Fundamental Insights On Two FTSE Stocks – ADM and SCE

Admiral Group Plc

Incorporated in 1999, and based in Cardiff, United Kingdom, Admiral Group Plc (ADM) is a company actively engaged in the car insurance business. The company is one of the leading car insurance providers globally. In the UK, the company is known by its brands, such as: Admiral, Elephant, Diamond and Bell, the price comparison listing, confused.com and the commercial vehicles insurance brand Gladiator. Alongside the major European states, the company operates in North America and Turkey and has offices in various locations in India as well. The company has around 6.5 million customers worldwide. The company currently offers household insurance, van and travel and leisure insurance, personal loans and car financing and insurance services. The company also generates revenue through underwriting of car insurance as well as vehicle financing and underwriting of other products that can be considered a subordinate to car and vehicle insurance policy within the United Kingdom. The Admiral Group prides itself in the partnership that it forms with reinsurance partners which reduces its risk in this uncertain business by strong underwriting results and this has proven to be a robust capital deployment strategy.

ADM Financial Performance (Interim results for six months ended 30 June 2019)

On 14^th August 2019, the company announced its interim results for six months ended 30 June 2019. The company reported a 6 per cent surge in the group turnover at £1.76 billion in H1 2019 from £1.66 billion in H1 2018. This was because of a growth in the number of customers to 6.74 million which was an increase of 8 per cent from H1 2018 figure of 6.23 million. There was a modest growth in the motor segment but a robust performance in the Household division, with an 18 per cent year over year increase in the number of customers. Group Statutory Profit Before Tax (PBT) was up 4 per cent year on year at £218.2 million in H1 2019 from £210.7 million in H1 2018. The company has also reported a significant profit growth (before Ogden rate impact) of £41 million in UK insurance which was driven by a favourable development in previous year’s loss ratios for UK Motor division. The company reported that including the Ogden rate impact, the profit growth was at £7.7 million. The results for the International Insurance division were a little dull with losses totalling to £2.7 million, due to the higher claim costs in the United States of America, even though the turnover strongly grew by 23 per cent year on year to £319.5 million and the customer numbers grew by 21 per cent to 1.36 million.

Earnings per share (EPS) was reported to be at a surge of 2 per cent year over year at 63.0 pence in comparison to EPS at 61.6 pence for H1 2018. The EPS was in line with the pre-tax profit growth. The Ogden rate impact reduced the EPS by 10.0 pence.

The company also announced a dividend in line with the policy of the group to pay 65 per cent of the Profit After Tax (PAT) as normal dividend and an additional special dividend to be paid with earnings which are not required to be held for buffers or for solvency. The company declared an interim dividend of 63.0 pence per share split as 41.8 pence per share as normal dividend and 21.2 pence per share as special dividend. The company announced that the payment date for the dividend will be 4 October 2019 with the record date as 6 September 2019.

ADM Share Performance

On 25^th October 2019, at 01:17 PM GMT, while writing, Admiral Group Plc’s stock traded at GBX 2005.98 per share, a decrease of 1.43 per cent or GBX 29.02 per share in comparison with the previous day’s closing price which was reported at GBX 2035.00 per share. The company’s share price traded 7.43 per cent above its 52 week low price of GBX 1867.30 per share, which the company’s stock hit on October 26, 2018. The company’s 52 week high price is of GBX 2276.72 per share, which it hit on July 03, 2019. The company’s Market Capitalisation is £5.97 billion.

By the time of writing, 208,120 stocks of the company had been traded in the day. The average volume of trade per day for last one year has been 549,180. The stock has gained 5.00 per cent in the last one year.

The Beta of the stock has been reported to be at 0.4978, from which it can be inferred that the stock is less volatile as compared to the movement of the comparative benchmark index.

Surface Transforms Plc

Surface Transforms Plc (SCE) is a Liverpool, United Kingdom based company that is engaged in the manufacturing and selling of carbon ceramic brakes the use in Automotive space. The company’s patented technology includes Carbon Fibre Reinforced Ceramic (CFRC) which converts Carbon into Carbon Silicone Carbide (CIC). This product improves the braking performance of a vehicle by reducing it weight up to 70 per cent as compared to iron brakes. This is a corrosion free material and improves handling and drivability of the vehicle. The company’s products include Brake Kits for the biggest luxury car brands like Porsche, Nissan and Ferrari, etc, Automotive OEMs, Aircraft Brakes and other Applications like Brakes in Motorsport vehicles and other special vehicles.

SCE Financial Performance (Preliminary Results for the year ended 31^st May 2019)

On 9^th September 2019, the company announced its preliminary full year results for the year ended 31^st May 2019. The company reported a 26.48 per cent or £361,000 year on year decline in the revenue to £1.002 million in 2019 as compared to £1.363 million in 2018. This was driven by the start of production for the OEM 6 hyper car being delayed, as well as the sensitivity of purchase demand from distributors and problems in production at company's three Original Equipment Manufacturing customers. The company also announced a decline in the gross margin to 61.6 per cent from 67.4% in FY2018.  The company reported an increase of 13.16 per cent year on year in the Loss before Interest Taxes Depreciation and Amortization (LBITDA) to £1.564 million in 2019 as compared to £1.382 million in 2018. The loss after tax was reported at £2.059 million which translated into a Loss per share of 1.64 pence. The company reportedly made a Capital Expenditure of £175,000 during the year, and cash outflow from operations was highlighted to be at £2.196 million, after which the cash balance was reported to be at £1.925 million as on 31^st May 2019. The company also reported to have raised £3.3 million of equity finance during the year, in two separate equity placements during the year.

SCE Share Performance

On 25^th October 2019, at 01:03 PM GMT, while writing, Surface Transforms Plc’s stock traded at GBX 24.70 per share, an increase of 0.82 per cent or GBX 0.20 per share in comparison with the previous day’s closing price which was reported at GBX 24.5 per share. The company’s share price traded 10.99 per cent below its 52 week high price of GBX 27.75 per share, which the company’s stock hit on October 02, 2019. The company’s 52 week low price is of GBX 8.25 per share, which it hit on May 07, 2019. The company’s Market Capitalisation is £33.32 million.

By the time of writing, 20,210 stocks of the company had been traded in the day. The average volume of trading per day for last one year has been 128,340. The stock has gained 67.46 per cent in the last one year.

The Beta of the stock has been reported to be at 1.3279, from which it can be inferred that the stock is more volatile as compared to the movement of the comparative benchmark index.

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