Office2Office Plc 
 
 
Annual Report 
2004  Page
Introduction 2
Financial Highlights 3
Chairman’s Statement 4-5
Chief Executive’s Review 6-9
Financial Review 10-11
Board of Directors 12
Corporate Social Responsibility 13
Directors’ Report 14-17
Corporate Governance 18-21
Audit Committee Report 22-23
Directors’ Remuneration Report 24-27
Report of the Independent Auditors 28-29
Consolidated Profit and Loss Account 30 
Consolidated and Parent Company 
Balance Sheets 31
Consolidated Cash Flow Statement 32
Consolidated Statement of Total Recognised
Gains and Losses 33
Reconciliation of Movement in Group
Shareholders' Funds 33
Principal Accounting Policies 34-36
Notes to the Financial Statements 37-53
Five Year Summary 54
Shareholder Information 55
Company Details 56
Contents
1 office2office Annual Report 2004
Annual Report 2004 office2office
office2office is the UK’s leading
independent contract supplier of office
consumables and related services. For
large organisations, the Group aims to
provide a one-stop-shop service, under
its ‘everything-for-the-office’ concept,
with tailored solutions to suit the
specific needs of individual customers.
For organisations of all sizes and
types, the Group’s offer features a wide
range of office consumables and 
related services.
2 office2office Annual Report 2004 *The exceptional costs of £3.3 million, pre-taxation (£3.1 million post-taxation), relate to listing on the 
London Stock Exchange.  
Increases and decreases above refer to changes compared to the year ended 31 December 2003.
£1.5m
4.2p per share
Financial Highlights
for the year ended 31 December 2004
3 office2office Annual Report 2004
Before goodwill amortisation, After goodwill amortisation,
flotation and other  flotation and other 
exceptional costs* exceptional costs*
£141.8m £141.8m
+£16.2m +£16.2m
£9.4m £5.4m
+£2.6m - £0.6m
£6.6m £2.8m
+£1.8m - £1.2m
16.6p 5.6p
+4.6p - 4.1p
Profit on ordinary
activities before taxation
Profit on ordinary
activities after taxation
Fully diluted earnings
per share
Turnover
Proposed dividend
£0.8m
Net cash at the year end
£7.2m
Increase in cash Chairman’s Statement
This year's Annual Report marks a
milestone in the development of
office2office. It covers the period in
which office2office made its debut on
the London Stock Exchange as well
as maintaining its track record of
growth in both sales and profit before
exceptional items.
RESULTS
Turnover grew by £16.2 million (12.9%) to
£141.8 million (2003: £125.6 million) with all
areas of the Group performing strongly.
Operating profit before goodwill amortisation
and exceptional costs, but after FRS20 costs
of £0.2 million, increased to £10.1 million
(2003: £7.7 million). FRS20 share option costs
related to the management share option
schemes and SAYE scheme. Goodwill
amortisation amounted to £0.7 million 
(2003: £0.7 million) and the exceptional costs
incurred in the flotation process were 
£3.3 million. After reflecting such charges,
operating profit was £6.1 million 
(2003: £6.9 million).
Profit after taxation before goodwill
amortisation and exceptional costs was 
£6.6 million (2003: £4.8 million). Profit after
taxation, after reflecting such charges, was
£2.8 million (2003: £4.0 million).
Net cash inflow from operating activities after
exceptional costs was £10.9 million 
(2003: £9.9 million). Net debt was eliminated,
with net cash in hand at 31 December 2004
of £0.5 million (2003: net debt £7.2 million).
Fully diluted earnings per Ordinary share
before goodwill amortisation and exceptional
costs were 16.6p (2003: 12.0p). After goodwill
amortisation and exceptional costs, fully
diluted earnings per Ordinary share were 5.6p
(2003: 9.7p).
DIVIDEND
The Directors recommend a final dividend in
respect of the year ended 31 December 2004
on Ordinary shares of 4.2p (2003: nil) per
share, amounting to £1.5 million. If authorised
at the Annual General Meeting, the dividend
will be paid on 9 May 2005 to shareholders
on the share register at the close of business
on 8 April 2005.
4 office2office Annual Report 2004 TRADING
Trading is discussed in detail in the Chief
Executive’s Review. In summary, despite a
competitive office supplies market, the Group
continued to diversify its customer base with
net customer wins. In particular, following the
largest customer contract re-tender since
flotation, we have retained a broadly similar
share of the significant NHS Logistics
business to that previously held. 
STOCK EXCHANGE LISTING
On 29th June 2004 the Group's shares
started trading on the main market of the
London Stock Exchange. The flotation
provided £5 million of cash, before costs,
which has allowed the Group to redeem all
outstanding Preference shares (£3.0 million)
and apply the balance for general working
capital purposes.
BOARD AND GOVERNANCE
In June, we welcomed Jim Cohen and 
Peter Bertram to the office2office Board as
independent non-executive Directors. They
bring a wealth of experience, which will be
invaluable to the Group over the coming
years. Jim Cohen is currently a main board
Director of Balfour Beatty plc. Peter Bertram,
a Chartered Accountant, was CEO of Azlan
Group plc prior to its sale in 2003 and has a
number of other non-executive Directorships.
EMPLOYEES 
Ultimately, the key to our success lies in the
enthusiasm, commitment and skills of those
who work for office2office. I would like to
acknowledge that contribution and to thank
everyone for their support and dedication
during an eventful year. We shall strive to
continue the development of an environment
where our staff find job fulfilment and success.
ANNUAL GENERAL MEETING
The Annual General Meeting will take place 
at the Group’s head office, St Crispins, 
Duke Street, Norwich on Wednesday 
20 April 2005 at 10.30 am. Notices detailing
the ordinary and special business to be
conducted together with the proxy forms are
circulated with these financial statements.
OUTLOOK 
The success of our strategy for growth and
profitability provided the platform for the
Group to debut successfully on the London
Stock Exchange. Throughout 2004 we have
continued to record net customer wins, mainly
in the private sector, which expand and
diversify our customer base to underpin future
growth. In addition, recent successful contract
renewals have demonstrated office2office’s
competitive ability.
The Board will continue to focus on the
fundamentals that have created success 
so far.
We intend to develop our customer service,
procurement and logistics strengths to
enhance our position in the bid to win new
customers, to renew existing customer
contracts as they expire and, ultimately, to
manage the impact of proposals to further
consolidate public sector contracts.
Accordingly, while recognising that we do
have challenges to face, we look forward to
2005 with measured confidence.
D J Callear
Chairman
14 March 2005
Chairman’s Statement
5 office2office Annual Report 2004 Chief Executive’s Review
The market for our products and
services is largely driven by
employment levels in office and
administrative jobs. Comparatively
strong employment in the UK and
Ireland has underpinned solid
demand in 2004.
6 office2office Annual Report 2004 OUR PROPOSITION
We provide a combination of the most cost-
effective solution to fulfil customers’ office
needs together with high levels of customer
service. This gives our customers both
economic benefit and peace of mind.
We offer our customers a broad product
range, which is delivered rapidly and
accurately. This supply model is enhanced by
a variety of e-commerce solutions and we
constantly seek to build stronger customer
relationships by developing additional services
and enhancing our overall service offering. 
The one-stop-shop solution for a wide range
of office goods and services, with just one bill
to pay, provides a cost-effective model for
customers to manage their procurement.
STRATEGY
The Group’s strategy is to achieve sales and
profit growth by: expanding its customer base
and broadening its range of products and
services; driving increased productivity and
efficiency in operations; and making suitable
acquisitions.
PROGRESS
This strategy, which produced strong growth
in both sales and profits prior to flotation, has
led to another successful year of sales and
profit growth in 2004, before taking account of
exceptional flotation costs, combined with
strong operating cash flow.
This year, the UK Government’s public sector
spending review has produced a trend of
public-sector contract consolidation both
within our existing customer base and across
the wider public sector. Our response to
counteract this trend has been actively to
expand and diversify our customer base,
whilst providing a high quality, efficient service
to our existing customers. I am pleased to
report continued broadening of our customer
base in 2004.
The nature of our business means that in
addition to bidding for new business, we also
bid to retain a significant proportion of existing
customers’ expenditure every year as their
current contracts come to an end. During the
year we continued with successful re-tender
campaigns.
The Group’s Stock Market listing has helped
to raise its profile, establish a diversified
shareholder base and position it for future
development.
Chief Executive’s Review
7 office2office Annual Report 2004 Chief Executive’s Review
PRODUCTS AND SOLUTIONS
An important element in winning business with
both existing and new customers is adding
new products to our range, both to broaden
trade with our customers and to reduce their
total costs of procurement. The range
includes branded goods together with a
selection of products under the Group’s own
label, Banner, as well as Group branded
services. This year we have made significant
progress in developing a more complete
solution for customers seeking greater visibility
and control over sundry purchasing
expenditure.
E-COMMERCE
Effective e-commerce is very important in a
mostly high-volume, low-value environment. In
2004 the number of orders processed
electronically grew by 52%. In addition, the
proportion of orders received electronically
has also increased by 10% to 48% of the
total. 
The Group continues to develop its e-
commerce systems and capabilities, which
are essential aids to efficient order handling
and low-cost fulfilment, whilst providing
greater visibility of transactions and control
over expenditure. 
EUROPEAN OFFICE SUPPLIES
ALLIANCE (“EOSA”)
EOSA, the Europe-wide alliance of office
supplies companies, of which we are a
founder member, has further expanded its
international coverage by co-operation
agreements with independent companies in
the Czech Republic, Hungary and Poland. 
The alliance has existed since 2002 to provide
pan-European supply arrangements for multi-
national companies and to co-operate in the
sourcing and purchasing of products. The
sales of the ten companies co-operating
under the EOSA name amount to some
$850m. 
To manage global customers’ requirements,
worldwide co-operation has been established
with a major North American contract supplier
of office products, which operates in five
countries: USA, Canada, Mexico, Australia
and New Zealand.
THE ENVIRONMENT
The Group’s environmentally preferred range,
Globe & Tick™, has continued to expand as
environmental concerns become increasingly
important in both the public and private
sectors. Sales of recycled products, including
paper, have grown and are continuing to
become an increasingly important part of 
our range.
Managing the Group’s environmental impact is
a high priority. Our fleet now includes a
number of LPG vehicles and the majority of
packaging is recycled to minimise landfill.
Once again the Group has been awarded the
British Office Supplies and Services
Federation (BOSS) Environment Certificate. 
8 office2office Annual Report 2004 REVIEW OF CUSTOMER
SATISFACTION
The results of our annual independent market
research survey once again confirmed the
value of the efforts we have directed to
improve our service to our customers. This is
an important focus for us and we will continue
to be guided by customer demand to ensure
that our standards of service meet or exceed
their expectations.
PEOPLE
The Company has a committed team of
people, which is reflected in their response to
our market listing. 53% of our eligible
employees have joined the SAYE scheme,
which was established post-flotation.
THE FUTURE
In 2005 we aim to win more customers,
succeed in the bids for the significant
proportion of customer contracts coming up
for re-tender, whilst at the same time,
expanding sales of our wider range of
products and services to existing customers
and minimising any adverse impact of the
trend towards public sector consolidation.
Our teams are focussed on producing sales
and profit growth and continuing to improve
our levels of customer service. We have
capacity in our infrastructure for expansion
together with the people to build on our
previous growth and we continue to enhance
our customer offer.
R C Peck
Chief Executive Officer
14 March 2005 
Chief Executive’s Review
9 office2office Annual Report 2004 Financial Review
In 2004 office2office has continued
to record improved financial
performance.
SALES AND OPERATING PROFIT
Total sales increased by 12.9% to 
£141.8 million. Our operating profit margin
(before amortisation of goodwill and
exceptional costs) increased to 7.1%,
compared to 6.1% in the previous year. 
Operating profit (before amortisation of
goodwill and exceptional costs) increased by
31.3% to £10.1 million whilst operating profit
after such charges was £6.1 million 
(2003: £6.9 million).
