Ezdan Holding Group Q.P.S.C. ($ERES)

Hello, and welcome to Ezdan Holdings. Please note that this call is being recorded. [Operator Instructions] I'd like to hand the call over now to our moderator, Dana Al Sowaidi. Please go ahead.

Hello, everyone. This is Dana Al Sowaidi from QNB Financial Services. I would like to welcome everyone to Ezdan Holding Group's First Quarter 2026 Financial Results Conference Call. On this call from management, we have Tamer Fouhad, Group, Chief Financial Officer; and Taha Moursi, Financial Controller and IR Officer. We will conduct this conference call with the management first reviewing the company's results followed by a Q&A session. I will now turn the call over to Tamer. Please go ahead.

Good afternoon, everyone. Thank you for joining us today for Ezdan Holding Group's Q1 '26 Conference Call. Our investor presentation is available on our website at www.ezdanholdings.qa under the Investor Relations section. Before we begin, we would like to provide a disclaimer that some of the information that will be discussed here might contain projections or other forward-looking statements regarding future events or future financial performance of Ezdan Holding Group. Any forward-looking statements, including those that are not historical facts speak 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's call will cover 3 main areas. First, we will look through our financial performance for Q1 '26 compared to Q1 '25. Second, we will compare the financial position of 31 March '26 to 31 December '25. And third, we will cover a brief of cash flow statement for Q1 '26 compared to Q1 '25. First, we will talk about financial performance. In Q1 '26, Ezdan achieved a net profit attributable to its owners of QAR 225 million compared to QAR 153 million. The main drivers behind these changes were as follows: finance cost decreased by around QAR 65 million; second, rental income increased by around QAR 14 million and third, other income increased by QAR 8 million. Turning to ratio of the operating gross margin remained stable at 83%. The net profit margin improved from 33% to 47%, reflecting mainly the reduction in finance cost rental income then around QAR 457 million compared to QAR 444 million, reflecting an increase of around QAR 14 million or approximately 3.1%. Growth in rental revenue was supported by improved performance across key operating segments, including residential segment with 2%, mall segment with around 29% and hotel segment with around 2%. The main statistics for residential segment where average occupancy improved to approximately 91.7% from 88%. Average revenue per unit remained broadly stable at around 44,000. The total number of units available for rent decreased slightly from approximately 33,300 during Q1 '25 to 32,100 units during Q1 '26. The main statistics for hotel segment, where average occupancy improved to approximately 87% compared to 84%. The average daily rate at Ezdan Palace Hotel increased to QAR 456 from QAR 411 and the average daily rate at Ezdan Hotel West Bay remained stable at QAR 176 compared to QAR 177. And for mall segment statistics was mainly average occupancy reached approximately 95% from 91% in Q1 '25. For operating expenses, operating expenses increased by around QAR 2 million from QAR 78 million to QAR 80 million, representing an increase of around 2.3%. On a component basis, the main driver was increase of staff costs and sewage expenses of approximately QAR 3.5 million, along with increase in maintenance expenses of around QAR 1 million. This was partially offset by a reduction in [ utility ] charges of approximately QAR 2.5 million. On a segment basis, the increase was mainly in hotel segment. Operating profit from main operations increased from QAR 386 million to QAR 397 million, an increase of approximately QAR 10 million or 2.7%. Breaking this down by segment, the residential segment operating profit grew from QAR 333 million to QAR 338 million with the gross margin holding stable at 86% in both periods. The hotel segment recorded a stable operating profit of around QAR 39 million for both periods. The gross margin declined slightly from 71% to 70%. The mall segment operating profit improved from QAR 15 million to QAR 20 million with the gross margin rising from 69% to 75%. General and administrative expenses increased by approximately QAR 2.5 million from QAR 20 million to QAR 22 million, an increase of around 12.5%. The main driver was an increase in staff cost by around QAR 2.3 million. Our gain on sale of assets held for sale during the period Ezdan sold a number of residential units, resulting in a recognized gain of approximately QAR 3.5 million. ForEx gain or losses, the group recorded a ForEx loss of approximately QAR 3.7 million in Q1 '26 compared to a gain of QAR 11 million in Q1 '25. This movement was mainly driven by changes in the British pound sterling exchange rate. On finance costs, this decreased by approximately QAR 65 million from QAR 218 million to QAR 153 million, representing a reduction of around 30%. This was primarily driven by lower borrowing rates and improved profit margins on finance [indiscernible]. Moving now to the financial position. Total assets stood at approximately QAR 45.8 billion compared to QAR 45.6 billion. Cash and bank balances increased to QAR 734 million from QAR 511 million, an improvement of approximately QAR 223 million or 44%. Assets held for sale decreased by around QAR 102 million as a result of selling the residential units during the period. Total liabilities decreased by QAR 101 million from QAR 12.1 billion to around QAR 12 billion. Trade and other payables decreased by approximately QAR 17 million. Islamic borrowings decreased by a net amount of QAR 84 million during the period. This reflects finance cost of approximately QAR 153 million and repayments of approximately QAR 237 million. Total equity, including noncontrolling interest increased from QAR 33.5 billion to QAR 33.8 billion, an increase of approximately QAR 227 million. The group share capital stands at QAR 26.5 billion. Retained earnings increased by QAR 220 million, primarily reflecting the net profit generated during the period. And for cash flow statement, net cash flows from operating activities were QAR 353 million compared to QAR 339 million. Net cash flows from investing activities were QAR 103 million compared to net cash flow used in investing activities of QAR 5 million and the net cash flows used in financing activities were QAR 236 million compared to QAR 305 million. Thank you for your attention. We are now happy to take any questions you may have.

