I N V E S T I N G I N B L O O D S T O C K

I N V E S T I N G I N B L O O D S T O C K

I N T R O D U C T I O N The roots of the modern thoroughbred can be traced back to Britain in the 18th Century and all modern thoroughbred horses are descended from the Byerley Turk, The Darley Arabian and the Godolphin Arabian, all of whom were imported to Britain. Known as the Sport of Kings, the history and connections of the Royal Family have ensured that Britain continues to have a reputation as the most prestigious racing country in the world. Britain is at the forefront of the production of global stars with leading bloodlines and an ideal climate for producing and rearing the very best youngstock. Britain has the reputation for one of the highest quality bloodstock industries in the world and is one of the major exporters of thoroughbreds globally to America, Australia, Hong Kong, Qatar, Japan and China. The prestige of the racing and breeding industry is underlined by the fact that the world s leading breeders and owners have all chosen to base their operations in Europe. One of the world s leading auction houses, Tattersalls are based in Newmarket where the key players and leading buyers from around the world meet and compete for the very best bloodstock that will bring them victory on the track or produce the next champion. The sport attracts a dedicated and passionate following, including high net worth individuals and risk-taking entrepreneurs with money to invest. The international nature of the business is recognised geographically by the spread of recent champions namely Frankel, Sea The Stars and Treve in Europe, Sea Biscuit, American Pharoah and Zenyatta in America and Winx and Black Caviar in Australia. In the British Thoroughbred Breeding Industry Report commissioned in 2014, PricewaterhouseCoopers concluded that the thoroughbred breeding industry which supports almost 10,000 jobs contributes 281m to the UK economy with 150m plus of foreign investment in thoroughbreds. It states that there are substantial future opportunities in established and developing racing markets. which is fully approved by HMRC and to deliver attractive returns to shareholders over the medium term. The EIS fund will appeal to high net-worth private investors who are looking for an alternative way of investing or the smaller investor, who is looking to take a higher than average investment risk for a small stake. We expect the fund to generate a good return on investment as well as individuals benefiting from a number of tax advantages through the EIS. The passion, prestige and thrill of the bloodstock industry will continue to be the main driver for some people investing in this alternative investment class. Others may wish to take the opportunity of the generous tax relief. Although bloodstock is a high-risk business, risks can be mitigated by investing in a bloodstock fund which diversifies the risks associated with owning a single horse outright. We look forward to welcoming investment from throughout the world. Investors will pool their money to buy shares in the bloodstock fund. There is a minimum entry level of 10,000 and a maximum investment of 1,000,000 per individual. Investors are required to remain in the fund for more than 3 years in order to qualify for the tax benefits. BlueCrest bloodstock has been established to purchase a carefully selected portfolio of bloodstock assets consisting of broodmares, foals and yearlings which offer the opportunity for profitable resale in order to produce a healthy return for investors. We aim to give access to an alternative asset class through the Enterprise Investment Scheme (EIS) The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. 1

I N V E S T I N G I N B L O O D S T O C K INVESTING IN BLOODSTOCK Investing in bloodstock and breeding is a particularly specialised and a niche sector business. It involves complex processes and has been described as an inexact science. Beyond the genetic make-up and pedigree bloodline of the family, there are physical and psychological attributes such as temperament that come into play which only a true expert will be able to identify. To run a successful bloodstock fund takes patience, persistence and tenacity as well as using years of our expects experience to cover depth of research, quality of analysis, stock selection, ability to spot market opportunities, risk mitigation and diversification. BlueCrest Bloodstock will be run with the highest levels of integrity, transparency, efficiency and service. BLUECREST S AIMS AND OBJECTIVES To build a band of high-quality sought-after bloodstock for resale every year. Use trusted relationships with potential buyers throughout the world. Horses will only be placed in the sales that we feel will optimise their profitability. The fund will be run in a cost-efficient manner in order to maximise profits. Our aim is to be profitable year on year. BLUECREST S STRATEGY The fund will be a trading operation with the emphasis on turning over stock for profit. The business will be global with horses purchased and boarded in various countries including Great Britain, France, America and Australia. All our horses will be boarded at renowned stud farms to ensure the best possible care and husbandry. We will only focus on quality bloodstock. We plan to use proven stallions to upgrade our bloodstock. We have a proven and tested method for targeting elite equine athletes. All horses will be vetted prior to sale. All horses will be insured for mortality. Our unique pre-purchase strategy will target individual horses that have potential to return multiples of their purchase price. 2

