Earnings Report

ALEC Holdings

9M 26

1. Company Overview & Earnings Context

ALEC Holdings PJSC is a UAE-based engineering and construction company engaged in building construction, infrastructure development, earthworks, civil engineering and industrial process plants. Its operations also cover mechanical, electrical and marine engineering, structural steelwork, process piping, oil and gas projects, shutdown and turnaround services, and building maintenance.

The Group operates across the UAE, Qatar, Oman, Saudi Arabia, Ethiopia and Egypt through its subsidiaries, branches, joint operations and joint ventures.

ALEC is a subsidiary of Investment Corporation of Dubai (ICD), which is ultimately owned by the Government of Dubai. Following its IPO in October 2025, ICD retained an 80% ownership stake while 20% was offered to public investors.

9M 2026 earnings context:

ALEC delivered strong revenue and profit growth during the first nine months of 2026. However, the reporting period was affected by the ongoing regional conflict that began in late February 2026.

Management highlighted that the conflict affected all areas of the business through slower deliveries, market slowdown, supply-chain disruptions, logistical constraints and delays in project execution.

The company reviewed the impact across its projects and incorporated the estimated effects into project costs, revenue assumptions and completion schedules.

Despite these challenges, ALEC reported higher profitability, supported by increased construction activity and contributions from its related businesses.

2. Financial Performance Snapshot

NINE MONTHS ENDED 30 SEPTEMBER | AED MILLION

Financial Metric	9M 2026	9M 2025	YoY Change
Revenue	13,896.2	8,906.2	+56.0%
Gross Profit	1,075.8	859.0	+25.2%
Operating Profit	719.6	544.7	+32.1%
Profit Before Tax	671.6	487.3	+37.8%
Net Profit	589.1	431.6	+36.5%
EPS (AED)	0.118	0.086	+37.2%

Key financial observations:

Revenue: Increased by approximately 56%, reaching AED 13.90 billion compared with AED 8.91 billion in the corresponding period last year.
Gross Profit: Increased to AED 1.08 billion from AED 859 million, reflecting higher construction activity, although gross profit growth remained below revenue growth.
Operating Profit: Increased by 32.1% to AED 719.6 million, demonstrating continued operating profitability.
Profit Before Tax: Increased to AED 671.6 million compared with AED 487.3 million.
Net Profit: Rose by 36.5% to AED 589.1 million, compared with AED 431.6 million.
EPS: Improved to AED 0.118 from AED 0.086, indicating higher earnings attributable to shareholders.

Underlying performance:

ALEC maintained strong earnings growth, although profitability margins moderated.

Gross profit margin declined to approximately 7.7% from 9.6%.
Operating profit margin declined to approximately 5.2% from 6.1%.
Net profit margin declined to approximately 4.2% from 4.8%.

This indicates that revenue expansion was significantly stronger than the growth in gross profit. Higher contract costs and the challenging project execution environment remain important factors to monitor.

3. Operating Performance & Major Programs

ALEC reports its operations through four main business segments:

A. Building & Infrastructure Construction Services

Revenue reached AED 8.90 billion compared with AED 4.79 billion in 9M 2025.
Gross profit increased to AED 609.4 million from AED 295.6 million.
Profit before tax reached AED 537.3 million compared with AED 270.3 million.

This remained the Group's largest revenue and profit-generating segment, benefiting from increased construction activity.

B. Energy

Revenue increased to AED 4.41 billion from AED 3.23 billion.
Gross profit declined significantly to AED 28.6 million from AED 276.3 million.
The segment reported a loss before tax of AED 131.1 million compared with a profit of AED 136.7 million in the previous year.

Energy was the weakest segment during the reporting period. Despite revenue growth, substantial pressure on project profitability resulted in a shift into losses.

C. Related Businesses

Revenue increased to AED 3.93 billion compared with AED 2.00 billion.
Gross profit increased to AED 491.5 million from AED 253.1 million.
Profit before tax increased to AED 345.2 million from AED 162.2 million.

Related Businesses delivered strong growth and became an important contributor to overall Group profitability.

D. Corporate Activities

- Reported a loss before tax of AED 26.5 million compared with a loss of AED 115.8 million in 9M 2025.

The improvement reflects a lower corporate-level loss compared with the previous year.

Business expansion and new subsidiaries

During 2026, ALEC invested in four newly incorporated UAE entities. Notable developments included:

Alentra Machines and Equipment Rentals: Heavy machinery and equipment rental, lifting and loading services.
AJI Heavy Machines and Equipment Renting: Equipment rental and onshore/offshore oil and gas field services.
ALEC Tunnelling and Drainage Contracting: Established in July 2026, with ALEC holding a 70% ownership stake.
Altura Factory: Established in September 2026, with ALEC holding a 65% ownership stake, focusing on electrical conduits, fittings and metal industrial frameworks.

These additions broaden the Group's capabilities in equipment rental, infrastructure contracting and manufacturing.

4. Key Performance Drivers

1. Strong construction revenue growth

The Group recorded a substantial increase in construction activity, with total contract revenue increasing to AED 13.90 billion.

2. Strong contribution from Related Businesses

Related Businesses recorded significant growth in both revenue and profitability, helping offset weakness in the Energy segment.

3. Energy segment profitability pressure

The Energy segment moved into a loss before tax of AED 131.1 million despite higher revenue. This is an important area of concern because it highlights pressure on project-level profitability.

