The David MacBrayne Group, which comprises the operators of both the Clyde & Hebrides and Northern Isles ferry services, has emerged from a year of considerable change, which has resulted in one of the most significant periods in the history of Scottish ferry services, according to the Group’s Chairman Peter Timms.

Writing in his statement in the first Annual Report of the Group, covering the period to March 2007, which was laid before the Scottish Parliament today (Thursday, 29 November 2007), Peter Timms states: “Throughout this challenging period of constant change, the Group continues to build on its strengths, focussing on maintaining and improving safety, comfort and the quality of our services, whilst controlling costs in order to provide best value for customers and the taxpayer. I look forward to the challenges which lie ahead with great confidence.”

Corporate restructuring in July and October 2006 brought into a single entity the companies that provide ferry services to the Clyde & Hebrides, together with those to the Northern Isles. In July 2006, operation of the Northern Isles ferry services was transferred to NorthLink Ferries Ltd. from the predecessor operator, NorthLink Orkney & Shetland Ferries Ltd. In October 2006, ownership of the Clyde & Hebrides vessel and harbour assets was separated from the associated ferry operations and the operations were transferred to a new operating company within the David MacBrayne Group, CalMac Ferries Ltd. Caledonian MacBrayne Ltd. retained ownership of these vessel and harbour assets and was renamed Caledonian Maritime Assets Ltd. (CMAL); CMAL and the David MacBrayne Group are independently owned by Scottish Ministers.

As a direct result of corporate restructuring, the Group financial information throughout the Annual Report relates to the period from commencement of trading of the main operating companies, CFL and NorthLink Ferries Ltd. (NFL), and, accordingly, no Group comparative figures are provided.

The purpose of the restructure was to ensure that the vessel and harbour assets remained in public ownership whichever operator won the public tender process.

Peter Timms also states: “I am delighted to report that CalMac Ferries Ltd. (CFL) has been awarded the Public Service Contract to operate the Clyde & Hebrides ferry services from 1 October 2007 until 30 September 2013. In the period to 31 March 2007, the Group recorded a profit before tax for the period of £2.1m. Group revenue from fares and other income, at £33.1m, and Group operating costs, at £83.4m, were in line with expectations. CFL took over interim operation of the Clyde & Hebrides ferry services on 1st October 2006. Traffic carryings for the period were in line with expectations, despite prolonged severe winter weather conditions. CFL also met all of the performance targets set by the then Scottish Executive with respect to service reliability and punctuality, as well as the relationship between fares income and operating costs. NorthLink Ferries Ltd took over operation of the Northern Isles services on 6th July 2006 after its bid won the tender for these services, and it has performed well both financially and operationally. Carryings for the period to 31 March 2007 were in line with expectations.”

The Annual Report and financial statements detail improvements carried out on behalf of CMAL in terms of infrastructure and new tonnage during the period.

Following corporate restructure, CFL and its subsidiaries are participating employers in the CalMac Pension Fund, which is operated by CMAL. Peter Timms explains: “Under these new arrangements, the pension rights of both current and past employees have been protected and CMAL is responsible for ensuring, on the basis of advice from the Trustees following approval by the pensions regulator, that past deficits will be properly funded. Liability for annual payments for past deficits in the Merchant Navy pension funds has also remained with CMAL. NorthLink Ferries Ltd contributes to a defined contribution pension scheme.”

The Annual Reports of both the David MacBrayne Group and its main operating subsidiaries are available on the CalMac Ferries website (www.calmac.co.uk).

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Background note: Until 1 October 2006, Caledonian MacBrayne Ltd provided the majority of Clyde and Hebrides ferry services and owned the associated vessels and a number of the harbour facilities. That company was wholly owned by Scottish Ministers. These services required an annual revenue deficit grant from the Scottish Executive to maintain lifeline service levels.

In order to comply with European guidelines on State Aids in Maritime Transport, an open public tender was deemed necessary in respect of these ferry services. The then Scottish Executive tendered the Clyde and Hebrides Ferry Services (CHFS) as a single bundle, with the exception of the Gourock-Dunoon service.

In recognition of the uniqueness of the fleet and in order to ensure a level playing field for all bidders on 1 October 2006 Caledonian MacBrayne Ltd was split into an asset-owning company, Caledonian Maritime Assets Ltd (CMAL), and a new operating company, CalMac Ferries Ltd (CFL). This was done by Caledonian MacBrayne Ltd transferring its operations (but not its assets) to CFL. Caledonian MacBrayne Ltd, now CMAL continues to own all vessels and land-based assets (ports, harbours, etc) and makes them available to an Operator through an open tendering process. From 01 October 2007 CalMac Ferries Limited continues to operate the services having won the tendering process with their bid. Under the terms of the tender CFL is bound to use the vessels of CMAL.

Caledonian Maritime Assets Limited, like CalMac Ferries Ltd and the predecessor to them both, Caledonian MacBrayne Ltd, is a publicly owned company with Scottish Ministers as the sole shareholder. The Caledonian Maritime Assets Limited Board has appointed an executive management team and supporting staff at its headquarters is in Port Glasgow.

NorthLink Ferries Ltd. took over operation of the Northern Isles ferry services from the predecessor operator, NorthLink Orkney & Shetland Ferries Ltd, on 6 July 2006.

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For further information on the contents of this News Release, please contact Hugh Dan MacLennan, Communications Director, Caledonian MacBrayne. Tel: 0776 435 4021; e-mail hugh.maclennan@calmac.co.uk. Caledonian MacBrayne and CalMac are trading names of CalMac Ferries Limited. Issued: Thursday, 29 November 2007 : 1600.