Since our last annual report, the global economy has encountered unprecedented headwinds. Volatile equity and constrained debt markets have impacted the carrying value of many companies’ assets and their earnings performance.

Share prices have been adversely impacted by the global turmoil, reflecting investor uncertainty and often a disregard for the underlying strengths of the businesses involved.

In the face of these volatile conditions, the diversified business model of the Group and its balance sheet have underwritten a creditable financial result for 2008. The Company achieved an 8.1% increase in underlying net operating profit after tax of $447.1 million.

The full year dividend, which is paid from after tax operating earnings, was 77 cents per share, in line with last year’s payment. The full year dividend represents a payout ratio of 69% of net operating profit after tax, at the midpoint of the Board’s policy range of 60% to 80%.

While achieving a very good result on many key measures, statutory profit after tax of $265.4 million reflected a non-cash decrease in the carrying value of inventory in our UK Communities business, Crosby Lend Lease.

The difficult market conditions of recent months are set to continue for some time yet. The Board and management’s priority is to manage the business efficiently, while continuing to build a portfolio of superior long term property projects to ensure we will be in a leading position when the market recovers.

In the meantime, while the Group expects financial year 2009 operating earnings to be 10–15% lower, they will be delivered through continuing strong operating cash flows, low interest costs and intensive risk management.

The Company’s conservative asset leverage and measured use of capital recycling ensures there is no pressure to realise assets to meet stated financial objectives. Instead, the Board and management continue to look through the cycle and maintain a clear focus on business fundamentals.

I want to take this opportunity to extend thanks to my fellow Board members, outgoing CEO Greg Clarke and his senior management team, and all our people. They have worked hard to ensure Lend Lease remains well positioned for growth despite the very difficult market conditions we are facing and are likely to face for some time yet. I also welcome Mark Selway to the Board.

In conclusion, this year marks the 50th anniversary of Lend Lease – our history is built on the key values that underpin our endeavours today and which were established by the Company’s founder, Dick Dusseldorp: care for our people, safety and the environment.

From a small office block and a residential subdivision on Sydney’s North Shore, Lend Lease has grown to be an international company creating landmarks, defining communities, changing the shape of retailing, inspiring the modern approach to urban renewal, and creating benchmarks for green building.

Outlook

Today Lend Lease remains well placed to continue for another 50 years. The Company has a clear, long term strategy; strong positions across all its key markets; a strong and secure pipeline of work with high quality partners, and the capital flexibility to take advantage of opportunities that come our way.

David Crawford