Q1 FY11 Analyst Presentation. 28 th July 2010

Transcription

1 Q1 FY11 Analyst Presentation 28 th July

2 SAFE HARBOUR This presentation contains certain forward looking statements concerning DLF s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc., interest and other fiscal cost generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the company. 2

3 FY 11..An Optimistic Start.. Strong GDP growth outlook, robust business confidence parameters and positive consumer sentiment continue to lead the India growth story On going recovery in real estate seems well entrenched & broad based across segments Homes Focus on ongoing project execution, lower number of new launches Continuing buyer interest Pricing at reasonable levels, price volume equation stabilized Offices Leasing momentum improving Uncertainty on DTC impacting IT SEZs in the near term Retail Signs of enquiry / interest in select locations footfalls improving significantly Clarity on FDI policy in multi-brand retail could be potential trigger for growth Industry Outlook - FY11 Inflationary concerns and aggressive policy actions may impact demand / margins in the near term Select developers more focused on execution than in the past Pace of launches to increase over progressive quarters with more emphasis in H2 FY 11 3

4 Performance of Company Q1 FY11 DevCo: 1.9 msf sales booked vs 2.7 msf in Q1 10 & 3.6 msf in Q4 10 Phase V city center projects 0.66 msf MICO city center Chennai (soft launch) 0.23 msf New Gurgaon, Chennai, Bangalore and Panchkula mid-income homes 0.84 msf RentCo : 0.98 msf of leasing vs 0.01 msf in Q1 10 & 0.69 msf in Q4 10 Higher number of enquiries / transactions being converted into actual leasing. Rentals stable, current 0.93 msf (offices) leasing done within the range prevalent in respective micro markets Divestment of non-core assets - Rs. 294 Crs Delivery msf handed over during the Qtr comprising of offices & commercial complexes Started handing over Magnolias towers for starting interior works 4

5 Profit & Loss Summary Q1 FY11 Q1 FY 11 vs Q4 FY 10 Sales(incl Other Income) at Rs 2161 Cr, compared to Rs 2146 Cr in Q4 FY 10. Net profit at Rs 411 Cr, as against Rs 426 Cr in Q4 FY 10; Rs 396 Cr in Q1 FY10 EBIDTA margins at 51% versus 53% Profitability All figures in Rs. Crs Particulars Q1 11 Q4 10 Change Q1 11 Q1 10 Change Sales % % EBIDTA ( Core Operations ) % % EBIDTA ( Consolidated ) % % % PBT ( Consolidated ) % % PAT % % 5

6 Consolidated P&L Q1 FY11 Q1 FY11 (reviewed) Q1 FY10 (reviewed) Q4 FY10 (reviewed) Year Ended FY10 (Audited) Sl.No. Consolidated Financials Rs. Crs. Percentage of Total Revenue Rs. Crs. Percentage of Total Revenue Rs. Crs. Percentage of Total Revenue A) 1 Sales and Other Receipts 2,029 1,650 1,994 7,423 2 Other Income Rs. Crs. Percentage of Total Revenue Total Income(A1+A2) 2, % 1, % 2, % 7, % B) Total Expenditure(B1+B2+B3) 1, , Construction Cost , Staff cost Other Expenditure C) Gross Profit Margin(%) 66% 62% 72% 67% D) EBITDA (D/A1) 1, , , E) EBIDTA ( Margin) 51% 47% 53% 50% F) Financial charges , G) Depreciation H) Profit/loss before taxes , I) Taxes expense J) Prior period expense/(income) (net) (3) K) Net Profit after Taxes before Minority Interest , L) Minority Interest (3) M) Profit/(losss) of Associates 5 0 (1) N) Net Profit , Note : 1 2 Construction Cost Includes Cost of Land, Plots and Constructed Properties and Cost of Revenue-others Gross Profit Margin = (Total Income - Construction Cost) / Total Income Above figures includes losses from non-core businesses.i.e. Hotels & the DLF Pramerica Life Insurance businesses 6

