Elbit Imaging Ltd. Announces Second Quarter Results for 2008

TEL AVIV, Israel, Aug. 31 /PRNewswire-FirstCall/ — Elbit Imaging Ltd.
(Nasdaq: EMITF) (”EI” or the “Company”) today announced its results for the
second quarter of 2008.

Profit for the second quarter of 2008 amounted to NIS 56.0 million
(approximately US$ 16.7 million) of which profit of NIS 15.8 million
(approximately US$ 4.7 million) is attributable to the equity holders of
the Company and NIS 40.3 million (approximately US$ 12.0 million) is
attributable to minority interest, compared with profit of NIS 83.6 million
in the corresponding period of 2007 of which NIS 57.7 million is
attributable to the equity holders of the Company and NIS 25.8 million is
attributable to minority interest.

Profit for the second quarter of 2008 excluding stock-base compensation
expenses (Non GAAP measure) amounted to NIS 66.8 million (approximately US$
19.9 million) compared with NIS 100.9 million in the corresponding period
of 2007.

Our consolidated financial statements for the second quarter of 2008
presentation are available through our website at: http://www.elbitimaging.com
under: “Investor Relations - Company Presentations (8/2008).”

Mr. Shimon Yitzhaki, President, commented: “Even in these restless
times in the markets, specifically the real-estate markets, Elbit Imaging
is pleased to report a profitable quarter. Elbit Imaging continues to
implement a policy under which it does not revaluate its real estate
assets. As such, Elbit Imaging’s profits are recognized on a cash flow
basis and from the Group’s core business activities. In this quarter we
completed and delivered our Plzen Shopping and Entertainment Center to
Klepierre, at 100% occupancy let out and as such completed the transaction
with a substantial profit. In this quarter we have opened our Hotel in
Bucharest, which is the largest Hotel in the City of Bucharest. The Hotel
is a high quality hotel, which following it’s opening trail period will
generate a steady cash flow and substantial profitability to the Company.
The Company is continuing to develop its projects in Europe and in India,
and continues to seek new opportunities and ventures. A week ago, we
declared our cooperation with Plaza Centers so that Plaza Centers and Elbit
will join forces in mixed used real-estate projects in India. Such joint
forces will optimize our cash flow and access to financing sources. In
addition, it will create a synergy regarding managerial, know how and
experience. In May 2008, we distributed a substantial dividend of
approximately NIS 170 Million, emphasizing our belief of sharing our
profits with our shareholders. The Company will take advantage of its high
liquidity of approximately one billion dollars in order to continue with
the impetus and to explore new opportunities on its doorstep, during this
period”.

About Elbit Imaging Ltd.

Elbit Imaging Ltd. (”EI”) is a subsidiary of Europe Israel (M.M.S.)
Ltd. EI’s activities are divided into the following principal fields: (i)
Initiation, construction, operation, management and sale of shopping and
entertainment centers in Israel, Central and Eastern Europe and India; (ii)
Hotels ownership, primarily in major European cities, as well as operation,
management and sale of same through its subsidiary, Elscint Ltd.; (iii)
Investments in the research and development, production and marketing of
magnetic resonance imaging guided focused ultrasound treatment equipment,
through its subsidiary, InSightec Ltd.; and (iv) Other activities
consisting of the distribution and marketing of women’s fashion and
accessories through our wholly-owned Israeli subsidiary, Elbit Trade &
Retail Ltd., and venture- capital investments.

Any forward looking statements with respect to EI’s business, financial
condition and results of operations included in this release are subject to
risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward looking statements,
including, but not limited to, ability to find suitable locations, receipt
of approvals and permits for zoning and construction, delays in
construction, dependency on partners in the hotels business, competition,
risks relating to operations in Eastern Europe and Asia (including India)
and risks relating to our image guided treatment, economic conditions, as
well as certain other risk factors which are detailed from time to time in
EI’s filings with the Securities and Exchange Commission including, without
limitation, Annual Report on Form 20-F for the fiscal year ended December
31, 2006, filed with the Securities and Exchange Commission on July 3,
2007.

