LONDON (ShareCast) - (ShareCast News) - PZ Cussons' balance sheet is looking stretched according to The Telegraph's Questor, prompting the columnist to rate the shares at 'sell' on Wednesday.
Foreign exchange hit the FTSE 250 company's half year results, with a small dip in reported revenue and a 3.7% drop in profit before tax.

Revenue dropped 0.2% to £385.9m, however on a constant currency basis it rose 9.6%.

The company said a strong performance in Europe was driven by the UK washing and bathing division with a continuous innovation pipeline and the launch of a new range of products.

However, Europe's success was offset by a difficult trading environment in Nigeria and the impact of weaker currencies in Asia and Africa.

As a result, the group's profit before tax dropped from a 2.1% increase on a constant currency basis to a contraction of 3.7% on a reported basis to £42.1m.

Questor highlighted that the company had spent nearly £112m on acquisitions in Australia and hadn't done anything to stop pre-tax profits falling.

It also said net debt increased to £157.4m in May 2015, and increased even further to £191m at the end of November.

"Higher debt levels are always a risk to the holders of equity when profits begin to fall," Questor noted.

However, the columnist was most worried about the fast growth in the value of its acquisitions over the last five years.

"It is the largest part of the balance sheet, with goodwill having increased by a third to £356m at the end of November."

With shares trading on 17 times forecast, Questor believed the most prudent option would be to sell until the company can demonstrate a turnaround.

Over in The Times, Tempus said patience had paid off for those who have understood how Intermediate Capital Group works.

The FTSE 250 firm reported strong fundraising inflows for the nine months to 31 December 2015, at €4.7bn (£3.6bn), though it said the pace of fundraising was likely to slow as the company focused on new strategies.

It also reported new third party money raised in the quarter to 31 December of €1.4bn, resulting in assets under management increasing by 5% to €21.2bn in the quarter, and third party fee-earning assets under management by 6% to €15.4bn.

"Intermediate Capital Group's strong momentum has continued", said CEO Christophe Evain.

"We had final closes on our North America Private Debt Fund and our Senior Debt Partners II strategy, both above their target sizes, and our domestic Japanese Mezzanine Fund, demonstrating the success of our organic product expansion", he added.

Tempus said it had been following the firm for a number of years and is convinced it is "an investment that the market has not fully understood in the past".

With a number of its investments up for sale in the fourth quarter, it said the business model will shift, and with the ability to borrow more to self-invest, the return on equity should rise to above 13% in good time.

Tempus recommended investors 'buy long term' with a steady profit trajectory, fee income increasing, and special returns to investors.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE