Keller acquired Austral Construction for A$42m (£20.5m) in 2015 and absorbed the business into its Asia-Pacific, Middle East and Africa division.
Austral contributes around 3% of group revenue and specialises in piling and civil engineering services for the infrastructure and mining sectors with an emphasis on near-shore marine work. It is unique in being the only business within the group that exclusively accounts for revenue on a percentage-of-completion basis.
The fraud, which was discovered as the result of an internal management operational review, relates to the overstatement of Austral’s performance from 2019 onwards. Keller estimates that the impact of the fraud on the group’s historical operating profits is approximately £6m over the first half of 2022 and from £8m to £10m in the previous years.
Keller said that, following the review, two individuals have been summarily dismissed.
An internal investigation is now underway and Keller is in the process of appointing an external advisor to undertake an independent investigation.
News of the fraud emerged as Keller published its year-end trading update. Although the fraud continued through the second half of 2022, Keller said that its overall performance in the second half has been strong.
The board now expects the group to report a full year operating profit “slightly below the bottom end of the range of market expectations”.
Group CEO 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.
“The board and management team has taken, and will continue to take, all actions we think appropriate to ensure the maintenance of both high ethical and professional standards and resilient and effective controls throughout our organisation,” he added.
Further details relating to the fraud are expected to emerge with the publication of Keller’s 2022 results which will be announced in March.
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