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Disappointing that Wood haven’t announced when they expect the review to be completed. If they can keep the expected duration secret, why didn’t they just keep the whole review secret, until they had completed it, and then advise any impact of their financial numbers, if the review required that. The answer to this question is, that our CEO is out of his depth, and does not have the skills or experience necessary to be the CEO.

The only crumb of comfort here, is that our CEO has spent a lot of his own money buying Wood shares, so, to some degree, he is suffering like the rest of us. I look forward to his resignation RNS.

I don’t think the uk institutions invested in Vistry will turn positive on the shares until Greg appoints an independent chair. He looks a bit like King Canute at the moment.

Happy,

Thank-you for your response re VAT.

I’m curious on your second point though. Who do you think Wood could recover the VAT they pay to the Ltd Co contractors from, i.e. the ‘input’ VAT you mention ?

Surprised there hasn’t been discussion of the VAT issue posted by ‘Pogue’ on Advfn in the last week or so. Apparently Wood did not allow their Ltd Co contractors to include VAT in their invoices, if they were engaged in work in countries which did not apply VAT. Saudi was the country mentioned, but I guess there will be others. It should be noted that Ltd Co contractors would normally include VAT in their invoice.

Apparently One of these Ltd Co contractors was concerned that HMRC might pursue him/ her for the VAT, and raised an action against Wood, asserting that Wood should allow Ltd Co contractors working on these overseas projects, to invoice for VAT. Apparently (apologies for repeatedly starting paras with this word) Wood recently lost the court / tribuneral case, and have now asked all affected Ltd Co contractors to retrospectively invoice for VAT, for the past four years. This is expected to be £ millions. This would probably require the results for the previous fours years to be restated. It’s not known if Wood can reclaim, all, or any of the VAT from HMRC.

If this is true, it is the sort of issue that might make the auditors nervous, and be one of the factors which drove the company to initiate an independent review. Thoughts anyone…?

Five… yes I follow your logic, but wouldn’t expect a bid to materialise until the review completed, so that the bidder knows the financial status of the company.

As we reflect on the impact of the calamitous Q3 trading statement, and await the outcome of the independent review, it’s easy to think that the company we are invested in, is a basket case. If you take a look at the presentation (on the Wood website) which accompanied the half year results on 20 August, and read it carefully, you might form a different, more optimistic view of Woods future. I recommend that all investors read it carefully, to fully appreciate the state of Woods finances, and the transformation that the company is undergoing. It could be a great company again.

It would be a shame if it’s taken over (on the cheap) before the management can deliver the results they have promised shareholders.

In my opinion, that RNS is not going to cut the mustard. They need to split CEO and Chair roles, and stop faffing about.

That’s a serious bit of investigative journalism. I think he will be forced to separate the CEO and Chairman roles and break links with some of the links to other companies he has interests in. It may not be illegal, but it is all starting to smell a bit iffy. I suspect the SP will drop tomorrow.

You are right. The CEO didn’t have to say anything. He should have initiated a review in private and either said nothing, or issued a profit warning as necessary, once the review was completed. He may have been poorly advised, but ultimately it’s his responsibility, and he should have thought about the impact of his open-ended, and worrying statement, before releasing the RNS. He was responsible for the 60% drop in SP, no one else. He should stand aside now.

wilyc…that is true. however their text says they also reviewed risks, one of which must have been inflation and any uncertainties in their calculations. you would have hoped they were conservative in their accounting, but human nature being what it is, this is not always the case.

also, they have david lockwood as a ned on their board. david has turned round bab**** international (a different sector - defence, but a valid comparitor) from a similar position as wood, so he will know about cleaning up a balance sheet.

This is what they said in August:

Finalised our views on exit from LSTK and large-scale EPC

o $140 million exceptional charge, consisting of $53 million write-off of receivable balances, $61 million of new provisions, and $26 million of final settlements (see pages 16-17)

o Anticipated cash impacts spread over many years

o No change to our cash guidance

We made the strategic decision to exit the lump sum turnkey and large-scale EPC work in 2022. The exit from this type of work has taken time, with multiple contracts being wound down. We have now finalised our view on the exit from such work, including a detailed review of contract positions, an assessment of the current material exposure and risks on remaining EPC contracts, and an assessment of the recoverability of outstanding receivable balances.

As a result of these updated views, we have recognised a $140 million exceptional charge, consisting of $53 million write-off of receivable balances, $61 million of new provisions, and $26 million related to final settlements. The anticipated cash impacts of these charges are spread over many years and are included in our unchanged cash guidance.