For Further Information:

Company Contact Investor Contact
Shimon Yitzhaki, President Rachel Levine
Elbit Imaging Ltd. The Global Consulting Group
(972-3) 608-6000 1-646-284-9439
syitzhaki@elbitimaging.com rlevine@hfgcg.com

Dudi Machluf, CFO
Elbit Imaging Ltd.
(972-3) 608-6024
dudim@elbitimaging.com

Elbit Imaging Ltd
————————————————
June 30, June 30, December 31, June 30,
2008 2007 2007 2008
————————————————
Convenience
translation
————-
(in thousand NIS) US$’000
————————————————

Current Assets
Cash and cash equivalents 1,796,077 1,937,768 1,416,710 535,823
Short-term deposits and
investments 857,866 583,133 700,055 255,926
Trade accounts receivable 379,082 228,579 1,521,521 113,091
Other receivable 117,560 99,460 65,271 35,071
Prepayments and other
assets 103,331 19,357 386,160 30,827
Inventories 30,078 27,593 25,492 8,973
Trading property 2,192,242 1,786,523 1,738,213 654,010
——— ——— ——— ———
5,476,236 4,682,413 5,853,422 1,633,721

Assets classified as held
for sale and discontinued
operation 10,890 551,830 11,120 3,250
——— ——— ——— ———
5,487,126 5,234,243 5,864,542 1,636,971
——— ——— ——— ———

Non-Current Assets
Deposits, loans and other
long-term balances 782,709 115,658 109,114 233,505
Investments in associates 50,371 51,373 58,062 15,026
Property, plant and
equipment 1,718,246 1,756,622 1,761,350 512,603
Investment property and
payments on account of
investment property 639,428 59,052 454,623 190,760
Other assets and deferred
expenses 132,983 139,848 148,137 39,673
Intangible assets 48,525 6,192 51,820 14,477
——— ——— ——— ———
3,372,262 2,128,745 2,583,106 1,006,044
——— ——— ——— ———

——— ——— ——— ———
8,859,388 7,362,988 8,447,648 2,643,015
========= ========= ========= =========

Current Liabilities
Short-term credits 197,684 621,251 166,469 58,975
Suppliers and service
providers 156,285 211,317 181,226 46,624
Payables and other credit
balances 370,634 151,352 437,813 110,571
Other liabilities 113,368 146,012 119,680 33,821
——— ——— ——— ———
837,971 1,129,932 905,188 249,991

Liabilities associated with
current assets classified
as held for sale and
discontinued operation 26,877 249,842 30,123 8,019
——— ——— ——— ———
864,848 1,379,774 935,311 258,010
——— ——— ——— ———

Non-Current liabilities
Borrowings 5,184,971 3,423,105 4,123,904 1,546,829
Other financial liabilities 73,651 104,229 91,685 21,972
Other liabilities 12,049 20,050 12,607 3,594
Deferred taxes 51,761 72,305 55,139 15,443
——— ——— ——— ———
5,322,432 3,619,689 4,283,335 1,587,838
——— ——— ——— ———

Shareholders’ Equity
Attributable to equity
holders of the Company 1,568,406 1,614,473 2,035,438 467,901
Minority Interest 1,103,702 749,052 1,193,564 329,266
——— ——— ——— ———
2,672,108 2,363,525 3,229,002 797,167
——— ——— ——— ———

——— ——— ——— ———
8,859,388 7,362,988 8,447,648 2,643,015
——— ——— ——— ———

Elbit Imaging Ltd

——————————————————–
Year
Six months Three months ended Six months
ended June 30 ended June 30 Dec. 31 ended June 30
——————————————————–
2008 2007 2008 2007 2007 2008
——————————————————–
Convenience
translation
———–
(in thousand NIS) US$’000
——————————————————–

