DEMATIC LIMITED lost money on operations and still paid interest of GBP 2.5k

DEMATIC LIMITED, a small UK company, reported revenue of GBP 188k for FY2025, down 8.0% from GBP 204k a year earlier. The operating result moved from a loss of GBP 36.4k to a loss of GBP 67.9k, and the operating margin worsened by 18.3 pp to -36.1%. Interest expense came to GBP 2.5k. With no operating profit to cover it, the interest was not earned by the business.

Interest cover falls when operating profit drops while the debt stays. The money for the interest then comes from cash reserves, new loans or the owners, not from trading. Cash ended the year at GBP 1.1k, so the cushion is thin. Equity rose to GBP 25.3k, an equity ratio of 20.3%, but the accounts do not show where that increase came from. I would watch the cash line. A loss that is larger than the interest bill is a poor way to service it.