Page 16 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

In terms of gross revenue, the share of personnel expenses grew from 26% to 28%, chiefly caused by
rising personnel costs in the TENOWO Division. To accelerate the establishment of new business
sectors, new organisational structures were implemented in 2019 and investments were made in
qualified personnel with industry and technology expertise.

Fixed cost depreciation and amortisation grew by EUR 0.8 million compared to the prior year to
EUR 11.3 million. The increase is mainly the result of investments in the TENOWO division.

Other operating expenses decreased to EUR 23.7 million (prior year: EUR 24.6 million), primarily
attributable to a EUR 0.4 million reduction in selling expenses, EUR 0.3 million less in currency
losses and a EUR 0.1 million drop in administrative costs.

The net interest result of EUR -1.6 million (prior year: EUR -1.8 million) and taxes on income of
EUR 0.1 million (prior year: EUR -0.5 million) resulted in EUR 3.4 million in earnings after taxes
compared to EUR 8.8 million the year before. The lower tax burden in 2019 is largely influenced by
refund claims for the 2019 year under review.

At EUR 2.7 million, the consolidated earnings for the 2019 year under review (prior year:
EUR 8.0 million) correspond to earnings per share of EUR 0.50 (prior year: EUR 1.47). We are
proposing a dividend of EUR 0.15 per share to the Annual General Meeting. This corresponds
to a dividend rate of 30% on consolidated earnings.

Financial position

With an excellent equity ratio of 59% as of 31 December 2019, promissory note loans (Schuldschein-
darlehen) and working capital lines, the Hoftex Group has a robust corporate financing structure.

The Schuldscheindarlehen issued in financial year 2016 with a term of three to seven years and
a total volume of EUR 50 million are variable/fixed-rate loans. The first cash repayment of
EUR 9 million was made in late 2019.

Cash inflows from operating activities of EUR 19.2 million rose by EUR 0.8 million compared to the
previous year, above all as a result of the positive effect of the change in working capital. Specifically,
the decline in inventories as a result of the sale of the Hoftex CoreTech GmbH spinning mill
that belonged to the HOFTEX division contributed to the improvement.

Negative cash flows from investing activities of EUR -14.3 (prior year: EUR 4.5 million) are mainly
attributable to payments for acquisitions of tangible fixed assets in the amount of EUR 14.6 million.

Cash flows from financing activities in 2019 amounted to EUR -13.0 million (prior year:
EUR -5.7 million). Particularly, the first cash repayment of the Schuldscheindarlehen, interest –
mainly from the Schuldscheindarlehen – and the dividend payment are reflected in the negative
cash flows.

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