first rate service delivering customer value introduction 
financial highlights 1
chairman’s statement 23
chief executive’s review 46
financial review 78
corporate social 
responsibility statement 910
board of directors 11
directors’report 1214
corporate governance 
statement 1518
nomination committee report 19
audit committee report 2021
directors’ remuneration 
report 2227
report of the 
independent auditors 2829
consolidated income statement 30
consolidated and parent 
company balance sheets 31
consolidated and parent company
statements of changes in equity 32
consolidated and parent  
company cash flow statements 33
principal accounting 
policies 3438
notes to the 
financial statements 3959
five year summary 60
shareholder information 61
company details 62
‘first rate service delivering customer value ’
office2office plc ‘o2o’ is a leading business
supplies managed services and integrated
supply chain company we are committed to
delivering value for money through relevant
products and tailored services in the uk and
republic of ireland markets
delivering customer value is one of o2o’s core
aims and it reflects our business purpose and
philosophy it underpins our objective to be
recognised as the leader in our markets by
value creation in excess of that of our
competitors   
delivering value also underscores our
commitment to employees suppliers and
investors it is the common target that shapes
our behaviour and is the basis of our business
culture
contents ‘o2o plc’ o2o plc annual report 2007 1
financial highlights
revenue
£1679m 07
£1659m 06
profit before tax
£90m 07
£103m 06
basic earnings
per share
174p 07
202p 06
cash and 
cash equivalents
£70m 07
£63m 06
final dividend proposed –
payable 9 may 2008
£24m 68p per share 07
£23m 64p per share 06
underlying profit 
before tax
£116m 07
£115m 06
profit before tax exceptional and nonrecurring costs of £23m 2006 £04m and share option charges of
£02m 2006 £08m 2
chairman’s statement
i am pleased to report that o2o has delivered strong results in 2007 against a
backdrop of significant change during the year following a review of our sales
and operations a new management structure was implemented including the
appointment of a new chief executive logistics efficiencies were realised and a
major cost reduction exercise was completed this restructuring has placed
the group in a strong position  
results
group revenue increased by 12 to
£1679m up from £1659m in 2006 
underlying profit before tax at
£116m was up from £115m in 2006
before exceptional and nonrecurring
costs of £23m 2006 £04m and
share option charges of £02m 2006
£08m profit before tax after all such
charges was £90m 2006 £103m
and profit after tax was £63m 2006
£72m basic earnings per share were
174p 2006 202p
net cash generated from operating
activities after reflecting cash
payments in respect of exceptional
and nonrecurring costs decreased
to £54m 2006 £77m at 31
december 2007 cash and cash
equivalents balances were £70m up
from £63m in 2006
dividends
the board recommends a final
dividend of 68p per share 2006
64p which if approved at the
annual general meeting will be paid
on 9 may 2008 to shareholders on
the register at the close of business
on 11 april 2008 combined with the
interim dividend paid in november
2007 this makes a total dividend per
share of 10p 2006 96p and
amounts to a distribution of £36m
2006 £34m and confirms the
board’s commitment to a progressive
dividend policy
review of operations
the year to 31 december 2007 has
been one of significant change our
supply arrangements with two large
public sector customers ministry of
defence mod and the national
health service nhs were due for
renewal by competitive tender
during the year and we anticipated
pressure on our gross margin
percentage 
in june we announced that we had
decided to withdraw from the e
auction process to supply office and
other products to the mod under a
new four year supply framework
because we believed that the quoted
selling prices would not generate
acceptable profit margins for o2o
product supply ceased in the last
quarter of 2007
at the same time we announced
that our arrangements to supply the
nhs had been extended to 31 march
2009 and expanded to include a
broader range of products
since the end of the year we have
received confirmation of a two year
extension through to september
2010 of our supply arrangements
with her majestys revenue and
customs
although the public sector is now a
smaller part of our overall business
extension of these supply
arrangements demonstrates our
ability to compete in one of our key
markets 
following the withdrawal from mod
supply we undertook a thorough
review of our operations as a result
we have improved operational
efficiency and reduced the cost base
to more closely reflect the needs of
the business significant supply chain
efficiency savings have been
achieved and we seized the
opportunity to reorganise our
warehouses and rationalise the
distribution function in addition our
sales and support functions have
been slimmed down centralised
where possible and consolidated
under common leadership  o2o plc annual report 2007 3
this restructuring is now substantially
complete at a total cost of £27m
comprising £04m charged in the
year ended 31 december 2006 and
£23m charged in the year ended 
31 december 2007 we expect to
realise the full benefits of the
resultant savings in 2008
despite our withdrawal from mod
supply our revenue grew during the
period the anticipated pressure on
gross margin was mitigated by
improved product sourcing that
resulted in a broadly stable gross
margin of 319 2006 320
however we anticipate that higher
energy costs and higher paper prices
will impact our margins in 2008
although as in this year our revised
approach to procurement is
expected to help mitigate the
impact underlying profit before tax
prior to exceptional and non
recurring costs and share option
charges as a percentage of revenue
was maintained at 69 
board changes
simon moate joined the board as
chief executive on 30 july 2007 he
has a successful track record in the
support services sector and
significant experience in strategic
planning and acquisitions simon’s
appointment follows the resignation
of ray peck on 1 february 2007
whom i would like to thank for his
contribution to the business 
prior to simon moate’s appointment
and for a short handover period
afterwards i acted in the capacity of
executive chairman
during the year the responsibilities
of mark cunningham finance
director were extended to
encompass a major project to
oversee the logistics and it
departments including the
implementation of the supply chain
restructuring
peter bertram who is due to retire by
rotation at the forthcoming annual
general meeting has decided not to
stand for reelection peter has
decided to resign to allow him to
pursue his other business interests i
thank him for both his commitment
and contribution to the board over
the last three and a half years as a
nonexecutive director
outlook
the new management structure and
the team ethic that has been evident
throughout a difficult period of
restructuring has resulted in a
stronger and more focused group
while we envisage a slight drop in
revenue in 2008 due to the
withdrawal from mod supply
partially offset by revenue growth
elsewhere we expect that the full
year impact of our restructuring
savings will more than compensate
we are confident that there is scope
to further improve the business and
remain committed to the expansion
of our routes to market beyond our
traditional contracted office supplies
base
we have a dedicated team reviewing
acquisition opportunities and we will
endeavour to expand the group and
increase shareholder value in 2008
we look forward to the coming year
with confidence and renewed vigour 
annual general meeting
the annual general meeting agm
will be held at the company’s head
office st crispins duke street
norwich on 24 april 2008 at 1030am
notice of the agm detailing the
ordinary and special business
together with the proxy forms for use
at the agm is being circulated with
these financial statements
d j callear
chairman
27 february 2008 4
chief executive’s review
i am delighted to present my first review as chief executive of o2o against the
background of a challenging marketplace o2o has delivered its seventh
consecutive year of revenue growth i believe that the group has the ability to
take full advantage of market opportunities and i am privileged to be leading
the business at this exciting time in its development 
in my role as chief executive i have
visited every part of the group and
met with customers employees and
investors this process has confirmed
that o2o is more than a contract
stationer in fact it offers a wide
range of business products and
related services supported by its
capability in managing complex
supply chains
prior to my arrival the board had
commissioned a review of our
strategies processes and operational
practices in order to take stock of the
business the review identified the
necessity for a fundamental
restructuring of the business and as
a result of this coupled with the
opportunity afforded by withdrawing
from mod supply we have taken
action to improve operational
efficiency and reduce the cost base
of the business to more closely
reflect its needs 
a changing market
the office and related products
supply market has undergone major
changes over the last few years
these include the emergence of 
eauctions erosion of profit margins
due to product cost increases public
sector account consolidation and a
succession of competitor mergers
which have contributed substantially
to changing many working practices 
o2o needs to adapt and innovate
within a market that is highly
competitive and growing steadily
the market for office products
remains relatively stable and the
opportunities to extend the range of
products and services are significant
strategy
over the last six months we have
built a simplified structure focused
on how we add value as a business
which will enable us to be quick to
react flexible in operation and
focused on doing fewer things better
the board is confident that there is
scope to drive further improvements
in the coming year we remain
consistent in our aim to grow the
business by enlarging and
diversifying our customer base the
key objective for 2008 is to continue
the expansion of our routes to
market beyond our traditional large
contracted office supplies base and
extend our service and product
ranges it is intended that this will be
achieved both through organic
growth and by taking advantage of
suitable acquisition opportunities
when they arise 
organisation structure
our new organisation is based on
•
simplicity clarity and focus to
create value for our customers
•
sourcing products to optimise
total product cost and
•
flexible distribution facilities to
deliver on our promises to
customers
the combination of these elements
firmly positions us as a major player
in the provision of business products
and services to the uk and irish
markets  o2o plc annual report 2007 5
we have now structured the group’s
trading operations to reflect our
three complementary core services
• banner business supplies limited
banner
banner is a market leader in the
provision of medium and longterm
contract management and the
procurement of office and business
products for large private and public
sector customers banner excels in
the management of complex 
multilevel business relationships    
• supply chain
the group’s integrated supply chain
activity procures manages picks and
nationally distributes over 15000
office and other business products it
consolidates our warehousing
distribution and procurement
activities to drive operating efficiency
acquisition of smaller locally
branded office and other business
product supply companies will create
additional revenue streams to build
critical sales volume to which we will
add o2o supply chain support    
• business services 
although our service offering is still
in its infancy we believe through our
existing customer base we can
create a significant presence in the
business services sector by offering
our customers addedvalue services
including print management
document management and storage
technology and business furniture       
this revised organisation structure
recognises that o2o is more than a
stationer and promotes its
development as a leading business
supplies integrated supply chain and
managed services group committed
to delivering on our promises and
adding value at every stage of the
process 
expanding our customer base
a core element of our strategy is to
win new customers through organic
sales growth we already supply
office products and solutions to
businesses and organisations of all
sizes across the uk and ireland in
what is a relatively fragmented
market and we have teams dedicated
to winning new customers
broadening our range of
products and services
the availability of a wide range of
products and services from a single
supplier is important to many of our
customers and we aim to offer just
that experience has proved that we
can deliver significant customer
benefits through a rationalised
supplier base and by consolidating
the management of large volumes of
lowvalue transactions  
developing innovative solutions
to meet the changing needs of
customers 
central to the group’s performance is
meeting the everchanging needs of
its customers changes in
technology purchasing patterns
customer priorities and service
requirements are a feature of our
business we encourage innovation
and remain flexible to the adoption
of new ideas at all levels   6
chief executive’s review continued
growth by acquisition
we continue to monitor and evaluate
potential acquisition opportunities
our criteria include the ability to
extract cost or revenue synergies and
the potential for the target to grow
profitability
management structure
we have reconfigured our senior
management better to reflect the
growth opportunities identified as
part of the strategic review 
the senior management comprises a
streamlined team with clearly defined
responsibilities to deliver our growth
plans they will oversee specific
business functions and teams 
mark cunningham in addition to the
responsibilities of the finance
director role is currently charged
with the reorganisation of the
logistics warehousing and operations
functions it is envisaged that this will
be complete by the end of 2008
mark goddard chief financial officer
leads the group’s finance team and is
providing additional support to the
finance director whilst the
reorganisation is implemented geoff
streetley who leads banner and is
responsible for growing the contract
office products customer base
became chief commercial officer
steve mckeever who joined us in
december as chief information
officer is responsible for delivering
best in class ecommerce and
business processes 
the board remains unchanged
however members of the senior
management team attend meetings
on a regular basis to update on
progress and developments in their
business areas 
employees 
we recognise that the success of o2o
is a reflection of the success of our
people and i would personally like to
thank our management and all our
employees for their contribution and
for their patience and perseverance
through a difficult period 
we aim to recruit and retain the best
people in the business supplies
industry at o2o our people have a
broad range of talents and
backgrounds our customers rely on
the combined efforts of around 800
people to manage relationships and to
deliver the right products and services
when and where they are needed 
the group operates a variety of
schemes to allow employees to
participate directly in the success of
the business these include a save
asyouearn share option scheme
with a broad participation in
addition to more targeted schemes
for senior employees 
i would like to express my thanks to
the chairman david callear who
stepped in and assumed executive
responsibility after my predecessor
left the business in february 2007
many of the initiatives and actions
taken during the ensuing period
strengthened the business for the
challenges faced during the
remainder of 2007
future prospects
o2o is a solid business with real
prospects for longerterm growth
both organically and by acquisition
the strategic review has delivered
clarity of vision and purpose and we
expect future acquisitions to deliver
growth we believe in getting the
basics right  delivering on our
promises achieving demonstrable
and consistent growth a
commitment to sustainable
performance and enhancing
shareholder value 
we have a growing customer base a
strong management team a
passionate and motivated workforce
and a flexible business model proven
to react quickly to market changes
our market will remain competitive
but our commitment to contain
operating costs and drive efficiencies
should enable us to deliver our
growth plans 
s r moate
chief executive
27 february 2008 o2o plc annual report 2007 7
financial review
revenue and operating profit
total revenue increased by 12 to
£1679m our operating profit prior to
exceptional and nonrecurring costs
of £23m and share option charges of
£02m was £117m 2006 £119m
prior to exceptional and nonrecurring
costs of £04m and share option
charges of £08m operating profit
after such items was £91m 2006
£107m the operating profit margin
prior to exceptional and 
nonrecurring costs and share option
charges decreased to 70 2006
72 
exceptional and nonrecurring costs
are those significant items which are
separately disclosed by virtue of their
size or incidence to enable a full
understanding of the groups
operating performance transactions
which may give rise to exceptional
and nonrecurring costs are principally
restructuring related charges and
costs in respect of key management
changes a full analysis of the
exceptional and nonrecurring costs is
set out in note 5 to the financial
statements
share option charges of £243000
2006 £768000 comprise £232000 in
respect of company share schemes
and an £11000 provision in respect of
national insurance contributions
which will become payable on share
options when exercised 
tax
a full analysis of the tax charge for the
year is set out in note 9 to the
financial statements
the group’s effective tax rate in 2007
was 304 2006 304 the amount
of corporation tax to be paid for the
year is £25m 2006 £29m
shareholders’ return
fully diluted earnings per share were
173p 2006 197p basic earnings per
share were 174p 2006 202p 
the total dividend paid and payable
for the year of 100p per share
including the 32p interim dividend
paid on 6 november 2007 is covered
174 times by earnings equity at the
end of the year was £169m 2006
£148m
the middlemarket quotation of the
company’s ordinary shares at the end
of the financial year was 1195p with a
market capitalisation of £434m
including shares held by the
employee benefit trust
cash flow
as set out on page 33 the group
continued to generate cash with net
cash generated from operating
activities of £54m 2006 £77m as at
31 december 2007 cash and cash
equivalents amounted to £70m
compared to £63m at the start of the
year we continue to focus on our
working capital although inevitably
over time as we obtain more private
sector customers and source more
goods overseas we will have to make
greater investment in this area 
principal risks and uncertainties
our business is built around a proven
service with reliance on our
warehouses and it infrastructure
following a comprehensive review of
significant risks the board considers a
disaster in either of these areas to
have the highest potential impact on
the group in order to mitigate these
risks we maintain adequate insurance
cover and have in place and maintain
under review appropriate disaster
recovery plans
in addition the group is inevitably
reliant on its customer base but as we
have demonstrated by our withdrawal
from mod supply we have already
been successful in mitigating a
significant change in our customer
base
financial risks and treasury
policies
the group’s main treasury risks relate
to the availability of funds to meet its
future requirements at the year end
the group had an unutilised working
capital facility of £15m 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 see note 1 to the financial
statements for further details
the group has some foreign currency
risk relating to a balance held in an
irish euro bank account and small
trading requirements in other foreign
currencies the overall treasury policy
in this area is to ensure that there are
no material currency risks attached to
any part of the business 8
financial review continued
2007 2006
gross margin  319 320
gross margin percentage is calculated as the margin expressed as a percentage of group revenue
it is the measure of profitability of sales less their direct purchase cost and is a comparable 
measure with other companies
distribution costs  129 132
distribution costs percentage is calculated as the cost associated with distribution
before exceptional and nonrecurring costs of £04m 2006 £nil expressed as a percentage of group revenue  
administration costs  122 121
administration costs percentage is calculated as the cost associated with administration 
before exceptional and nonrecurring costs of £19m 2006 £04m expressed as a percentage of group revenue  
underlying profit  69 69
underlying profit percentage is calculated as the underlying profit before exceptional and 
nonrecurring costs and share option costs expressed as a percentage of group revenue
adjusted earnings per share 220p 209p
adjusted earnings per share is calculated as the profits on ordinary activities before exceptional 
