF 3,000.00 BD Member CHF 25,000.00 CHF 3,000.00 BD Secretary CHF 10,000.00 CHF 3,000.00 Members of Audit Committee CHF 10,000.00 CHF 3,000.00 Members of Compensation Committee CHF 10,000.00 CHF 3,000.00 Members of Investment Committee CHF 15,000.00 CHF 5,000.00 The fee for the same function within the group of companies is only paid once.

CORPORATE GOVERNANCE In the case of multiple functions within the group of companies, the maximum fee shall be the first fee plus 50% of the second fee. In the case of multiple functions, a maximum lump sum for expenses of CHF 0.006 million is paid. The basic fees are proposed by the Compensation Committee and adopted by the Board of Directors. For the activity of the persons in management functions, no separate basic fees/salaries are paid if such persons are in an employment relationship with the asset manager, since these payments are included in the management fee. Share participation plan for the members of the Board of Directors and the Management Board Each member of the Board of Directors and the Management Board in office on 31 December of each year is entitled to acquire shares on the basis of Swiss Prime Site AG s preceding financial year as follows, the extent of the entitlement to subscribe being graduated according to the change in the NAV and the change in the market price of the Swiss Prime Site AG share at the end of the financial year in question as compared with the end of the preceding financial year, taking into account any distributions and other dilution effects: 50% of the change in the NAV (before deferred taxes) plus 50% of the change in the stock exchange price as against the previous year. No entitlement to shares arises if the total change is less than 5%. If a member of the Board of Directors or of the Management Board entitled to shares was not in office during the entire financial year in question, his entitlement to shares shall be on a pro rata basis. In the case of dual functions, only the higher rate shall apply. The share participation plan can be amended or terminated by the Board of Directors. Payments to current and former members of executive bodies Total payments 01.01. 31.12.2003 CHF 395,000.00 (excluding issue of shares and options) of which to current members of executive bodies: executive members of the Board of Directors CHF 0.00 (0) non-executive members of the Board of Directors CHF 362,000.00 (7) members of the Management Board CHF 33,000.00 (2) of which to former members of executive bodies: executive members of the Board of Directors CHF 0.00 (0) non-executive members of the Board of Directors CHF 0.00 (0) members of the Management Board CHF 0.00 (0) Neither additional separate severance payments nor compensation have been paid to former members of executive bodies who retired in previous reporting periods. The figures in brackets are the number of persons benefiting.

CORPORATE GOVERNANCE 16 17 Maximum total payment The maximum total payment amounts to CHF 138,600.00 (including issue of shares and options) of which: basic fee CHF 111,000.00 share allocations CHF 27,600.00 option allocations CHF 0.00 Share allocation in the period under review Total share allocations 01.01. 31.12.2003 of which to: executive members of the Board of Directors non-executive members of the Board of Directors members of the Management Board 760 shares 0 shares 480 shares 280 shares Shares held Total shares held as at 31.12.2003 of which by: executive members of the Board of Directors non-executive members of the Board of Directors members of the Management Board 1,301 shares 0 shares 1,104 shares 197 shares Options No options are outstanding or have been issued. Additional fees and payments No additional fees were paid. Loans to members of executive bodies At present, no loans to members of executive bodies are outstanding.

CORPORATE GOVERNANCE Shareholder participation rights The current Articles of Association can be found on our homepage (www.swiss-prime-site.ch) under the heading Corporate Governance. The following are references to selected articles: Register of shares and registration provisions (Article 5) Powers of the General Assembly of Shareholders (Article 9) Convening/agenda of the General Assembly of Shareholders (Article 11) Voting rights and the adoption of resolutions (Article 13) Special quorums (Article 14) Change of control and defence measures Anyone who directly, indirectly or in joint agreement with third parties acquires shares and, together with the shares already in his possession, exceeds the limit of 49% of the voting rights whether exercisable or not, must submit an offer for all the listed shares of the Company. There are no other provisions, agreements or plans. Auditors and group auditors Duration of the mandate and period of office of the Auditor in Chief Since the Company was founded, the statutory auditors and group auditors of Swiss Prime Site have been KPMG Klynveld Peat Marwick Goerdeler AG, Badenerstrasse 172, 8004 Zurich. The latter also acts as independent auditor for all Swiss subsidiaries of Swiss Prime Site AG. KPMG Jersey acts in this function for SPS Finance Ltd. The auditors and the group auditors are elected each year by the General Assembly of Shareholders. The auditor in chief has been in office since 01.01.2001. His period of office shall end with the financial year 2007 (subject to re-election of the auditor and group auditor). Fee Only CHF 0.0125 million have been so far invoiced for the current reporting period. For the 2003 financial year, we are expecting total costs for regular auditing to an amount of approximately CHF 0.190 million. Consultancy fees to the amount of around CHF 0.485 million were invoiced in connection with the acquisition of the Frey Group.