The Bluecrest team have almost a century of horse racing knowledge. They can therefore research the successful results of our bloodstock relatives which will enhance the value of our bloodstock. A plan will be made for each horse prior to purchase with the aim to maximise their resale value. We will purchase in-foal and maiden mares where there is an opportunity to develop the value of the mare and produce high value progeny which will be sold at the sales. The mares may be sold at any time. We will purchase successful racing fillies with a breeding certificate who will be put in foal to proven stallions and then resold. We will purchase several carefully selected foals who have correct conformation and walk well with a strong pedigree from a good family who will then be sold as yearlings. This is known as pinhooking. Provide an optional exit for investors after 3 years by way of money returned. PINHOOKING To create a profitable bloodstock fund requires the following skills:- Buy the right individual at the right price. Select a pedigree where the successful performance of the foal s relatives will enhance the horse s value. Envisage the physical development of the foal from a foal to a yearling. Select a sire (stallion) who will be popular, fashionable and in demand at re-sale. Raise and prepare the horse correctly and to place each horse in the best sale that will optimise their profitability based on their pedigree and physical conformation. The table below shows the past results for pinhooking foals to yearlings for Jamie Railton - BlueCrest s Bloodstock Agent. Year Number of Foal Price Keep Costs Sales Price Profit & Loss Profit & Loss % Foals Purchased 2017-18 10 487,500.00 100,000.00 865,000.00 377,500.00 77.44% 2016-17 12 568,584.00 120,000.00 876,000.00 187,416.00 32.96% 2015-16 18 1,243,656.00 180,000.00 2,041,120.00 617,464.00 49.65% 2014-15 10 354,000.00 100,000.00 549,000.00 95,000.00 26.84% 2013-14 11 483,100.00 110,000.00 1,061,350.00 468,250.00 96.93% The term for buying foals and then selling the following year as yearlings is called PINHOOKING. 3

4 Tattersalls was founded in 1766 being the oldest bloodstock auctioneers in the world and the largest in Europe. Tattersalls offer over 10,000 thoroughbreds for sale each year at 15 sales. Last year, Tattersalls turnover topped 331 million and the following tables are the best guide to trends which show a growing market.

TRENDS IN YEARLING SALES AT TATTERSALLS Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Cat. Offered Sold 502 551 513 472 513 577 508 689 676 611 733 652 688 791 1,065 927 1,089 1,021 442 493 462 414 450 514 446 595 609 532 639 563 592 708 955 833 1,017 951 349 386 372 336 339 418 364 449 474 410 510 432 499 512 788 701 749 776 519 456 392 Aggregate 106,503,000 102,290,000 88,038,000 82,744,500 79,274,000 70,343,000 68,102,500 51,634,000 48,243,000 53,735,000 49,821,000 64,922,000 55,035,000 59,635,000 52,631,500 43,527,700 30,196,500 26,055,700 32,256,200 Average 271,691 293,095 228,078 222,431 235,935 207,501 162,925 141,852 107,445 113,365 121,515 127,298 127,396 119,509 102,796 55,238 43,076 34,787 41,567 Median 165,500 165,000 130,000 150,000 150,000 130,000 100,000 100,000 70,000 78,000 85,000 80,000 82,000 70,000 70,000 35,000 30,000 21,000 26,000 5