and nonrecurring costs after tax excluding tax relief on exceptional and nonrecurring costs 
divided by the weighted average number of ordinary shares in issue during the year
content of the financial review
this financial review together with the information contained in the chairman’s statement and the chief executive’s
review has been produced with reference to best practice prescribed in ‘reporting statement operating and financial
review’ published by the accounting standards board although this standard is not currently mandatory the board
considers there to be no significant areas of noncompliance with this standard
m a cunningham
finance director
27 february 2008
the group has no borrowings other
than £06m of finance lease
obligations 2006 £07m the group’s
policy with respect to interest rate
management will be determined if
and when the group requires debt
funding in the future with regards to
cash surpluses these are placed on
overnight deposit at variable rates as
appropriate to maximise the return 
the group’s principal financial assets
are bank balances cash and trade
debtors which represent the
company’s maximum exposure to
credit risk in relation to financial assets
the group’s credit risk is primarily
attributable to its trade debtors credit
risk is managed by monitoring the
aggregate amount and duration of
exposure to any one customer
depending upon their credit rating
the amounts presented in the
balance sheet are net of allowances
for doubtful debts estimated by the
group’s management based on
current circumstances prior
experience and their assessment of
the current economic environment
the credit risk on liquid funds is
limited because the counterparties are
banks with high credit ratings
assigned by international creditrating
agencies the group has no significant
concentration of credit risk with
exposure spread over a large number
of counterparties and customers
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
key performance indicators
the key performance indicators which o2o regard as important measures for the business are product cost profitability
operating costs as a percentage of revenue operating profitability and shareholder return o2o plc annual report 2007 9
corporate social responsibility statement
demonstrating our commitment
to responsible business practices
corporate social responsibility csr
is relevant across all aspects of o2o’s
business and to commit to
responsible business practices is one
of our key objectives 
o2o’s approach to csr is
underpinned by our corporate social
responsibility policy
the board believes that an important
factor in our longterm success will
be to ensure that the activities of the
group are carried out in a responsible
way that produces benefits for all our
stakeholders  
employees are regarded as
fundamental to the continued
success of the group and are
provided with a challenging yet
rewarding working environment the
nature of the group’s business
activities brings with it environmental
protection obligations that the group
monitors closely to ensure
compliance with its environmental
management system and iso 14001
certification at certified sites 
the group works in partnership with
certain customers to ensure as far as
reasonably practicable that our
sourcing of products meets
minimum standards of corporate
social responsibility for example
regarding employment and safety
practices of suppliers and
contractors 
health safety and welfare
o2o is committed to maintaining the
health safety and welfare of our
employees customers and others
who may be affected by our business
activities managers are responsible
for the effective management of
health and safety which includes
conducting risk assessments and
taking preventative action to provide
a safe environment in which to work
to achieve the best for both our
people and our group 
among the key features are
•
considering health and safety
issues through the design
maintenance and operation of our
warehousing and distribution
fleet
•
supplying safe and reliable
products and services to the
marketplace
•
working to prevent incidents by
engaging with employees and
contractors and educating them in
the implementation of our policy
and
•
integrating health and safety
considerations into business
decisions from the planning stage
onwards
during the year an independent
review of health and safety of the
main warehouses was undertaken
and recommendations were fed back
to the board and senior management
as part of a health and safety training
programme – see pages 20 to 21 for
details a risk assessment process is
maintained to ensure that
assessments are prioritised followed
through and reviewed periodically
an independent third party has been
appointed to extend risk assessment
and audit to other areas of the
business during 2008
employees 
o2o employs approximately 800
people their welfare and safety is a
key priority and the group actively
encourages staff involvement in the
development of our business
activities 
employees are treated with fairness
and respect they are encouraged
and supported in their development
at work and provided with relevant
training all staff are expected to
maintain high standards of work and
behaviour and to display integrity in
their dealings with customers
suppliers and each other a code of
business ethics is applied and
maintained 
the board is confident that
employees will continue to rise to
the market opportunities and
challenges that lie ahead
environment 
o2o is committed to managing and
reducing any significant
environmental impacts through its
environmental management system
which is certified to the international
standard iso 14001 we have 10
maintained the registrations both at
head office and at our manchester
site which houses our largest
distribution centre the key activities
including the supply chain and
distribution are within the scope of
our certification our intention is to
improve our environmental
performance year on year and
therefore environmental objectives
have been set with periodic progress
reviews for example in the annual
report for 2006 we reported our
progress with regards to the two
priorities of waste packaging
management and energy
conservation in addition for 2007 we
adopted further objectives relating to
environmentallypreferred products
o2o’s full environmental policy may
be viewed at our web site
wwwoffice2officecouk the main
highlights are detailed below
management of packaging waste
generation of such waste is
inevitable in our business however
our aim has been to reduce volumes
and mitigate the impacts incoming
waste cardboard and plastic pallet
wrap continue to be baled for
recycling by approved waste
recycling contractors to divert these
materials from landfill we have also
instigated processes to collect similar
waste packaging from our outlying
premises the group is a member of
the valpak packaging compliance
scheme and has reduced its
packaging obligation through
improving internal packaging
processes and methods
reducing energy consumption
reducing the rate of climate change
is an acknowledged global priority
within o2o programmes have been
implemented to help reduce our
carbon output through initiatives to
manage our use of fuel by controlling
business travel and by effective fleet
management double deck trailers
logistics software and vehicle
selection continue to be the main
drivers to reduce miles travelled and
emissions the emissions and fuel
consumption of the delivery fleet are
monitored regularly delivery routes
are constantly reviewed both to
reduce costs and optimise mileage
all vehicles are serviced and
maintained regularly in order to
optimise performance we continue
to review the use of alternative 
fuelpowered goods vehicles the
group continues to back load to
optimise the use of otherwise empty
vehicles over 80 of the company
car fleet is now dieselpowered
exceeding our target of 75 which
helps to reduce fuel consumption
and certain emissions the average
carbon dioxide emission per
company car is now 150 gkm and all
cars are below 220 gkm meeting
our target the video conferencing
facilities installed in three of our
main sites are well used and reduce
business travel contributing to fuel
savings and reduced emissions 
environmentallypreferred
products
to provide customers with a wider
choice of environmentallypreferred
products we have continued to
extend our globe  tick™ range of
products to strict criteria during
2007 the range was extended further
to over 1100 products with some
new product categories we shall
continue to work with suppliers and
customers to identify products that
can be added to the range
environmental awards
during the course of the year the
company was awarded
•
the british office supplies and
services federation environment
certificate in recognition of our
commitment to environmental
responsibility and
•
a major commendation in the
business commitment to the
environment environmental
leadership awards in recognition
of our innovative globe  tick™
product range
in addition the company was
granted entry into the prestigious
ftse4good index for meeting
globally recognised corporate
responsibility standards we have also
joined the may day company a joint
venture between business in the
community and the carbon trust
formed to help reduce carbon
footprints
packaging waste energy conservation
and environmentallypreferred
products will continue to be our
focus during 2008 many companies
are now considering their ‘carbon
footprint’ – a way of measuring the
greenhouse gases produced by their
operations as this is a new area
standard methods of measurement
are still being developed o2o is
waiting for the british standards
institute to issue standards in order
to be able to ensure consistency
and comparability of measurement
we will then use our carbon
footprint as a tool for benchmarking
our performance in order to set
targets for reducing our greenhouse
gas emissions
corporate social responsibility statement continued o2o plc annual report 2007
11
board of directors
david callear
chairman
david aged 54 is a chartered
accountant whose career has been
in financial and general management
mainly with publicly quoted
companies during the 1990s he was
chief executive of both tip europe plc
europewide vehicle rental and
jeyes group plc international
household products manufacture
and supply
david joined o2o as chairman in
february 2001 in addition he has a
number of nonexecutive chairman
roles working with the boards of
private companies including rp
martin holdings ltd and swift
technical group holdings ltd
following the resignation of ray peck
in february 2007 david assumed the
role of executive chairman reverting
to the role of chairman on 
4 september 2007 after the
appointment and handover of
responsibilities to simon moate
simon moate
chief executive
simon aged 45 joined o2o as chief
executive on 30 july 2007 he was
previously an executive director of
johnson service group plc the
managed services business where as
chief executive of the facilities
management and specialist supplies
division he led and integrated a
number of acquisitions prior to this
he held a number of senior sales
marketing and operations roles with
blue chip companies including well
well well ltd aramark plc provend
group plc and coca cola
mark cunningham
finance director
mark aged 41 is a chartered
accountant and joined her majesty’s
stationery office 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 o2o in december 2000 a
role he has retained whilst
overseeing logistics and it on a
project basis since february 2007  
jim cohen
senior nonexecutive director
jim aged 66 was a main board
executive director of balfour beatty
until his retirement in february 2007
prior to joining balfour beatty in 1993
he held senior management
positions with gte and gec and was
a senior civil servant at the
department of energy in april 2007
jim took on a nonexecutive role for
the swiss construction company
implenia ag he is also chairman of
empower advisors limited a private
company which is owned by actis
and provides interim power
generation in subsaharan africa
peter bertram
nonexecutive director
peter aged 53 is a chartered
accountant who has worked in both
financial and general management
he is currently chairman of phoenix
it group plc and alphameric plc and
a nonexecutive director of anite
group plc and microgen plc peter
was nonexecutive chairman of
attentiv systems group plc until may
2005 and was formerly chief
executive of azlan group plc 12
directors’ report
principal activities and results
the group’s principal activity is the
supply of office and business
products the profit for the financial
year was £63m 2006 £72m
business review 
the business together with the
group’s strategy and objectives and
likely future developments in the
business are reviewed in the
chairman’s statement on pages 2 to
3 and in the chief executive’s
review on pages 4 to 6 the key
performance indicators are defined
and the principal risks and
uncertainties including financial
risks facing the business are
described in the financial review
on pages 7 to 8
dividends
an interim dividend of 32p 2006
32p per ordinary share amounting
to £11m 2006 £11m was paid on
6 november 2007 to shareholders on
the register at close of business on 
5 october 2007
the directors recommend a final
dividend in respect of the year ended
31 december 2007 of 68p 2006
64p per ordinary share amounting
to £24m 2006 £23m if authorised
at the annual general meeting agm
the dividend will be paid on 9 may
2008 to shareholders on the share
register at close of business on 
11 april 2008 
the directors present their report and financial statements for the group for
the year ended 31 december 2007
share capital and major
shareholders
details of the share capital of the
company as at 31 december 2007
are set out in note 24 
the company has been notified in
accordance with disclosure and
transparency rule 512 of the financial
services authority that as at 23 january
2008 the following shareholders
owned more than 3 of the issued
share capital of the company
the directors have 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
£121030 being onethird of the
current issued ordinary share
capital and the power to disapply
preemption rights in respect of the
allotment of shares under section
95 companies act 1985 up to an
aggregate nominal value of £18154
representing 5 of the issued
ordinary share capital in addition
the directors have authority on
behalf of the company to make
market purchases of up to 3630898
ordinary shares of the company
being approximately 10 of the
company’s ordinary shares in issue
these authorities were conferred by
approval of separate resolutions at
the company’s last agm and are
due to expire at the end of the
forthcoming agm separate
resolutions to renew these
authorities will be proposed at the
agm on 24 april 2008 details of
these resolutions are set out in the
notice of agm which is being
circulated with the annual report
aberforth partners 7006006 shares 1930
insight investment 3170415 shares 873
morley fund management 2864751 shares 789
r c peck 2661454 shares 733
baillie gifford 2497705 shares 688
bestinver 2428465 shares 669
axa framlington 2299260 shares 633
axa rosenberg 1369565 shares 377
mg investment management 1225000 shares 337
executive director resigned 1 february 2007 o2o plc annual report 2007
13
directors’ report continued
directors
the following were directors during
2007 and unless where specified
held office throughout the year 
d j callear
chairman
1
s r moate
chief executive 
appointment effective 30 july 2007
m a cunningham
finance director
j l cohen
nonexecutive director
2
p m bertram
nonexecutive director
3
1  chairman of the board throughout the
year and chairman of the nomination
committee except for the period
between 1 february 2007 and 
4 september 2007 when acting as
executive chairman
2  chairman of the remuneration
committee and senior nonexecutive
director chairman of the nomination
committee between 1 february 2007 
and 4 september 2007
3  chairman of the audit committee
biographical details of the directors
are shown on page 11
r c peck resigned as chief executive
on 1 february 2007
mark cunningham and jim cohen
will retire by rotation in accordance
with the company’s articles of
association at the forthcoming agm
and being eligible offer themselves
for reelection the board considers
that their performance continues to
be effective and that they
demonstrate a strong commitment
to their roles simon moate will offer
himself for election being the first
opportunity to do so since his
appointment
peter bertram who is also due to
retire by rotation at the forthcoming
agm has decided not to stand for 
reelection and has indicated his
intention to resign as a director in
order to allow him to pursue his
other business commitments
directors’ interests
directors’ interests are detailed in the
directors’ remuneration report on
pages 22 to 27
donations
no donations were made to any
charitable or political organisation in
the year 2006 £nil
employee involvement
the group has a policy of providing
employees with information through
corporate newsletters and regular
meetings which are held between
management and employees to
allow a free flow of information and
ideas 
the group operates a variety of share
schemes to allow the executive
directors and employees to
participate directly in the success of
the business details are included in
the directors’ remuneration report
on pages 22 to 27
employee benefit trust
during the year the company
loaned a total of £958000 to the
employee benefit trust ebt to
allow it to purchase shares in the
market with a view to satisfying the
exercise of options under its
employee sharesave schemes a
total of 550441 shares were
purchased the highest price paid
being £213 and the lowest price
paid being £128 as at 31 december
2007 the total number of shares
held by the ebt was 624248 172
of the issued share capital of the
company whilst held in trust the
shares do not attract any payment
of dividends nor do they have any
voting rights attached to them
equal opportunities
the group is fully committed to a
policy that provides all employees
irrespective of background with
equality of opportunity for
employment training career
development and selection on the
basis of ability qualifications and
suitability for the job executive
directors managers and employees
are required to promote equality of
opportunity and to take full account
of the policy in their daytoday work
the aim is to recruit the best staff in
the industry and the group is
committed to the principle of
maximising every employees
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 and re
trained where possible
creditor payment policy
it is the group’s policy to negotiate
with each of its principal suppliers
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 69 2006 71 for the
group the company has no trade
creditors 2006 nil
environmental policy
the group ensures that in satisfying
its customers’ requirements both the
goods and services supplied and its
own housekeeping comply with
legislation and best practice the
group continually reviews its
environmental performance across
the business
a summary report on the group’s
policies and objectives in respect of
corporate social responsibility is set
out on pages 9 to 10
principal risks and uncertainties
the groups operations expose it to a
variety of financial and other risks a
review of which is provided in the
financial review on pages 7 to 8 
the board has delegated the
responsibility of monitoring financial
risk management to the audit
committee
special business to be
considered at the forthcoming
agm
at the agm on 24 april 2008 the
directors will be seeking to renew
their authority to make market
purchases of up to 3630898
ordinary shares of the company
being approximately 10 of the
company’s ordinary shares in issue
and a special resolution will be
proposed for this
in addition a special resolution to
amend the current articles of
association the ‘articles’ of the
company will also be proposed at 14
directors’ report continued
the forthcoming agm in the main
these changes are to bring the
articles in line with the companies
act 2006 a separate special
resolution will be proposed to
amend the borrowing powers of the
company which are currently limited
to an aggregate cap of £30million
guidance issued by the association
of british insurers regarding
borrowing powers provisions
contained in public limited
company’s articles suggest that fixed
limits to borrowing powers should
only be a temporary measure and
that an aggregate cap should be
fixed as a multiple of capital and
reserves it is proposed that the fixed
aggregate cap is removed and the
cap be changed to a more flexible
and less prohibitive level of three
times capital and reserves
details of these special resolutions
are set out in the notice of agm
which is being circulated with the
annual report
statement of directors’
responsibilities
company law requires the directors
to prepare financial statements for
each financial year that give a true
and fair view of the state of affairs of
the company and the group and of
the profit or loss of the group for that
period under that law the directors
have prepared the company and the
group financial statements in
accordance with international
financial reporting standards ifrs
as adopted by the european union
in preparing those financial
statements the directors are
required to 
•
select suitable accounting policies
and then apply them consistently
•