CORPORATE GOVERNANCE 18 19 Management contracts Swiss Prime Site has transferred the asset management functions to Credit Suisse Asset Management, Zurich (Real Estate Asset Management department, hereinafter referred to as "CSAM"). All the details are regulated in the management contract dated August 2001. The contract can be terminated in writing at 12 months notice, for the first time as at 31.12.2010. In addition, the parties are entitled to terminate this contract immediately at any time for sound cause. Principle Swiss Prime Site contracts CSAM to implement, monitor and supervise the financial matters of the Company, the administrative and technical administration and the controlling of the properties. CSAM assists, advises, prepares proposals and handles the property transactions within the framework of the investment regulations of Swiss Prime Site. Management fee (basic remuneration) Per year: 0.25 0.35% of the total assets (total of all valued consolidated assets, at the beginning of each quarter). Calculation example Share of total assets up to CHF 0.5 billion 0.35% Next share of total assets up to CHF 1.0 billion 0.33% Next share of total assets from CHF 1.0 billion 0.31% Next share of total assets from CHF 2.0 billion 0.29% Next share of total assets from CHF 4.0 billion 0.25% Construction management fee (building trustee, owner representation) 1.50% of the total building costs in question (construction of buildings, comprehensive renovations and conversions). Purchase and sales commission 1.50 5.00% of the purchase or sales price (without purchase costs) of each property acquired or contributed by Swiss Prime Site Purchase and sales price under CHF 1.0 million 5.00% Purchase and sales price under CHF 3.0 million 3.00% Purchase and sales price from CHF 3.0 million 1.50% The fees paid to the asset manager are set out in the Notes to the consolidated financial statements.

CORPORATE GOVERNANCE Information policy Frequency Each six months, the Company publishes a Newsletter with information about the latest events of the preceding six months. The financial reporting is in the form of half year and annual reports according to the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB). Other information media Further information about the Company can be found on the Web site www.swiss-prime-site.ch Major changes since the balance sheet date No major changes have occurred since the balance sheet date.

20 21 FINANCIAL COMMENTARY

FINANCIAL COMMENTARY Major events and developments Swiss Prime Site in the financial year 2003 2003 another year of growth In the 2003 financial year, Swiss Prime Site further extended its real estate portfolio by 11.43% to over CHF 2.2 billion through the acquisition of the Frey Group, the new investment in "Sihlcity" and investments in existing buildings and projects. The net rent income rose by CHF 11.8 million to CHF 109.8 million, while net profit rose by no less than 34.29% to CHF 47.0 million. The good business result is reflected in the Board of Directors proposal to the General Assembly of Shareholders on 27 April 2004 of a distribution in the form of a reduction of nominal value of CHF 12.00 (previous year CHF 10.00) per share. This corresponds with a cash return of 5.22% (on the closing price at the end of the year). The background conditions for the letting of commercial surfaces were anything but easy during the 2003 financial year. The Zurich region in particular recorded an increasing surplus, causing considerable concern amongst many commercial property owners and office project developers. The average vacancy rate in Switzerland last year was around 10%. In contrast, thanks to its top-quality portfolio, Swiss Prime Site came off extremely well with an average loss of earnings rate of 4.60%. Rent income and profits increased In the 2003 financial year, Swiss Prime Site again achieved a convincing operating result. Rent income was up 12.04% in an annual comparison to CHF 109.8 million (previous year CHF 98.0 million), EBIT margin (before revaluation) remaining good at 74.16% (previous year 75.76%). The operating profit (EBIT, without revaluations) rose by 9.05% to CHF 81.9 million. Net profit (without revaluation effects*) rose by 15.29% to CHF 47.5 million (previous year CHF 41.2 million). The net profit, taking into account the non-cash-flow-relevant revaluation effects*, amounted to CHF 47.0 million, 34.29% up on the previous year. *No account has been taken of the revaluation (IAS 40) and the resulting deferred taxes. In the period under review, the real estate portfolio increased in value by 11.43% to CHF 2,232.9 million. The growth was due not only to the investments made in existing building projects, but above all to the acquisition of the Frey Group with properties to the value of CHF 168.5 million and the participation in the "Sihlcity" construction project in Zurich. A property at Birchstrasse 117 in Zurich was sold in autumn 2003 at a price roughly 5% above the market value as at 31.12.2002.

