REG - CMO Group PLC - Proposed Cancellation of AIM Listing

CMOAnnouncement

27/02/2025 07:15

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RNS Number : 6180Y  CMO Group PLC  27 February 2025

27 February 2025

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.

 

CMO Group PLC

 

Proposed Cancellation of Admission to trading on AIM

Re-registration as a Private Limited Company

Adoption of New Articles

Notice of General Meeting

Trading Update

CMO Group PLC ("CMO" or the "Company" or the "Group"), the UK's largest
online-only retailer of building materials, today announces the proposed
voluntary cancellation of the admission of its ordinary shares of £0.01 each
("Ordinary Shares") from trading on AIM (the "Cancellation"), pursuant to
Rule 41 of the AIM Rules for Companies (the "AIM Rules"), re-registration of
the Company as a private limited company (the "Re-registration") and adoption
of new articles of association (the "Proposals").

Further to the year-end trading and financing update announced on 10 January
2025, the Board has undertaken a review of its strategic options and concluded
that the best course of action is to pursue the Proposals. The reasons are
outlined later in this announcement but central to the Board's decision is the
additional funding requirements of the business for near-term working capital
requirements and to support medium-term growth towards the end of 2025.

Despite an extensive search the Directors have concluded that there is no
route to source the additional funds the Group requires while the Company
remains on market. The Cancellation is expected to provide access to
significant cost savings and identified sources of potential additional
funding which will support the Group's immediate funding requirements and fund
growth going forward. The Group's lending bank has provided additional
funding and given further flexibility to the existing facilities which will
remain in place post Cancellation.

A circular (the "Circular") will be posted to Shareholders later today, and
includes notice of a General Meeting of the Company which is being convened
for 11.30 a.m. on Monday, 17 March 2025 (the "General Meeting") at the
offices of Instinctif Partners, 65 Gresham Street, London EC2V 7NQ, for the
purposes of considering and, if thought fit, passing the requisite shareholder
resolution to approve (i) the Cancellation (the "Cancellation Resolution") and
(ii) the Re-registration and adoption of the New Articles (the
"Re-registration Resolution"). In accordance with the requirements of Rule 41
of the AIM Rules, the Cancellation is conditional upon the approval of not
less than 75 per cent. of the votes cast by Shareholders (whether present in
person or by proxy) at the General Meeting.

If the Cancellation Resolution is passed at the General Meeting, it is
anticipated that the Cancellation will become effective at 7:00 a.m. on 27
March 2025.

The Re-registration is conditional upon the Cancellation becoming effective.
Subject to and conditional upon the Cancellation and the passing of the
Re-registration Resolution, application will be made to the Registrar of
Companies for the Company to be reregistered as a private limited company.

The Company has received irrevocable undertakings to vote in favour of the
Resolutions from all Directors and majority shareholder Key Capital Partners
(Nominees) Limited. In aggregate, the irrevocable undertakings to vote in
favour of the Resolutions set out in the Circular represent approximately
45.7% per cent. of the Company's issued share capital.

Further information on the Proposals and the General Meeting is set out below
and in the Circular.

Current trading and Outlook

January saw the sharpest December-to-January drop in the Consumer Confidence
index since 2011 falling to minus 22 as a further consequence of the recent
Government Budget. Correspondingly, this has contributed to a softness in the
RMI market with orders from the DIY segment down 15% YoY. Sales at the Group
level for the month of January were down a similar amount. February has seen
an improving trend as the Group mobilises around current market dynamics.

The Group is encouraged by the longer-term macro indicators which do indicate
the market should see some positive volume growth in late H2 and into 2026, as
the current uplift in mortgage approvals translates into RMI intent.

Reasons for proposed Cancellation and Re-registration

Despite the trading in January, the Group is at an inflection point and is
seeking capital to fund its near and medium-term growth plans to take
advantage of the current real opportunity in its marketplace and which are
available from its disruptive business model, to continue to build market
share and scale CMO.

