Hello, Welcome to Ezdan Holding Group Conference Call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you'd like to ask a question by that time, please press star on your telephone keypad. Thank you. Now, I would like to hand the call over to Phibion Makuwerere . You may begin.
Thank you. Good afternoon to you all, and I would like to Welcome you to the Ezdan Holding Group 4 Q and FY 2025 Earnings Conference Call. On today's call from Ezdan's management team, we have Tamer Fouad, who is the Group Chief Financial Officer, and Taha Moursi, who is the Financial Controller and IR Officer. On the call today, the management team will first go over the numbers, and then after that, we have a Q&A session. Let me turn over the call to Taha to take over. Please go ahead, sir.
Thanks. Good afternoon, everyone. Thank you for joining us today in Ezdan Holding Group conference call to discuss the financial performance and position of the company for 2025. We have made the investor's presentation for this conference call available on our website, www.ezdanholding.qa, under Investor Relations section. Before proceeding, 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. Such forward-looking statements include those that are not historical facts, they 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. The conference call will include three parts. First part will be about comparing financial performance of 2025 with 2024.
Second part will be about financial position compared between 25 and December 2024. Third part will be a brief of the cash flow in 25 compared to 24. Regarding the first part, which is related to financial performance, Ezdan achieved a net profit for its owners of around QAR 114 million, compared to QAR 105 million. The profit or loss statement contains main changes in the following factors: Finance costs decreased by approximately QAR 277 million compared to last year. The group recognized a gain on sale of investment properties and assets held for sale of around QAR 121 million. Rental income increased by around QAR 58 million. The group recorded a loss on revaluation of investment properties of approximately QAR 660 million, compared to QAR 198 million in previous year.
Main ratios for financial performance were as follows: Operating gross margin improved from 81% to 82%. Net profit margin remained stable at 6%, in line with last year. In terms of the components of profit or loss statement, Ezdan recognized a rental income of QAR 1.8 billion, compared to QAR 1.75 billion in the previous year, reflecting an increase of approximately QAR 58 million, representing around 3.3% as a growth. The increase in rental revenue was mainly driven by growth across key operating segments, including increase in residential segment by 3%, increase in hotel segment by 6%, and increase in mall segment by 14%. The main statistics for residential segment showed an average occupancy rate of around 89.4%, compared to 89.2% in previous year.
While the average revenue per unit remained stable at 4.4K for both 2025 and 2024, and the average total units available for rent were approximately 33K units. The main statistics for hotel segment were an average occupancy rate of around 86%, compared to 79%, with an average daily rate for Ezdan Palace of QAR 432 per day, compared to QAR 439 per day, and for Ezdan Hotel, West Bay of QAR 173 per day, compared to QAR 177 per day. The main statistics for mall segment were average occupancy rate was around 91% for 2025 and 2024. Concerning operating expenses, operating expenses decreased by around QAR 10 million, from QAR 353 million to QAR 343 million, which represent a decrease by a percentage of 3%.
On a component basis, the decrease was mainly in sewage expenses, with around QAR 11 million. On a segment basis, the decrease was mainly in residential segment of QAR 10 million. Operating profit from main operations increased from QAR 1.48 billion in 2024 to QAR 1.55 billion in 2025, with an increase of around QAR 66 million, representing 4.5%. On a segment basis, operating profit for residential segment increased from QAR 1.28 billion- QAR 1.32 billion, with a gross margin of 85% compared to 84% in 2024. For hotel segment, operating profit increased from QAR 139 million- QAR 146 million, with a gross margin improving from 65%- 67%. Operating profit for mall segment increased from QAR 64 million- QAR 75 million, with gross margin improving from 67%- 70%.
For gain on sale of investment property and assets held for sale, during the year, the group sold the Ezdan Compound 40 and the specific residential units for around QAR 607 million, which had a carrying value of QAR 486 million, resulting in a recognized gain on sale of QAR 121 million. For gain from foreign currency exchange, the group recognized a Forex gain of QAR 17 million compared to a loss of QAR 8 million in 2024, mainly from changes in the exchange rates of the British pound sterling. Regarding finance costs, finance costs decreased by QAR 277 million, from QAR 1 billion- QAR 778 million, representing 26%, mainly due to decreasing of borrowing rates and profit margins. We are going to the second part, which is related to the financial position.
