1. No category

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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt about the action to be taken, you should immediately consult your bank manager,
stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial
Services and Markets Act 2000 (FSMA).
If you have sold or otherwise transferred all of your Shares in Octopus Apollo VCT 3 plc (the Company), please send
this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the
stockbroker, independent financial adviser or other person through whom the sale or transfer was effected for
delivery to the purchaser or transferee.
This document, which comprises a prospectus relating to the Company dated 17 August 2012, has been prepared in
accordance with the prospectus rules made under Part VI of FSMA.
A1: 1.1
A1: 1.2
The Company, the Directors and the Proposed Directors, whose names appear on pages 39 and 40 of this
document, accept responsibility for the information contained herein. To the best of the knowledge and belief of the
Company, the Directors and the Proposed Directors (who have taken all reasonable care to ensure that such is the
case), the information contained in this document is in accordance with the facts and does not omit anything likely to
affect the import of such information.
A3: 1.1
A3: 1.2
Matrix Corporate Capital LLP, which is authorised and regulated in the United Kingdom by the FSA, is acting as
sponsor for the Company and no-one else and will not be responsible to any other person for providing the
protections afforded to customers of Matrix Corporate Capital LLP (subject to the responsibilities and liabilities
imposed by FSMA and the regulatory regime established thereunder) in providing advice or in relation to any matters
referred to in this document.
A3: 10.1
SGH Martineau LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as
legal adviser to the Company, Octopus Apollo VCT 1 plc (Apollo 1), Octopus Apollo VCT 2 plc (Apollo 2) and
Octopus Apollo VCT 4 plc (Apollo 4) (Apollo 1, Apollo 2 and Apollo 4, together the Target VCTs) and no-one else and
will not be responsible to any other person for providing advice in connection with any matters referred to in this
document.
OCTOPUS APOLLO VCT 3 PLC
(Registered in England and Wales with registered number 05840377)
Prospectus
Relating to the issue of up to 110 million New Shares
in connection with:
.
the acquisition of the assets and liabilities of
Apollo 1, Apollo 2 and Apollo 4
.
an enhanced buyback facility
.
an offer for subscription to raise up to £20 million
(together with an over-allotment facility to raise up
to a further £10 million)
The existing Shares issued by the Company are listed on the premium segment of the Official List of the UKLA and
traded on the London Stock Exchange’s main market for listed securities. Application has also been made to the
UKLA for the New Shares to be listed on the premium segment of the Official List and will also be made to the
London Stock Exchange for such New Shares to be admitted to trading on its main market for listed securities. It is
expected that such admission will become effective and that trading in the New Shares will commence within three
business days of the allotment of such New Shares. The New Shares will rank pari passu with the existing issued
Shares from the date of issue.
The attention of shareholders of the Company and the Target VCTs and new investors who are resident in, or
citizens of, territories outside the United Kingdom is drawn to the information under the heading ‘‘Overseas
Shareholders’’ in paragraph 5 of Part XII of this document. The distribution of this document in jurisdictions other
than the UK may be restricted by law and therefore persons into whose possession this document comes should
inform themselves about and observe any of these restrictions. Any failure to comply with any of those restrictions
may constitute a violation of the securities laws of any such jurisdiction. In particular, the New Shares to be issued
pursuant to the Schemes, Enhanced Buyback Facility and Offer have not and will not be registered under the United
States Securities Act 1933 or the United States Investment Company Act 1990.
Persons receiving this document should carefully consider the risk factors on pages 12 and 13 of this
document.
1
A1: 5.1.1
A1: 5.1.2
A1: 5.1.4
CONTENTS
SUMMARY
3
RISK FACTORS
12
EXPECTED TIMETABLES
14
DEFINITIONS
17
PART I
MERGER OF THE COMPANY AND THE TARGET VCTS
22
PART II
THE SCHEMES
25
PART III
THE ENHANCED BUYBACK FACILITY
31
PART IV
THE OFFER
36
PART V
INFORMATION ON THE COMPANY
39
PART VI
THE INVESTMENT MANAGER
45
PART VII
FINANCIAL INFORMATION ON THE COMPANY AND THE TARGET VCTS
47
PART VIII
PRO FORMA FINANCIAL INFORMATION
50
PART IX
INVESTMENT PORTFOLIOS AND PRINCIPAL INVESTMENTS OF THE
COMPANY AND THE TARGET VCTS
53
PART X
TAX POSITION OF SHAREHOLDERS
60
PART XI
TAX POSITION OF THE COMPANY
63
PART XII
ADDITIONAL INFORMATION
65
PART XIII
ENHANCED BUYBACK FACILITY APPLICATION PROCEDURES AND
TERMS AND CONDITIONS
87
OFFER APPLICATION PROCEDURES AND TERMS AND CONDITIONS
93
PART XIV
ENHANCED BUYBACK FACILITY APPLICATION FORM
99
OFFER APPLICATION FORM
103
CORPORATE INFORMATION
106
2
SUMMARY
Summaries are made up of disclosure requirements known as ‘Elements’. These Elements are
numbered in Sections A to E.
This summary contains all of the Elements required to be included in a summary for the type of shares
being issued pursuant to this Prospectus and the Company being a closed-ended investment fund.
Some of the Elements are not required to be addressed and, as a result, there may be gaps in the
numbering sequence of the Elements.
Even though an Element may be required to be inserted in this summary, it is possible that no relevant
information can be given regarding that Element. In these instances, a short description of the Element is
included, together with an appropriate ‘Not applicable’ statement.
A
Introduction and Warnings
This summary should be read as an introduction to this Prospectus.
A22: A1
Any decision to invest in the securities of the Company should be
based on consideration of the Prospectus as a whole by the investor.
Where a claim relating to the information contained in this Prospectus is
brought before a court, the plaintiff investor might, under the national
legislation of Member States, have to bear the costs of translating this
Prospectus before the legal proceedings are initiated.
Civil liability attaches only to those persons who have tabled this
summary including any translation thereof, but only if the summary is
misleading, inaccurate or inconsistent when read together with the
other parts of the Prospectus or it does not provide, when read together
with other parts of the Prospectus, key information in order to aid
investors when considering whether to invest in such securities.
B
Issuer
B1
Legal and
commercial name
Octopus Apollo VCT 3 plc (‘‘the Company’’).
A22 B33: B1
B2
Domicile / Legal form
/ Legislation / Country
of incorporation
The Company is a public limited liability company which is registered in
England and Wales with registered number 05840377.
A22 B33: B2
B5
Group description
Not applicable. The Company is not part of a group.
B6
Material
Shareholders /
Differing voting rights
/ Control
The Company does not have any material shareholders with different
voting rights.
The principal legislation under which the Company operates is CA 2006
(and regulations made thereunder).
All Shareholders have the same voting rights in respect of the existing
share capital of the Company.
As at 16 August 2012 (this being the latest practicable date prior to
publication of this document), the Company is not aware of any person
who, directly or indirectly, has or will have an interest in the capital of
the Company or voting rights which is notifiable under UK law (under
which, pursuant to CA 2006 and the Listing Rules and Disclosure and
Transparency Rules of the FSA, a holding of 3% or more will be notified
to the Company.
3
A22 B33: B6
B7
Selected financial
information and
statement of any
significant changes
Certain selected historical information of the Company is set out below:
Audited year
ended 31
January 2012
Audited year
ended 31
January 2011
Audited year
ended 31
January 2010
Total profit/(loss) on
ordinary activities
before taxation
(£’000s)
1,356
677
244
Total net asset value
return per share (p)
4.7
2.5
0.9
Dividends paid per
Share (p)
3.5
3.0
3.0
Net assets (£’000s)
24,337
24,322
24,552
NAV per Share (p)
90.9
89.6
90.1
The Company’s net asset value per Share has risen from 90.1p as at
31 January 2010 to 90.9p as at 31 January 2012 and dividends of 9.5p
in aggregate were paid per Share during the three years ended 31
January 2012. As at 30 April 2012, the Company’s net asset value per
Share (unaudited) was 91.4p.
B8
Key pro forma
financial information
The Enlarged Company is expected to have net assets of
approximately £50 million (assuming the merger is completed based
on the NAVs of the Companies as at 31 January 2012, the Offer
(together with its over allotment facility) is fully subscribed and after
deducting expenses of the Schemes of £371,600 and the maximum
aggregate expenses of the Offer and the Enhanced Buyback Facility of
£2.8 million).
This pro forma financial information has been prepared for illustrative
purposes only and, because of its nature, addresses a hypothetical
situation and, therefore, does not represent the Company’s actual
financial position or results.
B9
Profit forecast
Not applicable. There are no profit forecasts in the Prospectus.
B10
Qualifications in the
audit reports
Not applicable. There were no qualifications in the audit reports for the
three years ended 31 January 2012.
B11
Insufficient working
capital
Not applicable. The Company is of the opinion that its working capital is
sufficient for its present requirements, that is for at least the twelve
month period from the date of this document.
B34
Investment objective
and policy, including
investment
restrictions
The investment objective of the Company is to invest in a diversified
portfolio of UK smaller companies in order to generate income and
capital growth over the long-term.
The Company’s investment policy has been designed to enable the
Company to comply with the VCT qualifying conditions. It is intended
that the long-term disposition of the Company’s assets will be not less
than 80% in a portfolio of unquoted investments and up to 20% in cash
or near-cash investments to provide a reserve of liquidity which will
maximise the Company’s flexibility as to the timing of investment
acquisitions and disposals, dividend payments and share buybacks.
Investments will be structured using various unquoted investment
instruments, including ordinary and preference shares, loan stocks and
convertible securities, to achieve an appropriate balance of income and
capital growth, having regard to the VCT legislation.
4
A22 B33 B9, B10,
B11
A22: B34
The portfolio will be diversified by investing in a broad range of industry
sectors and by holding investments in companies at various stages of
maturity in the corporate development cycle, though it is not intended
that investments will be made in early stage unquoted companies
which have yet to achieve profitability and cash generation.
The normal investment holding period will be in the range from three to
seven years. Any uninvested funds will typically be held in cash and
money market funds.
The Company is subject to the investment restrictions relating to a
venture capital trust in ITA 2007 and in the Listing Rules which specify
that (i) the Company must, at all times, invest and manage its assets in
a way which is consistent with its object of spreading investment risk
and in accordance with its published investment policy; (ii) the
Company must not conduct any trading activity which is significant in
the context of its group as a whole; and (iii) the Company may not
invest more than 10%, in aggregate, of the value of the total assets of
the issuer at the time an investment is made in other listed closedended investment funds.
B35
Borrowing limits
The Articles restrict borrowings to 50% of the adjusted capital and
reserves as defined therein; the current policy however is that
investments will normally be made using the shareholders’ funds and
it is not intended that the Company will take on any long-term
borrowings. As at the date of this document the Company has no
borrowings.
B36
Regulatory status
The Company is subject to the provisions of the Companies Act 2006
and UK law generally, its Shares are listed on the premium segment of
the Official List and, as a qualifying VCT, it is subject to regulation by
HMRC in order to retain such a status.
B37
Typical investor
The typical investor for whom investment in the Company is designed is
an individual retail investor aged 18 or over who is resident and a tax
payer in the UK.
B38
Investments of 20%
or more in a single
company
Not applicable. The Company does not have any investments which
represent more than 20% of its gross assets in a single company or
group.
B39
Investments of 40%
or more in a single
company
Not applicable. The Company does not have any investments which
represent more than 40% of its gross assets in a single company or
group.
B40
Service providers
Octopus receives an annual investment management fee of an amount
equal to 2% of the net assets of the Company plus applicable VAT.
Octopus also receives an annual administration and accounting fee
equal to 0.3% of the net assets of the Company (plus applicable VAT)
and a company secretarial fee of £5,000 (plus VAT). These fee
arrangements will continue to apply to the Enlarged Company but will
be across the enlarged net assets.
5
A15: 2.1
No performance related incentive fee is payable in the first five
accounting periods. Octopus is then entitled to an annual performance
related incentive fee of an amount equal to 20% (in respect of each
share in issue) of the amount by which the total return per Share (this
being NAV and dividends paid or declared) increases from the total
return per Share as at the start of the sixth accounting period (or, if
greater, 100p) in excess of the HSBC bank rate. The Board and
Octopus have agreed, subject to Shareholder approval, to replace the
existing performance related incentive fee arrangements whereby
Octopus will be entitled to an annual performance related incentive fee
in each accounting period commencing on or after 1 February 2012,
subject to the total return being 100p at the end of the relevant period.
The amount of the fee will be equal to 20% of the amount by which the
total return as at the end of the relevant period exceeds the total return
as at 31 January 2012 plus cumulative Bank of England base rate or, if
greater, the highest total return as at the end of the accounting period
commencing on 1 February 2012 or any subsequent accounting period.
B41
Regulatory status of
Octopus
Octopus is the investment manager of the Company and also provides
administration, secretarial and custodian services. Octopus is
registered in England and Wales as a private limited company under
number 03942880. Octopus is authorised and regulated by the
Financial Services Authority, with registered number 194779.
A22: B41
B42
Calculation of net
asset value
The Company’s net asset value is calculated at every quarter and
published on an appropriate regulatory information service. If for any
reason valuations are suspended, shareholders will be notified in a
similar manner.
A22: B42
B43
Umbrella collective
investment scheme
Not applicable. The Company is not part of an umbrella collective
investment scheme.
A22: B43
B44
Absence of financial
statements
Not applicable. The Company has commenced operations and
published financial statements.
A22: B44
B45
Investment portfolio
The Company invests in a diversified portfolio of UK smaller companies
in order to generate income and capital growth over the long-term. A
summary of the Company’s portfolio is set out below:
A22: B45
Date of launch
Funds raised Unaudited
since launch net assets
(£m)
(£m)*
July 2006
27.1
24.5
NAV per
Share
(p)*
91.4
Carrying
value of the
Number of
venture
venture
capital
capital
investments
investments*
(£m)*
19
22.7
* Taken from the unaudited management accounts to 30 April 2012 for the Company
(which is prior to the payment of dividends by the Company after 30 April 2012).
B46
Most recent net asset
value per Share
As at 30 April 2012, the unaudited NAV per Share was 91.4p.
6
A22: B46
C
Securities
C1
Description and class
of securities.
The securities being offered pursuant to the merger, the Enhanced
Buyback Facility and the Offer are ordinary shares of 10p each (‘‘New
Shares’’) (ISIN: GB00B17B3479).
A22: C1
C2
Currency
The Company’s share capital comprises ordinary shares of 10p each.
A22: C2
C3
Shares in issue
25,056,684 ordinary shares of 10p each are in issue at the date of this
document (all fully paid up). The maximum number of New Shares to
be issued pursuant to the merger, the Offer and the Enhanced Buyback
Facility is 110 million.
C4
Description of the
rights attaching to the
securities
The New Shares will rank equally in all respects with each other and
with the existing Shares.
A22: C4
C5
Restrictions on
transfer
The New Shares will be listed on the premium segment of the Official
List and, as a result, will be freely transferable.
A22: C5
C6
Admission
Application has been made to the UK Listing Authority for the New
Shares to be listed on the Official List and will be made to the London
Stock Exchange for such shares to be admitted to trading on its main
market for listed securities. It is anticipated that dealings in the New
Shares will commence within three business days following allotment.
A22: C6
C7
Dividend policy
The dividend policy of the Company is to maintain a regular dividend
flow where possible in order to take advantage of the tax free
distributions a VCT is able to provide. The Company has paid an
average annual dividend of 3.1p per Share over the last four years. The
Board intends to increase distributions, with a target annual dividend of
5p per Share following the merger (subject to available cash, portfolio
requirements, distributable reserves and applicable law at the relevant
time).
A22: B33: C7
D
D2
Risks
Key information on
the risks specific to
the Company
Company
.
There is no guarantee that the Enlarged Company will meet its
objectives. The value of Shares can fluctuate and Shareholders
may not get back the amount they invested and there is no
guarantee that dividends will be paid. The past performance of the
Company, the Target VCTs and/or Octopus is no indication of
future performance.
.
Although the existing Shares are (and the New Shares to be
issued will be) admitted to the premium segment of the Official
List and are traded on the London Stock Exchange’s market for
listed securities, the secondary market for VCT shares is
generally illiquid and Shareholders may find it difficult to realise
their investment. An investment in the Company should,
therefore, be considered as a long-term investment.
.
Whilst it is the intention of the Board that the Company will
continue to be managed so as to qualify as a VCT, there can be
no guarantee that such status will be maintained, which may
result in adverse tax consequences.
7
.
D3
Key information on
the risks specific to
the securities
The tax rules, or their interpretation, in relation to an investment in
the Company and/or the rates of tax may change during the life of
the Company and may apply retrospectively which could affect
tax reliefs obtained by Shareholders and the VCT status of the
Company.
.
Investment in unquoted companies, by its nature, involves a
higher degree of risk than investment in companies listed on the
Official List which could result in the value of such investment,
and interest income and dividends therefrom reducing.
.
The Company’s investments may be difficult, and take time, to
realise. There may also be constraints imposed on the realisation
of investments in order to maintain the VCT tax status of the
Enlarged Company which may restrict the Enlarged Company’s
ability to obtain maximum value from its investments.
Merger
A22: D3
.
Completion of any one Scheme is dependent upon a number of
conditions precedent being fulfilled, including the approval of
Shareholders. Whilst the Board has identified a number of
potential benefits for the Enlarged Company, there is no
certainty that these benefits will lead to improved prospects for
the Enlarged Company. If one or more of the Schemes are not
approved and effected, the full benefits of the Enlarged Company
may not be realised.
.
Shareholders may be adversely affected by the performance of
the investments, whether acquired from the Target VCTs or made
by the Company.
.
Shareholders may be adversely affected by a change in the VCT
status of the Company if a number of the investments acquired
from Target VCTs, or the investments of the Company, are, or
become, unable to meet VCT requirements.
Enhanced Buyback Facility and Offer
.
Implementation of the Enhanced Buyback Facility is conditional
on approval of Resolutions 1, 5 and 10. The Enhanced Buyback
Facility will be withdrawn if the requisite Resolutions are not
approved.
.
Implementation of the Offer is conditional on approval of
Resolutions 1, 6 and 11. The Offer will be withdrawn if the
requisite Resolutions are not approved.
.
Participation in the Enhanced Buyback Facility in respect of
Existing Shares which have not been held for five years will be
subject to clawback by HMRC of any upfront income tax reliefs
obtained on original subscription.
.
In addition, there could be an income tax charge for Shareholders
on any excess of the Tender Price above the original issue price
for the Existing Shares that are bought back. Shareholders whose
Existing Shares do not qualify for VCT reliefs may also be subject
to a capital gains tax charge.
8
E
E1
E2a
Offer
Merger net proceeds
and expenses
If effected, the merger will result in an Enlarged Company with total net
assets of approximately £50 million (after expected merger costs of
approximately £371,600). The merger will not, however, result in any
proceeds actually being raised by the Company.
A22: E1
Enhanced Buyback
Facility net proceeds
and expenses
The Enhanced Buyback Facility is not expected to have a material
effect on the net assets of the Company as the Shares are repurchased
and issued at equivalent prices (less costs amounting to 5% of the cost
of Shares repurchased).
A22: E1
A22: E1
Offer net proceeds
and expenses
The Board proposes to raise up to £20 million through an offer for
subscription of New Shares in the Company. The Board may decide to
increase the Offer to raise up to a further £10 million if there proves to
be excess demand from investors. The total expenses of the Offer will
be 5% of the gross proceeds and the total net proceeds will therefore
be a maximum of £28.5 million if the Offer is increased and fully
subscribed.
A22: E1
Reasons for the
merger
The Board considers that the merger will bring a number of benefits to
all of the groups of shareholders through:
A22: E2a
.
a reduction in annual running costs for the Enlarged Company
compared to the aggregate annual running costs of the separate
companies;
.
the creation of a single VCT with a greater capital base over which
to spread annual running costs;
.
participation in a larger VCT with a more diversified portfolio,
spreading the risk across a broader range of investments;
.
increasing the ability to support follow-on investments and new
investments; and
.
the potential to enhance the ability to pay dividends and buy back
shares in the future, as well as improve liquidity in the secondary
market, as it is hoped that a larger vehicle will attract increased
interest.
Reasons for the
Enhanced Buyback
Facility
The Enhanced Buyback Facility is an arrangement by which
Shareholders can sell existing Shares in the Company and reinvest
the proceeds in New Shares in the Company, on which upfront tax relief
may then be available.
Reasons for the Offer
and use of the
proceeds
The Board believes that this is an advantageous time in the economic
cycle with Octopus beginning to see a strengthening pipeline of
investment opportunities, at a time when prices of assets are still low by
historic standards. The Offer should also enable the Company to
maintain its portfolio diversification and continue to invest funds raised
before 6 April 2012 in companies where such funds will be used for
share acquisitions to support buy-outs and company acquisitions by
using the funds raised to maintain liquidity for dividends and buybacks,
as well as spreading the fixed running costs of the Company over a
larger asset base. In addition, the changes to the VCT investment limits
and size tests provide opportunity to participate in larger transactions
and continue to support existing portfolio companies.
The Offer will also provide Shareholders and new investors with the
opportunity to invest in the Company and benefit from the tax reliefs
available to qualifying investors in VCTs.
9
A22: E2a
E3
Terms and conditions
of the merger
The merger, the implementation of which is conditional on, inter alia,
the passing of resolutions at the General Meeting will be effected as
follows:
.
each Target VCT will be placed into members’ voluntary
liquidation pursuant to a scheme of reconstruction under
Section 110 IA 1986; and
.
all of the assets and liabilities of each Target VCT will be
transferred to the Company in consideration for the issue of New
Shares (which will be issued directly from the Company to the
shareholders of the relevant Target VCT).
A22: E3
Illustrative merger example based on the net assets of the Companies
as at 30 April 2012 (which is prior to the payment of dividends after 30
April 2012).
Terms and conditions
of the Enhanced
Buyback Facility
Unaudited
NAV
(p)
Roll-Over
Values /
Company Merger
Value
(p)
New Shares
for every
share held
Shares
91.4
90.70
–
Apollo 1 Shares
94.9
94.12
1.037649
Apollo 2 Shares
94.9
94.10
1.037459
Apollo 4 Shares
97.7
96.92
1.068556
A summary of the terms of the Enhanced Buyback Facility, the
implementation of which is conditional on, inter alia, the passing of
resolutions at the General Meeting, are as follows:
.
The Company is making a tender offer to all UK Shareholders on
the register on 1 October 2012 to purchase up to 50% of the
issued Share capital as at that date.
.
Implementation of the Enhanced Buyback Facility is conditional
on the approval by Shareholders of certain resolutions to be
proposed at the General Meeting. The Enhanced Buyback Facility
will only be implemented to the extent the Company has sufficient
distributable reserves (although the Board expects the Company
to be able to implement the Enhanced Buyback Facility in full).
.
Shareholders eligible to participate may tender some or all of their
Existing Shares (subject to the above).
.
The purchase will be subject to the participating Shareholder
agreeing to reinvest all of the proceeds of sale in the purchase of
New Shares.
.
The purchase will be completed at a price equal to the most
recently published net asset value per Share at the time of
purchase.
.
The reinvestment will be completed at a price equal to the most
recently published net asset value per Share at the time of
allotment, divided by 0.95.
10
A22: E3
Terms and conditions
of the Offer
New Shares issued under the Offer, the implementation of which is
conditional on, inter alia, the passing of resolutions at the General
Meeting, will be at an offer price equal to the most recently published
NAV of a Share at the time of allotment (to avoid dilution to existing
Shareholders), divided by 0.95 and will be invested in accordance with
the investment policy of the Company.
A22: E3
E4
Description of any
interest that is
material to the issue
Not applicable. There are no interests that are material to the issue.
A22: E4
E5
Name of persons
selling securities
Not applicable. No person or entity is selling securities in the Company.
A22: E5
E6
Amount and
percentage of dilution
If 110 million New Shares are issued in aggregate under the merger,
the Offer and the Enhanced Buyback Facility, the existing 25,056,684
Shares would represent 18.6% of the enlarged issued share capital.
E7
Expenses charged to
the investor
Not applicable. No expenses are charged to the investor by the
Company.
11
RISK FACTORS
Shareholders and prospective Shareholders should consider carefully the following risk factors in
addition to the other information presented in this document. If any of the risks described below were to
occur, it could have a material effect on the Company’s business, financial condition or results of
operations. The risks and uncertainties described below (such as changes in legal, regulatory or tax
requirements) are not the only ones the Company or Shareholders will face. Additional risks not currently
known to the Company or the Board, or that the Company or the Board currently believe are not material,
may also adversely affect the Company’s business, financial condition or results of operations. The
value of the Shares could decline due to any of the risk factors described below and Shareholders could
lose part or all of their investment. Shareholders and prospective Shareholders should consult an
independent financial adviser authorised under FSMA. References to the Company should be taken as
including the Enlarged Company.
Merger Related Risk Factors
Completion of the Schemes is dependent upon a number of conditions precedent being fulfilled,
including the approval of Shareholders. Whilst the Board has identified a number of potential benefits for
the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the
Enlarged Company. If one or more of the Schemes are not approved and effected, the full benefits of the
Enlarged Company may not be realised. Each Scheme is not conditional on the other Schemes being
approved and the conditions precedent for the other Schemes being fulfilled. A Scheme will proceed
independently and irrespective of the other Schemes.
Shareholders may be adversely affected by the performance of the investments, whether acquired from
a Target VCT or made by the Company. The performance of the investments acquired from a Target
VCT (as well as the investments of the Company) may restrict the ability of the Company following
implementation of one or more of the Schemes to distribute any capital gains and revenue received on
the investments transferred from a Target VCT to the Company (as well as the investments of the
Company). Any gains (or losses) made on the investments of the Company will, following
implementation of one or more of the Schemes, be shared amongst all the Shareholders pro rata to
the number of Shares of that class then in issue.
Shareholders may be adversely affected by a change in the VCT status of the Company if a number of
the investments acquired from a Target VCT or the investments of the Company are, or become, unable
to meet VCT requirements.
Risks applicable to both the Enhanced Buyback Facility and the Offer
The Enhanced Buyback Facility is conditional on approval of Resolutions 1, 5 and 10 to be proposed at
the General Meeting. If the requisite Resolutions are not approved, the Enhanced Buyback Facility will
be withdrawn. The Enhanced Buyback Facility will only be implemented to the extent the Company has
sufficient distributable reserves (although the Board expects the Company to be able to implement the
Enhanced Buyback Facility in full). The Enhanced Buyback Facility is not, however, conditional on the
merger or the Offer.
Implementation of the Offer is conditional on approval of Resolutions 1, 6 and 11 to be proposed at the
General Meeting. If the requisite Resolutions are not approved, the Offer will be withdrawn. The Offer is
not, however, conditional on the merger or the Enhanced Buyback Facility.
Shareholders should note that participation in the Enhanced Buyback Facility will be considered, for tax
purposes, as a disposal of Shares. Participation in the Enhanced Buyback Facility in respect of Shares
which have not been held for five years will, therefore, be subject to clawback by HMRC of any upfront
income tax reliefs obtained on original subscription. In addition, there could be an income tax charge for
Shareholders on any excess of the Tender Price above the original issue price for the Shares that are
bought back. Shareholders whose Shares do not qualify for VCT reliefs may also be a subject to a
capital gains tax charge.
Company Risk Factors
The value of Shares, and the income from them, can fluctuate and Shareholders may not get back the
amount they invested when sold. In addition, there is no certainty that the market price of Shares in the
Company will fully reflect their underlying NAV nor that any dividends will be paid. Shareholders in the
12
A1: 4
A3: 2
Company should not rely upon any share buyback policy to offer any certainty of selling their at prices
that reflect the underlying NAV.
There is no guarantee that the Company will meet its objectives. The past performance of the Company,
the Target VCTs and/or Octopus is no indication of future performance of the Company. The return
received by Shareholders will be dependent on the performance of the underlying investments. The
value of such investments, and interest income and dividends therefrom, may rise or fall and
Shareholders may not get back the full amount invested.
The existing Shares have been (and it is anticipated that the New Shares to be issued will be) admitted
to the premium segment of the Official List and are (or will be) traded on the London Stock Exchange’s
market for listed securities. However, the secondary market for VCT shares is generally illiquid (which
may be partly attributable to the fact that initial tax reliefs are not available for VCT shares bought in the
secondary market and because VCT shares usually trade at a discount to NAV) and Shareholders may
find it difficult to realise their investment. An investment in the Company should, therefore, be considered
as a long-term investment.
Whilst it is the intention of the Board that the Company will continue to be managed so as to qualify as a
VCT, there can be no guarantee that such status will be maintained. Failure to continue to meet the
qualifying requirements could result in Shareholders losing the tax reliefs available for VCT shares,
resulting in adverse tax consequences including, if the holding has not been held for the relevant holding
period, a requirement to repay the tax reliefs obtained. Furthermore, should the Company lose its VCT
status, dividends and gains arising on the disposal of Shares would become subject to tax and the
Company would also lose its exemption from corporation tax on its capital gains.
The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax
may change during the life of the Company and may apply retrospectively which may affect tax reliefs
obtained by Shareholders and the VCT status of the Company.
Changes in legislation concerning VCTs in relation to what constitutes qualifying holdings and qualifying
trades, may limit the number of qualifying investment opportunities, reduce the level of returns which
might otherwise be achievable or result in the Company not being able to meet its objectives.
If a Shareholder disposes of his or her Shares within five years of issue, he or she will be subject to
clawback by HMRC of any income tax reliefs originally claimed. For these purposes, the date of issue of
the New Shares in the Enlarged Company issued pursuant to the Schemes will be the original date of
issue of the relevant Target VCT’s shares in respect of which such New Shares in the Enlarged
Company are issued. Any realised losses on the disposal of Shares cannot be used to create an
allowable loss for capital gains tax purposes.
Investment in unquoted companies (including AIM-traded and PLUS market-traded companies), by its
nature, involves a higher degree of risk than investment in companies listed on the Official List, which
could result in the value of such investment, and interest income and dividends therefrom, reducing. In
particular, small companies often have limited product lines, markets or financial resources and may be
dependent for their management on a small number of key individuals and may be more susceptible to
political, exchange rate, taxation and other regulatory changes and may not produce the hoped-for
returns. In addition, the market for securities in smaller companies is less regulated and is usually less
liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing
and disposing of such securities. Full information for determining their value or the risks to which they are
exposed may also not be available. Investment returns will, therefore, be uncertain and involve a higher
degree of risk than investment in a company listed on the Official List.
Realisation of investments in unquoted companies may be difficult and may take considerable time.
There may also be constraints imposed on the realisation of investments in order to maintain the VCT
tax status of the Company which may restrict the Company’s ability to obtain maximum value from its
investments. In addition, although the Company may receive customary venture capital rights in
connection with some of its unquoted investments, as a minority investor it may not be in a position to
fully protect its interests.
13
EXPECTED TIMETABLES
EXPECTED TIMETABLE FOR THE COMPANY
Schemes
Latest time for receipt of forms of proxy for the
General Meeting
10.00 a.m. on 17 September 2012
General Meeting
10.00 a.m. on 19 September 2012
Calculation Date
after 5.00 p.m. on 26 September 2012
Effective Date for the transfer of the assets and
liabilities of the Target VCTs to the Company and
the issue of New Shares pursuant to the
Schemes*
27 September 2012
Announcement of the results of the Schemes
27 September 2012
Admission of and dealings in New Shares issued
pursuant to the Schemes to commence
28 September 2012
CREST accounts credited with New Shares issued
pursuant to the Schemes
28 September 2012
Certificates for New Shares issued pursuant to the
Schemes dispatched
5 October 2012
(*The last trading date for the shares in the Target VCTs will, therefore, be 26 September 2012.)
Enhanced Buyback Facility
Enhanced Buyback Facility Record Date
5.00 p.m. on 1 October 2012
Enhanced Buyback Facility opens
1 October 2012
Enhanced Buyback Facility closes
noon on 30 November 2012
Purchase of existing Shares and issue of New
Shares pursuant to the Enhanced Buyback Facility
4 December 2012
Announcement of the results of the Enhanced
Buyback Facility
4 December 2012
Admission of and dealings in New Shares issued
pursuant to the Enhanced Buyback Facility
commence
5 December 2012
Certificates for New Shares issued pursuant to the
Enhanced Buyback Facility dispatched
12 December 2012
(The Directors reserve the right to amend or extend these dates at their discretion.)
Offer
Offer opens
1 October 2012
Allotment of New Shares pursuant to the Offer
monthly
Admission of and dealings in New Shares issued
pursuant to the Offer commence
3 business days following allotment
Certificates for New Shares issued pursuant to the
Offer dispatched
10 business days following allotment
Offer closes*
noon on 5 April 2013
(*The Offer will close earlier than the date stated if it is fully subscribed. The Directors further reserve the right to close the Offer
earlier or to extend the Offer to no later than 30 June 2013 and to accept applications and allot and arrange for the listing of New
Shares as they see fit, which may not be on the dates stated above.)
14
A3: 4.7
A3: 5.1.8
EXPECTED TIMETABLE FOR APOLLO 1
Date from which it is advised that dealings in
Apollo 1 Shares should only be for cash settlement
and immediate delivery of documents of title
7 September 2012
Latest time for receipt of forms of proxy for the
Apollo 1 First General Meeting
10.30 a.m. on 17 September 2012
Apollo 1 First General Meeting
10.30 a.m. on 19 September 2012
Latest time for receipt of forms of proxy for the
Apollo 1 Second General Meeting
10.00 a.m. on 25 September 2012
Apollo 1 register of members closed
26 September 2012
Record Date for Apollo 1 Shareholders’
entitlements
5.00p.m. on 26 September 2012
Calculation Date
after 5.00 p.m. on 26 September 2012
Dealings in Apollo 1 Shares suspended
7.30 a.m. on 27 September 2012
Apollo 1 Second General Meeting
10.00 a.m. on 27 September 2012
Effective Date for the transfer of the assets and
liabilities of Apollo 1 to the Company and the issue
of New Shares pursuant to the Apollo 1 Scheme*
27 September 2012
Announcement of the results of the Apollo 1
Scheme
27 September 2012
Cancellation of the Apollo 1 Shares’ listing
8.00 a.m. on 26 October 2012
(*See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.)
