Page 22 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Personnel
The race to recruit highly qualified employees and talent for specialised fields such as digitalisation
and division of production tasks continues unabated in the regions in which we are active and
in the textile industry in general. There is a risk of employees leaving the Company in general,
which would result in a loss of expertise and a negative impact on business in production and
administration. HR development programs allow our employees to receive regular training along with
the opportunity to take on exciting additional responsibilities in the corporate group. Digitalisation
and new technologies in particular help us retain employees by offering them an interesting, modern
and flexible working atmosphere and working methods and recruit new candidates and get
them excited about working for us.
IT
The Hoftex Group’s system landscape plays a key role in the context of the digitalisation of our
business models and processes. As a globally operating company, it is essential for us to ensure
information is current, complete and correct and that it can be shared with ease. To ensure
this we are always investing in our IT infrastructure and expanding it to adapt to current conditions,
both internally and externally. Building on this, our project management will also expand and
adapt accordingly.

Due to constantly changing requirements pertaining to the confidentiality and availability of data,
HOFTEX GROUP AG defined preventative measures to minimise associated risks and possible
damages. However, despite all of these precautions, the risk of malfunctions and attacks on our
IT systems and improper handling thereof can never be fully mitigated. IT system malfunctions
could significantly disrupt operations.

Financial risks and opportunities

Currency and interest
Due to its global operations HOFTEX GROUP AG is faced with risks and opportunities related to
currency exchange rate fluctuations. These primarily result from fluctuations in the US dollar (USD)
and the Chinese Yen (CNY) along with other currencies against the euro (EUR). Risks and
opportunities arise in the Group’s operations primarily when sales are generated in a different
currency than the corresponding costs (transaction risk). The resulting risk is closely monitored
and forward exchange derivatives are used to hedge against currency risk as needed. The Group
is also exposed to risks and opportunities in relation to the translation of single-entity financial
statements for consolidated companies outside the Eurozone into the Group’s default currency,
the euro (translation risk).

Interest risks and opportunities for HOFTEX GROUP AG can arise due to rising or falling financing
costs resulting from increases or decreases in interest rates. Interest rate hedges are held and
interest rate developments are continuously monitored to mitigate potential risks.

Receivables
Outstanding receivables from customers or other payment obligations of third parties that remain
unmet present a material risk to HOFTEX GROUP AG. Group financial control counters these risks
by strictly monitoring the risk of default. Furthermore, outstanding customer debts and default
risks are covered by trade credit insurance. Our customers’ creditworthiness is reviewed on a
regular basis by trade credit insurers and monitored and controlled by our credit insurance team.

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