Unlocking the Value

1. Unlocking the Value Peter Johnson George Wimpey PLC 27 April 2001

2. Unlocking the Value • George Wimpey has earned lower margins than its main competitors - there is no good reason why it should continue to do so. • George Wimpey has the potential to compete with and better the performance of its peers. My objective today is to show you how we are bringing this about.

3. Agenda • Wimpey today - where we start from • The sources of value and how we will unlock them

4. Wimpey Today

5. 2000 1999 % Change Revenue £m Operating Profit £m Profit Before Tax £m Tax % Earnings per Share p Dividend per Share p Wimpey today • 2000 Results - P&L Account 1702 1527 +11% 170 119 +43% 146 113 +30% 24 22 N/A 30.0 24.5 +22% 7.5 6.6 +14%

6. Wimpey today • 2000 Results - Balance Sheet 2000 1999 Shareholders Funds £m 673 584 Net Debt £m 220 179 Capital Employed £m 893 763 Shareholders Funds p 182 158 Gearing % 33 31 Interest Cover 7.1 7.4

7. Wimpey today • 2000 Completions Completions Average Price No. % Change £/$000’s % Change UK PD 10823 -7% £112 +16% UK Social 614 -19% £50 +6% UK Total 11437 -8% £109 +16% USA Total 2638 +2% $227 +15% Group Total 14175 -5% £116 +16%

8. Wimpey today • Segmental Analysis Revenue Operating Profit Operating Margin £m % Change £m % Change % % Change UK 1254 +8.0% 143 +40% 11.4 +2.6% USA 405 +22% 35 +29% 8.6 +0.5% Corp. 43 (7) Group 1702 +10% 170 +37% 10.0 +2.0%

9. The sources of increased value • Land: strengthening our land-bank • Building: building high quality and reducing costs • Product: widening our range, better pricing and options • Overheads: getting the benefits from restructuring • USA: the growth potential and lessons to learn • Partners and people: working with the best

10. Land

11. We were competing internally reacting to local demands of regions trying to get 29 regions to critical mass rationing on first come first served basis Result was land in the wrong place bought at poor margins We now have prioritised land acquisitions based on our business strategy all regions with critical mass workable landbanks in all regions raised our target returns Result is we are buying land where we want it at much better margins Strengthening our land bank

12. Strengthening our land bank • Completions Before and After • Regional Businesses now up to critical mass 2001 Before 2001 After No of BU’s Ave. PC’s per BU No of BU’s Ave. PC’s per BU Scotland 4 390 2 780 North 8 420 6 560 Midlands 8 390 6 520 South 9 370 7 480 UK Total 29 390 21 540

13. Short Term Land • Short-term land bank: • 24000 plots owned • 9450 plots controlled • total 33450 equals 3.1 years supply • 2000 UK land spend of £420 million increased owned plots by 1350 (6%)

14. 6,100 7,900 6,550 2,250 4,200 2,800 3,650 Short Term Land Short Term Land Bank at end 2000 (Plots) Total = 33,450 Plots

15. 4.2 3.7 2.8 1.9 2.8 2.5 2.9 Short Term Land Short Term Land Bank at end 2000 (Years) Average = 3.1 Years

16. Short Term Land Cost of Short Term Land Bank at end 2000 (£millions) Total = 689.7m 42.2m 85.9m 50.3m 158.6m 161.7m 65.3m 125.7m

17. Strategic Land

18. We were managing strategic land outside UK housing business focusing on number of plots, not when they were available for use and on adding plots not getting planning on existing plots we had no geographical strategy and had not amended approach in light of PPG3 We now have fully integrated strategic land into the UK business created a smaller, more focused resource working closely with our regions prioritised action to bring existing sites through planning focused our efforts on high value and brownfield sites Strategic Land

19. Scotland & North East 5.4m 1.6m North West & Yorkshire West Midlands 2.3m East Midlands 3.5m East & South East 1.8m South 21.2m Total 35.8m Strategic Land Capital Locked Up in Strategic Land

20. Stategic Land Where is our Strategic Land? • Category 1 Sites • (developable within 2-3 years) • Total Number of Sites = 89 • Average estimated plots per site = 150 • Total estimated plots = 13350 22 6 9 13 8 31

21. 32 1 22 12 15 26 Stategic Land Where is our Strategic Land? • Category 2 Sites • (developable within 5 years) • Total Number of Sites = 108 • Average estimated plots per site = 175 • Total estimated plots = 18900

