THE PORT

ANNUAL REPORT 2014

THE PORT

THE ENGINE OF THE LOGISTICS CHAIN

TABLE OF CONTENTS Message from the Chairman of the Board of Directors and the President and Chief Executive Officer Summary of Traffic Handled in 2014 Summary by Sector

4 7 9

Year in Review - Port Facilities 10 - Development Projects 12 - Technological Advances 14 - Reaching Out to the World 16 -S ustainable Development: Community18 -S ustainable Development: Environment20 Human Resources 22 Management Committee 24 Board of Directors 25 Condensed Financial Results 26 The Logistics Chain: A Team Effort 30

THE PORT: THE ENGINE OF THE TRANSPORTATION LOGISTICS CHAIN

The Port of Montreal is at the heart of the transportation logistics chain. It welcomes more than 2,000 ships annually, up to 2,500 trucks per day, and 60 to 80 trains per week. Some $41 billion worth of goods move through the Port annually. Port activity represents $2.1 billion in added value to the Canadian economy and creates 16,000 direct and indirect jobs. MISSION: We are a North American ocean port at the heart of the continent and a hub for international trade that contributes to the well-being of our clients and partners and to the economic development of Greater Montreal, Quebec and Canada while respecting the environment. VISION: To be an efficient and innovative port that provides leadership and offers competitive value-added services, making it a partner of choice in the logistics chain. VALUES: Commitment: We strive for and value passion and employee excellence in order to create the best experience possible for our clients. Innovation: We constantly reinvent the way in which we do business and encourage agility in order to demonstrate our leadership in the industry. Responsibility: The Montreal Port Authority (MPA) is a sustainable organization that places great importance on the environment, on its neighbouring communities and on its contribution to the economy, and acts in accordance with rules of conduct dictated by honesty, transparency and accountability.

The MPA is an autonomous federal agency that must be financially self-sufficient. The MPA builds and maintains infrastructures that it leases to private stevedoring companies. › SUMMARY OF FINANCIAL RESULTS (in thousands of $) REVENUE FROM OPERATIONS EXPENSES Operating earnings before the following items Other items NET EARNINGS

2014 94,079 81,232 12,847 1,687 14,534

2013 87,357 81,691 5,666 (1,464) 4,202

Port of Montreal – Annual Report 2014 3

MESSAGE

FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

The Port of Montreal has long been the main hub for trade between Europe and North America. Today, its markets continue to become more and more diversified. Partnerships with terminal operators and shipping lines that link the Port to more than 140 countries and rail and road connections in North America make the Port of Montreal the engine of a major international transportation logistics chain. In 2014, increased activity and the completion of numerous projects confirmed and reinforced the Port’s essential role in this logistics chain. We handled more traffic and our financial results improved in 2014. The volume of total traffic moving through the Port increased by an impressive 8.1%, allowing us to break the 30-million-tonne mark for the very first time! Our development projects also continued to progress. For example, port partner CanEst Transit officially inaugurated its new terminal in 2014. CanEst not only handles and stores but also cleans and containerizes agricultural products. This service will help increase the volume of traffic moving through the Port. Moreover, it fits perfectly with our “Port +” strategy, a commitment to provide value-added services to port users and attract new clients.

4 Annual Report 2014 – Port of Montreal

Thanks to the redevelopment of land in the Viau and Maisonneuve sectors in 2014 for an additional 200,000 TEUs (20-foot equivalent unit containers), we are preparing ourselves to handle the increase in container traffic that is expected internationally over the next several years. A restoration project for Alexandra Pier and the Iberville Passenger Terminal also was unveiled in 2014. This project is subject to the completion of its financing structure. The City of Montreal already has shown its interest by guaranteeing a financial contribution of $15 million. The entire project is valued at $78 million. The MPA thanks the City of Montreal for its participation. Our objective is to give Montrealers and visitors a new terminal in 2017 to coincide with the City of Montreal’s 375th anniversary. Port development will continue in 2015 thanks in great part to an investment of $43.7 million from the Government of Canada, through the National Infrastructure Component of the New Building Canada Fund, to support major improvement projects at the Port of Montreal. The MPA would like to thank the federal government for its contribution. These works will improve road and maritime accesses at the Port and increase handling capacity, in particular for a future container terminal in the Viau sector. This terminal will have a handling capacity of

600,000 TEUs. Termont will operate the facility, which is expected to begin operations in autumn 2016. The Port will reach its maximum handling capacity on its Island of Montreal territory with this development. Each square metre will have been developed to its fullest thanks to the creative genius of the Port team. Our following phase of expansion will be at Contrecœur, where the Port already has begun preparations to develop land that it owns there.

