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
6
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
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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 2023 are included
in the Annual Financial Report 2023, 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 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 statements.
Auditors
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 2023 and 2022 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 2023, Embassy Limited and, on a nominee basis, Calamatta
Cuschieri Investment Services Limited (C13729) and Rizzo Farrugia & Co (Stockbrokers) Ltd (C13102), 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, 5.64.5, 5.64.6, 5.64.7, 5.64.10 and 5.64.11 it is hereby
declared that, as at 31 December 2023 none of the requirements apply to the company.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
9
Directors’ report - continued
We, the undersigned, declare that to the best of our knowledge, the financial statements prepared in
accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the company and that this report includes a fair review of the
performance of the business and the position of the company together with a description of the principal risks
and uncertainties that they face.
Signed on behalf of the company's Board of Directors on 24 April 2024 by Joseph A. Gasan and Etienne
Borg Cardona as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction
with the Annual Financial Report 2023.
Registered office:
Main Street Complex
Antoine de Paule Square
Paola PLA 1262
Malta
24 April 2024
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
10
Statement of compliance with the principles of good corporate governance
1. Introduction
As a company having its entire issued share capital listed and traded on the Official List of the Malta
Stock Exchange, Main Street Complex p.l.c. (the “company”) is subject to the Capital Markets Rules
issued by the Malta Financial Services Authority (MFSA) (the “Capital Markets Rules”). Pursuant to
the Capital Markets Rules, the company should endeavour to adopt the Code of Principles of Good
Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the
“Code”). In terms of Capital Markets Rule 5.94, the company hereby reports on the extent of its
adoption of the principles of the Code for the financial year being reported upon.
The company acknowledges that the Code does not dictate or prescribe mandatory rules but
recommends principles of good practice. However, the Directors strongly believe that such practices
are generally in the best interests of the company and its shareholders and that compliance with the
principles of good corporate governance is not only expected by investors but also evidences the
Directors’ and the company’s commitment to a high standard of good governance.
The Board of Directors of the company (the “Board”) has carried out a review of the company’s
compliance with the Code for the financial year being reported upon.
2. General
The company’s governance principally lies with its Board, which is responsible for the overall
determination of the company’s policies and business strategies. The company’s principal activity is
the management and operation of the Main Street Complex, a shopping and entertainment mall
located in Paola, Malta.
The company has adopted a corporate decision-making and supervisory structure that is tailored to
suit its requirements and designed to ensure the existence of adequate controls and procedures within
the company, whilst retaining an element of flexibility essential to allow the company to react promptly
and efficiently to circumstances arising in respect of its business, taking into account its size and the
economic conditions in which it operates. The Directors are of the view that it has employed structures,
which are most suitable and complementary for the size, nature and operations of the company.
Accordingly, in general the Directors believe that the company has adopted appropriate structures to
achieve an adequate level of good corporate governance, together with an adequate system of control
in line with the company’s requirements.
This corporate governance statement (the “Statement”) sets out the structures and processes in
place within the company and explains how these effectively achieve the goals set out in the Code.
For this purpose, this Statement will make reference to the pertinent principles of the Code and set
out the manner in which the Directors believe that these have been adhered to. Where the company
has not complied with any of the principles of the Code, this Statement will provide an explanation for
the non-compliance.
It is to be noted that reference in this Statement to compliance with the principles of the Code means
compliance with the Code’s main principles and provisions.
Principles One to Five
Principles One to Five of the Code deal fundamentally with the role of the Board and of the Directors.
The Directors believe that for the period under review the company has generally complied with the
requirements for each of these principles.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
11
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code
Principle One: The Board
The Board is responsible for determining the company’s strategic aims and organisational structure,
whilst ensuring that the company has the appropriate mix of financial and human resources to meet
its objectives and enhance performance.
The Board is composed of directors who are fit and proper to direct the business of the company with
honesty, competence and integrity. All the members of the Board are fully aware of, and conversant
with, the statutory and regulatory requirements connected to the business of the company.
The Board has delegated specific responsibilities to senior management and committees, notably the
Nominations Committee and the Audit Committee, which operate under their respective formal terms
of reference. The company is party to a management support services agreement with Embassy
Limited, pursuant to which the company appointed Embassy Limited as the agent and representative
of the company to supervise, control, manage and direct the management and operation of the Main
Street Complex. In this respect, the company considers the representatives of Embassy Limited as
the de facto Chief Executive Officer and Financial Controller of the company and ensures continuous
dialogue on the manner in which Main Street Complex is operated.
.
Principle Two: Chairman and Chief Executive
In terms of Article 13 of the Articles of Association of the company, the Board of Directors may from
time to time appoint any person to the office of Chief Executive Officer of the company, and on such
terms as the Board thinks fit. The functions and duties of Chief Executive Officer are performed by
Bettina Azzopardi, in her capacity as managing director of Embassy Limited, which, pursuant to the
terms of a management support services agreement between Embassy Limited and the company, is
responsible for the day-to-day management of the company and its business operations.
Joseph A. Gasan was re-appointed as the Chairman of the Board for the year under review.
The Chairman’s main function is to lead the Board and set its agenda, a function which the Board
believes has been conducted in compliance with the dictates of Code Provision 2.2. The Chairman is
also responsible to ensure that the Board receives precise, timely and objective information in order
for the Directors to take sound decisions and effectively monitor the performance of the company. The
Chairman ensures that there is effective communication with stakeholders and, during Board
meetings, that there is active engagement by all Directors for the discussion of complex and/or
contentious issues. The Board considers that notwithstanding that the Chairman is not an independent
Director as recommended by the Code, the means for addressing potential conflicts of interest are
suitably addressed in the Articles of Association of the company and terms of reference of the Audit
Committee of the company. Furthermore, the Board considers the present Chairman to be fit and
proper to occupy the role.
The Board is composed entirely of non-executive Directors, including independent non-executives, as
follows:
Director Title Director since
Joseph A. Gasan Non-Executive Director & Chairman 1 December 2009
Mario Camilleri Non-Executive Director 13 May 2010
Etienne Borg Cardona Independent Non-Executive Director 11 April 2018
Christopher Mifsud Independent Non-Executive Director 11 April 2018
Isabella Vella Independent Non-Executive Director 19 July 2018
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
12
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Three: Composition of the Board
Appointment and Removal of Directors
Pursuant to generally accepted practices, as well as the company’s Articles of Association, the
appointment of Directors to the Board is reserved exclusively to the company’s shareholders, except
in so far as an appointment is made to fill a vacancy on the Board, which vacancy may be filled by co-
option by the Board on the recommendation of the Nominations Committee.
The Articles of Association provide for two mechanisms by virtue of which Directors may be appointed:
(i) holders of 17% or more of the voting rights in the company have the right to appoint one (1) Director
for each and every block of shares representing 17% of the issued share capital of the company having
voting rights, by way of letter addressed to the company (“A Director”); (ii) any one or more
shareholders who in aggregate hold not less than 5% in nominal value of shares having voting rights,
may nominate fit and proper persons having the appropriate level and mix of skills, knowledge and
experience required for appointment to the Board, such nominations being subject to the approval of
the Nominations Committee (“B Director”). In addition, nominations may also be made by the Board
or the Nominations Committee, for consideration by the shareholders at the annual general meeting
of the company.
An A Director may be removed by the members who appointed him or her by letter to the company
and a B Director may be removed by an ordinary resolution of those members who are entitled to vote
for their election at a general meeting. Directors may be removed at any time by ordinary resolution of
the shareholders of the company, or in any other specific instances set out in the Articles of Association
of the company.
Independence of Non-Executive Directors
In line with supporting principle 3 (iii) of main principle three, at least one third of the Board consists of
non-executive Directors. Of these, the majority of non-executive Directors are considered
independent, these being Etienne Borg Cardona, Christopher Mifsud and Isabella Vella. Non-
executive Directors play an important role in overseeing management, ensuring a system of checks
and balances and contributing to the strategic direction of the company in an objective manner.
For the purposes of Code Provision 3.2, the Board considers each of the independent non-executive
Directors as independent within the meaning of the Code. None of the aforesaid:
(a) have been an executive officer or employee of the company or a subsidiary or parent of the
company, as the case may be, within the last three years;
(b) has or has had within the last three years, a significant business relationship with the company
either directly, or as a partner, shareholder, director or senior employee of a body that has such
a relationship with the company;
(c) receive significant additional remuneration from the company;
(d) have close family ties with any of the executive members of the Board or senior employees;
(e) has served on the Board of the company for more than twelve consecutive years; or
(f) have been within the last three years an engagement partner or a member of the audit team of
the present or past external auditor of the company.
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Annual Financial Report and Financial Statements - 31 December 2023
13
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Three: Composition of the Board - continued
In terms of Code Provision 3.4, each non-executive Director undertakes:
• to maintain in all circumstances his/her independence of analysis, decision and action;
• not to seek or accept any unreasonable advantages that could be considered as compromising
his/her independence; and
• to clearly express his/her opposition in the event that he/she finds that a decision of the Board
may harm the company.
Each non-executive director has complied with such an undertaking for the period under review.
Principle Four: The Responsibilities of the Board
In terms of Principle Four, it is the Board’s responsibility to ensure a system of accountability,
monitoring, strategy formulation and policy development.
The Board of Directors is entrusted with the overall direction, administration and management of the
company and meets on a regular basis to discuss and take decisions on matters concerning the
strategy, operational performance and financial performance of the company. The Board may also
delegate specific responsibilities to ad-hoc Committees as may be required from time to time, and in
the year under review, the Board has established and maintained an Audit Committee and a
Nominations Committee.
