Overview of Financial Issues

Wood Group, a London-listed engineering firm, has revealed its intention to restate financial results following an independent review that uncovered significant cultural issues within the organization. These findings indicated instances where crucial information was withheld from auditors, prompting the company to redefine its financial outlook.

Impact on Financial Statements

On Monday, Wood Group communicated that it anticipates material adjustments to its income statements and balance sheet for the last three fiscal years. Additionally, the accounts for the upcoming 2024 financial year will be postponed. Previously expected to be published by April 30, the full-year 2024 accounts may be delayed further, necessitating a potential suspension of shares from that date.

Market Reactions

The announcement had a considerable impact on Wood’s stock, leading to a staggering 36.3% drop in share value during early trading on Monday. Over the past year, Wood’s shares have plummeted nearly 70%, largely attributed to the company’s mounting debt and cash flow challenges.

Ongoing Takeover Discussions

In the backdrop of these financial troubles, Wood Group is engaged in discussions regarding a potential acquisition by Sidara, a privately owned consortium of engineering and design companies based in the UAE. Sidara has until April 17 to submit a firm offer or abandon the negotiations.

Review Findings and Cultural Failings

Initiated in response to interactions with its auditor, the independent review conducted by Wood highlighted significant weaknesses and failures within the company’s financial culture. It noted:

• Inadequate management practices that exerted undue pressure to uphold previously reported financial positions.
• Instances of optimism that lacked supporting evidence regarding accounting judgments.
• Concealing vital information and presenting unreliable data to auditors.

Commitment to Change

In light of the review’s findings, Wood Group has acknowledged that substantial changes have occurred within the organization since the relevant period. The company has committed to implementing a comprehensive remediation plan to address these internal issues and restore confidence among stakeholders.