Company Registration Number: C34767
Annual Financial Report and Financial Statements
31 December 2021
Annual Financial Report and Financial Statements - 31 December 2021
Chairman’s statement 1
Directors’ report 2 - 9
Statement of compliance with the principles of good corporate governance 10 - 21
Remuneration statement and report 20 - 24
Statement of financial position 25
Income statement, Statement of comprehensive income 26
Statement of changes in equity 27
Statement of cash flows 28
Notes to the financial statements 29 - 47
Independent auditor’s report
Annual Financial Report and Financial Statements - 31 December 2021
Chairman’s statement
I am pleased to be presenting the Main Street Complex p.l.c. annual financial report for 2021 to shareholders,
covering the third full year of operations following the official listing of the company on the Malta Stock
The year 2021 was another year of challenges for Main Street Complex and for business generally, as the
COVID-19 pandemic continued to severely impact the local and global economy. During 2021, the company
was also faced with the closure of the anchor Debenhams franchise outlet. Notwithstanding these difficulties, I
am proud to report that Main Street Complex continued to show remarkable resilience, with our Board and
management team stepping up to these challenges, mitigating their impact on the company, our
concessionaires, and our stakeholders.
As was the case in the previous year, in line with directives issued by Government as a result of the COVID-
19 pandemic, Main Street Complex was once again closed to the public at the beginning of March 2021. The
company continued to support concessionaires by waiving all fees during this period, and by offering fee
reductions beyond the closure period where significant restrictions remained in place. Encouragingly,
business recovered positively when the complex was re-opened at the beginning of May 2021 and, with the
exception of the Debenhams franchise, all retail outlets remained open for business for the remainder of the
year. When comparing the period from the re-opening of the complex to the same period in 2020, footfall
increased by 12%, despite the absence of the above-mentioned anchor store during the second half of 2021
and delayed opening of the entertainment and catering outlets.
The resulting upturn in business has had a direct impact on revenues. Revenues for 2021 reached €637K
compared to €517K in 2020, while profit before tax rose from €224K in 2020 to €335K in 2021. At the same
time, our management team worked hard to keep operating costs at the levels of the previous year and
continued to invest in energy-saving measures. The positive results achieved reflect the company’s
continuous efforts and its resilience to adverse situations. Our liquidity position remained sound as a result of
diligent financial management and the absence of debt on our balance sheet. While it was considered prudent
to postpone the payment of dividends in 2021, I am pleased to report that the board will be recommending a
final dividend payment for 2021 of €241,000 at the next AGM.
I am also pleased to advise that by the date of this annual financial report, the areas vacated by the
Debenhams franchisee have been leased out to two new brands. One of these opened for business in March
2022, while the larger one is expected to open in the second quarter of 2022 following extensive investment
on the part of the franchisee. We are confident that their stores will consolidate the present product offering
and enhance customer experience at Main Street Complex.
Just as we were hoping that life in general and business operations would begin to return to normality, the
unfortunate events that have unfolded in Ukraine are deeply distressing and of concern. Although the
company is not directly exposed to such events, their outcome at this time remains uncertain. The company’s
strong financial position and absence of debt has this far enabled us to manage the adverse situations the
company has faced, and, while remaining vigilant and prudent, we are encouraged by the levels of business
in early 2022 which so far indicate a gradual return to pre-COVID levels.
We remain confident that Main Street Complex will continue to be a popular shopping destination for the
southern part of the island, and our dedicated management team remains committed to continue to contribute
positively to the success of our concessionaires and to deliver a unique customer experience to our clients.
Encouraged by the results achieved in the year under review, the Board continues to look to the future with
determination and optimism.
Signed by Joseph A. Gasan (Chairman) on 25 April 2022
Annual Financial Report and Financial Statements - 31 December 2021
Directors’ report
The Directors present their annual financial report and the audited financial statements for the year ended 31
December 2021.
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
2021 was yet another abnormal year with the COVID-19 pandemic prevailing throughout. Nevertheless, while
the pandemic brought about its challenges, 2021 was still positive when compared to 2020, the year in which
the COVID-19 first surfaced locally. Despite the substantial decrease in footfall on account of the spike in
virus numbers in Q1/2021 and towards the end of Q4/2021, the mandatory closure in 2021 (which spanned 7
weeks for non-essential retail business and extended to 3 months for leisure and gaming operators), together
with the continued mitigation and capacity limitation measures, all of which had a repressive impact on
business and the social community, the general public is slowly and cautiously easing back to its normal’
routine. This gradual return to normality was reflected in a partial recovery in footfall figures, with the post lock
down period of 2021 registering a growth of 12% over the same period of 2020. This recovery in visitor
numbers to Main Street is encouraging when one takes to account that the Debenhams franchise closed its
doors for business at the end of June 2021 and remained vacant for the rest of the year. The positive
business sentiment also appears to be gaining momentum as the vacant Debenham’s space was leased out
in full to two separate operators IM Home and Lindex both of which opened for business in April 2022.
In the light of the above-mentioned recovery and the resultant improvement in business levels of most of the
tenants operating at Main Street Complex, the company’s revenues for 2021 increased by 23% to €637,517
over those of the previous year. This was mainly due to the tapering off of discounts that were still being
granted to assist tenants during this difficult period by the company’s Board up to Q3/2021. The Debenhams
closure did not impact revenues due to termination conditions that protected the company’s income during the
period under review. The company’s operating and administrative costs were well managed throughout the
year, and operating costs of €192,737 represent a 1% increase over the same costs in 2020. The increase in
revenues, stable cost base and negligible finance costs resulted in the company’s net profits before tax for the
year increasing to €335,416 from the €224,102 in 2020. The healthy EBITDA of €444,780 generated during
the year, tight control on debt collection, absence of loan repayment commitments and the prudent decision
not to pay dividends during 2021, together comfortably absorbed total capital expenditure amounting to
€64,065. Most of this capital expense was directed towards replacing one of the Complex’s chillers for
improved efficiency. This resulted in an increase in the company’s cash balances to €579,408 from 255,228
at the end of the previous financial reporting period. The company’s balance sheet remains strong with total
equity amounting to €11,459,041 financing 88% of the company’s total assets of €13,042,745.
