Keller Group warns on 2022 income after U.K. firm finds financial reporting fraud

By Scott Kanowsky 

Investing.com -- Shares in Keller Group PLC (LON:KLR) shed more than a tenth of their value on Monday after the U.K. engineering contractor warned that it expects to report lower-than-anticipated annual operating profit, following the discovery of financial reporting fraud at a unit based in Australia.

In a statement, Keller said it had identified "apparently deliberate and sophisticated" fraud in its Austral business that led to an overstatement of the unit's performance from 2019 onwards. Austral makes up about 3% of the FTSE 250-listed firm's total revenue.

The impact of the fraud on Keller's historical results is estimated at £8-10 million (£1 = $1.2185) in prior years, as well as £6M in the first half of its 2022 fiscal year.

The company now expects 2022 income will come in "slightly below" the bottom end of the company-provided consensus target range of £109M-114M. However, its outlook for 2023 and beyond remains unchanged.

Chief executive officer Michael Speakman said a full investigation into the fraud is now underway, adding that two individuals have already been dismissed.

"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 organization," Speakman said.

An external advisor will be brought on to independently look into the matter, according to the company.