Transcript George Wimpey Plc

George Wimpey Plc
Annual General Meeting 2007
Thursday 26 April 2007
Group Overview
Pete Redfern (Chief Executive)
2006
Full year results
£m
2006
before
exceptional
items
2006
exceptional
items
2006
total
2005
total
Change
3,147.4
-
3,147.4
3,003.2
+ 5%
Operating profit
422.8
(60.7)
362.1
437.5
- 17%
Interest
(51.9)
-
(51.9)
(71.0)
- 27%
Profit before tax
370.9
(60.7)
310.2
366.5
- 15%
(114.9)
22.7
(92.2)
(113.7)
64.4
(9.6)
54.8
64.3
NAV per share
426p
389p
DPS
19.4p
17.6p
2.8x
3.7x
Revenue
Tax
EPS
Dividend cover
Completions and prices
Full year results
Completions
UK private
UK affordable
UK total
US
GROUP TOTAL
Ave selling price
No
Change
£/$
Change
11,982
+ 12%
186.4
- 1%
1,634
+ 15%
94.9
- 4%
13,616
+ 13%
175.4
- 2%
4,347
- 12%
319.6
+ 1%
17,963
+ 6%
Segmental analysis
Full year 2006
Turnover
Operating profit*
Operating margin**
£m
Change
£m
Change
2006
2005
UK
2,391.2
+ 11%
317.6
+ 14%
13.0%
12.9%
US
756.2
- 11%
116.9
- 31%
15.5%
20.0%
Corporate
TOTAL
-
3,147.4
(11.7)
+ 5%
* Before exceptional items
** Operating margin before JVs and exceptional items
Exchange rate in 2006 £:1.84$ 2005 £:1.82$
422.8
- 3%
Balance sheet
Financing
31 Dec 2006
31 Dec 2005
1,707.1
1,544.4
387.1
521.9
2,094.2
2,066.3
Gearing
23%
34%
Interest cover last 12 months
7.0x
6.2x
Cash interest cover last 12 months
8.3x
8.8x
20.3%*
22.3%
Shareholders’ funds £m
Net debt £m
Capital employed £m
ROACE
* before exceptional costs of £60.7 million
US housing review
US housing
Financial summary
2006
2005
Change
2004
4,347
4,921
- 12%
4,422
$319,600
$312,700
+ 2%
$288,900
1,389.1
1,538.8
- 10%
1,277.3
Operating profit $m
214.7
308.3
- 30%
188.3
Operating margin
15.5%
20.0%
- 4.5pp
14.7%
Legal completions
Ave selling price
Revenue $m
US housing
2006 market conditions
• 2006 started with soft market conditions, steadily worsened through to Q4
• Tough market conditions caused by
– increased interest rates
– affordability
– investors cancelling homes under contract
– overstocking of inventory
– incentives/discounting by US competitors
• Consistently weak across Arizona, Florida and Northern California
US housing
Industry comparisons 2006
Company
PBIT margins
ROACE
Land stocks
(years)
Morrison Homes
15.5%
24.6%
3.5
Centex
11.7%
11.6%
6.4
DR Horton
14.6%
12.9%
6.1
Hovnanian
5.4%
5.3%
5.3
KB Homes
13.8%
15.8%
5.1
Lennar
14.2%
18.4%
6.8
Pulte
12.7%
13.7%
6.6
Ryland
14.9%
19.4%
4.1
Standard Pacific
17.2%
11.8%
6.0
Toll Brothers
20.4%
14.9%
8.6
Estimates from Credit Suisse, pre-exceptional figures based on latest full year
US housing
Performance initiatives
• Land
– renegotiation of existing land contracts
– land buying process
• $20 million targeted cost savings
– 5% initial reduction in build costs
– initiatives across all areas of the business
– outsource second year warranty programme
• Overhead reductions – 20% across the business
– ‘right-sizing the business’
• Sales
–
–
–
–
clear strategy
focus on opening outlets on time
achieve and maintain a consistent sales rate
re-build backlog levels
UK housing review
UK housing
Financial summary
2006
2005
Change
13,616
12,100
+ 13%
11,982
10,678
+ 12%
1,634
1,422
+ 15%
£175,400
£178,000
- 1%
£186,400
£188,600
- 1%
£94,900
£98,600
- 4%
2,391.2
2,157.6
+ 11%
Operating profit £m
317.6
278.0
+ 14%
Operating margin*
13.0%
12.9%
+ 0.1pp
Legal completions – total
Private
Affordable
Ave selling price – total
Private
Affordable
Revenue £m
*Excluding JV results
UK housing
Delivery on promises
H1 2006 low point of margin
Gross margin in H2 2.2% ahead
Better H1/2 balancing
H1 2006 compared to H1 2005 over 25%
improvement
Impact of strong order book
Real benefits of stronger negotiating position
delivered in H2 2006
Develop our good cost saving performance
Significant savings underpinned margins in
2006. New target for 2007
Deal with underperforming businesses
The 6 lowest performing businesses in 2005
have increased margins by over 4%
UK housing
Performance initiatives
• Costs
– appointed UK Head of Procurement, Peter Williams
– over 80 cost reduction initiatives underway or identified
– cost savings of £25m targeted for 2007
• Land
– 14% growth in UK landbank in 2006
– focusing on acquiring more long and medium term sites
– building and maintaining a balanced landbank is key to our strategy
• Sales
– review of marketing spend effectiveness identified new initiatives to improve brand image
– new and improved UK website introduced early 2007
– aim to set industry leading standards providing excellence in sales presentation,
management and customer service
• People
– aim to attract and retain the very best people in the industry
– talent management is the key focus of our people strategy
UK housing
Margin commitments firmed up
Gross margin %
H2
H1
H2
H1
2006
2006
2005
2005
21.5
19.3
20.3
23.5
• Commitment to improvement from H1 2006 ‘low point’ delivered
• Clear statement of future operating margin targets:
– 14% in 2007
– ongoing growth to 16% over 2-3 years
– longer term target of 18%
