OCTOPUS INTERMEDIATE CAPITAL: AN OVERVIEW

S h ay R a m a l i n ga mO c t o b e r 2 0 1 2

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Important InformationThis document has been prepared by Octopus Investments Ltd using sources believed to be reliable and accurate but which cannot be warranted to be completely accurate. Directors, representatives and employees of Octopus Investments Ltd or any associated companies do not accept liability for any inaccuracies in this document or for any loss or damage consequent on action taken reliant on information contained therein. This presentation is intended for use by, and the services of Octopus Investments Ltd may only be provided to, persons who are market counterparties and intermediate customers (within the definitions of the FSA rules). No other person may rely on it. The document is provided for information purposes only. The information contained in this document does not, and is not intended to constitute an offer or solicitation of an offer of finance. Information in this presentation is current as at 26 September 2012 unless otherwise stated.

Issued by Octopus Investments Ltd, 20 Old Bailey, London. EC4M 7AN Octopus Investments is authorised and regulated by the Financial Services Authority.

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The landscape we are all facing

Banks not lending

Economy fragile

Valuations are depressed

You have a solid businesses with growth opportunities

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The economy is still fragile...

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Banking market is still fragile....

Banks taking a tougher stance/ unwilling to lend

Lending contracted to UK businesses in the three months to May.

Lending to small and medium-sized enterprises also contracted

Syndicated loans to UK Business

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And valuations are depressed...

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Although there are some signs of hope.... More than half of businesses are looking

towards growth over the next 12 months This is coupled with a strong desire to innovate

over the coming year, despite the conditions Employment intentions remain balanced with

members keeping similar levels of staff from 2009 (with a shift towards part-time staff) with a tendency across the board for businesses to look to marginally increasing staff over the next year

In the circumstances, what are the options?

Banks not lending

Economy fragile

Valuations are depressed

Solid businesses with growth opportunities

Partial Exit is one option

Partial ExitAllows business owners to be rewarded for their hard work by taking some money now, and more over a 3 year period as valuations recover

Banks not lending

Economy fragile

Valuations are depressed

Solid businesses with growth opportunities

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So what can business owners do?

One option is a “partial exit” Enables business owners to be rewarded for their hard work

by taking some money now and further amounts over typically a 3-year period.

This de-risks their personal financial situation and enables them to remain majority shareholders in their businesses as values improve over the next few years.

Business owners may also find a partial exit enables them to focus more aggressively on growth, helping drive their businesses to even greater success

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What do we offer?

Capital Gains Tax efficiency through the use of Entrepreneurs’ Relief(10% tax on the first £10 million)

5 year interest only loans More flexibility than a bank A lower equity stake than equity providers

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Octopus expertise

We have over £2.5 billion retail funds under management, half of which is in tax efficient products

We manage more Venture Capital Trusts (VCT) and Enterprise Investment Scheme (EIS) money than anyone else

We support all of our customers and deliver on our promises

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What do debt providers like us look for?

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Stable businesses with passionate

management teams

Great companies

•Sales > £7m•EBITDA > £1m

Strong track record

Businesses with recurring revenues

or with a strong asset base

Downside protection

OIC

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Examples of OIC investments made to date

Funeral Services PartnershipFuneral services

Company: FSP bought smaller funeral services operators and was a consolidation play in a fragmented industry

Investment: Stable market with supportive demographics generating a reasonably predictable revenue stream for the sector

Rationale: Steady cash flows

AutologicVehicle diagnostic equipment

Company: Autologic designs, programmes and sells hand-held computer units that communicate with a car’s “Electronic Control Unit”, to diagnose and repair car faults

Investment: Once a unit is sold, Autologic receives a steady stream of revenue via an annual fee for software upgrades and support

Rationale: Steady cash flows / too quirky for the banks

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Questions?

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