EXPECTED TIMETABLE FOR APOLLO 2
Date from which it is advised that dealings in
Apollo 2 Shares should only be for cash settlement
and immediate delivery of documents of title
7 September 2012
Latest time for receipt of forms of proxy for the
Apollo 2 First General Meeting
11.00 a.m. on 17 September 2012
Apollo 2 First General Meeting
11.00 a.m. on 19 September 2012
Latest time for receipt of forms of proxy for the
Apollo 2 Second General Meeting
10.30 a.m. on 25 September 2012
Apollo 2 Register of Members closed
26 September 2012
Record Date for Apollo 2 Shareholders’
entitlements
5.00 p.m. on 26 September 2012
Calculation Date
after 5.00 p.m. on 26 September 2012
Dealings in Apollo 2 Shares suspended
7.30 a.m. on 27 September 2012
Apollo 2 Second General Meeting
11.00 a.m. on 27 September 2012
Effective Date for the transfer of the assets and
liabilities of Apollo 2 to the Company and the issue
of New Shares pursuant to the Apollo 2 Scheme*
27 September 2012
Announcement of the results of the Apollo 2
Scheme
27 September 2012
Cancellation of the Apollo 2 Shares’ listing
8.00 a.m. on 26 October 2012
(*See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.)
15
EXPECTED TIMETABLE FOR APOLLO 4
Date from which it is advised that dealings in
Apollo 4 Shares should only be for cash settlement
and immediate delivery of documents of title
7 September 2012
Latest time for receipt of forms of proxy for the
Apollo 4 First General Meeting
11.30 a.m. on 17 September 2012
Apollo 4 First General Meeting
11.30 a.m. on 19 September 2012
Latest time for receipt of forms of proxy for the
Apollo 4 Second General Meeting
11.00 a.m. on 25 September 2012
Apollo 4 Register of Members closed
26 September 2012
Record Date for Apollo 4 Shareholders’
entitlements
5.00 p.m. on 26 September 2012
Calculation Date
after 5.00 p.m. on 26 September 2012
Dealings in Apollo 4 Shares suspended
7.30 a.m. on 27 September 2012
Apollo 4 Second General Meeting
11.00 a.m. on 27 September 2012
Effective Date for the transfer of the assets and
liabilities of Apollo 4 to the Company and the issue
of New Shares pursuant to the Apollo 4 Scheme*
27 September 2012
Announcement of the results of the Apollo 4
Scheme
27 September 2012
Cancellation of the Apollo 4 Shares’ listing
8.00 a.m. on 26 October 2012
(*See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.)
16
DEFINITIONS
‘‘Admission’’
the New Shares allotted pursuant to the Schemes, the Enhanced
Buyback Facility and the Offer being listed on the Official List of the
UK Listing Authority and admitted to trading on the London Stock
Exchange’s market for listed securities
‘‘AIM’’
the Alternative Investment Market, a market operated by the London
Stock Exchange
‘‘Annual Report’’
the annual report and financial statements for the Company for the
year ended 31 January 2012
‘‘Apollo 1’’
Octopus Apollo VCT 1 plc
‘‘Apollo 1 Board’’
the board of directors of Apollo 1
‘‘Apollo 1 First General
Meeting’’
the general meeting of Apollo 1 to be held on 19 September 2012
‘‘Apollo 1 Meetings’’
the Apollo 1 First General Meeting and the Apollo 1 Second General
Meeting
‘‘Apollo 1 Roll-Over Value’’
the value of an Apollo 1 Share calculated in accordance with Part II
of this document
‘‘Apollo 1 Scheme’’
the proposed merger of the Company with Apollo 1 by means of
placing Apollo 1 into members’ voluntary liquidation pursuant to
Section 110 of IA 1986 and the acquisition by the Company of all of
Apollo 1’s assets and liabilities in consideration for New Shares,
further details of which are set out in Part II of this document
‘‘Apollo 1 Second General
Meeting’’
the general meeting of Apollo 1 to be held on 27 September 2012
‘‘Apollo 1 Shareholders’’
holders of Apollo 1 Shares (and each an ‘‘Apollo 1 Shareholder’’)
‘‘Apollo 1 Shares’’
ordinary shares of 10p each in the capital of Apollo 1 (and each an
‘‘Apollo 1 Share’’)
‘‘Apollo 1 Transfer
Agreement’’
the agreement between the Company and Apollo 1 (acting through
the Liquidators) for the transfer of all of the assets and liabilities of
Apollo 1 by the Liquidators to the Company pursuant to the Apollo 1
Scheme
‘‘Apollo 2’’
Octopus Apollo VCT 2 plc
‘‘Apollo 2 Board’’
the board of directors of Apollo 2
‘‘Apollo 2 First General
Meeting’’
the general meeting of Apollo 2 to be held on 19 September 2012
‘‘Apollo 2 Meetings’’
the Apollo 2 First General Meeting and the Apollo 2 Second General
Meeting
‘‘Apollo 2 Roll-Over Value’’
the value of an Apollo 2 Share calculated in accordance with Part II
of this document
‘‘Apollo 2 Scheme’’
the proposed merger of the Company with Apollo 2 by means of
placing Apollo 2 into members’ voluntary liquidation pursuant to
Section 110 of IA 1986 and the acquisition by the Company of all of
Apollo 2’s assets and liabilities in consideration for New Shares,
further details of which are set out in Part II of this document
‘‘Apollo 2 Second General
Meeting’’
the general meeting of Apollo 2 to be held on 27 September 2012
‘‘Apollo 2 Shareholders’’
holders of Apollo 2 Shares (and each an ‘‘Apollo 2 Shareholder’’)
17
‘‘Apollo 2 Shares’’
ordinary shares of 10p each in the capital of Apollo 2 (and each an
‘‘Apollo 2 Share’’)
‘‘Apollo 2 Transfer
Agreement’’
the agreement between the Company and Apollo 2 (acting through
the Liquidators) for the transfer of all of the assets and liabilities of
Apollo 2 by the Liquidators to the Company pursuant to the Apollo 2
Scheme
‘‘Apollo 4’’
Octopus Apollo VCT 4 plc
‘‘Apollo 4 Board’’
the board of directors of Apollo 4
‘‘Apollo 4 First General
Meeting’’
the general meeting of Apollo 4 to be held on 19 September 2012
‘‘Apollo 4 Meetings’’
the Apollo 4 First General Meeting and the Apollo 4 Second General
Meeting
‘‘Apollo 4 Roll-Over Value’’
the value of an Apollo 4 Share calculated in accordance with Part II
of this document
‘‘Apollo 4 Scheme’’
the proposed merger of the Company with Apollo 4 by means of
placing Apollo 4 into members’ voluntary liquidation pursuant to
Section 110 of IA 1986 and the acquisition by the Company of all of
Apollo 4’s assets and liabilities in consideration for New Shares,
further details of which are set out in Part II of this document
‘‘Apollo 4 Second General
Meeting’’
the general meeting of Apollo 4 to be held on 27 September 2012
‘‘Apollo 4 Shareholders’’
holders of Apollo 4 Shares (and each an ‘‘Apollo 4 Shareholder)
‘‘Apollo 4 Shares’’
ordinary shares of 10p each in the capital of Apollo 4 (and each an
‘‘Apollo 4 Share’’)
‘‘Apollo 4 Transfer
Agreement’’
the agreement between the Company and Apollo 4 (acting through
the Liquidators) for the transfer of all of the assets and liabilities of
Apollo 4 by the Liquidators to the Company pursuant to the Apollo 4
Scheme
‘‘Apollo VCTs’’
the Company, Apollo 1, Apollo 2 and Apollo 4
‘‘Applicant’’
an applicant under the Offer
‘‘Application Forms’’
the Enhanced Buyback Facility Application Form and the Offer
Application Form
‘‘Articles’’
the articles of association of the Company, as amended from time to
time
‘‘Basic Entitlement’’
the entitlement of each existing Shareholder to tender 50% of their
Existing Shares, rounded down to the nearest whole number
‘‘Board’’
the board of directors of the Company
‘‘Broker’’
Matrix Corporate Capital LLP (or such other broker as the Company
may appoint to act as its agent to implement the Enhanced Buyback
Facility)
‘‘Business Days’’
any day (other than a Saturday) on which clearing banks are open
for normal banking business in Sterling (and each a ‘‘Business Day’’)
‘‘CA 1985’’
the Companies Act 1985, as amended from time to time
‘‘CA 2006’’
the Companies Act 2006, as amended from time to time
‘‘Calculation Date’’
the date on which the Roll-Over Values and the Company Merger
Value will be calculated, this being after the close of business on 26
September 2012
‘‘Capita Registrars’’
Capita Registrars Limited
18
‘‘Circular’’
the circular to the Company’s Shareholders dated 17 August 2012
‘‘Companies’’
the Apollo VCTs
‘‘Company’’
Octopus Apollo VCT 3 plc
‘‘Company Merger Value’’
the value of a Share calculated in accordance with Part II of this
document
‘‘CREST’’
the central securities depository for the UK markets
‘‘Directors’’
the directors of the Company (and each a ‘‘Director’’)
‘‘Disclosure & Transparency
Rules’’
the disclosure and transparency rules of the FSA
‘‘EEA States’’
the member states of the European Economic Area
‘‘Effective Date’’
the date on which the Schemes will become effective, anticipated as
being 27 September 2012
‘‘Enhanced Buyback Facility’’
the enhanced buyback facility contained in this document
‘‘Enhanced Buyback Facility
Application Form’’
the application form at the end of this document coloured pink to be
used by Shareholders in respect of the Enhanced Buyback Facility
‘‘Enhanced Buyback Facility
Record Date’’
the record date to which Shareholders’ entitlements will be allocated
pursuant to the Enhanced Buyback Facility, this being 5.00 p.m. on 1
October 2012
‘‘Enlarged Company’’
the Company, following implementation of one or more of the
Schemes
‘‘Existing Shares’’
Shares on the register on 1 October 2012, (and each an ‘‘Existing
Share’’)
‘‘FSA’’
the Financial Services Authority
‘‘FSMA’’
the Financial Services and Markets Act 2000, as amended
‘‘General Meeting’’
the general meeting of the Company to be held on 19 September
2012
‘‘HMRC’’
Her Majesty’s Revenue & Customs
‘‘IA 1986’’
the Insolvency Act 1986, as amended
‘‘Issue Price’’
the price at which New Shares will be issued by the Company
pursuant to the Enhanced Buyback Facility
‘‘ITA 2007’’
the Income Tax Act 2007, as amended
‘‘Liquidators’’
William Duncan and Sarah Louise Burge, RSM Tenon Limited, 2
Wellington Place, Leeds LS1 4AP, being the proposed liquidators for
each of the Target VCTs
‘‘Listing Rules’’
the listing rules of the UKLA
‘‘London Stock Exchange’’
London Stock Exchange plc
‘‘Memorandum’’
the memorandum of association of the Company
‘‘Merger Regulations’’
the Venture Capital Trusts (Winding-up and Mergers) (Tax)
Regulations 2004
‘‘NAV’’ or ‘‘net asset value’’
net asset value
‘‘New Shares’’
Shares to be issued by the Company pursuant to the Schemes, the
Enhanced Buyback Facility and the Offer (and each a ‘‘New Share’’)
‘‘Octopus’’
Octopus Investments Limited
19
‘‘Offer’’
the offer for subscription of New Shares to raise up to £20 million
(with an over-allotment facility to raise a further £10 million)
contained in this document
‘‘Offer Application Form’’
the application form at the end of this document coloured blue in
respect of the Offer, or such other application form provided or
published by the Company in connection with the Offer
‘‘Offer Price’’
the price at which New Shares will be allotted by the Company
pursuant to the Offer calculated in accordance with the Pricing
Formula
‘‘Official List’’
the official list of the UKLA
‘‘Overseas Shareholders’’
Shareholders other than UK Shareholders
‘‘PLUS’’
a prescribed market for the purposes of Section 118 of FSMA and a
recognised investment exchange operated by PLUS Markets Group
plc
‘‘Pricing Formula’’
the formula to calculate the Offer Prices of the New Shares pursuant
to the Offer as set out in this document
‘‘Proposed Directors’’
Murray Steele and Christopher Powles (and each a ‘‘Proposed
Director’’)
‘‘Prospectus’’
this document
‘‘Qualifying Company’’
a company satisfying the requirements of Chapter 4 of Part 6 of ITA
2007
‘‘Qualifying Investment’’
an investment in a Qualifying company satisfying the requirements
of Chapter 4 of Part 6 of ITA 2007
‘‘Qualifying Investor’’
an individual aged 18 or over who satisfies the conditions of eligibility
for VCT tax reliefs
‘‘Receiving Agent’’
Capita Registrars Limited
‘‘Record Date’’
the record date to which entitlements will be allocated pursuant to
the Schemes, anticipated as being 26 September 2012
‘‘Resolutions’’
the resolutions to be proposed at the General Meeting (and each a
‘‘Resolution’’)
‘‘Roll-Over Values’’
the Apollo 1 Roll-Over Value, the Apollo 2 Roll-Over Value and the
Apollo 4 Roll-Over Value
‘‘RPI’’
Retail Prices Index
‘‘Schemes’’
the Apollo 1 Scheme, the Apollo 2 Scheme and the Apollo 4 Scheme
(and each a ‘‘Scheme’’)
‘‘Shareholders’’
holders of Shares (and each a ‘‘Shareholder’’)
‘‘Shares’’
ordinary shares of 10p each in the capital of the Company (ISIN
GB00B17B3479) (and each a ‘‘Share’’)
‘‘Target VCT First General
Meeting’’
the Apollo 1 First General Meeting or the Apollo 2 First General
Meeting or the Apollo 4 First General Meeting, as the context permits
‘‘Target VCT Meetings’’
in respect of a Target VCT, the relevant Target VCT First General
Meeting and the relevant Target VCT Second General Meeting to be
held on 19 September 2012 and 27 September 2012 respectively
‘‘Target VCT Second General
Meeting’’
the Apollo 1 Second General Meeting or the Apollo 2 Second
General Meeting or the Apollo 4 Second General Meeting, as the
context permits
‘‘Target VCT Share’’
an Apollo 1 Share or an Apollo 2 Share or an Apollo 4 Share, as the
context permits (together ‘‘Target VCTs’ Shares’’)
20
A3: 4.1
A3: 4.4
‘‘Target VCTs’’
Apollo 1, Apollo 2 and Apollo 4 (and each a ‘‘Target VCT’’)
‘‘Target VCTs’ Circular’’
the joint circular issued by the Target VCTs to the Target VCTs’
Shareholders
‘‘Target VCTs’ Shareholders’’
Apollo 1 Shareholders, Apollo 2 Shareholders and Apollo 4
Shareholders (and each a ‘‘Target VCTs’ Shareholder’’)
‘‘TCGA 1992’’
Taxation of Chargeable Gains Act 1992, as amended
‘‘Tender Price’’
the price at which New Shares will be purchased from Shareholders
by the Company pursuant to the Enhanced Buyback Facility
‘‘UK’’
the United Kingdom
‘‘UK Shareholder’’
a Shareholder who is resident in, or a citizen of, the UK
‘‘UKLA’’ or ‘‘UK Listing
Authority’’
the UK Listing Authority, being the Financial Services Authority
acting in its capacity as the competent authority for the purposes of
Part VI of the Financial Services and Markets Act 2000
‘‘United States’’ or ‘‘US’’
the United States of America, its states, territories and possessions
including the District of Columbia
‘‘VCT’’ or ‘‘venture capital
trust’’
a company satisfying the requirements of Chapter 3 of Part 6 of ITA
2007 for venture capital trusts
‘‘VCT Value’’
the value of an investment calculated in accordance with Section
279 of ITA 2007
21
PART I
MERGER OF THE COMPANY AND THE TARGET VCTS
Introduction
The Board considers that the interests of the shareholders of the Company and the Target VCTs will be
better served by a single, larger VCT. The most cost-effective way to achieve this is to complete a
merger with the Target VCTs by placing the Target VCTs into members’ voluntary liquidations and for all
of their assets and liabilities to be transferred to the Company in exchange for the issue of New Shares to
the Target VCTs’ Shareholders. The New Shares to be issued pursuant to the Schemes are not being
offered to the existing Shareholders of the Company or the public, save as may be the case in
connection with the Schemes.
A3: 3.4
Background
VCTs are required to be 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. A larger
VCT 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 for economic and administration
efficiencies, as well as to improve portfolio diversification.
With the above in mind, the Board and the boards of the Target VCTs have been considering a potential
merger of the Companies and they announced on 25 May 2012 that such terms had been agreed in
principle to create a single, larger VCT. The aim of the Board is to achieve long-term strategic benefits
and reductions in the annual running costs for Shareholders.
The Schemes
The mechanism by which the merger will be completed is as follows:
.
each Target VCT will be placed into members’ voluntary liquidation pursuant to a scheme of
reconstruction under Section 110 IA 1986; and
.
all of the assets and liabilities of each Target VCT will be transferred to the Company in
consideration for the issue of New Shares (which will be issued directly to the shareholders of the
relevant Target VCT).
In respect of each Scheme, the New Shares to be issued will be calculated on a relative net asset value
basis. The relative net asset values will be the unaudited net asset values of the Companies as at the
Calculation Date (this being 26 September 2012), adjusted to take into consideration each company’s
allocation of the estimated merger costs.
Had the Schemes been completed based on the illustrations set out in Part II of this document, the
number of New Shares that would have been issued are as follows for every existing Target VCT Share
held:
Number of New Shares
Apollo 1
Apollo 2
Apollo 4
1.037649
1.037459
1.068556
Each Scheme is not conditional on the other Schemes and will proceed independently and irrespective
of the other Schemes. Each Scheme will require the approval by the shareholders of the Company and
the relevant Target VCT of the relevant resolutions to be proposed at the General Meeting and the
relevant Target VCT Meetings respectively, as well as the other conditions set out in Part II of this
document applicable to the relevant Scheme.
22
A3:5.3.1
A3: 5.1.1
A3: 5.1.2
The merger will result in the creation of an enlarged company and should result in savings in running
costs and simpler administration. As all of the Companies have the same investment policies, a number
of common investments and are managed by Octopus, this is achievable without material disruption to
the Companies and their combined portfolio of investments.
The Board considers that the merger will bring a number of benefits to all of the groups of shareholders
through:
.
a reduction in annual running costs for the Enlarged Company compared to the aggregate annual
running costs of the separate Companies;
.
the creation of a single VCT of a more economically efficient size with a greater capital base over
which to spread annual running costs;
.
participation in a larger VCT with the longer term potential for a more diversified portfolio, thereby
spreading the portfolio risk across a broader range of investments;
.
increasing the ability to support follow-on investments and new investments in the future due to the
increased size and reduced running costs of the Enlarged Company; and
.
the potential to enhance the ability to pay dividends and buy back shares in the future due to the
increased size and reduced running costs of the Enlarged Company, as well as improve liquidity in
the secondary market, as it is hoped that a larger vehicle will attract increased interest.
Further information is set out in Part VIII of this document on the expected financial position of the
Enlarged Company had the merger by way of the Schemes been implemented as at 31 January 2012.
Cost Savings
The Board and the boards of the Target VCTs’ consider that the level of continued administrative annual
running costs of the individual Companies can be substantially reduced through the merger resulting in
benefits for all groups of shareholders. Annual running costs, excluding investment management fees,
for the Companies are as follows:
Company
Apollo 1
Apollo 2
Apollo 4
Unaudited net
assets
(£)*
Annual running
costs
(£)**
Percentage of
unaudited net
assets
(%)
24,457,715
8,121,668
8,120,274
11,234,814
213,943
121,825
121,804
157,287
0.9
1.5
1.5
1.4
A1: 20.4.3
* Taken from the unaudited management accounts for the Companies to 30 April 2012 (which is prior to the payment of dividends
by the Companies after 30 April 2012).
** Annual running costs for the Companies taken from the audited accounts for the year ended 31 January 2012 (these being the
annual running costs of the relevant company excluding annual management fees, performance incentive fees and exceptional
items, but taking into account any annual expenses costs cap).
To the extent not all of the Schemes are completed, the benefits of the Enlarged Company may not be
fully realised (in particular the annual costs savings would be reduced accordingly).
The aggregate anticipated cost of undertaking the merger is approximately £371,600, including VAT,
legal and professional fees, stamp duty and the costs of winding up the Target VCTs. The costs of the
merger will be split proportionately between the Companies by reference to their respective merger net
assets (ignoring merger costs). Completion of the three Schemes at the same time results in the
aggregate merger costs (and, therefore, the Company’s estimated allocation of such costs) being lower
per VCT than separate mergers being completed with the Companies or other single VCTs (i.e. there are
economies of scale from merging four VCTs in one transaction). Each of the Companies will continue to
be responsible for its allocation of the estimated merger costs whether or not a particular Scheme is
approved and becomes effective.
On the assumption that the net assets of the Enlarged Company will remain the same immediately after
the merger, the reduction in the annual running costs (ignoring annual management fees, performance
23
A3: 8.1
incentive fees and exceptional items) for the Enlarged Company are estimated to be at least £288,900
per annum, in particular, through the reduction in directors’ and advisers’ fees, audit fees, secretarial
fees, printing costs and listing fees, as well as other fixed costs. This would represent approximately
0.6% per annum of the expected net assets of the Enlarged Company. On this basis, and assuming that
no new funds were to be raised or investments realised to meet annual costs, the Board believes that the
costs of the merger would be recovered within 16 months.
24
PART II
THE SCHEMES
The definitions set out on pages 17 to 21 of this document shall have the same meanings when used in
the context of this Part II.
Apollo 1 Scheme
Conditions of the Apollo 1 Scheme
The Apollo 1 Scheme is conditional upon:
.
the passing of Resolutions 1 and 2 to be proposed at the General Meeting;
.
notice of dissent not having been received from Apollo 1 Shareholders holding more than 10% in
nominal value of Apollo 1’s entire issued share capital under Section 111 of IA 1986; and
.
the passing of the resolutions to be proposed at the Apollo 1 Meetings.
Subject to the above, the Apollo 1 Scheme shall become effective immediately after the passing of the
special resolution for the winding up of Apollo 1 to be proposed at the Apollo 1 Second General Meeting.
If it becomes effective, the Apollo 1 Scheme shall be binding on all Shareholders (including dissenting
Apollo 1 Shareholders) and all persons claiming through or under them.
Apollo 1 Roll-Over Value
The Apollo 1 Roll-Over Value will be calculated as:
A – (B + C)
D
where:
A = the unaudited net assets of Apollo 1 as at the Calculation Date (this being the unaudited net assets
of Apollo 1 as at 31 July 2012 (taken from the Apollo 1 unaudited management accounts to that
date)), plus (i) any increase/decrease in the valuation of an investment held by Apollo 1 where
there has been an event in the period between 31 July 2012 and the Calculation Date which
requires a revaluation of the investment in accordance with Financial Reporting Standards 26
‘Financial Instruments: Measurement’ (IAS39) and using International Private Equity and Venture
Capital Valuation Guidelines, (ii) any material increase/decrease in the cash position and/or
debtors and/or the creditors of Apollo 1 between 31 July 2012 and the Calculation Date, and (iii)
any adjustment that both the Apollo 1 Board and the Board consider appropriate to reflect any other
actual or contingent benefit or liability of Apollo 1;
B = Apollo 1’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes plus £10,000 (representing an
amount of contingency to cover any unforeseen additional costs attributable to Apollo 1 incurred by
the Company, which will indemnify the Liquidators in respect of all costs of Apollo 1 following the
transfer on the Effective Date);
C = the amount estimated to be required to purchase the holdings of Apollo 1 Shares from dissenting
Apollo 1 Shareholders; and
D = the number of Apollo 1 Shares in issue as at close of business on the Record Date (save for any
Apollo 1 Shares held by dissenting Apollo 1 Shareholders).
Company Merger Value
The Company Merger Value will be calculated as:
E–F
G
where:
E = the unaudited net assets of the Company as at the Calculation Date (this being the unaudited net
assets of the Company as at 31 July 2012 (taken from the Company’s unaudited management
25
accounts to that date)), plus (i) any increase/decrease in the valuation of an investment held by the
Company where there has been an event in the period between 31 July 2012 and the Calculation
Date which requires a revaluation of the investment in accordance with Financial Reporting
Standards 26 ‘Financial Instruments: Measurement’ (IAS39) and using International Private Equity
and Venture Capital Valuation Guidelines, (ii) any material increase/decrease in the cash position
and/or debtors and/or the creditors of the Company between 31 July 2012 and the Calculation Date
and (iii) any adjustment that both the Board and the Apollo 1 Board consider appropriate to reflect
any other actual or contingent benefit or liability of the Company);
F = the Company’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes; and
G = the number of Shares in issue as at close of business on the Record Date.
New Shares to be issued to Apollo 1 Shareholders.
The number of New Shares to be issued to Apollo 1 Shareholders (save for any dissenting Apollo 1
Shareholders) will be calculated as follows:
()
H
I
XJ
where:
H = the Apollo 1 Roll-Over Value;
I = the Company Merger Value; and
J = the number of Apollo 1 Shares in issue as at close of business on the Record Date (save for any
Apollo 1 Shares held by dissenting Apollo 1 Shareholders).
Apollo 1 Scheme Illustration
As at 30 April 2012, the unaudited NAV of an Apollo 1 Share (taken from the Apollo 1 unaudited
management accounts to that date) was 94.9p. The Apollo 1 Roll-Over Value (had the merger been
completed on that date and calculated as set out above) would have been 94.12p (assuming no
dissenting Apollo 1 Shareholders).
As at 30 April 2012, the unaudited NAV of a Share (taken from the Company’s management accounts to
that date) was 91.4p. The Company Merger Value (had the merger been completed on that date and
calculated as set out above) would have been 90.70p.
The number of New Shares that would have been issued to Apollo 1 Shareholders (had the merger been
completed on that date and calculated as set out above) would be 8,879,046 (1.037649 New Shares for
every Apollo 1 Share held).
The above illustration has not been adjusted for the payment of dividends or shares bought back by the
Company and Apollo 1.
Apollo 2 Scheme
Conditions of the Apollo 2 Scheme
The Apollo 2 Scheme is conditional upon:
.
the passing of Resolutions 1 and 3 to be proposed at the General Meeting;
.
notice of dissent not having been received from Apollo 2 Shareholders holding more than 10% in
nominal value of Apollo 2’s entire issued share capital under Section 111 of IA 1986; and
.
the passing of the resolutions to be proposed at the Apollo 2 Meetings.
Subject to the above, the Apollo 2 Scheme shall become effective immediately after the passing of the
special resolution for the winding up of Apollo 2 to be proposed at the Apollo 2 Second General Meeting.
If it becomes effective, the Apollo 2 Scheme shall be binding on all Shareholders (including dissenting
Apollo 2 Shareholders) and all persons claiming through or under them.
26
Apollo 2 Roll-Over Value
The Apollo 2 Roll-Over Value will be calculated as:
A – (B + C)
D
where:
A = the unaudited net assets of Apollo 2 as at the Calculation Date (this being the unaudited net assets
of Apollo 2 as at 31 July 2012 (taken from the Apollo 2 unaudited management accounts to that
date)), plus (i) any increase/decrease in the valuation of an investment held by Apollo 2 where
there has been an event in the period between 31 July 2012 and the Calculation Date which
requires a revaluation of the investment in accordance with Financial Reporting Standards 26
‘Financial Instruments: Measurement’ (IAS39) and using International Private Equity and Venture
Capital Valuation Guidelines, (ii) any material increase/decrease in the cash position and/or
debtors and/or the creditors of Apollo 2 between 31 July 2012 and the Calculation Date, and (iii)
any adjustment that both the Apollo 2 Board and the Board consider appropriate to reflect any other
actual or contingent benefit or liability of Apollo 2;
B = Apollo 2’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes plus £10,000 (representing an
amount of contingency to cover any unforeseen additional costs attributable to Apollo 2 incurred by
the Company, which will indemnify the Liquidators in respect of all costs of Apollo 2 following the
transfer on the Effective Date);
C = the amount estimated to be required to purchase the holdings of Apollo 2 Shares from dissenting
Apollo 2 Shareholders; and
D = the number of Apollo 2 Shares in issue as at close of business on the Record Date (save for any
Apollo 2 Shares held by dissenting Apollo 2 Shareholders).
Company Merger Value
The Company Merger Value will be calculated as:
E–F
G
where
E = the unaudited net assets of the Company as at the Calculation Date (this being the unaudited net
assets of the Company as at 31 July 2012 (taken from the Company’s unaudited management
accounts to that date)), plus (i) any increase/decrease in the valuation of an investment held by the
Company where there has been an event in the period between 31 July 2012 and the Calculation
Date which requires a revaluation of the investment in accordance with Financial Reporting
Standards 26 ‘Financial Instruments: Measurement’ (IAS39) and using International Private Equity
and Venture Capital Valuation Guidelines, (ii) any material increase/decrease in the cash position
and/or debtors and/or the creditors of the Company between 31 July 2012 and the Calculation Date
and (iii) any adjustment that both the Board and the Apollo 2 Board consider appropriate to reflect
any other actual or contingent benefit or liability of the Company);
F = the Company’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes; and
G = the number of Shares in issue as at close of business on the Record Date.
27
New Shares to be issued to Apollo 2 Shareholders
The number of New Shares to be issued to Apollo 2 Shareholders (save for any dissenting Apollo 2
Shareholders) will be calculated as follows:
()
H
I
XJ
where:
H = the Apollo 2 Roll-Over Value;
I = the Company Merger Value; and
J = the number of Apollo 2 Shares in issue as at close of business on the Record Date (save for any
Apollo 2 Shares held by dissenting Apollo 2 Shareholders).
Apollo 2 Scheme Illustration
As at 30 April 2012, the unaudited NAV of an Apollo 2 Share (taken from the Apollo 2 unaudited
management accounts to that date) was 94.9p. The Apollo 2 Roll-Over Value (had the merger been
completed on that date and calculated as set out above) would have been 94.10p (assuming no
dissenting Apollo 2 Shareholders).
As at 30 April 2012, the unaudited NAV of a Share (taken from the Company’s to that date) was 91.4p.
The Company Merger Value (had the merger been completed on that date and calculated as set out
above) would have been 90.70p.
The number of New Shares that would have been issued to Apollo 2 Shareholders (had the merger been
completed on that date and calculated as set out above) would be 8,877,414 (1.037459 New Shares for
every Apollo 2 Share held).
The above illustration has not been adjusted for the payment of dividends or shares bought back by the
Company and Apollo 2.
Apollo 4 Scheme
Conditions of the Apollo 4 Scheme
The Apollo 4 Scheme is conditional upon:
.
the passing of Resolutions 1 and 4 to be proposed at the General Meeting;
.
notice of dissent not having been received from Apollo 4 Shareholders holding more than 10% in
nominal value of Apollo 4’s entire issued share capital under Section 111 of IA 1986; and
.
the passing of the resolutions to be proposed at the Apollo 4 Meetings.
Subject to the above, the Apollo 4 Scheme shall become effective immediately after the passing of the
special resolution for the winding up of Apollo 4 to be proposed at the Apollo 4 Second General Meeting.
If it becomes effective, the Apollo 4 Scheme shall be binding on all Apollo 4 Shareholders (including
dissenting Apollo 4 shareholders) and all persons claiming through or under them.
Apollo 4 Roll-Over Value
The Apollo 4 Roll-Over Value will be calculated as:
A – (B + C)
D
where:
A = the unaudited net assets of Apollo 4 as at the Calculation Date (this being the unaudited net assets
of Apollo 4 as at 31 July 2012 (taken from the Apollo 4 management accounts to that date)), plus (i)
any increase/decrease in the valuation of an investment held by Apollo 4 where there has been an
event in the period between 31 July 2012 and the Calculation Date which requires a revaluation of
the investment in accordance with Financial Reporting Standards 26 ‘Financial Instruments:
Measurement’ (IAS39) and using International Private Equity and Venture Capital Valuation
Guidelines, (ii) any material increase/decrease in the cash position and/or debtors and/or the
28
creditors of Apollo 4 between 31 July 2012 and the Calculation Date, and (iii) any adjustment that
both the Apollo 4 Board and the Board consider appropriate to reflect any other actual or contingent
benefit or liability of Apollo 4;
B = Apollo 4’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes plus £10,000 (representing an
amount of contingency to cover any unforeseen additional costs attributable to Apollo 4 incurred by
the Company, which will indemnify the Liquidators in respect of all costs of Apollo 4 following the
transfer on the Effective Date);
C = the amount estimated to be required to purchase the holdings of Apollo 4 Shares from dissenting
Apollo 4 Shareholders; and
D = the number of Apollo 4 Shares in issue as at close of business on the Record Date (save for any
Apollo 4 Shares held by dissenting Apollo 4 Shareholders).
Company Merger Value
The Company Merger Value will be calculated as:
E–F
G
where
E = the unaudited net assets of the Company as at the Calculation Date (this being the unaudited net
assets of the Company as at 31 July 2012 (taken from the Company’s unaudited management
accounts to that date)), plus (i) any increase/decrease in the valuation of an investment held by the
Company where there has been an event in the period between 31 July 2012 and the Calculation
Date which requires a revaluation of the investment in accordance with Financial Reporting
Standards 26 ‘Financial Instruments: Measurement’ (IAS39) and using International Private Equity
and Venture Capital Valuation Guidelines, (ii) any material increase/decrease in the cash position
and/or debtors and/or the creditors of the Company between 31 July 2012 and the Calculation Date
and (iii) any adjustment that both the Board and the Apollo 4 Board consider appropriate to reflect
any other actual or contingent benefit or liability of the Company);
F = the Company’s pro rata proportion (by reference to the Roll-Over Values and the Company Merger
Value, but ignoring merger costs) of the costs of the Schemes; and
G = the number of Shares in issue as at close of business on the Record Date.
New Shares to be issued to Apollo 4 Shareholders.
The number of New Shares to be issued to Apollo 4 Shareholders (save for any dissenting Apollo 4
Shareholders) will be calculated as follows:
()
H
I
XJ
where:
H = the Apollo 4 Roll-Over Value;
I = the Company Merger Value; and
J = the number of Apollo 4 Shares in issue as at close of business on the Record Date (save for any
Apollo 4 Shares held by dissenting Apollo 4 Shareholders).
Apollo 4 Scheme Illustration
As at 30 April 2012, the unaudited NAV of an Apollo 4 Share (taken from the Apollo 4 unaudited
management accounts to that date) was 97.7p. The Apollo 4 Roll-Over Value (had the merger been
completed on that date and calculated as set out above) would have been 96.92p (assuming no
dissenting Apollo 4 Shareholders).
As at 30 April 2012, the unaudited NAV of a Share (taken from the Company’s management accounts to
that date) was 91.4p. The Company Merger Value (had the merger been completed on that date and
calculated as set out above) would have been 90.70p.
29
The number of New Shares that would have been issued to Apollo 4 Shareholders (had the merger been
completed on that date and calculated as set out above) would be 12,286,730 (1.068556 New Shares for
every Apollo 4 Share held).
The above illustration has not been adjusted for the payment of dividends or shares bought back by the
Company and Apollo 4.
