Freedom Holding Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LEASES

LEASES

3 Months Ended

Jun. 30, 2023

At March 31, 2023, the Group was obligated under a number of noncancellable leases, predominantly operating leases of office space, which expire at various dates through 2033. The Group's primary involvement with leases is in the capacity as a lessee where a Group company leases premises to support its business.

The Group determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The future lease payments are discounted at a rate that estimates the Company’s collateralized borrowing rate for financing instruments of a similar term and are included in accounts payable and other liabilities. The operating lease ROU asset, included in premises and equipment, also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received. Rental expense associated with operating leases is recognized on a straight-line basis over the lease term, and generally included in occupancy expense in the Consolidated Statements of Operations. Certain of these leases also have extension or termination options, and the Company assesses the likelihood of exercising such options. If it is reasonably

certain that the Group will exercise the options to extend, then the Company includes the impact in the measurement of its right-of-use assets and lease liabilities.

When readily determinable, the Company uses the rate implicit in the lease to discount lease payments to present value; however, the rate implicit on most of the Group's leases are not readily determinable. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate.

The table below presents the lease related assets and liabilities recorded on the Company's consolidated balance sheets as of June 30, 2023:


	Classification on Balance Sheet	June 30, 2023
Assets
Operating lease assets	Right-of-use assets	$	34,461
Total lease assets		$	34,461

Liabilities
Operating lease liability	Operating lease obligations	$	34,929
Total lease liability		$	34,929

The following table presents as of June 30, 2023, the annual maturities of the lease liabilities:


Leases maturing during twelve months ended March 31,
2024	$	8,915
2025	10,040
2026	9,249
2027	7,567
2028	5,492
Thereafter	4,793
Total payments	46,056
Less: amounts representing interest	(11,127)
Lease liability, net	$	34,929
Weighted average remaining lease term (in months)	31
Weighted average discount rate	13		%

Lease commitments for short-term operating leases as of June 30, 2023 was approximately $152. The Group's rent expense for office space was $860 for the three months ended June 30, 2023, $543 for the three months ended June 30, 2022.

The Group has leases that involve variable payments tied to an index, which are considered in the measurement of operating lease right-of-use (ROU) assets and operating lease liabilities.