Sun Art Retail Group Limited - TodayIR.com

RISK FACTORS
The Group’s businesses, financial condition, results of operations or growth prospects may be affected
by risks and uncertainties pertaining to the Group’s businesses. The factors set out below are those that
the Group believes could result in the Group’s businesses, financial condition, results of operations or
growth prospects differing materially from expected or historical results. These factors are by no means
exhaustive or comprehensive, and there may be other risks in addition to those shown below which are
not known to the Group or which may not be material now but could turn out to be material in the future.
RISK ASSOCIATED WITH THE GROUP BUSINESS
Our growth prospects may be limited if we encounter difficulties executing our expansion strategy.
As part of our business strategy, we plan to expand the network of our hypermarkets through organic
growth. Our ability to expand depends on, among other things:
• our ability to identify suitable sites for new hypermarkets and successfully negotiate purchase or
lease agreements for these sites on terms acceptable to us;
• the availability of financing for our expansion, investments or other strategic transactions;
• our ability to attract, train and retain management talents in sufficient numbers for our expanded
operations;
• our ability to obtain all the requisite governmental approvals, licences and permits in a timely
manner;
• our ability to adapt and grow our operational and management systems, including our information
technology systems, to support an expanded hypermarket network;
• our ability to effectively control and manage our costs in our expanded network, in particular,
purchase costs, and expenses related to rent, logistics, human resources and marketing; and
• the timely completion of our new hypermarkets under development.
If we fail to achieve any of the above, we may not be able to achieve our planned expansion objectives.
Our ability to manage our future growth will also depend on our ability to continue to successfully
implement and improve our operational, financial and management systems in the evolving competitive
markets. Our business growth could strain our managerial, operational and financial resources. Failure
to effectively execute our expansion strategy may result in limited growth and reduced profitability
We may not be able to find suitable locations for new hypermarkets on commercially acceptable
terms, if at all.
Our performance depends, to a significant extent, on the location of our hypermarkets. When selecting
a site for a hypermarket, we take into account various factors, including:
• population density, customer traffic and vehicle traffic;
• customer accessibility;
Sun Art Retail Group Limited
Annual Report 2012
35