Additional Information on the Schemes
The New Shares to be issued pursuant to the Schemes will be issued directly to the relevant Target VCT
Shareholder pro-rata to their existing holdings (disregarding Target VCT Shares held by dissenting
Target VCT’s Shareholders) on the instruction of the Liquidators.
The merger ratio will be rounded down to six decimal places and entitlements will be rounded down to
the nearest whole number and any fractional entitlements per holder of Target VCTs’ Shares (which will
not exceed £1) will be aggregated and sold in the market and the proceeds retained for the benefit of the
Enlarged Company.
13.3.1 (9) (d)
13.3.1 (9) (f)
13.3.1 (9) (g)
Where Target VCTs’ Shareholders hold their existing Target VCT Shares in certificated form, they will
receive a new certificate for the New Shares issued. Where Target VCTs’ Shareholders hold their
existing Target VCT Shares in uncertificated form, their CREST accounts will be credited with the
holding in New Shares.
A3: 4.3
Dividend payment mandates provided for existing Target VCT Shares will, unless a Target VCTs’
Shareholder advises otherwise in writing to Capita Registrars, be transferred to the New Shares.
An application has been made to the UKLA for the New Shares to be issued pursuant to the Schemes to
be listed on the premium segment of the Official List and will be made to the London Stock Exchange for
such New Shares to be admitted to trading on its market for listed securities. From the date of issue, the
New Shares issued pursuant to the Schemes will rank pari passu with the existing issued Shares.
The Liquidators will offer to purchase the holdings of dissenting Target VCTs’ Shareholders at the break
value price of the relevant Target VCT Share (as applicable), this being an estimate of the amount a
holder of such shares would receive in an ordinary winding-up of that Target VCT if all of the assets of
the Target VCT had to be realised. Due to the Target VCTs’ investments being in unquoted companies
for which there are not generally readily available purchasers, the break values for all of the Target VCTs
are expected to be significantly below the unaudited net asset values of such shares. Target VCTs’
Shareholders should also be aware that a purchase by the Liquidators will be regarded as a disposal for
HMRC purposes, thereby triggering the payment of any upfront income tax relief (assuming such shares
have not been held for the minimum five year holding period) received on the original subscription.
As is required by CA 2006, prior to the allotment of New Shares pursuant to a Scheme, the Company will
be posting to the relevant Target VCT’s shareholders at their registered address and uploading on to the
Company’s website a valuation report which will be prepared by Scott-Moncrieff. The report will confirm
to the Company that the value of the relevant Target VCT’s assets and liabilities which are being
transferred to the Company as part of the relevant Scheme is not less than the aggregate amount
treated as being paid up on the New Shares being issued to the relevant Target VCT’s shareholders
pursuant to that Scheme.
If the conditions for a Scheme, as set out above, have not been satisfied by 30 November 2012, then
that Scheme shall not become effective and the relevant Companies will continue in their current form
(but subject to the implementation of the other Schemes) and the boards of the relevant Companies will
continue to keep the future of their respective company under review.
Each Scheme is not conditional on the other Schemes and will proceed independently and irrespective
of the other Schemes.
30
PART III
ENHANCED BUYBACK FACILITY
If a Shareholder does not wish to participate, or is not eligible to participate, in the Enhanced
Buyback Facility, no further action is required.
Please note that the Enhanced Buyback Facility will open on 1 October 2012 (subject to
Resolutions 1, 5 and 10 to be proposed at the General Meeting being approved by Shareholders
and irrespective of whether the merger becomes effective or the Offer proceeds). If a Scheme
becomes effective, that Target VCT’s shareholders will be entitled to participate in respect of
their New Shares issued pursuant to the Scheme.
A3: 5.1.3
Shareholders may participate in the Enhanced Buyback Facility without participating in the
Offer.
Background
The Board has previously indicated its intention to provide Shareholders with the ability to participate in
an enhanced buyback facility and is pleased to now offer this facility to Shareholders.
Enhanced buyback facilities are arrangements by which shareholders can sell existing shares in a VCT
and reinvest the proceeds in new shares in the same VCT, on which upfront tax relief may then be
available.
Participation in an enhanced buyback facility in respect of Existing Shares which have not been
held for five years is considered for tax purposes as a disposal and is, therefore, subject to
clawback by HMRC of any upfront income tax reliefs obtained on original subscription.
Shareholders should be aware that HMRC operate on a ‘first in, first out’ basis in respect of
allocation to Existing Shares being sold.
There could also be an income tax charge for Shareholders on any excess of the Tender Price
above the original issue price for the Existing Shares that are bought back and Shareholders
should seek professional advice.
New Shares issued to Target VCTs’ Shareholders will be treated as having been acquired at the
same time and at the same cost of the original Target VCT Shares from which they are derived.
New Shares issued to an Apollo 4 Shareholder in respect of Apollo 4 Shares will not have been
held for five years.
The Enhanced Buyback Facility is conditional on the approval of Resolutions 1, 5 and 10 to be proposed
at the General Meeting. If the requisite Resolutions are not approved, the Enhanced Buyback Facility will
be withdrawn. The Enhanced Buyback Facility will only be implemented to the extent the Board believes
that the Company has sufficient reserves to effect the purchase of Shares pursuant to the Enhanced
Buyback Facility. The Enhanced Buyback Facility is not, however, conditional on the merger or the Offer
proceeding.
A3: 5.2.3 (g)
How Does the Enhanced Buyback Facility Work?
The Enhanced Buyback Facility comprises a tender offer by the Company to purchase Existing Shares
and an offer for New Shares in the Company to be effected as follows:
.
The Company is making a tender offer to all UK Shareholders (and their UK beneficial holder if the
Existing Shares are held by a nominee) on the register on 1 October 2012 to purchase up to 50% of
the issued Share capital as at that date.
.
Shareholders eligible to participate may tender some or all of their existing holding, such
Shareholders:
o
being entitled to sell up to their Basic Entitlement (this being up to 50% of their holding on the
register on 1 October 2012, rounded down to the nearest whole Existing Share); and
o
being able to tender additional Existing Shares that may be sold to the extent that other
Shareholders do not participate up to the maximum available amount (any such excess to be
allocated pro rata to the number of Existing Shares tendered, subject to the discretion of the
Board).
31
A3: 5.2.1
A3: 5.1.1
.
The purchase will be subject to the participating Shareholder agreeing to reinvest all of the
proceeds of sale in the purchase of New Shares at the Issue Price.
.
The Tender Price will be a price equal to the most recently published net asset value per Share at
the time of purchase, rounded down to the nearest 0.1p.
.
The Issue Price will be a price equal to the most recently published net asset value per Share at the
time of allotment, divided by 0.95 (to take into account the costs of the Enhanced Buyback Facility),
rounded up to the nearest 0.1p.
.
Financial intermediaries will receive a commission of an amount equal to 2.5% of their client’s
reinvestment (which may be waived and reinvested for additional new Shares purchased on behalf
of their client as part of the Enhanced Buyback Facility) and annual trail commission.
A3: 5.3.1
The net effect for participating Shareholders is that they will ‘substitute’ 1,000 Existing Shares with 950
New Shares (the reduction in the value of the investment holding representing the costs of implementing
the Enhanced Buyback Facility), with the reinvestment qualifying for upfront income tax relief of up to
30% of the amount reinvested if Shareholders are Qualifying Investors (which has been confirmed by
HMRC). There is no requirement for any application monies to be sent by participating Shareholders
who apply under the Enhanced Buyback Facility as the cost of the subscription of New Shares will be
met from the proceeds of sale of Existing Shares.
The Enhanced Buyback Facility is open to UK Shareholders only (and their UK beneficial holder if the
Existing Shares are held by a nominee). The Enhanced Buyback Facility is not being offered to
Overseas Shareholders and they are not entitled to participate. The maximum number of Existing
Shares to be purchased pursuant to the Enhanced Buyback Facility shall be no more than 50% of the
issued Share capital of the Company on 1 October 2012.
A3: 5.1.2
Each UK Shareholder is entitled to tender up to their Basic Entitlement (this being up to 50% of their
holding on the register on 1 October 2012, rounded down to the nearest whole Existing Share). Each UK
Shareholder is also entitled to tender additional Existing Shares in excess of their Basic Entitlement in
the event other Shareholders do not participate for their Basic Entitlement (the excess to be allocated
pro rata to the amount of Existing Shares tendered, subject to the discretion of the Board). The Shares
will be purchased at the Tender Price with the proceeds simultaneously being used to purchase New
Shares at the Issue Price, rounded down to the nearest whole New Share.
If the Board considers that the Company does not have sufficient reserves to lawfully implement the
Enhanced Buyback Facility in full or that implementing the Enhanced Buyback Facility in respect of valid
applications received would result in the Company having insufficient reserves for ongoing purposes
(taking into account reserves expected to be created), the Board may reduce the maximum number of
Existing Shares to be purchased under the Enhanced Buyback Facility and a Shareholder’s entitlement
to participate up to his or her Basic Entitlement will be reduced accordingly. The Board expects the
Company to be able to implement the Enhanced Buyback Facility in full. The Board further reserves the
right (following consultation with Octopus) to change the Enhanced Buyback Facility Record Date and
further amend or extend (as applicable) the closing date and implementation timetable at its discretion.
The New Shares will be issued in certificated form (though such New Shares can subsequently be
admitted to CREST) and will rank, from the date of issue, pari passu in all respects with the existing
issued share capital of the Company.
A3: 4.3
Application will be made to the UK Listing Authority for the New Shares to be issued to be admitted to the
premium segment of the Official List of the UK Listing Authority and to the London Stock Exchange for
such shares to be admitted to trading on the London Stock Exchange’s main market for listed securities.
Admission is expected to take place three Business Days after allotment.
The results of the Enhanced Buyback Facility, including the Tender Price and Issue Price, will be
announced to the London Stock Exchange through a Regulatory Information Service.
The full terms and conditions of the Enhanced Buyback Facility are set out in Part XIII of this document.
Shareholders’ attention is also drawn to the section entitled ‘‘Risk Factors’’ set out on pages 12 and 13
and Part X of this document in respect of the potential tax consequences. Please also refer to the
‘‘Frequently Asked Questions’’ below for further information.
32
A3: 5.3.2
A3: 5.1.9
Costs of the Enhanced Buyback Facility
A3: 8.1
Octopus will be paid an administration fee of 5% of the gross proceeds raised through the issue of New
Shares (ignoring reinvested commission) from which all costs and expenses will be paid (including initial
intermediary commission but excluding annual trail commission). Any costs above this, excluding annual
trail commission, will be met by Octopus. This cost is applied through the allotment process as shown
above, so that the number of New Shares subscribed for will be approximately 5% less than the number
of Existing Shares purchased pursuant to the Enhanced Buyback Facility. There will, therefore, be a
corresponding small reduction to the net assets of the Company, though the net asset value per Share is
not expected to be affected.
Buyback Facility Application Forms bearing a financial intermediary’s FSA number and/or IFA stamp will
normally be paid initial commission of 2.5% on the amount reinvested in New Shares through the
Enhanced Buyback Facility. Financial intermediaries may agree to waive their initial commission in
respect of an application. If this is the case, then the application for New Shares pursuant to the
Enhanced Buyback Facility will be increased by the amount of initial commission waived (i.e. up to 2.5%)
and the enlarged application will be applied in subscribing for New Shares at the Issue Price through the
Enhanced Buyback Facility. No further fees or commission will be paid in respect of such additional New
Shares.
Additionally, provided that the intermediary continues to act for the client and the client continues to be
the beneficial holder of the New Shares, the Company (where permitted) will pay intermediaries an
annual trail commission of 0.5% of the initial net asset value for a maximum of nine years.
Illustration of the Enhanced Buyback Facility
Based on the most recently published unaudited net asset values of the Shares as at 30 April 2012, the
following is an illustration of the effect for a Shareholder who tenders 10,000 Existing Shares and
qualifies for the full amount of upfront tax reliefs (ignoring reinvested commissions).
Shares
NAV
(p)
Tender
Price
(p)
Issue Price
(p)
91.4
91.4
96.3
Amount
Reinvested
30% income
(£)
tax relief (£)
9,139.83
2,741.94
The Tender Price and Issue Price used above are for illustrative purposes only as the NAV per Share may be different for the
purposes of calculating the actual Tender Price and Issue Price (which may be higher or lower than the example above).
FREQUENTLY ASKED QUESTIONS
Who should consider taking part in the Enhanced Buyback Facility?
.
A Shareholder who subscribed for Existing Shares and has held them for a period of at least five
years.
.
A Shareholder who has acquired Existing Shares in the market or otherwise where no upfront
income tax relief was obtained.
.
A Target VCT Shareholder who receives New Shares as part of the merger process and, as the
date of issue is deemed to be the original date of issue of the Target VCT’s shares from which the
New Shares are derived, would be regarded as having held the New Shares for a period of at least
five years.
In respect of New Shares issued to Target VCTs’ Shareholders pursuant to the merger, what is
the date of acquisition for the purposes of the five year holding period?
New Shares to be issued pursuant to the merger, which will have a deemed acquisition date of the date
the original Target VCT Shares (from which the New Shares are derived) were originally acquired.
Original Apollo 4 Shareholders should note that New Shares issued pursuant to the merger will not have
been held for the five year holding period required to maintain income tax relief.
When should Enhanced Buyback Facility Forms be submitted?
Enhanced Buyback Facility Forms should be submitted after the Enhanced Buyback Facility Record
Date and, where relevant, once a participating Shareholder is in receipt of their relevant share certificate.
33
If a holding in CREST needs to be rematerialised (see below), a participating Shareholder will need to
await receipt of their share certificate from Capita Registrars before submitting their Enhanced Buyback
Facility Form.
If the participating Shareholder is a Target VCT shareholder, he or she will need to await receipt of the
certificate for New Shares issued pursuant to the relevant Scheme.
What amount of Existing Shares held can be sold?
Shareholders eligible to participate can apply to sell some or all of their Existing Shares. Such
Shareholders will, subject to receipt of a valid Enhanced Buyback Application Form, be entitled to sell up
to their Basic Entitlement (this being up to 50% of their holding on the register on 1 October 2012,
rounded down to the nearest whole Existing Share).
Shareholders may also tender additional Existing Shares in excess of their Basic Entitlement to the
extent that other Shareholders do not participate for their basic Entitlement, up to the maximum available
amount. The excess will be allocated pro rata to the amount of Existing Shares tendered, subject to the
discretion of the Board.
What are the tax consequences of the Enhanced Buyback Facility?
Shareholders are referred to paragraph 2 on page 62 in respect of the tax consequences of participating
in the Enhanced Buyback Facility. Shareholders should seek professional advice.
What should a Shareholder do if Existing Shares are held in CREST?
If Existing Shares are held by a nominee and through CREST, please see the answer to the question
below.
If Existing Shares are personally held in CREST, holdings will first need to be rematerialised into
certificated form in order to participate. Shareholders are recommended to contact their broker or speak
with the Company’s registrar, Capita Registrars, for assistance in rematerialising holdings.
Once in receipt of the share certificate, this must then be submitted, together with the Enhanced
Buyback Facility Application Form.
What if Existing Shares are held by a nominee and the beneficial shareholder wishes to
participate in the Enhanced Buyback Facility?
Both the nominee and the beneficial shareholder will need to complete the Enhanced Buyback Facility
Application Form confirming that they wish to proceed by the nominee selling the holding in Existing
Shares on behalf of the beneficial shareholder and the beneficial shareholder applying for the New
Shares in his or her own name (so as to be able to obtain the income tax relief associated therewith).
A separate Enhanced Buyback Facility Application Form can be requested from Octopus where a
nominee holds Existing Shares in one holding for multiple beneficial shareholders.
If Existing Shares are held through CREST, then the nominee will need to liaise with their broker or
Capita Registrars (as the case may be) to rematerialise the Existing Shares first (as detailed above). The
New Shares (and the tax certificate) and share certificate will be issued in the name of the beneficial
shareholder but the New Shares can then be transferred back to the nominee as required.
Will New Shares be issued in certificated form or through CREST?
New Shares issued as part of the Enhanced Buyback Facility will be in certificated form. Shareholders
can then arrange through their broker or nominees for these New Shares to be subsequently admitted to
CREST.
What if Existing Shares are held in more than one registered holding?
If Existing Shares are held in different registered holdings, the maximum participation is up to 50% of
each holding and any excess Shares which may be tendered to the extent other Shareholders do not
participate or tender up to their basic entitlement. A separate Enhanced Buyback Facility Application
Form must be returned in respect of each such holding.
Are there any disadvantages to participating in the Enhanced Buyback Facility?
If a Shareholder participates in the Enhanced Buyback Facility, the Shareholder will acquire new VCT
shares. If that Shareholder qualifies for any upfront income tax relief on the reinvestment in New Shares,
the Shareholder will need to hold these shares for five years from the date of issue in order to retain such
34
relief. Sale (or other disposal) of the New Shares prior to the requisite minimum five year holding period
will result in a clawback of such relief by HMRC.
There could also be an income tax charge and/or a capital gain tax charge on the disposal of the
Shareholders’ original Shares (see paragraph 2 on page 62).
Can Shares be transferred and the transferee participate?
Yes, if Shares have been transferred and such transfer has been recorded on the Company’s register of
members prior to the Enhanced Buyback Facility Record Date (this being 1 October 2012). Any transfer
which is recorded thereafter will not allow the transferee to participate as the Enhanced Buyback Facility
Record Date sets the date for entitlements to be determined for participation.
Can a Shareholder participate in the Enhanced Buyback Facility and not reinvest?
No. The terms of the Enhanced Buyback Facility do not allow Shareholders to obtain cash from the
buyback of their Existing Shares. The process requires a Shareholder to agree to simultaneously
reinvest all of the proceeds of sale in New Shares.
If Existing Shares have been bought at different times which ones are deemed to have been
sold?
VCTs have different rules to normal companies and, therefore, the first Existing Shares bought in the
Company by a Shareholder are the first to be sold (i.e. a first in, first out basis). This same process will
apply where Existing Shares have been issued through the merger (i.e. the Existing Shares are treated
as if they have been acquired at the same date and at the same price as the original Target VCTs’
Shares).
Who should Shareholders contact if they have queries about the Enhanced Buyback Facility or
their shareholdings?
Shareholders who have queries in respect of the Enhanced Buyback Facility should contact Octopus,
telephone: 0800 316 2295 between the hours of 8.00 a.m. and 6.00 p.m. on any Business Day. No
financial, legal, tax or investment advice will be given.
Shareholders who have queries about their holdings and/or date(s) of acquisition should contact the
Company registrars, Capita Registrars, telephone: 0871 664 0324 from within the UK or on + 44 20
8639 3399 if calling from outside the UK. Calls to the 0871 664 0324 number cost 10p per minute from a
BT landline. Other network providers may vary. Lines are open Monday to Friday 9.00 a.m. – 5.30 p.m.
(London time), No financial, legal, tax or investment advice will be given.
What is the procedure for applying pursuant to the Enhanced Buyback Facility?
To apply to participate in the Enhanced Buyback Facility, Shareholders must complete and return the
Enhanced Buyback Facility Application Form (at the end of this document and coloured pink), together
with their relevant share certificate to Octopus Investments Limited, 20 Old Bailey, London EC4M 7AN
by post or hand delivered (during normal business hours only).
Further details on how to complete the Enhanced Buyback Facility Application Form are set out in Part
XIII.
35
PART IV
THE OFFER
If a Shareholder does not wish to participate or is not eligible to participate in the Offer no further
action is required.
Please note that the Offer will open on 1 October 2012 (subject to Resolutions 1, 6 and 11 to be
proposed at the General Meeting being approved by Shareholders and irrespective of whether
the Schemes become effective or the Enhanced Buyback Facility proceeds).
Shareholders may participate in the Offer without participating in the Enhanced Buyback
Facility.
Background
The Board proposes to raise up to £20 million through an offer for subscription for New Shares. The
Board may, in its absolute discretion, decide to increase the Offer to raise up to a further £10 million if
there proves to be excess demand from investors (over allotment facility).
This Offer will provide Shareholders with the opportunity to add to their current shareholdings while
benefiting from the tax reliefs available on an issue of new VCT shares for the tax year of 2012/2013.
New investors will also be able to participate in the Offer and, in particular, following the merger, access
a mature portfolio of investee companies in the Company with the potential for receiving regular dividend
payments.
Income tax relief of up to 30% is available to a Qualifying Investor on the amount subscribed, subject to a
maximum investment in VCTs of £200,000 per tax year (save that a Qualifying Investor’s income tax
liability may only be reduced to nil), provided the VCT shares are held for at least five years and provided
the Company’s VCT status is maintained. Dividends and gains received from VCTs by a Qualifying
Investor (subject to the annual investment limits) are tax free, including capital gains tax.
Reasons for the Offer
The Board believes that:
.
This is an advantageous time in the economic cycle, with Octopus beginning to see a
strengthening pipeline of investment opportunities, at a time when prices of assets are still low
by historic standards. Funds raised under the Offer will be invested, in part, to take advantage of
any rally in valuations and performance of smaller companies as the pace of economic growth
accelerates.
.
The Offer should enable the Company to maintain its portfolio diversification and continue to invest
funds raised before 6 April 2012 in companies where such funds will be used for share acquisitions
to support buy-outs and company acquisitions by using the new funds raised under the Offer to
maintain liquidity for dividends and buybacks.
.
The changes to the VCT investment limits and size tests provide an opportunity to participate in
larger transactions and continue to support existing portfolio companies.
.
New offers by VCTs continue to offer attractive tax incentives for private investors when compared
to other types of tax efficient investment.
.
The fixed running costs of the Company will be spread over a larger asset base, thereby reducing
costs as a percentage of the Company’s assets.
Terms of the Offer
The number of New Shares to be issued pursuant to the Offer is subject to the lower of the maximum
amount to be raised under the Offer of £20 million (or £30 million if the Board decides, in its absolute
discretion, to increase the Offer) and a maximum of 110 million New Shares being issued in aggregate
pursuant to the Offer, the Schemes and the Enhanced Buyback Facility (whichever is the lower).
The Offer is conditional on the approval of Shareholders of Resolutions 1, 6 and 11 to be proposed at the
General Meeting. If the requisite Resolutions are not approved, the Offer will be withdrawn. The Offer is
not conditional on the Schemes becoming effective or the Enhanced Buyback Facility proceeding.
36
The Offer will open on 1 October 2012 and will close on 5 April 2013 (unless fully subscribed before this
date or otherwise extended by the Board to no later than 30 June 2013). There is no minimum
subscription level for the Offer to proceed and the Offer is not underwritten.
An investment by an investor will be divided by the Offer Price of a New Share calculated as follows:
A3: 5.3.1
Latest published NAV of a Share at the time of allotment, divided by X and
rounded up to the nearest 0.1p per share
‘X’ for these purposes will be 0.95 (to allow for issue costs of up to 5%) or such other number between
0.95 and 1 as may be agreed by the Board and Octopus (to reflect a reduction in issue costs) and
announced to the London Stock Exchange through a Regulatory Information Service provider authorised
by the FSA prior to the date of an allotment.
Fractions of New Shares will not be issued and holdings will be rounded down to the nearest whole
number of New Shares.
Based on the unaudited NAV of the Company as at 30 April 2012 of 91.4p and ‘X’ being 0.95, the Offer
price for a New Share would be 96.3p.
Applications will be accepted (in whole or part) at the Directors’ discretion, but the Directors intend to
meet applications on a ‘first come, first served’ basis. The minimum investment per applicant is £3,000.
There is no maximum investment, however, potential investors should be aware that tax relief is only
available on a maximum £200,000 in each tax year.
A3: 5.2.3 (c)
Application has been made to the UK Listing Authority for the New Shares issued pursuant to the Offer to
be listed on the Official List and will be made to the London Stock Exchange for such shares to be
admitted to trading on its main market for listed securities. The New Shares will rank equally in all
respects to the issued Shares of the Company from the date of issue. It is anticipated that dealings in the
New Shares will commence within three business days following allotment.
The results of the Offer, including the Offer Price, will be announced to the London Stock Exchange
through a Regulatory Information Service provider authorised by the FSA.
A3: 5.1.9
A3: 5.3.2
Unless otherwise agreed with the Company, the New Shares will be issued in certificated form (though
such New Shares can subsequently be admitted to CREST).
Use of Proceeds
The proceeds of the Offer will be used by the Company in accordance with its investment policy.
A3: 3.4
Costs
Octopus will act as promoter to the Offer and be paid a commission of 5% of the gross proceeds raised
through the issue of New Shares (ignoring reinvested commission) from which all costs and expenses
will be paid (including any permissible initial intermediary commission but excluding any permissible
annual trail commission). Costs above this, excluding annual trail commission, will be borne by Octopus.
Octopus may agree to reduce the amount payable to it or agree, in respect of an individual investor, that
the application for New Shares pursuant to the Offer will be increased by this amount and the enlarged
Application will be applied in subscribing for New Shares at the Issue Price through the Offer. No further
fees or commission will be paid in respect of such additional New Shares.
The Offer costs will, therefore, be no greater than 5% of funds subscribed under the Offer (including any
permissible initial intermediary commission but excluding any permissible trail commission). The net
proceeds of the Offer, assuming full subscription and that the over allotment facility is exercised by the
Board, will be a maximum of £28.5 million (excluding any permissible trail commission).
Intermediary Commissions
Financial intermediaries will, where permissible, usually be entitled to receive an initial commission of
2.5% of the amount invested by their client. Financial intermediaries may agree to waive their initial
commission in respect of an application. If this is the case, then the application for New Shares pursuant
to the Offer will be increased by the amount of initial commission waived (i.e. up to 2.5%) and the
enlarged application will be applied in subscribing for New Shares at the Issue Price through the Offer.
No further fees or commission will be paid in respect of such additional New Shares.
37
A3: 3.3
Additionally, provided that the intermediary continues to act for the client and the client continues to be
the beneficial holder of the New Shares, the Company will, where permissible, pay intermediaries an
annual trail commission of 0.5% of the initial net asset value for a maximum of nine years.
The Company may (following consultation with Octopus) change the availability and terms of initial and
trail commission payable through an announcement to the London Stock Exchange through a
Regulatory Information Service provider authorised by the FSA applicable to applications received on or
after a specified date. The Company may also provide or publish an amended application form to that set
out in this document pursuant to applications under the Offer will be accepted.
Jurisdiction
No action has been or will be taken in any jurisdiction by, or on behalf of, the Company which would
permit a public offer of New Shares in any jurisdiction other than the UK.
Application Procedure
The application procedures and terms and conditions of the Offer are set out in Part XIV of this
Document.
The Offer Application Form can be found at the end of this Prospectus coloured blue (or one or more
amended application forms to the Offer Application Form set out in this document may be provided or
published pursuant to which applications under the Offer will be accepted). A completed Offer
Application Form should be posted together with a cheque (at the investor’s risk) to Octopus
Investments Limited, 20 Old Bailey, London EC4M 7AN.
If investors have any questions regarding an investment in the Company they should contact their
independent financial adviser. For questions relating to the application procedure please contact
Octopus on 0800 316 2295 between the hours of 8.00 a.m. and 6.00 p.m. on any Business Day. Please
note that no financial, legal, tax or investment advice can be given.
FREQUENTLY ASKED QUESTIONS
Who should I make the cheque payable to?
Cheques should be made payable to ‘Octopus Apollo VCT 3 – Applications’.
Can I invest via bank transfer instead?
Yes – bank transfers should be paid to:
‘Octopus Apollo VCT 3 – Applications’
Sort code: 40-03-28
Account no: 82721546
Please reference bank transfers with your surname and initials.
Where should I send my Application?
Your Offer Application Form (and cheque) should be sent to:
Octopus Investments Limited
20 Old Bailey
London
EC4M 7AN
What happens after I invest?
We will send you confirmation that we have received your application by return of post. You should
expect to receive your share certificate and tax certificate within a few weeks following allotment.
Please send the completed Offer Application Form together with your cheque or bankers’ draft to
Octopus Investments Limited, 20 Old Bailey, London EC4M 7AN. If you have any questions on how to
complete the Offer Application Form please contact Octopus Investments Limited on 0800 316 2295
between the hours of 8.00 a.m. and 6.00 p.m. on any Business Day.
38
PART V
INFORMATION ON THE COMPANY
Constitution and Status
The Company was incorporated and registered in England and Wales under CA 1985 as a public
company with limited liability on 7 June 2006, with registered number 05840377 under the name
Octopus Protected VCT plc. The Company name was changed to Octopus Apollo VCT 3 plc on 12
August 2010. A resolution has been proposed that the articles of association of the Company be
amended so as to allow the Board to change the name of the Company. Should this resolution be
approved by Shareholders at the General Meeting, the Board intend to utilise this authority to change the
name of the Company to Octopus Apollo VCT plc.
A1: 5.1.5
The Company was issued with a trading certificate under Section 117 of CA 1985 (now Section 761 of
CA 2006) on 14 July 2006.
A3: 4.2
A1: 5.1.2
A1: 5.1.4
The Company operates under CA 2006 and the regulations made thereunder.
VCTs are unregulated, but are required to manage their affairs to obtain and maintain approval as a VCT
under the provisions of Chapter 3 of Part 6 of ITA 2007. HMRC has granted approval of the Company as
a VCT under Section 259 of ITA 2007.
A15: 1.3
The business of the Company has been, and it is intended will be, carried on so as to continue to comply
with that section to maintain full approval.
The Company is not authorised and/or regulated by the FSA or an equivalent overseas regulator. The
Company’s Shares are listed on the premium segment of the Official List.
Share Capital
The share capital of the Company comprises ordinary shares of 10p each of which 25,056,684 are
currently in issue (as at 16 August 2012). The maximum number of New Shares to be issued in
connection with the Schemes, the Enhanced Buyback Facility and the Offer is 110 million.
Share certificates for existing Shares will continue to be valid and will not be replaced following the
Schemes, Enhanced Buyback Facility or Offer becoming effective (unless a Shareholder participates
and tenders such Existing Shares pursuant to the Enhanced Buyback Facility).
Selected Financial Information
Certain selected financial information of the Company is set out below:
Total profit/(loss) on
ordinary activities before
taxation (£’000s)
Total net asset value return
per share (p)
Dividends paid per Share (p)
Net assets (£’000s)
NAV per Share (p)
Audited year ended
31 January 2012
Audited year ended
31 January 2011
Audited year ended
31 January 2010
1,356
677
244
4.7
3.5
24,337
90.9
2.5
3.0
24,322
89.6
0.9
3.0
24,552
90.1
The Board
A1: 14.1
The Board and the Target VCTs’ Boards have considered what the size and future composition of the
Enlarged Company’s board should be following the merger and it has been agreed that Tony Morgan
shall step down as Chairman of the Company, but will continue as a Director of the Company, and
Robert Johnson will step down as a Director of the Company. Murray Steele (chairman of Apollo 4) and
Christopher Powles (a director of Apollo 4) will then be appointed as directors of the Company, with
Murray Steele being appointed as Chairman of the Company. Matt Cooper will continue as a Director of
the Company and, as he is also a director of Apollo 1 and Apollo 2, he will also bring recent knowledge
and experience of these Targets VCTs to the Enlarged Company. The composition of the Board will
continue to be kept under review.
39
Directors
Tony Morgan (80) (Chairman)
Tony Morgan spent seven years as chairman and chief executive of a highly successful and multinational company, Purle Bros, until its merger with Redland in 1971 when he joined their main board. He
became a Governor of the BBC in the same year. He was later to become deputy chairman and a
shareholder in a joint venture with Wimpey Construction developing their substantial environmental
business. In 1992, he was appointed chief executive of The Industrial Society and he has been chairman
of the charity Youth at Risk since 1996. Tony has had more than eight years’ specific VCT experience
formerly as a non-executive director of Octopus Phoenix VCT plc.
Robert Johnson (56)
Robert Johnson is a career managing director with five successful company sales, most recently he was
joint managing director of Buyagift plc until its sale. He was the chief operating officer and director of Fuel
Ltd, a leading e-learning company, until 2004 when Fuel was acquired by Stanley Davis and the
managing director of Ilion plc, a value-added distributor focusing on major networking and Unix brands
until 1999 when Ilion was acquired by Landis. Rob has experience of working with entrepreneurs in fastgrowth situations and an extensive background in sales, marketing and operations and hands-on
experience of start-up situations. Rob is a non executive director of Unicorn Training and Mirai
Investments.
Matt Cooper (45)
Matt Cooper is the chairman of Octopus, the investment manager of Apollo 3. Prior to joining Octopus,
Matt was the principal managing director of Capital One Bank (Europe) plc where he was responsible for
all aspects of the company’s strategic direction and day-to-day operations in Europe. He led the UK
portion of the business from start-up to two million customers, generating revenues of over £275 million
and employing over 2,000 people. Matt is also Chairman of Imaginatik plc and a non-executive director
of 10Duke Software Limited, MyDish Limited, Global Collect and eight other VCTs.
Proposed Directors
Murray Steele (64)
Murray has had a broad range of experience as a director of a number of companies. At present he is
chairman of Surface Generation Ltd, a hi-tech engineering company and a non-executive director of
James Walker Group, an international engineering group with revenues of £190 million, E – Energija, an
energy company in Lithuania and Vitalia, a health food company in Macedonia. Murray has Bachelor’s
and Master’s degrees in mechanical engineering from the University of Glasgow, an MBA from Cranfield
School of Management and holds an accounting qualification.
Christopher Powles (49)
Chris has extensive experience in the UK smaller companies sector. He was the principal founder of Pi
Capital, a private client fund management company that specialises in investing in smaller unquoted
companies. Prior to selling his stake in Pi Capital in 2002, he led the investment of more than £25 million
into 14 companies. Subsequently he was the finance director of an AIM-quoted company, a nonexecutive director of both listed and private companies and currently he is involved in renewable energy
and is a director of three companies in that sector. Chris is a chartered accountant, having qualified at
what is now part of PricewaterhouseCoopers LLP, and has a BA Hons degree from Oxford University.
Corporate Governance
The Financial Services Authority requires all listed companies to disclose how they have applied the
principles and complied with the provisions of the UK Corporate Governance Code (formerly the
Combined Code) (‘‘the Code’’) issued by the Financial Reporting Council (‘‘FRC’’) in May 2010.
The Board has also considered the principles and recommendations of the AIC Code of Corporate
Governance (‘‘AIC Code’’) by reference to the AIC Corporate Governance Guide for Investment
Companies (‘‘AIC Guide’’). The AIC Code, as explained by the AIC Guide, addresses all the principles
set out in the Code, as well as setting out additional principles and recommendations on issues that are
of specific relevance to the Company.
