Good evening, everyone. This is Mai Attia from EFG Hermes.

We're very happy to be hosting MCDC Q1 2026 earnings call today. We have from the management team Mr.

Ahmad Jaber, CFO. Before we dive into the presentation, I would like to draw your attention to the cautionary statement.

During today's presentation, we may make forward-looking statements that refer to estimates, plans, and expectations. Actual results, outcomes may differ materially due to factors stated in the slides.

With that out of the way, I will hand it over to Mr. Ahmad.

I'd like to welcome everyone and thank you for joining us today. We are pleased to share our quarterly results with you.

Despite the challenges posed by the current geopolitical environment, we continued to deliver growth and make steady progress on execution. Let me walk you through the key highlights.

Starting with our major strategic milestone for the quarter, we successfully completed the land acquisition in Ajyad for 980 million riyals. This is a crucial step that will support our long-term portfolio expansion.

Financially, we achieved solid year-over-year growth across the board. Revenue increased by 7% to reach 251 million riyals, which helped drive an 8% increase in net income to 162 million riyals.

Our adjusted free cash flow also grew by 10% to 99 million riyals, a figure that excludes the major capital expenditure for the new land. These strong financial results were supported by excellent operational metrics, notably a 10% rise in our average lease rate and a 5% increase in RevPAR.

Let me now take you through the performance of our Hotel and Towers segments in more detail. Looking at our Hotel and Towers performance, the sector delivered a resilient performance despite the impact of regional geopolitical conditions on travel demand.

Occupancy moderated to 88% compared to 93% in Q1 2025, with the decline mainly driven by softer hotel occupancy, while Towers remained relatively stable at 92.9%. Importantly, pricing remained strong.

Average daily rate increased by 10.4% to 1,314 riyals per room, with both hotels and towers achieving double-digit ADR growth. As a result, overall RevPAR increased by 4.5% to 1,157 riyals per room.

Towers were the key driver, with RevPAR more than growing 10%, while Hotel RevPAR was slightly lower by around 1% due to the occupancy decline. Moving now to MCDC Mall, the retail segment delivered a strong performance across both operating and profitability metrics.

Available area increased by 1.7% to 17,587 square meters, while leasable area grew by 5.3% to 16,394 square meters, reflecting continued optimization of the mall's retail space. Occupancy remained very strong at 98.6%, up slightly from 98% in Q1 2025, demonstrating sustained tenant demand.

Average lease rate increased by 10% to 18,835 riyals per square meter, supporting a 26% increase in gross profit to 65 million riyals. This also translated into a stronger gross profit margin of 83%, up 4 percentage points year-on-year.

Next, we will move to the financial indicators and look at the overall financial performance in more detail. Looking at the key financial indicators, we continued to deliver solid year-on-year growth across the main performance metrics.

Revenue increased by 7% to 251 million riyals, supported by steady Hotel and Tower performance and strong 20% growth from MCDC Mall. Gross profit grew by 10% to 187 million riyals, with the mall again being a key contributor, growing by 26%.

EBITDA also increased by 7% to 174 million riyals. This translated into an 8% increase in net income to 162 million riyals, and earnings per share improved to 0.81 riyals.

Operating cash flow was also strong, increasing by 28% to 127 million riyals. Free cash flow was impacted by the major capital expenditure during the period, mainly related to the Ajyad land acquisition of 951 million riyals.

As a result, gearing increased to 17.4%, while return on equity improved to 12%. Next, we will look more closely at the net income analysis.

Looking at net income in more detail, the increase was primarily driven by strong mall performance. Net income grew by 12 million riyals, from 150 million in Q1 2025 to 162 million in Q1 2026, representing an 8% year-on-year increase.

Hotel and Towers contributed a modest 1 million riyals improvement, reflecting the impact of softer occupancy despite stronger pricing. The main driver was MCDC Mall, which added 13 million riyals, supported by higher lease rates, improved occupancy, and stronger gross profit.

This was partially offset by a 2 million riyals impact from investment, operating expenses, and other items. Next, we will move to the cash analysis and review how operating cash flow and capital expenditure shaped our overall cash position.

Turning to cash analysis, the company maintained a strong cash position, with closing cash increasing by 17 million riyals to 112 million riyals. Operating cash flow was strong at 127 million riyals, supported by the underlying business performance.

Reported free cash flow was impacted by the major capital expenditure related to the Ajyad land acquisition, which represented 951 million riyals of the total capex. However, excluding the land purchase activity and the related bridge financing, the business continued to generate healthy cash flow, with adjusted free cash flow increasing to 99 million riyals.

Next, we will move to the Hotel and Towers renovation plan and discuss how we are investing to enhance the asset and support future performance. Moving to the Hotel and Towers renovation plan, capex is estimated to be around 400 million riyals across both the Hotel and Towers.

The Hotel will undergo a full renovation, while the Towers will receive a guest room refurbishment. Post-renovation, the Hotel will increase its key count from 609 to 629 rooms.

