| ASSETS AND LIABILITIES HELD FOR SALE |
ASSETS AND LIABILITIES HELD FOR SALE In the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022, the Company announced its plans to divest its interests in its Russian securities brokerage and complementary banking operations in Russia ("Russian segment"). On October 17, 2022, the Company entered into an agreement with Maxim Povalishin for the sale of 100% of the share capital of its Russian segment. Maxim Povalishin, the purchaser, is currently the Deputy General Director and a member of the Board of Directors of Freedom RU. The transaction is subject to the approval of the Central Bank of the Russian Federation and is expected to be completed within the thee months ended December 31, 2022.
The Company has classified the Russia segment as discontinued operations as of December 31, 2021 and for the three and nine months ended December 31, 2021, because the subsidiaries to be disposed of in this transaction met the held for sale criteria.
In accordance with US GAAP, the Company has reported separately the discontinued operations in the condensed consolidated financial statements. As of December 31, 2021, and March 31, 2021, the major classes of assets and liabilities from discontinued operations included the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
March 31, 2021 |
| Cash and cash equivalents |
$ |
346,996 |
|
|
$ |
531,791 |
|
| Restricted cash |
32,728 |
|
|
27,594 |
|
| Trading securities |
400,823 |
|
|
148,642 |
|
| Brokerage and other receivables, net |
108,245 |
|
|
15,575 |
|
| Loans issued |
2,557 |
|
|
2,041 |
|
| Other assets |
28,243 |
|
|
22,405 |
|
|
|
|
|
| Total assets held for sale |
$ |
919,592
|
|
|
$ |
748,048
|
|
|
|
|
|
| Customer liabilities |
$ |
636,898 |
|
|
$ |
573,181 |
|
| Debt securities issued |
71,716 |
|
|
37,095 |
|
| Securities repurchase agreement obligations |
82,791 |
|
|
51,997 |
|
| Other liabilities |
18,322 |
|
|
14,295 |
|
|
|
|
|
| Total liabilities held for sale |
$ |
809,727
|
|
|
$ |
676,568
|
|
The results of operations for discontinued operations for the three and nine months ended December 31, 2021 and 2020, consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Nine Months Ended
December 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
| Fee and commission income |
$ |
23,147 |
|
|
$ |
13,571 |
|
|
$ |
59,596 |
|
|
$ |
30,810 |
|
| Net (loss)/gain on trading securities |
(6,611) |
|
|
4,972 |
|
|
(9,716) |
|
|
17,087 |
|
| Interest income |
5,786 |
|
|
4,813 |
|
|
15,574 |
|
|
9,961 |
|
| Net gain/(loss) on foreign exchange operations |
(655) |
|
|
(1,516) |
|
|
(2,889) |
|
|
1,217 |
|
| Net gain/(loss) on derivative |
— |
|
|
49 |
|
|
— |
|
|
88 |
|
|
|
|
|
|
|
|
|
| Total revenue |
21,667
|
|
|
21,889
|
|
|
62,565
|
|
|
59,163
|
|
|
|
|
|
|
|
|
|
| Fee and commission expense |
2,075 |
|
|
1,983 |
|
|
6,300 |
|
|
4,298 |
|
| Interest expense |
2,365 |
|
|
3,426 |
|
|
6,824 |
|
|
6,289 |
|
| Operating expense |
22,253 |
|
|
11,583 |
|
|
53,841 |
|
|
29,979 |
|
| Provision for impairment losses |
13 |
|
|
156 |
|
|
89 |
|
|
200 |
|
| Other (income)/expense, net |
28 |
|
|
230 |
|
|
120 |
|
|
207 |
|
|
|
|
|
|
|
|
|
| Total expense |
26,734
|
|
|
17,378
|
|
|
67,174
|
|
|
40,973
|
|
|
|
|
|
|
|
|
|
| Profit before income tax |
$ |
(5,067) |
|
|
$ |
4,511
|
|
|
$ |
(4,609) |
|
|
$ |
18,190
|
|
The net cash flows from/(used in) operating and investing activities from discontinued operations for the nine months ended December 31, 2021 and 2020, consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
December 31, |
|
2021 |
|
2020 |
| Cash Flows (Used In)/From Operating Activities |
|
|
|
|
|
|
|
| Net income from discontinued operations |
$ |
(3,656) |
|
|
$ |
12,988
|
|
|
|
|
|
| Adjustments to reconcile net income from operating activities: |
|
|
|
| Depreciation and amortization |
1,637 |
|
|
439 |
|
| Noncash lease expense |
3,785 |
|
|
2,847 |
|
| Impairment of Freedom Bank RU goodwill |
— |
|
|
— |
|
| Impairment of Zerich goodwill |
— |
|
|
— |
|
| Loss on sale of fixed assets |
— |
|
|
— |
|
| Client base write-off |
— |
|
|
— |
|
| Change in deferred taxes |
(1,892) |
|
|
1,406 |
|
| Stock compensation expense |
5,647 |
|
|
1,033 |
|
| Unrealized (gain)/loss on trading securities |
9,082 |
|
|
(1,988) |
|
| Net change in accrued interest |
1,436 |
|
|
567 |
|
| Allowances/(recovery) for receivables |
89 |
|
|
203 |
|
| Changes in operating assets and liabilities: |
|
|
|
| Trading securities |
(262,438) |
|
|
(81,345) |
|
| Brokerage and other receivables |
(93,717) |
|
|
5,444 |
|
| Other assets |
(1,948) |
|
|
(1,792) |
|
| Securities sold, not yet purchased – at fair value |
(24) |
|
|
— |
|
| Customer liabilities |
121,173 |
|
|
217,034 |
|
| Current income tax liability |
(623) |
|
|
990 |
|
| Trade payables |
319 |
|
|
219 |
|
| Lease liabilities |
(3,947) |
|
|
(2,988) |
|
| Other liabilities |
2,176 |
|
|
1,426 |
|
| Net cash flows (used in)/from operating activities from discontinued operations |
(222,901) |
|
|
156,483
|
|
|
|
|
|
| Cash Flows (Used In)/From Investing Activities |
|
|
|
| Purchase of fixed assets |
(2,918) |
|
|
(985) |
|
| Proceeds from sale of fixed assets |
699 |
|
|
— |
|
| Purchase of intangible assets |
— |
|
|
— |
|
| Loans issued |
(571) |
|
|
(117) |
|
| Net cash flows (used in)/from investing activities from discontinued operations |
$ |
(2,790) |
|
|
$ |
(1,102) |
|
|