40
A1: 16.4
The Board considers that reporting against the principles and recommendations of the AIC Code, and by
reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better
information to shareholders.
For the year ended 31 January 2012, and as at the date of this document, the Company has complied
with the recommendations of the AIC Code and the relevant provisions of the Code, except where noted
below. There are certain areas of the Code that the AIC does not consider relevant to investment
companies and with which the Company does not specifically comply, of which the AIC Code provides
dispensation. The area and reason for non-compliance are as follows:
.
New directors do not receive a full, formal and tailored induction on joining the Board. Such matters
are addressed on an individual basis as they arise.
.
The Company has two independent Directors; Tony Morgan and Rob Johnson, as defined by the
Code. Matt Cooper holds directorships of other companies managed by Octopus and within
Octopus itself. The Board considers that all Directors have sufficient experience to be able to
exercise proper judgement within the meaning of the Code.
.
The Company does not have a chief executive officer or senior independent director. The Board
does not consider this necessary for the size of the Company.
.
The Company conducts a formal review as to whether there is a need for an internal audit function.
However, the Directors do not consider that an internal audit would be an appropriate control for a
venture capital trust.
.
The Company has no major shareholders so shareholders are not given the opportunity to meet
any non-executive directors at a specific meeting other than the annual general meeting.
.
The Company does not have a remuneration committee as it does not have any executive directors
Further details on the Company’s corporate governance including the constitution of the various
committees and other internal controls are set out in paragraph 7 of Part XII of this document.
Investment Manager
The Company’s investment manager is Octopus, the same investment manager as for the Target VCTs.
Octopus is a private limited company incorporated and registered in England and Wales on 8 March
2000 with registered number 03942880. Octopus’ registered office and principal place of business is at
20 Old Bailey, London EC4M 7AN (telephone 0800 316 2295). The principal legislation under which
Octopus operates is CA 2006 (and regulations made thereunder).
A15:4.1
Octopus also provides administration services to all of the Companies.
Octopus is one of the UK’s leading fund management companies with more than £2.7 billion under
management (as at 31 May 2012). Octopus has more than 200 staff, including over 50 investment
professionals, and has twice been voted as one of the ‘Top 100 Small and Medium-Sized Companies to
Work For’ in the Sunday Times.
Within financial services, Octopus has developed a reputation for quality and innovation, and prides itself
on providing exceptional levels of service to all its customers. Octopus has received an AAA rating for
financial planning from Citywire for two years in succession – one of only two fund management
companies to achieve this.
Octopus currently manages 19 VCTs – more than any other fund manager. Financial advisers have
voted Octopus ‘VCT Provider of the Year’ at the Professional Adviser Awards in 2007, 2008, 2009 and
2010, Octopus was also named VCT Manager of the Year at the unquote’’ British private Equity Awards
for 2010.
Investment Objective and Policy
The investment objective of the Company is the same as that for the Target VCTs, this being to invest in
a diversified portfolio of UK smaller companies in order to generate income and capital growth over the
long-term.
The Company also has the same investment policy as the Target VCTs. The Company’s investment
policy has been designed to enable the Company to comply with the VCT qualifying conditions. It is
intended that the long-term disposition of the Company’s assets will be not less than 80% in a portfolio of
unquoted investments and up to 20% in cash or near-cash investments to provide a reserve of liquidity
41
A15: 1.1
which will maximise the Company’s flexibility as to the timing of investment acquisitions and disposals,
dividend payments and share buybacks.
Investments will be structured using various unquoted investment instruments, including ordinary and
preference shares, loan stocks and convertible securities, to achieve an appropriate balance of income
and capital growth, having regard to the VCT legislation. The portfolio will be diversified by investing in a
broad range of industry sectors and by holding investments in companies at various stages of maturity in
the corporate development cycle, though it is not intended that investments will be made in early stage
unquoted companies which have yet to achieve profitability and cash generation. The normal investment
holding period will be in the range from three to seven years. Any uninvested funds will typically be held
in cash and money market funds.
Risk is spread by investing in a number of different businesses within different industry sectors using a
mixture of securities. The maximum amount invested in any one company will be limited to any HMRC
annual investment limits and generally no more than 15% of the Company’s assets, at cost, will be
invested in the same company. The value of an individual investment is expected to increase over time
as a result of trading progress and a continuous assessment is made of its suitability for sale. However,
Shareholders should be aware that the Company’s VCT qualifying investments are held with a view to
long-term capital growth as well as income and will often have limited marketability; as a result it is
possible that individual holdings may grow in value to the point where they represent a significantly
higher proportion of total assets prior to a realisation opportunity being available. Investments will
normally be made using the shareholders’ funds and it is not intended that the Company will take on any
long-term borrowings.
No material changes may be made to the Company’s investment policy described above without the
prior approval of shareholders by the passing of an ordinary resolution. The Directors will continually
monitor the investment process and ensure compliance with the investment policy.
Co-investment Policy
A15: 3.5
Where more than one of the companies managed or advised by Octopus wishes to participate in an
investment opportunity, allocations will be made in accordance with Octopus’ allocation policy as at the
date of allocation. The policy provides that allocations should be initially offered to the Company on a
basis which is pro-rata to its net asset value (or as otherwise agreed by the Board and Octopus). In the
event of a conflict of interests on the part of Octopus or where co-investment is proposed to be made
other than on a pro-rata basis (or as otherwise agreed by the Board and Octopus), such an investment
will require the approval of those members of the Board who are independent of Octopus.
Dividend Policy
A1: 20.7
The dividend policy of the Company is to maintain a regular dividend flow where possible in order to take
advantage of the tax free distributions a VCT is able to provide. The Company has paid an average
annual dividend of 3.1p per Share over the last four years. The Board intends to increase distributions,
with a target annual dividend of 5p per Share following the merger.
Dividend payments will be subject to available cash, portfolio requirements, distributable reserves and
applicable law at the relevant time. Shareholders will be kept informed of the progress of the Shares
through the interim management statements and accounts published by the Company.
Share Issues and Buybacks
The Company proposes (in addition to the authorities to allow for the Enhanced Buyback Facility and
Offer to take place) to renew its authorities to issue shares (having disapplied pre-emption rights)
following the merger up to 10% of its enlarged share capital for the purposes of small top up offers.
The Board also intends to continue to consider repurchasing shares (in addition to the Enhanced
Buyback Facility) following the merger up to 14.99% of its enlarged share capital for the purposes of the
general buyback policy. The Board believes that it is in the best interests of the Company and the
Shareholders to make occasional market purchases of the Shares, to allow any Shareholders who need
to sell their Shares to do so and to reduce, to a degree, any discount to NAV in the current market price
than might otherwise prevail. The Board will agree the discount to NAV at which Shares will be bought
back and regularly reviews the buyback policy.
Any future repurchases will be made in accordance with guidelines established by the Board from time to
time and will be subject to having the appropriate authorities from the Shareholders and sufficient funds
42
available for this purpose. Share buybacks will also be subject to the Listing Rules and any applicable
law at the relevant time. Shares bought back in the market will ordinarily be cancelled.
Investment Portfolios
The table below sets out the latest published NAVs of the Companies, together with the number of
venture capital investments within the portfolios of each company and the respective carrying value of
these investments. The Apollo 1 and Apollo 2 venture capital investment portfolios have common
investments.
Company
Apollo 1
Apollo 2
Apollo 4
Date of
launch
Funds raised
since launch
(£)
Unaudited
net assets
(£)*
NAV per
share
(p)*
Number of
venture
capital
investments*
Carrying
value of the
venture
capital
investments
(£)*
July 2006
May 2006
May 2006
June 2008
27.1 million
8.8 million
8.8 million
11.5 million
24,457,715
8,121,668
8,120,274
11,234,814
91.4
94.9
94.9
97.7
19
14
14
12
22,720,754
7,265,870
7,265,870
10,507,158
* Taken from the unaudited management accounts to 30 April 2012 for the Companies (which is prior to the payment of dividends
after 30 April 2012).
Further details on the Companies portfolios can be found in Part IX of this document.
Investment Management and Administration Arrangements
Octopus is the investment manager of all of the Companies and also provides administration and
secretarial services to all of the Companies.
In respect of the Company, Octopus receives an annual investment management fee of an amount
equal to 2% of the net assets of the Company at the end of the preceding accounting period (this being
£486,650 in the year ended 31 January 2012), payable quarterly in advance and plus applicable VAT.
Octopus also receives an annual administration and accounting fee equal to 0.3% of the net assets of
the Company at the end of the preceding accounting period (this being £72,997 in the year ended 31
January 2012), payable quarterly in advance (plus applicable VAT) and an annual company secretarial
fee of £5,000 (plus VAT). These fee arrangements will continue to apply to the Enlarged Company, but
will be across the enlarged net assets.
The existing annual expense cap on normal running costs of an amount equal to 3.3% of the net assets
will continue in respect of the Enlarged Company.
No performance related incentive fee is payable in the first five accounting periods. Octopus is then
entitled to an annual performance related incentive fee of an amount equal to 20% (in respect of each
share in issue) of the amount by which the Total Return per Share (this being NAV and dividends paid or
declared) increases from the Total Return per Share as at the start of the sixth accounting period (or, if
greater, 100p) in excess of the HSBC bank rate. The amount of the fee is calculated as at the date the
annual accounts for the relevant period are published and in respect of shares in issue as at that date.
The amount is then adjusted to deduct performance related incentive fees paid or payable in respect of
previous accounting periods.
The Board and Octopus have agreed, subject to Shareholder approval, to vary the terms of the
performance related incentive fee arrangements. Under the proposed terms, Octopus will be entitled to
an annual performance related incentive fee in each accounting period commencing on or after 1
February 2012, subject to the Total Return being 100p at the end of the relevant period. The amount of
the fee will be equal to 20% of the amount by which the Total Return as at the end of the relevant period
exceeds the Overall Hurdle Return (and payable in respect of each share in issue at the end of the
relevant period).
For these purposes,Total Return means NAV per Share plus dividends paid per Share since launch and
the Overall Hurdle Return means the greater of the:
43
A15: 8.3
A1: 20.4.3
.
Base Rate Hurdle Return - which means the Total Return as at 31 January 2012 increased by the
cumulative annual weighted average of the Bank of England base rate (measured daily) to the end
of the relevant accounting period; and
.
High Watermark Hurdle Return - which means the highest level of Total Return as at the end of the
accounting period commencing on 1 February 2012 or any subsequent accounting period.
The performance related incentive fee will be calculated and payable annually.
The proposed change to the performance related incentive fee is conditional on the approval of
Shareholders of Resolution 12 to be proposed at the General Meeting. The merger, the Offer and the
Enhanced Buyback Facility will continue irrespective of whether this resolution is approved. Should the
resolution not be approved then the Company and the Enlarged Company (as the case may be) will
continue under the existing performance related incentive fee arrangements as summarised above.
Secretary and Custodian
A15: 5.1
Tracey Spevack, an employee of Octopus, is the appointed Company Secretary and, through Octopus,
provides the necessary company secretarial services to the Company. Octopus provides custodian
services to the Company.
VCT Status Monitoring
PricewaterhouseCoopers LLP is the Company’s VCT status adviser. It carries out reviews of the
Company’s investment portfolio to ensure compliance and, when requested to do so by the Board or
Octopus, reviews prospective investments to ensure that they are qualifying investments.
The VCT tax implications of the Schemes have been advised upon by SGH Martineau LLP.
Duration of the Company
The Articles provide for a resolution to be proposed for the continuation of the Company as a VCT at the
fifteenth annual general meeting of the Company and at five-yearly intervals thereafter.
Investor Communications
The Board places a great deal of importance on communications with its Shareholders and supports
open communication with Shareholders. In addition to the announcement and publication of the annual
report and accounts, and the half-yearly results for the Company as detailed below, the Company also
publishes interim management statements as required by the Disclosure and Transparency Rules.
Reporting Dates
Year End
Announcement and publication of annual report and accounts to Shareholders
Announcement and publication of half-yearly results
31 January
May
September
Valuation Policy
The Company’s unquoted investments are valued at fair value through profit or loss in accordance with
the International Private Equity and Venture Capital Valuation Guidelines. These guidelines set out
recommendations, intended to represent current best practice on the valuation of venture capital
investments. These investments are valued on the basis of forward looking estimates and judgements
about the business itself, its market and the environment in which it operates, together with the state of
the mergers and acquisitions market, stock market conditions and other factors. In making these
judgements the valuation, which is undertaken by Octopus, takes into account all known material facts
up to the date of approval of the financial statements by the Board. The Company’s quoted investments
are valued at their bid prices. The Company’s net asset value is calculated at every quarter and
published on an appropriate regulatory information service. If for any reason valuations are suspended,
Shareholders will be notified in a similar manner.
44
A15: 6.1
A15: 3.4
A15: 6.2
PART VI
THE INVESTMENT MANAGER
Octopus
The investment manager to the Company is Octopus, the same investment manager as for the Target
VCTs. Octopus also provides administration and company secretarial services to the Company.
Octopus is one of the UK’s leading fund management companies with more than £2.7 billion under
management (as at 31 May 2012). Octopus has more than 200 staff, including over 50 investment
professionals, and has twice been voted as one of the ‘Top 100 Small and Medium-Sized Companies to
Work For’ in the Sunday Times.
Within financial services, Octopus has developed a reputation for quality and innovation and prides itself
on providing exceptional levels of service to all its customers. Octopus has received an AAA rating for
financial planning from Citywire for two years in succession – one of only two fund management
companies to achieve this.
Octopus currently manages 19 VCTs – more than any other fund manager. Financial advisers have
voted Octopus ‘VCT Provider of the Year’ at the Professional Adviser Awards in 2007, 2008, 2009 and
2010, Octopus was also named VCT Manager of the Year at the unquote’’ British private Equity Awards
for 2010.
Team
The investment team currently managing the investments of the Company and the Target VCTs will
continue to manage the Enlarged Company. The Octopus team includes the following individuals:
Mario Berti
Mario joined Octopus in 2010 to head Octopus’ Specialist Finance team, which currently has more than
£850m in funds under management (including VCT funds) and more than 20 investment professionals
overseeing a diverse range of investments. Mario chairs the Specialist Finance Investment Committee
and is responsible for evaluating potential investments to ensure they meet the funds’ investment
mandates. Prior to joining Octopus, Mario was at Rothschild where he was a board member of N M
Rothschild Banking and had roles including Head of Origination and Head of Structuring in the Leverage
Finance division. Mario is a qualified chartered accountant and read PPE at Oxford University.
Benjamin Davis
Benjamin joined Octopus in 2010 and is responsible for the day-to-day management of the Apollo and
Octopus VCT funds and managing the investment team. He has experience across a range of sectors
including technology, healthcare and business services. Prior to joining Octopus, Benjamin was at YFM
Equity Partners where he led numerous transactions and acted as board representative across a broad
range of sectors, and was an associate director at investment bank Interregnum, working across the
corporate finance and VC investment teams in the UK and USA. Benjamin has also worked as a
consultant for blue chip companies in the UK and New Zealand. Benjamin has an MBA from the
University of Cambridge and a first class honours degree from the University of Auckland, New Zealand.
Shay Ramalingham
Shay joined Octopus in 2012. He has worked across a range of sectors including healthcare,
construction and business services. Prior to joining Octopus, Shay was an Investment Director at Shore
Capital on the Puma VCTs. He was previously Principal responsible for developing Nomura’s Private
Equity’s investments in Healthcare and Business Services. Shay started his career at Arthur Andersen
Business Consulting advising blue chip businesses on strategy. Shay is a qualified chartered accountant
and has a first class degree in economics from the University of Cambridge.
Hugh Costello
Hugh joined Octopus in 2011. Hugh’s focus is on evaluating and assessing potential investee
companies, completing investments and board representation. Prior to joining Octopus, Hugh invested
into private equity funds in Africa and worked as a management consultant in New York. Hugh has a first
45
class honours degree in economics from the University of St Andrews and is a Chartered Financial
Analyst.
Martijn Kleibergen
Martijn is responsible for managing investments across the Octopus’ Specialist Finance portfolio. He is
involved in monitoring the performance of portfolio companies and working closely together with
investment teams in the origination of new transactions. Martijn is a member of the Specialist Finance
Investment Committee and Valuation Committee and is a board member for Apollo 4 and Octopus VCTs
1 & 2. Prior to joining Octopus Martijn spent 12 years at Fortis Bank, where he held various positions,
most recently as an executive director in its UK Corporate Banking & Project Finance unit. Martijn holds
an MSc degree from Erasmus University Rotterdam.
46
PART VII
FINANCIAL INFORMATION ON THE COMPANY AND THE TARGET VCTS
Audited financial information on the Companies is published in their respective annual reports for the
years ended 31 January 2010, 2011 and 2012.
The annual reports for the Companies for the financial years ended 31 January 2010, 2011 and 2012
were audited by Grant Thornton UK LLP, 3140 Rowan Place, John Smith Drive, Oxford Business Park
South, Oxford OX4 2WB and were reported on without qualification and contained no statements under
Section 495 to Section 497A of CA 2006.
A1: 20.4.1
A1: 2.1
The annual reports referred to above were all prepared in accordance with UK generally accepted
accounting practice (GAAP), the fair value rules of CA 2006 and the Statement of Recommended
Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’.
A1: 20.5.1
The annual reports contain a description of the relevant company’s financial condition, changes in
financial condition and results of operation for each relevant financial year. The annual reports are
incorporated in full by reference (which contain the information as detailed below) and can be accessed
at the following website:
www.octopusinvestments.com
and are also available for inspection through the national storage mechanism, which can be accessed at
the following website:
www.morningstar.co.uk/uk/NSM
Company
2010
Annual Report
Page 31
2011
Annual Report
Page 40
2012
Annual Report
Page 40
Income Statement (or equivalent)
Page 29
Page 37
Page 37
Statement showing all changes in equity
(or equivalent note)
Page 30
Page 39
Page 39
Cash Flow Statement
Page 32
Page 41
Page 41
Accounting Policies and Notes
Auditors’ Report
Page 34
Page 28
Page 43
Page 35
Page 43
Page 35
Description
Balance Sheet
This information has been prepared in a form consistent with that which will be adopted in the
Company’s next published annual financial statements having regard to accounting standards and
policies and legislation applicable to those financial statements.
The annual report also includes operating/financial reviews as follows:
2010
Annual Report
2011
Annual Report
2012
Annual Report
Page 3
Page 4
Page 3
Page 4
Page 3
Page 4
Pages 6 to 7
Page 8
Pages 6 to 7
Page 8
Pages 5 to 6
Page 7
Portfolio Summary
Pages 11 to 12
Pages 11 to 12
Page 9
Investment Policy
Valuation Policy
Page 16
Page 35
Pages 15 to 16
Page 34
Page 19
Page 43
Description
Objectives
Financial Highlights
Chairman’s Statement
Manager’s Report
47
A1:
A1:
A1:
A1:
A1:
A1:
A1:
20.7
9.1
20.6.2
3.1
20.1
21.1.7
19
Apollo 1
Description
Balance Sheet
Income Statement (or equivalent)
Statement showing all changes in equity
(or equivalent note)
Cash Flow Statement
Accounting Policies and Notes
Auditors’ Report
2010
Annual Report
Page 29
Page 27
Page
Page
Page
Page
2011
Annual Report
Page 39
Page 36
28
30
32
26
Page
Page
Page
Page
38
40
42
34
2012
Annual Report
Page 39
Page 36
Page
Page
Page
Page
38
40
42
34
This information in the annual reports has been prepared in a form consistent with that which will be
adopted in Apollo 1’s next published annual financial statements (if the Apollo 1 Scheme is not effected)
having regard to accounting standards and policies and legislation applicable to those financial
statements.
Such information also includes operating/financial reviews as follows:
Description
Objectives
Financial Highlights
Chairman’s Statement
Manager’s Report
Portfolio Summary
Investment Policy
Valuation Policy
2010
Annual Report
Page 3
Page 3
Pages 4 to 5
Page 6
Page 7
Page 13
Page 32
2011
Annual Report
Page 3
Page 4
Pages 5 to 6
Page 7
Page 9
Page 19
Page 42
2012
Annual Report
Page 3
Page 4
Pages 5 to 6
Page 7
Page 9
Page 19
Page 42
2010
Annual Report
Page 29
Page 27
2011
Annual Report
Page 39
Page 36
2012
Annual Report
Page 39
Page 36
Apollo 2
Description
Balance Sheet
Income Statement (or equivalent)
Statement showing all changes in equity
(or equivalent note)
Cash Flow Statement
Accounting Policies and Notes
Auditors’ Report
Page
Page
Page
Page
28
30
32
26
Page
Page
Page
Page
38
40
42
34
Page
Page
Page
Page
38
40
42
34
This information in the annual reports has been prepared in a form consistent with that which will be
adopted in Apollo 2’s next published annual financial statements (if the Apollo 2 Scheme is not effected)
having regard to accounting standards and policies and legislation applicable to those financial
statements.
Such information also includes operating/financial reviews as follows:
Description
Objectives
Financial Highlights
Chairman’s Statement
Manager’s Report
Portfolio Summary
Investment Policy
Valuation Policy
2010
Annual Report
Page 3
Page 3
Pages 4 to 5
Page 6
Page 7
Page 13
Page 32
48
2011
Annual Report
Page 3
Page 4
Pages 5 to 6
Page 7
Page 9
Page 19
Page 42
2012
Annual Report
Page 3
Page 4
Pages 5 to 6
Page 7
Page 9
Page 19
Page 42
Apollo 4
2010
Annual Report
2011
Annual Report
2012
Annual Report
Balance Sheet
Page 29
Page 39
Page 39
Income Statement (or equivalent)
Statement showing all changes in equity
(or equivalent note)
Page 27
Page 36
Page 36
Page 28
Page 38
Page 38
Cash Flow Statement
Accounting Policies and Notes
Page 30
Page 32
Page 40
Page 42
Page 40
Page 42
Auditors’ Report
Page 26
Page 34
Page 34
Description
This information in the annual reports has been prepared in a form consistent with that which will be
adopted in Apollo 4’s next published annual financial statements (if the Apollo 4 Scheme is not effected)
having regard to accounting standards and policies and legislation applicable to those financial
statements.
Such information also includes operating/financial reviews as follows:
2010
Annual Report
2011
Annual Report
2012
Annual Report
Page 4
Page 3
Page 3
Page 4
Pages 5 to 6
Page 4
Pages 5 to 6
Page 4
Pages 5 to 6
Manager’s Report
Portfolio Summary
Page 7
Page 8
Page 7
Page 9
Page 7
Page 9
Investment Policy
Page 15
Page 19
Page 19
Valuation Policy
Page 32
Page 42
Page 42
Description
Objectives
Financial Highlights
Chairman’s Statement
49
PART VIII
PRO FORMA FINANCIAL INFORMATION
ACCOUNTANT’S REPORT ON THE PRO FORMA FINANCIAL INFORMATION
The Directors
Octopus Apollo VCT 3 plc
20 Old Bailey
London
EC4M 7AN
A1: 20.4.2
A1: 20.2
Matrix Corporate Capital LLP
One Vine Street
London
W1J 0AH
17 August 2012
Dear Sirs
Octopus Apollo VCT 3 plc (‘‘the Company’’)
We report on the pro forma financial information (‘‘the pro forma financial information’’) set out in Part VIII
of the prospectus dated 17 August 2012 (‘‘Prospectus’’), which has been prepared on the basis
described, for illustrative purposes only, to provide information about how the Schemes (as defined in
the Prospectus) might have affected the financial information presented on the basis of the accounting
policies adopted by the Company in preparing the financial statements for the year ended 31 January
2012. This report is required by paragraph 20.2 of Annex I of the Commission Regulation (EC) 809/2004
and is given for the purpose of complying with that item and for no other purpose.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent
there provided, to the fullest extent permitted by law we do not assume any responsibility and will not
accept any liability to any other person for any loss suffered by any such other person as a result of,
arising out of, or in connection with this report or our statement, required by and given solely for the
purposes of complying with paragraph 23.1 of Annex I to the Commission Regulation (EC) 809/2004,
consenting to its inclusion in the Prospectus.
Responsibilities
It is the responsibility of the directors of the Company to prepare the pro forma financial information in
accordance with item 20.2 of Annex I of the Commission Regulation (EC) 809/2004.
It is our responsibility to form an opinion, as required by item 7 of Annex II of the Prospectus Directive
Regulation, as to the proper compilation of the pro forma financial information and to report that opinion
to you.
In providing this opinion we are not updating or refreshing any reports or opinions previously made by us
on any financial information used in the compilation of the pro forma financial information, nor do we
accept responsibility for such reports or opinions beyond that owed to those to whom those reports or
opinions were addressed by us at the dates of their issue.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making
this report, which involved no independent examination of any of the underlying financial information,
consisted primarily of comparing the unadjusted financial information with the source documents,
considering the evidence supporting the adjustments and discussing the pro forma financial information
with the directors of the Company.
We planned and performed our work so as to obtain the information and explanations we considered
necessary in order to provide us with reasonable assurance that the pro forma financial information has
been properly compiled on the basis stated and that such basis is consistent with the accounting policies
of the Company.
50
Our work has not been carried out in accordance with auditing or other standards and practices generally
accepted in other jurisdictions and accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
Opinion
In our opinion:
A2.7
.
the pro forma financial information has been properly compiled on the basis stated; and
.
such basis is consistent with the accounting policies of the Company.
Declaration
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the
Prospectus and declare that we have taken all reasonable care to ensure that the information contained
in this report is, to the best of our knowledge, in accordance with the facts and contains no omission
likely to affect its import. This declaration is included in the Prospectus in compliance with paragraph 1.2
of Annex I of the Commission Regulation (EC) 809/2004.
Yours faithfully
Scott-Moncrieff
51
A3: 10.3
PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information on the Company has been prepared for illustrative
purposes only, to show the impact of the Schemes, the Enhanced Buyback Facility and the Offer on the
Company’s audited net assets as at 31 January 2012 on the basis that the Schemes and the acquisition
of the investment portfolio and all of the other assets and liabilities of the Target VCTs by the Company
had been completed and the Enhanced Buyback Facility and the Offer had been fully subscribed on that
date. This pro forma financial information has been prepared in a manner consistent with the accounting
policies of the Company and the Target VCTs as adopted in their last published accounts.
A2:
A2:
A2:
A2:
1
2
4
5
The pro forma financial information has been prepared for illustrative purposes only and, because of its
nature, addresses a hypothetical situation and, therefore, does not represent the Company’s actual
financial position or results:
Adjustments
Acquisition Acquisition Acquisition
of
of
of
the assets the assets the assets
and
and
and
liabilities of liabilities of liabilities of
Company
Apollo 1
Apollo 2
Apollo 4
(£’000)
(£’000)
(£’000)
(£’000)
(Note 1)
(Note 2)
(Note 2)
(Note 2)
Expenses
of the
Schemes
(£’000)
(Note 3)
Enhanced
Buyback
Facility and
Offer
adjustments
(£’000)
(Note 4)
Enlarged
Company
pro forma
(£’000)
(Note 5)
Investments (at fair value)
Debtors
Other current assets
Cash at bank and in hand
Creditors: amounts falling
due within one year
Net current assets
19,671
374
3,059
1,447
5,866
114
768
1,462
5,866
114
768
1,462
9,757
189
1,161
130
(214)
4,666
(106)
2,238
(106)
2,238
(45)
1,435
(372)
(372)
(2,800)
27,200
(3,643)
37,405
Net assets
24,337
8,104
8,104
11,192
(372)
27,200
78,565
30,000
41,160
791
35,756
4,501
Notes:
A3: 8.1
1.
The financial information on the Company has been extracted without material adjustment from the Company’s audited
Annual Report for the year ended 31 January 2012 as incorporated into this Prospectus in Part VII of this document.
2.
The acquired assets and liabilities of the Target VCTs are the assets and liabilities of the Target VCTs as extracted without
material adjustment from the Target VCTs audited annual reports for year ended 31 January 2012 as incorporated into this
Prospectus in Part VII of this document.
A2: 3
3.
Total costs of approximately £371,600 (inclusive of VAT) are expected to be incurred in relation to the Schemes and will be
borne by all the Companies by their respective merger net assets (ignoring merger costs).
A2: 6
4.
The gross proceeds (assuming full subscription and utilisation in full of the over-allotment facility) expected to be raised
under the Offer is £30 million. On the same basis, the Offer costs, ignoring trail commission, are expected to be a maximum
of £1.5 million. No additional funds will be raised through the Enhanced Buyback Facility. Based on the illustrative merger
calculations set out in Part II of this document, the latest NAV of a Share as at 30 April 2012 and assuming the Enhanced
Buyback Facility is fully subscribed, the costs of the Enhanced Buyback Facility, ignoring trail commission, is expected to be
a maximum of £1.3 million. The maximum aggregate costs of the Offer and the Enhanced Buyback Facility are, therefore,
expected to be a maximum of £2.8 million.
5.
The pro forma statement of net assets of the Company does not take account of any transactions of the Companies or other
changes in the value of the assets and liabilities of the Companies since 31 January 2012.
6.
The Schemes, the Offer and the Enhanced Buyback Facility are together expected to have an earning enhancing impact on
the earnings of the Company had they occurred on 1 February 2012.
52
PART IX
INVESTMENT PORTFOLIOS AND PRINCIPAL INVESTMENTS
OF THE COMPANY AND THE TARGET VCTS
The following unaudited information represents all the investments of the Company and the Target VCTs
as at the date of this document.
A15: 8.2
Investment information (being investment amounts, holdings and valuations) in this Part IX has been
sourced from the Company’s and the Target VCT’s unaudited management accounts for the period to 30
April 2012, save for the valuation of Salus Services 1 Holdings Limited which has subsequently been
revalued following a distribution of £9,663,457 (in aggregate to the Companies) on 27 July 2012 and a
corresponding increase to the cash at bank and an investment into Borro Loan 2 Limited on 3 August
2012 which increased the valuation of the Company’s holding by £500,000 with a corresponding
decrease to cash at bank.
A1: 20.4.3
A1: 23.2
In respect of the information on investee companies’ sales, profits and losses and net assets, these have
been taken from the latest financial year end accounts published by those investee companies as
referred to in this Part IX. The information on the investee companies is, for the purpose of this
paragraph, ‘‘Third Party Information’’. The Third Party Information has been accurately reproduced and,
as far as the Company is aware and is able to ascertain from information published by those third
parties, no facts have been omitted which would render the reproduced information inaccurate or
misleading. The valuations as at 30 April 2012 (or as otherwise referred to above in respect of Salus
Services 1 Holdings Limited, Borro Loan 2 Limited and the cash at bank) set out in this Part IX are the
most recent valuations by the relevant Companies. There has been no material change to the portfolios
between 30 April 2012 (or as otherwise referred to above in respect of Salus Services 1 Holdings
Limited, Borro Loan 2 Limited and the cash at bank) and the date of this document.
A3: 10.4
Investments
Unquoted Investments
Clifford Thames Group Limited
CSL DualCom Holdings Limited
Bluebell Telecom Services Limited
Borro Loan 2 Limited
Winnipeg Heat Limited
Technical Software Consultants Limited
Resilient Corporate Services Limited
Shakti Power Limited
Hydrobolt Limited
Carebase (Col) Limited
Tanganyika Heat Limited
Erie Heat Limited
Sula Power Limited
Salus Services 2 Limited
Aashman Power Limited
Project Tristar Limited
Kala Power Limited
Bruce Dunlop & Associates International
Limited
Atlantic Screen International Limited
Donoma Power Limited
Tonatiuh Trading 1 Limited
Salus Services 1 Holdings Limited
Quoted Investments
British Country Inns
Total fixed asset investments
Current asset investment
Cash at bank
Gross assets
Company
Value
(£’000s)
Apollo 1
Value
% (£’000s)
Apollo 2
Value
% (£’000s)
Apollo 4
Value
% (£’000s)
%
3,314
3,382
2,220
700
1,000
750
1,000
1,000
750
479
–
1,000
1,000
–
950
431
425
13.4
13.7
9.0
2.8
4.1
3.0
4.1
4.1
3.0
1.9
–
4.1
4.1
–
3.9
1.7
1.7
1,116
1,042
250
900
500
250
–
413
244
154
500
–
–
–
–
215
142
13.6
12.7
3.0
11.0
6.1
3.1
–
5.1
3.0
1.9
6.1
–
–
–
–
2.6
1.7
1,116
1,042
250
900
500
250
–
413
244
154
500
–
–
–
–
215
142
13.6
12.7
3.0
11.0
6.1
3.1
–
5.1
3.0
1.9
6.1
–
–
–
–
2.6
1.7
1,545
1,444
555
1,000
–
750
1,000
–
–
231
–
–
–
1,000
–
–
–
13.7
12.8
4.9
8.9
–
6.6
8.9
–
–
2.0
–
–
–
8.8
–
–
–
350
–
–
420
40
1.4
–
–
1.7
0.2
175
–
–
–
14
2.1
–
–
–
0.2
175
–
–
–
14
2.1
–
–
–
0.2
–
600
500
–
19
–
5.3
4.4
–
0.2
50
0.2
–
–
–
–
–
–
19,261
1,479
3,927
24,667
78.1
6.0
15.9
100
5,915
148
2,129
8,192
72.2
1.8
26.0
100
5,915
148
2,128
8,191
72.2
1.8
26.0
100
8,644
556
2,101
11,301
76.5
4.9
18.6
100
53
Largest investments of the Company and Target VCTs
Set out below are further details of the largest fixed asset investments of the Company and the Target
VCTs representing more than 50% of the gross assets of each of the Company and the Target VCTs
(including investments representing 5% of each of the gross assets of each of the Company and Target
VCTs) as at the date of this document.
Clifford Thames Group Limited
Clifford Thames is a market leading provider of consultancy and business
outsourcing services for the automotive industry, and is a key partner of most of
the world’s leading car manufacturers. With offices in eight countries, Clifford
Thames has a well-established and impressive client list including Ford, GM
Europe, Jaguar Land Rover, Mazda and Fiat. They are based in Chelmsford, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended 31
March 2011
£
1,597,000
1,172,000
11,684,000
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets (%)
Company
Equity
Loan stock
2.8
–
462
2,583
462
2,852
1.9
11.5
Apollo 1
Equity
Loan stock
1.4
–
222
743
222
894
2.8
10.8
Apollo 2
Equity
Loan stock
1.4
–
222
743
222
894
2.8
10.8
Apollo 4
Equity
Loan stock
2.0
–
308
1,028
307
1,238
2.7
11.0
54
CSL Dualcom Holdings Limited
CSL DualCom is the UK’s leading supplier of dual path signalling devices, which
link burglar alarms to the police or a private security firm. The devices
communicate using a telephone line or broadband connection and a wireless
link from Vodafone, which has been a partner since 2000. DualCom has
developed a number of new products for the sector, which have enabled the
business to steadily grow its market share of new connections and its profitability
since the initial investment. They are based in Harefield, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended 31
March 2011
£
1,962,919
751,831
2,865,176
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets (%)
Company
Equity
Loan stock
1.0
–
220
3,162
220
3,162
0.9
12.8
Apollo 1
Equity
Loan stock
0.3
–
68
975
68
974
0.9
11.8
Apollo 2
Equity
Loan stock
0.3
–
68
975
68
974
0.9
11.8
Apollo 4
Equity
Loan stock
0.4
–
94
1,350
94
1,350
0.8
12.0
Bluebell Telecom Services Limited
Bluebell provides landline, mobile and data solutions to businesses, helping to cut
costs and improve efficiency through simple rationalisation and more effective
deployment of voice and data services. They are based in Newcastle, UK.
