Annual results for the year ended 31 December 2010
Cucina Lux Investments Limited, the holding company for Brakes Group (“Brakes” or the “Group”) the leading foodservice business, today publishes its statutory accounts for the year ended 31 December 2010.
Financial Highlights
- Total Group revenue up 15.5% to £2,552 million (2009: £2,209 million)
- Group EBITDA £141 million (2009: £151 million)
- Strong cash flow generated from operating activities (before exceptional items) of £125 million
- Continued investment in Group infrastructure of £29.6 million (2009: £29.7 million)
Group Overview
The Group delivered a strong performance in 2010 despite the continuing backdrop of a difficult economic environment and weak demand from both the public and private sectors.
Group revenue was up 15.5% to £2,552 million and all three geographical locations, UK (incl. Ireland), France and Sweden, saw encouraging sales growth. Over the last five years Group revenues have delivered above market growth of 12% CAGR. EBITDA held up well across the Group despite the margin pressures in the business and over the last five years EBITDA has grown by 7% CAGR.
UK
In a highly competitive trading environment in the UK, Brakes remains the number one foodservice distribution company with a market share of 18%. Revenues were up 2.8% to £1,799 million in 2010 from £1,750 million in 2009. Whilst we saw a reduction in operating margin in 2010 due to changing customer behaviour, we are delighted that we have retained significant customer contracts.
In particular, we were delighted to be awarded a seven year distribution contract by the Compass Group that will commence in 2012. The contract will consolidate the distribution of all major food categories into a world class network capable of providing the 5,500 Compass units in the UK with a single delivery for all their product needs.
In November 2010 the UK management team was strengthened by the appointment of Stefan Barden to the newly created role of UK CEO. Stefan brings with him significant experience in senior roles in the foodservice industry and his appointment has provided Brakes with dedicated leadership of the UK business.
Over the last five years Brakes’ UK revenues have grown by 8% CAGR outperforming the market every year. This together with our diversified channels, deep customer base and breadth of product range leaves us confident in the future of the UK business.
International
Brakes now operates in three geographies and we are pleased with the growth achieved in France and our new market, Sweden, over the last year. The Group enjoys market leading positions in both these geographies - number three in France and number two in Sweden.
During 2010, France experienced some similar trading conditions to the UK but has exited the year in a much stronger position. Revenues grew by 0.7% to £461.9 million in 2010 from £458.8 million in 2009. Growth in 2010 was achieved through market share gains and particularly good growth in corporate accounts. EBITDA fell from £17.7 million to £16.1 million, due in large part to a year on year step change in employee incentive costs and the one off consultancy costs associated with the strategic review carried out in the French market in 2010.
Brakes entered the Swedish market in April 2010 with an investment in Menigo Foodservice AB, the number two foodservice wholesaler in the country. The acquisition has expanded Brakes’ geographic reach, adding the attractive Swedish market to the Group’s portfolio. Menigo generated revenues of £291 million in the period since the acquisition.
Brakes anticipates that there will be significant synergies, both cost and margin that can be deployed as Menigo is integrated into the wider Group. In addition, there are good opportunities for sales growth in the corporate, independent and tender sales sectors that Menigo can pursue in order to grow revenue and profit over the next five years. We are excited about the potential of the Swedish market and are already pleased with the significant growth in profits achieved since our acquisition.
Philip Jansen, Group Chief Executive of Brakes Group, said:
“Against the backdrop of a weak economic outlook, low consumer confidence and a strong competitive environment we are pleased that Brakes has had a solid year and continues to enjoy stable long term prospects in the foodservice distribution industry.
As the Group’s robust results show the foodservice industry enjoys attractive fundamentals with steady long term growth prospects. We anticipate the UK will remain challenging in the near term however our market leading reputation with customers and proven track record of earnings growth and high cash conversion, combined with the continued investment in high calibre additions to the management team, as shown by the recent appointment of Stefan Barden as UK CEO, demonstrates that we are well positioned to manage the business going forward across all our geographies.”
Dwight Poler, Managing Director, Bain Capital, said:
“Since the acquisition of Brakes by Bain Capital in 2007 we have been delighted by the consistent revenue growth that the Group has achieved across the UK and Europe. Whilst the UK market is set to continue to be challenging in the near term the business is well positioned to navigate these tougher conditions and we believe that the recent additions to the executive team, the strong cash flow generated as well as Brakes’ diversified channels and customer base, mean that both the business and the sector it operates in remain attractive.”
About Brakes Group
Brakes Group is a leading supplier to the foodservice sector in the UK, Ireland, France and Sweden. The group comprises a family of specialist businesses which are able to deliver everything the caterer needs, including their very successful own brand ranges developed specifically for chefs.
Employing over 10,000 people, the group supplies a diverse customer base, which includes, independent pubs, restaurants and hotels, schools, hospitals, contract caterers and well known national chains.
Brakes Group has developed a clear customer focus and a strong understanding of the needs of the foodservice sector providing innovative products and services and is committed to improving both the environment and the communities its serves.
