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(Alliance News) - John Wood Group PLC shares tumbled on Thursday as the firm said it has turned to Deloitte to perform an independent review after exceptional contract write-offs.
The oilfield and engineering services firm said the probe will be focused on "reported positions on contracts in projects, accounting, governance and controls". The review will also look to determine whether any prior results need to be restated.
"Following the exceptional contract write-offs relating to the exit from lump sum turnkey and large-scale EPC reported at the half year 2024 results, and in conjunction with the auditor's ongoing work, the board, in response to dialogue with its auditor, has agreed to commission an independent review to be performed by Deloitte," Wood Group explained.
In results for the first half of 2024, Wood Group reported an impairment of goodwill of USD815 million and USD140 million of charges related to the exit of lump sum turnkey and large-scale engineering, procurement & construction work.
Shares were 44% lower at 70.20 pence each in London on Thursday morning, by far the worst FTSE 250 performer. It now has a market capitalisation of GBP481.2 million.
The company said revenue in the third-quarter of 2024 rose 0.6% on-year to USD1.49 billion from USD1.48 billion.
The performance in the Projects segment, which provides services such as front-end engineering design, was hurt by "weaker end markets". Revenue there fell 2% on-year in the third-quarter.
Operations revenue rose 9% on-year. The unit, which provides maintenance and modification work and keeps the "world's most critical industries performing", has seen strength in Europe and the Middle East.
Consulting revenue was down 9% amid "lower activity levels in our technical consultancy business partly due to client hesitancy around political and regulatory outcomes".
Chief Executive Officer Ken Gilmartin said: "We continue to make progress on our turnaround, building a simpler, higher quality Wood. Our Simplification programme is on-track to deliver annualised savings of USD60 million, and we completed the sale of CEC Controls and agreed the sale of EthosEnergy in the period. The increasing quality of our business is evidenced by higher pricing, expanded margins and a higher share of our pipeline from sustainable solutions.
"It was, however, a mixed quarter for group performance. We saw strong year-on-year growth in Operations and margin expansion in Consulting. Our Projects business delivered a disappointing quarter, impacted by delayed awards in our chemicals business and our continued weakness in minerals and life sciences. As such, we continue to take actions to redress this underperformance."
For the full-year, it still expects high single digit growth in adjusted earnings before, interest, tax, depreciation and amortisation, also excluding the impact of disposals, from USD423 million in 2023. Wood Group expects a "strong" fourth-quarter.
In August, one-time Wood Group suitor Dar Al-Handasah Consultants Shair & Partners Holdings Ltd, known as Sidara, said it does not intend to make a firm offer for the Aberdeen, Scotland-based firm.
Back in June, John Wood received a fourth possible takeover proposal from Sidara, worth 230 pence per share. Sidara had steadily increased its bid proposal after making an initial approach worth 205p per share, which John Wood disclosed in early May. The June tilt had valued Wood Group at around GBP1.58 billion.
In May 2023, a bidder owned by the US's Apollo Global Management Inc decided against making a firm takeover offer for Wood, having previously made five tentative proposals.
By Eric Cunha, Alliance News news editor
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