Gaining the Benefits of Scale

1. Gaining the Benefits of Scale Peter Johnson George Wimpey PLC 19 April 2001

2. 2000 1999 % Change Revenue £m Profit Before Tax £m Shareholder Funds (p) Interest Cover UK Completions USA Completions Wimpey today • 2000 Results 1702 1527 +11% 146 113 +30% 182 158 +15% 7.1 7.4 -4% 11437 12365 -7% 2638 2574 +2%

3. Agenda • What we’re doing to gain benefits from our scale • strengthening our land bank • building better and cheaper • improved selling and marketing • creating an efficient organisation • How scale is helping us • What this means for our shareholders

4. Strengthening our Land Bank

5. We were We now have prioritised land acquisitions based on our business strategy all regions with critical mass Strengthening our land bank • competing internally • reacting to regional demands • trying to grow 29 regions to achieve critical mass • rationing on first come first served basis • Result was • land in the wrong place • acquired at poor margins

6. 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

7. 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 Strengthening our land bank • We now have • prioritised land acquisitions based on our business strategy • all regions with critical mass • workable landbanks in all regions

8. 6,099 7,876 6,531 2,244 4,196 2,802 3,641 Strengthening our land bank Short Term Land Bank at end 2000 (Plots) Total = 33,389 Plots

9. 4.2 3.7 2.8 1.9 2.8 2.5 2.9 Strengthening our land bank Short Term Land Bank at end 2000 (Years) Average = 3.0 Years

10. Strengthening our land bank 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

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 Strengthening our land bank • 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

12. Building Better & Cheaper

13. We were using We now have local design (per McLean) savings identified adapted locally easier for PPG3 benchmark costs Building better and cheaper • Wimpey central design: • expensive design features • not adapted to local markets • costly to adapt to PPG3 • Wimpey central buying: • inflexible service • not suited to local needs • inhibited upgrades • buying at high prices

14. -Reduction of special features - £600 -Reduction of roof complexity - £1000 -Positioning - £500 Building better and cheaper Redesign of Vaudeville House Type by Leicester Office Before Front Right After

15. -Reduction of special features - 600 -Reduction of roof complexity - £1000 Total Saving = £2,100 Building better and cheaper Redesign of Vaudeville House Type by Leicester Office Before Front Right After

16. We were using We now have local design (per McLean) savings identified benchmark costs adapted locally easier for PPG3 Building better and cheaper • Wimpey central design: • expensive design features • not adapted to local markets • costly to adapt to PPG3 • Wimpey central buying: • inflexible service • not suited to local needs • inhibited upgrades • high prices • co-ordinated buying • flexibility for design • integrate service need • use scale effectively • savings identified

17. Building better and cheaper • Build Costs • McLean Build Costs more than 10% cheaper than Wimpey • Build time • McLean 12 Weeks • Wimpey 16 -19 Weeks • Benchmarking across regions to bring down both

18. Building better and cheaper • 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

19. Building better and cheaper • Procurement • How is it organised now? • National Product Consultation Groups run by regional Buyers to: • Meet quarterly with suppliers/subcontractors • Monitor and organise benchmarking • Introduce new products and innovations • Benefits • National scale but with knowledge on the ground • National deals supported by regional management • Materials procurement co-ordinated with site/subcontractor needs

20. Improving Sales & Marketing

21. 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

22. 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%

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

24. 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

25. 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

26. How restructuring is helping us

27. How restructuring is helping us • 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%

28. How scale is helping us • We are buying better • land • materials • services • We employ a wider range of skills and experience • developing innovative bespoke projects • larger inner-city development schemes • experimenting with additional options and extras

29. How scale is helping us • we are able to leverage these experiences • sharing design/bespoke experiences • developing a wider and larger range of options • applying lessons we can learn from our US business • we are better able to manage risk • large and complex land purchases • major development schemes • innovation in design or construction

30. How scale is helping us • we are able to attract top quality partners • suppliers and subcontractors • our own staff and management • partners in major development schemes

31. What this means for our shareholders

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

33. 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