Audit firm PKF Kenya has raised queries on the financial health of investment firm Fountain Enterprises Programme (FEP) Holdings after its fiscal results for 2017 indicated that its liabilities exceeded its assets by Sh339 million.
According to the company’s 2017 annual report released a fortnight ago, FEP incurred a net loss of Sh649 million in the year ended December 31 and had Sh3 billion accumulated losses against its current Sh2.5 billion net assets.
In 2016, the diaspora-backed firm posted Sh100 million as profit for the year.
PKF, however, noted that due to absence of supporting documentation of FEP subsidiaries Fountain Technologies (T) Limited, Fountain Technologies Uganda Limited and Mobikash Afrika Limited, it could not obtain audit evidence of the chama’s financial results.
“These conditions (loss and liabilities), along with other matters … indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” said PKF Kenya.
FEP, which boosts a membership of 200,000 people out of which investors are 70,000, has investments in the real estate, savings and loans, insurance and technology sectors.
Its outgoing chairman Erastus Mwongera blamed the firm’s poor financial performance on the prolonged electioneering period and adverse weather conditions that he said affected the economy.
“This resulted to us taking a conservative approach in operations and business while staying alert to identifying new opportunities and building on existing ones,” said Mr Mwongera who retired from the board last month.
The firm is now eyeing its mobile money lending product instaloan and the real estate business to steer it back to profitability.