Royal Mail workers set for £200m bonanza after profits hit new high

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Postal workers are to share a £200m windfall after annual profits at the Royal Mail surged to a record high.

Postal workers are to share a £200m windfall after annual profits at the Royal Mail surged to a record high.

The state-owned postal group will not publish its full-year results until 17 May. But The Independent on Sunday has learnt that profits will come in at more than £500m, with revenues up between 4 and 5 per cent.

That will trigger the payout to postal workers, the biggest in the organisation's history. All employees who have been with the company for more than a year are eligible for the payout - likely to be around £1,000 each - from sorting room to staff to chief executive Adam Crozier. It is understood, however, that chairman Allan Leighton, who took up the role in 2002, has decided to forgo his bonus.

The profit surge is being attributed to top-line growth, but aggressive cost cutting will have made the biggest contribution. The daily "second post" has been scrapped, nearly 35,000 jobs axed, post offices have been shut and the transport system pared down. Stamp prices have also risen.

Royal Mail did, however, report a bonanza festive season, with a total of 2.2 billion letters and cards posted in the four weeks before Christmas Day - 100 million up on 2003.

The letters business contributes three-quarters of the Royal Mail's turnover. However, the Post Office, which operates the retail network, and specialist delivery service Parcelforce are continuing to struggle.

Mr Leighton launched a three-year Royal Mail recovery plan in 2002. At that stage the group, which had been rebranded under the ill-fated Consignia name, was losing more than £1m a day.

The intention is to get the Royal Mail to a position where it can compete with rival operators. Earlier this year, regulator Postcomm announced it would lose its monopoly on letter post from the start of next year, 15 months ahead of schedule.

Last year the Royal Mail made a profit of £220m against a £197m loss for the 2002-03 financial year. This year's dividend payout was set to be triggered if annual profits were more than £400m.