26 Derivative financial instruments

	2023				2022
	Derivative assets		Derivative liabilities		Derivative assets		Derivative liabilities
millions of CHF	Notional value	Fair value	Notional value	Fair value	Notional value	Fair value	Notional value	Fair value
Forward exchange rate contracts	148.4	4.8	61.5	0.7	144.1	2.3	80.0	0.4
Interest rate swaps	25.0	0.0	100.0	2.2	–	–	–	–
Total as of December 31	173.4	4.8	161.5	2.9	144.1	2.3	80.0	0.4
– thereof due in <1 year	148.4	4.8	61.5	0.7	144.1	2.3	80.0	0.4
– thereof due in 1–5 years	25.0	–	100.0	–	–	–	–	–
– thereof due in >5 years	–	0.0	–	2.2	–	–	–	–

Cash flow hedge reserve

The notional value and the fair value of derivative assets and liabilities include current and non-current derivative financial instruments. The cash flow hedges of the expected future revenues were assessed as highly effective. The following tables present the cash flow hedge reserve as of December 31, 2023, and 2022.

	2023
millions of CHF	Gross amount	Deferred taxes	Cash flow hedge reserve in equity
Balance as of January 1	0.8	–0.1	0.7
Fair value adjustments	–2.5	0.1	–2.3
Reclassified to profit or loss	0.9	–0.2	0.7
Currency translation differences	–0.0	0.0	–0.0
Balance as of December 31	–0.8	–0.1	–0.9

	2022
millions of CHF	Gross amount	Deferred taxes	Cash flow hedge reserve in equity
Balance as of January 1	–0.6	0.1	–0.6
Fair value adjustments	–1.5	–0.2	–1.7
Reclassified to profit or loss	2.9	–	2.9
Currency translation differences	0.0	–0.0	0.0
Balance as of December 31	0.8	–0.1	0.7

There was no ineffectiveness that arose from cash flow hedges in 2023 (2022: CHF 0.0 million). The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the balance sheet.

The hedged, highly probable forecast transactions denominated in foreign currencies are mostly expected to occur at various dates during the next 12 months. Gains and losses recognized in the cash flow hedge reserve (cash flow hedges) in equity on forward foreign exchange contracts as of December 31, 2023, are recognized either in revenues, cost of goods sold or other operating income/expenses in the period or periods during which the hedged transaction affects the income statement. This is generally within 12 months of the balance sheet date unless the gain or loss is included in the initial amount recognized for the purchase of fixed assets, in which case recognition is over the lifetime of the asset (5 to 10 years).

The interest rate risk as shown in note 6 is hedged with financial derivatives and related to the variable financing of the group. The duration of the hedges are aligned with the duration of the hedged item. Gains and losses recognized in the cash flow hedge reserve (cash flow hedges) in equity on interest rate derivatives contracts as of December 31, 2023, are recognized in the interest expense over the next five years.

The group enters into derivative financial instruments under enforceable master netting arrangements. These agreements do not meet the criteria for offsetting derivative assets and derivative liabilities in the consolidated balance sheet. As of December 31, 2023, the amount subject to such netting arrangements was CHF 2.9 million (2022: CHF 0.4 million). Considering the effect of these agreements, the amount of derivative assets, recorded as other current receivables and prepaid expenses (note 19), would reduce from CHF 4.8 million to CHF 1.9 million (2022: from CHF 2.3 million to CHF 1.9 million) and the amount of derivative liabilities, recorded as other current and accrued liabilities or other non-current liabilities respectively (note 25), would reduce from CHF 2.9 million to CHF 0.0 million (2022: from CHF 0.4 million to CHF 0.0 million).