FINANCIAL COMMENTARY 22 23 Consistent quality pays off The strict quality approach and the concentration on top-quality commercial properties (office and retail surfaces) pay off particularly in an economically difficult environment. Top-class locations for the specific uses in selected business centres in Switzerland, reasonable rent rates and the solid tenant portfolio resulted in a 4.60% loss of earnings rate for 2003, while the Swiss average amounted to about 10%. Over 55% of the rent contracts have a residual term of more than five years, a clear reflection of the favourable structure of the contractual terms. The 5.22% net return 1 on high-quality real estate at top locations has remained practically unchanged as against the previous year. 1 Net return = net rent income less maintenance costs, loss of earnings, building owner charges (e.g. property taxes, water, caretaker etc.), in relation to market value at the end of the period under review. No account is taken of financing costs, taxes on income and capital, corporate costs, extraordinary expenditure (repairs /renovations), depreciation, provisions etc. Pleasing valuation balance The revaluation carried out in collaboration with Wüest& Partner semi-annually led to a revaluation profit of CHF 6.6 million as at the end of 2003. The net revaluation profit is made up as follows: for 21 portfolio properties rent income rose thanks to new rent contracts and value-increasing investments, resulting in revaluation profits of CHF 9.6 million. For 18 properties, the changed market situation led to a negative value adjustment of CHF 9.8 million. The completed projects led, as expected, to initial valuation profits of CHF 6.8 million. Financial situation Despite the investments made, the financial situation continues to remain very solid and stable. As of 31.12.2003, the shareholders equity amounted to CHF 1,043.3 million, CHF 6.1 million above the figure for the end of 2002, representing a capital ratio of around 46%. The average rate of interest for borrowings as at the end of 2003 amounted to 3.35% (end of 2002: 3.56%), with an average residual term of 2.8 years (end of 2002: 2.9 years). In the light of the currently attractive interest environment, we intend to increase the average residual term of the loans.

FINANCIAL COMMENTARY Share information/distribution Despite a high cash return and a discount to the net asset value (NAV), the Swiss Prime Site share moved sideways in the 2003 financial year, with a total return of 3.00%. The NAV after deferred taxes amounted to CHF 260.46 as at 31.12.2003 (previous year CHF 258.68). Thus the discount as at the end of 2003 amounted to 11.69% (previous year 9.93%). Given the good results for the year and the positive forecasts for the coming year, the Board of Directors has resolved to propose to the General Assembly of Shareholders on 27.04.2004 an increase of the distribution by CHF 2.00 to CHF 12.00 per share. As in the previous years, it is proposed to effect the distribution in the fiscally interesting form of a reduction of nominal value. The distribution of CHF 12.00 corresponds to a cash return of 5.22% (on the closing price as at 31.12.2003). Good grounds for optimism Many signs indicate that 2004 will once again be a difficult year, above all in the office market. However, there is no cause for concern at Swiss Prime Site. Roughly half the rent income is based on contracts with a residual term of six years or more. Our locations are top class, our properties are in high demand and our tenants are solvent. We anticipate positive impulses from the commercial premises in 2004, with Swiss Prime Site expecting to profit from the emerging revival in the retail trade, thanks to the partial indexing of the rents to sales developments.

