Taylor Wimpey plc · LSE:TW.
Taylor Wimpey — Investor Day (November 2009)
67 slides from Taylor Wimpey's investor day presentation, Nov 4, 2009
Slide 1: Analyst and Investor Day
Analyst and Investor Day Augusta Park, Andover 04 November 2009 1 1
Slide 2: Agenda
Agenda • Trading Update & UK Overview Pete Redfern • North Division & Build Costs Fergus McConnell • South Division & House Type Range Peter Truscott • Regulatory Environment Peter Andrew • Value Creation Capacity Chris Rickard • Lunch • Introduction to Augusta Park Nigel Holland • Site Visit 2
Slide 3: Trading Update
Trading Update Pete Redfern, Group Chief Executive 3 3
Slide 4: Market and current trading - UK
Market and current trading - UK • Housing market performing in line with half year expectations • H2 sales rate of 0.56 per site per week, with net price improvement of c.3% • Steadily increased build rates and opened 22 new outlets • Starting to repair margins in order book and landbank • Approved
Slide 5: Market and current trading – North America
Market and current trading – North America • Continued US market stability in second half to date • Canadian market has recovered and is performing well • Sales volumes of 0.6 per site per week, with stable pricing • Maintained tight control on inventory levels • Approved over 2,200 plots of new lan
Slide 6: Key progress and focus areas
Key progress and focus areas • Debt levels reduced by c.£1bn over the last 12 months • Reflects over £500m of cash generation excluding new equity • In addition, land and trade creditors have been reduced by over £500m in last 9 months • Back to business as usual in all markets: • Drive down overhea
Slide 7: UK Overview
UK Overview Pete Redfern, Group Chief Executive 7 7
Slide 8: Position update
Position update • Stable business structure with 23 regional businesses • Operating for around 18 months with current structure • Fully staffed in almost all areas – e.g. land • Strong and experienced senior operating team • Strong land position, with sensible valuations and good balance of location
Slide 9: Position update
Position update • One company one brand: Taylor Wimpey - all legacy brands will be phased out by mid 2010 • Efficient use of marketing spend for smaller business • Important for internal focus • Avoid ‘double heading’ self competition except where: • Long land position AND • Clear market depth/diffe
Slide 10: UK management team
UK management team Chief Executive Pete Redfern Divisional Chairman Divisional Chairman Land and Planning Finance Director HR Director North South Director Fergus McConnell Peter Truscott Peter Andrew Chris Carney Maria Pilfold 10
Slide 11: Management strength and industry experience
Management strength and industry experience Chief Executive Pete Redfern Present at analyst day 9 years Not present at analyst day Divisional Chairman – North Divisional Chairman – South Fergus McConnell Peter Truscott 21 Years 25 Years 3 Divisional MDs 3 Divisional MDs and 1 Business Unit MD Divisi
Slide 12: Approach to land
Approach to land • Maximise value of existing landbank • Re-plan and re-engineer sites • Manage pace/product to lift prices • Focus on value in existing strategic landbank • Add new sites where quality and value can be found • Product mix that fits strategy – good spread of all product types • Inves
Slide 13: Strategic land
Strategic land • Strategic landbank now stands at c.86k potential plots, which are risk weighted • Split across 223 sites • Owned plots generally have very low book costs c. £8.2k per owned acre (32% of total) • Controlled plots are typically held under options that allow us to purchase at a signifi
Slide 14: High quality strategic sites across the country
High quality strategic sites across the country Pipeline strategic sites Strategic sites with planning consent transferred to regional business in 2008/09 14 7
Slide 15: New land approvals since July 2009
New land approvals since July 2009 Key data No. of plots 1,011 Average cost per plot £k 18.0 % of apartments in the landbank in London 99% % of apartments in the landbank exc. London 13% Est. average selling price of private units £k 180.4 % of affordable housing 19% 15
Slide 16: Strengthened landbank
Strengthened landbank Short term Cost per plot Land cost per % of landbank £000 plot as a % of apartments in Owned plots Plots ASP landbank As at 30 September 2009 Scotland and North East 9,031 18.1 10.7% 8.6% Yorkshire and North West 6,836 30.8 22.3% 31.8% West Midlands* 5,169 17.7 12.8% 27.9% Nort
