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

Wimpey today 2000 Results Revenue £m Profit Before Tax £m Shareholder Funds (p) Interest Cover UK Completions USA Completions % +30% +15% -4% -7% +2% % Change

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

Strengthening our Land Bank

Strengthening our land bank We wereWe now have –prioritised land acquisitions based on our business strategy –all regions with critical mass –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

Strengthening our land bank Completions Before and After –Regional Businesses now up to critical mass Scotland North Midlands South UK Total After Before 6520 No of BU’s Ave. PC’s per BU No of BU’s Ave. PC’s per BU

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

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

Strengthening our land bank Short Term Land Bank at end 2000 (Years) Average = 3.0 Years

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

Strengthening our land bank 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 Result is –we are buying land where we want it –at much better margins –raised our target returns

Building Better & Cheaper

Building better and cheaper We were usingWe now have –local design (per McLean) savings identified adapted locally easier for PPG3 benchmark costs –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

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

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

Building better and cheaper We were usingWe now have –local design (per McLean) savings identified benchmark costs adapted locally easier for PPG3 –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

Building better and cheaper Build Costs –McLean Build Costs more than 10% cheaper than Wimpey Build time –McLean 12 Weeks –Wimpey Weeks Benchmarking across regions to bring down both

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

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

Improving Sales & Marketing

Improved selling and marketing We wereWe 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 –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

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

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

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

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

How restructuring is helping us

Reduced Overheads –Reduction in Staff –Completions per member of Office Staff increased by >40% – Overhead Savings - £20 million –Impact on Margin for %

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

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

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

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

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 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