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Office2Office dividend under review

RESULT: As profits and cash generation fall at office supplies business Office2Office, management put the dividend policy under review

In an increasingly competitive office supplies market, Office2Office (OFF) is having to run faster just to stand still. So, despite reporting a double-digit rise in revenue, underlying pre-tax profits slumped by £1.9m to £6.5m as margins fell from 4.3 to 2.9 per cent.

IC TIP: Sell at 98p

Big contracts are still being secured including a Government Office Supplies Contract and a deal with Advantia in the private sector, but clients are increasingly keeping an eagle eye on the stationary cupboard. Chief executive Simon Moate said orders were characterised by an attitude of "little but often", meaning deliveries were 50 per cent up on last year, driving up distribution costs. Sales to private customers, responsible for two-thirds of revenue, grew by 15 per cent in the period, but trading profits declined from £13m to £11.2m. The business process outsourcing unit also reported a double-digit revenue increase, but profits were fractionally down to £7m.

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