FINANCIAL COMMENTARY 24 25 Result from operating income Operating income Financial year Financial year in CHF 1,000 01.01. 31.12.2003 01.01. 31.12.2002 Rental income from investment properties 109,761 98,013 Other operating income 630 1,114 Total operating income 110,391 99,127 The main business activity of the Swiss Prime Site Group is renting investment properties. The rental income from investment properties amounts to CHF 109.761 million [CHF 98.013 million] and includes rental income from 01.01.2003 [01.01.2002] or from the time that the individual properties were acquired, as the case may be. Rent revenue was achieved in the period under review from a total floor space (excluding projects under construction) of roughly 468,110 m 2 [381,992 m 2 ]. The floor space can be divided into 455,551 m 2 [372,420 m 2 ] commercial space and 12,559 m 2 [9,572 m 2 ] residential space. Income failure (vacancy and collection losses) in the period under review amounted to CHF 5.287 million [CHF 3.731 million], an income failure rate of 4.60% [3.67%]. Income failures are deducted from the gross rent revenue. For details, see property details from page 82 onwards. In addition to the ordinary operating income from the letting of investment properties, other operating income of CHF 0.630 million was earned. This includes CHF 0.192 million from the acquisition of the Frey Group. This insignificant transaction profit was not recorded on the balance sheet but was released to the benefit of the income statement. Total operating expenditure Financial year Financial year in CHF 1,000 01.01. 31.12.2003 01.01. 31.12.2002 Direct operating expenditure 17,575 13,307 Change of fair market value of investment properties (upwards), net (6,604) 3,332 Personnel costs 336 232 Other operating expenditure 10,613 10,483 Depreciation on non-real-estate fixed assets 2 8 Total operating expenditure 21,922 27,362

FINANCIAL COMMENTARY Direct operating expenditure The direct rental costs include maintenance and repairs, ancillary costs charged to the owner, insurance charges and premiums, ground rent and costs for third-party services, such as management fees and valuation costs, etc. Mortgage and loan interest payments are reported entirely under financial profits. Change in fair market value of investment properties, net Pursuant to IAS 40, "Investment properties", properties are to be valued at fair market values. Deferred taxes on revaluations are to be accrued at the applicable maximum rates plus any speculation surcharges levied on short-term sales. However, the Swiss Prime Site Group bases calculations on a length of ownership of at least two years, i.e. speculation surcharges for the first two years are not taken into consideration. For the report as at 31.12.2003, this resulted in a tax charge of CHF 7.098 million [CHF 2.875 million]. The deferred tax liabilities accumulated to date amounted to CHF 50.584 million [CHF 32.112 million] as at 31.12.2003. Personnel costs At present, the Swiss Prime Site Group has no personnel of its own. The costs relate to Directors fees which are subject to AHV contributions, including the resulting social security contributions as well as expenditure on the leasing of personnel from Credit Suisse Asset Management. Credit Suisse Asset Management has been mandated to manage the Swiss Prime Site portfolio. The corresponding expenditure is included in management costs under other operating expenditure. Other operating expenditure Operating expenditure covers room costs, maintenance and repair costs for non-real-estate fixed assets, non-life insurance and fees, management and IT costs, as well as advertising expenditure. Capital tax is also charged to operating expenditure. The aim is to relate the taxes on earnings reported to the income statement directly to the business results, which is why mixing capital taxes and taxes on earnings should be avoided. Depreciation This item relates to depreciation on non-real-estate fixed assets of CHF 0.002 million [CHF 0.008 million].

FINANCIAL COMMENTARY 26 27 Financial income and expenditure The net financial expenditure of CHF 33.929 million [CHF 33.744 million] results mainly from mortgage and loan interest payments, less the income from short-term investments of liquid assets until used for investment projects. Current tax on earnings Tax on earnings is calculated at the effective maximum tax rate. This takes into consideration agreements with the relevant tax authorities. Deferred tax on earnings In accordance with IAS 12, "Income taxes" deferred tax on earnings can be reported as both deferred tax assets and deferred tax liabilities. Losses carried forward and tax credits can be entered as deferred tax assets if it is probable that future profits can be offset within the statutory time periods. Deferred tax liabilities are calculated as the difference between the book value of an asset or liability for the purposes of consolidation and its value for the purposes of the commercial or tax balance sheet. In principle, deferred taxes on all temporary differences are to be accrued at the full current or future expected rate (balance sheet liability method). Investments in investment properties and projects In the period under review, 01.01 31.12.2003, investments in the amount of CHF 68.777 million [CHF 276.615 million] were made in investment properties and projects. Of this, investment properties accounted for CHF 15.424 million (CHF 226.228 million) and projects accounted for CHF 53.353 million (CHF 50.387 million). In addition, the Frey Group with a real estate portfolio with a market value of CHF 168.470 million was acquired at the end of the financial year.