First question comes from the line of Adnan Muqeem with Al Rayan Investment.

This is Muhammad Adnan from Al Rayan Investment. I have a few questions. First of all, could you highlight why there's a jump in revenue from malls? And my second question is what is the current structure of rents in mall? Is it fixed or it's turnover? Third would be what is the current hotel occupancy? And how is the current situation right now? What are the rates?

Thank you for your question. Regarding malls, it has significantly increased during the period because from year to year, there is an incremental clause in the rental. So this resulted in increase in the revenue during this period. In addition, the increase in occupancy rate. These 2 factors has resulted in significant increase in revenue of the mall. For your second question of the rental structure, a lot of the rent is fixed, from it is increased by -- from average 2% to 5% and some tenants 7% from year to year. And there is another clause for turnover sharing of the profit of the sales. And what your third question again?

Hotel occupancy and current day rate. How much is the decline?

For hotel is stable. No decline in the hotel itself because our hotels, it is not daily hotels, it is most of our hotels around 75% of the tenant is long-term contracts. We are talking about from 3 to 6 months on average. The daily customers is representing insignificant portion of the tenants of hotels.

Okay. And one thing more, like why -- could you explain the gain in the income statement of like QAR 3.4 billion and other income of QAR 9.7 billion.

Yes. For the 3.5 million, as we mentioned, it was held for sale properties that has been sold during the period. We recognized QAR 3.5 million. There is a difference between the proceeds of QAR 105 million. This is the proceeds and the carrying value of QAR 102 million. This result is QAR 3.5 million gain. And regarding the other income, it is mainly coming from favorable adjustments from utility provider during the period by around QAR 5 million.

Okay. And like what's your outlook on the current situation?

For the current unit as all of us know there is a significant uncertainty about the current situation because the situation is evolving rapidly and there is uncertainty about what will the situation in the coming period.

[Operator Instructions] There are no further questions, I would like to conclude this Q&A session, and we'll turn the call back to Dana Al Sowaidi. Thank you.

As there are no more questions, we would like to thank the company's management for the results update and for taking the time to answer all queries. And we look forward to speaking to you all for the second quarter results.

Thank you, everyone, and that concludes today's call. Thank you. Thank you. Have a nice day ahead. You may now all disconnect.