george wimpey plc interim results for the half year ended 30 june 2001 tuesday 31 july 2001
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2001 Interim Results Headlines
• performance on track…° operating profit up 13% to £66.2 m° PBT up 11% to £53.1 m
• …in both businesses° UK operating profit close to last year at £54 m° US operating profit up 81% to $22.1 m
• restructuring continues ahead of plan° bulk of £20 m forecast savings in 2001° additional cost savings of £15 m by 2003
Agenda
H1 Financial Review Andrew Carr-Locke
Business Reviews Peter Johnson
Summary and Outlook Peter Johnson
2001 First half results
June June % 2001 2000 change
revenue £ m 707 694 + 2
operating profit* £ m 66.2 58.6 + 13
exceptional items £ m (14.2) - -
profit before tax* £ m 53.1 48.0 + 11
earnings per share* p 11.0 9.9 + 12
dividend per share p 2.9 2.65 + 9
* before exceptionals
First half results
• operating profit before exceptionals up 13% to £66.2 m
• UK restructuring completed, majority of £20 m savings to be seen in 2001
• US profits up 81% in dollar terms
First half results
• interest cover 5.1 times
• tax rate 23%
• EPS before exceptionals up 12% to 11p
• interim dividend up 9.4% to 2.9p
First half cash flow
• cash outflow of £181 m (2000:£146 m)
• end June gearing 59% (2000:55%)
• land spend £261 m, same as last year
• acquisition of Richardson Homes in Denver for $22 m
Balance sheet
Over last 12 months
• net debt up £76 m to £410 m
• shareholders’ funds up £83 m to £694 m
• return on equity before exceptionals 17.7% (2000:17%)
• net assets up 21p to 187p
• land holdings up £136 m
Exceptional operating costs
£ m
redundancies 6
asset write-downs and IT 2
property voids and office
move costs 5
transition costs 1
14
Segmental analysis
Operating Operating Revenue Profit Margin
% % % £m Change £m Change % Increase
UK 512 - 4 54.0* - 1 10.5 + 0.3
USA 189 +34 15.3 + 96 8.1 + 2.6
Corp 6 - (3.1) - - -
Group 707 + 2 66.2* +13 9.4 + 1.0
* Before exceptionals
Segmental analysis
• US revenue up 34%, 23% in dollar terms
• US profits up 96%, 81% in dollar terms
• US margins up 2.6% to 8.1%
• UK margins improve 0.3% to 10.5%
• corporate costs below last year’s £3.6 m
2001 completions
Completions Ave Price % %
No Change £/$000 Change
UK: PD 4161 - 13 £118 + 8
Social 237 - 1 £60 + 35
UK: Total 4398 - 12 £115 + 9
USA: 1142 + 21 $236 + 6
Group Total 5540 - 7 £125 + 9
UK completions
• lower UK completions due to fewer outlets coming into the year
• UK average selling prices up 8% to £118,000
• selling rate up 9% on last year
• average size up 2%, 60% detached
• volume of sales proceeding up 12% on last year
US completions
• US completions up 21%• US average selling prices up 6% to
$236,000• acquisition of Richardson Homes Denver,
Jacksonville start-up • volume of sales proceeding up 12% on last
year• outlets 89, up 17%, selling rate good • average size 2,400 square feet
Land
UK USA
land spend £ m 222 47*
short term plots 31,920 11,500
change since
December (1,530) 1,530
land bank in years 3.0 3.7
* Includes Richardson Homes land £8 m
Financial summary
• results show further improvements achieved
• benefits from UK restructuring
• US growing successfully
• strong interest and dividend cover
• second half looking good
UK: market
Short-term cautious; longer term positive• strong through H1 - prices > expectations
• site visitors and selling rates remain healthy
• national affordability near long run average
• London above average, but no problems yet
• South somewhat above average - but supported by planning driven shortages
• longer term outlook very favourable
UK: progress on restructuring
“Major focus is to ensure restructuring programme delivers on promises made”
excellent progress made
• action to integrate fast and lock in cost savings
• running rate of savings already at £20 m• great majority will be achieved in 2001• restructuring costs held to £14.2 m vs
forecast £15 m
UK: progress on restructuring
“Seek opportunities to improve margins:gain further benefits from our scale”
substantial potential quantified
• land acquired at better margins• procurement and build cost savings
projected at £15 m by 2003• group overheads down
UK: progress on restructuring
“Seek opportunities to improve margins:increase sales of options and extras”
potential for substantial improvement
• sales of options £3,300 per house H1 2001 cf £3,100 per house for whole of 2000
• new marketing suites being introduced following business review
• big potential in Wimpey Homes businesses
UK: progress on restructuring
“Seek opportunities to improve margins:increase exposure to higher margin
markets”
continued progress: much more to do
• average size up 2%• detached + flats up from 66% to 69%• selling prices up 8% to £118,000• >£100,000 up from 45% to 53%• average plot cost up 31% to £40,000
USA: market
Short term cautious; longer term positive
• most markets continued strong through H1
• weaknesses limited to hi-tech locations - esp Austin and Sacramento; Florida strong
• recent consensus forecast for new single family home sales for 2001 is 2.7% decline
• strong underlying demand vs supply
• longer term outlook favourable
USA: progress on strategy
• Growth sustained: 89 communities vs 76 in H1 2000 and 84 in H2 2000
• market position held - 2,389 sq ft vs 2,397 H1 2000 and 2,319 H2 2000
• new business established in Jacksonville
• Richardson Homes acquired in Denver
• additional profits from land title joint venture in Florida
A sound business
UK • quality sustained: 66 NHBC Quality Awards in
2001
• product base improving: much more to do
USA• first class business - strong in local markets
• excellent management team
• culture based on customer - lessons to learn
Better margins:encouraging initial progress
• UK restructuring complete without major mishaps and ahead of plan
• substantial further benefits identified• business culture transformed:
° new management team in place° decision making streamlined° office relocation within 8 weeks° UK and US now working together
Outlook
• UK market most likely to remain stable° market indicators mixed but mostly positive° some short-term risk in London and south-east° continued price inflation expected elsewhere
• most local US markets remain robust• strong order book for second half
° sales proceeding up 12% - UK and 12% - USA ° visitor levels remain strong° focus on getting outlets open for 2002
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