Page 34 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

In order to meet our obligations for post-employment employee benefits on the basis of deferred
compensation, 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 2,835 thousand (prior year: EUR 3,088 thousand), and the
settlement amount of the offset obligations is EUR 4,475 thousand (prior year: EUR 4,447 thousand),
resulting in a net post-employment benefit liability (provision) of EUR 1,641 thousand (prior year:
EUR 1,359 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 312 thousand (prior year:
EUR 366 thousand) are offset against the expected return on pension plan assets of EUR 34 thousand
(prior year: EUR 31 thousand).
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 2.71%
interest rate and a 1.5% rate of benefit increase. As provided in Section 253(2) sentence 2 HGB,
the underlying 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
published by the German Bundesbank in accordance with the German Regulation on the Discounting
of Provisions (Rückstellungsabzinsungsverordnung, or RückAbzinsV). The excess amount on
31 December 2019 resulting from exercising the option to choose between a seven and a ten prior
year average discount rate is EUR 560 thousand (prior year: EUR 703 thousand). The corresponding
amount for HOFTEX GROUP AG of EUR 453 thousand (prior year: EUR 569 thousand) falls short of
the dividend pay-out threshold.

The Company pension scheme has been closed to new members since 1976. According to an
agreement dated 14 December 1994, all unvested and vested pension entitlements were fixed and
guaranteed 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 1,562 thousand (prior year: EUR 1,816 thousand).
Post- retirement benefit obligations, valued as stipulated by Section 253(1) sentence 2 HGB, amount
to EUR 2,708 thousand (prior year: EUR 2,694 thousand). The net liability of EUR 1,146 thousand
(prior year: EUR 878 thousand) is not recognised in the consolidated annual financial statements
pursuant to Article 28(1) EGHGB.

34