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Board Meeting Minutes May 2015

CalMac Ferries Limited

Minutes of the Board Meeting held in the Boardroom, Oban, at 9am on Tuesday 12 May 2015  


Present                          Mr D C McGibbon, Chairman

                                      Mr S Hagan    

                                      Ms P J D Stark

                                      Mr J Stirling

                                      Mr A V Tait

                                      Mr R L Drummond

                                      Mr M Dorchester

                                               

In attendance:               Mr A Collier, Operations Director

                                      Ms C Roberts, HR Director, David MacBrayne HR (UK) Ltd

                                      Mr B Fulton, Bid Team Service Delivery Lead

                                      Mr C Paterson, Board Administrator

____________________________________________________________________________________

 

1. PRELIMINARIES

 

Safety Moment

 

Mr Stirling commented that there was no Safety Card available at the Front Desk in the Oban Terminal building.

Action1: Mr Collier

 

Welcome

 

Mr McGibbon welcomed Mr Collier, Ms Roberts and Mr Fulton to the meeting.

           

1.1       Apologies for absence

 

Apologies were offered by Mr Easton and Mr Ure.

 

1.2       Declarations of interest

 

There were no further declarations of interest, other than those previously made and known to all Directors.

 

2. MINUTES/MATTERS ARISING

 

2.1       Minutes of previous meeting

 

5. PROGRESS FOCUS

     

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Subject to the foregoing amendment, the Minutes of the Board Meeting held on 4 March 2015 were approved.

     

      The Action points were noted to have been completed.

 

2.2       Matters arising

 

There were no matters to record.

 

3. CHAIRMAN'S REMARKS

Mr McGibbon referred to the David MacBrayne Board meeting with the Minister for Transport and Islands, Derek Mackay, MSP, on 22 April 2015. Mr Hadfield had indicated the meeting had been very constructive.

 

Mr Cannon had issued a brief to Mr Dorchester, noting that of the 56 newly elected SNP MPs, four were serving in areas of the Company's operations, namely Ronnie Cowan, MP for Inverclyde, Brendan O'Hara, MP for Argyll & Bute, Patricia Gibson, MP for North Ayrshire & Arran and Ian Blackford MP for Ross, Skye & Lochaber. Mr Dorchester would be writing to them in early course to congratulate them on their election.

 

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

The Board discussed the Network Meetings programme and the methods of feedback available to the Public.

 

The Board also discussed the current Pensions matter, noting interest by the First Minister, Nicola Sturgeon, MSP, the Cabinet Secretary for Infrastructure, Investment and Cities, Keith Brown, MSP, and the Minister for Transport and Islands, Derek Mackay, MSP. It was noted that the Minister had stated a specific date in November 2015, by which consultations had to be concluded.

 

Mr McGibbon noted that the 2nd Annual Scottish Transport Conference 2015 had been held at the Surgeons' Hall in Edinburgh, with the Company being one of the supporters, and that the keynote speaker had been the Minister. In addition, Mr Dorchester had given a presentation on 'Thought Leader - investing in people and places' as well as sitting on a discussion panel examining 'Transport in the Economy - opportunity and challenge.'

 

4. OPERATIONAL PERFORMANCE REVIEW

 

4.1 SAFETY AND MANAGING DIRECTOR'S REPORT

 

1. OPERATIONAL PERFORMANCE UPDATE

 

1.1 Safety and Environment Report

 

Mr Dorchester indicated that he would address the highlights of his report.

 

Mr Dorchester noted that there had been no events of note since the Safety Report made to the David MacBrayne Board.

 

Mr Dorchester noted that resumption of operations at Ullapool after the renewal of the linkspan may give rise to noise level objections.

The Board discussed the noise issue and the potential outcomes of further complaints.

 

1.2 Key Business issues

 

Mr Dorchester noted that the difficulties in achieving a full timetable over the Easter Period. The Minister, as well as Michael Russell, MSP, Mr Laidlaw, Mr Dorchester and Mr Collier met in Edinburgh to hold a video conference with the Islay Community to discuss the Easter service provision.

A number of challenges arising from the video conference resulted in Mr Dorchester, Mr Ure and      Mr Collier meeting with Mr Docherty of CMAL. Various issues around investment in vessels, wear and tear, revisiting budgets and collaborative working were discussed. Mr Dorchester noted that further work would be done on costs and that a report would be brought to the Board when available.

 

The Board discussed asset management and investment in vessels.

 

1.5 Technical

 

Mr Dorchester noted that the MV Clipper Ranger charter would complete at the end of this month and thanked Ms Roberts and the HR team for their efforts towards the crew wage issue.

 

Mr Dorchester noted that the 3rd Hybrid Vessel build programme appeared to be progressing satisfactorily.

The Board discussed potential routes for the 4th Hybrid Vessel.

 

2. STRATEGIC DEVELOPMENTS

 

 

Mr Dorchester noted that the Company was joining the Interferry shipping association. One of the benefits would be a clearer view of EU legislation, as other operators, such as StenaLine or DFDS, would not necessarily represent the same views of new legislation as held by the Company.

 

Mr Dorchester noted that the integration of ITSO and Smart ticketing was being piloted on the Cumbrae route and its development was part of the Titan Project.

 

Mr Dorchester referred to the updated version of the Drugs & Alcohol Policy.

