Page 23 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Liquidity
The Hoftex Group can be exposed to liquidity risks if customers do not meet their outstanding payment
obligations. A rolling liquidity plan and a multi-year financing plan help HOFTEX GROUP AG secure
long-term credit lines and make cash and cash equivalents available. This also helps guarantee
the Group’s solvency and financial flexibility.

Capital markets
With our listing on the Munich Stock Exchange, HOFTEX GROUP AG is subject to regulatory
guidelines and laws, which can also pose risks. We work closely with a law firm that supports our
efforts to hedge capital market risks.

Compliance risks
Like other internationally operating companies, HOFTEX GROUP AG is exposed to a variety of legal
and compliance risks. Risks can arise from potential legal disputes and compliance violations and
from failure to meet regulatory requirements. In addition, we are subject to a broad range of
public regulations worldwide that govern environmental protection, data protection and other legal
guidelines. Non-compliance can lead to substantial fines, claims for damage and reputation
loss. We work with a law firm and consultancy to mitigate these risks. Furthermore, we have a
data protection officer, data protection coordinators and occupational safety officers in our various
locations and work closely with external consultants.

5. Forecasts and outlook

5.1. Outlook on macroeconomic conditions
According to the most recent statements from the International Monetary Fund IMF, the coronavirus
pandemic will cause the global economy to contract dramatically in 2020. Following a forecast
of 3.3% economic growth before the outbreak, now experts predict a -3% decline. The IMF
anticipates even more drastic effects on the Eurozone economy, forecasting a drop of -7.5% (forecast
in January 2020: +1.3 %). The growth forecast for China is 1.2% following their evident success
at containing the pandemic. Assuming that the pandemic is brought under control during the
second half year of 2020, the IMF predicts a dramatic recovery in 2021, with a potential worldwide
growth rate of 5.8% and Eurozone growth of 4.7%. However, as there are currently a number
of uncertainties regarding how the coronavirus crisis will continue to unfold and which measures
governments will impose in response to ongoing events, the forecast is extremely vague. What is
decisive for a rapid recovery is government support for the economy via assistance packages,
loans and funding.

5.2. Outlook on sector-specific conditions
As late as January 2020 the Industry association “textile+ mode” predicted a slight upturn in the
market with moderate gains in revenues based on the ifo Business Climate Index for the textile and
apparel segments. This forecast was based on sector economy figures, which had been growing more
stable since mid-2019, and the positive outlook of textile companies.

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