Keller Group PLC on Monday said it has identified ‘deliberate and sophisticated financial reporting fraud’ in its Austral arm in Australia.

The London-based geotechnical engineering firm said two individuals have been dismissed and an internal probe is underway. It is also in the process of naming an external adviser to perform an independent investigation.

‘Austral, contributing [around] 3% of group revenue, is a unique business within the group, and is the only business that exclusively accounts for revenue on a percentage of completion basis in the division,’ Keller added.

The fraud relates to Austral’s performance from 2019 onwards. Keller expects a hit of £6 million for the first half of 2022 and £8 million to £10 million relating to prior years.

The fraud continued into the second half of 2022, Keller noted. ‘Whilst the fraud continued in the second half of 2022, and has impacted the board’s expectations for the 2022 full year results, the group’s overall performance in the second half has been strong’, it said.

Looking ahead, Keller expects full-year operating profit ‘slightly below’ the bottom end of a £109 million to £114 million market forecast range. For 2021, Keller posted statutory operating profit of £80.5 million, or £92.8 million on an underlying basis.

Chief Executive Officer 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.’

The company will release financial 2022 results on March 7.

Keller shares were down 7.7% at 776.00 pence each on Monday morning in London.

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