SYLVIE VACHON President and Chief Executive Officer

MICHEL M. LESSARD Chairman of the Board of Directors

The concerted efforts of all of our operators, in addition to the quality of our facilities and equipment, have built the Port of Montreal’s enviable reputation as a fast, fluid and efficient intermodal hub. One word best describes our strength: collaboration. The Port of Montreal and its partners are interdependent. They are closely linked together and united around common objectives. The Port is the key link in this major transportation logistics chain. We would like to thank all of these partners with whom we have developed our business intelligence and a winning collaborative spirit. We also thank all MPA employees for their dedication and professionalism. The Port of Montreal has an excellent reputation on the world stage and is renowned for its efficiency because of their great efforts. Thank you to one and all! Port of Montreal – Annual Report 2014 5

12.6 MT

OF CONTAINERIZED CARGO

8.6 MT OF DRY BULK

30.4 MT OF TOTAL CARGO

9.2 MT

OF LIQUID BULK

71,044

PASSENGERS AND CREW MEMBERS WELCOMED

SUMMARY OF TRAFFIC HANDLED IN

2014

In 2014, the volume of traffic moving through the Port of Montreal surpassed the 30-million-tonne mark, a new all-time record for the Port. Traffic increased by an impressive 8.1% over the previous year. These results are more than satisfying considering the slow and modest global economic recovery. MAJOR SHIPPING LINES Major global shipping lines serve the Port of Montreal: Canada States Africa Line, CMA CGM, Federal Atlantic Lakes Line, Hapag-Lloyd, Maersk Line, MSC, Nirint Shipping and OOCL. Many Canadian shipping lines also serve the Port of Montreal: Algoma, Canada Steamship Lines, Canfornav, Fednav International, CTMA Group, Oceanex, Petro-nav, Rigel Shipping Canada and Transport Desgagnés.

› PORT OF MONTREAL TRAFFIC RESULTS (in thousands of metric tons) GENERAL CARGO Containerized Non-containerized TOTAL LIQUID BULK Petroleum products Other TOTAL DRY BULK Grain Other TOTAL TOTAL TONNAGE

2014

2013

VARIATION %

12,575 191 12,766

11,896 160 12,056

5.7 19.5 5.9

8,516 731 9,247

8,862 688 9,550

(3.9) 6.3 (3.2)

4,076 4,357 8,433 30,446

2,638 3,913 6,551 28,157

54.5 11.4 28.7 8.1

71,044

69,966

1.5

› CRUISE TRAFFIC (number of visitors) PASSENGERS AND CREW


CONTAINER MARKETS NORTHERN EUROPE MEDITERRANEAN ASIA MIDDLE EAST LATIN AMERICA AFRICA / OCEANIA CANADA

DRY BULK PRODUCTS 44% 20% 15% 8% 6% 4% 3%

DIESEL OIL JET FUEL OTHER

RAW SUGAR FERTILIZER SCRAP METAL GYPSUM

CRUISE TRAFFIC 49% 23% 9% 6% 13%

The leading liquid bulk product handled is gasoline at 48.7%. 8 Annual Report 2014 – Port of Montreal

SALT

48% 27% 8% 6% 3% 2% 1% 5%

Grain traffic increased by 54.5%, representing the strongest growth among all products handled in 2014.

LIQUID BULK PRODUCTS FUEL OIL

IRON ORE

OTHER

One of every four containers handled in Canada moves through the Port of Montreal.

GASOLINE

GRAIN

INTERNATIONAL PASSENGERS CREW MEMBERS DOMESTIC PASSENGERS

71% 20% 9%

The Port welcomed more cruise passengers in 2014 thanks in great part to the efforts of the Montreal Cruise Committee.

SUMMARY BY SECTOR

CONTAINERIZED CARGO Containerized cargo traffic increased by 5.7% to reach 12.6 million tonnes, or 1.4 million TEUs (20-foot equivalent unit containers). This increase had a significant impact on traffic results, as containerized cargo represents 41% of total traffic moving through the Port. This also is the freight transportation mode with the greatest potential for growth in the future.

DRY BULK The dry bulk sector recorded the greatest traffic volume increase in 2014, up 28.7% to reach 8.4 million tonnes. Grain traffic alone increased by 54.5%, representing the strongest growth among all products handled in 2014. The excellent harvest of 2013 in the Canadian Prairies and congestion at West Coast ports are among the reasons for this growth.

The 2014 results show that the markets served by the Port continue to diversify. In 2014, Asia gained 12.2% over 2013 and now accounts for 15% of the Port of Montreal’s market. It is the region that registered the largest gain compared with 2013. Northern Europe (+ 0.3%) was next, remaining the Port’s leading market in the containerized cargo sector.

Grain accounts for 48% of the volume of dry bulk traffic handled at the Port of Montreal, followed by iron ore at 27%. Iron ore traffic increased by 21.8% in 2014 due in large part to new production lines launched in July 2013. This iron ore was handled at Logistec facilities in Contrecœur.

The percentage of containers moving through the Port that are transshipped remained relatively the same in 2014 as in the previous year, at about 27.7%. Meanwhile, the Port’s inland container markets have evolved. The number of containers moving to or from Quebec increased by 7.1% in 2014 compared with the previous year. The number of containers moving to or from the rest of Canada, and to or from the U.S. Midwest, increased by 5.4% and 6%, respectively, in 2014. The main containerized cargo goods are foodstuffs, forest products, grains, metal products, construction materials, iron and steel products, vehicles and accessories, and chemical products.

NON-CONTAINERIZED CARGO Non-containerized cargo, which accounts for only a very small amount of total traffic at the Port of Montreal, increased by 19.5% to reach 190,740 tonnes. Cargo in this category includes vehicles, oversized cargo such as wind-turbine blades and railway tracks, and metals such as copper anodes, etc.

The other main dry bulk products are salt and raw sugar, up 7.2% and 9.3%, respectively.