TRENDS IN MARE SALES AT TATTERSALLS Year Cat. Offered Sold Aggregate Average Median 2017 1,087 857 675 68,315,300 101,208 25,000 2016 1,060 891 681 44,709,200 65,652 27,000 2015 1,117 908 680 46,513,500 68,402 28,000 2014 1,096 882 685 48,290,695 70,497 26,000 2013 1,118 891 721 62,985,000 87,358 28,000 2012 1,134 937 762 43,932,200 57,654 19,000 2011 1,087 865 629 44,121,500 70,145 21,000 2010 1,097 888 644 34,544,800 53,641 17,000 2009 984 792 628 33,197,700 52,863 14,500 2008 1,230 894 610 33,355,150 54,681 12,500 2007 1,390 1,132 762 69,613,500 91,356 23,000 2006 1,391 1,125 870 66,235,800 76,133 30,000 2005 1,383 1,133 901 46,525,800 51,638 22,000 2004 1,207 928 744 31,828,800 42,781 19,000 2003 1,284 1,038 799 38,728,950 48,472 18,500 2002 1,315 1,062 56 34,040,200 45,027 16,000 2001 1,248 1,017 767 36,065,500 47,022 18,000 2000 1,179 1,012 788 34,690,000 44,023 16,000 TRENDS IN FOAL SALES AT TATTERSALLS Year Cat. Offered Sold Aggregate Average Median 2017 1,147 957 742 32,668,200 44,027 25,000 2016 1,136 957 743 30,568,350 41,142 21,000 2015 1,277 1,089 803 33,565,600 41,800 20,000 2014 1,116 966 779 32,110,900 41,221 25,000 2013 1,072 943 740 31,420,400 42,460 23,000 2012 1,015 854 708 24,132,700 34,086 20,000 2011 1,003 879 665 23,860,100 35,880 21,000 2010 941 749 560 17,491,400 31,235 20,000 2009 950 793 618 20,218,700 32,716 16,000 2008 1,261 933 562 14,549,100 25,888 10,500 2007 1,395 1,182 785 28,684,600 36,541 20,000 2006 1,131 908 746 28,861,600 38,688 22,000 2005 1,281 1,089 809 23,305,600 28,808 18,000 2004 1,115 912 690 18,272,700 26,482 14,500 2003 1,122 945 738 21,157,000 28,668 17,000 2002 996 816 585 17,247,700 29,483 14,000 2001 862 709 514 13,569,750 26,400 11,000 2000 1,004 805 608 14,677,400 24,140 12,500 6

Keeneland Sales is an American Auction House in Lexington, Kentucky founded in 1935 which hosts three sales annually in January, September and November. KEENELAND 2018 YEARLING SALE Horses Gross Amount Average Price Median Price Top Price 138 48,620,000.00 352,319.00 260,000.00 2,200,000.00 168 65,835,000.00 391,875.00 300,000.00 2,400,000.00 151 52,833,000.00 350,219.00 270,000.00 1,400,000.00 139 49,475,000.00 355,935.00 300,000.00 2,100,000.00 284 51,059,700.00 179,788.00 140,000.00 1,000,000.00 264 36,054,000.00 136,568.00 117,500.00 875,000.00 289 22,360,550.00 77,372.00 55,000.00 450,000.00 271 19,603,540.00 72,337.00 50,000.00 420,000.00 283 13,354,600.00 47,189.00 35,000.00 370,000.00 272 9,019,400.00 33,160.00 22,000.00 250,000.00 287 5,313,000.00 18,512.00 11,000.00 170,000.00 187 2,228,600.00 11,918.00 7,000.00 65,000 183 1,334,200.00 7,291.00 4,000.00 70,000.00 KEENELAND 2017 YEARLING SALE Horses Gross Amount Average Price Median Price Top Price 95 54,175,000.00 570,263.00 500,000.00 2,700,000.00 194 48,221,000.00 248,562.00 200,000.00 950,000.00 194 47,018,000.00 242,361.00 180,000.00 1,100,000.00 198 47,231,000.00 238,540.00 175,000.00 1,000,000.00 253 31,392,500.00 124,081.00 100,000.00 525,000.00 245 26,875,500.00 109,606.00 80,000.00 625,000.00 276 18,385,000.00 66,612.00 50,000.00 350,000.00 266 8,839,600.00 33,323.00 25,000.00 175,000.00 255 6,557,100.00 25,714.00 15,000.00 180,000.00 159 2,111,900.00 13,282.00 7,500.00 115,000.00 135 1,467,800.00 10,873.00 7,000.00 85,000.00 7