On phasing, the Hotel will be executed in two phases of 290 keys each, starting mid-June 2026 through mid-January 2027. The Towers will follow a four-phase approach covering all 824 keys, beginning in June 2026 and completing by January 2028.

Execution will be phased and scheduled during the low season to minimize disruption. Importantly, during the peak Ramadan and Hajj seasons, the full asset is expected to be back in operation to capture high demand periods.

This is a significant investment in elevating our product quality and guest experience, which we expect to further support our pricing power going forward. Let me now share our guidance for the period ahead.

Finally, on 2026 guidance, we are maintaining the same guidance provided during the annual results call. For Makkah Hotel and Towers, RevPAR is expected to continue growing in line with recent trends, while following the usual seasonal pattern across the year.

We have also added the expected number of keys out of service during Q3 and Q4, consistent with the renovation plan shared earlier. For MCDC Mall, guidance remains broadly stable, with available area of around 17,700 square meters, leasable area of around 17,650 square meters, and average lease rate of around 17,700 riyals per square meter.

For MCDC Hajj, we continue to expect 2026 capacity of 60,000 to 70,000 pilgrims, with a gross margin of 5% to 6%. To wrap up, we delivered a solid quarter with growth across revenue, profitability, and cash generation, while executing on our long-term strategy through the Ajyad land acquisition and the launch of our renovation program.

We remain confident in our outlook and are focused on creating lasting value for our shareholders. With that, we would be happy to take your questions.

Thank you. We have the first question from Sultan.

The line is opened.

Yes, assalamu alaikum. Hi, Mr.

Ahmad. Am I audible?

Hello?

Yes. Yes, I can hear you.

Go ahead, please.

Okay. My first question is around the occupancy rate for Hotel asset.

It declined by around 10% 10 percentage points. Can you break down that into renovation versus the impact from the conflict?

Have you started to see normalization or...

Welcome, Sultan. I'd like first to welcome everyone for our earning call for Q1 2026.

Thankfully that the company achieved record figures although of the current geopolitical circumstances in the region. In terms of your question, Sultan, about the increase of 10%, I think you're talking about the average lease rate, right?

No, I'm referring to the occupancy rate for the Hotel. It declined by around 10% 10 percentage points, right?

Yes.

No, actually, the decline was about 5% 5 basis point...

That's the blended decline, but if you look at the Towers, it declined by 2 percentage points, the Hotel declined by 9.7 percentage points, right?

That's right. Actually, that depends on the pricing strategy we are focusing on.

We were trying to optimize the ADR rate in order to maximize the outcome of the Hotel and the Towers. You can find out that the net result was an increase of the RevPAR by 4.5%, which will optimize the profit from the Hotel and the Towers.

Sultan, this is Ahmed from the IR side. Touching the second component of your question, there was no renovation during Ramadan.

Okay? We always intend to have the full asset running during Ramadan and Hajj.

We did a quick accounting on the operational numbers last year, and these two periods currently they represent 45% of the hotel revenue. That's why these are very important periods where we make sure the full asset is in operation.

Now, when it comes to the performance of the hotel, as indicated by the CFO, it is the more premium element, and typically with the geopolitical situation as indicated in the CEO in the annual call, there was an initial impact, but thankfully to the hotel staff team credit, a recovery plan was made, and they're able to execute on it and to deliver a growth year-on-year rather than deliver a stable operation for the year.

Perfectly. The second question is around the second half of this year.

290 keys will be under renovation. Can you guide us around the yaani net impact on RevPAR?

I'm assuming you will see increase ADR for the rest of rooms. Fa what is your initial expectations around RevPAR for the second half of this year?

Exact numbers, we don't have that yet, or we don't do that just yet in our guidance. That's why we give you the RevPAR historical.

What typically happens in Q3 and Q4 is that you have a drop in occupancy. Typical performance in those quarters, you see occupancy, especially in the second quarter, dropped to the low 70s.

The impact isn't that big, and ADR obviously drops with that because it's dynamic pricing. Q4 is slightly better, but we're hoping to bring at least a couple of the floors or a couple of the keys ahead of time as that phase comes in.

One thing to highlight that this is, you can say, the most conservative plan when it comes to the execution, that all of these keys will be out. There is an opportunity for improvement where you have more keys available, but we'd rather be conservative in the guidance and deliver better numbers rather than overestimate what we could deliver.

Okay. Perfectly.

Thank you.

Yeah.

We have another question from Shahd. The line is opened.

Am I audible?

Yes, go ahead, please. Okay.

I have just a couple of questions. One just to ask, was there any rooms under renovation during 2025, either in the hotels or towers?

We have actually executed a limited renovation in the Hotel only. It was for 120 rooms, which is four floors.

That was executed in Q4 between Q4 2025 and Q1 2026. As Ahmed Aljiffry said, it was ready to enter with our inventory just before Ramadan in Q1 2026.

Great. My second question is related to the Ajyad land plot.

Would you just share some light on the strategy regarding the land, what should we expect from it in terms of operational strategy?

In fact, we are still performing a highest-best-use study for this project. We anticipate that this project will add prime benefit to the company.