make judgements and estimates
that are reasonable and prudent
•
state that the financial statements
comply with ifrs’s as adopted by
the european union and
•
prepare the financial statements
on the going concern basis unless
it is inappropriate to presume that
the group will continue in
business
the directors confirm that they have
complied with the above
requirements in preparing the
financial statements
the directors are responsible for
keeping proper accounting records
that disclose with reasonable
accuracy and at any time the
financial position of the company
and of the group and to enable them
to ensure that the financial
statements and the directors’
remuneration report comply with
the companies act 1985 and 2006
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
wwwoffice2officecouk 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
statement of disclosure of
information to auditors
so far as the directors are aware
there is no relevant audit information
of which the group’s auditors are
unaware and they have taken all
steps that they ought to have taken
as directors in order to make
themselves aware of any relevant
audit information and to establish
that the group’s auditors are aware of
that information
auditors
the audit committee has considered
and recommends the reappointment
of pricewaterhousecoopers llp as
auditors a resolution proposing the
reappointment will be put to the
forthcoming agm
for and on behalf of the board
d rodwell
company secretary
27 february 2008 o2o plc annual report 2007
15
corporate governance statement
application of the combined
code
the combined code on corporate
governance issued in june 2006
contains only a limited number of
modifications to the combined code
2003 following the financial
services authoritys fsa adoption of
the combined code 2006 and the
release of the fsa’s amended listing
rules in october 2006 the combined
code 2006 the combined code
takes effect for reporting periods
commencing on or after 1 november
2006
statement of compliance with
the code
the directors consider that the
company has complied with the
principles set out in section 1 of the
combined code throughout the
period with one exception as detailed
below the application of the principles
of the combined code in the
composition and operation of the
board the remuneration of the
directors shareholder relationships and
procedures for financial reporting and
internal control are described below 
directors and the board
the board comprises the chairman the
chief executive the finance director
and two nonexecutive directors 
in february 2007 ray peck resigned
as chief executive without an
immediate successor and having
consulted with the company’s
corporate advisors and major
shareholders the remaining board
members agreed to take on
additional responsibilities whilst a
new chief executive was sought 
david callear assumed the role of
executive chairman becoming
involved with the day to day running
of the business in conjunction with
the senior management team the
board accepted temporary non
compliance with provision a21 of the
combined code which states that the
role of chairman and chief executive
should be separate as being in the
overall interests of the group simon
moates appointment as chief
executive was effective from 30 july
2007 after a short handover 
david callear relinquished executive
responsibilities and reverted to his role
as chairman mark cunningham in
addition to his role as finance
director oversaw the logistics and it
functions and jim cohen and peter
bertram provided additional
assistance associated with their
existing nonexecutive responsibilities
the chairman is responsible for
leading the board and ensuring there
is timely and effective
communication to and between
board members the chief executive
is responsible for the daytoday
management of the group and once
agreed by the board as a whole the
development and implementation of
strategy the normal segregation of
responsibilities between the
chairman and the chief executive
has been set out in writing and
approved by the board the
chairman’s other main commitments
are disclosed on page 11
simon moate joined office2office
from a listed company environment
and was already fully versed in the
duties and obligations of a listed
company director upon joining he
was provided with a comprehensive
information pack on the group and
during the year visited all of the
group’s sites and met with all of the
various functions of the business in
september he met with shareholders
at the presentation of the 2007
interim results 
the nonexecutive directors are free
from any business or other
relationship which could materially
interfere with the exercise of their
judgement and have no involvement
with the daytoday management of
the group notwithstanding the
additional assistance provided during
the year the board considers both
nonexecutive directors to be
independent and feels that their
diverse experiences and backgrounds
bring a depth of debate and
alternative viewpoint to the board jim
cohen is the senior independent non
executive director the terms and
conditions of the nonexecutive
director’s appointments are available
on request from the company’s
registered office
the board operates formally through
agendadriven board meetings which
are held at least monthly usually at
the company’s head office in may
the board met on three occasions
twice prior to the pangovernment 
eauction to discuss the issues of the
eauction process with the team
directly involved with it and to
approve the pricing proposals and
once whilst the eauction was in
progress the board were kept
informed at all times and fully
supported all decisions made in
october a board meeting was
convened at the group’s main
warehouse in manchester to allow
the board to review the
improvements in operations and
logistics and for a presentation of a
health and safety audit undertaken
by an independent consultant which
included a review of the warehouse
operations see page 20 for details 
although the monthly agenda
includes operational and strategic
developments members of the
board met on other occasions with
corporate advisors attending as
required to review specific
acquisition opportunities and
business improvement plans
frequent informal dialogue between
the directors supplements the formal
board meetings on a number of
occasions during the year the
chairman met with the 
nonexecutive directors without the
executive directors present to discuss
the performance of individual
executive directors and other senior
managers the nonexecutive
directors have also met without the
chairman being present to discuss
his performance
the board is responsible to
shareholders for the management and
control of the group’s activities its
strategic objectives its system of
corporate governance and the
stewardship of its resources this is
achieved by regular review of the key
activities of the group through the
monthly management accounts
detailed reports and presentations
additionally the board receives
analysts’and brokers’reports and is
updated on any movements in major
shareholdings a board pack 16
corporate governance statement continued
comprising of information to be
reviewed and discussed is forwarded to
all board members in advance of the
monthly meetings to allow the
directors to be fully prepared there is
also a formal schedule of matters
reserved for consideration and
approval by the board specific
responsibilities have been delegated to
board committees as described below 
the company secretary reports to the
board and advises individual directors
as required on board procedures and
corporate governance matters a
procedure also exists for directors to
take independent professional advice
at the company’s expense
appropriate third party directors and
officers’ insurance is maintained by
the company
the board undertakes a critical
evaluation of itself and its committees
on an annual basis the company
secretary prepared an independent
assessment of the performance of the
board and its committees during the
year based on higgs performance
evaluation guidance and this was
discussed with the board in
december 2007 the assessment
recognised that the board had been
challenged by a number of significant
changes and the board had
responded by reorganising their
responsibilities and providing
additional assistance as detailed
above having gained considerable
knowledge and experience of the
business since its flotation in june
2004 the board was able to respond
with immediate effect and offer a
handson approach to deal with the
issues facing the business 
the board concurred with the
performance evaluation and was
satisfied with the work and support
provided by its committees
following a review of the schedule of
matters reserved for the board and all
of the committees’ terms of
reference the board agreed that no
changes were necessary
as in previous years the board met
formally and informally with a number
of the senior managers during the year
and intend for this to continue the
board felt that this not only improves
communications both in and out of
the boardroom but also helps in their
understanding of the business in order
to provide additional support to the
board mark goddard the chief
financial officer was invited to attend
the monthly board meetings since
assuming many of the daytoday
responsibilities for the finance function 
health and safety was one of the
areas that the board had prioritised
for detailed review see page 20 and
in order to assist with driving through
the initiatives in this area
participated in a health and safety
training programme during 2007
which specifically focused on
directors’ duties and responsibilities
in this area the senior management
team also participated in the training
programme
in accordance with the company’s
articles of association no more than
one third of the directors are
required to retire at each annual
general meeting and all directors
are required to submit themselves
for reelection at least once every
three years directors appointed by
the board during the year are
required to retire at the first annual
general meeting after their
appointment and offer themselves
for election see page 13 for details
of those directors retiring
committees of the board
specific responsibilities are delegated
to subcommittees of the board the
composition of these sub
committees is provided below
together with reference to reports on
their activities all other decisions are
taken collectively by the board
the nomination committee is
responsible for reviewing the size
structure and composition of the
board and making recommendations
to the board if it considers that any
changes are required it keeps
succession plans under review and
has a formal procedure for
appointments to the board and
senior management team the
nomination committee includes
both independent nonexecutive
directors and is chaired by david
callear during his period as executive
chairman david callear resigned his
chairmanship in accordance with the
combined code and the committee
was temporarily chaired by 
jim cohen a report on its activities is
given on page 19
the remuneration committee
reviews and makes recommendations
on the group’s overall remuneration
policy including individual
remuneration packages for executive
directors the chairman and senior
management it is also responsible for
the review of the company’s share
schemes and senior incentive plans
the remuneration committee is
chaired by jim cohen and comprises
the independent nonexecutive
directors and from 4 september
2007 david callear following a
relaxation of the rules in the
combined code and after he had
relinquished executive responsibilities
when necessary noncommittee
members are invited to attend by
prior arrangement a report on its
activities is given on pages 22 
to 27
the audit committee assists the
board in discharging its
responsibilities effectively for financial
reporting risk review and internal
control it comprises the independent
nonexecutive directors and is
chaired by peter bertram who is a
chartered accountant and has
relevant financial expertise as
described in his biography on 
page 11 noncommittee members
and the external auditors are invited
to attend by prior arrangement a
report on its activities is given on
pages 20 to 21 o2o plc annual report 2007
17
corporate governance statement continued
attendance at meetings
the number of full board meetings and committee meetings attended by each director in 2007 was as follows
remuneration audit nomination
full board committee committee committee
held attended held attended held attended held attended
chairman
d j callear 19 18 5 5  3 3  4 4
executive directors
s r moate 
appointed 30 jul 2007 19 9 5 2  3 2  4 0
r c peck 
resigned feb 2007 19 4503040
m a cunningham 19 17 5 1  3 1   4 1
non – executive directors
j l cohen 19 16 553344
p m bertram 19 13 553343
 by invitation
 all audit committee meetings were attended by mark goddard chief financial officer
as board packs are issued in advance
of the board meetings all directors
are kept informed of the matters to
be discussed and have the
opportunity to make their views
known to the chairman prior to the
meeting if they are unable to attend
additionally minutes of meetings are
circulated to the respective members
of the board or committee
directors’ remuneration
the directors’ remuneration report
on pages 22 to 27 includes details of
remuneration policies and the
remuneration of directors
relationship with shareholders
the board led by the chairman
recognises the importance of
effective communication and
accountability to all shareholders and
is kept informed of their views
through frequent contact with the
housebrokers and feedback from
direct communications with and
presentations to institutional
investors and fund managers
each shareholder receives the annual
report and financial statements
containing the fullyear results and an
interim report on the halfyear results
following the announcement of
results presentations are given to the
investment community in london
and edinburgh the fullyear and half
year reports and presentations are
made available on the company’s
website wwwoffice2officecouk
the company’s annual general
meeting takes place in norwich and
formal notification together with the
annual report and financial
statements is sent to shareholders at
least 20 working days in advance of
the meeting all board members are
available formally during the annual
general meeting and informally
afterwards for questions each item of
business is the subject of a separate
resolution the collection and analysis
of the proxy votes is handled
independently by the company’s
registrars the chairman announces
the results of the proxy votes after
shareholders have voted on a show of
hands these results are also made
available on the company’s website
details of the 2008 agm are set out in
the notice of the meeting enclosed
with this report
the chairman and the nonexecutive
directors are always available to
shareholders on all matters relating
to governance and strategy they
may be contacted through the
company’s website
internal control
the board has overall responsibility
for the group’s systems of internal
controls and delegates the annual
review of internal control processes
and their effectiveness to the audit
committee 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
only provide reasonable and not
absolute assurance against material
misstatement or loss necessary
actions are taken to remedy any
significant failings or weaknesses as
they are identified when the board
reviews the effectiveness of the
system of internal control 18
corporate governance statement continued
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 the daytoday operations
including regular meetings with
senior staff from across the group
and a review of the monthly
operational reports compiled by
the senior management
•
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 which is considered and
approved by the board
•
group management accounts are
prepared monthly and submitted
to the board for review variances
from budget and prior year are
closely monitored and
explanations are provided for
significant variances detailed
expense reports with comparisons
against budget are issued monthly
to cost centre managers to assist
in cost control 
•
a continuous process for
identifying evaluating and
managing significant risks across
the group together with a
comprehensive annual review of
risks which covers both financial
and nonfinancial areas 
•
an annual review of insurance cover
for the group including a review of
disaster recovery plans for it and
the warehouses the significant risks
facing the business are considered
to be those of a catastrophic nature
being either a disaster in the
warehouse or it infrastructure and
• a risk review committee to oversee
the embedding of internal controls
and risk management into the
organisation the risk review
committee chaired by 
peter bertram comprises the 
chief executive and the finance
director
in previous years the risk review
committee had met to review
updates to the risk register initially
compiled after a review of the
group’s internal controls and risk
management in line with turnbull
guidance and which scores risks
on the basis of likelihood of
occurrence and impact on the
business in february 2007 a
reassessment of the risks facing
the business was undertaken and
a number of areas were prioritised
for a review the key areas are
detailed below a more proactive
approach was required and as a
result steering committees were
set up with a specific focus on
operational commercial and
strategic issues and matters
including sales strategy and health
and safety were subject to
independent review these
reviews were extended across the
whole group following
withdrawal from mod supply and
prior to a restructuring of the
business although no risk review
committee meetings were
convened during 2007 the
committee was represented by its
individual members attending
meetings of the steering
committees 
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 senior
management meetings
a summary report on the group’s
policies and objectives for corporate
social responsibility is set out on
pages 9 to 10
d rodwell
company secretary
27 february 2008  o2o plc annual report 2007
19
role of the nomination
committee
the nomination committee is a sub
committee of the board and is
responsible for all appointments to
the board giving full consideration to
succession plans and the leadership
of the group it makes
recommendations to the board of
any changes to the board and its
committees it considers necessary
and also reviews the senior
management structure the
committee has a formal procedure
for appointments to the board and
senior management team which is
available together with the
committee’s terms of reference on
the company’s website
wwwoffice2officecouk
composition of the nomination
committee
the nomination committee
comprises the chairman and the
independent nonexecutive
directors during his period as
executive chairman david callear
resigned his chairmanship in
accordance with the combined code
and the committee was temporarily
chaired by jim cohen the company
secretary is secretary to the
nomination committee the
committee meets to deal with
assignments in accordance with
company needs and best practice in
corporate governance 
main activities of the
nomination committee
in 2007 the nomination committee
met on four occasions
in january the committee met twice
to deal with succession plans and
review the structure and
responsibilities of the board and the
senior management team
following the resignation of ray peck
in february 2007 the committee met
to discuss how responsibilities would
be covered whilst a replacement
chief executive was sought 
david callear agreed to temporarily
extend his role to take on the
responsibilities of the chief executive
and mark cunningham agreed to
extend his role to take on the
responsibility for logistics and it in
addition to that of finance director
in order to facilitate this the chief
financial officer mark goddard
assumed a number of the finance
director’s daytoday responsibilities
and the nonexecutive directors
offered more of their time to assist as
required the committee also
appointed recruitment consultants to
search for a replacement chief
executive
in april the committee met with the
candidates shortlisted for the role of
chief executive and acting on their
recommendations the board offered
the position to simon moate
d j callear
chairman of the nomination
committee
27 february 2008
nomination committee report 20
role of the audit committee
the audit committee is a sub
committee of the board whose
responsibilities include
•
reviewing the interim report the
annual report and accounts
results announcements of the
group 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 of
internal financial control risk
management policies and
procedures 
•
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 accounts and systems of
internal financial control and risk
management and
•
monitoring the group’s whistle
blowing procedures
composition of the audit
committee
the audit committee comprises both
independent nonexecutive directors
whose biographical details are
included on page 11 and their
remuneration on pages 22 to 27
peter bertram chairman of the audit
committee is a chartered
accountant noncommittee
members and the company’s
external auditors are invited to attend
meetings as and when appropriate
at least once each year
representatives of the group’s
external auditors meet the audit