Sustainable development
Taking a proactive stance
• Recently listed as one of the Global 100 Most Sustainable Companies
• Appointed as the house building and construction representative on the
CBI Task Force on Climate Change
• Established an internal team to meet the Government’s recently published
voluntary ‘Code for Sustainable Homes’ which includes the target to build all new
homes as ‘Zero Carbon’ by 2016
• Working in partnership with Building Research Establishment (BRE), and other
industry experts, to beat this target and lead the industry to deliver fully
sustainable new homes and communities
The merger
Taylor Wimpey plc
Business benefits
• Improves margin growth in the UK
– George Wimpey’s cost efficiency and business structure
– Taylor Woodrow’s strategic land development skills
– the ability to adjust the business model focus to a lower sales rate per outlet
• Provides for economies of scale in the UK
– better procurement terms and supply chain efficiencies
– overhead efficiency
– improved land management
• Creates a truly leading business in the US
– enhanced strength in target states
– broader brand and product offering
– improved position from which to benefit from a US recovery
• Offers the opportunity to extract material annual synergies in the short term
Taylor Wimpey plc
The merger terms
• Taylor Woodrow shareholders will own 51% of the combined entity, George
Wimpey shareholders will own the remaining 49%
• Recommended share for share merger to be effected via a scheme of
arrangement of George Wimpey
– posting of documentation – by early May 2007
– court meeting and EGM – by end May 2007
– completion – Summer 2007
• George Wimpey shareholders on the register on the dividend record date (2
March 2007) to receive George Wimpey final dividend of 13.10p per share
• Taylor Woodrow shareholders on the register on the dividend record date (25
May 2007) to receive Taylor Woodrow final dividend of 9.75p per share
• Combined business to be re-named - Taylor Wimpey plc
Taylor Wimpey plc
Summary
• An enhanced UK business with an improved margin growth profile
• An enhanced US business, with critical mass and a broader brand and product
offering
• Strong land position with attractive strategic landbank
• Scope for operational efficiencies and ongoing cost saving programmes
• Strong financial position, allowing for improved growth in the UK and US
Outcome of Proxy Voting
John Robinson (Chairman)
Proxy vote for Resolution 1
Resolution 1:
To Receive the Directors’ Report and Accounts
Total Votes
294,506,307
Votes in favour
290,984,963
Votes against
Abstentions
912,786
2,608,558
In the case of all resolutions, votes in favour include
votes exercisable at the Chairman’s discretion
Proxy vote for Resolution 2
Resolution 2:
To Approve a Dividend
Total Votes
294,506,307
Votes in favour
294,170,417
Votes against
Abstentions
152
335,738
Proxy vote for Resolution 3
Resolution 3:
To Reappoint Andrew Carr-Locke
Total Votes
294,506,307
Votes in favour
294,354,760
Votes against
Abstentions
142,350
9,197
Proxy vote for Resolution 4
Resolution 4:
To Reappoint Christine Cross
Total Votes
294,506,307
Votes in favour
294,332,693
Votes against
Abstentions
162,487
11,127
Proxy vote for Resolution 5
Resolution 5:
To Reappoint Baroness Dean of Thornton-le-Fylde
Total Votes
294,506,307
Votes in favour
292,351,183
Votes against
Abstentions
2,139,918
15,206
Proxy vote for Resolution 6
Resolution 6:
To Reappoint Ian Sutcliffe
Total Votes
294,506,307
Votes in favour
294,106,871
Votes against
140,029
Abstentions
259,407
Proxy vote for Resolution 7
Resolution 7:
To Reappoint Price WaterhouseCoopers LLP as Auditors
Total Votes
294,506,307
Votes in favour
291,236,946
Votes against
Abstentions
3,212,634
56,727
Proxy vote for Resolution 8
Resolution 8:
To Give the Directors Authority to Allot Shares
Total Votes
294,506,307
Votes in favour
288,955,210
Votes against
Abstentions
5,541,890
9,207
Proxy vote for Resolution 9
Resolution 9:
To Disapply Pre-Emption Rights
Total Votes
294,506,307
Votes in favour
291,081,800
Votes against
Abstentions
3,384,394
40,113
Proxy vote for Resolution 10
Resolution 10:
To Empower the Company to Make Market Purchases of its
Shares
Total Votes
294,506,307
Votes in favour
294,466,113
Votes against
Abstentions
34,628
5,566
Proxy vote for Resolution 11
Resolution 11:
To Approve the New Three Year Morrison Homes Long Term
Incentive Plan for the President of Morrison Homes
Total Votes
294,506,307
Votes in favour
289,010,247
Votes against
2,102,315
Abstentions
3,393,745
Proxy vote for Resolution 12
Resolution 12:
To Approve the Remuneration Report of the Company
Total Votes
294,506,307
Votes in favour
282,980,300
Votes against
4,999,092
Abstentions
6,526,915
Proxy vote for Resolution 13
Resolution 13:
To Authorise the Company to use E-Communications
Total Votes
294,506,307
Votes in favour
293,374,644
Votes against
736,565
Abstentions
395,098
George Wimpey Plc
Annual General Meeting 2007
Thursday 26 April 2007