Albaad: How Much Cash Really Remains After Investment, Leases and Debt
This follow-up isolates the gap between Albaad's reported free cash flow in the presentation, NIS 54.2 million, and the cash that remained after leases, CAPEX, the final Optimal Care payment, dividends and debt service. Operating cash flow was positive in 2025, but real financing flexibility still depended on rolling debt and on the Dimona line finally starting commercial operation in 2026.
Where The Main Article Stopped, And What This Follow-Up Is Isolating
The main article made a clear point: the improvement in profitability and in net debt to EBITDA is real, but 2026 still runs through Dimona and through financing. This follow-up takes that one step further and asks a harder question: how much cash really remains once every real claim on the cash balance passes through the statements.
The right frame here is all-in cash flexibility, not only the FCF shown in the presentation. The reason is simple. In the presentation Albaad reports free cash flow of NIS 54.2 million, but to get there it adds back NIS 29.5 million of interest that was actually paid in cash. That is a legitimate metric, and it helps frame the cash-generating power of the business before financing, but it does not answer the question of how much cash really remained after leases, investment, debt and dividends.
This is also not a distress reading. This is not a covenant problem. It is a bridge-layer problem. Albaad ended 2025 with a tangible equity ratio of 35.1% against a 23% floor, and a debt-coverage ratio of 1.15 against a ceiling of 3.6. The banks are not standing at the edge of a covenant breach here. The friction sits elsewhere: investment cash has already gone out, interest has already been paid, the Dimona line is not yet contributing, and a large share of the debt stack is still short.
From NIS 54.2 Million On The Slide To NIS 28.1 Million Negative After Real Cash Uses
The presentation tells a comfortable story. Operating cash flow of NIS 127.5 million, minus lease principal repayment of NIS 31.7 million, plus the add-back of NIS 29.5 million of interest paid, minus CAPEX of NIS 71.1 million, and the result is free cash flow of NIS 54.2 million. The problem is that the interest did not stay in the cash balance.
If the bridge stays with actual cash and does not put interest back into the equation, only NIS 24.6 million remains after lease principal and CAPEX. Then two more cash uses arrive, both real and both below that headline FCF number: the final NIS 32.7 million payment for Optimal Care, and the NIS 20 million dividend. At that point the bridge is already at negative NIS 28.1 million.
The table below is an analytical bridge built from the consolidated cash-flow statement and the presentation. It is not a company-reported metric. It is a way to see what remains on each floor of the cash stack:
| Layer | 2025 | What it means |
|---|---|---|
| Reported FCF in the presentation | NIS 54.2 million | Includes an add-back of NIS 29.5 million of interest actually paid |
| Cash after lease principal and CAPEX | NIS 24.6 million | The operating cash left without putting interest back in |
| After Optimal Care and dividend | Negative NIS 28.1 million | No free cash is left before the debt layer |
| After long-term loan principal repayment, before refinancing | Negative NIS 168.6 million | This is where refinancing dependence becomes visible |
That chart is the real reason this continuation matters. In 2025 the business did produce operating cash, but it did not produce enough cash to fund leases, CAPEX, the final Optimal Care payment, dividends and debt service without relying on refinancing. The receipt of NIS 117.5 million of new long-term loans and net NIS 34.6 million of short-term bank credit closed most of the gap. Without that, the picture would look far tighter.
This Is Not Covenant Stress. It Is Refinancing Dependence
The good news is clear. Net debt to EBITDA improved steadily from 6.01 in the fourth quarter of 2022 to 2.02 in the fourth quarter of 2025. That is a real improvement, not cosmetic window dressing. Covenant compliance at year-end also looks comfortable. Albaad is not entering 2026 from a bank-pressure position.
That is exactly why the real issue is easy to miss. The issue is not whether the bank allows the structure. The issue is how much of the structure still has to be rolled. On a consolidated basis, 68% of bank debt is due within less than a year. At the company level, 67% of bank credit sits in that time bucket. The group has NIS 193.8 million of short-term bank credit and another NIS 112.7 million of current maturities on long-term loans. In other words, more than NIS 300 million of bank debt already sits on the short end of the maturity profile.
| Financing metric | End of 2025 | What it means |
|---|---|---|
| Consolidated cash and cash equivalents | NIS 10.8 million | A relatively thin cash cushion after a heavy investment year |
| Short-term bank credit in the group | NIS 193.8 million | A layer that has to be rolled on an ongoing basis |
| Current maturities of long-term loans in the group | NIS 112.7 million | More debt already sitting inside the coming year |
| Bank debt due within a year | 68% in the group, 67% at company level | The core refinancing layer |
| Bank covenants | 35.1% tangible equity, 1.15 debt coverage | Comfortable headroom versus 23% and 3.6 |
| Rate sensitivity | About 80% of funding sources are floating-rate | A 1% rate increase is expected to add about NIS 2.9 million of annual finance expense |
That chart captures the tension well. On one hand, net debt fell and EBITDA rose. On the other hand, the better ratio does not cancel the fact that year-end cash was only NIS 10.8 million and that a large part of the debt structure is still short. This is a story of improving financing flexibility, but not yet a story of surplus cash.
Dimona Explains The Cash Outflow, But Not Yet The Cash Inflow
To understand why 2025 looks this way, the bridge has to come back to Dimona. At year-end the new line carried accumulated investment of about NIS 169 million. That is a net figure after deducting roughly NIS 18 million removed under the sale-and-leaseback transaction, and it sits on a project whose commercial start was delayed into 2026. In other words, the cash has already gone out, but the operating contribution has not yet arrived.
This is also where the leverage improvement has to be read carefully. In the 2023-2025 sources-and-uses slide, management shows NIS 468 million of sources against NIS 319 million of uses, and a NIS 149 million reduction in net debt. Inside the uses sit NIS 129 million of Dimona line 2 investment, NIS 105 million of ongoing investments, NIS 65 million of Optimal Care payment and NIS 20 million of dividends. Inside the sources sits another NIS 38 million from the Dimona sale-and-leaseback.
That has a double meaning. On one side, Dimona is a real explanation for why cash has been pressured: this is a heavy project intended to produce plastic-free fabrics for a market that increasingly wants them. On the other side, part of the balance-sheet improvement also came from partial asset monetization through a sale-and-leaseback deal, not only from internally retained cash. That matters because it means the deleveraging of recent years reflects better operating execution, but also monetization and debt-structure recycling.
That is why 2026 is the real proof year. If the Dimona line starts commercial operation during the year, 2025 will look in hindsight like a bridge year: the heavy cash outflow has already happened, and the asset finally starts to give something back. If there is another delay, the same NIS 169 million investment will keep looking like cash that already left with no operating payback yet in place.
Bottom Line
The bottom line is straightforward: Albaad did not end 2025 with a bank problem, but it also did not end 2025 with a cash balance that proves real financing independence. The NIS 54.2 million FCF shown in the presentation is a useful metric for understanding the business before financing, but it is not the metric that answers how much cash really remained. Once interest already paid, Optimal Care, dividends and debt service are put back into the frame, the picture becomes materially tighter.
That is why the next real trigger here is not another small improvement in net debt to EBITDA. The trigger is whether 2026 starts converting Dimona from a CAPEX box into a cash-generation box, and whether Albaad can at the same time lengthen duration and shrink the short layer without buying that relief back through higher financing cost. Until that happens, the flexibility is real, but it still rests on refinancing capacity rather than on surplus cash.