Profile: Jolly Roger is flying high: Roger Luard: The head of Flextech tells Patrick Hosking of blue skies ahead
Sunday 06 February 1994
The company is now valued at more than pounds 400m - not bad for a hotchpotch of loss-making television interests - one that has warned, to boot, that it won't pay a dividend before 1996.
But Flextech is the only quoted company devoted to that most glamorous of stock market sectors, non-terrestrial TV, and investors can't get enough of it.
BSkyB added to the satellite euphoria last week by reporting a fivefold surge in earnings. Goldman Sachs is so excited by the sector that it has registered its research on it as a trade mark, under the name 'Communicopia'.
Last week Flextech shareholders approved a deal in which Flextech absorbs the European programming interests of United Artists European Holdings. In return UAEH's US parent, TeleCommunications Inc (TCI), received 60 per cent of the enlarged Flextech.
It was a terrific coup for Luard, Flextech's managing director. His 600,000 share options, exercisable at 92p, are now showing a theoretical profit for him of more than pounds 2.1m. More important, his vision and his decision to convert the company from a low-rated oil services company five years ago into a cable TV business is - for the moment at least - looking extremely canny.
Flextech now has a stake in 11 broadcast channels across Europe, including seven broadcast to Sky subscribers. They include the Children's Channel, Bravo and the Family Channel, a joint venture with the American TV evangelist Pat Robertson.
Flextech also has interests in Sell-A-Vision, a home shopping venture, IVS Cable, a company with a franchise of 210,000 homes, and Action Stations, a business planning to install adventure playgrounds in British shopping centres.
The deal catapults Luard into the big time. TCI, headed by the powerful John Malone, is in the process of merging with Bell Atlantic, the telephone utility, in a dollars 60bn (pounds 40bn) merger that will create America's sixth biggest corporation. Flextech may prove to be a key vehicle in the group's plans this side of the Atlantic.
It has the advantage of some heavyweight City connections. Stanislas Yassukovich, former chairman of the Securities Association, is chairman. Advisers include the stockbrokers Cazenove and bankers N M Rothschild.
It is all rather unexpected for Luard, 45, who comes across as amiable and entertaining but rather laid- back: slouched in shirt-sleeves in his office chair, he sometimes gets close to horizontal.
According to one associate: 'He's a very engaging character. He comes across as a Jack-the-lad. But that masks a serious businessman and someone who's very well connected. He might seem scatterbrained, but he's absolutely calculating. He's an intriguing character.'
A bit of a rebel at public school (Rugby), where he was as likely to be found in one of the town's many pubs as in the classroom, he was no academic. A good university was out of the question after poor exam results. So Luard joined Price Waterhouse. It was in the days when the accounting firm happily took trainees straight from school.
He did not stick around after qualifying as a chartered accountant and was happy to leave the staid world of pure bean-counting. He quickly let his membership of the Institute of Chartered Accountants lapse. He joined the Hollas group, a textile company based in Worcester, but left in 1979 to launch his own business, buying a small Somerset textile firm for pounds 52,000. It was a corking deal: he later sold some of the unused land for a reported pounds 800,000.
He went on to purchase various engineering interests before he was asked by a rescue consortium in 1987 to sort out troubled Flextech - at that point a loss- making oil services company. He made his reputation with Flextech's main subsidiary, Expro, which he turned around from a pounds 2m loss to a pounds 6m profit by 1992.
Expro was eventually sold to a management buy-out team for pounds 55m, and Luard distributed pounds 41m of the proceeds straight back to shareholders in the form of a bumper dividend. Meanwhile he had begun buying into the media industry, taking stakes in a variety of TV production, cable, TV shopping and other companies. He first came across United Artists when he beat the Americans for a stake in the Children's Channel.
Later he approached them to help to finance a bid for the Welsh terrestrial ITV franchise, C3W. Their bid, at pounds 17.76m (a figure chosen because it was the date of American independence), lost to HTV's pounds 22m.
United later bought its own stake in Children's Channel and won the management contract to run it. According to Luard: 'We just got to know each other more and more and it just seemed sensible to put the two entities together.' Other partners were considered: 'We had a flirt or two but at the end of the day there is only one true love.'
With TCI being the biggest cable operator in the US, Flextech now has plenty of fans, including Neil Blackley, the media analyst with Goldman Sachs. He likes the shares, despite the colossal price: they stand on a multiple of 1,500 times forecast 1996 earnings, though the prospective multiple comes down to a more manageable six by the year 2002 if Flextech meets its ambitious targets.
Fred Vierra, executive vice- president of TCI, who has joined the Flextech board, says such valuations are meaningless: 'John Malone (TCI chairman) completely changed the way Wall Street values companies. We're creating net asset value for our shareholders. We're valued as a function of our cash flow. Our philosophy has been that we have so much growth opportunity that we want to put every dollar and cent back into the business. So we don't pay dividends.'
Unusually for a media man, Luard is an intensely private person, living in deepest Gloucestershire with his wife, Rowena, nicknamed Roly, six horses, four dogs, three cats, nine ducks, two chickens and a few doves. They have no children. Roly's best friend is the neighbour and novelist Jilly Cooper. Her sister is the Marchioness of Reading.
Luard obviously enjoys the rough and tumble of dealmaking, but bridles at the suggestion he may be less suited to the business of managing a more mature business, pointing to the enormous success of Expro. Anyway, he adds, Flextech will continue to do deals as opportunities arise.
He does not suffer fools gladly and can be intimidating. According to one colleague: 'It's just him enjoying himself. He thinks at 100mph, but he's not a zealot - it's simply the pace he goes.'
So far his new American masters are delighted with the turn of speed. They have just signed a new three-year contract paying him pounds 125,000 a year. Whether he will fit well into the monolithic culture of a huge American corporation remains to be seen.
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