TITLE DEEDS ARE OUT!Issuance of Title Deeds Shores up Real Estate Uptake.

www.fep-group.com

2017 End Year EditionBUSINESS QUARTERLY

TEMBO HOUSE IN LUKENYA PARK

Maurice KorirCEO, FEP Holdings Ltd

Message from the CEO

Our quest for operational excellence as FEP Holdings has led to improved business performance since we launched our transformation programme at the end of 2014. This realignment has seen the company record year on year business improvement between 2014 and 2016.

We continue to engineer FEP Holdings’ operations through technology and innovation in order to meet customer needs, improve performance and increase the Group’s competitiveness in a dynamic business ecosystem where disruptive technologies necessitate consistent and continued adaptation.

However, despite a steady improvement in operational efficiency, the business needs funding to steady and shore up other projects and products including Suntec Supermarkets,Sagana Hotel, TecTailer and Instaloan.

We have consolidated Fountain Credit Services Ltd (FCSL) by reducing the number of brick and mortar branches that we operate, from 13 to just 1 in 2017 by introducing digital loans. The uptake of loans through Instaloan, our mobile loan application surpassed our expectations in the pilot phase. Under FCSL, we are presently working on allocating a revolving fund to grow the customer base.

For Sagana Hotel, the main structural works are 80 percent complete, but for us to reap from Kenya’s tourism fortune, we need to inject an estimated Ksh900 million. We are currently in search of a strategic partner or investor to support us in completion of the final phase. Ideally, a partner in the hotel business who comes with the benefit of having a brand name that is already established in the market would be the perfect fit.

We have nonetheless been successful on other fronts, such as securing a strategic partnership for Fountain Technologies. We recently signed a strategic alliance with Ferri Group, a European company. This will enable the two businesses to jointly pursue and develop energy infrastructure projects in the region under a profit share agreement on a project by project basis.

However, like any other business in the country, we also bore the brunt of uncertainty following the nullification of the presidential election. This slowed down our business in the third and fourth quarters.

Thus, as we seek funds for operations and expansion during this turbulent phase, we are also in the processof evaluating our cost structure to ensure a leaner and less costly operating model. We have since reorganized our senior management structure by collapsing some convergent roles under one department.

In addition, we are actively sourcing additional capital to fund the next phase of transformation as well as to enable us to support the growing businesses.

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In our endeavor to stay on a growth trajectory, we are keenly enumerating the hurdles we face as a business and the proposed solutions in detail. We have had continuous deliberations involving the leadership, management and all staff on various operational areas earmarked for improvement.

We intend to stay on a path to profitability through enlisting more talent in sales and marketing, management rationalization and continued automation. We believe in well thought out, inexpensive and practical technological solutions to address our business and client needs and deliver a Return on Investment.

I want to take this opportunity to wish you a Merry Christmas and a Prosperous New Year 2018.

Maurice Korir,The Chief Executive Officer, FEP Holdings Ltd.

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We value your partnership and look forwardto working with you in the year 2018

Dear Investor,

Merry Christmas anda Happy New Year

Future Solutions NowA M E M B E R O F F E P G R O U P O F C O M P A N I E SFEP

INSURANCE AGENCYin it together

l

Changes in Board and Management

Management Changes

As articulated by the CEO in the introductory article, the Group has reorganized its management team in the year. The process involved consolidation of roles. This need was necessitated by the completion of the first phase of our transformative program and need to reduce costs.

Effective 1st September 2017, the Group managers are:

Maurice Korir Group Chief Executive Officer

Susan NgalawaGroup Manager

Finance, Investments & Strategy

Joshua WaringoGroup Manager- Shared Services

Arthur Mbugua Group Manager

Audit, Risk and Compliance

Shelmith MugohGroup Commercial Manager

Prof Agnes Mwang’ombe resigned from the Board in June 2017 and her resignation was accepted on 1st July 2017. We thank her for her dedicated service in the period she served as a Director. The Board and Advisory Council are in the process of filling two casual vacancies in line with the Articles of Association.

Board Changes

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Issuance of title deeds shores up uptake of Kisima Real Estate parcels

Though previously dominated by private individual developers, the real estate sector has recently witnessed the entry of individual developers such as co-operatives, societies, church based organizations, foreign players and private firms such as Kisima Real Estate. A burgeoning middle class with a higher spending power is fueling the rise of integrated housing developments such as mixed use resorts and planned housing projects that are serviced with infrastructure, water supply to each plot, power supply and other social amenities. Kisima Real Estate flagship project, Lukenya Park, has recorded remarkable progress and is expected to inject about Ksh272 million upon completion, through the development of social amenities and infrastructure.

