Veridis: Meshua, support payments, and the economic cost of regulation
A follow-up to the main article: Veridis kept receiving current support payments in 2025, but almost the same magnitude was wiped from revenue for 2023. Meshua is not just a legal file, but the point where licensing, support eligibility, and earnings quality meet.
The main article argued that Veridis’s weakness is not demand. It is the company’s ability to convert environmental activity into clean value that can actually be trusted. This follow-up isolates the exact place where that happens in practice: Meshua, the support-payment mechanism for sorting plants, and the gap between cash that comes in and earnings that deserve to be treated as durable.
There are three conclusions here that do not show up in the headline. First, at the two main supported plants, RDF and Afula, Veridis recognized about NIS 64 million of support revenue in 2025, but in that same year it also recorded about NIS 61 million of revenue reduction for 2023 at those same plants. In other words, almost the whole current support layer was swallowed by the reversal of older support recognition. Second, Meshua is not just a criminal or licensing risk. It helps determine the support rate itself. When the organic stream goes to a treatment site, the sorting plant can work under support of NIS 75 per ton plus VAT. When the stream is sent straight to landfill, the support drops to NIS 50 per ton. Third, the April 2024 memorandum that helped restore activity did not just release part of the money. It also changed the value split: the treatment component of NIS 25 per ton is meant to be assigned to a new operator that will be chosen for the site.
That is the point that matters. Meshua is not sitting at the edge of the filing. It sits exactly where regulation determines whether support exists, how much of it can be recognized as revenue, and how much of that value stays inside the group.
Where The Profit Gets Weaker
The support model in waste sorting looks technical, but it defines the economics of the segment. Under the updated call for proposals, a sorting plant that has no outlet for the organic fraction and sends it directly to landfill is entitled to support of NIS 50 per ton plus VAT. A sorting plant that sends the organic fraction to a treatment facility is entitled to NIS 75 per ton plus VAT, but only if more than 40% of the waste received by the plant goes to a treatment facility, and only if the treatment residuals sent to landfill remain below 70%.
That reads like a regulatory clause. In practice it is a pricing system. From the moment the group stopped, on February 15, 2024, sending sorted organic material from its sorting plants to Meshua and started sending it directly to landfill, it did not just buy operational stability. It moved down to a weaker economic model.
There is another layer that is easy to miss. The terms of the support program require the sorting plants to give customers a discount equal to 50% of the support. So even when support is paid, it is not free money. The mechanism is designed to lower the gate price for the customer, not just enrich the operator. That means when support quality deteriorates, the damage is not only to a future cash line. It also hits the ability to keep pricing competitive without giving away margin.
| Item | What the mechanism says | Economic meaning |
|---|---|---|
| Base support | NIS 50 per ton plus VAT when there is no treatment outlet for the organic fraction and it goes to landfill | Weaker sorting economics, with no treatment premium |
| Higher support | NIS 75 per ton plus VAT when the organic fraction goes to a treatment facility and the threshold conditions are met | Better sorting economics, but dependent on regulatory and operating continuity |
| Customer discount | 50% of support must be passed through to customers | Even in a clean scenario, support does not stay fully inside Veridis |
| Treatment component in the memorandum | NIS 25 per ton plus VAT is meant to be assigned to a new operator for the site | Even a return to activity is not necessarily a return to the old economics of Meshua |
That chart is the core of the story. RDF recognized about NIS 39 million of support revenue in 2025, and Afula recognized about NIS 25 million. But in the same year the company also booked a 2023-related revenue reduction of about NIS 34 million at RDF and about NIS 27 million at Afula. In 2024 it had already booked another revenue reduction for 2022, NIS 13 million at RDF and NIS 10 million at Afula. So a reader who looks only at incoming cash misses the real issue. The model is still not stable enough for one year’s support to avoid being erased by a correction to an older year.
Meshua Is A Regulatory Junction, Not Just A Treatment Site
Meshua is the central treatment site in the chain. It handles about 550 thousand tons of sorted organic waste a year, making it the largest site of its kind in Israel. It is also the asset that links the group’s sorting plants to the higher support rate. That is why a disruption at Meshua is not a local problem. It flows back into RDF, Afula, and the entire question of earnings quality in the environmental segment.
Here it helps to separate three layers that the filing presents together even though the economics ties them tightly together. The first layer is the criminal layer. The investigation around Meshua focuses on the allegation that compost leaving the site was in fact waste that was illegally landfilled while being presented as compost. According to the press notices cited in the filing, the suspicion also includes the claim that trucks leaving Meshua were not weighed on entry and exit to landfill, allegedly in order to mislead authorities about the maximum landfill rate permitted for operating support. By the time the 2025 statements were approved, the investigation file had already been transferred from the police to the prosecution for review and decision, and the company’s legal advisers said they still could not assess whether the company would be called to a criminal hearing or eventually face an indictment.
