Hello, and welcome to Ezdan Holding Group. 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 would like to ask a question by that time, please press Star followed by the number one on your telephone keypad. I'd like to hand the call over now to our moderator, Dana Al Sowaidi. Please go ahead.
Hello, everyone. This is Dana Al So waidi 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 for management, we have Tamer Fouad, the 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 2026 conference call. Our investor presentation is available on our website at www.ezdanholding.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 three main areas. First, we will look through our financial performance for Q1 2026 compared to Q1 2025. Second, we will compare the financial position of 31 March 2026 to 31 December 2025.
Third, we will cover a brief of cash flow statement for Q1 2026 compared to Q1 2025. First, we'll talk about financial performance. In Q1 2026, 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. First, finance costs decreased by around QAR 65 million. Second, rental income increased by around QAR 14 million. Third, other income increased by QAR 8 million. Turning to key ratios, ratio of the operating gross margin remained stable at 83%. The net profit margin improved from 53% to 47%, reflecting mainly the reduction in finance costs. On rental income, Ezdan recognized 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 were average occupancy improved to approximately 91.7% from 88%. Average revenue per unit remained broadly stable at around QAR 4,400. The total number of units available for rent decreased slightly from approximately 33,300 during the Q1 2025 to 32,100 units during the Q1 2026. The main statistics for hotel segment were average occupancy improved to approximately 87% compared to 84%. The average daily rate at Ezdan Palace Hotel increased to QAR 456 from QAR 411.
The average daily rate at Ezdan Hotel, West Bay remained stable at 176 compared to 177. For the mall segment statistics was mainly average occupancy reached approximately 95% from 91% in Q1 2025. 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 the 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 profits 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 59 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 the increase in stock costs by around QAR 2.3 million. For 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. For FX gain or losses, the group recorded a FX loss of approximately QAR 3.7 million in Q1 2026 compared to a gain of QAR 11 million in Q1 2025. This movement was mainly driven by changes in the British pound sterling exchange rate. On financial costs, this decreased by approximately QAR 65 million from QAR 218 million to QAR 163 million, representing a reduction of around 30%. This was primarily driven by lower borrowing rates and improved profit margins on financial establishments. 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 reselling 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 financial costs of approximately QAR 163 million and repayments of approximately QAR 237 million. Total equity, including non-controlling interest, increased from QAR 33.5 billion to QAR 33.8 billion, an increase of approximately QAR 227 million.
The group's share capital stands at QAR 26.5 billion. Retained earnings increased by QAR 220 million, primarily reflecting the net profit generated during the period. 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 a net cash flows used in investing activities of QAR 5 million. 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.
At this time, I would like to remind everyone that in order to ask the question, please press star followed by the number one on your telephone keypad. Okay. Your first question comes in the line of Adnan Mukim with Argan Investment. Please go ahead.
Hello everyone. This is Mohamed Laaouan from Argan Investment. I have few questions. First of all, like could you highlight why there's a jump in revenue from malls? 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 questions. Regarding malls, it has significantly increased during the period because from year to year there is an incremental clause in the rental. This resulted in increase in the revenue during this period. In addition, the increase in occupancy rate. These two factors has resulted in significant increase in revenue of the malls. For your second questions of the rental structure, part of the rent is fixed, from it is increased by from average 2%-5% and some tenants 7% from year to year. What's your third questions again?
Hotel occupancy and current day rate. Like, how much is the decline?
For the hotels, it's stable. No decline in the hotels itself. Because our hotels, it is not really real hotels. It is most of the our hotels, around 75% of the tenants is long-term contract. We are talking about from 3-6 months on average. The daily customers is representing insignificant portion of the tenants of hotels.
Okay. 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, if-
For the QAR 3.5 million, as we mentioned, it was held for sale properties that has been sold during the period. We recognize QAR 3.5 million. There's a difference between the proceeds of QAR 105 million and the carrying value of QAR 102 million. This resulted the QAR 3.5 million gain. Regarding the other income, it is mainly coming from favorable adjustments from utility provider during the period by around QAR 5 million.
Okay. Like, what's your outlook on the current situation?
For the current period, as all of us knows, there is a significant uncertainty about the current situation because the situation is evolving rapidly, and there is the uncertainty about what will the situation in the coming period.
Thank you so much, sir. Thank you for all your answers. Thank you so much.
Thank you.
Once again, if you would like to ask questions, please press star followed by the number one on your telephone keypad. Okay, since 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 all disconnect.