“Real estate projects require massive capital outlay and planning because the turnaround time for a project is often prolonged and returns are long-term,” says Shelmith Mugo, the Group Commercial Manager. The real estate sector which contributes about 10 percent of the country’s GDP has steadily outdone other assets in the last half a decade, recording returns as high as 30 percent. “The multiplier effect of such projects will be in part an economic one that can be measured in jobs - created in building, maintaining and operating the new projects,” she adds.

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Ms. Mugo reveals that after a prolonged lull in financial performance, Kisima Real Estate is finally exhibiting steady growth owing to fast tracking infrastructure development for its flagship project and speedier issuance of title deeds. “We recently conducted a “Kisima hits the road campaign” where we issued title deeds for Donyo Sabuk parcel owners in Kirinyaga, Embu and Meru counties. The process of selling land can be a tedious process; it can take up to six months from when you initiate the process to when you receive an offer letter or title deed. We are striving to make the process more seamless and fast; that is only way you can attract repeat clients and word of mouth referrals,” she says. Like any other real estate market across the globe, Kenya’s real estate market is cyclical, with the economy experiencing fluctuations in business confidence during disruptive electioneering processes as the market adopts a wait and see attitude. However, the ebb and flow of the real estate sector and property market has not dented the fortunes of Kisima Real Estate which have been on a steady rise. She notes that rapid population growth of 2.4 percent per annum is aiding growing demand for housing, as families grow and clientele needs shift to reflect independent living.

“Kisima Real Estate sales has grown by over 400% percent recording Ksh106 million in sales in 2016 as compared to Ksh11.3 million in 2015.

The demand has also been driven by the increased urbanization rate of 4.4 per annum in Nairobi area and its environs. “The consistent use of one-on-one engagement with buyers and existing Kisima Real Estate customers has yielded real dividends through increased sales, the enquiries on available parcels of land are on the rise,” says Ms. Mugo.

Kisima Real Estate is involved in the purchase of prime land, sub-divisions, value addition and the subsequent sale after the provision of elaborate infrastructure and social amenities.

The streamlining of internal processes and the development of close working relationship with external stakeholders has helped drastically improve the turnaround time of buying, subdividing and selling land. “In a market infested by unscrupulous real estate firms, the reputation of keeping your word is integral to business growth,” she adds.

Having concluded the subdivision, titles for various properties have been issued, with others being processed in the names of customers who have fully settled their payments, including transfer fees. For Donyo Sabuk in Komarock, FEP Holding Ltd has obtained a total of 454 title deeds, with 253 of them in the name of FEP Holdings Ltd. The process of subdivision has been completed for the Ruai Kamulu parcels and titles processed in name of FEP Holdings Ltd pending transfer to clients once they settle their accounts. The property is comprised of two parcels of 5acres each namely; Mavoko town Block 12/649 with 36 plots and Mavoko town Block 12/659 with 33 plots. The Kisima Gardens property is a further subdivision of plots that had been subdivided into quarters in the main subdivision. The exercise has been concluded and the number of plots/expected titles are 30. Out of the 30 titles, 16 will be a direct transfer to clients and 14 will be in the name of FEP Holdings Ltd.

For Isinya 6 and 7, the process of subdivision and registration of titles commenced in 2016. Kisima Real Estate has since managed to complete the subdivision “process by obtaining the mutations and having them registered. We have also opened green cards for a few entries,” said Ms. Mugo.

The subdivision process was concluded and the registry index maps obtained for Lukenya Park. “We conducted the amalgamation process and obtained approvals to make new entries for the 2012 titles. We have recived all the 2012 Lukenya Park titles in the name of FEP Holdings Ltd awaiting transfer to clients who have cleared all the outstanding balances”. says Ms. Mugo.

Some clients have already commenced construction on their plots.

Issuance of title deeds shores up uptake of Kisima Real Estate parcels...cont’d

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She says the real estate company has mastered the art of identifying the most suitable pieces of land to meet the needs of its clientele, therefore making the acquisition of land quick and simplified for both individuals and organisations.

Besides sale of land and serviced plots, property development and sale of residential houses, Kisima Real Estate also specializes in commercial and residential property management which involves collection of rent, negotiating leases with clients, marketing of premises and maintenance.