The Company has been exploring funding options but attempts to raise
sufficient additional equity capital have not been successful. The Board has
undertaken a review of strategic options to explore the optimum route to
raising growth capital from other available sources.

Following the review, the Directors believe that the Proposals are in the best
interests of the Company and its Shareholders as a whole. In reaching this
conclusion the Board has considered the following key factors:

The considerable cost, management time and the legal and regulatory burden
associated with maintaining the Company's admission to trading on AIM

The considerable cost of c.£0.7m associated with maintaining the admission of
the Ordinary Shares (such as nominated adviser and broker fees, London Stock
Exchange fees and the costs associated with being a quoted company in having
perceived higher level of corporate governance and audit scope) are, in the
Board's opinion, disproportionately high, compared with the benefits. The
Directors believe the time and cost savings expected from the Proposals could
be better utilised, for the benefit of the Company, by providing an extended
cash runway to capitalise on growth opportunities that the Group's disruptive
and agile business model is positioned to take advantage of.

Access to capital

The Directors have discussed the potential of an equity fundraise with major
shareholders and other investors in recent months and received indicative
levels of support. However, the terms and amount available were not at a
sufficient level to offer a satisfactory result for the Company, the Group's
lending bank and other stakeholders. Therefore, the Directors have concluded
that there is no route to source sufficient additional funds the Group
requires while the Company remains on market.

The Group believes that post-Cancellation it will more easily be able to
access additional funding and the Group believes that this, in conjunction
with the reduced cost burden of being publicly listed, will support
medium-term growth plans.

The Directors have been actively engaged with the Group's supportive lending
bank. The bank has provided additional funding and given further flexibility
to the existing facilities which will remain in place post-Cancellation. In
addition, the Company requires further funding to provide the liquidity to
meet its short-term working capital requirements. While not yet guaranteed,
the Group has received indicative support from key shareholders to meet this
funding requirement post-Cancellation. This, together with the cost benefits
attributable to the Cancellation, provide a platform for the future
development of the Group.

Limited free float and lack of liquidity of the Ordinary Shares

The Directors believe the current levels of liquidity in trading of the
Ordinary Shares on AIM do not offer investors the opportunity to trade in
meaningful volumes, or with frequency, within an active market. In conjunction
with the volatile trading environment highlighted in the point above, this has
negatively affected the share price of CMO and therefore its market
capitalisation, which the Directors do not believe accurately reflects
potential or underlying prospects of the business.

Support for delisting

The Company has obtained irrevocable commitments for the Proposals from
certain of its largest Shareholders representing, in aggregate and in
combination with those of the Directors, approximately 45.7 per cent. of the
Company's current issued share capital.

The Company is seeking to make arrangements for a Matched Bargain Facility to
assist Shareholders to trade in the Ordinary Shares to be put in place from
the date of the Cancellation if the Resolutions are passed. The Matched
Bargain Facility would be provided by JP Jenkins. JP Jenkins is an appointed
representative of Prosper Capital LLP, which is authorised and regulated by
the FCA. Further detail is set out in the Circular and Appendix 1 to this
announcement.

Board changes

The Group currently operates with three non-executive directors and three
executive directors.

Independent non-executive chair, Ken Ford, and independent non-executive
director, Helen Deeble, propose to resign upon Cancellation.

Operating as a private company will provide greater flexibility as to board
structure, potentially including financial benefits and following the
Cancellation, the governance arrangements of the Company will be reviewed by
the Board.

A copy of this announcement and the Circular, when available, will be made
available on the Company's website at www.cmogroup.com
(http://www.cmogroup.com) . Shareholders are strongly encouraged to read the
Circular in full.

Capitalised terms used but not defined in this announcement shall have the
same meanings as are given to such terms in the Circular.

Enquiries

 CMO Group PLC                                             Via Instinctif
 Dean Murray, CEO
 Jonathan Lamb, CFO

 Panmure Liberum Limited (Nominated Adviser & Broker)      Tel: +44 20 3100 2000
 Andrew Godber
 Rupert Dearden
 Satbir Kler
 Ailsa Macmaster

 Instinctif Partners (Financial PR)                        Tel: +44 20 7457 2020
 Justine Warren
 Matthew Smallwood
 Hannah Scott

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain. The person responsible for arranging for the release of this
announcement on behalf of the Company is Jonathan Lamb, Chief Financial
Officer.

