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W&W Group pushing ahead with future-oriented projects

The Wüstenrot & Württembergische Group (W&W) is continuing to pool its forces. On the one hand, the specialist for financial provisions is moving decisively to put construction financing under one roof. On the other, it is expanding its new company campus. These projects were presented at the Annual General Meeting of W&W AG, which took place in Ludwigsburg today. In the meantime, new business is developing positively, entirely in the spirit of the growth programme “W&W@2020”.

The construction financing business will be processed by Wüstenrot Bausparkasse AG in future. As a result, the construction financing business of Württembergische Lebensversicherung AG and of Wüstenrot Bank AG Pfandbriefbank will be transferred to the building society. The building society will, subject to approval by the supervisory authorities, make use of the options afforded by the new home loan and savings law.

The transition is expected to take place within a year and to lead to substantial synergies: the elimination of interfaces, lower settlement costs, IT simplifications and the freeing up of capital. The staffing effects still need to be clarified with the works councils of the affected companies.

As a result, the Wüstenrot Bank can then fully concentrate on its new role as a digital transaction bank. This concerns current accounts, card services, fund brokers and online activites.

New company campus with some 4,000 modern workspaces

In another respect as well, the W&W Group is relying on the pooling of its forces: in the consolidation of workplaces at the company’s Kornwestheim location. The W&W campus is scheduled to be completed by 2023 in an additional construction phase. Until now, completion in two additional phases had been contemplated. The basis for this construction phase is the revised draft for the campus prepared by the architecture firm Ortner + Ortner Baukunst. This envisions five additional office buildings with 2,800 workspaces. In addition, at the northern tip of the W&W campus, taking the place of a 12-storey high rise, there will be an office building based on the standard layout of the campus building units. This has an inviting effect and signifies transparency. With a structural opening onto an interior courtyard with a multi-storey lobby, this northern building will mark the entrance structure. Work on the second phase is scheduled to begin in 2018, and over the ensuing five years, all new buildings are to be completed and occupied one after another. The first two new buildings should be ready for occupancy on schedule at the start of 2017. The investment volume for the second construction phase amounts to about EUR 280 million, and as a whole, the new campus will cost about EUR 410 million.

For more than 10 years now, W&W has been committed to consolidating operations into a single company. For the first time in the 17-year history of the financial services group, the new campus will offer a central location for both the administrative and operational units of both large divisions. Short pathways, more direct communication, more solidarity will result. The Group is doing away with the complexity of the existing building situation, with a variety of satellites in Stuttgart, Ludwigsburg, Kornwestheim, and Karlsruhe and highly diverse architectural languages, in favour of a clear architectural structure. The new campus stands for the reduction of complexity and for greater homogeneity, and it leaves the outdated office landscape, which in many cases was badly in need of renovation, far behind it.

Dr Michael Gutjahr, W&W Executive Board member in charge of personnel: “With the new campus, we will be able to offer a total of 4,000 modern workspaces at the Kornwestheim location in just a few years, which will be state of the art in technological and architectural terms, make flexible forms of working possible and complete our consolidation into a specialist for financial provisions.”

Review of the residential use of the Feuersee site

Parallel to the progress on the campus construction, the W&W Group is currently reviewing whether its location at Feuersee in Stuttgart-West can have a stronger residential use. For this purpose, it has commissioned a feasibility study and is in contact with the municipality. However, the internal W&W bodies have not yet decided on the conversion of some of the office spaces into residential rental housing. This primarily depends on the legal feasibility and the economic viability of the project. If the course is set in this direction, residential use cannot be expected until 2021, at the earliest.

The Feuersee location has total floor space of 32,000 m2. Currently, 27,000 m2 are being used by about 1,200 employees. By rededicating use in some cases and dividing the project into three construction phases (Johannesstraße, Gutenbergstraße and Senefelderstraße), some 200 residential units could be created. At the same time, however, existing building stock will continue to be used as offices. The project is related to the above-described “W&W Campus” project.

Units are already being gradually relocated from Stuttgart to Kornwestheim/Ludwigsburg, which would likewise be the case in the event of stronger residential use of the Feuersee location in Stuttgart. The background to the campus concept is, first, pushing ahead with the consolidation of the Group and, second, creating modern office worlds that enable flexible forms of working and offer attractive workspaces. At all locations there is an urgent need for renovations, which is further underscored by the construction plans.

Dr Michael Gutjahr: “We have the choice of modernising our buildings at Feuersee as either office or residential properties. What is certain is that on account of the housing shortage in Stuttgart and our tradition as a housing financier, we are reviewing whether we can make a contribution to urban living through a corresponding change of use.”

Financial year 2015 with record figures – strong start in 2016

At EUR 274.3 million, the financial services group posted the highest net-income figure in company history in 2015. With profits rising by about 15% to EUR 62.6 million, the success story continued in the first quarter of 2016. Details about the previously published business figures were shared with the shareholders today at the meeting in Ludwigsburg, and it was proposed to them that the dividend for the 2015 financial year be increased from EUR 0.50 to EUR 0.60 per share.

The results for the first quarter of 2016 also give the W&W Group grounds for optimism, and consolidated net income for 2016 is now expected to top EUR 220 million, depending on how the capital markets develop and the occurrence of extreme weather events.

Growth was also able to be achieved over the ongoing course of the current financial year. To mention just two examples, gross new business in home loan and savings rose by nearly 20% to some EUR 5.7 billion from January to April 2016, and gross premiums written by Württembergische Versicherung grew by 2.5% to EUR 918 million, which was above the market average. The solid development in corporate customer business had a positive impact here.

The losses due to the current severe weather patterns "Elvira" and "Friederike" amount to EUR 35 million for the W&W group, according to current calculations, but the reinsurance has relieved this noticeably. The Württembergische Versicherung is currently working on helping affected people and businesses in the fastest and most straightforward way.

Success story to be continued

With regard to business performance, CEO Dr Alexander Erdland remarked at the Annual General Meeting: “We were able to achieve this only because of our employees and tied agents, and their tireless efforts. Stronger growth is of great importance to the attractiveness of our jobs.”

There is continued cost pressure in the industry, he said, also as a result of persistently low interest rates. At the same time, said Erdland, the W&W Group is in the midst of confronting the challenge of fundamentally overhauling the established IT landscape. According to Erdland, the task is to push forward with cross- and up-selling across various sales channels, as well as with digitalisation, which constitutes the core of the new growth programme W&W@2020. Roughly EUR 650 million will be invested in the programme by 2018.

At the Annual General Meeting, Erdland emphasised people’s basic need for financial provision: “It’s up to us to give better answers compared to former and new competitors, in order to continue Wüstenrot & Württembergische’s success. The strengths that others do not possess as we do can only come from our group as a whole. We can, we must, and we will do more about this.”

Increased attention on stock

In recent months, W&W stock has garnered significantly greater attention as a result of W&W’s solid, future-oriented business model and a roughly 20% increase in free float in 2015. For instance, over the course of nearly one year, monthly trading volume jumped from about EUR 2 million to EUR 15.5 million. In addition, on 1 December 2015, W&W stock was admitted to the Prime Standard by the Frankfurt Stock Exchange. This created the conditions for inclusion in the SDAX index, which was accomplished on 21 March 2016, enabling W&W AG to join the largest stocks listed on the SDAX. Analysts have in recent weeks given W&W shares a “buy” recommendation and consider a price above EUR 25 to be appropriate.