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George Wimpey Investor Visit Sovereigns, Beaulieu Park Chelmsford 14 June 2002.

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Presentation on theme: "George Wimpey Investor Visit Sovereigns, Beaulieu Park Chelmsford 14 June 2002."— Presentation transcript:

1 George Wimpey Investor Visit Sovereigns, Beaulieu Park Chelmsford 14 June 2002

2 Agenda George Wimpey UK –A successful transformation –McAlpine Homes a favourable deal –A landbank for future growth –Focusing on higher margins George Wimpey East London –Integration –McAlpine acquisition Sovereigns Beaulieu Park

3 George Wimpey UK Keith Cushen Managing Director

4 A successful transformation 2001 a year of significant change integration of McLean Homes and Wimpey Homes followed by acquisition of McAlpine Homes process complete by end of 2001 with £40 m overhead savings achieved £20 m further cost savings in hand 1

5 A successful transformation Turnover per employee Pre restructuring Post restructuring Post McAlpine acquisition Staff per business unit Completions per business unit485373 4247 20012000 £984,000 £1,316,000 £1,698,000 Organisational efficiency 2

6 A successful transformation £20 m build cost savings identified –£10 m on track for 2002 –further benefits flowing through in 2003 all achieved without mishap on cost control or land acquisition 3

7 4 McAlpine Homes - a favourable deal Completed on 1 October 2001- well timed H1 2002 strong market –increased outlets open at beginning of 2002 –sales well in advance of 2001 –100% of required land to support 2002 planned sales achieved desired geographic and product mix –regional mix moved towards South –average selling prices improved from £117,000 to > £140,000

8 5 McAlpine Homes - a favourable deal Addressed land procurement issues geographic refocusing of short term landbank following acquisition –56% McAlpine land in south v 34% for Wimpey acquisition of land in prime locations all 2002 land acquired > 90% 2003 land needs acquired acquired strategic land with high potential margin sites - 50% in southern England

9 McAlpine Homes - a favourable deal No surprises carefully handled negotiations thorough due diligence at all levels of the business maintained levels of confidentiality clear strategic rationale for acquisition –knew why McAlpine –knew what needed to be achieved –Size isn’t everything! 6

10 McAlpine Homes - a favourable deal Financial risk carefully managed attractive price paid –£463 m - 9% premium –followed by period of continued growth in house and land prices deferred payments –will be completed on 30 August 2002 debt managed well - comfortably within planned limits –year end gearing at 50% as targeted 7

11 McAlpine Homes - a favourable deal Minimised integration risks learnt from McLean/Wimpey merger got to know the people established George Wimpey culture and values from day 1 moved fast but communicated plans treated people properly and fairly no compromises 8

12 McAlpine Homes - greater opportunities Acquisition benefits set to exceed original expectations 2002 annual completions secured - helped by markets but achieved through increased outlets pricing increases achieved faster than expected –improved locations –show homes upgraded –introduced options 9

13 10 McAlpine Homes - greater opportunities On site initiatives build time reductions already achieved –24 weeks to 13 weeks large reductions in work in progress being achieved well advanced with rationalising large range of McAlpine house types McLean processes introduced –TGI joists, plastic plumbing, door sets etc

14 McAlpine Homes - greater opportunities Using experiences and knowledge from McLean/Wimpey merger effective benchmarking across all businesses purchasing efficiencies being achieved design efficiencies being introduced specifications being changed and sale of options being introduced new products being introduced to range of existing house types 11

15 A landbank for future growth a better balance of locations prime locations more able to support higher priced products able to support increased number of selling outlets no pressure to buy land ‘at any cost’ –land now bought at significantly better margins increased focus achieving value from strategic landbank 12

16 Delivering higher margins Opportunities for the future introduction of sale of options throughout all regional businesses –new marketing suites –emphasis on greater range of products customised for individual sites as required –off-site design centres for the future £4,000 average per completion a rise of 14% 13

17 One business one brand total commitment to –deliver on promises to shareholders –health, safety and the environment –satisfying customers’ expectations continue to build on achievements in –product quality awards –customer satisfaction awards aim to provide levels of service expected in other retail sectors consider opportunities for offering customers more than just house purchase 14

18 George Wimpey East London William Gosling Regional Managing Director

19 15 George Wimpey East London Formerly Wimpey Homes Eastern Region operating area East London and Essex 2002 turnover forecast at £100 m from 600 units regional average selling price £160,000 –ranging from £95,000 to £550,000 –regional and bespoke products –increasing as business focuses nearer to London 80% of 2003 land owned with planning permission, balance controlled experienced Regional Board with successful track record

20 Integration March 2001- George Wimpey UK objectives and working practices defined franchise rules bench marking sharing best practice reporting systems 16

21 17 Integration April 2001 - Wimpey Homes Eastern Region restructured office overheads reduced in line with central targets build cost reductions identified from –design and specification review –competitive tendering and improved procurement –build period reductions –material control work in progress reductions post integration savings and improvements reported separately during 2002

22 Integration Land acquisition approval process reviewed support documentation confirmed UK Board committed to urgent consideration of land purchase proposals hurdle rates increased 18

23 McAlpine Homes acquisition full regional involvement in due diligence process responsibility for closure of McAlpine Homes Eastern business –transfer of some staff to GW East London and neighbouring regions –redundancies effected without disputes –ongoing responsibility for closed sites 19

24 McAlpine Homes acquisition Six McAlpine sites transferred to GW East London sale completions 2001/2004 costs in line with due diligence turnover at or above due diligence levels site sales and production staff joined GW McAlpine house types retained on all sites but materials and specifications revised focus to reduce work in progress 20

25 Sovereigns Beaulieu Park acquired in limited tender competition planning permission fixed –number of units –mix of 2,3 and 4+ bedroom units coverage –size of units maximised to increase coverage –all units 3 storey to maximise coverage –achieved density of 19000 sq ft per net developable acre 21

26 Sovereigns Beaulieu Park designs –compete with adjoining Beaulieu Park phases –achieve premium on coverage –produced to GW brief by external architect –construction drawings prepared in house using GW specified materials and build practices to minimise variation 22

27 Sovereigns Beaulieu Park purchaser specification levels –fixed to match competing schemes –extensive range of further options offered from our on-site option centre –option take up running at higher percentage of house selling price than regional average 23

28 Sovereigns Beaulieu Park Bespoke v standard product consistent actual unit build costs with appraisals actual unit build periods longer than in appraisals leading to increased site overhead costs premium above market inflation achieved more than off setting increased costs customer satisfaction levels exceeded regional averages 24

29 In conclusion... George Wimpey UK a business: –transformed –well positioned for the future –in control of costs –with opportunities to deliver margin improvement achieving benefits ahead of original expectations 25

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