
Wood shares have plummeted further after a review of contracts from prior years identified “material weaknesses and failures” in the financial culture of the Aberdeen-headquartered firm, the company has revealed.
The review of a number of “legacy lump sum turnkey” (LSTK) projects means Wood will not be able to file its fully year accounts as planned next month which will result in a temporary suspension of its shares.
Wood shares dropped more than 30% in early trading as markets digested the investigation, which the firm commissioned last year.
The publication of the audit comes as the group is subject to fresh buyout approach from Dar Al-Handasah Consultants Shair and Partners, otherwise known as Sidara.
The review means the firm has had to seek “retrospective waivers” on debt facilities up to the end of April as the revision of books over the last three years means the firm will have breached lending covenants.
Nevertheless, Wood said there would be “no material impact” on its historic cash flow as a result of the review, nor does it “expect any material impact” on its ability to generate cash in the future.
Weaknesses and failures
The “weaknesses and failures” identified by Deloitte included “inappropriate management pressure” and “over-optimism and/or lack of evidence” in respect of accounting judgements.
These “cultural failings” led to instances of information being “inappropriately withheld” and “unreliable information” being provided to Wood’s auditors.
Wood said it “remains in discussions” with Lebanese-owned Sidara over possible cash offer for the group.
Last year Wood rejected a bid worth $1.65 billion, representing an offer price of 205 pence per Wood share.
It is thought any fresh bid from Sidara will be less than this. The bidder has until 17 April to announce a firm intention to make an offer for Wood.
In addition to requiring a stay pf execution from lenders, Wood said it will be tackling “material” balance sheet adjustments for 2022, 2o23 and the first half of 2024.
It added its expects “material restatements” for 2022 and 2023.