LIQUID BULK Liquid bulk traffic decreased by 3.2% to total 9.2 million tonnes in 2014. Significant changes to the regional petroleum industry logistics chain affected traffic volumes in 2014. The decrease is also explained by the fact that petroleum companies conducted major maintenance shutdowns in 2013, resulting in a temporary increase in the amount of oil transported by ship through the Port that year. The main liquid bulk products handled at the Port of Montreal are gasoline (48.7%), fuel oil (22.6%), diesel oil (9.1%) and jet fuel (6.4%).

CRUISES The Port of Montreal also enjoyed a strong year in the cruise sector, welcoming 50,093 international passengers. Including domestic cruise passengers and crew members, the Port welcomed a record 71,044 visitors in 2014, up 1.5% over the previous season.


YEAR IN REVIEW

PORT FACILITIES The Montreal Port Authority (MPA) maintains its infrastructure to the highest standard in order to provide its tenants with first-rate facilities. It invested a total of $27 million in its facilities in 2014. Most of these investments were made to increase handling capacity and improve the quality of facilities.

VIAU AND MAISONNEUVE SECTORS The MPA completed in 2014 the first phase of redevelopment projects at the Port’s Viau and Maisonneuve sectors. These projects have added space for another 200,000 TEUs (20-foot equivalent unit containers) on port territory and increased container-handling capacity by 13% to 1.7 million TEUs from 1.5 million TEUs. Transport Canada contributed $15.1 million to the projects. The total cost of the work amounted to almost $40 million. At the Maisonneuve sector, space to handle an additional 50,000 TEUs was developed at the site. The MPA also built a new longshoremen’s hall and a new parking area and maintenance workshop for equipment and vehicles used by longshoremen. Capacity at the 16.5-hectare Viau sector site stands at 150,000 TEUs following the redevelopment of land there. Railway tracks were relocated, energy-efficient LED lighting was installed, and sewer and water systems and the underground electrical network were restructured in order to fully optimize operations at the site. A highly innovative soil recovery and reuse project that employed a soil encapsulation technique allowed the MPA to reuse 44,000 tonnes of poor load-bearing capacity soil that had been extracted at the site. The


TOTAL CONTAINERHANDLING CAPACITY WILL REACH

2.1 MILLION TEUs

extracted soil was mixed with cement to increase solidity and then re-deposited at the bottom of excavated areas. In June 2014, the Association québécoise du transport (Quebec Transport Association) awarded a Grand Prize for Excellence in Transportation, Environment Category, to engineering firm SNC-Lavalin, which partnered with the MPA on the soil reinforcement project. In January 2015, the Government of Canada announced a major investment in a project to further increase container-handling capacity in the Viau sector, deepen berths and improve truck traffic flow in and around the Port. The Port of Montreal will receive up to $43.7 million through the National Infrastructure Component of the New Building Canada Fund for these upgrades. The MPA thanks the federal government for its contribution. The MPA will be responsible for the remaining cost of the project. The total cost of the project is estimated at $132 million. The Viau sector’s total handling capacity, including the work previously carried out in the area, will eventually reach 600,000 TEUs, increasing the Port’s total container-handling capacity to 2.1 million TEUs from the current 1.7 million TEUs. The Viau sector component of the project will cost $83 million.

LOGISTEC AND THE PORT HAVE JOINED FORCES TO

SECTION 102 HAS BEEN ENHANCED WITH THE INSTALLATION OF TWO DOLPHINS, FOLLOWING AN

IMPROVE THE EFFICIENCY OF FACILITIES AT CONTRECŒUR

AGREEMENT WITH VALERO

PETROLEUM PRODUCTS SECTOR Following an agreement that it concluded with Valero Energy, the MPA restored berths at Sections 101 and 102 and carried out work at Berths 105 and 106. It also extended the length of the berth at Section 102 so that it can accommodate tankers that will transport to Valero’s refinery in Lévis, oil sourced in North America and moved via pipeline to Montreal. At Section 102 specifically, the MPA solidified the retention structure and redid the concrete above and below the water in order to restore the berth. The MPA extended the length of the berth by 40 metres by installing two dolphins. A dolphin is a fixed man-made structure that is not connected to shore. It typically consists of a number of piles that are anchored into the seabed and joined above the water to create a single structure. For this project, the MPA sank the piles to the riverbed and then used a drilling technique that is quieter than the traditional technique that drives the piles into the riverbed with a heavy weight. The Port of Montreal monitored noise levels during the construction period. However, because it drilled the piles into place rather than drive them down, there was no disturbing noise for nearby residents or aquatic life.

NEW EQUIPMENT AT CONTRECŒUR In 2014, Logistec Stevedoring Inc., which operates the Port of Montreal’s multipurpose terminal at Contrecœur, completed three years’ worth of investments at the facility totalling $12 million. Logistec has installed a new rail-mounted hopper and a Liebherr crane with a capacity of 120 tonnes in lift mode and 75 tonnes in grab mode – the largest SWL (safe working load) capacity in North America for a rail-mounted crane. Logistec also installed new tracks and an electrical supply and distribution system to meet the crane and hopper’s modern designs and to make the terminal more energy efficient. Logistec also covered fixed conveyors that link the berth to the Yara Canada terminal. The new equipment allows Logistec to move larger volumes of bulk cargo and work with a more diversified cargo base. In addition to bulk cargo, the terminal has enhanced its ability to handle breakbulk, project and heavy-lift cargo. For its part, the MPA has invested $2 million in its Contrecœur facilities over the past three years to rebuild a handling area, renovate a gangway and reconstruct aqueducts and storm sewers in order to provide high-quality infrastructures. Port of Montreal – Annual Report 2014 11