GOODWILL AMORTISATION,
EXCEPTIONAL COSTS AND SHARE
OPTION EXPENSES
Goodwill amortisation at £0.7 million was at
the same level as last year. Goodwill arose
from the management buy-in/buy-out in
December 2000.
One off exceptional costs of £3.3 million for
the year relate to the listing on the London
Stock Exchange. 
Share option expenses of £216,000 for the
year comprise £191,000 of FRS20 “share
based payment” book entries and £25,000 
in respect of national insurance contributions
payable on the share options when the 
share options vest.
TAXATION
A full analysis of the taxation charge for the
year is set out in note 7 to the financial
statements.
The Group's effective tax rate in 2004 was
30.3% (2003: 29.7%) of profit before goodwill
amortisation and exceptional costs. The
amount of corporation tax to be paid on the
results for the year is £2.4 million 
(2003: £1.8 million).
SHAREHOLDERS’ RETURN
Fully diluted earnings per share (before
goodwill amortisation and exceptional costs
but after charging share option expenses of
£0.2 million) increased by 38.3% to 16.6p
(2003: 12.0p). Fully diluted earnings per share
(after goodwill amortisation and exceptional
costs) decreased to 5.6p from 9.7p.
Comparable basic earnings per share were
16.8p (2003: 12.0p) and 5.7p (2003: 9.7p)
respectively. 
The proposed dividend for the full year of 4.2p
per share will be covered 4.0 times by
earnings per share (before goodwill
amortisation and exceptional costs) and 1.3
times after goodwill amortisation and
exceptional costs. Shareholders’ funds at 
the end of the year were £3.3 million 
(2003: £0.9 million).
The middle-market quotation of the
Company's Ordinary shares at the end of the
financial year was 242.5p with a market
capitalisation of £88.0 million. The shares
started trading on the London Stock
Exchange on 29 June 2004 at 178.0p with a
market capitalisation of £64.6 million.
10 office2office Annual Report 2004 CASHFLOW
As set out on page 32, the Group continues
to generate cash, with a net cash inflow from
operating activities of £10.9 million after
reflecting £3.2 million of exceptional cash
costs (2003: £9.9 million). £5.0 million of
additional cash was raised from the flotation
before costs incurred of £0.4 million. £3.0
million of Preference shares were also
redeemed and net borrowings were
eliminated. This cash inflow was partly as a
result of strong working capital management.
Trade creditor days based on the year end
figures were 72 days (2003: 66 days) and
trade debtor days were 27 days (2003: 31
days).
FINANCIAL RISKS AND TREASURY
POLICIES
The Group’s main treasury risks relate to the
availability of funds to meet its future
requirements. The Group has an unutilised
bank facility of £15 million which expires on 
20 December 2005. The Group’s policy with
respect to facilities is to ensure that these are
sufficient to cover the expected needs of the
Group, having reflected the inherent
uncertainty of projections and forecasts. 
The Group has minimal foreign currency risk
relating to a balance held in an Irish Euro bank
account and small trading requirements in any
foreign currency. The overall treasury policy in
this area is to ensure that there are no material
currency risks attached to any part of the
business.
Following flotation in June 2004, the Group
repaid its net borrowings and currently has no
borrowings other than £0.3 million finance
lease obligations. The Group’s policy with
respect to interest rate management will
accordingly be determined in the event of the
Group requiring debt funding in the future, and
expectations of future interest rates, as it was
prior to flotation.
The Group monitors its cash resources
through short, medium and long-term cash
forecasting. Surplus cash is pooled into an
interest bearing account.
INTERNATIONAL FINANCIAL
REPORTING STANDARDS
The Group will be required to adopt
International Financial Reporting Standards
(IFRSs) when preparing its financial
statements for 2005. In preparation for this, 
all existing IFRSs have been reviewed in detail,
so as to assess their likely impact on the
reported figures of the Group and the actions
required to collect the necessary data.
Adoption of IFRS, with its focus on the
balance sheet and the incorporation of 
fair-value accounting, will potentially impact on
the balance sheet by recognising the deficit
on the BBS Defined Benefit Pension Scheme.
Additionally, goodwill, under IFRS, will be
subject to an annual review, instead of an
amortisation charge over its expected 
useful life.
GOING CONCERN
The Directors, having made appropriate
enquiries, consider it reasonable to assume
that the Group and the Company have
adequate resources to continue for the
foreseeable future and, for this reason, have
continued to adopt the going concern basis in
preparing the financial statements.
M A Cunningham
Finance Director
14 March 2005
Financial Review
11 office2office Annual Report 2004 Board of Directors
David Callear
Chairman
David is a Chartered Accountant whose
career has been in financial, and later, general
management with publicly quoted companies.
During the 1990’s he was Chief Executive
Officer of both TIP Europe plc (European-wide
vehicle rental) and Jeyes Group plc
(international household products manufacture
and supply).
David joined office2office in February 2001. In
addition, he has a small number of part-time
chairman roles working with the boards of
mainly private companies, including Total
Fitness Group Limited and Jeyes Holdings
Limited, the latter of which he re-joined as
part of a management buy-out in 2002.
Ray Peck
Chief Executive Officer
Ray was appointed CEO after leading the
management buy in/buy out of Banner
Business Supplies Ltd in late 2000.
He has over 20 years of experience in the
office supplies industry and was previously
Managing Director of both Guilbert Niceday
Ltd and Corporate Express (UK) Ltd. Ray is a
qualified accountant, with a Master’s degree in
Business Management from Manchester
Business School.
Mark Cunningham
Finance Director
Mark is a Chartered Accountant and joined
HMSO in 1994. He was appointed Finance
Director of Banner Business Supplies Ltd in
1999, having previously worked as Finance
Controller. Mark became Finance Director of
office2office plc in December 2000.
Jim Cohen
Senior Non-Executive Director
Jim started his career in the Civil Service and
after he left held roles in general management
positions with both GEC and GTE. He joined
Balfour Beatty in 1993 and is currently a main
board executive Director. 
He is also a Director of Metronet Rail SSL and
BCV Holdings and was until late 2003 a
Trustee Director of Ciras.
Peter Bertram
Non-Executive Director 
Peter is a Chartered Accountant who has
worked in both financial and general
management. He was CEO of Azlan Group
plc from 1997 until 2003. 
Peter is currently non-executive Chairman of
AttentiV Systems Group plc and Phoenix IT
Group plc and a non-executive Director of
Anite Group plc.
12 office2office Annual Report 2004 The Board of office2office plc recognises the
importance of social, environmental and
ethical matters in the conduct of the Group’s
business. The Group carries out its activities
responsibly in respect of the health and safety
of its employees, suppliers and customers.
The distribution nature of the business also
brings with it environmental protection
obligations to which the Group adheres.
Employees are provided with a challenging yet
rewarding working environment and are
regarded as fundamental to the future
success of the Group.
HEALTH AND SAFETY
It is an important office2office objective to fulfil
our statutory obligations in respect of the
health and safety of our employees, our
customers and the communities in which we
work. Managers are responsible for effective
management of health and safety which
includes conducting risk assessments and
taking preventative actions to provide a safe
environment to work in. Among the key
features are:
• considering health and safety issues
throughout the design, maintenance and
operation of our fleet;
• supplying safe and reliable products and
services to the market-place;
• working diligently to prevent all incidents by
engaging with employees and educating
them in the implementation of our policy;
and
• integrating health and safety considerations
into all relevant business decisions.
EMPLOYEES
The welfare and safety of employees is a key
priority and the Group actively encourages
staff involvement in the development of the
Group’s business activities. Employees are
treated with fairness and respect and are
encouraged and supported in the
development of their careers and the Group
continues to share its success with them.
ENVIRONMENT
The Group is committed to operating an
environmental management system to the 
ISO 14001 standard. Priorities in 2005 will be
given to:
• the effective management of waste
packaging, reducing packaging and
increasing the recyclable content;
• reducing our energy and fuel consumption
by working with suppliers and customers to
reduce the number of unnecessary
deliveries and collections;
• promoting and demonstrating our
commitment to pollution prevention; and
• integrating environmental considerations
into all relevant business decisions.
Corporate Social Responsibility
13 office2office Annual Report 2004 Directors’ Report
The Directors present their Report and
financial statements for the Group for the year
ended 31 December 2004.
PRINCIPAL ACTIVITIES AND REVIEW
OF BUSINESS
The Chairman's Statement, Chief Executive's
Review and Financial Review on pages 4 to
11 report on the principal activities of the
Group in the UK and Ireland, its operations
during 2004 and future developments in
business.
DIVIDENDS
The Directors recommend a final dividend in
respect of the year ended 31 December 2004
on Ordinary shares of 4.2p (2003: nil) per
share, amounting to £1.5 million. If authorised
at the Annual General Meeting, the dividend
will be paid on 9 May 2005 to shareholders
on the share register at the close of business
on 8 April 2005. 
Prior to flotation, the Company paid a
participating dividend on A Ordinary shares
amounting to £729,000 and a preferred
dividend on A Ordinary shares amounting to
£126,000. All A Ordinary shares were
converted to Ordinary shares and all
Preference shares were redeemed prior to the
flotation.
SHARE CAPITAL AND MAJOR
SHAREHOLDERS
Details of the share capital of the Company as
at 31 December 2004 are set out in Note 21
to the financial statements. 
As at 1 March 2005, the Company had been
notified in accordance with Sections 198 to
208 of the Companies Act 1985 that the
following shareholders held, or were
beneficially interested in, 3% or more of the
Company’s Ordinary shares:
R C Peck*
4,139,318 shares 11.40%
M A Cunningham*
1,448,750 shares 3.99%
G W Streetley
1,448,750 shares 3.99%
Aegon Asset Management
1,320,117 shares 3.64%
Legal & General Group plc
1,220,000 shares 3.36%
*Executive Director
Save for the above, no person has reported
any material interest of 3% or more or any
non-material interest exceeding 10% of the
issued Ordinary share capital of the Company.
An ordinary resolution will be proposed at the
forthcoming Annual General Meeting to renew
the Directors’ authority to allot the Company’s
unissued Ordinary shares (within the meaning
of section 80 Companies Act 1985) up to a
maximum nominal amount of £121,030 (being
one-third of the current issued Ordinary share
capital). Subject to the passing of this ordinary
resolution, a special resolution will be
proposed to renew the Directors’ power to
disapply pre-emption rights in respect of the
allotment of shares (under section 95
Companies Act 1985) up to an aggregate
nominal value of £18,154 (representing 5% of
the current issued Ordinary share capital). The
authority, if granted, would be valid from the
date of the passing of the resolutions to the
next Annual General Meeting.
14 office2office Annual Report 2004 DIRECTORS
The following were Directors during the year
and held office throughout the year, unless
otherwise indicated:
D J Callear
Chairman
R C Peck
Chief Executive
M A Cunningham
Finance Director
J L Cohen
(appointed 23 June 2004)
Senior non-executive Director and Chairman 
of the Remuneration Committee
P Bertram
(appointed 23 June 2004) 
Non-executive Director and Chairman 
of the Audit Committee
G W Streetley
(resigned 7 June 2004)*
J K A Barbour-Smith
(resigned 7 June 2004) 
*G W Streetley continues as Group Business
Development Director with Group-wide
responsibility for sales and marketing.
Biographical details of the current Directors
are shown on page 12.
M A Cunningham will retire by rotation at the
forthcoming AGM and, being eligible, will offer
himself for re-election. J L Cohen and 
P Bertram will also retire and offer themselves
for election, the AGM being the first General
Meeting following their appointment. The
Chairman and executive Directors recommend
their election given the commercial
knowledge, experience and independence
they bring to the Board.
Directors’ Report
15 office2office Annual Report 2004
DIRECTORS' INTERESTS
The beneficial interests of the Directors in office at 31 December 2004 and their immediate
families in the share capital of office2office plc and its subsidiary undertakings during the year are
set out below:
Number of Ordinary shares
At At
2004 2003
D J Callear 568,319 807,055
R C Peck 4,139,318 6,456,242
M A Cunningham 1,448,750 2,259,667
J L Cohen - -
P Bertram --
Note: To aid comparison, the December 2003 shareholdings have been multiplied by the bonus
issue (38.737 per share) which occurred in June 2004, prior to flotation.
