TIDMKLR
RNS Number : 0176M
Keller Group PLC
09 January 2023
9 January 2023
Keller Group plc
Financial reporting fraud in Austral and year end trading
update
Keller Group plc ('Keller' or 'the Group'), the world's largest
geotechnical specialist contractor, today announces that it has
identified a financial reporting fraud in its Austral Business Unit
in Australia, and issues a trading update for the year ended 31
December 2022.
Fraud investigation
The Group announces that, following an internal management
operational review, it has recently identified an apparently
deliberate and sophisticated financial reporting fraud discrete to
the Austral business in Australia, a business unit within the AMEA
(Asia-Pacific, Middle East and Africa) Division. As a result of the
review, two individuals have been summarily dismissed. Austral,
contributing c 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. An
internal investigation is underway and we are in the process of
appointing an external adviser to undertake an independent
investigation.
Financial impact and year end update
The financial reporting fraud relates to the overstatement of
Austral's performance from 2019 onwards. The impact of the
financial reporting fraud on the Group's historical operating
profits is currently estimated to be approximately GBP6m related to
the first half of 2022, and GBP8m to GBP10m relating to prior
years. 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, and therefore the Board now expects the Group to
report a full year operating profit slightly below the bottom end
of the range of market expectations(1) . The Board's expectations
for 2023 and beyond remain unchanged. Given this is a reporting
issue, there is no impact on the Group's year end cash position and
therefore we expect year end net debt/EBITDA leverage to be at
least in line with market expectations of c1.3x. As announced in
October 2022, the Board will recommend a further 5% increase in the
final dividend to 24.5p (2022: 23.3p), bringing the 2022 total
dividend payable to 37.7p (2021: 35.9p).
Further details relating to these matters will be set out with
the FY 2022 results which will be announced on 7 March 2023.
Divisional update
In North America, trading continued with a high level of
activity. As a result of management actions, the challenges in the
foundations business in the first half relating to inflation and
supply chain have in part receded, and project execution issues
have reduced, benefitting the operating margin. In Europe, trading
remained robust in the second half, despite the operational
challenges following the disruption and economic uncertainty in the
region primarily generated by the war in Ukraine. Notwithstanding
the issue in Austral, the AMEA Division more widely is performing
strongly. Work on the major NEOM project in Saudi Arabia has
commenced and this will continue to evolve into a significant and
material opportunity for 2023 and beyond.
Michael Speakman, Chief Executive Officer:
"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 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 North America foundations business. Our
substantial order book, together with the significant potential of
the NEOM project, support our confidence in the Group's prospects
in both the short and medium term."
(1) Analyst consensus underlying operating profit for FY 2022:
GBP111m; range: GBP109m - GBP114m.
For further information, please contact:
Keller Group plc www.keller.com
020 7616 7575
Michael Speakman, Chief Executive
Officer
David Burke, Chief Financial Officer
Caroline Crampton, Group Head of
Investor Relations
FTI Consulting
Nick Hasell / Matthew O'Keeffe 020 3727 1340
Notes to editors:
Keller is the world's largest geotechnical specialist contractor
providing a wide portfolio of advanced foundation and ground
improvement techniques used across the entire construction
sector. With around 10,000 staff and operations across five
continents, Keller tackles an unrivalled 6,000 projects every year,
generating annual revenue of more than GBP2bn.
Cautionary statements:
This document contains certain 'forward looking statements' with
respect to Keller's financial condition, results of operations and
business and certain of Keller's plans and objectives with respect
to these items. Forward looking statements are sometimes, but not
always, identified by their use of a date in the future or such
words as 'anticipates', 'aims', 'due', 'could', 'may', 'should',
'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably
possible', 'targets', 'goal' or 'estimates'. By their very nature
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, changes in the economies and markets in which the
group operates; changes in the regulatory and competition
frameworks in which the group operates; the impact of legal or
other proceedings against or which affect the group; and changes in
interest and exchange rates. For a more detailed description of
these risks, uncertainties and other factors, please see the Risk
Management approach and Principal Risks section of the Strategic
Report in the Annual Report and Accounts. All written or verbal
forward looking statements, made in this document or made
subsequently, which are attributable to Keller or any other member
of the group or persons acting on their behalf are expressly
qualified in their entirety by the factors referred to above.
Keller does not intend to update these forward looking statements.
Nothing in this document should be regarded as a profits forecast.
This document is not an offer to sell, exchange or transfer any
securities of Keller Group plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
This announcement includes inside information for the purposes
of Article 7 of the Market Abuse Regulation No. 596/2014, as it
forms part of the laws of England and Wales and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations. On the publication of this announcement via a
Regulatory Information Service, this information is considered to
be in the public domain. The person responsible for making this
announcement is Kerry Porritt, Group Company Secretary and Legal
Advisor.
LEI: 549300QO4MBL43UHSN10
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