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UK’s financial watchdog, the Financial Conduct Authority (FCA), is launching an investigation into engineering giant Wood Group after an independent review uncovered “cultural failings” in its accounting practices. The probe will focus on the period spanning from January 2023 to November 2024. Despite the scrutiny, a spokesperson for Wood Group assured full cooperation with the investigation.
Based in Aberdeen, Wood Group specializes in providing oilfield and engineering services. The company recently disclosed the need to restate its accounts from previous years, prompting a delay in the release of its 2024 financial year results, which were originally slated for April. Consequently, trading of Wood Group’s shares on the London Stock Exchange has been suspended.
An independent review conducted by Deloitte earlier in the year highlighted “material weaknesses and failures” in the financial culture of Wood Group’s projects business unit and interactions with the group finance team. The review identified instances of “inappropriate management pressure” to uphold previously reported positions, as well as “over-optimism and lack of evidence” in accounting judgements. Wood Group has acknowledged the cultural failings and emphasized significant changes made within the organization to rectify the identified issues.
Despite these challenges, Wood Group attracted a takeover bid from Dubai-based buyer Sidara, valuing the company at approximately £242m. The directors of Wood Group have endorsed the proposed takeover by Sidara, although formal offers have been delayed multiple times due to lingering doubts about Wood Group’s accounts. The company’s removal from the FTSE indices, effective from 2 July, further compounds the uncertainty surrounding its status as an investable entity
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