Senior management of the company is composed of the following members who are employees of
Embassy Limited and provide their services to the company pursuant to the terms of the management
support services agreement between the company and Embassy Limited:
Bettina Azzopardi - Chief Executive Officer (CEO)
Simon DeMarco - Financial Controller
Chris Borg - Assistant to CEO
Role and Responsibilities of the Board
The role of the Board is exercised in a manner designed to ensure that it can function independently
of management and effectively supervises the operations of the company. At each of its meetings, the
Board is presented with an operations update by the Chief Executive Officer and a financial update
covering the period since the previous board meeting by the Financial Controller.
In fulfilling its mandate, the Board assumes responsibility to:
a) establish appropriate corporate governance standards;
b) review, evaluate and approve, on a regular basis, long-term plans for the company;
c) review, evaluate and approve the company’s budgets and forecasts;
d) review, evaluate and approve major resource allocations and capital investments;
e) review the financial and operating results of the company;
f) ensure appropriate policies and procedures are in place to manage risks and internal control;
g) review, evaluate and approve the overall corporate organisation structure, the assignment of
management responsibilities and plans for senior management development including
succession;
h) review, evaluate and approve compensation to senior management; and
i) review periodically the company’s objectives and policies relating to social, health and safety and
environmental responsibilities.
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Annual Financial Report and Financial Statements - 31 December 2023
14
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Four: The Responsibilities of the Board - continued
In fulfilling its responsibilities, the Board continuously assesses and monitors the company’s present
and future operations, opportunities, threats and risks in the external environment, and its current and
future strengths and weaknesses. The Board evaluates and reviews the implementation of the
business and financial strategy of the company.
In ensuring compliance with other statutory requirements and with continuing listing obligations, the
Board is advised directly, as appropriate, by its appointed legal advisor and other advisors. Directors
are entitled to seek independent professional advice at any time on any aspect of their duties and
responsibilities, at the company’s expense.
This Code Provision recommends the development of a succession policy for the future composition
of the Board of Directors and particularly the executive component thereof, for which the Chairman
should hold key responsibility.
In the context of the appointment of Directors being a matter reserved exclusively to the company’s
shareholders (except where the need arises to fill a casual vacancy) as explained under Principle
Three, considering that every Director retires from office at the AGM, the company does not consider
it feasible to have in place such a succession policy.
The Audit Committee
In line with the requirements of the Capital Markets Rules, the company has established an Audit
Committee whose principal role is the review and oversight of the company’s financial reporting
process, accounting policies and standards, the audit process, any related party transactions, and the
monitoring of internal systems and control. When the Audit Committee’s monitoring and review
activities reveal cause for concern or scope for improvement, it makes recommendations to the Board
on the action needed to address the issue or make improvements
Unlike the provisions of the Code, which are not mandatory in nature, the Directors acknowledge that
the requirement of having an Audit Committee in place is an obligation under the Capital Markets
Rules. The Audit Committee operates under its own terms of reference which have been approved by
its Board. The terms of reference of the Audit Committee are modelled on the recommendations of
the Capital Markets Rules and have been approved by the MFSA.
The Audit Committee is a committee appointed by the Board and is directly responsible and
accountable to the Board. In the period under review, the Audit Committee met five (5) times. The
external auditors are invited to attend specific meetings of the Audit Committee and are entitled to
convene a meeting if considered necessary.
For the period under review, the Audit Committee was composed of Etienne Borg Cardona
(independent non-executive Director who is competent in accounting and/or auditing matters),
Christopher Mifsud (independent non-executive Director) and Isabella Vella (independent non-
executive Director). The members of the Audit Committee are appointed for a period of three (3)
years and shall be eligible for re-appointment by the Board of Directors. Audit Committee meetings
are chaired by a non-executive Director of the Board who is independent of the company. Etienne
Borg Cardona has been appointed as chairman of the Audit Committee members in accordance with
the terms of reference of the Audit Committee. The Directors believe that all three Audit Committee
members satisfy the independence criteria as they are independent within the meaning of the Code
as explained above in this Statement.
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Annual Financial Report and Financial Statements - 31 December 2023
15
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Related party transactions
The Audit Committee has the role and function of evaluating any proposed transaction to be entered
into by the company and a related party (which term shall have the same meaning as in the
International accounting standards adopted in accordance with Regulation (EC) No. 1606/2002 of the
European Parliament and of the Council) to ensure that the execution of any such transaction is at
arm’s length, on a commercial basis and ultimately in the best interests of the company.
Any proposed transaction which the company wishes to enter into, and which satisfies either of the
following conditions shall be referred to the Audit Committee for its consideration and approval:
transactions which clearly fall within the ambit of the Capital Markets Rules as related party
transactions, and which are not the subject of an exemption therefrom; and transactions in respect of
which management is not certain as to whether they fall within the ambits of the Capital Markets Rules
as related party transactions or in respect of which there is uncertainty as to whether any one or more
exemptions should apply to the proposed transactions.
At the meeting convened for this purpose, the Audit Committee shall consider the proposed transaction
and first determine whether it is a transaction that falls within the ambit of the applicable Capital
Markets Rules and, if it so determines, shall then consider the merits of the proposed transaction.
In its evaluation of the proposed transaction, the Audit Committee is at all times guided by the best
interests of the company and its general body of shareholders taken as a whole. The Audit Committee
reports to the Board on its findings and makes its recommendations to the Board as to whether the
transaction should be entered into in the first place and to make such further recommendations as to
any matters that, in the opinion of the Audit Committee, need to be reviewed or improved in the
proposed transaction or any of its terms so as to ensure that the best interests of the company are
properly safeguarded.
Oversight role
The Audit Committee oversees the conduct of the external audit and facilitates communication
between the company’s Board, management and external auditors. When the Audit Committee’s
monitoring and review activities reveal cause for concern or scope for improvement, it shall make
recommendations to the Board on the action needed to address the issue or make improvements.
Conflicts of interest
Furthermore, the Audit Committee is vested with the task of ensuring that any potential conflicts of
interest between the duties of the Directors and their respective private interests or duties unrelated
to the company are resolved in the best interests of the company.
Terms of reference
The terms of reference of the Audit Committee, approved by the Board, are modelled on the
recommendations of the Capital Market Rules.
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Annual Financial Report and Financial Statements - 31 December 2023
16
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Five: Board Meetings
The Board believes that it complies fully with the requirements of this principle and the relative Code
Provisions, in that it has systems in place to ensure the reasonable notice of meetings of the Board
and the circulation of discussion papers in advance of meetings so as to provide adequate time to
Directors to prepare themselves for such meetings.
Minutes are prepared during Board meetings by the Company Secretary recording faithfully
attendance, discussions and resolutions. These minutes are subsequently circulated to all Directors
as soon as practicable after the meeting.
The Board meets as often and as frequently as is required in line with the nature and demands of the
business of the company. Directors attend meetings on a frequent and regular basis and dedicate the
necessary time and attention to their duties as Directors of the company.
The following reports the attendance at Board meetings of each of the Directors during the period
under review:
Name Capacity Meetings attended
Joseph A. Gasan Non-Executive Director & Chairman 7 out of 7
Mario Camilleri Non-Executive Director 7 out of 7
Etienne Borg Cardona Independent Non-Executive Director 7 out of 7
Christopher Mifsud Independent Non-Executive Director 7 out of 7
Isabella Vella Independent Non-Executive Director 7 out of 7
Board meetings are also attended by representatives of management, principally Bettina Azzopardi
(CEO) and Simon Demarco (Financial Controller).
The Chairman ensures that all issues relevant to long-term strategic and short-term performance of
the company are placed on the agenda of Board meetings and, for the purpose of discussion thereon,
are supported by all available information, whilst encouraging the presentation of views pertinent to
the subject matter and giving all Directors every opportunity to contribute to the discussion.
Principle Six: Information and Professional Development
The Board believes that this principle has been duly complied with for the period under review. The
Board actively ensures that there is adequate training for Directors and management. The Board
ensures that all Directors are supplied with precise, timely and clear information so as to enable them
to effectively contribute to Board decisions in line with the high standards expected of them.
Directors have access to the advice and services of the Company Secretary who is also the legal
counsel to the Board and the company, in order to ensure that each Director is aware of his/her legal
and fiduciary obligations. The company also bears the expense incurred by the Directors requiring
independent professional advice should they judge it necessary to discharge their responsibilities as
Directors. During the period under review, Directors and senior management were kept informed of
their statutory and fiduciary duties and the skills and competence requirements of senior management.
The company pledges to make available to the Directors the appropriate training and advice, as
required.
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Annual Financial Report and Financial Statements - 31 December 2023
17
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Seven: Evaluation of the Board’s performance
The Board is of the view that over the period under review, all members of the Board, individually and
collectively, have contributed to proceedings in line with the required levels of diligence and skill. In
addition, the Board believes that its current composition endows the Board with a cross-section of
skills and experience and achieves the appropriate balance required for it to function effectively. For
this reason, the Board has not appointed a committee for the purpose of undertaking an evaluation of
the Board’s performance in accordance with the requirements of Code Provision 7.1.
Principle Eight: Committees
Principle Eight A of the Code deals with the establishment of a Remuneration Committee aimed at
developing policies on remuneration for Directors and senior executives and devising appropriate
remuneration packages.
