1. Irish Association of Corporate Treasurers 14th April 2010
Michael G. O’Sullivan
Finance Director – Bord Gáis Éireann

2. Credit Crisis – how close did we come to wipe out ?1

3. Bord Gais Today Our Company Our Industry
Established in 1976, Bord Gáis is a Commercial State body operating in the energy industry and owned by the Government of Ireland (with a 3.27% ESOP holding)
Strong Governmental Support
Approx.1m gas and electricity customers, 900 employees and headquartered in Cork
2008 turnover of €1,379m and 2008 EBITDA of €299m
98% of EBITDA generated from Networks Assets
Bord Gáis has three main businesses – Networks, Energy and Investments
Natural gas accounts for approximately 25% of primary energy demand in Ireland
Ireland has one of the most modern and robust gas networks in the world
Significant development of the Irish gas network and its UK interconnection over the last number of years means that there is adequate capacity to meet the growing demand for gas
In excess of 90% of gas used in Ireland is imported through the interconnectors from the UK
Capital intensive industry
Our Company
Our Industry

4. Transmission Infrastructure

5. Energy
BGÉ’s retail - Gas
supplies gas to over 630,000 customers
38% share of Irish gas market (99% of Domestic market ) – predominately regulated market
BGÉ’s retail - Electricity
Strategy to leverage strong gas platform to sell a dual-fuel gas and electricity energy solution
c.12% share of Irish electricity market
Entered domestic electricity market in February 2009, with in excess of 300,000 customers already signed
Trading division procures gas and electricity for sale to retail customers
Integrated Support Trader Model
No speculative trading positions
Follows board-approved Energy Trading and Procurement Risk Management Policy
BGE Energy comprises separate Retail and Trading divisions that procure and supply gas to 630,000 customers and holds c.12% of the electricity market with a domestic electricity launch in 2009

6. Strategic Investments - Generation
BGE Strategy is to develop a balanced portfolio of generation assets in support of a developing retail position
Baseload, high merit order plant – Whitegate CCGT
445MW gas fired combined cycle power plant
Commercial operations to begin on schedule in mid-2010
Wind, representative of overall penetration in the market – in excess of c.700MW (with REFIT support, in operation and development)
Open Cycle Gas Turbine, providing portfolio shape/response – plan to develop c.300MW
Constructing a modern 445MW Open CCGT Power Plant

7. Where does gas come from ……6

8. Gas prices can be very volatile……7

9. How Bord Gáis assesses risk ....
Reputational
Operational
Risk Management
Strategic
Financial 8

10. Risk Management Framework
Risk Identification
Risk Assessment
Risk Mitigation
Residual Risk
Risk Reporting 9

11. Risk appetite informed by .......
appetite is conservative 10

12. Risk Management Policy
Energy Trading Risk Management Policy
Communicates the Board’s appetite for risk
Sets out a governance framework within which commodity market risks are measured, reported and controlled
Sets out the processes and rules for authorising;
Which markets, products, contracts and time periods can be traded
Which counterparties can be traded with
Which members of Energy Trading staff can trade
Sets out limits delegated to Energy Trading which govern authorised activity

13. Commodity Market Risk
To deal with volatility in the gas and electricity markets Energy Trading protects itself through:
Robust governance structure
Hedging strategies
Pursuing a vertical integrated strategy for electricity
Regulation
Portfolio limits such as
Exposure limits
Mark to market /stop loss limits
VaR and GMar
Peak day management tools such as storage

14. Treasury Risks ........ Foreign exchange Interest Rate Counterparty
Gas
Electricity
Investments
Interest Rate
Facilities
Fixed
Variable
Counterparty
Liquidity
Mark to Market
Credit Rating
Relationship management 13

15. Foreign Exchange Risks......
Trading
Treasury
Counterparties 14

16. Key elements to foreign exchange risk management cycle......15

17. Funding Policy
Liquidity
Pricing
Leverage
Maturity Profile
Funding Sources
Maintain 120% headroom of projected core borrowings for current year and 90% for following three years
Fixed Debt 60% for current year and 50% for following three years
Leverage in range of 44-55%, statutory borrowing limit €3bn
No term loans to exceed 50% of portfolio to avoid refinancing risk
Maintain diversified funding base (Project finance/EMTN programme, US$ Private Placement and Bank facilities), 45/55 split between Bank and Debt Capital Markets

18. Interest Rate Profile as at 31 December 2008
Debt Funding Structure
Interest Rate Profile as at 31 December 2008
21% 1%
Floating
RPI Linked
Fixed
78%
Source: Company data

19. Historic EUR Credit Spreads

20. US$ Private Placement
BGE successfully circled a US$ private placement in February 2009
The issue was significantly oversubscribed at US$ 532 million. BGE took up its full authority of US$450 million
The issue was swapped back to Euro through relationship banks (Euro Equivalent €357 million)
A broad maturity spread was achieved with the majority of funds being 10 – 12 year money
Pricing reflected recent market activity

21. Eurobond Issuance Issuer: BGE Guarantor: BGE Ratings: A2/A-
Documentation: Off EMTN Programme
Currency: Euro or Sterling
Size: €550m
Pricing: 5.75% fixed
Maturity: 5 years
Use of Proceeds: GCP and Capital Expenditure Projects
Bookrunners: Barclays Capital, BNP Paribas, Danske, HSBC, LloydsTSB
Issued Bond on 15 June 2009 : Book significantly oversubscribed €2.3bn with a well diversified investor base i.e. 156 orders from 25 jurisdictions with 32% of the bonds being allocated to UK investors, 20% to France, 12% to Scandinavia and 6% to Ireland.

22. BGE’s financial strength is underpinned by;
BGE Credit Rating
Outlook Stable Stable
Senior Unsecured Debt A2 A-
Moody’s
Standard & Poor’s
BGE’s financial strength is underpinned by;
Strong market position
Low-risk business operating in a transparent regulatory environment
Strong credit profile reflected in ratings
Government ownership
Strong demand for gas and electricity in Ireland
High quality asset base
Robust capital structure and strong liquidity position
Experienced management team

23. Credit rating risk assessment methodology......
Rating outcome
Sovereign risk profile
Business risk profile
Financial risk profile 22

24. Credit Rating Activity
Recent market turmoil has resulted in a marked uptick in Rating Agency reviews with a strong downside bias……….. 23

25. Questions