The June 2008 interim results of Camper & Nicholsons Marina Investments Limited (CNMI), the majority shareholder of Grand Harbour Marina plc (GHM), issued on September 18 via the London Stock Exchange revealed that a second 30-metre super-yacht berth was sold in July. GHM published its half-year report on August 29 and no mention was made of this sale. The company had concluded the long-term lease of a 30-metre yacht berth in the first half of the year for a value of €0.51 million but this was not sufficient for GHM to generate a profit during the period - mainly due to an adjustment in rent payable for the previous year. The CNMI announcement stated that the sale of the second berth was also carried out at a value of €0.5 million.
During the first six months of the year, GHM's turnover increased to €1.1 million from €0.5 million in the comparative period of 2007 mainly as a result of the sale of the super yacht berth. On the other hand, during the first half of 2007 no super yacht berth sales were recorded while in December last year three 75 metre berth licences were concluded for a total consideration of €10 million. Meanwhile, also during the first half of 2008, income from pontoon fees and other ancillary services increased by 21 per cent to €0.6 million. CNMI reported that GHM's pontoon berths are at 98 per cent occupancy and rates were increased by around 17 per cent during 2007 and by a further 5 per cent during 2008. Moreover, the company has a waiting list for pontoon rentals of circa 90 yachts. As a result, the marina configuration has been altered to temporarily convert some of the smaller super yacht berths in Xatt ir-Risq into pontoons to accommodate an additional 24 pontoons (20 berths are for 15 metres and four for 12 metre yachts). CNMI reported that these new pontoons were brought into use at the end of August and all the berths have been let in September.
CNMI also announced that the marina configuration of GHM is being reviewed to determine other ways of increasing the pontoon area as well as that dedicated to the super-yacht berths. This is being done in order to make optimal use of the area and maximise the value of the company's assets. The configuration of the super yachts berths along St Angelo Wharf is expected to create a further large berth which could eventually also be leased for a 25-year period. While the current waiting list for pontoons has instigated GHM to convert some of the smaller super-yacht berths in Xatt ir-Risq to an area dedicated for pontoons, the strong order book for new super yacht deliveries continues to indicate the potential in this area. In fact, CNMI also revealed in its recent 2008 interim report that "enquiry levels are strong, which combined with the increased prices, continues to support our confidence for the medium and long term". Despite the current difficult international economic environment, 900 super yachts are expected to be delivered in the coming four years, creating a further imbalance between the supply of berths and demand for additional berths providing further evidence of the potential for growth in rates.
GHM had leased one of its larger berths in 2006 for a total of €2.7 million (equivalent to €1,080 per square metre) while in last year three 75-metre berth leases were concluded for a total consideration of €10 million (equivalent to €2,222 per square metre). Although GHM experienced a surge in rates for super yacht berths, these are reportedly still well-below charges in some other marinas such as those in the south of France, Italy, the Balearics, Turkey and Greece.
The increase in rates achieved by GHM helped its valuation increase to €24.4 million as at June 30, up from €23.2 million in June last year and €24.1 million last December. This valuation was conducted by international property appraiser CB Richard Ellis as a fully operational business entity and in accordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Standards.
Apart from the operation of the marina in Vittoriosa, Grand Harbour Marina plc wish to expand their activities to other marinas in Malta and Gozo and on various occasions the company has indicated its willingness to participate in the eventual bidding process for the privatisation of the existing government-owned marinas in Msida and Mġarr. This was reiterated in the CNMI announcement last week. Although the government had initially indicated that the process will take place by the end of the year, it remains to be seen whether this timeframe will be met since the Privatisation Unit within the Ministry of Finance have yet to issue a request for expressions of interest as well as the relative bidding documents. It was recently suggested that the Government intends to offer the marinas on a 25-year lease. However, various players in the yachting industry including GHM's general manager argue that a 25-year lease is too short a time to make an adequate return due to the large investment required to update the current facilities of the Msida and Mġarr marinas presently managed by the Malta Maritime Authority.
Due to the shortage of pontoons, in recent years the government also indicated that it plans to set up new marinas in the Grand Harbour and Marsamxett and possibly also in St Paul's Bay, Marsascala and Gozo. In a recent article, GHM also mentioned the possibility of converting the Kalkara bay into a marina as part of the government's Grand Harbour regeneration plan.
