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The Group primarily enters into financial instru- ments and transactions with the Group’s rela- tionship banks, i.e. banks extending loans to the Group. In most cases, the Group will be in a net debt position with its relationship banks. 

Group Treasury monitors the Group’s gross credit exposure to banks and operates with individual limits on banks based on rating, level of government support and access to netting of assets and liabilities. 

## EXPOSURE TO CREDIT RISK 

The carrying amount of DKK 3,714m (2012: DKK 5,760m) represents the maximum credit exposure related to cash and cash equivalents. 

The credit risk on receivables is described in section 1.6.1. 

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## Foreign exchange risk related to net investments and financing activities 

The Group is exposed to foreign exchange risk on the translation of the net result and net assets in foreign investments to DKK and on borrowings denominated in a currency other than the functional currency of the individual Group entity. 

## 4.5.1 Currency profile of the Group’s borrowings 

The Group is exposed to foreign exchange risk on borrowings denominated in a cur- rency other than the Group’s functional currency due to the foreign exchange risk as well as the risk that arises when net cash in- flow is generated in one currency and loans are denominated in and have to be repaid in another currency. 

At 31 December 2013, 79% of the Group’s net financial debt was in EUR (2012: 87%), cf. section 4.6. 

## CURRENCY PROFILE OF BORROWINGS BEFORE AND AFTER DERIVATIVE FINANCIAL INSTRUMENTS 

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## 4.5.2 Hedging of net investments in foreign subsidiaries 

The Group holds a number of investments in foreign subsidiaries where the translation of net assets to DKK is exposed to foreign ex- change risks. The Group hedges part of this foreign exchange exposure by entering into forward exchange contracts (net investment hedges). This applies to net investments in CHF, CNY, MYR, HKD and SEK. The basis for hedging is reviewed at least once a year, and the two parameters, risk reduction and cost, are balanced. 

Where the fair value adjustments do not exceed the value adjustments of the invest- ment, the adjustments of the financial instruments are recognised in other com- prehensive income; otherwise the fair value adjustments are recognised in the income statement. For 2013, all fair value adjust- ments were recognised in other comprehen- sive income. The effect of net investment hedges on the income statement and other comprehensive income is summarised on the next page. 