Revenues and gains
Commercial
centers (1) 426,374 552,887 352,666 114,741 2,917,616 127,201
Hotels operations
and management 190,220 189,249 98,332 98,935 395,227 56,748
Gain from sale of
real estate assets - 63,464 - 63,464 62,621 -
Sale of medical
systems 28,914 27,039 17,524 6,517 49,648 8,626
Decrease in
shareholding of
subsidiaries - - - - 5,310 -
Sale of fashion
merchandise 45,969 28,214 27,796 15,106 68,139 13,714
——– ——– ——– ——– ——— ——–
691,477 860,853 496,318 298,763 3,498,561 206,289
——– ——– ——– ——– ——— ——–

Costs and expenses
Commercial
centers (1) 319,206 473,004 278,400 49,450 1,714,253 95,229
Hotels operations
and management 166,687 164,215 85,061 82,633 330,063 49,728
Cost and expenses
of medical systems
operation 29,257 33,069 14,274 15,306 69,953 8,728
Cost of fashion
merchandise 53,660 35,055 30,963 17,642 80,308 16,008
Research and
development
expenses, net 33,779 33,562 17,613 17,420 69,559 10,077
General and
administrative
expenses 27,344 34,532 18,793 18,116 116,992 8,157
Share in losses of
associates, net 7,820 8,112 5,502 3,616 12,667 2,333
Financial expenses,
net 5,460 26,433 (6,653) 3,779 140,926 1,629
Other expenses, net (933) 2,028 922 5,502 38,233 (278)
——– ——– ——– ——– ——— ——–
642,280 810,010 444,874 213,464 2,572,954 191,611
——– ——– ——– ——– ——— ——–

Profit before
income taxes 49,197 50,843 51,444 85,299 925,607 14,678
Income taxes
(tax benefits) (271) 2,854 (3,326) 3,133 16,288 (81)
——– ——– ——– ——– ——— ——–
Profit from
continuing
operations 49,468 47,989 54,770 82,166 909,319 14,759
Profit from
discontinued
operation, net 2,992 1,579 1,238 1,409 10,289 893
——– ——– ——– ——– ——— ——–
Profit for the
period 52,460 49,568 56,008 83,575 919,608 15,652
======== ======== ======== ======== ========= ========

Attributable to:
Equity holders of
the Company (11,593) 17,049 15,755 57,742 539,749 (3,458)
Minority interest 64,053 32,519 40,253 25,833 379,859 19,110
——– ——– ——– ——– ——— ——–
52,460 49,568 56,008 83,575 919,608 15,652
======== ======== ======== ======== ========= ========

(1) Sale of trading property and investment property operations

Elbit Imaging Ltd

Cumulative
foreign Stock
currency base
Share Capital translation Hedging compen- Retained
Capital reserves adjustments Reserves sation earnings
(In thousand NIS)
———————————————————-

Balance -
January 1,
2007 38,032 815,112 47,966 20,080 13,482 852,416

Gain for the
period - - - - - 539,749
Differences from
translation of
foreign entities’
financial
statements - - (2,094) - - -
Dividend paid - - - - - (159,766)
Issuance of
shares to the
minority by a
subsidiary - - - - - -
Purchase of
the minority
interest - - - - - -
Repayment of
loans as a
result of the
realization by
employees of
rights to shares - - - - - -
Change in fair
value of Swap
transactions - - - (7,232) - -
Stock based
compensation
expenses - - - - 19,427 -
Initially
consolidation of
a subsidiary - - - - - -
Employee share
premium - 163 - - - -
———————————————————-
December 31,
2007 38,032 815,275 45,872 12,848 32,909 1,232,399

Gain for the
period - - - - - (11,593)
Differences from
translation of
foreign entities’
financial
statements - - (312,891) - - -
Dividend paid - - - - - (168,064)
issuance of
shares to the
minority by
a subsidiary - - - - - -
Repayment of
loans as a
result of the
realization by
employees of
rights to shares - - - - - -
Change in fair
value of Swap
transactions - - - 15,338 - -
Stock based
compensation
expenses - - - - 6,784 -
Dividend to the
minority - - - - - -
Employee share
premium - 16 - - - -
———————————————————-
June 30, 2008 38,032 815,291 (267,019) 28,186 39,693 1,052,742
==========================================================

Total
amount
Loans to attribut-
employees able to Total
to acquire share- share-
Gross Treasury Company holders of Minority holders’
Amount stock Shares the Company Interest equity
(In thousand NIS)
————————————————————

