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SPARK draws purse strings

Technology VC investor, NewMedia SPARK is treading carefully in the current climate and has implemented a 35 per cent reduction in headcount, as well as portfolio write-downs. The firm has also postponed its international expansion plans in order to conserve cash and wait for a more profitable time to enter its chosen markets. (See Company Profile this issue.)

“In view of the extremely difficult market conditions and a worsening general commercial environment, we wrote down the value of our portfolio including both realised and unrealised adjustments by a net GBP37.7 million during the six month period to 30 September,” said Michael Whitaker, CEO of NewMedia SPARK.

SPARK has substantially reduced its central operating costs in order to conserve cash and maximise the efficiency of its operational resources. This included a deferral of expansion plans in India and Spain as well as headcount reductions in London, Stockholm and Berlin. Earlier this year, executive director Tony Sarin left the firm to become chief executive officer of Numerica Group. He maintains his involvement with SPARK by continuing to work with the team as non-executive director.

Going forward, Whitaker predicts annualised central costs will be GBP4.5 million per annum, compared with GBP7 million per annum previously.

Spark’s cash reserves fell by GBP41.5 million to GBP35 million for the six-month period. Of this amount, GBP15.6 million was used for the purchase of GlobalNet and Sputz see evcj September, page 20. SPARK expects its cash position to improve through disposals of investments, such as its shares held in Deutsche Brse, valued at GBP19.9 million as at 30 September.

In October, the firm announced the disposal of three of its portfolio companies, Global Euronet, Dataroam and Clipserver see evcj November, page 24. The investor netted an aggregate cash consideration of GBP4.7 million on investments with a net cash acquisition cost of GBP4.3 million.