The Board does not consider it necessary to constitute separate committees to deal, inter alia, with
the compensation packages of Directors and senior management, as might be appropriate in a larger
company. The company relies on the constant scrutiny of the Board itself, the company’s
shareholders, the market and the rules by which the company is regulated as a listed company. The
Board shall retain this matter under review over the coming year.
Principle Eight B of the Code deals with the requirement of a formal and transparant procedure for the
appointment of Directors.
Nominations Committee
The Board believes that the main principle has been duly complied with, as the Articles of Association
establish a formal and transparent procedure for the appointment and nomination of Directors, and
provide for the establishment of the Nominations Committee.
A Nominations Committee has been appointed to lead to the process for Board appointments of B
Directors and to make recommendations to it for the said appointment. The Nominations Committee
consists of Joseph A. Gasan, Etienne Borg Cardona and Christopher Mifsud. In accordance with Code
Provision 8.B.1, the Nominations Committee is composed entirely of Directors, the majority of whom
are independent non-executive Directors.
The Nominations Committee is empowered by the Articles of Association to reject any
recommendation made to it if, in its considered opinion, the appointment of the person so
recommended as a Director could be detrimental to the company’s interests or if such person is not
considered fit and proper to occupy that position. The Nominations Committee reports to the Board on
all recommendations made to it.
The Nominations Committee also has the function of periodically assessing the skills, knowledge and
experience of individual Directors necessary for the Board to have the appropriate level of skill,
competence and experience that would endow the Board with the requisite collective knowledge and
skill necessary for the proper functioning of the company and its oversight by the Board of Directors.
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Annual Financial Report and Financial Statements - 31 December 2023
18
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principles Nine and Ten: Relations with Shareholders and with the Market, and Institutional
Shareholders
The company is committed to having an open and communicative relationship with its shareholders
and investors, and is compliant with its statutory and regulatory requirements relating to the Annual
General Meeting, the publication of interim and annual financial statements, and market updates
through company announcements.
The Board serves the legitimate interests of the company, accounts to shareholders fully and ensures
that the company communicates with the market effectively and in a timely manner through a number
of company announcements that it published, informing the market of significant events relevant to
the company and its business.
At its forthcoming Annual General Meeting, the Board intends to communicate directly with
shareholders on the performance of the company over the period under review and to inform
shareholders of the challenges and opportunities that lie ahead.
Business at the company’s Annual General Meeting covers the approval of the Annual Financial
Report and Audited Financial Statements, the declaration of a final dividend, the election of Directors,
the determination of the maximum aggregate emoluments that may be paid to Directors, the
appointment of auditors and the authorisation of the Directors to set the auditors’ remuneration.
Extraordinary business may also be resolved upon at the Annual General Meeting as the case so
requires. The company’s Articles of Association allow shareholders to call special meetings on matters
of importance to the company, provided that the minimum threshold of ownership established in the
Articles of Association is met.
Apart from the Annual General Meeting, the company intends to continue with its active
communication strategy in the market and shall accordingly continue to communicate with its
shareholders and the market by way of the Annual Financial Report and Audited Financial Statements,
by publishing its results on a six-monthly basis during the year, and by way of company
announcements to the market in general. The company recognises the importance of maintaining
dialogue with the market to ensure that its strategies and performance are well understood and
disclosed to the market in a timely manner.
As a source of further information to the market, the company’s website
(http://mainstreetcomplex.com/investor-relations/) also contains information about the company, its
business and developments pertinent to the Main Street Complex.
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Annual Financial Report and Financial Statements - 31 December 2023
19
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Eleven: Conflicts of Interest
It is the practice of the Board that when a potential conflict of interest arises in connection with any
transaction or other matter, the potential conflict of interest is declared, so that steps may be taken to
ensure that such items are appropriately addressed. The steps taken will depend on the circumstances
of the particular case and may include the setting up of ad-hoc committees of independent Directors
that would assist and monitor management as appropriate in the execution of specific transactions.
By virtue of the Memorandum and Articles of Association, the Directors are obliged to keep the Board
advised, on an ongoing basis, of any interest that could potentially conflict with that of the company. A
director is not entitled to vote in respect of any contract, arrangement, transaction or proposal in which
he has material interest in accordance with the Memorandum and Articles of Association. The Board
believes that this is a procedure that achieves compliance with both the letter and rationale of principle
eleven.
In situations giving rise to potential conflicts of interest, the conflicted Directors are to act in accordance
with the majority decision of those Directors who are not conflicted in the proposed contract,
transaction or arrangement, and in line with the advice of outside legal counsel where such is solicited.
During the period under review, the company did not enter into any material agreements in which any
one of the Directors had a conflict of interest save in the case of the concessions relative to the Bingo
and Pull & Bear outlets. Joseph A. Gasan declared his conflict and did not participate in the vote
approving the concession in relation to Bingo, whereas Mario Camilleri declared his conflict and did
not participate in the vote approving the concessions of both Bingo and Pull & Bear.
Related Party Transactions
The following are related parties to the company:
- Embassy Limited
- Gasan Group
- the company’s Directors (‘key management personnel’).
The following are related party transactions that the company has entered into during the year under
review or otherwise ensuing up until the year under review:
i. transactions with Embassy Limited;
ii. transactions with entities having significant influence over the company;
iii. transactions with the Directors of the company.
These related party transactions which were carried out with related parties related to the following:
Expenditure for services 2023 2022
€ €
Management and administration fees 43,081 42,444
Other expenses 39,668 40,196
Other than the aforesaid, the Directors are not aware of any related party transactions having been
entered into by the company up until the year under review. In particular, the company has not entered
into material transactions with key management personnel that would warrant disclosure for the
purpose of understanding the company’s financial results or financial position. Furthermore, the
company has not entered into material transactions with entities in which its key management
personnel directly or indirectly have an interest or over which they have direct or indirect influence.
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Annual Financial Report and Financial Statements - 31 December 2023
20
Statement of compliance with the principles of good corporate governance
3. Compliance with the Code - continued
Principle Eleven: Conflicts of Interest - continued
All related party transactions are reported at the meetings of the Audit Committee for review.
Further information on the related party transactions mentioned above may be found in Note 21 to the
financial statements.
Principle Twelve: Corporate Social Responsibility
The Directors are committed to high standards of ethical conduct and to contribute to the well-being
of the local community and society at large. The company recognises the importance of its role in the
corporate social responsibility arena and seeks to ensure that in its operations the environment is
respected. The Directors are also aware of the importance of having good relations with stakeholders
and strive to work together with them in order to invest in human capital and safety issues and to adopt
environmentally friendly responsible practices.
4. Non-Compliance with the Code
The Directors set out below the Code Provisions with which the company does not comply and an
explanation as to the reasons for such non-compliance:
Code Provision/
Principle
Explanation
2.3
Principle 3
With respect to Code Provision 2.3, the Board notes that during the year
under review, the post of Chairman of the Board of Directors was occupied
by Mr. Joseph A. Gasan, a non-executive Director. Although Code provision
2.3 provides that the chairman of the Board should meet the independence
criteria set out in the Code, the Board of Directors was of the view that Mr.
Gasan was and remains best-placed to lead the Board, having the relevant
and necessary experience and expertise to fulfil the role. Although not
considered independent in terms of the criteria specified by the Code in this
regard the Board is of the view that this does not in any way impinge on the
Chairman’s ability to bring to bear independent judgement to the Board.
The Board is composed entirely of non-executive Directors rather than a
mix of executive and non-executive directors as recommended by Principle
3 of the Code. Nonetheless, the company is of the view that the composition
of the Board of Directors is suitable when taking into account the following
considerations: (i) the day-to-day activities of the company are the setting
of the strategic direction and overall oversight thereof, being an activity that
non-executive directors are well suited to be entrusted with; and (ii) the de
facto CEO and CFO are invited as observers at the meetings of the Board
of Directors of the company, ensuring regular and open communication
between management and the Board of Directors.
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Annual Financial Report and Financial Statements - 31 December 2023
21
Statement of compliance with the principles of good corporate governance
4. Non-Compliance with the Code - continued
Code Provision/
Principle
Explanation
4.2
The Board has not formally developed a succession policy for the future
composition of the Board of Directors as recommended by Code Provision
4.2.7. In the context of the appointment of Directors being a matter
reserved exclusively to the company’s shareholders (except where the
need arises to fill a casual vacancy) as explained under Principle Three,
considering that every Director retires from office at the AGM, the company
does not consider it feasible to have in place such a succession policy.
7.1
The Board has not appointed a committee for the purpose of undertaking
an evaluation of the Board’s performance in accordance with the
requirements of Code Provision 7.1. The Board believes that the size of the
company and the Board itself does not warrant the establishment of a
committee specifically for the purpose of carrying out a performance
evaluation of its role. Whilst the requirement under Code Provision 7.1
might be useful in the context of larger companies having a more complex
set-up and a larger Board, the size of the company’s Board is such that it
should enable it to evaluate its own performance without the requirement
of setting up an ad-hoc committee for this purpose. The Board shall retain
this matter under review over the coming year.
8A
The Board has not appointed a Remuneration Committee in line with Code
Provision 8A. The Board believes that the size of the company and the
Board itself does not warrant the setting up of an ad hoc committee to
establish the remuneration packages of individual Directors and relies on
the constant scrutiny of the Board itself, the company’s shareholders, the
market and the rules by which the company is regulated as a listed
company. In addition, the Board took into consideration the fact that the
remuneration of the Board is not performance related. The Board intends
to keep under review the utility and possible benefits of having a
Remuneration Committee in due course.
