Rm Plc (LON:RM.), the IT software and infrastructure group that has excelled in recent years on the back of the UK government’s PFI-funded Building Schools for the Future (BSF) programme, was today left figuring out the cost of news that the entire programme is being scrapped.

Under austerity measures brought in by the new Coalition Government, BSF has been halted and 715 school refurbishment and construction projects have been either cancelled or left in limbo. As part of the Government plans, 44 existing BSF projects which have reached financial close will continue as planned. BSF projects which are 'close to' financial close – where preferred bidders have been appointed – together with Academies included in BSF projects will be reviewed on a case-by-case basis. All other BSF projects will be stopped. The Secretary of State said: “Rebuilding and refurbishment projects may go ahead under future capital investment programmes, shaped by the capital review - but they will no longer be funded under the existing programme.”

RM has reached financial close on 14 BSF projects and the large majority of the BSF schools RM had anticipated delivering in 2010 and 2011 are part of these 14 projects. The company has previously announced that it has been appointed preferred bidder for a further seven BSF projects, with a total value of £200m of which £121m was included in the committed revenues figure of £505m disclosed in the group's interim results announcement in mid-May. These projects will now be subject to review and may be scaled back significantly. Bid costs incurred for BSF projects up to preferred bidder stage are expensed in the year they arise.

Terry Sweeney, the chief executive of RM, said: "We have strong relationships at individual school, local government and central government levels. With our strong position in the Academy market, we remain confident that RM is well-placed to adapt to changes in capital spending programmes. We will continue to analyse the impact of the DfE's review and, as appropriate, update the market in due course."

In May’s interim report, Mr Sweeney was at pains to point out that RM was not dependent on any one product or market area, having spent the last five years broadening the range of education products and services it sells, significantly increasing its international footprint and building a substantial order book.

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