Bold headline: A UK oil engineering giant fined nearly £13m for repeatedly publishing false financial results.
John Wood Group, a FTSE-listed oil services and engineering company that is nearing a takeover by a Dubai-based rival, has admitted there were “cultural failings” that led to information being withheld from auditors. The Financial Conduct Authority (FCA) fined Wood Group £12.9 million for producing inaccurate financial reporting between January 2023 and November 2024. The FCA began its probe in June of the previous year.
The regulator stated that, after some projects underperformed, Wood Group’s accounting judgments were inappropriately swayed by a desire to preserve previously disclosed financial results. The FCA also noted that the company lacked adequate systems, controls, or procedures to prevent such issues. The penalty could have been £18.5 million, but was reduced by 30% after Wood Group accepted the regulator’s findings.
Wood Group, based in Aberdeen, provides engineering and consulting services for oil rigs. The firm has been grappling with the accounting fallout since 2024, when it commissioned an independent review by Deloitte into its finances. The Deloitte review found “inappropriate management pressure” to maintain existing financial reports despite problems in several contracts within its projects division, specifically legacy lump-sum turnkey projects that cover design through construction.
The situation worsened when Wood Group’s chief financial officer, Arvind Balan, abruptly resigned last year after it emerged he had misstated his professional qualifications.
Meanwhile, Sidara, the Middle Eastern engineering company that had been negotiating to acquire Wood Group, substantially lowered its bid last November due to market turmoil. The sale, valued at £216 million, would represent only a fraction of Sidara’s initial offer of £1.58 billion in 2024.
The deal would also place Wood Group among a small group of UK-listed firms that have exited the London Stock Exchange in recent years, joining Flutter Entertainment, Ashtead, and Indivior in that trend.
As of Wednesday, Wood Group had a market capitalization of about £199 million, with its share price having declined by roughly 91% over the past five years.
Steve Smart, the FCA’s enforcement director, commented: “Investors depend on accurate information to make informed decisions. Wood Group failed to provide this and fell far short of the standards we expect from listed companies.”
In its reply, Wood Group referred to the matter as tied to historic financial reporting issues and stated that the regulator’s conclusions align with Deloitte’s independent review. The company emphasized that it cooperated fully with the FCA throughout the investigation and has since implemented a remediation and governance action plan to address the identified problems, steps that the FCA noted in its findings.