YEAR IN REVIEW

DEVELOPMENT PROJECTS THE CANEST TRANSIT PROJECT FITS PERFECTLY WITHIN THE

MPA’S PORT+ STRATEGY

NEW CANEST TRANSIT GRAIN CONTAINERIZATION FACILITY On October 20, 2014, CanEst Transit officially inaugurated its new terminal that specializes in the cleaning and containerization of agricultural products. Completely renovated, the building features 91 silos with a total capacity of 68,000 tonnes to store and transship agricultural products. These products are then cleaned and placed in containers destined for local and international markets. With its cutting-edge technology, CanEst Transit can fill eight containers per hour. Converting the Port’s former Grain Elevator No. 3 annex into a containerization operation for agricultural products created about 100 direct jobs during the construction period. The CanEst Transit project fits perfectly within the MPA’s “Port+” strategy, a commitment by the Port to develop and provide value-added services that allow for a diversification of activities on the Port while providing the shipping lines that serve Montreal with additional freight volume. CanEst Transit is a joint venture among La Coop fédérée, Transit BD and MGT Holdings. The company signed a long-term lease with the MPA in 2013 to operate out of the former Grain Elevator No. 3 annex. The MPA invested $4 million in the project to improve the building and road and rail access. CanEst Transit invested $20 million in the facility, primarily for the purchase of modern equipment to handle and load agricultural products.

COST OF THE ALEXANDRAIBERVILLE PROJECT:

$78 M

RESTORATION OF ALEXANDRA PIER AND IBERVILLE PASSENGER TERMINAL The MPA unveiled in 2014 a plan for an extensive restoration of Alexandra Pier and the Iberville Passenger Terminal. The MPA held about 20 meetings during the year with key partners in the economic, tourism and political sectors, as well as with stakeholders committed to Montreal’s development, to discuss the restoration project. MPA officials also presented the project at open houses that were held over a three-day period at the beginning of December. About 100 people met at the site of the current passenger terminal for the public information and exchange process. MPA officials gathered input and listened to comments from citizens and answered their questions. Construction of Alexandra Pier was completed in 1901. Iberville Passenger Terminal was inaugurated for the Montreal Universal and International Exposition of 1967, or Expo 67. The new project would restore the existing infrastructure and contribute to better integrating the pier and the terminal into the urban fabric of Old Montreal while offering water access to one and all. It will breathe new life into the reception facilities that greet cruise passengers who sail into Montreal, providing a welcome that is on par with the city’s international reputation. The project will feature a world-class passenger terminal, a green roof that can be accessed at all times, public spaces, an interactive port interpretation centre, a redesigned parking area, a lowered pier facilitating water access, and an observation tower that will become an attractive element for cruise development. The future Alexandra Pier will be an exceptionally welcoming site and allow visitors to feel a sense of pride in the Port.

CONTRECŒUR The MPA continued its planning work in 2014 for a container terminal on land that it owns in Contrecœur, located some 40 kilometres east of Montreal. This project, which is part of the MPA’s long-term expansion plan, calls for the development of a 1.15-million TEU container terminal. The Port initiated in spring 2014 a voluntary preconsultation exercise with its stakeholders, including business partners, public authorities, local communities and interest groups. Some 40 municipal, environmental, government and transportation stakeholders participated in a series of meetings. In keeping with its commitment to carry out this project in a spirit of communication, openness and transparency, the Port held an open house and information evening on December 1, 2014, for residents of the nearby municipalities of Contrecœur and Verchères. More than 200 people attended and were able to share their impressions and any concerns with MPA officials. This ongoing pre-consultation and information process is an essential condition to the success of the project and the attainment of benefits for the community at large. This process is occurring in advance of consultations to be carried out by the regulatory authorities responsible for issuing permits for the project. All of the winning conditions, including continued growth of the container market and positive impacts from the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), must be met before the terminal is developed.

The restoration project is valued at $78 million. The MPA is working to complete the project’s financing structure, a pre-commencement condition. The MPA also thanks the City of Montreal, which already has indicated its support for the project in the form of a $15-million contribution announced in its three-year capital works program for 2015-2017. Port of Montreal – Annual Report 2014 13

YEAR IN REVIEW

TECHNOLOGICAL ADVANCES

COLLABORATION

PORT+

CANADIAN COAST GUARD + HYDROGRAPHIC SERVICE

WE ARE OPTIMIZING THE USE OF THE WATER COLUMN

ELECTRONIC NAVIGATION The MPA continued its collaboration in 2014 with the Canadian Coast Guard and the Canadian Hydrographic Service in the transition toward electronic navigation. The partners continued with testing to evaluate a dynamic under keel clearance management system that would further optimize the use of the St. Lawrence River shipping channel. This web-based technology uses accurate vessel information and hydrodynamic modelling combined with bathymetry and environmental data to measure in real time a vessel’s under keel clearance. The implementation of this system on the St. Lawrence River will allow vessel operators to optimize the use of the water column in the channel in order to better plan the safe, efficient and cost-effective passage of their ships numerous days before arriving in the Port of Montreal. The federal government contributed $500,000 toward this project.


