SPARK draws purse strings

Technology VC investor, NewMedia SPARK is treading carefully in the current climate and has implemented a 35% 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.

“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 £37.7 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 that annualised central costs will be £4.5 million per annum, compared with £7 million per annum previously.

Spark’s cash reserves fell by £41.5 million to £35 million for the six-month period. Of this amount, £15.6 million was used for the purchase of GlobalNet and Spütz – see evcj September, page 20. SPARK expects its cash position to improve through disposals of investments, such as its shares held in Deutsche Börse, valued at £19.9 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 aggregate cash consideration of £4.7 million on investments with a net cash acquisition cost of £4.3 million.