Slide 17: Q&A
Q&A 17
Slide 18: North Division & Build Costs
North Division & Build Costs Fergus McConnell, Divisional Chairman - North 18 18
Slide 19: North Division
North Division • 10 regional business units • 145 outlets Scotland and North East • 1,832 completions in H1 2009 Yorkshire and • 6.8% of H1 2009 completions North West were social West Midlands • 32.1% of H1 2009 private completions were apartments • Current order book of 1,981 homes • 15.0% gross m
Slide 20: North landbank – overview
North landbank – overview Scotland and Yorkshire and West North Division North East North West Midlands* total* As at 30 September 2009 (unless otherwise stated) H1 2009 completions 609 733 490 1,832 Short term landbank plots 9,031 6,836 5,169 21,036 Landbank years 6.7 4.0 4.7 5.1 H1 2009 Average se
Slide 21: North landbank – overview
North landbank – overview Scotland and Yorkshire and West Midlands North Division North East North West total As at week 43 2009 (unless otherwise stated) Number of current outlets with 25 53 38 116 NRV provision Number of current outlets without 19 10 - 29 NRV provision Number of current outlets 44
Slide 22: Focus area - build cost
Focus area - build cost • Efficiency of build cost base is critical to: • Recovering margin on existing sites • Maximising value on new sites acquired • Areas of significant opportunity incorporated into standard practice: • Ongoing savings post merger to drive out costs, particularly from Taylor Wo
Slide 23: Build cost model – indicative example
Build cost model – indicative example Baseline New build on New build on Targeted Per unit Cost existing sites new sites cost £000 % saving % saving £000 S/structure - Labour 24.0 15% 15% 20.4 S/structure - Materials 24.0 8% 8% 22.1 Foundations 7.0 5% 7% 6.5 Local site works 10.0 5% 7% 9.3 Main site
Slide 24: Merger build cost savings example
Merger build cost savings example Taylor Wimpey Midlands Westminster Clover Bank Reduction Reduction Place (Wolverhampton) £’s % (Rushall) Dwelling Structures £/Sq Foot £44.20 £36.28 £7.92 17.9% All in Build Costs £/Sq Foot £80.68 £69.53 £11.15 13.8% 24
Slide 25: Post merger build cost example
Post merger build cost example Taylor Wimpey Midlands • Westminster Place £44.20 per sqft • Clover Bank £36.28 per sqft 25
Slide 26: Build cost progress - dwelling structures
Build cost progress - dwelling structures Harvington 994 sq ft Taylor Wimpey North West Aug 2009 Jan 2008 Mar 2009 Jun 2009 ( 930 sq ft ) Dwelling Structure £’s 45,352 39,315 35,867 32,102 Dwelling Structure - £’s/Sq 45.63 39.55 36.08 34.44 Foot % Reduction from Jan 08 13.3% 20.9% 29.2% 26
Slide 27: Build cost – benchmarking impact
Build cost – benchmarking impact Dwelling Structure Tracker 1089 standard house type Jan 2008 Jun 2009 % Reduction TW North East 44,328 35,481 20.0% TW North Yorkshire 42,487 34,843 18.0% TW West Yorkshire 40,328 34,301 14.9% TW Manchester 39,556 35,585 10.0% TW North Midlands 42,085 34,628 17.7% •
Slide 28: Summary
Summary North Division • Strong and stable management team has delivered steady performance in challenging market conditions • 2009 completions secured and 2010 order book developing ahead of plan with slight increase in margins • Quality landbank at an average cost of 14.6% of ASP Build costs • Con
Slide 29: Q&A
Q&A 29
Slide 30: South Division & House Type Range
South Division & House Type Range Peter Truscott Divisional Chairman - South 30 30
Slide 31: South Division
South Division • 13 regional business units South East • 172 outlets and London • 2,859 completions in H1 2009 Eastern • 25% of H1 2009 completions were social South West • 42.4% of H1 2009 private completions were apartments • Current order book of 4,310 homes • 13.5% gross margin (before sales cos
Slide 32: South landbank – overview
South landbank – overview As at 30 September 2009 South East South (unless otherwise stated) Eastern South West and London* Division total* H1 2009 completions 1,003 857 999 2,859 Short term landbank plots 12,713 10,714 14,157 37,584 Landbank years 5.3 5.4 5.6 5.4 H1 2009 average selling price £k 14
Slide 33: South landbank - overview
