The latest research note from Singer Capital Markets highlights encouraging progress at RM Plc (LON:RM), with FY25 results demonstrating meaningful operational improvement and renewed confidence in the company’s long term strategy. According to the update, the education technology group is taking significant steps towards stabilising and growing the business while positioning itself as a more focused EdTech and SaaS provider.
Singer Capital Markets currently rates RM Plc as a Buy with a 12 month target price of 184p, compared with a share price of 102p at the time of publication. This implies notable upside potential should the company successfully deliver on its strategic initiatives.
Research analyst Harold Evans summarised the investment case clearly in the note, stating: “Given this implied upside, we think those willing to take a leap of faith, will be rewarded.”
Improving Financial Performance
One of the most encouraging developments is the improvement in RM’s financial footing. While the company’s transformation programme is ongoing, underlying cash generation and operational metrics have strengthened considerably.
Operating cash flow before working capital has improved markedly in recent years, moving from negative territory to a much healthier position. This reflects improved billing processes, better collections and stronger operational discipline.
Singer Capital Markets noted that the company has moved from a low point of negative £7.3 million in FY22 to positive £21.1 million in FY25. This improvement provides greater confidence in RM’s ability to manage its debt obligations and maintain supportive relationships with lenders.
FY25 Financial Highlights
Key figures from the latest full year results illustrate the company’s progress:
- Revenue of £162.1 million, a modest 2 percent decline year on year
- Adjusted operating profit rising 33 percent to £11.5 million
- Adjusted EBITDA of £16.5 million
- Adjusted profit before tax of £5.5 million
- Net debt of approximately £64 million
- Continued investment across technology and platform development
Despite slightly lower revenues, cost efficiencies and operational improvements helped drive meaningful profit growth during the year.
RM Assessment Continues to Stand Out
Within the group, RM Assessment remains the standout division. The business delivered strong growth during FY25, supported by demand for digital and paper based assessment services.
Platform revenue increased by 17 percent to approximately £30 million, contributing to divisional revenue growth of 20 percent. The division also benefits from a highly attractive recurring revenue model, with around 76 percent of income recurring in nature.
The business marked a record 20 million exam papers during the year and continues to benefit from long standing relationships with high profile customers such as Cambridge University Press & Assessment and the International Baccalaureate.
Singer Capital Markets believes the ongoing migration from paper to digital assessment could unlock further growth opportunities in the coming years.
Strategic Restructuring Underway
RM is currently undertaking a structural transformation designed to sharpen its strategic focus and accelerate deleveraging. The company plans to separate the group into three standalone divisions, each with its own management team and operating systems.
This structure could allow RM to divest its TTS and Technology divisions over time, leaving the group primarily focused on its higher growth Assessment business.
Singer Capital Markets believes this potential breakup scenario could help unlock additional value and support a faster reduction in debt.
Outlook and Forecasts
Looking ahead, the broker expects relatively flat revenue performance in FY26 but continued profit growth driven by cost efficiencies and operational improvements. Adjusted operating profit is forecast to grow by around 19 percent in FY26.
Importantly, the group is also expected to move towards positive free cash flow in FY27, marking another milestone in its turnaround journey.
Final Thoughts
RM Plc appears to be making steady progress in its transformation strategy. While challenges remain, particularly in parts of the UK schools market, the improving cash profile, strong performance of RM Assessment and a clearer strategic direction are encouraging signals.
If management successfully executes its restructuring plans and continues strengthening the balance sheet, the company may be well placed to realise the growth opportunities highlighted in the latest research note from Singer Capital Markets.
