Follow-up to Eshel Hayarden: How Much of 2025 Earnings Rested on Related Parties
In 2025, Eshel Hayarden barely relied on open-market apartment sales and instead leaned on execution work and engineering-management services. The issue is not the existence of related parties by itself, but the fact that roughly three quarters of revenue, a large share of procurement and part of the collection mechanics all sat inside the same circle.
The main article argued that Eshel Hayarden's project pipeline is large, but financing still sets the pace. This follow-up isolates one layer of that picture: how much of 2025 earnings power rested on transactions, services and collections inside the related-party and controlling-shareholder circle.
That matters here because 2025 was not a year in which Eshel Hayarden proved out a clean, external apartment-sales engine. Out of total revenue of NIS 50.988 million, only NIS 1.371 million came from apartment sales. Most of the year came from construction and other execution work of NIS 29.799 million, plus management, planning and engineering-supervision fees of NIS 19.818 million. A superficial read might treat 2025 as a year of outside execution and commercialization. The report points to something narrower: it was mainly a year of execution and management services, and the same related-party circle shows up throughout that story.
The first finding is that roughly three quarters of annual revenue came from related parties, the controlling shareholder and interested parties. The second is that the move to profit in the fourth quarter was driven mainly by management and supervision agreements, while the annual note shows that a very material share of those revenue streams came from the same circle. The third is that the report is not clean or fully consistent on the procurement side: one section presents the main supplier as unrelated, while another describes the main supplier as a company owned by the controlling shareholders. The fourth is that even after year-end, part of the collection path still ran through lender approval, debt assignment and direct payment by the controlling shareholder rather than through plain external cash realization.
Roughly three quarters of revenue sat inside the same circle
The revenue note shows NIS 50.988 million of revenue in 2025. The related-party note shows NIS 38.219 million of revenue from related parties, the controlling shareholder and interested parties within that same year. That included NIS 4.601 million of execution revenue from Geshem Hayarden Nahariya, NIS 8.854 million of management, planning and engineering-supervision fees from Elad Center, and another NIS 24.764 million of execution revenue from related companies and the controlling shareholder.
Put simply, about 75% of 2025 revenue came from that same circle. This is not a footnote item buried at the edge of the filing. It is the economic structure of the year.
That concentration looks even sharper once the revenue mix itself is laid out. Of the NIS 19.818 million of management, planning and engineering-supervision revenue, NIS 8.854 million came from Elad Center, or roughly 45% of that category. At the same time, execution work represented almost all of the operating revenue base. So the real question is not merely whether related-party transactions existed. The real question is whether 2025 proves out normal outside economics, or whether a large share of the year's revenue was still being generated inside the same business circle.
The note also does not stop at the income statement. At year-end, current assets included NIS 21.017 million from associates that were customers and NIS 18.039 million from the parent company as a customer. Together that is NIS 39.056 million of customer balances inside the related-party circle. On top of that, non-current assets included NIS 25.832 million vis-a-vis an equity-accounted company, while loans from controlling and interested parties stood at NIS 37.849 million. The same circle therefore shows up in revenue, in the balance sheet and in financing. This is no longer just a governance footnote. It is the economic map.
The fourth quarter turned profitable through management and supervision services
The quarterly table in the annual report shows why the earnings-quality question matters now. The company lost money in the first three quarters of 2025, then posted net profit of NIS 5.641 million in the fourth quarter. The explanation given in the filing is unusually direct: the move into profit came mainly from signing management and supervision agreements.
The more important number is the net profit or loss from engineering-management and supervision services. In the fourth quarter it reached NIS 9.156 million. That is higher than the company's total net profit for the quarter. In other words, even after the company crossed into profit, the management-and-supervision layer was larger than the bottom line itself and had to offset weakness elsewhere.
The report does not split that quarterly profit pool by counterparty, so it would be too strong to claim that all of the fourth-quarter profit came from related parties. But a more careful and still important conclusion is available: the year in which management and supervision services became the late-year profit engine is also the year in which the related-party note shows that material execution and service revenue came from the controlling-shareholder circle.
That is the earnings-quality issue. Not because the revenue is necessarily invalid, but because the filing still does not provide a clean demonstration that the new profit base rests mainly on outside projects, outside customers and outside cash generation.