South landbank - overview South East South As week 43 2009 (unless Eastern South West and Division otherwise stated) London Total Number of current outlets with 45 27 40 112 NRV provision Number of current outlets without 20 22 18 60 NRV provision Number of current outlets 65 49 58 172 Number of out
Slide 34: South East and London– overview
South East and London– overview West London South East South Southern East South East As at 30 September 2009 West Counties London* and London (unless otherwise stated) Thames Total* H1 2009 completions 287 193 133 186 200 999 Short term landbank plots 2,015 3,753 1,829 3,147 3,413 14,157 Landbank y
Slide 35: National house type range
National house type range • Bryant Homes - 65 standard types, 70% compliance, large central overhead support • George Wimpey – 32 ‘preferred’ types, partial compliance, very little central support Wimpey Homes McLean Homes Standard house types, Separate regional house types, strong central support n
Slide 36: National house type range rationale
National house type range rationale • Huge potential ‘costs’ benefit • Mitigation of risk (particularly sustainability agenda) • Enables Regional Business Unit Management to focus on other value adding activities 36
Slide 37: The design challenge
The design challenge Cost Customer preference Range Profile Compliance Ease of build Flexibility Plot efficiency 37
Slide 38: The design solution
The design solution • The range is designed to be future proof (approximately 7-10 years) • Latest design and sustainability requirements can be “bolted-on”, rather than the house re-designed from scratch • To achieve flexibility in planning – we have a range of 61 floor plans but only 43 shells • T
Slide 39: Implementation
Implementation • New product range due to be rolled out 2010 – targeted at 70% of output • Standard components to be utilised with a “catalogue” of elevational features which can be chosen to suit site requirements and local vernacular • Scope for significant cost savings due to fabric of the buildi
Slide 40: 40
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Slide 41: Front elevation
9000 FRONT ELEVATION CONTEMPORARY NEUTRAL PLANS TRADITIONAL
Slide 42: Summary
Summary South Division • 2009 sales secured • Strong orderbook for 2010 with improving pricing and margins • Stable regional business unit structure with excellent management and assets House type range • Focus on driving cost savings, aided by introduction of new standard house type range 42
Slide 43: Q&A
Q&A 43
Slide 44: Regulatory Environment
Regulatory Environment Peter Andrew, Land & Planning Director 44 44
Slide 45: Taxation, policy and regulation burden
Taxation, policy and regulation burden • Considerable increase in legislation over the last few years with more impacting in 2010 onwards: • Community Infrastructure Levy (CIL) to be introduced from 2010 • Zero Carbon initiative – Code for Sustainable Homes • 2010 Code 4 • 2013 Code 5 • 2016 Code 6
Slide 46: Our response – managing the risk
Our response – managing the risk • Active involvement with Government departments and HBF: • CLG/HBF Community Infrastructure Levy working group • CLG Technical Advisory Group for Lifetime Homes • HBF Energy Efficiency and the Code • HCA Compliance with Standards working Group • DOE/HCA Waste Regula
Slide 47: Political influences on housebuilding sector
Political influences on housebuilding sector • Very different approach to housing delivery and planning from the political parties • Labour party: • Gordon Brown made housing a key priority – brought Ministerial role into Cabinet • Top down approach with Regional and Local Authority housing targets
Slide 48: Political influences on housebuilding sector
Political influences on housebuilding sector • Conservative party (General Election likely May 2010) • Strong focus on sustainability and green issues – the detail of policy is still to be published • The third Housing/Planning Green Paper expected by the end of the year and will include: • Abolishi
Slide 49: Government initiatives for housebuilding industry to counter reduced output
Government initiatives for housebuilding industry to counter reduced output • Homebuy Direct – HCA/housebuilder shared equity partnership • TW allocation of £15.3m on 645 plots • To date 223 plots completed/ proceeding using £3.6m of allocation and a further 53 awaiting HCA approval • Kickstart – HC
Slide 50: Summary
