Losses at Brakes parent company Cucina Lux deepened by 13% to £106m in 2011, The Grocer can reveal.

Group sales increased by 9% to £2.6bn in the 12 months to 31 December, driven by growth in France and Brakes’ acquisition of Swedish foodservice supplier Menigo. UK sales rose slightly, to £1.8bn.

Brakes finance director Phil Wieland insisted the loss was a function of Brakes’ private-equity ownership structure through Bain Capital and was not a fair representation of its trading performance.

Under accounting rules, the £1.4bn Bain paid for Brakes in 2007 is written as a loss against the company over a period of about 10 years. At the same time, some of the money Bain invested in the company was structured as a debt against Brakes, which accrues interest that appears on Brakes’ balance sheet.

Although Brakes was legally required to publish these metrics, Wieland said cash generation was a better reflection of the company’s performance. Brakes ended 2011 with £28.6m more cash than it held in 2010, despite having spent £46.7m on completing the Menigo deal and opening a new UK depot. “A lot of PLCs would get stressed about recording a loss, but we can focus on cash generation,” he said.

Brakes’ main credit insurers, Atradius and Coface, had increased their cover of Brakes because of last year’s strong cashflow, Wieland added. “Trade credit insurers are insuring their customers on our ability to pay. That’s not influenced by what Bain bought the business for.” However, a third insurance house, Euler Hermes, last week slashed coverage over concerns the group was highly leveraged, as well as the general vulnerability of the foodservice sector in the current economic climate.

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