In the absence of an escalation of the Russia Ukraine war and/or currently unforeseen repercussions arising
therefrom impacting the operators within the complex, Main Street Complex plc’s Board is optimistic that
further recovery will be registered during 2022 and beyond. It is worth noting that the expectation of rising
inflation, the increase in base costs of raw materials, services and finished goods, as well as the ongoing
need to adopt and embrace the ever-increasing regulatory and compliance statutory requirements, are
expected to impinge on the company’s cost base. Notwithstanding, the company remains in a strong financial
position and the Board is confident that as profitability returns to normal levels the company will return to
payment of dividends to its Shareholders.
The Directors recommend that at the forthcoming Annual General Meeting, the shareholders approve the
payment of a net final dividend of 241,000.
The statement of comprehensive income is set out on page 26.
Annual Financial Report and Financial Statements - 31 December 2021
Directors’ report - continued
Our principal risk and uncertainties
Risks relating to reliance on concession agreements
In its business operations, the company enters into concession agreements with third parties pursuant to
which it grants such third parties the right to use the outlets forming part of Main Street Complex for an agreed
annual rate and, in some cases, a fee payable on the percentage of concession turnover, usually subject to a
minimum annual rent. The concessionaires of Main Street Complex are principally engaged in retail, catering
and entertainment. The company, therefore, relies on the revenues it expects to generate from the
Concessions. There can be no guarantee that the company will continue to find suitable concessionaires on
the terms it seeks from time to time. In addition, the financial stability of the concessionaires may change over
time. Defaults by concessionaires could result in a reduction in concession fee revenues, which may require
the company to contribute additional capital or obtain alternative financing. 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 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 are further accentuated by the impact that the COVID-19 and/or any other similar
pandemic will have on consumer spending 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 such as COVID-19 and ensuing government and/or public health authorities legislations
and/or recommendations related to but not limited to restrictions on daily activities, social distancing,
quarantine, lock-down imposition on specific or wide-spread industries and members of the society and other
general market and economic conditions. International economic and political factors, such as the Russia
Ukraine conflict 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 to its shareholders.
Annual Financial Report and Financial Statements - 31 December 2021
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. These are particularly accentuated
owing to the size of the Maltese market. A significant downturn in the performance of the retail sector 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 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 under bank credit facilities
are or 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
Key senior management and personnel
The operations and profitability of the company are dependent on the management support services provided
by Embassy Limited to the company in terms of a management support services agreement. Should either
party terminate the management support services agreement prior to the expiry of its term, or, should
Embassy Limited decide not to renew the agreement following the lapse of the term thereof, the company
would need to seek a new management support services provider or individuals to occupy the executive
management roles of the company. The company may be unable to replace the services provided by
Embassy Limited within the short term and/or on the same or similar terms. This could have a material
adverse effect on the company’s business and results of its operations.
Annual Financial Report and Financial Statements - 31 December 2021
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. 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. If these risks were to materialise, they could have an adverse impact on the company and its ability
to distribute dividends
Annual Financial Report and Financial Statements - 31 December 2021
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.
Annual Financial Report and Financial Statements - 31 December 2021
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), credit risk, and liquidity risk. The company’s overall
risk management, covering risk exposures for all subsidiaries, focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the respective company’s financial performance.
The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk
management framework. Accordingly, the company’s Board of Directors provides principles for overall risk
management, as well as risk management policies covering risks referred to above and specific areas such as
investment of excess liquidity. A detailed review of the risk management policies employed by the company is
included in Note 2 to the financial statements.
The Statement of Compliance with the Principles of Good Corporate Governance in this Annual Financial
Report describes the company’s adherence with the Principles and Code Provisions of Good Corporate
Governance set out in Appendix 5.1 of the Capital Markets Rules and the non-financial key performance
indicators relevant to the company, including information relating to environmental and employee matters.
The Directors who served on the Board during the year under review and up to the date of this report are
listed hereunder.
Joseph A. Gasan Executive Director and Chairman
Mario Camilleri 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.
Annual Financial Report and Financial Statements - 31 December 2021
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 2021 are included in
the Annual Financial Report 2021, 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 COVID-19 and the Russia Ukraine conflict, 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, they continue to adopt the going concern basis
in preparing the financial statements.
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 2021 and 2020 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 2021 and 2020, Embassy Limited held a shareholding in
excess of 5% of the total issued share capital.
Any amendment to the company’s Memorandum and Articles of Association has to be made in accordance
with the Companies Act (Cap 386).
The company may, subject to the applicable restrictions, limitations and conditions contained in the
Companies Act (Cap 386) acquire its own shares and or Equity Securities.
Pursuant to Capital Markets Rules 5.64.2, 5.64.4, 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 2021 none of the requirements apply to the company.
Annual Financial Report and Financial Statements - 31 December 2021
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 25 April 2022 by Joseph A. Gasan and Christopher
Mifsud as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the
Annual Financial Report 2021.
Registered office:
Main Street Complex
Antoine de Paule Square
Paola PLA 1262
25 April 2022