committee without any executive
directors being present the
company secretary is secretary to
the audit committee the
committee’s terms of reference are
available on the company’s website
wwwoffice2officecouk
main activities of the audit
committee
the audit committee met on three
occasions in 2007 with other board
members and the auditors attending
as required two of these meetings
were to review the 2006 fullyear
results and the 2007 halfyear results
prior to recommending them to the
board for approval the committee
also reviewed the results
announcements and presentations to
investors and received reports from
the external auditors on their work in
december 2007 the committee met
the external auditors who set out
their audit approach and procedures
including matters relating to scope
auditor independence and fees for
the full year audit at the same
meeting the committee reviewed
the whistleblowing policy and
considered the scope of the work
done by the steering committees
and the need for an internal audit
function
review of risk management and
internal control
in february 2007 a number of areas
of potential risk were prioritised for
review and specific steering
committees were established to drive
this forward these reviews were later
extended across the whole of the
group prior to restructuring 
• loss of a large customer
the impact on the business of
withdrawing from mod supply was
considered well before the decision
to withdraw from the eauction
process a detailed contingency plan
was formulated quantified and
approved by the board before the 
eauction tender process had
commenced due to the advanced
nature of the planning the business
was able to respond rapidly to the
withdrawal from the eauction
process and allowed the cost base to
be reduced with minimal disruption
this experience with historically our
largest customer coupled with the
programme to diversify our customer
base stands us in good stead to react
to any other customer losses that
may arise
• warehouse and it infrastructure
mark cunningham took on the
responsibility for the logistics and it
functions and in conjunction with
the logistics steering committee
established early 2007 focused on
improving efficiency and achieving
cost savings the focus during the
second half of 2007 was directed
towards the opportunity to further
reduce the cost base afforded by
withdrawal from mod supply the
responsibility for the further
development of our it infrastructure
has now been handed to steve
mckeever our newly appointed chief
information officer
• health and safety
health and safety risk assessment had
previously been conducted by
internal resource the board
considered that in order to maintain
the integrity of these assessments an
independent review should be
undertaken this review which
concentrated on the main
warehouses was completed in
october and presented to the board
and senior management as part of a
health and safety training
programme although no major
exposure was unveiled a number of
improvements were identified and
the operations director was given
responsibility for implementing
these an independent third party
has since been appointed to extend
risk assessment and audit to other
areas of the business during 2008
in december 2007 the audit
committee reviewed the results of
these initiatives and were satisfied
that the proactive approach taken in
identifying risk and resolving control
issues had resulted in many positive
outcomes not least the forecast that
the full year financial results would be
in line with expectations as a
consequence the audit committee
were of the opinion that there is
currently no need for an internal
audit function
audit committee report o2o plc annual report 2007
21
audit committee report continued
• review of whistleblowing policy
no concerns were reported in the
year and following a review of the
policy the committee did not
consider that any changes were
necessary the policy is available on
the company’s website
wwwoffice2officecouk
independence of external
auditors
the audit committee monitors the
independence and objectivity of the
external auditors by keeping under
review the relationship between the
group and the external auditors and
ensuring group policy is followed in
relation to the provision of nonaudit
services
the committee meets with the
external auditors to review and
approve audit scope and fees and
obtain written confirmation of their
independence following the audit
the committee meets with the
external auditors without the
executive directors being present
and also discusses the efficiency of
the audit process with the
executive directors
company policy on the provision of
nonaudit services requires that
other than for corporate taxation
services approval is sought from the
audit committee in advance of any
engagement the audit committee
will consider taking into account the
scope of the work and level of fees
involved whether the provision of
such nonaudit services impairs the
independence and objectivity of the
external auditors
p m bertram
chairman of the audit committee
27 february 2008 22
remuneration committee and
its terms of reference
the remuneration committee is a
subcommittee of the board and
membership was previously confined
to nonexecutive directors who are
independent of management and
free from any business or other
relationship which could interfere
with the exercise of their
independent judgement during the
year following a change in the
combined code and upon
relinquishing his temporary role as
executive chairman david callear
became a member of the committee
the chairman of the remuneration
committee is jim cohen when
necessary noncommittee members
are invited to attend by prior
arrangement the committee met
five times in the year
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 executive management are
recruited developed and
remunerated in an appropriate
fashion in determining remuneration
packages and policies due regard is
given to any legal requirements the
provisions of the combined code
2006 the listing rules of the
financial services authority and the
directors’ remuneration report
regulations 2002 during the year
the committee met to discuss
aligning the incentive arrangements
of senior management for 2008
following on from this we consulted
with the major shareholders the
association of british insurers abi
and the research recommendations
and electronic voting agency rrev
as detailed below the committee
uses new bridge street consultants
llp and macfarlanes as its
professional advisers on executive
remuneration and employee share
schemes
the terms of reference of the
committee are available on the
company’s website
wwwoffice2officecouk 
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 long term
incentive schemes taxable benefits
saye option schemes 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 the
group’s performance against financial
objectives and when deemed
appropriate information from
independent remuneration
consultants’ sources on levels of
salary for similar jobs
the annual cash bonus scheme for
executive directors in 2007 was
based on earnings per share
performance against the prior year
and individual personal objectives
with payment dependent upon the
achievement of preagreed targets
and up to a maximum of 60 of
basic salary for exceptional
performance the actual growth in
earnings per share in 2007 was below
these targets however simon moate
and mark cunningham have each
been awarded a bonus to recognise
their performance in the
restructuring activity 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
will provide the best measure for the
target 
pension contributions of up to 10
of basic salary were made to the
personal pension schemes of the
current executive directors 
simon moate’s service agreement
dated 8 may 2007 with an effective
appointment date of 30 july 2007 is
terminable on 12 month’s notice by
either party with the right for the
company to make a payment in lieu
of salary and benefits excluding
bonus for any unexpired period of
notice it also contains a change of
control clause which removes his
obligation to mitigate following a
change of control of the company in
the first twelve months of
employment this clause is valid until
29 july 2008
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 2007 in accordance with the
regulations a resolution to approve this report will be proposed at the
forthcoming agm
directors’ remuneration report o2o plc annual report 2007
23
mark cunningham’s service
agreement of 23 june 2004 was
amended with effect from 1 january
2008 to reflect a 12 month notice
period by either party with the right
for the company to make a payment
in lieu of salary and benefits
excluding bonus for any unexpired
period of notice his other terms and
conditions of employment are
unchanged
following his resignation on
1 february 2007 and in accordance
with his service agreement ray peck
received 6 month’s payment of salary
and benefits in lieu of notice pension
contributions of 15 of basic salary
were paid over this period a
payment of £30000 for loss of office
was also made details are provided
on page 26
save as you earn share option
scheme saye
the group operates an inland
revenue approved saye scheme
open to all employees and in which
mark cunningham currently
participates since joining o2o in
july 2007 simon moate has not had
the opportunity to participate in the
scheme details are provided on
page 27
long term incentive plans
the company currently operates a
long term incentive plan the
performance share plan psp as
detailed below the company also
has a deferred share bonus plan
dsbp which has been inactive since
inception both these plans were
approved by shareholders in
november 2005 following a review
by an independent adviser and
consultation with shareholders and
the abi in line with abi guidelines
awards granted under this plan are
subject to dilution limits 
performance share plan
the psp rules allow awards over
shares subject to performance
criteria as detailed below and vesting
in three years to be made to
individuals in any year of a value of
up to 100 of basic salary in
exceptional circumstances the
remuneration committee has
discretion to increase the award to
up to 200 of basic salary in
accordance with the scheme rules
the number of shares awarded are
calculated by reference to the three
day average of the closing mid
market quotation of the company’s
share price prior to the award date
the exercise price of options under
the psp scheme is 01p per share
mark cunningham currently holds
awards over 38011 shares following
grants made in december 2005 and
april 2006 based on an average
share price of 2560p and 24767p
respectively in september 2007
simon moate was granted an award
over 232907 shares 064 of the
issued ordinary share capital based
on an average share price of 1890p
representing 200 of his basic salary
further details of the awards are
given on page 27 and in note 25 to
the financial statements
the psp will reward participants by
reference to performance criteria
based in equal proportion on i a
comparative measure of total
shareholder return tsr against the
companies in the ftse small cap
index and ii the company’s earnings
per share eps growth the
combined use of tsr and eps targets
is intended to incentivise participants
to deliver substantial real earnings
growth in addition to generating
above market returns for
shareholders 
the portion of any award based on
tsr will other than as discussed
below vest 25 for median
performance with full vesting at the
upper quartile level and the
proportion vesting increasing on a
straightline basis between these
points tsr will be measured over a
three year performance period
the balance of the award will be
based on the company’s eps growth
other than as discussed below this
part of the award will vest 25 if eps
grows by an average of 4 per
annum more than the increase in rpi
over a three year performance
period if eps grows by an average of
15 per annum more than the
increase in rpi over the period this
portion of the award will vest in full
for eps growth between these levels
the proportion vesting will increase
on a straightline basis eps growth
will be measured over a three year
period 
the psp award granted to simon
moate on joining the company is
subject to eps and tsr performance
conditions that portion based on
tsr will vest 40 for median
performance with full vesting at the
upper quartile that portion based on
eps will vest 50 if eps grows by an
average of 4 per annum more than
the increase in rpi over a three year
performance period if eps grows by
an average of 8 per annum more
than the increase in rpi over the
same period this portion of the
award will vest in full 
in november 2007 we wrote to the
major institutional investors setting
out the plans for the 2008 psp
awards the intention is to provide a
common incentive to the whole of
the new management team which
will have common goals and a
shared responsibility in driving the
company forward this will increase
participation in the psp  but this is
balanced by continuing to hold the
dsbp inactive at least through 2008
having taken into account the views
of major   and having advised the abi
and rrev the performance targets
will continue to be split 5050 eps
and tsr the eps element will reflect
those targets applied to simon
moate’s 2007 award as detailed
above and the tsr element will
remain as before with 25 vesting at
median and full vesting at the upper
quartile
in the event of a takeover all awards
granted under the psp  vest or
become exercisable to the extent
that the performance targets have
been achieved as determined by the
remuneration committee in the
event of a reorganisation the awards
may be exchanged for options over
shares in the new holding company
on such terms determined by the
committee
directors’ remuneration report continued 24
chairman and nonexecutive
directors
the chairman’s and nonexecutive
directors’ service agreements were
renewed during the year following
the expiry of their initial three year
term the agreements are for a
further three years ending on 
28 june 2010 and are terminable on
three months’ notice by either the
company or the relevant director
the chairman’s and nonexecutive
directors’ remuneration is non
pensionable 
the remuneration of the non
executive directors is determined by
the board to reflect the time
commitment and responsibilities of
the role in 2007 the nonexecutive
directors’ remuneration included fees
for additional services provided
the remuneration of the chairman is
determined by the remuneration
committee during his time as
executive chairman david callear’s
basic salary was increased to reflect
the increased time commitment and
responsibilities 
the chairman and nonexecutive
directors are not eligible to
participate in any of the company’s
share option or group bonus
schemes
directors’ remuneration report continued o2o plc annual report 2007
25
directors’ remuneration report continued
15000
13000
11000
9000
7000
5000
jun 04
aug 04
oct 04
dec 04
feb 05
apr 05
jun 05
aug 05
oct 05
dec 05
feb 06
apr 06
jun 06
aug 06
oct 06
dec 06
office2office
ftse small cap
17000
19000
feb 07
apr 07
jun 07
aug 07
oct 07
dec 07
29th june 2004 to 31st december 2007
performance graph
the graph below shows office2office’s total shareholder return performance compared to the ftse small cap index
of which office2office was until 17 december 2007 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 from flotation to 31 december 2007 26
directors’ remuneration report continued
2007 2007 2007 2007 2007 2006
salary compensation allowances annual total total
fees for loss and benefits bonus
of office in kind
£000 £000 £000 £000 £000 £000
chairman
d j callear 213    213 79
executive
m a cunningham 149  10 60 219 147
s r moate appointed july 2007 135  4 41 180 
r c peck resigned february 2007 112  30 4  146 206
subtotal 396 30 18 101 545 353
nonexecutive
p m bertram 48    48 37
j l cohen 52    52 34
subtotal 100    100 71
total 709 30 18 101 858 503
 includes £98989 for 6 month’s payment of salary and benefits in lieu of notice
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
directors’ pensions – audited
pension contributions reflect amounts payable to defined contribution personal pension schemes
the contributions payable to personal pension schemes in the year are shown below
pension contributions
2007 2006
m a cunningham 15 14
s r moate appointed july 2007 9 
r c peck resigned february 2007 17 29
41 43
directors’ interests – unaudited
the beneficial interests of the directors and their immediate families in the share capital of office2office plc at the year
end are set out below  
number of ordinary shares
2007 2006
d j callear 350991 340991
m a cunningham 1086562 1086562
s r moate appointed july 2007 11000 
r c peck resigned february 2007 2661454 3311454
there have been no changes in the directors’ interests between 31 december 2007 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’ remuneration earned in 2007– audited
the emoluments of the directors excluding pension contributions are shown below o2o plc annual report 2007
27
directors’ remuneration report continued
directors’ share options – audited  
awards granted to directors under the psp were as follows
exercise 
price per exercisable expiry
1 jan 07 granted exercised lapsed 31 dec 07 share from date
m a cunningham
2005 psp award 16406    16406 01p 211208 210609
2006 psp award 21605    21605 01p 240409 241009
38011    38011
s r moate appointed july 2007
2007 psp award  232907   232907 01p 110910 110311
r c peck resigned february 2007
2005 psp award 16406   16406  01p 211208 210609
2006 psp award 30745   30745  01p 240409 241009
47151   47151 
the award granted during the year was made on 11 september 2007 the market price of ordinary shares at the date of
grant was 1920p
beneficial options granted to directors under the saye scheme were as follows  
exercise 
price per exercisable expiry
1 jan 07 granted exercised lapsed 31 dec 07 share from date
m a cunningham 5521    5521 1716p 011207 310508
r c peck 
resigned february 2007 5521   5521  1716p 011207 310508
the closing market price of ordinary shares at 31 december 2007 was 1195p the shares traded in the range 11275p to
2555p during the year
the details and the performance criteria in respect of the above schemes are discussed on page 23
j l cohen
chairman of the remuneration committee
27 february 2008  28
report of the independent auditors
we have audited the group and
parent company financial statements
the ‘‘financial statements’’ of
office2office plc for the year ended
31 december 2007 which comprise
the consolidated income statement
the consolidated and parent
company balance sheets the
consolidated and parent company
statements of changes in equity the
consolidated and parent company
cash flow statements and the related
notes these financial statements
have been prepared under the
accounting policies set out therein
we have also audited the information
in the directors’ remuneration report
that is described as having been
audited
respective responsibilities of
directors and auditors
the directors’ responsibilities for
preparing the annual report the
directors’ remuneration report and
the financial statements in
accordance with applicable law and
international financial reporting
standards ifrss as adopted by the
european union are set out in the
statement of directors’
responsibilities
our responsibility is to audit the
financial statements and the part of
the directors’ remuneration report
to be audited in accordance with
relevant legal and regulatory
requirements and international
standards on auditing uk and
ireland 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 part of
the directors’ remuneration report
to be audited have been properly
prepared in accordance with the
companies act 1985 and as regards
the group financial statements
article 4 of the ias regulation we
also report to you whether in our
opinion the information given in the
directors’ report is consistent with
the financial statements the
information given in the directors’
report includes that specific
information presented in the
chairman’s statement the chief
executive’s review and the financial
review that is cross referred from the
business review section of the
directors’ report 
in addition we report to you if in our
opinion 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
other transactions is not disclosed
we review whether the corporate
governance statement reflects the
company’s compliance with the nine
provisions of the combined code
2006 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
we read other information contained
in the annual report and consider
whether it is consistent with the
audited financial statements the
other information comprises only the
chairman’s statement the chief
executive’s review the financial
review the corporate social
responsibility statement the
directors’ report the corporate
governance statement the
nomination committee report the
audit committee report and the
unaudited part of the directors’
remuneration report we consider
the implications for our report if we
become aware of any apparent mis
statements or material
inconsistencies with the financial
statements our responsibilities do
not extend to any other information
basis of audit opinion
we conducted our audit in
accordance with international
standards on auditing uk and
ireland 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 part of the directors’
remuneration report to be audited it
also includes an assessment of the
significant estimates and judgments
