Company: FRHC
Filing Date: 2025-07-29
Form Type: ARS
Source: 0000924805-25-000027
Chunk: 129

Company: Freedom Holding Corp.
Filing Date: 2025-07-29
Form: ARS
Chunk 129
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 Contents 80

overall growth of our operations as well as the addition of new subsidiaries. Interest expense in the Other segment increased by $25.0 million, mainly attributable to an increase in interest expense from the debt securities issued by Freedom SPC. Cost of sales increased by $13.7 million due to higher sales volumes, which reflect our expansion into the telecommunications sector through the acquisition of SilkNetCom, as well as increased customer activity and order volume at Arbuz. Fee and commission expense increased by $4.6 million, mostly driven by higher bank commission expenses related to an increase in payment processing operations at certain Paybox subsidiaries. In addition, stock based compensation expenses increased by $6.1 million as a result of the issuance of new stock grants, the majority of which vested on the date of issuance during fiscal 2025 and the partial amortization of stock grants. LIQUIDITY AND CAPITAL RESOURCES During the periods covered in this report our operations were primarily funded through a combination of existing cash on hand, cash generated from operations, returns generated from our proprietary trading and proceeds from the issuance of bonds and other borrowings. We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have established to maintain compliance with net capital and capital adequacy requirements imposed on securities brokerages, insurance companies and banks in jurisdictions where we do business. We assess our leverage and liquidity risk based on considerations and assumptions of market factors, as well as other factors, including the amount of available liquid capital (i.e., the amount of cash and cash equivalents not invested in our operating business). While we have in place the risk management monitoring and processes, a significant portion of our trading securities and cash and cash equivalents are subject to collateralization agreements. This significantly enhances our risk of loss in the event financial markets move against our positions which can negatively impact our liquidity, capitalization and business. Certain market conditions can impact the liquidity of our assets, potentially requiring us to hold positions longer than anticipated. Our liquidity, capitalization, projected return on investment and results of operations can be significantly impacted by market events over which we have no control, and which can result in disruptions to our investment strategy for our assets. We maintain a majority of our tangible assets in cash and securities that are readily convertible to cash, including governmental and quasi-governmental debt and highly liquid corporate equities and debt. Our financial instruments and other asset positions are stated at fair value and should generally be readily marketable in most market conditions. The following sets out certain information regarding our assets