Ekocorp Plc, the owners of the embattled Eko Hospital recently released its financial statements for the year ended December 2017. Turnover increased slightly from N1.3 billion in 2016 to N1.4 billion in 2017. The company however recorded a loss before tax of N970 million in 2017, as against a profit of N76 million in 2016.
The firm recorded a loss after tax of N1.2 billion in 2017 as against a profit after tax of N79.6 million in 2016. Ekocorp now has a negative retained earnings of about N889 million which means it cannot pay dividends this year and until it is able to generate enough profits to have positive retained earnings.
What led to the loss?
The loss recorded last year was largely due to the company’s decision to write off a total of N983 million. A breakdown of the write-off shows that trade receivables comprised a large portion of the write-offs at N929 million. Debt owed by staff, amounting to N19 million, was also written off. Trade receivables represent money due from customers for services rendered.
The company reported that it wrote off the receivables because there has been a
“significant change in credit quality and the amounts may not be recoverable.” This means most of the hospital fees owed by most of its customers over the years have now been written off as the company does not see any possibility of recovering them.
In accounting, these debts are classified as bad and doubtful and are typically written off over a period. It appears though, that EkoCorp has decided to write this off immediately.
Other minor losses.
In what could be interpreted as either tardiness or an element of fraud, the hospital also wrote off what it described as unsubstantiated bank balances of N31.2 million. This basically means these are bank balances that are carried in the company’s books but not found in any bank accounts.
The hospital owner also said it had written off its investments in Hope Valley Clinic as it no longer exist.
A new sheriff in town?
Perhaps in response to these issues, the company may have decided to change its senior management staff. In a notice sent to the Nigerian Stock Exchange (NSE) on the 9th of April, 2018, Ekocorp had intimated regulators that the primary reason behind the delay in its FY 2017 results was what it termed as fundamental changes in its operations.
The company had effected some changes in its accounting department in order to ensure smooth operations. An interim Chief Executive Officer (CEO), Chief Operating Officer (COO) and Chief Financial Officer (CFO) had been appointed pending the contract conclusion with permanent staff for those positions.
Past Chief Medical Director (CMD) of the firm, Dr. O. A. Odukoya, resigned on the 13th of August, 2017.
The company’s results, however, do not reflect any interim appointment.
EkoCorp Shareholder squabble.
EkoCorp has been embroiled in a shareholder squabble dating back to 2007 when they received some funds from shareholder Geoff Ohen. This battle was detailed extensively in a widely read Nairametrics Corporate Story.
This case still appears unresolved as the company’s latest annual report still disclosed the 265.1 million shares or 51.9% of the company held by Geoff Ohen as still being disputed and is still under litigation. Ohen was accused of acquiring the shares surreptitiously by the founders of the popular Nigerian hospital.
The shares acquired ny Geoff Ohen was said to be in dispute until Ohen coerced the directors into dropping the suit. He then allegedly went behind the founders to acquire the shares of the company.
About Ekocorp Plc
Ekocorp Plc started off as Mercy Specialist Hospital in 1977 and was incorporated on the 9th of February 1982 as a private company limited by shares. It became a Public Liability Company (Plc) in 1991 and by 1994, the name changed to Ekocorp Plc.
The EKO represents the first letter of the surname of each of the 3 founders Eneli, Kuku, and Obiora.
Ekocorp’s shares closed at N3.37 in today’s trading session on the NSE. Year-to-date, the stock is flat.