Elbit Imaging Ltd. (Elbit Imaging), a diagnostic imaging company, has reported consolidated revenues of NIS1.098 million for the full year of 2008, compared with consolidated revenues of NIS3.498 million in the previous year-end. It also reported a net loss of NIS24.1 million for the full year of 2008, compared with the net income of NIS919.7 million in the previous year-end.
Year 2008 compared to year 2007 results
Consolidated revenues in Year 2008 were NIS1,098 million ($288.8 million) compared to NIS3,498.5 million reported last year.
Revenues from commercial centers decreased in 2008 to NIS524.2 million ($137.8 million) from NIS2,917.6 million last year.
Cost of commercial centers decreased to NIS432.8 million ($113.8 million) compared to NIS1,714.2 million reported last year.
Revenues from hotels operations and management decreased to NIS384.2 million ($101 million) as compared to NIS395.2 million reported last year.
Costs and expenses from hotels operations and management increased to NIS354.8 million ($93.3 million) compared to NIS330 million reported last year.
Revenues from sale of medical systems decreased to NIS38 million ($10 million) compared to NIS49.6 million reported last year.
Costs and expenses of medical systems operations decreased to NIS55.5 million ($14.6 million) compared to NIS69.9 million reported last year.
Revenues from sale of fashion merchandise is attributed to the operations of Elbit Trade & Retail Ltd. which increased to NIS102.7 million in 2008 (US $27 million) compared to NIS68.1 million reported last year.
Cost and expenses of fashion merchandise increased to NIS118 million ($31 million) compared to NIS80.3 million reported last year.
Research and development expenses decreased to NIS68.7 million ($18 million) compared to NIS69.6 million reported last year.
General and administrative expenses decreased to NIS54.9 million ($14.4 million) compared to NIS117 million reported last year.
Other expenses increased to NIS68.8 million ($18 million), compared to NIS38.2 million reported last year.
Loss before taxes in 2008 was NIS4.3 million ($1.1 million) as compared to profit of NIS925.6 million in 2007.
Income tax in 2008 was NIS24.7 million ($6.5 million) as compared to tax benefits in the amount of NIS16.3 million last year.
Profit (loss) from continuing operations in 2008, was loss of NIS29 million ($7.6 million) compared to profit of NIS909.3 million reported last year.
Profit from discontinuing operation, net in 2008 was NIS4.9 million ($1.3 million) compared to NIS10.3 million reported last year. Such profit is attributable mainly to the cancellation of provisions accrued in connection with discontinued operations and collection of bad debts.
Net income in 2007 was NIS919.7 million of which NIS539.7 million is attributable to the equity holders of the company and NIS379.8 million is attributable to minority interest.
Mordechay Zisser, chairman of the board of directors of the company, commented:
Leading a well established global business enterprise, is tested especially in times of crises.
The Elbit Imaging Group had met the current financial crisis, well prepared both in terms of its core activities, as well as with its debt structure. The Elbit Imaging Group had concluded realization of essentially all of its trading properties, well ahead of this current crisis, and yet it still maintains a streamline of real estate projects under various stages of planning and construction which do not require substantial liquidity resources. Elbit Imaging had also managed to provide an advantageous debt structure, so as to face the current crisis while in possession of substantial cash reserves.The company’s management and employees are committed to use their utmost best to meet the challenges they are facing to act conservatively and with due care, in examining, under stringent criteria, highly attractive business opportunities arising, both in the Central and Eastern Europe markets – with which we are well acquainted, and in other territories as well.
It is now a time for our company to start examining and reviewing those new markets which can present rare opportunities to us, including the American market. History has presented us with a rare window of opportunities, occurring only once in decades, of which we intend to take full advantage.
Some 13 years ago, our Group had begun the initiation and development activities in Eastern Europe as these markets presented yields ranging between 10%-15%, while Western markets were only presented at 4%-7% yield. In those Eastern European markets, our investment in the projects commenced with the acquisition of the land, and continued to the planning, construction and marketing of the centers – a process generally completed within 2-3 years and required considerable managerial resources, before we were able to proceed to the realization of such commercial centers and ripe the fruits of our investment. Nowadays, current US real estate market conditions allow for the acquisition of operational shopping centers with yields ranging between of 9%-14%, and enjoy immediate rent proceeds.
It is my estimate, that within 2-3 years when our world recovers, Elbit will be able to realize such commercial centers, with yields ranging between 4%-7%.
Our Group has the power, the experience, the know-how and the financial resources to take advantage of these rare circumstances. We have therefore resolved to explore this unique opportunity of acquiring American shopping centers while investing our 15 year experience and extensive know-how in the development, management and improvement of same. To that end, the Group is looking into the possibility of raising, through a fund, approximately $400 million, in which Elbit’s share (together with our subsidiary Plaza Centers N.V. – in equal parts) is expected to be approximately $100 million. This will allow us to fund the acquisition of shopping centers at prices (aggregate) ranging between approximately $800 million to $1 billion”.
Shimon Yitzhaki, president and chief executive officer of the company, commente :
The global crisis that began in 2008, met the Elbit Imaging Group well prepared. Our real estate business, concentrated mostly via our subsidiary Plaza Centers, focuses on the development and realization of commercial centers, and as such we foresee such investments over a period of several years, rather than on a quarterly or annual basis. The Group currently owns a large number of plots and properties in Central and Eastern Europe, which were acquired with equity and are not leveraged.
In view of the market conditions, the Group has chosen to move forward with construction of fewer projects, with particular emphasis on projects for which bank financing has already been secured. Plaza Centers has many years of experience in the management of commercial centers, and the ability to adjust its business to market conditions.
In the event selling prices fall short of the company’s expectations, we then intend to allow this global crisis to run its course and come to an end, before proceeding with the sale of the commercial centers, and all while enjoying a current cash flow from the management of same.
Preserving flexibility between two business models, one which allowed the construction and operations of commercial centers and the other of building and selling same, has been our company’s strategy throughout its years of operation and it is proving itself in these days.
We are continuing to develop all of the Group’s foreign operations. In the real estate sector, the Group has announced its intention to start exploring the US market, in addition to a cautious and conservative examination of opportunities in the current markets, in which the knowledge, experience and expertise it has acquired over the last decade are a considerable advantage.