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George Wimpey PlcAnnual General Meeting 2006
The Royal College of Physicians
Thursday 20 April 2006
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Group Overview
Peter Johnson
Group Chief Executive
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2005 results
£m
Tax
Profit before tax
Dividend cover
DPS
NAV per share
EPS
366.5 437.6 - 16%
17.6p 16.0p + 10%
3.7x 4.9x -
64.3p 78.4p - 18%
389p 340p + 14%
31% 31% -
3* restated for IFRS and land sales
Interest (71.0) (59.9) + 19%
Operating profit 437.5 497.5 - 12%
Turnover 3,003.2 2,976.0 + 1%
2005 2004* Change
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2005 completions and prices
10,678 - 5% £188,600 - 2%UK private
1,422 + 48% £98,600 + 10%UK affordable
12,100 - 1% £178,000 - 4%UK total
4,921 + 11% $312,700 + 8%US total
17,021 + 2%GROUP TOTAL
No Change £ / $ Change
Completions Ave selling price
4
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Turnover
£m
Operating profit
Operating margin*
Change £m Change 2005 2004
UK
US
Other
TOTAL
2,157.6 - 5% 278.0 - 32% 12.9%
845.5 + 21% 169.4 + 65%
18.0%
14.7%20.0%
0.1 - (9.9) - 33%
3,003.2 + 1% 437.5 - 12%
Segmental analysis
*Exchange rate in 2005 $/£=1.82, 2004 $/£=1.83
*UK operating profits stated after charging £5m of restructuring costs 5
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Balance sheetfinancing
6
Shareholders’ funds £m
Net debt £m
Capital employed £m
Gearing
Interest cover - reported
Interest cover - underlying
ROACE
1,544.4 1,331.4
521.9 520.9
2,066.3 1,852.3
34% 39%
6.2x 8.3x
8.8x 10.4x
22.3% 28.9%
Dec2005
Dec2004
* restated for IFRS
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US Business Review
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5 year review: Morrison Homes
CompletionsOperatingmargin %
Operatingprofit* $m
Turnover*$m
ASP$
2004
2005
2001
2002
2003
1,277.3 188.3 14.7% 4,422 289,000
1,538.8 308.3 20.0% 4,921 313,000
687.7 66.4 9.7% 2,900 238,000
804.7 80.7 10.0% 3,197 252,000
988.3 118.6 12.0% 3,661 270,000
CAGR 22.3% 46.8% - - 7.1%
8* restated for IFRS and land sales
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Some industry comparisons
:
Company Est PBT margins 2005 asp 2005 increase % US GAAP $000 %
Toll Brothers 21.6 654 13 NVR 21.0 376 13Morrison 18.5 313 8Standard Pacific 17.6 352 -6DR Horton 17.0 263 9 Hovnanian 16.7 319 14 Pulte 15.8 316 10 Ryland 15.6 274 9 Centex 14.4 297 10
Beazer 12.2 271 17
Estimates from broker reports
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Successful growth strategy
Focus on growth markets
Morrison markets account for 45% of job growth, 49% of population growth and 38% of 2005 H2 SF permits
Growth through satellites
3 satellites started in 2001 produced >20% 2005 completions
Growth through product development
Townhomes 12% Florida completions
Addressing underperforming businesses
Atlanta exited
Texas completions +47%, order book +55%
Strong landbank
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Landbank in place to deliver growth
0
5,000
10,000
15,000
20,000
25,000
2001 2002 2003 2004 2005
controlled owned/optioned total
11
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UK Business Review
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2005 financial summary
* restated for IFRS and land sales
13
Total completions
Private completions
Affordable completions
Private ASP
Total turnover £m
Gross margin %
Operating profit £m
Operating margin %
12,100
10,678
12,232
11,274
1,422 958
£188,600 £193,400
2,157.6 2,277.9
21.5% 26.1%
278.0 409.4
12.9% 18.0%
2005 2004*
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Causes of margin reduction
Selling pricestough market: total transactions down 17%, 28% H1change in mix: affordable housing, smaller homes/more flatsweak southern marketshort order book
Short land bank: rapid unwinding of “stock profits”
Rising costs: esp energy related materials
Underperforming businesses and sites
Heavy second half volume weighting
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Actions to improve margins
Strengthen sales position, processes and management
order book + 33% at 1 January,
southern markets first to recover
Acquisition of larger sites on better terms
Programme to drive down build and overhead costs £20m cost savings achieved in 2005
organisation structure rationalised: two brands retained
plan for ongoing reduction in build costs in 2006+
Underperformers addressed: withdrawal from high-rise
Better H1/H2 volume balance
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Landbank
North
Midlands
16,447
13,878
5,112
4,662
2005 2004 2005 2004
Owned andcontrolled plots
Strategic acres
18,615
11,882
4,934
5,529
TOTAL 50,985 14,16951,119 17,571
16
South 20,660 20,622 7,1084,395
