Does Trematon Capital Investments (JSE:TMT) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Trematon Capital Investments Limited (JSE:TMT) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Trematon Capital Investments's Debt?

You can click the graphic below for the historical numbers, but it shows that Trematon Capital Investments had R160.7m of debt in August 2025, down from R1.14b, one year before. However, it does have R99.1m in cash offsetting this, leading to net debt of about R61.5m.

How Healthy Is Trematon Capital Investments' Balance Sheet?

We can see from the most recent balance sheet that Trematon Capital Investments had liabilities of R86.1m falling due within a year, and liabilities of R230.6m due beyond that. Offsetting these obligations, it had cash of R99.1m as well as receivables valued at R16.6m due within 12 months. So it has liabilities totalling R201.0m more than its cash and near-term receivables, combined.

This deficit is considerable relative to its market capitalization of R231.6m, so it does suggest shareholders should keep an eye on Trematon Capital Investments' use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Trematon Capital Investments will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

See our latest analysis for Trematon Capital Investments

In the last year Trematon Capital Investments wasn't profitable at an EBIT level, but managed to grow its revenue by 3.3%, to R297m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Trematon Capital Investments had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost R1.8m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled R37m in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should learn about the 3 warning signs we've spotted with Trematon Capital Investments (including 2 which are concerning) .

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.