Scott Fletcher reveals...

Meet the former child actor who’s in his sector’s second recession of the decade. Elizabeth Donevan pretends she knows blackberries aren’t just for eating as Scott Fletcher reveals…

Scott Fletcher landed his first job in a software house in 1989 and technically he hasn't had another job since. When that firm downsized and was bought by a larger rival, Fletcher, having moved quickly from writing software to invoicing and cash flow forecasting, was taken on in a senior position. He stayed there until, he says, it “overexpanded and overtraded” before going bust in 1996.

At just 22 years old, Fletcher saw the opportunity to take advantage of the knowledge he'd acquired and the loyalty he'd earned from customers after five years in the industry. He says, “There were 20 or 30 customers who had solutions that only I knew how to support. The day after the company went under I rang them all up and suggested that instead of invoicing them annually in advance I would invoice them monthly in arrears. That method addressed the only concern that the customers could have had – whether we were financially stable.”

Fletcher had set up Associated Network Solutions (ANS Group) within a week and within two weeks he'd secured around £100,000 worth of contracts.

By 2000 ANS was providing e-solutions and security systems for computer networks to the public sector and corporate clients. With a turnover of around £2 million and employing 20 staff, Fletcher was keen to grow the firm but the funding wasn't there. He took on Paul Sweeney, now ANS Group's managing director, who bought a quarter of the company and by August 2000, he'd floated ANS on the OFEX market (now PLUS), raising £1.5 million for the firm on a valuation of £6 million.

“Our profitability at the time was a couple of hundred grand so it was a cracking deal,” says Fletcher. “It was during the tech boom of 1999 and 2000 and we got it away before the whole thing came tumbling down. We went for equity funding rather than debt at the time and it's kept the flexibility to keep the business moving. We've always come back to a couple of million quid in the bank.”

The money raised from the listing has helped ANS fund acquisitions and provided the cash flow to deal with big orders from customers. And Fletcher counts the listing as one of his best deals because it's proving valuable nearly ten years later.

“We're not beholden to banks because of the money it raised. As we've got to this situation with the credit crunch, it's not affected us at all in terms of financing.”

The floating of the company taught Fletcher important lessons in the timing of a float – “don't even think about trying to do it in the run up to the Summer or Christmas holidays, you have two very brief windows of opportunity” – and how to treat advisors in the process. He says, “I learned not to let advisors dictate the pace of it all. They should have your best interests in mind and you need to remember that they are in it for the money. I call them the gatekeepers for the money.”

Five per cent of the £1.5 million raised by flotation paid for the advisors' fees and expenses, leaving ANS with around £1.3 million.

Ironically, one of Fletcher's best deals was followed by a very difficult time for the firm. A combination of the dotcom downfall and the effects of 11 September meant that ANS suffered a significant loss in 2001 but Fletcher has directed steady growth for the firm since the “IT recession”.

The group's turnover to 31 March this year was just over £10 million, with a net profit of £1.4 million.

The experience of ANS Group's float proved useful when Fletcher hived off one of its software development subsidiaries and floated it separately on PLUS last autumn, just before the credit crunch. The float raised £1 million for Smart ID and expenses were kept under £100,000. Now ANS owns about 50 per cent of Smart ID.

“Now that business is trading at about break even/small profit level. It's got £1 million in the bank and it's stable. It can pick its moments and it can look for acquisitions. We repeated the model used when floating ANS, having learned from the difficulties we encountered.”