2Birds' LLPs reveal firm's 'very healthy' debt position

The financial statement filed for the end of the 2011/12 financial year reveals that net debt has shrunk by 12 per cent from €25.7m at the end of 2010/11 to €22.5m at 30 April 2012.

Staff costs have risen to €112.4m from €101.3m, which Kerr said reflects the growth of the firm, with almost 150 extra staff members year-on-year.

Bird & Bird has added just two partners - a total of 215 at 30 April 2012 - on average over the year, though has increased its fee-earner headcount by 100 from 673 in 2010/11 to 773 in 2011/12. Support staff numbers have increased from 628 to 675.

Partner remuneration is now back towards the pre-recession levels of 2008, with the highest-paid member taking home more than €1m for the first time in around five years – up from €868,000 in 2010/11. The LLP accounts confirm that under the firm’s remuneration system, members are required to provide capital generally in proportion to the profit sharing points allocated to them, with those points assessed annually.

As of 30 April 2012, the firm owed €80m to its members – an increase from €67m 12 months prior. Kerr said this was not as a result of a cash call. He explained: “This figure has gradually built up over time. The €14m increase is the ins and outs of profit in that year. It’s normal in LLPs for that to be relatively high at the end of the financial year and then paid out over the next 12 months.”

Also on the up is the amount the firm owes to creditors within the next year. The figure has gone up from €48m to €53m. A further €15.6m is owed to creditors after more than one year. But Kerr pointed to falling net debt as evidence of “quite a strong cash year”. Bird & Bird has moved from being in the red with a cash outflow of €5.7m, to an inflow of €8.9m.

Kerr said: “The figures represent a snapshot. But they do reflect something quite real. The rise in creditors encompasses trade creditors, corporate tax and accruals and is healthy for the general size of the business.

“We’ve managed to reduce our net debt by about 12 per cent through being pretty strict on improving practice management in the firm, such as lock-up. We find clients prefer to know where they stand and it increases equity capital in the firm.

“We have very modest levels of debt and are in a very strong position to continue our growth, even in this tough economy.”

The firm is planning a further push internationally in the coming months (22 November 2012). This week it added brand management partners Rebecca Delorey and Nathalie Ruffin to its Paris office from Gilbey Delorey.

As of 30 April 2012 the firm has four bank loans outstanding. Two loans negotiated in November 2011 totalling more than €16.5m and due in three years are as a result of changing banks to Barclays, Kerr explained. The other two are relatively modest at €1.3m and €835,000.

Kerr said he was “happy” with the level of bank debt as a ratio of equity and in relation to cash held within the firm.

In November 2011, the firm sold an interest rate swap – bought to protect the firm against currency exposure when translating assets across its international structure - at a loss of €437,000.

Kerr said: “These instruments may be sensible in a more stable world, but I’m not a huge fan and we won’t be buying any more.”

Bird & Bird’s declared revenue was €270m (£235m) and last week it revealed a double-digit rise in its half year figures (26 November 2012)