9.3
9.4
There are no formal procedures in place within the company for the
resolution of conflicts between minority and controlling shareholders, nor
do the Memorandum and Articles of Association of the company
contemplate any mechanism for arbitration in these instances. In practice,
however, the open channel of communication between the company and
minority shareholders via the Office of the Company Secretary is such that
any issue that may merit bringing to the attention of the Board may be
transmitted via the Company Secretary, who is in attendance at all
meetings of the Board of Directors.
The company does not have a policy in place to allow minority shareholders
to present an issue to the Board. The explanation provided above in respect
of Principle 9.3 refers.
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Annual Financial Report and Financial Statements - 31 December 2023
22
Statement of compliance with the principles of good corporate governance
5. Internal control
The Board is ultimately responsible for the company’s system of internal controls and for reviewing its
effectiveness. Such a system is designed to manage, rather than eliminate, risk to achieve business
objectives, and can provide only reasonable, and not absolute, assurance against normal business
risks or loss.
Through the Audit Committee, the Board reviews the effectiveness of the companyʼs system of internal
controls. The key features of the company’s system of internal control are as follows:
Organisation
The company operates through the Board with clear reporting lines and delegation of powers.
Control Environment
The company is committed to the highest standards of business conduct and seeks to maintain these
standards across all its operations. company policies and employee procedures are in place for the
reporting and resolution of improper activities.
The company has an appropriate organisational structure for planning, executing, controlling and
monitoring business operations in order to achieve its objectives.
Risk Identification
Management is responsible for the identification and evaluation of key risks applicable to their
respective areas of business.
6. General meetings
The general meeting is the highest decision making body of the company and is regulated by its
Articles of Association. All shareholders registered on the register of members of the company on a
particular record date are entitled to attend and vote at general meetings. A general meeting is called
by twenty-one (21) days’ notice, which notice must specify the place, day and hour of the meeting,
and in case of special business, the general nature of that business, and shall be accompanied by a
statement regarding the effect and scope of such special business. The notice period may be reduced
to 14 days if certain conditions are satisfied.
At an Annual General Meeting, what is termed as “ordinary business” is transacted, namely, the
declaration of a dividend, the consideration of the financial statements and the reports of the Directors
and the auditors, the election of Directors, the appointment of auditors and the fixing of remuneration
of Directors and auditors. Other business, which may be transacted at a general meeting (including at
the Annual General Meeting), will be dealt with as “Special Business”.
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Statement of compliance with the principles of good corporate governance
6. General meetings - continued
The quorum of shareholders required is not less than fifty-one (51%) of the nominal value of the issued
share capital in respect of which holders thereof are entitled to attend and vote at the meeting. Voting
at any general meeting takes place by a show of hands or a poll where this is demanded. Subject to
any rights or restrictions for the time being attached to any class or classes of shares, on a show of
hands, each shareholder is entitled to one vote and on a poll, each shareholder is entitled to one vote
for each share carrying voting rights of which he is a holder. Shareholders who cannot participate in
the general meeting may appoint a proxy by written or electronic notification to the company.
Appointed proxy holders enjoy the same rights to participate in the general meeting as those to which
the shareholder they represent is entitled. Every shareholder represented in person or by proxy is
entitled to ask questions which are pertinent and related to the items on the agenda of the general
meeting and to have such questions answered by the Directors or such persons as the Directors may
delegate for such person.
The Directors’ statement of responsibilities for preparing the financial statements is set out on pages
7 and 8.
The information required by Capital Markets Rule 5.97.5, where applicable for the company, is found
in the Directors’ Report.
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Annual Financial Report and Financial Statements - 31 December 2023
24
Remuneration statement
In terms of Rule 8A.4 of the Code of Principles of Good Corporate Governance contained in Appendix 5.1 of
the Capital Markets Rules of the MFSA (the “Code”), the company is to include a remuneration statement in
its annual financial report which shall include details of the remuneration policy of the company in respect of
the financial packages of members of the Board of Directors and the Chief Executive Officer of the company.
During the year under review, no individual was formally appointed as Chief Executive Officer of the company
although in effect Bettina Azzopardi occupied such role pursuant to a management support services
agreement entered into between the company and Embassy Limited (C20568), whereby the Main Street
Complex and operations relating thereto are managed by Embassy Limited. Accordingly, the remuneration
policy of the company is limited to the remuneration that may be paid to members of its Board of Directors.
The company’s remuneration of its Directors is based on the remuneration policy adopted and approved by
the shareholders of the company at the annual general meeting held on 29 July 2020 (the “Remuneration
Policy”). The Remuneration Policy of the company is available for inspection on the company’s website on
https://mainstreetcomplex.com/investor-relations/.
Remuneration policy
The Remuneration Policy of the company is intended to provide an over-arching framework that establishes
the principles and parameters to be applied in determining the remuneration to be paid to any member of the
Board of Directors. The Remuneration Policy is also intended to contribute to the development and
attainment of the company’s corporate strategy and its long-term success, development and sustainability.
Remuneration payable to Directors
Fixed remuneration
The remuneration payable to Directors of the company shall consist of fixed remuneration only and shall not
include any variable remuneration component based on performance indicators, share-based remuneration,
or other pension benefits, deferred consideration or other non-cash benefits.
In addition to fixed remuneration in respect of their position as members of the Board of Directors of the
company, individual Directors who are also appointed to chair, or to sit as members of, one or more
committees or sub-committees of the company may be entitled to receive additional compensation to occupy
such role. To date, no decision to grant such additional compensation has been taken.
In determining the fixed remuneration component payable to Directors, a number of key factors are taken
into consideration, including: the level of skills, competencies, expertise and experience required of, and
enjoyed by, such individuals; the duties and responsibilities attaching to their position and multiplicity of roles
or involvements within the company; and remuneration practices adopted by local companies operating in
the same industry sector of like standing, repute, size and complexity, among other factors.
Director service contracts
Each Director is party to a director service contract with the company, which contracts sets out the respective
role, responsibilities, duties and applicable remuneration of each Director, as well as the applicable term for
which the Directors shall be engaged, which term shall be in accordance with the provisions of the Articles
of Association of the company regulating the appointment, resignation and removal of directors of the
company.
The Remuneration Policy of the company does not allow the granting to Directors of any entitlement to
termination payments or other payments linked to early termination of director service contracts.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
25
Remuneration report
In terms of Capital Markets Rule 12.26K, the company is also required to draw up an annual remuneration
report (the “Remuneration Report”), which report is to:
i. provide an overview of the remuneration, including benefits in whatever form, awarded or due to members
of the Board of Directors and the CEO (where appointed) during the financial year under review; and
ii. explain whether any deviations from the Remuneration Policy of the company arose.
In this respect, the company is hereby producing its fourth Remuneration Report since the approval and entry
into effectiveness, in July 2020, of the Remuneration Policy described in the preceding sections.
Remuneration paid to Directors
The aggregate emoluments which may be paid to Directors in any one financial year, and any increases
thereto, shall be as determined by the company in general meeting in accordance with Article 20.1 of the
Articles of Association of the company. The aggregate remuneration that may be paid to the Directors of the
company was last set at €40,000 and has not been the subject of any increase since the admission to listing
of the company’s shares on the Official List of the Malta Stock Exchange.
The remuneration which the individual Directors were entitled to receive during the year under review,
compared to the remuneration actually received in the previous financial years, was as follows:
Name Position Remuneration paid
2023 2022 2021 2020
Joseph A. Gasan Non-Executive Director & Chairman €8,000 €8,000 €8,000 €6,000
Mario Camilleri Non-Executive Director €8,000 €8,000 €8,000 €6,000
Etienne Borg Cardona Independent Non-Executive Director €8,000 €8,000 €8,000 €6,000
Christopher Mifsud Independent Non-Executive Director €8,000 €8,000 €8,000 €6,000
Isabella Vella Independent Non-Executive Director €8,000 €8,000 €8,000 €6,000
The remuneration paid in respect of the year under review represents a return to the remuneration paid in
respect of the financial year ended 31 December 2023. With respect to the year under review: the
remuneration paid to Mr. Joseph A. Gasan covered both his role as Director and Chairman of company; the
remuneration paid to the independent non-executive Directors covered both their role as Directors of the
company and their role as members and/or chairpersons of sub-committees of the Board of Directors of the
company.
In view of the management structure of the company, and the fact that the sole asset of the company is the
Main Street Complex, the performance of which is dependent on concession income, the Board considers a
fixed remuneration to Directors as an appropriate and suitable remuneration package for the Board members
in the performance of their duties. Furthermore, the Board of Directors is satisfied that the fixed remuneration
for the year under review is in line with the core principles of the Remuneration Policy applicable during the
year under review, including giving due regard to market conditions and remuneration rates offered by
comparable organisations for comparable roles. Such remuneration was also considered to be consistent
with the practice adopted in respect of the determination of the remuneration payable to the members of the
Board of Directors in the preceding financial periods.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
26
Remuneration report - continued
Decision-making with respect to the Remuneration Policy
The Board of Directors is responsible for determining the Remuneration Policy of the company and, acting
in its function as the Remuneration Committee, is also responsible for overseeing and monitoring the
implementation and ongoing review thereof. The Remuneration Policy is to be reviewed by the Board of
Directors regularly, and any material amendments thereto shall be submitted to a vote by the annual general
meeting of the company before adoption, and in any case at least every four (4) years. As required in terms
of the Capital Markets Rule12.26I, the Remuneration Policy shall be submitted to a vote by the general
meeting of the company at the 2024 annual general meeting, being the fourth annual general meeting to be
held since the original approval and inception of the Remuneration Policy.
