Quarterly report pursuant to Section 13 or 15(d)

RECAST

v3.23.1
RECAST
 3 Months Ended
Jun. 30, 2022
Accounting Changes and Error Corrections [Abstract]  
Recast RECAST
On October 17, 2022, the Company entered into an agreement with Mr. Maxim Povalishin for the sale of the Company's subsidiaries comprising the Russian segment. Because the assets and liabilities to be disposed of met the held for sale criteria, as of and for the three months ended June 30, 2022 and in the corresponding periods of 2021 and 2020 for comparative purposes. For additional information see Note 26 - Assets and Liabilities held for sale.

The previously issued Condensed Consolidated Balance Sheets as of June 30,2022 and March 31, 2022, and Condensed Consolidated Statement of Operations and Statements of Other Comprehensive Income for the three months ended June 30, 2022 and 2021, have been revised as follows:
As of March 31, 2022
As previously reported Recast insurance companies Recast discontinued operations As recasted
ASSETS
Cash and cash equivalents $ 625,547  $ 816  $ (400,899) $ 225,464 
Restricted cash 553,680  —  (5,730) 547,950 
Trading securities 1,203,479  77,395  (122,497) 1,158,377 
Available-for-sale securities, at fair value 1  161,363  —  161,364 
Brokerage and other receivables, net 357,567  179  (210,087) 147,659 
Loans issued 94,797  43  (2,394) 92,446 
Fixed assets, net 21,365  436  (3,978) 17,823 
Intangible assets, net 5,791  1,650  (2,278) 5,163 
Goodwill 5,388  510  —  5,898 
Right-of-use asset 15,669  684  (8,922) 7,431 
Deferred tax assets 12,018  51  (11,161) 908 
Assets from insurance activity —  5,712  —  5,712 
Assets held for sale —  —  825,419  825,419 
Other assets, net 25,707  7,643  (7,214) 26,136 
TOTAL ASSETS $ 2,921,009  $ 256,482  $ 50,259  $ 3,227,750 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations $ 775,178  $ 97,515  $ (32,469) $ 840,224 
Customer liabilities 1,417,937  (983) (651,326) 765,628 
Trade payables 45,229  1  (147) 45,083 
Liabilities from insurance activity —  119,490  —  119,490 
Current income tax liability 14,556  —  —  14,556 
Securities sold, not yet purchased – at fair value 14,103  —  (238) 13,865 
Loans received 3,538  —  —  3,538 
Debt securities issued 99,027  —  (64,637) 34,390 
Lease liability 15,315  719  (8,530) 7,504 
Deferred distribution payments 8,534  —  —  8,534 
Liabilities held for sale —  —  812,478  812,478 
Other liabilities 19,917  807  (4,872) 15,852 
TOTAL LIABILITIES 2,413,334  217,549  50,259  2,681,142 
Commitments and Contingent Liabilities (Note 25) —  —  —  — 
SHAREHOLDERS’ EQUITY
Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding
 —  —  —  — 
Common stock - $0.001 par value; 500,000,000 shares authorized; 59,542,212 shares issued and outstanding as of June 30, 2022, and March 31, 2022, respectively
 59  —  —  59 
Additional paid in capital 141,340  33,405  —  174,745 
Retained earnings 426,563  15,361  —  441,924 
Accumulated other comprehensive loss (53,291) (9,834) —  (63,125)
TOTAL FRHC SHAREHOLDERS’ EQUITY 514,671  38,932  —  553,603 
Non-controlling interest (6,996) 1  —  (6,995)
TOTAL SHAREHOLDERS’ EQUITY 507,675  38,933  —  546,608 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,921,009  $ 256,482  $ 50,259  $ 3,227,750 
As of June 30, 2022
As previously reported* Recast discontinued operations As recasted
ASSETS
Cash and cash equivalents $ 905,685  $ (659,286) $ 246,399 
Restricted cash 375,118  48,071  423,189 
Trading securities 1,420,481  (122,079) 1,298,402 
Available-for-sale securities, at fair value 219,470  —  219,470 
Brokerage and other receivables, net 511,047  (278,938) 232,109 
Loans issued 223,519  (11,431) 212,088 
Fixed assets, net 29,203  (7,248) 21,955 
Intangible assets, net 9,404  (4,028) 5,376 
Goodwill 5,932  —  5,932 
Right-of-use asset 24,394  (14,908) 9,486 
Deferred tax assets 16,263  (14,329) 1,934 
Assets from insurance activity 7,170  —  7,170 
Assets held for sale —  1,168,692  1,168,692 
Other assets, net 49,508  (10,969) 38,539 
TOTAL ASSETS $ 3,797,194  $ 93,547  $ 3,890,741 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations $ 1,030,171  $ (34,264) $ 995,907 
Customer liabilities 1,652,643  (889,774) 762,869 
Trade payables 82,202  (15,078) 67,124 
Liabilities from insurance activity 135,563  —  135,563 
Current income tax liability 23,803  —  23,803 
Securities sold, not yet purchased – at fair value 7,706  (520) 7,186 
Loans received 5,435  —  5,435 
Debt securities issued 115,629  (64,636) 50,993 
Lease liability 23,642  (14,098) 9,544 
Deferred distribution payments 8,534  —  8,534 
Liabilities held for sale —  1,119,655  1,119,655 
Other liabilities 79,984  (7,738) 72,246 
Payable for acquisition 24,966  —  24,966 
TOTAL LIABILITIES 3,190,278  93,547  3,283,825 
Commitments and Contingent Liabilities (Note 25) —  —  — 
SHAREHOLDERS’ EQUITY
Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding
 —  —  — 
Common stock - $0.001 par value; 500,000,000 shares authorized; 59,542,212 shares issued and outstanding as of June 30, 2022, and March 31, 2022, respectively
 59  —  59 
Additional paid in capital 152,532  —  152,532 
Retained earnings 502,990  —  502,990 
Accumulated other comprehensive loss (39,676) —  (39,676)
TOTAL FRHC SHAREHOLDERS’ EQUITY 615,905  —  615,905 
Non-controlling interest (8,989) —  (8,989)
TOTAL SHAREHOLDERS’ EQUITY 606,916  —  606,916 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,797,194  $ 93,547  $ 3,890,741 
Three months ended June 30, 2022
As previously reported* Recast discontinued operations As recasted
Revenue:
Fee and commission income $ 126,727  $ (37,281) $ 89,446 
Net gain on trading securities 15,582  (11,149) 4,433 
Net realized loss on investments available for sale (593) —  (593)
Interest income 54,367  (5,804) 48,563 
Income from insurance activity 24,241  —  24,241 
Net gain/(loss) on foreign exchange operations 5,019  (426) 4,593 
Net gain on derivative 1,265  1  1,266 
TOTAL REVENUE, NET 226,608  (54,659) 171,949 
Expense:
Fee and commission expense 25,241  (1,926) 23,315 
Interest expense 45,829  (5,758) 40,071 
Expense from insurance activity 16,692  —  16,692 
Operating expense 65,467  (27,468) 37,999 
Provision for impairment losses 2,798  (370) 2,428 
Other expense, net (527) (34) (561)
TOTAL EXPENSE 155,500  (35,556) 119,944 
NET INCOME BEFORE INCOME TAX 71,108  (19,103) 52,005 
Income tax expense (12,035) 3,156  (8,879)
INCOME FROM CONTINUING OPERATIONS 59,073  (15,947) 43,126 
Income before income tax expense of discontinued operations —  19,102  19,102 
Income tax expense of discontinued operations —  (3,156) (3,156)
Income from discontinued operations —  15,946  15,946 
NET INCOME 59,073  $ (1) $ 59,072 
Less: Net loss attributable to non-controlling interest in subsidiary (1,994) —  (1,994)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 61,067  $ (1) $ 61,066 
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect 866  —  866 
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect 593  —  593 
Foreign currency translation adjustments, net of tax effect 21,977  13  21,990 
OTHER COMPREHENSIVE INCOME 23,436  13  23,449 
COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS $ 82,509  $ 12  $ 82,521 
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (1,994) —  (1,994)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 84,503  $ 12  $ 84,515 
For the three months ended June 30, 2022, the Company’s EPS as reported was 0.99 for both basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to 0.72 for both basic and diluted EPS for continuing operations to 0.27, for both basic and diluted EPS for discontinued operations, and to 1.03 for both basic and diluted total EPS, respectively.

