NISSHIN FUDOSAN Co.,Ltd.

Due to difficulty in securing building materials amid factors such as Middle East tensions, there is a possibility that the completion and delivery of condominiums may be pushed back from the planned timing to the following fiscal period. In addition to delays in recognizing sales and profit, there is a risk of adverse effects on reputation among purchasers. As a countermeasure, the design department and the construction site manager work closely together to resolve issues, and schedule management is implemented so that, when delays are unavoidable, purchasers can be informed well in advance of the scheduled delivery date.

Since it takes two to three years from the acquisition of condominium sales sites to delivery, if market conditions deteriorate during the project period, there is a possibility of stagnation of completed inventory, occurrence of inventory valuation losses, and impacts on cash flow. In particular, since repayment due dates for project loans are often set at the time of building completion, there are concerns about impacts on financial condition. As a countermeasure, under a prior application system, project profit including interest costs is carefully examined, and a certain level of cash and deposits is maintained on hand for operations.

While increases in building materials, labor costs, and interest costs are expected, profit margins at the time of order agreements are expected to remain sluggish for the time being, which could lead to deterioration in construction profitability in the Construction Business. Changes in the order-taking environment and competitive conditions are also factors putting pressure on profitability. As countermeasures, the company is developing value-added proposal-based sales activities, as well as implementing cost control through centralized procurement and early ordering.

If qualified personnel serving as site supervisors leave the company or retire due to aging, the securing and training of replacement personnel may not keep pace, potentially limiting the number of construction sites that can be undertaken. Since technically skilled personnel are the source of profitability, a shortage of personnel poses a risk directly linked to a contraction in business scale. As countermeasures, the company is strengthening recruitment, including graduates of technical high schools and overseas engineering schools, and implementing one-year training programs for new employees, technical training systems, and support measures to promote the acquisition of qualifications.

If management staff responsible for on-site management duties such as garbage collection supervision and cleaning retire due to aging, it may become difficult to secure new personnel, which could hinder the provision of basic services and constrain the number of buildings under management contract. There are limits to relying on temporary in-house personnel to address this, posing a risk that could affect the growth of the management business. As countermeasures, the company is promoting operational efficiency through the use of digital technology, securing funding sources by reviewing management commission fees, and improving the working environment through workstyle reforms.

The repeal or amendment of laws and regulations such as the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the Construction Business Act, the Act on Advancement of Proper Management of Condominiums, and the Financial Instruments and Exchange Act, as well as the introduction of new regulations, may affect business performance. Should the maintenance of licenses and permits be affected, there is a risk of a material impact on business continuity. As countermeasures, the company gathers information on regulatory trends through industry associations and thoroughly ensures legal compliance through the development of group-wide common compliance and risk management regulations.

If system unavailability or leakage of personal information occurs due to cyberattacks or other causes, there is a possibility of incurring response costs, disruption to sales activities and business processing, and adverse effects on external credibility. The Real Estate Management Business holds a large amount of customers' personal information, and the risk of information leakage is directly linked to the reliability of the business. As countermeasures, the company implements access control and network security management based on its information security management regulations, and has also taken out cyber insurance.