1 george wimpey plc analysts visit to milton keynes 11/12 october 2006

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George Wimpey PlcAnalysts Visit to Milton Keynes

11/12 October 2006

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George Wimpey PlcMarket and trading update Pete Redfern Group Chief Executive

Analyst Visit South Midlands - 12 October 20063

UK market and trading updateEnd September 2006

• Market continues to be stable and positive across the UK

• Sales rates/margins year to date are in line with our plans for the UK business

• 97% sold for 2006 target volume

• Small price gains are being achieved

• Changes in business are well underway– land strategy being delivered

– cost improvement plans in place


US market and trading updateEnd September 2006

• Market has weakened significantly since half year and 1 August results

• Current market conditions are poor– record stock levels driving price reductions

– US majors liquidating long land positions, through land sales and incentives

– US majors exiting land options and writing down positions

• Weakest markets are California, Nevada, Arizona, Florida, with Texas still sound

• However– changed position of Fed, with interest rates on hold

– general economic data remains sound

– new build starts have declined as realism takes hold

– September data (where available) shows first stabilising of stock position


Morrison Homes sales dataTo week 38

Q3 2006 H1 2006 H2 2005

Weekly net sales rate 0.48 0.76 0.96

Average no of outlets 113 102 97

Cancellation rate* 41% 26% 13%

* Average cancellation rate flagged by US majors 35% (Q2 2006 Source: Credit Suisse)


US short term market conditionsUpdated stock position

August 2006 June 2006 June 2005

Existing homes 3.92 m 3.73 m 2.65 m

Months’ supply 7.5 6.8 4.3

New homes 0.57 m 0.57 m 0.45 m

Months’ supply 6.6 6.3 4.2

Source: NAR / US Census Bureau

• Level of housing stock reaching 15 year high

• September data where available shows first signs of bottom


US short term stock positionAnnual trend

0

1

2

3

4

5

6

7

8

9

10

Jan-85

Jan-87

Jan-89

Jan-91

Jan-93

Jan-95

Jan-97

Jan-99

Jan-01

Jan-03

Jan-05

Mon

ths'

sup

ply

January 1985 – August 2006Source: US Census Bureau


• Generally price to market but Morrison do not need to follow land liquidators– average price reduction 10%, wide range around this

– competitor incentives up to $100k

– Morrison maintain a sales rate, but not chasing volume

– combination of incentives and now some headline reductions

• Strong focus on ensuring affordability– financing led deals

– some spec. adjustments

– medium term may be some product shift

• Q4 2006/Q1 2007 price positioning will depend on

– pricing actions of competitors

– underlying change in absorptions

Morrison HomesForward tactics - sales


• Land values are reducing and terms are improving

• Some way to go in most markets before reaches current market price

• Cash pressure yet to bite on most land sellers

• Large land pipelines means future recovery in land price will probably be slow

US land marketCurrent position


End 2005 * End 2000 *

Toll Brothers 9.5 years 7.7 years

Pulte 7.9 years 3.8 years

Lennar 7.9 years 7.1 years

NVR 7.6 years 3.6 years

Centex 6.8 years 3.9 years

DR Horton 6.6 years 4.4 years

Morrison 4.8 years 3.8 years

Ryland 4.5 years 3.7 years

Pipeline landbanksUS majors’ landbanks

* Based on closing volumes in the year


• Withdraw from most new land purchases until value rebases– exceptions in Texas

– exceptions for A locations that reflect current pricing

– Q3 new approvals 706, of which 55% Texas

• Review existing land positions– non committed deals for current market value

– option and deposited deals for economic value

– owned deals for NRV (2005/6 purchases)

• Short term slow down of land purchases can be managed with current landbank

• Medium term opportunities for purchase from under pressure sellers

Morrison HomesForward tactics - land


• Current market conditions poor and pricing worsening

• Action of US majors is impacting prices and volumes in short term – likely to continue into 2007

• Significant majority of Morrison land is well priced

– helped by cautious approach in 2005/6, particularly in California,

– some asset issues possible in year end review

– dependent on pricing patterns in Q4/Q1 in certain markets

• Underlying value intact

– employment and economic data still strong

– Morrison markets still seeing good job growth

– September re-sales listing shows signs of peaking

– market conditions will provide future opportunities for real growth

US marketConclusions


• Continuing strong performance in the UK

• Tougher trading conditions in the US

• For the group as a whole– trading for the year in line with our expectations – assuming no further deterioration in the US market– assumes no material asset adjustments in US market

George Wimpey PlcGroup outlook

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George Wimpey UKStrategy Ian Sutcliffe Managing Director


