John Wood Group PLC (LSE:WG.) shares plummeted 37% to 25p as it warned that adjustments are necessary to prior year accounts after a review identified many concerns, including "material weaknesses and failures" in financial culture as recently at the 2024 financial year.
Failings included "inappropriate management pressure", including management overriding financial reporting to maintain previously reported positions, including through "unsupported dispensations, over-optimism and lack of evidence" over accounting judgements.
Various instances were identified where managers had hidden information and provided "unreliable" information to auditors.
The draft review, conducted by Deloitte, has called for "material" prior year adjustments to be made to the profit & loss and balance sheets of the 2022 and 2023 financial years, and the first half of 2024.
Adjusted EBITDA and EBIT are also likely to be restated, with the changes mainly affecting historical reported performance in the Projects business unit and with "no material impact" on historical cash flow generation.
Issues related to legacy lump sum turnkey contracts and misapplication of accounting standards. No major problems were found in Wood's Consulting, Operations or Investment Services units.
Wood now expects it will not publish its 2024 accounts by 30 April 2025, missing the LSE's four-month deadline and resulting in its shares being suspended from trading.
"We are committed to implementing a detailed remediation plan, including necessary follow-on actions from the review, to continue to strengthen the group's financial culture, governance and controls. This will include actions on culture, controls and organisational structure," the company said.
The company said it is continuing constructive talks with lenders over refinancing and appropriate waivers, and remains in discussions with Sidara over a possible takeover offer.
Last week a new deadline for Sidara to make a firm offer was set for 17 April after re-starting talks in Feburary with the Dubai-based group, which had pursued a deal last year before withdrawing due to what it said were geopolitical risks and market uncertainty.
** Update: Share price added **