Summary • Proposed new legislation presents a risk to timescales and scheme viability but we are working with policy makers to make them workable and affordable • We are actively taking part in current Government initiatives to increase housing volumes during the current economic downturn • Any chan
Slide 51: Q&A
Q&A Wimpey! Wimpey
Slide 52: Value Creation Capacity
Value Creation Capacity Chris Rickard, Group Finance Director 52 52
Slide 53: Land spend capacity
Land spend capacity • Any land purchase commitments prior to 07 April 2009 are ring-fenced from land spend • Non-UK land spend FY09 FY10 FY11 FY12 £m US 79 84 160 160 Canada 63 30 38 27 Europe 14 4 6 0 • Non-UK land spend is measured on a commitment basis, not cash spend • UK land spend •“… does not
Slide 54: Covenant tests
Covenant tests Position as at 30 Sept 2009 Actual Covenant Headroom Operating cash flow Q3 September 158.4 (359.0) 517.4 actual £m Tangible net worth £m 1,569.2 1,061.5 507.7 Asset leverage 31.0% 64.9% 33.9ppt Operating cash flow future testing dates Covenant £m 31 December 2009 (51) 31 March 2010 1
Slide 55: Unconditional UK land spend commitments as at September 2009
Unconditional UK land spend commitments as at September 2009 Actual Estimated Estimated 2008 2009 FY 2010 £m £m £m Payments made to date 538 280 Expected payments in respect of - 14 unconditional contracts Total 538 294 114 Note: numbers are rounded Total excludes conditional commitments 55
Slide 56: Managing WIP
Managing WIP Private plots build status (plots) Sold* Unsold – split by build stage Total under build All stages Foundation Superstructure Roof Second Build All stages tile fix complete Sept 2009 3,581 888 657 364 382 165 2,456 Sept 2008 3,656 1,561 747 1,335 849 1,361 5,853 56
Slide 57: Q&A
Q&A 57
Slide 58: Introduction to Augusta Park
Introduction to Augusta Park Peter Truscott & Nigel Holland, Regional Managing Director, Southern Counties 58 58
Slide 59: Augusta Park – strategic approach
Augusta Park – strategic approach • Dual branded site: Bryant and Taylor Wimpey • Site already partly rebranded to Taylor Wimpey (from George Wimpey) with balance of rebrand in early 2010 • Life span of 15 years (to 2025) • Currently Taylor Wimpey only new build developer in area • 188 plots sold to
Slide 60: Augusta Park, Andover
Augusta Park, Andover • Strategic land site assembled through parcels optioned by George Wimpey and Taylor Woodrow and brought through planning by Taylor Wimpey in 2008 • All options were held at a discount to open market value • Phased land payment terms over 3 years • Land cost c. £17.8k per plot
Slide 61: Augusta Park, Andover
Augusta Park, Andover • Outline planning (including infrastructure) consent August 2008 • Infrastructure commencement September 2008 • Phase 1 detailed consent November 2008 • Phase 1 build start November 2008 • Temporary sales centres opened Q1 2009 and show homes opened Q2 2009 • Q1 2009 – 1.04 sa
Slide 62: Cashflow
Cashflow • Actions taken in 2008 to generate cash and help fund development • Land sale and build contract for Annington Developments for 52 homes for 09 delivery – housing for MoD personnel based locally • Provision of 154 affordable homes for Sentinel Housing (42 for 09 delivery) • These actions m
Slide 63: Driving value from the site
Driving value from the site • Maximising selling prices • Ave £181 per sqft ytd – 1.5% reduction in level of incentives from March 2009 • Plot specific pricing • 20% of sales part exchange linked – small profit on part exchange activities • Currently no unsold part exchange stock • Minimising cost •
Slide 64: Health & Safety Briefing
Health & Safety Briefing 64 64
Slide 65: Health, Safety & Environmental Induction
Health, Safety & Environmental Induction 65
Slide 66: No full induction today because you will be accompanied by a designated escort
No full induction today because you will be accompanied by an designated escort but remember Construction sites can be dangerous places. Over 200 workers were killed on construction sites in the UK over the past three years! About half as the result of falls! About a third by being struck by plant!
Slide 67: Therefore: Follow any instructions given by your escort on site
Therefore: Follow any instructions given by your escort on site Keep to the designated pedestrian routes Be aware of vehicles and plant when crossing site roads However, if you want to investigate something in more depth – just ask! 67