In evaluating whether it is necessary or beneficial to supplement or otherwise alter the Remuneration Policy
of the company, the Board of Directors shall have regard to, inter alia, best industry and market practice on
remuneration, the remuneration policies adopted by companies operating in the same industry sectors,
as well as legal and, or statutory rules, recommendations or guidelines on remuneration, including but not
limited to the Code of Principles of Good Corporate Governance contained in Appendix 5.1 of the Capital
Markets Rules of the MFSA.
Whilst members of the Board of Directors may be present while his/her remuneration as a Director or sub-
committee member is being discussed at a meeting of the Board of Directors, no Director may be present
while his/her remuneration as aforesaid is being voted upon.
The contents of the Remuneration Report have been reviewed by the external auditor of the company for
the purpose of verifying that the information required in terms of Chapter 12 of the Capital Markets Rules
(including Appendix 12.1) has been included.
Joseph A. Gasan
Chairman
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
27
Statement of financial position
As at 31 December
2023
2022
Notes
€
€
ASSETS
Non-current assets
Property, plant and equipment
4
11,471,545
11,571,998
Current assets
Trade and other receivables
6
154,353
134,510
Cash and cash equivalents
7
750,562
636,157
Total current assets
904,915
770,667
Total assets
12,376,460
12,342,665
EQUITY AND LIABILITIES
Capital and reserves
Share capital
8
1,938,462
1,938,462
Share premium
9
2,876,923
2,876,923
Revaluation reserve
10
4,868,958
4,861,000
Retained earnings
1,239,035
1,236,313
Total equity
10,923,378
10,912,698
Non-current liabilities
Deferred tax liability
5
1,136,542
1,144,500
Total non-current liabilities
1,136,542
1,144,500
Current liabilities
Trade and other payables
11
189,116
161,601
Current tax liabilities
127,424
123,866
Total current liabilities
316,540
285,467
Total liabilities
1,453,082
1,429,967
Total equity and liabilities
12,376,460
12,342,665
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 27 to 50 were authorised for issue by the Board of Directors on 24 April
2024. The financial statements were signed on behalf of the company’s Board of Directors by Joseph A.
Gasan and Etienne Borg Cardona as per the Directors’ Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Financial Report 2023.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
28
Income statement
Year ended 31 December
2023
2022
Notes
€
€
Revenue
12
809,580
786,774
Operating expenses
13
(105,958)
(85,576)
Depreciation
13
(101,229)
(111,220)
Administrative expenses
13
(123,502)
(126,794)
Operating profit
478,891
463,184
Finance costs
15
(951)
(933)
Profit before tax
477,940
462,251
Tax expense
16
(123,668)
(120,639)
Profit for the year
354,272
341,612
Earnings per share
17
0.018
0.018
Statement of comprehensive income
Year ended 31 December
2023
2022
Notes
€
€
Comprehensive income
Profit for the year
354,272
341,612
Other comprehensive income
Items that will not be reclassified to profit or
loss
Reversal of part of the revaluation surplus previously
recognised, on land and buildings, arising during the
year, before deferred tax
10
-
(592,804)
Movement in deferred tax
5
7,958
77,238
Total other comprehensive income for the year,
net of tax
7,958
(515,566)
Total comprehensive income for the year
362,230
(173,954)
(500,000)
The accompanying notes are an integral part of these financial statements.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
29
Statement of changes in equity
Share
Share
Revaluation
Retained
Total
capital
premium
reserve
earnings
equity
Notes
€
€
€
€
€
Balance at 1 January 2022
1,938,462
2,876,923
5,376,566
1,267,090
11,459,041
Comprehensive income
Profit for the year
-
-
-
341,612
341,612
Other comprehensive income
Reversal of part of the
revaluation surplus previously
recognised, on land and
buildings, arising during the
year, net of deferred tax
5, 10
-
-
(515,566)
-
(515,566)
Total comprehensive income
-
-
(515,566)
341,612
(173,954)
Transactions with owners
Dividends paid
18
-
-
-
(372,389)
(372,389)
Balance at 31 December 2022
1,938,462
2,876,923
4,861,000
1,236,313
10,912,698
Balance at 1 January 2023
1,938,462
2,876,923
4,861,000
1,236,313
10,912,698
Comprehensive income
Profit for the year
-
-
-
354,272
354,272
Other comprehensive income
Reversal of part of the
revaluation surplus previously
recognised, on land and
buildings, arising during the
year, net of deferred tax
5
-
-
7,958
-
7,958
-
Total comprehensive income
-
-
7,958
354,272
362,230
Transactions with owners
Dividends paid
18
-
-
-
(351,550)
(351,550)
Balance at 31 December 2023
1,938,462
2,876,923
4,868,958
1,239,035
10,923,378
The accompanying notes are an integral part of these financial statements.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
30
Statement of cash flows
Year ended 31 December
Notes
2023
2022
€
€
Cash flows from operating activities
Cash generated from operations
19
587,792
554,046
Interest paid
(951)
(933)
Net tax paid
(120,110)
(101,119)
Net cash generated from operating activities
466,731
451,994
Cash flows from financing activities
Dividends paid
(351,550)
(368,369)
Net cash used in financing activities
(351,550)
(368,369)
Cash flows from investing activities
Additions to property, plant and equipment
(776)
(26,876)
Net cash used in investing activities
(776)
(26,876)
Net movement in cash and cash equivalents
114,405
56,749
Cash and cash equivalents at beginning of year
636,157
579,408
Cash and cash equivalents at end of year
7
750,562
636,157
The accompanying notes are an integral part of these financial statements.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
31
Notes to the financial statements
1. Summary of material accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
1.1 Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU and with the requirements of the Maltese Companies Act
(Cap. 386). The financial statements have been prepared under the historical cost convention,
except as modified by the fair valuation of the land and buildings class within property, plant and
equipment.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires Directors to exercise their judgement in the
process of applying the company’s accounting policies (see Note 3 - Critical accounting estimates
and judgements).
Standards, interpretations and amendments to published standards effective in 2023
In 2023, the company adopted amendments to existing standards that are mandatory for the
company’s accounting year beginning on 1 January 2023.
The company has applied the following amendments for the first time for its annual reporting period
commencing on 1 January 2023:
- Definition of Accounting Estimates - amendments to IAS 8
- Deferred Tax relating to Assets and Liabilities arising from a Single Transaction -
amendments to IAS 12
- Disclosure of Accounting Policies - amendments to IAS 1 and IFRS Practice Statement 2
The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in
changes to the company’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for the
company’s accounting periods beginning after 1 January 2023. The company has not early adopted
these revisions to the requirements of IFRSs as adopted by the EU and the company’s Directors are
of the opinion that there are no requirements that will have a possible significant impact on the
company’s financial statements in the period of initial application.
1.2 Foreign currency translation
Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The euro is the
company’s functional and presentation currency.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
32
1. Summary of material accounting policies - continued
1.3 Property, plant and equipment
All property, plant and equipment, is initially recorded at cost. Land and buildings are subsequently
stated at market value, based on valuations by external independent valuers, less depreciation.
Valuations of land and buildings are carried out regularly, such that the carrying amount of property
does not differ materially from that which would be determined using fair values at the end of the
reporting period. All other property, plant and equipment are stated at historical cost less
depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the
items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the company and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown as a revaluation reserve in shareholders’ equity. Decreases that
offset previous increases of the same individual asset are charged in other comprehensive income
and debited against the revaluation reserve directly in equity; all other decreases are charged to profit
or loss. Any subsequent increases are recognised in profit or loss up to the amount previously
charged to profit or loss, and then reflected in other comprehensive income and shown as a
revaluation reserve.
An external, independent valuer, having appropriate recognised professional qualifications and
recent experience in the location and category of property being valued, values the company’s
property portfolio at periodical intervals. The fair values are based on market values, being the
estimated amount or price that would be received to sell an asset in an orderly transaction between
market participants at the measurement date. In the absence of current prices in an active market,
the valuations are prepared by considering the aggregate of the estimated cash flows expected to be
received from renting out the property. A yield that reflects the specific risk inherent in the net cash
flows is then applied to the net annual cash flows to arrive at the property valuation.
Land is not depreciated as it is deemed to have an indefinite life. Depreciation on other assets is
calculated using the straight-line method to allocate their cost or revalued amounts to their residual
values over their estimated useful life. Depreciation is calculated using the straight-line method to
allocate the cost of the assets to their residual values over their estimated useful lives as follows:
%
Buildings
1
Improvements to premises
5
Plant, machinery and equipment
5 - 25
Furniture, fixtures and fittings
10 - 20
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of
each reporting period, or whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The
assets that suffered impairment are reviewed for possible reversal of the impairment at the end of
each reporting period.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount and are recognised in profit or loss.
When revalued assets are sold, the amounts included in the revaluation reserve relating to the asset
are transferred to retained earnings.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
33
1. Summary of material accounting policies - continued
1.4 Financial assets
The company classifies its financial assets in at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
Recognition and derecognition
The company recognises a financial asset in its statement of financial position when it becomes a
party to the contractual provisions of the instrument.
