A decision to close Pall-Ex’s network in Poland following Russia’s invasion of Ukraine led to the group making a loss of more than £3m last year.

However, Pall-Ex said its businesses saw another positive year of growth, with revenue increasing by £4.1m and the group remained well ahead and gaining market share.

Financial results for Pall-Ex Investments, which includes all of its group businesses, in the year ending 31 July 2023 showed turnover increased to £141.2m, from £137m in 2022.

It said this growth across all its divisions came despite contraction of the market due to the economy and unprecedented inflation.

Gross profit was £21.3m (£17.5m).

Pall-Ex UK, the main pallet and haulage business, saw EBITDA profits of £2.6m, which Pall-Ex Investments said was £0.3m above the previous year of £1.4m.

It attributed this to significant growth in the transport division, improved corporate margins and reduced caretaker costs.

But an exceptional item of £3m, made up of investment assets and loans relating to its Polish franchisee and 100% subsidiary Pall-Ex 24 Sp. Zoo filing for bankruptcy, led to the group reporting a pre-tax loss of £3.4m.

In its business review, Pall-Ex Investments said: “The bankruptcy followed a challenging economic period in Poland following the invasion of Russia into Ukraine and inflation at 15% to 20%.

“There will be a further impairment of £0.4m in 2024 covering loans issued post 31 July 2023.”

Barry Byers, Pall-Ex MD for UK business units, said: “The financial year ending July 2023 saw another positive year of growth, with the underlying EBITDA profit, excluding exceptional items, almost doubling year on year with this improvement being the best in the sector.

“The progress for the Pall-Ex Group result was achieved through growth and cost reductions made within both Pall-Ex UK and further profit improvements in Fortec.

“We also achieved very positive growth in our international networks in Romania and in Italy, both of whom are seeing double digit growth and have consolidated their market leading position.”

Byers added: “The exceptional item reported was a result of the strategic decision to close our Polish network due to the economic climate and poor trading conditions in that territory, created by the neighbouring conflict in Ukraine.

“The Pall-Ex Group remains committed to service excellence and our growth and improvements in the UK businesses is down to the quality of service we offer combined with the investment we have made in commercial resource and training to support our shareholder members across the UK.

“The result of these programmes is evident as we are continually increasing our market share and are achieving growth even when the wider sector volumes have declined.”

Byers added that the outlook continued to be ”extremely progressive” and he said: “The Pall-Ex Group remains well ahead of last year, whilst above our internal budget and we are continuing to gain market share.”