Shikun & Binui Announces First Quarter 2010 Results

By Shikun Binui Ltd., PRNE
Wednesday, May 26, 2010

Net Income Totaled NIS 107 Million, 22% Growth Compared With Q1 2009; Gross Margin of 20%; Operating Margin of 12.5%

RAMAT GAN, Israel, May 27, 2010 - Shikun & Binui Ltd. (TASE: SKBN.TA) ("Shikun & Binui" or the
"Company"), a member of the Arison Group and Israel's leading infrastructure
and real estate company, announced today its results for the first quarter
2010, ended March 31, 2010.

"Continuing with our 2009 momentum, the first quarter of 2010
was characterized by an increase in all of the Group's growth engines. We are
confident that the outcome of this activity will continue to drive positive
results in the upcoming quarters," commented Mr. Ofer Kotler, Chief Executive
Officer of Shikun & Binui.

    Main Events of the First Quarter and Subsequent to it:

    - The Group's orders backlog in the construction and infrastructure
      segment totaled NIS 8.4 billion as of 31.3.10, an increase of 8%
      compared with 31.12.2009.

    - In May, H2ID announced that the water desalination plant in
      the city of Hadera, in which the Company holds 50% of the rights,
      successfully completed the State's acceptance test and began to produce
      and sell water at an annual output of 105 million cubic meters.
      Construction of the facility was completed before its expected time,
      and came in under the construction budget.

    - In May, the Group announced a cash dividend of NIS 110 million,
      representing NIS 0.274 per share.

    - In the first quarter of the year, Shikun & Binui Real Estate sold 344
      units totaling NIS 515 million, and since the beginning of the year
      until the end of April, it sold 454 units for total proceeds of NIS 673
      million. In April alone, the company sold 110 units for a total of NIS
      158 million. During the quarter, Shikun & Binui Real Estate sold land
      in the Ramat Aviv Gimmel neighborhood at a pre-tax gain of NIS 23
      million. In May, Shikun & Binui Real Estate sold property in the city
      of Netanya in the "City Of Seas" neighborhood at a pre-tax gain of NIS
      32 million.

    - The subsidiary, Solel Boneh Israel, was awarded the tender to design,
      build and maintain the Tel Aviv Hall of Justice for a 20-year period.
      This Build-Operate-Transfer ("BOT") project includes the construction
      of a new building, underground parking and additional projects. In
      return, the company will receive a fee of NIS 165 million as well as
      additional annual consideration during the agreement period.

First Quarter 2010 Results

Revenues from projects and sales totaled NIS 1.1 billion this
quarter, 10% less than the first quarter of 2009. The decrease is driven by:

    - Revenues from apartment occupancy in Shikun & Binui Real
      Estate were at a lower volume than in the first quarter of 2009. Since
      early 2009, Shikun & Binui has accelerated the pace of activity, which
      will also lead to increased apartments sold in the future.

    - A decrease in the revenues of Solel Boneh Israel with the
      completion of the Segment 18 Project on Highway 6 in Israel.

Gross profit totaled NIS 217 million (20% of revenues), a
decrease of 17.8% compared with Q1 of 2009 (21.7% of revenues). The decrease
was due mainly to infrastructure and construction projects abroad (Shikun &
Binui SBI Infrastructures). The gross margin of Shikun & Binui SBI
Infrastructures in the first quarter of 2009 was especially high as the
company received final payments and adjustments for completing a project,
whereas the current quarter saw a project delayed.

General and administrative expenses totaled NIS 72 million
(representing 6.6% of revenues), compared with NIS 66 million (5.4% of
revenues) in Q1 of 2009. The increase was due to expenses for stock options
granted to employees and to a television marketing campaign launched by the
Group.

Operating income totaled NIS 136 million (12.5% of revenues),
a decrease of 29% from Q1 2009 (15.8% of revenues). The decrease was due
mainly to a decline in the gross profit in infrastructure and construction
projects abroad. In non-allocated expenses to segments, a growth of NIS 11
million
was recorded.