There have been no changes in the above interests between 31 December 2004 and the date of
this report.
No Director had any material interest in any contract of significance with the Group during the
period under review. Directors’ Report
DONATIONS
No donations were made to any charitable or
political organisation in the year (2003: nil).
EMPLOYEE INVOLVEMENT
The Group has a policy of providing
employees with information through a
corporate newsletter and regular meetings
which are held between management and
employees to allow a free flow of information
and ideas. Senior employees participate
directly in the success of the business through
the Group bonus scheme. 
In addition, the Group operates a Save-As-
You-Earn share option scheme. 318 current
employees, representing 53% of our eligible
employees as at 31 December 2004, were
members of the scheme, with options over
654,726 shares (1.8% of issued Ordinary
share capital). 
A number of managers have also been
included within the management share
options schemes. 59 managers hold options
over 635,241 shares (1.7% of issued Ordinary
share capital), which are held in an employee
benefit trust.
EQUAL OPPORTUNITIES
The Group is fully committed to a policy that
provides all employees with equality of
opportunity, irrespective of background, for
employment, training, career development and
selection on the basis of ability, qualifications
and suitability for the job. Senior
management, managers and employees are
required to promote equality of opportunity
and to take full account of the policy in their
day-to-day work. Our aim is to recruit the best
staff in the industry, and we are committed to
the principle of maximising every employee’s
potential. In selecting, training and promoting
staff, the Group has to take account of the
physically demanding nature of much of its
work. Employees who become disabled will
be retained, where possible, and re-trained
where necessary.
CREDITOR PAYMENT POLICY
It is the Group’s policy to negotiate with each
of its principal supplier’s terms of trade
appropriate to the business and to operate
within those terms of payment once agreed.
Trade creditor days based on the year end
figures are 72 days (2003: 66 days) for the
Group. The Company has no trade creditors
(2003: nil).
ENVIRONMENTAL POLICY
The Group will ensure that, in satisfying its
customers’ requirements, both the goods and
services supplied and its own housekeeping
comply with legislation and best practice. It
will continually review its environmental
performance across the range of its activities.
16 office2office Annual Report 2004 STATEMENT OF DIRECTORS’
RESPONSIBILITIES
Company law requires the Directors to
prepare financial statements for each financial
year which give a true and fair view of the
state of affairs of the Company and of the
Group and of the profit or loss of the Group
for that period. The Directors are required to
prepare the financial statements on a going-
concern basis, unless it is inappropriate to
presume that the Company will continue in
business.
The Directors confirm that suitable accounting
policies have been used and applied
consistently. They also confirm that
reasonable and prudent estimates have been
made in preparing the financial statements for
the year ended 31 December 2004 and that
applicable accounting standards have been
followed.
The Directors are responsible for keeping
proper accounting records which disclose,
with reasonable accuracy at any time, the
financial position of the Company and of the
Group and to enable them to ensure that the
financial statements comply with the
Companies Act 1985. They are also
responsible for safeguarding the assets of the
Company and of the Group and, hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Company has a website
(www.office2office.biz), which contains up to
date information on Group activities and
published financial results. The maintenance
and integrity of this website is the
responsibility of the Directors. Legislation in
the United Kingdom governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
AUDITORS
The Audit Committee has considered and
recommends the re-appointment of
PricewaterhouseCoopers LLP as auditors. 
A resolution proposing the re-appointment will
be put to the forthcoming Annual General
Meeting.
For and on behalf of the Board
D Rodwell
Company Secretary
14 March 2005                     
Directors’ Report
17 office2office Annual Report 2004 Corporate Governance
STATEMENT OF COMPLIANCE WITH
THE COMBINED CODE
The Directors confirm that in the period
following flotation, the Company has complied
with the provisions of the revised Combined
Code on Corporate Governance issued by the
Financial Reporting Council in July 2003, other
than as disclosed below. The application of
the principles of the Code, in the composition
and operation of the Board, the remuneration
of the Directors, relations with shareholders
and procedures for financial reporting and
internal control are described below.
DIRECTORS AND THE BOARD
The Board operates formally through regular
Board meetings and informally through regular
communication between the Directors. In the
six months following flotation the Board met
six times and delegated specific
responsibilities to Board committees as
described below.
The Board is responsible to the Company’s
shareholders for the management and control
of the Group’s activities, its strategic
objectives, its system of corporate
governance and the stewardship of the
Group’s resources. This is achieved by regular
review of the key activities of the business
through the monthly management accounts,
detailed reports and presentations.
Additionally, the Board receives copies of
analysts’ and brokers’ reports and is updated
on any movements in major shareholdings.
There is also a formal schedule of matters
reserved for consideration and approval by
the Board. The Company Secretary is
responsible to the Board and is available to
individual Directors in respect of Board
procedures. The day-to day operational
management of the Group’s activities is
delegated to the executive Directors. The
executive Directors have specific
responsibilities and have direct responsibility
for all operations and activities.
The Board comprises the Chairman, the Chief
Executive, the Finance Director and two
independent non-executive Directors. The
Chairman’s main other commitments are
disclosed on page 12. The roles of Chairman
and Chief Executive are separate. The
Chairman is responsible for leadership of the
Board, ensuring its effectiveness and setting
its agenda. Once agreed by the Board as a
whole, it is the Chief Executive’s responsibility
to ensure delivery of the strategic and financial
objectives. The Board are satisfied with the
division of responsibility between the
Chairman and Chief Executive Officer. The
Board has not formally agreed a detailed job
specification for the Chief Executive Officer as
they do not regard it as appropriate to do so
given the size of the Group.
Both non-executive Directors are independent
of management and free from any business or
other relationship which could materially
interfere with the exercise of their independent
judgement. 
In accordance with the Company’s Articles,
not more than one third of the Directors are
required to retire at each AGM, the Directors
to do so being those who have been longest
in office since their last appointment or
election. The non-executive Directors are
subject to election at the forthcoming AGM,
being the first General Meeting following their
appointment.
The Board has not undertaken a formal 
and rigorous evaluation of its own and sub-
committees’ performance, but will assess the
collective contribution of the Board of
Directors during 2005.
18 office2office Annual Report 2004 COMMITTEES OF THE BOARD
The Audit Committee's purpose is to assist
the Board in the effective discharge of its
responsibilities for financial reporting and
corporate control. It comprises both
independent non-executive Directors, chaired
by P Bertram. The Committee invites others,
including the Company’s external auditors and
the Finance Director, to attend as appropriate.
A report on its activities is given on page 22.
The Nomination Committee is responsible for
advising the Board and making
recommendations on the size, structure and
composition of the Board and the
appointment of new Directors. The Committee
comprises the Chairman and both
independent non-executive Directors and is
chaired by D J Callear. The Committee has
not met in the period following flotation as
there have not been any Board appointments
to consider.
The Remuneration Committee's principal
responsibilities are to review and make
recommendations on the Group’s overall
remuneration policy, individual remuneration
packages for executive Directors and the
Chairman, salary structure and employment
terms for Senior Management and the terms
and conditions of any Group share scheme.
The Committee comprises both independent
non-executive Directors and is chaired by 
J L Cohen. When necessary, non-committee
members are invited to attend by prior
arrangement with the Remuneration
Committee. A report on its activities is given
on page 24.
The terms of reference for these Committees
can be found on the Company’s website.
DIRECTORS' REMUNERATION
The Remuneration Report on pages 24 to 27
includes details of remuneration policies and
of the remuneration of the Directors.
ATTENDANCE AT MEETINGS
The number of full Board meetings and
Committee meetings attended by each
Director in the six months following flotation
was as follows:
Corporate Governance
19 office2office Annual Report 2004
Board Audit Remuneration Nomination 
Committee Committee Committee
Held Attended Held Attended Held Attended Held Attended
Chairman
D J Callear 6 6 - - - - - -
Executive Directors
R C Peck 6 6 - - - - - -
M A Cunningham 6 6 - - - - - -
Non-executive Directors
J L Cohen 6 6 2 2 3 3 - -
P Bertram 6 6 2 2 3 3 - - Corporate Governance
RELATIONSHIPS WITH
SHAREHOLDERS
The Board considers effective communication
with shareholders, whether institutional
investors, private or employee shareholders,
to be extremely important.
The Company reports formally to shareholders
twice a year, when its half-year and full-year
results are announced and an interim report
and a full report respectively are issued to
shareholders. These reports are posted on the
Company’s website (www.office2office.biz). 
At the same time, executive Directors give
presentations on the results to institutional
investors, analysts and the media in London
and Edinburgh. Copies of major presentations
are also posted on the Company’s website. In
November the Company hosted a site visit at
its Basingstoke warehouse for institutional
investors.
The Company’s Annual General Meeting takes
place in Norwich and formal notification is
sent to shareholders with the Annual Report
at least 20 working days in advance of the
meeting. The Directors are available, formally
during the AGM and informally afterwards, for
questions. Details of the 2005 AGM are set
out in the notice of the meeting enclosed with
this Annual Report.
There is a programme of regular dialogue with
major institutional shareholders and fund
managers. The Chairman and the Senior
Independent Director are always available to
shareholders on all matters relating to
governance.
INTERNAL CONTROL
The Directors are responsible for the Group’s
systems of internal controls and for reviewing
their effectiveness. The internal control
systems are designed to meet the Group’s
needs and address the risks to which it is
exposed. Such systems manage, rather than
eliminate, the risks faced by the business and
can provide only reasonable and not absolute
assurance against material misstatement or
loss.
There is a continuous process for identifying,
evaluating and managing the significant risks
faced by the Group which has been in place
throughout the year under review and up to
the date of approval of this Annual Report.
This process is regularly reviewed by the
Board to ensure that material risks and
problems are identified and appropriate 
action taken at an early stage. 
The key elements of the Group’s procedures
and internal financial control framework are:
• the close involvement of the executive
Directors in all aspects of day-to-day
operations, including regular meetings with
senior staff from all parts of the business to
review all operational aspects of the
business;
• clearly defined responsibilities and limits of
authority. The Board has responsibility for
strategy and has adopted a schedule of
matters which are required to be brought 
to it for decision;
• a comprehensive system of financial
reporting, forecasting and budgeting.
Detailed budgets are prepared annually for
all parts of the business. Reviews occur
through the management structure
culminating in a Group budget, including
forecasts for the next two years, which is
considered and approved by the Board.
20 office2office Annual Report 2004 Financial accounts are prepared monthly and
submitted to the Board to review actual
performance, relative to budget and prior year,
of the Group. Explanations are provided for
significant variances as identified and
investigated. Detailed expense reports with
comparisons against budget are issued
monthly to cost centre managers to assist in
cost control. Variances from budget are
closely monitored, and a comprehensive
annual review of risks across the Group is
produced. The review is followed up by
regular updates to the Board about the
effectivness of internal controls.
In view of the Group’s controls structure
summarised above, and on advice from the
Audit Committee, the Board has resolved that
at the present time there is no need to
establish an internal audit function.
CORPORATE SOCIAL
RESPONSIBILITY
Measures to ensure responsible business
conduct and the identification and
assessment of risks associated with social,
ethical and environmental matters are
managed in conjunction with all other
business risks and reviewed at regular
meetings of the Board and executive
management meetings.
A summary report on the Group’s policies and
targets for corporate social responsibility is set
out on page 13. 
The Board reviews the effectiveness of the
principles of its corporate social responsibility
annually. 
Corporate Governance
21 office2office Annual Report 2004 Audit Committee Report
ROLE OF THE AUDIT COMMITTEE
The Audit Committee is a sub-committee of
the Board whose responsibilities include:
• reviewing the interim and full year financial
statements and results announcements of
the Company and any other formal
announcements relating to the Group's
financial performance and recommending
them to the Board for approval;
• reviewing the Group's systems for internal
financial control and risk management;
• monitoring and reviewing the requirement
for an internal audit function;
• considering the appointment of the external
auditors; overseeing the process for their
selection; and making recommendations to
the Board in relation to their appointment;
• monitoring and reviewing the effectiveness
and independence of the external auditors,
agreeing the nature and scope of their
audit, their remuneration, and considering
their reports on the Group's financial
statements and systems of internal financial
control and risk management; and
• monitoring the Group’s “whistleblowing”
procedures.
