Listing regime – company fined for breaches of Listing Rules

The FCA has fined John Wood Group £12.9 million for breaches of the Listing Rules. 

The FCA said that between January 2023 and November 2024, the company operated a poor financial culture that resulted in inappropriate accounting judgements being made in its results for 2022 and 2023 and its half year results for 2024. Issues included failing to account for costs properly, attempting to recognise revenue inappropriately and failing to write off unsupportable debit amounts. As a result, the company overstated its operating profit in its 2022 and 2023 results announcements. Following concerns raised by its auditors about the 2024 half year results, the company announced an independent review and later indicated that material restatements would be required.

The FCA concluded that the company’s failure to maintain a robust control framework created an environment in which inappropriate accounting judgements could be made. Staff failed to be transparent with the auditors and the audit and risk committee. It said that Wood Group’s processes enabled, rather than prevented, the breaches of the Listing Rule requirements. 

The FCA concluded that Wood Group had breached:

• Listing Rule 1.3.3R (misleading information must not be published) because it failed to take reasonable care to ensure that its results announcements did not contain false or misleading information; and 
• Listing Principle 1 (the requirement to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations).

The FCA said one of the factors that aggravated the breaches was that the FCA had published notices in relation to Carillion (see our blog post here) and Metro Bank (see our blog post here) shortly before these breaches occurred, and that those notices should have led Wood Group, and other listed companies, to consider whether the risks identified might arise in their own business. 

In calculating the fine, the figure was increased by nearly £15 million to act as a deterrent. The company qualified for a 30% early settlement discount (the fine would otherwise have been £18.5 million).