WHITE BUTTERFLY DEVELOPMENTS LIMITED

Executive Summary

White Butterfly Developments Limited has made a promising recovery from a negative equity position to positive net assets, supported by a significant increase in cash reserves. Despite these improvements, the company remains reliant on director loans and carries high current liabilities, indicating ongoing liquidity risks. Focused financial management, especially on reducing related party debts and maintaining cash flow discipline, will be essential for sustainable growth.

WHITE BUTTERFLY DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13916024

Analysis Date: 2025-07-29 20:19 UTC

Financial Health Assessment of White Butterfly Developments Limited

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1. Financial Health Score: C

Explanation:
The company shows signs of recovery from previous distress but remains in a fragile state. Its net assets have improved from negative to positive in the latest financial year, suggesting a turnaround. However, the current liabilities remain high relative to current assets, and reliance on director loans indicates ongoing liquidity pressure. This score reflects moderate health with caution advised.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	581,239	796,647	Decrease mainly due to lower inventories & cash
Cash at Bank	574,019	105,610	Healthy increase in cash reserves, positive sign
Debtors	7,220	3,490	Low receivables, manageable credit exposure
Current Liabilities	492,803	590,778	High, but reduced from prior year, still significant
Net Current Assets	88,436	205,869	Positive but diminished working capital
Net Assets (Equity)	157,719	-25,720	Turned positive, indicating improved solvency
Director Loans (Current Liabilities)	460,213	533,357	Heavy reliance on director financing
Fixed Tangible Assets	91,632	0	New investment in assets, possibly for growth
Deferred Tax Liability	22,349	0	Future tax obligation from timing differences
Employees	0	0	No staff, likely subcontracting or project-based

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3. Diagnosis

Symptoms Analysis:

• The company has emerged from a negative net asset position to a positive one within a year. This is a critical symptom indicating better financial stability.
• The sharp increase in cash reserves from £105k to £574k is a strong sign of improved liquidity—akin to a patient regaining hydration after dehydration.
• However, current liabilities remain high, largely driven by director loans (£460k), which suggests the company is still dependent on internal financing rather than external credit. This is a symptom of ongoing liquidity strain despite the cash build-up.
• Investment in fixed assets (£91k) indicates the company is deploying resources toward growth or operational capacity, a positive development but one that may constrain cash if not managed carefully.
• Absence of employees suggests a lean operational model — possibly project-based or subcontracted — which reduces fixed costs but may limit scale.
• The deferred tax liability signals timing differences and future tax outflows that will need monitoring.

Overall Financial Condition:
The company is showing early signs of recovery ("returning from illness") with a stronger balance sheet and better cash position. However, the high level of director loans and current liabilities is a cautionary symptom indicating potential liquidity risks if cash flow deteriorates. The financial "vital signs" suggest a condition of guarded optimism but with ongoing vulnerabilities.

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4. Recommendations

• Reduce Reliance on Director Loans: Seek to refinance or pay down director loans to reduce related party risk and improve financial independence. Consider external funding or equity injection if feasible.
• Improve Working Capital Management: Monitor and manage payables and receivables actively to ensure net current assets remain positive and robust. Avoid build-up of overdue payables that could strain supplier relationships.
• Cash Flow Forecasting: Implement detailed cash flow forecasting to anticipate liquidity needs and avoid cash crunch situations, especially given the asset investments and deferred tax obligations.
• Asset Utilization Review: Ensure that the tangible fixed assets purchased are effectively contributing to revenue generation to justify the capital outlay.
• Maintain Lean Operations: Continue operating with minimal fixed staff costs, leveraging subcontractors or freelancers to keep overheads low until the business grows sustainably.
• Tax Planning: Engage in tax planning to manage deferred tax liabilities and optimize tax payments timing.
• Regular Financial Monitoring: Conduct periodic financial health checks, focusing on liquidity ratios, solvency, and capital structure to detect early signs of distress.

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