Keller shares plunge after reporting fraud uncovered

Keller’s share price dropped 10 per cent in the first few hours of trading this morning following the announcement of a “deliberate and sophisticated” fraud within the group.

The London-headquartered ground-engineering multinational is set to launch an independent investigation after uncovering an overstatement of the results of a business it owns in Australia.

Keller said in a trading update this morning that the reporting fraud would have an estimated impact of up to £16m on its operating profit from the past four years.

Shares in the PLC were worth 841p at close of trading on Friday but fell to 754.89p at 11am today.

The group, which operates in more than 40 countries, said the performance of Austral – a civils, mining and marine works contractor – had been overstated between 2019 and 2022. Two people have been sacked following the outcome of a management review.

Keller 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. 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.”

Keller insisted that despite the fraud continuing into the latter half of last year, the group only expected 2022 operating profit to be “slightly below” the range of market expectations, which it described as being from £109m to £114m.

European trading remained “robust” in the second half of the year, it added, despite “operational challenges” from the ongoing war in Ukraine.

Work has started on the Neom megacity project in Saudi Arabia, a job expected to bring Keller “hundreds of millions of pounds” of future revenue.

Speakman added: “The group continues to perform well overall with the momentum achieved in the first half of the year continuing in the second half.

“We are also benefitting from the actions we have taken to improve performance in our North America foundations business. Our substantial order book, together with the significant potential of the Neom project, supports our confidence in the group’s prospects in both the short and medium term.”

Last summer Keller reported a record order book of £1.6bn. Its worldwide revenue of £1.3bn for the six months to the end of June 2022 was up more than a third on the same period the prior year.

The group acquired Austral in 2015 and the business contributed around 3 per cent of its revenue in 2022.