Company Registration Number: C34767
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements
31 December 2023
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
Pages
Chairman’s statement 1
Directors’ report 2 - 9
Statement of compliance with the principles of good corporate governance 10 - 23
Remuneration statement, Remuneration report 24 - 26
Statement of financial position 27
Income statement, Statement of comprehensive income 28
Statement of changes in equity 29
Statement of cash flows 30
Notes to the financial statements 31 - 50
Independent auditor’s report
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
1
Chairman’s statement
I am pleased to be presenting the Main Street Complex p.l.c. annual report for 2023 to shareholders, covering
the fifth full year of operations following the official listing of the company on the Malta Stock Exchange.
The year 2023 was a positive year for Main Street Complex, with revenues increasing by 2.9% from €786,774
in 2022 to €809,580 in 2023. EBITDA increased slightly from €574,404 in 2022 to €580,120 in 2023, while
profits after tax increased from €341,612 in 2022 to €354,272 in 2023, despite an increase in the marketing
budget for the complex. This resulted in occupancy levels remaining stable compared to the previous year
at 98.5%. These results are a testament to our hard-working management team, which obtained positive
results in the face of several challenges encountered during the year, namely inflation and its effect on the
local community. The positive results achieved reflect the company’s continuous efforts in the face of adverse
situations.
Our liquidity position remained sound as a result of diligent financial management and the absence of debt
on our balance sheet. This said, one must acknowledge a number of clear challenges ahead, including the
opening of new shopping malls in the south of the island, ever increasing online and overseas shopping
activity, and increasing costs in the face of stable turnover levels.
On a positive note, a number of initiatives being taken in the vicinity will also impact commercial activity in
the area. These include the opening of the new Vincent Moran Regional Health Centre, the continually
growing population at MCAST, and the upgrading of Gnien il-Mediterran. These projects are expected to
inject renewed commercial activity in the locality.
Main Street Complex continues to present an appealing and relevant product conveniently located in the
heart of Paola, the busiest commercial area of the south The Board continues to monitor the situation closely
and after almost 20 years since the complex first opened its doors, have approved a complete overhaul of
all levels. Main Street will be commencing the refurbishment process in 2024 and continuing into 2025,
remodelling one floor at a time. This will allow the complex to continue uninterrupted business while giving
the Main Street the opportunity to introduce some new attractive brands alongside several of the shops
already present.
I am pleased to advise that following the payment of a net interim dividend of €139,569 in September 2023,
the company will be declaring a final net dividend of €214,000, equivalent to €0.011 per share for 2023.
While both local and 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. While we are conscious of a number of clear emerging
challenges ahead, our dedicated management team remains committed to continue to contribute positively
to the success of our concessionaires and to deliver a convenient customer experience to our clients.
Joseph A. Gasan
Signed by Joseph A. Gasan (Chairman) on 24 April 2024
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
2
Directors’ report
The Directors present their annual financial report and the audited financial statements for the year ended
31 December 2023.
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 company registered a positive year of trading during the year under review with revenues increasing
from €786,774 in 2022 to €809,580 in 2023. This 2.9% increase in revenues reflects a stable 98.5%
occupancy level at the complex at the end of 2023 which is unchanged from the corresponding occupancy
level at the end of 2022.
Operating and administrative expenses increased by 8% over the previous year, up to €229,460 (€212,370
in 2022). Additional marketing spend contributed to 40% of the increase in this expenditure, with the
remainder represented by inflationary increases in ongoing service and upkeep expenses for the mall.
Administrative expenses registered a nominal decrease of 2.6% as a result of lower listing fees incurred
throughout the year.
As a result, the company’s net profit after tax for the year increased to 354,272 as against €341,612
registered in the previous year. EBITDA amounting to €580,120 (€574,404 in 2022) generated throughout
2023 funded the total net dividends of €351,550 paid during the year, and continued to strengthen the
company’s cash balances, which stood at €750,562 at year end (€636,157 as at end 2022). The company’s
financial position remains strong with no external borrowing other than normal trade credit. Total equity
amounted to €10,923,378 (€10,912,698 in 2022).
The majority of the company’s concession agreements will expire at the end of 2025, with a few expiring in
2024. Discussions with existing and new tenants have commenced with mixed results so far. Some of the
current tenants have expressed interest to extend, while others remain undecided or intend to honour the
current term of their agreement. Interest from new tenants has been slow on account of various factors cited
by potential tenants, including the emergence of new and larger shopping malls in the south of the island
with sizeable parking availability, intensifying competition from online activity, and increasing operating and
rental costs versus stable turnover levels.
On the other hand, Paola remains the main commercial hub in the south of Malta with imminent plans for the
opening of the new Vincent Moran Regional Health Centre, the ongoing expansions at MCAST and the
eventual plans by the Central Government for the conversion of Paola’s Schriber Ground into an open
community space and the revamping of Gnien il-Mediterran (linked to Pjazza Antoine de Paule by a green
corridor). These projects are expected to positively contribute towards more visitors to the locality and
consequent boost in commercial activity in the Paola area.
With all of the above-mentioned projects being within walking distance of Main Street Complex, the Board
remains cautiously optimistic that Paola will remain a relevant commercial hub, enabling Main Street
Complex to continue to attract relevant retail businesses. As previously announced, the company is
concurrently embarking on a phased refurbishment and unit reconfiguration program aimed at refreshing
Main Street Complex’s image and strengthening its appeal to potential tenants and customers. In this regard,
it is company’s intention is to fund this capital expenditure from cash reserves.
The Directors recommend that at the forthcoming Annual General Meeting, the shareholders approve the
payment of a net final dividend of 214,000.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
3
Directors’ report - continued
The statement of comprehensive income is set out on page 28.
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, 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.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
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.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
5
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.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
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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 dividends.
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.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
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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 financial 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.
Directors
The Directors who served on the Board during the year under review and up to the date of this report are
listed hereunder.
Joseph A. Gasan Non-Executive Director & Chairman
Mario Camilleri Non-Executive 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.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
8
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.