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H2APEX Group (ETR:H2A) Is Making Moderate Use Of Debt

Simply Wall St · 11/27/2025 04:13

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 can see that H2APEX Group SCA (ETR:H2A) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is H2APEX Group's Debt?

As you can see below, at the end of September 2025, H2APEX Group had €36.2m of debt, up from €76.0k a year ago. Click the image for more detail. However, it does have €19.7m in cash offsetting this, leading to net debt of about €16.5m.

debt-equity-history-analysis
XTRA:H2A Debt to Equity History November 27th 2025

A Look At H2APEX Group's Liabilities

We can see from the most recent balance sheet that H2APEX Group had liabilities of €28.0m falling due within a year, and liabilities of €40.8m due beyond that. Offsetting this, it had €19.7m in cash and €15.7m in receivables that were due within 12 months. So its liabilities total €33.4m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since H2APEX Group has a market capitalization of €62.2m, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine H2APEX Group's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for H2APEX Group

Over 12 months, H2APEX Group made a loss at the EBIT level, and saw its revenue drop to €11m, which is a fall of 71%. To be frank that doesn't bode well.

Caveat Emptor

While H2APEX Group's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost a very considerable €33m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through €21m of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that H2APEX Group is showing 5 warning signs in our investment analysis , and 2 of those make us uncomfortable...

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.