According to a report by a local investment company, residential units in Kenya generate an average rental yield of five percent, while commercial space generates an average yield of over 9 percent.

“Our broad service portfolio has greatly contributed to the growth of Kisima Real Estate. Equipped with exquisite taste in residential house design and superbly creative minds in property development, we have the resources at hand to make your dream home a reality” explains Ms. Mugo.

The table below shows tremendous achievement in one of the critical success drivers in our business.

Issuance of title deeds shores up uptake of Kisima Real Estate parcels...cont’d

Parcel Old Title No (2016) New Title No. issued 2017 Titles Processed

Total Titles

Donyo Sabuk Komarock block 1/25 Donyo sabuk komarock block1/73***

454 454

Kisima Gardens Mavoko town block 3/2197 Mavoko town block 3/49600 272 272 Ruai Kamulu Mavoko town block 12/656

Mavoko town block 12/649 Mavoko town block 12/97 Mavoko town block 12/98

69 69

Isinya 6 Kajiado/Kaputei north/36648

In progress Nil 75

Isinya 7 Kajiado/kipeto/11192 Kajiado/kipeto/200*** 37 37 Kisima Park-Lukenya LR No.343/3 and 343/2 Athi River/Athi River block

15(kisima)/**** 1162 2012 2012

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(*) denotes the individual title numbers

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Simba House - 2 Bedroom Bungalow

Kifaru House - 3 Bedroom Bungalow

Kiboko House - 3 Bedroom Bungalow

The Magnificent Lukenya Park Kisima Real Estate welcomes you to the upscale Lukenya Park, a secluded and serene gated community revolutionizing comfort and luxury living in the heart of Lukenya hills. Lukenya Park provides you with a choice of 7 modern, masterful and sophisticated architectural designs for your selections as below:The houses are on a self-build basis. Your dream home is now a reality!

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The Magnificent Lukenya Park...cont’d

Twiga House - 3 Bedroom Maisonette Tembo House - 4 Bedroom Maisonette

Tausi House - 3 Bedroom Bungalow

Tai House - 4 Bedroom Bungalow

Suntec Supermarkets is a subsidiary of FEP Holdings Ltd within the retail sector. Formerly Just Homes, the business had 3 branches in Narok, Kapenguria and Kitui, however the Narok branch did not gain traction as expected and therefore was shut down in 2016. Currently, the Kapenguria branch which has more capacity deals in retail, wholesale and bakery. The Kitui branch deals with retail and small scale distribution and most recently a bakery.

After a business audit of Kapenguria branch, the commercial team realised that the bakery business had good margins and this necessitated the need to open a bakery in Kitui to supplement the retail function which has not been giving good returns mainly focusing on distribution. This would also form part of Just Homes’ strategic plan to grow business and sustainability.

Suntec Supermarkets ventures into bakery business

The bakery went live on 9th August 2017, since inception the sales grew steadily within the first month, reaching new levels of average sales every week. The Kitui branch bakery has continued toexperience about 20% growth monthly, while Kapenguria branch bakery has grown by 101% from January 2017. Distribution areas covered by the business include: Kitui town, Kisasi, Kavisuni, Matinyani, Kabati, Mbitini, Mulutu, Kathivo, Katheka, Kathungi, Kwa Vonza, Kativa and Kakeani.

Owing to increased demand, the production team has been split into two with day and night shifts working to ensure that the market demand is met. The business currently has three staff dedicated to distribution covering three major routes supplying the above towns.

The business is additionally planning on embarking on an expansion drive targeting the following areas: Matuu, Mutomo, Mwingi, Machakos, Kibwezi, Kangundo, Mwala, Zombe, Masii, Tawa, Katulani, Ikalaasa, Nyumbani, Kathungi, Mwewe, Migwani and Ikoo.

The next time you find yourself in Kitui or Kapenguria be sure to visit Suntec supermarket fora quick bite of our freshly baked pasteries...yummy!!

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Fountain School Tigoni

Fountain School Tigoni is located along the Nakuru – Nairobi highway, 5km after the Limuru junction and 2km off the tarmac, Kiambu County, Limuru Sub County.

Our main objective is to produce all rounded students who easily fit into the society and become employers and not employees. The school is a vibrant modern school that offers the 8-4-4 system of Education with an additional offering of French Language from the Pre unit level.

Currently, the school has 236 pupils (end of 2017) and 19 members of staff. The numbers of pupils is projected to hit above 300 by the end of 2018.