Financing costs net totaled NIS 13 million, compared with NIS
39 million
in the first quarter of 2009. The financing expenses in Q1 2009
were driven by exchange rate fluctuations that did not have an effect during
the current quarter, due to foreign currency hedges executed by the Group.

Company's share in profit losses of investee companies
accounted for by the equity method totaled income of NIS 13 million, compared
with a loss of NIS 24 million in Q1 2009. The income is due to the results of
the foreign investees as well as an affiliate engaged in concession activity,
which recognized financing income this quarter due to the erosion in the euro
exchange rate.

Net income amounted to NIS 107 million, an increase of 22%
over the first quarter last year.

Cash flows from operating activities totaled NIS 53 million,
compared to NIS 110 million in the first quarter of 2009.

The Group does not revalue its real estate assets and it is
thus stated at historical costs in the financial statements.

Shareholders' equity as of March 31, 2010 totaled NIS 616
million
, compared with NIS 508 million at the end of 2009.

The Company has cash balances and equivalents totaling NIS 1.1
billion
and an unutilized credit facility amounting to NIS 831 million.

Total assets amount to NIS 7.3 billion.

Doron Blachar, the Group's CFO said: "The Group is working constantly to
increase its shareholders' equity. The full or partial realization of assets
will expose the real value of those assets, which are recorded at their
historic values on the balance sheet. I think this is a positive way to
improve the Group's capital structure.

About Shikun & Binui

Shikun & Binui, a member of the Arison Group, is the leading
infrastructure and real estate company in Israel. The Group's subsidiaries
have been operating since 1924. The Group's companies have gained extensive
experience in complex construction and infrastructure projects in Israel and
abroad. Shikun & Binui Group has proven achievements in building, residential
neighborhoods, commercial and industrial buildings, as well as large-scale
transportation, infrastructure and ecological projects, water purification
and desalination and development of international projects. In addition,
Shikun & Binui also operates in the initiating, planning, construction and
operation of projects in renewable energy. Shikun & Binui is a leading,
multi-faceted and socially responsible international group that produces
balance between the business, social and environmental accomplishment. The
group places emphasis on honesty, transparency, innovation, and excellence.
The group has accepted upon itself a leadership role in creation of a
sustainable and progressive life environment.

The above noted in this release includes forward-looking
statements based on Company data, as well as Company plans and estimations
based on this data. The activity, results and other data may be substantially
different in reality given uncertainty and various risks, including those
discussed under risk factors in the Company's financial statements and
Director's reports.

Condensed Consolidated Interim Statement of Financial Position as at

                                          March 31    March 31    December 31
                                              2010        2009          2009
                                              (Unaudited)           (Audited)
                                     NIS thousands         NIS  NIS thousands
                                                     thousands

    Assets
    Cash and cash equivalents               1,128,818   1,339,243   1,180,517
    Bank deposits                             180,919      45,144     170,226
    Short-term loans and investments           68,231      47,793      63,915
    Short-term loans to investee              173,468     338,782     331,304
    companies
    Trade receivables - accrued               749,872     868,990     872,670
    income
    Inventory of buildings held for         1,117,076     862,852   1,021,668
    sale
    Receivables and debit balances            205,981 (1) 208,850 (1) 166,744
    Other investments, including                5,995       2,547       2,619
    derivatives
    Current tax assets                         64,411      78,369      72,107
    Inventory                                 199,524     205,326     199,234
    Assets classified as held for               8,070           -       8,065
    sale
    Total current assets                    3,902,365   3,997,896   4,089,069

