IFRS Transition

RM PLC
14 December 2005



    RM plc: IFRS transition information for the year ended 30 September 2005

RM plc, the leading supplier of information and communications technology (ICT)
and other services to education, is providing International Financial Reporting
Standards (IFRS) transition information for the year ended 30 September 2005. RM
will report interim results for the six months to 31 March 2006 under IFRS in
May 2006, when additional transitional information will be provided.

Key Financials - Transition of FY2005 from UK GAAP to IFRS

   • Underlying business performance and cash flow unchanged
   • Revenue unchanged at £262.7 million
   • Profit before tax and goodwill charges increases from £12.8 million to
     £14.0 million (+9%)
     - Pension cost falls by £1.3 million
     - Application of IFRS 2 (Share-based Payment) increasesprofit
     - No R&D capitalised
   • Profit before tax increases from £5.5 million to £11.5 million (+109%)
     - Goodwill amortisation ceases
   • Diluted EPS before goodwill charges increases from 10.5p to 11.6p (+10%)
   • Net assets £38.2 million compared to £38.5 million

This press release and the accompanying presentation have been prepared on the
basis of current understanding of IFRS as it will apply on 30 September 2006.
These standards are subject to review and endorsement by the European Commission
and may change. Further industry-specific practice about the application of IFRS
may also emerge. All restatements are unaudited.

A conference call for investment analysts will take place at 10:00am on
Wednesday 14 December 2005. To access this facility dial [phone]. A
copy of the accompanying presentation will be available at 8:30am at www.rm.com/
investors

                                    - Ends -
For further information, please contact:

Mike Greig, Group Finance Director               RM plc        08709 200200
Phil Hemmings, Director of Corporate Affairs
Andrew Fenwick                                   Brunswick     020 7404 5959
Fiona Laffan
Mark Antelme

Adoption choices

Share-based payments: IFRS 2 applied to equity instruments granted post 7
November 2002.

Employee benefits: Adoption of 16 December 2004 amendment to IAS 19 allowing
actuarial gains and losses to be presented in statement of recognised income and
expenditure rather than using a corridor approach.

Business combinations: Combinations already recognised at 1 October 2004 have
not had IFRS 3 retrospectively applied.

Financial instruments: IAS 32 and 39 not applied to periods prior to 1 October
2005.

Consolidated income statement

£'000                                                 2005
UK GAAP profit before tax                            5,459
Add back goodwill amortisation                       6,294
Add back goodwill impairment                         1,092
UK GAAP profit before tax and goodwill charges      12,845
Share-based payment                                     14
Pensions                                             1,260
Holiday pay accrual                                  (122)
IFRS profit before tax and goodwill charges         13,997
Goodwill impairment                                 (2,469)
IFRS profit before tax                              11,528

Earnings per share

IFRS                                        UK       GAAP
Basic                                       8.9p     2.3p
Diluted                                     8.9p     2.2p
Diluted - before goodwill charges           11.6p   10.5p

Consolidated net assets

£'000                                     2005       2004
UK GAAP net assets                       38,515     40,601
Dividends                                 3,399      3,195
Pensions (net of tax)                   (11,123)   (10,395)
Goodwill                                  4,917        -
Tax                                       1,236        821
Share-based payment                       2,331      1,328
Holiday pay liability                    (1,027)      (906)
IFRS net assets                          38,248     34,644

Goodwill

FY2005 impact:

   • Amortisation charge of £6.3 million reduces to nil, resulting in
     increase in intangible assets (goodwill)
   • peakschoolhaus impairment charge increases from £1.1 million to £1.2
     million, reflecting impairment of the balance at transition
   • Sentinel goodwill written down to £4.2 million by an impairment charge
     of £1.2 million (UK GAAP amortisation charge £1.2 million)

Future impact:

   • Historic goodwill not amortised and subject to annual impairment review
   • Future acquisitions will involve the identification and evaluation of
     separate intangible assets in addition to goodwill

Current policy:

   • Goodwill is shown at cost less amortisation
   • Amortisation provided to write off cost over 5 years.
   • Provision is made for impairment where appropriate

IFRS policy:

   • Goodwill is carried at transition value
   • Annual impairment review of carrying value, no goodwill amortisation


Share based payments

FY2005 impact:

