33.Lease Arrangements (continued)Where the lease income is adjusted periodically by a specified rate, the lease income is recognised on a straight-line basis over the lease term.
The income above includes an amount of EUR 2,864,164 (2020: EUR 2,609,414) generated by the Group in relation to the business centre classified as investment property as well as an amount of EUR 75,443 (2020: EUR 75,443) generated by the Company in relation to the corresponding right-of-use assets in relation to the land on which the business centre is located. The Group and the Company generate EUR 11,434,897 and EUR 10,944,604 (2020: EUR 6,558,886 and EUR 7,019,390), respectively, from subleasing right-of-use assets that are classified as property, plant and equipment.
All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period. The Group manages credit risk from operating lease contracts by implementing contractual terms that ensure that rentals are payable quarterly in advance. All leases include clauses to enable upward revision of the rental charge according to prevailing market conditions or at pre-fixed rates. In addition, the Group obtains security deposits from tenants, in the form of bank guarantees for the term of the lease.
34.Material Contracts
The material contracts entered into by the Company in the year ended 31 December 2021 with its current substantial shareholders and their related parties are the following:
The Government of Malta
(i)The terminal and other land lease agreements with Malita Investments plc for EUR 1,157,111 (2020: EUR 1,150,960);
(ii)Licence Fee payable to the Government of Malta for the airport operation amounting EUR 496,157 (2020: EUR 496,157); (iii)The contract for contribution to the Malta Tourism Authority for EUR 232,937 (2020: EUR 232,937); the contracts for contributions payable towards the Route Development Fund that is administered by the Malta Tourism Authority for EUR 1,150,000 (2020: EUR 3,300,000). No contract for the contribution for a calendar of events was in place for the reporting year (2020: EUR 8,000);
(iv)The contract with the Armed Forces of Malta for the security of the restricted areas at the Airport for an expense of EUR 1,549,998 (2020: EUR 1,778,125);
(v)The provision of Air Navigation Services and other services by Malta Air Traffic Services Limited for an expense of EUR 929,611 (2020: EUR 929,611);
(vi)The provision of Meteorological Services and other services to Malta Air Traffic Services Limited for revenue of EUR 743,688 (2020: EUR 743,688);
(vii)The contract with Enemalta Corporation for fuel throughput charges generated the amount of EUR 229,300 (2020: EUR 170,020) in revenue;
(viii)The ground handling and concession agreements with Air Malta p.l.c. and its subsidiaries that generated income of EUR 1,433,447 (2020: EUR 1,283,037); and
(ix)The contracts with Indis Malta Ltd. for the lease of land that generated income of EUR 1,082,385 (2020: EUR 1,082,385).