Times today1 Apr 2025 07:14
Times today
Devil's in the detail at Wood Group
Amid the usual polite corporate language, this was a stock exchange statement with eyebrow-raising detail
It's almost standard practice that, whenever possible, companies and the spin doctors who advise them favour euphemistic language to gloss over bad news.
Job cuts following a takeover are often camouflaged as “cost synergies”. An accounting blunder becomes a more innocuous-sounding “miscalculation”, as was the case with Direct Line last August, or might be referred to obliquely as an “adjustment”, which was the language used by Metro Bank six years ago when it admitted to a howler of an error.
Given this preference for semantic gymnastics, there was a surprising element of candour in the latest bombshell statement from Wood Group, the troubled London-listed engineering business that yesterday disclosed a litany of problems at one of its main divisions.
True, there was the usual polite corporate language of “cultural failings” and “material weaknesses”. Yet this was a stock exchange statement with eyebrow-raising detail.
Wood revealed that an independent review by Deloitte, first announced in November, found “inappropriate management pressure and override to maintain previously reported positions” as well as “over-optimism and/or lack of evidence in respect of accounting judgments”. These problems “appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided” to the company's auditors at KPMG.
A nasty surprise for Wood's investors, who, already shaken by the abrupt departure of the group's finance chief in February over his misstated professional qualifications, yesterday sent shares in the business down by 29.8 per cent to 28p, taking their slump in the last year to 79 per cent and leaving the debt-laden company valued at about £194 million.
But perhaps not as off-putting for Sidara, the Dubai-based group that is considering a takeover of Wood and, seemingly undaunted by the latest revelations, is still in deal talks.
Sidara must have a pretty good idea of where the broader problems at the British company lie. After all, it is in the midst of its second round of due diligence, having first eyed a bid last year before walking away in August, when it blamed “rising geopolitical risks and financial market uncertainty”.
Granted, Deloitte's findings are an obstacle to a transaction: They mean Wood will not be able to publish its 2024 accounts by the end of this month, and audited figures are a prerequisite for a firm offer from Sidara.
Yet the debacle also significantly strengthens Sidara's negotiating position when it comes to the price it might be willing to pay to take out Wood's shareholders.
The 230p a share that was Sidara's final proposal last year, valuing the Aberdeen-based group at about £1.6 billion, seems a distant memory now
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