Taylor Wimpey plc Analyst and Investor Day 31 October 2007

Transcription

1 1 Taylor Wimpey plc Analyst and Investor Day 31 October 2007

2 Agenda > Introduction Pete > Market update Pete > NA operations & integration Sheryl > UK operations & integration Ian > Acquisition accounting & NRV Peter > Summary Pete 2 Analyst and Investor Day 31 October 2007

3 Introduction > Very poor US housing market conditions > Uncertain UK market conditions > Strong progress on integration and synergy savings > Strong land position > Focus on creating and preserving value across the Group > Back to basics efficiency in all businesses > Add to good quality long term sites > Manage cash tightly 3 Analyst and Investor Day 31 October 2007

4 North America market update > US housing market has continued to deteriorate since the end of July > Key drivers > Direct impact of credit upheaval on buyers ability to close > Indirect impact on customer confidence > Increasing discounting by both new build and resale sellers > Canada has remained robust and continues to perform well > US markets from best to worst > Texas > San Francisco Bay Area > Phoenix > Rest of California > Florida 4 Analyst and Investor Day 31 October 2007

5 North America total market data Region Pro forma 2006 Closings (homes & lots) YOY Existing Home Sales Home Inventory (months) YOY SFD Start Change YOY Existing Price Change YOY Foreclosure Change Florida 2,966 (41%) 22 (49%) (14%) 158% California 1,283 (20%) 21 (32%) (11%) 246% Colorado 285 (5%) 7 (31%) (2%) 40% Arizona 2,985 (23%) 13 (29%) (11%) 178% Texas 1,852 (1%) 5 (24%) (1%) 22% US Total 9,371 (11%) 11 (27%) (8%) 99% Ontario, Canada 2,100 (2%) 3 (10%) 5% Source: NAR CMHC 3Q07 NAR MLS NAHB 10/07 CMHC 3Q07 Case Schiller Zelman & Assoc. CMHC 3Q07 RealtyTrac 9/07 5 Analyst and Investor Day 31 October 2007

6 North America (excluding Canada) sales statistics update H to date H to date H H H H Ave no of outlets No of visitors* Cancellation rate 38% 40% 24% 48% 18% 13% Sales rate* Ave selling price $ *per site per week The above pro forma data has been estimated by the aggregation of the underlying historic information for Taylor Woodrow plc and George Wimpey Plc to illustrate the effect of the merger as though the transaction had taken place at the beginning of the earliest period presented. 6 Analyst and Investor Day 31 October 2007

7 Pattern of credit issues > Sub-prime and Alt-A loans almost non-existent in market place now > Jumbo loans (> $417k) largely unobtainable during Sep/early Oct, now more stability > General tightening of conditions and withdrawal of products across most lending categories > 0.5% interest rate reduction largely not passed onto customer immediately although has led to stability improvements. Real rates now starting to improve > High proportion of cancellations relate directly to credit issues 7 Analyst and Investor Day 31 October 2007

8 Our approach > Sales related > Prices and incentives to compete in local markets > Buying credit availability at reasonable (sub 6%) rates > Goal is to drive sensible per site rates > Cost related > Ramp up build cost and overhead cost savings > Reduction in number of overhead staff > Cash related > No new land approvals (ex Canada) > Exit from option deals > Focus on reducing speculative stock > Withdrawal/merger in markets with smaller presence (e.g. Dallas, SE Florida) > Increasing number of sites to be mothballed 8 Analyst and Investor Day 31 October 2007

9 Action taken: Land / Volume 100% Challenged US Markets - Total 13% 24% 21% 42% End 2006 Lots Walk away Renegotiate Mothball or sell Unaffected 9 Analyst and Investor Day 31 October 2007