COMPOSITION OF THE AUDIT
COMMITTEE
The Audit Committee comprises both
independent non-executive Directors.
Biographical details of the independent
Directors are set out on page 12 and their
remuneration is set out on page 26. The
Chairman of the Audit Committee is 
P Bertram. The Committee invites others,
including the Company's external auditors and
the Finance Director, to attend as appropriate.
At least once each year representatives of the
Company's external auditors meet the Audit
Committee without any executive Directors
present. The Company Secretary, D Rodwell,
is secretary to the Audit Committee.
MAIN ACTIVITIES OF THE AUDIT
COMMITTEE
In the six months since flotation the Audit
Committee has met twice. At its meeting on
10 September 2004 the Committee reviewed
the half-year interim results and presentation
of results to investors, and received reports
from the external auditors on their review. The
Audit Committee met on 17 November 2004
to receive a presentation by the external
auditors setting out their audit approach and
procedures, including matters relating to
scope, auditor independence and audit fees.
At the same meeting the Committee also
reviewed risk management and internal
controls and considered the need for an
internal audit function. The Committee
concluded that, given the internal controls in
place at the present time, there is no need to
establish an internal audit function.
22 office2office Annual Report 2004 INDEPENDENCE OF EXTERNAL
AUDITORS
The Audit Committee keeps under review the
relationship with external auditors including:
• the independence and objectivity of the
external auditors taking into account
relevant UK professional and regulatory
requirements and the relationship with the
auditor as a whole, including the provision
of non-audit services; and
• the consideration of audit fees and fees for
other non-audit services.
The Audit Committee develops and
recommends to the Board the Company's
policy in relation to the provision of non-audit
services by the auditors and ensures that the
provision of such services does not impair the
external auditors’ independence or objectivity.
P Bertram
Chairman of the Audit Committee
14 March 2005
Audit Committee Report
23 office2office Annual Report 2004 Directors’ Remuneration Report
This Report has been prepared in accordance
with the Directors’ Remuneration Report
Regulations 2002. It outlines the membership
and workings of the Remuneration
Committee, together with details of Directors’
remuneration in respect of the year ended 
31 December 2004. In accordance with the
Regulations, a resolution to approve this
Report will be proposed at the forthcoming
Annual General Meeting.
REMUNERATION COMMITTEE AND
ITS TERMS OF REFERENCE
The Remuneration Committee is a sub-
committee of the Board and membership is
confined to non-executive Directors who are
independent of management and free from
any business or other relationship which could
interfere with the exercise of their independent
judgement. The Chairman of the
Remuneration Committee is J L Cohen. The
Committee invites others to attend as
appropriate.
The principal function of the Committee is to
make recommendations to the Board
regarding the Company’s policy on the
remuneration, benefits and terms of
employment of the executive Directors and
the Chairman of the Company. In addition the
Committee assists the Board in ensuring that
the Group’s senior managers are recruited,
developed and remunerated in an appropriate
fashion. Due regard is given to any legal
requirements, the provisions of the Combined
Code, the Listing Rules of the United
Kingdom Listing Authority and the Directors’
Remuneration Report Regulations 2002, in
determining remuneration packages and
policies. During 2005 the Committee will be
reviewing its approach in the light of the latest
guidelines.
The Terms of Reference of the Committee can
be found on the Company’s website. In the
six months since flotation the Remuneration
Committee has met three times.
EXECUTIVE DIRECTORS'
REMUNERATION
Remuneration policy in respect of executive
Directors is designed to ensure that the Group
achieves its potential and increases
shareholder value. In respect of basic salary,
the objective is to ensure that the Group
retains and attracts high calibre executives
with the skills, experience and motivation
necessary to direct and manage the affairs of
the Group. Annual bonuses and long-term
incentive schemes are seen as an important
part of each Director’s total remuneration and
are designed to drive and reward exceptional
performance.
The current remuneration package of the
executive Directors consists of basic salary,
annual bonus, taxable benefits, SAYE option
scheme participation and pension
arrangements. These are described in more
detail below.
The executive Directors’ basic salaries are
reviewed annually by the Committee, taking
into account the performance of the individual,
changes in their responsibilities, information
from independent remuneration consultants'
sources on levels of salary for similar jobs and
the Group's performance against financial
objectives.
The annual cash bonus system for executive
Directors in 2004 was based on operating
profit performance against budget and
individual personal objectives, with payment
dependent upon the achievement of pre-
agreed targets. These financial goals for the
year and personal performance objectives
determined the bonus payable.
Each year the Committee reviews the
arrangements and may recommend different
targets or performance conditions to keep the
objectives aligned with shareholder interests.
Its current view is that growth in earnings per
share (based on the Institute of Investment
Management and Research (IIMR) definition of
headline earnings) will provide the best
alignment as a target. The maximum bonus to
executive Directors is 60% of basic salary for
exceptional performance.
In 2004, R C Peck and M A Cunningham both
earned a bonus of 25% of basic salary based
upon objectives set at the start of the year.
24 office2office Annual Report 2004 Pension contributions are made to the
personal pension schemes of the executive
Directors. A contribution of 15% of R C Peck’s
basic salary and 10% of M A Cunningham’s
basic salary is paid to their personal pension
schemes.
The executive Directors have service
agreements dated 23 June 2004 with the
Company. The service agreement for each
executive Director is terminable on 6 months’
notice by either party and contains the right
for the Company to make a payment in lieu of
salary and benefits (excluding bonus) for any
unexpired period of notice. 
SAVE AS YOU EARN SHARE OPTION
SCHEME
The Company operates an Inland Revenue
approved Save-As-You-Earn share option
scheme (“SAYE”) under which employees are
granted an option to purchase shares in the
Company in either three or five years time,
dependent upon their entering into a contract
to make monthly contributions to a savings
account over the relevant period. These
savings are used to fund the option exercise.
The exercise price for the SAYE options
granted in 2004 was at 20% discount to
market value at the date of invitation. This
scheme is open to all Group employees
including executive Directors, and
performance conditions are not applied to the
exercise of SAYE options.
MANAGEMENT SHARE OPTION
SCHEMES
Two share option schemes, granting options
over Ordinary shares, were introduced on 8
October 2004 to reward key employees for
their contribution towards the achievement of
the Group’s long term goals. The executive
Directors are not included in these schemes.
The shares under option were issued
immediately prior to flotation to the employee
benefit trust and full details were provided in
the prospectus and therefore did not give rise
to further dilution.
The “Senior Managers Scheme” applies to 13
managers, with average option holdings of
33,319 shares. There are no performance
conditions attached to these options.
The “Managers Scheme” applies to 46
managers, with average holdings of 4,393
shares. Financial performance hurdles have
been applied to these options based on
turnover and profit targets and in some
instances personal performance conditions.
INCENTIVE ARRANGEMENTS
The Company has an approved Enterprise
Management Incentive (EMI) share option
scheme in place, under which no options
have been granted. The Remuneration
Committee is of the opinion that this scheme
will not achieve its objectives of motivating
and retaining key employees. Accordingly the
Remuneration Committee will be reviewing
long term incentive arrangements in the
coming months with a view to recommending
to the Board an alternative to the EMI
scheme. It will consult with shareholders
during this review.
NON-EXECUTIVE DIRECTORS AND
CHAIRMAN
The non-executive Directors’ and Chairman’s
service agreements, dated 23 June 2004, are
for a fixed term of three years and are
terminable on three months’ notice by either
the Company or the relevant Director or
Chairman. The non-executive Directors’ and
Chairman's remuneration are non-
pensionable. The remuneration of the non-
executive Directors is determined by the
Board of Directors to reflect the time
commitment and responsibilities of the role.
The remuneration of the Chairman is
determined by the Remuneration Committee.
The non-executive Directors and Chairman
are not eligible to participate in any of the
Company’s share option or Group bonus
schemes. The Chairman was, however,
granted options prior to the flotation of the
Company, as described on page 27.
PERFORMANCE GRAPH
The graph on page 26 shows office2office’s
total shareholder return performance
compared to the FTSE Small Cap index of
which office2office is a constituent member.
The values indicated in the graph show the
share price growth plus reinvested dividends
from a £100 hypothetical holding of Ordinary
shares in office2office plc and in the index at
the start of the period.
Directors’ Remuneration Report
25 office2office Annual Report 2004 Directors’ Remuneration Report
The following information is subject to audit
DIRECTORS' REMUNERATION 
The emoluments of the Directors are shown below:
2004 2004 2004 2004 2003
Salary Allowances Annual Total Total
/fees and bonus
Benefits
in kind
£000 £000 £000 £000 £000
Chairman
D J Callear 69 - - 69 63
Executive
R C Peck 173 12 43 228 245
M A Cunningham 119 11 30 160 163
G W Streetley (resigned 7 June 2004) 67 5 - 72 190
Total 359 28 73 460 598
Non-executive
J L Cohen (appointed 23 June 2004) 17 - - 17 -
P Bertram (appointed 23 June 2004) 18 - - 18 -
J K A Barbour-Smith (resigned 7 June 2004) -----
Total 35 - - 35 -
Other allowances and benefits in kind provided to executive Directors comprise car benefits, family private health
care, permanent health insurance and life assurance at the rate of four times annual salary.
G W Streetley resigned as a statutory Director on 7 June 2004, although he continues as the Group
Business Development Director with Group–wide responsibility for sales and marketing.
DIRECTORS' PENSIONS
Pension contributions reflect amounts payable to personal defined contribution pension schemes.
The Directors’ contributions paid/payable to personal pension schemes in the year are shown below:
Pension contribution
2004 2003
D J Callear - 25
R C Peck 22 16
M A Cunningham 11 8
G W Streetley (resigned 7 June 2004) 5 11
38 60
26 office2office Annual Report 2004
160
140
120
100
80
Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04
ftse small cap
29th June 2004 to 31st December 2004
office2office DIRECTORS' SHARE OPTIONS
Beneficial options granted to Directors prior to flotation of the Company at nil cost were as follows:
Exercise
price per
1 Jan 04 Granted Exercised 31 Dec 04 share
D J Callear - 81,421* 81,421 - 2.52p
*Reflecting the bonus issue of 38.737 Ordinary shares per Ordinary share.
Mr D J Callear exercised his options on flotation for a gain of £142,880. The market price on the date of exercising
the option was 178.0p. There were no performance conditions attached to the exercise of the options. The options
were granted on 25 June 2004 and exercised on 29 June 2004.
Beneficial options granted to Directors under the Company's SAYE scheme at nil cost were as follows: 
Exercise
price per Exercisable Expiry
1 Jan 04 Granted Exercised 31 Dec 04 share from date
R C Peck - 5,521 - 5,521 171.6p 01.12.07 31.05.08
M A Cunningham - 5,521 - 5,521 171.6p 01.12.07 31.05.08
All of the above options were granted on 1 October 2004.
The closing market price of Ordinary shares at 31 December 2004 was 242.5p. Since flotation, the shares traded in
the range 178.0p to 249.5p.
J L Cohen
Chairman of the Remuneration Committee
14 March 2005
Directors’ Remuneration Report
27 office2office Annual Report 2004
DIRECTORS' INTERESTS
Directors’ interests are shown on page 15 in the Directors’ Report. We have audited the financial statements
which comprise the consolidated profit and
loss account, the consolidated and Company
balance sheets, the consolidated cash flow
statement, the consolidated statement of total
recognised gains and losses, the reconciliation
of movement in Group shareholders’ funds
and the related notes. We have also audited
the disclosures required by Part 3 of Schedule
7A to the Companies Act 1985 contained in
the Directors' Remuneration Report ('the
auditable part').
RESPECTIVE RESPONSIBILITIES OF
DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the
Annual Report and the financial statements in
accordance with applicable United Kingdom
law and accounting standards are set out in
the Statement of Directors’ Responsibilities.
The Directors are also responsible for
preparing the Directors’ Remuneration Report.
