Shikun & Binui Delivers Strong Second Quarter and First Six Month 2009 Results

RAMAT GAN, Israel -

- Quarterly net Income Increase 7% to NIS 41 Million; Gross Profit up 22% to NIS 219 Million; Gross Margin up to 19.5% From 16.3% Last Year; Operating Cash Flow of NIS 40 Million in Second Quarter 2009

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 three and six month periods ended June 30, 2009.

As of January 1, 2009 the Company started recording its results based on the following business segments: Infrastructure and construction outside of Israel, Infrastructure and construction in Israel, Real Estate Development in Israel, Real Estate Development outside of Israel, Concessions, Environment and Others.

“During the second quarter we continued to promote national projects such as section 18 of the Cross Israel Highway, which was opened to traffic ahead of time, and the acceleration of works on the Carmel tunnels.” commented Mr. Ofer Kotler, Chief Executive Officer of Shikun & Binui. “During the first six months we continued to present profitable growth in all areas of activity.”

Main events and Second Quarter Business Highlights - Signed financing agreements following H2ID’s, a 50% held subsidiary of Shikun & Binui, being chosen by the Israeli Government to expand the Hadera sea water desalination plant. Under the agreement, H2ID will increase the desalination capacity by 27 cubic meters, beyond the current 100 million cubic meters per annum contract, for an estimated cost of NIS 300 million; - Shikun & Binui Real Estate sold 300 apartments throughout the country in the second quarter, and 435 apartments during the first six months; - Shikun & Binui Real Estate sold a third of a plot in Ir Yamim, Netanya for NIS 34 million; - Backlog of firm orders in building and infrastructure totaled NIS 6.4 billion at June 30, 2009, up 3% from end-2008. NIS 1.8 billion of backlog relates to projects in Israel and NIS 4.6 billion overseas; the latter excludes the road maintenance project won after the end of the quarter; - In line with the Company’s strategy to divest of the public Company’s non-core assets, during the quarter the Company divested of its holdings in “Pereg Factories” for NIS 7.9 million; - The Company joined, as a founding member, the Israeli Green Building Council, whose goals include developing building and development standards; - After the balance sheet date the Company opened section 18 of the Cross Israel Highway, eight months ahead of schedule; - After the balance sheet date the Company declared a dividend of NIS 100 million.

Second Quarter 2009 Results

Revenues for the second quarter of 2009 totaled NIS 1.1 billion, a 2% increase compared to the second quarter last year. Revenues from the Infrastructure and construction outside of Israel segment increased 17.5% reaching NIS 600 million. This growth was driven by an increase in the US dollar conversion rate as well as the approval of price increases on completed projects. Revenues from the Infrastructure and construction in Israel segment decreased 9% from the comparable period, following lower housing construction, including related inter-group activities in this area.

Gross profit for the second quarter totaled NIS 219 million (19.5% of revenues), a 22% increase compared to the second quarter last year (16.3% of revenues). The higher gross profit resulted from the Infrastructure and construction outside of Israel segment mainly due to a change in project mix and the completion of certain oversea projects. The higher gross margin is also attributed to Shikun & Binui Real Estate’s higher gross profit.

Sales and marketing as well as general and administrative expenses, for the second quarter, totaled NIS 64 million, similar to the comparable period last year.

Operating income for the second quarter totaled NIS 163 million (14.5% of revenues), a 5.5% increase compared to the second quarter last year (13.9% of revenues). During the comparable period the Company recorded an additional NIS 51 million operating income on the sale of Even & Sid Industries and its holding in Mag’ar. Net of this contribution, operating income for the second quarter 2009 increased 57.6% as compared to the second quarter last year.

Finance expenses, net, for the second quarter decreased to NIS 88 million, compared to NIS 93 million in the second quarter last year. The majority of the decrease resulted from the lower Israeli Consumer Price Index (CPI), which lowered long term debenture expenses, partially offset by currency losses resulting from the impact of currency fluctuations on foreign activities.

Net income for the second quarter 2009 totaled NIS 41 million, a 6.9% increase from the second quarter last year.

Cash flow generated from operating activities during the second quarter of 2009 totaled NIS 40 million. In the second quarter last year the Company recorded a negative cash flow (cash utilization) to the amount of NIS 53.4 million.

