Company Registration Number: C34767
Annual Financial Report and Financial Statements
31 December 2022
Annual Financial Report and Financial Statements - 31 December 2022
Chairman’s statement 1
Directors’ report 2 - 9
Statement of compliance with the principles of good corporate governance 10 - 21
Remuneration statement, Remuneration report 22 - 24
Statement of financial position 25
Income statement, Statement of comprehensive income 26
Statement of changes in equity 27
Statement of cash flows 28
Notes to the financial statements 29 - 47
Independent auditor’s report
Annual Financial Report and Financial Statements - 31 December 2022
Chairman’s statement
I am pleased to be presenting the Main Street Complex p.l.c. annual report for 2022 to shareholders, covering
the fourth full year of operations following the official listing of the company on the Malta Stock Exchange.
2022 witnessed a progressive return to normality for Main Street Complex and for business generally, as the
effects of the COVID-19 pandemic gradually receded. This notwithstanding, the company faced the challenge
of managing the introduction of two important new brands to the Complex following the departure of the anchor
Debenhams franchise in 2021. I am proud to report that Main Street Complex handled this transition smoothly,
with our Board and management team stepping up to the challenge, efficiently managing the impact on the
company, our concessionaires, and our stakeholders.
It is encouraging to note that business has recovered positively in 2022, with footfall at the complex increasing
by 27% over 2021, or +9% if one factors in the days the complex was closed for business in 2021. When
compared with the year 2019 before the COVID -19 pandemic, which was a record-breaking year in terms of
footfall for Main Street, footfall in 2022 was short by 15%.
The resulting upturn in business has had a direct impact on revenues. Gross revenues for 2022 reached €787K
compared to €638K in 2021, while profit before tax rose from €335K in 2021 to €462K in 2022. At the same
time, our management team worked hard to keep operating costs at the levels of the previous year. The positive
results achieved reflect the company’s continuous efforts and its resilience to adverse situations. Our liquidity
position remained sound as a result of diligent financial management and the absence of debt on our balance
In last year’s annual report, we reported that the company would resume the payment of dividends in 2022.
Following the payment of a net interim dividend of €0.0067 per share in September 2022, the company will be
declaring a final net dividend of €0.0109 per share for 2022.
I am also pleased to advise that by the date of this annual report, the complex is at 100% occupancy and that
footfall in the first quarter of 2023 has exceeded the same period in 2022. We are confident that the new brand
line-up presents an appealing product offering that will ensure an enhanced customer experience at Main Street
While international events and their effects on the global and local economy continue to be a cause for concern,
we remain confident that Main Street Complex will continue to be a popular shopping destination for the
southern part of the island. Our dedicated management team remains committed to continue to contribute
positively to the success of our concessionaires and to deliver a unique customer experience to our clients.
Encouraged by the results achieved in the year under review, the Board continues to look to the future with
Signed by Joseph A. Gasan (Chairman) on 24 April 2023
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report
The Directors present their annual financial report and the audited financial statements for the year ended 31
December 2022.
Principal activity
The company’s principal activity is the management of and the granting of concessions of outlets and spaces
within Main Street Complex, as a retail and entertainment complex, featuring four floors of retail outlets, a
bar/restaurant and entertainment area, and parking facilities in the heart of Paola, Malta.
Review of the business
The year 2022 under review was the first year of uninterrupted operations in the last three years and a year that
saw the opening up of two new franchises, Lindex and IM Home, during the first 4 months. End of year
occupancy stood at 98.5% while the average occupancy for the year stood at 94.3%. Footfall at the Complex
was up by 27% over the previous year, adjusted to +9% if one had to eliminate the comparative period during
which the Shopping Complex was closed in March/April 2021. Despite the strong recovery, footfall remained
at 15% and 9% below 2019 and 2018 levels respectively, which were record years for the Complex since its
opening in terms of footfall.