Balance -
January 1,
2007 1,787,088 (138,519) (3,853) 1,644,716 649,515 2,294,231

Gain for the
period 539,749 - - 539,749 379,859 919,608
Differences from
translation of
foreign entities’
financial
statements (2,094) - - (2,094) 10,467 8,373
Dividend paid (159,766) - - (159,766) (159,766)
Issuance of
shares to the
minority by a
subsidiary - - - - 45,459 45,459
Purchase of
the minority
interest - - - - (601) (601)
Repayment of
loans as a
result of the
realization by
employees of
rights to shares - - 638 638 - 638
Change in fair
value of Swap
transactions (7,232) - - (7,232) - (7,232)
Stock based
compensation
expenses 19,427 - - 19,428 76,450 95,877
Initially
consolidation of
a subsidiary - - - - 32,415 32,415
Employee share
premium 163 - (163) (0) - (0)
————————————————————
December 31,
2007 2,177,335 (138,519) (3,378) 2,035,438 1,193,564 3,229,002

Gain for the
period (11,593) - - (11,593) 64,053 52,460
Differences from
translation of
foreign entities’
financial
statements (312,891) - - (312,891) (86,536) (399,427)
Dividend paid (168,064) - - (168,064) - (168,064)
Issuance of
shares to the
minority by
a subsidiary - - - - 6,522 6,522
Repayment of
loans as a
result of the
realization by
employees of
rights to shares - - 3,394 3,394 - 3,394
Change in fair
value of Swap
transactions 15,338 - - 15,338 - 15,338
Stock based
compensation
expenses 6,784 - - 6,784 23,865 30,649
Dividend to the
minority - - - - (97,766) (97,766)
Employee share
premium 16 - (16) - - -
————————————————————
June 30,
2008 1,706,925 (138,519) (0) 1,568,406 1,103,702 2,672,108
============================================================

Cumulative
foreign Stock
currency base
Share Capital translation Hedging compen- Retained
Capital reserves adjustments Reserves sation earnings
Convenience translation US$’000
———————————————————-

December 31,
2007 11,346 243,220 13,685 3,833 9,818 367,661

Gain for
the period - - - - - (3,458)
Differences
from translation
of foreign
entities’
financial
statements - - (93,345) - - -
Dividend paid - - - - - (50,138)
Issuance of
shares to
the minority
by a
subsidiary - - - - - -
Repayment of
loans as
a result of the
realization by
employees of
rights to shares - - - - - -
Change in fair
value of Swap
transactions - - - 4,574 - -
Stock based
compensation
expenses - - - - 2,024 -
Dividend to the
minority - - - - - -
Employee share
premium - 5 - - - -
———————————————————-
June 30, 2008 11,346 243,225 (79,660) 8,407 11,842 314,065
———————————————————-

Total
amount
Loans to attribut-
employees able to Total
to acquire share- share-
Gross Treasury Company holders of Minority holders’
Amount stock Shares the Company Interest equity
Convenience translation US$’000
———————————————————-

December 31,
2007 649,563 (41,324) (1,009) 607,230 356,075 963,306

Gain for
the period (3,458) - - (3,458) 19,110 15,652
Differences
from translation
of foreign
entities’
financial
statements (93,345) - - (93,345) (25,816) (119,161)
Dividend paid (50,138) - - (50,138) - (50,138)
Issuance of
shares to
the minority
by a
subsidiary - - - - 1,944 1,944
Repayment of
loans as
a result of the
realization by
employees of
rights to shares - - 1,014 1,014 - 1,014
Change in fair
value of Swap
transactions 4,574 - - 4,574 - 4,574
Stock based
compensation
expenses 2,024 - - 2,024 7,119 9,142
Dividend to the
minority - - - - (29,166) (29,166)
Employee share
premium 5 - (5) - - -
———————————————————-
June 30, 2008 509,225 (41,324) 0 467,901 329,266 797,167
———————————————————-

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Elbit Imaging Ltd. Announces Second Quarter Results for 2008

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