Our responsibility is to audit the financial
statements and the auditable part of the
Directors’ Remuneration Report in accordance
with relevant legal and regulatory requirements
and United Kingdom Auditing Standards
issued by the Auditing Practices Board. This
report, including the opinion, has been
prepared for and only for the Company's
members as a body in accordance with
Section 235 of the Companies Act 1985 and
for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for
any other purpose or to any other person to
whom this report is shown or into whose
hands it may come save where expressly
agreed by our prior consent in writing.
We report to you our opinion as to whether
the financial statements give a true and fair
view and whether the financial statements and
the auditable part of the Directors’
Remuneration Report have been properly
prepared in accordance with the Companies
Act 1985. We also report to you if, in our
opinion, the Directors’ Report is not consistent
with the financial statements, if the Company
has not kept proper accounting records, if we
have not received all the information and
explanations we require for our audit, or if
information specified by law regarding
Directors’ remuneration and transactions is 
not disclosed.
We read the other information contained in the
Annual Report and consider the implications
for our report if we become aware of any
apparent misstatements or material
inconsistencies with the financial statements.
The other information comprises the Financial
Highlights, the Chairman’s Statement, the
Chief Executive’s Review, the Financial
Review, the Statement of Corporate Social
Responsibility, the Directors’ Report, the
Corporate Governance Statement and the
unaudited part of the Directors’ Remuneration
Report.
We review whether the Corporate Governance
Statement reflects the Company’s compliance
with the nine provisions of the 2003 FRC
Combined Code specified for our review by
the Listing Rules of the Financial Services
Authority, and we report if it does not. We are
not required to consider whether the Board’s
statements on internal control cover all risks
and controls, or form an opinion on the
effectiveness of the Group’s corporate
governance procedures or its risk and control
procedures. 
Report of the Independent Auditors
28 office2office Annual Report 2004 BASIS OF AUDIT OPINION
We conducted our audit in accordance with
auditing standards issued by the Auditing
Practices Board. An audit includes
examination, on a test basis, of evidence
relevant to the amounts and disclosures in the
financial statements and the auditable part of
the Directors’ Remuneration Report.
It also includes an assessment of the
significant estimates and judgements made by
the Directors in the preparation of the financial
statements, and of whether the accounting
policies are appropriate to the Company's
circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to
obtain all the information and explanations
which we considered necessary in order to
provide us with sufficient evidence to give
reasonable assurance that the financial
statements and the auditable part of the
Directors’ Remuneration Report are free from
material misstatement, whether caused by
fraud or other irregularity or error. In forming
our opinion we also evaluated the overall
adequacy of the presentation of information in
the financial statements.
In our opinion:
• the financial statements give a true and fair
view of the state of the Company and
Group’s affairs at 31 December 2004 and
the profit and cash flows of the Group for
the year then ended; 
• the financial statements have been properly
prepared in accordance with the
Companies Act 1985; and
• those parts of the Directors' Remuneration
Report required by Part 3 of Schedule 7A
to the Companies Act 1985 have been
properly prepared in accordance with the
Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered
Auditors
London, 14 March 2005
Report of the Independent Auditors
29 office2office Annual Report 2004 Consolidated Profit and Loss Account
for the year ended 31 December 2004
2004 2004 2004 2003 2003 2003
Before Goodwill After Before Goodwill After
goodwill amortisation goodwill goodwill amortisation goodwill
amortisation and amortisation amortisation and amortisation
and exceptional and and exceptional and
exceptional costs exceptional exceptional costs exceptional
costs costs costs costs
Note £000 £000 £000 £000 £000 £000
Turnover 1 141,769 - 141,769 125,554 - 125,554
Operating profit:
• Excluding goodwill 10,320 - 10,320 7,698 - 7,698
amortisation, share option
costs and exceptional
costs
• Goodwill amortisation - (690) (690) - (690) (690)
• Share option costs 23 (216) - (216) -- -
• Exceptional costs:
- relating to listing on the 
London Stock Exchange 3 - (3,324) (3,324) -- -
- other 3 --- - (92) (92)
Operating profit 2, 4 10,104 (4,014) 6,090 7,698 (782) 6,916
Net interest payable          6 (675) - (675) (896) - (896)
Profit on ordinary activities 
before taxation 1 9,429 (4,014) 5,415 6,802 (782) 6,020
Taxation on profit 
on ordinary activities 7 (2,856) 250 (2,606) (2,022) 28 (1,994)
Profit on ordinary activities 
after taxation 6,573 (3,764) 2,809 4,780 (754) 4,026
Dividends-including
non-equity 8 (2,355) (7,888)
Transfer to/(from) reserves 
for the period 22 454 (3,862)
Earnings per Ordinary share:
Basic 10 16.8p 5.7p 12.0p 9.7p
Diluted 10 16.6p 5.6p 12.0p 9.7p
All amounts relate to continuing operations.
30 office2office Annual Report 2004 Group Company
2004 2003 2004 2003
Note £000 £000 £000 £000
Fixed assets
Intangible assets 11 11,033 11,723 - -
Tangible assets 12 1,313 1,626 - -
Investments 13 - - 5,586 5,556
12,346 13,349 5,586 5,556
Current assets
Stocks 14 6,689 6,415 - -
Debtors 15 14,519 13,472 5,970 2,453
Cash at bank and in hand 807 - 320 13
22,015 19,887 6,290 2,466
Creditors: amounts falling due within one year 17 (30,230) (31,397) (1,549) (646)
Net current (liabilities)/assets (8,215) (11,510) 4,741 1,820
Total assets less current liabilities 4,131 1,839 10,327 7,376
Creditors: amounts falling due after 
more than one year 18 (206) (271) - -
Provision for liabilities and charges 20 (653) (703) - -
Net assets 1 3,272 865 10,327 7,376
Capital and reserves
Called up share capital 21 363 38 363 38
Share premium account 22 5,009 3,722 5,009 3,722
Profit and loss account 22 (2,100) (2,895) 4,955 3,616
Total shareholders’ funds                                 3,272 865 10,327 7,376
The financial statements, comprising the consolidated profit and loss account, the consolidated and parent
Company balance sheets, the consolidated cash flow statement, the consolidated statement of total recognised
gains and losses, the reconciliation of movement in Group shareholders’ funds and the related notes were approved
by the Board of Directors on 14 March 2005.
D J Callear M A Cunningham
Chairman Finance Director
14 March 2005 14 March 2005
Consolidated and Parent Company
Balance Sheets 
as at 31 December 2004
31 office2office Annual Report 2004 Consolidated Cash Flow Statement
for the year ended 31 December 2004
2004 2003
Note £000 £000
Operating activities
Net cash inflow from operating activities before exceptional costs 14,043 9,995
Cash outflow relating to exceptional costs (3,181) (92)
Net cash inflow from operating activities 25 10,862 9,903
Returns on investments and servicing of finance
Interest received 61 76
Interest paid (701) (779)
Interest element of finance lease repayments (35) (21)
Non-equity dividends paid to:
Preference shareholders (126) (211)
A Ordinary shareholders (1,372) (4,502)
Net cash outflow from returns on investments and servicing of finance (2,173) (5,437)
Taxation (2,266) (630)
Capital expenditure and financial investment
Purchase of tangible fixed assets (272) (342)
Net cash outflow for capital expenditure and financial investment (272) (342)
Equity dividends paid to shareholders - (3,043)
Cash inflow before financing 6,151 451
Financing
Issue of ordinary share capital 5,010 25
Expenses paid in connection with share issue (388) -
Redemption of Preference shares (3,010) -
Capital element of finance lease repayments (137) (36)
(Repayment of)/increase in borrowings (423) 423
Repayment of loan notes - (3,201)
Net cash inflow/(outflow) from financing 1,052 (2,789)
Increase/(decrease) in cash 26 7,203 (2,338)
Reconciliation to net funds/(overdraft)
Net overdraft at 1 January (6,396) (4,058)
Increase/(decrease) in net cash 7,203 (2,338)
Net cash/(overdraft) at 31 December 807 (6,396)
Invoicing discounting facility - (423)
Finance leases (311) (400)
Net funds/(debt) 26 496 (7,219)
32 office2office Annual Report 2004 2004 2003
£000 £000
Profit for the financial year 2,809 4,026
Currency translation differences on foreign currency net investments 7 -
Total recognised gains and losses relating to the year 2,816 4,026
Reconciliation of Movement in 
Group Shareholders’ Funds
for the year ended 31 December 2004
2004 2003
£000 £000
Profit for the financial year 2,809 4,026
Dividends (2,355) (7,888)
Retained profit for the financial year 454 (3,862)
New share capital issued 5,010 25
Other recognised gains and losses relating to the year 7 -
Costs associated with issue of Ordinary shares (388) -
FRS20 share based compensation expense 334 -
Redemption of Preference shares (3,010) -
Net change in shareholders’ funds 2,407 (3,837)
Shareholders’ funds at 1 January 865 4,702
Shareholders’ funds at 31 December 3,272 865
Shareholders’ funds are attributable to:
Equity interests 3,272 (886)
Non equity interests - 1,751
3,272 865
Consolidated Statement of Total Recognised 
Gains and Losses
for the year ended 31 December 2004
33 office2office Annual Report 2004 Principal Accounting Policies
for the year ended 31 December 2004
The principal accounting policies adopted in
the preparation of these financial statements
are set out below.
BASIS OF PREPARATION
These financial statements are prepared on
the going concern basis, under the historical
cost convention, in accordance with the
Companies Act 1985 and applicable
accounting standards. The principal
accounting policies have been applied
consistently.
BASIS OF CONSOLIDATION
The consolidated financial statements include
the financial statements of office2office plc
and all of its subsidiaries, made up to 
31 December 2004. The results of
subsidiaries and businesses acquired are
included in the consolidated profit and loss
account from the date of acquisition or when
control is deemed to pass to the Group. Intra-
Group sales and profits are eliminated fully on
consolidation. 
TURNOVER
Turnover represents the amounts derived from
the provision of goods and services, which fall
within the Group’s ordinary activities exclusive
of VAT. Turnover is recognised on delivery at
which point the obligations of the Group have
been satisfied.  
LEASING COMMITMENTS
Assets held under finance leases are
capitalised in the balance sheet and are
depreciated over their useful lives or the lease
term if shorter. The capital elements of future
obligations under finance leases are included
as liabilities in the balance sheet. The interest
element of the rental obligations is charged to
the profit and loss account over the period of
the lease and represents a constant
proportion of the balance of capital
repayments outstanding. Rentals payable
under operating leases are charged to the
profit and loss account on a straight-line basis
over the term of the lease.
DEFERRED TAXATION
In accordance with Financial Reporting
Standard 19, Deferred Tax, an undiscounted
provision is made for deferred tax using the
incremental liability method for timing
differences between profits as stated in the
financial statements and as computed for
taxation purposes. Deferred tax assets are
recognised to the extent that they are
regarded as recoverable.
GOODWILL
Goodwill on acquisitions is capitalised and
amortised over the Directors’ estimate of its
useful economic life. Goodwill, which arose on
the acquisition of Banner Business Supplies
Group Ltd, is considered to have a useful
economic life of 20 years.
34 office2office Annual Report 2004 TANGIBLE FIXED ASSETS
The cost of tangible fixed assets is their
purchase cost, together with any incidental
costs of acquisition. Depreciation commences
in the month that the assets are fully installed
and commissioned and is provided on a
straight line basis on all tangible fixed assets
at rates calculated to write off the cost, less
estimated residual value, of each asset over
its expected useful life, as follows:
Leasehold land and buildings
- over the lease term
Plant and machinery
- over 4 to 15 years
Other assets
- over 3 to 10 years.
STOCKS
Stocks are stated at the lower of cost 
incurred in bringing each product to its
present location and condition and net
realisable value.
Net realisable value is based on estimated
selling price less further costs expected to 
be incurred to completion and disposal.
REBATES RECEIVABLE FROM
SUPPLIERS
Volume related rebates receivable from
suppliers are credited to the carrying value of
the stock to which they relate. Where a rebate
agreement with a supplier covers more than
one year the rebates are recognised in the
period in which they are earned.