The company’s revenues increased by 23% to €786,774 over the previous year (€637,517), positively impacted
by the fact that the Complex was open all throughout the year. The increase was partially affected as a result
of an initial rent-free period supporting the settling in of the new tenants in lieu of Debenhams and some ad hoc
support to tenants. A total of 45% (€8,923) of the increase of €19,633 (10% over 2021) in the company’s
operating and administrative costs were the result of an increase in professional & listing fees, with the balance
representing the additional costs related to increased days of business and cost of living increases. The
company’s net profit after tax for the year increased to €341,612 as against €241,617 registered in the previous
year. The strong EBITDA amounting to €574,404, the end of year cash balance of €636,157 and the absence
of debt commitments has enabled the resumption of payment of dividends, and the company’s financial position
remains strong with total equity amounting to €10,912,698, despite a negative impact of a 592,804 impairment
(€500,000 in 2021) which was taken to revaluation reserve. This was considered necessary to reflect the result
of independent technical and professional valuations of the property, which as a result of current interest rate
increases, prevailing adjustments to discounting rates, and future expectations indicated a revised property
value of €11,445,000.
In view that a number of concession agreements expire between 2024 and 2025, and of the upcoming shopping
mall developments across the island, the company is currently embarking on a plan for a soft refurbishment and
reconfiguration of spaces with the aim of giving a refreshed image to the Complex and retaining Main Street
Complex an important and attractive destination in the region. The Board remains confident that the strong
brand equity that Main Street Complex has accumulated over the years will continue to attract visitors and
tenants, resulting in continued positive results in the future.
The Directors recommend that at the forthcoming Annual General Meeting, the shareholders approve the
payment of a net final dividend of 212,000.
The statement of comprehensive income is set out on page 26.
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report - continued
Our principal risk and uncertainties
Risks relating to reliance on concession agreements
In its business operations, the company enters into concession agreements with third parties pursuant to which
it grants such third parties the right to use the outlets forming part of Main Street Complex for an agreed annual
rate and, in some cases, a fee payable on the percentage of concession turnover, usually subject to a minimum
annual rent. The concessionaires of Main Street Complex are principally engaged in retail, catering and
entertainment. The company, therefore, relies on the revenues it expects to generate from the Concessions.
There can be no guarantee that the company will continue to find suitable concessionaires on the terms it seeks
from time to time. In addition, the financial stability of the concessionaires may change over time. Defaults by
concessionaires could result in a reduction in concession fee revenues. In addition, the company may incur
costs in enforcing rights under the Concession Agreements of a defaulting concessionaire, including legal fees,
re-possession of the space/s granted on concession and costs to grant a concession of the re-possessed space
to a new third-party/ies. Any adverse changes in a concessionaire’s financial condition may negatively affect
cash flows and profits generated by the company. Furthermore, if the company’s concessionaires decide not to
renew their respective Concession Agreements upon expiration, the company may not be able to grant
concessions on the same terms, if at all. Any of the foregoing factors may adversely affect the business, financial
condition and results of operations of the company.
All the above identified risks could be further accentuated by any pandemic, inflation and its impact pricing and
on consumer spending power and the general state of the retail market and local economy. In addition, the
impact of these risks affects the financial standing of concessionaires, the levels of business they are able to
generate, and where applicable, on their principals’ ability to continue supporting the underlying brand operation
and supply of required inventory.
Risks relating to changes in the market and economic conditions
The company’s business activities are subject to general market and economic conditions. These conditions
include, inter alia, consumer demand, financial market volatility, inflation, fluctuation in interest rates, exchange
rates, direct and indirect taxation, the health of the local retail markets, property prices, energy and fuel costs,
unemployment, wage rates, tightening of credit markets, government spending and budget priorities, pandemics
and ensuing government and/or public health authorities legislations and/or recommendations related to but not
limited to restrictions on daily activities, and other general market and economic conditions. International
economic and political factors, such as the Russia Ukraine conflict, as well as turmoil in the financial and/or
banking sectors and any ensuing collapses of operators within those sectors could also lead to direct or indirect
impact on the local market conditions which could in turn effect the company’s business activities.
In the event that the general market or specific sectors within it and economic conditions were to experience a
downturn and/or a complete halt, these weakened conditions may have an adverse impact on the company.
Annual Financial Report and Financial Statements - 31 December 2022
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.
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report - continued
The company’s insurance policies
The company maintains insurance at levels determined by the company to be appropriate in light of the cost of
cover and the risk profile of the business in which the company operates. With respect to losses for which the
company is covered by its policies, it may be difficult and may take time to recover such losses from insurers.
In addition, the company may not be able to recover the full loss incurred from the insurer. No assurance can
be given that the company’s current insurance coverage would be sufficient to cover all potential losses,
regardless of the cause, nor can any assurance be given that an appropriate coverage would always be
available at acceptable commercial rates.
