G1: What is really left in the centers unit after the Prison Service exit?
The centers unit was not hollowed out by the Prison Service exit, but 2025 is still not a clean post-exit earnings base: the year still included four months of the old line, monitoring, patrol and control revenue fell to NIS 107.1 million, and adjusted EBITDA fell to NIS 33.8 million. What remains is a more recurring, more private-sector core, but the full replacement path is still not proven.
The main article already established that the centers unit remained a major earnings engine even in a year when G1 lost a material activity line. This follow-up isolates the narrower question: what earnings base is really left there after the Prison Service exit, and how much of the 2025 number still belongs to the old world.
The first number is misleading. In 2025 the centers unit still produced the highest adjusted EBITDA in the group at NIS 33.8 million, above technology at NIS 28.9 million and security solutions at NIS 28.3 million. But that same number carries a built-in problem: the Prison Service contract ended only on April 30, 2025. That means the 2025 annual number still contains four months of the old activity and only eight months without it.
That creates the key conclusion: 2025 is still not a clean post-Prison Service year. The filing says explicitly that the end of the contract had a material effect on the unit's results, and that the damage was only partly offset by efficiency measures and a stronger core business. So NIS 33.8 million is not yet the new base that has been tested over a full 12 months without that line. It is a transition number, still sitting between the old model and the new one.
2025 still does not show the new run-rate
Timing matters here. The group had provided the Prison Service with operating leases for electronic monitoring equipment and systems, as well as patrol and breach-verification services, for years, under a 2015 operating-lease agreement and a 2022 patrol-services agreement. On September 16, 2024, the Prison Service notified the company that its offer in the new tender had not been selected. The related petition was dropped on January 23, 2025. The contract itself ended on April 30, 2025.
The implication is not only legal or operational. It is accounting and economic as well. Every number recorded in the centers unit during 2025 still includes about one-third of a year from the activity that was lost. The filing does not separate the contribution from the first four months, so it is impossible to calculate a clean post-exit EBITDA base from the report. But one thing is clear: the 2025 figure is still above the full-year base of a unit operating without the Prison Service line for all 12 months.
That is also why the NIS 4.96 million decline in adjusted EBITDA, from NIS 38.8 million to NIS 33.8 million, should not be read as the full depth of the hit. It is the depth of the hit inside a year that still included part of the old activity. The gap between 2025 and 2026 may therefore matter as much as the gap between 2024 and 2025.
Where the core held, and where it still falls short
The interesting point is that the centers unit did not become hollow after the exit. Revenue from monitoring, patrol and control services fell in 2025 to NIS 107.1 million from NIS 118.5 million in 2024, and its share of total group revenue fell to 10.6% from 12.3%. That is a clear sign that the lost line left a real hole.
And yet the core layer did not break by the same magnitude. Revenue generated from continuing contracts in the centers field came to about NIS 108.7 million, slightly above NIS 108.1 million in 2024. In other words, the recurring base held. What weakened was the binding backlog, which fell to NIS 18.4 million from NIS 23.7 million a year earlier.
That distinction matters. It says the centers unit's recurring revenue layer held better than the headline suggests. What it did lose was mainly the larger and more time-bound layer of activity, exactly the area where the Prison Service line also sat. Put differently, what remains after the exit is a real business core, but a smaller one and one that depends more on organic expansion than on replacing the lost line with another large contractual win.
The customer mix shows the same shift. In 2024, institutional and government customers represented 28% of the field's activity. In 2025 that share fell to 18%. Meanwhile, businesses rose to 54% from 46%, and residential customers rose to 28% from 26%.
That move is highly consistent with the Prison Service exit. It also means the unit leaves 2025 less government-driven and more business and household-oriented. That could become a healthier base over time because it spreads concentration risk. But it also pushes the unit deeper into a market where competition is broader, pricing erodes faster, and replacing lost activity does not come through one new government contract.
| What supports the remaining base | What shows the replacement is still incomplete |
|---|---|
| NIS 33.8 million of adjusted EBITDA, still the highest in the group | 2025 still includes four months of Prison Service activity |
| NIS 108.7 million of revenue from continuing contracts, almost flat versus 2024 | Monitoring, patrol and control revenue fell by NIS 11.4 million |
| A more private mix: businesses at 54% and residential at 28% | The binding backlog fell to NIS 18.4 million from NIS 23.7 million |
| A parking-control center and an observers center point to adjacent growth lines | The filing itself says the hit was only partly offset |
The replacement path exists, but it is harder than it looks
The company is not entering 2026 without replacement ideas. In the centers field it already has a parking-management center and an observers center based on video analytics, and the filing stresses that industry success factors increasingly run through technology, robotics inside the control-center software, fire and distress solutions, smart-home services, and Smart Security. On the competition side, the company also speaks explicitly about growing the subscriber base and expanding into adjacent activities.
But the same filing also spells out why that path is not simple. In basic monitoring and patrol services, pricing is under pressure. The company identifies a growing number of cases in which insurers waive the requirement for a control-center connection when policies are renewed. At the same time, some customers can use cameras and alarm systems connected directly to apps and perform their own viewing and alerting.
That is exactly the difference between "there is a replacement direction" and "the replacement has already happened." The company estimates that its share of monitoring and patrol services in Israel was about 20% in 2025, so this is not a marginal player. But it also makes clear that competition is broad, with dozens of monitoring firms and installation contractors, and that even the old monopoly declaration in the Eilat area no longer reflects current reality. So the market in which the unit is supposed to refill the hole is real, existing, and meaningful in scale, but far from protected.
That is why the right read of 2025 is this: efficiency helped, the recurring core held, but the replacement engine is still only partial. If the replacement had already become full, the report would likely show not only resilience in continuing contracts but also a clearer recovery in the binding backlog and in the main service line itself. That is not what the filing shows yet.
What is really left in the centers unit
What remains after the Prison Service exit is not a shell. There is still a large centers unit, with a recurring base, a meaningful market share, a more private-sector customer mix, and a technology layer that is meant to produce richer services than basic monitoring and patrol alone. That is why the unit still led group adjusted EBITDA even in the transition year.
But what remains is also not yet a fully tested base. The 2025 year still includes Prison Service activity in its first part, the binding backlog is smaller, the core service line is still lower, and the competitive environment itself works against an easy replacement. So the answer to the title is double-sided: a real and profitable core remains, but not yet a base that has proved it can fully replace what was lost.
The 2026 test will therefore be very sharp. For the thesis to strengthen, the unit will have to show that the monitoring and patrol service line stabilizes even without the Prison Service, that the binding backlog stops shrinking, and that adjacent services such as analytics, observers, and parking management start to become a material replacement engine rather than only a strategically sensible direction on paper.
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.