Fraud probe at Keller Group finds ‘no cash leakage’
By Neil Gerrard07 March 2023
An external forensic investigation into financial reporting fraud at UK-based geotechnical engineering company Keller Group has found no evidence of ‘cash leakage’.
Keller announced that it had discovered reporting fraud in its Austral business unit in Australia in January this year.
It related to the overstatement of Austral’s performance from 2019 onwards by two senior individuals in the finance function.
The impact of the fraud on past profits totalled more than £18 million (US$21.7 million), Keller revealed in its preliminary results for the year to 31 December 2022.
That included an impact of around £7.3 million in the first half of 2022, £4.3 million in 2021, and £6.7 million in the years prior to 2021.
But the investigation did not find evidence of “cash leakage”, suggesting that the fraud was to inflate performance figures rather than for financial gain.
The two individuals implicated in the reporting fraud were dismissed earlier this year after an internal review.
The company said it has now relocated one of its experienced managing directors into the business while it reviews a longer-term succession plan. It has also taken a £7.7 million goodwill impairment on the Austral business to reflect a more cautious view on its future profitability.
2022 results Keller Group
Meanwhile, Keller Group reported a 32% increase in revenue in 2022, rising to £2.9 billion (US$3.5 billion). Its statutory pre-tax profit fell 17% to £56.3 million.
The business blamed pressure on its profit margins on inflationary cost increases, supply chain challenges, and operational issues in its North America Foundations division in the first half of 2022.
It also heralded a “robust” order book at the year end of £1.4 billion (US$1.7 billion), which excludes upcoming packages of work on the NEOM project in Saudi Arabia. Keller said it expected those packages to be “sizeable”.
The company is already working on NEOM and completed piling on its £40 million initial works order for the 170m-long linear city ‘The Line’ in February this year, ahead of schedule. It said that it was now in advanced discussions on the next tranche of works.
Keller Group chief executive Michael Speakman said, “In 2022 Keller made some notable achievements and delivered strong growth in revenue and underlying profits as well as maintaining a robust order book of £1.4bn.
“We also faced, and dealt with, a number of challenges and headwinds, which held us back during the year. The Group will continue to pursue organic and targeted M&A growth opportunities and we will also look to further refine the portfolio as we continue to execute our strategy.”