10 North America (excluding Canada) current position Week Week % change Week Order book vol total 1,839 3,533 (48%) 1,561 Order book ASP $ (12%) 447 Order book vol for following year 486 1,145 (58%) 1,561 The above pro forma data has been estimated by the aggregation of the underlying historic information for Taylor Woodrow plc and George Wimpey Plc to illustrate the effect of the merger as though the transaction had taken place at the beginning of the earliest period presented. 10 Analyst and Investor Day 31 October 2007

11 UK market update > UK market has remained subdued in the normally strong autumn selling season > Pricing has remained stable, but visitors and reservations are down > No clear geographic differentials, although the Midlands has continued to under perform > Key drivers > Some direct impact of changing cost/availability of mortgages > Indirect impact of credit upheaval on customer confidence > Impact of continuing negative press on confidence 11 Analyst and Investor Day 31 October 2007

12 UK housing sales statistics update H to date H to date H H H H Ave no of outlets No of visitors* Cancellation rate 23% 20% 17% 20% 18% 24% Sales rate* Ave selling price *per site per week The above pro forma data has been estimated by the aggregation of the underlying historic information for Taylor Woodrow plc and George Wimpey Plc to illustrate the effect of the merger as though the transaction had taken place at the beginning of the earliest period presented. 12 Analyst and Investor Day 31 October 2007

13 Four weekly trends in UK Sales rate Taylor Wimpey UK Sales Rate TW 2005 sales rate (4) TW 2006 sales rate (4) TW 2007 sales rate (4) Week 13 Analyst and Investor Day 31 October 2007

14 Pattern of customer activity > Significant fall in investor sales > Increasing number of customers affected by availability or cost of mortgages > Customers taking longer to commit/making multiple visits > Higher cancellations driven by customers reduced confidence > A sense of wait and see for new sellers and buyers 14 Analyst and Investor Day 31 October 2007

15 Our approach > Continual review of volume/pricing strategy > Ramp up speed of build cost and overhead cost savings > Continued focus on back to basics simplifying and standardising processes. > Focus on extracting value from longer term sites: > Planning gain on strategic land > Manage value from larger sites > Reduction in WIP per site > Reduction in underlying build cost base 15 Analyst and Investor Day 31 October 2007

16 UK current order book position Week Week % change Order book vol total 11,276 11,325 - Order book ASP Order book value m 2,018 2,016 - Order book vol for following year 4,116 4,208 (2%) The above pro forma data has been estimated by the aggregation of the underlying historic information for Taylor Woodrow plc and George Wimpey Plc to illustrate the effect of the merger as though the transaction had taken place at the beginning of the earliest period presented. 16 Analyst and Investor Day 31 October 2007

17 Outlook in UK > Expect 2008 to be a more subdued housing market than 2006/7. > Key spring selling season will depend on a return to confidence and probably an interest rate adjustment. > Underlying supply remains tightly constrained in fact the process is getting harder not easier. > Underlying demand is strong but fragile in the short term. > Underlying margin improvement plans are key: > Original cost reduction plans > Increasing proportion of strategic land > Synergy savings 17 Analyst and Investor Day 31 October 2007

18 18 Q&A

19 19 NA Operations & Integration Sheryl Palmer

20 NA strategy Balanced by > Product/price > Geography > Development/homebuilding Short term strategy > Return cash > Reduce total investment in land/wip > Emphasis on build cost reduction and control of overheads > Detailed asset strategy 20 Analyst and Investor Day 31 October 2007

21 Decision Tree Owned? Optioned? Contributing? One-off Costs? No One-off Costs? Not Contributing? Stop! Mothball Not Profitable? Profitable? Stop! Mothball? Continue. Manage sales rate Stop! Renegotiate or walk away Continue. Manage drawdowns > Firm action to reduce landholding well underway 21 Analyst and Investor Day 31 October 2007

22 NA strategy Mid/Long term strategy > At scale operations in existing markets > Develop key markets > Evaluate complementary markets over next 24 months 22 Analyst and Investor Day 31 October 2007

