ELLA: How Much Cash Is Truly Accessible at the Parent?

In the main article, the core conclusion was that ELLA’s bottleneck is not asset quality. It is the path through which value created lower in the structure becomes usable cash higher up. This continuation isolates only the parent layer: what actually sits on the solo balance sheet, how much debt is waiting over the next year, what the new bank line really buys, and how much of the value already recorded inside subsidiaries can actually move upstairs to the public parent.

This is not a solo-profit read and it is not a paper-value read. The correct framing here is all-in cash flexibility: how much cash and room for action truly remain at the parent after near-term debt service and real commitments. On that framing, 2025 looks much tighter than the headline profit line suggests.

Four points matter immediately:

• The parent’s main asset is not cash. At the top company level there are NIS 13.6 million of cash, but also NIS 263.95 million of related-party receivables and NIS 667.18 million of net assets in held companies.
• The solo profit mostly stayed below the parent. Parent net profit reached NIS 47.3 million, but NIS 47.1 million of that came from the share of earnings in held companies, while solo operating cash flow was only NIS 1.8 million.
• Next year’s debt service is far larger than the cash balance. The parent’s first-year contractual obligations amount to NIS 59.2 million, of which NIS 55.6 million is bond service.
• The new NIS 48 million line is a bridge, not a solution. By the publication date, about NIS 12 million had already been drawn, so the remaining cushion is not enough on its own to clear the first-year test.

This chart is the heart of the distinction between value and liquidity. The parent assets are real, but most of them sit either as balances against subsidiaries or as the net value of those subsidiaries. Those items may carry real value. They are not the same thing as unrestricted cash available to pay bonds.

Where the Parent’s Value Actually Sits

The December 31, 2025 solo balance sheet is a classic holding-company statement. On the directly liquid side there are NIS 13.6 million of cash and cash equivalents, NIS 274 thousand of other receivables, and NIS 8.3 million of land inventory. But the real weight of the balance sheet sits elsewhere: NIS 263.95 million of related-party receivables and NIS 667.18 million of net assets in held companies.

That is not a technical distinction. It defines the entire parent-level read. When most of the parent’s asset base sits as intercompany balances or as the net value of subsidiaries and associates, the question is not whether value exists. The question is how much of that value can move up in time, without asset sales, without another refinancing layer, and without simply increasing more internal balances.

The detailed breakdown of balances with held companies makes the point sharper. At year-end 2025, the parent carried NIS 266.65 million of debit balances from subsidiaries, against only NIS 3.18 million of credit balances to subsidiaries and NIS 334 thousand of debit balances from associates. In practical terms, the parent is mostly a creditor to the companies below it. It is not a cash-rich topco receiving steady excess liquidity from them.

There is another friction here that is easy to miss. The parent is not only waiting for cash to come up. It is also standing behind the system. Guarantees to subsidiaries stood at NIS 75.9 million at year-end. So upstreaming is not just a dividend decision. It takes place inside a structure in which the parent both expects repayment and supports part of the downside.

This table explains why ELLA’s parent-level liquidity cannot be read like a normal balance sheet. A reader who stops at equity of NIS 754.8 million will see strength. A reader who focuses on the parent layer will see that much of that strength still has to pass through time, partnership structures, bank approvals, and actual distributions before it becomes accessible cash.

The Solo Profit Looked Strong, But Hardly Reached the Parent Cash Box

The parent P&L looks much calmer than the cash position. In 2025 the parent reported NIS 47.3 million of net profit. But almost all of that came from below: NIS 47.1 million from the share of earnings in held companies. On top of that, the parent booked NIS 15.5 million of interest income from subsidiaries and NIS 1.858 million of management-fee income. On paper, that looks like a very healthy earnings layer at the parent.

The problem is that those earnings hardly turned into free cash. Solo operating cash flow came in at only NIS 1.794 million. In other words, the parent ended the year with net profit more than 26 times larger than its solo operating cash flow. That is the exact difference between earnings recognized inside held companies and cash that actually made it upstairs.

That chart matters because it strips out the accounting illusion. The profit was not fake. It was simply not liquid at the parent. The share of earnings from held companies lifted the bottom line, and a NIS 4 million dividend from an associate did move up. But that is still far from turning the parent into a comfortable liquidity layer.

The investing cash flow tells the same story from another angle. In 2025 the parent used NIS 26.3 million in investing activity, mainly because of a NIS 59.1 million increase in related-party balances, partly offset by a NIS 32.5 million decrease in loans to subsidiaries and investees. So even in a year when ELLA created real value and real profit lower in the group, the parent-level cash still moved through the internal system more than it accumulated in the top-company cash box.

That is also why the parent’s interest income should be read carefully. NIS 15.5 million of interest income from subsidiaries sounds like a healthy liquidity layer. In practice it mostly reminds the reader that part of the value recognized at the parent comes from funding the group below. As long as repayment of those balances does not arrive at a pace that widens the parent cash layer, this is closer to an accounting yield than to a real liquidity cushion.

