Octopus Apollo VCT plc ("Apollo")
Octopus VCT plc ("OVCT") 

(together the "Companies")

24 October 2014

Publication of a Prospectus (the "Prospectus") and Circulars (the "Circulars") in connection with recommended proposals to merge the Companies (to be completed pursuant to a scheme of reconstruction (the "Scheme" or "Merger") under section 110 Insolvency Act 1986) and an offer for subscription by Apollo.  

On 29 September 2014, the boards of Apollo and OVCT (the "Boards") announced that they had entered into discussions to merge the Companies into one company (the "Enlarged Company") and that it was also intended to raise further funds into Apollo pursuant to an offer for subscription at the same time. The Boards are pleased to advise that discussions have now concluded and that the Companies have today issued the Circulars to set out the proposals for the Merger for consideration by their respective shareholders. Each of the Companies is managed by Octopus Investments Limited ("Octopus").

The Merger will be completed by OVCT being placed into members' voluntary liquidation pursuant to a scheme of reconstruction under Section 110 of the Insolvency Act 1986. Shareholders should note that the Merger will be outside the provisions of the City Code on Takeovers and Mergers.

OVCT shareholders will receive one C ordinary share of 1p in the capital of Apollo ("Scheme Shares" or "C Ordinary Shares") for every ordinary share of 1p held in OVCT and the benefits will be shared by each set of shareholders, with the costs being split proportionately based on the net asset values of the Companies. The Merger requires the approval of resolutions by the Companies' shareholders.

Apollo is seeking to raise £20 million under an offer for subscription for new ordinary shares ("Offer Shares"), with an over allotment facility of a further £10 million (the "Offer"). Participation by Apollo in the Offer is subject to the approval of the Shareholders and is conditional on the Scheme having taken place prior to the time of the first allotment.

Apollo is seeking the approval of shareholders of an offer agreement relating to the Offer (the "Offer Agreement") and a deed of variation to its existing management and administration agreement with Octopus, being arrangements with Octopus which is a related party under the Listing Rules.

Background
Apollo was launched in July 2006 as Octopus Protected VCT plc and became part of the Apollo family of VCTs in 2008.  It has been managed, with a capital preservation mandate, by the Octopus team since inception. OVCT was launched in September 2009 and has also been managed by the Octopus team since inception.  

The latest unaudited NAV of Apollo, taken from its unaudited half yearly report for the six months to 31 July 2014, published on 15 October 2014, was 86.9p per share, and the latest unaudited NAV of OVCT, taken from its unaudited half yearly report for the six months to 31 August 2014, was 98.8p per share. The table below sets out the unaudited NAVs of the Companies and provides further detail on the venture capital investments in their portfolios as at these dates.

* the sum of (i) the NAV per share and (ii) all distributions per share paid since the first admission of the shares to the Official List

Each of the Companies has an investment objective and policy of providing Shareholders with an attractive income and capital return by investing their funds in a broad spread of unquoted UK companies which meet the relevant criteria for venture capital trusts ("VCTs").

VCTs are required to be traded on a European Union/European Economic Area regulated market. The Companies are listed on the premium segment of the Official List, which involves a significant level of listing costs, as well as related fees to ensure they comply with all relevant legislation. The Enlarged Company should be better placed to spread such running costs across a larger asset base and facilitate better liquidity management and, as a result, may be able to maximise investment opportunities and sustain a higher level of dividends to shareholders over its life.

In September 2004, the Merger Regulations were introduced allowing VCTs to be acquired by, or merge with, each other without prejudicing the VCT tax reliefs obtained by their shareholders. A number of VCTs have taken advantage of these regulations to create larger VCTs.

With the above in mind, the Boards entered into discussions with Octopus to consider a merger of the Companies to create a single, larger VCT. The aim of the Boards is to improve shareholder value while also creating liquidity for those current investors of OVCT who wish to exit when the 5 year qualifying holding period for all OVCT shareholders has been reached,.  The Boards also expect to achieve, among other things, strategic and scale benefits through the creation of an enlarged VCT.

