Shares in the UK-based engineering company Wood Group dropped by 25% after it announced that accounting issues would delay the publication of its full year results for 2024.

The company, which has numerous project contracts around the Middle East and North Africa, said that it had identified “material weaknesses and failures” in its financial culture within its projects business unit, following an independent review conducted by financial services company Deloitte.

Wood said the failures included “inappropriate management pressure and override to maintain previously reported positions”, and led to instances of information withheld from Wood’s auditors.

It also said there was an inappropriate “over-optimism and/or lack of evidence in respect of accounting judgements”.

Wood has project contracts in Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, where the company opened its third office in Sharjah.

The firm’s regional projects pipeline includes pre-front-end engineering and design (pre-feed) work on Saudi Aramco’s Southern and Northern Areas project in Saudi Arabia.

It is also working on an integrated feed, detailed design, procurement support, and construction and commissioning assistance for TotalEnergies in Iraq.

In its latest statement, Wood said: “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.”

As a result of the initial report from Deloitte, Wood said:

• A number of prior year adjustments are expected to be required for the income statement and balance sheet
• Issues identified in a limited number of contracts in the Projects Business Unit, particularly in relation to legacy lump-sum-turnkey (LSTK) projects
• Issues with the application of relevant accounting standards, such as holding specific amounts on the Projects balance sheet that should have been written off
• Gaps and deficiencies within the application of controls, which relate to the monitoring and reporting of project positions within the Projects Business Unit
• No material issues identified in our other business units (Consulting, Operations and Investment Services)

Extensive work is needed to conclude the audit, according to Wood.

The company has said that it is now expected that it will have to delay the publication of its full year accounts and will not publish them for 2024 by 30 April 2025 as was previously expected.

It also said that, if the publication of its results is delayed, the company’s shares will be suspended from trading from 30 April 2025 as work progresses towards completion of its FY24 accounts.

Commenting on its engagement with lenders, Wood said: “We remain in constructive dialogue with the group’s lenders regarding refinancing options and will engage with lenders in respect of the timing of our FY24 accounts, including putting in place appropriate pre-emptive waivers under our committed debt facilities.”

Last month, Wood said it had extended the deadline for talks regarding a possible takeover by Dubai-based Dar Al-Handasah Consultants Shair & Partners Holdings (Sidara).

The new deadline was set for 17 April.

In its latest statement, Wood said that it remains in discussions with Sidara about a possible cash offer for “the entire issued and to be issued share capital of the company”.