Regular way purchases and sales of financial assets are recognised on settlement date, the date on
which an asset is delivered to or by the company. Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or have been transferred and the
company has transferred substantially all the risks and rewards of ownership or has not retained
control of the asset.
Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the company’s business model for
managing the asset and the cash flow characteristics of the asset. There are three measurement
categories into which the company classifies its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest income
from these financial assets is included in finance income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented
as a separate line item in the statement of profit or loss, subject to materiality.
- FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain
or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in
other gains/(losses).
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
34
1. Summary of material accounting policies - continued
1.4 Financial assets - continued
Interest income from these financial assets is included in finance income using the effective interest
rate method. Foreign exchange gains and losses are presented in other gains/(losses) and
impairment losses are presented as a separate line item in the statement of profit or loss.
- FVPL: assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A
gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or
loss and presented net within other gains/(losses) in the period in which it arises.
Impairment
The company assesses on a forward-looking basis the expected credit losses associated with its
debt instruments carried at amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables and contract assets, the company applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the
receivables (See Note 2.1 for further information).
For all others financial assets that are subject to impairment under IFRS 9, the company applies a
three-stage model for impairment, based on changes in credit quality since initial recognition. A
financial asset that is not credit impaired on initial recognition is classified in stage 1.
Financial assets in stage 1, have their expected credit loss measured at amount equal to the portion
of lifetime expected credit loss that results from default events possible within the next 12 months, or
until contractual maturity if shorter. If the company identifies a significant increase in credit risk since
initial recognition, the asset is transferred to stage 2 and its expected credit loss is measured on a
lifetime basis, that is up until contractual maturity. If the company determines that a financial asset
is credit impaired, the asset is transferred to stage 3 and the expected credit loss is measured on a
lifetime credit loss basis.
1.4.1 Trade and other receivables
Trade receivables comprise amounts due from customers for services performed in the ordinary
course of business. If collection is expected in one year or less (or in the normal operating cycle of
the business if longer), they are classified as current assets. If not, they are presented as non-current
assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision for impairment, i.e. expected credit
loss allowance.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less expected credit loss allowances.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The company
holds the trade receivables with the objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest method.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
35
1. Summary of material accounting policies - continued
1.4 Financial assets - continued
1.4.2 Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at
call with banks.
1.5 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
1.6 Financial liabilities
The company recognises a financial liability in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. The company’s financial liabilities are classified
as financial liabilities which are not at fair value through profit or loss (classified as ‘Other liabilities’)
under IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at fair
value, being the fair value of consideration received, net of transaction costs that are directly
attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently
measured at amortised cost. The company derecognises a financial liability from its statement of
financial position when the obligation specified in the contract or arrangement is discharged, is
cancelled or expires.
1.6.1 Trade and other payables
Trade payables comprise obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business if longer). If
not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
1.7 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle the liability simultaneously.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
36
1. Summary of material accounting policies - continued
1.8 Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss,
except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other comprehensive income or directly in equity,
respectively.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the end of the reporting period and are expected to apply
when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either the taxable entity or different
taxable entities where there is an intention to settle the balances on a net basis.
1.9 Revenue recognition
Revenues include all revenues from the ordinary business activities. Ordinary activities do not only
refer to the core business but also to other recurring sales of goods or rendering of services.
Revenues are recorded net of value added tax, rebates and discounts.
(a) Sale of services
Revenue from services is generally recognised in the period in which the services are provided, based
on the services performed to date as a percentage of the total services to be performed. Accordingly,
revenue is recognised by reference to the stage of completion of the transaction under the percentage
of completion method.
IFRS 15 requires that at contract inception the goods or services promised in a contract with a
customer are assessed and each promise to transfer to the customer the good or service is identified
as a performance obligation. Promises in a contract can be explicit or implicit if the promises create
a valid expectation to provide a good or service based on the customary business practices, published
policies, or specific statements.
A contract asset must be recognised if the company recorded revenue for fulfilment of a contractual
performance obligation before the customer paid consideration or before – irrespective of when
payment is due – the requirements for billing and thus the recognition of a receivable exist.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
37
1. Summary of material accounting policies - continued
1.9 Revenue recognition - continued
A contract liability must be recognised when the customer paid consideration or a receivable from the
customer was due before the company fulfilled a contractual performance obligation and thus
recognised revenue.
(b) Property related income
Concession income receivable and premia charged are recognised in the period when the property
is occupied and is credited to profit or loss on a straight-line basis over the period of the leases to
which they relate.
(c) Interest income
Interest income is recognised for all interest-bearing instruments on a time-proportion basis using the
effective interest method. When a receivable is impaired, the company reduces the carrying amount
to its recoverable amount, being the estimated future cash flow discounted at original effective
interest rate of the instrument and continues unwinding the discount as interest income.
1.10 Leases - where the company is a lessor
Leases in which the company does not transfer substantively all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Assets leased out under operating leases are
mainly being leased to third parties, with other assets being included in property, plant and equipment in
the statement of financial position. The latter are depreciated over their expected useful lives on a basis
consistent with similar owned property, plant and equipment. Concession income is recognised in profit
or loss on a straight-line basis over the period of the lease.
1.11 Finance costs
Finance costs are recognised in profit or loss for all interest-bearing instruments on an accrual basis
using the effective yield method. Finance costs includes the effects of amortising any difference
between net proceeds and redemption value in respect of the company’s borrowings. Finance costs
are charged against income without restrictions.
1.12 Dividends
Dividend distribution to the company’s shareholders is recognised as a liability in the company’s
financial statements in the period in which the dividends are approved by the company’s
shareholders.
1.13 Earnings per share
The company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the company by the weighted
average number of ordinary shares outstanding during the period.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
38
2. Financial risk management
2.1 Financial risk factors
The company’s activities potentially expose it to a variety of financial risks: market risk (including
foreign exchange risk, fair value interest rate risk and cash flow interest rate risk), credit risk and
liquidity risk. The company’s overall risk management focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the company’s financial performance.
The company does not make use of derivative financial instruments to hedge certain risk exposures
during the current and preceding financial years.
The Board of Directors provides principles for overall company risk management, as well as policies
covering risks referred to above and specific areas such as investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
All monetary assets and liabilities of the company are denominated in the functional currency and
accordingly, the company is not exposed to foreign exchange risk.
(ii) Cash flow and fair value interest rate risk
The company does not have significant interest-bearing assets, and its income and operating cash
flows are substantially independent of changes in market interest rates. Management monitors the
level of floating rate as a measure of cash flow risk taken on. Interest rates on these financial
instruments are linked with the Central Intervention Rate issued by the European Central bank.
Based on this, management considers the potential impact on profit or loss of a defined interest rate
shift that is reasonably possible at the end of the reporting period to be immaterial.
(b) Credit risk
Credit risk arises from cash and cash equivalents, as well as credit exposures to customers, including
outstanding receivables and committed transactions.
The maximum exposure to credit risk at the reporting date was:
2023
2022
€
€
Financial assets at amortised costs
Trade and other receivables (excluding prepayments) (Note 6)
150,010
129,840
Cash and cash equivalents (Note 7)
750,562
636,157
900,572
765,997
The maximum exposure to credit risk at the end of the reporting period in respect of the financial
assets mentioned above is equivalent to their carrying amount as disclosed in the respective notes
to the financial statements. The company does not hold any significant collateral as security in this
respect. The figures disclosed in the table above in respect of trade and other receivables exclude
prepayments and deferred expenditure.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
39
2. Financial risk management - continued
2.1 Financial risk factors - continued
(b) Credit risk - contimued
Trade and other receivables
The company assesses the credit quality of its trade customers, the majority of which are unrated,
taking into account financial position, past experience and other factors. The company’s exposure
to credit risk is influenced mainly by the individual characteristics of each customer. It has policies in
place to ensure that sales of services are effected to customers with an appropriate credit history.
The company’s management monitors the performance of its trade and other receivables on a regular
basis to identify expected collection losses, which are inherent in the company’s receivables, taking
into account historical experience in collection of accounts receivable. The company’s trade
receivables which are not impaired financial assets are principally debts in respect of transactions
with customers for whom there is no history of default.
Impairment of trade and other receivables
The company applies the IFRS 9 simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days past due.
In measuring the expected credit losses on trade receivables, the expected loss rates are based on
the payment profiles of sales over a period of time before the reporting date and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. The company adjusts the historical loss rates based on expected
changes in these factors.
Credit loss allowances include specific provisions against credit impaired individual exposures with
the amount of the provisions being equivalent to the balances attributable to credit impaired
receivables. The company considers that there is evidence of impairment if any of the following
indicators is present:
- significant financial difficulties of the debtor,
- probability that the customer will enter bankruptcy or financial reorganisation, and
- default or late payments (more than 90 days overdue).
The closing loss allowances for trade receivables as at 31 December 2023 and 2022 reconcile to the
opening loss allowances as follows:
2023
2022
€
€
At beginning and end of year
8,494
8,494
The company established an allowance for impairment that represented its estimate of expected
credit losses in respect of trade and other receivables. The individually credit impaired trade
receivables mainly relate to a number of independent customers which are in unexpectedly difficult
economic situations and which are accordingly not meeting repayment obligations.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
40
2. Financial risk management - continued
2.1 Financial risk factors - continued
(b) Credit risk - continued
Cash and cash equivalents
The company principally banks with local financial institutions with high quality standing or rating.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the
identified impairment loss is insignificant.