Our teaching staff are trained, qualified and registered with the TSC.

FOUNTAIN GROUP OF SCHOOLS

We also offer Computer classes from baby class level and we have incorporated it in teaching all the other subjects in line with the government efforts of integrating ICT in education. We engage in severalco-curricular activities such as swimming, skating, athletics,ball games,martial arts and music and drama which has seen us get recognition at the regional level.

We are highly competitive academically within Limuru Sub County and by extension Kiambu county. Our aim is to make FST an academic giant in the country. For the five years we have sat for KCPE (since 2013) we have reported excellent results putting us among the top in the region. We have already laid down the necessary strategy for effective implementation of the new curriculum effective January 2018.The school attained a mean score of 329.4 in the 2017 KCPE exams.

Fountain School Mwea

Fountain School Mwea is located at Wang’uru Town in Mwea sub-county, Kirinyaga County.

We are a mixed day and boarding primary school offering the Kenyan curriculum in Pre-school as well as primary school. Our teachers are all trained and registered by T.S.CMusic, French and IT studies are also offered here. Pupils also take part in co-curricular activities and we have managed to compete up to the National level.High moral and religious values are cultivated among all pupils in our school.

Currently, the school has 227 pupils (end of 2017) and 23 members of staff. The numbers of pupils is projected to hit above 300 by the end of 2018. Pupils in our school come from different parts of Kenya such as Central Kenya, Nairobi, Rift Valley and Coast among other regions.For day scholars, we offer convenient transport at very reasonable charges. The school attained a mean score of 323.9 in the 2017 KCPE exams.

2017 Graduation Day

2017 Sports Day

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FCSL cuts back on operational costs through Instaloan

In an effort to cut back on operational costs and improve the profit margins, Fountain Credit Services Limited (FCSL), introduced an innovative mobile banking platform dubbed Instaloan to help disburse loans more efficiently. Lucy Luchinga of FCSL tackles questions on how Instaloan App works. Q: How does the Instaloan App work? Are loans disbursed through M-PESA and all other mobile platforms? A: Instaloan is an android application and loan disbursement is currently done through M-PESA only. We are in the process of evaluating whether we can ride on other mobile platforms as well. The App works on a referral mechanism and we maximize use of the FEP Network of over 180,000 members. We also lend to existing clients who have borrowed and repaid promptly. We work from known to unknown and manage our collections in the same manner across the board, whether you are a new or repeat client. Once a leader has referred a client, they receive a referral code from FCSL which they use to register. FCSL reviews & approves where necessary for the client to access Instaloan and they can start borrowing or building their network by further referring quality referrals, it works on a referral and co-guarantee mechanism. A client referring becomes responsible for non-performing loans advanced to customers they referred.

Q: When was the first loan advanced and how many user downloads have you had so far. A: We disbursed the first loan on 1st March 2017 to our staff. We went public to our clients on 1st April 2017. We have so far issued 5,247 loans to over 2,487 clients. The app has been downloaded over 21,812 times.

Q: What is the average loan size advanced through Instaloan? A: Our average loan size is Ksh8,500. Our clients can access loans starting from Ksh1,000 to Ksh100,000. A client will obtain Ksh10,000 and after successfully servicing the loan, the system will upgrade by Ksh1,000.

What is instaloan?It is a �exible mobile emergency loan product by FEP Holdings ltd for FEP members and those who have been referred by existing customers. It is easy, instant, �exible, anytime, anywhere, scalable loan limit rewarding faithful use, network bene�ts, one time process of registration, repay and borrow at your will.

How to downloadFor android users, please search and download instaloan from playstore and the icon will be found on your screen shortcuts.

How to log in instaloan?

1. Click the shortcut icon

2. Enter your mobile phone no and pin

3. The app asks for OTP Number

4. Wait for a quick OTP Number to be sent to your phone, copy and paste or type correctly

When to refer a person1. You must borrow and repay a cumulative minimum of

Ksh5, 000 from FCSL on its new product Instaloan.

2. You must not be listed in CRB

3. You must not have any loans in arrears in FCSL

4. You must be referred by FCSL or another member who has quali�ed to refer

How to refer a trusted person1. Log in Instaloan

2. Choose the item on the menu “Recommend” only available after you log in and if you qualify to refer

3. Indicate the Safaricom Number of the person you wish to refer and click refer

4. A referral six digit code shall be sent to your client’s number from FCSL & he/she can use it to register

5. Call your client to make a good introduction and customer care sta� can pick it up from there.

Registration using the six digital referral codeFor Android users whose details had not been captured by FCSL before.

