Netanel Group: What 85/15 And 20/80 Sales Really Leave In Cash
The main article showed that permits and planning progress still do not solve Netanel Group's tight balance sheet. This follow-up shows why: most 2025 sales were signed on 85/15 and 20/80 structures, apartment-sale receivables climbed to NIS 112.9 million, and the conversion of sales into cash remained weak.
The main article already established that permits, planning progress, and resumed selling activity were not enough to free Netanel from its balance-sheet constraint. This follow-up isolates the point hiding inside the sales line itself: in 2025 the company sold mostly on time, not on cash.
This is not a minor marketing detail. Out of 49 units sold in 2025, 45 were sold on 85/15 or 20/80 payment terms. Developer loans were used in only about 5% of the transactions and in a non-material share of sales, so the core issue is not a narrow interest subsidy program. It is the payment deferral itself. At the same time, the significant financing component deducted from transaction prices for revenue-recognition purposes rose to NIS 3.288 million, from NIS 1.425 million in 2024. The company estimates that the embedded discount in these structures ranges from 1% to 5% of the apartment value.
The practical meaning is simpler than the accounting. The company succeeded in restoring sales pace, but a larger part of the sale reaches the cash line only later. So the right question is not whether sales returned. It is what those sales leave in cash, how long they take to collect, and who funds the gap in the meantime.
Revenue Was Booked, But The Customer Did Not Pay On The Same Clock
The apartment-sale receivable roll-forward tells the cleanest story in the report. At the start of the year, apartment-sale receivables stood at NIS 34.6 million. During 2025 the company recognized NIS 138.1 million of apartment-sale revenue, reclassified another NIS 2.6 million from customer advances, but collected only NIS 62.4 million. The result was a closing balance of NIS 112.9 million.
That is the core point. The sale is signed, the project progresses, but cash does not move at the same pace. The net increase in apartment-sale receivables was NIS 78.2 million, almost identical to the NIS 78.39 million rise in customers and accrued revenue that dragged operating cash flow lower. That is not a coincidence. It means most of the cash-flow pressure did not come from weak demand. It came from demand being closed on deferred collection terms.
The usual buyer-funding line on the balance sheet makes the point even sharper. Customer advances for apartments and land stood at only NIS 8.6 million at the end of 2025, slightly below NIS 9.3 million a year earlier. So in a year of recovering sales the company did not get stronger early-stage buyer funding. The opposite happened: more receivables, less cash, and a thin advances base.
Receivables Did Not Only Grow, They Also Moved Further Out
This is the less obvious finding. The problem is not only that the receivable balance grew. The collection tail also lengthened. At the end of 2024 only about NIS 4.7 million out of NIS 49.4 million of receivables sat beyond 12 months, roughly 9.6% of the balance. By the end of 2025, NIS 28.5 million out of NIS 124.1 million sat beyond one year, about 23% of the balance.
That is already a change in the character of the asset, not just in its size. A receivable due inside one year is one thing. A receivable with a meaningful part pushed into the second and third year is already a funding layer the company carries on its own balance sheet for longer.
And this links directly back to the company's own description of the sales structures. In developer-loan cases the company relies on underwriting performed by the financing body. But where the benefit is mainly deferred payment and CPI-indexation relief, the company explicitly says it does not perform additional underwriting of the apartment buyers. So the counter-argument that "cancellation risk is low, therefore everything is fine" misses the core issue. Even if cancellation rates stay low, the company is still carrying a longer gap between revenue and cash.
