Wood Group warns over need to restate accounts after ‘weaknesses' uncovered
The troubled engineering and oilfield services firm said it was expecting to make 'material' adjustments to previous financial statements and its balance sheet for the past three financial years.
This means its results for 2024 – which had been due to be published on April 30 – will be delayed, which will see its shares suspended as a result.
Shares in the FTSE 250 group plunged by more than 30% on Monday, with the group having lost nearly 80% of its stock market value in the past year.
It stressed it remains in talks over a potential takeover by Sidara – a privately-held network of engineering and design companies run from the United Arab Emirates – with its suitor given until April 17 to make an offer or walk away.
Aberdeen-based Wood Group said the draft results of an independent review by Deloitte found 'material weaknesses and failures in the group's financial culture' within its projects business unit and engagement between the division and its group finance team.
It added: '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.
'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 firm stressed there has since been significant change within the group and steps taken to address the failings discovered.
Russ Mould, investment director at AJ Bell, said: 'The deadline for Sidara to formalise a takeover deal has been pushed to April 17 but whether the latest revelations cause a rethink for the Dubai-based group or complications in the timetable remains to be seen.
'While the issues revealed in a draft review of the business mainly relate to historical performance at its projects business unit and do not relate to cashflow, they raise questions of culture given the failure to maintain robust accounting standards.'
Sidara abandoned an initial takeover tilt last August, blaming global market turmoil and geopolitical risks, having put forward four takeover proposals – the last valuing Wood Group at around £1.56 billion.
It is understood to have made the fresh approach due to Wood's recent heavy share price falls.
Sidara's decision to abandon a deal last summer sent Wood Group's shares plunging, dealing a blow to investors who have suffered a languishing share price and a number of failed takeover attempts for the company.
In another unfortunate twist, Wood Group's chief financial officer Arvind Balan resigned in February after admitting making an inaccurate claim about a chartered accountant qualification.
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