Engineering giant Wood Group is being investigated by the UK's financial watchdog following an independent review which found "cultural failings" with its accounting practices. The Financial Conduct Authority (FCA) probe will look into the period between January 2023 and November 2024. A Wood Group spokesperson said the company would cooperate fully with the investigation. The Aberdeen-based group, which provides oilfield and engineering services, warned in April that it had to restate its accounts from previous years. It also delayed the publication of results for the 2024 financial year, which were due at the end of April. This meant its shares have since been suspended from trading on the London Stock Exchange. Earlier this year, an independent review by Deloitte found "material weaknesses and failures in the group's financial culture" within its projects business unit and the engagement with its group finance team. This included "inappropriate management pressure" to maintain previously reported positions and "over-optimism and/or lack of evidence in respect of accounting judgements". The report said: "The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood's auditors." Wood Group stressed there has been significant change within the business since the period in question and steps taken to address the failings discovered. The firm has also been the subject of a takeover approach by Dubai-based buyer Sidara. The latest offer, received in April, valued the company at around £242m. A year ago, Sidara made a £1.56bn takeover approach before talks collapsed. Wood Group's share price subsequently plummeted. The directors of Wood are recommending the proposed takeover by Sidara but a formal offer has been postponed several times while doubts remain about the accounts. In what will be seen as a further blow to its status as an investable firm, it was announced today that Wood Group will be removed from the FTSE indices from 2 July, having had trading in its shares suspended for months.
Financial watchdog launches probe into Wood Group
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"FCA Investigates Wood Group Amidst Accounting Culture Concerns"
Bbc News
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TruthLens AI Summary
Wood Group, a prominent engineering firm based in Aberdeen, is currently under investigation by the UK's Financial Conduct Authority (FCA) following an independent review that uncovered significant cultural failings in the company's accounting practices. The FCA's inquiry will focus on the company's operations from January 2023 to November 2024. A spokesperson for Wood Group has indicated that the company intends to fully cooperate with the investigation. This scrutiny comes after the company announced in April that it would need to restate its financial accounts for previous years and subsequently delayed the release of its financial results for the 2024 fiscal year, which were originally scheduled for the end of April. As a consequence of these developments, Wood Group's shares have been suspended from trading on the London Stock Exchange, marking a significant setback for the company amidst ongoing concerns about its financial integrity.
The independent review conducted by Deloitte revealed serious deficiencies in Wood Group's financial culture, particularly within its projects business unit and its interactions with the group finance team. Key issues identified included undue management pressure to uphold prior financial positions and a general lack of evidence supporting accounting judgments, leading to the withholding of critical information from auditors. In light of these findings, Wood Group has emphasized that substantial changes have been implemented within the organization to rectify the identified failings. Additionally, the company is facing a potential takeover by Dubai-based Sidara, which recently proposed a valuation of approximately £242 million, following a failed £1.56 billion takeover attempt last year. While Wood's directors support the latest takeover bid, the formal offer has been delayed multiple times due to ongoing uncertainties regarding the company's financial statements. In a further setback, it has been announced that Wood Group will be removed from the FTSE indices effective July 2, following months of share trading suspension, further complicating its status as a viable investment option.
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