Nice Corporation

In addition to the deterioration of the domestic economy and declining demand, structural market changes—namely, the decrease in new housing starts accompanying population decline and the aging society with fewer children—have already become apparent and may affect business performance over the medium to long term. As a countermeasure, based on the "Medium-Term Management Plan Road to 2030," the company is promoting the optimization of its business portfolio through strengthening the domestic timber supply system and expanding the stock business and non-residential fields.

Since timber, building materials, and housing equipment are procured both domestically and internationally, supply instability, price surges, and logistics disruptions for raw materials such as insulation and piping materials (e.g., naphtha) due to natural disasters, geopolitical risks, and instability in the Middle East have already materialized, resulting in delivery delays for some products. The company strives to secure stable supply through procurement from multiple production areas and manufacturers and by utilizing the stock function of its nationwide logistics facilities; however, if these conditions become prolonged or severe, they may affect business performance through increased procurement costs and supply restrictions.

Violation of various laws and regulations such as the Building Lots and Buildings Transaction Business Act, the Construction Business Act, the Architects Act, the Logistics Efficiency Act, and the Freelance Act could result in damage compensation payments, administrative sanctions such as business suspension, and loss of customers and business transactions due to damage to social credibility and brand image. In response, the company has established measures including the dissemination and thorough implementation of the "Nice Group Code of Ethical Conduct," compliance training, operation of an internal whistleblowing system, quarterly meetings of the Nice Group Central Health and Safety Committee, and advisory contracts with multiple law firms.

Insufficient recruitment and development of highly specialized personnel, unexpected departure of personnel in key positions, or decreased motivation due to inadequate workplace environment improvement could seriously affect business performance and continuity. Based on the "Medium-Term Management Plan Road to 2030," the company is promoting talent management practices, enhancement of human resource capabilities, and improvement of employee engagement as important initiatives, and strengthened its risk management framework by establishing the Human Capital Subcommittee in June 2025.

In addition to the aging of skilled construction workers and the decline in young entrants to the field, the application of overtime work limit regulations has made securing stable construction capacity a key challenge; a shortage of skilled workers could cause construction delays and rising labor costs, affecting business performance. The company is addressing this through rationalization of construction processes, labor-saving and productivity improvements via digital tool utilization, retention of skilled workers by maintaining appropriate wage levels, and deepening long-term cooperative relationships with construction partners.

If cyberattacks or virus infections on IT systems cause business disruption or leakage of personal or confidential information, this could affect business performance through loss of social credibility, damage compensation, and recovery cost burdens. The company has implemented measures including unauthorized access prevention and detection systems, cloud backup system construction, cyber insurance enrollment, continuous information security education such as targeted attack email training, and establishment of an initial response framework for incidents.

A decline in the fair value of real estate for sale, tangible fixed assets, investment securities, and other assets, leading to the recording of valuation losses or impairment losses, as well as significant repair costs arising from the aging of facilities such as timber markets and logistics centers nationwide, may affect business performance and financial condition. For real estate for sale, the company implements the acquisition of high-quality land based on purchasing criteria along with board deliberation and agile inventory control; for cross-shareholdings, the rationale for holding is individually verified by the board of directors each year with sales proceeding as appropriate; and for facilities and equipment, planned maintenance is conducted based on medium- to long-term renovation plans.

Turmoil in financial markets, credit rating downgrades, or changes in financial institutions' lending policies may constrain fund procurement, and future interest rate increases may raise funding costs, affecting business performance and financial condition. The company strives to secure long-term funding and fix interest rates, while sufficiently ensuring fund liquidity through the use of commitment lines and other means, working to build a stable and efficient fund procurement and management framework.

Since timber and building materials are imported in foreign currency, fluctuations in exchange rates that result in costs exceeding expectations may affect business performance and financial condition. The company strives to mitigate the impact of exchange rate fluctuations on business results by utilizing forward exchange contracts for a certain proportion of the value of import and export contracts.

In the condominium and detached house businesses, if external contractors such as design companies or construction companies fail to perform their duties or go bankrupt, the company, as the seller in cases where sales contracts have been concluded before construction completion, may bear liability to customers for non-performance of obligations, and may also receive corrective guidance from regulatory authorities, potentially affecting business performance and financial condition. The company minimizes this risk by establishing a system that shares quality standards with multiple business operators that meet certain transaction conditions, including creditworthiness, in addition to deposit of guarantee funds and insurance enrollment, thereby eliminating dependence on specific subcontractors.