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Summary and Outlook
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5 year review
18
Group completions
PBT £m
Net worth £m
Dividends per share
Gearing
17,021 16,654 16,654 16,570 16,917 14,437
366.5 437.6
1,544.4 1,331.4
17.6p 16.0p
34% 39%
450.7 378.2 285.9 152.0
1,439.1 1,168.4 944.6 783.3
16.0p
36%
12.25p
45%
9.1p
40%
8.25p
49%
2005 2004 2004 2003 2002 2001
IAS UK GAAP
Profits increased by 141%Dividends annual growth rate 21%Balance sheet strengthened
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Group outlook
US
economy projected to remain healthy
strong forward order book at start of year
total market projected to be down ~8%
return to use of incentives in most markets
Morrison located in markets with continuing employment growth
UK
market recovery has continued, esp in south
further cost saving opportunities identified and in place
strong forward order book starting to reduce use of incentives
prices moving up on selected sites
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Summary
US growth strategy paid off in 2005
Morrison Homes outperformed in a strong market
But is facing tougher market conditions in 2006
UK results in 2005 affected by short land bank, weak market (esp in south) and some underperforming businesses
Weaknesses have been addressed, the forward land position is stronger and the market is improving, esp in the south
UK soundly based to rebalance volumes in H1 and begin to rebuild margins in stable and improved market in H2
20
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Presentation title / Audience / Location / Date / © George Wimpey 2002
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Outcome of Proxy Voting
John Robinson
Chairman
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Proxy vote for Resolution 1
Resolution 1:
TO RECEIVE THE DIRECTORS’ REPORT AND ACCOUNTS
Total votes 275,763,846
Votes in favour 272,133,325
Against 548,880
Abstentions 3,081,641
23
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Proxy vote for Resolution 2
Resolution 2:
TO APPROVE A DIVIDEND
Total votes 275,763,846
Votes in favour 275,493,232
Against 0
Abstentions 270,614
24
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Proxy vote for Resolution 3
Resolution 3:
TO REAPPOINT JOHN ROBINSON
Total votes 275,763,846
Votes in favour 273,199,986
Against 2,166,111
Abstentions 397,749
25
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Proxy vote for Resolution 4
Resolution 4:
TO REAPPOINT DAVID WILLIAMS
Total votes 275,763,846
Votes in favour 275,345,414
Against 21,258
Abstentions 397,174
26
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Proxy vote for Resolution 5
Resolution 5:
TO REAPPOINT ANTHONY READING
Total votes 275,763,846
Votes in favour 275,344,879
Against 20,591
Abstentions 398,376
27
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Proxy vote for Resolution 6
Resolution 6:
TO REAPPOINT ROBERT SHARPE
Total votes 275,763,846
Votes in favour 275,338,628
Against 29,092
Abstentions 396,126
28
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Proxy vote for Resolution 7
Resolution 7:
TO REAPPOINT STEVE PARKER
Total votes 275,763,846
Votes in favour 275,306,199
Against 180,892
Abstentions 276,755
29
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Proxy vote for Resolution 8
Resolution 8:
TO REAPPOINT PRICEWATERHOUSECOOPERS LLP AS AUDITORS
Total votes 275,763,846
Votes in favour 275,105,847
Against 383,644
Abstentions 274,355
30
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Proxy vote for Resolution 9
Resolution 9:
TO GIVE THE DIRECTORS AUTHORITY TO ALLOT SHARES
Total votes 275,763,846
Votes in favour 270,148,691
Against 5,335,313
Abstentions 279,842
31
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Proxy vote for Resolution 10
Resolution 10:
TO DISAPPLY PRE-EMPTION RIGHTS
Total votes 275,763,846
Votes in favour 274,026,752
Against 1,713,196
Abstentions 23,898
32
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Proxy vote for Resolution 11
Resolution 11:
TO EMPOWER THE COMPANY TO MAKE MARKET PURCHASES
OF ITS SHARES
Total votes 275,763,846
Votes in favour 275,275,227
Against 207,538
Abstentions 281,081
33
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Proxy vote for Resolution 12
Resolution 12:
TO APPROVE THE REMUNERATION REPORT OF THE COMPANY
Total votes 275,763,846
Votes in favour 268,310,278
Against 1,200,082
Abstentions 6,253,486
34
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Proxy vote for Resolution 13
Resolution 13:
TO AMEND THE ARTICLES OF ASSOCIATION CONCERNING
DIRECTORS’ INDEMNITIES
Total votes 275,763,846
Votes in favour 275,399,120
Against 53,154
Abstentions 311,572
35
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Presentation title / Audience / Location / Date / © George Wimpey 2002