28 29 VALUATION EXPERT S REPORT

VALUATION EXPERT S REPORT Valuation expert s report by Wüest &Partner AG, Zurich The properties in the Swiss Prime Site AG portfolio are valued by Wüest & Partner half-yearly at their current market value. The present valuation is valid as at 31.12.2003. Valuation standards and principles Wüest &Partner values the properties according to the principle of a "fair value", i.e., the established market value is defined as the selling price most likely to be obtained on the free market under fair conditions at the time of the valuation between well-informed parties (IAS 40). Extremely high and extremely low positions are thus eliminated. Construction projects or properties in the development stage are also valued and reported either "at cost" or at the lower market value, i.e., the investment costs to date less any necessary depreciation are reported (IFRS /IAS 16). The valuation guarantees a high degree of transparency, uniformity, relevance and completeness. The relevant legal regulations, as well as the specific national and international standards, are respected (regulations for property companies listed on the SWX, IFRS, etc.). In order to ensure an independent valuation and thus the highest possible level of objectivity, the business activity of Wüest & Partner excludes both trade and transactions on a commission basis, as well as the management of properties. The valuation is based on the most recent information available concerning the properties and the property market. The data and documents pertaining to the properties are made available by the owner. These documents are assumed to be correct. All property market data come from the continuously updated databases held by Wüest & Partner (Immo-Monitoring 2003/2004). Valuation methods In general, Wüest & Partner values investment properties according to the discounted cash flow method. This corresponds to international standards and is also used in business valuations. It is recognised within the framework of the freedom of choice of basic method to be a "best practice". Using the DCF method, the current market value of a property is established according to the sum of all net earnings (before taxes, interest payments, depreciation and amortisation = EBITDA) expected in the future and discounted to the present. The net earnings (EBITDA) per property are individually discounted in the light of the relevant prospects and risks and depending on the market and an adjustment for risks. A detailed financial report per property reports all expected cash flows, thus creating the greatest degree of transparency possible. In the report, attention is drawn to substantial changes as compared with the previous valuation. Valuation results as at 31.12.2003 In the period under review, 01.01. 31.12.2003, the portfolio increased substantially through the acquisition of 26 properties, with one property sold. As a result, the Swiss Prime Site AG portfolio as at 31.12.2003 comprised a total of 68 properties, of which 62 are existing properties, four are plots of building land and two projects are still under construction.

VALUATION EXPERT S REPORT 30 31 The acquisitions comprise a package of 25 properties with a total market value of CHF 168.5 million and the "Sihlcity" project in Zurich, in which SPS Immobilien AG has acquired a co-ownership share of 242/1000. The acquisitions were by private contract at market conditions. No transactions with affiliated companies were carried out in the period under review. The sales price of the "Birchstrasse 117" property in Zurich was roughly 5% above the market value of CHF 14.5 million as at 31.12.2002. The property was sold by private contract at market conditions. In the period under review, a number of conversion and construction projects were completed and are now valued at current market value. The completion of the "Under Höh" project in Volketswil led to a substantial initial valuation profit, while the "Messeturm" project in Basle produced a slight initial valuation loss. The upgrading of the "Shopping Centre Volkiland" in Volketswil led to a development profit. The projects "Opus 2" in Zug and "Sihlcity" in Zurich have progressed further and are valued at cost. As at 31.12.2003, the market value of the SPS portfolio as a whole (a total of 68 properties) is valued at CHF 2,232.9 million. As a result, the market value compared with 31.12.2002 rose by CHF 229.2 million or 11.4%. The increase is composed of the acquisition of a package of 25 properties (CHF 168.5 million), investments in conversions and new buildings (CHF 75.3 million: "Opus 2" in Zug, "Sihlcity" in Zurich, "Messeturm" in Basle, "Under Höh" and "Industriestrasse 1" in Volketswil; including initial valuation and revaluation effects during the period), value adjustments for the existing properties (CHF 0.1 million) and the sale of "Birchstrasse 117" in Zurich (CHF 14.5 million). Of the existing properties, 21 have been valued higher than on 31.12.2002, one property has remained unchanged and 18 have been valued at less. The increases are largely due to the completion of maintenance and investment measures (renovations), increased rental income, successful letting and new tenancy agreements. The reductions in value are primarily due to changes in letting potential and vacancy risks, as well as higher assessments of costs for operation and maintenance. The value changes are also related to the general current market situation for business properties. This affects properties with long-term tenancy agreements less than short tenancies about to expire and current vacancies. Overall, the SPS portfolio, thanks to mostly long-term secured income, proves to be of more than average stability in the current environment. In addition, a number of persistent vacancies were eliminated. The newly acquired properties are mostly in very good locations, with the result that the acquisition not only increases the value of the portfolio but also consolidates the Prime Site strategy. Individual properties acquired at less advantageous locations are of no significance in terms of value. Zurich, 27 February 2004 Wüest & Partner AG Andreas Ammann Matthias Haag

