NewMedia Spark philosophical as it writes down £45.5m

The company blames market turbulence but says it will continue to invest in early-stage technology companies.

Recent turbulence in the technology, media and telecoms [TMT] sectors has prompted NewMedia Spark, one of the UK’s largest technology incubators, to write down the value of its assets by £45.5m. The company made the announcement in its 6 months interim results to 30 September 2000.

The company has written down the book value of its portfolio by £45.5 million to £120.8 million. £39.1 million of the write off is from the carrying value of its Swedish investment portfolio, the valuation of its quoted investments have fallen by £3.1 million and a statement says that the directors' estimates of remaining unquoted investments has given rise to a further reduction of £3.2 million. The non-Swedish portion of the portfolio has been helped by its focus on core technology and software investments.

Michael Whitaker, chief executive, said: “Clearly the last six months, and in particular the last few weeks, have been a period of extraordinary turmoil in the technology, media and telecoms markets worldwide. We regard this as an inevitable reaction to the equally extraordinary period of speculative excess that preceded it. In the short term, it is difficult to judge when TMT markets will experience a sustained recovery.”

“Over the past six months, Spark has consolidated its European presence and continued to build its portfolio. Nevertheless, in view of the severe turmoil in TMT markets worldwide in recent months, the board has taken a conservative view of the carrying value of the portfolio. We remain optimistic about the long-term future of many areas of the TMT sector and will continue to pursue our strategy of investment in early stage technology companies. Spark is now a leading investor in this sector in Europe with a balanced portfolio of TMT investments which we believe will deliver substantial returns to our shareholders in the medium to long term.”

The company also revealed that it has total assets of £172.7m, £39m or 23 per cent is cash and 70 per cent or £120.8m is in investments in 49 companies. Consolidated net asset value per share was at 54p at 30 September compared to 77p as at 31 March 2000). Total issued share capital increased to 321.3m shares.

The company announced pre-tax losses of £1.4m (compared to pre-tax profits £2.8m for the period 26 July 1999 to 31 March 2000). Since 30 September 2000, SPARK has acquired Internet Indirect plc which will contribute approximately £70m in cash and 6 investments.

As reported on PEO, investment bank Durlacher last week announced that it expected to report substantial losses for the six months to December 31. Shares in the company fell by 19 per cent to 23.5 pence upon the announcement. In a statement, the bank said “recent turbulence in the technology, media and telecoms sectors has negatively impacted on Durlacher's stockbroking, corporate finance and investment businesses which are principally concentrated in these areas.”