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• Group external revenue of GBP 9,388million, up 2.3pct

• Group operating profit before exceptionals of GBP 162million, down 30.4pct

• Royal Mail Letters recorded a loss of GBP 3million due to a sharp decline in mail volumes, the continuing impact of full competition and increased levels of investment

• The Universal Service made an estimated loss – for the first time – of around GBP 100million with the overall price controlled area of Royal Mail’s business making a loss of around GBP 200million

• GLS and Parcelforce Worldwide saw a significant rise in revenues, with profits remaining constant due to increased, volume-driven costs and competitive pressures

• Post Office Limited recorded an overall loss of GBP 34million, this was an improvement due to the full year impact of the Social Network Payment

• Landmark agreements on pay, pensions and modernisation

• Cash contribution by the Company to Pension Plan of more than GBP 800million

Commenting on these results Adam Crozier, Royal Mail Group’s Chief Executive, said:

The results are dominated by the profit fall in the Letters business where overall market volumes have declined by 3.2pct year on year in line with other major European postal markets. Royal Mail Letters is handling three million fewer letters a day than a year ago, and revenues have fallen further as customers down-trade to lower priced products and rivals handle increasing volumes. The company is also continuing to pay huge sums into the Royal Mail Pension Plan – more than GBP 800million in cash last year. A key achievement of last year, however, was to put in place and agree with a strategy to modernise and transform the Letters business with heavy investment in our people and technology that will deliver efficiencies and provide the platform for new and more flexible products for customers – alongside the agreement on major pension reform which took effect on 1 April 2008.

Royal Mail called today for price controls to be lifted after admitting it is now handling 3m letters a day fewer than it was a year ago and has run up GBP 200m of losses from its regulated letters and parcels business.

The figures underline the financial crisis facing the state-owned postal operator from private sector competition and the migration of post to the internet, coupled with the downward pressure on bonds and other investments in its retirement scheme.

The scale of the problems add urgency to a review of the market after an independent inquiry commissioned by the government warned earlier this week that liberalisation of the wider postal market had provided no benefit to the average customer but put the universal service at risk.

The company delivered 80m letters a day in the 12 months to March 31 2008, compared with 83m in the year before. The GBP 200m deficit incurred by its letters and parcels business regulated by Postcomm compared with a GBP 29m loss before and a GBP 200m profit two years ago.

The universal service, which guarantees the same price and delivery date for letters throughout Britain, was in the red – for the first time – to the tune of GBP 100m while the group’s overall letters division reported a GBP 3m loss.

Royal Mail’s group operating profits before exceptionals fell 30pct to GBP 162m while overall revenues rose 2.3pct to GBP 9.8bn. Crozier said the profit figure had been helped by cost-cutting mainly through a heavy programme of redundancies.

Post Office Ltd, which has closed 600 of its branches in the face of much local opposition, saw its operating loss fall from GBP 108m to GBP 34m as the Royal Mail benefited from a GBP 150m annual subsidy for keeping parts of the network open.

The company’s plan to close a further 2,100 post offices continues as Royal Mail reported that four million fewer people a week were visiting their local branch.