Page 37 - Hoftex Annual Report 2018 EN

In order to meet our obligations for post-employment employee benefits on the basis of deferred com- pensation, we have taken out endowment life insurance policies, which are pledged to the qualifying employees and therefore exempt from attachment by all other creditors. As of fiscal 2009, these assets are carried at fair value as communicated to the Group by the insurance company. Pursuant to Section 246(2) sentence 2 HGB, the fair value of plan assets is offset against the matched post- employment benefit obligations. If the obligations exceed the plan assets, the excess is recognised in provisions. If the fair value of the plan assets exceeds the obligations, this must be recognised under the item “Excess of plan assets over post-employment benefit liability” on the asset side of the balance sheet. The acquisition cost of the offset assets is almost exactly the same as the fair value amounting to EUR 3,088 thousand (prior year: EUR 3,189 thousand), and the settlement amount of the offset obligations amounts to EUR 4,447 thousand (prior year: EUR 4,430 thousand), resulting in a net post- employment benefit liability (provision) of EUR 1,359 thousand (prior year: EUR 1,241 thousand). In the interest income/expense item, expenses for the reversal of discounting on pension obligations are offset against the expected return on pension plan assets. Expenses for the reversal of discounting on pension obligations amounting to EUR 366 thousand (prior year: EUR 426 thousand) are offset against the expected return on pension plan assets of EUR 31 thousand (prior year: EUR 29 thousand).
Letter to Shareholders Supervisory Board Report Group Management Report Consolidated Financial Statements Annexes
Provisions for the post-employment benefit entitlements of individual employees and pensioners are calculated using the projected unit credit method taking into account actuarial principles and all binding obligations on the balance sheet date. The present value is calculated using a 3.21 % interest rate and a 1.5 % rate of benefit increase. As provided in Section 253(2) sentence 2 HGB, the under- lying interest rate used to discount pension obligations corresponds to the average market interest rate from the past ten fiscal years based on an assumed term of 15 years as calculated and pub- lished by the German Bundesbank in accordance with the German Regulation on the Discounting of Provisions (Rückstellungsabzinsungsverordnung, or RückAbzinsV). The excess amount on 31 December 2018 resulting from exercising the option to choose between a seven and a ten-year average discount rate is EUR 703 thousand (prior year: EUR 725 thousand). The corresponding amount for HOFTEX GROUP AG of EUR 569 thousand (prior year: EUR 585 thousand) falls short of the dividend pay-out threshold.
The Company pension scheme has been closed to new members since 1976. According to an agree- ment dated 14 December 1994, all unvested and vested pension entitlements were fixed and guaran- teed at their corresponding Deutschmark amount with effect from 31 December 1994.
We use Prof Dr Klaus Heubeck’s 2018 G Standard Tables published in 2018 for estimating biometric probabilities. The salaries have already been frozen and will therefore no longer be increased. As the scheme is closed to new members, no fluctuation rate is taken into account.
Pursuant to Section 290(2) no. 4 HGB and its interpretation in DRS 19 (published on 18 February 2011), relief funds (Unterstützungskassen) must now also be included in consolidation, contrary to previous accounting policies. According to this interpretation of the law, the Hoftex Group is required to include its relief fund in the consolidated annual financial statements. For the most part, the relief fund’s obligations are funded by life insurance policies. The present value of the claims against insurance companies is EUR 1,816 thousand (prior year: EUR 1,921 thousand). Post- retirement benefit obliga- tions, valued as stipulated by Section 253(1) sentence 2 HGB, amount to EUR 2,694 thousand (prior year: EUR 2,717 thousand). The net liability of EUR 878 thousand (prior year: EUR 796 thousand) is not recognised in the consolidated annual financial statements pursuant to Article 28(1) EGHGB.
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