Freetrade: Difference between revisions

Freetrade Limited
	Freetrade app
Type	Private company
Industry	Financial services; Investment and brokerage services;
Founded	September 25, 2015; 8 years ago in London, United Kingdom.
Founders	Adam Dodds; Davide Fioranelli; Andre Mohamed;
Headquarters	10 Devonshire Square, London, United Kingdom
Key people	Adam Dodds
Revenue	£12.68 million (2021)
Operating income	£(18.23) million (2021)
Net income	£(17.11) million (2021)
Total assets	£29.33 million (2021)
Total equity	£29.33 million (2021)
Number of employees	201 (2021)
Website	https://freetrade.io/

Revision as of 00:24, 19 June 2023

Investing in investments is one of the best ways to grow your money^[1], and Freetrade is a company that's on a mission to get everyone investing.^[2]

The main offering of the company is an app that enables people in the United Kingdom to buy and sell from around 6,000 investments without paying any trading commissions.^[3] Currently, there doesn't seem to be an obvious material uniqueness of the offering relative to peers, such as Trading 212.^[4]

Assuming that Freetrade increases its share of the global brokerage market by 1000x to 1% (from less than 0.0010%^[5]) and other assumptions, the expected return of an investment in the company over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £100,000 investment in the company is expected to return £ccc in five years time.

The degree of risk associated with an investment in Freetrade is 'extremely high', with the shares having an adjusted beta that is 41x above the market (41 vs. 1).^[6]

Operations

How did the idea of the company come about?

The idea for Freetrade Limited came about when the company's founder and CEO, Adam Dodds, relocated from Canada to the UK. He had been an investor since his teenage years and was working as a Manager at KPMG. Upon arriving in the UK, Dodds was surprised by the quality of investment platforms available, particularly in terms of their cost and usability. This experience appears to have been instrumental in his decision to create Freetrade, which aimed to offer a superior investment platform in these respects. ^[2]

What's the mission of the company?

The mission of the company is to get everyone investing.

What are the main offerings of the company?

The main offering of the company is an app, also called Freetrade, that enables users to buy and sell investments without paying any trading commissions.

Other key features of the offering are listed in the table below:


Offering feature	Comment(s)
General investment account (GIA)	A General Investment Account (GIA), sometimes also referred to as a Dealing Account or an Investment Account, is a type of investment account that provides you with a way to buy, hold, and sell a variety of different investments, such as shares, bonds, funds, and more.
Stocks and shares ISA	A Stocks and Shares Individual Savings Account (ISA) is a type of tax-efficient investment account available in the UK. The key benefit of a Stocks and Shares ISA is its tax efficiency. Any income you receive from your investments, such as dividends, and any capital gains you make when you sell your investments, are free from UK tax. This can make them a more efficient way to invest, compared to a General Investment Account (GIA).
Self-invested personal pension (SIPP)	A Self-Invested Personal Pension (SIPP) is a type of pension in the UK that gives you more control over your pension investments compared to conventional personal pensions.
Commission-free trades	Commission-free trading refers to the ability to purchase and sell stocks, ETFs, options, and other securities without being charged a brokerage commission. Currently, the number of investments offered on the Freetrade platform is 6,000 investments.
US fractional shares	Fractional shares are portions of a full share of stock.
Automated order types	Automated order types refer to a variety of instructions that investors can use when placing trades in the financial markets. These instructions are designed to automate certain aspects of the trading process, and they can help investors manage risk, lock in profits, and execute trades at desired price levels without having to constantly monitor the market.
Interest on uninvested cash	"Interest on uninvested cash" refers to the interest that Freetrade pays to you on the cash balance that is sitting in your account but has not been invested in any security, much like interest paid on a traditional savings account balance. Currently, the highest interest offered is 3% on a maximum £4k uninvested cash.
Priority customer service
'Advanced' stock fundamentals
Web application access	Web application access refers to the ability to access and use a software application through a web browser on a device connected to the internet (rather than a mobile app).
FX conversion	Freetrade offers FX conversion, for the trading of shares in a currency other than in the user's local currency.

What is the price of the offering?

The offering is offered in three pricing plans: basic, standard and plus. The key differences between the pricing plans are illustrated in the table below.

Freetrade pricing plans
	Basic	Standard	Plus
Annual price (£)	£0.00/year	£59.88/year	£119.88/year
Monthly price (£)	£0.00/month	£5.99/month	£11.99/month
Accounts
General investment account (GIA)	Yes	Yes	Yes
Stocks and shares ISA	No	Yes	Yes
Self-invested personal pension (SIPP)	Yes	Yes	Yes
Benefits
Commission-free trades	Yes	Yes	Yes
US fractional shares	Yes	Yes	Yes
Range of stocks	1,500	6,000	6,000
Automated order types	No	Yes	Yes
1% interest on a maximum £2k uninvested cash	No	Yes	No
3% interest on a maximum £4k uninvested cash	No	No	Yes
Customer service	Basic	Basic	Priority
Advanced stock fundamentals	No	Yes	Yes
Freetrade Web beta	No	No	Yes
FX fee	0.99%	0.59%	0.39%

For a clearer comparison of Freetrade's services and key features with its competitors, the following table lists the cost for accessing individual features. For instance, the monthly fee for trading commission-free from a pool of 6,000 investments is £5.99.


Offering feature	Price (£/month)	Price (£/year)
General investment account (GIA)	£0.00	£0.00
0.99% fX fee	£0.00	£0.00
Self-invested personal pension (SIPP)	£0.00	£0.00
Commission-free trades	£0.00	£0.00
US fractional shares	£0.00	£0.00
1,500 stocks	£0.00	£0.00
6,000 stocks	£5.99	£59.88
Stocks and shares ISA	£5.99	£59.88
Automated order types	£5.99	£59.88
1% interest on a maximum £2k uninvested cash	£5.99	£59.88
Advanced stock fundamentals	£5.99	£59.88
0.59% fX fee	£5.99	£59.88
3% interest on a maximum £4k uninvested cash	£11.99	£119.88
Priority customer service	£11.99	£119.88
Freetrade Web beta	£11.99	£119.88
0.39% fX fee	£11.99	£119.88

From which place(s) are the offerings able to be purchased?

The main places that the offerings are able to be purchased is in the United Kingdom and Sweden through the company's app, which can be downloaded from the Apple App Store and Google Play Store. Assuming that everyone in the UK and Sweden is able to access the Freetrade platform, the number of people that are able to access the platform is estimated at 77.75 million, or around 1% of the global population.

From which place(s) are the offerings promoted?

The main way that Freetrade promotes the offerings is through word of mouth, via its referral scheme.

What's the current strategy of the company?

The company's main strategy is to make its offerings available in other geographical regions, such as Sweden and the rest of the EU. At the same time, Freetrade plans to release new features, thereby improving the user experience of the offerings.

Team

The company is led by the person who believes in the mission of the company the most: the creator of the company mission (i.e. Adam Dodds). Combined, the members of the management team brings together talent from tech titans, financial service giants, and top-tier consulting firms.

Adam Dodds, Founder & CEO

The instigator of this whole Freetrade thing. ACA and CFA qualified. Ex-KPMG, experience auditing global banks and brokerages; advising on financial services, fintech M&A.

Viktor Nebehaj, CMO & Co-founder

Drives the company's customer growth across the whole marketing stack. Used to scale Google's core search business in Europe. Grew start-ups across EU & Asia.

Paul Brooking, CFO

Paul is a former deputy CFO at Revolut, ex Paysafe, almost 20 years at IG and PwC.

Dan Tedman, VP Risk & Compliance

Joined the regulator in 2010. 5+ years working at the FSA and Bank of England then moved to Alvarez and Marsal as a regulatory consultant.

Amy Gilman, Associate Director of People

Amy is a former Director of Learning and Development at La Fosse Associates. Amy is in charge of all things people and culture at Freetrade.

Timothy Drew, Director of Engineering, Australia

Tim is the original architect of the company's proprietary brokerage system, the Freetrade Cloud Platform. He's now based in Australia at the company's Brisbane engineering office.

Market

The company is expected to make most of its money via brokerage-related services, such as foreign exchange transactions.

Total Addressable Market

Here, the total addressable market (TAM) is defined as the global brokerage market, and based on a number of assumptions, it is estimated that the size of the market as of today (6th May 2023), in terms of revenue, is $1.3 trillion.^[7]

Serviceable Available Market

Here, the serviceable available market (SAM) is defined as the global equity brokerage market, and based on a number of assumptions, it is estimated that the size of the market as of today (6th May 2023), in terms of revenue, is $334 billion.

Serviceable Obtainable Market

Here, the serviceable obtainable market (SOM) is defined as the UK equity brokerage market, and based on a number of assumptions, it is estimated that the size of the market as of today (6th May 2023), in terms of revenue, is $33 billion.

Competition

A key way to determine a product's closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. Active Investors) and aiming to provide the same core benefit (i.e. more money), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings relative to other similar offerings. With that said, according to Stockhub users, the closest competitor of the Freetrade offering is Trading 212.

Freetrade and Trading 212 are similar in that they both offer commission free trading. Trading 212 is better than Freetrade in terms of the number of investments offered (12,000 vs. 6,000), FX fees (0.15% vs. 0.39%) and platform usage fee [Zero vs. £5.99 per month to access the 6,000 investments (note, to access 1,500 investments only, there is no fee)]. Currently, there doesn't seem to be an obvious material uniqueness of the Freetrade platform. A detailed comparison between Freetrade and some of its main competitors are shown in the table below.


	Freetrade Basic	Freetrade Standard	Freetrade Plus	Trading 212	Hargreaves Lansdown	Robinhood	Kroo Bank
Commission free trades	Yes	Yes	Yes	Yes	No	Yes	No
Platform fee	Free	£5.99/month	£11.99/month	Free
Number of investments offered	1,500	6,000^[8]	6,000^[8]	12,000^[9]^[10]			Zero
FX fees	0.99%	0.59%	0.39%	0.15%^[11]
Custody fee	Free	Free	Free	Free^[11]
Account closure fee	Free	Free	Free	Free^[11]
Statements fee	Free	Free	Free	Free^[11]
GBP interest rate	0%	1%^[12]	3%^[13]	1.65%^[11]			3.60%^[14]
EUR interest rate	0%	0%	0%	1.25%^[11]
USD interest rate	0%	0%	0%	1.9%^[11]
General investment account (GIA)	Yes	Yes	Yes	Yes	Yes
Stocks and shares ISA	No	Yes	Yes	Yes	Yes
Self-invested personal pension (SIPP)	Yes	Yes	Yes	No	Yes
CFDs	No	No	No	Yes	No
Google review^[15]	3.4 out of 5 (225 reviews)	3.4 out of 5 (225 reviews)	3.4 out of 5 (225 reviews)	3.1 out of 5 (384 reviews)	3.7 out of 5 (228 reviews)

Financials

The company was incorporated on 28th September 2015. ^[16]

Revenue

Revenue is recognised in the consolidated statement of comprehensive income on the following basis:

Transaction revenue

The group does not charge a commission on stockbroking transactions entered into on behalf of customers but does provide a foreign exchange service to enable customers to purchase instruments listed on exchanges in the United States and Europe. Revenue consisting of a predetermined flat fee is recognised on the execution date of the transaction. This is the date on which services are provided to customers and the group becomes entitled to the revenue. There is no variable consideration in relation to transactional revenue.

Transaction revenue for the financial year ended 30th September 2021 was £9,408,000 (2020: £1,323,000), which represented 74% (2020: 80%) of total revenue.

Recurring revenue

Revenue consisting of account subscription fees, are charged monthly in advance. All obligations to the customer are satisfied across the period in which the service is provided. Recognition of recurring revenue is on an accruals basis over the period in which the service is provided. The consideration due is based on a fixed fee and there is no variable income in which judgement or estimation is involved.

Recurring revenue for the financial year ended 30th September 2021 was £3,274,000 (2020: £338,000), which represented 26% (2020: 20%) of total revenue.

Operating expenses

Freetree, in an effort to boost its platform's user adoption, has implemented an incentive scheme: they are providing free shares - valued up to £100 - to both those who bring in new users through successful referrals, as well as to the new users themselves.^[17] These complimentary shares have a weighted average value of £23.35. This means that the cost Freetrade incurs for acquiring each new user under this program is £46.70. The table below presents the average probability distribution of these free shares.