T H E E N T E R P R I S E I N V E S T M E N T S C H E M E The Enterprise Investment Scheme (EIS) is a government initiative offering the most attractive tax breaks in the UK. The EIS has existed in various forms since 1994. In its present form, the possible reliefs and benefits are more extensive than ever. What benefits does the EIS provide to the Investor? Income tax relief at 30% on the amount invested in qualifying investments of up to 1,000,000 per annum. (The EIS relief may be withdrawn if certain events occur within 3 years eg shares sold). An individual may carry-back all or part of current year EIS investments to the previous tax year provided that the limit in the previous year is not exceeded. Any gain arising on a disposal of the shares after 3 or more years will be free from capital gains tax. Deferral of capital gains (no limit) on any other assets by reinvesting all or part of the gain into an EIS company with 1 year before, or 3 years after, the gain accrued. The deferred gain becomes chargeable to capital gains tax if the EIS company shares are sold or on the occurrence of certain other events. Gains realised on or after 3 December 2014 which qualified for Entrepreneurs Relief may be reinvested under the EIS and will still remain eligible for Entrepreneurs Relief when the deferred gain is revived. An investor cannot be connected with the EIS company ie he or she together with associated such as a spouse or close relative cannot own more than 30% of the shares, directly or indirectly. An employee or paid director of the company is also connected, subject to certain exceptions for directors. Relief for any losses made on the disposal of EIS shares can be offset against capital gains tax or, in some circumstances, income tax. As a result of the above, an individual could have a total income tax saving of up to 61.5% of their investment it if fails completely. Our investment places your capital at risk. We do not provide investment, tax or legal advice and we recommend that you seek professional advice if you are considering investing in BlueCrest Bloodstock. You may lose part or all of the capital you invest with us. The value of the bloodstock and markets can be volatile and past performances are not a reliable indicator of future results. Please note that initial charge will be deducted at the outset and will thus reduce the amount invested which will affect the final value of your investment and the tax reliefs you may be able to claim. 8

I N V E S T M E N T I L L U S T R A T I O N S Income Tax Relief Initial Investment 10,000 Income Tax Relief 3,000 Net Cost 7,000 Accrues at 30% irrespective of individual. To obtain this the company issues an EIS Certificate after the company has operated for 4 months Capital Tax Relief If future value is 20,000 less:- Net Cost 7,000 Tax Free Gain 13,000 Profits are not liable for Capital Gains Tax (CGT) as long as shares have been held for 3 years and the investment did not exceed 100,000 Loss Relief If future value is 0.00 Loss is 10,000 Loss Net of Tax Credit 7,000 Tax Credit @ 45% 3,150 Loss after Tax Credits 3,850 Any losses realised on the sale of shares, after having held them for 3 years, attracts a tax credit at individuals highest marginal tax rate. This can be applied to income tax liability in current or previous year OR CGT in current or future years. Reinvestment Relief Other Capital Gains 30,000 CGT Tax @ 28% 8,400 Reinvested in Year 20,000 CGT Tax Credit 2,800 Reinvestment Relief Assume a 30,000 Capital Gain is made in the year that attracts V+CGT and 20,000 is invested in EIS then that 20,000 attracts a credit of 50% of the tax due. Inheritance Tax Relief Initial Investment 10,000 Income Tax Relief 3,000 IHT Tax Relief @ 40% 4,000 Net Cost 3,000 Inheritance Tax Relief any investment in EIS is tax exempt on inheritance as long as held for 2 years. In this example the 10,000 investment passes to the beneficiary with no IHT liability. The information above is for illustration purposes only and may not be relied on in any manner as legal, tax or investment advice. We do not provide investment, tax or legal advice and we recommend that you seek your own professional advice if you are considering investing in BlueCrest Bloodstock Limited. 9

C H A R G E S INITIAL CHARGE An initial charge of 3% (plus VAT where applicable) calculated on the individual s initial gross investment will be made to cover the fund establishment costs. ANNUAL MANAGEMENT CHARGE An annual management charge of 2.5% (plus VAT where applicable) calculated on the individual s initial gross investment to the fund will be payable monthly. PERFORMANCE FEE A performance fee of 20% (plus VAT where applicable) calculated on the net profit will be due on all investments. OTHER CHARGES The purchase price of the bloodstock including any bloodstock agent fees and commissions will be deducted from the investment fund together with associated expenses including keep fees, blacksmith, veterinary, insurance, stallion nomination fees, transport, registrations, sales commission and general business expenditure. Annual accounts will be produced together with quarterly management accounts. 10

