Audited by PwC

Note 26 - Derivatives

Cash flow hedges
The table below shows the derivatives that the Group has contracted to hedge currency exposure or interest rate exposure on expected future cash flows. The total fair value adjustment at year-end is entered directly in Shareholders' equity and will be taken to the income statement as the financial contracts are realized, with the exception of currency translation and accrued interest on currency swaps used for interest hedging, as these do not qualify as cash flow hedges and are therefore entered directly in the income statement.
   2008    2007  
DKK million Contract amount based on agreed rates Market value Dec. 31   Contract amount based on agreed rates Market value Dec. 31  
Forward exchange contracts (sales)
JPY 216  84 
USD 2,031  84      -   -  
2,247  85  84 
Currency options (purchased put options)
USD   -    -    972  60   
  -     -   972  60 
Interest rate swaps
USD/USD - pays fixed rate of 3.73% / earns variable rate of 1.83% (compared to 5.38% in 2007) 244  (2) 244 
CAD/CAD - pays fixed rate of 6.77% / earns variable rate of 1.62% (compared to 6.16% in 2007) 15  (3)   22  (1)  
259  (5) 266    -  
Currency swaps
EUR/DKK - pays fixed rate of 4.27% / earns variable rate of 4.92% (compared to 4.93% in 2007) 250  (13) 250 
EUR/USD - pays fixed rate of 3.84% / earns variable rate of 1.53% (compared to 4.91% in 2007) 527  (89) 527  (100)
EUR/USD - pays fixed rate of 4.03% / earns variable rate of 1.47% (compared to 4.86% in 2007) 384  (55)   384  (58)  
1,161  (157) 1,161  (157)
  3,667  (77)   2,483  (95)  
There is no hedging ineffectiveness.
The forward exchange contracts and currency options fall due in the period January 2009 to June 2010 (January 2008 to December 2008 at the end of 2007), while the interest rate and currency swaps fall due in the period June 2009 to July 2017 (June 2009 to July 2017 at the end of 2007).
The Group's expected future net cash flows in USD and JPY are hedged as follows:
        2008 2007  
USD 18 months 12 months
JPY 12 months 6 months

Hedges of net investments in foreign subsidiaries
The table below shows the derivatives that the Group has contracted to hedge currency exposure on investments in subsidiaries. Gains or losses on market value adjustments (excluding accrued interest) at year-end are entered directly in Shareholders' equity.
   2008    2007  
DKK million Contract amount based on agreed rates Market value Dec. 31   Contract amount based on agreed rates Market value Dec. 31  
Currency swap
CHF/DKK - pays fixed rate of 3.62% / earns fixed rate of 5.27%   -     -     275   
  -     -   275 
Currency loan
 USD - pays variable rate of 1.85% (compared to 4.94% in 2007) 244  33    244  41   
244  33  244  41 
  244  33    519  47   
There is no hedging ineffectiveness.
The currency swap falls due in June 2009 (June 2009 at the end of 2007).
Fair value hedges
The table below shows the derivatives that the Group has contracted to hedge currency exposure on financial assets and liabilities that give rise to currency adjustments in the income statement, and derivatives that no longer fulfil the criteria for cash flow hedges. Gains or losses on market value adjustments at year-end are entered in the income statement.
   2008    2007  
DKK million Contract amount based on agreed rates Market value Dec. 31   Contract amount based on agreed rates Market value Dec. 31  
Forward exchange contracts (sales)
AUD 118  155  (1)
CAD (net purchase) (26)   -    -    - 
CHF (net purchase) (322) 16  344  (5)
GBP (net purchase) (90) (7) 11  (2)
KRW (net purchase) (34) (1)   -    - 
JPY 51  (5) 40 
SEK 18    -  185    - 
USD 88    210   
(197) 15  945  (6)
The forward exchange contracts fall due in the period February 2009 to June 2009 (January 2007 to June 2008 at the end of 2007). 
The gain on forward exchange contracts was DKK 0 million (DKK 23 million in 2007), compared to a loss on the hedged items of DKK 13 million (DKK 26 million i 2007).
    
A sensitivity analysis and description of the credit risk, liquidity risk, and market risk will be found in the section on Risk factors.
    
The carrying amounts for the categories Loans and receivables and Other financial liabilities at December 31, 2008, are DKK 2,593 million and DKK 3,870 million respectively (DKK 1,928 million and DKK 3,587 million in 2007). For the categories Hedge accounting (asset), Available-for-sale financial assets, and Hedge accounting (liability) the carrying amounts are shown in the balance sheet and the notes.