Risk Analysis

Operating risks and non-operating risks that may materially influence investor decisions are described below. The management maintains awareness that these scenarios may emerge and implements measures to avoid their emergence and to minimize their potential impact on corporate performance.

The description of risks given here is based on current evaluations as of January 27, 2014, it does not include risks which could not be foreseen.

Islamic industry segment

The Islamic economy and its components are solid emerging economic segments with huge potential. Risks linked to this industry segment are linked to the lack of maturity and lack of infrastructures. The active segment of Islamic finance entails three particular risks: potential conflicts of interest linked to the use of Islamic windows by conventional banks, concentration of Sharia professionals, diverse standardization sources. The major challenges facing the overall industry are: harmonization and compliance to regulations, supply chain integrity, lack of skilled human capital, consumer education, enlargement to the SME sector and lack of venture capital.

ISFIN has called upon the industry to conduct a stronger risk management for the Islamic economy. read more

Exchange rate fluctuation

Operations based overseas maintain accounts in the local currency where they operate. The Euro value of projects carried in these accounts is affected by the exchange rate at the time of conversion to Euros. Although measures such as currency exchange hedges are utilized to minimize the short-term effects of exchange rate fluctuations, such fluctuations may exceed the foreseeable range over the short to long term, thereby affecting our consolidated performance and financial condition, in a limited way.

Overseas operations

Overseas operations may face a variety of risks which are mostly foreseen for a consulting company like ours. Misfortunes are limited, due to our policy of having regional headquarters. Risks include the existence or emergence of economically-unfavourable circumstances due to legal and regulatory changes, costs of infrastructure, difficulty in hiring/retaining qualified employees, or other factors, and social or political instability due to terrorism, war, or other factors which could impact our partner firms. Overseas operations may be impaired by such scenarios, thereby affecting our consolidated performance and business plans.

Tax policy

Operations from our headquarters in the Western regions could be affected by higher tax policies conducted by Western governments. However, benefit taxes, office taxes, etc. could be balanced by lower taxes on labour, used as incentive to hire. Taxes may result in affecting our consolidated performance and financial conditions.

Profitability of partner firms

Our business model, which is strongly dependent on the relationship with partner firms, could be influenced by the profitability of the latter, or the firm leaving the project, thereby affecting our consolidated performance and financial condition. However, the fact that the ISFIN brand and service performance is increasingly popular and attractive, the opportunity to be affected by a high turnover is limited. So far, we have experienced a very high retention rate. Our plan to open up to other sectors will not only grow the structure in numbers, but in solidity as well.

Intellectual property and legal regulation

An unfavourable ruling may emerge in a dispute relating to intellectual property and detrimental legal and regulatory changes may emerge in any country where we operate. Such scenarios may affect our consolidated performance and financial condition.

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