Risks relative to changes in laws
Various aspects of the company’s business are subject to specific laws and regulation including consumer laws
and licensing requirements. The business of the company is also subject to laws and regulations of general
application such as taxation, health and safety and employment. The timing and effects of changes in the laws
and regulations, to which the company is subject, including changes in the interpretation thereof, cannot be
predicted and could have an adverse effect on the business, financial condition and profitability of the company.
Reputational risk
Reputational risk is the risk that negative publicity regarding the company’s business practices, whether true or
not, may cause a decline in the customer base, costly litigation, or revenue reductions. Reputational risk could
be particularly damaging for the company since the nature of its business requires maintaining the confidence
of clients and of the general marketplace.
Health and safety
The nature of the company’s business necessitates that adequate importance is given to maintaining
compliance with international health and safety standards. The failure to comply with such standards could
expose the company to third party claims, which could in turn have a material adverse effect on its business
and profitability.
Litigation risk
The company is susceptible to legal claims, with or without merit, by concessionaires and/or patrons of the
Complex. Defence and settlement costs can be substantial, even with respect to claims that have no merit. Due
to the inherent uncertainty of the litigation and dispute resolution process, there can be no assurance that the
resolution of any particular legal proceeding or dispute will not have a material adverse effect on the company’s
future cash flow, results of operations or financial condition.
Competitiveness in the commercial property market
The real estate market in Malta is very competitive in nature. The emergence of new shopping malls and/or
shopping districts, an increase in supply and/or a reduction in demand in the commercial property segments in
which the company targets to grant Concessions, may cause the Concessions to be granted at lower rates than
is being anticipated by the company or may cause the concession of the Main Street Complex spaces to take
place at a slower pace than that anticipated by the company or not take place at all. If these risks were to
materialise, they could have an adverse impact on the company and its ability to distribute dividends.
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report - continued
Material risks relating to the potential future development of real estate
The company may from time to time develop Main Street Complex further or develop other properties it may
acquire. Risks relating to real estate development may affect the economic performance and value of the
property under development. There are a number of factors that commonly affect the real estate development
industry, many of which are beyond the company’s control, and which could adversely affect the economic
performance and value of the company’s real estate property and any developments that the company may
seek to implement.
Such factors include: changes in general economic conditions in Malta; general industry trends, including the
cyclical nature of the real estate market; changes in local market conditions, such as an oversupply of similar
properties, a reduction in demand for real estate or change of local preferences and tastes; possible structural
and environmental problems, liabilities to which the company may be exposed to in connection with the
construction of real estate including but not limited to, environmental liabilities, health and safety liabilities and
liabilities pertaining to the disposal of waste products; acts of nature, such as earthquakes and floods, that may
damage the property or delay its development; increased competition in the market segment in which the
company is undertaking the real estate development may lead to an oversupply of commercial properties in
such markets, which could lead to a lowering of concession payments and a corresponding reduction in revenue
of the company from Main Street Complex; the incurrence of cost overruns; delays in the processing of permits
for the development and construction of real estate property; and the dependence of the company on third party
contractors and the availability of same to carry out construction and structural works at the times scheduled
by, and costs agreed with, the company. In the event of real estate developments being carried out by the
company, any of the factors described above could have an adverse effect on the company’s business, its
respective financial condition and prospects and accordingly on the ability of the company to distribute
Exposure to environmental liabilities
The company may become liable for the costs of removal, investigation or remediation of any hazardous or
toxic substances that may be located on or which may have migrated from, a property owned or occupied by it,
which costs may be substantial. The company may also be required to remove or remediate any hazardous
substances that it causes or knowingly permits at any property that it owns or may in future own. Laws and
regulations, which may be amended over time, may also impose liability for the presence of certain materials
or substances or the release of certain materials or substances into the air, land or water or the migration of
certain materials or substances from a real estate investment, and such presence, release or migration could
form the basis for liability to third parties for personal injury or other damages. These environmental liabilities, if
realised, could have a material adverse effect on its business, financial condition and results of operations.
Risks inherent in property valuations
The valuation of the Complex is based on certain assumptions, which ultimately may cause the actual values
to be materially different from any future values that may be expressed or implied by such forward-looking
statements or anticipated on the basis of historical trends, as reality may not match the assumptions. There can
be no assurance that such valuation of the Complex will reflect actual market values.