Three months ended June 30, 2021
As previously reported* Recast insurance companies Recast discontinued operations As recasted
Revenue:
Fee and commission income $ 96,306  $ (24) $ (18,167) $ 78,115 
Net gain on trading securities 9,900  841  (2,059) 8,682 
Net realized loss on investments available for sale —  (31) —  (31)
Interest income 19,178  6,585  (3,525) 22,238 
Income from insurance activity —  14,076  —  14,076 
Net (loss)/gain on foreign exchange operations (1,187) 163  2,232  1,208 
Net loss on derivative (59) (1) 1  (59)
TOTAL REVENUE, NET 124,138  21,609  (21,518) 124,229 
Expense:
Fee and commission expense 21,863  1,397  (2,066) 21,194 
Interest expense 14,272  2,223  (2,249) 14,246 
Expense from insurance activity —  11,296  —  11,296 
Operating expense 30,318  2,926  (13,823) 19,421 
Provision for impairment losses 293  —  (26) 267 
Other expense, net 14  111  (115) 10 
TOTAL EXPENSE 66,760  17,953  (18,279) 66,434 
NET INCOME BEFORE INCOME TAX 57,378  3,656  (3,239) 57,795 
Income tax expense (5,669) 5  537  (5,127)
INCOME FROM CONTINUING OPERATIONS 51,709  3,661  (2,702) 52,668 
Income before income tax expense of discontinued operations —  —  3,237  3,237 
Income tax expense of discontinued operations —  —  (537) (537)
Income from discontinued operations —  —  2,700  2,700 
NET INCOME 51,709  3,661  (2) 55,368 
Less: Net loss attributable to non-controlling interest in subsidiary (52) —  —  (52)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 51,761  $ 3,661  $ (2) $ 55,420 
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect —  874  —  874 
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect —  31  —  31 
Foreign currency translation adjustments, net of tax effect 3,300  (278) —  3,022 
OTHER COMPREHENSIVE INCOME 3,300  627  —  3,927 
COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS $ 55,009  $ 4,288  $ (2) $ 59,295 
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (52) —  —  (52)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 55,061  $ 4,288  $ (2) $ 59,347 
For the three months ended June 30, 2021, the Company’s EPS as reported was 0.87 for both basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to 0.89 and 0.88 for both basic and diluted EPS respectively for continuing operations, to 0.05 for both basic and diluted EPS for discontinued operations, and to 0.93 for both basic and diluted total EPS, respectively.

*amounts with restatement in fee and commission income and interest income, for more information please see Note 4 Restatement.