1. Download Instaloan App from Playstore

2. Indicate your Safaricom Number

3. Indicate the six digit Referral Code sent to you only by FCSL

4. Fill in the 10 step procedure & upload a copy of your ID & photo

5. Click “Submit” and wait for one time approval by an FCSL o�cial who will validate the documents submitted and you will be noti�ed of your success via SMS for your next activation step.

Activating my account1. You will need your mobile phone no. that you used to

register and referral code sent ONLY from FCSL

2. Indicate your phone number & referral code sent

3. Click on Activate

4. Follow other instructions including choosing your PIN number

N/BRemember your PIN number is your secret, don’t share with any one

Uploading documents on the APP1. Take a photo of your ID Card & Upload

2. You can take a photo of yourself and upload or pick an already existing photo from your gallery

Applying for a loan1. Check your Eligibility Criteria to con�rm the maximum

amount you can borrow

2. Click on Apply Emergency Loan, enter amount, type of loan (individual or payment, repayment for other companies in the menu, choose repayment period, type of loan and lastly accept when done going through the simple menu downwards.

3. You will receive the amount shortly in your Phone via M-pesa

Repaying your loan1. Go to M-pesa Menu in your phone

2. Under paybill put FCSL Paybill Number 575500

3. Indicate amount to pay

4. Indicate your ID Number & Add M at the end e.g 2545786M

5. Your loan repayment shall be posted automatically to your loan account

6. You will get a message con�rming the same

7. If you repaid the loan on time, the system automatically award you points that quali�es you for higher loan limit depending on the no of points accumulated

What can stop me from using the APP?1. When you are listed in CRB

2. When you have a previous outstanding loan in FCSL that is in Arrears

How to apply for a loan on instaloan if enlisted on CRB or have arrears

1. Clear any outstanding loans in CRB & Obtain a clearance certi�cate & ensure your credit rating has improved.

2. Clear any outstanding loans in FCSL

Generating side by side income by referring othersYou may be knowing this group for the �rst time but why not grasp the opportunity of being known by one of our investors or their network and work towards your �nancial freedom in the use of instaloan and be empowered as you empower your strategic network with this amazing product

You may grow your network easily by

1. Log in to instaloan and using the Recommend icon to refer your strategic friends, individuals and groups.

2. Guiding them to do the same to others

3. Organizing events with the help of your upline or FCSL customer care for training when appropriate

4. investing your time to ensure your immediate referral understand the product and grow their referrals database

5. Having your downlines know that the product can grow their side by side income by only working once at the beginning of referring and helping downlines clients understand the product.

6. Empower your friends, relatives and help them to know the importance of building good credit legacy by repaying loans on time. That will ensure your PAR is 5% or below for you to constantly earn commissions.

7. Refer at least two successful users every week and empower them to do the same.

8. Choosing your downlines wisely by targeting those in employment, businesses and economic activity

9. Becoming a trainer by sharing business ideas with other instaloan users and network marketers on WhatsApp and other forum

10. Be a trainer and then Train, Train, Train others have FUN with our customer care team by asking questions and sharing your experience

Q: What interest rate do you charge on loans advanced through the App and what is the repayment period? A: We charge a fee of 8% deducted from the disbursed loan effective July 2017. For the pilot commercial phase (April to June) we had an introductory rate of 5%. The rate increased because of demand. The repayment period is one month.

Q: What is the current size of your loan book and what are your growth projections going forward? A: The current loan book is Ksh15,862,400. We have 13,000 clients and only 2,261 clients have been approved to transact on Instaloan. The demand has exceeded the Ksh15 million that was allocated for the pilot phase. We are presently working on allocating a revolving fund of Ksh140 million per month to be able to disburse at least Ksh10,000 to all our existing clients (13,000 current and 1,000 pending authorization). A client can recommend a maximum of five other clients per month.

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Our model has immense potential. We will fund the growth as follows; a) Retirement of our current loan book of Ksh282million on maturity b) Bank facility of Ksh50million c) Equity of about Ksh200 million, we are in initial discussions with a private equity firm. d) Additional funding from FEP Holdings in medium term.Q: How many loans have been advanced through the App so far?A: We have disbursed Ksh42 million as of 30th November 2017.

