Solid State PLC (LON:SOLI) FY25 Results

Things haven't worked out as I hoped

Please bear in mind when reading this post that I currently own shares in Solid State, which likely distorts my perspective. Also, the following content represents my personal views only and is not investment advice. Please see the about page for my disclosure policy.

I hold Solid State shares in my investing portfolio and already knew that FY25 results were going to be poor due to the delay of a key communications order as a result of the UK defence spending review. This delay caused an unpleasant fall in Solid State’s share price last year, which I rode because I expected the contract to eventually go ahead, which it has.

However, I’ve now realised that there are deeper problems at Solid State than just a delayed contract. For example, today’s announcement included news of a £2.7 million impairment to the Custom Power business:

"Our Power business unit has faced challenges in the industrial market where we have seen higher customer churn having exited some low engineering value add customers. As a result, we have recognised a write-down on our acquisition goodwill. Positively, we have secured a number of important opportunities with Tier-one customers which should result in increased activity in the second half of FY25/26.”

I first bought Solid State back in October 2022, shortly after the group acquired US battery pack maker, Custom Power for $40 million. At the time, Solid State was promising to replicate its impressive historical performance:

The group continued to make such promises until as recently as a year ago:

However, today the picture has changed - the following statement was included in today’s FY25 results release:

“Our 2030 goal is to return to the levels of performance achieved in FY23/24 of adjusted PBT from the core business (excluding "non-recurring" material communications revenues).”

This comment has led me to decide to sell my shares — a return to FY24 levels by 2030 is nowhere near the performance I was expecting.

I have never been entirely comfortable holding Solid State because it heavily relies on sourcing components from China and have regularly debated selling for this reason. Now that my hopes for 20% annualised total shareholder returns have been burst, the decision to sell is easy.

I will not sell before two full trading days from publishing this article (ie before Friday 11 July), but I might wait a while longer. The company continues to expect a substantial improvement in profitability in FY26 and so I am in no rush.