Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk primarily arises from cash and cash equivalents, financial assets and trade receivables, and is limited to the carrying amounts of those assets.
The Group minimises counterparty risk by holding a substantial share of its cash and cash equivalents and deposits with financial institutions that have a Standard & Poor's rating of BBB- or better. Additionally, risks are further mitigated by predominantly working with leading financial institutions based in Switzerland.
A significant portion of the Group’s financial assets, amounting to CHF 4,720 thousand (previous year: CHF 7,298 thousand), comprises loans granted to MEP participants. A qualitative assessment has shown that the credit risk associated with loans granted to selected key employees under the Group’s share-based compensation plan is low. In addition, a total of CHF 914 thousand (previous year: CHF 950 thousand) is held as bank deposits. This primarily relates to the Group’s rental deposit for business premises and is assessed by the Group as low risk.
Financial Risk from Operating Activities and Valuation Allowances
Credit risk on trade receivables arises from the Group’s operating activities. The Group manages default risk through established trade receivables management processes. Default risk is primarily influenced by individual customer characteristics and the industry sectors in which customers operate. Given the heterogeneous customer structure, the Group does not apply general credit limits for trade receivables.
The Group considers credit risk on trade receivables to be limited, as it is not exposed to material concentration risk due to its large and well-diversified customer base. At the reporting date, the largest single customer accounted for 0.9% (previous year: 1.2%) of the outstanding gross carrying amount of trade receivables, while the five most significant customers together accounted for 4.3% (previous year: 4.5%).
In assessing default risk, the Group considers both the business unit in which the customer operates and the ageing profile of trade receivables. The breakdown of trade receivables by aging is as follows:
2025 | 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
at 31 December | in CHF thousand | Receivables | Allowances | Rate | Receivables | Allowances | Rate | ||||||
Not due | 23,809 | (235) | 1.0% | 24,079 | (285) | 1.2% | ||||||
Past due up to 90 days | 7,381 | (72) | 1.0% | 5,840 | (74) | 1.3% | ||||||
Past due over 90 days | 2,175 | (1,179) | 54.2% | 2,577 | (1,457) | 56.5% | ||||||
Total | 33,365 | (1,486) | 4.5% | 32,496 | (1,816) | 5.6% |
Allowances for trade receivables are remeasured based on credit loss rates in accordance with the expected credit loss model. Increases and reversals of allowances for doubtful trade receivables are recognised under other operating expense.
Optimisation measures that selected business units implemented in the reporting year, including the expansion of electronic payment methods for certain customer groups, improved the efficiency and quality of payment processes and helped reduce allowances.
The movements in valuation allowances are set out below.
in CHF thousand | 2025 | 2024 | ||
|---|---|---|---|---|
Balance at 1 January | (1,816) | (2,255) | ||
Addition to allowances | (1,844) | (3,711) | ||
Reversal of allowances | 618 | 2,272 | ||
Allowances used during the financial year | 1,556 | 1,878 | ||
Balance at 31 December | (1,486) | (1,816) |