23 Balanced by geography US Average: Pop:1.2% Emp:1.2% Pop 1.4% Emp (0.9)% Pop 1.8% Emp 2.4% Pop 0.9% +xx% pop Emp 2.0% +xx% jobs Pop 0.5% Emp 1.5% Pop 1.3% Emp 2.8% > Sun belt region > Positive migration > Job growth Pop 0.7% Emp 2.4% Pop 0.8% Emp 1.5% Population statistics annual change in population by state Q206-Q207 (sources: Census Bureau, Zelman and Associates, Statistics Canada) Employment statistics Seasonally adjusted non-farm employment statistics, Sep 06-Sep07. ( Bureau of Labor Statistics, Statistics Canada ) 23 Analyst and Investor Day 31 October 2007

24 Existing market summary West Region Sacramento/ Reno - 12 sites - Mid-market position - Single family detached Garden Gate, Sacramento Central Valley, CA - 11 sites - Mid-market/executive market position - Single family detached Magnolia at Patterson Gardens 24 Analyst and Investor Day 31 October 2007

25 Existing market summary West Region Bay Area - 8 sites - Mid-market position - Single family detached, townhomes and condos Marburg Place Southern CA - 12 sites - Mid-market to executive market position - Single family detached, townhomes Las Colinas at Portola Springs 25 Analyst and Investor Day 31 October 2007

26 Existing market summary West Region Denver - 11 sites - Mid-market to executive market position - Single family detached The Crossing at Riverdale 26 Analyst and Investor Day 31 October 2007

27 Existing market summary South West Region Phoenix - 41 sites - Starter homes to mid-market position - Single family detached Voyage collection at Shamrock Estates 27 Analyst and Investor Day 31 October 2007

28 Existing market summary Texas Region Houston - 34 sites - Starter homes to luxury market position - Single family detached Avalon at Seven Meadows Austin - 26 sites - First move-up to luxury market position - Single family detached Steiner Ranch 28 Analyst and Investor Day 31 October 2007

29 Existing market summary Florida Region Jacksonville - 10 sites - Starter homes to executive market position - Single family detached and townhomes Segovia Townhomes at World Commerce Centre Tampa - 18 sites - Entry level to luxury market - Single family detached, townhomes, large master plan amenitised communities Fish Hawk Ranch 29 Analyst and Investor Day 31 October 2007

30 Existing market summary Florida Region Orlando - 21 sites - Starter homes to mid-market position - Single family detached and town homes Tuscany Place Sarasota - 11 sites - Mid-market to luxury position - Single family detached and townhomes, communities Crystal Lakes 30 Analyst and Investor Day 31 October 2007

31 Existing market summary Florida Region South East/South West Florida - 16 sites - Mid-market to luxury position - Community living, single family detached and multi-family Addison at Mirasol Country Club 31 Analyst and Investor Day 31 October 2007

32 Existing market summary Ontario Region Toronto, Ottawa - 31 sites inc 13 high-rise - Starter home to executive market position - High-rise apartments, townhome, single family detached Battery Park, Toronto 32 Analyst and Investor Day 31 October 2007

33 Development strength supports homebuilding operations Development operations made up 23% of combined lot/unit sales in % of the combined landbank is self-developed. Home sales made up 94% of the combined NA revenues and 93% of combined NA gross profit in 2006 (pre-exceptionals). 33 Analyst and Investor Day 31 October 2007

34 Diverse but balanced product portfolio > Diverse product portfolio based on consumer segmentation > Entry level to luxury homes > Core business price point - $120k to $600k > Multi-family and townhomes to full service country clubs > High-rise apartments and bungalows 34 Analyst and Investor Day 31 October 2007

35 Scaled operations Divisional and regional scale brings > Overhead efficiencies > Buying power > Penetration and presence > Marketing efficiencies Number of divisions at scale* Pre-merger Post-merger Taylor Woodrow 3 (of 11) Morrison Homes 8 (of 12) Combined 13 (of 14) *At scale defined as 250 or more completions per year 35 Analyst and Investor Day 31 October 2007

