CMO Group To De-list From AIM

CMO Group PLC ("CMO" or the "Company" or the "Group"), the UK's largest online-only retailer of building materials, today [28 February]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.

Source : CMO Group PLC

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