Free share probability
Minimum free share value (£)	Maximum free share value (£)	Mean free share value (£)	Probability of being rewarded these shares (%)	Probability weighted mean value (£)
10.00	25.00	17.50	80%	14.00
25.01	50.00	37.51	15%	5.63
50.01	75.00	62.51	3%	1.88
75.01	100.00	87.51	2%	1.75
Weighted mean value:				23.25


Year	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30	31	32	33	34	35	36	37	38	39	40	41	42	43	44	45	46	47	48	49	50
Year end date	30/09/2016	30/09/2017	30/09/2018	30/09/2019	30/09/2020	30/09/2021	30/09/2022	30/09/2023	30/09/2024	30/09/2025	30/09/2026	30/09/2027	30/09/2028	30/09/2029	30/09/2030	30/09/2031	30/09/2032	30/09/2033	30/09/2034	30/09/2035	30/09/2036	30/09/2037	30/09/2038	30/09/2039	30/09/2040	30/09/2041	30/09/2042	30/09/2043	30/09/2044	30/09/2045	30/09/2046	30/09/2047	30/09/2048	30/09/2049	30/09/2050	30/09/2051	30/09/2052	30/09/2053	30/09/2054	30/09/2055	30/09/2056	30/09/2057	30/09/2058	30/09/2059	30/09/2060	30/09/2061	30/09/2062	30/09/2063	30/09/2064	30/09/2065
	Historic	Historic	Historic	Historic	Historic	Historic	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast
Profit and loss
Revenue (£'000)	0	0	0	86	1,660	12,682	15,700	36,877	73,489	140,709	258,852	457,517	776,948	1,267,665	1,987,217	2,993,053	4,331,235	6,021,953	8,044,353	10,324,598	12,731,612	15,084,185	17,170,720	18,779,473	19,733,609	19,923,143	19,325,797	18,011,305	16,128,025	13,875,396	11,469,324	9,108,744	6,950,361	5,095,473	3,589,135	2,428,977	1,579,374	986,677	592,234	341,539	189,241	100,744	51,529	25,323	11,956	5,424	2,364	990	398	154
Cost of sales	0	0	0	N/A	(440)	(1,639)
Gross profit	0	0	0	N/A	1,220	11,043
Other operating expenses	N/A	(525)	(1,301)	(3,970)	(10,737)	(29,274)
Operating loss	N/A	(525)	(1,301)	(3,884)	(9,517)	(18,231)
Finance costs					0	(16)
Loss before tax (£'000)	N/A	(525)	(1,165)	(3,470)	(9,517)	(18,247)
Tax on loss on ordinary activities	N/A	21	164	414	557	1,136
Loss for the year	N/A	(504)	(1,165)	(3,470)	(8,960)	(17,111)
Other comprehensive income	N/A	0	0	0	0	0
Total comprehensive expense for the year	N/A	(504)	(1,165)	(3,470)	(8,960)	(17,111)
Balance sheet
Assets
Non-current assets
Property, plant and equipment	3	9	39	76	94	5,588
Intangible assets	0	3	93	828	1,905	2,354
Trade and other receievables	0	13	0	0	0	731
Total non-current assets	3	25	132	904	1,999	8,673
Current assets
Trade and other receiveables	4	2	186	847	2,761	7,859
Corporation tax receivables	0	0	0	0	557	1,021
Cash and cash equivalents	112	727	2,684	3,355	6,730	22,672
Total current assets	116	729	2,870	4,202	10,048	31,552
Liabilitites
Current liabilities
Trade and other payables	18	84	208	297	1,461	5,381
Lease liabilities	0	0	0	0	0	2,127
Total current liabilities	18	84	208	297	1,461	7,508
Net current assets	98	645	2,662	3,905	8,587	24,044
Non-current liabilities
Lease liabilities	0	0	0	0	0	3,388
Total non-current liabilities	0	0	0	0	0	3,388
Net assets	101	670	2,794	4,809	10,586	29,329
Equity
Share capital	0	0	0	0	0	0
Share premium	252	1,324	4,610	10,086	22,801	57,837
Other reserves	0	0	3	12	2,034	2,852
Retained earnings	(151)	(654)	(1,819)	(5,289)	(14,249)	(31,360)
Total equity	101	670	2,794	4,809	10,586	29,329
Cash flow statement
Operating activities
Loss before tax	N/A	N/A	N/A	N/A	(9,517)	(18,247)
Adjustments for:
Depreciation of property, plant and equipment	N/A	N/A	N/A	N/A	84	331
Amortisation of intangible assets	N/A	N/A	N/A	N/A	592	1,143
Share-based payment expenses	N/A	N/A	N/A	N/A	2,022	818
Finance costs	N/A	N/A	N/A	N/A	0	16
Operating cash flows before movements in working capital	N/A	N/A	N/A	N/A	(6,819)	(15,939)
Increase in trade and other receivables	N/A	N/A	N/A	N/A	(2,325)	(5,829)
Increase in trade and other payables	N/A	N/A	N/A	N/A	1,164	3,920
Cash used in operations	N/A	(455)	(1,257)	(3,909)	(7,980)	(17,848)
Income taxes received	N/A	21	72	95	411	672
Net cash flows from operating activities	N/A	(434)	(1,185)	(3,814)	(7,569)	(17,176)
Investing activities
Purchase of property, plant and equipment	N/A	(8)	(43)	(93)	(102)	(326)
Purchase and development of intangible assets	N/A	(3)	(90)	(898)	(1,669)	(1,592)
Net cash flows from investing activities	N/A	(11)	(133)	(991)	(1,771)	(1,918)
Financing activities
Proceeds on issues of shares	N/A	1,072	3,286	5,476	12,715	35,036
Investment in subsidiary	N/A	(12)	(11)	0	0	0
Net cash flows from financing activities	N/A	1,060	3,275	5,476	12,715	35,036
Net increase in cash and cash equivalents	N/A	615	1,957	671	3,375	15,942
Cash and cash equivalents at beginning of the year	N/A	112	727	2,684	3,355	6,730
Cash and cash equivalents at end of year	N/A	727	2,684	3,355	6,730	22,672
Other
Number of registered users					248,848	886,743
Assets under management^[18] (£'million)					249.1	897.5
Trading volumes^[19] (£'billion)					0.8	3.3
Employees (excluding directors)					80^[20]	201^[20]
Ratios
Cost of goods sold as a proportion of revenue (%)	N/A	N/A	N/A	N/A	26.51%	12.92%
Operating expenses as a proportion of revenue (%)	N/A	N/A	N/A	4616.28%	646.81%	230.83%
Tax rate (%)	N/A	(4.00)%	(14.08)%	(11.93)%	(5.85)%	(6.23)%
Depreciation and amortisation rate (%)	N/A	N/A	N/A	N/A	38.17%	76.85%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	N/A	N/A	N/A	1152.33%	106.69%	15.12%
Working Capital Investment (WCInv) as a proportion of revenue (%)	N/A	N/A	N/A	1445.35%	282.05%	121.88%
Net borrowing as a proportion of revenue (%)	N/A	N/A	N/A	N/A	N/A	43.49%
Interest expense as a proportion of revenue (%)	N/A	N/A	N/A	N/A	0%	0.12%

What are the assumptions used to estimate the financial forecasts?

Key inputs
Description	Value	Commentary
Revenue
What's the estimated current size of the total addressable market?	$1,300,000,000	Here, the total addressable market (TAM) is defined as the global brokerage market, and based on a number of assumptions^{[Note 1]}, it is estimated that the size of the market as of today (6th May 2023), in terms of revenue, is $1.3 trillion.
What is the estimated company lifespan?	50 years	Currently, Freetrade employs around 201, making the company a small organisation (less than 10,000 employees). That said, given the company's mission, we expect the company to grow to a large organisation, and research shows that the average lifespan of a large corporation is around 50 years.^[21]
What's the estimated annual growth rate of the total addressable market over the lifecycle of the company?	3%	Research shows that the growth rate of the global automotive market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product^[22], which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022)^[23].
What's the estimated company peak market share?	10%	The Stockhub users estimate that especially given the leadership of the company, the peak market share of Freetrade is around 10%, and, therefore, suggests using the share amount here. As of 31st December 2021, Freetrade's current share of the market is estimated at around 1.8%.
Which distribution function do you want to use to estimate company revenue?	Gaussian	Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)^[24], so the Stockhub users suggest using that function here.
What's the estimated standard deviation of company revenue?	6 years	Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Freetrade's current revenue amount (i.e. £12.68 million) and Freetrade's estimated lifespan (i.e. 50 years) and Freetrade's estimated current stage of its lifecycle (i.e. introduction stage), the Stockhub users suggest using 6 years (i.e. 68% of all sales happen within 6 years either side of the mean year), so that's what's used here.
Growth stages
How many main stages of growth is the company expected to go through?	4 stages	Research suggests that a company typically goes through four distinct stages of cash flow growth.^[25] Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.^[26] In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.^[27] A summary of the economic links to cash flow patterns can be found in the appendix of this report. The Stockhub users estimate that with Freetrade's operating cash flows negative (-), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the first stage of growth (i.e. the 'introduction' stage), and, therefore, it has a total of four main stages of growth. Note, to account for one-off events, the three-year average (median) amount was used to calculate the cash flows.
What proportion of the company lifecycle is represented by growth stage 1?	30%	Research suggests 30%.^[28]
What proportion of the company lifecycle is represented by growth stage 2?	10%	Research suggests 10%.^[28]
What proportion of the company lifecycle is represented by growth stage 3?	20%	Research suggests 20%.^[28]
What proportion of the company lifecycle is represented by growth stage 4?	40%	Research suggests 40%.^[28]
Growth stage 1
Cost of goods sold as a proportion of revenue (%)	79%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the margin for its peers is 79%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the margin for its peers is 15%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	11%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the rate for its peers is 11%.
Depreciation and amortisation rate (%)	7%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the margin for its peers is 7%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1)^[29], and the amount for its peers is 15%.
Net borrowing as a proportion of revenue (%)	0%	Stockhub suggests that for simplicity, the net borrowing figure is zero.
Interest expense as a proportion of revenue (%)	0%	Stockhub suggests that for simplicity, the interest amount figure is zero.
Growth stage 2
Cost of goods sold as a proportion of revenue (%)	79%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the margin for its peers is 79%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the margin for its peers is 15%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	11%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the rate for its peers is 11%.
Depreciation and amortisation rate (%)	7%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the margin for its peers is 7%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)^[29], and the amount for its peers is 15%.
Net borrowing as a proportion of revenue (%)	0%	Stockhub suggests that for simplicity, the net borrowing figure is zero.
Interest expense as a proportion of revenue (%)	0%	Stockhub suggests that for simplicity, the interest amount figure is zero.
Growth stage 3
Cost of goods sold as a proportion of revenue (%)	62%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)^[29], and the margin for its peers is 62%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	13%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)^[29], and the margin for its peers is 13%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	14%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)^[29], and the rate for its peers is 14%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	4%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)^[29], and the amount for its peers is 4%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	3%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)^[29], and the amount for its peers is 3%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	0%	The Stockhub users suggest that for simplicity, the net borrowing figure is zero.
Interest expense as a proportion of revenue (%)	0%	The Stockhub users suggest that for simplicity, the interest amount figure is zero.
Growth stage 4
Cost of goods sold as a proportion of revenue (%)	99%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the margin for its peers is 99%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the margin for its peers is 15%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	0%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the rate for its peers is 0%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	37%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the amount for its peers is 37%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	1%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the amount for its peers is 1%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)^[29], and the amount for its peers is 10%. Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	0%	The Stockhub users suggest that for simplicity, the net borrowing figure is zero.
Interest expense as a proportion of revenue (%)	0%	The Stockhub users suggest that for simplicity, the interest amount figure is zero.

Risks

As with any investment, investing in Freetrade carries a level of risk. Overall, based on the Freetrade's adjusted beta (i.e. 41)^[30], the degree of risk associated with an investment in Freetrade is 'extremely high'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. We note that the amount of available data observations for Freetrade is less than what's typically used in the five years of monthly data beta calculation (i.e. four observations vs. 60 observations), and accordingly, calculating the beta of such a company has been considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta.

The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'extremely high' risk, it must have a beta value of 3 or more. Further information about the beta ratings can be found in the appendix section of this report.

Early-stage investment

Freetrade is at one of the earliest stages of the business lifecycle, and the failure rate of companies at that stage is usually much higher than those at a later stage. As of 2022, 57% of companies that are incorporated in the United Kingdom fail within the first five years of the companies incorporation, according to the Office for National Statistics.^[31]

Illiquid investment

The number of transactions in shares of private companies is usually significantly lower than in public companies, typically resulting in it taking longer to sell shares in private companies at a price that is at least equal to the price that the shares were bought at. Accordingly, the Freetrade investment opportunity is considered to be higher risk than more liquid companies (such as Hargreaves Lansdown).

Regulatory

Freetrade operates in an industry with extensive and comprehensive regulation. The risk that the company fails to comply with the existing standards of the regulatory system has the potential impact for financial penalties, regulatory censure and negative publicity. There is also a risk that the regulatory environment evolves in a manner that has a negative impact on its business and operations, whether through reduced revenue, higher costs or increases in capital and liquidity requirements.

Business

Freetrade operates in a competitive environment and runs the risk that revenue and customer growth do not meet expectations or slow down. Freetrade’s customer activity is sensitive to market conditions and volatility.

Operational

High volume or levels of activity through the trading platform can place stress on Freetrade’s systems, people and processes, which could result in service outages or in Freetrade being unable to deliver the level of service that its customers expect. Poor customer service and outcomes could result in a loss of customers and reputational damage.

Conduct

Freetrade runs the risk that its culture, values and actions fail to adequately support customer focused conduct and thereby lead to potentially poor customer outcomes or not treating customers fairly. Equally, Freetrade interacts with financial markets and poorly controlled activities could threaten the sound, stable, resilient and transparent operation of the financial markets. These risks could result in regulatory censure, as well as a reputational impact, a loss of customers and increased difficulty in attracting new customers.

Information security

Freetrade or its trusted third party service providers could suffer a data breach as a result of a cyber attack, just as any other financial services company. Such a breach could result in financial penalties or censure from both data protection and financial regulators. As well as reputational damage impacting Freetrade's ability to attract and retain customers.