First Six Months 2009 Results

Revenues for the first six months of 2009 increased 11% compared to last year, reaching NIS 2.3 billion. Revenues from the Infrastructure and construction outside of Israel segment increased 15.2% reaching NIS 1.2 billion, compared to NIS 1.0 billion in the first six months last year. Revenues from the Real Estate Development in Israel segment increased 76% compared to the first six months last year reaching NIS 426 million.

Gross profit for the first six months totaled NIS 483 million (20.6% of revenues), a 49% increase compared to the first six months last year (15.4% of revenues).

Sales and marketing expenses for the first six months of 2009 totaled NIS 11.6 million, similar as the comparable period last year.

General and administrative expenses represented 5.3% of revenues totaling NIS 124 million, compared to 5.8% of revenues, or NIS 123 million, in the comparable period last year.

Operating income for the first six months totaled NIS 354 million (15.2% of revenues), compared to NIS 238 million (11.3% of revenues) in the comparable period last year.

Finance expenses, net, for the six months totaled NIS 127 million, compared to NIS 116 million in the comparable period last year. The increase resulted from losses incurred on the foreign activities due to currency fluctuations. This was partially offset by lower long term credit expenses primarily impacted by the level of CPI change. Between November 2008 and May 2009 the CPI increased 1.15%, while in the comparable period last year the CPI increased 2.85%. Due to the difference in the CPI increase, during the reported period the Company incurred NIS 84 million in expenses relating to the long term debentures, as compared to NIS 141 million in the comparable period last year.

Net income for the first six months of 2009 totaled NIS 128 million, a 14.3% increase from the comparable period last year.

Cash flow generated from operating activities during the first six months of 2009 totaled NIS 150 million, and served to finance NIS 200 million of investment activities.

Following the balance sheet date there was an increase in the inflation rate which is expected to contribute to an increase in net finance expenses in the third quarter of the year.

The group does not re-evaluate its real estate assets and records them based on their historic cost in the balance sheet.

Shareholders’ equity as at June 30, 2009, totaled NIS 376 million, compared to NIS 192 million at the end of 2008. The increase primarily resulted from the first six month 2009 net income (NIS 128 million) and from translation differences resulting from the conversion of the foreign subsidiaries financial statements (NIS 43 million) primarily prepared in US dollars and Euro.

Credit. During the first six months the Company repaid NIS 214 million of credit and paid out interest to the amount of NIS 112 million. During the period the Company received NIS 86 million of credit.

Working capital totaled NIS 180 million at the end of the period, compared to NIS 380 million at the end of 2008. As of June 30, 2009 the Company had cash, cash equivalents and deposits totaling NIS 1.2 billion. Furthermore, the Company has unutilized credit facilities in the amount of NIS 779 million, NIS 444 million of which overseas.

Total assets, as at June 30, 2009, totaled NIS 7.3 billion.

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. 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.

Shikun & Binui Ltd. Condensed Consolidated Interim Statement of Financial Position as at In Thousand NIS June 30 June 30 December 31 2009 2008 2008 (Unaudited) (Audited) Assets Cash and cash equivalents 1,100,421 1,196,010 1,348,846 Bank deposits 93,821 20,550 44,001 Short-term loans and investments 56,938 53,559 34,974 Short-term loans to investee companies 343,194 - 318,598 Trade receivables - accrued income 961,476 997,290 822,029 Receivables and debit balances 188,269 190,284 200,954 Other investments, including derivatives 2,807 24,748 11 Current tax assets 75,494 53,482 90,631 Inventory 176,834 162,582 192,364 Inventory of buildings held for sale 872,598 1,099,040 926,311 Assets classified as held for sale 3,962 26,029 - Total current assets 3,875,814 3,823,574 3,978,719 Non-current inventory of land (freehold) 487,445 510,324 497,466 Non-current inventory of land (leasehold) 245,743 131,178 197,506 Investment property, net 298,251 318,932 300,071 Land rights 16,508 16,325 16,478 Long-term prepaid expenses 47,631 44,451 45,118 Receivables, loans and deposits 477,404 409,387 513,694 Investments in equity-accounted investees 139,293 133,161 151,746 Loans to investee companies 618,376 551,298 561,368 Deferred tax assets 132,856 138,514 119,115 Receivables - financial asset 26,968 - 6,861 Property, plant and equipment, net 861,519 666,661 769,896 Intangible assets, net 95,416 76,665 90,794 Total non-current assets 3,447,410 2,996,896 3,270,113 Total assets 7,323,224 6,820,470 7,248,832