George Wimpey UKStrategic vision

• To have the lowest unit land cost of any major builder

• To create the most value in the planning process

• To be the most efficient builder

• To gain the maximum value for every plot sold

• To have the lowest, fit for purpose cost base

• To have the best people, who never want to leave

• To have a culture of delivering as advertised every time


FinancialObjectives

Land

Product

People

Sales & Marketing

IT

Health & Safety

Cost Management

George Wimpey UKStrategic framework

Core Strategies

Key Enablers

PBIT

Volume

OP Margin


FinancialObjectives

Land

Product

People

Sales & Marketing

IT

Health & Safety

Cost Management

George Wimpey UKKey areas of focus

Core Strategies

Key Enablers

PBIT

Volume

OP Margin


George Wimpey UKTotal current landbank

46,000

47,000

48,000

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

To

tal p

lots

2004 2005 2006


George Wimpey UKCurrent land use

Short term land• 1-2 years• nearer planning completion • lower risk/lower margin

Medium term land• 2-5 years• variable stages of planning• risks variable

Long term land• 5-10 years • little planning• higher risk/higher reward

10%

66%

24%


George Wimpey UKLand value chainC

umul

ativ

e %

val

ue o

f fin

al s

ales

val

ue

100 %

+2 Yrs-10 Yrs -5 Yrs -2 Yrs Start

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

Ma

rke

tin

g a

nd

Se

llin

g

Plo

t S

ub

sti

tuti

on

Gro

un

d w

ork

s a

nd

Bu

ild

De

tail

ed

Pla

nn

ing

Pe

rmis

sio

n

Infr

as

tru

ctu

re a

nd

su

bd

ivis

ion

Val

ue

En

gin

eeri

ng

Ou

tlin

e P

lan

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erm

iss

ion

An

nu

al

Mo

nit

ori

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R

ep

ort

Ch

an

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of

Us

e

LD

F A

llo

ca

tio

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Ba

se

La

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RS

S

Land Developers

George Wimpey UK


George Wimpey UKLand strategy

Issues

• Unit land input cost too high, too much short term land

• Size and quality of the landbank is insufficient for growth

• Planning timeline extending with more complex schemes

• Need for greater capital efficiency to fund growth

Actions

• Need to get further back in the value chain

• Continue to improve discipline around short term land buying

• Upgrade planning skills and major project development

• Restructuring of the overall landbank


George Wimpey UKLand strategy

How will we get there?

• Focus– creating a dedicated land development resource specifically for long and medium term

land

• Process– proactively targeting opportunities, detailed value engineering and risk management

• Competence– develop capability to find, negotiate, promote and project manage through the very best

people


George Wimpey UK Landbank split

2004 2005 2006 2007 2008 2009

Short term Medium term Long term


George Wimpey UK2006 land acquisitions

Business unit Site name Month Total scope

Cost per plot

Cost per plot % asp

W Midlands Peugeot Works May 1,120 40.4 24.9%

E London UEL, Barking March 525 44.6 21.3%

E London Old church Hospital April 520 50.4 30.1%

S Wales Rodney Parade June 480 11.5 8.5%

N Yorkshire Thornaby Gas Depot March 326 35.0 27.3%

S Yorkshire Darnall January 318 29.9 21.9%

N Midlands Springfield Brewery February 307 26.2 21.5%

Midland St Modwens Developments January 272 44.1 30.8%

W London Wellesbourne Campus February 260 86.4 39.1%

N Thames Oaklands August 251 49.8 30.5%

South East Eastbourne coach park August 225 20.0 12.4%

W London Trout Road January 218 100.9 43.5%

N Thames Sunday Market site June 199 50.4 35.1%

North West St Benedict’s School June 188 31.9 24.9%

E Midlands Bestwood April 175 58.9 33.3%


George Wimpey UK Sales and marketing

Issues

• Little demonstrable value added from the brand

• Costly visitor generation with fragmenting media viewing

• Inconsistent sales areas not maximising conversion

• Need for a more structured sales process to capture the maximum value

Actions

• Sharper brand positioning focussed on key benefits

• Full review of marketing spend effectiveness

• Create initial impact and a desire to purchase

• Build capability to deliver a consistent sense of urgency


George Wimpey UKBrand strategy - framework

Laing(Premium)

10-20%

George Wimpey (Mainstream)

60-80%

G2(Value)10-20%

EmotionalPositioning

RationalSupport

Core Brand ValuesBuild Quality, Customer Care, Cost Efficiency and Processes

(The Way We Do Things – Common to all sub brands)

