The division is well placed due to its spread across a number of market sectors.

Fit Out performed strongly in 2008 delivering operating profit of £25.8m (2007: £25.9m) with an increased margin of 5.4% (2007: 5.3%) equalling the division’s peak margin. Revenues across the division fell by 4% to £474m (2007: £492m) in line with our expectations.

Fit Out’s businesses are ideally placed to respond to market opportunities presented in tough economic conditions. As previously announced we continue to expect a fall in demand over the course of 2009. However, the division’s broad sector spread and market leadership in the quality of its delivery is expected to enable it to adapt to the challenges of the market. It is also expected that a greater balance of activity will come from the fit out of existing commercial offices rather than new buildings. Overbury and Morgan Lovell are leaders in the fit out of occupied office space, and the regional businesses are providing around a quarter of projects, both of which are markets that traditionally generate resilient workloads in a downturn.

The division has also seen its relative market share in the commercial office market continue to grow to over 20%, largely due to an increased presence in the high value projects sector and organic regional growth. The division completed its largest projects to date during the year, for Deloitte and the International Maritime Organization, both in excess of £40m each. In addition it retained its focus on the strategically important market of projects under £1m in value.

The business continues to secure major frameworks in the office, retail and education sectors, which now account for around a third of the division’s revenue. In 2008 these included frameworks with the BBC, RBS, Imperial College and the Post Office.

The division’s public sector workload, which accounts for around a quarter of projects, is expected to provide some stability to performance in 2009.

The forward order book at the start of the year stood at £124m (2007: £179m), although it has subsequently strengthened to stand at £185m at the end of January, consistent with the same period last year and now extends the forward order book into 2010. The fit out market faces challenging conditions in 2009 with a fall in revenue expected, as previously announced. However, the division is well placed due to its spread across a number of market sectors and resilience coming from its market leading position.