“Misrepresentation of the contract performance is something we take very seriously and we are looking at very closely. Whether that meets the legal definition of fraud is something we will be investigating,” Fenn said.

The manager who was in charge of the contract for the undisclosed client had left the company and other people were now in charge, Fenn said.

“Although the business has a general skew to the second-half, we think the challenge for the last seven months of [financial year 2023] has become too large,” Mr Fenn said.

Excluding the impact of the accounting irregularities, Downer now expects underlying profit for the year to be between $210 million and $230 million assuming there is no further impact on earnings from COVID-19, weather, labour shortages or other disruptions.

The difficult weather conditions and rising costs have hit most of its businesses during the first quarter in Australia’s eastern states. “Very few of our businesses [are] unaffected,” he said.

“Our Road Services and Utilities businesses have been heavily impacted by weather and all businesses have been battling with staff shortages and supply chain issues. These issues are dissipating but not in time for 2023 earnings.”

With AAP

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