John Wood Group PLC on Monday warned ‘material’ adjustments are expected to be made to prior year earnings after receiving findings of an independent review.

In response, shares in the Aberdeen-based oilfield and engineering services provider slumped 28% to 28.80 pence each for a market value of £190 million.

The company said the probe by accountancy and audit firm Deloitte found ‘material weaknesses and failures’ in the ‘financial culture’ of its Projects division.

‘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 judgements,’ the company said.

The ‘cultural failings’ may have led to some information being withheld from auditors, Wood Group added.

‘As a result of the review, a number of prior year adjustments are expected to be required to the income statement and balance sheet,’ it said, predominantly within the Projects unit.

Wood Group said it expects ‘material prior year profit & loss and balance sheet adjustments’ for 2022, 2023 and the first half of 2024. In addition ‘material’ restatements are expected for adjusted earnings before interest, tax, depreciation and amortisation and adjusted Ebit for 2022 and 2023.

‘The company does not currently expect any material impact from the review on the group’s ability to generate cash in the future,’ it added.

For the 2024 annual results, Wood Group does not expect these to be published by April 30. ‘In that case, the company’s shares would be suspended from trading from that time as work progresses towards completion of its FY24 accounts,’ it cautioned.

‘We remain in constructive dialogue with the group’s lenders regarding refinancing options and will engage with lenders in respect of the timing of our FY24 accounts, including putting in place appropriate pre-emptive waivers under our committed debt facilities.’

Wood Group announced the probe, done by Deloitte, in November.

Last month, it announced cost cuts and also said that Arvind Balan had stepped down as finance chief, after it emerged that his professional qualifications had been incorrectly described in public statements.

Wood Group said talks with Dar Al-Handasah Consultants Shair and Partners Holdings Ltd, known as Sidara, in relation to a possible cash offer for the company continue.

Sidara has until April 17 to make a firm proposal to buy the firm.

Talks between the two firms broke down last year after Sidara made a series of attempts to buy the business. Sidara’s final tilt, priced around 230p per share, valued John Wood at £1.58 billion.

In May 2023, John Wood rejected the fifth in a series of bids from Apollo Global Management, with the final approach worth 240p per share, or around £1.7 billion.

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