Third party

Freetrade contracts with third-party providers to provide services to customers and to support back-end processes. The risk of a loss of service from a third-party provider which could result in a delay or inability to process customer transactions or perform regulatory reconciliations and could result in customer dissatisfaction and financial loss to Freetrade through a reduction in transactions through the trading platform or regulatory penalties.

Valuation

What's the expected return of an investment in the company?

The Stockhub users estimate that the expected return of an investment in the company over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in five years time. The assumptions used to estimate the return figure can be found in the table below.

Assuming that a suitable return level over five years is 10% per year and Freetrade achieves its expected return level (of negative 24%), then an investment in the company is considered to be an 'ccc' one.

What are the assumptions used to estimate the return?

Key inputs
Description	Value	Commentary
Which valuation model do you want to use?	Discounted cash flow	Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach^[32], so that's the approach that he Stockhub users suggest to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report). Freetrade has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, the Stockhub users suggest using the free cash flow valuation method (rather than the dividend discount model).
Which financial forecasts to use?	Stockhub	The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub users (the forecasts can be found in the financials section of this report), so the Stockhub users suggest using those.
Growth stage 1
Discount rate (%)	15%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	90%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 1) is 90%.
Growth stage 2
Discount rate (%)	15%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	90%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 90%.
Growth stage 3
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%.
Growth stage 4
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.
Other key inputs
What's the current value of the company?	£658 million	As at 24th November 2021, the current value of its company at £658 million.
Which time period do you want to use to estimate the expected return?	Between now and five years time	Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years.^[33] Accordingly, Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Sensitivity analysis

The main inputs that result in the greatest change in the expected return of the Freetrade investment are, in order of importance (from highest to lowest):

The size of the total addressable market (the default size is $1.3 trillion);
Freetrade peak market share (the default share is 1%); and
The discount rate (the default time-weighted average rate is 10%).

The impact of a 50% change in those main inputs to the expected return of the Freetrade investment is shown in the table below.

Freetrade investment expected return sensitive analysis
Main input	50% worse	Unchanged	50% better
The size of the total addressable market	ccc	ccc	ccc
Freetrade peak market share	ccc	ccc	ccc
The discount rate	ccc	ccc	ccc

Appendix

Relative valuation approach

As noted earlier in this report, research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that Stockhub suggests using to determine the estimated value of the company (the valuation based on the discounted cash flow approach can be found in the valuation section of this report); nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the relative valuation approach.

What's the expected return of an investment in Freetrade using the relative valuation approach?

Stockhub estimates that the expected return of an investment in Freetrade over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in five years time. The assumptions used to estimate the return figure can be found in the table below.

Assuming that a suitable return level over the next five years is 20% per year and Freetrade achieves its expected return level (of 60% per year), then an investment in the company is considered to be a 'ccc' one.

What are the assumptions used to estimate the return figure?

Key inputs
Description	Value	Commentary
Which type of multiple do you want to use?	Growth-adjusted EV/sales	For the numerator, the Stockhub users believe that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, the Stockhub users believe that because it expects Freetrade to reinvest almost all of its revenue back into the business over the five year forecast period and therefore its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, the Stockhub users suggest valuing its company using the EV/sales ratio. However, the Stockhub users think that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the growth-adjusted EV/sales multiple, rather than the EV/sales multiple.
In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use?	Year 5	Stockhub suggests that with sales forecast to grow exponential over the five year forecast period, it's best to use forward-looking data, rather than historic data. In regards to the growth-adjusted EV/sales multiple, for the sales figure, Stockhub suggests that in order to account for the forecasted exponential growth of the business, it's best to use one at the end of the forecast period (i.e. Year 5).
In regards to the growth-adjusted EV/sales multiple, for the sales growth figure, which year(s) do you want to use?	Year 6, from now	Stockhub suggests that for the sales growth figure, it's best to use Year 6.
In regards to the growth-adjusted EV/sales multiple, what multiple figure do you want to use?	0.19x	In Stockhub's view, Freetrade closest peers are AJ Bell, Hargreaves Lansdown, Robinhood Markets, Inc, Avanza Bank Holding AB and The Charles Schwab Corporation.
Which financial forecasts to use?	Stockhub	The only available forecasts are the ones that are supplied by the Stockhub company (the forecasts can be found in the financials section of this report), so Stockhub suggests using those.
What's the current value of the Stockhub company?	£225 million	As at 13th June 2023, the current value of its company at £225 million.^[34]
Which time period do you want to use to estimate the expected return?	Between now and five years time	Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Sensitivity analysis

The main inputs that result in the greatest change in the expected return of the Freetrade investment are, in order of importance (from highest to lowest):

The growth-adjusted EV/sales multiple (the default multiple 0.19);
Freetrade Year 5 sales figure (the default figure is £777 million); and
Freetrade Year 6 sales growth rate (the default rate is 63%).

The impact of a 50% change in those main inputs to the expected return of the Freetrade investment is shown in the table below.

Freetrade investment expected return sensitive analysis
Main input	50% worse	Unchanged	50% better
The growth-adjusted EV/sales multiple
Freetrade Year 5 sales figure
Freetrade Year 6 sales growth rate

Freetrade peer(s)


	Freetrade	Trading 212	Robinhood	Hargreaves Lansdown	AJ Bell	Avanza Bank Holding AB	The Charles Schwab Corporation	Average (median)
Relative valuation data
Local currency	GBP	EUR	USD	GBP	GBP	SEK	USD	N/A
Current market capitalisation (local currency, million)	658	N/A	8,500	4,080	1,300	34,690	100,102	N/A
Year ago sales	16		1,360	583	164	2,970	20,760	N/A
Current sales	37	N/A	1,860	709	212	3,540	19,570	N/A
Sales growth rate (%)	135	N/A	37	22	30	19	(5.70)	N/A
Current cash	23		10,520	446	100	9,050	81,300	N/A
Current debt	32^[35]		2,750	15	13	83	76,850	N/A
Relative valuation metrics
Enterprise value/sales	41.69	N/A	0.39	5.15	5.72	7.27	4.89	5.15
Growth-adjusted enterprise value/sales ratio	0.31	N/A	0.01	0.23	0.19	0.38	(0.85)	0.19
Absolute valuation data
Lifecycle growth stage	Stage 1 (of 4)	Stage 2 (of 4)	Stage 1 (of 4)	Between stage 2 and 3 (of 4)	Stage 3 (of 4)	Stage 3 (of 4)	Between stage 2 and 3 (of 4)	N/A
Cost of goods sold as a proportion of revenue (%)	12.9%			0%
Operating expenses as a proportion of revenue (%)	(143.75)%
Tax rate (%)	(6.23)%
Depreciation and amortisation rate (%)	76.85%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	15.12%
Working Capital Investment (WCInv) as a proportion of revenue (%)
Net borrowing as a proportion of revenue (%)
Interest expense as a proportion of revenue (%)

Key metrics for different stages of the business lifecycle
	Stage 1	Stage 2
Cost of goods sold as a proportion of revenue (%)	12.92%	0.00%
Operating expenses as a proportion of revenue (%)	159.10%	41.11%
Tax rate (%)	(3.07)%	15.23%
Depreciation and amortisation rate (%)	56.26%	79.52%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	8.59%	1.13%
Working Capital Investment (WCInv) as a proportion of revenue (%)	50.93%	52.01%
Net borrowing as a proportion of revenue (%)	21.75%	0.27%
Interest expense as a proportion of revenue (%)	0.06%	0.41%

Stage 1
	Freetrade	Robinhood	Median
Cost of goods sold as a proportion of revenue (%)	87.08%	N/A	87.08%
Operating expenses as a proportion of revenue (%)	143.75%	174.45%	159.10%
Tax rate (%)	(6.23)%	0.10%	(3.07)%
Depreciation and amortisation rate (%)	76.85%	35.67%	56.26%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	15.12%	2.06%	8.59%
Working Capital Investment (WCInv) as a proportion of revenue (%)	121.88%	(20.03)%	50.93%
Net borrowing as a proportion of revenue (%)	43.49%	0%	21.75%
Interest expense as a proportion of revenue (%)	0.12%	0%	0.06%

Stage 2
	Trading 212	Median
Cost of goods sold as a proportion of revenue (%)	0.00%	0.00%
Operating expenses as a proportion of revenue (%)	41.11%	41.11%
Tax rate (%)	15.23%	15.23%
Depreciation and amortisation rate (%)	79.52%	79.52%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	1.13%	1.13%
Working Capital Investment (WCInv) as a proportion of revenue (%)	52.01%	52.01%
Net borrowing as a proportion of revenue (%)	0.27%	0.27%
Interest expense as a proportion of revenue (%)	0.41%	0.41%

Stage 3
	AJ Bell	Hargreaves Lansdown
Cost of goods sold as a proportion of revenue (%)	0%	N/A
Operating expenses as a proportion of revenue (%)	64.00%	46.31%
Tax rate (%)	19.98%	19.84%
Depreciation and amortisation rate (%)	14.94%	22.91%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	2.06%	2.35%
Working Capital Investment (WCInv) as a proportion of revenue (%)	0.18%	(3.09)%
Net borrowing as a proportion of revenue (%)	-1.52%
Interest expense as a proportion of revenue (%)	0.48%

Stage 4
				Median
Cost of goods sold as a proportion of revenue (%)
Operating expenses as a proportion of revenue (%)
Tax rate (%)
Depreciation and amortisation rate (%)
Fixed Capital Investment (FCInv) as a proportion of revenue (%)
Working Capital Investment (WCInv) as a proportion of revenue (%)
Net borrowing as a proportion of revenue (%)
Interest expense as a proportion of revenue (%)

Hargreaves Lansdown
	30/06/2018	30/06/2019	30/06/2020	30/06/2021	30/06/2022
Profit and loss
Revenue (£'million)	447.50	480.50	550.90	631.00	583.00
Gross profit				N/A	N/A
Operating profit/(loss)	291.10	303.30	337.70	365.60	270.00
Net interest	1.30	2.50	1.80	0.40	(0.80)
Profit Before Tax	292.40	305.80	378.30	366.00	269.20
Profit for the period	236.70	247.60	313.20	296.30	215.80
Balance sheet
Assets
Non-current assets
Goodwill				1.3	1.3
Other intangible assets				33.6	37.3
Property, plant and equipment				22.5	28.6
Deferred tax assets				3.7	1.9
Current assets
Investments				0.9	0.8
Trade and other receivables				869.2	523.5
Cash and cash equivalents (£'million)	125.30	179.30	235.90	445.3	488.3
Current tax assets				1.5	0.6
Total current assets				1,316.9	1,013.2
Liabilities
Non-current liabilities
Debt (£'million)	0	0	19.90	15.00	11.80
Current liabilities
Trade and other payables				774.0	488.3
Total current liabilities				774.0	488.3
Net assets	405.20	459.30	557.60	592.40	573.50
Cash flow statement
Net cash from/(used in) operating activities			265.4	328.6	262.9
Investing activities
Decrease in term deposits				170.0	40.0
Purchase of property, plant and equipment				(5.4)	(2.8)
Purchase of intangible assets				(12.8)	(10.9)
Proceeds on disposal of subsidiary				0.2	0.0
Proceeds/(purchase) on disposal of investments				(0.3)	0.1
Net cash from/(used in) investing activities			7.8	151.7	26.4
Net cash from/(used in) financing activities			(216.6)	(270.9)	(246.3)
Revenue breakdown
Ongoing revenue
Platform fees				263.7	289.1
Fund management fees				60.8	60.3
Ongoing advice charges				9.0	8.3
Interest earned on client money				51.9	51.8
Renewal commission				5.1	4.6
Transactional revenue
Fees on stockbroking transactions				231.6	164.6
Initial advice charges				5.1	4.0
Other transactional income				3.8	0.3
Operating costs
Depreciation of owned plant and equipment and right-of-use assets				9.0	8.9
Amortisation of other intangible assets				6.1	6.2
Impairment of intangible assets				1.1	1.0
Marketing costs				28.3	25.8
Operating lease rentals payable – property
Office running costs – excluding operating lease rents payable
FSCS costs
Dealing and financial services costs
Data and technology costs
Legal and professional costs
Other operating costs
Staff (including contractors) costs
Total				266.0	313.0
Metrics
Cost of goods sold as a proportion of revenue (%)				N/A	N/A
Operating expenses as a proportion of revenue (%)	65.05	63.12	61.30	57.94	46.31
Tax rate (%)	19.05	19.03	17.21	19.04	19.84
Depreciation and amortisation rate (%)				26.92	22.91
Fixed Capital Investment (FCInv) as a proportion of revenue (%)				2.88	2.35
Working Capital Investment (WCInv) as a proportion of revenue (%)					(3.09)
Net borrowing as a proportion of revenue (%)
Interest expense as a proportion of revenue (%)