Q: Is this model sustainable, do you see this replacing your brick and mortar branches?A: This is a sustainable model for us and it is in line with the current trends in the financial services sector. Financial institutions are increasingly going digital and linking their operations to Credit Reference Bureaus to ascertain creditworthiness of customers, and this new mobile banking facility will help avert incidences of non-performing loans.

The model has inbuilt eligibility criteria that is integrated with CRB and with our current core banking system, IMAB. This has made it easier to access data necessary for the disbursement of loans at a click of a button. Disbursement of loans is only done if clients meet a set criteria and this helps us manage our portfolio better. It has already replaced our brick and mortar branches that we shut down effective 1st May 2017.

We are experiencing cost savings of about Ksh7 million per year for branch running expenses that we used to incur including rentals and office expenses.We had 13 branches as at the end of year 2016, we reduced to eight branches at the beginning of year 2017 and we are now operating from a central location. .

FCSL cuts back on operational costs through Instaloan...cont’d

We are receiving gains from higher returns and cost attainment on reduction in operating expenses.

Q: How unique is this product in terms of meeting the special needs of consumers in the context of the Kenyan market?A: The product is unique because it works on a referral mechanism and co-guarantee mechanism. This replaces collateral and enables those without a formal borrowing history to access funds.

Q: Are you making a decent return from these products?A: We are making a decent return from this product. Our return on operating capital is potentially over 50 percent per annum net of all expenses.

Q: What is the future like for mobile-based loan apps vs. traditional banking models?A: The future for mobile-based loan apps is greater than traditional banking models. There are many opportunities surrounding mobile-based loan apps including provision of merchant services, pay bill or biller among others. The almost ubiquitous presence of affordable mobile phones and cellular networks is giving rise to a generation that may never have to set foot in a banking hall. Q: What is your outlook for mobile-based loans here in Kenya?A: In year 2015, 2.82 trillion was transacted on mobile lending. In year 2016, the figure rose by 18 percent to 3.35trillion. Mobile loans have transformed how clients access funds by dispensing lengthy paperwork and layered approvals by managers. In Kenya, many financial institutions are reviewing their models and the outlook is bright for mobile-based loans as more institutions will be inclined to lend through mobile-based platforms owing to the efficiency they present.

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Fountain Technologies Ltd (FTL) is currently implementing energy and telecoms infrastructure projects across the region worth over Ksh2 billion. In Kenya FTL was among one of only two Kenyan firms who were awarded Rural Electrification Authority (REA) contracts to extend electricity supply to 591 public facilities and 35,460 households in 16 counties under the BADEA project. The remaining 80% of the project was awarded to international companies. The BADEA project, with funding of Ksh 6.3 billion, is financed by the Arab Bank for Economic Development in Africa (BADEA), Saudi Fund for Development, OPEC fund for Development, Abu Dhabi Fund for Development (ADFD and the Government of Kenya.

Currently, Fountain Technologies has managed toprocure the wooden poles which are part of the localmaterials. The poles are awaiting Factory Acceptance Test (FAT)by the Rural Electrification Authority (REA) consultant before being transported to the site.

The next step will be to procure and import materials.Once,all the required materials pass the acceptancetest, implementation will commence.

FTL was allocated lot three covering south Rift Region mainly Kajiado, Narok counties. The project involves supply and installation of 33 kV,11 kV lines and associated transformers and Low Voltage (LV) networks.

The project has four main components: 1. Local Materials - Wooden Poles 2. Imported Materials - Transformers, Insulators 3. Local transportation and warehousing 4. Implementation

FTL KICKS OFF MEGA RURAL ELECTRIFICATION

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THE GEM AWARD

The GEM Award is an initiative of the Human Resources Department conducted quarterly to recognize special efforts by employees who go beyond their job description. The GEM may be an individual or group and the nominations are usually done by employees. This award plays a key role in meeting business goals and creating a conducive work environment where employees are motivated by this appreciation. The award is categorized into the following; Leadership Award (GEM), Innovation Award, Customer Service Excellence Award, Administrative Support Award and Extra mile Award,

Leadership Award also known as the "GEM Award" is given to an employee who models, exemplifies, and promotes outstanding leadership qualities and behaviors. This employee motivates others to excel, demonstrates significant organizational commitment, leads by example in contributing to the team’s or department’s productivity and outcomes, takes initiative to make things better, shares resources and collaborates with others to help the team succeed.