WE ARE INSPECTING

UNDERWATER SECTIONS IN TWO DAYS

NEW MULTIBEAM ECHO SOUNDER The MPA continued to play a leadership role in 2014 in the promotion of new technologies that are used to inspect the underwater sections of the Port. A new multibeam echo sounder imaging technique provides an extremely accurate picture of submerged portions of berth walls and the riverbed floor. This technology allows for more efficient planning of any work that needs to be carried out in port waters. Moreover, with this new method, the entire underwater section of the Port can be inspected in only two days. This is a much faster and more precise method than traditional methods that used a team of divers and a tug and barge, and required the equivalent of several years’ worth of work.

WE ARE SHARING ON A UNIQUE NETWORK

INFORMATION MOBILITY PROJECT The MPA completed in 2014 its new Information Mobility project that centralizes applications and information used every day by various Port of Montreal teams: the Engineering Department, the Infrastructure Management team, and those responsible for Safety and Fire Prevention.

TRANSPARENT AND

INTEGRATED APPROACH TO INFORMATION

These employees, no matter where they are working on port territory, now have direct access to the mobility configuration of their own department as soon as they open their tablet. They also have access, as required, to certain sections of information belonging to other departments, and are able to exchange information with their colleagues. This integrated and transparent approach facilitates information sharing among different departments where information overlaps. This new tool reduces the amount of travel on port territory for employees and allows personnel to more quickly respond in emergency situations. It also allows the MPA to document events involving employees at port facilities. Port of Montreal – Annual Report 2014 15

YEAR IN REVIEW

REACHING OUT TO THE WORLD

IABC

MERIT AWARD

SPECIAL EVENTS CATEGORY

RIVAGES DU MONDE CHOOSES

montreal AS HOME PORT FOR ITS CRUISE SHIP M/V SAINT-LAURENT PRESTIGE FOR THE ENTIRE 2015 SEASON

AAPA

AWARD OF DISTINCTION

SPECIAL EVENTS CATEGORY

The Port of Montreal relayed its message in various ways it 2014. It launched a B2B (business-to-business) platform for shipping lines and freight forwarders so that they can immediately find necessary information and contacts in order to do business with the Port. This platform is part of a rebranding campaign that promotes the Port’s advantages for “Trading with the World.” The campaign includes a dynamic, straight-to-the-point video presentation of the Port of Montreal, available on the Port website. The MPA launched its first mobile application during the 175th Gold-Headed Presentation Ceremony held at the beginning of 2014. Last autumn, the Port strengthened its presence on social media and now has an active presence on Twitter, Instagram, YouTube and LinkedIn. The Port of Montreal also won several awards in 2014. Sylvie Vachon, President and CEO of the Port, received the St. Lawrence Award from the St. Lawrence Economic 16 Annual Report 2014 – Port of Montreal

Development Council (SODES) in recognition of her contributions to the maritime industry. The 175th Gold-Headed Cane Presentation Ceremony won two awards for the high quality of design and execution of the event: an Award of Distinction, Special Events category, from the American Association of Port Authorities (AAPA), and a Merit Award, Special Events, from the International Association of Business Communicators (IABC). Claude Beaubien, Chief Engineer in the Port’s Infrastructure Management Department, won the Award of Merit from the Cement Association of Canada (CAC) for the soil encapsulation technique that was used in the redevelopment of the Viau sector into a container-handling site. The Port’s Logbook e-zine won an AAPA Award of Distinction in the Periodicals category. The Association québécoise des transports (AQTr) (Quebec Transport Association) awarded a Grand Prize for Excellence

in Transportation, Environment Category, to engineering firm SNC-Lavalin for a contaminated soil recovery project, carried out as part of the Port of Montreal’s redevelopment of the Viau sector. Several appointments also helped promote the Port: Daniel Dagenais, Vice-President of Operations, was appointed a Director of the Board of the AQTr. Tony Boemi, Vice-President of Growth and Development, was named President of Cruise the Saint Lawrence. Serge Auclair, Vice-President, Strategy and Human Resources, was appointed a Director of the Board of the Human Resources Sectorial Committee of the Marine Industry. Robert Sauvé, Director of Infrastructure Management, was elected President of the Ordre des ingénieurs du Québec (Quebec Order of Engineers).

Elsewhere, the Port of Montreal is becoming a more popular destination with international cruise passengers. In addition to the fact that the number of cruise passengers is increasing each year, the French company Rivages du Monde, which specializes in cruises on the world’s most beautiful rivers, chose Montreal in 2014 as a home port for its cruise ship M/V Saint-Laurent Prestige for the entire 2015 season.


YEAR IN REVIEW

SUSTAINABLE DEVELOPMENT: COMMUNITY 1

GETTING CLOSER TO THE COMMUNITY The Port of Montreal continued to implement in 2014 its policy to strengthen relations with its neighbouring communities and the residents of the Ville-Marie, Mercier-Hochelaga–Maisonneuve and Rivière-des-Prairies–Pointe-aux-Trembles boroughs and the cities of Montreal-East and Contrecœur. OPEN HOUSES The Port held two open houses to present to the public its two major projects: the construction of a container terminal at Contrecœur, and the restoration of Alexandra Pier and the Iberville Passenger Terminal. Meetings with political and social stakeholders from zones touched by the projects were held prior to the open houses. The objective of the open houses was to inform citizens, answer their questions and listen to their comments. These events allowed the Port to reach hundreds of people.


