Turkey’s Cesme Marina ‘a great investment’

Almost a year since its official inauguration Cesme Marina in Turkey is already reaping positive results and Cesme Village has generated revenue of around €1.2 million, Nick Maris, director of Grand Harbour Marina plc told The Sunday Times.

In March, Grand Harbour Marina acquired 45 per cent of the issued share capital of Cesme Marina. The purchase was funded out of the proceeds of the company’s 2010 bond issue, and furthers Grand Harbour Marina’s business of acquiring, operating and managing marinas with a focus on the Mediterranean basin, Mr Maris said.

“When fully operational, the marina’s establishments and berths should be generating over €4 million in revenues. Cesme Marina stands as a great investment for the company’s shareholders and bond holders and is well positioned to benefit from the fast growth that the Turkish market is experiencing.

“Turkey has been very successful with the significant steps it has made to expand its marine sector and to establish a good reputation as an important yachting destination and we are proud to see this investment reaping new value for our stakeholders,” he said.

Mr Maris, chief executive of Camper and Nicholsons, which owns Grand Harbour Marina, said Cesme Marina was awarded first prize in the multi-purpose category of the Arkitera Real Estate Awards 2011  organised by Arkitera Architecture Centre, the most prestigious architectural centre in Turkey. The theme of the awards was ‘Dialogue for Urban Quality’ aimed at honouring projects that contributed to the city, dwellers and investors.

“This already augurs very well for our newly acquired marina,” he emphasised.

Mr Maris described Cesme Marina’s acquisition as “low risk” as its development phase had been completed and it had successfully opened. As a result, there was no pre-development or development risk, both in terms of cost and time.

Asked how Grand Harbour Marina could be brought to a sustainable profit level even in the event of a lack of berth sales, Mr Maris said that the company’s EBITDA (earnings before interest, taxes, depreciation and amortisation) excluding berth sales showed a healthy progress.

“From a loss of €0.7 million in 2007 we saw a profit of €0.1 million in 2008, a €0.1 million profit in 2009 and a €0.3 million profit in 2010. We continue to strive to bring the company to a profit before tax level through tariff increases in line with our comparable competitors, increasing the occupancy of our super yacht berths and investing the remainder of the bond issue proceeds,” he said.

Mr Maris said the company was in the process of seeking planning permission to reconfigure the St Angelo wharf area currently designated as two by 100 metre berths.

“If successful this will increase the lettable water area significantly but we cannot be specific until the process is complete. We would only proceed with this reconfiguration on the back of committed sales in that area. Of course, if successful, this reconfiguration will surely leave a positive impact on GHM’s future financial performance.”

He said that in March one super yacht berth was sold for €400,000 and the company was following other sales opportunities.

Asked whether Grand Harbour Marina was delivering shareholder value, Mr Maris said this remained on top of the company’s agenda.

“In 2010 total revenue increased from €2,053,407 to €2,342,648, an increase of 14 per cent over the year ended December 31, 2009. This is attributable to tariff increases and higher occupancy levels attained during the year.

“We can also confirm that the first quarter of 2011 saw the continuation of a high level of occupancy throughout the marina. Berthing revenues for the first three months of this year amounted to €303,212 compared to €279,879 in the first three months of 2010. The board is cautiously optimistic that progress, while slow, will result in further positive outcomes,” he said.

Mr Maris said the company had also seen an increase in total assets to €17,297,983 at December 31, 2010 from €11,175,188 as at December 31, 2009.

“This is mainly related to the increase in cash and cash equivalents resulting from the proceeds of the bond issue. The increase in total liabilities to €13,432,539 at December 31, 2010, from €5,788,302 as at December 31, 2009, is the net result of the bond issue in 2010, and the early repayment of the bank loan.”

How is it that despite an increase in revenue in 2010 the company still made a pre-tax loss?

“Following the bond issue, net finance costs have increased by over €400,000 and this is the reason why the pre-tax loss increased in 2010 when compared to 2009. Excluding finance and acquisition costs, there was actually an improvement in Grand Harbour Marina’s financial performance (pre tax) of more than €150,000 in 2010.

“One may be tempted to ask why the board embarked on a bond issue and therefore incur significant finance costs, when the core business of GHM (the management of the Cottonera marina) was turning a profit?

“The principal object of the company is to carry out the construction, development, operations and management not only of GHM but also that of other marinas. Without raising the bond funds the company did not have the funds to meet this objective,” he said.