UK oil firm admits ‘cultural failings' after it withheld figures from auditors

The Guardian

31-03-2025

The UK oil services company John Wood Group has admitted that its financial results need to be restated, after a review found 'cultural failings' led to information being withheld from its auditors.
The FTSE 250-listed company said the independent review, carried out by Deloitte, also found 'inappropriate management pressure' to stick with existing financial reports.
Shares in the company – which is in takeover talks with a Dubai-based suitor – plummeted by 31% on the news, and are down by 84% over the past five years.
The Aberdeen-based engineering and consultancy company, which employs 35,000 people, said Deloitte had found 'material weaknesses and failures in the group's financial culture' within the projects division, and engagement between the unit and group finance.
This means that financial results will have to be restated for 2022, 2023 and 2024, and profits are likely to be lower than previously reported.
The Deloitte review identified issues in a number of contracts in the projects division, particularly in relation to 'legacy lump sum turnkey projects' – projects where a contractor handles everything from design and planning to construction and handover.
It also unearthed problems with the application of accounting standards, such as holding amounts on the balance sheet that should have been written off.
'This included inappropriate management pressure and override to maintain previously reported positions, including through unsupported dispensations, and over-optimism and/or lack of evidence in respect of accounting judgments,' the company said.
'The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood's auditors.' The group was audited by KPMG.
It added that were 'no material issues' in Wood's other businesses – consulting, operations and investment services.
Wood said it had taken action, including changes in important roles in finance, and was committed to strengthening its financial culture, governance and controls.
It is likely that, due to the 'extensive work' needed to complete the audit, it will not publish its 2024 accounts by 30 April, which would lead to its shares being suspended from trading. Wood remains in talks with its lenders over refinancing options.
Last week, Wood's chief financial officer, Arvind Balan, quit abruptly after it emerged that he had misstated his professional qualifications, and was replaced on an interim basis by Iain Torrens, who previously served as CFO at TalkTalk and the financial services firm Icap.
The company is still in discussions with Dubai-based Sidara, a group of specialist engineering and design companies, whose deadline to make a firm offer or walk away has been extended until 17 April.
Sidara has made a number of attempts to buy the company, and last week offered 230p a share, valuing Wood at £1.58bn. Amid much to-ing and fro-ing, Sidara pulled out of a bid last August, citing 'rising geopolitical risks and financial market uncertainty'. Sidara, which was founded in Beirut, Lebanon, in 1956 as Dar al-Handasah, provides engineering and consultancy services on large building projects.
Nearly two years ago, Wood rejected a series of bids from the US fund manager Apollo Global Management, whose final proposal offered 240p a share, or £1.7bn.