Guernsey Post has made an operating profit of £1.6 million in the financial year to the end of March.

The company will pay a dividend of £500,000 to Guernsey's States, as its shareholder.

Chief Executive Boley Smillie says the financial results are testament to the hard work of staff, but says there is no room for complacency.

He is warning of short term losses ahead due to Royal Mail worsening the terms of its contract with Guernsey Post by £4m.

GP will moved to a 'short-term loss-making position' as it undergoes a major redesign and investment into headquarters in St Peter Port.

"The company is embarking on a multi-million pound investment, funded from our own reserves, which includes the redesign of its Postal Headquarters and the installation of fully automated parcel sorting equipment.”

A £1.8m piece of kit is being put in which includes scanning technology and can process up to 6,000 parcels an hour.

Steve Sheridan, Guernsey Post's Finance Director, says it will help the company become more efficient and grow its capacity.

"During the pandemic, Guernsey Post experienced strong growth in parcel volumes to levels that we would not have otherwise anticipated to reach for another three or four years. Our existing forecasts suggest that this growth will continue for the foreseeable future, albeit at a slower rate. However, the parcel growth is in stark contrast to the decline of core letter revenue which continues to fall by more than 10% per year.”

Building work is underway at Envoy House to make way for the parcel machine.

Work is due to be completed in the first half of 2023, with the parcel sorting system installation planned for July.