The development of innovative manufacturing activities and processes in MED Islands can improve their innovation capacities, the diversification of their economy, the qualifications of the jobs offered and has a multiplier effect on all economic activities, while it contributes to a more sustainable use of key natural resources, notably water and energy. However insularity, scarcity of some resources and the need for compatibility with existing activities are constraints for exploiting this potential. SMILIES proposes to apply the Trans-local Innovation System concept which links innovation and internationalisation policies to boost regional competitiveness to develop a governance model for MED islands industrial innovation development. SMILIES will organise focused actions in concrete cases on the field, from which sustainable policies for islands industrial innovation will be defined. The SMILIES workplan follows a 30- month phased schedule, including a pilot phase. Pilot projects profiles will be selected after a contextual analysis of 6 opportunity scenarios of use of industrial innovation (to benefit from Tourism, Retail, Agro or Building activities, global niche markets or poorly- served local needs). End results are context and impact analysis tools for setting priorities of MED-Islands industrial innovation regional policies and a sustainable infrastructure and tools to support innovation transfer to entrepreneurs in projects that fit such policies. Achievements: State of the art of project implementation since the project startSMILIES identified, at its start, for each type of island, innovative industrial activities which enhance or exploit existing activities (Tourism, Agriculture, Retail, Building and Construction) and valorize local resources, R&D and innovation potential. For this 67 best practices, 6 scenarios and a set of local studies and impact studies have been produced. This documentation was used to launch, in a 2nd phase, a call for Expressions of Interest. This call received 131 proposals out of which 99 have been selected. From September 2010 to January 2012 the selected pilots have been coached. At the end, prize awards were given to the best performing ones. Out of the pilot experiences a rich set of policy briefings has been produced, published in the form of leaflets and of a final brochure and publicized through a rich set of events, including two week-ends devoted to the promotion and the facilitation of international networking of the prized pilots in Sicily, Crete and Athens.Latest project activities and outputsThis reporting period was devoted to the completion of pilot activities and their reporting, the selection and prize awards to the best pilots, the organization of a series of communication events, the final publications and the production of the final evaluation reports out of which different policy briefings and policy recommendations have been deduced. The partnership met three times: in Palermo on November 21st and 22nd, 2011 for a Technical Meeting and a Steering Committee, in Larnaca on February 13th and 14th for selecting the pilots to be prized and for assisting to a National Conference and in Rethymno on March 19th and 20th to assist at the Final Conference and to a Final Technical Meeting and Steering Committee. SMILIES has also participated actively to the Capitalisation activities organized within MED through different contributions and by assisting to the MED Capitalisation event, organized on December 1st, in Marseille.Next key steps for the projectThe project is now finished. The partners intend however to pursue activities to exploit SMILIES conclusions within EEN and INSULEUR Networks and trough exchanges within CPRM, especially during the EU presidency by Cyprus, but also with other partners of other MED projects within the framework of the Capitalisation Activities organized by MED Programme.