AJ Bell Plc
	30/09/2020	30/09/2021	30/09/2022	30/09/2023	30/09/2024
Profit and loss
Revenue (£'000)	126,749	145,826	163,847	212,100	240,900
Administrative expenses		(89,975)	(104,866)
Operating profit		55,851	58,981
Investment income		23	198
Finance costs		(790)	(768)
Profit before tax		55,084	58,411	79,800	92,600
Tax expense		(11,262)	(11,672)
Profit for the financial year attributable to:
Equity holders of the Parent Company		43,822	46,739
Earnings per share:
Basic (pence)		10.71	11.39
Diluted (pence)		10.67	11.35
Balance sheet
Assets
Non-current assets
Goodwill		6,991	6,991
Other intangible assets		6,014	8,779
Property, plant and equipment		3,351	3,325
Right-of-use assets		13,325	12,273
Deferred tax asset		940	610
		30,621	31,978
Current assets
Trade and other receivables		37,462	49,436
Current tax receivable		51	38
Cash and cash equivalents (£'000)		94,008	84,030
		131,521	133,504
Total assets		162,142	165,482
Liabilities
Current liabilities
Trade and other payables		(12,765)	(15,604)
Lease liabilities		(1,708)	(1,566)
Provisions		(1,526)	(519)
		(15,999)	(17,689)
Non-current liabilities
Lease liabilities		(13,886)	(12,395)
Provisions		(1,549)	(2,004)
		(15,435)	(14,399)
Total liabilities		(31,434)	(32,088)
Net assets		130,708	133,394
Equity
Share capital		51	51
Share premium		8,658	8,930
Own shares		(740)	(473)
Retained earnings		122,739	124,886
Total equity		130,708	133,394
Cash flow statement
Cash flows from operating activities
Profit for the financial year		43,822	46,739
Adjustments for:
Investment income		(23)	(198)
Finance costs		790	768
Income tax expense		11,262	11,672
Depreciation and amortisation		3,623	3,643
Share-based payment expense		4,952	4,728
Decrease in provisions and other payables		(69)	(1,007)
Loss on disposal of property, plant and equipment		13	21
Profit on disposal of right-of-use assets		(3)	0
Increase in trade and other receivables		(6,889)	(11,974)
Increase / (decrease) in trade and other payables		(1,347)	2,839
Cash generated from operations		56,131	57,231
Income tax paid		(11,455)	(11,433)
Interest expense paid		(1)	0
Net cash from/(used in) operating activities		44,675	45,798
Cash flows from investing activities
Purchase of other intangible assets		(2,370)	(2,365)
Purchase of property, plant and equipment		(1,174)	(1,014)
Acquisition of subsidiary, net of cash acquired		(2,561)	0
Interest received		23	198
Net cash from/(used in) investing activities		(6,082)	(3,181)
Cash flows from financing activities
Payments of principal in relation to lease liabilities		(1,241)	(1,716)
Payments of interest on lease liabilities		(789)	(768)
Proceeds from issue of share capital		199	272
Dividends paid		(29,138)	(50,383)
Net cash from/(used in) financing activities		(30,969)	(52,595)
Metrics
Cost of goods sold as a proportion of revenue (%)		0%	0%
Operating expenses as a proportion of revenue (%)		61.70%	64.00%
Tax rate (%)		20.45%	19.98%
Depreciation and amortisation rate (%)		15.97%	14.94%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)		2.43%	2.06%
Working Capital Investment (WCInv) as a proportion of revenue (%)			0.18%
Net borrowing as a proportion of revenue (%)		-1.39%	-1.52%
Interest expense as a proportion of revenue (%)		0.53%	0.48%

Trading 212 Group Limited
Year	1^[36]	2	3	4	5	6	7^[37]
Year end date	31/12/2015	31/12/2016	31/12/2017	31/12/2018	31/12/2019	31/12/2020	31/12/2021
	Historic	Historic	Historic	Historic	Historic	Historic	Historic
Profit and loss
Revenue (£'000)	925	3,081				124,077	138,685
Gross profit (£'000)						124,077	138,685
Other operating income						106	4,701
Administrative expenses						(108,782)	(57,018)
Profit from operations	345	1,603				15,401	86,368
Finance income						79	244
Finance expense						(321)	(564)
Profit before tax						15,159	86,048
Tax expense						(5,048)	(13,109)
Profit for the year						10,111	72,939
Exchange (losses)/gains arising on translation on foreign operations						1,522	(1,317)
Total comprehensive income						11,633	71,622
Balance sheet
Assets
Non-current assets
Property, plant and equipment						1,882	1,384
Intangible assets						67	37
Investment in associates						202	215
Trade and other receivables						35	34
Deferred tax assets						37	99
						2,223	1,769
Current assets
Trade and other receivables						28,952	13,360
Cash and cash equivalents						24,649	114,813
Current asset investments						14,076	34,995
						67,677	163,168
Total assets						69,900	164,937
Liabilities
Non-current liabilities
Loans and borrowings						27	40
						27	40
Current liabilities
Trade and other payables						24,524	47,900
Loans and borrowings						636	625
						25,160	48,525
Total liabilities						25,187	48,565
Net assets						44,713	116,372
Issued capital and reserves attributable to owners of the parent
Share capital						3,132	3,132
Foreign exchange reserves						970	(347)
Other reserves						720	720
Retained earnings						39,891	112,867
						44,713	116,372
Total equity						44,713	116,372
Cash flow statement
Cash flows from operating activities
Profit for the year						10,111	72,939
Adjustments for:
Depreciation of property, plant and equipment						705	1,099
Amortisation of intangible fixed assets						22	31
Interest and other finance income						(79)	(244)
Interest and other finance expenses						321	564
Loss/(gain) on sale of property, plant and equipment						(50)	904
Foreign exchange gain/(loss) of revaluation of assets						(40)	45
Foreign exchange (loss)/gain on consolidation						1,522	(1,280)
Interest paid						(321)	(564)
Interest received						79	244
Income tax expense						5,048	13,109
						17,318	86,847
Movements in working capital:
Decrease/(increase) in trade and other receivables						(23,894)	15,531
Increase in current asset investments						(13,861)	(20,919)
Increase in trade and other payables						13,156	19,033
Cash generated from operations						(7,281)	100,492
Income tax paid						(2,061)	(9,134)
Net cash from/(used in) operating activities					7,306	(9.342)	91,358
Cash flows from investing activities
Purchases of property, plant and equipment						(1,819)	(1,564)
Purchases of intangible assets						(79)	0
Proceeds from disposal of property, plant and equipment						131	0
Net cash from/(used in) investing activities					121	(1,767)	(1,564)
Cash flows from financing activities
Finance lease payments						(112)	(69)
New finance leases						0	86
Loan repayments						(91)	(7,210)
Loans received						7,210	7,563
Net cash from/(used in) financing activities					(3,902)	7,007	370
Metrics
Cost of goods sold as a proportion of revenue (%)						0%	0%
Operating expenses as a proportion of revenue (%)						87.67%	41.11%
Tax rate (%)						33.30%	15.23%
Depreciation and amortisation rate (%)						37.30%	79.52%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)						1.53%	1.13%
Working Capital Investment (WCInv) as a proportion of revenue (%)							52.01%
Net borrowing as a proportion of revenue (%)						5.65%	0.27%
Interest expense as a proportion of revenue (%)						0.26%	0.41%

Robinhood Markets, Inc.
	30/09/2020	30/09/2021	30/09/2022
Profit and loss
Revenues:
Transaction-based revenues		1,402	814
Net interest revenues		256	424
Other revenues		157	120
Total net revenues		1,815	1,358

Operating expenses:
Brokerage and transaction		158	179
Technology and development		1,234	878
Operations		368	285
Marketing		325	103
General and administrative		1,371	924
Total operating expenses		3,456	2,369

Change in fair value of convertible notes and warrant liability		2,045	—
Other (income) expense, net		(1)	16
Income (loss) before income taxes		(3,685)	(1,027)
Provision for (benefit from) income taxes		2	1
Net income (loss)		(3,687)	(1,028)
Net income (loss) attributable to common stockholders:
Basic		(3,687)	(1,028)
Diluted		(3,687)	(1,028)
Net income (loss) per share attributable to common stockholders:
Basic		(7.49)	(1.17)
Diluted		(7.49)	(1.17)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		492,381,190	878,630,024
Diluted		492,381,190	878,630,024
Balance sheet
Assets
Current assets:
Cash and cash equivalents		6,253	6,339
Cash segregated under federal and other regulations		3,992	2,995
Receivables from brokers, dealers, and clearing organizations		88	76
Receivables from users, net		6,639	3,218
Securities borrowed		—	517
Deposits with clearing organizations		328	186
Asset related to user cryptocurrencies safeguarding obligation		—	8,431
User-held fractional shares		1,834	997
Prepaid expenses		92	86
Other current assets		57	72
Total current assets		19,283	22,917
Property, software, and equipment, net		146	146
Goodwill		101	100
Intangible assets, net		34	25
Non-current prepaid expenses		44	17
Other non-current assets		161	132
Total assets		19,769	23,337
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses		252	185
Payables to users		6,476	4,701
Securities loaned		3,651	1,834
User cryptocurrencies safeguarding obligation		—	8,431
Fractional shares repurchase obligation		1,834	997
Other current liabilities		134	105
Total current liabilities		12,347	16,253
Other non-current liabilities		129	128
Total liabilities		12,476	16,381
Commitments and contingencies
Stockholders’ equity:
Additional paid-in capital		11,169	11,861
Accumulated other comprehensive income (loss)		1	—
Accumulated deficit		(3,877)	(4,905)
Total stockholders’ equity		7,293	6,956
Total liabilities and stockholders’ equity		19,769	23,337
Cash flow statement
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	10	26	61
Net cash from/(used in) operating activities	1,876	(885)	(852)
Investing activities:
Purchase of property, software, and equipment	(24)	(63)	(28)
Capitalization of internally developed software	(8)	(20)	(29)
Acquisitions of a business, net of cash acquired	0	(125)	0
Purchase of investments	0	(27)	(25)
Sales of investments	0	0	42
Other	0	(3)	(20)
Net cash from/(used in) investing activities	(32)	(238)	(60)
Financing activities:
Proceeds from issuance of common stock in connection with initial public offering, net of offering costs	0	2,052	0
Proceeds from issuance of common stock under the Employee Stock Purchase Plan	0	7	16
Taxes paid related to net share settlement of equity awards	0	(422)	(12)
Proceeds from issuance of convertible notes and warrants	0	3,552	0
Draws on credit facilities	938	1,968	21
Repayments on credit facilities	(938)	(1,968)	(21)
Payments of debt issuance costs	0	0	(10)
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs	1,267	0	0
Proceeds from exercise of stock options, net of repurchases	9	14	6
Net cash from/(used in) financing activities	1,276	5,203	0
Metrics
Cost of goods sold as a proportion of revenue (%)		N/A	N/A
Operating expenses as a proportion of revenue (%)		190.41%	174.45%
Tax rate (%)		0.05%	0.10%
Depreciation and amortisation rate (%)		14.44%	35.67%
Fixed Capital Investment (FCInv) as a proportion of revenue (%)		3.47%	2.06%
Working Capital Investment (WCInv) as a proportion of revenue (%)			(20.03)%
Net borrowing as a proportion of revenue (%)	0%	0%	0%
Interest expense as a proportion of revenue (%)		0%	0%

Funding History^[38]

As of November 24th 2021, the company held a valuation of £658 million. However, it has since executed two funding rounds through debt financing instead of equity, which hints at a potential decrease in its valuation from the previous £658 million. It has been reported by relatively reliable sources that the current valuation of the company is £225 million.^[34]

Date announced	Investment type	Post money valuation	Amount	No. of investors
15/09/2022	Equity Crowdfunding	-	US$1,733,820.00	-
20/05/2022	Debt Financing	-	£30,000,000.00	6
24/11/2021	Equity Crowdfunding	£658,363,176.00	£8,363,176.00	-
23/03/2021	Series B	US$345,057,713.00	£35,000,000.00	4
14/05/2020	Equity Crowdfunding	-	£7,099,999.00	-
31/10/2019	Series A	-	£12,000,000.00	1
25/06/2019	Equity Crowdfunding	-	£3,793,410.00	1
25/04/2019	Equity Crowdfunding	-	US$1,927,630.00	1
29/07/2018	Equity Crowdfunding	£46,516,630.00	£3,516,630.00	1
18/05/2018	Pre Seed	-	-	2
05/03/2017	Equity Crowdfunding	-	£1,071,850.00	4
01/03/2017	Seed	-	-	-
28/07/2016	Equity Crowdfunding	£2,069,980.00	£169,980.00	-

According to Crunchbase, Freetrade has raised a total of $135.5 million since the company's inception across 13 funding rounds.^[39] However, that seems inaccurate when compared against the company's financial statements.