ExclusiveAspirational

Distinct

LocationPublic RealmSpecification

Floor PlansOptionalityDetailing

PricingFunctionality

Efficiency

EntryLevel

Affordability

ValueFor

Money


George Wimpey UKBrand positioning

• Clearly defined customer offer

• Affordable, functional, fun

• Non traditional build

• Non traditional sales

• Low cost, fast cash turn

• All 60 on pilot scheme sold on the first day


George Wimpey UK Cost management

Issues

• Build cost movement sq ft basis8.1% AAI 2002 – 2005

• Fragmented procurement not leveraging buying power

• Direct selling cost increases6.8% AAI 2002 – 2005

2005 total cost

Build 59.3%

Land 30.1%

Overhead6.0%

Selling4.6%


George Wimpey UKCost management

Actions

• Developing an on going cost driven mind set

• Challenge every process and line item

• Identification of each saving initiative– 50+ initiatives

• Senior management ownership of each cost area

• Overall framework established to track benefits

• Fully integrated IT system rolled out in 2007/8


George Wimpey UK Cost management initiative

Waste Management

• Cost champion Ed Woods

• Target savings £1.2 m

• Identification date November 2006

• Implementation date January 2007 (pilot September 2006)

• Identified savings 2006 - £300,000 Total £1.2m

Key actions Measure and track

1. Decrease total waste taken off siteNo skips x £/skip

2. Segregate inert and active waste Land fill tax

3. Increase use of REL v builder skips £/skip

4. Reduce overall administration Administration charge

5. Establish ongoing measurement,ownership and reporting


George Wimpey UK People strategy

Issues

• Attraction and development

• Succession planning

• Talent management

• Retention of key staff


George Wimpey UK People strategy

Actions

• Double the annual graduate recruitment intake

• Identify key development roles

• Management development programmes and exposure– position people for succession

• Remuneration more directly linked to performance– appraisal rating = incentive award

• Recognition for the champions of our business


George Wimpey UK Summary and conclusions

We have a clear strategic plan

• Landbank quality is our top priority

• Structured approach to cost management

• Sharper sales and marketing to capture value

• Increased investment in people

All areas are already showing strong results


George Wimpey UK Strategy

Any questions?

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George Wimpey South Midlands

Peter Gurr Managing Director


George Wimpey South Midlands

• Peter Gurr – MD George Wimpey South Midlands appointed June 2004– 13 years experience as MD within industry

• GW South Midlands opened in 1985 as Tarmac Homes business

• By June 2004 stronger business focus required – land strategy needed clarifying

– geographic spread too broad

– limited presence in key regional growth areas - Milton Keynes

– people set in their ways, resistant to change

• Landbank depleted – at the end of 2003

• 1,027 plots = less than 2 years’ land supply,

• only 400 plots with planning


George Wimpey South MidlandsStrategy to create a balanced business

• Immediate action taken to strengthen landbank – Develop a clear land strategy to refocus on key areas of

short term land (1-2 years)

medium term land (2-5 years)

long term land (strategic) (5 years +)

• Appointed new Land and Planning Team – Director appointed October 2004

– Land Managers appointed September 2004

• Developed relationships with – local/national land agents

– strategic alliances with EP and Milton Keynes Council

• Developed a new product range– PPG3 compliant products, increased standardisation


George Wimpey South MidlandsCreating a balanced business

• Since June 2004 – 19 new sites purchased

– 4,153 plots

• Short term 804 plots

• Medium 3,149 plots

• Long term 200 plots

• Gross margin achieved on land bought pre June 2004: 16%

• Gross margin achieved on land bought post June 2004: 22%


George Wimpey South Midlands Landbank

2004 2005 2006 2007* 2008*

Total landbank end of prior year 1,027 1,749 1,695 2,000 2,100

Opening plot with planning for year 398 422 534 750 900

Total volume 427 484 565* 540 600

* Estimated from current budgets


George Wimpey South MidlandsLand acquisitions

Short term sites – Pages Priory, Leighton Buzzard (600 units) – part of Pratts Pitt (1,500 units)

– Eyebrook Vale, Corby (75) – part of Oakley Vale masterplan (+ 3,000 units)

Medium term sites – Design for Manufacture competition winner

• awarded Oxley Park site from English Partnerships (145 units)

– Parklands – Woburn Sands (576 units)

– Newton Leys (1,650 units)

– Stotfold (300 units)

Long term / strategic– Berryfields, Aylesbury (1,800 units)


George Wimpey South Midlands Shape of the landbank

0

500

1000

1500

2000

2500

2004 2005 2006 2007 2008 2009

Short term Medium term Long term


George Wimpey South MidlandsThe future business

• Financially secure– certainty of financial results, not reliant on market conditions

– greater flexibility to balance sales rates and margins

• Clearly defined geographic boundaries– well positioned in areas of greatest market demand

– established relationships with land agents, planning authorities and strategic partners

• Established product range– introduced preferred house type range

– secure cost base

• Focussed organisation – established as a ‘team’

– internal recognition for excellence in people development

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George Wimpey PlcAnalysts Visit to Milton Keynes

11/12 October 2006

1 george wimpey plc analysts visit to milton keynes 11/12 october 2006

Documents

us market

land price

land sales

south midlands

stock position slide

uk market

us census bureau slide

tactics sales slide