The Scheme
The mechanism by which the Merger will be completed is as follows:

• OVCT will be placed into members' voluntary liquidation pursuant to a scheme of reconstruction under Section 110 IA 1986;
• all of the assets and liabilities of OVCT will be transferred to Apollo in consideration for the issue of Scheme Shares; and
• the assets and liabilities of OVCT transferred to the Company will constitute a separate share fund (the "C Ordinary Share Fund").

The effect of the Scheme will be that OVCT Shareholders will receive one Scheme Share for each OVCT share held.

The Scheme is conditional upon its approval by the Apollo shareholders and by the OVCT shareholders, as well as the other conditions set out in the Prospectus and Circulars.

As the Companies have a similar investment objective and policy, the same investment manager and other common advisers, the proposed Merger should be achievable without major additional cost or disruption to the Companies and their combined portfolio of investments.

The aggregate anticipated cost of undertaking the Merger is approximately £0.4 million, including VAT, legal and professional fees, stamp duty and the costs of winding up OVCT. The costs of the Merger will be split proportionately between the Companies by reference to their respective NAVs immediately prior to the Merger.

The portfolio of assets which will be transferred from OVCT to the Company as part of the Scheme is all considered to be in keeping with the Company's investment policy. The extent of the liabilities (if any) which will be transferred from OVCT to the Company as part of the Scheme will be those which are incurred in the ordinary course of business and any merger costs which remain unpaid at the time of transfer. Any such liabilities are expected to be nominal in comparison to the value of the assets.

OVCT shareholders who do not vote in favour of the resolution to be proposed at OVCT's first general meeting, as referred to in the timetable below, are entitled to dissent and have their shareholding purchased by the liquidators of OVCT (the "Liquidators") at a price agreed between the dissenting OVCT Shareholders and the Liquidators (or by arbitration), which would be expected to be at a significant reduction to the net asset value of an OVCT share. If the conditions of the Scheme are not satisfied, the Companies will continue in their current form and the Boards will continue to review all options available to them regarding the future of the Companies.

Clearance has been requested from HMRC that the Scheme meets the requirements of the Merger Regulations and, therefore, that the implementation of the Scheme should not affect the status of the Company as a VCT. It is the intention of the Board of the Company to continue to comply with the requirements of Income Tax Act 2007 following the Merger so that the Company continues to qualify as a VCT.

Exit opportunity for OVCT Shareholders
In the summer of 2015, once the five-year VCT qualifying period for the current OVCT shareholders has been achieved, an opportunity will be provided for the holders of C Ordinary Shares to exit their investment in Apollo or, should they wish to continue their investment, to have their C Ordinary Shares converted into Ordinary Shares on a relative NAV basis in accordance with the Company's articles of association.

EXPECTED TIMETABLE, OFFER STATISTICS AND COSTS

Expected Timetable for the Scheme

Apollo

OVCT

(*The final expected date of trading of the OVCT Shares will be 27 November 2014. See the timetable for Apollo with regard to admission, CREST accounts being credited and certificates being despatched in respect of the Scheme Shares)

Expected Timetable for the Offer

• The Offer will close earlier if fully subscribed. The Board reserves the right to close the Offer earlier and to accept Applications and issue Offer Shares at any time following the receipt of valid applications.
   
• The results of the Offer will be announced to the London Stock Exchange through a Regulatory Information Service provider authorised by the Financial Conduct Authority.
   
• Dealing is expected to commence in Offer Shares within ten business days of allotments and share and tax certificates are expected to be despatched within 14 business days of allotments.
   
• The dates set out in the expected timetable above may be adjusted by the Company, in which event details of the new dates will be notified through a Regulatory Information Service.

Offer Statistics

• The cost of the Offer is capped at 7.0%. Octopus has agreed to indemnify the Company against the costs of the Offer in excess of this amount.

Copies of the Prospectus and Circulars will shortly be available for inspection at the National Storage Mechanism, which is located at:

http://www.hemscott.com/nsm.do

and on the Company's website:

http://www.octopusinvestments.com

For further information please contact:

Nicola Board
Company Secretary
0207 776 8663