Keller hit by multi-million pound fraud at Australia business

A “sophisticated” fraud at Keller’s Australia business in which operating profit was exaggerated by as much as £18m over several years has seen two directors fired and the firm admit the amount of money it will now make last year be less than expected.

In an update this morning, the ground engineer said: “Following an internal management operational review, it has recently identified an apparently deliberate and sophisticated financial reporting fraud discrete to the Austral business in Australia, a business unit within the AMEA (Asia-Pacific, Middle East and Africa) division.”

It said two people had been fired and that an internal investigation was now underway with the firm looking to bring in outside involvement to carry out an independent investigation.

Keller said the impact of the fraud on operating profit would be £6m on the first half of last year, plus a further £8m to £10m on previous years.

It added: “The financial reporting fraud relates to the overstatement of Austral’s performance from 2019 onwards.”

As a result, it said the firm’s operating profit for 2022 would be “slightly below the bottom end of the range of market expectations”. Analysts had been forecasting a figure of between £109m and £114m.

Chief executive Michael Speakman said: “We have responded swiftly and decisively to a serious issue within one of our business units and a full investigation is underway. Until this process is complete and its consequences fully understood, it is inappropriate to comment further.”

Keller said the overall group was continuing to “perform well” and would announce its 2002 results on 7 March at which it is expected to give an update on the Austral investigation.

Austral is a civil, mining and marine contractor that Keller said contributes around 3% of the firm’s revenue.

Group turnover in 2021 was up 8% to £2.2bn with pre-tax profit up 12% to £71.6m. Operating profit was down 16% to £93m.