Turnover increased to £8.4bn, almost 10% up on last year's result of £7.5bn. This figure represents 27% of the group's worldwide turnover.
Overall, HBG Group returned a pre-tax profit of £47.5m compared with last year's £68m, which was boosted by incidental income totalling £25m.
HBG UK managing director Adrian Franklin said of the UK performance: "There's been a distinct improvement in HBG Construction but we've got to get it better."
Franklin added that HBG's civils subsidiary, Nuttall, had performed "extremely well" during 1998 and said he expected to see a similar improvement in the construction division in 1999.
He said: "Last year, we had a number of integration costs putting companies together. But after reorganisation and shakedown costs, we are now in a better position in the market and hope to improve it again this year."
Between 5% and 10% of HBG UK's turnover came from private finance initiative contracts. Franklin explained that the PFI was a major part of the company's business, but conceded that there were still problems with the progress of schemes.
"Like other companies, we have invested in PFI, but contracts haven't come through very quickly. We're confident it will produce good results, but at the moment, it is still a long procurement process."
Franklin added that the adoption of standardised forms of procurement contract would go a long way to easing the PFI log-jam.
Despite the slow progress of the PFI, Franklin said he was optimistic about the state of the UK construction market.
"It is not as buoyant as we would like to see it, but I see healthy workloads for this year. There is a certain nervousness in the commercial market, but it is easy to overstate that and talk ourselves into a recession.
"However, we do need to see some more government spending on infrastructure projects, schools and hospitals," he said.
Franklin added that HBG's Irish construction and civils subsidiary, Ascon, had a full order book for 1999.
Analysts expect HBG to announce new cross-border alliances, similar to Amec's tie-up with French firm Spie, as HBG is particularly keen to crack the US market.