DONG Energy A/S serves as a holding company, with all primary business activities conducted through our subsidiaries. DONG Energy’s financing strategy is to concentrate group borrowings at the group parent level to simplify our liability profile while avoiding any structural subordination issues. In accordance with this policy, in 2006 we transferred and exchanged certain notes, loans and bonds from Elsam, Energi E2, and Nesa to DONG Energy A/S, centralising most of their debt.

Long-term assets financing
We expect to finance our long-term assets primarily through operations cash flows and debt issuance, such as bonds, in the Euro markets. We plan to supplement this with other competitive financing arrangements with banks, multilateral institutions, Danish mortgage institutions and other lenders and investors. As part of our funding strategy, and in order to provide flexible and efficient access to funding, we have established a Debt Issuance Program as well as a 5-year committed syndicated revolving credit facility to provide access to back-up liquidity.

Cash position and debt profile management
We manage our cash position and debt profile through a range of policies which focus on minimising refinancing risk by diversifying funding sources over time and securing cash availability and undrawn committed credit lines. In general, we seek to minimise group liquidity and debt by allocating excess liquidity in subsidiaries to group parent, DONG Energy A/S.

Risk management
We have employed active, internal risk management policies and procedures to hedge against risks arising from our business activities and financial transactions. DONG Energy A/S or our Markets segment normally deal with our financial derivatives, the later primarily focussing on our energy commodity trading and hedging activities. We select trading counterparties with high credit standings and by employing standard credit support measures in the energy markets.