Ms Roberts summarised the main updates which focused on bringing the permitted alcohol level into alignment with the current Scottish drink-drive limit. She also noted that the Policy was very specific about what "on duty" meant in relation to the consumption of alcohol.

 

The Board indicated that it would be grateful for a note summarising the changes to the Policy. Ms Roberts agreed to provide the note.

Action2: Ms Roberts

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

4. OTHER/INDUSTRY NEWS

 

Mr Dorchester noted that the French Government had been forced by the EU to put the ferry operator SNCM into liquidation. He noted that there would be care taken to identify any new clauses inserted into the CHFS2 Public Service Contract by Transport Scotland as a result of the EU determination.

 

Commenting on the position of a Norwegian ferry operator and its request to Government regarding the provision of an additional vessel due to increased volatility in weather patterns, Mr Dorchester noted that it may be an approach that the Company could consider.

 

The Board discussed the operation and viability of Community-owned ferries. It was recognised that there was huge financial risk as subsidies would not be payable. The Board also noted that communities required to understand the cost factors of operating a vessel and why a community ferry would not operate more cheaply, efficiently, or reliably than one of the Company's chartered vessels.

 

5. OUTLOOK

 

6. Infrastructure

 

Mr Dorchester noted that the value of quotes for a new building and improvements at Brodick had significantly increased. He also noted that Ardrossan, Colintraive and Uig needed significant upgrades but that Ardrossan, for example, was not scheduled to be invested in by Peel Ports Glasgow.

 

The Board discussed the issue of building new vessels but not upgrading route infrastructure.

 

The Board also discussed the service level of shipyards.

 

 

4.2 FINANCE REPORT

 

Mr Drummond presented his paper.

 

2.  Key Financial Numbers 12 months to 31/03/2015

 

Mr Drummond noted that the figures reflected spend on the CHFS Bid and included a slightly reduced subsidy draw-down due to underspend on Projects. Mr Drummond also set out other cost variations including fuel pricing and higher maintenance costs.

Mr Drummond also took the Board through the results analysis of the Company's divisions including Crewing (Guernsey), Support Services and Business Development.

 

3. CHFS Contract year 7 update

 

 

Mr Drummond noted that Transport Scotland had received a £1.2M clawback payment.

 

4. CHFS Contract year 8 update

 

Mr Drummond noted that an improvement in costs had arisen partly through the delayed service deployment of MV Loch Seaforth. Noting the fuel variance, he also expanded upon how fuel is accounted for in the Base Case.

 

PORTFOLIO

 

Mr Drummond presented his paper, noting that Mr Tait had attended the last Project Board meeting.

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Mr Drummond noted that delay to Project Valiant was due to two reasons; one being the pace of installation works by a sub-contracted telecoms provider and the other being the speed of contractual access being granted by CMAL. It was noted that both were being actively pursued to achieve progress. It was also noted the main contractor was experiencing some financial challenge due to the delay.

 

Mr Drummond noted that Project Infinity progress was affected by older software programmes currently being operated such as 'Open Accounts' and 'Open People'.

 

The Board discussed the progress of the Projects, noting the current position. Mr Drummond indicated that the Transformation Programme Key Messages page was an extract of a more detailed report which goes to the Project Board for review. It was suggested that an overview of Project Infinity would be helpful to the Board.

Noting the request, Mr Drummond confirmed that there was absolute focus on Projects' progress. Mr Dorchester noted the complexity of these large projects.

    Action3: Mr Drummond

 

5. PROGRESS FOCUS

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

6. ANY OTHER BUSINESS

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

6.2 PENSIONS UPDATE

 

Ms Roberts noted that the meeting held with the Unions on 6 May 2015 had been productive.

She reported that the Unions had issued a letter seeking a number of assurances and expecting a response by 5pm at today's date. Ms Roberts also noted that it would not be possible to give those assurances.

 

Ms Roberts noted that a meeting was to be held tomorrow between the First Minister, Nicola Sturgeon, MSP, with the Unions and a further meeting with the Minister, Derek Mackay, MSP, on Thursday. She noted that a consultation pack had been issued to help clarify matters.

 

The Board discussed the matter, noting the particular political input to the matter.

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

OTHER MATTERS

 

Meetings structure

 

Mr Dorchester asked the Board to discuss how meetings could be restructured.

 

The Board agreed that it should be able to focus on strategy, key themes and what can be achieved in the future. It was agreed that the Chairman and Non-executives would work on proposals for the Board to consider.

 

Informing the Shareholder

 

Mr Dorchester asked the Board to consider to what level the Minister should be informed about Board strategy.

 

The Board discussed the matter and agreed that an informal approach to the Minister should assist in determining his expectations of involvement.

 

 

7. APPENDICES 

 

The Board noted the appendices to the Managing Director's summary.

 

8. NEXT MEETING

 

To be held at Gourock on 19 August 2015.

 

 

 

 

.........................................

Chairman

 

CALMAC FERRIES LTD

 

BOARD MEETING ACTION POINTS

 

Meeting

Action No.

Responsibility

Topic

Action

12/05/15

1

AC

PRELIMINARIES

Safety card for front desk in Oban terminal building.

12/05/15

2

CR

STRATEGIC DEVELOPMENTS

To issue a note to the Board summarising the changes to the D&A Policy.

12/05/15

3

RLD

         PORTFOLIO

To provide the Board with a current overview of Project Infinity.

 

 

 

 

 

 

 

 

 

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