The initial assessment that this project might contribute a gross profit of about 250 million Saudi riyals, but yet we are doing the final assessment based on the final HBU study we are performing.

Great. Thank you.

Just to add on that, right now the plan is to operate ourselves, we're going to continue to be a self-operator on the asset itself. Once we have any other updates, inshallah, we'll be updating either through the calls or through one-on-one engagements.

Great. Thank you.

My last question is also related to the Hotel and Towers segment. Your guidance for the rest of the year is basically, if you're assuming better performance in this segment, is it stemming from enhanced occupancy due to, for instance, the resolvement of the geopolitical tensions, or is it a strategy mainly on your pricing?

The focus is mainly on occupancy or pricing?

Actually, we focus more in the pricing, especially when the outcome of the renovation will start to come in reality. You can see also that strategy in our Q1 2026.

Of course, we have very high occupancy during the high seasons. We have no issues with that.

We are trying to optimize and build on the ADR rates with the support of the renovation plan we have just started.

Great. Thank you.

Simplify, our plan is to solve for RevPAR. Whatever has the best RevPAR is what we solve for, it is not one or the other.

We don't do only pricing or only occupancy. We do both to maximize revenue per available room.

Understood. Can I ask one more question, or do I come in the line again?

Please go ahead.

Okay. Just to touch on the leasable area and the rates on the mall, what exactly hints on seeing more room for improvement in the mall?

Is there more room to use the areas and be more efficient on it, or do you think you're reaching the maximum of the potential for the mall?

You are asking about the room that's supporting the increase in leasable rate? Yes.

Yes, exactly.

Yes, actually in our mall, we are focusing currently on improving the tenant mix, and that's supporting our plan to increase the leasable rate. In addition to that, our strategy in most of our lease contracts that we do it annual lease contracts, and that give us a good opportunity to adjust the pricing at the beginning of every year.

If we find any room of improvement, we do that, as I said, with the support of the tenant mix improvement.

Understood. Thank you, and good luck.

Touching on the total available area, I think is part of your question. Yes, the mall is undergoing an optimization for certain common areas or areas that were not used in an ideal manner.

We still have the objective or the target we stated in the annual report. We're trying to achieve 18,000 square meters of leasable space in the original mall without considering the additional floor.

Now within the guidance, we're hoping to achieve 17,700. At the same time, we hope that the team in the mall operations will overdeliver in the area just like they did in the lease rate, which they did in Q1 this year.

Understood. Thank you, and good luck.

Welcome.

Sultan, you have another question, right? The line is opened.

Dashit han me. Just another question around the occupancy rate and the F&B business.

First the occupancy rate, is it necessary that when we see decline in the occupancy rate and you start focusing on the ADR, that we will see some savings in the employee cost, or that is not necessarily the assumption?

Usually in a certain limits of drop in occupancy, we can start noticing a drop in some operating expenses. That depends on the size of decrease in occupancy.

Sometimes you don't feel any saving if that drop is not material. In general, yes, it does play a good impact if there is a significant drop in the occupancy.

Okay. What was the F&B contribution in first quarter '26 versus first quarter '25?

In first quarter '26, we have achieved about 12% F&B revenue comparing to the total revenue of Hotel and Towers. Last year, it was slightly above 1% above, was 13%.

Is that the normal level, or is there a level you guys want to reach to?

Actually we have in our plan with the upcoming renovation to uplift the share of food and beverage by improving the guest layers that are invited to the hotel. We might experience an increase.

We did not calculate the impact on this actually yet, but we can share it with you maybe in the future.

What are you doing to improve this segment? Are you guys renovating the restaurants, increasing your offerings, or pricing, or just a little bit more color here, please?

Part of the renovation plan is to renovate the restaurants as well, and to start doing more campaigns to the groups, Hajj and Umrah groups, by including food and beverage element to it. It's a mix between the renovation plan and the marketing and sales.

Mr. Ahmed, the 12% or 13% is the average annual run rate, right?

This would be the most recent rates that we have,

but

as highlighted by the CFO, we're trying to push this higher. I think what would be a normal figure we're trying to target is somewhere close to the higher teens rather than at that level.

Now, shedding more light on the renovation, as highlighted by the CFO, right now we're a bit fragmented, we have, I think, six or seven restaurants in the hotel. Part of the renovation is going to reduce the number and focus on more quality to make sure you have an experience that is worth the level of guests you're planning to attend with the renovation, which will hopefully also push the percentage higher.

You think you'll achieve the average industry level in terms of F&B contribution after the renovation?

This is the plan. Now it might not happen immediately because you need to build up credibility first, but this is what we're aiming for, yes.

Thank you. Wish you all the best.

Thank you.

Welcome.

If anyone has questions...

If you have any questions, can you please raise up the hand button? We have no more questions.

Okay. I guess with that, I would like to thank EFG for hosting us, and I would like to thank everyone for participating in the call.

If you have any other follow-up questions, please send them to our communication channels through the IR email or through the inquiry form, or you could reach to myself or any of the team members directly, and we'll get back to you as soon as we can. Thank you for joining our call today.

Thank you, everyone.

Bye.