32 33 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS To the General Assembly of Shareholders of Swiss Prime Site AG, Olten As group auditors, we have audited the consolidated financial statements (income statement, balance sheet, cash flow statement, statement of changes in shareholders equity and notes / pages 30, 31, 35 72 and 82 93) of Swiss Prime Site AG for the year ended 31.12.2003. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with the International Standards on Auditing (ISA), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, the significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS), and the accounting provisions as contained in the Additional Rules for the Listing of Real Estate Companies of the Swiss Exchange (SWX) and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. Zurich, 4 March 2004 KPMG Klynveld Peat Marwick Goerdeler SA Markus Schunk Swiss Certified Accountant Auditor in Charge Astrid Keller Swiss Certified Accountant

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 34 35 Consolidated income statement Financial year Financial year in CHF 1,000 Notes 01.01. 31.12.2003 01.01. 31.12.2002 Rental income from investment properties 3 109,761 98,013 Other operating income 3 630 1,114 Total operating income 3 110,391 99,127 Direct operating expenditure 4 17,575 13,307 Change in fair market value of investment properties (upwards), net 5/19 (6,604) 3,332 Personnel costs 6 336 232 Other operating expenditure 7 10,613 10,483 Depreciation of non-real-estate fixed assets 8 2 8 Total operating expenditure 21,922 27,362 Operating profit (EBIT) 88,469 71,765 Financial expenditure 9 33,944 33,774 Financial income 9 15 30 Profit before tax on earnings 54,540 38,021 Current tax on earnings 10 410 125 Deferred tax on earnings 10 7,098 2,875 Profit for the period under review 47,032 35,022 Earnings per share for the period under review 11 11.72 10.83 The Notes are an integral component of the consolidated annual financial statements.

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Consolidated balance sheet in CHF 1,000 Notes 31.12.2003 31.12.2002 Assets Current assets Cash and other liquid assets 12 8,000 1,427 Securities 13 6,585 67 Receivables from deliveries and services 14 13,692 9,498 Other receivables 15 5,156 9,043 Accrued income and prepaid expenses 16 7,774 10,533 Total current assets 41,207 30,567 Fixed assets Long-term financial assets 17 515 Non-real-estate fixed assets 18 2 Investment properties 19 2,232,940 2,003,759 Total fixed assets 2,232,940 2,004,276 Total assets 2,274,147 2,034,843 Liabilities and shareholders equity Short-term liabilities Accounts payable 20 475 268 Other short-term liabilities 20 1,318 7,300 Advance payments 20 18,721 12,515 Accrued expenses and deferred income 20 15,466 19,480 Total short-term liabilities 35,980 39,564 Long-term liabilities Long-term financial liabilities 21 1,143,515 926,000 Deferred tax liabilities 22 50,584 32,112 Provisions 23 770 Total long-term liabilities 1,194,869 958,112 Total liabilities 1,230,849 997,676 Shareholders equity Share capital 24 729,032 769,811 Capital reserves 24 145,349 145,471 Retained earnings 24 168,917 121,885 Total shareholders equity 1,043,298 1,037,167 Total liabilities and shareholders equity 2,274,147 2,034,843 The Notes are an integral component of the consolidated annual financial statements.

