Veridis Inside Delek Rehev: How Much Value Is Being Discounted by the Subsidy and Investigation Overhang

The main article already argued that Veridis has become the key support layer cushioning Delek Rehev against the weakness in vehicle imports. This follow-up isolates a different question: what is the quality of that support layer. Not whether there is value there, but how much of it the market is still justified in discounting because the regulatory, investigative, and legal cloud has not closed.

That is exactly what the 2025 filing shows. Veridis did not lose the ability to generate money. It lost the innocence of the subsidy line. The same system that forced the group to record revenue reductions of about NIS 23 million for 2022 support and about NIS 61 million for 2023 support also paid the full 2024 support in May 2025, the group's share about NIS 55 million, and started paying quarterly advances for 2025 that reached about NIS 46 million through January 2026. The cash did not disappear. It shifted from a clean support layer into a conditional, disputed, and reversible layer.

That detail matters because it explains why the discount can persist without an operating collapse. If the state had shut the business down or stopped all support flows, the story would be binary. Here the picture is more complicated: 2022 and 2023 were denied, 2024 was paid in full, and 2025 already started receiving advances. That does not erase the value. It does lower the quality the market is willing to assign to it.

The second key point is that this is no longer a buried footnote. The board raises it in the annual narrative, and the auditor separately highlights it in an emphasis-of-matter paragraph without modifying the opinion. That distinction matters. The statements are not qualified, but the reader is also not being allowed to move on as if this were minor legal noise.

Three Points To Hold In Mind

• The subsidies did not disappear, but they stopped looking like a clean recurring layer. 2022 and 2023 became disputed years, and 2023 even required a cash repayment of about NIS 47 million plus VAT in May 2025, while 2024 and 2025 were still producing inflows.
• The auditor's emphasis-of-matter paragraph hardens the cloud. Once the auditor explicitly points to searches, investigations of officers, class-action requests, and claims against group companies, the issue is no longer just note-level legal drafting.
• The legal stack is broader than the subsidy dispute. Alongside the petition on denied subsidies, there is an open criminal investigation, an environmental class action, a securities class action, a business-license and planning front around the waste-treatment site, and a new post-balance-sheet claim.

The Subsidy Front: Cash Still Flows, But It No Longer Counts The Same Way

The superficial reading can miss the paradox. On the one hand, on April 20, 2025 the support committee of the Cleanliness Fund decided to deny eligibility for support for 2022 and 2023. As a result, the 2022 support that had been seized as part of the criminal investigation is to be returned to the fund through the forfeiture unit, and Veridis's consolidated subsidiaries were required to repay the part of the 2023 support they had already received. In practice, about NIS 47 million plus VAT was repaid on May 6, 2025, and the related bank guarantees were canceled on May 8, 2025.

On the other hand, the same evidence set shows a completely different picture for the current flow. In May 2025, the full 2024 support was received, the group's share about NIS 55 million. Starting in 2025, the Ministry of Environmental Protection moved to quarterly advance payments against the annual support, and about NIS 46 million had already been received for 2025 during 2025 and January 2026.

That is not a contradiction. It is the distinction the market makes between an asset that continues to operate and a support line that no longer looks close to automatic. 2022 had already forced the group to record a revenue reduction of about NIS 23 million in the 2024 statements. 2023 added another revenue reduction of about NIS 61 million in the 2025 statements. The cumulative picture is clear: even if Veridis and its legal advisers believe it has strong arguments, revenue recognition no longer rests on sufficient certainty as of the approval date of the statements.

That chart tells the whole story. Anyone assigning a full-quality multiple to Veridis's support layer has to explain not only why 2024 and 2025 are still flowing, but also why 2022 and 2023 will not repeat as an accounting and cash problem. Until there is a clean answer to that question, the value remains there, but the quality of that value is lower.

The procedural posture reinforces that reading. On June 4, 2025 an administrative petition was filed against the denial of the 2022 and 2023 support. Later, on September 14, 2025 Veridis and the Ministry of Environmental Protection told the court that they were in talks on a range of issues, including the decision at the center of the petition. The November 2025 hearing was canceled, and the proceeding was stayed while the talks continued. That point matters: as of the approval date of the statements there was no resolution cleaning up this front, only a freeze.

The Auditor's Emphasis Paragraph Changes The Quality Of The Read

This is where the reader should slow down. The auditor issued an unmodified opinion on the consolidated statements, but immediately added an emphasis-of-matter paragraph referring to note 23E on the searches at Veridis's offices, the investigation of officers in the group and its possible consequences, and the class-action requests and claims against group companies.

This is not a qualification, but it is not a comforting pass-through either. The economic meaning of an emphasis-of-matter paragraph is that the auditor wants the reader to stop exactly where the market already struggles. In Delek Rehev terms, that matters twice. First, because Veridis is a material value layer inside the group. Second, because once the auditor raises the issue from note level to emphasis level, it becomes harder to treat that value as if it sits on a calm regulatory foundation.

