Wood Group is to restate prior reporting figures after a review into its operations found “inappropriate management pressure” and “over-optimism” in respect of accounting judgements.
The Aberdeen-based energy services company said the “cultural failings” appear to have led to information being inappropriately withheld from, and unreliable information being provided to, its auditors.
After receiving the draft review from Deloitte, it said it is committed to implementing “a detailed remediation plan”.
Further work required on the review means it is unlikely to publish audited accounts for 2024 by 30 April and trading in its shares will be suspended at that point. They closed today 11.9p (29.79%) lower at 28.04p, valuing the company at £194m.
Material prior year P&L and balance sheet adjustments are expected for the years 2022 to 2024 and restatements are expected for adjusted EBITDA and adjusted EBIT for 2022 and 2023.
Wood said it has identified “material weaknesses” and failures in the group’s financial culture within the Projects business unit and engagement between Group Finance and Projects.
“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 judgements.
“The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood’s auditors.
“There has been significant change within Wood and steps taken during and since the period covered by the Review, including changes in key roles in Finance and external expert assistance in the application of accounting standards.
“We are committed to implementing a detailed remediation plan, including necessary follow-on actions from the Review, to continue to strengthen the Group’s financial culture, governance and controls. This will include actions on culture, controls and organisational structure.
“We will provide a further update on the impacts of the Review, and actions being taken, as appropriate.”
As a result of the Review, a number of prior year adjustments are expected to be required to the income statement and balance sheet. This will mainly concern the reported performance of the Projects business unit in prior periods with no material impact on the Group’s historical cash flow generation.
The company does not currently expect any material impact from the review on the group’s ability to generate cash in the future.
Publication of FY24 results
Given the timing of the review and prior year adjustments, and the extensive work needed to conclude the audit, it is now expected that the company will not publish its FY24 accounts by 30 April. The company’s shares will be suspended from trading from that time.
Engagement with lenders
The company said it remains in constructive dialogue with the Group’s lenders regarding refinancing options and will engage with lenders in respect of the timing of its FY24 accounts.
Discussions with Sidara
Wood remains in discussions with Dubai-based Dar Al-Handasah Consultants Shair and Partners Holdings (Sidara) in relation to a possible cash offer for the company.
As announced on 24 March, Sidara has until 5pm on 17 April to announce a firm intention to make an offer for Wood.
See Comment: Wood Group destined for Dubai