GOOD NEIGHBOUR COMMITTEE A Good Neighbour Committee was created to establish dialogue and offer a forum for discussion and exchange on subjects of mutual interest and to develop a collaborative approach to examine neighbourhood issues. This committee comprises 17 members who are representatives of the Port and its partners as well as social, community and economic groups from concerned cities and boroughs. RESPONSIBLE INVESTMENT The MPA redefined its Community Investment Policy in order to align it with its new Strategic Plan, all within the realm of responsible leadership. Eligibility requirements were reviewed in order to better define organizations that have a significant social impact and to maximize the Port’s visibility within the community. Within the scope of its Community Investment Policy, the Port of Montreal is a proud partner in three projects that provide assistance to young people in the Mercier– Hochelaga-Maisonneuve borough.

2

“Before my interview for the cycling tour guide job… I thought I was going to be driving some kind of big bicycle-taxi. But to my delight, my experience was much deeper and rewarding. These are not simple taxis; they are huge scarlet red bikes, ridden by young and enthusiastic guides who offer lively tours of the Hochelaga-Maisonneuve district. My many interactions within the district showed me that this is an area with friendly, kind and open people, light years away from the picture of a gloomy and rough neighbourhood that had been painted for me before moving here.” PASCAL LAFORTUNE REGARDING HIS EXPERIENCE WITH VÉLOPOUSSE

3

They are the following: ÉCOMARIS: the Port provided grants to four young people to board the Roter Sand sail training vessel for one week in summer 2014. The experience helped them learn how to excel, work as team and discover the St. Lawrence River ecosystem. 1

2 VÉLOPOUSSE: the project provided summer jobs to a dozen young adults who worked as pedicab tour guides in their district. 3 SAMAJAM: a program that helps young people develop their love of learning and their sense of belonging to their school through music.

PORT IN THE CITY DAY Port in the City Day, held in September, once again drew huge crowds. More than 2,000 Montrealers responded to an invitation from the Port of Montreal to take a river cruise aboard the Cavalier Maxim to discover port facilities. AML Cruises partners with the Port for this event.

VISITORS AND STUDENTS The Port of Montreal generously opened its doors to hundreds of visitors and students, in particular those studying logistics and transportation, for presentations about port operations. More than 2,500 people visited the Dominic J. Taddeo Room. LOGBOOK Two issues of Logbook magazine were distributed to Friends of the Port in 2014. This magazine is available free-of-charge on the Port of Montreal website. It is written for the general public. Readers are able to learn more about port activity, the social and economic role of the Port, and the people who work in the Port. SOCIAL MEDIA The Port of Montreal made itself more accessible to the public in 2014 by reinforcing its presence on social media. The Port is now active on Twitter, Facebook, LinkedIn, YouTube and Instagram. Port of Montreal – Annual Report 2014 19

YEAR IN REVIEW

SUSTAINABLE DEVELOPMENT: ENVIRONMENT

33%

REDUCTION IN GREENHOUSE GASES (GHGs)

LIMITING GHG EMISSIONS The Port of Montreal began using an electronic management system in 2014 that measures truck fluidity on port territory at approaches to marine terminals. Our target is to reduce by 10% the amount of greenhouse gas (GHG) emissions from trucks within the next five years. The Port continued its hybrid vehicle acquisition program and installed speed regulators on its vehicles in 2014. Through this program, we have registered a 33% reduction in GHGs compared with 2007. To compensate for GHG emissions, the Port of Montreal adopted a tree-planting program at the end of 2014. Our objective is to plant 150 trees per year.

ADAPTATION OF INFRASTRUCTURE The Port of Montreal used a structural liner to rehabilitate 1,400 metres of water mains, a technique that eliminates the digging of trenches. The installation of white energy-efficient membranes reduced energy consumption at the Section 42 building in both winter and summer. A new wash-water treatment system was developed during the construction of a mechanical workshop at Maisonneuve Terminal. The system includes an exterior washing slab that collects all water combined with an oil/ grease and suspended solids separator as well as a clarifier. Brightness in the workshop has been maximized through the installation of numerous high-level windows that allow more natural light to enter the building. Heat loss was reduced through the installation of an air curtain at garage doors. A new soil encapsulation technique was used during the redevelopment of a site at the Viau sector to provide space for more containers. The technique allowed the Port to save the equivalent of 170 tonnes of greenhouse gas emissions and thereby reduce the project’s carbon footprint. The project was completed in 2014.

GREEN MARINE REPORT CARD The Port of Montreal recorded in 2014 the best results among Quebec ports and the third-best results among North American ports that participate in the Green Marine environmental program.


RECYCLING AND RECOVERY In 2014, the materials recycling and recovery program led to the recycling of: ALMOST

5,500 LITRES OF OILY WATER 205 KG OF BATTERIES 1 BARREL OF AEROSOL CANS 6,600 LITRES OF WASTE OIL 71 TIRES

ADAPTING PROCESSES AND MANAGEMENT SYSTEMS In 2014, the Port of Montreal integrated its main financial, environmental and social risks in its risk management process in order to ensure compliance with the MPA’s guidelines of sustainable development and the environment. For example, it integrated environmental requirements in clauses in tender notices and contracts. The Port of Montreal also integrated its Green Marine environmental performance criteria in its Environmental Management System (EMS), a first among Green Marine members in North America. Moreover, qualitative criteria were integrated into cost-benefit analyses in order to take into account environmental and social aspects.

