Unlocking the Value Peter Johnson George Wimpey PLC

Unlocking the Value Peter Johnson George Wimpey PLC 27 April 2001

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.

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

Wimpey Today

Wimpey today • 2000 Results - P&L Account 2000 1999 % Change 1702 1527 +11% Operating Profit £m 170 119 +43% Profit Before Tax £m 146 113 +30% 24 22 Earnings per Share p 30. 0 24. 5 +22% Dividend per Share p 7. 5 6. 6 +14% Revenue £m Tax % N/A

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

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

Wimpey today • Segmental Analysis Revenue % Change £m Operating Profit % Change £m Operating Margin % Change % 1254 +8. 0% 143 +40% 11. 4 +2. 6% USA 405 +22% 35 +29% 8. 6 +0. 5% Corp. 43 Group 1702 +37% 10. 0 +2. 0% UK (7) +10% 170

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

Land

Strengthening our land bank • We were – competing internally – reacting to local demands of regions – trying to get 29 regions to critical mass • 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 – rationing on first come first served basis • Result was • Result is – we are buying land where we – land in the wrong place – bought at poor margins want it – at much better margins

Strengthening our land bank • Completions Before and After – Regional Businesses now up to critical mass 2001 Before No of BU’s 2001 After 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 29 390 21 540 UK Total

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%)

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

Short Term Land Bank at end 2000 (Years) Average = 3. 1 Years 4. 2 3. 7 2. 8 1. 9 2. 8 2. 5 2. 9

Short Term Land Cost of Short Term Land Bank at end 2000 (£millions) Total = 689. 7 m 42. 2 m 85. 9 m 50. 3 m 158. 6 m 161. 7 m 65. 3 m 125. 7 m

Strategic Land

Strategic Land • 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 PPG 3 • 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 Capital Locked Up in Strategic Land Scotland & North East 5. 4 m North West & Yorkshire 1. 6 m West Midlands 2. 3 m East Midlands 3. 5 m East & South East 1. 8 m South 21. 2 m Total 35. 8 m

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 22 • Total estimated plots = 13350 6 9 13 8 31

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 32 • Total estimated plots = 18900 1 22 12 15 26

Stategic Land Key Sites

Stategic Land Key A Brownfield Site Bradbury Estate -Sites

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

Building

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

Building high quality and reducing costs NHBC Quality Awards 1999 2000

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

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

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

Building high quality and reducing costs House Design • We were using – Wimpey central design: • We now have – local design (per Mc. Lean) • expensive design features • savings identified • not adapted to local markets • adapted locally • costly to adapt to PPG 3 • easier for PPG 3 • benchmark costs

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

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

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

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

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

Product

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

Product - Range Movement of product range to higher selling prices

Product - Range Product Mix

Improved selling and marketing • We were – not sharing pricing information between Wimpey and Mc. Lean – not working together on mixed outlet developments – not transferring experience of successes on options – not sharing market, competitor or customer data • 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

Product - Options Top 10 Options for 2000 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 Margin on Options between 20% and 30%

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

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

Product - Options Project Team • 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

Product - Options Project Team • 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

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, 500

Product - Options Sales of Options as Percentage of House Price in 2000 National Average = 2. 8% 3. 1% 2. 9% 2. 6% 2. 9% 2. 8% 2. 2%

Overheads

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%

Getting the benefits from restructuring Summary of Redundancies WHH Top Management 10 Central & Duplicated Functions 35 9 Closed BU’s 235 New Staff Profile 100 Handover Staff (Apr/May) Total 55 435

Getting the benefits from restructuring Closed Businesses Mc. Lean East Scotland Wimpey West Scotland Wimpey Yorkshire Rivermead Mc. Lean East Midlands Wimpey Northern Home Counties Wimpey South East Thameswey Wimpey South Wales (kept as satellite) New Business Central London

Getting the benefits from restructuring Distribution of Remaining Offices

Getting the benefits from restructuring • Completions Before and After – Regional Businesses now up to critical mass 2001 Before No of BU’s 2001 After 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 29 390 21 540 UK Total

USA

USA - a growth opportunity • located in growing markets – 5 of 6 States with greatest job creation – well positioned in higher value segments • with a structure to support growth – mature businesses to generate cash – well established growing businesses – development businesses established for future growth • potential to grow through satellites or small acquisitions

USA - a growth opportunity Current Morrison Markets Sacramento East Bay Area San Joaquin Valley Phoenix Austin San Antonio Dallas/Ft Worth Houston Atlanta Jacksonville Orlando Tampa Sarasota

USA - a growth opportunity Where the Jobs are. Job Growth Rates over the Last 4 Quarters Source: The Meyers Group, Inc. 2001 Sarasota, Florida 5. 9% Tucson, Arizona 5. 4% Austin, Texas 4. 7% Tampa, Florida 4. 9% Orlando, Florida 5. 1%

USA - a growth opportunity Where the jobs are. Even the most pessimistic forecasts for housing starts this year (~1. 5 million) is higer than the previous peak years. Better still, economists agree that many areas of the country notably the West, parts of the Northeast, Texas and Florida will experience strong housing growth in 2001. Depending on where you build and, to a lesser degree, for whom, the slower gowing economy will be felt differently. -Taken from article in Professional Builder Magazine

USA - Regional Analysis Orlando Local economy satistics Population Average population change = 3. 2% Average employment change = 4. 7% Average Income change = 3. 7% Total Employment Median Household Income

USA - Regional Analysis Orlando Largest Private Employers

USA - Regional Analysis Orlando Top 10 House Builders

USA - Regional Analysis Orlando Market Position

USA - Regional Analysis Orlando Market Segmentation

USA - Options Top 5 Options in Morrisons Category Flooring Carpet/Vinyl/Tile/Hardwood Structural Flexible Designs/Bonus Room/Elevation Cabinetry/Countertop Non-Standards Custom changes per buyer request Pool Option only in Tampa and Orlando Total Revenue $25 m $9 m $7 m $3 m

USA - Options • Total revenue from options in 2000 - $55 m • Options revenue per house - $20, 850 • Options revenue as percentage of house price - 9. 2% • Margins between 20% and 50%

Partners and people

Partners & People • we are able to attract top quality partners – suppliers and subcontractors – partners in major development schemes – our own staff and management

Partners & People Years within George Wimpey

Partners & People Age of Regional Management

Partners & People Strengthening our Staff • Graduate Intake in 2000 – 4 Oxbridge, Sheffield, Manchester, UCL, Newcastle – Two 1 s and Five 2: 1 s • Graduate Intake for 2001 – 5 Oxbridge, Warwick, York, St Andrews – Chemistry, Engineering, History, Law, Biosciences etc • 16 Women in Regional Boards or above • 2 Women are Managing Directors

What this means for our shareholders

What this means for our shareholders • Margins will increase – £ 20 million overhead cost reductions – land is being bought at better margins – benefits from improved design/procurement – prices will improve through better product and geographical mix – increased options/extras

What this means for our shareholders • 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. We are putting in place the organisation and processes to ensure it does.