7 Consolidated Balance Sheet Q1 FY11 (Rs. In Crores) As at 30-Jun Jun Mar-10 SOURCES OF FUNDS Shareholders' funds Capital Reserves and surplus Minority Interests Loan funds Secured loans Unsecured loans Deferred tax liabilities (net) ,421 39,920 52,989 APPLICATION OF FUNDS Fixed assets Gross block Less: Depreciation Net block Capital work in progress Investments Goodwill on consolidation Deferred Tax Assets Current assets, loans and advances Stocks Sundry debtors Cash and bank balances Loans and advances Other Current Assets Less : Current liabilities and provisions Liabilities Provisions Net current assets Reduction in share capital is on account of buyback/redemption of CCPS / RPS 7

8 Consolidated Cash Flow Q1 FY11 Rs in crores Period ended Period ended Period ended Particulars 30-Jun Mar Jun-09 A. Cash flow from operating activities: Net profit before tax 573 2, Adjustments for: Depreciation Loss/(profit) on sale of fixed assets, net 1 (58) - Provision for doubtful debts/unclaimed balances written back (2) Loss/(profit) on sale of current Investments (12) (9) (1) Amortisation cost of Employee Stock Option Interest/gurantee expense 388 1, Interest/dividend income (97) (259) (82) Operating profit before working capital changes 1,016 3, Adjustments for: Trade and other receivables (84) 5,893 2,485 Inventories (389) (960) (180) Trade and other payables (388) Taxes paid (268) (857) (70) Net cash (used in) / from operating activities 655 8,555 2,623 B. Cash flow from investing activities: Sale/Purchases of fixed assets(net) (172) (14,384) (227) Interest/Dividend received Sale/Purchases of Investment(net) 2,559 (2,050) (652) Net cash used in investing activities 2,510 (16,255) (818) C. Cash flow from financing activities: Proceeds/(repayment) from long term borrowings (net) 1,302 4,957 (1,039) Proceeds from issuance of preference shares 4,524 Proceeds from issue of debentures 500 1,067 Buy back of Preference shares of group companies (3,752) - Proceeds of short term borrowings (net) (107) (644) (532) Proceeds from issuance of prefernce shares Interest paid (550) (2,103) (683) Share premium Dividend Paid (207) (383) - Increase in share capital (1) Net cash used in financing activities (2,814) 7,431 (2,255) Net increase / (decrease) in cash and cash equivalents 351 (269) (449) Opening cash and cash equivalents 827 1,096 1,096 Closing cash and cash equivalents 1, Net Increase / (decrease) 351 (269) (449) Difference 8

9 Debt Position Q1-11 DEBT STATUS Rs.\ Crs. Rs.\ Crs. Gross Opening Debt ( as on 1 st April-10 ) 21,677 Less / Add : Repaid during Q1-11 (732) : New loan availed 2,330 : Debt Increase due to Consolidation 100 : Net Increase in Debt 1,697 Gross Debt position ( as on 30th June-10 ) 23,374 Less : Cash in hand 3,533 : Equity shown as Debt / JV Co. Debt 1,378 4,911 Net Debt ( Rs. 14,820 Crs was at 31 st Mar-10) 18,463 DEBT REPAYMENT ACTION PLAN Mandatory Debt Repayment in f.y ( as on 30 th June-10 ) 2,890 Less : Paid till 30 th June BALANCE OBLIGATION 2,158 9

