Eshraq Investments

1. Company Overview & Earnings Context

Eshraq Investments PJSC is an Abu Dhabi Securities Exchange-listed investment and real estate company. The Group is principally engaged in commercial enterprise investments and real estate activities, including development, sale, investment, construction, management and associated services.

Eshraq delivered a strong improvement in profitability in H1 2026, with profit for the period increasing to AED 75.3 million from AED 41.7 million, representing growth of approximately 80.6% YoY.

2. Financial Performance Snapshot

• Revenue from Commercial Operations: AED 9.27 Million (+19.5% YoY)

• Gross Profit from Commercial Operations: AED 6.88 Million (+23.4% YoY)

• Net Finance Income: AED 5.03 Million, vs. AED 0.50 million loss

• Net Income from Investment Activities: AED 77.65 Million (+76.0% YoY)

• Total Operating Income: AED 94.53 Million (+92.2% YoY)

• Profit Before Tax: AED 78.62 Million (+90.3% YoY)

• Net Profit: AED 75.30 Million (+80.6% YoY)

• EPS: AED 0.0280, vs. AED 0.0155

Eshraq's earnings growth was therefore driven primarily by its investment activities rather than its commercial operating revenue.

3. Investment Performance & Key Earnings Drivers

Investment activities were the largest contributor to H1 earnings. Net investment income increased to AED 77.65 million from AED 44.11 million a year earlier.

The Group recorded AED 42.98 million in fair-value gains on financial assets and AED 34.55 million in gains from the disposal of financial assets. The latter included a realised gain of AED 34.08 million from the disposal of its entire holding in a listed equity investment.

A major contributor to fair-value gains was Eshraq's investment in Islamic Arab Insurance Company (Salama). The Group invested AED 66.83 million through a mandatory convertible sukuk, which was converted into approximately 145.3 million Salama shares in April. At 30 June, the investment had generated a fair-value gain of approximately AED 46.5 million.

4. Commercial Operations & Cash Flow

Eshraq's underlying commercial operations also improved. Revenue increased 19.5% to AED 9.27 million, while gross profit rose 23.4% to AED 6.88 million.

Finance income more than doubled to AED 8.61 million from AED 3.67 million, while finance costs declined to AED 3.58 million from AED 4.17 million. This resulted in AED 5.03 million of net finance income, compared with a net finance loss of AED 0.50 million in H1 2025.

Cash generation improved significantly, with net operating cash flow increasing to AED 28.4 million from AED 4.3 million. Cash and cash equivalents ended the period at AED 116.0 million.

5. Balance Sheet & Investment Portfolio

Eshraq ended June 2026 with:

• Total Assets: AED 1.84 Billion

• Total Equity: AED 1.70 Billion

• Total Liabilities: AED 138.1 Million

• Cash & Bank Balances: AED 122.3 Million

• Investment Properties: AED 215.8 Million

• Financial Assets at FVTPL: AED 973.5 Million

• Bank Borrowings: AED 114.0 Million

Accumulated losses also improved to AED 394.2 million from AED 469.2 million at the end of 2025, reflecting the AED 75.3 million profit generated during H1.

The Group's FVTPL investment portfolio increased to AED 973.5 million, including AED 819.4 million invested in the Goldilocks Fund.

6. Investor Takeaway

Eshraq's H1 2026 results showed a significant improvement in earnings, with total operating income almost doubling and net profit increasing 80.6% to AED 75.3 million. Commercial operations improved, but the majority of earnings continued to come from the Group's investment portfolio.

A key consideration is that a meaningful portion of H1 earnings came from fair-value and disposal gains, including the strong appreciation of the Salama investment. This means the sustainability of the current earnings level will depend partly on future investment performance.

Investors should also note the auditor's qualified conclusion relating to the valuation of the Goldilocks Fund. The AED 973 million FVTPL portfolio includes approximately AED 819 million invested in Goldilocks, and the auditor said it could not obtain sufficient appropriate evidence to assess whether the Fund's valuation methodology and key inputs were appropriate. The same matter also resulted in a modified audit opinion for FY2025.

Key areas to monitor in H2 2026 are investment returns, the sustainability of fair-value gains, cash generation, commercial operations, accumulated losses and developments relating to the valuation of the Goldilocks investment.