27 Derivative financial instruments
2025 | 2024 | |||||||||||||||
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 | 101.9 | 0.5 | 101.0 | 0.5 | 68.8 | 1.0 | 130.6 | 3.2 | ||||||||
Interest rate swaps | – | – | 125.0 | 4.1 | – | – | 125.0 | 5.8 | ||||||||
Total as of December 31 | 101.9 | 0.5 | 226.0 | 4.6 | 68.8 | 1.0 | 255.6 | 9.0 | ||||||||
– thereof due in <1 year | 101.9 | 0.5 | 101.0 | 0.5 | 68.8 | 1.0 | 130.6 | 3.2 | ||||||||
– thereof due in 1–5 years | – | – | 125.0 | 4.1 | – | – | 125.0 | 5.8 | ||||||||
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 and interest payments were assessed as highly effective. The following tables present the cash flow hedge reserve as of December 31, 2025, and 2024.
2025 | ||||||
millions of CHF | Gross amount | Deferred taxes | Cash flow hedge reserve in equity | |||
Balance as of January 1 | –6.8 | 0.8 | –6.0 | |||
Fair value adjustments | 1.0 | –0.1 | 0.9 | |||
Reclassified to profit or loss | 1.9 | –0.2 | 1.7 | |||
Currency translation differences | –0.0 | 0.0 | –0.0 | |||
Balance as of December 31 | –3.9 | 0.5 | –3.4 | |||
2024 | ||||||
millions of CHF | Gross amount | Deferred taxes | Cash flow hedge reserve in equity | |||
Balance as of January 1 | –0.8 | –0.1 | –0.9 | |||
Fair value adjustments | –4.8 | 0.9 | –3.9 | |||
Reclassified to profit or loss | –1.2 | 0.1 | –1.1 | |||
Currency translation differences | 0.0 | –0.0 | 0.0 | |||
Balance as of December 31 | –6.8 | 0.8 | –6.0 | |||
There was no ineffectiveness that arose from cash flow hedges in 2025 (2024: 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, 2025, are recognized 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 (five to ten years).
The interest rate risk disclosed in note 6 is hedged using financial derivatives and relates to the group’s variable financing. The maturity of the hedging instruments is aligned with the maturity of the hedged items; both committed syndicated credit facilities mature in September 2028. Gains and losses recognized in the cash flow hedge reserve (cash flow hedges) in equity on interest rate derivatives contracts as of December 31, 2025, will be reclassified to interest expense over the period to maturity, ending in September 2028.
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, 2025, the amount subject to such netting arrangements was CHF 4.6 million (2024: CHF 9.0 million). Considering the effect of these agreements, the amount of derivative assets, recorded as other current receivables and prepaid expenses (note 18), would reduce from CHF 0.5 million to CHF 0.0 million (2024: from CHF 1.0 million to CHF 0.0 million). Similarly, the amount of derivative liabilities, recorded as other non-current liabilities (note 24) and other current and accrued liabilities (note 26), would reduce from CHF 4.6 million to CHF 4.1 million (2024: from CHF 9.0 million to CHF 8.0 million).