T H E T E A M MANAGING DIRECTOR - SARAH WHITNEY With a career spanning over 30 years in the bloodstock industry, Sarah brings a wealth of experience, knowledge and expertise in financial and administrative management. She began her profession working for top racehorse trainers Michael Dickinson and Jenny Pitman and then in 1989, joined Gerald Leigh who established a world-renowned thoroughbred breeding and racing operation at Eydon Hall Farm which included the stud at Eydon, a broodmare band in America, horses in training throughout the world and business interests within the racing industry. In addition, Sarah was an accomplished rider in show jumping circles representing Great Britain. DIRECTOR OF BLOODSTOCK - DOUGLAS McMAHON Douglas is an accomplished businessman and a founder of BlueCrest Bloodstock. He has a vast knowledge and experience of the bloodstock market and has been a very successful owner and breeder with numerous horses over a period of 20 years. There are many people in the bloodstock world with these key attributes but what sets Douglas apart is his natural flare and the ability to select the right horse with potential. In 2011, Douglas purchased a yearling filly for 22,000 Euros from the Arqana Yearling Sales. Named Odeliz, she went on to become a multiple Group 1 winning filly who was subsequently sold privately for 1,000,000 Guineas at the 2015 Tattersalls December Sales. BLOODSTOCK AGENT JAMIE RAILTON Jamie has been buying and selling bloodstock for over 20 years. Whilst initially a jump jockey during which time he rode more than 250 winners, his passion has always been in Flat racing and bloodstock. After several years successfully pinhooking foals to sell as yearlings and spending time in America on various stud farms to further his knowledge, he established Jamie Railton Bloodstock in 2000. Since then Jamie has built up a reputation as a meticulous and honest professional with an intuitive knowledge of the bloodstock markets. Competitive by nature, he is always looking to improve his service and ensure any bloodstock under his care reaches its optimum potential, the objective being to achieve maximum results for his clients for whom he has acted as a sales consignor or investment partner. DIRECTOR OF INVESTMENT - ROGER CLEGG Roger comes from a financial services background having started his career as a Financial Consultant for Prudential plc. His drive and enthusiasm enabled him to develop into a successful entrepreneur working in various sectors whilst keeping an interest in financial services working as a freelance Mergers and Acquisitions Consultant. Roger specialised in the sale of Regulated Independent Financial Advisor firms and has been involved in some large scale acquisitions over the years. Roger looks after our Investment Clients, using his years of experience working along side quality IFAs and Wealth Managers to create an exemplary level of service and over all experience. MARKETING AND CLIENT LIAISON LUCY CAIN Lucy believes marketing is the invisible force that propels the modern business world forward. She is very creativeand always looking for new innovative ways to achieve marketing targets. Lucy is a real people person and a firstclass communicator. One of Lucy s key roles is advising investors on BlueCrest Bloodstock s progression, notifying them of the horses development and any exciting updates to their pedigrees. CHARTERED ACCOUNTANT BROOK ALDER Brook Alder is a partner at Alder Demain & Akers. He is an experienced chartered accountant specialising in the thoroughbred bloodstock market and an industry expert in Enterprise Investment Schemes. 11

C O N T A C T D E T A I L S BlueCrest Bloodstock Limited Company Registration Number 11561083 Swallow Barn, Liverpool Old Road, Sollom, Preston, Lancashire, PR4 6HR E: Enquiries@bluecrestbloodstock.com W: www.bluecrestbloodstock.com Douglas McMahon Director of Bloodstock M: 07765 005000 E: Douglas.M@bluecrestbloodstock.com Sarah Whitney Managing Director M: 07990 591592 E: Sarah.W@bluecrestbloodstock.com Roger Clegg Director of Investments M: 07957 833351 E: Roger.C@bluecrestbloodstock.com Lucy Cain Marketing and Client Liaison M: 07517 402814 E: Lucy.C@bluecrestbloodstock.com 12

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