29Derivative financial instruments

In 2023, the notional value and the fair value of derivative assets and liabilities consists of current derivative financial instruments. Some of these derivative assets and liabilities are dedicated as hedging instruments for cash flow hedges. The cash flow hedges of expected future sales were assessed as highly effective. In 2023, the net unrealized gains for cash flow hedges recorded in the cash flow hedge reserves in other comprehensive income amount to CHF 8.3 million (2022: losses of CHF 7.5 million), net of a deferred tax impact of CHF 2.7 million (2022: CHF 2.6 million). As of December 31, 2023, the accumulated cash flow hedge reserve amounts to CHF 5.3 million (2022: CHF –5.7 million) with the recognition of net deferred tax liabilities of CHF 1.0 million (2022: deferred tax assets of CHF 1.6 million) relating to these cash flow hedges included in the cash flow hedge reserves. In 2023, gains of CHF 2.6 million (2022: gains of CHF 0.1 million) were reclassified from the cash flow hedge reserves to the income statement. 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 in equity on forward foreign exchange contracts as of December 31, 2023, 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, 2023, the amount subject to such netting arrangements was CHF 2.1 million (2022: CHF 2.7 million). Considering the effect of these agreements, the amount of derivative assets would reduce from CHF 13.9 million to CHF 11.8 million (2022: from CHF 13.2 million to CHF 10.5 million), and the amount of derivative liabilities would reduce from CHF 3.2 million to CHF 1.1 million (2022: from CHF 7.0 million to CHF 4.3 million).