Economic links to cash flow patterns

Economic links to cash flow patterns
Cash flow type	Introduction	Growth	Shake out	Mature	Decline
Operating	-	+	+/-	+	-
Investing	-	-	+/-	-	+
Financing	+	+	+/-	-	+/-

Beta risk profile


Beta value	Risk rating
0 to 0.50	Low
0.50 to 1.50	Medium
1.50 to 3.00	High
3.00 and above	Extremely high

Freetrade adjusted beta calculation


Date	iShares MSCI World ETF share price	Freetrade valuation (£)	iShares MSCI World ETF share price change	Freetrade valuation change
01/07/2018	82	2,069,980
01/08/2018	83	46,516,630	1.14%	2147.20%
01/09/2018	84	46,516,630	0.75%
01/10/2018	78	46,516,630	(7.14)%
01/11/2018	79	46,516,630	1.13%
01/12/2018	72	46,516,630	(8.51)%
01/01/2019	78	46,516,630	8.75%
01/02/2019	81	46,516,630	2.98%
01/03/2019	82	46,516,630	1.49%
01/04/2019	85	46,516,630	3.72%
01/05/2019	80	46,516,630	(5.79)%
01/06/2019	84	46,516,630	4.91%
01/07/2019	86	46,516,630	2.30%
01/08/2019	84	46,516,630	(2.20)%
01/09/2019	86	46,516,630	2.16%
01/10/2019	88	46,516,630	2.55%
01/11/2019	90	46,516,630	2.80%
01/12/2019	92	46,516,630	2.09%
01/01/2020	92	46,516,630	(0.13)%
01/02/2020	85	46,516,630	(8.25)%
01/03/2020	74	46,516,630	(13.09)%
01/04/2020	81	46,516,630	10.82%
01/05/2020	86	46,516,630	5.03%
01/06/2020	87	46,516,630	1.59%
01/07/2020	92	46,516,630	5.96%
01/08/2020	98	46,516,630	6.53%
01/09/2020	95	46,516,630	(3.34)%
01/10/2020	92	46,516,630	(3.00)%
01/11/2020	104	46,516,630	12.86%
01/12/2020	107	46,516,630	3.19%
01/01/2021	107	46,516,630	(0.10)%
01/02/2021	110	46,516,630	2.49%
01/03/2021	114	46,516,630	3.69%
01/04/2021	119	274,498,000	4.32%	490.11%
01/05/2021	121	274,498,000	1.61%
01/06/2021	121	274,498,000	0.77%
01/07/2021	125	274,498,000	2.59%
01/08/2021	128	274,498,000	2.48%
01/09/2021	122	274,498,000	(4.21)%
01/10/2021	129	274,498,000	5.84%
01/11/2021	127	274,498,000	(2.05)%
01/12/2021	131	274,498,000	3.22%
01/01/2022	125	274,498,000	(4.44)%
01/02/2022	121	274,498,000	(2.91)%
01/03/2022	125	274,498,000	2.87%
01/04/2022	114	274,498,000	(8.38)%
01/05/2022	115	274,498,000	0.44%
01/06/2022	104	274,498,000	(9.38)%
01/07/2022	114	274,498,000	9.07%
01/08/2022	108	274,498,000	(4.58)%
01/09/2022	98	274,498,000	(9.37)%
01/10/2022	106	274,498,000	7.47%
01/11/2022	113	274,498,000	7.47%
01/12/2022	107	658,363,176	(5.36)%	139.84%
01/01/2023	116	658,363,176	7.89%
01/02/2023	113	658,363,176	(2.59)%
01/03/2023	117	658,363,176	3.24%
01/04/2023	119	658,363,176	1.80%
01/05/2023	117	658,363,176	(0.99)%
01/06/2023	120	658,363,176	2.10%
09/06/2023	121	225,000,000^[34]	0.97%	(65.82)%

Freetrade beta and adjusted beta value
Beta:	61.33
Adjusted beta:	41.22

Other information

Freetrade was unsuccessful in its 'Freetrade' word application in the EU.^[40] Does this mean that Freetrade has to pay the trademark holder a fee to use the 'Freetrade' word in the EU?


	Freetrade	Trading 212	Hargreaves Lansdown
Austria	No	Yes^[41]	No
Bulgaria	No	Yes^[41]	No
Croatia	No	Yes^[41]	No
Cyprus	No	Yes^[41]	No
Czech Republic	No	Yes^[41]	No
Denmark	No	Yes^[41]	No
Estonia	No	Yes^[41]	No
Finland	No	Yes^[41]	No
France	No	Yes^[41]	No
French Guiana	No	Yes^[41]	No
Gibraltar	No	Yes^[41]	No
Greece	No	Yes^[41]	No
Guadeloupe	No	Yes^[41]	No
Guernsey	No	Yes^[41]	No
Hungary	No	Yes^[41]	No
Iceland	No	Yes^[41]	No
Ireland	Yes^[42]	Yes^[41]	No
Isle of Man	No	Yes^[41]	No
Italy	No	Yes^[41]	No
Jersey	No	Yes^[41]	No
Latvia	No	Yes^[41]	No
Liechtenstein	No	Yes^[41]	No
Lithuania	No	Yes^[41]	No
Luxembourg	No	Yes^[41]	No
Malta	No	Yes^[41]	No
Martinique	No	Yes^[41]	No
Mayotte	No	Yes^[41]	No
Netherlands	Yes^[42]	Yes^[41]	No
Norway	No	Yes^[41]	No
Poland	No	Yes^[41]	No
Portugal	No	Yes^[41]	No
Reunion	No	Yes^[41]	No
Romania	No	Yes^[41]	No
Slovakia	No	Yes^[41]	No
Slovenia	No	Yes^[41]	No
Spain	No	Yes^[41]	No
Sweden	No	Yes^[41]	No
Switzerland	No	Yes^[41]	No
United Kingdom	Yes^[43]	Yes^[41]	Yes


	Population	Population date	Date source	Data source link
Austria	9,154,938	09/06/2023	Worldometer	https://www.worldometers.info/world-population/austria-population/
Bulgaria	6,797,490	09/06/2023	Worldometer	https://www.worldometers.info/world-population/bulgaria-population/
Croatia	4,032,123	09/06/2023	Worldometer	https://www.worldometers.info/world-population/croatia-population/
Cyprus	1,232,816	09/06/2023	Worldometer	https://www.worldometers.info/world-population/cyprus-population/
Czech Republic	10,766,276	09/06/2023	Worldometer	https://www.worldometers.info/world-population/czech-republic-population/
Denmark	5,851,092	09/06/2023	Worldometer	https://www.worldometers.info/world-population/denmark-population/
Estonia	1,329,115	09/06/2023	Worldometer	https://www.worldometers.info/world-population/estonia-population/
Finland	5,851,092	09/06/2023	Worldometer	https://www.worldometers.info/world-population/finland-population/
France	65,682,979	09/06/2023	Worldometer	https://www.worldometers.info/world-population/france-population/
French Guiana	321,180	09/06/2023	Worldometer	https://www.worldometers.info/world-population/french-guiana-population/
Gibraltar	33,662	09/06/2023	Worldometer	https://www.worldometers.info/world-population/gibraltar-population/
Greece	10,276,210	09/06/2023	Worldometer	https://www.worldometers.info/world-population/greece-population/
Guadeloupe	395,766	09/06/2023	Worldometer	https://worldpopulationreview.com/countries/guadeloupe-population
Guernsey	63,521	09/06/2023	Worldometer	https://worldpopulationreview.com/countries/guernsey-population
Hungary	9,589,714	09/06/2023	Worldometer	https://www.worldometers.info/world-population/hungary-population/
Iceland	347,645	09/06/2023	Worldometer	https://www.worldometers.info/world-population/iceland-population/
Ireland	5,096,846	09/06/2023	Worldometer	https://www.worldometers.info/world-population/ireland-population/
Isle of Man	86,334	09/06/2023	Worldometer	https://www.worldometers.info/world-population/isle-of-man-population/
Italy	60,205,049	09/06/2023	Worldometer	https://www.worldometers.info/world-population/italy-population/
Jersey	111,725	09/06/2023	Worldometer	https://nationsgeo.com/population/europe/je/
Latvia	1,825,986	09/06/2023	Worldometer	https://www.worldometers.info/world-population/latvia-population/
Liechtenstein	38,445	09/06/2023	Worldometer	https://www.worldometers.info/world-population/liechtenstein-population/
Lithuania	2,612,554	09/06/2023	Worldometer	https://www.worldometers.info/world-population/lithuania-population/
Luxembourg	655,414	09/06/2023	Worldometer	https://www.worldometers.info/world-population/luxembourg-population/
Malta	534,914	09/06/2023	Worldometer	https://nationsgeo.com/population/europe/mt/
Martinique	374,430	09/06/2023	Worldometer	https://www.worldometers.info/world-population/martinique-population/
Mayotte	334,796	09/06/2023	Worldometer	https://nationsgeo.com/population/africa/yt/
Netherlands	17,244,317	09/06/2023	Worldometer	https://www.worldometers.info/world-population/netherlands-population/
Norway	5,543,798	09/06/2023	Worldometer	https://www.worldometers.info/world-population/norway-population/
Poland	37,727,112	09/06/2023	Worldometer	https://www.worldometers.info/world-population/poland-population/
Portugal	10,110,612	09/06/2023	Worldometer	https://www.worldometers.info/world-population/portugal-population/
Reunion	913,818	09/06/2023	Worldometer	https://www.worldometers.info/world-population/reunion-population/
Romania	18,864,146	09/06/2023	Worldometer	http://srv1.worldometers.info/world-population/romania-population/
Slovakia	5,467,253	09/06/2023	Worldometer	https://www.worldometers.info/world-population/slovakia-population/
Slovenia	2,079,771	09/06/2023	Worldometer	http://srv1.worldometers.info/world-population/slovenia-population/
Spain	46,807,044	09/06/2023	Worldometer	https://www.worldometers.info/world-population/spain-population/
Sweden	10,281,472	09/06/2023	Worldometer	https://www.worldometers.info/world-population/sweden-population/
Switzerland	8,839,152	09/06/2023	Worldometer	http://srv1.worldometers.info/world-population/switzerland-population/
United Kingdom	68,916,741	09/06/2023	Worldometer	https://www.worldometers.info/world-population/uk-population/


	Freetrade	Trading 212	Hargreaves Lansdown
How many people are able to access the platform?	68,916,741	436,397,348	68,916,741
What proportion of the global population is able to access the platform?^[44]	0.86%	5.43%	0.86%

Key terms of the convertible loan note

Key terms
A convertible loan is an investment for equity in a company where shares will be issued at a future date. Usually, the shares will be issued when the company completes a larger round of investment. A convertible loan allows a company to raise equity finance without setting a valuation. Please see below a summary of the key terms of within tranche 1 of the convertible loan notes offered to Crowdcube investors in this round.
Share type(s) on offer	Series B shares.	The convertible loan notes will convert into the most senior share class created and in issue at the point of conversion. The Company's most senior share class is currently Series B shares, which carry voting and pre-emption rights and a preference to receive the issue price back first alongside the other preference shares in certain circumstances.
Duration/Relevant Date	12 months from the date of issue.	If no conversion event occurs before this date, the convertible loan notes will automatically convert into Shares.
Discount Rate	20%	This is the amount of discount on the Shares which investors will receive compared to the share price at which other shares in the Company are being issued following a Qualified Financing event.
Interest	N/A.	The convertible loan notes offered in tranche 1 of this Crowdcube round do not accrue interest.
Valuation Cap	£400,000,000 pre-money valuation.	Convertible loans may contain a Valuation Cap, which is the maximum pre-money valuation of the Company that will be used to calculate the share price if there is a Qualified Financing prior to the Relevant Date.
Default Price	£3.7711	The Default Price is the price per Share of the Company that will be used to calculate the number of Shares investors will receive following a CET1 Capital Event, Sale or on the Relevant Date.
Conversion Events	The convertible loan will convert into fully paid Shares on the occurrence of the following: Qualified Financing - automatically if the Company raises at least £40,000,000 at a price per Share of more than £3.7711 (Default Price). CET1 Capital Event - in the event that the capital held by the Company to meet its regulatory capital requirements under the FCA’s rules, falls below a certain level. Please note that in the event that there is a CET1 Capital Event only the amount of outstanding convertible loan required to meet the regulatory capital requirement will convert. Relevant Date - if no conversion event has occurred automatically on the date falling 12 months after the date of issue of the convertible loan note (or such other date as may be agreed between the Company and the Noteholder Majority). Sale - automatically on a sale of all, or substantially all of, the Company’s assets; or a sale of any of the shares in the Company resulting in a change of control of the Company.	The convertible loan notes will convert into fully paid Shares in the Company on the occurrence of certain events.
Conversion Price	On a Qualified Financing a price per Share equal to the lower of: the lowest price per Share paid by investors in the Qualified Financing by a 20% discount; and a price per share which results from dividing a pre-money valuation of £400,000,000 by the number of Shares in the Fully Diluted Share Capital. On a CET1 Capital Event; the Relevant Date; or a Sale, the Default Price (£3.7711 per Share).	This is the price per Share at which the convertible loan notes will convert into Shares in the Company following a Qualified Financing, CET1 Capital Event, Relevant Date or Sale.
Additional Shares	In the event that, following conversion of any of the convertible loan notes prior to a Qualified Financing, the Company issues Shares at a price less than the Default Price, noteholders will be issued with such number of additional Conversion Shares to put them in the position they would have been if the loan notes had converted at the lower price.	The convertible loan notes being offered to Crowdcube investors benefit from anti-dilution protection.
Repayment	Provided no CET1 Capital Event has occurred and the FCA has given prior permission for such repayment, the convertible loan notes are repayable at the written demand of the majority of noteholders (being holders of 66.67% of the principal amount outstanding) on an Event of Default - i.e. if the Company becomes insolvent.	In certain circumstances the convertible loan notes may be repaid, rather than converted into Shares.
Tax relief being offered	N/A.	Tax relief is not being offered in respect of tranche 1 of the convertible loan notes offered in this Crowdcube round.

