Kardan Nadlan: How Much of the Project Surplus Can Actually Reach Shareholders?
Kardan Nadlan's execution-project table shows an expected end-of-project surplus balance of NIS 523.7 million, but the header itself makes clear that the figure also includes a project-level equity component. Against NIS 669 million of solo net financial liabilities and a NIS 30 million dividend approved after year-end, this is not a clean cash reservoir for shareholders but a value layer that still has to pass through debt, covenants, and time.
What the Project-Surplus Table Actually Says
The main article identified the right bottleneck: at Kardan Nadlan, the real argument is not whether activity exists, but how much of the value created inside projects can actually make its way up to shareholders. This follow-up isolates that middle layer. Not the economics of the whole company, but the distance between the project-surplus table and cash that is truly accessible at the solo holding-company layer.
The first point: the execution-project table is not a shareholder-cash table. It shows an expected surplus balance at completion, and the page header explicitly states that the balance also includes a project-level equity component. That is no longer just net profit, and it is certainly not freely distributable cash. It is a broader project-level balance built not only on profit, but also on an equity component.
At year-end 2025, the table aggregates six execution projects with an expected end-of-project surplus balance of NIS 523.7 million. The largest numbers sit in Masada at NIS 175.2 million, Holiland at NIS 110.0 million, and Karmi Gat at NIS 101.8 million. Those three projects alone account for about 73.9% of the total. In other words, even before the solo layer enters the picture, the expected surplus is fairly concentrated and spread across 2027 to 2030, not sitting there as a near-term cash pool.
| Project | Expected end-of-project surplus balance, including project-level equity component | Expected withdrawal timing | Equity ratio invested |
|---|---|---|---|
| Holiland | 110.0 | 2027 | 15.0% |
| Uziel | 68.2 | 2029 | 19.9% |
| Masada | 175.2 | 2030 | 18.1% |
| Netanya 1011 | 24.0 | 2029 | 3.8% |
| Park Hayam | 44.5 | 2028 | 6.9% |
| Karmi Gat | 101.8 | 2029-2030 | 5.3% |
| Total | 523.7 | - | - |
There is another important signal on the same page. The summary line also shows expected gross profit of only NIS 403.9 million, which is NIS 119.9 million lower than the expected end-of-project surplus balance. That is exactly why it is wrong to read the NIS 523.7 million as if it were profit left for shareholders. The table itself already tells you that the column measures a broader balance, not a clean profit figure.
The maturity profile is uneven as well. In Netanya 1011, Park Hayam, and Karmi Gat, the invested equity ratio at the end of 2025 stands at 3.8%, 6.9%, and 5.3%, respectively. That is another indication that the table is describing projects still moving through the capital cycle, not surplus that has already turned into accessible cash higher up the structure.
The Solo Layer Changes the Math
Once you move one layer up from the project table to the company itself, the question changes. The solo statements at year-end 2025 show net financial liabilities of NIS 669 million. That is the number shareholders actually need to place against the project-surplus table, not just market value or reported net profit.
| Component | NIS m |
|---|---|
| Bonds | 589 |
| Bank credit | 295 |
| Liabilities for land purchases | 80 |
| Trade payables | 30 |
| Other payables and accruals | 35 |
| Other | 3 |
| Less cash and cash equivalents | -187 |
| Less short-term investments | -63 |
| Less receivables, loans, and debit balances | -113 |
| Total net financial liabilities | 669 |
This is not a full accounting bridge between the two tables, because the definitions and timelines are different. But it is a basic reality check. Even before the dividend approved after the balance-sheet date, solo net liabilities exceed the expected end-of-project surplus balance by NIS 145.3 million. So anyone reading the project table as a cash reservoir for shareholders is skipping the layer where the debt actually sits.
The gap becomes even sharper once Note 27(b) is added. On March 16, 2026, the board approved a dividend of about NIS 0.16 per share, for a total of NIS 30 million, to be paid in April 2026. That does not mean the company is under immediate pressure. It does mean that cash at the shareholder layer is already moving out now, while the larger project balances are mostly scheduled across 2027 to 2030.
This is the heart of the gap. At the project level, the table shows attractive surplus balances. At the shareholder level, the real question is who gets first claim on that cash, when, and at which layer.
Covenants Are Not Tight, but They Still Define Priority
This is not an immediate-distress thesis. Quite the opposite. Year-end covenant metrics still show comfortable room: for Series D and E, tangible equity to tangible balance stood at 41.7% against a 24% floor; for Series V, the ratio stood at 49.0% against a 23% floor; tangible equity stood at NIS 749.2 million for Series D and E and NIS 751.4 million for Series V, well above minimum levels of NIS 270 million and NIS 360 million; net financial debt to solo net CAP stood at 45.8% against a 75% ceiling; and consolidated tangible equity to consolidated tangible balance stood at 35.8% for Series E and 45.1% for Series V, against a 20% floor.
| Metric | Covenant threshold | Result as of 31.12.2025 |
|---|---|---|
| Tangible equity / tangible balance, Series D and E | 24% minimum | 41.7% |
| Tangible equity / tangible balance, Series V | 23% minimum | 49.0% |
| Tangible equity, Series D and E | NIS 270m minimum | 749.2 |
| Tangible equity, Series V | NIS 360m minimum | 751.4 |
| Net financial debt / solo net CAP, Series D and E | 75% maximum | 45.8% |
| Consolidated tangible equity / consolidated tangible balance, Series E | 20% minimum | 35.8% |
| Consolidated tangible equity / consolidated tangible balance, Series V | 20% minimum | 45.1% |
That is exactly the point. Because the company is not close to breach, it can keep financing, keep rolling projects forward, and even keep paying dividends. But from a shareholder perspective, that means future project surpluses first support balance-sheet stability, bond amortization, bank financing, and covenant room. Only after that does the question of truly free cash arise.
For shareholders, this is material. A company can be comfortably inside covenants and still have a much narrower distribution capacity than the project table alone seems to imply. At Kardan Nadlan, that is precisely the picture the filing draws: not a survival issue, but a gap between project-level value and accessible value.
So How Much Can Actually Reach Shareholders?
The direct answer is that the report does not provide one clean number. It gives three different layers: expected surplus balances at project completion, which already include a project-level equity component; a solo layer with NIS 669 million of net financial liabilities; and a covenant framework that proves there is room, but also reminds you that cash does not jump straight from the project to the shareholder.
That is why NIS 523.7 million should not be read as “future cash for shareholders.” It is a multi-year project-level potential, mostly concentrated in three projects, before it has passed through solo debt, amortization schedules, and management’s capital-allocation choices. The post-balance-sheet dividend sharpens the point: the company can distribute cash, but the fact of a distribution does not solve the accessibility question around the much larger balances that still sit further out.
If there is one sentence that captures the continuation thesis, it is this: project surpluses at Kardan Nadlan are an indicator of value creation, not proof of value accessibility for shareholders. For that reading to improve, the large projects need to finish on schedule, the surplus needs to be released in practice, and the solo liability layer needs to start falling faster than the company continues to send cash out the door.
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