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## Borrowings and cash 

## 4.4.1 Borrowings 

Other total borrowings include finance lease liabilities of DKK 46m (2012: DKK 39m) and employee bonds of DKK 18m. No new em- ployee bonds were issued in 2013 or 2012. 

The Group has designated a fixed-interest rate GBP 300m bond as the hedged item in a fair value hedge with the designated risk being movements in a benchmark interest rate (floating interest rate). The carrying amount of this borrowing is therefore adjusted for move- ments in the fair value due to movements in the benchmark rate. The carrying amount of this borrowing was DKK 2,824m in 2013. 

A GBP 200m bond matured during the year and was replaced with long-term bank bor- rowing of approximately the same amount. 

The development in net interest-bearing debt is shown in section 4.2. 

A EUR 1,000m bond has been reclassified to current borrowings as it matures in May 2014. 

## GROSS FINANCIAL DEBT 

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## CASH FLOW FROM EXTERNAL FINANCING 

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## 4.4.1 ACCOUNTING POLICIES 

Amounts owed to credit institutions, bonds etc. are recognised at the date of borrowing at fair value less transaction costs. In subsequent periods, the financial liabilities are measured at amortised cost using the effective interest method. Accordingly, the difference between the fair value less transaction costs and the nominal value is recognised in the income statement under financial expenses over the term of the loan. 

Financial liabilities also include the capitalised resid- ual obligation on finance leases, which is measured at amortised cost. Other liabilities are measured at amortised cost. 

## 4.4.2 Cash 

In the statement of cash flows, bank overdrafts are offset against cash and cash equivalents as specified below. 

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Short-term bank deposits amounted to DKK 1,785m (2012: DKK 3,580m). The average interest rate on these deposits was 8.2% (2012: 6.6%). 

Proportionately consolidated entities’ share of cash and cash equivalents is specified in section 5.6. 

## ASSESSMENT OF CREDIT RISK 

The Group is exposed to credit risk on cash and cash equivalents (including fixed de- posits), investments and derivative financial instruments with a positive fair value due to uncertainty as to whether the counterparty will be able to meet its contractual obliga- tions as they fall due. 

The Group has established a credit policy under which financial transactions may be entered into only with financial institutions with a solid credit rating. The credit exposure on financial institutions is effectively man- aged by Group Treasury. 

