UK Pallets is to close, after parent company UK Mail pulled the plug following years of poor profitability. The closure will cost UK Mail £1m, plus asset write-downs of £2m.

In a trading statement to investors UK Mail said the closure of the pallet network would be managed over the next three months, as it sought to ensure that all employees and customers were properly supported. It added that a number of its employees would be able to take up roles in UK Mail.

In November UK Mail Group wrote down the value of the business, revealing a £7.3m impairment charge relating to goodwill dating back to its purchase in 2003.

The statement said: “We reported [in November] that our non-core subsidiary UK Pallets, having suffered declining profitability in recent years, was continuing to experience a number of challenges and that we were taking action to address this underperformance.

“As previously indicated, we have been actively considering all options for this business and a proposal has now been made to close it,” it read.

UK Pallets accounted for 5.3% of overall group revenues of £508.5m, as of 31 March 2014, and 2.3% of group operating profit of £22.7m.

According to Termination of Member Agreement documents seen by, UK Pallets MD Graeme Wilson said: "It has been a challenging few years for the network and... it has unfortunately become apparent that continued operation of the network will be unsustainable and despite exploring different avenues, we have ultimately been unable to avoid making this very difficult decision."

  • Outside of its pallets business UK Mail said that the demise of City Link was likely to “have a positive impact on the overall UK parcels industry” and that it had also taken on some volumes from ex City Link customers.