Q2 FY11 Analyst Presentation 10 th Nov 2010 1
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
Q2 FY 11.. update The year 2010 started on an optimistic note with a gradually stabilizing global economy. Robust economic growth, measured policy actions and global liquidity flows continue to provide strong visibility for the India growth story through H1 FY 11. Real estate market remains healthy across all segments with capital Flows to the sector also witnessing an increase i.e. IPO s / PE deals etc Homes Volumes sustaining despite price increases across most locations as consumers regained confidence Capital values witnessed an increase across high end and mid range segments esp. in city center locations Offices Commercial office market witnessing growth Stable rental values & reducing inventory levels PAN India augur well for further growth in the segment Retail Mall rentals remained stable over the last quarter across most micro markets Increased traction by prospective tenants, existing & new, as consumer spend increases Industry Outlook - H211 Pricing discipline keeping in view the absorption capacity, important to sustain ongoing growth Launch momentum to be more visible in H2 FY 11 Further policy action on interest rates / provisioning front could become a concern Commodity / Labour price increases may impact input cost / margins 3
Performance of Company Q2 FY11 Dev Co: 2.08 msf gross sales booked vs 1.9 msf in Q1 11. In Q2 10, the sales booking amounted to 2.74 msf Phase V 0.50 msf Panchkula, Chandigarh 0.51 msf New Gurgaon, OMR Chennai, Begur Bangalore, MICO Chennai homes and commercial complexes 1.07 msf Rent Co : 1.56 msf of leasing vs 0.98 msf in Q1 11. In Q2 10 leasing was at ( 0.44 ) msf. Total achieved > 2.54 msf during H1 11 The commercial office market witnessing signs of stability & growth Rentals across most locations stable. Cumulative leasing as on date stands at 22.05 msf. New lease rentals still off peak 08 levels. Divestment of non-core assets - Rs. 413 Crs in the quarter. Total achieved for H1 11 Rs. 707 Crs 3.22 msf new construction started during the Qtr in Offices and Homes. Cumulative construction stands at 57 msf Delivery- 1.32 msf handed over during the Qtr in the offices segment 4
Profit & Loss Summary Q2 FY11 Q2 FY 11 vs Q1 FY 11 Sales(incl Other Income) at Rs 2520 Cr, compared to Rs 2161 Cr. Net profit at Rs 418 Cr, as against Rs 411 Cr EBIDTA margins at 42% versus 51% Profitability All figures in Rs. Crs Particulars Q2 11 Q1 11 Change Q2 11 Q2 10 Change Sales 2520 2161 17% 2520 1810 39% EBIDTA ( Core Operations ) 1153 1164-1% 1153 1020 13% EBIDTA ( Consolidated ) 1080 1112-3% 1080 973 11% % 42 51 42 53 PBT ( Consolidated ) 492 574-14% 492 648-24% PAT 418 411 2% 418 440-5% 5
Consolidated P&L Q2 FY11 Sl.No. Consolidated Financials Rs. Crs. Q2 FY11 (reviewed) Percentage of Total Revenue Q2 FY10 (review ed) Rs. Crs. Percentage of Total Revenue Q1 FY11 (reviewed) Rs. Crs. Percentage of Total Revenue A) 1 Sales and Other Receipts 2,369 1,751 2,029 4,398 2 Other Income 151 59 132 283 Half year FY 11 Percentage Rs. Crs. of Total Revenue Total Income(A1+A2) 2,520 100% 1,810 100% 2,161 100% 4,681 100% B) Total Expenditure(B1+B2+B3) 1,440 57 837 46 1,049 49 2,489 53 1 Construction Cost 1,014 40 515 28 734 34 1,748 37 2 Staff cost 162 6 108 6 129 6 291 6 3 Other Expenditure 264 10 214 12 186 9 450 10 C) Gross Profit Margin(%) 60% 72% 66% 63% D) EBITDA (D/A1) 1,080 43 973 54 1,112 51 2,192 47 E) EBIDTA ( Margin) 42% 53% 51% 46% F) Financial charges ( Gross ) 434 17 249 14 388 18 822 18 G) Depreciation 154 6 76 4 150 7 304 6 H) Profit/loss before taxes 492 20 648 36 574 27 1,066 23 I) Taxes expense 73 3 191 11 168 8 241 J) Prior period expense/(income) (net) (6) 0 5 0 (3) 0 (9) K) Net Profit after Taxes before Minority Interest 425 17 452 25 409 19 834 18 L) Minority Interest (7) 0 (12) -1 (3) 0 (10) M) Profit/(losss) of Associates (0) 0 0 0 5 0 5 N) Net Profit 418 17 440 24 411 19 829 18 Note : 1 2 Construction Cost Includes Cost of Land, Plots and Constructed Properties and Cos t of Reve nue-others Gross Profit Margin = (Total Income - Construction Cost) / Total Incom e Above figures includes losses from non-core businesses.i.e. Hotels & the DLF Pramerica Life Insurance businesses 6