The Near-Term Debt Test Is a Cash Test, Not an Accounting Test

At year-end 2025 the solo balance sheet shows current liabilities of NIS 76.7 million against current assets of NIS 22.2 million. On first glance that looks like a wall. But it is important to be precise here: not every current liability line is an equal near-term cash payment.

The clearest example is the convertible loan. In the working-capital discussion, the company explains that following the IAS 1 amendment, the convertible loan and the related warrants were classified as current liabilities when they become convertible into shares within 12 months. That is why NIS 17.1 million of convertible debt and NIS 5.2 million of derivatives weigh on the current-liability line, even though they are not the same thing as near-term cash service in that full amount.

That is why the better test is the parent’s contractual maturity schedule. There the picture becomes sharper: first-year contractual obligations amount to NIS 59.194 million, made up of NIS 55.637 million of bonds, NIS 2.960 million of payables and accruals, and only NIS 597 thousand on the convertible.

The bond itself is laid out in a clear staircase: NIS 51.42 million in the first year on the balance sheet, another NIS 51.42 million in the second and third years, and NIS 25.71 million in the fourth year. On a contractual basis including interest, the first year is already a NIS 55.6 million test. That is why the right debate here is not whether the company is close to tripping covenants. It is how much cash really stands opposite the bond service.

And that is exactly where two different stories have to be separated. One story is the covenant story, where the room is still wide: equity stood at NIS 755 million against a minimum of NIS 275 million, and net financial debt to net CAP stood at 36.19% against a ceiling of 75%. The other story is the liquidity story, where the room is much narrower. The company is nowhere near a covenant wall. It is, however, still in a place where bond service depends on more cash moving up from below or on more bridge funding remaining open.

What the New NIS 48 Million Facility Really Buys

This is where the genuine post-balance-sheet improvement sits. On February 23, 2026, the company signed a NIS 48 million credit-line agreement with Bank Hapoalim at prime, which was 5.5% at the publication date, through June 30, 2027. The agreement includes an undertaking not to create a floating charge over all assets in favor of a third party, together with the same two familiar financial tests: minimum equity of NIS 275 million and net financial debt to net CAP of no more than 75%. If those ratios are breached, the rate steps up by 1%.

That is an important improvement, but it has to be read correctly. It does not change the parent-liquidity thesis from the ground up. It mostly adds a usable bridge. In fact, the annual report also says that by the publication date about NIS 12 million had already been drawn under that line. That means the remaining cushion had already narrowed to roughly NIS 36 million by the end of March 2026.

This chart is deliberately indicative because it combines year-end cash with publication-date line headroom. That is exactly why it is useful. Even after adding the undrawn portion of the new line, the parent still does not fully cover its first-year contractual obligations. The gap is not dramatic, but it is large enough to explain why the bank line is a bridge solution rather than a closure of the story.

There is also an important point in the company’s favor. This new line was not signed on distress terms. The same financial ratios are already far from breach under the bond framework, so the facility is not a sign of immediate covenant pressure. It is a sign that the company is choosing to build a top-level liquidity layer before value has fully moved up from below. That distinction matters. It still leaves the original question open: will this line remain a short bridge, or will it effectively become a standing substitute for real upstreaming from the held companies?

How Much Cash Can Really Move Up

The short answer is that some capacity exists, but there is no full comfort layer yet. The report already shows that the parent can receive something from below: the solo cash-flow appendix records a NIS 4 million dividend from an associate. The interest-income line also shows that the parent actively lends into the group. And in the working-capital discussion, the company explicitly leans on its access to banks and capital markets and on the ability to pledge unencumbered assets.

But none of that yet makes the value fully accessible. If year-end subsidiary debit balances to the parent still stand at NIS 266.65 million, and if the parent’s solo operating cash flow is still only NIS 1.8 million, then the main path upward is still not clean. Part of the cash remains invested inside the structure, part of it is supported by guarantees, and part of it simply has not been distributed yet.

Even the intercompany interest rate says something about this structure. Group companies operate under an internal funding framework that accrued interest at roughly 6.75% during 2025. That may be economically fair, but it also underlines that the system behaves like an internal funding network. As long as that is the structure, the parent can show yield on balances without those balances turning into unrestricted cash at the same pace.

That is why the board is not overstating matters when it says the working-capital deficit is not a going-concern warning sign. There is no persistent negative cash flow, and there is demonstrated access to financing. But it would also be wrong to conclude that the parent bottleneck is solved. For a bondholder, or for anyone trying to judge how much real room remains at the parent, the key question is not whether funding exists. It is whether more of it will start to come from below the parent and less of it will have to come from another bank or market bridge.

The bottom line here is sharp. There is substantial value at ELLA’s parent, but there is still not much directly accessible cash. 2025 ended without a covenant wall and with a new credit line, but also with only NIS 13.6 million of cash, with bond service of NIS 55.6 million in the first year, and with a balance sheet still dominated by intercompany balances and held-company value. So the 2026 test is not whether the group keeps creating value. It is whether more of that value finally starts moving up as cash, rather than staying attractively recorded below.