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report - continued
Financial risk management
The company’s activities potentially expose it to a variety of financial risks: market risk (including foreign
exchange risk, cash flow and fair value interest rate risk), inflation risk, credit risk, and liquidity risk. The
company’s overall risk management, covering risk exposures for all subsidiaries, focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the respective company’s financial
performance. The Board of Directors has overall responsibility for the establishment and oversight of the
company’s risk management framework. Accordingly, the company’s Board of Directors provides principles for
overall risk management, as well as risk management policies covering risks referred to above and specific
areas such as investment of excess liquidity. A detailed review of the risk management policies employed by
the company is included in Note 2 to the financial statements.
The Statement of Compliance with the Principles of Good Corporate Governance in this Annual Financial Report
describes the company’s adherence with the Principles and Code Provisions of Good Corporate Governance
set out in Appendix 5.1 of the Capital Markets Rules and the non-financial key performance indicators relevant
to the company, including information relating to environmental and employee matters.
The Directors who served on the Board during the year under review and up to the date of this report are listed
Joseph A. Gasan Chairman
Mario Camilleri Director
Etienne Borg Cardona Independent Non-Executive Director
Christopher Mifsud Independent Non-Executive Director
Isabella Vella Independent Non-Executive Director
In accordance with the provisions of the Articles of Association of the company, the Directors shall hold office
until the subsequent annual general meeting, unless s/he resigns or is earlier removed in accordance with the
Articles, provided that a Director whose term of office expires shall be eligible for re-appointment.
The Directors have a service contract with the company.
Statement of Directors’ responsibilities for the financial statements
The Directors are required by the Companies Act (Cap. 386) to prepare financial statements that give a true
and fair view of the state of affairs of the company as at the end of each reporting period and of the profit or
loss for that period.
In preparing the financial statements, the Directors are responsible for:
ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
selecting and applying appropriate accounting policies;
making accounting estimates that are reasonable in the circumstances;
ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to
presume that the company will continue in business as a going concern.
Annual Financial Report and Financial Statements - 31 December 2022
Directors’ report - continued
The Directors are also responsible for designing, implementing and maintaining internal control as they
determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and that comply with the Companies Act (Cap. 386). They are
also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The financial statements of Main Street Complex p.l.c. for the year ended 31 December 2022 are included in
the Annual Financial Report 2022, which is made available publicly. The Directors are responsible for the
maintenance and integrity of the Annual Financial Report on the website in view of their responsibility for the
controls over, and the security of, the website. Access to information published on the company’s website is
available in other countries and jurisdictions, where legislation governing the preparation and dissemination of
financial statements may differ from requirements or practice in Malta.
Information provided in accordance with Capital Markets Rule 5.70.1
There were no material contracts to which the company was a party, and in which anyone of the company’s
Directors was directly or indirectly interested.
Going concern
The Directors, as required by the Capital Markets Rule 5.62, have considered the company’s operating
performance, the balance sheet at year-end, as well as the business plan for the coming year, also taking into
account possible impact of the Russia Ukraine conflict, the inflationary pressures and the proximity to the
expiry of a number of concession agreements, and they have a reasonable expectation that the company has
adequate resources to continue in operational existence for the foreseeable future. For this reason, in preparing
the financial statements, the Directors continue to adopt the going concern basis in preparing the financial
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. A resolution to
re-appoint the auditors and to authorise the Directors to fix their remuneration will be proposed at the
forthcoming Annual General Meeting.
Information provided in accordance with Capital Markets Rule 5.64
The authorised share capital of the company as at 31 December 2022 and 2021 is €5,000,000 divided into
50,000,000 ordinary shares of €0.10 each. The issued share capital of the company is €1,938,462 divided into
19,384,619 ordinary shares of €0.10 each.
The Directors confirm that as at 31 December 2022 and 2021, Embassy Limited held a shareholding in excess
of 5% of the total issued share capital.
Any amendment to the company’s Memorandum and Articles of Association has to be made in accordance with
the Companies Act (Cap 386).
The company may, subject to the applicable restrictions, limitations and conditions contained in the Companies
Act (Cap 386) acquire its own shares and or Equity Securities.
Pursuant to Capital Markets Rules 5.64.2, 5.64.4,