MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2022
4
Directors’ report - continued
Risks relating to the retail sector
The company grants Concessions to entities engaged principally in the retail sector, including the catering and
gaming sectors. The health of the retail market may have a direct or indirect effect on the ability of the company
to grant Concessions, and for the said concessionaires to continue operations. The health of the retail market
may be affected by a number of factors, including, inter alia, consumer demand, tastes, shopping preferences,
trends, online shopping, inflation, supply chain and/or shipment disruptions, fluctuation in interest rates,
exchange rates, direct and indirect taxation, regulations, mandatory closures, maximum capacity measures,
energy and fuel costs, unemployment, wage rates, availability of credit, government spending and budget
priorities, and other general market and economic conditions. Furthermore, with the emergence of a number of
new shopping malls across the island, the risks related to the retail market could also be regional and/or specific
to certain geographical areas as new shopping malls may divert retail activity from one area to another. These
are particularly accentuated owing to the size of the Maltese market. A significant downturn in the performance
of the retail sector and/or the retail activity in the area in which the company operates could have a material
adverse effect on the company’s business, financial position and results of operation.
Risks emanating from the company’s financing strategy
The company may not be able to obtain the capital it requires for development or improvement of existing or
new properties on commercially reasonable terms, or at all. The company may not be able to secure sufficient
financing for its investment requirements. No assurance can be given that sufficient financing will be available
on commercially reasonable terms or within the timeframes required by the company, also taking into account
the need from time to time for the Complex to undergo renovation, refurbishment or other improvements in the
future. Any weakness in the capital markets and, more generally, the inability to raise the necessary financing
from time to time, may limit the company’s ability to raise capital for the execution of future developments or
acquisitions. Failure to obtain, or delays in obtaining, the capital required to complete future developments and
acquisitions on commercially reasonable terms, including increases in borrowing costs or decreases in loan
availability, may limit the company’s growth and materially and adversely affect its business, financial condition,
results of operations and prospects.
Future indebtedness
The company may, from time to time, require bank credit facilities and/or external finance to maintain the
Complex, to refinance indebtedness as well as to fund future growth in terms of acquisition and developments.
There can be no assurance that the company will have access to sufficient capital or access to capital on terms
favourable to the company for future property acquisitions, refinancing its indebtedness, financing or refinancing
of properties, funding operating expenses or other purposes. Moreover, borrowings may be at variable interest
rates, which would render the company vulnerable to increases in interest rates. The agreements regulating the
company’s bank debt may impose, and are likely to impose, significant operating restrictions and financial
covenants on the company. These restrictions and covenants could limit the company’s ability to obtain future
financing, make capital expenditure, withstand a future downturn in business or economic conditions generally
or otherwise inhibit the ability to conduct necessary corporate activities.
Key senior management and personnel
The operations and profitability of the company are dependent on the management support services provided
by Embassy Limited to the company in terms of a management support services agreement. Should either party
terminate the management support services agreement prior to the expiry of its term, or, should Embassy
Limited decide not to renew the agreement following the lapse of the term thereof, the company would need to
seek a new management support services provider or individuals to occupy the executive management roles
of the company. The company may be unable to replace the services provided by Embassy Limited within the
short term and/or on the same or similar terms. This could have a material adverse effect on the company’s
business and results of its operations.