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Purple flags have been raised over Wooden Group’s monetary statements way back to 2017, in accordance with company and regulatory data that point out persistent questions over its accounting practices.
The London-listed firm — which the UK’s monetary markets regulator is now investigating as £242mn takeover talks languish — needed to restate an revenue assertion after being questioned over its 2022 annual report by the nation’s accounting watchdog. It was the second time the Monetary Reporting Council had discovered issues with Wooden’s accounts.
The vitality engineering firm’s administrators additionally criticised three separate inner audit stories protecting sure enterprise divisions in 2022 and 2023.
One was an “unsatisfactory” audit into Wooden’s tasks division, its second-biggest by income. The unit is on the centre of a disaster after an unbiased assessment by Deloitte — prompted by conversations with Wooden’s auditor KPMG — discovered “materials weaknesses and failures” in its monetary tradition, together with data being withheld from auditors.
It marks the newest signal of bother at Wooden, which has needed to droop its shares whereas it restates accounts for 2023 and 2022 and prepares these for 2024, complicating a possible takeover by the United Arab Emirates-based Sidara.
Sidara declined to remark. It was nonetheless intent on seeing the deal “over the road”, in accordance with one individual near the corporate.
“These points complicate life for everybody concerned, however the push continues,” the individual mentioned.
Wooden has prolonged the deadline for Sidara to finish its provide a number of instances, with the present goal set for the top of July.
Earlier than its droop, Wooden had been a homegrown success story of the UK’s improvement of its North Sea assets. It had a market capitalisation of greater than £5bn as not too long ago as 2018 however has been struggling since a £2.2bn takeover of Amec Foster Wheeler in 2017 left it with excessive money owed and authorized liabilities. Its market cap fell to about £126mn earlier than its shares have been suspended on Might 1.
The corporate introduced on June 27 that it was being investigated by the Monetary Conduct Authority, the UK’s monetary regulator, following the Deloitte assessment. The FCA, which may impose swingeing fines, can examine listed corporations past the monetary sector for the accuracy and timeliness of statements made to the market.
Individually, Wooden’s finance chief Arvind Balan, who joined the corporate in April final yr, resigned in February after admitting misstating his accounting {qualifications}.
The FRC can assessment an organization’s reporting to the market if it feels that the revealed data doesn’t adjust to laws. If it finds an issue, the regulator can then write to the group’s chair.
Within the case of Wooden, the FRC reviewed its reporting 3 times, two of which led to such a “substantive” trade of letters concerning Wooden’s 2017 and 2022 accounts, in accordance with the regulator’s web site.
Wooden got here beneath specific scrutiny from the FRC for not together with $54.5mn of currency-related adjustments in its 2022 “assertion of complete revenue” regardless of the determine being included in a separate assertion that tracks actions in shareholders’ fairness.
Wooden acknowledged the error and agreed to restate the assertion of complete revenue, the FRC’s abstract mentioned. It additionally promised to reinforce its disclosures round so-called liquidated damages, in response to a separate FRC criticism the identical yr.
In its 2022 annual report, Wooden mentioned the change was “deemed to not be materials by the administrators”. No FRC abstract is accessible for the trade over the 2017 accounts.
The corporate’s personal annual stories additionally reveal questions raised by its administrators.
The 2023 report particulars that the audit, danger and ethics committee held a assessment over an “unsatisfactory group audit and danger report”.
The 2022 annual report mentions the identical committee held a “assessment with senior enterprise management of an unsatisfactory audit report within the tasks enterprise unit and actions taken”, together with the same challenge within the consulting enterprise unit.
Wooden, the FRC and the FCA declined to remark.