Accounts
for the year
ended 30
April 2011
£
Profit before tax
Retained profit
Net assets
(173,949)
(271,733)
4,580,368
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets (%)
Company
Equity
Loan stock
4.4
–
214
1,786
214
2,006
0.9
8.1
Apollo 1
Equity
Loan stock
0.5
–
24
201
25
225
0.3
2.7
Apollo 2
Equity
Loan stock
0.5
–
24
201
25
225
0.3
2.7
Apollo 4
Equity
Loan stock
1.1
–
54
446
54
501
0.5
4.4
55
Borro Loan 2 Limited
Borro Loan 2 limited is a 100% subsidiary of ‘Borro Limited’ - an online pawn
broker, providing short term loans secured against high value assets. They are
based in Milton Keynes, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended - n/a
£
Borro Loan 2 Limited has not yet
passed its first accounting period
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
0.0
–
–
700
–
700
0.0
2.8
Apollo 1
Equity
Loan stock
0.0
–
–
900
–
900
0.0
11.0
Apollo 2
Equity
Loan stock
0.0
–
–
900
–
900
0.0
11.0
Apollo 4
Equity
Loan stock
0.0
–
–
1,000
–
1,000
0.0
8.9
Winnipeg Heat Limited
Winnipeg Heat Limited is searching for a suitable area to construct and operate
ground source heat pumps. They are based in London, UK.
Accounts
for the year
ended - n/a
£
Profit before tax
Retained profit
Net assets
Winnipeg Heat Limited has not yet
passed its first accounting period end
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
49.9
–
300
700
300
700
1.3
2.8
Apollo 1
Equity
Loan stock
25.0
–
150
350
150
350
1.8
4.3
Apollo 2
Equity
Loan stock
25.0
–
150
350
150
350
1.8
4.3
Apollo 4
Equity
Loan stock
–
–
–
–
–
–
–
–
56
Technical Software Consultants Limited
Technical Software Consultants Limited specialise in developing non-destructive
oil pipe crack detection systems. They are based in Milton Keynes, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended
31 December
2010
£
Abbreviated accounts only
1,576,477
1,577,457
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
2.5
–
75
675
75
675
0.3
2.7
Apollo 1
Equity
Loan stock
0.8
–
25
225
25
225
0.3
2.8
Apollo 2
Equity
Loan stock
0.8
–
25
225
25
225
0.3
2.8
Apollo 4
Equity
Loan stock
2.5
–
75
675
75
675
0.7
5.9
Resilient Corporate Services Limited
Resilient Corporate Services Limited constructed and operates a solar renewable
energy site at a carefully selected location. They are based in London, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended
28 February
2011
£
(16,068)
(16,068)
2,983,932
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
18.2
–
300
700
300
700
1.3
2.8
Apollo 1
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 2
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 4
Equity
Loan stock
18.2
–
300
700
300
700
2.7
6.2
57
Shakti Power Limited
Shakti Power Limited constructed and operates a solar renewable energy site at a
carefully selected location in Dunsfold, Surrey, UK.
Profit before tax
Retained profit
Net assets
Accounts
for the year
ended - n/a
£
Shakti Power Limited has not yet
passed its first accounting period end
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
26.1
–
1000
0
1000
0
4.1
0.0
Apollo 1
Equity
Loan stock
10.8
–
413
0
413
0
5.1
0.0
Apollo 2
Equity
Loan stock
10.8
–
413
0
413
0
5.1
0.0
Apollo 4
Equity
Loan stock
–
–
–
–
–
–
–
–
Tanganyika Heat Limited
Tanganyika Heat Limited is searching for a suitable area to construct and operate
ground source heat pumps. They are based in London, UK.
Accounts
for the year
ended - n/a
£
Profit before tax
Retained profit
Net assets
Tanganyika Heat Limited has not yet
passed its first accounting period end
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 1
Equity
Loan stock
24.9
–
150
350
150
350
1.8
4.3
Apollo 2
Equity
Loan stock
24.9
–
150
350
150
350
1.8
4.3
Apollo 4
Equity
Loan stock
–
–
–
–
–
–
–
–
58
Salus Services 2 Limited
Salus Services 2 Limited is currently seeking a suitable site in which to construct
an elderly care home. They are based in Birmingham, UK.
Profit before tax
Retained profit
Net assets
Accounts for
the year
ended
30 November
2011
£
(5,089)
(5,089)
944,911
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 1
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 2
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 4
Equity
Loan stock
49.9
–
300
700
300
700
2.7
6.1
Atlantic Screen International Limited
Atlantic Screen International Limited was established to create and exploit music
for international film and television productions. It does so by commissioning,
creating and owning original scores which are written and recorded specifically
for inclusion in international film and television projects. They are based in
Wiltshire, UK.
Accounts for
the year
ended - n/a
£
Profit before tax
Retained profit
Net assets
Atlantic Screen International Limited has not
yet passed its first accounting period end
Equity
percentage
(%)
Accounting
cost (£’000)
Valuation
(£’000)
Percentage
of gross
assets
(%)
Company
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 1
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 2
Equity
Loan stock
–
–
–
–
–
–
–
–
Apollo 4
Equity
Loan stock
30.0
–
600
0
600
0
5.3
0.0
59
PART X
TAX POSITION OF SHAREHOLDERS OF THE COMPANY AND TARGET VCTS
The following paragraphs apply to the Company and to persons holding Shares as an investment who
are the absolute beneficial owners of such Shares and are resident in the UK. They may not apply to
certain classes of persons, such as dealers in securities. The following information is based on current
UK law and practice, is subject to changes therein, is given by way of general summary and does not
constitute legal or tax advice.
If you are in any doubt about your position, or if you may be subject to a tax in a jurisdiction
other than the UK, you should consult your independent financial adviser.
The Schemes
1.
Shareholders
The implementation of the Schemes will not affect the VCT status of the Company as a VCT or the
reliefs obtained by Shareholders on subscription for existing Shares. Although the Company will be
required to pay UK stamp duty or stamp duty reserve tax on the transfer to it of the assets and liabilities
of the Target VCTs (which form part of the estimated merger costs being allocated to the Company and
the Target VCTs), no UK stamp duty or stamp duty reserve tax will be payable directly by Shareholders
as a result of the implementation of the Scheme.
2.
Target VCTs’ Shareholders
The effective exchange of Target VCTs’ Shares for New Shares will not constitute a disposal of such
shares for the purposes of UK taxation. Instead, the new holding of New Shares will be treated as having
been acquired at the same time and at the same cost as the existing Target VCTs’ Shares from which
they are derived. Any capital gains tax deferral relief obtained on subscription of the existing Target
VCTs’ Shares will not, therefore, be crystallised for payment, but will be transferred to the New Shares.
For Target VCTs’ Shareholders holding (together with their associates) more than 5% in the share
capital of any one of the Target VCTs, clearance has been obtained from HMRC in terms of Section 138
of TCGA 1992 that the treatment described above for persons who (together with their associates) own
less than 5% of the share capital of any one of the Target VCTs will also apply to them.
Dissenting Target VCTs’ Shareholders whose holdings are purchased for cash at the break value price
shall be treated as having disposed of their existing Target VCT shares. The Target VCTs should still be
able to claim the benefit of VCT status and the dissenting Target VCTs’ Shareholders should not be
subject to any UK taxation in respect of any capital gains arising on disposal.
However, the purchase of their holdings by the Liquidators will constitute a disposal in the Target VCTs
and a dissenting Target VCT shareholder will be liable to pay any capital gains tax for which such
dissenting Target VCT shareholder obtained deferral relief on subscription. If dissenting Target VCTs’
Shareholders have disposed of their shares within the holding period required to retain upfront tax relief,
income tax relief on those subscriptions will also be repayable.
3.
HMRC Clearances
Clearance has been obtained from HMRC in respect of the Schemes under Section 701 ITA 2007 and
Section 138 TCGA 1992. With regard to the former, the receipt of New Shares should not, except in the
case of dealers, fail to be regarded as an income receipt for the purposes of UK taxation.
Clearance has also been obtained from HMRC that the Schemes meet the requirements of the Merger
Regulations and as such the receipt by Target VCTs’ Shareholders of New Shares should not prejudice
tax reliefs obtained by Shareholders on existing Shares in the Company and should not be regarded as a
disposal.
4.
Overseas Shareholders
Shareholders not resident in the UK should seek their own professional advice as to the consequences
of making and holding an investment in a VCT as they may be subject to tax in other jurisdictions as well
as in the UK.
60
The Enhanced Buyback Facility and the Offer
The tax reliefs set out below are those currently available to individuals aged 18 or over who subscribe
for New Shares under the Enhanced Buyback Facility and/or the Offer and will be dependent on
personal circumstance. Whilst there is no specific limit on the amount of an individual’s acquisition of
shares in a VCT, tax reliefs will only be given to the extent that the total of an individual’s subscriptions or
other acquisitions of shares in VCTs in any tax year do not exceed £200,000. Qualifying Investors who
intend to invest more than £200,000 in VCTs in any one tax year should consult their professional
advisers.
1.
General VCT Tax Reliefs
(a)
(i)
Income tax
Relief from income tax on investment
A Qualifying Investor subscribing for New Shares will be entitled to claim income tax relief on amounts
subscribed up to a maximum of £200,000 invested in VCTs in any tax year.
To obtain relief a Qualifying Investor must subscribe on their own behalf although the New Shares may
subsequently be transferred to a nominee.
The relief is given at the rate of 30% on the amount subscribed regardless of whether the Qualifying
Investor is a higher rate, additional rate or basic rate tax payer, provided that the relief is limited to the
amount which reduces the Qualifying Investor’s income tax liability to nil. Investments to be used as
security for or financed by loans may not qualify for relief, depending on the circumstances.
(ii)
Dividend relief
A Qualifying Investor, who acquires shares in VCTs in any tax year costing up to a maximum of
£200,000, will not be liable to income tax on dividends paid on those shares and there is no withholding
tax thereon.
(iii)
Purchases in the market
A Qualifying Investor who purchases existing shares in the market will be entitled to claim dividend relief
(as described in paragraph 1(a)(ii) above) but not relief from income tax on the investment (as described
in paragraph 1(a)(i) above).
(iv)
Withdrawal of relief
Relief from income tax on a subscription for VCT shares (including New Shares) will be withdrawn if the
VCT shares are disposed of (other than between spouses or on death) within five years of issue or if the
VCT loses its approval within this period as detailed below.
Dividend relief ceases to be available once the Qualifying Investor ceases to own VCT shares in respect
of which it has been given or if the VCT loses its approval within this period as detailed below.
(b)
Capital gains tax
(i)
Relief from capital gains tax on the disposal of VCT shares
A disposal by a Qualifying Investor of VCT shares will give rise to neither a chargeable gain nor an
allowable loss for the purposes of UK capital gains tax. The relief is limited to the disposal of VCT shares
acquired within the limit of £200,000 for any tax year.
(ii)
Purchases in the market
An individual purchaser of existing shares in the market will be entitled to claim relief from capital gains
tax on disposal (as described in paragraph b(i) above).
(c)
Loss of VCT approval
For a company to be fully approved as a VCT it must meet the various requirements for full approval as
set out below.
If a company which has been granted approval as a VCT subsequently fails to comply with the
conditions for approval, approval as a VCT may be withdrawn. In these circumstances, relief from
income tax on the initial investment is repayable unless loss of approval occurs more than five years
after the issue of the relevant VCT shares. In addition, relief ceases to be available on any dividend paid
in respect of profits or gains in any accounting period ending when VCT status has been lost and any
61
gains on the VCT shares up to the date from which loss of VCT status is treated as taking effect will be
exempt, but gains thereafter will be taxable.
(d) Overseas investors
Investors not resident in the UK should seek professional advice as to the consequences of making an
investment in a VCT or in the UK generally.
2.
Tax Consequences of the Enhanced Buyback Facility
(a)
Disposal of Existing Shares by Shareholders
The purchase of Existing Shares by the Company will be treated, for tax purposes, as a disposal.
(i)
Income tax consequences
The disposal is treated as a repayment of the amount subscribed for each Existing Share. To the extent
that the proceeds of the disposal are greater than the amount subscribed for on each Existing Share, the
Company will be treated as having made a distribution of the amount of the excess (if any). This amount
of excess is a distribution received by a Shareholder which is subject to income tax.
The Tender Price of an Existing Share, based on the latest published net asset values as at 30 April
2012 of the Shares would be 91.4p. Shareholders will be subject to an income tax charge on any excess
of the Tender Price that is above the original issue price of the Shares that are bought back.
A disposal of Existing Shares which have not been held for the minimum five year holding period will be
subject to clawback by HMRC of any upfront income tax reliefs obtained on original subscription.
(ii)
Capital gains tax consequences
If a Shareholder qualifies for VCT reliefs in respect of the Existing Shares sold, the disposal will give rise
to neither a chargeable gain nor an allowable loss for the purposes of capital gains tax.
In respect of other Existing Shares, capital gains tax could be payable where shares were acquired from
a previous shareholder (rather than having been subscribed for directly from the Company). If the
participating Shareholder acquired the Existing Shares for an amount (the ‘‘Acquisition Price’’) less than
their subscription price, the part of the Tender Price in excess of the Acquisition Price up to the
subscription price will be subject to capital gains tax.
If the Tender Price for Existing Shares, which do not qualify for the capital gains tax disposal exemption,
is less than the Acquisition Price for those shares, Shareholders should be entitled to an allowable loss.
Where Shareholders acquired Existing Shares on more than one occasion, Existing Shares acquired
earlier are treated as having been disposed of prior to Existing Shares acquired later (i.e. first in, first
out).
(iii)
Stamp duty
No stamp duty is payable by Shareholders in respect of the Existing Shares sold or the New Shares
subscribed.
The Company will pay stamp duty at the rate of 0.5% of the aggregate amount paid for Existing Shares
purchased from a Shareholder under the Enhanced Buyback Facility (rounded up to the nearest £5).
(b) Subscription for New Shares by Shareholders and HMRC confirmation
HMRC have confirmed that usual VCT tax reliefs, including the upfront income tax relief, will be available
on the New Shares issued pursuant to the Enhanced Buyback Facility.
3.
Obtaining Tax Reliefs
The Company will provide to each Qualifying Investor a certificate which the Qualifying Investors may
use to claim income tax relief, either by obtaining from HMRC an adjustment to their tax coding under the
PAYE system or by waiting until the end of the tax year and using their tax return to claim relief.
4.
Overseas Shareholders
Shareholders not resident in the UK should seek their own professional advice as to the consequences
of making and holding an investment in a VCT as they may be subject to tax in other jurisdictions as well
as in the UK.
62
PART XI
TAX POSITION OF THE COMPANY
1.
Qualification as a VCT
To qualify as a VCT, a company must be approved as such by HMRC. To obtain such approval it must:
(a)
not be a close company;
(b)
have each class of its ordinary share capital listed on a regulated market;
(c)
derive its income wholly or mainly from shares or securities;
(d)
have at least 70% by VCT Value of its investments in shares in Qualifying Investments, 30% of
which must be eligible shares (70% for funds raised after 5 April 2011);
(e)
have at least 10% by VCT Value of each Qualifying Investment in eligible shares;
(f)
not have more than 15% by VCT Value of its investments in a single company or group (other than
a VCT or a company which would, if its shares were listed, qualify as a VCT);
(g)
not retain more than 15% of its income derived from shares and securities in any accounting
period; and
(h)
not invest in a single company or group in excess of the annual limit.
The term ‘eligible shares’ means ordinary shares which do not carry any rights to be redeemed or a
preferential right to assets on a winding-up or dividends (in respect of the latter, where the right to the
dividend is cumulative or, where the amount or dates of payment of the dividend may be varied by the
company, a shareholder or any other person).
2.
Qualifying Investments
A Qualifying Investment consists of shares or securities first issued to the VCT (and held by it ever since)
by a company satisfying the conditions set out in Chapters 3 and 4 of Part 6 of ITA 2007.
The conditions are detailed, but include that the company must be a Qualifying Company, have gross
assets not exceeding £15 million immediately before and £16 million immediately after the investment,
apply the money raised for the purposes of a qualifying trade within certain time periods, cannot be
controlled by another company, have fewer than 250 full-time (equivalent) employees and at the time of
investment do not obtain more than £5 million of investment from state aided risk capital measure in any
rolling 12 month period. In certain circumstances, an investment in a company by a VCT can be split into
a part which is a qualifying holding and a part which is a non-qualifying holding.
3.
Qualifying Companies
A Qualifying Company must be unquoted (for VCT purposes this includes companies whose shares are
traded on PLUS and AIM) and must carry on a qualifying trade. For this purpose certain activities are
excluded (such as dealing in land or shares or providing financial services). The qualifying trade must
either be carried on by, or be intended to be carried on by, the Qualifying Company or by a qualifying
subsidiary at the time of the issue of shares or securities to the VCT (and at all times thereafter).
The company must have a permanent establishment in the UK, but the company need not be UK
resident. A company intending to carry on a qualifying trade must begin to trade within two years of the
issue of shares or securities to the VCT and continue it thereafter.
A Qualifying Company may have no subsidiaries other than qualifying subsidiaries which must, in most
cases, be at least 51% owned.
4.
Approval as a VCT
A VCT must be approved at all times by HMRC. Approval has effect from the time specified in the
approval.
A VCT cannot be approved unless the tests detailed above are met throughout the most recent complete
accounting period of the VCT and HMRC is satisfied that they will be met in relation to the accounting
period of the VCT which is current when the application is made. However, where a VCT raises further
63
funds, VCTs are given grace periods to invest those funds before such further funds become subject to
the tests.
However, to aid the launch of a VCT, HMRC may give provisional approval if satisfied that conditions (b),
(c), (f) and (g) in paragraph 1 above will be met throughout the current or subsequent accounting period
and condition (d) in paragraph 1 above will be met in relation to an accounting period commencing no
later than three years after the date of provisional approval.
The Company has obtained approval as a VCT from HMRC. The Board considers that the Company has
conducted its affairs and will continue to do so to enable it to qualify as a VCT.
5.
Withdrawal of approval
Approval of a VCT (full or provisional) may be withdrawn by HMRC if the various tests set out above are
not satisfied. The exemption from corporation tax on capital gains will not apply to any gain realised after
the point at which VCT status is lost.
Withdrawal of approval generally has effect from the time when notice is given to the VCT but, in relation
to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting
period commencing immediately after the last accounting period of the VCT in which all of the tests were
satisfied.
Withdrawal of provisional approval has effect as if provisional approval had never been given (including
the requirement to pay corporation tax on prior gains).
The above is only a summary of the conditions to be satisfied for a company to be treated as a
VCT.
64
PART XII
ADDITIONAL INFORMATION
1.
The Company
1.1
The Company was incorporated and registered in England and Wales under CA 1985 as a public
company with limited liability on 7 June 2006, with registered number 05840377 and the name
Octopus Protected VCT plc. The Company changed its name to Octopus Apollo VCT 3 plc on 12
August 2010. The Board are proposing to change the name of the Company to Octopus Apollo
VCT plc, subject to completion of the merger and Shareholder approval. The principal legislation
under which the Company operates is CA 2006 (and regulations made thereunder). The legal and
commercial name of the Company is Octopus Apollo VCT 3 plc. The Company is not regulated by
the FSA or an equivalent European Economic Area regulator, but it is subject to regulation by
HMRC under the VCT rules in order to qualify as a VCT.
1.2
On 14 July 2006, the Registrar of Companies issued the Company with a trading certificate under
Section 117 of CA 1985 (now Section 761 of CA 2006) entitling it to commence business.
1.3
The Company’s registered office is at 20 Old Bailey, London EC4M 7AN. The Company is
domiciled in England and does not have, nor has it had since incorporation, any subsidiaries or
employees.
2.
2.1
Share Capital
The authorised share capital of the Company on incorporation was £5,000,000 divided into
49,500,000 ordinary shares of 10p each and 50,000 redeemable non-voting shares of 100p each.
Resolution 1 to be proposed at the General Meeting will approve an amendment to the Articles to
revoke the share capital limit of £5,000,000 now deemed contained in the Articles under CA 2006.
2.2
To enable the Company to obtain a certificate under Section 117 of CA 1985 (now Section 761 of
CA 2006), on 13 July 2006, 50,000 redeemable shares of £1 each were allotted by the Company at
par for cash, paid up as to one quarter of their nominal value. Such redeemable shares were paid
up in full and redeemed in full out of the proceeds of the Company’s public offer in 2006. The
authorised but unissued shares so arising were automatically redesignated as ordinary shares of
10p each in the capital of Company.
2.3
On 13 July 2006, the Company passed a resolution approving, subject to the sanction of the High
Court, the cancellation of the amount standing to the credit of the share premium account (such
cancellation being subsequently confirmed by the High Court on 10 October 2007 and registered at
Companies House on 24 October 2007).
2.4
As at 31 January 2012, the date to which the last audited accounts have been prepared, the issued
share capital of the Company was 26,771,709 (£2,677,170.90 nominal).
2.5
The Company bought back 900,000 Shares on 25 July 2012 and 815,025 Shares on 31 July 2012.
2.6
As at 16 August 2012 (this being the latest practicable date prior to publication of this document)
the Company had 25,056,684 Shares (£2,505,668.40 nominal) in issue (all fully paid up) and no
share or loan capital of the Company was under option or had been agreed, conditionally or
unconditionally, to be put under option, nor did the Company hold any share capital in treasury.
2.7
The following resolutions were passed at the annual general meeting of the Company held on 26
July 2012:
2.7.1 that the directors be generally and unconditionally authorised in accordance with section 551 of CA
2006 to allot shares up to a maximum of 2,667,170 shares (representing approximately 10% of the
ordinary share capital in issue at that date) this authority to expire at the later of the conclusion of
the Company’s annual general meeting next following the passing of this resolution and the expiry
of 15 months from the passing of the resolution (unless previously revoked, varied or extended by
the Company in general meeting but so that such authority allows the Company to make offers or
agreements before the expiry thereof which would or might require relevant securities to be allotted
after the expiry of such authority);
2.7.2 that the directors be empowered pursuant to Section 571(1) of CA 2006 to allot or make offers or
agreements to allot equity securities (as defined in Section 560(1) of CA 2006) for cash pursuant to
65
A15: 1.3
A3: 4.2
A1: 5.1.3
A3: 4.6
A1: 21.1.7
the authority conferred by the resolution in paragraph 2.7.1 above as if Section 560(1) of CA 2006
did not apply to any such allotments and so that:
(a)
reference to allotment in this resolution shall be construed in accordance with s560(1) of CA
2006; and
(b)
the power conferred by this resolution shall enable the Company to make any offer or
agreement before the expiry of the said power which would or might require equity securities
to be allotted after the expiry of the said power and the Directors may allot equity securities in
pursuance of such offer or agreement notwithstanding the expiry of such power
this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of
the annual general meeting of the Company next following the passing of this resolution or, if
earlier, on the expiry of 15 months from the passing of this resolution; and
2.7.3 that, the Company be and is generally and unconditionally authorised to make market purchases
(within the meaning of Section 693(4) of CA 2006) of ordinary shares of 10p each in the Company
provided that:
2.8
(a)
the maximum number of ordinary shares so authorised to be purchased shall not exceed 10%
of the present issued ordinary share capital of the Company;
(b)
the minimum price which may be paid for an ordinary share shall be 10p;
(c)
the maximum price, exclusive of expenses, which may be paid for an ordinary share is an
amount equal to 105% of the average of the middle market quotations for an ordinary share
taken from the London Stock Exchange Daily Official List for the five business days
immediately preceding the day on which the ordinary share is contracted to be purchased;
(d)
the authority conferred comes to an end at the conclusion of the next annual general meeting
of the Company or upon the expiry of 15 months from the passing of this resolution,
whichever is the later; and
(e)
that the Company may enter into a contract to purchase its ordinary shares under this
authority prior to the expiry of this authority which would or might be completed wholly or
partly after the expiry of the authority.
The following resolutions of the Company will be proposed at the General Meeting of the Company
to be held on 19 September 2012:
2.8.1 That, the existing Articles of the Company be amended by revoking all of the provisions which, by
virtue of paragraph 42 of Schedule 2 of The Companies Act 2006 (Commencement No 8
Transitional Provisions and Savings) Order 2008, are treated as provisions of its Articles.
2.8.2 That, subject to the Apollo 1 Scheme becoming unconditional:
(a)
the acquisition of the assets and liabilities of Apollo 1 on the terms set out in the Circular be
and hereby is approved; and
(b)
the directors of the Company be and hereby are generally and unconditionally authorised in
accordance with Section 551 of CA 2006 to exercise all the powers of the Company to allot
shares in the capital of the Company up to an aggregate nominal amount of £1,150,000 in
connection with the Apollo 1 Scheme, provided that the authority conferred shall expire on the
date falling 18 months from the date of the passing of the resolution (unless renewed, varied
or revoked by the Company in a general meeting).
2.8.3 That, subject to the Apollo 2 Scheme becoming unconditional:
(a)
the acquisition of the assets and liabilities of Apollo 2 on the terms set out in the Circular be
and hereby is approved; and
(b)
in addition to the authorities conferred by the resolution set out at paragraph 2.8.2 above, the
directors of the Company be and hereby are generally and unconditionally authorised in
accordance with Section 551 of CA 2006 to exercise all the powers of the Company to allot
shares in the capital of the Company up to an aggregate nominal amount of £1,150,000 in
connection with the Apollo 2 Scheme, provided that the authority conferred shall expire on the
date falling 18 months from the date of the passing of the resolution (unless renewed, varied
or revoked by the Company in a general meeting).
66
2.8.4 That, subject to the Apollo 4 Scheme becoming unconditional:
(a)
the acquisition of the assets and liabilities of Apollo 4 on the terms set out in the Circular be
and hereby is approved; and
(b)
in addition to the authorities conferred by the resolutions set out at paragraphs 2.8.2 and 2.8.3
above, the directors of the Company be and hereby are generally and unconditionally
authorised in accordance with Section 551 of CA 2006 to exercise all the powers of the
Company to allot shares in the capital of the Company up to an aggregate nominal amount of
£1,700,000 in connection with the Apollo 4 Scheme, provided that the authority conferred
shall expire on the date falling 18 months from the date of the passing of the resolution
(unless renewed, varied or revoked by the Company in a general meeting).
2.8.5 That in addition to the authorities set out at paragraphs 2.8.2 to 2.8.4 above:
(a)
the Company be generally and unconditionally authorised pursuant to Section 701 of the Act
to make market purchases (within the meaning of Section 693(4) of the Act) of its shares of
up to such number of shares as represents 50% of the issued share capital of the Company at
5.00 p.m. on 1 October 2012 (or such later date as the directors may determine) at a fixed
price equal to the latest published net asset value per share prior to the date of purchase
(rounded down to the nearest 0.1p), which fixed price shall, for the purposes of Section 701
(3)(b) of the Act, constitute both the maximum and minimum price that may be paid for the
shares purchased pursuant to, or in contemplation of, an enhanced buyback facility;
(b)
the directors be and hereby are generally and unconditionally authorised in accordance with
Section 551 of the Act to exercise all powers of the Company to allot and issue shares in the
capital of the Company up to such number of shares as represents 50% of the issued share
capital of the Company at 5.00 p.m. on 1 October 2012 (or such later date as the directors
may determine), provided that this power shall be limited to the allotment of shares at a price
per share equal to the latest published net asset value of an existing share prior to the date of
allotment and divided by 0.95 (rounded up to the nearest 0.1p), pursuant to, or in
contemplation of, an enhanced buyback facility;
(c)
the directors be and hereby are empowered pursuant to Sections 570 and 573 of the Act to
allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the
authority referred to at paragraph (b) above as if Section 561(1) of the Act did not apply to any
such allotment, provided that this power shall be limited to the allotment of shares at a price
per share equal to the latest published net asset value of an existing share prior to the date of
allotment and divided by 0.95 (rounded up to the nearest 0.1p) pursuant to, or in
contemplation of, an enhanced buyback facility
and the authority and powers conferred by this resolution shall expire on the conclusion of the
annual general meeting of the Company to be held in 2013, save that the Company may, before
such expiry, make offers or agreements which would or might require shares to be allotted and
purchased and the directors may allot and purchase shares in pursuance of such offer or
agreement notwithstanding that the authority conferred by this resolution has expired.
2.8.6 That in addition to the authorities set out at paragraphs 2.8.2 to 2.8.5 above:
(a)
the directors of the Company be and hereby are generally and unconditionally authorised in
accordance with Section 551 of the Act to exercise all the powers of the Company to allot
shares in the capital of the Company and to grant rights to subscribe for or to convert any
security into shares in the capital of the Company up to an aggregate nominal amount of
£4,600,000, provided that, the authority conferred shall expire on the conclusion of the annual
general meeting of the Company to be held in 2013 (unless renewed, varied or revoked by
the Company in a general meeting) but so that this authority shall allow the Company to make
before the expiry of this authority offers or agreements which would or might require shares to
be allotted or rights to be granted after such expiry;
(b)
the directors of the Company be and hereby are empowered pursuant to Sections 570 and
573 of the Act to allot or make offers or agreements to allot equity securities (which
expression shall have the meaning ascribed to it in Section 560(1) of the Act) for cash
pursuant to the authority referred to at paragraph (a) above or by way of a sale of treasury
shares, as if Section 561(1) of the Act did not apply to such allotment, provided that the power
conferred shall expire on the conclusion of the annual general meeting of the Company to be
67
held in 2013 (unless renewed, varied or revoked by the Company in a general meeting) and
provided further that this power shall be limited to
(i)
the allotment and issue of shares up to an aggregate nominal value of £3,500,000
pursuant to offer(s) for subscription; and
(ii)
the allotment and issue of shares up to an aggregate nominal value of 10% of the issued
share capital of the Company from time to time.
in each case where the proceeds may in whole or part be used to purchase shares; and
(c)
the Company be and hereby is empowered to make one or more market purchases within the
meaning of Section 693(4) of the Act of its own shares (either for cancellation or for the
retention as treasury shares for future re-issue or transfer) provided that:
(i)
the aggregate number of shares which may be purchased shall not exceed 16,489,000
shares;
(ii)
the minimum price which may be paid per share is the nominal value thereof;
(iii)
the maximum price which may be paid per share is an amount equal to the higher of (i)
105% of the average of the middle market quotation per share (of the relevant class)
taken from the London Stock Exchange daily official list for the five business days
immediately preceding the day on which such share is to be purchased; and (ii) the
amount stipulated by Article 5(1) of the Buy Back and Stabilisation Regulation 2003;
(iv)
the authority conferred shall expire on the conclusion of the annual general meeting of
the Company to be held in 2013 (unless renewed, varied or revoked by the Company in
general meeting); and
(v)
the Company may make a contract to purchase shares under the authority conferred
prior to the expiry of such authority which will or may be executed wholly or partly after
the expiration of such authority and may make a purchase of such shares.
2.8.7 That, the amount standing to the credit of the share premium account of the Company as at 17
August 2012 and the amounts credited to the share premium account of the Company pursuant to
the issue of shares, or otherwise, in connection with the Schemes be and hereby are cancelled
2.8.8 That the share premium account of the Company and the capital redemption reserve of the
Company be and hereby are cancelled.
2.8.9 That the articles of association of the Company be amended by:
3.
(i)
the deletion of article 5.1; and
(ii)
the insertion of a new article 107.3 in the following form ‘‘the Company may change its
name by resolution of the Board’’.
Memorandum and Articles of Association
In this paragraph 3, reference to ‘Directors’ means the directors of the Company from time to time,
reference to the ‘Board’ means the board of directors of the Company from time to time.
Memorandum
A1: 21.2.1
The Memorandum, which, by virtue of Section 28 of CA 2006, is now treated as being part of the Articles,
provides that the Company’s principal object and purpose is to carry on the business of a VCT.
68
Articles
The following defined terms shall apply in this section only:
.
‘‘Acts’’ means the Companies Acts as defined in Section 2 of CA 2006; and
.
‘‘Statutes’’ means CA 1985, CA 2006, the Uncertificated Securities Regulations 1995 (SI 1995 No
3272) and every other statute, statutory instrument, rule, order or regulation for the time being in
force concerning companies and affecting the Company.
The following is a summary of the current Articles. Pursuant to certain resolutions being proposed at the
General Meeting of the Company, the Articles are subject to amendment as detailed accordingly in the
summary below and/or referred to at paragraph 2.8 above. Statutory references are subject to as
updated from time to time.
3.1
3.2
3.3
A1: 21.2.3
A3: 4.5
Uncertificated Shares
(i)
Notwithstanding anything in the Articles to the contrary, any shares in the Company may be
issued, held, registered, converted to, transferred or otherwise dealt with in uncertificated
form and converted from uncertificated form to certificated form in accordance with the
Uncertificated Securities Regulations 1995 (SI 1995 No 3272) and practices instituted by the
Operator of the relevant system.
(ii)
The Board may resolve that a class of shares is to become a participating security and may at
any time determine that a class of shares shall cease to be a participating security.
Share Capital
A1: 21.2.8
(i)
The issued share capital of the Company shall not exceed 49,500,000 ordinary shares of 10p
each and 50,000 redeemable shares of £1 each without the approval of the Company in
general meeting. This article is proposed to be deleted pursuant to Resolution 9 being
proposed at the General Meeting.
(ii)
Subject to the provisions of the Statutes and without prejudice to the rights attaching to any
existing shares or class of shares, any share may be issued with such preferred, deferred, or
other special rights or such restrictions as the Company may from time to time by ordinary
resolution determine or, if the Company has not so determined, as the Directors may
determine (but so that no shares shall be issued by the Company carrying any present or
future rights to dividend or to the Company’s assets on a winding-up or to be redeemed or any
other rights which would or might make any ordinary shares then in issue, or which might in
the future be issued, ineligible for subscribers therefore to obtain tax reliefs pursuant to
Schedule 15B of the Income and Corporation Taxes Act 1988 and/or Section 151A, 151B and
Schedule 5C of the Taxes and Chargeable Gains Act 1992 (as amended from time to time)).
