Unique year for Orkney Ferries scrutinised by Councillors

The last financial year was a unique one for Orkney Ferries, councillors at today's (9 November) Development and Infrastructure Committee (D&I) heard.

Councillors were scrutinising revenue budget and management accounting information for the company for the 2020/21 financial year.

Following a recent recommendation from Audit Scotland, it was the first such time the Council's D&I committee has been presented with this detailed annual report.

The 2020-21 financial year saw Orkney Ferries Ltd operational performance affected by COVID-19 social distancing restrictions - passenger numbers were down by 51.5% on the 2019-20 financial year – and vehicle numbers decreased by 29.7%.

However, the total operating costs were 8.4% lower than the previous financial year and 10.5% below budget in 2020/21:

• Fuel costs were 43.5% lower than the previous financial year and 47.8% below budget in 2020/21 due to fuel price fluctuations and fewer sailings due to covid restrictions.
• Refit and repair costs were 11.3% lower than the previous financial year and 1.1% below budget for 2020/21, due to amendments to the refit timetable.

Also in the 2020-21 financial year, further Scottish Government funding enabled the company to introduce a fare cut to 38% of previous prices from July this year, and provide Sunday sailings all year round (ie in winter as well as summer).

Chair of the Committee, Councillor Graham Sinclair, said: "Detailed information on Orkney Ferries' financial and operation performance is reported monthly to the Board of Orkney Ferries - which five OIC Councillors sit on.

"However we of course welcome the additional assurance that scrutiny of the company’s annual monitoring report by a committee of the Council, as recommended by Audit Scotland, will offer elected members and the wider community that the Council subsidy is being well spent.

"The level of operational and financial information does mean that this report had to be presented in private today - as is required by law when the Council is considering the business affairs of any third party.”

Committee member Councillor David Dawson is also Chair of the Orkney Ferries Board - he praised the staff at Orkney Ferries for their efforts during the period reported: “I would commend staff, both seagoing and the Shore Street office-based staff who had a very challenging year dealing with ever changing covid restrictions and all the uncertainty that brought to operations and to their dealings with customers. Their perseverance and professionalism under such conditions is admirable and very much appreciated by the Board and I hope by the general public.

“I would also thank the senior officers at both Orkney Ferries and OIC and Leader James Stockan for their continued liaison with Scottish Government with regards to fair funding for our services and for our ageing fleet.”

Orkney Ferries Limited is a self-accounting Arm’s Length External Organisation (ALEO), with its own accounting system operated from its Shore Street Office.

The Council owns 100% of the shares in Orkney Ferries Limited, with all five seats on the Board occupied by Elected Members.

Budget monitoring reports are presented to the regular Board meetings of Orkney Ferries Limited and are subject to scrutiny by the directors. The annual accounts are also presented to the Board of Orkney Ferries for approval before being adopted at the Annual General Meeting of the Company.

Orkney Ferries Annual Accounts are available from their website www.orkneyferries.co.uk

Notes:

In the Annual Report on the 2019/20 audit by Audit Scotland, a recommendation was made that 'following the public pound' arrangements for Orkney Ferries should include an annual review of the financial position. Audit Scotland recommended that Orkney Ferries Limited’s performance be reported to the Council on an annual basis.