Abu Dhabi National Co. for Building Materials

1. Company Overview & Earnings Context

Abu Dhabi National Company for Building Materials PJSC (BILDCO) is an ADX-listed company with operations across building materials, concrete products, steel processing and manufacturing. During H1 2026, the Group also expanded into tourism and hospitality through the acquisition of Arabian Nights Village Tourist Camp.

H1 2026 was a major restructuring period for BILDCO. Core operating performance improved substantially, although significant non-cash revaluation and impairment charges resulted in a net loss of AED 95.66 million.

2. Financial Performance Snapshot

• Revenue: AED 34.15 Million (+37.4% YoY)

• Gross Profit: AED 11.94 Million (+114.6% YoY)

• Gross Profit Margin: 35.0%, vs. 22.4%

• Loss Before Tax: AED 95.66 Million

• Net Loss: AED 95.66 Million, vs. AED 12.51M loss

• Loss Attributable to Shareholders: AED 95.80 Million

• Loss Per Share: AED 0.065, vs. AED 0.042

The important positive was that revenue growth significantly outpaced cost growth, resulting in gross profit more than doubling.

3. Operating Performance & Q2 Turnaround

BILDCO's underlying operating performance strengthened during H1. Revenue increased 37.4%, while cost of revenue increased only 15.1%, helping gross margin expand by approximately 12.6 percentage points to 35%.

The improvement became particularly visible in Q2. Revenue reached AED 17.43 million, up 59.3% YoY and 4.2% compared with Q1 2026.

More importantly, BILDCO moved from a AED 103.52 million pre-tax loss in Q1 to an AED 7.86 million pre-tax profit in Q2.

This suggests a significant sequential improvement after the majority of the Group's restructuring-related accounting charges were recognised during Q1.

4. Key Performance Drivers

The H1 headline loss was heavily affected by non-cash accounting charges, rather than solely by the Group's underlying operating activities.

Major charges included:

• PPE Revaluation Loss: AED 47.62 Million

• Investment Property Fair-Value Loss: AED 27.70 Million

• Slow-Moving & Obsolete Inventory Provision: AED 5.90 Million

• Unrealised Investment Loss: AED 4.68 Million

• Expected Credit Loss Allowance: AED 2.19 Million

• Term Deposit Impairment: AED 0.63 Million

Management states that excluding non-cash items together with finance costs, the Group would have recorded an adjusted positive result of approximately AED 3.1 million for H1 2026.

This distinction is important because BILDCO's reported AED 95.7 million loss substantially reflects the balance-sheet clean-up undertaken during the period.

5. Balance Sheet, Capital Restructuring & Cash Flow

BILDCO ended June 2026 with:

• Total Assets: AED 2.43 Billion

• Total Equity: AED 2.11 Billion

• Total Liabilities: AED 323.15 Million

• Property, Plant & Equipment: AED 2.29 Billion

• Borrowings: AED 173.97 Million

• Bank Overdraft: AED 26.14 Million

• Accrued Interest: AED 39.35 Million

• Cash & Cash Equivalents: AED 4.91 Million

The dramatic increase in assets and equity followed the acquisition of Arabian Nights Village and an AED 1.2 billion increase in share capital, involving an in-kind contribution associated with land valued at approximately AED 2.13 billion. BILDCO also extinguished AED 464.1 million of accumulated losses against its general reserve.

Liquidity, however, remains an important area to watch. Operating activities used AED 0.85 million of cash, while cash and cash equivalents declined from AED 13.34 million to AED 4.91 million.

6. Investor Takeaway

BILDCO's H1 2026 results represent a major financial and operational reset. Revenue increased 37.4%, gross profit more than doubled and gross margin expanded significantly, showing a clear improvement in the underlying business.

The strongest near-term signal came from Q2, when BILDCO returned to a AED 7.86 million pre-tax profit after recording a AED 103.52 million loss in Q1. However, the Group still reported an AED 95.66 million H1 net loss because of substantial revaluation, impairment and other non-cash charges.

The balance sheet has also been transformed, with total assets reaching AED 2.43 billion and equity AED 2.11 billion. However, the AED 4.91 million cash balance, outstanding borrowings and overdrafts, and ability to convert the enlarged asset base into sustainable cash generation remain important areas to monitor.

The independent auditor issued a qualified conclusion, an improvement from the adverse opinion on FY2025 and adverse conclusion on H1 2025. Going into H2 2026, the key areas to watch are whether Q2 profitability can be sustained, revenue and margin growth, liquidity improvement, resolution of bank obligations, monetisation of the enlarged asset base and progress toward resolving the auditor's qualifications.