FOREIGN CURRENCIES
Transactions in foreign currencies are
recorded at the rate ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the rate of exchange ruling at
the balance sheet date. All differences are
taken to the profit and loss account.
The results of subsidiaries who operate in
currencies other than sterling are translated
using the closing rate/net investment method
to enable consolidation in the Group financial
statements. Exchange differences arising from
the retranslation of the results and opening
net assets of these subsidiaries are taken to
reserves. 
SHARE BASED PAYMENTS
In accordance with Financial Reporting
Standard 20, Accounting for Share-Based
Payments, a non-cash charge to the profit
and loss account in respect of share option
charges has been reflected in respect of the
fair value to the employee of the share options
granted. In determining this charge, an option-
pricing model (Black-Scholes model) has been
applied with the resulting cost spread over the
vesting period of the option. 
In accordance with the provisions of UITF
Abstract 25, National Insurance Contributions
on share option gains, the Group makes
charges to the profit and loss account for the
potential employer’s National Insurance liability
on options granted, spread over the vesting
period of those options. 
In accordance with UITF Abstract 38,
Accounting for ESOP Trusts, shares
purchased through Employee Share Option
Trusts (ESOPs) are held at cost and treated as
Treasuary Shares and are taken as a
deduction from shareholders’ equity. The right
to a dividend on these shares has been
waived.
Principal Accounting Policies
for the year ended 31 December 2004
35 office2office Annual Report 2004 Principal Accounting Policies
for the year ended 31 December 2004
PENSIONS
The Group maintains a defined benefit
pension scheme for former employees of 
Her Majesty’s Stationery Office, which requires
contributions to be made to a separately
administered fund. The scheme currently has
166 members and is closed to new members.
The scheme is administered by Trustee
Directors of Banner Business Supplies
(Pensions) Ltd, which is a wholly owned
subsidiary of office2office (UK) plc.
Contributions are invested with a fund
manager and are charged to the profit and
loss account so as to spread the cost of
pensions over the employees’ working lives
within the Group. The regular cost is attributed
to individual years using the projected unit
method. Variations in pension cost, which are
identified as a result of actuarial valuations, are
amortised over the average expected
remaining working lives of employees in
proportion to their expected remuneration
costs. Differences between the amounts
funded and the amounts charged to the profit
and loss account are treated as either
provisions or prepayments in the balance
sheet.
Since 30 September 1996 all new employees
have been eligible to join the Group personal
pension scheme, which is a defined
contribution scheme. Contributions to defined
contribution arrangements are charged to the
profit and loss account in the period to which
they relate.
In November 2000, the Accounting Standards
Board issued Financial Reporting Standard
17, Retirement Benefits. The Company is
adopting the transitional arrangements
prescribed in the standard. The financial
statements therefore reflect the transitional
disclosures required by the standard.
RELATED PARTY TRANSACTIONS
The Group has taken advantage of the
exemption available under Financial Reporting
Standard 8, Related Party Transactions, not to
disclose transactions with wholly owned
subsidiaries.
36 office2office Annual Report 2004 1. GEOGRAPHICAL ANALYSIS
Turnover Profit before taxation Net assets
2004 2003 2004 2003 2004 2003
£000 £000 £000 £000 £000 £000
United Kingdom 140,073 124,413 5,863 6,655 2,964 762
Republic of Ireland 1,696 1,141 227 261 308 103
141,769 125,554 6,090 6,916 3,272 865
Net interest (675) (896)
Profit before taxation 5,415 6,020
Turnover by geographical area is stated by origin which is not materially different from turnover by destination.
Under SSAP 25, Segmental Reporting, there are no individual reportable segments.  
2. OPERATING PROFIT RECONCILIATION
2004 2003
£000 £000
Turnover 141,769 125,554
Cost of sales (95,111) (85,387)
Gross profit 46,658 40,167
Distribution costs (18,208) (16,364)
Administrative expenses (22,360) (16,887)
Operating profit 6,090 6,916
3. EXCEPTIONAL COSTS
An exceptional charge of £3,324,000 (2003: £92,000) has been included in operating profit.  
This comprises:
2004 2003
£000 £000
Flotation costs - professional fees 2,526 -
Flotation costs - share reward and bonuses crystallised on flotation 798 -
Severance payments -92
3,324 92
Exceptional costs are part of administrative expenses.
Notes to the Financial Statements
for the year ended 31 December 2004
37 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
4. OPERATING PROFIT
Operating profit is stated after charging:
2004 2003
£000 £000
Depreciation of tangible fixed assets:
owned 562 531
leased 71 57
Amortisation of goodwill 690 690
Operating lease rentals:
plant and machinery 1,748 1,368
other 1,446 1,377
Auditors’ remuneration in respect of:
audit services (Company £2,000; 2003: £2,000) 44 34
non-audit services - accounting advice 20 -
non-audit services - share option planning 24 -
non-audit services - taxation compliance 16 8
- taxation advisory 14 -
5. EMPLOYEE INFORMATION
The employment costs (including Directors) during the year was as follows:
2004 2003
£000 £000
Wages and salaries 17,547 16,195
Social security costs 1,756 1,494
Other pension costs (see Note 29) 698 704
20,001 18,393
The average monthly number of employees (including Directors) during the year was as follows:
2004 2003
No. No.
Sales and marketing 271 251
Distribution 436 404
Administration 67 62
774 717
A detailed numerical analysis of Directors' remuneration and share options forms part of these financial statements.
This analysis is included in the Directors' Remuneration report on pages 24 to 27 and shows the highest paid
Director and the number of Directors accruing benefits under money-purchase personal pension schemes.
38 office2office Annual Report 2004 6. NET INTEREST PAYABLE AND SIMILAR CHARGES
2004 2003
£000 £000
Amortisation of loan note issue costs - 172
Interest payable on loans 74 35
Other financial charges 627 744
Finance lease interest 35 21
736 972
Bank interest receivable (61) (76)
675 896
7. TAXATION
a)   Analysis of tax charge in the year
2004 2003
£000 £000
Current tax
United Kingdom corporation tax at 30% (2003: 30%) 2,422 1,730
Republic of Ireland corporation tax at 12.5% (2003: 12.5%) 5 20
Total current tax 2,427 1,750
Deferred tax
Origination and reversal of timing differences (see Note 16) 179 244
Tax on profit on ordinary activities 2,606 1,994
b)   Factors affecting tax charge for the year
The current tax charge for the year differs from the standard rate of Corporation Tax of 30%. 
The differences are explained below.
2004 2003
£000 £000
Profit on ordinary activities before taxation 5,415 6,020
Profit on ordinary activities at the standard rate of UK corporation 
tax of 30% (2003: 30%) 1,625 1,806
Tax effects (at 30%) of:
Goodwill amortisation not deductible for tax purposes 207 207
Capital allowances in excess of qualifying depreciation for the period (48) (90)
Short term timing differences 24 (11)
Other permanent differences 774 (2)
Utilisation of losses brought forward (155) (160)
Current tax charge for the year 2,427 1,750
Factors affecting future tax rates:
Other than goodwill not being deductible for tax purposes and the further utilisation of losses brought forward, there
should be no significant differences between the statutory and effective tax rate.
Notes to the Financial Statements
for the year ended 31 December 2004
39 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
8. DIVIDENDS
2004 2003
£000 £000
Equity shares:
Ordinary
Interim dividend paid nil (2003: 857p) per share - 2,893
Final dividend proposed 4.2p (2003: nil) per share 1,500 -
Non-equity shares:
A Ordinary
Preferred dividend paid nil (2003: 7.0p) per share - 33
Participating dividend paid 152.1p (2003: 134.4p) per share 729 644
Interim dividend paid nil (2003: 857p) per share - 4,107
Preference
Final dividend paid 126 211
2,355 7,888
9. PROFITS OF HOLDING COMPANY  
Of the profit for the financial year, a profit of £3,360,000 (2003: £10,677,000) is dealt with in the financial statements
of office2office plc. The Directors have taken advantage of the exemption available under section 230 of the
Companies Act 1985 and not presented a profit and loss account for the Company alone.
40 office2office Annual Report 2004 10. EARNINGS PER SHARE
Earnings, prior to flotation, were attributable to both the Ordinary and A Ordinary shares (“total Ordinary shares”).
However, under the definition of FRS 4, the A Ordinary shares are classified as non-equity.  Earnings attributable to
Ordinary shares are allocated on a proportional basis for the purposes of calculating basic earnings per equity share.
The calculation of basic earnings per share is based on profits on ordinary activities after taxation of £2,809,000
(2003: £4,026,000) less participating and preference non-equity share dividends paid of £855,000 (2003: £888,000).
The weighted average number of Ordinary and A Ordinary shares in issue and ranking for a dividend, excluding
those held by the employee benefit trust, during the period are as follows:
2004 2003
Weighted average number of shares: No. % No. %
Ordinary shares (equity) 25,047,860 72.8 13,389,591 41.3
A Ordinary shares (non-equity) 9,364,348 27.2 19,040,840 58.7
Total Ordinary shares 34,412,208 100.0 32,430,431 100.0
Dilutive impact of share options 202,471 -
Total diluted shares 34,614,679 32,430,431
£000 £000
Earnings attributable to total Ordinary shares 1,954 3,138
Goodwill amortisation 690 690
Exceptional costs, net of tax 3,074 64
Earnings attributable to total Ordinary shares before 5,718 3,892
goodwill amortisation and exceptional costs
pence pence
Basic earnings per share attributable to equity shares 5.7 9.7
Goodwill amortisation 2.1 2.1
Exceptional costs, net of tax 9.0 0.2
Earnings per share attributable to equity shares before 16.8 12.0 
goodwill amortisation and exceptional costs
pence pence
Diluted earnings per share attributable to equity shares 5.6 9.7
Goodwill amortisation 2.1 2.1
Exceptional costs, net of tax 8.9 0.2
Diluted earnings per share attributable to equity shares, 16.6 12.0 
before goodwill amortisation and exceptional costs 
The comparatives for 2003 have been restated to reflect the bonus issue in June 2004, details of which are
provided in note 21.
Supplementary basic and diluted earnings per share are presented before goodwill amortisation and exceptional
costs so that the effect of these items can be fully appreciated.
Notes to the Financial Statements
for the year ended 31 December 2004
41 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
11. INTANGIBLE FIXED ASSETS
Group
Intangible fixed assets represent goodwill arising on consolidation.
Cost £000
As at 1 January 2004 and as at 31 December 2004 13,793
Amortisation
As at 1 January 2004 (2,070)
Amortisation in the year (690)
As at 31 December 2004 (2,760)
Net book value at 31 December 2004 11,033
Net book value at 31 December 2003 11,723
12. TANGIBLE FIXED ASSETS
Group
Short Plant & Office Assets in Total
leasehold machinery equipment the course
land & of
buildings construction
£000 £000 £000 £000 £000
Cost
As at 1 January 2004 1,124 689 1,401 115 3,329
Additions at cost 8 60 241 11 320
Transfers 25 - 90 (115) -
As at 31 December 2004 1,157 749 1,732 11 3,649
Accumulated depreciation 
As at 1 January 2004 (404) (397) (902) - (1,703)
Charge for the year (102) (92) (439) - (633)
As at 31 December 2004 (506) (489) (1,341) - (2,336)
Net book value at 31 December 2004 651 260 391 11 1,313
Net book value at 31 December 2003 720 292 499 115 1,626
The net book value of fixed assets held under finance leases was £346,000 (2003: £369,000) for the Group with
related depreciation provided in the year of £71,000 (2003: £57,000).
Company
The Company has no tangible fixed assets.
