On 3 March 2026, the Financial Conduct Authority (FCA) issued John Wood Group PLC ("Wood Group") with a Final Notice imposing a financial penalty of £12,993,700 for publishing inaccurate information in its financial results for FY22, FY23 and HY24. Wood Group agreed to resolve the matter and qualified for a 30% Stage 1 settlement discount; were it not for this discount, the penalty would have been £18,562,500.
Background to the findings
Wood Group is an international consulting and engineering company whose shares are admitted to the Official List. The scale of the misstatement was stark: for example in Wood Group's FY23 results it was reported an operating profit of $38 million and adjusted EBITDA of $423 million. According to its FY24 results, these numbers should have been an operating loss of $55 million and adjusted EBITDA of $378.2 million.
Between November 2024 and March 2025, Wood Group's share price fell by around 78%, and its shares were subsequently suspended on 1 May 2025 as a result of its failure to publish the FY24 results within the required timeframe.
The failings
The FCA found two regulatory breaches:
- Listing Rule 1.3.3R: a listed company must take reasonable care to ensure that misleading information is not published.
- 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.
The issues included:
- Projects Business Unit staff did not inform Wood Group's auditors about a proposed settlement with a customer, which the FCA described as reflecting a culture where issues were not raised until fully resolved internally.
- Recognition of $16 million of revenue from a change order despite it being widely understood that its true purpose was to maintain a predetermined loss figure of $9 million in relation to a project. Wood Group also assumed $22.9 million of cost savings that were widely recognised internally as highly unlikely to be realised, and under-estimated future costs by $20 million. In total, Wood Group overstated its FY23 operating profit by $42.9 million in relation to this project.
- $32.4 million of provision and contingency releases at the FY23 year-end were not supportable, having been performed at an aggregate level to offset losses on other projects rather than by reference to specific project risks. A further $27 million of debit balances on the Projects Business Unit balance sheet were subsequently written off - amounts which should have been recognised in prior periods.
- A failure to disclose significant concerns at a meeting with auditors- an approach described internally as "toeing the party line". Wood Group announced its HY24 results on 20 August 2024 without ensuring its auditors had sufficient notice to review key matters.
Penalty calculation
The FCA applied its five-step penalty framework under DEPP 6.5A. However, as is standard with listings breach cases of this nature, the FCA considered that Wood Group's revenue was not an appropriate indicator of harm, and instead used Wood Group's average daily market capitalisation throughout the Relevant Period as the reference figure. The FCA assessed the seriousness of the breach as Level 4 (on its 1 to 5 scale) applying its standard rate of 0.375% to produce a Step 2 figure of £4,125,000.
The FCA identified two aggravating factors: first, the Final Notices against Carillion (June 2022) and Metro Bank (December 2022), published shortly before the Relevant Period, should have prompted Wood Group and other listed firms to assess whether similar risks might arise in their own businesses; and second, Wood Group was already aware of the risk of similar failings around its financial culture as a result of an internal review conducted in 2022.
Mitigating factors included Wood Group's significant cooperation with the Authority - including providing material under a limited waiver of legal professional privilege - and the development and implementation of a remediation and governance action plan.
Balancing these factors, the FCA reduced the Step 2 figure by 10%, producing a Step 3 figure of £3,712,500.
However, the FCA considered £3,712,500 to be too small in relation to the breach to meet its objective of credible deterrence, and applied a multiplier of 5, producing a Step 4 figure of £18,562,500. The FCA noted that it would have adopted a higher multiplier had the mitigating factors not been present.
Comment
The five-times multiplier applied at Step 4 is striking: after mitigating and aggravating factors are balanced, the FCA effectively regarded the adjusted penalty of £3,712,500 as so inadequate that it needed to be multiplied fivefold to achieve credible deterrence - and would have gone higher still in the absence of Wood Group's cooperation and remediation steps.
The FCA's policy expressly provides that a deterrence uplift may be appropriate where the absolute value of the penalty is too small in relation to the breach, or where previous action by the Authority has failed to improve industry standards and in this case the FCA cited Carillion and Metro Bank in the aggravating factors section - two Final Notices published shortly before the Relevant Period which the FCA considered should have prompted listed firms to reflect on their own financial reporting risk.
In some respects it is an odd decision to use "deterrent" to increase the penalty to a palatable level. The factors which the FCA will have taken into account in deciding to increase the penalty - Wood Group's average daily market capitalisation (the Step 2 input), the seriousness of the failures (which were adjudged to amount to level 4 seriousness) and the prior cases against Carillion and Metro Bank (an aggravating factor at Step 3) - substantially overlap with those already reflected at those earlier stages of the penalty calculation. If application of the penalty formula for listing rules breaches produces a figure which is so far removed from what the FCA regards as proportionate, then that would suggest that the formula itself should perhaps be revisited.
It is instructive also to consider this case alongside the PRA's enforcement action against UK Insurance Limited ("UKI"), which we cover elsewhere [insert link] in Enforcement Watch. The two cases share a common theme - financial misstatement to the market and regulators - but the character of the underlying conduct is materially different. The miscalculation at UKI arose due to ineffective preventative and detective controls and resourcing issues in its finance and actuarial functions, and went undetected by DLG's internal controls for a significant period. There is nothing in the PRA's account of UKI to suggest the misstatement was anything other than completely inadvertent. As soon as the matter was discovered it was promptly reported to the PRA and the market and UKI received a very substantial reduction in penalty to reflect its behaviour post the discovery.
The picture at Wood Group is different. The FCA characterised its breach as negligent rather than deliberate or reckless, however the final notice describes a culture in which concerns were actively suppressed, settlements were timed to avoid disclosure, and auditors were kept in the dark. This is perhaps a key factor in why the FCA sought to increase the penalty for deterrence.
The lesson for listed companies and their boards is a familiar one: the manner in which problems are managed, disclosed and escalated is as important as the underlying facts. A pattern of selective disclosure and the suppression of internal concerns will not only fail to attract the benefits of early and transparent engagement - it will materially increase the penalty ultimately imposed.