Ezdan Holding Group Q.P.S.C. (ERES) Earnings Call Transcript & Summary

Hello, and welcome to the Ezdan Holding's conference call. I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. Roy Thomas to begin the conference. Roy, over to you.

Thanks. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Ezdan Holding Group's Second Quarter and First Half 2023 Financial Results Conference Call. On this call from Ezdan Holding Group, we have: Tamer Fouad, the Group Chief Financial Officer; and Taha Moursi, the Group Financial Controller and IR Officer. We will conduct this conference call with management first reviewing the company's results followed by a Q&A. I will turn the call now over to Taha Moursi. Go ahead, Taha.

Good afternoon, everyone, and thanks Roy for your introduction. First, we will start with the disclaimer that part of the information discussed here might contain projections or other forward-looking statements regarding future events or future financial performance of Ezdan Holdings Group. These forward-looking statements include all matters that are not historical facts. And any forward-looking statements speaks only as of when it is made. Ezdan undertakes no obligation to publicly update or publicly revise any forward-looking statements, whether because of new information, future events or otherwise. Today, we will discuss the financial performance and financial position for Ezdan for Q2 '232. Investor presentation for this conference call is now available at Ezdan's website, www.ezdanholding.qa, under Investor Relations section. First, regarding the financial performance of the Group for Q2 '23 Ezdan achieved a net profit to its owners was around QAR 161 million compared to QAR 261 million. Major changes in profit and loss statement contained, increased the rental income by around QAR 164 million increase in operating expenses by around QAR 25 million, decrease in investment income by around QAR 63 million, increase in financial costs by around QAR 209 million and the net positive change in foreign currency transactions by around QAR 34 million. For Q2 '23, main ratios of financial performance, were as following. Percent of operating expenses compared to rental income was 19% compared to 20%. Operating gross margin was 81% compared to 80%. Net profit margin was 17% compared to 29%. Earnings per share was QAR 0.016 compared to QAR 0.001. Regarding the components of profit or loss statements, Ezdan recognized the rental income of QAR 916 million for Q2 '23 compared to QAR 752 million for Q2 '22, with an increase of QAR 164 million, representing around 22%. Rental revenue from Residential segments, representing about 88% from total rental revenue increased by around 21% with QAR 139 million compared to '22. Considering that the Group's average total units available for rent increased from 27,200 during Q2 '22 to around 31,400 units during Q2 '23, with average occupancy rate of around 90% compared to 93% and average unit revenue of 5,100 compared to 4,500. Rental revenue from Hotel segment representing around 8% from total rent revenue increased by 36% with QAR 20 million compared to '22. Considering that average occupancy rate increased from around 40% during Q2 '22 to around 65% during Q2 '23, with average daily rate of QAR 253 per night during Q2 '23 compared to QAR 305 per night during Q2 '22. Rental revenue from Malls segments, which represents 4% from total rental revenue increased by around 16% to around QAR 5 million, considering that average occupancy rate in Malls was 85% for Q2, 23 compared to 82% for Q2 '22. Other operating revenue for Q2 '23 was around QAR 47 million, compared to QAR 52 million with a decrease of around QAR 5 million, representing around 9% compared to '22. Other operating revenue from Residential segments has decreased by around QAR 9 million, and from Motor segment increased by around QAR 5 million. Regarding operating expenses, operating expenses incurred during Q2 '23 were QAR 184 million compared to QAR 159 million for '22, with an increase of QAR 25 million, representing around 16%. The main components of operating expenses were soft benefit of QAR 45 million compared to QAR 40 million. Electricity charges were QAR 39 million compared to QAR 46 million, [Technical Difficulty] of QAR 35 million compared to QAR 18 million. Maintenance expense was QAR 23 million compared to QAR 18 million. Operating expense for Residential segments increased by QAR 19 million and for Hotels increased by QAR 5 million. Operating profit from main operations was around QAR 779 million compared to QAR 644 million for Q2 '22. Gross margin from main operation of 81% for Q2 '23 compared to 80% for Q2 '22. Operating profit from the Residential and Commercial segment was QAR 689 million compared to QAR 578 million with a gross margin of 84% compared to 83%. Operating profit from Hotel segment was QAR 56 million compared to QAR 36 million with gross margin of 61% compared to 55%. Operating profit from Malls segment was QAR 33 million compared to QAR 29 million with a gross margin of 70% for Q2 '23 compared to 68% in Q2 '22. During the second half of '22, the Group derecognized its equity accounted in the fees and equity investments through our disposal of 7 of subsidiaries, which own such investments, which is a result of no investment income during the Q2 '23 compared to around QAR 64 million during the Q2 '22. General and admin expenses have increased by around QAR 15 million, which was due mainly to increase in professional fees expenses. Regarding on financial costs for Q2 '23, finance cost was QAR 572 million compared to QAR 363 million during the Q2 '22, with an increase of around QAR 209 million, mainly due to increase in reference rate of borrowings. During the Q2 '23, the Group recognized a gain from foreign currency exchange of around QAR 9 million compared to a loss of QAR 25 million during the Q2 '22, mainly due to changes in GBP rates against Qatari riyal rate. Now we will move to the financial position of the Group as of 30 June, '23. As of 30 June, '23, the Group has total assets of around INR 47 billion. Total liabilities was around QAR 13.7 billion, and total equity, including noncontrolling interest was around QAR 3.4 billion. Cash and the banking balances are almost the same with around QAR 461 million as of 30 June, '23. Investment properties of QAR 45.8 billion with an increase of around QAR 52 million, representing capitalized expenditure during the period. Islamic borrowings have decreased by QAR 72 million, which results from movements in Islamic borrowings from finance costs and repayment of [ dirham and sukuk ], retained the earnings have increased by QAR 161 million, which represents the net profit for the period. The share capital was QAR 26.5 billion as of 30 June, '23. And regarding cash flow, net cash flows from operating activities were QAR 724 million for Q2 '23 compared to QAR 547 million for Q2 '22. Net cash flows used in investing activities were QAR 40 million for Q2 '23 compared to net cash flows from investing activities of QAR 68 million during Q2 '22. Net cash flows used in financing activities for Q2 '23 was QAR 0.7 billion compared to QAR 1.4 billion for Q2 '22. Thanks. Operator, you can start a session of questions now.

Thank you. [Operator Instructions] There appear to be no questions at this time. I will now hand the call back to Mr. Roy Thomas.

All right. If there are no questions, we'd like to thank Ezdan Holding Group's management for the results update, and we look forward to speaking to you all for the third quarter results.

Thank you.

[Foreign Language]

This does conclude today's conference call. You may now disconnect.