Shikun & Binui Ltd. Condensed Consolidated Interim Statement of Financial Position as at (cont.) In Thousand NIS June 30 June 30 Dec-31 2009 2008 2008 (Unaudited) (Audited) Liabilities Short-term credit from banks and others 1,245,299 1,175,864 1,116,352 Subcontractors and trade payables 625,028 683,205 608,611 Short-term employee benefits 28,447 27,126 45,390 Payables and credit balances including derivatives 256,482 266,059 260,436 Current tax liabilities 101,807 64,132 72,732 Provisions 332,014 304,215 315,129 Payables - customer work orders 692,630 432,806 727,490 Advances received from customers 414,190 729,929 453,295 Held-to-sale commitments - 19,471 - Total current liabilities 3,695,897 3,702,807 3,599,435 Liabilities to banks and others 1,190,760 785,491 1,385,385 Debentures 1,844,157 2,016,822 1,852,308 Employee benefits 132,909 127,138 139,323 Deferred tax liabilities 19,054 16,762 16,906 Provisions 26,514 25,989 26,625 Excess of accumulated losses over cost of investment and deferred credit balance in affiliated companies 37,870 33,684 36,653 Total non-current liabilities 3,251,264 3,005,886 3,457,200 Total liabilities 6,947,161 6,708,693 7,056,635 Equity Total equity attributable to equity holders of the parent Company 370,268 104,774 183,252 Minority interest 5,795 7,003 8,945 Total equity 376,063 111,777 192,197 Total equity and liabilities 7,323,224 6,820,470 7,248,832

Shikun & Binui Ltd. Condensed Consolidated Interim Statements of Income For the six months For the three months In thousands NIS ended June 30 ended June 30 2009 2008 2009 2008 (Unaudited) (Unaudited) Revenues from work performed and sales 2,338,506 2,108,816 1,124,435 1,103,026 Cost of work performed and sales 1,855,618 1,784,524 905,179 922,703 Gross profit 482,888 324,292 219,256 180,323 Gain on sale of investment property 8,107 14,174 8,107 (185) Selling and marketing expenses (11,569) (11,862) (5,987) (5,948) Administrative and general expenses (123,932) (122,928) (58,123) (58,443) Other operating income 2,623 51,179 1,201 (*) 50,712 Other operating expenses (3,580) (16,534) (1,876) (*)(12,320) Operating income 354,537 238,321 162,578 154,139 Financing income 62,588 (*) 93,065 33,415 (*) 40,814 Financing expenses (189,405) (*)(209,242) (121,465) (*)(133,634) Net financing expenses (126,817) (116,177) (88,050) (92,820) Company’s share in income of equity accounted investees (23,014) 35,125 1,429 5,584 Income before taxes on income 204,706 157,269 75,957 66,903 Taxes on income (76,550) (45,179) (34,773) (28,368) Net income for the period 128,156 112,090 41,184 38,535 Attributable to: Equity holders of the parent Company 129,881 112,970 41,527 39,713 Minority interest (1,725) (880) (343) (1,178) 128,156 112,090 41,184 38,535 Basic and diluted earnings per share (in NIS) 0.33 0.29 0.11 0.10 Number of shares used in the computation of earnings per share (in thousands) 394,545 394,545 394,545 394,545 * Reclassified

(Table Continued…)

for the twelve months ended In thousands NIS December 31 2008 (Audited) Revenues from work performed and sales 4,446,828 Cost of work performed and sales 3,778,464 Gross profit 668,364 Gain on sale of investment property 20,895 Selling and marketing expenses (23,598) Administrative and general expenses (253,765) Other operating income 72,114 Other operating expenses (85,211) Operating income 398,799 Financing income 156,074 Financing expenses (405,306) Net financing expenses (249,232) Company’s share in income of equity accounted investees 20,677 Income before taxes on income 170,244 Taxes on income (80,554) Net income for the period 89,690 Attributable to: Equity holders of the parent Company 91,762 Minority interest (2,072) 89,690 Basic and diluted earnings per share (in NIS) 0.23 Number of shares used in the computation of earnings per share (in thousands) 394,545 * Reclassified