About CMO Group PLC

Founded in 2008 as Construction Materials Online, CMO is the UK's largest
online-only retailer of building materials. The Company is disrupting
a £29 billion predominantly offline market with a digital first proposition
and market leading product choice, supported by high quality customer service
and technical expertise.

CMO has created category authority by offering market-leading ranges listing
over 140,000 products through its many specialist SUPERSTORE websites which
recently underwent exciting new rebranding.

Its unique digital hybrid service model, developed over more than 10 years,
combines specialist advice and expertise tailored to category and customer
needs online, to service the next generation of digital natives by bridging
the gap between traditional bricks and mortar retailers and pureplay digital
retailing. CMO has established trusted partnerships with manufacturers and
supply partners across the UK. Its business model is asset light with most
products drop shipped directly from the manufacturers to its customers.
CMO's aim is to become the destination of choice for anyone building or
improving homes in the UK, providing the widest range, backed by specialist
expertise, and helpful customer solutions.

Appendix 1

Extracts from the Circular

Process for, and principal effects of, the Cancellation

If the Cancellation becomes effective, Panmure Liberum will cease to be the
nominated adviser of the Company pursuant to the AIM Rules and the Company
will no longer be required to comply with the AIM Rules. However, the Company
will remain subject to the Takeover Code for a period of two years after the
Cancellation, details of which are set out below.

The principal effects of the Cancellation will include the following:

·     there will be no formal market mechanism enabling Shareholders to
trade Ordinary Shares (other than a limited off-market mechanism provided by
the Matched Bargain Facility);

·     it is possible that, following the announcement of the intention to
propose the Cancellation, the liquidity and marketability of the Ordinary
Shares may be significantly reduced);

·     the Ordinary Shares may be more difficult to sell compared to
shares of companies traded on AIM (or any other recognised market or trading
exchange):

·     in the absence of a formal market and quoted price it may be
difficult for Shareholders to determine the market value of their investment
in the Company at any given time;

·     the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no longer apply
albeit the Company will remain subject to the Takeover Code for a period of
two years after the Cancellation (see below for more details);

·     Shareholders will no longer be afforded the protections given by
the AIM Rules, such as the requirement to be notified of price sensitive
information or certain events and the requirement that the Company seek
Shareholder approval for certain corporate actions, where applicable,
including, reverse takeovers, and fundamental changes in the Company's
business, such as certain acquisitions and disposals;

·     the levels of disclosure and corporate governance within the
Company may not be as stringent as for a company quoted on AIM:

·     the Company will no longer be subject to UK MAR regulating inside
information and other matters:

·     the Company will no longer be required to publicly disclose any
change in major shareholdings in the Company under the Disclosure Guidance and
Transparency Rules;

·     Panmure Liberum will cease to be nominated adviser and broker to
the Company:

·     whilst the Company's CREST facility will remain in place
immediately following the Cancellation, the Company's CREST facility may be
cancelled in the future and, although the Ordinary Shares will remain
transferable, they may cease to be transferable through CREST (in which case,
Shareholders who hold Ordinary Shares in CREST will receive share
certificates);

·     stamp duty will be due on transfers of shares and agreements to
transfer shares unless a relevant exemption or relief applies to a particular
transfer: and

·     the Cancellation and Re-registration may have personal taxation
consequences for Shareholders.  Shareholders who are in any doubt about their
tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive. Shareholders should seek their
own independent advice when assessing the likely impact of the Cancellation on
them.

For the avoidance of doubt, the Company will remain registered with the
Registrar of Companies in England and Wales in accordance with, and subject
to, the Companies Act, notwithstanding the Cancellation.

