3.7 Provisions
CHF million | 2024/25 | |||||||||
Warranty and returns | Reimbursement to customers | Product liabilities | Other provisions | Total | ||||||
Balance April 1 | 123.5 | 11.0 | 44.8 | 29.4 | 208.7 | |||||
Changes through business combinations | 0.2 | 0.4 | 0.5 | |||||||
Amounts used | (40.1) | (9.9) | (15.7) | (13.1) | (78.8) | |||||
Reversals | (19.7) | (3.7) | (0.2) | (7.4) | (31.0) | |||||
Increases | 57.6 | 15.5 | 17.5 | 90.6 | ||||||
Present value adjustments | 0.5 | 0.5 | ||||||||
Exchange differences | (3.6) | (0.2) | (1.0) | (0.7) | (5.5) | |||||
Balance March 31 | 117.8 | 12.6 | 28.4 | 26.3 | 185.1 | |||||
thereof short-term | 87.3 | 12.4 | 5.8 | 13.0 | 118.5 | |||||
thereof long-term | 30.5 | 0.2 | 22.7 | 13.3 | 66.6 | |||||
CHF million | 2023/24 | |||||||||
Warranty and returns | Reimbursement to customers | Product liabilities | Other provisions | Total | ||||||
Balance April 1 | 139.7 | 10.7 | 58.5 | 36.3 | 245.2 | |||||
Changes through business combinations | 1.6 | 1.6 | ||||||||
Amounts used | (54.6) | (15.6) | (12.0) | (12.3) | (94.5) | |||||
Reversals | (7.8) | (3.6) | (1.1) | (5.0) | (17.5) | |||||
Increases | 49.6 | 19.8 | 10.1 | 79.5 | ||||||
Present value adjustments | 0.5 | 0.5 | ||||||||
Exchange differences | (3.4) | (0.3) | (1.1) | (1.3) | (6.1) | |||||
Balance March 31 | 123.5 | 11.0 | 44.8 | 29.4 | 208.7 | |||||
thereof short-term | 91.4 | 10.9 | 11.0 | 15.0 | 128.3 | |||||
thereof long-term | 32.1 | 0.1 | 33.9 | 14.4 | 80.5 | |||||
Warranty and returns
The provision for warranty and returns considers any costs arising from the warranty given on products sold. In general, the Group grants a 12 to 24 months warranty period for audio devices, hearing instruments and related products and up to 10 years on cochlear implants. The calculation is based on turnover, past experience and projected number and costs of warranty claims and returns.
Reimbursement to customers
The provision for reimbursement to customers considers commitments to provide volume rebates. The provision is based on expected volumes. The large majority of the cash outflows are expected to take place within the next 12 months.
Product liabilities
The provisions for product liabilities mainly relates to the Advanced Bionics voluntary field corrective action regarding cochlear implant products, as announced on February 18, 2020.
The provisions for product liabilities are reassessed on a regular and systematic basis and follow a financial model which is consistently applied. The calculation of the provision is based on past experience regarding the number and cost of current and future claims. In the 2024/25 financial year, changes in the assessment of the expected number and cost of current and future claims led to reversals of CHF 0.2 million (previous year reversals of CHF 1.1 million). As per March 31, 2025 the provision for product liabilities amount to CHF 28.4 million (previous year CHF 44.8 million). The timing of future cash outflows is uncertain since it will largely depend on the outcome of administrative and legal proceedings. In the case of the voluntary recall of AB products in 2006, considering periods of limitation, claims will have until 2026 to be filed in most jurisdictions. However, depending on the length of proceedings and negotiations, further years may pass until all claims are settled. We expect the main cash outflow relating to the provision for product liabilities to occur within the next 4 years.
Other provisions
Other provisions include provisions for specific business risks such as litigation CHF 1.0 million (prior year CHF 0.7 million) and restructuring costs CHF 8.9 million (prior year CHF 7.1 million). While the timing of the cash outflow from the restructuring provisions is expected to take place within the next 12 months, the cash outflows for the remainder of the other provisions is expected to take place within the next two years.
Accounting policies
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows.
Accounting judgements and estimates
Provisions are based upon managementʼs best estimate, taking into consideration past experience regarding the number and cost of claims. Management believes that the provisions are adequate based upon currently available information. However, given that judgment has to be applied, the actual costs and results may differ from these estimates.