The group has a total assets of around QAR 45.6 billion compared to QAR 46.3 billion. Cash and bank balances were QAR 511 million compared to QAR 113 million, with an increase of around QAR 398 million. Investment properties decreased by QAR 1.3 billion, from QAR 45.5 billion to QAR 44.1 billion, mainly due to disposing of Ezdan Compound forty, with a book value of QAR 299 million, and reclassifying investment to properties of QAR 420 million as Assets held for sale, in addition to revaluation loss of QAR 660 million. Total liabilities were QAR 12 billion compared to QAR 12.9 billion. Trade and other payables have decreased by around QAR 20 million due to related parties have fully settled by QAR 1.4 billion.
Islamic borrowings have increased by a net amount of QAR 546 million. That increased from obtaining new facilities of around QAR 4.5 billion, related finance costs of around QAR 673 million, and repayment of around QAR 4.6 billion during the year. Total equity, including non-controlling interest, increased from QAR 33.4 billion- QAR 33.5 billion, with an increase of around QAR 104 million. Share capital of Ezdan is QAR 26.5 billion. Regarding retained earnings, retained earnings have increased by QAR 56 million, representing net profit for the year of QAR 114 million, transferring abortion of retained earnings to legal reserve of QAR 11 million, and the transfer of a cumulative share of non-controlling interest of QAR 155 million.
Regarding the last part, which is the cash flow statement, net cash flows from operating activities were QAR 1.43 billion compared to QAR 1.36 billion. Net cash flows from investing activities was QAR 585 million compared to net cash flow used in investing activities of QAR 63 million. Net cash flow used in financing activities were QAR 1.6 billion compared to QAR 1.56 billion. Thank you. We are open for any questions you may have.
Thank you. As a reminder, you may ask a question by pressing star followed by the number one on your telephone keypad. Our first question comes from the line of Ejayan Ahbabi from Al Rayan Investment. Please go ahead.
Thank you for the presentation. Could you give us some color on what was this downgrade of or these provisions on investment properties, revaluation of investment properties? Which properties were these, and what was the rationale to revalue them lower? Thank you.
Thanks for your questions. Regarding the investment properties, investment properties of Ezdan, we are talking about QAR 45 billion. If you back to the sensitivity analysis of the financial statements, you find that any, 50 basis points, for example, the changes in WACC or terminal growth rate, it will affect a huge amount of, investment properties. During this year, the terminal growth rate, that has been used by valuator has been decreased from 2.2 last year to 2.185 this year. That's mainly The main reason behind this decrease in the valuation of investment properties.
Sorry, what was decreased?
We are talking about the full portfolio. It is not specifically.
I'm a bit confused. You said that the loss is because of the decline in WACC, is that correct?
No, declining in terminal growth rate.
Terminal yield, basically. Terminal income.
Yes. Terminal growth rate, because terminal value.
Oh, terminal growth rate. Okay. Oh.
Terminal growth rate. Last year was 2.2, this year, 2.185. This little decrease affect this amount because we are talking about QAR 46 billion as investment properties. Any.
Uh.
Any basis point, for example, 10 basis point decrease or increase in the terminal growth rate affect significantly on the valuation of investment properties.
And this.
What?
Sorry.
Continue. If you return back to the sensitivity analysis, you will find that the changes in by 50 basis point in terminal growth rate will affect the valuation of investment properties by around from QAR 3 billion-QAR 4 billion.
This terminal growth rate, this was changed by your valuation company, the company that does the valuations?
Exactly. Because it's the input that's coming from their side. Based also on the average five years of the market growth rate and the inflation rate, all these, so all these factors.
They changed this because of the market five-year average of the market growth rate?
Yes, exactly.
Okay. Thank you.
Once again, if you would like to ask a question, please press Star followed by the number one on your telephone keypad. It seems that we have no further questions. That concludes our Q&A session and today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.