36 North American Integration Update Benefits revisited > Critical mass in more markets > Broader product offering > Inherent geographical overlap > Synergies 36 Analyst and Investor Day 31 October 2007

37 Key integration highlights > All people decisions complete by 31 July 2007 > Single consumer and corporate brand > Property moves completed by 30 Sept 2007 > ERP choice is Newstar > ERP implementation started. Complete by early 2009 > Bradenton is NA Head Office > Decentralized finance org structure adopted 37 Analyst and Investor Day 31 October 2007

38 Organizational restructuring Taylor Woodrow Morrison Homes Combined Pre-merger Combined Post-merger 4 regions 2 regions 6 regions 5 regions 11 divisions 12 divisions 23 divisions 14 divisions 38 Analyst and Investor Day 31 October 2007

39 New organization structure CEO Sheryl Palmer West Mike Forsum Southwest Steve Wethor Canada Brian Johnston Texas Tim Towell Florida Lou Steffens Denver Sacramento/Reno Central Valley S. Area S. California Phoenix High Rise Low Rise Austin Houston Jacksonville Orlando Tampa Sarasota/ SE Florida/ SW Florida 39 Analyst and Investor Day 31 October 2007

40 Brand solution > Taylor Wimpey plc > Simplified from original approach > Taylor Morrison proposed as US homebuilding brand (B to C) > Taylor Woodrow Communities will be the community developer (both B to B and B to C) > Monarch unaffected in Ontario 40 Analyst and Investor Day 31 October 2007

41 Update on synergies and other savings Analysis of total expected synergy and savings benefits $m Synergy savings Market related savings Total potential Headcount Property 2-2 Strategic sourcing Mortgage/title operations 4-4 Sales efficiencies 4-4 IT 2-2 Total Analyst and Investor Day 31 October 2007

42 Action taken: Overhead Region Headcount 31/12/06 Headcount Today Variance Florida (222) California (108) Colorado Arizona (48) Texas (51) Canada (41) Corporate (84) Total 1,891 1,342 (549) > Right-sizing will continue through 2008 > Approximately half of headcount reduction synergy related 42 Analyst and Investor Day 31 October 2007

43 Procurement synergies > National agreements > 5 exclusive suppliers (hardware, appliances, paint, fixtures, faucets) deals agreed > Regional agreements > Lumber, framing, concrete etc > Front end discount and rebate proposals > Divisional re-bid > Price comparison and benchmarking exercise complete > Re-bid complete by December 31, 2007 nationally > Exploits best practice pre-merger and increased volumes 43 Analyst and Investor Day 31 October 2007

44 Procurement synergies Analysis of anticipated procurement synergies National agreements Regional agreements Divisional re-bids Total $m Note: Additional cost savings will be recognized in addition to synergies above. 44 Analyst and Investor Day 31 October 2007

45 Properties Regional co-location benefits $m South West Texas Florida Corporate Total Analyst and Investor Day 31 October 2007

46 Sales efficiencies > National synergy from presence in limited markets as volume homebuilders and developer > Housebuilding margin consisting of new selling opportunities in Phoenix Houston Austin Total $m Analyst and Investor Day 31 October 2007

47 Other benefits > Sales and marketing efficiencies additional potential available > Single mortgage relationship > 65% ownership > Higher captive rate > Higher margins per $ loaned > Single title solution > Florida and Texas only > IT Savings > SAP redundant by 12/31/08 47 Analyst and Investor Day 31 October 2007

48 Summary > US remains key growth opportunity > Return to growth strategy when normalized markets return > Canada remains key element of the NA portfolio > Integration is on track: > Synergies will be delivered/exceeded as advised > Operational processes integrated by 12/31/07 > Back office systems integrated by 12/31/08 48 Analyst and Investor Day 31 October 2007

49 49 Q&A