13,040 LITRES OF GLYCOL 160 TONNES OF METAL 30 M3 OF OIL AND AIR FILTERS,

AND SOILED ABSORBENT MATERIALS

INVOLVEMENT The MPA chairs the Regroupement des usagers du Saint-Laurent (St. Lawrence Users Group). This organization participates in the public and governmental consultation process regarding the Canada/United States International Joint Commission’s new regulation plan, which aims to add environmental objectives to the decision-making process.

Visit the Port of Montreal website for further information on its environmental performance.

WWW.PORT-MONTREAL.COM/EN/ SUSTAINABLE-DEVELOPMENTCOMMUNITY.HTML


YEAR IN REVIEW

HUMAN RESOURCES

4,500 HOURS OF TRAINING

226

EMPLOYEES

The Port of Montreal has 226 employees in a wide range of areas: engineers, computer specialists and economists, fire prevention and hazardous materials technicians, building mechanics and secretarial staff, specialists in finance and accounting, business intelligence and geomatics, communications and human resources, directors and managers, evaluation experts and navigation officers. The Port of Montreal has always placed a great emphasis on investing in skills development for its employees. In 2014, close to 4,500 hours of individual or group training were provided so that we can remain competitive and develop our employees. With the projects that have been announced for 2015, all of our efforts will be made in order to meet new challenges related to change management while promoting employee excellence and engagement.

HAPPY EMPLOYEES WORK BETTER!


MANAGEMENT COMMITTEE

7 4

5 1

6

2

3

SERGE AUCLAIR Vice-President, Strategy and Human Resources 2 TONY BOEMI Vice-President, Growth and Development RÉ AL COUTURE Vice-President, Finance and Administration 4 DANIEL DAGENAIS Vice-President, Operations 5 MARIE-CLAUDE LEROUX Vice-President and Secretary, Corporate Affairs and Secretariat 6 SOPHIE ROUX Director of Communications 7 SYLVIE VACHON President and Chief Executive Officer 1

3


BOARD OF DIRECTORS

1

2

5

6

3

7

4

8

1 MICHEL M. LESSARD Chairman of the Board of Directors (member since 27-06-2007) / Corporate Director 2 ANIK TRUDEL Vice-Chair of the Board of Directors (member since 19-06-2008) / Vice-President, Corporate Communications, Gildan 3 NORMAND MORIN Eng. PH.D. (end of term 27-11-2014) Corporate Director 4 YVES FILION (end of term 11-12-2014) Certified Corporate Director 5 MARC Y. BRUNEAU L.SC.Comm, F.C.A. (member since 12-04-2010) Corporate Director 6 CLAUDE MELANÇON (member since 24-03-2012) Corporate Director 7 GERMAIN THIBAULT (member since 29-11-2012) General Manager, Grand défi Pierre Lavoie 8 MARIE-CLAUDE BOISVERT (member since 11-12-2014) Chief Operating Officer, Desjardins Business Capital régional et coopératif

GOVERNANCE On October 20, 2013, Michel M. Lessard was reappointed Chairman of the Board of Directors of the Montreal Port Authority (MPA) for a period of two years. Anik Trudel was appointed Vice-Chair of the Board of Directors, also for a two-year term. In 2014, the terms of Messrs. Normand Morin and Yves Filion came to an end. The MPA thanks them for their contributions and welcomes Ms. MarieClaude Boisvert, who joined the Board of Directors in December 2014.

Governance and Human Resources Committee This committee fulfilled its mandate with respect to the remuneration of senior management and non-unionized employees. It closely monitored the performance of MPA employee pension fund portfolio investments. It ensured that declarations of conflict of interest or perceived conflict of interest were filed in conformity with the MPA’s Code of Conduct set out in its letters patent. It coordinated self-evaluations for the Board of Directors and Board committees.

COMMITTEES OF THE BOARD OF DIRECTORS To guide its decisions, the Board of Directors relies on four committees.

Sustainable Development and Safety Committee* This committee conducted its annual review of the activities of the Environment and Security departments. It also examined measures related to health and safety. It monitored priorities related to the MPA’s Sustainable Development Policy and its implementation.

Audit Committee This committee recommended the approval of the MPA’s audited financial statements as well as the report of the five-year special examination set out under Article 41 of the Canada Maritime Act, examined the recommendations of the external auditor and ensured monitoring. It monitored the MPA’s financial results on a quarterly basis. It kept track of the capital budget. It analyzed the annual and interim reports on risk management and ensured that proper measures were in place to manage any potential risks. It closely monitored the performance of the MPA’s investment portfolio as well as legal requirements, regulations and contracts that could impact the MPA.

Infrastructure Committee This committee helped the Board fulfill its mandate relative to infrastructure management and investments by the MPA in its building infrastructures, including the relevance and rationale of the five-year plan and the annual infrastructure budget.