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References and notes

↑ There is substantial evidence to suggest that investing is one of the best ways to grow your money over time. Here are a few key points: 1) Historical Returns: Over the long term, the stock market has provided substantial returns. For example, the S&P 500, an index of the 500 largest companies in the United States, has delivered an average annual return of approximately 10% since its inception in 1926. While past performance is not a guarantee of future returns, this long-term trend suggests that investing in a diversified portfolio of stocks can yield significant returns over time. 2) Compounding Interest: Investing allows your money to work for you through the power of compound interest. When you invest, you not only earn a return on your initial investment, but also on any returns that investment generates. Over time, this can lead to exponential growth in your wealth. 3) Inflation Hedging: Investing can help protect your money from inflation. While the value of cash can be eroded by inflation over time, investments like stocks and real estate typically increase in value at a rate that outpaces inflation. 4) Wealth Creation: Numerous studies have shown that the wealthiest individuals and families often have substantial portions of their wealth invested. For example, a report from the Federal Reserve found that the top 10% of U.S. households by wealth held an average of nearly 90% of their wealth in investments as of 2019. 5) Retirement Savings: Investing is a key component of planning for retirement. Most retirement savings strategies, like 401(k) plans and individual retirement accounts (IRAs), involve investing in a mix of stocks, bonds, and other assets. While investing can offer substantial benefits, it's also important to note that all investments carry risk. The value of investments can go down as well as up, and it's possible to lose money. Therefore, it's important to thoroughly research any investment, diversify your portfolio, and consider seeking advice from a financial professional if you're unsure about where to start. In addition, while investing can be a powerful tool for wealth creation, it's not the only strategy. Other important aspects of personal finance, such as maintaining a budget, managing debt, and building an emergency fund, also play critical roles in financial health.
↑ ^2.0 ^2.1 https://freetrade.io/about
↑ https://freetrade.io/compare-plans
↑ Freetrade and Trading 212 are similar in that they both offer commission free trading. Trading 212 is better than Freetrade in terms of the number of investments offered (12,000 vs. 6,000), FX fees (0.15% vs. 0.39%) and platform usage fee [Zero vs. £5.99 per month to access the 6,000 investments (note, to access 1,500 investments only, there is no fee)].
↑ The annual global brokerage market right now (2023) is estimated at $1.30 trillion, and Freetrade generated around £12.68 million ($15.93 million) in revenue in its most recent full-year results
↑ Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. We note that the amount of available data observations for Freetrade is less than what's typically used in the five years of monthly data beta calculation (i.e. 3 observations vs. 60 observations), and accordingly, calculating the beta of such a company has been considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'extremely high' risk, it must have a beta value of 3 or more. Further information about the beta ratings can be found in the appendix section of this report.
↑ https://www.researchandmarkets.com/reports/5141120/securities-brokerages-and-stock-exchanges
↑ ^8.0 ^8.1 https://freetrade.io/stock-list#stock-list-table
↑ https://www.trading212.com/
↑ https://play.google.com/store/apps/details?id=com.avuscapital.trading212
↑ ^11.0 ^11.1 ^11.2 ^11.3 ^11.4 ^11.5 ^11.6 https://www.trading212.com/terms/invest
↑ On a maximum £2k uninvested cash.
↑ On a maximum £4k uninvested cash.
↑ https://www.kroo.com/
↑ Note: Reviews aren't verified by Google, but Google checks for and removes fake content when it's identified.
↑ https://find-and-update.company-information.service.gov.uk/company/09797821
↑ https://freetrade.io/legal/summer-freeshare-offer
↑ Assets under management is the total value of securities and cash balances administered and managed by Freetrade on behalf of its users.
↑ Trading volumes are the total value of executed orders placed by Freetrade users.
↑ ^20.0 ^20.1 https://find-and-update.company-information.service.gov.uk/company/09797821/filing-history
↑ Stadler, Enduring Success, 3–5.
↑ http://www.robertpicard.net/files/econgrowthandadvertising.pdf
↑ https://www.macrotrends.net/countries/WLD/world/gdp-growth-rate
↑ http://escml.umd.edu/Papers/ObsCPMT.pdf
↑ Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. https://doi.org/10.1111/j.1540-6520.2010.00377.x
↑ Stef Hinfelaar et al.:, 2019.
↑ Dickinson, 2010.
↑ ^28.0 ^28.1 ^28.2 ^28.3 http://escml.umd.edu/Papers/ObsCPMT.pdf
↑ ^29.00 ^29.01 ^29.02 ^29.03 ^29.04 ^29.05 ^29.06 ^29.07 ^29.08 ^29.09 ^29.10 ^29.11 ^29.12 ^29.13 ^29.14 ^29.15 ^29.16 ^29.17 ^29.18 ^29.19 ^29.20 ^29.21 ^29.22 ^29.23 http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf
↑ Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Supply@ME Capital's adjusted beta (5 years, monthly data) is 4.61, and is, accordingly, 561% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Supply@ME Captial is considered to be 'high' (561%>50%). For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. An argument can be made that the 2 years, weekly data can be especially appropriate in fast growing markets. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.
↑ https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/bulletins/businessdemography/2020#the-south-west-continued-to-have-the-highest-five-year-survival-rate
↑ Demirakos et al., 2010; Gleason et al., 2013
↑ https://www.newyorkfed.org/mediabrary/media/medialibrary/media/research/staff_reports/research_papers/9809.pdf
↑ ^34.0 ^34.1 ^34.2 https://www.telegraph.co.uk/business/2023/06/13/freetrade-stock-trading-start-up-valuation-plunge/
↑ https://www.crowdcube.com/companies/freetrade/pitches/qQNNal
↑ https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/VjHMtIQiiQi__nVCWAt11Y5huQG68koLl03pvpnqrn0/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3KS3H3G5V%2F20230606%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20230606T213520Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEAMaCWV1LXdlc3QtMiJIMEYCIQC660r%2Bjx4D8MAt7dZnQyI4rQKB%2ByjmjuPvdqPe%2FzG5gwIhAMWx9BAf15tgFNPWA30ZMAQoITU1FekaZU4DdaDpbqpBKroFCEwQBBoMNDQ5MjI5MDMyODIyIgxTLwy1663v14A2ya4qlwW716KZyuhql1qyYzIKJqYYB3LoPM5dO6SP%2BGh1aYozdNJq7ZXCxOATczExlzncRJDmLWz0z1CurY9ZplLg4eiabGEMU0sZQshK4gKgagQ1A4rNWijM5fefc0CIoE%2FanqRcqu95iDs%2FiQofP48NNSqCxwcNUcBk1sSojK4RPJIlJxb5AeU2khPA1ldd80lrLdDrLswPOtjjyzLenNFGf5q2ArWweQL%2FzvPIg%2FelxdUzd91W1PLmU%2BBXfDEw%2BXdnD25AB2%2BLhij7Ueg8hc9hl0wSikQ6%2BLXpQyJBlgy0sURS0k2FSsEDv35cmdHX%2BTG0jUMQvdeKRy7FhHZhp%2BkcAnTMXoD5Q8flHUeigOAM1H4Upeukj%2FQvHxeIJwJECydGsGxed8x8uzREXYJPoijgRJjaXIMQXPY%2FwZ%2F0uK0iZnNwLPdQ3iUfwFFr5Z8LJB22iJA0WQOGVXtrWOPm2ePOkVz7kYYVYYFWaUKsFJXoTz1ddQ6yxrlXJELpXwOqClKe%2B2jXqA%2FPPjGqJzhxN08oKsE4R1tI%2F5XO8CkkVt1j9dzkcg3j46oz%2Frah5op4BvY%2BZ5SwJKe1k7IAjzerriBgvb0nevlWE%2B2M7P6wX0xqaFh28yzraDWif0VYhqwWbxm4Fa1QooHBTDLNSHcUKAPrWMfa8dA3OKIgOqybGtrBu%2FGIcsBkEXOajDjVE5OlmQakV%2Brz8XRPYEbzMMNuSawNwrv8NW3Mm7mb8y%2Bivq72a4YuaqwRhPPXv7ZJMPBs48hgjH8lRNMqmyK6FLaEIDyFLAGiRpXCTsaRyDqA7ydsGd4sdEUKzlAwpXzKH3ZrR%2B8webQv4S4Mo7lY9XmLXF1a4UEjiX6MNYLQfhpEs6WfAIL%2B6CiR7U1PfuQwiIf%2BowY6sAHe%2B%2FOG%2FE7AbAx8JhLgEhcGzWkFdOHiC0G5h%2Brx6a7s%2BKDx6Y2uB%2FH8Iz2BvGmuyJywGfydIu%2BpuBpyXDJIiSHEaPXgdem9Vr1qfWp4DgAKBDqbXXynyVzhBfIcTshNhDAV%2FeCRyk1sMW8wOGvkXh09tP6hekKWL84gHFuzpO5P2TD5ssECMlD2mzAKzgG%2FJ4m6s1vPE6uS%2F7zLhcjceOfFo1CH2Vzib3s5ZkCMSQo%2Bbg%3D%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=b2374cf4a6daa79a50613961fbeed5cee094a9ab08c59ad284c7ee50ff859a78
↑ https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/TSm136YZkgOVAft-B377F-NKlBy9iC-6ZBi-J0I__mk/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3KS3H3G5V%2F20230606%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20230606T211732Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEAMaCWV1LXdlc3QtMiJIMEYCIQC660r%2Bjx4D8MAt7dZnQyI4rQKB%2ByjmjuPvdqPe%2FzG5gwIhAMWx9BAf15tgFNPWA30ZMAQoITU1FekaZU4DdaDpbqpBKroFCEwQBBoMNDQ5MjI5MDMyODIyIgxTLwy1663v14A2ya4qlwW716KZyuhql1qyYzIKJqYYB3LoPM5dO6SP%2BGh1aYozdNJq7ZXCxOATczExlzncRJDmLWz0z1CurY9ZplLg4eiabGEMU0sZQshK4gKgagQ1A4rNWijM5fefc0CIoE%2FanqRcqu95iDs%2FiQofP48NNSqCxwcNUcBk1sSojK4RPJIlJxb5AeU2khPA1ldd80lrLdDrLswPOtjjyzLenNFGf5q2ArWweQL%2FzvPIg%2FelxdUzd91W1PLmU%2BBXfDEw%2BXdnD25AB2%2BLhij7Ueg8hc9hl0wSikQ6%2BLXpQyJBlgy0sURS0k2FSsEDv35cmdHX%2BTG0jUMQvdeKRy7FhHZhp%2BkcAnTMXoD5Q8flHUeigOAM1H4Upeukj%2FQvHxeIJwJECydGsGxed8x8uzREXYJPoijgRJjaXIMQXPY%2FwZ%2F0uK0iZnNwLPdQ3iUfwFFr5Z8LJB22iJA0WQOGVXtrWOPm2ePOkVz7kYYVYYFWaUKsFJXoTz1ddQ6yxrlXJELpXwOqClKe%2B2jXqA%2FPPjGqJzhxN08oKsE4R1tI%2F5XO8CkkVt1j9dzkcg3j46oz%2Frah5op4BvY%2BZ5SwJKe1k7IAjzerriBgvb0nevlWE%2B2M7P6wX0xqaFh28yzraDWif0VYhqwWbxm4Fa1QooHBTDLNSHcUKAPrWMfa8dA3OKIgOqybGtrBu%2FGIcsBkEXOajDjVE5OlmQakV%2Brz8XRPYEbzMMNuSawNwrv8NW3Mm7mb8y%2Bivq72a4YuaqwRhPPXv7ZJMPBs48hgjH8lRNMqmyK6FLaEIDyFLAGiRpXCTsaRyDqA7ydsGd4sdEUKzlAwpXzKH3ZrR%2B8webQv4S4Mo7lY9XmLXF1a4UEjiX6MNYLQfhpEs6WfAIL%2B6CiR7U1PfuQwiIf%2BowY6sAHe%2B%2FOG%2FE7AbAx8JhLgEhcGzWkFdOHiC0G5h%2Brx6a7s%2BKDx6Y2uB%2FH8Iz2BvGmuyJywGfydIu%2BpuBpyXDJIiSHEaPXgdem9Vr1qfWp4DgAKBDqbXXynyVzhBfIcTshNhDAV%2FeCRyk1sMW8wOGvkXh09tP6hekKWL84gHFuzpO5P2TD5ssECMlD2mzAKzgG%2FJ4m6s1vPE6uS%2F7zLhcjceOfFo1CH2Vzib3s5ZkCMSQo%2Bbg%3D%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=d6d6e64d192d38e0d55e9784f1eeaea2fc9d75fc7a93e9c93081aa1ac5c5bc57
↑ https://www.crunchbase.com/organization/freetrade-limited
↑ https://www.crunchbase.com/organization/freetrade-limited/company_financials
↑ https://www.trademarkelite.com/europe/trademark/trademark-detail/014989172/FREETRADE
↑ ^41.00 ^41.01 ^41.02 ^41.03 ^41.04 ^41.05 ^41.06 ^41.07 ^41.08 ^41.09 ^41.10 ^41.11 ^41.12 ^41.13 ^41.14 ^41.15 ^41.16 ^41.17 ^41.18 ^41.19 ^41.20 ^41.21 ^41.22 ^41.23 ^41.24 ^41.25 ^41.26 ^41.27 ^41.28 ^41.29 ^41.30 ^41.31 ^41.32 ^41.33 ^41.34 ^41.35 ^41.36 ^41.37 ^41.38 https://globefunder.com/trading-212-countries/
↑ ^42.0 ^42.1 https://www.financemagnates.com/forex/brokers/freetrade-enters-netherland-ireland-with-zero-free-services/
↑ https://help.freetrade.io/en/articles/1794457-which-countries-is-freetrade-available-in
↑ Here, we have assumed that the global population is 8,037,772,395 people (source: https://www.worldometers.info/world-population/#:~:text=World%20Population%20Clock%3A%208%20Billion,(LIVE%2C%202023)%20%2D%20Worldometer)

