Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.22.4
SEGMENT REPORTING
 9 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
SEGMENT REPORTING SEGMENT REPORTING
During the fourth quarter of 2022 fiscal year, the Company's CODM restructured the way he views the Company's business from a single operating segment to five geographic regional segments including Central Asia, Europe, United States, Russia and Middle East/Caucasus. The Company has classified the Russia segment as discontinued operations for the periods presented because the assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of December 31, 2022. The Company's CODM do not review inter-segment revenues as part of segment reporting.
The following tables summarize the Company's Statement of Operations and Statements of Other Comprehensive Income by its geographic segments. Intercompany balances were eliminated for separate disclosure:
Three months ended December 31, 2022
STATEMENTS OF OPERATIONS
 Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income (1)
$ 31,248  $ 48,486  $ 1,149  $ —  $ 80,883 
Net gain/(loss) on trading securities 28,080  819  (3,443) —  25,456 
Interest income 66,324  11,417  2,500  14  80,255 
Insurance underwriting income 28,557  —  —  —  28,557 
Net gain/(loss) on foreign exchange operations 20,402  313  152  (1) 20,866 
Net loss on derivative (21,469) —  —  —  (21,469)
TOTAL REVENUE, NET 153,142  61,035  358  13  214,548 
Fee and commission expense 10,110  7,933  255  16  18,314 
Interest expense 43,880  4,590  3,567  —  52,037 
Insurance claims incurred, net of reinsurance 17,418  1  —  —  17,419 
Operating expense (2)
28,494  12,824  8,655  635  50,608 
Provision for impairment losses 12,767  11,363  10  —  24,140 
Other expense/(income), net 647  (74) —  (3) 570 
TOTAL EXPENSE 113,316  36,637  12,487  648  163,088 
INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 39,826  $ 24,398  $ (12,129) $ (635) $ 51,460 
Income tax expense (95) (4,557) (398) (19) (5,069)
INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 39,731  $ 19,841  $ (12,527) $ (654) $ 46,391 
Nine months ended December 31, 2022
STATEMENTS OF OPERATIONS
 Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income (1)
$ 56,715  $ 193,439  $ 3,332  $ —  253,486 
Net gain/(loss) on trading securities 65,497  (21,815) (4,788) —  38,894 
Interest income 154,300  24,014  9,489  14  187,817 
Insurance underwriting income 78,998  —  —  —  78,998 
Net gain/(loss) on foreign exchange operations 32,270  (1,517) (747) 8  30,014 
Net loss on derivative (22,523) —  —  —  (22,523)
TOTAL REVENUE, NET 365,257  194,121  7,286  22  566,686 
Fee and commission expense 32,638  26,834  551  45  60,068 
Interest expense 110,410  10,250  12,311  —  132,971 
Insurance claims incurred, net of reinsurance 51,585  1  —  —  51,586 
Operating expense 70,975  34,923  19,015  1,454  126,367 
Provision for impairment losses/(recoveries) 18,930  11,362  2  —  30,294 
Other expense/(income), net 116  31  (8) (60) 79 
TOTAL EXPENSE 284,654  83,401  31,871  1,439  401,365 
INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 80,603  $ 110,720  $ (24,585) $ (1,417) 165,321 
Income tax expense (691) (18,403) (7,475) 2  (26,567)
INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 79,912  $ 92,317  $ (32,060) $ (1,415) 138,754 
Three months ended December 31, 2021 (Restated)
STATEMENTS OF OPERATIONS
 Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income $ 6,990  $ 83,162  $ 1,256  $ —  $ 91,408 
Net gain on trading securities 7,081  481  101  —  7,663 
Interest income 28,703  4,940  14  —  33,657 
Insurance underwriting income 21,394  —  —  —  21,394 
Net gain/(loss) on foreign exchange operations 2,002  (437) (209) 5  1,361 
Net loss on derivative (314) —  —  —  (314)
TOTAL REVENUE, NET 65,856  88,146  1,162  5  155,169 
Fee and commission expense 6,523  18,106  153  —  24,782 
Interest expense 17,553  3,919  418  —  21,890 
Insurance claims incurred, net of reinsurance 16,286  —  —  —  16,286 
Operating expense 15,247  10,517  5,903  (86) 31,581 
Provision for impairment (recoveries)/losses (365) —  32  —  (333)
Other expense/(income), net 990  (13) 2  979 
TOTAL EXPENSE 56,234  32,529  6,506  (84) 95,185 
INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 9,622  $ 55,617  $ (5,344) $ 89  59,984 
Income tax benefit/(expense) 1,256  (7,176) 4,114  —  (1,806)
INCOME FROM CONTINUING OPERATIONS $ 10,878  $ 48,441  $ (1,230) $ 89  $ 58,178 
Nine months ended December 31, 2021 (Restated)
STATEMENTS OF OPERATIONS
 Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income $ 18,092  $ 241,066  $ 3,391  $ —  $ 262,549 
Net gain/(loss) on trading securities 18,779  179,473  (305) —  197,947 
Interest income 74,425  8,015  74  —  82,514 
Income from insurance activity 51,491  —  —  —  51,491 
Net gain/(loss) on foreign exchange operations 4,775  (497) (207) 5  4,076 
Net loss on derivative (1,028) —  —  —  (1,028)
TOTAL REVENUE, NET 166,534  428,057  2,953  5  597,549 
Fee and commission expense 11,177  56,946  503  —  68,626 
Interest expense 44,311  7,422  1,119  —  52,852 
Insurance claims incurred, net of reinsurance 41,096  —  —  —  41,096 
Operating expense 38,327  20,089  14,275  81  72,772 
Provision for impairment losses 868  11  32  —  911 
Other expense/(income), net 2,449  (21) —  (2) 2,426 
TOTAL EXPENSE 138,228  84,447  15,929  79  238,683 
INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 28,306  $ 343,610  $ (12,976) $ (74) $ 358,866 
Income tax benefit/(expense) 1,278  (21,190) (19,114) —  (39,026)
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 29,584  $ 322,420  $ (32,090) $ (74) $ 319,840 
(1) All trading of U.S. and European exchange traded and OTC securities by all of the Company's securities brokerage firms, excluding PrimeEx, are routed to and executed through Freedom EU and all fee and commission income for those transactions is recognized at Freedom EU.
(2) Operating expense includes significant noncash items stock based compensation expenses. The following table summarizes the Company's stock based compensation by its geographic segments:
Three Months Ended December 31, Nine Months Ended December 31,
2022 2021* 2022 2021*
Central Asia $ 2,077  $ 1,384  $ 4,215  $ 3,414 
U.S. 717  691  1,869  1,737 
Europe 145  196  436  485 
Total stock based compensation $ 2,939  $ 2,271  $ 6,520  $ 5,636 
The following tables summarize the Company's total asset and total liabilities by its geographic segments. Intercompany balances were eliminated for separate disclosure:
December 31, 2022
Central Asia Europe U.S. Russia (Discontinued operations) Middle East/Caucasus Total
Total assets $ 3,770,032  $ 519,760  $ 114,609  $ 961,566  $ 2,167  $ 5,368,134 
Total liabilities 3,071,804  607,536  74,618  931,484  361  4,685,803 
Net assets $ 698,228  $ (87,776) $ 39,991  $ 30,082  $ 1,806  $ 682,331 
March 31, 2022 (Recasted)
Central Asia Europe U.S. Russia (Discontinued operations) Middle East/Caucasus Total
Total assets $ 1,423,529  $ 805,768  $ 172,679  $ 825,419  $ 355  $ 3,227,750 
Total liabilities 1,203,473  489,883  175,136  812,478  172  2,681,142 
Net assets $ 220,056  $ 315,885  $ (2,457) $ 12,941  $ 183  $ 546,608 
Central Asia Segment

The Central Asia segment comprises the Kazakhstan headquarters and operations in Kazakhstan (including in the AIFC), Kyrgyzstan, Uzbekistan, Ukraine and Turkey.

Recently acquired insurance companies, Freedom Insurance, Freedom Life, and London Almaty, are included within Central Asia segment.

Europe Segment

The Cyprus securities brokerage firm, Freedom EU, oversees the Europe segment operations (consisting of operations in Cyprus, the UK, Germany, Spain, Greece, and France).

U.S. Segment

The U.S. segment currently consists of FRHC and the Company's PrimeEx subsidiary.

Middle East/Caucasus Segment

As of December 31, 2022, the Middle East/Caucasus segment consisted of four offices, in Azerbaijan, Armenia and the United Arab Emirates, that provide brokerage and investment education services. The Company entered into the Caucasus market during fiscal year 2022 by establishing subsidiaries in Azerbaijan and Armenia, and in April 2022 it entered into the Middle East market by establishing a subsidiary in the United Arab Emirates.

Russia Segment

The Russia segment, that was classified as assets and liabilities held for sale, includes the securities brokerage subsidiary Freedom RU and its subsidiaries Freedom Bank RU and Freedom Auto.