Company: FRHC
Filing Date: 2025-02-07
Form Type: 10-Q
Source: 0000924805-25-000002
Chunk: 294

Company: Freedom Holding Corp.
Filing Date: 2025-02-07
Form: 10-Q
Item: Part I, Item 8
Chunk 294
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 our risk management policies, we manage foreign currency exchange risk on financial assets by holding or creating financial liabilities in the same currency, maturity and interest rate profile. This foreign exchange risk is calculated on a net foreign exchange basis for individual currencies. We may also enter into foreign currency forward, swap and option contracts with financial institutions to mitigate foreign currency exposures associated with certain existing assets and liabilities, firmly committed transactions and forecasted future cash flows. 

The main market of our operations is Kazakhstan. Because Kazakhstan's economy is highly dependent on oil  exports, any significant decrease in oil prices lead to a devaluation of local currency, which can fluctuate significantly (e.g., losing up to 17% quarterly during COVID-19 outbreak) relative to the U.S. dollar.

An analysis of our December 31, 2024, and March 31, 2024 (not including assets held for sale) balance sheets estimates that the net impact of a 10% adverse change in the value of the U.S. dollar relative to all other currencies, would have resulted in a decrease of income before income tax in the amount of $19.8 million and $121.5 million, respectively. 

93

Equity Price Risk 

Our equity investments are susceptible to market price risk arising from uncertainties about future values of such investment securities. Equity price risk results from fluctuations in price and level of the equity securities or instruments we hold. We also have equity investments in entities where the investment is denominated in a foreign currency, or where the investment is denominated in U.S. dollars but the investee primarily makes investments in foreign currencies. The fair values of these investments are subject to change at the spot foreign exchange rate between these currencies and our functional currency fluctuates. We attempt to manage the risk of loss inherent in our equity securities portfolio through diversification and by placing limits on individual and total equity instruments we hold. Reports on our equity portfolio are submitted to our management on a regular basis.

As of December 31, 2024, and March 31, 2024, our exposure to equity investments at fair value was $118.8 million and $126.1 million, respectively. Based on an analysis of the December 31, 2024, and March 31, 2024 (not including assets held for sale), balance sheets, we estimate that a decrease of 10% in the equity price would have reduced the value of the equity securities or instruments we held by approximately $11.9 million and $12.6 million