Consolidated Balance Sheet Q2 FY11 Particulars As at Schedule 30-Sep-10 30-Sep-09 30-Jun-10 31-Mar-10 (Review ed) (Unaudited) (Unaudited) (Audited) SOURCES OF FUNDS Shareholders' funds Capital 1 2,423 1,735 3,361 6,259 Reserves and surplus 2 24,232 23,269 23,736 24,173 26,656 25,005 27,096 30,433 Minority Interests 602 629 653 628 Loan funds Secured loans 3 20,810 13,297 20,946 19,302 Unsecured loans 4 2,428 1,431 2,428 2,375 Deferred tax liabilities (net) 5 - - 297 251 50,496 40,362 51,421 52,989 APPLICATION OF FUNDS Fixed assets 6 Gross block 18,502 8,700 18,197 17,884 Less: Depreciation 1,630 725 1,472 1,325 Net block 16,872 7,975 16,725 16,558 Capital work in progress 9,351 6,374 11,079 11,129 Investments 7 1,682 1,542 3,006 5,505 Goodwill on consolidation Deferred Tax Assets 1,277 2,018 1,258 1,268 5 77 79 - - Current assets, loans and advances Stocks 8 14,397 11,392 13,096 12,481 Sundry debtors 9 1,918 1,567 1,438 1,619 Cash and bank balances 10 1,556 634 1,297 928 Loans and advances 11 7,548 8,306 7,364 7,593 Other Current Assets 12 4,734 7,306 4,768 4,685 30,152 29,204 27,963 27,306 Less : Current liabilities and provisions Liabilities 13 5,162 3,008 5,059 4,637 Provisions 14 3,752 3,823 3,552 4,140 8,915 6,831 8,611 8,777 Net current assets 21,238 22,374 19,353 18,529 50,496 40,362 51,421 52,989 7
Consolidated Cash Flow Q2 FY11 For Period ended Particulars Q2 30-Sep-10 30-Jun-10 31-Mar-10 30-Sep-09 A. Cash flow from operating activities: Net profit before tax 492 1,065 573 2,505 1,123 Adjustments for: Depreciation 154 304 150 325 152 Loss/(profit) on sale of fixed assets, net 11 12 1 (58) - Provision for doubtful debts/unclaimed balances written back and others 22 19 (3) 82 46 Loss/(profit) on sale of current Investments (74) (86) (12) (9) 1 Amortisation cost of Employee Stock Option 15 30 15 42 24 Interest/gurantee expense 433 822 389 1,110 536 Interest/dividend income (75) (172) (97) (256) (125) - Operating profit before working capital changes 978 1,994 1,016 3,741 1,757 Adjustments for: - Trade and other receivables (326) (410) (84) 5,892 2,302 Inventories 266 (123) (389) (913) (276) Trade and other payables 84 455 371 764 (1,231) Taxes paid (177) (444) (267) (856) (184) - Net cash (used in) / from operating activities 825 1,472 647 8,628 2,368 - B. Cash flow from investing activities: - Sale/Purchases of fixed assets(net) (8) (180) (172) (13,324) (556) Interest/Dividend received 22 144 122 127 86 Sale/Purchases of Investment(net) 1,364 3,913 2,549 (3,109) 48 Net cash used in investing activities 1,378 3,877 2,499 (16,306) (422) C. Cash flow from financing activities: - Proceeds/(repayment) from long term borrowings (net) (255) 1,547 1,802 6,025 (1,223) Proceeds from issuance of prefernce shares (1,145) (4,887) (3,742) 4,524 - Proceeds of short term borrowings (net) 125 18 (107) (644) (393) Interest paid (630) (1,180) (550) (2,104) (845) Dividend Paid (54) (260) (206) (383) (1) Increase in share capital 14 14 - (1) (1) Net cash used in financing activities (1,945) (4,748) (2,803) 7,417 (2,463) Net increase / (decrease) in cash and cash equivalents 258 601 342 (261) (518) - Opening cash and cash equivalents - 835 835 1,096 1,096 Closing cash and cash equivalents 258 1,436 1,178 835 578 Net Increase / (decrease) 258 601 342 (261) (518) Difference 8
