Wood Group, the London-based engineering firm, announced that it will need to revise its financial results and is likely to suspend trading of its shares next month. This follows an independent review that revealed significant “cultural failings” within the company, including issues with information being concealed from auditors.
On Monday, Wood stated that it expects “material” adjustments to its financial statements and balance sheets for the last three years. Consequently, the release of its financial reports for the year 2024 will be delayed.
The company mentioned it can no longer promise to publish its full-year 2024 accounts by the previously set date of April 30. If the accounts are not finalized by then, it will likely suspend its shares from trading.
As a result of this news, shares in Wood dropped 25 percent on Monday morning, after initially plunging by as much as 36.3 percent.
Wood is currently in discussions regarding a potential takeover by Sidara, an engineering and design group based in the UAE and London, which has until April 17 to make a formal offer or withdraw. However, these negotiations had already faced delays to allow time to finalize the accounts, and the latest developments may complicate the situation further.
Over the past year, Wood’s shares have plummeted more than 75 percent, amid mounting debt issues and significant cash losses.
The company’s chief financial officer resigned abruptly in February after admitting to incorrectly stating his qualifications. Following this, Wood initiated an independent review of its projects division last November, prompted by conversations with its auditor, KPMG.
The review, led by Deloitte, identified serious weaknesses in the company’s financial practices. It noted that there were inappropriate pressures from management to maintain previously reported figures, leading to unsupported decisions and a lack of clear evidence for certain accounting judgments.
Wood acknowledged that the cultural shortcomings seemed to have resulted in instances where information was improperly withheld from auditors, leading to unreliable data being presented.
The firm has committed to significant changes and is dedicated to following a comprehensive remediation plan to address these issues.
Founded as a key player in the development of the North Sea, Wood was valued at over £5 billion in 2018. However, the company has struggled notably since its £2.2 billion acquisition of Amec Foster Wheeler in 2017, with its market capitalization now dropping to under £210 million.
Sidara had previously attempted a bid for Wood last summer, offering a valuation of nearly £1.6 billion, but ultimately walked away from that offer.