made by the directors in the
preparation of the financial
statements and of whether the
accounting policies are appropriate to
the group’s and 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 part of the
directors’ remuneration report to be
audited are free from material mis
statement 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 and the part of
the directors’ remuneration report to
be audited
opinion
in our opinion
•
the group financial statements
give a true and fair view in
accordance with ifrss as adopted
by the european union of the
state of the group’s affairs as at 
31 december 2007 and of its
profit and cash flows for the year
then ended
•
the parent company financial
statements give a true and fair
view in accordance with ifrss as
adopted by the european union
as applied in accordance with the
provisions of the companies act o2o plc annual report 2007
29
report of the independent auditors continued
1985 of the state of the parent
company’s affairs as at 
31 december 2007 and cash flows
for the year then ended
•
the financial statements and the
part of the directors’
remuneration report to be
audited have been properly
prepared in accordance with the
companies act 1985 and as
regards the group financial
statements article 4 of the ias
regulation and
•
the information given in the
directors report is consistent with
the financial statements
as explained in the principal
accounting policies to the group
financial statements the group in
addition to complying with its legal
obligation to comply with ifrss as
adopted by the european union
pricewaterhousecoopers llp
chartered accountants and
registered auditors
norwich
27 february 2008
‘the maintenance and integrity of the office2office
website is the responsibility of the directors the work
carried out by the auditors does not involve
consideration of these matters and accordingly the
auditors accept no responsibility for any changes that
may have occurred to the financial statements since
they were initially presented on the website  
legislation in the united kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions’ 30
consolidated income statement for the year ended 31 december 2007
2007 2006
note £000 £000
revenue 3 167862 165897
cost of sales 114276 112787
gross profit 53586 53110
distribution costs 22082 21927
administrative expenses 22386 20471
operating profit 4 9118 10712
finance income 512 409
finance costs 627 776
finance costs  net 8 115 367
profit before income tax 9003 10345
analysed as
underlying profit before income tax 11579 11505
share option charges 25 243 768
exceptional and nonrecurring costs 5 2333 392
profit before income tax 3 9003 10345
income tax expense 9 2733 3149
profit for the year 6270 7196
earnings per ordinary share
basic 11 174p 202p
diluted 11 173p 197p
 profit before income tax exceptional and nonrecurring costs and share option charges
 restated to reflect the disclosure of the analysis of underlying profit before income tax share option charges and exceptional and non
recurring costs see note 5 for further detail on exceptional and nonrecurring costs
all amounts relate to continuing operations
the company has elected to take exemption under section 230 of the companies act 1985 to not present the parent company’s income
statement the profit for the parent company for the year was £4275000 2006 £4286000
 o2o plc annual report 2007
31
consolidated and parent company balance sheets as at 31 december 2007
2007 2006 2007 2006
note £000 £000 £000 £000
assets
noncurrent assets
property plant and equipment 12 1740 2330  
intangible assets 13 13607 13565  
investments in subsidiaries 14   5586 5586
deferred income tax asset 15 1316 1614  
16663 17509 5586 5586
current assets
inventories 16 6513 7982  
trade and other receivables 17 20052 18504 8861 8623
cash and cash equivalents 18 6963 6290 1 340
33528 32776 8862 8963
liabilities
current liabilities
trade and other payables 19 30242 31851 25 25
financial liabilities 20a 177 178  
current income tax liabilities 21 720 1100 38 
31139 33129 63 25
net current assetsliabilities 2389 353 8799 8938
noncurrent liabilities
financial liabilities 20a 410 560  
provisions 22 602 453  
retirement benefit liability 23 1133 1310  
2145 2323  
net assets 16907 14833 14385 14524
equity
capital and reserves attributable to equity holders of the company
ordinary shares 24 363 363 363 363
share premium account 26 5009 5009 5009 5009
other reserves 26 46 11  
retained earnings 26 11489 9472 9013 9152
total equity 16907 14833 14385 14524
 restated to reflect the presentation of property dilapidation provisions on the termination of leases as provisions see note 22
the financial statements comprising the consolidated income statement the consolidated and parent company balance sheets the
consolidated and parent company cash flow statements and the consolidated and parent company statements of changes in equity were
approved for issue by the board of directors on 27 february 2008
d j callear
chairman
27 february 2008

group company 32
consolidated and parent company statements of changes
in equity for the year ended 31 december 2007
2007 2006 2007 2006
£000 £000 £000 £000
currency translation differences 57 5  
net gainslosses recognised directly in equity 57 5  
profit for the year 6270 7196 4275 4286
total recognised income for the year 6327 7191 4275 4286
employee share options
 value of employee services 232 683  
 deferred tax on share options 49 20  
 proceeds from share options 2 4  
purchase of shares by employee benefit trust 958  958 
deferred tax charged directly to equity upon change of united kingdom 24   
corporation tax rate
dividends and other appropriations
 ordinary shares 3456 3353 3456 3353
2074 4545 139 933
balance at 1 january 14833 10288 14524 13591
balance at 31 december 16907 14833 14385 14524
group company o2o plc annual report 2007
33
consolidated and parent company cash flow statements
for the year ended 31 december 2007
2007 2006 2007 2006
note £000 £000 £000 £000
cash flows from operating activities 
cash generatedused in operations 27 8394 11321 238 905
interest received 512 409 313 286
interest paid 595 745  
interest element of finance lease repayments 32 29  
income tax paid 2857 3274  18
net cash generated fromused in operating activities 5422 7682 75 637
cash flows from investing activities
purchase of property plant and equipment 184 588  
purchase of alpha office limited including overdrafts  2247  
dividends received   4000 4000
net cash used infrom investing activities 184 2835 4000 4000
cash flows from financing activities
finance lease principal payments 151 234  
repayment of borrowings  107  
purchase of shares by employee benefit trust 958  958 
dividends paid to company’s shareholders 10 3456 3353 3456 3353
net cash used in financing activities 4565 3694 4414 3353
net increasedecrease in cash and cash equivalents 673 1153 339 10
cash and cash equivalents at 1 january 6290 5137 340 330
cash and cash equivalents at 31 december 18 6963 6290 1 340
group company 34
principal accounting policies for the year ended 31 december 2007
the principal accounting policies
adopted in the preparation of these
financial statements are set out
below
basis of preparation
the principal accounting policies
applied in the preparation of these
consolidated financial statements are
set out below these policies have
been consistently applied to all the
years presented unless otherwise
stated
the consolidated financial statements
of office2office plc have been
prepared in accordance with
international financial reporting
standards as adopted by the
european union ifrss as adopted by
the eu ifric interpretations and the
companies act 1985 applicable to
companies reporting under ifrs the
consolidated financial statements
have been prepared under the
historical cost convention
the preparation of financial
statements in conformity with ifrs
requires the use of certain critical
accounting estimates it also requires
management to exercise its
judgement in the process of applying
the group’s accounting policies the
areas involving a higher degree of
judgement or complexity or areas
where assumptions and estimates are
significant to the consolidated
financial statements are disclosed in
note 2
standards amendments and
interpretations effective in 2007
•
ifric 8 ‘scope of ifrs 2’  requires
consideration of transactions
involving the issuance of equity
instruments where the identifiable
consideration received is less than
the fair value of the equity
instruments issued in order to
establish whether or not they fall
within the scope of ifrs 2 this
standard does not have any
impact on the group or
companys financial statements 
•
ifric 11 ‘ifrs 2 – group and
treasury share transactions’  ifric
11 provides guidance on whether
sharebased transactions involving
treasury shares or involving group
entities for example options over
a parents shares should be
accounted for as equitysettled or
cashsettled sharebased payment
transactions in the standalone
accounts of the parent and group
companies this interpretation
does not have an impact on the
group or companys financial
statements
•
ifrs 7 ‘financial instruments
disclosures’  and the
complementary amendment to
ias 1 ‘presentation of financial
statements – capital disclosures’ 
introduces new disclosures
relating to financial instruments
and does not have any impact on
the classification and valuation of
the group or company’s financial
instruments or the disclosures
relating to taxation and trade and
other payables
standards and interpretations to
existing standards that are not yet
effective and have not been early
adopted
the following standards and
interpretations to existing standards
have been published that are
mandatory for the group’s accounting
periods beginning on or after 1
january 2008 or later periods but
which the group has not early
adopted
•
ifric 14 ‘ias 19 – the limit on a
defined benefit asset minimum
funding requirements and their
interaction’ effective from 1
january 2008 ifric 14 provides
guidance on assessing the limit
in ias 19 ‘employee benefits’ on
the amount of the defined
benefit plan surplus that can be
recognised as an asset it also
explains how the pension asset
or liability may be affected by a
statutory or contractual
minimum funding requirement
the group will apply ifric 14
from 1 january 2008 but it is not
expected to have any impact on
the group or companys
financial statements 
•
ifrs 8 ‘operating segments’  this
standard is effective for
accounting periods beginning on
or after 1 january 2009 and
introduces new rules on the
disclosure of operating results by
business segment the new
standard requires a management
approach under which segment
information is presented on the
same basis as that used for
internal reporting procedures the
group will apply ifrs 8 from 1
january 2009 the resultant impact
is still being assessed by
management but it is not
expected based upon the present
operations of the group that
there will be any significant
impact
•
ias 23 ‘borrowing costs’ as revised
this standard is effective for
accounting periods beginning on
or after 1 january 2009 the main
change from the previous version
is the removal of the option of
immediately recognising as an
expense borrowing costs that
relate to assets that take a
substantial period of time to get
ready for use or sale the impact of
ias 23 is dependent upon the
extent of qualifying expenditure
from 1 july 2009 onwards and
hence cannot be quantified at the
moment
•
ifrs 3 ‘business combinations’ as
revised this standard is applicable
to business combinations
occurring in accounting periods
beginning on or after 1 july 2009
this standard continues to apply
the acquisition method to
business combinations with some
significant changes for example
all payments to purchase a
business are to be recorded at fair
value at the acquisition date with
some contingent payments
subsequently remeasured at fair
value through income goodwill
may be calculated based on the
parent’s share of net assets or it
may include goodwill related to
the minority interest all
transaction costs will be expensed 
standards and interpretations to
existing standards that are not yet
effective and not relevant for the
group’s operations
the following interpretations to
existing standards have been
published that are mandatory for the
group’s accounting periods
beginning on or after 1 january 2008
or later periods but are not relevant o2o plc annual report 2007
35
for the group’s operations
•
ifric 10 ‘interim financial
reporting and impairment’
prohibits the impairment losses
recognised in an interim period
on goodwill and investments in
equity instruments and in
financial assets carried at cost to
be reversed at a subsequent
balance sheet date this standard
does not currently have any
impact on the group or
companys financial statements
•
ifric 12 ‘service concession
arrangements’  ifric 12 applies to
contractual arrangements
whereby a private sector operator
participates in the development
financing operation and
maintenance of infrastructure for
public sector services for example
under pfi contracts this is not
relevant to the group as it does
not enter into such contracts
•
ifric 13 ‘customer loyalty
programmes’  ifric 13 clarifies that
where goods or services are sold
together with a customer loyalty
incentive for example loyalty
points or free products the
arrangement is a multipleelement
arrangement and the
consideration receivable from the
customer should be allocated
between the components of the
arrangement in proportion to their
fair values this is not relevant to
the group as it does not operate
or have plans to operate any such
loyalty schemes
•
ias 27 ‘consolidated and separate
financial statements’ as revised
this standard requires the effects
of all transactions with non
controlling minority interests to
be recorded in equity if there is no
change in control they will no
longer result in goodwill or gains
and losses this standard also
specifies the accounting when
control is lost any remaining
interest in the entity is re
measured to fair value and a gain
or loss is recognised in profit or
loss this is not relevant to the
group as it does not currently
have any noncontrolling interests
changes in accounting policy 
exceptional and nonrecurring
costs
during the period the group has
adopted an accounting policy in
respect of the classification of
exceptional and nonrecurring costs
the comparative figures have
therefore been restated accordingly
the effect of this change in
accounting policy was that
£2333000 2006 £392000 of
administrative expenses were
classified as ‘exceptional and non
recurring costs’ and presented
separately on the face of the income
statement there is no effect on profit
or net assets for the period
presented the only effect being to
restate the comparative amounts on
a comparable basis 
exceptional and nonrecurring costs
are those significant items which are
separately disclosed by virtue of their
size or incidence to enable a full
understanding of the group’s
financial performance transactions
which may give rise to exceptional
and nonrecurring costs are
principally restructuring related costs
and costs in respect of key
management changes
changes in presentation 
provisions
property dilapidation provisions on
the termination of leases have been
presented as provisions noncurrent
liabilities previously they were
included in accrued expenses and
deferred income within trade and
other payables due within one year
the comparatives in relation to trade
and other payables and provisions
have been restated in order to more
accurately reflect the nature of these
balances
basis of consolidation
subsidiaries are all entities including
special purpose entities over which
the group has the power to govern
the financial and operating policies
generally accompanying a
shareholding of more than one half
of the voting rights the existence
and effect of potential voting rights
that are currently exercisable or
convertible are considered when
assessing whether the group
controls another entity subsidiaries
are fully consolidated from the date
on which control is transferred to the
group they are deconsolidated
from the date that control ceases
the purchase method of accounting
is used to account for the acquisition
of subsidiaries by the group the cost
of an acquisition is measured as the
fair value of the assets given equity
instruments issued and liabilities
incurred or assumed at the date of
exchange plus costs directly
attributable to the acquisition
identifiable assets acquired and
liabilities and contingent liabilities
assumed in a business combination
are measured initially at their fair
values at the acquisition date
irrespective of the extent of any
minority interest the excess of the
cost of the acquisition over the fair
value of the group’s share of the
identifiable net assets acquired is
recorded as goodwill if the cost of
the acquisition is less than the fair
value of the net assets of the
subsidiary acquired the difference is
recognised directly in the income
statement
intercompany transactions balances
and unrealised gains on transactions
between group companies are
eliminated unrealised losses are also
eliminated but are considered for
impairment purposes in respect of
the asset transferred accounting
policies of subsidiaries have been
aligned where necessary to ensure
consistency with the policies
adopted by the group
revenue
revenue comprises the fair value of
sales to external customers exclusive
of vat  revenue is stated after
deducting rebates returns other
similar discounts and after eliminating
sales between group companies
revenue is recognised when the
significant risks and rewards of
ownership are transferred to a
customer which occurs on delivery of
goods
segment reporting
a business segment is a group of
assets and operations engaged in 
principal accounting policies for the year ended 31 december 2007 36
principal accounting policies for the year ended 31 december 2007
providing products or services that
are subject to risks and returns that
are different from those of other
business segments a geographical
segment is engaged in providing
products or services within a
particular economic environment that
are subject to risks and returns that
are different from those operating in
other economic environments
based on risks and returns the
directors consider that the primary
reporting format is by business
segment the directors consider that
there is only one business segment
being the supply of office and
business products therefore the
disclosures for the primary segment
have already been given in the
financial statements the secondary
reporting format is by geographical
analysis by origin and destination
foreign currency translation
the income and cash flow statements
of group undertakings expressed in
currencies other than sterling which
is determined as the primary
economic currency are translated at
the average rate of exchange for each
period which is deemed to
approximate to the actual rate ruling
at the date of transaction assets and
liabilities of these undertakings are
translated at the rate of exchange at
the end of each period
the differences between retained
profits of overseas subsidiaries
translated at average and closing
rates of exchange are taken to
reserves as are differences arising on
the retranslation to sterling using
closing rates of exchange of
overseas net assets at the beginning
of the period
foreign currency transactions are
initially recorded at the exchange
rate ruling at the date of the
transaction foreign exchange gains
and losses resulting from the
settlement of such transactions and
from the translation at period end
rates of exchange are recognised in
the income statement
goodwill
goodwill arising on acquisitions is
capitalised and is subject to annual
impairment review goodwill
represents the excess of the cost of
acquisition of a subsidiary over the
group’s share of the fair value of
identifiable net assets acquired at
the date of acquisition
goodwill acquired up to 31
december 2003 was capitalised and
amortised over its useful economic
life as permitted by ifrs1 firsttime
adoption of international financial
reporting standards the
classification and accounting
treatment of business combinations
made prior to 1 january 2004 has not
been amended on transition to ifrs
intangible assets
acquired intangible assets such as
contractual customer arrangements
are measured initially at fair value and
are amortised on a straightline basis
over their estimated useful lives
impairment of assets
assets that are subject to
amortisation or depreciation are
reviewed for impairment whenever
events or changes in circumstances
indicate that the carrying amount
may not be recoverable an
impairment loss is recognised in the
income statement for the amount by
which the asset’s carrying amount
exceeds its recoverable amount for
the purposes of assessing
impairment assets are grouped at
the lowest levels for which there are
separately identifiable cash flows
cashgenerating units
the recoverable amount is the higher
of an asset’s fair value less costs to sell
and value in use in assessing value in
use the estimated future cash flows
are discounted to their present value
using a pretax discount rate that
reflects current market assessments of
the time value of money and the risks
specific to the asset
in respect of assets other than
goodwill an impairment loss is
reversed if there has been a change
in the estimates used to determine
the recoverable amount an
impairment loss is reversed only to
the extent that the asset’s carrying
