Tel Aviv, Israel, March 28, 2010, Elbit Imaging Ltd. (“EI”) (TASE, NASDAQ: EMITF) announced today its results for the year 2009.

Years 2009 and 2008 results analysis:

Consolidated revenues in Year 2009 were NIS 693 million (US$ 184 million) compared to NIS 1,098 million reported last year.

Revenues from commercial centers decreased in 2009 to NIS 85 million (US$ 23 million) from NIS 524 million last year. This decrease is attributable to: a decrease in revenues from sale of trading property from NIS 439 million  in 2008 (attributable to the sale of the Plzen Plaza commercial center in Czech Republic and price adjustment in Arena Plaza in Hungary which was sold in the end of 2007) to nil in 2009. The revenue in the amount NIS 85 million is attributable mainly to the commencement of operation of two commercial centers in the beginning of 2009 (Riga Plaza in Latvia and Liberec Plaza in Czech Republic).

Cost of commercial centers decreased to NIS 169 million (US$ 45 million) compared to NIS 433 million reported last year. This decrease is attributable mainly to decrease in the cost of sales of trading property due to the fact that no sales of commercial centers has been executed in 2009 compared to sale of the Plzen Plaza commercial center in 2008 as mentioned above. 

Revenues from hotels operations and management increased to NIS 397 million (US$ 105 million) as compared to NIS 384 million reported last year. This increase is attributable to: (i) an increase in the revenues from the Radisson Bucuresti Hotel in Romania which was partially opened in mid of 2008 offset by; (ii) decrease in the revenues from all other hotels as a result of the global economic slowdown mainly effected the results of the first half of 2009; (iii) devaluation of the average Pound rate against the NIS.

Costs and expenses from hotels operations and management decreased to NIS 353 million (US$ 94 million) compared to NIS 355 million reported last year. This decrease is attributable mainly to the reduction of operational expenses in the hotels and to the devaluation of the average rate Pound against the NIS, offset by; increase in expenses related to the Radisson Bucuresti Hotel which was partially opened in mid 2008.

Revenues from sale of medical systems increased to NIS 62 million (US$ 16 million) compared to NIS 38 million reported last year. This increase was mainly due to increase in the number of systems sold compared to last year.

Costs and expenses of medical systems operations increased to NIS 67 million (US$ 18 million) compared to NIS 55 million reported last year. The increase is attributed to the increase in number of system sold as mentioned above.

Research and development expenses increased to NIS 74 million (US$ 20 million) compared to NIS 69 million reported last year. These costs are attributable to the operations of InSightec.

Revenues from sale of fashion merchandise increased to NIS 118 million in 2009 (US$ 31 million) compared to NIS 103 million reported last year. The increase is mainly attributable to: (i) the opening of first Gap store in Jerusalem; (ii) full operation in 2009 of eight Mango stores which opened during 2008 as compared to partly operation in 2008 offset by; (iii) decrease in sales of Mango existing stores during 2009 as compared to 2008. 

Cost and expenses of fashion merchandise increased to NIS 134 million (US$ 35 million) compared to NIS 118 million reported last year. This increase was attributable mainly to increase in retail operation as mentioned above.

General and administrative expenses increased to NIS 66 million (US$ 17 million) compared to NIS 55 million reported last year. The increase is attributed mainly to: (i) change in non cash expenses (mainly stock based compensation expenses and provisions) in the amount of NIS 11 million; (ii) decreases in management fee charges to the group companies in the amount of NIS 5 million offset by (iii) reduction in salaries costs in the amount of NIS 5 million.

