A local investment club, partly backed by the Kenyan diaspora, has bounced back to profit on lower costs and a tax credit.
Fountain Enterprise Programme (FEP) Group posted Sh106.01 million profit in the period ended December 2016, compared to a loss of Sh905.7 million a year earlier. It made a loss of Sh1.4 billion in 2014.
The investment group’s revenue dipped by a quarter to Sh709 million due to some of its units posting lower earnings, FEP said in a trading update.
FEP’s administrative expenses dropped 15 per cent to Sh618.9 million as it cut finance costs by 37 per cent to Sh17 million in the period under review.
The chama also benefited from a Sh214.8 million tax credit in 2016 compared to a tax bill of 39.4 million the previous year.
“We have had improved business efficiency across the board owing to operational restructuring and better internal controls after the installation of a Sage Evolution enterprise resource planning (ERP) system,” said Maurice Korir, FEP Group chief executive.
FEP in 2014 began cutting back on administrative costs by reducing the number of regional offices and automating processes.
FEP has 70,273 shareholders, a significant number living in the UK and the US. FEP did not provide a breakdown of financial performance for each of its 15 subsidiaries broadly classified in four clusters, namely financial services and retail, energy and ICT, real estate and security, and education and hospitality.
Mr Korir said Kisima, the group’s real estate arm, recorded a fivefold growth in sales to Sh106 million from Sh21 million in 2015.
He disclosed that the chama had identified a strategic investor to acquire a 40 per cent stake in Fountain Technologies to help the unit build a war chest to bid for multi-billion shilling tenders such as power plants, telecoms, and electricity projects.
FEP’s asset base grew to Sh4.50 billion from Sh4.44 billion in 2015, but was still lower than the Sh5.7 billion registered in 2014.