Hiron: What Is Still Open in the Old Wood-Customer Debt Settlement

The main article already established that the Lod uplift stopped being a theoretical option and became a booked asset. This continuation isolates what still sits outside that cleaner read: the old debt settlement with a customer from the wood business. If year-end 2025 still carries a specific provision of NIS 7.013 million, while the Tel Aviv-Jaffa property rights in the same settlement remain tied to compensation discussions with the municipality, then this story is not closed. It has only moved from broad uncertainty to a narrower question: how much of the old receivable will actually turn into accessible value, and when.

Three points matter up front. First: this is no longer a broad credit problem. The company says that as of the reporting date it had no other material customers overdue beyond net plus 270 days without a specific provision, so this looks like a concentrated scar rather than a sign that the whole wood-customer book deteriorated. Second: even after Lod was recognized, the remaining amount is still material enough to matter. NIS 7.013 million is not a balance-sheet threat for Hiron, but it is large enough to show that the settlement benefit is still only partial. Third: the Tel Aviv-Jaffa property is not value that can simply be carried forward from the Lod read. It was expropriated, the company is still negotiating compensation, and no final decision had been reached by the date the financial statements were approved.

In plain terms, anyone reading this settlement as fully resolved just because Lod is now inside investment property is being too generous. What has been resolved is the easier part to recognize. What remains open is exactly the part that is harder to convert into cash, into a release of the provision, or into value investors can treat as dependable.

What Has Been Resolved, And What Has Not

The basic thread is clear. In 2017 the company booked a credit-loss provision of NIS 10.225 million against the customer. In June 2018 it signed a settlement under which, instead of full cash repayment, the group would receive rights in two real-estate assets, one in Lod and one in Tel Aviv-Jaffa, plus a cash component spread over 10 years. In 2020, against the backdrop of Covid-related uncertainty over the customer’s ability to repay the balance that was not backed by real-estate assets, the group booked an additional provision of about NIS 2.222 million. Then, on September 30, 2025, after completion of the lease-renewal process, the rights in the Lod asset were transferred and the group recognized that asset in its books.

That part matters because it shows that the settlement did move forward. The customer balance fell from NIS 17.494 million at the end of 2024 to NIS 7.013 million at the end of 2025, and the investment-property note recorded a NIS 11.354 million addition in 2025 for receiving an asset under a customer debt settlement.

That chart is not meant to force a full accounting bridge between every number, because the filing presents different layers of the same story. What it does show very clearly is the key point: 2025 was a year of progress, not a year of closure. Lod entered the books, the customer balance fell, but the residue did not disappear.

Why This Residue Still Matters

NIS 7.013 million is not Hiron’s main problem. It is not the kind of amount that destabilizes the whole balance sheet. But it is still a useful test of balance-sheet quality. The reason is straightforward: the Lod asset has already been recognized and moved into the investment-property layer. What remains outside that cleaner accounting outcome is exactly the part still sitting either as a specific provision or as a compensation option that has not yet been resolved.

That distinction matters. Once the Lod asset was recognized, it becomes tempting to read the entire settlement as if the value had effectively been locked in. The filing is more cautious than that. On the Tel Aviv-Jaffa asset, the company states explicitly that the relevant land was expropriated, that it is conducting negotiations with the municipality to obtain compensation, and that no final decision had been reached by the date the financial statements were approved. So there is no cash value or booked real-estate value here that investors can treat as part of the 2025 comfort. There is upside, but it is still contingent upside.

The remaining provision tells the same story. The company explains that the provision remained against the part of the receivable that was not covered by the real-estate assets. That is dry wording, but the implication is sharp: even after Lod, there is still a portion of the old debt that the group does not yet present as a clean and dependable recovery.

What Sits Between The Lines

There are a few subtler signals here that make the conservative reading the right one.

The first is that this story already carried an estimation error once before. The company says that, in calculating the original doubtful-debt allowance, it used a discount rate that later proved too low because not all relevant parameters had been taken into account, and the error was corrected through a restatement of comparative figures. That does not mean management is wrong today. It does mean investors should be careful about giving full credit to upside that still depends on estimates and negotiations.

The second is that the customer continues to repay old balances even after the provisions. That is an important counterpoint, because it prevents an overly dramatic reading. This is not a dead file. It is a file that is still moving, but not at a pace or in a form that justifies full release of accounting caution.

The third is that the company itself frames this as concentrated rather than systemic. The wood activity has about 1,500 customers, no single main customer, and no other material overdue customers beyond net plus 270 days without a specific provision. So the question here is not whether the entire credit model in wood has broken. The question is whether this old scar will keep appearing in future filings even after Lod has already been converted into a booked asset, or whether the next step will finally bring resolution in Tel Aviv-Jaffa or further erosion of the remaining balance.

What Has To Happen Next For This Chapter To Actually Close

The first checkpoint is straightforward: there needs to be either a decision or at least concrete progress in the negotiations with the Tel Aviv-Jaffa municipality over compensation. As long as there is no final outcome, that piece remains far more optional than real.

The second checkpoint is an actual decline in either the remaining provision or the customer balance. That could come through ongoing collections, an improved settlement outcome, or progress on the Tel Aviv-Jaffa compensation. But without numerical movement, investors are left with the same conclusion: part of the old debt still has not translated into clean value.

The third checkpoint is keeping this case isolated from the rest of the customer book. As of year-end 2025, the company still allows this to be read as a legacy case rather than a fresh deterioration. If future disclosures show other material customers moving into severe arrears or requiring specific provisions, that calm read would no longer hold.

The right read today is fairly simple. Lod has already moved from promise to booked asset, so part of the old settlement is genuinely resolved. But the settlement as a whole is still not behind Hiron. As long as a NIS 7.013 million specific provision remains, and as long as the Tel Aviv-Jaffa rights depend on an outside decision that still has not arrived, the last piece of the settlement should be read as contingent upside rather than as value already fully settled into the balance sheet.

This is not a new balance-sheet drama, but it is not a footnote either. It is a small but useful test of Hiron’s balance-sheet quality: whether even the harder edges of old recovery cases eventually become cash or definite assets, or whether part of them remains unresolved long after the easier piece has already been booked.