FCA fines John Wood Group PLC almost £13m for issuing misleading statements. But would the penalty be worse in future?

The Financial Conduct Authority (“FCA”) has fined John Wood Group PLC (Wood Group) £12,993,700 for publishing inaccurate information in its financial results.  The case represents swift, substantial enforcement action by the FCA.  It also raises some interesting questions as to how such matters could be pursued in future.

What happened?

Following concerns expressed by Wood Group's auditors about the group’s HY24 results, and the manner in which these had been prepared, Wood Group announced an independent review on 7 November 2024.  In March 2025, Wood Group published a market announcement, which reported (among other things) that the group had identified:

• “Issues … in a limited number of contracts in Projects, particularly in relation to legacy lump sum turnkey ('LSTK') projects”.
• “Issues with the application of relevant accounting standards, such as holding specific amounts on the Projects centre balance sheet that should have been written off”;
• “Gaps and deficiencies within the application of controls which relate to the monitoring and reporting of project positions within the Projects business unit”; and
• “material weaknesses and failures in the Group's financial culture within the Projects business unit and engagement between Group Finance and Projects. 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 cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood's auditors”.

LSTK contracts are fixed-price agreements in the engineering, procurement and construction (“EPC”) sectors where a contractor (in this case, Wood Group) is responsible for designing, procuring, constructing and delivering a project to full completion.

The FCA announced an investigation in June 2025.  That investigation confirmed the findings of Wood Group’s independent review, finding that inappropriate accounting judgements were made concerning Wood Group's LSTK EPC projects within its Projects Business Unit for FY22, FY23 and HY24, as well as a lack of transparency with its auditors and AREC.  More specifically, the FCA found that Wood Group (among other things):

• failed to account properly for certain costs on EPC contracts worth $736 million, which led to a cumulative overstatement of reported operating profit of $26 million in its FY22 and FY23 results;
• recognised unrealistic costs savings estimates and under­estimated future costs to complete in respect of another project, which resulted in an overstatement of reported operating profit of $22.9 million and $20 million respectively in its FY23 results; and
• released provisions and contingencies held against specific risks within its Projects Business Unit in order to offset losses elsewhere in the business, without proper regard to the specific projects that the provisions were allocated to or the risks or progress in those projects, which led to a cumulative overstatement of Wood Group's adjusted EBITDA and operating profit of $28.0 million across the FY22 and FY23 results.

Pursuant to its powers under section 91 of the Financial Services and Markets Act 2000, the FCA imposed a financial penalty of £12,993,700 on Wood Group for breach of:

• Listing Rule 1.3.3R (a listed company must take reasonable care to ensure that misleading information is not published); and
• Listing Principle 1 (a listed company must take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations).

Wood Group agreed to resolve the case at an early stage, accepting the FCA’s findings, and therefore qualified for a 30% discount on the penalty imposed. Without this discount, the FCA would have imposed a financial penalty of £18,562,500 on Wood Group.

Wood Group’s shares were delisted from the London Stock Exchange earlier this month, following its acquisition by Dar Al-Handasah Consultants Shair and Partners Holdings Ltd.

How could such matters be pursued in future?

The FCA opened its investigation into Wood Group in June 2025 and concluded it within 9 months.  Presumably, the independent investigation commissioned by Wood Group made this a relatively straightforward investigation for the FCA.  Nonetheless, it is remarkably fast (the FCA has previously published an average length of investigations of 3-4 years) and has been cited by the FCA as “an example of how the FCA is improving the pace of its enforcement investigations”.  It is, however, notable that other enforcement options may be available in respect of similar conduct in future.

The offence of failure to prevent fraud came into force on 1 September 2025.  Under the offence,  a “Large Organisation” can be guilty of an offence if an “Associate” commits a “Fraud Offence” intending to benefit that organisation or its clients, unless the organisation can prove that it had “reasonable” prevention procedures in place.  Relevant fraud offences include false accounting and fraud by false representation, both of which appear ostensibly relevant in Wood Group’s case (subject to dishonesty being established).  Therefore, had the conduct described above occurred after 1 September 2025, it is conceivable that Wood Group could have been prosecuted for the offence of failure to prevent fraud. Fines for the offence are unlimited, and a criminal prosecution (and conviction) brings significant reputational risk and conviction can lead to debarment from public procurement activities.

The Wood Group case throws up some interesting questions – and highlights the growing number of ways in which corporates can be pursued following allegations of wrongdoing.  While there is no indication that it would apply in Wood Group’s  case, it is further notable that, since 26 December 2023, criminal liability may be attributed to a body corporate or partnership for economic crime offences listed in Schedule 12 to the Economic Crime and Corporate Transparency Act 2023 where the offence is committed by a "senior manager" acting within the actual or apparent scope of their authority, regardless of the size of the organisation.  Relevant offences listed in Schedule 12 again include false accounting and fraud by false representation (and this route to liability is on course to be widened to apply to all criminal offences).

The need for organisations to fully understand risk areas within their business, and to design and implement bespoke, proportionate prevention policies and procedures is ever greater.

Should you wish to discuss any of the matters raised in this article, please contact Guy Bastable, Matthew Kaltsas-Walker, Andrew Matheson or Sam Aldous in Burges Salmon’s Corporate Crime & Investigations team.