The possible launch of new marinas and upgraded facilities to the marinas following privatisation could help portray the Maltese islands as a leading yachting destination and withstand the competition arising from other areas of the Mediterranean region.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, "RFC", are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
During the first six months of the year, GHM's turnover increased to €1.1 million from €0.5 million in the comparative period of 2007 mainly as a result of the sale of the super yacht berth. On the other hand, during the first half of 2007 no super yacht berth sales were recorded while in December last year three 75 metre berth licences were concluded for a total consideration of €10 million. Meanwhile, also during the first half of 2008, income from pontoon fees and other ancillary services increased by 21 per cent to €0.6 million. CNMI reported that GHM's pontoon berths are at 98 per cent occupancy and rates were increased by around 17 per cent during 2007 and by a further 5 per cent during 2008. Moreover, the company has a waiting list for pontoon rentals of circa 90 yachts. As a result, the marina configuration has been altered to temporarily convert some of the smaller super yacht berths in Xatt ir-Risq into pontoons to accommodate an additional 24 pontoons (20 berths are for 15 metres and four for 12 metre yachts). CNMI reported that these new pontoons were brought into use at the end of August and all the berths have been let in September.
CNMI also announced that the marina configuration of GHM is being reviewed to determine other ways of increasing the pontoon area as well as that dedicated to the super-yacht berths. This is being done in order to make optimal use of the area and maximise the value of the company's assets. The configuration of the super yachts berths along St Angelo Wharf is expected to create a further large berth which could eventually also be leased for a 25-year period. While the current waiting list for pontoons has instigated GHM to convert some of the smaller super-yacht berths in Xatt ir-Risq to an area dedicated for pontoons, the strong order book for new super yacht deliveries continues to indicate the potential in this area. In fact, CNMI also revealed in its recent 2008 interim report that "enquiry levels are strong, which combined with the increased prices, continues to support our confidence for the medium and long term". Despite the current difficult international economic environment, 900 super yachts are expected to be delivered in the coming four years, creating a further imbalance between the supply of berths and demand for additional berths providing further evidence of the potential for growth in rates.
GHM had leased one of its larger berths in 2006 for a total of €2.7 million (equivalent to €1,080 per square metre) while in last year three 75-metre berth leases were concluded for a total consideration of €10 million (equivalent to €2,222 per square metre). Although GHM experienced a surge in rates for super yacht berths, these are reportedly still well-below charges in some other marinas such as those in the south of France, Italy, the Balearics, Turkey and Greece.
The increase in rates achieved by GHM helped its valuation increase to €24.4 million as at June 30, up from €23.2 million in June last year and €24.1 million last December. This valuation was conducted by international property appraiser CB Richard Ellis as a fully operational business entity and in accordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Standards.
Apart from the operation of the marina in Vittoriosa, Grand Harbour Marina plc wish to expand their activities to other marinas in Malta and Gozo and on various occasions the company has indicated its willingness to participate in the eventual bidding process for the privatisation of the existing government-owned marinas in Msida and Mġarr. This was reiterated in the CNMI announcement last week. Although the government had initially indicated that the process will take place by the end of the year, it remains to be seen whether this timeframe will be met since the Privatisation Unit within the Ministry of Finance have yet to issue a request for expressions of interest as well as the relative bidding documents. It was recently suggested that the Government intends to offer the marinas on a 25-year lease. However, various players in the yachting industry including GHM's general manager argue that a 25-year lease is too short a time to make an adequate return due to the large investment required to update the current facilities of the Msida and Mġarr marinas presently managed by the Malta Maritime Authority.
Due to the shortage of pontoons, in recent years the government also indicated that it plans to set up new marinas in the Grand Harbour and Marsamxett and possibly also in St Paul's Bay, Marsascala and Gozo. In a recent article, GHM also mentioned the possibility of converting the Kalkara bay into a marina as part of the government's Grand Harbour regeneration plan.
The possible launch of new marinas and upgraded facilities to the marinas following privatisation could help portray the Maltese islands as a leading yachting destination and withstand the competition arising from other areas of the Mediterranean region.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, "RFC", are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Ltd.