(c) Liquidity risk
The company is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise principally trade and other payables (refer to Note 11). Prudent
liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure
the availability of an adequate amount of funding to meet the company’s obligations.
Management monitors liquidity risk by means of cash flow forecasts on the basis of expected cash
flows over a twelve-month period detailed to ensure that no additional financing facilities are expected
to be required over the coming year.
2.2 Capital risk management
The company’s objectives when managing capital are to safeguard the company’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other stakeholders
and to ensure that borrowings are adequately serviced and repaid on their contractual maturity date.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends
paid to shareholders, issue new shares or sell assets to reduce debt.
The company’s equity, as disclosed in the statement of financial position, constitutes its capital. The
company maintains the level of capital by reference to its financial obligations and commitments
arising from operational requirements. In view of the nature of the company’s activities, the capital
level as at the end of the reporting period is deemed adequate by the Directors.
2.3 Fair value estimation
At 31 December 2023 and 2022 the carrying amounts of cash and cash equivalents, receivables, and
payables are reasonable estimates of fair value in view of the nature of these instruments or the
relatively short period of time between the origination of the instruments and their expected
realisation.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
41
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances.
The company makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. These estimates and
assumptions present a risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year. The company’s management also makes judgements, apart
from those involving estimations, in the process of applying the entity's accounting policies that may
have a significant effect on the amounts recognised in the financial statements.
In the opinion of the Directors, the accounting estimates and judgements made in the course of
preparing these financial statements, which have been highlighted above, are not difficult, subjective
or complex to a degree which would warrant their description as critical in terms of the requirements
of IAS 1, other than the fair valuation of land and buildings.
As referred to in Note 4, the land and buildings class of property, plant and equipment is fair valued
on the basis of future cash flows emanating from the operation of the property and other key inputs,
namely the discount and growth rates.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
42
4. Property, plant and equipment
Land and
buildings
including
improvements
to premises
Plant,
machinery
and
equipment
Furniture,
fixtures
and
fittings
Total
€
€
€
€
At 1 January 2022
Cost or valuation
12,435,673
679,746
367,026
13,482,445
Accumulated depreciation
(318,295)
(560,986)
(354,018)
(1,233,299)
Net book amount
12,117,378
118,760
13,008
12,249,146
Year ended 31 December 2022
Opening net book value
12,117,378
118,760
13,008
12,249,146
Additions
-
10,910
15,966
26,876
Reversal of part of the revaluation
surplus, previously recognised (Note 10)
(592,804)
-
-
(592,804)
Depreciation charge
(79,574)
(28,094)
(3,552)
(111,220)
Closing net book amount
11,445,000
101,576
25,422
11,571,998
At 1 January 2023
Cost or valuation
11,842,869
690,656
382,992
12,916,517
Accumulated depreciation
(397,869)
(589,080)
(357,570)
(1,344,519)
Net book amount
11,445,000
101,576
25,422
11,571,998
Year ended 31 December 2023
Opening net book value
11,445,000
101,576
25,422
11,571,998
Additions
-
776
-
776
Depreciation charge
(79,574)
(18,102)
(3,553)
(101,229)
Closing net book amount
11,365,426
84,250
21,869
11,471,545
At 31 December 2023
Cost or valuation
11,842,869
691,432
382,992
12,917,293
Accumulated depreciation
(477,443)
(607,182)
(361,123)
(1,445,748)
Net book amount
11,365,426
84,250
21,869
11,471,545
The company operates Main Street Complex, a fully serviced shopping complex, leasing out retail
space. The extent of the services provided is deemed to be significant to the arrangement with the
concessionaires as a whole. The shopping complex, which is made up of all the classes of assets
included in property, plant and equipment above, is leased out under operating leases and
accordingly is treated as property, plant and equipment under the requirements of IAS 16 rather than
investment property under IAS 40.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
43
4. Property, plant and equipment - continued
Fair value of land and buildings
The land and buildings within property, plant and equipment were revalued during the year ended 31
December 2022 by an independent property valuer having appropriate recognised professional
qualifications and experience in the location and category of the property being valued. During the
year ended 31 December 2022 the Directors had reviewed the valuation, following which a reversal
of part of the revaluation surplus previously recognised, amounting to €592,804, was accounted for.
This reversal was debited to the revaluation reserve, in shareholders’ equity (Note 10), net of
applicable deferred tax. Management have reviewed the carrying amounts of the properties as at 31
December 2023, no adjustments to the carrying amounts were deemed necessary as at that date
taking cognisance of the developments that occurred during the current financial year. The Directors
are of the opinion that the principal assumptions used reflect a prudent approach and that the carrying
amount of the company’s property as at the end of the current financial year, is an appropriate
estimate of its fair value.
The company is required to disclose fair value measurements by level of the following fair value
measurement hierarchy for non-financial assets carried at fair value:
- Quoted prices (unadjusted) in active markets for identical assets (level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset that are not based on observable market data (that is, unobservable inputs)
(level 3).
The company’s recurring fair value measurements are categorised as level 3 as they are based on
significant unobservable inputs. The company’s policy is to recognise transfers into and out of fair
value hierarchy levels as of the beginning of the reporting period. During the current financial year
there were no transfers between the fair value levels.
A reconciliation from the opening balance to the closing balance of land and buildings for recurring
fair value measurements categorised within Level 3 of the value hierarchy, is reflected in the table
above. The changes during the year are mainly attributable to additions and depreciation charge.
The company’s land and buildings represent Main Street Complex, and its current use equates to the
highest and best use.
Valuation process and techniques
The company’s property is valued on periodic valuation by the Directors after seeking professional
advice from independent professionally qualified valuers who hold a recognised relevant professional
qualification and have the necessary experience in the location and segments of the property being
valued.
At the end of every reporting period during which an external valuation is not carried out, the Directors
also assess whether any significant changes in actual circumstances, income streams, results and
developments have been experienced since the last external valuation. An adjustment to the carrying
amount of the property is only reflected if it has been determined that there has been a significant
change.
The valuation was determined using discounted cash flow projections considering, inter alia, the
projected future earnings from the Complex, in the main based on current concession agreements,
its ongoing maintenance needs, and other relevant market factors. Accordingly, the significant
unobservable inputs applied in the company’s valuation are the following:
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
44
4. Property, plant and equipment - continued
- Earnings before interest, tax, depreciation and amortisation (EBITDA): which is based on the
company’s existing concession income streams less operating costs (before depreciation) which
include marketing and maintenance expenses.
- Growth rate, at an average of 2.5% (2022: 2.5%) represents the estimated average growth of the
company’s concession income.
- A discount rate of 8.5% (2022: 8.5%) was applied in estimating the net present value of the
projected future free cash flows, and a cap rate of 7.0% (2022: 7.0%).
An increase in the EBITDA and the growth rate and/or a decrease in the discount rate, would result
in an increase to the fair value of the property. Management carried out a sensitivity analysis and
determined that, as an example, a shift of +/-0.5% in the discount rate, which is deemed to be the
main key input, would result in a reduction of €252,000 (or 2.2%) or an increase of €291,000 (or
2.5%) in fair value respectively.
Historical cost of land and buildings
The carrying value of land and buildings would have been as follows had these assets been included
in the financial statements at cost less depreciation:
2023
2022
€
€
Cost
5,837,369
5,837,369
Accumulated depreciation
(710,685)
(631,111)
5,126,684
5,206,258
5. Deferred taxation
2023
2022
€
€
Deferred tax liability
At beginning of year
1,144,500
1,221,738
Deferred tax on movement for the year (Note 10)
(7,958)
(77,238)
At end of year
1,136,542
1,144,500
Deferred taxes are calculated on all temporary differences under the liability method using a principal
tax rate of 35% (2022: 35%), except for deferred taxation on the fair valuation of property which is
computed on the basis applicable to disposals of immovable property, i.e. tax rate of 10% (2022:
10%) of the transfer value.
The balance at 31 December represents temporary differences attributable to:
2023
2022
€
€
Fair valuation of property
1,136,542
1,144,500
Deferred taxation is principally composed of deferred tax liabilities which are to be mainly recovered
and settled after more than twelve months.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
45
6. Trade and other receivables
2023
2022
€
€
Current
Trade receivables – gross
158,504
138,334
Expected credit loss allowance
(8,494)
(8,494)
Trade receivables – net
150,010
129,840
Prepayments
4,343
4,670
154,353
134,510
7. Cash and cash equivalents
For the purposes of the statement of cash flows, the year-end cash and cash equivalents comprise
the following:
2023
2022
€
€
Cash at bank
750,562
636,157
8. Share capital
2023
2022
€
€
Authorised share capital
50,000,000 ordinary shares of €0.10 each
5,000,000
5,000,000
Issued and fully paid share capital
19,384,619 ordinary shares of €0.10 each
1,938,462
1,938,462
9. Share premium
2023
2022
€
€
At beginning and end of year
2,876,923
2,876,923
The share premium arose on the issue of 5,230,769 ordinary shares at a premium of €0.55.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
46
10. Revaluation reserve
2023
2022
€
€
Year ended 31 December
At beginning of year
4,861,000
5,376,566
Reversal of part of the revaluation surplus,
previously recognised (Note 4)
-
(592,804)
Deferred tax on movement for the year (Note 5)
7,958
77,238
At end of year
4,868,958
4,861,000
The revaluation reserve relates to fair valuation of the land and buildings component of property, plant
and equipment, and the balance represents the cumulative net increase in fair value of such property,
net of related deferred tax. The revaluation reserve is a non-distributable reserve.