amount does not exceed the
carrying amount that would have
been determined net of depreciation
or amortisation if no impairment loss
had been recognised impairment
losses in respect of goodwill are not
reversed
property plant and equipment
property plant and equipment is
stated at historical cost less
accumulated depreciation and any
accumulated impairment losses
historical costs include expenditure
that is directly attributable to the
acquisition of the items the assets’
residual values and useful lives are
reviewed annually for impairment
and adjusted as appropriate
depreciation commences in the
month that the assets are fully
installed and commissioned and is
provided on a straightline basis at
rates calculated to write off the cost
less estimated residual value of each
asset over its expected useful life as
follows
short leasehold land and buildings 
– over the lease term
plant and machinery 
– over 4 to 15 years
office equipment 
– over 3 to 10 years
investments
in the company’s financial
statements investments in subsidiary
undertakings are initially stated at
cost provision is made for any
permanent diminution in the value of
these investments
leased assets
assets held under finance leases as
defined under ias 17 ‘leases’  are
capitalised and included as part of
property plant and equipment they
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 income
statement over the period of the
lease and represents a constant
proportion of the balance of capital
repayments outstanding leases in
which a significant proportion of the
risks and rewards of ownership are
retained by the lessor are classified as
operating leases rentals payable
under operating leases are charged
to the income statement on a o2o plc annual report 2007
37
principal accounting policies for the year ended 31 december 2007
straightline basis over the term of
the lease
inventories
inventories comprise goods held for
resale and are stated at the lower of
cost or net realisable value cost
includes all expenditure directly
attributable to bringing each product
to its present location and condition
on a first in first out method net
realisable value is based on estimated
selling price less further costs
expected to be incurred to
completion and disposal
cash and cash equivalents
cash and cash equivalents comprise
cash in hand and deposits with banks
that have a maturity of three months
or less from the date of inception
provisions
provisions for dilapidations represent
the current estimated costs to repair
leased properties which are required
to be made good before the
properties are returned at the end of
the leases provision is made on a
property by property basis and the
timing of the utilisation will differ for
each property
retirement benefit costs
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 165 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 a subsidiary company of
office2office plc
the net surplus or deficit of the
defined benefit pension scheme is
calculated in accordance with ias 19
‘employee benefits’  based on the fair
value of the plan assets less the
present value of the defined benefit
obligation at the balance sheet date
the defined benefit obligation is
calculated annually by independent
actuaries using the projected unit
credit method the present value of
defined benefit obligations is
determined by discounting the
estimated future cash outflows using
interest rates of highquality
corporate bonds that are determined
in the currency in which the benefits
will be paid and have terms to
maturity approximating to the terms
of the related pension liability
the group has in respect of ias19
and ifrs1 adopted the corridor
approach to account for its pension
scheme liability as a result all
cumulative actuarial gains and losses
at the date of transition to ifrs 1
january 2004 have been taken
directly to reserves in respect of
actuarial gains and losses that arise
subsequent to that date to the
extent that cumulatively they
exceed 10 per cent of the greater of
the present value of the defined
benefit obligation and the fair value
of the plan assets that portion is
recognised in the income statement
over the expected average remaining
working lives of the employees
participating in the plan otherwise
the accumulated actuarial gains and
losses are not recognised
where the actuarial valuation of the
scheme demonstrates that the
scheme is in surplus the recognised
asset is limited to that for which the
group can benefit in future for
example by refunds or a reduction in
contributions
the cost charged to administrative
expenses in the income statement
consists of current service cost
interest cost expected return on plan
assets past service cost and the
impact of any settlements or
curtailments as well as actuarial
gains or losses to the extent that they
are recognised
since 30 september 1996 all new
employees have been eligible to join
the groups personal pension
scheme which is a defined
contribution scheme contributions
to defined contribution
arrangements are charged to the
income statement in the period in
which they fall due
a valuation is performed annually by
an independent actuary further
details in respect of the assumptions
used in providing the valuation are
included in note 23
sharebased compensation
the group operates a number of
share based compensation schemes
including a saye scheme which is
open to all employees the fair value
of the employee services received in
exchange for the grant of options
approximated by reference to the
fair value of the option granted is
recognised as an expense the fair
value of the option is measured at
grant date and spread over the
vesting period through the income
statement with a corresponding
increase in equity the fair value of
the share options and awards are
measured using an optionpricing
model taking into account the terms
and conditions of the individual
schemes the fair value of options
awarded under schemes with market
based performance conditions is
estimated using a montecarlo
model the fair value of options
awarded under schemes with non
market based performance
conditions is estimated using a black
scholes model
shares purchased through the
employee benefit trust ebt are held
at cost and treated as treasury shares
and are deducted from shareholders’
equity the right to a dividend on
these shares has been waived 
the group makes charges to the
income statement for any potential
employer’s national insurance liability
on options granted based on the
company’s best estimate of the fair
value of the options granted at the
balance sheet date and spread over
the vesting period of the option
the fair value of the options granted
under the various schemes has been
accounted for in the groups financial
statements these amounts are
recharged to group companies
through the intercompany accounts
in both current and prior years
at each balance sheet date the
group revises its estimate of the
number of options that are going to
vest the group recognises the
impact of any revision to original
estimates if any in the income 38
principal accounting policies for the year ended 31 december 2007
statement with a corresponding
adjustment to equity the proceeds
on exercise of options net of any
directly attributable transaction costs
are credited to share capital and
share premium
current and deferred income tax
the tax charge for the period
comprises both current and deferred
tax tax is recognised in the income
statement except to the extent that it
relates to items recognised directly in
equity in which case it is recognised
in equity
current tax is the expected tax
payable on the taxable income for the
period and any adjustment to tax
payable in respect of previous periods  
deferred tax is provided in full using
the balance sheet liability method on
temporary differences between the
tax bases of assets and liabilities and
their carrying value for accounting
purposes  
deferred tax is determined on a non
discounted basis using tax rates and
laws that have been enacted or
substantially enacted by the balance
sheet date and are expected to apply
when the related deferred tax asset is
realised or deferred tax liability is
settled 
deferred tax is provided on temporary
differences arising on investments in
subsidiaries except where the timing
of the reversal of the temporary
difference is controlled by the group
and it is probable that the temporary
difference will not reverse in the
foreseeable future
where the intrinsic value of a share
option exceeds the fair value the
corresponding deferred tax on the
excess is recognised directly in equity
a deferred tax asset is recognised only
to the extent that it is probable that
sufficient taxable profit will be
available to utilise the temporary
difference
financial instruments
financial assets and financial liabilities
are recognised on the groups
balance sheet when the group
becomes a party to the contractual
provisions of the instrument
•
trade receivables trade
receivables are recognised initially
at fair value less provision for
impairment a provision for
impairment of trade receivables is
established when there is
objective evidence that the group
will not be able to collect all
amounts due according to the
original terms of the receivables
significant financial difficulties of
the debtor probability that the
debtor will enter bankruptcy or
financial reorganisation and
default or delinquency in
payments more than 60 days
overdue are considered indicators
that the trade receivable is
impaired the amount of the
provision is the difference
between the asset’s carrying
amount and the present value of
estimated future cash flows the
carrying amount of the asset is
reduced through the use of an
allowance account and the
amount of the loss is recognised
in the income statement within
cost of sales when a trade
receivable is uncollectable it is
written off against the allowance
account for trade receivables
subsequent recoveries of amounts
previously written off are credited
against administration expenses in
the income statement
•
financial liabilities and equity
instruments financial liabilities
and equity instruments are
classified according to the
substance of the contractual
arrangements entered into an
equity instrument is any contract
that gives a residual interest in the
assets of the group after deducting
all of its liabilities
•
interestbearing borrowings
interestbearing bank loans and
overdrafts are initially recorded at
the proceeds received net of
associated transaction costs
subsequent to initial recognition
interestbearing borrowings are stated
at amortised cost with any difference
between cost and redemption value
being recognised in the income
statement over the period of the
borrowings
•
trade payables trade payables are not
interestbearing and are stated at their
nominal value which approximates to
fair value
•
equity instruments equity instruments
issued by the company are recorded
at the proceeds received net of direct
issue costs where any group company
purchases the companys equity share
capital treasury shares the
consideration paid including any
directly attributable incremental costs
net of income taxes is deducted from
equity attributable to the company’s
equity holders until the shares are
cancelled or reissued where such
shares are subsequently reissued any
consideration received net of any
directly attributable incremental
transaction costs and the related
income tax effects is included in
equity attributable to the company’s
equity holders 
dividends
distributions to equity holders are
disclosed as a component of the
movement in shareholders equity a
liability is recorded for a final dividend
when the dividend is approved by the
companys shareholders interim
dividends are recognised in the period
they are paid 
use of nongaap profit measures
the directors believe that the use of
underlying profit before income tax
provides a clearer understanding of the
performance of the group
underlying profit is calculated as follows
2007 2006
£000 £000
profit before income tax 9003 10345
less
share option charges 243 768
exceptional and nonrecurring costs 2333 392
underlying profit before income tax 11579 11505 o2o plc annual report 2007
39
notes to the financial statements for the year ended 31 december 2007
the group’s activities expose it to a variety of financial risks market risk including currency risk and interest rate risk
credit risk and liquidity risk the group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the group’s financial performance
a market risk
i currency risk
the group operates in the united kingdom and republic of ireland and accordingly has limited exposure to foreign
exchange risk currency risk is managed by matching where possible cash inflows and outflows denominated in euros
at 31 december 2007 if the euro had weakenedstrengthened by 10 against sterling with all other variables held
constant posttax profit for the year would have been £6000 2006 £6000 lowerhigher as a result of foreign exchange
gainslosses on translation of the eurodenominated trade receivables at fair value through profit or loss
ii interest rate risk
the group has interestbearing assets in the form of cash and cash equivalents therefore interest income is sensitive to
movements in interest rates
the group does not have significant borrowings and to the extent it has borrowings these are subject to fixed rates
borrowings issued at fixed rates expose the group to fair value interest rate risk  
b credit risk
credit risk is managed on a group basis credit risk arises from cash and cash equivalents and deposits with banks and
financial institutions and transactions with third party customers
the credit ratings above are from standard and poors longterm ratings
internally customers are rated according to financial position history of trading and other factors individual credit
limits are based on internal and external ratings in accordance with limits set by the board the utilisation of credit
limits is regularly monitored
c liquidity risk
prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of
funding through an adequate amount of committed credit facilities
management monitors rolling forecasts of the group’s liquidity reserve on the basis of expected cash flow
the table below analyses the groups financial liabilities which will be settled on a net basis into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date 
1 financial risk management
rating 2007 2006
£000 £000
bank of scotland aa 5587 3361
hsbc aa 134 460
barclays aa 990 1461
ulster bank aa 249 1008
other 3 
6963 6290
at 31 december 2007 less than between 1 between 2 over 5
1 year and 2 years and 5 years years
finance leases 177 91 272 47
trade and other payables 30242   
at 31 december 2006 less than between 1 between 2 over 5
1 year and 2 years and 5 years years
finance leases 178 148 272 140
trade and other payables 31851    40
notes to the financial statements for the year ended 31 december 2007
the group’s objectives and policies on the use of financial instruments including derivatives can be found in the
financial review on pages 7 to 8 under the heading ‘financial risks and treasury policies’ amounts dealt with in the
remainder of this note exclude shortterm debtors and creditors
2007 2006
£000 £000
fixedrate borrowings 410 560
410 560
interest rate risk profile of financial liabilities
the interest rate risk profile of financial liabilities was as follows
the fixedrate borrowings comprise finance leases with an effective weighted average interest rate of 48 2006 46
and are fixed for a weighted average period of 28 years 2006 21 years
2007 2006
£000 £000
over one year and under two years 91 148
between two and five years 272 272
after five years 47 140
410 560
maturity profile of financial liabilities
the maturities of creditors due after one year are as follows
2007 2006
£000 £000
sterling 6692 5263
euro 271 1027
6963 6290
currency risk profile of financial assets
financial assets relate to cash balances held at financial institutions they all carry interest at floating rates based on
money market rates financial assets are denominated in the currencies shown below
fair values of financial instruments
the fair value of financial assets and liabilities is not materially different to their book value due to the shortterm
maturity of the instruments in respect of finance lease liabilities the directors consider the difference between book
value and fair value to be immaterial
currency exposure and hedges
the group did not have a material income statement exposure to foreign exchange gains or losses on monetary assets
and liabilities denominated in foreign currencies at 31 december 2007 and has not used any instruments to hedge
foreign currency transactions
embedded derivatives
management have undertaken a review of the group for embedded derivatives and none were found 2006 nil
capital risk management
the group does not anticipate any significant future capital expenditure
2007 2006
£000 £000
within one year 15000 15000
15000 15000
committed undrawn facilities
the maturities of the committed undrawn facilities available to the group are shown below o2o plc annual report 2007
41
notes to the financial statements for the year ended 31 december 2007
estimates and judgements are continually evaluated and
are based on historical experience and other factors
including expectations of future events that are believed to
be reasonable under the circumstances
the group makes estimates and assumptions concerning
the future the resulting accounting estimates will by
definition seldom equal the related actual results the
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are
discussed below
estimated impairment of goodwill
the group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy the
recoverable amounts of cashgenerating units have been
determined based on valueinuse calculations these
calculations require the use of estimates see note 13
income tax
the group is subject to income tax in both the united
kingdom and the republic of ireland significant
judgement is required in determining the provision for
income tax there are many transactions and calculations
for which the ultimate tax determination is uncertain
during the ordinary course of business where the final tax
outcome of these matters is different from the amounts
that were initially recorded such differences will impact the
income tax and deferred tax provisions in the period in
which such determination is made see note 9
assets and liabilities
the preparation of the consolidated financial statements
requires management to make judgements estimates and
assumptions that affect the application of policies and
reported amounts of assets and liabilities income and
expenses the estimates and associated assumptions are
based on historical experience and various other factors that
are believed to be reasonable under the circumstances the
results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources actual results may differ from
these estimates
impairment of inventories
where necessary provision is made for obsolete slowmoving
and damaged stock this provision represents the difference
between the cost of the stock and its estimated market value
based upon stock turn rates market conditions and trends in
consumer demand see note 16
allowances for doubtful receivables
allowances are made for doubtful receivables for estimated
losses resulting from the subsequent inability of customers to
make required payments if the financial conditions of
customers were to deteriorate resulting in an impairment of
their ability to make payments additional allowances may be
required in future periods see note 17
pensions
the determination of the pension benefit obligation and
expense for the defined benefit pension plan is dependent on
the selection of certain assumptions used by actuaries in
calculating such amounts those assumptions are described in
note 23 to the financial statements and include among
others the discount rate the expected longterm rate of
increase in future compensation levels and expected mortality
rates a portion of the plan assets are invested in equity
securities the equity markets have experienced volatility
which has affected the value of the pension plan assets this
volatility may make it difficult to estimate the longterm rate
of return on plan assets assumptions are based on actual
historical experience and external data regarding
compensation and discount rate trends while the directors
believe that the assumptions are to be appropriate significant
differences in the actual experience or significant changes in
the assumptions may materially affect the pension obligation
and the future expense see note 23
the estimates and underlying assumptions are reviewed on
an ongoing basis revisions to accounting estimates are
recognised in the period in which the estimate is revised if
revision affects only that period or in the period of the
revision and future periods if the revision affects both current
and future periods
revenue and profit before tax by geographical area is stated by origin which is not materially different from the
analysis by destination of the capital expenditure of £184000 2006 £1205000 £184000 was incurred in the united
kingdom 2006 £1093000
2 critical accounting estimates and judgements
3 geographical analysis
revenue profit before income tax net assets
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
united kingdom 165396 163616 9061 10765 16218 14261
republic of ireland 2466 2281 57 53 689 572
167862 165897 9118 10712 16907 14833
net interest 115 367
profit before income tax 9003 10345 42
