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Q2 FY11 Analyst Presentation
10th Nov 2010
Q2 FY11 Analyst Presentation Q2 FY11 Analyst Presentation
1010thth Nov 2010Nov 2010
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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.
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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
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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
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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%
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Consolidated P&L – Q2 FY11
Above figures includes losses from non-core businesses .i.e. Hotels & the DLF Pramerica Life Insurance businesses
Sl.No. Consolidated Financials Rs. Crs. Percentage of Total Revenue Rs. Crs. Percentage of
Total Revenue Rs. Crs. Percentage of Total Revenue Rs. Crs.
Percentage of Total Revenue
A)1 Sales and Other Receipts 2,369 1,751 2,029 4,398 2 Other Income 151 59 132 283
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 2,489 531 Construction Cost 1,014 40 515 28 734 34 1,748 372 Staff cost 162 6 108 6 129 6 291 63 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 18G) Depreciation 154 6 76 4 150 7 304 6
H) Profit/loss before taxes 492 20 648 36 574 27 1,066 23I) 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
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Half year FY 11Q2 FY11 (reviewed) Q1 FY11 (reviewed)Q2 FY10 (review ed)
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
Note :
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Consolidated Balance Sheet – Q2 FY11
Schedule 30-Sep-10 30-Sep-09 30-Jun-10 31-Mar-10(Reviewed) (Unaudited) (Unaudited) (Audited)
Shareholders' funds 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
5 - - 297 251 50,496 40,362 51,421 52,989
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
1,277 2,018 1,258 1,268
5 77 79 - -
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
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
Less : Current liabilities and provisions
APPLICATION OF FUNDS
Goodwill on consolidation
Current assets, loans and advances Stocks
Deferred Tax Assets
Particulars As at
SOURCES OF FUNDS
Capital
Deferred tax liabilities (net)
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Consolidated Cash Flow – Q2 FY11
ForQ2 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
ParticularsPeriod ended
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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.
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Debt Position – Q2 FY11
All figures in Rs. CrsDebt Pref Cap. Consol.
Gross Opening Bal ( as on 1st July-10 ) 23375 1643 25,018Less / 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 30th Sept-10 ) 23239 474 23,713Less : Cash in hand 2,404
: Equity shown as Debt / JV Co. Debt 1,396Net Debt ( as on 30th Sept-10 ) 19,913Net Debt ( as on 30th June-10 ) 20,107
DEBT REPAYMENT ACTION PLANMandatory Debt Repayment in f.y.2010-11 2890Less : Paid till 30th Sep-10 1224
1666
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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
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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
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Business Operations
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Execution Capability
Handed over 1.32 msf of office space
Added 3.22 msf of Homes & office space
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
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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
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Dev CO.
ParticularsTotal 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 RateHomes (in Rs.sqft ) 6078 7328 6074
C.Complexes (in Rs.sqft ) 16671 12917 8965
Wt. Avg. Project CostHomes (in Rs.sqft ) 2491 2707 2667
C.Complexes (in Rs.sqft ) 5336 3355 2225
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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
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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
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RENT CO.
ParticularsTotal 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 RateOffice Building (in Rs.sqft ) 43 45 48
Retail Building (in Rs.sqft ) 64 145 77
Wt. Avg. Project CostOffice Building (in Rs.sqft ) 2110 2160 2173
Retail Building (in Rs.sqft ) 6310 7821 7530
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Our Land Resources
Area ( msf ) Other Land Hotel Land G.TotalGross Area – as on 1st July-10 402 11 413
Less : Projects Disposed off ( Net ) 7 0 7
Net Land Bank - as on 30th Sept-10 395 11 406
Cost ( Rs \ Crs )Total Payable – as on 30th Sept-10 1584 2 1586
Amt payable includes Rs.1533 crs outstanding towards HSIIDC New Golf Course land payable over 13 half yearlyInstallments.
Break up of 406 msf of Land Resources availableParticulars Dev. Co Rent. Co Hotel TotalBreak up 307 89 11 406Project Under Construction 41 16 0 57Notes
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.
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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
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EXECUTION UPDATEDELHI PROJECTS
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CAPITAL GREENS ~ NEW DELHI
OKHLA COMMERCIAL COMPLEXCAPITAL GREENS – PHASE –I, NEW DELHI
SIEL – COMMERCIAL COMPLEX, NEW DELHI SIEL – COMMERCIAL COMPLEX
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MLCP PROJECTS ~ NEW DELHI
SNM – MLCP, New Delhi BKS – MLCP, New Delhi
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EXECUTION UPDATEPHASE V PROJECTS
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PHASE V- DLF CITY , GURGAON
Magnolias – DLF Phase V, GugaonPark Place – DLF Phase V, Gurgaon
Belaire – DLF Phase V, Gurgaon Star Tower - Gurgaon
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EXECUTION UPDATENEW GURGAON PROJECTS
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NEW TOWN HEIGHTS – NEW GURGAON
NTH – Sector 86, New GurgaonNTH – Sector 91, New Gurgaon
NTH - Sector 90, New Gurgaon NTH – Sector -90, New Gurgaon
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EXPRESS GREENS & CORPORATE GREENS – NEW GURGAON
EXPRESS GREENS – M1A, NEW GURGAON
CORPORATE GREEN – SECTOR -74A, NEW GURGAON
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EXECUTION UPDATEREST OF INDIA PROJECTS
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REST OF INDIA PROJECTS
DLF GARDEN CITY INDOREBEGUR – BANGLORE
MALL OF INDIA - NOIDA KAKANAD HOMES
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REST OF INDIA PROJECTS
GARDEN CITY, OMR CHENNAI – HOMES DLF RIVER SIDE, VYTILLA KOCHI - HOMES
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Thank You