42 office2office Annual Report 2004 13. INVESTMENT IN SUBSIDIARIES
Company 2004 2003
£000 £000
As at 1 January 5,556 5,556
Additions at cost 30 -
As at 31 December 5,586 5,556
Details of the subsidiaries are as follows:
Name of Company Nature of business Country of % of equity
incorporation and votes
held
office2office (UK) plc Non trading holding company England 100%
Banner Business Supplies Ltd* **see below England 100%
Banner Business Supplies (Pensions) Ltd* Non trading - trustee for pension 
scheme only England 100%
first2office Ltd* **see below England 100%
esp2office Ltd* **see below England 100%
image2office Ltd* Print management services England 100%
Banner Business Supplies (Ireland) Ltd **see below Republic of 100%
Ireland
*held by office2office (UK) plc
**supplying office supplies, office furniture and office equipment
14. STOCK
Group 2004 2003
£000 £000
Finished goods and goods for resale 6,689 6,415
The difference between cost of goods purchased or production cost of stocks and their replacement cost is not
material.
Company
The Company has no stock.
Notes to the Financial Statements
for the year ended 31 December 2004
43 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
15. DEBTORS
Group Company
2004 2003 2004 2003
£000 £000 £000 £000
Trade debtors 10,640 10,204 - -
Other debtors 2 6 - -
Owed by other Group companies - - 5,838 2,453
Prepayments and accrued income 2,644 1,850 - -
Deferred tax (see Note 16) 1,233 1,412 132 -
14,519 13,472 5,970 2,453
With the exception of deferred tax, all of the above amounts are due within one year.
16. DEFERRED TAXATION
The deferred taxation recognised in the financial statements is as follows:-
Group Company
2004 2003 2004 2003
£000 £000 £000 £000
Tax effect of timing differences:
Excess of qualifying depreciation over tax allowances 346 394 - -
Other short term timing differences 782 758 65 -
Unutilised tax losses carried forward 105 260 67 -
1,233 1,412 132 -
At 1 January 1,412 1,656 - -
(Charged)/credited to the profit and loss account (179) (244) 132 -
At 31 December 1,233 1,412 132 -
17. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
2004 2003 2004 2003
£000 £000 £000 £000
Bank overdraft - 6,396 - -
Loans - 423 - -
Obligations under finance leases (see Note 19) 105 129 - -
Trade creditors 13,427 10,345 - -
Corporation tax 1,281 1,120 - -
Taxation and social security 1,889 2,112 24 -
Accruals and deferred income 12,028 10,229 24 2
Amounts owed to other Group companies - - 1 1
Proposed dividend 1,500 643 1,500 643
30,230 31,397 1,549 646
44 office2office Annual Report 2004 18. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2004 2003 2004 2003
£000 £000 £000 £000
Obligations under finance leases (see Note 19) 206 271 - -
19. OBLIGATIONS UNDER LEASES
Group
Annual commitments under non-cancellable operating leases are as follows:
Land & buildings Other
2004 2003 2004 2003
£000 £000 £000 £000
Operating leases which expire:
Within one year - 53 449 37
Between two and five years 164 121 1,060 1,521
Over five years 1,312 1,206 - 24
1,476 1,380 1,509 1,582
Plant & machinery
2004 2003
£000 £000
Total Total
Obligations under finance leases:
Due within one year 105 129
Due between two and five years 202 271
Due after five years 4 -
Due after one year 206 271
311 400
Company
The Company has no obligations under leases.
Notes to the Financial Statements
for the year ended 31 December 2004
45 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
20. PROVISION FOR LIABILITIES AND CHARGES
Group Pension costs
2004 2003
£000 £000
Within one year 50 50
Between two and five years 200 200
After five years 403 453
653 703
Being the pension and past service deficit provision held in Banner Business Supplies Ltd. 
2004 2003
£000 £000
Provision as at 1 January 703 774
Released to profit and loss account in the year (50) (71)
Provision at 31 December 653 703
Company
The Company has no provisions.
21. SHARE CAPITAL
2004 2003
Authorised No. £ No. £
A Ordinary shares of 1p each -- 479,167 4,792
Ordinary shares of 1p each 50,000,000 500,000 354,167 3,542
Deferred shares of £1 each -- 50,000 50,000
Preference shares of 1p each -- 3,010,416 30,104
50,000,000 500,000 3,893,750 88,438
2004 2003
Allotted, called up and fully paid No. £ No. £
A Ordinary shares of 1p each -- 479,167 4,792
Ordinary shares of 1p each 36,308,984 363,090 337,500 3,375
Preference shares of 1p each -- 3,010,416 30,104
36,308,984 363,090 3,827,083 38,271
A Ordinary shares carried a preferred dividend of 7% and a cumulative participating dividend of 15% (inclusive of the
preferred dividend). The preferred dividend was payable half yearly in arrears on 30 June and 31 December. 
The Preference shares carried a cumulative preferred dividend of 8.5%. The dividend accrued on a daily basis and
was payable half yearly on 30 June and 31 December each year. Preference shares carried no voting rights.
Under the Companies Act 1985, the A Ordinary share capital was classed as equity share capital. However, under
the definition in Financial Reporting Standard 4 the A Ordinary shares were classed as non-equity.
Prior to the bonus issue and subsequent flotation, 10,382 Ordinary shares were issued to senior managers at a
price of £1 per share and 15,986 Ordinary shares were allotted and issued to an Employee Benefit Trust at a price
of 1p per share, the cost of which has been reflected as a debit to reserves. The Preference shares were redeemed
at a value of £1 per share. A Ordinary shares were converted to Ordinary shares on a 1 for 1 basis, following this
there was a bonus issue of 38.737 Ordinary shares per Ordinary share. 2,808,984 Ordinary shares were issued at
the time of flotation, raising £5 million.
On winding up, the Ordinary shareholders are entitled to the amount paid up on the shares, including any share
premium and any surplus available for distribution. 
46 office2office Annual Report 2004 22. RESERVES
Group Company
Share Profit and Share Profit and
Premium loss account Premium loss account
£000 £000 £000 £000
Balance at 1 January 2004 3,722 (2,895) 3,722 3,616
Profit for the year - 2,809 - 3,360
Other recognised gains and losses relating to the year - 7 - -
Bonus issue of Ordinary shares (327) - (327) -
Issue of Ordinary shares 4,982 - 4,982 -
Costs associated with issue of Ordinary shares (388) - (388) -
Redemption of Preference shares (2,980) - (2,980) -
FRS20 share based compensation expense - 334 - 334
Dividends - (2,355) - (2,355)
Balance at 31 December 2004 5,009 (2,100) 5,009 4,955
23. SHARE OPTIONS Exercise
price per Exercisable    Expiry
1 Jan 04 Granted Exercised Lapsed 31 Dec 04 share from date 
Senior Managers Scheme
Date granted
October 2001* 331,128 - (331,128) - - 2.52p - -
June 2004* - 81,421 (81,421) - - 2.52p - -
October 2004 - 433,146 - - 433,146 1.0p 08.10.06 08.10.14
Managers Scheme
Date granted
October 2004 - 202,095 - - 202,095 1.0p 08.10.06 08.10.14
SAYE Scheme
Date granted
October 2004 (3yr) - 409,001 - (1,435) 407,566 171.6p 01.12.07 31.05.08
October 2004 (5yr) - 247,160 - - 247,160 171.6p 01.12.09 31.05.10
- 656,161 - (1,435) 654,726
*Reflect the bonus issue of 38.737 Ordinary shares per Ordinary share, exercised on flotation.
The share price at the date of exercise of the options granted in October 2001 and June 2004 was £1.78.
At 31 December 2004, there were 13 members of the Senior Managers Scheme, with average option holdings of
33,319 shares; there were 46 members of the Managers Scheme, with average option holdings of 4,393 shares;
there were 317 members of the Save-As-You-Earn (SAYE) scheme, with average holdings of 2,065 shares.
Notes to the Financial Statements
for the year ended 31 December 2004
47 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
The Senior Managers Scheme was introduced on 8 October 2004 to reward key employees for their contribution to
the enhancement of the Group's longer term future and their commitment to the Group over a sustained period.
There are no performance conditions attached.
The Managers Scheme was introduced on 8 October 2004 to encourage and reward managers for their continued
contribution to the Group's success.  Financial performance conditions based on turnover and profit targets and in
some instances personal performance conditions apply to the exercise of the options.
The Save-As-You-Earn (SAYE) scheme was introduced on 1 October 2004. The exercise price was at 20% discount
of the closing mid-market price on 30 September 2004.
The FRS20 and UITF25 costs, before tax, occurred in relation to the above schemes were as follows:
2004 FRS20 2004 UITF25 2004 Total
£000 £000 £000
Senior Managers Scheme Date granted
October 2001 -7474
June 2004 143 18 161
143 92 235
October 2004 110 17 127
Managers Scheme Date granted
October 2004 51 8 59
SAYE Scheme Date granted
October 2004 (3yr) 21 - 21
October 2004 (5yr) 9- 9
191 25 216
334 117 451
*included within exceptional costs.
No FRS20 charge arose in respect of the options granted in October 2001 as the date of the grant predated that
stipulated in the standard.
With the following valuation assumptions: 2004 2003
Senior Managers Scheme - Oct 2004 Option value information
Fair value per option* £2.04 -
Valuation assumptions
Expected option term 2 years -
Assumed volatility 27.1% -
Assumed dividend yield 3.7% -
Risk free interest rate 4.62% -
Managers Scheme - Oct 2004 Option value information
Fair value per option* £2.04 -
Valuation assumptions
Expected option term 2 years -
Assumed volatility 27.1% -
Assumed dividend yield 3.7% -
Risk free interest rate 4.62% -
SAYE 3 Year Scheme - Oct 2004 Option value information
Fair value per option* £0.61 -
Valuation assumptions
Expected option term 3.25 years -
Assumed volatility 30.2% -
Assumed dividend yield 3.9% -
Risk free interest rate 4.67% -
SAYE 5 Year Scheme - Oct 2004 Option value information
Fair value per option* £0.70 -
Valuation assumptions
Expected option term 5.25 years -
Assumed volatility 30.2% -
Assumed dividend yield 3.9% -
Risk free interest rate 4.76% -
*Estimated using Black-Scholes option pricing method.
In all cases it is assumed that all employees remain in employment up to the earliest date of exercise.
48 office2office Annual Report 2004
* 24. CAPITAL COMMITMENTS
There are no amounts contracted for but not provided in the financial statements (2003: nil).
25.  RECONCILIATION BETWEEN OPERATING PROFIT AND NET CASHFLOW FROM
OPERATING ACTIVITIES Group Group
2004 2003
£000 £000
Operating profit 6,090 6,916
Depreciation charge 633 588
Goodwill amortisation 690 690
Share option expense 334 -
(Increase)/decrease in stocks (274) 253
(Increase)/decrease in debtors (1,226) (180)
Increase/(decrease) in creditors and provisions 4,615 1,636
Total net cash inflow from operating activities 10,862 9,903
Split between:
Exceptional items (3,181) (92)
Ordinary activities 14,043 9,995
Total net cash inflow from operating activities 10,862 9,903
26. RECONCILIATION OF NET CASH INFLOW TO MOVEMENT IN NET FUNDS
Group Group
2004 2003
£000 £000
Increase/(decrease) in cash in the year 7,203 (2,338)
Cash inflow from change in debt 560 2,814
Change in net debt resulting from cash flows 7,763 476
Other non-cash items:
New finance leases and HP contracts (48) (72)
Movement in net debt in the year 7,715 404
Net debt at 1 January (7,219) (7,623)
Net funds/(debt) at 31 December 496 (7,219)
27. ANALYSIS OF NET FUNDS/(DEBT)
Other 
Cash non-cash  
2003 flows changes 2004
£000 £000 £000 £000
Cash at bank/(bank overdraft) (6,396) 7,203 - 807
Debt due within one year:
- Invoice discounting facility (423) 423 - -
- Finance leases and HP contracts (129) 137 (113) (105)
Debt due after one year:
- Finance leases and HP contracts (271) - 65 (206)
Total (7,219) 7,763 (48) 496
Notes to the Financial Statements
for the year ended 31 December 2004
49 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
28. FINANCIAL INSTRUMENTS
The Group's objectives and policies on the use of financial instruments, including derivatives, can be found in the
Financial Review on pages 10 to 11 under the heading 'Financial risks and treasury policies'. Amounts dealt with in
this note exclude short-term debtors and creditors.
