We are pleased to report that Morgan Sindall produced a record result in 2008.

Trading across the Group was in line with our expectations and we are pleased to report a 20% increase in revenue to £2,548m (2007: £2,115m) and a 15% increase in profit before tax and amortisation to £71.4m (2007: £62.1m).

Profit before tax (after amortisation of intangible assets) rose by 8% to £62.3m (2007: £57.6m) while earnings per share before amortisation of intangible assets increased by 22% to 127.8p (2007: 104.5p). A final dividend of 30.0p (2007: 28.0p) is recommended by the Board, giving a total dividend for the year of 42.0p (2007: 38.0p), an increase of 11%.

The Group remains financially strong with average cash balances for the year of £77m (2007: £75m), year end cash of £120m (2007: £219m) and debt facilities available if required to help us exploit opportunities presented by our markets.

Strategy

This record performance was achieved through our long-term strategy of creating a construction and regeneration group with market leading positions in our chosen sectors within the UK construction market. In 2008 Fit Out produced an excellent performance, expanding its workload in the public sector to offset the decline in the commercial sector, matching the record operating profit achieved in 2007 and delivering a peak operating margin. The Construction and Infrastructure Services divisions both increased in size, scale and capability and generated record operating profits in 2008 reflecting the full year impact of the July 2007 acquisition from Amec in addition to organic growth from public and regulated sector work. Affordable Housing concentrated on its refurbishment and new build social housing capabilities to largely offset the impact of the subdued open market housing sector.

Finally, Urban Regeneration performed in line with our expectations in 2008 and remains ideally positioned to take advantage of opportunities presented when its market recovers. We report more fully on each division and explain in greater detail the diversity and balance of our work in the business review following this statement.

Changes to the Board

We welcome Adrian Martin to the Board as a non-executive director. The Board will benefit from his accounting and financial expertise as well as his experience over a number of years in various executive and non-executive roles.

Bernard Asher will retire from the Board at the forthcoming Annual General Meeting. We would like to extend our personal thanks and recognition for his wisdom, guidance and support to the Group for over a decade during which time our revenue has grown from £331m to £2.5bn.

Looking ahead

We expect 2009 to remain challenging for the Group as the construction and regeneration markets continue to be affected by the general economic downturn. As previously announced, we expect the strength in the infrastructure market to continue, as will the ongoing weakness of the commercial property and open market housing sectors. Overall, we expect a reduction in the Group's level of profitability in 2009 compared to the previous year. Nevertheless we do expect opportunities to present themselves and we remain positive given the financial strength of the Group and its market leading positions in a number of construction and regeneration market sectors. Fit Out is well positioned with a broad sector spread, which gives it flexibility to react to changes in any one particular sector. Construction's exposure to the public sector and the education market in particular will help to counter any further softening in demand from the private sector. Infrastructure Services' market is set for further growth with expansion in the transport, water and energy sectors given a number of major projects currently being procured. Affordable Housing is seeing buoyant demand for refurbishment and social housing new build, which will help to mitigate the impact of weak open market demand. Finally, Urban Regeneration is continuing to secure development agreements, particularly with the public sector, although its short-term outlook remains subdued.

Given the general economic downturn we continue to place an increased emphasis on cash and working capital management, cost reductions and supply chain improvements in each of our divisions. At the same time, however, we are seeking to exploit growth opportunities where they arise.

Our forward order book at the start of 2009 stood at £3.7bn (2007: £4.3bn) and, in addition, Urban Regeneration's forward development pipeline, its share of regeneration projects in which it has an interest, is valued at £1.3bn (2007: £1.2bn). The forward order book gives us good visibility and a measure of confidence over the coming year's performance. This, added to a healthy pipeline of opportunities, particularly a number of major upcoming infrastructure projects, and our financial resources, provides us with confidence as we progress into 2009.

Overall, therefore, we are well placed to emerge from these challenging times as an even stronger business. We all face 2009 with the positive attitude, enthusiasm and drive that has characterised Morgan Sindall for so long.