ALEC Holdings

1. Company Overview & Earnings Context

ALEC Holdings PJSC is a Dubai-based engineering and construction group operating across building and infrastructure construction, civil works, industrial process plants, mechanical and electrical engineering, marine engineering, and onshore and offshore oil & gas projects. The Group operates across the UAE, Saudi Arabia, Qatar, Oman, Egypt and Ethiopia.

ALEC completed its IPO on the Dubai Financial Market in October 2025, with Investment Corporation of Dubai retaining an 80% stake following the listing.

H1 2026 was characterised by very strong revenue growth but pressure on project margins, particularly from regional conflict and associated supply-chain disruptions, higher costs and project delays.

2. Financial Performance Snapshot

• Contract Revenue: AED 8.99 Billion (+67.6% YoY)

• Gross Profit: AED 513.1 Million (-4.4% YoY)

• Profit from Operations: AED 276.3 Million (-11.0% YoY)

• Profit Before Tax: AED 245.9 Million (-7.8% YoY)

• Net Profit: AED 213.8 Million (-10.5% YoY)

• Net Profit Attributable to Owners: AED 214.3 Million (-9.9% YoY)

• EPS: AED 0.043, vs. AED 0.048 in H1 2025

• Operating Cash Flow: AED 694.6 Million (+7.6% YoY)

The major theme was therefore a sharp divergence between top-line growth and profitability. Revenue increased by almost 68%, but higher contract costs compressed gross profit and ultimately resulted in lower net earnings.

3. Revenue Growth & Segment Performance

ALEC's contract revenue surged to AED 8.99 billion from AED 5.36 billion, representing growth of approximately 67.6% YoY. The Group operates through four key business units: Building & Infrastructure Construction Services, Energy, Related Businesses and Corporate Activities.

Building & Infrastructure Construction Services generated AED 5.84 billion of H1 contract revenue and AED 408.3 million of gross profit. The segment delivered profit before tax of AED 364.9 million, making it a major contributor to Group profitability.

The Energy segment generated AED 2.75 billion of revenue, but recorded a gross loss of AED 157.5 million and a loss before tax of AED 258.1 million. Related Businesses generated AED 2.59 billion of revenue and AED 320.5 million of gross profit before inter-segment eliminations.

The segment numbers show that while ALEC's overall revenue base expanded significantly, weakness in the Energy business had a substantial impact on consolidated profitability.

4. Key Performance Drivers

The biggest positive was exceptionally strong revenue growth. Contract revenue increased by more than AED 3.6 billion YoY as the Group continued executing its construction and engineering projects across its markets.

However, contract costs increased to AED 8.48 billion from AED 4.83 billion, significantly faster than revenue. As a result, gross profit declined slightly to AED 513.1 million despite the substantial increase in business volumes. Administrative expenses also increased to AED 236.7 million from AED 225.9 million.

Management highlighted the regional conflict that began in late February 2026 as a major factor affecting operations. Supply-chain disruptions, input-cost volatility, logistics constraints and project delays affected project estimates and margins. Management incorporated the estimated effects into project costs, revenues and completion schedules for the period.

Importantly, management stated that awarded projects continue to be delivered and that no pipeline projects had been cancelled, although the market could experience a slowdown in new project awards.

5. Balance Sheet, Liquidity & Cash Flow

ALEC ended June 2026 with:

• Total Assets: AED 12.25 Billion

• Total Equity: AED 1.36 Billion

• Total Liabilities: AED 10.89 Billion

• Cash & Bank Balances: AED 2.39 Billion

• Contract & Other Receivables: AED 3.80 Billion

• Amounts Due From Customers on Construction Contracts: AED 4.01 Billion

• Total Borrowings: AED 1.12 Billion

• Operating Cash Flow: AED 694.6 Million

Total assets increased significantly from AED 10.62 billion at the end of 2025 to AED 12.25 billion, while cash and bank balances rose from AED 1.57 billion to AED 2.39 billion. The expansion reflects the significant increase in the scale of ALEC's operations.

Cash generation remained strong, with net operating cash flow increasing to AED 694.6 million from AED 645.7 million. After AED 234.8 million of investing outflows, the Group generated AED 352.3 million from financing activities, resulting in a net increase in cash and cash equivalents of AED 812.1 million. ALEC also paid AED 250 million in dividends during H1 2026.

6. Investor Takeaway

ALEC delivered exceptional top-line growth in H1 2026, with revenue surging nearly 68% YoY to AED 8.99 billion. This demonstrates the significant scale of project execution across the Group's construction, infrastructure, energy and related businesses.

However, the revenue growth did not translate into higher profitability. Contract costs rose substantially faster than revenue, pushing gross profit slightly lower and reducing profit attributable to owners by around 10% to AED 214.3 million. The Energy segment was particularly weak, recording a substantial loss during the period.

A key positive was cash generation and liquidity. Operating cash flow increased to AED 694.6 million, while cash and bank balances reached AED 2.39 billion. This provides ALEC with a substantial liquidity position as it manages a much larger operating and project base.

For H2 2026, the key areas to monitor are project margins, recovery in the Energy segment, regional supply-chain and cost pressures, operating cash flow and the conversion of strong revenue growth into earnings growth. The independent reviewer concluded that nothing had come to its attention indicating that the interim financial information was not prepared, in all material respects, in accordance with IAS 34.