The last Quarter's GEM, is an extraordinary young man by the name of Justus Gitonga who works as a guard for Citadelle Security Company. He is currently in charge of the Makomboki China site a new project in Murang'a. Prior to this, he was stationed at NCCK, Tumaini house CBD.

Mr. Justus Gitonga has worked as a guard for 22 years with different security firms but cites Citadelle as the best of all companies he has worked for. He has five children and the first born is a doctor.

Here is what he had to say about his day to day life.Q. What is your routine like before you get to work in the morning? A. I wake up at 4 am, pray, take breakfast leave early so that I have sufficient time on my hands to plan my day. Q. What does a typical day look like for you? A. Normally busy, because I work in a construction site and am in charge of 18 guards as well as the contact person between the guards and the clients. Q. How long have you worked for Citadelle Security? A. I have worked for 4 years. Q. What is the best part about your work? A. When the assignment is seamless with no hitches, I however take pleasure in being a problem solver as well. Q. What do you find as the most challenging at your current role? A. Preventing theft and managing people; dealing within human beings takes a lot patience and understanding. Q. What has been your favorite project at Citadelle Security? A. Managing the security of the Makomboki Road Project in Murang'a.

Q. What does the GEM Award mean to you? A. It motivated me, my family and colleagues a lot because it was unexpected and having worked for over 22 years in different companies I have never received such recognition. I felt lucky that I was chosen amongst all my other colleagues.

Mr. Justus GitongaCitadelle Security Guard

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Q. If you could switch your position with anyone else within Citadelle Security, whose position would you want? A. I would like to be in Operations.

Q. Tell us three things most people don’t know about you? A. I am Prayerful, I am a Church Elder and a good singer.

Q. What are your three most overused words/phrases? A. By the way, my God, just saying and assignment covered.

Q. How did you get into the Security industry? A. I used to work at kenol kobil in the sales and marketing department but eventually got cut off. Since I had a family to feed, I needed to get a job quickly and that’s when a friend told me that the easiest job to get was as a guard. I went for an interview in a security company where I went through, then went for a 3 weeks training. I started as a junior guard but eventually rose through the ranks to where I am. Q. What is the weirdest job you've ever had? A. None so far.

Q. How do you define success? A. Not complaining when handling different assignments.

Q. What kinds of hobbies and interests do you have outside work? A. Singing, Playing Football and Travelling.

Q. Describe Citadelle Security in 3 words from your perspective? A. It's going places.

Q. What is the most important thing you have learnt during your time here? A. Respect is earned not given!

THE GEM AWARD...cont’d

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FEP Holdings Ltd has weathered a season of repeat annual losses and returned to a profit trajectory in 2016 financial year, by recording KSh106.01 million in profits. The change of fortunes came against a backdrop of thinning administrative costs and a favourable tax position.

A stellar performance by the Groups real estate business unit, Kisima Real Estate whic recorded 400% growth in sales and its lending subsidiary, Fountain Credit Services Limited (FCSL) shored up FEP Holdings’ revenues.

After introducing Instaloan, a mobile lending platform, FCSL is working on sourcing additional capital in order to disburse at least Ksh10,000 to all existing clients and meet the overwhelming demand.

The effects of a long drawn electioneering process, which has led to clients holding back their funds, coupled with historical losses have also eroded capital, leaving the business with limited funds available to support expanding businesses.

Despite the improved business efficiency, FEP Holdings nonetheless faces operational cash constraints for the next phase of growth as it gears up for the completion of infrastructure for real estate projects such as Lukenya Park.

Other entities that need an urgent injection of funds include Sagana Hotel and Fountain Technologies which has big ticket tenders in energy infrastructure that are due for implementation. The sluggish business environment has led to longer payment cycle and has put unforeseen pressure on business operations.

FEP Holdings Limited capital raising plan

FCSL cut branch operation costs by Ksh7 million per year by reducing its branches from 13 to 1 through adoption of technology.

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FEP Holdings Ltd capital raising plan...cont’d

The Group is also seeking funding for the SBU’s with priority being given to Fountain Credit Services Limited, Just Homes Limited and Kisima Real Estate. FCSL requires funding for onward lending via the Instaloan Product and has already commenced discussions with several financial institutions, including commercial banks and private eqiuity funds. Just Homes Limited requires funding to support the purchase of inventory for the wholesale arm of the business. Kisima Real Estate Limited requires financing for the construction of infrastructure including but not limited to roads and perimeter wall for the flagship Lukenya Project.