The second layer is the support layer. In the Environmental Protection Ministry’s letter of February 13, 2024, the ministry said an investigation was under way, that 2022 support funds had been seized, and that it was reconsidering eligibility for 2023 support and beyond. From that point, the group’s sorting plants stopped sending organic material to Meshua, and the site itself stopped receiving organic material from sorting plants across Israel. Only on May 5, 2024, after the memorandum, did the site return to full activity.
The third layer is the licensing layer. In December 2024 an indictment arrived over operating the site without a valid business license. In January 2025 the Environmental Protection Ministry and the fire authority both issued approvals, but in February 2025 the existing planning scheme was stripped of validity, adding another obstacle. In July 2025 the court made clear that there was no barrier to continued operation during the interim period, but the license-renewal request was still denied in September 2025, the administrative objection was rejected in December 2025, and on January 4, 2026 the company filed an administrative petition against the refusal to renew the business license. The company continues to operate the site pending the exhaustion of proceedings.
| Date | What happened | Why it matters economically |
|---|---|---|
| February 15, 2024 | Sorting plants stopped sending organic material to Meshua and shifted it directly to landfill | The sorting chain moved from a treatment-based support model to a weaker base-support model |
| April 25, 2024 and May 5, 2024 | The memorandum was signed and the site returned to full activity | Operations resumed, but under guarantees, a hearing process, and a new value-sharing structure |
| April 20, 2025 and May 6, 2025 | The support committee cancelled 2022-2023 eligibility and the company returned 2023 cash already received | The past became a charge against the present, not just a historical dispute |
| July 6, 2025 | The court clarified that there was no barrier to continued interim operation | Operational continuity survived, but without a final licensing resolution |
| January 4, 2026 | An administrative petition was filed against the refusal to renew the business license | As Veridis entered 2026, the site was still operating under active regulatory uncertainty |
Why 2025 Does Not Close The File
At first glance, the picture may even look better. The full 2024 support amounts were received in May 2025, with the group’s share at about NIS 55 million. During 2025 and in January 2026 the group also received about NIS 46 million of advances on 2025 support. That sounds like normalization.
But the filing says something else. The company explicitly says it has serious legal arguments against the cancellation of 2022 and 2023 support, and in relation to the main portion of 2023 support, the sorting component, it says the odds of intervention are good. In the same breath, it also says the outcome still cannot be estimated at the level of certainty required for revenue recognition. That is not a legal contradiction. It is the key accounting point. A case can look defensible and still fail the threshold for earnings quality.
That is also the right way to read 2025. Current cash returned, but it did not make the past safe. The administrative petition filed on June 4, 2025 against the cancellation of 2022 and 2023 support is still open. In September 2025 the parties told the court they were conducting talks, the hearing was cancelled, and by the time the annual report was approved the companies still had to submit another update by April 1, 2026. So even at year-end there is no resolution. There are still negotiations.
That is why Veridis could, in the same period, receive support relating to 2024 and 2025 while still wiping out almost the entire 2023 support layer in the income statement. For anyone focused on clean earnings, the right question is not only whether the state is still paying. It is whether the state is paying under a mechanism that is truly settled and no longer reversible.
The Economic Cost Of Regulation
The economic cost of regulation here is not one large fine. It is built from four smaller but more dangerous layers.
The first is pricing. Every period in which the organic stream does not flow to an approved treatment facility damages the support level available to the sorting plants. This is not a theoretical clause. It is a direct change in the revenue model of the sorting chain.
The second is value allocation. Even if the operating model returns, the memorandum states that the treatment component of NIS 25 per ton is supposed to be assigned to a new operator for the site. So the price of restoring regulatory continuity may be surrendering part of the economics that previously stayed inside the group.
The third is accounting recognition. 2022 was already erased through a NIS 23 million revenue reduction. 2023 was erased through a NIS 61 million revenue reduction. That is proof that the gap between support as cash and support as earnings is not academic. It has already been recorded.
The fourth is business continuity. Meshua continues to operate, but at the same time the site is still under unresolved licensing, an open administrative petition, and an investigation file now sitting with the prosecution. That does not mean the outcome must be negative. It does mean the regulator remains part of the segment’s cost structure in practice.
Put as directly as possible, Meshua is no longer just a site. It has become the mechanism through which every ton, every grant, and every line of profit is being re-tested.
Conclusion
The continuation of the Veridis environmental story does not begin with the question of whether the activity exists. It does. It begins with the question of under what regulatory conditions that activity can count as stable profit. At the end of 2025, that answer is still only partial.
2025 showed that the system can put cash back on track: 2024 was paid, 2025 already received advances, and Meshua continued operating during the interim period. But the same year also showed that the past is still open, that accounting recognition can be reversed after the fact, and that restoring regulatory continuity has already come with a structure that weakens part of the treatment economics.
That is the real economic cost of regulation here. It is not a one-off event. It is a condition in which every seemingly simple support shekel has to pass first through a support committee, a licensing authority, and the prosecution, and only then can it become earnings that deserve to be trusted.
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