(iii)
Subject to the provisions of the Statutes, the Company may issue shares which are liable to
be redeemed at the option of the Company or the shareholder on such terms and in such
manner as the Articles provide.
(iv)
The Company may, with respect to any fully paid shares, issue a share warrant stating that
the bearer of the share warrant is entitled to the shares specified in it and may provide (by
coupons or otherwise) for the payment of future dividends on the shares included in a share
warrant and the bearer of the share warrant shall be deemed to be a member for all purposes.
Such powers may be exercised by the Board, which may determine and vary the conditions
on which share warrants shall be issued.
(v)
In connection with the issue of any shares the Company may exercise all powers of paying
commission and brokerage conferred or permitted by the Statutes.
Call on and forfeiture of shares
Subject to the terms of allotment, the Directors may make calls on members for monies unpaid on
any shares. If any call remains unpaid after the date for payment (being at least 14 clear days
following the call) then the board may, after giving not less than seven clear days’ notice, forfeit
such share and sell or transfer such forfeited shares on such terms as the board may determine.
69
3.4
Transfer of Shares
(i)
Form of Transfer
All transfers of shares which are in certificated form may be effected by transfer in writing in
any usual or common form or in any other form acceptable to the Directors and may be under
hand only. The instrument of transfer shall be signed by or on behalf of the transferor and
(except in the case of fully paid shares) by or on behalf of the transferee. The transferor shall
remain the holder of the shares concerned until the name of the transferee is entered in the
Register in respect thereof.
(ii)
3.5
Right to Refuse Registration
(1)
The Directors may decline to recognise an instrument of transfer relating to shares in
certificated form unless the instrument of transfer is (a) in respect of only one class of
share; (b) is in favour of not more than four transferees; and (c) is lodged at the
registered office of the Company accompanied by the relevant share certificates and
any other evidence as the Directors may reasonably require to show the right of the
transferor to make the transfer.
(2)
The Directors may, in the case of shares in certificated form, in their absolute discretion
and without assigning any reason therefore, refuse to register any transfer of shares
where the shares in question are not fully paid up where such refusal does not restrict
dealings on an open and proper basis.
Alteration of Share Capital
(i)
Increase, consolidation, cancellation and sub-division
The Company may from time to time by ordinary resolution:
(ii)
(a)
consolidate and divide all or any of its share capital into shares of larger nominal amount
than its existing shares; and
(b)
subject to the provisions of the Statutes, sub-divide its shares or any of them into shares
of smaller nominal value.
Fractions
If, as a result of any consolidation or subdivision of shares, any members would become
entitled to fractions of a share, the board may deal with such fractions as it thinks fit.
(iii)
Reduction of capital
Subject to the provisions of the Statutes and to any rights for the time being attached to any
shares, the Company may by special resolution reduce its share capital or any capital
redemption reserve or share premium account or other undistributable reserve in any way.
(iv)
Purchase of own shares
Subject to the provisions of the Statutes and to any rights for the time being attached to any
shares, the Company may purchase any of its own shares of any class.
3.6
Variation of Class Rights
(i)
If the share capital of the Company is divided into shares of different classes any of the rights
for the time being attached to any class of shares in issue (whether or not the Company is
being wound up) may be varied in such manner (if any) as may be provided by such rights or
with the consent in writing of the holders of three-fourths of the issued shares of that class or
with the sanction of a special resolution passed at a separate general meeting of the holders
of those shares.
(ii)
All the provisions in the Articles as to general meetings shall mutatis mutandis apply to every
meeting of the holders of any class of shares save that the quorum at every such meeting
shall be not less than two persons holding or representing by proxy at least one-third of the
issued shares of the class (excluding treasury shares); at any adjourned meeting of such
holders, one person holding shares of the class who is present in person or by proxy shall be
a quorum every holder of shares of the class present in person or by proxy may demand a
70
A1: 21.2.4
poll; and each such holder shall be entitled to one vote for every share of the class held by
him.
3.7
General Meetings
(i)
A1: 21.2.5
Convening of General Meetings
The Company shall within six months of its financial year end hold a general meeting as its
Annual General Meeting. An annual general meeting and any general meeting at which it is
proposed to pass a special resolution or (except as provided by the Statutes) a resolution of
which special notice has been given to the Company, must be called by at least 21 days
notice in writing and any other general meeting by at least 14 days notice in writing. The
period of notice must in each case be exclusive of the day in which the notice is served or
deemed to be served and of the day in which the meeting is to be held.
(ii)
Notice of General Meetings
The notice calling a general meeting shall specify:
(iii)
(a)
whether the meeting is an annual general meeting or an extraordinary general meeting,
(b)
the place, the day and the time of the meeting;
(c)
the general nature of the business to be transacted; and
(d)
with reasonable prominence that a member entitled to attend, speak and vote is entitled
to appoint one or more proxies to attend, speak and vote instead of him and that a proxy
need not also be a member.
Omission to Send Notice
The accidental omission to send a notice of any meeting, or (where forms of proxy are sent
out with notices) to send a form of proxy with a notice to any person entitled to receive the
same, or the non-receipt of a notice of meeting or form of proxy by such a person, shall not
invalidate the proceedings at the meeting.
(iv) Quorum at General Meetings
3.8
(1)
No business shall be transacted at any general meeting unless a quorum is present.
Two members present in person (or by representative) or by proxy and entitled to vote
shall be a quorum.
(2)
If within 15 minutes (or such longer period as the chairman may determine) from the
time appointed for a meeting a quorum is not present or if during a meeting a quorum
ceases to be present, the meeting, if convened on the requisition of members, shall be
dissolved and in any other case shall stand adjourned to such day and to such time
(which must be not less than ten clear days thereafter) and place as may be determined
by the Chairman.
Voting
(i)
Subject to the provisions of the Statutes, to any special terms as to voting on which any
shares may have been issued or may for the time being be held, and to any suspension or
abrogation of voting rights pursuant to these Articles, at any general meeting every member
who is present in person or by proxy or (being a corporation) represented by a duly authorised
representative, not being himself a member shall on a show of hands have one vote and
every member shall on a poll have one vote for each share of which he is the holder.
(ii)
If two or more persons are joint holders of a share, the vote of the senior who has tendered a
vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the
other joint holders and for this purpose seniority shall be determined by the order in which the
names stand in the register of members of each company in respect of the holding.
(iii)
At any general meeting a resolution put to a vote of the meeting shall be decided on a show of
hands, unless (before or on the declaration of the result of the show of hands) a poll is duly
demanded. Subject to the provisions of the Statutes, a poll may be demanded by:
(a)
the chairman of the meeting; or
71
(iv)
3.9
(b)
by at least three members present in person or by proxy and entitled to vote at the
meeting; or
(c)
a member or members present in person or by proxy representing not less than onetenth of the total voting rights of all the members having the right to vote at the meeting;
or
(d)
member or members present in person or by proxy holding shares conferring a right to
vote at the meeting, being shares on which an aggregate sum has been paid up equal to
not less than one-tenth of the total sum paid up on all the shares conferring that right.
No member shall, unless the Directors otherwise determine, be entitled to vote at a general
meeting or at any separate meeting of the holders of any class of shares, either in person or
by proxy, or to exercise any other right or privilege as a member in respect of a share held by
him unless and until all calls together with interest and expenses (if any) or other sums
presently due and payable by him in respect of that share whether alone or jointly with any
other person have been paid to the Company.
Failure to disclose interests in shares
A1: 21.2.7
If any member, or any other person appearing to be interested in shares held by that member, has
been served with a notice under Section 793 of CA 2006 in respect of such shares (or any further
shares which are issued in respect of such default shares) (‘‘default shares’’) and is in default for a
period of 14 days from the date of service of the notice in supplying to the Company the information
thereby required, then the following restrictions shall apply to the default shares for a period
specified by the Company (being a period ending not later than seven days after the earliest of
compliance with the notice or receipt by the Company of notice that the shareholding has been sold
to a third party pursuant to any arm’s length transfer):
(a)
the holder of the default shares shall not be entitled to attend or vote on any question, either in
person or by proxy, at any general meeting of the Company; and
(b)
if the default shares represent at least 0.25% of the issued shares of the same class the
holder of the default shares shall not be entitled to receive any dividend (including shares
issued in lieu of dividend) or to transfer any of the shares (other than by way of an arm’s
length transfer).
3.10 Untraced Members
(i)
(ii)
The Company shall be entitled to sell at the best price reasonably obtainable any share of a
member, or any share to which a person is entitled by virtue of transmission or otherwise by
operation of law, if and provided that:
(a)
during the period of 12 years prior to the date of the publication of the advertisements
referred to below (‘‘Relevant Period’’) at least three dividends have been paid, but not
cashed, in accordance with the Articles in respect of the share to be sold and no
dividend has been claimed in respect of such share;
(b)
during the Relevant Period no communication has been received by the Company from
the member or person entitled by transmission to the share;
(c)
after expiry of the Relevant Period the Company has published notice of its intention to
sell the share in both a national newspaper and in a newspaper circulating in the area in
which the last known address of such member or person appeared;
(d)
during the further period of three months following the date of publication of the said
advertisements and after that period until the exercise of the power to sell the share, the
Company has not received communication from the member or person entitled by
transmission to the share; and
(e)
the Company has given notice to the London Stock Exchange of its intention to make
such sale, if shares of the class concerned are listed or dealt in on that exchange.
The Company shall account to the member or other person entitled to such share for the net
proceeds of such sale by carrying all money in respect thereof to a separate account. The
Company shall be deemed to be a debtor to, and not a trustee for, such member or other
person in respect of such monies.
72
A3: 4.8
3.11 Directors
A1: 21.2.2
(i)
There shall be no less than two and not more than six Directors in the Company (unless
otherwise determined by ordinary resolution).
(ii)
The Directors shall not be required to hold any shares in the Company by way of qualification.
(iii)
Directors may be appointed by ordinary resolution or by the Directors. No person (other than
a director retiring by rotation) shall be appointed or re-appointed at a general meeting unless
he is recommended by the Directors or not less than seven nor more than 42 days before the
date of the meeting (at which the director is to be appointed) notice of a member’s proposed
resolution for the appointment of the prospective director be included in the Company’s
register of directors. Subject to the provisions of the Statutes, the Board may from time to time
appoint one or more of its body to hold any employment or executive office (including that of
Chief Executive or Managing Director) for such term (subject to the provisions of the Statutes)
and subject to such other conditions as the Board thinks fit in accordance with the Articles.
(iv)
At each annual general meeting of the Company one-third of the Directors (or, in the case of
each Company if their number is not a multiple of three, then the nearest number to but not
exceeding one-third) shall retire from office by rotation. The Directors to retire by rotation shall
include (so far as necessary to obtain the number required) any Director who wishes to retire
and not to offer himself for re-election. Any further Directors so to retire shall be those of the
other Directors subject to retirement by rotation who have been longest in office since their
last re-election and so that as between persons who became or were last re-elected Directors
on the same day those to retire shall (unless they otherwise agree among themselves) be
determined by lot. Any Director appointed by the Directors shall hold office only until the next
annual general meeting, when he shall be eligible for re-election, but shall not be taken into
account in determining the Directors to retire by rotation at the meeting.
(v)
A director may be removed from office by an ordinary resolution of the Company, subject to
special notice being given in accordance with the Statutes.
(vi)
The Directors (other than alternate directors) shall be entitled to receive by way of fees for
their services as Directors such sum as the Directors, shall in their discretion determine save
that the maximum aggregate remuneration does not exceed £75,000 per annum (unless
approved by ordinary resolution). The Directors are entitled to be repaid all reasonable
travelling, hotel and other expenses properly incurred by him in or about the performance of
his duties as Director. The board may grant reasonable additional remuneration to any
director who performs any special duties or services outside his ordinary duties.
3.12 Borrowing Powers
A15: 1.2
(i)
The Board may exercise all the powers of the Company to borrow money and to mortgage or
charge its undertaking, property and assets (present and future) and uncalled capital and,
subject to the Acts, to create and issue debentures, loan stock and other securities whether
outright or as collateral security for any debt, liability or obligation of the Company or of any
third party.
(ii)
The Board shall restrict the borrowings of the Company and exercise all voting and other
rights or powers of control exercisable by the Company in relation to its subsidiary
undertakings so as to procure (but as regards subsidiary undertakings only insofar as it can
procure by such exercise) that the aggregate principal amount for the time being outstanding
of all borrowings by the group (excluding money borrowed by one group company from
another and after deducted cash deposited) shall not without the previous sanction of an
ordinary resolution of the Company exceed an amount equal to 50% of the Adjusted Capital
and Reserves (as defined below).
(iii)
The expression ‘‘Adjusted Capital and Reserves’’ means, as shown by the latest audited
consolidated balance sheet of the Company subject to deductions and adjustments set out in
the articles of association of the Company, a sum equal to the aggregate of (a) the amount
paid up on the issued share capital of the Company; and (b) the amount standing to the credit
of the reserves including without limitation any share premium account or capital redemption
reserve and taking into account any credit or debit balance on profit and loss account.
73
3.13 Directors’ Interests
(i)
Subject to the provisions of the Statutes a Director may:
(a)
be interested in any contract or arrangement or in any proposal with the Company or in
which the Company may be interested;
(b)
may hold any other office or place of profit under the Company (except that of Auditor or
of auditor of a subsidiary of the Company) in conjunction with the office of Director on
such terms as to remuneration and otherwise as the Board may approve;
(c)
may be a director or other officer of, or employed by, or a party to any transaction or
arrangement with or otherwise interested in, any company promoted by the Company or
in which the Company is otherwise interested or as regards which the Company has any
powers of appointment
and shall not be liable to account to the Company for any profit, remuneration or other benefit
realised by any such office, employment, contract, arrangement, transaction or proposal.
(ii)
Subject to the provisions of the Statutes and provided that he declares the nature of his
interest at a meeting of the Directors, a Director may be interested directly or indirectly in any
contract or arrangement or in any proposed contract or arrangement with the Company or
with any other company in which the Company may be interested.
(iii)
A Director shall not vote or be counted in the quorum in relation to any resolution concerning
any contracts, arrangements, transactions or any other proposal whatsoever to which the
Company is or are to be a party and in which he has an interest which is, to his knowledge, a
material interest unless the resolution concerns any of the following matters:
(a)
the giving to him or any other person of any guarantee, security or indemnity in respect
of money lent or obligations incurred by him or any other person at the request of or for
the benefit of the Company or any of their subsidiary undertakings;
(b)
the giving to any third party of any guarantee, security or indemnity in respect of a debt
or obligation of the Company or any of its subsidiary undertakings for which he himself
has assumed responsibility in whole or in part and whether alone or jointly with others
under a guarantee or indemnity or by the giving of security;
(c)
any proposal concerning an offer of shares or debentures or other securities of or by the
Company or any of its subsidiary undertakings for subscription or purchase in which
offer he is or may be entitled to participate as a holder of securities or any underwriting
or sub-writing of which he is to participate;
(d)
any proposal concerning any other corporate in which he does not to his knowledge
have an interest in one per cent or more of the issued equity share capital of any class of
such body corporate or of the voting rights available to member of such body corporate;
(e)
any proposal relating to any scheme of arrangement for the benefit of the employees of
the Company or any of its subsidiary undertakings which does not award him any
privilege or benefit not generally awarded to the employees to whom such arrangement
relates; or
(f)
any proposal concerning insurance which the Company propose to maintain or
purchase for the benefit of Directors or for the benefit of persons who include the
Directors.
(iii)
A Director shall not vote or be counted in the quorum on any resolution of the Board or
committee of the Board concerning his own appointment as the holder of any office or place
of profit with the Company or any company in which the Company is interested.
(iv)
Subject to the provisions of the Acts and for the purposes of Section 175 of CA 2006, the
Directors may authorise in such manner and on such terms as they think fit any matter
proposed to it in which a Director and/or any connected persons of a Director has or can
have, a direct or indirect interest which conflicts, or possibly may conflict, with the interests of
the Company provided that the authorisation is passed at a meeting where such is effective
without the Director in question and any other interested Director being counted in the quorum
or voting at the meeting at which the conflict of interest is authorised.
74
3.14 Dividends and Other Payments
(i) Declaration of Dividends
(1)
The Company may by ordinary resolution and subject to the provisions of the Statutes
and the Articles declare dividends to be paid to members according to their respective
rights and interest in the profits of the Company, provided that no dividend shall exceed
the amount recommended by the Directors.
(2)
The Directors may pay such interim dividends (including any dividend payable at a fixed
rate) as appears to them to be justified by the profits of the Company available for
distribution.
(ii) Entitlement to dividends
(iii)
(1)
Except as otherwise provided by the rights that attach to shares, all dividends shall be
declared and paid according to the amounts paid up (otherwise than in advance of calls)
on the shares in respect of which the dividend is paid.
(2)
Unless otherwise provided by the rights attached to the share, no dividend or other
monies payable by the Company or in respect of a share shall bear interest as against
the Company.
(3)
If any dividend remains unclaimed after a period of 12 years from the date of the
declaration of that dividend, it shall be forfeited and shall revert to the Company.
(4)
The Directors may, with the prior authority of an ordinary resolution of the Company,
subject to such terms and conditions as the Directors may determine, offer to holders of
shares the right to elect to receive shares credited as fully paid, instead of the whole (or
some part, to be determined by the Directors) of any dividend specified by the ordinary
resolution.
Reserves
At any time when the Company has given notice in the prescribed form to the Registrar of
Companies of its intention to carry on business as investment company (‘‘a relevant period’’)
the Company shall be prohibited from distributing any capital profits (within the meaning of
Section 833(2)(c) of CA 2006. The Directors will establish a reserve to be called the capital
reserve and during a relevant period all surpluses arising from the realisation or revaluation of
investments or deriving from the realisation, payment off of or other dealing with any capital
asset in excess of the book value thereof and all other monies which are considered by the
Directors to be in the nature of accretion to capital shall be credited to the capital reserve.
Subject to the Acts, the Directors may determine whether any amount received by the
Company is to be dealt with as income or capital, or partly one way and partly the other.
During a relevant period, any loss realised on the realisation or payment off of other dealing
with any investment or other capital assets and, subject to the Acts, any expenses, liability,
loss (or provision therefor) which the Directors consider to relate to a capital item (including
any proportion of the expenses of management or administration of its assets and/or of the
finance costs of the Company) or which they otherwise consider appropriate to be debited to
the capital reserve, shall be carried to the debit of the capital reserve. During a relevant
period, all sums carried and standing to the credit of the capital reserve may be applied for
any of the purposes for which sums standing to the credit of any revenue reserve are
applicable except that no part of the capital reserve or any other money in the nature of
accretion to capital shall be transferred to the revenue reserves of the Company or be treated
as profits of the Company available for distribution (as defined by Section 833(2)(c) of CA
2006) or be applied in paying dividends on any shares of the Company. In periods other than
a relevant period, any amount standing to the credit of the capital reserve may be transferred
to the revenue reserves of the Company or be regarded or treated as profits of the Company
available for distribution (as defined in Section 829 of CA 2006) or be applied in paying
dividends of any shares of the Company.
3.15 Transfer or Sale under Section 110, Insolvency Act 1986
A special resolution sanctioning a transfer or sale to another company duly passed pursuant to
Section 110 of the Insolvency Act 1986 may in the like manner authorise the distribution of any
shares or other consideration receivable by the liquidator among the members otherwise than in
75
accordance with their existing rights and any such determination shall be binding on the members,
subject to the right of dissent and consequential rights conferred by said section.
3.16 Voluntary Liquidation of the Company
(i)
(ii)
The Directors shall procure that at the fifteenth annual general meeting of the Company (and
thereafter at five yearly intervals) an ordinary resolution will be proposed to the effect that the
Company shall continue in being. If such resolution is not passed the board shall within four
months of that meeting convene a general meeting to propose either or both of the following:
(a)
a special resolution for the reorganisation or reconstruction of the Company; or
(b)
a special resolution to wind up the Company voluntarily.
On any voluntary winding-up of the Company, the liquidator may, with the sanction of an
special resolution and any other sanctions required by law, divide amongst the members in
specie the whole or any part of the assets of the Company in such manner as he may
determine.
3.17 Indemnity and Insurance
(i)
The Directors may purchase and maintain insurance for, or for the benefit of, any persons
who are or were Directors, officers or employees of the Company or of any other company
which is a subsidiary undertaking of the Company or in which the Company has an interest,
whether direct or indirect including without limitation insurance in relation to duties, power or
offices in relation to any pension fund or employees benefits trust.
(ii)
The Company shall indemnify the Directors to the extent permitted by law and may take out
and maintain insurance for the benefit of the Directors.
4
Directors and their Interests
4.1
As at 16 August 2012 (this being the latest practicable date prior to publication of this document),
the Company is not aware of any person who, immediately following the issue of the New Shares
pursuant to the Schemes and the Enhanced Buyback Facility, directly or indirectly, has or will have
an interest in the Company’s capital or voting rights which is notifiable under UK law (under which,
pursuant to CA 2006 and the Listing Rules and the Disclosure & Transparency Rules of the FSA, a
holding of 3% or more must be notified to the Company).
4.2
As at 16 August 2012 (this being the latest practicable date prior to publication of this document),
the interests of the Directors (and their immediate families) and the directors of the Target VCTs in
the issued share capital of the Company and the Target VCTs were as follows:
Directors
Tony Morgan
Matt Cooper
Rob Johnson
Andrew Boyle
Rupert Bell
Stuart Brocklehurst
Alan Pepper
Murray Steele
Christopher Powles
Martijn Kleibergen
4.3
Company
Shares
% of
issued
share
capital
5,000
10,023
–
–
–
–
–
–
–
–
0.02
0.04
–
–
–
–
–
–
–
–
Apollo 1
Apollo 1
% of
Shares
Apollo 1
issued
share
capital
–
–
5,012
0.06
–
–
26,375
0.33
–
–
5,275
0.07
–
–
–
–
–
–
–
–
Apollo 2
Apollo 2
% of
Shares
Apollo 2
issued
share
capital
–
–
5,012
0.06
–
–
26,375
0.33
–
–
5,275
0.07
–
–
–
–
–
–
–
–
Apollo 4
Apollo 4
% of
Shares
Apollo 4
issued
share
capital
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,275
0.05
5,275
0.05
–
–
As at 16 August 2012 (this being the latest practicable date prior to publication of this document)
save as disclosed above, no Director, his family or any person connected to the Director within the
meaning of Section 252 CA 2006 has any interest in the share or loan capital of the Company.
76
A1: 14.1
A1: 17.2
4.4
Details of the Directors’ appointments are as follows
A1: 15.1
Director
Date of
appointment
Date of
appointment
letter*
Annual
remuneration
(£)**
Year to 31
January 2012
Remuneration
(£)***
Tony Morgan
17 July 2006
15 October 2010
21,000
21,000
Matt Cooper
17 July 2006
15 October 2010
16,000
16,000
Rob Johnson
1 June 2010
15 October 2010
16,000
16,000
A1: 15.2
A1: 16.1
A1: 16.2
* The Directors have been appointed pursuant to appointment letters which require either party to give three months’ notice
before termination of the appointment (respectively).
** No arrangements have been entered into by the Company, entitling the Directors to compensation for loss of office nor
have any amounts been set aside to provide pension, retirement or similar benefits.
*** Exclusive of applicable employers National Insurance Contributions.
Assuming the merger is effected, the Proposed Directors will be appointed pursuant to
appointment letters on identical terms as that set out above. Murray Steele, who is proposed to
be appointed as Chairman of the Company, will receive £21,000 per annum and Christopher
Powles will receive £16,000 per annum. Tony Morgan, the current Chairman of the Company, will
see his annual remuneration reduced to £16,000 per annum.
4.5
Save for in respect of Matt Cooper, who is the chairman and a shareholder of Octopus and is also a
director and shareholder of other VCTs managed by Octopus (including Apollo 1 and Apollo 2),
there are no potential conflicts of interests between the duties of any Director and their private
interests and/or duties.
4.6
No loan or guarantee has been granted or provided to or for the benefit of any of the Directors.
4.7
The Company has taken out directors’ and officers’ liability insurance for the benefit of its Directors,
which is renewable on an annual basis.
4.8
The Directors and the Proposed Directors are currently or have been within the last five years, a
member of the administrative, management or supervisory bodies or partners of the companies
and partnerships mentioned below:
Director
Current
Past five years
Tony Morgan
Youth At Risk (UK)
Yar Trading Limited
Octopus Apollo VCT 3 plc
Quickheart Limited
Re-energy Group plc
Octopus Phoenix VCT plc
Matt Cooper
Octopus Capital Limited
Octopus Investments Limited
Octopus Eclipse VCT plc
Octopus Eclipse VCT 2 plc
Octopus Eclipse VCT 3 plc
Octopus Eclipse VCT 4 plc
Octopus Apollo VCT 1 plc
Octopus Apollo VCT 2 plc
Octopus Apollo VCT 3 plc
10Duke Software Ltd.
The Mental Health Foundation
Octopus Titan VCT 1 plc
Octopus Titan VCT 2 plc
My Dish Limited
Imaginatik plc
PPL Realisations 2011 Limited
Knowledge & Merchandising inc. Ltd
KMI Brands Ltd
Ultimate Finance Group Limited
Which? Limited
Carbon Search Limited
Sadler’s Wells Limited
Sadler’s Wells Development Trust
TDX Group Limited
Silvermere Energy Limited
Activ8 Intelligence Limited
Octopus Phoenix VCT plc
New Saddler’s Wells Limited
Online All-Stars Limited
Carbon Leadership LLP
Perfect Pizza Limited
Badenoch and Clark Limited
Global Collect
The Core Business plc
Axiant
Nottingham Trent University
77
A1: 14.2
A1: 14.1 (a)
4.9
Director
Current
Past five years
Rob Johnson
Octopus Apollo VCT 3 plc
Buyagift plc
Unicorn Training Group Limited
Absolute Training (Holdings) plc
Murray Steele
James Walker Group Limited
James Walker Trustees Limited
JWPS Trustees Limited
JWSEMPP Trustees Limited
Octopus Apollo VCT 4 plc
WMB Steele (2009) & Co. Limited
Surface Generation Limited
CBG Holdings Limited
NHFA Limited
Ringmount Limited
WMB Steele & Co. Limited
Christopher
Powles
Octopus Apollo VCT 4 plc
Little Sutton Energy Company
Limited
Susenco Management Limited
Flights Mill Community Hydro Power
Limited
Dawkins & Company Limited
Dawkins Capital Limited
Litho Supplies plc
Adili plc
Adili.com Limited
None of the Directors or Proposed Directors have any convictions in relation to fraudulent offences
during the previous five years.
A1: 14.1 (b)
4.10 Save as disclosed in this paragraph, there were no bankruptcies, receiverships or liquidations of
any companies or partnership where any of the Directors were acting as (i) a member of the
administrative, management or supervisory body, (ii) a partner with unlimited liability, in the case of
a limited partnership with a share capital, (iii) a founder where the company had been established
for fewer than five years or (iv) a senior manager during the previous five years.
A1: 14.1 (c)
Tony Morgan and Matt Cooper were directors of Octopus Phoenix VCT plc until November 2011,
following the company being placed into members’ voluntary liquidation in August 2010 pursuant to
a merger with Octopus AIM VCT plc prior to being dissolved in November 2011.
Matt Cooper was also a director of PPL Realisations 2011 Limited until it was placed into
administration in August 2011. At the date of the latest filed administrator’s progress report there
was in excess of £6.9 million owing to secured creditors and a total of £1.7 million owing to
unsecured creditors. Matt Cooper was also, a director of Online All-Stars Limited and New
Saddler’s Wells Limited which were voluntarily struck off the Register of Companies and dissolved
in November 2009 and December 2011 respectively.
Rob Johnson was a director of Absolutely Training (Holdings) plc which was voluntarily struck off
the Register of Companies and dissolved in January 2012.
Murray Steele was a director of CBG Holdings Limited which was placed into creditors’ voluntary
liquidation in May 2010 but is yet to be dissolved. Murray Steele was also a director of Ringmount
Limited and W M B Steele & Co Limited both of which were struck off the Register of Companies for
non-compliance of filing annual returns. Murray Steele was also a director of Ringmount (2009)
Limited which was voluntarily struck off the Register of Companies and dissolved in July 2010.
Christopher Powles resigned as a director of Dawkins & Company Limited in February 2008. The
company was subsequently placed into administration in April 2008, which ceased in April 2010.
There were no funds to pay preferential or unsecured creditors (no deficit was, therefore,
established). Christopher Powles resigned as a director of Adili.com Limited in April 2009. This
company was placed into creditors’ voluntary liquidation in June 2010 and no distribution was
made to unsecured creditors prior to being dissolved in April 2012. Christopher Powles also
resigned as a director of Adili plc in April 2009. Subsequently, the company was struck off the
Register of Companies for non-compliance of filing annual returns. Christopher Powles was also a
director of Litho Supplies plc which was placed into administration in December 2009. On 14 July
2010 the final administrator’s report to the creditors confirmed that all preferential creditors had
been satisfied and a balance of approximately £3.1 million was owing to unsecured creditors. The
administrators were appointed liquidators in July 2012 and dissolved in October 2010. Christopher
78
Powles was also a director of Shostar Limited against which a winding up order was made in
January 1999 but no creditors’ meeting was convened. The company was dissolved in June 2001.
4.11 There have been no official public incriminations and/or sanctions of any Director or Proposed
Director by statutory or regulatory authorities (including designated professional bodies) and no
Director or Proposed Director has ever been disqualified by a court from acting as a member of the
administrative, management or supervisory bodies of a company or from acting in the management
or conduct of the affairs of any company during the previous five years.
5.
5.1
Overseas Shareholders
The issue of New Shares to be issued pursuant to the Schemes and Offer to persons resident in or
citizens of jurisdictions outside the UK may be affected by the laws of the relevant jurisdiction. Such
shareholders should inform themselves about and observe any legal requirements. The Enhanced
Buyback Facility is only being made available to UK Shareholders.
5.2
None of the New Shares to be issued pursuant to the Schemes, Enhanced Buyback Facility and
Offer have been or will be registered under the United States Securities Act 1933, as amended, or
qualify under applicable United States state statute and the relevant clearances have not been, and
will not be, obtained from the securities commission of any province of Canada, Australia, Japan,
South Africa or New Zealand.
5.3
The Company is not registered under the United States Investment Company Act of 1940, as
amended, and investors are not entitled to the benefits of that Act.
5.4
No offer is being made, directly, under the Schemes, Enhanced Buyback Facility or Offer, in or into
or by the use of emails, or by means of instrumentality (including, without limitation, facsimile,
transmission, telex or telephone) or interstate or foreign commerce, or of any facility in a national
securities exchange, of the United States, Canada, Australia, Japan, South Africa or New Zealand.
5.5
It is the responsibility of Target VCTs’ Shareholders, Shareholders and new investors with
registered addresses outside the UK to satisfy themselves as to the observance of the laws of the
relevant jurisdiction in connection with the issue of New Shares pursuant to the Schemes, the
Enhanced Buyback Facility and the Offer, including the obtaining of any government or exchange
control or other consents which may be required, the compliance with any other necessary
formalities which need to be observed and the payment of any issue, transfer or other taxes or
duties due in such jurisdiction.
6.
Material Contracts
6.1
Save as disclosed in this paragraph 6.1, the Company has not entered, other than in the ordinary
course of business, into any contract which is or may be material to the Company within the two
years immediately preceding the publication of this document or into any contract containing
provisions under which the Company has any obligation or entitlement which is material to the
Company as at the date of this document:
A1: 14.1 (d)
A1: 22
6.1.1 An investment management agreement dated 27 July 2006 between the Company (1) and
Octopus (2) pursuant to which Octopus provides discretionary investment management and
administration services to the Company.
The appointment of Octopus is terminable by either party on not less than 12 months’ notice in
writing and may also be terminated in circumstances of material breach by either of these parties.
Octopus receives an annual management fee of an amount equal to 2% of the net assets of the
Company, calculated at annual intervals as at 31 January and payable quarterly in advance,
together with any applicable VAT thereon, in respect of investment management services.
Octopus also receives an annual administration and accounting fee of an amount equal to 0.3% of
the net assets of the Company, calculated at annual intervals as at 31 January and payable
quarterly in advance (plus applicable VAT) and an annual company secretarial fee of £5,000 (plus
VAT) payable annually or quarterly.
No performance related incentive fee is payable in the first five accounting periods. Octopus is then
entitled to an annual performance related incentive fee of an amount equal to 20% (in respect of
each share in issue) of the amount by which the Total Return per Share (this being NAV and
dividends paid or declared) increases from the Total Return per Share as at the start of the sixth
79
A15: 3.1
accounting period (or, if greater, 100p) in excess of the HSBC bank rate. The amount of the fee is
calculated as at the date the annual accounts for the relevant period are published and in respect of
shares in issue as at that date. The amount is then adjusted to deduct performance related
incentive fees paid or payable in respect of previous accounting periods.
These management and administration fees shall not change in respect of the Enlarged Company
and shall automatically cover the enlarged assets following the merger. The performance incentive
fee arrangements will, subject to approval by Shareholders of Resolution 12 to be proposed at the
General Meeting, be replaced with the revised arrangements detailed at paragraph 6.2.7 below.
The normal annual expenses of the Company are capped each year at an amount equal to 3.3% of
the Company’s net assets, as agreed between the Company and Octopus from time to time. Any
excess over this amount will be borne by Octopus. Normal annual expenses means the annual
expenses of the Company incurred in its ordinary course of business and includes the annual
investment management, administration, and secretarial fees, directors’ remuneration, normal fees
payable to the Company’s registrars, stockbroker, auditors, solicitors and VCT status advisers and
irrecoverable VAT thereon. It does not include any exceptional items and annual trail commission.
Octopus also retains the right pursuant to the agreement to charge transaction, directors’,
monitoring, consultancy, corporate finance, introductory, syndication fees, commissions and
refunds of commissions in respect of the management of the Company’s investment portfolio.
The agreement includes indemnities given by the Company to Octopus which are usual for this
type of agreement.
6.1.2 A letter of engagement dated 3 July 2012 between the Company and Matrix Corporate Capital
LLP, pursuant to which Matrix Corporate Capital LLP will act as sponsor to the Company for the
purposes of the merger. The agreement may be terminated if any statement in the Prospectus is
untrue, any material omission from the Prospectus arises or any breach of warranty occurs.
