Final Results -10-

investments in unquoted companies held at fair value.  The valuation methods 
used by the Company include the application of a price/earnings ratio derived 
from listed companies with similar characteristics, and consequently the value 
of the unquoted element of the portfolio can be indirectly affected by price 
movements on the London Stock Exchange. A 10% overall increase in the valuation 
of the unquoted investments at 31 January 2011 would have increased net assets 
and the total profit for the year by  GBP669,100 (31 January 2010:  GBP666,200) an 
equivalent change in the opposite direction would have reduced net assets and 
the total profit for the year by the same amount. 
 
The Investment Manager considers that the majority of the investment valuations 
are based on earnings multiples which are ascertained with reference to the 
individual sector multiple or similarly listed entities. It is considered that 
due to the diversity of the sectors, the 10% sensitivity discussed above 
provides the most meaningful potential impact of average multiple changes across 
the portfolio. 
 
14.0% (31 January 2010: 17.4%) by value of the Company's net assets comprises of 
money market funds held at fair value.  A 1% overall increase in the valuation 
of the money market funds at 31 January 2011 would have increased net assets and 
the total profit for the year by  GBP11,240 (31 January 2010:  GBP14,210)  an 
equivalent change in the opposite direction would have reduced net assets and 
the total profit for the year by the same amount. 
 
Interest rate risk 
Some of the Company's financial assets are interest-bearing.  As a result, the 
Company is exposed to fair value interest rate risk due to fluctuations in the 
prevailing levels of market interest rates. All interest-bearing assets are held 
at FVTPL. 
 
Fixed rate 
The table below summarises weighted average effective interest rates for the 
fixed interest-bearing financial instruments: 
                    As at 31 January 2011            As at 31 January 2010 
 
                                                                        Weighted 
                                       Weighted                          average 
              Total fixed               average Total fixed             time for 
                     rate   Weighted   time for        rate   Weighted     which 
                portfolio    average which rate   portfolio    average   rate is 
                       by   interest   is fixed          by   interest  fixed in 
              value  GBP'000     rate %   in years value  GBP'000     rate %     years 
 
 
 
Unquoted 
fixed- 
interest 
investments         2,268     13.20%        3.0       2,858     15.05%       3.0 
 
 
Floating rate 
The Company's floating rate investments comprise cash held on interest-bearing 
deposit accounts and, where appropriate, within interest bearing money market 
funds.  The benchmark rate which determines the rate of interest receivable on 
such investments is the bank base rate, which was 0.5% at 31 January 2011 (31 
January 2010: 0.5%).  The amounts held in floating rate investments at the 
balance sheet date were as follows: 
 
                                31 January 2011   31 January 2010 
 
                                            GBP000               GBP000 
 
 Unquoted floating rate notes             1,500             1,455 
 
 Cash on deposit                          1,277             1,515 
 
                                          2,777             2,970 
 
 
Every 1% increase or decrease in the base rate would increase or decrease income 
receivable from these investments and the total profit for the year by  GBP27,770 
(31 January 2010:  GBP29,700) 
 
Credit risk 
Credit risk is the risk that a counterparty to a financial instrument will fail 
to discharge an obligation or commitment that it has entered into with the 
Company. The Investment Manager and the Board carry out a regular review of 
counterparty risk. The carrying values of financial assets represent the maximum 
credit risk exposure at the balance sheet date. 
 
At 31 January 2011, the Company's financial assets exposed to credit risk 
comprised the following: 
 
                                             31 January 2011   31 January 2010 
 
                                                         GBP000               GBP000 
 
 Investments in floating rate instruments              1,500             1,455 
 
 Investments in fixed rate instruments                 2,268             2,858 
 
 Cash on deposit                                       1,277             1,515 
 
 Accrued dividends and interest receivable                87                36 
 
                                                       5,132             5,864 
 
 
Credit risk relating to listed money market funds is mitigated by investing in a 
portfolio of investment instruments of high credit quality, comprising major UK 
institutions. Credit risk relating to loans to and preference shares in unquoted 
companies is considered to be part of market risk. 
 