* Previously known as the Environment, Safety, Health and Security Committee


CONDENSED FINANCIAL RESULTS

STATEMENTS OF EARNINGS

For the year ended December 31, 2014

2014

2013

Revenue from operations

94,079

87,357

Expenses Salaries and benefits Maintenance and repairs Public services Professional services Payments in lieu of property taxes Other expenses Gross revenue expenses Amortization of fixed assets

31,790 9,953 506 4,212 2,557 7,280 3,912 21,022

35,595 8,890 424 4,432 2,620 5,041 3,819 20,870

81,232

81,691

12,847 1,687 – –

5,666 3,633 2,000 (7,097)

14,534

4,202

2014

2013

14,534

4,202

(in thousands of Canadian dollars)

Operating earnings before the following items Investment income Settlement of legal proceeding Restructuring expense NET EARNINGS

$

$

STATEMENT OF COMPREHENSIVE LOSS For the year ended December 31, 2014 (in thousands of Canadian dollars)

Net earnings

$

$

Other comprehensive income Items that will be reclassified subsequently to net earnings Available-for-sale financial assets Gain for the year Reclassification in net earnings Items that will not be reclassified subsequently to net earnings Remeasurement of defined benefit obligation

1,089 (213)

(3,102) (1,162)

(3,050)

28,708

Other comprehensive income

(2,174)

24,444

12,360

28,646

TOTAL COMPREHENSIVE INCOME


STATEMENTS OF CHANGES IN THE EQUITY OF THE GOVERNMENT OF CANADA For the year ended December 31, 2014

2014

2013

Accumulated other comprehensive Total income equity

Total equity


Contributed Retained capital earnings

$ $

Balance, beginning of year

235,199

16,572

Net earnings of the year

–

14,534

Other comprehensive income Available-for-sale financial assets Gain for the year Reclassification in net earnings Remeasurement of defined benefit obligation

– – –

– – (3,050)

Total comprehensive income of the year

– 235,199

BALANCE, END OF YEAR

$ $

(876)

$

250,895

222,249

14,534

4,202

1,089 (213) –

1,089 (213) (3,050)

(3,102) (1,162) 28,708

11,484

876

12,360

28,646

28,056

–

263,255

250,895

–


CONDENSED FINANCIAL RESULTS (continued)

SUMMARIZED STATEMENTS OF CASH FLOWS For the year ended December 31, 2014 (in thousands of Canadian dollars)

Operating activities Net earnings Non-cash items

2014

2013

14,534 13,599

4,202 11,304

28,133

15,506

$

$

Net change in working capital Expenses payable

(3,560) (321)

Net cash from operating activities

24,252

16,256

(23,347) 374 (21,419) 54,806 1,607

(37,911) 985 (43,296) 59,732 2,916

12,021

(17,574)

Investing activities Acquisition of fixed assets net of government grant Disposal of fixed assets Acquisition of investments Disposal of investments Interest received Net cash used in investing activities Financing activities Payments under finance lease contracts

(277)

294 456

(287)

Net change in cash Cash, beginning of year

35,996 2,374

(1,605) 3,979

CASH, END OF YEAR

38,370

2,374


SUMMARIZED STATEMENTS OF FINANCIAL POSITION For the year ended December 31, 2014

2014

2013

75,244 10,000 153 265,009

46,367 42,333 238 259,647

350,406

348,585

29,161 135 692 745 56,418

33,797 456 692 3,683 59,062

87,151

97,690

235,199 28,056 –

235,199 16,572 (876)

263,255

250,895

350,406

348,585

$


Assets Current Investments Other assets Fixed assets Liabilities Current Expenses payable Asset retirement obligations Obligation under finance lease contracts Employee benefit obligation Equity of the Government of Canada Contributed capital Retained earnings Accumulated other comprehensive income

$

The financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS). The complete version of the audited financial statements is available upon request.

MICHEL M. LESSARD Chairman of the Board of Directors

SYLVIE VACHON President and Chief Executive Officer

February 26, 2015 Montreal, Quebec, Canada


THANK YOU

THE LOGISTICS CHAIN: A TEAM EFFORT TRUCK TRANSPORT AGENTS

ASSOCIATIONS SHIPPING LINES EDUCATIONAL INSTITUTIONS

GOVERNMENT DEPARTMENTS

The partners in a logistics chain are economic players who understand that it is to their advantage to work toward common goals, beyond competitive forces. They bring together their resources and business expertise to increase the impact of their group within their industry and, at the same time, increase their own strength within their respective markets. The Port of Montreal would like to thank its employees and all of its partners in the Greater Montreal region’s transportation logistics chain: shipping lines, terminal operators, agents and other intermediaries, railways, trucking companies, associations, government departments, and educational and research institutions that are part of this huge team effort.

THANK YOU TO ONE AND ALL FOR YOUR ENTHUSIASM AND YOUR COLLABORATIVE SPIRIT!

RESEARCH INSTITUTIONS

TERMINAL OPERATORS

RAIL TRANSPORT

INFORMATION MONTREAL PORT AUTHORITY

COMMUNICATIONS DEPARTMENT [email protected] CE DOCUMENT EST DISPONIBLE EN FRANÇAIS SUR DEMANDE : 514 283-7050 PHOTO CREDITS PORT OF MONTREAL ARCHIVES, GUY TESSIER GRAPHIC DESIGN DYADE PRINTED IN CANADA MAY 2015

MONTREAL PORT AUTHORITY

Montreal Port Authority 2100 Pierre-Dupuy Avenue, Wing 1 Montreal, Quebec H3C 3R5 Canada T 514 283-7011 F 514 283-0829

port-montreal.com