    Receivables in respect of
    concession
    arrangements                               74,754      15,182      68,109
    Non-current inventory of land             467,138     468,876     478,425
    (freehold)
    Non-current inventory of land             172,172     206,149     198,620
    (leasehold)
    Investment property, net                  311,304 (1) 319,120 (1) 317,152
    Land rights                                16,560      16,501      16,975
    Long-term prepaid expenses                  2,208   (1) 3,765   (1) 2,868
    Receivables, loans and deposits           382,536     556,447     406,653
    Due from Group employees                                    -           -
    Investments in equity-accounted           156,509     130,392     138,572
    investees
    Loans to investee companies               719,095     600,291     618,270
    Deferred tax assets                       114,128     142,256     116,498
    Property, plant and equipment,            843,281 (1) 894,948 (1) 820,789
    net
    Intangible assets, net                    106,700      93,814     101,459
    Total non-current assets                3,366,385   3,447,741   3,284,390

    Total assets                            7,268,750   7,445,637   7,373,459

    (1) Retrospective application, see Note 3C.

    Liabilities
    Short-term credit from banks and others   862,281   1,145,468     879,586
    Subcontractors and trade payables         651,158     670,733     683,040
    Short-term employee benefits               35,701      38,831      35,982
    Payables and credit balances including    267,451     305,063     289,917
    derivatives
    Current tax liabilities                    91,536     119,745      95,445
    Provisions                                343,323     311,205     303,631
    Payables - customer work orders           627,868     774,505     750,958
    Advances received from customers          613,156     319,046     565,072
    Total current liabilities               3,492,474   3,684,596   3,603,631

    Liabilities to banks and others         1,030,268   1,332,359   1,129,821
    Debentures                              1,907,718   1,837,117   1,912,160
    Employee benefits                         142,145     139,607     140,703
    Deferred tax liabilities                   14,124      17,646      15,299
    Provisions                                 23,998      26,557      24,654
    Excess of accumulated losses over cost of
    investment and deferred credit balance
    in affiliated companies                    42,152      41,546      39,056

    Total non-current liabilities           3,160,405   3,394,832   3,261,693

    Total liabilities                       6,652,879   7,079,428   6,865,324

    Equity
    Total equity attributable to equity
    holders
    of the parent company                     459,190     357,638     351,003
    Minority interest                         156,681       8,571     157,132
    Total equity                              615,871     366,209     508,135

    Total equity and liabilities            7,268,750   7,445,637   7,373,459

    Condensed Consolidated Interim Statement of Income

                                                                      For the
                                              For the three-month  year ended
                                                  period ended
                                              March 31   March 31 December 31
                                                  2010       2009        2009
                                                   (Unaudited)      (Audited)
                                            NIS thousands     NIS         NIS
                                                        thousands   thousands

    Revenues from work performed and sales      1,088,167 1,214,071 4,453,729

    Cost of work performed and sales              871,335   950,439 3,570,666

    Gross profit                                  216,832   263,632   883,063

    Gain on sale of investment property                 -         -    10,978
    Selling and marketing expenses                (5,310)   (5,582)  (25,147)
    Administrative and general expenses          (72,226)  (65,809) (268,704)
    Other operating income                            716     1,422   135,565
    Other operating expenses                      (4,297)   (1,704)  (28,690)

    Operating profit                              135,715   191,959   707,065

    Financing income                               81,122    29,173   132,726
    Financing expenses                           (94,082)  (67,940) (393,437)

    Net financing expenses                       (12,960)  (38,767) (260,711)

    Share of profit (losses)
    of equity accounted investees (net of tax)     13,420  (24,443)  (66,981)

    Profit before taxes on income                 136,175   128,749   379,373
    Taxes on income                              (29,621)  (41,777) (147,232)

    Net profit for the period                     106,554    86,972   232,141

    Attributable to:
    Equity holders of the parent company          103,077    88,354   237,337
    Minority interest                               3,477   (1,382)   (5,196)

                                                  106,554    86,972   232,141

    Basic and diluted earnings per share (in NIS)   0.261     0.224     0.602

    Number of shares used in the computation
    of
    earnings per share (in thousands)             394,545   394,545   394,545

    (*) Reclassified

    Business Operating Segments (cont'd)

                      For the three month period ended March 31, 2010

          Infrastructures
                      and Infrastructures             Real estate
             construction             and Real estate development
               outside of    construction development  outside of
                   Israel       in Israel   in Israel      Israel Concessions

