FLAC to PS3

Please forgive me for this amateur question (I'm new to Serviio) but does Serviio stream FLAC files natively to PS3? i.e is there any transcoding/compression - is it "lossless"?
Unfortunately I've noticed a bit of sound degradation.
Thanks in advance

[zip]

It's transcoded to LPCM, so theoretically there should not be any degradation - but I'm not an expert tbh.