Cite error: <ref> tags exist for a group named "Note", but no corresponding <references group="Note"/> tag was found

[1] There is substantial evidence to suggest that investing is one of the best ways to grow your money over time. Here are a few key points: 1) Historical Returns: Over the long term, the stock market has provided substantial returns. For example, the S&P 500, an index of the 500 largest companies in the United States, has delivered an average annual return of approximately 10% since its inception in 1926. While past performance is not a guarantee of future returns, this long-term trend suggests that investing in a diversified portfolio of stocks can yield significant returns over time. 2) Compounding Interest: Investing allows your money to work for you through the power of compound interest. When you invest, you not only earn a return on your initial investment, but also on any returns that investment generates. Over time, this can lead to exponential growth in your wealth. 3) Inflation Hedging: Investing can help protect your money from inflation. While the value of cash can be eroded by inflation over time, investments like stocks and real estate typically increase in value at a rate that outpaces inflation. 4) Wealth Creation: Numerous studies have shown that the wealthiest individuals and families often have substantial portions of their wealth invested. For example, a report from the Federal Reserve found that the top 10% of U.S. households by wealth held an average of nearly 90% of their wealth in investments as of 2019. 5) Retirement Savings: Investing is a key component of planning for retirement. Most retirement savings strategies, like 401(k) plans and individual retirement accounts (IRAs), involve investing in a mix of stocks, bonds, and other assets. While investing can offer substantial benefits, it's also important to note that all investments carry risk. The value of investments can go down as well as up, and it's possible to lose money. Therefore, it's important to thoroughly research any investment, diversify your portfolio, and consider seeking advice from a financial professional if you're unsure about where to start. In addition, while investing can be a powerful tool for wealth creation, it's not the only strategy. Other important aspects of personal finance, such as maintaining a budget, managing debt, and building an emergency fund, also play critical roles in financial health.

[:8-2] 2.0 ^2.1 https://freetrade.io/about

[3] ttps://freetrade.io/compare-plans

[4] Freetrade and Trading 212 are similar in that they both offer commission free trading. Trading 212 is better than Freetrade in terms of the number of investments offered (12,000 vs. 6,000), FX fees (0.15% vs. 0.39%) and platform usage fee [Zero vs. £5.99 per month to access the 6,000 investments (note, to access 1,500 investments only, there is no fee)].

[5] The annual global brokerage market right now (2023) is estimated at $1.30 trillion, and Freetrade generated around £12.68 million ($15.93 million) in revenue in its most recent full-year results

[6] Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. We note that the amount of available data observations for Freetrade is less than what's typically used in the five years of monthly data beta calculation (i.e. 3 observations vs. 60 observations), and accordingly, calculating the beta of such a company has been considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'extremely high' risk, it must have a beta value of 3 or more. Further information about the beta ratings can be found in the appendix section of this report.

[7] ttps://www.researchandmarkets.com/reports/5141120/securities-brokerages-and-stock-exchanges

[:4-8] 8.0 ^8.1 https://freetrade.io/stock-list#stock-list-table

[9] ttps://www.trading212.com/

[10] ttps://play.google.com/store/apps/details?id=com.avuscapital.trading212

[:3-11] 11.0 ^11.1 ^11.2 ^11.3 ^11.4 ^11.5 ^11.6 https://www.trading212.com/terms/invest

[12] On a maximum £2k uninvested cash.

[13] On a maximum £4k uninvested cash.

[14] ttps://www.kroo.com/

[15] Note: Reviews aren't verified by Google, but Google checks for and removes fake content when it's identified.

[16] ttps://find-and-update.company-information.service.gov.uk/company/09797821

[17] ttps://freetrade.io/legal/summer-freeshare-offer

[18] Assets under management is the total value of securities and cash balances administered and managed by Freetrade on behalf of its users.

[19] Trading volumes are the total value of executed orders placed by Freetrade users.

[:2-20] 20.0 ^20.1 https://find-and-update.company-information.service.gov.uk/company/09797821/filing-history

[22] Stadler, Enduring Success, 3–5.

[23] ttp://www.robertpicard.net/files/econgrowthandadvertising.pdf

[24] ttps://www.macrotrends.net/countries/WLD/world/gdp-growth-rate

[25] ttp://escml.umd.edu/Papers/ObsCPMT.pdf

[26] Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. https://doi.org/10.1111/j.1540-6520.2010.00377.x

[27] Stef Hinfelaar et al.:, 2019.

[28] Dickinson, 2010.

[:6-29] 28.0 ^28.1 ^28.2 ^28.3 http://escml.umd.edu/Papers/ObsCPMT.pdf

[:7-30] 29.00 ^29.01 ^29.02 ^29.03 ^29.04 ^29.05 ^29.06 ^29.07 ^29.08 ^29.09 ^29.10 ^29.11 ^29.12 ^29.13 ^29.14 ^29.15 ^29.16 ^29.17 ^29.18 ^29.19 ^29.20 ^29.21 ^29.22 ^29.23 http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf

[31] Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Supply@ME Capital's adjusted beta (5 years, monthly data) is 4.61, and is, accordingly, 561% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Supply@ME Captial is considered to be 'high' (561%>50%). For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. An argument can be made that the 2 years, weekly data can be especially appropriate in fast growing markets. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.

[32] ttps://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/bulletins/businessdemography/2020#the-south-west-continued-to-have-the-highest-five-year-survival-rate

[:5-33] Demirakos et al., 2010; Gleason et al., 2013

[34] ttps://www.newyorkfed.org/mediabrary/media/medialibrary/media/research/staff_reports/research_papers/9809.pdf

[:9-35] 34.0 ^34.1 ^34.2 https://www.telegraph.co.uk/business/2023/06/13/freetrade-stock-trading-start-up-valuation-plunge/

[36] ttps://www.crowdcube.com/companies/freetrade/pitches/qQNNal

[37] ttps://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/VjHMtIQiiQi__nVCWAt11Y5huQG68koLl03pvpnqrn0/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3KS3H3G5V%2F20230606%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20230606T213520Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEAMaCWV1LXdlc3QtMiJIMEYCIQC660r%2Bjx4D8MAt7dZnQyI4rQKB%2ByjmjuPvdqPe%2FzG5gwIhAMWx9BAf15tgFNPWA30ZMAQoITU1FekaZU4DdaDpbqpBKroFCEwQBBoMNDQ5MjI5MDMyODIyIgxTLwy1663v14A2ya4qlwW716KZyuhql1qyYzIKJqYYB3LoPM5dO6SP%2BGh1aYozdNJq7ZXCxOATczExlzncRJDmLWz0z1CurY9ZplLg4eiabGEMU0sZQshK4gKgagQ1A4rNWijM5fefc0CIoE%2FanqRcqu95iDs%2FiQofP48NNSqCxwcNUcBk1sSojK4RPJIlJxb5AeU2khPA1ldd80lrLdDrLswPOtjjyzLenNFGf5q2ArWweQL%2FzvPIg%2FelxdUzd91W1PLmU%2BBXfDEw%2BXdnD25AB2%2BLhij7Ueg8hc9hl0wSikQ6%2BLXpQyJBlgy0sURS0k2FSsEDv35cmdHX%2BTG0jUMQvdeKRy7FhHZhp%2BkcAnTMXoD5Q8flHUeigOAM1H4Upeukj%2FQvHxeIJwJECydGsGxed8x8uzREXYJPoijgRJjaXIMQXPY%2FwZ%2F0uK0iZnNwLPdQ3iUfwFFr5Z8LJB22iJA0WQOGVXtrWOPm2ePOkVz7kYYVYYFWaUKsFJXoTz1ddQ6yxrlXJELpXwOqClKe%2B2jXqA%2FPPjGqJzhxN08oKsE4R1tI%2F5XO8CkkVt1j9dzkcg3j46oz%2Frah5op4BvY%2BZ5SwJKe1k7IAjzerriBgvb0nevlWE%2B2M7P6wX0xqaFh28yzraDWif0VYhqwWbxm4Fa1QooHBTDLNSHcUKAPrWMfa8dA3OKIgOqybGtrBu%2FGIcsBkEXOajDjVE5OlmQakV%2Brz8XRPYEbzMMNuSawNwrv8NW3Mm7mb8y%2Bivq72a4YuaqwRhPPXv7ZJMPBs48hgjH8lRNMqmyK6FLaEIDyFLAGiRpXCTsaRyDqA7ydsGd4sdEUKzlAwpXzKH3ZrR%2B8webQv4S4Mo7lY9XmLXF1a4UEjiX6MNYLQfhpEs6WfAIL%2B6CiR7U1PfuQwiIf%2BowY6sAHe%2B%2FOG%2FE7AbAx8JhLgEhcGzWkFdOHiC0G5h%2Brx6a7s%2BKDx6Y2uB%2FH8Iz2BvGmuyJywGfydIu%2BpuBpyXDJIiSHEaPXgdem9Vr1qfWp4DgAKBDqbXXynyVzhBfIcTshNhDAV%2FeCRyk1sMW8wOGvkXh09tP6hekKWL84gHFuzpO5P2TD5ssECMlD2mzAKzgG%2FJ4m6s1vPE6uS%2F7zLhcjceOfFo1CH2Vzib3s5ZkCMSQo%2Bbg%3D%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=b2374cf4a6daa79a50613961fbeed5cee094a9ab08c59ad284c7ee50ff859a78

[38] ttps://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/TSm136YZkgOVAft-B377F-NKlBy9iC-6ZBi-J0I__mk/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3KS3H3G5V%2F20230606%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20230606T211732Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEAMaCWV1LXdlc3QtMiJIMEYCIQC660r%2Bjx4D8MAt7dZnQyI4rQKB%2ByjmjuPvdqPe%2FzG5gwIhAMWx9BAf15tgFNPWA30ZMAQoITU1FekaZU4DdaDpbqpBKroFCEwQBBoMNDQ5MjI5MDMyODIyIgxTLwy1663v14A2ya4qlwW716KZyuhql1qyYzIKJqYYB3LoPM5dO6SP%2BGh1aYozdNJq7ZXCxOATczExlzncRJDmLWz0z1CurY9ZplLg4eiabGEMU0sZQshK4gKgagQ1A4rNWijM5fefc0CIoE%2FanqRcqu95iDs%2FiQofP48NNSqCxwcNUcBk1sSojK4RPJIlJxb5AeU2khPA1ldd80lrLdDrLswPOtjjyzLenNFGf5q2ArWweQL%2FzvPIg%2FelxdUzd91W1PLmU%2BBXfDEw%2BXdnD25AB2%2BLhij7Ueg8hc9hl0wSikQ6%2BLXpQyJBlgy0sURS0k2FSsEDv35cmdHX%2BTG0jUMQvdeKRy7FhHZhp%2BkcAnTMXoD5Q8flHUeigOAM1H4Upeukj%2FQvHxeIJwJECydGsGxed8x8uzREXYJPoijgRJjaXIMQXPY%2FwZ%2F0uK0iZnNwLPdQ3iUfwFFr5Z8LJB22iJA0WQOGVXtrWOPm2ePOkVz7kYYVYYFWaUKsFJXoTz1ddQ6yxrlXJELpXwOqClKe%2B2jXqA%2FPPjGqJzhxN08oKsE4R1tI%2F5XO8CkkVt1j9dzkcg3j46oz%2Frah5op4BvY%2BZ5SwJKe1k7IAjzerriBgvb0nevlWE%2B2M7P6wX0xqaFh28yzraDWif0VYhqwWbxm4Fa1QooHBTDLNSHcUKAPrWMfa8dA3OKIgOqybGtrBu%2FGIcsBkEXOajDjVE5OlmQakV%2Brz8XRPYEbzMMNuSawNwrv8NW3Mm7mb8y%2Bivq72a4YuaqwRhPPXv7ZJMPBs48hgjH8lRNMqmyK6FLaEIDyFLAGiRpXCTsaRyDqA7ydsGd4sdEUKzlAwpXzKH3ZrR%2B8webQv4S4Mo7lY9XmLXF1a4UEjiX6MNYLQfhpEs6WfAIL%2B6CiR7U1PfuQwiIf%2BowY6sAHe%2B%2FOG%2FE7AbAx8JhLgEhcGzWkFdOHiC0G5h%2Brx6a7s%2BKDx6Y2uB%2FH8Iz2BvGmuyJywGfydIu%2BpuBpyXDJIiSHEaPXgdem9Vr1qfWp4DgAKBDqbXXynyVzhBfIcTshNhDAV%2FeCRyk1sMW8wOGvkXh09tP6hekKWL84gHFuzpO5P2TD5ssECMlD2mzAKzgG%2FJ4m6s1vPE6uS%2F7zLhcjceOfFo1CH2Vzib3s5ZkCMSQo%2Bbg%3D%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=d6d6e64d192d38e0d55e9784f1eeaea2fc9d75fc7a93e9c93081aa1ac5c5bc57

[39] ttps://www.crunchbase.com/organization/freetrade-limited

[40] ttps://www.crunchbase.com/organization/freetrade-limited/company_financials

[41] ttps://www.trademarkelite.com/europe/trademark/trademark-detail/014989172/FREETRADE

