Keller profit falls after £18m reporting fraud

Keller’s pre-tax profit fell by 17 per cent in 2022, after the company uncovered an £18m reporting fraud in its Australian business.

The UK-headquartered geotechnical contractor made £56m profit across the year, from a turnover of £2.9bn. The group said that around £18.3m had gone missing from its balance sheet due to the fraud – although it emphasised the £18.3m been not lost or stolen.

Two employees of Austral – Keller’s Melbourne-based civils, mining and marine contractor – were fired in January after the misreporting of results was uncovered by internal checks. Construction News understands that Australian police are now investigating the fraud.

Keller chief executive Michael Speakman told CN: “In terms of benefit, one of the two guys may have got circa £30,000 to £40,000 in additional bonus in one year, but there was not a major cash leakage at all.

“In terms of motive you are left to a certain extent scratching your head as to why [they did it]… It started, as far as we can tell, in 2019 and gradually picked up momentum as the people involved got increasingly addicted to it.”

Keller said the misreporting had knocked off £7.3m from its anticipated pre-tax profit for 2022, while £4.3m was knocked off its profit figure for its restated 2021 results and a further £6.7m of profit has been removed from its 2019 and 2020 results.

Elsewhere in its 2022 results, Keller reported revenue growth of 32 per cent on the back of organic growth (responsible for 22 per cent of the increase), acquisitions (2 per cent) and more favourable exchange rates (8 per cent).

Speakman told CN that the company could record £3bn of revenue in 2023, with further growth from repeat work and acquisitions.

The company had a net debt of £218m at the end of 2022, an increase of 83 per cent from a year earlier. Keller warned that its debt and leverage ratio were likely to increase “as a consequence of anticipated investment in Neom”.

The company has completed a £40m piling package on The Line, part of the $500bn (£412bn) Neom super-city planned in Saudia Arabia, and said that it was in “advanced discussions on the next tranche of work”.

Speakman said that extra debt is needed for Neom “to fund the working capital cycle of business in Saudi Arabia”, as Keller will have to pay its suppliers “pretty quickly”, but payment from the Saudi state “typically tends to take a bit longer than it does in other parts of the world”.

Keller’s share price had dropped by 7 per cent as of 12.15pm on Tuesday (7 March) following the publication of its annual results.