10 Debt De-Leveraging Plan Continued Focus on de-leveraging continues with monies from operational cash flows & non-core asset divestments Plans ongoing for achieving the divestment targets of non-core assets / businesses over the medium term Improved cash flows from operations given the success of recent launches as well as launches yet to be done With commencement of construction of many projects, the cash flows are expected to further improve as installments are linked to constructions Reduction in Cost of Debt Average cost of debt has come down from 11.9% in Dec 2008 to 10.5% in Jun 2010 Current net debt/equity ratio: 0.68 Targeting net debt equity of 0.4x 0.5x versus a peak range of 0.65x x On-going Strategy Continue to use all free cash flows to reduce debt on an accelerated basis Keep improving the tenure and quality of debt Further reduction of cost of debt through refinancing 10

11 Divestments Plans of Non-core assets / businesses Progress on divestment plan on track Targeting potential divestment proceeds in excess of Rs 2500 Crores in months Rs. 294 Crs recovered during the quarter DLF Retail Brands - Wholly owned subsidiary, having paid up equity capital of Rs. 8 Crs, engaged in the business of retailing various life style / luxury brands. For FY10, the business had revenue s of approx.rs 33 Crs, with losses of approx. Rs 25 Crs (cumulative losses of approx. Rs.45 Crs) Preferential allotment to a promoter company at par resulting in - Infusion of Rs 92 crores by the promoter company to take 92% stake at par via new share allotment - Dilution of DLF stake from 100% to 8% post promoter infusion - Rationale identified as non-core business, recovers shareholder loans Aman Resorts - Operating performance continues to improve as global economic environment stabilizes - Explore possibilities for strategic partnerships to further strengthen the business model 11

12 Business Operations 12

13 Execution Capability Area in msf Region Q1 11 Q4 10 Q1 10 Gurgaon Super Metro Rest of India For Rent Co Area under construction Strong focus on timely approvals, faster execution and meeting delivery commitment to customers Handed over 1.37 msf during the Qtr, (Offices , Comm. Complex 0.51) ~ 30 msf expected to be delivered through Addition to execution of another 3-4 msf expected during the year 13

14 Nationwide Execution Footprint Chandigarh Gurgaon Delhi Jalandhar Noida Indore Kolkatta Mumbai Pune Goa Bangalore Hyderabad Chennai Cochin 14

15 DevCo Homes Q1-FY 11 witnessed sales of 1.44 msf, comprising 1.21 msf of existing stock & 0.23 msf of Sales from new launch in Chennai New launches in Q1 low as approvals are awaited. Sales in coming quarters to come from both existing inventory & new launches / subsequent phases of existing launches Cost visibility & execution scale up to provide sustainability to margins On track to meet planned sales (more from existing projects already launched) of > 15 msf in 2011, subject to market conditions remaining stable Mumbai NTC mills project launch - timing dependent on all approvals being received New launches keeping volume-margin mix in balance 15

16 DevCo - Q1 FY11 Particulars Total Mn sqft Q1-11 Q1-10 Q4-10 Sales Status Opening Balance Add:- Sale Booked During the Qty Less : Handed over Closing Balance Under Construction Opening Balance New Launches / Additions Less:- Handed over Closing Balance Wt. Avg. Sale Rate Homes (in Rs.sqft ) C.Comples (in Rs.sqft ) Under Construction (msf) Q4' 10 Q1' 11 Development Potential (Msf) Wt. Avg. Project Cost Homes (in Rs.sqft ) C.Complex (in Rs.sqft ) Q4' 10 Q1' 11 16

17 DevCo Commercial Complexes - Buying being witnessed in select locations as interest coming back (Q1 sales 0.46 msf) - Incremental sales of unsold inventory to contribute to profitability going forward Sale of Commercial Office Towers Strategic extension to the Dev Co model Sale of commercial Office Towers in select locations to large MNC s on specific demand Utilizing available Commercial development opportunities in vicinity of Townships Attractive profit margins with strong cash flows Fortifying existing large customer relationships ( tenant + customer profile ) Complimenting and not in conflict with company s primary commercial office developments ( i.e. Cyber City & SEZ s ) Does not impact strategic & continuing focus on increasing the Rental portfolio 17

