NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS IS AN ANNOUNCEMENT UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER WILL BE MADE.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

20 October 2017

Property Franchise Group plc
(the "Company", "TPFG" or the "Group")

Further Response to Possible Merger Offer

Further to the Company's announcement on 19^th October 2017, the board of directors of the Company (the "Board") sets out below the reasons for the rejection of the possible merger offer (the "Possible Merger Offer") as announced by Belvoir Lettings plc ("Belvoir") on the same day.

The Board, holding in aggregate 49.3% of the ordinary shares, believes that the Possible Merger Offer significantly undervalues TPFG and had accordingly unanimously rejected the unsolicited approach made by Belvoir previously on the terms disclosed.

In coming to this view, the Board considered, and continues to believe, that, notwithstanding the scale that would be achieved in combining the two businesses, the Possible Merger Offer terms should be rejected in light of the following principal reasons:  

·      The Possible Merger Offer values the Company's shares on a nil premium, based on a valuation of 130.5 pence for each TPFG share on the closing mid-market share price on 18^th October 2017. 

·      The cash element of the Possible Merger Offer was proposed to be funded through a new revolving credit facility, significantly increasing the level of debt within an enlarged Group. The Board does not feel that given the market outlook and uncertainty around the potential tenant fee ban that increased leverage is in the best interest of the Company's shareholders.  TPFG had net debt of £0.7m as at 30 June 2017 and continues to have strong cash generation. 

·      TPFG has a progressive dividend policy and has had a significantly stronger dividend cover than Belvoir over the last three years. The Board believes that the increased leverage that would be introduced as part of the Possible Merger Offer could put pressure on the dividend going forward. 

·      The proposed Board structure under the Possible Merger Offer gives undue weighting and control to Belvoir's existing board and is representative of a takeover, not a merger of equals. The Board remains confident in the strong and stable executive management team of TPFG which has led the business since IPO and believes they are best placed to deliver further growth to TPFG shareholders.   

·      At the time of the interim results released on 14^th September 2017, the Board announced that progress across the business had been encouraging, including at the EweMove business where a new managing director had been appointed.  The Board continues to believe that this challenger "hybrid/online" business will continue to grow strongly and are pleased to report that it has performed in line with management expectations since the half year and has been cash generative during this period. 

The Board is confident in delivering further growth and returns to TPFG shareholders through both capital appreciation and its progressive dividend policy and sees no merit in any further discussions with Belvoir. This announcement has been made without the consent of Belvoir.

Enquiries:

The Property Franchise Group Plc                          01202 292829
Ian Wilson, Chief Executive Officer
David Raggett, Chief Financial Officer

Cenkos Securities plc                                              020 7397 8925
Max Hartley (Nomad)

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for; any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3. Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available on the Company's website www.propertyfranchise.co.uk  by no later than 12 noon on 20 October 2017. For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.