6.2
The following contracts will be entered into, subject, inter alia, to the approval by Shareholders of
applicable Resolutions at the General Meeting and, other than in respect of the contract referred to
at paragraph 6.2.7 below, the relevant Scheme becoming effective:
6.2.1 A transfer agreement between the Company and Apollo 1 (acting through the Liquidators) pursuant
to which all of the assets and liabilities of Apollo 1 will be transferred to the Company (subject only
to the consent required to transfer such assets and liabilities) in consideration for New Shares in
accordance with Part II of this document. The Liquidators will further agree under this agreement
that all sale proceeds and/or dividends received in respect of the underlying assets and/ or other
rights of Apollo 1 will be transferred on receipt to the Company as part of the Apollo 1 Scheme. This
agreement will be entered into as part of the Apollo 1 Scheme.
6.2.2 A transfer agreement between the Company and Apollo 2 (acting through the Liquidators) pursuant
to which all of the assets and liabilities of Apollo 2 will be transferred to the Company (subject only
to the consent required to transfer such assets and liabilities) in consideration for New Shares in
accordance with Part II of this document. The Liquidators will further agree under this agreement
that all sale proceeds and/or dividends received in respect of the underlying assets and/or other
rights of Apollo 2 will be transferred on receipt to the Company as part of the Apollo 2 Scheme. This
agreement will be entered into as part of the Apollo 2 Scheme.
6.2.3 A transfer agreement between the Company and Apollo 4 (acting through the Liquidators) pursuant
to which all of the assets and liabilities of Apollo 4 will be transferred to the Company (subject only
to the consent required to transfer such assets and liabilities) in consideration for New Shares in
accordance with Part II of this document. The Liquidators will further agree under this agreement
that all sale proceeds and/or dividends received in respect of the underlying assets and/or other
rights of Apollo 4 will be transferred on receipt to the Company as part of the Apollo 4 Scheme. This
agreement will be entered into as part of the Apollo 4 Scheme.
6.2.4 An indemnity from the Company to the Liquidators pursuant to which the Company will indemnify
the Liquidators for expenses and costs incurred by them in connection with the Apollo 1 Scheme. A
liquidation fee has been agreed (including an amount representing contingency) and taken into
account in the merger calculations. This agreement will be entered into as part of the Apollo 1
Scheme.
80
A15: 3.3
6.2.5 An indemnity from the Company to the Liquidators pursuant to which the Company will indemnify
the Liquidators for expenses and costs incurred by them in connection with the Apollo 2 Scheme. A
liquidation fee has been agreed (including an amount representing contingency) and taken into
account in the merger calculations. This agreement will be entered into as part of the Apollo 2
Scheme.
6.2.6 An indemnity from the Company to the Liquidators pursuant to which the Company will indemnify
the Liquidators for expenses and costs incurred by them in connection with the Apollo 4 Scheme. A
liquidation fee has been agreed (including an amount representing contingency) and taken into
account in the merger calculations. This agreement will be entered into as part of the Apollo 4
Scheme.
6.2.7 A deed of variation between the Company (1) and Octopus (2) to the investment management
agreement referred to at paragraph 6.1.1 pursuant to which the existing performance related
incentive fee arrangement with Octopus will be replaced with a revised arrangement, Under the
new arrangement, Octopus will be entitled to an annual performance related incentive fee in each
accounting period commencing on or after 1 February 2012, subject to the Total Return being 100p
at the end of the relevant period. The amount of the fee will be equal to 20% of the amount by which
the Total Return as at the end of the relevant period exceeds the Overall Hurdle Return (and
payable in respect of each share in issue at the end of the relevant period). For these purposes,
Total Return means NAV per Share plus dividends paid per Share since launch and the Overall
Hurdle Return means the greater of the:
.
Base Rate Hurdle Return - which means the Total Return as at 31 January 2012 increased by
the cumulative annual weighted average of the Bank of England base rate (measured daily)
to the end of the relevant period; and
.
High Watermark Hurdle Return - which means the highest level of Total Return as at the end
of the accounting period commencing on 1 February 2012 or any subsequent accounting
period.
The performance related incentive fee will be calculated and payable annually.
7.
Corporate Governance
7.1
Board of Directors
The Company has a Board of three Non-Executive Directors, two of which are considered to be
independent of Octopus. Matt Cooper (who is also a director of Apollo 1 and Apollo 2) is not
considered to be independent due to his role as chairman of Octopus. The Board meets regularly
on a quarterly basis, and on other occasions as required, to review the investment performance
and monitor compliance with the investment policy laid down by the Board.
The Board has a formal schedule of matters specifically reserved for its decision which include:
.
the consideration and approval of future developments or changes to the investment policy,
including risk and asset allocation;
.
consideration of corporate strategy;
.
approval of the appropriate dividend to be paid to the shareholders;
.
the appointment, evaluation, removal and remuneration of the Octopus;
.
the performance of the Company, including monitoring of the discount of the net asset value
to the share price; and
.
monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its strategy and in the achievement of its
objectives. The Chairman is responsible for organising the business of the Board, ensuring its
effectiveness and setting its agenda, and has no involvement in the day to day business of the
Company. He facilitates the effective contribution of the Directors and ensures that they receive
accurate, timely and clear information and that they communicate effectively with shareholders.
The company secretary is responsible for advising the Board through the Chairman on all
governance matters. All of the Directors have access to the advice and services of the company
secretary, who has administrative responsibility for the meetings of the Board and its committees.
81
Directors may also take independent professional advice at the Company’s expense where
necessary in the performance of their duties. The Board does not consider it necessary for the size
of the Board or the Company to identify a member of the Board as the senior non-executive
Director.
The Company’s Articles and the schedule of matters reserved to the Board for decision provide
that the appointment and removal of the company secretary is a matter for the full Board.
7.2
Audit Committee
A1: 16.3
The Audit Committee, chaired by Rob Johnson, consists of two independent directors. The Audit
Committee believes Rob Johnson possesses appropriate and relevant financial experience as per
the requirements of the Code. The Board considers that the members of the Audit Committee are
independent and have collectively the skills and experience to discharge their duties effectively.
The Audit Committee terms of reference include the following roles and responsibilities:
.
reviewing and making recommendations to the Board in relation to the Company’s published
financial statements and other formal announcements relating to the Company’s financial
performance;
.
reviewing and making recommendations to the Board in relation to the Company’s internal
control (including internal financial control) and risk management systems;
.
periodically considering the need for an internal audit function;
.
making recommendations to the Board in relation to the appointment, re-appointment and
removal of the external auditor and approving the remuneration and terms of engagement of
the external auditor;
.
reviewing and monitoring the external auditor’s independence and objectivity and the
effectiveness of the audit process, taking into consideration relevant UK professional
regulatory requirements;
.
monitoring the extent to which the external auditor is engaged to supply non-audit services;
and
.
ensuring that Octopus has arrangements in place for the investigation and follow-up of any
concerns raised confidentially by staff in relation to propriety of financial reporting or other
matters.
The Committee reviews its terms of reference and its effectiveness annually and recommends to
the Board any charges required as a result of the review. The terms of reference are available on
request from the company secretary. The Audit Committee meets twice per year and has direct
access to Grant Thornton UK LLP, the Company’s external auditor. The Audit Committee has
reviewed the non audit services provided by the external auditor and does not believe they are
sufficient to influence their independence or objectivity due to the fee being an immaterial expense.
Once the Audit Committee has made a recommendation to the Board in relation to the appointment
of the external auditor this is then ratified at the annual general meeting through an ordinary
resolution.
The Company does not have an independent internal audit function as it is not deemed appropriate
given the size of the Company and the nature of the Company’s business. However, the committee
considers annually whether there is a need for such a function and if so would recommend this to
the Board.
During the year ended 31 January 2012, the Audit Committee discharged its responsibilities by:
.
reviewing and approving the external auditor’s terms of engagement and remuneration;
.
reviewing the external auditor’s plan for the audit of the Company’s financial statements,
including identification of key risks and confirmation of auditor independence;
.
reviewing Octopus’ statement of internal controls in relation to the Company’s business and
assessing the effectiveness of those controls in minimising the impact of key risks;
.
reviewing periodic reports on the effectiveness of Octopus’ compliance procedures;
.
reviewing the appropriateness of the Company’s accounting policies;
82
7.3
.
reviewing the Company’s draft annual financial and interim results statement prior to Board
approval; and
.
reviewing the external auditor’s detailed reports to the committee on the annual financial
statements.
Nomination Committee
The Nomination Committee considers the selection and appointment of Directors and makes
recommendations to the Board as to the level of Directors’ fees. It has not yet been necessary for
the Committee to meet and so terms of reference will be agreed if and when appropriate. The
Board does not have a separate Remuneration Committee as the Company has no employees or
executive Directors.
7.4
Internal control
The Directors have overall responsibility for keeping under review the effectiveness of the
Company’s systems of risk management and internal control.
The purpose of these controls is to ensure that proper accounting records are maintained, the
Company’s assets are safeguarded and the financial information used within the business and for
publication is accurate and reliable; such a system can only provide reasonable and not absolute
assurance against material misstatement or loss. The system of risk management and internal
controls is designed to manage rather than eliminate the risk of failure to achieve the business
objectives. The Board regularly reviews financial results and investment performance with its
investment manager.
Octopus acts on a discretionary basis to determine which investments are made, subject to policy
decisions and directions.
Octopus is engaged to carry out the accounting function and retains physical custody of the
documents of title relating to unquoted investments. Quoted investments are held in CREST,
although no quoted investments were held at the year end. Octopus regularly reconciles the client
asset register with the physical documents.
The Directors confirm that they have established a continuing process throughout the year and up
to the date of this report for identifying, evaluating and managing the significant potential risks
faced by the Company and have reviewed the effectiveness of the risk management and internal
control systems. As part of this process an annual review of the risk management and internal
control systems is carried out in accordance with the Financial Reporting Council guidelines for risk
management and internal control. The Board does not consider it necessary to maintain a separate
internal audit function.
Risk management and internal control systems include the production and review of monthly bank
reconciliations and management accounts. All outflows made from the VCT’s accounts require the
authority of two signatories from Octopus. The VCT is subject to a full annual audit whereby the
auditors are the same auditors as other venture capital trusts managed by the Octopus and thus
controls are tested on a frequent basis. Further to this, the audit partner has open access to the
Directors of the Company and Octopus is subject to regular review by the Octopus’ compliance
department.
8.
8.1
Taxation
The following paragraphs, which are intended as a general guide only and are based on current
legislation and HMRC practice, summarise advice received by the Board as to the position of the
Company’s Shareholders who hold Shares other than for trading purposes. Any person who is in
any doubt as to his taxation position or may be subject to taxation in any jurisdiction other than the
UK should consult his professional advisers.
8.2
Taxation of dividends – under current law, no tax will be withheld by the Company when it pays a
dividend.
8.3
Stamp duty and stamp duty reserve tax – the Company has been advised that no stamp duty or
stamp duty reserve tax will be payable on the issue of the New Shares to be issued pursuant to the
merger. The Company has been advised that the transfer of New Shares will, subject to any
applicable exemptions, be liable to ad valorem stamp duty at the rate of 0.5% of the consideration
83
A3: 4.11
paid. An unconditional agreement to transfer such New Shares if not completed by a duly stamped
stock transfer will be subject to stamp duty reserve tax generally at the rate of 50p per £100 (or part
thereof) of the consideration paid.
8.4
Close company – the Board believes that the Company is not, and expects that following
completion of the Schemes, the Enhanced Buyback Facility and the Offer, it will not be, a close
company within the meaning of ITA 2007. If the Company was a close company in any accounting
period, approval as a VCT for the Company would be withdrawn.
8.5
Further details on the position for Shareholders who may participate in the Enhanced Buyback
Facility and/or Offer are set out in Part X of this document.
9.
Related Party Transactions
Related party transactions for the Company undertaken in the three financial years ended 31
January 2010, 2011 and 2012 are set out in the respective audited reports and accounts for those
years which are incorporated by reference: in Notes 3 and 5 on pages 6 and 7 for the year ended
31 January 2010, in Notes 3 and 5 on pages 46 and 47 for the year ended 31 January 2011 and in
Notes 3 and 5 on pages 46 and 47 for the year ended 31 January 2012. Apart from the payment of
the Directors’ remuneration on the basis set out in paragraph 4.4 above and payments to Octopus
on the basis set out in paragraph 6.1.1 above, the Company has not entered into an related party
transactions within the meaning of IFRS or UK GAAP since 31 January 2012.
10.
General
Working Capital Statement
A1: 19
A3: 3.1
10.1 The Company is of the opinion that its working capital is sufficient for its present requirements, that
is for at least the twelve month period from the date of this document.
Capitalisation and Indebtedness Statement
A3: 3.2
10.2 As at 16 August 2012 (the latest practicable date prior to publication of this document), the
Company has no indebtedness, whether guaranteed, unguaranteed, secured, unsecured, direct
and/or contingent and there is no current intention of incurring any such indebtedness for at least
the twelve month period from the date of this document.
10.3 The capitalisation of the Company as at 31 January 2012 (extracted from the Annual Report), is set
out below. There has been no material change in the capitalisation of the Company between 31
January 2012, the date of the Annual Report and 16 August 2012, the latest practicable date before
the date of publication of this document.
£’000
Called-up Share Capital
Other reserves
2,677
21,660
Total
24,337
Other
10.4 There are no governmental, legal or arbitration proceedings (including any such proceedings which
are pending or threatened, of which the Company is aware) which may have, or have had in the 12
months immediately preceding the date of this document, a significant effect on the financial
position or profitability of the Company.
A1: 20.8
10.5 There has been no significant change in the financial or trading position of the Company since 31
January 2012, the date to which the Annual Report was made up to, to the date of this document.
A1: 20.9
10.6 There has been no significant change in the financial or trading position of Apollo 1 since 31
January 2012, the date to which the Apollo 1 annual report was made up to, to the date of this
document.
10.7 There has been no significant change in the financial or trading position of Apollo 2 since 31
January 2012, the date to which the Apollo 2 annual report was made up to, to the date of this
document.
84
10.8 There has been no significant change in the financial or trading position of Apollo 4 since 31
January 2012, the date to which the Apollo 4 annual report was made up to, to the date of this
document.
10.9 There have been no important events so far as the Company and the Directors are aware relating
to the development of the Company or its business.
A1: 5.1.5
10.10 There have been no significant factors, whether governmental, economic, fiscal, monetary or
political, including unusual or infrequent events or new developments nor any known trends,
uncertainties, demands, commitments or events that are reasonably likely to have an effect on the
Company’s prospects or which have materially affected the Company’s income from operations
so far as the Company and the Directors are aware.
A1: 9.2.3
10.11 There are no known trends, uncertainties, demands, commitments or events that are reasonably
likely to have a material effect on the Company’s prospects for at least the current financial year,
so far as the Company and the Directors are aware.
10.12 Scott-Moncrieff (a member of the Institute of Chartered Accountants in Scotland) has given and
has not withdrawn its written consent to the inclusion in this document of its report set out in Part
VIII of this document in the form and context in which it is included and has authorised the
contents of its report for the purposes of Rule 5.5.3(2)(f) of the Prospectus Rules.
A1: 23.1
10.13 Matrix Corporate Capital LLP and the Liquidators have given and not withdrawn their written
consent to the issue of this document and the inclusion of their names and the references to them
in this document in the form and context in which they appear.
10.14 Shareholders will be informed, by means of the half-yearly and/or annual report or through a
Regulatory Information Service announcement if the investment restrictions which apply to the
Company as a VCT detailed in this document are breached.
A15: 2.1
10.15 The Company’s capital resources are restricted insofar as they may be used only in putting into
effect the investment policies in this document. There are no firm commitments in respect of the
Company’s principal future investments.
A1: 10.4
10.16 The Company does not have any material shareholders with different voting rights. All
Shareholders have the same voting rights in respect of the existing share capital of the Company.
The Company is not aware of any person who, directly or indirectly, exercises or could exercise
control over the Company, nor of any arrangements, the operation of which, may be at a
subsequent date result in a change of control of the Company.
A1: 18.2
A1: 18.3
A1: 18.4
10.17 The Company has no employees or subsidiaries.
A1: 7.1
10.18 The typical investor for whom investment in the Company is designed is an individual retail
investor aged 18 or over who is resident and a tax payer in the UK.
A15: 1.4
10.19 As at 16 August 2012 (this being the latest practicable date prior to publication of this document),
the Company is not aware of any person who, directly or indirectly, has or will have an interest in
the capital of the Company or voting rights which is notifiable under UK law (under which, pursuant
to CA 2006 and the Listing Rules and Disclosure and Transparency Rules of the FSA, a holding of
3% or more will be notified to the Company.
A1: 18.1
10.20 The Company is subject to the investment restrictions relating to a venture capital trust in ITA
2007, as more particularly detailed in Part XI of this document, and in the Listing Rules which
specify that (i) the Company must, at all times, invest and manage its assets in a way which is
consistent with its object of spreading investment risk and in accordance with its published
investment policy as set out in pages 41 and 42 of this document; (ii) the Company must not
conduct any trading activity which is significant in the context of its group as a whole; and (iii) the
Company may not invest more than 10%, in aggregate, of the value of the total assets of the
issuer at the time an investment is made in other listed closed-ended investment funds. Any
material change to the investment policy of the Company will require the approval of Shareholders
pursuant to the Listing Rules. The Company intends to direct its affairs in respect of each of its
accounting periods so as to qualify as a venture capital trust and accordingly:
(a)
the Company’s income is intended to be derived wholly or mainly from shares or other
securities, as this phrase is interpreted by HMRC;
85
(b)
the Company will not control the companies in which it invests in such a way as to render
them subsidiary undertakings.
10.21 The Company and its Shareholders are subject to the provisions of the City Code on Takeovers
and Mergers and CA 2006, which require shares to be acquired/transferred in certain
circumstances.
10.22 If 110 million New Shares are issued in aggregate under the Schemes, the Enhanced Buyback
Facility and the Offer, the existing 25,056,684 Shares would represent 18.6% of the enlarged
issued share capital.
10.23 The Company and its Shareholders are subject to the provisions of the City Code on Takeovers
and Mergers and CA 2006 which require shares to be acquired/transferred in certain
circumstances.
11.
Information Incorporated by Reference
A1: 24
11.1 In respect of the Company the audited annual report for the years ended 31 January 2010, 2011
and 2012 are being incorporated by reference into Part VII of this document.
11.2 In respect of Apollo 1, the annual report for the years ended 31 January 2010, 2011 and 2012 are
being incorporated by reference into Part VII of this document.
11.3 In respect of Apollo 2, the annual report for the years ended 31 January 2010, 2011 and 2012 are
being incorporated by reference into Part VII of this document.
11.4 In respect of Apollo 4, the annual report for the year ended 31 January 2010, 2011 and 2012 are
being incorporated by reference into Part VII of this document.
12.
Documents Available for Inspection
Copies of the following documents will be available for inspection during normal business hours on
any day (Saturdays, Sundays and public holidays excepted) from the date of this document until
the Effective Date at the offices of SGH Martineau LLP, One America Square, Crosswall, London
EC3N 2SG and also at the registered office of the Company:
12.1 the memorandum and articles of association of the Company;
12.2 the annual reports of the Company for the financial years ended 31 January 2010, 2011 and 2012;
12.3 the annual reports of Apollo 1 for the financial years ended 31 January 2010, 2011 and 2012;
12.4 the annual reports of Apollo 2 for the financial years ended 31 January 2010, 2011 and 2012;
12.5 the annual reports of Apollo 4 for the financial years ended 31 January 2010, 2011 and 2012;
12.6 the material contracts referred to in paragraph 6 above (the contracts referred to at paragraph 6.2
being subject to non-material amendment);
12.7 the Target VCTs’ Circular;
12.8 the Circular; and
12.9 this document.
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A1: 24
PART XIII
ENHANCED BUYBACK FACILITY APPLICATION PROCEDURES AND TERMS AND CONDITIONS
ENHANCED BUYBACK FACILITY APPLICATION PROCEDURES
To apply to participate in the Enhanced Buyback Facility, please complete and return the Enhanced
Buyback Facility Application Form (at the end of this document and coloured pink), together with your
relevant share certificate to Octopus Investments Limited, 20 Old Bailey, London EC4M 7AN by post or
hand delivered (during normal business hours only).
Please complete all parts of the relevant Enhanced Buyback Facility Application Form(s) in accordance
with the following instructions. If multiple registered holdings are applicable please complete separate
Enhanced Buyback Facility Application Forms for each such holding by copying the form as necessary.
Section 1
Existing Shares to be Tendered
A Shareholder’s Basic Entitlement is 50% of a Shareholder’s holding rounded down to the nearest whole
share. Place a cross [x] in Box 1A if the application is for the Basic Entitlement only. Insert in Box 1B the
number of Existing Shares being applied for if less or more (including your Basic Entitlement) than the
Basic Entitlement.
Section 2
To be completed by all Shareholders
Please sign/execute and date the form in accordance with the instructions thereon. By signing and
dating the form, Shareholders will agree to sell Existing Shares and subscribe in their own name or, if
completed, the name of the person detailed in Section 3 for New Shares under the terms and conditions
of the Enhanced Buyback Facility as set out in this Part XIII.
By signing an Enhanced Buyback Facility Application Form, a Shareholder DECLARES THAT:
i.
they have read the Enhanced Buyback Facility Terms and Conditions of Application set out in the
Prospectus dated 17 August 2012 and agree to be bound by them;
ii.
they are the beneficial owner of the Existing Shares being tendered under the Enhanced Buyback
Facility;
iii
they will be the beneficial owner of the New Shares issued to them under the Enhanced Buyback
Facility;
iv.
they understand the risk factors associated with the Enhanced Buyback Facility and an investment
in the Company; and
v.
to the best of the Shareholder’s knowledge and belief, the personal details given are correct.
By signing the Enhanced Buyback Facility Application Form on behalf of an individual whose details are
shown in Section 2 of the Enhanced Buyback Facility Application Form, the person signing the form
makes a declaration (on behalf of such individual) on the terms of sub-paragraphs i. to v above.
Section 3
Only to be completed for applications by a nominee where the proceeds are to be
reinvested for a beneficial shareholder
Please insert, in BLOCK CAPITALS, the personal details relating to the beneficial shareholder (please
ensure full details are provided including full name, address, date of birth, national insurance number
and contact details).
The beneficial shareholder must sign/execute and date the form and in doing do agrees to use the
proceeds of sale of the Existing Shares to subscribe for New Shares, such sale and subscription to be
under the terms and conditions of the Enhanced Buyback Facility as set out in this Part XIII.
Please provide contact details for the nominee to assist with queries in relation to the application.
Section 4
Financial Intermediaries’ Details
If applications are being submitted via a financial intermediary, the financial intermediary should
complete (in BLOCK CAPITALS) and stamp Section 4. Please provide a contact name, telephone
number, email address and details of their authorisation under the Financial Services and Markets Act
2000. The right is reserved to withhold any payment of commission if the Company is not, at its sole
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A3: 5.1.3
discretion, satisfied that the agent is authorised or is unable to identify the agent on the basis of the
information provided. Commission cheques will be made payable to the IFA detailed in Section 4.
If you complete and stamp Section 4 of the Application Form you are warranting that the applicant is
known to you and that you have completed all the verification procedures as required by the relevant
rules and guidance of the FSA, the Joint Money Laundering Steering Group Guidance Notes and other
anti-money laundering laws and regulations as may be considered appropriate. You also confirm that
this information can be relied upon by the Receiving Agent and will, subject to reasonable notice, be
made available to the Company or the Receiving Agent for inspection upon request. In the event of delay
or failure to produce such information, the Company may refuse to accept an application.
Applicants under the Enhanced Buyback Facility should return completed Enhanced Buyback
Facility Application Forms, together with share certificates, by post to Octopus Investments
Limited, 20 Old Bailey, London EC4M 7AN by post or hand delivered (during normal business
hours only).
ENHANCED BUYBACK FACILITY TERMS AND CONDITIONS
The following terms and conditions apply to the Enhanced Buyback Facility, save as set out below.
Save where the context otherwise requires, words and expressions defined in the Definitions section of
this document have the same meanings when used in these terms and conditions and the Enhanced
Buyback Facility Application Form.
The section headed ‘‘Enhanced Buyback Facility Application Procedure’’ in this Part XIII and the
Enhanced Buyback Facility Application Form form part of these terms and conditions of application.
General
(a)
The Enhanced Buyback Facility provides the means for Shareholders (which for the avoidance of
doubt includes Target VCT Shareholder who receives New Shares as part of the merger process)
to apply to tender some or all of their Existing Shares to the Company for repurchase and to
subscribe (or, if applicable, for the underlying beneficial holder to subscribe where the Existing
Shares are held by a nominee) for New Shares on the terms and subject to the conditions set out in
this document (including any supplementary prospectus issued by the Company and filed with the
FSA) and the accompanying Enhanced Buyback Facility Application Form.
(b)
Shareholders are not obliged to tender any Existing Shares pursuant to the Enhanced Buyback
Facility. Shareholders who do not wish to participate in the Enhanced Buyback Facility in respect of
Existing Shares should not take any action and must not complete or return the Enhanced Buyback
Facility Application Form coloured pink at the end of this document.
Conditions
(c) The Enhanced Buyback Facility is conditional on approval of Resolutions 1, 5 and 10 to be
proposed at the General Meeting. If such Resolutions are not approved, the Enhanced Buyback
Facility will be withdrawn. The Enhanced Buyback Facility will only be implemented to the extent
that the Board believes that the Company has sufficient reserves to lawfully effect the purchase of
Shares pursuant to the Enhanced Buyback Facility.
(d)
The maximum number of Existing Shares to be purchased will be such number that represents
50% of the issued Share capital as at the Enhanced Buyback Facility Record Date.
(e)
The Enhanced Buyback Facility is only open to UK Shareholders (and their UK beneficial holder if
the Existing Shares are held by a nominee) on the register on the Enhanced Buyback Facility
Record Date. Shareholders who hold their Existing Shares in CREST will need to rematerialise
their Existing Shares into certificated form in order to participate in the Enhanced Buyback Facility.
(f)
The closing date for the Enhanced Buyback Facility is noon on 30 November 2012. The Board
reserves the right to extend the closing date of the Enhanced Buyback Facility.
(g)
Each UK Shareholder is:
(i)
entitled to apply to sell a number of Existing Shares up to their Basic Entitlement at the
Tender Price with the proceeds simultaneously being used to purchase New Shares at the
Issue Price, rounded down to the nearest whole New Share; and
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A3: 5.1.1
(ii)
also entitled to apply to tender additional Existing Shares in excess of their Basic Entitlement
in the event other Shareholders do not participate up to 50% of the issued Share capital as at
1 October 2012 (the excess to be allocated pro rata to the number of Existing Shares
tendered, subject to the discretion of the Board).
(h)
If the Board considers that the Company does not have sufficient reserves to lawfully implement
the Enhanced Buyback Facility in full or that implementing the Enhanced Buyback Facility in
respect of valid applications received would result in the Company having insufficient reserves for
ongoing purposes (taking into account reserves expected to be created), the Board may reduce the
maximum number of Existing Shares to be purchased under the Enhanced Buyback Facility and a
Shareholder’s entitlement to participate up to his or her Basic Entitlement will be reduced
accordingly. The Board expects the Company to be able to implement the Enhanced Buyback
Facility in full. The Board further reserves the right (following consultation with Octopus) to change
the Enhanced Buyback Facility Record Date and further amend or extend (as applicable) the
closing date and implementation timetable at its discretion.
(i)
The Enhanced Buyback Facility will be implemented by the Company and the Broker (as the
Company’s agent) and no cash requires to be paid by participating Shareholders. The Enhanced
Buyback Facility is treated as comprising a tender offer to purchase Existing Shares and the issue
of New Shares pursuant to an open offer.
Settlement
(j)
The Receiving Agent will process applications from Shareholders to sell Existing Shares to the
Company and to subscribe for New Shares under the Enhanced Buyback Facility.
(k)
Existing Shares in respect of which a valid application is made under the Enhanced Buyback
Facility will be purchased by the Broker as agent for the Company at the Tender Price. The
proceeds of the sale of the Existing Shares are authorised by each relevant Shareholder to be
retained by the Company and used on behalf of that Shareholder or, if applicable, the underlying
beneficial holder where the Existing Shares are held by a nominee, to purchase New Shares at the
Issue Price.
(l)
New Shares will be issued and credited as fully paid. Application will be made to the UK Listing
Authority for the New Shares to be issued to be admitted to the premium segment of the Official
List of the UK Listing Authority and to the London Stock Exchange’s market for trading on the
London Stock Exchange’s main market for listed securities. Admission is expected to take place
within three Business Days after each allotment.
(m) The application of the proceeds of the sale of Existing Shares in respect of the subscription for New
Shares will fully discharge any obligation of the Company and/or the Broker to pay to a Shareholder
the consideration to which he or she is entitled in respect of the purchase of Existing Shares. Any
proceeds of sale of the Existing Shares insufficient to purchase a whole New Share will be retained
by the Company and used for its own purposes.
Overseas Shareholders
(n)
The distribution of this document and an Enhanced Buyback Facility Application Form and making
the Enhanced Buyback Facility available to persons who have registered addresses in, or who are
resident or ordinarily resident in, or citizens of, or which are corporations, partnerships or other
entities created or organised under the laws of countries other than the UK or to persons who are
nominees of or custodians, trustees or guardians for citizens, residents in or nationals of, countries
other than the UK may be affected by the laws or regulatory requirements of the relevant
jurisdictions.
(o)
No action has been or will be taken by the Receiving Agent, the Company, the Broker or any other
person, to permit a public offering or distribution of this document (or any other offering or publicity
materials or the Enhanced Buyback Facility Application Form relating to the tendering of Existing
Shares or the issue of New Shares) in any jurisdiction where action for that purpose may be
required, other than in the UK.
(p)
The terms and conditions set out in this document and/or the accompanying Enhanced Buyback
Facility Application Form relating to the participation of Overseas Shareholders may be waived,
varied or modified as regards specific Shareholders or on a general basis by the Company in its
absolute discretion.
89
(q)
Shareholders who are citizens, residents or nationals, of other countries should inform themselves
about and observe any applicable legal requirements. It is the responsibility of any such
Shareholder to satisfy himself as to the full observance of the laws of the relevant jurisdiction in
connection therewith, including the obtaining of any governmental or other consents that may be
required, the compliance with other necessary formalities and the payment of any issue, transfer or
other taxes due in such jurisdiction. Any such Shareholder will be responsible for payment of any
such issue, transfer or other taxes or other requisite payments due by whomsoever payable and
the Company, the Broker and/or the Receiving Agent and any person acting on either’s behalf shall
be entitled to be fully indemnified and held harmless by such Shareholder for any such issue,
transfer or other taxes as such person may be required to pay.
Adviser Commission
(r) Financial intermediaries who, acting on behalf of their clients, return valid Enhanced Buyback
Facility Application Forms for the Enhanced Buyback Facility bearing their FSA number, will
normally be paid initial commission of 2.5%. In addition, provided that the intermediary continues to
act for the client and the client continues to be the beneficial owner of the New Shares, they will
normally (where permitted) be paid an annual trail commission of 0.5% of the initial net asset value
of their client’s holding in New Shares for a period of nine years from the allotment date of the
relevant New Shares. Financial intermediaries may agree to waive all of their initial commission in
respect of an application. If this is the case, then applications will be increased by the amount of
initial commission waived (i.e. up to 2.5%) and the enlarged application will be applied in
subscribing for New Shares at the Issue Price through the Enhanced Buyback Facility. No further
fees or commission will be paid in respect of such additional New Shares. Financial intermediaries
should keep a record of Enhanced Buyback Application Forms submitted bearing their FSA
number to substantiate any claim for introductory commission. Claims for introductory commission
must be made and substantiated on the Enhanced Buyback Application Forms.
Applications
(s) Each Shareholder by whom, or on whose behalf, an Enhanced Buyback Facility Application Form
is executed irrevocably undertakes, represents, warrants and agrees to and with the Company and
the Broker (so as to bind such Shareholder and their personal or legal representatives, heirs,
successors and assigns) that:
.
the execution of the Enhanced Buyback Facility Application Form constitutes an offer to sell
the number of Existing Shares inserted or deemed to be inserted in Box 1 of the Enhanced
Buyback Facility Application Form and an offer to subscribe for New Shares, such New
Shares to be issued to such Shareholder, subject to the Articles and subject to the terms and
conditions set out or referred to in this document (or any supplementary prospectus issued by
the Company and filed with the FSA) and the Enhanced Buyback Facility Application Form
and that, once lodged, such offers are irrevocable;
.
such Shareholder has full power and authority to tender, sell, assign or transfer the Existing
Shares in respect of which such irrevocable offer is accepted (together with all rights
attaching thereto) and, when the same are purchased by the Company (through the Broker
as its agent), the Company will acquire such Existing Shares free and clear from all liens,
charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of
any nature and together with all the rights attaching thereto, including the right to receive all
dividends and other distributions declared, paid or made after the date of purchase;
.
that the execution of the Enhanced Buyback Facility Application Form will, subject to the
Enhanced Buyback Facility becoming unconditional, constitute the irrevocable appointment
of any Director or officer of, or other person nominated by, the Company as such
Shareholder’s attorney and agent (‘‘attorney’’), and an irrevocable instruction to the attorney,
to complete and execute all or any instruments of transfer and/ or other documents at the
attorney’s discretion in relation to the purchase of the Existing Shares tendered and accepted
for purchase and to do all such other acts and things as may in the opinion of such attorney
be necessary or expedient for the purpose of, or in connection with, the Enhanced Buyback
Facility (and if the appointment of an attorney hereunder shall be unenforceable or invalid or
shall not operate so as to afford any Director or officer of the Company the benefit or authority
expressed to be given therein, the Shareholder shall with all practicable speed do all such
90
A3: 5.1.4
acts and things and execute all such documents that may be required to enable the Company
to secure the full benefits of this paragraph);
.
such Shareholder agrees to ratify and confirm each and every act or thing that may be done
or effected by the Receiving Agent, the Company and/or the Broker or any of their Directors
or any person nominated by them in the proper exercise of its or his or her respective powers
and/or authorities hereunder;
.
in respect of the tendered Existing Shares, such Shareholder will deliver to the Receiving
Agent their share certificate(s) and/or other document(s) of title in respect thereof, or an
indemnity acceptable to the Company in lieu thereof, or will procure the delivery of such
documents to such person as soon as possible after and, in any event, before the closing
date or, if earlier, the date of completion of the purchase of Existing Shares and allotment of
New Shares;
.
such Shareholder shall do all such acts and things as shall be necessary or expedient and
execute any additional documents deemed by the Company to be desirable, in each case to
complete the purchase of the Existing Shares and/or to subscribe for any New Shares issued
under the relevant Enhanced Buyback Facility and/or to perfect any of the authorities
expressed to be given hereunder;
.
such Shareholder is a UK Shareholder and its offer to sell Existing Shares pursuant to the
Enhanced Buyback Facility and any acceptance thereof, shall not be unlawful under the laws
of any jurisdiction;
.
the execution of the Enhanced Buyback Facility Application Form constitutes a warranty by
such Shareholder that the information given by or on behalf of such Shareholder is true and
accurate in all respects at the time the Company purchases the Existing Shares and allots the
New Shares and that in making the application such Shareholder is not relying on any
information or representation in relation to the Company other than that contained in this
document (including any supplementary prospectus issued by the Company and filed with the
FSA), and that the Shareholder applying to participate in the Enhanced Buyback Facility
accordingly agrees that no person responsible solely or jointly for this document or any part
thereof (including any supplementary prospectus issued by the Company and filed with the
FSA), or involved in the preparation thereof, shall have any liability for any such information or
representation not so contained and further agrees that, having had the opportunity to read
this document, it will be deemed to have had notice of all information in relation to the
Company contained in this document (including any supplementary prospectus issued by the
Company and filed with the FSA);
.
such Shareholder is not, and nor are they applying as nominee or agent for, a person who is
or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations
1986 at any of the increased rates referred to in sections 67, 70, 93 or 96 (depository receipts
and clearance services) of the Finance Act 1986;
.
the execution of the Enhanced Buyback Facility Application Form constitutes such
Shareholder’s submission to the exclusive jurisdiction of the courts of England in relation
to all matters arising out of or in connection with the Enhanced Buyback Facility and their
agreement that nothing shall limit the right of the Company to bring any action, suit or
proceeding arising out of or in connection with such Shareholder’s application, acceptances
of the application and contracts in any other manner permitted by law or any court of
competent jurisdiction;
.
such Shareholder agrees that mandates in respect of the dividend investment schemes to
which the Existing Shares are mandated and information and authorities in respect of
payment of dividends direct to bank accounts be transferred to the New Shares allotted
through participating in the Enhanced Buyback Facility.
