John Wood Group, a UK oil services company listed on the FTSE 250, has admitted that it needs to restate its financial results after an independent review by Deloitte uncovered “cultural failings” that led to information being withheld from auditors. The review also found that there was “inappropriate management pressure” to adhere to existing financial reports. As a result, shares in the company, which employs 35,000 people and is involved in takeover discussions with a Dubai-based suitor, plummeted by 31% and have fallen by 84% over the past five years.
The review identified material weaknesses and failures in the group’s financial culture within the projects division and its interaction with group finance. Consequently, financial results for 2022, 2023, and 2024 will need to be restated, with profits likely to be lower than previously reported. Issues were found in several contracts within the projects division, particularly those involving legacy lump-sum turnkey projects. Additionally, problems with applying accounting standards were discovered, including inaccurately recording amounts on the balance sheet and refusing to write off losses.
The company stated that these issues were caused by “inappropriate management pressure and override to maintain previously reported positions” and “overoptimism and/or lack of evidence in respect of accounting judgments.” This led to instances of information being withheld from or unreliable information being provided to auditors, who were KPMG.
Wood Group emphasized that there were no material issues found in its other businesses, including consulting, operations, and investment services. In response to the findings, the company has implemented changes in key positions within finance and is committed to improving its financial culture, governance, and controls.
Due to the “extensive work” needed to complete the audit, it is possible that the company will not publish its 2024 accounts by the expected deadline of 30 April, resulting in a potential suspension of trading. The company remains in discussions with its lenders to explore refinancing options.
Last week, Wood’s chief financial officer, Arvind Balan, resigned abruptly after misrepresenting his professional qualifications. He has been replaced on an interim basis by Iain Torrens, who previously served as CFO at TalkTalk and financial services company Icap.
Wood Group is still engaged in discussions with its potential buyer, Dubai-based Sidara, a group of specialist engineering and design companies. Sidara’s deadline to submit an offer has been extended until 17 April. Sidara has previously attempted to purchase the company, most recently offering 230p per share last week, valuing it at £1.58bn. However, they withdrew their bid in August last year, citing rising geopolitical risks and financial market uncertainty. Sidara, founded in 1956 in Beirut, Lebanon, as Dar al-Handasah, provides engineering and consultancy services for large building projects.
Two years ago, Wood Group rejected a series of bids from the US fund manager Apollo Global Management, with Apollo’s final proposal offering 240p per share.
Source: https://www.theguardian.com/business/2025/mar/31/uk-oil-firm-admits-cultural-failings-after-it-withheld-figures-from-auditors
