The plans to privatise Royal Mail have gained momentum following the announcement of the turnaround in their financial position for the first half of their trading year.
Half year group operating profits, including transformation costs, jumped to £144m from £12m a year ago.
Following these results Royal Mail said that preparations for privatisation were now underway, and that “all options are being considered” for bringing in external investment to help continue its transformation into more of a parcel business.
Moya Greene, Chief Executive Royal Mail, said the timing of any privatisation was a matter for Government, but she believed that the organisation could not generate the investment needed by itself.
Commenting on the Royal Mall results Business Minister Michael Fallon said: “Today’s results from Royal Mail are encouraging showing how Royal Mail staff and management together with the Government’s reforms, have put the company on the road to sustainable health and long term viability.
“Parliament decided, via the Postal Services Act 2011, to inject private capital into the company in order to secure the future of the universal postal service. The structure and the timing remain open, but Government is committed to doing that to ensure the ongoing viability of the company.”
The Communication Workers Union said the profit proved that modernisation of the Royal Mail can be successful within the public sector.
Meanwhile, the Government has signed up UBS bankers to run their side of the deal, while Royal Mail has hired Barclays to look after its own back.
The hoped-for method of privatisation is a flotation – much more palatable, the Government thinks, than a sale, which could struggle if no buyers emerge, or hit major controversy if an asset-stripper such as private equity came up with the best bid. So ministers and the Shareholder Executive, which manages state-owned assets, plan a roadshow of City institutions to begin early in the New Year.