If you take this at face value, it sounds like they did a thorough job in quantifying their exposure, resulting in a $140M exceptional charge. Can they really have missed something material, which would require a further major write off? You would have thought that was unlikely.

I think the SP bombed because of they communicated the review poorly, particularly during the analyst conference call, (for which the CEO should exit stage left), rather than the substance of what was said, when you read it in conjunction with what they said in the August results.

Wood opened their books to Sidara on 6 June 24. Sidara advised Wood they had completed their due diligence on 2 Aug 24. That’s almost two months doing due diligence. You would think that Sidara would have discovered any big issues in two months. Sidara advised the market on 5 Aug 24 that they did not intend to did for Wood, but reserved the right to do so under the following circumstances:

Under Note 2 on Rule 2.8 of the Code, Sidara and any person(s) acting in concert with it reserve the right to set aside the restrictions in Rule 2.8 of the Code in the following circumstances:

· with the agreement or recommendation of the Board of Directors of Wood;

· following the announcement of a firm intention to make an offer for Wood, by or on behalf of a third party;

· following the announcement by Wood of a Rule 9 waiver proposal (as described in Note 1 on the Notes on Dispensations from Rule 9 of the Code) or a reverse takeover (as defined in the Code); or

· if the Panel on Takeovers and Mergers determines there has been a material change of circumstances.

If the issues that caused our BOD to initiate an independent review existed during Sidara’s period of due diligence, Sidara may have discovered, some or all of them, and that may have made them decide not to make a formal bid. This is speculation on my part, but it’s possible. If the issues didn’t materialise until after Sidara departed the scene, Sidara will continue themselves lucky, not to have bought Wood.

However, Sidara had a really close look at Wood’s books, and may be tempted to have another go at buying Wood in its distressed state, or more likely, shortly after it emerges from its distressed state (fingers crossed), probably for a price that is significantly lower than the 230p they originally proposed.

Interesting times…

Hi JXP…it’s not the CFOs fault. He has only been there a few months, and by all accounts was instrumental in writing off almost one £ billion in August. Well done him.

The CEO has been there since June 22. The Chairman has been there since mid 2019. That’s ample time to make sure that their cost forecasting / reporting at project level is robust, that the correct financial provisions are made in a timely manner, and management focus on project performance using risk based metrics. It’s standard practice in other Tier 1 EPCs.

However, I think much of the SP fall on Thursday, was due to the clumsy way the CEO communicated the news of the independent review. The transcript is not reassuring. The CEO has been promising ‘jam tomorrow’ ever since he arrived and has rebuffed two credible takeover approaches, to the detriment of the shareholders. I think we need a more better leader.

Dave…the company wrote of £815M of good will and £140M due to getting out of large scale projects, in August. That was apparently the work of the new FD (who came from Rolls Royce). Given the scale of these write-off’s, (kitchen sinking comes to mind) the market thought that was the end of the bad news. How wrong they were.

So, now the CEO and Chairmen have little credibility left. In these circumstances, at least one of those two gentlemen needs to fall on their sword, and more importantly, are replaced by serious industry professionals, to build trust with the institutional investors and lead the company forward. Wood could be a great company again, but they need to draw a line under past mistakes, and get the correct management team in place quickly.

That’s a pretty shocking transcript. Ken G was asked several times about the Deloitte review and he wouldn’t be drawn further. My conclusion is that they have a good idea of what the review will discover, and that it will have a material impact on the business. The dramatic fall in the SP tells you that the market also thinks the worst. Wood need to be more open about the nature and scale of the problem, and either issue a preliminary profit warning, or explain why we should believe there wont be more write-offs and exceptional costs in the full year results.

It would also be helpful if they replaced Ken Gilmarten as CEO. He is clearly out of his depth.

This update does not inspire confidence. No prizes for guessing how the market will react. They have had the audacity to reject two bids, each for roughly double the current SP, and they reward their shareholders with this mediocre update. Heads should roll…starting with our CEO.

Mr Bishoy Azmy, ASGC’s representative on the BoD, stepped down from the BoD on 31 March this year. He was not replaced by ASGC. I suppose that was an early indication that ASGC would sell their holding.

I don’t know if Sidara would have been aware of these numbers during their due-diligence, but if not, they will be smiling this morning, as they have avoided buying a pig in a poke. What an awful company this is.

Https://www.investorschronicle.co.uk/content/542c56c7-2eb0-50bb-b1b9-367aa61508a2

Glad I am now out of this company. Wouldn’t be surprised if KeySight walk away, or reduce the offer price. After all, they are not bidding against another suitor now.