FEP Holdings Ltd successfully obtained bridge facilities from Credit Bank Limited of KES 67 million which was allocated as follows: (a) To support working capital needs for the Holding Company (KES 20 million). (b) The onward lending of Fountain Credit Services Limited Instaloan Product (KES 5 million). (c) Inventory purchase for the wholesale section of Just Homes Limited (trading as Suntec Supermarkets, KES 12 million). (d) Kisima Real Estate Infrastructure for the first phase of the Lukenya Park Project (KES 30 million).

The Groups subsidiary, Fountain Technologies, has also entered into a partnership with Ferri Group Limited who will fund any new telecoms and energy infrastructure projects. The new partner will provide financing of a maximum contract value of US$ 100 million per project. Ferri Group also has an option to acquire an equity stake in FTL in the next two (2) years.

The Group has embarked on disposing a few non-core assets. The proceeds for these funds will be deployed to the priority areas where they are likely to yield a better return than if the assets continued to remain idle. This funding plan is aimed at closing the gaps that have constrained the business but even more importantly at supporting key revenue generating plans. The main aim continues to be to ensure the long term sustainability of the business.

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ITEM TIER 1,2,3 PPO 2014 NUMBER OF CERTIFICATES ISSUED Q1 2017 - 371 Q1 2017 - 380 Q2 2017 - 373 Q2 2017 - 340 Q3 2017 - 392 Q3 2017 - 94 Q4 2017 - 608 Q4 2017 - 292

NUMBER OF CERTIFICATES IN THE OFFICE 4,967 (END OF MARCH)

4699 (END OF MARCH)

4, 556 (END OF JUNE)

4,355 (END OF JUNE)

4,164 (MID SEPTEMBER)

4,261(MID SEPTEMBER)

PENDING CONCERNS WITH IMAGE Q4 2016-445 Q4 2016 - 192 Q1 2017 - 26 Q1 2017 - 85 Q2 2017 - NONE Q2 2017 - 85 Q3 2017 - 29 Q3 2017- 21 NUMBER UNDER PROCESSING Q4 2016 - 342 Q4 2016 - 89 Q1 2017- 216 Q1 2017 - 20 Q2 2017 - 628 Q2 2017 - 427 Q3 2017 - 550 Q3 2017- 82

SHARE REGISTRY DATA FACTS

TIER I, II, III AND PPO 2014 CERTIFICATES

The share registry and investor relations department have embarked on sending the ready share certificates to the postal addresses using the registered mail service. We have so far been able to reach over 500 investors on phone to confirm their postal addresses and successfully sent over 300 since we embarked on the exercise. The process is still on going and we request that investors accord the share registry staff assistance to facilitate the quick dispatch of the certificates to them when they call for the confirmations.

HOTEL, IMPEX AND SCHOOL

The registry is appealing to all investors who have not confirmed their payments with us to kindly use all means possible to do so. The confirmations can be done either through our emails ian.thuo@fep-group.com and james.masila@fep-group.com . Reach us via phone on 0730 601 161 and 0730 601 152

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6th November 2017

The Secretary General,Consumers Federation of Kenya (COFEK),P. O Box 28053-00200,NAIROBI

Dear Sir,

RE: INVESTOR PETITION - FEP HOLDINGS LIMITED

We refer to the online petition published on COFEK’s website on 6th November 2017 with respect to FEP Holdings Ltd (herein the “Company”).

The Company acknowledges receiving the complaints from a group of investors on 22nd September 2017 via a detailed Memorandum which also contained strategic and business proposals to the Company. The Board and Management are working to address these complaints and are considering the proposals put forward by the investors.

We advise you that the Board Committee, the CEO and Senior Management of the Company reviewed these complaints and proposals and met the investors on 17th and 24th of October 2017 to discusss and review the issues and concerns raised. These discussions are ongoing.

On 2nd November 2017, the CEO on behalf of the Board received the detailed petition from the shareholders. The right for shareholders to petition is provided for in the Companies Act and the Company respects this right as a tool of enhancing Corporate Governance. We confirm that the petition is under Board deliberation. We would like to assure all esteemed shareholders and stakeholders of the Company that the Board and Management of the Company are taking the matter seriously and will continue to engage all investors for a positive, amicable and sustainable solution for the Company and its stakeholders.

Yours sincerely,On behalf of FEP Holdings Ltd.

Maurice Korir,Group CEO

COMPANY’S RESPONSE TO THE INVESTOR PETITION TO COFEK

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