11. Trade and other payables
2023
2022
€
€
Current
Trade payables
64,883
56,826
Amounts owed to related parties
14,379
24,804
Accruals
52,828
45,493
Contract liabilities
18,750
25,445
Indirect taxes and social security
38,276
9,033
189,116
161,601
Amounts owed to related parties are unsecured, interest free and repayable on demand.
Contract liabilities comprise deposits received in advance from customers:
2023
2022
€
€
Deposits received in advance from customers
At beginning of year
25,445
62,250
Originations
-
695
Refunds to customers
(6,695)
(37,500)
At end of year
18,750
25,445
12. Revenue
All the company’s revenue relates to concession income arising over time, from contracts with
customers, attributable to retail outlets in Main Street Complex in Paola, Malta.
The company primarily operates in one segment that comprises granting of concessions of outlets or
spaces within the Main Street Complex against an agreed annual rate, and in some cases, a fee
payable based on a percentage of the concessionaire’s turnover, which activities are substantially
subject to the same risks and returns. Accordingly, the presentation of segment information required
by IFRS 8, Operating segments, within these financial statements is not deemed applicable.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
47
13. Expenses by nature
2023
2022
€
€
Depreciation of property, plant and equipment (Note 4)
101,229
111,220
Administrative and management fees
43,081
42,444
Other expenses
186,379
169,926
Total operating expenses, depreciation, and administrative expenses
330,689
323,590
Auditor’s fees:
Included in other expenses are fees charged by the auditor and its connected undertakings to the
company for services rendered during the financial periods ended 31 December 2023 and 2022.
These relate to the following:
2023
2022
€
€
Annual statutory audit
13,600
12,500
Other assurance services
800
1,800
14,400
14,300
During the current year fees in relation to non-assurance services amounting to €1,905 (2022:
€1,880) have been charged by connected undertakings of the company’s auditor, in respect of tax
advisory and compliance services.
14. Directors’ fees
2023
2022
€
€
Directors’ fees
40,000
40,000
15. Finance costs
2023
2022
€
€
Bank charges and interest
951
933
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
48
16. Tax expense
2023
2022
€
€
Current tax expense
123,668
120,639
The tax on the company’s profit before tax differs from the theoretical amount that would arise using
the basic tax rate as follows:
2023
2022
€
€
Profit before tax
477,940
462,251
Tax at 35%
167,279
161,788
Income taxed at different rates
(159,685)
(154,613)
Expenses not allowed for tax purposes
118,242
113,464
Other
(2,168)
-
Tax expense
123,668
120,639
The tax rate applied to rental income during the year ended 31 December 2023 and 2022 was 15%.
17. Earnings per share
Earnings per share is based on the net profit for the year divided by the weighted average number of
ordinary shares in issue during the year. The diluted earnings per share is equal to the basic earnings
per share.
2023
2022
Net profit attributable to shareholders
€354,272
€341,612
Weighted average number of ordinary shares in issue
19,384,619
19,384,619
Earnings per share
€0.018
€0.018
18. Dividends
2023
2022
€
€
Net dividends paid on ordinary shares
351,550
372,389
Dividends per share
€4
0.018
0.019
A net dividend in respect of the year ended 31 December 2023 of €0.011 per share amounting to
€214,000 is to be proposed by the Board of Directors at the forthcoming Annual General Meeting.
The financial statements do not reflect this proposed dividend, which, subject to the approval by the
shareholders, will be accounted for within shareholders’ equity as an appropriation of retained
earnings in the year ending 31 December 2024.
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
49
19. Cash generated from operations
Reconciliation of operating profit to cash generated from operations:
2023
2022
€
€
Operating profit
478,891
463,184
Adjustment for:
Depreciation of property, plant and equipment (Note 4)
101,229
111,220
Changes in working capital:
Trade and other receivables
(19,843)
79,681
Trade and other payables
27,515
(100,039)
Cash generated from operations
587,792
554,046
20. Commitments
Operating lease commitments - where the company is the lessor
The future minimum lease payments receivable under non-cancellable operating leases are as
follows:
2023
2022
€
€
Not later than 1 year
546,541
567,335
Later than 1 year and not later than 5 years
598,248
955,296
1,144,789
1,522,631
21. Related party transactions
The company has related party relationships with Embassy Limited (its former parent), and all entities
ultimately controlled by it are still considered to be related parties, in view of Embassy Limited’s
interest in the company. Gasan Group is also considered to be a related party of the company, inview
of the fact that Joseph A. Gasan, the Chairman, is the ultimate controlling party of the Gasan Group.
Related entities ultimately controlled by Embassy Limited and Gasan Group, together with the
company’s Directors (‘key management personnel’) are also considered to be related parties.
The following principal operating transactions, which were carried out with related parties, have a
material effect on the operating results and financial position of the company:
2023
2022
€
€
Expenditure for services
Management and administration fees
43,081
42,444
Other expenses
39,668
40,196
MAIN STREET COMPLEX p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
50
21. Related party transactions - continued
Except for Directors’ fees (Note 14) the company has not entered into material transactions with key
management personnel which would warrant disclosure thereof for the purpose of understanding the
company’s financial results or its financial position. Also, the company has not entered into material
transactions with entities in which its key management personnel directly or indirectly have an interest
or over which they have direct or indirect influence. Any such transactions would constitute normal
operating transactions under normal market and commercial terms relating to provision of operational
services by the company and would not comprise financing transactions.
Year-end balances with related parties, arising principally from transactions referred to previously,
are disclosed in Note 11 to these financial statements.
22. Statutory information
Main Street Complex p.l.c. is a public liability company and is incorporated in Malta, with its registered
office at Main Street Complex, Antoine de Paule Square, Paola PLA 1262
Independent auditor’s report
To the Shareholders of Main Street Complex p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
● The financial statements give a true and fair view of the financial position of Main Street Complex p.l.c. (the Company) as at 31 December 2023, and of the company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
● The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).
Our opinion is consistent with our additional report to the Audit Committee.
What we have audited
Main Street Complex p.l.c.’s financial statements comprise:
● the statement of financial position as at 31 December 2023;
● the income statement and statement of comprehensive income for the year then ended;
● the statement of changes in equity for the year then ended;
● the statement of cash flows for the year then ended; and
● the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the company, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 13 to the financial statements.
Our audit approach
Overview
|
Materiality |
· Overall materiality: €23,800, which represents 5% of profit before tax. |
|
Key audit matters |
· Valuation of property, plant and equipment. |
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which the company operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
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Overall materiality |
€23,800 |
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How we determined it |
5% of profit before tax |
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Rationale for the materiality benchmark applied |
We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the company is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €2,380 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key audit matter |
How our audit addressed the Key audit matter |
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Valuation of property, plant and equipment
The company’s property comprises the Main Street Complex, having a carrying amount of €11.4 million. The property, which leases units primarily for retail activity, was revalued by an independent professionally qualified valuer in prior years.
Following the Directors’ valuation assessment as at 31 December 2023, of whether any significant changes occurred since the last external valuation, no revaluation adjustment was required.
As explained in Note 4 to the financial statements, the valuation was determined using discounted cash flow projections. The most significant estimates and judgements affecting these valuations include the projected pre-tax cash flows or concession income, the growth rate and the discount rate.
The valuation considers the agreements in hand as well as possible future concession income streams that are comparable to market.
We focused on this area because of the significance of the carrying amount of the property in the company’s statement of financial position and the judgemental nature of the assumptions used in the valuation model. |
We agreed the property information in the valuation to the underlying property records held by the company. We tested the data inputs, including the concession income by agreeing it to supporting concession agreements and documentation.
We understood the methodology, tested the accuracy of the workings within the valuation model, and challenged the assumptions to ensure that they apply for the year under review. We engaged our own in-house valuation experts to review and challenge the valuation approach and assumptions for the property.
We discussed the valuation with the Audit Committee and concluded, based on our audit work, that the parameters utilised by the company were reasonable, given historic results, economic outlook, industry forecasts and other market data as at 31 December 2023, and that the property valuation to be within an acceptable range of values. Our discussions with the Audit Committee and the Directors in respect of this key audit matter focused on the key assumptions.
In addition, we evaluated the adequacy of the accounting policy (Note 1.3) and the appropriateness of disclosures made in this respect in Note 4 to these financial statements, including those relating to the key valuation assumptions. |
Other information
The directors are responsible for the other information. The other information comprises Chairman’s statement, the Directors’ report, the Statement of compliance with principals of good corporate governance, and the Remuneration statement and Remuneration report (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors and those charged with governance for the financial statements
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the company’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (“the ESEF Directive 6”) on the Annual Financial Report of Main Street Complex p.l.c. for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the financial statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the financial statements, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
● Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report in XHTML format.
● Examining whether the Annual Financial Report has been prepared in XHTML format.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in XHTML format in all material respects.
Other reporting requirements
The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
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Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. |
In our opinion: · the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Statement of Compliance with the Code of Principles of Good Corporate Governance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles. |
We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures. |
In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Remuneration statement; Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. |
We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. |
In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. |
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: · adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. · the financial statements are not in agreement with the accounting records and returns. · we have not received all the information and explanations which, to the best of our knowledge and belief, we require for our audit.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Our report, including the opinions, has been prepared for and only for the Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Company on 30 April 2005. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 19 years. The company became listed on a regulated market on 30 May 2018.
Lucienne Pace Ross
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
24 April 2024