The Company Explains Itself How Sales Terms Turn Into Financing Pressure
The most important passage in the sales section is that the company does not hide the economic cost of these structures. It states directly that non-linear payment schedules increase project financing needs, because the credit the bank committed to provide will likely not, on its own, cover the construction costs that still need to be funded. It then lays out four ways this gap can be closed.
| If the company does this | The economic effect |
|---|---|
| Injects additional equity into the project | The capital comes back only toward the end of the project, so cash remains tied up for longer |
| Asks the bank to enlarge the credit line | Financing expense rises and project surplus is reduced |
| Funds developer-loan interest from its own resources | The financing commission does not reduce project surplus, but it does reduce gross profit |
| Funds the developer-loan burden through additional bank credit | Financing expense rises and project surplus is reduced |
That table explains why 2025 cannot be read as a clean cash recovery year. In every version, the company must carry more time, more credit, or more financing cost in order to preserve the sales pace. This connects directly to the cash-flow statement: NIS 132.4 million of negative operating cash flow, including among the main drags NIS 39.8 million into inventory, NIS 78.4 million absorbed by customers and accrued revenue, and NIS 101.3 million of interest, fees, and tax payments.
In the same year financing cash flow was positive by NIS 89.4 million, mainly from bank loans and bond issuance and expansion. Even so, cash still fell from NIS 74.6 million to NIS 36.2 million. So even after fresh funding, 2025 sales did not leave behind a cash-flow release.
The point becomes even sharper when combined with the interest-sensitivity test. The company shows that a 50% change in variable interest rates would change pre-tax profit by about NIS 22.4 million in 2025. In a business already forced to stretch interim funding because of 85/15 and 20/80 structures, that level of rate sensitivity means every delayed customer receipt is not only a timing issue. It is also a cost issue.
Even In The Signed Backlog, Cash Still Lags The Accounting
The backlog-and-receipts table adds another important angle. From the end of 2025 onward, the company expected to recognize another NIS 123.7 million of revenue from signed contracts, but to collect another NIS 353.3 million of receipts and advances from those same contracts. That gap is not an accounting error. It means a large part of the value has already started to appear in the income statement, while a much larger part of the cash is still waiting further down the road.
In 2026 alone, revenue still to be recognized from signed contracts was NIS 65.1 million, versus NIS 181.7 million of expected receipts. So from an accounting perspective the company has already eaten part of the project, while from a cash perspective it is still waiting for the money. That is exactly how 85/15 and 20/80 selling during construction works.
That is why a reader focused only on sales recovery can miss the more important message. At Netanel in 2025, selling activity improved before cash conversion improved. As long as that is the structure, the sale itself does not solve the tight balance sheet. It simply moves the main question toward collections, funding, and the company's ability to carry the gap until delivery.
Conclusion
The main article argued that permits are starting to arrive, but the balance sheet is still not breathing. This follow-up shows why both statements can be true at the same time. 2025 really was a recovery year in sales, but it was a recovery built mostly on payment terms that push cash further out.
This is the thesis here: Netanel's sales came back, but the quality of their conversion into cash weakened. The evidence is not only that 45 out of 49 units were sold on 85/15 or 20/80, but that apartment-sale receivables jumped to NIS 112.9 million, a larger share of them moved beyond 12 months, and the company still ended the year with less cash even after raising fresh funding.
The reasonable counter-thesis is that these are now common sales structures in a high-rate market, that the actual use of developer loans at Netanel is not material, and that management itself considers the probability of buyers failing to complete transactions to be very low. That is a fair argument, but it is incomplete. Even if cancellations stay low, these sales terms already change the collection period, lift financing needs, and shift part of the cost into gross profit, financing expense, or equity trapped inside projects.
Over the next 2 to 4 quarters the market should watch less the contract count and more three other signals: a real decline in apartment-sale receivables, a real rise in advances and collections relative to the pace of revenue recognition, and lower dependence on 85/15 and 20/80 in order to preserve the selling pace. Only if all three appear together will the 2025 sales recovery begin to look like a cash improvement, not only a headline improvement.
Disclosure: Deep TASE analyses are general informational, research, and commentary content only. They do not constitute investment advice, investment marketing, a recommendation, or an offer to buy, sell, or hold any security, and are not tailored to any reader's personal circumstances.
The author, site owner, or related parties may hold, buy, sell, or otherwise trade securities or financial instruments related to the companies discussed, before or after publication, without prior notice and without any obligation to update the analysis. Publication of an analysis should not be read as a statement that any position does or does not exist.
The analysis may contain errors, omissions, or information that changes after publication. Readers should review official filings and primary sources before making decisions.