29Derivative financial instruments

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 sales were assessed as highly effective. As of December 31, 2021, net cumulative unrealized gains of CHF 4.3 million (2020: gains of CHF 7.4 million) with deferred tax liabilities of CHF 1.0 million (2020: tax liabilities of CHF 1.5 million) relating to these cash flow hedges were included in the cash flow hedge reserves. In 2021, gains of CHF 0.7 million (2020: losses of CHF 6.3 million) were reclassified from cash flow hedge reserves to profit and loss (thereof gains of CHF 1.8 million to continuing operations and a losses of CHF 1.1 million to discontinued operations, 2020: losses of 6.3 million to continuing operations and CHF 0.0 million to discontinued operations). There was no ineffectiveness that arose from cash flow hedges in 2021 (2020: 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, 2021, are recognized either in sales, 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 from 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 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, 2021, the amount subject to such netting arrangements was CHF 3.4 million (2020: CHF 5.0 million). Considering the effect of these agreements, the amount of derivative assets would reduce from CHF 7.7 million to CHF 4.3 million (2020: from CHF 13.2 million to CHF 8.2 million), and the amount of derivative liabilities would reduce from CHF 7.5 million to CHF 4.1 million (2020: from CHF 8.1 million to CHF 3.1 million).