notes to the financial statements for the year ended 31 december 2007
4 expenses by nature
2007 2006
£000 £000
inventories expensed 114083 112671
employee benefit expense note 6a 25426 23068
depreciation of tangible fixed assets
 owned 533 417
 leased 241 183
amortisation of intangible assets 20 8
exceptional and nonrecurring costs note 5 2333 392
foreign exchange losses 193 116
operating lease payments
 plant and machinery 1948 1640
 other 1891 1847
other operating costs 12076 14843
total cost of sales distribution costs and administrative expenses 158744 155185
5 exceptional and nonrecurring costs
the amounts recognised as exceptional and nonrecurring costs are as follows
2007 2006
£000 £000
compensation payments and executive recruitment costs 1626 218
business review costs and strategic review costs 707 174
2333 392
compensation payments relate to amounts paid to exemployees of group companies executive recruitment costs are
the search fees incurred in appointing a new chief executive officer business and strategic review costs relate to costs
incurred by the group in relation to managements commitment to improve operational efficiency these costs are
considered to be exceptional in nature and not reflective of the underlying operating performance of the group 
6a employee benefit expense
2007 2006
£000 £000
wages and salaries 22172 19649
social security costs 2083 1959
share options granted to directors and employees 243 768
pension costs 928 692
25426 23068
key management emoluments
the employment costs of key management personnel including executive directors during the year were as follows
2007 2006
£000 £000
salaries and employee benefits 1562 1195
pension costs 99 115
share based payments 182 219
1843 1529
salaries and employee benefits include £128989 2006 £73513 in respect of compensation payments to exemployees
of group companies 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 22 to 27 and shows the
highest paid director and the number of directors accruing benefits under moneypurchase personal pension schemes  o2o plc annual report 2007
43
notes to the financial statements for the year ended 31 december 2007
6b average number of people employed
2007 2006
average number of people including executive directors employed
sales and marketing 312 311
production and distribution 491 460
administration 69 74
872 845
as at 31 december 2007 the group had 778 employees 2006 922
the company has no employees 2006 nil
7 auditor remuneration
services provided by the company’s auditor and its associates
during the year the group including its overseas subsidiary obtained the following services from the company’s
auditor and its associates
2007 2006
group £000 £000
fees payable to company’s auditor for the audit of parent company and consolidated financial statements 45 39
fees payable to the company’s auditor and its associates for other services
 audit of company’s subsidiaries pursuant to legislation 45 39
 other services pursuant to legislation 8 14
 tax services 10 8
108 100
8 finance income and costs
2007 2006
£000 £000
interest expense
 finance lease interest 32 29
 other financial charges 54 82
 customer procurement card charges 541 665
finance costs 627 776
finance income
 interest income on shortterm bank deposits 512 409
net finance costs 115 367 44
notes to the financial statements for the year ended 31 december 2007
9 income tax expense
2007 2006
£000 £000
current tax
united kingdom corporation tax at 30 2006 30 2508 2901
deferred tax
origination and reversal of timing differences see note 15 155 248
impact of change in united kingdom tax rate 70 
225 248
2733 3149
tax on items charged to equity
2007 2006
£000 £000
deferred tax chargecredit on share options see note 15 48 20
impact of change in united kingdom tax rate 25 
73 20
factors affecting tax charge for the year 
the group tax charge for the year differs from the standard rate of corporation tax of 30 the differences are explained
below
2007 2006
£000 £000
profit before income tax 9003 10345
income tax at the standard rate of uk corporation tax of 30 2006 30 2701 3104
tax effects at 30 of
expenses not deductible 45 45
other permanent differences 83 
impact of change in united kingdom tax rate 70 
total tax charge for the year 2733 3149
10 dividends
2007 2006
£000 £000
amounts recognised as distributions in the period in respect of
ordinary shares – interim dividend 2007 – 32p per share 1149 
ordinary shares – final dividend 2006 – 64p per share 2307 
ordinary shares – interim dividend 2006 – 32p per share  1141
ordinary shares   final dividend 2005 – 62p per share  2212
3456 3353
the directors have proposed a final dividend of 68p per ordinary share payable on 9 may 2008 to shareholders on the
register at the close of business on 11 april 2008 the dividend has not been included as a liability as at 31 december
2007 o2o plc annual report 2007
45
notes to the financial statements for the year ended 31 december 2007
11 earnings per share
a basic
basic earnings per share is calculated by dividing profit attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the year excluding ordinary shares held by the employee benefit
trust
2007 2006
profit attributable to equity holders of the company £000 6270 7196
weighted average number of ordinary shares in issue thousands 35975 35706
basic earnings per share pence per share 174 202
b diluted
diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares the company has one category of dilutive potential ordinary
shares being share options for share options a calculation is undertaken to determine the number of shares that could
have been acquired at fair value determined as the average annual market share price of the companys shares based
on the monetary value of the subscription rights attached to outstanding share options the number of shares
calculated as above is compared with the number of shares that would have been issued assuming the exercise of the
share options
2007 2006
profit attributable to equity holders of the company £000 6270 7196
weighted average number of ordinary shares in issue thousands 35975 35706
adjusted for share options thousands 253 796
weighted average number of ordinary shares for diluted earnings per share thousands 36228 36502
basic earnings per share pence per share 173 197 46
notes to the financial statements for the year ended 31 december 2007
12 property plant and equipment
group
short plant  office assets under total
leasehold machinery equipment construction
land 
buildings
2007 £000 £000 £000 £000 £000
cost
as at 1 january 2007 1841 1515 2289 100 5745
additions at cost  49 135  184
transfers  100  100 
as at 31 december 2007 1841 1664 2424  5929
accumulated depreciation
as at 1 january 2007 776 731 1908  3415
charge for the year 257 220 297  774
as at 31 december 2007 1033 951 2205  4189
net book value 
as at 31 december 2007 808 713 219  1740
short plant  office assets under total
leasehold machinery equipment construction
land 
buildings
2006 £000 £000 £000 £000 £000
cost
as at 1 january 2006 1587 768 2047 1 4403
additions at cost 234 642 229 100 1205
acquisition of alpha office ltd 20 105 12  137
transfers   1 1 
as at 31 december 2006 1841 1515 2289 100 5745
accumulated depreciation
as at 1 january 2006 603 600 1612  2815
charge for the year 173 131 296  600
as at 31 december 2006 776 731 1908  3415
net book value 
as at 31 december 2006 1065 784 381 100 2330
the gross cost of fixed assets held under finance leases was £1332000 2006 £1332000 for the group with related
depreciation of £705000 2006 £464000
the transfers in the year relate to assets which were under construction at the previous reporting date and have since
become operational
company
the company has no tangible fixed assets o2o plc annual report 2007
47
notes to the financial statements for the year ended 31 december 2007
13 intangible assets
group
2007 goodwill other total
£000 £000 £000
cost
as at 1 january 2007 13545 28 13573
additions 62  62
as at 31 december 2007 13607 28 13635
amortisation
amortisation as at 1 january 2007  8 8
amortisation in year  20 20
amortisation as at 31 december 2007  28 28
net book value as at 31 december 2007 13607  13607
2006 goodwill other total
£000 £000 £000
cost
as at 1 january 2006 11723  11723
additions 1822 28 1850
as at 31 december 2006 13545 28 13573
amortisation
amortisation as at 1 january 2006   
amortisation in year  8 8
amortisation as at 31 december 2006  8 8
net book value as at 31 december 2006 13545 20 13565
in accordance with ias 36 ‘impairment of assets’  the group regularly monitors the carrying value of its goodwill a review
was undertaken at 31 december 2007 to assess whether the carrying value of assets was supported by the net present
value of pretax cash flow projections for a five year period the calculation was based on financial budgets approved by
the board covering a one year period cash flows beyond the one year period are extrapolated beyond one year based on
estimated long term average growth rates generally 3 the assumed growth rate does not exceed the longterm
average growth rate for the market in which the group operates
the discount rates for the review were based on a pretax weighted average cost of capital percentage of 104 which
approximates to the groups weighted average cost of capital
the impairment review was undertaken by comparing the carrying value of the goodwill with the recoverable amount of the
cash generating units to which goodwill has been allocated management concluded that no impairment was necessary
additions in the year relate to finalising the fair value review of assets and liabilities acquired as a result of alpha office
limited on 3 july 2006
other intangibles relate to acquired customer contracts
company
the company had no intangible assets 48
notes to the financial statements for the year ended 31 december 2007
14 investment in subsidiaries
company 2007 2006
£000 £000
as at 1 january and 31 december 5586 5586
the directors consider that the carrying value of the investment is supported by the value of the underlying assets
details of the subsidiaries are as follows
name of company nature of business country of  of 
incorporation equity 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 england 100
 trustee for pension scheme only
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
alpha office ltd see below england 100
alpha data supplies ltd non trading england 100
alpha stationers ltd non trading england 100
alpha litho ltd non trading england 100
colebrook services ltd non trading england 100
 held by office2office uk plc      
 supply of office and business products
15 deferred income tax asset
the deferred income tax asset recognised in the financial statements is as follows
group 2007 2006
£000 £000
tax effect of timing differences
excess of qualifying depreciation over tax allowances 198 216
employee benefits in excess of amount vested 228 348
retirement benefit obligations 317 393
provisions 538 595
unutilised tax losses carried forward 35 62
1316 1614
at 1 january 1614 1710
charged to the income statement 155 248
charged to the income statement  tax rate change 70 
acquisition of alpha office ltd  172
credited to equity note 9 48 20
credited to equity  tax rate change 25 
at 31 december 1316 1614 o2o plc annual report 2007
49
notes to the financial statements for the year ended 31 december 2007
the deferred income tax asset is estimated to be recoverable as follows
2007 2006
£000 £000
deferred tax assets
 to be recovered after more than 1 year 1279 1517
 to be recovered within 1 year 37 97
1316 1614
deferred income tax assets and liabilities are only offset where there is a legally enforceable right to offset and there is
an intention to settle the balances net
the movements in deferred tax assets during the period are shown below
deferred income tax assets depreciation retirement 
over tax benefit
allowances provisions obligations tax losses share options total
£000 £000 £000 £000 £000 £000
at 1 january 2007 216 595 393 62 348 1614
charged to income statement 4 19 53 24 55 155
charged to income statement  tax rate change 14 38 1 3 16 70
charged to equity  48 48
charged to equity  tax rate change   24  1 25
at 31 december 2007 198 538 317 35 228 1316
company
the company has no provided or unprovided deferred tax balances
16 inventories
2007 2006
group £000 £000
finished goods and goods for resale 6513 7982
the difference between cost of goods purchased or production cost of stocks and their replacement cost is not
material
the group consumed £114083000 2006 £112671000 of inventories during the year  
the provision to reflect net realisable value being less than cost increased by £40000 2006 decreased by £147000
during the year
company
the company has no inventory 50
notes to the financial statements for the year ended 31 december 2007
17 trade and other receivables
2007 2006 2007 2006
£000 £000 £000 £000
trade receivables 17924 15697  
less provision for impairment 772 635  
17152 15062  
prepayments and accrued income 2900 3442  
receivables from related parties   8861 8623
20052 18504 8861 8623
all of the above amounts are due within one year
there is no difference between the amounts disclosed above and their fair values
credit risk in respect to trade receivables is limited due to the group’s customers base being large and public sector
dominated  as a result the directors consider that no further credit risk provision is required in excess of the normal
provision for doubtful receivables
the carrying amounts of trade and other receivables are denominated in the following currencies
2007 2006 2007 2006
£000 £000 £000 £000
sterling 20031 18485 8861 8623
euro 21 19  
20052 18504 8861 8623
group
trade receivables that are less than 2 months past due are not considered impaired  as of 31 december 2007 trade
receivables of £8911000 2006 £6770000 were past due but not impaired  the ageing analysis of these trade
receivables by reference to due date is as follows
2007 2006
£000 £000
up to 3 months 8911 6770
as of 31 december 2007 trade receivables of £1684000 2006 £1335000 were impaired  the amount of the provision
against such impaired trade receivables was £772000 as of 31 december 2007 2006 £635000  the individually
impaired receivables mainly relate to customers which are in unexpectedly difficult economic situations  the ageing of
these receivables is as follows
2007 2006
£000 £000
3 to 6 months overdue 1311 1117
over 6 months overdue 373 218
1684 1335
movements on the group provision for impairment of trade receivables are as follows
2007 2006
£000 £000
at 1 january 635 573
increase in provision for receivables impairment 177 128
receivables written off during the year as uncollectable 40 66
at 31 december 772 635
group company
group company o2o plc annual report 2007
51
notes to the financial statements for the year ended 31 december 2007
the creation and release of provision for impaired receivables have been included in “cost of sales’’ in the income
statement  amounts charged to the provision are generally written off when there is no expectation of recovering
additional cash the other classes within trade and other receivables do not contain impaired assets the maximum
exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above the
group does not hold any collateral as security
company
the company has no trade receivables
18 cash and cash equivalents
2007 2006 2007 2006
£000 £000 £000 £000
cash at bank and in hand 6963 6290 1 340
the effective average interest rate on overnight deposits as at 31 december 2007 was 55 2006 475  
19 trade and other payables
2007 2006 2007 2006
£000 £000 £000 £000
trade payables 11015 16486  
social security and other taxes 2448 1909 24 24
accrued expenses and deferred income 16779 13456  
payables to related parties   1 1
30242 31851 25 25
an amount of £453000 has been reclassified from accrued expenses and deferred income to provisions in the prior year
to more accurately reflect the nature of the balances accordingly accrued expenses and deferred income have reduced
from £13909000 to £13456000 in the comparative period see note 22
20a financial liabilities
2007 2006 2007 2006
£000 £000 £000 £000
current liabilities
obligations under finance leases 177 178  
noncurrent liabilities
obligations under finance leases 410 560  
587 738 
20b operating lease commitments
2007 2006 2007 2006
£000 £000 £000 £000
group
commitments under noncancellable operating leases expiring
within one year 1939 1762 1365 1645
between two and five years 6064 6175 1294 2610
over five years 3125 4159  
11128 12096 2659 4255
company
the company has no obligations under operating leases
group company
group company
group company
land  buildings other 52
notes to the financial statements for the year ended 31 december 2007
21 current income tax liabilities
2007 2006 2007 2006
£000 £000 £000 £000
current income tax liabilities 720 1100 38 
22 provisions
2007 2007
£000 £000
at 1 january 453 
charged to the income statement 149 
at 31 december 602 
the provisions relate to property dilapidation provisions on termination of leases
an amount of £453000 has been reclassified from accrued expenses and deferred income to provisions in the prior year
to more accurately reflect the nature of the balances see note 19
23 retirement benefit liability
group
the group is the 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 ltd 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 ltd the
scheme is funded by the payment of contributions to a separately administered trust fund  the scheme currently has
165 members and is closed to new members
the latest full actuarial valuation was carried out on 31 july 2004 and updated to 31 december 2007 by mercer llc 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 70 per annum that salary increases would average 32 per
annum and that present and future pensions would increase at the rate of 32 per annum  
the fair value of the bbs scheme assets at 31 december 2007 amounted to £8542000 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
group contributions in respect of the defined benefit pension scheme for the period were £341000 2006 £344000
group contributions in 2008 are expected to be approximately £340000
the group also incurred £693000 2006 £454000 in respect of group personal pension arrangements and employees’
own personal pension arrangements for staff recruited by the stationery office ltd and group companies since 30
september 1996 at rates varying between 6 and 15 of pensionable earnings
the outstanding accrual in respect of pension contributions at 31 december 2007 was £463000 2006 £450000
group company
group company o2o plc annual report 2007
53
notes to the financial statements for the year ended 31 december 2007
the amounts recognised in the balance sheet are determined as follows
2007 2006
£000 £000
present value of funded obligations 10413 9587
fair value of plan assets 8542 7651
1871 1936
unrecognised actuarial losses 738 626
liability in the balance sheet 1133 1310
the amounts included in the fair value of plan assets are as follows
2007 2006
£000 £000
equities 7004 6611
bonds 513 295
property 256 306
other 769 439
8542 7651
the amounts recognised in the income statement are as follows
2007 2006
£000 £000
current service cost 235 238
interest cost 497 429
expected return on plan assets 568 445
amortisation of net loss  7
expenses recognised in income statement as administrative expenses 164 229
the movement in the fair value of plan assets is as follows
2007 2006
£000 £000
fair value of plan assets as at 1 january         7651 6323
expected return on plan assets 568 445
actuarial lossesgains 102 417
employer contribution 341 344
member contributions 126 128
benefits paid 42 6
fair value of plan assets as at 31 december 8542 7651 54
notes to the financial statements for the year ended 31 december 2007
the movement in the present value of funded obligations is as follows
2007 2006
£000 £000
present value of funded obligations as at 1 january         9587 8768
current service cost 235 238
interest cost 497 429
plan participants contributions 126 128
actuarial losses 10 30
benefits paid 42 6
present value of funded obligations as at 31 december 10413 9587
the movement in the liability is as follows
2007 2006
£000 £000
post employment liability as at 1 january 1936 2445
total expense charged in the income statement 164 229
contributions paid 341 344
unrecognised actuarial losses 112 394
post employment liability as at 31 december 1871 1936
the principal actuarial assumptions were as follows
2007 2006
pa pa
discount rate 55 51
expected rate of return on plan assets 70 73
future salary increases 32 29
future pension increases 32 29
inflation 32 29
the weighted average life expectancy derived from mortality tables used to determine benefit obligations were
2007 2006
years years
male member aged 65 current life expectancy 219 179
female member aged 65 current life expectancy 248 209
male member aged 45 life expectancy at age 65 230 198
female member aged 45 life expectancy at age 65 258 228
history of experienced gains and losses
2007 2006
difference between expected and actual return on scheme assets
amount £000 102 417
percentage of scheme assets 1 5
experience gains and losses on scheme liabilities
amount £000 436 14
percentage of scheme liabilities 4 0
the expected return on plan assets for 2008 is based on market expectations at 17 january 2008 for returns over the entire life of the obligation
company
the company has no retirement benefit liabilities o2o plc annual report 2007
55
notes to the financial statements for the year ended 31 december 2007