Transactions in the Ordinary Shares prior to and post the proposed
Cancellation

Prior to the Cancellation

Shareholders should note that they are able to continue trading in the
Ordinary Shares on AIM prior to the Cancellation.

Following the Cancellation

The Company is making arrangements for a Matched Bargain Facility to assist
Shareholders to trade in the Ordinary Shares to be put in place from the date
of the Cancellation, if the Cancellation Resolution is passed.  The Matched
Bargain Facility will be provided by JP Jenkins.  JP Jenkins (a trading name
of InfinitX Limited and an appointed representative of Prosper Capital LLP,
which is authorised and regulated by the FCA) has been appointed to facilitate
trading in the Ordinary Shares.

Under the Matched Bargain Facility, Shareholders or persons wishing to acquire
or dispose of Ordinary Shares will be able to leave an indication with JP
Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with
members of the public), of the number of Ordinary Shares that they are
prepared to buy or sell at an agreed price.  In the event that JP Jenkins is
able to match that order with an opposite sell or buy instruction, it would
contact both parties and then effect the bargain (trade).  Shareholdings
remain in CREST and can be traded during normal business hours via a UK
regulated stockbroker.  Should the Cancellation become effective, and the
Company puts in place the Matched Bargain Facility, details will be made
available to Shareholders on the Company's website at
https://www.cmogroup.com/ (https://www.cmogroup.com/) .

The Matched Bargain Facility will operate for a minimum of 12 months after the
Cancellation. The Directors' current intention is that it will continue beyond
that time. However, Shareholders should note that there can be no guarantee
that the Matched Bargain Facility will operate beyond 12 months after the
Cancellation and that it could be withdrawn, consequently inhibiting the
ability to trade the Ordinary Shares. Further details will be communicated to
the Shareholders at the relevant time.

There can be no guarantee as to the level of the liquidity or marketability of
the Ordinary Shares under the Matched Bargain Facility, or the level of
difficultly for Shareholders seeking to realise their investment under the
Matched Bargain Facility.

Before giving your consent to the Cancellation, you may want to take
independent professional advice from an appropriate independent financial
adviser.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so
prior to the Cancellation becoming effective. As noted above, in the event
that Shareholders approve the Cancellation, it is anticipated that the last
day of dealings in the Ordinary Shares on AIM will be Wednesday, 26 March 2025
and that the effective date of the Cancellation will be Thursday, 27 March
2025.

Recommendation

The Directors consider that the Proposals and the Resolutions to be in the
best interests of the Company and its Shareholders as a whole.  Accordingly,
the Directors unanimously recommend that you vote in favour of the Resolutions
as they intend to do in respect of their own shareholdings of 5,370,641
Ordinary Shares, representing approximately 7.5 per cent. of the Company's
issued share capital as of the date of the Circular.

Shareholders are encouraged to read the Circular in its entirety

Appendix 2

Expected timetable of principal events

 Event                                                                          Time and/or date*
 Formal announcement relating to the proposed Cancellation                      Thursday, 27 February 2025
 Publication and posting of the Circular (including Notice of General Meeting)  Thursday, 27 February 2025
 Latest time for receipt of proxy appointments and CREST voting instructions    11.30 a.m. on Thursday, 13 March 2025
 General Meeting                                                                11.30 a.m. on Monday, 17 March 2025
 Announcement of result of General Meeting                                      Monday, 17 March 2025
 Expected last day of dealings in Ordinary Shares on AIM                        Wednesday, 26 March 2025
 Expected date of Cancellation                                                  7.00 a.m. on Thursday, 27 March 2025
 Matched Bargain Facility for Ordinary Shares expected to commence              7.00 a.m. on Thursday, 27 March 2025
 Expected date of Re-registration                                               by Friday, 11 April 2025

 

Note:

Each of the dates in the above timetable is subject to change at the absolute
discretion of the Company.

References to time above are to UK time.

The timetable above assumes that the Resolutions set out in the Notice of
General Meeting are passed.

If any of the above times and/or dates change, the revised time(s) and/or
date(s) will be notified to Shareholders by announcement through a Regulatory
Information Service.

 

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