Hello, and welcome to the Ezdan Holding Group conference call. I would like to advise all participants this call is being recorded. Thank you. I'd now like to welcome Roy Thomas to begin the conference. Roy, over to you.
Thanks, Kevin. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Ezdan Holding Group's fourth quarter and year-end 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 Financial Controller and IR Officer. We'll conduct this conference call with management first reviewing the company's results, followed by Q&A. I will turn the call now over to Taha Moursi. Go ahead, Taha.
Good afternoon, everyone. Thanks, Roy, for your introduction. First, we will start with a 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 Holding Group. These forward-looking statements include all matters that are not historical facts. Any forward-looking statement 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 the financial position for Ezdan for the year '23. Investors presentation for the conference call is available at Ezdan website, www.ezdanholding.qa under Investor Relations section.
Regarding the financial performance of the group, for '23, Ezdan achieved a net profit to its owners with around QAR 100 million compared to around QAR 87 million for '22. Major changes in profit or loss statements contain a decrease in investment income of around QAR 645 million, decrease in revaluation losses by around QAR 866 million, increase in finance costs by around QAR 308 million, increase in other income of around QAR 51 million.
For '23, the main ratios for financial performance were as following: the percent of operating expenses to operating income was 20% for '23 and '22. Operating gross margin was 80% for '23 and '22. Net profit margin was 5% for '23 compared to 3% for '22. Earnings per share was QAR 0.004 for '23 compared to QAR 0.003 for '22. Regarding components of profit or loss statements, Ezdan recognized a rental income of QAR 1,764 million for '23 compared to QAR 1,744 million for '22, with an increase of QAR 19 million representing around 1%. Rental revenue from residential segment representing about 87% from total rental revenue increased by around 4% with QAR 54 million compared to '22. Considering that the group's average total units available for rent increased from 28,400 during '22 to around 30,500 during '23, with average occupancy rate of around 9% compared to the 10% in '22 and average unit revenue of QAR 4,800 for '23 compared to QAR 4,900 for '22.
Rental revenue from hotel segment representing around 9% from total rental revenue decreased by around 18% with QAR 35 million compared to '22. Considering that average occupancy rate increased from around 48% in '22 to around 74% in '23 with average daily rate of QAR 173 per night for '23 compared to QAR 305 per night for '22. Rental revenue from mall segment, which represents 4% from total rental revenue, increased by around 1% with around QAR 1 million, considering that average occupancy rate in malls was 69.2% for '23 compared to 68.8% for '22.
Other operating revenue for '23 was around QAR 88 million compared to QAR 113 million for '22 with a decrease of around QAR 26 million representing around 23% compared to '22. Other operating revenue from residential segment decreased by around QAR 19 million. Our hotel segment decreased by around QAR 9 million. For mall segment, increased by around QAR 2 million.
Regarding operating expenses, operating expenses incurred for '23 were QAR 365 million compared to QAR 379 million for '22 with a decrease of QAR 15 million representing around 4%. The main components of operating expenses were soft benefit of QAR 97 million for '23, which was almost the same for '22. Utility charges was QAR 73 million compared to QAR 106 million; sewage of QAR 64 million compared to QAR 47 million. Maintenance expenses was QAR 48 million compared to QAR 44 million. Operating expenses for residential segment decreased by QAR 11 million; for hotel, decreased by QAR 1 million; and for malls decreased by QAR 2.4 million.
Operating profit from main operations was around QAR 1.5 billion for '23, which was almost the same for '22 with a gross margin from main operations of 80% for '23 and '22. Operating profit from residential and commercial segment was QAR 1.3 billion compared to QAR 1.25 billion with a gross margin of 83% for '23 and 82% for '22. Operating profit from hotel segment was QAR 121 million during the '23 compared to QAR 163 million for '22 with a gross margin of 63% for '23 compared to 69% in '22. Operating profit from malls segment was QAR 67 million compared to QAR 62 million with a gross margin of 69% for '23 compared to 65% for '22.
During 2022, the group recognized its equity accounting investees and the equity investments through the disposal of 7 of its subsidiaries, which own such investments so no investment income in '23 compared to around QAR 645 million during '22. For general and admin expenses, they have increased by around QAR 3 million, which was mainly due to increase in professional fees expenses. Regarding finance costs, finance cost was QAR 1.1 billion compared to QAR 0.8 billion during '22 with an increase of QAR 0.3 billion mainly due to increase in reference rates of borrowings.