Financial expenses (income), net resulted in expenses of NIS 261 (US$ 69 million) in 2009 compared to income of NIS 64 million reported last year. The increase in the amount of NIS 325 million is attributed mainly to: (i) increase in expenses in the amount of NIS 296 million from change in fair value of financial instruments measured at fair value through profit and loss which totaled to the amount of NIS 71 million (mainly revaluation of Plaza Centers Debentures and SWAP transactions in the amount of NIS 177 million offset by revenue in the amount of NIS 106 million from derivatives and marketable securities) compared to revenue in the amount of NIS 225 million in 2008;(ii) decrease in the amount of NIS 42 million in financial revenue which totaled in 2009 to the amount of NIS 93 million comparing to NIS 135 million in 2008 mainly due to a decrease in the interests rates and the exchanges rates offset by: (iii) decrease in financial expenses in the amount of NIS 13 million (interest, exchange rate, Israel Consumer Price Index ("CPI") attributed to loans and debentures after capitalization of financial expenses to qualifying assets) which totaled to the amount of NIS 283 million in 2009 as compared to NIS 296 million in 2008.

Impairment charges and other expenses, net increased to NIS 260 million (US$ 69 million), compared to NIS 69 million reported last year. The impairment charged in 2009 is mainly attributable to real estate assets in the amount of NIS 232 million.   The Company impaired Plaza Center's real estate assets in the amount of NIS 216 million following the market conditions in Eastern Europe and following the increase in the sales yields and the expectations for decrease in rent income.

Loss before taxes in 2009 was NIS 706 million (US$ 187 million) as compared to NIS 4 million in 2008.

Tax benefits in 2009 were NIS 36 million (US$ 9 million) as compared to income taxes in the amount of NIS 25 million last year.

Loss from continuing operations in 2009, was loss of NIS 671 million (US$ 178 million) compared to NIS 29 million reported last year.

Profit from discontinuing operation, net in 2009 was NIS 17 million (US$ 5 million) compared to NIS 5 million reported last year.

Loss  in 2009 was NIS 654 million (US $173 million) of which NIS 533 million (US$ 141 million) is attributable to the equity holders of the Company and amount of NIS 121.2 million (US$ 32 million) is attributable to the minority interest.

Loss in 2008 was NIS 24 million of which NIS 104 million is attributable to the equity holders of the Company and income of NIS 80 million is attributable to minority interest.

Mr. Dudi Machluf, co-CEO of the Company stated: 

The implications of the global crisis are evident in our 2009 results, in which we recorded a loss derived mainly from non-cash expenses of NIS 400 million attributable to impairment of real estate assets and change in fair value of debentures of Plaza Centers.

Our two major operating sectors, Commercial Centers and Hotels, were significantly influenced by the global recession and slowdown.

The decrease of financial resources in Eastern Europe affected Plaza Centers: by reducing the volume of  construction and development of projects for which bank financing is yet to be secured; and by reducing the number of potential buyers for Plaza’s commercial centers, since many of the potential buyers are dependent on bank financing.

Despite the challenging market conditions, in 2009, Plaza Centers successfully obtained financing lines for several of its commercial centers - two in Poland and one India. One of the  commercial centers in Poland was opened to the public about a week ago and the other is scheduled to open in June 2010. In addition, Plaza Centers is finalizing negotiations to secure additional construction bank financing loans, mainly in Poland and in Serbia. 

We expect that the recovery of financial markets and return of potential buyers, will enable the sale of commercial centers by Plaza Centers done in the past.  

The global recession and slowdown has also affected our Hotel Division. Lately, there are signs of improvement in the hotels division; however it is still too early to evaluate if this is indeed a trend.

While 2009 was a challenging year, the financial crisis created new opportunities for Elbit Imaging to strategically position the Company for the years to come. We were one of the first companies to identify the opportunity in the US commercial real estate market, and in the past year we carefully examined potential real estate acquisitions that meet our criteria. About two months ago, we executed a joint venture agreement with a strategic partner, according to which we committed to invest USD 200 million, in equal parts, in a high yield real estate investment in the US, with a focus on commercial centers. We are investing a great deal of management resources in developing this real estate US arm and we expect our efforts to bear fruit.

As part of the group strategic reorganization, we established a subsidiary under the name of "Elbit Medical Ltd." which will hold our medical and bio-tech holdings in InSightec and Gamida Cell. As announced, we have filed a draft prospectus, with the Israel Securities Authority, in respect of a proposed initial public offering of shares on the Tel Aviv Stock Exchange to enable the public to be part of the group's medical companies.