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 36 37 Consolidated cash flow statement Financial year Financial year in CHF 1,000 Notes 01.01. 31.12.2003 01.01. 31.12.2002 Profit for the period under review 47,032 35,022 Adjustments for: Change in fair value of investment properties (upwards), net 5/19 (6,604) 3,332 Transaction profit from the acquisition of the Frey Group (192) Transaction profit from the disposal of investment properties (2) Depreciation on non-real-estate fixed assets 8/18 2 8 Financial expenditure 9 33,944 33,774 Financial income 9 (15) (30) Taxes on earnings 10 410 125 Changes in working capital: Increase in securities portfolio 13 (67) Increase of receivables from deliveries and services 14 (3,211) (5,041) Decrease/increase of other receivables 15 5,295 (8,777) Decrease/increase of accrued income and prepaid expenses 16 2,792 (8,976) Decrease/increase of accounts payable 20 (61) 90 Decrease/increase of other short-term liabilities and advance payments 20 (1,464) 11,024 Decrease/increase of accrued expenses and deferred income 20 (5,744) 2,244 Increase in deferred tax liabilities 10/22 7,058 2,875 Interest payments made (33,797) (35,814) Interest payments received 15 30 Payments of tax on earnings (266) (16) Net cash inflow from operational activity 45,192 29,802 Investments in investment properties 19 (68,777) (276,615) Acquisition of the Frey Group, less liquid funds acquired (71,127) Desinvestments of investment properties 19 14,672 Desinvestments of long-term financial assets 17 515 412 Net cash outflow from investment activity (124,718) (276,203) Acceptance of long-term financial liabilities, net 21 127,000 73,000 Capital increase including premium, minus costs 24 193,447 Revenue from sale of own subscription rights 24 55 Reduction of nominal value 24 (40,267) (24,160) Sale/purchase of own shares 24 (634) 1,921 Payment of profit distributions 24 Net cash inflow from financing activity 86,099 244,263 Net increase/decrease of cash and other liquid assets 6,573 (2,138) Cash and other liquid assets at start of the period under review 12 1,427 3,565 Cash and other liquid assets at the end of the period under review 12 8,000 1,427 The Notes are an integral component of the consolidated annual financial statements.

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Notes to the consolidated cash flow statement Financial year Financial year in CHF 1,000 Notes 01.01. 31.12.2003 01.01. 31.12.2002 Interest receivable at the beginning of the period under review Interest income in the period under review 9 15 30 less interest receivable at the end of the period under review Interest payments received 15 30 Accrued income and prepaid expenses at the beginning of period under review 16 10,533 1,557 less interest receivable at the beginning of the period under review Subtotal 10,533 1,557 Accrued income and prepaid expenses at the end of period under review 16 7,774 10,533 of which, from the acquisition of the Frey Group (34) less interest receivable at the end of the period under review Subtotal 7,741 10,533 Decrease/increase in accrued income and prepaid expenses (2,792) 8,976 Interest obligations at the beginning of the period under review 635 2,675 Interest expenditure during the period under review 9 33,944 33,774 less interest liabilities at the end of the period under review 20 (782) (635) Interest payments made 33,797 35,814 Liabilities for taxes on earnings at the beginning of the period under review 276 167 Taxes on earnings during the period under review 10 410 125 less liabilities for taxes on earnings at the end of the period under review (1,692) (276) of which, from the acquisition of the Frey Group 1,272 Taxes paid on income 266 16 Accrued expenses and deferred income at the beginning of the period under review 20 19,480 19,167 less interest liabilities at the beginning of the period under review (635) (2,675) less liabilities for taxes on earnings at the beginning of the period under review (276) (167) Subtotal 18,569 16,325 Accrued expenses and deferred income at the end of the period under review 20 15,466 19,480 of which from the acquisition of the Frey Group (1,438) less interest liabilities at the end of the period under review 20 (782) (635) less liabilities for taxes on earnings at the end of the period under review (1 692) (276) of which from the acquisition of the Frey Group 1,272 Subtotal 12,826 18,569 Decrease/increase in accrued expenses and deferred income (5,744) 2,244 The Notes are an integral component of the consolidated annual financial statements.