What matters most is the combination between the board's annual narrative and the auditor's emphasis. Management itself already presents the subsidy front as part of the year's core story, and the auditor separately highlights the investigation, searches, and claims. So even anyone trying to read Veridis only through operating performance gets a sharp signal from the filing: the value here is being judged not only through earnings, but through the quality of the legal and regulatory wrapper around it.

The Problem Is Not One Claim, But A Stack Of Open Fronts

If the only friction were the dispute over 2022 and 2023 support, one could argue this was a narrow administrative event that would eventually close. But note 23 shows a wider picture. Not one large front, but several fronts at once, some still too early even to produce a measurable provision. For market purposes, that is exactly the kind of noise that creates a persistent discount.

Two details in that stack deserve extra weight. The first is that the environmental class action is no longer framed only as a general allegation, but through highly specific claimed amounts: about NIS 311 million for landfill levies that allegedly should have been paid, about NIS 100 million for pollution, and about NIS 9 million for environmental nuisance. The second is that the securities class action explicitly ties the investigative front to the question of public disclosure. That is exactly why the market does not need to wait for an indictment to keep applying a discount.

It is also important to understand what the absence of provisions means. In several of these fronts, Veridis says it and its legal advisers cannot yet assess the likelihood of the proceedings, and therefore no provision was recorded. That does not ease the discount. It does the opposite. Markets can live with a known problem. They are more cautious with value whose legal perimeter is still not closed enough to measure.

The Licensing Front Shows Why The Discount Can Persist Without A Shutdown

The licensing front around the waste-treatment site matters because it sharpens the in-between state in which Veridis is operating. At the end of December 2024 an indictment was filed against a consolidated Veridis company and one of its officers for operating the site without a lawful business license. In early January 2025, the environmental approval for renewing the license and a fire-safety approval were received, but in February 2025 the validity of the existing plan at the site was canceled, adding another obstacle. Later, Veridis's requests to renew the license were rejected, and on January 4, 2026 it filed a petition against the licensing authority's refusal to renew it.

The key detail is that Veridis decided to continue operating the site until the proceedings are exhausted. In value terms that means the asset did not disappear, but it also did not return to a clean state. This is exactly the zone where discounts tend to persist: the operation is still there, inflows have not vanished, but the law, licensing, and regulatory stability around the asset are still not fully settled.

Why The Discount Can Stay

From a holding-company perspective, this may be the most important point. Veridis can remain a good asset inside Delek Rehev and still trade, inside the group, at an effectively lower value. The reason is not necessarily that the market assumes every one of these fronts will crystallize in full. The reason is that the value cannot be treated as clean, accessible, and free of surprise risk.

The 2025 evidence creates three different layers of erosion. The first is earnings-quality erosion: once 2022 and 2023 support have already produced revenue reductions and cash repayment, the support line stops looking close to routine. The second is wrapper-quality erosion: an open investigation, an emphasis-of-matter paragraph, class actions, and claims force the market to apply a caution factor even if operations continue. The third is closure-horizon erosion: instead of a clear line of event, review, and resolution, the filing shows talks, stays, mediation, petitions, and new claims even after the balance sheet date.

That is why the discount does not need one dramatic conclusion to survive. It can come from accumulation. This is exactly the kind of situation where each individual front might be digestible on its own, but together they turn part of Veridis's value inside Delek Rehev from operational value that deserves close to a full multiple into value that still trades with a question mark attached.

What Has To Happen For The Value To Be Counted Differently

For the discount to start closing, it is not enough for Veridis to keep operating. It needs to show that the operation is also getting cleaner. First trigger: the subsidy front needs to move from talks and stay orders into a resolution or settlement that restores real certainty for the coming years. If 2025 remains a disputed advance-payment layer, the market will keep assuming the problem is not behind it.

Second trigger: the investigative front needs to move in a direction that narrows the uncertainty rather than widens it. As long as the file sits with the prosecution and Veridis itself says it cannot assess whether there will be a criminal hearing or indictment, the discount remains rational.

Third trigger: the site needs to move out of the twilight zone of continued operation under proceedings and into a cleaner licensing and planning path. An operating asset under petitions and refusals is worth less than the same asset under a stable regulatory framework.

Fourth trigger: one of the larger monetary fronts needs to fall away, whether through dismissal, settlement, or a clearer conclusion that no provision is required. As long as the large headlines remain alive, the market does not need to wait for the very end to apply a discount.

The conclusion is sharp: Veridis still creates value inside Delek Rehev, but 2025 showed that part of this value comes with baggage. The 2024 and 2025 support flows prove the activity has not broken. The emphasis paragraph, the investigation, the class actions, the licensing front, and the post-balance-sheet claim explain why the market can still price that value at a lower quality level.