The financial result triggered a £418 Share in Success payment to Royal Mail’s people, amounting to a payout of nearly £100 million.

For the financial year ending March 2006, Royal Mail posted record turnover of £9,056 million. The £355 million operating profit was £53 million higher than the previous year.

Royal Mail’s Letters business posted a £344 million operating profit - £1 million more than the previous year.

The Post Office® reported an operating loss of £111 million, a £12 million improvement on the previous year – a significant achievement as the year saw the end of pension and benefit books, which had previously generated annual revenues of £327 million.

Parcelforce Worldwide made its first full-year operating profit – £5 million – after a long haul involving a focus on business customers, getting out of loss-making contracts and cutting costs.

GLS delivered a 37% improvement in operating profit to £100 million with a 9.6% margin on revenues that grew to £1,037 million.

Chairman Allan Leighton said: “The results show that Royal Mail has consolidated the gains it made during its three-year renewal plan when the business returned to profit and began to hit service targets instead of routinely failing them.”

He noted, however, that there can be no let-up, especially as the market is now open to full competition. Last year, rivals handled more than one billion letters under access arrangements, a number that is set to hit three billion in two years’ time, if not sooner.