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 38 39 Notes to the consolidated cash flow statement in CHF 1,000 as at 31.12.2003 The following assets and liabilities were taken over with the acquisition of the Frey Group: Assets Current assets Cash and other liquid assets 4,888 Securities 6,518 Receivables from deliveries and services 983 Other receivables 1,408 Accrued income and prepaid expenses 34 Total current assets 13,831 Fixed assets Long-term financial assets Non-real-estate fixed assets Investment properties 168,470 Total fixed assets 168,470 Total assets 182,301 Liabilites Short-term liabilities Accounts payable 268 Other short-term liabilities 263 Advance payments 1,424 Accrued expenses and deferred income 1,438 Total short-term liabilities 3,393 Long-term liabilities Long-term financial liabilities 90,515 Deferred tax liabilities 11,416 Provisions 770 Total long-term liabilities 102,701 Total liabilities 106,094 Total net assets acquired 76,207 Transaction profit (192) Purchase price paid (including transaction costs) 76,015 Less liquid funds acquired (4 888) Total cash flow from the purchase of the Frey Group 71,127 The Notes are an integral component of the consolidated annual financial statements.

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Consolidated statement of changes in shareholders equity Capital Total Share reserves Retained shareholders in CHF 1,000 Notes capital (premium) earnings equity As at 01.01.2002 599,131 144,889 86,864 830,884 Profit distributions Profit for the period 35,022 35,022 Capital increase as at 11.10.2002, including premium 193,280 8,053 201,333 Capital increase cost (7,887) (7,887) Revenue from sale of own subscription rights 55 55 Reduction of nominal value as of 29.07.2002 (24,160) (24,160) Sale of own shares, net 1,560 361 1,921 As at 31.12.2002 769,811 145,471 121,885 1,037,167 Profit distributions Profit for the period 47,032 47,032 Reduction of nominal value as of 28.07.2003 24 (40,267) (40,267) Purchase of own shares, net 24 (512) (122) (634) As at 31.12.2003 729,032 145,349 168,917 1,043,298 The Notes are an integral component of the consolidated annual financial statements.

40 41 NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 1 Business activity 1.1 Purpose The purpose of Swiss Prime Site AG is exclusively the acquisition, holding, management and disposal of investments in other companies. SPS Immobilien AG, SPS Immobilien Residenz AG, Arthur Frey AG, Frewa AG, Métropole-Monopole AG and Société Immobilière Rue Céard No. 14 have as their objects the development, acquisition, holding, management and disposal of business property located in Switzerland with little or no residential space. SPS Finance Ltd. has been founded for providing funds within the Group. 1.2 Business strategy Swiss Prime Site offers Swiss and foreign investors the opportunity to participate in a professionally managed Swiss property portfolio established according to strict criteria. Swiss Prime Site focuses on the Swiss real estate market by means of a clearly communicated strategy. Swiss Prime Site invests in Swiss properties at selected sites and gives its shareholders the opportunity to participate in the potential for value growth of an enterprise managed by experienced real estate specialists. In operational terms, Swiss Prime Site works together with acclaimed industry partners. 1.3 Investment strategy The investment regulations define the Company s investment strategy. When selecting investments, the Company primarily concentrates on business properties with good prospects of development in the larger business locations in Switzerland. The Company does not invest in tourism buildings, factory properties or properties financed within the framework of the Residential Property Promotion Act, nor does the Company invest in purely residential properties. For the purpose of optimising the revenue, the aim is to achieve 50% borrowed financing for real estate investments, with a maximum of 60% borrowed financing permissible as based on the total property stock. Land can be pledged to secure corresponding loans. 1.4 Business activity The company s business activities are primarily carried out via the subsidiaries. As a real estate investment company, the company aims to minimise the staff level. According to the principles of lean management, the Company has transferred the management, the administration of the properties and certain other services to Credit Suisse Asset Management. As at 31.12.2003 the Company had no personnel of its own.