During '23, the group recognized the revaluation losses of investment properties of QAR 193 million compared to QAR 1.1 billion in '22. During '23, the group recognized a gain from foreign currency exchange of around QAR 9 million compared to a loss of QAR 27 million during '22 mainly due to changes in GBP rates against QAR.
Now we will move to the financial position of the group. As of 31 December '23, the group had total assets of around QAR 46.8 billion. Total liabilities were around QAR 13.5 billion, and total equity, including the noncontrolling interest, was around QAR 33.3 billion. Cash and bank balances was QAR 371 million as of 31 December '23 compared to QAR 463 million as of December '22.
Investments of QAR 45.6 billion with a decrease of around QAR 58 million representing capitalized expenditures during the period of QAR 129 million, foreign currency adjustments of QAR 5 million and the revaluation loss of around QAR 196 million. Islamic borrowings have decreased by QAR 181 million, which results from movements in Islamic borrowings from finance costs and repayments during the period. Retained earnings have increased by QAR 87 million, which represents a net profit for '23 after deduction of the required legal reserves and provision for sports and social activities. The share capital was QAR 26.5 billion as at 31 December '23.
And regarding cash flows, net cash flows from operating activities was QAR 1.43 billion for '23 compared to QAR 1.37 billion for '22. Net cash flows used in investing activities, we had QAR 117 million for '23 compared to net cash flows from investing activities of QAR 21 million during '22. And the net cash flow used in financing activities for '23 was QAR 1.4 billion compared to QAR 2 billion for '22.
Thanks. And operator, you can start the session of questions now.
[Operator Instructions] And your first question comes from the line of Zohaib Pervez from Al Rayan Investment.
So with regards to the residential segment, you mentioned that the average rental rates had increased from QAR 4,300 to QAR 4,800. Is that correct? Did I hear it correct? Did I hear right?
No. The average revenue per unit has decreased for residential from QAR 4,900 in '22 to QAR 4,800 in '23.
QAR 4,900 to QAR 4,800. And the occupancy, how -- what has the occupancy been?
Occupancy almost the same, 90%.
90%. So I was wondering, I mean, if you look at your revenue from the residential segment, each quarter of this year has actually come down. In the first quarter, your residential revenue was QAR 411 million, then QAR 393 million, QAR 380 million, QAR 346 million. So is it because your occupancy is falling? Is it because the revenue is falling? Is it because the rental revenue is coming up for renewal and they are at a lower rate? What's the rationale? Because your number of units have increased and occupancy has remained the same.
No. It is not about the occupancy decrease or something like this, no. Because last year, most of our contracts is annual contracts. So the revenue of, for example, in Q1 coming from the pricing in Q1 in '22, which is higher than now. So that's the main reason behind this decrease during the quarter. But now we reached to the stabilized rate for the pricing.
So it's because of the renewal rates, I mean, whenever they came up for renewal and the prices are lower?
Lower because last year was [indiscernible] Of course, the rates were very high. And most of the people that is renewed now, they are renewed on the rates stabilized in '23, which is almost lower than -- down in 2022.
Okay. How many units are coming up for renewal in 2024? And do you still believe that -- are you looking at the rates being lower from where they are right now or it should stabilize at QAR 4,800?
No. As I mentioned, now we reached the stabilized rate, we are not expecting the decrease in the rates during '24. We're expecting the slight increase in 2024.
Why do you expect an increase?
Why? Because as we announced in our conference call before, we're already starting a development plan at the beginning of 2022. So now this development plan almost will be finalized in the first quarter or the second quarter of 2024. So this will give us room to increase our rates but not very much. It will be like from 5% to 7.5%.
Okay. I've got 1 last question. In your cash flows, there is dividend payments. I do understand you have not declared a dividend, so what is the dividend payment?
This is coming from the dividends payable from 2016.
2016, okay. So -- okay. So this was not paid before, so why is it -- why is this like -- why is every year, you're paying this off?
It's about the management decision.
This is actually to a related party, to the controlling shareholder?
Of course, all the shareholders are related party. It is for the main shareholders.
[Operator Instructions] And there are no further questions at this time so I'd like to hand back to Roy.
If there are no further questions, we'd like to thank Ezdan Holding Group's management for the results update and answering queries, and look forward to speaking to you all for the first quarter 2024 results conference call. Thank you.
Thank you.
That does conclude our conference for today. Thank you for participating. You may now all disconnect.
