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Wood Group has said it will need to restate its financial results and will probably have to suspend its shares next month after an independent review found “cultural failings”, including information being withheld from auditors.
The troubled London-listed engineering group said on Monday that “material” adjustments were expected to its income statements and balance sheet for its three most recent financial years and that its accounts for its 2024 financial year would be delayed as a result.
Wood said it no longer expected to publish its full-year 2024 accounts by April 30, and would suspend its shares from that date if further work was still needed to complete them.
Shares were trading 25 per cent lower on Monday morning after initially falling as much as 36.3 per cent.
The company remains in talks over a possible takeover by Sidara, a privately held network of engineering and design companies run from the United Arab Emirates and London, which has until April 17 to make a firm offer or walk away.
But the talks had already been extended, in part to allow the completion of the final accounts to help inform Sidara’s bid. The latest developments are likely to further complicate efforts to reach a deal.
Shares in Wood have fallen more than 75 per cent over the past year as it struggles with a heavy debt load and burns cash.
Wood, whose chief financial officer stepped down abruptly in February after admitting misstating his accounting qualifications, had announced an independent review into its projects division in November last year after discussions with its auditor KPMG.
On Monday, the company said the review led by Deloitte had “identified material weaknesses and failures in the group’s financial culture”.
“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 judgments,” it said.
It added: “The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood’s auditors.”
The company said there had been “significant” changes within Wood since the period covered by the review, and it was “committed to implementing a detailed remediation plan”.
Wood was one of the homegrown success stories of the UK’s development of the North Sea, valued at more than £5bn in 2018 as it expanded its global footprint and pursued ambitious plans to transition from an oil services provider to a full-scale engineering and consulting firm.
But the company has struggled since shortly after its £2.2bn takeover of Amec Foster Wheeler in 2017, and its market capitalisation has collapsed in recent months to less than £210mn.
Sidara walked away from a previous bid for the company last summer that would have valued Wood at almost £1.6bn.
