Grand Harbour Marina pre-tax profit at €300,000

Income from pontoon fees and from ancillary services for the first 6 months ended 30 June 2012 amounted to €1.3 million (2011: € 1.3 million) which was marginally higher than the same period of last year (excluding long term berth sales). There were no super yacht berth sales during the period ended 30 June 2012 (2011: €0.4 million)

The company's operating costs for the six months ended 30 June 2012 decreased from €1.2 million to €1 million. This decrease is mainly related to the direct costs of revenue from the sale of the long term berth in 2011, which included the capital costs of the berth sold, brokerage commissions and turnover rent payable.

As a result of the above, profit before interest, tax, depreciation and amortisation (EBITDA) for the six months ended 30 June 2012 decreased from €0.5 million to €0.3 million.

Finance expenses incurred were €0.4 million (2011: € 0.4 million) which mainly relate to the interest costs of the bond issued in February 2010.

During the first half of 2012 management has carried out an assessment of it's deferred tax position and concluded that it is probable that future taxable profit would allow a deferred tax asset to be recovered. As a result of this assessment the unrecognised deferred tax asset of €460,679 (note 8) that would have been applicable as at 31 December 2011 was recognised during the six months ending 30 June 2012. The recovery of this deferred tax asset in the 6 months to 30 June 2012 amounted to €24,550 leading to a total income tax credit in the period of €436,129.

As a result of the above, the results of Grand Harbour Marina for the 6 months ended 30 June 2012 show a profit after tax of €0.2 million compared to a loss of €0.2 million in the same period of 2011.

The performance of IC Cesme marina in the six months ending 30 June 2012 has proved to be better than budgeted. Seaside revenues almost doubled from the equivalent period in 2011 as berth occupancy continued to rise. At the end of June 2012, 296 berths were either let or reserved on annual contracts representing a 25 % increase on the level at 30 June 2011. Initial price discounts that were offered when the marina was opened were reduced from 1 January 2012 representing an effective price increase of 13%. As reported in the 2011 Annual Report a small breakwater extension costing around €0.5 million was completed during the period to improve comfort for vessels in the outer berths and also to improve water utilisation. The improved conditions have already resulted in favourable comments from several boat owners and captains.

The retail village continued to perform strongly and with increased turnover in several locations and the replacement of some underperforming tenants, landside revenues increased by 30% over the equivalent period in 2011.

The condensed consolidated financial statements include the proportionate consolidation of the 45% beneficial interest in IC Cesme.

The revenue earned of €2 million for the six months ending 30 June 2012 (2011: €1.6 million), reflects an increase in the level of marina operating activities of the Group excluding the effect of any long term berth sales.

Operating expenses, including personnel expenses and directors' emoluments, were €1.6 million (2011: €1.6 million) in the first six months of 2012. Although operating expenses were similar they reflect the increase in IC Cesme's operating expenses being for a period of 6 months as compared to 3 and a half months in the prior period and the decrease in direct costs incurred in relation to the long term berth sold in the prior period.

As a result, EBITDA generated in the first six months of 2012 amounts to €0.4 million (2011: €0.5 million including the effect of the long term berth sale).

The company continues to focus on long term berth sales and has a number of potential clients with whom it is in discussion.

Grand Harbour Marina has been selected as a home port by 14 super-yachts which have acquired long term licenses to date. In times of economic uncertainty long term commitments are often delayed, however the fundamental reasons for berth ownership have, if anything, strengthened in the past year.

Taxation issues have assumed greater importance and Malta's yacht friendly jurisdiction is particularly attractive to owners of larger yachts. Likewise, berth ownership in an easily accessible homeport that provides yacht crews with a high quality of life, while meeting the ongoing operational needs of the yacht, helps ensure crew retention whilst keeping operating costs contained.

Historic and future growth in the super-yacht fleet also supports the demand for super-yacht berths. The Super-yacht Report from August 2012 records that over 2,800 super yachts have been added to the fleet since 1992, with 1,000 yachts delivered between 2005 and 2012 alone. The total fleet currently stands at over 4,500 and conservative estimates anticipate it will reach 7,000 in the next two decades.

As these super-yachts increase in numbers, they are also dramatically increasing in size, providing an opportunity for marinas with large super-yacht berths and superior infrastructure and services, to benefit through increased occupancy and berth sales.

Berth ownership provides owners of berths with protection against future rental rate increases and the opportunity for capital appreciation.