Procurement was concentrated too, and the disclosure is not clean enough
If revenue was concentrated in a related circle but procurement was diversified and transparent, the issue could be framed mainly as customer mix. The problem is that procurement points in the same direction, and on this point the report itself is not consistent.
| Disclosure location | What it says | 2025 figure | Why it matters |
|---|---|---|---|
| Operating review | Bitzua U'Binyan is presented as the main supplier and not a related party | NIS 34.438 million, 65% of total company purchases | Shows high concentration but without a controlling-shareholder link |
| Related-party note | The main supplier is described as a company of the controlling shareholders | NIS 29.068 million, 78% of total company purchases | Shows even higher concentration, this time explicitly related-party |
| Commitments note | The framework agreement with Bitzua U'Binyan served as the company's execution arm | The agreement ended at the end of 2025 | Suggests that the concentration was real in 2025 even if it may ease later |
This is not a cosmetic discrepancy. In a report that is trying to frame the company as moving from dependence toward a broader operating base, the difference between "not related party, 65%" and "company of the controlling shareholders, 78%" is material. Even if the gap reflects different measurement bases or a different procurement perimeter, the reader is still left without a clean, consistent picture of who actually carried the execution chain in 2025.
There is also an important counterpoint. The operating section says dependence on a single supplier fell materially versus 2024 and that, as of the report date, no such dependence remained because the projects in which that supplier acted as subcontractor had already ended. The commitments note also says that the framework agreement with Bitzua U'Binyan expired at the end of 2025. So the counter-thesis is real and respectable: 2025 may have been the last heavy year of old dependence rather than the start of a new permanent structure.
But that does not clean up 2025. If anything, it sharpens the point. The year may have been built on an execution base that is not representative of the external economics the company will now need to prove in 2026 and 2027.
Even the post-balance-sheet collection path did not fully leave that circle
The most revealing passage for earnings quality sits in the post-balance-sheet discussion of Project Tersa. The company wrote that, as of September and after final project accounting, it was entitled to around NIS 28.4 million of receivables to be collected over the next two quarters. But the breakdown of that collection tells a more complicated story.
Of the NIS 28.4 million, NIS 12.5 million was supposed to come from the project finance account and only after the lender approved the transfer. Another NIS 5.4 million was structured as a debt assignment to be paid by the controlling shareholders to the subcontractor, meaning a settlement mechanism within the same circle. The remaining NIS 10.5 million was committed by the controlling shareholder from its own sources by the end of March 2026. After year-end, the controlling shareholder did in fact transfer NIS 10.5 million to the company.
The implication is that more than half of that collection package, NIS 15.9 million, depended directly on the controlling-shareholder side rather than on a plain external cash inflow. Even the remaining NIS 12.5 million was not framed as immediately free cash, but as money to be released from the project finance account subject to lender approval.
That is the core point. The question is not whether the company will eventually receive the money. The question is by what mechanism. The more the path to cash runs through lender approval, debt assignment and support from the controlling shareholder, the weaker the earnings quality is relative to revenue that converts straight into ordinary outside cash.
Conclusion
The right read of 2025 is not just that Eshel Hayarden had related-party transactions. It is something sharper: the company built 2025 through the same circle on the revenue side, on the procurement side and in part of the collection mechanics.
That does not mean the revenue is invalid. It does mean the year still falls short of proving clean outside economics. Roughly three quarters of revenue came from related parties, the fourth-quarter move into profit was explained mainly by management and supervision agreements, the main supplier was described once as unrelated and elsewhere as a company of the controlling shareholders, and even after year-end part of the collection path leaned on the controlling shareholder and project-finance mechanics.
The counter-thesis is that the filing also points to a transition: dependence on the single supplier fell versus 2024, the framework agreement with the execution arm ended at the end of 2025, and the company should gradually move into years in which financed projects and external sales carry more of the weight. If that happens, 2025 may later look like an unusual bridge year rather than a new steady state.
Until then, the test is not whether the company can record revenue inside that circle. The test is whether it can gradually replace that revenue with normal outside economics. That will decide whether 2025 was a legitimate bridge year or a warning that earnings still rely too heavily on the controlling shareholder, related companies and the collection structures built around them.
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