Additional Provisions
(t) The Company reserves the absolute right to inspect (either itself or through the Receiving Agent or
other agents) all Enhanced Buyback Facility Application Forms, and may consider void and reject
any Enhanced Buyback Facility Application Form that does not in the sole judgment of the
Company satisfy the terms and conditions of the Enhanced Buyback Facility. If the Enhanced
91
Buyback Facility Application Form is not completed or in the Company’s determination (in its
absolute discretion) has not been validly completed, provided that the Enhanced Buyback Facility
Application Form is otherwise in order and accompanied by all other relevant documents, the
tender may be accepted as a valid tender in whole or part at the Company’s discretion. The
delivery of share certificate(s) for Existing Shares and all other required documents will be at the
risk of the Shareholder participating in the Enhanced Buyback Facility. If the relevant Enhanced
Buyback Facility is withdrawn or terminated, all documents lodged will be returned to Shareholders
by post (at the risk of the Shareholder) within 14 business days. In these circumstances, Enhanced
Buyback Facility Application Forms for the Enhanced Buyback Facility will cease to have any
effect.
(u)
Existing Shares acquired by the Company (through the Broker as its agent) pursuant to the
Enhanced Buyback Facility will be on-market purchases in accordance with the rules of the London
Stock Exchange, the UKLA and CA 2006. Existing Shares sold by Shareholders pursuant to the
Enhanced Buyback Facility will be acquired with full title guarantee, fully paid and free from all liens,
charges, encumbrances and equitable interests, rights of pre-emption or other third party rights of
any nature and together with all rights attaching thereto, including the right to receive all dividends
and other distributions declared, paid or made on or after the date of purchase.
(v)
The failure of any person to receive a copy of this document (including any supplementary
prospectus issued by the Company and filed with the FSA) or the Enhanced Buyback Facility
Application Form shall not invalidate any aspect of the Enhanced Buyback Facility. Additional
copies of this document and Enhanced Buyback Facility Application Forms can be obtained from
the Receiving Agent. No acknowledgement of receipt of any Enhanced Buyback Facility
Application Forms, share certificates and/or other documents of title will be given.
(w)
References in these terms and conditions to a holder of Existing Shares or a Shareholder shall
include references to the person or persons executing an Enhanced Buyback Facility Application
Form (including, as is applicable, to a beneficial shareholder where the Existing Shares are held by
a nominee) and, in the event of more than one person executing an Enhanced Buyback Facility
Application Form, the provisions of this paragraph shall apply to them jointly and to each of them.
(x)
The terms of the Enhanced Buyback Facility shall have effect subject to such non-material
modifications as the Board sees fit.
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PART XIV
OFFER APPLICATION PROCEDURES AND TERMS AND CONDITIONS
OFFER APPLICATION PROCEDURES
Section 1
Personal Details
Please insert your full name, permanent address, daytime telephone number, date of birth, email
address and national insurance number in Section 1. Your national insurance number is required to
ensure you obtain your income tax relief. Joint applications are not permitted but husbands and wives
may apply separately.
Section 2
Investor Services
Please indicate how you would like the Company to communicate with you.
The Board intend to publish annual and interim reports, and other statutory communications online at
www.octopusinvestments.com. If you would prefer to receive hard copies of such publications please
indicate this by ticking the box at point 3.
Section 3
Subscription Details
Please note that the minimum investment under the Offer is £3,000. The maximum investment into
VCTs in any tax year, on which tax reliefs are available, is £200,000. Attach your cheque or bankers’
draft to the Offer Application Form for the total amount of your investment. Alternatively, you can make
your investment via bank transfer.
Please make cheques payable to ‘Octopus Apollo VCT 3 plc – Applications’ and crossed ‘A/C payee
only’. Cheques must be from a recognised UK bank account and your payment must relate solely to this
application.
Bank transfers should be paid to:
‘Octopus Apollo VCT 3 plc – Applications’
Sort code: 40-03-28
Account no: 82721546
Please reference bank transfers with your surname and initials.
Investors should read the declaration below and sign and date the Offer Application Form.
If the Offer Application Form is completed and signed by the investor named in Section 1, such investor
DECLARES THAT:
i.
they have read the Offer Terms and Conditions of Application set out in the Prospectus dated 17
August 2012 and agree to be bound by them;
ii.
they will be the beneficial owner of the New Shares issued under this Offer;
iii.
they understand the risk factors associated with an investment in the Company; and
iv.
to the best of their knowledge and belief, the personal details given are correct.
If the Offer Application Form is completed and signed on behalf of the individual whose details are shown
in Section 1, the person signing the form makes a declaration (on behalf of such individual) on the terms
of sub-paragraphs i. to iv above.
Section 4
Adviser Details
If the application is from a financial intermediary, please include full name and address, telephone
number and details of your firm’s authorisation under the Financial Services and Markets Act 2000. The
right is reserved to withhold payment of commission if Octopus is not, in its sole discretion, satisfied that
the financial intermediary is authorised.
Section 5
Dividend Instructions
Please complete the mandate instruction if you wish to have dividends paid directly into your bank or
building society.
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A3: 5.2.3 (f)
OFFER TERMS AND CONDITIONS
The following terms and conditions apply to the Offer, save as set out below.
Save where the context otherwise requires, words and expressions defined in the Definitions section of
this document have the same meanings when used in these terms and conditions and the Offer
Application Form.
The section headed ‘‘Offer Application Procedure’’ in this Part XIV and the Offer Application Form form
part of these terms and conditions of application.
1.
The Offer is conditional on the approval of Resolutions 1, 6 and 11 to be proposed at the General
Meeting. The number of New Shares to be issued pursuant to the Offer is subject to the lower of
the maximum amount to be raised under the Offer of £20 million (or £30 million if the Board
decides, in its absolute discretion, to increase the Offer) and a maximum of 110 million New Shares
being issued in aggregate pursuant to the Offer, the Schemes and the Enhanced Buyback Facility.
An investment by an investor will be divided by the Offer Price to calculate the number of New
Shares to be issued. The Offer Price will be calculated as the latest published NAV of a Share at
the time of allotment, divided by X and rounded up to the nearest 0.1p per share. X’ for these
purposes will be 0.95 (to allow for issue costs of up to 5%) or such other number between 0.95 and
1 as may be agreed by the Board and Octopus (to reflect a reduction in issue costs) and
announced to the London Stock Exchange through a Regulatory Information Service provider
authorised by the FSA prior to the date of an allotment.
2.
The contract created by the acceptance of applications in the manner herein set out will be
conditional on the admission of the New Shares being issued to the Official List of the UK Listing
Authority and to trading on the London Stock Exchange’s main market for listed securities unless
otherwise so resolved by the Board. If any application is not accepted, or if any contract created by
acceptance does not become unconditional, or if any application is accepted for fewer New Shares
than the number applied for, or if there is a surplus of funds in excess of £1 from the application
amount, the application monies or the balance of the amount paid on application will be returned
without interest by post at the risk of the applicant. In the meantime, application monies will be
retained by the Company on the applicant’s behalf.
3.
The Company reserves the right to present all cheques and banker’s drafts for payment on receipt
and to retain documents of title and surplus application monies pending clearance of the successful
applicants’ cheques and banker’s drafts. There is no minimum application level under the Offer,
upon which the Offer is conditional.
4.
By completing and delivering an Offer Application Form, you (as the Applicant):
(a)
irrevocably offer to subscribe, in respect of the amount of money specified in your Offer
Application Form, for such number of New Shares at the Offer Price per share, subject to the
provisions of (i) the Prospectus (including any supplementary prospectus issued by the
Company and filed with the FSA), (ii) these terms and conditions and (iii) the Memorandum
and Articles;
(b)
authorise the Company’s registrar to send definitive documents of title for the number of New
Shares for which your application is accepted and to procure that your name is placed on the
register of members of the Company in respect of such shares and authorise the Company to
send you a crossed cheque for any monies returnable, by post to your address as set out in
your Offer Application Form;
(c)
in consideration of the Company agreeing that it will not, prior to the closing date of the Offer,
offer any New Shares to any persons other than by means of the procedures set out or
referred to in this document, agree that your application may not be revoked until the closing
date of the Offer, and that this paragraph constitutes a collateral contract between you and
the Company which will become binding upon dispatch by post or delivery by hand of your
Offer Application Form duly completed to Octopus (as the receiving agent);
(d)
agree and warrant that your cheque, banker’s draft or electronic transfer (CHAPS) will be
presented for payment on receipt and will be honoured on first presentation and agree that, if
such remittance is not so honoured, you will not be entitled to receive certificates for the New
Shares applied for or to enjoy or receive any rights or distributions in respect of such New
Shares unless and until you make payment in cleared funds for such New Shares and such
94
A3: 5.1.1
A3: 5.2.3 (g)
A3: 5.1.7
payment is accepted by the Company (which acceptance shall be in their absolute discretion
and may be on the basis that you indemnify them against all costs, damages, losses,
expenses and liabilities arising out of or in connection with the failure of your remittance to be
honoured on first presentation) and that at any time prior to unconditional acceptance by the
Company of such late payment in respect of such New Shares, the Company may (without
prejudice to their other rights) treat the agreement to allot such New Shares as void and may
allot such New Shares to some other person in which case you will not be entitled to any
refund or payment in respect of such New Shares (other than return of such late payment);
(e)
agree that any documents of title and any monies returnable to you may be retained by the
Company pending clearance of your remittance, that such monies will not bear interest and
any monies not used to purchase New Shares of an amount less than £1 will not be
returnable and will be retained by the Company for use by the Company for any purpose;
(f)
agree that all applications, acceptances of applications and contracts resulting therefrom will
be governed by, and construed in accordance with, English law and that you submit to the
jurisdiction of the English courts and agree that nothing shall limit the right of the Company to
bring any action, suit or proceeding arising out of or in connection with any such applications,
acceptances of applications and contracts in any other manner permitted by law or in any
court of competent jurisdiction;
(g)
agree that, in respect of those New Shares for which your application has been received and
processed and not refused, acceptance of your application shall be constituted by notice of
acceptance thereof by Octopus;
(h)
agree that all documents in connection with the Offer and any returned monies will be sent at
your risk and may be sent by post to you at your address as set out in the Offer Application
Form;
(i)
agree that, having had the opportunity to read the Prospectus and any supplementary
prospectus issued by the Company and filed with the FSA, you shall be deemed to have had
notice of all information and representations concerning the Company contained herein and
any supplementary prospectus issued by the Company and filed with the FSA (whether or not
so read);
(j)
confirm that in making such application you are not relying on any information or
representation in relation to the Company other than those contained in this Prospectus
(including any supplementary prospectus issued by the Company and filed with the FSA) and
you accordingly agree that no person responsible solely or jointly for this Prospectus
(including any supplementary prospectus issued by the Company and filed with the FSA) or
involved in the preparation thereof shall have any liability for any such information or
representation;
(k)
confirm that you have reviewed the restrictions contained in paragraphs 4 and 5 below and
warrant as provided therein;
(l)
warrant that you are not under the age of 18 years;
(m) agree that such Offer Application Form is addressed to the Company and Octopus;
(n)
agree to provide the Company and/or Octopus with any information which they may request
in connection with your application and/or in order to comply with VCT or other relevant
legislation and/or the Money Laundering Regulations 2007 (as the same may be amended
from time to time);
(o)
warrant that, in connection with your application, you have observed the laws of all relevant
territories, obtained any requisite governmental or other consents, complied with all requisite
formalities and paid any issue, transfer or other taxes due in connection with your application
in any territory and that you have not taken any action which will or may result in the Company
or Octopus acting in breach of the regulatory or legal requirements of any territory in
connection with the Offer or your application;
(p)
agree that Octopus will not regard you as its customer by virtue of your having made an
application for New Shares or by virtue of such application being accepted;
95
(q)
declare that a loan has not been made to you or any associate, which would not have been
made or not have been made on the same terms, but for you offering to subscribe for, or
acquiring New Shares and that the New Shares are being acquired for bona fide commercial
purposes and not as part of a scheme or arrangement the main purposes of which, or one of
the main purposes of which, is the avoidance of tax;
(r)
agree that, unless otherwise indicated on the Offer Application Form, you consent to the
website publication of annual and interim reports, and other statutory communications, online
at www.octopusinvestments.com and the provision of an email notification, to the email
address provided on the Offer Application Form, of when such documents are available for
viewing online; and
(s)
consent to information provided on the Offer Application Form being provided to the registrars
of the Company (from time to time) to process shareholding information and notifications as
referred to in paragraph (r) above.
4.
No action has been or will be taken in any jurisdiction by, or on behalf of, the Company which would
permit a public offer of New Shares in any jurisdiction where action for that purpose is required,
other than the UK, nor has any such action been taken with respect to the possession or
distribution of this document other than in the UK. No person receiving a copy of this Prospectus
(including any supplementary prospectus issued by the Company and filed with the FSA) or an
Offer Application Form in any territory other than the UK may treat the same as constituting an
invitation or offer to him nor should he in any event use such Offer Application Form unless, in the
relevant territory, such an invitation or offer could lawfully be made to him or such Offer Application
Form could lawfully be used without contravention of any registration or other legal requirements. It
is the responsibility of any person outside the UK wishing to make an application for New Shares to
satisfy himself as to full observance of the laws of any relevant territory in connection therewith,
including obtaining any requisite governmental or other consents, observing any other formalities
required to be observed in such territory and paying any issue, transfer or other taxes required to
be paid in such territory. The New Shares have not been nor will be registered under the United
States Securities Act of 1933, as amended, and may not be offered or sold in the United States of
America, its territories or possessions or other areas subject to its jurisdictions (the ‘‘US’’). In
addition, the Company has not been and will not be registered under the United States Investment
Advisers Act of 1940, as amended. No Offer Application Form will be accepted if it bears an
address or post mark in the US.
5.
The basis of allocation will be determined by the Company (after consultation with Octopus) in its
absolute discretion. It is intended that applications will be accepted in the order in which they are
received. The Offer will be closed at noon on 5 April 2013 or as soon as full subscription is reached
(unless extended by the Board in its absolute discretion to no later than 30 June 2013, or closed
earlier at its discretion). The Board in its absolute discretion may also decide to increase the Offer
to raise a further £10 million subject to a maximum of 110 million New Shares being issued in
aggregate pursuant to the Offer, the Schemes and the Enhanced Buyback Facility. The right is
reserved, notwithstanding the basis so determined, to reject in whole or in part and/or scale down
any application, in particular multiple and suspected multiple applications which may otherwise be
accepted. Application monies not accepted or if the Offer is withdrawn will be returned to the
applicant in full by means of a cheque, posted at the applicant’s risk. The right is also reserved to
treat as valid any application not complying fully with these Offer Terms and Conditions of
Application or not in all respects complying with the Offer Application Procedures set out on page
93. In particular, but without limitation, the Company (after consultation with Octopus) may accept
applications made otherwise than by completion of an Offer Application Form where the applicant
has agreed in some other manner to apply in accordance with these Offer Terms and Conditions.
The Offer is not underwritten. The Offer will be suspended if at any time the Company is prohibited
by statute or other regulations from issuing New Shares.
6.
Save where the context requires otherwise, terms defined in this Prospectus bear the same
meaning when used in these Offer Terms and Conditions of Application and in the Offer Application
Form.
7.
Octopus may agree to reduce the amount payable to it by the Company or agree, in respect of an
individual investor, that the application for New Shares pursuant to the Offer will be increased by
this amount and the enlarged application will be applied in subscribing for New Shares at the Offer
96
A3: 5.1.5
Price through the Offer. No further fees or commission will be paid in respect of such additional
New Shares.
8.
Financial intermediaries who, acting on behalf of their clients, return valid Offer Application Forms
bearing their stamp or full address details and FSA number will, where permissible, normally be
entitled to receive an initial commission of 2.5%. Financial intermediaries may agree to waive their
initial commission in respect of an application. If this is the case, then the Application for New
Shares pursuant to the Offer will be increased by the amount of initial commission waived (i.e. up to
2.5%) and the enlarged application will be applied in subscribing for New Shares at the Offer Price
through the Offer. No further fees or commission will be paid in respect of such additional New
Shares. In addition, provided that the intermediary continues to act for the client and the client
continues to be the beneficial owner of the New Shares, they will normally be paid, where
permissible, an annual trail commission of 0.5% of the initial net asset value of their client’s holding
in New Shares for a period of nine years from the allotment date of the relevant New Shares.
9.
The Company (after consultation with Octopus) may change the availability and terms of initial and
trail commission payable through an announcement to the London Stock Exchange through a
Regulatory Information Service provider authorised by the FSA applicable to applications received
on or after a specified date. The Company may also provide or publish one or more amended
application forms to the Offer Application Form set out in this document pursuant to which
applications under the Offer will be accepted.
10.
Where commission is permissible, Octopus will collate the Offer Application Forms bearing the
financial intermediaries’ stamps or full address details and calculate and pay the initial commission
payable, which will be paid monthly, and also calculate the annual trail commission payable by the
Company.
11.
If the Company is required to publish a supplementary prospectus, subscribers who have yet to be
entered on to the Company’s register of members will be given two working days to withdraw from
their subscription. In the event that notification of withdrawal is given by post, such notification will
be effected at the time the subscriber posts such notification rather than at the time of receipt by the
Company.
Lodging of Offer Application Forms and dealing arrangements
Completed Offer Application Forms with the appropriate remittance must be posted or delivered by hand
to Octopus Investments Limited, 20 Old Bailey, London EC4M 7AN. The Offer will be open from 1
October 2012 and will close at noon on 5 April 2013 or as soon as full subscription is reached (unless
extended by the Board in its absolute discretion to no later than 30 June 2013, or closed earlier at its
discretion). The Board in its absolute discretion may also decide to increase the Offer to raise a further
£10 million if there proves to be excess demand from investors, subject to a maximum of 110 million New
Shares being issued in aggregate pursuant to the Offer, the Schemes and the Enhanced Buyback
Facility. If you post your Offer Application Form, you are recommended to use first class post and to
allow at least two Business Days for delivery.
Unless otherwise agreed by the Company, the New Shares will be issued in certificated form (though
such New Shares can subsequently be admitted to CREST).
It is expected that dealings in the New Shares will commence within ten Business Days following
allotment and that share certificates will be dispatched within 15 Business Days of allotment of the New
Shares. Allotments will be announced on an appropriate Regulatory Information Service Provider.
Temporary documents of title will not be issued. Dealings prior to receipt of share certificates will be at
the risk of applicants. A person so dealing must recognise the risk that an application may not have been
accepted to the extent anticipated or at all.
To the extent that any application is not accepted any payment will be returned without interest by
returning the applicant’s cheque or banker’s draft or by sending a crossed cheque in favour of the
applicant through the post, at the risk of the person entitled thereto.
97
Money Laundering Notice - Important procedures for applications of £10,001 or more in
aggregate in Octopus products.
In such circumstances, Octopus will require verification of the identity of the applicant. Failure to provide
the necessary evidence of identity may result in your application being treated as invalid or in a delay of
confirmation.
If the application is for £10,001 or more (or is one of a series of linked applications for the Octopus
products, the value of which exceeds that amount) in such circumstances, Octopus will carry out money
laundering checks through Experian.
Should verification of an Investor’s identity be unsuccessful through Experian:
A
Verification of the investor’s identity may be provided by means of a ‘‘Letter of Introduction’’, from
an intermediary or other regulated person (such as a solicitor or accountant) who is a member of a
regulatory authority and is required to comply with the Money Laundering Regulations 2007 or a
UK or EC financial institution (such as a bank). Octopus will supply specimen wording on request;
or
B
If an application is made direct (not through an intermediary), you must provide the following
documents:
1.
either a certified copy of your passport or driving licence; and
2.
a recent (no more than three months old) original bank or building society statement, or utility
bill, or recent tax bill, in your name.
Copies should be certified by a solicitor or bank. Original documents will be returned by post at your risk.
If a cheque is drawn by a third party, the above will also be required from that third party.
98
OCTOPUS APOLLO VCT 3 PLC
ENHANCED BUYBACK FACILITY APPLICATION FORM
Before completing this Enhanced Buyback Facility Application Form you should read the prospectus
issued by the Company dated 17 August 2012 (‘‘Prospectus’’). Definitions used in the Prospectus apply
herein.
This document is important and requires your immediate attention. If you are in any doubt as to what action
you should take, you are recommended to consult a person authorised under the Financial Services and
Markets Act 2000 who specialises in advising upon investment in shares and other securities, without
delay.
The distribution of this and the accompanying documents into certain jurisdictions other than the UK (including, but
not limited to, the United States, Canada, Australia, South Africa, Japan or the Republic of Ireland) is or may be
restricted by law and therefore persons into whose possession this document and accompanying forms come should
inform themselves about, and observe, such restrictions. Failure to comply with any such restrictions may constitute
a violation of the securities laws of any such jurisdiction.
The Enhanced Buyback Facility is only being made available to UK Shareholders on the register on 1 October 2012
and is conditional on the approval of Resolutions 1, 5 and 10 to be proposed at the General Meeting to be held on 19
September 2012. If the requisite Resolutions are not approved, the Enhanced Buyback Facility will be withdrawn.
Target VCT Shareholders can only participate in the Enhanced Buyback Facility if New Shares in respect of their
relevant Scheme have been allotted and registered into the register of members of the Company by 1 October 2012.
Shareholders who do not wish to participate in the Enhanced Buyback Facility should take no further
action.
AN APPLICATION UNDER THE ENHANCED BUYBACK FACILITY MAY ONLY BE MADE BY THE
SHAREHOLDER(S) ON THE REGISTER ON 1 OCTOBER 2012. IT IS NOT A NEGOTIABLE DOCUMENT OR
A DOCUMENT OF TITLE AND CANNOT BE TRADED. This Enhanced Buyback Facility Application Form is to UK
Shareholder(s) and cannot be sold, assigned, transferred, or split. Nominees who wish to participate in respect of
multiple beneficial shareholders should contact Octopus Investments Limited (contact details below).
SECTION 1 – TO BE COMPLETED BY ALL SHAREHOLDERS
Title: Mr/Mrs/Miss/Dr/Other:
Telephone (mobile):
Forename:
Telephone (home):
Surname(s):
National Insurance number:
Address:
Date of Birth:
Box 1A
Place a cross [x] in this box to apply for your full
Basic Entitlement
OR
Box 1B
Insert in this box the number of Existing Shares for
which your application is for if less or more than your
Basic Entitlement
1.
If you wish to apply to participate for your Basic Entitlement in full only (i.e. 50% of your holding of Existing Shares), please
place a cross in Box 1A.
2.
If you wish to apply for less or more than your Basic Entitlement, please insert in Box 1B the number of whole Existing
Shares you wish to apply for (if more than your Basic Entitlement please insert the number of Existing Shares including your
Basic Entitlement (i.e. in aggregate)).
3.
Please note that your shareholding may have changed following the merger.
Completed Application Forms for the Enhanced Buyback Facility must be posted, together with existing
share certificates (for Target VCT Shareholders these are the new share certificates issued by the Company
following completion of the merger), to Octopus Investments Limited, 20 Old Bailey, London EC4M 7AN by
post or hand delivered (during normal business hours).
99
Shareholders who have queries in respect of the Enhanced Buyback Facility should contact Octopus
Investments Limited, telephone: 0800 316 2295 between the hours of 8.00 a.m. and 6.00 p.m. on any
Business Day. No financial, legal, tax or investment advice will be given.
Shareholders who have queries about their holdings and/or date(s) of acquisition should contact the
Company registrars, Capita Registrars, telephone: 0871 664 0324 from within the UK or on + 44 20 8639
3399 if calling from outside the UK. Calls to the 0871 664 0324 number cost 10p per minute from a BT
landline. Other network providers may vary. Lines are open Monday to Friday 9.00 a.m. – 5.30 p.m. (London
time), No financial, legal, tax or investment advice will be given.
ALL SHAREHOLDERS - PLEASE SIGN AND DATE THE ENHANCED BUYBACK FACILITY APPLICATION
FORM AT SECTION 2. IF YOUR APPLICATION IS VIA A FINANCIAL INTERMEDIARY, PLEASE ENSURE
SECTION 4 IS COMPLETED BY SUCH INTERMEDIARY BEFORE BEING SUBMITTED.
APPLICATIONS BY A NOMINEE WHERE THE PROCEEDS ARE TO BE REINVESTED FOR A BENEFICIAL
SHAREHOLDER - PLEASE ARRANGE FOR THE BENEFICIAL SHAREHOLDER TO COMPLETE, SIGN AND
DATE SECTION 3.
SECTION 2 – TO BE COMPLETED BY ALL SHAREHOLDERS
By signing this Enhanced Buyback Facility Application Form at Section 2 or 3, you agree to sell the number
of Existing Shares detailed in Box 1 at the Tender Price and have the net proceeds of sale used to purchase
New Shares at the Issue Price in your name or, if completed, the name of the person detailed in Section 3 on
the terms and conditions of the Enhanced Buyback Facility contained in the Prospectus. In the event of
inadequate existing share certificates being received, applications will be rejected.
EXECUTION BY INDIVIDUALS - Signed and delivered as a deed by:
Signature(s) of Applicant(s)
Signature(s) of Witness(es)
Name and address of Witness(es)
EXECUTION BY COMPANIES - Executed and delivered as a deed by the company named below
Alternative 1 – Director and Director/Secretary
Name
Signature
Director
Director/Secretary*
(*delete as appropriate)
or
Alternative 2 – Director and Witness
Name
Address
Director
Not required
Witness
100
Signature
Data Protection
Octopus Investments Limited and Capita Registrars Limited will use the information you give for
administration, research and statistical purposes. Information provided by you will be held in
confidence by Octopus Investments Limited and Capita Registrars Limited and will not be passed on
to any other product or service companies. Your details may be used by Octopus Investments Limited
and Capita Registrars Limited to send you information on other products and services they offer. If
you would prefer not to receive such information, please tick this box.
truept
SECTION 3 – ONLY TO BE COMPLETED FOR APPLICATIONS BY A NOMINEE WHERE THE
PROCEEDS ARE TO BE REINVESTED FOR A BENEFICIAL SHAREHOLDER
Beneficial shareholder to complete details.
Title: Mr/Mrs/Miss/Other:
Telephone (work):
Forename(s):
Telephone (home):
Surname:
National Insurance number:
Address:
Date of Birth:
By signing this Enhanced Buyback Facility Application Form the beneficial shareholder agrees to
subscribe for New Shares at the Issue Price (such subscription monies to be satisfied from the net
proceeds of sale of the Shares) on the terms and conditions of the Enhanced Buyback Facility contained in
the Prospectus. In the event of inadequate information being received, applications will be rejected.
Evidence of identity may be requested.
Signed and delivered as a deed by:
Signature(s) of Applicant(s)
Signature(s) of Witness(es)
Nominee contact details for queries
Telephone:
Email:
101
Name and address of Witness(es)
SECTION 4 – TO BE COMPLETED BY FINANCIAL INTERMEDIARIES
Financial Advisers to complete details for the purposes of initial commission and annual trail commission.
Name of Financial Adviser:
Execution Only
Company Name: Interactive Investor
_________
Network Name:
n/a
Title: Mr/Mrs/Miss/Other
FSA No.:
190551
David
Surname:
Scrivens
Telephone:
01442 217 287
Forename(s):
Email: ii@applicationadmin.co.uk
Name of Administrator/Support Staff:
______
Title Mr/Mrs/Miss
Forename(s):
Dr
Philip
Surname:
Rhoden
If commission is to be paid to a network or head office, please give details:
Re-invested Commission
Please insert the amount of initial commission to be waived (up to 2.5%)
to be reinvested for additional New Shares for your client
2.5
%
Intermediary Bank Details
Account name:
Bank/Building Society:
Sort Code:
Account Number:
Commission email address:
ii@applicationadmin.co.uk
The Company, Octopus Investments Limited and Capita Registrars Limited accept no liability for any
instruction that does not comply with these conditions.
102
OCTOPUS APOLLO VCT 3 PLC
OFFER APPLICATION FORM
Before completing this Offer Application Form you should read the prospectus issued by the Company
dated 17 August 2012 (‘‘Prospectus’’) and the Offer Terms and Conditions of Application and Offer
Application Procedure contained therein. Definitions used in the Prospectus apply herein, save that
references to Existing Shares herein also means New Shares as may have been issued pursuant to the
merger. The Offer opens on 1 October 2012 and will close at noon on 5 April 2013, unless the Offer is fully
subscribed prior to that date or extended by the Board (to no later than 30 June 2013). For applications on
or after 31 December 2012, please check with Octopus as to whether the Company has published or made
available revised application form(s).
PLEASE COMPLETE IN BLOCK CAPITALS.
SECTION 1 – PERSONAL DETAILS
Title: Mr/Mrs/Miss/Other
Address:
Forename:
Middle Name(s):
Surname:
Postcode:
Date of Birth:
Telephone (Day):
National Insurance Number:
Telephone (Home):
I am an existing investor with Octopus
Email:
SECTION 2 – INVESTOR SERVICES
1. Would you like to be included in future mailings on
other Octopus products (please tick all that apply)?
2. How would you like to be updated about your
investment?
Information about other Octopus products
Email or
Quarterly Octopus Newsletter
Post
3. If you would like to receive hard copy publications of
annual and interim reports, and other statutory
communications, please tick the following box
No thank you
SECTION 3 – SUBSCRIPTION DETAILS AND SIGNATURE
I enclose a cheque or bank made payable to
I offer to subscribe the following amount for New
Shares bankers’ draft drawn on a UK clearing under
the Offer Terms and Conditions of Application as set
out in the Prospectus. The application must be for a
minimum of £3,000. Please see pages 36 to 38 of the
Prospectus for further details.
Signature
‘Octopus Apollo VCT 3 plc – Applications’
I have made a bank transfer into ‘Octopus Apollo
VCT 3 plc – Applications’.
£
103
Date
SECTION 4 – ADVISER DETAILS
(FOR COMPLETION BY FINANCIAL INTERMEDIARIES ONLY)
Company Name: Interactive
Investor
________ Mr
Title: Mr/Mrs/Miss/Other
Network Name:
Address:
Forename:
David
Surname:
Scrivens
Telephone:
01442 217 287
n/a
Interactive Investor
VCT Service
c/o Clubfinance Ltd
PO Box 1036
Hemel Hempstead
Hertfordshire
Postcode: HP1
Email: ii@applicationadmin.co.uk
2WU
Administrator Email: ii@applicationadmin.co.uk
Please provide details of your bank account so that commission can be paid to you via BACS
Account Name:
Account Number:
Email for Commission Statements:
ii@applicationadmin.co.uk
Sort Code:
Special Instructions (i.e. amount of initial commission
to be waived): Please rebate 2.5% (all
FSA Number and Company Stamp:
190551
initial)commission to our client as
additional shares. Please pay trail
commission to Clubfinance Ltd.
SECTION 5 – DIVIDEND INSTRUCTIONS
All dividends on New Shares held in the Company may
be paid directly into bank and building society
accounts. In order to facilitate this, please complete
the mandate instruction form below. Dividends paid
directly to your account will be paid in cleared funds on
the dividend payment dates. Your bank or building
society statement will identify details of the dividend as
well as the dates and amounts paid.
Please forward until further notice, all dividends that
may from time to time become due on any New Shares
now standing, or which may hereafter stand, in my
name on the register of members of the Company to:
Name of Bank or Building Society:
Account Number:
Address of Branch:
Sort Code Number:
Account Name:
Signature:
Date:
Postcode:
Applicant’s Name:
The Company cannot accept responsibility if any details provided by you are incorrect.
104
105
CORPORATE INFORMATION
Directors
Tony Morgan (Chairman)
Rob Johnson
Matt Cooper
A1: 1.1
A1: 14.1
Registered Office
20 Old Bailey
London
EC4M 7AN
A3: 1.1
A1: 5.1.4
Telephone: 0800 316 2295
Website: www.octopusinvestments.com
Company Number: 05840377
A3: 5.4.1
A3: 10.1
Investment Manager and Administrator
Octopus Investments Limited
20 Old Bailey
London
EC4M 7AN
Company Secretary
Tracey Spevack
20 Old Bailey
London
EC4M 7AN
Solicitors
SGH Martineau LLP
No. 1 Colmore Square
Birmingham
B4 6AA
Sponsor
Matrix Corporate Capital LLP
One Vine Street
London
W1J 0AH
Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Reporting Accountant
Scott-Moncrieff
Exchange Place 3
Semple Street
Edinburgh
EH3 8BL
Auditors and Tax Advisers
Grant Thornton UK LLP
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford
OX4 2WB
Broker
Matrix Corporate Capital LLP
One Vine Street
London
W1J 0AH
106
107
NP0812.713
108