Interest rate risk profile of financial liabilities
The interest rate risk profile of financial liabilities was as follows:
2004 2003
£000 £000
Floating-rate borrowings - 6,819
Fixed-rate borrowings 311 3,410
Financial liabilities on which no interest is paid 653 703
964 10,932
The floating-rate borrowings are interest-bearing borrowings at a fixed percentage above the LIBOR rate.
The fixed-rate borrowings comprise obligations under finance leases with an effective weighted average interest rate
of 6.6% (2003: 8.6%), fixed for a weighted average period of 4.7 years, of £311,000 (2003: 6.5 years,£400,000),
and, in respect of 2003, preference shares with a weighted average interest rate of 8%, fixed for a weighted average
period of 3.5 years.
Maturity profile of financial liabilities
2004 2003
£000 £000
The maturities of borrowings are as follows:
Within one year 155 6,998
155 6,998
The maturities of creditors due after one year are as follows:
Over one year and under two years 125 758
Between two and five years 277 2,121
After five years 407 1,055
809 3,934
Interest rate risk profile of financial assets
Financial assets relate to cash balances held at financial institutions.  They all carry interest at floating rates based on
local money market rates.  Financial assets are denominated in the currencies shown below:
2004 2003
£000 £000
Sterling 332 -
Euro 475 -
807 -
Fair values of financial instruments
The fair value of financial assets and liabilities are not materially different to their book value due to the short term
maturity of the instruments.
Committed undrawn facilities
The maturities of the committed undrawn facilities available to the Group are shown below:
2004 2003
£000 £000
Within one year 15,000 -
Between one and two years - 14,577
15,000 14,577
Currency exposure and hedges
The Group did not have a material profit and loss account exposure to foreign exchange gains or losses on
monetary assets and liabilities denominated in foreign currencies at 31 December 2004 and has not used any
instruments to hedge foreign currency transactions.
50 office2office Annual Report 2004 Notes to the Financial Statements
for the year ended 31 December 2004
51 office2office Annual Report 2004
29. PENSION COMMITMENTS
The Group is a contributing employer to a defined benefit pension scheme, The Banner Business Supplies Pension
Scheme (“BBS Scheme”), all the members of which were formerly employed by Her Majesty’s Stationery Office and
were members of the Principal Civil Service Pension Scheme who first elected to transfer funds accrued to The
Stationery Office Limited Scheme and subsequently elected to transfer funds accrued to the BBS scheme. 
The BBS scheme commenced on 1 August 2000 when the funds were transferred in by The Stationery Office
Limited. The scheme is funded by the payment of contributions to a separately administered trust fund. The scheme
currently has 166 members and is closed to new members.
The latest full actuarial valuation was carried out on the 31 July 2004 and updated to 31 December 2004 by a
qualified independent actuary.  The pension costs have been determined on the basis of the results of this valuation.
It was assumed that the investment return would be 7.09% per annum, that salary increases would average 2.60%
per annum and that present and future pensions would increase at the rate of 2.60% per annum.  
The value of the BBS scheme assets at the date of valuation amounted to £4,808,000. The actuarial value of the
assets of the scheme was sufficient to cover 82% of the benefits that had accrued to members, after allowing for
expected future increases in earnings.
The total pension cost in respect of the defined benefit pension scheme for the period was £237,000 (2003:
£306,000).
The Group also contributed £461,000 (2003: £398,000) to a group personal pension arrangement and to
employees’ own personal pension arrangements for staff recruited by The Stationery Office Group Limited and
Banner Business Supplies Limited since 30 September 1996 at rates varying between 6% and 10% of pensionable
earnings.
The outstanding accrual in respect of pension contributions at 31 December 2004 was £368,000 (2003: £341,000).
FRS17 Disclosures
The latest formal valuation of the scheme was carried out as at 31 July 2004. The valuation of liabilities detailed
below has been derived by projecting forward the position from 31 July 2004 to 31 December 2004.  The following
assumptions were used:
2004 2003 2002
% pa % pa % pa
Inflation 2.6 2.5 2.5
Rate of increase in salaries 2.6 2.5 2.5
Rate of increase of pensions in payment 2.6 2.5 2.5
Rate of increase for deferred pensioners 2.6 2.5 2.5
Discount rate 5.4 5.6 5.6
The market values of scheme assets and the expected rates of return are as follows:
2004 2003 2002
Long term Value Long term Value Long term Value
rate of return rate of return rate of return 
expected expected expected
% £000 % £000 % £000
Equities 7.5 3,894 7.5 3,075 7.5 2,369
Bonds 4.5 659 4.8 831 4.5 640
Other 7.5 255 7.5 92 7.5 71
Total market value of assets 4,808 3,998 3,080 Notes to the Financial Statements
for the year ended 31 December 2004
Comparison of the market values of the schemes assets to its liabilities
2004 2003 2002
£000 £000 £000
Market value of scheme assets 4,808 3,998 3,080
Actuarial value of scheme liabilities (6,948) (5,629) (5,051)
(Deficit) in the scheme (2,140) (1,631) (1,971)
Deferred taxation asset 642 489 591
Net pension scheme liability (1,498) (1,142) (1,380)
Amount charged to operating profit
2004 2003
£000 £000
Service cost (136) (154)
Total operating charge (136) (154)
Analysis of net return on pension scheme
2004 2003
£000 £000
Expected return on pension scheme assets 292 224
Interest on pension liabilities (323) (289)
Net cost (31) (65)
The total amount charged to profit before taxation is £167,000 (2003: £219,000).
Analysis of amount recognised in statement of total recognised gains and losses (“STRGL”)
2004 2003
£000 £000
Actual return less expected return on assets 104 331
Experience gains and losses on liabilities (195) (78)
Changes in assumptions (538) -
Actuarial (loss)/gain recognised in STRGL (629) 253
Movement in deficit during the year
2004 2003
£000 £000
Deficit in scheme at beginning of year (1,631) (1,971)
Movement in year:
Current service cost (136) (154)
Contributions 287 306
Net interest cost (31) (65)
Actuarial (loss)/gain (629) 253
Deficit in scheme at end of year (2,140) (1,631)
The actuarial valuation at 31 December 2004 showed an increase in the deficit before deferred tax from £1,631,000
to £2,140,000. The contributions during the year were £287,000.  Contributions payable will be at a rate of 10.8%
of pensionable pay plus an additional amount £85,000 during 2005.  It has been agreed with the trustees that
contributions will remain at this level until the next actuarial valuation.
52 office2office Annual Report 2004 History of experience gains and losses
2004 2003 2002
Difference between expected and actual return on scheme assets:
Amount £104,000 £331,000 £(867,000)
Percentage of scheme assets 2% 8% (28%)
Experience gains and losses on scheme liabilities:
Amount £(195,000) £(78,000) £(214,000)
Percentage of scheme liabilities (3%) (1%) (4%)
Total amount recognised in statement of total recognised
Gains and losses:
Amount £(629,000) £253,000 £(893,000)
Percentage of scheme liabilities (9%) 4% (18%)
Restated Balance Sheet position
If the above amounts had been recognised in the financial statements, the Group’s net assets and profit and loss
reserve at 31 December 2004 would be as follows:
2004 2003
£000 £000
Net assets excluding FRS 17 pension liability 3,272 865
Pension provision under SSAP 24 net of deferred tax 457 492
Pension liability net of deferred tax (1,498) (1,142)
Net assets including pension liability 2,231 215
Profit and loss reserve excluding FRS 17 pension liability (2,100) (2,895)
Pension provision under SSAP 24 net of deferred tax 457 492
Pension liability net of deferred tax (1,498) (1,142)
Profit and loss reserve including pension liability (3,141) (3,545)
30. RELATED PARTIES
As at 31 December 2004, there was no single controlling party.
During 2004 the Group paid £27,484 (2003: £51,585) to Gresham LLP (known formerly as Gresham Trust plc) in
respect of a monitoring fee.  There were no outstanding balances at the period end (2003: nil).
Gresham LLP disposed of all their shares and interest in the Company upon flotation.
There are no other related party transactions requiring disclosure in accordance with Financial Reporting Standard 8.
Notes to the Financial Statements
for the year ended 31 December 2004
53 office2office Annual Report 2004 Five Year Summary
2004 2003 2002 2001 2000*
£000 £000 £000 £000 £000
Profits:
Turnover 141,769 125,554 109,147 101,122 82,315
Operating profit - before goodwill amortisation, 
exceptional costs and share option expenses 10,320 7,698 2,448 1,674 485
Goodwill amortisation (690) (690) (690) (690) (762)
Exceptional costs (3,324) (92) (222) (487) (735)
Share option expenses (216) -- --
Loss on disposal of fixed assets - - (3) (107) -
Profit/(loss) on ordinary activities before interest 6,090 6,916 1,533 390 (1,012)
Net interest payable (675) (896) (771) (651) (272)
Profit/(loss) before tax 5,415 6,020 762 (261) (1,284)
Capital employed:
Shareholders’ funds 3,272 865 4,702 5,175 1,909
Statistics:
Adjusted earnings per Ordinary share** 16.6p 12.0p 2.4p 0.2p n/a
Basic earnings/(loss) per Ordinary share 5.7p 9.7p (0.3p) (3.3p) n/a
Diluted earnings/(loss) per Ordinary share 5.6p 9.7p (0.3p) (3.3p) n/a
Dividends per share 4.2p 21.6p 1.2p nil n/a
Share price (period end) pence 242.5p n/a n/a n/a n/a
*The comparatives shown for 2000 are for Banner Business Supplies Limited.
**Adjusted earnings per Ordinary share before goodwill amortisation and exceptional costs have been disclosed to
give a clearer understanding of the Group's underlying trading performance.
54 office2office Annual Report 2004 FINANCIAL CALENDAR 2005
Announcement of final results for the year ended 31 Dec 2004 15 March 2005
Annual General Meeting 20 April 2005
Payment of final dividend on Ordinary shares to shareholders on the share
register at the close of business on 8 April 2005 9 May 2005
REGISTRAR AND TRANSFER OFFICE
Enquiries relating to the following administrative matters should be addressed to the Company's registrars:
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone 0870 162 3100
or by email to: ssd@capitaregistrars.com
• Dividend payment enquiries.
• Dividend mandate instructions: Dividends may be paid directly into your bank or building society account on
completion of a mandate instruction form. Tax vouchers are sent to the shareholder's registered address.
• Loss of share certificates/dividend warrants/tax vouchers.
• Notification of change of address.
• Transfer of shares to another person.
• Amalgamate multiple accounts.
• Resolve any other question about your shareholding.
SHARE PRICE
Information concerning the day to day movement of the share price of the Company can be found on our website
www.office2office.biz or that of the London Stock Exchange www.prices.londonstockexchange.com. The share
price can also be found in the appropriate sections of national newspapers under the classification "Support
Services" and under the ticker code "OFF.L" or "OFF".
UNSOLICITED MAIL
As the Company's share register is, by law, open to public inspection, shareholders may receive unsolicited mail
from organisations that use it as a mailing list. To reduce the amount of unsolicited mail you receive, contact: 
The Mailing Preference Service, FREEPOST 22, London W1E 7EZ. Telephone +44 (0) 845 703 4599. 
Website www.mpsonline.org.uk 
Shareholder Information
55 office2office Annual Report 2004 Company Details
REGISTERED AND HEAD OFFICE
St Crispins
Duke Street
Norwich NR3 1PD
United Kingdom
Tel: +44 (0) 1603 695 756
Fax: +44 (0) 1603 694 544
Website: www.office2office.biz 
Email: info@office2office.biz
PROFESSIONAL ADVISORS:
Auditors
PricewaterhouseCoopers LLP
The Atrium
St Georges Street
Norwich NR3 1AG
Bankers
Bank of Scotland
The Mound
Edinburgh EH1 1YZ
Brokers
Panmure Gordon
50 Stratton Street
London W1J 8LL
Financial Advisors
Hawkpoint Partners
4 Great St Helens
London EC3A 6HA
Solicitors
Macfarlanes
10 Norwich Street
London EC4A 1BD
56 office2office Annual Report 2004