Those assets of the Company which are traded on recognised stock exchanges are 
held on the Company's behalf by third party custodians. Bankruptcy or insolvency 
of a custodian could cause the Company's rights with respect to securities held 
by the custodian to be delayed or limited. 
 
Credit risk arising on the sale of investments is considered to be small due to 
the short settlement and the contracted agreements in place with the settlement 
lawyers. 
 
The Company's interest-bearing deposit and current accounts are maintained with 
HSBC Bank plc. The Investment Manager has in place a monitoring procedure in 
respect of counterparty risk which is reviewed on an ongoing basis. Should the 
credit quality or the financial position of either entity deteriorate 
significantly the Investment Manager will move the cash holdings to another 
bank. 
 
Other than cash or liquid money market funds, there were no significant 
concentrations of credit risk to counterparties at 31 January 2011 or 31 January 
2010. 
 
Liquidity risk 
The Company's financial assets include investments in unquoted equity securities 
which are not traded on a recognised stock exchange and which generally may be 
illiquid.  As a result, the Company may not be able to realise some of its 
investments in these instruments quickly at an amount close to their fair value 
in order to meet its liquidity requirements, or to respond to specific events 
such as deterioration in the creditworthiness of any particular issuer. 
 
The Company's listed money market funds are considered to be readily realisable 
as they are of high credit quality as outlined above. 
 
The Company's liquidity risk is managed on a continuing basis by the Investment 
Manager in accordance with policies and procedures laid down by the Board. The 
Company's overall liquidity risks are monitored on a quarterly basis by the 
Board. 
 
The Company maintains sufficient investments in cash and readily realisable 
securities to pay accounts payable and accrued expenses.  At 31 January 2011 
these investments were valued at  GBP1,277,000 (31 January 2010:  GBP1,515,000). 
 
 
17.        Post balance sheet events 
The following events occurred between the balance sheet date and the signing of 
these financial statements: 
 
  * 23 March 2011 - the Company disposed of part of GreenCo Services Limited for 
     GBP268,000 and on the same day invested a further  GBP68,181 into the company. 
  * 13 March 2011 - the Company invested  GBP124,000 into Evaki Power Limited 
  * 13 March 2011 - the Company invested  GBP142,000 into Kala Power Limited. 
 
 
18.        Contingencies, guarantees and financial commitments 
There were no contingencies, guarantees or financial commitments as at 31 
January 2011 (2010:  GBPnil). 
 
19.        Related party transactions 
Matt Cooper, a non-executive Director of Octopus Apollo VCT 2 plc, is the 
Chairman of Octopus Investments Limited.  Octopus Apollo VCT 2 plc has employed 
Octopus Investments throughout the year as Investment Manager.  The Company has 
paid Octopus  GBP167,000 (2010:  GBP160,000) in the year as a management fee and there 
is  GBPnil outstanding at the balance sheet date.  The management fee is payable 
quarterly in advance and is based on 2.0% of the net asset value calculated at 
annual intervals as at 31 January.  Octopus provides accounting and 
administrative services to the Company, payable quarterly in advance for a fee 
of 0.3% of the net asset value calculated at annual intervals as at 31 January. 
In addition, Octopus also provides company secretarial services for an 
additional fee of  GBP7,500 per annum. 
During the year  GBP24,500 (2010:  GBP23,500) was paid to Octopus Investments and 
there is  GBPnil outstanding at the balance sheet date, for the accounting and 
administrative services. 
 
No performance related incentive fee will be payable over the first five years. 
Thereafter, Octopus will be entitled to an annual performance related incentive 
fee.  This performance fee is equal to 20% of the amount by which the NAV from 
the start of the sixth accounting and subsequent accounting period exceeds 
simple interest of the HSBC Bank plc base rate for the same period.  The NAV at 
the start of the sixth accounting period must be at least 100p.  Any 
distributions paid out by the the Company will be added back when calculating 
this performance fee.  The Board considers that the liability becomes due at the 
point that the performance criteria are met; this has not been achieved and 
therefore no liability has been recognised. 
 
 During the year to 31 January 2011, the Directors received the following 
dividends from the Company: 
 
                                  Dividend received 
 
 Stuart Brocklehurst (Chairman)               GBP1,055 
 
 Matt Cooper                                    GBP200