   • 0% of profit before tax
   • Income statement charge £1.13 million - £14k less than UK GAAP charge
    £0.27 million charge for share options (new)
    £0.77 million charge for co-investment plan (£0.2 million reduction from UK
    GAAP)
    £0.09 million charge for other schemes (£0.1 million reduction from UK GAAP)
   • Since 2003, RM has used a co-investment scheme rather than share options
    for senior management

Future impact:

   • Dependent upon share price at grant, performance conditions, quantity of
     shares/options granted, historic share price volatility, leavers and
     exercise experience

Current policy:

   • Share options not expensed, as exercise price is set at market value at
     grant
   • Co-investment scheme shares expensed

IFRS policy:

   • Income statement charge at fair value for equity instruments granted to
     employees, including share options; co-investment plan; staff share scheme;
     and deferred bonus


Pensions

FY2005 impact:

   • Increase in liabilities of £11.1 million: £15.9 million pension
    liability net of £4.8 million deferred tax asset, previously disclosed under
    UK GAAP
   • Reduced income statement charge at £2.1 million (a reduction of £1.3
    million from SSAP 24 charge)
   • Income statement charge of £2.1 million comprises £1.7 million operating
    charge and £0.4 million other finance charge

Future impact:

   • Balance sheet bears net of pension scheme assets and liabilities, with
    expected movements reflected in income statement and variations reflected in
    equity

Current policy:

   • Regular pension cost charged to the profit and loss at a substantially
    level % of current and future pensionable payrolls
   • Variations over regular pension cost allocated to the profit and loss
    over average remaining lives of the current members
   • Balance sheet shows the difference between the profit and loss charge
    and amounts paid to the pension fund

IFRS policy:

   • Assets and liabilities of the defined benefit pension scheme on balance
    sheet
   • Movements reflected in income statement and statement of recognised
    income and expenditure


R&D

FY2005 impact:

   • Nil - no project expenditure meeting recognition criteria (technical
    feasibility, future economic benefit, intention to use/sell, technical/
    financial resource to complete, ability to use/sell, ability to measure
    expenditure reliably)

Future impact:

   • Project expenditure will continue to be reviewed against capitalisation
    criteria. Expenditure meeting the criteria will be capitalised and amortised
    over its expected useful life. Assets will then be subject to an annual
    impairment review

Current policy:

   • Expenditure is written off to the profit and loss account in the year in
    which incurred

IFRS policy:

   • Expenditure, including software development, meeting certain recognition
    criteria must be capitalised, amortised over its useful economic life and
    subject to impairment reviews
   • Industry practice on treatment has not yet emerged - RM view: technical
    feasibility is achieved when product enters validation


Hedge accounting and inventory valuation

FY2005 impact:

   • Nil - IAS 39 Financial instruments not adopted until 1 October 2005

Future impact:

   • Foreign exchange forward contracts will be reviewed for effectiveness in
    meeting hedge accounting requirements
   • Inventory purchases will no longer be accounted for at contracted
    exchange rates
   • Potential for short-term income statement volatility

Current policy:

   • Gains and losses arising on foreign exchange forward contracts are
    deferred until the hedged transaction is recognised
   • Inventory is recorded at rates in matched forward contracts

IFRS policy:

   • Hedging instruments are recorded at fair value. Movements on effective
    hedges deferred in reserves until inventory is received and taken to income
    statement thereafter. Movements on ineffective hedges taken to income
    statement immediately
   • Gains/losses deferred in reserves are recycled to the income statement
    when inventory is sold
   • Inventory receipts recorded at average exchange rates


Other impact areas

Holiday pay accrual

   • at 1 October 2004 and 1 October 2005 employees had on average 5 days of
    holiday accrued. IFRS requires a liability to be recorded for this
    entitlement. A liability of £0.9 million is recognised at 1 October 2004
    which increases by £0.1 million to £1.0 million at 1 October 2005,
    reflecting the increased payroll over this time

Dividends

   • the final dividend is not accrued until approved, therefore not included
    within year end numbers. Distributions to shareholders are not recorded in
    the income statement. The FY2005 impact is a reduction in creditors of £3.4
    million
   • RM plc distributable reserves £31.8 million (UK GAAP £30.3 million)

Taxation

   • in addition to the deferred tax on the pension scheme liability, IFRS
    requires that deferred tax is provided on temporary differences which are
    expected to be recovered. £1.2 million deferred tax asset recognised on
    share based payment and holiday pay accrual balances


Segmental reporting

Primary reported segments unchanged:

   • Infrastructure software and services;
   • Education software and services; and
   • Hardware





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