The increase in the net turnover of EUR5,650 million to EUR6,147 million in 2008 was mainly attributable to higher gas income. The net turnover of electricity increased from EUR2,857 million to EUR2,905 million, notably due to sales in the business market and in Belgium. The net turnover of gas increased 21% to EUR2,248 million (2007: EUR1,860 million). This was strongly related to the contribution from the acquisition of gas fields in the North Sea, the doubled capacity for gas storage and the colder weather in 2008.

The decrease in net profit was mainly due to the lower fair value results, which arose from accounting effects, and will be results-neutral in due course. Nuon values part of the commodity contracts to cover the future need of energy to supply customers and the production of electricity at fair value. The price decreases in the commodity markets in the second half year led to a decrease in the fair value results, as opposed to an increase in the first half of the year.

The operating results of network company Alliander remained stable. However, one-off expenses arising from the credit crisis dampened the result. This concerns the non-cash effect on an investment relating to a cross border lease.

Fourth quarter

Net turnover decreased in the fourth quarter despite higher trading results to EUR1,616 million (2007: EUR1,779 million). This was principally caused by the substantial negative fair value movements. The reported net profit decreased in the fourth quarter to EUR79 million (Q4 2007: EUR210 million). Alongside the aforementioned effect, this was also due to lower production results compared to 2007 and higher operating expenses. The participating interest in gas fields in the North Sea, together with gas storage activities and heating activities, made a positive contribution. There was also a one-off tax rebate.

Commenting on the results Oystein Loseth, chairman of the management board, says: Though the figures show a decrease compared to the record year of 2007, we can be satisfied with the result in view of the turbulence in the financial market and the commodity market. The fair value results, which reflect the development in the commodity markets, showed a decrease over the entire year, which negatively influenced our overall result. Against this, the trading results were higher this year than in 2007. We also succeeded in completing the organisational unbundling on time on the set date of 1 July 2008. More customers were acquired in Belgium, Germany and the Netherlands. We have strengthened our gas chain with a participating interest in gas fields in the North Sea. Other highlights in 2008 were the creation of a broad grid manager within the network company and the decision to seek an alliance with a strategic international partner for the production and supply company. We expect to complete the process before the summer.

Market development

Despite the growing competition in the Netherlands, the number of customers increased slightly compared to 2007. In round figures the number of customers remained stable.

In the core countries of Belgium and Germany, Nuon is also gaining more and more customers. Compared to the end of 2007 both countries experienced strong growth; Nuon Belgium saw the number of customers grow by 9% and Nuon Germany now has 33% more customers than in 2007.

Operating cash flow and net debt position

The outgoing operating cash flow in the fourth quarter amounted to EUR177 million, compared to an incoming operating cash flow of EUR144 million in the fourth quarter of 2008. The investments in power stations, underground gas storage and the replacement and expansion of the electricity and gas networks amounted in 2008 to EUR940 million (2007: EUR523 million). In addition, Nuon also took a participating interest in gas fields in the North Sea last year. The net debt position at the end of 2008 amounted to EUR642 million compared to a net cash position of EUR293 million at the end of 2007. This change is also due to the definite settlement for the acquisition of the gas fields and the payment of dividends in the second and third quarters of 2008. The free cash flow for 2008 was positive and amounted to EUR202 million (2007: EUR736 million).

Expenses

The activities arising from the organisational unbundling in 2008 led to a higher cost level. This mainly applies to personnel expenses, which increased due to the dissynergies of setting up two independently operating organisations. The expenses also increased due to the separation of ICT systems and the inability to carry out planned cost saving programmes in this connection. Alongside the aforementioned expenses, the increase in commercial activities also led to higher expenses. Cost reduction continues to have the undiminished attention of the management.

Strategy

In 2008 nv Nuon laid the basis for the future of two companies: Alliander and Nuon. Since 1 July 2008 both companies operate independently under a common financial holding company, Management Board and Supervisory Board. The organisational unbundling proceeded smoothly and had no negative effects for customers.

The regional grid manager Liander constitutes the core of the new network company which was renamed Alliander as per mid-November. Alliander also comprises Liandon which focuses on the construction and maintenance of complex energy infrastructures (formerly Tecno) and Liandyn (formerly Dynamicom) which is active in the market for public lighting.

In June 2008 the production and supply company that continues to operate under the brand name Nuon announced its intention to seek an international partner that will strengthen Nuon’s position in the European market. This process is on schedule.

Dividend

The supervisory board and the management board propose to pay out a dividend of EUR350 million.