4. Regional conflict and supply-chain disruptions

Management identified several operational challenges:

Slower project deliveries.
Supply-chain disruptions.
Volatility in key input costs.
Logistical constraints.
Resource availability issues.
Delays in project execution.

Management has incorporated the estimated impact into project cost and revenue forecasts. However, the full financial effect of future developments cannot currently be reliably quantified.

5. Cost and project execution management

ALEC has implemented mitigation measures, including supply-chain reconfiguration, optimized resource deployment and closer coordination with clients and authorities.

The company is also reviewing contractual and insurance positions and evaluating potential claims arising from project delays and cost escalation.

6. Expansion into complementary activities

The incorporation of new subsidiaries strengthens ALEC's presence in machinery rental, tunnelling, drainage contracting and manufacturing, potentially supporting its wider construction operations.

5. Balance Sheet, Backlog & Cash Flow

A. Balance Sheet Position

AS AT 30 SEPTEMBER 2026 | AED MILLION

Balance Sheet Metric	Sep 2026	Dec 2025
Total Assets	12,837.5	10,621.7
Property, Plant & Equipment	1,470.6	1,267.6
Contract & Other Receivables	4,451.1	3,303.7
Gross Amounts Due from Customers	4,184.9	3,813.5
Cash & Bank Balances	1,404.0	1,574.5
Total Equity	1,734.6	1,393.8
Bank Borrowings	974.1	429.3
Lease Liabilities	264.6	302.8

Total equity and bank borrowing figures are based on the reported statements and relevant notes.

Key balance-sheet observations:

Total assets increased to AED 12.84 billion from AED 10.62 billion.
Property, plant and equipment increased to AED 1.47 billion, reflecting continued investment in operational capacity.
Contract and other receivables increased significantly to AED 4.45 billion, highlighting the importance of collection efficiency and working-capital management.
Cash and bank balances declined to AED 1.40 billion from AED 1.57 billion.
Bank borrowings increased to AED 974.1 million from AED 429.3 million.
Lease liabilities declined to AED 264.6 million from AED 302.8 million.
Total equity increased to AED 1.73 billion, supported by higher retained earnings and current-period profitability.

B. Contract Backlog and Revenue Visibility

One of the strongest positives in ALEC's financial statements is its substantial outstanding contract position.

Transaction price allocated to partially unsatisfied performance obligations stood at AED 29.44 billion as of September 2026.
This compares with AED 32.92 billion in September 2025.
Management expects approximately 20% of this amount, equivalent to AED 5.89 billion, to be recognized as revenue during the remaining quarter of 2026.
The remaining amount is expected to be recognized between 2027 and 2030.

This provides substantial revenue visibility over the coming years, although actual realization remains dependent on project execution, delivery schedules and contractual conditions.

C. Cash Flow Performance

Cash Flow Metric	9M 2026 (AED mn)	9M 2025 (AED mn)
Cash from Operating Activities	505.6	1,052.7
Cash Used in Investing Activities	(846.8)	(296.0)
Cash from / (Used in) Financing Activities	167.3	(657.1)
Net Change in Cash	(173.9)	99.6
Closing Cash & Cash Equivalents	1,363.7	1,264.4

Cash flow observations:

Operating cash flow declined significantly to AED 505.6 million from AED 1.05 billion.
Increased contract and other receivables, advances to suppliers and subcontractors, and amounts due from customers on construction contracts absorbed substantial working capital.
Investing cash outflow increased to AED 846.8 million, mainly due to AED 407.2 million in capital expenditure and AED 470.9 million invested in short-term financial assets.
Financing activities generated AED 167.3 million, supported by new bank borrowings of AED 1.03 billion, partly offset by repayments.
Closing cash and cash equivalents increased compared with the previous year, despite a decline from the beginning of the current period.

D. Dividend Developments

ALEC paid AED 250 million in dividends during the first nine months of 2026, equivalent to AED 0.05 per share.
Subsequently, on 9 October 2026, the Board approved an additional interim dividend of AED 0.02 per share, amounting to AED 100 million.
This additional dividend was paid on 29 October 2026.

The dividend distribution demonstrates continued shareholder returns alongside investment in business expansion.

6. Investor Takeaway

ALEC Holdings delivered strong revenue and earnings growth during 9M 2026, supported primarily by Building & Infrastructure Construction Services and Related Businesses.

The company's outstanding performance obligations of AED 29.44 billion provide significant revenue visibility for the coming years. Its expansion into machinery rental, tunnelling, drainage contracting and manufacturing also strengthens its operational capabilities and business diversification.

However, several factors require investor attention:

Declining gross profit and operating margins.
Significant deterioration in Energy segment profitability.
Lower operating cash flow due to increased working-capital requirements.
Higher bank borrowings compared with December 2025.
Regional conflict-related project delays, cost escalation and supply-chain disruptions.

Investor View:

ALEC's 9M 2026 performance reflects strong business expansion, healthy revenue growth and improving net profitability. Its substantial contract pipeline provides a positive long-term outlook.

However, the decline in operating margins, Energy segment losses and weaker operating cash generation indicate that revenue growth is not yet translating proportionately into cash generation and profitability.

Going forward, investors should closely monitor Energy segment recovery, project margins, receivable collections, operating cash flow and the successful execution of the outstanding contract pipeline.

Overall, ALEC presents a positive growth outlook supported by a substantial order pipeline, but sustained margin improvement and stronger cash conversion will be important for maintaining earnings quality.