While all four units within the mail operator recorded a profit for the first time in 20 years, Royal Mail has also seen its pension fund deficit more than double to £6.8bn.

Group profits increased on revenues of £9.75bn, a near 2% increase on the year previous.

Across the board Royal Mail divisions turned in profits despite a 5.5% drop in mail volumes during the year, with a daily mailing tally for letters and parcels of 75m.

Royal Mail predicts that such volumes could dip by a further 10% this financial year with each percentage drop equivalent to £70m in lost revenues.

Despite recording profits in its Letters, General Logistics Systems, Parcelforce and Post Office businesses, cashflow at Royal Mail was negative with outflow of £373m.

Royal Mail attributed this to investment into the ongoing modernisation of the business coupled with annual payments of £800m into the operator's problematic pension pot.

Adam Crozier, chief executive of Royal Mail Group, said: "Our people have delivered strong financial results and high quality customer service across all our businesses in the face of extremely challenging trading conditions."

He added that the efforts poured into modernising the service "will enable Royal Mail to secure a strong and vibrant future in the competitive marketplace."

The strong set of results arrive at a time when the Business Secretary Lord Mandelson is continuing to push for part privatisation of the mail operator.

Such plans have come under fire recently with two possible bidders, Deutsche Post and TNT, reportedly curbing their interest in the group.

Crozier added: "We are working with the Government on a package of measures which will help secure a successful future for Royal Mail - and secure the future of the six-days-a-week Universal Service on which the whole country depends."

Such plans have come under fire recently with two possible bidders, Deutsche Post and TNT, reportedly curbing their interest in the group.