Tag: Royal Mail

The government today confirmed a 1.75 bln stg financing package for the Royal Mail as the UK’s main postal service unveiled a 17.5 pct increase in annual profits. The government package, structured as a 900 mln stg loan on commercial terms to be paid back by 2013 plus an 850 mln stg draw on the Royal Mail Reserve to help plug an estimated 5.6 bln stg deficit in the organisation’s pension scheme. Aside from the pension deficit, the package is aimed at funding modernisation of Royal Mail’s infrastructure to enable it to cope with the UK postal market being opened up to greater competition. ‘Giving Royal Mail the freedom to use its financial resources to invest for the future puts the company in a stronger position to successfully compete in the marketplace and also deliver a financial return for the taxpayer,’ said Trade and Industry Secretary Alistair Darling.

Royal Mail will unveil record profits of nearly GBP600m – GBP1.6m a day – this week, triggering an incentive scheme that will give its 180,000 employees a minimum bonus of GBP400 each. Last year, Royal Mail’s profits were GBP537m. This year, helped by stamp price increases, profits are expected to go up by ten per cent and it will be able to report that all its businesses are now in profit. At the same time, the Government is expected to give its support in principle to a radical restructuring plan that would give workers shares in the business and about GBP1.3bn to inject in the pension scheme.