22. Stategic Land Key Sites

23. Bradbury Estate - A Brownfield Site Stategic Land Key Sites

24. Eastanton Manor Farm - A Greenfield Site Town Andover County Hampshire Gross Area 253 Acres Net Area 109 Acres Expected Plots 1350 Stategic Land Key Sites

25. Building

26. Building high quality and reducing costs • We build well • Our competitors say so • The NHBC says so • The facts confirm they’re right

27. 1999 2000 Building high quality and reducing costs NHBC Quality Awards

28. 1999 2000 Building high quality and reducing costs NHBC Top 100 Site Manager Awards

29. Building high quality and reducing costs Housing Forum Customer Satisfaction Survey George Wimpey UK National Average Recommend without being asked 29% 20% I am pleased I bought this home 94% 85% Quality of construction is very good 46% 36% Overall I am very satisfied 56% 45% Overall I am fairly or very satisfied 93% 87% Survey involved over 10,000 Home Buyers Nationally

30. Building high quality and reducing costs • Build Costs • McLean Build Costs more than 10% cheaper than Wimpey • Build time • McLean 12 Weeks • Wimpey 16 -19 Weeks

31. We were using Wimpey central design: expensive design features not adapted to local markets costly to adapt to PPG3 We now have local design (per McLean) savings identified adapted locally easier for PPG3 benchmark costs Building high quality and reducing costs House Design

32. -Reduction of special features - £600 -Reduction of roof complexity - £1000 -Positioning - £500 Building high quality and reducing costs Redesign of Vaudeville House Type by Leicester Office Before Front Right After

33. -Reduction of special features - 600 -Reduction of roof complexity - £1000 Total Saving = £2,100 Building high quality and reducing costs Redesign of Vaudeville House Type by Leicester Office Before Front Right After

34. We were using Wimpey central buying: inflexible service not suited to local needs inhibited upgrades high prices Building high quality and reducing costs Procurement

35. Building high quality and reducing costs Procurement • Central Purchasing not working • Bricks • Wimpey National deal cost £12 per thousand more than McLean • Sanitary Ware • McLean co-ordinated approach bought sanitary ware sets £300 cheaper than Wimpey

36. We were using Wimpey central buying: inflexible service not suited to local needs inhibited upgrades high prices We now have Product Consultation Groups national deals supported by regional management national scale with knowledge on the ground procurement co-ordinated with site/sub-contractor needs benchmarking of costs Building high quality and reducing costs Procurement

37. Product

38. Product - Range • Continued increase in product selling price • Continued progression to larger house types • Continued increase in Bespoke

39. Product - Range Movement of product range to higher selling prices

40. Product - Range Product Mix

41. We were We now have common price and market data plans to exploit full product range where it is needed established project teams to exploit experience on “options” as well as on Bespoke developments Improved selling and marketing • not sharing pricing information between Wimpey and McLean • not working together on mixed outlet developments • not transferring experience of successes on options • not sharing market, competitor or customer data

42. Take up as % of PC’s Option >40% Downlights Kitchen Flooring - Ceramic Carpets 25%-40% Electrical Sockets/Pointing Coving Glazed Doors 20%-25% Garden Landscaping Burglar Alarms Fire Surrounds Additional Lighting Product - Options Top 10 Options for 2000 Margin on Options between 20% and 30%

43. e.g. • Double Garage Sales Centre - Yorkshire Product - Options • Taking ideas from regions to form consistent approach Options Project Team

44. Product - Options • Taking ideas from regions to form consistent approach e.g. • Double Garage Sales Centre - Yorkshire Options Project Team • Car Style Specification Sheet - Bristol

45. Product - Options • Taking ideas from regions to form consistent approach e.g. • Double Garage Sales Centre - Yorkshire • Car Style Specification Sheet - Bristol • Commissions from off-site Sales - West London Options Project Team

46. Product - Options • Taking ideas from regions to form consistent approach e.g. • Double Garage Sales Centre - Yorkshire • Car Style Specification Sheet - Bristol • Commissions from off-site Sales - West London • Off-site Sales Centres - USA Options Project Team

47. Product - Options Sales of Options per House in 2000 (£’s) National Average = £3,100 £2,750 £2,800 £2,600 £2,950 £4,100 £3,100 £3,500

48. 3.1% 3.1% 2.9% 2.6% 2.9% 2.8% 2.2% Product - Options Sales of Options as Percentage of House Price in 2000 National Average = 2.8%

49. Overheads

50. Getting the benefits from restructuring • Reduced Overheads • Reduction in Staff - 435 • Completions per member of Office Staff increased by >40% • Overhead Savings - £20 million • Impact on Margin for 2002 - 1.7%