Cashflow Statement Summary Net Investable surplus during Q2 FY 11 is Rs 516 Crs Cashflow to strengthen further with the scale up of execution & new launches (plotted developments and high end projects.i.e. Mumbai, Cochin, Gurgaon,etc) Cost efficiencies planned last year beginning to see results on overheads, but increase in input prices beginning to impact Projected net cashflow from operations & recoveries expected to be between Rs. 750 to 1000 Crs per Qtr. 9
Debt Position Q2 FY11 All figures in Rs. Crs Debt Pref Cap. Consol. Gross Opening Bal ( as on 1 st July-10 ) 23375 1643 25,018 Less / Add : Repaid during Q2-11 (2,229) (2229) : New loan availed 2,033 2033 : Repayment of Pref. Shares (1169) (1169) : Debt Increase due to Consolidation 60 60 Gross Debt position ( as on 30 th Sept-10 ) 23239 474 23,713 Less : Cash in hand 2,404 : Equity shown as Debt / JV Co. Debt 1,396 Net Debt ( as on 30 th Sept-10 ) 19,913 Net Debt ( as on 30 th June-10 ) 20,107 DEBT REPAYMENT ACTION PLAN Mandatory Debt Repayment in f.y.2010-11 2890 Less : Paid till 30 th Sep-10 1224 1666 10
Debt De-Leveraging Plan Continued Focus on de-leveraging continues with monies from operational cash flows & non core asset divestments On target with divestment plans of non core assets / businesses over the medium term Slew of launches in H2 11 to substantially improve cashflow from Operations Increased percentage of construction to further add momentum to cashflows Reduction in Cost of Debt Average cost of debt at 10.5% Sept 2010 Current net debt/equity ratio: 0.73 Continue to target net debt equity of 0.5x versus a peak range of 0.65x - 0.75x 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 Explore possibilities for further reduction of cost of debt 11
Divestments Plans of Non-core assets / businesses Since, the start against medium term target of Rs. 5500 Crs achieved Rs. 2507 Crs in 18 months Achieved in H1 FY11 Rs. 707 Crs Divestment of the non core retail brands business Non core / non strategic land sales in select cities Total expected to be garnered over next 12-18 months approx. Rs. 2000 Cr Proceeds from further land bank rationalization Refunds from state government authorities 12
Business Operations 13
Execution Capability Area in msf Region Q2 11 Q1 11 Q2 10 Gurgaon 22 21 19 Super Metro 7 5 3 Rest of India 12 12 9 For Rent Co 16 17 17 57 55 49 Handed over 1.32 msf of office space Added 3.22 msf of Homes & office space 14
Dev Co. Homes Q2-FY 11 witnessed sales booking of 2.08 msf, comprising 1.57 msf of existing stock & 0.51 msf of new sales from new launches in Panchkula and Shimla New launches in H1 low as approvals are awaited Launch of plotted development in Gurgaon in Nov-2010 Expected launches in H211 On track to meet planned sales of > 12 msf in 2011 Mumbai NTC mills project expected launch once all approvals are in place Plotted development Launches of 4-5 msf planned in Gurgaon & Chandigarh Premium project launches and plotted development to provide impetus to margins and cashflows 15
Dev CO. Particulars Total Mn sqft Q2-11 Q2-10 Q1-11 Sales Status Opening Balance 40.24 30.09 38.85 Add:- Sale Booked During the Qty 2.08 2.74 1.90 Less : Handed over 0.00 0.00 0.51 Closing Balance 41.95 32.82 40.24 Under Construction Opening Balance 38.32 25.01 38.83 New Launches / Additions 2.37 6.56 0.00 Less:- Handed over 0.00 0.00 0.51 Closing Balance 40.69 31.57 38.32 Wt. Avg. Sale Rate Homes (in Rs.sqft ) 6078 7328 6074 C.Complexes (in Rs.sqft ) 16671 12917 8965 Wt. Avg. Project Cost Homes (in Rs.sqft ) 2491 2707 2667 C.Complexes (in Rs.sqft ) 5336 3355 2225 16
Rent Co. Offices Total Lease portfolio of 20.76 msf Q2 11 Rs. 266 Crs & H1 2011 Rs 521 Crs of rental income Strong momentum in leasing 1.56 msf done during Q2 and 2.54 msf done in H1 2011. Initial target for FY 11 was at 3-4 msf Average rentals across locations at Rs.43 psf pm for current leasing done rentals stabilizing across micro markets ( e.g. Gurgaon current leasing at Rs 55 psf pm). On track to meet the guidance of 3-4 msf for FY 11 Robust macro environment & enhanced expectations to have positive impact on demand 17
