Elmor Electric: How Much Of The Renewables Engine Runs Through Related Parties

What This Follow-Up Is Isolating

The main article argued that Elmor’s 2026 test is about the quality of renewables growth, not just the existence of backlog. This follow-up isolates one question that is easy to underweight on a quick read: how much of that renewables engine is running through a related-party work pipe, mainly through Rafak and its group.

That is not automatically a problem. Elmor says related-party transactions were executed on market terms, and the two large 2025 transactions with Rafak Energies went through the full approval path of the audit committee, board, and shareholders. But once that pipe becomes material, the backlog has to be read differently. It no longer speaks only to external market demand. It also says something about the controlling-shareholder group’s ability to route work through the listed company.

What makes the issue sharper is the gap between what was already recognized in 2025 and what was already signed. The income statement shows meaningful activity with related parties. The events note shows a larger pipe that has not yet fully run through revenue and balance-sheet lines. So the real discussion here is less about what already happened and more about how the renewables engine should be read going forward.

What Already Ran Through The Related-Party Pipe

In 2025 the group recorded NIS 72.6 million of sales to other related parties, broadly flat against NIS 75.9 million in 2024, plus another NIS 4.4 million of sales to associates and partnerships. On a broad view, nearly NIS 77.0 million of group sales ran through affiliated entities. That is still not the majority of the business, but it is no longer a footnote either.

The balance-sheet angle is more nuanced than the headline. Customers from interested parties rose to NIS 11.5 million from NIS 6.8 million, but accrued income from interested parties fell to NIS 14.3 million from NIS 20.9 million. The combined amount of those two lines slipped modestly to NIS 25.8 million from NIS 27.7 million. In other words, 2025 does not yet show a blowout in related-party working balances. It does show a meaningful and persistent exposure, with a change in mix between billed customers and accrued income.

That matters because it blocks a lazy read in both directions. The relationship is clearly not immaterial. At the same time, the 2025 report does not prove that the pipe is already burdening the balance sheet through a sharp build in outstanding balances. The main risk here is therefore less about a bad-debt event that has already shown up, and more about dependence that may become more material faster than the 2025 historical line alone suggests.

How The Pipe Was Built

The starting point goes back to June 29, 2023. On that date, the shareholders approved a framework agreement under which Elmor Energies would provide contracting services on renewable-energy projects initiated by Rafak or companies under its control, subject to the required approvals. That matters because this is not a one-off deal. It is a contractual base that allows recurring work to move through the same channel.

The picture gets sharper because the same business-description section also lists Rafak Renewables among the leading developers that count as customers in the segment. That is exactly why the related-party pipe can disappear inside an otherwise ordinary market-demand story. Rafak is both a legitimate operating customer in renewables and part of the control group. When those two facts sit together, it becomes risky to read all that activity as if it were clean, fully independent demand diversification.

During 2025 that contractual base turned into two explicit and sizable transactions:

Both transactions were described as having been executed on market terms. That is an important governance valve, but it is not the end of the analytical discussion. The real question is not whether the formal process took place. It is how much of the next phase of renewables growth will keep coming through that process.

What A Quick Reader Can Miss

The first finding: revenue already recognized in 2025 is still much smaller than the pipe that has already been signed. The Ramat Beka agreement alone, at about NIS 280 million plus another USD 72 million, makes clear that the bigger question sits ahead. A reader looking only at the NIS 72.6 million of related-party sales in 2025 can miss that the heavier next leg has not yet fully entered the financial statements.

The second finding: as of year-end 2025, the balance sheet still does not show a sharp deterioration through balances with interested parties. That is the less intuitive point. The debate is not really about damage that has already crystallized in receivables. It is about the quality and independence of the next growth engine.

The third finding: a related-party work pipe is not automatically negative. It can shorten the sales cycle, improve visibility, and support utilization in EPC activity. But it also blurs the line between broad external market demand and growth sourced from inside the control group. For investors reading a renewables execution story, that distinction matters.

The fourth finding: as the Rafak relationship becomes larger, the discussion shifts from pricing to concentration. Even if each individual transaction is on market terms, the key question becomes whether Elmor is also continuing to grow non-related-party work in parallel, or whether the renewables engine is starting to lean too heavily on one affiliated anchor customer.

What The Next Reports Have To Prove

The first test: how much of 2026 renewables revenue growth actually comes from transactions with Rafak and its group. Backlog by itself is not enough. The market will need to know how much of that backlog is increasingly running through the same affiliated channel.

The second test: whether customer balances and accrued income from interested parties remain proportional to execution pace, or start rising faster than revenue recognition. At year-end 2025 the combined amount was still around NIS 25.8 million. If that number jumps as the new projects ramp, the read changes.

The third test: whether Rafak-related contracts look like ordinary EPC work in margin and execution profile, or whether they hold volume at the cost of heavier procurement, lower flexibility, or less favorable commercial economics for the listed company.

The fourth test: whether Elmor continues to win meaningful projects from non-related developers alongside the Rafak pipe. If yes, the affiliated pipe is an accelerator. If not, it starts to look like a structural pillar the company is becoming too dependent on.

Conclusion

The cleaner conclusion at this stage is that Elmor is not living only on affiliated work, but it also can no longer present that relationship as a minor detail. The 2025 report shows meaningful related-party sales, NIS 25.8 million of customers and accrued income from interested parties, and a contractual base with Rafak that has already matured into transactions much larger than what has been recognized so far.

Current thesis: Elmor’s renewables engine still relies on broad market demand, but the portion running through the control group is already large enough to change how investors should read backlog quality and demand quality.

The strongest counter-thesis is that the Rafak relationship is simply an efficient, market-based commercial channel that adds visibility and scale without hurting economic quality. That is a real possibility. Which is exactly why the 2026 reports will have to show not just higher revenue, but also healthy collection, normal margins, and continued outside-market diversification.