24 share capital
2007 2006
authorised no £ no £
ordinary shares of 1p each 50000000 500000 50000000 500000
2007 2006
allotted called up and fully paid no £ no £
ordinary shares of 1p each 36308984 363090 36308984 363090
624248 ordinary shares are held by the employee benefit trust 2006 260889 for which the right to receive dividends
has been waived
25 share options
exercise
number number number number number price per exercisable expiry
1 jan 07 granted exercised lapsed 31 dec 07 share from date
senior managers scheme
date granted
october 2004 228655  178655  50000 10p 081006 081014
managers scheme
date granted
october 2004 18190  8427  9763 10p 081006 081014
performance share plan
date granted
december 2005 133698   16406 117292 01p 211208 210609
april 2006 133251   30745 102506 01p 240409 241009
september 2007  232907   232907 01p 110910 110311
december 2007  189566   189566 01p 010411 011011
executive bonus plan
date granted
december 2005 36968    36968 01p 211208 210609
april 2006 30857    30857 01p 240409 241009
saye scheme
date granted
october 2004 3yr 356036   41621 314415 1716p 011207 310508
october 2004 5yr 220589   44787 175802 1716p 011209 310510
october 2005 3yr 85049   20907 64142 2244p 111108 110509
october 2005 5yr 44470   10759 33711 2244p 111110 110511
1287763 422473 187082 165225 1357929
at 31 december 2007 there was 1 member 2006 5 members of the senior managers scheme there were 3 members
2006 6 members of the managers scheme with average option holdings of 3254 shares there were 310 members of
the saveasyouearn saye scheme with average holdings of 1897 shares
the senior managers scheme was introduced on 8 october 2004 to reward key employees for their contribution to the
enhancement of the group’s longerterm future and their commitment to the group over a sustained period  there are
no performance conditions attached 178655 options were exercised during the year under review the weighted
average share price as at the date of exercise was 2240p per share
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 apply to the exercise of the options based on
profit expectations set by the board 8427 options were exercised during the year under review the weighted average
share price as at the date of exercise was 2020p per share 56
notes to the financial statements for the year ended 31 december 2007
the ifrs 2 and associated national insurance costs before tax incurred in relation to the above schemes were as follows
2007 2007 2006 2006
ifrs 2 ni ifrs 2 ni
£000 £000 £000 £000
senior managers scheme
date granted
october 2004  7 330 39
managers scheme
date granted
october 2004  139 17
performance share plan
date granted
december 2005 36 2 47 14
april 2006 27 1 29 9
september 2007 25 4 
december 2007 2 
april 2008 71 17 
executive bonus plan
date granted
december 2005 13  13 4
april 2006 10  72
saye scheme
date granted
october 2004 3yr 29  61 
october 2004 5yr 5 28 
october 2005 3yr 10  21 
october 2005 5yr 4 8
232 11 683 85
the performance share plan and executive bonus plan were introduced on 21 december 2005 to incentivise senior
management relative to the long term strategy of the group financial performance conditions apply to exercise of the
options based on a comparative measure of total shareholder return against the companies in the ftse small cap
index and the company’s earnings per share growth
the saye scheme was first introduced on october 2004 and a second invitation was made in 2005  the exercise price
was at 20 discount of the closing midmarket price on date of invitation for both years the schemes have either a
three or five year vesting period
the exercise price of the granted options is equal to the market price at the date of grant which has been discounted to
reflect the benefit granted to the employee
on 11 september 2007 simon moate was granted an award over 232907 shares based on an average share price of
1890p under the performance share plan  on 19 december 2007 an award of 189566 shares based on an average
share price of 1213p was made to a member of the senior management team under the performance share plan 
in addition to the above £71000 of ifrs 2 charges and £17000 of national insurance costs have been accrued in respect
of a management bonus award to senior managers under the performance share plan which the company is
committed to granting in april 2008 based on the average share price over the three days preceding the grant the following valuation assumptions have been applied
2007 2006
senior managers scheme – oct 2004 option value information
fair value per option £204 £204
valuation assumptions
expected option term 2 years 2 years
expected volatility 271 271
expected dividend yield 37 37
risk free interest rate 469 469
managers scheme – oct 2004 option value information 
fair value per option £204 £204
valuation assumptions
expected option term 2 years 2 years
expected volatility 271 271
expected dividend yield 37 37
risk free interest rate 469 469
performance share plan – dec 2005 option value information
fair value per option £106 £106
valuation assumptions
expected option term 4 years 4 years
expected volatility 260 260
expected dividend yield 36 36
risk free interest rate 422 422
performance share plan – apr 2006 option value information
fair value per option £098 £098
valuation assumptions
expected option term 4 years 4 years
expected volatility 265 265
expected dividend yield 40 40
risk free interest rate 455 455
performance share plan – sept 2007 option value information
fair value per option £107 
valuation assumptions
expected option term 325 years 
expected volatility 267 
expected dividend yield 50 
risk free interest rate 492  
performance share plan – dec 2007 option value information
fair value per option £063 
valuation assumptions
expected option term 35 years 
expected volatility 302 
expected dividend yield 78 
risk free interest rate 463  
executive bonus plan – dec 2005 option value information
fair value per option £106 £106
valuation assumptions
expected option term 4 years 4 years
expected volatility 260 260
expected dividend yield 36 36
risk free interest rate 422 422
executive bonus plan – apr 2006 option value information
fair value per option £098 £098
valuation assumptions
expected option term 4 years 4 years
expected volatility 265 265
expected dividend yield 40 40
risk free interest rate 455 455
o2o plc annual report 2007
57
notes to the financial statements for the year ended 31 december 2007 58
notes to the financial statements for the year ended 31 december 2007
2007 2006
saye 3 year scheme – oct 2004 option value information
fair value per option £061 £061
valuation assumptions
expected option term 325 years 325 years
expected volatility 302 302
expected dividend yield 39 39
risk free interest rate 469 469
saye 5 year scheme – oct 2004 option value information
fair value per option £070 £070
valuation assumptions
expected option term 525 years 525 years
expected volatility 341 341
expected dividend yield 39 39
risk free interest rate 476 476
saye 3 year scheme – oct 2005 option value information
fair value per option £077 £077
valuation assumptions
expected option term 325 years 325 years
expected volatility 267 267
expected dividend yield 32 32
risk free interest rate 431 431
saye 5 year scheme – oct 2005 option value information
fair value per option £089 £089
valuation assumptions 
expected option term 525 years 525 years
expected volatility 301 301
expected dividend yield 32 32
risk free interest rate 432 432
 estimated using blackscholes option pricing method
 estimated using the montecarlo simulation and blackscholes option pricing methods
expected volatility was determined by reference to historic share price information of similar companies o2o plc annual report 2007
59
notes to the financial statements for the year ended 31 december 2007
26 reserves
share retained other share retained other
premium earnings reserves premium earnings reserves
£000 £000 £000 £000 £000 £000
balance at 1 january  2006 5009 4922 6 5009 8219 
foreign exchange differences   5   
profit for the year  7196   4286 
employee share options 
 value of employee services  683 
 deferred tax on share options  20 
 proceeds from share options  4 
dividends  3353   3353 
balance at 31 december 2006 5009 9472 11 5009 9152 
foreign exchange differences  57
profit for the year  6270   4275 
employee share options
 value of employee services  232
 deferred tax on share options  49 
 proceeds from share options  2
purchase of shares by employee benefit trust  958   958 
deferred tax charged directly to 
equity upon change of united kingdom  24 
corporation tax rate
dividends  3456   3456 
balance at 31 december 2007 5009 11489 46 5009 9013 
other reserves relate to foreign exchange translation differences on net asset investments
the company acquired 550441 of its own shares through purchases on the london stock exchange during three
separate occasions in 2007  the shares are held as treasury shares by the employee benefit trust
group company
27 cash generated from operations
2007 2006 2007 2006
£000 £000 £000 £000
profit before income tax 9003 10345 4313 4286
adjustments for
amortisation 20 8  
depreciation charge 774 600  
interest received 512 409 313 286
interest and similar charges paid 627 776  
income from investments   4000 4000
share option expense 232 683  
proceeds from share options 2   
decrease in inventories 1469 256  
increase in trade and other receivables 1548 1118 238 904
decreaseincrease in trade payables and provisions 1673 180  1
total net cash inflowoutflow from operations 8394 11321 238 905
28 capital commitments
there are no amounts contracted for but not provided in the financial statements 2006 nil
29 related parties
there are no related party transactions requiring further disclosure in this year’s financial statements  the relationship
between the company and its subsidiaries is disclosed in note 14 the key management emoluments are disclosed in
note 6
group company 60
five y ear summary
2007 2006 2005 2004 2003
£000 £000 £000 £000 £000
revenue 167862 165897 150897 141769 125554
operating profit  before goodwill amortisation 
exceptional costs and share option expenses 11694 11872 11534 10390 7698
goodwill amortisation     690
exceptional costs 2333 392  3324 92
share option expenses 243 768 869 216 
profit on ordinary activities before interest 9118 10712 10665 6850 6916
net interest payable 115 367 430 675 896
profit before tax 9003 10345 10235 6175 6020
capital employed
shareholders’ funds 16907 14833 10288 4862 865
statistics
adjusted earnings per ordinary share 220p 209p 202p 168p 120p
basic earnings per ordinary share 174p 202p 202p 78p 97p
diluted earnings per ordinary share 173p 197p 197p 78p 97p
dividends per share 100p 96p 93p 41p 216p
share price period end pence 1195p 2435p 2600p 2425p na
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         
ifrs uk gaap o2o plc annual report 2007
61
shareholder information
financial calendar 2008
announcement of final results for the year ended 31 december 2007 28 february 2008
annual general meeting 24 april 2008
payment of final dividend on ordinary shares to shareholders on the 
share register at the close of business on 11 april 2008 9 may 2008
registrar and transfer office
enquiries about administrative matters relating to
shareholding and dividends should be addressed to the
company’s registrars
capita registrars
northern house
woodsome park
fenay bridge
huddersfield
west yorkshire hd8 0la
telephone 0871 664 0300 
calls cost 10p per minute plus network extras
international 44 0 208 639 3399
or by email to 
ssdcapitaregistrarscom
share price
information concerning the day to day movement of
the share price of the company can be found on our
website wwwoffice2officecouk or that of the london
stock exchange wwwpriceslondonstockexchangecom
the share price can also be found in the appropriate
sections of national newspapers under the classification
support services and under the ticker code offl 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 wwwmpsonlineorguk   62
company details
registered office
st crispins
duke street
norwich nr3 1pd
united kingdom
tel 44 0 1603 695 756
fax 44 0 1603 694 544
website wwwoffice2officecouk 
email infooffice2officebiz
professional advisers
auditors
pricewaterhousecoopers llp
the atrium
st georges street
norwich nr3 1ag
bankers
bank of scotland
the mound
edinburgh eh1 1yz
brokers
panmure gordon
155 moorgate
london ec2m 6xb
financial advisers
hawkpoint partners
41 lothbury
london ec2r 7ae
solicitors
macfarlanes
10 norwich street
london ec4a 1bd first rate service delivering customer value
head office o2o plc st crispins duke street norwich nr3 1pd
telephone 0845 226 7780 wwwoffice2officecouk
o2o plc registered number 04083206


Summary:
 4
chief executive’s review
i am delighted to present my first review as chief executive of o2o against the
background of a challenging marketplace o2o has delivered its seventh
consecutive year of revenue growth i believe that the group has the ability to
take full advantage of market opportunities and i am privileged to be leading
the business at this exciting time in its development 
in my role as chief executive i have
visited every part of the group and
met with customers employees and
investors this process has confirmed
that o2o is more than a contract
stationer in fact it offers a wide
range of business products and
related services supported by its
capability in managing complex
supply chains
prior to my arrival the board had
commissioned a review of our
strategies processes and operational
practices in order to take stock of the
business the review identified the
necessity for a fundamental
restructuring of the business and as
a result of this coupled with the
opportunity afforded by withdrawing
from mod supply we have taken
action to improve operational
efficiency and reduce the cost base
of the business to more closely
reflect its needs 
a changing market
the office and related products
supply market has undergone major
changes over the last few years
these include the emergence of 
eauctions erosion of profit margins
due to product cost increases public
sector account consolidation and a
succession of competitor mergers
which have contributed substantially
to changing many working practices 
o2o needs to adapt and innovate
within a market that is highly
competitive and growing steadily
the market for office products
remains relatively stable and the
opportunities to extend the range of
products and services are significant
strategy
over the last six months we have
built a simplified structure focused
on how we add value as a business
which will enable us to be quick to
react flexible in operation and
focused on doing fewer things better
the board is confident that there is
scope to drive further improvements
in the coming year we remain
consistent in our aim to grow the
business by enlarging and
diversifying our customer base the
key objective for 2008 is to continue
the expansion of our routes to
market beyond our traditional large
contracted office supplies base and
extend our service and product
ranges it is intended that this will be
achieved both through organic
growth and by taking advantage of
suitable acquisition opportunities
when they arise 
organisation structure
our new organisation is based on
•
simplicity clarity and focus to
create value for our customers
•
sourcing products to optimise
total product cost and
•
flexible distribution facilities to
deliver on our promises to
customers
the combination of these elements
firmly positions us as a major player
in the provision of business products
and services to the uk and irish
markets  o2o plc annual report 2007 5
we have now structured the group’s
trading operations to reflect our
three complementary core services
• banner business supplies limited
banner
banner is a market leader in the
provision of medium and longterm
contract management and the
procurement of office and business
products for large private and public
sector customers banner excels in
the management of complex 
multilevel business relationships    
• supply chain
the group’s integrated supply chain
activity procures manages picks and
nationally distributes over 15000
office and other business products it
consolidates our warehousing
distribution and procurement
activities to drive operating efficiency
acquisition of smaller locally
branded office and other business
product supply companies will create
additional revenue streams to build
critical sales volume to which we will
add o2o supply chain support    
• business services 
although our service offering is still
in its infancy we believe through our
existing customer base we can
create a significant presence in the
business services sector by offering
our customers addedvalue services
including print management
document management and storage
technology and business furniture       
this revised organisation structure
recognises that o2o is more than a
stationer and promotes its
development as a leading business
supplies integrated supply chain and
managed services group committed
to delivering on our promises and
adding value at every stage of the
process 
expanding our customer base
a core element of our strategy is to
win new customers through organic
sales growth we already supply
office products and solutions to
businesses and organisations of all
sizes across the uk and ireland in
what is a relatively fragmented
market and we have teams dedicated
to winning new customers
broadening our range of
products and services
the availability of a wide range of
products and services from a single
supplier is important to many of our
customers and we aim to offer just
that experience has proved that we
can deliver significant customer
benefits through a rationalised
supplier base and by consolidating
the management of large volumes of
lowvalue transactions  
developing innovative solutions
to meet the changing needs of
customers 
central to the group’s performance is
meeting the everchanging needs of
its customers changes in
technology purchasing patterns
customer priorities and service
requirements are a feature of our
business we encourage innovation
and remain flexible to the adoption
of new ideas at all levels   6
chief executive’s review continued
growth by acquisition
we continue to monitor and evaluate
potential acquisition opportunities
our criteria include the ability to
extract cost or revenue synergies and
the potential for the target to grow
profitability
management structure
we have reconfigured our senior
management better to reflect the
growth opportunities identified as
part of the strategic review 
the senior management comprises a
streamlined team with clearly defined
responsibilities to deliver our growth
plans they will oversee specific
business functions and teams 
mark cunningham in addition to the
responsibilities of the finance
director role is currently charged
with the reorganisation of the
logistics warehousing and operations
functions it is envisaged that this will
be complete by the end of 2008
mark goddard chief financial officer
leads the group’s finance team and is
providing additional support to the
finance director whilst the
reorganisation is implemented geoff
streetley who leads banner and is
responsible for growing the contract
office products customer base
became chief commercial officer
steve mckeever who joined us in
december as chief information
officer is responsible for delivering
best in class ecommerce and
business processes 
the board remains unchanged
however members of the senior
management team attend meetings
on a regular basis to update on
progress and developments in their
business areas 
employees 
we recognise that the success of o2o
is a reflection of the success of our
people and i would personally like to
thank our management and all our
employees for their contribution and
for their patience and perseverance
through a difficult period 
we aim to recruit and retain the best
people in the business supplies
industry at o2o our people have a
broad range of talents and
backgrounds our customers rely on
the combined efforts of around 800
people to manage relationships and to
deliver the right products and services
when and where they are needed 
the group operates a variety of
schemes to allow employees to
participate directly in the success of
the business these include a save
asyouearn share option scheme
with a broad participation in
addition to more targeted schemes
for senior employees 
i would like to express my thanks to
the chairman david callear who
stepped in and assumed executive
responsibility after my predecessor
left the business in february 2007
many of the initiatives and actions
taken during the ensuing period
strengthened the business for the
challenges faced during the
remainder of 2007
future prospects
o2o is a solid business with real
prospects for longerterm growth
both organically and by acquisition
the strategic review has delivered
clarity of vision and purpose and we
expect future acquisitions to deliver
growth we believe in getting the
basics right  delivering on our
promises achieving demonstrable
and consistent growth a
commitment to sustainable
performance and enhancing
shareholder value 
we have a growing customer base a
strong management team a
passionate and motivated workforce
and a flexible business model proven
to react quickly to market changes
our market will remain competitive
but our commitment to contain
operating costs and drive efficiencies
should enable us to deliver our
growth plans 
s r moate
chief executive
27 february 2008