                                      (Unaudited)
                                     NIS thousands

    Total         616,696         275,624     161,264       1,359           -
    external
    revenues
    Inter-segment       -          30,647       2,241           -           -
    revenues

    Total         616,696         306,271     163,505       1,359           -
    revenues

    Segment
    profit (loss)
    before
    income tax    114,168             845      41,788     (8,346)      23,567

    (table continued)

                        Renewable
                           energy   Water   Other Adjustments Consolidated

                                       (Unaudited)
                                      NIS thousands

    Total                  21,177  12,047       -           -    1,088,167
    external
    revenues
    Inter-segment               -       -       -    (32,888)            -
    revenues

    Total                  21,177  12,047       -    (32,888)    1,088,167
    revenues

    Segment
    profit (loss)
    before
    income tax            (6,710) (2,085) (6,706)    (20,346)      136,175

                      For the three month period ended March 31, 2010

          Infrastructures
                      and Infrastructures             Real estate
             construction             and Real estate development
               outside of    construction development  outside of
                   Israel       in Israel   in Israel      Israel Concessions

                                      (Unaudited)
                                     NIS thousands

    Total         605,598         326,090     254,866       1,436           -
    external
    revenues
    Inter-segment       -          23,482       1,885           -           -
    revenues

    Total         605,598         349,572     256,751       1,436           -
    revenues

    Segment
    profit (loss)
    before
    income tax    133,467           4,938      44,100    (32,056)    (11,220)

    (table continued)

                        Renewable
                           energy   Water   Other Adjustments Consolidated

                                       (Unaudited)
                                      NIS thousands

    Total                  13,741  11,566     774           -    1,214,071
    external
    revenues
    Inter-segment               -       -       -    (25,367)            -
    revenues

    Total                  13,741  11,566     774    (25,367)    1,214,071
    revenues

    Segment
    profit (loss)
    before
    income tax              1,133 (1,573)   (406)     (9,634)      128,749

    Business Operating Segments (cont'd)

                               For the year ended December 31, 2009

          Infrastructures
                      and Infrastructures             Real estate
             construction             and Real estate development
               outside of    construction development  outside of
                   Israel       in Israel   in Israel      Israel Concessions

                                      (Unaudited)
                                     NIS thousands

    Total       2,199,643       1,317,154     804,830       6,546           -
    external
    revenues
    Inter-segment       -         119,444       8,295           -           -
    revenues

    Total       2,199,643       1,436,598     813,125       6,546           -
    revenues   

    Segment
    profit (loss)
    before
    income tax    365,997           9,206     181,112    (58,482)    (43,349)

    (table continued)

                        Renewable
                           energy   Water   Other Adjustments Consolidated

                                       (Unaudited)
                                      NIS thousands

    Total                  75,523  50,263   (230)           -    4,453,729
    external
    revenues
    Inter-segment               -       -       -   (127,739)            -
    revenues

    Total                  75,523  50,263   (230)   (127,739)    4,453,729
    revenues

    Segment
    profit (loss)
    before
    income tax           (12,635) (6,368) (9,201)    (46,907)      379,373

    Company Contact:
    Doron Blachar, CFO
    Shikun & Binui
    Tel: +972-3-630-1518

    Investor Relations Contacts:
    Ehud Helft / Porat Saar
    GK Investor Relations
    Tel: +1-646-233-2161/ +972-52-776-3687
    email: info@gkir.com

Company Contact: Doron Blachar, CFO, Shikun & Binui, Tel: +972-3-630-1518; Investor Relations Contacts: Ehud Helft / Porat Saar, GK Investor Relations, Tel: +1-646-233-2161/ +972-52-776-3687, email: info at gkir.com

YOUR VIEW POINT
NAME : (REQUIRED)
MAIL : (REQUIRED)
will not be displayed
WEBSITE : (OPTIONAL)
YOUR
COMMENT :