18 Proposed Commercial Office Towers 18

19 RentCo Offices Current Lease portfolio of 20 msf providing annualized Rental of > Rs.1400 Crs (Q ~ Rs 300 Crs of rental income) Improving momentum in leasing with 1.12 msf done in Q1 2011, more than whole of last year(net leasing of 0.93 msf) Average rentals across locations at Rs.48 psf pm for current leasing done rentals stabilizing across micro markets ( e.g. Gurgaon current leasing at Rs 55 psf pm) Subject to clarity in the proposed DTC & its impact of SEZ s, volume improvement may take place in coming quarters as tenants will have to move in prior to March 2011 to avail benefits. Targeting leasing of 3-4 msf in the year, assuming no significant change in Govt. policy actions / macro environment Retail Malls Increased traction in mall occupancy witnessed in the quarter with enquiries increasing and interest coming back ( Q1 FY 11 leasing of 0.05 msf) Mall rentals across micro markets are likely to remain stable in the medium term. 19

20 RentCo Particulars Total Mn sqft Q1-11 Q1-10 Q4-10 Lease Status Opening Balance Add:- Lease Booked During the Qty Less :- Cancellation / Adjustment (0.18) (0.56) 0.0 Closing Balance Under Construction Opening Balance New Launches / Additions Less:- Handed over Less :- Suspension/Adju Closing Balance Under Construction (Annuity) ( Msf) Q 4 Q Wt. Avg. Leasing Rate Office Building (in Rs.sqft ) Retail Building (in Rs.sqft ) Wt. Avg. Project Cost Office Building (in Rs.sqft ) Retail Building (in Rs.sqft )

21 Our Land Resources Area ( msf ) Other Land Hotel Land G.Total Gross Area as on 1 st April Less : Projects Disposed off ( Net ) 3-3 Net Land Bank - as on 30 th June Cost ( Rs \ Crs ) Total Payable as on 30 th June Amt payable includes Rs.1,533 crs outstanding towards HSIIDC New Golf Course land payable over 13 half yearly Instilments. Break up of 413 msf of Land Resources available Particulars Dev. Co Rent. Co Hotel Total Break up Project Under Construction Notes 1. Short / medium term development potential land parcels not impacted 2. Projects disposed off ( 3 msf ) relate to non-core, non-strategic land parcels across various locations and amounts recovered thereof are a part of non core sales made in Q

22 Going Forward Further strengthening of cash flows / profitability via - Right pricing strategy Budgetary controls Value engineering Timely execution / deliveries Material Inflation could impact EBIDTA margins going forward Continue to focus on the Balance Sheet through debt reduction and improving the quality of the debt portfolio Focus on execution and sale of stock in existing projects, with selective launches in ensuing quarters Sale of commercial office towers to provide impetus to profitability Focus on non-core asset divestment to continue, leading to rationalization of our core real estate portfolio Given stable cash flows, Company is comfortable with a debt equity of 0.75x. On a longer term sustainable basis, this ratio is expected to be lower for FY11 targeting between 0.4x -0.5x Well positioned to capture increased momentum in leasing demand provided clarity on the Govt. policy front; improved leasing seen in Q1 22

23 EXECUTION UPDATE 23

24 NEW DELHI PROJECTS SIEL COMMERCIAL COMPLEX NEW DELHI OKHLA COMMERCIAL COMPLEX BKS MLCP, NEW DELHI 24

25 GURGAON PROJECTS Belaire DLF Phase V, Gurgaon Magnolias DLF Phase V, Gugaon NTH Sector-91, New Gurgaon Corporate Greens Sector 74A, New Gurgaon 25

26 REST OF INDIA PROJECTS KAKANAD HOMES - COCHIN JALANDHAR COMMERCIAL COMPLEX GARDEN CITY OMR, CHENNAI HOMES 26

27 SEZ PROJECTS SILOKHERA - GURGAON PUNE IT PARK PUNE 27

28 Thank You 28