Shikun & Binui Ltd. Business Operating Segments In thousands NIS six month period ended June 30, 2009 Infrastructure and Infrastructure Real Estate construction and Real Estate Development outside of construction Development outside of Israel in Israel in Israel Israel (Unaudited) Revenues from external 1,208,385 651,911 421,600 3,926 Inter-segment revenues - 45,849 4,154 - Total revenues 1,208,385 697,760 425,754 3,926 Net sector income (loss) before tax 219,552 10,144 89,570 (27,871) six month period ended June 30, 2008 Infrastructure and Infrastructure Real Estate construction and Real Estate Development outside of construction Development outside of Israel in Israel in Israel Israel (Unaudited) Revenues from external 1,047,849 654,618 237,970 8,898 Inter-segment revenues - 65,324 3,551 - Total revenues 1,047,849 719,942 241,521 8,898 Net sector income (loss) before tax 188,933 9,387 42,855 (17,349)

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In thousands NIS six month period ended June 30, 2009 Concessions Environment Others Adjust. Consolidated (Unaudited) Revenues from external - 51,670 1,014 - 2,338,506 Inter-segment revenues - - - (50,003) - Total revenues - 51,670 1,014 (50,003) 2,338,506 Net sector income (loss) before tax (16,183) (2,593) (3,009) (64,904) 204,706 six month period ended June 30, 2008 Concessions Environment Others Adjust. Consolidated (Unaudited) Revenues from external - 57,111 102,370 - 2,108,816 Inter-segment revenues - - 1,751 (70,626) - Total revenues - 57,111 104,121 (70,626) 2,108,816 Net sector income (loss) before tax 8,048 1,943 (7,818) (68,730) 157,269

Shikun & Binui Ltd.

Business Operating Segments (cont.)

three month period ended June 30, 2009 Infrastructure and Infrastructure Real Estate construction and Real Estate Development outside of construction Development outside of Israel in Israel in Israel Israel (Unaudited) Revenues from external 602,787 325,821 166,734 2,490 Inter-segment revenues - 22,367 2,269 - Total revenues 602,787 348,188 169,003 2,490 Net sector income (loss) before tax 86,085 5,206 45,470 4,185 three month period ended June 30, 2008 Infrastructure and Infrastructure Real Estate construction and Real Estate Development outside of construction Development outside of Israel in Israel in Israel Israel (Unaudited) Revenues from external 512,699 345,204 171,090 3,678 Inter-segment revenues - 36,273 1,778 - Total revenues 512,699 381,477 172,868 3,678 Net sector income (loss) before tax 85,280 4,935 20,866 (3,157)

(Table Continued…)

three month period ended June 30, 2009 Concessions Environment Others Adjust. Consolidated (Unaudited) Revenues from external - 26,363 240 - 1,124,435 Inter-segment revenues - - - (24,636) - Total revenues - 26,363 240 (24,636) 1,124,435 Net sector income (loss) before tax (4,963) (2,230) (2,526) (55,270) 75,957 three month period ended June 30, 2008 Concessions Environment Others Adjust. Consolidated (Unaudited) Revenues from external - 26,414 43,941 - 1,103,026 Inter-segment revenues - - 509 (38,560) - Total revenues - 26,414 44,450 (38,560) 1,103,026 Net sector income (loss) before tax (3,087) 4,931 (619) (42,246) 66,903

Company Contact: Doron Blachar, CFO Shikun & Binui Tel: +972-3-630-1518 Investor Relations Contacts: Ehud Helft / Fiona Darmon GK Investor Relations Tel: +1-646-797-2868 / +97-52-695-4400 Email: info@gkir.com

Source: Shikun & Binui Ltd.

Company Contact: Doron Blachar, CFO, Shikun & Binui, Tel: +972-3-630-1518; Investor Relations Contacts: Ehud Helft / Fiona Darmon, GK Investor Relations, Tel: +1-646-797-2868 / +97-52-695-4400, Email: info at gkir.com