The group reported a 20.1% decline in diluted headline earnings per share to 1,402.4 cents for the year ended June from 1,754.4 cents a year ago. Revenue decreased 2.9% to 14.8 billion rand, while operating profit before non-trading items declined 14.5% to 1.09 billion rand, reflecting the decline in available work and consequential margin pressures.
"Despite such margin pressures the group has maintained a satisfactory margin of 7.4%, firstly through the finalisation of some major contracts and secondly through effective cost management within the operating divisions," it said.
Earnings per share decreased by 23.6% to 1,340 cents, impacted predominantly by the decrease in operating profits, but furthermore through impairments of goodwill and loans and a 19.6% decrease in investment income.
A final dividend of 220 cents per share was declared, for a total dividend of 330 cents, unchanged from last year.
The I-Net Bridge/BusinessLIVE consensus forecast had been for diluted HEPS of 1,523 cents, and a total dividend of 318.2 cents per share.
The company said the results were "commendable" considering the particularly tough market conditions experienced over the last 18 months.
WBHO noted matching the performance of the prior year in its Building and Civil Engineering division, after the completion of all the major projects, was always going to be a challenge for the division. While lower revenue was anticipated, slow starts on some of the division's larger projects further exacerbated this impact.
WBHO added that the recessionary effects within the construction environment were perhaps most prevalent within the local roads and earthworks market. Instead of securing projects at very low margins the division elected to focus on strengthening revenue streams from the rest of Africa. The division's revenue for the period decreased by 10.8% to 4.1 billion rand with an operating profit of 525 million rand, down from 2010's 630 million rand.
In the rest of Africa, mining projects in Sierra Leone, Zambia and in the Moatize coal fields in Mozambique underpinned the division's offshore operations. Activity in Ghana has also improved and construction of a tailings dam and haul road at the Iduapriem Mine has commenced.
In Botswana, mining infrastructure work at Jwaneng for Debswana continues and the division has secured additional work at the AK6 Boteti Mine. The division has also been appointed as the preferred bidder in a joint venture, on the North South Carrier project, to the value of 1.2 billion rand.
The Australian operations began the year with an impressive order book of 7.7 billion rand, which represented 140% of the revenue achieved in 2011. However, in line with local markets this increase in activity remained at competitive margins.
The acquisition of three subsidiaries together with the strength of the Australian dollar saw revenue from Australia grow by 21% over the comparative period.
The Projects team was strengthened during the year and was successful in negotiating the design and construct contract for the upgrade of the Beitbridge border post in Zimbabwe.
The Overberg Consortium, in which WBHO is a partner, has reached the Best and Final Offer (BAFO) stage of the N1/N2 Winelands Project and the group expects the preferred bidder to be announced soon. In addition to a number of other potential projects, WBHO is involved in an EPC contract for a new gas-fuelled power plant in Mozambique and is the preferred bidder for the Department of Rural Development and Land Reform offices in Tshwane.
WBHO added that the Competition Commission is currently in the process of assessing WBHO's submissions, which will possibly result in the imposition of an administrative penalty. The outcome of the process will only be known early in 2012 and therefore no provision for a penalty has been made in the current results.
Looking ahead, the group said it commences the current financial year with an "impressive" order book of 16.2 billion rand, which is well balanced with 50% outside of SA. 80% of the order book is with private clients and the group is thus well positioned, once government spending increases.
However, it noted that margins would remain under pressure for the foreseeable future until there is sufficient work to absorb the excess capacity in the market.
Despite the resilience of the resources market, the global economy especially in Europe and America remains sluggish regardless of all the financial support mechanisms put in place. Institutional investment is extremely conservative, which negatively impacts the construction industry, it said.
Government in SA is still slow in producing an adequate stream of identified infrastructure and PPP work, it added.
"Our civil business benefits from the mining industry, particularly in Africa and Australia and rides on the back of the demand from China and India. Strategically we are focusing on the civil opportunities in both Africa and Australia and to this end our acquisitions will assist us going forward," it said.
The Building division continues to secure opportunities in SA and Australia but is intent on procuring further building work in other African countries in order to expand its footprint in a similar fashion to the Roads and Earthworks and Civil Engineering divisions.