Annual report pursuant to Section 13 and 15(d)

27. Acquisitions and Disposal of Subsidiary

v3.19.2
27. Acquisitions and Disposal of Subsidiary
12 Months Ended
Mar. 31, 2019
Business Combinations [Abstract]  
Acquisitions and Disposal of Subsidiary

Acquisition of Asyl

 

On April 12, 2018, we completed the acquisition and merger of Asyl into the Company. This acquisition joined the two largest retail brokerage firms in Kazakhstan. Asyl was formerly controlled by Mr. Turlov since April 28, 2017. The Company agreed to acquire Asyl from Mr. Turlov for approximately $2.2 million.

 

When preparing the consolidated financial statements for the year ended March 31, 2019, management determined that certain amounts included in the Company’s consolidated financial statements as of March 31, 2018 and for the year ended March 31, 2018, required revision, due to completion of the merger of Asyl in April 2018, which was deemed to be an entity under common control with the Company since April 28, 2017. The transaction is accounted for as a restructuring transaction and all the assets and liabilities of Asyl were transferred to the Company at their respective carrying amounts on the date of transaction.

 

As of the acquisition date by Mr. Turlov, the fair value of Asyl was $4,583. The total purchase price was allocated as follows:

 

 

    Purchase price allocation
    As of April 28, 2017
Assets:    
Cash and cash equivalents   $ 310
Restricted cash   10,204
Trading securities   858

Available-for-sale securities, at fair value

 

  324
Fixed assets   313
Intangible assets   1,971
Brokerage and other receivables   856
Other assets   34
Total assets   $ 14,870
     
Liabilities:    
Customer liabilities   $ 10,204
Deferred income tax liabilities   33
Other liabilities   50
Total liabilities   $ 10,287
     
Net assets acquired   $ 4,583
     
Goodwill   1,511
     
Total purchase price   $ 6,094

 

Acquisition of Nettrader

 

On May 28, 2018, we completed the acquisition and merger of Nettrader. This acquisition also finalized our acquisition of the Tradernet trading platform, a browser-based application and in some countries a supporting mobile app to facilitate our customers’ trading activities and ability to monitor and manage all aspects of their personal accounts and participate in our client social network. Nettrader was formerly owned by Mr. Turlov since May 18, 2017. The Company acquired Nettrader for approximately $3.8 million.

 

When preparing the consolidated financial statements for the year ended March 31, 2019, management determined that certain amounts included in the Company’s consolidated financial statements as of March 31, 2018 and for the year ended March 31, 2018, required revision, due to the completion of the merger of Nettrader in May 2018, which was deemed to be an entity under common control with the Company since May 18, 2017. The transaction is accounted for as a restructuring transaction and all the assets and liabilities of Nettrader were transferred to the Company at their respective carrying amounts on the date of transaction.

 

As of the acquisition date by Mr. Turlov, the fair value of Nettrader was $7,037. The total purchase price was allocated as follows:

 

    Purchase price allocation
    As of May 18, 2017
Assets:    
Cash and cash equivalents   $ 120
Restricted cash   938
Brokerage and other receivables   4,637
Loan issued   338
Fixed assets   460
Intangible assets   4,523
Deferred income tax assets   60
Other assets   81
Total assets   $ 11,157
     
Liabilities:    
Customer liabilities   $ 4,103
Trade and other payables   3
Other liabilities   14
Total liabilities   $ 4,120
     
Net assets acquired   $ 7,037
     
Goodwill   -
     
Total purchase price   $ 7,037

 

Acquisition of Freedom UA:

 

On November 1, 2017, FRHC acquired 100% of the outstanding common shares and voting interest in Freedom UA in exchange for 387,700 shares of restricted common stock of the Company with the fair market value of $1,485. FRHC acquired Freedom UA to expand its existing securities brokerage business to the Ukrainian securities brokerage market. The Company believes it can take advantage of the synergies that exist between its current expertise and infrastructure and Freedom UA’s existing business to rapidly expand the Company’s presence in the Ukrainian financial services industry.

 

As of the acquisition date, the fair value of Freedom UA was $653. For the five months ended March 31, 2018, net loss of Freedom UA totaled $53.

 

The total purchase price was allocated as follows:

 

    Purchase price allocation
    As of November 1, 2017
Assets:    
Cash and cash equivalents   $ 432
Trading securities   6
Fixed assets   88
Customer list   176
Brokerage and other receivables   947
Other assets   3
Total assets   $ 1,652
     
Liabilities:    
Customer liabilities   $ 997
Trade payables   1
Other liabilities   1
Total liabilities   $ 999
     
Net assets acquired   $ 653
     
Goodwill   832
     
Total purchase price   $ 1,485

 

Disposal of First Stock Store

 

During the year ended March 31, 2019, the Company fully disposed of its subsidiary LLC First Stock Store. LLC First Stock Store provided an online securities marketplace in Russia through a project called Freedom24. LLC First Stock Store was disposed of for $7, with net assets as of the date of disposal of $22. The difference was recognized as loss on disposal of subsidiary in the amount of $15. Prior to the disposal, the Freedom24 project and the First Stock Store employees were transferred to Freedom RU.