Delays in agreeing a contract to supply computer systems to Northern Ireland's schools hit full-year profits at RM, based at Milton Park.

The company has spent £5.4m in bidding for the £300m project, which would generate about 15m a year if agreed.

Chief executive Richard Girling said: "We understand a lot now about organising technology work in education and we will only take it on at an acceptable level of profit."

Trilith, the joint venture between RM and IT company ICL, has been the sole bidder since June 1999. RM warned at the end of September that a delay in the Classroom 2000 project would mean higher one-off costs.

Pre-tax profits including the one-off charge, for the year to September 30, fell to £9.5m, compared with £12.3m at the same point last year. Turnover rose to £207.6m, against 162.2m last time.

Mr Girling said that apart from Classroom 2000, it had been a year of excellent growth for RM.

Excluding the one-off charge, goodwill and depreciation, pre-tax profits had increased by 26 per cent to £15.5m.

"The next stage of RM's development will see further growth in the UK education market and significant expansion. Against such a positive backdrop, it is disappointing that acceptable commercial terms have still not been agreed for the Classroom 2000 project. No contribution from the project is built into the plan for the current year.

"As usual, it is too early in the year to comment on the likely outcome for 2001, particularly given the seasonal nature of our business," he said.

"Nonetheless, the board is confident that RM will continue to be the ICT partner of choice for the UK's education establishments and, as a consequence, results for the full-year will show good progress."

The workforce rose by 250 to 1,400 and expanded into a third building at Milton Park. Mr Girling said they expected to take on a further 200 staff this year.