[:0-42] 41.00 ^41.01 ^41.02 ^41.03 ^41.04 ^41.05 ^41.06 ^41.07 ^41.08 ^41.09 ^41.10 ^41.11 ^41.12 ^41.13 ^41.14 ^41.15 ^41.16 ^41.17 ^41.18 ^41.19 ^41.20 ^41.21 ^41.22 ^41.23 ^41.24 ^41.25 ^41.26 ^41.27 ^41.28 ^41.29 ^41.30 ^41.31 ^41.32 ^41.33 ^41.34 ^41.35 ^41.36 ^41.37 ^41.38 https://globefunder.com/trading-212-countries/

[:1-43] 42.0 ^42.1 https://www.financemagnates.com/forex/brokers/freetrade-enters-netherland-ireland-with-zero-free-services/

[44] ttps://help.freetrade.io/en/articles/1794457-which-countries-is-freetrade-available-in

[45] Here, we have assumed that the global population is 8,037,772,395 people (source: https://www.worldometers.info/world-population/#:~:text=World%20Population%20Clock%3A%208%20Billion,(LIVE%2C%202023)%20%2D%20Worldometer)

[1]

[2]

[3]

[4]

[5]

[6]

[7]

[8]

[9]

[10]

[11]

[12]

[13]

[14]

[15]

[16]

[17]

[18]

[19]

[20]

[Note 1]

[21]

[22]

[23]

[24]

[25]

[26]

[27]

[28]

[29]

[30]

[31]

[32]

[33]

[34]

[35]

[36]

[37]

[38]

[39]

[40]

[41]

[42]

[43]

[44]

@@ Line 5,357: / Line 5,357: @@
 |
 |
-|
+|0.00%
 |-
 |'''Operating expenses as a proportion of revenue (%)'''
@@ Line 5,363: / Line 5,363: @@
 |
 |
-|
+|41.11%
 |-
 |'''Tax rate (%)'''
@@ Line 5,369: / Line 5,369: @@
 |
 |
-|
+|15.23%
 |-
 |'''Depreciation and amortisation rate (%)'''
@@ Line 5,375: / Line 5,375: @@
 |
 |
-|
+|79.52%
 |-
 |'''Fixed Capital Investment (FCInv) as a proportion of revenue (%)'''
@@ Line 5,381: / Line 5,381: @@
 |
 |
-|
+|1.13%
 |-
 |'''Working Capital Investment (WCInv) as a proportion of revenue (%)'''
@@ Line 5,387: / Line 5,387: @@
 |
 |
-|
+|52.01%
 |-
 |'''Net borrowing as a proportion of revenue (%)'''
@@ Line 5,393: / Line 5,393: @@
 |
 |
-|
+|0.27%
 |-
 |'''Interest expense as a proportion of revenue (%)'''
@@ Line 5,399: / Line 5,399: @@
 |
 |
-|
+|0.41%
 |}
 {| class="wikitable"
@@ Line 5,410: / Line 5,410: @@
 |-
 |'''Cost of goods sold as a proportion of revenue (%)'''
+|0%
 |
-|
+|N/A
-|
 |
 |-
 |'''Operating expenses as a proportion of revenue (%)'''
+|64.00%
 |
-|
+|46.31%
-|
 |
 |-
 |'''Tax rate (%)'''
+|19.98%
 |
-|
+|19.84%
-|
 |
 |-
 |'''Depreciation and amortisation rate (%)'''
+|14.94%
 |
-|
+|22.91%
-|
 |
 |-
 |'''Fixed Capital Investment (FCInv) as a proportion of revenue (%)'''
+|2.06%
 |
-|
+|2.35%
-|
 |
 |-
 |'''Working Capital Investment (WCInv) as a proportion of revenue (%)'''
+|0.18%
 |
-|
+|(3.09)%
-|
 |
 |-
 |'''Net borrowing as a proportion of revenue (%)'''
-|
+| -1.52%
 |
 |
@@ Line 5,452: / Line 5,452: @@
 |-
 |'''Interest expense as a proportion of revenue (%)'''
-|
+|0.48%
 |
 |
@@ Line 5,968: / Line 5,968: @@
 |240,900
 |-
-|Profit before tax
+|Administrative expenses
+|
+|
+|
+|(89,975)
+|(104,866)
+|
+|
+|-
+|Operating profit
+|
+|
+|
+|55,851
+|58,981
+|
+|
+|-
+|Investment income
+|
+|
+|
+|23
+|198
+|
+|
+|-
+|Finance costs
+|
+|
 |
+|(790)
+|(768)
 |
 |
+|-
+|Profit before tax
 |
 |
+|
+|55,084
+|58,411
 |79,800
 |92,600
+|-
+|Tax expense
+|
+|
+|
+|(11,262)
+|(11,672)
+|
+|
+|-
+| colspan="8" |'''Profit for the financial year attributable to:'''
+|-
+|Equity holders of the Parent Company
+|
+|
+|
+|43,822
+|46,739
+|
+|
+|-
+| colspan="8" |'''Earnings per share:'''
+|-
+|Basic (pence)
+|
+|
+|
+|10.71
+|11.39
+|
+|
+|-
+|Diluted (pence)
+|
+|
+|
+|10.67
+|11.35
+|
+|
 |-
 ! colspan="6" |Balance sheet
 !
 !
+|-
+| colspan="8" |'''Assets'''
+|-
+| colspan="8" |'''Non-current assets'''
+|-
+|Goodwill
+|
+|
+|
+|6,991
+|6,991
+|
+|
+|-
+|Other intangible assets
+|
+|
+|
+|6,014
+|8,779
+|
+|
+|-
+|Property, plant and equipment
+|
+|
+|
+|3,351
+|3,325
+|
+|
+|-
+|Right-of-use assets
+|
+|
+|
+|13,325
+|12,273
+|
+|
+|-
+|Deferred tax asset
+|
+|
+|
+|940
+|610
+|
+|
+|-
+|
+|
+|
+|
+|30,621
+|31,978
+|
+|
+|-
+| colspan="8" |'''Current assets'''
+|-
+|Trade and other receivables
+|
+|
+|
+|37,462
+|49,436
+|
+|
+|-
+|Current tax receivable
+|
+|
+|
+|51
+|38
+|
+|
 |-
 |Cash and cash equivalents (£'000)
@@ Line 5,990: / Line 6,144: @@
 |
 |-
-|Debt (£'000)
 |
 |
 |
-|0
+|
-|0
+|131,521
+|133,504
+|
+|
+|-
+|Total assets
+|
+|
+|
+|162,142
+|165,482
+|
+|
+|-
+| colspan="8" |'''Liabilities'''
+|-
+| colspan="8" |'''Current liabilities'''
+|-
+|Trade and other payables
+|
+|
+|
+|(12,765)
+|(15,604)
+|
+|
+|-
+|Lease liabilities
+|
+|
+|
+|(1,708)
+|(1,566)
+|
+|
+|-
+|Provisions
+|
+|
+|
+|(1,526)
+|(519)
+|
+|
+|-
+|
+|
+|
+|
+|(15,999)
+|(17,689)
+|
+|
+|-
+| colspan="8" |'''Non-current liabilities'''
+|-
+|Lease liabilities
+|
+|
+|
+|(13,886)
+|(12,395)
+|
+|
+|-
+|Provisions
+|
+|
+|
+|(1,549)
+|(2,004)
+|
+|
+|-
+|
+|
+|
+|
+|(15,435)
+|(14,399)
+|
+|
+|-
+|Total liabilities
+|
+|
+|
+|(31,434)
+|(32,088)
+|
+|
+|-
+|Net assets
+|
+|
+|
+|130,708
+|133,394
+|
+|
+|-
+| colspan="8" |'''Equity'''
+|-
+|Share capital
+|
+|
+|
+|51
+|51
+|
+|
+|-
+|Share premium
+|
+|
+|
+|8,658
+|8,930
+|
+|
+|-
+|Own shares
+|
+|
+|
+|(740)
+|(473)
+|
+|
+|-
+|Retained earnings
+|
+|
+|
+|122,739
+|124,886
+|
+|
+|-
+|Total equity
+|
+|
+|
+|130,708
+|133,394
 |
 |
@@ Line 6,002: / Line 6,299: @@
 !
 !
+|-
+| colspan="8" |'''Cash flows from operating activities'''
+|-
+|Profit for the financial year
+|
+|
+|
+|43,822
+|46,739
+|
+|
+|-
+| colspan="8" |Adjustments for:
+|-
+|Investment income
+|
+|
+|
+|(23)
+|(198)
+|
+|
+|-
+|Finance costs
+|
+|
+|
+|790
+|768
+|
+|
+|-
+|Income tax expense
+|
+|
+|
+|11,262
+|11,672
+|
+|
+|-
+|Depreciation and amortisation
+|
+|
+|
+|3,623
+|3,643
+|
+|
+|-
+|Share-based payment expense
+|
+|
+|
+|4,952
+|4,728
+|
+|
+|-
+|Decrease in provisions and other payables
+|
+|
+|
+|(69)
+|(1,007)
+|
+|
+|-
+|Loss on disposal of property, plant and equipment
+|
+|
+|
+|13
+|21
+|
+|
+|-
+|Profit on disposal of right-of-use assets
+|
+|
+|
+|(3)
+|0
+|
+|
+|-
+|Increase in trade and other receivables
+|
+|
+|
+|(6,889)
+|(11,974)
+|
+|
+|-
+|Increase / (decrease) in trade and other payables
+|
+|
+|
+|(1,347)
+|2,839
+|
+|
+|-
+|Cash generated from operations
+|
+|
+|
+|56,131
+|57,231
+|
+|
+|-
+|Income tax paid
+|
+|
+|
+|(11,455)
+|(11,433)
+|
+|
+|-
+|Interest expense paid
+|
+|
+|
+|(1)
+|0
+|
+|
 |-
 |Net cash from/(used in) operating activities
@@ Line 6,009: / Line 6,436: @@
 |44,675
 |45,798
+|
+|
+|-
+| colspan="8" |'''Cash flows from investing activities'''
+|-
+|Purchase of other intangible assets
+|
+|
+|
+|(2,370)
+|(2,365)
+|
+|
+|-
+|Purchase of property, plant and equipment
+|
+|
+|
+|(1,174)
+|(1,014)
+|
+|
+|-
+|Acquisition of subsidiary, net of cash acquired
+|
+|
+|
+|(2,561)
+|0
+|
+|
+|-
+|Interest received
+|
+|
+|
+|23
+|198
 |
 |
@@ Line 6,018: / Line 6,483: @@
 |(6,082)
 |(3,181)
+|
+|
+|-
+| colspan="8" |'''Cash flows from financing activities'''
+|-
+|Payments of principal in relation to lease liabilities
+|
+|
+|
+|(1,241)
+|(1,716)
+|
+|
+|-
+|Payments of interest on lease liabilities
+|
+|
+|
+|(789)
+|(768)
+|
+|
+|-
+|Proceeds from issue of share capital
+|
+|
+|
+|199
+|272
+|
+|
+|-
+|Dividends paid
+|
+|
+|
+|(29,138)
+|(50,383)
 |
 |
@@ Line 6,036: / Line 6,539: @@
 |
 |
-|
+|0%
-|
+|0%
 |
 |
@@ Line 6,045: / Line 6,548: @@
 |
 |
-|
+|61.70%
-|
+|64.00%
 |
 |
@@ Line 6,054: / Line 6,557: @@
 |
 |
-|
+|20.45%
-|
+|19.98%
 |
 |
@@ Line 6,063: / Line 6,566: @@
 |
 |
-|
+|15.97%
-|
+|14.94%
 |
 |
@@ Line 6,072: / Line 6,575: @@
 |
 |
-|
+|2.43%
-|
+|2.06%
 |
 |
@@ Line 6,082: / Line 6,585: @@
 |
 |
-|
+|0.18%
 |
 |
@@ Line 6,090: / Line 6,593: @@
 |
 |
-|
+| -1.39%
-|
+| -1.52%
 |
 |
@@ Line 6,099: / Line 6,602: @@
 |
 |
-|
+|0.53%
-|
+|0.48%
 |
 |

Freetrade: Difference between revisions

Revision as of 00:24, 19 June 2023

Operations

How did the idea of the company come about?

What's the mission of the company?

What are the main offerings of the company?

What is the price of the offering?

From which place(s) are the offerings able to be purchased?

From which place(s) are the offerings promoted?

What's the current strategy of the company?

Team

Market

Total Addressable Market

Serviceable Available Market

Serviceable Obtainable Market

Competition

Financials

Revenue

Transaction revenue

Recurring revenue

Operating expenses

What are the assumptions used to estimate the financial forecasts?

Risks

Early-stage investment

Illiquid investment

Regulatory

Business

Operational

Conduct

Information security

Third party

Valuation

What's the expected return of an investment in the company?

What are the assumptions used to estimate the return?

Sensitivity analysis

Appendix

Relative valuation approach

What's the expected return of an investment in Freetrade using the relative valuation approach?

What are the assumptions used to estimate the return figure?

Sensitivity analysis

Freetrade peer(s)

Funding History[38]

Economic links to cash flow patterns

Beta risk profile

Freetrade adjusted beta calculation

Other information

Key terms of the convertible loan note

Actions

References and notes

Funding History^[38]