Rent Co. Retail Malls Total Lease portfolio of 1.29 msf Q2 11 Rs. 48 Crs & H1 2011 Rs 88 Crs of rental income Mall rentals remained stable over the last quarter across most micro markets With rising consumers spending retailers showing visible signs of business confidence to further expand operations Enquiries by prospective / existing tenants increasing on QoQ basis, however leasing uptake across main streets and malls is expected to be limited in the near term FDI multi brand retail policy can be an upside for this segment 18
RENT CO. Particulars Total Mn sqft Q2-11 Q2-10 Q1-11 Lease Status Opening Balance 20.38 16.95 19.40 Add:- Lease Booked During the Qty 2.01 0.09 1.17 Less :- Cancellation / Adjustment (0.33) (0.53) (0.18) Closing Balance 22.06 16.51 20.38 Under Construction Opening Balance 16.27 17.13 17.13 New Launches / Additions 0.85 0.00 0.00 Less:- Handed over 1.32 0.00 0.86 Less :- Suspension/Adju 0.00 0.00 0.00 Closing Balance 15.80 17.13 16.27 Wt. Avg. Leasing Rate Office Building (in Rs.sqft ) 43 45 48 Retail Building (in Rs.sqft ) 64 145 77 Wt. Avg. Project Cost Office Building (in Rs.sqft ) 2110 2160 2173 Retail Building (in Rs.sqft ) 6310 7821 7530 19
Our Land Resources Area ( msf ) Other Land Hotel Land G.Total Gross Area as on 1 st July-10 402 11 413 Less : Projects Disposed off ( Net ) 7 0 7 Net Land Bank - as on 30 th Sept-10 395 11 406 Cost ( Rs \ Crs ) Total Payable as on 30 th Sept-10 1584 2 1586 Amt payable includes Rs.1533 crs outstanding towards HSIIDC New Golf Course land payable over 13 half yearly Installments. Break up of 406 msf of Land Resources available Particulars Dev. Co Rent. Co Hotel Total Break up 307 89 11 406 Project Under Construction 41 16 0 57 Notes 1. High potential & short / medium development potential not affected by above actions. 2. Project disposed off relate to Non core non strategic land Parcels across various locations and amount recovered thereof is part & parcel of recovery during Q2-11. 20
Going Forward Maintain EBIDTA at stable levels in the near term with further strengthening of cash flows. However, increased commodity prices may have an adverse impact in the medium term Increase pace of launches in ensuing quarters while ensuring appropriate pricing and demand parameters Focus on launches across all segments including plotted development in the residential vertical, after receiving all approvals in place Focus on non-core asset divestment to continue leading to rationalization of our core real estate portfolio Continue to focus on the Balance Sheet through debt reduction and improving the quality of the debt portfolio Given stable cash flows, Company is comfortable with a debt equity of 0.75x target for FY 11 between 0.4x -0.5x 21
EXECUTION UPDATE DELHI PROJECTS 22
CAPITAL GREENS ~ NEW DELHI CAPITAL GREENS PHASE I, NEW DELHI OKHLA COMMERCIAL COMPLEX SIEL COMMERCIAL COMPLEX, NEW DELHI SIEL COMMERCIAL COMPLEX 23
MLCP PROJECTS ~ NEW DELHI SNM MLCP, New Delhi BKS MLCP, New Delhi 24
EXECUTION UPDATE PHASE V PROJECTS 25
PHASE V- DLF CITY, GURGAON Park Place DLF Phase V, Gurgaon Magnolias DLF Phase V, Gugaon Belaire DLF Phase V, Gurgaon Star Tower - Gurgaon 26
EXECUTION UPDATE NEW GURGAON PROJECTS 27
NEW TOWN HEIGHTS NEW GURGAON NTH Sector 91, New Gurgaon NTH Sector 86, New Gurgaon NTH - Sector 90, New Gurgaon NTH Sector -90, New Gurgaon 28
EXPRESS GREENS & CORPORATE GREENS NEW GURGAON EXPRESS GREENS M1A, NEW GURGAON CORPORATE GREEN SECTOR -74A, NEW GURGAON 29
EXECUTION UPDATE REST OF INDIA PROJECTS 30
REST OF INDIA PROJECTS BEGUR BANGLORE DLF GARDEN CITY INDORE MALL OF INDIA - NOIDA KAKANAD HOMES 31
REST OF INDIA PROJECTS GARDEN CITY, OMR CHENNAI HOMES DLF RIVER SIDE, VYTILLA KOCHI - HOMES 32
Thank You 33