Fri | Sep 21, 2018

Pulse transitions - Special payments to Cooper end

Published:Wednesday | August 1, 2018 | 12:00 AMAvia Collinder/Business Reporter
Kingsley Cooper, chairman of Pulse Investments Limited.

For more than two decades, Pulse Investments Limited has been managed by a company owned by its chairman, Kingsley Cooper, and was the vehicle through which he was compensated for services that extended beyond his executive role.

But that arrangement ended July 1 more than two years after Cooper gave up the job of Pulse's CEO to his daughter Safia Cooper back in January 2016.

Cooper said Monday that the change does not imply a reorganisation at the modelling and entertainment company, but the elimination of fees which were paid to GL Superb Limited would save Pulse around $40 million per year.

"Management fees were paid to the chairman's company which has been the case since Pulse was listed on the JSE in 1994," Cooper said Monday.

Pulse otherwise pays rental of $1,000 per year to another company owned by Cooper, Samurai Investments Limited, on a 50-year lease. The lease contract was extended and repriced from $1 per year in 2017.

Explaining his compensation, Cooper said that over the years at the modelling agency he founded four decades ago he acted in various capacities, first as executive chairman and more recently as director of special projects, but also provided other expertise over time.

"The board's decision to no longer pay management fees means that these costs will no longer be incurred by the company which is an obvious benefit," the chairman said.

Those savings will buttress the company's bottom line, and likely result in higher dividends to shareholders, Cooper added.

Following a long dividend drought, Pulse paid out six cents and eight cents per share to shareholders in 2016 and 2017, respectively distributions that totalled $38 million over the two years. The lion's share would have been paid to Cooper who owns around three-quarters of the company. So far this year, it has paid dividend of 1.5 cents per share, representing a distribution of more than $4 million.

Cooper said the board now believes that Pulse "has achieved a level of maturity, a point at which they wished to demonstrate their complete confidence in the company's future prospects and performance", and that he shares that view.

Pulse's business lines include the modelling agency, and hospitality services at Villa Ronai in Stony Hill, St Andrew and at the Pulse Centre in New Kingston. It also stages the fashion show, Caribbean Fashion Week, annually.

Last year, Pulse made a profit of $268 million before tax credits, up from $239 million in the previous period ending June 2016.

The 2018 annual results are pending, but at the nine-month mark, the company has already grown its profit by 18 per cent to $260 million.

Cooper said that the company's management remains the same since his daughter succeeded him. Safia remains CEO while Kingsley is chairman as well as a director of special projects, through which he currently oversees expansion of the hospitality segment, real estate development and other new initiatives.

Existing costs relating to the company's management will remain a charge on Pulse.

Pulse Investments itself is a 25-year-old company incorporated in 1993, but the business has been around for nearly 40 years. The company was previously known as Pulse Entertainment Group Limited.

"Over many years, the chairman has provided a variety of services which fall outside the scope of his duties as chairman and CEO, including, but not limited to, building design, construction planning and execution, as well as legal vetting," Cooper told the Financial Gleaner.

"These contributions saved Pulse many millions of dollars. Against this background, these management fees were paid," he said.

The company's shares have been trading energetically, leading to a 66 per cent increase in its market price year to date. The stock last traded at $3 per share, placing Pulse's market value at $4.89 billion. The stock has traded as high as $3.38 per share year to date.

avia.collinder@gleanerjm.com